[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [Third Quarter 2025 Key Financial Highlights](index=1&type=section&id=Third%20Quarter%202025%20Key%20Financial%20Highlights) M/I Homes reported a decrease in pre-tax income and net income for Q3 2025 compared to Q3 2024, with an inventory charge impacting results, yet achieved a record in homes delivered and increased shareholders' equity and book value per share | Metric | Q3 2025 | Q3 2024 | Change (%) | | :----------------------- | :------ | :------ | :--------- | | Pre-tax Income | $139.8M | $188.7M | -25.9% | | Net Income | $106.5M | $145.4M | -26.8% | | Diluted EPS | $3.92 | $5.10 | -23.1% | | Revenue | $1.1B | $1.11B | -1.0% | | Inventory Charge (pre-tax) | $7.6M | $0 | N/A | | Shareholders' Equity | $3.1B | $2.8B | +10.7% | | Book Value Per Share | $120 | $104.59 | +14.7% | [Third Quarter 2025 Key Operational Highlights](index=1&type=section&id=Third%20Quarter%202025%20Key%20Operational%20Highlights) Operational performance in Q3 2025 showed a record in homes delivered, but new contracts and backlog units decreased year-over-year, reflecting a challenging market despite community count expansion | Metric | Q3 2025 | Q3 2024 | Change (%) | | :------------------- | :------ | :------ | :--------- | | Homes Delivered | 2,296 | 2,271 | +1% | | New Contracts | 1,908 | 2,023 | -6% | | Backlog Units | 2,189 | 3,174 | -31% | | Backlog Sales Value | $1.21B | $1.73B | -30% | | Average Sales Price (Backlog) | $553,000 | $544,000 | +1.7% | | Communities | 233 | 217 | +7.4% | | Cancellation Rate | 12% | 10% | +2 ppts | [CEO Commentary & Strategic Position](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Position) CEO Robert H. Schottenstein acknowledged challenging housing market conditions but highlighted a solid quarter with strong pre-tax income and return on equity, expressing confidence in long-term housing fundamentals and an excellent financial position - CEO Robert H. Schottenstein noted a solid quarter despite challenging housing market conditions, achieving **$140 million of pre-tax income** (12% of revenue) and a **16% return on equity**[5](index=5&type=chunk) - The company's financial position is strong, evidenced by a Moody's credit rating upgrade to **Ba1** and the extension of its unsecured credit facility to 2030, increasing borrowing capacity from **$650 million to $900 million**, with **zero borrowings** at quarter-end[5](index=5&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - M/I Homes ended the quarter with a homebuilding debt-to-capital ratio of **18%** and a net debt-to-capital ratio of **negative 1%**, positioning it well for the fourth quarter of 2025[7](index=7&type=chunk) [Company Overview & Investor Relations](index=2&type=section&id=Company%20Overview%20%26%20Investor%20Relations) M/I Homes, Inc. is a leading single-family homebuilder operating in multiple states across the Midwest, South, and Southeast US, providing investor contact information and details on its earnings conference call - M/I Homes, Inc. is a leading homebuilder with operations in **16 markets** across Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee[8](index=8&type=chunk) - An earnings conference call was broadcast live on October 22, 2025, with a replay available on the company's website through October 2026[7](index=7&type=chunk) [Summary Statement of Income (Unaudited)](index=3&type=section&id=Summary%20Statement%20of%20Income%20(Unaudited)) [Three Months Ended September 30, 2025 vs 2024](index=3&type=section&id=Three%20Months%20Ended%20September%2030%2C%202025%20vs%202024) For the third quarter of 2025, M/I Homes experienced a slight decrease in total revenue, primarily due to lower housing revenue, with gross margin and operating income declining, impacted by an impairment charge, leading to significant reductions in net income and diluted EPS | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | New contracts | 1,908 | 2,023 | -5.7% | | Homes delivered | 2,296 | 2,271 | +1.1% | | Total revenue | $1,131,791 | $1,142,909 | -1.0% | | Cost of sales - operations | $854,122 | $833,468 | +2.5% | | Cost of sales - impairment | $7,583 | — | N/A | | Gross margin | $270,086 | $309,441 | -12.7% | | Operating income | $135,271 | $181,993 | -25.7% | | Income before income taxes | $139,819 | $188,673 | -25.9% | | Net income | $106,490 | $145,449 | -26.8% | | Diluted EPS | $3.92 | $5.10 | -23.1% | [Nine Months Ended September 30, 2025 vs 2024](index=3&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202025%20vs%202024) For the first nine months of 2025, total revenue slightly decreased, while cost of sales increased, leading to a lower gross margin, with operating income, income before income taxes, net income, and diluted EPS all seeing declines compared to the same period in 2024 | Metric | YTD 2025 (in thousands) | YTD 2024 (in thousands) | Change (%) | | :-------------------------- | :---------------------- | :---------------------- | :--------- | | New contracts | 6,278 | 6,825 | -8.0% | | Homes delivered | 6,620 | 6,653 | -0.5% | | Total revenue | $3,270,476 | $3,299,393 | -0.9% | | Cost of sales - operations | $2,453,405 | $2,397,329 | +2.3% | | Cost of sales - impairment | $7,583 | — | N/A | | Gross margin | $809,488 | $902,064 | -10.2% | | Operating income | $431,912 | $542,103 | -20.3% | | Income before income taxes | $446,034 | $563,051 | -20.8% | | Net income | $338,970 | $430,256 | -21.3% | | Diluted EPS | $12.32 | $14.99 | -17.8% | [Summary Balance Sheet and Other Information (Unaudited)](index=4&type=section&id=Summary%20Balance%20Sheet%20and%20Other%20Information%20(Unaudited)) [Assets Overview](index=4&type=section&id=Assets%20Overview) As of September 30, 2025, M/I Homes reported an increase in total assets, driven primarily by a significant rise in total inventory, particularly in lots, land, and land development, and homes under construction, with cash and cash equivalents also seeing a modest increase | Asset Category | Sep 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total cash, cash equivalents and restricted cash | $734,174 | $719,920 | +2.0% | | Mortgage loans held for sale | $239,585 | $242,812 | -1.3% | | Total Inventory | $3,412,830 | $3,132,694 | +8.9% | | Lots, land and land development | $1,743,476 | $1,558,300 | +11.9% | | Homes under construction | $1,457,843 | $1,401,260 | +4.0% | | Total Assets | $4,769,544 | $4,459,857 | +6.9% | [Liabilities and Shareholders' Equity](index=4&type=section&id=Liabilities%20and%20Shareholders'%20Equity) Total liabilities remained relatively stable year-over-year, with a slight decrease in total debt, while shareholders' equity significantly increased, contributing to a stronger capital base | Liability/Equity Category | Sep 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Debt - Homebuilding Operations | $695,980 | $694,702 | +0.2% | | Total Debt | $927,959 | $930,143 | -0.2% | | Total Liabilities | $1,620,095 | $1,614,501 | +0.3% | | Shareholders' Equity | $3,149,449 | $2,845,356 | +10.7% | | Total Liabilities and Shareholders' Equity | $4,769,544 | $4,459,857 | +6.9% | [Key Financial Ratios](index=4&type=section&id=Key%20Financial%20Ratios) The company improved its homebuilding debt to capital ratio and increased its book value per common share, reflecting a stronger financial structure | Ratio | Sep 30, 2025 | Sep 30, 2024 | Change (ppts) | | :-------------------------- | :----------- | :----------- | :------------ | | Book value per common share | $120.44 | $104.59 | +15.2% | | Homebuilding debt to capital ratio | 18% | 20% | -2 ppts | [Selected Supplemental Financial and Operating Data (Unaudited)](index=5&type=section&id=Selected%20Supplemental%20Financial%20and%20Operating%20Data%20(Unaudited)) [Cash Flow Activities](index=5&type=section&id=Cash%20Flow%20Activities) In Q3 2025, M/I Homes generated positive cash flow from operating activities, a significant improvement from a net outflow in Q3 2024, though cash used in financing activities increased substantially | Cash Flow Activity | Q3 2025 (in thousands) | Q3 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Cash provided by (used in) operating activities | $43,414 | $(67,942) | $146,056 | $75,341 | | Cash used in investing activities | $(15,452) | $(17,496) | $(30,698) | $(45,037) | | Cash used in financing activities | $(94,186) | $(32,100) | $(202,754) | $(43,188) | [Land and Lot Activity](index=5&type=section&id=Land%20and%20Lot%20Activity) Land/lot purchases decreased in Q3 2025 compared to the prior year, while land development spending remained relatively stable, and land sale revenue and gross profit increased | Land Activity | Q3 2025 (in thousands) | Q3 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :---------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Land/lot purchases | $115,372 | $138,711 | $363,106 | $365,553 | | Land development spending | $181,320 | $180,753 | $421,927 | $444,659 | | Land sale revenue | $1,724 | $1,550 | $12,933 | $11,753 | | Land sale gross profit | $163 | $72 | $4,151 | $3,318 | [Financial Services Pre-Tax Income](index=5&type=section&id=Financial%20Services%20Pre-Tax%20Income) Pre-tax income from financial services showed a healthy increase for both the three and nine months ended September 30, 2025, indicating strong performance in this segment | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Financial services pre-tax income | $16,598 | $12,936 | $47,180 | $39,648 | [Non-GAAP Financial Results (Unaudited)](index=5&type=section&id=Non-GAAP%20Financial%20Results%20(Unaudited)) [Adjusted EBITDA Reconciliation](index=5&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA, a non-GAAP measure, decreased for both the three and nine months ended September 30, 2025, reflecting the decline in net income, despite adjustments for taxes, interest, depreciation, and non-cash charges | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Net income | $106,490 | $145,449 | $338,970 | $430,256 | | Provision for income taxes | $33,329 | $43,224 | $107,064 | $132,795 | | Interest income - net | $(8,118) | $(10,089) | $(23,885) | $(30,542) | | Interest amortized to cost of sales | $7,651 | $7,632 | $22,779 | $23,872 | | Depreciation and amortization | $5,116 | $4,816 | $14,797 | $13,890 | | Non-cash charges | $12,108 | $6,750 | $20,224 | $14,099 | | Adjusted EBITDA | $156,576 | $197,782 | $479,949 | $584,370 | [Regional Operating Data](index=6&type=section&id=Regional%20Operating%20Data) [New Contracts by Region](index=6&type=section&id=New%20Contracts%20by%20Region) New contracts decreased overall in Q3 2025 and YTD 2025, primarily driven by a significant decline in the Northern region, while the Southern region saw a modest increase in Q3 | Region | Q3 2025 | Q3 2024 | Q3 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :------- | :------ | :------ | :------------ | :------- | :------- | :------------- | | Northern | 742 | 890 | (17)% | 2,680 | 3,054 | (12)% | | Southern | 1,166 | 1,133 | 3% | 3,598 | 3,771 | (5)% | | Total | 1,908 | 2,023 | (6)% | 6,278 | 6,825 | (8)% | [Homes Delivered by Region](index=6&type=section&id=Homes%20Delivered%20by%20Region) Total homes delivered increased slightly in Q3 2025, with the Southern region showing growth, offsetting a decline in the Northern region, while year-to-date deliveries remained flat | Region | Q3 2025 | Q3 2024 | Q3 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :------- | :------ | :------ | :------------ | :------- | :------- | :------------- | | Northern | 942 | 1,015 | (7)% | 2,735 | 2,809 | (3)% | | Southern | 1,354 | 1,256 | 8% | 3,885 | 3,844 | 1% | | Total | 2,296 | 2,271 | 1% | 6,620 | 6,653 | —% | [Backlog by Region](index=6&type=section&id=Backlog%20by%20Region) Backlog units and sales value decreased significantly across both Northern and Southern regions as of September 30, 2025, compared to the prior year, although the average sales price per unit increased | Region | Sep 30, 2025 Units | Sep 30, 2025 Sales Value (millions) | Sep 30, 2025 Avg Sales Price | Sep 30, 2024 Units | Sep 30, 2024 Sales Value (millions) | Sep 30, 2024 Avg Sales Price | | :------- | :----------------- | :---------------------------------- | :--------------------------- | :----------------- | :---------------------------------- | :--------------------------- | | Northern | 1,081 | $609 | $563,000 | 1,493 | $803 | $538,000 | | Southern | 1,108 | $602 | $544,000 | 1,681 | $923 | $549,000 | | Total | 2,189 | $1,211 | $553,000 | 3,174 | $1,726 | $544,000 | [Land Position Summary by Region](index=6&type=section&id=Land%20Position%20Summary%20by%20Region) M/I Homes' total land position, including owned and under contract lots, slightly decreased year-over-year, with the Northern region seeing an increase in total lots while the Southern region experienced a decrease | Region | Sep 30, 2025 Owned Lots | Sep 30, 2025 Lots Under Contract | Sep 30, 2025 Total Lots | Sep 30, 2024 Owned Lots | Sep 30, 2024 Lots Under Contract | Sep 30, 2024 Total Lots | | :------- | :---------------------- | :------------------------------- | :---------------------- | :---------------------- | :------------------------------- | :---------------------- | | Northern | 7,140 | 10,843 | 17,983 | 6,528 | 10,885 | 17,413 |\ | Southern | 17,268 | 15,374 | 32,642 | 17,114 | 17,678 | 34,792 | | Total | 24,408 | 26,217 | 50,625 | 23,642 | 28,563 | 52,205 | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) [Disclaimer on Forward-Looking Statements](index=2&type=section&id=Disclaimer%20on%20Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties, and the company disclaims any duty to publicly update these statements - The press release includes forward-looking statements subject to risks and uncertainties, such as economic environment, interest rates, resource availability, competition, and governmental regulations[9](index=9&type=chunk) - Actual results may differ materially from expectations, and the company undertakes no duty to publicly update these statements[9](index=9&type=chunk)

Core Insights - M/I Homes, Inc. reported a pre-tax income of $139.8 million and a net income of $106.5 million for Q3 2025, reflecting a decline from the previous year's record results [3][8] - The company delivered a record 2,296 homes in Q3 2025, a 1% increase from Q3 2024, but new contracts decreased by 6% year-over-year [4][8] - The backlog of homes at the end of Q3 2025 had a total sales value of $1.21 billion, down 30% from the previous year, with a significant decrease in backlog units [4][8] Financial Performance - Revenue for Q3 2025 declined by 1% to $1.1 billion, with a gross margin of $270.1 million [8][9] - Pre-tax income was $140 million, representing 12% of revenue, down 26% from the previous year, which included a $7.6 million inventory charge [3][8] - Net income per diluted share was $3.92, compared to $5.10 in Q3 2024 [3][8] Operational Metrics - Homes delivered in the first nine months of 2025 totaled 6,620, slightly down from 6,653 in the same period of 2024 [4][8] - The cancellation rate increased to 12% in Q3 2025 from 10% in Q3 2024 [4][8] - The average sales price of homes in backlog was $553,000, up from $544,000 a year ago [4][8] Market Position and Outlook - The company maintained a strong financial position, highlighted by an upgrade from Moody's to Ba1 and an extension of its unsecured credit facility to 2030 with increased borrowing capacity [5][8] - M/I Homes had 233 communities as of September 30, 2025, compared to 217 communities a year earlier [4][8] - The CEO expressed confidence in the long-term fundamentals of the housing industry despite current market volatility [5][8]

Core Insights - Analysts project that M/I Homes (MHO) will report quarterly earnings of $4.37 per share, reflecting a year-over-year decline of 14.3% [1] - Revenue is expected to reach $1.16 billion, indicating a 1.2% increase from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting a reevaluation of initial estimates by analysts [1] Revenue Estimates - Financial services revenue is estimated at $29.85 million, a decrease of 0.4% from the previous year [4] - Homebuilding revenue is projected to be $1.12 billion, reflecting a year-over-year increase of 1.1% [4] Key Metrics - The average home closing price is expected to be $480.56 thousand, down from $489.00 thousand a year ago [5] - Total homes delivered is forecasted at 2,339, compared to 2,271 in the same quarter last year [5] - New contracts are estimated to reach 2,013, slightly lower than the year-ago figure of 2,023 [5] Backlog and Community Metrics - The average sales price of homes in backlog is projected at $552.34 thousand, up from $544.00 thousand in the same quarter last year [6] - The number of active communities is expected to be 231, compared to 214 in the same quarter last year [6] - The aggregate sales value of homes in backlog is estimated at $1.24 billion, down from $1.73 billion a year ago [7] - Homes in backlog are projected to be 2,251, significantly lower than the 3,174 reported in the same quarter last year [7] Stock Performance - M/I Homes shares have shown a return of -11.3% over the past month, contrasting with the Zacks S&P 500 composite's +0.7% change [7] - The company holds a Zacks Rank 3 (Hold), indicating expected performance in line with the overall market [7]

Company Performance - M/I Homes closed at $136.23, reflecting a -4.77% change from the previous day, underperforming the S&P 500's daily loss of 0.38% [1] - Over the past month, M/I Homes shares have decreased by 9.01%, significantly trailing the Construction sector's loss of 1.68% and the S&P 500's gain of 4.06% [1] Upcoming Earnings - M/I Homes is set to report earnings on October 22, 2025, with projected earnings of $4.37 per share, indicating a year-over-year decline of 14.31% [2] - The Zacks Consensus Estimate for revenue is $1.12 billion, down 2.27% from the previous year [2] Full Year Projections - For the full year, earnings are projected at $17.25 per share and revenue at $4.39 billion, reflecting changes of -12.48% and -2.57% respectively from the prior year [3] - Recent adjustments to analyst estimates for M/I Homes can indicate short-term business trends, with positive revisions seen as a favorable sign for the business outlook [3] Valuation Metrics - M/I Homes has a Forward P/E ratio of 8.29, which is lower than the industry average Forward P/E of 11.95 [6] - The Building Products - Home Builders industry, part of the Construction sector, currently holds a Zacks Industry Rank of 214, placing it in the bottom 14% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown that 1 stocks have delivered an average annual return of +25% since 1988 [5] - M/I Homes currently holds a Zacks Rank of 3 (Hold), with the consensus EPS estimate remaining unchanged over the past month [5]

Core Points - M/I Homes, Inc. has amended its credit agreement, increasing borrowing availability from $650 million to $900 million and extending the maturity to September 2030 [1][2] - The company reported zero borrowings under its existing credit facility and a cash position of $800 million as of June 30, 2025 [2] - Homebuilding debt-to-capital ratio stands at 18%, while the net debt-to-capital ratio is negative 3% [2] Company Overview - M/I Homes, Inc. is a leading homebuilder in the United States, with operations in multiple states including Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee [2]

Core Insights - M/I Homes, Inc. is set to report its third quarter earnings on October 22, 2025, before the market opens [1][4] - The company is recognized as one of the leading homebuilders in the United States, focusing on single-family homes [2] Company Overview - M/I Homes operates in multiple states including Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee [2] - The company has a significant presence in major metropolitan areas such as Columbus, Cincinnati, Indianapolis, Chicago, and others [2] Upcoming Events - A live webcast for the third quarter earnings report will be available on the company's website [1][4] - The webcast is scheduled for October 22, 2025, at 10:30 AM Eastern Time [4]

Company Performance - M/I Homes (MHO) closed at $152.96, reflecting a -2.71% change from the previous day's closing price, underperforming the S&P 500 which gained 0.27% [1] - Over the past month, M/I Homes shares increased by 21.35%, outperforming the Construction sector's gain of 4.79% and the S&P 500's gain of 1.85% [1] Upcoming Earnings - The upcoming earnings disclosure is anticipated to show an EPS of $4.37, representing a 14.31% decline compared to the same quarter last year [2] - Revenue is forecasted to be $1.12 billion, indicating a 2.27% decline from the corresponding quarter of the prior year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at $17.25 per share and revenue at $4.39 billion, reflecting changes of -12.48% and -2.57% respectively from the previous year [3] - Recent analyst estimate revisions suggest a favorable outlook on the business health and profitability [3] Valuation Metrics - M/I Homes has a Forward P/E ratio of 9.11, which is lower than the industry average Forward P/E of 11.93, indicating that M/I Homes is trading at a discount [6] - The Building Products - Home Builders industry is currently ranked 229 in the Zacks Industry Rank, placing it in the bottom 8% of over 250 industries [6] Analyst Ratings - M/I Homes currently holds a Zacks Rank of 5 (Strong Sell), with no changes in the Zacks Consensus EPS estimate over the past month [5] - The Zacks Rank system has a history of outperforming, with stocks rated 1 producing an average annual return of +25% since 1988 [5]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on M/I Homes (MHO), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][5]. Brokerage Recommendations - M/I Homes has an average brokerage recommendation (ABR) of 1.80, indicating a position between Strong Buy and Buy, with 80% of the recommendations being Strong Buy from five brokerage firms [2][5]. - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies suggest brokerage recommendations often fail to guide investors effectively [5][10]. Analyst Bias - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - This bias can mislead investors, as the recommendations may not accurately reflect the actual price trajectory of a stock [7][10]. Zacks Rank Comparison - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which have shown a strong correlation with near-term stock price movements [8][11]. - The Zacks Rank is distinct from the ABR, as it is a quantitative model that reflects timely earnings estimates, while the ABR may not always be up-to-date [9][13]. Current Earnings Estimates for M/I Homes - The Zacks Consensus Estimate for M/I Homes has declined by 2.2% over the past month to $16.62, indicating growing pessimism among analysts regarding the company's earnings prospects [14]. - This decline in earnings estimates has resulted in a Zacks Rank of 5 (Strong Sell) for M/I Homes, suggesting caution despite the favorable ABR [15].

Group 1 - The home builder stocks are experiencing a bearish to bullish reversal, indicating volatility in the market [1] - M/I Homes (MHO) earnings report is highlighted as a significant focus within the upcoming batch of home builder earnings [1] - The blog "One-Twenty Two" by Dr. Duru provides unique perspectives on financial markets, challenging conventional wisdom [1] Group 2 - Dr. Duru has extensive experience in various financial crises, enhancing his understanding of market behavior [1] - The blog covers a wide range of topics including stocks, options, currencies, and Bitcoin, utilizing both technical and fundamental analysis [1] - Dr. Duru's educational background includes a B.S. in Mechanical Engineering and a Ph.D. in Engineering-Economic Systems [1]

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides the basic filing information for the M/I Homes, Inc. Form 10-Q for the quarterly period ended June 30, 2025 [FORM 10-Q Details](index=1&type=section&id=FORM%2010-Q%20Details) This section provides the basic filing information for the M/I Homes, Inc. Form 10-Q for the quarterly period ended June 30, 2025, including registrant details, exchange listings, and filer status - Registrant: **M/I HOMES, INC.**, incorporated in Ohio, IRS Employer ID **31-1210837**, located at 4131 Worth Avenue, Suite 500, Columbus, Ohio 43219[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Shares, par value $.01 | MHO | New York Stock Exchange | - Filer Status: **Large accelerated filer**[5](index=5&type=chunk) - Shares Outstanding: **26,390,709 common shares** as of July 23, 2025[6](index=6&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20M%2FI%20Homes%2C%20Inc.%20and%20Subsidiaries%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of M/I Homes, Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of income, shareholders' equity, and cash flows, along with detailed notes [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024) Total assets increased to **$4.74 billion** at June 30, 2025, from **$4.55 billion** at December 31, 2024, primarily due to increased inventory, while total liabilities and shareholders' equity also grew Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |---|---|---| | Total Assets | $4,740,039 | $4,549,796 | | Total Liabilities | $1,657,903 | $1,610,119 | | Total Shareholders' Equity | $3,082,136 | $2,939,677 | | Cash, cash equivalents and restricted cash | $800,398 | $821,570 | | Inventory | $3,286,606 | $3,091,862 | [Unaudited Condensed Consolidated Statements of Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For Q2 2025, revenue increased by **4.8%** to **$1.16 billion**, but net income decreased by **17.4%** to **$121.2 million**, with diluted EPS falling to **$4.42** Condensed Consolidated Statements of Income Highlights (in thousands, except per common share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Revenue | $1,162,592 | $1,109,781 | $2,138,685 | $2,156,484 | | Total costs and expenses | $1,002,498 | $915,642 | $1,832,470 | $1,782,106 | | Income before income taxes | $160,094 | $194,139 | $306,215 | $374,378 | | Net income | $121,243 | $146,746 | $232,480 | $284,807 | | Diluted EPS | $4.42 | $5.12 | $8.40 | $9.90 | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Shareholders' equity increased to **$3.08 billion** at June 30, 2025, from **$2.94 billion** at December 31, 2024, driven by net income, partially offset by share repurchases Shareholders' Equity Changes (in thousands) | Metric | Balance at Dec 31, 2024 | Net Income (6M 2025) | Repurchase of Common Shares (6M 2025) | Balance at Jun 30, 2025 | |---|---|---|---|---| | Total Shareholders' Equity | $2,939,677 | $232,480 | $(100,199) | $3,082,136 | - Repurchased **882,000 common shares** for **$100.2 million** during the six months ended June 30, 2025[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net cash provided by operating activities decreased to **$102.6 million** for H1 2025, primarily due to increased inventory purchases and decreased accrued compensation, while financing activities used significantly more cash due to increased share repurchases Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | |---|---|---| | Net cash provided by operating activities | $102,642 | $143,283 | | Net cash used in investing activities | $(15,246) | $(27,541) | | Net cash used in financing activities | $(108,568) | $(11,088) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(21,172) | $104,654 | | Cash, cash equivalents and restricted cash balance at end of period | $800,398 | $837,458 | - Operating cash flow decreased due to **$183.6 million increase in inventory purchases** and **$35.8 million decrease in accrued compensation** in H1 2025[15](index=15&type=chunk) - Financing cash flow significantly impacted by **$100.2 million in common share repurchases** in H1 2025 (vs. $75.6 million in H1 2024) and net repayments of **$10.2 million in bank borrowings** (vs. $56.9 million net proceeds in H1 2024)[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering significant accounting policies, inventory valuation, joint ventures, fair value measurements, guarantees, commitments, debt, earnings per share, income taxes, business segments, share repurchase programs, and revenue recognition [NOTE 1. Basis of Presentation](index=8&type=section&id=NOTE%201.%20Basis%20of%20Presentation) The financial statements are prepared in accordance with SEC rules for interim financial information and GAAP, requiring management estimates, with no significant changes to critical accounting policies in Q2 2025 - Financial statements prepared under SEC rules for interim information and GAAP, requiring management estimates[17](index=17&type=chunk) - **ASU 2023-07 (Segment Reporting)** is effective and applied retrospectively; **ASU 2023-09 (Income Taxes)** and **ASU 2024-03 (Expense Disaggregation)** are being evaluated for future impact[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - No significant changes to accounting policies in Q2 2025 compared to 2024 Form 10-K[22](index=22&type=chunk) [NOTE 2. Inventory and Capitalized Interest](index=9&type=section&id=NOTE%202.%20Inventory%20and%20Capitalized%20Interest) Inventory increased to **$3.29 billion** at June 30, 2025, from **$3.09 billion** at December 31, 2024, primarily in single-family lots and homes under construction, with capitalized interest remaining consistent at **$17.9 million** for H1 2025 Inventory Summary (in thousands) | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | Single-family lots, land and land development costs | $1,683,930 | $1,630,190 | | Land held for sale | $5,005 | $7,699 | | Homes under construction | $1,403,582 | $1,271,626 | | Model homes and furnishings - at cost | $94,865 | $88,216 | | Community development district infrastructure | $9,867 | $12,839 | | Land purchase deposits | $76,771 | $69,483 | | Consolidated inventory not owned | $12,586 | $11,809 | | Total inventory | $3,286,606 | $3,091,862 | - Homes under construction not subject to sales contract: **2,726 homes** (**$585.9 million** carrying value) at June 30, 2025, up from 2,502 homes (**$551.3 million**) at December 31, 2024[25](index=25&type=chunk) Capitalized Interest Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Capitalized interest, beginning of period | $38,022 | $32,792 | $35,953 | $32,144 | | Interest capitalized to inventory | $8,947 | $9,004 | $17,917 | $17,954 | | Capitalized interest charged to land and housing costs and expenses | $(8,227) | $(7,938) | $(15,128) | $(16,240) | | Capitalized interest, end of period | $38,742 | $33,858 | $38,742 | $33,858 | | Interest incurred - net | $4,570 | $1,656 | $8,343 | $3,686 | [NOTE 3. Investment in Joint Venture Arrangements](index=10&type=section&id=NOTE%203.%20Investment%20in%20Joint%20Venture%20Arrangements) The Company's investment in joint venture arrangements increased by **$2.2 million** to **$67.5 million** at June 30, 2025, primarily due to cash contributions offset by lot distributions Investment in Joint Venture Arrangements (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |---|---|---| | Total Investment in Joint Venture Arrangements | $67,466 | $65,334 | | Investment in JODAs | $59,100 | $59,300 | | Investment in LLCs | $8,400 | $6,000 | - Increase of **$2.2 million** in joint venture investments during H1 2025, driven by **$18.4 million cash contributions** offset by **$16.2 million lot distributions**[30](index=30&type=chunk) - No losses or income from LLCs during the three and six months ended June 30, 2025 or 2024[33](index=33&type=chunk) [NOTE 4. Fair Value Measurements](index=11&type=section&id=NOTE%204.%20Fair%20Value%20Measurements) The Company measures mortgage loans held for sale and interest rate lock commitments (IRLCs) at fair value, recognizing a total gain of **$1.6 million** from these instruments for the six months ended June 30, 2025 - Mortgage loans held for sale and IRLCs are measured at fair value on a recurring basis, using **Level 2 and Level 3 inputs**[39](index=39&type=chunk)[42](index=42&type=chunk) Gain (Loss) Recognized on Fair Value Measurements (in thousands) | Description | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Mortgage loans held for sale | $5,544 | $(623) | $5,452 | $(3,471) | | Forward sales of mortgage-backed securities | $(3,701) | $1,647 | $(9,144) | $8,888 | | Interest rate lock commitments | $1,404 | $(1,322) | $4,621 | $(2,179) | | Whole loan contracts | $1,235 | $843 | $644 | $(49) | | Total gain (loss) recognized | $4,482 | $545 | $1,573 | $3,189 | - No impairment charges recorded on inventory or investments in unconsolidated joint ventures during the three and six months ended June 30, 2025 and 2024[52](index=52&type=chunk)[53](index=53&type=chunk) [NOTE 5. Guarantees and Indemnifications](index=14&type=section&id=NOTE%205.%20Guarantees%20and%20Indemnifications) M/I Financial provides limited-life guarantees on loans sold to third-party purchasers, covering approximately **$738.3 million** in loans as of June 30, 2025, with a recorded liability of **$1.0 million** for these guarantees - Loans covered by limited-life guarantees decreased to **$738.3 million** at June 30, 2025, from **$936.0 million** at December 31, 2024, due to a change in investor mix and purchase terms[62](index=62&type=chunk) - Liability for guarantees totaled **$1.0 million** at June 30, 2025, compared to **$1.3 million** at December 31, 2024[65](index=65&type=chunk) [NOTE 6. Commitments and Contingencies](index=15&type=section&id=NOTE%206.%20Commitments%20and%20Contingencies) The Company maintains warranty reserves of **$35.2 million**, has outstanding completion bonds and standby letters of credit totaling **$536.6 million**, and land option/contingent purchase agreements of approximately **$1.56 billion**, with a legal expense reserve of **$1.4 million** Warranty Reserves Activity (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Warranty reserves, beginning of period | $35,043 | $32,263 | $36,219 | $31,980 | | Warranty expense on homes delivered | $6,288 | $5,904 | $11,549 | $11,503 | | Changes in estimates for pre-existing warranties | $45 | $580 | $(54) | $605 | | Settlements made during the period | $(6,144) | $(5,686) | $(12,482) | $(11,027) | | Warranty reserves, end of period | $35,232 | $33,061 | $35,232 | $33,061 | - Outstanding completion bonds and standby letters of credit: **$536.6 million** at June 30, 2025[70](index=70&type=chunk) - Land option and contingent purchase agreements: approximately **$1.56 billion** at June 30, 2025[71](index=71&type=chunk) - Legal expense reserve: **$1.4 million** at June 30, 2025, up from $1.2 million at December 31, 2024[72](index=72&type=chunk) [NOTE 7. Goodwill](index=16&type=section&id=NOTE%207.%20Goodwill) Goodwill of **$16.4 million**, from the 2018 Pinnacle Homes acquisition, remained unchanged at June 30, 2025, with no impairment recorded - Goodwill balance: **$16.4 million** at June 30, 2025, unchanged from December 31, 2024[73](index=73&type=chunk) - No goodwill impairment recorded in Q4 2024 or at June 30, 2025[74](index=74&type=chunk) [NOTE 8. Debt](index=17&type=section&id=NOTE%208.%20Debt) The Company maintains a **$650 million** unsecured revolving Credit Facility with **$561.5 million** available, a **$300 million** MIF Mortgage Repurchase Facility with **$275.9 million** outstanding, and Senior Notes totaling **$700 million**, all in compliance with covenants as of June 30, 2025 - Credit Facility: **$650 million** unsecured revolving credit facility, maturing December 9, 2026; **$561.5 million available** at June 30, 2025 (no borrowings, $88.5 million letters of credit outstanding)[75](index=75&type=chunk)[76](index=76&type=chunk) - MIF Mortgage Repurchase Facility: **$300 million** maximum borrowing availability, expiring October 21, 2025; **$275.9 million outstanding** at June 30, 2025[79](index=79&type=chunk)[80](index=80&type=chunk) - Senior Notes: **$300 million of 3.95% notes due 2030** and **$400 million of 4.95% notes due 2028** outstanding[81](index=81&type=chunk)[82](index=82&type=chunk) - All financial covenants for Credit Facility, 2030 Senior Notes, and 2028 Senior Notes were in compliance at June 30, 2025[75](index=75&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Restricted payments basket for 2028 Senior Notes was **$904.3 million** at June 30, 2025, up from $900.2 million at December 31, 2024[86](index=86&type=chunk) [NOTE 9. Earnings Per Common Share](index=19&type=section&id=NOTE%209.%20Earnings%20Per%20Common%20Share) Diluted earnings per common share decreased to **$4.42** for Q2 2025 and **$8.40** for H1 2025, reflecting a decline in net income Earnings Per Common Share (in thousands, except per common share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income | $121,243 | $146,746 | $232,480 | $284,807 | | Basic weighted average shares outstanding | 26,836 | 27,878 | 27,074 | 27,965 | | Diluted weighted average shares outstanding | 27,406 | 28,668 | 27,673 | 28,777 | | Basic EPS | $4.52 | $5.26 | $8.59 | $10.18 | | Diluted EPS | $4.42 | $5.12 | $8.40 | $9.90 | [NOTE 10. Income Taxes](index=19&type=section&id=NOTE%2010.%20Income%20Taxes) The effective tax rate for Q2 2025 was **24.3%** and for H1 2025 was **24.1%**, with a **$1.7 million** tax benefit from energy efficient homes credit in H1 2025 Effective Tax Rates | Period | Effective Tax Rate 2025 | Effective Tax Rate 2024 | |---|---|---| | Three Months Ended June 30 | 24.3% | 24.4% | | Six Months Ended June 30 | 24.1% | 23.9% | - Recognized **$1.7 million tax benefit** for energy efficient homes credit in H1 2025, up from $1.3 million in H1 2024[88](index=88&type=chunk) - The One Big Beautiful Bill Act (OBBBA) accelerated the termination date of the energy efficient homes credit to June 30, 2026[88](index=88&type=chunk) [NOTE 11. Business Segments](index=20&type=section&id=NOTE%2011.%20Business%20Segments) Northern homebuilding revenue increased by **5.1%** to **$488.3 million** in Q2 2025, while Southern homebuilding revenue increased by **4.7%** to **$642.9 million**, but Southern operating income decreased by **29.6%** due to lower gross margins Segment Revenue (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Northern homebuilding | $488,250 | $464,781 | $898,627 | $873,301 | | Southern homebuilding | $642,892 | $614,238 | $1,177,088 | $1,225,459 | | Financial services | $31,450 | $30,762 | $62,970 | $57,724 | | Total revenue | $1,162,592 | $1,109,781 | $2,138,685 | $2,156,484 | Segment Operating Income (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Northern homebuilding | $76,014 | $72,821 | $136,606 | $130,882 | | Southern homebuilding | $84,300 | $119,750 | $164,731 | $237,593 | | Financial services | $17,542 | $17,883 | $36,309 | $33,070 | | Total operating income | $155,717 | $186,791 | $296,641 | $360,110 | Total Assets by Segment (in thousands) | Segment | June 30, 2025 | December 31, 2024 | |---|---|---| | Northern | $1,145,236 | $1,091,643 | | Southern | $2,406,481 | $2,235,590 | | Financial Services | $377,271 | $370,558 | | Corporate and Unallocated | $811,051 | $852,005 | | Total assets | $4,740,039 | $4,549,796 | [NOTE 12. Share Repurchase Program](index=22&type=section&id=NOTE%2012.%20Share%20Repurchase%20Program) A new **$250 million** share repurchase program was approved in February 2025, under which the Company repurchased **0.5 million shares** for **$50.1 million** in Q2 2025, leaving **$149.8 million** available - New **$250 million share repurchase program** approved on February 11, 2025, replacing the 2024 program[99](index=99&type=chunk) - Repurchased **0.5 million common shares** for **$50.1 million** in Q2 2025[101](index=101&type=chunk) - **$149.8 million** remained available for repurchases under the 2025 Share Repurchase Program as of June 30, 2025[101](index=101&type=chunk) [NOTE 13. Revenue Recognition](index=22&type=section&id=NOTE%2013.%20Revenue%20Recognition) Revenue from home and land sales is recognized at closing, while financial services revenue is recognized upon sale of mortgage loans/servicing rights or rendering of title services Revenue Disaggregated by Source (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Housing | $1,124,475 | $1,072,044 | $2,064,506 | $2,088,557 | | Land sales | $6,667 | $6,975 | $11,209 | $10,203 | | Financial services | $31,450 | $30,762 | $62,970 | $57,724 | | Total revenue | $1,162,592 | $1,109,781 | $2,138,685 | $2,156,484 | - Homebuilding operations accounted for **97% of total revenues** for both three and six months ended June 30, 2025 and 2024[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the Company's financial performance and condition, highlighting the impact of macroeconomic challenges, results by homebuilding regions and financial services, critical accounting estimates, and strategic objectives for 2025 - Company is one of the nation's leading builders of single-family homes, having sold over **164,300 homes** since 1976[111](index=111&type=chunk) - Housing market faces headwinds from elevated mortgage interest rates, higher lot costs, limited affordable housing, and economic uncertainty, leading to decreased buyer urgency[118](index=118&type=chunk) Key Financial and Operational Highlights (Q2 and H1 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | H1 2025 | H1 2024 | Change (YoY) | |---|---|---|---|---|---|---| | Revenue | $1.16B | $1.11B | +5% | $2.14B | $2.16B | -1% | | Homes Delivered | 2,348 | 2,224 | +6% | 4,324 | 4,382 | -1% | | Income Before Taxes | $160.1M | $194.1M | -18% | $306.2M | $374.4M | -18% | | Gross Margins | 24.7% | 27.9% | -320 bps | 25.2% | 27.5% | -230 bps | | Net Income | $121.2M | $146.7M | -17% | $232.5M | $284.8M | -18% | | New Contracts | 2,078 | 2,255 | -8% | 4,370 | 4,802 | -9% | | Shareholders' Equity | $3.1B | $2.74B | +12% | $3.1B | $2.74B | +12% | | Book Value per Share | $117 | $100 | +17% | $117 | $100 | +17% | | Homebuilding Debt to Capital | 18% | 20% | -200 bps | 18% | 20% | -200 bps | - Financial services achieved record quarterly revenue and strong H1 income, benefiting from higher margins, improved capture rate, and increased loan originations[119](index=119&type=chunk) - Company-wide absorption pace declined to **3.0 sales per community per month** in Q2 2025 compared to 3.5 in Q2 2024[120](index=120&type=chunk) - Strategic objectives for remainder of 2025 include promoting sales with incentives, managing land spend and inventory, controlling construction cycle times, opening new communities, managing overhead, maintaining a strong balance sheet, and emphasizing customer service, product quality, and premier locations[131](index=131&type=chunk) - Ended Q2 2025 with approximately **50,500 lots under control** (a six-year supply), a **2% increase** from Q2 2024[132](index=132&type=chunk) - Opened **50 new communities** and closed 36 in H1 2025, ending Q2 with **234 active communities** (up from 211 YoY); expects **5% growth in average community count** by end of 2025[133](index=133&type=chunk) [Overview](index=24&type=section&id=Overview) M/I Homes, Inc. is a leading single-family homebuilder operating in 16 markets, with this section introducing key topics of the Management's Discussion and Analysis, including forward-looking statements, critical accounting estimates, results of operations, liquidity, capital resources, and the impact of interest rates and inflation - M/I Homes, Inc. is a leading builder of single-family homes, having sold over **164,300 homes** since 1976[111](index=111&type=chunk) - The Company operates homebuilding operations in **16 markets** across Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee[111](index=111&type=chunk) [Application of Critical Accounting Estimates and Policies](index=25&type=section&id=Application%20of%20Critical%20Accounting%20Estimates%20and%20Policies) The preparation of financial statements requires management to make estimates and assumptions in accordance with GAAP, with no significant changes to critical accounting policies made during Q2 2025 - Financial statements require management estimates and assumptions based on historical experience and other reasonable factors[115](index=115&type=chunk) - No significant changes to critical accounting policies in Q2 2025 compared to the 2024 Form 10-K[116](index=116&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) The Company's Q2 2025 revenue increased **5%** to **$1.16 billion**, driven by a **6%** increase in homes delivered, despite an **18%** decrease in income before taxes and net income due to lower gross margins and increased incentives Key Financial and Operational Highlights (Q2 and H1 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | H1 2025 | H1 2024 | Change (YoY) | |---|---|---|---|---|---|---| | Revenue | $1.16B | $1.11B | +5% | $2.14B | $2.16B | -1% | | Homes Delivered | 2,348 | 2,224 | +6% | 4,324 | 4,382 | -1% | | Income Before Taxes | $160.1M | $194.1M | -18% | $306.2M | $374.4M | -18% | | Gross Margins | 24.7% | 27.9% | -320 bps | 25.2% | 27.5% | -230 bps | | Net Income | $121.2M | $146.7M | -17% | $232.5M | $284.8M | -18% | | New Contracts | 2,078 | 2,255 | -8% | 4,370 | 4,802 | -9% | - Homebuilding gross margin percentage declined by **320 basis points** to **22.6%** in Q2 2025, primarily due to a **$16.7 million increase in lot costs** and an **$8.7 million increase in interest rate buydowns**[122](index=122&type=chunk) - Financial services revenue increased **2%** in Q2 2025 to a record **$31.5 million**, driven by higher margins, improved capture rate, and a **15% increase in loan originations**[151](index=151&type=chunk) Cancellation Rates by Region | Region | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | |---|---|---|---|---| | Northern | 10.7 % | 9.3 % | 9.1 % | 8.2 % | | Southern | 14.0 % | 10.2 % | 12.9 % | 9.7 % | | Total | 12.7 % | 9.8 % | 11.3 % | 9.0 % | - Northern region revenue increased **5%** in Q2 2025, driven by a **3% increase in average sales price** and a **2% increase in homes delivered**; operating income increased **4.4%**[144](index=144&type=chunk) - Southern region revenue increased **5%** in Q2 2025 due to an **8% increase in homes delivered**, but operating income decreased **29.6%** due to a **550 basis points decline in gross margin** (to 22.4%) from increased lot costs and incentives[148](index=148&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Discussion%20of%20Our%20Liquidity%20and%20Capital%20Resources) Cash, cash equivalents, and restricted cash decreased by **$21.3 million** to **$800.4 million** at June 30, 2025, primarily due to lower home deliveries and land spend timing, with key uses of cash including land acquisitions, land development, and share repurchases - Cash, cash equivalents and restricted cash decreased by **$21.3 million** to **$800.4 million** at June 30, 2025, from December 31, 2024[168](index=168&type=chunk) - Principal uses of cash in H1 2025: **$247.7 million in land acquisitions**, **$240.6 million in land development**, and **$100.2 million in common share repurchases**[168](index=168&type=chunk)[172](index=172&type=chunk)[177](index=177&type=chunk) - Credit Facility: **$650 million**, **$561.5 million available** at June 30, 2025 (no borrowings, $88.5 million letters of credit outstanding)[171](index=171&type=chunk) - MIF Mortgage Repurchase Facility: **$300 million**, **$275.9 million outstanding** at June 30, 2025[170](index=170&type=chunk) - Homebuilding debt to capital ratio: **18%** at June 30, 2025 (vs. 19% at Dec 31, 2024)[180](index=180&type=chunk) Credit Facility Covenants Compliance (as of June 30, 2025, in millions) | Financial Covenant | Requirement | Actual | |---|---|---| | Consolidated Tangible Net Worth | ≥ $1,901.2 | $2,989.5 | | Leverage Ratio | ≤ 0.60 | — | | Interest Coverage Ratio | ≥ 1.5 to 1.0 | 21.73 to 1.0 | | Investments in Unrestricted Subsidiaries and Joint Ventures | ≤ $896.8 | $8.8 | | Unsold Housing Units and Model Homes | ≤ 3,149 | 1,922 | MIF Mortgage Repurchase Facility Covenants Compliance (as of June 30, 2025, in millions) | Financial Covenant | Requirement | Actual | |---|---|---| | Leverage Ratio | ≤ 12.0 to 1.0 | 7.26 to 1.0 | | Liquidity | ≥ $10.0 | $58.5 | | Adjusted Net Income | > $0.0 | $29.2 | | Tangible Net Worth | ≥ $25.0 | $43.5 | [Impact of Interest Rates and Inflation](index=41&type=section&id=Impact%20of%20Interest%20Rates%20and%20Inflation) The Company's business is significantly affected by interest rates and inflation, with the annual inflation rate at **2.7%** in June 2025 and mortgage rates remaining elevated between **6% and 7%**, leading to the use of interest rate buydowns - Annual inflation rate (CPI) was **2.7%** in June 2025, down from 3.0% in June 2024[209](index=209&type=chunk) - Mortgage interest rates hover between **6% and 7%**, comparable to prior year, making it difficult for homebuyers[210](index=210&type=chunk) - Company offers interest rate buydowns to address elevated rates and spur demand, which may reduce margins[210](index=210&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk stems from interest rate fluctuations, which it hedges using derivative instruments like Forward Sales of Mortgage-Backed Securities (FMBSs) and Whole Loan Contracts, recognizing a total gain of **$1.6 million** from these instruments for H1 2025 - Primary market risk is from interest rate fluctuations affecting revolving credit facilities and mortgage loan origination[212](index=212&type=chunk) - Uses FMBSs and Whole Loan Contracts to hedge interest rate risk for IRLCs and Mortgage Loans Held for Sale[215](index=215&type=chunk)[216](index=216&type=chunk) Notional Amounts of Financial Instruments (in thousands) | Description | June 30, 2025 | December 31, 2024 | |---|---|---| | Whole loan contracts and related committed IRLCs | $1,012 | $— | | Uncommitted IRLCs | $317,593 | $215,696 | | FMBSs related to uncommitted IRLCs | $372,000 | $228,000 | | Whole loan contracts and related mortgage loans held for sale | $16,841 | $17,667 | | FMBSs related to mortgage loans held for sale | $258,000 | $252,000 | | Mortgage loans held for sale covered by FMBSs | $267,599 | $276,140 | Gain (Loss) Recognized on Financial Instruments (in thousands) | Description | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Mortgage loans held for sale | $5,544 | $(623) | $5,452 | $(3,471) | | Forward sales of mortgage-backed securities | $(3,701) | $1,647 | $(9,144) | $8,888 | | Interest rate lock commitments | $1,404 | $(1,322) | $4,621 | $(2,179) | | Whole loan contracts | $1,235 | $843 | $644 | $(49) | | Total gain (loss) recognized | $4,482 | $545 | $1,573 | $3,189 | [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were **effective** as of June 30, 2025[220](index=220&type=chunk) - No material changes in internal control over financial reporting during Q2 2025[221](index=221&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding the Company's legal proceedings is incorporated by reference from Note 6 to the Condensed Consolidated Financial Statements - Legal proceedings are discussed in **Note 6** to the Company's Consolidated Financial Statements[222](index=222&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The Company's business is subject to various risks and uncertainties, which are consistent with those disclosed in the 2024 Form 10-K, with no material changes reported in this quarterly filing - No material changes to the risk factors disclosed in the 2024 Form 10-K[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not have any unregistered sales of equity securities, but repurchased **460,000 common shares** for **$50.1 million** in Q2 2025 under its 2025 Share Repurchase Program, leaving **$149.8 million** available - No unregistered sales of equity securities[224](index=224&type=chunk) Common Shares Purchased (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Common Share | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | |---|---|---|---| | April 1, 2025 - April 30, 2025 | 40,000 | $105.17 | $195,738,273 | | May 1, 2025 - May 31, 2025 | 420,000 | $109.37 | $149,801,549 | | June 1, 2025 - June 30, 2025 | — | $— | $149,801,549 | | Quarter ended June 30, 2025 | 460,000 | $109.01 | $149,801,549 | - The 2025 Share Repurchase Program, authorized for up to **$250 million**, replaced the 2024 program[225](index=225&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities[228](index=228&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - No mine safety disclosures[229](index=229&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during Q2 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q2 2025[229](index=229&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including an amendment to a master repurchase agreement, a list of subsidiary guarantors, and various certifications by the CEO and CFO, along with XBRL documents Key Exhibits Filed | Exhibit Number | Description | |---|---| | 10.1 | Amendment No. 3 to Master Repurchase Agreement between M/I Financial, LLC and JPMorgan Chase Bank, National Association, dated July 1, 2025 | | 22 | List of Subsidiary Guarantors | | 31.1, 31.2 | Certifications by Robert H. Schottenstein (CEO) and Phillip G. Creek (CFO) pursuant to Sarbanes-Oxley Act Section 302 | | 32.1, 32.2 | Certifications by Robert H. Schottenstein (CEO) and Phillip G. Creek (CFO) pursuant to Sarbanes-Oxley Act Section 906 | | 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF | XBRL Instance Document and Taxonomy Extensions | | 104 | Cover Page Interactive Data File | [Signatures](index=48&type=section&id=Signatures) [Signatures](index=48&type=section&id=Signatures) The report is signed by Robert H. Schottenstein, Chairman, Chief Executive Officer and President, and Ann Marie W. Hunker, Vice President, Chief Accounting Officer and Controller, on July 25, 2025 - Report signed by Robert H. Schottenstein (Chairman, CEO and President) and Ann Marie W. Hunker (VP, Chief Accounting Officer and Controller) on July 25, 2025[233](index=233&type=chunk)