Attached files
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| 8-K - 8-K - M/I HOMES, INC. | a8k3rdquarterearningsrelea.htm |
Exhibit 99.1
M/I Homes Reports
Third Quarter Results
Columbus, Ohio (October 25, 2012) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2012.
2012 Third Quarter Results:
• | Net income of $8.3 million; diluted earnings per share of $0.42 |
• | Adjusted pre-tax income from operations of $6.8 million |
• | New contracts increased 29% |
• | Homes delivered increased 28% |
• | Backlog units and value increased 41% and 50%, respectively |
• | Adjusted EBITDA of $20.3 million |
• | Cash balance of $168.7 million |
• | Net debt to net capital ratio of 36% |
For the third quarter of 2012, the Company reported net income of $8.3 million, or $0.42 per diluted share, compared to a net loss of $4.7 million, or $0.25 per share for the third quarter of 2011. Net income for the quarter consists primarily of $6.8 million adjusted pre-tax income from operations, a $3.0 million recovery related to a drywall settlement, and $1.3 million of asset impairments. The prior year third quarter loss consisted primarily of a $3.0 million adjusted pre-tax loss from operations and $1.8 million of asset impairments. The Company reported net income of $8.3 million for the first nine months of 2012, or $0.43 per diluted share, compared to a net loss of $30.9 million, or $1.65 per share, for the same period a year ago.
New contracts for 2012's third quarter were 757, up 29% from 2011's third quarter of 587. For the nine months ended September 30, 2012, new contracts increased 25% from 1,876 in 2011 to 2,347. M/I Homes had 128 active communities at September 30, 2012 compared to 120 at September 30, 2011 and 124 at June 30, 2012. The Company's cancellation rate was 18% in the third quarter of 2012 compared to 19% in 2011's third quarter. Homes delivered in 2012's third quarter were 746 compared to 582 in 2011's third quarter. Homes delivered for the nine months ended September 30, 2012 were 1,878 compared to 2011's deliveries of 1,611 - up 17%. Backlog of homes at September 30, 2012 had a sales value of $334 million, with an average sales price of $284,000 and backlog units of 1,179. At September 30, 2011 backlog sales value was $223 million, with an average sales price of $266,000 and backlog units of 838.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are pleased with our third quarter results as they represent our best quarterly performance in 5 years, and position us to return to full year profitability. We are making meaningful progress on a number of important fronts as housing conditions throughout most of our markets have improved. Net income improved by more than $13 million for the quarter and by more than $39 million for the first nine months. This was our 6th consecutive quarter of year over year improvement in new contracts as we continue to strengthen our market share in virtually every one of our markets. Our gross margin for the quarter equaled
19.8%, representing a 190 basis point improvement over last year's third quarter; and we continue to gain operating leverage as our selling, general and administrative expense ratio also improved. We were also pleased with our 28% increase in closings, as well as a 12% year over year improvement in our average closing price.”
Mr. Schottenstein, continued, "With the combination of improving operating conditions and our return to profitability, we took important steps during the quarter to further strengthen our balance sheet by issuing $58 million of convertible debt and raising $42 million of additional equity. We ended the quarter with $169 million of cash, no borrowings under our $140 million homebuilding credit facility, and a 36% net debt to capital ratio. During the quarter, we also announced our decision to expand into the Austin, Texas market. Looking ahead, we believe we are well positioned to continue expanding our community count and growing the Company.”
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 October 2013.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 82,000 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Homes, TriStone Homes and Triumph Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Austin, 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, 2011, 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 the following non-GAAP financial measures: adjusted operating gross margin, adjusted operating gross margin percentage, adjusted pre-tax income (loss) from operations, and adjusted EBITDA. For these measures, we have provided reconciliations to the most comparable GAAP measures along with an explanation of the usefulness of the non-GAAP measures. Please see the “Non-GAAP Financial Results / Reconciliations” 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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
New contracts | 757 | 587 | 2,347 | 1,876 | |||||||||||
Average community count | 126 | 118 | 124 | 113 | |||||||||||
Cancellation rate | 18 | % | 19 | % | 16 | % | 18 | % | |||||||
Backlog units | 1,179 | 838 | |||||||||||||
Backlog value | $ | 334,336 | $ | 222,738 | |||||||||||
Homes delivered | 746 | 582 | 1,878 | 1,611 | |||||||||||
Average home closing price | $ | 266 | $ | 238 | $ | 259 | $ | 235 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 198,406 | $ | 138,597 | $ | 486,399 | $ | 379,161 | |||||||
Land revenue | 4,086 | 155 | 8,972 | 1,110 | |||||||||||
Total homebuilding revenue | $ | 202,492 | $ | 138,752 | $ | 495,371 | $ | 380,271 | |||||||
Financial services revenue | 6,383 | 2,872 | 15,623 | 9,367 | |||||||||||
Total revenue | $ | 208,875 | $ | 141,624 | $ | 510,994 | $ | 389,638 | |||||||
Cost of sales - operations | 167,452 | 116,269 | 411,893 | 322,886 | |||||||||||
Cost of sales - impairment | 1,309 | 1,697 | 1,876 | 18,013 | |||||||||||
Cost of sales - other | (3,000 | ) | — | (3,000 | ) | — | |||||||||
Gross margin | 43,114 | 23,658 | 100,225 | 48,739 | |||||||||||
General and administrative expense | 16,016 | 13,896 | 42,299 | 38,064 | |||||||||||
Selling expense | 14,647 | 11,213 | 38,483 | 30,621 | |||||||||||
Operating profit (loss) | 12,451 | (1,451 | ) | 19,443 | (19,946 | ) | |||||||||
Interest expense | 3,999 | 3,384 | 12,066 | 10,884 | |||||||||||
Income (loss) before income taxes | 8,452 | (4,835 | ) | 7,377 | (30,830 | ) | |||||||||
Expense (benefit) from income taxes | 138 | (117 | ) | (955 | ) | 71 | |||||||||
Net income (loss) | $ | 8,314 | $ | (4,718 | ) | $ | 8,332 | $ | (30,901 | ) | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.43 | $ | (0.25 | ) | $ | 0.44 | $ | (1.65 | ) | |||||
Diluted | $ | 0.42 | $ | (0.25 | ) | $ | 0.43 | $ | (1.65 | ) | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 19,434 | 18,728 | 19,014 | 18,685 | |||||||||||
Diluted | 20,273 | 18,728 | 19,238 | 18,685 | |||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Assets: | |||||||
Total cash and cash equivalents(1) | $ | 168,745 | $ | 93,047 | |||
Mortgage loans held for sale | 58,338 | 36,666 | |||||
Inventory: | |||||||
Lots, land and land development | 230,040 | 240,916 | |||||
Land held for sale | 8,448 | — | |||||
Homes under construction | 252,325 | 204,338 | |||||
Other inventory | 53,058 | 46,107 | |||||
Total inventory | $ | 543,871 | $ | 491,361 | |||
Property and equipment - net | 11,956 | 14,741 | |||||
Investments in unconsolidated joint ventures | 11,256 | 10,256 | |||||
Income tax receivable | 592 | 1,267 | |||||
Other assets(2) | 22,534 | 14,387 | |||||
Total Assets | $ | 817,292 | $ | 661,725 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes | $ | 227,570 | $ | 238,914 | |||
Convertible senior subordinated notes | 57,500 | — | |||||
Notes payable - other | 10,769 | 5,857 | |||||
Total Debt - Homebuilding Operations | $ | 295,839 | $ | 244,771 | |||
Note payable bank - financial services operations | 54,840 | 31,658 | |||||
Total Debt | $ | 350,679 | $ | 276,429 | |||
Accounts payable | 65,348 | 45,842 | |||||
Other liabilities | 74,772 | 63,562 | |||||
Total Liabilities | $ | 490,800 | $ | 385,833 | |||
Shareholders' Equity | 326,492 | 275,892 | |||||
Total Liabilities and Shareholders' Equity | $ | 817,292 | $ | 661,725 | |||
Book value per common share | $ | 10.57 | $ | 9.39 | |||
Net debt/net capital ratio(3) | 36 | % | 40 | % | |||
(1) | 2012 and 2011 amounts include $9.0 million and $46.2 million of restricted cash and cash held in escrow, respectively. |
(2) | 2012 and 2011 amounts include gross deferred tax assets of $137.1 million and $139.5 million, respectively, net of valuation allowances of $137.1 million and $139.5 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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Adjusted operating gross margin(1) | $ | 41,423 | $ | 25,355 | $ | 99,101 | $ | 66,752 | |||||||
Adjusted operating gross margin %(1) | 19.8 | % | 17.9 | % | 19.4 | % | 17.1 | % | |||||||
Adjusted pre-tax income (loss) from operations(1) | $ | 6,761 | $ | (2,998 | ) | $ | 6,509 | $ | (12,377 | ) | |||||
Adjusted EBITDA(1) | $ | 20,253 | $ | 5,021 | $ | 37,751 | $ | 12,642 | |||||||
Cash flow provided by (used in) operating activities | $ | 7,208 | $ | (16,047 | ) | $ | (16,321 | ) | $ | (24,566 | ) | ||||
Cash provided by (used in) investing activities | $ | 2,643 | $ | 18,321 | $ | 25,877 | $ | (10,723 | ) | ||||||
Cash provided by (used in) financing activities | $ | 105,617 | $ | (345 | ) | $ | 90,416 | $ | 910 | ||||||
Land/lot purchases | $ | 23,474 | $ | 20,160 | $ | 80,652 | $ | 56,616 | |||||||
Land development spending | $ | 17,604 | $ | 13,268 | $ | 37,161 | $ | 33,482 | |||||||
Land/lot sale proceeds | $ | 4,086 | $ | 155 | $ | 8,972 | $ | 1,110 | |||||||
Financial services pre-tax income | $ | 3,545 | $ | 766 | $ | 7,512 | $ | 3,559 | |||||||
Deferred tax valuation (benefit) expense | $ | (3,578 | ) | $ | 1,345 | $ | (3,721 | ) | $ | 11,657 | |||||
Impairment and Abandonments by Region
(Dollars in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
Impairment by Region: | 2012 | 2011 | 2012 | 2011 | |||||||||||
Midwest | $ | 1,309 | $ | 1,103 | $ | 1,876 | $ | 11,442 | |||||||
Southern | — | 594 | — | 6,554 | |||||||||||
Mid-Atlantic | — | — | — | 17 | |||||||||||
Total | $ | 1,309 | $ | 1,697 | $ | 1,876 | $ | 18,013 | |||||||
Abandonments by Region: | |||||||||||||||
Midwest | $ | — | $ | 121 | $ | 36 | $ | 143 | |||||||
Southern | — | 19 | 110 | 56 | |||||||||||
Mid-Atlantic | — | — | 110 | 241 | |||||||||||
Total | $ | — | $ | 140 | $ | 256 | $ | 440 | |||||||
(1) | See “Non-GAAP Financial Results / Reconciliations” table below. |
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliations
(Dollars in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Gross margin | $ | 43,114 | $ | 23,658 | $ | 100,225 | $ | 48,739 | |||||||
Add: Impairments | 1,309 | 1,697 | 1,876 | 18,013 | |||||||||||
Imported drywall | (3,000 | ) | — | (3,000 | ) | — | |||||||||
Adjusted operating gross margin | $ | 41,423 | $ | 25,355 | $ | 99,101 | $ | 66,752 | |||||||
Income (loss) before income taxes | $ | 8,452 | $ | (4,835 | ) | $ | 7,377 | $ | (30,830 | ) | |||||
Add: Impairments and abandonments | 1,309 | 1,837 | 2,132 | 18,453 | |||||||||||
Imported drywall | (3,000 | ) | — | (3,000 | ) | — | |||||||||
Adjusted pre-tax income (loss) from operations | $ | 6,761 | $ | (2,998 | ) | $ | 6,509 | $ | (12,377 | ) | |||||
Net income (loss) | $ | 8,314 | $ | (4,718 | ) | $ | 8,332 | $ | (30,901 | ) | |||||
Add: | |||||||||||||||
Income tax expense (benefit) | 138 | (117 | ) | (955 | ) | 71 | |||||||||
Interest expense net of interest income | 3,609 | 3,124 | 10,952 | 10,137 | |||||||||||
Interest amortized to cost of sales | 3,674 | 2,515 | 9,130 | 7,672 | |||||||||||
Depreciation and amortization | 2,775 | 1,896 | 6,762 | 5,685 | |||||||||||
Non-cash charges | 1,743 | 2,321 | 3,530 | 19,978 | |||||||||||
Adjusted EBITDA | $ | 20,253 | $ | 5,021 | $ | 37,751 | $ | 12,642 | |||||||
Adjusted operating gross margin, adjusted operating gross margin percentage, adjusted pre-tax income (loss) from operations and adjusted EBITDA are non-GAAP financial measures. Management finds these measures to be useful in evaluating the Company's performance because they disclose the financial results generated from homes the Company actually delivered during the period, as the asset impairments and certain other write-offs relate, in part, to inventory that was not delivered during the period. They also assist the Company's management in making strategic decisions regarding the Company's future operations. The Company believes investors will also find these measures to be important and useful because they disclose financial measures that can be compared to a prior period without regard to the variability of asset impairments and certain other write-offs and unusual charges. In addition, to the extent that the Company's competitors provide similar information, disclosure of these measures helps readers of the Company's financial statements compare the Company's financial results to the results of its competitors with regard to the homes they deliver in the same period. Because these measures are not calculated in accordance with GAAP, they may not be completely comparable to similarly titled measures of the Company's competitors due to potential differences in methods of calculation and charges being excluded. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP. Adjusted EBITDA is also presented in accordance with the terms of our revolving credit facility.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||
Midwest | 274 | 251 | 9 | % | 913 | 846 | 8 | % | |||||||||
Southern | 224 | 149 | 50 | % | 707 | 451 | 57 | % | |||||||||
Mid-Atlantic | 259 | 187 | 39 | % | 727 | 579 | 26 | % | |||||||||
Total | 757 | 587 | 29 | % | 2,347 | 1,876 | 25 | % | |||||||||
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||
Midwest | 307 | 254 | 21 | % | 795 | 741 | 7 | % | |||||||||
Southern | 223 | 162 | 38 | % | 543 | 395 | 37 | % | |||||||||
Mid-Atlantic | 216 | 166 | 30 | % | 540 | 475 | 14 | % | |||||||||
Total | 746 | 582 | 28 | % | 1,878 | 1,611 | 17 | % | |||||||||
BACKLOG | |||||||||||||||||||||
September 30, 2012 | September 30, 2011 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 505 | $ | 135 | $ | 267,000 | 441 | $ | 112 | $ | 253,000 | |||||||||||
Southern | 362 | $ | 95 | $ | 263,000 | 184 | $ | 42 | $ | 230,000 | |||||||||||
Mid-Atlantic | 312 | $ | 104 | $ | 333,000 | 213 | $ | 69 | $ | 324,000 | |||||||||||
Total | 1,179 | $ | 334 | $ | 284,000 | 838 | $ | 223 | $ | 266,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
September 30, 2012 | September 30, 2011 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 3,119 | 1,748 | 4,867 | 4,006 | 772 | 4,778 | ||||||||
Southern | 1,452 | 1,977 | 3,429 | 1,431 | 1,029 | 2,460 | ||||||||
Mid-Atlantic | 1,635 | 1,268 | 2,903 | 1,750 | 1,205 | 2,955 | ||||||||
Total | 6,206 | 4,993 | 11,199 | 7,187 | 3,006 | 10,193 | ||||||||