M/I Homes, Inc.

Good morning, ladies and gentlemen, and welcome to the MI Homes, Inc. Second Quarter Earnings Webcast Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Phil Kreeke, Please go ahead, sir.

Thank you for joining us today. On the call is Bob Schottenstein, our CEO and president, and Derek Clutch, president of our mortgage company. First, to address regulation fair disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant nonpublic items with you directly. And as to forward-looking statements, Want to remind everyone that the cautionary language about forward-looking statements contained in today's press release also applies to any comments made during this call. Also be advised that the company undertakes no obligation to update any forward-looking statements made during this call. I'll now turn the call over to Bob.

Thanks, Phil. Good morning, everyone, and thank you for joining us today. We had a very strong second quarter. Despite higher interest rates and uncertain economic conditions, we were very pleased with our new contracts, homes delivered, margins, and income. And we ended the quarter with our balance sheet in excellent shape. In terms of our new contracts, we sold 2,197 homes during the quarter, 21% better than 1,820 homes that we sold last year. during 2022 second quarter. Smart Series, which is our most affordable line of homes, continues to be an important contributor to our sales performance. During the quarter, our Smart Series sales comprised about 55% of total company sales, roughly the same percentage as a year ago. During the quarter, we were operating in 15% more communities on average than we were a year ago. Our sales pace equaled 3.7 homes sold per community per month. We are on track to open a number of new communities this year. We expect to increase our community count for 2023 by approximately 15% of the 196 communities that we had open at the end of 2022. We closed 1,990 homes in the quarter, and continue to improve our construction cycle time throughout all of our divisions. Gross margins for the quarter were a very solid 26%, considerably better expected going into this year. Our pre-tax income for the quarter was $155 million, down from last year's record level, still very pleased to produce pre-tax results of 15.3% of revenue. Now I will provide some additional comments on our markets. Our division income contributions in the second quarter were led by Dallas, Tampa, Columbus, Sarasota, Raleigh, and Orlando. New contracts for the second quarter in the northern region increased by 31%. New contracts in our southern region increased by 14%. Our deliveries in the southern region increased by 7% from last year. Our deliveries in the northern region decreased by 22% from last year. 61% of our deliveries came out of the southern region, and the balance of our deliveries, 39% out of the northern region. Our owned and controlled lot position in the southern region increased by 18% compared to last year. increased by 4% from last year in the northern region. 36% of our owned and controlled lots are in the northern region, while the other 64% are in our southern region. We have a very strong land position. Company-wide, we own approximately 23,000 single-family lots, which is roughly a three-year supply. In regards to our balance sheet, we ended the second quarter of 2023 with an all-time record $2.3 billion of equity, which equates to a book value per share of $83. We also ended the quarter with a cash balance of nearly $670 million and zero borrowings under our $650 million unsecured revolving credit facility. This resulted in a debt-to-capital ratio of 23%, down from 28% a year ago, and a net debt-to-capital ratio of just 1%. I conclude, let me just state that we are in the best financial condition in our company's history, very good about our business, and are well positioned to have another year of very strong results. With that, I'll turn it over to Phil.