EX-99.1 2 exhbit991earningspressrele.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE 04-25-18 Exhibit


Exhibit 99.1
mihomeslogowithoutwelcometob.jpg

M/I Homes Reports
2018 First Quarter Results

Columbus, Ohio (April 25, 2018) - M/I Homes, Inc. (NYSE:MHO) announced results for the three months ended March 31, 2018.

2018 First Quarter Highlights:
•
New contracts increased 20% to an all-time quarterly record of 1,739 contracts
•
Backlog sales value increased 31% to a first quarter record of $1.1 billion, and backlog units
    increased 24% to 2,744 homes
•
Revenue increased 8% to a first quarter record of $438 million
•
Homes delivered increased 8% to a first quarter record of 1,122 homes
•
Pre-tax income of $23.9 million; excluding $2.6 million of acquisition-related costs,
pre-tax income was $26.5 million compared to $26.3 million in 2017
•
Net income of $18.1 million ($0.60 per diluted share) compared to $16.9 million ($0.55 per diluted share)
in 2017; effective tax rate of 24% compared to 36% in last year’s first quarter

For the first quarter of 2018, the Company reported net income of $18.1 million, or $0.60 per diluted share. This compares to net income of $16.9 million, or $0.55 per diluted share, for the first quarter of 2017. On March 1, 2018, the Company closed on the acquisition of Pinnacle Homes, a homebuilder in the greater Detroit, Michigan market. Expenses of $2.6 million (including $0.9 million in housing cost of sales for purchase accounting adjustments) related to this transaction were included in our first quarter results.

New contracts for the first quarter reached an all-time quarterly record of 1,739, increasing 20% from the 1,454 contracts recorded in 2017's first quarter. Homes delivered in 2018’s first quarter increased 8% to a first quarter record of 1,122. This compares to 1,038 homes delivered in 2017’s first quarter. Homes in backlog at March 31, 2018 had a first quarter record total sales value of $1.1 billion, a 31% increase over a year ago, with backlog units increasing 24% to 2,744 and an average sales price of $398,000. At March 31, 2017, backlog sales value was $834 million, with backlog units of 2,220 and an average sales price of $376,000. M/I Homes had 205 active communities at March 31, 2018, an increase of 11% over our 184 communities at March 31, 2017. The Company's cancellation rate was 12% in the first quarter of 2018 compared to 14% in 2017's first quarter.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had a strong first quarter highlighted by record new contracts of 1,739 - a 20% increase from last year’s first quarter, and first quarter records in homes delivered and revenue. We also achieved record first quarter backlog, with sales value of $1.1 billion - a 31% increase over 2017’s first quarter, and our units in backlog increased by 24%. Our overhead expense ratio improved 30 basis points and diluted earnings per share improved 9% from 2017’s first quarter. ”

Mr. Schottenstein continued, “We are off to a very solid start in 2018. On March 1, we successfully closed on the acquisition of Detroit-based Pinnacle Homes, strengthening and expanding our geographic footprint. Our financial condition remains strong. We ended the quarter with shareholders’ equity of $786 million and a homebuilding debt to capital ratio of 48%. Looking ahead, with our record first quarter backlog, planned new community openings and




steady housing market conditions, we are poised to have a solid 2018. We will continue to focus on increasing profitability, growing our market share, and investing in attractive land opportunities.”

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 April 2019.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 107,000 homes. The Company’s homes are marketed and sold primarily under the trade names M/I Homes and Showcase Collection (exclusively by M/I Homes), and also currently are sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota market and Pinnacle Homes in the Detroit, Michigan market. 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 the Virginia and Maryland suburbs of Washington, D.C.

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, with respect to the impact of the Pinnacle Homes acquisition on operations and results. 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, the risk that the business of Pinnacle Homes will not be successfully integrated as well as factors relating to the economic environment, interest rates, availability of resources, competition, market concentration, land development activities, construction defect, 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, 2017, 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.


Contact M/I Homes, Inc.
Kevin C. Hake, Senior Vice President, Treasurer, (614) 418-8227
Ann Marie W. Hunker, Vice President, Controller, (614) 418-8225





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,
 
2018
 
2017
New contracts
1,739

 
1,454

Average community count
197

 
181

Cancellation rate
12
%
 
14
%
Backlog units
2,744

 
2,220

Backlog sales value
$
1,091,194

 
$
834,415

Homes delivered
1,122

 
1,038

Average home closing price
$
373

 
$
373

 
 
 
 
Homebuilding revenue:
 
 
 
   Housing revenue
$
418,424

 
$
387,458

   Land revenue
4,407

 
5,215

Total homebuilding revenue
$
422,831

 
$
392,673

 
 
 
 
Financial services revenue
15,026

 
14,307

Total revenue
$
437,857

 
$
406,980

 
 
 
 
Cost of sales - operations
347,806

 
320,281

Cost of sales - purchase accounting adjustments
896

 
—

Gross margin
$
89,155

 
$
86,699

General and administrative expense
27,951

 
27,760

Selling expense
30,063

 
27,283

Operating income
$
31,141

 
$
31,656

Acquisition and integration costs
1,700

 
—

Equity in income from joint venture arrangements
(310
)
 
(17
)
Interest expense
5,878

 
5,338

Income before income taxes
$
23,873

 
$
26,335

Provision for income taxes
5,810

 
9,452

Net income
$
18,063

 
$
16,883

Preferred dividends
—

 
1,219

Net income to common shareholders
$
18,063

 
$
15,664

 
 
 
 
Earnings per share:
 
 
 
Basic
$
0.64

 
$
0.63

Diluted
$
0.60

 
$
0.55

 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
28,124

 
24,738

Diluted
30,544

 
30,329





M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)

 
As of
 
March 31,
 
2018
 
2017
Assets:
 
 
 
Total cash, cash equivalents and restricted cash(1)
$
53,577

 
$
38,898

Mortgage loans held for sale
110,612

 
113,596

Inventory:
 
 
 
Lots, land and land development
752,921

 
616,239

Land held for sale
3,571

 
10,475

Homes under construction
678,122

 
538,758

Other inventory
145,730

 
121,146

Total Inventory
$
1,580,344

 
$
1,286,618

 
 
 
 
Property and equipment - net
25,872

 
22,338

Investments in joint venture arrangements
22,066

 
24,218

Goodwill
16,400

 
—

Deferred income tax asset
18,104

 
30,449

Other assets
67,398

 
56,148

Total Assets
$
1,894,373

 
$
1,572,265

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes due 2021 - net
$
297,056

 
$
295,953

Senior notes due 2025 - net
246,181

 
—

Convertible senior subordinated notes due 2017 - net
—

 
57,237

 Convertible senior subordinated notes due 2018 - net
—

 
85,600

 Notes payable - homebuilding
162,300

 
110,900

 Notes payable - other
10,011

 
7,022

Total Debt - Homebuilding Operations
$
715,548

 
$
556,712

 
 
 
 
Notes payable bank - financial services operations
102,711

 
106,937

Total Debt
$
818,259

 
$
663,649

 
 
 
 
Accounts payable
118,839

 
94,403

Other liabilities
170,910

 
142,501

Total Liabilities
$
1,108,008

 
$
900,553

 
 
 
 
Shareholders’ Equity
786,365

 
671,712

Total Liabilities and Shareholders’ Equity
$
1,894,373

 
$
1,572,265

 
 
 
 
Book value per common share
$
27.52

 
$
25.07

Homebuilding debt / capital ratio(2)
48
%
 
45
%
(1)
Includes $7.7 million and $1.0 million of restricted cash and cash held in escrow for the quarters ended March 31, 2018 and 2017, 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
(Dollars in thousands)
 
Three Months Ended
 
March 31,
 
2018
 
2017
Adjusted EBITDA(1)
$
38,581

 
$
39,324

 
 
 
 
Cash used in operating activities
$
(31,190
)
 
$
(23,275
)
Cash (used in) provided by investing activities
$
(97,672
)
 
$
3,206

Cash provided by financing activities
$
30,736

 
$
24,526

 
 
 
 
Land/lot purchases
$
85,045

 
$
81,833

Land development spending
$
41,654

 
$
39,572

Land sale revenue
$
4,407

 
$
5,215

Land sale gross profit
$
404

 
$
376

 
 
 
 
Financial services pre-tax income
$
8,771

 
$
8,562

(1)
See “Non-GAAP Financial Results” table below.



M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (2) 
(Dollars in thousands)
 
Three Months Ended
 
March 31,
 
2018
 
2017
Net income
$
18,063

 
$
16,883

Add:
 
 
 
Provision for income taxes
5,810

 
9,452

Interest expense net of interest income
5,156

 
4,612

Interest amortized to cost of sales
4,864

 
3,766

Depreciation and amortization
3,649

 
3,583

Non-cash charges
1,039

 
1,028

Adjusted EBITDA
$
38,581

 
$
39,324




























M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (2) 
(Dollars and shares in thousands, except per share amounts)
 
Three Months Ended
 
March 31,
 
2018
 
2017
Total revenue
$
437,857

 
$
406,980

 
 
 
 
Income before income taxes
$
23,873

 
$
26,335

Add: Purchase accounting adjustments
896

 
—

Add: Acquisition and integration costs
1,700

 
—

Adjusted income before income taxes
$
26,469

 
$
26,335

 
 
 
 
Pre-tax operating margin percentage
5.5
%
 
6.5
%
Adjusted pre-tax operating margin percentage
6.0
%
 
6.5
%
 
 
 
 
Net income available to common shareholders
$
18,063

 
$
15,664

Add: Purchase accounting adjustments - net of tax
663

 
—

Add: Acquisition and integrations costs - net of tax
1,258

 
—

Adjusted net income available to common shareholders
$
19,984

 
$
15,664

 
 
 
 
Purchase accounting adjustments - net of tax
$
663

 
$
—

Divided by: Diluted weighted average shares outstanding
30,544

 
30,329

Diluted earnings per share related to purchase accounting adjustments
$
0.02

 
$
—

 
 
 
 
Acquisition and integration costs - net of tax
$
1,258

 
$
—

Divided by: Diluted weighted average shares outstanding
30,544

 
30,329

Diluted earnings per share related to acquisition and integration costs
$
0.04

 
$
—

 
 
 
 
Add: Diluted earnings per share
0.60

 
0.55

Adjusted diluted earnings per share
$
0.66

 
$
0.55

(2)
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
2018
 
2017
 
Change
Midwest
698

 
556

 
26
 %
Southern
797

 
590

 
35
 %
Mid-Atlantic
244

 
308

 
(21
)%
Total
1,739

 
1,454

 
20
 %


HOMES DELIVERED
 
Three Months Ended
 
March 31,
 
 
 
 
 
%
Region
2018
 
2017
 
Change
Midwest
411

 
379

 
8
 %
Southern
541

 
419

 
29
 %
Mid-Atlantic
170

 
240

 
(29
)%
Total
1,122

 
1,038

 
8
 %


BACKLOG
 
March 31, 2018
 
March 31, 2017
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
Midwest
1,228

 
$
519

 
$
423,000

 
934

 
$
373

 
$
400,000

Southern
1,164

 
$
425

 
$
365,000

 
845

 
$
295

 
$
349,000

Mid-Atlantic
352

 
$
148

 
$
419,000

 
441

 
$
166

 
$
377,000

Total
2,744

 
$
1,091

 
$
398,000

 
2,220

 
$
834

 
$
376,000



LAND POSITION SUMMARY
 
March 31, 2018
 
 
March 31, 2017
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Midwest
5,138

7,565

12,703

 
 
3,591

5,779

9,370

Southern
6,092

7,526

13,618

 
 
4,859

6,211

11,070

Mid-Atlantic
1,668

2,809

4,477

 
 
1,952

2,028

3,980

Total
12,898

17,900

30,798

 
 
10,402

14,018

24,420