M/I Homes Reports First Quarter Results

25 Apr, 2013, 08:30 ET from M/I Homes, Inc.

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.



RELATED LINKS

http://www.mihomes.com