M/I Homes Reports 2022 Second Quarter Results

Jul 27th, 2022 12:30 EST

COLUMBUS, Ohio, July 27, 2022 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for the three and six months ended June 30, 2022.

2022 Second Quarter Highlights:

  • Revenue increased 8% to $1.0 billion, a second quarter record
  • Pre-tax income increased 29% to $182 million, an all-time quarter record
  • Net income, an all-time quarter record, increased 27% to $137 million ($4.79 per diluted share) from  2021's $108 million ($3.58 per diluted share)
  • Homes delivered decreased 6% to 2,133 and average sales price increased 16% to $477,000
  • New contracts of 1,820, down 20% with average community count down 8%
  • Backlog units decreased 5% to 5,213
  • Backlog sales value increased 9% to $2.7 billion, a second quarter record
  • Shareholders' equity reached an all-time record of $1.8 billion, a 24% increase from a year ago, with book value per share of $66
  • Homebuilding debt to capital ratio of 28% compared to 31% at June 30, 2021
  • Return on equity improved to 27%

For the second quarter of 2022, the Company reported pre-tax income of $182.2 million and net income of $136.8 million, or $4.79 per diluted share.  This compares to pre-tax income of $141.3 million and net income of $107.6 million, or $3.58 per diluted share, for the second quarter of 2021.  For the six months ended June 30, 2022, net income increased 19% to $228.7 million, or $7.93 per diluted share, compared to $192.5 million, or $6.43 per diluted share, for the same period of 2021.

Homes delivered in 2022's second quarter decreased 6% to 2,133 homes. This compares to 2,258 homes delivered in 2021's second quarter.  Homes delivered for the six months ended June 30, 2022 decreased 8% to 3,956 from 2021's deliveries of 4,277.  New contracts for the second quarter of 2022 decreased 20% over 2021's 2,267 new contracts.  For the first six months of 2022, new contracts decreased 19% to 4,334 compared to 5,376 in 2021. Homes in backlog at June 30, 2022 had a total sales value of $2.7 billion, a 9% increase from a year ago. Backlog units at June 30, 2022 decreased 5% to 5,213 homes, with an average sales price of $519,000.  At June 30, 2021, backlog sales value was $2.5 billion, with backlog units of 5,488 and an average sales price of $454,000.  M/I Homes had 168 communities at June 30, 2022 compared to 175 communities at June 30, 2021.  The Company's cancellation rate was 11% in the second quarter of 2022 compared to 7% in the second quarter of 2021.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "At a time of rapidly changing market conditions, we had a very strong quarter highlighted by record quarterly net income of $137 million, 27% better than a year ago, and a 34% increase in earnings per diluted share. These record earnings resulted in our return on equity improving to 27%. Our revenues increased 8% to a second quarter record $1 billion, with gross margins improving by 220 basis points to 27.3%, and SG&A improving by 70 basis points to 9.7%, all leading to a pretax income margin of 17.5%. Our backlog sales value at June 30 increased 9% to a second quarter record $2.7 billion."

Mr. Schottenstein continued, "During the quarter, we began experiencing a moderation in demand due to the unprecedented rapid rise in interest rates and continued inflationary pressures across the economy. Clearly, there is growing uncertainty on a number of fronts and choppy market conditions may persist for some time. Still, our financial condition is very strong. We ended the quarter with record shareholders' equity of $1.8 billion, an increase of 24% over last year, book value of $66 per share, cash of $189 million, zero borrowings on our $550 million credit facility, and a homebuilding debt to capital ratio of 28%. Additionally, housing fundamentals remain solid with an undersupply of available homes and favorable demographics. Looking ahead, we believe we are well positioned to manage through these changing and uncertain times given the strength of our balance sheet, low debt levels, record backlog sales value, diverse product offerings and well-located communities."

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 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

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

New contracts

1,820

2,267

4,334

5,376

Average community count

172

181

173

188

Cancellation rate

11 %

7 %

9 %

7 %

Backlog units

5,213

5,488

5,213

5,488

Backlog sales value

$  2,706,586

$  2,489,926

$  2,706,586

$  2,489,926

Homes delivered

2,133

2,258

3,956

4,277

Average home closing price

$           477

$           411

$           468

$           404

Homebuilding revenue:

   Housing revenue

$  1,017,906

$   927,506

$  1,851,069

$  1,725,785

   Land revenue

3,374

4,899

6,911

5,747

Total homebuilding revenue

$  1,021,280

$   932,405

$  1,857,980

$  1,731,532

Financial services revenue

19,374

28,635

43,485

58,284

Total revenue

$  1,040,654

$   961,040

$  1,901,465

$  1,789,816

Cost of sales - operations

756,367

719,672

1,404,069

1,346,257

Gross margin

$   284,287

$   241,368

$   497,396

$   443,559

General and administrative expense

55,216

49,078

103,999

94,283

Selling expense

46,206

50,576

87,627

96,265

Operating income

$   182,865

$   141,714

$   305,770

$   253,011

Other income

(1)

(35)

(17)

(195)

Interest expense

693

452

1,364

1,628

Income before income taxes

$   182,173

$   141,297

$   304,423

$   251,578

Provision for income taxes

45,335

33,690

75,746

59,105

Net income

$   136,838

$   107,607

$   228,677

$   192,473

Earnings per share:

Basic

$          4.88

$          3.68

$          8.10

$          6.60

Diluted

$          4.79

$          3.58

$          7.93

$          6.43

Weighted average shares outstanding:

Basic

28,041

29,271

28,231

29,144

Diluted

28,590

30,093

28,826

29,935

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)

As of

June 30,

2022

2021

Assets:

Total cash, cash equivalents and restricted cash (1)

$      188,755

$      371,806

Mortgage loans held for sale

194,450

172,760

Inventory:

Lots, land and land development

1,136,380

833,665

Land held for sale

10,524

3,840

Homes under construction

1,514,965

1,095,585

Other inventory

154,396

143,379

Total Inventory

$  2,816,265

$  2,076,469

Property and equipment - net

36,150

23,997

Investments in joint venture arrangements

55,625

32,833

Operating lease right-of-use assets

52,328

52,085

Goodwill

16,400

16,400

Deferred income tax asset

10,251

6,183

Other assets

123,100

108,879

Total Assets

$  3,493,324

$  2,861,412

Liabilities:

Debt - Homebuilding Operations:

Senior notes due 2025 - net

$                —

$      247,873

Senior notes due 2028 - net

395,718

394,944

Senior notes due 2030 - net

296,109

 Notes payable - other

1,001

4,126

Total Debt - Homebuilding Operations

$      692,828

$      646,943

Notes payable bank - financial services operations

194,602

167,119

Total Debt

$      887,430

$      814,062

Accounts payable

329,384

221,909

Operating lease liabilities

53,058

52,450

Other liabilities

405,185

306,447

Total Liabilities

$  1,675,057

$  1,394,868

Shareholders' Equity

1,818,267

1,466,544

Total Liabilities and Shareholders' Equity

$  3,493,324

$  2,861,412

Book value per common share

$          65.50

$          50.02

Homebuilding debt to capital ratio (2)

28 %

31 %

(1)

Includes $1.2 million and $0.5 million of restricted cash and cash held in escrow for the quarters ended June 30, 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

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Cash provided by operating activities

$            9,214

$         98,633

$         78,540

$       173,801

Cash used in investing activities

$          (4,829)

$        (13,386)

$        (11,463)

$        (12,763)

Cash used in financing activities

$        (34,236)

$          (6,341)

$      (114,690)

$        (50,042)

Land/lot purchases

$       120,667

$       150,271

$       214,615

$       242,629

Land development spending

$       106,543

$         86,425

$       207,240

$       157,620

Land sale revenue

$            3,374

$            4,899

$            6,911

$            5,747

Land sale gross profit

$               591

$               926

$            1,558

$            1,176

Financial services pre-tax income

$            8,667

$         17,976

$         21,722

$         37,669

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results (1)

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Net income

$       136,838

$       107,607

$       228,677

$       192,473

Add:

Provision for income taxes

45,335

33,690

75,746

59,105

Interest income

(750)

(543)

(1,307)

(268)

Interest amortized to cost of sales

7,536

9,438

14,863

17,643

Depreciation and amortization

4,286

4,124

8,474

8,234

Non-cash charges

2,018

2,141

3,849

4,243

Adjusted EBITDA

$       195,263

$       156,457

$       330,302

$       281,430

(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

2022

2021

Change

2022

2021

Change

Northern

722

884

(18) %

1,912

2,190

(13) %

Southern

1,098

1,383

(21) %

2,422

3,186

(24) %

Total

1,820

2,267

(20) %

4,334

5,376

(19) %

HOMES DELIVERED

Three Months Ended

Six Months Ended

June 30,

June 30,

%

%

Region

2022

2021

Change

2022

2021

Change

Northern

1,000

961

4 %

1,760

1,762

— %

Southern

1,133

1,297

(13) %

2,196

2,515

(13) %

Total

2,133

2,258

(6) %

3,956

4,277

(8) %

BACKLOG

June 30, 2022

June 30, 2021

Dollars

Average

Dollars

Average

Region

Units

(millions)

Sales Price

Units

(millions)

Sales Price

Northern

2,042

$        1,036

$    507,000

2,243

$        1,050

$   468,000

Southern

3,171

$        1,670

$    527,000

3,245

$        1,440

$   444,000

Total

5,213

$        2,706

$    519,000

5,488

$        2,490

$   454,000

LAND POSITION SUMMARY

June 30, 2022

June 30, 2021

Lots

Lots Under

Lots

Lots Under

Region

Owned

Contract

Total

Owned

Contract

Total

Northern

7,601

7,764

15,365

6,655

8,344

14,999

Southern

17,196

15,285

32,481

11,608

17,433

29,041

Total

24,797

23,049

47,846

18,263

25,777

44,040

SOURCE M/I Homes, Inc.

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