Homex Third Quarter 2009 Results

October 27, 2009 8:02 PM EDT

CULIACAN, Mexico, Oct. 27 /PRNewswire-FirstCall/ -- 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 September 30, 2009(1).

Highlights

    --  Total revenue in the 2009 third quarter increased 8.2 percent to Ps.5.1
        billion (US$377 million) from Ps.4.7 billion (US$348 million) for the
        same period in 2008.
    --  In the third quarter of 2009, total homes sold increased 8.4 percent
        when compared to the third quarter of 2008, mainly driven by solid 9.3
        percent volume growth in the affordable entry-level home segment,
        reflecting Homex' focus on constantly improving its product offering,
        and continued availability of mortgage financing through INFONAVIT and
        FOVISSSTE.
    --  Gross margin for the third quarter of 2009 was 28.4 percent compared to
        29.7 percent during the third quarter of 2008. Gross margin adjusted for
        the application of MFRS D-6 "Capitalization of Comprehensive Financing
        Cost" remained relatively stable at 33.1 percent compared to 33.4
        percent during the same period of last year. The lower margin reflects
        the Company's volume growth in the affordable entry-level segment as
        well as the higher costs of materials, such as cement.
    --  Adjusted earnings before interest, taxes, depreciation and amortization
        (Adjusted EBITDA) during the recent quarter was Ps.1,175 million (US$87
        million), a 4.3 percent increase from the Ps.1,127 million (US$83
        million) reported in the third quarter of 2008.
    --  Adjusted EBITDA margin decreased 87 basis points to 23.0 percent in the
        third quarter of 2009 from 23.9 percent in the third quarter of 2008,
        driven by higher SG&A expenses resulting from increased marketing
        efforts and initial payroll expenses relating to the start of the
        Company's operations in Brazil.
    --  For the third quarter of 2009, net income was Ps.447 million (US$33
        million) compared to Ps.348 million (US$26 million) for the third
        quarter of 2008. Net income margin, including FX non-cash items for the
        third quarter of 2009 was 8.8 percent. On a pro-forma basis (without
        considering FX non-cash items) net income margin would have been 9.8
        percent.

    --  In the third quarter of 2009 free cash flow generation resulted in a
        positive balance of Ps.277 million, as a result of increased sales,
        lower capital expenditures and land purchases in line with the Company's
        conservative strategy to preserve cash as well as the maintenance of
        stable construction materials accounts payable.

Commenting on third quarter performance, Gerardo de Nicolas, Chief Executive Officer of Homex, said: "During the third quarter of 2009 we were able to maintain operational momentum witnessed during the first-half of 2009 by delivering solid quarterly revenue growth of 8.2 percent, driven by our strength and superior performance in the affordable entry-level segment of our business, and, as a result of Homex' enhanced brand recognition among our clients and prospective clients. At the same time we did see some reduction in demand in our middle-income home segment, reflecting the nagging complexities of Mexico's economic environment, which has taken a toll on middle-income families, affirming the appropriateness of our last year decision to reduce our exposure to the higher, middle income market segment. On balance, we have been able to find our way through this complex environment, maintaining our profitability with a conservative strategy to preserve cash and to minimize our land investments and capital expenditures as well as continuing to emphasize our on-going expense reduction programs. For the remainder of the year and for 2010 we will continue to be appropriately prudent as we pursue our business plan in the coming term."

(1) Unless otherwise noted, all monetary figures are presented in thousands of Mexican pesos and in accordance with Mexican Financial Reporting Standards (MFRS). Third Quarter 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 are presented only for the convenience of the reader and are estimated, using an exchange rate of Ps.13.5513 per US$1.00. Third quarter 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.

      FINANCIAL AND OPERATING HIGHLIGHTS
      ----------------------------------

                            3Q'09 U.S.
                             Dollars
                          (Convenience
    (Thousands of pesos)   Translation)      3Q'09       3Q'08    % Chg.
    ===================    -----------       -----       -----    -----
     Volume (Homes)             16,251      16,251      14,989     8.4%
     -------------              ------      ------      ------     ---
     Revenues                 $377,143  $5,110,783  $4,723,106     8.2%
     --------                 --------  ----------  ----------     ---
     Gross profit             $107,195  $1,452,629  $1,402,684     3.6%
     ------------             --------  ----------  ----------     ---
     Operating income          $60,895    $825,202    $845,259    -2.4%
     ----------------          -------    --------    --------   -----
     Interest expense, net     $10,988    $148,900     $63,231   135.5%
     ---------------------     -------    --------     -------   -----
     Net income                $33,004    $447,253    $348,383    28.4%
     ----------                -------    --------    --------   -----
     Adjusted EBITDA (a)       $86,722  $1,175,196  $1,127,086     4.3%
     -------------------       -------  ----------  ----------     ---
     Gross margin                 28.4%       28.4%       29.7%
     ------------                 ----        ----        ----
     Operating margin             16.1%       16.1%       17.9%
     ----------------             ----        ----        ----
     Adjusted EBITDA margin       23.0%       23.0%       23.9%
     ----------------------       ----        ----        ----
     Earnings per share           1.34        1.34        1.04
     ------------------           ----        ----        ----
     Earnings per ADR
      presented in US (b)         0.59        0.59        0.46
     --------------------         ----        ----        ----
     Weighted average
      shares outstanding (MM)    334.9       334.9       334.9
      -----------------------    -----       -----       -----


     FINANCIAL AND OPERATING HIGHLIGHTS              NINE
     ----------------------------------             MONTHS
                                                   ---------
    (Thousands of pesos)                 2009         2008   % Chg.
    ====================                 ----         ----    -----
     Volume (Homes)                    43,070       39,066    10.2%
     -------------                     ------       ------    ----
     Revenues                     $13,606,836  $12,585,558     8.1%
     --------                     -----------  -----------    ----
     Gross profit                  $3,858,646   $3,916,916    -1.5%
     ------------                  ----------   ----------    ----
     Operating income              $2,178,378   $2,474,493   -12.0%
     ----------------              ----------   ----------    ----
     Interest expense, net           $144,452     $123,348    17.1%
     ---------------------           --------     --------    ----
     Net income                    $1,393,625   $1,575,005   -11.5%
     ----------                    ----------   ----------    ----
     Adjusted EBITDA (a)           $3,129,276   $3,024,110     3.5%
     -------------------           ----------   ----------    ----
     Gross margin                        28.4%        31.1%
     ------------                        ----         ----
     Operating margin                    16.0%        19.7%
     ----------------                    ----         ----
     Adjusted EBITDA margin              23.0%        24.0%
     ----------------------              ----         ----
     Earnings per share                  4.16         4.70
     ------------------                  ----         ----
     Earnings per ADR                    1.84         2.08
      presented in US (b)                ----         ----
     --------------------
     Weighted average shares            334.9        334.9
      outstanding (MM)                  -----        -----
      -----------------
     Accounts receivable
      (as a % of sales)                  64.7%        59.8%
      -----------------                  ----         ----
     Accounts receivable
      (days) period-end                   233          215
      -----------------                   ---          ---
     Inventory turnover
      (days) period-end                   365          348
      -----------------                   ---          ---
     Inventory (w/o land)
      turnover (days) period-end           57           62
      --------------------------          ---          ---

    (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 third quarter of
    2009 and 2008.
    (b) US$ values estimated using an exchange rate of Ps.13.5513 per US$1.00.
     Common share/ADR ratio: 6:1

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.

Third Quarter 2009 Results Conference Call Notice

DATE: Wednesday, October 28, 2009

TIME: 9:00 AM Central Time (Mexico City) / 11:00 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: 31596152

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 31596152. 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 October 27, 2009. 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: investor.relations@homex.com.mx with any questions.

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

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