Homex Announces Fourth Quarter and Full Year 2009 Results
CULIACAN, Mexico, Feb. 23 /PRNewswire-FirstCall/ -- Desarrolladora Homex, S.A.B. de C.V. ("Homex" or "the Company") (NYSE: HXM, BMV: HOMEX) today announced financial results for the Fourth Quarter and Full Year ended on December 31, 2009(1).
Highlights
-- As previously stated, effective January 1, 2010, Homex will no longer recognize its revenues, costs and expenses based on the percentage-of-completion method, and will begin to recognize them based on applicable rules under INIF 14, where revenues, costs and expenses are recognized when the Company has transferred title of the property to the homebuyer. Homes under construction will thus be considered as inventory until they are titled. Homex will commence reporting quarterly results pursuant to INIF 14 accounting method starting the first quarter ended March 31, 2010.
-- The Company previously estimated that 2009 revenues under INIF 14 accounting rules would have a variation of up to 15 percent and that shareholders' equity would have a variation of between 20-21 percent. Importantly, today the Company estimates that Homex' 2009 revenues under INIF 14 accounting rules would have a variation of up to 12 percent, while shareholders' equity would vary approximately 18 percent.
-- Total revenue in the 2009 fourth quarter decreased 7.2 percent to Ps.5.8 billion (US$446 million) from Ps.6.3 billion (US$480 million) for the same period in 2008, reflecting the Company's strategy to align its growth to cash generation and working capital improvements. For the full year 2009, revenues rose 3.0 percent to Ps.19.4 billion (US$1.5 billion) from Ps.18.9 billion (US$1.4 billion) in 2008.
-- In the fourth quarter of 2009, the total number of homes sold decreased 19.2 percent when compared to the fourth quarter of 2008. However, the volume of total homes sold for the year rose 0.8 percent. The quarterly volume contraction reflects Homex' focus on privileging cash generation by aligning investments related to construction-in-process to collections.
-- Gross margin for the fourth quarter of 2009 was 33.1 percent compared to 23.3 percent during the fourth quarter of 2008. 4Q09 gross margin adjusted for the application of MFRS D-6 "Capitalization of Comprehensive Financing Cost" decreased 110 bps to 34.1 percent compared to 35.2 percent during the same period of last year, driven by a reduction in the contribution of total (higher margin) middle-income revenues from 24.6 percent as of 4Q08 to 23.9 percent as of 4Q09.
-- Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the recent quarter was Ps.1,412 million (US$108 million), a 6.4 percent increase from the Ps.1,328 million (US$102 million) reported in the fourth quarter of 2008, evidencing the Company's year-over- year improved profitability. For the full year, EBITDA grew 4.0 percent to Ps.4,526 million from Ps. 4,352 million.
-- Adjusted EBITDA margin increased 310 basis points to 24.3 percent in the fourth quarter of 2009 from 21.2 percent in the fourth quarter of 2008, as a result of realized savings from the Company's on-going expense reduction program. Adjusted EBITDA margin for the full year 2009 improved 22 bps to 23.3 percent compared to 23.1 percent in 2008.
-- For the fourth quarter of 2009, net income was Ps.841 million (US$64 million) compared to Ps.6 million (US$450 thousand) for the fourth quarter of 2008. On a pro-forma basis (without considering FX non-cash items for both periods) net income margin would have been 13.4 percent during the fourth quarter of 2009 compared to 8.1 percent during the year ago period. For the year, net income was Ps. 2.2 billion (US$171 million) compared to 1.6 billion (US$121 million) for 2008.
-- As a result of the Company's measures to minimize land and CAPEX investments, as well as its proactive decision to align investments related to construction-in-process to cash generated from collections, during the fourth quarter of 2009, Homex generated a positive free cash flow balance of Ps.10 million. This was the third consecutive quarter of positive cash generation for the Company. The Company ended 2009 with a negative FCF of Ps.302 million, compared to year-end 2008, when it reported negative FCF of Ps.5,230 million.
FINANCIAL AND OPERATING HIGHLIGHTS
Thousands of pesos 4Q'09 U.S
Dollars
(Convenience
Translation) 4Q'09 4Q'08 % Chg.
Volume (Homes) 14,885 14,885 18,432 -19.2%
Revenues $445,542 $5,811,515 $6,264,938 -7.2%
Gross profit $147,532 $1,924,362 $1,460,323 31.8%
Operating income $90,185 $1,176,351 $525,099 124.0%
Interest expense, net $4,742 $61,859 -$43,667 -
Net income $64,486 $841,142 $5,871 -
Adjusted EBITDA (a) $108,272 $1,412,270 $1,327,811 6.4%
Gross margin 33.1% 33.1% 23.3%
Operating margin 20.2% 20.2% 8.4%
Adjusted EBITDA margin 24.3% 24.3% 21.2%
Earnings per share 2.51 2.51 0.02
Earnings per ADR
presented in US (b) 1.16 1.16 0.01
Weighted average shares
outstanding (MM) 334.8 334.8 334.9
Accounts receivable (as a
% of sales)
Accounts receivable
(days) period-end
Inventory turnover (days)
period-end
Inventory (w/o land)
turnover (days)
period-end
FINANCIAL AND OPERATING HIGHLIGHTS TWELVE MONTHS
Thousands of pesos 2009 2008 % Chg.
Volume (Homes) 57,955 57,498 0.8%
Revenues $19,418,351 $18,850,496 3.0%
Gross profit $5,783,009 $5,377,239 7.5%
Operating income $3,354,729 $2,999,593 11.8%
Interest expense, net $206,312 $79,682 158.9%
Net income $2,234,767 $1,580,876 41.4%
Adjusted EBITDA (a) $4,526,481 $4,351,922 4.0%
Gross margin 29.8% 28.5%
Operating margin 17.3% 15.9%
Adjusted EBITDA margin 23.3% 23.1%
Earnings per share 6.68 4.72
Earnings per ADR presented in
US (b) 3.07 2.17
Weighted average shares
outstanding (MM) 334.8 334.9
Accounts receivable (as a %
of sales) 67.1% 62.8%
Accounts receivable (days)
period-end 242 226
Inventory turnover (days)
period-end 401 384
Inventory (w/o land) turnover
(days) period-end 75 67
(a) Adjusted EBITDA is not a financial measure computed under Mexican Financial Reporting Standards (MFRS). Adjusted EBITDA as derived from our MFRS financial information means MFRS net income, excluding (i) depreciation and amortization; (ii) net comprehensive financing costs ("CFC") (comprised of net interest expense (income), foreign exchange gain or loss, valuation effects of derivative instruments and monetary position gain or loss), including CFC, capitalized to land balances, that is subsequently charged to cost of sales; and (iii) income tax expense and employee statutory profit-sharing expense. See "Adjusted EBITDA" for reconciliation of net income to Adjusted EBITDA for the fourth quarter and full year of 2009 and 2008.
(b) US$ values estimated using an exchange rate of Ps.13.0437 per US$1.00. Common share/ADR ratio: 6:1
Commenting on fourth quarter and full year performance, Gerardo de Nicolas, Chief Executive Officer of Homex, said: "As a response to national and sector specific trends that continued to impact our working capital cycle, during the final quarter of the year, we took proactive measures to focus our efforts on collections while benefiting our cash generation.
"At the same time, and recognizing the fact that only five percent of FOVISSSTE's clients in 2010 will have the benefit of a higher-valued mortgage credit (more than Ps.500 thousand), and that pre-approved clients for a higher valued mortgage will lose their right to exercise it, during the fourth quarter of 2009, we focused our construction-in-process investments and collection efforts on those high-valued homes previously sold through a FOVISSSTE mortgage. Positively, collection delays experienced during the year with FOVISSSTE were partially solved by the added liquidity provided by the completion of its securitization program in December 2009 for Ps.5.0 billion.
"All in all, I am confident that the proactive measures undertaken during the fourth quarter better position us with respect to growth opportunities that we see in 2010, and that we will continue to improve on our working capital cycle and enjoy positive cash flows. It is worth noting that our reported sales volume is not a reflection of our quarterly sales trends, since we did register new client closings; it is more a reflection of our conservative posture to working capital management.
"During 2010, we will continue to grow our operations in actual cities, as these cities offer us plenty of opportunity for market share growth. We will continue to pursue our conservative strategy regarding land investments and CAPEX, while continuing with our on-going expense reduction program."
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.
DESARROLLADORA HOMEX, S.A.B de C.V.
FOURTH QUARTER AND FULL YEAR 2009 RESULTS
CONFERENCE CALL NOTICE
DATE: Wednesday, February 24, 2010
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: 51062669
Please call 10 minutes prior to start time and request the Homex call
REPLAY: 706-645-9291, available one hour after the call ends, the pass code to access the replay of the call is 51062669. Or via webcast at http://www.homex.com.mx/ri/index.htm
A copy of the earnings release will be e-mailed to you after market close on February 23, 2010. It will also be available on the Company IR website at http://www.homex.com.mx/ri/index.htm
Please contact Ms. Vania Fueyo at (011-52-667) 758 5838 or via email at [email protected] with any questions.
About Homex
Desarrolladora Homex, S.A.B. de C.V. (NYSE: HXM, BMV: HOMEX) is a leading, vertically integrated home-development company focused on affordable entry-level and middle-income housing in Mexico. It is one of the most geographically diverse homebuilders in the country. Homex has a leading position in the top four markets in Mexico and is the largest homebuilder in Mexico, based on the number of homes sold, revenues and net income.
For additional corporate information, please visit the Company's web site at: www.homex.com.mx
Desarrolladora Homex, S.A.B. de C.V. quarterly reports and all other written materials may from time to time contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors can cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include economic and political conditions and government policies in Mexico or elsewhere, including changes in housing and mortgage policies, inflation rates, exchange rates, regulatory developments, customer demand and competition. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Discussion of factors that may affect future results is contained in our filings with the Securities and Exchange Commission.
(1) Unless otherwise noted, all monetary figures are presented in thousands of Mexican pesos and in accordance with Mexican Financial Reporting Standards (MFRS). Fourth Quarter and Full Year 2009 and 2008 figures are presented without recognizing the effects of inflation per the application of MFRS B-10 "Effects of inflation." The symbols "Ps." and "$" refer to Mexican pesos and "US$" refers to U.S. dollars. U.S. dollar figures in this release are presented only for the convenience of the reader and are estimated, using an exchange rate of Ps.13.0437 per US$1.00. Fourth quarter and Full Year 2009 financial information is unaudited and is subject to adjustments.
Figures comparison expressed in basis points are provided for the convenience of the reader. Basis points figures may not match, due to rounding.
Investor Contacts
[email protected]
Vania Fueyo
Head of Investor Relations
+5266-7758-5838
[email protected]
SOURCE Desarrolladora Homex, S.A.B. de C.V.
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