M/I Homes(US:MHO)2024-01-31 18:11Financial Data and Key Metrics Changes - Pre-tax income for the year was $607 million, with a pre-tax return of 15% and a return on equity of 20.2% [2] - Gross margins for the year remained steady at 25.3%, while the fourth quarter gross margin was 25.1%, up 250 basis points year-over-year [7][12] - Revenue decreased by 20% in the fourth quarter to $973 million, with an average closing price of $471,000, a 4% decrease from the previous year [7][8] - Earnings per diluted share decreased to $366 from $465 in the fourth quarter of the previous year, and decreased 6% for the year to $1,621 from $1,724 [14] Business Line Data and Key Metrics Changes - Smart Series sales comprised 53% of total company sales in the fourth quarter, up from 52% a year ago [3] - New contracts increased by 61% in the fourth quarter, with a sales pace of 2.5 homes per community compared to 1.8 in the previous year [5][41] - Homes delivered decreased by 3% for the year, totaling 8,112 homes [42] Market Data and Key Metrics Changes - New contracts in the Southern region increased by 44% in the fourth quarter, while the Northern region saw an increase of 89% [47] - Deliveries in the Southern region decreased by 17% year-over-year, while the Northern region saw a decrease of 13% [47] Company Strategy and Development Direction - The company aims to grow its community count by approximately 10% in 2024, with over half of new store openings expected in the first half of the year [62] - The focus remains on maintaining margins around 25% while increasing the mix of attached products to enhance density and profitability [70][74] - The company is optimistic about the housing market and expects to deliver strong results in 2024 [48][70] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment has stabilized, with moderating inflation on land development costs and a positive outlook for demand [59][65] - The company is optimistic about maintaining margins and believes that the current demand and traffic levels will support this [28][63] - Management highlighted improvements in cycle times, which have approached pre-COVID levels, contributing positively to margins [67][68] Other Important Information - The company ended the year with a cash balance of $733 million and no borrowings under its unsecured revolving credit facility [9] - The total home building inventory at year-end was $2.8 billion, flat compared to the previous year [9] Q&A Session Summary Question: What are the expectations for margins and pricing power in 2024? - Management indicated that while pricing power may be limited, they are optimistic about maintaining margins around 25% due to strong demand and improved operational efficiencies [63][64] Question: Can you provide insights on community count and store openings? - The company expects to increase its community count by about 10% in 2024, with many new stores opening in the first half of the year [62] Question: How is the company addressing competitive pressures and incentives? - Management noted that incentives are market-specific and that they have seen a slight decline in the need for incentives due to improved demand and lower mortgage rates [65][66]