M/I HOMES, INC. COLUMBUS, Ohio, Oct. 27, 2016 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the three months and nine months ended September 30, 2016.
2016 Third Quarter Highlights:
-- Net income of $10.9 million ($0.35 per diluted share) which includes a
$14.5 million pre-tax charge ($0.30 per diluted share) for
stucco-related repairs
-- Net income, excluding the stucco-related charge, increased 28% to $19.9
million or $0.65 per diluted share
-- Revenue increased 22% to a record $442 million
-- New contracts increased 10%; community count up 5%
-- Homes delivered increased 15%; average closing price increased 5%
-- Backlog sales value increased 25% to $821 million; backlog units
increased 24% to 2,221
For the third quarter of 2016, the Company reported net income of $10.9 million, or $0.35 per diluted share. This compares to net income of $15.6 million, or $0.51 per diluted share, for the third quarter of 2015. The third quarter of 2016 includes a $14.5 million pre-tax charge ($0.30 per diluted share) for known and estimated future stucco-related repair costs in certain of our Florida communities. For the nine months ended September 30, 2016, the Company reported net income of $36.0 million, or $1.17 per diluted share, compared to net income of $38.5 million, or $1.25 per diluted share, for the same period of 2015. Year-to-date in 2016, the Company has incurred $19.4 million of pre-tax charges ($0.40 per diluted share) related to stucco-related repair costs. Exclusive of these charges, year-to-date net income is $48.1 million compared to $38.5 million in 2015's same period, a 25% increase.
New contracts for 2016's third quarter were 1,088, an increase of 10% over 2015's third quarter. For the first nine months of 2016, new contracts increased 18% to 3,756 from 3,196 in 2015. M/I Homes had 174 active communities at September 30, 2016 compared to 166 at September 30, 2015. The Company's cancellation rate was 15% in the third quarter of 2016 and 16% in 2015. Homes in backlog increased 24% at September 30, 2016 to 2,221 units, with a sales value of $821 million (a 25% increase over last year's third quarter), and an average sales price of $370,000. At September 30, 2015, the sales value of homes in backlog was $657 million, with an average sales price of $367,000 and backlog units of 1,788. Homes delivered in 2016's third quarter were 1,148 compared to 994 deliveries in 2015's third quarter - a 15% increase. Homes delivered for the nine months ended September 30, 2016 increased 17% to 3,066 from 2015's deliveries of 2,630.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are very pleased with our third quarter results highlighted by record revenue of $442 million - 22% above 2015's third quarter, a 10% increase in new contracts, and a 15% increase in homes delivered. We also reached our highest third quarter backlog level in 10 years, with a sales value of $821 million - a 25% increase over 2015's third quarter. Excluding the $14.5 million stucco-related charge, net income improved by 28%, and our pre-tax operating margin increased to 7.4%. The stucco-related charge we incurred in the third quarter, along with the charges we incurred in the first half of 2016, cover repair costs that we have incurred to date along with our estimate of repair costs that we may incur in the future. "
Mr. Schottenstein continued, "Looking ahead, 2016, our 40(th) year in business, is shaping up to be a very good year for M/I Homes. We have a strong backlog going into the last quarter of the year and housing market conditions remain favorable throughout most of our markets. Our financial condition is strong with shareholders' equity of $632 million and homebuilding debt to capital of 46%. We will continue to focus on increasing profitability, growing our market share, and investing 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 October 2017.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having delivered over 97,000 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 and shares in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
---- ---- ----
New contracts 1,088 988 3,756 3,196
Average community
count 174 161 176 155
Cancellation rate 15% 16% 13% 15%
Backlog units 2,221 1,788
Backlog value $821,494 $656,917
Homes delivered 1,148 994 3,066 2,630
Average home closing
price $365 $349 $361 $339
-------------------- ---- ---- ---- ----
Homebuilding revenue:
Housing revenue $419,228 $346,562 $1,105,701 $891,674
Land revenue 12,674 7,619 31,816 31,490
------------ ------ ----- ------ ------
Total homebuilding
revenue $431,902 $354,181 $1,137,517 $923,164
Financial services
revenue 10,562 9,276 30,564 26,308
------------------ ------ ----- ------ ------
Total revenue $442,464 $363,457 $1,168,081 $949,472
------------- -------- -------- ---------- --------
Cost of sales -
operations 349,135 285,416 924,106 744,194
Cost of sales -
stucco-related
charges 14,500 - 19,409 -
--------------- ------ --- ------ ---
Gross margin $78,829 $78,041 $224,566 $205,278
General and
administrative
expense 29,160 23,651 78,249 64,690
Selling expense 27,663 24,270 75,462 64,891
--------------- ------ ------ ------ ------
Operating income $22,006 $30,120 $70,855 $75,697
Equity in income of
unconsolidated joint
ventures (24) (36) (413) (248)
Interest expense 3,587 3,658 13,160 11,870
Income before income
taxes $18,443 $26,498 $58,108 $64,075
Provision for income
taxes 7,501 10,928 22,061 25,587
-------------------- ----- ------ ------ ------
Net income $10,942 $15,570 $36,047 $38,488
Preferred dividends 1,218 1,218 3,656 3,656
------------------- ----- ----- ----- -----
Net income to common
shareholders $9,724 $14,352 $32,391 $34,832
-------------------- ------ ------- ------- -------
Earnings per share:
Basic $0.39 $0.58 $1.31 $1.42
Diluted $0.35 $0.51 $1.17 $1.25
------- ----- ----- ----- -----
Weighted average shares outstanding:
Basic 24,669 24,605 24,665 24,551
Diluted 30,139 30,067 30,093 30,021
------- ------ ------ ------ ------
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
September 30,
2016 2015
---- ----
Assets:
Total
cash
and
cash
equivalents(1) $23,308 $28,126
Mortgage
loans
held
for
sale 95,545 77,550
Inventory:
Lots,
land
and
land
development 554,150 539,517
Land
held
for
sale 15,956 5,803
Homes
under
construction 544,350 488,041
Other
inventory 110,697 100,053
---------- ------- -------
Total
Inventory $1,225,153 $1,133,414
---------- ---------- ----------
Property
and
equipment
-net 21,792 11,841
Investments
in
unconsolidated
joint
ventures 26,528 33,282
Deferred
income
taxes,
net of
valuation
allowance 39,944 70,943
Other
assets 64,967 46,102
------- ------ ------
Total
Assets $1,497,237 $1,401,258
======= ========== ==========
Liabilities:
Debt -Homebuilding
Operations:
Senior
notes $295,401 $226,863
Convertible
senior
subordinated
notes
due
2017 56,949 56,375
Convertible
senior
subordinated
notes
due
2018 85,246 84,537
Notes
payable
bank -
homebuilding 85,000 156,100
Notes
payable
-
other 8,566 9,363
-------- ----- -----
Total
Debt -
Homebuilding
Operations $531,162 $533,238
Notes
payable
bank -
financial
services
operations 91,483 73,239
----------- ------ ------
Total
Debt $622,645 $606,477
Accounts
payable 110,179 95,950
Other
liabilities 132,821 115,493
------------ ------- -------
Total
Liabilities $865,645 $817,920
------------ -------- --------
Shareholders'
Equity 631,592 583,338
------------- ------- -------
Total
Liabilities
and
Shareholders'
Equity $1,497,237 $1,401,258
============== ========== ==========
Book
value
per
common
share $23.58 $21.64
Homebuilding
debt /
capital
ratio(2) 46% 48%
------------ --- ---
(1) 2016 and 2015 amounts include $1.0
million and $3.1 million of
restricted cash and cash held in
escrow, respectively.
(2) The ratio of homebuilding debt to
capital is calculated as the
carrying value of our
homebuilding debt outstanding
divided by the sum of the
carrying value of our
homebuilding debt outstanding
plus shareholders' equity.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
---- ---- ---- ----
Adjusted
EBITDA(1) $31,284 $37,694 $96,402 $97,223
Cash flow
provided by
(used in)
operating
activities $(13,952) $(48,986) $26,520 $(95,196)
Cash used in
investing
activities $(4,023) $(2,020) $(19,799) $(6,048)
Cash provided by
financing
activities $12,613 $54,288 $5,384 $110,764
Land/lot
purchases $49,612 $82,639 $146,998 $177,456
Land development
spending $48,230 $63,187 $121,763 $145,414
Land sale revenue $12,674 $7,619 $31,816 $31,490
Land sale gross
profit $1,063 $905 $3,095 $6,364
Financial
services pre-
tax income $5,393 $4,444 $16,136 $14,287
-------------- ------ ------ ------- -------
(1) See "Non-GAAP Financial
Results" table below.
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (2)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
---- ---- ---- ----
Net income $10,942 15,570 $36,047 38,488
Add:
Provision for
income taxes 7,501 10,928 22,061 25,587
Interest expense
net of interest
income 2,980 3,128 11,531 10,496
Interest amortized
to cost of sales 4,963 4,318 13,138 11,637
Depreciation and
amortization 3,030 2,478 8,880 7,213
Non-cash charges 1,868 1,272 4,745 3,802
---------------- ----- ----- ----- -----
Adjusted EBITDA $31,284 $37,694 $96,402 $97,223
=============== ======= ======= ======= =======
M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (2)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
---- ---- ---- ----
Total revenue $442,464 $363,457 $1,168,081 $949,472
Gross margin $78,829 $78,041 $224,566 $205,278
Add: Stucco-
related charges 14,500 - 19,409 -
Adjusted gross
margin $93,329 $78,041 $243,975 $205,278
============== ======= ======= ======== ========
Gross margin
percentage 17.8% 21.5% 19.2% 21.6%
Adjusted gross
margin
percentage 21.1% 21.5% 20.9% 21.6%
Income before
income taxes $18,443 $26,498 $58,108 $64,075
Add: Stucco-
related charges 14,500 - 19,409 -
------ --- ------ ---
Adjusted income
before income
taxes $32,943 $26,498 $77,517 $64,075
=============== ======= ======= ======= =======
Net income $10,942 $15,570 $36,047 $38,488
Add: Stucco-
related charges
- net of tax 8,990 - 12,034 -
---------------- ----- --- ------ ---
Adjusted income
before income
taxes $19,932 $15,570 $48,081 $38,488
=============== ======= ======= ======= =======
Stucco-related
charges - net
of tax $8,990 $ - $12,034 $ -
Divided by:
Diluted
weighted
average shares
outstanding 30,139 30,067 30,093 30,021
--------------- ------
Diluted earnings
per share
related to
stucco-related
charges $0.30 $ - $0.40 $ -
Add: Diluted
earnings per
share 0.35 0.51 1.17 1.25
------------- ----
Adjusted diluted
earnings per
share $0.65 $0.51 $1.57 $1.25
================ ===== ===== ===== =====
(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 our GAAP results 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 Nine Months Ended
September 30, September 30,
------------- -------------
% %
Region 2016 2015 Change 2016 2015 Change
------ ---- ---- ------ ---- ---- ------
Midwest 407 341 19% 1,409 1,158 22%
Southern 437 399 10% 1,444 1,220 18%
Mid-
Atlantic 244 248 (2)% 903 818 10%
--------- --- --- --- --- --- ---
Total 1,088 988 10% 3,756 3,196 18%
===== ===== === === ===== ===== ===
HOMES DELIVERED
---------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
% %
Region 2016 2015 Change 2016 2015 Change
------ ---- ---- ------ ---- ---- ------
Midwest 443 363 22% 1,163 962 21%
Southern 410 377 9% 1,158 964 20%
Mid-
Atlantic 295 254 16% 745 704 6%
--------- --- --- --- --- --- ---
Total 1,148 994 15% 3,066 2,630 17%
===== ===== === === ===== ===== ===
BACKLOG
-------
September 30, 2016 September 30, 2015
------------------ ------------------
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
------ ----- --------- ----------- ----- --------- -----------
Midwest 918 $356 $388,000 701 $265 $378,000
Southern 846 $296 $350,000 706 $256 $363,000
Mid-
Atlantic 457 $170 $371,000 381 $136 $357,000
--------- --- ---- -------- --- ---- --------
Total 2,221 $821 $370,000 1,788 $657 $367,000
===== ===== ==== ======== ===== ==== ========
LAND POSITION SUMMARY
---------------------
September 30, 2016 September 30, 2015
------------------ ------------------
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
------ ----- -------- ----- ----- -------- -----
Midwest 3,846 5,378 9,224 3,619 3,632 7,251
Southern 4,213 5,333 9,546 4,683 5,114 9,797
Mid-
Atlantic 2,068 2,381 4,449 2,771 1,743 4,514
--------- ----- ----- ----- ----- ----- -----
Total 10,127 13,092 23,219 11,073 10,489 21,562
===== ====== ====== ====== ====== ====== ======
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SOURCE M/I Homes, Inc.
