Homex Reports Solid Revenue Growth of 15.7 Percent as Well as Positive Quarterly Cash Flow Generation

CULIACAN, Mexico, July 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 Second Quarter ended on June 30th, 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 of the home to the homebuyer.  Homes under construction are now considered as inventory until they are titled.

We have presented 2Q09 figures on the same basis as 2Q10, since INIF 14 requires that all periods be presented on a consistent basis, giving effect to the new accounting standard.

Financial Highlights

• Total revenue increased 15.7 percent in the second quarter of 2010 to Ps.4.8 billion (US$376 million) from Ps.4.2 billion (US$325 million) for the same period in 2009.
• In the second quarter of 2010, the total number of titled homes increased 3.3 percent compared to the second quarter of 2009 (12,312 vs 11,915), mainly driven by the Company's strategy of focusing on the most profitable segments, with a product offering affordable for families who earn between two to eleven times minimum wages.
• Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the quarter was Ps.1,060 million, a 9.1 percent increase from the Ps.972 million reported in the second quarter of 2009. EBITDA margin was 22.0 percent, in line with the Company's yearly guidance of 21.0 to 22.0 percent.
• In the second quarter of 2010, free cash flow generation resulted in a positive balance of Ps. 181 million, as a result of increased sales and lower land purchases, in line with the Company's strategy to preserve cash.

Commenting on second quarter results, Gerardo de Nicolas, Chief Executive Officer of Homex, said: "I feel very pleased with our second quarter results, as we were able to achieve double digit revenue growth of 15.7 percent - clearly ahead of our 2010 yearly guidance - while at the same time delivering on our undertaking of generating positive Free Cash Flow.  Our results demonstrate the effectiveness of our proactive strategy of re-aligning our product mix to attend to the most profitable segments of the market with a product offering that is affordable for families who earn between two to eleven times minimum wages which, in some markets today, are unattended by medium and small sized homebuilders who have exited the market in light of credit restrictions.  This has opened a new and significant opportunity for well capitalized homebuilders with a proven expertise in the market, such as Homex. At the same time, we have continued to follow a conservative investment policy to work diligently to improve the speed of our construction process, to positively and sustainably impact our working capital cycle. Our work with INFONAVIT also reflects our improved collection process, where during the first six months of the year, we were able to grow our collected units by 25 percent, compared to an average of negative 0.3 percent among the other public homebuilders.  We have enjoyed a six percent growth in INFONAVIT formalized mortgages during the period.

"The second quarter of 2010 was also gratifying for our operations abroad, as we effectively collected the first revenues for the year from our pilot project at Sao Jose Dos Campos, a fact that encourages us to continue to prudently look for additional opportunities in Brazil to replicate our business model.

"As we look ahead to the remainder of the year, we feel confident in our growth strategy, which we believe will allow us to continue to deliver on our yearly guidance.  We continue to be supported by the solid fundamentals of the homebuilding industry in Mexico, leveraged mainly by the main mortgage financing institutions INFONAVIT and FOVISSSTE, institutions that today have financed  87 percent of our total units," concluded Mr. de Nicolas.

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.

A copy of the earnings release will be e-mailed to you after market close on July 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). Second 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. 12.8394 per US$1.00. Second quarter 2010 and 2009 financial information is unaudited and is subject to adjustments.

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

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