M/I Homes Q1 Earnings Call Highlights

Key Points

• Q1 results: M/I Homes reported $921 million of revenue and $89.2 million of pre-tax income (revenue down 6% and pre-tax income down 39% year-over-year), with EPS falling to $2.55 as margins were pressured by higher incentives and lot costs (gross margin 22%, down 390 bps).
• Strong balance sheet and land position: The company ended the quarter with record shareholders’ equity of $3.2 billion and book value per share of $125, about $767 million in cash with zero borrowings on a $900 million revolver (debt-to-cap 18%, net debt-to-cap -2%), and roughly 50,000 owned/controlled lots (~five-year supply) with $1.9 billion of unsold land investment.
• Sales dynamics and mortgage capture: New contracts rose 3% to 2,350 (Jan/Feb strength offset by a weak March), deliveries were 1,914, 50% of buyers were first-time purchasers and 70% were inventory homes, and the mortgage arm captured 96% of customers while rate buydowns remained a key sales tool.

M/I Homes NYSE: MHO reported what management called a “very solid” first quarter, posting $921 million of revenue and $89.2 million of pre-tax income, while navigating a housing market shaped by affordability pressures, shifting consumer confidence, and higher mortgage-rate volatility.

On the company’s April 22 earnings call, CEO and President Robert H. Schottenstein said results were highlighted by a 10% pre-tax income return and 12% return on equity, even as demand remained “challenging and impacted by affordability, uneven consumer confidence, the conflict in the Middle East, and general uncertainty and volatility in the broader economy.”

First-quarter results and operating trends

Schottenstein said new contracts increased 3% year over year to 2,350 homes, supported by sales momentum that carried from late 2025 into January and February. He noted winter storms affected multiple markets early in the quarter, but traffic and buyer activity improved as the spring selling season began. Conditions then “slightly shifted” late in February and into March, he said, as events in the Middle East contributed to higher mortgage rates, higher gas prices, and increased uncertainty.

During the quarter, M/I Homes delivered 1,914 homes, down 3% from a year earlier. Total revenue declined 6% to $921 million and pre-tax income fell 39% to $89.2 million. Schottenstein also highlighted a record $3.2 billion of shareholders’ equity and record book value per share of $125, up 11% from last year.

EVP and CFO Phillip G. Creek provided additional detail on the quarterly cadence: new contracts were up 11% in January, up 7% in February, and down 6% in March, with March 2025 described as the highest monthly contract total of last year. Creek said the cancellation rate was 8%.

Creek said 50% of first-quarter sales were to first-time buyers and 70% were inventory homes. The company’s average monthly sales pace was 3.4 homes per community, consistent with 2025. Schottenstein said buyers remained “high-quality” from a credit perspective, with average credit scores of 747 and average down payments of 15%.

Margins pressured by incentives and lot costs

Creek said gross margin was 22% in the first quarter, down 390 basis points year over year, primarily due to higher homebuyer incentives and higher lot costs. SG&A expenses rose to 12.7% of revenue from 11.5% a year ago, with costs up 4% due mainly to higher selling expenses, a larger community count, and added headcount.

Earnings per diluted share were $2.55, down from $3.98 a year earlier. EBITDA was $99 million compared with $154 million in the prior-year period. The effective tax rate was 24%, unchanged from last year’s first quarter. Creek also reported net interest income of $3.1 million, with $9 million of interest incurred.

Schottenstein emphasized the role of incentives, saying mortgage rate buydowns continued to be “an important part of our sales strategy.” He said the company has worked to balance margins and sales pace at the community level, offering buydowns for both spec and to-be-built homes.

In response to a question about whether incentives increased during March’s volatility, Schottenstein described the company’s approach as “pretty consistent.” He said most buyers prefer a 30-year fixed-rate mortgage, and M/I Homes has generally led with a 4 7/8 rate on inventory homes deliverable within roughly 60 days, and “a rate in the very low fives” for to-be-built homes with a long-term rate lock, while noting there are exceptions across the company’s 200-plus communities.

Community count, regional mix, and land position

M/I Homes ended the quarter with 230 communities, up from 226 a year ago. Creek said the company opened 22 new communities and closed 24 during the quarter, finishing with 91 communities in the northern region and 139 in the southern region.

Schottenstein said division income contributions in the quarter were led by Chicago, Columbus, Dallas, Orlando, and Raleigh. He added that new contracts in the northern region decreased 4% while southern-region contracts increased 8% year over year. Deliveries in the northern region fell 9% and represented just under 40% of total deliveries, while southern deliveries increased 1% and represented the remaining 60%.

On market-level trends, Schottenstein said margins over the past year have generally held up better in Midwest markets than in Florida, and he pointed to the west coast of Florida—“from Tampa, down through Sarasota”—as the most challenging area currently. Creek said the company believes its diversification across 17 markets and multiple price points has been beneficial, particularly as Florida and Texas have cooled from earlier strength.

Schottenstein outlined the company’s owned and controlled lot position, saying the company owns about 24,200 lots (slightly under a three-year supply) and controls roughly 25,800 lots via option contracts, for approximately 50,000 total lots, equating to “about a five-year supply.” Creek added that unsold land investment was $1.9 billion at quarter-end, including $844 million of raw land and land under development and $1 billion of finished unsold lots.

M/I Financial results and capture rate

Derek Klutch, president of M/I Financial, said mortgage and title operations produced pre-tax income of $14.1 million, down 12% from $16.1 million in the prior-year quarter. Revenue decreased 1% to $31.2 million, which Klutch attributed to slightly lower margins on loans sold and a lower average loan amount, partially offset by an increase in originations.

Klutch said the average loan-to-value on first mortgages was 85%, up from 83% a year ago. He also noted a shift in product mix: 66% of loans closed were conventional and 34% were FHA or VA, compared to 57% and 43%, respectively, in last year’s first quarter. The average mortgage amount declined to $401,000 from $406,000, while loans originated rose 3% to 1,579 and the volume of loans sold increased 1%.

Klutch said the mortgage operation captured 96% of the company’s business in the quarter, up from 92% last year. Schottenstein later said M/I Homes’ capture rate is “the highest in the industry” and described the mortgage platform as a contributor to profitability, particularly amid widespread use of rate buydowns.

Balance sheet, inventory, and capital returns

Management emphasized liquidity and leverage. Schottenstein said the company ended the quarter with zero borrowings under its $900 million unsecured revolving credit facility and more than $750 million in cash, producing a debt-to-capital ratio of 18% and a net debt-to-capital ratio of negative 2%. Creek put the cash balance at $767 million and said the company’s public debt matures in 2028 and 2030 and carries interest rates below 5%.

Creek said the company had 4,600 homes in the field at March 31, compared with 4,800 a year ago. Inventory at quarter-end included 740 completed inventory homes and 2,584 total inventory homes, with 999 in the northern region and 1,585 in the southern region.

On capital returns, Creek said the company repurchased $50 million of stock during the quarter and had $170 million remaining under its board authorization. He added that M/I Homes has repurchased 18% of its outstanding shares over the last four years. Asked whether repurchases could accelerate given cash generation, Schottenstein said the company discusses buybacks regularly with the board but added, “I don’t really see any change,” while acknowledging it is possible.

Looking ahead, Schottenstein said 2026 marks the company’s 50th year in business and reiterated confidence in its positioning, citing the balance sheet, land supply, geographic footprint, and product diversity. He added that while uncertainty has increased, he believes housing is “holding up pretty damn well” and said the company expects 2026 to be “one of our five or six best years” in its history.

About M/I Homes NYSE: MHO

M/I Homes, Inc is a publicly traded residential homebuilder founded in 1976 and headquartered in Columbus, Ohio. The company designs, markets and constructs single-family homes and townhome communities across the United States, offering a range of floor plans with customizable design options. Its product portfolio includes starter homes, move-up homes and luxury models, as well as multi-family residences in urban and suburban infill locations.

In addition to its core homebuilding operations, M/I Homes provides mortgage, title and closing services through its in-house affiliate M/I Financial Services.

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