MHO 8-K
M/I Homes, Inc. (MHO)
8-K
2020-10-28
For: 2020-10-27
View Original
Added on
April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
| CURRENT REPORT | ||
| Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934 | ||
Date of Report (Date of earliest event reported): October 27, 2020
| (Exact name of registrant as specified in its charter) | ||||||||||||||
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
(614 ) 418-8000
(Telephone Number)
| N/A | ||
| (Former name or former address, if changed since last report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
SECTION 2 FINANCIAL INFORMATION
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 28, 2020, M/I Homes, Inc. issued a press release reporting financial results for the three-months ended September 30, 2020. A copy of this press release, including information concerning forward-looking statements and factors that may affect our future results, is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 is furnished pursuant to Item 2.02 on Form 8-K.
SECTION 5 CORPORATE GOVERNANCE AND MANAGEMENT
SECTION 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY AGRRANGEMENTS OF CERTAIN OFFICERS
(b) On October 27, 2020, J. Thomas Mason announced his decision to retire as Executive Vice President, Secretary, and Chief Legal Officer of M/I Homes, Inc. effective after the company has hired his replacement to assure a smooth and orderly transition of responsibilities. It is anticipated that such transition will occur in the first half of 2021.
SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
Exhibit No. | Description of Exhibit | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document).* | |||||||
*Submitted electronically with this Report in accordance with the provisions of Regulation S-T.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 28, 2020
M/I Homes, Inc.
By: | /s/ Ann Marie W. Hunker | ||||
Ann Marie W. Hunker | |||||
Vice President, Controller and Chief Accounting Officer | |||||
Exhibit 99.1
M/I Homes Reports
2020 Third Quarter Results
Columbus, Ohio (October 28, 2020) - M/I Homes, Inc. (NYSE:MHO) announced results for the three and nine months ended September 30, 2020.
2020 Third Quarter Highlights:
•New contracts increased 71% to 2,949 contracts, an all-time quarterly record
•Backlog units increased 54% to 4,503, an all-time quarterly record
•Backlog sales value reached $1.8 billion, an all-time quarterly record
•Homes delivered increased 29% to 2,137, an all-time quarterly record
•Revenue increased 30% to an all-time quarterly record of $847.9 million
•Pre-tax income increased 90% to $95.1 million, an all-time quarterly record
•Third quarter net income of $73.5 million ($2.51 per diluted share), a 94% increase
compared to $37.8 million ($1.32 per diluted share) in 2019
•Shareholders’ equity reached an all-time record of $1.2 billion, a 23% increase from a year ago,
with book value per share of $41
•Homebuilding debt to capital of 36% compared to 44% at September 30, 2019
For the third quarter, pre-tax income increased 90% to a record $95.1 million and third quarter net income increased 94% to $73.5 million, or $2.51 per diluted share. This compares to pre-tax income of $50.1 million and net income of $37.8 million, or $1.32 per diluted share, for the third quarter of 2019. For the nine months ended September 30, 2020, net income increased 86% to a record $159.8 million, or $5.50 per diluted share, compared to $85.8 million, or $3.04 per diluted share, for the same period of 2019.
Homes delivered in 2020’s third quarter increased 29% to a record 2,137. This compares to 1,651 homes delivered in 2019’s third quarter. Homes delivered for the nine months ended September 30, 2020 increased 25% to a record 5,467 from 2019's deliveries of 4,375. New contracts for the third quarter of 2020 were a record 2,949, a 71% increase over 2019’s 1,721. For the first nine months of 2020, new contracts increased 43% to a record 7,299 compared to 5,096 in 2019. Homes in backlog at September 30, 2020 had a total sales value of $1.8 billion, a 60% increase from a year ago. Backlog units at September 30, 2020 increased 54% to a record 4,503 homes, with an average sales price of $404,000. At September 30, 2019, backlog sales value was $1.1 billion, with backlog units of 2,915 and an average sales price of $390,000. M/I Homes had 207 active communities at September 30, 2020 compared to 221 active communities at September 30, 2019. The Company's cancellation rate was 10% and 13% in the third quarter of 2020 and 2019, respectively.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had an outstanding quarter highlighted by a 71% increase in new contracts, a 29% increase in homes delivered and a 94% increase in net income. Our gross margins were very strong, improving 240 basis points over last year, and our overhead expense ratio improved by 60 basis points. As a result, our third quarter pre-tax income percentage improved to 11.2% from 7.7% last year. And, our backlog sales value at September 30, 2020 increased 60% to a record $1.8 billion.”
Mr. Schottenstein continued, “We ended the quarter with record-high shareholders’ equity of $1.2 billion, an increase of 23% from 2019’s third quarter, book value of $41 per share, cash of $203 million, no borrowings on our $500 million credit facility and a homebuilding debt to capital ratio of 36%. Despite the impact of COVID-19, housing fundamentals remain strong. We have significant operating momentum and are poised to continue delivering very strong results in 2020.”
J. Thomas Mason Announces Retirement
On October 27, 2020, J. Thomas Mason announced his decision to retire as Executive Vice President, Secretary, and Chief Legal Officer of M/I Homes effective after the Company has hired his replacement to assure a smooth and orderly transition of responsibilities. It is anticipated that such transition will occur in the first half of 2021. In connection with Mr. Mason’s retirement announcement, Robert H. Schottenstein stated, “Tom Mason has been an outstanding leader of our company since joining M/I in 2002. A valued co-worker and friend, Tom has meaningfully contributed to our success. We thank him for all he has done, and wish him only the best in his retirement; and we look forward to a smooth transition in the first half of next year.”
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 2021.
M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 125,500 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 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, including the impact of COVID-19, 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 our 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.
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 | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| New contracts | 2,949 | 1,721 | 7,299 | 5,096 | |||||||||||||||||||
| Average community count | 214 | 221 | 219 | 216 | |||||||||||||||||||
| Cancellation rate | 10 | % | 13 | % | 12 | % | 13 | % | |||||||||||||||
| Backlog units | 4,503 | 2,915 | 4,503 | 2,915 | |||||||||||||||||||
| Backlog sales value | $ | 1,819,231 | $ | 1,137,207 | $ | 1,819,231 | $ | 1,137,207 | |||||||||||||||
| Homes delivered | 2,137 | 1,651 | 5,467 | 4,375 | |||||||||||||||||||
| Average home closing price | $ | 380 | $ | 382 | $ | 378 | $ | 388 | |||||||||||||||
| Homebuilding revenue: | |||||||||||||||||||||||
| Housing revenue | $ | 812,999 | $ | 631,380 | $ | 2,067,148 | $ | 1,695,558 | |||||||||||||||
| Land revenue | 5,976 | 8,511 | 11,109 | 23,042 | |||||||||||||||||||
| Total homebuilding revenue | $ | 818,975 | $ | 639,891 | $ | 2,078,257 | $ | 1,718,600 | |||||||||||||||
| Financial services revenue | 28,946 | 13,454 | 61,461 | 39,540 | |||||||||||||||||||
| Total revenue | $ | 847,921 | $ | 653,345 | $ | 2,139,718 | $ | 1,758,140 | |||||||||||||||
| Cost of sales - operations | 653,407 | 519,082 | 1,672,122 | 1,410,849 | |||||||||||||||||||
| Cost of sales - purchase accounting adjustments | — | 82 | — | 639 | |||||||||||||||||||
| Gross margin | $ | 194,514 | $ | 134,181 | $ | 467,596 | $ | 346,652 | |||||||||||||||
| General and administrative expense | 48,879 | 39,385 | 123,763 | 106,248 | |||||||||||||||||||
| Selling expense | 49,539 | 40,147 | 127,494 | 109,150 | |||||||||||||||||||
| Operating income | $ | 96,096 | $ | 54,649 | $ | 216,339 | $ | 131,254 | |||||||||||||||
Equity in income from joint venture arrangements | (252) | (52) | (307) | (118) | |||||||||||||||||||
| Interest expense | 1,239 | 4,637 | 8,454 | 16,626 | |||||||||||||||||||
| Income before income taxes | $ | 95,109 | $ | 50,064 | $ | 208,192 | $ | 114,746 | |||||||||||||||
| Provision for income taxes | 21,572 | 12,226 | 48,401 | 28,939 | |||||||||||||||||||
| Net income | $ | 73,537 | $ | 37,838 | $ | 159,791 | $ | 85,807 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 2.57 | $ | 1.35 | $ | 5.60 | $ | 3.10 | |||||||||||||||
| Diluted | $ | 2.51 | $ | 1.32 | $ | 5.50 | $ | 3.04 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 28,653 | 27,981 | 28,554 | 27,695 | |||||||||||||||||||
| Diluted | 29,286 | 28,598 | 29,030 | 28,238 | |||||||||||||||||||
M/I Homes, Inc. and Subsidiaries
Summary Balance Sheet and Other Information (unaudited)
(Dollars in thousands, except per share amounts)
| As of | |||||||||||
| September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Assets: | |||||||||||
Total cash, cash equivalents and restricted cash (1) | $ | 202,512 | $ | 33,451 | |||||||
| Mortgage loans held for sale | 140,046 | 128,322 | |||||||||
| Inventory: | |||||||||||
| Lots, land and land development | 840,637 | 824,835 | |||||||||
| Land held for sale | 4,357 | 8,465 | |||||||||
| Homes under construction | 863,603 | 848,302 | |||||||||
| Other inventory | 134,812 | 145,466 | |||||||||
| Total Inventory | $ | 1,843,409 | $ | 1,827,068 | |||||||
| Property and equipment - net | 25,696 | 27,621 | |||||||||
| Investments in joint venture arrangements | 34,038 | 47,557 | |||||||||
| Operating lease right-of-use assets | 52,574 | 19,059 | |||||||||
| Goodwill | 16,400 | 16,400 | |||||||||
| Deferred income tax asset | 9,205 | 11,988 | |||||||||
| Other assets | 96,675 | 70,137 | |||||||||
| Total Assets | $ | 2,420,555 | $ | 2,181,603 | |||||||
| Liabilities: | |||||||||||
| Debt - Homebuilding Operations: | |||||||||||
| Senior notes due 2021 - net | $ | — | $ | 298,712 | |||||||
| Senior notes due 2025 - net | 247,483 | 246,962 | |||||||||
| Senior notes due 2028 - net | 394,363 | — | |||||||||
| Notes payable - homebuilding | — | 189,900 | |||||||||
| Notes payable - other | 5,325 | 5,508 | |||||||||
| Total Debt - Homebuilding Operations | $ | 647,171 | $ | 741,082 | |||||||
| Notes payable bank - financial services operations | 136,119 | 108,594 | |||||||||
| Total Debt | $ | 783,290 | $ | 849,676 | |||||||
| Accounts payable | 176,581 | 169,528 | |||||||||
| Operating lease liabilities | 52,666 | 19,059 | |||||||||
| Other liabilities | 233,278 | 188,699 | |||||||||
| Total Liabilities | $ | 1,245,815 | $ | 1,226,962 | |||||||
| Shareholders’ Equity | 1,174,740 | 954,641 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,420,555 | $ | 2,181,603 | |||||||
| Book value per common share | $ | 40.87 | $ | 33.92 | |||||||
Homebuilding debt to capital ratio (2) | 36 | % | 44 | % | |||||||
(1)Includes $0.2 million and $0.5 million of restricted cash and cash held in escrow for the quarters ended September 30, 2020 and 2019, 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.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data (unaudited)
(Dollars in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Cash provided by (used in) operating activities | $ | 114,400 | $ | (9,640) | $ | 197,226 | $ | 977 | |||||||||||||||
| Cash used in investing activities | $ | (10,625) | $ | (8,980) | $ | (31,327) | $ | (25,710) | |||||||||||||||
| Cash provided by financing activities | $ | 4,714 | $ | 31,678 | $ | 30,530 | $ | 36,655 | |||||||||||||||
| Land/lot purchases | $ | 106,846 | $ | 92,096 | $ | 266,824 | $ | 258,438 | |||||||||||||||
| Land development spending | $ | 88,682 | $ | 68,780 | $ | 222,604 | $ | 185,508 | |||||||||||||||
| Land sale revenue | $ | 5,976 | $ | 8,511 | $ | 11,109 | $ | 23,042 | |||||||||||||||
| Land sale gross profit | $ | 187 | $ | 75 | $ | 251 | $ | 530 | |||||||||||||||
| Financial services pre-tax income | $ | 19,179 | $ | 5,623 | $ | 35,647 | $ | 17,279 | |||||||||||||||
M/I Homes, Inc. and Subsidiaries
Non-GAAP Financial Results (1)
(Dollars in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net income | $ | 73,537 | $ | 37,838 | $ | 159,791 | $ | 85,807 | |||||||||||||||
| Add: | |||||||||||||||||||||||
| Provision for income taxes | 21,572 | 12,226 | 48,401 | 28,939 | |||||||||||||||||||
| Interest expense net of interest income | 327 | 3,625 | 5,835 | 13,788 | |||||||||||||||||||
| Interest amortized to cost of sales | 8,803 | 7,836 | 23,127 | 20,609 | |||||||||||||||||||
| Depreciation and amortization | 4,590 | 4,089 | 13,014 | 11,796 | |||||||||||||||||||
| Non-cash charges | 2,274 | 1,492 | 6,372 | 4,086 | |||||||||||||||||||
| Adjusted EBITDA | $ | 111,103 | $ | 67,106 | $ | 256,540 | $ | 165,025 | |||||||||||||||
M/I Homes, Inc. and Subsidiaries
Non-GAAP Reconciliation (1)
(Dollars and shares in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Income before income taxes | $ | 95,109 | $ | 50,064 | $ | 208,192 | $ | 114,746 | |||||||||||||||
Add: Purchase accounting adjustments (2) | — | 82 | — | 639 | |||||||||||||||||||
| Adjusted income before income taxes | $ | 95,109 | $ | 50,146 | $ | 208,192 | $ | 115,385 | |||||||||||||||
| Net income | $ | 73,537 | $ | 37,838 | $ | 159,791 | $ | 85,807 | |||||||||||||||
Add: Purchase accounting adjustments - net of tax (2) | — | 61 | — | 473 | |||||||||||||||||||
| Adjusted net income | $ | 73,537 | $ | 37,899 | $ | 159,791 | $ | 86,280 | |||||||||||||||
Purchase accounting adjustments - net of tax (2) | $ | — | $ | 61 | $ | — | $ | 473 | |||||||||||||||
| Divided by: Diluted weighted average shares outstanding | 29,286 | 28,598 | 29,030 | 28,238 | |||||||||||||||||||
Diluted earnings per share related to purchase accounting adjustments (2) | $ | — | $ | — | $ | — | $ | 0.02 | |||||||||||||||
| Add: Diluted earnings per share | 2.51 | 1.32 | 5.50 | 3.04 | |||||||||||||||||||
| Adjusted diluted earnings per share | $ | 2.51 | $ | 1.32 | $ | 5.50 | $ | 3.06 | |||||||||||||||
(1) 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.
(2) Represents purchase accounting adjustments related to our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.
M/I Homes, Inc. and Subsidiaries
Selected Supplemental Financial and Operating Data
| NEW CONTRACTS | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||||||||
| Region | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||||
| Northern | 1,176 | 635 | 85 | % | 2,951 | 2,040 | 45 | % | ||||||||||||||||||||||||||||||
| Southern | 1,773 | 1,086 | 63 | % | 4,348 | 3,056 | 42 | % | ||||||||||||||||||||||||||||||
| Total | 2,949 | 1,721 | 71 | % | 7,299 | 5,096 | 43 | % | ||||||||||||||||||||||||||||||
| HOMES DELIVERED | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||||||||
| Region | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||||
| Northern | 868 | 651 | 33 | % | 2,190 | 1,739 | 26 | % | ||||||||||||||||||||||||||||||
| Southern | 1,269 | 1,000 | 27 | % | 3,277 | 2,636 | 24 | % | ||||||||||||||||||||||||||||||
| Total | 2,137 | 1,651 | 29 | % | 5,467 | 4,375 | 25 | % | ||||||||||||||||||||||||||||||
| BACKLOG | ||||||||||||||||||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||||||||||||||
| Dollars | Average | Dollars | Average | |||||||||||||||||||||||||||||||||||
| Region | Units | (millions) | Sales Price | Units | (millions) | Sales Price | ||||||||||||||||||||||||||||||||
| Northern | 1,904 | $ | 814 | $ | 427,000 | 1,231 | $ | 529 | $ | 430,000 | ||||||||||||||||||||||||||||
| Southern | 2,599 | $ | 1,005 | $ | 387,000 | 1,684 | $ | 608 | $ | 361,000 | ||||||||||||||||||||||||||||
| Total | 4,503 | $ | 1,819 | $ | 404,000 | 2,915 | $ | 1,137 | $ | 390,000 | ||||||||||||||||||||||||||||
| LAND POSITION SUMMARY | ||||||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||
| Lots | Lots Under | Lots | Lots Under | |||||||||||||||||||||||
| Region | Owned | Contract | Total | Owned | Contract | Total | ||||||||||||||||||||
| Northern | 6,858 | 6,892 | 13,750 | 6,696 | 5,015 | 11,711 | ||||||||||||||||||||
| Southern | 8,203 | 17,640 | 25,843 | 8,145 | 9,210 | 17,355 | ||||||||||||||||||||
| Total | 15,061 | 24,532 | 39,593 | 14,841 | 14,225 | 29,066 | ||||||||||||||||||||