Homex Reports Second Quarter 2012 Results

CULIACAN, Mexico, July 24, 2012 /PRNewswire/ --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 June 30, 2012 [1].

Pursuant to Article 78 of the General Provisions Applicable to Securities Issuers and Other Participants in the Securities Market (Disposiciones de Caracter General Aplicables a las Emisoras de Valores y a Otros Participantes del Mercado de Valores), beginning in 2012, the Company has adopted IFRS as issued by the International Accounting Standards Boards ("IASB"). Please refer to page 17 for a detailed description of the transition.

Financial Highlights

• Total revenue for the second quarter of 2012 increased 30.7 percent to Ps.7.2 billion (US$525 million) from Ps.5.5 billion (US$402 million) for the same period in 2011. During the quarter, the Company recognized Ps.1.8 billion (US$132 million) of revenues from its penitentiary construction projects with the federal government.
• Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) during the quarter was Ps.1,660 million (US$122 million), a 34.2 percent increase from the Ps.1,237 million (US$91 million) reported in the second quarter of 2011. Adjusted EBITDA margin increased 61 basis points to 23.1 percent in the second quarter of 2012 from 22.5 percent in the second quarter of 2011.
• Net income (adjusted for non-cash, foreign exchange (FX) effects) for the second quarter of 2012 was Ps.687 million (US$50 million) reflecting 9.6 percent margin in the second quarter of 2012 compared to Ps.547 million (US$40 million) and a margin of 10.0 percent reported in the same period in 2011. Earnings per Share adjusted for non-cash foreign exchange (FX) effects during the second quarter of 2012 increased 25.6 percent to Ps.2.05 compared to Ps.1.63 during the second quarter of 2011.
• Average selling price for all homes in Mexico during the second quarter of 2012 was stable at Ps.393 thousand when compared to Ps.388 thousand during the year ago period. Home prices in Brazil increased by 7 percent to Ps.528 thousand as of the second quarter of 2012 from Ps.495 thousand during the second quarter of 2011.
• As of June 30, 2012, Homex' free cash flow (FCF) generation was positive at Ps.128.6 million (US$9 million) mainly driven by the recognition of a higher level of accounts payable. On a consolidated basis, including penitentiary construction projects, Homex generated a negative free cash flow of Ps.4.5 billion (US$329 million), primarily because construction in progress at these projects is required to be recognized as accounts receivable for accounting purposes.

FINANCIAL AND OPERATING HIGHLIGHTS					SIX-MONTHS
Thousands of pesos	2Q'12 Thousands U.S dollars (Convenience Translation)	2Q'12 Thousands of pesos	2Q'11	Chg % and bps	2012 Thousands U.S Dollars (Convenience Translation)	2012	2011	Chg % and bps
Volume (Homes)	11,154	11,154	12,576	-11.3%	19,892	19,892	23,870	-16.7%
Revenues	$525,340	$7,172,473	$5,489,608	30.7%	$956,581	$13,060,201	$9,588,035	36.2%
Housing revenues	$321,978	$4,395,960	$4,933,125	-10.9%	$589,855	$8,053,297	$8,978,809	-10.3%
Cost	$379,584	$5,182,457	$3,795,232	36.6%	$688,586	$9,401,271	$6,733,737	39.6%
Capitalization of Comprehensive Financing Costs (CFC)	$19,774	$269,977	$211,075	27.9%	$36,003	$491,547	$428,104	14.8%
Gross profit	$145,757	$1,990,016	$1,694,376	17.4%	$267,995	$3,658,930	$2,854,298	28.2%
Gross profit adjusted for capitalization of CFC	$165,531	$2,259,993	$1,905,452	18.6%	$303,997	$4,150,477	$3,282,402	26.4%
Operating income	$94,721	$1,293,220	$933,235	38.6%	$168,902	$2,306,017	$1,486,640	55.1%
Operating income adjusted for capitalization of CFC	$114,495	$1,563,198	$1,144,310	36.6%	$204,905	$2,797,564	$1,914,744	46.1%
Interest expense, net (a)	$24,312	$331,928	$323,238	2.7%	$49,023	$669,313	$569,127	17.6%
Net income	$30,930	$422,293	$506,664	-16.7%	$94,947	$1,296,310	$843,561	53.7%
Net Income adjusted for FX	$50,295	$686,683	$546,686	25.6%	$87,619	$1,196,268	$859,439	39.2%
Adjusted EBITDA (b)	$121,602	$1,660,226	$1,237,411	34.2%	$220,043	$3,004,244	$2,076,172	44.7%
Gross margin	27.7%	27.7%	30.9%	- 312	28.0%	28.0%	29.8%	- 175
Gross margin adjusted for capitalization of CFC	31.5%	31.5%	34.7%	- 320	31.8%	31.8%	34.2%	- 245
Operating margin	18.0%	18.0%	17.0%	103	17.7%	17.7%	15.5%	215
Operating margin adjusted for capitalization of CFC	21.8%	21.8%	20.8%	95	21.4%	21.4%	20.0%	145
Adjusted EBITDA margin	23.1%	23.1%	22.5%	61	23.0%	23.0%	21.7%	135
Net Income margin adjusted for FX	9.6%	9.6%	10.0%	- 38	9.2%	9.2%	9.0%	20
Earnings per share in Ps.		1.26	1.51			3.87	2.52
Earnings per share in Ps. adjusted for FX		2.05	1.63			3.58	2.57
Earnings per ADR presented in US$ (c)	0.55		0.67		1.70		1.11
Earnings per ADR presented in US$ adjusted for FX	0.90		0.72		1.57		1.13
Weighted avg. shares outstanding (MM)	334.7	334.7	334.7		334.7	334.7	334.7
Accounts receivable days (d)						59	32
Inventory days						765	733
Accounts payable days ( e)						126	113
Working Capital Cycle (WCC) days (f)						697	653
Including interest expense recognized in COGS and CFC; not including interest expense from the penitentiary construction projects. Adjusted EBITDA is not a financial measure computed under Mexican Financial Reporting Standards (MFRS).Adjusted EBITDA as derived from our MFRS financial information means net income, excluding (i)depreciation and amortization; (ii)net comprehensive financing costs ("CFC") (comprised of net interest expense (income), foreign exchange 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 a reconciliation of net income to Adjusted EBITDA for the second quarter and six-months accumulated of 2012 and 2011. US$ values estimated using an exchange rate of Ps.13.653 per US$1.00 as of June 30, 2012. Common share/ADR ratio: 6:1. Accounts receivable not including receivables from the penitentiary construction projects. Accounts payable not including payables related to the penitentiary construction projects. WCC computation based on LTM COGS under IFRS and not including COGS and revenues from the penitentiary construction projects.

Commenting on second quarter results, Gerardo de Nicolas, Chief Executive Officer of Homex, said:

"Our second quarter 2012 results reflect continued construction advances at our penitentiary construction projects. During the quarter, we recognized Ps.1.8 billion in revenues from these projects, and on an accumulated basis we have recognized Ps.3.9 billion, which represents an advance of approximately 50 percent of completion of the projects; and we are well in track to deliver the prisons during this year.

"In our Mexico Housing Division, we continued to face the negative effects from administrative delays in titling mortgages related to the Housing Registry System (RUV) mainly during the first quarter of the year and approval delays resulting from compliance with the new sustainability requirements of CONAVI. It is worth nothing that this has not only affected Homex, evidenced by INFONAVIT's 6.0 percent decline in mortgages for new homes granted as of June 30, 2012 and by a decrease of 10.6 percent of new housing starts in Mexico accumulated as of May 30, 2012, reflecting the learning curve which the industry is going through to comply with new requirements of vertical construction and increased costs associated with sustainability best practices. During the second quarter, we accelerated our home production, but the efficiencies gained were not sufficient to achieve the needed level of completed homes to improve our collections for the quarter and on an accumulated basis.

"In Brazil, we have continued to face inherent administrative constraints in the collection of units through the mortgage program Minha Casa Minha Vida, and during the quarter we titled 84 units, which represent a decline of 82 percent compared to the second quarter of 2011. We are working diligently with the system and authorities in Brazil to rectify these administrative delays.

"On a consolidated basis, housing revenues for the quarter were down 10.9 percent and on a six months accumulated basis, housing revenues show a 10.3 percent decline when compared to 2011. In view of the lower than anticipated volume of housing sales during the first six months of 2012, we consider it appropriate to reduce our yearly revenue guidance to a revenue growth of 3 to 4 percent without including the contribution of the federal penitentiaries from an original revenue growth guidance of 10 percent to 12 percent. Including the contribution of the federal penitentiaries, our revenue growth for 2012 would be 51 to 52 percent from an original guidance of 58 to 61 percent. We are also reducing our EBITDA margin guidance, but by a significantly lesser extent; 100 bps to a margin of 20 to 21 percent without the contribution of the federal penitentiaries and 24 to 26 percent including the contribution of the federal penitentiaries. Our Free Cash Flow guidance will remain without change.

"Despite of the fact that we are adjusting our growth guidance for our housing divisions, we remain confident about the growth for our housing businesses in both countries and we anticipate that we will be able to reverse in the second half of the year, in part, the softness in home deliveries experienced in the first half of the year," he concluded.

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.

SECOND QUARTER 2012 RESULTS CONFERENCE CALL NOTICE

DATE:	Wednesday, July 25, 2012
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: 95446473
	Please call 10 minutes prior to start time and request the Homex call

INVESTOR CONTACTS
[e-mail]

Vania Fueyo
Head of Investor Relations
[phone]
[e-mail]
Ernesto Victoria
Investor Relations Manager
[phone] ext.5852
[e-mail]

[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 2012 and 2011 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.13.653 per US$1.00. Second quarter and six-months accumulated 2012 and 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.

SOURCE Homex