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M/I Homes Reports Second Quarter Results

  (July 24, 2014)

COLUMBUS, Ohio, July 24, 2014 /PRNewswire/ --M/I Homes, Inc. (NYSE: MHO) announced results for the second quarter and six months ended June 30, 2014.

2014 Second Quarter Highlights:

  • Pre-tax income of $15.3 million, an increase of 107% over 2013's second quarter's $7.4 million
  • Net income of $13.6 million, including a $4.0 million benefit from the reversal of our deferred tax asset valuation allowance
  • Diluted earnings per share of $0.44 ($0.31 per share excluding the impact of the deferred tax valuation allowance reversal)
  • Homes delivered increased 13%; New contracts declined 6%
  • Revenue increased 20%
  • Backlog sales value increased 11%
  • Cash balance of $43.7 million
  • Net debt to net capital ratio of 43%

For the second quarter of 2014, the Company reported net income of $13.6 million, or $0.44 per diluted share. Excluding the reversal of $4.0 million of the Company's state deferred tax asset valuation allowance, net income totaled $9.6 million or $0.31 per diluted share. This compares to net income of $7.3 million for the second quarter of 2013, or $0.25 per diluted share. For the six months ended June 30, 2014, the Company had net income of $16.9 million which excludes $9.3 million of state deferred tax asset valuation allowance reversal, compared to net income of $11.9 million, in the same period a year ago.


Homes delivered in 2014's second quarter were 894 compared to 788 deliveries in 2013's second quarter - a 13% increase. Homes delivered for the six months ended June 30, 2014 increased 15% to 1,631 compared to 2013's deliveries of 1,415. New contracts for 2014's second quarter were 1,016, down 6% from 2013's second quarter due primarily to delays in opening new communities and lower traffic levels. For the first six months of 2014, new contracts decreased 6% from 2,125 in 2013 to 1,998 in 2014. M/I Homes had 145 active communities at June 30, 2014 compared to 140 at June 30, 2013. The Company's cancellation rate was 15% in the second quarter of 2014 compared to 14% in 2013's second quarter. The backlog of homes at June 30, 2014 had a sales value of $546 million (an 11% increase over last year's second quarter), with an average sales price of $332,000 and backlog units of 1,647. At June 30, 2013 backlog sales value was $491 million, with an average sales price of $293,000 and backlog units of 1,675.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had another solid quarter highlighted by earning $15.3 million of pre-tax income -- a 107% increase over the second quarter of 2013. Several factors contributed to our improving profitability, including a 13% increase in homes delivered, a 9% increase in average closing price and a 150 basis point improvement in our gross margin. Our backlog sales value also improved, increasing 11% from a year-ago to $546 million, and our backlog average sales price is now at $332,000-13% higher than a year ago."

Mr. Schottenstein continued, "Our financial condition remains strong, with shareholders' equity of $520 million, net debt to net capital of 43%, and no outstanding borrowings under our credit facility at the end of the quarter. We continue to believe that the fundamentals are in place to support further improvement in housing conditions. With the strength of our backlog, we are poised to have a very solid 2014. We will stay focused on increasing our profitability while continuing to invest 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 2015.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 88,300 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 December31,2013, 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


Six Months Ended


June 30,


June 30,


2014



2013



2014



2013


New contracts

1,016



1,078



1,998



2,125


Average community count

152



138



155



135


Cancellation rate

15

%


14

%


15

%


15

%

Backlog units







1,647



1,675


Backlog value







$

546,221



$

490,769


Homes delivered

894



788



1,631



1,415


Average home closing price

$

306



$

281



$

303



$

282














Homebuilding revenue:












Housing revenue

$

273,374



$

221,700



$

494,084



$

399,490


Land revenue

1,764



5,601



8,030



10,128


Total homebuilding revenue

$

275,138



$

227,301



$

502,114



$

409,618














Financial services revenue

6,470



7,252



14,335



15,662














Total revenue

$

281,608



$

234,553



$

516,449



$

425,280














Cost of sales - operations

221,217



187,136



405,181



338,649


Cost of sales - impairment

804



1,201



804



2,101


Gross margin

59,587



46,216



110,464



84,530


General and administrative expense

21,281



18,149



39,596



34,128


Selling expense

20,251



16,275



36,220



29,384


Operating income

18,055



11,792



34,648



21,018


Loss (income) from unconsolidated joint ventures

22





(40)




Interest expense

2,730



4,397



6,900



8,737


Income before income taxes

15,303



7,395



27,788



12,281


Provision for income taxes

1,749



131



1,602



430


Net income

$

13,554



$

7,264



$

26,186



$

11,851


Excess of fair value over book value of preferred shares redeemed

$



$



$



$

2,190


Preferred dividends

$

1,219



$

1,219



$

2,438



$

1,219


Net income to common shareholders

$

12,335



$

6,045



$

23,748



$

8,442














Earnings per share:












Basic

$

0.50



$

0.25



$

0.97



$

0.36


Diluted

$

0.44



$

0.25



$

0.85



$

0.36














Weighted average shares outstanding:












Basic

24,470



24,271



24,444



23,278


Diluted

29,913



24,646



29,891



23,671



M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)



As of


June 30,


2014



2013


Assets:






Total cash and cash equivalents(1)

$

43,719



$

178,730


Mortgage loans held for sale

64,782



51,491


Inventory:






Lots, land and land development

366,945



261,985


Land held for sale

3,450



6,389


Homes under construction

384,930



294,234


Other inventory

60,815



52,391


Total inventory

$

816,140



$

614,999








Property and equipment - net

11,283



10,267


Investments in unconsolidated joint ventures

42,182



28,648


Deferred income taxes, net of valuation allowance(2)

109,558




Other assets

39,042



34,131


Total Assets

$

1,126,706



$

918,266








Liabilities:






Debt - Homebuilding Operations:






Senior notes

$

228,269



$

227,870


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




Notes payable - other

7,717



9,429


Total Debt - Homebuilding Operations

$

379,736



$

381,049








Note payable bank - financial services operations

61,914



50,442


Total Debt

$

441,650



$

431,491








Accounts payable

87,325



61,888


Other liabilities

77,587



70,353


Total Liabilities

$

606,562



$

563,732








Shareholders' Equity

520,144



354,534


Total Liabilities and Shareholders' Equity

$

1,126,706



$

918,266








Book value per common share

$

19.21



$

12.50


Net debt/net capital ratio(3)

43

%


42

%



(1)

2014 and 2013 amounts include $10.1 million and $12.5 million of restricted cash and cash held in escrow, respectively.

(2)

2013 amounts include gross deferred tax assets of $131.3 million net of a valuation allowance of $131.3.

(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


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013

Adjusted EBITDA(1)

$

25,601


$

19,379


$

47,777


$

35,405









Cash flow used in operating activities

$

(64,566)


$

(33,736)


$

(66,669)


$

(25,178)

Cash used in investing activities

$

(328)


$

(10,505)


$

(9,207)


$

(23,207)

Cash provided by (used in) financing activities

$

9,177


$

(52,564)


$

(19,206)


$

69,139









Land/lot purchases

$

71,880


$

55,810


$

124,883


$

100,219

Land development spending

$

34,408


$

20,620


$

51,938


$

36,348

Land gross margin

$

442


$

297


$

1,763


$

1,288









Financial services pre-tax income

$

3,072


$

3,835


$

7,783


$

8,971

(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,


2014


2013


2014


2013

Net income

$

13,554


$

7,264


$

26,186


$

11,851

Add:









Provision for income taxes

1,749


131


1,602



430

Interest expense net of interest income

2,352


4,112


6,129



8,167

Interest amortized to cost of sales

3,843


3,693


6,951



7,221

Depreciation and amortization

2,037


2,181


3,949



4,319

Non-cash charges

2,066


1,998


2,960



3,417

Adjusted EBITDA

$

25,601


$

19,379


$

47,777


$

35,405

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

2014


2013


Change


2014


2013


Change

Midwest

394


395


%


768


744


3

%

Southern

363


376


(3)

%


699


754


(7)

%

Mid-Atlantic

259


307


(16)

%


531


627


(15)

%

Total

1,016


1,078


(6)

%


1,998


2,125


(6)

%

HOMES DELIVERED


Three Months Ended


Six Months Ended


June 30,


June 30,






%






%

Region

2014


2013


Change


2014


2013


Change

Midwest

291


298


(2)

%


550


530


4

%

Southern

330


249


33

%


605


440


38

%

Mid-Atlantic

273


241


13

%


476


445


7

%

Total

894


788


13

%


1,631


1,415


15

%

BACKLOG


June 30, 2014


June 30, 2013




Dollars


Average




Dollars


Average

Region

Units


(millions)


Sales Price


Units


(millions)


Sales Price

Midwest

763


$

247


$

324,000


632


$

178


$

282,000

Southern

543


$

182


$

336,000


655


$

180


$

275,000

Mid-Atlantic

341


$

117


$

343,000


388


$

132


$

340,000

Total

1,647


$

546


$

332,000


1,675


$

491


$

293,000

LAND POSITION SUMMARY


June 30, 2014



June 30, 2013


Lots


Lots Under






Lots


Lots Under




Region

Owned


Contract


Total




Owned


Contract


Total


Midwest

3,342


2,688


6,030




3,403


2,550


5,953


Southern

5,003


4,143


9,146




3,648


3,372


7,020


Mid-Atlantic

2,582


3,233


5,815




1,625


2,565


4,190


Total

10,927


10,064


20,991




8,676


8,487


17,163


SOURCE M/I Homes, Inc.

Copyright 2014 PR Newswire. All Rights Reserved


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