For six quarters straight M/I Homes was able to report better sales over the year before. And then the federal home buyer tax credit expired, and home builders' sales fell off the cliff in May and then June.
Sales fell 21% for M/I Homes. CEO Robert H. Schottenstein said during a call with analysts Wednesday that it's unclear whether they will improve or not this year.
"For the back half of the year, based on what we know today, I think it would be ill-advised to plan for things to get much better, if at all," Schottenstein told analysts. "There is a significant lack of clarity. Things are very choppy now and are likely to remain so for at least some time."
M/I reported a loss of $4.8 million for the quarter, $0.26 per share, narrowed considerably from last year's same quarter loss of $19.9 million, or $1.26 per share.
That said, there were positives to report. The company delivered 790 homes for the quarter, up 61% from the 492 it closed during the same quarter last year. That jacked revenue up by 71%. And the company would have had a pre-tax profit of $1.7 million had it not been for asset impairments. The company had its fourth consecutive positive quarter for EBITDA. And SG&A as a percentage of revenue fell to its lowest levels in more than two years.
Another positive is the company's low 26% debt to capital and no borrowings on its credit line.
The executives offered some regional breakdowns:
Midwest: Sales contracts were down 25%, but closings were up 80% for the quarter. Six new communities were opened. The company now holds 4,000 lots versus 4,800 last year.
Florida: The markets continued to be challenging in Tampa and Orlando, however new contracts were up 18% and closings were up 62%. Gross margins on new communities in Tampa were well above a 20% return on investment. M/I owned 1,600 lots versus 1,700 last year.
Mid-Atlantic: Sales were down 33% while deliveries were up 31%. The division met its community sales goals for the first half. M/I beefed up its owned lot count in the region by 815 from 1,254 to 2,069. Executives said their Carolina markets are doing better than most.
Analysts questioned whether M/I would continue with its new venture into the Houston market given market conditions.
"The short answer is it's full speed ahead no matter what," Schottenstein said. "We have a lot of confidence long term in Houston. We do think we can compete there."