M/I Homes Reports 2024 First Quarter Results

Rhea-AI Summary

M/I Homes, Inc. (NYSE:MHO) announced impressive first-quarter results for 2024, with significant increases in new contracts, homes delivered, revenue, pre-tax income, net income, and shareholders' equity. The company reported record numbers across various metrics, showcasing a strong financial performance and growth trajectory.

Positive

• New contracts increased by 17% to 2,547 homes, homes delivered rose by 8% to 2,158, revenue surged by 5% to $1.05 billion, pre-tax income grew by 33% to $180.2 million, net income increased by 34% to $138.1 million, shareholders' equity reached $2.6 billion, backlog sales value increased to $1.8 billion, and return on equity stood at 21%.
• The company's CEO highlighted the exceptional performance, setting records in various areas, including homes delivered, revenue, and income. Strong margins and returns were noted, with gross margins improving by 360 basis points to 27%. The financial condition of the company was described as excellent, with significant cash reserves and a strong debt position.
• M/I Homes operates in multiple states across the U.S. and is positioned well for a successful year ahead, given its diverse product offerings and strategic community locations.
• Overall, the first-quarter results reflect a robust and promising outlook for M/I Homes, demonstrating growth, profitability, and financial strength.

Negative

• None.

Insights

Financial Analyst

The earnings report from M/I Homes reflects a robust performance in the first quarter of 2024, signaling positive growth in several key areas. With an impressive 17% increase in new contracts and an 8% rise in homes delivered compared to the same period last year, the company is demonstrating significant market momentum. These figures also translated into a 5% gain in revenue, reaching the $1.05 billion mark, which hints at efficient scaling of operations and market demand for their homes. The highlight is the 33% surge in pre-tax income, indicating enhanced profitability, likely resulting from improved operational efficiencies, cost control measures, or favorable market conditions that allowed for higher margins. Investors should take note of these developments, particularly the 21% return on equity which showcases the company's effective use of shareholder capital. The reduced cancellation rate from 13% to 8%, in combination with an expanded community count, suggests that M/I Homes is not just growing, but also improving its retention of potential buyers. These financial health indicators, especially the zero borrowings on their credit facility and the negative net-debt-to-capital ratio, provide a glimpse into the company’s strong balance sheet, potentially positioning it well for future growth or adverse market conditions.

Market Research Analyst

The real estate sector can be cyclical and sensitive to interest rate changes, but the results from M/I Homes point towards strategic positioning within the market. The 17% growth in new contracts may reflect a robust demand for housing in the areas the company operates, or it could be a sign that their product mix is well-aligned with current consumer preferences. The average sales price of homes in the backlog, $528,000, gives us an insight into the segment of the market they are servicing – potentially leaning towards a mid to upper range consumer base. The increase in community count from 200 to 219 indicates a strategic expansion, which, coupled with the mentioned average sales price, suggests that they're not just selling more homes, but also potentially increasing their market reach. The homebuilding market can often be a leading indicator of economic trends and the growth M/I Homes is experiencing could be read as a signal of consumer confidence and a healthy job market in the regions they serve, which is critical for retail investors evaluating the potential for sustained growth.

Equity Analyst

The impressive financial performance by M/I Homes may lead to positive reevaluations in their stock valuation. With a record first quarter pre-tax income and net income, the company’s earnings per share (EPS) have risen substantially to $4.78 from $3.64 year-over-year. Such an increment is a significant indicator of the company's profitability and can often result in a higher stock price as the market adjusts to these new metrics. However, investors should consider the potential for market saturation or economic downturns, which can rapidly change the dynamics within the homebuilding industry. While the current data suggests strong operational execution, it is essential to remain vigilant of broader economic indicators that could affect the housing market demand, such as mortgage rates and consumer spending power. Short-term, the stock might react positively to these results, but the long-term view should consider these industry-specific risks. The record shareholders' equity and book value per share of $95 further strengthen the balance sheet, potentially making M/I Homes a more resilient investment during market fluctuations. Retail investors should also look out for the company's forward-looking statements and guidance in their earnings conference call, as it may offer insights into management's expectations and strategic direction, influencing investor sentiment.

COLUMBUS, Ohio, April 24, 2024 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three months ended March 31, 2024.

2024 First Quarter Highlights:

• New contracts increased 17% to 2,547
• Homes delivered increased 8% to 2,158, a first quarter record
• Revenue increased 5% to $1.05 billion, a first quarter record
• Pre-tax income increased 33% to $180.2 million, 17.2% of revenue and a first quarter record
• Net income increased 34% to a first quarter record $138.1 million ($4.78 per diluted share)
• Shareholders' equity reached a record of $2.6 billion, a 21% increase from a year ago, with book
• value per share of $95
• Backlog sales value increased to $1.8 billion, up 4%
• Return on equity of 21%

The Company reported record first quarter pre-tax income of $180.2 million and record first quarter net income of $138.1 million, or $4.78 per diluted share. This compares to pre-tax income of $136.0 million and net income of $103.1 million, or $3.64 per diluted share, for the first quarter of 2023.

Homes delivered in 2024's first quarter increased 8% to 2,158 homes, a first quarter record for the Company. This compares to 2,007 homes delivered in 2023's first quarter. New contracts for the first quarter of 2024 increased 17% to 2,547 compared to 2,171 in 2023. Homes in backlog at March 31, 2024 had a total sales value of $1.8 billion, a 4% increase from a year ago. Backlog units at March 31, 2024 increased 3% to 3,391 homes, with an average sales price of $528,000. At March 31, 2023, backlog sales value was $1.7 billion, with backlog units of 3,301 and an average sales price of $522,000. M/I Homes had 219 communities at March 31, 2024 compared to 200 communities at March 31, 2023. The Company's cancellation rate was 8% in the first quarter of 2024 compared to 13% in the first quarter of 2023.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had an exceptional first quarter - setting first quarter records in homes delivered, revenue, and income. In addition, we were very pleased with our new contracts increasing by 17%, as well as producing strong margins and returns. Our homes delivered increased 8% to a record 2,158, revenue increased 5% to a record $1.05 billion and our gross margins improved by 360 basis points to 27%. This resulted in pre-tax income increasing by 33% to a first quarter record of $180.2 million, 17.2% of revenue, and a 21% return on equity."

Mr. Schottenstein continued, "Our financial condition is excellent. We ended the quarter with record shareholders' equity of $2.6 billion, book value of $95 per share, cash of $870 million, zero borrowings on our $650 million credit facility, and a homebuilding debt to capital ratio of 21%, and net-debt-to-capital ratio of negative 7%. Given our performance in the first quarter of 2024, our diverse product offerings and well-located communities, we are positioned to have a strong 2024."

The Company will broadcast live its earnings conference call today at 10:30 A.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 April 2025.

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, 2023, 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
	March 31,
	2024		2023
New contracts	2,547		2,171
Average community count	216		198
Cancellation rate	8 %		13 %
Backlog units	3,391		3,301
Backlog sales value	$   1,789,340		$   1,724,550
Homes delivered	2,158		2,007
Average home closing price	$             471		$             486
Homebuilding revenue:
Housing revenue	$  1,016,513		$     974,946
Land revenue	3,228		303
Total homebuilding revenue	$  1,019,741		$     975,249
Financial services revenue	26,962		25,281
Total revenue	$  1,046,703		$  1,000,530
Cost of sales - operations	763,360		765,904
Gross margin	$    283,343		$     234,626
General and administrative expense	56,084		50,960
Selling expense	53,940		49,080
Operating income	$    173,319		$    134,586
Other income	—		(7)
Interest income, net of interest expense	(6,920)		(1,389)
Income before income taxes	$    180,239		$    135,982
Provision for income taxes	42,178		32,916
Net income	$    138,061		$    103,066
Earnings per share:
Basic	$          4.92		$          3.73
Diluted	$          4.78		$          3.64
Weighted average shares outstanding:
Basic	28,052		27,602
Diluted	28,888		28,305

 

M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts)
	As of
	March 31,
	2024		2023
Assets:
Total cash, cash equivalents and restricted cash (1)	$      870,162		$      542,564
Mortgage loans held for sale	235,047		226,629
Inventory:
Lots, land and land development	1,448,459		1,279,673
Land held for sale	136		17,959
Homes under construction	1,169,791		1,190,519
Other inventory	155,779		169,258
Total Inventory	$  2,774,165		$  2,657,409
Property and equipment - net	33,145		37,419
Investments in joint venture arrangements	59,146		49,031
Operating lease right-of-use assets	57,890		59,787
Goodwill	16,400		16,400
Deferred income tax asset	15,313		18,019
Other assets	150,683		155,112
Total Assets	$  4,211,951		$  3,762,370
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2028 - net	$     397,072		$     396,298
Senior notes due 2030 - net	296,991		296,487
Total Debt - Homebuilding Operations	$     694,063		$     692,785
Notes payable bank - financial services operations	224,321		223,618
Total Debt	$     918,384		$     916,403
Accounts payable	224,972		208,426
Operating lease liabilities	59,163		60,763
Other liabilities	370,647		393,563
Total Liabilities	$  1,573,166		$  1,579,155
Shareholders' Equity	2,638,785		2,183,215
Total Liabilities and Shareholders' Equity	$  4,211,951		$  3,762,370
Book value per common share	$         95.09		$         78.77
Homebuilding debt to capital ratio (2)	21 %		24 %

(1)	Includes $0.5 million and $1.4 million of restricted cash and cash held in escrow for the quarters ended March 31, 2024 and 2023, 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
	March 31,
	2024		2023
Cash provided by operating activities	$       115,772		$        251,499
Cash used in investing activities	$       (17,108)		$          (4,793)
Cash provided by (used in) financing activities	$         38,694		$        (15,684)
Land/lot purchases	$       107,660		$         45,646
Land development spending	$       119,367		$         92,419
Land sale revenue	$           3,228		$              303
Land sale gross profit (loss)	$           1,313		$                 (3)
Financial services pre-tax income	$         12,312		$         12,641

 

M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results (1) (Dollars in thousands)
	Three Months Ended
	March 31,
	2024		2023
Net income	$       138,061		$       103,066
Add:
Provision for income taxes	42,178		32,916
Interest income - net	(9,767)		(3,673)
Interest amortized to cost of sales	8,302		8,040
Depreciation and amortization	4,467		4,397
Non-cash charges	3,539		2,073
Adjusted EBITDA	$       186,780		$       146,819

(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
		March 31,
						%
Region		2024		2023		Change
Northern		1,162		828		40 %
Southern		1,385		1,343		3 %
Total		2,547		2,171		17 %
	HOMES DELIVERED
		Three Months Ended
		March 31,
						%
Region		2024		2023		Change
Northern		843		797		6 %
Southern		1,315		1,210		9 %
Total		2,158		2,007		8 %

 

	BACKLOG
	March 31, 2024							March 31, 2023
			Dollars		Average					Dollars		Average
Region	Units		(millions)		Sales Price			Units		(millions)		Sales Price
Northern	1,567		$            822		$    525,000			1,087		$           560		$   515,000
Southern	1,824		$            967		$    530,000			2,214		$        1,165		$   526,000
Total	3,391		$         1,789		$    528,000			3,301		$        1,725		$   522,000

 

	LAND POSITION SUMMARY
	March 31, 2024					March 31, 2023
	Lots	Lots Under				Lots	Lots Under
Region	Owned	Contract	Total			Owned	Contract	Total
Northern	7,005	9,279	16,284			7,712	7,214	14,926
Southern	16,821	14,352	31,173			16,054	9,761	25,815
Total	23,826	23,631	47,457			23,766	16,975	40,741

 

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SOURCE M/I Homes, Inc.

FAQ

How many new contracts did M/I Homes secure in the first quarter of 2024?

M/I Homes secured 2,547 new contracts in the first quarter of 2024.

What was the revenue increase percentage for M/I Homes in the first quarter of 2024?

M/I Homes experienced a 5% increase in revenue in the first quarter of 2024.

What was the pre-tax income growth percentage for M/I Homes in the first quarter of 2024?

M/I Homes saw a 33% growth in pre-tax income in the first quarter of 2024.

What was the net income per diluted share for M/I Homes in the first quarter of 2024?

M/I Homes reported a net income of $4.78 per diluted share in the first quarter of 2024.

What was the total backlog sales value for M/I Homes at the end of March 31, 2024?

M/I Homes had a total backlog sales value of $1.8 billion at the end of March 31, 2024.