M/I HOMES, INC. COLUMBUS, Ohio, July 27, 2016 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the three months and six months ended June 30, 2016.
2016 Second Quarter Highlights:
-- Net income increased 19% to $15.9 million ($0.52 per diluted share;
includes $0.06 per share for stucco-related charges)
-- New contracts increased 23% to 1,354 - a second quarter record
-- Homes delivered increased 13%; average closing price increased 7%
-- Backlog sales value increased 28% to $842 million; backlog units
increased 27% to 2,281
For the second quarter of 2016, the Company reported net income of $15.9 million, or $0.52 per diluted share. This compares to net income of $13.4 million, or $0.43 per diluted share, for the second quarter of 2015. The second quarter of 2016 includes a $2.8 million pre-tax charge ($0.06 per diluted share) for stucco-related repairs in certain of our Florida communities. For the six months ended June 30, 2016, the Company reported net income of $25.1 million, or $0.81 per diluted share, compared to net income of $22.9 million, or $0.74 per diluted share, in the same period of 2015. Year-to-date results for 2016 include a $4.9 million pre-tax charge ($0.10 per diluted share) for stucco-related repairs.
New contracts for 2016's second quarter were 1,354, a second quarter record, and an increase of 23% over 2015's second quarter. For the first six months of 2016, new contracts increased 21% to 2,668 from 2,208 in 2015. M/I Homes had 174 active communities at June 30, 2016 compared to 155 at June 30, 2015. The Company's cancellation rate was 14% in the second quarter of both 2016 and 2015. Homes in backlog increased 27% at June 30, 2016 to 2,281 units, with a sales value of $842 million (a 28% increase over last year's second quarter), and an average sales price of $369,000. At June 30, 2015, the sales value of homes in backlog was $657 million, with an average sales price of $366,000 and backlog units of 1,794. Homes delivered in 2016's second quarter were 1,042 compared to 919 deliveries in 2015's second quarter - a 13% increase. Homes delivered for the six months ended June 30, 2016 increased 17% to 1,918 from 2015's deliveries of 1,636.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "Following our strong first quarter results, we had another very good quarter highlighted by record second quarter sales, solid increases in both revenue and profit, and our highest second quarter backlog in 10 years. Our sales for the quarter were particularly strong increasing by 23% over last year; and year-to-date, our sales are 21% better than a year ago. Homes delivered increased 13% and revenue improved by 24%. Our adjusted gross margin (exclusive of stucco-related charges) improved 50 basis points compared to the first quarter. Net income for the quarter improved by 19% and pre-tax income, excluding stucco-related charges, improved by 27%. Our backlog sales value stands at $842 million, 28% higher than last year's second quarter."
Mr. Schottenstein continued, "With our strong backlog, along with the planned community openings in the second half of 2016, we are well positioned to have a very solid 2016. Our financial condition remains strong with shareholders' equity of $621 million and net debt to capital of less than 50%."
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 2017.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 96,000 homes. The Company's homes are marketed and sold primarily under the trade names M/I Homes and Showcase Collection (exclusively by M/I Homes), and also currently operates under the name Hans Hagen Homes in its Minneapolis/St. Paul, Minnesota market. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Tampa, Sarasota and Orlando, Florida; Austin, Dallas/Fort 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 any 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, construction defect, product liability and warranty claims and various governmental rules and regulations, as more fully discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2015, 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 herein will increase with the passage of time. We undertake 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.
M/I Homes, Inc. and Subsidiaries
Summary Statement of Income (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
---- ---- ----
New contracts 1,354 1,100 2,668 2,208
Average community count 178 154 177 153
Cancellation rate 14% 14% 13% 14%
Backlog units 2,281 1,794
Backlog value $842,442 $656,935
Homes delivered 1,042 919 1,918 1,636
Average home closing price $362 $340 $358 $333
-------------------------- ---- ---- ---- ----
Homebuilding revenue:
Housing revenue $377,226 $312,112 $686,473 $545,112
Land revenue 14,072 1,810 19,142 23,871
------------ ------ ----- ------ ------
Total homebuilding revenue $391,298 $313,922 $705,615 $568,983
Financial services revenue 9,949 8,934 20,002 17,032
-------------------------- ----- ----- ------ ------
Total revenue $401,247 $322,856 $725,617 $586,015
------------- -------- -------- -------- --------
Cost of sales - operations 316,954 252,595 574,971 458,778
Cost of sales - stucco-related charges 2,754 - 4,909 -
-------------------------------------- ----- --- ----- ---
Gross margin $81,539 $70,261 $145,737 $127,237
General and administrative expense 26,830 21,705 49,089 41,039
Selling expense 25,533 22,935 47,799 40,621
--------------- ------ ------ ------ ------
Operating income $29,176 $25,621 $48,849 $45,577
Equity in income of unconsolidated joint ventures (82) (14) (389) (212)
Interest expense 4,308 3,750 9,573 8,212
Income before income taxes $24,950 $21,885 $39,665 $37,577
Provision for income taxes 9,034 8,535 14,560 14,659
-------------------------- ----- ----- ------ ------
Net income $15,916 $13,350 $25,105 $22,918
Preferred dividends 1,219 1,219 2,438 2,438
------------------- ----- ----- ----- -----
Net income to common shareholders $14,697 $12,131 $22,667 $20,480
--------------------------------- ------- ------- ------- -------
Earnings per share:
Basic $0.60 $0.49 $0.92 $0.84
Diluted $0.52 $0.43 $0.81 $0.74
------- ----- ----- ----- -----
Weighted average shares outstanding:
Basic 24,669 24,531 24,663 24,523
Diluted 30,077 30,023 30,055 30,002
------- ------ ------ ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
June 30,
2016 2015
---- ----
Assets:
Total cash and cash
equivalents(1) $30,000 $26,947
Mortgage loans held for sale 100,379 75,063
Inventory:
Lots, land and land development 563,112 486,895
Land held for sale 11,597 5,754
Homes under construction 487,895 444,855
Other inventory 107,721 103,440
--------------- ------- -------
Total Inventory $1,170,325 $1,040,944
--------------- ---------- ----------
Property and equipment - net 22,154 11,819
Investments in unconsolidated
joint ventures 28,160 28,357
Deferred income taxes, net of
valuation allowance 47,023 81,054
Other assets 55,113 45,585
------------ ------ ------
Total Assets $1,453,154 $1,309,769
============ ========== ==========
Liabilities:
Debt - Homebuilding Operations:
Senior notes $295,125 $226,608
Convertible senior subordinated
notes due 2017 56,806 56,231
Convertible senior subordinated
notes due 2018 85,069 84,360
Notes payable bank -
homebuilding 70,000 105,600
Notes payable - other 8,552 8,230
--------------------- ----- -----
Total Debt -Homebuilding
Operations $515,552 $481,029
Notes payable bank -financial
services operations 92,666 69,681
----------------------------- ------ ------
Total Debt $608,218 $550,710
Accounts payable 105,669 90,643
Other liabilities 118,755 101,243
----------------- ------- -------
Total Liabilities $832,642 $742,596
----------------- -------- --------
Shareholders' Equity 620,512 567,173
-------------------- ------- -------
Total Liabilities and
Shareholders' Equity $1,453,154 $1,309,769
===================== ========== ==========
Book value per common share $23.13 $21.06
%
Net debt/net capital ratio(2) 49 48%
----------------------------- --- ---
(1) 2016 and 2015 amounts include $2.3 million and $5.2 million of restricted cash and cash held in escrow, respectively.
(2) Net debt/net capital ratio is calculated as the principal amount outstanding of our total debt minus total cash and cash equivalents,
divided by the sum of the principal amount outstanding of our 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,
2015 2016
2016 2015
---- ----
32,760 65,118 59,529
Adjusted EBITDA(1) $37,885 $ $ $
(16,934) 40,472 (46,210)
Cash flow provided by (used in) operating activities $39,416 $ $ $
(3,183) (15,776) (4,028)
Cash used in investing activities $(2,913) $ $ $
11,932 (7,229)
Cash (used in) provided by financing activities $(40,586) $ $ $56,476
97,386 94,817
Land/lot purchases $45,413 $43,617 $ $
44,546 73,533 82,227
Land development spending $41,339 $ $ $
1,810 19,142
Land sale revenue $14,072 $ $ $23,871
218 2,032
Land sale gross profit $1,303 $ $ $5,459
4,850 10,743 9,843
Financial services pre-tax income $4,852 $ $ $
--------------------------------- ------ --- --- ---
(1) See "Non-GAAP Financial Results / Reconciliation" table below.
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliation (2)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2016
2016 2015
---- ----
322,856 725,617
Total revenue $401,247 $ $ $586,015
70,261 145,737 127,237
Gross margin $81,539 $ $ $
- 4,909
Add: Stucco-related charges 2,754 -
--------------------------- ----- ---
70,261 150,646 127,237
Adjusted gross margin $84,293 $ $ $
===================== ======= === === ===
21.8% 20.1
%
Gross margin percentage 20.3% % 21.7
21.8% 20.8%
%
Adjusted gross margin percentage 21.0% 21.7
21,885 37,577
Income before income taxes $24,950 $ $39,665 $
- 4,909
Add: Stucco-related charges 2,754 -
--------------------------- ----- ---
21,885 44,574 37,577
Adjusted income before income taxes $27,704 $ $ $
=================================== ======= === === ===
Three Months Ended Six Months Ended
June 30, June 30,
2015
2016 2015 2016
---- ---- ----
$
22,918
Net income $15,916 $13,350 $25,105
Add:
Provision for income taxes 9,034 8,535 14,560 14,659
Interest expense net of interest income 3,716 3,265 8,551 7,368
Interest amortized to cost of sales 4,631 3,780 8,175 7,319
Depreciation and amortization 2,966 2,429 5,850 4,735
Non-cash charges 1,622 1,401 2,877 2,530
---------------- ----- ----- ----- -----
$
59,529
Adjusted EBITDA $37,885 $32,760 $65,118
=============== ======= ======= =======
(2) We believe these non-GAAP
financial measures are relevant
and useful to investors in
understanding our operations, and
may be helpful in comparing us
with other companies in the
homebuilding industry to the
extent they provide similar
information. These non-GAAP
financial measures should be used
to supplement their respective
most directly comparable GAAP
financial measures in order to
provide a greater understanding of
the factors and trends affecting
our operations.
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 2016 2015 Change 2016 2015 Change
% 817
%
Midwest 507 397 28 1,002 23
%
%
Southern 515 407 27 1,007 821 23
% 570
%
Mid-Atlantic 332 296 12 659 16
------------ --- --- --- --- ---
% 2,208
%
Total 1,354 1,100 23 2,668 21
===== ===== ===== === ===== ===
HOMES DELIVERED
---------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
% %
Region 2016 2015 Change 2016 2015 Change
------ ---- ---- ------ ---- ---- ------
%
Midwest 398 351 13% 720 599 20
Southern 398 312 28% 748 587 27%
%
Mid-Atlantic 246 256 (4)% 450 450 -
------------ --- --- --- --- --- ---
%
Total 1,042 919 13% 1,918 1,636 17
===== ===== === === ===== ===== ===
BACKLOG
-------
June 30, 2016 June 30, 2015
------------- -------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
------ ----- --------- ----------- ----- --------- -----------
$ 268
Midwest 954 364 $382,000 723 $ $371,000
$
Southern 819 288 $352,000 684 $252 $368,000
$ 137
Mid-Atlantic 508 190 $374,000 387 $ $355,000
------------ --- --- -------- --- --- --------
$ 657
Total 2,281 842 $369,000 1,794 $ $366,000
===== ===== === ======== ===== === ========
LAND POSITION SUMMARY
---------------------
June 30, 2016 June 30, 2015
------------- -------------
Lots
Lots Under
Lots Lots Under
Owned
Contract
Region Owned Contract Total Total
------ ----- -------- ----- -----
3,260 4,186
Midwest 3,640 4,570 8,210 7,446
4,596 4,653
Southern 4,435 5,119 9,554 9,249
2,484
Mid-Atlantic 2,395 1,789 4,184 2,559 5,043
------------ ----- ----- ----- ----- -----
11,323
Total 10,470 11,478 21,948 10,415 21,738
===== ====== ====== ====== ====== ======
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SOURCE M/I Homes, Inc.
