COLUMBUS, Ohio, July 28, 2021 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and six months ended June 30, 2021, and a $100 million share repurchase authorization.
2021 Second Quarter Highlights:
For the second quarter, pre-tax income increased 97% to a record $141.3 million and net income increased 97% to $107.6 million, or $3.58 per diluted share. This compares to pre-tax income of $71.7 million and net income of $54.5 million, or $1.89 per diluted share, for the second quarter of 2020. For the six months ended June 30, 2021, net income increased 123% to $192.5 million, or $6.43 per diluted share, compared to $86.3 million, or $2.98 per diluted share, for the same period of 2020.
Homes delivered in 2021's second quarter increased 23% to 2,258. This compares to 1,835 homes delivered in 2020's second quarter. Homes delivered for the six months ended June 30, 2021 increased 28% to 4,277 from 2020's deliveries of 3,330. New contracts for the second quarter of 2021 were 2,267 compared to 2,261 in 2020. For the first six months of 2021, new contracts increased 24% to 5,376 compared to 4,350 in 2020. Homes in backlog at June 30, 2021 had a total sales value of $2.5 billion, a 71% increase from a year ago. Backlog units at June 30, 2021 increased 49% to 5,488 homes, with an average sales price of $454,000. At June 30, 2020, backlog sales value was $1.5 billion, with backlog units of 3,691 and an average sales price of $396,000. M/I Homes had 175 active communities at June 30, 2021 compared to 220 communities at June 30, 2020. The Company's cancellation rate was 7% in the second quarter of 2021 compared to 14% in the second quarter of 2020.
The Company also announced that its Board of Directors has approved a $100 million share repurchase authorization, replacing its existing $50 million share repurchase authorization. From August 14, 2018 through July 27, 2021, the Company repurchased approximately 1.4 million shares for an aggregate purchase price of $32.8 million.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had a record-setting second quarter highlighted by a 97% increase in net income, a 23% increase in homes delivered, a 35% increase in revenue, and a return on equity of 27%. Our gross margins were very strong, improving 320 basis points over last year to 25.1% and our overhead expense ratio improved by 110 basis points to 10.4%. As a result, our pre-tax income percentage improved to 14.7% from 10.0% in last year's second quarter. We set all-time quarterly records in backlog units and sales value, with sales value rising to $2.5 billion – a 71% increase from a year-ago. Demand for new homes continues to be very strong. Despite our community count being down throughout the quarter, and significantly limiting sales in the majority of our communities, we were pleased to set a record for second quarter new contracts selling 2,267 homes.
Mr. Schottenstein continued, "We ended the quarter with record-high shareholders' equity of $1.5 billion, an increase of 34% from 2020's second quarter, book value of $50 per share, cash of $372 million, no borrowings on our $550 million credit facility, and a homebuilding debt to capital ratio of 31%. During the quarter, we also extended the maturity of our credit facility to July 2025 and raised our commitment amount to $550 million. In addition, our Board of Directors approved a new share repurchase authorization under which the Company may purchase up to $100 million of our common shares. This share repurchase authorization reflects the strength of our business and our commitment to creating long-term shareholder value. We have significant operating momentum and are poised to continue delivering strong results."
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 2022.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 133,000 homes. The Company's homes are marketed and sold primarily under the M/I Homes Brand. 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, the impact of the COVID-19 pandemic, 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 our Annual Report on Form 10-K for the year ended December 31, 2020, 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,
2021
2020
New contracts
2,267
2,261
5,376
4,350
Average community count
181
222
188
223
Cancellation rate
7
%
14
13
Backlog units
5,488
3,691
Backlog sales value
$
2,489,926
1,460,076
Homes delivered
2,258
1,835
4,277
3,330
Average home closing price
411
379
404
377
Homebuilding revenue:
Housing revenue
927,506
694,700
1,725,785
1,254,149
Land revenue
4,899
446
5,747
5,133
Total homebuilding revenue
932,405
695,146
1,731,532
1,259,282
Financial services revenue
28,635
19,048
58,284
32,515
Total revenue
961,040
714,194
1,789,816
1,291,797
Cost of sales - operations
719,672
557,791
1,346,257
1,018,715
Gross margin
241,368
156,403
443,559
273,082
General and administrative expense
49,078
41,037
94,283
74,884
Selling expense
50,576
41,127
96,265
77,955
Operating income
141,714
74,239
253,011
120,243
Equity in income from joint venture arrangements
(35)
(3)
(195)
(55)
Interest expense
452
2,515
1,628
7,215
Income before income taxes
141,297
71,727
251,578
113,083
Provision for income taxes
33,690
17,219
59,105
26,829
Net income
107,607
54,508
192,473
86,254
Earnings per share:
Basic
3.68
1.91
6.60
3.03
Diluted
3.58
1.89
6.43
2.98
Weighted average shares outstanding:
29,271
28,531
29,144
28,504
30,093
28,836
29,935
28,920
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of
Assets:
Total cash, cash equivalents and restricted cash (1)
371,806
94,023
Mortgage loans held for sale
172,760
163,536
Inventory:
Lots, land and land development
833,665
843,649
Land held for sale
3,840
2,385
Homes under construction
1,095,585
834,661
Other inventory
143,379
150,115
Total Inventory
2,076,469
1,830,810
Property and equipment - net
23,997
21,004
Investments in joint venture arrangements
32,833
45,144
Operating lease right-of-use assets
52,085
51,193
Goodwill
16,400
Deferred income tax asset
6,183
9,378
Other assets
108,879
96,220
Total Assets
2,861,412
2,327,708
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2025 - net
247,873
247,353
Senior notes due 2028 - net
394,944
394,174
Notes payable - other
4,126
7,041
Total Debt - Homebuilding Operations
646,943
648,568
Notes payable bank - financial services operations
167,119
134,184
Total Debt
814,062
782,752
Accounts payable
221,909
169,088
Operating lease liabilities
52,450
Other liabilities
306,447
230,270
Total Liabilities
1,394,868
1,233,303
Shareholders' Equity
1,466,544
1,094,405
Total Liabilities and Shareholders' Equity
Book value per common share
50.02
38.34
Homebuilding debt to capital ratio (2)
31
37
(1)
Includes $0.5 million of restricted cash and cash held in escrow for both the quarters ended June 30, 2021 and 2020.
(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.
Selected Supplemental Financial and Operating Data (unaudited)
(Dollars in thousands)
Cash provided by operating activities
98,633
107,053
173,801
82,826
Cash used in investing activities
(13,386)
(14,156)
(12,763)
(20,702)
Cash (used in) provided by financing activities
(6,341)
(20,058)
(50,042)
25,816
Land/lot purchases
150,271
84,284
242,629
159,978
Land development spending
86,425
71,924
157,620
133,922
Land sale revenue
Land sale gross profit (loss)
926
(5)
1,176
64
Financial services pre-tax income
17,976
10,837
37,669
16,468
Non-GAAP Financial Results (1)
Add:
Interest expense net of interest income
(543)
1,620
(268)
5,508
Interest amortized to cost of sales
9,438
7,754
17,643
14,324
Depreciation and amortization
4,124
4,200
8,234
8,424
Non-cash charges
2,141
1,175
4,243
4,098
Adjusted EBITDA
156,457
86,476
281,430
145,437
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.
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
Region
Change
Northern
884
922
(4)
2,190
1,775
23
Southern
1,383
1,339
3
3,186
2,575
24
Total
—
HOMES DELIVERED
961
734
1,762
1,322
33
1,297
1,101
18
2,008
25
28
BACKLOG
June 30, 2021
June 30, 2020
Dollars
Average
Units
(millions)
Sales Price
2,243
1,050
468,000
1,596
668
419,000
3,245
1,440
444,000
2,095
792
378,000
2,490
454,000
1,460
396,000
LAND POSITION SUMMARY
Lots
Lots Under
Owned
Contract
6,655
8,344
14,999
6,859
6,222
13,081
11,608
17,433
29,041
7,921
13,515
21,436
18,263
25,777
44,040
14,780
19,737
34,517
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SOURCE M/I Homes, Inc.