EX-99.1 2 mho20100930exh99101.htm PRESS RELEASE WebFilings | EDGAR view
 

Exhibit 99.1
 
M/I Homes Reports
Third Quarter Results
 
Columbus, Ohio (October 25, 2010) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2010.
 
2010 Third Quarter Highlights:
•    
Operating gross margins of 18.1%
•    
Pre-tax loss from operations of $2.2 million; net loss of $2.1 million
•    
Cash of $92 million
•    
EBITDA of $7.3 million - fifth consecutive quarter of positive EBITDA
•    
Net debt to net capital ratio of 30%
•    
Backlog average sales price of $261,000
 
For the third quarter of 2010, the Company reported a net loss of $2.1 million, or $0.11 per share, compared to a net loss of $21.1 million, or $1.14 per share during the third quarter of 2009. The current quarter loss includes $1.9 million of asset impairments, offset by a $2.4 million recovery related to imported drywall. The Company reported a net loss of $15.2 million for the first nine months of 2010, or $0.82 per share, compared to a net loss of $69.1 million, or $4.29 per share, for the same period a year ago.
 
Homes delivered in the third quarter of 2010 decreased 23% to 515 from 665 in the same period of 2009. For the nine months ended September 30, 2010, homes delivered increased 15% to 1,784 from 1,551 in the same period of 2009. New contracts for 2010's third quarter were 489, down 21% from 2009's third quarter of 619. For the first nine months of 2010, new contracts were 1,856 compared to 2,045 in the first nine months of 2009. The Company had 108 active communities at September 30, 2010 compared to 105 at September 30, 2009 and 109 at June 30, 2010. The backlog of homes at September 30, 2010 had a sales value of $188 million, consisting of 722 units with an average sales price of $261,000. The backlog of homes at September 30, 2009 had a sales value of $263 million comprised of 1,060 units with an average sales price of $248,000.
 
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Housing conditions continued to be challenging during our third quarter. We experienced sluggish demand for new homes linked to high unemployment rates and low levels of consumer confidence across our markets. From a macro standpoint, demand for new homes has been adversely affected by weak and uncertain general economic conditions along with the expiration of the federal homebuyer tax credit. Despite these conditions and our decline in volume, we were pleased that our third quarter operating gross margin of 18.1% reached its highest level in three years, and improved by more than 200 basis points from the second quarter's 16.0 %. Our selling, general and administrative expenses declined compared to the prior year quarter and our net loss improved to $2 million from a loss of $21 million a year ago. We also achieved our fifth consecutive quarter of positive EBITDA.”
 
Mr. Schottenstein continued, “Housing and general economic conditions are likely to remain uncertain and choppy in the near term. Because of this, we will continue to manage cautiously. We ended the quarter with $92 million of cash, no outstanding borrowings under our $140 million homebuilding credit facility, and a 30% net debt to net capital ratio. Looking ahead, we will continue focusing on our core business strategies while maintaining tight controls on our expenses.”
 
The Company will broadcast live its earnings conference call today at 4:00 p.m. Eastern Time. To listen to the call live, log on to the M/I Homes' website at mihomes.com, click on the “Investors” section of the site, and select “Listen to the Conference Call.” A replay of the call will continue to be available on our website through October 2011.
 
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 77,500 homes. The Company's homes are marketed and sold under the trade names M/I Homes and Showcase Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Charlotte and Raleigh, North Carolina; the Virginia and Maryland suburbs of Washington, D.C.; and Houston, Texas.
 
Certain statements in this Press Release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks and uncertainties. Any forward-looking statements that we make herein and in future reports and statements are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements as a result of various factors relating to the economic environment, interest rates, availability of resources, competition, market concentration, land development activities and various governmental rules and regulations, as more fully discussed in the Risk Factors section in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. All forward-looking statements made in this Press Release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this Press Release will increase with the passage of time. The Company undertakes no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.
 
We have used non-GAAP financial measures in this press release, including adjusted operating gross margin, adjusted gross margin percentage, adjusted pre-tax loss from operations, adjusted EBITDA and adjusted cash flow provided by (used in) operating activities. For these measures we have provided reconciliations to the most comparable GAAP measures along with an explanation of the usefulness of the non-GAAP measure. Please see the “Non-GAAP Financial Results / Reconciliations” table.
 
Contact M/I Homes, Inc.
Phillip G. Creek, Executive Vice President, Chief Financial Officer, (614) 418-8011
Ann Marie W. Hunker, Vice President, Corporate Controller, (614) 418-8225
Kevin C. Hake, Vice President, Treasurer (614) 418-8224
 

 
 

M/I Homes, Inc. and Subsidiaries
Summary Operating Results (Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2010
 
2009
 
2010
 
2009
New contracts
 
489
 
 
619
 
 
1,856
 
 
2,045
 
Average community count
 
109
 
 
106
 
 
107
 
 
113
 
Cancellation rate
 
22
%
 
20
%
 
18
%
 
18
%
Backlog units
 
 
 
 
 
722
 
 
1,060
 
Backlog value
 
 
 
 
 
$
188,000
 
 
$
263,000
 
 
 
 
 
 
 
 
 
 
Homes delivered
 
515
 
 
665
 
 
1,784
 
 
1,551
 
Average home closing price
 
$
257
 
 
$
224
 
 
$
247
 
 
$
228
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
135,609
 
 
$
152,738
 
 
$
451,402
 
 
$
365,033
 
Cost of sales
 
110,455
 
 
146,378
 
 
384,236
 
 
353,413
 
Gross margin
 
25,154
 
 
6,360
 
 
67,166
 
 
11,620
 
General and administrative expense
 
13,148
 
 
14,414
 
 
39,601
 
 
42,831
 
Selling expense
 
11,735
 
 
11,601
 
 
36,482
 
 
30,339
 
Operating loss
 
271
 
 
(19,655
)
 
(8,917
)
 
(61,550
)
Other loss
 
—
 
 
—
 
 
—
 
 
941
 
Interest expense
 
1,952
 
 
1,298
 
 
6,172
 
 
6,305
 
Loss before income taxes
 
(1,681
)
 
(20,953
)
 
(15,089
)
 
(68,796
)
Provision for income taxes
 
389
 
 
121
 
 
123
 
 
309
 
Net loss
 
(2,070
)
 
(21,074
)
 
(15,212
)
 
(69,105
)
Net loss per share
 
$
(0.11
)
 
$
(1.14
)
 
$
(0.82
)
 
$
(4.29
)
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
18,523
 
 
18,514
 
 
18,523
 
 
16,127
 
Diluted
 
18,523
 
 
18,514
 
 
18,523
 
 
16,127
 

 
 

M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share and unit amounts)
 
 
As of
 
 
September 30,
 
 
2010
 
2009
Assets:
 
 
 
 
Total cash and cash equivalents(1)
 
$
92,002
 
 
$
102,794
 
Mortgage loans held for sale
 
32,446
 
 
37,087
 
Inventory:
 
 
 
 
Lots, land and land development
 
258,657
 
 
259,651
 
Land held for sale
 
—
 
 
2,804
 
Homes under construction
 
199,129
 
 
206,361
 
Other inventory
 
30,200
 
 
25,454
 
Total inventory
 
$
487,986
 
 
$
494,270
 
 
 
 
 
 
Property and equipment - net
 
17,453
 
 
19,701
 
Investments in unconsolidated joint ventures
 
11,102
 
 
7,656
 
Income tax receivable
 
4,298
 
 
—
 
Other assets(2)
 
11,937
 
 
16,424
 
Total Assets
 
$
657,224
 
 
$
677,932
 
 
 
 
 
 
Liabilities:
 
 
 
 
Debt - Homebuilding Operations:
 
 
 
 
Senior notes
 
$
199,616
 
 
199,360
 
Notes payable - other
 
5,932
 
 
6,232
 
Total Debt - Homebuilding Operations
 
$
205,548
 
 
$
205,592
 
 
 
 
 
 
Note payable bank - financial services operations
 
23,773
 
 
26,622
 
Total Debt
 
$
229,321
 
 
$
232,214
 
 
 
 
 
 
Accounts payable
 
53,863
 
 
50,464
 
Obligations for inventory not owned
 
7,406
 
 
9,754
 
Other liabilities
 
52,751
 
 
66,543
 
Total Liabilities
 
$
343,341
 
 
$
358,975
 
 
 
 
 
 
Shareholders' Equity
 
313,883
 
 
318,957
 
Total Liabilities and Shareholders' Equity
 
$
657,224
 
 
$
677,932
 
 
 
 
 
 
Book value per common share
 
$
11.55
 
 
$
11.82
 
Net debt/net capital ratio(3)
 
30
%
 
29
%
(1)    
2010 and 2009 amounts include $48.1 million and $77.8 million of restricted cash and cash held in escrow, respectively.
(2)    
2010 and 2009 amounts include gross deferred tax assets of $122.8 million and $128.2 million, respectively, net of valuation allowances of $122.8 million and $128.2 million, respectively.
(3)    
Net debt/net capital ratio is calculated as total debt minus total cash and cash equivalents, divided by the sum of total debt minus total cash and cash equivalents plus shareholders' equity.

 
 

M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2010
 
2009
 
2010
 
2009
Homebuilding revenue:
 
 
 
 
 
 
 
 
Housing revenue
 
$
132,003
 
 
$
148,587
 
 
$
440,516
 
 
$
354,042
 
Land revenue
 
—
 
 
92
 
 
86
 
 
749
 
Total homebuilding revenue
 
$
132,003
 
 
$
148,679
 
 
$
440,602
 
 
$
354,791
 
 
 
 
 
 
 
 
 
 
Financial services revenue
 
3,606
 
 
4,059
 
 
10,800
 
 
10,242
 
Total revenue
 
$
135,609
 
 
$
152,738
 
 
$
451,402
 
 
$
365,033
 
 
 
 
 
 
 
 
 
 
Gross margin
 
$
25,154
 
 
$
6,360
 
 
$
67,166
 
 
$
11,620
 
Adjusted operating gross margin(1)
 
$
24,540
 
 
$
25,722
 
 
$
76,562
 
 
$
53,754
 
Adjusted operating gross margin %(1)
 
18.1
%
 
16.8
%
 
17.0
%
 
14.7
%
 
 
 
 
 
 
 
 
 
Adjusted pre-tax loss from operations(1)
 
$
(2,155
)
 
$
(1,224
)
 
$
(5,296
)
 
$
(22,123
)
 
 
 
 
 
 
 
 
 
Adjusted EBITDA(1)
 
$
7,189
 
 
$
1,212
 
 
$
19,963
 
 
$
(11,514
)
 
 
 
 
 
 
 
 
 
Cash flow (used in) provided by operating activities
 
$
(24,949
)
 
$
(15,834
)
 
$
(42,987
)
 
$
25,017
 
Adjusted cash flow provided by (used in) operating activities(1)
 
$
25,935
 
 
$
(2,782
)
 
$
80,593
 
 
$
59,853
 
Cash (used in) provided by investing activities
 
$
(2,543
)
 
$
8,674
 
 
$
(18,551
)
 
$
(63,682
)
Cash (used in) provided by financing activities
 
$
(10,216
)
 
$
7,160
 
 
$
(4,498
)
 
$
31,147
 
 
 
 
 
 
 
 
 
 
Financial services pre-tax income
 
$
1,519
 
 
$
2,007
 
 
$
4,500
 
 
$
4,737
 
 
 
 
 
 
 
 
 
 
Deferred tax asset valuation allowance - net
 
$
763
 
 
$
8,204
 
 
$
5,684
 
 
$
27,532
 
 
Land, Lot and Investment in Unconsolidated Subsidiaries
Impairment by Region
(Dollars in thousands)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2010
 
2009
 
2010
 
2009
Midwest
 
$
141
 
 
$
8,557
 
 
$
3,113
 
 
$
11,492
 
Florida
 
1,545
 
 
6,383
 
 
3,717
 
 
16,991
 
Mid-Atlantic
 
110
 
 
22
 
 
4,376
 
 
4,001
 
Total
 
$
1,796
 
 
$
14,962
 
 
$
11,206
 
 
$
32,484
 
 
 
 
 
 
 
 
 
 
Abandonments by Region:
 
 
 
 
 
 
 
 
Midwest
 
$
5
 
 
$
24
 
 
$
94
 
 
$
547
 
Florida
 
94
 
 
6
 
 
95
 
 
20
 
Mid-Atlantic
 
41
 
 
42
 
 
208
 
 
921
 
Total
 
$
140
 
 
$
72
 
 
$
397
 
 
$
1,488
 
 
(1)    
See “Non-GAAP Financial Results / Reconciliations” table below.
 
 

 
 

M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliations
(Dollars in thousands)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2010
 
2009
 
2010
 
2009
Gross margin
 
$
25,154
 
 
$
6,360
 
 
$
67,166
 
 
$
11,620
 
Add: Impairments
 
1,796
 
 
14,962
 
 
11,206
 
 
32,484
 
       Imported drywall charges
 
(2,410
)
 
4,400
 
 
(1,810
)
 
9,650
 
Adjusted operating gross margin
 
$
24,540
 
 
$
25,722
 
 
$
76,562
 
 
$
53,754
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
 
$
(1,681
)
 
$
(20,953
)
 
$
(15,089
)
 
$
(68,796
)
Add: Impairments and abandonments
 
1,936
 
 
15,034
 
 
11,603
 
 
33,972
 
      Imported drywall charges
 
(2,410
)
 
4,400
 
 
(1,810
)
 
9,650
 
      Other loss/expense
 
—
 
 
—
 
 
—
 
 
941
 
      Restructuring/bad debt expense
 
—
 
 
295
 
 
—
 
 
2,110
 
Adjusted pre-tax loss from operations
 
$
(2,155
)
 
$
(1,224
)
 
$
(5,296
)
 
$
(22,123
)
 
 
 
 
 
 
 
 
 
Net loss
 
$
(2,070
)
 
$
(21,074
)
 
$
(15,212
)
 
$
(69,105
)
Add (subtract):
 
 
 
 
 
 
 
 
Income taxes
 
389
 
 
121
 
 
123
 
 
309
 
Interest expense net of interest income
 
1,631
 
 
1,007
 
 
5,261
 
 
5,538
 
Interest amortized to cost of sales
 
2,719
 
 
3,363
 
 
9,904
 
 
8,093
 
Depreciation and amortization
 
1,889
 
 
1,930
 
 
6,105
 
 
6,342
 
Non-cash charges
 
2,631
 
 
15,865
 
 
13,782
 
 
37,309
 
Adjusted EBITDA
 
$
7,189
 
 
$
1,212
 
 
$
19,963
 
 
$
(11,514
)
 
 
 
 
 
 
 
 
 
Cash flow (used in) provided by operating activities
 
$
(24,949
)
 
$
(15,834
)
 
$
(42,987
)
 
$
25,017
 
Add: Land/lot purchases
 
35,873
 
 
7,821
 
 
94,017
 
 
22,157
 
       Land development spending
 
15,011
 
 
5,323
 
 
29,649
 
 
13,428
 
Less: Land/lot sale proceeds
 
—
 
 
(92
)
 
(86
)
 
(749
)
Adjusted cash flows provided by (used in) operating activities
 
$
25,935
 
 
$
(2,782
)
 
$
80,593
 
 
$
59,853
 
 
Adjusted operating gross margin, adjusted operating gross margins %, adjusted pre-tax loss from operations, adjusted EBITDA and adjusted cash flows provided by (used in) operating activities are non-GAAP financial measures. Management finds these measures to be useful in evaluating the Company's performance because they disclose the financial results generated from homes the Company actually delivered during the period, as the asset impairments and certain other write-offs relate, in part, to inventory that was not delivered during the period. They also assist the Company's management in making strategic decisions regarding the Company's future operations. The Company believes investors will also find these measures to be important and useful because they disclose profitability measures that can be compared to a prior period without regard to the variability of asset impairments and certain other write-offs. In addition, to the extent that the Company's competitors provide similar information, disclosure of these measures helps readers of the Company's financial statements compare the Company's profits to the profits of its competitors with regard to the homes they deliver in the same period. Because these measures are not calculated in accordance with GAAP, they may not be completely comparable to similarly titled measures of the Company's competitors due to potential differences in methods of calculation and charges being excluded.  Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
 

 
 

M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
 
 
NEW CONTRACTS
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2010
 
2009
 
Change
 
2010
 
2009
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
248
 
 
322
 
 
(23
)
 
994
 
 
1,076
 
 
(8
)
 
 
 
 
 
 
 
 
 
 
 
 
Florida
93
 
 
124
 
 
(25
)
 
365
 
 
348
 
 
5
 
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
148
 
 
173
 
 
(14
)
 
497
 
 
621
 
 
(20
)
 
 
 
 
 
 
 
 
 
 
 
 
Total
489
 
 
619
 
 
(21
)
 
1,856
 
 
2,045
 
 
(9
)
 
 
HOMES DELIVERED
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2010
 
2009
 
Change
 
2010
 
2009
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
272
 
 
367
 
 
(26
)
 
967
 
 
783
 
 
23
 
 
 
 
 
 
 
 
 
 
 
 
Florida
79
 
 
107
 
 
(26
)
 
323
 
 
302
 
 
7
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
164
 
 
191
 
 
(14
)
 
494
 
 
466
 
 
6
 
 
 
 
 
 
 
 
 
 
 
 
Total
515
 
 
665
 
 
(23
)
 
1,784
 
 
1,551
 
 
15
 
 
BACKLOG
 
September 30, 2010
 
September 30, 2009
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
444
 
 
$
110
 
 
$
248,000
 
 
658
 
 
$
144
 
 
$
218,000
 
 
 
 
 
 
 
 
 
 
 
 
 
Florida
97
 
 
$
21
 
 
$
221,000
 
 
123
 
 
$
27
 
 
$
224,000
 
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
181
 
 
$
57
 
 
$
315,000
 
 
279
 
 
$
92
 
 
$
330,000
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
722
 
 
$
188
 
 
$
261,000
 
 
1,060
 
 
$
263
 
 
$
248,000
 
 
 
LAND POSITION SUMMARY
 
September 30, 2010
 
 
September 30, 2009
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
 
 
 
 
 
 
 
 
 
Midwest
4,189
 
1,137
 
5,326
 
 
 
4,442
 
1,111
 
5,553
 
 
 
 
 
 
 
 
 
 
Florida
1,539
 
223
 
1,762
 
 
 
1,591
 
36
 
1,627
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
2,080
 
489
 
2,569
 
 
 
1,267
 
803
 
2,070
 
 
 
 
 
 
 
 
 
 
Total
7,808
 
1,849
 
9,657
 
 
 
7,300
 
1,950
 
9,250