M/I Homes Reports Third Quarter Results

                   M/I Homes Reports Third Quarter Results

PR Newswire

COLUMBUS, Ohio, Oct. 25, 2012

COLUMBUS, Ohio, Oct. 25,2012 /PRNewswire/ --M/I Homes, Inc. (NYSE:MHO)
announced results for the third quarter and nine months ended
September30,2012.

2012 Third Quarter Results:

  oNet income of $8.3 million; diluted earnings per share of $0.42
  oAdjusted pre-tax income from operations of $6.8 million
  oNew contracts increased 29%
  oHomes delivered increased 28%
  oBacklog units and value increased 41% and 50%, respectively
  oAdjusted EBITDA of $20.3 million
  oCash balance of $168.7 million
  oNet 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 December31,2011,
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.

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 16,016       13,896       42,299       38,064
expense
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       8,452        (4,835)      7,377        (30,830)
income taxes
Expense (benefit) from     138          (117)        (955)        71
income taxes
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 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 $ 41,423     $ 25,355      $ 99,101      $ 66,752
margin^(1)
Adjusted operating gross 19.8      %  17.9       %  19.4       %  17.1       %
margin %^(1)
Adjusted pre-tax income
(loss) from              $ 6,761      $ (2,998)     $ 6,509       $ (12,377)
operations^(1)
Adjusted EBITDA^(1)      $ 20,253     $ 5,021       $ 37,751      $ 12,642
Cash flow provided by
(used in) operating      $ 7,208      $ (16,047)    $ (16,321)    $ (24,566)
activities
Cash provided by (used   $ 2,643      $ 18,321      $ 25,877      $ (10,723)
in) investing activities
Cash provided by (used   $ 105,617    $ (345)       $ 90,416      $ 910
in) financing activities
Land/lot purchases       $ 23,474     $ 20,160      $ 80,652      $ 56,616
Land development         $ 17,604     $ 13,268      $ 37,161      $ 33,482
spending
Land/lot sale proceeds   $ 4,086      $ 155         $ 8,972       $ 1,110
Financial services       $ 3,545      $ 766         $ 7,512       $ 3,559
pre-tax income
Deferred tax valuation   $ (3,578)    $ 1,345       $ (3,721)     $ 11,657
(benefit) expense

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     $ 8,452    $ (4,835)   $ 7,377     $ (30,830)
taxes
Add: Impairments and            1,309      1,837       2,132       18,453
abandonments
Imported drywall                (3,000)    —           (3,000)     —
Adjusted pre-tax income (loss)  $ 6,761    $ (2,998)   $ 6,509     $ (12,377)
from operations
Net income (loss)               $ 8,314    $ (4,718)   $ 8,332     $ (30,901)
Add:
Income tax expense (benefit)    138        (117)       (955)       71
Interest expense net of         3,609      3,124       10,952      10,137
interest income
Interest amortized to cost of   3,674      2,515       9,130       7,672
sales
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 financialmeasures
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
             September30, 2012             September30, 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
             September30, 2012       September30, 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



SOURCE M/I Homes, Inc.

Website: http://www.mihomes.com
Contact: Phillip G. Creek, Executive Vice President, Chief Financial Officer,
+1-614-418-8011, Ann Marie W. Hunker, Vice President, Controller,
+1-614-418-8225, or Kevin C. Hake, Senior Vice President, Treasurer,
+1-614-418-8227, all of M/I Homes, Inc.
 
Press spacebar to pause and continue. Press esc to stop.