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

PR Newswire

COLUMBUS, Ohio, Jan. 29, 2014 /PRNewswire/ -- M/I Homes, Inc. (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

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