Columbus, Ohio-based M/I Homes will report its fourth quarter and full-year 2009 earnings during an earnings call Feb. 3, and analysts are expecting the company will continue to temper its losses. Wall Street consensus is that the company will report earnings per share of ($0.41) for the quarter, compared to a 3Q2009 loss of $1.14 per share, or $21.1 million.
The bright spot in the previous quarter's earnings report was a 36% year-over-year increase in sales, although at least one housing analyst wasn't particularly impressed with the order numbers. In a research note, Jim Wilson with JMP Securities stated:
"New orders missed our estimate (619 vs. 679) but were up y/y (36%), a good order number, but after last quarter's great result (up 43% y/y in a surprise to the market), we expected a bit more."
And during the company's related earnings call, M/I Homes CEO Bob Schottenstein seemed to echo Wilson's sentiments. "While we are certainly pleased to see our loss narrowing, we are not where we want to be," he said.
But going into the fourth quarter, the company had some opportunity to capture order improvement. After achieving some initial success with the launch of its value-oriented Eco Series product line in its Columbus and Cincinnati markets, the company had plans to roll out the new product in additional markets. Sources indicate that seven out of the company's nine divisions now offer the new product.
The product line consists of five base plans--one ranch-style, single-story plan and four two-story plans, which range in square foot from roughly 1,300 square feet to just less than 2,000 square feet. Square footages can be increased with flex options, such as bonus rooms over the garage.
In addition, each plan in the series is Energy Star qualified for 30% more energy efficiency and includes a so-called "e-zone." The design feature acts as a convenience valet or plug-in station for buyers' electronic devices such as cell phones, PDAs, iPods, and more. In addition, the home can be wired for what the builder calls "effortless connectivity."
However, despite the new product line's promise, analysts have expressed concern over the ability of the company to compete with larger, better capitalized public builder peers for land necessary for growth in a market upswing. As Citi analyst Josh Levin noted following the company's last quarter results:
"Over the past few months, we believe MHO has been forthright about the lack of opportunities in the land market. On today's call management reiterated this opinion, noting land deals in many regions are 'so few that it's very competitive' and that 'opportunities do not seem to represent themselves with quite a frequency.'"
With limited ability to restock its lot pipeline with lower-priced lots, the company's future growth remains in question.
Learn more about markets featured in this article: Columbus, OH.