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- **Resilient Performance Despite Challenges**: Q3 revenue of $1.1B (-1% YoY) supported by 2,296 home closings (+1% YoY) and 12% pretax margin, despite 6% decline in new contracts.
- **Mortgage Buydowns Driving Traffic**: 250 basis points of gross margin decline attributed to rate buydowns, with costs stabilizing in Q3. Southern region deliveries up 8% vs. Northern region's 7% decline.
- **Strong Financial Position**: $734M cash, no debt, and 18% debt-to-capital ratio. Mortgage division achieved 93% capture rate, up from 89% YoY.
- **Growth Focus**: 5%+ community count growth in 2025, with 50,700 owned/controlled lots (5-6 year supply) and $3.1B equity.

**【CEO Summary Section】**
- Q3 2025 revenue decreased 1% to $1.1 billion, with pretax income of $140 million (12% of revenue) and gross margin of 24%. Home closings rose 1% year-over-year to 2,296 units, while new contracts fell 6% due to challenging market conditions.
- The company emphasized selective use of mortgage rate buydowns to drive traffic, with 52% of sales from the affordable Smart Series line. Cycle time improved by 10 days year-over-year, and the company ended the quarter with 233 communities (5% growth year-to-date).
- Southern region deliveries increased 8%, while Northern region deliveries declined 7%. The company maintained a strong land position with 50,700 owned and controlled lots (5-6 year supply) and a book value per share of $120.

**【CFO Financial Commentary】**
- GAAP pretax income of $140 million reflected a 26% decline from Q3 2024, driven by $7.6 million in inventory charges (60 basis points of gross margin decline). Non-GAAP EPS was $3.92, down 23% year-over-year due to higher selling expenses and mortgage buydown costs.
- The company extended its unsecured credit facility to $900 million (maturing in 2030) and ended the quarter with $734 million in cash, no debt, and a debt-to-capital ratio of 18%. EBITDA was $157 million, down 21% year-over-year.
- SG&A expenses rose 6% to $11.9 million of revenue, driven by higher community count and sales incentives. Construction costs remained stable, with no material impact from tariffs.

**【Mortgage Division Highlights】**
- M/I Financial reported pretax income of $16.6 million (28% year-over-year growth), with record $34.6 million in mortgage revenue. The mortgage capture rate reached 93%, up from 89% in Q3 2024, reflecting strong internal sales efforts.
- Average loan size increased to $406,000, with 45% of loans FHA/VA-backed, up from 34% a year ago. The company originated 1,848 loans, a 9% increase year-over-year.

**【Q&A Key Highlights】**
- **Mortgage Buydowns Impact**: CEO Bob Schottenstein stated 250 basis points of gross margin decline was due to buydowns, with costs stabilizing in Q3. The company aims to maintain double-digit pretax margins despite pressures.
- **Regional Performance**: Southern region new contracts grew 3% vs. Northern region's 17% decline. Columbus, Chicago, Dallas, and Orlando divisions exceeded expectations, while Texas markets showed cooling.
- **Balance Sheet Flexibility**: CFO Phil Creek highlighted $900 million credit facility and $1.8 billion unsold land investment, with no plans for M&A despite strong liquidity.
- **Spec Homes Management**: Completed inventory homes rose to 776 (vs. 555 in Q3 2024), but the company maintained a 75-77% broker co-op rate without increasing incentives.
- **2026 Outlook**: Community count expected to grow 5% year-over-year, with focus on existing market expansion rather than new market entry.

M/I Homes, Inc. (MHO) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

MHO

MHO fundamentals

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