M/I Homes, Inc. 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% net 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 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, 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.
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 $28,487 $(4,594) $54,657 $62,835
(excluding land/lot
purchases and sales and
land
development spending)(1)
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 $28,487 $(4,594) $54,657 $62,835
(excluding land/lot
purchases and sales ======= ======= ======= =======
and land development
spending)
====================
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
------------- -------------
Region Units Dollars Average Units Dollars Average
Sales Sales
(millions) Price (millions) 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
Lots Under 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
===== ===== ===== ===== ===== ===== =====
Source: M/I Homes, Inc.
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