Homex's Q3 earnings of 479.7M pesos are up 0.1% from a year ago as revenue rises 10.3% to 5.2B pesos
October 26, 2010
– Desarrolladora Homex, S.A.B. de C.V. ("Homex" or "the Company") [NYSE: HXM, BMV: HOMEX] today announced financial results for the Third Quarter ended on September 30, 2010 (1).
As previously stated, effective January 1, 2010, and in accordance with INIF 14, Homex recognizes its revenues, costs and expenses when the Company has transferred the control of the home to the homebuyer. Homes under construction are now considered as inventory until they are titled.
We have presented 3Q09 figures on the same basis as 3Q10, since INIF 14 requires that all periods be presented on a consistent basis, giving effect to the new accounting standard.
* Total revenue increased 10.3 percent in the third quarter of 2010 to Ps.5.2 billion (US$414 million) from Ps.4.7 billion (US$375 million) for the same period in 2009. On a nine-month accumulated basis as of September 30, 2010, revenues increased to Ps.13.6 billion, a revenue growth of 12.7 percent when compared to the same period of last year.
* In the third quarter of 2010, Homex titled 12,808 homes, an increase of 0.6 percent compared to the third quarter of 2009. The Company continued with its strategy of focusing on the most profitable products within the Affordable Entry-Level (AEL) segment, with a product offering affordable for families who earn between two and eleven times minimum wages.
* Gross margin for the third quarter of 2010 was 33.0 percent compared to 30.0 percent during the third quarter of 2009, mainly driven by a lower capitalization of Comprehensive Financing Cost (CFC), as well as by Homex' product mix change (See "Titled Volume" and "The Average Price"). The higher margin also reflects lower cost result from the Company's efforts to innovate and improve at its construction process. Gross margin adjusted for the application of MFRS D-6 "Capitalization of CFC" for the third quarter on a sequential basis improved at 33.8 percent compared to 32.8 percent during the second quarter of 2010.
* Operating income during the third quarter increased 19.2 percent to Ps. 938.5 million from Ps. 787.4 million during the same period of 2009, driven by improved gross margin as well as a lower capitalization of CFC. Operating income as a percentage of revenues was 18.2 percent compared to 16.8 percent during the third quarter of 2009.
* Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the quarter was Ps.1,141 million, a 3.5 percent increase from the Ps.1,103 million reported in the third quarter of 2009. EBITDA margin was 22.1 percent, in line with the Company's yearly guidance of 21.0 to 22.0 percent.
"For the third consecutive quarter this year, our financial and operating results continue to demonstrate the leading position, expertise and solid business model that Homex has in the Affordable Entry-level homebuilding sector, where our revenues in México grew a remarkable 31.5 percent. This is principally the result of our proactive strategy to identify and pursue niche opportunities, thus re-aligning our product offering to serve markets unattended by our competitors. At the same time, our positive results are a reflection of the sustainability of our sales strategy, where we have again improved our closing efficiency with our massive presentations approach. Importantly, and as a result of our focused strategy to improve our working capital cycle, we have consistently advanced our collection process with INFONAVIT, where, as of September 30 and on a nine-month accumulated basis, we were able to grow our collected units by 24.5 percent, with a resulting market share of 5.9 percent.
"The third quarter of 2010 was also an important and positive quarter for our operations in Sao Jose Dos Campos, Brazil, as we recognized our first, meaningful revenue stream from these operations, growing our titled revenues by 155 percent. This is a clear demonstration of our improved execution in the country, as well as a recognition of client preference. Despite a competitive environment, our team in Brazil has done excellent work, positioning and growing the Homex brand in the country.
"During this period, we also made strategic investments, advancing infrastructure, urbanization and edification of homes efforts for our project's next stages, in order to prevent collection delays during the fourth quarter of the year. While these investments naturally have had a negative impact on our working capital cycle, we are confident that this will help us to achieve our collection goals for the year.
"As we enter the latter part of the year, we will continue to focus on growing our operations, leveraging on our optimal product mix here in Mexico, as well as continue to pursue growth opportunities in our International and Tourism division, and to continue to work diligently on working capital improvements to meet our objectives for 2010," concluded Mr. de Nicolas.
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.
Editor's note: In an omitted table, Homex reported Q3 earnings of 479.7M pesos, compared with earnings of 479.4M pesos a year ago, amid revenues of 5.2B pesos, versus 4.7B pesos a year ago.