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M/I Homes Reports Fourth Quarter and Year-End Results



            M/I Homes Reports Fourth Quarter and Year-End Results

PR Newswire

COLUMBUS, Ohio, Jan. 31, 2013

COLUMBUS, Ohio, Jan. 31, 2013 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO)
announced results for its fourth quarter and year ended December 31, 2012.

2012 Fourth-Quarter Results:

  o Adjusted pre-tax income from operations of $7.0 million
  o Net income of $5.0 million; diluted earnings per share of $0.23
  o New contracts and homes delivered increased 33%
  o Adjusted gross margin improved 120 basis points to 19.6%
  o Backlog units and value increased 43% and 56%
  o Adjusted EBITDA of $18.2 million
  o Cash balance of $154.2 million
  o Net debt to net capital ratio of 39%

2012 Full-Year Results:

  o Adjusted pre-tax income from operations of $13.5 million
  o Net income of $13.3 million; diluted earnings per share of $0.67
  o New contracts and homes delivered increased 27% and 21%
  o Adjusted gross margin improved 200 basis points to 19.5%
  o 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.

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 20,328       14,600       62,627       52,664
expense
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       5,382        (3,072)      12,759       (33,902)
income taxes
Expense (benefit) from     367          (96)         (588)        (25)
income taxes
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             $      154,178              $    101,127
equivalents^(1)
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   11,732                      10,357
joint ventures
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 57,500                      —
notes
Notes payable - other           11,105                      5,801
Total Debt - Homebuilding       $      296,275              $    244,817
Operations
Note payable bank - financial   67,957                      52,606
services operations
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           $      831,300              $    664,485
Shareholders' Equity
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      $ 49,264      $ 32,542      $ 148,365     $ 99,294
gross margin^(1)
Adjusted operating      19.6       %  18.4       %  19.5       %  17.5       %
gross margin %^(1)
Adjusted pre-tax income
(loss) from             $ 7,008       $ 1,442       $ 13,517      $ (10,935)
operations^(1)
Adjusted EBITDA^(1)     $ 18,215      $ 10,702      $ 55,966      $ 23,344
Cash flow provided by
(used in) operating     $ (30,674)    $ (18,197)    $ (46,995)    $ (33,961)
activities
Cash provided by (used
in) investing           $ (555)       $ 1,399       $ 25,322      $ (9,324)
activities
Cash provided by (used
in) financing           $ 16,962      $ 20,960      $ 107,378     $ 21,870
activities
Land/lot purchases      $ 52,214      $ 15,696      $ 138,735     $ 72,312
Land development        $ 19,229      $ 11,460      $ 56,389      $ 44,942
spending
Land/lot sale proceeds  $ 905         $ —           $ 9,877       $ 1,110
Financial services      $ 3,503       $ 2,128       $ 11,015      $ 5,687
pre-tax income
Deferred tax valuation  $ (1,355)     $ (1,293)     $ (5,076)     $ (12,950)
(benefit) expense

 

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     $ 5,382    $ (3,072)   $ 12,759    $ (33,902)
taxes
Add: Impairments and            1,626      4,514       3,758       22,967
abandonments
Imported drywall                —          —           (3,000)     —
Adjusted pre-tax income (loss)  $ 7,008    $ 1,442     $ 13,517    $ (10,935)
from operations
Net income (loss)               $ 5,015    $ (2,976)   $ 13,347    $ (33,877)
Add:
Income tax expense (benefit)    367        (96)        (588)       (25)
Interest expense net of         3,655      3,752       14,607      13,889
interest income
Interest amortized to cost of   4,236      3,277       13,366      10,949
sales
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

 

SOURCE M/I Homes, Inc.

Website: http://www.mihomes.com
Contact: Phillip G. Creek, Executive Vice President, Chief Financial Officer,
+1-614-418-8011, or 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.
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