Brookfield Homes Corporation
NYSE : BHS

Brookfield Homes Corporation

July 28, 2005 16:46 ET

Brookfield Homes Reports Second Quarter Earnings and Revised 2005 Earnings Guidance

DEL MAR, CALIFORNIA--(CCNMatthews - July 28, 2005) -

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' second quarter investor conference call can be accessed by teleconference on July 29, 2005 at 11:00 am (Eastern Time) at 1-800-251-4491, toll free in North America. The archived teleconference may be accessed by dialing 1-800-807-5315, toll free in North America through August 12, 2005. Alternatively, the conference call can be accessed by Webcast on Brookfield Homes' website at www.brookfieldhomes.com.

Brookfield Homes Corporation (NYSE:BHS) today announced strong financial results for the second quarter ended June 30, 2005:

- Housing revenue totaled $238 million compared to $212 million for the same period in 2004, an increase of $26 million. The 2005 increase in revenue is primarily due to an increase in the units closed during the quarter of 23 units and an increase in the average selling price of the company's homes to $669,000 from $639,000 for the same period last year.

- Net income for the quarter totaled $32 million or $1.03 per share, an increase of $14 million or $0.47 per share from the same period in 2004. Also contributing to the increase in net income are improvements in the housing gross margin from 20% to 30% for the same period in 2004. The increase in housing gross margin percentage is due to a higher percentage of home closings in San Diego and Washington D.C. area, where margins are the highest as the company is building on land that it entitled and developed.



- Financial Highlights:

Results of Operations Three Months Ended Six Months Ended
June 30 June 30
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(Millions, except per
share amounts) 2005 2004 2005 2004
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Housing revenue $ 238 $ 212 $ 381 $ 351
Total revenue 253 229 405 372
Gross margin 76 48 124 81
Contribution from bulk land
sales to net income - - 3 -
Net income 32 18 51 28
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Earnings per share - diluted
- Excluding bulk land sales $ 1.03 $ 0.56 $ 1.54 $ 0.87
- Bulk land sales - - 0.09 -
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$ 1.03 $ 0.56 $ 1.63 $ 0.87
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Operating Highlights

- As a result of strong market conditions and growth in the number of available active selling communities, the company has in backlog 100% of its planned home closings for 2005.

- Brookfield Homes' lots owned or controlled total 30,318, an increase of 8% from inventory levels at the end of 2004. Direct ownership of 12,517 lots, provides strong visibility on our future cash flows, and 17,801 lots under option are controlled with the objective of adding value through land entitlements.

- A summary of our lots, owned or controlled under option, by region, follows:



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San
Francisco Southland / San Diego / Washington
Bay Area Los Angeles Riverside Sacramento D.C. Area Total
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Lot
supply
Owned 1,341 575 6,253 310 4,038 12,517
Optioned 3,551 2,313 2,322 4,510 5,105 17,801
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Total 4,892 2,888 8,575 4,820 9,143 30,318
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Geographic
Diversification
of lots 16% 10% 28% 16% 30% 100%
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Other Developments

- 2005 Earnings Guidance - As a result of continued strong markets and the possible bulk sale of 2,000 lots over the next 12 months, the company expects earnings per share growth in 2005 to between $6.50 and $7.00 from $4.64 in 2004, and the previous guidance of $5.35.

Outlook

"Markets remain strong and we are well positioned to generate value for our shareholders, from our land holdings and strong development pipeline. We continue to add value by entitling lots for sale to other homebuilders or for homebuilding in our own operations. Our recent announcement of the possible bulk sale of over 2,000 entitled lots is an example of value realization in the current strong markets. On the lot sales, we expect to realize net income over the next 12 months of $75 million or $2.40 per share. With 100% of our planned 2005 homes closed or in backlog and the increase in our 2005 earnings guidance, we continue to seek unentitled land opportunities to create further value for shareholders," concluded Ian Cockwell, President & Chief Executive Officer of Brookfield Homes.

Brookfield Homes Corporation

Brookfield Homes Corporation is a residential homebuilder and land developer, building homes and developing land in master-planned communities and infill locations. We design, construct and market single-family and multi-family homes primarily to move-up and luxury homebuyers. We also entitle and develop land for our own communities and sell lots to other homebuilders. Our portfolio includes 30,000 lots owned and controlled in the San Francisco Bay Area; Southland / Los Angeles; San Diego / Riverside; Sacramento; and Washington D.C. Area markets. For more information, visit the Brookfield Homes website at www.brookfieldhomes.com.

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, expected home closings and deliveries (and the timing thereof), expected 2005 earnings guidance, possible bulk land sales and net income derived therefrom, the company's future outlook and growth plans, and those statements preceded by, followed by, or that include the words "planned", "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


(Unaudited)
------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------
(thousands, except
per share amounts) 2005 2004 2005 2004
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Revenue
Housing $237,424 $212,080 $380,507 $351,038
Land and other revenues 15,006 16,367 24,078 20,598
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Total revenue 252,430 228,447 404,585 371,636
Direct cost of sales (176,557) (180,927) (280,535)(290,978)
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75,873 47,520 124,050 80,658
Equity in earnings from
housing and land joint
ventures 2,279 3,142 9,591 3,993
Selling, general and
administrative expense (19,763) (17,200) (40,987) (33,371)
Minority interest (5,780) (4,661) (8,989) (6,807)
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Net income before taxes 52,609 28,801 83,665 44,473
Income tax expense (20,254) (10,945) (32,366) (16,900)
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Net income $ 32,355 $ 17,856 $ 51,299 $ 27,573
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Weighted average shares
outstanding
Basic 30,998 30,882 30,932 30,881
Diluted 31,555 31,600 31,536 31,511

Earnings per share
Basic $ 1.05 $ 0.58 $ 1.66 $ 0.89
Diluted $ 1.03 $ 0.56 $ 1.63 $ 0.87
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Brookfield Homes Corporation
Condensed Balance Sheets

(Unaudited)
As at June 30 As at December 31
--------------------------------------
(thousands) 2005 2004 2004
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Assets
Housing and land inventory $ 819,024 $ 680,548 $ 679,930
Investments in housing and
land joint ventures 40,344 76,590 59,810
Consolidated land
inventory not owned 39,731 20,925 47,240
Receivables and other assets 31,074 64,258 73,986
Cash and cash equivalents 175,250 81,177 186,731
Deferred income taxes 34,885 45,915 33,924
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$ 1,140,308 $ 969,413 $ 1,081,621
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Liabilities and
Stockholders' Equity
Project specific and
other financings $ 535,552 $ 484,066 $ 512,098
Accounts payable and
other liabilities 246,509 157,834 256,985
Subordinated debt - 137,294 -
Minority interest 63,361 58,533 66,422
Stockholders' equity 294,886 131,686 246,116
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$ 1,140,308 $ 969,413 $ 1,081,621
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