Exhibit 99.1
M/I Homes Reports
Second Quarter Results
Columbus, Ohio (July 24, 2014) - 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 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.
Contact M/I Homes, Inc.
Phillip G. Creek, Executive Vice President, Chief Financial Officer, (614) 418-8011
Ann Marie W. Hunker, Vice President, Controller, (614) 418-8225
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
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 |