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M/I Homes Reports Fourth Quarter and Year-End Results

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COLUMBUS, Ohio, Feb. 2, 2021 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2020.

M/I Homes, Inc. Logo (PRNewsfoto/M/I Homes, Inc.)
M/I Homes, Inc. Logo (PRNewsfoto/M/I Homes, Inc.)

2020 Fourth Quarter Results:

  • New contracts increased 27% to a fourth quarter record of 2,128

  • Homes delivered increased 17% to 2,242, an all-time quarterly record

  • Backlog units increased 64% to 4,389, a fourth quarter record

  • Backlog sales value reached $1.8 billion, an all-time quarterly record

  • Revenue increased 22% to an all-time quarterly record of $906 million

  • Pre-tax income increased 99% to $101.9 million, an all-time quarterly record

  • Net income increased 92% to $80.1 million ($2.71 per diluted share) compared to $41.8 million ($1.44 per diluted share) in 2019

2020 Full Year Results:

  • Record new contracts of 9,427, an increase of 39%

  • Record homes delivered of 7,709, a 22% increase

  • Record revenue of $3.0 billion, an increase of 22%

  • Record pre-tax income of $310.0 million, an 87% increase compared to $166.0 million in 2019

  • Net income increased 88% to $239.9 million ($8.23 per diluted share) compared to $127.6 million in 2019 ($4.48 per diluted share)

  • Shareholders' equity reached an all-time record of $1.3 billion, a 25% increase from a year ago, with book value per share of $44

  • Return on equity of 22%

  • Homebuilding debt to capital ratio of 34% compared to 38% at December 31, 2019

For the fourth quarter of 2020, the Company reported record net income of $80.1 million, or $2.71 per diluted share. This compares to net income of $41.8 million, or $1.44 per diluted share, for the fourth quarter of 2019. Net income in the fourth quarter of 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share), while 2019's fourth quarter net income included $3.8 million of after-tax impairment charges ($0.13 per diluted share).

For the year ended December 31, 2020, the Company reported net income of $239.9 million, or $8.23 per diluted share, compared to net income of $127.6 million, or $4.48 per diluted share, in 2019. Net income in 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share). Net income in 2019 included $3.8 million of after-tax impairment charges ($0.13 per diluted share) and $0.5 million of after-tax acquisition-related charges ($0.02 per diluted share).

Homes delivered in 2020's fourth quarter reached an all-time quarterly record of 2,242, increasing 17% compared to 1,921 deliveries in 2019's fourth quarter. Homes delivered for the twelve months ended December 31, 2020 increased 22% to a record 7,709 from 2019's deliveries of 6,296. New contracts for 2020's fourth quarter increased 27% to a fourth quarter record of 2,128 from 1,677 new contracts in 2019's fourth quarter. For 2020, new contracts reached a record of 9,427, a 39% increase over 2019's new contracts of 6,773. Homes in backlog increased 64% at December 31, 2020 to 4,389 units, with an all-time record sales value of $1.84 billion, a 74% increase over last year, and the average sales price in backlog increased 6% to $419,000. At December 31, 2019, the sales value of the 2,671 homes in backlog was $1.1 billion, with an average sales price of $396,000. M/I Homes had 202 active communities at December 31, 2020 compared to 225 a year ago. The Company's cancellation rate was 10% in 2020's fourth quarter and 11% for the year.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are extremely pleased with our fourth quarter results, capping off a tremendous year for M/I Homes with strong growth and record- setting financial achievements across the board. We nearly doubled our net income from 2019 resulting in a very strong return on equity of 22%. We also achieved a record level of new contracts, homes delivered and backlog sales value. Our 2020 results include an 87% increase in pre-tax income and an 84% improvement in diluted earnings per share, along with a 74% increase in our backlog sales value to a record $1.84 billion and record earnings in our financial services operations. Our gross margins were very strong, reaching 23.0% in the fourth quarter and 22.2% for the year – a 260 basis point improvement over 2019, and our pre-tax income percentage for the year improved 360 basis points to 10.2%. A number of factors drove these strong results, including low mortgage rates, increased home demand from younger buyers and the current undersupply of homes available. In addition, we also benefited from strong community locations, well-designed product and superb execution across our markets."

"We ended the year with record-high shareholders' equity of $1.3 billion, an increase of 25% from 2019 and book value per share of $44," Mr. Schottenstein continued. "Our year-end cash balance was $261 million, with no borrowings on our $500 million credit facility and a homebuilding debt to capital ratio of 34%. Housing conditions are very good and, given the strength of our record backlog and strong competitive position across our markets, we are well positioned for another strong year in 2021."

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 February 2022.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 127,650 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 are also currently sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota market. 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; and Charlotte and Raleigh, North Carolina.

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, integration of acquisitions, 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, 2019, 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


Twelve Months Ended


December 31,


December 31,


2020


2019


2020


2019

New contracts

2,128



1,677



9,427



6,773


Average community count

205



223



215



218


Cancellation rate

10

%


13

%


11

%


13

%

Backlog units

4,389



2,671



4,389



2,671


Backlog sales value

$

1,836,907



$

1,057,528



$

1,836,907



$

1,057,528


Homes delivered

2,242



1,921



7,709



6,296


Average home closing price

$

389



$

377



$

381



$

384










Homebuilding revenue:








Housing revenue

$

872,814



$

724,790



$

2,939,962



$

2,420,348


Land revenue

8,061



1,577



19,170



24,619


Total homebuilding revenue

$

880,875



$

726,367



$

2,959,132



$

2,444,967










Financial services revenue

25,552



15,783



87,013



55,323










Total revenue

$

906,427



$

742,150



$

3,046,145



$

2,500,290










Cost of sales - operations

689,245



594,373



2,361,367



2,005,222


Cost of sales - acquisition-related charges







639


Cost of sales - impairment

8,435



5,002



8,435



5,002


Gross margin

$

208,747



$

142,775



$

676,343



$

489,427


General and administrative expense

53,784



41,706



177,547



147,954


Selling expense

52,041



45,234



179,535



154,384


Operating income

$

102,922



$

55,835



$

319,261



$

187,089


Equity in income from joint venture arrangements

(159)



(193)



(466)



(311)


Interest expense

1,230



4,749



9,684



21,375


Income before income taxes

$

101,851



$

51,279



$

310,043



$

166,025


Provision for income taxes

21,768



9,499



70,169



38,438


Net income

$

80,083



$

41,780



$

239,874



$

127,587










Earnings per share:








Basic

$

2.78



$

1.48



$

8.38



$

4.58


Diluted

$

2.71



$

1.44



$

8.23



$

4.48










Weighted average shares outstanding:








Basic

28,776



28,297



28,610



27,846


Diluted

29,507



29,049



29,152



28,475


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




As of


December 31,


2020


2019

Assets:




Total cash, cash equivalents and restricted cash

$

260,810



$

6,083


Mortgage loans held for sale

234,293



155,244


Inventory:




Lots, land and land development

868,288



858,065


Land held for sale

4,623



5,670


Homes under construction

898,966



756,998


Other inventory

144,731



148,774


Total Inventory

$

1,916,608



$

1,769,507






Property and equipment - net

26,612



22,118


Operating lease right-of-use assets

52,291



18,415


Goodwill

16,400



16,400


Investments in joint venture arrangements

34,673



37,885


Deferred income tax asset

6,183



9,631


Other assets

95,175



70,311


Total Assets

$

2,643,045



$

2,105,594






Liabilities:




Debt - Homebuilding Operations:




Senior notes due 2021 - net

$



$

298,988


Senior notes due 2025 - net

247,613



247,092


Senior notes due 2028 - net

394,557




Notes payable - homebuilding



66,000


Notes payable - other

4,072



5,828


Total Debt - Homebuilding Operations

$

646,242



$

617,908






Notes payable bank - financial services operations

225,634



136,904


Total Debt

$

871,876



$

754,812






Accounts payable

185,669



125,026


Operating lease liabilities

52,474



18,415


Other liabilities

274,328



203,864


Total Liabilities

$

1,384,347



$

1,102,117






Shareholders' Equity

1,258,698



1,003,477


Total Liabilities and Shareholders' Equity

$

2,643,045



$

2,105,594






Book value per common share

$

43.68



$

35.35


Homebuilding debt / capital ratio(1)

34

%


38

%



(1)

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
(Dollars in thousands)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2020


2019


2020


2019

Cash (used in) provided by operating activities

$

(28,892)



$

64,654



$

168,334



$

65,631


Cash used in investing activities

$

(2,543)



$

(1,884)



$

(33,870)



$

(27,594)


Cash provided by (used in) financing activities

$

89,733



$

(90,138)



$

120,263



$

(53,483)










Land/lot purchases

$

148,126



$

73,619



$

414,950



$

332,057


Land development spending

$

95,732



$

82,839



$

318,336



$

268,347


Land sale revenue

$

8,061



$

1,577



$

19,170



$

24,619


Land sale gross profit

$

738



$

(32)



$

989



$

498










Financial services pre-tax income

$

14,821



$

6,420



$

50,468



$

23,699


M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results (1)

(Dollars in thousands)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2020


2019


2020


2019

Net income

$

80,083



$

41,780



$

239,874



$

127,587


Add:








Provision for income taxes

21,768



9,499



70,169



38,438


Interest expense, net of interest income

333



3,727



6,168



17,515


Interest amortized to cost of sales

9,559



8,802



32,686



29,411


Depreciation and amortization

4,564



4,154



17,578



15,950


Non-cash charges

10,313



6,762



16,685



10,848


Adjusted EBITDA

$

126,620



$

74,724



$

383,160



$

239,749


M/I Homes, Inc. and Subsidiaries

Non-GAAP Reconciliation (1)

(Dollars and shares in thousands, except per share amounts)






Three Months Ended


Twelve months ended


December 31,


December 31,


2020


2019


2020


2019

Income before income taxes

$

101,851



$

51,279



$

310,043



$

166,025


Add: Impairment (2)

8,435



5,002



8,435



5,002


Add: Acquisition-related charges (3)







639


Add: Stucco-related charges (4)

860





860




Adjusted income before income taxes

$

111,146



$

56,281



$

319,338



$

171,666










Net income

$

80,083



$

41,780



$

239,874



$

127,587


Add: Impairment - net of tax (2)

6,411



3,802



6,411



3,802


Add: Acquisition-related charges - net of tax (3)







486


Add: Stucco-related charges - net of tax (4)

654





654




Adjusted net income

$

87,148



$

45,582



$

246,939



$

131,875










Impairment - net of tax (2)

$

6,411



$

3,802



$

6,411



$

3,802


Acquisition-related charges - net of tax (3)

$



$



$



$

486


Stucco-related charges - net of tax (4)

$

654



$



$

654



$










Divided by: Diluted weighted average shares outstanding

29,507



29,049



29,152



28,475










Diluted earnings per share related to impairment (2)

$

0.22



$

0.13



$

0.22



$

0.13


Diluted earnings per share related to acquisition-related charges (3)







0.02


Diluted earnings per share related to stucco-related charges (4)

0.02





0.02












Add: Diluted earnings per share

2.71



1.44



8.23



4.48










Adjusted diluted earnings per share

$

2.95



$

1.57



$

8.47



$

4.63




(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.

(2)

Represents the related charges divided by diluted weighted average shares outstanding during the respective period as presented in the Summary Statement of Income.

(3)

Represents purchase accounting adjustments related to our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

(4)

Represents charges for stucco-related repair costs taken in certain of our Florida communities.

M/I Homes, Inc. and Subsidiaries

Selected Supplemental Financial and Operating Data



NEW CONTRACTS


Three Months Ended



Twelve Months Ended


December 31,



December 31,






%







%

Region

2020


2019


Change



2020


2019


Change

Northern

792



655



21

%



3,743



2,695



39

%

Southern

1,336



1,022



31

%



5,684



4,078



39

%

Total

2,128



1,677



27

%



9,427



6,773



39

%


HOMES DELIVERED


Three Months Ended



Twelve Months Ended


December 31,



December 31,






%







%

Region

2020


2019


Change



2020


2019


Change

Northern

881



743



19

%



3,071



2,482



24

%

Southern

1,361



1,178



16

%



4,638



3,814



22

%

Total

2,242



1,921



17

%



7,709



6,296



22

%


BACKLOG


December 31, 2020



December 31, 2019




Dollars


Average





Dollars


Average

Region

Units


(millions)


Sales Price



Units


(millions)


Sales Price

Northern

1,815



$

792



$

436,000




1,143



$

495



$

433,000


Southern

2,574



$

1,045



$

406,000




1,528



$

563



$

368,000


Total

4,389



$

1,837



$

419,000




2,671



$

1,058



$

396,000



LAND POSITION SUMMARY


December 31, 2020



December 31, 2019


Lots

Lots Under




Lots

Lots Under


Region

Owned

Contract

Total



Owned

Contract

Total

Northern

6,786


7,801


14,587




6,857


6,207


13,064


Southern

10,013


14,909


24,922




7,809


12,386


20,195


Total

16,799


22,710


39,509




14,666


18,593


33,259


Cision
Cision

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SOURCE M/I Homes, Inc.