M/I Homes, Inc.

Reported second-quarter revenue was $1.1 billion, down 9% year over year. Pretax income was $105 million, down 35%, and pretax income margin was 10% of revenue. Gross margin was 22.1%, including $4 million of inventory charges; excluding those charges, gross margin would have been about 22.5%. Diluted EPS was $3.02 versus $4.42 a year ago. Deliveries were 2.21 thousand homes, down 6%, while new contracts were 2.39 thousand homes, up 15%. For the first six months, sales were 4.74 thousand homes, up 8%, pretax income was $194 million, and pretax margin was also 10%. Management said it expects average 2026 community count to be about 5% higher than last year and reiterated that mortgage rate buy-downs will remain a key incentive in the current rate environment.

Bob Schottenstein struck an optimistic but cautious tone, saying the company is pleased with solid second-quarter and first-half results despite choppy demand, higher rates, and broader uncertainty. He emphasized that the main driver of sales is well-located communities and good product, not incentives alone, and said M/I has a strong land position and balance sheet to navigate volatility. He also pointed to strength in many markets, with newer markets like Nashville and Fort Myers/Naples starting to gain traction, while Tampa, Sarasota, and Austin are weaker.

Phillip Creek focused on the operating and financial details: 2.39 thousand new contracts, 8% cancellations, 78% of sales in spec homes, and 42% of deliveries sold and closed in the same quarter. He said gross margin was 22.1%, SG&A was 12.6% of revenue versus 11.3% a year ago, EBITDA was $120 million, and the effective tax rate was 24%. On the balance sheet, he noted $736 million of cash, no borrowings on the $900 million revolver, book value per share of $128, debt-to-cap of 18%, and net debt-to-cap of negative 1%. He also said the company spent $286 million on land and development during the quarter and repurchased $50 million of stock, with $120 million remaining under authorization.

Analysts pressed on the mix shift toward move-up product, the company’s margin drivers, spec versus to-be-built economics, land strategy, and incentive intensity. Management said the move-up shift is partly demand-driven and partly the result of selectively pursuing better-penciling infill and higher-priced opportunities, with most to-be-built margins higher than spec but varying by market. They also said incentives remain necessary because 30-year fixed rates are still around 7%, but they are using targeted buy-downs by subdivision rather than a one-size-fits-all approach. On M&A and industry dynamics, management said they have not yet seen much impact from consolidation, though they noted possible effects in land, labor, and supplier markets.