EX-99.1 2 mho-20110930xexh991.htm EXHIBIT 99.1 PRESS RELEASE MHO-2011.09.30-Exh 99.1


Exhibit 99.1


M/I Homes Reports
Third Quarter Results


Columbus, Ohio (October 27, 2011) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2011.
 
2011 Third Quarter Results:
•
New contracts increased 20%
•
Homes delivered increased 13%
•
Backlog units and value increased 16% and 18%
•
Adjusted pre-tax loss from operations of $3.0 million
•
Net loss of $4.7 million
•
Adjusted EBITDA of $5.0 million
•
Cash balance of $93.0 million, including $46.8 million of unrestricted cash
•
Net debt to net capital ratio of 40%

For the third quarter of 2011, the Company reported a net loss of $4.7 million, or $0.25 per share, compared to a net loss of $2.1 million, or $0.11 per share during the third quarter of 2010. The current quarter loss consists primarily of a $3.0 million adjusted pre-tax loss from operations and $1.8 million of asset impairments. The prior year third quarter loss consisted primarily of a $2.2 million adjusted pre-tax loss from operations and $1.9 million of asset impairments, offset by a $2.4 million recovery related to imported drywall. The Company reported a net loss of $30.9 million for the first nine months of 2011, or $1.65 per share, compared to a net loss of $15.2 million, or $0.82 per share, for the same period a year ago.
  
New contracts for 2011's third quarter were 587, up 20% from 2010's third quarter of 489. For the nine months ended September 30, 2011, new contracts increased 1% from 1,856 in 2010 to 1,876 in 2011. M/I Homes had 120 active communities at September 30, 2011 compared to 108 at September 30, 2010 and 115 at June 30, 2011. The Company's cancellation rate was 19% in the third quarter of 2011 compared to 22% in 2010's third quarter. Homes delivered in 2011's third quarter were 582 compared to 515 in 2010's third quarter. Homes delivered for the nine months ended September 30, 2011 were 1,611 compared to 2010's deliveries of 1,784. Backlog of homes at September 30, 2011 had a sales value of $223 million, with an average sales price of $266,000 and backlog units of 838. At September 30, 2010 backlog sales value was $188 million, with an average sales price of $261,000 and backlog units of 722.
 
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are pleased to report a 20% improvement in our new contracts when compared to last year's third quarter, along with a 90 basis point sequential improvement in our adjusted operating gross margin compared to this year's second quarter. We achieved these results despite continued weakness and challenges in the general economy and housing industry. Our new communities significantly contributed to our improved new contracts and adjusted gross margin with 60% of our homes delivered during the quarter coming from new communities. Year-to-date, we have opened 37 new communities, and we plan to open ten additional new communities by year end. We are also pleased to report a reduction in our selling, general and administrative expenses as a percentage of revenue when compared to 2010's third quarter and our ninth consecutive




quarter of positive adjusted EBITDA. "
Mr. Schottenstein, continued, "While we are making progress on a number of fronts, economic conditions continue to be uncertain. We will thus continue to manage cautiously while taking advantage of opportunities and investments that we believe will improve our business. We ended the quarter with $93 million of cash, no outstanding borrowings under our $140 million homebuilding credit facility, and a 40% net debt to net capital ratio. We are confident that our strategy and market position will allow us to continue making progress as we strive to return to profitability."



The Company will broadcast live its earnings conference call today at 3:00 p.m. Eastern Time. To listen to the call live, 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.” A replay of the call will continue to be available on our website through October 2012.
 
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 79,500 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Homes and TriStone Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Houston and San Antonio, Texas; 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, including, without limitation, 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, 2010, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. 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.
 
In this press release, we use the following non-GAAP financial measures: adjusted operating gross margin, adjusted operating gross margin percentage, adjusted pre-tax loss from operations, and adjusted EBITDA. For these measures, we have provided reconciliations to the most comparable GAAP measures along with an explanation of the usefulness of the non-GAAP measures. Please see the “Non-GAAP Financial Results / Reconciliations” table below.
 
 
Contact M/I Homes, Inc.
Phillip G. Creek, Executive Vice President, Chief Financial Officer, (614) 418-8011
Ann Marie W. Hunker, Vice President, Controller, (614) 418-8225
Kevin C. Hake, Senior Vice President, Treasurer (614) 418-8227
 







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,
 
2011
 
2010
 
2011
 
2010
New contracts
587

 
489

 
1,876

 
1,856

Average community count
118

 
109

 
113

 
107

Cancellation rate
19
%
 
22
%
 
18
%
 
18
%
Backlog units
 
 
 
 
838

 
722

Backlog value
 
 
 
 
$
222,738

 
$
188,304

 
 
 
 
 
 
 
 
Homes delivered
582

 
515

 
1,611

 
1,784

Average home closing price
$
238

 
$
257

 
$
235

 
$
247

 
 
 
 
 
 
 
 
Homebuilding revenue:
 
 
 
 
 
 
 
   Housing revenue
$
138,597

 
$
132,003

 
$
379,161

 
$
440,516

   Land revenue
155

 
—

 
1,110

 
86

Total homebuilding revenue
$
138,752

 
$
132,003

 
$
380,271

 
$
440,602

 
 
 
 
 
 
 
 
   Financial services revenue
2,872

 
3,606

 
9,367

 
10,800

 
 
 
 
 
 
 
 
Total revenue
$
141,624

 
$
135,609

 
$
389,638

 
$
451,402

 
 
 
 
 
 
 
 
Cost of sales - operations
116,269

 
111,069

 
322,886

 
374,841

Cost of sales - impairment / other
1,697

 
(614
)
 
18,013

 
9,395

Gross margin
23,658

 
25,154

 
48,739

 
67,166

General and administrative expense
13,896

 
13,148

 
38,064

 
39,601

Selling expense
11,213

 
11,735

 
30,621

 
36,482

Operating (loss) profit
(1,451
)
 
271

 
(19,946
)
 
(8,917
)
Interest expense
3,384

 
1,952

 
10,884

 
6,172

Loss before income taxes
(4,835
)
 
(1,681
)
 
(30,830
)
 
(15,089
)
Expense (benefit) for income taxes
(117
)
 
389

 
71

 
123

Net loss
(4,718
)
 
(2,070
)
 
(30,901
)
 
(15,212
)
Net loss per share
$
(0.25
)
 
$
(0.11
)
 
$
(1.65
)
 
$
(0.82
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
18,728

 
18,523

 
18,685

 
18,523

Diluted
18,728

 
18,523

 
18,685

 
18,523





M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)

 
As of
 
September 30,
 
2011
 
2010
Assets:
 
 
 
Total cash and cash equivalents(1)
$
93,047

 
$
92,002

Mortgage loans held for sale
36,666

 
32,446

Inventory:
 
 
 
Lots, land and land development
240,916

 
258,657

Land held for sale
—

 
—

Homes under construction
204,338

 
199,129

Other inventory
46,107

 
30,200

Total inventory
$
491,361

 
$
487,986

 
 
 
 
Property and equipment - net
14,741

 
17,453

Investments in unconsolidated joint ventures
10,256

 
11,102

Income tax receivable
1,267

 
4,298

Other assets(2)
14,387

 
11,937

Total Assets
$
661,725

 
$
657,224

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes
$
238,914

 
$
199,616

Notes payable - other
5,857

 
5,932

Total Debt - Homebuilding Operations
$
244,771

 
$
205,548

 
 
 
 
Note payable bank - financial services operations
31,658

 
23,773

Total Debt
$
276,429

 
$
229,321

 
 
 
 
Accounts payable
45,842

 
53,863

Other liabilities
63,562

 
60,157

Total Liabilities
$
385,833

 
$
343,341

 
 
 
 
Shareholders' Equity
275,892

 
313,883

Total Liabilities and Shareholders' Equity
$
661,725

 
$
657,224

 
 
 
 
Book value per common share
$
9.39

 
$
11.55

Net debt/net capital ratio(3)
40
%
 
30
%
(1)
2011 and 2010 amounts include $46.2 million and $48.1 million of restricted cash and cash held in escrow, respectively.
(2)
2011 and 2010 amounts include gross deferred tax assets of $139.5 million and $122.8 million, respectively, net of valuation allowances of $139.5 million and $122.8 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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
 
 
 
 
 
 
 
 
Adjusted operating gross margin(1)
$
25,355

 
$
24,540

 
$
66,752

 
$
76,562

Adjusted operating gross margin %(1)
17.9
%
 
18.1
%
 
17.1
%
 
17.0
%
 
 
 
 
 
 
 
 
Adjusted pre-tax loss from operations(1)
$
(2,998
)
 
$
(2,155
)
 
$
(12,377
)
 
$
(5,296
)
 
 
 
 
 
 
 
 
Adjusted EBITDA(1)
$
5,021

 
$
7,189

 
$
12,642

 
$
19,963

 
 
 
 
 
 
 
 
Cash flow used in operating activities
$
(16,047
)
 
$
(24,949
)
 
$
(24,566
)
 
$
(42,987
)
Cash (used in) provided by investing activities
$
18,321

 
$
(2,543
)
 
$
(10,723
)
 
$
(18,551
)
Cash (used in) provided by financing activities
$
(345
)
 
$
(10,216
)
 
$
910

 
$
(4,498
)
 
 
 
 
 
 
 
 
Land/lot purchases
$
20,160

 
$
35,873

 
$
56,616

 
$
94,017

Land development spending
$
13,268

 
$
15,011

 
$
33,482

 
$
29,649

Land/lot sale proceeds
$
155

 
$
—

 
$
1,110

 
$
86

 
 
 
 
 
 
 
 
Financial services pre-tax income
$
766

 
$
1,519

 
$
3,559

 
$
4,500

 
 
 
 
 
 
 
 
Deferred tax asset valuation allowance
$
1,345

 
$
763

 
$
11,657

 
$
5,684


Impairment and Abandonments by Region
(Dollars in thousands)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
Impairment by Region:
2011
 
2010
 
2011
 
2010
Midwest
$
1,103

 
$
141

 
$
11,442

 
$
3,113

Southern
594

 
1,545

 
6,554

 
3,717

Mid-Atlantic
—

 
110

 
17

 
4,376

Total
$
1,697

 
$
1,796

 
$
18,013

 
$
11,206

 
 
 
 
 
 
 
 
Abandonments by Region:
 
 
 
 
 
 
 
Midwest
$
121

 
$
5

 
$
143

 
$
94

Southern
19

 
94

 
56

 
95

Mid-Atlantic
—

 
41

 
241

 
208

Total
$
140

 
$
140

 
$
440

 
$
397

(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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Gross margin
$
23,658

 
$
25,154

 
$
48,739

 
$
67,166

Add: Impairments
1,697

 
1,796

 
18,013

 
11,206

       Imported drywall charges
—

 
(2,410
)
 
—

 
(1,810
)
Adjusted operating gross margin
$
25,355

 
$
24,540

 
$
66,752

 
$
76,562

 
 
 
 
 
 
 
 
Loss before income taxes
$
(4,835
)
 
$
(1,681
)
 
$
(30,830
)
 
$
(15,089
)
Add: Impairments and abandonments
1,837

 
1,936

 
18,453

 
11,603

      Imported drywall charges
—

 
(2,410
)
 
—

 
(1,810
)
Adjusted pre-tax loss from operations
$
(2,998
)
 
$
(2,155
)
 
$
(12,377
)
 
$
(5,296
)
 
 
 
 
 
 
 
 
Net loss
$
(4,718
)
 
$
(2,070
)
 
$
(30,901
)
 
$
(15,212
)
Add (subtract):
 
 
 
 
 
 
 
Income taxes
(117
)
 
389

 
71

 
123

Interest expense net of interest income
3,124

 
1,631

 
10,137

 
5,261

Interest amortized to cost of sales
2,515

 
2,719

 
7,672

 
9,904

Depreciation and amortization
1,896

 
1,889

 
5,685

 
6,105

Non-cash charges
2,321

 
2,631

 
19,978

 
13,782

Adjusted EBITDA
$
5,021

 
$
7,189

 
$
12,642

 
$
19,963


Adjusted operating gross margin, adjusted operating gross margin percentage, adjusted pre-tax (loss) income from operations and adjusted EBITDA 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 financial  measures that can be compared to a prior period without regard to the variability of asset impairments and certain other write-offs and unusual charges. 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 financial results to the results 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.  Adjusted EBITDA is also presented in accordance with the terms of our revolving credit facility.





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
2011
 
2010
 
Change
 
2011
 
2010
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
251

 
248

 
1
%
 
846

 
994

 
(15
)%
 
 
 
 
 
 
 
 
 
 
 
 
Southern
149

 
93

 
60
%
 
451

 
365

 
24
 %
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
187

 
148

 
26
%
 
579

 
497

 
16
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total
587

 
489

 
20
%
 
1,876

 
1,856

 
1
 %

 
HOMES DELIVERED
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2011
 
2010
 
Change
 
2011
 
2010
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
254

 
272

 
(7
)%
 
741

 
967

 
(23
)%
 
 
 
 
 
 
 
 
 
 
 
 
Southern
162

 
79

 
105
 %
 
395

 
323

 
22
 %
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
166

 
164

 
1
 %
 
475

 
494

 
(4
)%
 
 
 
 
 
 
 
 
 
 
 
 
Total
582

 
515

 
13
 %
 
1,611

 
1,784

 
(10
)%

 
BACKLOG
 
September 30, 2011
 
September 30, 2010
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
 
 
 
 
 
 
 
 
 
 
 
 
Midwest
441

 
$
112

 
$
253,000

 
444

 
$
110

 
$
248,000

 
 
 
 
 
 
 
 
 
 
 
 
Southern
184

 
$
42

 
$
230,000

 
97

 
$
21

 
$
221,000

 
 
 
 
 
 
 
 
 
 
 
 
Mid-Atlantic
213

 
$
69

 
$
324,000

 
181

 
$
57

 
$
315,000

 
 
 
 
 
 
 
 
 
 
 
 
Total
838

 
$
223

 
$
266,000

 
722

 
$
188

 
$
261,000


 
LAND POSITION SUMMARY
 
September 30, 2011
 
 
September 30, 2010
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
 
 
 
 
 
 
 
 
 
Midwest
4,006

772

4,778

 
 
4,189

1,137

5,326

 
 
 
 
 
 
 
 
 
Southern
1,431

1,029

2,460

 
 
1,539

223

1,762

 
 
 
 
 
 
 
 
 
Mid-Atlantic
1,750

1,205

2,955

 
 
2,080

489

2,569

 
 
 
 
 
 
 
 
 
Total
7,187

3,006

10,193

 
 
7,808

1,849

9,657