M/I Homes Reports Fourth Quarter and Year-End Results
COLUMBUS, Ohio, Feb. 1, 2023 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2022.
2022 Fourth Quarter Results:
- Homes delivered increased 3% to 2,384, an all-time quarterly record
- Revenue increased 16% to an all-time quarterly record of $1.2 billion
- Pre-tax income increased 16% to $164.2 million, a fourth quarter record
- Net income increased 15% to $130.4 million ($4.65 per diluted share) compared to $113.4 million ($3.83 per diluted share) in 2021
- Results include $18.4 million of impairments ($13.9 million after tax or $0.50 per diluted share)
- New contracts were 985 compared to 1,744 in 2021's fourth quarter, a 44% decrease
- Backlog sales value of $1.7 billion versus $2.4 billion last year
2022 Full Year Results:
- Homes delivered of 8,366 compared to 8,638 in 2021, a 3% decrease
- Record revenue of $4.1 billion, an increase of 10% over last year
- Record pre-tax income of $635.2 million, a 25% increase compared to $509.1 million in 2021
- Net income increased 24% to a record $490.7 million ($17.24 per diluted share) compared to $396.9 million in 2021 ($13.28 per diluted share)
- New contracts were 6,668 compared to 2021's 9,084, a 27% decrease
- Shareholders' equity reached an all-time record of $2.1 billion, a 28% increase from a year ago, with book value per share of $75
- Return on equity of 27%
- Homebuilding debt to capital ratio of 25% compared to 30% at December 31, 2021
For the fourth quarter of 2022, the Company reported record net income of $130.4 million, or $4.65 per diluted share, compared to net income of $113.4 million, or $3.83 per diluted share, for the fourth quarter of 2021. Net income for the fourth quarter of 2022 included $13.9 million of after-tax charges ($0.50 per diluted share) for impairments of land-related assets and deposit write-offs. For the year ended December 31, 2022, the Company reported net income of $490.7 million, or $17.24 per diluted share, compared to net income of $396.9 million, or $13.28 per diluted share in 2021. Net income for the year ended December 31, 2022 included $13.9 million of after-tax charges ($0.50 per diluted share) for impairments of land-related assets and deposit write-offs. Net income in 2021 included a $7.0 million after-tax loss on early extinguishment of debt ($0.23 per diluted share).
Homes delivered in 2022's fourth quarter reached an all-time quarterly record of 2,384, increasing 3% compared to 2,316 deliveries in 2021's fourth quarter. Homes delivered for the twelve months ended December 31, 2022 decreased 3% to 8,366 from 2021's deliveries of 8,638. New contracts for 2022's fourth quarter decreased 44% to 985 from 1,744 new contracts in 2021's fourth quarter. For 2022, new contracts were 6,668, declining 27% from 2021's 9,084 new contracts. Homes in backlog decreased 35% at December 31, 2022 to 3,137 units, with a sales value of $1.7 billion, a 28% decrease from last year, and the average sales price in backlog increased 11% to $541,000. At December 31, 2021, the sales value of the 4,835 homes in backlog was $2.4 billion, with an average sales price of $490,000. M/I Homes had 196 active communities at December 31, 2022 compared to 175 a year ago. The Company's cancellation rate was 30% in 2022's fourth quarter and 10% for the prior year's fourth quarter.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased to announce our fourth quarter and full year financial results, highlighted by record revenue, income, and very strong returns. We increased our revenue by 10% to a record $4.1 billion, increased pre-tax income by 25% to $635 million, and improved our operating margin by 160 basis points to 15.4%. Our gross margins, exclusive of 2022 impairments, improved by 140 basis points over last year to 25.7%, our overhead expense ratio improved by 60 basis points to 9.8%, and our return on equity continued to be strong at 27%. These results drove record diluted earnings per share of $17.24, a 30% increase over 2021 and produced year-end book value of $75 per share."
Mr. Schottenstein continued, "Our financial condition is excellent. We ended the year with record shareholders' equity reaching $2.1 billion, cash of $312 million, zero borrowings under our $650 million credit facility, and a homebuilding debt to capital of 25%. The rapid rise in interest rates over the past 9 months has materially impacted demand. On the other hand, favorable homebuyer demographics and a prolonged undersupply of available homes give us confidence in the housing market's long-term outlook. Though current conditions remain challenging, we feel very good about our position given the strength of our balance sheet, our low debt levels, our diverse product offerings and our well-located communities."
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 February 2024.
M/I Homes, Inc. is one of the nation's leading homebuilders of single-family homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Detroit, Michigan; Tampa, Sarasota, Fort Myers/Naples 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, 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2021, 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 | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
New contracts | 985 | 1,744 | 6,668 | 9,084 | |||
Average community count | 187 | 176 | 179 | 183 | |||
Cancellation rate | 30 % | 10 % | 14 % | 8 % | |||
Backlog units | 3,137 | 4,835 | 3,137 | 4,835 | |||
Backlog sales value | $ 1,698,169 | $ 2,366,873 | $ 1,698,169 | $ 2,366,873 | |||
Homes delivered | 2,384 | 2,316 | 8,366 | 8,638 | |||
Average home closing price | $ 492 | $ 443 | $ 479 | $ 420 | |||
Homebuilding revenue: | |||||||
Housing revenue | $ 1,172,515 | $ 1,026,082 | $ 4,010,427 | $ 3,630,469 | |||
Land revenue | 21,874 | 2,721 | 34,771 | 13,390 | |||
Total homebuilding revenue | $ 1,194,389 | $ 1,028,803 | $ 4,045,198 | $ 3,643,859 | |||
Financial services revenue | 22,611 | 22,949 | 86,195 | 102,028 | |||
Total revenue | $ 1,217,000 | $ 1,051,752 | $ 4,131,393 | $ 3,745,887 | |||
Cost of sales - operations | 924,117 | 808,150 | 3,069,199 | 2,836,972 | |||
Cost of sales - impairment | 18,352 | — | 18,352 | — | |||
Gross margin | $ 274,531 | $ 243,602 | $ 1,043,842 | $ 908,915 | |||
General and administrative expense | 52,565 | 48,306 | 214,811 | 192,009 | |||
Selling expense | 57,580 | 55,231 | 191,580 | 198,610 | |||
Operating income | $ 164,386 | $ 140,065 | $ 637,451 | $ 518,296 | |||
Other loss (income) | 11 | (1,901) | (6) | (2,046) | |||
Interest expense | 185 | 602 | 2,250 | 2,156 | |||
Loss on early extinguishment of debt | — | — | — | 9,072 | |||
Income before income taxes | $ 164,190 | $ 141,364 | $ 635,207 | $ 509,114 | |||
Provision for income taxes | 33,795 | 27,981 | 144,545 | 112,246 | |||
Net income | $ 130,395 | $ 113,383 | $ 490,662 | $ 396,868 | |||
Earnings per share: | |||||||
Basic | $ 4.75 | $ 3.93 | $ 17.60 | $ 13.64 | |||
Diluted | $ 4.65 | $ 3.83 | $ 17.24 | $ 13.28 | |||
Weighted average shares outstanding: | |||||||
Basic | 27,435 | 28,833 | 27,876 | 29,092 | |||
Diluted | 28,017 | 29,612 | 28,463 | 29,880 | |||
M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts) | |||
As of | |||
December 31, | |||
2022 | 2021 | ||
Assets: | |||
Total cash, cash equivalents and restricted cash | $ 311,542 | $ 236,368 | |
Mortgage loans held for sale | 242,539 | 275,655 | |
Inventory: | |||
Lots, land and land development | 1,294,779 | 1,125,738 | |
Land held for sale | 3,331 | 4,312 | |
Homes under construction | 1,366,804 | 1,187,341 | |
Other inventory | 163,688 | 135,043 | |
Total Inventory | $ 2,828,602 | $ 2,452,434 | |
Property and equipment - net | 37,446 | 37,648 | |
Operating lease right-of-use assets | 60,416 | 50,950 | |
Goodwill | 16,400 | 16,400 | |
Investments in joint venture arrangements | 51,554 | 57,121 | |
Deferred income tax asset | 18,019 | 10,251 | |
Other assets | 148,405 | 103,026 | |
Total Assets | $ 3,714,923 | $ 3,239,853 | |
Liabilities: | |||
Debt - Homebuilding Operations: | |||
Senior notes due 2028 - net | 396,105 | 395,331 | |
Senior notes due 2030 - net | 296,361 | 295,937 | |
Notes payable - other | — | 4,549 | |
Total Debt - Homebuilding Operations | $ 692,466 | $ 695,817 | |
Notes payable bank - financial services operations | 245,741 | 266,160 | |
Total Debt | $ 938,207 | $ 961,977 | |
Accounts payable | 228,597 | 244,505 | |
Operating lease liabilities | 61,310 | 51,497 | |
Other liabilities | 416,084 | 357,690 | |
Total Liabilities | $ 1,644,198 | $ 1,615,669 | |
Shareholders' Equity | 2,070,725 | 1,624,184 | |
Total Liabilities and Shareholders' Equity | $ 3,714,923 | $ 3,239,853 | |
Book value per common share | $ 75.46 | $ 56.99 | |
Homebuilding debt / capital ratio(1) | 25 % | 30 % | |
(1) | 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 | Twelve Months Ended | |||||||
December 31, | December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Cash provided by (used in) operating activities | $ | 198,220 | $ | 17,518 | $ | 184,071 | $ | (16,823) |
Cash used in investing activities | $ | (8,282) | $ | (19,799) | $ | (27,380) | $ | (51,722) |
Cash provided by (used in) financing activities | $ | 53,843 | $ | 17,492 | $ | (81,517) | $ | 44,103 |
Land/lot purchases | $ | 51,480 | $ | 156,307 | $ | 341,084 | $ | 630,120 |
Land development spending | $ | 146,937 | $ | 140,640 | $ | 496,177 | $ | 421,824 |
Land sale revenue | $ | 21,874 | $ | 2,721 | $ | 34,771 | $ | 13,390 |
Land sale gross profit | $ | 8,827 | $ | 707 | $ | 11,735 | $ | 3,228 |
Financial services pre-tax income | $ | 9,655 | $ | 10,775 | $ | 39,260 | $ | 58,379 |
M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results (1) (Dollars in thousands) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net income | $ 130,395 | $ 113,383 | $ 490,662 | $ 396,868 | |||
Add: | |||||||
Provision for income taxes | 33,795 | 27,981 | 144,545 | 112,246 | |||
Interest income | (2,034) | (677) | (4,403) | (1,950) | |||
Interest amortized to cost of sales | 8,724 | 7,974 | 30,270 | 33,829 | |||
Depreciation and amortization | 4,350 | 4,378 | 17,174 | 16,915 | |||
Non-cash charges | 20,526 | 2,360 | 27,139 | 10,437 | |||
Adjusted EBITDA | $ 195,756 | $ 155,399 | $ 705,387 | $ 568,345 | |||
M/I Homes, Inc. and Subsidiaries Non-GAAP Reconciliation (1) (Dollars and shares in thousands, except per share amounts) | |||||||
Three Months Ended | Twelve months ended | ||||||
December 31, | December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Income before income taxes | $ 164,190 | $ 141,364 | $ 635,207 | $ 509,114 | |||
Add: Impairment (2) | 18,352 | — | 18,352 | — | |||
Add: Loss on early extinguishment of debt (3) | — | — | — | 9,072 | |||
Adjusted income before income taxes | $ 182,542 | $ 141,364 | $ 653,559 | $ 518,186 | |||
Net income | $ 130,395 | $ 113,383 | $ 490,662 | $ 396,868 | |||
Add: Impairment - net of tax (2) | 13,948 | — | 13,948 | — | |||
Add: Loss on early extinguishment of debt (3) | — | — | — | 6,985 | |||
Adjusted net income | $ 144,343 | $ 113,383 | $ 504,610 | $ 403,853 | |||
Impairment - net of tax (2) | $ 13,948 | $ — | $ 13,948 | $ — | |||
Loss on early extinguishment of debt (3) | $ — | $ — | $ — | $ 6,985 | |||
Divided by: Diluted weighted average shares outstanding | 28,017 | 29,612 | 28,463 | 29,880 | |||
Diluted earnings per share related to impairment (2) | $ 0.50 | $ — | $ 0.50 | $ — | |||
Diluted earnings per share related to loss on early extinguishment of debt (3) | — | — | — | 0.23 | |||
Add: Diluted earnings per share | 4.65 | 3.83 | 17.24 | 13.28 | |||
Adjusted diluted earnings per share | $ 5.15 | $ 3.83 | $ 17.74 | $ 13.51 | |||
(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. |
(2) | Represents the related charges divided by diluted weighted average shares outstanding during the respective period as presented in the Summary Statement of Income. |
(3) | Represents loss on early extinguishment of debt related to the early redemption of our 2025 Senior Notes during the third quarter of 2021, consisting of a $7.1 million prepayment premium due to early redemption and $2.0 million for the write-off of unamortized debt issuance costs. |
M/I Homes, Inc. and Subsidiaries Selected Supplemental Financial and Operating Data | ||||||||||||
NEW CONTRACTS | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
% | % | |||||||||||
Region | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
Northern | 369 | 705 | (48) % | 2,747 | 3,667 | (25) % | ||||||
Southern | 616 | 1,039 | (41) % | 3,921 | 5,417 | (28) % | ||||||
Total | 985 | 1,744 | (44) % | 6,668 | 9,084 | (27) % | ||||||
HOMES DELIVERED | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
% | % | |||||||||||
Region | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
Northern | 971 | 954 | 2 % | 3,581 | 3,592 | — % | ||||||
Southern | 1,413 | 1,362 | 4 % | 4,785 | 5,046 | (5) % | ||||||
Total | 2,384 | 2,316 | 3 % | 8,366 | 8,638 | (3) % | ||||||
BACKLOG | ||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||
Dollars | Average | Dollars | Average | |||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | ||||||
Northern | 1,056 | $ 552 | $ 523,000 | 1,890 | $ 914 | $ 484,000 | ||||||
Southern | 2,081 | $ 1,146 | $ 551,000 | 2,945 | $ 1,453 | $ 493,000 | ||||||
Total | 3,137 | $ 1,698 | $ 541,000 | 4,835 | $ 2,367 | $ 490,000 | ||||||
LAND POSITION SUMMARY | ||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||
Northern | 7,972 | 7,406 | 15,378 | 7,729 | 7,160 | 14,889 | ||||||
Southern | 17,032 | 9,643 | 26,675 | 16,864 | 12,204 | 29,068 | ||||||
Total | 25,004 | 17,049 | 42,053 | 24,593 | 19,364 | 43,957 | ||||||
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SOURCE M/I Homes, Inc.