M/I Homes Reports Second Quarter Results

Jul 25, 2013, 08:27 ET from M/I Homes, Inc.

COLUMBUS, Ohio, July 25, 2013 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the second quarter and six months ended June 30, 2013.

2013 Second Quarter Highlights:

  • Net income of $7.3 million
  • New contracts increased 31%
  • Homes delivered increased 26%
  • Backlog units and value increased 43% and 53%, respectively
  • Cash balance of $178.7 million
  • Net debt to net capital ratio of 42%

For the second quarter of 2013, the Company reported net income of $7.3 million, which includes $1.2 million of asset impairments. This compares to net income of $3.2 million for the second quarter of 2012, which included $0.7 million of asset impairments.  For the six months ended June 30, 2013, the Company had net income of $11.9 million, compared to net income of $18,000, in the same period a year ago. 

New contracts for 2013's second quarter were 1,078, up 31% from 2012's second quarter of 826.  For the first six months of 2013, new contracts increased 34% from 1,590 in 2012 to 2,125 in 2013. M/I Homes had 140 active communities at June 30, 2013 compared to 124 at June 30, 2012.  The Company's cancellation rate was 14% in the second quarter of 2013 compared to 16% in 2012's second quarter.  Homes delivered in 2013's second quarter were 788 compared to 625 in 2012's second quarter - up 26%.  Homes delivered for the six months ended June 30, 2013 increased 25% to 1,415 compared to 2012's deliveries of 1,132.  Backlog of homes at June 30, 2013 had a sales value of $491 million (a 53% increase over last year's second quarter), with an average sales price of $293,000 and backlog units of 1,675.  At June 30, 2012 backlog sales value was $320 million, with an average sales price of $274,000 and backlog units of 1,168.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased with our improving results - our homes delivered during the quarter increased 26% and our new contracts were up 31%.  We were also pleased with the increase in our community count (up 13%) and average sales price (up 7%), resulting in our highest quarter-end backlog units and sales value in over 5 years.  And, our recent expansion into Texas continues to positively impact our results, as new contracts in Texas almost doubled when compared to last year's second quarter and first half.  In addition, our gross margin and selling, general and administrative expense leverage for the first half of 2013 both improved over 100 basis points from last year's first half."

Mr. Schottenstein continued, "Our financial condition remains strong, with shareholder's equity at $355 million, net debt to net capital at 42%, and no outstanding borrowings under our credit facility.  Furthermore, we enhanced our capital structure, as announced last week, entering into a new $200 million three-year unsecured credit facility.  And, as just announced, we are very excited to be entering the Dallas/Fort Worth market - this will further complement our Texas operations in Austin, Houston and San Antonio.  Moving forward, we will stay focused on improving our profitability, growing our market share in our existing markets, expanding our community count and investing 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 2014.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 84,500 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, Dallas, 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

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

New contracts

1,078

826

2,125

1,590

Average community count

138

123

135

123

Cancellation rate

14

%

16

%

15

%

15

%

Backlog units

1,675

1,168

Backlog value

$

490,769

$

320,388

Homes delivered

788

625

1,415

1,132

Average home closing price

$

281

$

259

$

282

$

254

Homebuilding revenue:

Housing revenue

$

221,700

$

161,915

$

399,490

$

287,993

Land revenue

5,601

4,155

10,128

4,886

Total homebuilding revenue

$

227,301

$

166,070

$

409,618

$

292,879

Financial services revenue

7,252

4,924

15,662

9,240

Total revenue

$

234,553

$

170,994

$

425,280

$

302,119

Cost of sales - operations

187,136

137,111

338,649

244,441

Cost of sales - impairment

1,201

472

2,101

567

Gross margin

46,216

33,411

84,530

57,111

General and administrative expense

18,149

13,826

34,128

26,283

Selling expense

16,275

12,825

29,384

23,836

Operating income

11,792

6,760

21,018

6,992

Interest expense

4,397

3,461

8,737

8,067

Income (loss) before income taxes

7,395

3,299

12,281

(1,075)

Expense (benefit) from income taxes

131

95

430

(1,093)

Net income

$

7,264

$

3,204

$

11,851

$

18

Excess of fair value over book value of preferred  

   shares redeemed

$

$

$

2,190

$

Preferred dividends

1,219

$

1,219

Net income to common shareholders

$

6,045

$

3,204

$

8,442

$

18

Earnings per share:

Basic

$

0.25

$

0.17

$

0.36

$

Diluted

$

0.25

$

0.17

$

0.36

$

Weighted average shares outstanding:

Basic

24,271

18,833

23,278

18,803

Diluted

24,646

19,031

23,671

18,998

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)

As of

June 30,

2013

2012

Assets:

Total cash and cash equivalents(1)

$

178,730

$

56,890

Mortgage loans held for sale

51,491

49,779

Inventory:

Lots, land and land development

261,985

242,377

Land held for sale

6,389

9,889

Homes under construction

294,234

218,140

Other inventory

52,391

51,550

Total inventory

$

614,999

$

521,956

Property and equipment - net

10,267

12,902

Investments in unconsolidated joint ventures

28,648

10,904

Other assets(2)

34,131

18,329

Total Assets

$

918,266

$

670,760

Liabilities:

Debt - Homebuilding Operations:

Senior notes

$

227,870

$

227,470

Convertible senior subordinated notes due 2017

57,500

  Convertible senior subordinated notes due 2018

86,250

Notes payable - other

9,429

10,766

Total Debt - Homebuilding Operations

$

381,049

$

238,236

Note payable bank - financial services operations

50,442

46,343

Total Debt

$

431,491

$

284,579

Accounts payable

61,888

51,307

Other liabilities

70,353

59,728

Total Liabilities

$

563,732

$

395,614

Shareholders' Equity

354,534

275,146

Total Liabilities and Shareholders' Equity

$

918,266

$

670,760

Book value per common share

$

12.50

$

9.29

Net debt/net capital ratio(3)

42

%

45

%

(1) 2013 and 2012 amounts include $12.5 million and $12.6 million of restricted cash and cash held in escrow,

      respectively.

(2) 2013 and 2012 amounts include gross deferred tax assets of $131.3 million and $140.7 million, respectively, net

      of valuation allowances of $131.3 million and $140.7 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

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Adjusted EBITDA(1)

$

19,379

$

12,569

$

35,405

$

17,498

Cash flow used in operating activities

$

(33,736)

$

(15,854)

$

(25,178)

$

(23,529)

Cash (used in) provided by investing activities

$

(10,505)

$

(4,098)

$

(23,207)

$

23,234

Cash provided by (used in) financing activities

$

(52,564)

$

(2,729)

$

69,139

$

(15,201)

Land/lot purchases

$

55,810

$

26,726

$

100,219

$

57,178

Land development spending

$

20,620

$

10,244

$

36,348

$

19,556

Land/lot sale proceeds

$

5,601

$

4,155

$

10,128

$

4,886

Financial services pre-tax income

$

3,835

$

1,899

$

8,971

$

3,967

Deferred tax valuation benefit

$

(2,674)

$

(1,283)

$

(4,462)

$

(143)

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

 

Impairment and Abandonments by Region

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

Impairment by Region:

2013

2012

2013

2012

Midwest

$

1,201

$

472

$

2,101

$

567

Southern

Mid-Atlantic

Total

$

1,201

$

472

$

2,101

$

567

Abandonments by Region:                     

Midwest

$

$

34

$

$

36

Southern

103

110

Mid-Atlantic

88

110

Total

$

$

225

$

$

256

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Result / Reconciliation

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Net income

$

7,264

$

3,204

$

11,851

$

18

Add:

Income tax expense (benefit)

131

95

430

(1,093)

Interest expense net of interest income

4,112

3,106

8,167

7,343

Interest amortized to cost of sales

3,693

2,892

7,221

5,456

Depreciation and amortization

2,181

2,045

4,319

3,987

Non-cash charges

1,998

1,227

3,417

1,787

Adjusted EBITDA

$

19,379

$

12,569

$

35,405

$

17,498

 

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

2013

2012

Change

2013

2012

Change

Midwest

395

299

32

%

744

639

16

%

Southern

376

269

40

%

754

483

56

%

Mid-Atlantic                                   

307

258

19

%

627

468

34

%

Total

1,078

826

31

%

2,125

1,590

34

%

 

HOMES DELIVERED

Three Months Ended

Six Months Ended

June 30,

June 30,

%

%

Region

2013

2012

Change

2013

2012

Change

Midwest

298

255

17

%

530

488

9

%

Southern

249

187

33

%

440

320

38

%

Mid-Atlantic                                       

241

183

32

%

445

324

37

%

Total

788

625

26

%

1,415

1,132

25

%

 

BACKLOG

June 30, 2013

June 30, 2012

Dollars

Average

Dollars

Average

Region

Units

(millions)

Sales Price

Units

(millions)

Sales Price

Midwest

632

$

178

$

282,000

538

$

142

$

263,000

Southern

655

$

180

$

275,000

361

$

87

$

242,000

Mid-Atlantic                                  

388

$

132

$

340,000

269

$

91

$

340,000

Total

1,675

$

491

$

293,000

1,168

$

320

$

274,000

 

LAND POSITION SUMMARY

June 30, 2013

June 30, 2012

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Midwest

3,403

2,550

5,953

3,258

1,367

4,625

Southern

3,648

3,372

7,020

1,374

1,524

2,898

Mid-Atlantic                                   

1,625

2,565

4,190

1,860

1,211

3,071

Total

8,676

8,487

17,163

6,492

4,102

10,594

 

SOURCE M/I Homes, Inc.



RELATED LINKS

http://www.mihomes.com