With a $22.2 million loss in 2008’s first quarter, M/I Homes’ earnings report released this week looks like a lot of public builders, the vast majority of which have reported quarterly losses recently.
But the comments of M/I CEO Robert Schottenstein during today’s earnings call sounded nothing like many of his public builder colleagues. In contrast to their measured, restrained tones and answers, Schottenstein gave feisty, determined responses to analysts in the question-and-answer portion of the call.
“Our goal is to be the last man standing in every market,” he replied to an analyst who questioned M/I’s decision to open its first community in Chicago. (Two major Chicago-based builders—Neumann Homes and Kimball Hill Homes—have filed for bankruptcy.)
But Schottenstein also shrugged off the current chatter that new-home prices can’t go any lower. “Frankly, the notion that prices can’t be reduced much more---I’m not sure I understand that any more than I would have understood five years ago the inability to raise prices.”
He stressed the importance of consumer confidence in the housing market. “If you wake up every day for a month and everyone around you tells you they feel lousy, pretty soon you don’t feel too good yourself. Right now, that’s about what we are dealing with,” he said. “There are a lot of reasons and there is a lot of legitimate news that is making people feel that way, but the fact is that the get-up-and-go associated with buying a house is incredibly hampered right now.“
M/I’s numbers for the quarter ending March 31 certainly reflects that situation. The company delivered 474 homes in 2008’s first quarter, a 33 percent year-over-year drop. Revenues fell 28 percent, to $156 million. Staffing has also been slimmed down at M/I, from a peak of 1,200 employees to 675 people today.
Sinking land and home values also affected the Columbus-based builder. M/I reported $21.1 million in write-downs, primarily in Florida. Still, the company’s executives said today they have budgeted $30 million for land purchases in 2008, most of which they plan to make in the Carolinas.
Alison Rice is a contributing editor to BUILDER Online.
Learn more about markets featured in this article: Chicago, IL.