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Homex Reports First Quarter 2012 Results

17:35 EDT Wednesday, May 02, 2012

Total Revenue Grows 43.7 percent; EBITDA Margin 22.8 percent; Positive Free Cash Flow Ps.865 Million, Excluding Penitentiary Construction Projects

CULIACAN, Mexico, May 2, 2012 /PRNewswire/ -- Desarrolladora Homex, S.A.B. de C.V. ("Homex" or "the Company") [NYSE: HXM, BMV: HOMEX] today announced financial results for the First Quarter ended on March 31, 2012.

Pursuant to Article 78 of the General Provisions Applicable to Securities Issuers and Other Participants in the Securities Market (Disposiciones de Caracter General Aplicables a las Emisoras de Valores y a Otros Participantes del Mercado de Valores), beginning in 2012, the Company is adopting IFRS as issued by the International Accounting Standards Boards ("IASB"). Please refer to page 23 for a detailed description of the transition.

Financial Highlights

  • Total revenue for the first quarter of 2012 increased 43.7 percent to Ps. 5.9 billion (US$458 million) from Ps.4.1 billion (US$319 million) for the same period in 2011. During the quarter, the Company recognized Ps.2.2 billion (US$168 million) of revenues from its penitentiary construction projects with the federal government.
  • Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the quarter was Ps.1,344 million (US$105 million), a 60.2 percent increase from the Ps.839 million (US$65 million) reported in the first quarter of 2011. Adjusted EBITDA margin increased 236 basis points to 22.8 percent in the first quarter of 2012 from 20.5 percent in the first quarter of 2011.
  • Net income (adjusted for non-cash, foreign exchange (FX) effects) for the first quarter of 2012 was Ps.514.1 million (US$40 million) reflecting an  8.7 percent margin in the first quarter of 2012 compared to Ps.314.7 million (US$24 million)  and a margin of 7.7 percent reported in the same period  in 2011. This was principally due to lower general and administrative expenses.
  • As of March 31, 2012 Homex' working capital cycle (WCC) was 640 days (excluding the penitentiary construction projects), an improvement of 24 days from 664 days as of March 31, 2011 mainly, as a result of a decrease of 27 days in inventory days for the period as a result of the Company's conservative land acquisition replacement strategy and the stability of its work in progress inventory.  WCC decreased 6 days from 646 days as of December 31, 2011, mainly as a result of an increase of 20 days in accounts payable days for the period.
  • As of March 31, 2012, Homex' free cash flow (FCF) generation (excluding the penitentiary construction projects) and adjusted for non-cash FX effects was positive at Ps.865 million (US$67 million).  On a consolidated basis, including the penitentiary construction projects, Homex generated a negative free cash flow of Ps.893 million  (US$69 million), primarily because these projects' construction in progress is required to be recognized as accounts receivable for accounting purposes.

FINANCIAL AND OPERATING HIGHLIGHTS

Thousands of pesos

1Q'12

Thousands U.S dollars (Convenience Translation)

1Q'12

Thousands of pesos

1Q'11

% Chg.

Volume (Homes)

8,738

8,738

11,294

-22.6%

Revenues

$458,228

$5,887,728

$4,098,427

43.7%

Housing revenues

$285,412

$3,667,236

$4,045,684

-9.4%

Cost

$328,340

$4,218,814

$2,938,505

43.6%

  Capitalization of Comprehensive Financing Costs (CFC)

$17,244

$221,570

$217,029

2.1%

Gross profit

$129,888

$1,668,914

$1,159,922

43.9%

Gross profit adjusted for capitalization of CFC

$147,132

$1,890,484

$1,376,951

37.3%

Operating income

$78,824

$1,012,796

$553,405

83.0%

Operating income adjusted for capitalization of CFC

$96,068

$1,234,366

$770,434

60.2%

Interest expense, net (a)

$26,258

$337,385

$245,890

37.2%

Net income

$68,023

$874,017

$336,897

159.4%

Net Income adjusted for FX

$40,013

$514,126

$314,709

63.4%

Adjusted EBITDA (b)

$104,602

$1,344,018

$838,761

60.2%

Gross margin

28.3%

28.3%

28.3%

Gross margin adjusted for capitalization of CFC

32.1%

32.1%

33.6%

Operating margin

17.2%

17.2%

13.5%

Operating margin adjusted for capitalization of CFC

21.0%

21.0%

18.8%

Adjusted EBITDA margin

22.8%

22.8%

20.5%

Earnings per share in Ps.

2.29

0.98

Earnings per share in Ps. adjusted for FX

1.54

0.94

Earnings per ADR presented in US$ (c)

1.07

0.46

Earnings per ADR presented in US$ adjusted for FX

0.72

0.44

Weighted avg. shares outstanding (MM)

334.7

334.7

334.7

Accounts receivable days (d)

35

32

Inventory days

716

743

Inventory (w/o land) days

Accounts payable days

111

111

Working Capital Cycle (WCC) days (e)

640

664

(a) Excluding interest expense from the penitentiary construction projects.

(b) Adjusted EBITDA is not a financial measure computed under Mexican Financial Reporting Standards (MFRS). Adjusted EBITDA as derived from our MFRS financial information means net income, excluding (i) depreciation and amortization; (ii) net comprehensive financing costs ("CFC") (comprised of net interest expense (income), foreign exchange gain or loss, including CFC, capitalized to land balances, that is subsequently charged to cost of sales and (iii) income tax expense and employee statutory profit-sharing expense. See "Adjusted EBITDA" for a reconciliation of net income to Adjusted EBITDA for the first quarter of 2012 and 2011.

(c) US$ values estimated using an exchange rate of Ps.12.8489 per US$1.00 as of March 31, 2012.  Common share/ADR ratio: 6:1.

(d) Accounts receivable not including receivables from the penitentiary construction projects.

(e) WCC computation based on LTM COGS under IFRS and not including COGS and revenues from the penitentiary construction projects.

Commenting on first quarter results, Gerardo de Nicolas, Chief Executive Officer of Homex, said:

"Our first quarter 2012 results reflect a bright start to the year, particularly with respect to the strong contribution from our penitentiary construction projects. During the quarter, we recognized Ps.2.2 billion revenues from these projects, alone, which represented 33 percent of completion of the total projects, and we are confident that we will be in line to deliver the prisons to Mexico's federal government this year. At the same time, we had a strong start to the year at our housing division in Mexico in regard to working capital management. Once again, we are demonstrating that the different initiatives on which we have been working over the last years to improve our working capital cycle are starting to pay off, despite the fact that we continue to increase our participation in vertical construction which, as of 1Q12, represented 41 percent of total construction in progress.

"On the other side of the coin, our first quarter results from our housing divisions reflect a bumpy start with respect to revenue growth. Our lower than expected results in Mexico were mainly driven by a temporary delay that we faced in relation to the housing registry system (RUV). Nonetheless, as the nature of this delay is administrative rather than operational, we believe that we will catch up in the following quarters as sales dynamics at our projects reflect a positive outlook. In Brazil, we continued to face seasonality of the housing business, which is driven by the administrative capacity of the different players in the mortgage and titling processes.  But here, again, we believe that as we advance on the year we will deliver on our expectations and goals for the year in Brazil.

"All in all, we feel well positioned to deliver on our 2012 guidance in both revenue growth and margins, as we continue to improve our profitability in both our housing operations and in our work for the Federal government."

Detailed Financial Reports

The Company produces a detailed earnings report that provides information regarding Operating and Financial results. This detailed information is considered part of this earnings announcement and is available in full with this earnings release via the Company's website at http://www.homex.com.mx/ri/index.htm through email distribution or the Company's filings with the SEC and the CNBV.

FIRST QUARTER 2012 RESULTS CONFERENCE CALL NOTICE

DATE:

Thursday, May 3, 2012

TIME:

9:00 AM Central Time (Mexico City)

10:00 AM Eastern Time (New York)

HOSTS:

Gerardo de Nicolas, Chief Executive Officer

Carlos Moctezuma, Vice President of Finance and Planning and Chief Financial Officer

Vania Fueyo, Investor Relations Officer

DIAL-IN:

International: 706-643-5124

U.S.: 866- 887-3678

Passcode: 72404934

Please call 10 minutes prior to start time and request the Homex call

Investor  Contactsinvestor.relations@homex.com.mx

Vania FueyoHead of Investor Relations+5266-7758-5838vfueyo@homex.com.mx  

SOURCE Desarrolladora Homex, S.A. de C.V.




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