PR Newswire | Feb 2, 2021 08:30AM EST

02/02 07:30 CST

M/I Homes Reports Fourth Quarter and Year-End Results COLUMBUS, Ohio, Feb. 2, 2021

COLUMBUS, Ohio, Feb. 2, 2021 /PRNewswire/ -- M/I Homes, Inc. (NYSE: MHO) announced results for its fourth quarter and year ended December 31, 2020.

2020 Fourth Quarter Results:

* New contracts increased 27% to a fourth quarter record of 2,128 * Homes delivered increased 17% to 2,242, an all-time quarterly record * Backlog units increased 64% to 4,389, a fourth quarter record * Backlog sales value reached $1.8 billion, an all-time quarterly record * Revenue increased 22% to an all-time quarterly record of $906 million * Pre-tax income increased 99% to $101.9 million, an all-time quarterly record * Net income increased 92% to $80.1 million ($2.71 per diluted share) compared to $41.8 million ($1.44 per diluted share) in 2019

2020 Full Year Results:

* Record new contracts of 9,427, an increase of 39% * Record homes delivered of 7,709, a 22% increase * Record revenue of $3.0 billion, an increase of 22% * Record pre-tax income of $310.0 million, an 87% increase compared to $166.0 million in 2019 * Net income increased 88% to $239.9 million ($8.23 per diluted share) compared to $127.6 million in 2019 ($4.48 per diluted share) * Shareholders' equity reached an all-time record of $1.3 billion, a 25% increase from a year ago, with book value per share of $44 * Return on equity of 22% * Homebuilding debt to capital ratio of 34% compared to 38% at December 31, 2019

For the fourth quarter of 2020, the Company reported record net income of $80.1 million, or $2.71 per diluted share. This compares to net income of $41.8 million, or $1.44 per diluted share, for the fourth quarter of 2019. Net income in the fourth quarter of 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share), while 2019's fourth quarter net income included $3.8 million of after-tax impairment charges ($0.13 per diluted share).

For the year ended December 31, 2020, the Company reported net income of $239.9 million, or $8.23 per diluted share, compared to net income of $127.6 million, or $4.48 per diluted share, in 2019. Net income in 2020 included $6.4 million of after-tax impairment charges ($0.22 per diluted share). Net income in 2019 included $3.8 million of after-tax impairment charges ($0.13 per diluted share) and $0.5 million of after-tax acquisition-related charges ($0.02 per diluted share).

Homes delivered in 2020's fourth quarter reached an all-time quarterly record of 2,242, increasing 17% compared to 1,921 deliveries in 2019's fourth quarter. Homes delivered for the twelve months ended December 31, 2020 increased 22% to a record 7,709 from 2019's deliveries of 6,296. New contracts for 2020's fourth quarter increased 27% to a fourth quarter record of 2,128 from 1,677 new contracts in 2019's fourth quarter. For 2020, new contracts reached a record of 9,427, a 39% increase over 2019's new contracts of 6,773. Homes in backlog increased 64% at December 31, 2020 to 4,389 units, with an all-time record sales value of $1.84 billion, a 74% increase over last year, and the average sales price in backlog increased 6% to $419,000. At December 31, 2019, the sales value of the 2,671 homes in backlog was $1.1 billion, with an average sales price of $396,000. M/I Homes had 202 active communities at December 31, 2020 compared to 225 a year ago. The Company's cancellation rate was 10% in 2020's fourth quarter and 11% for the year.

Robert H. Schottenstein, Chief Executive Officer and President, commented, "We are extremely pleased with our fourth quarter results, capping off a tremendous year for M/I Homes with strong growth and record- setting financial achievements across the board. We nearly doubled our net income from 2019 resulting in a very strong return on equity of 22%. We also achieved a record level of new contracts, homes delivered and backlog sales value. Our 2020 results include an 87% increase in pre-tax income and an 84% improvement in diluted earnings per share, along with a 74% increase in our backlog sales value to a record $1.84 billion and record earnings in our financial services operations. Our gross margins were very strong, reaching 23.0% in the fourth quarter and 22.2% for the year - a 260 basis point improvement over 2019, and our pre-tax income percentage for the year improved 360 basis points to 10.2%. A number of factors drove these strong results, including low mortgage rates, increased home demand from younger buyers and the current undersupply of homes available. In addition, we also benefited from strong community locations, well-designed product and superb execution across our markets."

"We ended the year with record-high shareholders' equity of $1.3 billion, an increase of 25% from 2019 and book value per share of $44," Mr. Schottenstein continued. "Our year-end cash balance was $261 million, with no borrowings on our $500 million credit facility and a homebuilding debt to capital ratio of 34%. Housing conditions are very good and, given the strength of our record backlog and strong competitive position across our markets, we are well positioned for another strong year in 2021."

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 2022.

M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold over 127,650 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 are also currently sold under the name Hans Hagen Homes in the Minneapolis/St. Paul, Minnesota 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; and Charlotte and Raleigh, North Carolina.

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," "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, factors relating to the economic environment, interest rates, availability of resources, competition, market concentration, land development activities, integration of acquisitions, construction defects, 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, 2019, 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.

M/I Homes, Inc. and Subsidiaries Summary Statement of Income (Unaudited) (Dollars and shares in thousands, except per share amounts)



Three Months Ended Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

New contracts 2,128 1,677 9,427 6,773

Average community count 205 223 215 218

Cancellation rate 10 %13 %11 %13 %

Backlog units 4,389 2,671 4,389 2,671

Backlog sales value $1,836,907 $1,057,528 $1,836,907 $1,057,528

Homes delivered 2,242 1,921 7,709 6,296

Average home closing price $389 $377 $381 $384



Homebuilding revenue:

Housing revenue $872,814 $724,790 $2,939,962 $2,420,348

Land revenue 8,061 1,577 19,170 24,619

Total homebuilding revenue $880,875 $726,367 $2,959,132 $2,444,967



Financial services revenue 25,552 15,783 87,013 55,323



Total revenue $906,427 $742,150 $3,046,145 $2,500,290



Cost of sales - operations 689,245 594,373 2,361,367 2,005,222

Cost of sales - acquisition-related charges - - - 639

Cost of sales - impairment 8,435 5,002 8,435 5,002

Gross margin $208,747 $142,775 $676,343 $489,427

General and administrative expense 53,784 41,706 177,547 147,954

Selling expense 52,041 45,234 179,535 154,384

Operating income $102,922 $55,835 $319,261 $187,089

Equity in income from joint venture arrangements(159) (193) (466) (311)

Interest expense 1,230 4,749 9,684 21,375

Income before income taxes $101,851 $51,279 $310,043 $166,025

Provision for income taxes 21,768 9,499 70,169 38,438

Net income $80,083 $41,780 $239,874 $127,587



Earnings per share:

Basic $2.78 $1.48 $8.38 $4.58

Diluted $2.71 $1.44 $8.23 $4.48



Weighted average shares outstanding:

Basic 28,776 28,297 28,610 27,846

Diluted 29,507 29,049 29,152 28,475

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



As of

December 31,

2020 2019

Assets:

Total cash, cash equivalents and restricted cash$260,810 $6,083

Mortgage loans held for sale 234,293 155,244

Inventory:

Lots, land and land development 868,288 858,065

Land held for sale 4,623 5,670

Homes under construction 898,966 756,998

Other inventory 144,731 148,774

Total Inventory $1,916,608 $1,769,507



Property and equipment - net 26,612 22,118

Operating lease right-of-use assets 52,291 18,415

Goodwill 16,400 16,400

Investments in joint venture arrangements 34,673 37,885

Deferred income tax asset 6,183 9,631

Other assets 95,175 70,311

Total Assets $2,643,045 $2,105,594



Liabilities:

Debt - Homebuilding Operations:

Senior notes due 2021 - net $- $298,988

Senior notes due 2025 - net 247,613 247,092

Senior notes due 2028 - net 394,557 -

Notes payable - homebuilding - 66,000

Notes payable - other 4,072 5,828

Total Debt - Homebuilding Operations $646,242 $617,908



Notes payable bank - financial services 225,634 136,904 operations

Total Debt $871,876 $754,812



Accounts payable 185,669 125,026

Operating lease liabilities 52,474 18,415

Other liabilities 274,328 203,864

Total Liabilities $1,384,347 $1,102,117



Shareholders' Equity 1,258,698 1,003,477

Total Liabilities and Shareholders' Equity $2,643,045 $2,105,594



Book value per common share $43.68 $35.35

Homebuilding debt / capital ratio^(1) 34 %38 %

The ratio of homebuilding debt to capital is calculated as the carrying(1) 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,

2020 2019 2020 2019

Cash (used in) provided by operating activities$(28,892)$64,654 $168,334 $65,631

Cash used in investing activities $(2,543) $(1,884) $(33,870)$(27,594)

Cash provided by (used in) financing activities$89,733 $(90,138)$120,263 $(53,483)



Land/lot purchases $148,126 $73,619 $414,950 $332,057

Land development spending $95,732 $82,839 $318,336 $268,347

Land sale revenue $8,061 $1,577 $19,170 $24,619

Land sale gross profit $738 $(32) $989 $498



Financial services pre-tax income $14,821 $6,420 $50,468 $23,699

M/I Homes, Inc. and Subsidiaries Non-GAAP Financial Results^ (1) (Dollars in thousands)



Three Months Ended Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

Net income $80,083 $41,780$239,874$127,587

Add:

Provision for income taxes 21,768 9,499 70,169 38,438

Interest expense, net of interest income333 3,727 6,168 17,515

Interest amortized to cost of sales 9,559 8,802 32,686 29,411

Depreciation and amortization 4,564 4,154 17,578 15,950

Non-cash charges 10,313 6,762 16,685 10,848

Adjusted EBITDA $126,620$74,724$383,160$239,749

M/I Homes, Inc. and Subsidiaries Non-GAAP Reconciliation ^(1) (Dollars and shares in thousands, except per share amounts)



Three Months Ended Twelve months ended

December 31, December 31,

2020 2019 2020 2019

Income before income taxes $101,851$51,279$310,043$166,025

Add: Impairment ^(2) 8,435 5,002 8,435 5,002

Add: Acquisition-related charges^ (3) - - - 639

Add: Stucco-related charges^ (4) 860 - 860 -

Adjusted income before income taxes $111,146$56,281$319,338$171,666



Net income $80,083 $41,780$239,874$127,587

Add: Impairment - net of tax^ (2) 6,411 3,802 6,411 3,802

Add: Acquisition-related charges - net of tax^ (3) - - - 486

Add: Stucco-related charges - net of tax ^(4) 654 - 654 -

Adjusted net income $87,148 $45,582$246,939$131,875



Impairment - net of tax ^(2) $6,411 $3,802 $6,411 $3,802

Acquisition-related charges - net of tax^ (3) $- $- $- $486

Stucco-related charges - net of tax^ (4) $654 $- $654 $-



Divided by: Diluted weighted average shares outstanding 29,507 29,049 29,152 28,475



Diluted earnings per share related to impairment ^(2) $0.22 $0.13 $0.22 $0.13

Diluted earnings per share related to acquisition-related charges ^(3)- - - 0.02

Diluted earnings per share related to stucco-related charges ^(4) 0.02 - 0.02 -



Add: Diluted earnings per share 2.71 1.44 8.23 4.48



Adjusted diluted earnings per share $2.95 $1.57 $8.47 $4.63

We believe these non-GAAP financial measures are relevant and useful to investors in understanding our operations and may be helpful in comparing(1) 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.

Represents the related charges divided by diluted weighted average shares(2) outstanding during the respective period as presented in the Summary Statement of Income.

(3) Represents purchase accounting adjustments related to our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

(4) Represents charges for stucco-related repair costs taken in certain of our Florida communities.

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 2020 2019 Change 2020 2019 Change

Northern 792 655 21 % 3,743 2,695 39 %

Southern 1,336 1,022 31 % 5,684 4,078 39 %

Total 2,128 1,677 27 % 9,427 6,773 39 %

HOMES DELIVERED

Three Months Ended Twelve Months Ended

December 31, December 31,

% %

Region 2020 2019 Change2020 2019 Change

Northern881 743 19 %3,0712,48224 %

Southern1,3611,17816 %4,6383,81422 %

Total 2,2421,92117 %7,7096,29622 %

BACKLOG

December 31, 2020 December 31, 2019

Dollars Average Dollars Average

Region Units (millions)Sales PriceUnits (millions)Sales Price

Northern1,815$792 $436,000 1,143$495 $433,000

Southern2,574$1,045 $406,000 1,528$563 $368,000

Total 4,389$1,837 $419,000 2,671$1,058 $396,000

LAND POSITION SUMMARY

December 31, 2020 December 31, 2019

Lots Lots Under Lots Lots Under

Region Owned Contract Total Owned Contract Total

Northern6,786 7,801 14,5876,857 6,207 13,064

Southern10,01314,909 24,9227,809 12,386 20,195

Total 16,79922,710 39,50914,66618,593 33,259

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SOURCE M/I Homes, Inc.