M/I Homes reports Q1 net income of US$12.6M, up from US$4.6M a year earlier, on revenues up 23.1% to US$234.8M; home deliveries up 17.5% to 737, number of active communities up 17% to 158
COLUMBUS, Ohio
,
April 24, 2014
(press release)
– M/I Homes, Inc. (NYSE: MHO) announced results for the first quarter ended March 31, 2014.
M/I Homes, Inc. and Subsidiaries
Summary Operating Results (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2014
2013
New contracts
982
1,047
Average community count
158
133
Cancellation rate
16
%
15
%
Backlog units
1,525
1,385
Backlog value
$
496,428
$
401,186
Homes delivered
737
627
Average home closing price
$
299
$
284
Homebuilding revenue:
Housing revenue
$
220,710
$
177,790
Land revenue
6,266
4,527
Total homebuilding revenue
$
226,976
$
182,317
Financial services revenue
7,865
8,410
Total revenue
$
234,841
$
190,727
Cost of sales - operations
183,964
151,513
Cost of sales - impairment
—
900
Gross margin
50,877
38,314
General and administrative expense
18,315
15,979
Selling expense
15,969
13,109
Operating income
16,593
9,226
Income from unconsolidated joint ventures
(62)
—
Interest expense
4,170
4,340
Income before income taxes
12,485
4,886
(Benefit) provision for income taxes
(147)
299
Net income
$
12,632
$
4,587
Excess of fair value over book value of preferred shares redeemed
$
—
$
2,190
Preferred dividends
$
1,219
$
—
Net income to common shareholders
$
11,413
$
2,397
Earnings per share:
Basic
$
0.47
$
0.11
Diluted
$
0.41
$
0.11
Weighted average shares outstanding:
Basic
24,417
22,273
Diluted
29,870
22,688
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
March 31,
2014
2013
Assets:
Total cash and cash equivalents(1)
$
100,911
$
272,551
Mortgage loans held for sale
55,750
57,721
Inventory:
Lots, land and land development
337,137
255,934
Land held for sale
3,623
8,591
Homes under construction
325,439
245,074
Other inventory
57,428
68,041
Total inventory
$
723,627
$
577,640
Property and equipment - net
10,506
9,994
Investments in unconsolidated joint ventures
44,847
22,275
Deferred income taxes, net of valuation allowance(2)
111,214
—
Other assets
38,048
28,471
Total Assets
$
1,084,903
$
968,652
Liabilities:
Debt - Homebuilding Operations:
Senior notes
$
228,169
$
227,770
Convertible senior subordinated notes due 2017
57,500
57,500
Convertible senior subordinated notes due 2018
86,250
86,250
Preferred stock - subject to redemption
—
50,352
Notes payable - other
7,757
10,316
Total Debt - Homebuilding Operations
$
379,676
$
432,188
Note payable bank - financial services operations
51,532
53,126
Total Debt
$
431,208
$
485,314
Accounts payable
71,376
57,071
Other liabilities
75,728
81,266
Total Liabilities
$
578,312
$
623,651
Shareholders' Equity
506,591
345,001
Total Liabilities and Shareholders' Equity
$
1,084,903
$
968,652
Book value per common share
$
18.66
$
12.20
Net debt/net capital ratio(3)
39
%
38
%
(1)
2014 and 2013 amounts include $11.6 million and $9.5 million of restricted cash and cash held in escrow, respectively.
(2)
2014 and 2013 amounts include gross deferred tax assets of $115.2 million and $134.0 million, respectively, net of valuation allowances of $4.0 million and $134.0 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,
2014
2013
Adjusted EBITDA(1)
$
22,176
$
16,026
Cash flow (used in) provided by operating activities
$
(2,103)
$
8,558
Cash used in investing activities
$
(8,879)
$
(12,702)
Cash (used in) provided by financing activities
$
(28,383)
$
121,703
Land/lot purchases
$ 53,003
$
44,381
Land development spending
$ 17,530
$
15,728
Land gross margin
$ 1,321
$
991
Financial services pre-tax income
$
4,711
$
5,137
Deferred tax expense
$
5,024
$
1,788
Deferred tax asset valuation benefit
$
(5,327)
$
(1,788)
(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
March 31,
2014
2013
Net income
$
12,632
$
4,587
Add:
(Benefit) provision for income taxes
(147)
299
Interest expense net of interest income
3,777
4,055
Interest amortized to cost of sales
3,108
3,528
Depreciation and amortization
1,912
2,138
Non-cash charges
894
1,419
Adjusted EBITDA
$
22,176
$
16,026
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
Three Months Ended
March 31,
%
Region
2014
2013
Change
Midwest
374
349
7
%
Southern
336
378
(11)%
Mid-Atlantic
272
320
(15)%
Total
982
1,047
(6)%
HOMES DELIVERED
Three Months Ended
March 31,
%
Region
2014
2013
Change
Midwest
259
232
12
%
Southern
275
191
44
%
Mid-Atlantic
203
204
—
%
Total
737
627
18
%
BACKLOG
March 31, 2014
March 31, 2013
Dollars
Average
Dollars
Average
Region
Units
(millions)
Sales Price
Units
(millions)
Sales Price
Midwest
660
$
209
$
317,000
535
$
144
$
270,000
Southern
510
$
169
$
331,000
528
$
148
$
280,000
Mid-Atlantic
355
$
118
$
334,000
322
$
109
$
339,000
Total
1,525
$
496
$
326,000
1,385
$
401
$
290,000
LAND POSITION SUMMARY
March 31, 2014
March 31, 2013
Lots
Lots Under
Lots
Lots Under
Region
Owned
Contract
Total
Owned
Contract
Total
Midwest
3,532
2,609
6,141
3,078
2,989
6,067
Southern
4,823
4,306
9,129
2,693
3,800
6,493
Mid-Atlantic
2,287
3,408
5,695
1,685
2,124
3,809
Total
10,642
10,323
20,965
7,456
8,913
16,369
2014 First Quarter Highlights:
For the first quarter, the Company reported net income of $12.6 million, or $0.41 per diluted share. Excluding the reversal of $5.3 million of our state deferred tax asset valuation allowance, the Company's net income totaled $7.3 million or $0.23 per diluted share. This compares to $4.6 million, or $0.11 per share during the first quarter of 2013.
Homes delivered in the first quarter were 737, an increase of 18% from the 627 reported for the same period of 2013. New contracts for the first quarter were 982, a 6% decrease from the 1,047 recorded in 2013's first quarter. The backlog of homes at March 31, 2014 had a total sales value of $496 million, a 24% increase over a year-ago, with backlog units of 1,525 and an average sales price of $326,000. At March 31, 2013 backlog sales value was $401 million, with backlog units of 1,385 and an average sales price of $290,000. M/I Homes had 158 active communities at March 31, 2014 compared to 135 at March 31, 2013 and 157 at December 31, 2013. The Company's cancellation rate was 16% in the first quarter of 2014 compared to 15% in 2013's first quarter.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had a very solid first quarter highlighted by an 18% increase in homes delivered, 23% growth in revenue, 156% improvement in pre-tax income and our gross margin improving to 21.7%, a 180 basis point increase over the fourth quarter of 2013. At the same time, our results were a bit mixed, with new contracts declining by 6%, in part due to unusually harsh winter weather conditions, but also due to a softer than expected start to the spring selling season."
Mr. Schottenstein continued, "Our financial condition is strong, with cash of $101 million at the end of the quarter, shareholders' equity of $507 million, net debt to net capital at 39%, and no outstanding borrowings under our $200 million credit facility. Looking ahead, with the strength of our backlog and planned new community openings, we are poised to have a very solid 2014. We remain focused on increasing our profitability, continuing to grow 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 April 2015.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 87,400 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Collection (exclusively by M/I), 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, 2013, 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.
SOURCE M/I Homes, Inc.
RELATED LINKS
http://www.mihomes.com
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