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Comstock Reports Third Quarter 2023 Results

  • Revenue increased for the 13th consecutive quarter to $14.5 million; YTD revenue of $33.7 million, up 12% vs. prior year
  • Net income increased 27% to $4.7 million; YTD net income of $5.9 million
  • Adjusted EBITDA increased 35% to $5.6 million; YTD Adjusted EBITDA of $8.3 million, up 16% vs. prior year
  • Commercial and Residential portfolios each remain well over 90% leased
  • Parking management expansion continues, 37% revenue growth vs. prior year; YTD revenue up 54%
  • Further strengthened balance sheet, including 81% current ratio growth vs. 12/31/22

Comstock Holding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”), a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region, announced its financial results for the third quarter ended September 30, 2023.

“The strategic growth platform we have built at Comstock continues to produce positive results, as evidenced by top-line revenue growth for the 13th consecutive quarter that included a 13% increase in recurring fee-based revenue streams,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “In Q3 we achieved significant increases in both operating income and Adjusted EBITDA while further strengthening our balance sheet, a testament to the resiliency of our business model. We remain well-positioned to both sustain current operations and capitalize on new growth opportunities that may arise during this time of dislocation in the real estate industry. I am proud of the high-quality assets we manage and our best-in-class team members that show up every single day focused on providing remarkable services and experiences. I look forward to reporting on our continued success in future periods as we strive to maximize value for our shareholders.”

Key Performance Metrics1

($ in thousands, except per share and portfolio data)

Q3 2023

 

Q3 2022

 

YTD 2023

 

YTD 2022

 

 

Revenue

$

14,463

 

$

12,813

 

$

33,705

 

$

30,011

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

$

5,257

 

$

3,875

 

$

7,221

 

$

6,357

 

 

Net income

 

4,685

 

 

3,689

 

 

5,914

 

 

6,417

3

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

5,605

 

$

4,143

 

$

8,258

 

$

7,137

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share — diluted

$

0.46

 

$

0.37

 

$

0.59

 

$

0.90

2, 3

 

 

 

 

 

 

 

 

 

 

 

Managed Portfolio - # of assets

 

46

 

 

40

 

 

46

 

 

40

 

 

 

 

 

 

 

 

 

 

 

1

All amounts represent continuing operations. Please see the included financial tables for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure

 

 

 

 

 

 

 

 

 

 

2

Amount reflects $2.0 million positive impact of Q2 2022 Series C Preferred Stock redemption

 

 

 

 

 

 

 

 

 

 

3

Amounts reflect impact of $0.5 million non-cash tax benefit stemming from partial release of deferred tax valuation allowance

Q3 2023 Highlights

  • Recognized $4.8 million incentive fee revenue based on achievement of operating asset stabilization, pursuant to the terms of the 2022 Asset Management Agreement (“2022 AMA”).
  • Welcomed Securiport, Noku Sushi, and Tous les Jour to Reston Station, which has secured 8 new leases year-to-date covering nearly 200,000 sqft of office and retail spaces.
  • Managed commercial portfolio leased percentage of 92%, up from 87% in Q3 2022; produced in-place rent growth of 5.5% vs. prior year.
  • Managed residential portfolio leased percentage of 97%, up from 88% in Q3 2022; produced in-place rent growth of 5.1% vs. prior year.
  • Continued growth of parking management portfolio, including 26% growth in average parking management contract value vs. prior year.
  • Added former JBG Smith executive David Paul to Board of Directors.

About Comstock

Founded in 1985, Comstock is a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region. With a managed portfolio comprising approximately 10 million square feet at full build-out that includes stabilized and development assets strategically located at key Metro stations, Comstock is at the forefront of the urban transformation taking place in the fastest growing segments of one of the nation’s best real estate markets. Comstock’s developments include some of the largest and most prominent mixed-use and transit-oriented projects in the mid-Atlantic region, as well as multiple large-scale public-private partnership developments. For more information, please visit Comstock.com.

Cautionary Statement Regarding Forward-Looking Statements

This release may include "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by use of words such as "anticipate," "believe," "estimate," "may," "intend," "expect," "will," "should," "seeks" or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements. Additional information concerning important risk factors and uncertainties can be found under the heading "Risk Factors" in our latest Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

COMSTOCK HOLDING COMPANIES, INC.

Consolidated Balance Sheets

(Unaudited; In thousands)

 

 

September 30,

 

December 31,

 

2023

 

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

10,935

 

 

$

11,722

 

Accounts receivable, net

 

571

 

 

 

504

 

Accounts receivable - related parties

 

10,381

 

 

 

3,291

 

Prepaid expenses and other current assets

 

307

 

 

 

264

 

Total current assets

 

22,194

 

 

 

15,781

 

Fixed assets, net

 

512

 

 

 

421

 

Intangible assets

 

144

 

 

 

144

 

Leasehold improvements, net

 

97

 

 

 

119

 

Investments in real estate ventures

 

5,984

 

 

 

7,013

 

Operating lease assets

 

7,002

 

 

 

7,625

 

Deferred income taxes, net

 

10,720

 

 

 

11,355

 

Other assets

 

35

 

 

 

15

 

Total assets

$

46,688

 

 

$

42,473

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accrued personnel costs

$

3,226

 

 

$

4,959

 

Accounts payable and accrued liabilities

 

975

 

 

 

742

 

Current operating lease liabilities

 

838

 

 

 

791

 

Total current liabilities

 

5,039

 

 

 

6,492

 

Operating lease liabilities

 

6,493

 

 

 

7,127

 

Total liabilities

 

11,532

 

 

 

13,619

 

 

 

 

 

Stockholders' equity:

 

 

 

Class A common stock

 

94

 

 

 

93

 

Class B common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

201,922

 

 

 

201,535

 

Treasury stock

 

(2,662

)

 

 

(2,662

)

Accumulated deficit

 

(164,200

)

 

 

(170,114

)

Total stockholders' equity

 

35,156

 

 

 

28,854

 

Total liabilities and stockholders' equity

$

46,688

 

 

$

42,473

 

COMSTOCK HOLDING COMPANIES, INC.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share data)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Revenue

$

14,463

 

 

$

12,813

 

 

$

33,705

 

 

$

30,011

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of revenue

 

8,557

 

 

 

8,346

 

 

 

24,561

 

 

 

22,112

 

Selling, general, and administrative

 

575

 

 

 

537

 

 

 

1,711

 

 

 

1,393

 

Depreciation and amortization

 

74

 

 

 

55

 

 

 

212

 

 

 

149

 

Total operating costs and expenses

 

9,206

 

 

 

8,938

 

 

 

26,484

 

 

 

23,654

 

Income (loss) from operations

 

5,257

 

 

 

3,875

 

 

 

7,221

 

 

 

6,357

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

 

 

 

 

(94

)

 

 

 

 

 

(222

)

Gain (loss) on real estate ventures

 

(241

)

 

 

(31

)

 

 

(720

)

 

 

238

 

Income (loss) from continuing operations before income tax

 

5,017

 

 

 

3,751

 

 

 

6,549

 

 

 

6,375

 

Provision for (benefit from) income tax

 

332

 

 

 

62

 

 

 

635

 

 

 

(42

)

Net income (loss) from continuing operations

 

4,685

 

 

 

3,689

 

 

 

5,914

 

 

 

6,417

 

Net income (loss) from discontinued operations, net of tax

 

 

 

 

(99

)

 

 

 

 

 

(376

)

Net income (loss)

$

4,685

 

 

$

3,590

 

 

$

5,914

 

 

$

6,041

 

Impact of Series C preferred stock redemption

 

 

 

 

 

 

 

 

 

 

2,046

 

Net income (loss) attributable to common stockholders

$

4,685

 

 

$

3,590

 

 

$

5,914

 

 

$

8,087

 

 

 

 

 

 

 

 

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

Basic

 

9,647

 

 

 

9,464

 

 

 

9,621

 

 

 

8,806

 

Diluted

 

10,130

 

 

 

10,007

 

 

 

10,082

 

 

 

9,363

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic - Continuing operations

$

0.49

 

 

$

0.39

 

 

$

0.61

 

 

$

0.96

 

Basic - Discontinued operations

 

 

 

 

(0.01

)

 

 

 

 

 

(0.04

)

Basic net income (loss) per share

$

0.49

 

 

$

0.38

 

 

$

0.61

 

 

$

0.92

 

 

 

 

 

 

 

 

 

Diluted - Continuing operations

$

0.46

 

 

$

0.37

 

 

$

0.59

 

 

$

0.90

 

Diluted - Discontinued operations

 

 

 

 

(0.01

)

 

 

 

 

 

(0.04

)

Diluted net income (loss) per share

$

0.46

 

 

$

0.36

 

 

$

0.59

 

 

$

0.86

 

COMSTOCK HOLDING COMPANIES, INC.

Non-GAAP Financial Measures

(Unaudited; In thousands)

Adjusted EBITDA

The following table presents a reconciliation of net income (loss) from continuing operations, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA:

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Net income (loss) from continuing operations

$

4,685

 

$

3,689

 

$

5,914

 

$

6,417

 

Interest expense

 

 

 

94

 

 

 

 

222

 

Income taxes

 

332

 

 

62

 

 

635

 

 

(42

)

Depreciation and amortization

 

74

 

 

55

 

 

212

 

 

149

 

Stock-based compensation

 

273

 

 

212

 

 

777

 

 

629

 

(Gain) loss on equity method investments

 

241

 

 

31

 

 

720

 

 

(238

)

Adjusted EBITDA

$

5,605

 

$

4,143

 

$

8,258

 

$

7,137

 

We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and gain or loss on equity method investments.

We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute Adjusted EBITDA consistently using the same methods each period.

We believe Adjusted EBITDA is a useful measure because it permits investors to better understand changes over comparative periods by providing financial results that are unaffected by certain non-cash items that are not considered by management to be indicative of our operational performance.

While we believe that Adjusted EBITDA is useful to investors when evaluating our business, it is not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. Adjusted EBITDA should not be considered in isolation, or as a substitute, for other financial performance measures presented in accordance with GAAP. Adjusted EBITDA may differ from similarly titled measures presented by other companies.

“In Q3 we achieved significant increases in both operating income and Adjusted EBITDA while further strengthening our balance sheet, a testament to the resiliency of our business model."

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