M/I Homes Reports Fourth Quarter and Year-End Results
- Record shareholders' equity of $2.5 billion, a 22% increase from the previous year
- New contracts increased 20% to 7,977, highlighting strong demand for the company's homes
- Return on equity of 20.2% and a homebuilding debt to capital ratio of 22% showcase the company's financial strength
- Homes delivered and revenue decreased, affecting net income and pre-tax income
- Backlog sales value and average sales price in backlog also saw a decrease
Insights
Observing the reported financials, M/I Homes, Inc.'s decrease in net income and revenue year-over-year indicates margin pressures, potentially from rising costs or a cooling housing market. Despite this, the significant increase in new contracts suggests a strong demand for new homes. The reduction in the homebuilding debt to capital ratio from 25% to 22% is a positive sign of the company's financial prudence, enhancing its creditworthiness and potentially lowering future borrowing costs.
The record shareholders' equity and cash position, coupled with no borrowings under their credit facility, provide M/I Homes with a solid foundation to weather economic uncertainties. The 20.2% return on equity is robust, reflecting efficient utilization of shareholders' funds. However, investors should monitor the company's ability to maintain profitability in the face of potential headwinds such as interest rate hikes and inflationary pressures.
The increase in new contracts by 20% and the expansion of active communities from 196 to 213 reflect a strategic growth in operations, aligning with favorable demographic trends and housing undersupply. The reduction in backlog sales value and average sales price might indicate a strategic shift in product mix or pricing to stimulate demand or adapt to market conditions.
While the decreased cancellation rate from 30% to 13% is a strong indicator of improved consumer confidence or changes in market dynamics, it is essential to understand the broader housing market trends. Factors such as employment rates, wage growth and mortgage rates will continue to influence the company's performance. The housing industry's susceptibility to economic cycles means that M/I Homes' future results will be closely tied to the health of the economy.
The company's performance must be contextualized within the broader economic environment, which includes higher interest rates and inflationary pressures. These factors typically dampen housing demand due to increased mortgage costs and decreased consumer purchasing power. Despite this, M/I Homes' strong performance in new contracts could signal underlying strength in the housing market or the company's resilience to economic headwinds.
The undersupply of housing and favorable demographic trends mentioned by the CEO can act as buffers against economic downturns, sustaining demand. The company's positioning, with a diverse product offering and well-located communities, could allow it to capitalize on niche market opportunities and demographic shifts, such as migration patterns influenced by remote work trends.
2023 Fourth Quarter Results:
- New contracts increased
61% to 1,588 - Backlog sales value of
$1.6 billion $1.7 billion - Homes delivered decreased
15% to 2,019 - Revenue of
$972.6 million 20% - Pre-tax income of
$138.0 million 16% - Net income decreased
19% to$105.3 million $3.66 $130.4 million $4.65
2023 Full Year Results:
- New contracts increased
20% to 7,977 - Homes delivered of 8,112 compared to 8,366 in 2022, a
3% decrease - Revenue of
$4.0 billion 2% over last year - Pre-tax income of
$607.3 million 4% decrease compared to$635.2 million - Net income of
$465.4 million $16.21 $490.7 million $17.24 - Shareholders' equity reached an all-time record of
$2.5 billion 22% increase from a year ago, with book value per share of$91 - Return on equity of
20.2% - Homebuilding debt to capital ratio of
22% compared to25% at December 31, 2022
For the fourth quarter of 2023, the Company reported net income of
Homes delivered in 2023's fourth quarter reached 2,019, a
Robert H. Schottenstein, Chief Executive Officer and President, commented, "2023 was a very strong year for our Company highlighted by earning
Mr. Schottenstein continued, "We are in excellent financial condition. We ended the year with record shareholders' equity of
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 January 2025.
M/I Homes, Inc. is one of the nation's leading homebuilders of single-family homes. The Company has homebuilding operations in
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, 2022, 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 | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
New contracts | 1,588 | 985 | 7,977 | 6,668 | |||
Average community count | 209 | 187 | 202 | 179 | |||
Cancellation rate | 13 % | 30 % | 11 % | 14 % | |||
Backlog units | 3,002 | 3,137 | 3,002 | 3,137 | |||
Backlog sales value | |||||||
Homes delivered | 2,019 | 2,384 | 8,112 | 8,366 | |||
Average home closing price | $ 471 | $ 492 | $ 483 | $ 479 | |||
Homebuilding revenue: | |||||||
Housing revenue | $ 950,872 | ||||||
Land revenue | 2,025 | 21,874 | 25,301 | 34,771 | |||
Total homebuilding revenue | $ 952,897 | ||||||
Financial services revenue | 19,691 | 22,611 | 93,829 | 86,195 | |||
Total revenue | $ 972,588 | ||||||
Cost of sales - operations | 728,202 | 942,469 | 3,014,573 | 3,087,551 | |||
Gross margin | $ 244,386 | $ 274,531 | |||||
General and administrative expense | 60,284 | 52,565 | 222,765 | 214,811 | |||
Selling expense | 54,256 | 57,580 | 208,942 | 191,580 | |||
Operating income | $ 129,846 | $ 164,386 | $ 587,222 | $ 637,451 | |||
Other loss (income) | 1 | 11 | (33) | (6) | |||
Interest (income) expense | (8,129) | 185 | (20,022) | 2,250 | |||
Income before income taxes | $ 137,974 | $ 164,190 | $ 607,277 | $ 635,207 | |||
Provision for income taxes | 32,692 | 33,795 | 141,912 | 144,545 | |||
Net income | $ 105,282 | $ 130,395 | $ 465,365 | $ 490,662 | |||
Earnings per share: | |||||||
Basic | $ 3.79 | $ 4.75 | $ 16.76 | $ 17.60 | |||
Diluted | $ 3.66 | $ 4.65 | $ 16.21 | $ 17.24 | |||
Weighted average shares outstanding: | |||||||
Basic | 27,769 | 27,435 | 27,769 | 27,876 | |||
Diluted | 28,756 | 28,017 | 28,716 | 28,463 | |||
M/I Homes, Inc. and Subsidiaries Summary Balance Sheet and Other Information (unaudited) (Dollars in thousands, except per share amounts) | |||
As of | |||
December 31, | |||
2023 | 2022 | ||
Assets: | |||
Total cash, cash equivalents and restricted cash | $ 732,804 | $ 311,542 | |
Mortgage loans held for sale | 176,329 | 242,539 | |
Inventory: | |||
Lots, land and land development | 1,446,576 | 1,294,779 | |
Land held for sale | 6,932 | 3,331 | |
Homes under construction | 1,177,101 | 1,366,804 | |
Other inventory | 166,542 | 163,688 | |
Total Inventory | $ 2,797,151 | $ 2,828,602 | |
Property and equipment - net | 34,918 | 37,446 | |
Operating lease right-of-use assets | 56,364 | 60,416 | |
Goodwill | 16,400 | 16,400 | |
Investments in joint venture arrangements | 44,011 | 51,554 | |
Deferred income tax asset | 16,094 | 18,019 | |
Other assets | 148,369 | 148,405 | |
Total Assets | $ 4,022,440 | $ 3,714,923 | |
Liabilities: | |||
Debt - Homebuilding Operations: | |||
Senior notes due 2028 - net | 396,879 | 396,105 | |
Senior notes due 2030 - net | 296,865 | 296,361 | |
Total Debt - Homebuilding Operations | $ 693,744 | $ 692,466 | |
Notes payable bank - financial services operations | 165,844 | 245,741 | |
Total Debt | $ 859,588 | $ 938,207 | |
Accounts payable | 204,678 | 228,597 | |
Operating lease liabilities | 57,566 | 61,310 | |
Other liabilities | 383,669 | 416,084 | |
Total Liabilities | $ 1,505,501 | $ 1,644,198 | |
Shareholders' Equity | 2,516,939 | 2,070,725 | |
Total Liabilities and Shareholders' Equity | $ 4,022,440 | $ 3,714,923 | |
Book value per common share | $ 90.66 | $ 75.46 | |
Homebuilding debt / capital ratio(1) | 22 % | 25 % | |
(1) | 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 (Dollars in thousands) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Cash provided by operating activities | $ 54,901 | $ 198,220 | $ 552,131 | $ 184,071 | |||
Cash used in investing activities | $ (4,500) | $ (8,282) | $ (18,632) | $ (27,380) | |||
Cash (used in) provided by financing activities | $ (53,849) | $ 53,843 | $ (112,237) | $ (81,517) | |||
Land/lot purchases | $ 95,930 | $ 51,480 | $ 343,504 | $ 341,084 | |||
Land development spending | $ 159,550 | $ 146,937 | $ 512,105 | $ 496,177 | |||
Land sale revenue | $ 2,025 | $ 21,874 | $ 25,301 | $ 34,771 | |||
Land sale gross profit | $ 356 | $ 8,827 | $ 3,360 | $ 11,735 | |||
Financial services pre-tax income | $ 4,676 | $ 9,655 | $ 38,354 | $ 39,260 | |||
M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results (1) (Dollars in thousands) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income | $ 105,282 | $ 130,395 | $ 465,365 | $ 490,662 | |||
Add: | |||||||
Provision for income taxes | 32,692 | 33,795 | 141,912 | 144,545 | |||
Interest income | (10,908) | (2,034) | (30,030) | (4,403) | |||
Interest amortized to cost of sales | 7,724 | 8,724 | 33,326 | 30,270 | |||
Depreciation and amortization | 4,479 | 4,350 | 17,369 | 17,174 | |||
Non-cash charges | 13,241 | 20,526 | 20,247 | 27,139 | |||
Adjusted EBITDA | $ 152,510 | $ 195,756 | $ 648,189 | $ 705,387 | |||
(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 | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
% | % | |||||||||||
Region | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Northern | 699 | 369 | 89 % | 3,361 | 2,747 | 22 % | ||||||
Southern | 889 | 616 | 44 % | 4,616 | 3,921 | 18 % | ||||||
Total | 1,588 | 985 | 61 % | 7,977 | 6,668 | 20 % | ||||||
HOMES DELIVERED | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
% | % | |||||||||||
Region | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Northern | 848 | 971 | (13) % | 3,169 | 3,581 | (12) % | ||||||
Southern | 1,171 | 1,413 | (17) % | 4,943 | 4,785 | 3 % | ||||||
Total | 2,019 | 2,384 | (15) % | 8,112 | 8,366 | (3) % | ||||||
BACKLOG | ||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||
Dollars | Average | Dollars | Average | |||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | ||||||
Northern | 1,248 | $ 663 | $ 531,000 | 1,056 | $ 552 | $ 523,000 | ||||||
Southern | 1,754 | $ 912 | $ 520,000 | 2,081 | $ 1,146 | $ 551,000 | ||||||
Total | 3,002 | $ 1,576 | $ 525,000 | 3,137 | $ 1,698 | $ 541,000 | ||||||
LAND POSITION SUMMARY | ||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||
Northern | 6,852 | 8,935 | 15,787 | 7,972 | 7,406 | 15,378 | ||||||
Southern | 17,522 | 12,351 | 29,873 | 17,032 | 9,643 | 26,675 | ||||||
Total | 24,374 | 21,286 | 45,660 | 25,004 | 17,049 | 42,053 | ||||||
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SOURCE M/I Homes, Inc.
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