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Homex Reports 4Q12 and Full Year 2012 Earnings Results

Total Revenue Growth of 21.5 Percent for the Fourth Quarter of 2012 and Full Year 2012 Growth of 30.5 Percent.

CULIACAN, Mexico, Feb. 26, 2013 /PRNewswire/ -- 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 December 31, 2012[1].

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 has adopted  IFRS as issued by the International Accounting Standards Boards ("IASB").

Financial Highlights

  • Total revenue for the fourth quarter of 2012 increased 21.5 percent to Ps.7.9 billion (US$614 million) from Ps.6.6 billion (US$505 million) for the same period in 2011.  Housing revenues were Ps.5.7 billion (US$439 million), a decline of 4.4 percent compared to Ps. 5.9 billion (US$459 million) during the fourth quarter of 2011.  
  • For the full year 2012, total revenues rose 30.5 percent to Ps.28.5 billion (US$2.2 billion) from Ps.21.8 billion (US$1.7 billion) in 2011.  Total housing revenue for the full year 2012 decreased 6.5 percent to Ps.18.9 billion (US$1.4 billion) from Ps.20.2 billion (US$1.5 billion) during the same period of 2011. The Company's operations during the quarter and year were affected by 1) the uneven allocation of subsidies between vertical and horizontal home construction, 2) changes in the subsidy program affecting pricing dynamics, 3) additional requirements for mortgage originations with INFONAVIT and FOVISSSTE, 4) inherent effect from the government transition during the last quarter.
  • During the quarter, in accordance with IFRS, the Company decided not to consolidate results of its penitentiary project located in Chiapas. As a result of this decision, during the quarter Homex had a negative contribution from penitentiary revenues.  In contrast, revenues from infrastructure increased significantly to Ps.3.9 billion, as the construction services related to the Chiapas Project were recognized in this line.
  • For the year, revenues from  Penitentiary Projects were Ps.3.8 billion, reflecting the contribution from the Morelos project. During the quarter, due to the effects of the government transition, the issuance of Certificates of Construction Completion (CAAPS) was delayed affecting the Company's ability to draw down on the Banobras loan.
  • Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the quarter was Ps.491.9 million (US$37.9 million), a 63.3 percent decrease from the Ps.1, 339.1 million (US$103.1 million) during the same period in 2011. Adjusted EBITDA margin for the recent quarter was 6.2 percent compared to 20.4 percent during the same period of 2011. The decline in the quarter mainly reflects the accounting effect resulting from the Company's decision not to consolidate the Chiapas project.
  • As of December 31, 2012 and on a consolidated basis, Homex generated negative FCF of Ps.6.4 billion which was driven by the increase in accounts receivable from Mexico's housing division as well as from the recognition of the construction in progress (as AR) from the penitentiary project of Morelos.  Homex FCF without the Federal Penitentiary and adjusted for FX was negative at Ps.3.0 billion. On a quarterly basis, Homex FCF without the Federal Penitentiaries was negative at Ps.2.4 billion for the fourth quarter from negative Ps.522 million for the third quarter.

FINANCIAL AND OPERATING HIGHLIGHTS



Twelve-Months

Thousands of pesos

4Q'12
Thousands U.S. dollars (Convenience Translation)

4Q'12
Thousands of pesos

4Q'11

Chg % and bps

2012
Thousands U.S. Dollars (Convenience Translation)

2012

2011

Chg % and bps

Volume (Homes)

13,919

13,919

15,345

-9.3%

46,357

46,357

52,486

-11.7%

Revenues

$614,255

$7,977,950

$6,566,146

21.5%

$2,196,304

$28,525,602

$21,853,279

30.5%

Housing revenues

$438,830

$5,699,530

$5,961,536

-4.4%

$1,454,333

$18,888,883

$20,209,967

-6.5%

Cost

$575,401

$7,473,302

$5,016,465

49.0%

$1,731,097

$22,483,483

$15,814,910

42.2%

  Capitalization of Comprehensive Financing Costs (CFC)

$31,211

$405,364

$373,514

8.5%

$96,705

$1,256,003

$1,048,918

19.7%

Gross profit

$38,855

$504,647

$1,549,680

-67.4%

$465,208

$6,042,119

$6,038,369

0.1%

Gross profit adjusted for capitalization of CFC

$70,066

$910,011

$1,923,195

-52.7%

$561,913

$7,298,122

$7,087,287

3.0%

Operating income

-$2,322

-$30,157

$829,573

-103.6%

$275,149

$3,573,629

$3,263,440

9.5%

Operating income adjusted for capitalization of CFC

$28,889

$375,207

$1,203,087

-68.8%

$371,853

$4,829,632

$4,312,358

12.0%

Interest expense, net (a)

$34,346

$446,092

$319,785

39.5%

$112,342

$1,459,101

$1,244,543

17.2%

Net income

-$16,005

-$207,874

$55,592

-473.9%

$121,881

$1,582,991

$1,079,535

46.6%

Net Income adjusted for FX

-$4,646

-$60,337

$153,255

-139.4%

$131,880

$1,712,860

$1,644,881

4.1%

Adjusted EBITDA (b)

$37,872

$491,885

$1,339,092

-63.3%

$404,627

$5,255,292

$4,724,029

11.2%

Gross margin

6.3%

6.3%

23.6%

-1,728

21.2%

21.2%

27.6%

-645

Gross margin adjusted for capitalization of CFC

11.4%

11.4%

29.3%

-1,788

25.6%

25.6%

32.4%

-685

Operating margin

-0.4%

-0.4%

12.6%

-1,301

12.5%

12.5%

14.9%

-241

Operating margin adjusted for capitalization of CFC

4.7%

4.7%

18.3%

-1,362

16.9%

16.9%

19.7%

-280

Adjusted EBITDA margin

6.2%

6.2%

20.4%

-1,423

18.4%

18.4%

21.6%

-319

Net Income margin adjusted for FX

-0.8%

-0.8%

2.3%

-309

6.0%

6.0%

7.5%

-152

Earnings per share in Ps.


-0.62

0.17



4.73

3.22


Earnings per share in Ps. adjusted for FX


-0.18

0.46



5.12

4.91


Earnings per ADR presented in US$ (c)

-0.29


0.08


2.18


1.49


Earnings per ADR presented in US$ adjusted for FX

-0.08


0.21


2.36


2.27


Weighted avg. shares outstanding (MM)

334.7

334.7

334.7


334.7

334.7

334.7


Accounts receivable days (d)






85

36


Inventory days






621

696


Inventory (w/o land) days






428

440


Accounts payable days ( e)






88

98


Working Capital Cycle (WCC) days (f)






619

634




  1. Including interest expense recognized in Cost of Goods Sold  ( COGS ) and Comprehensive Financing Costs (CFC); not including interest expense from the penitentiary construction projects.
  2. Adjusted EBITDA is not a financial measure computed under IFRS. Adjusted EBITDA as derived from IFRS financial information means net income, plus (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 fourth quarter and full year 2012 and 2011.
  3. US$ values estimated using an exchange rate of Ps.12.9880 per US$1.00 as of December 31, 2012.  Common share/ADR ratio: 6:1.
  4. Accounts receivable not including receivables from the penitentiary construction projects
  5. Due to the Company's decision not to consolidate the Chiapas Penitentiary Project the Company is also not recognizing the previously recognized Account Payable of Ps. 1.1 billion in relation to the acquisition of the equity stake at that federal penitentiary, even though the Company still has the commitment to acquire it. Previous periods are comparable as this payment has been excluded from the WCC calculations.
  6. WCC computation based on LTM COGS under IFRS and not including COGS and revenues from the penitentiary construction projects.

Commenting on fourth quarter and full year results, Gerardo de Nicolas, Chief Executive Officer of Homex, said:

"The year 2012 was challenging and the last quarter was no exception. Throughout the year, we faced a number of challenges which are a reflection of the continuing evolution of the housing industry in Mexico into one that is more supportive of better planned communities that provide for a better quality of life for Mexican families. We are happy to be an integral part of this positive transition, despite its initial negative financial effect, as we are convinced that this is the right path for long term positive performance of the housing industry in Mexico and we are confident that, at Homex, we have made the right decisions to ensure a profitable long-term future focused on positive Free Cash Flow generation.

We are also confident that the new Federal Government administration will continue to be supportive of the housing industry as demonstrated by the National Housing Policy recently announced, which we anticipate will provide  greater support to higher density projects, which is a competitive strength for Homex and accordingly, an area in which we will continue to be a key player.

In regard to our Infrastructure Division and Prison Projects, we remain confident that both will be a key long- term asset for Homex that will provide significant added value to our business strategy. Today, we already have new contracts to execute construction works in addition to the Federal Penitentiaries. This also adds strategic value and business line diversification for Homex, and contributes to the Company's positive long-term outlook.

Overall, despite the lower than anticipated results, I am confident about Homex and our future, and that we will continue working to deliver positive results in each of our Four Divisions."

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 2012 RESULTS

CONFERENCE CALL NOTICE



DATE:

Wednesday, February 27, 2013



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: 93193158


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



[1] Unless otherwise noted, all monetary figures in the tables are presented in thousands of Mexican pesos and in accordance with International Financial Reporting Standards (IFRS). Fourth quarter and Full Year 2012  and 2011 figures are presented without recognizing the effects of inflation per the application of IAS-29 "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.12.9880 per US$1.00. Fourth quarter and Full Year 2012 and 2011 financial information is unaudited and subject to adjustments.

Percentage of change 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]
Erika Hernandez
Investor Relations Manager
+5266-7758-5800 ext.5852
[email protected]

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

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