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Homex Reports Fourth Quarter and Full Year 2011


Total Housing Revenue Growth of 18.1 percent for the Fourth Quarter and Full Year growth of 11.2 percent, and EBITDA Margin of 21.0 and 21.6 percent, respectively, in Line with Annual Guidance.

CULIACAN, Mexico, Feb. 27, 2012 /PRNewswire/ -- Desarrolladora Homex, S.A.B. de C.V. ("Homex" or "the Company") [NYSE: HXM, BMV: HOMEX] today announced financial results for the Fourth Quarter and Full Year ended on December 31, 2011 (1).

Financial Highlights

  • Total Housing revenue for the fourth quarter of 2011 increased 18.1 percent to Ps. 6.3 billion (US$449 million) from Ps. 5.3 billion (US$434 million) for the same period in 2010. Mexico Division housing revenue growth for the fourth quarter of 2011 was 14.4 percent, mainly driven by a 34.6 percent growth in the Affordable Entry-level (AEL) segment.
  • For the full year 2011, total revenues rose 10.5 percent to Ps.21.7 billion (US$1.6 billion) from Ps.19.7 billion (US$1.4 billion) in 2010.  Total Housing revenue for the full year 2011 grew 11.2 percent to Ps.20.5 billion (US$1.5 billion) from Ps.18.5 billion (US$1.3 billion) during the same period of 2010. For the full year 2011, Mexico Division housing revenue grew 8.9 percent to Ps.19.9 billion (US$1.4 billion) from Ps. 18.3 billion (US$1.3 billion) during the same period of 2010.  Brazilian operations contributed 2.8 percent of total revenue in 2011.
  • In the fourth quarter of 2011, the total number of titled homes increased 29.5 percent when compared to the fourth quarter of 2010, driven by a 32.0 percent quarter-over-quarter growth in the Company's titled units in Mexico's Affordable Entry level (AEL) segment, in line with the Company's continued strategy of increased focus on the AEL segment of the housing market, its core business.  For the full year 2011, total volume of titled homes rose 18.4 percent, from 44,347 units to 52,486 units. The AEL segment in Mexico represented 91.2 percent of Homex total volume at year end.
  • Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the recent quarter was Ps.1,350 million (US$97 million), a 12.2 percent increase from the Ps.1,203 million (US$86 million) reported in the fourth quarter of 2010. Adjusted EBITDA margin increased 116 basis points to 21.0 percent in the fourth quarter of 2011 from 19.8 percent in the fourth quarter of 2010. For the full year, adjusted EBITDA improved by 11.4 percent to Ps.4,688 million (US$335 million) from Ps. 4,207 million (US$301 million).  Adjusted EBITDA margin for the full year 2011 was 21.6 percent, an increase of 18 basis points compared to 21.4 percent during 2010.
  • Net income (adjusted by non cash, Foreign Exchange (FX) effects) for the fourth quarter of 2011 was Ps.404.1 million (US$28.9 million) or a 6.3 percent margin compared to Ps.500.0 million (US$35.8 million) a margin of 8.2 percent reported in the same period of 2010. This was principally due to higher capitalized financing costs from higher FX losses and the depreciation of the Mexican peso against the U.S. dollar.  For the full year 2011, net income margin (adjusted by non cash, FX effects) was 8.1 percent, stable when compared to 8.4 percent during the full year 2010.
  • As of December 31, 2011 Homex' Working Capital Cycle was 645 days, an improvement of 18 days from 663 days as of September 30, 2011 and an improvement of 7 days when compared to December 31, 2010. The improvement mainly derives from an inventory decrease as a result of the Company's land acquisition replacement strategy.
  • As of December 31,2011, Homex' Free Cash Flow generation (adjusted by non cash FX effects) (2) was negative at Ps.780 million (US$46 million), while the Company's Mexico's Division generated a positive cash flow of Ps.103 million  (US$7.4 million), primarily the result of the stability of its working capital cycle. The Company presents Free Cash Flow according to the Changes in Financial Position accounting methodology pursuant to Mexican Financial Reporting Standards (MFRS), which includes Non-Cash Foreign Exchange effects.

(1) Unless otherwise noted, all monetary figures are presented in thousands of Mexican pesos and in accordance with Mexican Financial Reporting Standards (MFRS). Fourth quarter and full year 2011 and 2010 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 Ps13.9787 per US$1.00. Fourth quarter and full year 2011 financial information is unaudited and subject to adjustments.

Percentage change expressed in basis points is provided for the convenience of the reader. Basis points figures may not match, due to rounding.

(2) The Company presents Free Cash Flow according to the Changes in Financial Position accounting methodology pursuant to Mexican Financial Reporting Standards(MFRS), which includes Non-Cash Foreign Exchange effects.



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(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 fourth quarter and full year of 2011 and 2010.

(b) US$ values estimated using an exchange rate of Ps.13.9787 per US$1.00 as of December 31, 2011 Common share/ADR ratio: 6:1

Commenting on fourth quarter and full year results, Gerardo de Nicolas, Chief Executive Officer of Homex, said:

" For Homex, 2011 was a year of adapting to challenges and opportunities, and we believe that overall, we ended the year once again well positioned for the intermediate term, both strategically and operationally."

"In Mexico, we were able to successfully mainstream vertical construction into our product offering. We are proud to be the first Company among our peers to successfully make this transition; and as a result, today we have the highest proportion of vertical construction in our developments. We are strategically positioned to benefit further from government incentives earmarked for homebuilders who are committed to the creation of better planned communities in Mexico, with housing developments that provide for increased density through vertical construction.  Importantly, this successful transition reflects our innovative spirit of leadership, always in the vanguard of the homebuilding industry, finding and adapting to new and best practices, while continually seeking to improve our business model, ultimately for the benefit of our customers. For the year, in Mexico, we grew our housing revenues by 8.9 percent, titling 51,421 units, 91.2 percent of which were in the Affordable Entry-level segment of the market.

"In Brazil, we showed remarkable improvement in our operations, growing our collected units from 326 to 1,065 units. This improvement reflects our continuing to gain practical knowledge and a better understanding of the dynamics at work in this country, which has resulted in more efficient working capital management.

"In our Infrastructure division, we continued to work with state and federal government agencies in the execution of different building service contracts which have contributed revenues of Ps.857million or 4 percent of our total revenues for the full year 2011. More importantly, we were also assigned to build and operate over a 20-year period two Federal Penitentiaries with a value of Ps.10.6 billion, which we expect could provide Homex a permanent and reliable source of revenues.  Both penitentiary projects got underway successfully late in the fourth quarter of 2011, and we expect to record our initial construction progress in revenues in the first quarter of 2012.

"Regarding cash flow generation, we feel comfortable with our achieved results although we did not reach consolidated positive cash flow for the year.  In Mexico, despite the fact that we increased vertical construction from five percent as of year-end  2010 to 40 percent as of year end 2011, we were able to deliver positive cash flow generation of Ps.103 million, reflecting our ability to generate cash under a business model that by nature requires an initially higher capital investment, while at the same time carrying a longer construction cycle. The negative consolidated cash flow reported of approximately Ps.780 million is mainly driven by our operations in Brazil, which continue to carry the initial negative result from the first phases of our projects there. Nonetheless, through the changes that we have made in that country, which today are reflected in improved collections, I feel comfortable that Brazil will continue to improve its working capital cycle.

"Regarding profitability, our 2011 results continue to show stability and resiliency, reflected in our EBITDA margin of 21.6 percent, which is in line with our 2011 guidance of 21 to 22 percent. 

"For 2012, we feel confident that we are well positioned for continued, profitable growth as we have done our homework in every division, while shoring our financial resources with the successful issuance of US$400 million in bonds due in 2020, which also provides us with a more flexible balance sheet and significant improvement in our debt maturities. Overall, we feel confident in the quality and attractiveness of our product portfolio both in Mexico and Brazil; we are very pleased with the excellent work that we have performed in migrating into vertical construction and in our ongoing strategies to improve working capital management.  We are encouraged by the opportunities we continue to see in under-served housing markets throughout the regions that we are operating in today, and the proven applicability of our business model in such markets with similar economic characteristics as Mexico."

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 through email distribution or the Company's filings with the SEC and the CNBV.

Fourth Quarter and Full Year 2011 Results Conference Call Notice


Tuesday, February 28, 2012


9:00 AM Central Time (Mexico City)

10:00 AM Eastern Time (New York)


Gerardo de Nicolas, Chief Executive Officer

Carlos Moctezuma, Vice President of Finance and Planning and Chief Financial Officer

Vania Fueyo, Investor Relations Officer


International: 212-401-6760

U.S.: 866-551-3680

Passcode: 54644628#

About Homex

Desarrolladora Homex, S.A.B. de C.V. [NYSE: HXM, BMV: HOMEX] is a leading, vertically integrated home- development company focused on affordable entry-level and middle-income housing in Mexico and Brazil.  It is one of the largest Mexican homebuilders based on its revenues and one of the most geographically diverse homebuilders in the country.  

Founded in Culiacan, Sinaloa in 1989, Homex continues expanding operations across Mexico and at the same time the Company has replicated its business model at three cities in Brazil.  Homex' dynamic nature has allowed the Company to identify, respond and adapt to market opportunities, supported by a solid operative and administrative team as well as by an effective and efficient use of its IT and construction systems which has been the cornerstone for its growth.  

In 2010, Homex consolidated its Mexico operations merging the Affordable Entry-level and middle income segments into the Mexico Division.

In addition, during 2010, the Infrastructure Division was launched, focused on building services contracts with the federal and state government. As a result of this re-organization, today Homex is formed by four divisions: Mexico Division, International Division, Infrastructure Division and Tourism Division.

For additional corporate information, please visit the Company's web site at: Additional information for Homex' holders of US Dollar denominated bonds is also available on the Company's Investor Relations portal at

Desarrolladora Homex, S.A.B. de C.V. quarterly reports and all other written materials may from time to time contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Forward-looking statements involve inherent risks and uncertainties.  We caution investors that a number of important factors can cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.  These factors include economic and political conditions and government policies in Mexico or elsewhere, including changes in housing and mortgage policies, inflation rates, exchange rates, regulatory developments, customer demand and competition.  For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Discussion of factors that may affect future results is contained in our filings with the Securities and Exchange Commission.

Attached is the unaudited Consolidated Financial Information of Desarrolladora Homex, S.A.B. de C.V. for the three and twelve month periods ended December 31, 2011 and 2010, which includes the Consolidated Balance Sheets as of  December 31, 2011 and 2010, and the Consolidated Statements of Income for the three- and twelve-month periods ended December 31, 2011 and 2010 and the and Consolidated Statement of Changes in Financial Position for the twelve-month period ended December 31, 2011 and 2010.

Investor  Contacts

Vania Fueyo
Head of Investor Relations

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

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