Exhibit 99.1
M/I Homes Reports
Second Quarter Results
Columbus, Ohio (July 28, 2010) - M/I Homes, Inc. (NYSE:MHO) announced results for the second quarter and six months ended June 30, 2010.
2010 Second Quarter Highlights:
| · | Homes delivered increased 61% |
| · | Pre-tax income from operations of $1.7 million; net loss of $4.8 million |
| · | Cash balance of $129 million |
| · | Fourth consecutive quarter of positive EBITDA |
| · | Net debt to net capital ratio of 26% |
For the second quarter of 2010, the Company reported a net loss of $4.8 million, or $0.26 per share, compared to a net loss of $19.9 million, or $1.26 per share during the second quarter of 2009. The current quarter loss consists of $1.7 million of pre-tax income from operations and $6.5 million of asset impairments. The Company reported a net loss of $13.1 million for the first half of 2010, or $0.71 per share, compared to a net loss of $48.0 million, or $3.22 per share, for the same period a year ago.
Homes delivered in the second quarter of 2010 increased 61% to 790 from 492 in the same period of 2009. For the six months ended June 30, 2010, homes delivered increased 43% to 1,269 from 886 in the same period of 2009. New contracts for 2010’s second quarter were 602, down 21% from 2009’s second quarter of 759. For the first six months of 2010, new contracts were 1,367 compared to 1,426 in the first six months of 2009. The Company had 109 active communities at June 30, 2010 compared to 106 at June 30, 2009 and 109 at March 31, 2010. The backlog of homes at June 30, 2010 had a sales value of $200 million, consisting of 748 units with an average sales price of $267,000. The backlog of homes at June 30, 2009 had a sales value of $260 million comprised of 1,106 units with an average sales price of $235,000.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Our second quarter results are highlighted by a number of positives. Homebuilding revenues for the quarter increased 71% driven by a 61% increase in closings. Excluding asset impairments, we recorded a pre-tax operating profit of $1.7 million, an improvement of more than $10 million over last year’s second quarter and we achieved our fourth consecutive quarter of positive EBITDA. Our SG & A, as a percentage of revenue, reached its lowest level in more than two years. These results demonstrate the effectiveness of our focus on returning to profitability.”
Mr. Schottenstein continued, “At the same time, coincident with the expiration of the tax credit on April 30, 2010, we experienced a noticeable decline in our sales activity for May and June, resulting in a 21% decline in sales for the quarter. Prior to this quarter, we had posted six consecutive quarters of positive year-over-year sales comparisons. In addition to the expiration of the tax credit, we believe the reduction in sales is a reflection of the challenging and uncertain macro economic conditions, marked by weak consumer demand and lack of meaningful job growth. With this continued uncertainty in housing demand, it is important that we have maintained our strong financial condition, with $129 million of cash, no outstanding borrowings under our $140 million homebuilding credit facility, and a 26% ne t debt to capital ratio.”
The Company will broadcast live 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 2011.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 77,000 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; the Virginia and Maryland suburbs of Washington, D.C.; and Houston, Texas.
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 rel ating 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, 2009. 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.
Where we have used non-GAAP financial measures in the press release, we have also provided reconciliations to the most comparable GAAP measures along with an explanation of the usefulness of the non-GAAP measure. Please see the “Non-GAAP Financial Results / Reconciliations” table.
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
Kevin C. Hake, Vice President, Treasurer (614) 418-8224
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, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| New contracts | | 602 | | | 759 | | | 1,367 | | | 1,426 | |
| Average community count | | 109 | | | 113 | | | 107 | | | 118 | |
| Cancellation rate | | 16 | % | | 16 | % | | 17 | % | | 18 | % |
| Backlog units | | | | | | | | 748 | | | 1,106 | |
| Backlog value | | | | | | | $ | 200,000 | | $ | 260,000 | |
| | | | | | | | | | | | | |
| Homes delivered | | 790 | | | 492 | | | 1,269 | | | 886 | |
| Average home closing price | $ | 245 | | $ | 230 | | $ | 243 | | $ | 232 | |
| | | | | | | | | | | | | |
| Total revenue | $ | 196,404 | | $ | 116,146 | | $ | 315,793 | | $ | 212,295 | |
| Cost of sales | | 171,357 | | | 108,174 | | | 273,781 | | | 207,035 | |
| Gross margin | | 25,047 | | | 7,972 | | | 42,012 | | | 5,260 | |
| General and administrative expense | | 13,561 | | | 16,415 | | | 26,453 | | | 28,417 | |
| Selling expense | | 14,153 | | | 9,629 | | | 24,747 | | | 18,738 | |
| Operating loss | | (2,667 | ) | | (18,072 | ) | | (9,188 | ) | | (41,895 | ) |
| Other loss | | - | | | - | | | - | | | 941 | |
| Interest expense | | 2,079 | | | 1,811 | | | 4,220 | | | 5,007 | |
| Loss from operations before income taxes | | (4,746 | ) | | (19,883 | ) | | (13,408 | ) | | (47,843 | ) |
| Provision (benefit) for income taxes | | 61 | | | 19 | | | (266 | ) | | 188 | |
| Net loss | | (4,807 | ) | | (19,902 | ) | | (13,142 | ) | | (48,031 | ) |
| Net loss per share | $ | (0.26 | ) | $ | (1.26 | ) | $ | (0.71 | ) | $ | (3.22 | ) |
| | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | |
| Basic | | 18,523 | | | 15,790 | | | 18,522 | | | 14,913 | |
| Diluted | | 18,523 | | | 15,790 | | | 18,522 | | | 14,913 | |
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share and unit amounts)
| | As of | |
| | June 30, | |
| | 2010 | | 2009 | |
| Assets: | | | | |
Total cash and cash equivalents(1) | $ | 128,673 | | $ | 104,382 | |
| Mortgage loans held for sale | | 51,944 | | | 30,509 | |
| Inventory: | | | | | | |
| Lots, land and land development | | 232,171 | | | 293,217 | |
| Land held for sale | | 3,047 | | | 2,804 | |
| Homes under construction | | 171,113 | | | 175,129 | |
| Other inventory | | 26,917 | | | 25,217 | |
| Total inventory | $ | 433,248 | | $ | 496,367 | |
| | | | | | | |
| Property and equipment – net | | 17,778 | | | 20,097 | |
| Investments in unconsolidated joint ventures | | 10,569 | | | 7,432 | |
| Income tax receivable | | 4,450 | | | 3,067 | |
Other assets(2) | | 18,494 | | | 18,971 | |
| Total Assets | $ | 665,156 | | $ | 680,825 | |
| | | | | | | |
| Liabilities: | | | | | | |
| Debt – Homebuilding Operations: | | | | | | |
| Senior notes | $ | 199,552 | | $ | 199,296 | |
| Notes payable – other | | 6,010 | | | 6,304 | |
| Total Debt – Homebuilding Operations | $ | 205,562 | | $ | 205,600 | |
| | | | | | | |
| Note payable bank – financial services operations | | 33,911 | | | 19,478 | |
| Total Debt | $ | 239,473 | | $ | 225,078 | |
| | | | | | | |
| Accounts payable | | 48,376 | | | 44,778 | |
| Obligations for inventory not owned | | - | | | 803 | |
| Community development district obligations | | 7,575 | | | 9,548 | |
| Other liabilities | | 54,499 | | | 61,532 | |
| Total Liabilities | $ | 349,923 | | $ | 341,739 | |
| | | | | | | |
| Shareholders’ Equity | | 315,233 | | | 339,086 | |
| Total Liabilities and Shareholders’ Equity | $ | 665,156 | | $ | 680,825 | |
| | | | | | | |
| Book value per common share | $ | 11.62 | | $ | 12.92 | |
Net debt/net capital ratio(3) | | 26 | % | | 26 | % |
| (1) | 2010 and 2009 amounts include $47.1 million and $79.4 million of restricted cash and cash held in escrow, respectively. |
| (2) | 2010 and 2009 amounts include gross deferred tax assets of $122.0 million and $128.2 million, respectively, net of valuation allowances of $122.0 million and $128.2 million, respectively. |
| (3) | Net debt/net capital ratio is calculated as total debt minus total cash and cash equivalents, divided by the sum of total debt minus total cash and cash equivalents plus shareholders’ equity. |
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, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| Homebuilding revenue: | | | | | | | | |
| Housing revenue | $ | 192,917 | | $ | 112,952 | | $ | 308,513 | | $ | 205,455 | |
| Land revenue | | - | | | - | | | 86 | | | 657 | |
| Total homebuilding revenue | $ | 192,917 | | $ | 112,952 | | $ | 308,599 | | $ | 206,112 | |
| | | | | | | | | | | | | |
| Financial services revenue | | 3,487 | | | 3,194 | | | 7,194 | | | 6,183 | |
| Total revenue | $ | 196,404 | | $ | 116,146 | | $ | 315,793 | | $ | 212,295 | |
| | | | | | | | | | | | | |
| Gross margin | $ | 25,047 | | $ | 7,972 | | $ | 42,012 | | $ | 5,260 | |
Adjusted operating gross margin(1) | $ | 31,341 | | $ | 15,798 | | $ | 52,022 | | $ | 28,032 | |
Adjusted operating gross margin %(1) | | 16.0 | % | | 13.6 | % | | 16.5 | % | | 13.2 | % |
| | | | | | | | | | | | | |
Adjusted pre-tax income (loss) from operations(1) | $ | 1,730 | | $ | (9,015 | ) | $ | (3,141 | ) | $ | (20,900 | ) |
| | | | | | | | | | | | | |
Adjusted EBITDA(1) | $ | 11,429 | | $ | (3,611 | ) | $ | 12,774 | | $ | (12,726 | ) |
| | | | | | | | | | | | | |
| Cash flow (used in) provided by operating activities | $ | (13,403 | ) | $ | (12,788 | ) | $ | (18,038 | ) | $ | 40,851 | |
| Cash flow provided by (used in) operating activities | | | | | | | | | | | | |
| (excluding land/lot purchases and sales and land | | | | | | | | | | | | |
development spending)(1) | $ | 28,487 | | $ | (4,594 | ) | $ | 54,657 | | $ | 62,835 | |
| Cash used in investing activities | $ | (13,251 | ) | $ | (42,374 | ) | $ | (16,008 | ) | $ | (72,356 | ) |
| Cash provided by financing activities | $ | 5,670 | | $ | 51,535 | | $ | 5,718 | | $ | 23,987 | |
| | | | | | | | | | | | | |
| Financial services pre-tax income | $ | 1,248 | | $ | 1,429 | | $ | 2,981 | | $ | 2,730 | |
| | | | | | | | | | | | | |
| Deferred tax asset valuation allowance – net | $ | 1,887 | | $ | 7,608 | | $ | 4,922 | | $ | 19,327 | |
Land, Lot and Investment in Unconsolidated Subsidiaries
Impairment by Region
(Dollars in thousands)
| | Three Months Ended | | Six Months Ended | |
| | June 30, | | June 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| Midwest | $ | 2,971 | | $ | 1,523 | | $ | 2,972 | | $ | 2,935 | |
| Florida | | 437 | | | 3,942 | | | 2,172 | | | 10,608 | |
| Mid-Atlantic | | 2,886 | | | 1,111 | | | 4,266 | | | 3,979 | |
| Total | $ | 6,294 | | $ | 6,576 | | $ | 9,410 | | $ | 17,522 | |
| | | | | | | | | | | | | |
| Abandonments by Region: | | | | | | | | | | | | |
| Midwest | $ | 79 | | $ | 520 | | $ | 89 | | $ | 523 | |
| Florida | | - | | | - | | | 1 | | | 14 | |
| Mid-Atlantic | | 103 | | | 864 | | | 167 | | | 879 | |
| Total | $ | 182 | | $ | 1,384 | | $ | 257 | | $ | 1,416 | |
| (1) | See “Non-GAAP Financial Results / Reconciliations” table below. |
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliations
(Dollars in thousands)
| | Three Months Ended | | Six Months Ended | |
| | June 30, | | June 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| Gross margin | $ | 25,047 | | $ | 7,972 | | $ | 42,012 | | $ | 5,260 | |
| Add: Impairments | | 6,294 | | | 6,576 | | | 9,410 | | | 17,522 | |
| Imported drywall charges | | - | | | 1,250 | | | 600 | | | 5,250 | |
| Adjusted operating gross margin | $ | 31,341 | | $ | 15,798 | | $ | 52,022 | | $ | 28,032 | |
| | | | | | | | | | | | | |
| Loss from operations before income taxes | $ | (4,746 | ) | $ | (19,883 | ) | $ | (13,408 | ) | $ | (47,843 | ) |
| Add: Impairments and abandonments | | 6,476 | | | 7,960 | | | 9,667 | | | 18,938 | |
| Imported drywall charges | | - | | | 1,250 | | | 600 | | | 5,250 | |
| Other loss/expense | | | | | 1,658 | | | | | | 2,755 | |
| Adjusted pre-tax income (loss) from operations | $ | 1,730 | | $ | (9,015 | ) | $ | (3,141 | ) | $ | (20,900 | ) |
| | | | | | | | | | | | | |
| Net loss | $ | (4,807 | ) | $ | (19,902 | ) | $ | (13,142 | ) | $ | (48,031 | ) |
| Add (subtract): | | | | | | | | | | | | |
| Income taxes | | 61 | | | 19 | | | (266 | ) | | 188 | |
| Interest expense net of interest income | | 1,702 | | | 1,593 | | | 3,630 | | | 4,533 | |
| Interest amortized to cost of sales | | 4,954 | | | 3,056 | | | 7,185 | | | 4,728 | |
| Depreciation and amortization | | 2,254 | | | 1,910 | | | 4,216 | | | 4,412 | |
| Non-cash charges | | 7,265 | | | 9,713 | | | 11,151 | | | 21,444 | |
| Adjusted EBITDA | $ | 11,429 | | $ | (3,611 | ) | $ | 12,774 | | $ | (12,726 | ) |
| | | | | | | | | | | | | |
| Cash flow (used in) provided by operating activities | $ | (13,403 | ) | $ | (12,788 | ) | $ | (18,038 | ) | $ | 40,851 | |
| Add: Land/lot purchases | | 32,861 | | | 3,635 | | | 58,143 | | | 14,336 | |
| Land development spending | | 9,029 | | | 4,559 | | | 14,638 | | | 8,305 | |
| Less: Land/lot sale proceeds | | - | | | - | | | (86 | ) | | (657 | ) |
| Cash flows provided by (used in) operating activities | | | | | | | | | | | | |
| (excluding land/lot purchases and sales | | | | | | | | | | | | |
| and land development spending) | $ | 28,487 | | $ | (4,594 | ) | $ | 54,657 | | $ | 62,835 | |
Adjusted operating gross margin, adjusted pre-tax income (loss) from operations, adjusted EBITDA and cash flows provided by (used in) operating activities (excluding land/lot purchases and sales and land development spending) are non-GAAP financial measures. Management finds these measures to be useful in evaluating the Company’s performance because they disclose the financial results generated from homes the Company actually delivered during the period, as the asset impairments and certain other write-offs relate, in part, to inventory that was not delivered during the period. They also assist the Company’s management in making strategic decisions regarding the Company’s future operations. The Company believes investors will also find these measures to be important and useful because they disclose profitability measures that can be compared to a prior period without regard to the variability of asset impairments and certain other write-offs. In addition, to the extent that the Company’s competitors provide similar information, disclosure of these measures helps readers of the Company’s financial statements compare the Company’s profits to the profits of its competitors with regard to the homes they deliver in the same period. Because these measures are not calculated in accordance with GAAP, they may not be completely comparable to similarly titled measures of the Company’s competitors due to potential differences in methods of calculation and charges being excluded. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
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 | 2010 | 2009 | Change | | 2010 | 2009 | Change |
| |
| Midwest | 310 | 407 | (24) | | 746 | 754 | (1) |
| |
| Florida | 133 | 113 | 18 | | 272 | 224 | 21 |
| |
| Mid-Atlantic | 159 | 239 | (33) | | 349 | 448 | (22) |
| |
| Total | 602 | 759 | (21) | | 1,367 | 1,426 | (4) |
| | HOMES DELIVERED |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | | | % | | | | % |
| Region | 2010 | 2009 | Change | | 2010 | 2009 | Change |
| |
| Midwest | 430 | 240 | 79 | | 695 | 416 | 67 |
| |
| Florida | 151 | 93 | 62 | | 244 | 195 | 25 |
| |
| Mid-Atlantic | 209 | 159 | 31 | | 330 | 275 | 20 |
| |
| Total | 790 | 492 | 61 | | 1,269 | 886 | 43 |
| | BACKLOG |
| | June 30, 2010 | | June 30, 2009 |
| | | | Dollars | | Average | | | | Dollars | | Average |
| Region | Units | | (millions) | | Sales Price | | Units | | (millions) | | Sales Price |
| |
| Midwest | 468 | | $115 | | $246,000 | | 703 | | $145 | | $207,000 |
| |
| Florida | 83 | | $ 18 | | $212,000 | | 106 | | $ 23 | | $217,000 |
| |
| Mid-Atlantic | 197 | | $ 67 | | $341,000 | | 297 | | $ 92 | | $309,000 |
| |
| Total | 748 | | $200 | | $267,000 | | 1,106 | | $260 | | $235,000 |
| | |
| | LAND POSITION SUMMARY |
| | | | | | | | | | | | |
| | June 30, 2010 | | June 30, 2009 |
| | Lots | | Lots Under | | | | Lots | | Lots Under | | |
| Region | Owned | | Contract | | Total | | Owned | | Contract | | Total |
| |
| Midwest | 4,027 | | 1,286 | | 5,313 | | 4,800 | | 855 | | 5,655 |
| |
| Florida | 1,576 | | 184 | | 1,760 | | 1,678 | | 83 | | 1,761 |
| |
| Mid-Atlantic | 2,069 | | 419 | | 2.488 | | 1,254 | | 480 | | 1,734 |
| |
| Total | 7,672 | | 1,889 | | 9,561 | | 7,732 | | 1,418 | | 9,150 |
