EX-99.1 2 exhibit.htm EXHIBIT 99.1 PRESS RELEASE exhibit.htm

Exhibit 99.1

 
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M/I Homes Reports
Fourth Quarter and Year-End Results

Columbus, Ohio (February 3, 2010) - 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.

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
  
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