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M/I Homes (MHO) Q4 Earnings & Revenues Lag, New Orders Rise
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M/I Homes, Inc. (MHO - Free Report) reported tepid results in fourth-quarter 2023, wherein both earnings and revenues missed their respective Zacks Consensus Estimate and declined on a year-over-year basis.
Post the announcement, shares of this homebuilder fell 5.7% during the trading session on Jan 31.
The downtrend in the company’s quarterly results is driven by year-over-year low home deliveries attributable to the lingering headwinds in the form of high mortgage rates, inflationary pressures and other economic risk factors. Low backlog levels, along with the sales value, are also concerning. Nonetheless, the growth prospects of the company are partially salvaged by the year-over-year increase in new home contracts and reduced cancellation rates, thanks to the demand uptrend for affordable homes on the back of low existing home inventory.
Inside the Headlines
The company reported quarterly earnings per share of $3.66, which missed the Zacks Consensus Estimate of $4.94 by 25.9%. In the year-ago quarter, the company reported adjusted earnings of $5.15 per share.
Total revenues of $972.6 million also missed the consensus mark of $1.19 billion by 18% and declined 20.1% year over year from $1.22 billion.
The quarter’s adjusted EBITDA decreased 22.1% to $152.5 million from the year-ago quarter's level. Adjusted EBITDA margin contracted 40 basis points (bps) to 15.7% year over year.
Segmental Details
Homebuilding: The segment's revenues of $952.9 million decreased from the prior-year quarter’s level of $1.19 billion. The number of homes delivered totaled 2,019 units, down 15% from the year-ago period’s levels. The average selling price, or ASP, declined 4.3% from the prior-year figure to $471,000.
Net new home contracts surged 61% to 1,588 units from the prior-year reported value of 985 units. The quarter’s cancellation rate was 13%, down from 30% in the year-ago period.
Quarter-end backlog totaled 3,002 homes, down 4.3% from the year-ago figure. Further, potential housing revenues from backlog declined 7.2% year over year to $1.58 billion.
As of Dec 31, 2023, the average community count was 209, up 11.8% from the year-ago period’s figure of 187. The active communities totaled 213 in the quarter-end compared with 196 reported a year ago.
Total lot inventory as of Dec 31, 2023, increased 8.6% year over year to 45,660, of which 24,374 was owned and 21,286 was controlled.
Financial Services: The segment's revenues declined 12.9% year over year to $19.7 million.
Operating Highlights
In the fourth quarter, M/I Homes’ gross profit was $244.4 million, down 11% year over year. The quarter’s gross margin expanded 250 bps to 25.1%, compared with the year-ago quarter.
Selling, general and administrative (SG&A) expenses increased to $114.5 million from $110.1 million reported in the prior year. SG&A expenses – as a percentage of total revenues – expanded 270 bps to 11.8% year over year.
2023 in a Glance
Total revenues were $4.03 billion, down from $4.13 billion reported in the prior year. Homebuilding revenues were $3.94 billion, down from $4.05 billion reported in 2022. Earnings were $16.21 per share, down from $17.24 per share reported in 2022.
Total homes delivered were 8,112 units in 2023, down 3% from 8,366 units in 2022.
Adjusted EBITDA was $648.2 million, down from $705.4 million reported in the prior year. Adjusted EBITDA margin was 16.1%, down 100 bps year over year.
Financial Position
MHO had total cash, cash equivalents and restricted cash of $732.8 million as of Dec 31, 2023, up from $311.5 million in 2022 end. Total inventory was recorded as $2.8 billion in 2023 end, down from $2.83 billion reported in 2022 end.
As of the end of 2023, the homebuilding debt-to-capital ratio was 22%, down from 25% in 2022 end.
Cash from operating activities at the end of 2023 was $552.1 million, up from $184.1 million reported in the prior year end.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both earnings and revenues surpassed the Zacks Consensus Estimate, marking the fourth consecutive quarter of beat.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.
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M/I Homes (MHO) Q4 Earnings & Revenues Lag, New Orders Rise
M/I Homes, Inc. (MHO - Free Report) reported tepid results in fourth-quarter 2023, wherein both earnings and revenues missed their respective Zacks Consensus Estimate and declined on a year-over-year basis.
Post the announcement, shares of this homebuilder fell 5.7% during the trading session on Jan 31.
The downtrend in the company’s quarterly results is driven by year-over-year low home deliveries attributable to the lingering headwinds in the form of high mortgage rates, inflationary pressures and other economic risk factors. Low backlog levels, along with the sales value, are also concerning. Nonetheless, the growth prospects of the company are partially salvaged by the year-over-year increase in new home contracts and reduced cancellation rates, thanks to the demand uptrend for affordable homes on the back of low existing home inventory.
Inside the Headlines
The company reported quarterly earnings per share of $3.66, which missed the Zacks Consensus Estimate of $4.94 by 25.9%. In the year-ago quarter, the company reported adjusted earnings of $5.15 per share.
M/I Homes, Inc. Price, Consensus and EPS Surprise
M/I Homes, Inc. price-consensus-eps-surprise-chart | M/I Homes, Inc. Quote
Total revenues of $972.6 million also missed the consensus mark of $1.19 billion by 18% and declined 20.1% year over year from $1.22 billion.
The quarter’s adjusted EBITDA decreased 22.1% to $152.5 million from the year-ago quarter's level. Adjusted EBITDA margin contracted 40 basis points (bps) to 15.7% year over year.
Segmental Details
Homebuilding: The segment's revenues of $952.9 million decreased from the prior-year quarter’s level of $1.19 billion. The number of homes delivered totaled 2,019 units, down 15% from the year-ago period’s levels. The average selling price, or ASP, declined 4.3% from the prior-year figure to $471,000.
Net new home contracts surged 61% to 1,588 units from the prior-year reported value of 985 units. The quarter’s cancellation rate was 13%, down from 30% in the year-ago period.
Quarter-end backlog totaled 3,002 homes, down 4.3% from the year-ago figure. Further, potential housing revenues from backlog declined 7.2% year over year to $1.58 billion.
As of Dec 31, 2023, the average community count was 209, up 11.8% from the year-ago period’s figure of 187. The active communities totaled 213 in the quarter-end compared with 196 reported a year ago.
Total lot inventory as of Dec 31, 2023, increased 8.6% year over year to 45,660, of which 24,374 was owned and 21,286 was controlled.
Financial Services: The segment's revenues declined 12.9% year over year to $19.7 million.
Operating Highlights
In the fourth quarter, M/I Homes’ gross profit was $244.4 million, down 11% year over year. The quarter’s gross margin expanded 250 bps to 25.1%, compared with the year-ago quarter.
Selling, general and administrative (SG&A) expenses increased to $114.5 million from $110.1 million reported in the prior year. SG&A expenses – as a percentage of total revenues – expanded 270 bps to 11.8% year over year.
2023 in a Glance
Total revenues were $4.03 billion, down from $4.13 billion reported in the prior year. Homebuilding revenues were $3.94 billion, down from $4.05 billion reported in 2022. Earnings were $16.21 per share, down from $17.24 per share reported in 2022.
Total homes delivered were 8,112 units in 2023, down 3% from 8,366 units in 2022.
Adjusted EBITDA was $648.2 million, down from $705.4 million reported in the prior year. Adjusted EBITDA margin was 16.1%, down 100 bps year over year.
Financial Position
MHO had total cash, cash equivalents and restricted cash of $732.8 million as of Dec 31, 2023, up from $311.5 million in 2022 end. Total inventory was recorded as $2.8 billion in 2023 end, down from $2.83 billion reported in 2022 end.
As of the end of 2023, the homebuilding debt-to-capital ratio was 22%, down from 25% in 2022 end.
Cash from operating activities at the end of 2023 was $552.1 million, up from $184.1 million reported in the prior year end.
Zacks Rank & Some Recent Construction Releases
M/I Homes currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both earnings and revenues surpassed the Zacks Consensus Estimate, marking the fourth consecutive quarter of beat.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.