BHS Brookfield Homes Corp

Brookfield Homes Corporation (NYSE:BHS) - Investors, analysts and other interested parties can access Brookfield Homes' Supplemental Information Package on Brookfield Homes' website under the Investor Relations/Financial Reports section at www.brookfieldhomes.com. Brookfield Homes' year end investor conference call can be accessed by teleconference on February 2, 2006 at 11:00 am (Eastern Time) at 1-877-667-7774, toll free in North America. The archived teleconference may be accessed by dialing 1-888-509-0081, toll free in North America through February 15, 2006. Alternatively, the conference call can be accessed by Webcast on Brookfield Homes' website at www.brookfieldhomes.com. Brookfield Homes Corporation (NYSE:BHS) today announced strong financial results for the year ended December 31, 2005: - Net income totaled $219 million, an increase of $73 million from the same period in 2004. The 2005 results included $39 million generated from bulk land sales, and an increase in housing margins to 30% from 22% in 2004. Earnings per share totaled $7.04, compared to $4.64 in 2004. - Housing revenue totaled $1,074 million, compared to $1,169 million in 2004. The decrease in housing revenue is primarily due to 216 fewer units closed during the year compared to 2004, partially offset by an increase in the average selling price of the company's homes to $679,000 from $650,000 in 2004. - Cash flow from operating activities was $60 million in 2005, and over the past two years the company generated a total of $224 million of operating cash flow. - Fourth Quarter and Year Ended 2005 Financial and Operating Highlights -0- *T Results of Operations Three Months Ended Years Ended Dec. 31 Dec. 31 (Millions, except ------------------------------------------ per share amounts) 2005 2004 2005 2004 --------------------------------------------------------------------- Housing revenue $ 440 $ 510 $ 1,074 $ 1,169 Total revenue 559 547 1,231 1,232 Gross margin 211 138 416 287 Contribution from bulk land sales to net income 34 9 39 9 Net income 130 89 219 146 --------------------------------------------------------------------- Earnings per share - diluted - Excluding bulk land sales $ 3.20 $ 2.55 $ 5.77 $ 4.36 - Bulk land sales 1.16 0.28 1.27 0.28 --------------------------------------------------------------------- $ 4.36 $ 2.83 $ 7.04 $ 4.64 --------------------------------------------------------------------- *T Recent Developments and Operating Highlights - 2005 Home and Lot Closings: In 2005, Brookfield Homes closed 1,582 homes and 1,242 lots for a total of 2,824 home and lot closings. This compares to a total of 2,198 home and lot closings in 2004. Brookfield Homes' backlog as of the end of January 2006 was approximately 35% of the estimated 1,625 home closings for this year. The company has also targeted to close approximately 1,500 bulk lot sales during 2006. - Lots Owned and Controlled: The company's lots owned or controlled at December 31, 2005 total 29,512, an increase of 6% from inventory levels at the end of 2004. Direct ownership of 12,333 lots provides strong visibility on Brookfield Homes' future cash flows, and the 17,179 lots under option are controlled with the objective of adding value through land entitlements. - A summary of lots, owned or controlled under option, by region, follows: -0- *T --------------------------------------------------------------------- San Francisco Southland / San Bay Los Diego / Washington Area Angeles Riverside Sacramento D.C. Area Total --------------------------------------------------------------------- Geographic diversification of lots 16% 10% 28% 17% 29% 100% 2005 home closings (units) 192 223 611 - 556 1,582 2005 lot closings (units) - 41 750 - 451 1,242 --------------------------------------------------------------------- Lot supply Owned 1,082 1,279 5,949 310 3,713 12,333 Optioned 3,551 1,616 2,300 4,810 4,902 17,179 --------------------------------------------------------------------- Total 4,633 2,895 8,249 5,120 8,615 29,512 --------------------------------------------------------------------- *T - Increased Regular Dividend: On February 1, 2006, the board of directors approved an increase in its semi-annual dividend to $0.20 per share. The increased dividend is payable on June 30, 2006 to shareholders of record on June 15, 2006. - Tender Offer and Share Buyback Program: The company purchased, at a price of $55.00 per share, 10% or 3,000,000 shares of its outstanding common stock through a tender offer which expired in the fourth quarter of 2005. In addition, under the share buyback program, Brookfield Homes purchased a further 707,500 shares or $34 million of its common stock at an average price of $47.84 during 2005. - 2006 Earnings Guidance - The company expects earnings per share to grow to between $7.60 and $8.20 in 2006, from $7.04 in 2005, an increase of up to 16%. Contributing factors to the positive earnings guidance are: the sale to other homebuilders of lots originally held through options, and then processed through the entitlement and/or development phases; and strong operating margins as a result of building homes on land the company entitled and developed. Outlook "We believe our markets will see a soft landing, characterized by a leveling off of home prices and deliveries. Having said that, we are well positioned to maintain our strong performance by proactively managing our operations through changing economic environments," concluded Ian Cockwell, Brookfield Homes' President and Chief Executive Officer. Brookfield Homes Corporation Brookfield Homes Corporation is a residential homebuilder and land developer, building homes and developing land in master-planned communities and infill locations. We design, construct and market single-family and multi-family homes primarily to move-up and luxury homebuyers. We also entitle and develop land for our own communities and sell lots to other homebuilders. Our portfolio includes 30,000 lots owned and controlled in the San Francisco Bay Area; Southland / Los Angeles; San Diego / Riverside; Sacramento; and Washington D.C. Area markets. For more information, visit the Brookfield Homes website at www.brookfieldhomes.com. Note: Certain statements in this press release that are not historical facts, including information concerning possible or assumed future results of operations of the company, expected home closings and deliveries (and the timing thereof), expected 2006 earnings guidance, possible bulk land sales and net income derived therefrom, the company's future outlook and growth plans, and those statements preceded by, followed by, or that include the words "believe", "planned", "should", "goals", "expected", "potential," "estimate," "targeted," "scheduled" or similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Undue reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward-looking statements include, but are not limited to: changes in general economic, real estate and other conditions; mortgage rate changes; availability of suitable undeveloped land at acceptable prices; adverse legislation or regulation; ability to obtain necessary permits and approvals for the development of our land; availability of labor or materials or increases in their costs; ability to develop and market our master-planned communities successfully; confidence levels of consumers; ability to raise capital on favorable terms; adverse weather conditions and natural disasters; relations with the residents of our communities; risks associated with increased insurance costs or unavailability of adequate coverage and ability to obtain surety bonds; competitive conditions in the homebuilding industry, including product and pricing pressures; and additional risks and uncertainties referred to in our Form 10-K and other SEC filings, many of which are beyond our control. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. -0- *T Brookfield Homes Corporation Condensed Balance Sheets As at December 31 ---------------------------------- (thousands) 2005 2004 2003 --------------------------------------------------------------------- Assets Housing and land inventory $ 912,617 $ 679,930 $ 567,302 Investments in housing and land joint ventures 53,260 59,810 78,198 Consolidated land inventory not owned 22,100 47,240 25,542 Receivables and other assets 94,081 73,986 80,346 Cash and cash equivalents 198,411 186,731 218,606 Deferred income taxes 49,417 33,924 43,446 --------------------------------------------------------------------- $ 1,329,886 $ 1,081,621 $ 1,013,440 --------------------------------------------------------------------- --------------------------------------------------------------------- Liabilities and Stockholders' Equity Project specific and other financings $ 691,410 $ 512,098 $ 426,311 Accounts payable and other liabilities 320,787 256,985 145,090 Minority interest 53,040 66,422 59,781 Stockholders' equity 264,649 246,116 382,258 --------------------------------------------------------------------- $ 1,329,886 $ 1,081,621 $ 1,013,440 --------------------------------------------------------------------- --------------------------------------------------------------------- Brookfield Homes Corporation Consolidated Statements of Income Three Months Ended Years Ended December 31 December 31 -------------------------------------------- (thousands, except per share amounts) 2005 2004 2005 2004 --------------------------------------------------------------------- Revenue Housing $ 440,589 $ 510,560 $1,074,155 $ 1,169,073 Land and other revenues 118,169 36,486 156,897 62,677 --------------------------------------------------------------------- Total revenue 558,758 547,046 1,231,052 1,231,750 Direct cost of sales (348,569) (408,783) (815,423) (945,387) --------------------------------------------------------------------- 210,189 138,263 415,629 286,363 Equity in earnings from housing and land joint ventures 39,835 53,037 65,084 61,394 Selling, general and administrative expense (19,799) (28,460) (89,693) (79,904) Minority interest (20,621) (15,160) (36,498) (28,140) --------------------------------------------------------------------- Net income before taxes 209,604 147,680 354,522 239,713 Income tax expense (79,985) (58,324) (135,782) (93,297) --------------------------------------------------------------------- Net income $ 129,619 $ 89,356 $ 218,740 $ 146,416 --------------------------------------------------------------------- --------------------------------------------------------------------- Weighted average shares outstanding Basic 29,208 30,891 30,497 30,903 Diluted 29,743 31,563 31,071 31,547 Earnings per share Basic $4.44 $2.89 $7.17 $4.74 Diluted $4.36 $2.83 $7.04 $4.64 --------------------------------------------------------------------- --------------------------------------------------------------------- *T Brookfield Homes Corporation (NYSE:BHS)