If it were not for a $28.1 million loss and closings that were down from last year, M/I Homes' first quarter results would be startlingly positive. The Columbus, Ohio-based builder managed to pull off what has been rare--improved sales over last year's first quarter.
"We are not there yet, but we are getting closer to break even," said CEO Robert H. Schottenstein.
M/I reported 667 new sales contracts, 20% better than the first quarter of 2008, despite the fact that the company's community count is down 20. It was the highest quarterly sales number in six quarters.
Backlog was up a smidgeon too, 839 versus 828. The company also managed to significantly boost its cash position up to $65.3 million from $13.3 in the first quarter of 2008.
Schottenstein called it a "glimmer of improved market conditions," but stopped short from calling it a sustainable trend. "The general economy remains far too weak."
Its Florida market, however, remains a sore spot for M/I. While its Midwest and Mid-Atlantic regions have shown improved contract numbers, Florida continued to suffer, posting only 111 new contracts compared to 149 in the same quarter of last year. At the same time, M/I has severely reduced its Florida land holdings from 4,444 lots under control last year to 1,843 this year.
M/I was optimistic enough, or convinced enough, that it was getting a bargain, to spend $11 million in the quarter on land. During the conference call, executives said M/I bought assets in Chicago from Kimball Hill, which is in bankruptcy, and some in Raleigh, N.C., from a public builder it did not name.
"The Chicago deal was fairly sizable," said Schottenstein. "We were talking to Kimball Hill about it before the bankruptcy. ... We thought it was a pretty darned good price."
The company continued penny-pinching, though, selling off the corporate jet for $9 million, taking a $1 million loss in the process.
Of the $28.1 million loss, $11 million was due to impairments and another $4 million was for charges related to defective imported drywall.
The company was able to recoup $36 million in tax refunds and has another $3 million to come. But that's all the losses the company will be able to claim against past profits until it becomes profitable again, unless the government allows businesses to start carrying back losses against past profits for five years. If that occurs, the company could get another $80 million in refunds.
Company executives also announced that sales of its new line of smaller greener homes, called the Eco Series, are selling well even though the company has no models opened yet. M/I will be offering the homes in Columbus and Cincinnati, Ohio; Raleigh; and Indianapolis.
Teresa Burney is a senior editor for Builder and Big Builder magazines.