Attached files
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| 8-K - 8-K - M/I HOMES, INC. | a8kearnings4thqtr20131-31x.htm |
Exhibit 99.1
M/I Homes Reports
Fourth Quarter and Year-End Results
Columbus, Ohio (January 31, 2013) - M/I Homes, Inc. (NYSE:MHO) announced results for its fourth quarter and year ended December 31, 2012.
2012 Fourth-Quarter Results:
• | Adjusted pre-tax income from operations of $7.0 million |
• | Net income of $5.0 million; diluted earnings per share of $0.23 |
• | New contracts and homes delivered increased 33% |
• | Adjusted gross margin improved 120 basis points to 19.6% |
• | Backlog units and value increased 43% and 56% |
• | Adjusted EBITDA of $18.2 million |
• | Cash balance of $154.2 million |
• | Net debt to net capital ratio of 39% |
2012 Full-Year Results:
• | Adjusted pre-tax income from operations of $13.5 million |
• | Net income of $13.3 million; diluted earnings per share of $0.67 |
• | New contracts and homes delivered increased 27% and 21% |
• | Adjusted gross margin improved 200 basis points to 19.5% |
• | Adjusted EBITDA of $56.0 million |
For the 2012 fourth quarter, the Company reported net income of $5.0 million, or $0.23 per diluted share, compared to a net loss of $3.0 million, or $0.16 per diluted share for the fourth quarter of 2011. Net income for the 2012 fourth quarter consisted primarily of adjusted pre-tax income from operations of $7.0 million, offset by $1.6 million of asset impairments and $0.4 million of tax expense. The prior year fourth quarter loss consisted primarily of adjusted pre-tax income from operations of $1.4 million, offset by $4.5 million of asset impairments. The Company reported net income of $13.3 million for the year ended December 31, 2012, or $0.67 per diluted share, compared to a net loss of $33.9 million, or $1.81 per diluted share for the year ended December 31, 2011.
New contracts for 2012's fourth quarter were 673 - increasing 33% from 2011's fourth quarter of 505. For 2012, new contracts increased 27% from 2,381 in 2011 to 3,020 in 2012. M/I Homes had 131 active communities at December 31, 2012 compared to 122 a year ago. The Company's cancellation rate was 21% in the fourth quarter of 2012, compared to 23% in 2011's fourth quarter and for 2012 it was 17%. Homes delivered in 2012's fourth quarter were 887 compared to 667 in 2011's fourth quarter. Homes delivered for the twelve months
ended December 31, 2012 increased 21% to 2,765 compared to 2011's deliveries of 2,278. Backlog of homes at December 31, 2012 had a sales value of $283 million, with backlog units of 965 and an average sales price of $293,000. At December 31, 2011, backlog sales value was $181 million, with backlog units of 676 and an average sales price of $267,000.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are very pleased with our fourth quarter and full year results highlighted by a $47 million bottom-line improvement over last year and a return to full year profitability. Several factors contributed to the year-over-year improvement in our profitability, including a 27% increase in new contracts, a 21% increase in homes delivered, and a 200 basis point increase in adjusted gross margins, with 2012 margins reaching 19.5%. This material improvement in our margins was the result of continued solid performance of our newer communities and the strategic shift in our geographic footprint, which resulted in more closings in our better performing markets as well as pricing power in select locations and submarkets. We ended the year with nearly 300 units more in backlog than a year ago, representing our highest year-end backlog, both in units and dollar value since 2006.”
Mr. Schottenstein continued, “Our financial condition remains strong. We ended the year with $154 million in cash, a 39% net debt to net capital ratio, and no outstanding borrowings under our $140 million credit facility. Looking ahead, with macro housing conditions continuing to show noticeable signs of improvement, we are excited about our future. From an operating standpoint, we will stay focused on improving our profitability, growing our aggregate market share in our existing markets, expanding our community count and continuing the successful expansion of our footprint into Texas, with the opening of our first communities in Austin later this year. We ended 2012 with momentum and believe we are very well positioned to build upon that momentum as we look to 2013 and beyond.”
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 2014.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 83,000 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; Houston, Austin 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 | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
New contracts | 673 | 505 | 3,020 | 2,381 | |||||||||||
Average community count | 130 | 121 | 125 | 116 | |||||||||||
Cancellation rate | 21 | % | 23 | % | 17 | % | 19 | % | |||||||
Backlog units | 965 | 676 | |||||||||||||
Backlog value | $ | 282,540 | $ | 180,655 | |||||||||||
Homes delivered | 887 | 667 | 2,765 | 2,278 | |||||||||||
Average home closing price | $ | 273 | $ | 257 | $ | 264 | $ | 242 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 242,373 | $ | 171,687 | $ | 728,772 | $ | 550,848 | |||||||
Land revenue | 905 | — | 9,877 | 1,110 | |||||||||||
Total homebuilding revenue | $ | 243,278 | $ | 171,687 | $ | 738,649 | $ | 551,958 | |||||||
Financial services revenue | 7,633 | 5,099 | 23,256 | 14,466 | |||||||||||
Total revenue | $ | 250,911 | $ | 176,786 | $ | 761,905 | $ | 566,424 | |||||||
Cost of sales - operations | 201,647 | 144,244 | 613,540 | 467,130 | |||||||||||
Cost of sales - impairment | 1,626 | 3,980 | 3,502 | 21,993 | |||||||||||
Cost of sales - other | — | — | (3,000 | ) | — | ||||||||||
Gross margin | 47,638 | 28,562 | 147,863 | 77,301 | |||||||||||
General and administrative expense | 20,328 | 14,600 | 62,627 | 52,664 | |||||||||||
Selling expense | 17,923 | 12,913 | 56,406 | 43,534 | |||||||||||
Operating profit (loss) | 9,387 | 1,049 | 28,830 | (18,897 | ) | ||||||||||
Interest expense | 4,005 | 4,121 | 16,071 | 15,005 | |||||||||||
Income (loss) before income taxes | 5,382 | (3,072 | ) | 12,759 | (33,902 | ) | |||||||||
Expense (benefit) from income taxes | 367 | (96 | ) | (588 | ) | (25 | ) | ||||||||
Net income (loss) | $ | 5,015 | $ | (2,976 | ) | $ | 13,347 | $ | (33,877 | ) | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.23 | $ | (0.16 | ) | $ | 0.68 | $ | (1.81 | ) | |||||
Diluted | $ | 0.23 | $ | (0.16 | ) | $ | 0.67 | $ | (1.81 | ) | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 21,545 | 18,736 | 19,651 | 18,698 | |||||||||||
Diluted | 21,961 | 18,736 | 19,891 | 18,698 | |||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Assets: | |||||||
Total cash and cash equivalents(1) | $ | 154,178 | $ | 101,127 | |||
Mortgage loans held for sale | 71,121 | 57,275 | |||||
Inventory: | |||||||
Lots, land and land development | 257,397 | 242,372 | |||||
Land held for sale | 8,442 | — | |||||
Homes under construction | 221,432 | 181,483 | |||||
Other inventory | 69,546 | 42,917 | |||||
Total inventory | $ | 556,817 | $ | 466,772 | |||
Property and equipment - net | 10,439 | 14,358 | |||||
Investments in unconsolidated joint ventures | 11,732 | 10,357 | |||||
Other assets(2) | 27,013 | 14,596 | |||||
Total Assets | $ | 831,300 | $ | 664,485 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes | $ | 227,670 | $ | 239,016 | |||
Convertible senior subordinated notes | 57,500 | — | |||||
Notes payable - other | 11,105 | 5,801 | |||||
Total Debt - Homebuilding Operations | $ | 296,275 | $ | 244,817 | |||
Note payable bank - financial services operations | 67,957 | 52,606 | |||||
Total Debt | $ | 364,232 | $ | 297,423 | |||
Accounts payable | 47,690 | 41,256 | |||||
Other liabilities | 83,950 | 52,456 | |||||
Total Liabilities | $ | 495,872 | $ | 391,135 | |||
Shareholders' Equity | 335,428 | 273,350 | |||||
Total Liabilities and Shareholders' Equity | $ | 831,300 | $ | 664,485 | |||
Book value per common share | $ | 10.86 | $ | 9.25 | |||
Net debt/net capital ratio(3) | 39 | % | 42 | % | |||
(1) | 2012 and 2011 amounts include $8.5 million and $41.3 million of restricted cash and cash held in escrow, respectively. |
(2) | 2012 and 2011 amounts include gross deferred tax assets of $135.7 million and $140.8 million, respectively, net of valuation allowances of $135.7 million and $140.8 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, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Adjusted operating gross margin(1) | $ | 49,264 | $ | 32,542 | $ | 148,365 | $ | 99,294 | |||||||
Adjusted operating gross margin %(1) | 19.6 | % | 18.4 | % | 19.5 | % | 17.5 | % | |||||||
Adjusted pre-tax income (loss) from operations(1) | $ | 7,008 | $ | 1,442 | $ | 13,517 | $ | (10,935 | ) | ||||||
Adjusted EBITDA(1) | $ | 18,215 | $ | 10,702 | $ | 55,966 | $ | 23,344 | |||||||
Cash flow provided by (used in) operating activities | $ | (30,674 | ) | $ | (18,197 | ) | $ | (46,995 | ) | $ | (33,961 | ) | |||
Cash provided by (used in) investing activities | $ | (555 | ) | $ | 1,399 | $ | 25,322 | $ | (9,324 | ) | |||||
Cash provided by (used in) financing activities | $ | 16,962 | $ | 20,960 | $ | 107,378 | $ | 21,870 | |||||||
Land/lot purchases | $ | 52,214 | $ | 15,696 | $ | 138,735 | $ | 72,312 | |||||||
Land development spending | $ | 19,229 | $ | 11,460 | $ | 56,389 | $ | 44,942 | |||||||
Land/lot sale proceeds | $ | 905 | $ | — | $ | 9,877 | $ | 1,110 | |||||||
Financial services pre-tax income | $ | 3,503 | $ | 2,128 | $ | 11,015 | $ | 5,687 | |||||||
Deferred tax valuation (benefit) expense | $ | (1,355 | ) | $ | (1,293 | ) | $ | (5,076 | ) | $ | (12,950 | ) | |||
Impairment and Abandonments by Region
(Dollars in thousands)
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Impairment by Region: | 2012 | 2011 | 2012 | 2011 | |||||||||||
Midwest | $ | 1,626 | $ | 2,015 | $ | 3,502 | $ | 13,457 | |||||||
Southern | — | 149 | — | 6,703 | |||||||||||
Mid-Atlantic | — | 1,816 | — | 1,833 | |||||||||||
Total | $ | 1,626 | $ | 3,980 | $ | 3,502 | $ | 21,993 | |||||||
Abandonments by Region: | |||||||||||||||
Midwest | $ | — | $ | 298 | $ | 36 | $ | 441 | |||||||
Southern | — | 33 | 110 | 89 | |||||||||||
Mid-Atlantic | — | 203 | 110 | 444 | |||||||||||
Total | $ | — | $ | 534 | $ | 256 | $ | 974 | |||||||
(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 | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Gross margin | $ | 47,638 | $ | 28,562 | $ | 147,863 | $ | 77,301 | |||||||
Add: Impairments | 1,626 | 3,980 | 3,502 | 21,993 | |||||||||||
Imported drywall | — | — | (3,000 | ) | — | ||||||||||
Adjusted operating gross margin | $ | 49,264 | $ | 32,542 | $ | 148,365 | $ | 99,294 | |||||||
Income (loss) before income taxes | $ | 5,382 | $ | (3,072 | ) | $ | 12,759 | $ | (33,902 | ) | |||||
Add: Impairments and abandonments | 1,626 | 4,514 | 3,758 | 22,967 | |||||||||||
Imported drywall | — | — | (3,000 | ) | — | ||||||||||
Adjusted pre-tax income (loss) from operations | $ | 7,008 | $ | 1,442 | $ | 13,517 | $ | (10,935 | ) | ||||||
Net income (loss) | $ | 5,015 | $ | (2,976 | ) | $ | 13,347 | $ | (33,877 | ) | |||||
Add: | |||||||||||||||
Income tax expense (benefit) | 367 | (96 | ) | (588 | ) | (25 | ) | ||||||||
Interest expense net of interest income | 3,655 | 3,752 | 14,607 | 13,889 | |||||||||||
Interest amortized to cost of sales | 4,236 | 3,277 | 13,366 | 10,949 | |||||||||||
Depreciation and amortization | 2,980 | 1,889 | 9,742 | 7,574 | |||||||||||
Non-cash charges | 1,962 | 4,856 | 5,492 | 24,834 | |||||||||||
Adjusted EBITDA | $ | 18,215 | $ | 10,702 | $ | 55,966 | $ | 23,344 | |||||||
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 | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||
Midwest | 231 | 196 | 18 | % | 1,144 | 1,042 | 10 | % | |||||||||
Southern | 259 | 156 | 66 | % | 966 | 607 | 59 | % | |||||||||
Mid-Atlantic | 183 | 153 | 20 | % | 910 | 732 | 24 | % | |||||||||
Total | 673 | 505 | 33 | % | 3,020 | 2,381 | 27 | % | |||||||||
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||
Midwest | 318 | 250 | 27 | % | 1,113 | 991 | 12 | % | |||||||||
Southern | 280 | 176 | 59 | % | 823 | 571 | 44 | % | |||||||||
Mid-Atlantic | 289 | 241 | 20 | % | 829 | 716 | 16 | % | |||||||||
Total | 887 | 667 | 33 | % | 2,765 | 2,278 | 21 | % | |||||||||
BACKLOG | |||||||||||||||||||||
December 31, 2012 | December 31, 2011 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 418 | $ | 113 | $ | 270,000 | 387 | $ | 100 | $ | 259,000 | |||||||||||
Southern | 341 | $ | 96 | $ | 280,000 | 164 | $ | 40 | $ | 241,000 | |||||||||||
Mid-Atlantic | 206 | $ | 74 | $ | 360,000 | 125 | $ | 41 | $ | 328,000 | |||||||||||
Total | 965 | $ | 283 | $ | 293,000 | 676 | $ | 181 | $ | 267,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
December 31, 2012 | December 31, 2011 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 3,384 | 1,629 | 5,013 | 3,903 | 795 | 4,698 | ||||||||
Southern | 2,160 | 2,827 | 4,987 | 1,460 | 964 | 2,424 | ||||||||
Mid-Atlantic | 1,874 | 2,329 | 4,203 | 1,794 | 1,437 | 3,231 | ||||||||
Total | 7,418 | 6,785 | 14,203 | 7,157 | 3,196 | 10,353 | ||||||||