When Comstock Homebuilding's CEO Christopher Clemente says the Reston, Virginia-based company, No. 82 on the 2006 BUILDER 100, has been through worse times than this, it might sound disingenuous. After all, Comstock Homebuilding is reporting second-quarter losses (ending June 30) of $4.7 million.
Included in that $4.7 million loss is a non-cash impairment and write-off charge of $7.5 million. Before impairments and write-offs, the company's results would have been a net loss of $0.1 million. However, revenues more than doubled to $114.3 million, from $50.7 million a year ago. In addition, Comstock Homebuilding reduced its debt by $63.3 million to $230.1 million during the second quarter.
But Clemente's statement about having been through worse is true. The 2006 second quarter saw new home orders fall 29 percent as the company posted a net loss of $7.1 million. Once considered a fast-rising darling on Wall Street after going public 2004, less than one year ago, Comstock Homebuilding's future looked bleak. Their stock sank to a 52-week low at $3.65 per share in the second quarter 2006 and throughout the year, the stock hovered near the $5 mark. Currently, the company's stock sits close to the $2 mark.
In order to combat a challenging market, Clemente recently reduced payroll by 30 percent. But that wasn't the only step taken to battle current conditions.
"Because of the uncertainties we have been facing, we have been taking steps to survive," Clemente said Monday during a conference call. Reducing costs, stabilizing lending relationships, managing assets in a conservative manner, and striving to please its customers are all methods he said the company remains focused on.
"We are encouraged by our results and accomplishments during the second quarter," Clemente continued. "We recognize the challenges that this market presents and feel that we are taking the necessary steps to strengthen our balance sheet and manage our liquidity. The significant reduction in debt this quarter is an indication of our commitment to selling through our inventory and reducing our exposure to unfunded interest costs."
In addition to reducing staff, Comstock Homebuilding, which builds primarily in the Northeast and Southeast, has begun a cost-reduction campaign at the construction site. Clemente says the cost-reductions fall between 7 percent and 24 percent.
"I have been asking everyone in the company to do more with less," he explained.
Although he did not want to forecast when the housing market would turn around, he did say he sees some signs of an upturn.
"This cycle is following a predictable path to recovery," he states.
