M/I Homes, Columbus, Ohio (NYSE:MHO) on Wednesday reported a profitable fourth quarter ended Dec. 31, but it would have remained in the red were it not for a $31 million tax benefit resulting from the extended net-opearating-loss carryback enacted by Congress last year. Still, orders and closings were up, and the financials showed marked improvement froom yearend 2008.
M/I ended the quarter with net income of $7 million ($0.38 per share), on $3 million in pre-tax income from operations and a $31 million tax benefit versus $23 million in impairments and write-downs and $4 million in charges related primarily to defective Chinese drywall claims. The results compare with a net loss of $75 million (-$5.38 per share) for the fourth quarter of 2008, which included $58 million in impairments and other charges.
For the full year, the company lost $62 million (- $3.71 per share), compared to a net loss of $250 million (-$17.86 per share) for 2008. The current year loss included a $19 million pre-tax loss from operations, $57 million of asset impairments and abandonments; and other non-operating charges totaling $17 million primarily related to imported drywall, offset, in part, by the $31 million tax benefit.
Analysts were expecting a loss of $0.43 per share for the quarter and $4.79 for the year. Shares of M/I shot up nearly 12% to $13.50 during early trading on the NYSE.
Home building revenue for the quarter was up 39.4% to $201,1 million as homes delivered rose 55% from the 2008 quarter to 858. New contracts were up 32.1% to 448 compared to 339 in 2008. The cancellation rate was 23% in the quarter, down from 31% in 2008¹s fourth quarter.
For the full year, closings were up 17% to 2,409 and new orders rose 33% to 2,493.
The sales value of homes in backlog at Dec. 31 was $177 million, with backlog units of 650 and an average sales price of $272,000. The backlog at December 31, 2008 had a sales value of $139 million, with backlog units of 566 and an average sales price of $247,000.
M/I's community count was down to 101 at yearend from 128 a year before.
The company ended the quarter and the year with a lot count of 9,314, 7,195 owned and 2,119 optioned, down marginally from 9,723, 8,797 owned and 926 optioned, at the end of fiscal 2008.
The company's operating gross margin improved substantially to 16.3% from 8.9% at the same time in 2008. SG&A cam in at roughly $30 million, down from approximately $38 million in the prior-year quarter.
M/I had $132.2 million in home building cash at the end of the quarter and was carrying $229.7 million in debt on its balance sheet, none of it due before 2012. It had no borrowings on its revolver. The net debt-to-capital ratio fell to 18% from 36% at the end of the prior fiscal year.
Robert H. Schottenstein, president and CEO, was upbeat in his statement accompanying the earnings release. He specifically cited the company's eco series line of homes, introduced in mid 2009, which he said has been "very well received" by home buyers.
"Our gross margins improved throughout the year...going from 12.7% in the first quarter to 16.3% in the fourth quarter," said Schottenstein. "Our expenses declined year-over-year in every quarter and were 20% below 2008 levels. We finished 2009 with strong new orders and closings...and, we ended the year with our backlog value up over 25% from a year ago."
He continued, "While economic conditions remain difficult, the general economy is, by most measures, more stable today than it was last year at this time. Though no one knows when we will begin to see tangible signs of job growth and a stronger economy, we are confident that as conditions improve, we have the right strategy and people to return to profitability."
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