Homex Delivers Solid Q-1 2010 Revenue Growth of 12.2 Percent

CULIACAN, Mexico, April 26 /PRNewswire-FirstCall/ -- Desarrolladora Homex, S.A.B. de C.V. ("Homex" or "the Company") (NYSE: HXM, BMV: HOMEX) today announced financial results for the First Quarter ended on March 31, 2010(1).

As previously stated, effective January 1, 2010, and in accordance with the INIF 14 rule, Homex recognizes its revenues, costs and expenses when the Company has transferred the control to the homebuyer. Homes under construction are now considered as inventory until they are titled.

We have presented 1Q09 figures on the same basis as 1Q10, since INIF 14 requires that all periods be presented on a consistent basis, giving effect to the new accounting standard.

As a result of the application of INIF-14, the inventory line item related to the capitalization of Comprehensive Financing Cost (CFC) on the Company's balance sheet at December 31, 2009 has been adjusted to Ps. 806 million from Ps. 244 million previously reported under the percentage of completion method. The adjustment results from the cancellation of previously recognized interest into Cost of Goods Sold (COGS), in line with the cancellation of revenues related to homes under construction and not titled during 2009.

Therefore, the capitalization of Comprehensive Financing Cost registered into COGS as of March 31, 2010 has been adjusted accordingly, and during 1Q10, the Company's capitalized interest applied to cost of sales has an excess of Ps. 189 million of capitalized interest above the accrued interest for the first quarter of 2010.

Financial Highlights

-- Total revenue in the first quarter of 2010 increased 12.2 percent to Ps. 3.6 billion (US$289 million) from Ps. 3.2 billion (US$258 million) for the same period in 2009.

-- In the first quarter of 2010, the total number of titled homes slightly decreased compared to the first quarter of 2009 (9,777 vs 9,859), mainly driven by the Company's strategy of focusing on the most profitable segments within the Affordable Entry-Level and Low Middle Income segment.

-- Gross margin for the quarter was 21.8 percent compared to 25.7 percent during the first quarter of 2009. 1Q10 gross margin without considering the application of MFRS D-6 "Capitalization of Comprehensive Financing Cost" (pro- forma) increased 41 bps to 32.8 percent compared to 32.4 percent during the same period of last year, mainly driven by efficiencies generated from a higher percentage of homes built through aluminum moulds thus effectively reducing the number of different materials used for each home as well as other operating measures that will lead the Company to a faster delivery of homes to its clients.

-- Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) margin increased 130 basis points to 22.4 percent in the first quarter of 2010 from 21.1 percent in the first quarter of 2009, evidencing the Company's year-over-year improved operating profitability.

-- For the first quarter of 2010, net income was Ps. 188 million (US$15 million) compared to Ps. 193 million (US$16 million) for the first quarter of 2009. On a pro-forma basis, by only considering accrued interest for the quarter, net income margin for the first quarter of 2010 would have been 8.6 percent during the first quarter of 2010 compared to 6.6 percent during the year ago period.

    FINANCIAL AND OPERATING HIGHLIGHTS
                                    1Q'10
                                  Thousands
                                 U.S Dollars     1Q'10
                                 (Convenience  Thousands
                                 Translation)   of pesos      1Q'09    % Chg.
          Volume (Homes)              9,777        9,777        9,859   -0.8%
          Revenues                 $289,421   $3,593,446   $3,202,022   12.2%
          Cost                     $226,228   $2,808,842   $2,378,120   18.1%
             Capitalization of
              CFC                   $31,790     $394,700     $213,660   84.7%
          Gross profit              $63,193     $784,604     $823,902   -4.8%
          Gross profit adjusted
           by capitalization of
           CFC                      $94,983   $1,179,304   $1,037,562   13.7%
          Operating income          $24,625     $305,744     $356,353  -14.2%
          Operating income
           adjusted by
           capitalization of CFC    $56,415     $700,444     $570,013   22.9%
          Interest expense, net        $337       $4,187     -$21,476      -
          Net income                $15,123     $187,767     $193,134   -2.8%
          Adjusted EBITDA (a)       $64,713     $803,473     $674,403   19.1%
          Gross margin                21.8%        21.8%        25.7%
          Gross margin adjusted
           by capitalization of
           CFC                        32.8%        32.8%        32.4%
          Operating margin             8.5%         8.5%        11.1%
          Operating margin
           adjusted by
           capitalization of CFC      19.5%        19.5%        17.8%
          Adjusted EBITDA margin      22.4%        22.4%        21.1%
          Earnings per share in
           Ps.                                      0.56         0.58
          Earnings per ADR
           presented in US (b)         0.27                      0.28
          Weighted average
           shares outstanding
           (MM)                       334.8        334.8        334.9
          Accounts receivable       $65,805     $817,039     $838,374
          Inventory              $1,970,042  $24,460,039  $22,517,985
          Inventory (w/o land)     $917,723  $11,394,443   $9,859,774

(a) Adjusted EBITDA is not a financial measure computed under Mexican Financial Reporting Standards (MFRS). Adjusted EBITDA as derived from our MFRS financial information means MFRS net income, excluding (i) depreciation and amortization; (ii) net comprehensive financing costs ("CFC") (comprised of net interest expense (income), foreign exchange gain or loss, valuation effects of derivative instruments and monetary position gain or loss), including CFC, capitalized to land balances, that is subsequently charged to cost of sales; and (iii) income tax expense and employee statutory profit-sharing expense. See "Adjusted EBITDA" for reconciliation of net income to Adjusted EBITDA for the first quarter of 2010 and 2009.

(b) US$ values estimated using an exchange rate of Ps. 12.416 per US$1.00. Common share/ADR ratio: 6:1

Commenting on first quarter results, Gerardo de Nicolas, Chief Executive Officer of Homex, said: "A year ago, during the first quarter, we were faced with a struggling macroeconomic environment which presented new opportunities for Homex and encouraged us to implement new strategies to become even more profitable and gain market share. At the same time, our prudent capital investment policy directed our energies to tightening our working capital cycle and our goal of attaining sustainable, positive cash flows from our operations. Proactive measures taken since then, and particularly in the last quarter of 2009, started to bear fruit this quarter, and we delivered solid, 12.2 percent revenue growth and adjusted EBITDA margin improvement to 22.4 percent, year over year.

"We are very pleased with this performance," de Nicolas continued. "It demonstrates our resiliency to volatile economic conditions as well as the strength of our business model and leadership in the affordable entry-level segment -- the right place to be, in Mexico's homebuilding industry. In Q1, this is particularly reflected in our market share gain with INFONAVIT, where we moved from 4.7 percent of homes collected as of year-end 2009 to 5.4 percent this quarter.

"As we continue to work to improve our efficiency, at the beginning of this year we consolidated our affordable-entry level and middle income operations into one new division -- Homex Mexico. These unified operations will allow us to better manage projects and customer service, while enjoying economies of scale, leveraging operational efficiency across all our developments. I am confident that this consolidation will provide us more flexibility and enable us to sustain market share gains in the most profitable segments of our target markets. We also continue to work hard to improve our working capital cycle, and our first quarter results also reflect our strong relationships with suppliers, who have been offering us better credit terms and, in some cases, more competitive pricing.

"Today, we are encouraged, as we see some indicators pointing to economic recovery. We have seen continued strength in the Mexican housing market and support from the Mexican government. We are very pleased with the initial, successful replication of our business model in Brazil, as well as the growing Homex brand recognition. We are most prepared to seize the opportunities ahead for us in 2010, and confident in reaffirming our guidance of 12 to 14 percent revenue growth, while generating an EBITDA margin of 21 to 22 percent for the year."

Detailed Financial Reports

The Company produces a detailed earnings report that provides information regarding Operating and Financial results. This detailed information is considered part of this earnings announcement and is available in full with this earnings release via the Company's website at http://www.homex.com.mx/ri/index.htm, through email distribution or the Company's filings with the SEC and the CNBV.

    First Quarter 2010 Results Conference Call Notice

    DATE:      Tuesday, April 27, 2010

    TIME:      9:00 AM Central Time (Mexico City)
               10:00 AM Eastern Time (New York)

    HOSTS:     Gerardo de Nicolas, Chief Executive Officer
               Carlos Moctezuma, Vice President of Finance and Planning and
               Chief Financial Officer
               Vania Fueyo, Investor Relations Officer

    DIAL-IN:   International: 706-643-5124
               U.S.: 866-887-3678
               Passcode: 67770588
               Please call 10 minutes prior to start time and request the
               Homex call

    REPLAY:    706-645-9291, available one hour after the call ends, the pass
               code to access the replay of the call is 67770588. Or via
               webcast at http://www.homex.com.mx/ri/index.htm

A copy of the earnings release will be e-mailed to you after market close on April 26, 2010. It will also be available on the Company IR website at http://www.homex.com.mx/ri/index.htm

Please contact Ms. Vania Fueyo at (011-52-667) 758 5838 or via email at [email protected] with any questions.

(1) Unless otherwise noted, all monetary figures are presented in thousands of Mexican pesos and in accordance with Mexican Financial Reporting Standards (MFRS). First Quarter 2010 and 2009 figures are presented without recognizing the effects of inflation per the application of MFRS B-10 "Effects of inflation." The symbols "Ps." and "$" refer to Mexican pesos and "US$" refers to U.S. dollars. U.S. dollar figures in this release are presented only for the convenience of the reader and are estimated, using an exchange rate of Ps. 12.416 per US$1.00. First quarter 2010 and 2009 financial information is unaudited and is subject to adjustments.

Figures comparison expressed in basis points are provided for the convenience of the reader. Basis points figures may not match, due to rounding.

    Investor Contacts
    [email protected]

    Vania Fueyo
    Head of Investor Relations
    +5266-7758-5838
    [email protected]

SOURCE Desarrolladora Homex, S.A.B. de C.V.