M/I Homes(US:MHO)2021-04-29 01:30Financial Data and Key Metrics Changes - The company reported a record first quarter with revenues increasing by 43% to $829 million compared to the previous year [11][26] - Pre-tax income reached an all-time quarterly record of $110 million, up 167% year-over-year, resulting in a pre-tax income percentage of 13.3% compared to 7.2% last year [11][27] - Return on equity improved to 25% from 15% a year ago [29] Business Line Data and Key Metrics Changes - The company sold a record 3,109 homes during the quarter, a 49% increase from the previous year [9][23] - Homes delivered increased by 35%, totaling 2,019 homes, which represented 46% of the backlog [11][25] - Smart Series sales comprised nearly 35% of total sales, up from 30% a year ago [9][98] Market Data and Key Metrics Changes - New contracts in the Southern region increased by 46%, while the Northern region saw a 53% increase [15] - The backlog sales value reached a record $2.4 billion, an 82% increase from last year [12] - The average price in backlog increased by nearly 10% to $433,000 compared to the previous year [12] Company Strategy and Development Direction - The company aims to continue gaining market share and improving profitability across all 15 markets [8][21] - There is a focus on expanding the Smart Series product line, which has shown better sales pace and higher gross margins [10][19] - The company plans to open more communities this year than last year, despite challenges in community count growth [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for new housing driven by low mortgage rates and a growing number of millennials entering the housing market [7][8] - The company anticipates a strong second quarter in closings, despite some delays due to weather-related issues [45] - Management expects to maintain strong margins unless there are significant changes in market conditions [51][73] Other Important Information - The company has a strong financial position with $1.4 billion in equity and a cash balance of $293 million [20] - The owned and controlled lot position approximates 42,000 single-family lots, providing a nearly five-year supply [17][38] - The average mortgage amount increased to $328,000, with a solid borrower profile [33] Q&A Session Summary Question: Can you discuss the increase in order growth from February to March? - Management noted that the order growth was consistent, with some closings delayed due to weather issues in Texas [44] Question: What is the expected pace of closings for the rest of the year? - Management indicated that the current pace of closings is strong, driven by the Smart Series homes, and they expect to maintain this pace [48][49] Question: What drove the gross margin increase this quarter? - Management attributed the gross margin increase primarily to strong demand rather than mix or older land purchases [50][51] Question: How do you view community growth by year-end 2021? - Management expressed that achieving community count growth this year will be challenging, but they expect to continue growing overall [55] Question: Can you comment on interest expense and capital allocation? - Management feels confident about their capital structure and is focused on land purchases to support growth, with discussions ongoing about potential stock buybacks or dividends [96] Question: What percentage of orders or closings were from the Smart Series? - Management confirmed that 35% of total sales were from the Smart Series, up from 30% a year ago [98]