Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Phillip G. Creek
Senior Vice President, Chief Financial Officer
M/I Homes, Inc.
(614) 418-8011
M/I Homes Reports
Third Quarter Results
Columbus, Ohio (October 26, 2006) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2006.
The Company recorded net income of $15.2 million and diluted earnings per share of $1.08 in 2006’s third quarter compared to 2005’s third quarter amounts of $25.1 million and $1.72, respectively. Net income and diluted earnings per share for the nine months of 2006 were $49.8 million and $3.51, respectively, compared to $59.5 million and $4.09, respectively for the nine months of 2005. Included in 2006 third quarter results are after-tax charges totaling $2.6 million, or $0.18 per diluted share, resulting from inventory impairment, deposit and pre-acquisition cost write-offs with respect to abandoned land transactions, and costs associated with workforce reductions. Year-to-date 2006 diluted earnings per share include a $0.53 charge related to the cumulative impact of impairment, write-offs and separation related costs. In addition, third quarter and nine months results also include a $0.05 and $0.11 diluted per share charge, respectively, related to the implementation of SFAS 123R, Share Based Payments, in 2006.
As previously reported, homes delivered in 2006’s third quarter were 927, down 11% compared to 1,047 in the third quarter of 2005. For the nine months ended September 30, 2006, homes delivered were 2,746, up 3% from 2005’s 2,675. New contracts for 2006’s third quarter were 571 compared to 2005’s third quarter record of 1,163. For the nine months, 2006’s new contracts declined to 2,472 from 3,413 in 2005. Backlog of homes at September 30, 2006 was 2,533 units, with a sales value of $923 million and an average sales price of $364,000. The backlog of homes at September 30, 2005 had a record sales value of $1.14 billion with backlog units of 3,522 and an average sales price of $323,000. M/I Homes had 170 active communities at September 30, 2006 compared to 140 at September 30, 2005.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Our results reflect the challenging conditions we are facing in most of our markets, along with the impact of defensive steps we are taking to manage through this cycle. As we previously reported, our new contracts were negatively impacted by increased cancellation rates, an excess supply of both existing and new home inventory, and weak demand. Homes delivered, while slightly up year-to-date versus last year, declined when compared to 2005’s third quarter. We are pleased that our gross and operating margins for the quarter, exclusive of charges taken, remained solid at 25% and 10%, respectively. We continue to focus on our balance sheet, in particular, our land position -- at September 30, we owned 7% fewer lots than just three months ago. And, as noted in our October 10 press release, we currently estimate that we will deliver approximately 4,000 homes and earn between $5.25 - $5.75 diluted per share.”
The Company will broadcast live its earnings conference call today at 4:00 p.m. EDT. To hear the call, log on to the M/I Homes’ website at mihomes.com, click on the “Investor Relations” 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 26, 2007.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered nearly 67,000 homes. The Company’s homes are marketed and sold under the trade names M/I Homes, Showcase Homes and Shamrock Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Delaware; 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, 2005. 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, | ||||
2006 | 2005 | 2006 | 2005 | ||
| Revenue | $306,188 | $332,478 | $877,037 | $839,876 | |
| Net income | $ 15,185 | $ 25,079 | $ 49,844 | $ 59,470 | |
| Earnings per share | |||||
| Basic | $ 1.09 | $ 1.75 | $ 3.56 | $ 4.16 | |
| Diluted | $ 1.08 | $ 1.72 | $ 3.51 | $ 4.09 | |
| Weighted average shares outstanding | |||||
| Basic | 13,892 | 14,325 | 13,991 | 14,291 | |
| Diluted | 14,078 | 14,577 | 14,187 | 14,540 | |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2006 | 2005 | 2006 | 2005 | ||||
| Revenue | $306,188 | $332,478 | $877,037 | $839,876 | |||
| Gross margin | $ 73,155 | $ 84,748 | $229,830 | $213,186 | |||
| General and administrative expense | 25,052 | 21,039 | 74,609 | 53,345 | |||
| Selling expense | 21,645 | 21,394 | 65,510 | 56,378 | |||
| Operating income | 26,458 | 42,315 | 89,711 | 103,463 | |||
| Interest expense | 3,578 | 3,903 | 10,930 | 8,673 | |||
| Income before income taxes | 22,880 | 38,412 | 78,781 | 94,790 | |||
| Income taxes | 7,695 | 13,333 | 28,937 | 35,320 | |||
| Net income | $ 15,185 | $ 25,079 | $ 49,844 | $ 59,470 | |||
Revenue: | |||||||
| Housing revenue | $290,100 | $320,642 | $839,959 | $788,043 | |||
| Land revenue | 13,821 | 8,894 | 18,243 | 26,998 | |||
| Other | (1,372) | (1,934) | 3,425 | 10,340 | |||
| Total homebuilding revenue | $302,549 | $327,602 | $861,627 | $825,381 | |||
| Financial services revenue | 5,124 | 6,869 | 19,250 | 20,293 | |||
| Eliminations | (1,485) | (1,993) | (3,840) | ( 5,798) | |||
| Total revenue | $306,188 | $332,478 | $877,037 | $839,876 | |||
Additional Information: | |||||||
| Average closing price | $ 313 | $ 307 | $ 306 | $ 295 | |||
| Housing gross margin percentage | 23.0% | 23.8% | 24.7% | 23.6% | |||
| Land gross margin percentage | 12.1% | 22.0% | 15.4% | 17.3% | |||
| Land gross margin dollars | $ 1,676 | $ 1,956 | $ 2,812 | $ 4,659 | |||
| Financial services pre-tax income | $ 2,397 | $ 4,193 | $ 10,717 | $ 12,875 | |||
| EBITDA | $ 31,990 | $ 45,234 | $ 99,610 | $110,367 | |||
| Interest incurred | $ 12,009 | $ 8,093 | $ 32,398 | $ 17,729 | |||
| Interest amortized to cost of sales | $ 4,225 | $ 1,953 | $ 6,162 | $ 5,432 | |||
| Depreciation and amortization | $ 1,675 | $ 1,353 | $ 4,809 | $ 3,057 | |||
| Cash used in operating activities | $(182,009) | $(143,430) | |||||
| Cash used in investing activities | $ (17,144) | $ (47,186) | |||||
| Cash from financing activities | $ 176,781 | $ 191,542 | |||||
Units: | |||||||
| New contracts | 571 | 1,163 | 2,472 | 3,413 | |||
| Homes delivered | 927 | 1,047 | 2,746 | 2,675 | |||
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)
September 30, | |||
2006 | 2005 | ||
Backlog: | |||
| Units | 2,533 | 3,522 | |
| Aggregate sales value | $ 923,000 | $1,139,000 | |
| Average sales price | $ 364 | $ 323 | |
September 30, | |||
2006 | 2005 | ||
Balance Sheet and Operating Data: | |||
| Unrestricted cash | $ 2,713 | $ 3,277 | |
| Homebuilding inventory | |||
| Lots, land and land development costs | $ 813,410 | $ 699,447 | |
| Land held for Sale | 56,290 | - | |
| Houses under construction | 494,384 | 409,689 | |
| Land purchase deposit | 4,411 | 8,303 | |
| Other | 29,593 | 11,570 | |
| Total homebuilding inventory | $1,398,088 | $1,129,009 | |
| Total assets | $1,590,891 | $1,301,370 | |
| Homebuilding debt | $ 696,592 | $ 509,554 | |
| Shareholders’ equity | $ 626,925 | $ 551,814 | |
| Book value per share | $ 45.12 | $ 38.50 | |
| Homebuilding debt/capital ratio | 53% | 48% | |
Land Position Summary | |||||||
September 30, 2006 | September 30, 2005 | ||||||
Lots | Lots Under | Lots | Lots Under | ||||
Owned | Contract | Total | Owned | Contract | Total | ||
| Ohio & Indiana | 7,619 | 1,143 | 8,762 | 8,658 | 4,547 | 13,205 | |
| Florida | 8,454 | 1,170 | 9,624 | 6,789 | 4,085 | 10,874 | |
| North Carolina, Delaware | |||||||
| and Washington, D.C. | 2,846 | 1,233 | 4,079 | 2,660 | 2,080 | 4,740 | |
| Total | 18,919 | 3,546 | 22,465 | 18,107 | 10,712 | 28,819 | |