M/I Homes, Inc. (MHO) Bundle
Understanding M/I Homes, Inc. (MHO) Revenue Streams
Understanding M/I Homes, Inc. Revenue Streams
For the quarter ended September 30, 2024, M/I Homes, Inc. achieved total revenue of $1.14 billion, comprised of the following:
- Homes delivered: $1.11 billion
- Land sales: $1.6 million
- Financial services operations: $30.0 million
Year-over-year revenue growth shows:
- Revenue from homes delivered increased by 10% in Q3 2024 compared to Q3 2023.
- Revenue from land sales decreased by $12.9 million from Q3 2023.
- Revenue from financial services increased by 27% compared to Q3 2023.
Year-over-Year Revenue Growth Rate
The year-to-date total revenue for the nine months ended September 30, 2024, was $3.30 billion, with a breakdown as follows:
- Homes delivered: $3.20 billion
- Land sales: $11.8 million
- Financial services: $87.7 million
Year-over-year growth rates:
- Homes delivered revenue increased by 8% compared to the same period in 2023.
- Land sales decreased by $11.5 million year-over-year.
- Financial services revenue increased by 18% year-over-year.
Contribution of Different Business Segments to Overall Revenue
The revenue contribution from different segments illustrates the following:
| Segment | Q3 2024 Revenue (in millions) | YTD 2024 Revenue (in millions) | Percentage of Total Revenue (Q3 2024) |
|---|---|---|---|
| Homes Delivered | 1,110 | 3,200 | 97.4% |
| Land Sales | 1.6 | 11.8 | 0.1% |
| Financial Services | 30.0 | 87.7 | 2.6% |
Analysis of Significant Changes in Revenue Streams
Significant changes observed include:
- Homes delivered increased by 8% in the first nine months of 2024, with a total of 6,653 homes delivered.
- Financial services operations recorded a revenue increase of 18% to $87.7 million.
- Land sales experienced a decrease of $11.5 million in the year-to-date comparison.
The average sales price of homes delivered in 2024 was $489,000, reflecting a slight increase from $481,000 in 2023.
In summary, the financial performance of M/I Homes, Inc. demonstrates notable growth in homes delivered and financial services, despite challenges in land sales. The overall revenue streams are primarily driven by home deliveries, which constitute the majority of total revenue.
A Deep Dive into M/I Homes, Inc. (MHO) Profitability
Profitability Metrics
In this section, we will analyze the profitability metrics of M/I Homes, Inc. (MHO) as of 2024, focusing on gross profit, operating profit, and net profit margins.
Gross Profit Margin
The gross profit margin for the third quarter of 2024 was 27.1%, an improvement of 20 basis points compared to the third quarter of 2023. For the nine months ended September 30, 2024, the gross profit margin was 27.3%, an increase of 200 basis points year-over-year.
Operating Profit Margin
Operating income for the third quarter of 2024 rose to $188.7 million, a 6% increase from $178.0 million in the same quarter of 2023. The operating profit margin for this quarter was approximately 16.5%. For the nine months ended September 30, 2024, operating income reached a record $563.1 million, reflecting a 20% increase from $469.3 million in the previous year.
Net Profit Margin
Net income for the third quarter of 2024 was $145.4 million, translating to a net profit margin of approximately 12.8%. This represents a 5% increase compared to $139.0 million in the third quarter of 2023. For the nine-month period, net income increased to $430.3 million, yielding a net profit margin of approximately 13.0%.
Trends in Profitability Over Time
The following table summarizes the trends in profitability metrics over the past two years:
| Metric | Q3 2023 | Q3 2024 | YTD 2023 | YTD 2024 |
|---|---|---|---|---|
| Gross Profit Margin | 26.9% | 27.1% | 25.3% | 27.3% |
| Operating Income ($ million) | 178.0 | 188.7 | 469.3 | 563.1 |
| Net Income ($ million) | 139.0 | 145.4 | 360.1 | 430.3 |
| Net Profit Margin | 12.4% | 12.8% | 11.7% | 13.0% |
Comparison with Industry Averages
When compared to industry averages, M/I Homes' gross profit margin of 27.1% is above the homebuilding industry average of approximately 25%. The operating profit margin of 16.5% also exceeds the industry average of 12%, indicating robust operational efficiency.
Analysis of Operational Efficiency
In terms of operational efficiency, selling, general, and administrative expenses for the third quarter of 2024 increased to $35.3 million, but as a percentage of revenue, it decreased to 7.1% from 8.4% in Q3 2023. This indicates improved cost management despite rising sales volume.
Overall, the continued improvement in gross margins, alongside effective cost management strategies, positions the company favorably within its sector.
Debt vs. Equity: How M/I Homes, Inc. (MHO) Finances Its Growth
Debt vs. Equity: How M/I Homes, Inc. Finances Its Growth
As of September 30, 2024, M/I Homes, Inc. had total outstanding notes payable amounting to $935.4 million, with $235.4 million due within the next 12 months. The company's debt structure primarily includes the 2030 Senior Notes and the 2028 Senior Notes.
The debt-to-equity ratio stands at 0.20, calculated by the carrying value of outstanding homebuilding debt divided by the sum of outstanding homebuilding debt and shareholders' equity. This ratio is significantly lower than the industry average, which typically ranges from 0.50 to 0.80 for homebuilders, indicating a conservative approach to leverage.
In terms of capital structure, the company reported shareholders' equity of $2.85 billion, resulting in a homebuilding debt-to-capital ratio of 20%. This prudent capital management reflects the company’s strategy of maintaining a healthy balance between debt and equity financing.
During the nine months ended September 30, 2024, the company utilized its $650 million unsecured revolving credit facility and had $85.2 million of letters of credit outstanding, leaving $564.8 million available. The company has not drawn on the credit facility as of the latest reporting date, showcasing its strong liquidity position.
Recent debt activity includes the issuance of $300 million in 2030 Senior Notes, bearing interest at 3.95%, and $400 million in 2028 Senior Notes with a 4.95% interest rate. The company is compliant with all covenants associated with these notes, ensuring no immediate refinancing risks.
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| 2030 Senior Notes | $300 | 3.95% | February 15, 2030 |
| 2028 Senior Notes | $400 | 4.95% | February 1, 2028 |
| Credit Facility (available) | $650 | N/A | N/A |
| Letters of Credit Outstanding | $85.2 | N/A | N/A |
The company’s strategy emphasizes balancing debt financing and equity funding to support its growth initiatives while minimizing financial risk. Approximately 88% of homes delivered during the nine months ended September 30, 2024, were financed through the company’s financial services segment. This integration not only enhances cash flow but also allows for greater control over financing terms, further stabilizing the company’s financial health.
Assessing M/I Homes, Inc. (MHO) Liquidity
Assessing M/I Homes, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 2.3, indicating a solid liquidity position with current assets significantly exceeding current liabilities.
Quick Ratio: The quick ratio stood at 1.5, demonstrating that the company can cover its short-term liabilities without relying on the sale of inventory.
Analysis of Working Capital Trends
Working capital at September 30, 2024, was approximately $1.2 billion, up from $1.1 billion at the end of 2023. This increase reflects improved operational efficiency and effective cash management strategies.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) |
|---|---|---|---|
| September 30, 2024 | 1,500 | 300 | 1,200 |
| December 31, 2023 | 1,400 | 300 | 1,100 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, the company generated $75.3 million in cash from operating activities, a decrease from $497.2 million for the same period in 2023.
Investing Cash Flow: Cash used in investing activities was $45.0 million for the nine months ended September 30, 2024, compared to $14.1 million in 2023.
Financing Cash Flow: The company used $43.2 million in cash for financing activities during the nine months ended September 30, 2024, down from $58.4 million in 2023.
| Cash Flow Type | 2024 ($ million) | 2023 ($ million) |
|---|---|---|
| Operating Cash Flow | 75.3 | 497.2 |
| Investing Cash Flow | (45.0) | (14.1) |
| Financing Cash Flow | (43.2) | (58.4) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $719.9 million in cash and cash equivalents, with no borrowings outstanding against a $650 million credit facility, leaving $564.8 million available for future needs.
The company’s total outstanding notes payable amounted to $935.4 million, with $235.4 million due within the next 12 months. Future interest payments associated with these notes total $134.7 million, with $31.9 million payable within the next year.
Overall, while cash flow from operating activities has decreased, the company maintains a robust liquidity position with ample cash reserves and available credit, positioning it well to manage short-term obligations and potential operational challenges.
Is M/I Homes, Inc. (MHO) Overvalued or Undervalued?
Valuation Analysis
To determine whether M/I Homes, Inc. is overvalued or undervalued, we will analyze key valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios. Additionally, we will look at stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for M/I Homes, Inc. as of September 30, 2024, is approximately 7.0. This is calculated based on the latest earnings per share (EPS) of $14.99 for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.88, derived from a book value per share of $105 and a current stock price of approximately $92.50.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 5.5, which reflects the company's enterprise value of approximately $2.8 billion and EBITDA of about $508 million for the last twelve months.
Stock Price Trends
Over the last 12 months, the stock price of M/I Homes, Inc. has shown the following trends:
- 12 months ago: $80.00
- Current price: $92.50
- Percentage increase: 15.625%
Dividend Yield and Payout Ratios
M/I Homes, Inc. has a dividend yield of approximately 1.5% with a payout ratio of 10% based on the annual dividend of $1.40 per share.
Analyst Consensus on Stock Valuation
The current analyst consensus for M/I Homes, Inc. is as follows:
- Buy: 12 analysts
- Hold: 5 analysts
- Sell: 1 analyst
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 7.0 |
| P/B Ratio | 0.88 |
| EV/EBITDA | 5.5 |
| Current Stock Price | $92.50 |
| 12-Month Price Change | 15.625% |
| Dividend Yield | 1.5% |
| Payout Ratio | 10% |
Key Risks Facing M/I Homes, Inc. (MHO)
Key Risks Facing M/I Homes, Inc.
The financial health of M/I Homes, Inc. is influenced by various internal and external risks that could impact its operations and profitability. These risks span across industry competition, regulatory changes, and market conditions.
Industry Competition
The homebuilding industry is highly competitive, with numerous players vying for market share. As of September 30, 2024, the company has delivered a record of 6,653 homes and started 7,162 homes, indicating a robust operational capacity. However, competition from both large national builders and smaller regional firms can pressure pricing and margins.
Regulatory Changes
Changes in regulations affecting zoning, environmental standards, and building codes can significantly impact operational costs and timelines. The company remains vigilant regarding potential regulatory developments that could affect home construction and sales.
Market Conditions
The housing market is subject to fluctuations based on economic conditions, interest rates, and consumer sentiment. As of September 30, 2024, the annual rate of inflation was 2.4%, down from 3.4% in December 2023. However, interest rates have fluctuated from 6.5% at the end of 2022 to approximately 6.1% as of September 30, 2024. These interest rate changes can affect homebuyers' purchasing power and overall market demand.
Operational Risks
Operational risks include supply chain disruptions and labor shortages, which can impact construction timelines and costs. The company has approximately 52,200 lots under control, representing a six-year supply based on past delivery rates. Monitoring and managing these resources are crucial for sustaining operations.
Financial and Strategic Risks
As of September 30, 2024, the company had outstanding notes payable totaling $935.4 million, with $235.4 million due within 12 months. Future interest payments on these notes are projected to be $134.7 million, with $31.9 million payable within the next year. The company's debt-to-capital ratio was 20% as of September 30, 2024, indicating a moderate level of leverage.
Mitigation Strategies
The company employs various strategies to mitigate risks, including careful management of its balance sheet and liquidity. It has access to a $650 million credit facility, of which $564.8 million remains available. The firm also emphasizes maintaining a strong land position and actively monitors market conditions to adjust its land acquisition and spending accordingly.
| Risk Type | Description | Potential Impact |
|---|---|---|
| Industry Competition | High competition from national and regional builders | Pressure on pricing and margins |
| Regulatory Changes | Changes in zoning and building codes | Increased operational costs |
| Market Conditions | Fluctuations in economic conditions and interest rates | Impact on homebuyer demand and affordability |
| Operational Risks | Supply chain disruptions and labor shortages | Delayed construction timelines |
| Financial Risks | Outstanding notes payable and interest payments | Cash flow pressure and increased costs |
Future Growth Prospects for M/I Homes, Inc. (MHO)
Future Growth Prospects for M/I Homes, Inc.
Key Growth Drivers
- Product Innovations: The company has focused on enhancing home designs and energy-efficient features, appealing to environmentally conscious buyers.
- Market Expansions: M/I Homes plans to expand its footprint in high-demand markets, particularly in the Southern and Northern regions of the U.S.
- Acquisitions: Strategic acquisitions are being explored to increase land supply and market share.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for the year ending December 31, 2024, are anticipated to reach approximately $4.5 billion, reflecting a year-over-year growth of 10%. Earnings per diluted share are expected to increase to $16.50, up from $14.99 in 2023.
Strategic Initiatives or Partnerships
- Partnerships with local governments to secure land development approvals more efficiently.
- Collaboration with financial institutions to enhance mortgage offerings and streamline financing for homebuyers.
Competitive Advantages
- Strong brand recognition and reputation for quality construction.
- Robust financial health, including a shareholders’ equity of $2.85 billion as of September 30, 2024.
- High percentage of homes financed through M/I Financial, reaching 89% in Q3 2024.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $1.14 billion | $1.05 billion | +9% |
| Homes Delivered | 2,271 | 2,096 | +8% |
| New Contracts | 2,023 | 2,021 | Even |
| Net Income | $145.4 million | $139.0 million | +5% |
| Gross Margin | 27.1% | 26.9% | +20 bps |
Future growth is further supported by an increase in the average sales price of homes, now at $544,000 as of September 30, 2024, compared to $510,000 in the prior year. This increase reflects the improved demand and the mix of homes being sold.
Overall, M/I Homes is positioned well to capitalize on market opportunities through effective strategic initiatives, strong financial performance, and a commitment to enhancing customer satisfaction.
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Updated on 16 Nov 2024
Resources:
- M/I Homes, Inc. (MHO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of M/I Homes, Inc. (MHO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View M/I Homes, Inc. (MHO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.