M/I Homes Reports 2015 Second Quarter Results

Jul 23, 2015, 08:30 ET from M/I Homes, Inc.

COLUMBUS, Ohio, July 23, 2015 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the second quarter and six months ended June 30, 2015.

2015 Second Quarter Highlights:

  • Pre-tax income of $21.9 million - a 43% increase over 2014's second quarter
  • Revenue increased 15% to $323 million; average closing price increased 11%
  • Gross margin of 21.8%, up 60 basis points from 2014's second quarter
  • Net income of $13.4 million ($0.43 per diluted share)
  • New contracts increased 8%; homes delivered increased 3%
  • Backlog sales value increased 20%

For the second quarter of 2015, the Company reported net income of $13.4 million, or $0.43 per diluted share.  This compares to net income of $9.6 million, or $0.31 per diluted share, for the second quarter of 2014 excluding the reversal of $4.0 million of the Company's state deferred tax asset valuation allowance.  For the six months ended June 30, 2015, the Company reported net income of $22.9 million, or $0.74 per diluted share, compared to net income of $16.9 million, or $0.54 per diluted share, in the same period of 2014, excluding the reversal of $9.3 million of the Company's state deferred tax asset valuation allowance.

Homes delivered in 2015's second quarter were 919 compared to 894 deliveries in 2014's second quarter - a 3% increase.  Homes delivered for the six months ended June 30, 2015 were 1,636 compared to 2014's deliveries of 1,631.  New contracts for 2015's second quarter were 1,100, an increase of 8% from 2014's second quarter.  For the first six months of 2015, new contracts increased 11% from 1,998 in 2014 to 2,208 in 2015.  M/I Homes had 155 active communities at June 30, 2015 compared to 145 at June 30, 2014 and 150 at December 31, 2014.  The Company's cancellation rate was 14% in the second quarter of 2015 compared to 15% in 2014's second quarter.  Homes in backlog increased 9% at June 30, 2015 to 1,794 units, with a sales value of $657 million (a 20% increase over last year's second quarter), and an average sales price increase of 10% to a record high of $366,000.  At June 30, 2014, the sales value of homes in backlog was $546 million, with an average sales price of $332,000 and backlog units of 1,647.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had another strong quarter highlighted by a 43% increase in pre-tax income, an 8% increase in  new contracts, and a 20% increase in our backlog sales value.  Several factors contributed to our improved profitability, including an 11% increase in our average closing price, a 60 basis point improvement in our gross margin, and better operating leverage reflected in a 90 basis point decline in our overhead expense ratio.  Our backlog sales value of $657 million includes a backlog average sales price of $366,000 - a record high for our Company."

Mr. Schottenstein continued, "We were pleased to open 28 new communities in the first half of 2015 and are on track to increase our community count by 15% in 2015. Looking ahead, with the strength of our backlog and planned new community openings, we are poised to have a very solid 2015.  We remain focused on improving profitability, growing our market share, 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 2016.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 92,000 homes. The Company's homes are marketed and sold under the trade names M/I Homes and Showcase Collection (exclusively by M/I Homes).  The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; 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 Statement of Income (Unaudited)

(Dollars in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

New contracts

1,100

1,016

2,208

1,998

Average community count

154

152

153

155

Cancellation rate

14

%

15

%

14

%

15

%

Backlog units

1,794

1,647

Backlog value

$

656,935

$

546,221

Homes delivered

919

894

1,636

1,631

Average home closing price

$

340

$

306

$

333

$

303

Homebuilding revenue:

   Housing revenue

$

312,112

$

273,374

$

545,112

$

494,084

   Land revenue

1,810

1,764

23,871

8,030

Total homebuilding revenue

$

313,922

$

275,138

$

568,983

$

502,114

Financial services revenue

8,934

6,470

17,032

14,335

Total revenue

$

322,856

$

281,608

$

586,015

$

516,449

Cost of sales - operations

252,595

221,217

458,778

405,181

Cost of sales - impairment

804

804

Gross margin

$

70,261

$

59,587

$

127,237

$

110,464

General and administrative expense

21,705

21,281

41,039

39,596

Selling expense

22,935

20,251

40,621

36,220

Operating income

$

25,621

$

18,055

$

45,577

$

34,648

Equity in (income) loss of unconsolidated joint ventures

(14)

22

(212)

(40)

Interest expense

3,750

2,730

8,212

6,900

Income before income taxes

$

21,885

$

15,303

$

37,577

$

27,788

Provision for income taxes

8,535

1,749

14,659

1,602

Net income

$

13,350

$

13,554

$

22,918

$

26,186

Preferred dividends

1,219

1,219

2,438

2,438

Net income to common shareholders

$

12,131

$

12,335

$

20,480

$

23,748

Earnings per share:

Basic

$

0.49

$

0.50

$

0.84

$

0.97

Diluted

$

0.43

$

0.44

$

0.74

$

0.85

Weighted average shares outstanding:

Basic

24,531

24,470

24,523

24,444

Diluted

30,023

29,913

30,002

29,891

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)

As of

June 30,

2015

2014

Assets:

Total cash and cash equivalents(1)

$

26,947

$

43,719

Mortgage loans held for sale

75,063

64,782

Inventory:

Lots, land and land development

486,895

366,945

Land held for sale

5,754

3,450

Homes under construction

444,855

384,930

Other inventory

103,440

60,815

Total Inventory

$

1,040,944

$

816,140

Property and equipment - net

11,819

11,283

Investments in unconsolidated joint ventures

28,357

42,182

Deferred income taxes, net of valuation allowance

81,054

109,558

Other assets

50,805

39,042

Total Assets

$

1,314,989

$

1,126,706

Liabilities:

Debt - Homebuilding Operations:

Senior notes

$

228,669

$

228,269

Convertible senior subordinated notes due 2017

57,500

57,500

 Convertible senior subordinated notes due 2018

86,250

86,250

 Notes payable bank - homebuilding

105,600

Notes payable - other

8,230

7,717

Total Debt - Homebuilding Operations

$

486,249

$

379,736

Notes payable bank - financial services operations

69,681

61,914

Total Debt

$

555,930

$

441,650

Accounts payable

90,643

87,325

Other liabilities

101,243

77,587

Total Liabilities

$

747,816

$

606,562

Shareholders' Equity

567,173

520,144

Total Liabilities and Shareholders' Equity

$

1,314,989

$

1,126,706

Book value per common share

$

21.06

$

19.21

Net debt/net capital ratio(2)

48

%

43

%

(1)

2015 and 2014 amounts include $5.2 million and $10.1 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

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Adjusted EBITDA(1)

$

32,760

$

25,601

$

59,529

$

47,777

Cash flow used in operating activities

$

(16,934)

$

(64,566)

$

(46,210)

$

(66,669)

Cash used in investing activities

$

(3,183)

$

(328)

$

(4,028)

$

(9,207)

Cash provided by (used in) financing activities

$

11,932

$

9,177

$

56,476

$

(19,206)

Land/lot purchases

$

43,617

$

71,880

$

94,817

$

124,883

Land development spending

$

44,546

$

34,408

$

82,227

$

51,938

Land gross margin

$

218

$

442

$

5,459

$

1,763

Financial services pre-tax income

$

4,850

$

3,072

$

9,843

$

7,783

(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

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Net income

$

13,350

$

13,554

$

22,918

$

26,186

Add:

Provision for income taxes

8,535

1,749

14,659

1,602

Interest expense net of interest income

3,265

2,352

7,368

6,129

Interest amortized to cost of sales

3,780

3,843

7,319

6,951

Depreciation and amortization

2,429

2,037

4,735

3,949

Non-cash charges

1,401

2,066

2,530

2,960

Adjusted EBITDA

$

32,760

$

25,601

$

59,529

$

47,777

 

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

2015

2014

Change

2015

2014

Change

Midwest

397

394

1

%

817

768

6

%

Southern

407

363

12

%

821

699

17

%

Mid-Atlantic

296

259

14

%

570

531

7

%

Total

1,100

1,016

8

%

2,208

1,998

11

%

 

HOMES DELIVERED

Three Months Ended

Six Months Ended

June 30,

June 30,

%

%

Region

2015

2014

Change

2015

2014

Change

Midwest

351

291

21

%

599

550

9

%

Southern

312

330

(5)

%

587

605

(3)

%

Mid-Atlantic

256

273

(6)

%

450

476

(5)

%

Total

919

894

3

%

1,636

1,631

%

 

BACKLOG

June 30, 2015

June 30, 2014

Dollars

Average

Dollars

Average

Region

Units

(millions)

Sales Price

Units

(millions)

Sales Price

Midwest

723

$

268

$

371,000

763

$

247

$

324,000

Southern

684

$

252

$

368,000

543

$

182

$

336,000

Mid-Atlantic

387

$

137

$

355,000

341

$

117

$

343,000

Total

1,794

$

657

$

366,000

1,647

$

546

$

332,000

 

LAND POSITION SUMMARY

June 30, 2015

June 30, 2014

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Midwest

3,260

4,186

7,446

3,342

2,688

6,030

Southern

4,596

4,653

9,249

5,003

4,143

9,146

Mid-Atlantic

2,559

2,484

5,043

2,582

3,233

5,815

Total

10,415

11,323

21,738

10,927

10,064

20,991

 

SOURCE M/I Homes, Inc.



RELATED LINKS

http://www.mihomes.com