Exhibit 99.1
M/I Homes Reports
Third Quarter Results
Columbus, Ohio (October 30, 2007) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2007.
The Company reported a net loss of $21.7 million before preferred share dividends in its 2007 third quarter. Included in this loss are pre-tax charges totaling $33.4 million ($1.49 per common share) which includes land-related impairment and abandonment charges of $26.5 million, joint venture investment write-offs of $6.1 million and $0.8 million of severance costs. The Company’s net loss after preferred share dividends of $2.5 million was $24.2 million or $1.73 per common share compared to net income of $15.2 million, or $1.08 per diluted share in last year’s third quarter. The Company reported a net loss after preferred share dividends of $64.5 million for the first nine months of 2007, or $4.62 per common share, compared to net income of $49.8 million, or $3.51 per diluted share in the same period a year ago. Included in the Company’s 2007 year-to-date loss are pre-tax charges totaling $109.3 million ($4.86 per common share) as follows: (i) land-related impairment and abandonment charges of $92.9 million; (ii) joint venture investment write-offs of $8.8 million; (iii) $5.2 million for the write-off of acquisition intangibles; and (iv) $2.4 million of severance costs.
New contracts for 2007’s third quarter were 561, down 2% from 2006’s third quarter of 571. For the nine-month period ended September 30, 2007, new contracts declined 11% to 2,191 from 2,472 in 2006. Homes delivered for the 2007 third quarter decreased 15% to 787 from 2006’s 927. For the nine-month period ended September 30, 2007, homes delivered were 2,246, down 18% from 2,746 in the same period of 2006. The sales value of backlog of homes at September 30, 2007 was $481 million with backlog units of 1,468 and an average sales price of $327,000. The backlog of homes at the same time last year had a sales value of $923 million with backlog units of 2,533 and an average sales price of $364,000. M/I Homes had 159 active communities at September 30, 2007 compared to 170 at September 30, 2006.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Market conditions continue to be challenging. We remain focused on initiatives that include reducing our land and expense levels, improving our balance sheet, as well as continued improvements in our customer service and quality processes. We expect to deliver approximately 3,000 homes this year and further reduce our debt levels by year end. ”
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 “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 2008.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered nearly 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, 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, 2006. 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.
Contact M/I Homes, Inc.
Phillip G. Creek, Senior Vice President and Chief Financial Officer, (614) 418-8011
Ann Marie W. Hunker, Vice President, Corporate Controller, (614) 418-8225
investorrelations@mihomes.com
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, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
Revenue | $ | 243,668 | $ | 306,188 | $ | 703,774 | $ | 877,037 | ||||
Net (loss) income | $ | (21,717 | ) | $ | 15,185 | $ | (59,666 | ) | $ | 49,844 | ||
Preferred share dividends | $ | 2,437 | - | $ | 4,875 | - | ||||||
Net (loss) income available to | ||||||||||||
common shareholders | $ | (24,154 | ) | $ | 15,185 | $ | (64,541 | ) | $ | 49,844 | ||
Earnings per share | ||||||||||||
Basic | $ | (1.73 | ) | $ | 1.09 | $ | (4.62 | ) | $ | 3.56 | ||
Diluted | $ | (1.73 | ) | $ | 1.08 | $ | (4.62 | ) | $ | 3.51 | ||
Weighted average shares outstanding | ||||||||||||
Basic | 13,990 | 13,892 | 13,969 | 13,991 | ||||||||
Diluted | 13,990 | 14,078 | 13,969 | 14,187 |
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, | ||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||
Revenue | $ | 243,668 | $ | 306,188 | $ | 703,774 | $ | 877,037 | |||||||
Gross margin | 15,315 | 73,155 | 47,394 | 229,830 | |||||||||||
General and administrative expense | 24,648 | 25,052 | 73,486 | 74,609 | |||||||||||
Selling expense | 20,605 | 21,645 | 58,206 | 65,510 | |||||||||||
Operating income | (29,938 | ) | 26,458 | (84,298 | ) | 89,711 | |||||||||
Interest expense | 5,014 | 3,578 | 12,280 | 10,930 | |||||||||||
(Loss) income before income taxes | (34,952 | ) | 22,880 | (96,578 | ) | 78,781 | |||||||||
Income tax (benefit) provision | (13,235 | ) | 7,695 | (36,912 | ) | 28,937 | |||||||||
Net (loss) income | (21,717 | ) | 15,185 | (59,666 | ) | 49,844 | |||||||||
Preferred share dividends | 2,437 | - | 4,875 | - | |||||||||||
Net (loss) income available to | |||||||||||||||
common shareholders | $ | (24,154 | ) | $ | 15,185 | $ | (64,541 | ) | $ | 49,844 | |||||
Revenue: | |||||||||||||||
Housing revenue | $ | 232,271 | $ | 290,101 | $ | 673,389 | $ | 839,960 | |||||||
Land revenue | 7,140 | 13,820 | 16,209 | 18,242 | |||||||||||
Other | (552 | ) | (1,372 | ) | (780 | ) | 3,425 | ||||||||
Total homebuilding revenue | $ | 238,859 | $ | 302,549 | $ | 688,818 | $ | 861,627 | |||||||
Financial services revenue | 4,809 | 5,124 | 14,956 | 19,250 | |||||||||||
Eliminations | - | (1,485 | ) | - | (3,840 | ) | |||||||||
Total revenue | $ | 243,668 | $ | 306,188 | $ | 703,774 | $ | 877,037 | |||||||
Additional Information: | |||||||||||||||
Average closing price | $ | 295 | $ | 313 | $ | 300 | $ | 306 | |||||||
Housing gross margin percentage | 7.2 | % | 23.0 | % | 5.9 | % | 24.7 | % | |||||||
Land gross margin percentage | (90.3 | )% | 12.1 | % | (46.7 | )% | 15.4 | % | |||||||
Land gross margin dollars | $ | (6,448 | ) | $ | 1,676 | $ | (7,574 | ) | $ | 2,812 | |||||
Financial services pre-tax income | $ | 2,015 | $ | 2,397 | $ | 6,853 | $ | 10,717 | |||||||
Land, Lot and Investment in | |||||||||||||||
Unconsolidated Subsidiaries | |||||||||||||||
Impairment by Region: | |||||||||||||||
Midwest | $ | 453 | $ | 1,921 | $ | 7,342 | $ | 1,921 | |||||||
Florida | 25,217 | - | 57,842 | - | |||||||||||
Mid-Atlantic | 6,664 | - | 34,355 | - | |||||||||||
Total Impairment | $ | 32,334 | $ | 1,921 | $ | 99,539 | $ | 1,921 | |||||||
Abandonments by Region: | |||||||||||||||
Midwest | $ | 269 | $ | 1,731 | $ | 291 | $ | 1,976 | |||||||
Florida | - | 28 | 1,828 | 1,494 | |||||||||||
Mid-Atlantic | - | 271 | 46 | 510 | |||||||||||
Total Abandonments | $ | 269 | $ | 2,030 | $ | 2,165 | $ | 3,980 |
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, | ||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||
EBITDA (1) | $ | 9,447 | $ | 36,968 | $ | 41,346 | $ | 107,881 | |||||||||
Interest incurred – net of fee | |||||||||||||||||
amortization | $ | 8,702 | $ | 12,009 | $ | 26,926 | $ | 32,398 | |||||||||
Interest amortized to cost of sales | $ | 4,013 | $ | 4,225 | $ | 11,049 | $ | 6,162 | |||||||||
Depreciation and amortization | $ | 2,438 | $ | 1,675 | $ | 6,306 | $ | 4,809 | |||||||||
Non-cash charges | $ | 33,307 | $ | 4,978 | $ | 109,333 | $ | 8,271 | |||||||||
Cash provided by (used in) operating | |||||||||||||||||
activities | $ | 11,285 | $ | (44,729 | ) | $ | 73,722 | $ | (182,009 | ) | |||||||
Cash used in investing activities | $ | (2,789 | ) | $ | (5,176 | ) | $ | (8,992 | ) | $ | (17,144 | ) | |||||
Cash provided by (used in) financing | |||||||||||||||||
activities | $ | (8,359 | ) | $ | 51,907 | $ | (73,761 | ) | $ | 176,781 | |||||||
Units: | |||||||||||||||||
New contracts | 561 | 571 | 2,191 | 2,472 | |||||||||||||
Homes delivered | 787 | 927 | 2,246 | 2,746 | |||||||||||||
(1) 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. |
September 30, | |||||||
2007 | 2006 | ||||||
Backlog: | |||||||
Units | 1,468 | 2,533 | |||||
Aggregate sales value | $ | 481,000 | $ | 923,000 | |||
Average sales price | $ | 327 | $ | 364 | |||
September 30, | |||||||
2007 | 2006 | ||||||
Balance Sheet and Operating Data: | |||||||
Unrestricted cash/cash held in escrow | $ | 21,265 | $ | 25,470 | |||
Homebuilding inventory: | |||||||
Lots, land and land development costs | $ | 583,197 | $ | 813,410 | |||
Land held for sale | 72,592 | 56,290 | |||||
Homes under construction | 407,293 | 494,384 | |||||
Land purchase deposit | 4,899 | 4,411 | |||||
Other | 42,688 | 29,593 | |||||
Total homebuilding inventory | $ | 1,110,669 | $ | 1,398,088 | |||
Total assets | $ | 1,354,380 | $ | 1,590,891 | |||
Homebuilding debt | $ | 460,613 | $ | 696,592 | |||
Shareholders’ equity | $ | 651,888 | $ | 626,925 | |||
Total book value per share | $ | 46.38 | $ | 45.12 | |||
Book value per common share | $ | 39.27 | $ | 45.12 | |||
Homebuilding net debt/capital ratio | 40 | % | 51 | % |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
Land Position Summary | |||||||||||
September 30, 2007 | September 30, 2006 | ||||||||||
Lots | Lots Under | Lots | Lots Under | ||||||||
Owned | Contract | Total | Owned | Contract | Total | ||||||
Midwest Region | 6,568 | 515 | 7,083 | 7,619 | 1,143 | 8,762 | |||||
Florida Region | 7,725 | 351 | 8,076 | 8,454 | 1,170 | 9,624 | |||||
Mid-Atlantic Region | 2,474 | 1,356 | 3,830 | 2,846 | 1,233 | 4,079 | |||||
Total | 16,767 | 2,222 | 18,989 | 18,919 | 3,546 | 22,465 | |||||