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

COLUMBUS, Ohio, Feb. 1, 2023 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2022.

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

2022 Fourth Quarter Results:

  • Homes delivered increased 3% to 2,384, an all-time quarterly record

  • Revenue increased 16% to an all-time quarterly record of $1.2 billion

  • Pre-tax income increased 16% to $164.2 million, a fourth quarter record

  • Net income increased 15% to $130.4 million ($4.65 per diluted share) compared to $113.4 million ($3.83 per diluted share) in 2021

  • Results include $18.4 million of impairments ($13.9 million after tax or $0.50 per diluted share)

  • New contracts were 985 compared to 1,744 in 2021's fourth quarter, a 44% decrease

  • Backlog sales value of $1.7 billion versus $2.4 billion last year

2022 Full Year Results:

  • Homes delivered of 8,366 compared to 8,638 in 2021, a 3% decrease

  • Record revenue of $4.1 billion, an increase of 10% over last year

  • Record pre-tax income of $635.2 million, a 25% increase compared to $509.1 million in 2021

  • Net income increased 24% to a record $490.7 million ($17.24 per diluted share) compared to $396.9 million in 2021 ($13.28 per diluted share)

  • New contracts were 6,668 compared to 2021's 9,084, a 27% decrease

  • Shareholders' equity reached an all-time record of $2.1 billion, a 28% increase from a year ago, with book value per share of $75

  • Return on equity of 27%

  • Homebuilding debt to capital ratio of 25% compared to 30% at December 31, 2021

For the fourth quarter of 2022, the Company reported record net income of $130.4 million, or $4.65 per diluted share, compared to net income of $113.4 million, or $3.83 per diluted share, for the fourth quarter of 2021. Net income for the fourth quarter of 2022 included $13.9 million of after-tax charges ($0.50 per diluted share) for impairments of land-related assets and deposit write-offs. For the year ended December 31, 2022, the Company reported net income of $490.7 million, or $17.24 per diluted share, compared to net income of $396.9 million, or $13.28 per diluted share in 2021. Net income for the year ended December 31, 2022 included $13.9 million of after-tax charges ($0.50 per diluted share) for impairments of land-related assets and deposit write-offs. Net income in 2021 included a $7.0 million after-tax loss on early extinguishment of debt ($0.23 per diluted share).

Homes delivered in 2022's fourth quarter reached an all-time quarterly record of 2,384, increasing 3% compared to 2,316 deliveries in 2021's fourth quarter. Homes delivered for the twelve months ended December 31, 2022 decreased 3% to 8,366 from 2021's deliveries of 8,638. New contracts for 2022's fourth quarter decreased 44% to 985 from 1,744 new contracts in 2021's fourth quarter. For 2022, new contracts were 6,668, declining 27% from 2021's 9,084 new contracts. Homes in backlog decreased 35% at December 31, 2022 to 3,137 units, with a sales value of $1.7 billion, a 28% decrease from last year, and the average sales price in backlog increased 11% to $541,000. At December 31, 2021, the sales value of the 4,835 homes in backlog was $2.4 billion, with an average sales price of $490,000. M/I Homes had 196 active communities at December 31, 2022 compared to 175 a year ago. The Company's cancellation rate was 30% in 2022's fourth quarter and 10% for the prior year's fourth quarter.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased to announce our fourth quarter and full year financial results, highlighted by record revenue, income, and very strong returns. We increased our revenue by 10% to a record $4.1 billion, increased pre-tax income by 25% to $635 million, and improved our operating margin by 160 basis points to 15.4%. Our gross margins, exclusive of 2022 impairments, improved by 140 basis points over last year to 25.7%, our overhead expense ratio improved by 60 basis points to 9.8%, and our return on equity continued to be strong at 27%. These results drove record diluted earnings per share of $17.24, a 30% increase over 2021 and produced year-end book value of $75 per share."

Mr. Schottenstein continued, "Our financial condition is excellent. We ended the year with record shareholders' equity reaching $2.1 billion, cash of $312 million, zero borrowings under our $650 million credit facility, and a homebuilding debt to capital of 25%. The rapid rise in interest rates over the past 9 months has materially impacted demand. On the other hand, favorable homebuyer demographics and a prolonged undersupply of available homes give us confidence in the housing market's long-term outlook. Though current conditions remain challenging, we feel very good about our position given the strength of our balance sheet, our low debt levels, our diverse product offerings and our 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 February 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, 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


Twelve Months Ended


December 31,


December 31,


2022


2021


2022


2021

New contracts

985


1,744


6,668


9,084

Average community count

187


176


179


183

Cancellation rate

30 %


10 %


14 %


8 %

Backlog units

3,137


4,835


3,137


4,835

Backlog sales value

$ 1,698,169


$ 2,366,873


$ 1,698,169


$ 2,366,873

Homes delivered

2,384


2,316


8,366


8,638

Average home closing price

$           492


$           443


$           479


$           420









Homebuilding revenue:








   Housing revenue

$ 1,172,515


$ 1,026,082


$ 4,010,427


$ 3,630,469

   Land revenue

21,874


2,721


34,771


13,390

Total homebuilding revenue

$ 1,194,389


$ 1,028,803


$ 4,045,198


$ 3,643,859









   Financial services revenue

22,611


22,949


86,195


102,028









Total revenue

$ 1,217,000


$ 1,051,752


$ 4,131,393


$ 3,745,887









Cost of sales - operations

924,117


808,150


3,069,199


2,836,972

Cost of sales - impairment

18,352



18,352


Gross margin

$    274,531


$    243,602


$ 1,043,842


$    908,915

General and administrative expense

52,565


48,306


214,811


192,009

Selling expense

57,580


55,231


191,580


198,610

Operating income

$    164,386


$    140,065


$    637,451


$    518,296

Other loss (income)

11


(1,901)


(6)


(2,046)

Interest expense

185


602


2,250


2,156

Loss on early extinguishment of debt




9,072

Income before income taxes

$    164,190


$    141,364


$    635,207


$    509,114

Provision for income taxes

33,795


27,981


144,545


112,246

Net income

$    130,395


$    113,383


$    490,662


$    396,868









Earnings per share:








Basic

$          4.75


$          3.93


$        17.60


$        13.64

Diluted

$          4.65


$          3.83


$        17.24


$        13.28









Weighted average shares outstanding:








Basic

27,435


28,833


27,876


29,092

Diluted

28,017


29,612


28,463


29,880

 

M/I Homes, Inc. and Subsidiaries

Summary Balance Sheet and Other Information (unaudited)

(Dollars in thousands, except per share amounts)




As of


December 31,


2022


2021

Assets:




Total cash, cash equivalents and restricted cash

$      311,542


$      236,368

Mortgage loans held for sale

242,539


275,655

Inventory:




Lots, land and land development

1,294,779


1,125,738

Land held for sale

3,331


4,312

Homes under construction

1,366,804


1,187,341

Other inventory

163,688


135,043

Total Inventory

$  2,828,602


$  2,452,434





Property and equipment - net

37,446


37,648

Operating lease right-of-use assets

60,416


50,950

Goodwill

16,400


16,400

Investments in joint venture arrangements

51,554


57,121

Deferred income tax asset

18,019


10,251

Other assets

148,405


103,026

Total Assets

$  3,714,923


$  3,239,853





Liabilities:




Debt - Homebuilding Operations:




Senior notes due 2028 - net

396,105


395,331

Senior notes due 2030 - net

296,361


295,937

Notes payable - other


4,549

Total Debt - Homebuilding Operations

$      692,466


$      695,817





Notes payable bank - financial services operations

245,741


266,160

Total Debt

$      938,207


$      961,977





Accounts payable

228,597


244,505

Operating lease liabilities

61,310


51,497

Other liabilities

416,084


357,690

Total Liabilities

$  1,644,198


$  1,615,669





Shareholders' Equity

2,070,725


1,624,184

Total Liabilities and Shareholders' Equity

$  3,714,923


$  3,239,853





Book value per common share

$          75.46


$          56.99

Homebuilding debt / capital ratio(1)

25 %


30 %



(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,



2022


2021


2022


2021

Cash provided by (used in) operating activities

$

198,220

$

17,518

$

184,071

$

(16,823)

Cash used in investing activities

$

(8,282)

$

(19,799)

$

(27,380)

$

(51,722)

Cash provided by (used in) financing activities

$

53,843

$

17,492

$

(81,517)

$

44,103










Land/lot purchases

$

51,480

$

156,307

$

341,084

$

630,120

Land development spending

$

146,937

$

140,640

$

496,177

$

421,824

Land sale revenue

$

21,874

$

2,721

$

34,771

$

13,390

Land sale gross profit

$

8,827

$

707

$

11,735

$

3,228










Financial services pre-tax income

$

9,655

$

10,775

$

39,260

$

58,379

 

M/I Homes, Inc. and Subsidiaries

Non-GAAP Financial Results (1)

(Dollars in thousands)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2022


2021


2022


2021

Net income

$       130,395


$       113,383


$       490,662


$       396,868

Add:








Provision for income taxes

33,795


27,981


144,545


112,246

Interest income

(2,034)


(677)


(4,403)


(1,950)

Interest amortized to cost of sales

8,724


7,974


30,270


33,829

Depreciation and amortization

4,350


4,378


17,174


16,915

Non-cash charges

20,526


2,360


27,139


10,437

Adjusted EBITDA

$       195,756


$       155,399


$       705,387


$       568,345

 

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,


2022


2021


2022


2021

Income before income taxes

$   164,190


$   141,364


$   635,207


$   509,114

Add: Impairment (2)

18,352



18,352


Add: Loss on early extinguishment of debt (3)




9,072

Adjusted income before income taxes

$   182,542


$   141,364


$   653,559


$   518,186









Net income

$   130,395


$   113,383


$   490,662


$   396,868

Add: Impairment - net of tax (2)

13,948



13,948


Add: Loss on early extinguishment of debt (3)




6,985

Adjusted net income

$   144,343


$   113,383


$   504,610


$   403,853









Impairment - net of tax (2)

$     13,948


$             —


$     13,948


$             —

Loss on early extinguishment of debt (3)

$            —


$             —


$            —


$       6,985









Divided by: Diluted weighted average shares outstanding

28,017


29,612


28,463


29,880









Diluted earnings per share related to impairment (2)

$         0.50


$             —


$         0.50


$             —

Diluted earnings per share related to loss on early extinguishment of debt (3)




0.23









Add: Diluted earnings per share

4.65


3.83


17.24


13.28









Adjusted diluted earnings per share

$         5.15


$         3.83


$       17.74


$       13.51



(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 loss on early extinguishment of debt related to the early redemption of our 2025 Senior Notes during the third quarter of 2021, consisting of a $7.1 million prepayment premium due to early redemption and $2.0 million for the write-off of unamortized debt issuance costs.

 

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

2022


2021


Change



2022


2021


Change

Northern

369


705


(48) %



2,747


3,667


(25) %

Southern

616


1,039


(41) %



3,921


5,417


(28) %

Total

985


1,744


(44) %



6,668


9,084


(27) %




HOMES DELIVERED


Three Months Ended



Twelve Months Ended


December 31,



December 31,






%







%

Region

2022


2021


Change



2022


2021


Change

Northern

971


954


2 %



3,581


3,592


— %

Southern

1,413


1,362


4 %



4,785


5,046


(5) %

Total

2,384


2,316


3 %



8,366


8,638


(3) %




BACKLOG


December 31, 2022



December 31, 2021




Dollars


Average





Dollars


Average

Region

Units


(millions)


Sales Price



Units


(millions)


Sales Price

Northern

1,056


$          552


$    523,000



1,890


$          914


$    484,000

Southern

2,081


$       1,146


$    551,000



2,945


$       1,453


$    493,000

Total

3,137


$       1,698


$    541,000



4,835


$       2,367


$    490,000




LAND POSITION SUMMARY


December 31, 2022



December 31, 2021


Lots


Lots Under





Lots


Lots Under



Region

Owned


Contract


Total



Owned


Contract


Total

Northern

7,972


7,406


15,378



7,729


7,160


14,889

Southern

17,032


9,643


26,675



16,864


12,204


29,068

Total

25,004


17,049


42,053



24,593


19,364


43,957

 

Cision
Cision

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SOURCE M/I Homes, Inc.