M/I Homes (MHO) Q3 2025 earnings summary

Executive summary

• Pre-tax income for the quarter was $140 million, down 26% year-over-year, with net income at $106.5 million and EPS at $3.92, both down from last year, as revenue declined 1% to $1.13 billion.

• Achieved a record 2,296 homes delivered in the quarter, up 1% year-over-year, while new contracts fell 6% to 1,908, reflecting softer demand and longer buyer decision timelines.

• Gross margin declined 320 basis points to 23.9%, primarily due to increased incentives, higher lot costs, and $7.6 million in inventory charges.

• Smart Series homes comprised 52% of sales, and the company ended the quarter with 233 communities, up 7% year-over-year.

• Shareholders' equity reached a record $3.1 billion, with book value per share at $120.

Financial highlights

• Nine-month revenue was $3.27 billion, down from $3.30 billion year-over-year, and nine-month net income was $339 million ($12.32 per share), down from $430.3 million ($14.99 per share).

• Adjusted EBITDA for the quarter was $156.6 million, down from $197.8 million last year.

• SG&A expenses were 11.9% of revenue, up from 11.2% last year, with total expenses increasing 6% due to higher community count and selling expenses.

• Homebuilding debt-to-capital ratio improved to 18% from 20% year-over-year; net debt-to-capital ratio was -1%.

• Book value per share rose to $120, up $16 from a year ago.

Outlook and guidance

• Market expected to remain soft through year-end due to elevated mortgage rates and affordability concerns, but management remains confident in long-term housing fundamentals.

• Average community count expected to grow by about 5% in 2025, with continued focus on existing markets.

• Management targets double-digit pre-tax income percentage and return on equity, aiming to maintain current strong levels.

• Anticipates continued use of mortgage rate buy-downs as primary sales incentive, with margin pressures expected to stabilize.

• Strong balance sheet and increased borrowing capacity position the company well for the fourth quarter.