Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Hazik Siddiqui

Thanks to a strong forward orderbook in the third quarter of 2022, Miller Homes achieved record house completions and EBITDA in the fourth quarter. 

The UK-based homebuilder delivered impressive Q4 22 results on Tuesday (28 March), at a time when mortgage offers were being replaced overnight and chaos reigned in the housing market amid fallout from the mini-Budget. Unlike its peer Keepmoat, the quarter seems to have gone smoothly for Miller, with key metrics surpassing guidance

Management mentioned that supply chain disruption and raw material availability are returning to pre-pandemic levels, and said they expected to reach a “manageable cost inflation” level in FY 23. However, the growing share of affordable housing (lower margins than private sales) could negatively impact FY 23 Average Selling Prices (ASP) and weigh on margins. Affordable housing made up 26% of Miller’s FY 22 completions, and is guided to reach 30% in FY 23.

Over the conference call management guided that so far this year, sales rates — total reservations divided by sales outlets further divided by the number of weeks — have rebounded to 0.60 from a trough of 0.26 in Q4 22. With spring being a strong season for reservations, the rate increased to 0.70 in the first three weeks of March 2023.

Management added that 0.70 should not be seen as a proxy for FY 23 sales rates as reservations are likely to cool in the summer. Sales rates could normalise to 0.55-0.60, which would mean 3,250-3,600 housing units for FY 23 vs 3,970 units sold in FY 22. 

Forward order book of £481m is substantially below £665m as of FY 21, but the orderbook has grown to £690m as of March 2023, thanks to strong spring demand.

Miller Homes is entering FY 23 with lower expectations around forward orderbook and volume, but amid a cautious recovery in UK housing market. The company’s land management strategy (which we discuss below) should help in managing near-term headwinds.

Miller’s ability to optimise inventory during downturns could be seen favorably.

In response to mini-budget induced uncertainty, Miller Homes was quick to cut down on land buying during Q4 22, acquiring 745 new plots versus 1,595 the previous year. This meant net land spend fell to a record low since pandemic related cuts in Q2 20. Controlled land buying in Q2 20 and Q4 22 led to improved cash balances in the respective financial years:

Effective land bank management during downturn scenarios, source: 9fin.com

Despite stepping into 2023 with a lower landbook (13,914 plots as of Q4 22 vs 15,169 in Q4 21), supply capacity looks adequate and near-term house completions would not be significantly impacted by the reduction in land buying. Based on a 2022 run rate, Miller Homes’ current land bank can give house deliveries for another 3.5 years.

Record high completions and cautious land buying saw cash balance reach £189.8m from £100.7m in Q3 22. The high cash balance will likely normalise when Miller Homes resumes its land buying.

Nonetheless, lenders should be pleased to see a liquidity purse of £370m, supported by an undrawn £180m super senior RCF. Management added there are no plans to use cash for a shareholder distribution because the company would need to reinvest the cash into working capital as sales rates recover. 

The £425m 2029 SSNs and €465m 2028 SS FRNs were largely unmoved after Tuesday’s earnings as positive trading got priced in post release of a FY 22 trading update in January. Since the release of the trading update, prices have trended upwards steadily with euros and sterling gaining close to 6.5 and 7 points respectively.

As of writing, the SSNs were indicated at a mid-price of 79.6 (YTW 11.8%) and the FRNs at mid-price of 83.7.

Miller Homes’ Q1 23 results will be released on 30 May 2023

🍪 Our Cookies

Miller Homes outperforms in Q4 22, FY 23 volumes to decline

Read all our public content for free

Recently Published

Lenders resist KKR’s co-op ban in Stepstone carve-out financing

9Questions — Ashwin Krishnan, Morgan Stanley — Opportunistic credit finds itself in the LP spotlight

European Distressed Year in Review 2024

Taking the Credit — Highlights of 2024

What are you waiting for?