Attached files
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| 8-K - 8-K 2ND QUARTER EARNINGS PRESS RELEASE 7-29-2020 - M/I HOMES, INC. | mho-20200729.htm |
Exhibit 99.1
M/I Homes Reports
2020 Second Quarter Results
Columbus, Ohio (July 29, 2020) - 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.
Contact M/I Homes, Inc.
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
Ann Marie W. Hunker, Vice President, 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 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 | ||||||||||||||||||||