M/I Homes Reports 2023 Third Quarter Results
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 | ||
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SOURCE M/I Homes, Inc.
