M/I Homes Reports 2020 Second Quarter Results
COLUMBUS, Ohio, July 29, 2020 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and six months ended June 30, 2020.
2020 Second Quarter Highlights:
-- New contracts increased 31% to 2,261 contracts, an all-time quarterly
record
-- Backlog units increased 30% to 3,691, an all-time quarterly record
-- Backlog sales value reached $1.46 billion, an all-time quarterly record
-- Homes delivered increased 19% to a second quarter record of 1,835 homes
-- Revenue increased 15% to a second quarter record of $714 million
-- Pre-tax income increased 74% to $71.7 million, an all-time quarterly
record
-- Record second quarter net income of $54.5 million ($1.89 per diluted
share), an 80% increase compared to $30.2 million ($1.08 per diluted
share) in 2019
-- Shareholders' equity reached an all-time record of $1.1 billion, a 21%
increase from a year ago, with book value per share of $38.34
-- Homebuilding debt to capital of 37% compared to 45% at June 30, 2019
For the second quarter of 2020, pre-tax income increased 74% to $71.7 million, an all-time quarterly record, and second quarter record net income increased 80% to $54.5 million, or $1.89 per diluted share. This compares to pre-tax income of $41.2 million and net income of $30.2 million, or $1.08 per diluted share, for the second quarter of 2019. For the six months ended June 30, 2020, net income increased 80% to a record $86.3 million, or $2.98 per diluted share, compared to $48.0 million, or $1.71 per diluted share, for the same period of 2019.
Homes delivered in 2020's second quarter increased 19% to a second quarter record of 1,835. This compares to 1,538 homes delivered in 2019's second quarter. Homes delivered for the six months ended June 30, 2020 increased 22% to a record 3,330 from 2019's deliveries of 2,724. New contracts for the second quarter of 2020 were an all-time quarterly record 2,261, a 31% increase over 2019's 1,731 new contracts. For the first six months of 2020, new contracts increased 29% to a record 4,350 compared to 3,375 in 2019. Homes in backlog at June 30, 2020 had a total sales value of $1.46 billion, a 30% increase from a year ago and an all-time quarterly record. Backlog units at June 30, 2020 increased 30% to an all-time quarterly record 3,691 homes, with an average sales price of $396,000. At June 30, 2019, backlog sales value was $1.12 billion, with backlog units of 2,845 and an average sales price of $395,000. M/I Homes had 220 active communities at June 30, 2020 and at June 30, 2019. The Company's cancellation rate was 14% in the second quarter of 2020 and 2019.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "The first half of 2020 has been a time of significant economic and social instability in our country and globally, precipitated by an unprecedented health crisis. Notwithstanding these difficult and challenging conditions, we are pleased to report a strong, record-setting quarter. We began the quarter with a focus on adapting our operations and business to safeguard our employees, customers, and work environment, while also continuing to sell and build quality homes. In late March and early April, our new contracts declined substantially; conditions, however began to improve in the last half of April and then rebounded significantly in May and June. As a result, we ended the quarter with an all-time quarterly record 2,261 new contracts, a 31% increase over last year. Despite the challenges presented by the pandemic, we were able to maintain our construction schedule in most of our markets and delivered a second quarter record 1,835 homes, a 19% increase over 2019. Combined with a higher gross margin of 21.9% in the quarter, 270 basis points better than 2019's second quarter, and a 30 basis point decline in our overhead expense ratio, our increase in deliveries led to an all-time quarterly record in pre-tax income of $71.7 million, a 74% increase over 2019's second quarter. We also achieved an all time-quarterly record backlog in both units and sales value, with each up 30% or more compared to June 2019."
Mr. Schottenstein continued, "Clearly, economic conditions remain uncertain due to the on-going impact of COVID-19; accordingly, we will continue to monitor conditions closely. We ended the quarter with shareholders' equity of $1.1 billion, a cash balance of $94 million and no borrowings on our $500 million credit facility. We could not be more pleased with the solid execution and outstanding effort of our teams, who have managed to continue to meet the needs and expectations of our customers in achieving their goals of living in a safe and comfortable home. Our strong results position us to have an outstanding year."
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 2021.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 122,600 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 are also currently sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota market. 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; and Charlotte and Raleigh, North Carolina.
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, including the impact of COVID-19, interest rates, availability of resources, competition, market concentration, land development activities, integration of acquisitions, 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, 2019, 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
Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
New contracts 2,261 1,731 4,350 3,375
Average community
count 222 217 223 214
Cancellation rate 14
% 14
% 13
% 13
%
Backlog units 3,691 2,845 3,691 2,845
Backlog sales value $
1,460,076 $
1,124,756 $
1,460,076 $
1,124,756
Homes delivered 1,835 1,538 3,330 2,724
Average home closing
price $
379 $
389 $
377 $
391
Homebuilding revenue:
Housing revenue $
694,700 $
597,870 $
1,254,149 $
1,064,178
Land revenue 446 11,513 5,133 14,531
Total homebuilding
revenue $
695,146 $
609,383 $
1,259,282 $
1,078,709
Financial services
revenue 19,048 14,303 32,515 26,086
Total revenue $
714,194 $
623,686 $
1,291,797 $
1,104,795
Cost of sales -
operations 557,791 503,728 1,018,715 891,767
Cost of sales -
purchase accounting
adjustments - 129 557
Gross margin $
156,403 $
119,829 $
273,082 $
212,471
General and
administrative
expense 41,037 36,164 74,884 66,863
Selling expense 41,127 37,452 77,955 69,003
Operating income $
74,239 $
46,213 $
120,243 $
76,605
Equity in income
from joint venture
arrangements (3) (187) (55) (66)
Interest expense 2,515 5,197 7,215 11,989
---
Income before income
taxes $
71,727 $
41,203 $
113,083 $
64,682
Provision for income
taxes 17,219 10,957 26,829 16,713
Net income $
54,508 $
30,246 $
86,254 $
47,969
Earnings per share:
Basic $
1.91 $
1.10 $
3.03 $
1.74
Diluted $
1.89 $
1.08 $
2.98 $
1.71
Weighted average shares outstanding:
Basic 28,531 27,599 28,504 27,549
Diluted 28,836 28,090 28,920 28,027
---
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
June 30,
2020 2019
Assets:
Total cash, cash
equivalents and
restricted cash (1) $
94,023 $
20,393
Mortgage loans held
for sale 163,536 123,909
Inventory:
Lots, land and land
development 843,649 804,453
Land held for sale 2,385 13,018
Homes under
construction 834,661 796,479
Other inventory 150,115 149,529
Total Inventory $
1,830,810 $
1,763,479
Property and
equipment -net 21,004 28,094
Investments in joint
venture arrangements 45,144 41,344
Operating lease
right-of-use
assets 51,193 19,397
Goodwill 16,400 16,400
Deferred income tax
asset 9,378 12,594
Other assets 96,220 63,596
Total Assets $
2,327,708 $
2,089,206
Liabilities:
Debt -Homebuilding Operations:
Senior notes due 2021
-net
$ $
298,436
Senior notes due 2025
-net 247,353 246,832
Senior notes due 2028
-net 394,174
Notes payable -
homebuilding - 174,300
Notes payable -other 7,041 5,092
Total Debt -
Homebuilding
Operations $
648,568 $
724,660
Notes payable bank -
financial services
operations 134,184 104,003
Total Debt $
782,752 $
828,663
Accounts payable 169,088 154,070
Operating lease
liabilities 51,193 19,397
Other liabilities 230,270 182,836
Total Liabilities $
1,233,303 $
1,184,966
Shareholders' Equity 1,094,405 904,240
Total Liabilities and
Shareholders' Equity $
2,327,708 $
2,089,206
Book value per common
share $
38.34 $
32.74
Homebuilding debt to
capital ratio (2) 37
% 45
%
--- ---
(1) Includes $0.5 million and $1.0
million of restricted cash and
cash held in escrow for the
quarters ended June 30, 2020 and
2019, 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 (unaudited)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Cash provided by
operating
activities $
107,053 $
33,250 $
82,826 $
10,617
Cash used in
investing
activities $
(14,156) $
(10,229) $
(20,702) $
(16,730)
Cash (used in)
provided by
financing
activities $
(20,058) $
(44,559) $
25,816 $
4,977
Land/lot
purchases $
84,284 $
85,918 $
159,978 $
166,342
Land development
spending $
71,924 $
62,363 $
133,922 $
116,728
Land sale revenue $
446 $
11,513 $
5,133 $
14,531
Land sale gross
(loss) profit $
(5) $
400 $
64 $
455
Financial
services pre-
tax income $
10,837 $
6,704 $
16,468 $
11,656
---
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results
(1)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Net income $
54,508 $
30,246 $
86,254 $
47,969
Add:
Provision for income
taxes 17,219 10,957 26,829 16,713
Interest expense net
of interest income 1,620 4,225 5,508 10,163
Interest amortized to
cost of sales 7,754 7,380 14,324 12,773
Depreciation and
amortization 4,200 3,890 8,424 7,707
Non-cash charges 1,175 1,682 4,098 2,594
Adjusted EBITDA $
86,476 $
58,380 $
145,437 $
97,919
===
M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation
(1)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Income before income
taxes $
71,727 $
41,203 $
113,083 $
64,682
Add: Purchase
accounting
adjustments (2) - 129 557
---
Adjusted income
before income taxes $
71,727 $
41,332 $
113,083 $
65,239
Net income $
54,508 $
30,246 $
86,254 $
47,969
Add: Purchase
accounting
adjustments -net
of tax (2) - 95 412
---
Adjusted net income $
54,508 $
30,341 $
86,254 $
48,381
Purchase accounting
adjustments -net
of tax (2)
$ $
95
$ $
412
Divided by: Diluted
weighted average
shares outstanding 28,836 28,090 28,920 28,027
Diluted earnings per
share related to
purchase accounting
adjustments (2)
$
$
$ $
0.01
Add: Diluted
earnings per share 1.89 1.08 2.98 1.71
Adjusted diluted
earnings per share $
1.89 $
1.08 $
2.98 $
1.72
===
(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 purchase accounting
adjustments related to our
acquisition of Pinnacle Homes in
Detroit, Michigan on March 1,
2018.
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 2020 2019 Change 2020 2019 Change
Northern 922 703 31% 1,775 1,405 26%
Southern 1,339 1,028 30% 2,575 1,970 31%
Total 2,261 1,731 31% 4,350 3,375 29%
=== ===
HOMES DELIVERED
Three Months Ended
Six Months Ended
June 30,
June 30,
% %
Region 2020 2019 Change 2020 2019 Change
Northern 734 614 20% 1,322 1,088 22%
Southern 1,101 924 19% 2,008 1,636 23%
Total 1,835 1,538 19% 3,330 2,724 22%
=== ===
BACKLOG
June 30, 2020
June 30, 2019
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
Northern 1,596 $
668 $
419,000 1,247 $
528 $
424,000
Southern 2,095 $
792 $
378,000 1,598 $
596 $
373,000
Total 3,691 $
1,460 $
396,000 2,845 $
1,125 $
395,000
=== ===
LAND POSITION SUMMARY
June 30, 2020
June 30, 2019
---
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
Northern 6,859 6,222 13,081 6,456 5,471 11,927
Southern 7,921 13,515 21,436 8,403 8,746 17,149
Total 14,780 19,737 34,517 14,859 14,217 29,076
=== ===
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SOURCE M/I Homes, Inc.
