COLUMBUS, Ohio, April 24, 2019 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the three months ended March 31, 2019.

M/I Homes, Inc. Logo (PRNewsfoto/M/I Homes, Inc.)

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.