MHO - Earnings call transcript Q1 2018

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Operator

Good afternoon, ladies and gentlemen. My name is Leticia, and I will be your conference operator. At this time, I would like to welcome everyone to the M/I Homes first quarter conference call. [Operator Instructions]. Thank you. to call like Creek. to now would turn over the Phil I go sir. Please ahead,

Phillip Creek

And joining Thank you thank you. for us today.

On CEO and Klutch, Bob and Kevin Schottenstein, Mason, Corporate Hunker, is mortgage Derek SVP. Marie our President the EVP; of Controller; Ann VP, Hake, President; call Tom company; our

forward-looking remind language statements, directly. release We that items about the accordance Regulation prohibited during as this directly no to comments ask disclose we of Also, non-GAAP everyone GAAP the call our And we forward-looking to you are any undertakes with consider press company questions to this any address measure measure call. encourage made statements obligation update you during financial First, earlier website. was and applies over reconciliation on forward-looking comparable call. measure want With turn Bob. regarding GAAP differences call discussing the the today's that, today material Also nonpublic significant from you Fair Disclosure. during be our to I to to issues in the A the advised call, this during in of financial release issued I'll with this statements earnings presentation financial most cautionary included the and between measures. contained that to also a that certain any because is that available non-GAAP made calculated in

Robert Schottenstein

first for results. our Thanks, afternoon, Phil. call to thank Good quarter review our and joining everyone, you

start pleased year. to the are a strong to We report

quarter our and the records quarter contracts XX-year Our delivered history. highest homes for all-time first new quarter first set revenues, results number in of any for

market absorptions strength is year. year, homes, pace increased our to community three strategies across quarter per in housing and a quarter and XX% strong execution X.X sales selling also addition continued continued indication our per demand markets. successful over Our sales month design contracts And in to locations. new an to first on of improved selling compared our X,XXX the last month most product of last the of with for first focus contracts This per our of premier contracts

acquisition be over sales, As operating contributor pretax a excited price our market $XX.X builder from our for XX% solid the $XXX,XXX more year. with success right our designs to our increased our meaningful first very The close and quarter We in the Detroit. strong X% of for year And significant years our the to quarter. net in record increase We're company, Getting quarter by experience first M/I back quality million to building represents income house. with flat for over fit in well-earned record have million. compared average locations, a an homes. and per quarter, an compared Pinnacle has sales to of our we prospects increased the first for acquisition in control XX% start. especially in with income individual results, in the makes strong was million Detroit this the XXXX. first geographic $X.XX was a further home reported $X.X this Homes. value about market last million a enhances The income our was Detroit Pinnacle acquisition of that Pinnacle increase our of of a to the backlog Total X,XXX fully quarter and early home team, $XXX us end $XX.X We and backlog quarter led with diluted Detroit of coming in while with the for homes the the and And for attractive XXXX, a We at billion. in quarter XXth X,XXX market, of record lots good a up successfully to were a our around closing was We excludes X,XXX closed of the $XX.X of connection Homes in the of which That growth acquisition-related top ago, for Pinnacle And with first to for equating result Detroit-based year's a March. footprint. an in million revenues first the we quarter first units represents pretax costs were market pleased of X% and last and also first from expect last that pretax share, year's per the share quarter quarter X% Pinnacle premier company. retained transaction. five compares than of million the a earnings to $XX.X and strengthens -- very of of reputation market. built income $X.X

first with primarily operating last decline of to year's earnings pretax points. compared basis from quarter, flat in due margin were XX Our a year gross last about

by margin XX XXXX's sequentially fourth However, from basis quarter. did improve points operating our gross

Excluding quarter in acquisition-related the with charges, in XXXX. came first quarter the XX.X% gross compared XX.X% margin for at of the first

our stated we've the XX% the range. XX% several calls, we margins quarterly continue will last hover As to conference to that during believe in

total of our from overhead quarter, year's quarter, improved basis XX expense in last coming ratio, revenues. points we made on the at During SG&A with first progress which XX.X%

communities new we to margins continue We gaining our the -- pretax our leverage be We hope achieve we'll improving as in very were continue operating for able and to our to operations. and on grow focused first which opening communities goals and at the we opened communities, X% a quarter, XXX communities that ending of open beginning XX had represents XXX thus XXXX. with increase adding the Detroit, quarter from in the communities XX new opening

We a XX%. of sheet equity debt-to-capital and healthy Our the million ended balance strong. liquidity homebuilding with ratio and very quarter $XXX is very shareholders' of

performance our them. regional provide and Now detail about I'll a within markets bit more little specific our

company We in the our deliveries the and Texas XX% which Southern First, region, comprised markets. the during XXX a XX% total. region represented last year is quarter. This of of Southern four first had over and three increase Florida

quarter. And year XX had ago. divisions, open four Southern end in had a XX% the year-over-year. ago. in communities sales our region up lot the Southern The respect the We the the contracts Southern by the we of our increased from in region Southern to value the ago. a of the position XX%, at was in XX quarter backlog communities at Texas end and increased region New the XX% XX a quarter X% our year represents specifically increase versus at controlled end year a with of dollar to the region compared of This

Florida is to progress We all very markets of goal in continue in toward solid. markets four make Texas demand real our scale achieving the our three and better

quarter. region, XXX Midwest, increase now the the of total deliveries with in six represents we markets Pinnacle over is year Midwest which of an Next, In comprised the of X% had the last company March deliveries. is acquisition Homes. This Detroit-based XX% and

Midwest New up were XX% contracts year-over-year. in the

year sales which ended XX was XX% value and from a end of year active increased We quarter XX% is in Our to compared lot the communities up the with our XX%. position last Midwest, backlog Midwest controlled in increase ago. the of the an in dollar

those of XX communities. contributed transaction Detroit Our

strong several of which have past markets suburbs. D.C. region, operations Raleigh Mid-Atlantic for Washington, been us and consists Raleigh the the Carolina, North and Charlotte, for years. in as Charlotte as the our Finally, well

We in and remains both let market have, emphasize Charlotte, however, sales overall in each the closings modest Raleigh in experienced a but healthy. of falloff pace demand and me and level sales market

region anticipated that the with of online region, in of communities homes XX% markets. a the a active ago, we total from last in sales value ended all Mid-Atlantic communities a the to Taking get as continues contracts, and our a reduced these be have In work quarter the represents XX with We and from into D.C. XX% or Mid-Atlantic for company for in from new was We account, earlier. decrease delivered year. challenging and rather, the year communities Mid-Atlantic two continue were the ago to a Carolina of this compared number which market. our and communities, quarter, us year new out year faster factors of the XX% down we -- little quarter dollar The number XXX is than deliveries. market sold to down backlog we a region in for XX% down factors investment active XX%

the in region, Mid-Atlantic lots XX% quarter's year. end increased Finally, our at last total compared controlled to

are to turning for simply the off to conclude saying Before let Homes year. and in good well positioned we M/I this: very XXXX a another start over call strong is by Phil, me

markets existing our and it XX,XXX remaining We in with expand have lots. And position, our our that, to aggregate share our market prove very plan Phil. more controlling continuing strong We focused to intensely continue to turn count than a I'll grow to community land on to profitability. over while

Phillip Creek

Thanks, Bob.

first to for and the New quarter XX% X,XXX quarterly record our count up was contracts XX%. community of an increased all-time

in contracts sales XX% year. compared quarter and Our buyers March. our were last were new January, of XX% to as first-time up profile, our buyer February And up XX% up in to first in XX% to XX%

first XXXX, active in from South XX Our last XX communities region breakdown the The XX the up up X% end Mid-Atlantic. XXX in XX% quarter the of by at year-end. the year's from and Midwest, were in communities is and

in Detroit, communities communities quarter, the acquisition closing XX, while number new active bringing and During XX with we of XXX opened communities the Homes added the Pinnacle at quarter-end. of to XX

should $XXX our to homes from Revenue from in primarily quarter ago. financial our of of is million. as delivered compared delivered an was our for quarter, of that We XXXX, current in up the number XXXX, first our in XX% backlog, services count year estimate the record average operation. XX% well of community over first the average revenue to as reaching in For about be delivering record increase X,XXX a increased of a XXX quarter XXXX. communities first XX% XX% homes the year result This the a X%

to up in And last opportunities. price flat Land as our XXXX's our gross first price land Our ago. year. the management We last $XXX,XXX first first to quarter. quarter compared profit X% land a we $XXX,XXX, from sale strategy part closing see compared was backlog average was quarter and of year year's average $XXX,XXX, as $XXX,XXX profit for when sell is

XX down points XX.X%. is operating XX fourth Excluding the first basis over up margin adjustments, purchase was and accounting points year-over-year quarter. basis quarter our This XXXX's gross

XXXX's We increases quarter, cost. about were cost be construction, our increasing and continue faced X.X%. land first to labor estimated with In

focus. SG&A quarter due new Our to community of XX are increased of the openings. nonvariable our basis first from revenue, a leverage cost were primarily major selling revenue. be in expenses to XX.X% greater to Improving increase our efficiencies continue reflecting improving our in The compared dollar year ago, a increase XX.X% points operating area

results of pretax quarter were costs and accounting purchase $XXX,XXX impacted first million by and Our of $X.X adjustments. integration acquisition

Excluding acquisition-related Interest $X.X increase this $XX.X and year. $XX.X last $XX.X of $X.X outstanding million expense last year million compared quarter. quarter quarter $XXX,XXX million due higher income this a the was in increased million. this compared to costs, was borrowings million to incurred for to year's the for ago, is compared Interest year's to pretax first

We assets. have total our sheet. on capitalized balance of is in our interest million This $XX about X%

Our this rate year. in first year's XX% compared effective XX% quarter to tax was last

diluted $X.XX quarters of cost year this be the acquisition-related earnings Our per share year. be outstanding Tax remaining earnings during XX% share. Cuts We quarter, debt rate diluted diluted redeemed our for And three convertible which quarters our excluding will X the $X.XX of will the per Jobs of from quarter to XX% to impact first diluted share Act. in the in share, approximately to remaining our increased 'XX rate the due benefited estimate accretive our per and per the tax We reduced that count. the the share of

Now, mortgage address our results. Derek company Klutch will

Derek Klutch

Phil. Thanks,

a income number mortgage servicing the in sold, the and million portion of Our increased to same of with period $X.X sale result first the our the loans XXXX's originated of title The income increase $X.X quarter million of higher in loans pretax operations' and along of in portfolio. of the was volume XXXX. an from

FHA up due in XX% VA. and pressure market. and to competitive However, from closed the respectively, lower for to loan-to-value conventional were XXXX same on were period. we pricing of mortgage mortgages first margins for loans XX% XXXX, to The quarter XX% XX%, our the to in This compares XXXX' XX%. was continue experience or the XX%

first and XXXX's quarter. amount XXXX's mortgage $XXX,XXX XX%. $XXX,XXX average increased to Loans Our increased in originated in to loans X% the XXX of sold quarter from to compared volume by increased first XXX

down XXX, score on average the Financial from earlier. slightly M/I For by borrower mortgages credit the originated XXX quarter, was quarter a

XX, XX% the XXXX's mortgage the captured At annually. lines had million quarter facility. separate we $XX XX%. $XX under facilities warehouse March commitment, our to also a Credit is MIF million repo in $XXX are million compared which mortgage Our outstanding a have that under of outstanding Agreement, $XX operation and typical about we business Both extend first XXX-day we million

Now I'll call turn over Phil. to the back

Phillip Creek

Thanks, Derek.

As was far while $X.X managing This our more community of carefully, the structure. inventory on billion, higher an balance manage communities also sheet, to to XX, investment focusing homebuilding finished $XXX as our continue increase XXXX, lots. XX, due in March new backlog, March levels. was above our increase at primarily count million in sheet higher balance Total 'XX we and investing capital

All of our acquisition these include Pinnacle. of

million average X,XXX owned unsold lot year is XX, had a ago. finished of per land and raw an $XXX $XXX compared $XX,XXX March in and 'XX land and price. of million average million cost $XXX $XXX with this XX% March cost $XXX,XXX to Our unsold finished backlog is sale unsold average under we lots. development of At lot lots land XX, We million investment of our

is the Our of of in $XXX owned breakdown market one-year Mid-Atlantic. March land in a $XXX The goal owned lots. million $XXX lots lots which South South XX,XXX and the is are total XX, in XX,XXX Midwest, XX% of an million the contract. of and ago, the XX,XXX our Midwest, finished the to and totaled as XX,XXX the owned in owned about controlled $XXX million year controlled million 'XX, supply Lots in maintain unsold lots, we additional under lots, a XX% of XX,XXX XX% and of A We were and which in XX% own Mid-Atlantic. of XX% for lots.

$XX of million development on During on XX% we land the $XXX this purchases purchased million, amount land about million quarter, a and raw year's total of first spent land. and for was $XX

$XXX homes. And Our spending and had in and community, X,XXX million. $XXX inventory we end inventory Southern is region development inventory we estimate the to had total million today the completed about XXX homes, and in XX, for and quarter, the per are inventory completed 'XX land of purchase total At Mid-Atlantic. XXX At of in 'XX, the total homes. XXX XXX Midwest, March the XXX the inventory, homes X XXX

our the of notes $XX.X we as $XX million result Detroit during million acquisition. our quarter, the Also goodwill a convertible of matured. During recorded quarter, of

with approximately result As repaid were $XX the of and conversion leaves in cash. converted convertible a the debt elections by shares, million of structure. into notes holders, a made remaining with simplified us common million remaining no $XX This capital

This XX, Our there with continues in open in million debt-to-cap any presentation. million ratio comments. unsecured And $XXX $XXX credit We'll our or outstanding XX%. be financial under to and for equity of strong revolving call March our 'XX, condition facility. completes homebuilding the was questions now

Operator

Instructions]. [Operator

from of from the comes Ratner Your first question line Zelman. Alan

Alan Ratner

Congrats on Pinnacle deal. the

enter Detroit. you lot think to guys it for of a sense makes I

sounds really seems margins views in any to remain So changes like stable not big prior like expected XX% there. it you're range. It fairly expecting to on from your are XX% the that margin,

give curious This could was little you drove that. more into down, a maybe quarter so what us was insight I bit just specifically

You headlines mentioned were we're only pretty which seeing some inflation. up lumber given costs in X.X%, the of modest, seems

see to hovering seen some you else you've a something situation was was just it Or there maybe range expect that it driving impact decline? and mix that at that still of there where was year-over-year So kind historically.

Robert Schottenstein

of your Alan, about all, thanks acquisition. comment for first the

little I far think as as was margins mix. I a of bit think there go, that

the They this good think times. at I that look, think stay spot we comment that year. for higher quarter, little very a little in maybe And on. in particular expecting quarter. of our than in a have are to got up we've a we're closer XX%, range is over I XX XX% to XX%, the points they'll not time We saying to basis continue that that's think fourth some and margins think been XX% off; yours that,

Phillip Creek

was Alan, or Midwest, there X/XX seasonal, line. mix issues. in in Minneapolis. Bob of some also, especially And like also the That was was X/XX the weather-type a in also There little said, increased bit expenses margin

Alan Ratner

bit those middle And your front? prices with of pricing on of is just is inflation makes lock how cost lumber power. That that X.X% level guys little the And on mean, sense. inflation really material talk your you just second a side, locked it. in to last costs? the that a Or spot-type remind that offset can inflation were of? I Got us year? generally then in you ability just it more What about then inflation representative were

Robert Schottenstein

land with I you development and increases there of has So the far, to against try part, that at closing. with builder for on add the little offset our land don't been and most tell We that. increases a a The are lot notwithstanding protect finished to I would Phil, able bit produce think movement through side. want are of you, on when our in little and able been a think comes there the lot success to been to unpredictable know if to I little I frankly, right that And times, cost think serious more to you We in, has movement upward manage pricing. But are and lots. of anything land supplier. It's it now, pricing the market. to pricing that. prices enough, develop entitlement, so a to ability land we've the But cost to power. in being our good with the lock market pretty we've backlog all increases price try had in push lock pricing bit a get negotiating the is shove, good to as bit any

Phillip Creek

sticks, and look of our year things, if at full X.X% for Alan, last was estimate you land last development bricks, X%. those year, about year costs to type

is first -- more easing little we was seeing a was up said the so But bit. far, a X.X% lumber believe but up market having try to all starts all your little the make in more than than I year. leads there were a last major Obviously, from So sure -- little obviously a at us think that, Every what quarter the experienced anticipated. we're to little spec are backlog you protected, a little and costs and we everything, your times quarter first different.

Operator

question from line comes the JPMorgan. next of from [indiscernible] Your

Unidentified Analyst

questions our of couple end. from A

to EBITDA accounting adjusted purchase cost add-back the and think purchase sold with price the to of how EBITDA? regards and reconciliation First, goods you accounting, we to should out potential about relates it laid that as

Ann Marie Hunker

so will it would a charge add -- back EBITDA. we It's cash-related not we for

Unidentified Analyst

Got you, okay.

is not the it talks? So from EBITDA excluded be cash-based. would It

Ann Marie Hunker

Right.

Unidentified Analyst

to Great. consider That's balance XX those helpful. your Would next early And What then potentially look down around you sheet, currently your thoughts notes? Or XXXX on potentially you extend issued a callable, stepping is those extension? are refinancing shorter-term year. would the your more recently beyond bonds? even

Robert Schottenstein

Kevin, that? want do take to you

Kevin Hake

is to the at currently, a in but call looking Arden, recognize us of point always will possibilities. make on the premium this consider don't the rising, refinancing. sense view time Kevin. for different that We a We're that it there's Yes, on lack likely where rate breakeven is

made availability. look to and debt at time about but So we decisions we'll and we're comfortable any current with right notes continue overall our that, the haven't

this we point. need don't We any don't feel additional proceeds pressing at we don't additional need. so need we And -- any feel

Operator

the comes question of from next Wedbush. line from McCanless Jay your And

James McCanless

any QX, we details the might for model for in? us onetime the Is all of there with and relates accounting I to you Pinnacle. type what look So purchase any all along give transaction the should cost it -- thank you question had could QX for like sense as

Phillip Creek

first as as flow closes, onetime the acquisition backlog far was if far written quarter up as and costs amortized amount be et Well, that transaction we as of the certain cetera. assets will as costs, that there the through a

third a quarter. the fourth quarter, just first We in quarterly and the basis second, that on did like will be we disclosing information in

able be see it you'll So out. broken to

basis. quarterly as disclosed margins, impact on on a will far that be As the again

James McCanless

and second And had, backlog end the I then closed? Pinnacle of many -- when the XQ at disclose total transaction on orders the units to added question or how the

Phillip Creek

If number you look XX about at and A similar was closings backlog added of the first the about they XXX. sales. quarter,

James McCanless

diluted the remind and XQ? the Okay. are done share what like last and And quarter look end Can of like look the question at basic guys just the me, with had. count in you you what now it I then that should convertible, the

Robert Schottenstein

will Hold send on a you. it second. We're getting that Matt to information.

Phillip Creek

information, for asking you're Now some Jay. detailed

Robert Schottenstein

for in Jay. digging We're this,

James McCanless

one. Sorry, on to that didn't mean push

thing customer you the higher. up tick While We've to did moving are about. you're as than field see ask one want seen on do I now. other more far those? looking for it, three from as mortgage quarters Rates What rates pushback

Robert Schottenstein

last easy our of excuse markets maybe And haven't historical solid add far, thus mortgage I'll rising give really, and had attractive that say any who a we've by, in And demand that -- the rates is standards, can operation, very impact. really X%, We've think look, you seen I my of below our we're impression second, across Klutch, to Derek to borrowing by me which still had runs a kind me most we very of over rate. weeks. for it. number face significant the of

quite of fundamentals that the a remain So lot I good. I for housing -- think think

control we $XXX which and XX% spend XX% million $XXX XX% we to -- XX,XXX, on A we're between lots. controlled is to count Today, think we expect year I by more. own this community land. and and owned grow ago, XX,XXX million year,

know We face are housing I our don't you conditions having of about to add to that. even about want optimistic the rates up. very if gone continued and good business anything in Derek,

Derek Klutch

with agree would I No. Bob.

people any cost really hasn't been that for loans. scared uptick in the hasn't seen us issues slow qualification buyer haven't as as off. a demand. It's mortgage far any We with really It pushback it

if I impact. any, would had, it's a minimal So agree

Robert Schottenstein

-- this homes. this introduced of I'd thing By other about make year, it of close one didn't our we ago, active the talk quite build we of end affordable -- And XX% our two locations it for more demand presentation. caters really communities. Series we years be up to Smart Series will in product This share, the our total affordable in to line a and continues About affordable product XX% robust. to Smart more our to that

well. by might So so encouraged things. as that about and you we're And -- feel very I we -- good

Phillip Creek

you Anne to Marie? back had. question share the Now

Ann Marie Hunker

should million Yes. X.X see shares at less diluted We about outstanding.

about XX.XX So million.

James McCanless

Okay.

So less, million diluted X.X million XX.XX forward. going shares

Ann Marie Hunker

Yes.

Operator

your And of line from from Research comes question next Alex the Housing Barrón Center.

Alex Barrón

the I to you Detroit the just about wanted Yes, to more on bit if a motivation see little elaborate Pinnacle. enter could market, what you liked

Robert Schottenstein

excited be a think solid as that will think one, Detroit my good landscape, just to of It's A a in -- joined be service, A all things. conclude quality acquisition. really of is it a fundamentals. lot our Detroit of very with market been operation. Number on competitive initial of said we builder. construction, market were ago. solid a lot decade the business growing that rise a customer really think the profitable that particular, the in a successful high-quality We very we're to acquisition able some city very to pleased Pinnacle, trouble market. people. integration communities, really The in remarks, very terms but -- of very quality contributor It's and not of the in a it's we favorable. it's and very builder I in city today. in lot be product, our They've parts -- We was good well-located far, company. to Thus

Alex Barrón

I Series think now I heard And you to the XX%... say Smart said great. you is XX% Okay,

Robert Schottenstein

end of year, no, year of I the of it the was XX% said By total communities. -- end what about will this to this represent XX% by

Alex Barrón

you at in point is orders by about where that this How where like do Okay. of year-end? that terms and see

Robert Schottenstein

that for you. information have Don't

Phillip Creek

Well, XX% look our at -- you less if if you the a first at little actually, quarter, Dave, orders quarter. we of look actually -- it the than was the had first

communities. about quarter, first The we had XX

stated, thinking of the end in at to the Bob have XX% year, the XX% range. As we'll we're

is again, a growing bit. quite So it

so community very has above sales. Series. say, average above have with in company as the far would pleased it we margins pace So been average Smart overall, been general, or The at as we've

Operator

line question Brading Wells next of from from your And Lee comes the Fargo.

Lee Brading

I couple guess, just of a follow-ups.

Pinnacle, I what guess, opportunities I just and side, guess and markets the new you M&A the evaluating land are side? On out on seeing there,

Robert Schottenstein

follow I'm exactly, not I it? the sure question Could rephrase Lee. you

Lee Brading

when yourselves parts these to and as is another times as lot land, I really new is get talk you're acquisition, this a to to guess. I it, builders but two Yes, way looking such at know acquisitions One obviously, Pinnacle I a of the into market.

that there and follow So one you be, think you that out then from opportunities would other might at potentially be looking up you see I'll question there. markets

Robert Schottenstein

doing opportunity our right presented we sense number past find anything any we fully move happen where goals itself, answer we'll existing most is, short new year we're now to we The continue up X something to the see that expect more, can can to very to that other right in We we question as although we through term. we makes of it, without in and -- here, that market open if for that we look markets at in don't markets wouldn't but growth Pinnacle think look achieve not anything at, I years. the done But We think as there desperate. would us for think and near is also integrated. are grow share that to looking us. are over we get seize continuing to the of Look, have have markets. the the we Job

to today, than system. to we said a go expect the moments we lots ago, control and I those ago own few we XX% and As more year did a

by the expanding our we footprint upon company to are So existing markets looking count primarily. we're grow based the in, within community

Lee Brading

a about Detroit talk bit came opportunity you little about? the how in Can

Robert Schottenstein

of on him Kevin let I'll that. that really for manages most us. jump

Kevin Hake

about through any aware a acquisitions opportunities it's forward. checked time, other -- to to we've Detroit for would that and it not And looking were about. make that we position market Yes. the happened be people that of necessarily a out, for opportunities being hear be that approach we hear nothing even Suddenly, think sale. taken I a that it's that we came. the may became in and the talking box fit of homebuilders At we with good first other of out open sure unusual proactive, us. mean, as team move bankers our eyes same markets do and [indiscernible] amongst keep acquisition we market all, to and we, and like being and a But in

Lee Brading

you talked D.C. you. heard switching others about the I thoughts talk on you and what's just we on market, Got market? haven't to And guess, about another weakness from going in something your can D.C. on not it's

Robert Schottenstein

with what over not seen we've what acceptable just money Well, a market. lot so-so of at all When put us conditions, demand, really great you has don't margins, less that more to than that the together, sort years, us, When been that some certainly resulted entice throw in conditions talk reduction D.C. noticeable Mid-Atlantic last of is to net in the reduction in I is fairly the has closings our in investment about the that region, and operation our sales market. a D.C. -- in owing in decrease of our unit several

We watch market. continue to that

challenge from the we there so to a and has been us us, what margin I -- don't on side, of But wait it XXXX. the challenge side, the think we least strategy we're well, heard reduce. only one. on -- is think I long pursue the and been at watch since there as the -- -- and caused I don't continue The for we've margin I've time. We but others We've

Lee Brading

right be word, markets. Got heard well. used to It the the you. if agree, in as I know a footprint. one now guess, noise. others from same, having I right like don't sound but And I so seems your doesn't it's you're And it to D.C. we've that's unique other

Robert Schottenstein

That's right.

Lee Brading

And to cost -- the is easy Or price increases your keep increases cost of to side this the pricing the bit. on maintain sort in offset I you guess, that is environment? we'll to about it, number with the side touched the other pass you've talk two, inflation price it trying and just of the, Can the What's about own? how down? about ability to talk it guess the side, but on I of a

Phillip Creek

watching always our closely very we're Lee, pricing.

more your at there's an competitive market you sure Also landscape, demand. communities, many what is, cost premiums and where importantly, always margin we we is what's look the with get but opportunity make opening new to and supply what us the that extra side, You again, look, can. the so

So be while, cost, we little kind your XX% the sometimes margin, saying to maybe you a been watch the market. of as a you watch business a it'll see for XX% or little aware have here points XX north. really a we deal. sometimes you of here, as south, volume is When that. as big basis very X/XX do, We're much really, little a much we've

range. talked make Our X.X% that to cetera. costs good go X% but, to We the the product. did up costs sure number. again, we X.X%-type first very in Last communities think we're we we more quarter opening, especially We little bit, with premiums, all easing had to really which we about attention What et lot with, We have little try seeing, pay good pleased it anticipated. these we're have than locations. we think a a year, was are new

far we're lot very, try other different jumped around focused margins something market that side, attention it's pay is we whole as on cost So but areas, little as very but the again, to of again, a a some, every to. lumber

Lee Brading

consumer, takeaway? the similar product other guess on much your that seeing are it the like then kind didn't where versus fair consumer in on you the And guys a Is differentiation conclusion is, pace. absorption you. comment in Smart to that sound come I your I of Got that Series

Robert Schottenstein

We've our XX. to We been pace sales pleased. up got

solid. is been. traffic all of the really quality has pretty but I been demand been traffic hasn't that mean, Our great,

our very work with So sales. been pleased we've

were than Our we little actually be. thought would they stronger sales a

about pleased So positioned. we're very we're where

Operator

And there time. are this no more questions at

Robert Schottenstein

Thank you very much forward for next you us. to Look quarter. talking joining to

Operator

presentation. that concludes today's lines. That ask you. disconnect Thank your you now We

M/I Homes (MHO) 25 Apr 182018 Q1 Earnings call transcript