Exhibit 99.1
FOR IMMEDIATE RELEASE
M/I Homes Reports
Second Quarter Results
Columbus, Ohio (July 31, 2008) - M/I Homes, Inc. (NYSE:MHO) announced results for the second quarter and six months ended June 30, 2008.
The Company reported a net loss in the quarter of $94.1 million, or $6.72 per share. This net loss is composed of: (i) a $58.0 million ($4.14 per share) after-tax, non-cash valuation allowance against deferred tax assets, (ii) pre-tax charges totaling $39.9 million ($1.77 per share) for land-related charges of $28.4 million and joint venture investment write-offs of $11.5 million; and (iii) a pre-tax loss from operations of $13.5 million. In 2007’s second quarter, the Company reported a net loss of $42.6 million, or $3.05 per share.
The Company reported a net loss of $116.3 million for the first half of 2008, or $8.30 per share, compared to a net loss of $40.4 million, or loss per share of $2.89, in the same period a year ago. During the first half of 2008, the Company recorded $62.2 million of pre-tax impairments charges and the $58.0 million deferred tax valuation allowance. This compares to pre-tax charges in the first half of 2007 of $74.3 million. As a result of the 2008 year-to-date net loss, the Company will discontinue paying cash dividends on its common and preferred shares.
The Company delivered 478 homes in the second quarter compared to 755 in same period of 2007, a decrease of 37%. Homes delivered for the six months ended June 30, 2008 decreased 35% to 952 from 1,459 in 2007. New contracts for 2008’s second quarter were 530, down 23% from 2007’s second quarter of 688. For the first six months, 2008’s new contracts declined 34% to 1,084 from 1,630 in 2007. The Company had 138 active communities at June 30, 2008 compared to 161 at June 30, 2007. The sales value of backlog of homes at June 30, 2008 was $254 million with backlog units of 880 and an average sales price of $289,000. The backlog of homes at June 30, 2007 had a sales value of $554 million, with backlog units of 1,694 and an average sales price of $327,000.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Market conditions remain difficult for the homebuilding industry. Demand is weak, consumer confidence is low and margins remain under pressure. We continue to make meaningful progress on reducing our debt, inventory and expense levels. During the second quarter, our homebuilding borrowings were further reduced to $10 million, and we lowered our owned lots by over 1,000. At quarter’s end, our stockholders’ equity stands at $466 million, with our debt to capital ratio at 31%.”
Mr. Schottenstein continued, “We anticipate that challenging conditions will continue for the balance of 2008 and, in all likelihood, through much of 2009. Recent federal legislation in support of housing is clearly a positive, although it is by no means a silver bullet. We will continue to work toward strengthening our balance sheet and position M/I for future opportunities that we expect to occur once housing conditions begin to 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 July 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.
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
M/I Homes, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||
| Revenue: | $ | 141,002 | $ | 226,448 | $ | 297,087 | $ | 443,017 | |||||
| Net loss: | |||||||||||||
Loss from continuing operations(1) | $ | (91,250 | ) | $ | (35,431 | ) | $ | (111,400 | ) | $ | (33,360 | ) | |
| Loss from discontinued operations | (413 | ) | (4,748 | ) | (33 | ) | (4,589 | ) | |||||
| Net loss | (91,663 | ) | (40,179 | ) | (111,433 | ) | (37,949 | ) | |||||
| Preferred share dividends | 2,438 | 2,438 | 4,875 | 2,438 | |||||||||
| Net loss to common shareholders | $ | (94,101 | ) | $ | (42,617 | ) | $ | (116,308 | ) | $ | (40,387 | ) | |
| Loss per share: | |||||||||||||
| Basic and Diluted: | |||||||||||||
| Continuing operations | $ | (6.69 | ) | $ | (2.71 | ) | $ | (8.30 | ) | $ | (2.56 | ) | |
| Discontinued operations | (0.03 | ) | (0.34 | ) | - | (0.33 | ) | ||||||
| Total | $ | (6.72 | ) | $ | (3.05 | ) | $ | (8.30 | ) | $ | (2.89 | ) | |
| Weighted average shares outstanding: | |||||||||||||
| Basic | 14,016 | 13,975 | 14,012 | 13,959 | |||||||||
| Diluted | 14,016 | 13,975 | 14,012 | 13,959 | |||||||||
| (1) | For the three and six months ended June 30, 2008, loss from continuing operations includes a $58.0 million deferred tax asset valuation allowance. |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||
| Revenue | $ | 141,002 | $ | 226,448 | $ | 297,087 | $ | 443,017 | |||||||
| Gross margin | (21,103 | ) | (10,226 | ) | (17,693 | ) | 35,017 | ||||||||
| General and administrative expense | 17,133 | 25,947 | 34,691 | 46,688 | |||||||||||
| Selling expense | 13,087 | 18,807 | 26,813 | 35,938 | |||||||||||
| Operating loss | (51,323 | ) | (54,980 | ) | (79,197 | ) | (47,609 | ) | |||||||
| Other income | - | - | 5,555 | - | |||||||||||
| Interest expense | 2,106 | 2,760 | 6,545 | 6,788 | |||||||||||
| Loss from continuing operations | |||||||||||||||
| before income taxes | (53,429 | ) | (57,740 | ) | (80,187 | ) | (54,397 | ) | |||||||
| Provision (benefit) for income taxes | 37,821 | (22,309 | ) | 31,213 | (21,037 | ) | |||||||||
| Loss from continuing operations, | |||||||||||||||
| net of income taxes | (91,250 | ) | (35,431 | ) | (111,400 | ) | (33,360 | ) | |||||||
| Loss from discontinued operations, | |||||||||||||||
| net of income taxes | (413 | ) | (4,748 | ) | (33 | ) | (4,589 | ) | |||||||
| Net loss | (91,663 | ) | (40,179 | ) | (111,433 | ) | (37,949 | ) | |||||||
| Preferred share dividends | 2,438 | 2,438 | 4,875 | 2,438 | |||||||||||
| Net loss to common shareholders | $ | (94,101 | ) | $ | (42,617 | ) | $ | (116,308 | ) | $ | (40,387 | ) | |||
| Revenue: | |||||||||||||||
| Housing revenue | $ | 126,795 | $ | 217,962 | $ | 257,731 | $ | 424,029 | |||||||
| Land revenue | 10,870 | 4,703 | 23,644 | 9,069 | |||||||||||
| Other | 166 | (1,012 | ) | 7,131 | (228 | ) | |||||||||
| Total homebuilding revenue | $ | 137,831 | $ | 221,653 | $ | 288,506 | $ | 432,870 | |||||||
| Financial services revenue | 3,171 | 4,795 | 8,581 | 10,147 | |||||||||||
| Total revenue | $ | 141,002 | $ | 226,448 | $ | 297,087 | $ | 443,017 | |||||||
| Land, Lot and Investment in | |||||||||||||||
| Unconsolidated Subsidiaries | |||||||||||||||
| Impairment by Region: | |||||||||||||||
| Midwest | $ | 10,455 | $ | 7,129 | $ | 12,974 | $ | 6,889 | |||||||
| Florida | 22,998 | 24,437 | 41,492 | 24,744 | |||||||||||
| Mid-Atlantic | 6,419 | 26,613 | 6,513 | 27,691 | |||||||||||
| Continuing operations | $ | 39,872 | $ | 58,179 | $ | 60,979 | $ | 59,324 | |||||||
| Discontinued operations | - | 7,881 | - | 7,881 | |||||||||||
| Consolidated Total | $ | 39,872 | $ | 66,060 | $ | 60,979 | $ | 67,205 | |||||||
Abandonments by Region: | |||||||||||||||
| Midwest | $ | 1 | $ | - | $ | 25 | $ | 22 | |||||||
| Florida | 2 | 825 | 133 | 1,828 | |||||||||||
| Mid-Atlantic | 5 | 16 | 1,054 | 46 | |||||||||||
| Continuing operations | $ | 8 | $ | 841 | $ | 1,212 | $ | 1,896 | |||||||
| Discontinued operations | - | - | - | - | |||||||||||
| Consolidated Total | $ | 8 | $ | 841 | $ | 1,212 | $ | 1,896 | |||||||
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||
EBITDA (1) | $ | (7,086 | ) | $ | 15,859 | $ | (556 | ) | $ | 31,899 | |||
| Interest incurred - net of fee amortization | $ | 4,396 | $ | 8,522 | $ | 9,907 | $ | 18,224 | |||||
| Interest amortized to cost of sales | $ | 2,453 | $ | 3,640 | $ | 5,026 | $ | 7,036 | |||||
| Depreciation and amortization | $ | 1,921 | $ | 1,943 | $ | 4,701 | $ | 3,868 | |||||
| Non-cash charges | $ | 40,813 | $ | 72,850 | $ | 63,950 | $ | 76,026 | |||||
Cash provided by (used in) operating activities activities operating activities | $ | 10,747 | $ | 9,241 | $ | 109,499 | $ | 62,437 | |||||
| Cash (used in) provided by investing activities | $ | (3,678 | ) | $ | (3,969 | ) | $ | 4,056 | $ | (6,203 | ) | ||
Cash used in financing activities financing activities | $ | (6,571 | ) | $ | (7,159 | ) | $ | (112,948 | ) | $ | (65,402 | ) | |
| Financial services pre-tax income | $ | 1,012 | $ | 2,188 | $ | 4,349 | $ | 4,838 | |||||
(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. | |||||||||||||
Units: | |||||||||||||
| New contracts: | |||||||||||||
| Continuing operations | 530 | 682 | 1,084 | 1,613 | |||||||||
| Discontinued operations | - | 6 | - | 17 | |||||||||
| Consolidated total | 530 | 688 | 1,084 | 1,630 | |||||||||
| Homes delivered: | |||||||||||||
| Continuing operations | 466 | 738 | 916 | 1,424 | |||||||||
| Discontinued operations | 12 | 17 | 36 | 35 | |||||||||
| Consolidated total | 478 | 755 | 952 | 1,459 | |||||||||
| June 30, | |||||||||||||
| 2008 | 2007 | ||||||||||||
| Consolidated Backlog: | |||||||||||||
| Units | 880 | 1,694 | |||||||||||
| Aggregate sales value (in millions) | $ | 254 | $ | 554 | |||||||||
| Average sales price | $ | 289,000 | $ | 327,000 | |||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet Information
(Unaudited)
| June 30, | |||||||
| 2008 | 2007 | ||||||
| Assets: | |||||||
| Cash / cash held in escrow | $ | 9,144 | $ | 16,013 | |||
| Mortgage loans held for sale | 31,919 | 32,380 | |||||
| Inventory: | |||||||
| Lots, land and land development | 404,992 | 589,993 | |||||
| Land held for sale | 2,739 | 35,511 | |||||
| Homes under construction | 259,851 | 357,893 | |||||
| Other inventory | 31,114 | 44,825 | |||||
| Total Inventory | 698,696 | 1,028,222 | |||||
| Fixed assets - net | 32,216 | 36,785 | |||||
| Investment in unconsolidated joint ventures | 26,011 | 50,453 | |||||
| Income tax receivable | 31,857 | - | |||||
| Deferred income taxes | 7,622 | 65,351 | |||||
| Assets from discontinued operation | - | 100,781 | |||||
| Other assets | 23,091 | 29,538 | |||||
| Total Assets | $ | 860,556 | $ | 1,359,523 | |||
| Liabilities: | |||||||
| Debt –Homebuilding Operations: | |||||||
| Notes payable banks | $ | 10,000 | $ | 265,000 | |||
| Notes payable other | 16,661 | 6,826 | |||||
| Senior notes | 199,040 | 198,784 | |||||
| Total Debt – Homebuilding Operations | 225,701 | 470,610 | |||||
| Note payable bank – financial services operations | 29,640 | 16,000 | |||||
| Total Debt | 255,341 | 486,610 | |||||
| Accounts payable | 55,162 | 80,516 | |||||
| Other liabilities | 64,724 | 85,301 | |||||
| Community development district obligations | 12,153 | 23,750 | |||||
| Obligation for inventory not owned | 7,093 | 7,729 | |||||
| Total Liabilities | 394,473 | 683,906 | |||||
| Stockholders’ Equity | 466,083 | 675,617 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 860,556 | $ | 1,359,523 | |||
| Book value per common share | $ | 26.11 | $ | 40.98 | |||
| Homebuilding net debt/capital ratio | 31 | % | 40 | % | |||
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
| Land Position Summary | |||||||||||
| June 30, 2008 | June 30, 2007 | ||||||||||
| Lots | Lots | ||||||||||
| Lots | Under | Lots | Under | ||||||||
| Owned | Contract | Total | Owned | Contract | Total | ||||||
| Midwest region | 6,012 | 659 | 6,671 | 6,820 | 504 | 7,324 | |||||
| Florida region | 3,452 | 251 | 3,703 | 7,982 | 351 | 8,333 | |||||
| Mid-Atlantic region | 1,842 | 804 | 2,646 | 2,413 | 1,163 | 3,576 | |||||
| Continuing operations | 11,306 | 1,714 | 13,020 | 17,215 | 2,018 | 19,233 | |||||
| Discontinued operations | - | - | - | 408 | - | 408 | |||||
| Consolidated total | 11,306 | 1,714 | 13,020 | 17,623 | 2,018 | 19,641 | |||||