Despite handily beating analysts' earnings expectations and narrowing its loss for 3Q2010 to $2.1 million, or 0.11 cents a share, M/I Homes CEO Bob Schottenstein told analysts during an earnings call yesterday afternoon that weak demand in the market, resulting in fewer new orders, was pushing the company to keep a tight rein on its overhead costs. Consequently, management had to cut headcount during the quarter by 8% from the prior quarter.
The layoffs were taken at the same time that the company saw a 9% year-over-year decrease in general and administrative expenses during the quarter. When selling expenses were added to overhead costs, the company's SG&A totals hit 18.3% of revenues, a level company executives would like to see decrease.
When asked what geographies or departments were hit hardest by the headcount reduction, company EVP and CFO Phil Creek said positions were eliminated companywide.
"We pretty much cut our headcount almost everywhere," Creek said. "Our better markets tend to be in the Mid-Atlantic, so less of the cuts came from there. But where our business is down-the Midwest and Florida-obviously that impacts corporate and [the] mortgage company. So, really it's been cuts across the board."
And given the continued uncertainty in the market, Shottenstein indicated that this latest reduction in force may not be the last.
"We continue to focus on and closely monitor all of our overhead and selling expenses," he said. "And given the persistence of difficult conditions in the market and a lower sales pace, we continue to aggressively focus on areas where we can cut costs, including the further reduction in headcount where appropriate to match current volume levels."