M/I Homes Reports 2022 Second Quarter Results

Rhea-AI Summary

M/I Homes, Inc. (MHO) reported a strong second quarter for 2022, with revenues of $1.0 billion, an 8% increase, and record net income of $137 million, up 27% year-over-year. Despite a 6% decrease in homes delivered to 2,133, the average sales price rose 16% to $477,000. New contracts dropped 20% to 1,820, and backlog units fell 5% to 5,213. The company's shareholders' equity reached a record $1.8 billion, marking a 24% increase from 2021. CEO Robert Schottenstein acknowledged challenges from rising interest rates but emphasized a solid financial position and strong market fundamentals.

Positive

• Revenue increased 8% to $1.0 billion.
• Net income rose 27% to a record $137 million.
• Record backlog sales value at $2.7 billion, up 9%.
• Shareholders' equity reached an all-time high of $1.8 billion, a 24% increase.
• Return on equity improved to 27%.

Negative

• Homes delivered decreased 6% to 2,133.
• New contracts fell 20% to 1,820.
• Backlog units decreased 5% to 5,213.
• Cancellation rate increased to 11% from 7%.

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

 

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SOURCE M/I Homes, Inc.

FAQ

What were M/I Homes' second quarter earnings results for 2022?

M/I Homes reported a net income of $137 million, or $4.79 per diluted share, for Q2 2022, a 27% increase from $108 million in Q2 2021.

How did the backlog for M/I Homes perform in Q2 2022?

The backlog units decreased 5% to 5,213 homes, while backlog sales value increased 9% to a record $2.7 billion.

What challenges did M/I Homes face during the second quarter of 2022?

The company experienced a moderation in demand due to rising interest rates and inflationary pressures.

What is the current shareholder equity of M/I Homes?

As of June 30, 2022, M/I Homes' shareholders' equity reached a record $1.8 billion, a 24% increase from the previous year.

How many new contracts did M/I Homes secure in Q2 2022?

M/I Homes secured 1,820 new contracts in the second quarter of 2022, a 20% decline compared to the same period last year.