M/I Homes Reports 2024 Second Quarter Results

Rhea-AI Summary

M/I Homes (NYSE:MHO) reported record-breaking results for Q2 2024. Highlights include:

• Revenue up 9% to $1.1 billion
• Net income increased 24% to $146.7 million ($5.12 per diluted share)
• Homes delivered up 12% to 2,224
• New contracts increased 3% to 2,255
• Backlog sales value up 3% to $1.82 billion

The company achieved all-time quarterly records in income, gross margins (28%), and pre-tax margins (17.5%). M/I Homes ended the quarter with record shareholders' equity of $2.7 billion, a 19% increase year-over-year, and a strong financial position with $837 million in cash and a net-debt-to-capital ratio of negative 6%.

Positive

• Record Q2 revenue of $1.1 billion, up 9% year-over-year
• All-time quarterly record net income of $146.7 million, up 24%
• Homes delivered increased 12% to 2,224
• Gross margins improved to 28% from 25% a year ago
• Pre-tax margins increased to 17.5% from 15.3% year-over-year
• Return on equity of 21%
• Record shareholders' equity of $2.7 billion, up 19% from previous year
• Strong cash position of $837 million
• Low homebuilding debt to capital ratio of 20%

Negative

• Backlog units decreased 2% to 3,422 homes compared to previous year

Financial Analyst

M/I Homes' Q2 2024 results demonstrate robust financial performance and operational strength. The 12% increase in homes delivered and $1.1 billion in revenue highlight the company's ability to capitalize on market demand. The 25% jump in pre-tax income to a record $194.1 million is particularly impressive, indicating improved operational efficiency and cost management.

The 28% gross margin, up from 25% last year, suggests strong pricing power and effective cost control. The 17.5% pre-tax margin is exceptional for the homebuilding industry, reflecting M/I Homes' operational excellence. The 21% return on equity is a testament to the company's ability to generate value for shareholders.

The company's financial position is rock-solid, with $837 million in cash and a negative net-debt-to-capital ratio. This provides significant flexibility for future growth initiatives or to weather potential market downturns. The 3% increase in backlog sales value to $1.82 billion indicates a healthy pipeline for future revenue.

However, investors should note the slight 2% decrease in backlog units, which could signal a potential slowdown in new order growth. The modest 3% increase in new contracts also suggests a cooling market compared to the previous year's growth rates.

Market Research Analyst

M/I Homes' Q2 results offer valuable insights into the current state of the U.S. housing market. The 12% increase in homes delivered suggests continued strong demand, despite rising interest rates and affordability concerns. This resilience is particularly noteworthy given the challenging macroeconomic environment.

The 3% increase in new contracts, while positive, indicates a potential moderation in demand growth. This could be attributed to rising home prices, as evidenced by the increase in average sales price in the backlog from $507,000 to $533,000. The stable 10% cancellation rate is encouraging, suggesting that buyers remain committed despite economic uncertainties.

The expansion to 211 communities from 195 a year ago demonstrates M/I Homes' confidence in the market's long-term prospects. This strategic growth could position the company well for future demand, especially in high-growth markets like Texas and Florida.

However, the slight decrease in backlog units warrants attention. It could indicate a shift in buyer behavior, possibly due to affordability concerns or expectations of future price moderation. The housing market's sensitivity to interest rates and economic conditions makes this metric important for gauging future performance.

Overall, M/I Homes' results suggest a housing market that remains robust but may be showing early signs of normalization after a period of exceptional growth.

COLUMBUS, Ohio, July 30, 2024 /PRNewswire/ -- M/I Homes, Inc. (NYSE:MHO) announced results for the three and six months ended June 30, 2024.

2024 Second Quarter Highlights:

• Homes delivered increased 12% to 2,224
• Revenue increased 9% to $1.1 billion, a second quarter record
• Pre-tax income increased 25% to $194.1 million, 17.5% of revenue, all-time quarterly records
• Net income increased 24% to an all-time quarterly record of $146.7 million ($5.12 per diluted share)
• Shareholders' equity reached a record $2.7 billion, a 19% increase from a year ago, with book value per share of $100
• New contracts increased 3% to 2,255
• Backlog sales value increased to $1.82 billion, up 3%
• Repurchased $50 million of common stock
• Return on equity of 21%

The Company reported pre-tax income of $194.1 million and net income of $146.7 million ($5.12 per diluted share), both all-time quarterly records. This compares to pre-tax income of $155.4 million and net income of $118.0 million, or $4.12 per diluted share, for the second quarter of 2023. For the six months ended June 30, 2024, pre-tax income increased to a record $374.4 million and net income increased to a record $284.8 million, or $9.90 per diluted share, compared to $291.3 million and $221.1 million, or $7.77 per diluted share, for the same period of 2023, respectively.

Homes delivered in 2024's second quarter increased 12% to 2,224 homes. This compares to 1,990 homes delivered in 2023's second quarter. Homes delivered for the six months ended June 30, 2024 increased 10% to 4,382 from 2023's deliveries of 3,997. New contracts for the second quarter of 2024 increased 3% to 2,255 compared to 2,197 in 2023.  For the first half of 2024, new contracts increased 10% to 4,802 compared to 4,368 in 2023. Homes in backlog at June 30, 2024 had a total sales value of $1.82 billion, a 3% increase from a year ago. Backlog units at June 30, 2024 decreased 2% to 3,422 homes, with an average sales price of $533,000. At June 30, 2023, backlog sales value was $1.78 billion, with backlog units of 3,508 and an average sales price of $507,000. M/I Homes had 211 communities at June 30, 2024 compared to 195 communities at June 30, 2023. The Company's cancellation rate was 10% in both the second quarter of 2024 and the second quarter of 2023.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We had a very strong second quarter highlighted by all-time quarterly records in income, gross margins and pre-tax margins. For the quarter, revenue increased by 9%, gross margins were 28% compared to 25% a year-ago, pre-tax margins were 17.5% compared to 15.3% a year ago, and pre-tax income improved by 25% to an all-time record $194.1 million. These results produced a solid 21% return on equity."

Mr. Schottenstein continued, "Our financial condition is strong. We ended the quarter with record shareholders' equity of $2.7 billion, an increase of 19% from a year ago, book value of $100 per share, cash of $837 million, a homebuilding debt to capital ratio of 20%, and a net-debt-to-capital ratio of negative 6%. Given our first-half performance, along with the strength of our balance sheet, low debt levels, diverse product offerings and well-located communities, we are positioned to have a very 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 July 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				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
New contracts	2,255		2,197		4,802		4,368
Average community count	215		198		214		197
Cancellation rate	10 %		10 %		9 %		12 %
Backlog units	3,422		3,508		3,422		3,508
Backlog sales value	$  1,822,686		$  1,777,657		$  1,822,686		$  1,777,657
Homes delivered	2,224		1,990		4,382		3,997
Average home closing price	$           482		$           493		$           477		$           489
Homebuilding revenue:
Housing revenue	$  1,072,044		$   980,198		$  2,088,557		$  1,955,144
Land revenue	6,975		8,549		10,203		8,852
Total homebuilding revenue	$  1,079,019		$   988,747		$  2,098,760		$  1,963,996
Financial services revenue	30,762		25,266		57,724		50,547
Total revenue	$  1,109,781		$  1,014,013		$  2,156,484		$  2,014,543
Cost of sales - operations	800,501		755,829		1,563,861		1,521,733
Gross margin	$   309,280		$   258,184		$   592,623		$   492,810
General and administrative expense	63,994		55,654		120,078		106,614
Selling expense	58,495		51,871		112,435		100,951
Operating income	$   186,791		$   150,659		$   360,110		$   285,245
Other income	—		(28)		—		(35)
Interest income, net of interest expense	(7,348)		(4,670)		(14,268)		(6,059)
Income before income taxes	$   194,139		$   155,357		$   374,378		$   291,339
Provision for income taxes	47,393		37,356		89,571		70,272
Net income	$   146,746		$   118,001		$   284,807		$   221,067
Earnings per share:
Basic	$          5.26		$          4.25		$        10.18		$          7.98
Diluted	$          5.12		$          4.12		$          9.90		$          7.77
Weighted average shares outstanding:
Basic	27,878		27,792		27,965		27,698
Diluted	28,668		28,624		28,777		28,469

 

M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts)
	As of
	June 30,
	2024		2023
Assets:
Total cash, cash equivalents and restricted cash (1)	$      837,458		$      668,287
Mortgage loans held for sale	227,254		190,845
Inventory:
Lots, land and land development	1,467,961		1,296,486
Land held for sale	4,235		15,183
Homes under construction	1,306,650		1,207,759
Other inventory	159,618		167,586
Total Inventory	$  2,938,464		$  2,687,014
Property and equipment - net	36,438		35,495
Investments in joint venture arrangements	46,180		41,988
Operating lease right-of-use assets	56,697		58,404
Goodwill	16,400		16,400
Deferred income tax asset	15,313		18,019
Other assets	165,866		145,297
Total Assets	$  4,340,070		$  3,861,749
Liabilities:
Debt - Homebuilding Operations:
Senior notes due 2028 - net	$      397,266		$      396,492
Senior notes due 2030 - net	297,117		296,613
Total Debt - Homebuilding Operations	$      694,383		$      693,105
Notes payable bank - financial services operations	222,792		186,396
Total Debt	$      917,175		$      879,501
Accounts payable	278,859		264,656
Operating lease liabilities	58,043		59,461
Other liabilities	344,876		359,672
Total Liabilities	$  1,598,953		$  1,563,290
Shareholders' Equity	2,741,117		2,298,459
Total Liabilities and Shareholders' Equity	$  4,340,070		$  3,861,749
Book value per common share	$        100.03		$          82.73
Homebuilding debt to capital ratio (2)	20 %		23 %

(1)	Includes $0.2 million and $0.9 million of restricted cash and cash held in escrow for the quarters ended June 30, 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				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Cash provided by operating activities	$          27,511		$        166,190		$       143,283		$       417,689
Cash (used in) provided by investing activities	$        (10,433)		$            1,991		$        (27,541)		$          (2,802)
Cash used in financing activities	$        (49,782)		$        (42,458)		$        (11,088)		$        (58,142)
Land/lot purchases	$        119,182		$          96,068		$       226,842		$       141,714
Land development spending	$        144,539		$        108,914		$       263,906		$       201,333
Land sale revenue	$            6,975		$            8,549		$         10,203		$           8,852
Land sale gross profit	$            1,933		$               892		$           3,246		$              889
Financial services pre-tax income	$          14,400		$         11,159		$         26,712		$         23,800

 

M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results (1) (Dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$       146,746		$       118,001		$       284,807		$       221,067
Add:
Provision for income taxes	47,393		37,356		89,571		70,272
Interest income - net	(10,686)		(6,980)		(20,453)		(10,653)
Interest amortized to cost of sales	7,938		8,734		16,240		16,774
Depreciation and amortization	4,607		4,266		9,074		8,663
Non-cash charges	3,810		2,301		7,349		4,374
Adjusted EBITDA	$       199,808		$       163,678		$       386,588		$       310,497

(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		2024		2023		Change			2024		2023		Change
Northern		1,002		949		6 %			2,164		1,777		22 %
Southern		1,253		1,248		— %			2,638		2,591		2 %
Total		2,255		2,197		3 %			4,802		4,368		10 %
	HOMES DELIVERED
		Three Months Ended							Six Months Ended
		June 30,							June 30,
						%							%
Region		2024		2023		Change			2024		2023		Change
Northern		951		783		21 %			1,794		1,580		14 %
Southern		1,273		1,207		5 %			2,588		2,417		7 %
Total		2,224		1,990		12 %			4,382		3,997		10 %
		BACKLOG
		June 30, 2024							June 30, 2023
				Dollars		Average					Dollars		Average
Region		Units		(millions)		Sales Price			Units		(millions)		Sales Price
Northern		1,618		$            853		$    527,000			1,253		$           631		$   504,000
Southern		1,804		$            970		$    538,000			2,255		$        1,147		$   509,000
Total		3,422		$        1,823		$    533,000			3,508		$        1,778		$   507,000
		LAND POSITION SUMMARY
		June 30, 2024							June 30, 2023
		Lots		Lots Under					Lots		Lots Under
Region		Owned		Contract		Total			Owned		Contract		Total
Northern		6,784		10,250		17,034			7,545		7,199		14,744
Southern		16,520		15,898		32,418			15,893		10,695		26,588
Total		23,304		26,148		49,452			23,438		17,894		41,332

 

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SOURCE M/I Homes, Inc.

FAQ

What was M/I Homes' (MHO) revenue in Q2 2024?

M/I Homes reported revenue of $1.1 billion in Q2 2024, a 9% increase from the previous year and a second quarter record.

How many homes did M/I Homes (MHO) deliver in Q2 2024?

M/I Homes delivered 2,224 homes in Q2 2024, a 12% increase compared to 1,990 homes delivered in Q2 2023.

What was M/I Homes' (MHO) net income for Q2 2024?

M/I Homes reported a record net income of $146.7 million, or $5.12 per diluted share, for Q2 2024, a 24% increase from the previous year.

What was M/I Homes' (MHO) backlog value as of June 30, 2024?

M/I Homes' backlog had a total sales value of $1.82 billion as of June 30, 2024, a 3% increase from the previous year.

What was M/I Homes' (MHO) return on equity in Q2 2024?

M/I Homes reported a return on equity of 21% for Q2 2024.