EX-99.1 2 mho-20140630xexh991.htm EXHIBIT 99.1 PRESS RELEASE MHO-2014.06.30-Exh 99.1


Exhibit 99.1


M/I Homes Reports
Second Quarter Results


Columbus, Ohio (July 24, 2014) - M/I Homes, Inc. (NYSE:MHO) announced results for the second quarter and six months ended June 30, 2014.

2014 Second Quarter Highlights:
•
Pre-tax income of $15.3 million, an increase of 107% over 2013’s second quarter’s $7.4 million
•
Net income of $13.6 million, including a $4.0 million benefit from the reversal
of our deferred tax asset valuation allowance
•
Diluted earnings per share of $0.44 ($0.31 per share excluding the impact of the
deferred tax valuation allowance reversal)
•
Homes delivered increased 13%; New contracts declined 6%
•
Revenue increased 20%
•
Backlog sales value increased 11%
•
Cash balance of $43.7 million
•
Net debt to net capital ratio of 43%
 
For the second quarter of 2014, the Company reported net income of $13.6 million, or $0.44 per diluted share. Excluding the reversal of $4.0 million of the Company’s state deferred tax asset valuation allowance, net income totaled $9.6 million or $0.31 per diluted share. This compares to net income of $7.3 million for the second quarter of 2013, or $0.25 per diluted share. For the six months ended June 30, 2014, the Company had net income of $16.9 million which excludes $9.3 million of state deferred tax asset valuation allowance reversal, compared to net income of $11.9 million, in the same period a year ago.
  
Homes delivered in 2014's second quarter were 894 compared to 788 deliveries in 2013's second quarter - a 13% increase. Homes delivered for the six months ended June 30, 2014 increased 15% to 1,631 compared to 2013's deliveries of 1,415. New contracts for 2014's second quarter were 1,016, down 6% from 2013's second quarter due primarily to delays in opening new communities and lower traffic levels. For the first six months of 2014, new contracts decreased 6% from 2,125 in 2013 to 1,998 in 2014. M/I Homes had 145 active communities at June 30, 2014 compared to 140 at June 30, 2013. The Company's cancellation rate was 15% in the second quarter of 2014 compared to 14% in 2013's second quarter. The backlog of homes at June 30, 2014 had a sales value of $546 million (an 11% increase over last year’s second quarter), with an average sales price of $332,000 and backlog units of 1,647. At June 30, 2013 backlog sales value was $491 million, with an average sales price of $293,000 and backlog units of 1,675.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had another solid quarter highlighted by earning $15.3 million of pre-tax income -- a 107% increase over the second quarter of 2013. Several factors contributed to our improving profitability, including a 13% increase in homes delivered, a 9% increase in average closing price and a 150 basis point improvement in our gross margin. Our backlog sales value also improved, increasing 11% from a year-ago to $546 million, and our backlog average sales price is now at $332,000-13% higher than a year ago.”





Mr. Schottenstein continued, “Our financial condition remains strong, with shareholders’ equity of $520 million, net debt to net capital of 43%, and no outstanding borrowings under our credit facility at the end of the quarter. We continue to believe that the fundamentals are in place to support further improvement in housing conditions. With the strength of our backlog, we are poised to have a very solid 2014. We will stay focused on increasing our profitability while continuing to invest in attractive land opportunities.”

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 July 2015.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 88,300 homes. The Company's homes are marketed and sold under the trade names M/I Homes, Showcase Collection (exclusively by M/I), and Triumph Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Chicago, Illinois; Indianapolis, Indiana; Tampa and Orlando, Florida; Austin, Dallas/Ft 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 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, 2013, 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 adjusted EBITDA, a non-GAAP financial measure. Please see the “Non-GAAP Financial Results / Reconciliation” 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
 
Six Months Ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
New contracts
1,016

 
1,078

 
1,998

 
2,125

Average community count
152

 
138

 
155

 
135

Cancellation rate
15
%
 
14
%
 
15
%
 
15
%
Backlog units
 
 
 
 
1,647

 
1,675

Backlog value
 
 
 
 
$
546,221

 
$
490,769

Homes delivered
894

 
788

 
1,631

 
1,415

Average home closing price
$
306

 
$
281

 
$
303

 
$
282

 
 
 
 
 
 
 
 
Homebuilding revenue:
 
 
 
 
 
 
 
   Housing revenue
$
273,374

 
$
221,700

 
$
494,084

 
$
399,490

   Land revenue
1,764

 
5,601

 
8,030

 
10,128

Total homebuilding revenue
$
275,138

 
$
227,301

 
$
502,114

 
$
409,618

 
 
 
 
 
 
 
 
Financial services revenue
6,470

 
7,252

 
14,335

 
15,662

 
 
 
 
 

 
 
Total revenue
$
281,608

 
$
234,553

 
$
516,449

 
$
425,280

 
 
 
 
 
 
 
 
Cost of sales - operations
221,217

 
187,136

 
405,181

 
338,649

Cost of sales - impairment
804

 
1,201

 
804

 
2,101

Gross margin
59,587

 
46,216

 
110,464

 
84,530

General and administrative expense
21,281

 
18,149

 
39,596

 
34,128

Selling expense
20,251

 
16,275

 
36,220

 
29,384

Operating income
18,055

 
11,792

 
34,648

 
21,018

Loss (income) from unconsolidated joint ventures
22

 
—

 
(40
)
 
—

Interest expense
2,730

 
4,397

 
6,900

 
8,737

Income before income taxes
15,303

 
7,395

 
27,788

 
12,281

Provision for income taxes
1,749

 
131

 
1,602

 
430

Net income
$
13,554

 
$
7,264

 
$
26,186

 
$
11,851

Excess of fair value over book value of preferred
   shares redeemed
$
—

 
$
—

 
$
—

 
$
2,190

Preferred dividends
$
1,219

 
$
1,219

 
$
2,438

 
$
1,219

Net income to common shareholders
$
12,335

 
$
6,045

 
$
23,748

 
$
8,442

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.50

 
$
0.25

 
$
0.97

 
$
0.36

Diluted
$
0.44

 
$
0.25

 
$
0.85

 
$
0.36

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
24,470

 
24,271

 
24,444

 
23,278

Diluted
29,913

 
24,646

 
29,891

 
23,671





M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)

 
As of
 
June 30,
 
2014
 
2013
Assets:
 
 
 
Total cash and cash equivalents(1)
$
43,719

 
$
178,730

Mortgage loans held for sale
64,782

 
51,491

Inventory:
 
 
 
Lots, land and land development
366,945

 
261,985

Land held for sale
3,450

 
6,389

Homes under construction
384,930

 
294,234

Other inventory
60,815

 
52,391

Total inventory
$
816,140

 
$
614,999

 
 
 
 
Property and equipment - net
11,283

 
10,267

Investments in unconsolidated joint ventures
42,182

 
28,648

Deferred income taxes, net of valuation allowance(2)
109,558

 
—

Other assets
39,042

 
34,131

Total Assets
$
1,126,706

 
$
918,266

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes
$
228,269

 
$
227,870

Convertible senior subordinated notes due 2017
57,500

 
57,500

 Convertible senior subordinated notes due 2018
86,250

 
86,250

 Preferred stock - subject to redemption
—

 
—

Notes payable - other
7,717

 
9,429

Total Debt - Homebuilding Operations
$
379,736

 
$
381,049

 
 
 
 
Note payable bank - financial services operations
61,914

 
50,442

Total Debt
$
441,650

 
$
431,491

 
 
 
 
Accounts payable
87,325

 
61,888

Other liabilities
77,587

 
70,353

Total Liabilities
$
606,562

 
$
563,732

 
 
 
 
Shareholders' Equity
520,144

 
354,534

Total Liabilities and Shareholders' Equity
$
1,126,706

 
$
918,266

 
 
 
 
Book value per common share
$
19.21

 
$
12.50

Net debt/net capital ratio(3)
43
%
 
42
%
(1)
2014 and 2013 amounts include $10.1 million and $12.5 million of restricted cash and cash held in escrow, respectively.
(2)
2013 amounts include gross deferred tax assets of $131.3 million net of a valuation allowance of $131.3.
(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
 
Six Months Ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Adjusted EBITDA(1)
$
25,601

 
$
19,379

 
$
47,777

 
$
35,405

 
 
 
 
 
 
 
 
Cash flow used in operating activities
$
(64,566
)
 
$
(33,736
)
 
$
(66,669
)
 
$
(25,178
)
Cash used in investing activities
$
(328
)
 
$
(10,505
)
 
$
(9,207
)
 
$
(23,207
)
Cash provided by (used in) financing activities
$
9,177

 
$
(52,564
)
 
$
(19,206
)
 
$
69,139

 
 
 
 
 
 
 
 
Land/lot purchases
$
71,880

 
$
55,810

 
$
124,883

 
$
100,219

Land development spending
$
34,408

 
$
20,620

 
$
51,938

 
$
36,348

Land gross margin
$
442

 
$
297

 
$
1,763

 
$
1,288

 
 
 
 
 
 
 
 
Financial services pre-tax income
$
3,072

 
$
3,835

 
$
7,783

 
$
8,971

(1)
See "Non-GAAP Financial Results / Reconciliation" table below.


M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliation
(Dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Net income
$
13,554

 
$
7,264

 
$
26,186

 
$
11,851

Add:
 
 
 
 
 
 
 
Provision for income taxes
1,749

 
131

 
1,602

 
430

Interest expense net of interest income
2,352

 
4,112

 
6,129

 
8,167

Interest amortized to cost of sales
3,843

 
3,693

 
6,951

 
7,221

Depreciation and amortization
2,037

 
2,181

 
3,949

 
4,319

Non-cash charges
2,066

 
1,998

 
2,960

 
3,417

Adjusted EBITDA
$
25,601

 
$
19,379

 
$
47,777

 
$
35,405








M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data

NEW CONTRACTS
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2014
 
2013
 
Change
 
2014
 
2013
 
Change
Midwest
394

 
395

 
—
 %
 
768

 
744

 
3
 %
Southern
363

 
376

 
(3
)%
 
699

 
754

 
(7
)%
Mid-Atlantic
259

 
307

 
(16
)%
 
531

 
627

 
(15
)%
Total
1,016

 
1,078

 
(6
)%
 
1,998

 
2,125

 
(6
)%

HOMES DELIVERED
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2014
 
2013
 
Change
 
2014
 
2013
 
Change
Midwest
291

 
298

 
(2
)%
 
550

 
530

 
4
%
Southern
330

 
249

 
33
 %
 
605

 
440

 
38
%
Mid-Atlantic
273

 
241

 
13
 %
 
476

 
445

 
7
%
Total
894

 
788

 
13
 %
 
1,631

 
1,415

 
15
%

BACKLOG
 
June 30, 2014
 
June 30, 2013
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
Midwest
763

 
$
247

 
$
324,000

 
632

 
$
178

 
$
282,000

Southern
543

 
$
182

 
$
336,000

 
655

 
$
180

 
$
275,000

Mid-Atlantic
341

 
$
117

 
$
343,000

 
388

 
$
132

 
$
340,000

Total
1,647

 
$
546

 
$
332,000

 
1,675

 
$
491

 
$
293,000


LAND POSITION SUMMARY
 
June 30, 2014
 
 
June 30, 2013
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Midwest
3,342

2,688

6,030

 
 
3,403

2,550

5,953

Southern
5,003

4,143

9,146

 
 
3,648

3,372

7,020

Mid-Atlantic
2,582

3,233

5,815

 
 
1,625

2,565

4,190

Total
10,927

10,064

20,991

 
 
8,676

8,487

17,163