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 UPLAND, Calif., Oct. 25 /PRNewswire/ -- Inco Homes Corp. (NASDAQ: INHM), a major builder of affordable single-family homes in Southern California, today reported higher third quarter financial results on a strong increase in new home deliveries. For the quarter ended Sept. 30, 1993, net income rose to $899,000, up 77 percent from pro forma net income of $508,000 in the third quarter of 1992. Earnings per share for the third quarter were $0.113 vs. $0.085. Revenues in the period increased to $25.4 million, up 95 percent from $13.0 million in the year-earlier third quarter.
 For the first nine months of 1993, the company reported pro forma net income of $2.0 million, up 19 percent from $1.7 million in the same period of 1992. Earnings per share decreased slightly to $0.271 from $0.277 due to an increase in average common shares outstanding. Revenues in the first nine months rose to $52.0 million, up 13 percent from $45.9 million in the prior-year's nine-month period.
 Earnings per share amounts reflect an increase in the company's average common shares outstanding to 7,985,000 in the third quarter of 1993 and 7,318,333 in the first nine months of 1993 from 5,985,000 in both periods of 1992 as a result of Inco Homes' initial public offering in April 1993.
 Ira Norris, chairman, president and chief executive officer of Inco Homes, said the company's third quarter financial results improved due to a 77 percent increase in new home closings. Inco delivered 250 new homes from eight active communities during the third quarter, the highest number of closings for any quarterly period in the company's history. The average price of new homes delivered was $102,000, compared to $93,000 in the year-earlier quarter, due to a shift in product mix.
 The impact of higher sales volume was partially offset by a decrease in the company's gross profit margin during the third quarter, primarily due to higher construction costs resulting from sharply rising lumber prices. Sales incentives and selected price discounts also increased during the period in response to growing competitive pressures within the Southern California housing market. For the third quarter, the company's gross margin decreased to 19.3 percent from 23.1 percent in the year-earlier period, while the operating margin declined to 4.6 percent from 5.9 percent. For the nine-month period of 1993, the gross margin was 21.2 percent compared to 21.9 percent a year earlier, and the operating margin was 5.2 percent vs. 5.7 percent.
 Since July, Inco has purchased lumber directly from suppliers in an effort to mitigate future spikes in lumber prices. Nonetheless, the company expects continued pressure on fourth quarter profit margins from both high-priced lumber purchased earlier in the year and the continuing need for sales incentives and price discounts.
 Inco's net new sales contracts in the third quarter of 1993 more than doubled to 171 units from 80 units in the year-earlier quarter. For the first nine months of 1993, net new sales contracts rose to 598 units, up 10 percent from 542 units in the prior year's period. Despite this improvement, closings during the third quarter decreased the company's backlog to 293 units at Sept. 30, 1993 from 377 units a year ago. The aggregate sales value of this backlog totaled $35.2 million.
 "Despite continuing weakness in the Southern California economy, Inco Homes turned in a record performance in the third quarter, delivering more homes than in any previous quarter in our history," noted Steve Vliss, the company's chief operating officer.
 "Our competitive position within the region's entry level housing market has never been stronger," Vliss added. "Inco has opened five new projects this year, and we're currently selling from 10 active new home communities through our two Southern California housing divisions. We will deliver new homes from all 10 communities in the fourth quarter."
 Inco Homes Corp. is among the largest home builders in Southern California The company develops and builds affordably priced, single- family homes for first-time and first-time move-up home buyers.
 Statement of Operations
 (In thousands, except per share and homes sold data)
 Three Months Ended Nine Months Ended
 Sept. 30, Sept. 30,
 1993 1992 1993 1992
 Homes sold 250 141 516 442
 Sales of homes $25,390 $13,044 $52,047 $45,863
 Cost of homes sold 20,500 10,025 41,021 35,835
 Gross profit 4,890 3,019 11,026 10,028
 Selling and marketing
 expenses (2,614) (1,331) (5,488) (4,609)
 General and administrative
 expenses (1,109) (923) (2,821) (2,809)
 Other income 71 56 337 160
 Mortgage brokerage
 income (loss) 185 25 167 (21)
 Settlement of compensation
 for services and severance
 arrangements(a) 0 0 1,043 0
 Income before minority
 partners' share and
 provision for income taxes 1,423 846 4,264 2,749
 Minority partners' share (10) 784 866 1,849
 Income before provision for
 income taxes 1,433 62 3,398 900
 Provision for incomes taxes 534 25 904 351
 Net income $899 $37 $2,494 $549
 Pro forma statement of
 operations data
 Income before allocation of
 profits to minority
 partners participating in
 the Reorganization,
 compensation for services
 and settlement of severance
 arrangements, and provision
 for income taxes and after
 adjustments for stockholder
 compensation(b) $1,433 $847 $3,238 $2,769
 Provision for income taxes 534 339 1,258 1,110
 Pro forma net income $899 $508 $1,980 $1,659
 Pro forma net income
 per common share(c) $0.113 $0.085 $0.271 $0.277
 Weighted average number of
 shares outstanding 7,985,000 5,985,000 7,318,333 5,985,000
 (a) Represents non-cash recognition of income attributable to the favorable settlement of compensation for services and severance arrangements with the general partner of certain of the company's predecessor limited partnerships which was expensed in the fourth quarter of 1992.
 (b) The pro forma statement of operations data reflects the effects of the historical statement of operations data for the three months and nine months ended Sept. 30, 1993 and 1992, as if (i) the Reorganization (pursuant to which the company succeeded to the homebuilding business of its predecessors operating under the "Inco Homes" name through several limited partnerships and various corporations) had taken place of Jan. 1, 1992, (ii) compensation for services and settlement of several arrangements was eliminated, and (iii) the amount of compensation paid to Ira C. Norris was limited in the year ended Dec. 31, 1992, to the $750,000 maximum compensation arrangements to be effective during 1993 and 1994. The pro forma statement of operations data also reflects provisions for federal and state income taxes (assuming a 40 percent effective tax rate).
 (c) Computed using pro forma weighted average number of shares of 5,985,000 for the three months ended Sept. 30, 1992, and the nine months ended Sept. 30, 1992; 7,985,000 for the three months ended Sept. 30, 1993; and 7,318,333 for the nine months ended Sept. 30, 1993.
 Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
 1993 1992 1993 1992
 Home closings: 250 141 516 442
 Net sales
 contracts: 171 80 598 542
 Homes in backlog: Sept. 30, 1993 Sept. 30, 1992
 Number 293 377
 sales value $35,232,000 $38,500,000
 -0- 10/25/93
 /CONTACT: Steve Adelman, CFO, or Eileen Rose, investor relations, of Inco Homes, 909-981-8989/

CO: Inco Homes Corp. ST: California IN: CST SU: ERN

JL-MF -- LA009 -- 6127 10/25/93 08:33 EDT
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Publication:PR Newswire
Date:Oct 25, 1993

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