Upgrade to SI Premium - Free Trial

M/I Homes Reports 2016 Second Quarter Results

July 27, 2016 8:31 AM

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,

2016

2015

2016

2015

Adjusted EBITDA(1)

$

37,885

$

32,760

$

65,118

$

59,529

Cash flow provided by (used in) operating activities

$

39,416

$

(16,934)

$

40,472

$

(46,210)

Cash used in investing activities

$

(2,913)

$

(3,183)

$

(15,776)

$

(4,028)

Cash (used in) provided by financing activities

$

(40,586)

$

11,932

$

(7,229)

$

56,476

Land/lot purchases

$

45,413

$

43,617

$

97,386

$

94,817

Land development spending

$

41,339

$

44,546

$

73,533

$

82,227

Land sale revenue

$

14,072

$

1,810

$

19,142

$

23,871

Land sale gross profit

$

1,303

$

218

$

2,032

$

5,459

Financial services pre-tax income

$

4,852

$

4,850

$

10,743

$

9,843

(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,

2016

2015

2016

2015

Total revenue

$

401,247

$

322,856

$

725,617

$

586,015

Gross margin

$

81,539

$

70,261

$

145,737

$

127,237

Add: Stucco-related charges

2,754

—

4,909

—

Adjusted gross margin

$

84,293

$

70,261

$

150,646

$

127,237

Gross margin percentage

20.3

%

21.8

%

20.1

%

21.7

%

Adjusted gross margin percentage

21.0

%

21.8

%

20.8

%

21.7

%

Income before income taxes

$

24,950

$

21,885

$

39,665

$

37,577

Add: Stucco-related charges

2,754

—

4,909

—

Adjusted income before income taxes

$

27,704

$

21,885

$

44,574

$

37,577

Three Months Ended

Six Months Ended

June 30,

June 30,

2016

2015

2016

2015

Net income

$

15,916

$

13,350

$

25,105

$

22,918

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

Adjusted EBITDA

$

37,885

$

32,760

$

65,118

$

59,529

(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

Midwest

507

397

28

%

1,002

817

23

%

Southern

515

407

27

%

1,007

821

23

%

Mid-Atlantic

332

296

12

%

659

570

16

%

Total

1,354

1,100

23

%

2,668

2,208

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

Midwest

954

$

364

$

382,000

723

$

268

$

371,000

Southern

819

$

288

$

352,000

684

$

252

$

368,000

Mid-Atlantic

508

$

190

$

374,000

387

$

137

$

355,000

Total

2,281

$

842

$

369,000

1,794

$

657

$

366,000

LAND POSITION SUMMARY

June 30, 2016

June 30, 2015

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Midwest

3,640

4,570

8,210

3,260

4,186

7,446

Southern

4,435

5,119

9,554

4,596

4,653

9,249

Mid-Atlantic

2,395

1,789

4,184

2,559

2,484

5,043

Total

10,470

11,478

21,948

10,415

11,323

21,738

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mi-homes-reports-2016-second-quarter-results-300304738.html

SOURCE M/I Homes, Inc.

Categories

Press Releases

Next Articles