M/I Homes Reports Fourth Quarter and Year-End Results
COLUMBUS, Ohio, Feb. 3 /PRNewswire-FirstCall/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2009.
2009 Fourth Quarter Highlights:
- Pre-tax income from operations of $3 million
- Net income of $7 million
- New contracts increased 32%
- Backlog units up 15%, with average sales price up 10%
- Cash balance of $132 million
- Net debt to capital ratio of 18%
- Zero homebuilding bank borrowings and no debt maturing until 2012
For the 2009 fourth quarter, the Company reported net income of $7 million, or $0.38 per share. The current quarter income consists of $3 million of pre-tax income from operations, a $31 million tax benefit related to the 5-year carryback tax law, offset in part, by $23 million of asset impairments and $4 million of other non-operating charges primarily related to imported drywall. In 2008's fourth quarter, the Company reported a net loss of $75 million, or $5.38 per share, including $53 million of similar asset impairments as well as $5 million of other charges.
The Company reported a net loss of $62 million for the year ended December 31, 2009, or $3.71 per share, compared to a net loss of $250 million, or $17.86 per share for 2008. The current year loss consists of (i) a $19 million pre-tax loss from operations; (ii) $57 million of asset impairments and abandonments; and (iii) other non-operating charges totaling $17 million primarily related to imported drywall, offset, in part, by the $31 million tax benefit mentioned above. For the year ended December 31, 2008, the Company recorded $159 million of pre-tax charges for inventory impairments and abandonments and a $109 million after-tax non-cash valuation allowance against its deferred tax assets.
New contracts of 2,493 for the twelve months ended December 31, 2009 were up 33% from 2008's 1,879. New contracts for 2009's fourth quarter were 448 compared to 339 in 2008. The Company's cancellation rate was 23% in the fourth quarter of 2009, compared to 31% in 2008's fourth quarter. Homes delivered for the twelve months ended December 31, 2009 increased 17% to 2,409 compared to 2008's deliveries of 2,061. Homes delivered in 2009's fourth quarter were 858, increasing 55% from 2008's fourth quarter 554. The sales value of homes in backlog at December 31, 2009 was $177 million, with backlog units of 650 and an average sales price of $272,000. The backlog of homes at December 31, 2008 had a sales value of $139 million, with backlog units of 566 and an average sales price of $247,000. M/I Homes had 101 active communities at December 31, 2009 compared to 128 at December 31, 2008.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased with what we accomplished in 2009. In the face of uncertain and challenging market conditions, we made meaningful progress on many fronts. We materially reduced our operating loss in each quarter of 2009, and recorded pre-tax income from operations, net income and positive EBITDA in the fourth quarter. Our gross margins improved throughout the year as well, going from 12.7% in the first quarter to 16.3% in the fourth quarter. Our expenses declined year-over-year in every quarter and were 20% below 2008 levels. We finished 2009 with strong new orders and closings, with new orders increasing 33% over 2008 despite a 20% decline in active communities. And, we ended the year with our backlog value up over 25% from a year ago."
Mr. Schottenstein continued, "We also made considerable progress in the execution of a number of key operating initiatives. The development and roll-out of our new eco series homes in mid-2009 has been very well received by homebuyers and we are now offering this series in most of our markets. Our customer service scores for 2009 improved from 2008 in all categories and we have improved our market share in every one of our nine homebuilding divisions. We also strengthened our balance sheet and financial position. We reduced our unsold owned lots from 8,800 to 7,200, generated cash flow from operations of $68 million and completed a $53 million equity offering, increasing our year-end cash balance to $132 million. We ended the year with no homebuilding bank borrowings and equity of $327 million, improving our net debt to capital ratio to 18% from 36% a year-ago."
Mr. Schottenstein, concluded, "As we begin 2010, we feel good about our position and our performance. While economic conditions remain difficult, the general economy is, by most measures, more stable today than it was last year at this time. Though no one knows when we will begin to see tangible signs of job growth and a stronger economy, we are confident that as conditions improve, we have the right strategy and people to return to profitability."
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 February 2011.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 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 Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
New contracts 448 339 2,493 1,879
Backlog units 650 566
Backlog value $177,000 $139,000
Homes delivered 858 554 2,409 2,061
---------- --- --- ----- -----
Revenue $204,916 $150,187 $569,949 $607,659
Cost of sales 196,997 186,019 550,410 685,464
------------- ------- ------- ------- -------
Gross margin 7,919 (35,832) 19,539 (77,805)
General and
administrative
expense 16,339 25,500 59,170 77,458
Selling expense 13,611 12,680 43,950 54,219
--------------- ------ ------ ------ ------
Operating loss (22,031) (74,012) (83,581) (209,482)
Other expense
(income) - - 941 (5,555)
Interest expense 2,162 2,502 8,467 11,197
---------------- ----- ----- ----- ------
Loss from continuing
operations before
income taxes (24,193) (76,514) (92,989) (215,124)
(Benefit) provision
for income taxes (31,189) (1,154) (30,880) 30,291
--------- ------- ------ ------- ------
Income (loss)
from continuing
operations, net
of income taxes 6,996 (75,360) (62,109) (245,415)
Loss from
discontinued
operations, net
of income taxes - - - (33)
---------------- --- --- --- ---
Net income (loss) 6,996 (75,360) (62,109) (245,448)
Preferred share
dividends - - - 4,875
----------- --- --- --- -----
Net income (loss) to
common shareholders $6,996 $(75,360) $(62,109) $(250,323)
-------------------- ------ -------- -------- ---------
Income (loss)
per share $0.38 $(5.38) $(3.71) $(17.86)
========== ===== ====== ====== =======
Weighted average
shares outstanding:
Basic 18,518 14,022 16,730 14,016
Diluted 18,712 14,022 16,730 14,016
------- ------ ------ ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
December 31,
2009 2008
---- ----
Assets:
Total cash and cash equivalents(1) $132,232 $39,175
Mortgage loans held for sale 34,978 37,772
Inventory:
Lots, land and land development 232,127 333,651
Land held for sale 4,300 2,804
Homes under construction 158,998 150,949
Other inventory 24,864 28,625
--------------- ------- -------
Total Inventory 420,289 516,029
=============== ======= =======
Property and equipment - net 18,998 27,732
Investment in unconsolidated joint ventures 10,299 13,130
Income tax receivable 30,135 39,457
Other assets 16,897 19,993
------------ ------ ------
Total Assets $663,828 $693,288
============ ======= =======
Liabilities:
Debt –Homebuilding Operations:
Senior notes $199,424 $199,168
Notes payable – other 6,160 16,300
--------------------- ------- -------
Total Debt – Homebuilding Operations 205,584 215,468
==================================== ======= =======
Note payable bank – financial services
operations 24,142 35,078
-------------------------------------- ------ ------
Total Debt 229,726 250,546
========== ======= =======
Accounts payable 38,262 27,542
Obligations for inventory not owned 616 5,549
Community development district obligations 8,204 11,035
Other liabilities 60,257 65,555
----------------- ------ ------
Total Liabilities 337,065 360,227
================= ======= =======
Shareholders' Equity 326,763 333,061
-------------------- ------- -------
Total Liabilities and Shareholders' Equity $663,828 $693,288
========================================== ======= ======
Book value per common share $12.28 $16.62
Net debt/total capital ratio (2) 18% 36%
-------------------------------- ------ ------
(1) 2009 amount includes $22.3 million of restricted cash and cash held
in escrow.
(2) Net debt/total capital ratio 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
(Dollars in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Housing revenue $201,100 $144,275 $555,142 $553,497
Land revenue - 2,933 749 32,899
Other - - - 7,131
----- --- --- --- -----
Total homebuilding
revenue 201,100 147,208 555,891 593,527
------------------ ------- ------- ------- -------
Financial services
revenue 3,816 2,979 14,058 14,132
------------------ ----- ----- ------ ------
Total revenue $204,916 $150,187 $569,949 $607,659
================ ======= ===== ===== ========
Gross margin $7,919 $(35,832) $19,539 $(77,805)
Operating gross
margin(1) $33,356 $13,323 $87,110 $75,495
Operating gross
margin %(1) 16.3% 8.9% 15.3% 12.4%
Pre-tax income
(loss) from
operations(1) $2,863 $(18,185) $(19,260) $(54,208)
Adjusted EBITDA(1) $8,427 $(11,219) $(3,087) $(19,578)
Cash provided by
operating
activities $43,464 $22,702 $68,481 $148,875
Cash provided by
(used in) investing
activities $44,203 $(2,642) $(19,479) $742
Cash (used in)
provided by
financing
activities $(2,737) $8,115 $28,410 $(118,605)
Financial services
pre-tax income $1,296 $587 $6,033 $5,554
Deferred tax asset
valuation
allowance -net(2) $(19,312) $28,992 $8,220 $108,607
----------------- -------- ------- ------ --------
Land, Lot and Investment in Unconsolidated Subsidiaries
Impairment by Region
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Midwest $8,294 $21,698 $19,786 $56,022
Florida 7,114 13,994 24,105 66,744
Mid-Atlantic 7,529 13,463 11,530 30,534
------------ ----- ------ ------ ------
Total $22,937 $49,155 $55,421 $153,300
======= ======= ======= ======= ========
Abandonments by
Region:
Midwest $22 $285 $569 $311
Florida - 25 20 162
Mid-Atlantic 146 3,434 1,067 4,839
------------ --- ----- ----- -----
Total $168 $3,744 $1,656 $5,312
======= ==== ====== ====== ======
(1) See non-GAAP reconciliations in Non-GAAP Financial Results /
Reconciliations table below.
(2) 2009 amounts include reversal of $30.1 million of previously reserved
for deferred tax assets.
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliations
(Dollars in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Gross margin $7,919 $(35,832) $19,539 $(77,805)
Add: Impairments 22,937 49,155 55,421 153,300
Warranty –
imported
drywall 2,500 - 12,150 -
--------------- ----- --- ------ ---
Operating gross
margin $33,356 $13,323 $87,110 $75,495
========= ======= ======= ======= =======
Loss from continuing
operations before
income taxes $(24,193) $(76,514) $(92,989) $(215,124)
Add: Impairments
and
abandonments 23,105 52,899 57,077 158,612
Imported
drywall
remediation 2,500 - 12,150 -
Other expense
(income) - - 941 (5,555)
Restructuring/
other 1,451 5,430 3,561 7,859
-------------- ----- ----- ----- -----
Pre-tax income
(loss) from
operations $2,863 $(18,185) $(19,260) $(54,208)
=========== ====== ======== ======== ========
Net income (loss) $6,996 $(75,360) $(62,109) $(245,448)
Income taxes (31,189) (1,154) (30,880) 30,270
Interest expense
net of interest
income 1,757 2,196 7,295 10,002
Interest amortized
to cost of sale 3,627 2,780 11,720 10,651
Depreciation
and
amortization 2,083 2,323 8,425 8,813
Non-cash charges 25,153 57,996 62,462 166,134
---------------- ------ ------ ------ -------
Adjusted EBITDA $8,427 $(11,219) $(3,087) $(19,578)
=============== ====== ======== ======= ========
Operating gross margin, pre-tax income (loss) from operations and EBITDA
are non-GAAP financial measures. Management finds these measures to be a
useful in evaluating the Company's performance because it discloses the
financial results generated from homes it 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 assist
the Company's management in making strategic decisions regarding the
Company's future operations. The Company believes investors will also find
these to be important and useful because it discloses profitability
measures that can be compared to a prior period without regard to the
variability of asset impairments and certain unusual 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 profits to its competitors with regard to the
homes they deliver in the same period. In addition, 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.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
Three months ended Twelve months ended
December 31, December 31,
------------ ------------
% %
Region 2009 2008 Change 2009 2008 Change
------ ---- ---- ------ ---- ---- ------
Midwest 258 185 39 1,334 911 46
Florida 58 56 4 406 430 (6)
Mid-Atlantic 132 98 35 753 538 40
------------ --- --- --- --- --- ---
Total 448 339 32 2,493 1,879 33
===== === === === ===== ===== ===
HOMES DELIVERED
Three months ended Twelve months ended
December 31, December 31,
------------ ------------
% %
Region 2009 2008 Change 2009 2008 Change
------ ---- ---- ------- ---- ---- -----
Midwest 499 264 89 1,282 937 37
Florida 126 119 6 428 474 (10)
Mid-Atlantic 233 171 36 699 614 14
*Discontinued
Operations - - - - 36 -
------------- --- --- --- --- --- ---
Consolidated
Total 858 554 55 2,409 2,061 17
============= === === === ===== ===== ===
BACKLOG
December 31, 2009 December 31, 2008
----------------- -----------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
--------------------------------------------------------------------------
Midwest 417 $101 $241,000 365 $84 $230,000
Florida 55 $12 $220,000 77 $20 $265,000
Mid-Atlantic 178 $64 $359,000 124 $35 $285,000
------------ --- --- -------- --- --- --------
Total 650 $177 $272,000 566 $139 $247,000
===== === ==== ======= === ==== ========
* The Florida Region excludes the Company's West Palm Beach Division,
which is now classified as a Discontinued Operation.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
Land Position Summary
---------------------
December 31, 2009 December 31, 2008
------------------------- ------------------------
Lots Lots
Lots Under Lots Under
Owned Contract Total Owned Contract Total
----- -------- ----- ----- -------- -----
Midwest
region 4,285 1,104 5,389 5,234 521 5,755
Florida
region 1,575 190 1,765 1,885 73 1,958
Mid-Atlantic
region 1,335 825 2,160 1,678 332 2,010
-------- ----- --- ----- ----- --- -----
Total 7,195 2,119 9,314 8,797 926 9,723
===== ===== ===== ===== ===== === =====
SOURCE M/I Homes, Inc.
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