The ASP was lower this quarter compared to historical ranges. What drove this, and what is the outlook for ASP going forward?

The lower ASP was primarily driven by product mix, specifically a concerted effort over the last five years to produce more affordable products, including attached townhomes. Management expects ASP to remain at current levels or slightly higher in the upper $400,000s for the foreseeable future, as affordability remains a key factor. “I think it's more mix than anything else. I'd expect our average sales price to be at this level, maybe slightly higher, so they bounce around in this -- in the upper 4s for the foreseeable future.”

Are most intra-quarter order closings coming from the Smart Series due to their pre-built nature?

Not necessarily. While some Smart Series homes are pre-built, the company manages spec levels on a subdivision-by-subdivision basis, less related to price point and more to location. There's no discernible difference in intra-quarter closings between Smart Series and other products. Reduced cycle times have also contributed to faster closings. “I don't think there's really any discernible difference between intra-quarter closings coming from Smart Series spec homes versus the other half of our business.”

Given margin swings and declining mix in the Northern region, how are different regions impacting overall margins, particularly the South (Texas vs. Florida)?

Over the last year, margins held up better in Midwest markets than in Florida. Dallas still has solid margins, though lower than before. The West Coast of Florida (Tampa through Sarasota) is currently the most challenging. The company benefits from diversification across 17 markets, allowing it to react to competitive landscapes and focus on better locations and products. “In general, over the last year or so, our margins have held up better in our Midwest markets than in our Florida markets. For a while, our Florida markets had some of the best margins in the company. That's not the case today.”

MHO

M/I Homes (MHO) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Apr 22, 2026

Source: earnings call transcript

Executive summary

M/I Homes Q1 FY26 — Solid Sales Growth Amidst Market Headwinds

M/I Homes delivered a solid first quarter, achieving a 3% increase in new contracts and maintaining a strong balance sheet despite a challenging market environment. The company effectively leveraged mortgage rate buydowns and a diverse product offering to balance sales pace and margins, navigating headwinds from affordability concerns and geopolitical uncertainty. While revenue and profit metrics saw year-over-year declines, the company's strategic land position and operational focus contributed to robust returns on equity and pretax income.

Highlights

New contracts increased by 3% year-over-year to 2,350 homes.
Monthly sales pace averaged 3.4 homes per community, consistent with 2025.
Shareholders' equity reached a record $3.2 billion, with book value per share up 11% to $125.
Mortgage operation captured 96% of business, an increase from 92% last year.
Ended the quarter with a strong balance sheet, including $767 million in cash and a net debt-to-capital ratio of negative 2%.

Concerns

Total revenue decreased 6% to $921 million compared to a year ago.
Pretax income decreased 39% to $89.2 million year-over-year.
Gross margin was 22%, down 390 basis points year-over-year due to higher home buyer incentives and lot costs.
SG&A expenses as a percentage of revenue increased to 12.7% from 11.5% a year ago.
Earnings per diluted share decreased to $2.55 from $3.98 in the prior year.

Guidance & targets

Category	Target	Timeline	Confidence
Community count growth	average of about 5% from 2025 medium materiality	FY26	High
Full-year store openings	more than 80 medium materiality	FY26	High
Share repurchase pace	$50 million per quarter medium materiality	ongoing	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Northern Region New contracts decreased, and deliveries saw a notable decline, representing a smaller portion of overall company deliveries. Owned and controlled lots increased by 21% YoY in this region. Deliveries: decreased 9% YoYShare of company-wide deliveries: just under 40%Share of owned and controlled lots: 40%Community count: 91	—	-4% (new contracts)	—	—
Southern Region New contracts and deliveries increased, contributing the majority of company-wide deliveries. Owned and controlled lots decreased by 13% YoY in this region. Deliveries: increased 1% YoYShare of company-wide deliveries: 60%Share of owned and controlled lots: 60%Community count: 139	—	+8% (new contracts)	—	—

MHO operating KPIs by quarter

MHO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Homes closed	1,914 During the quarter, we closed 1,914 homes a 3% decrease compared to a year ago. Source: earnings call transcript	2,206 We closed 2,206 homes in the quarter, down 6% compared to a year ago. Source: earnings call transcript	+15.3%
Homes sold	2,350 We sold 2,350 homes during the quarter. Source: earnings call transcript	2,387 For the second quarter, we sold a second quarter record 2,387 homes, 15% better than last year. Source: earnings call transcript	+1.6%
Average buyer credit score	747 We continue to see high-quality buyers in terms of creditworthiness with average credit scores of 747 and an average down payment of 15%. Source: earnings call transcript	748 We continue to see quality buyers for the most part, in terms of creditworthiness with average credit scores of 748 and an average down payment of about 15%. Source: earnings call transcript	+0.1%
Owned lots	~24.2K Company-wide, we own approximately 24,200 lots, which is slightly less than a 3-year supply. Source: earnings call transcript	~23.5K Company-wide, we own approximately 23,500 lots, which is roughly a 2.5-year supply. Source: earnings call transcript	—
Controlled lots	~25.8K 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 5-year supply. Source: earnings call transcript	~25.7K In addition, we control approximately 25,700 lots via option contracts, resulting in a total of slightly more than 49,000 owned and controlled lots, which equates to about a 5-year supply. Source: earnings call transcript	—
Owned and controlled lots	~50K 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 5-year supply. Source: earnings call transcript	49K+ In addition, we control approximately 25,700 lots via option contracts, resulting in a total of slightly more than 49,000 owned and controlled lots, which equates to about a 5-year supply. Source: earnings call transcript	—
Cancellation rate	8% Our cancellation rate for the quarter was 8%. Source: earnings call transcript	8% Our sales were up 13% in April, up 23% in May and up 9% in June, and our cancellation rate for the second quarter was 8%. Source: earnings call transcript	0 pt
Communities closed	24 During the quarter, we opened 22 new communities while closing 24. Source: earnings call transcript	23 During the quarter, we opened 27 new communities while closing 23. Source: earnings call transcript	-4.2%
Homes in the field	4,600 And as of March 31, we had 4,600 homes in the field versus 4,800 homes in the field a year ago. Source: earnings call transcript	5,100 And at June 30, we had 5,100 homes in the field, flat versus a year ago. Source: earnings call transcript	+10.9%
Average loan to value	85% Average loan to value on our first mortgages for the quarter was 85% compared to 83% in 2025's first quarter, 66% of the loans closed in the quarter were conventional and 34% FHA/VA, compared to 57% and 43%, respectively, for 2025's first quarter. Source: earnings call transcript	85% The average loan-to-value on our first mortgages for the second quarter was 85% compared to 83% in 2025's second quarter. Source: earnings call transcript	0 pt
Average mortgage amount	$401K Our average mortgage amount decreased to $401,000 in 2026 this first quarter compared to $406,000 last year. Source: earnings call transcript	$405K Our average mortgage amount increased to $405,000 in 2026 second quarter compared to $403,000 last year. Source: earnings call transcript	+1%
Loans originated	1,579 Loans originated increased to 1,579 loans, which was up 3% from last year, while the volume of loans sold increased by 1%. Source: earnings call transcript	1,817 Loans originated decreased to 1,817, which was down 3% from last year, while the volume of loans sold increased by 6%. Source: earnings call transcript	+15.1%
Mortgage capture rate	96% Finally, our mortgage operation captured 96% of our business in the first quarter, up from 92% last year. Source: earnings call transcript	96% Our mortgage company had a terrific and very strong second quarter, capturing a record 96% of our business. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Challenging new home demand and homebuilding conditions Q1 FY26 and ongoing

Impacted by affordability and consumer confidence

Mitigation:Mortgage rate buydowns, balancing margins and sales pace at community level, diverse product offering.

Geopolitical events impacting mortgage rates and gas prices End of February and into March FY26

Middle East events pushed mortgage rates up higher, impacted gas prices, contributed to market uncertainty

Mitigation:Continued use of rate buydowns and flexible sales strategies.

Higher home buyer incentives and lot costs Q1 FY26

Gross margin down 390 basis points YoY to 22%

Mitigation:Focus on balancing pace and margin, internal cost reduction efforts, strong relationships with suppliers.

Increased operating expenses Q1 FY26

SG&A expenses at 12.7% of revenue vs 11.5% a year ago

Mitigation:Increased costs primarily due to increased selling expenses, community count, and additional headcount. Management is focused on efficient growth.

Potential vendor cost increases due to fuel prices Potential future impact

Fuel price increases have been raised by vendors in several divisions, but 'no impact' so far

Mitigation:Leveraging long-standing relationships with subcontractors and suppliers, mutual cooperation on cost reductions.

Challenging market conditions in West Coast Florida Q1 FY26 and ongoing

West Coast of Florida (Tampa down through Sarasota) appears to be the most challenging right now

Mitigation:Diversification across 17 markets, community-by-community management, focus on better locations.

What to watch in Q2 FY26

Gross margin trajectory

next quarter

Current 22%

Target Stabilization or improvement

Why it matters

Gross margin declined significantly YoY but was sequentially stable from Q4. Its future trend will indicate the effectiveness of balancing incentives and costs.

I think that over time -- I mean, I don't know what will happen, but I think over time, we've always pushed very hard to be in the upper tier. And I believe we -- wherever homebuilding margins settle, I think you'll see M/I in the upper tier of margin performance relative to our peers.

Find out whether MHO delivers this. Inve re-checks your case every morning.

Q&A highlights

Has the company received communications about cost increases from vendors due to fuel prices, and if so, what is the impact and negotiation strategy?

Management confirmed that fuel price increases have been raised by vendors in several divisions, but so far, there has been no material impact. They rely on long-standing relationships with subcontractors and suppliers and a history of mutual cooperation, including recent cost reduction efforts.

“So far, there hasn't been much impact. In fact, so far, I think there's been no impact. Having said that, if the conditions were to persist at worse, at some point, we've been in business for 50 years, and one of the things we're most proud about is not only the consistency of our strategy, but the long-standing relationships both at the national level and at the local level that we have with so many of our subcontractors and suppliers.”

asked by Natalie Kulasekere · answered by Robert Schottenstein

2 min read 6 chapters

Detailed narrative

Market Conditions and Sales Strategy

The first quarter saw new home demand challenged by affordability, consumer confidence, and geopolitical events in the Middle East, which pushed mortgage rates higher and impacted gas prices. Despite this, M/I Homes increased new contracts by 3% year-over-year. The company's sales strategy heavily relies on mortgage interest rate buydowns for both spec and to-be-built sales, with specific programs offering 4.75% rates for homes deliverable within 60 days and low 5% rates for to-be-builts with long-term rate locks.

This approach aims to balance sales pace and margins at the community level.

Product Mix and Buyer Profile

M/I Homes' product diversity remains a key contributor to its performance. The Smart Series, representing the most affordable line of homes, accounted for 47% of total sales in Q1 FY26, down from 53% a year ago. Approximately half of the company's buyers are first-time homebuyers, with the other half being move-up buyers.

The average credit score for buyers was 747, and the average down payment was 15%, indicating a high-quality buyer base.

Land Position and Supply Management

The company maintains a strong land position, owning approximately 24,200 lots, which represents slightly less than a 3-year supply. Additionally, M/I Homes controls about 25,800 lots via option contracts, totaling roughly 50,000 owned and controlled lots, equating to about a 5-year supply.

The land position is strategically balanced, with 40% in the Northern region and 60% in the Southern region. The company spent $79 million on land purchases and $104 million on land development in Q1 FY26, totaling $183 million.

Balance Sheet Strength and Capital Allocation

M/I Homes ended the first quarter with a record $3.2 billion in shareholders' equity, $767 million in cash, and no borrowings under its $900 million unsecured revolving credit facility. This resulted in a debt-to-capital ratio of 18% and a net debt-to-capital ratio of negative 2%.

The company repurchased $50 million of stock in Q1 FY26, with $170 million remaining under Board authorization, having repurchased 18% of outstanding shares over the last four years.

Mortgage Operations Performance

The mortgage and title operations achieved pretax income of $14.1 million in Q1 FY26, a 12% decrease from $16.1 million in the prior year. Revenue for the segment decreased 1% to $31.2 million, primarily due to slightly lower margins on loans sold and a lower average loan amount, partially offset by a 3% increase in loans originated to 1,579.

The mortgage operation's capture rate was 96%, up from 92% last year, reflecting the effectiveness of rate buydown programs.

Regional Performance and Margin Dynamics

The company's diverse geographic footprint provides resilience. Division income contributions were led by Chicago, Columbus, Dallas, Orlando, and Raleigh. While Northern region new contracts decreased 4% and deliveries decreased 9%, Southern region new contracts increased 8% and deliveries increased 1%.

Midwest markets generally saw better margin performance than Florida, with the West Coast of Florida (Tampa through Sarasota) identified as the most challenging area currently. Management emphasizes a community-by-community approach to managing pace and margin.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.