EX-99.1 2 exhbit991earningspress.htm EXHIBIT 99.1 PRESS RELEASE 3RD QTR.19 10-23-19 Exhibit


Exhibit 99.1

milogo.jpg

M/I Homes Reports
2019 Third Quarter Results


Columbus, Ohio (October 23, 2019) - M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2019.

2019 Third Quarter Highlights:
•
New contracts increased 32% to a third quarter record 1,721 contracts
•
Homes delivered increased 16% to a third quarter record 1,651 homes
•
Revenue increased 15% to a third quarter record of $653 million
•
Net income increased 29% to $37.8 million from $29.3 million in 2018
•
Diluted earnings per share increased 31% to $1.32 from $1.01 in 2018
•
Shareholders’ equity reached an all-time record of $955 million, a 14% increase from a year ago,
with book value per share of $34

For the third quarter of 2019, the Company reported record pre-tax income of $50.1 million and net income of $37.8 million, or $1.32 per diluted share. For the nine months ended September 30, 2019, the Company reported record pre-tax income of $114.7 million and net income of $85.8 million, or $3.04 per diluted share. This compares to pre-tax income of $96.9 million and net income of $75.3 million, or $2.56 per diluted share, for the same period of 2018. The Company incurred $0.6 million of pre-tax acquisition-related expense year-to-date in 2019 compared to $6.2 million in the same period of 2018.

Homes delivered in 2019’s third quarter reached a third quarter record of 1,651 deliveries, increasing 16% from 1,422 deliveries in 2018’s third quarter. Homes delivered for the nine months ended September 30, 2019 increased 11% to a record 4,375 deliveries from 3,953 deliveries in the first nine months of 2018. New contracts for 2019’s third quarter reached a third quarter record 1,721 contracts, increasing 32% from 1,302 new contracts in 2018’s third quarter. For the first nine months of 2019, new contracts increased 9% to a record 5,096 contracts from 4,672 contracts in 2018. Homes in backlog increased 2% at September 30, 2019 to 2,915 units, with a sales value of $1.1 billion, and an average sale price of $390,000. At September 30, 2018, the sales value of homes in backlog was $1.1 billion, with an average sale price of $401,000 and backlog units of 2,846. M/I Homes had 221 active communities at September 30, 2019 compared to 212 at September 30, 2018. The Company’s cancellation rate was 13% in the third quarter of 2019 and 16% in the third quarter of 2018.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “Our third quarter results were very strong highlighted by record new contracts, homes delivered, revenue and pre-tax income. New contracts for the quarter increased 32%, homes delivered increased 16%, revenue improved by 15%, and net income increased by 29%. Gross margin improved to 20.5%, a 130-basis point improvement from the second quarter of 2019. In addition, we continue to improve our operating leverage as our overhead expense ratio for the quarter was 12.2%, 50 basis points better than last year’s third quarter. The combination of our revenue growth and improved margins resulted in a 27% increase in pre-tax income to a third quarter record of $50.1 million.”





Mr. Schottenstein continued, “Our financial condition remains strong. We ended the third quarter with record-high shareholders’ equity of $955 million, an increase of 14% from 2018’s third quarter, book value per share of $34, and a homebuilding debt to capital ratio of 44%. As we begin the final quarter of 2019, we are on track for another solid year of growth and improved financial performance.”

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 October 2020.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 116,500 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 are sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota market and Pinnacle Homes in the Detroit, Michigan 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; 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,” “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, 2018, 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 and shares in thousands, except per share amounts)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
New contracts
1,721

 
1,302

 
5,096

 
4,672

Average community count
221

 
211

 
216

 
204

Cancellation rate
13
%
 
16
%
 
13
%
 
14%

Backlog units
 
 
 
 
2,915

 
2,846

Backlog sales value
 
 
 
 
$
1,137,207

 
$
1,140,037

Homes delivered
1,651

 
1,422

 
4,375

 
3,953

Average home closing price
$
382

 
$
390

 
$
388

 
$
384

 
 
 
 
 
 
 
 
Homebuilding revenue:
 
 
 
 
 
 
 
   Housing revenue
$
631,380

 
$
554,820

 
$
1,695,558

 
$
1,518,278

   Land revenue
8,511

 
829

 
23,042

 
6,424

Total homebuilding revenue
$
639,891

 
$
555,649

 
$
1,718,600

 
$
1,524,702

 
 
 
 
 
 
 
 
Financial services revenue
13,454

 
12,193

 
39,540

 
39,095

Total revenue
$
653,345

 
$
567,842

 
$
1,758,140

 
$
1,563,797

 
 
 
 
 
 
 
 
Cost of sales - operations
519,082

 
451,337

 
1,410,849

 
1,245,518

Cost of sales - purchase accounting adjustments
82

 
692

 
639

 
4,549

Gross margin
$
134,181

 
$
115,813

 
$
346,652

 
$
313,730

General and administrative expense
39,385

 
36,897

 
106,248

 
99,514

Selling expense
40,147

 
35,054

 
109,150

 
100,708

Operating income
$
54,649

 
$
43,862

 
$
131,254

 
$
113,508

Acquisition and integration costs
—

 
—

 
—

 
1,700

Equity in income from joint venture arrangements
(52
)
 
(44
)
 
(118
)
 
(268
)
Interest expense
4,637

 
4,426

 
16,626

 
15,192

Income before income taxes
$
50,064

 
$
39,480

 
$
114,746

 
$
96,884

Provision for income taxes
12,226

 
10,198

 
28,939

 
21,628

Net income
$
37,838

 
$
29,282

 
$
85,807

 
$
75,256

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
1.35

 
$
1.03

 
$
3.10

 
$
2.65

Diluted
$
1.32

 
$
1.01

 
$
3.04

 
$
2.56

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
27,981

 
28,469

 
27,695

 
28,389

Diluted
28,598

 
28,906

 
28,238

 
29,511





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

 
As of
 
September 30,
 
2019
 
2018
Assets:
 
 
 
Total cash, cash equivalents and restricted cash(1)
$
33,451

 
$
36,360

Mortgage loans held for sale
128,322

 
115,189

Inventory:
 
 
 
Lots, land and land development
824,835

 
754,322

Land held for sale
8,465

 
14,312

Homes under construction
848,302

 
831,129

Other inventory
145,466

 
151,762

Total Inventory
$
1,827,068

 
$
1,751,525

 
 
 
 
Property and equipment - net
27,621

 
28,691

Investments in joint venture arrangements
47,557

 
24,568

Operating lease right-of-use assets
19,059

 
—

Goodwill
16,400

 
16,400

Deferred income tax asset
11,988

 
16,925

Other assets
70,137

 
68,677

Total Assets
$
2,181,603

 
$
2,058,335

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes due 2021 - net
$
298,712

 
$
297,608

Senior notes due 2025 - net
246,962

 
246,441

 Notes payable - homebuilding
189,900

 
222,700

 Notes payable - other
5,508

 
8,838

Total Debt - Homebuilding Operations
$
741,082

 
$
775,587

 
 
 
 
Notes payable bank - financial services operations
108,594

 
104,026

Total Debt
$
849,676

 
$
879,613

 
 
 
 
Accounts payable
169,528

 
148,421

Operating lease liabilities
19,059

 
—

Other liabilities
188,699

 
195,097

Total Liabilities
$
1,226,962

 
$
1,223,131

 
 
 
 
Shareholders’ Equity
954,641

 
835,204

Total Liabilities and Shareholders’ Equity
$
2,181,603

 
$
2,058,335

 
 
 
 
Book value per common share
$
33.92

 
$
29.69

Homebuilding debt / capital ratio(2)
44
%
 
48
%
(1)
Includes $0.5 million and $0.9 million of restricted cash and cash held in escrow for the quarters ended September 30, 2019 and 2018, 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,
 
2019
 
2018
 
2019
 
2018
Cash (used in) provided by operating activities
$
(9,640
)
 
$
(54,194
)
 
$
977

 
$
(75,119
)
Cash used in investing activities
$
(8,980
)
 
$
(17,417
)
 
$
(25,710
)
 
$
(120,302
)
Cash provided by financing activities
$
31,678

 
$
40,154

 
$
36,655

 
$
80,078

 
 
 
 
 
 
 
 
Land/lot purchases
$
92,096

 
$
81,222

 
$
258,438

 
$
256,498

Land development spending
$
68,780

 
$
63,680

 
$
185,508

 
$
152,256

Land sale revenue
$
8,511

 
$
829

 
$
23,042

 
$
6,424

Land sale gross profit
$
75

 
$
66

 
$
530

 
$
552

 
 
 
 
 
 
 
 
Financial services pre-tax income
$
5,623

 
$
4,846

 
$
17,279

 
$
18,860




M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (1) 
(Dollars in thousands)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
37,838

 
$
29,282

 
$
85,807

 
$
75,256

Add:
 
 
 
 
 
 
 
Provision for income taxes
12,226

 
10,198

 
28,939

 
21,628

Interest expense net of interest income
3,625

 
3,516

 
13,788

 
12,765

Interest amortized to cost of sales
7,836

 
6,278

 
20,609

 
17,345

Depreciation and amortization
4,089

 
3,650

 
11,796

 
10,754

Non-cash charges
1,492

 
1,041

 
4,086

 
3,771

Adjusted EBITDA
$
67,106

 
$
53,965

 
$
165,025

 
$
141,519























M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (1) 
(Dollars and shares in thousands, except per share amounts)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Income before income taxes
$
50,064

 
$
39,480

 
$
114,746

 
$
96,884

Add: Purchase accounting adjustments (2)
82

 
692

 
639

 
4,549

Add: Acquisition and integration costs (3)
—

 
—

 
—

 
1,700

Adjusted income before income taxes
$
50,146

 
$
40,172

 
$
115,385

 
$
103,133

 
 
 
 
 
 
 
 
Net income
$
37,838

 
$
29,282

 
$
85,807

 
$
75,256

Add: Purchase accounting adjustments - net of tax (2)
61

 
512

 
473

 
3,366

Add: Acquisition and integrations costs - net of tax (3)
—

 
—

 
—

 
1,258

Adjusted net income
$
37,899

 
$
29,794

 
$
86,280

 
$
79,880

 
 
 
 
 
 
 
 
Purchase accounting adjustments - net of tax (2)
$
61

 
$
512

 
$
473

 
$
3,366

Acquisition and integration costs - net of tax (3)
$
—

 
$
—

 
$
—

 
$
1,258

 
 
 
 
 
 
 
 
Divided by: Diluted weighted average shares outstanding
28,598

 
28,906

 
28,238

 
29,511

 
 
 
 
 
 
 
 
Diluted earnings per share related to purchase accounting adjustments (2)
$
—

 
$
0.02

 
$
0.02

 
$
0.12

Diluted earnings per share related to acquisition and integration costs (3)
—

 
—

 
—

 
0.04

 
 
 
 
 
 
 
 
Add: Diluted earnings per share
1.32

 
1.01

 
3.04

 
2.56

 
 
 
 
 
 
 
 
Adjusted diluted earnings per share
$
1.32

 
$
1.03

 
$
3.06

 
$
2.72

(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 purchase accounting adjustments related to our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.
(3) Represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses, and miscellaneous expenses related to our acquisition of Pinnacle Homes. As these costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.





M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data

 
NEW CONTRACTS (a)
 
Three Months Ended
 
 
Nine Months Ended
 
September 30,
 
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
 
%
Region
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
Northern
635

 
537

 
18
%
 
 
2,040

 
1,891

 
8
%
Southern
1,086

 
765

 
42
%
 
 
3,056

 
2,781

 
10
%
Total
1,721

 
1,302

 
32
%
 
 
5,096

 
4,672

 
9
%


 
HOMES DELIVERED (a)
 
Three Months Ended
 
 
Nine Months Ended
 
September 30,
 
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
 
%
Region
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
Northern
651

 
583

 
12
%
 
 
1,739

 
1,548

 
12
%
Southern
1,000

 
839

 
19
%
 
 
2,636

 
2,405

 
10
%
Total
1,651

 
1,422

 
16
%
 
 
4,375

 
3,953

 
11
%


 
BACKLOG (a)
 
September 30, 2019
 
 
September 30, 2018
 
 
 
Dollars
 
Average
 
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
 
Units
 
(millions)
 
Sales Price
Northern
1,231

 
$
529

 
$
430,000

 
 
1,284

 
$
549

 
$
427,000

Southern
1,684

 
$
608

 
$
361,000

 
 
1,562

 
$
591

 
$
379,000

Total
2,915

 
$
1,137

 
$
390,000

 
 
2,846

 
$
1,140

 
$
401,000



 
LAND POSITION SUMMARY (a)
 
September 30, 2019
 
 
September 30, 2018
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Northern
6,696

5,015

11,711

 
 
5,561

6,921

12,482

Southern
8,145

9,210

17,355

 
 
8,219

8,904

17,123

Total
14,841

14,225

29,066

 
 
13,780

15,825

29,605


(a)
Beginning in the second quarter of 2019, we changed from three reportable segments to two reportable segments: Northern and Southern. Prior year information has been restated for corresponding items of our segment information.