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.
