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.

2014 First Quarter Highlights:

  • Pre-tax income of $12.5 million - a 156% increase over 2013's first quarter
  • Net income of $12.6 million, including a $5.3 million benefit from the reversal of a portion of our state deferred tax asset valuation allowance
  • Diluted earnings per share of $0.41 ($0.23 per share excluding the impact of the state deferred tax valuation allowance reversal)
  • Homes delivered increased 18%; New contracts declined 6%
  • Backlog sales value and units increased 24% and 10%, respectively
  • Cash balance of $101 million
  • Net debt to net capital ratio of 39%

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.

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

 

SOURCE M/I Homes, Inc.


RELATED LINKS
http://www.mihomes.com

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