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M/I Homes Inc.
M/I Homes Inc.
10/25/2012 | Press release
M/I Homes Reports Third Quarter Results
distributed by noodls on 10/25/2012 09:23
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 19,415 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 deb t 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
Imported drywall (3,000) - (3,000) -
Adjusted pre-tax income (loss) from operations $ 6,761 $ (2,998) $ 6,509 $ (12,377)
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 di sclose 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 Lots Lots Under Region Owned Contract Total |
September 30, 2011 Lots Lots Under Owned Contract Total |
|
Midwest 3,119 1,748 4,867 Southern 1,452 1,977 3,429 Mid-Atlantic 1,635 1,268 2,903 |
4,006 772 4,778 1,431 1,029 2,460 1,750 1,205 2,955 |
|
Total 6,206 4,993 11,199 |
7,187 3,006 10,193 |
