MHO - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the M/I Homes Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Thank you.

Mr. ahead. go please Creek, Phil

Phillip Creek

Thank you. the today. turning appreciate you into call I

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

directly. to items prohibited consider to this material you we call, address with from regarding questions because Disclosure, Fair any First, are discussing during nonpublic significant issues you Regulation we encourage ask that you

to I forward-looking statements that contained call. also statements, as be the the undertakes cautionary made in release, advised everyone And to remind Also, company comments no forward-looking want press this during any language statements applies forward-looking obligation made this call. that any during to about to today's update

certain of call, accordance on the calculated differences measure issued non-GAAP measures. this our comparable most earnings is our reconciliation A in non-GAAP website. earlier the was measure during the we today, release a available presentation the directly that and financial GAAP of Also measure, and included financial in financial between with GAAP, disclose

Now, I'll over to Bob. call turn the

Bob Schottenstein

Homes, a Thanks, strong joining our pre-tax income. was all Phil. year and for contracts, good today. revenue, XXXX for delivered And you call record record and record afternoon, thank highlighted M/I new homes by very record

than the better quarter, sold XX% X,XXX we For the fourth year year, XXXX. record we sold X,XXX and homes, fourth over And homes, an increase ago. of during XX% quarter a a

Our community about X%. count XXXX average during increased on

with results our smart our sales very XX% month. priced we better pace sale series sales per experienced of pleased per with up And nearly affordably product. So, community, are most we XX% the

well sales greater continues percentage a greater as overall of of Series our our mix, overall Smart mix. community represent a to percentage Our as

be the total higher and roughly of Series ago that our of our XX% a communities, end of will sales. XX% than in comprised even compares houses slightly to XXXX, over offered just year XX% Smart At and

both to good and achieve in to business Smart a continue Series good that to margins very way. continue our in pace We our and expect grow of communities segment good

XXXX better by sales leverage profitability. and And also year increased for an XX% sales income, increased company yearend homes. X% that's with than highest ago. and backlog revenues continue year billion, Our value we million to delivered of $X.X with We XX% in improve a homes million. ended the $XXX to to for improved to by income to the average history $XXX grew operating $X.X increased XX% X% net our XXXX, X,XXX billion, aided Pretax

leverage compared in point achieved and XXXX. points specifically, to terms margins, of also SG&A More our operating improved to expense our XXXX. basis in XX full XXXX ratio, year compared gross our we a improved by And profitability, basis improvement XX

record segment, also financial a revenue. with our MI another services of financial, strong loans well recorded number originated, as year record as

at grown we improved and EBITDA years, period impressive same return company, with XX% in that achieved grown XX has very that equity period a past annual Revenues a XX%. XXXX. growth compounded contracts our reached And and rate. steady XX% by on consistent the XX%, XXXX over annual rate have during our strong year compounded returns, at an with since have As growth new growing over XX

over X.XX%. that quarter increased a borrowing our We rate senior XXXX, by notes debt year $XXX extended and debt we're successfully to balance six with maturity million $XXX are redeeming our improved with of been shape just a best a and From and improved ever eight our a worth replacing three it the of rate $X doing offering million, debt-to-capital our in. sheet and net standpoint, billion we XX%, we've homebuilding in rate our notes,

various our Now bit more little markets. a like to about detail provide I'd

our deliveries Texas X,XXX three the of company and First we X,XXX and markets. is quarter during total the North than deliveries beginning Carolina two had of XX% the year fourth the with the the Florida, for for of In region, year. the Southern that’s four year, comprised which and Southern last better region, XX%

in the region Southern increased New by the year. the fourth contracts full for and quarter, during XX% XX%

the region than that's The year-over-year. dollar backlog year in the increased region and in ago. a the at sales controlled-lot our value of XXXX position XX% the XX%, active our XXX communities had was year X% We end, Southern better end of at at region Southern in Southern

and well closings experienced new Sarasota, increases communities in now growing making sales We our and where open in in relatively Florida, significant selling. all Charlotte, are progress solid both in in we of have as as and in our markets XXXX, XX four Texas operation

stated this be two All markets to and continued say, in this closings all grew and as of well, to for sales in should quarter and we increase Tampa lead increases to substantial I calls volumes in of fourth of full XXXX, operations. unit Orlando also our previous and will both and substantial strongest year. their the

the further me as as to note we operation the of end of XXXX, during sold let invest not Finally, closed market, have earlier, in that XXXX. D.C. decided we substantially that reported out and

have We XXXX. homes remaining merely close handful to of a in

XXX our That's delivered markets. the region, and quarter Next, Northern six in to from the region, year. we and year. for of last fourth is moving increase In Northern Midwest X% which homes the companywide the total year for XX% of a X,XXX comprised the

Northern quarter region, year. in and during for XX% XX% up the the the were fourth contracts New

We X% high by to region with over XX the an year a region, position in the of increase level. our start X% a XX% in our in that's backlog region markets from Overall, year-over-year. perform up of ago. was dollar communities the in Northern Northern year at active sales Our the year controlled-lot the and ended the northern increased value, continue

Cincinnati of well, markets. and is performance very we is significant and growth financial Columbus very one Minneapolis. performing achieved our strongest solid in

new and this are track on Detroit the progress And, achieve with in year. in significant higher expect we operation. this Chicago pleased, volumes sales we are relatively Indianapolis, also in experienced increases and to make We our in to closing year

a with points. Phil, just Before call me let few turning the over conclude to

barrier for a with First, our XXXX was We ended company. XXXX record backlog. a

balance strong ever communities sheet position is as our it's of about excited markets. our as all our in and been. Our We're XX

out MI a growing experience We performance And Smart spring strong of housing very XXXX. Series. selling good, is optimistic continue very the our are sum, about to conditions positioned we well season. were In and strong for Homes

Phil. to With turn over I'll that, it

Phillip Creek

Thanks, Bob.

in New XX% improvement all-time and compared November for to contracts XX% XXXX for a total for of up October, X,XXX. our up up in our XX% year's fourth increased in quarter. XX%. last And quarter XX% quarter, to record an were the new XX% contracts And fourth the for traffic December, up was

of fourth quarter were to sales homes XX% compares buyers, first of quarter the our to As inventory to buyer our XX% this were XX% compared in XX% XXXX sales time and profile, our fourth the quarter. third third about in quarter,

Our community XXXX at XXXX, Northern by versus yearend. in and XXX breakdown region was count XX XXX the is the up in The end a of Southern. X% the

while X%. XX our quarter, year and During and the communities average opened closed the we we closing and was community opened for year XX, communities up XX, new count for the XX new

XX% from Series be XXXX, up year X% XX% aiding current will Smart of our rate. backlog For ago. homes efficient conversion our And X,XXX community is a backlog estimate to in We our camp delivered XXXX. more quarter, our about that the compared average is delivering fourth our

of Revenue in delivered. a in $XXX,XXX, increased closing for was quarter And increase quarter fourth fourth quarter XXXX, record This compared average fourth fourth of was homes $XXX,XXX. X% decrease the $XXX a number the last primarily the of average million. reaching price our when of closing to year's X% record price quarter result the

fourth year and of is Chicago our our $XXX,XXX. higher in backlog million charge Our slots, from in XXXX's X% million Charlotte. quarter, compared $X.X fourth Series The to of We and a impairment backlog was recorded average Smart primarily average price ago, down in quarter. sale charges $X for price XXXX is price $XXX,XXX, sale XXXX's

was the margin. the construction quarter. And our of XX.X%. XX.X, margin minimal than margin adjusted gross year quarter fourth change for last adjusted comparable full gross during cost adjusted had Our basis XXXX's was versus XX.X%, points fourth And higher year's for the was this gross XXX XXXX, our

pre-tax income, charges impacted 'XX, from was Detroit XXX,XXX of by XXXX. acquisition in in year related acquisition of full March million our XXXX compared Our with $X.X

number XX.X% expenses from to increased revenue, of significant last XX.X% of quarter. communities. This from with a new up Our costs earnings, were fourth SG&A primarily was fourth in our associated strong year's compensation quarter opening due increase cost

technology XX new fourth quarter, and communities new our quarter cost We in upgrades in fourth systems. opened to versus communities XX increased XXXX's related in information XXXX's

a be compared improvement XX.X%, improving For continues XX And the to SG&A efficiencies ratio area point year, was our a our to XXXX. of focus. operating expense basis major

year, due to the and million, is expense same ago. weighted compared Interest XXXX. to the incurred year the $XX.X compared quarter for increased last for $XXX,XXX a increase The for decreased $XX.X in quarter, to $XXX,XXX borrowings was year for period the million XXXX. outstanding Interest average higher

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

Our in was annual in quarter. in And XXXX. last rate fourth fourth effective XX% effective our year's compared XXXX's tax XX%, to XXXX rate compared was quarter, in XX% XX% to

tax extension December around tax quarter rate rate And we the of and in tax energy annual 'XX. fourth the be effective credit XXXX's from Our XX%. benefited of expect to

increased and the for quarter first impairment any to XX% year And XX% remainder repurchased excluding shares for impact the during to share XXXX. diluted of shares. outstanding per not our charges. the the related earnings million We XXXX, we of $X during repurchase per of share the of did increased $X.XX, $X.XX costs and acquisition Our quarter

Now, address Company results. our Mortgage Derek will Klutch

Derek Klutch

Phil. Thanks

number up record records and revenue up pre-tax over last including of title million, which of was a Our income XXXX, year, $X.X over closings. and million record $XX.X quarter mortgage of million, in fourth XX% record achieved $X.X XXXX, operations

the and income $XX.X year. million all-time pre-tax was year, some in second the $XX.X saw improvement million, margins, pricing records. in other of the For and We was particularly half revenue

was XX% XX% modest to XXXX, the increase quarter period. were the fourth Loan to XX% in on and compared XX% FHA This a or VA. of loans XX%. the value XXXX's quarter quarter conventional from XXXX's mortgages closed respectively same first in for for and were our fourth XX%, of

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

For a decline score Financial from originated quarter. the credit mortgages last borrower on by XXX was MI quarter, the average slight XXX,

in operation Our business about the XX% XXXX's in fourth captured increase fourth our mortgage a significant quarter, of XX% quarter. from

of Financial are extend XXX typical we December day October mortgage outstanding, million warehouse a our of we that June At facilities, Those warehouse in total mortgage which credit under facilities $XXX and had expire two year. XXst, MI this annually. lines

include we seasonal million. our warehousing availability closings, Due to million $XXX of to increase total time quarter a typical volume January our provide high which temporary of of fourth through availability facilities, $XXX which in after XXXX, returns

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

Phillip Creek

Thanks Derek.

focusing $XX to million XX/XX/XX manage XX/XX/XX communities community to managing structure. continue investing our our primarily balance increase was sheet more an $X.X of carefully on while count Total billion, finished in also We homebuilding at due and higher lots. inventory capital above levels, new

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

on XX% Lots to as year year under $XXX total XX% the breakdown were the a million North XX,XXX owned and million in supply of and goal of In controlled sales, supply owned ago, currently we owned and lots. $XXX lots North finished owned in which our in maintain sold market XX,XXX Based we lots XX% lots, XXXX XX,XXX one in lots controlled among lots. of X.X supply. XX,XXX owned the and contract. $XXX which A a is year were control XX% the We is of owned South. X.X of million year South. XX/XX/XX the totaled land of and and the of Our about

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

spent XX% the and XXXX, For purchases amount and raw purchase we about land. development, on land million of was land $XXX

homes, 'XX, XXX in region. December the and XXXX land homes, is homes. and $XXX XXX $XXX the spending XXX for XX, and estimate completed X,XXX inventory quarter X,XXX were At current development to of completed end total Our Northern in region, inventory total of million the XXX million. and the total at inventory had purchase homes, had we the and we And inventory Southern are inventory

For per at at XX/XX/XX, comparison, humanity X.X X.X three we versus finished specs XX/XX/XX. had

yearend, continues $X ago. a book condition at ratio homebuilding to be our share, a XX% $XX financial Our in with to year debt-to-cap record a at to billion of equal equity and yearend XX% strong per value from declined

In was XX% And and up compared XXXX, $XX XXXX, we issued million $XX we X.XX% facility. our million there unsecured year over par. of eight $XXX At generated at XXXX $XXX of senior incurred million senior last January revolving in our EBITDA, million from to million XXXX last $XXX XX/XX/XX, redeemed of generated of $XX million Interest operating was in year. and notes X.XX% million due outstanding notes, $XX $XXX under activities. cash million credit year,

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

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

Your is open. line

Thomas Maguire

the strong our strong I on talked the And, talk finish Hey in is? the do you model. absorptions quarter absolute I and a the first now? difference for seen guys, the But, the basis. it's highest is level, from forward? product the quarter, an really affordable spread of about fourth community, about, in tailwind the year, how really for going we're to the think absorptions there higher a an you in is a can go probably we strong little perspective wall And then per the on just Or go volume traditional that entry-level communities? a wide of equation, absolute we've side from as room results. as bit forward you to pace at communities for sales guess, right And just think think about Congrats with

Bob Schottenstein

I in improve high a Series where even little bit but go to a right hope, level communities. we there's Clearly, if they and can say at I Smart stay are, room will better the I think for up, perform profitability. is they pace absorptions our

think, I know, that give number you. I don't to I an have exact

I that In know say, to have you. I give fact, I guess don't should I number exact an

some bit is four, running, other X.X. that an X is, we side running the we could But to a a it that sales be have smart of six, because them, month. five, average misleading, some that two are of might communities And little then seven some are have

we understand all So, know they're runs but pace. clearly I that, better home have not and probably you on average,

we XX%, Series will continue I represent around of to it And, Last our actually might that greater year think XX%, percentage Smart business. a that higher overall thought at it's now. than this be time,

are it I remain same the if, months. our the think next as XX% could they pace. up XX%, north to over to And should XX still XX now much that conditions of improve pretty creep

Phillip Creek

we But, with open growth, excited also for about they’ve average up communities our X% I average with XX, last to excited as by community said, And strong out continue on about challenging mean, communities we're count are year, able been. of we're close all community X%. increase to very us that that. continuing it's so about did to as count XX were we looking year, as this But sales we again, we've

Thomas Maguire

Bob, like Yes, you've cost, to in Is really guys support understanding Is being moving business about And land we that you so And right and of think side profitability it how lot that? How quick, have? talked different range. absolutely. the comment then pricing tight saw pipeline today's environment that power, do forward. dynamic relatively with the both the pickup the back the there's just would that any perspective an looks when price you being think if should cost about the go from raise too, about a you about you consumer And ability there, frame to the you now, there kind side think flat consumer? of marrying price? that

Bob Schottenstein

about we're margins be we more to Well, it's I XX% think optimistic today. than said a we've just to not. consistent, think better And XX% being business

have mix market margins sometimes closing built. lower to quarter little and is dependent location tend be than to pricing of I think average we power, I on spec more bit the margins, dependent. there in not see our to think we fourth a a quarter, lot But, a little and lot, it's tend know specs a I and and be

been don't that gross any I And, think, I But, think our margins going up. trending to get have they're worse.

I guidance if now, think on to better would that least year. they where for be give no this, the I at are we but expect them not

Thomas Maguire

guys. Thanks, great. Sounds

Phillip Creek

Thanks.

Operator

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

Alex Barron

I and on little little I guys you margin a quarter lower. you had might guess, front, margins the were bit quarter thanks. better be thought Yes, think a last indicated the they this

said So, you closed? it was just it specs that that mainly what was more

Phillip Creek

mix they quarter I look It Yes, Alex. We there flat margins for really at was like was Bob over were border a wasn't, more up no, second said. for close of went few little so a swing, specs nothing mean, XX% a if our sure. you the the first-half, unusual. did above, major fourth XXXX, major, in kind but

Alex Barron

then, overall of you And for guys How was the January? And was up are about, wondering on, thanks. say what was December comment expectations if pieces how the heard I could rest think, XX% sales year? are I current sustainable you Okay, your I something.

Phillip Creek

again, December don't was October as as XX% was comments up Yes, the specific up far make any going January. November We up XX%. was really through numbers XX%, and about

Bob Schottenstein

about other the say than optimistic it's that to selling underway. that, to add season, I'll And we're Yes.

any pay earlier. think than this to start in started and some this housing Bowl, There year the started didn't Bowl would it I be normal. sort that attention belief after used to of Super earlier my view, year that it's Super

a consumer And favorable assume this I roughly which time. environment. at stay And rate that reasonable think this four will good to for or in longest is level, think certainly think spot. I rate four below in confidence And, I it's a we're some they

little of housing we room do too. a run think got bit has to I I think and

Phillip Creek

mean, into X% I going had we year the the the year. more stores at of end

as we also with We fourth of them opened XX year in XX last communities said, being the quarter.

hitting So we're excited ground the running. about

we excited yes, about season. the selling spring So are

Alex Barron

change exposure, is any outlook change entering? ask Is going think, you for guys more, you that markets thinking of are to And in any I indicated And could your you I there? D.C. markets? there there if were one had any changes the

Bob Schottenstein

our about reasons, ago. have as a it announced in It's we a I We but, market have. close of as it flawlessly obvious lots closed we small standpoint. painless, to year We was for seamless D.C. from D.C. nothing at easy that We've a financial the up either all executed somewhat never about operation. a think could and but sell just basically, And or least handful close left

as, further look we something far forward, As at. it's going expansion always

but it We was report, transaction in there We our monitor. human is have geographic which the footprint, best sensible something was and company. the and look we continue to believe that we if we financial, at expand further nothing to and this thought and have watch of both the to capital, interest

Phillip Creek

said continue years. number markets. last have of market. in one few We've we positioned markets existing existing the the also years, really Job been think well that, past our to entered a new to But, growth strong the having grow Alex, our for in said to has we trying few as we're next

all that. can sure not need we about that do have we we type to that. want But, of makes if did any find So, be to something sense,

Alex Barron

Okay, the queue. I'll back great. Thanks. Well, good in get job.

Bob Schottenstein

Thanks.

Operator

Art Winston the next comes line from of your And from Advisors. Pilot question

Your line open. is

Art Winston

managed sheet same that's the quarter. looking for what decreased inventory? doing you to the explain a not seems maybe right. Could like time me to it you debt, at And little great balance you seems I'm the I'm the how appropriately, if detail to a me. increase it it Thank more But,

Phillip Creek

on investment owned about feel talked and $XXX side Well, our position. as very good land, we we spend as did controlled as the far about, land million it, of

the quarter record fourth We also in closings the and had year.

year operations. with we about higher talked closings million for the of record generated and level, about $XX cash from the the So, income we

what that's sheet. led balance of straightening the to So, the

Kevin Hake

this most grew I answer dividend, us paid would cash us earnings. we the paying to Without Kevin. what question Art, debt. your than and is is that down Yes, add, just inventory we And allowed was the our we in I mean, of less to earnings generated grow from

Art Winston

ago that the of the apples-to-apples it cost apples-to-apples or much unit? units in than inventory Would to say an the higher fair was it Excellent. be isn't year basis per inventory a

Phillip Creek

wishing the units, cost you unit closings you year, unit, fourth price and not opposed a there average volume, sale volume come of because down little the in much up more a if bit. No, per quarter were was and look lot the more the our how unit close as actually to are

Art Winston

are my having it question is is lots? to or just much The it the very going completed the next, pay going little? buy land to up I mean, you Is and a raw a appreciably up

Bob Schottenstein

have average to is year two. that don't what was think I bucks roughly probably our lot within I X,XXX it number. ago. equivalent a finish It's or cost

Phillip Creek

number That XX,XXX, I around is recall.

Bob Schottenstein

and like ago like now. was markets competitive, The are land right XX Look, are a XX expensive. sites tight. they're less becoming year It good the it's

able of see run inflation a on is, just far. I think, we'll think it little side. housing I if continues been manage to bit the the through it way But, to so land we've

Phillip Creek

look also, is being average less And about Series you price than lot price share price with per we more stuff. the talked land house I cost, when Smart XXX. Series at the and backlog Smart higher then our land the mean,

the as price that So, keeping is in also pretty equation that flat. land [ph] as far

Bob Schottenstein

believe that a your maybe other that less half thing our under is it's is years it to five sort land at supply. The control question least we do. our than related slightly a I we And, great very of a of or we bit on is, think position one land just quite thing, have strong books. we position, about and

from is so own back. you'll sort means don't no which that land of builders, more than least percent acquired, a And, there's typically rather if not any or away turn of just got see contract us When but, turning walk look, already back is control want we've XX% deals, other think you we or a compare net. at under which I we to to their safety lot already XX%, owned,

Art Winston

very you Thank Terrific. much.

Bob Schottenstein

Thank you.

Phillip Creek

there more Thanks. any can hear Operator, questions? anybody Operator? Hello, is us?

Operator

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

line open. is Your

your You question. may ask

Bob Schottenstein

Hey, Jay.

Jay McCandless

afternoon, Can you Good guys. hear me?

Bob Schottenstein

We fine. can Yes. hear you

Jay McCandless

All right.

Bob Schottenstein

We lost thought we everybody.

Jay McCandless

No, we're still here.

So, SG&A. three to questions ask I on want two,

The first Phil 'XX, one, that there any in see is on may tailwind in wise you might for we all D.C. done 'XX? that have spending dollar isn't going to repeat

Phillip Creek

as really, as Not to a far D.C. people. We're couple down

heard costs past those much we pretty you are explanation us. get did Jay, SG&A. So, sure I'm the that for

Bob Schottenstein

expense Excuse year. me, year of was expensed I he think stuff lot we to if we last that want asking, a this

Ann Marie Hunker

No, not year. in this

Bob Schottenstein

it's because … you Speakers]. really, mentioned about [Multiple No,

Phillip Creek

far lot sometimes, SG&A as, opening thing little Also, things you tend as in those of bonuses another a also. at more reason and can a type lumpy the the to is part As earnings be expenses new of SG&A and book made, of are communities. that's

are you And sale functions spend was XX type not it's opening center. to quarter. a And communities communities, the fourth as grand things those a into is centers, new significant of XX those expensed get communities The their there amount of per those sales lot when open brochures, construct and have unusual as things, up new put way new those we broker centers, those technology, furniture treat new are that we dollars sales as we we in pretty expense. opened those to

in little fourth couple higher reasons quarter, the a was a were of it the bit those Jay. So,

Jay McCandless

more my And quarter have when think is going going you're of growth to actually next Yes. waiting count getting be community even in then, two about into we or that it year, the a openings? to this one leads question, quarters the pretty

Phillip Creek

it this at in XX% year. again the average to kind us the of for was second, but growth year, be a It look like like to pretty X%, looking second-half. during it'll about XX% looks the XX% so, the you similar again, was XXXX, XX% first-half, the and what first-half If it that

Jay McCandless

some look about? just if were I the you spent question about ‘XX, other the should amount IT the at for then SG&A, on XQ dollar that we we talking upgrades adding XQ And think in ‘XX, had to

Phillip Creek

revenue that. When year necessarily up I X%. XXXX, almost were expenses up wouldn't No, in do was at our XX%, look SG&A you

If up our you about is headcount X%. look today,

to there we will trying people, be XX% because, a have are at the more number stores. larger we be increases Are So, is a revenue will we cost Yes, of growth? have obviously, some answer least still yes. opening company, we

to specific it's any give hard So, guidance.

we we in said it, we sale but get But, efficiencies. As comments, the impacts working through hard average are our of are one price we that and lower really is come operating challenges still having to again, the get good if X.X. went to pre-tax, look hope to fourth operating the The quarter fourth you X.X X.X. pre-tax efficiencies. for the from pre-tax thing was year also, you quarter at look When X.X versus

So, we getting better returns. are

but, little now quarter-to-quarter. lumpy progress a going making we're be SG&A So, can

Jay McCandless

seeing I in down that side a count price closing it average that prices basically level next going the backlog ‘XX. Is what assuming on or same average that they actually are the should think taking as was was, ask. two? now? thing 'XX, Or right that prices, was the We're in did to And about your guys it. for about community in 'XX percent Got and we you

Phillip Creek

you're talking If average Jay? about sale price

Jay McCandless

Yes.

Phillip Creek

as mean, of Series what ASP, Smart overall that I it's to that's to That's kind our downward continues be little a are. range to X%, in bit, to to would hard X% tend going thoughts predict. increase think we

Bob Schottenstein

It moderate should down. slightly

Phillip Creek

about to we XX% hard because, know, predict kind specs. you do as It's to Jay, of XX%

product pricing are location. margin But, little a opening you good to will in very Bob ASP pretty be to better we're still said. tend thoughts We're on you our different, where have power as But, moving that's X% something a focused X%. a So, a target. stores, improvement, have down lot a little better of

Jay McCandless

would on type what insight of question more some behavior out of Okay, last there price, seeing being be people discounting Series in the you And are you there, aggressive communities, price your and incentives decent had that's amount great. with competitors? helpful? from there more have on then, I any a entry-level Is of Smart still

Bob Schottenstein

most First really I of communities. our Smart good in had, all, Series success think we've of

some is. in there and is our company terms Series Smart you And other affordable the bet most offerings are like of in So, by most of competitive frankly, of in San Houston, the some markets competition, builders. successful there communities Antonio,

of of impacted now I and We but, issue. it lot big we know, some that don't on, by too, then haven't and from do consider been every discounting I other builders. goes a it a

Phillip Creek

average said, has and our mean, company pace, Smart Series we average company As margins. above I has Jay, above

So, we've been very pleased product with line. that

Jay McCandless

color. so Thank the much great. you all for That's

Bob Schottenstein

Thanks.

Phillip Creek

Thanks, Jay.

Operator

We have follow-up Barron a Center. [Operator Housing Alex question Research from Instructions] from

Your line is open.

Alex Barron

thanks the and you guys slow year least you leverage. Do of beginning XXXX, feel this get got operating conditions year you XX better eventually more taking at and better was that points get the pretty maybe could the this given stronger to Yes, managed of things for At still follow-up. year? basis the

Phillip Creek

at line, from the looking Well, X.X did the went When at you're when XX improve X.X. that yes, for bottom it look pre-tax actually the to basis you what SG&A points. line year,

improvement. basis a it's XX points So

focused on we're income increases. You Alex, know, always

growth continuing or to more the year next our for are invest in We business too.

interest we out. percent but the are to keep pleased and little So right metrics a is room there's always pretty are. if our the improving margin. leverage, we sure our all We're going kind flattened on focused challenge on also SG&A that our way, income think is the of We incurred

strong We about ROE. of equation, different that our there's talked effecting lot a parts moving So, overall.

a lot things of we're on. there's So, focusing

Operator

this Instructions] presenters you questions no at proceed. There may time, are [Operator further

Phillip Creek

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

Operator

concludes call. that today’s you now Ladies you and may all all for disconnect. joining, conference Thank gentlemen,

M/I Homes (MHO) 5 Feb 202019 Q4 Earnings call transcript