Attached files
| file | filename |
|---|---|
| 8-K - 8-K - M/I HOMES, INC. | a8k3rdqtrearnings-firstame.htm |
| EX-10.1 - FIRST AMENDMENT TO CREDIT AGREEMENT 10-20-14 - M/I HOMES, INC. | exhibit101firstamendmentto.htm |
Exhibit 99.1
M/I Homes Reports
Third Quarter Results
Columbus, Ohio (October 23, 2014) - M/I Homes, Inc. (NYSE:MHO) announced results for the third quarter and nine months ended September 30, 2014 and an amendment to its homebuilding credit facility.
2014 Third Quarter Highlights:
• | Pre-tax income of $22.2 million, an increase of 62% over 2013’s third quarter |
• | Net income of $13.6 million, diluted earnings per share of $0.44 |
• | Homes delivered increased 5%; New contracts increased 3% |
• | Revenue increased 20% |
• | Backlog sales value increased 6% |
• | Net debt to net capital ratio of 45% |
For the third quarter of 2014, the Company reported net income of $13.6 million, or $0.44 per diluted share. This compares to net income of $125.3 million for the third quarter of 2013, or $4.22 per diluted share, which included a $111.6 million reversal of a deferred tax valuation allowance. For the nine months ended September 30, 2014, the Company had net income of $30.5 million which excludes a $9.3 million benefit from the reversal of our state deferred tax asset valuation allowance, compared to net income of $25.5 million for the nine months ended September 30, 2013 which excludes the $111.6 million deferred tax asset valuation allowance reversal.
Homes delivered in 2014's third quarter were 985 compared to 937 deliveries in 2013's third quarter - a 5% increase. Homes delivered for the nine months ended September 30, 2014 increased 11% to 2,616 compared to 2013's deliveries of 2,352. New contracts for 2014's third quarter were 892, up 3% from 2013's third quarter. For the first nine months of 2014, new contracts decreased 3% from 2,994 in 2013 to 2,890 in 2014. M/I Homes had 147 active communities at September 30, 2014 and 147 communities at September 30, 2013. The Company's cancellation rate was 16% in the third quarter of 2014 compared to 17% in 2013's third quarter. The backlog of homes at September 30, 2014 had a sales value of $518 million (a 6% increase over last year’s third quarter), with an average sales price of $333,000 and backlog units of 1,554. At September 30, 2013 backlog sales value was $488 million, with an average sales price of $304,000 and backlog units of 1,607.
On October 20, 2014, the Company closed on an amendment to its unsecured homebuilding credit facility which among other things, extended the facility maturity date to October 20, 2018, reduced the Company’s borrowing rate, and increased availability to $300 million.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had another solid quarter highlighted by $22.2 million of pre-tax income - a 62% increase over the third quarter of 2013. A number of factors contributed to our improved profitability including a 5% increase in homes delivered, a 13% increase in our average closing price and a 70 basis point improvement in our gross margin. We continue to focus on improving our returns and our third
quarter operating margin increased to 7.5% from 6.8% in last year’s third quarter. Our backlog sales value also increased 6% from a year ago to $518 million, with an average sales price of $333,000 compared to $304,000 a year ago.”
Mr. Schottenstein continued, “ We continue to believe that the fundamentals are in place to support further improvement in housing market conditions; however demand during 2014 has been uneven in many of our markets. This is reflected in our new contracts increasing 3% in 2014’s third quarter following a 6% decline in 2014’s first half. In addition, delays in certain of our planned new community openings have also impacted our sales. Our financial condition remains strong, with shareholders’ equity of $533 million, and a ratio of net debt to net capital of 45%. We will stay focused on improving our profitability and remain poised to have a very solid 2014.”
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 2015.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 89,300 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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
New contracts | 892 | 869 | 2,890 | 2,994 | |||||||||||
Average community count | 146 | 144 | 152 | 138 | |||||||||||
Cancellation rate | 16 | % | 17 | % | 16 | % | 15 | % | |||||||
Backlog units | 1,554 | 1,607 | |||||||||||||
Backlog value | $ | 518,086 | $ | 488,089 | |||||||||||
Homes delivered | 985 | 937 | 2,616 | 2,352 | |||||||||||
Average home closing price | $ | 320 | $ | 284 | $ | 309 | $ | 283 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 315,357 | $ | 265,886 | $ | 809,441 | $ | 665,376 | |||||||
Land revenue | 7,830 | 2,628 | 15,860 | 12,756 | |||||||||||
Total homebuilding revenue | $ | 323,187 | $ | 268,514 | $ | 825,301 | $ | 678,132 | |||||||
Financial services revenue | 7,580 | 6,681 | 21,915 | 22,343 | |||||||||||
Total revenue | $ | 330,767 | $ | 275,195 | $ | 847,216 | $ | 700,475 | |||||||
Cost of sales - operations | 261,636 | 218,150 | 666,817 | 556,799 | |||||||||||
Cost of sales - impairment | 622 | 2,136 | 1,426 | 4,237 | |||||||||||
Gross margin | 68,509 | 54,909 | 178,973 | 139,439 | |||||||||||
General and administrative expense | 21,724 | 18,261 | 61,320 | 52,389 | |||||||||||
Selling expense | 21,955 | 17,999 | 58,175 | 47,383 | |||||||||||
Operating income | 24,830 | 18,649 | 59,478 | 39,667 | |||||||||||
Equity in income of unconsolidated joint ventures | (22 | ) | (278 | ) | (62 | ) | (278 | ) | |||||||
Interest expense | 2,649 | 3,449 | 9,549 | 12,186 | |||||||||||
Loss on early extinguishment of debt | — | 1,726 | — | 1,726 | |||||||||||
Income before income taxes | 22,203 | 13,752 | 49,991 | 26,033 | |||||||||||
Provision (benefit) for income taxes | 8,586 | (111,559 | ) | 10,188 | (111,129 | ) | |||||||||
Net income | $ | 13,617 | $ | 125,311 | $ | 39,803 | $ | 137,162 | |||||||
Excess of fair value over book value of preferred shares redeemed | $ | — | $ | — | $ | — | $ | 2,190 | |||||||
Preferred dividends | $ | 1,218 | $ | 1,219 | $ | 3,656 | $ | 2,438 | |||||||
Net income to common shareholders | $ | 12,399 | $ | 124,092 | $ | 36,147 | $ | 132,534 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.51 | $ | 5.09 | $ | 1.48 | $ | 5.61 | |||||||
Diluted | $ | 0.44 | $ | 4.22 | $ | 1.30 | $ | 4.79 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 24,474 | 24,358 | 24,454 | 23,642 | |||||||||||
Diluted | 29,921 | 29,745 | 29,900 | 28,410 | |||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Assets: | |||||||
Total cash and cash equivalents(1) | $ | 26,066 | $ | 158,281 | |||
Mortgage loans held for sale | 76,983 | 60,388 | |||||
Inventory: | |||||||
Lots, land and land development | 402,352 | 283,455 | |||||
Land held for sale | 2,898 | 6,899 | |||||
Homes under construction | 419,931 | 331,969 | |||||
Other inventory | 68,783 | 54,013 | |||||
Total inventory | $ | 893,964 | $ | 676,336 | |||
Property and equipment - net | 11,430 | 10,346 | |||||
Investments in unconsolidated joint ventures | 40,769 | 34,088 | |||||
Deferred income taxes, net of valuation allowance(2) | 102,882 | 112,682 | |||||
Other assets | 41,060 | 30,946 | |||||
Total Assets | $ | 1,193,154 | $ | 1,083,067 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes | $ | 228,369 | $ | 227,970 | |||
Convertible senior subordinated notes due 2017 | 57,500 | 57,500 | |||||
Convertible senior subordinated notes due 2018 | 86,250 | 86,250 | |||||
Notes payable bank - Homebuilding | 14,400 | — | |||||
Notes payable - other | 8,530 | 8,126 | |||||
Total Debt - Homebuilding Operations | $ | 395,049 | $ | 379,846 | |||
Note payable bank - financial services operations | 73,778 | 55,614 | |||||
Total Debt | $ | 468,827 | $ | 435,460 | |||
Accounts payable | 97,873 | 85,804 | |||||
Other liabilities | 93,161 | 82,223 | |||||
Total Liabilities | $ | 659,861 | $ | 603,487 | |||
Shareholders' Equity | 533,293 | 479,580 | |||||
Total Liabilities and Shareholders' Equity | $ | 1,193,154 | $ | 1,083,067 | |||
Book value per common share | $ | 19.75 | $ | 17.64 | |||
Net debt/net capital ratio(3) | 45 | % | 37 | % | |||
(1) | 2014 and 2013 amounts include $8.9 million and $15.8 million of restricted cash and cash held in escrow, respectively. |
(2) | 2013 amount includes gross deferred tax assets of $127.6 million, net of a valuation allowance of $14.9 million. |
(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, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Adjusted EBITDA(1) | $ | 32,317 | $ | 27,262 | $ | 80,094 | $ | 62,667 | |||||||
Cash flow used in operating activities | $ | (40,042 | ) | $ | (15,258 | ) | $ | (106,711 | ) | $ | (40,436 | ) | |||
Cash used in investing activities | $ | (2,292 | ) | $ | (9,695 | ) | $ | (11,499 | ) | $ | (32,902 | ) | |||
Cash provided by financing activities | $ | 25,859 | $ | 1,176 | $ | 6,653 | $ | 70,315 | |||||||
Land/lot purchases | $ | 58,788 | $ | 56,484 | $ | 183,671 | $ | 156,703 | |||||||
Land development spending | $ | 41,276 | $ | 31,108 | $ | 93,213 | $ | 67,456 | |||||||
Land gross margin | $ | 1,022 | $ | 668 | $ | 2,785 | $ | 1,956 | |||||||
Financial services pre-tax income | $ | 3,402 | $ | 3,465 | $ | 11,185 | $ | 12,436 | |||||||
(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 | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income | 13,617 | 125,311 | 39,803 | 137,162 | |||||||||||
Add: | |||||||||||||||
Provision (benefit) for income taxes | 8,586 | (111,559 | ) | 10,188 | (111,129 | ) | |||||||||
Interest expense net of interest income | 2,202 | 3,042 | 8,331 | 11,209 | |||||||||||
Interest amortized to cost of sales | 4,281 | 4,074 | 11,232 | 11,295 | |||||||||||
Depreciation and amortization | 2,113 | 2,013 | 6,062 | 6,332 | |||||||||||
Non-cash charges | 1,518 | 4,381 | 4,478 | 7,798 | |||||||||||
Adjusted EBITDA | $ | 32,317 | $ | 27,262 | $ | 80,094 | $ | 62,667 | |||||||
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 | 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||
Midwest | 325 | 318 | 2 | % | 1,093 | 1,062 | 3 | % | |||||||||
Southern | 327 | 289 | 13 | % | 1,026 | 1,043 | (2 | )% | |||||||||
Mid-Atlantic | 240 | 262 | (8 | )% | 771 | 889 | (13 | )% | |||||||||
Total | 892 | 869 | 3 | % | 2,890 | 2,994 | (3 | )% | |||||||||
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||
Midwest | 381 | 307 | 24 | % | 931 | 837 | 11 | % | |||||||||
Southern | 344 | 354 | (3 | )% | 949 | 794 | 20 | % | |||||||||
Mid-Atlantic | 260 | 276 | (6 | )% | 736 | 721 | 2 | % | |||||||||
Total | 985 | 937 | 5 | % | 2,616 | 2,352 | 11 | % | |||||||||
BACKLOG | |||||||||||||||||||||
September 30, 2014 | September 30, 2013 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 707 | $ | 237 | $ | 336,000 | 643 | $ | 191 | $ | 297,000 | |||||||||||
Southern | 526 | $ | 170 | $ | 323,000 | 590 | $ | 170 | $ | 287,000 | |||||||||||
Mid-Atlantic | 321 | $ | 111 | $ | 346,000 | 374 | $ | 128 | $ | 341,000 | |||||||||||
Total | 1,554 | $ | 518 | $ | 333,000 | 1,607 | $ | 488 | $ | 304,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
September 30, 2014 | September 30, 2013 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 3,510 | 2,626 | 6,136 | 3,384 | 2,407 | 5,791 | ||||||||
Southern | 5,071 | 4,591 | 9,662 | 3,633 | 3,992 | 7,625 | ||||||||
Mid-Atlantic | 2,637 | 2,647 | 5,284 | 2,125 | 2,592 | 4,717 | ||||||||
Total | 11,218 | 9,864 | 21,082 | 9,142 | 8,991 | 18,133 | ||||||||