Exhibit 99.1
M/I Homes Reports
Second Quarter Results
Columbus, Ohio (July 30, 2009) - M/I Homes, Inc. (NYSE:MHO) announced results for the second quarter and six months ended June 30, 2009. Second quarter results were highlighted by a reduced loss, increased new orders, deliveries and backlog, and ending the quarter with $104 million of cash.
For the second quarter, the Company reported a net loss of $19.9 million, or $1.26 per share, compared to a net loss of $94.1 million, or $6.72 per share during the second quarter of 2008. The current quarter loss consists of a $9.0 million pre-tax operating loss, $8.0 million of asset impairments, and other non-operating charges totaling $2.9 million primarily for issues related to imported drywall and severance.
The Company reported a net loss of $48.0 million for the first half of 2009, or $3.22 per share, compared to a net loss of $116.3 million, or $8.30 per share for the same period a year ago.
New contracts for 2009’s second quarter were 759, up 43% from 2008’s second quarter of 530. For the first six months, 2009’s new contracts increased 32% to 1,426 from 1,084 in 2008. The Company delivered 492 homes in the second quarter compared to 478 in same period of 2008, an increase of 3%. Homes delivered for the six months ended June 30, 2009 decreased 7% to 886 from 952 in 2008. The Company had 106 active communities at June 30, 2009 compared to 138 at June 30, 2008. The sales value of backlog of homes at June 30, 2009 increased to $260 million with backlog units increasing to 1,106 and an average sales price of $235,000. The backlog of homes at June 30, 2008 had a sales value of $254 million, with backlog units of 880 and an average sales price of $289,000.
Robert H. Schottenstein, Chief Executive Officer and President commented, “We continue to make progress during these challenging times. During the second quarter of 2009, we recorded our third consecutive quarter of increased new contracts, and second consecutive quarter of higher backlog units. For the quarter, our new contracts increased 43% and backlog units improved by 26%, despite a 23% decline in active communities. Also, homes delivered in the quarter increased compared to 2008. In addition, our gross margin has increased in each of the past three quarters, and we continue to see positive results from our focus on reducing expenses -- as recurring selling, general and administrative expenses declined 22% from prior year levels. The combination of all these factors resulted in a 24% reduction in our operating loss from the first quarter of 2009.”
Mr. Schottenstein, continued, “We have also made considerable progress in adjusting our product offering and strengthening our line of affordable homes. Specifically, during the quarter, we successfully launched our eco series, a new line of homes designed to appeal to first time homebuyers and others interested in a more efficient and economical lifestyle. We are currently selling our eco series in several of our Columbus and Cincinnati communities and initial market reaction has been quite strong. We plan to offer this series in most of our markets by year end.”
Mr. Schottenstein, concluded, “Looking ahead, we want to build on the momentum generated during the first half of 2009. At the same time, we are mindful that economic conditions remain difficult and unpredictable. We therefore, will maintain our predominantly defensive operating strategy. We ended the quarter with $104 million of cash, zero borrowings under our credit facility and no debt maturing until 2012. We also have significantly reduced our homebuilding inventory, including our owned lots. Our net debt to capital ratio stands at 21% at quarter end, one of the lowest levels in our industry.”
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 will continue to be available on our website through July 2010.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 74,000 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 global, U.S., local and homebuilding economic environments, interest rates, risks associated with owning and developing land, availability of resources, competition, market concentration, lack of geographic diversification, availability of financing resources, terms of our indebtedness and our ability to incur additional indebtedness, outcome of legal claims brought against us, ownership changes that could limit our ability to utilize our net operating loss carryforwards, and various governmental rules and regulations, among other matters, more fully discussed in the Risk Factors section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, 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
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
New contracts | 759 | 530 | 1,426 | 1,084 | ||||||||
Backlog units | 1,106 | 880 | ||||||||||
Backlog value | $ | 260,000 | $ | 254,000 | ||||||||
Homes delivered | 492 | 478 | 886 | 952 | ||||||||
Revenue | $ | 116,146 | $ | 141,002 | $ | 212,295 | $ | 297,087 | ||||
Gross margin | $ | 7,972 | $ | (21,103 | ) | $ | 5,260 | $ | (17,693 | ) | ||
Adjusted gross margin(1) | $ | 15,798 | $ | 18,769 | $ | 28,032 | $ | 43,286 | ||||
Adjusted gross margin %(1) | 13.6 | % | 13.3 | % | 13.2 | % | 14.5 | % | ||||
Loss from continuing operations | ||||||||||||
before income taxes | $ | (19,883 | ) | $ | (53,429 | ) | $ | (47,843 | ) | $ | (80,187 | ) |
Adjusted Pre-tax operating loss(1) | $ | (9,015 | ) | $ | (12,619 | ) | $ | (20,899 | ) | $ | (21,586 | ) |
Deferred tax asset valuation allowance | $ | 7,608 | $ | 57,568 | $ | 19,328 | $ | 58,011 | ||||
Net loss to common shareholders | $ | (19,902 | ) | $ | (94,101 | ) | $ | (48,031 | ) | $ | (116,308 | ) |
Loss per share | $ | (1.26 | ) | $ | (6.72 | ) | $ | (3.22 | ) | $ | (8.30 | ) |
Diluted shares outstanding (000s) | 15,790 | 14,016 | 14,913 | 14,012 | ||||||||
(1) See non-GAAP reconciliations in Non-GAAP Financial Reconciliations table below. | ||||||||||||
Non-GAAP Reconciliations | ||||||||||||
(Dollars in thousands) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
Gross margin | $ | 7,972 | $ | (21,103 | ) | $ | 5,260 | $ | (17,693 | ) | ||
Add: Impairments | 6,576 | 39,872 | 17,522 | 60,979 | ||||||||
Warranty – Imported Drywall | 1,250 | - | 5,250 | - | ||||||||
Adjusted gross margin | $ | 15,798 | $ | 18,769 | $ | 28,032 | $ | 43,286 | ||||
Loss from continuing operations | ||||||||||||
before income taxes | $ | (19,883 | ) | $ | (53,429 | ) | $ | (47,843 | ) | $ | (80,187 | ) |
Add: Impairments and abandonments administrative expense | 7,960 | 39,880 | 18,938 | 62,191 | ||||||||
Warranty – imported drywall | 1,250 | - | 5,250 | - | ||||||||
Other expense (income) | - | - | 941 | (5,555 | ) | |||||||
Restructuring/bad debt expense | 1,658 | 930 | 1,815 | 1,995 | ||||||||
Adjusted pre-tax loss from operations | $ | (9,015 | ) | $ | (12,619 | ) | $ | (20,899 | ) | $ | (21,556 | ) |
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, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
Revenue | $ | 116,146 | $ | 141,002 | $ | 212,295 | $ | 297,087 | ||||
Cost of sales | 108,174 | 162,105 | 207,035 | 314,780 | ||||||||
Gross margin | 7,972 | (21,103 | ) | 5,260 | (17,693 | ) | ||||||
General and administrative expense | 16,415 | 17,133 | 28,417 | 34,691 | ||||||||
Selling expense | 9,629 | 13,087 | 18,738 | 26,813 | ||||||||
Operating loss | (18,072 | ) | (51,323 | ) | (41,895 | ) | (79,197 | ) | ||||
Other expense (income) | - | - | 941 | (5,555 | ) | |||||||
Interest expense | 1,811 | 2,106 | 5,007 | 6,545 | ||||||||
Loss from continuing operations | ||||||||||||
before income taxes | (19,883 | ) | (53,429 | ) | (47,843 | ) | (80,187 | ) | ||||
Provision for income taxes | 19 | 37,821 | 188 | 31,213 | ||||||||
Loss from continuing operations, | ||||||||||||
net of income taxes | (19,902 | ) | (91,250 | ) | (48,031 | ) | (111,400 | ) | ||||
Loss from discontinued operations, | ||||||||||||
net of income taxes | - | (413 | ) | - | (33 | ) | ||||||
Net loss | (19,902 | ) | (91,663 | ) | (48,031 | ) | (111,433 | ) | ||||
Preferred share dividends | - | 2,438 | - | 4,875 | ||||||||
Net loss to common shareholders | $ | (19,902 | ) | $ | (94,101 | ) | $ | (48,031 | ) | $ | (116,308 | ) |
Revenue: | ||||||||||||
Housing revenue | $ | 112,952 | $ | 126,795 | $ | 205,455 | $ | 257,731 | ||||
Land revenue | - | 10,870 | 657 | 23,644 | ||||||||
Other | - | 166 | - | 7,131 | ||||||||
Total homebuilding revenue | $ | 112,952 | $ | 137,831 | $ | 206,112 | $ | 288,506 | ||||
Financial services revenue | 3,194 | 3,171 | 6,183 | 8,581 | ||||||||
Total revenue | $ | 116,146 | $ | 141,002 | $ | 212,295 | $ | 297,087 | ||||
Land, Lot and Investment in | ||||||||||||
Unconsolidated Subsidiaries | ||||||||||||
Impairment by Region: | ||||||||||||
Midwest | $ | 1,523 | $ | 10,455 | $ | 2,935 | $ | 12,975 | ||||
Florida | 3,942 | 22,998 | 10,608 | 41,491 | ||||||||
Mid-Atlantic | 1,111 | 6,419 | 3,979 | 6,513 | ||||||||
Total | $ | 6,576 | $ | 39,872 | $ | 17,522 | $ | 60,979 | ||||
Abandonments by Region: | ||||||||||||
Midwest | $ | 520 | $ | 1 | $ | 523 | $ | 25 | ||||
Florida | - | 2 | 14 | 133 | ||||||||
Mid-Atlantic | 864 | 5 | 879 | 1,054 | ||||||||
Total | $ | 1,384 | $ | 8 | $ | 1,416 | $ | 1,212 |
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, | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
EBITDA (1) | $ | (3,611 | ) | $ | (7,086 | ) | $ | (12,726 | ) | $ | (556 | ) |
Interest incurred - net of fee amortization | $ | 3,699 | $ | 4,396 | $ | 7,472 | $ | 9,907 | ||||
Interest amortized to cost of sales | $ | 3,056 | $ | 2,453 | $ | 4,728 | $ | 5,026 | ||||
Depreciation and amortization | $ | 1,910 | $ | 1,921 | $ | 4,412 | $ | 4,701 | ||||
Non-cash charges | $ | 9,713 | $ | 40,813 | $ | 21,444 | $ | 63,950 | ||||
Cash provided by (used in) operating activities activities operating activities | $ | (12,788 | ) | $ | 10,747 | $ | 40,851 | $ | 109,499 | |||
Cash (used in) provided by investing activities | $ | (42,374 | ) | $ | (3,678 | ) | $ | (72,356 | ) | $ | 4,056 | |
Cash provided by (used in) financing activities financing activities | $ | 51,535 | $ | (6,571 | ) | $ | 23,987 | $ | (112,948 | ) | ||
Financial services pre-tax income | $ | 1,429 | $ | 1,012 | $ | 2,730 | $ | 4,349 | ||||
(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. |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, | June 30, | ||||||||||
% | % | ||||||||||
Region | 2009 | 2008 | Change | 2009 | 2008 | Change | |||||
Midwest | 407 | 248 | 64 | 754 | 488 | 55 | |||||
Florida | 113 | 138 | (18) | 224 | 287 | (22) | |||||
Mid-Atlantic | 239 | 144 | 66 | 448 | 309 | 45 | |||||
Total | 759 | 530 | 43 | 1,426 | 1,084 | 32 | |||||
HOMES DELIVERED | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, | June 30, | ||||||||||
% | % | ||||||||||
Region | 2009 | 2008 | Change | 2009 | 2008 | Change | |||||
Midwest | 240 | 227 | 6 | 416 | 416 | - | |||||
Florida | 93 | 110 | (15) | 195 | 250 | (22) | |||||
Mid-Atlantic | 159 | 129 | 23 | 275 | 250 | 10 | |||||
Continuing Operations | 492 | 466 | 6 | 886 | 916 | (3) | |||||
Discontinued Operation | - | 12 | - | - | 36 | - | |||||
Total | 492 | 478 | 3 | 886 | 952 | (7) | |||||
BACKLOG | |||||||||||
June 30, 2009 | June 30, 2008 | ||||||||||
Dollars | Average | Dollars | Average | ||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||
Midwest | 703 | $145 | $207,000 | 463 | $124 | $267,000 | |||||
Florida | 106 | $ 23 | $217,000 | 158 | $ 44 | $278,000 | |||||
Mid-Atlantic | 297 | $ 92 | $309,000 | 259 | $ 86 | $334,000 | |||||
Total | 1,106 | $260 | $235,000 | 880 | $254 | $289,000 |
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet Information (unaudited)
(Dollars in thousands, except per share amounts)
June 30, | ||||||
2009 | 2008 | |||||
Assets: | ||||||
Total cash and cash equivalents | $ | 104,382 | $ | 9,144 | ||
Mortgage loans held for sale | 30,509 | 31,919 | ||||
Inventory: | ||||||
Lots, land and land development | 293,217 | 404,992 | ||||
Land held for sale | 2,804 | 2,739 | ||||
Homes under construction | 175,129 | 259,851 | ||||
Other inventory | 25,217 | 31,114 | ||||
Total Inventory | 496,367 | 698,696 | ||||
Property and equipment - net | 20,097 | 32,216 | ||||
Investment in unconsolidated joint ventures | 7,432 | 26,011 | ||||
Income tax receivable | 3,067 | 31,857 | ||||
Deferred income taxes | - | 7,622 | ||||
Other assets | 18,971 | 23,091 | ||||
Total Assets | $ | 680,825 | $ | 860,556 | ||
Liabilities: | ||||||
Debt –Homebuilding Operations: | ||||||
Notes payable banks | $ | - | $ | 10,000 | ||
Notes payable other | 6,304 | 16,661 | ||||
Senior notes | 199,296 | 199,040 | ||||
Total Debt – Homebuilding Operations | 205,600 | 225,701 | ||||
Note payable bank – financial services operations | 19,478 | 29,640 | ||||
Total Debt | 225,078 | 255,341 | ||||
Accounts payable | 44,778 | 55,162 | ||||
Community development district obligation | 9,548 | 12,153 | ||||
Obligation for inventory not owned | 803 | 7,093 | ||||
Other liabilities | 61,532 | 64,724 | ||||
Total Liabilities | 341,739 | 394,473 | ||||
Shareholders’ Equity | 339,086 | 466,083 | ||||
Total Liabilities and Shareholders’ Equity | $ | 680,825 | $ | 860,556 | ||
Book value per common share | $ | 12.92 | $ | 26.11 | ||
Net debt/total capital ratio (1) | 21 | % | 34 | % |
(1) Net debt-to capital is calculated as total debt minus total cash and cash equivalents, divided by the sum of total debt plus shareholders’ equity. |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
Land Position Summary | ||||||||||||
June 30, 2009 | June 30, 2008 | |||||||||||
Lots | Lots | |||||||||||
Lots | Under | Lots | Under | |||||||||
Owned | Contract | Total | Owned | Contract | Total | |||||||
Midwest region | 4,800 | 855 | 5,655 | 6,012 | 659 | 6,671 | ||||||
Florida region | 1,678 | 83 | 1,761 | 3,452 | 251 | 3,703 | ||||||
Mid-Atlantic region | 1,254 | 480 | 1,734 | 1,842 | 804 | 2,646 | ||||||
Total | 7,732 | 1,418 | 9,150 | 11,306 | 1,714 | 13,020 |