M/I Homes, Inc.

Good morning ladies and gentlemen and welcome to the MI Homes first quarter earnings conference call. At this time, all lines are in a 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 be recorded on Wednesday, April 22, 2026. I would now like to turn the conference over to Mr. Phil Crick. Please go ahead.

Thank you for joining us today. On the call is Bob Schottenstein, our CEO and president, Derek Clutch, president of our mortgage company. 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. I'll now turn the call over to Bob.

Thanks, Bill. Good morning, everyone, and thank you for joining us today. We had a very solid first quarter. highlighted by revenues of $921 million, pre-tax income of $89 million, and a strong pre-tax income return of 10%. Clearly, during the quarter, new home demand and home building conditions continue to be challenging and impacted by affordability, uneven consumer confidence, the conflict in the Middle East, and general uncertainty and volatility in the broader economy. Despite this, we were very pleased to increase our first quarter new contracts by 3%, generate gross margins of 22%, and produce a return on equity of 12%. Our sales momentum from late last year continued into January and February, even with the winter storms that had a pretty significant impact on a number of our markets at the beginning of the year. During this period, we saw improved traffic and heightened homebuyer activity as we began the spring selling season. However, market conditions slightly shifted at the end of February and into March as events in the Middle East pushed mortgage rates up higher, impacted gas prices, and contributed to further market uncertainty. In managing all of this, mortgage rate buy-downs continue to be an important part of our sales strategy. We continue to successfully balance margins and sale pace at the community level and offer mortgage interest rate buy-downs both on spec sales and to-be-built sales as a leading incentive to promote our sales activity. During the quarter, we closed 1,914 homes, a 3% decrease compared to a year ago. Our first quarter total revenue decreased 6% to $921 million, and pre-tax income decreased 39% to $89.2 million. Still, we ended the quarter with a record $3.2 billion in shareholders' equity, and our book value per share is now at a record $125, up 11% from last year. As I mentioned, Our sales improved 3% year over year. We sold 2,350 homes during the quarter. Our monthly sales pace averaged 3.4 homes per community, consistent with 2025. We continue to see high-quality buyers in terms of creditworthiness, with average credit scores of 747 and an average down payment of 15%. Our Smart Series, which is our most affordable line of homes, continues to be an important contributor to our sales performance. During the first quarter, Smart Series sales were about 47% of total sales compared to 53% a year ago. Company-wide, about half of our buyers are first-time homebuyers, while the other half are first, second, or third move-up. The diversity of our product offering remains an important factor in contributing to our sales performance and overall profitability. We ended the first quarter with 230 communities and are on track to grow our community count in 2026 by an average of about 5% from 2025. Turning to our markets, our division income contributions in the first quarter were led by Chicago, Columbus, Dallas, Orlando, and Raleigh. New contracts for the first quarter in our northern region decreased by 4%, while new contracts in our southern region increased by 8% compared to a year ago. Our deliveries in the northern region decreased 9% compared to last year and represented just under 40% of our company-wide total. Our southern region deliveries increased by 1% over a year ago and represented the other 60% of our deliveries. We have an excellent land position. Our owned and controlled lot position in the southern region decreased by 13% compared to last year and increased by 21% compared to a year ago in our northern region. 40% of our owned and controlled lots are in the northern region the other 60% in the south. Company-wide, we own approximately 24,200 lots, which is slightly less than a three-year supply. In addition, we control approximately 25,800 lots via option contracts, which results in a total of roughly 50,000 owned and controlled lots, equating to about a five-year supply. Our balance sheet continues to be very strong. As I previously mentioned, we ended the first quarter with an all-time record $3.2 billion of equity, zero borrowings under our $900 million unsecured revolving credit facility, and over $750 million in cash. This resulted in a debt-to-capital ratio of 18% and a net debt-to-capital ratio of negative 2%. As I conclude, I'll remind everyone that 2026 marks our 50th year in business. We're very proud of our record and look to build on our success in 2026. Given the strength of our balance sheet, the breadth of our geographic footprint, an excellent land position, and well-located communities, along with a diverse product offering, we are well positioned to continue delivering continue delivering very solid results in 2026. With that, I'll turn the call over to Phil. Thanks, Bob.