Dominion Homes Reports Financial Results for the Second Quarter of 2006.DUBLIN, Ohio Dublin is a city in Delaware, Franklin, and Union counties in the U.S. state of Ohio. The population was 31,392 at the 2000 census. In 2006, the population was estimated to be 36,565[1], and Dublin continues to be one of the fastest-growing suburbs of Columbus. -- Dominion dominion, power to rule, or that which is subject to rule. Before 1949 the term was used officially to describe the self-governing countries of the Commonwealth of Nations—e.g., Canada, Australia, or India. Homes, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DHOM) today announced financial results for the three months ended June June: see month. 30, 2006. Highlights for the second quarter of 2006 compared to the second quarter of 2005 included: --A net loss of $5.9 million, or $0.73 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus net income of $2.5 million, or $0.31 per diluted share; --Revenues of $75.8 million, from the delivery of 398 homes versus revenues of $105.2 million, from the delivery of 548 homes; --Sales of 356 homes, with a sales value of $66.2 million, versus sales of 655 homes, with a sales value of $123.1 million; --A backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of 548 sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. , with an aggregate sales value of $109.5 million, versus 887 sales contracts, with a sales value of $177.1 million at June 30, 2005; --Selling, general and administrative expenses of $13.5 million versus $17.2 million; and --The current quarter results include a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern , non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $2.1 million primarily related to write-offs of land deposits and pre-acquisition costs and a $456,000 gain on the sale of land. The second quarter 2006 net loss was expected based on the low number of sales contracts in backlog at the beginning of the period combined with the delivery of homes with less gross profit due to increased sales discounts and increased land and construction costs. Douglas Douglas, city, Isle of Man Douglas, city (1991 pop. 19,950), capital of the Isle of Man, Great Britain. It is a popular resort, connected by rail to Ramsey and Port Erin, on the Irish Sea. Tourism is the chief industry. G. Borror, Chief Executive Officer, commented, "While we are disappointed with reporting a loss for this quarter, we also recognize that overall home sales conditions remain challenging in our markets. New building permits declined 27% in Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , 39% in Louisville Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. and 20% in Lexington Lexington.1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. during the first six months of 2006. We did, however, make significant progress in reducing our land development and acquisition costs and lowering our selling, general and administrative expenses during the second quarter and will continue to manage these areas." The Company will host a conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 4, 2006 at 10:00 a.m. Eastern Time to discuss these results and other developments in the business. The analyst conference call will be webcast simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics in listen-only mode via the Company's website www.dominionhomes.com. For those who cannot listen to the live webcast, an archived replay will be available at www.dominionhomes.com beginning on August 5, 2006 and continuing for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 60 days. Interested parties may listen in by accessing the Company's website, and selecting "Investors." Dominion Homes offers a variety of homes, which are differentiated dif·fer·en·ti·ate v. dif·fer·en·ti·at·ed, dif·fer·en·ti·at·ing, dif·fer·en·ti·ates v.tr. 1. To constitute the distinction between: by size, price, standard features and available options. The Company's "The Best of Everything" philosophy focuses on providing its customers with unsurpassed products, quality, and customer service. Additional information about the Company and its homes is located on its website. Second Quarter of 2006 Net Loss. The Company recognized a net loss for the second quarter of 2006 of $5.9 million, or $0.73 per diluted share, compared to net income of $2.5 million, or $0.31 per diluted share for the second quarter of 2005. The loss in the second quarter of 2006 is principally a result of fewer closings and a decline in the Company's gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. . Revenues. Revenues for the second quarter of 2006 were $75.8 million from the delivery of 398 homes, compared to $105.2 million from the delivery of 548 homes during the same period the previous year. The average delivery price of homes during the second quarter of 2006 was approximately $188,900 compared to $189,600 during the second quarter of 2005. There were no model home sale/lease backs during the second quarter of 2006. Second quarter 2005 revenues include the sale of 20 model homes, with a sales value of $3.2 million, which the Company immediately leased back for use as sales models. Gross Profit. Gross profit for the second quarter of 2006 declined to $7.5 million compared to $22.4 million for the second quarter of 2005, principally due to the delivery of 150 fewer homes and an 11.4% decrease in gross profit margin. Included in cost of sales for the second quarter of 2006 is a $2.1 million write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. primarily related to deposits and pre-acquisition costs incurred for land the Company decided not to purchase and a $456,000 gain from the sale of land. Included in cost of sales for the second quarter of 2005 is a similar write-off of $1.4 million and an $824,000 gain from the sale of land. These transactions reduced the second quarter 2006 and 2005 gross profit margin by 2.2% and 0.5%, respectively. Selling, General and Administrative Expense. Selling, general and administrative expense for the second quarter of 2006 decreased to $13.5 million from $17.2 million for the second quarter of 2005. Second quarter 2006 expenses include the separation costs associated with a reduction in the Company's workforce that was implemented in May of 2006 and the benefit of lower expenses related to commissions, bonuses and other performance based compensation programs. The cost savings programs implemented during the second quarter of 2006 are expected to reduce the level of selling, general and administrative expense by an additional 10% during the third and fourth quarters of 2006. The Company is continuing to reduce its cost structure in response to changing market conditions and projected sales levels and expects to generate further cost savings during the second half of 2006. Sales The Company sold 356 homes, with a sales value of $66.2 million, during the second quarter of 2006 compared to 655 homes, with a sales value of $123.1 million, sold during the same period the previous year. The average home sale price for the second quarter of 2006 was $186,000 compared to $187,900 for the second quarter of 2005. Backlog at June 30, 2006 was 548 sales contracts with an average sale price of $200,000 compared to 887 sales contracts with an average sale price of $199,700 at June 30, 2005. Active Sales Communities The Company had 55 active sales communities at June 30, 2006 compared to 61 at June 30, 2005. Effective June 30, 2006, the Company began reporting its number of active sales communities by geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. location rather than by series of homes. This change was implemented due to the development of a limited number of master planned communities Noun 1. planned community - a residential district that is planned for a certain class of residents residential area, residential district, community - a district where people live; occupied primarily by private residences that contain as many as five different series of homes. In most cases these master planned communities are in a single geographic location and are usually promoted using a similar, common community name. This change reduced the number of active sales communities reported at June 30, 2005 to 61 from 63. First Six Months of 2006 Net Loss. The Company recognized a net loss for the first six months of 2006 of $9.9 million, or $1.22 per diluted share, compared to net income of $3.2 million, or $0.39 per diluted share, for the same period in 2005. Revenues. Revenues for the first six months of 2006 were $137.6 million from the delivery of 713 homes, compared to $197.8 million from the delivery of 1,026 homes during the same period the previous year. The average delivery price of homes during the first half of 2006 was approximately $191,100 compared to $190,500 during the first half of 2005. Gross Profit. Gross profit for the first six months of 2006 declined to $16.6 million compared to $41.1 million for the first six months of 2005, principally due to the delivery of 313 fewer homes and an 8.7% decrease in gross profit margin. Included in cost of sales for the first half of 2006 is a $2.7 million write-off primarily related to deposits and pre-acquisition costs incurred for land that the Company decided not to purchase and a $456,000 gain from the sale of land. Included in cost of sales for the first half of 2005 is a similar write-off of $2.4 million and an $824,000 gain from the sale of land. These transactions impacted the first half 2006 gross profit margin by 1.6% and the first half 2005 gross profit margin by 0.8%. Selling, General and Administrative Expense. Selling, general and administrative expense for the first six months of 2006 decreased to $28.2 million from $33.3 million for the first six months of 2005. First half 2006 expenses include separation costs associated with of a reduction in the Company's workforce that was implemented in May of 2006 and the benefit of lower expenses related to commissions, bonuses and other performance based compensation programs. Sales. The Company sold 831 homes, with a sales value of $155.5 million, during the first six months of 2006 compared to 1,281 homes, with a sales value of $243.9 million, during the first six months of 2005. The average home sale price for the first half of 2006 was $187,100 compared to $190,400 for the first half of 2005. Gain on Sale of Investment in Centennial Home Mortgage, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control On March 31, 2006 the Company, Dominion Homes Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Ltd, Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. Bank N.A. and its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. Wells Fargo Ventures, Inc. formed a new joint venture, Centennial Home Mortgage, LLC, which operates as a full service mortgage bank. The Company recognized a gain of approximately $1.8 million in exchange for a 50.1% interest in the joint venture sold to Wells Fargo. The Company continues to own the remaining 49.9%. The joint venture utilizes Wells Fargo's underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. expertise, quality control practices, software systems, operating policies and training programs. The Company is in the process of exiting the operations of Dominion Homes Financial Services, Ltd and expects to complete the processing of the current pipeline of loan activity by the end of the third quarter of 2006. In July July: see month. 2006 the Company received notices from the U. S. Department of Housing and Urban Development indicating that it had completed its review of Dominion Homes Financial Services operations with no material adverse findings. Certain statements in this news release are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, changes in national or local economic conditions, changes in federal lending programs, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition and other factors described in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.
FINANCIAL HIGHLIGHTS
(Unaudited)
(In thousands, except share and per share amounts)
Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenues $75,835 $105,207 $137,620 $197,850
Cost of real estate sold 68,310 82,830 121,021 156,779
---------- ---------- ---------- ----------
Gross profit 7,525 22,377 16,599 41,071
Selling, general and
administrative 13,467 17,244 28,240 33,292
---------- ---------- ---------- ----------
Income (loss) from
operations (5,942) 5,133 (11,641) 7,779
Gain on sale of investment
in Centennial Home
Mortgage, LLC - - 1,800 -
Interest expense (2,568) (1,873) (4,876) (3,564)
---------- ---------- ---------- ----------
Income (loss) before
income taxes (8,510) 3,260 (14,717) 4,215
Provision for income taxes (2,583) 741 (4,844) 1,054
---------- ---------- ---------- ----------
Net income (loss) $(5,927) $2,519 $(9,873) $3,161
========== ========== ========== ==========
Earnings per share (loss)
Basic $(0.73) $0.31 $(1.22) $0.39
========== ========== ========== ==========
Diluted $(0.73) $0.31 $(1.22) $0.39
========== ========== ========== ==========
Weighted average shares
outstanding
Basic 8,114,174 8,054,648 8,104,494 8,049,844
========== ========== ========== ==========
Diluted 8,114,174 8,203,815 8,104,494 8,206,933
========== ========== ========== ==========
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2006 2005
(unaudited)
-----------------------
Assets
Cash and cash equivalents $705 $3,554
Accounts receivable 3,234 4,889
Real estate inventories 405,652 426,275
Prepaid expenses and other 14,499 8,792
Deferred income taxes 1,044 1,485
Net property and equipment 5,556 6,562
---------- ------------
Total assets $430,690 $451,557
========== ============
Liabilities and
Shareholders' Equity
Note payable, banks $207,628 $205,240
Term debt 9,300 9,300
Other liabilities 27,690 41,484
---------- ------------
Total liabilities 244,618 256,024
---------- ------------
Shareholders' equity 186,072 195,533
---------- ------------
Total liabilities and shareholders' equity $430,690 $451,557
========== ============
Lot Inventory as of June 30, 2006
Unimproved
Finished Lots Under Land Total
Land Inventory Lots Development Estimated Lots Estimated Lots
------------------- -------- ----------- -------------- --------------
Owned by the
Company:
Central Ohio 1,776 976 9,936 12,688
Kentucky 285 390 955 1,630
Controlled by the
Company:
Central Ohio - - 1,494 1,494
Kentucky - - - -
Held for sale:
Central Ohio - 40 558 598
Kentucky - 46 137 183
--------------------------------------------------
Total Land
Inventory 2,061 1,452 13,080 16,593
======== =========== ============== ==============
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