M/I Homes, Inc. (NYSE:MHO), Columbus, Ohio reported a profit of $10.9 million, or $0.35 per share, for the the third quarter ended September 30, 2016. The gain compares with a profit of $15.6 million, or $0.51 per diluted share, for the third quarter of 2015 and includes a $14.5 million pre-tax charge ($0.30 per share) for stucco-related repairs in Florida. Analysts were expecting a profit of $0.62 per share.
Revenue was up 22% to a record $422 million for the quarter as homes delivered rose 15% to 1,148 compared to 994 deliveries in 2015’s third quarter and prices rose 5%. Homes delivered year-to-quarter-end increased 17% to 3,066 from 2015’s deliveries of 2,630.
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.
Robert H. Schottenstein, CEO and president, commented, “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. ”
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 home-building debt to capital of 46%. We will continue to focus on increasing profitability, growing our market share, and investing in attractive land opportunities.”
