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Financial report summary
?Risks
- Increased competition levels in the homebuilding and mortgage lending industries could reduce our new contracts and homes delivered, decrease the average sales prices of homes delivered and decrease mortgage originations, which would have a negative impact on our results of operations.
- Further reduction in the availability of mortgage financing or continued increases in mortgage interest rates or down payment requirements could adversely affect our business.
- If land is unavailable at reasonable prices or terms, our homes sales revenue and results of operations could be negatively impacted and/or we could be required to scale back our operations in a given market.
- Our land investment exposes us to significant risks, including potential impairment charges, that could negatively impact our profits if the market value of our inventory declines.
- Supply shortages and risks related to the demand for labor and building materials could increase costs and delay deliveries.
- We may not be able to offset the impact of inflation through price increases.
- Our limited geographic diversification could adversely affect us if the demand for new homes in our markets declines.
- Homebuilding is subject to construction defect, product liability and warranty claims that can be significant and costly.
- The terms of our indebtedness may restrict our ability to operate and, if our financial performance declines, we may be unable to maintain compliance with the covenants in the documents governing our indebtedness.
- Our indebtedness could adversely affect our financial condition, and we and our subsidiaries may incur additional indebtedness, which could increase the risks created by our indebtedness.
- In the ordinary course of business, we are required to obtain performance bonds from surety companies, the unavailability of which could adversely affect our results of operations and/or cash flows.
- The M/I Financial repurchase facility will expire in 2024.
- We have financial needs that we meet through the capital markets, including the debt and secondary mortgage markets, and disruptions in these markets could have an adverse impact on our results of operations, financial condition and/or cash flows.
- Mortgage investors could seek to have us buy back loans or compensate them for losses incurred on mortgages we have sold based on claims that we breached our limited representations or warranties.
- If our ability to resell mortgages to investors is impaired, we may be required to broker loans.
- We can be injured by failures of persons who act on our behalf to comply with applicable regulations and guidelines.
- We could be adversely affected by efforts to impose joint employer liability on us for labor law violations committed by our subcontractors.
- We are subject to extensive government regulations, which could restrict our business and cause us to incur significant expense.
- Our results of operations, financial condition and cash flows could be adversely affected if pending or future legal claims against us are not resolved in our favor.
- Because of the seasonal nature of our business, our quarterly operating results can fluctuate.
- Damage to our corporate reputation or brand from negative publicity could adversely affect our business, financial results and/or stock price.
- Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for homes in affected areas.
- Information technology failures and data security breaches could harm our business.
- We depend on the services of certain key employees, and the loss of their services could hurt our business.
Management Discussion
- M/I Homes, Inc. and subsidiaries is one of the nation’s leading builders of single-family homes, having sold over 151,400 homes since commencing homebuilding activities in 1976. The Company’s homes are marketed and sold primarily under the M/I Homes brand. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Detroit, Michigan; Fort Myers/Naples, Tampa, Sarasota and Orlando, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and Nashville, Tennessee.
- •Impact of Interest Rates and Inflation.
- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and assumptions on historical experience and various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. On an ongoing basis, management evaluates such estimates and assumptions and makes adjustments as deemed necessary. Actual results could differ from these estimates using different estimates and assumptions, or if conditions are significantly different in the future. See “Special Note of Caution Regarding Forward - Looking Statements” above in Part I.