M/I Homes(MHO) - 2024 Q4 - Annual Report

Financial Performance - In 2024, the company achieved record homes delivered, revenue of $4.50 billion, and net income of$ 563.7 million, reflecting a 12% increase in revenue and homes delivered compared to 2023[183][186][187]. - Total revenue increased 12% to $4.5 billion in 2024, an all-time record for the company[190]. - Homes delivered increased 12% to 9,055, marking an all-time record for the company[190]. - Pre-tax income rose 21% to$ 733.6 million, representing 16.3% of revenue, also an all-time record[190]. - Income before income taxes rose 21% from $607.3 million in 2023 to$ 733.6 million in 2024[186]. - The effective tax rate was 23.2% in 2024, slightly down from 23.4% in 2023[186]. - Shareholders' equity increased 17% to $2.9 billion, reaching an all-time record high for the company[190]. - The company ended 2024 with strong cash flow and liquidity, maintaining low leverage[183]. - The company ended 2024 with$ 821.6 million in cash, an increase of $88.9 million in unrestricted cash and cash equivalents from December 31, 2023[225]. - The ratio of homebuilding debt to capital improved from 22% in 2023 to 19% in 2024, indicating a stronger financial position[239]. - The Company reported a leverage ratio of 0.01, well below the maximum allowed ratio of 0.60[246]. - The Interest Coverage Ratio stood at 23.74 to 1.0, significantly above the minimum requirement of 1.5 to 1.0[246]. - The Company had$ 4,388.5 million in revenues for the year ended December 31, 2024, with a net income of $524.8 million[262]. Sales and Contracts - New contracts increased by 8% in 2024, driven by improved homebuyer demand and the introduction of mortgage interest rate buydowns[183]. - The company-wide absorption pace of sales per community was consistent at 3.3 per month, with plans to increase the average community count by approximately 5% in 2025[185]. - Homes delivered in the Southern region increased by 5%, from 4,943 units in 2023 to 5,182 units in 2024[213]. - In 2024, the company experienced a 4% increase in new contracts in the Southern region, rising from 4,616 in 2023 to 4,823 in 2024, attributed to an increase in average communities from 101 to 121[216]. - The backlog decreased by 20% from 1,754 homes at December 31, 2023, to 1,395 homes at December 31, 2024, due to improved construction cycle times[216]. Homebuilding Operations - The company's gross margin reached a record 26.6%, a 130 basis point improvement from 2023, due to enhanced construction cycle times[183]. - Gross margin for homebuilding operations improved by$ 157.6 million, with gross margin percentage increasing by 120 basis points to 24.7%[188]. - Selling, general and administrative expenses increased by $61.1 million, rising to 10.9% of revenue from 10.7% in 2023[190]. - The average sales price of homes delivered remained at$ 483,000, with 943 units delivered in 2024[187]. - The average sales price in backlog increased to $547,000 at December 31, 2024, up from$ 520,000 at December 31, 2023[216]. Regional Performance - Homebuilding revenue in the Northern region rose by $376.1 million, a 25% increase from$ 1.52 billion in 2023 to $1.90 billion in 2024[210]. - Homes delivered in the Northern region increased by 22%, from 3,169 units in 2023 to 3,873 units in 2024[210]. - Average sales price of homes delivered in the Northern region increased by$ 11,000, from $479,000 in 2023 to$ 490,000 in 2024[210]. - Total homebuilding revenue across both regions increased from $3.91 billion in 2023 to$ 4.38 billion in 2024, a 11.8% increase[210]. - Operating income in the Northern region increased by $104.8 million, from$ 176.3 million in 2023 to $281.1 million in 2024[210]. - Selling, general and administrative expenses in the Southern region increased by$ 22.5 million, from $189.9 million in 2023 to$ 212.4 million in 2024[215]. Financial Services - Financial services operations reported a $14.7 million increase in operating income in 2024, attributed to a rise in closings and average loan amounts[184]. - Revenue from financial services increased by 24% to$ 116.2 million in 2024, driven by an increase in loans closed and sold[187]. - The number of loans originated in Financial Services increased from 5,395 in 2023 to 6,731 in 2024, a 24.7% increase[206]. - Revenue from mortgage and title operations increased by $22.4 million, or 24%, from$ 93.8 million in 2023 to $116.2 million in 2024, driven by an increase in loan originations from 5,395 to 6,731[217]. - Approximately 89% of homes delivered in 2024 were financed through M/I Financial, compared to 83% in 2023[219]. Land and Development - The company invested$ 472.9 million in land acquisitions and $646.0 million in land development during 2024[192]. - The company ended 2024 with approximately 52,200 lots under control, a 14% increase from 45,700 lots at the end of 2023[193]. - The average community count increased by 7% to 220 active communities at the end of 2024[190]. - The company had 28,320 lots under contract with an aggregate purchase price of approximately$ 1.4 billion, to be acquired from 2025 through 2031[230]. Market Conditions and Expectations - The company expects some margin compression in 2025 compared to 2024 levels due to current market conditions[191]. - The annual inflation rate in the U.S. was 2.9% in December 2024, slightly down from 3.4% in December 2023[268]. - The Company plans to offer mortgage interest rate buydowns in 2025 to improve affordability for potential homebuyers[269]. Debt and Financial Instruments - The Company issued $300.0 million aggregate principal amount of 3.95% Senior Notes due 2030 and$ 400.0 million aggregate principal amount of 4.95% Senior Notes due 2028, both of which are fully guaranteed by its subsidiaries[254][255]. - The total assets of the Company as of December 31, 2024, were $4,169.9 million, with total liabilities of$ 1,284.0 million[261]. - As of December 31, 2024, the company had uncommitted interest rate lock commitments (IRLCs) totaling $215.7 million, an increase of 23.8% from$ 174.3 million in 2023[275]. - The company reported forward sales of mortgage-backed securities (FMBSs) related to uncommitted IRLCs amounting to $228.0 million, up from$ 174.0 million in 2023, reflecting a 30.9% increase[275]. - Mortgage loans held for sale increased to $283.5 million in 2024 from$ 176.3 million in 2023, representing a growth of 60.7%[275]. - The company experienced a loss of $6.7 million on mortgage loans held for sale in 2024, compared to a gain of$ 6.7 million in 2023[275]. - Interest rate lock commitments resulted in a loss of $3.1 million in 2024, down from a gain of$ 2.8 million in 2023[275]. - The company’s total financial instruments notional amounts increased significantly, with a total of $286.2 million in liabilities as of December 31, 2024[277]. - The company's long-term fixed-rate debt totaled$ 700.0 million, with a weighted average interest rate of 4.52%[278]. - Short-term variable-rate debt stood at $286.2 million, with a weighted average interest rate of 6.19%[278].