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

Jan 29, 2014, 08:30 ET from M/I Homes, Inc.

COLUMBUS, Ohio, Jan. 29, 2014 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2013.

2013 Fourth-Quarter Results:

  • Pre-tax income of $15.3 million, up 184% from 2012's fourth quarter
  • New contracts increased 18%
  • Homes delivered increased 26%
  • Backlog sales value increased 44%
  • Cash balance of $142.6 million at year-end
  • Net debt to net capital ratio of 39%

2013 Full-Year Results:

  • Pre-tax income of $41.3 million, an increase of 224% from 2012
  • Net income of $151.4 million, including a $112.8 million deferred tax asset valuation allowance reversal
  • Diluted earnings per share of $5.24 ($1.32 per share excluding the deferred tax asset valuation allowance reversal)
  • New contracts increased 25%
  • Homes delivered increased 26%
  • Control 19,831 lots, an increase of 40% from December 31, 2012

For the fourth quarter of 2013, the Company reported net income of $14.3 million, or $0.48 per diluted share.  This compares to net income of $5.0 million for the fourth quarter of 2012, or $0.23 per diluted share.  Net income for the fourth quarter of 2013 includes $1.6 million of pre-tax asset impairment charges and a $1.2 million non-operating benefit from the reversal of a portion of our state deferred tax asset valuation allowance. Net income for the fourth quarter of 2012 also included $1.6 million of pre-tax asset impairment charges.  For the year ended December 31, 2013, the Company reported net income of $38.6 million (excluding a non-operating benefit of $112.8 million from the reversal of a majority of our deferred tax asset valuation allowance) or $1.32 per diluted share, compared to $13.3 million, or $0.67 per diluted share for the year ended December 31, 2012. 

New contracts for 2013's fourth quarter were 793 - increasing 18% from 2012's fourth quarter of 673.  For 2013, new contracts increased 25% from 3,020 in 2012 to 3,787 in 2013. M/I Homes had 157 active communities at December 31, 2013 compared to 131 a year ago - a 20% increase.  The Company's cancellation rate was 19% in the fourth quarter of 2013, compared to 21% in 2012's fourth quarter. Homes delivered of 1,120 in 2013's fourth quarter were 26% higher than 2012's 887 homes delivered.  Homes delivered for the twelve months ended December 31, 2013 reached their highest level in seven years, increasing 26% to 3,472 from 2012's deliveries of 2,765.  The backlog of homes at December 31, 2013 had a total sales value of $408 million, a 44% increase over a year-ago, with backlog units of 1,280 and an average sales price of $319,000. At December 31, 2012, backlog total sales value was $283 million, with backlog units of 965 and an average sales price of $293,000.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "2013 was a very good year for M/I Homes, with pre-tax income increasing over 200%, revenue growing by 36% and new contracts, homes delivered, backlog units, and backlog sales value each improving by over 25% from 2012.  While our results were aided by improving housing market conditions, they also reflect our success in strategically shifting and diversifying our geographic footprint.  In 2013, we also gained market share in nearly all of our markets as we opened 65 new communities and increased our community count by 20% from a year-ago.  With our fourth quarter new contracts up 18%, we ended 2013 with 315 more units in backlog and a 44% increase in backlog sales value than in 2012."

Mr. Schottenstein continued, "We begin 2014 with a strong backlog, a strong balance sheet, and a solid land position - controlling 40% more lots than we did a year ago.  We ended 2013 with cash of $143 million, shareholders' equity of $493 million, no borrowings under our $200 million credit facility, and a net debt to net capital ratio of 39%.  We remain optimistic about our business and will continue to focus on increasing our profitability and growing our market share." 

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 January 2015.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 86,700 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/Ft 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 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.  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

Twelve Months Ended

December 31,

December 31,

2013

2012

2013

2012

New contracts

793

673

3,787

3,020

Average community count

152

130

142

125

Cancellation rate

19

%

21

%

16

%

17

%

Backlog units

1,280

965

Backlog value

$

408,017

$

282,540

Homes delivered

1,120

887

3,472

2,765

Average home closing price

$

292

$

273

$

286

$

264

Homebuilding revenue:

Housing revenue

$

326,702

$

242,373

$

992,078

$

728,772

Land revenue

3,409

905

16,165

9,877

Total homebuilding revenue

$

330,111

$

243,278

$

1,008,243

$

738,649

Financial services revenue

6,196

7,633

28,539

23,256

Total revenue

$

336,307

$

250,911

$

1,036,782

$

761,905

Cost of sales - operations

267,709

201,647

824,508

613,540

Cost of sales - impairment

1,568

1,626

5,805

3,502

Cost of sales - other

(3,000)

Gross margin

67,030

47,638

206,469

147,863

General and administrative expense

27,105

20,328

79,494

62,627

Selling expense

20,899

17,923

68,282

56,406

Operating income

19,026

9,387

58,693

28,830

Income from unconsolidated joint ventures

(28)

(306)

Interest expense

3,752

4,005

15,938

16,071

Loss on early extinguishment of debt

1,726

Income before income taxes

15,302

5,382

41,335

12,759

(Benefit) provision for income taxes

1,041

367

(110,088)

(588)

Net income

$

14,261

$

5,015

$

151,423

$

13,347

Excess of fair value over book value of

preferred shares redeemed

2,190

Preferred dividends

1,218

3,656

Net income to commons shareholders

$

13,043

$

5,015

$

145,577

$

13,347

Earnings per share:

Basic

$

0.54

$

0.23

$

6.11

$

0.68

Diluted

$

0.48

$

0.23

$

5.24

$

0.67

Weighted average shares outstanding:

Basic

24,358

21,545

23,822

19,651

Diluted

29,783

21,961

28,763

19,891

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)

As of

December 31,

2013

2012

Assets:

Total cash and cash equivalents(1)

$

142,627

$

154,178

Mortgage loans held for sale

81,810

71,121

Inventory:

Lots, land and land development

323,673

257,397

Land held for sale

8,059

8,442

Homes under construction

305,499

221,432

Other inventory

53,703

69,546

Total Inventory

$

690,934

$

556,817

Property and equipment - net

10,536

10,439

Investments in unconsolidated joint ventures

35,266

11,732

Deferred income taxes, net of valuation allowance(2)

110,911

Other assets

38,092

27,013

Total Assets

$

1,110,176

$

831,300

Liabilities:

Debt - Homebuilding Operations:

Senior notes

$

228,070

$

227,670

Convertible senior subordinated notes due 2017

57,500

57,500

Convertible senior subordinated notes due 2018

86,250

Notes payable - other

7,790

11,105

Total Debt - Homebuilding Operations

$

379,610

$

296,275

Notes payable bank - financial services operations

80,029

67,957

Total Debt

$

459,639

$

364,232

Accounts payable

70,226

47,690

Other liabilities

87,508

83,950

Total Liabilities

$

617,373

$

495,872

Shareholders' Equity

492,803

335,428

Total Liabilities and Shareholders' Equity

$

1,110,176

$

831,300

Book value per common share

$

18.18

$

10.86

Net debt/net capital ratio(3)

39

%

39

%

(1)

2013 and 2012 amounts include $13.9 million and $8.7 million of restricted cash and cash held in escrow, respectively.

(2)

2013 and 2012 amounts include gross deferred tax assets of $120.2 million and $135.7 million, respectively, net of valuation allowances of $9.3 million and $135.7 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

Twelve Months Ended

December 31,

December 31,

2013

2012

2013

2012

Adjusted EBITDA(1)

$

26,537

$

18,215

$

89,204

$

55,966

Cash used in operating activities

$

(33,538)

$

(30,674)

$

(73,974)

$

(46,995)

Cash (used in) provided by investing activities

$

(2,652)

$

(555)

$

(35,554)

$

25,322

Cash provided by financing activities

$

22,440

$

16,962

$

92,755

$

107,378

Land/lot purchases

$

60,138

$

58,083

$

216,841

$

138,735

Land development spending

$

39,306

$

19,229

$

106,762

$

56,389

Financial services pre-tax income

$

1,980

$

3,503

$

14,416

$

11,015

Deferred tax expense

$

6,357

$

1,355

$

15,547

$

5,076

Deferred tax asset valuation benefit

$

(5,622)

$

(1,355)

$

(126,458)

$

(5,076)

(1)

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

 

Impairment and Abandonments by Region

(Dollars in thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Impairment by Region:

2013

2012

2013

2012

Midwest

$

1,568

$

1,626

$

5,805

$

3,502

Southern

Mid-Atlantic

Total

$

1,568

$

1,626

$

5,805

$

3,502

Abandonments by Region:

Midwest

$

$

$

$

36

Southern

110

Mid-Atlantic

110

Total

$

$

$

$

256

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results / Reconciliations

(Dollars in thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2013

2012

2013

2012

Net income

$

14,261

$

5,015

$

151,423

$

13,347

Add:

(Benefit) provision for income taxes

1,041

367

(110,088)

(588)

Interest expense, net of interest income

3,299

3,655

14,508

14,607

Interest amortized to cost of sales

3,880

4,236

15,175

13,366

Depreciation and amortization

1,979

2,980

8,311

9,742

Non-cash charges

2,077

1,962

9,875

5,492

Adjusted EBITDA

$

26,537

$

18,215

$

89,204

$

55,966

 

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

2013

2012

Change

2013

2012

Change

Midwest

302

231

31

%

1,364

1,144

19

%

Southern

247

259

(5)

%

1,290

966

34

%

Mid-Atlantic

244

183

33

%

1,133

910

25

%

Total

793

673

18

%

3,787

3,020

25

%

 

HOMES DELIVERED

Three Months Ended

Twelve Months Ended

December 31,

December 31,

%

%

Region

2013

2012

Change

2013

2012

Change

Midwest

400

318

26

%

1,237

1,113

11

%

Southern

388

280

39

%

1,182

823

44

%

Mid-Atlantic

332

289

15

%

1,053

829

27

%

Total

1,120

887

26

%

3,472

2,765

26

%

 

BACKLOG

December 31, 2013

December 31, 2012

Dollars

Average

Dollars

Average

Region

Units

(millions)

Sales Price

Units

(millions)

Sales Price

Midwest

545

$

170

$

311,000

418

$

113

$

270,000

Southern

449

$

138

$

307,000

341

$

96

$

280,000

Mid-Atlantic

286

$

100

$

351,000

206

$

74

$

360,000

Total

1,280

$

408

$

319,000

965

$

283

$

293,000

 

LAND POSITION SUMMARY

December 31, 2013

December 31, 2012

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Midwest

3,731

2,366

6,097

3,384

1,629

5,013

Southern

4,337

4,601

8,938

2,160

2,827

4,987

Mid-Atlantic

2,031

2,765

4,796

1,874

2,329

4,203

Total

10,099

9,732

19,831

7,418

6,785

14,203

SOURCE M/I Homes, Inc.



RELATED LINKS

http://www.mihomes.com