EX-99.1 2 exhbit991earningspressrele.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE 04-26-17 Exhibit


Exhibit 99.1

milogoa18.jpg

M/I Homes Reports
2017 First Quarter Results


Columbus, Ohio (April 26, 2017) - M/I Homes, Inc. (NYSE:MHO) announced results for the three months ended March 31, 2017.

2017 First Quarter Highlights:
•
Pre-tax income of $26.3 million compared to $14.7 million in 2016
•
Pre-tax income increased 56%, excluding $2.2 million of pre-tax charges for stucco-related repairs in 2016
•
Net income of $16.9 million ($0.55 per diluted share)
•
Record revenue of $407 million, a 25% increase from 2016
•
Record homes delivered of 1,038, an 18% increase from 2016
•
New contracts of 1,454, an 11% increase from 2016 and an all-time quarterly record
•
Average home closing price increased 6% to $373,000
•
Backlog sales value increased 14% to $834 million; backlog units increased 13% to 2,220

For the first quarter of 2017, the Company reported net income of $16.9 million, or $0.55 per diluted share. This compares to net income of $9.2 million, or $0.30 per diluted share, for the first quarter of 2016. The first quarter of 2016 included a $1.3 million after-tax charge for stucco-related repairs in certain of our Florida communities.

New contracts for the first quarter reached an all-time quarterly record of 1,454, increasing 11% from the 1,314 contracts recorded in 2016's first quarter. Homes delivered in 2017’s first quarter increased 18% to a first quarter record of 1,038. This compares to 876 homes delivered in 2016’s first quarter. Homes in backlog at March 31, 2017 had a total sales value of $834 million, a 14% increase over a year ago, with backlog units of 2,220 and an average sales price of $376,000. At March 31, 2016, backlog sales value was $730 million, with backlog units of 1,969 and an average sales price of $371,000. M/I Homes had 184 active communities at March 31, 2017 compared to 181 at March 31, 2016. The Company's cancellation rate was 14% in the first quarter of 2017 compared to 11% in 2016's first quarter.

Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had a very strong first quarter highlighted by a 56% increase in pre-tax income, a 170 basis point increase in our operating margin, and a number of record-setting achievements. We had record first quarter revenue of $407 million, record first quarter homes delivered of 1,038, and record new contracts of 1,454. Homes delivered were 18% higher than 2016’s first quarter and new contracts improved by 11%. In addition, first quarter backlog reached a 10-year high with a sales value of $834 million - 14% better than a year ago. We were very pleased with our gross margin improvement, and our operating margin rose to 7.8%. We also opened a record 24 new communities during the quarter, increasing our community count to 184.”

Mr. Schottenstein continued, “We are off to a very good start in 2017. We have a healthy backlog and housing market conditions remain favorable throughout most of our markets. Our financial condition is strong with shareholders’ equity of $672 million and homebuilding debt to capital of 45%. 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 2018.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 101,500 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, 2016, 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,
 
2017
 
2016
New contracts
1,454

 
1,314

Average community count
181

 
178

Cancellation rate
14
%
 
11
%
Backlog units
2,220

 
1,969

Backlog value
$
834,415

 
$
729,950

Homes delivered
1,038

 
876

Average home closing price
$
373

 
$
353

 
 
 
 
Homebuilding revenue:
 
 
 
   Housing revenue
$
387,458

 
$
309,247

   Land revenue
5,215

 
5,070

Total homebuilding revenue
$
392,673

 
$
314,317

 
 
 
 
Financial services revenue
14,307

 
10,053

Total revenue
$
406,980

 
$
324,370

 
 
 
 
Cost of sales - operations
320,281

 
258,017

Cost of sales - stucco-related charges
—

 
2,155

Gross margin
$
86,699

 
$
64,198

General and administrative expense
27,760

 
22,259

Selling expense
27,283

 
22,266

Operating income
$
31,656

 
$
19,673

Equity in income from joint venture arrangements
(17
)
 
(307
)
Interest expense
5,338

 
5,265

Income before income taxes
$
26,335

 
$
14,715

Provision for income taxes
9,452

 
5,526

Net income
$
16,883

 
$
9,189

Preferred dividends
1,219

 
1,219

Net income to common shareholders
$
15,664

 
$
7,970

 
 
 
 
Earnings per share:
 
 
 
Basic
$
0.63

 
$
0.32

Diluted
$
0.55

 
$
0.30

 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
24,738

 
24,657

Diluted
30,329

 
30,032





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

 
As of
 
March 31,
 
2017
 
2016
Assets:
 
 
 
Total cash, and cash equivalents and restricted cash
$
38,898

 
$
34,321

Mortgage loans held for sale
113,596

 
94,438

Inventory:
 
 
 
Lots, land and land development
616,239

 
596,072

Land held for sale
10,475

 
13,801

Homes under construction
538,758

 
439,328

Other inventory
121,146

 
104,336

Total Inventory
$
1,286,618

 
$
1,153,537

 
 
 
 
Property and equipment - net
22,338

 
22,740

Investments in joint venture arrangements
24,218

 
25,693

Deferred income taxes, net of valuation allowance
30,449

 
55,860

Other assets
56,148

 
50,123

Total Assets
$
1,572,265

 
$
1,436,712

 
 
 
 
Liabilities:
 
 
 
Debt - Homebuilding Operations:
 
 
 
Senior notes due 2021 - net
$
295,953

 
$
294,904

Convertible senior subordinated notes due 2017 - net
57,237

 
56,662

 Convertible senior subordinated notes due 2018 - net
85,600

 
84,891

 Notes payable bank - homebuilding
110,900

 
114,500

Notes payable - other
7,022

 
8,805

Total Debt - Homebuilding Operations
$
556,712

 
$
559,762

 
 
 
 
Notes payable bank - financial services operations
106,937

 
87,186

Total Debt
$
663,649

 
$
646,948

 
 
 
 
Accounts payable
94,403

 
81,594

Other liabilities
142,501

 
103,565

Total Liabilities
$
900,553

 
$
832,107

 
 
 
 
Shareholders' Equity
671,712

 
604,605

Total Liabilities and Shareholders' Equity
$
1,572,265

 
$
1,436,712

 
 
 
 
Book value per common share
$
25.07

 
$
22.48

Homebuilding debt / capital ratio(1)
45
%
 
48
%

(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
 
 
March 31,
 
 
2017
 
2016
 
Adjusted EBITDA(1)
$
39,324

 
$
27,233

 
 
 
 
 
 
Cash flow (used in) provided by operating activities
$
(23,275
)
 
$
1,415

(2) 
Cash provided by (used in) investing activities
$
3,206

 
$
(13,552
)
(2) 
Cash provided by financing activities
$
24,526

 
$
33,357

 
 
 
 
 
 
Land/lot purchases
$
81,833

 
$
51,973

 
Land development spending
$
39,572

 
$
32,194

 
Land sale revenue
$
5,215

 
$
5,070

 
Land sale gross profit
$
376

 
$
729

 
 
 
 
 
 
Financial services pre-tax income
$
8,562

 
$
5,891

 
(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 (3) 
(Dollars in thousands)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Net income
$
16,883

 
$
9,189

Add:
 
 
 
Provision for income taxes
9,452

 
5,526

Interest expense net of interest income
4,612

 
4,835

Interest amortized to cost of sales
3,766

 
3,544

Depreciation and amortization
3,583

 
3,223

Non-cash charges
1,028

 
916

Adjusted EBITDA
$
39,324

 
$
27,233





























M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (3) 
(Dollars and shares in thousands, except per share amounts)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Total revenue
$
406,980

 
$
324,370

 
 
 
 
Gross margin
$
86,699

 
$
64,198

Add: Stucco-related charges
—

 
2,155

Adjusted gross margin
$
86,699

 
$
66,353

 
 
 
 
Gross margin percentage
21.3
%
 
19.8
%
Adjusted gross margin percentage
21.3
%
 
20.5
%
 
 
 
 
Income before income taxes
$
26,335

 
$
14,715

Add: Stucco-related charges
—

 
2,155

Adjusted net income before income taxes
$
26,335

 
$
16,870

 
 
 
 
Net income
$
16,883

 
$
9,189

Add: Stucco-related charges - net of tax
—

 
1,336

Adjusted net income
$
16,883

 
$
10,525

 
 
 
 
Stucco-related charges - net of tax
$
—

 
$
1,336

Divided by: Diluted weighted average shares outstanding
30,329

 
30,032

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

 
$
0.04

Add: Diluted earnings per share
0.55

 
0.30

Adjusted diluted earnings per share
$
0.55

 
$
0.34

(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
 
March 31,
 
 
 
 
 
%
Region
2017
 
2016
 
Change
Midwest
556

 
495

 
12
 %
Southern
590

 
492

 
20
 %
Mid-Atlantic
308

 
327

 
(6
)%
Total
1,454

 
1,314

 
11
 %


HOMES DELIVERED
 
Three Months Ended
 
March 31,
 
 
 
 
 
%
Region
2017
 
2016
 
Change
Midwest
379

 
322

 
18
%
Southern
419

 
350

 
20
%
Mid-Atlantic
240

 
204

 
18
%
Total
1,038

 
876

 
18
%


BACKLOG
 
March 31, 2017
 
March 31, 2016
 
 
 
Dollars
 
Average
 
 
 
Dollars
 
Average
Region
Units
 
(millions)
 
Sales Price
 
Units
 
(millions)
 
Sales Price
Midwest
934

 
$
373

 
$
400,000

 
845

 
$
330

 
$
391,000

Southern
845

 
$
295

 
$
349,000

 
702

 
$
247

 
$
352,000

Mid-Atlantic
441

 
$
166

 
$
377,000

 
422

 
$
153

 
$
361,000

Total
2,220

 
$
834

 
$
376,000

 
1,969

 
$
730

 
$
371,000



LAND POSITION SUMMARY
 
March 31, 2017
 
 
March 31, 2016
 
Lots
Lots Under
 
 
 
Lots
Lots Under
 
Region
Owned
Contract
Total
 
 
Owned
Contract
Total
Midwest
3,591

5,779

9,370

 
 
3,488

5,003

8,491

Southern
4,859

6,211

11,070

 
 
4,630

5,132

9,762

Mid-Atlantic
1,952

2,028

3,980

 
 
2,750

1,259

4,009

Total
10,402

14,018

24,420

 
 
10,868

11,394

22,262