M/I Homes Reports 2019 First Quarter Results
COLUMBUS, Ohio, April 24, 2019 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the three months ended March 31, 2019.
2019 First Quarter Highlights:
-- Revenue increased 10% to a first quarter record of $481 million
-- Homes delivered increased 6% to a first quarter record of 1,186 homes
-- Pre-tax income of $23.5 million compared to $23.9 million in 2018's
first quarter
-- Net income of $17.7 million ($0.63 per diluted share) compared to $18.1
million ($0.60 per diluted share) in 2018
-- New contracts decreased 5% to 1,644 contracts
-- Backlog sales value decreased 2%, and backlog units decreased 3% to
2,652 homes
For the first quarter of 2019, the Company reported pre-tax income of $23.5 million and net income of $17.7 million, or $0.63 per diluted share. This compares to pre-tax income of $23.9 million and net income of $18.1 million, or $0.60 per diluted share, for the first quarter of 2018. Pre-tax income in the first quarter of 2019 included $0.4 million of acquisition-related expense, compared with $2.6 million in the first quarter of 2018.
Homes delivered in 2019's first quarter increased 6% to a first quarter record of 1,186. This compares to 1,122 homes delivered in 2018's first quarter. New contracts for the first quarter of 2019 decreased 5% to 1,644 from the all-time quarterly record of 1,739 contracts achieved in 2018's first quarter. Homes in backlog at March 31, 2019 had a total sales value of $1.07 billion, a 2% decrease from a year ago, and backlog units decreased 3% to 2,652, with an average sales price of $403,000. At March 31, 2018, backlog sales value was $1.09 billion, with backlog units of 2,744 and an average sales price of $398,000. M/I Homes had 214 active communities at March 31, 2019, an increase of 4% over our 205 communities at March 31, 2018. The Company's cancellation rate was 12% in the first quarter of 2019 and 2018.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had solid first quarter results considering the choppy market conditions experienced during the latter part of 2018 and leading into 2019. Though our first quarter new contracts declined by 5%, they represented the second highest quarterly sales in Company history. In addition, we were very pleased with our 6% increase in homes delivered to a first quarter record 1,186 homes; and our revenue increased by 10% to a first quarter record $481 million. We also continue to make progress in managing our overhead expense ratio which declined 30 basis points when compared to 2018's first quarter."
Mr. Schottenstein continued, "With a lower share count, our diluted earnings per share improved 5% from 2018's first quarter. We ended the quarter with shareholders' equity of $871 million and a homebuilding debt to capital ratio of 47%. Looking ahead, with our sales backlog of $1.1 billion, and planned new community openings, we are positioned to have a solid 2019."
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 April 2020.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 113,100 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 are sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota market and Pinnacle Homes in the Detroit, Michigan 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; 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," "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, 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2018, 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
March 31,
2019 2018
New contracts 1,644 1,739
Average community
count 212 197
Cancellation rate 12
% 12
%
Backlog units 2,652 2,744
Backlog sales value $
1,070,074 $
1,091,194
Homes delivered 1,186 1,122
Average home closing
price $
393 $
373
---
Homebuilding revenue:
Housing revenue $
466,308 $
418,424
Land revenue 3,018 4,407
---
Total homebuilding
revenue $
469,326 $
422,831
Financial services
revenue 11,783 15,026
---
Total revenue $
481,109 $
437,857
---
Cost of sales -
operations 388,039 347,806
Cost of sales -
purchase accounting
adjustments 428 896
---
Gross margin $
92,642 $
89,155
General and
administrative
expense 30,699 27,951
Selling expense 31,551 30,063
---
Operating income $
30,392 $
31,141
Acquisition and
integration costs - 1,700
Equity in loss
(income) from joint
venture
arrangements 121 (310)
Interest expense 6,792 5,878
Income before income
taxes $
23,479 $
23,873
Provision for income
taxes 5,756 5,810
---
Net income $
17,723 $
18,063
Earnings per share:
Basic $
0.64 $
0.64
Diluted $
0.63 $
0.60
---
Weighted average shares outstanding:
Basic 27,498 28,124
Diluted 27,970 30,544
---
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
March 31,
2019 2018
---
Assets:
Total cash, cash
equivalents and
restricted cash(1) $
41,931 $
53,577
Mortgage loans held
for sale 119,665 110,612
Inventory:
Lots, land and land
development 807,324 752,921
Land held for sale 8,732 3,571
Homes under
construction 760,756 678,122
Other inventory 153,976 145,730
---
Total Inventory $
1,730,788 $
1,580,344
---
Property and
equipment -net 28,392 25,872
Investments in joint
venture arrangements 40,736 22,066
Operating lease
right-of-use
assets 20,603
Goodwill 16,400 16,400
Deferred income tax
asset 13,146 18,104
Other assets 60,117 67,398
---
Total Assets $
2,071,778 $
1,894,373
===
Liabilities:
Debt -Homebuilding Operations:
Senior notes due 2021
-net $
298,160 $
297,056
Senior notes due 2025
-net 246,702 246,181
Notes payable -
homebuilding 218,800 162,300
Notes payable -other 5,937 10,011
---
Total Debt -
Homebuilding
Operations $
769,599 $
715,548
Notes payable bank -
financial services
operations 104,026 102,711
---
Total Debt $
873,625 $
818,259
Accounts payable 132,935 118,839
Operating lease
liabilities 20,603
Other liabilities 173,153 170,910
---
Total Liabilities $
1,200,316 $
1,108,008
---
Shareholders' Equity 871,462 786,365
---
Total Liabilities and
Shareholders' Equity $
2,071,778 $
1,894,373
===
Book value per common
share $
31.61 $
27.52
Homebuilding debt /
capital ratio(2) 47
% 48
%
--- ---
(1) Includes $1.1 million and $7.7
million of restricted cash and
cash held in escrow for the
quarters ended March 31, 2019 and
2018, 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
March 31,
2019 2018
---
Cash used in
operating
activities $
(22,633) $
(32,414)
Cash used in
investing
activities $
(6,501) $
(96,448)
Cash provided by
financing
activities $
49,536 $
30,736
Land/lot
purchases $
80,424 $
85,045
Land development
spending $
54,365 $
41,654
Land sale revenue $
3,018 $
4,407
Land sale gross
profit $
55 $
404
Financial
services pre-
tax income $
4,952 $
8,771
---
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results
(1)
(Dollars in thousands)
Three Months Ended
March 31,
2019 2018
---
Net
income $
17,723 $
18,063
Add:
Provision
for
income
taxes 5,756 5,810
Interest
expense
net
of
interest
income 5,938 5,156
Interest
amortized
to
cost
of
sales 5,393 4,864
Depreciation
and
amortization 3,817 3,649
Non-
cash
charges 912 1,039
---
Adjusted
EBITDA $
39,539 $
38,581
===
M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation
(1)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended
March 31,
2019 2018
---
Income before
income taxes $
23,479 $
23,873
Add: Purchase
accounting
adjustments (2) 428 896
Add: Acquisition
and integration
costs (3) - 1,700
Adjusted income
before income
taxes $
23,907 $
26,469
===
Net income $
17,723 $
18,063
Add: Purchase
accounting
adjustments -
net of tax (2) 317 663
Add: Acquisition
and integrations
costs -net of
tax (3) - 1,258
Adjusted net
income $
18,040 $
19,984
===
Purchase
accounting
adjustments -
net of tax (2) $
317 $
663
Acquisition and
integration
costs -net of
tax (3)
$ $
1,258
Divided by:
Diluted weighted
average shares
outstanding 27,970 30,544
---
Diluted earnings
per share
related to
purchase
accounting
adjustments (2) $
0.01 $
0.02
Diluted earnings
per share
related to
acquisition and
integration
costs (3)
$ $
0.04
Add: Diluted
earnings per
share 0.63 0.60
---
Adjusted diluted
earnings per
share $
0.64 $
0.66
===
(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.
(3) Represents costs which include, but
are not limited to, legal fees and
expenses, travel and communication
expenses, cost of appraisals,
accounting fees and expenses, and
miscellaneous expenses related to
our acquisition of Pinnacle Homes.
As these costs are not eligible for
capitalization as initial direct
costs, such amounts are expensed as
incurred.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
---
Three Months Ended
March 31,
%
Region 2019 2018 Change
---
Midwest 702 698 1
%
Southern 727 797 (9)
%
Mid-Atlantic 215 244 (12)
%
---
Total 1,644 1,739 (5)
%
===
HOMES DELIVERED
---
Three Months Ended
March 31,
%
Region 2019 2018 Change
---
Midwest 474 411 15
%
Southern 577 541 7
%
Mid-Atlantic 135 170 (21)
%
---
Total 1,186 1,122 6
%
===
BACKLOG
---
March 31, 2019
March 31, 2018
---
Dollars Average Dollars Average
Region Units (millions) Sales Price Units (millions) Sales Price
--- ---
Midwest 1,158 $
498 $
430,000 1,228 $
519 $
423,000
Southern 1,176 $
434 $
369,000 1,164 $
425 $
365,000
Mid-Atlantic 318 $
138 $
433,000 352 $
148 $
419,000
---
Total 2,652 $
1,070 $
403,000 2,744 $
1,091 $
398,000
===
LAND POSITION SUMMARY
---
March 31, 2019
March 31, 2018
---
Lots Lots Under Lots Lots Under
Region Owned Contract Total Owned Contract Total
--- ---
Midwest 5,889 6,034 11,923 5,138 7,565 12,703
Southern 6,543 4,965 11,508 6,092 7,526 13,618
Mid-Atlantic 2,078 2,470 4,548 1,668 2,809 4,477
---
Total 14,510 13,469 27,979 12,898 17,900 30,798
===
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SOURCE M/I Homes, Inc.
