Exhibit 99.1
FOR IMMEDIATE RELEASE
M/I Homes Reports
Third Quarter Results
Columbus, Ohio (October 30, 2008) - 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.
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 | 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 third and nine months ended September 30, 2008, loss from continuing operations includes a $21.6 and $79.6 million deferred tax asset valuation allowance, respectiverly. | |||||||||||||||||
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 months ended September 30, 2008, loss from continuting operations includes a $21.6 and $79.6 million deferred tas asset valuation allowanc, respectiverly. | |||||||||||||||
| 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 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 ("EDITDA") is defined, in accordance with our credit facility, as net income, plus interest expesne (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 | ||||||||||||||||||