M/I Homes Reports Fourth Quarter and Year-End Results

04 Feb, 2016, 08:30 ET from M/I Homes, Inc.

COLUMBUS, Ohio, Feb. 4, 2016 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2015.

2015 Fourth-Quarter Results:

  • Pre-tax income increased 55% to $30.7 million, excluding a $7.8 million charge related to extinguishment of debt
  • Net income increased to  $13.3 million ($0.43 per diluted share; $0.59 per diluted share excluding debt extinguishment)
  • Revenue increased 27% to $468.9 million; homes delivered increased 13%
  • Average home closing price increased 12% to $360,000
  • New contracts increased 16%; year-end community count increased 17%
  • Backlog sales value increased 34% to $569 million; backlog units up 25%

2015 Full-Year Results:

  • Pre-tax income increased 36% to $94.8 million, excluding a $7.8 million charge related to extinguishment of debt
  • Net income increased 25% to $51.8 million, from 2014's $41.4 million excluding a $9.3 million tax benefit recorded in 2014
  • Diluted earnings per share of $1.68 ($1.84 excluding the charge on debt extinguishment)
  • Revenue increased 17%; homes delivered increased 4%
  • New contracts increased 12%
  • Net debt to net capital ratio of 50%

For the fourth quarter of 2015, the Company reported net income of $13.3 million, or $0.43 per diluted share, including a $4.9 million after-tax charge on extinguishment of debt associated with retirement of our 2018 senior notes in December of 2015. Diluted earnings per share was $0.59 excluding this charge. This compares to net income of $11.0 million for the fourth quarter of 2014, or $0.36 per diluted share.  For the year ended December 31, 2015, the Company reported net income of $51.8 million or $1.68 per diluted share.  Diluted earnings per share was $1.84 excluding the charge on extinguishment of debt.  Pre-tax income for the year was $86.9 million, including the $7.8 million pre-tax charge on extinguishment of debt and $3.6 million of impairment charges.  For the year ended December 31, 2014, the Company reported net income of $50.8 million or $1.65, per diluted shares, or $1.34 per share excluding a $9.3 million benefit from the reversal of our state deferred tax valuation allowance.

New contracts for 2015's fourth quarter were 897 - increasing 16% from 2014's fourth quarter of 773.  For 2015, new contracts totaled 4,093, a 12% increase over 2014's new contracts of 3,663. M/I Homes had 175 active communities at December 31, 2015 compared to 150 a year ago - a 17% increase.  The Company's cancellation rate was 18% in 2015's the fourth quarter and 19% in 2014.  Homes delivered of 1,253 in 2015's fourth quarter were 13% higher than 2014's 1,105 homes delivered.  Homes delivered for the twelve months ended December 31, 2015 reached their highest level in nine years, increasing 4% to 3,883 from 2014's deliveries of 3,721. Homes in backlog increased 25% at December 31, 2015 to 1,531 units, with a sales value of $569 million (a 34% increase over last year), and average sales price in backlog increased 7% to a record high of $372,000.  At December 31, 2014, the sales value of the 1,222 homes in backlog was $425 million, with an average sales price of $348,000

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are very pleased with our 2015 results highlighted by a 36% increase in pre-tax income (excluding the debt charge), a 17% increase in revenue and a 12% increase in new contracts.  A number of factors contributed to the significant improvement in our earnings, including a 4% increase in homes delivered and a 10% increase in the average sale price of homes delivered.  In addition, we achieved a 40 basis point increase in our gross margins and a 70 basis point reduction in our overhead expense ratio. As a result, we were able to improve our operating margin by 110 basis points to 7.9%.  We ended the year with a backlog sales value of $569 million, a 34% increase over a year ago and the highest level since 2005."

Mr. Schottenstein continued, "2016 promises to be a milestone year for M/I Homes as we celebrate our 40th year in business. We are excited about our business as we continue to make progress on many fronts.  Our newest market, Minneapolis, is off to a good start, and with our strong year-end backlog and the strength of our land position, we are positioned to continue growing and further improve our profitability in 2016."

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 February 2017.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 94,300 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Collection (exclusively by M/I).  The Company also operates under the name Hans Hagan Homes in its Minneapolis/St. Paul, Minnesota market. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa and Orlando, Florida; Austin, Dallas/Fort 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 any 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 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014, 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 herein will increase with the passage of time.  We undertake 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.

 

M/I Homes, Inc. and Subsidiaries

Summary Operating Results (Unaudited)

(Dollars in thousands, except per share amounts)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

New contracts

897

773

4,093

3,663

Average community count

171

149

159

151

Cancellation rate

18

%

19

%

15

%

16

%

Backlog units

1,531

1,222

Backlog sales value

$

569,424

$

425,187

Homes delivered

1,253

1,105

3,883

3,721

Average home closing price

$

360

$

322

$

346

$

313

Homebuilding revenue:

   Housing revenue

$

450,461

$

355,363

$

1,342,135

$

1,164,804

   Land revenue

8,795

4,394

40,285

20,254

Total homebuilding revenue

$

459,256

$

359,757

$

1,382,420

$

1,185,058

   Financial services revenue

9,667

8,207

35,975

30,122

Total revenue

$

468,923

$

367,964

$

1,418,395

$

1,215,180

Cost of sales - operations

370,469

292,174

1,114,663

958,991

Cost of sales - impairment

3,638

2,031

3,638

3,457

Gross margin

94,816

73,759

300,094

252,732

General and administrative expense

28,518

27,510

93,208

88,830

Selling expense

30,201

22,973

95,092

81,148

Operating income

36,097

23,276

111,794

82,754

Equity in income from unconsolidated

  joint ventures

(250)

(285)

(498)

(347)

Interest expense

5,651

3,816

17,521

13,365

Loss on early extinguishment of debt

7,842

7,842

Income before income taxes

22,854

19,745

86,929

69,736

Provision for income taxes

9,579

8,759

35,166

18,947

Net income

$

13,275

$

10,986

$

51,763

$

50,789

Preferred dividends

1,219

1,219

4,875

4,875

Net income to common shareholders

$

12,056

$

9,767

$

46,888

$

45,914

Earnings per share:

Basic

$

0.49

$

0.40

$

1.91

$

1.88

Diluted

$

0.43

$

0.36

$

1.68

$

1.65

Weighted average shares outstanding:

Basic

24,649

24,489

24,575

24,463

Diluted

30,107

29,944

30,047

29,912

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)

As of

December 31,

2015

2014

Assets:

Total cash and cash equivalents(1)

$

13,101

$

22,486

Mortgage loans held for sale

127,001

92,794

Inventory:

Lots, land and land development

584,542

463,198

Land held for sale

12,630

10,647

Homes under construction

420,206

371,119

Other inventory

94,664

73,625

Total Inventory

$

1,112,042

$

918,589

Property and equipment - net

12,897

11,490

Investments in unconsolidated joint ventures

36,967

27,769

Deferred income taxes

67,404

94,412

Other assets

46,142

37,699

Total Assets

$

1,415,554

$

1,205,239

Liabilities:

Debt - Homebuilding Operations:

Senior notes - net

$

294,727

$

226,099

Convertible senior subordinated notes due 2017 - net

56,518

55,943

Convertible senior subordinated notes due 2018 - net

84,714

84,006

Notes payable - homebuilding

43,800

30,000

Notes payable - other

8,441

9,518

Total Debt - Homebuilding Operations

$

488,200

$

405,566

Notes payable bank - financial services operations

123,648

85,379

Total Debt

$

611,848

$

490,945

Accounts payable

86,878

75,338

Other liabilities

120,262

94,661

Total Liabilities

$

818,988

$

660,944

Shareholders' Equity

596,566

544,295

Total Liabilities and Shareholders' Equity

$

1,415,554

$

1,205,239

Book value per common share

$

22.17

$

20.16

Net debt/net capital ratio(2)

50

%

47

%

(1)

2015 and 2014 amounts include $2.9 million and $7.0 million of restricted cash and cash held in escrow, respectively.

(2)

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

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

Adjusted EBITDA(1)

$

43,595

$

33,480

$

140,818

$

113,574

Cash provided by (used in) operating activities

$

13,037

$

(25,964)

$

(82,159)

$

(132,675)

Cash used in investing activities

$

(31,583)

$

(1,082)

$

(37,631)

$

(12,581)

Cash provided by financing activities

$

3,696

$

25,413

$

114,460

$

32,066

Land/lot purchases

$

55,251

$

54,068

$

232,707

$

237,739

Land development spending

$

59,655

$

51,056

$

205,069

$

144,269

Land gross margin

$

297

$

834

$

6,661

$

3,619

Financial services pre-tax income

$

5,129

$

2,992

$

19,416

$

14,177

(1)

See "Non-GAAP Financial Results / Reconciliations" table below.

 

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results / Reconciliations

(Dollars in thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

Net income

$

13,275

$

10,986

$

51,763

$

50,789

Add:

Provision for income taxes

9,579

8,759

35,166

18,947

Interest expense, net of interest income

5,036

3,321

15,532

11,652

Interest amortized to cost of sales

5,329

5,211

16,966

16,443

Depreciation and amortization

2,705

2,234

9,918

8,296

Non-cash charges

7,671

2,969

11,473

7,447

Adjusted EBITDA

$

43,595

$

33,480

$

140,818

$

113,574

 

M/I Homes, Inc. and Subsidiaries

Selected Supplemental Financial and Operating Data

NEW CONTRACTS

Three Months Ended

Twelve Months Ended

December 31,

December 31,

%

%

Region

2015

2014

Change

2015

2014

Change

Midwest

327

243

35

%

1,485

1,336

11

%

Southern

337

307

10

%

1,557

1,333

17

%

Mid-Atlantic

233

223

4

%

1,051

994

6

%

Total

897

773

16

%

4,093

3,663

12

%

 

HOMES DELIVERED

Three Months Ended

Twelve Months Ended

December 31,

December 31,

%

%

Region

2015

2014

Change

2015

2014

Change

Midwest

455

445

2

%

1,417

1,376

3

%

Southern

483

383

26

%

1,447

1,332

9

%

Mid-Atlantic

315

277

14

%

1,019

1,013

1

%

Total

1,253

1,105

13

%

3,883

3,721

4

%

 

BACKLOG

December 31, 2015

December 31, 2014

Dollars

Average

Dollars

Average

Region

Units

(millions)

Sales Price

Units

(millions)

Sales Price

Midwest

672

$

262

$

390,000

505

$

177

$

351,000

Southern

560

$

200

$

357,000

450

$

153

$

341,000

Mid-Atlantic

299

$

108

$

360,000

267

$

95

$

354,000

Total

1,531

$

569

$

372,000

1,222

$

425

$

348,000

 

LAND POSITION SUMMARY

December 31, 2015

December 31, 2014

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Midwest

3,921

4,220

8,141

3,551

2,156

5,707

Southern

4,664

4,972

9,636

5,016

4,900

9,916

Mid-Atlantic

2,814

1,831

4,645

2,794

2,308

5,102

Total

11,399

11,023

22,422

11,361

9,364

20,725

 

SOURCE M/I Homes, Inc.



RELATED LINKS

http://www.mihomes.com