Brookfield Homes Corporation
NYSE : BHS

Brookfield Homes Corporation

February 10, 2010 08:01 ET

Brookfield Homes Reports 2009 Year End Results

Investors, analysts and other interested parties can access Brookfield Homes' Supplemental Information Package on Brookfield Homes' website under the Investor Relations/Financial Reports section at www.brookfieldhomes.com. Brookfield Homes' year end investor conference call can be accessed by teleconference on Wednesday, February 10, 2010 at 11:00 am (Eastern Time) at 1-800-319-4610, toll free in North America or 1-604-638-5340. The archived teleconference may be accessed by dialing 1-800-319-6413 (Pincode: 2818), toll free in North America through March 10, 2010. Alternatively, the conference call can be accessed by Webcast on Brookfield Homes' website at www.brookfieldhomes.com.

FAIRFAX, VIRGINIA--(Marketwire - Feb. 10, 2010) - Brookfield Homes Corporation (NYSE:BHS) today announced net new orders and financial results for the year ended December 31, 2009:

  Three Months Ended Dec. 31     Year Ended Dec. 31
Unit Activity   2009     2008     2009     2008
Net new home orders   129     98     756     729
Home closings   268     230     703     750
Backlog of homes (units at end of period)   187     134     187     134
Average home selling price $ 505,000    $ 557,000 $ 488,000   $ 562,000
Lot sales to homebuilders   235     548     469     616
* Unit information includes unconsolidated entities  
  •  Net new orders for the fourth quarter ended December 31, 2009 were 129 units, up 32% when compared to the same quarter in 2008. In addition, the overall cancellation rate remains stable at 19%. The company's historical average is 15%.
  • Home closings increased by 17% during the three months ended December 31, 2009 in comparison to the same period in 2008, which was offset by a decrease in the company's average selling price of homes delivered to $505,000 from $557,000 during the same period last year.
 Results of Operations Three Months Ended Dec. 31     Year Ended Dec. 31  
 (Millions, except per share amounts)   2009     2008     2009     2008  
 Total revenue $ 145   $ 150 $ 376   $ 449  
 Housing revenue   134     127     340     415  
 Impairment of housing and land inventory and                        
     write-offs of option deposits   6     60     24     115  
 Gross margin   (12)     (64)     (2)     (82)  
 Impairment of investments in unconsolidated entities   -     19     13     38  
 Net loss attributable to Brookfield Homes Corporation   (17)     (69)     (28)     (116)  
 Loss per share – diluted $ (0.81)   $ (2.58) $ (1.54)   $ (4.33)  
  • Revenue for the year ended December 31, 2009 totaled $376 million, compared to $449 million for the year ended December 31, 2008. The decrease in revenue is a result of fewer homes closed in 2009 as well as the decrease in the average selling price. Land sales to other homebuilders contributed $36 million to revenues in 2009.
  • The company recorded impairments of $37 million during the year ended December 31, 2009, compared to $153 million for the same period in 2008. The impairments related to housing and land inventory and write-offs of option deposits, and impairments on investments in unconsolidated entities.
  • Net loss attributable to Brookfield Homes Corporation for the year ended December 31, 2009 was $28 million or $1.54 per share, compared to a net loss of $116 million or $4.33 per share for the year ended December 31, 2008.
  • Cash flow from operating activities was $137 million for the year ended December 31, 2009, compared to $66 million for the year ended December 31, 2008. A portion of this cash flow was utilized to reduce the company's debt, and as a result the debt to total capitalization at December 31, 2009 was 42%, a significant improvement from 71% for the year ended in 2008.

Operating Highlights and Recent Developments

  • Lots Owned and Controlled: At December 31, 2009, the company owned or controlled 24,245 lots, similar in comparison to the year ended December 31, 2008, however a decrease of 2,578 lots from September 30, 2009, primarily a result of the disposal of lots in San Diego/Riverside.

    For the year ended December 31, 2009, the company entitled 1,061 lots, creating long-term value in our supply constrained markets.

    The company currently sells from 25 active communities, compared to 30 for the fourth quarter of 2008. A summary of lots owned or controlled under option, by region, follows:
  Northern Southland / San Diego / Washington Corporate  
  California Los Angeles Riverside D.C. Area and Other Total
 Lot supply            
         Owned Directly 769 981 6,852 2,195 204 11,001
         Unconsolidated Entities - 254 1 1,432 59 1,746
         Options            
               - Consolidated 1,232 - 2,000 - - 3,232
               - Unconsolidated 4,950 2,027 - 1,289 - 8,266
 Total lot supply – Dec/09 6,951 3,262 8,853 4,916 263 24,245
 Geographic diversification of lots – Dec/09 29% 13% 37% 20% 1% 100%
 Total lot supply – Dec/08 7,290 3,460 8,105 4,981 273 24,109
 Geographic diversification of lots – Dec/08 30% 14% 34% 21% 1% 100%

Outlook

Brookfield Homes' outlook for 2010, while cautiously optimistic heading into the traditional spring selling season, is tempered for the second half of the year by the impact of continued economic weakness, high unemployment, foreclosures and shadow inventory.

The housing market has relied on federal government stimulus to bridge between weak economic fundamentals until the return of job growth and consumer confidence. Strategically, this presents opportunities to capitalize on mispriced longer-term replacement assets as in general the industry continues to focus its lot acquisition efforts on short-term finished lot positions to meet near-term closings.

Looking longer-term as housing production continues to be depressed historically and relative to demographic fundamentals, an under supply of housing units is being created. In particular, California should be one of the first areas of the country to experience a recovery in housing due to the speed at which the distressed inventory is being absorbed and the fact that there is very little supply in the development pipeline.

Strategies that have allowed Brookfield Homes to meet the challenges of the current cycle, combined with the company's strengthened balance sheet should enable it to continue to capitalize on select acquisition opportunities in strategic market areas, positioning for stronger operating results in 2010 and beyond.

The company will continue in 2010 to balance the signs of improvement in its markets with the challenges the housing industry could face with increasing mortgage interest rates, high unemployment and low consumer confidence. Brookfield Homes' goals for 2010 include:

  • Continue to monetize our inventory, targeting $90 million of net cash from operating activities.
  • Increase lots controlled in certain strategic market areas.
  • Improve overall gross margins as capital is invested in new homebuilding communities.
  • Continue to meet the challenges presented in the market and position ourselves to return to profitability.

Brookfield Homes Corporation

Brookfield Homes Corporation is a land developer and homebuilder. We entitle and develop land for our own communities and sell lots to third parties. We also design, construct and market single-family and multi-family homes primarily to move-up and luxury homebuyers. Our portfolio includes over 24,000 lots owned and controlled in the Northern California; Southland / Los Angeles; San Diego / Riverside; and Washington D.C. Area markets.

Note: Certain statements in this press release that are not historical facts, including information concerning possible or assumed future results of operations of the company, the company's 2010 outlook, the company's 2010 goals, value creation, targeted 2010 operating cash flow, the entitlement and monetization of lots (and the timing thereof), the company's future outlook and growth plans including acquisitions and lots controlled, and those statements preceded by, followed by, or that include the words "believe", "planned", "anticipate", "should", "goals", "expected", "potential," "estimate," "targeted," "scheduled" or similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Undue reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward-looking statements include, but are not limited to: changes in general economic, real estate and other conditions; mortgage rate changes; availability of suitable undeveloped land at acceptable prices; adverse legislation or regulation; ability to obtain necessary permits and approvals for the development of our land; availability of labor or materials or increases in their costs; ability to develop and market our master-planned communities successfully; confidence levels of consumers; ability to raise capital on favorable terms; adverse weather conditions and natural disasters; relations with the residents of our communities; risks associated with increased insurance costs or unavailability of adequate coverage and ability to obtain surety bonds; competitive conditions in the homebuilding industry, including product and pricing pressures; and additional risks and uncertainties referred to in our Form 10-K and other SEC filings, many of which are beyond our control. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

             
 
Brookfield Homes Corporation              
Consolidated Statements of Income              
 
 
  Three Months Ended       Year Ended
    December 31       December 31
(thousands, except per share amounts) (unaudited)   2009   2008       2009   2008
 
Revenue                    
     Housing $ 133,811 $ 127,292 $ 339,625 $ 415,311
     Land   11,346 22,569     36,355 33,692
Total revenue 145,157 149,861     375,980 449,003
Direct cost of sales                    
     Housing (111,836) (110,527)     (294,493) (363,038)
     Land (38,507) (43,423)     (59,308) (53,057)
     Impairment of housing and land inventory and                    
         write-off of option deposits   (6,225) (60,536)     (23,963) (115,124)
  (11,411) (64,625)       (1,784) (82,216)
Selling, general and administrative expense (15,561) (21,882)     (52,339) (69,498)
(Loss) / equity in earnings from unconsolidated entities   (262)   919       1,331   3,302
Impairment of investments in unconsolidated entities   (109) (19,338)     (12,995) (37,863)
Other income / (expense)   3,276 (16,707)     13,191 (17,823)
Loss before income taxes (24,067) (121,633)     (52,596) (204,098)
Income tax recovery   7,761 42,298     20,134 70,861
Net loss (16,306) (79,335)     (32,462) (133,237)
Less net loss attributable to non-controlling interest and                    
     other interests in consolidated subsidiaries   (371) 10,322       4,753 17,622
Net loss attributable to Brookfield Homes Corporation $(16,667) $ (69,013) $ (27,709) $(115,615)
 
Loss per share                    
     Basic $ (0.81) $ (2.58)     $ (1.54) $ (4.33)
     Diluted $ (0.81) $ (2.58)     $ (1.54) $ (4.33)
 
Weighted average shares outstanding                    
     Basic   27,039 26,761       26,838 26,688
     Diluted   27,039 26,761       26,838 26,688
           
 
Brookfield Homes Corporation
Condensed Balance Sheets
 
        As at December 31    
   (thousands) (unaudited)   2009   2008  
 
   Assets          
   Housing and land inventory $ 809,829 $ 946,875  
   Investments in unconsolidated entities   92,477   105,261  
   Consolidated land inventory not owned   25,434   3,328  
   Receivables and other assets   61,744   92,333  
   Restricted cash   7,485   -  
   Deferred income taxes   40,112   59,438  
      $ 1,037,081 $ 1,207,235  
 
   Liabilities and Equity          
   Project specific financings $ 231,567 $ 433,580  
   Revolving and other financings   150,000   314,977  
   Total financings   381,567   748,557  
   Accounts payable and other liabilities   122,190   146,320  
   Total liabilities   503,757   894,877  
   Other interests in consolidated subsidiaries   47,011   49,839  
   Total equity   486,313   262,519  
      $ 1,037,081 $ 1,207,235  

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