M/I HOMES, INC. COLUMBUS, Ohio, July 24, 2014 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the second quarter and six months ended June 30, 2014.
2014 Second Quarter Highlights:
-- Pre-tax income of $15.3 million, an increase of 107% over 2013's second
quarter's $7.4 million
-- Net income of $13.6 million, including a $4.0 million benefit from the
reversal of our deferred tax asset valuation allowance
-- Diluted earnings per share of $0.44 ($0.31 per share excluding the
impact of the deferred tax valuation allowance reversal)
-- Homes delivered increased 13%; New contracts declined 6%
-- Revenue increased 20%
-- Backlog sales value increased 11%
-- Cash balance of $43.7 million
-- Net debt to net capital ratio of 43%
For the second quarter of 2014, the Company reported net income of $13.6 million, or $0.44 per diluted share. Excluding the reversal of $4.0 million of the Company's state deferred tax asset valuation allowance, net income totaled $9.6 million or $0.31 per diluted share. This compares to net income of $7.3 million for the second quarter of 2013, or $0.25 per diluted share. For the six months ended June 30, 2014, the Company had net income of $16.9 million which excludes $9.3 million of state deferred tax asset valuation allowance reversal, compared to net income of $11.9 million, in the same period a year ago.
Homes delivered in 2014's second quarter were 894 compared to 788 deliveries in 2013's second quarter - a 13% increase. Homes delivered for the six months ended June 30, 2014 increased 15% to 1,631 compared to 2013's deliveries of 1,415. New contracts for 2014's second quarter were 1,016, down 6% from 2013's second quarter due primarily to delays in opening new communities and lower traffic levels. For the first six months of 2014, new contracts decreased 6% from 2,125 in 2013 to 1,998 in 2014. M/I Homes had 145 active communities at June 30, 2014 compared to 140 at June 30, 2013. The Company's cancellation rate was 15% in the second quarter of 2014 compared to 14% in 2013's second quarter. The backlog of homes at June 30, 2014 had a sales value of $546 million (an 11% increase over last year's second quarter), with an average sales price of $332,000 and backlog units of 1,647. At June 30, 2013 backlog sales value was $491 million, with an average sales price of $293,000 and backlog units of 1,675.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had another solid quarter highlighted by earning $15.3 million of pre-tax income -- a 107% increase over the second quarter of 2013. Several factors contributed to our improving profitability, including a 13% increase in homes delivered, a 9% increase in average closing price and a 150 basis point improvement in our gross margin. Our backlog sales value also improved, increasing 11% from a year-ago to $546 million, and our backlog average sales price is now at $332,000-13% higher than a year ago."
Mr. Schottenstein continued, "Our financial condition remains strong, with shareholders' equity of $520 million, net debt to net capital of 43%, and no outstanding borrowings under our credit facility at the end of the quarter. We continue to believe that the fundamentals are in place to support further improvement in housing conditions. With the strength of our backlog, we are poised to have a very solid 2014. We will stay focused on increasing our profitability while continuing to invest 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 July 2015.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 88,300 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 Six Months Ended
June 30, June 30,
2014 2013 2014 2013
---- ----
New contracts 1,016 1,078 1,998 2,125
Average community
count 152 138 155 135
Cancellation rate 15% 14% 15% 15%
Backlog units 1,647 1,675
Backlog value $546,221 $490,769
Homes delivered 894 788 1,631 1,415
Average home closing
price $306 $281 $303 $282
-------------------- ---- ---- ---- ----
Homebuilding revenue:
Housing revenue $273,374 $221,700 $494,084 $399,490
Land revenue 1,764 5,601 8,030 10,128
------------ ----- ----- ----- ------
Total homebuilding
revenue $275,138 $227,301 $502,114 $409,618
------------------ -------- -------- -------- --------
Financial services
revenue 6,470 7,252 14,335 15,662
------------------ ----- ----- ------ ------
Total revenue $281,608 $234,553 $516,449 $425,280
------------- -------- -------- -------- --------
Cost of sales -
operations 221,217 187,136 405,181 338,649
Cost of sales -
impairment 804 1,201 804 2,101
Gross margin 59,587 46,216 110,464 84,530
General and
administrative
expense 21,281 18,149 39,596 34,128
Selling expense 20,251 16,275 36,220 29,384
--------------- ------ ------ ------ ------
Operating income 18,055 11,792 34,648 21,018
Loss (income) from
unconsolidated joint
ventures 22 - (40) -
Interest expense 2,730 4,397 6,900 8,737
Income before income
taxes 15,303 7,395 27,788 12,281
Provision for income
taxes 1,749 131 1,602 430
Net income $13,554 $7,264 $26,186 $11,851
---------- ------- ------ ------- -------
Excess of fair value
over book value of
preferred shares
redeemed $ - $ - $ - $2,190
Preferred dividends $1,219 $1,219 $2,438 $1,219
------------------- ------ ------ ------
Net income to common
shareholders $12,335 $6,045 $23,748 $8,442
-------------------- ------- ------ ------- ------
Earnings per share:
Basic $0.50 $0.25 $0.97 $0.36
Diluted $0.44 $0.25 $0.85 $0.36
------- ----- ----- ----- -----
Weighted average shares outstanding:
Basic 24,470 24,271 24,444 23,278
Diluted 29,913 24,646 29,891 23,671
------- ------ ------ ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
June 30,
2014 2013
---- ----
Assets:
Total
cash
and
cash
equivalents(1) $43,719 $178,730
Mortgage
loans
held for
sale 64,782 51,491
Inventory:
Lots,
land
and
land
development 366,945 261,985
Land
held
for
sale 3,450 6,389
Homes
under
construction 384,930 294,234
Other
inventory 60,815 52,391
---------- ------ ------
Total
inventory $816,140 $614,999
---------- -------- --------
Property
and
equipment
-net 11,283 10,267
Investments
in
unconsolidated
joint
ventures 42,182 28,648
Deferred
income
taxes,
net of
valuation
allowance(2) 109,558 -
Other
assets 39,042 34,131
------- ------ ------
Total
Assets $1,126,706 $918,266
======= ========== ========
Liabilities:
Debt -Homebuilding
Operations:
Senior
notes $228,269 $227,870
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 - -
Notes
payable
-other 7,717 9,429
-------- ----- -----
Total
Debt -
Homebuilding
Operations $379,736 $381,049
------------- -------- --------
Note
payable
bank -
financial
services
operations 61,914 50,442
----------- ------ ------
Total
Debt $441,650 $431,491
----- -------- --------
Accounts
payable 87,325 61,888
Other
liabilities 77,587 70,353
------------ ------ ------
Total
Liabilities $606,562 $563,732
------------ -------- --------
Shareholders'
Equity 520,144 354,534
------------- ------- -------
Total
Liabilities
and
Shareholders'
Equity $1,126,706 $918,266
============== ========== ========
Book
value
per
common
share $19.21 $12.50
Net
debt/
net
capital
ratio(3) 43% 42%
--------- --- ---
(1) 2014 and 2013 amounts include
$10.1 million and $12.5 million
of restricted cash and cash held
in escrow, respectively.
(2) 2013 amounts include gross
deferred tax assets of $131.3
million net of a valuation
allowance of $131.3.
(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 Six Months Ended
June 30, June 30,
2014 2013 2014 2013
---- ---- ---- ----
Adjusted EBITDA(1) $25,601 $19,379 $47,777 $35,405
Cash flow used in
operating
activities $(64,566) $(33,736) $(66,669) $(25,178)
Cash used in
investing
activities $(328) $(10,505) $(9,207) $(23,207)
Cash provided by
(used in)
financing
activities $9,177 $(52,564) $(19,206) $69,139
Land/lot purchases $71,880 $55,810 $124,883 $100,219
Land development
spending $34,408 $20,620 $51,938 $36,348
Land gross margin $442 $297 $1,763 $1,288
Financial services
pre-tax income $3,072 $3,835 $7,783 $8,971
------------------ ------ ------ ------ ------
(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 Six Months Ended
June 30, June 30,
2014 2013 2014 2013
---- ---- ---- ----
Net income $13,554 $7,264 $26,186 $11,851
Add:
Provision for
income taxes 1,749 131 1,602 430
Interest expense
net of interest
income 2,352 4,112 6,129 8,167
Interest amortized
to cost of sales 3,843 3,693 6,951 7,221
Depreciation and
amortization 2,037 2,181 3,949 4,319
Non-cash charges 2,066 1,998 2,960 3,417
---------------- ----- ----- ----- -----
Adjusted EBITDA $25,601 $19,379 $47,777 $
35,405
=== === ======
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
-------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
% %
Region 2014 2013 Change 2014 2013 Change
------ ---- ---- ------ ---- ---- ------
Midwest 394 395 - % 768 744 3%
Southern 363 376 (3)% 699 754 (7)%
Mid-
Atlantic 259 307 (16)% 531 627 (15)%
--------- --- --- ---- --- --- ----
Total 1,016 1,078 (6)% 1,998 2,125 (6)%
===== ===== ===== === ===== ===== ===
HOMES DELIVERED
---------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
% %
Region 2014 2013 Change 2014 2013 Change
------ ---- ---- ------ ---- ---- ------
Midwest 291 298 (2)% 550 530 4%
Southern 330 249 33% 605 440 38%
Mid-
Atlantic 273 241 13% 476 445 7%
--------- --- --- --- --- --- ---
Total 894 788 13% 1,631 1,415 15%
===== === === === ===== ===== ===
BACKLOG
-------
June 30, 2014 June 30, 2013
------------- -------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
------ ----- --------- ----------- ----- --------- -----------
Midwest 763 $247 $324,000 632 $178 $282,000
Southern 543 $182 $336,000 655 $180 $275,000
Mid-
Atlantic 341 $117 $343,000 388 $132 $340,000
--------- --- ---- -------- --- ---- --------
Total 1,647 $546 $332,000 1,675 $491 $293,000
===== ===== ==== ======== ===== ==== ========
LAND POSITION SUMMARY
---------------------
June 30, 2014 June 30, 2013
------------- -------------
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
------ ----- -------- ----- ----- -------- -----
Midwest 3,342 2,688 6,030 3,403 2,550 5,953
Southern 5,003 4,143 9,146 3,648 3,372 7,020
Mid-
Atlantic 2,582 3,233 5,815 1,625 2,565 4,190
--------- ----- ----- ----- ----- ----- -----
Total 10,927 10,064 20,991 8,676 8,487 17,163
===== ====== ====== ====== ===== ===== ======
SOURCE M/I Homes, Inc.
