M/I Homes, Columbus (NYSE:MHO) on Wednesday reported net income of $18.1 million, or $0.60 per diluted share for the first quarter ended March 31, up from net income of $16.9 million, or $0.55 per diluted share, for the first quarter of 2017. Wall Street was looking for a gain of $0.72 per share.
On March 1, 2018, the Company closed on the acquisition of Pinnacle Homes, a home builder in the greater Detroit, Michigan market. Expenses of $2.6 million (including $0.9 million in housing cost of sales for purchase accounting adjustments) related to this transaction were included in the first quarter results.
New contracts for the first quarter reached an all-time quarterly record of 1,739, increasing 20% from the 1,454 contracts recorded in 2017’s first quarter.
Homes delivered in 2018’s first quarter increased 8% to a first quarter record of 1,122. This compares to 1,038 homes delivered in 2017’s first quarter.
Homes in backlog at March 31, 2018 had a first quarter record total sales value of $1.1 billion, a 31% increase over a year ago, with backlog units increasing 24% to 2,744 and an average sales price of $398,000. At March 31, 2017, backlog sales value was $834 million, with backlog units of 2,220 and an average sales price of $376,000.
M/I Homes had 205 active communities at March 31, 2018, an increase of 11% over our 184 communities at March 31, 2017. The Company’s cancellation rate was 12% in the first quarter of 2018 compared to 14% in 2017’s first quarter.
Robert H. Schottenstein, Chief Executive Officer and President, commented, “We had a strong first quarter highlighted by record new contracts of 1,739 – a 20% increase from last year’s first quarter, and first quarter records in homes delivered and revenue. We also achieved record first quarter backlog, with sales value of $1.1 billion – a 31% increase over 2017’s first quarter, and our units in backlog increased by 24%. Our overhead expense ratio improved 30 basis points and diluted earnings per share improved 9% from 2017’s first quarter. ”
Schottenstein continued, “We are off to a very solid start in 2018. On March 1, we successfully closed on the acquisition of Detroit-based Pinnacle Homes, strengthening and expanding our geographic footprint. Our financial condition remains strong. We ended the quarter with shareholders’ equity of $786 million and a home building debt to capital ratio of 48%. Looking ahead, with our record first quarter backlog, planned new community openings and steady housing market conditions, we are poised to have a solid 2018. We will continue to focus on increasing profitability, growing our market share, and investing in attractive land opportunities.”
