2014

M/I Homes Reports First Quarter Results

COLUMBUS, Ohio, April 25, 2013 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the first quarter ended March 31, 2013.

2013 First Quarter Results:

  • Net income of $4.6 million
  • Diluted earnings per share of $0.11
  • New contracts increased 37%
  • Homes delivered increased 24%
  • Backlog units and value increased 48% and 60%, respectively
  • Cash balance of $273 million
  • Net debt to net capital ratio of 38%

For the first quarter, the Company reported net income of $4.6 million and net income to common shareholders of $2.4 million, or $0.11 per diluted share, compared to a net loss of $3.2 million, or $0.17 per share during the first quarter of 2012.  The current quarter net income to common shareholders consists primarily of pre-tax income of $5.8 million (exclusive of $0.9 million of impairment charges), partially offset by a $2.2 million non-cash fair value equity adjustment related to the previously announced redemption of 2,000 of our outstanding preferred shares which was completed on April 10, 2013. 

New contracts for the first quarter were 1,047 - a 37% increase over the 764 recorded in 2012's first quarter.  Homes delivered in the first quarter were 627, an increase of 24% from the 507 reported for the same period of 2012.  Backlog of homes at March 31, 2013 had a sales value of $401 million, with an average sales price of $290,000 and backlog units of 1,385.  At March 31, 2012 backlog sales value was $251 million, with an average sales price of $269,000 and backlog units of 933.  M/I Homes had 135 active communities at March 31, 2013 compared to 122 at March 31, 2012 and 131 at December 31, 2012. The Company's cancellation rate was 15% in the first quarter of 2013 compared to 14% in 2012's first quarter. 

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are very pleased with our first quarter results - achieving our fourth consecutive quarter of net income and fourth consecutive quarter of at least 30% improvement in our new contracts.  In addition, we ended the quarter with a strong backlog value of $401 million, representing a 60% improvement over last year.  Our gross margin of 20.1% and our selling, general and administrative expense leverage of 15.3% both improved by over 200 basis points from last year's first quarter and our operating margin of 4.8% is the highest level we have achieved since 2006."

Mr. Schottenstein continued, "Our financial condition remains strong.  With the combination of improved operating conditions, our profitability and our plans for new community openings and future growth, we took important steps during the quarter to further strengthen our balance sheet by issuing $86 million of convertible debt and raising $55 million of equity while also announcing the redemption of half of our preferred stock.  We ended the quarter with $273 million of cash, had no outstanding borrowings under our $140 million credit facility, and a 38% net debt to net capital ratio. With housing conditions continuing to improve, we are optimistic about our business and look for continued growth."

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 2014.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 83,500 homes.  The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Homes, and Triumph Homes.  The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Austin, 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, 2012, 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.  For this measure, we have provided reconciliation to the most comparable GAAP measures along with an explanation of the usefulness of the non-GAAP 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,


2013



2012


New contracts

1,047



764


Average community count

133



122


Cancellation rate

15

%


14

%

Backlog units

1,385



933


Backlog value

$

401,186



$

251,379


Homes delivered

627



507


Average home closing price

$

284



$

249






Homebuilding revenue:




Housing revenue

$

177,790



$

126,078


Land revenue

4,527



731


Total homebuilding revenue

$

182,317



$

126,809






Financial services revenue

8,410



4,316






Total revenue

$

190,727



$

131,125






Cost of sales - operations

151,513



107,330


Cost of sales - impairment

900



95


Gross margin

38,314



23,700


General and administrative expense

15,979



12,457


Selling expense

13,109



11,011


Operating income

9,226



232


Interest expense

4,340



4,606


Income (loss) before income taxes

4,886



(4,374)


Expense (benefit) from income taxes

299



(1,188)


Net income (loss)

$

4,587



$

(3,186)


Excess of fair value over book value of preferred stock subject to redemption

$

2,190



$


Net income (loss) to common shareholders

$

2,397



$

(3,186)






Earnings (loss) per share:




Basic

$

0.11



$

(0.17)


Diluted

$

0.11



$

(0.17)






Weighted average shares outstanding:




Basic

22,273



18,772


Diluted

22,688



18,772


 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)










As of


March 31,


2013


2012

Assets:








Total cash and cash equivalents(1)

$

272,551



$

80,711


Mortgage loans held for sale

57,721



45,345


Inventory:




Lots, land and land development

255,934



254,609


Land held for sale

8,591



3,243


Homes under construction

245,074



185,242


Other inventory

68,041



46,964


Total inventory

$

577,640



$

490,058






Property and equipment - net

9,994



13,531


Investments in unconsolidated joint ventures

22,275



10,716


Other assets(2)

28,471



17,372


Total Assets

$

968,652



$

657,733






Liabilities:




Debt - Homebuilding Operations:




Senior notes

$

227,770



$

239,118


Convertible senior subordinated notes due 2017

57,500




  Convertible senior subordinated notes due 2018

86,250




Preferred stock - subject to redemption

50,352




Notes payable - other

10,316



5,881


Total Debt - Homebuilding Operations

$

432,188



$

244,999






Note payable bank - financial services operations

53,126



41,580


Total Debt

$

485,314



$

286,579






Accounts payable

57,071



41,068


Other liabilities

81,266



59,071


Total Liabilities

$

623,651



$

386,718






Shareholders' Equity

345,001



271,015


Total Liabilities and Shareholders' Equity

$

968,652



$

657,733






Book value per common share

$

12.20



$

9.10


Net debt/net capital ratio(3)

38

%


43

%


(1)

2013 and 2012 amounts include $9.5 million and $13.7 million of restricted cash and cash

held in escrow, respectively.

(2)

2013 and 2012 amounts include gross deferred tax assets of $134.0 million and $142.0 million,

respectively, net of valuation allowances of $134.0 million and $142.0 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,


2013


2012

Adjusted EBITDA(1)

$

15,963



$

4,929






Cash flow provided by (used in) operating activities

$

8,558



$

(7,675)


Cash (used in) provided by investing activities

$

(12,702)



$

27,332


Cash provided by (used in) financing activities

$

121,703



$

(12,472)






Land/lot purchases

$

44,381



$

30,452


Land development spending

$

15,728



$

9,312


Land/lot sale proceeds

$

4,527



$

731






Financial services pre-tax income

$

5,136



$

2,068






Deferred tax valuation (benefit) expense

$

(1,788)



$

1,140


(1) See "Non-GAAP Financial Results / Reconciliation" table below.





Impairment and Abandonments by Region

(Dollars in thousands)










Three Months Ended





March 31,

Impairment by Region:




2013


2012

Midwest




$

900



$

95


Southern







Mid-Atlantic







Total




$

900



$

95









Abandonments by Region:







Midwest




$



$

2


Southern






7


Mid-Atlantic






22


Total




$



$

31






M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results / Reconciliations

(Dollars in thousands)










Three Months Ended





March 31,





2013


2012

Net income (loss)




$

4,587



$

(3,186)


Add:







Income tax expense (benefit)




299



(1,188)


Interest expense net of interest income




4,055



4,237


Interest amortized to cost of sales




3,465



2,564


Depreciation and amortization




2,138



1,942


Non-cash charges




1,419



560


Adjusted EBITDA




$

15,963



$

4,929


 

 

M/I Homes, Inc. and Subsidiaries

Selected Supplemental Financial and Operating Data
























NEW CONTRACTS




































Three Months Ended

























March 31,





























%

Region























2013


2012


Change

Midwest























349



340



3

%





























Southern























378



214



77

%





























Mid-Atlantic























320



210



52

%





























Total























1,047



764



37

%
























HOMES DELIVERED




































Three Months Ended

























March 31,





























%

Region























2013


2012


Change

Midwest























232



233



%





























Southern























191



133



44

%





























Mid-Atlantic























204



141



45

%





























Total























627



507



24

%








BACKLOG




March 31, 2013


March 31, 2012






Dollars


Average




Dollars


Average

Region



Units


(millions)


Sales Price


Units


(millions)


Sales Price

Midwest



535



$

144



$

270,000



494



$

127



$

257,000
















Southern



528



$

148



$

280,000



245



$

59



$

242,000
















Mid-Atlantic



322



$

109



$

339,000



194



$

65



$

336,000
















Total



1,385



$

401



$

290,000



933



$

251



$

269,000






















LAND POSITION SUMMARY











March 31, 2013




March 31, 2012












Lots

Lots Under




Lots

Lots Under


Region









Owned

Contract

Total



Owned

Contract

Total

Midwest









3,078


2,989


6,067




3,490


1,071


4,561



















Southern









2,693


3,800


6,493




1,402


995


2,397



















Mid-Atlantic









1,685


2,124


3,809




2,031


1,395


3,426



















Total









7,456


8,913


16,369




6,923


3,461


10,384


 

SOURCE M/I Homes, Inc.



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