M/I Homes Reports Third Quarter Results
- Press Release
- Source: M/I Homes, Inc.
- On 8:32 am EDT, Thursday October 29, 2009
COLUMBUS, Ohio, Oct. 29 /PRNewswire-FirstCall/ -- M/I Homes, Inc. (NYSE: MHO - News) announced results for the third quarter and nine months ended September 30, 2009. Third quarter results were highlighted by:
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| MHO | 11.57 | -0.07 |
- 36% increase in new contracts;
- 20% increase in deliveries;
- 36% increase in units in backlog;
- reduced operating loss to $1.2 million;
- EBITDA of $1.2 million;
- net debt to capital ratio of 23%;
- cash balance of $102.8 million;
- zero bank borrowings and no debt maturing until 2012.
For the 2009 third quarter, the Company reported a net loss of $21.1 million, or $1.14 per share, compared to a net loss of $58.7 million, or $4.18 per share, during the third quarter of 2008. The current quarter loss consists primarily of a $1.2 million pre-tax operating loss, $15.0 million of asset impairments, and a $4.4 million charge related to imported drywall.
The Company reported a net loss of $69.1 million for the nine-month period ended September 30, 2009, or $4.29 per share, compared to a net loss of $175.0 million, or $12.48 per share, for the same period a year ago.
New contracts for 2009's third quarter were 619, up 36% from 2008's third quarter of 456. For the nine months ended September 30, 2009, new contracts increased 33%, to 2,045 from 1,540 in 2008. The Company delivered 665 homes in the third quarter compared to 555 in same period of 2008, an increase of 20%. Homes delivered for the nine months ended September 30, 2009 increased 5% to 1,551 from 1,471 in 2008. The Company had 105 active communities at September 30, 2009 compared to 138 at September 30, 2008. The sales value of backlog of homes at September 30, 2009 was $263 million, with backlog units increasing to 1,060 and an average sales price of $248,000. The backlog of homes at September 30, 2008 had a sales value of $212 million, with backlog units of 781 and an average sales price of $272,000.
Robert H. Schottenstein, Chief Executive Officer and President commented, "We continue to make progress during these difficult times. Our predominantly defensive operating strategy and cost reduction efforts have served us well as we have significantly reduced our operating loss over the past 12 months. Our gross margins have increased during each of the past four quarters and expenses declined 19% from a year ago. The combination of these factors resulted in $1.2 million of positive EBITDA for the quarter and an operating loss approaching break even."
Mr. Schottenstein continued, "In addition, we continue to be pleased with our strong sales performance. Our third quarter sales represent our fourth consecutive quarter of increased new contracts and our third consecutive quarter of increased backlog. The adjustments we have made to our product offering, including our new 'eco Series' and the strengthening of our line of affordable homes have contributed to our sales increase. Looking ahead, economic conditions are likely to remain challenging and unpredictable. Accordingly, we will continue managing defensively. At the end of the third quarter, we had $103 million of cash and our net debt to capital ratio stood at 23%. Our shareholders' equity is $319 million and we have no significant debt maturing until 2012."
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 October 2010.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered nearly 75,000 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-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, 2008, and 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.
M/I Homes, Inc. and Subsidiaries
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
New contracts 619 456 2,045 1,540
Backlog units 1,060 781
Backlog value $263,000 $212,000
Homes delivered 665 555 1,551 1,471
-------------------------------------------------------------------------
Revenue $152,738 $160,385 $365,033 $457,472
Gross margin $6,360 $(24,280) $11,620 $(41,973)
Adjusted gross margin(1) $25,722 $18,886 $53,754 $62,172
Adjusted gross margin %(1) 16.8% 11.8% 14.7% 13.6%
Loss from continuing
operations before income
taxes $(20,953) $(58,423) $(68,796) $(138,610)
Adjusted pre-tax
operating loss(1) $(1,224) $(14,467) $(22,123) $(36,023)
Deferred tax asset
valuation allowance $8,204 $21,604 $27,532 $79,615
Net loss to common
shareholders $(21,074) $(58,655) $(69,105) $(174,963)
Loss per share $(1.14) $(4.18) $(4.29) $(12.48)
Diluted shares
outstanding (000s) 18,514 14,019 16,127 14,014
-------------------------------------------------------------------------
(1) See non-GAAP reconciliations in Non-GAAP Financial Reconciliations
table below.
Non-GAAP Reconciliations
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
Gross margin $6,360 $(24,280) $11,620 $(41,973)
Add: Impairments 14,962 43,166 32,484 104,145
Warranty - imported
drywall 4,400 - 9,650 -
-------------------------------------------------------------------------
Adjusted gross margin $25,722 $18,886 $53,754 $62,172
=========================================================================
Loss from continuing
operations before income
taxes $(20,953) $(58,423) $(68,796) $(138,610)
Add: Impairments and
abandonments 15,034 43,522 33,972 105,713
Warranty - imported
drywall 4,400 - 9,650 -
Other expense (income) - - 941 (5,555)
Restructuring/other 295 434 2,110 2,429
-------------------------------------------------------------------------
Adjusted pre-tax loss
from operations $(1,224) $(14,467) $(22,123) $(36,023)
=========================================================================
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenue $152,738 $160,385 $365,033 $457,472
Cost of sales 146,378 184,665 353,413 499,445
-------------------------------------------------------------------------
Gross margin 6,360 (24,280) 11,620 (41,973)
General and administrative
expense 14,414 17,267 42,831 51,958
Selling expense 11,601 14,726 30,339 41,539
-------------------------------------------------------------------------
Operating loss (19,655) (56,273) (61,550) (135,470)
Other expense (income) - - 941 (5,555)
Interest expense 1,298 2,150 6,305 8,695
-------------------------------------------------------------------------
Loss from continuing
operations before income
taxes (20,953) (58,423) (68,796) (138,610)
Provision for income taxes 121 232 309 31,445
-------------------------------------------------------------------------
Loss from continuing
operations, net of income
taxes (21,074) (58,655) (69,105) (170,055)
Loss from discontinued
operations, net of income
taxes - - - (33)
-------------------------------------------------------------------------
Net loss (21,074) (58,655) (69,105) (170,088)
Preferred share dividends - - - 4,875
-------------------------------------------------------------------------
Net loss to common
shareholders $(21,074) $(58,655) $(69,105) $(174,963)
=========================================================================
Revenue:
Housing revenue $148,587 $151,491 $354,042 $409,222
Land revenue 92 6,322 749 29,966
Other - - - 7,131
-------------------------------------------------------------------------
Total homebuilding revenue $148,679 $157,813 $354,791 $446,319
=========================================================================
Financial services revenue 4,059 2,572 10,242 11,153
-------------------------------------------------------------------------
Total revenue $152,738 $160,385 $365,033 $457,472
=========================================================================
Land, Lot and Investment in
Unconsolidated Subsidiaries
Impairment by Region:
Midwest $8,557 $21,350 $11,492 $34,324
Florida 6,383 11,258 16,991 52,750
Mid-Atlantic 22 10,558 4,001 17,071
-------------------------------------------------------------------------
Total $14,962 $43,166 $32,484 $104,145
=========================================================================
Abandonments by Region:
Midwest $24 $1 $547 $26
Florida 6 4 20 137
Mid-Atlantic 42 351 921 1,405
-------------------------------------------------------------------------
Total $72 $356 $1,488 $1,568
=========================================================================
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
EBITDA (2) $1,212 $(7,803) $(11,514) $(8,359)
Interest incurred - net
of fee amortization $3,599 $4,241 $11,071 $14,148
Interest amortized to
cost of sales $3,363 $2,845 $8,093 $7,871
Depreciation and
amortization $1,930 $1,789 $6,342 $6,490
Non-cash charges $15,865 $44,188 $37,309 $180,138
Cash provided by (used in)
operating activities $(15,834) $16,674 $25,017 $126,173
Cash (used in) provided
by investing activities $8,674 $(672) $(63,682) $3,384
Cash provided by (used in)
financing activities $7,160 $(13,772) $31,147 $(126,720)
Financial services
pre-tax income $2,007 $618 $4,737 $4,967
-------------------------------------------------------------------------
(2) 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
Summary Balance Sheet Information (unaudited)
(Dollars in thousands, except per share amounts)
September 30,
2009 2008
-------------------------------------------------------------------------
Assets:
Total cash and cash equivalents(3) $102,794 $14,465
Mortgage loans held for sale 37,087 34,695
Inventory:
Lots, land and land development 259,651 357,068
Land held for sale 2,804 2,773
Homes under construction 206,361 227,344
Other inventory 25,454 30,748
-------------------------------------------------------------------------
Total Inventory 494,270 617,933
Property and equipment - net 19,701 31,244
Investment in unconsolidated joint ventures 7,656 22,955
Income tax receivable - 39,457
Other assets 16,424 20,743
-------------------------------------------------------------------------
Total Assets $677,932 $781,492
=========================================================================
Liabilities:
Debt -Homebuilding Operations:
Senior notes $199,360 $199,104
Notes payable other 6,232 16,481
-------------------------------------------------------------------------
Total Debt - Homebuilding Operations 205,592 215,585
Note payable bank - financial services
operations 26,622 25,606
-------------------------------------------------------------------------
Total Debt 232,214 241,191
Accounts payable 50,464 48,271
Obligations for inventory not owned 9,754 18,584
Other liabilities 66,543 65,602
-------------------------------------------------------------------------
Total Liabilities 358,975 373,648
=========================================================================
Shareholders' Equity 318,957 407,844
-------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $677,932 $781,492
=========================================================================
Book value per common share $11.82 $21.95
Net debt/total capital ratio (4) 23% 35%
-------------------------------------------------------------------------
(3) 2009 amount includes $66.9 million and $10.9 million of restricted
cash and cash held in escrow, respectively.
(4) 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
-------------------------------------------------------------------------
NEW CONTRACTS
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------------------------------------
% %
Region 2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
Midwest 322 238 35 1,076 726 48
Florida 124 87 43 348 374 (7)
Mid-Atlantic 173 131 32 621 440 41
-------------------------------------------------------------------------
Total 619 456 36 2,045 1,540 33
=========================================================================
-------------------------------------------------------------------------
HOMES DELIVERED
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------------------------------------
% %
Region 2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
Midwest 367 257 43 783 673 16
Florida 107 105 2 302 355 (15)
Mid-Atlantic 191 193 (1) 466 443 5
-------------------------------------------------------------------------
Continuing Operations 665 555 20 1,551 1,471 5
=========================================================================
-------------------------------------------------------------------------
BACKLOG
-------------------------------------------------------------------------
September 30, 2009 September 30, 2008
-------------------------------------------------------------------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
-------------------------------------------------------------------------
Midwest 658 $144 $218,000 444 $109 $247,000
Florida 123 $27 $224,000 140 $41 $291,000
Mid-Atlantic 279 $92 $330,000 197 $62 $314,000
-------------------------------------------------------------------------
Total 1,060 $263 $248,000 781 $212 $272,000
=========================================================================
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
-------------------------------------------------------------------------
Land Position Summary
-------------------------------------------------------------------------
September 30, 2009 September 30, 2008
-------------------------------------------------------------------------
Lots Lots
Lots Under Lots Under
Owned Contract Total Owned Contract Total
-------------------------------------------------------------------------
Midwest region 4,442 1,111 5,553 5,429 893 6,322
Florida region 1,591 36 1,627 2,353 56 2,409
Mid-Atlantic region 1,267 803 2,070 1,748 677 2,425
-------------------------------------------------------------------------
Total 7,300 1,950 9,250 9,530 1,626 11,156
=========================================================================
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