Comstock Holding Companies, Inc (NASDAQ:CHCI)

First Quarter 2014 Results

• 
  Total revenue for the first quarter of 2014 totaled $8.0 million ($7.8 million from 19 home settlements) compared to $11.6 million for the 2013 first quarter ($11.4 million from 21 home settlements).
• In the first quarter of 2014, net loss attributable to Comstock Holding Companies totaled $1.6 million, or $0.08 per diluted share, compared to net income of $0.7 million, or $0.03 per diluted share, in the prior-year period.

Chairman and CEO Christopher Clemente commented, “As noted in our year-end press release on March 28, 2014, unusually harsh winter conditions delayed development and construction activities and impacted Comstock’s deliveries and revenue for the first quarter. However, in spite of the weather conditions, sales during the first quarter of this year kept pace with the strong sales we experienced during the same period last year. Comstock generated 32 new orders valued at approximately $14 million during the first quarter of this year compared to 33 sales valued at $15.2 million during the same period last year. Sales during the first quarter of this year expanded our backlog as of quarter end to 41 units, valued at $18.5 million, as compared to 21 units, valued at $9.2 million, as of March 31, 2013. Our open community count stands at 11, up from five at the same time last year. Based on continued healthy activity in the market, a limited supply of existing homes listed for sale, and our expanded pipeline of building lots, we believe Comstock is well positioned to capitalize on the favorable market trends in the Washington, D.C. region.”

Fourth Quarter 2013 Results

• The company reported revenue of $21.2 million compared to $2.6 million for the same quarter 2012.
• The company reported a loss per share of $0.06 compared to a loss of $0.10 for the same quarter 2012.

“As expected, we resumed growth and regained operating profitability in 2013. Homebuilding revenue, settlements, average settlement prices, gross margin, overhead leverage and net income from continuing operations all improved substantially, reflecting improving economic conditions and growing demand for new homes in our core market of Washington, D.C.,” said Chairman and CEO Christopher Clemente. “Our success in more than doubling our open community count, from five at year-end 2012 to 11 at year-end 2013 contributed to the significant increase of net new orders for the year.

“With additional communities planned for opening in 2014 and a growing pipeline of controlled land inventory, Comstock is well positioned to capitalize further on the favorable market trends in the Washington, D.C. region and to generate another year of growth. Although unusually harsh winter conditions will have an impact on deliveries and revenue in the first quarter of this year, new orders YTD have kept pace with 2013 and currently our backlog is above year-ago levels, giving us confidence that we will achieve our objective of continuing the pattern of growth that began with 2013.”

WASHINGTON & RESTON, Va.--(BUSINESS WIRE)--Comstock Holding Companies, Inc., (NASDAQ:CHCI), announced preliminary highlights for its homebuilding operation, including that new orders, unit deliveries, revenue, and backlog increased substantially during 2013.

Preliminary performance highlights for 2013 include:

• Homebuilding revenue increased 364% to approximately $53.8 million from $11.6 million in 2012;
• New orders increased 147% to 126 units, compared to 51 units in 2012;
• Unit deliveries increased 138% to 107, compared to 45 unit deliveries in 2012;
• Backlog at year-end 2013 of 28 units valued at $12.3 million, compared to nine units valued at $5.4 million at year-end 2012;
• Community count increased to ten at year-end 2013 from five at year-end 2012;
• Comstock’s pipeline of controlled land inventory expanded to approximately 637 lots at year-end 2013 from 354 lots at year-end 2012.

“Improving market conditions in the Washington, DC region and a relatively stable and healthy employment picture helped us put Comstock back on a growth path in 2013,” said Chairman and CEO Christopher Clemente. “We’re especially proud of the nearly fourfold increase in homebuilding revenue that we generated. We believe the limited supply of housing, affordability provided by attractive mortgage rates and improving consumer confidence should contribute to Comstock’s prospects for additional growth and enhanced results in 2014. We look forward to reporting our final financial results for the fourth quarter and full year 2013 in March 2014.”

On December 12, 2013, Comstock Investors VIII, L.C. (“Investors VIII”), a subsidiary of Comstock Holding Companies, Inc. (the “Company”), entered into subscription agreements (each a “Subscription Agreement”) with certain accredited investors (the “Purchasers,” and each a “Purchaser”), pursuant to which the Purchasers purchased membership interests (the “Interests”) in Investors VIII for an initial aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,550,000) of an up to Four Million Dollar ($4,000,000) capital raise (the “Private Placement”). The Purchasers included unrelated third-party accredited investors along with members of the Company’s Board of Directors and the chief operating officer and the chief financial officer of the Company. As part of the Private Placement, the Company issued warrants (“Warrants,” and each a “Warrant”) to purchase shares of the Company’s Class A Common Stock (“Class A Common Stock”) to the Purchasers who are not officers, directors or affiliates of the Company and purchased an amount of Interests that equaled or exceeded an initial investment amount of $250,000. The Warrants represent the right to purchase an aggregate amount of up to 102,000 shares of Class A Common Stock.

The Subscription Agreement contains certain customary representations, warranties and covenants of the Purchaser and Investors VIII, including representations to support the Company’s reasonable belief that, among other things, the Purchaser had access to information concerning the Company’s operations and financial condition, the Purchaser acquired the securities for its own account and not with a view to the distribution thereof, and the Purchaser is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and certain risk factors related to the Private Placement, the Company and Investors VIII. The Interests are governed by the Operating Agreement of Investors VIII entered into by the Company and each Purchaser (the “Operating Agreement”). The Operating Agreement contains terms and provisions governing Investors VIII, including distributions to the Purchasers, representations and covenants of the Purchasers and the Company, and limitations on liability. In addition, the Operating Agreement provides that the Purchasers are entitled to a cumulative, compounded, preferred return of twenty percent (20%) per annum on their Interests, compounded annually on their capital account balances.

The Warrants have an initial exercise price (subject to certain restrictions as indicated on each Warrant) equal to the average of the closing price of the Class A Common Stock over the 20 trading days preceding the issuance of the Warrant. The exercise price and number of the shares of Class A Common Stock issuable upon the exercise of the Warrants will be subject to adjustment as a result of certain events as described in the Warrants. The Warrants contain a cashless exercise provision. In the event a Purchaser exercises the Warrant on a cashless basis, the Company will not receive any proceeds. The Warrants may be exercised at any time prior to December 12, 2023.

The Private Placement provides capital related to the current and planned construction of the following projects: Hallcrest in Sterling, Virginia consisting of property approved for 42 townhome units, and Maxwell Square Condominium in Frederick, Maryland consisting of up to 45 townhome condominium units (collectively, the “Projects”). Proceeds of the Private Placement are to be utilized (i) to provide capital needed to complete the Projects in conjunction with project financing for the Projects, (ii) to reimburse the Company for prior expenditures incurred on behalf of the Projects, and (iii) for general corporate purposes of the Company.

The foregoing description of the material terms of the Subscription Agreements, the Interests, the Warrants and the Operating Agreement is qualified in its entirety by reference to the full text of the form of Subscription Agreement, the form of Warrant and the Operating Agreement, which will be filed as exhibits to the Company’s Form 10-K for the year ending December 31, 2013.

The information set forth in response to Item 1.01 of this Form 8-K is incorporated by reference in response to this Item 2.03.

The information set forth in response to Item 1.01 of this Form 8-K is incorporated by reference in response to this Item 3.02. The Interests and the Warrants were offered and sold to Purchasers in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act, and Rule 506(c) promulgated thereunder, and the certificates representing the securities shall bear legends to that effect. Each Purchaser represented him, her, or itself as an accredited investor (as defined by Rule 501 under the Securities Act) and Investors VIII and the Company took reasonable steps to verify such status. The Interests, the Warrants and the shares of our Class A Common Stock issuable upon the exercise of the Warrants have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Third Quarter 2013 Results

• Total revenue for the third quarter of 2013 totaled $9.6 million compared to $3.5 million for the third quarter of 2012.
• The company reported a loss per share of $0.03, compared to a loss of $0.22 for the same quarter of the prior year.

“The significant increase in new orders, settlements and revenue generated in the third quarter and the first nine months of 2013 is the result of two primary factors; a meaningful increase in demand for new homes in our core market of Washington, DC, and our focus on increasing our open community count so that we can position Comstock to capitalize on the increased demand” stated Chairman and CEO, Christopher Clemente. “At year end 2012, we had two open communities. We expect to have six open communities by year-end 2013. With additional increases planned for 2014, we expect to continue the progress we have made over the past year towards our ultimate goal of generating consistently positive results.

Business Outlook

As of November 11, 2013, the Company has total backlog of $24.3 million representing 51 units. Of these units in backlog, 46 representing $21.3 million in revenue are expected to close this year. Total revenue settled to date as of November 11, 2013 is $37.6 million representing 73 units. Consequently, the Company estimates total homebuilding revenue for 2013 will be approximately $60 million on 120 units settled.

FREDERICK, Md. & RESTON, Va.--(BUSINESS WIRE)--Comstock Homes of Washington, LC, a wholly owned subsidiary of Comstock Holding Companies, Inc. (NASDAQ: CHCI), today announced it will build Maxwell Square, a community of 45 townhomes, in the historic district of Frederick, Maryland. The property is fully entitled and Comstock will begin construction shortly. The Sales Center opened in September 2013 and the first deliveries are expected in early 2014.

Maxwell Square combines modern grace with historic elegance in the heart of Frederick’s ‘walkable urban’ district. The facades of the brick homes are designed to complement the rich architectural flavor of downtown Frederick, each with a front porch in keeping with the Federal nature of the neighborhood.

The townhomes are four levels ranging from 2,400 to 2,900 square feet. Each has a fourth-floor loft and hosts a balcony. The kitchens offer upgraded appliances, fine cabinetry and granite countertops. All of the homes come with a two-car garage. Preconstruction pricing will begin in the mid-$300,000’s.

Historic Frederick has become a cultural hotbed in recent years, abundant with art galleries, performing arts spaces, history and antiques. Fine dining is a city standard, with Top Chef winner Brian Voltaggio’s VOLT only a few blocks from Maxwell Square.

Second Quarter 2013 Results

• Total revenue for the second quarter of 2013 totaled $12.2 million ($12.0 million from 22 home settlements) compared to $4.2 million ($3.8 million from 12 home settlements) for the 2012 second quarter.
• The Company reported net income from continuing operations of $0.1 million for the second quarter of 2013 compared to a net loss from continuing operations of $(1.9) million for the same period in 2012.

“For the second consecutive quarter, our homebuilding revenue for just three months approximated the homebuilding revenue we generated for the full year 2012,” remarked Chairman and CEO Christopher Clemente. “These results reflect the rebounding demand for new homes in the Washington, D.C. area and the positive response to the new communities and products Comstock is bringing to market.

“Sales at our open communities continue to reflect increased demand for new homes and the reduced inventory of existing homes for sale. Our robust sales in the first half of 2013 enabled us to generate total first-half revenue of $23.8 million, significantly outpacing last year’s results, while generating current backlog as of August 13th of $23.2 million on 52 pre-sold units.

“However, delays in permitting for our newer projects and the well-publicized shortage of skilled labor have resulted in what we believe are temporary production cycle delays. We are now projecting settlements of 125-130 units with a significant number of these settlements to occur in the fourth quarter of 2013. As a result, we expect to report revenue from our homebuilding operations to approximate $64 million and break-even or marginal profitability for 2013.”

Clemente added, “Returning Comstock to profitability for 2013 while positioning for additional growth and profitability in 2014 remains a top priority. We are confident in the steps we have taken to position Comstock for further growth in 2014 and look forward to opening additional communities that will build on the progress we have made this year. Recently, we started site development at two new communities: The Townes at Shady Grove Metro (36 townhouses located in Rockville, MD) and Falls Grove (19 single family homes and 110 townhomes located in Manassas, VA). We are also preparing to commence work on additional projects in Loudoun County, VA and Frederick, MD, with the goal of having seven active communities by early 2014.

“We anticipate that our production cycle will normalize by early 2014, as critical subcontractor trades increase their workforce to meet the resurgent demand in the Washington, D.C. market. The demonstrated demand for our products, tightening inventory and improved market pricing trends bode well for a 2014.”

WASHINGTON & RESTON, Va.--(BUSINESS WIRE)--Comstock Homes of Washington, LC, a wholly owned subsidiary of Comstock Holding Companies, Inc. (NASDAQ: CHCI), has opened the townhome section of the Hampshires, one of the largest new home communities currently being developed in downtown Washington, DC. Comstock will be holding a Grand Opening celebration that is open to the public at The Townes at the Hampshires on Saturday, July 27 from 12:00 to 2:30 p.m. The Hampshires is located in the 6000 block of New Hampshire Avenue NE at its intersection with Peabody Street.

The Townes at the Hampshires is comprised of 73 luxury brick townhomes, complementing Comstock’s City Homes at the Hampshires, a 38-unit section of luxury single-family homes that Comstock opened in the fall of last year. The Townes at Hampshires range in size from 1,600 to 2,000 square feet with four levels of living space, including a roof top deck. Each townhome has three bedrooms, a den, designer kitchens with upgraded appliances, granite countertops and upscale cabinetry. Some of the townhomes include garages. The Townes at the Hampshires are priced from $499,900.

“Early sales of The Townes at the Hampshires have been strong,” reports Comstock spokesperson Maggie Parker, “continuing the trend that began with the opening of the City Homes at the Hampshires. We are excited to be in a position to meet the robust demand for high-quality, reasonably priced homes in Washington.”

The community is located in the Lamond-Riggs neighborhood of Washington, DC, providing easy access to the two Metro stations, Fort Totten and Takoma Metro, and direct on-site access to the robust New Hampshire Avenue bus route. A central park area enhances the lovely City-Style neighborhood, combining the ease of urban living with green, open space. Comstock and its development partner, Four Points, LC have designed the brick colonial homes to complement the neighborhood.

WASHINGTON & RESTON, Va.--(BUSINESS WIRE)--Comstock Homes of Washington, LC, a wholly owned subsidiary of Comstock Holding Companies, Inc. (NASDAQ: CHCI) announces the opening of Falls Grove, conveniently located in Northern Prince William County just south of Centreville, Virginia. The Falls Grove Sales Center, located at Route 28 and Yorkshire Lane, is open daily from 11 am until 6 pm.

The Falls Grove community will include 110 townhomes and 19 single-family homes. Sales have begun on the first phase of Falls Grove, 48 townhomes, with pre-construction pricing from $269,900. The first deliveries are expected in late 2013.

Each three-level townhome will include approximately 1,800 square feet of finished living space and will have three bedrooms, three bathrooms, well-appointed kitchens, a rear deck and a private fenced yard. The Townes at Falls Grove are designed to provide gracious living spaces inside and out.

Falls Grove is located at the intersection of Route 28 and Yorkshire Lane just four miles south of Route 66 and a short distance from the Virginia Rail Express Station in Manassas, Virginia. With Centreville close by there is a wide array of restaurants to choose from, a movie theatre complex and many shops. Area amenities include the National Air & Space Museum at Dulles Airport, the Sully Historic Site & Museum, and numerous parks and golf courses.

Alerts sent to members

On April 26, 2013 we added CHCI to our 52 week high screen.  Our research note:

On the surface  CHCI’s fundamental story does not look compelling; the revenues of this home builder declined from $266 million in 2007 to $14.3 million in 2012.  But as with many of the stocks we bring to Geo Investing members, a silver lining exists.  Management commentary in its 2012 yearend earnings release was incredibly bullish and included some hefty financial guidance.  The company, "...anticipates 2013 homebuilding revenue and home settlements to be exponentially higher than in 2012."  Specifically, the company expects 2013 revenues to exceed $55million and for 2015 revenues to range between $125-$150million.  It also stated that the 2013 1st quarter revenues will be higher than all of 2012.  The stock has run hard on this news but we think it has a 50% upside from its current level ($2.60).  We are hoping shares pull back.

On May 2, 2013 we alerted members that we were continuing to add to our GeoBargain on the radar CHCI position as we thought current prices were an opportunity to average down from original purchases.

On May 3, 2013 we once again alerted members that we were adding to our position in the $2.60 area.

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First Quarter 2013 Results

• Total revenue for the first quarter of 2013 totaled $11.6 million ($11.4 million from 21 home settlements) compared to $3.9 million for the 2012 first quarter. This compares to 17 settlements and $3.2 million in homebuilding revenue in the first quarter of 2012.
• The Company reported net income from continuing operations of $1.1 million for the first quarter 2013 compared to a net loss from continuing operations of $(1.4) million for the same period in 2012.
•  In the first quarter of 2013, net income attributable to Comstock Holding Companies totaled $0.7 million, or $0.03 per diluted share, compared to $3.9 million, or $0.19 per diluted share, in the prior-year period, which included a gain of $6.5 million within net income from discontinued operations resulting from the $19.35 million sale of Cascades Apartments, the Company’s first investment grade property. The Company’s 2013 results reflect the reversal of an impairment charge of $0.7 million reflecting increased sales activity at its Eclipse project.

“As expected, first-quarter homebuilding revenue approximated the homebuilding revenue we generated for all of 2012,” commented Chairman and CEO Christopher Clemente. “With our backlog of sold homes increasing and new communities coming on line during the upcoming months, we believe we are well positioned to produce enhanced results each quarter this year as compared to 2012.

“During the housing downturn, we implemented many initiatives in preparation for the market’s recovery,” continued Clemente. “Those initiatives included developing a strong land acquisitions team, building new relationships with land developers and project lenders, and where needed, committing management’s personal resources and guarantees on construction loans to facilitate Comstock’s access to favorable project financing. As a result Comstock is positioned to take full advantage of the rebounding market.

“The spring season is off to a strong start and ongoing sales at our communities continue to be robust. With first-quarter homebuilding revenue of $11.4 million combined with our second quarter settlements to date and backlog of $26.1 million (on 56 units), we believe we are within easy reach of the $55 million to $64 million revenue target for 2013 that we provided in March. Because our project performance continues to outpace our early expectations, we are increasing our revenue forecast for the year to a range of $64 million to $69 million based on an upward revision of our projected home settlements to 125-140. At this higher revenue level, we are even more confident that we will restore Comstock to profitability in 2013, which is our primary objective for the year.

“It is important to note that Comstock’s current operations do not reflect the full earnings power of our business due to the joint venture partnerships we used during the economic downturn to fund two of our currently open housing communities. We are currently exploring more cost-effective financing options that would give us the flexibility to fund future projects through the Company’s improved balance sheet.”

Fourth Quarter and Full Year 2012 Results