Form 8-K M/I HOMES, INC. For: Oct 27

October 27, 2021 8:43 AM EDT

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Exhibit 99.1

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M/I Homes Reports
Third Quarter Results and
Announces Entry into Nashville Market

Columbus, Ohio (October 27, 2021) - M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2021.

2021 Third Quarter Highlights:
Revenue increased 7% to a third quarter record of $904.3 million
Pre-tax income increased 22% to $116.2 million, a third quarter record, inclusive of a $9.1 million charge for early extinguishment of debt ($0.24 per diluted share)
Net income of $91.0 million ($3.03 per diluted share), a 24% increase
compared to $73.5 million ($2.51 per diluted share) in 2020
Return on equity of 27%
Homes delivered decreased 4% to 2,045
New contracts were 1,964, a 33% decrease; community count down 15% at quarter end
Backlog units increased 20% to 5,407, a third quarter record
Backlog sales value increased 40% to $2.5 billion, an all-time record
Shareholders’ equity reached an all-time record of $1.5 billion, a 31% increase from a year ago,
with book value per share of $53
Homebuilding debt to capital of 31% compared to 36% at September 30, 2020

For the third quarter, pre-tax income increased 22% to a record $116.2 million and third quarter net income increased 24% to $91.0 million, or $3.03 per diluted share. This compares to pre-tax income of $95.1 million and net income of $73.5 million, or $2.51 per diluted share, for the third quarter of 2020. The third quarter of 2021 includes a $9.1 million pre-tax loss on early extinguishment of debt, or $0.24 per diluted share. For the nine months ended September 30, 2021, net income increased 77% to $283.5 million, or $9.46 per diluted share, compared to $159.8 million, or $5.50 per diluted share, for the same period of 2020.

Homes delivered in 2021’s third quarter decreased 4% to 2,045, compared to 2,137 homes delivered in 2020’s third quarter. Homes delivered for the nine months ended September 30, 2021 increased 16% to 6,322 from 5,467 deliveries in the first nine months of 2020. New contracts for the third quarter of 2021 were 1,964, a 33% decrease from 2,949 new contracts in 2020. For the first nine months of 2021, new contracts increased 1% to 7,340 compared to 7,299 in the first nine months of 2020. Homes in backlog at September 30, 2021 had a record total sales value of $2.5 billion, a 40% increase from a year ago. Backlog units at September 30, 2021 increased 20% to a third quarter record 5,407 homes, with an all-time record average sales price of $471,000. At September 30, 2020, backlog sales value was $1.8 billion, with backlog units of 4,503 and an average sales price of $404,000. M/I Homes had 176 communities at September 30, 2021 compared to 207 communities at September 30, 2020. The Company's cancellation rate was 8% and 10% in the third quarter of 2021 and 2020, respectively.



Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are pleased with our third quarter performance highlighted by a number of records including a 24% increase in net income and continued strong returns. We achieved these record third quarter results despite 15% fewer communities than a year ago and significant supply chain disruptions. We increased our revenue by 7% to a third quarter record $904 million, increased pre-tax income by 32% to $125 million, excluding a charge for early extinguishment of debt, and improved our operating margin by 250 basis points to 13.8%, which aided us in producing a strong return on equity of 27%. Our gross margins improved by 160 basis points over last year to 24.5%, and our overhead expense ratio improved by 90 basis points to 10.7%. Despite our reduced community count and limiting sales in a majority of our communities, our third quarter sales pace was 3.7 homes per month. As a result, we set an all-time quarterly record in backlog sales value of $2.5 billion – a 40% increase from a year-ago.”

Mr. Schottenstein continued, “We are also very excited to announce that we are commencing operations in the Nashville market, one of the nation’s most dynamic and fastest growing housing markets. We have been looking at Nashville for several years and believe it will be a very successful operation for us.”

Mr. Schottenstein concluded, “We ended the quarter with record-high shareholders’ equity of $1.5 billion, an increase of 31% from 2020’s third quarter, equating to book value of $53 per share. Our cash position at quarter end was $221 million, with no borrowings on our $550 million credit facility and a homebuilding debt to capital ratio of 31%. During the quarter, we also repurchased $16 million of our common shares and extended our senior debt maturities by issuing $300 million of 3.95% senior notes that mature in 2030, replacing our 2025 senior notes. Overall, we are on track for a solid finish to 2021 and are well positioned for 2022 with a healthy balance sheet, a solid land pipeline, a strong backlog and a significant number of new communities opening in 2022.”

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 2022.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 135,000 homes. The Company’s homes are marketed and sold primarily under the M/I Homes Brand. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Detroit, Michigan; Tampa, Sarasota and Orlando, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina and Nashville, Tennessee.

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,” “envisions,” “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, the impact of the COVID-19 pandemic, interest rates, availability of resources, competition, market concentration, land development activities, construction defects, product liability and warranty claims and various governmental rules and regulations, as more fully discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020, 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.





Contact M/I Homes, Inc.
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
Ann Marie W. Hunker, Vice President, Chief Accounting Officer and Controller, (614) 418-8225



M/I Homes, Inc. and Subsidiaries
Summary Statement of Income (unaudited)
(Dollars and shares in thousands, except per share amounts)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
New contracts1,964 2,949 7,340 7,299 
Average community count176 214 185 219 
Cancellation rate%10 %%12 %
Backlog units5,407 4,503 5,407 4,503 
Backlog sales value$2,545,964 $1,819,231 $2,545,964 $1,819,231 
Homes delivered2,045 2,137 6,322 5,467 
Average home closing price$430 $380 $412 $378 
Homebuilding revenue:
   Housing revenue$878,602 $812,999 $2,604,387 $2,067,148 
   Land revenue4,922 5,976 10,669 11,109 
Total homebuilding revenue$883,524 $818,975 $2,615,056 $2,078,257 
Financial services revenue20,795 28,946 79,079 61,461 
Total revenue$904,319 $847,921 $2,694,135 $2,139,718 
Cost of sales - operations682,565 653,407 2,028,822 1,672,122 
Gross margin$221,754 $194,514 $665,313 $467,596 
General and administrative expense49,420 48,879 143,703 123,763 
Selling expense47,114 49,539 143,379 127,494 
Operating income$125,220 $96,096 $378,231 $216,339 
Equity in loss (income) from joint venture arrangements50 (252)(145)(307)
Interest (income) expense(74)1,239 1,554 8,454 
Loss on early extinguishment of debt9,072 — 9,072 — 
Income before income taxes$116,172 $95,109 $367,750 $208,192 
Provision for income taxes25,160 21,572 84,265 48,401 
Net income$91,012 $73,537 $283,485 $159,791 
Earnings per share:
Basic$3.11 $2.57 $9.72 $5.60 
Diluted$3.03 $2.51 $9.46 $5.50 
Weighted average shares outstanding:
Basic29,250 28,653 29,179 28,554 
Diluted30,028 29,286 29,966 29,030 



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

As of
September 30,
20212020
Assets:
Total cash, cash equivalents and restricted cash (1)
$221,157 $202,512 
Mortgage loans held for sale215,857 140,046 
Inventory:
Lots, land and land development1,022,434 840,637 
Land held for sale3,620 4,357 
Homes under construction1,190,921 863,603 
Other inventory136,168 134,812 
Total Inventory$2,353,143 $1,843,409 
Property and equipment - net23,644 25,696 
Investments in joint venture arrangements42,466 34,038 
Operating lease right-of-use assets51,181 52,574 
Goodwill16,400 16,400 
Deferred income tax asset6,183 9,205 
Other assets116,569 96,675 
Total Assets$3,046,600 $2,420,555 
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2025 - net$— $247,483 
Senior notes due 2028 - net395,137 394,363 
Senior notes due 2030 - net296,002 — 
 Notes payable - other5,537 5,325 
Total Debt - Homebuilding Operations$696,676 $647,171 
Notes payable bank - financial services operations211,281 136,119 
Total Debt$907,957 $783,290 
Accounts payable227,311 176,581 
Operating lease liabilities51,637 52,666 
Other liabilities315,228 233,278 
Total Liabilities$1,502,133 $1,245,815 
Shareholders’ Equity1,544,467 1,174,740 
Total Liabilities and Shareholders’ Equity$3,046,600 $2,420,555 
Book value per common share$53.08 $40.87 
Homebuilding debt to capital ratio (2)
31 %36 %
(1)Includes $0.2 million of restricted cash and cash held in escrow for both the quarters ended September 30, 2021 and 2020.
(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 (unaudited)
(Dollars in thousands)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Cash (used in) provided by operating activities$(208,142)$114,400 $(34,341)$197,226 
Cash used in investing activities$(19,160)$(10,625)$(31,923)$(31,327)
Cash provided by financing activities$76,653 $4,714 $26,611 $30,530 
Land/lot purchases$231,184 $106,846 $473,813 $266,824 
Land development spending$123,564 $88,682 $281,184 $222,604 
Land sale revenue$4,922 $5,976 $10,669 $11,109 
Land sale gross profit$1,345 $187 $2,521 $251 
Financial services pre-tax income$9,935 $19,179 $47,604 $35,647 



M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (1)
(Dollars in thousands)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Net income$91,012 $73,537 $283,485 $159,791 
Add:
Provision for income taxes25,160 21,572 84,265 48,401 
Interest (income) expense-net of interest income(1,005)327 (1,273)5,835 
Interest amortized to cost of sales8,212 8,803 25,855 23,127 
Depreciation and amortization4,303 4,590 12,537 13,014 
Non-cash charges3,834 2,274 8,077 6,372 
Adjusted EBITDA$131,516 $111,103 $412,946 $256,540 

(1) 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 EndedNine Months Ended
September 30,September 30,
%%
Region20212020 Change20212020Change
Northern772 1,176 (34)%2,962 2,951 — %
Southern1,192 1,773 (33)%4,378 4,348 %
Total1,964 2,949 (33)%7,340 7,299 %


HOMES DELIVERED
Three Months EndedNine Months Ended
September 30,September 30,
%%
Region20212020 Change20212020Change
Northern876 868 %2,638 2,190 20 %
Southern1,169 1,269 (8)%3,684 3,277 12 %
Total2,045 2,137 (4)%6,322 5,467 16 %


BACKLOG
September 30, 2021September 30, 2020
DollarsAverageDollarsAverage
RegionUnits(millions)Sales PriceUnits(millions)Sales Price
Northern2,139 $1,015 $475,000 1,904 $814 $427,000 
Southern3,268 $1,531 $468,000 2,599 $1,005 $387,000 
Total5,407 $2,546 $471,000 4,503 $1,819 $404,000 


LAND POSITION SUMMARY
September 30, 2021September 30, 2020
LotsLots UnderLotsLots Under
RegionOwnedContractTotalOwnedContractTotal
Northern7,353 7,078 14,431 6,858 6,892 13,750 
Southern15,311 13,253 28,564 8,203 17,640 25,843 
Total22,664 20,331 42,995 15,061 24,532 39,593 




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