Comstock Reports Third Quarter 2022 Results

Rhea-AI Summary

Comstock Holding Companies (CHCI) reported a strong financial performance for Q3 2022, with revenue rising 26% to $12.8 million compared to $10.1 million in Q3 2021, and year-to-date revenue increasing by 29% to $30.0 million. Operating income also saw a 24% increase to $3.9 million. The company successfully reduced its debt by paying off $5.5 million of its revolving credit facility, positioning itself well against rising interest rates. Key achievements include securing 98,000 square feet of new leases and advancing the Reston Station development.

Positive

• Revenue increased 26% to $12.8 million in Q3 2022.
• Year-to-date revenue grew by 29% to $30.0 million.
• Operating income rose 24% to $3.9 million in Q3 2022.
• Successful debt reduction of $5.5 million, enhancing financial stability.
• Secured approximately 98,000 square feet of new leases in Q3 2022.
• Advancing the Reston Station development project, enhancing future revenue potential.

Negative

• Net income for YTD 2021 included an $11.3 million tax benefit which distorts year-over-year comparisons.
• Net income per share decreased to $0.90 in YTD 2022 compared to $1.67 in YTD 2021 when accounting for tax benefits.

• Revenue increased 26% to $12.8 million in Q3 2022 vs. $10.1 million in Q3 2021; YTD revenue increased 29% to $30.0 million vs. $23.3 million in 2021
• Operating income increased 24% to $3.9 million in Q3 2022 vs. $3.1 million in Q2 2021; YTD operating income increased 56% to $6.4 million in Q3 2022 vs. $4.1 million in 2021
• Further strengthened balance sheet through pay off of $5.5 million balance on $10.0 million revolving credit facility

RESTON, Va.--(BUSINESS WIRE)-- Comstock Holding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”) announced its financial results for the three and nine months ended September 30, 2022.

“We continue to achieve positive financial results, primarily driven by the consistency and strength of our Anchor Portfolio and highlighted by our 9th consecutive quarter of year-over-year top line growth,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “We completed the deleveraging of our balance sheet by paying off our last remaining debt, minimizing the risk associated with rising interest rates and positioning us to continue our recent trend of year-over-year revenue and earnings growth. Our growing revenue pipeline and our low-leverage, asset-light business model will drive further earnings growth, allowing us to out-perform many industry peers and deliver value for our shareholders.”

Key Performance Metrics¹

		($ in thousands, except per share data)
		Revenue	Q3 2022			Q3 2021			YTD 2022			YTD 2021
			$	12,813		$	10,164		$	30,011		$	23,328
		Income from operations	$	3,875		$	3,137		$	6,357		$	4,072
		Net income2		3,689			3,057			6,417			15,096
		Adjusted EBITDA	$	4,143		$	3,317		$	7,137		$	4,595
		Net income per share — diluted	$	0.37		$	0.34		$	0.90		$	1.67
		Managed Portfolio - # of assets		40			30			40			30
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 YTD 2021 includes the impact of a $11.3 million tax benefit stemming from the partial release of deferred tax valuation allowance. Excluding this impact, YTD 2022 net income increased 70% vs. the prior year, to $6.5 million

Q3 2022 Highlights

• Recognized $3.9 million incentive fee revenue based on achievement of operating asset stabilization, pursuant to the terms of the 2022 Asset Management Agreement (“2022 AMA”).
• Continued to deleverage the balance sheet to reduce exposure to increasing interest rates through $5.5 million full pay down of outstanding principal balance on $10.0 million revolving credit facility.
• Secured approximately 98,000 square feet of new leases in Q3 related to office and retail assets, including a lease to Puttshack, whose 29,000 square foot facility will anchor Phase II of Reston Station, (which is currently under construction) and will be the first active entertainment venue of its kind in the area; Portfolio-wide, new leases secured year-to-date now at nearly 350,000 square feet.
• Advanced development of Phase II of Reston Station, the Reston Row District, that includes approximately 500,000 square feet of office space in two Trophy-Class towers, 450 multi-family units, 136,000 square feet of retail, dining, and entertainment venues, and Virginia’s first JW Marriott luxury hotel and branded condominium tower.
• Further expansion of managed assets in the Anchor Portfolio via significant additions land to the Reston Station development, including approximately 8 acres across Wiehle Avenue from the JW Marriott hotel/condo that will represent Phase III of Reston Station and approximately 3 acres located at the intersection of Reston Station Boulevard and Metro Center Drive. The Reston Station neighborhood now covers nearly 80 acres spanning the Dulles Toll Road and surrounding the Wiehle Reston-East Metro Station.
• Continued expansion of the ParkX portfolio of managed commercial garages, with new locations open or coming soon in Fairfax County, Montgomery County, and Washington, D.C.
• Utilization of leased commercial properties in our managed portfolio increased during the period, a trend that began early in the year.
• Residential portfolio continues to experience year-over-year growth in occupancy levels and revenue.

About Comstock

Founded in 1985, Comstock is a leading developer, investor, and asset manager of mixed-use and transit-oriented properties in the Washington, D.C. region. With a managed portfolio comprising approximately 10 million square feet of transit-oriented and mixed-use properties, including stabilized and development assets strategically located at key Metro stations, Comstock is at the forefront of the urban transformation taking place in the fastest growing segments of 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. 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.

COMSTOCK HOLDING COMPANIES, INC. Consolidated Balance Sheets (Unaudited; In thousands)
	September 30,				December 31,
	2022				2021
Assets
Current assets:
Cash and cash equivalents	$	5,357			$	15,823
Accounts receivable, net		793				46
Accounts receivable - related parties		6,884				1,697
Prepaid expenses and other current assets		339				197
Current assets held for sale		—				2,313
Total current assets		13,373				20,076
Fixed assets, net		404				264
Intangible assets		144				—
Leasehold improvements, net		126				—
Investments in real estate ventures		7,207				4,702
Operating lease assets		6,807				7,245
Deferred income taxes, net		11,470				11,300
Other assets		22				15
Total assets	$	39,553			$	43,602
Liabilities and Stockholders' Equity
Current liabilities:
Accrued personnel costs		4,307				3,468
Accounts payable and accrued liabilities		818				783
Current operating lease liabilities		692				616
Current liabilities held for sale		—				1,194
Total current liabilities		5,817				6,061
Credit facility - due to affiliates		—				5,500
Operating lease liabilities		6,393				6,745
Total liabilities		12,210				18,306
Stockholders' equity:
Series C preferred stock		—				6,765
Class A common stock		93				81
Class B common stock		2				2
Additional paid-in capital		201,330				200,617
Treasury stock		(2,662	)			(2,662	)
Accumulated deficit		(171,420	)			(179,507	)
Total stockholders' equity		27,343				25,296
Total liabilities and stockholders' equity	$	39,553			$	43,602

COMSTOCK HOLDING COMPANIES, INC. Consolidated Statements of Operations (Unaudited; In thousands, except per share data)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
Revenue	$	12,813			$	10,164			$	30,011			$	23,328
Operating costs and expenses:
Cost of revenue		8,346				6,695				22,112				18,275
Selling, general, and administrative		537				309				1,393				916
Depreciation and amortization		55				23				149				65
Total operating costs and expenses		8,938				7,027				23,654				19,256
Income (loss) from operations		3,875				3,137				6,357				4,072
Other income (expense):
Interest expense		(94	)			(60	)			(222	)			(176	)
Gain (loss) on real estate ventures		(31	)			1				238				(93	)
Other income (expense), net		1				4				2				4
Income (loss) from continuing operations before income tax		3,751				3,082				6,375				3,807
Provision for (benefit from) income tax		62				25				(42	)			(11,289	)
Net income (loss) from continuing operations		3,689				3,057				6,417				15,096
Net income (loss) from discontinued operations, net of tax		(99	)			(137	)			(376	)			(724	)
Net income (loss)		3,590				2,920				6,041				14,372
Impact of Series C preferred stock redemption		—				—				2,046				—
Net income (loss) attributable to common shareholders	$	3,017			$	11,205			$	4,764			$	11,452
Weighted-average common stock outstanding:
Basic		9,464				8,234				8,806				8,205
Diluted		10,007				9,072				9,363				9,030
Net income (loss) per share:
Basic - Continuing operations	$	0.39			$	0.37			$	0.96			$	1.84
Basic - Discontinued operations		(0.01	)			(0.02	)			(0.04	)			(0.09	)
Basic net income (loss) per share	$	0.38			$	0.35			$	0.92			$	1.75
Diluted - Continuing operations	$	0.37			$	0.34			$	0.90			$	1.67
Diluted - Discontinued operations		(0.01	)			(0.02	)			(0.04	)			(0.08	)
Diluted net income (loss) per share	$	0.36			$	0.32			$	0.86			$	1.59

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 September 30,							Nine Months Ended September 30,
	2022			2021				2022				2021
Net income (loss) from continuing operations	$	3,689		$	3,057			$	6,417			$	15,096
Interest expense		94			60				222				176
Income taxes		62			25				(42	)			(11,289	)
Depreciation and amortization		55			23				149				65
Stock-based compensation		212			153				629				454
(Gain) loss on equity method investments		31			(1	)			(238	)			93
Adjusted EBITDA	$	4,143		$	3,317			$	7,137			$	4,595

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221110006128/en/

Investor Contact

Christopher Guthrie

Executive Vice President & Chief Financial Officer

cguthrie@comstock.com

703-230-1292

Media Contact

Shanna Wilson

shanna.wilson@allisonpr.com

917-674-3096

Source: Comstock Holding Companies, Inc.

FAQ

What were Comstock Holding Companies' Q3 2022 revenue figures?

Comstock reported a revenue of $12.8 million for Q3 2022, a 26% increase from $10.1 million in Q3 2021.

How much did Comstock reduce its debt in Q3 2022?

Comstock paid off $5.5 million of its revolving credit facility, reducing its exposure to rising interest rates.

What is the significance of the Reston Station development for Comstock?

The Reston Station development includes approximately 500,000 square feet of office space and is expected to enhance revenue through new leases and residential growth.

How did Comstock perform year-to-date in 2022 compared to 2021?

Year-to-date revenue increased by 29% to $30.0 million, and operating income rose 56% to $6.4 million.

What impact did tax benefits have on Comstock's YTD 2021 net income?

The net income for YTD 2021 included an $11.3 million tax benefit, making comparisons with YTD 2022 less straightforward.