Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Phillip G. Creek
Senior Vice President, Chief Financial Officer
M/I Homes, Inc.
(614) 418-8011
M/I Homes Announces Record Results and
Tenth Consecutive Record Year
Columbus, Ohio (February 2, 2006) - M/I Homes, Inc. (NYSE:MHO) announced record results for the fourth quarter and year ended December 31, 2005. This represents the Company’s tenth consecutive year of record results.
Net income for the fourth quarter was an all-time quarterly high of $41.3 million, or $2.84 per diluted share, compared to $24.5 million or $1.70 per diluted share for the fourth quarter of 2004. These increases of 68% and 67% respectively were primarily the result of a 140 basis point improvement in gross margins and a 35% increase in homes delivered when compared to the same period of 2004. For the year ended December 31, 2005, net income and diluted earnings per share reached records of $100.8 million and $6.93, increasing 10% and 9% over 2004’s $91.5 million and $6.35, respectively.
As previously reported, the Company delivered a record 1,616 homes in the fourth quarter compared to 1,200 in 2004. Homes delivered for the twelve months ended December 31, 2005 decreased slightly to 4,291 from 4,303 in 2004. Annual new contracts of 4,314 were also slightly lower than 2004’s 4,333. New contracts for the fourth quarter decreased 2% to 901 from 2004’s 922, with active subdivisions increasing to 150 at year end.
Year-end backlog, both in units and sales value, was the highest in the Company’s 29-year history. Backlog of homes at December 31, 2005 reached 2,807 units with sales value increasing 19% to $954 million compared to 2004’s year-end. The backlog of homes at December 31, 2004 was 2,688 units with a sales value of $800 million. The average sales price of homes in backlog at December 31, 2005 rose to a record-high $340,000, which is a 14% increase over 2004’s year-end average sales price of $298,000.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are pleased to announce our tenth consecutive year of record results - reaching new highs in revenue, net income, diluted earnings per share and year-end backlog. In particular and as expected, our fourth quarter represented the strongest quarter in M/I’s 29-year history. Our average sales price for 2005 was 11% higher than a year ago and our margins continued to be strong with gross margins of 25.2% and operating margins of 13.0%. Our shareholders’ equity is approaching $600 million and our book value per share increased 20% from 2004 to $41. During 2005, we improved our capital structure with the issuance of $200 million of Senior Notes and increased our bank line availability to $725 million. We also improved and diversified our land position, as planned - purchasing $320 million of land in 2005.”
Mr. Schottenstein continued, “We continue to make significant progress in our geographic diversification strategy with 70% of our year end backlog in Florida, North Carolina and Washington, D.C. In addition, during 2006, we plan to increase our active communities to 175 by year end, with all of the net new communities being in our higher growth markets. We are excited about our future and expect 2006 to be our eleventh consecutive record year. The year is off to a good start with January new contracts reaching a record level and increasing 25% over January 2005. For the year, we plan to deliver approximately 5,000 homes and produce record diluted earnings per share of approximately $7.55 - $7.75, an increase of approximately 10% over 2005’s $6.93. Our projected results for 2006 include an after tax expense of approximately $3.0 million, or $0.21 per diluted share for the implementation of FAS 123R, Accounting for Share-Based Payments.”
The Company will broadcast live its earnings conference call today at 4:00 p.m. EST. To hear the call, log on to the M/I Homes’ website at mihomes.com click on the “Investor Relations” section of the site, and select “Listen to the Conference Call.” The call, along with any applicable reconciliation of non-GAAP financial measures, will continue to be available on our website through February 2007.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold nearly 64,000 homes. The Company’s homes are marketed and sold under the trade names M/I Homes, Showcase Homes and Shamrock Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Delaware; 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 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, 2004. 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.
M/I Homes, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | ||||
December 31, | December 31, | ||||
2005 | 2004 | 2005 | 2004 | ||
| Revenue | $507,770 | $349,278 | $1,347,646 | $1,174,635 | |
| Net income | $ 41,315 | $ 24,549 | $ 100,785 | $ 91,534 | |
| Earnings per share | |||||
| Basic | $2.88 | $1.74 | $7.05 | $6.49 | |
| Diluted | $2.84 | $1.70 | $6.93 | $6.35 | |
| Weighted average shares outstanding | |||||
| Basic | 14,333 | 14,141 | 14,302 | 14,107 | |
| Diluted | 14,538 | 14,412 | 14,539 | 14,407 | |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | |||||||
December 31 | December 31, | |||||||
2005 | 2004 | 2005 | 2004 | |||||
| Revenue | $507,770 | $349,278 | $1,347,646 | $1,174,635 | ||||
| Gross margin | 126,937 | 82,346 | 340,123 | 299,021 | ||||
| General and administrative expense | 27,312 | 18,765 | 80,657 | 64,954 | ||||
| Selling expense | 27,553 | 21,220 | 83,931 | 74,428 | ||||
| Operating income | 72,072 | 42,361 | 175,535 | 159,639 | ||||
| Interest expense | 5,435 | 1,785 | 14,108 | 8,342 | ||||
| Income before income taxes | 66,637 | 40,576 | 161,427 | 151,297 | ||||
| Income taxes | 25,322 | 16,027 | 60,642 | 59,763 | ||||
| Net income | $ 41,315 | $ 24,549 | $ 100,785 | $ 91,534 | ||||
Additional Information: | ||||||||
| Housing revenue* | $488,760 | $347,135 | $1,276,803 | $1,149,227 | ||||
| Land revenue* | $ 16,328 | $ 6,441 | $ 43,326 | $ 14,884 | ||||
| Financial services revenue | $ 8,343 | $ 6,587 | $ 28,635 | $ 32,909 | ||||
| Eliminations/other - net* | $ (5,661) | $(10,885) | $ (1,118) | $ (22,385) | ||||
| Financial services pre-tax income | $ 5,175 | $ 3,600 | $ 18,050 | $ 21,632 | ||||
| Average Closing Price | $ 302 | $ 289 | $ 298 | $ 268 | ||||
| EBITDA | $ 75,791 | $ 44,571 | $ 186,158 | $ 165,681 | ||||
| Interest incurred | $ 8,587 | $ 3,075 | $ 26,316 | $ 14,758 | ||||
| Interest amortized to cost of sales | $ 2,832 | $ 1,923 | $ 8,264 | $ 5,221 | ||||
| Depreciation and amortization | $ 1,441 | $ 664 | $ 4,498 | $ 2,448 | ||||
| Cash used in operating activities | $ (92,639) ) | $ (77,688) ) | ||||||
| Cash used in investing activities | $ (64,124) | $ (20,604) ) | ||||||
| Cash from financing activities | $ 179,497 | $ 98,100 | ||||||
Units: | ||||||||
| New contracts | 901 | 922 | 4,314 | 4,333 | ||||
| Homes delivered | 1,616 | 1,200 | 4,291 | 4,303 | ||||
December 31, | |||||
2005 | 2004 | ||||
Backlog: | |||||
| Units | 2,807 | 2,688 | |||
| Aggregate sales value (millions) | $954 | $800 | |||
| Average sales price in backlog | $340 | $298 | |||
*2004 amounts contain changes to segment information to conform to the 2005 presentation. These segment changes had no overall impact on consolidated financial results.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands, except per share amounts)
December 31, | |||||
2005 | 2004 | ||||
Balance Sheet and Operating Data: | |||||
| Unrestricted cash | $ 25,085 | $ 2,351 | |||
| Homebuilding inventory: | |||||
| Lots, land and land development costs | $ 754,530 | $553,237 | |||
| Houses under construction | 294,363 | 226,789 | |||
| Land purchase deposits | 14,058 | 7,119 | |||
| Other | 13,181 | 11,341 | |||
| Total homebuilding inventory | $1,076,132 | $798,486 | |||
| Total assets | $1,329,678 | $978,526 | |||
| Homebuilding debt | $ 465,565 | $287,370 | |||
| Shareholders’ equity | $ 592,568 | $487,611 | |||
| Book value per share | $ 41.36 | $ 34.37 | |||
| Homebuilding debt/capital ratio | 44% | 37% | |||