M/I Homes, Inc. (NYSE:MHO) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 04:00 pm ET


M/I Homes, Inc. (NYSE:MHO) Q4 2014 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Sara and I will be your conference operator today. At this time, I would like to welcome everyone to the M/I Homes Year-End Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions)

Thank you. Mr. Phil Creek, you may begin your conference.

Phillip Creek

Thank you for joining us on our call today. With me is Bob Schottenstein, our CEO and President; Tom Mason, EVP; Paul Rosen, President of our Mortgage Company; Ann Marie Hunker, VP Corporate Controller; and Kevin Hake, Senior VP.First, to address regulation fair disclosure. We encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant non-public items with you directly.

(Forward-Looking Cautionary Statements)

With that, I'll turn the call over to Bob.

Robert Schottenstein

Thanks, Phil and thank you all for joining us today. As stated in our release, we are pleased with our fourth and full year results highlighted by earning $69.7 million a pre-tax income which represents a 69% increase over 2013. For the fourth quarter, our pre-tax profits increased to $19.7 million from $15.3 million a year ago which is a 29% improvement. There were number of factors that contributed to our improved profitability. We delivered 1,105 homes in the fourth quarter 3,721 homes for the year. The yearly closing total was a 7% increase over 2013.

Our average sales price on home delivered was $313,000, this being a 10% increase over the average selling price in 2013. Revenues increased for the year by 17% to nearly $1.2 billion and we improved our margins with gross margins increasing by 90 basis points and our SG&A ratio decreasing by 30 basis points. More specifically for the quarter, we lowered our SG&A ratio to 13.7%, this represents a 60 basis point reduction from last year's fourth quarter.

I remind everyone that we've remained very focused on managing our expenses and expect to further improve our SG&A ratio in 2015. Our average sale price in backlog also increase in 2014, resulting an year-end backlog sales value of $425 million, 4% better than the end of 2013

Robert Schottenstein

than the highest year-end backlog level since 2006. Our financial services also posted very strong results in 2014. Shortly, Paul Rosen, the Head of our Mortgage Operation will discuss this in more detail. Beginning in 2010, when we first opened in Huston and for each of the next three years, we opened a new market in Texas. We now operate in Huston, San Antonio, Austin and Dallas. I'm pleased to report that in 2014, our expansion in the Texas began to contribute positively to our financial results. We delivered over 200 homes in both Huston and San Antonio in 2014 and we were pleased to close our first homes in both Austin and Dallas.

We are expecting significant growth in Texas in 2015 as well as meaningful contribution to our 2015