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| 8-K - 8-K 4TH QTR. AND YEAR-END EARNINGS 2-4-16 - M/I HOMES, INC. | a8k4thqtrandyear-endearnin.htm |
Exhibit 99.1
M/I Homes Reports
Fourth Quarter and Year-End Results
Columbus, Ohio (February 4, 2016) - M/I Homes, Inc. (NYSE:MHO) announced results for its fourth quarter and year ended December 31, 2015.
2015 Fourth-Quarter Results:
• | Pre-tax income increased 55% to $30.7 million, excluding a $7.8 million charge related to |
extinguishment of debt
• | Net income increased to $13.3 million ($0.43 per diluted share; $0.59 per diluted share excluding |
debt extinguishment)
• | Revenue increased 27% to $468.9 million; homes delivered increased 13% |
• | Average home closing price increased 12% to $360,000 |
• | New contracts increased 16%; year-end community count increased 17% |
• | Backlog sales value increased 34% to $569 million; backlog units up 25% |
2015 Full-Year Results:
• | Pre-tax income increased 36% to $94.8 million, excluding a $7.8 million charge related to |
extinguishment of debt
• | Net income increased 25% to $51.8 million, from 2014’s $41.4 million excluding a $9.3 million |
tax benefit recorded in 2014
• | Diluted earnings per share of $1.68 ($1.84 excluding the charge on debt extinguishment) |
• | Revenue increased 17%; homes delivered increased 4% |
• | New contracts increased 12% |
• | Net debt to net capital ratio of 50% |
For the fourth quarter of 2015, the Company reported net income of $13.3 million, or $0.43 per diluted share, including a $4.9 million after-tax charge on extinguishment of debt associated with retirement of our 2018 senior notes in December of 2015. Diluted earnings per share was $0.59 excluding this charge. This compares to net income of $11.0 million for the fourth quarter of 2014, or $0.36 per diluted share. For the year ended December 31, 2015, the Company reported net income of $51.8 million or $1.68 per diluted share. Diluted earnings per share was $1.84 excluding the charge on extinguishment of debt. Pre-tax income for the year was $86.9 million, including the $7.8 million pre-tax charge on extinguishment of debt and $3.6 million of impairment charges. For the year ended December 31, 2014, the Company reported net income of $50.8 million or $1.65, per diluted shares, or $1.34 per share excluding a $9.3 million benefit from the reversal of our state deferred tax valuation allowance.
New contracts for 2015's fourth quarter were 897 - increasing 16% from 2014's fourth quarter of 773. For 2015, new contracts totaled 4,093, a 12% increase over 2014’s new contracts of 3,663. M/I Homes had 175 active communities at December 31, 2015 compared to 150 a year ago - a 17% increase. The Company's cancellation rate
was 18% in 2015's the fourth quarter and 19% in 2014. Homes delivered of 1,253 in 2015's fourth quarter were 13% higher than 2014’s 1,105 homes delivered. Homes delivered for the twelve months ended December 31, 2015 reached their highest level in nine years, increasing 4% to 3,883 from 2014’s deliveries of 3,721. Homes in backlog increased 25% at December 31, 2015 to 1,531 units, with a sales value of $569 million (a 34% increase over last year), and average sales price in backlog increased 7% to a record high of $372,000. At December 31, 2014, the sales value of the 1,222 homes in backlog was $425 million, with an average sales price of $348,000
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are very pleased with our 2015 results highlighted by a 36% increase in pre-tax income (excluding the debt charge), a 17% increase in revenue and a 12% increase in new contracts. A number of factors contributed to the significant improvement in our earnings, including a 4% increase in homes delivered and a 10% increase in the average sale price of homes delivered. In addition, we achieved a 40 basis point increase in our gross margins and a 70 basis point reduction in our overhead expense ratio. As a result, we were able to improve our operating margin by 110 basis points to 7.9%. We ended the year with a backlog sales value of $569 million, a 34% increase over a year ago and the highest level since 2005.”
Mr. Schottenstein continued, “2016 promises to be a milestone year for M/I Homes as we celebrate our 40th year in business. We are excited about our business as we continue to make progress on many fronts. Our newest market, Minneapolis, is off to a good start, and with our strong year-end backlog and the strength of our land position, we are positioned to continue growing and further improve our profitability in 2016.”
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 February 2017.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 94,300 homes. The Company’s homes are marketed and sold under the trade names M/I Homes, Showcase Collection (exclusively by M/I). The Company also operates under the name Hans Hagan Homes in its Minneapolis/St. Paul, Minnesota market. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa and Orlando, Florida; Austin, Dallas/Fort 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 any 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 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, 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 herein will increase with the passage of time. We undertake 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.
Contact M/I Homes, Inc.
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
Ann Marie W. Hunker, Vice President, Controller, (614) 418-8225
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
New contracts | 897 | 773 | 4,093 | 3,663 | |||||||||||
Average community count | 171 | 149 | 159 | 151 | |||||||||||
Cancellation rate | 18 | % | 19 | % | 15 | % | 16 | % | |||||||
Backlog units | 1,531 | 1,222 | |||||||||||||
Backlog sales value | $ | 569,424 | $ | 425,187 | |||||||||||
Homes delivered | 1,253 | 1,105 | 3,883 | 3,721 | |||||||||||
Average home closing price | $ | 360 | $ | 322 | $ | 346 | $ | 313 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 450,461 | $ | 355,363 | $ | 1,342,135 | $ | 1,164,804 | |||||||
Land revenue | 8,795 | 4,394 | 40,285 | 20,254 | |||||||||||
Total homebuilding revenue | $ | 459,256 | $ | 359,757 | $ | 1,382,420 | $ | 1,185,058 | |||||||
Financial services revenue | 9,667 | 8,207 | 35,975 | 30,122 | |||||||||||
Total revenue | $ | 468,923 | $ | 367,964 | $ | 1,418,395 | $ | 1,215,180 | |||||||
Cost of sales - operations | 370,469 | 292,174 | 1,114,663 | 958,991 | |||||||||||
Cost of sales - impairment | 3,638 | 2,031 | 3,638 | 3,457 | |||||||||||
Gross margin | 94,816 | 73,759 | 300,094 | 252,732 | |||||||||||
General and administrative expense | 28,518 | 27,510 | 93,208 | 88,830 | |||||||||||
Selling expense | 30,201 | 22,973 | 95,092 | 81,148 | |||||||||||
Operating income | 36,097 | 23,276 | 111,794 | 82,754 | |||||||||||
Equity in income from unconsolidated joint ventures | (250 | ) | (285 | ) | (498 | ) | (347 | ) | |||||||
Interest expense | 5,651 | 3,816 | 17,521 | 13,365 | |||||||||||
Loss on early extinguishment of debt | 7,842 | — | 7,842 | — | |||||||||||
Income before income taxes | 22,854 | 19,745 | 86,929 | 69,736 | |||||||||||
Provision for income taxes | 9,579 | 8,759 | 35,166 | 18,947 | |||||||||||
Net income | $ | 13,275 | $ | 10,986 | $ | 51,763 | $ | 50,789 | |||||||
Preferred dividends | 1,219 | 1,219 | 4,875 | 4,875 | |||||||||||
Net income to common shareholders | $ | 12,056 | $ | 9,767 | $ | 46,888 | $ | 45,914 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.49 | $ | 0.40 | $ | 1.91 | $ | 1.88 | |||||||
Diluted | $ | 0.43 | $ | 0.36 | $ | 1.68 | $ | 1.65 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 24,649 | 24,489 | 24,575 | 24,463 | |||||||||||
Diluted | 30,107 | 29,944 | 30,047 | 29,912 | |||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of | |||||||
December 31, | |||||||
2015 | 2014 | ||||||
Assets: | |||||||
Total cash and cash equivalents(1) | $ | 13,101 | $ | 22,486 | |||
Mortgage loans held for sale | 127,001 | 92,794 | |||||
Inventory: | |||||||
Lots, land and land development | 584,542 | 463,198 | |||||
Land held for sale | 12,630 | 10,647 | |||||
Homes under construction | 420,206 | 371,119 | |||||
Other inventory | 94,664 | 73,625 | |||||
Total Inventory | $ | 1,112,042 | $ | 918,589 | |||
Property and equipment - net | 12,897 | 11,490 | |||||
Investments in unconsolidated joint ventures | 36,967 | 27,769 | |||||
Deferred income taxes | 67,404 | 94,412 | |||||
Other assets | 46,142 | 37,699 | |||||
Total Assets | $ | 1,415,554 | $ | 1,205,239 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes - net | $ | 294,727 | $ | 226,099 | |||
Convertible senior subordinated notes due 2017 - net | 56,518 | 55,943 | |||||
Convertible senior subordinated notes due 2018 - net | 84,714 | 84,006 | |||||
Notes payable - homebuilding | 43,800 | 30,000 | |||||
Notes payable - other | 8,441 | 9,518 | |||||
Total Debt - Homebuilding Operations | $ | 488,200 | $ | 405,566 | |||
Notes payable bank - financial services operations | 123,648 | 85,379 | |||||
Total Debt | $ | 611,848 | $ | 490,945 | |||
Accounts payable | 86,878 | 75,338 | |||||
Other liabilities | 120,262 | 94,661 | |||||
Total Liabilities | $ | 818,988 | $ | 660,944 | |||
Shareholders' Equity | 596,566 | 544,295 | |||||
Total Liabilities and Shareholders' Equity | $ | 1,415,554 | $ | 1,205,239 | |||
Book value per common share | $ | 22.17 | $ | 20.16 | |||
Net debt/net capital ratio(2) | 50 | % | 47 | % | |||
(1) | 2015 and 2014 amounts include $2.9 million and $7.0 million of restricted cash and cash held in escrow, respectively. |
(2) | 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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Adjusted EBITDA(1) | $ | 43,595 | $ | 33,480 | $ | 140,818 | $ | 113,574 | |||||||
Cash provided by (used in) operating activities | $ | 13,037 | $ | (25,964 | ) | $ | (82,159 | ) | $ | (132,675 | ) | ||||
Cash used in investing activities | $ | (31,583 | ) | $ | (1,082 | ) | $ | (37,631 | ) | $ | (12,581 | ) | |||
Cash provided by financing activities | $ | 3,696 | $ | 25,413 | $ | 114,460 | $ | 32,066 | |||||||
Land/lot purchases | $ | 55,251 | $ | 54,068 | $ | 232,707 | $ | 237,739 | |||||||
Land development spending | $ | 59,655 | $ | 51,056 | $ | 205,069 | $ | 144,269 | |||||||
Land gross margin | $ | 297 | $ | 834 | $ | 6,661 | $ | 3,619 | |||||||
Financial services pre-tax income | $ | 5,129 | $ | 2,992 | $ | 19,416 | $ | 14,177 | |||||||
(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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income | $ | 13,275 | $ | 10,986 | $ | 51,763 | $ | 50,789 | |||||||
Add: | |||||||||||||||
Provision for income taxes | 9,579 | 8,759 | 35,166 | 18,947 | |||||||||||
Interest expense, net of interest income | 5,036 | 3,321 | 15,532 | 11,652 | |||||||||||
Interest amortized to cost of sales | 5,329 | 5,211 | 16,966 | 16,443 | |||||||||||
Depreciation and amortization | 2,705 | 2,234 | 9,918 | 8,296 | |||||||||||
Non-cash charges | 7,671 | 2,969 | 11,473 | 7,447 | |||||||||||
Adjusted EBITDA | $ | 43,595 | $ | 33,480 | $ | 140,818 | $ | 113,574 | |||||||
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 | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||
Midwest | 327 | 243 | 35 | % | 1,485 | 1,336 | 11 | % | |||||||||
Southern | 337 | 307 | 10 | % | 1,557 | 1,333 | 17 | % | |||||||||
Mid-Atlantic | 233 | 223 | 4 | % | 1,051 | 994 | 6 | % | |||||||||
Total | 897 | 773 | 16 | % | 4,093 | 3,663 | 12 | % | |||||||||
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||
Midwest | 455 | 445 | 2 | % | 1,417 | 1,376 | 3 | % | |||||||||
Southern | 483 | 383 | 26 | % | 1,447 | 1,332 | 9 | % | |||||||||
Mid-Atlantic | 315 | 277 | 14 | % | 1,019 | 1,013 | 1 | % | |||||||||
Total | 1,253 | 1,105 | 13 | % | 3,883 | 3,721 | 4 | % | |||||||||
BACKLOG | |||||||||||||||||||||
December 31, 2015 | December 31, 2014 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 672 | $ | 262 | $ | 390,000 | 505 | $ | 177 | $ | 351,000 | |||||||||||
Southern | 560 | $ | 200 | $ | 357,000 | 450 | $ | 153 | $ | 341,000 | |||||||||||
Mid-Atlantic | 299 | $ | 108 | $ | 360,000 | 267 | $ | 95 | $ | 354,000 | |||||||||||
Total | 1,531 | $ | 569 | $ | 372,000 | 1,222 | $ | 425 | $ | 348,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
December 31, 2015 | December 31, 2014 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 3,921 | 4,220 | 8,141 | 3,551 | 2,156 | 5,707 | ||||||||
Southern | 4,664 | 4,972 | 9,636 | 5,016 | 4,900 | 9,916 | ||||||||
Mid-Atlantic | 2,814 | 1,831 | 4,645 | 2,794 | 2,308 | 5,102 | ||||||||
Total | 11,399 | 11,023 | 22,422 | 11,361 | 9,364 | 20,725 | ||||||||