M/I HOMES, INC. 
By COLUMBUS, Ohio, April 24, 2014 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the first quarter ended March 31, 2014.
2014 First Quarter Highlights:
-- Pre-tax income of $12.5 million - a 156% increase over 2013's first
quarter
-- Net income of $12.6 million, including a $5.3 million benefit from the
reversal of a portion of our state deferred tax asset valuation
allowance
-- Diluted earnings per share of $0.41 ($0.23 per share excluding the
impact of the state deferred tax valuation allowance reversal)
-- Homes delivered increased 18%; New contracts declined 6%
-- Backlog sales value and units increased 24% and 10%, respectively
-- Cash balance of $101 million
-- Net debt to net capital ratio of 39%
For the first quarter, the Company reported net income of $12.6 million, or $0.41 per diluted share. Excluding the reversal of $5.3 million of our state deferred tax asset valuation allowance, the Company's net income totaled $7.3 million or $0.23 per diluted share. This compares to $4.6 million, or $0.11 per share during the first quarter of 2013.
Homes delivered in the first quarter were 737, an increase of 18% from the 627 reported for the same period of 2013. New contracts for the first quarter were 982, a 6% decrease from the 1,047 recorded in 2013's first quarter. The backlog of homes at March 31, 2014 had a total sales value of $496 million, a 24% increase over a year-ago, with backlog units of 1,525 and an average sales price of $326,000. At March 31, 2013 backlog sales value was $401 million, with backlog units of 1,385 and an average sales price of $290,000. M/I Homes had 158 active communities at March 31, 2014 compared to 135 at March 31, 2013 and 157 at December 31, 2013. The Company's cancellation rate was 16% in the first quarter of 2014 compared to 15% in 2013's first quarter.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had a very solid first quarter highlighted by an 18% increase in homes delivered, 23% growth in revenue, 156% improvement in pre-tax income and our gross margin improving to 21.7%, a 180 basis point increase over the fourth quarter of 2013. At the same time, our results were a bit mixed, with new contracts declining by 6%, in part due to unusually harsh winter weather conditions, but also due to a softer than expected start to the spring selling season."
Mr. Schottenstein continued, "Our financial condition is strong, with cash of $101 million at the end of the quarter, shareholders' equity of $507 million, net debt to net capital at 39%, and no outstanding borrowings under our $200 million credit facility. Looking ahead, with the strength of our backlog and planned new community openings, we are poised to have a very solid 2014. We remain focused on increasing our profitability, continuing to grow our market share and investing in attractive land opportunities."
The Company will broadcast live its earnings conference call today at 4:00 p.m. Eastern Time. To listen to the call live, log on to the M/I Homes' website at mihomes.com, click on the "Investors" section of the site, and select "Listen to the Conference Call." A replay of the call will continue to be available on our website through April 2015.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 87,400 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Collection (exclusively by M/I), and Triumph Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Austin, Dallas/Ft Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C.
Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks and uncertainties. Any forward-looking statements that we make herein and in future reports and statements are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements as a result of various factors, including, without limitation, factors relating to the economic environment, interest rates, availability of resources, competition, market concentration, land development activities and various governmental rules and regulations, as more fully discussed in the Risk Factors section in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.
In this press release, we use adjusted EBITDA, a non-GAAP financial measure. Please see the "Non-GAAP Financial Results / Reconciliation" table below.
M/I Homes, Inc. and Subsidiaries
Summary Operating Results (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2014 2013
----
New contracts 982 1,047
Average community count 158 133
Cancellation rate 16% 15%
Backlog units 1,525 1,385
Backlog value $496,428 $401,186
Homes delivered 737 627
Average home closing price $299 $284
-------------------------- ---- ----
Homebuilding revenue:
Housing revenue $220,710 $177,790
Land revenue 6,266 4,527
------------ ----- -----
Total homebuilding revenue $226,976 $182,317
-------------------------- -------- --------
Financial services revenue 7,865 8,410
-------------------------- ----- -----
Total revenue $234,841 $190,727
------------- -------- --------
Cost of sales - operations 183,964 151,513
Cost of sales - impairment - 900
Gross margin 50,877 38,314
General and administrative expense 18,315 15,979
Selling expense 15,969 13,109
--------------- ------ ------
Operating income 16,593 9,226
Income from unconsolidated joint ventures (62) -
Interest expense 4,170 4,340
Income before income taxes 12,485 4,886
(Benefit) provision for income taxes (147) 299
Net income $12,632 $4,587
---------- ------- ------
Excess of fair value over book value of preferred shares redeemed $ - $2,190
Preferred dividends $1,219 $ -
------------------- ------
Net income to common shareholders $11,413 $2,397
--------------------------------- ------- ------
Earnings per share:
Basic $0.47 $0.11
Diluted $0.41 $0.11
------- ----- -----
Weighted average shares outstanding:
Basic 24,417 22,273
Diluted 29,870 22,688
------- ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
March 31,
2014 2013
---- ----
Assets:
Total cash and
cash
equivalents(1) $100,911 $272,551
Mortgage loans
held for sale 55,750 57,721
Inventory:
Lots, land and
land
development 337,137 255,934
Land held for
sale 3,623 8,591
Homes under
construction 325,439 245,074
Other
inventory 57,428 68,041
---------- ------ ------
Total
inventory $723,627 $577,640
---------- -------- --------
Property and
equipment -
net 10,506 9,994
Investments in
unconsolidated
joint
ventures 44,847 22,275
Deferred
income taxes,
net of
valuation
allowance(2) 111,214 -
Other assets 38,048 28,471
------------ ------ ------
Total Assets $1,084,903 $968,652
============ ========== ========
Liabilities:
Debt - Homebuilding Operations:
Senior notes $228,169 $227,770
Convertible
senior
subordinated
notes due
2017 57,500 57,500
Convertible
senior
subordinated
notes due
2018 86,250 86,250
Preferred
stock -
subject to
redemption - 50,352
Notes payable
-other 7,757 10,316
------------- ----- ------
Total Debt -
Homebuilding
Operations $379,676 $432,188
------------- -------- --------
Note payable
bank -
financial
services
operations 51,532 53,126
------------ ------ ------
Total Debt $431,208 $485,314
---------- -------- --------
Accounts
payable 71,376 57,071
Other
liabilities 75,728 81,266
------------ ------ ------
Total
Liabilities $578,312 $623,651
------------ -------- --------
Shareholders'
Equity 506,591 345,001
------------- ------- -------
Total
Liabilities
and
Shareholders'
Equity $1,084,903 $968,652
============== ========== ========
Book value per
common share $18.66 $12.20
Net debt/net
capital
ratio(3) 39% 38%
------------ --- ---
(1) 2014 and 2013 amounts include $11.6
million and $9.5 million of
restricted cash and cash held in
escrow, respectively.
(2) 2014 and 2013 amounts include gross
deferred tax assets of $115.2
million and $134.0 million,
respectively, net of valuation
allowances of $4.0 million and
$134.0 million, respectively.
(3) Net debt/net capital ratio is
calculated as total debt minus
total cash and cash equivalents,
divided by the sum of total debt
minus total cash and cash
equivalents plus shareholders'
equity.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
Three Months Ended
March 31,
2014 2013
---- ----
Adjusted
EBITDA(1) $22,176 $16,026
Cash
flow
(used
in)
provided
by
operating
activities $(2,103) $8,558
Cash
used
in
investing
activities $(8,879) $(12,702)
Cash
(used
in)
provided
by
financing
activities $(28,383) $121,703
Land/
lot
purchases $53,003 $44,381
Land
development
spending $17,530 $15,728
Land
gross
margin $1,321 $991
Financial
services
pre-
tax
income $4,711 $5,137
Deferred
tax
expense $5,024 $1,788
Deferred
tax
asset
valuation
benefit $(5,327) $(1,788)
--------- ------- -------
(1) See "Non-GAAP Financial
Results /Reconciliation" table
below.
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliation
(Dollars in thousands)
Three Months Ended
March 31,
2014 2013
---- ----
Net income $12,632 $4,587
Add:
(Benefit)
provision for
income taxes (147) 299
Interest expense
net of interest
income 3,777 4,055
Interest
amortized to
cost of sales 3,108 3,528
Depreciation and
amortization 1,912 2,138
Non-cash charges 894 1,419
---------------- --- -----
Adjusted EBITDA $22,176 $16,026
=============== ======= =======
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
-------------
Three Months Ended
March 31,
---------
%
Region 2014 2013 Change
------ ---- ---- ------
Midwest 374 349 7%
Southern 336 378 (11)%
Mid-Atlantic 272 320 (15)%
------------ --- --- ----
Total 982 1,047 (6)%
===== === ===== ===
HOMES DELIVERED
---------------
Three Months Ended
March 31,
---------
%
Region 2014 2013 Change
------ ---- ---- ------
Midwest 259 232 12%
Southern 275 191 44%
Mid-Atlantic 203 204 - %
------------ --- --- --- ---
Total 737 627 18%
===== === === ===
BACKLOG
-------
March 31, 2014 March 31, 2013
-------------- --------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
------ ----- --------- ----------- ----- --------- -----------
Midwest 660 $209 $317,000 535 $144 $270,000
Southern 510 $169 $331,000 528 $148 $280,000
Mid-Atlantic 355 $118 $334,000 322 $109 $339,000
------------ --- ---- -------- --- ---- --------
Total 1,525 $496 $326,000 1,385 $401 $290,000
===== ===== ==== ======== ===== ==== ========
LAND POSITION SUMMARY
---------------------
March 31, 2014 March 31, 2013
-------------- --------------
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
------ ----- -------- ----- ----- -------- -----
Midwest 3,532 2,609 6,141 3,078 2,989 6,067
Southern 4,823 4,306 9,129 2,693 3,800 6,493
Mid-
Atlantic 2,287 3,408 5,695 1,685 2,124 3,809
-------- ----- ----- ----- ----- ----- -----
Total 10,642 10,323 20,965 7,456 8,913 16,369
===== ====== ====== ====== ===== ===== ======
SOURCE M/I Homes, Inc.
