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M/I Homes Reports Third Quarter Results
COLUMBUS, Ohio, Oct. 30 /PRNewswire-FirstCall/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the third quarter and nine months ended September 30, 2008. The Company reported a pre-tax loss of $58.4 million which was comprised of pre-tax charges totaling $43.5 million for asset impairments and a loss from operations of $14.9 million. The net loss for the quarter was $58.7 million, or $4.18 per share, and reflects a $21.6 million after-tax expense for the FAS 109 increase in the Company's deferred tax asset valuation allowance. In 2007's third quarter, the Company reported a net loss of $24.2 million, or $1.73 per share, including $32.6 million of asset impairments. The Company reported a net loss of $175.0 million for the nine-month period ended September 30, 2008, or $12.48 per share, compared to a net loss of $64.5 million, or $4.62 per share, in the same period a year ago. For the nine-month period ended September 30, 2008, the Company recorded $105.7 million of pre-tax charges for asset impairments. This compares to pre-tax charges in the same period of 2007 of $101.7 million. In addition, the Company's 2008 year-to-date results reflect a $79.6 million after-tax non-cash valuation allowance against its deferred tax assets. The Company delivered 555 homes in the third quarter compared to 787 in same period of 2007, a decrease of 29%. Homes delivered for the nine-month period ended September 30, 2008 decreased 33% to 1,507 from 2,246 in the 2007 comparable period. New contracts for the 2008 third quarter were 456, down 19% from 2007's third quarter of 561. For the nine-month period ended September 30, 2008, new contracts declined 30% to 1,540 from 2,191 in the same 2007 period. The Company had 138 active communities at September 30, 2008 compared to 159 at September 30, 2007. The sales value of backlog of homes at September 30, 2008 was $212 million, with backlog units of 781 and an average sales price of $272,000. The backlog of homes at September 30, 2007 had a sales value of $481 million, with backlog units of 1,468 and an average sales price of $327,000. Robert H. Schottenstein, Chief Executive Officer and President, commented, "Market conditions in the homebuilding industry continue to be very challenging. Demand is weak, consumer confidence is at or near an historical low, unemployment is rising and tightened mortgage lending standards, combined with the unprecedented turmoil in the financial markets, have further contributed to very difficult conditions for homebuilders. We remain in a primarily defensive operating mode -- focusing on generating cash, reducing debt levels and expenses -- and we have made considerable progress on a number of fronts. At the end of the third quarter, the outstanding balance on our homebuilding credit facility was reduced to zero, our net debt to capital ratio stood at 32%, and we had cash of $14 million. At the beginning of 2008, we owned 13,750 lots -- at the end of this quarter our owned lot count equaled 9,530 lots, a 31% reduction. Our shareholders' equity is $408 million, with no significant debt maturing until 2012." Mr. Schottenstein continued, "We believe that our strategy has served us well during these difficult times, always being led by our commitment to customer service and building quality homes in desirable communities. Homebuilding is a cyclical business and M/I Homes will continue to work diligently in order to be positioned to capitalize on opportunities that will occur when housing conditions improve." The Company will broadcast its earnings conference call today at 4:00 p.m. Eastern Time. To hear the call, 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." The call, along with any applicable reconciliation of non-GAAP financial measures, will continue to be available on our website through October 2009. M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 72,000 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; and the Virginia and Maryland suburbs of Washington, D.C. 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, 2007, as updated in the Company's periodic filings on Form 10-Q. 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.
M/I Homes, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenue: $160,385 $232,983 $457,472 $676,000
Net loss:
Loss from continuing
operations (1) $(58,655) $(16,805) $(170,055) $(50,165)
Loss from discontinued
operations - (4,912) (33) (9,501)
Net loss (58,655) (21,717) (170,088) (59,666)
Preferred share
dividends - 2,437 4,875 4,875
Net loss to common
shareholders $(58,655) $(24,154) $(174,963) $(64,541)
Loss per share:
Basic and Diluted:
Continuing operations $(4.18) $(1.38) $(12.48) $(3.94)
Discontinued operations - (0.35) - (0.68)
Total $(4.18) $(1.73) $(12.48) $(4.62)
Weighted average shares
outstanding:
Basic 14,019 13,990 14,014 13,969
Diluted 14,019 13,990 14,014 13,969
(1) For the three and nine months ended September 30, 2008, loss from continuing operations includes a $21.6 and $79.6 million deferred tax asset valuation allowance, respectively.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenue $160,385 $232,983 $457,472 $676,000
Gross margin (24,280) 20,858 (41,973) 55,875
General and administrative
expense 17,267 23,719 51,958 70,407
Selling expense 14,726 19,709 41,539 55,647
Operating loss (56,273) (22,570) (135,470) (70,179)
Other income - - (5,555) -
Interest expense - net 2,150 4,638 8,695 11,426
Loss from continuing
operations before income
taxes (58,423) (27,208) (138,610) (81,605)
Provision (benefit) for
income taxes(2) 232 (10,403) 31,445 (31,440)
Loss from continuing
operations, net of income
taxes (58,655) (16,805) (170,055) (50,165)
Loss from discontinued
operations, net of income
taxes - (4,912) (33) (9,501)
Net loss (58,655) (21,717) (170,088) (59,666)
Preferred share dividends - 2,437 4,875 4,875
Net loss to common
shareholders $(58,655) $(24,154) $(174,963) $(64,541)
(2) For the three and nine months ended September 30, 2008, loss from continuing operations includes a $21.6 and $79.6 million deferred tax asset valuation allowance, respectively.
Revenue:
Housing revenue $151,491 $222,228 $409,222 $646,257
Land revenue 6,322 6,498 29,966 15,567
Other - (552) 7,131 (780)
Total homebuilding
revenue 157,813 228,174 446,319 661,044
Financial services revenue 2,572 4,809 11,153 14,956
Total revenue $160,385 $232,983 $457,472 $676,000
Land, Lot and Investment in
Unconsolidated Subsidiaries
Impairment by Region:
Midwest $21,350 $453 $34,324 $7,342
Florida 11,258 17,132 52,750 41,876
Mid-Atlantic 10,558 6,664 17,071 34,355
Continuing operations 43,166 24,249 104,145 83,573
Discontinued operations - 8,085 - 15,966
Consolidated Total $43,166 $32,334 $104,145 $99,539
Abandonments by Region:
Midwest $1 $269 $26 $291
Florida 4 - 137 1,828
Mid-Atlantic 351 - 1,405 46
Continuing operations 356 269 1,568 2,165
Discontinued operations - - - -
Consolidated Total $356 $ 269 $ 1,568 $2,165
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
EBITDA (3) $(7,803) $9,447 $(8,359) $41,346
Interest incurred - net
of fee amortization $4,241 $8,702 $14,148 $26,926
Interest amortized to cost
of sales $2,845 $4,013 $7,871 $11,049
Depreciation and
amortization $1,789 $2,438 $6,490 $6,306
Non-cash charges $44,188 $33,307 $ 108,138 $109,333
Cash provided by operating
activities $16,674 $11,285 $ 126,173 $73,722
Cash (used in) provided by
investing activities $(672) $(2,789) $3,384 $(8,992)
Cash used in financing
activities $(13,772) $(8,359) $(126,720) $(73,761)
Financial services
pre-tax income $618 $2,015 $4,967 $6,853
(3) Earnings before interest, taxes, depreciation and amortization
("EBITDA") is defined, in accordance with our credit facility, as net income,
plus interest expense (including interest amortized to land and housing
costs), income taxes, depreciation, amortization and non-cash charges, minus
interest income.
Units:
New contracts:
Continuing operations 456 546 1,540 2,159
Discontinued operations - 15 - 32
Consolidated total 456 561 1,540 2,191
Homes delivered:
Continuing operations 555 765 1,471 2,189
Discontinued operations - 22 36 57
Consolidated total 555 787 1,507 2,246
September 30,
2008 2007
Consolidated Backlog:
Units 781 1,468
Aggregate sales value
(in millions) $212 $481
Average sales price $272 $327
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet Information
(Unaudited)
September 30,
2008 2007
Assets:
Cash/Cash held in escrow $14,465 $21,265
Mortgage loans held for sale 34,695 33,080
Inventory:
Lots, land and land development 357,068 539,723
Land held for sale 2,773 53,410
Homes under construction 227,344 380,471
Other inventory 30,748 45,666
Total Inventory 617,933 1,019,270
Fixed assets - net 31,244 36,792
Investment in unconsolidated joint ventures 22,955 42,725
Income tax receivable 39,457 8,147
Deferred income taxes - 73,149
Assets from discontinued operations - 92,139
Other assets 20,743 27,813
Total Assets $ 781,492 $1,354,380
Liabilities:
Debt - Homebuilding Operations:
Notes payable banks $- $255,000
Notes payable other 16,481 6,765
Senior notes 199,104 198,848
Total Debt - Homebuilding Operations 215,585 460,613
Note payable bank - financial services
operations 25,606 21,700
Total Debt 241,191 482,313
Accounts payable 48,271 95,596
Other liabilities 65,602 94,247
Community development district obligations 11,491 22,963
Obligation for inventory not owned 7,093 7,373
Total Liabilities 373,648 702,492
Stockholders' Equity 407,844 651,888
Total Liabilities and Stockholders' Equity $781,492 $1,354,380
Book value per common share $21.95 $39.27
Homebuilding net debt/capital ratio 32% 40%
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
Land Position Summary
September 30, 2008 September 30, 2007
Lots Lots
Lots Under Lots Under
Owned Contract Total Owned Contract Total
Midwest region 5,429 893 6,322 6,568 515 7,083
Florida region 2,353 56 2,409 7,304 351 7,655
Mid-Atlantic region 1,748 677 2,425 2,474 1,356 3,830
Continuing
operations 9,530 1,626 11,156 16,346 2,222 18,568
Discontinued operations - - - 421 - 421
Consolidated total 9,530 1,626 11,156 16,767 2,222 18,989
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