M/I Homes, Inc.

Good morning, ladies and gentlemen, and welcome to the MI Homes Third Quarter Earnings 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. This call is being recorded on October 22, 2025. I would now like to turn the conference over to Phil Creek. Please go ahead.

Thank you for joining us today. On the call with me 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 non-public items with you directly. And as to forward-looking statements, I 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. With that, I'll turn the call over to Bob.

Thanks, Phil. Good morning, and I, too, want to thank you all for joining us today. Despite the continued challenging market conditions and choppy, uneven demand environment, we had a very solid third quarter. We generated $140 million of pre-tax income, though down 26% from last year's record third quarter results. Our pre-tax income percentage was a very solid 12% of revenue, with gross margins of 24%, and resulted in a strong return on equity of 16%. Consistent with our first and second quarter commentary, and also consistent with what our industry peers have reported, housing demand and overall market conditions remain somewhat challenging. In our view, housing conditions are just okay. Certainly not great, but still just okay. Probably about a C+. and we continue to incentivize sales and drive traffic primarily with mortgage rate buy downs. The cost of such buy downs are the primary reason for the decline in our gross margins. We will continue to use such rate buy downs where necessary on a subdivision by subdivision basis in order to drive traffic and generate sales. In terms of our third quarter performance, we closed a third quarter record 2,296 homes, a 1% increase compared to a year ago. Our third quarter total revenue decreased 1% to $1.1 billion. We sold 1,908 homes during the quarter, down 6% compared to 2024's third quarter of 2,023 homes sold. And our monthly sales pace averaged 2.7 homes per community, compared to a monthly pace of 3.2 homes in 2024. Year to date, we have sold 6,278 homes, down 8% from a year ago. Encouragingly, we continue to see quality buyers in terms of credit worthiness with a strong average credit score of 745 and average down payments of around 16%. Our Smart Series, which is, as we've stated previously, our most affordable line of homes, continues to be an important contributor to sales performance. During the third quarter, Smart Series sales comprised about 52% of total sales compared to just about 50% a year ago. We continue to make important progress in our cycle time. Our third quarter cycle time was about 10 days better than last year, as well as about 10 days better than this year's first quarter. We ended the quarter with 233 communities and remain on track to grow our community count, the balance of 2025, by about 5% from 2024. As Derek Clutch will review in a few minutes, our mortgage and title operations had a very strong quarter, highlighted by capturing a record 93% of our business in the quarter. Now I will provide some additional comments on our markets. Our division income contributions in the third quarter were led by Columbus, Chicago, Dallas, Minneapolis, Orlando, and Cincinnati. New contracts for the third quarter in the northern region decreased by 17%, and new contracts in our southern region increased by 3% compared to last year's third quarter. Our deliveries in the southern region increased by 8%, and our deliveries in the northern region decreased by 7% from a year ago. 59% of deliveries came out of the southern region, 41% out of the northern region. We feel very good about all 17 of our markets. That said, we are expecting particularly strong full-year results in Columbus, Chicago, Dallas, Minneapolis, Cincinnati, Orlando, and Charlotte. We have a strong land position. Our owned and controlled lot position in the southern region decreased by 6% compared to last year and increased by 3% versus last year in the northern region. 36% of our owned and controlled lots are in the north, the other 64% in the southern region. Company-wide, We own approximately 24,400 lots, which is slightly less than a three-year supply. In addition, we control approximately 26,300 lots via option contracts, resulting in a total of 50,700 owned and controlled lots, equating to about a five- to six-year supply. With respect to our balance sheet, we once again ended the quarter in excellent shape. During the quarter, we extended our bank credit facility by five years to 2030 and increased the borrowing capacity under that line from $650 million to $900 million. We ended the third quarter with an all-time record $3.1 billion of equity, equating to a book value per share of $120, up 15% from a year ago. We had zero borrowings under the $900 million unsecured line, and over $700 million in cash, all resulting in a very strong debt-to-capital ratio of 18%, down from 20% last year, and a net debt-to-capital ratio of negative 1%. As I conclude, let me just say we remain quite optimistic about our business and continue to believe that our industry will benefit from the undersupply of homes and and growing household formations throughout our markets. Our backlog remains healthy, and with our strong balance sheet and strong liquidity, we have tremendous flexibility as conditions evolve. We are well positioned as we begin the fourth quarter of 2025. With that, I'll turn it over to Phil. Thanks, Bob.