MHO - M/I Homes Reports 2022 First Quarter Results

April, 27 2022 08:30 AM M/I Homes Inc.

PR Newswire

COLUMBUS, Ohio , April 27, 2022 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three months ended March 31, 2022 .

2022 First Quarter Highlights:

Revenue increased 4% to $860.8 million , a first quarter record
Pre-tax income increased 11% to $122.3 million , a first quarter record
Net income, a first quarter record, increased 8% to $91.8 million ( $3.16 per diluted share) from 2021's $84.9 million ( $2.85 per diluted share)
Homes delivered decreased 10% to 1,823 and average sales price increased 16% to $457,000
New contracts decreased 19% to 2,514 contracts
Backlog units increased 1% to 5,526, an all-time quarterly record
Backlog sales value increased 17% to $2.8 billion , an all-time quarterly record

For the first quarter of 2022, the Company reported pre-tax income of $122.3 million and net income of $91.8 million , or $3.16 per diluted share. This compares to pre-tax income of $110.3 million and net income of $84.9 million , or $2.85 per diluted share, for the first quarter of 2021.

Homes delivered in 2022's first quarter decreased 10% to 1,823 homes. This compares to 2,019 homes delivered in 2021's first quarter. New contracts for the first quarter of 2022 decreased 19% over 2021's 3,109 new contracts. Homes in backlog at March 31, 2022 had a total sales value of $2.8 billion , a 17% increase from a year ago and an all-time quarterly record. Backlog units at March 31, 2022 increased 1% to an all-time quarterly record 5,526 homes, with an average sales price of $505,000 . At March 31, 2021 , backlog sales value was $2.4 billion , with backlog units of 5,479 and an average sales price of $433,000 . M/I Homes had 176 active communities at March 31, 2022 compared to 187 communities at March 31 , 2021. The Company's cancellation rate was 7% in both the first quarter of 2022 and 2021.

Robert H. Schottenstein , Chief Executive Officer and President, commented, "We had strong first quarter results highlighted by record levels of revenue, income and quarter-end backlog. Our revenue increased 4% to $861 million , pre-tax income and diluted earnings per share each improved 11% to $122 million and $3.16 per share. We achieved these record first quarter results due to a 16% increase in our average closing price, a 40 basis point improvement in our gross margin to 24.8% and a 50 basis point improvement in our overhead expense ratio. Our return on equity remained strong at 26%. We are particularly pleased with these results given the unprecedented labor challenges and supply chain issues that impacted our deliveries. In addition, despite a 6% decline in community count and limiting sales in most of our communities, we achieved record backlog units and backlog sales value, with sales value improving 17% from a year ago."

Mr. Schottenstein continued, "We ended the quarter with record shareholders' equity of $1.7 billion , an increase of 26% from 2021, book value per share of $60 , cash of $219 million , no borrowings on our $550 million credit facility and a homebuilding debt to capital ratio of 29%. During the quarter, we also repurchased $15 million of our common shares. Demand for new homes remains strong despite the increase in interest rates. Looking ahead, given our record backlog and strong backlog margins, along with a record number of new community openings planned this year, we are positioned to achieve another year of strong results 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 April 2023 .

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 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, 2021 , 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

March 31,

2022

2021
New contracts
2,514

3,109
Average community count
176

195
Cancellation rate
7%

7%
Backlog units
5,526

5,479
Backlog sales value
2,788,234

2,373,828
Homes delivered
1,823

2,019
Average home closing price
457

395




Homebuilding revenue:



Housing revenue
833,163

798,279
Land revenue
3,537

848
Total homebuilding revenue
836,700

799,127




Financial services revenue
24,111

29,649
Total revenue
860,811

828,776




Cost of sales - operations
647,702

626,585
Gross margin
213,109

202,191
General and administrative expense
48,783

45,205
Selling expense
41,421

45,689
Operating income
122,905

111,297
Other income
(16)

(160)
Interest expense
671

1,176
Income before income taxes
122,250

110,281
Provision for income taxes
30,411

25,415
Net income
91,839

84,866




Earnings per share:



Basic
3.23

2.92
Diluted
3.16

2.85




Weighted average shares outstanding:



Basic
28,424

29,015
Diluted
29,072

29,743

M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts)


As of

March 31,

2022

2021
Assets:



Total cash, cash equivalents and restricted cash ⁽¹⁾
218,606

292,900
Mortgage loans held for sale
200,455

217,524
Inventory:



Lots, land and land development
1,116,069

831,837
Land held for sale
8,377

4,085
Homes under construction
1,325,672

985,227
Other inventory
132,434

139,385
Total Inventory
2,582,552

1,960,534




Property and equipment - net
36,776

24,939
Investments in joint venture arrangements
57,309

33,822
Operating lease right-of-use assets
50,907

51,755
Goodwill
16,400

16,400
Deferred income tax asset
10,251

6,183
Other assets
133,255

105,503
Total Assets
3,306,511

2,709,560




Liabilities:



Debt - Homebuilding Operations:



Senior notes due 2025 - net
—

247,743
Senior notes due 2028 - net
395,524

394,750
Senior notes due 2030 - net
295,983

—
Notes payable - other
1,871

2,544
Total Debt - Homebuilding Operations
693,378

645,037




Notes payable bank - financial services operations
203,650

176,204
Total Debt
897,028

821,241




Accounts payable
281,387

198,216
Operating lease liabilities
51,546

52,029
Other liabilities
372,861

284,652
Total Liabilities
1,602,822

1,356,138




Shareholders' Equity
1,703,689

1,353,422
Total Liabilities and Shareholders' Equity
3,306,511

2,709,560




Book value per common share
60.22

46.37
Homebuilding debt to capital ratio ⁽²⁾
29%

32%

(1)

Includes $0.9 million and $0.5 million of restricted cash and cash held in escrow for the quarters ended March 31, 2022 and 2021, 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

March 31,

2022

2021
Cash provided by operating activities
69,326

75,168
Cash (used in) provided by investing activities
(6,634)

623
Cash used in by financing activities
(80,454)

(43,701)




Land/lot purchases
93,948

92,358
Land development spending
100,697

71,195
Land sale revenue
3,537

848
Land sale gross profit
967

250




Financial services pre-tax income
13,055

19,693

M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results ⁽¹⁾ (Dollars in thousands)


Three Months Ended

March 31,

2022

2021
Net income
91,839

84,866
Add:



Provision for income taxes
30,411

25,415
Interest (income) expense-net of interest income
(557)

275
Interest amortized to cost of sales
7,327

8,205
Depreciation and amortization
4,188

4,110
Non-cash charges
1,831

2,102
Adjusted EBITDA
135,039

124,973

(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





March 31,









%




Region



2022
2021
Change




Northern



1,190
1,306
(9) %




Southern



1,324
1,803
(27) %




Total



2,514
3,109
(19) %



























HOMES DELIVERED







Three Months Ended





March 31,









%




Region



2022
2021
Change




Northern



760
801
(5) %




Southern



1,063
1,218
(13) %




Total



1,823
2,019
(10) %






























BACKLOG







March 31, 2022


March 31, 2021







Dollars

Average





Dollars

Average




Region

Units
(millions)

Sales Price



Units

(millions)

Sales Price




Northern

2,320
1,145

494,000



2,320

1,049

452,000




Southern

3,206
1,643

513,000



3,159

1,325

419,000




Total

5,526
2,788

505,000



5,479

2,374

433,000



















LAND POSITION SUMMARY





March 31, 2022



March 31, 2021





Lots
Lots Under





Lots

Lots Under






Region

Owned
Contract

Total



Owned

Contract

Total




Northern

7,359
7,906

15,265



6,242

8,489

14,731




Southern

16,871
13,646

30,517



10,522

16,730

27,252




Total

24,230
21,552

45,782



16,764

25,219

41,983

SOURCE M/I Homes, Inc.

Company Name:	M/I Homes Inc.
Stock Symbol:	MHO
Market:	NYSE
Website:	mihomes.com

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