COLUMBUS, Ohio, Feb. 2, 2021 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2020.
2020 Fourth Quarter Results:
2020 Full Year Results:
For the fourth quarter of 2020, the Company reported record net income of $80.1 million, or $2.71 per diluted share. This compares to net income of $41.8 million, or $1.44 per diluted share, for the fourth quarter of 2019. Net income in the fourth quarter of 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share), while 2019's fourth quarter net income included $3.8 million of after-tax impairment charges ($0.13 per diluted share).
For the year ended December 31, 2020, the Company reported net income of $239.9 million, or $8.23 per diluted share, compared to net income of $127.6 million, or $4.48 per diluted share, in 2019. Net income in 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share). Net income in 2019 included $3.8 million of after-tax impairment charges ($0.13 per diluted share) and $0.5 million of after-tax acquisition-related charges ($0.02 per diluted share).
Homes delivered in 2020's fourth quarter reached an all-time quarterly record of 2,242, increasing 17% compared to 1,921 deliveries in 2019's fourth quarter. Homes delivered for the twelve months ended December 31, 2020 increased 22% to a record 7,709 from 2019's deliveries of 6,296. New contracts for 2020's fourth quarter increased 27% to a fourth quarter record of 2,128 from 1,677 new contracts in 2019's fourth quarter. For 2020, new contracts reached a record of 9,427, a 39% increase over 2019's new contracts of 6,773. Homes in backlog increased 64% at December 31, 2020 to 4,389 units, with an all-time record sales value of $1.84 billion, a 74% increase over last year, and the average sales price in backlog increased 6% to $419,000. At December 31, 2019, the sales value of the 2,671 homes in backlog was $1.1 billion, with an average sales price of $396,000. M/I Homes had 202 active communities at December 31, 2020 compared to 225 a year ago. The Company's cancellation rate was 10% in 2020's fourth quarter and 11% for the year.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are extremely pleased with our fourth quarter results, capping off a tremendous year for M/I Homes with strong growth and record- setting financial achievements across the board. We nearly doubled our net income from 2019 resulting in a very strong return on equity of 22%. We also achieved a record level of new contracts, homes delivered and backlog sales value. Our 2020 results include an 87% increase in pre-tax income and an 84% improvement in diluted earnings per share, along with a 74% increase in our backlog sales value to a record $1.84 billion and record earnings in our financial services operations. Our gross margins were very strong, reaching 23.0% in the fourth quarter and 22.2% for the year – a 260 basis point improvement over 2019, and our pre-tax income percentage for the year improved 360 basis points to 10.2%. A number of factors drove these strong results, including low mortgage rates, increased home demand from younger buyers and the current undersupply of homes available. In addition, we also benefited from strong community locations, well-designed product and superb execution across our markets."
"We ended the year with record-high shareholders' equity of $1.3 billion, an increase of 25% from 2019 and book value per share of $44," Mr. Schottenstein continued. "Our year-end cash balance was $261 million, with no borrowings on our $500 million credit facility and a homebuilding debt to capital ratio of 34%. Housing conditions are very good and, given the strength of our record backlog and strong competitive position across our markets, we are well positioned for another strong year in 2021."
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 February 2022.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 127,650 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, 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, 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
Twelve Months Ended
December 31,
2020
2019
New contracts
2,128
1,677
9,427
6,773
Average community count
205
223
215
218
Cancellation rate
10
%
13
11
Backlog units
4,389
2,671
Backlog sales value
$
1,836,907
1,057,528
Homes delivered
2,242
1,921
7,709
6,296
Average home closing price
389
377
381
384
Homebuilding revenue:
Housing revenue
872,814
724,790
2,939,962
2,420,348
Land revenue
8,061
1,577
19,170
24,619
Total homebuilding revenue
880,875
726,367
2,959,132
2,444,967
Financial services revenue
25,552
15,783
87,013
55,323
Total revenue
906,427
742,150
3,046,145
2,500,290
Cost of sales - operations
689,245
594,373
2,361,367
2,005,222
Cost of sales - acquisition-related charges
—
639
Cost of sales - impairment
8,435
5,002
Gross margin
208,747
142,775
676,343
489,427
General and administrative expense
53,784
41,706
177,547
147,954
Selling expense
52,041
45,234
179,535
154,384
Operating income
102,922
55,835
319,261
187,089
Equity in income from joint venture arrangements
(159)
(193)
(466)
(311)
Interest expense
1,230
4,749
9,684
21,375
Income before income taxes
101,851
51,279
310,043
166,025
Provision for income taxes
21,768
9,499
70,169
38,438
Net income
80,083
41,780
239,874
127,587
Earnings per share:
Basic
2.78
1.48
8.38
4.58
Diluted
2.71
1.44
8.23
4.48
Weighted average shares outstanding:
28,776
28,297
28,610
27,846
29,507
29,049
29,152
28,475
M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts)
As of
Assets:
Total cash, cash equivalents and restricted cash
260,810
6,083
Mortgage loans held for sale
234,293
155,244
Inventory:
Lots, land and land development
868,288
858,065
Land held for sale
4,623
5,670
Homes under construction
898,966
756,998
Other inventory
144,731
148,774
Total Inventory
1,916,608
1,769,507
Property and equipment - net
26,612
22,118
Operating lease right-of-use assets
52,291
18,415
Goodwill
16,400
Investments in joint venture arrangements
34,673
37,885
Deferred income tax asset
6,183
9,631
Other assets
95,175
70,311
Total Assets
2,643,045
2,105,594
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2021 - net
298,988
Senior notes due 2025 - net
247,613
247,092
Senior notes due 2028 - net
394,557
Notes payable - homebuilding
66,000
Notes payable - other
4,072
5,828
Total Debt - Homebuilding Operations
646,242
617,908
Notes payable bank - financial services operations
225,634
136,904
Total Debt
871,876
754,812
Accounts payable
185,669
125,026
Operating lease liabilities
52,474
Other liabilities
274,328
203,864
Total Liabilities
1,384,347
1,102,117
Shareholders' Equity
1,258,698
1,003,477
Total Liabilities and Shareholders' Equity
Book value per common share
43.68
35.35
Homebuilding debt / capital ratio(1)
34
38
(1)
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)
Cash (used in) provided by operating activities
(28,892)
64,654
168,334
65,631
Cash used in investing activities
(2,543)
(1,884)
(33,870)
(27,594)
Cash provided by (used in) financing activities
89,733
(90,138)
120,263
(53,483)
Land/lot purchases
148,126
73,619
414,950
332,057
Land development spending
95,732
82,839
318,336
268,347
Land sale revenue
Land sale gross profit
738
(32)
989
498
Financial services pre-tax income
14,821
6,420
50,468
23,699
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (1)
(Dollars in thousands)
Add:
Interest expense, net of interest income
333
3,727
6,168
17,515
Interest amortized to cost of sales
9,559
8,802
32,686
29,411
Depreciation and amortization
4,564
4,154
17,578
15,950
Non-cash charges
10,313
6,762
16,685
10,848
Adjusted EBITDA
126,620
74,724
383,160
239,749
Non-GAAP Reconciliation (1)
(Dollars and shares in thousands, except per share amounts)
Twelve months ended
Add: Impairment (2)
Add: Acquisition-related charges (3)
Add: Stucco-related charges (4)
860
Adjusted income before income taxes
111,146
56,281
319,338
171,666
Add: Impairment - net of tax (2)
6,411
3,802
Add: Acquisition-related charges - net of tax (3)
486
Add: Stucco-related charges - net of tax (4)
654
Adjusted net income
87,148
45,582
246,939
131,875
Impairment - net of tax (2)
Acquisition-related charges - net of tax (3)
Stucco-related charges - net of tax (4)
Divided by: Diluted weighted average shares outstanding
Diluted earnings per share related to impairment (2)
0.22
0.13
Diluted earnings per share related to acquisition-related charges (3)
0.02
Diluted earnings per share related to stucco-related charges (4)
Add: Diluted earnings per share
Adjusted diluted earnings per share
2.95
1.57
8.47
4.63
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 the related charges divided by diluted weighted average shares outstanding during the respective period as presented in the Summary Statement of Income.
(3)
Represents purchase accounting adjustments related to our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.
(4)
Represents charges for stucco-related repair costs taken in certain of our Florida communities.
Selected Supplemental Financial and Operating Data
NEW CONTRACTS
Region
Change
Northern
792
655
21
3,743
2,695
39
Southern
1,336
1,022
31
5,684
4,078
Total
27
HOMES DELIVERED
881
743
19
3,071
2,482
24
1,361
1,178
16
4,638
3,814
22
17
BACKLOG
December 31, 2020
December 31, 2019
Dollars
Average
Units
(millions)
Sales Price
1,815
436,000
1,143
495
433,000
2,574
1,045
406,000
1,528
563
368,000
1,837
419,000
1,058
396,000
LAND POSITION SUMMARY
Lots
Lots Under
Owned
Contract
6,786
7,801
14,587
6,857
6,207
13,064
10,013
14,909
24,922
7,809
12,386
20,195
16,799
22,710
39,509
14,666
18,593
33,259
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SOURCE M/I Homes, Inc.