Exhibit 99.1
M/I Homes Reports
2016 Third Quarter Results
Columbus, Ohio (October 27, 2016) - M/I Homes, Inc. (NYSE:MHO) announced results for the three months and nine months ended September 30, 2016.
2016 Third Quarter Highlights:
| |
| • | Net income of $10.9 million ($0.35 per diluted share) which includes a $14.5 million pre-tax charge |
($0.30 per diluted share) for stucco-related repairs
| |
| • | Net income, excluding the stucco-related charge, increased 28% to $19.9 million or $0.65 per diluted share |
| |
| • | Revenue increased 22% to a record $442 million |
| |
| • | New contracts increased 10%; community count up 5% |
| |
| • | Homes delivered increased 15%; average closing price increased 5% |
| |
| • | Backlog sales value increased 25% to $821 million; backlog units increased 24% to 2,221 |
For the third quarter of 2016, the Company reported net income of $10.9 million, or $0.35 per diluted share. This compares to net income of $15.6 million, or $0.51 per diluted share, for the third quarter of 2015. The third quarter of 2016 includes a $14.5 million pre-tax charge ($0.30 per diluted share) for known and estimated future stucco-related repair costs in certain of our Florida communities. For the nine months ended September 30, 2016, the Company reported net income of $36.0 million, or $1.17 per diluted share, compared to net income of $38.5 million, or $1.25 per diluted share, for the same period of 2015. Year-to-date in 2016, the Company has incurred $19.4 million of pre-tax charges ($0.40 per diluted share) related to stucco-related repair costs. Exclusive of these charges, year-to-date net income is $48.1 million compared to $38.5 million in 2015’s same period, a 25% increase.
New contracts for 2016's third quarter were 1,088, an increase of 10% over 2015's third quarter. For the first nine months of 2016, new contracts increased 18% to 3,756 from 3,196 in 2015. M/I Homes had 174 active communities at September 30, 2016 compared to 166 at September 30, 2015. The Company's cancellation rate was 15% in the third quarter of 2016 and 16% in 2015. Homes in backlog increased 24% at September 30, 2016 to 2,221 units, with a sales value of $821 million (a 25% increase over last year’s third quarter), and an average sales price of $370,000. At September 30, 2015, the sales value of homes in backlog was $657 million, with an average sales price of $367,000 and backlog units of 1,788. Homes delivered in 2016's third quarter were 1,148 compared to 994 deliveries in 2015's third quarter - a 15% increase. Homes delivered for the nine months ended September 30, 2016 increased 17% to 3,066 from 2015's deliveries of 2,630.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are very pleased with our third quarter results highlighted by record revenue of $442 million - 22% above 2015’s third quarter, a 10% increase in new contracts, and a 15% increase in homes delivered. We also reached our highest third quarter backlog level in 10 years, with a sales value of $821 million - a 25% increase over 2015’s third quarter. Excluding the $14.5 million stucco-related charge, net income improved by 28%, and our pre-tax operating margin increased to 7.4%. The stucco-related charge we incurred in the third quarter, along with the charges we incurred in the first half of 2016, cover repair costs that we have incurred to date along with our estimate of repair costs that we may incur in the future. ”
Mr. Schottenstein continued, “Looking ahead, 2016, our 40th year in business, is shaping up to be a very good year for M/I Homes. We have a strong backlog going into the last quarter of the year and housing market conditions remain favorable throughout most of our markets. Our financial condition is strong with shareholders’ equity of $632 million and homebuilding debt to capital of 46%. We will continue to focus on increasing profitability, growing our market share, and investing in attractive land opportunities.”
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 2017.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 97,000 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 operates under the name Hans Hagen Homes in its Minneapolis/St. Paul, Minnesota market. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; 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,” “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 defect, 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, 2015, 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.
Contact M/I Homes, Inc.
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
Ann Marie W. Hunker, Vice President, Controller, (614) 418-8225
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, | | September 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| New contracts | 1,088 |
| | 988 |
| | 3,756 |
| | 3,196 |
|
| Average community count | 174 |
| | 161 |
| | 176 |
| | 155 |
|
| Cancellation rate | 15 | % | | 16 | % | | 13 | % | | 15% |
|
| Backlog units | | | | | 2,221 |
| | 1,788 |
|
| Backlog value | | | | | $ | 821,494 |
| | $ | 656,917 |
|
| Homes delivered | 1,148 |
| | 994 |
| | 3,066 |
| | 2,630 |
|
| Average home closing price | $ | 365 |
| | $ | 349 |
| | $ | 361 |
| | $ | 339 |
|
| | | | | | | | |
| Homebuilding revenue: | | | | | | | |
| Housing revenue | $ | 419,228 |
| | $ | 346,562 |
| | $ | 1,105,701 |
| | $ | 891,674 |
|
| Land revenue | 12,674 |
| | 7,619 |
| | 31,816 |
| | 31,490 |
|
| Total homebuilding revenue | $ | 431,902 |
| | $ | 354,181 |
| | $ | 1,137,517 |
| | $ | 923,164 |
|
| | | | | | | | |
| Financial services revenue | 10,562 |
| | 9,276 |
| | 30,564 |
| | 26,308 |
|
| Total revenue | $ | 442,464 |
| | $ | 363,457 |
| | $ | 1,168,081 |
| | $ | 949,472 |
|
| | | | | | | | |
| Cost of sales - operations | 349,135 |
| | 285,416 |
| | 924,106 |
| | 744,194 |
|
| Cost of sales - stucco-related charges | 14,500 |
| | — |
| | 19,409 |
| | — |
|
| Gross margin | $ | 78,829 |
| | $ | 78,041 |
| | $ | 224,566 |
| | $ | 205,278 |
|
| General and administrative expense | 29,160 |
| | 23,651 |
| | 78,249 |
| | 64,690 |
|
| Selling expense | 27,663 |
| | 24,270 |
| | 75,462 |
| | 64,891 |
|
| Operating income | $ | 22,006 |
| | $ | 30,120 |
| | $ | 70,855 |
| | $ | 75,697 |
|
| Equity in income of unconsolidated joint ventures | (24 | ) | | (36 | ) | | (413 | ) | | (248 | ) |
| Interest expense | 3,587 |
| | 3,658 |
| | 13,160 |
| | 11,870 |
|
| Income before income taxes | $ | 18,443 |
| | $ | 26,498 |
| | $ | 58,108 |
| | $ | 64,075 |
|
| Provision for income taxes | 7,501 |
| | 10,928 |
| | 22,061 |
| | 25,587 |
|
| Net income | $ | 10,942 |
| | $ | 15,570 |
| | $ | 36,047 |
| | $ | 38,488 |
|
| Preferred dividends | 1,218 |
| | 1,218 |
| | 3,656 |
| | 3,656 |
|
| Net income to common shareholders | $ | 9,724 |
| | $ | 14,352 |
| | $ | 32,391 |
| | $ | 34,832 |
|
| | | | | | | | |
| Earnings per share: | | | | | | | |
| Basic | $ | 0.39 |
| | $ | 0.58 |
| | $ | 1.31 |
| | $ | 1.42 |
|
| Diluted | $ | 0.35 |
| | $ | 0.51 |
| | $ | 1.17 |
| | $ | 1.25 |
|
| | | | | | | | |
| Weighted average shares outstanding: | | | | | | | |
| Basic | 24,669 |
| | 24,605 |
| | 24,665 |
| | 24,551 |
|
| Diluted | 30,139 |
| | 30,067 |
| | 30,093 |
| | 30,021 |
|
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
|
| | | | | | | |
| | As of |
| | September 30, |
| | 2016 | | 2015 |
| Assets: | | | |
Total cash and cash equivalents(1) | $ | 23,308 |
| | $ | 28,126 |
|
| Mortgage loans held for sale | 95,545 |
| | 77,550 |
|
| Inventory: | | | |
| Lots, land and land development | 554,150 |
| | 539,517 |
|
| Land held for sale | 15,956 |
| | 5,803 |
|
| Homes under construction | 544,350 |
| | 488,041 |
|
| Other inventory | 110,697 |
| | 100,053 |
|
| Total Inventory | $ | 1,225,153 |
| | $ | 1,133,414 |
|
| | | | |
| Property and equipment - net | 21,792 |
| | 11,841 |
|
| Investments in unconsolidated joint ventures | 26,528 |
| | 33,282 |
|
| Deferred income taxes, net of valuation allowance | 39,944 |
| | 70,943 |
|
| Other assets | 64,967 |
| | 46,102 |
|
| Total Assets | $ | 1,497,237 |
| | $ | 1,401,258 |
|
| | | | |
| Liabilities: | | | |
| Debt - Homebuilding Operations: | | | |
| Senior notes | $ | 295,401 |
| | $ | 226,863 |
|
| Convertible senior subordinated notes due 2017 | 56,949 |
| | 56,375 |
|
| Convertible senior subordinated notes due 2018 | 85,246 |
| | 84,537 |
|
| Notes payable bank - homebuilding | 85,000 |
| | 156,100 |
|
| Notes payable - other | 8,566 |
| | 9,363 |
|
| Total Debt - Homebuilding Operations | $ | 531,162 |
| | $ | 533,238 |
|
| | | | |
| Notes payable bank - financial services operations | 91,483 |
| | 73,239 |
|
| Total Debt | $ | 622,645 |
| | $ | 606,477 |
|
| | | | |
| Accounts payable | 110,179 |
| | 95,950 |
|
| Other liabilities | 132,821 |
| | 115,493 |
|
| Total Liabilities | $ | 865,645 |
| | $ | 817,920 |
|
| | | | |
| Shareholders' Equity | 631,592 |
| | 583,338 |
|
| Total Liabilities and Shareholders' Equity | $ | 1,497,237 |
| | $ | 1,401,258 |
|
| | | | |
| Book value per common share | $ | 23.58 |
| | $ | 21.64 |
|
Homebuilding debt / capital ratio(2) | 46 | % | | 48 | % |
| |
| (1) | 2016 and 2015 amounts include $1.0 million and $3.1 million of restricted cash and cash held in escrow, 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 | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
Adjusted EBITDA(1) | $ | 31,284 |
| | $ | 37,694 |
| | $ | 96,402 |
| | $ | 97,223 |
|
| | | | | | | | |
| Cash flow provided by (used in) operating activities | $ | (13,952 | ) | | $ | (48,986 | ) | | $ | 26,520 |
| | $ | (95,196 | ) |
| Cash used in investing activities | $ | (4,023 | ) | | $ | (2,020 | ) | | $ | (19,799 | ) | | $ | (6,048 | ) |
| Cash provided by financing activities | $ | 12,613 |
| | $ | 54,288 |
| | $ | 5,384 |
| | $ | 110,764 |
|
| | | | | | | | |
| Land/lot purchases | $ | 49,612 |
| | $ | 82,639 |
| | $ | 146,998 |
| | $ | 177,456 |
|
| Land development spending | $ | 48,230 |
| | $ | 63,187 |
| | $ | 121,763 |
| | $ | 145,414 |
|
| Land sale revenue | $ | 12,674 |
| | $ | 7,619 |
| | $ | 31,816 |
| | $ | 31,490 |
|
| Land sale gross profit | $ | 1,063 |
| | $ | 905 |
| | $ | 3,095 |
| | $ | 6,364 |
|
| | | | | | | | |
| Financial services pre-tax income | $ | 5,393 |
| | $ | 4,444 |
| | $ | 16,136 |
| | $ | 14,287 |
|
| |
| (1) | See "Non-GAAP Financial Results" table below. |
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (2)
(Dollars in thousands)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| Net income | $ | 10,942 |
| | 15,570 |
| | $ | 36,047 |
| | 38,488 |
|
| Add: | | | | | | | |
| Provision for income taxes | 7,501 |
| | 10,928 |
| | 22,061 |
| | 25,587 |
|
| Interest expense net of interest income | 2,980 |
| | 3,128 |
| | 11,531 |
| | 10,496 |
|
| Interest amortized to cost of sales | 4,963 |
| | 4,318 |
| | 13,138 |
| | 11,637 |
|
| Depreciation and amortization | 3,030 |
| | 2,478 |
| | 8,880 |
| | 7,213 |
|
| Non-cash charges | 1,868 |
| | 1,272 |
| | 4,745 |
| | 3,802 |
|
| Adjusted EBITDA | $ | 31,284 |
| | $ | 37,694 |
| | $ | 96,402 |
| | $ | 97,223 |
|
M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (2)
(Dollars and shares in thousands, except per share amounts)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| Total revenue | $ | 442,464 |
| | $ | 363,457 |
| | $ | 1,168,081 |
| | $ | 949,472 |
|
| | | | | | | | |
| Gross margin | $ | 78,829 |
| | $ | 78,041 |
| | $ | 224,566 |
| | $ | 205,278 |
|
| Add: Stucco-related charges | 14,500 |
| | — |
| | 19,409 |
| | — |
|
| Adjusted gross margin | $ | 93,329 |
| | $ | 78,041 |
| | $ | 243,975 |
| | $ | 205,278 |
|
| | | | | | | | |
| Gross margin percentage | 17.8 | % | | 21.5 | % | | 19.2 | % | | 21.6 | % |
| Adjusted gross margin percentage | 21.1 | % | | 21.5 | % | | 20.9 | % | | 21.6 | % |
| | | | | | | | |
| Income before income taxes | $ | 18,443 |
| | $ | 26,498 |
| | $ | 58,108 |
| | $ | 64,075 |
|
| Add: Stucco-related charges | 14,500 |
| | — |
| | 19,409 |
| | — |
|
| Adjusted income before income taxes | $ | 32,943 |
| | $ | 26,498 |
| | $ | 77,517 |
| | $ | 64,075 |
|
| | | | | | | | |
| Net income | $ | 10,942 |
| | $ | 15,570 |
| | $ | 36,047 |
| | $ | 38,488 |
|
| Add: Stucco-related charges - net of tax | 8,990 |
| | — |
| | 12,034 |
| | — |
|
| Adjusted income before income taxes | $ | 19,932 |
| | $ | 15,570 |
| | $ | 48,081 |
| | $ | 38,488 |
|
| | | | | | | | |
| Stucco-related charges - net of tax | $ | 8,990 |
| | $ | — |
| | $ | 12,034 |
| | $ | — |
|
| Divided by: Diluted weighted average shares outstanding | 30,139 |
| | 30,067 |
| | 30,093 |
| | 30,021 |
|
| Diluted earnings per share related to stucco-related charges | $ | 0.30 |
| | $ | — |
| | $ | 0.40 |
| | $ | — |
|
| Add: Diluted earnings per share | 0.35 |
| | 0.51 |
| | 1.17 |
| | 1.25 |
|
| Adjusted diluted earnings per share | $ | 0.65 |
| | $ | 0.51 |
| | $ | 1.57 |
| | $ | 1.25 |
|
| |
| (2) | 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 | | Nine Months Ended |
| | September 30, | | September 30, |
| | | | | | % | | | | | | % |
| Region | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| Midwest | 407 |
| | 341 |
| | 19 | % | | 1,409 |
| | 1,158 |
| | 22 | % |
| Southern | 437 |
| | 399 |
| | 10 | % | | 1,444 |
| | 1,220 |
| | 18 | % |
| Mid-Atlantic | 244 |
| | 248 |
| | (2 | )% | | 903 |
| | 818 |
| | 10 | % |
| Total | 1,088 |
| | 988 |
| | 10 | % | | 3,756 |
| | 3,196 |
| | 18 | % |
|
| | | | | | | | | | | | | | | | | |
| HOMES DELIVERED |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | | | | | % | | | | | | % |
| Region | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| Midwest | 443 |
| | 363 |
| | 22 | % | | 1,163 |
| | 962 |
| | 21 | % |
| Southern | 410 |
| | 377 |
| | 9 | % | | 1,158 |
| | 964 |
| | 20 | % |
| Mid-Atlantic | 295 |
| | 254 |
| | 16 | % | | 745 |
| | 704 |
| | 6 | % |
| Total | 1,148 |
| | 994 |
| | 15 | % | | 3,066 |
| | 2,630 |
| | 17 | % |
|
| | | | | | | | | | | | | | | | | | | | | |
| BACKLOG |
| | September 30, 2016 | | September 30, 2015 |
| | | | Dollars | | Average | | | | Dollars | | Average |
| Region | Units | | (millions) | | Sales Price | | Units | | (millions) | | Sales Price |
| Midwest | 918 |
| | $ | 356 |
| | $ | 388,000 |
| | 701 |
| | $ | 265 |
| | $ | 378,000 |
|
| Southern | 846 |
| | $ | 296 |
| | $ | 350,000 |
| | 706 |
| | $ | 256 |
| | $ | 363,000 |
|
| Mid-Atlantic | 457 |
| | $ | 170 |
| | $ | 371,000 |
| | 381 |
| | $ | 136 |
| | $ | 357,000 |
|
| Total | 2,221 |
| | $ | 821 |
| | $ | 370,000 |
| | 1,788 |
| | $ | 657 |
| | $ | 367,000 |
|
|
| | | | | | | | | | | | | | |
| LAND POSITION SUMMARY |
| | September 30, 2016 | | | September 30, 2015 |
| | Lots | Lots Under | | | | Lots | Lots Under | |
| Region | Owned | Contract | Total | | | Owned | Contract | Total |
| Midwest | 3,846 |
| 5,378 |
| 9,224 |
| | | 3,619 |
| 3,632 |
| 7,251 |
|
| Southern | 4,213 |
| 5,333 |
| 9,546 |
| | | 4,683 |
| 5,114 |
| 9,797 |
|
| Mid-Atlantic | 2,068 |
| 2,381 |
| 4,449 |
| | | 2,771 |
| 1,743 |
| 4,514 |
|
| Total | 10,127 |
| 13,092 |
| 23,219 |
| | | 11,073 |
| 10,489 |
| 21,562 |
|
