M/I Homes Reports 2022 Third Quarter Results
M/I Homes, Inc. (NYSE:MHO) reported record financial results for Q3 2022, with revenue rising 12% to $1.0 billion and pre-tax income climbing 43% to $167 million. Net income jumped 45%, reaching $132 million ($4.67 per diluted share). Despite a 1% decrease in homes delivered, the average sales price increased by 13% to $487,000. New contracts fell 31%, reflecting lower demand due to rising mortgage rates. Backlog units decreased 16% to 4,536, while shareholders' equity hit a record $1.9 billion, a 25% increase year-over-year.
- Revenue increased by 12% to $1.0 billion, a record for Q3.
- Pre-tax income rose 43% to $167 million, a Q3 record.
- Net income climbed 45% to $132 million, $4.67 per diluted share, setting a Q3 record.
- Average sales price of homes increased 13% to $487,000.
- Shareholders' equity reached a record $1.9 billion, up 25% from last year.
- New contracts decreased by 31% to 1,349, driven by lower buyer demand.
- Backlog units fell 16% to 4,536, indicating reduced future revenue.
- Homes delivered decreased by 1% to 2,026 in Q3 2022.
COLUMBUS, Ohio, Oct. 26, 2022 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2022.
2022 Third Quarter Highlights:
- Revenue increased
12% to$1.0 billion , a third quarter record - Pre-tax income increased
43% to$167 million , a third quarter record - Net income increased
45% to a third quarter record$132 million ($4.67 per diluted share) from 2021's$91 million ($3.03 per diluted share) - Homes delivered decreased
1% to 2,026 and average sales price increased13% to$487,000 - New contracts of 1,349, down
31% with average community count down2% and a cancellation rate of17% - Backlog units decreased
16% to 4,536 - Backlog sales value decreased
5% to$2.4 billion , with average sales price in backlog at an all-time record$533,000 - Shareholders' equity reached an all-time record of
$1.9 billion , a25% increase from a year ago, with book value per share of$71 - Homebuilding debt to capital ratio of
26% compared to31% at September 30, 2021 - Return on equity of
27%
For the third quarter of 2022, pre-tax income increased
Homes delivered in 2022's third quarter decreased
Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are pleased to announce record financial results for the third quarter of 2022, highlighted by record revenue, income, and earnings per share. Our margins during the quarter were very strong with gross margins of
Mr. Schottenstein continued, "New contracts for the quarter declined
Mr. Schottenstein concluded, "There is much uncertainty concerning the general economy, and it is unclear when demand for new homes will improve. However, we believe, over the long term, that housing markets will benefit from strong fundamentals, including favorable demographic trends and an undersupply of housing. We are well positioned to manage through these changing and uncertain times given the strength of our balance sheet, low debt levels, 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 October 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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
New contracts | 1,349 | 1,964 | 5,683 | 7,340 | |||
Average community count | 173 | 176 | 174 | 185 | |||
Cancellation rate | 17 % | 8 % | 11 % | 7 % | |||
Backlog units | 4,536 | 5,407 | 4,536 | 5,407 | |||
Backlog sales value | $ 2,419,291 | $ 2,545,964 | $ 2,419,291 | $ 2,545,964 | |||
Homes delivered | 2,026 | 2,045 | 5,982 | 6,322 | |||
Average home closing price | $ 487 | $ 430 | $ 474 | $ 412 | |||
Homebuilding revenue: | |||||||
Housing revenue | $ 986,843 | $ 878,602 | $ 2,837,912 | $ 2,604,387 | |||
Land revenue | 5,986 | 4,922 | 12,897 | 10,669 | |||
Total homebuilding revenue | $ 992,829 | $ 883,524 | $ 2,850,809 | $ 2,615,056 | |||
Financial services revenue | 20,099 | 20,795 | 63,584 | 79,079 | |||
Total revenue | $ 1,012,928 | $ 904,319 | $ 2,914,393 | $ 2,694,135 | |||
Cost of sales - operations | 741,013 | 682,565 | 2,145,082 | 2,028,822 | |||
Gross margin | $ 271,915 | $ 221,754 | $ 769,311 | $ 665,313 | |||
General and administrative expense | 58,247 | 49,420 | 162,246 | 143,703 | |||
Selling expense | 46,373 | 47,114 | 134,000 | 143,379 | |||
Operating income | $ 167,295 | $ 125,220 | $ 473,065 | $ 378,231 | |||
Other loss (income) | — | 50 | (17) | (145) | |||
Interest expense (income) | 701 | (74) | 2,065 | 1,554 | |||
Loss on early extinguishment of debt | — | 9,072 | — | 9,072 | |||
Income before income taxes | $ 166,594 | $ 116,172 | $ 471,017 | $ 367,750 | |||
Provision for income taxes | 35,004 | 25,160 | 110,750 | 84,265 | |||
Net income | $ 131,590 | $ 91,012 | $ 360,267 | $ 283,485 | |||
Earnings per share: | |||||||
Basic | $ 4.76 | $ 3.11 | $ 12.86 | $ 9.72 | |||
Diluted | $ 4.67 | $ 3.03 | $ 12.59 | $ 9.46 | |||
Weighted average shares outstanding: | |||||||
Basic | 27,618 | 29,250 | 28,025 | 29,179 | |||
Diluted | 28,185 | 30,028 | 28,610 | 29,966 | |||
M/I Homes, Inc. and Subsidiaries | |||
As of | |||
September 30, | |||
2022 | 2021 | ||
Assets: | |||
Total cash, cash equivalents and restricted cash (1) | $ 67,761 | $ 221,157 | |
Mortgage loans held for sale | 183,327 | 215,857 | |
Inventory: | |||
Lots, land and land development | 1,230,139 | 1,022,434 | |
Land held for sale | 9,174 | 3,620 | |
Homes under construction | 1,624,831 | 1,190,921 | |
Other inventory | 152,591 | 136,168 | |
Total Inventory | $ 3,016,735 | $ 2,353,143 | |
Property and equipment - net | 35,217 | 23,644 | |
Investments in joint venture arrangements | 51,700 | 42,466 | |
Operating lease right-of-use assets | 55,388 | 51,181 | |
Goodwill | 16,400 | 16,400 | |
Deferred income tax asset | 10,251 | 6,183 | |
Other assets | 151,134 | 116,569 | |
Total Assets | $ 3,587,913 | $ 3,046,600 | |
Liabilities: | |||
Debt - Homebuilding Operations: | |||
Senior notes due 2028 - net | $ 395,911 | $ 395,137 | |
Senior notes due 2030 - net | 296,235 | 296,002 | |
Notes payable - other | 429 | 5,537 | |
Total Debt - Homebuilding Operations | $ 692,575 | $ 696,676 | |
Notes payable bank - financial services operations | 189,371 | 211,281 | |
Total Debt | $ 881,946 | $ 907,957 | |
Accounts payable | 296,326 | 227,311 | |
Operating lease liabilities | 56,199 | 51,637 | |
Other liabilities | 415,669 | 315,228 | |
Total Liabilities | $ 1,650,140 | $ 1,502,133 | |
Shareholders' Equity | 1,937,773 | 1,544,467 | |
Total Liabilities and Shareholders' Equity | $ 3,587,913 | $ 3,046,600 | |
Book value per common share | $ 70.65 | $ 53.08 | |
Homebuilding debt to capital ratio (2) | 26 % | 31 % | |
(1) | Includes |
(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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash used in operating activities | $ (92,689) | $ (208,142) | $ (14,149) | $ (34,341) | |||
Cash used in investing activities | $ (7,635) | $ (19,160) | $ (19,098) | $ (31,923) | |||
Cash (used in) provided by financing activities | $ (20,670) | $ 76,653 | $ (135,360) | $ 26,611 | |||
Land/lot purchases | $ 74,989 | $ 231,184 | $ 289,604 | $ 473,813 | |||
Land development spending | $ 142,000 | $ 123,564 | $ 349,240 | $ 281,184 | |||
Land sale revenue | $ 5,986 | $ 4,922 | $ 12,897 | $ 10,669 | |||
Land sale gross profit | $ 1,350 | $ 1,345 | $ 2,908 | $ 2,521 | |||
Financial services pre-tax income | $ 7,883 | $ 9,935 | $ 29,605 | $ 47,604 | |||
M/I Homes, Inc. and Subsidiaries | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net income | $ 131,590 | $ 91,012 | $ 360,267 | $ 283,485 | |||
Add: | |||||||
Provision for income taxes | 35,004 | 25,160 | 110,750 | 84,265 | |||
Interest income | (1,062) | (1,005) | (2,369) | (1,273) | |||
Interest amortized to cost of sales | 6,683 | 8,212 | 21,546 | 25,855 | |||
Depreciation and amortization | 4,350 | 4,303 | 12,824 | 12,537 | |||
Non-cash charges | 2,764 | 3,834 | 6,613 | 8,077 | |||
Adjusted EBITDA | $ 179,329 | $ 131,516 | $ 509,631 | $ 412,946 | |||
(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 | ||||||||||||
NEW CONTRACTS | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
% | % | |||||||||||
Region | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
Northern | 466 | 772 | (40) % | 2,378 | 2,962 | (20) % | ||||||
Southern | 883 | 1,192 | (26) % | 3,305 | 4,378 | (25) % | ||||||
Total | 1,349 | 1,964 | (31) % | 5,683 | 7,340 | (23) % | ||||||
HOMES DELIVERED | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
% | % | |||||||||||
Region | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
Northern | 850 | 876 | (3) % | 2,610 | 2,638 | (1) % | ||||||
Southern | 1,176 | 1,169 | 1 % | 3,372 | 3,684 | (8) % | ||||||
Total | 2,026 | 2,045 | (1) % | 5,982 | 6,322 | (5) % | ||||||
BACKLOG | ||||||||||||
September 30, 2022 | September 30, 2021 | |||||||||||
Dollars | Average | Dollars | Average | |||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | ||||||
Northern | 1,658 | $ 856 | $ 517,000 | 2,139 | $ 1,015 | $ 475,000 | ||||||
Southern | 2,878 | $ 1,563 | $ 543,000 | 3,268 | $ 1,531 | $ 468,000 | ||||||
Total | 4,536 | $ 2,419 | $ 533,000 | 5,407 | $ 2,546 | $ 471,000 | ||||||
LAND POSITION SUMMARY | ||||||||||||
September 30, 2022 | September 30, 2021 | |||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||
Northern | 7,713 | 8,111 | 15,824 | 7,353 | 7,078 | 14,431 | ||||||
Southern | 17,204 | 13,044 | 30,248 | 15,311 | 13,253 | 28,564 | ||||||
Total | 24,917 | 21,155 | 46,072 | 22,664 | 20,331 | 42,995 | ||||||
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SOURCE M/I Homes, Inc.
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