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M/I Homes Inc. (NYSE:MHO)

F1Q10 Earnings Call

April 28, 2010; 4:00 pm ET

Executives

Bob Schottenstein - CEO and President

Phil Creek - EVP and CFO

Paul Rosen - President, Mortgage Company

Analysts

Josh Levin - Citi

Alan Ratner - Zelman & Associates

Alex Barren - Housing Research

Joel Locher - FBN Securities

Operator

Good afternoon. My name is Kala and I will be your conference operator today. At this time I would like to welcome everyone to the M/I Homes first quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer. (Operator Instructions)

Thank you. Mr. Creek, you may begin your conference.

Phil Creek

Thank you very much and thanks for joining us today. Joining me on the call is Bob Schottenstein, our CEO and President; Tom Mason, our EVP and Corporate Consul; Paul Rosen, President of our Mortgage Company; Ann Marie Hunker, VP Corporate Controller and Kevin Hake, VP, Treasurer.

First to address regulation per disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant non-public items with you directly. And as to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today’s press release also applies to any comments made during this call. Also be advised that the company undertakes no obligation to update any forward-looking statements made during this call.

With that, I will now turn the call over to Bob.

Bob Schottenstein

Thank you Phil and good afternoon everyone. We are pleased to share with your our first quarter results. We continue to make meaningful progress in a number of key areas as we remain firmly focused on returning to profitability. While we believe 2010 will be somewhat choppy and challenging, conditions today are clearly better than a year ago and we are optimistic about our future.

I would like to take a few minutes to highlight a number of our accomplishment during the quarter. Sales, we sold 15% more of homes the last years first quarter despite an 8% decline in active communities. This marks our sixth consecutive quarter positive sales comp. We grew our market share at everyone of our market during 2009. In our first quarter sales results allow us to continue to build on that momentum.

In addition, we improved our sales absorption rate per community from 1.8 sales per month one year ago to 2.4 sales per month for the first quarter, a 33% increased and approaching our internal goal of selling at least 2.5 homes per month per community. Also, we experienced improved per month absorption rates in each of our regions.

Closings, for the quarter we closed 479 homes, a 22% increase over the last year’s first quarter. Margins as stated in the release, our gross operating margins for the quarter was 17.3%, reaching our highest level in more than two years.

Our first-quarter gross margins improved over the margins for 2009’s fourth quarter by 100 basis points. In calendar year 2009 for the year, our gross margins equal 15.3%. Clearly, the increase in margins is an important and vital component as we work to retuned to profitability and while we experience the loss for the quarter its worth noting that our loss has been materially reduced from last year's first quarter by more than 60%. And after having achieved in operating profit during last year's fourth quarter, our first quarter results still represent our third consecutive quarter of positive EBITDA.

Backlog. As a result of our continued positive sales performance, our units and backlog were up 12% year-over-year. The value of homes in backlog at March 31, equal $247 million compared to $193 million a year ago, a 28% increase. In particular, our average sales price in backlog is $263,000 of home compared to $230,000 a year ago which is the 14% increase.

SG&A, as a percentage of revenue we continue to make progress in reducing the impact of our SG&A. For the quarter, our SG&A percentage equal 19.7% compared to 22% last year. New communities, obviously one of our greatest challenges in one of our greatest areas of opportunity relates to tying up and securing new land deals in the opening of new communities. As we work through this cycle, we have been both cautious and prudent in our approach to buying new lots and new land. In a few minutes, Phil will be reviewing in detail our land purchases made during the quarter. There are however several points that I’d like to make relating to land.

Clearly, we have begun seeing an increase in the number of new land opportunities and we have been successful in securing many of them. For the year over two thirds of our planned purchases will be based in our DC Charolette, Raleigh and Chicago markets. Our minimum threshold for new land deals as 20% of return on investment and we seek an even greater return in those instances will buying land in bulk as appose to buying finish lots on an option taken home basis.

We feel very good about our new land deals and we feel even better about the opening of new communities. There is no question that these new communities will play an increasingly important role in our return to profitability. Specifically, we were pleased to open 40 new communities in the first quarter with the expectation that we will open up these 20 additional communities by year-end.

Finally, before reviewing our various regions, let me just say a word or two about our balance sheet. We ended the quarter with $134 million of cash, zero borrowings outstanding under our credit facility and equity of 319 million. Our net debt-to-capital ratio remains one of the lowest in the home building industry equaling 23% compared to 34% a year-ago.

Now, I will briefly review our regions, first the Midwest region. Healthy markets continue to be challenging throughout the Midwest however we continue to see some positive trends. In the Midwest, our new contracts were up approximately 25% and we continue to gain market share in each of our Midwest markets. We’re also excited about having open seven new communities in this region during the quarter, many of them in our relativity new Chicago market. Homes delivered for the quarter were up 50% compared to last year.

Florida, general market conditions continue to be challenging in both Tampa and Orlando. Our new contracts despite this were up 25% for the quarter. At quarter’s end, we owned nearly 1600 lots in the Florida region versus 1800 lots a year-ago. The Mid Atlantic region, new contracts was down approximately 10% and homes delivered for this reason were up 5% for the quarter when compared to 2009 first quarter.

On the other hand, our March 31 backlog increased nearly 15% from the prior year with our average sale price increasing approximately 25%, our operation Raleigh continues to improves. First quarter gross margins on new communities exceeded our gross margin goal of 20% and we opened two new communities in Raleigh during the quarter.

Though Charlotte has been challenging, we continue to see improvement there as well as sales for the quarter were higher than anticipated. And there is no question that DC market is showing signs of market stabilization particularly in select sub markets. There is no question however did this market is extremely competitive especially in the land area. But we expect to see continued growth for M/I Homes in DC as our market share of entire Mid-Atlantic region continues to increase.

Finally, as we have recently announced, we are entering the Houston, Texas market. Houston has is been one of the strongest housing markets in the country and the one that we have believed for sometime that we could successfully complete here. We had excellent person to lead our operation there and we expect to open at least one probably two communities in Houston in the later part of this year.

Over time, we expect Houston to play a very important part in MI home’s future success. With that I will turn it over to Phil

Phil Creek

Thanks Bob. New contracts with the first quarter and 15% to 765 with the net absorption rates of 2.4 sales per community per months for the quarter versus 1.8 a year ago. Our cancellation rate for the first quarter dropped to 18% from 20% in the previous year.

Our traffic for the quarter increased 8%. Our sales were up 22% in January and traffic was down 31%. Sales were up 2% in February, and traffic was up 5% and our sales were up 21% in March while traffic was down 6%. Our active communities decreased 8% from 119 last year to 109 but were up from year end 101. And the breakdown by region is 66 in the Midwest, 22 in Florida and 21 in the mid-Atlantic.

During the quarter, we opened 14 new communities while closing six for a net increase of eight and our current estimate is to end this year with about 110 communities, up about 10% over ’09’s year end. Homes delivered in ‘010’s first quarter were 479, up 22% when compared to ’09’s 394 and we delivered 74% of our backlog this quarter compared to 70% in ‘09. In our backlog of 936 tons is 12% higher then a year ago plus our backlog every sell price had 263 is 15% higher. Today, we have recorded a total 12.8 million in dry wall related charges for homes that we delivered in our Florida operations.

And our first quarter results include expense of 600,000 related to this issue.

Turning to impairments in the first quarter, we recorded pre-tax charges of $3 million related to land that we intend to build homes on with about 55% of the impairments in Florida and 45 % in the Mid-Atlantic region and approximately $12 million of previous impairments reversed in the housing gross margins in the first quarter of 2010.

Our gross margins exclusive of the impact of impairments in dry wall charges were 17% for the quarter compare to 13% in 2009 same period and 16% in ’09’s fourth quarter. And as Bob mentioned, we are very focused on our gross margins. SG&A expenses for the quarter were 13 million increasing 7% from last year’s expenses primarily due to our increased volume. Our first quarter revenue was up 24%. Selling expenses for the quarter increased 1.5 million from a year ago. Overall, our SG&A expense increase 2 million. However as a percent of revenue decreased at 19.7% in the first quarter of 2010 compared to 22 % in last year’s first quarter.

Historically, our expense percentages had been higher in the first quarter due to the seasonality of home been delivered. Interest expense decreased 1.1 million for the first quarter compared to the same period last year. Interest expense was 1.8% of revenue for the quarter interest incurred was 3.7 million for the quarter. We had 4.9 million of adjusted pre-tax loss from operations for the quarter compared to a 12 million loss during the first quarter of ’09.

We generated positive EBITDA in the quarter and this is our third consecutive quarter of positive EBITDA. We have 24 million in capitalized interest on our balance sheet at March 31 ’10 compared to 26 million a year ago and we reported a non-cash after tax charge of three million in the first quarter for a valuation allows reported related to our differed tax assets. And as of March 31, 2010, our gross differed tax asset is 120 million which is totally reserved. Now Paul Rosen will address our mortgage company results.

Paul Rosen

Thank you Phil. Mortgage and title operations pre-tax income increased from 1.3 million in 2009’s first quarter to 1.7 million in the same period of 2010. The increased income was primarily due to a result of an 11% increase and in loans originated from 346 in 2009 to 385 in 2010 along with favorable servicing released premiums. Loan to values on our first mortgages for the first quarter was 87% in 2010 compared to 88% in 2009’s first quarter. 56% of the loans closed FHA/VA and 44% were conventional. This compares to 54% and 46% respectably for 2009 same period. Over 90% of our communities are eligible for FHA financing.

Overall, our average total mortgage amount was $210,000 in 2010’s first quarter compared to $211,000 in 2009. The average borrower credit score on mortgages originated by M/I Financial was $734 in the first quarter of 2010, compared to $732 in 2009’s fourth quarter. These scores compared to $718 in the first quarter of 2009 and fourth quarter of 2008.

Our mortgage operation captured approximately 85% of our business in the first quarter compared to 2009’s 90%. At March 31, 2010 M/I Financial has $24.3 million outstanding under the $30 million M/I F credit agreement. Effective April 27, 2010 M/I Financial signs in new credit agreements with it’s current lender increasing the facility to $45 million, which expires in April 2011. The terms of this new facility are consistent with the previous one. Now, I’ll turn the call back over to Phil.

Phil Creek

Thanks, Paul. As far as the balance sheet summary, we continually focused on our capital structure, cash and liquidity. We ended the quarter with $134 million of cash compared year end’s $132 million. Our operating cash flow for the quarter included purchasing land of $25 million and land development spend of $6 million. Lots owned and controlled as of March 31, 2010 totaled 9,785 lots, 75% of which were owned and 25% under contract. The mix of lots owned and controlled are 57% Midwest, 19% Florida and 24% Mid-Atlantic.

With respect to our lots under contract, we had $2.6 million at risk and deposits letters of credit in pre-acquisition cost at March 31. Total home building inventory at March 31 ‘10 was $443 million a decrease of $55 million or 11% below March 31 ‘09. Our unsold land investment in March 31 ‘10 is $232 million, which is 7,306 lots compared to $318 million, which was 8,431 lots at March 31 ’09. Compared to year ago raw land and land under development decreased 13% and finished unsold lots decreased 39%.

At March 31, 2010 had a $129 million of raw land and land under development and a $104 million of finished unsold lots. Our unsold finished lots totaled 2,516 lots with an average cost of $41,000 per lot and this $41000 average lot cost is 16% of our $263,000 backlog average sale price. And the market breakdown of the $232 million of unsold land is $122 million in the Midwest, $39 million in Florida and $71 million in the Mid-Atlantic region.

During the 2010 first quarter we purchased approximately 750 lots valued at $25 million and we spent $6 million in land development, approximately 59% of the $25 million in land purchases related to land in the Midwest region with our biggest purchase being in Chicago. 22% of the land spend was in Florida and 19% of the Mid-Atlantic region.

We currently estimate that we will spend about $100 million of land this year plus about $40 million in land development. Our desired financial returns for new community has not changed, minimum gross margin of 20% sales pace goal of.5 per month with a ROI target on a community basis of 20%. At the end of the quarter we had $48 million invested in specs, a 143 specs that were completed and 305 specs in various stages of construction.

This translates into about four specs per community and that will 448 total specs, 201 in the Midwest, 145 at Florida and 102 in the Mid-Atlantic. And at March 31’09, we had 351 specs with an investment of 45 million and at 12/31/09 we had 545 specs with an investment of $59 million.

During the quarter we collected $26 million in tax refunds. At March 31 2010, the company had no borrowings under its $150 million credit facility. Our borrowing availability at March 31 ’10 was 25 million. This availability can be increased by pledging additional assets. The facility maturity date is October 2010.

We are currently in the process of obtaining commitment for a new three-year $100 million credit facility, the terms of which we expect to be materially consistent with the terms in our current facility. We expect to close on this facility during the second quarter. With respect to our $200 million of 6% and 7%, 8% senior notes that mature in March of 2012 our goal is to provide for their refinancing in advance over the maturity date, we continue to monitor the capital markets and review re-financing alternatives including the estimated issuance cost of new debt and the estimated cost of redeeming our senior notes and we weigh those factors to determining when to refinance the notes being mindful of the maturity date asset approaches.

That completes our formal presentation. We’ll now open the call for any questions or comments.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Josh Levin with Citi.

Josh Levin - Citi

So the tax credit is expiring soon, how much do you think demand will be affected by the expiration of the tax credit?

Bob Schottenstein

Josh, we’ve actually figured that out, but we can’t share it, no. That's a great question and I think that you or someone has asked that on every builder’s call now for the last couple of weeks and it seems to get asked of us constantly. I don't think is there any question it's going to have some impact. Don't think it's going to be a severe, there may have to be a little bit more promoting done by builders during this sort of transition period, but we’re prepared for it from a marketing standpoint, we’re prepared from the standpoint that we have materially reduced our spec inventory.

We’ve begun to increasingly sell a lot more new builds any way and we've never been a large spec builder in any event. I only know that for historical reference. But I mean I think it will have a slight impact. There is no question, it has helped a little bit. It hasn’t helped nearly has much in this period as it did when it was offered for the first time last year. It never did quite gain the traction that it got the first time. But I think the other thing is it might be a little bit difficult to exact to gauge it accurately also because we’re beginning to enter what is naturally a slightly slower sales period anywhere during the summer.

Josh Levin - Citi

Let me ask just one follow-up, for the new builds, over the past few weeks, March, early April, for the new builds which cannot be completed by the June 30 deadline and the buyer knows there's no way they can be delivered by the June 30 deadline, have you seen a material downtick in new orders for the new builds that just won't qualify?

Bob Schottenstein

No, it's a great question, but we haven't, so that would have to be my answer.

Operator

Your next question comes from Alan Ratner with Zelman & Associates.

Alan Ratner - Zelman & Associates

I was wondering if you might be able to comment a little bit on what you're seeing on the commodities side? We’ve seen some major increases on lumber and in talking to some other builders I know a lot of companies are kind of locked into whether it's 60 or 90-day type contracts, so they might not have seen the full impact on the gross margin side. So I was just curious kind of what you're seeing from a commodity cost inflation and whether you expect that to be kind of a material headwind in the next few quarters?

Bob Schottenstein

No, I don't think it's a material headwind, we will have some impact from it. I don't have the exact number here handy. Phil, you may have that information. There is no question, it's going up, the fact that lumber anyway is and it will have a slight impact like-for-like on our margins even though we’ve been very successful over the past 18 to 24 months in reducing the cost of our bricks and sticks. And we also have some price protection, so the full impact of the increase will not translate dollar for dollar down. I’ve go some fairly specific information, I just don't have it here right at my hands.

Phillip Creek

I mean we are very focused on margins, Bob talked about margins moving up a 100 basis points in the first quarter versus the full year. There's definitely been fairly significant lumber increases, asphalt, some other issues. There's also been some areas where we have been able to get some decreases, it doesn't appear to be a significant issue for the second quarter. The impact after that, we are working very hard to minimize, but there is definitely been a couple of issues there.

Bob Schottenstein

I just want to restate, I would not characterize this as material and then as Phil said also there's probably been two of three areas in the last six months where we’ve been successful in materially renegotiating and/or switching out our national supplier with relative to some of our key components. And so some of the stuff tends to net out, but it's I think part of the reason that lumber is going up is in response to what is believed to be a slowly materially improving housing market.

Alan Ratner - Zelman & Associates

Right. No, that's a good segway, and if I can kind of sneak a follow-in on that? In prior periods where we've seen similar commodity cost increases it's usually been a supply driven as demand has increased. Is this something when you think about your markets right now, are you seeing any minimal pricing power that might allow you to pass some of those rising costs along to the consumer or do you still think the market is tenuous enough where you wouldn't risk trying to interrupt that flow?

Bob Schottenstein

First of all as you know every market is different and every sub-market, every market is a little different, but I think that we are ever so slowly beginning to see some pricing power in some markets more than others. I sort of mentioned in my remarks in Raleigh for us, certainly in Chicago, and I think in Chicago it’s largely do to the uniqueness of our land position there which is at this point largely consisting of deals that you have been buying in distress situations at very good prices which have allowed us to get very strong margins and to improve those margins and as we move down the road, but DC and Raleigh and Chicago, and maybe in select sub-markets we are getting little bit of pricing power.

Phillip Creek

We are still focused somewhat on the balance sheet of course as far as wanting to keep strong liquidity and so fourth. So we are trying to work through our existing communities to generate cash. We have brought our finished lots down to about 2500, so do feel pretty good about the new communities we’re buying and getting opened, but we are also still mindful of working through the elder inventory to generate cash to get our balance sheet, strong so we can prepare for more opportunities.

Alan Ratner - Zelman & Associates

Incentives, do you guys have a way of quantifying kind of what current incentives are running maybe as a percentage of gross price? And maybe how that might have compared to a year ago?

Phillip Creek

I would say the short answer is that they are lower, they can take the form of reduced sale price, increase help on the options, closing expenses, those type things I mean we are still having to do certain things in certain markets, but in general they have slowed down a little bit, but as Bob said as we get into post tax credit in the summer months, it’s hard to predict what that type of number is going to be.

Operator

(Operator Instructions) Your next question comes from Alex Barren with Housing Research.

Alex Barren - Housing Research

A lot of builders have been talking about their expectation for profitability for this year or in the near term. Can you just elaborate or restate maybe what your expectations are in that terms?

Bob Schottenstein

We're really not comfortable doing so and let me say why. I think we are as focused on returning to profitability as any homebuilder in the United States. Having said that, we believe that the conditions are still pretty fragile and while conditions as I said are clearly better than they were a year ago, we’re just not comfortable projecting out, given the fact that we haven’t seen enough stability within the markets and some markets that we operate to give us the confidence to make a reasonable projection on earnings guidance.

I would like to think that we are a lot closer to getting back to that, they will redo that because we are used to providing guidance on a regular basis, so it’s not something that we are opposed a mater of course. It just that we are not comfortable doing it. When we don’t think we’ve really know. And I can't really comment why not all, but a few others have selectively chosen to be a little bit more forthcoming with information about the market. I still feel like at least from our perspective and maybe we are being overly cautious, but you have to be who you are. And that’s who we are right now that there is just not enough tangible, sustainable, clear signs that would suggest that things are in a relative straight line basis heading in enough of a direction for us to be able to say, yes this is what our guidance is.

I wish I could tell you more. I want to underscore, we are not afraid. But then we are focused on profitability and getting back to it quickly. After all we were profitable in the fourth quarter, not many were and we would like to think we are close and we believe we are not providing any guidance.

Phillip Creek

And just to add on that a little bit, in the third quarter of last year, we lost $1.2 million from operations. In the fourth quarter of last year we made $2.9 million from operations, then the first quarter of this year with the lower delivery we lost $4.9 million from operations. So, if you look at the last three quarters we haven’t been that far away from it.

Obviously the keys are, if we can get margins, if we can get a little more volume and get scale, those are the things we’re working on every day trying to get back to profitability, but like Bob says there is still lot of choppiness out there, but we are not that far away.

Alex Barren - Housing Research

Right. Yes, no, that's what I was asking, because it seems like you guys are kind of flirting with almost being there. And along those lines can you comment, I remember you guys used to comment in previous calls on kind of your margins and backlog, so can you give us a sense of what those are by market, and what you expect over the rest of the year? And also along those lines how much can you really leverage the SG&A at this point? Is there more room to cut, or is this kind of as low as it goes in dollars?

Phillip Creek

To address your first point as far as margins, we really haven’t given any margin. It’s in backlog or guidance for a couple of quarters just due to market conditions. I mean if you look at our margins, they were 16% in the third quarter of last year, 16 in the fourth quarter and 17 in the first quarter and we’re very focused on the margins and obviously we do hope to improve those, but forecasting is just too difficult to get into. So we really don’t want to get into that. Again back to the comment of profitability, it’s just still very hard to get into something like that, there is just too many things still going on.

Alex Barren - Housing Research

On a slightly different note, I was looking at your lot position, owned versus finished lots, and I've heard a lot of builders are out there buying more finished lots rather than developing the ones they already have. So I'm kind of wondering what is your strategy? And if you're doing something similar of just going out there and buying the finished lots rather than developing, is that just a function that it's faster or is that a function of the cost?

Bob Schottenstein

From the macro standpoint our strong preference in every market is to buy finished lots on some type of an option takedown basis. And we would prefer to do that in each and every case. Having said that it’s not possible, and the reason it’s not possible are several fold. Number one, in some markets there aren’t sellers and/or developers and the other side of it is in Chicago would be a classic of example.

We now have a number of location in Chicago and with the exception of one of those communities, each of them represent a deal that we bough in bulk that was in the distress where we paid a percentage against the par value. So it just even though our goal are first, second, third goal is to buy finish lots in a take down basis in a particular calendar order, due the nature of the deals we’re buying and where they might be, we just settled on a deal in Charlotte within the last 48 hours where we took title to a deal that was in the fore closure process.

Obviously that’s one we would have loved to have bought on finish lot basis but we think it’s a home run having bought it in bulk but we did it through a little bit of a left handed acquisition of note and mortgage and now, we hold title to it. So I mean they come in so many different sizes and they are very deal dependent, I guess Job one is to secure premier locations.

Job two is to secure that also have a minimum return on investment is still pointed out in his comments during our presentation that have a minimum ROI of 20% and higher on deals of intend to be bulk year. So having settle that they its one of the most tightly controlled, tightly managed time consuming parts of the business buying new lots, buying new locations, opening new locations but and that its if it one side doesn’t fit all, there are some overwriting principles against which we operate the company to mitigate the risk but it sort to safe housing system in a lot of different ways particularly in these unsettled times

Alex Barren - Housing Research

But when you use the term bulk, does that mean they're undeveloped or partially developed or what does that mean?

Bob Schottenstein

No. No that could well, that could be in there undeveloped that everything is in titled They could be partially developed, it could be phases developed in two phases that aren’t but when I start about bulk, I'm talking about taking a large group that weren’t suppose to on take down basis where the taken downs tend to more to mere more closely the sales phase.

Phillip Creek

And in our terminology Alex it worth buying more than what we think that your supply, we internally call that bulk

Alex Barren - Housing Research

Got it, got it. Okay, thanks. I'll get back into queue.

Phillip Creek

Higher return rates on must because we are taking some market risk in other things

Operator

Your next question comes from Joel Locher with FBN Securities.

Joel Locher - FBN Securities

Just, wanted to, I guess a little more on the G&A, it was up I guess about $1 million, $900,000 year-over-year. I was expecting more so to be flat. Was wondering was there any expenses relating to the Houston market that was just initial costs or anything like that fell through?

Phillip Creek

That was very little. We have added a few people. Again, our revenue was up 25% for the quarter.

Joel Locher - FBN Securities

Right.

Phillip Creek

But minimal expenses we used in

Joel Locher - FBN Securities

Was there any, I guess stock option expense or anything greater than a year ago?

Phillip Creek

Nothing significant or anything Joel

Joel Locher - FBN Securities

Nothing significant. All right. And the, just I guess on the refinancing, everybody but a lot of builders have been taking advantage of the credit markets in the last few weeks. Wondering, I mean are you guys close to maybe doing something or pushing out the maturity date or I mean how close should we expect anything from the bond side issuance?

Kevin Hake

Joel, this is Kevin. As Phil has said in his comments, we just continued to look and unmissed possibilities. We’re certainly aware of other builders accessing the market recently and tendering and refinancing. We’ve certainly looked at what we expect would be the cost for us to tender. And we’ll continue to evaluate the tradeoffs between what would potentially for us be fairly high cost of taking out the current house versus pretty attractive rate issue for us. And we continuing to evaluate and to those trade offs. But we still feel it’s two years till maturity. It’s our preference as Phil said but the deal is an advance of that maturity but we feel two years as is a reasonable amount of time for us to work on it.

Operator

(Operator Instructions). There are no further questions at this time.

Phil Creek

Thank you very much for joining us. And we look forward to talking to you after the second quarter.

Operator

This concludes today’s conference call. You may now disconnect.

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Source: M/I Homes Inc. Q1 2010 Earnings Call Transcript
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