Attached files
| file | filename |
|---|---|
| 8-K - 8K FOURTH QUARTER & YEAR-END RESULTS 12-31-10 - M/I HOMES, INC. | mho201012308k.htm |
Exhibit 99.1
M/I Homes Reports
Fourth Quarter and Year-End Results
Columbus, Ohio (February 3, 2011) - M/I Homes, Inc. (NYSE:MHO) announced results for its fourth quarter and year ended December 31, 2010.
2010 Fourth Quarter Highlights:
• | Pre-tax loss from operations of $2.4 million |
• | New contracts increased 3% |
• | Cash balance of $123 million |
• | Extended maturity of Senior Notes |
• | Net debt to capital ratio of 34% |
For the 2010 fourth quarter, the Company reported a net loss of $11.1 million, or $0.60 per share. The loss consists of a $2.4 million pre-tax loss from operations; $8.4 million loss on the early retirement of senior notes; $1.6 million of asset impairments; and a $1.3 million tax benefit. In 2009's fourth quarter, the Company reported net income of $7.0 million, or $0.38 per share, primarily due to a $31.2 million tax benefit.
The Company reported a net loss of $26.3 million for the year ended December 31, 2010, or $1.42 per share, compared to a net loss of $62.1 million, or $3.71 per share for 2009. The current year loss primarily consists of a $7.7 million pre-tax loss from operations; $13.4 million of asset impairments; and an $8.4 million loss on the early retirement of debt. For the year ended December 31, 2009, the Company had a pre-tax operating loss of $19.3 million, recorded pre-tax charges totaling $73.7 million for asset impairments and imported drywall, and had a $30.9 million tax benefit related to changes in federal carry-back tax laws.
New contracts increased 3% in 2010's fourth quarter to 460 compared to 448 in 2009's same period. For the year, new contracts declined 7% from 2,493 in 2009 to 2,316 for the twelve months ended December 31, 2010. M/I Homes had 110 active communities at December 31, 2010 compared to 101 a year-ago. The Company's cancellation rate was 25% in the fourth quarter of 2010, compared to 23% in 2009's fourth quarter and for the year it was 20%. Homes delivered for the twelve months ended December 31, 2010 increased 1% to 2,434 compared to 2009's deliveries of 2,409. Homes delivered in 2010's fourth quarter were 650 compared to 858 in 2009's fourth quarter. The sales value of homes in backlog at December 31, 2010 was $135 million, with backlog units of 532 and an average sales price of $254,000. The backlog of homes at December 31, 2009 had a sales value of $177 million, with backlog units of 650 and an average sales price of $272,000.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Despite challenging housing conditions and continued concern and uncertainty with regard to the state of the general economy, we made meaningful progress in 2010 on a number of important fronts. We materially reduced our pre-tax operating loss from $19.3 million in 2009 to $7.7 million in 2010 on essentially the same number of homes delivered, our gross margins improved 140 basis points to 16.7% and our selling, general and administrative expenses declined $4 million in the fourth quarter when compared to 2009's same period. We were also pleased to see our fourth quarter new contracts increase by 3% over last year's fourth quarter. In addition, we had our sixth consecutive quarter of positive EBITDA and we maintained our strong balance sheet and liquidity.”
Mr. Schottenstein continued, “We are excited about the new communities that we opened in 2010 and those that we plan to open in 2011. Specifically, during 2010 we opened 41 communities with the majority located in our Washington, D.C., Chicago, Raleigh and Charlotte markets. In 2011, we expect to open 40 additional communities, including several in our newly opened Houston, Texas market - ending 2011 with approximately 120 active communities compared to 110 at the start of the year. We also made progress in the execution of a number of key initiatives. In particular, our customer service scores improved in all of our markets and we were extremely pleased to be ranked first by J.D. Power in both customer satisfaction and new home quality in Washington D.C, and first in new home quality in Tampa.”
Mr. Schottenstein, concluded, “As we enter 2011, we are confident that our strategy and market position will allow us to continue making progress as we strive to return to profitability.”
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 78,000 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, 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, adjusted EBITDA and adjusted cash flow provided by operating activities. For these measures, we have 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.
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
Kevin C. Hake, Vice President, Treasurer (614) 418-8224
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, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
New contracts | 460 | 448 | 2,316 | 2,493 | ||||||||||||
Average community count | 109 | 103 | 108 | 111 | ||||||||||||
Cancellation rate | 25 | % | 23 | % | 20 | % | 19 | % | ||||||||
Backlog units | 532 | 650 | ||||||||||||||
Backlog value | $ | 135,000 | $ | 177,000 | ||||||||||||
Homes delivered | 650 | 858 | 2,434 | 2,409 | ||||||||||||
Average home closing price | $ | 246 | $ | 234 | $ | 247 | $ | 230 | ||||||||
Total revenue | $ | 164,975 | $ | 204,916 | $ | 616,377 | $ | 569,949 | ||||||||
Cost of sales - operations | 138,378 | 171,560 | 513,218 | 482,838 | ||||||||||||
Cost of sales - impairment /other | 1,332 | 25,437 | 10,728 | 67,572 | ||||||||||||
Gross margin | 25,265 | 7,919 | 92,431 | 19,539 | ||||||||||||
General and administrative expense | 14,357 | 16,339 | 53,958 | 59,170 | ||||||||||||
Selling expense | 11,602 | 13,611 | 48,084 | 43,950 | ||||||||||||
Loss on extinguishment of debt | 8,378 | — | 8,378 | — | ||||||||||||
Other loss | — | — | — | 941 | ||||||||||||
Interest expense | 3,243 | 2,162 | 9,415 | 8,467 | ||||||||||||
Loss before income taxes | (12,315 | ) | (24,193 | ) | (27,404 | ) | (92,989 | ) | ||||||||
Benefit for income taxes | (1,258 | ) | (31,189 | ) | (1,135 | ) | (30,880 | ) | ||||||||
Net (loss) income | (11,057 | ) | 6,996 | (26,269 | ) | (62,109 | ) | |||||||||
Net (loss) income per share | $ | (0.60 | ) | $ | 0.38 | $ | (1.42 | ) | $ | (3.71 | ) | |||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 18,523 | 18,518 | 18,523 | 16,730 | ||||||||||||
Diluted | 18,523 | 18,712 | 18,523 | 16,730 | ||||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share and unit amounts)
As of | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Assets: | ||||||||
Total cash and cash equivalents(1) | $ | 123,131 | $ | 132,232 | ||||
Mortgage loans held for sale | 43,312 | 34,978 | ||||||
Inventory: | ||||||||
Lots, land and land development | 262,960 | 232,127 | ||||||
Land held for sale | — | 4,300 | ||||||
Homes under construction | 151,524 | 158,998 | ||||||
Other inventory | 36,452 | 24,864 | ||||||
Total inventory | $ | 450,936 | $ | 420,289 | ||||
Property and equipment - net | 16,554 | 18,998 | ||||||
Investments in unconsolidated joint ventures | 10,589 | 10,299 | ||||||
Income tax receivable | 994 | 30,135 | ||||||
Other assets(2) | 16,378 | 16,897 | ||||||
Total Assets | $ | 661,894 | $ | 663,828 | ||||
Liabilities: | ||||||||
Debt - Homebuilding Operations: | ||||||||
Senior notes, net of discount | $ | 238,610 | 199,424 | |||||
Notes payable - other | 5,853 | 6,160 | ||||||
Total Debt - Homebuilding Operations | $ | 244,463 | $ | 205,584 | ||||
Note payable bank - financial services operations | 32,197 | 24,142 | ||||||
Total Debt | $ | 276,660 | $ | 229,726 | ||||
Accounts payable | 29,030 | 38,262 | ||||||
Obligations for inventory not owned | 7,580 | 8,820 | ||||||
Other liabilities | 45,133 | 60,257 | ||||||
Total Liabilities | $ | 358,403 | $ | 337,065 | ||||
Shareholders' Equity | 303,491 | 326,763 | ||||||
Total Liabilities and Shareholders' Equity | $ | 661,894 | $ | 663,828 | ||||
Book value per common share | $ | 10.99 | $ | 12.24 | ||||
Net debt/net capital ratio(3) | 34 | % | 23 | % | ||||
(1) | 2010 and 2009 amounts include $41.9 million and $22.3 of restricted cash and cash held in escrow, respectively. |
(2) | 2010 and 2009 amounts include gross deferred tax assets of $127.9 million and $117.1 million, respectively, net of valuation allowances of $127.9 million and $117.1 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 | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Homebuilding revenue: | ||||||||||||||||
Housing revenue | $ | 160,216 | $ | 201,100 | $ | 600,732 | $ | 555,142 | ||||||||
Land revenue | 1,322 | — | 1,408 | 749 | ||||||||||||
Total homebuilding revenue | $ | 161,538 | $ | 201,100 | $ | 602,140 | $ | 555,891 | ||||||||
Financial services revenue | 3,437 | 3,816 | 14,237 | 14,058 | ||||||||||||
Total revenue | $ | 164,975 | $ | 204,916 | $ | 616,377 | $ | 569,949 | ||||||||
Gross margin | $ | 25,265 | $ | 7,919 | $ | 92,431 | $ | 19,539 | ||||||||
Adjusted operating gross margin(1) | $ | 26,597 | $ | 33,356 | $ | 103,159 | $ | 87,110 | ||||||||
Adjusted operating gross margin %(1) | 16.1 | % | 16.3 | % | 16.7 | % | 15.3 | % | ||||||||
Adjusted pre-tax (loss) income from operations(1) | $ | (2,382 | ) | $ | 2,863 | $ | (7,678 | ) | $ | (19,260 | ) | |||||
Adjusted EBITDA(1) | $ | 6,588 | $ | 8,427 | $ | 26,551 | $ | (3,087 | ) | |||||||
Cash flow provided by (used in) operating activities | $ | 5,685 | $ | 43,464 | $ | (37,302 | ) | $ | 68,481 | |||||||
Adjusted cash flow provided by operating activities(1) | $ | 33,672 | $ | 71,836 | $ | 114,264 | $ | 131,698 | ||||||||
Cash (used in) provided by investing activities | $ | (3,810 | ) | $ | 44,203 | $ | (22,361 | ) | $ | (19,479 | ) | |||||
Cash provided by (used in) financing activities | $ | 35,439 | $ | (2,737 | ) | $ | 30,941 | $ | 28,410 | |||||||
Financial services pre-tax income | $ | 1,065 | $ | 1,296 | $ | 5,564 | $ | 6,033 | ||||||||
Deferred tax asset valuation allowance - net(2) | $ | 5,113 | $ | (19,312 | ) | $ | 10,797 | $ | 8,220 | |||||||
Land, Lot and Investment in Unconsolidated Subsidiaries
Impairment by Region
(Dollars in thousands)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Midwest | $ | 552 | $ | 8,294 | $ | 3,665 | $ | 19,786 | ||||||||
Florida | 657 | 7,114 | 4,374 | 24,105 | ||||||||||||
Mid-Atlantic | 123 | 7,529 | 4,499 | 11,530 | ||||||||||||
Total | $ | 1,332 | $ | 22,937 | $ | 12,538 | $ | 55,421 | ||||||||
Abandonments by Region: | ||||||||||||||||
Midwest | $ | 104 | $ | 22 | $ | 198 | $ | 569 | ||||||||
Florida | 65 | — | 160 | 20 | ||||||||||||
Mid-Atlantic | 54 | 146 | 262 | 1,067 | ||||||||||||
Total | $ | 223 | $ | 168 | $ | 620 | $ | 1,656 | ||||||||
(1) | See “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, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Gross margin | $ | 25,265 | $ | 7,919 | $ | 92,431 | $ | 19,539 | ||||||||
Add: Impairments | 1,332 | 22,937 | 12,538 | 55,421 | ||||||||||||
Imported drywall charges (recovery) | — | 2,500 | (1,810 | ) | 12,150 | |||||||||||
Adjusted operating gross margin | $ | 26,597 | $ | 33,356 | $ | 103,159 | $ | 87,110 | ||||||||
Loss before income taxes | $ | (12,315 | ) | $ | (24,193 | ) | $ | (27,404 | ) | $ | (92,989 | ) | ||||
Add: Impairments and abandonments | 1,555 | 23,105 | 13,158 | 57,077 | ||||||||||||
Imported drywall charges (recovery) | — | 2,500 | (1,810 | ) | 12,150 | |||||||||||
Loss on extinguishment of debt | 8,378 | — | 8,378 | — | ||||||||||||
Other loss | — | — | — | 941 | ||||||||||||
Restructuring/bad debt expense | — | 1,451 | — | 3,561 | ||||||||||||
Adjusted pre-tax (loss) income from operations | $ | (2,382 | ) | $ | 2,863 | $ | (7,678 | ) | $ | (19,260 | ) | |||||
Net (loss) income | $ | (11,057 | ) | $ | 6,996 | $ | (26,269 | ) | $ | (62,109 | ) | |||||
Add (subtract): | ||||||||||||||||
Income taxes | (1,258 | ) | (31,189 | ) | (1,135 | ) | (30,880 | ) | ||||||||
Interest expense net of interest income | 2,941 | 1,757 | 8,202 | 7,295 | ||||||||||||
Interest amortized to cost of sales | 3,435 | 3,627 | 13,339 | 11,720 | ||||||||||||
Depreciation and amortization | 1,962 | 2,083 | 8,067 | 8,425 | ||||||||||||
Loss on extinguishment of senior notes(1) | 8,378 | — | 8,378 | — | ||||||||||||
Non-cash charges | 2,187 | 25,153 | 15,969 | 62,462 | ||||||||||||
Adjusted EBITDA | $ | 6,588 | $ | 8,427 | $ | 26,551 | $ | (3,087 | ) | |||||||
Cash flow provided by (used in) operating activities | $ | 5,685 | $ | 43,464 | $ | (37,302 | ) | $ | 68,481 | |||||||
Add: Land/lot purchases | 16,730 | 22,182 | 110,746 | 44,339 | ||||||||||||
Land development spending | 12,579 | 6,190 | 42,228 | 19,627 | ||||||||||||
Less: Land/lot sale proceeds | (1,322 | ) | — | (1,408 | ) | (749 | ) | |||||||||
Adjusted cash flows provided by operating activities | $ | 33,672 | $ | 71,836 | $ | 114,264 | $ | 131,698 | ||||||||
(1) Includes non-cash charges totaling $847.
Adjusted operating gross margin, adjusted operating gross margins %, adjusted pre-tax loss from operations, adjusted EBITDA and adjusted cash flows provided by operating activities 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 | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||
Midwest | 221 | 258 | (14 | ) | 1,215 | 1,334 | (9 | ) | |||||||||
Florida | 96 | 58 | 66 | 461 | 406 | 14 | |||||||||||
Mid-Atlantic | 143 | 132 | 8 | 640 | 753 | (15 | ) | ||||||||||
Total | 460 | 448 | 3 | 2,316 | 2,493 | (7 | ) | ||||||||||
HOMES DELIVERED | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
% | % | |||||||||||||||
Region | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||
Midwest | 329 | 499 | (34 | ) | 1,296 | 1,282 | 1 | |||||||||
Florida | 106 | 126 | (16 | ) | 429 | 428 | — | |||||||||
Mid-Atlantic | 215 | 233 | (8 | ) | 709 | 699 | 1 | |||||||||
Total | 650 | 858 | (24 | ) | 2,434 | 2,409 | 1 | |||||||||
BACKLOG | |||||||||||||||||||||
December 31, 2010 | December 31, 2009 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 336 | $ | 83 | $ | 247,000 | 417 | $ | 101 | $ | 241,000 | |||||||||||
Florida | 87 | $ | 19 | $ | 218,000 | 55 | $ | 12 | $ | 220,000 | |||||||||||
Mid-Atlantic | 109 | $ | 33 | $ | 304,000 | 178 | $ | 64 | $ | 359,000 | |||||||||||
Total | 532 | $ | 135 | $ | 254,000 | 650 | $ | 177 | $ | 272,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
December 31, 2010 | December 31, 2009 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 4,184 | 1,318 | 5,502 | 4,285 | 1,104 | 5,389 | ||||||||
Florida | 1,384 | 209 | 1,593 | 1,575 | 190 | 1,765 | ||||||||
Mid-Atlantic | 2,043 | 1,032 | 3,075 | 1,335 | 825 | 2,160 | ||||||||
Total | 7,611 | 2,559 | 10,170 | 7,195 | 2,119 | 9,314 | ||||||||