SOURCE: Comstock Homebuilding Companies, Inc.

August 15, 2008 16:25 ET

Comstock Homebuilding Companies, Inc. Reports Results for Three and Six Months Ended June 30, 2008

RESTON, VA--(Marketwire - August 15, 2008) - Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or the "Company") today announced its unaudited results for three and six months ended June 30, 2008 as follows:

For the three months ended June 30, 2008, the Company reported a net loss of $16.6 million or ($1.00) per share basic and diluted on total revenue of $12.0 million compared to a net loss of $4.7 million or ($0.29) per share basic and diluted on total revenue of $114.3 million for the three months ended June 30, 2007. In connection with these results, the Company announced that it had elected to record a non-cash impairment and write-off charge of $13.7 million for the three months ended June 30, 2008, compared to a $7.5 million charge for the three months ended June 30, 2007.

For the six months ended June 30, 2008, the Company reported a net loss of $10.1 million or ($0.61) per share basic and diluted on total revenue of $28.4 million, compared to a net loss of $6.3 million or ($0.40) per share basic and diluted on total revenue of $161.0 million for the six months ended June 30, 2007. In connection with these results, the Company announced that it had elected to record a non-cash impairment and write-off charge of $14.6 million for the six months ended June 30, 2008 as compared to an $8.4 million charge for the six months ended June 30, 2007.

During the period, the Company continued to execute on its debt reduction initiative. Outstanding debt at June 30, 2008 was $153.0 million (net of a $4.2 million deferred gain on the restructuring of its senior unsecured notes); a reduction of $5.3 million as compared to March 31, 2008, a reduction of $18.2 million as compared to December 31, 2007, and a reduction of $77.1 million as compared to June 30, 2007. The company's net debt-to-cap ratio at June 30, 2008 (adjusted for the deferred gain) was 73.5%.

For the six months ended June 30, 2008, the Company generated positive cash flow from operating activities of $8.4 million as compared to $64.1 million of positive cash flow from operating activities during the six months ended June 30, 2007.

The Company reported the following orders, cancellations and backlog by segment for the three and six months ended June 30, 2008:

Three months ended
 June 30, 2008                                     North              All
(dollars in 000s)                       DC Metro Carolina  Georgia  Markets
                                        -------- -------- -------- --------
Gross new orders                              18       12        4       34
Cancellations                                  8        3        3       14
Net new orders                                10        9        1       20
Gross new order revenue                 $  5,971 $  3,502 $  1,395 $ 10,868
Cancellation revenue                    $  1,761 $    899 $    975 $  3,635
Net new order revenue                   $  4,210 $  2,603 $    420 $  7,233
Backlog units                                 10       21        9       40
Backlog revenue                         $  3,094 $  6,732 $  3,174 $ 13,000
Average backlog revenue per unit        $    309 $    321 $    353 $    325


Six months ended
 June 30, 2008                                     North              All
(dollars in 000s)                       DC Metro Carolina  Georgia  Markets
                                        -------- -------- -------- --------
Gross new orders                              42       30       13       85
Cancellations                                 12       11        7       30
Net new orders                                30       19        6       55
Gross new order revenue                 $ 14,206 $  7,711 $  4,188 $ 26,105
Cancellation revenue                    $  3,140 $  3,625 $  1,930 $  8,695
Net new order revenue                   $ 11,066 $  4,086 $  2,258 $ 17,410
Backlog units                                 10       21        9       40
Backlog revenue                         $  3,094 $  6,732 $  3,174 $ 13,000
Average backlog price                   $    309 $    321 $    353 $    325

Additional results of the three months ended June 30, 2008 include:

--  At June 30, 2008, the Company's reported shareholder equity was $37.4
    million or $2.08 per share based on 17.9 million shares issued and
    outstanding.
--  Cash on hand at June 30, 2008 was $9.9 million, with receivables,
    representing settlement proceeds in transit, of $0.1 million.
--  Gross profit on all revenue was $1.7 million, representing a gross
    margin of 14.5% on all revenue, compared to $7.7 million or 6.7% for the
    three months ended June 30, 2007.
--  Gross profit from homebuilding revenue was $1.2 million representing a
    gross margin of 10.3%, compared to gross profit from homebuilding of $7.4
    million or 6.7% for the three months ended June 30, 2007.
--  SG&A decreased by $3.2 million or 39.0% to $5.0 million, compared to
    $8.2 million for the three months ended June 30, 2007.  SG&A for the three
    months ended June 30, 2008 included $0.6 million of interest and real
    estate taxes related to inactive projects, an increase of $0.6 million
    compared to the three months ended June 30, 2007 when there were no
    inactive projects.
--  Operating loss was ($17.0) million or (141.9%) of total revenue, as
    compared to ($7.9) million or (6.9%) of total revenue for the three months
    ended June 30, 2007.
    

Additional results of the six months ended June 30, 2008 include:

--  Gross profit was $4.2 million, representing a gross margin of 14.6% on
    all revenue, compared to $14.0 million or 8.7% for the six months ended
    June 30, 2007. Gross profit from homebuilding was $3.2 million representing
    a gross margin of 11.6%, compared to gross profit from homebuilding of
    $13.6 million or 8.9% for the six months ended June 30, 2007.
--  SG&A decreased by $6.8 million or 41.5% to $9.6 million, compared to
    $16.4 million for the six months ended June 30, 2007.  SG&A included $1.4
    million of interest and real estate taxes related to inactive projects, an
    increase of $1.4 million compared to the six months ended June 30, 2007
    when there were no inactive projects.
--  Operating loss was ($20.0) million or (70.4%) of total revenue, as
    compared to ($10.8) million or (6.7%) of total revenue for the six months
    ended June 30, 2007.
--  The Company recorded an $8.4 million gain on the restructuring of it
    senior unsecured notes and deferred and additional $4.4 million of gain to
    be recorded over the remaining five-year life of the notes.
    

At December 31, 2007, the Company established a $29.9 million valuation allowance against its deferred tax asset. The Company is currently projecting a tax loss for 2008 after recognizing current year tax deductions associated with prior period impairments charges. As a result, an effective tax rate of zero was assumed in calculating the Company's current income tax expense for the three and six months ended June 30, 2008.

As previously reported, during the three months ended June 30, 2008 the Company retained FTI Consulting to act as an advisor in exploring and developing a plan of debt restructuring. The Company announced that it will delay holding an investor conference call until certain milestones in the process of renegotiating its debts have been achieved.

About Comstock Homebuilding Companies, Inc.

Established in 1985, Comstock Homebuilding Companies, Inc. is a publicly traded, diversified real estate development firm with a focus on affordably priced for-sale residential products. Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the Washington, D.C.; Raleigh, North Carolina and Atlanta, Georgia metropolitan areas. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or its projects, please visit www.comstockhomebuilding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the Company's most recent form 10-K, as filed with the Securities and Exchange Commission on March 24, 2008. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Comstock Homebuilding Companies, Inc.

                                Three Months Ended,   Three Months Ended,
                                      June 30,              June 30,
                                --------------------  --------------------
Income Statement                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
  Revenue - homebuilding        $  11,435  $ 110,313  $  27,375  $ 153,338
  Revenue - other                     568      3,987      1,004      7,685
                                ---------  ---------  ---------  ---------
Total revenue                      12,003    114,300     28,379    161,023
Expenses
  Cost of sales - homebuilding     10,260    102,876     24,200    139,743
  Cost of sales - other                --      3,680         28      7,304
  Impairments and write-offs       13,746      7,492     14,577      8,383
  Selling, general and
   administrative                   5,029      8,151      9,575     16,376
                                ---------  ---------  ---------  ---------
Operating loss                    (17,032)    (7,899)   (20,001)   (10,783)
Gain on troubled debt
 restructuring                         --         --     (8,325)        --
Other income, net                    (413)      (302)    (1,598)      (646)
                                ---------  ---------  ---------  ---------
Loss before minority interest     (16,619)    (7,597)   (10,078)   (10,137)
Minority interest                      (1)        (3)        (3)        (5)
                                ---------  ---------  ---------  ---------
Total pre tax loss                (16,618)    (7,594)   (10,075)   (10,132)
Income taxes benefit                   --     (2,926)        --     (3,796)
                                ---------  ---------  ---------  ---------
Net loss                        $ (16,618) $  (4,668) $ (10,075) $  (6,336)
Basic loss per share            $   (1.00) $   (0.29) $   (0.61) $   (0.40)
Basic weighted average shares
 outstanding                       16,541     16,095     16,502     15,992
                                ---------  ---------  ---------  ---------
Diluted loss per share          $   (1.00) $   (0.29) $   (0.61) $   (0.40)
Diluted weighted average shares
 outstanding                       16,541     16,095     16,502     15,992



Comstock Homebuilding Companies, Inc.
Balance Sheet                                     June 30,    December 31,
                                                    2008          2007
ASSETS
  Cash and cash equivalent                      $      9,939  $      6,822
  Restricted cash                                      4,400         4,985
  Receivables                                            118           370
  Due from related parties                                91            92
  Real estate held for development and sale          186,512       203,860
  Inventory not owned - variable interest
   entities                                           19,250        19,250
  Property, plant and equipment, net                   1,184         1,539
  Other assets                                         2,817        22,058
                                                ------------  ------------
    TOTAL ASSETS                                $    224,311  $    258,976
                                                ============  ============

LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable and accrued liabilities      $     10,477  $     21,962
  Obligations related to inventory not owned          19,050        19,050
  Notes payable                                      144,006       141,214
  Senior unsecured debt                               13,182        30,000
                                                ------------  ------------
    TOTAL LIABILITIES                                186,715       212,226
                                                ------------  ------------
  Commitments and contingencies (Note 10)
  Minority interest                                      228           231
                                                ------------  ------------

SHAREHOLDERS' EQUITY
  Class A common stock, $0.01 par value,
   77,266,500 shares authorized, 15,209,075 and
   15,120,955 issued and outstanding,
   respectively                                          152           151
  Class B common stock, $0.01 par value,
   2,733,500 shares authorized, 2,733,500 issued
   and outstanding                                        27            27
  Additional paid-in capital                         156,922       155,998
  Treasury stock, at cost (391,400 Class A common
   stock)                                             (2,439)       (2,439)
  Accumulated deficit                               (117,294)     (107,219)
                                                ------------  ------------
    TOTAL SHAREHOLDERS' EQUITY                        37,368        46,519
                                                ------------  ------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $    224,311  $    258,976
                                                ============  ============

Contact Information

  • CONTACT:
    Comstock Homebuilding Companies, Inc.
    Bruce Labovitz
    703.230.1131
    Email Contact