Press Release

M/I Homes Reports 2023 Second Quarter Results

Company Release - 7/26/2023 7:30 AM ET

COLUMBUS, Ohio, July 26, 2023 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and six months ended June 30, 2023.

2023 Second Quarter Highlights:

  • New contracts increased 21% to 2,197 contracts
  • Delivered 1,990 homes, down 7% from 2022's 2,133 homes delivered
  • Revenue of $1.0 billion, down 3% from 2022's second quarter record level
  • Pre-tax income of $155.4 million, down 15% from 2022's record of $182.2 million
  • Net income of $118.0 million ($4.12 per diluted share), down 14% from 2022's record of $136.8 million
  • Shareholders' equity reached a record of $2.3 billion, a 26% increase from a year ago, with book value per share of $83
  • Return on equity of 23%

For the second quarter of 2023, the Company reported pre-tax income of $155.4 million and net income of $118.0 million, or $4.12 per diluted share. This compares to pre-tax income of $182.2 million and net income of $136.8 million, or $4.79 per diluted share, for the second quarter of 2022. For the six months ended June 30, 2023, net income decreased 3% to $221.1 million, or $7.77 per diluted share, compared to $228.7 million, or $7.93 per diluted share, for the same period of 2022.

Homes delivered in 2023's second quarter decreased 7% to 1,990 homes. This compares to 2,133 homes delivered in 2022's second quarter. Homes delivered for the six months ended June 30, 2023 increased 1% to 3,997 from 2022's deliveries of 3,956. New contracts for the second quarter of 2023 increased 21% to 2,197 new contracts. For the first six months of 2023, new contracts increased 1% to 4,368 compared to 4,334 in 2022. Homes in backlog at June 30, 2023 had a total sales value of $1.8 billion, a 34% decrease from a year ago. Backlog units at June 30, 2023 decreased 33% to 3,508 homes, with an average sales price of $507,000. At June 30, 2022, backlog sales value was $2.7 billion, with backlog units of 5,213 and an average sales price of $519,000.  M/I Homes had 195 communities at June 30, 2023 compared to 168 communities at June 30, 2022. The Company's cancellation rate was 10% in the second quarter of 2023 compared to 11% in the second quarter of 2022.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had a very strong second quarter. Despite higher interest rates and uncertain economic conditions, we were very pleased with our new contracts, homes delivered, margins and income.  New contracts improved by 21% over last year; we delivered 1,990 homes and continued to improve our construction cycle time; gross margins were considerably better than expected at 26%; and pre-tax income of $155 million, though down from last year's record level, represented 15.3% of revenue.  These results produced a very solid 23% return on equity.  Our book value per share is now $83, an increase of 26% versus a year ago."  

Mr. Schottenstein continued, "Our financial condition remains strong. We ended the quarter with record shareholders' equity of $2.3 billion and available liquidity in excess of $1 billion.  We believe our industry will continue to benefit from strong fundamentals, including favorable demographic trends and an undersupply of housing. Looking ahead, we are well positioned to continue delivering strong results."

The Company will broadcast live its earnings conference call today at 10:30 A.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 2024.

M/I Homes, Inc. is one of the nation's leading homebuilders of single-family homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Detroit, Michigan; Tampa, Sarasota, Fort Myers/Naples 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, 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2022, 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,


June 30,


2023


2022


2023


2022

New contracts

2,197


1,820


4,368


4,334

Average community count

198


172


197


173

Cancellation rate

10 %


11 %


12 %


9 %

Backlog units

3,508


5,213


3,508


5,213

Backlog sales value

$  1,777,657


$  2,706,586


$  1,777,657


$  2,706,586

Homes delivered

1,990


2,133


3,997


3,956

Average home closing price

$           493


$           477


$           489


$           468









Homebuilding revenue:








   Housing revenue

$   980,198


$  1,017,906


$  1,955,144


$  1,851,069

   Land revenue

8,549


3,374


8,852


6,911

Total homebuilding revenue

$   988,747


$  1,021,280


$  1,963,996


$  1,857,980









Financial services revenue

25,266


19,374


50,547


43,485

Total revenue

$  1,014,013


$  1,040,654


$  2,014,543


$  1,901,465









Cost of sales - operations

755,829


756,367


1,521,733


1,404,069

Gross margin

$   258,184


$   284,287


$   492,810


$   497,396

General and administrative expense

55,654


55,216


106,614


103,999

Selling expense

51,871


46,206


100,951


87,627

Operating income

$   150,659


$   182,865


$   285,245


$   305,770

Other income

(28)


(1)


(35)


(17)

Interest (income) expense -  net

(4,670)


693


(6,059)


1,364

Income before income taxes

$   155,357


$   182,173


$   291,339


$   304,423

Provision for income taxes

37,356


45,335


70,272


75,746

Net income

$   118,001


$   136,838


$   221,067


$   228,677









Earnings per share:








Basic

$          4.25


$          4.88


$          7.98


$          8.10

Diluted

$          4.12


$          4.79


$          7.77


$          7.93









Weighted average shares outstanding:








Basic

27,792


28,041


27,698


28,231

Diluted

28,624


28,590


28,469


28,826

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)



As of


June 30,


2023


2022

Assets:




Total cash, cash equivalents and restricted cash (1)

$      668,287


$      188,755

Mortgage loans held for sale

190,845


194,450

Inventory:




Lots, land and land development

1,296,486


1,136,380

Land held for sale

15,183


10,524

Homes under construction

1,207,759


1,514,965

Other inventory

167,586


154,396

Total Inventory

$  2,687,014


$  2,816,265





Property and equipment - net

35,495


36,150

Investments in joint venture arrangements

41,988


55,625

Operating lease right-of-use assets

58,404


52,328

Goodwill

16,400


16,400

Deferred income tax asset

18,019


10,251

Other assets

145,297


123,100

Total Assets

$  3,861,749


$  3,493,324





Liabilities:




Debt - Homebuilding Operations:




Senior notes due 2028 - net

$      396,492


$      395,718

Senior notes due 2030 - net

296,613


296,109

 Notes payable - other


1,001

Total Debt - Homebuilding Operations

$      693,105


$      692,828





Notes payable bank - financial services operations

186,396


194,602

Total Debt

$      879,501


$      887,430





Accounts payable

264,656


329,384

Operating lease liabilities

59,461


53,058

Other liabilities

359,672


405,185

Total Liabilities

$  1,563,290


$  1,675,057





Shareholders' Equity

2,298,459


1,818,267

Total Liabilities and Shareholders' Equity

$  3,861,749


$  3,493,324





Book value per common share

$          82.73


$          65.50

Homebuilding debt to capital ratio (2)

23 %


28 %



(1)

Includes $0.9 million and $1.2 million of restricted cash and cash held in escrow for the quarters ended June 30, 2023 and 2022, 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,


2023


2022


2023


2022

Cash provided by operating activities

$        166,190


$            9,214


$       417,689


$         78,540

Cash provided by (used in) investing activities

$            1,991


$          (4,829)


$          (2,802)


$        (11,463)

Cash used in financing activities

$        (42,458)


$        (34,236)


$        (58,142)


$      (114,690)









Land/lot purchases

$          96,068


$        120,667


$       141,714


$       214,615

Land development spending

$        108,914


$        106,543


$       201,333


$       207,240

Land sale revenue

$            8,549


$            3,374


$           8,852


$           6,911

Land sale gross profit

$               892


$               591


$              889


$           1,558









Financial services pre-tax income

$          11,159


$            8,667


$         23,800


$         21,722

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results (1)

(Dollars in thousands)



Three Months Ended


Six Months Ended


June 30,


June 30,


2023


2022


2023


2022

Net income

$       118,001


$       136,838


$       221,067


$       228,677

Add:








Provision for income taxes

37,356


45,335


70,272


75,746

Interest (income) expense - net

(6,980)


(750)


(10,653)


(1,307)

Interest amortized to cost of sales

8,734


7,536


16,824


14,863

Depreciation and amortization

4,266


4,286


8,663


8,474

Non-cash charges

2,301


2,018


4,324


3,849

Adjusted EBITDA

$       163,678


$       195,263


$       310,497


$       330,302



(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.

 

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

2023


2022


Change



2023


2022


Change

Northern

949


722


31 %



1,777


1,912


(7) %

Southern

1,248


1,098


14 %



2,591


2,422


7 %

Total

2,197


1,820


21 %



4,368


4,334


1 %

 


HOMES DELIVERED


Three Months Ended



Six Months Ended


June 30,



June 30,






%







%

Region

2023


2022


Change



2023


2022


Change

Northern

783


1,000


(22) %



1,580


1,760


(10) %

Southern

1,207


1,133


7 %



2,417


2,196


10 %

Total

1,990


2,133


(7) %



3,997


3,956


1 %

 


BACKLOG


June 30, 2023



June 30, 2022




Dollars


Average





Dollars


Average

Region

Units


(millions)


Sales Price



Units


(millions)


Sales Price

Northern

1,253


$            631


$    504,000



2,042


$        1,036


$   507,000

Southern

2,255


$        1,147


$    509,000



3,171


$        1,670


$   527,000

Total

3,508


$        1,778


$    507,000



5,213


$        2,706


$   519,000

 


LAND POSITION SUMMARY


June 30, 2023



June 30, 2022


Lots

Lots Under




Lots

Lots Under


Region

Owned

Contract

Total



Owned

Contract

Total

Northern

7,545

7,199

14,744



7,601

7,764

15,365

Southern

15,893

10,695

26,588



17,196

15,285

32,481

Total

23,438

17,894

41,332



24,797

23,049

47,846

 

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SOURCE M/I Homes, Inc.