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
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Unit Activity 2009 2008 2009 2008
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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
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(i) 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.
Three Months Ended
Results of Operations Dec. 31 Year Ended Dec. 31
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(Millions, except per share
amounts) 2009 2008 2009 2008
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Total revenue $ 145 $ 150 $ 376 $ 449
Housing revenue 134 127 340 415
Impairment of housing and land
inventory and write-offs of 6 60 24 115
option deposits
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)
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-- 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:
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Southland San Washing- Corpor-
Northern / Los Diego / ton D.C. ate and
California Angeles Riverside Area Other Total
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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
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Total lot supply -
Dec/09 6,951 3,262 8,853 4,916 263 24,245
Geographic
diversification of 29% 13% 37% 20% 1% 100%
lots - Dec/09
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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%
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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
December 31 31
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(thousands, except per share
amounts) (unaudited) 2009 2008 2009 2008
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Revenue
Housing $ 133,811 $ 127,292 $ 339,625 $ 415,311
Land 11,346 22,569 36,355 33,692
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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)
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(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)
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Loss before income taxes (24,067) (121,633) (52,596) (204,098)
Income tax recovery 7,761 42,298 20,134 70,861
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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
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Net loss attributable to
Brookfield Homes Corporation $ (16,667) $ (69,013) $ (27,709) $(115,615)
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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
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Brookfield Homes Corporation
Condensed Balance Sheets
As at December 31
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(thousands) (unaudited) 2009 2008
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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
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$ 1,037,081 $ 1,207,235
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Liabilities and Equity
Project specific financings $ 231,567 $ 433,580
Revolving and other financings 150,000 314,977
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Total financings 381,567 748,557
Accounts payable and other liabilities 122,190 146,320
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Total liabilities 503,757 894,877
Other interests in consolidated subsidiaries 47,011 49,839
Total equity 486,313 262,519
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$ 1,037,081 $ 1,207,235
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Contacts: Brookfield Homes Corporation Linda Northwood Director,
Investor Relations 858-481-2567 lnorthwood@brookfieldhomes.com
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