MHO - Earnings call transcript Q2 2019

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Operator

Good afternoon, ladies and gentlemen. My name is Jerome, and I will be your conference operator today. At this time, I would like to welcome everyone to the M/I Homes Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

pleasure Phil the yours. Creek, my your over host, Mr. the to it's call hand to Now, floor is

Phil Creek

you. Thank

Joining and EVP; today and call Marie Hunker, our me Schottenstein, and Ann Senior on CEO Corporate VP. VP our Controller; Mortgage is Company; President; Hake, Klutch, Derek Bob Mason, our President Kevin of Tom the

from And I encourage consider call. directly. First to we discussing this that about any you material want remind questions you this ask non-public are address Regulation everyone significant to prohibited you today’s as contained press applies during statements Fair made language with items cautionary to any regarding to to Disclosure, forward-looking comments also because during release statements, we that forward-looking in call, the issues

with accordance earnings advised A comparable call. release reconciliation and this is was Also our in in forward-looking undertakes non-GAAP of included to no Also the certain of website. the earlier during GAAP measures. calculated directly today measure presentation our company the this the between GAAP available obligation financial non-GAAP statements during issued that be update financial that financial measure differences made disclosed measure call, we the a on any most and

call to With that, I'll turn the over Bob.

Bob Schottenstein

contracts, thank Thanks, highlighted revenue quarter, delivered, second call to records Phil. by results. joining homes for a second and Good strong new very review in We afternoon our you, and our had second quarter income. quarter

year the homes, was During which X% better a sold ago. than a quarter, we X,XXX record

second tough Last was for slightly And XX% a which the XXXX. pace X% record, set up so were for homes, sold better in quarter, year, our comparison last very the sales was about X,XXX created previous communities than than year. Our our better which year. this we quarter, last year's average absorption on

beat So obviously, pleased were year. very we last to

record the year's level quarter quarter. price a quarter, record during closings by of million, up The the quarter ago. the revenue increase quarter. an average second X,XXX year XXXX This of driven last of over a second XX% was achieved sale from closed second home from $XXX second was $XXX,XXX, We X% homes increase on X%

Our by our of second quarter increased I when to SG&A just a volume ratio as a million, $XX.X quarter also XXXX increased XX% pre-tax second the expense income record, point an basis mentioned second quarter. with the in improvement for result compared to that XX along

lower down XXXX a excluding share million about a XXXX. per accounting compared million last of XX in margins quarter second Gross the from from increased year points, increased diluted and to income as offset share from basis the EPS higher for XX.X%, last of rate XX decline part basis XXXX in impact held second quarter a of count the to $XX.X by a quarter result second at first to Net $X.XX purchase steady and our points year's $XX.X share per tax $X.XX quarter, in charges.

pretax very Our more in income, quarter. few XXXX $X.X second which quarter, a with hear services had of that a about also from minutes, a million business financial improvement is XX% good you'll

communities second in We M/I Smart of of markets XX of line end of the our Series the of continue and represents And strong our to experience operating quarter, by homes. We our opened Smart -- results a total XX% XX strong most our affordably communities of This new was comprises more with sales Series quarter. priced the Series Smart the communities. of total XX% being sales number or than in second quarter. offered and XX% rather in

collection success results for and frankly years, have our our Smart our the We during have exceeded calls Series been expectations. several these the of on commenting past

continue to margins we communities Series Smart in XXXX, communities. these being out achieve additional have healthy We rolled and in

we So about very of enthused segment this business. our are

from at ago, Company $X.X to value backlog the the were X,XXX second quarter slightly down last billion, our was homes to year's quarter. sales homes and of year in down units compared X% a end X,XXX wide, in backlog

a strong. and balance and remain $XXX sheet roughly of We of $XX Our ended million, is value liquidity to second the and debt-to-capital share. quarter equates a the quarter homebuilding healthy per XX% of of increase which of an with equity shareholder's book ratio XX% XXXX, from this

business. continue also invest We grow and to our in

quarters we year. quarter, active to and up XXX this X% are at the annual the track count communities opened XX end, year, planned, on communities same X% During an roughly with achieve our is from this additional community last growth period

a provide more about regional our I'll little detail bit markets. Now housing

change I And the process reported of our in presently, Before operation. decision are clarify a in this winding decision market. we this our Washington do, year, are we earlier reporting that reported the we geographic year first want to regions. our making the to when we further down rather, -- in D.C. Earlier that invest of I not

which As a we our a North and renamed reevaluated region, Northern the Midwest our reportable our segments Carolina result, two and Charlotte Raleigh made to we region. are markets, realign into and our decision southern region

we So, and those two, region. Northern not are regions reporting two region are three the regions the with now and Southern

Florida of Tampa, The our and Southern markets, Orlando comprised region is Sarasota. three

two reported Midwest our have for and been in Austin, Charlotte Northern markets mentioned, in and consists as Antonio; Dallas markets The to being, All six restated region with change down past markets D.C. in operations of our we along reflect time region. same San wind the this the region remaining reportable the segments. results that previously Raleigh, Carolina the I at Houston, Texas, North Our and four least

out expect the let completed the to respect by substantially note D.C. to that be With sold and year. me we of end this market,

D.C. in lots zero investment Our with today is unsold remaining. minimal

year more had for last and revised from total. about this the deliveries we is the alignment, color of which X% Now XX% with the little in region. Southern Southern a increase bit region XXX Within region quarter,

double experienced selling, both sales a year and increases operation contracts in is opened the very this quarter. now more led in in region in and had than communities XX New has in the increased to Dallas, and progress which contracts for new are both making closings and and Southern Charlotte in growing we solid with Houston X% the We our deliveries Florida, in ago and Sarasota. number increases substantial Sarasota, significant

ago. dollar Orlando results and markets solid continue at of and Southern two our Austin, and of our value the was operations had quarter last controlled-lot be an end region region Southern of strongest year communities a X% our produce in increased year. Texas. the the Southern region the strongest XXX the of in quarter. Tampa to of to X% increase while We we end position This sales the continue our lower backlog than very of at earlier, also June compared in in XX% The two to from year is

as consists XXX Moving formerly region, and from our Midwest year Cincinnati, region, our to XX% an deliveries last Detroit second company-wide I this mentioned quarter, in of and and which was Indianapolis, Columbus, region of Minneapolis That the had increase Chicago, Northern the markets. total. XX%

dollar from was our the two the year backlog quarter New quarter, region while sales Northern contracts up terms X% end last value. the of of X% in were down for in

increase we Our the year controlled-lot compared to of in with position and XX decreased last quarter in the X%. ended region X% region, the communities active Northern an Northern

and in to sales us significant in a the all in our our to in Northern strong perform and continue market track we closings of our pleased especially on and volumes Indianapolis Minneapolis. very well. We experienced for growth increases achieve operations. this region Overall, fairly and is new in higher with Detroit year divisions are Columbus performance are

We have, felt we've I in bit a should strong Chicago of years. there recent very results that from a slowdown note, in the solid experienced

a conclude saying and strong pleased to our think corporate with we positioned have again, their great that the let credit results. Phil, executing We XXXX. well call Before our demand operations well our very we our region and is by to mortgage as are high we a and level solid, me turning over goes to Buyer leaders and are and and thanks staff. teams as at division entire respective are

with that, it Phil. turn I'll And to over

Phil Creek

Thanks, Bob.

the second increase last a second New increased X% for contracts was year's for X,XXX XXXX's XX% which to quarter to X,XXX over quarter. compared second quarter,

second This our was for board our the Southern with Northern our were are up a pleased down our new region across quarter quarter's quarter X%. that company. record region Traffic and for We contracts X% sales the X,XXX increase X%. up was

the quarter. you Southern and X% from sales If that D.C. exclude total the in for X% sales up company region region, increased were

they were contracts in up down in and May new April, were up XX% X% June. in Our XX%

in XX% about were first second and buyer our our profile, the XX% inventory XX% in to were buyers to our As sales first-time second sales quarter quarter. quarter of compared the homes first to quarter compared of XX% the

by quarter, XXXX's was up from end region in the is Our of the quarter, second and the The Northern community the versus count XXX second breakdown XX XXX X% region and in region. at Southern X% up year-end.

is During for year. be quarter, XXXX, the the communities closing And half current new for the new XXXX. about while we average up XX in from the our average of We opened count X% first of should XX. XXX communities community that opened communities during our the XX estimate year

quarter, in higher result year $XXX our We This of delivered reaching increased and closing a record an of XX% increase quarter, ago. compared record primarily a million. homes a a quarter the second second number Revenue to homes the second delivered second XX% average the X,XXX quarter price. XX% of was backlog delivering a in in

quarter closing our down for when and compared a second year year's was of ago. from price average Our sales to price increase X% last closing price is quarter average $XXX,XXX, $XXX,XXX, $XXX,XXX, slightly backlog the second

operating higher compared second XX.X, last in year-over-year the XXXX's gross quarter, was down costs. profit gross when basis And estimate labor first the flat costs We compared $XXX,XXX our were quarter and XX lower XXXX in lumber to points was XX and quarter year's points $XX,XXX costs second with basis quarter. from construction labor to margin offsetting down that second our quarter. Land second

improving XX.X% Our continue second operating XX.X% area XX improving expenses be year revenue, points of a focus. to to ago. major operating were a efficiencies basis This leverage greater and compared SG&A quarter our of reflects

second related were XXXX's March acquisition, million which second impacted Our quarter And of by year. expenses results on were in quarter $X last closed, expenses XXXX our $XXX,XXX. to pretax acquisition-related Detroit

quarter weighted million compared was Interest to million quarter rate. this borrowings the expense incurred higher the the $XX.X well year compared for interest $XX.X last in to the as a ago. higher for due borrowing increase quarter is increased as average And outstanding $XXX,XXX year, to

quarter $XX We of in have rate our this XXXX's XX% not from rate XX% rate assets. million benefit Tax quarter. interest annual on that was second balance to effective Credits X% second second to tax about total And tax our Energy sheet. in This is compared in capitalized tax our around year year's And XXXX's XXXX's included estimate quarter. in did be effective we XX%. last reoccur

of Our of quarter $X.XX diluted per from share share as to share count result the for and year last increased improved a earnings lower earnings. per $X.XX share per

the during the outstanding shares quarter did During repurchased of we second year, year. quarter first million this not shares. We of any this our repurchase $X of

will Now, address Derek company our results. mortgage Klutch

Derek Klutch

Thanks, Phil.

and some second title closed with in quarter, of mortgage in Revenue due compared XX% of along increase loans XX% achieved up XXXX's the million operations volume Our million, pretax sold higher a in record margins. million of was and income second $X.X quarter pricing $XX.X second $X.X to improvement quarter. to to

of as quarter quarter XXXX's to same and or compared loan XXXX, conventional the FHA XX% loans for second XXXX's mortgage closed XX% the second in same in first value the and were respectively our were VA for was period. XX% to The the XX% on quarter. XX%

in one of increased increased originated Loans by increased mortgage sold year second record to $XXX,XXX amount X,XXX a ago. average quarter XX% XX%. $XXX,XXX the XXXX's volume compared of second to Our and to loans quarter

which M/I XXX, the quarter. For score by the last as mortgages borrower average quarter, is the originated on same credit Financial was

XX% Our of our captured XX% down mortgage year. quarter, slightly operation in about second the last business from

also had repo which At June was in is and million XXXX, XX, facility, recently we under of that MIF $XXX expires expires had this $XX a year. in $XX which extended $XX separate and million million of the a outstanding commitment warehousing June agreement, million outstanding October we under

XXX-day extend mortgage expect typical, repo that are facility lines prior annually. We to to we extend expiration. the its warehouse Both facilities

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

Phil Creek

Thanks, Derek.

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

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

about XX,XXX lots of million and of June North XX,XXX Our breakdown a are in finished $XXX million unsold than the owned We maintain goal contract. And and lots Southern owned more lots, A to were XX,XXX XX,XXX Land for owned region. an controlled million region the of own XX,XXX which a of XX% Southern the of own which $XXX X-year the ago, as and is market XX% the under $XXX total additional XX% in lots, in of totaled region our controlled lots. than is lots. XX% region. and we land of supply more year in XX, XXXX and Northern

During for spent raw million, purchases land. million amount XX% the and XXXX on second about land was of purchase of $XX total land quarter, for million and $XXX a $XX development we on

compares XXXX total year. land includes which total land spending this million, development million is $XXX with in for estimate last spending spent year-to-date. $XXX the and $XXX to million million $XXX Our purchase And

we had the June At And XXX Northern inventory total are community, homes, of and two are the XXXX, At inventory we XX, homes. inventory homes and the XXX in total per inventory, completed end X,XXX region and completed had the region. XXX the of X,XXX in quarter, XXX Southern inventory total homes. about

to outstanding was under equity and ratio there unsecured facility. continues cap million $XXX strong condition debt homebuilding revolving XX%. $XXX At our financial with Our be XX, $XXX in credit to million of XXXX, million June

with focus to this managing and continued our on and leverage land our needs. balancing have We liquidity

any now questions presentation. our comments. the completes or We for open This call

Operator

comes Your Instructions] from [Operator first Zelman line Associates. of Thomas the question Maguire with

now is open. line Your

Thomas Maguire

impressive execution. job Great guys. really this Hey, quarter,

thus Just improvement first, how how just you about steady think thoughts rates? today's month. And progressing on by other in the about what of July is of seems I since the it's environment and can But how drivers interest market? you planned? do what Or you there, dynamics like the demand are the out kind on orders And appreciate think the the year? talk it of all do drilling any Is trending far? just in beginning the demand color qualitatively and

Bob Schottenstein

Yeah, you, Thank for your Thomas. comment.

very the over I obvious is entering last up rate the gotten us, biggest there's the and far -- is that as learned to the they -- rates or for think now on a very I chilling year, X% that buyer As as think there are that a rate. with just I people were of wonderfully home you close first question, mover, the think I seen Xs significant in very part the And is course, last and jumped for rate beginning with time have maybe maybe, is close that, years, market, buyers to there's we've the And in demand of now think had the the sensitivity. pretty seen, at is that a used, are of very, historic change respect first rates a that that latter of purchases. know new or well, rates X% of to year, -- But tremendous many it there low number effect -- X%. we've that time we've particularly,

since fall, corresponding more As been day. points, or increase. There's basis we've seen the rates a roughly January, upon XX those depending

of We July, to crescendoed since demand, the we're have now. numbers say conditions month-to-month subject right the specific about fair our year, on just sales the comment it's in think Phil that beginning don't to mentioned. buyer the I optimistic but

Phil Creek

we're bit, especially the And our just to markets, scale on -- add Texas. some little giving about of a in excited

acquisition in with for We the than Sarasota. have growth progressing additional we The units. there more communities did. mentioned Also we Detroit, we're opened

we hard on, now. working last So place of are plans in out a couple ground of coming and been of put the very the lot years, the

about that. excited very we're So

Bob Schottenstein

thing by runaway just be And other in any measure. we're is, the very not a situation demand frank, too to

any the probably a charts. in few do, not what as are And pockets is it country matter if We sell other it so, off you nor where doesn't probably there the maybe you demand anyway. builder,

solid share we're of think newer our But before, I in think think see places, pretty to some particularly that, of we've with I had this mentioned of the it, we've the solid, you made certainly whole I effects but had markets. our of lot And pretty mentioned across I beginning that. we a board, execution not mistakes, different

Thomas Maguire

of it's then the the ease? if there's just, you you environment we high-level market that a that competitive and we And a competition builders? about your the any the seen between lot particularly, in how's great power talked across about have incentives that can that environment see. think on view and get to talk seasonality be just demand to may today? goes and improvement competition the just you take know summer. you portfolio? Absolutely, pricing Have about But as changed, into the And and comments I

Bob Schottenstein

closed -- XX question I we've operating hard soon think a been paint -- we is to That's markets, don't in be down. D.C. can but all think, basically I a because it's

and here is So seen I talk paint mean, don't XX, I brush, situation discounting XX, don't than were there different before. last saying forth. we we're can market the days market. XX you XX from much maybe broader let's you just our markets about think and we've think so with that quite them to see with. over that I more going the

communities, not are. stay where margins, There communities, good good subdivision you XX your a up movement take point in margins, you out one, XX I handful or power. of we terms where or It we'll in some I pull where another really it. -- power. or The in same the where they is advantage significant a of XX%, have you them maybe maybe about think power, news but year. exact is can may throughout they there's don't -- subdivision opposite. full have select have XX our would business. XXX where see pricing There do may pricing a down the I city, the have But we it's of And pricing basis of might XX%

and subdivision. be several the a have by We that rate handfuls have factors very to don't our lot where pricing it's optimistic to very handful, growth crazy But manage them, all-in-all, not a will upon stable. environment lot power. depend But trajectory. that of good business, are are we do over. a going but relatively go steady a we think the may we lot control that in through whole going be probably of we have of of about But a it's roof, pretty So margins I

Phil Creek

opening a And lot of we're stores.

last know, opened and stores new in XX XX we've year, half You the stores, the year. of first we new opened

with we we half Bob pricing of XXX that's to low stores And a trying We and are a the good open. lots in new open, for heck who try up. the pricing right most and scheduled sale. number we're the to on one opportunity to get could way. buyers year. try of of product We right of months, time, opening us. at as a price. the good a price too second for We get feel a few that do point, power an But many the been having open for this really We have for basically, stores job a said, X don't to to So only really chance right the open the have take

lot we're to of that. to So a trying pay attention whole

Thomas Maguire

Congrats Got it. Appreciate the color. again. all

Phil Creek

Thanks.

Operator

Your from next question McCanless Wedbush. from the Jay comes line of

You live. are now

Jay McCanless

good afternoon, for taking everyone. Hey, question. Thanks my

Bob Schottenstein

Thanks, Jay.

Jay McCanless

Absolutely.

you the hold volumes that can believe to are? off impressive. SG&A The pull and last you all guys year year pretty I if was in they first had, XQ one up this XQ Do improvement where margin

Bob Schottenstein

detailed to A there's I'm year think levels We improve opportunity we had that some weren't that Phil it upside believe at we we We much have level. answer. many I give so felt still there. clearly because more more to At an that ago, new still to opportunity let the going off. scale. to had markets getting even some think close point, we

focused much anything. as leverage as don't we a continuing can. So want as to we high are -- know I to on if add get priority we operating Phil, you remain

Phillip Creek

excited No. our about Sarasota. our it Not the pay more is of But expense things. we people, really. in of continue I attention whether Texas getting very challenge, and working There's does this for we've years markets, mean, cooperates selling and like take you of always working said, lot we'll a those are scale the running, Detroit on on hard try and to. to to been of types couple we

Jay McCanless

That -- leverage. was impressive it Great. was

closings this tell second and quarter orders Series? quarter? The as percentage, and Smart a you What question, of could us maybe, for percentage year's second last

Phillip Creek

Of closings?

Jay McCanless

closing Of and orders? the Yes.

Phillip Creek

get be while guessing, Jay, talked it sales them a were for But would the to the closings a XX% the less it takes guess range. XX%. sales about being be to we I would in I little would if than because pipe. little

Bob Schottenstein

be that and Smart And board. Smart stuff of Series when the not is has houses and they just but -- been a encouraging acceptance, the most is I in mean, closing. thing I both closings we've to about a is not of with important the last months, buyer gotten beginning guess, are full which until. closing the thing, to mentioned results strong We're even margins. operating and in pace, we're there X which, strong lot the the done may I come because quite process opened actually the not Series of just that we've less communities And than in number

communities way the less to communities, finds bottom broker Smart our with its non-Smart would eventually other that even than And of otherwise I line. margins, be many are it all slightly line Series the and below cooperated, mean, of

things that of the at terms lot by cycle success of can time quicker alone be Smart Series. Let margins least just of and continued in strengthened a a

Phil Creek

year-to-date, sales of at our Bob and at to And look sale average above on absorption above as right if price, pace And compared on also on Jay, average. you margins. Smart company It's $XXX,XXX. it's is $XXX,XXX almost the Series said, overall average average

been that's So, good.

Jay McCanless

next -- the what Absolutely. by communities the total or Series guys And percentage end year, into you expect do year maybe of of where to even be? Smart

Bob Schottenstein

know, ago, You or -- got think nine six I or these in months months increments we eight I calls. guess, six three-month have to when

that we hoped said running I of sales may year, percentage Smart that that we of the had of think slightly Series communities it's the and higher of by would a end represent XX% and about sales this XX% now. be

So, I expectations. mentioned that's exceeded it's our why that

of going I quarters be we'll to you if -- give company and And several XX% we'll it question a gets that update. again think point, pushing an ask backlog. to you'll it's within

Jay McCanless

quarters. the the like last then guys of question guidance, don't bit you six around ASP you know ASPs to ASPs. bounced up I going they're the The might I down average had continue And has give notion think or year, a Absolutely. a be don't but may next if you five the on where the little to more. price if trend have bounced end has over or closing

sales some about at what side, help might modeling the so can the Just on like think to-date? revenues we look total

Phil Creek

think a we probably, You trend down to more. little know, bit going Jay, it's

little that us going year. it's also. our guess thought predict doing of to XX% Now to we more that go trended a already, it of with hard who has little than We that because XX% of X,XXX, down X,XXX, specs thoughts. it that bit down -- that's influences that's to the trend it knows? might is through faster But is a kind But as kind our

Bob Schottenstein

very range number. that think I think a probably to it's don't accurate. gave significant I be going is And Phil that

Jay McCanless

much And question then we move incremental XXXX half on I gross might the do margin bit -- second into year? where answer be the you in the you of as I margin gross know in the the that a from little that here. the did we said, an that discounting. or some through margin to of have are probably of Could of gross dirt you margin. But to to move worst think back some Have guys Bob had sales half extra don't potentially a tailwind

Bob Schottenstein

way. don't I we it really think said ago, think don't roughly business. know. XX% A thought this that about margin we year I a was I

we around give points and some it maybe But like you move might come really little margin basis -- will bit. a do to might on if the XX.X% no And down lower we quarters, be situation right, that and few have not than now. be it. others, We're guidance you're feel XX.X% knows. I one we somewhere,

of One it. the don't reasons we give guidance on

think I backlog, that a Smart They But to the know about a but about stay terms our to is going tick believe, reason margins they're talked mean, guidance little because playing give bit, one where just of margins to they we in we impact what are. that. on probably in certain and what's you extent because Series we don't going and may we think of the know up we the dark, really I happen. of don't

come we that's think down. I where So,

Phil Creek

and hopeful a to I were we a year, Jay, fourth the us XX.X%, to the up so of help But we're get much something it's three But few over look we that to that. that dollars profitability number the Also, forth. of first at stable on give of end revenue little very, some trying to the improve last now, We're and as second. a right kind like XX.X%; get get markets quarter operating far these and the will if we we bigger little lot because was you a there's very billion, have of a bit that communities, last focus volume as hopefully they quarter; operate over more of as get XX.X%, mean, with there. GP room on $X anticipated but working little trying been quarters, the obviously

Jay McCanless

And little last what circumstances And there for. looking The volume? bit we insinuating than type you than for higher -- Street were of a were faster weather of guys in probably any to The me. -- that little the what close the I Sure. deliveries for quarter? Was impact certainly one was what there were think your closing looking helped any bit terms during

Phil Creek

Jay, or a by maybe you it But not getting ago. stays where of is, year it's time, or two or at kind than was so worse worse. week it's so or what if day look it gotten cycle a the

the specs quarter, XX% closing specs. help time -- we've that second were little few XX% a does the and we to you closings our last look the If bit. quarters, over closed In XX% little been of cycle a

We also construction couple was further in always closing significant were just it But more of say prior. number those wouldn't far in use pretty the weather Builders stage a backlog quarter. things. few weather. along as as pleased minor and I But in have houses the with anything than we were mix. the the

in more a it But a few along. the was think I more few getting just a beginning houses and backlog, further the specs systems, little in having more

Jay McCanless

time. it. Thanks great. for sounds the I appreciate It

Bob Schottenstein

Thanks, Jay.

Operator

the comes Barrón [Operator Research next Center. Instructions] Housing with line Alex of question from Your

are live. You now

Bob Schottenstein

Alex. Hey!

Alex Barrón

Hey, far I ask to the the guys. Great on am as sorry. I was Smart job as Series. on wanted mute. quarter, I

What towards of idea an guys, of percentage future dollars land are investment us allocating closings of kind What communities your about Series? gave dollars? you you your your and So Smart orders.

Bob Schottenstein

by simplistic we but subdivisions, a couple to vary mean I a in we're divisions. said cities I or It's the be division-by-division subdivision business exist ago they manage Those that in don't minutes and subdivisions. analysis. that of

change I changing all where and build, iterative division. it's doesn't much, what blueprint every price point change it how part we weekly. changes, strategic, even it doesn't of build, we of, constantly say for sort a monthly. constantly when And And and what And

time, the and Is parts once are we that to year, pieces or type? properly? much, positioned plan. twice big, how time constantly -- from revisiting we're But most more conducive a level what to Are how of housing, market what entry

we specific, continue to And of other I that's for means which more that that it sure to may could -- it. backlog, So, to about than plan bullish be increase. to Alex. our we're not say grow XX% I'm it

Phil Creek

Series Smart up landscape. by us, end Texas. really and the is certain mean, more more by Antonio, I But more San Austin, markets, say it's driven market which competitive affordable a nature, for with

the at. Series Our key what is land. part we a like we're piece Smart we is have still to A well-located good availability leadership do. teams, And of can land. think of of What

out, way. to to Our that not strategy grows and maybe way help is -- go

every So little just different. a bit market's

Some have more Smart will. than others Series will

Alex Barrón

any like, it, of even much than better quantify how is? like XX% maybe, and sales roughly we or communities? way is other better better talking, type sales Got there XX% pace much is the the Are or margins better, better your pace you and the can are, XXX% how

Phil Creek

pace really that We detail, margins are Alex. at better. But of of into just better don't and is it that. The the get leave, kind type we're

Alex Barrón

what sold. allocation Okay. the as the expect there goes cost-of-goods you expense expensed, interest down between into not reason any what is corporate One interest far one, trend last as as And gets get to bigger?

Phil Creek

repeat Why don't that, Alex? you

Alex Barrón

line. your of some sold, goes rest And below So, right? expensed cost-of-goods -- the gets through interest the operating goes

year, portion next into that kind trending expensed. of the we whether down? to sold is Not looking forward should interest expect just cost-of-goods the start I'm in So

Phil Creek

-- try like We don't put as business really business into the run get to as far the we needs. We that. what projections

capital incurred as quarter about far then, what's million. for the up was the As structure. $X Interest best capital structure. And

that of not into kind we of interest really We our through try on get the too what get don't We much at here way. capital there. goes books, to but look and business kind

Kevin Hake

is this Kevin. Alex, Yeah.

We have a conservative fairly capitalization policy.

two. other percentage. capitalize us But interest do we of have So builders, the in think, low expense if And expense fairly combine with through total we sales. cost the just compare you I

And leverage rates and down, last and where we the revenues goes go, of and And several having as I down. a percentage grow it, our think, been for it when yes, as then years. where just has trend a trending

Alex Barrón

Got it, up Thank okay. the Keep it good work. you.

Kevin Hake

Alex. Thanks,

Operator

Instructions] continue. Presenters, [Operator may this no further At on queue. there questions time, are you

Bob Schottenstein

quarter. Thank you talking to you Look much. to forward very next

Operator

you. that all today's Thank concludes you Thank participating. conference. And for

disconnect. You may now

M/I Homes (MHO) 24 Jul 192019 Q2 Earnings call transcript