MHO - M/I Homes Reports 2023 Third Quarter Results

October, 25 2023 07:30 AM M/I Homes Inc.

PR Newswire

COLUMBUS, Ohio , Oct. 25, 2023 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2023 .

2023 Third Quarter Highlights:

New contracts increased 50% to 2,021 contracts
Delivered 2,096 homes, up 3% from 2022's 2,026 homes delivered
Record third quarter revenue of $1.0 billion , up 3% from 2022's third quarter
Pre-tax income increased 7% to $178.0 million , a third quarter record
All-time quarterly record net income of $139.0 million ( $4.82 per diluted share), up 6% from 2022's $131.6 million
Shareholders' equity reached a record of $2.4 billion , a 25% increase from a year ago, with book value per share of $87
Return on equity of 23%

For the third quarter of 2023, the Company reported pre-tax income of $178.0 million and net income of $139.0 million , or $4.82 per diluted share. This compares to pre-tax income of $166.6 million and net income of $131.6 million , or $4.67 per diluted share, for the third quarter of 2022. For the nine months ended September 30, 2023 , net income decreased slightly to $360.1 million , or $12.58 per diluted share, compared to $360.3 million , or $12.59 per diluted share, for the same period of 2022.

Homes delivered in 2023's third quarter increased 3% to 2,096 homes. This compares to 2,026 homes delivered in 2022's third quarter. Homes delivered for the nine months ended September 30, 2023 increased 2% to 6,093 from 2022's deliveries of 5,982. New contracts for the third quarter of 2023 increased 50% to 2,021 new contracts compared to 1,349 in 2022. For the first nine months of 2023, new contracts increased 12% to 6,389 compared to 5,683 in 2022. Homes in backlog at September 30, 2023 had a total sales value of $1.8 billion , a 28% decrease from a year ago. Backlog units at September 30, 2023 decreased 24% to 3,433 homes, with an average sales price of $510,000 . At September 30, 2022, backlog sales value was $2.4 billion , with backlog units of 4,536 and an average sales price of $533,000 . M/I Homes had 204 communities at September 30, 2023 compared to 178 communities at September 30, 2022. The Company's cancellation rate was 10% in the third quarter of 2023 compared to 17% in the third quarter of 2022.

Robert H. Schottenstein , Chief Executive Officer and President, commented, "We had a very strong third quarter, highlighted by record revenue, record income, a 50% increase in new contracts and very strong returns. We increased revenue by 3% to a record $1.0 billion , increased pre-tax income by 7% to a record $178.0 million , generated 27% gross margins and 17% pre-tax income margins. These results produced a solid 23% return on equity."

Mr. Schottenstein continued, "Our financial condition is strong. We ended the quarter with record shareholders' equity of $2.4 billion , an increase of 25% from a year ago, book value of $87 per share, cash of $736 million , zero borrowings on our $650 million credit facility, and a homebuilding debt to capital ratio of 22%. Given our performance through three quarters of this year, along with the strength of our balance sheet, low debt levels, diverse product offerings and well-located communities, we are positioned to have a very strong 2023."

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 October 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

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022
New contracts
2,021

1,349

6,389

5,683
Average community count
200

173

199

174
Cancellation rate
10 %

17 %

11 %

11 %
Backlog units
3,433

4,536

3,433

4,536
Backlog sales value
1,751,442

2,419,291

1,751,442

2,419,291
Homes delivered
2,096

2,026

6,093

5,982
Average home closing price
481

487

486

474








Homebuilding revenue:







Housing revenue
1,008,356

986,843

2,963,500

2,837,912
Land revenue
14,424

5,986

23,276

12,897
Total homebuilding revenue
1,022,780

992,829

2,986,776

2,850,809








Financial services revenue
23,591

20,099

74,138

63,584
Total revenue
1,046,371

1,012,928

3,060,914

2,914,393








Cost of sales - operations
764,638

741,013

2,286,371

2,145,082
Gross margin
281,733

271,915

774,543

769,311
General and administrative expense
55,867

58,247

162,481

162,246
Selling expense
53,735

46,373

154,686

134,000
Operating income
172,131

167,295

457,376

473,065
Other income
1

—

(34)

(17)
Interest (income) expense - net
(5,834)

701

(11,893)

2,065
Income before income taxes
177,964

166,594

469,303

471,017
Provision for income taxes
38,948

35,004

109,220

110,750
Net income
139,016

131,590

360,083

360,267








Earnings per share:







Basic
4.98

4.76

12.97

12.86
Diluted
4.82

4.67

12.58

12.59








Weighted average shares outstanding:







Basic
27,909

27,618

27,769

28,025
Diluted
28,837

28,185

28,631

28,610

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


As of

September 30,

2023

2022
Assets:



Total cash, cash equivalents and restricted cash ⁽¹⁾
736,252

67,761
Mortgage loans held for sale
207,181

183,327
Inventory:



Lots, land and land development
1,355,622

1,230,139
Land held for sale
6,881

9,174
Homes under construction
1,218,256

1,624,831
Other inventory
159,769

152,591
Total Inventory
2,740,528

3,016,735




Property and equipment - net
36,015

35,217
Investments in joint venture arrangements
44,866

51,700
Operating lease right-of-use assets
58,304

55,388
Goodwill
16,400

16,400
Deferred income tax asset
18,019

10,251
Other assets
145,803

151,134
Total Assets
4,003,368

3,587,913




Liabilities:



Debt - Homebuilding Operations:



Senior notes due 2028 - net
396,685

395,911
Senior notes due 2030 - net
296,739

296,235
Notes payable - other
—

429
Total Debt - Homebuilding Operations
693,424

692,575




Notes payable bank - financial services operations
200,619

189,371
Total Debt
894,043

881,946




Accounts payable
250,937

296,326
Operating lease liabilities
59,433

56,199
Other liabilities
373,243

415,669
Total Liabilities
1,577,656

1,650,140




Shareholders' Equity
2,425,712

1,937,773
Total Liabilities and Shareholders' Equity
4,003,368

3,587,913




Book value per common share
87.10

70.65
Homebuilding debt to capital ratio ⁽²⁾
22 %

26 %

(1)

Includes $0.2 million and $0.7 million of restricted cash and cash held in escrow for the quarters ended September 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

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022
Cash provided by (used in) operating activities
79,541

(92,689)

497,230

(14,149)
Cash used in investing activities
(11,330)

(7,635)

(14,132)

(19,098)
Cash used in financing activities
(246)

(20,670)

(58,388)

(135,360)








Land/lot purchases
105,860

74,989

247,574

289,604
Land development spending
151,222

142,000

352,555

349,240
Land sale revenue
14,424

5,986

23,276

12,897
Land sale gross profit
2,115

1,350

3,004

2,908








Financial services pre-tax income
9,878

7,883

33,678

29,605

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


Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022
Net income
139,016

131,590

360,083

360,267
Add:







Provision for income taxes
38,948

35,004

109,220

110,750
Interest income - net
(8,469)

(1,062)

(19,122)

(2,369)
Interest amortized to cost of sales
8,778

6,683

25,602

21,546
Depreciation and amortization
4,227

4,350

12,890

12,824
Non-cash charges
2,682

2,764

7,006

6,613
Adjusted EBITDA
185,182

179,329

495,679

509,631

(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


Nine Months Ended

September 30,


September 30,





%






%
Region
2023

2022

Change


2023

2022

Change
Northern
885

466

90 %


2,662

2,378

12 %
Southern
1,136

883

29 %


3,727

3,305

13 %
Total
2,021

1,349

50 %


6,389

5,683

12 %


HOMES DELIVERED

Three Months Ended


Nine Months Ended

September 30,


September 30,





%






%
Region
2023

2022

Change


2023

2022

Change
Northern
741

850

(13) %


2,321

2,610

(11) %
Southern
1,355

1,176

15 %


3,772

3,372

12 %
Total
2,096

2,026

3 %


6,093

5,982

2 %


BACKLOG

September 30, 2023


September 30, 2022



Dollars

Average




Dollars

Average
Region
Units

(millions)

Sales Price


Units

(millions)

Sales Price
Northern
1,397

727

521,000


1,658

856

517,000
Southern
2,036

1,024

503,000


2,878

1,563

543,000
Total
3,433

1,751

510,000


4,536

2,419

533,000


LAND POSITION SUMMARY

September 30, 2023


September 30, 2022

Lots
Lots Under



Lots
Lots Under

Region
Owned
Contract
Total


Owned
Contract
Total
Northern
7,341
8,385
15,726


7,713
8,111
15,824
Southern
15,835
13,267
29,102


17,204
13,044
30,248
Total
23,176
21,652
44,828


24,917
21,155
46,072

SOURCE M/I Homes, Inc.

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

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