COLUMBUS, Ohio, Oct. 27, 2021 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2021.
2021 Third Quarter Highlights:
For the third quarter, pre-tax income increased 22% to a record $116.2 million and third quarter net income increased 24% to $91.0 million, or $3.03 per diluted share. This compares to pre-tax income of $95.1 million and net income of $73.5 million, or $2.51 per diluted share, for the third quarter of 2020. The third quarter of 2021 includes a $9.1 million pre-tax loss on early extinguishment of debt, or $0.24 per diluted share. For the nine months ended September 30, 2021, net income increased 77% to $283.5 million, or $9.46 per diluted share, compared to $159.8 million, or $5.50 per diluted share, for the same period of 2020.
Homes delivered in 2021's third quarter decreased 4% to 2,045, compared to 2,137 homes delivered in 2020's third quarter. Homes delivered for the nine months ended September 30, 2021 increased 16% to 6,322 from 5,467 deliveries in the first nine months of 2020. New contracts for the third quarter of 2021 were 1,964, a 33% decrease from 2,949 new contracts in 2020. For the first nine months of 2021, new contracts increased 1% to 7,340 compared to 7,299 in the first nine months of 2020. Homes in backlog at September 30, 2021 had a record total sales value of $2.5 billion, a 40% increase from a year ago. Backlog units at September 30, 2021 increased 20% to a third quarter record 5,407 homes, with an all-time record average sales price of $471,000. At September 30, 2020, backlog sales value was $1.8 billion, with backlog units of 4,503 and an average sales price of $404,000. M/I Homes had 176 communities at September 30, 2021 compared to 207 communities at September 30, 2020. The Company's cancellation rate was 8% and 10% in the third quarter of 2021 and 2020, respectively.
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased with our third quarter performance highlighted by a number of records including a 24% increase in net income and continued strong returns. We achieved these record third quarter results despite 15% fewer communities than a year ago and significant supply chain disruptions. We increased our revenue by 7% to a third quarter record $904 million, increased pre-tax income by 32% to $125 million, excluding a charge for early extinguishment of debt, and improved our operating margin by 250 basis points to 13.8%, which aided us in producing a strong return on equity of 27%. Our gross margins improved by 160 basis points over last year to 24.5%, and our overhead expense ratio improved by 90 basis points to 10.7%. Despite our reduced community count and limiting sales in a majority of our communities, our third quarter sales pace was 3.7 homes per month. As a result, we set an all-time quarterly record in backlog sales value of $2.5 billion – a 40% increase from a year-ago."
Mr. Schottenstein continued, "We are also very excited to announce that we are commencing operations in the Nashville market, one of the nation's most dynamic and fastest growing housing markets. We have been looking at Nashville for several years and believe it will be a very successful operation for us."
Mr. Schottenstein concluded, "We ended the quarter with record-high shareholders' equity of $1.5 billion, an increase of 31% from 2020's third quarter, equating to book value of $53 per share. Our cash position at quarter end was $221 million, with no borrowings on our $550 million credit facility and a homebuilding debt to capital ratio of 31%. During the quarter, we also repurchased $16 million of our common shares and extended our senior debt maturities by issuing $300 million of 3.95% senior notes that mature in 2030, replacing our 2025 senior notes. Overall, we are on track for a solid finish to 2021 and are well positioned for 2022 with a healthy balance sheet, a solid land pipeline, a strong backlog and a significant number of new communities opening in 2022."
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 October 2022.
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 135,000 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; Charlotte and Raleigh, North Carolina and Nashville, Tennessee.
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
Nine Months Ended
September 30,
2021
2020
New contracts
1,964
2,949
7,340
7,299
Average community count
176
214
185
219
Cancellation rate
8
%
10
7
12
Backlog units
5,407
4,503
Backlog sales value
$
2,545,964
1,819,231
Homes delivered
2,045
2,137
6,322
5,467
Average home closing price
430
380
412
378
Homebuilding revenue:
Housing revenue
878,602
812,999
2,604,387
2,067,148
Land revenue
4,922
5,976
10,669
11,109
Total homebuilding revenue
883,524
818,975
2,615,056
2,078,257
Financial services revenue
20,795
28,946
79,079
61,461
Total revenue
904,319
847,921
2,694,135
2,139,718
Cost of sales - operations
682,565
653,407
2,028,822
1,672,122
Gross margin
221,754
194,514
665,313
467,596
General and administrative expense
49,420
48,879
143,703
123,763
Selling expense
47,114
49,539
143,379
127,494
Operating income
125,220
96,096
378,231
216,339
Equity in loss (income) from joint venture arrangements
50
(252)
(145)
(307)
Interest (income) expense
(74)
1,239
1,554
8,454
Loss on early extinguishment of debt
9,072
—
Income before income taxes
116,172
95,109
367,750
208,192
Provision for income taxes
25,160
21,572
84,265
48,401
Net income
91,012
73,537
283,485
159,791
Earnings per share:
Basic
3.11
2.57
9.72
5.60
Diluted
3.03
2.51
9.46
5.50
Weighted average shares outstanding:
29,250
28,653
29,179
28,554
30,028
29,286
29,966
29,030
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)
221,157
202,512
Mortgage loans held for sale
215,857
140,046
Inventory:
Lots, land and land development
1,022,434
840,637
Land held for sale
3,620
4,357
Homes under construction
1,190,921
863,603
Other inventory
136,168
134,812
Total Inventory
2,353,143
1,843,409
Property and equipment - net
23,644
25,696
Investments in joint venture arrangements
42,466
34,038
Operating lease right-of-use assets
51,181
52,574
Goodwill
16,400
Deferred income tax asset
6,183
9,205
Other assets
116,569
96,675
Total Assets
3,046,600
2,420,555
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2025 - net
247,483
Senior notes due 2028 - net
395,137
394,363
Senior notes due 2030 - net
296,002
Notes payable - other
5,537
5,325
Total Debt - Homebuilding Operations
696,676
647,171
Notes payable bank - financial services operations
211,281
136,119
Total Debt
907,957
783,290
Accounts payable
227,311
176,581
Operating lease liabilities
51,637
52,666
Other liabilities
315,228
233,278
Total Liabilities
1,502,133
1,245,815
Shareholders' Equity
1,544,467
1,174,740
Total Liabilities and Shareholders' Equity
Book value per common share
53.08
40.87
Homebuilding debt to capital ratio (2)
31
36
(1)
Includes $0.2 million of restricted cash and cash held in escrow for both the quarters ended September 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 (used in) provided by operating activities
(208,142)
114,400
(34,341)
197,226
Cash used in investing activities
(19,160)
(10,625)
(31,923)
(31,327)
Cash provided by financing activities
76,653
4,714
26,611
30,530
Land/lot purchases
231,184
106,846
473,813
266,824
Land development spending
123,564
88,682
281,184
222,604
Land sale revenue
Land sale gross profit
1,345
187
2,521
251
Financial services pre-tax income
9,935
19,179
47,604
35,647
Non-GAAP Financial Results (1)
Add:
Interest (income) expense-net of interest income
(1,005)
327
(1,273)
5,835
Interest amortized to cost of sales
8,212
8,803
25,855
23,127
Depreciation and amortization
4,303
4,590
12,537
13,014
Non-cash charges
3,834
2,274
8,077
6,372
Adjusted EBITDA
131,516
111,103
412,946
256,540
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
772
1,176
(34)
2,962
2,951
Southern
1,192
1,773
(33)
4,378
4,348
1
Total
HOMES DELIVERED
876
868
2,638
2,190
20
1,169
1,269
(8)
3,684
3,277
(4)
16
BACKLOG
September 30, 2021
September 30, 2020
Dollars
Average
Units
(millions)
Sales Price
2,139
1,015
475,000
1,904
814
427,000
3,268
1,531
468,000
2,599
1,005
387,000
2,546
471,000
1,819
404,000
LAND POSITION SUMMARY
Lots
Lots Under
Owned
Contract
7,353
7,078
14,431
6,858
6,892
13,750
15,311
13,253
28,564
8,203
17,640
25,843
22,664
20,331
42,995
15,061
24,532
39,593
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SOURCE M/I Homes, Inc.