Comstock Reports Fourth Quarter and Fiscal Year 2023 Results

Rhea-AI Summary

Comstock Holding Companies, Inc. (Nasdaq: CHCI) reported strong financial results for Q4 2023 and fiscal year 2023, with revenue increasing by 18% to $11.0 million in Q4 and 14% to $44.7 million for the fiscal year. Operating income rose by 22% in Q4 to $1.9 million and 15% for the fiscal year to $9.2 million. Net income saw a significant increase of 43% in Q4 to $1.9 million. Adjusted EBITDA also increased by 17% in Q4 to $2.2 million and 16% for the fiscal year to $10.4 million. The company generated $9.0 million in cash flow from operations and maintained high leased percentages in both Commercial and Residential portfolios. Comstock's Chairman and CEO, Christopher Clemente, highlighted the company's growth and success, emphasizing the continuous increase in quarterly revenue, growth in Adjusted EBITDA, and strong cash generation in 2023. With a debt-free balance sheet and upcoming property deliveries, Comstock is well-positioned for future growth and success.

Insights

Financial Analyst

The report from Comstock Holding Companies indicates a robust financial performance, particularly noting an 18% year-over-year increase in Q4 revenue and a 14% increase in year-to-date (YTD) revenue. The growth in recurring fee-based revenue by 12% and 13% for Q4 and YTD respectively, suggests a stable revenue stream which is a positive indicator for investor confidence. Moreover, the 22% increase in Q4 operating income and a significant 43% increase in Q4 net income highlight improved operational efficiency and profitability.

However, it is important to note that while the YTD net income remained flat compared to the previous year, the Adjusted EBITDA saw a 16% increase, which suggests that non-operating factors have influenced net income. The flat net income could be a point of concern for investors looking for growth in profitability. Additionally, the cash flow generation of $9.0 million from operations underscores the company's ability to convert earnings into cash, which is critical for sustaining growth and funding future projects.

The high leased percentages in both commercial and residential portfolios signal strong demand for Comstock's properties and effective asset management. This is further supported by the in-place rent growth reported in the residential and commercial segments. The strategic acquisition and expansion of the parking management portfolio also demonstrate a forward-looking approach to diversifying revenue streams.

Real Estate Market Analyst

Comstock's performance in the real estate market, especially in the Washington, D.C. region, reflects a thriving sector with their managed commercial portfolio's leased percentage rising to 92% from 87% in the previous fiscal year. The 2% in-place rent growth for commercial spaces and an 8% increase for residential units indicate a competitive market with potential for revenue growth through rent escalations.

The acquisition of Comstock 41 investment property in Q4 and the overall expansion of their development assets position the company well for capitalizing on the demand in the mixed-use and transit-oriented development space. The parking management portfolio's exponential growth could be a response to urbanization trends and a shift in mobility patterns. These strategic moves imply that Comstock is not only strengthening its core business but also adapting to market dynamics, which can be a significant factor in long-term value creation.

Corporate Governance Analyst

From a governance perspective, the appointment of Thomas Holly and David Paul to the Board of Directors is a strategic move that could bring fresh perspectives and strengthen oversight. While the news release does not detail their backgrounds, such appointments can often enhance a company's governance structure and strategic planning.

Additionally, the company's mention of a streamlined, debt-free balance sheet is not only a testament to Comstock's fiscal prudence but also potentially reduces financial risk for the company and its investors. This financial position could afford the company greater flexibility in pursuing growth opportunities and weathering economic downturns.

Q4 2023

• Q4 revenue increased 18% to $11.0 million, including 12% increase in recurring fee-based revenue

• Q4 operating income increased 22% to $1.9 million; Q4 net income increased 43% to $1.9 million

• Q4 Adjusted EBITDA increased 17% to $2.2 million

Fiscal Year 2023

• YTD revenue increased 14% to $44.7 million, including 13% increase in recurring fee-based revenue

• YTD operating income increased 15% to $9.2 million; YTD net income of $7.8 million flat vs. prior year

• YTD Adjusted EBITDA of $10.4 million, up 16% vs. prior year

• Generated $9.0 million of cash flow from operations

• Maintained well above-average leased percentages in both Commercial and Residential portfolios (90+%)

RESTON, Va.--(BUSINESS WIRE)-- Comstock Holding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”), a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region, announced its financial results for the fourth quarter and fiscal year ended December 31, 2023.

“Our fiscal 2023 results underscore the strength and resiliency of the growth engine we’ve built at Comstock,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “It is our goal to provide best-in-class service to our clients and deliver value to our stakeholders. Our success in achieving that goal is evidenced by our ability to deliver higher comparative quarterly revenue for the 14th consecutive period, showcase 16% growth in Adjusted EBITDA, and generate over $9 million in cash from operations during 2023. With a streamlined, debt-free balance sheet and additional world-class properties slated for delivery in the next 12 to 24 months, we have clear visibility to near-term growth. Our robust pipeline of development assets continues to expand as well, positioning us for sustainable, long-term success.”

Key Performance Metrics¹

($ in thousands, except per share and portfolio data)		Q4 2023			Q4 2022			FY 2023			FY 2022
	Revenue	$	11,016		$	9,302		$	44,721		$	39,313
	Income from operations	$	1,943		$	1,595		$	9,164		$	7,952
	Net income		1,870			1,311			7,784			7,728
	Adjusted EBITDA	$	2,165		$	1,857		$	10,423		$	8,994
	Net income per share — diluted	$	0.18		$	0.13		$	0.77		$	1.02	2
	Managed Portfolio - # of assets		49			41			49			41
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	Amount reflects $2.0 million positive impact of Q2 2022 Series C Preferred Stock redemption.

Additional Highlights

• Managed commercial portfolio leased percentage of 92%, up from 87% in FY22; produced in-place rent growth of 2% vs. prior year and leased a total of approximately 273,000 sqft. of commercial space in FY23.

• Managed residential portfolio leased percentage of 97%, up from 88% in 2022; produced in-place rent growth of 8% vs. prior year and leased over 700 units in FY23.

• Recognized $4.8 million incentive fee revenue, a 23% increase from FY22.

• Completed strategic acquisition of Comstock 41 investment property in Q423.

• Continued exponential growth of parking management portfolio, including a 50% increase in top-line revenue and 20% growth in average contract value vs. prior year.

• Welcomed Thomas Holly and David Paul to Board of Directors. 

About Comstock

Founded in 1985, Comstock is a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region. With a managed portfolio that includes approximately 10 million square feet of stabilized, under construction, and planned assets that are strategically located at key Metro stations, Comstock is at the forefront of the urban transformation taking place in one of the nation’s best real estate markets. Comstock’s developments include some of the largest and most prominent mixed-use and transit-oriented projects in the mid-Atlantic region, as well as multiple large-scale public-private partnership developments. For more information, please visit 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. You should not place any undue reliance on any forward-looking statement, which speaks only as of the date made. Any number of important factors could cause actual results to differ materially from those projected or suggested by the forward-looking statements. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise.

COMSTOCK HOLDING COMPANIES, INC.
Consolidated Balance Sheets
(Unaudited; In thousands)
	December 31,				December 31,
		2023				2022
Assets
Current assets:
Cash and cash equivalents	$	18,788			$	11,722
Accounts receivable, net		496				504
Accounts receivable - related parties		4,749				3,291
Prepaid expenses and other current assets		353				264
Total current assets		24,386				15,781
Fixed assets, net		478				421
Intangible assets		144				144
Leasehold improvements, net		89				119
Investments in real estate ventures		7,077				7,013
Operating lease assets		6,790				7,625
Deferred income taxes, net		10,885				11,355
Deferred compensation plan assets		53				—
Other assets		37				15
Total assets	$	49,939			$	42,473
Liabilities and Stockholders' Equity
Current liabilities:
Accrued personnel costs	$	4,681			$	4,959
Accounts payable and accrued liabilities		838				742
Current operating lease liabilities		854				791
Total current liabilities		6,373				6,492
Deferred compensation plan liabilities		77				—
Operating lease liabilities		6,273				7,127
Total liabilities		12,723				13,619
Stockholders' equity:
Class A common stock		94				93
Class B common stock		2				2
Additional paid-in capital		202,112				201,535
Treasury stock		(2,662	)			(2,662	)
Accumulated deficit		(162,330	)			(170,114	)
Total stockholders' equity		37,216				28,854
Total liabilities and stockholders' equity	$	49,939			$	42,473

COMSTOCK HOLDING COMPANIES, INC.
Consolidated Statements of Operations
(Unaudited; In thousands, except per share data)
	Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Revenue	$	11,016			$	9,302			$	44,721			$	39,313
Operating costs and expenses:
Cost of revenue		8,479				7,259				33,040				29,371
Selling, general, and administrative		594				391				2,305				1,784
Depreciation and amortization		—				57				212				206
Total operating costs and expenses		9,073				7,707				35,557				31,361
Income (loss) from operations		1,943				1,595				9,164				7,952
Other income (expense):
Interest income (expense), net		96				—				96				(222	)
Gain (loss) on real estate ventures		(467	)			(117	)			(1,187	)			121
Other income (expense), net		31				—				79				2
Income (loss) from continuing operations before income tax		1,603				1,478				8,152				7,853
Provision for (benefit from) income tax		(267	)			167				368				125
Net income (loss) from continuing operations		1,870				1,311				7,784				7,728
Net income (loss) from discontinued operations, net of tax		—				(5	)			—				(381	)
Net income (loss)	$	1,870			$	1,306			$	7,784			$	7,347
Impact of Series C preferred stock redemption		—				—				—				2,046
Net income (loss) attributable to common stockholders	$	1,870			$	1,306			$	7,784			$	9,393
Weighted-average common stock outstanding:
Basic		9,653				9,470				9,629				8,974
Diluted		10,169				10,055				10,108				9,575
Net income (loss) per share:
Basic - Continuing operations	$	0.19			$	0.14			$	0.81			$	1.09
Basic - Discontinued operations		—				—				—				(0.04	)
Basic net income (loss) per share	$	0.19			$	0.14			$	0.81			$	1.05
Diluted - Continuing operations	$	0.18			$	0.13			$	0.77			$	1.02
Diluted - Discontinued operations		—				—				—				(0.04	)
Diluted net income (loss) per share	$	0.18			$	0.13			$	0.77			$	0.98

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 December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net income (loss) from continuing operations	$	1,870			$	1,311			$	7,784			$	7,728
Interest (income) expense, net		(96	)			—				(96	)			222
Income taxes		(267	)			167				368				125
Depreciation and amortization		—				57				212				206
Stock-based compensation		191				205				968				834
(Gain) loss on real estate ventures		467				117				1,187				(121	)
Adjusted EBITDA	$	2,165			$	1,857			$	10,423			$	8,994

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 in real estate ventures.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240321778716/en/

Investor Contact

Christopher Guthrie

Executive Vice President & Chief Financial Officer

cguthrie@comstock.com

703-230-1292

Media Contact

publicrelations@comstock.com

301-785-6327

Source: Comstock

FAQ

What is Comstock Holding Companies, Inc.'s ticker symbol?

Comstock Holding Companies, Inc.'s ticker symbol is CHCI.

How much did revenue increase in Q4 2023 for Comstock Holding Companies, Inc.?

Revenue increased by 18% to $11.0 million in Q4 2023 for Comstock Holding Companies, Inc.

What was the percentage increase in operating income for Comstock Holding Companies, Inc. in Q4 2023?

Operating income increased by 22% to $1.9 million in Q4 2023 for Comstock Holding Companies, Inc.

What was the net income for Comstock Holding Companies, Inc. in Q4 2023?

Net income for Comstock Holding Companies, Inc. was $1.9 million in Q4 2023.

How much did Adjusted EBITDA increase in Q4 2023 for Comstock Holding Companies, Inc.?

Adjusted EBITDA increased by 17% to $2.2 million in Q4 2023 for Comstock Holding Companies, Inc.

What was the YTD revenue increase for Comstock Holding Companies, Inc. in fiscal year 2023?

YTD revenue increased by 14% to $44.7 million in fiscal year 2023 for Comstock Holding Companies, Inc.

How much cash flow did Comstock Holding Companies, Inc. generate from operations?

Comstock Holding Companies, Inc. generated $9.0 million of cash flow from operations.

What was the managed commercial portfolio leased percentage for Comstock Holding Companies, Inc. in FY23?

The managed commercial portfolio leased percentage was 92% in FY23 for Comstock Holding Companies, Inc.

Who is the Chairman and CEO of Comstock Holding Companies, Inc.?

Christopher Clemente is the Chairman and CEO of Comstock Holding Companies, Inc.

What acquisitions did Comstock Holding Companies, Inc. complete in Q4 2023?

Comstock Holding Companies, Inc. completed the strategic acquisition of Comstock 41 investment property in Q4 2023.