Attached files
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| 8-K - 8-K 2ND QUARTER 2016 EARNINGS 7-2716 - M/I HOMES, INC. | a8k2ndqtr16eanings07-27x16.htm |
Exhibit 99.1
M/I Homes Reports
2016 Second Quarter Results
Columbus, Ohio (July 27, 2016) - M/I Homes, Inc. (NYSE:MHO) announced results for the three months and six months ended June 30, 2016.
2016 Second Quarter Highlights:
• | Net income increased 19% to $15.9 million ($0.52 per diluted share; includes $0.06 per share |
for stucco-related charges)
• | New contracts increased 23% to 1,354 - a second quarter record |
• | Homes delivered increased 13%; average closing price increased 7% |
• | Backlog sales value increased 28% to $842 million; backlog units increased 27% to 2,281 |
For the second quarter of 2016, the Company reported net income of $15.9 million, or $0.52 per diluted share. This compares to net income of $13.4 million, or $0.43 per diluted share, for the second quarter of 2015. The second quarter of 2016 includes a $2.8 million pre-tax charge ($0.06 per diluted share) for stucco-related repairs in certain of our Florida communities. For the six months ended June 30, 2016, the Company reported net income of $25.1 million, or $0.81 per diluted share, compared to net income of $22.9 million, or $0.74 per diluted share, in the same period of 2015. Year-to-date results for 2016 include a $4.9 million pre-tax charge ($0.10 per diluted share) for stucco-related repairs.
New contracts for 2016's second quarter were 1,354, a second quarter record, and an increase of 23% over 2015's second quarter. For the first six months of 2016, new contracts increased 21% to 2,668 from 2,208 in 2015. M/I Homes had 174 active communities at June 30, 2016 compared to 155 at June 30, 2015. The Company's cancellation rate was 14% in the second quarter of both 2016 and 2015. Homes in backlog increased 27% at June 30, 2016 to 2,281 units, with a sales value of $842 million (a 28% increase over last year’s second quarter), and an average sales price of $369,000. At June 30, 2015, the sales value of homes in backlog was $657 million, with an average sales price of $366,000 and backlog units of 1,794. Homes delivered in 2016's second quarter were 1,042 compared to 919 deliveries in 2015's second quarter - a 13% increase. Homes delivered for the six months ended June 30, 2016 increased 17% to 1,918 from 2015's deliveries of 1,636.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “Following our strong first quarter results, we had another very good quarter highlighted by record second quarter sales, solid increases in both revenue and profit, and our highest second quarter backlog in 10 years. Our sales for the quarter were particularly strong increasing by 23% over last year; and year-to-date, our sales are 21% better than a year ago. Homes delivered increased 13% and revenue improved by 24%. Our adjusted gross margin (exclusive of stucco-related charges) improved 50 basis points compared to the first quarter. Net income for the quarter improved by 19% and pre-tax income, excluding stucco- related charges, improved by 27%. Our backlog sales value stands at $842 million, 28% higher than last year’s second quarter.”
Mr. Schottenstein continued, “With our strong backlog, along with the planned community openings in the second half of 2016, we are well positioned to have a very solid 2016. Our financial condition remains strong with shareholders’ equity of $621 million and net debt to capital of less than 50%.”
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 July 2017.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 96,000 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 in thousands, except per share amounts)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
New contracts | 1,354 | 1,100 | 2,668 | 2,208 | |||||||||||
Average community count | 178 | 154 | 177 | 153 | |||||||||||
Cancellation rate | 14 | % | 14 | % | 13 | % | 14 | % | |||||||
Backlog units | 2,281 | 1,794 | |||||||||||||
Backlog value | $ | 842,442 | $ | 656,935 | |||||||||||
Homes delivered | 1,042 | 919 | 1,918 | 1,636 | |||||||||||
Average home closing price | $ | 362 | $ | 340 | $ | 358 | $ | 333 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 377,226 | $ | 312,112 | $ | 686,473 | $ | 545,112 | |||||||
Land revenue | 14,072 | 1,810 | 19,142 | 23,871 | |||||||||||
Total homebuilding revenue | $ | 391,298 | $ | 313,922 | $ | 705,615 | $ | 568,983 | |||||||
Financial services revenue | 9,949 | 8,934 | 20,002 | 17,032 | |||||||||||
Total revenue | $ | 401,247 | $ | 322,856 | $ | 725,617 | $ | 586,015 | |||||||
Cost of sales - operations | 316,954 | 252,595 | 574,971 | 458,778 | |||||||||||
Cost of sales - stucco-related charges | 2,754 | — | 4,909 | — | |||||||||||
Gross margin | $ | 81,539 | $ | 70,261 | $ | 145,737 | $ | 127,237 | |||||||
General and administrative expense | 26,830 | 21,705 | 49,089 | 41,039 | |||||||||||
Selling expense | 25,533 | 22,935 | 47,799 | 40,621 | |||||||||||
Operating income | $ | 29,176 | $ | 25,621 | $ | 48,849 | $ | 45,577 | |||||||
Equity in income of unconsolidated joint ventures | (82 | ) | (14 | ) | (389 | ) | (212 | ) | |||||||
Interest expense | 4,308 | 3,750 | 9,573 | 8,212 | |||||||||||
Income before income taxes | $ | 24,950 | $ | 21,885 | $ | 39,665 | $ | 37,577 | |||||||
Provision for income taxes | 9,034 | 8,535 | 14,560 | 14,659 | |||||||||||
Net income | $ | 15,916 | $ | 13,350 | $ | 25,105 | $ | 22,918 | |||||||
Preferred dividends | 1,219 | 1,219 | 2,438 | 2,438 | |||||||||||
Net income to common shareholders | $ | 14,697 | $ | 12,131 | $ | 22,667 | $ | 20,480 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.60 | $ | 0.49 | $ | 0.92 | $ | 0.84 | |||||||
Diluted | $ | 0.52 | $ | 0.43 | $ | 0.81 | $ | 0.74 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 24,669 | 24,531 | 24,663 | 24,523 | |||||||||||
Diluted | 30,077 | 30,023 | 30,055 | 30,002 | |||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
As of | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
Assets: | |||||||
Total cash and cash equivalents(1) | $ | 30,000 | $ | 26,947 | |||
Mortgage loans held for sale | 100,379 | 75,063 | |||||
Inventory: | |||||||
Lots, land and land development | 563,112 | 486,895 | |||||
Land held for sale | 11,597 | 5,754 | |||||
Homes under construction | 487,895 | 444,855 | |||||
Other inventory | 107,721 | 103,440 | |||||
Total Inventory | $ | 1,170,325 | $ | 1,040,944 | |||
Property and equipment - net | 22,154 | 11,819 | |||||
Investments in unconsolidated joint ventures | 28,160 | 28,357 | |||||
Deferred income taxes, net of valuation allowance | 47,023 | 81,054 | |||||
Other assets | 55,113 | 45,585 | |||||
Total Assets | $ | 1,453,154 | $ | 1,309,769 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes | $ | 295,125 | $ | 226,608 | |||
Convertible senior subordinated notes due 2017 | 56,806 | 56,231 | |||||
Convertible senior subordinated notes due 2018 | 85,069 | 84,360 | |||||
Notes payable bank - homebuilding | 70,000 | 105,600 | |||||
Notes payable - other | 8,552 | 8,230 | |||||
Total Debt - Homebuilding Operations | $ | 515,552 | $ | 481,029 | |||
Notes payable bank - financial services operations | 92,666 | 69,681 | |||||
Total Debt | $ | 608,218 | $ | 550,710 | |||
Accounts payable | 105,669 | 90,643 | |||||
Other liabilities | 118,755 | 101,243 | |||||
Total Liabilities | $ | 832,642 | $ | 742,596 | |||
Shareholders' Equity | 620,512 | 567,173 | |||||
Total Liabilities and Shareholders' Equity | $ | 1,453,154 | $ | 1,309,769 | |||
Book value per common share | $ | 23.13 | $ | 21.06 | |||
Net debt/net capital ratio(2) | 49 | % | 48 | % | |||
(1) | 2016 and 2015 amounts include $2.3 million and $5.2 million of restricted cash and cash held in escrow, respectively. |
(2) | Net debt/net capital ratio is calculated as the principal amount outstanding of our total debt minus total cash and cash equivalents, divided by the sum of the principal amount outstanding of our total debt minus total cash and cash equivalents plus shareholders' equity. |
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
(Dollars in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Adjusted EBITDA(1) | $ | 37,885 | $ | 32,760 | $ | 65,118 | $ | 59,529 | |||||||
Cash flow provided by (used in) operating activities | $ | 39,416 | $ | (16,934 | ) | $ | 40,472 | $ | (46,210 | ) | |||||
Cash used in investing activities | $ | (2,913 | ) | $ | (3,183 | ) | $ | (15,776 | ) | $ | (4,028 | ) | |||
Cash (used in) provided by financing activities | $ | (40,586 | ) | $ | 11,932 | $ | (7,229 | ) | $ | 56,476 | |||||
Land/lot purchases | $ | 45,413 | $ | 43,617 | $ | 97,386 | $ | 94,817 | |||||||
Land development spending | $ | 41,339 | $ | 44,546 | $ | 73,533 | $ | 82,227 | |||||||
Land sale revenue | $ | 14,072 | $ | 1,810 | $ | 19,142 | $ | 23,871 | |||||||
Land sale gross profit | $ | 1,303 | $ | 218 | $ | 2,032 | $ | 5,459 | |||||||
Financial services pre-tax income | $ | 4,852 | $ | 4,850 | $ | 10,743 | $ | 9,843 | |||||||
(1) | See "Non-GAAP Financial Results / Reconciliation" table below. |
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliation (2)
(Dollars in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total revenue | $ | 401,247 | $ | 322,856 | $ | 725,617 | $ | 586,015 | |||||||
Gross margin | $ | 81,539 | $ | 70,261 | $ | 145,737 | $ | 127,237 | |||||||
Add: Stucco-related charges | 2,754 | — | 4,909 | — | |||||||||||
Adjusted gross margin | $ | 84,293 | $ | 70,261 | $ | 150,646 | $ | 127,237 | |||||||
Gross margin percentage | 20.3 | % | 21.8 | % | 20.1 | % | 21.7 | % | |||||||
Adjusted gross margin percentage | 21.0 | % | 21.8 | % | 20.8 | % | 21.7 | % | |||||||
Income before income taxes | $ | 24,950 | $ | 21,885 | $ | 39,665 | $ | 37,577 | |||||||
Add: Stucco-related charges | 2,754 | — | 4,909 | — | |||||||||||
Adjusted income before income taxes | $ | 27,704 | $ | 21,885 | $ | 44,574 | $ | 37,577 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 15,916 | $ | 13,350 | $ | 25,105 | $ | 22,918 | |||||||
Add: | |||||||||||||||
Provision for income taxes | 9,034 | 8,535 | 14,560 | 14,659 | |||||||||||
Interest expense net of interest income | 3,716 | 3,265 | 8,551 | 7,368 | |||||||||||
Interest amortized to cost of sales | 4,631 | 3,780 | 8,175 | 7,319 | |||||||||||
Depreciation and amortization | 2,966 | 2,429 | 5,850 | 4,735 | |||||||||||
Non-cash charges | 1,622 | 1,401 | 2,877 | 2,530 | |||||||||||
Adjusted EBITDA | $ | 37,885 | $ | 32,760 | $ | 65,118 | $ | 59,529 | |||||||
(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 their respective most directly comparable GAAP financial measures 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 | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||
Midwest | 507 | 397 | 28 | % | 1,002 | 817 | 23 | % | |||||||||
Southern | 515 | 407 | 27 | % | 1,007 | 821 | 23 | % | |||||||||
Mid-Atlantic | 332 | 296 | 12 | % | 659 | 570 | 16 | % | |||||||||
Total | 1,354 | 1,100 | 23 | % | 2,668 | 2,208 | 21 | % | |||||||||
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||
Midwest | 398 | 351 | 13 | % | 720 | 599 | 20 | % | |||||||||
Southern | 398 | 312 | 28 | % | 748 | 587 | 27 | % | |||||||||
Mid-Atlantic | 246 | 256 | (4 | )% | 450 | 450 | — | % | |||||||||
Total | 1,042 | 919 | 13 | % | 1,918 | 1,636 | 17 | % | |||||||||
BACKLOG | |||||||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 954 | $ | 364 | $ | 382,000 | 723 | $ | 268 | $ | 371,000 | |||||||||||
Southern | 819 | $ | 288 | $ | 352,000 | 684 | $ | 252 | $ | 368,000 | |||||||||||
Mid-Atlantic | 508 | $ | 190 | $ | 374,000 | 387 | $ | 137 | $ | 355,000 | |||||||||||
Total | 2,281 | $ | 842 | $ | 369,000 | 1,794 | $ | 657 | $ | 366,000 | |||||||||||
LAND POSITION SUMMARY | ||||||||||||||
June 30, 2016 | June 30, 2015 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 3,640 | 4,570 | 8,210 | 3,260 | 4,186 | 7,446 | ||||||||
Southern | 4,435 | 5,119 | 9,554 | 4,596 | 4,653 | 9,249 | ||||||||
Mid-Atlantic | 2,395 | 1,789 | 4,184 | 2,559 | 2,484 | 5,043 | ||||||||
Total | 10,470 | 11,478 | 21,948 | 10,415 | 11,323 | 21,738 | ||||||||