M/I HOMES, INC. COLUMBUS, Ohio, Oct. 23, 2014 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the third quarter and nine months ended September 30, 2014 and an amendment to its homebuilding credit facility.
2014 Third Quarter Highlights:
-- Pre-tax income of $22.2 million, an increase of 62% over 2013's third
quarter
-- Net income of $13.6 million, diluted earnings per share of $0.44
-- Homes delivered increased 5%; New contracts increased 3%
-- Revenue increased 20%
-- Backlog sales value increased 6%
-- Net debt to net capital ratio of 45%
For the third quarter of 2014, the Company reported net income of $13.6 million, or $0.44 per diluted share. This compares to net income of $125.3 million for the third quarter of 2013, or $4.22 per diluted share, which included a $111.6 million reversal of a deferred tax valuation allowance. For the nine months ended September 30, 2014, the Company had net income of $30.5 million which excludes a $9.3 million benefit from the reversal of our state deferred tax asset valuation allowance, compared to net income of $25.5 million for the nine months ended September 30, 2013 which excludes the $111.6 million deferred tax asset valuation allowance reversal.
Homes delivered in 2014's third quarter were 985 compared to 937 deliveries in 2013's third quarter - a 5% increase. Homes delivered for the nine months ended September 30, 2014 increased 11% to 2,616 compared to 2013's deliveries of 2,352. New contracts for 2014's third quarter were 892, up 3% from 2013's third quarter. For the first nine months of 2014, new contracts decreased 3% from 2,994 in 2013 to 2,890 in 2014. M/I Homes had 147 active communities at September 30, 2014 and 147 communities at September 30, 2013. The Company's cancellation rate was 16% in the third quarter of 2014 compared to 17% in 2013's third quarter. The backlog of homes at September 30, 2014 had a sales value of $518 million (a 6% increase over last year's third quarter), with an average sales price of $333,000 and backlog units of 1,554. At September 30, 2013 backlog sales value was $488 million, with an average sales price of $304,000 and backlog units of 1,607.
On October 20, 2014, the Company closed on an amendment to its unsecured homebuilding credit facility which among other things, extended the facility maturity date to October 20, 2018, reduced the Company's borrowing rate, and increased availability to $300 million.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had another solid quarter highlighted by $22.2 million of pre-tax income - a 62% increase over the third quarter of 2013. A number of factors contributed to our improved profitability including a 5% increase in homes delivered, a 13% increase in our average closing price and a 70 basis point improvement in our gross margin. We continue to focus on improving our returns and our third quarter operating margin increased to 7.5% from 6.8% in last year's third quarter. Our backlog sales value also increased 6% from a year ago to $518 million, with an average sales price of $333,000 compared to $304,000 a year ago."
Mr. Schottenstein continued, "We continue to believe that the fundamentals are in place to support further improvement in housing market conditions; however, demand during 2014 has been uneven in many of our markets. This is reflected in our new contracts, increasing 3% in 2014's third quarter following a 6% decline in 2014's first half. In addition, delays in certain of our planned new community openings have also impacted our sales. Our financial condition remains strong, with shareholders' equity of $533 million, and a ratio of net debt to net capital of 45%. We will stay focused on improving our profitability and remain poised to have a very solid 2014."
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 October 2015.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 89,300 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 Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
---- ----
New contracts 892 869 2,890 2,994
Average community count 146 144 152 138
Cancellation rate 16% 17% 16% 15%
Backlog units 1,554 1,607
Backlog value $518,086 $488,089
Homes delivered 985 937 2,616 2,352
Average home closing price $320 $284 $309 $283
-------------------------- ---- ---- ---- ----
Homebuilding revenue:
Housing revenue $315,357 $265,886 $809,441 $665,376
Land revenue 7,830 2,628 15,860 12,756
------------ ----- ----- ------ ------
Total homebuilding revenue $323,187 $268,514 $825,301 $678,132
-------------------------- -------- -------- -------- --------
Financial services revenue 7,580 6,681 21,915 22,343
-------------------------- ----- ----- ------ ------
Total revenue $330,767 $275,195 $847,216 $700,475
------------- -------- -------- -------- --------
Cost of sales - operations 261,636 218,150 666,817 556,799
Cost of sales - impairment 622 2,136 1,426 4,237
Gross margin 68,509 54,909 178,973 139,439
General and administrative expense 21,724 18,261 61,320 52,389
Selling expense 21,955 17,999 58,175 47,383
--------------- ------ ------ ------ ------
Operating income 24,830 18,649 59,478 39,667
Equity from unconsolidated joint ventures (22) (278) (62) (278)
Interest expense 2,649 3,449 9,549 12,186
Loss on early extinguishment of debt - 1,726 - 1,726
------------------------------------ --- ----- --- -----
Income before income taxes 22,203 13,752 49,991 26,033
Provision (benefit) for income taxes 8,586 (111,559) 10,188 (111,129)
Net income $13,617 $125,311 $39,803 $137,162
---------- ------- -------- ------- --------
Excess of fair value over book value of preferred $ - $ - $ - $2,190
shares redeemed
Preferred dividends $1,218 $1,219 $3,656 $2,438
------------------- ------ ------ ------
Net income to common shareholders $12,399 $124,092 $36,147 $132,534
--------------------------------- ------- -------- ------- --------
Earnings per share:
Basic $0.51 $5.09 $1.48 $5.61
Diluted $0.44 $4.22 $1.30 $4.79
------- ----- ----- ----- -----
Weighted average shares outstanding:
Basic 24,474 24,358 24,454 23,642
Diluted 29,921 29,745 29,900 28,410
------- ------ ------ ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
September 30,
2014 2013
---- ----
Assets:
Total cash and cash equivalents(1) $26,066 $158,281
Mortgage loans held for sale 76,983 60,388
Inventory:
Lots, land and land development 402,352 283,455
Land held for sale 2,898 6,899
Homes under construction 419,931 331,969
Other inventory 68,783 54,013
--------------- ------ ------
Total inventory $893,964 $676,336
--------------- -------- --------
Property and equipment - net 11,430 10,346
Investments in unconsolidated joint ventures 40,769 34,088
Deferred income taxes, net of valuation allowance(2) 102,882 112,682
Other assets 41,060 30,946
------------ ------ ------
Total Assets $1,193,154 $1,083,067
============ ========== ==========
Liabilities:
Debt - Homebuilding Operations:
Senior notes $228,369 $227,970
Convertible senior subordinated notes due 2017 57,500 57,500
Convertible senior subordinated notes due 2018 86,250 86,250
Notes payable - Homebuilding 14,400 -
Notes payable - other 8,530 8,126
--------------------- ----- -----
Total Debt - Homebuilding Operations $395,049 $379,846
------------------------------------ -------- --------
Note payable bank - financial services operations 73,778 55,614
------------------------------------------------- ------ ------
Total Debt $468,827 $435,460
---------- -------- --------
Accounts payable 97,873 85,804
Other liabilities 93,161 82,223
----------------- ------ ------
Total Liabilities $659,861 $603,487
----------------- -------- --------
Shareholders' Equity 533,293 479,580
-------------------- ------- -------
Total Liabilities and Shareholders' Equity $1,193,154 $1,083,067
========================================== ========== ==========
Book value per common share $19.75 $17.64
Net debt/net capital ratio(3) 45% 37%
----------------------------- --- ---
(1) 2014 and 2013 amounts include $8.9 million and $15.8 million of restricted cash and cash held in escrow, respectively.
(2) 2013 amount includes gross deferred tax assets of $127.6 million, net of a valuation allowance of $14.9 million.
(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 Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
---- ---- ---- ----
Adjusted EBITDA(1) $32,317 $27,262 $80,094 $62,667
Cash flow used in operating activities $(40,042) $(15,258) $(106,711) $(40,436)
Cash used in investing activities $(2,292) $(9,695) $(11,499) $(32,902)
Cash provided by financing activities $25,859 $1,176 $6,653 $70,315
Land/lot purchases $58,788 $56,484 $183,671 $156,703
Land development spending $41,276 $31,108 $93,213 $67,456
Land gross margin $1,022 $668 $2,785 $1,956
Financial services pre-tax income $3,402 $3,465 $11,185 $12,436
--------------------------------- ------ ------ ------- -------
(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 Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
---- ---- ---- ----
Net income 13,617 125,311 39,803 137,162
Add:
Provision (benefit) for income taxes 8,586 (111,559) 10,188 (111,129)
Interest expense net of interest income 2,202 3,042 8,331 11,209
Interest amortized to cost of sales 4,281 4,074 11,232 11,295
Depreciation and amortization 2,113 2,013 6,062 6,332
Non-cash charges 1,518 4,381 4,478 7,798
---------------- ----- ----- ----- -----
Adjusted EBITDA $32,317 $27,262 $80,094 $62,667
=============== ======= ======= ======= =======
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
-------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
% %
Region 2014 2013 Change 2014 2013 Change
------ ---- ---- ------ ---- ---- ------
Midwest 325 318 2% 1,093 1,062 3%
Southern 327 289 13% 1,026 1,043 (2)%
Mid-Atlantic 240 262 (8)% 771 889 (13)%
------------ --- --- --- --- --- ----
Total 892 869 3% 2,890 2,994 (3)%
===== === === === ===== ===== ===
HOMES DELIVERED
---------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
% %
Region 2014 2013 Change 2014 2013 Change
------ ---- ---- ------ ---- ---- ------
Midwest 381 307 24% 931 837 11%
Southern 344 354 (3)% 949 794 20%
Mid-Atlantic 260 276 (6)% 736 721 2%
------------ --- --- --- --- --- ---
Total 985 937 5% 2,616 2,352 11%
===== === === === ===== ===== ===
BACKLOG
-------
September 30, 2014 September 30, 2013
------------------ ------------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
------ ----- --------- ----------- ----- --------- -----------
Midwest 707 $237 $336,000 643 $191 $297,000
Southern 526 $170 $323,000 590 $170 $287,000
Mid-Atlantic 321 $111 $346,000 374 $128 $341,000
------------ --- ---- -------- --- ---- --------
Total 1,554 $518 $333,000 1,607 $488 $304,000
===== ===== ==== ======== ===== ==== ========
LAND POSITION SUMMARY
---------------------
September 30, 2014 September 30, 2013
------------------ ------------------
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
------ ----- -------- ----- ----- -------- -----
Midwest 3,510 2,626 6,136 3,384 2,407 5,791
Southern 5,071 4,591 9,662 3,633 3,992 7,625
Mid-Atlantic 2,637 2,647 5,284 2,125 2,592 4,717
------------ ----- ----- ----- ----- ----- -----
Total 11,218 9,864 21,082 9,142 8,991 18,133
===== ====== ===== ====== ===== ===== ======
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SOURCE M/I Homes, Inc.
