CURRENT REPORT |
Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934 |
M/I HOMES, INC. | ||||
(Exact name of registrant as specified in its charter) | ||||
Ohio | 1-12434 | 31-1210837 | ||
(State or other jurisdiction | (Commission | (I.R.S. Employer | ||
of incorporation) | File Number) | Identification No.) |
3 Easton Oval, Suite 500, Columbus OH | 43,219 |
(Address of principal executive offices) | (Zip Code) |
(614) 418-8000 |
(Telephone Number) |
N/A |
(Former name or former address, if changed since last report) |
Exhibit No. | Description of Exhibits | |
99.1 | Press release dated October 25, 2017 |
By: | /s/Ann Marie W. Hunker |
Ann Marie W. Hunker | |
Vice President, Controller | |
and Chief Accounting Officer |
Exhibit No. | Description of Exhibits | |
99.1 |
• | Net income increased to $22.3 million ($0.64 per diluted share) from $10.9 million ($0.35 per diluted share) in 2016 |
• | Diluted earnings per share increased to $0.71, excluding the $0.07 per share impact of a $2.3 million equity adjustment due to the redemption of preferred shares. In 2016’s third quarter, diluted earnings per share was $0.65, excluding the impact of stucco-related charges |
• | New contracts increased 13% to 1,225, a record level for the third quarter |
• | Homes delivered increased 9% to a third quarter record 1,256 |
• | Revenue increased 8% to a third quarter record $476 million |
• | Backlog sales value increased 11% to $912 million; backlog units increased 7% to 2,378 |
• | Estimated impact of hurricanes - 20 delayed closings and $700,000 of expense |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
New contracts | 1,225 | 1,088 | 4,079 | 3,756 | |||||||||||
Average community count | 183 | 174 | 182 | 176 | |||||||||||
Cancellation rate | 15 | % | 15 | % | 14 | % | 13 | % | |||||||
Backlog units | 2,378 | 2,221 | |||||||||||||
Backlog sales value | $ | 911,657 | $ | 821,494 | |||||||||||
Homes delivered | 1,256 | 1,148 | 3,505 | 3,066 | |||||||||||
Average home closing price | $ | 366 | $ | 365 | $ | 368 | $ | 361 | |||||||
Homebuilding revenue: | |||||||||||||||
Housing revenue | $ | 459,342 | $ | 419,228 | $ | 1,289,893 | $ | 1,105,701 | |||||||
Land revenue | 5,318 | 12,674 | 12,438 | 31,816 | |||||||||||
Total homebuilding revenue | $ | 464,660 | $ | 431,902 | $ | 1,302,331 | $ | 1,137,517 | |||||||
Financial services revenue | 11,763 | 10,562 | 37,938 | 30,564 | |||||||||||
Total revenue | $ | 476,423 | $ | 442,464 | $ | 1,340,269 | $ | 1,168,081 | |||||||
Cost of sales - operations | 374,673 | 349,135 | 1,054,052 | 924,106 | |||||||||||
Cost of sales - stucco-related charges | — | 14,500 | 8,500 | 19,409 | |||||||||||
Gross margin | $ | 101,750 | $ | 78,829 | $ | 277,717 | $ | 224,566 | |||||||
General and administrative expense | 31,337 | 29,160 | 89,209 | 78,249 | |||||||||||
Selling expense | 31,136 | 27,663 | 88,666 | 75,462 | |||||||||||
Operating income | $ | 39,277 | $ | 22,006 | $ | 99,842 | $ | 70,855 | |||||||
Equity in income from joint venture arrangements | (71 | ) | (24 | ) | (198 | ) | (413 | ) | |||||||
Interest expense | 4,675 | 3,587 | 13,847 | 13,160 | |||||||||||
Income before income taxes | $ | 34,673 | $ | 18,443 | $ | 86,193 | $ | 58,108 | |||||||
Provision for income taxes | 12,346 | 7,501 | 29,994 | 22,061 | |||||||||||
Net income | $ | 22,327 | $ | 10,942 | $ | 56,199 | $ | 36,047 | |||||||
Excess of fair value over book value of preferred shares subject to redemption | 2,257 | — | 2,257 | — | |||||||||||
Preferred dividends | 1,218 | 1,218 | 3,656 | 3,656 | |||||||||||
Net income to common shareholders | $ | 18,852 | $ | 9,724 | $ | 50,286 | $ | 32,391 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.74 | $ | 0.39 | $ | 2.00 | $ | 1.31 | |||||||
Diluted | $ | 0.64 | $ | 0.35 | $ | 1.73 | $ | 1.17 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 25,581 | 24,669 | 25,106 | 24,665 | |||||||||||
Diluted | 30,675 | 30,139 | 30,539 | 30,093 |
As of | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Assets: | |||||||
Total cash, cash equivalents and restricted cash | $ | 103,636 | $ | 23,308 | |||
Mortgage loans held for sale | 91,987 | 95,545 | |||||
Inventory: | |||||||
Lots, land and land development | 663,170 | 554,150 | |||||
Land held for sale | 12,330 | 15,956 | |||||
Homes under construction | 645,816 | 544,350 | |||||
Other inventory | 134,493 | 110,697 | |||||
Total Inventory | $ | 1,455,809 | $ | 1,225,153 | |||
Property and equipment - net | 25,320 | 21,792 | |||||
Investments in joint venture arrangements | 22,981 | 26,528 | |||||
Deferred income taxes, net of valuation allowance | 29,569 | 39,944 | |||||
Other assets | 55,393 | 64,967 | |||||
Total Assets | $ | 1,784,695 | $ | 1,497,237 | |||
Liabilities: | |||||||
Debt - Homebuilding Operations: | |||||||
Senior notes due 2021 - net | $ | 296,505 | $ | 295,401 | |||
Senior notes due 2025 - net | 245,958 | — | |||||
Convertible senior subordinated notes due 2017 - net | — | 56,949 | |||||
Convertible senior subordinated notes due 2018 - net | 85,955 | 85,246 | |||||
Notes payable - homebuilding | — | 85,000 | |||||
Notes payable - other | 4,057 | 8,566 | |||||
Total Debt - Homebuilding Operations | $ | 632,475 | $ | 531,162 | |||
Preferred shares subject to redemption | 50,420 | — | |||||
Notes payable bank - financial services operations | 91,275 | 91,483 | |||||
Total Debt | $ | 774,170 | $ | 622,645 | |||
Accounts payable | 120,598 | 110,179 | |||||
Other liabilities | 166,954 | 132,821 | |||||
Total Liabilities | $ | 1,061,722 | $ | 865,645 | |||
Shareholders’ Equity | 722,973 | 631,592 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,784,695 | $ | 1,497,237 | |||
Book value per common share | $ | 26.27 | $ | 23.58 | |||
Homebuilding debt / capital ratio(1) | 47 | % | 46 | % |
(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. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Adjusted EBITDA(1) | $ | 48,765 | $ | 31,284 | $ | 126,042 | $ | 96,402 | ||||||||
Cash (used in) provided by operating activities | $ | (26,705 | ) | $ | (14,437 | ) | (2) | $ | (66,025 | ) | $ | 26,502 | (2) | |||
Cash used in investing activities | $ | (6,022 | ) | $ | (4,868 | ) | (2) | $ | (5,065 | ) | $ | (21,679 | ) | (2) | ||
Cash provided by financing activities | $ | 106,423 | $ | 12,613 | $ | 140,285 | $ | 5,384 | ||||||||
Land/lot purchases | $ | 65,511 | $ | 49,612 | $ | 250,141 | $ | 146,998 | ||||||||
Land development spending | $ | 53,755 | $ | 48,230 | $ | 137,019 | $ | 121,763 | ||||||||
Land sale revenue | $ | 5,318 | $ | 12,674 | $ | 12,438 | $ | 31,816 | ||||||||
Land sale gross profit | $ | 365 | $ | 1,063 | $ | 883 | $ | 3,095 | ||||||||
Financial services pre-tax income | $ | 5,231 | $ | 5,393 | $ | 19,988 | $ | 16,136 |
(1) | See “Non-GAAP Financial Results” table below. |
(2) | During the fourth quarter of 2016, we elected to early-adopt Accounting Standards Update 2016-18, Statement of Cash Flows: Restricted Cash. Certain amounts above have been adjusted to apply the new method retrospectively. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 22,327 | $ | 10,942 | $ | 56,199 | $ | 36,047 | |||||||
Add: | |||||||||||||||
Provision for income taxes | 12,346 | 7,501 | 29,994 | 22,061 | |||||||||||
Interest expense net of interest income | 4,003 | 2,980 | 11,719 | 11,531 | |||||||||||
Interest amortized to cost of sales | 4,988 | 4,963 | 13,597 | 13,138 | |||||||||||
Depreciation and amortization | 3,633 | 3,541 | 10,499 | 10,142 | |||||||||||
Non-cash charges | 1,468 | 1,357 | 4,034 | 3,483 | |||||||||||
Adjusted EBITDA | $ | 48,765 | $ | 31,284 | $ | 126,042 | $ | 96,402 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total revenue | $ | 476,423 | $ | 442,464 | $ | 1,340,269 | $ | 1,168,081 | |||||||
Income before income taxes | $ | 34,673 | $ | 18,443 | $ | 86,193 | $ | 58,108 | |||||||
Add: Stucco-related charges | — | 14,500 | 8,500 | 19,409 | |||||||||||
Adjusted income before income taxes | $ | 34,673 | $ | 32,943 | $ | 94,693 | $ | 77,517 | |||||||
Pre-tax operating margin percentage | 7.3 | % | 4.2 | % | 6.4 | % | 5.0 | % | |||||||
Adjusted pre-tax operating margin percentage | 7.3 | % | 7.4 | % | 7.1 | % | 6.6 | % | |||||||
Net income | $ | 22,327 | $ | 10,942 | $ | 56,199 | $ | 36,047 | |||||||
Add: Stucco-related charges - net of tax | — | 8,990 | 5,440 | 12,034 | |||||||||||
Adjusted net income | $ | 22,327 | $ | 19,932 | $ | 61,639 | $ | 48,081 | |||||||
Stucco-related charges - net of tax | $ | — | $ | 8,990 | $ | 5,440 | $ | 12,034 | |||||||
Divided by: Diluted weighted average shares outstanding | 30,675 | 30,139 | 30,539 | 30,093 | |||||||||||
Diluted earnings per share related to stucco-related charges | $ | — | $ | 0.30 | $ | 0.18 | $ | 0.40 | |||||||
Excess of fair value over book value of preferred shares subject to redemption | $ | 2,257 | $ | — | $ | 2,257 | $ | — | |||||||
Divided by: Diluted weighted average shares outstanding | 30,675 | 30,139 | 30,539 | 30,093 | |||||||||||
Diluted earnings per share related to preferred shares subject to redemption | $ | 0.07 | $ | — | $ | 0.07 | $ | — | |||||||
Add: Diluted earnings per share | 0.64 | 0.35 | 1.73 | 1.17 | |||||||||||
Adjusted diluted earnings per share | $ | 0.71 | $ | 0.65 | $ | 1.98 | $ | 1.57 |
(3) | 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. |
NEW CONTRACTS | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||
Midwest | 458 | 407 | 13 | % | 1,545 | 1,409 | 10 | % | |||||||||
Southern | 583 | 437 | 33 | % | 1,798 | 1,444 | 25 | % | |||||||||
Mid-Atlantic | 184 | 244 | (25 | )% | 736 | 903 | (18 | )% | |||||||||
Total | 1,225 | 1,088 | 13 | % | 4,079 | 3,756 | 9 | % |
HOMES DELIVERED | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
% | % | ||||||||||||||||
Region | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||
Midwest | 461 | 443 | 4 | % | 1,277 | 1,163 | 10 | % | |||||||||
Southern | 520 | 410 | 27 | % | 1,459 | 1,158 | 26 | % | |||||||||
Mid-Atlantic | 275 | 295 | (7 | )% | 769 | 745 | 3 | % | |||||||||
Total | 1,256 | 1,148 | 9 | % | 3,505 | 3,066 | 14 | % |
BACKLOG | |||||||||||||||||||||
September 30, 2017 | September 30, 2016 | ||||||||||||||||||||
Dollars | Average | Dollars | Average | ||||||||||||||||||
Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | |||||||||||||||
Midwest | 1,025 | $ | 416 | $ | 406,000 | 918 | $ | 356 | $ | 388,000 | |||||||||||
Southern | 1,013 | $ | 360 | $ | 355,000 | 846 | $ | 296 | $ | 350,000 | |||||||||||
Mid-Atlantic | 340 | $ | 136 | $ | 399,000 | 457 | $ | 170 | $ | 371,000 | |||||||||||
Total | 2,378 | $ | 912 | $ | 383,000 | 2,221 | $ | 821 | $ | 370,000 |
LAND POSITION SUMMARY | ||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||
Lots | Lots Under | Lots | Lots Under | |||||||||||
Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||
Midwest | 4,622 | 4,947 | 9,569 | 3,846 | 5,378 | 9,224 | ||||||||
Southern | 5,081 | 7,688 | 12,769 | 4,213 | 5,333 | 9,546 | ||||||||
Mid-Atlantic | 1,746 | 2,779 | 4,525 | 2,068 | 2,381 | 4,449 | ||||||||
Total | 11,449 | 15,414 | 26,863 | 10,127 | 13,092 | 23,219 |
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