Harbor Custom Development : Reports 2021 Third Quarter Results - Form 8-K

Harbor Custom Development, Inc. Reports 2021 Third Quarter Results

Gig Harbor, Washington - (GLOBENEWSWIRE) - November 15, 2021 - Harbor Custom Development, Inc. ("Harbor," "Harbor Custom Homes®," or the "Company"), (NASDAQ: HCDI; HCDIP; HCDIW, HCDIZ), an innovative and market leading real estate company involved in all aspects of the land development cycle, today announced the financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights Compared to Third Quarter 2020

	●	Consolidated net sales of $18.0 million, compared to $7.8 million
	●	Gross profit of $7.1 million, compared to $0.6 million
	●	Selling General & Administrative ("SG&A") of $3.3 million, compared to $1.5 million
	●	Net income of $3.7 million, or $0.21 basic earnings per share (EPS), compared to a net loss of ($0.4) million, or ($0.10) EPS

Nine Months 2021 Financial Highlights Compared to Nine Months 2020

	●	Consolidated net sales of $46.0 million, compared to $26.1 million
	●	Gross profit of $11.1 million, compared to $1.6 million
	●	SG&A of $7.6 million, compared to $3.8 million
	●	Net income of $3.2 million, or $0.17 basic EPS, compared to a net loss of ($1.8) million, or ($0.43) EPS

Full Year 2021 and 2022 Estimates

	●	2021 revenue expected to be in the range of $70 to $80 million
	●	2022 revenue expectations remain at approximately $160 million

Harbor President and CEO, Sterling Griffin stated, "I am very proud of our dedicated employees and Board of Directors that have combined to drive Harbor to profitability in our first year as a public company. Our third quarter results demonstrate our commitment to increasing shareholder value through sustainable growth and increased earnings."

Results for the Third Quarter 2021

Net sales for the third quarter of 2021 increased by 130.7% to $18.0 million, compared to net sales of $7.8 million for the third quarter of 2020. This increase was largely due to the sale of entitled land of $10.4 million to Lennar and fee build revenue of $2.8 million, which was partially offset by a decrease in home sales of ($3.9) million.

Gross profit for the third quarter of 2021 increased to $7.1 million, compared to $0.6 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 39.7%, compared to 8.0% for the third quarter of 2020. The increase in gross margin was primarily due to the sale of land at a 57.0% gross margin and lot sales of 35.7% gross margin.

SG&A expenses for the third quarter of 2021 were $3.3 million, or 18.4% of net sales, compared to $1.5 million, or 18.7% of net sales, for the third quarter of 2020. This increase in SG&A is primarily attributable to the continued investment in public company infrastructure and personnel to support our future growth plans, an increase in depreciation expense, and an increase in stock compensation expense.

For the third quarter of 2021, net income was $3.7 million, or $0.21 basic EPS, compared to net loss of ($0.4) million, or ($0.10) basic EPS, for the third quarter of 2020.

Results for the Nine Months Ended September 30, 2021

Net sales for the first nine months of 2021 increased by 76.5% to $46.0 million, compared to net sales of $26.1 million for the first nine months of 2020. This increase was largely due to sale of entitled land to Lennar of $19 million.

Gross profit for the first nine months of 2021 increased to $11.1 million, compared to $1.6 million for the first nine months of 2020. Gross margin for the first nine months of 2021 was 24.1%, compared to 6.2% for the first nine months of 2020. The increase in gross margin was primarily due to sale of entitled land to Lennar with a gross margin of 42%.

SG&A expenses for the first nine months of 2021 were $7.6 million, or 16.6 % of net sales, compared to $3.8 million, or 14.5% of net sales, for the first nine months of 2020. This increase is primarily attributable to the continued investment in public company infrastructure and personnel to support our future growth plans, an increase in D&O insurance, an increase in depreciation expense, and an increase in stock compensation expense.

For the first nine months of 2021, net income was $3.3 million, or $0.17 EPS, compared to net loss of ($1.8) million, or ($0.43) EPS, for the first nine months of 2020.

Full Year 2021 and 2022 Estimates

We expect full year 2021 revenues to be in the range of $70 to $80 million. We anticipate our fourth quarter 2021 revenues and net income to exceed our third quarter 2021 results. We continue to reiterate our previously announced 2022 revenue guidance of approximately $160 million.

Financial Results Conference Call Details

Harbor will host a conference call on Monday, November 15, 2021, at 9 a.m. PT (12 p.m. ET) to elaborate on the third quarter results and the Company's outlook. The public may access the conference call through a live audio webcast available at https://investors.harborcustomhomes.com/events. Those who would like to submit written questions in advance, please email: [e-mail]. The conference call will be available by telephone at 1-877-407-0789 (for international callers, dial 1-201-689-8562), and refer to "Harbor" or conference ID: 13723841. A replay of the conference call will be available for two weeks at 1-844-512-2921 (for international callers, dial 1-412-317-6671) using the replay PIN: 13723841.

About Harbor Custom Development, Inc.

Harbor Custom Development, Inc. is a real estate development company involved in all aspects of the land development cycle including land acquisition, entitlements, construction of project infrastructure, home building, marketing, sales, and management of various residential projects in Western Washington's Puget Sound region; Sacramento, California; and Austin, Texas. Harbor has active or recently sold-out residential communities in Gig Harbor, Bremerton, Silverdale, Bainbridge Island, Belfair, Allyn, Port Orchard, Lacey, Burien, Yelm and Blaine in the state of Washington. In addition, Harbor has acquired land and will begin constructing homes in three new markets. In the Sacramento metro market, Harbor will be constructing homes in completed subdivisions in both Rocklin and Auburn, California. In the Austin metro market, Harbor has acquired developed lot inventory in Dripping Springs, Driftwood, and Horseshoe Bay, Texas. The Company recently acquired property in Punta Gorda, Florida, and plans to begin construction of oceanfront condominiums there in 2022. Harbor's business strategy is to acquire and develop land strategically, based on an understanding of population growth patterns, entitlement restrictions, infrastructure development, and geo-economic forces. Harbor focuses on real estate within target markets with convenient access to metropolitan areas that are generally characterized by diverse economic and employment bases and increasing populations. For more information on the Company, please visit www.harborcustomdev.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, but are not limited to, expectations of future operating results and financial performance, including GAAP and non-GAAP guidance for quarterly and annual periods during the years ending December 31, 2021 and 2022, the calculation of certain of our key financial and operating metrics and expectations regarding sales of inventory, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "expect," "plan," anticipate," "believe," "estimate, "predict," "target," "project," "intend," "potential," "would," "continue," "ongoing," or the negative of these terms or other comparable terminology that concerns our expectations, strategy, priorities, plans, or intentions. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. These forward-looking statements are subject to various risks and uncertainties, including without limitation complications due to COVID-19 which could cause delays in dates of completion or closings, and those risks and uncertainties set forth in the Company's filings with the Securities and Exchange Commission. Thus, actual results could be materially different. This document includes statements of summarized financial projections. There will be differences between the projected and actual results because events and circumstances frequently do not occur as expected and those differences may be material. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations

Hanover International

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