M/I HOMES, INC. 
By 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:
-- Adjusted pre-tax income from operations of $7.0 million
-- Net income of $5.0 million; diluted earnings per share of $0.23
-- New contracts and homes delivered increased 33%
-- Adjusted gross margin improved 120 basis points to 19.6%
-- Backlog units and value increased 43% and 56%
-- Adjusted EBITDA of $18.2 million
-- Cash balance of $154.2 million
-- Net debt to net capital ratio of 39%
2012 Full-Year Results:
-- Adjusted pre-tax income from operations of $13.5 million
-- Net income of $13.3 million; diluted earnings per share of $0.67
-- New contracts and homes delivered increased 27% and 21%
-- Adjusted gross margin improved 200 basis points to 19.5%
-- 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 expense 20,328 14,600 62,627 52,664
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 income taxes 5,382 (3,072) 12,759 (33,902)
Expense (benefit) from income taxes 367 (96) (588) (25)
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 equivalents(1) $154,178 $101,127
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 joint ventures 11,732 10,357
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 notes 57,500 -
Notes payable - other 11,105 5,801
--------------------- ------ -----
Total Debt - Homebuilding Operations $296,275 $244,817
------------------------------------ -------- --------
Note payable bank - financial services operations 67,957 52,606
------------------------------------------------- ------ ------
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 Shareholders' Equity $831,300 $664,485
========================================== ======== ========
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 gross margin(1) $49,264 $32,542 $148,365 $99,294
Adjusted operating gross margin %(1) 19.6% 18.4% 19.5% 17.5%
Adjusted pre-tax income (loss) from operations(1) $7,008 $1,442 $13,517 $(10,935)
Adjusted EBITDA(1) $18,215 $10,702 $55,966 $23,344
Cash flow provided by (used in) operating activities $(30,674) $(18,197) $(46,995) $(33,961)
Cash provided by (used in) investing activities $(555) $1,399 $25,322 $(9,324)
Cash provided by (used in) financing activities $16,962 $20,960 $107,378 $21,870
Land/lot purchases $52,214 $15,696 $138,735 $72,312
Land development spending $19,229 $11,460 $56,389 $44,942
Land/lot sale proceeds $905 $ - $9,877 $1,110
Financial services pre-tax income $3,503 $2,128 $11,015 $5,687
Deferred tax valuation (benefit) expense $(1,355) $(1,293) $(5,076) $(12,950)
---------------------------------------- ------- ------- ------- --------
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 taxes $5,382 $(3,072) $12,759 $(33,902)
Add: Impairments and abandonments 1,626 4,514 3,758 22,967
Imported drywall - - (3,000) -
--- --- ------ ---
Adjusted pre-tax income (loss) from operations $7,008 $1,442 $13,517 $(10,935)
============================================== ====== ====== ======= ========
Net income (loss) $5,015 $(2,976) $13,347 $(33,877)
Add:
Income tax expense (benefit) 367 (96) (588) (25)
Interest expense net of interest income 3,655 3,752 14,607 13,889
Interest amortized to cost of sales 4,236 3,277 13,366 10,949
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.
