CURRENT REPORT |
PURSUANT TO SECTION 13 OR 15(D) |
OF THE 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.) |
(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 27, 2016 |
By: | /s/ Ann Marie W. Hunker |
Ann Marie W. Hunker | |
Vice President and Corporate Controller | |
(Principal Accounting Officer) |
Exhibit No. | Description of Exhibits | |
99.1 | Press release dated October 27, 2016 |
• | Net income of $10.9 million ($0.35 per diluted share) which includes a $14.5 million pre-tax charge |
• | 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 |
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 |
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. |
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. |
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 |
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. |
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 |
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