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Comstock Reports Second Quarter 2022 Results

  • Revenue increased 34% to $8.5 million in Q2 2022 vs. $6.3 million in Q2 2021; YTD revenue increased 31% to $17.2 million vs. $13.2 million in 2021
  • Operating income increased 127% to $1.1 million in Q2 2022 vs. $0.5 million in Q2 2021; YTD operating income increased 166% to $2.5 million in Q2 2022 vs. $1.0 million in 2021
  • Strengthened balance sheet via redemption of Series C preferred stock at discount
  • New asset management agreement covering Anchor Portfolio provides expanded revenue opportunities and extends term through 2035
  • Dwight Schar, recently retired CEO/Chairman of NVR, Inc. (NYSE: NVR), joining Comstock as significant shareholder

RESTON, Va., Aug. 15, 2022 (GLOBE NEWSWIRE) — Comstock Holding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”) announced its financial results for the three and six months ended June 30, 2022.

“The commitment of our team of commercial real estate and asset management professionals and the consistent performance of our managed assets continues to drive increases in revenue, operating income, and Adjusted EBITDA. The new asset management agreement covering our growing Anchor Portfolio further enhances our revenue and earnings growth potential, and its extended term provides a platform for reliable future growth across all Comstock operations,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “In addition, the redemption of 100% of the Series C preferred stock at a significant discount further streamlined our balance sheet, while the addition of Dwight Schar, my long-time partner in the Anchor Portfolio, as a major Comstock shareholder will create alignment between Anchor Portfolio asset ownership and Comstock.”

Key Performance Metrics1

  ($ in thousands, except per share data)            
    Q2 2022   Q2 2021   YTD 2022   YTD 2021
  Revenue $ 8,467   $ 6,324   $ 17,198   $ 13,164
                 
  Income from operations $ 1,117   $ 492   $ 2,482   $ 935
  Net income2   714     11,649     2,728     12,039
                 
  Adjusted EBITDA $ 1,388   $ 667   $ 2,994   $ 1,283
                 
  Net income per share — diluted $ 0.30   $ 1.29   $ 0.53   $ 1.34
                 
  Managed Portfolio – # of assets   36     29     36     29
                 
1 All amounts represent continuing operations. Please see the included financial tables for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure
                 
2 Net income for Q2 and YTD 2022, excluding the $11.3 million tax impact of a partial release of deferred tax valuation allowance, increased 114% to $0.7 million and 276% to $2.7 million, respectively.

Q2 2022 Highlights

  • Completed redemption of all outstanding shares of Series C preferred stock in exchange for 1 million shares of the Company’s Class A Common Stock and $4.0 million in cash, representing a discount of approximately 52% as compared to the stated liquidation preference amount of $17.2 million.
  • Announced that Dwight Schar, founder and recently retired CEO and Chairman of NVR, Inc. (NYSE: NVR) to become a major shareholder of the Company.
  • Entered into a new asset management agreement covering the Anchor Portfolio, most notably introducing new mark-to-market incentive fees that significantly accelerate revenue generating milestones related to Anchor Portfolio assets and increase various fees related to development, construction, and stabilization of portfolio assets. Term of the agreement extended through 2035.
  • Generated “same-store” year-over-year rental growth across residential portfolio while maintaining or increasing occupancy levels at each residential asset.
  • Secured approximately 150,000 square feet of new leases related to office and retail assets while experiencing increased utilization of office portfolio by tenant base. Revenue among our retail and restaurant tenants continue to recover from the impact of the COVID-19 pandemic.
  • Continued progress on development and construction of the 1.3 million square foot Reston Row project, the newest phase of Comstock’s mixed-use and transit-oriented Reston Station development. Positioned additional pipeline assets for development in future periods.

About Comstock

Comstock is a leading developer and manager of mixed-use and transit-oriented properties in the Washington, D.C. metropolitan area. As a vertically integrated and multi-faceted asset management and real estate services company, Comstock has designed, developed, constructed, acquired, and managed thousands of residential units and millions of square feet of commercial and mixed-use properties since 1985, and has been selected by multiple jurisdictions as Master Developer of Public-Private Partnerships responsible for development of some of the most prominent mixed-use and transit-oriented developments in the Washington, D.C. region. Comstock provides a wide array of real estate-related services that include asset management, strategic capital markets advisory services, development and construction management, marketing and leasing services, office and retail property management, residential property management, and commercial garage management. Comstock is publicly traded on Nasdaq under the ticker symbol CHCI. For more information, please visit www.comstock.com.

Cautionary Statement Regarding Forward-Looking Statements

This release may include “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seeks” or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements. Additional information concerning important risk factors and uncertainties can be found under the heading “Risk Factors” in our latest Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Investor Contact
Christopher Guthrie, CFO
cguthrie@comstock.com
703-230-1292

Media Contact
Denise Pattakos
dpattakos@comstock.com
703-230-1146

COMSTOCK HOLDING COMPANIES, INC.
Consolidated Balance Sheets
(Unaudited; In thousands)

  June 30,   December 31,
    2022       2021  
Assets      
Current assets:      
Cash and cash equivalents $ 8,427     $ 15,823  
Accounts receivable   826       46  
Accounts receivable – related parties   2,933       1,697  
Prepaid expenses and other current assets   490       197  
Current assets held for sale         2,313  
Total current assets   12,676       20,076  
Fixed assets, net   379       264  
Intangible assets   144        
Leasehold improvements, net   133        
Investments in real estate ventures   7,455       4,702  
Operating lease assets   6,985       7,245  
Deferred income taxes, net   11,427       11,300  
Other assets   26       15  
Total assets $ 39,225     $ 43,602  
       
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accrued personnel costs   2,206       3,468  
Accounts payable and accrued liabilities   649       783  
Current operating lease liabilities   679       616  
Current credit facility – due to affiliates   5,500        
Current liabilities held for sale         1,194  
Total current liabilities   9,034       6,061  
Credit facility – due to affiliates         5,500  
Operating lease liabilities   6,570       6,745  
Total liabilities   15,604       18,306  
Commitments and contingencies (Note 8)      
Stockholders’ equity:      
Series C preferred stock         6,765  
Class A common stock   93       81  
Class B common stock   2       2  
Additional paid-in capital   201,198       200,617  
Treasury stock   (2,662 )     (2,662 )
Accumulated deficit   (175,010 )     (179,507 )
Total stockholders’ equity   23,621       25,296  
Total liabilities and stockholders’ equity $ 39,225     $ 43,602  

COMSTOCK HOLDING COMPANIES, INC.
Consolidated Statements of Operations
(Unaudited; In thousands, except per share data)

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Revenue $ 8,467     $ 6,324     $ 17,198     $ 13,164  
Operating costs and expenses:              
Cost of revenue   6,831       5,502       13,766       11,580  
Selling, general, and administrative   469       308       856       607  
Depreciation and amortization   50       22       94       42  
Total operating costs and expenses   7,350       5,832       14,716       12,229  
Income (loss) from operations   1,117       492       2,482       935  
Other income (expense):              
Interest expense   (69 )     (58 )     (128 )     (116 )
Gain (loss) on real estate ventures   17       (100 )     269       (94 )
Other income (expense), net   1       (1 )     1        
Income (loss) from continuing operations before income tax   1,066       333       2,624       725  
Provision for (benefit from) income tax   352       (11,316 )     (104 )     (11,314 )
Net income (loss) from continuing operations   714       11,649       2,728       12,039  
Net income (loss) from discontinued operations, net of tax   (10 )     (444 )     (277 )     (587 )
Net income (loss)   704       11,205       2,451       11,452  
Impact of Series C preferred stock redemption   2,046             2,046        
Net income (loss) attributable to common shareholders $ 3,017     $ 11,205     $ 4,764     $ 11,452  
               
Weighted-average common stock outstanding:              
Basic   8,599       8,215       8,470       8,191  
Diluted   9,157       9,061       9,033       9,014  
               
Net income (loss) per share:              
Basic – Continuing operations $ 0.32     $ 1.42     $ 0.56     $ 1.47  
Basic – Discontinued operations         (0.05 )     (0.03 )     (0.07 )
Basic net income (loss) per share $ 0.32     $ 1.37     $ 0.53     $ 1.40  
               
Diluted – Continuing operations $ 0.30     $ 1.29     $ 0.53     $ 1.34  
Diluted – Discontinued operations         (0.05 )     (0.03 )     (0.07 )
Diluted net income (loss) per share $ 0.30     $ 1.24     $ 0.50     $ 1.27  

COMSTOCK HOLDING COMPANIES, INC.
Non-GAAP Financial Measures
(Unaudited; In thousands)

Adjusted EBITDA

The following table presents a reconciliation of net income (loss) from continuing operations, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA:

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Net income (loss) from continuing operations $ 714     $ 11,649     $ 2,728     $ 12,039  
Interest expense   69       58       128       116  
Income taxes   352       (11,316 )     (104 )     (11,314 )
Depreciation and amortization   50       22       94       42  
Stock-based compensation   220       154       417       306  
(Gain) loss on equity method investments   (17 )     100       (269 )     94  
Adjusted EBITDA $ 1,388     $ 667     $ 2,994     $ 1,283  

We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and gain or loss on equity method investments.

We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute Adjusted EBITDA consistently using the same methods each period.

We believe Adjusted EBITDA is a useful measure because it permits investors to better understand changes over comparative periods by providing financial results that are unaffected by certain non-cash items that are not considered by management to be indicative of our operational performance.

While we believe that Adjusted EBITDA is useful to investors when evaluating our business, it is not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. Adjusted EBITDA should not be considered in isolation, or as a substitute, for other financial performance measures presented in accordance with GAAP. Adjusted EBITDA may differ from similarly titled measures presented by other companies.

 

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