EX-99.1 2 exhibit9914thqtr16earingsp.htm EXHIBIT 99.1 PRESS RELEASE 2-2-17 Exhibit


Exhibit 99.1

milogoa01.jpg

M/I Homes Reports
Fourth Quarter and Year-End Results


Columbus, Ohio (February 2, 2017) - M/I Homes, Inc. (NYSE:MHO) announced results for its fourth quarter and year ended December 31, 2016 - the Company’s 40th year in business.

2016 Fourth-Quarter Results:
•
Net income of $20.6 million ($0.67 per diluted share), compared to 2015’s
$13.3 million ($0.43 per diluted share)
•
Pre-tax income increased to $33.7 million from $22.9 million in 2015; 2016
includes $4.0 million of impairment charges and 2015 included $3.6 million
of impairment charges and a $7.8 million debt extinguishment charge
•
Revenue increased 12% to $523 million
•
Homes delivered increased 13%
•
New contracts increased 11%
•
Backlog sales value increased 20% to $685 million; backlog units up 18%

2016 Full-Year Results:
•
Pre-tax income of $91.8 million compared to $86.9 million in 2015
•
Pre-tax income increased to $111.2 million from $94.8 million in 2015, exclusive
of $19.4 million pre-tax charges for stucco-related repairs in 2016 and a $7.8 million
debt extinguishment charge in 2015
•
Net income of $56.6 million ($1.84 per diluted share)
•
Net income, excluding the stucco-related charge in 2016 and debt extinguishment
charge in 2015, increased 21% to $68.6 million or $2.24 per diluted share
•
Record revenue of $1.7 billion, 19% better than 2015
•
Record homes delivered of 4,482, 15% better than 2015
•
Record new contracts of 4,755, 16% better than 2015
•
Average home closing price increased 4% to $359,000

For the fourth quarter of 2016, the Company reported net income of $20.6 million, or $0.67 per diluted share. This compares to net income of $13.3 million, or $0.43 per diluted share in 2015. The fourth quarter of 2015 included a $4.9 million after-tax charge ($0.16 per diluted share) for extinguishment of debt. For the year ended December 31, 2016, the Company reported net income of $56.6 million or $1.84 per diluted share. This includes the impact of $12.0 million of after-tax charges ($0.40 per diluted share) for stucco-related repair costs in certain of our Florida communities. Exclusive of these stucco-related charges and the $4.9 million after-tax debt extinguishment charge in 2015, net income increased 21% to $68.6 million compared to $56.6 million in 2015.

New contracts for 2016's fourth quarter reached a fourth quarter record-high of 999, increasing 11% from 2015's fourth quarter of 897. For 2016, new contracts also reached a record-high of 4,755, a 16% increase over 2015’s new contracts of 4,093. M/I Homes had 178 active communities at December 31, 2016 compared to 175 a year ago. The Company's cancellation rate was 18% in 2016’s fourth quarter. Homes delivered of 1,416 in 2016's fourth quarter were 13% higher than 2015’s 1,253 homes delivered. Homes delivered for the twelve months ended December 31, 2016 increased 15% to a record-high 4,482 from 2015’s deliveries of 3,883. Homes in backlog increased 18% at December 31, 2016 to 1,804 units, with a sales value of $685 million (a 20% increase over last year), and the average sales price in backlog increased 2% to a record-high of $380,000. At December 31, 2015, the sales value of the 1,531 homes in backlog was $569 million, with an average sales price of $372,000.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “We are very pleased to report strong results for 2016, our 40th year in business. The year was highlighted by record new contracts, record homes delivered, record performance by our mortgage and title business, and a 21% increase in net income, excluding the charges for stucco repair and debt extinguishment. Revenue increased 19% to a record $1.7 billion and we continued to improve our operating leverage with a 30 basis point reduction in our overhead expense ratio.”

Mr. Schottenstein continued, “We are very excited about our business as we reflect on our strong results in 2016 and look for a continued healthy homebuilding environment in 2017. Our financial condition is strong with shareholders’ equity of $654 million and homebuilding debt to capital of 43%. With our strong year-end backlog and our planned new community openings for 2017, we are well positioned to continue our growth and improve profitability.”

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 February 2018.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having delivered over 98,800 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 Operating Results (Unaudited)
(Dollars in thousands, except per share amounts)

 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
New contracts
999

 
897

 
4,755

 
4,093

Average community count
176

 
171

 
176

 
160

Cancellation rate
18
%
 
18
%
 
14
%
 
15
%
Backlog units
 
 
 
 
1,804

 
1,531

Backlog sales value
 
 
 
 
$
685,457

 
$
569,424

Homes delivered
1,416

 
1,253

 
4,482

 
3,883

Average home closing price
$
356

 
$
360

 
$
359

 
$
346

 
 
 
 
 
 
 
 
Homebuilding revenue:
 
 
 
 
 
 
 
   Housing revenue
$
504,795

 
$
450,461

 
$
1,610,496

 
$
1,342,135

   Land revenue
7,004

 
8,795

 
38,820

 
40,285

Total homebuilding revenue
$
511,799

 
$
459,256

 
$
1,649,316

 
$
1,382,420

 
 
 
 
 
 
 
 
   Financial services revenue
11,447

 
9,667

 
42,011

 
35,975

 
 
 
 
 

 
 
Total revenue
$
523,246

 
$
468,923

 
$
1,691,327

 
$
1,418,395

 
 
 
 
 
 
 
 
Cost of sales - operations
414,668

 
370,469

 
1,338,774

 
1,114,663

Cost of sales - impairment
3,992

 
3,638

 
3,992

 
3,638

Cost of sales - stucco related charges
—

 
—

 
19,409

 
—

Gross margin
104,586

 
94,816

 
329,152

 
300,094

General and administrative expense
33,351

 
28,518

 
111,600

 
93,208

Selling expense
33,347

 
30,201

 
108,809

 
95,092

Operating income
37,888

 
36,097

 
108,743

 
111,794

Equity in income from joint venture arrangements
(227
)
 
(250
)
 
(640
)
 
(498
)
Interest expense
4,438

 
5,651

 
17,598

 
17,521

Loss on early extinguishment of debt
—

 
7,842

 
—

 
7,842

Income before income taxes
33,677

 
22,854

 
91,785

 
86,929

Provision for income taxes
13,115

 
9,579

 
35,176

 
35,166

Net income
$
20,562

 
$
13,275

 
$
56,609

 
$
51,763

Preferred dividends
1,219

 
1,219

 
4,875

 
4,875

Net income to common shareholders
$
19,343

 
$
12,056

 
$
51,734

 
$
46,888

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.78

 
$
0.49

 
$
2.10

 
$
1.91

Diluted
$
0.67

 
$
0.43

 
$
1.84

 
$
1.68

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
24,671

 
24,649

 
24,666

 
24,575

Diluted
30,166

 
30,107

 
30,116

 
30,047





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

 
As of
 
December 31,
 
2016
 
2015
Assets:
 
 
 
Total cash, cash equivalents and restricted cash
$
34,441

 
$
13,101

Mortgage loans held for sale
154,020

 
127,001

Inventory:
 
 
 
Lots, land and land development
602,528

 
584,542

Land held for sale
12,155

 
12,630

Homes under construction
494,664

 
420,206

Other inventory
106,587

 
94,664

Total Inventory
$
1,215,934

 
$
1,112,042

 
 
 
 
Property and equipment - net
22,299

 
12,897

Investments in joint venture arrangements
28,016

 
36,967

Deferred income taxes, net of valuation allowance
30,875

 
67,404

Other assets
62,926

 
46,142

Total Assets
$
1,548,511

 
$
1,415,554

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes due 2021 - net
$
295,677

 
$
294,727

Convertible senior subordinated notes due 2017 - net
57,093

 
56,518

Convertible senior subordinated notes due 2018 - net
85,423

 
84,714

Notes payable - homebuilding
40,300

 
43,800

Notes payable - other
6,415

 
8,441

Total Debt - Homebuilding Operations
$
484,908

 
$
488,200

 
 
 
 
Notes payable bank - financial services operations
152,895

 
123,648

Total Debt
$
637,803

 
$
611,848

 
 
 
 
Accounts payable
103,212

 
86,878

Other liabilities
153,322

 
120,262

Total Liabilities
$
894,337

 
$
818,988

 
 
 
 
Shareholders' Equity
654,174

 
596,566

Total Liabilities and Shareholders' Equity
$
1,548,511

 
$
1,415,554

 
 
 
 
Book value per common share
$
24.48

 
$
22.17

Homebuilding debt / capital ratio(1)
43
%
 
45
%

(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,
 
 
2016
 
2015
 
2016
 
2015
 
Adjusted EBITDA(1)
$
51,995

 
$
43,595

 
$
148,397

 
$
140,818

 
 
 
 
 
 
 
 
 
 
Cash provided (used in) by operating activities
$
7,695

 
$
13,096

(2) 
$
34,197

 
$
(82,365
)
(2) 
Cash used in investing activities
$
(9,966
)
 
$
(31,817
)
(2) 
$
(31,645
)
 
$
(41,480
)
(2) 
Cash provided by financing activities
$
13,404

 
$
3,696

 
$
18,788

 
$
114,460

 
 
 
 
 
 
 
 
 
 
Land/lot purchases
$
80,648

 
$
55,251

 
$
227,646

 
$
232,707

 
Land development spending
$
58,441

 
$
59,655

 
$
180,204

 
$
205,069

 
Land sale revenue
$
7,004

 
$
8,795

 
$
38,820

 
$
40,285

 
Land sale gross profit
$
1,039

 
$
297

 
$
4,134

 
$
6,661

 
 
 
 
 
 
 
 
 
 
Financial services pre-tax income
$
5,014

 
$
5,129

 
$
21,150

 
$
19,416

 
(1)
See “Non-GAAP Financial Results” table below.
(2)
During 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.


M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results / Reconciliations
(Dollars in thousands)

 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
Net income
$
20,562

 
$
13,275

 
$
56,609

 
$
51,763

Add:
 
 
 
 
 
 
 
Provision for income taxes
13,115

 
9,579

 
35,176

 
35,166

Interest expense, net of interest income
3,755

 
5,036

 
15,286

 
15,532

Interest amortized to cost of sales
5,275

 
5,329

 
18,413

 
16,966

Depreciation and amortization
3,464

 
2,986

 
13,606

 
10,928

Non-cash charges
5,824

 
7,390

 
9,307

 
10,463

Adjusted EBITDA
$
51,995

 
$
43,595

 
$
148,397

 
$
140,818






M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (3) 
(Dollars and shares in thousands, except per share amounts)
 
Three Months Ended
 
Twelve months ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
Income before income taxes
$
33,677

 
$
22,854

 
$
91,785

 
$
86,929

Add: Loss on early extinguishment of debt
—

 
7,842

 
—

 
7,842

Add: Stucco-related charges
—

 
—

 
19,409

 
—

Adjusted income before income taxes
$
33,677

 
$
30,696

 
$
111,194

 
$
94,771

 
 
 
 
 
 
 
 
Net income
$
20,562

 
$
13,275

 
$
56,609

 
$
51,763

Add: Loss on early extinguishment of debt - net of tax
—

 
4,862

 
—

 
4,862

Add: Stucco-related charges - net of tax
—

 
—

 
12,034

 
—

Adjusted income before income taxes
$
20,562

 
$
18,137

 
$
68,643

 
$
56,625

 
 
 
 
 
 
 
 
Stucco-related charges - net of tax
$
—

 
$
—

 
$
12,034

 
$
—

Loss on early extinguishment of debt - net of tax
—

 
4,862

 
—

 
4,862

Divided by: Diluted weighted average shares outstanding
30,166

 
30,107

 
30,116

 
30,047

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

 
$
—

 
$
0.40

 
$
—

Diluted earnings per share related to debt extinguishment charges
$
—

 
$
0.16

 
$
—

 
$
0.16

Add: Diluted earnings per share
0.67

 
0.43

 
1.84

 
1.68

Adjusted diluted earnings per share
$
0.67

 
$
0.59

 
$
2.24

 
$
1.84

(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.




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
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Midwest
366

 
327

 
12
%
 
1,775

 
1,485

 
20
%
Southern
378

 
337

 
12
%
 
1,822

 
1,557

 
17
%
Mid-Atlantic
255

 
233

 
9
%
 
1,158

 
1,051

 
10
%
Total
999

 
897

 
11
%
 
4,755

 
4,093

 
16
%

HOMES DELIVERED
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
 
 
 
 
%
 
 
 
 
 
%
Region
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Midwest
527

 
455

 
16
%
 
1,690

 
1,417

 
19
%
Southern
550

 
483

 
14
%
 
1,708

 
1,447

 
18
%
Mid-Atlantic
339

 
315

 
8
%
 
1,084

 
1,019

 
6
%
Total
1,416

 
1,253

 
13
%
 
4,482

 
3,883

 
15
%

BACKLOG
 
December 31, 2016
 
December 31, 2015
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
Midwest
757

 
$
305

 
$
403,000

 
672

 
$
262

 
$
390,000

Southern
674

 
$
239

 
$
355,000

 
560

 
$
200

 
$
357,000

Mid-Atlantic
373

 
$
142

 
$
380,000

 
299

 
$
108

 
$
360,000

Total
1,804

 
$
685

 
$
380,000

 
1,531

 
$
569

 
$
372,000


LAND POSITION SUMMARY
 
December 31, 2016
 
 
December 31, 2015
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Midwest
3,747

5,527

9,274

 
 
3,921

4,220

8,141

Southern
4,421

5,474

9,895

 
 
4,664

4,972

9,636

Mid-Atlantic
2,187

1,708

3,895

 
 
2,814

1,831

4,645

Total
10,355

12,709

23,064

 
 
11,399

11,023

22,422