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Brookfield Homes Reports 2009 Second Quarter Results
Marketwire
Jul 29, 2009
FAIRFAX, VIRGINIA -- (Marketwire) -- 07/29/09 -- Brookfield Homes Corporation (NYSE: BHS) today announced net new orders and financial results for the second quarter ended June 30, 2009:
Three Months Ended Six Months Ended
Unit Activity June 30 June 30
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(per unit) 2009 2008 2009 2008
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Net new home orders 266 237 419 468
Home closings 169 216 243 336
Backlog of homes (units at
end of period) 310 287 310 287
Average home selling price $ 486,000 $ 548,000 $ 485,000 $ 558,000
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(i) Unit information includes joint ventures
- Net new orders for the second quarter ended June 30, 2009 were 266 units,
up 12% when compared to the same quarter in 2008.
Three Months Ended Six Months Ended
Results of Operations June 30 June 30
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(Millions, except per 2009 2008 2009 2008
share amounts)
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Total revenue $ 95 $ 120 $ 132 $ 189
Housing revenue 82 115 117 181
Impairment and write-offs of
option deposits 4 17 8 23
Gross margin 5 (2) 5 2
Impairment of investments in
housing and land joint ventures - 10 12 10
Net loss attributable to
Brookfield Homes Corporation - (9) (10) (21)
Loss per share - diluted $ (0.12) $ (0.33) $ (0.51) $ (0.80)
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- Revenue for the three months ended June 30, 2009 totaled $95 million, compared to $120 million for the same period in 2008.
- The decrease in housing revenue is primarily due to 47 fewer home closings during the second quarter of 2009 when compared to the same period in 2008, together with the company's selling price averaging $486,000 compared to $548,000 during the same period last year.
- Net income attributable to Brookfield Homes Corporation for the three months ended June 30, 2009 was $0.2 million, compared to a net loss of $9 million for the same period in 2008. For the three months ended June 30, 2009, the company reported a loss of $0.12 per share after preferred share dividends, compared to a net loss of $0.33 per share for the same period in 2008.
- The company recorded impairments on housing and land inventory of $4 million. This compares to impairment charges for the second quarter of 2008 on housing and land inventory of $17 million and $10 million on investments in housing and land joint ventures.
- Cash flow from operating activities was $16 million for the three months ended June 30, 2009.
Operating Highlights and Recent Developments
- Net New Orders and Home & Lot Closings: Net new orders for the three months ended June 30, 2009 were 266 units, an increase of 29 units when compared to the same period in 2008. The company currently sells from 30 active communities, compared to 33 for the second quarter of 2008. From these communities, the company closed 169 homes for the second quarter of 2009, compared to 216 home closings for the same quarter in 2008.
- Lots Owned and Controlled: At June 30, 2009, the company owned or controlled 27,052 lots. A summary of lots, owned or controlled under option, by region, follows:
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Northern Southland / San Diego /
California Los Angeles Riverside
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Lot supply
Owned Directly 968 1,102 9,683
Joint Ventures - 254 1
Optioned 6,182 2,039 1,500
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Total lot supply - Jun/09 7,150 3,395 11,184
Geographic diversification
of lots - Jun/09 26% 13% 41%
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Total lot supply - Dec/08 7,290 3,460 8,105
Geographic diversification
of lots - Dec/08 30% 14% 34%
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Washington Corporate
D.C. Area and Other Total
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Lot supply
Owned Directly 2,345 205 14,303
Joint Ventures 1,410 63 1,728
Optioned 1,300 - 11,021
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Total lot supply - Jun/09 5,055 268 27,052
Geographic diversification
of lots - Jun/09 19% 1% 100%
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Total lot supply - Dec/08 4,981 273 24,109
Geographic diversification
of lots - Dec/08 21% 1% 100%
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- Acquisitions: During the quarter, the company acquired 1,412 lots in the San Diego/Riverside area for $12 million.
Outlook
Sales improved in the second quarter, with increased traffic contributing to a 12% increase in net new orders compared to the same quarter last year. A reduction in overall cancellation rates has also occurred. The company continues to see an improvement in net new orders for the month of July when compared to July 2008.
Selling communities have seen an increased number of homebuyers take advantage of improved affordability, low interest rates, declining home prices and government stimulus programs. However the North American homebuilding industry continues to face a number of challenges, with home foreclosures continuing to have an effect on inventory and new home sales. Despite these challenging conditions, this risk is mitigated by the company's assets which are largely located in geographic areas with a constrained supply of lots and which have demonstrated strong economic characteristics over the long term.
Looking forward to the remainder of 2009, Brookfield Homes Corporation continues to make significant progress in meeting its goals, specifically:
- Strengthening the balance sheet by completing the $250 million rights offering to stockholders in the second quarter of 2009.
- Entitling or advancing the entitlement of optioned lots which also provide visibility on future cash flows. The goal is to entitle 1,500 lots during 2009 and 2010.
- Deferring significant development of land until there is a meaningful reduction in current inventories.
- Increasing the lots controlled in certain strategic market areas where the company has developed a strong reputation and relationships within the community. The company acquired 1,800 lots during the first quarter of 2009 and 1,412 lots during the second quarter of 2009, both through foreclosure sales.
With the acquisition of the aforementioned lots, the company now targets approximately $90 million of operating cash flow in 2009. Brookfield Homes Corporation plans to utilize this capital to continue to reduce its debt. During the second quarter, $16 million of operating cash flow was generated, while $53 million of project-specific debt was repaid from operating cash flow and proceeds received from the preferred stock issuance.
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 27,000 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 2009 goals, visibility on future cash flows, expected investment in land development, targeted 2009 operating cash flow and planned use of capital, the entitlement and monetization of lots (and the timing thereof), the company's future outlook and growth plans including 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 Operations
Three Months Ended Six Months Ended
June 30 June 30
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(thousands, except per share
amounts) (unaudited) 2009 2008 2009 2008
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Revenue
Housing $ 82,051 $ 115,235 $ 117,412 $ 181,641
Land 13,050 4,525 14,868 7,811
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Total revenue 95,101 119,760 132,280 189,452
Direct cost of sales
Housing (75,250) (101,679) (106,890) (157,546)
Land (10,570) (3,609) (12,222) (7,098)
Impairment of housing and
land inventory and
write-off of option deposits (4,258) (16,651) (8,158) (22,801)
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5,023 (2,179) 5,010 2,007
Selling, general and
administrative expense (13,545) (15,087) (25,274) (31,692)
(Loss) / equity in earnings
from housing and land
joint ventures (231) 2,385 2,128 2,424
Impairment of investments in
housing and joint ventures - (10,000) (11,618) (10,000)
Other income / (expense) 8,505 8,613 10,950 (417)
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Loss before income taxes (248) (16,268) (18,804) (37,678)
Income tax (expense) / recovery (115) 5,413 6,204 13,061
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Net loss $ (363) $ (10,855) $ (12,600) $ (24,617)
Less net loss attributable to
noncontrolling interest and
other interests in consolidated
subsidiaries 550 2,020 2,478 3,306
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Net income / (loss) attributable
to Brookfield Homes Corporation $ 187 $ (8,835) $ (10,122) $ (21,311)
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Weighted average common shares
outstanding
Basic 26,769 26,663 26,769 26,663
Diluted 26,769 26,663 26,769 26,663
Loss per share
Basic $ (0.12) $ (0.33) $ (0.51) $ (0.80)
Diluted $ (0.12) $ (0.33) $ (0.51) $ (0.80)
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Brookfield Homes Corporation
Condensed Balance Sheets
As at June 30 As at Dec. 31
(thousands) (unaudited) 2009 2008
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Assets
Housing and land inventory $ 938,685 $ 946,875
Investments in housing and land 103,839 105,261
joint ventures
Consolidated land inventory 3,328 3,328
not owned
Receivables and other assets 29,035 92,333
Cash and cash equivalents 464 -
Deferred income taxes 65,834 59,438
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$ 1,141,185 $ 1,207,235
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Liabilities and Stockholders'
Equity
Project specific financings $ 353,192 $ 433,580
Revolving and other financings 136,700 314,977
Accounts payable and other
liabilities 101,465 146,320
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Total liabilities 591,357 894,877
Other interests in consolidated 50,705 49,839
subsidiaries
Stockholders' equity 499,123 262,519
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$ 1,141,185 $ 1,207,235
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