EX-99.1 2 exhbit991earningspressrele.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE 10-27-16 Exhibit


Exhibit 99.1

milogoa01.jpg

M/I Homes Reports
2016 Third Quarter Results

Columbus, Ohio (October 27, 2016) - M/I Homes, Inc. (NYSE:MHO) announced results for the three months and nine months ended September 30, 2016.

2016 Third Quarter Highlights:
•
Net income of $10.9 million ($0.35 per diluted share) which includes a $14.5 million pre-tax charge
($0.30 per diluted share) for stucco-related repairs
•
Net income, excluding the stucco-related charge, increased 28% to $19.9 million or $0.65 per diluted share
•
Revenue increased 22% to a record $442 million
•
New contracts increased 10%; community count up 5%
•
Homes delivered increased 15%; average closing price increased 5%
•
Backlog sales value increased 25% to $821 million; backlog units increased 24% to 2,221

For the third quarter of 2016, the Company reported net income of $10.9 million, or $0.35 per diluted share. This compares to net income of $15.6 million, or $0.51 per diluted share, for the third quarter of 2015. The third quarter of 2016 includes a $14.5 million pre-tax charge ($0.30 per diluted share) for known and estimated future stucco-related repair costs in certain of our Florida communities. For the nine months ended September 30, 2016, the Company reported net income of $36.0 million, or $1.17 per diluted share, compared to net income of $38.5 million, or $1.25 per diluted share, for the same period of 2015. Year-to-date in 2016, the Company has incurred $19.4 million of pre-tax charges ($0.40 per diluted share) related to stucco-related repair costs. Exclusive of these charges, year-to-date net income is $48.1 million compared to $38.5 million in 2015’s same period, a 25% increase.

New contracts for 2016's third quarter were 1,088, an increase of 10% over 2015's third quarter. For the first nine months of 2016, new contracts increased 18% to 3,756 from 3,196 in 2015. M/I Homes had 174 active communities at September 30, 2016 compared to 166 at September 30, 2015. The Company's cancellation rate was 15% in the third quarter of 2016 and 16% in 2015. Homes in backlog increased 24% at September 30, 2016 to 2,221 units, with a sales value of $821 million (a 25% increase over last year’s third quarter), and an average sales price of $370,000. At September 30, 2015, the sales value of homes in backlog was $657 million, with an average sales price of $367,000 and backlog units of 1,788. Homes delivered in 2016's third quarter were 1,148 compared to 994 deliveries in 2015's third quarter - a 15% increase. Homes delivered for the nine months ended September 30, 2016 increased 17% to 3,066 from 2015's deliveries of 2,630.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are very pleased with our third quarter results highlighted by record revenue of $442 million - 22% above 2015’s third quarter, a 10% increase in new contracts, and a 15% increase in homes delivered. We also reached our highest third quarter backlog level in 10 years, with a sales value of $821 million - a 25% increase over 2015’s third quarter. Excluding the $14.5 million stucco-related charge, net income improved by 28%, and our pre-tax operating margin increased to 7.4%. The stucco-related charge we incurred in the third quarter, along with the charges we incurred in the first half of 2016, cover repair costs that we have incurred to date along with our estimate of repair costs that we may incur in the future. ”





Mr. Schottenstein continued, “Looking ahead, 2016, our 40th year in business, is shaping up to be a very good year for M/I Homes. We have a strong backlog going into the last quarter of the year and housing market conditions remain favorable throughout most of our markets. Our financial condition is strong with shareholders’ equity of $632 million and homebuilding debt to capital of 46%. 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 October 2017.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 97,000 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 operates under the name Hans Hagen Homes in its Minneapolis/St. Paul, Minnesota market. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; 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. Words such as “expects,” “anticipates,” “targets,” “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 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, 2015, 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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
New contracts
1,088

 
988

 
3,756

 
3,196

Average community count
174

 
161

 
176

 
155

Cancellation rate
15
%
 
16
%
 
13
%
 
15%

Backlog units
 
 
 
 
2,221

 
1,788

Backlog value
 
 
 
 
$
821,494

 
$
656,917

Homes delivered
1,148

 
994

 
3,066

 
2,630

Average home closing price
$
365

 
$
349

 
$
361

 
$
339

 
 
 
 
 
 
 
 
Homebuilding revenue:
 
 
 
 
 
 
 
   Housing revenue
$
419,228

 
$
346,562

 
$
1,105,701

 
$
891,674

   Land revenue
12,674

 
7,619

 
31,816

 
31,490

Total homebuilding revenue
$
431,902

 
$
354,181

 
$
1,137,517

 
$
923,164

 
 
 
 
 
 
 
 
Financial services revenue
10,562

 
9,276

 
30,564

 
26,308

Total revenue
$
442,464

 
$
363,457

 
$
1,168,081

 
$
949,472

 
 
 
 
 
 
 
 
Cost of sales - operations
349,135

 
285,416

 
924,106

 
744,194

Cost of sales - stucco-related charges
14,500

 
—

 
19,409

 
—

Gross margin
$
78,829

 
$
78,041

 
$
224,566

 
$
205,278

General and administrative expense
29,160

 
23,651

 
78,249

 
64,690

Selling expense
27,663

 
24,270

 
75,462

 
64,891

Operating income
$
22,006

 
$
30,120

 
$
70,855

 
$
75,697

Equity in income of unconsolidated joint ventures
(24
)
 
(36
)
 
(413
)
 
(248
)
Interest expense
3,587

 
3,658

 
13,160

 
11,870

Income before income taxes
$
18,443

 
$
26,498

 
$
58,108

 
$
64,075

Provision for income taxes
7,501

 
10,928

 
22,061

 
25,587

Net income
$
10,942

 
$
15,570

 
$
36,047

 
$
38,488

Preferred dividends
1,218

 
1,218

 
3,656

 
3,656

Net income to common shareholders
$
9,724

 
$
14,352

 
$
32,391

 
$
34,832

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.39

 
$
0.58

 
$
1.31

 
$
1.42

Diluted
$
0.35

 
$
0.51

 
$
1.17

 
$
1.25

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
24,669

 
24,605

 
24,665

 
24,551

Diluted
30,139

 
30,067

 
30,093

 
30,021





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

 
As of
 
September 30,
 
2016
 
2015
Assets:
 
 
 
Total cash and cash equivalents(1)
$
23,308

 
$
28,126

Mortgage loans held for sale
95,545

 
77,550

Inventory:
 
 
 
Lots, land and land development
554,150

 
539,517

Land held for sale
15,956

 
5,803

Homes under construction
544,350

 
488,041

Other inventory
110,697

 
100,053

Total Inventory
$
1,225,153

 
$
1,133,414

 
 
 
 
Property and equipment - net
21,792

 
11,841

Investments in unconsolidated joint ventures
26,528

 
33,282

Deferred income taxes, net of valuation allowance
39,944

 
70,943

Other assets
64,967

 
46,102

Total Assets
$
1,497,237

 
$
1,401,258

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes
$
295,401

 
$
226,863

Convertible senior subordinated notes due 2017
56,949

 
56,375

 Convertible senior subordinated notes due 2018
85,246

 
84,537

 Notes payable bank - homebuilding
85,000

 
156,100

Notes payable - other
8,566

 
9,363

Total Debt - Homebuilding Operations
$
531,162

 
$
533,238

 
 
 
 
Notes payable bank - financial services operations
91,483

 
73,239

Total Debt
$
622,645

 
$
606,477

 
 
 
 
Accounts payable
110,179

 
95,950

Other liabilities
132,821

 
115,493

Total Liabilities
$
865,645

 
$
817,920

 
 
 
 
Shareholders' Equity
631,592

 
583,338

Total Liabilities and Shareholders' Equity
$
1,497,237

 
$
1,401,258

 
 
 
 
Book value per common share
$
23.58

 
$
21.64

Homebuilding debt / capital ratio(2)
46
%
 
48
%
(1)
2016 and 2015 amounts include $1.0 million and $3.1 million of restricted cash and cash held in escrow, 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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
Adjusted EBITDA(1)
$
31,284

 
$
37,694

 
$
96,402

 
$
97,223

 
 
 
 
 
 
 
 
Cash flow provided by (used in) operating activities
$
(13,952
)
 
$
(48,986
)
 
$
26,520

 
$
(95,196
)
Cash used in investing activities
$
(4,023
)
 
$
(2,020
)
 
$
(19,799
)
 
$
(6,048
)
Cash provided by financing activities
$
12,613

 
$
54,288

 
$
5,384

 
$
110,764

 
 
 
 
 
 
 
 
Land/lot purchases
$
49,612

 
$
82,639

 
$
146,998

 
$
177,456

Land development spending
$
48,230

 
$
63,187

 
$
121,763

 
$
145,414

Land sale revenue
$
12,674

 
$
7,619

 
$
31,816

 
$
31,490

Land sale gross profit
$
1,063

 
$
905

 
$
3,095

 
$
6,364

 
 
 
 
 
 
 
 
Financial services pre-tax income
$
5,393

 
$
4,444

 
$
16,136

 
$
14,287

(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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
10,942

 
15,570

 
$
36,047

 
38,488

Add:
 
 
 
 
 
 
 
Provision for income taxes
7,501

 
10,928

 
22,061

 
25,587

Interest expense net of interest income
2,980

 
3,128

 
11,531

 
10,496

Interest amortized to cost of sales
4,963

 
4,318

 
13,138

 
11,637

Depreciation and amortization
3,030

 
2,478

 
8,880

 
7,213

Non-cash charges
1,868

 
1,272

 
4,745

 
3,802

Adjusted EBITDA
$
31,284

 
$
37,694

 
$
96,402

 
$
97,223





























M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (2) 
(Dollars and shares in thousands, except per share amounts)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
Total revenue
$
442,464

 
$
363,457

 
$
1,168,081

 
$
949,472

 
 
 
 
 
 
 
 
Gross margin
$
78,829

 
$
78,041

 
$
224,566

 
$
205,278

Add: Stucco-related charges
14,500

 
—

 
19,409

 
—

Adjusted gross margin
$
93,329

 
$
78,041

 
$
243,975

 
$
205,278

 
 
 
 
 
 
 
 
Gross margin percentage
17.8
%
 
21.5
%
 
19.2
%
 
21.6
%
Adjusted gross margin percentage
21.1
%
 
21.5
%
 
20.9
%
 
21.6
%
 
 
 
 
 
 
 
 
Income before income taxes
$
18,443

 
$
26,498

 
$
58,108

 
$
64,075

Add: Stucco-related charges
14,500

 
—

 
19,409

 
—

Adjusted income before income taxes
$
32,943

 
$
26,498

 
$
77,517

 
$
64,075

 
 
 
 
 
 
 
 
Net income
$
10,942

 
$
15,570

 
$
36,047

 
$
38,488

Add: Stucco-related charges - net of tax
8,990

 
—

 
12,034

 
—

Adjusted income before income taxes
$
19,932

 
$
15,570

 
$
48,081

 
$
38,488

 
 
 
 
 
 
 
 
Stucco-related charges - net of tax
$
8,990

 
$
—

 
$
12,034

 
$
—

Divided by: Diluted weighted average shares outstanding
30,139

 
30,067

 
30,093

 
30,021

Diluted earnings per share related to stucco-related charges
$
0.30

 
$
—

 
$
0.40

 
$
—

Add: Diluted earnings per share
0.35

 
0.51

 
1.17

 
1.25

Adjusted diluted earnings per share
$
0.65

 
$
0.51

 
$
1.57

 
$
1.25

(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
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Midwest
407

 
341

 
19
 %
 
1,409

 
1,158

 
22
%
Southern
437

 
399

 
10
 %
 
1,444

 
1,220

 
18
%
Mid-Atlantic
244

 
248

 
(2
)%
 
903

 
818

 
10
%
Total
1,088

 
988

 
10
 %
 
3,756

 
3,196

 
18
%


HOMES DELIVERED
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Midwest
443

 
363

 
22
%
 
1,163

 
962

 
21
%
Southern
410

 
377

 
9
%
 
1,158

 
964

 
20
%
Mid-Atlantic
295

 
254

 
16
%
 
745

 
704

 
6
%
Total
1,148

 
994

 
15
%
 
3,066

 
2,630

 
17
%


BACKLOG
 
September 30, 2016
 
September 30, 2015
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
Midwest
918

 
$
356

 
$
388,000

 
701

 
$
265

 
$
378,000

Southern
846

 
$
296

 
$
350,000

 
706

 
$
256

 
$
363,000

Mid-Atlantic
457

 
$
170

 
$
371,000

 
381

 
$
136

 
$
357,000

Total
2,221

 
$
821

 
$
370,000

 
1,788

 
$
657

 
$
367,000



LAND POSITION SUMMARY
 
September 30, 2016
 
 
September 30, 2015
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Midwest
3,846

5,378

9,224

 
 
3,619

3,632

7,251

Southern
4,213

5,333

9,546

 
 
4,683

5,114

9,797

Mid-Atlantic
2,068

2,381

4,449

 
 
2,771

1,743

4,514

Total
10,127

13,092

23,219

 
 
11,073

10,489

21,562