M/I Homes (NYSE:MHO), Columbus, on Thursday reported net income for the fourth quarter of 2016 of $20.6 million, or $0.67 per diluted share, up from $13.3 million, or $0.43 per diluted share in comparable quarter of 2015. Analysts polled by The Wall Street Journal were expecting a gain of $0.94 per share.
The fourth quarter of 2015 included a $4.9 million after-tax charge ($0.16 per diluted share) for extinguishment of debt. For the year ended December 31, 2016, the company reported net income of $56.6 million or $1.84 per diluted share. This includes the impact of $12.0 million of after-tax charges ($0.40 per diluted share) for stucco-related repair costs in certain Florida communities. Exclusive of these stucco-related charges and the $4.9 million after-tax debt extinguishment charge in 2015, net income increased 21% to $68.6 million compared to $56.6 million in 2015.
New contracts for 2016's fourth quarter reached a fourth quarter record-high of 999, increasing 11% from 2015's fourth quarter of 897. For 2016, new contracts also reached a record-high of 4,755, a 16% increase over 2015’s new contracts of 4,093. M/I Homes had 178 active communities at December 31, 2016 compared to 175 a year ago. The cancellation rate was 18% in 2016’s fourth quarter.
Homes delivered of 1,416 in 2016's fourth quarter were 13% higher than 2015’s 1,253 homes delivered. Homes delivered for the twelve months ended December 31, 2016 increased 15% to a record-high 4,482 from 2015’s deliveries of 3,883. Homes in backlog increased 18% at December 31, 2016 to 1,804 units, with a sales value of $685 million (a 20% increase over last year), and the average sales price in backlog increased 2% to a record-high of $380,000. At December 31, 2015, the sales value of the 1,531 homes in backlog was $569 million, with an average sales price of $372,000.
Robert H. Schottenstein, CEO and president, commented, “We are very pleased to report strong results for 2016, our 40th year in business. The year was highlighted by record new contracts, record homes delivered, record performance by our mortgage and title business, and a 21% increase in net income, excluding the charges for stucco repair and debt extinguishment. Revenue increased 19% to a record $1.7 billion and we continued to improve our operating leverage with a 30 basis point reduction in our overhead expense ratio.”
Schottenstein continued, “We are very excited about our business as we reflect on our strong results in 2016 and look for a continued healthy home building environment in 2017. Our financial condition is strong with shareholders’ equity of $654 million and home-building debt to capital of 43%. With our strong year-end backlog and our planned new community openings for 2017, we are well positioned to continue our growth and improve profitability.”