M/I Homes on Thursday morning reported a net loss of $68.5 million ($5.06 per diluted share) for the fourth quarter of 2007, including pre-tax charges totaling $112.3 million ($4.90 per share), which includes land-related impairment and abandonment charges of $104.9 million, joint venture investment write-offs of $4.3 million and $3.1 million of severance costs. The loss also included a loss from discontinued operations of $26.1 million ($1.86 per share) as a result of the M/I's previously announced decision to exit the West Palm Beach market.
The company, based in Columbus, Ohio, reported that new contracts for the quarter fell 8.7% from the same period in 2006 to 322, deliveries fell 24% to 1,042, and active communities fell from 163 at yearend 2006 to 146 at the end of 2007. Homes in backlog fell 50.2% to 748 at yearend 2007 compared to a year earlier. The value of the homes in backlog fell by 56.3% to $233 million as the average sales price fell 10.8% to $312,000.
For the year, M/I reported a net loss before preferred dividends of $128.1 million ($135.4 million after preferred dividends or $9.69 per share) compared to net income of $38.9 million in 2006. Included in the year ended December 31, 2007 were pre-tax charges totaling $221.5 million ($9.74 per common share) which includes land-related impairment and abandonment charges of $197.8 million, joint venture investment write-offs of $13.1 million, $5.2 million for the write-off of intangibles and $5.4 million of severance costs. 2006's fiscal year included $85.8 million ($3.81 per share) of similar charges. The annual loss included $35.6 million ($2.55 per share) as a result of the exit from the West Palm Beach market.
For the year, the company reduced its lot count by 28% from the end of 2006 to 16,173, including owned lots and those under contract. Its net dbt-to-capital ratio fell from 44% at yearend 2006 to 33% at the end of 2007.
"Though 2007 was a difficult year for our industry, we made significant strides in improving our financial condition and strengthening our balance sheet," said Robert H. Schottenstein, M/I CEO, in a prepared statement. "We generated over $200 million of cash from operations and successfully reduced our homebuilding bank borrowings from $410 million at the beginning of 2007 to $115 million at year end."
Schottenstein also said the company's goal is to end 2008 with zero bank debt on its balance sheet. "With net worth in excess of $580 million and minimal off balance sheet exposure, we believe M/I is well positioned to manage through the current cycle. In the meantime, we will remain focused on the key operational aspects of our business -- premier locations, building quality homes and taking care of our customers," he said.
M/I stock (NYSE:MHO) was trading up 2.7% at $16.69 shortly before 2 p.m.