EX-99.1 2 exhibit.htm PRESS RELEASE exhibit.htm
Exhibit 99.1
 
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M/I Homes Reports
Third Quarter Results

Columbus, Ohio (October 30, 2007) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2007.

The Company reported a net loss of $21.7 million before preferred share dividends in its 2007 third quarter.  Included in this loss are pre-tax charges totaling $33.4 million ($1.49 per common share) which includes land-related impairment and abandonment charges of $26.5 million, joint venture investment write-offs of $6.1 million and $0.8 million of severance costs.  The Company’s net loss after preferred share dividends of $2.5 million was $24.2 million or $1.73 per common share compared to net income of $15.2 million, or $1.08 per diluted share in last year’s third quarter.  The Company reported a net loss after preferred share dividends of $64.5 million for the first nine months of 2007, or $4.62 per common share, compared to net income of $49.8 million, or $3.51 per diluted share in the same period a year ago.  Included in the Company’s 2007 year-to-date loss are pre-tax charges totaling $109.3 million ($4.86 per common share) as follows: (i) land-related impairment and abandonment charges of $92.9 million; (ii) joint venture investment write-offs of $8.8 million; (iii) $5.2 million for the write-off of acquisition intangibles; and (iv) $2.4 million of severance costs.

New contracts for 2007’s third quarter were 561, down 2% from 2006’s third quarter of 571.  For the nine-month period ended September 30, 2007, new contracts declined 11% to 2,191 from 2,472 in 2006.  Homes delivered for the 2007 third quarter decreased 15% to 787 from 2006’s 927.  For the nine-month period ended September 30, 2007, homes delivered were 2,246, down 18% from 2,746 in the same period of 2006.  The sales value of backlog of homes at September 30, 2007 was $481 million with backlog units of 1,468 and an average sales price of $327,000.  The backlog of homes at the same time last year had a sales value of $923 million with backlog units of 2,533 and an average sales price of $364,000.  M/I Homes had 159 active communities at September 30, 2007 compared to 170 at September 30, 2006.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “Market conditions continue to be challenging.  We remain focused on initiatives that include reducing our land and expense levels, improving our balance sheet, as well as continued improvements in our customer service and quality processes.  We expect to deliver approximately 3,000 homes this year and further reduce our debt levels by year end. ”

The Company will broadcast live its earnings conference call today at 4:00 p.m. EDT.  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, along with any applicable reconciliation of non-GAAP financial measures, will continue to be available on our website through October 2008.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered nearly 72,000 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, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Delaware; 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 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, 2006.  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, Senior Vice President and Chief Financial Officer, (614) 418-8011
Ann Marie W. Hunker, Vice President, Corporate Controller, (614) 418-8225
investorrelations@mihomes.com

 
 
M/I Homes, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)



 
      Three Months Ended
      Nine Months Ended
 
September 30,
      September 30,
     
 
 2007
    2006 
  2007   
  2006
                         
Revenue
$
243,668
  
$
306,188
  
$
703,774
  
$
877,037
  
                         
Net (loss) income
$
 (21,717 )
$
15,185
  
$
 (59,666 )
$
49,844
  
                         
Preferred share dividends
$
2,437
    
-
  
$
4,875
    
-
  
                         
Net (loss) income available to
                        
   common shareholders
$
 (24,154 )
$
15,185
  
$
 (64,541 )
$
49,844
  
                         
Earnings per share
                        
Basic
$
 (1.73 )
$
1.09
  
$
 (4.62 )
$
3.56
  
Diluted
$
 (1.73 )
$
1.08
  
$
 (4.62 )
$
3.51
  
                         
Weighted average shares outstanding
                        
Basic
  
13,990
    
13,892
    
13,969
    
13,991
  
Diluted
  
13,990
    
14,078
    
13,969
    
14,187
  

 
 

M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)

 
Three Months Ended
 
Nine Months Ended
 
  September 30,      
  
  September 30,      
                               
 
2007   
  
 2006  
  
2007   
  
   2006
                               
Revenue
$
243,668
    
$
306,188
    
$
703,774
    
$
877,037
  
Gross margin
  
15,315
      
73,155
      
47,394
      
229,830
  
General and administrative expense
  
24,648
      
25,052
      
73,486
      
74,609
  
Selling expense
  
20,605
      
21,645
      
58,206
      
65,510
  
Operating income
   (29,938 )    
26,458
       (84,298 )    
89,711
  
Interest expense
  
5,014
      
3,578
      
12,280
      
10,930
  
(Loss) income before income taxes
   (34,952 )    
22,880
       (96,578 )    
78,781
  
Income tax (benefit) provision
   (13,235 )    
7,695
       (36,912 )    
28,937
  
Net (loss) income
   (21,717 )    
15,185
       (59,666 )    
49,844
  
Preferred share dividends
  
2,437
      
-
      
4,875
      
-
  
Net  (loss) income available to
                              
   common shareholders
$
 (24,154 )   $
15,185
     $ (64,541 )   $
49,844
  
                               
                               
                               
Revenue:
                              
Housing revenue
 $
232,271
     $
290,101
     $
673,389
     $
839,960
  
Land revenue
  
7,140
      
13,820
      
16,209
      
18,242
  
Other
   (552 )     (1,372 )     (780 )    
3,425
  
   Total homebuilding revenue
 $
238,859
     $
302,549
     $
688,818
     $
861,627
  
                               
Financial services revenue
  
4,809
      
5,124
      
14,956
      
19,250
  
Eliminations
  
-
       (1,485 )    
-
       (3,840 )
   Total revenue
 $
243,668
     $
306,188
     $
703,774
     $
877,037
  
                               
                               
Additional Information:
                              
Average closing price
 $
295
     $
313
     $
300
     $
306
  
Housing gross margin percentage
   7.2 %     23.0 %     5.9 %     24.7 %
Land gross margin percentage
   (90.3 )%     12.1 %     (46.7 )%     15.4 %
Land gross margin dollars
 $ (6,448 )   $
1,676
     $ (7,574 )   $
2,812
  
                               
Financial services pre-tax income
 $
2,015
     $
2,397
     $
6,853
     $
10,717
  
                               
Land, Lot and Investment in
                              
  Unconsolidated Subsidiaries
                              
    Impairment by Region:
                              
Midwest
 $
453
     $
1,921
     $
7,342
     $
1,921
  
Florida
  
25,217
      
-
      
57,842
      
-
  
Mid-Atlantic
  
6,664
      
-
      
34,355
      
-
  
Total Impairment
 $
32,334
     $
1,921
     $
99,539
     $
1,921
  
                               
Abandonments by Region:
                              
Midwest
 $
269
     $
1,731
     $
291
     $
1,976
  
Florida
  
-
      
28
      
1,828
      
1,494
  
Mid-Atlantic
  
-
      
271
      
46
      
510
  
Total Abandonments
 $
269
     $
2,030
     $
2,165
     $
3,980
  



M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)

 
 Three Months Ended
    
    Nine Months Ended    
  
 
     September 30,    
    
September 30,
  
                       
 
   2007 
 
 
   2006 
    
   2007 
    
   2006 
  
 
 
                    
EBITDA (1)
 $
9,447
     $
36,968
     $
41,346
     $
107,881
  
Interest incurred – net of fee
                              
amortization
 $
8,702
     $
12,009
     $
26,926
     $
32,398
  
Interest amortized to cost of sales
 $
4,013
     $
4,225
     $
11,049
     $
6,162
  
Depreciation and amortization
 $
2,438
     $
1,675
     $
6,306
    $
4,809
  
Non-cash charges
 $
33,307
     $
4,978
     $
109,333
     $
8,271
  
                               
Cash provided by (used in) operating
                              
activities
 $
11,285
     $ (44,729 )   $
73,722
     $ (182,009 )
Cash used in investing activities
 $ (2,789 )   $ (5,176 )   $ (8,992 )   $ (17,144 )
Cash provided by (used in) financing
                              
activities
 $ (8,359 )   $
51,907
     $ (73,761 )   $
176,781
  
                               
Units:
                              
New contracts
  
561
      
571
      
2,191
      
2,472
  
Homes delivered
  
787
      
927
      
2,246
      
2,746
  
                               
(1) 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.


 
September 30,
  
 
2007
 
  
 2006
  
Backlog:
           
Units
  
1,468
      
2,533
  
Aggregate sales value
 $
481,000
     $
923,000
  
Average sales price
 $
327
     $
364
  
               
 
September 30,
  
 
2007
    
2006
  
Balance Sheet and Operating Data:
              
Unrestricted cash/cash held in escrow
 $
21,265
     $
25,470
  
               
Homebuilding inventory:
              
  Lots, land and land development costs
 $
583,197
     $
813,410
  
  Land held for sale
  
72,592
      
56,290
  
  Homes under construction
  
407,293
      
494,384
  
  Land purchase deposit
  
4,899
      
4,411
  
  Other
  
42,688
      
29,593
  
Total homebuilding inventory
 $
1,110,669
     $
1,398,088
  
               
Total assets
 $
1,354,380
     $
1,590,891
  
Homebuilding debt
 $
460,613
     $
696,592
  
Shareholders’ equity
 $
651,888
     $
626,925
  
Total book value per share
 $
46.38
     $
45.12
  
Book value per common share
 $
39.27
     $
45.12
  
Homebuilding net debt/capital ratio
   40 %     51 %

 
 
 
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data


 
 
       Land Position Summary
                       
 
September 30, 2007    
  
September 30, 2006     
                       
 
Lots
  
Lots Under
      
Lots
  
Lots Under 
    
 
Owned
  
Contract
  
Total
  
 Owned
  
Contract 
  
Total 
                       
Midwest Region
  6,568
  
   515
  
  7,083
 
  7,619
  
1,143
  
  8,762
                       
Florida Region
  7,725
  
   351
  
  8,076
  
  8,454
  
1,170
  
  9,624
                       
Mid-Atlantic Region
  2,474
  
1,356
  
  3,830
  
  2,846
  
1,233
  
  4,079
                       
Total
16,767
  
2,222
  
18,989
  
18,919
  
3,546
  
22,465