MHO - Earnings call transcript Q2 2020

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Operator

Good afternoon. My name is Heather and I will be your conference operator today. At this time I would like to welcome everyone to the M/I Homes Incorporated Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions]. you. Thank would today’s I our over to Mr. like now call turn to And Creek. Phil

You may begin.

Phillip Creek

much. very you Thank

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

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

Robert Schottenstein

today for us you And on call. you, Thank thank joining our Phil.

for Homes. The was second setting quarter record M/I a quarter

fact, With every company financial record history. was set quarter virtually best important in In and metric. it the

strong results our you. to excited are share We with

the Housing as defensive of the of to to in conditions, social unprecedented in much half our mode, protect part world, our unimaginable by We knows, challenging time significantly. the saw country and time declining for proceeding to work the customers, As other our XXXX safeguard quarter then while adapting operations concern, That April half home. and to all our and improvement has March business, highly precipitous in half began throughout react early for quality employees, new accelerated in April. our extreme in crisis. first complex conditions, to instability health caution our the and been sell and almost best builders, both large setting and of an and decline precipitated us, a rebounded with The contracts improve environment, as and economic business at everyone us as June, levels. of significant to began the our possible, operating record doing in a continuing to last our the and May and a materially significantly try with last while build same

June best May our sales be the surpassed XX% contracts ever quarter, contracts with were the year-over-year up by down new for year-over-year. setting was record year-ago. than our record has time macro tremendous number in are sales a momentum economic continued sales quarter experienced selling X,XXX strong and homes, results. the July. to a Specifically month We year-over-year. contracts sales XX% contributing there we a with to new may micro quickly then better ended June believe new our XX% factors into We XX% at up and April The of only

and buyer in selling inventory and catch April perhaps up a First, shift levels, noticeable preference. low from rates, March a of record the historically bit low macro, near mortgage spring

a or located with the to more result certain housing of As densely out from in a way other move of households choosing areas. pandemic rentals

sales notably outperformed strong sales performance. into leads our our our smart its in to sales most our on ability terms of results. finally, to series I smart series into has the communities. micro And In sales mentioned effectively factors, number have market. convert priced generate believe leads communities increase we our those M/I that also our of a material positive the our good online affordably Most and contributed impact

As you product our this affordably know, is priced offering. most

smart better offering produce of returns. and smart line performance. our that success our and gross our of series XX% and we has During the the average, than the cycle pace, sales On of continued company series XX% total question sales. across roughly This homes record communities second locations better smart series better more smart to year-ago. sales comprised contributed our is growth bottom no better company margins, a There time our rollout compares quarter, to setting were homes XX% series and our

community quarter closings, which result the Pre-tax better in XX% than expense overhead ratio improvement overall mentioned, this was was million quarter. Other to absorption quarter. improved a improvement X.X clearly better home to last by for series. to of compared quarter pace smart During per company-wide $XXX X,XXX second driven year of million a the second record a of a year an the we our increase volume, from to part the our a second due along quarter achieved are of $XX.X per year with a point income level sales month, basis record as X.X last as XX% year-ago was record quarter sales from highlights revenue year-ago, when quarter increased XX% of compared last second than XX

homes. record $XX.X M/I our was last XXX year, Financial, a value from time this a also margin $XX.X better our for pre-tax year. last second income Company-wide a from to to Net earnings increased year-ago. quarter financial units points all-time an the the diluted and later. income, business Derek X,XXX up gross up backlog of quarter increased our second million, another quarter end year’s record of and discuss per a to per detail share million our second had were sales quarter also services Klutch, and XX% billion more M/I all $X.XX to CEO record in XX% quarterly basis $X.XX basis $X.X at quarter share will up XX.X% backlog second than but of with improved XX% points our of record quarter. Additionally QX XXX Financial from during this quarterly

the average $XXX,XXX, year’s to While for second to compared price quarter. in last $XXX,XXX backlog increased sale

six Now our additional across will XX% the on performances it will and We region region I for Southern contracts regions in similar nine region. Northern our markets, new both our markets experienced new and a in strong this do comments markets. Southern increase increasing in provide some XX% our by quarter Northern and with contracts

months. last Southern We increases experienced and Charlotte in markets our we strongest to in Columbus closings, XX the unit as Northern growing and down And, quarter continue profits, our and too markets last Texas that significant Tampa well grow quarter we solid the nine and of increased total to progress the and the XX in also end in of had of deliveries from perform about volumes and Southern Southern first our of X% up we which Sarasota. region both the at levels. XX% four the of markets, June in into be and second after very markets. and XX% to communities very continued sales quite in in that Minneapolis Minneapolis the are March improving region the and deliveries. notable experienced as six from all They Florida region, the to at our their also two in down communities Our slow in a has high at and and year They a our continue continue over Northern the continue region increases with year. and profitability both Cincinnati. operation Northern make for April. our in both Orlando of In in XXX end comprising quarter, region year-ago, had XXX We performance well the of among is volumes have strongest recovered very

results position, have produce very coming we on supply well via roughly growth to us allowing a of own our XX,XXX the We achieve option additional and current XX,XXX goals top strong lots. year that and a approximately in Company-wide, as lots, as control years. to two contracts land approximately our

equal XX,XXX five-year controlled our lots and about owned total, or So lots in supply. roughly a

half and Southern of are books. about region that XX% over in Northern roughly the lots is control, our XX% which owned are on region. balance XX% and in the the lots Importantly, the we of controlled with our own not

economic call Before quarter turning let remain COVID-XX. of year. Phil? over uncertain our One, and operate the impact to we poised could pleased more teams. conditions standard and continue continuing They expectations a to and be execution meeting are and to conditions great appropriate due needs company had to is at customers. a an Phil, of the in will our points. with manage with what to continue have Three, conclude outstanding caution. Two, me our we not monitor shape, we several just effort the and high Accordingly, of excellent the

Phillip Creek

Thanks, Bob.

contracts to second quarter for second As last increased time to all far year’s as the results financial XX% for XXXX, record quarter. quarterly X,XXX compared and new

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

X.X XX%. quarter, second cancellation in was pace sales the our Our was and rate

our first our second about time As sales profile quarter. quarter buyers, buyer to XX% as were of same the the about to first

sales of In XX% were first compared quarter. in second to the XX% quarter inventory our addition, homes, about

region. region region the count the at second community is and year the last by quarter end quarter, to down Our in as in was the same XXX XXX of northern southern the to break XX

delivering we second XX reaching communities new the revenue a quarter, a opened and in year. XX compared during of delivered of closing to XXX X,XXX record We second quarter, opened homes second we XX% record quarter, the million. the while our the new XX% quarter half first During backlog XX year-ago. a quarter communities increased the And in of XX% second

XXX,XXX, the XXX,XXX, XXX,XXX. a our quarter year XXX,XXX. backlog year-ago quarter decrease for price from our is of slightly of XXX,XXX average average compared second sale closing up last backlog closing average smart our second price sales to price was price is series And when and Our a X%

from quarter second margin margin quarter. basis our basis reason operations. big year-over-year due Our first our points was XXX up for up points the is Texas to A gross XXX and improvement XX.X%

XX.X second year-ago. labor last XX.X% reflecting million when Interest the expenses million a to costs revenue, to compared to lower to of basis well XXXX and rate. quarter compared for the a was points compared average XX.X this quarter XX.X expense quarter for leverage. operating X.X a interest as this compared borrowing And and year-ago, quarter, decreases our greater year, the construction improving borrowings lower period million outstanding same weighted were due as to SG&A decreased were Our second incurred flat XX year,

And the our on interest assets. During balance of in second to generated our compared quarter. million we about in year sheet have EBITDA last of capitalized quarter, million million XX we XX XX X%

in last tax this XX% tax second estimate effective be around XX% benefited rate to quarter. year our the in that from year, rate And this credits. second effective annual XX%. energy Our rate was We compared quarter, to year, our

share million from Our quarter We shares. for increased repurchase diluted the of per did of share earnings quarter first quarter. last XXX during in any outstanding per $X.XX the share year, the not to we second year, and this our per two shares purchase

will Klutch Derek results. our address Now mortgage company

Derek Klutch

Thanks Phil.

Our improved loans operations of number in was pricing second achieved sold, higher results to and and the XX% income rate. mortgage quarter capture record closed of a along and pre-tax a loans million with higher up originated. due title volume to Revenue margins $XX revenue and

the on as pre-tax our million, were up last closed year, value of from compared increase quarter. loan XX% to quarter which XX% were first second or in quarter. The quarter quarter XX% FHA XXXX second conventional same in for XXXX the and was income was $XX.X the was XX% XX% loans mortgages VA, the XXXX, slightly to a second For

XX% Our originated of amount second to which average year. quarter, year, of to loans, increased the more sold loans to last second mortgage increased the last XXXX quarter volume and by XX%. was in than Loans compared a increased $XXX,XXX $XXX,XXX record

score quarter. the originated the average credit from financial last M/I mortgages For up by borrower XXX quarter on XXX, was

under warehouse Both mortgage provide At in captured originations second the XX% of also warehousing And the our of prior the increase facilities facilities separate a mortgage business million million agreement, operation us $XX that to mortgage an We from about maintain year. which two our is last XXth, credit quarter, outstanding year. May for expires repo we $XX had separate June that a mortgage was we million lines facility, outstanding that sale which October of $XX funding with and in in we Our XXX-day to million expanded commitment $XXX warehouse MIF XX% annually. typical investors. XXXX. under expires have extend recently are this

Phil. to over back call the turn will I Now

Phillip Creek

Derek. Thanks

As in on the our balance continues revolving to outstanding no XXX of XXth, balance and strong, facility to and equity of $XX Also under facility. did borrowings our our we with far billion June June, as be sheet, million cash July very X.X unsecured maturity financial condition credit credit million XXXX. extend in

environment. are monitoring cash and carefully uncertain our our current We in the expenditures

to at inventory We billion, million balance manage June continue our carefully. XXth year. an increase XX X.X last above homebuilding was sheet Total of

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

finished own to two of June and than of additional were a about XX,XXX under XX,XXX region, northern to for region. controlled than watts is more owned XX,XXX XXth. lots XX,XXX our of supply. of watts owned and And lots Total total we three goal an XX,XXX as and XX,XXX Our in to X,XXX and contract, Lots we year watts supply owned one lots. a year own controlled more a southern year-ago, which maintain and X,XXX our a in

This XXX the And homes During At of land XXX development on for total presentation. million inventory June we about in the million end had inventory total and million inventory on total total homes, our spent the a purchases, X,XXX XXXX, homes inventory million. we second purchases the on community XXX land XXX and XX and for this XX of on spend year-to-date southern XXX of quarter, in in X.XXX XXth quarter at homes. had per and northern region total completed are land of million. a completed development have XXX two inventory we XXX region. million the we land Year-to-date, XXX year’s or completes as spent

the now for open will We or comments. questions any call

Operator

and So, instructions] Zelman from line question with [Operator Associates. of our first the comes Alan Ratner

Alan Ratner

Hey the records period. all on congrats on guys, out this that really this you set good Congrats to incredible afternoon. given the there at quarter and climate an

Robert Schottenstein

Thanks, Alan

Alan Ratner

few like housing at I guess growing how XX% mean, about an be always forward, looks meant you going when you are tricky others down what see to playing a see I down curious more a plan homes sense through And over the makes few you you on growing greater based continue the feel push supply harder saw managing not we the on land there like how have to just XX% is just is on months last it means business are clip. these not next slow can out. guess going I but and and levels because think lot that like next I And of year-over-year, on like, and just specs your at is curious I’m business clearly, level? labor the supply kind reporting others that you of conceptualize the levels, there to growth Or disclosure rates the the I’m inefficiencies market maybe things just months. presumably availability than your that that here are you because past? to certainly for your to you where, start to price at spec it growing is do in point

Robert Schottenstein

we would growth of XXX%. have have rate asked Well, by have ago, coming. in April, me May that three first this guessed June, been if would missed would all, I our didn’t months and see you Yes, what

I what corner. around so is that hard management guide a think to think know And I guide. as the is a it fact serves as the know hard around it so to the corner, But, is what is very

months, momentum give As there I I specifics mentioned, very July, well, of communities. competitors over our no we be, the just And Particularly on I land is into affordably us. for all And think, July the continued that while our hearing from and yet, position. continues of I’m conditions some about priced as to Xst to spoke respect good with I more not think

is them as of the is levels. are today. the of to uncertainty given which books, for we our great it grow that not as and community just good that number been, fact be think fact acceptable position is a us give off the is the terms at in given of they’re price I lawsuits that the the it us of that that live and ever the market But assuming of in, that a the there in coming to lot on, points is confidence majority

XX% more for a much think, year. than or is grow I it XX% to hard businesses

You things I the do slip is cracks. start that to can that through to there. But economy we that believe the and get above start if

that, mainly may you challenges I challenges there with manageable. a but there thus less on certain appliances things the But far, delaying imagine, that few are maybe might be it been construction than a now think are side certain little components other right bit. is logistics, certain and

have able in generated many returns quarter everywhere, We we that. I places, the that push for to support the been price, but not think and

sanctity, then, privacy and We home preference, I whether And low research pie happen. is resonating shift has such the of think are think to that, don’t it this that the I rates is the that take XX do levels the for that. home security, probably look there based it is And, are you in But particularly respect I a of country, with where you we still perhaps become being pool will But be there never great numbers know. some the how cohort the our wish on of a people forever? you are ownership think home time, time. are standards. lasts our got I we tailwind look, don’t resales, from comfort, slightly under this in the that larger. that, for given sale also in certain at have a better I that particularly with that with new to next know have piece like should careful historical before. that results know they at But, think same I But, I probably the because the didn’t inventory this year rational. The competitors. think

do. going are what We And, are we are that but very to rational. also optimistic, we continue to is

XX-days I XX-days think the where we didn’t would are poised other hand, on we here know ago, we to outstanding to But an year. have be now.

a XX-days and of with in not lot things, it had really under people went field, a there be play distance, we have left-handed. masks the we our to are think that, as about more me, time to and see to just April we at sort I mode of as who of no defensive all ready it Really, proud for is, call, may We the very from into almost difficult the now, gets and were and just drive then unfolded. full is folks very But it. uncomfortable circumstances this maintaining started some March execution. will is is other end just which we able a This wearing really few about it we not about And deal doing surprises. matter closings April, have quickly. adapt the But, early to what offensive know. not of on

lot, I are results, let talking. our but online. our talk we do it about think the We think we results really I a good don’t

Alan Ratner

of That do yeah, you the Certainly all agree. And, for is I results the great. talking. Thank that.

pre-pandemic of best margins. could. this great lot in level actually time. long I a if I quarter’s we think question margin, Gross strength have quite contributed that Second that was to probably would a that seen

to just specific you record So, going talk quarter’s guidance, the I you should give think I’m about - of minuses off level. if are can know but that just and we forward this to going maybe curious not pluses

Robert Schottenstein

operations all our were operations, but on to a year-ago a we were level in weren’t to of not newer to been us A contributing they with our some. number Phil we And Those them, should this. at Several performing First where have is certainly Texas shifts few lift. comments add want pulling to certainly they back, years not be. of I of all of be righted wanted the that two think ago, regard may

yet. which come, We are results get good starting upside lot been it to of just time not newer road really down of from is tremendous, will a a market. is the for got has there lot Minneapolis firm a our Detroit contributor. but us, Sarasota, a from quite

have there less five-years. only than We been

I our So margin. some to has improvement just own of operational internal think that contributed

and margin smart line two years better ago, is, at our thing at line of smart its XX% and Last about our other than sales the returns XX% it year series both our The Today XX% closings on business. was time, on the of was and series our this and business. not. are gross growing net

but price average the is the the know You returns, lower, percentages.

So we when you are put you the in to Pill. all don’t sort I you today. get add of blender, where know that anything want if

Phillip Creek

is just to sale the little in that better. the where Bob, which thing look a affordable, bit good. only is instance series. that was for that business of our is not margins is Alan, majority today It price bit, you also are way And And if Antonio, the more drill average down year-ago. Houston a smart The San a quite

combination So Texas, four from we below of getting market, company all were of a those improved margins year-ago definitely all benefit a Texas have smart, are average. our a margins

plus and average kind bigger Sarasota, better getting mentioned, of or scale a kind are there, are little market accompanying to just a of more getting are getting we they where we a Bob are like pricing power. as started we as little Now getting

So Sarasota is also helping.

important our our margins stabilized efficiency, costs, as bit, SG&A is a gone also down price very very, is little it Obviously, improvement. get that control or very important margin those getting our with sales pleased really are we So up but has us. to we

So we continue to work on that.

Alan Ratner

Good luck guys. Fantastic.

Robert Schottenstein

Alan. Thanks

Operator

the line Hecht JMP of Securities. from next comes Your Aaron question with

Aaron Hecht

on I the margins is was with or of quickly are or on traditional spec but wondering still the still side, here, You that major to par buyers right going running home now themes preferring the build want? they on you the And hit buyers spread way are the negative? on builds seeing guys most the

Robert Schottenstein

First of margins narrowed historically the XXX on the of margins a I previous margin brush, The try a answer a didn’t response to points to but instances. number have of as basis lift have margins broad that with builds, where is on in new mention And same all, pretty we spec I that. instances is some somewhat. in fact, to to question, part than our markets in that that number XB been we certain I are, well. will basically specs as think you paint provided XXX know And hard of It the lower is that have builds. probably it too but of

previous So, question. your inform question the helps

if terms think you buyer -. preference, don’t In a Phil, would know there last of I the more been that specs has XX-days. over I demand little bit for

Phillip Creek

for very a a last that Again, blip that is on not you’d some to quarters, quicker specs, far But the only a XX% have do that their as, as places little strategy tend XX% the couple the the stay have want want back spec make we put of commission on house a the and the margins are point. can buyers quicker, we Definitely specs mindful a sure to have the get of if they for Also price good have in level. us, they really the of housing specs our months, strength job it goes product But to so brokers Also, price couple home of operators six type in done, have pretty a think Bob people not to to April the that where a lot at it the it definite our think subdivision off but I we speck to at get did few try forth. in even, is bit. tend to a we lot we to process. look to take range. improved be transaction to and we community. point finished a on,

want does type they helps an people ebb costing. our compressed schedule, in of kind we production help it the can still situation if a So, with of complete construction time. our make selections, Also, to flow and cycle teams more and that

we about feel very do So, good that.

primarily couple just we We our the of now conditions. same, little because we very forward. we of specs community again, on hundred strong a just a but are a down bit sales, as counts reload that our, year-ago, very, market than were, about depends go will that hopefully But

Aaron Hecht

years? land of And years. irregularities obviously, how Right. have magnitude timing terms you strongest that your next of that talked different positions going are before. the land position to being orders the about you seen in But Is haven’t had some your rollouts over the by couple community we in plan in cause or you to phase

Robert Schottenstein

mean, I and over with we - all it I manage we are think now. through delivery land I are will land we schedules. schedules, it. could mean, It dealing development

And that on But a even a world are about of XX% the to years supply. of that XX% at because control from if look, four kind loss. to thing or relying and current sales upside XX%, totally walk Some of and nearly things have can’t own right away we And it point. third add rate, you the we that turns you factor is party you down. the XX,XXX I And least price of most two like are inspections control stuff. our right

Aaron Hecht

have problem a is right now. It we

Robert Schottenstein

Yes.

do general, our of communities about development. our we in at we communities, control look you XX% the the development, If

selling people we impacted we like and overall, also our that it really sales community pretty mean communities So, count, XXX%. gets are we think feel really shape. we obviously third down us division-by-division is a of good to things We pace, have thought on a situation. in mix reliance pretty on And I subdivision-by-subdivision good faster than but party are

Aaron Hecht

needs is internally side, Alright. of difference rate? that capture something of the to was you this And capture on you is out that services drive And can degree higher what or situation? that unique the because it financial is maintain, that in rate, then was that know had a

Phillip Creek

The last rate. quarter are XX% to was we the second XX%, in quarter, capture XX% comparison close year year-to-date this actually

think So high on able going it pretty a capture low we’ll side, bit we rate XX% is that to know is high. to forward. little mid confident be maintain, We the we that but feel

Robert Schottenstein

don’t Derek, speak want I to And I will. but for

he pace, doesn’t to with homes. opportunity I that in series also capture That that greater if series, to I on or better or private else. banker say you better think smart margins, their in there price our will, our that with addition would own the capture returns lower hang smart rates, lender, walk think buyer point better owner or is anyone is a

So it and at being contribute should able keep to this that us higher level. be could to

Aaron Hecht

That got. time, Thanks I the Alright. for all Good quarter. guys. is

Robert Schottenstein

Thank you.

Phillip Creek

Aaron. Thanks

Operator

next [Operator of comes Instructions] with Winston Art Pilot from the Advisories. line Your question

Arthur Winston

holders all excellent for the you Hi the of on behalf stock management business. of thank just we this want to

Robert Schottenstein

Thanks so I appreciate much it. for that.

Arthur Winston

are a time and questions. mortgage you you and pay to debt ability I yourself? on seems way you what and borrowings at little is over In go bank Why to increasing a back good described happened this not have just good homes? your be to actual last at It land as effect, about has cautious the keep out you debt, have an financial make talking XX like smart your the two make rates cautious the loans no do inventories down months your would with - bit inventory? smaller of so X% money, with as all, position why managed and had profit the and the be buying you grown a on

Robert Schottenstein

Well, I things true. be two think can

own allow what on own is with And cautious doing. next still we kind be do can you assuming several almost plate, about what control. significantly we what thing. that pretty XX,XXX the ability we have you grow for that are and you And which can years, conditions the economic think business of the lots, this over control I and our have to

predict. And acknowledge wouldn’t if to we is economy honest, the The very caution noise they somehow full prevent think track I about conditions calamity, a there, we the intend hard it will that feel be to, I but understand to while the long what a achieving have take not I the have within growth continue I of that didn’t managed housing just And think there record. from We going that whether that and to us least question to conditions just exists I out through be would at pierce have all are that would that. conditions and of advantage are we someway goals. is - think think acceptable

Phillip Creek

today, and if so be there to own be it are you the I I where were year think houses our not that, you where a change, you the are buyers, buy is taking situation if and you who from, lot were a you actually mean, land, tends and jobs those so land coming business may to buy go something landscape away, are in risks. when jobs buyers forth. to the a when certain for also, selling about the also those competitive

if think locks. on that year and have what If are think said. you will another top you our is of getting or another we factors, about if on probably you that, market real we you year only to should own you that can then you give a cheaper two. We if two, not run business. you really happens So, running of of us happens or a way than today, do of But top so, own that carrying control well. the five-years. four we year as finished Then or of costs, proven can two, year or the risks have What we Bob jobs. business to a land economic buy the perhaps can

Arthur Winston

in Is difficult that intend homes, to smart you it the harder invest land build find? on. the homes smaller Is it to more to

Robert Schottenstein

Just Right only depends. you got head output good a on now know, probably as hanging have affordable not the that is pipeline. we their we increasing But of are their homes. builder, really

is good it So, a competitive. got really we pipeline. But, have

Arthur Winston

cetera. on to operations, finance with company kind Is way to and bigger has make at done natural I that division by greater return I this mortgage words, rates, to past? have given growth an there are in think in a investment the business make et pace acquisition you getting higher success in any one stuff your on, your more rates, expand this business your very low well other high mortgage the than capture the questions some of on

Robert Schottenstein

Maybe, is current although our of part not that all. is something that at thinking

Art to ago. some done years entrance about a acquisitions. $XX Detroit have our We small was our entrance into acquisition couple million a

markets look enter -. to continue We additional to at

Arthur Winston

the company. talking I’m No finance

Robert Schottenstein

I missed that.

Arthur Winston

Yes, I’m sorry.

Derek Klutch

is, This Derek.

mortgage business. have retail a for operations a do really business. And investment that good and to we do different It a the the stick we totally well. We just have is at business think with spot us. what we title separate from that. decided we is We refinance get up returns hang and don’t have the We sign we a and looked

Arthur Winston

Thank everything. you for

Robert Schottenstein

you. Thank

Phillip Creek

Thank you.

Operator

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

Jay McCanless

land let this So, ask question and me try the way.

amazing might inflect to With sales higher? the you the community quarter. have. count pipeline When back start this Because,

are like when the start how when back also, well about, you is quickly to just Sounds in on of doing higher? have going communities. you you through now, right might turn to count what very July I’m And based that front worried run

Robert Schottenstein

Phil ready while getting this. simply I say that, But answer will is to

that count I land span two was areas. look, were suspended One community we other community we we is, the count, in suspended guidance that. was giving think

of at both the road. some reinstate probably will We down those point

be it as the it So, can guidance but were on think deceiving. I count that, community that important, fact make also we do you us giving must is think very

then more series more, would average be up an even number, them whereas that an guess As smart significantly exact move have but atypical to XX or community of I XXX the series most higher communities don’t family XX price I our typical lots. lots, might community smart has have lots lots some have to single other in community. XXX example,

can you that You you not skip impact when or at, know, of believing to through buy couple on you when look whether analyze has to. with And pace years. a an

saying as more and belief controlled, lots think community our total I’m owned and that I if is think not goals, important, achieve as not least at isn’t, growth so. important. but it I counts So, really to whether can we

comprising given smart slight the of change with product business. our So, the almost XX% offering in now

Phillip Creek

a add us, us series in run That all That is for mean, higher is to echoing very, about. it cetera. I what equal. the Bob et smart is would tends are business. business. are item I how give communities very what is all absorptions, definitely we said, important the is The Generally that, profitability, higher we And subdivision it created not

days. never crazy these We say are probably never

obviously We had March with, the than the year communities this are going April craziness in especially open we fewer probably and thought, world. to the

more going going So than we if July, sales are open are sell they we continue as less to in than probably you strong we thought. to thought. Also, have

said land what So our count again is to said positioned continue we challenged standpoint echoing Having that, this going are we be think the from growth. very community definitely to increase year. Bob well a

know, You right if a at we we couple ago, year, X,XXX. are X,XXX look rate like unit run you this doing now years of a, were

the So a some in part still be as average a our be markets bit in couple divisions years might our might that grow of is and having community to very next on some then obviously room We XX grow quite in those much we existing said XXX, XX divisions, of think is to you XXX. XXX, there to continue know, XXX, that.

We first because shape business. buying are the But like good have we in we of again, the land picked we were feel to of now than are quarters, growing things up. couple continue kind more back in

Jay McCanless

what you to about information Thank power, communities of were the for you your able on raise quarter. for can price the On talk that. percentage Great. pricing

Phillip Creek

very we far communities to I We about have of too spend our a right a control We because, cost of don’t lot don’t much get good in ourselves on way. protection on don’t ahead our and business. challenging the communities percentage always really have, margins. good that. mean, I feel I time is opening to try

we try run the to So business.

You five houses. or sell six

You a XXX take thousand. even the for up just price bucks or

every little community getting power. but a is So price some and are different, we

margins. continue to focus that know, you on that. And, our see You will can in we

Jay McCanless

two late and I of And most builders of incentives parts quick first. questions running March the were know in then some other April.

small maybe headwind you if are wondering that, the a gross any should about think half margin of could be guys back expect year? as to of Just we that doing we the

Phillip Creek

sales June You in said, were pandemic and margin we incentives, XXX know projection. with or continuing a right of started not give say selling beating being July. after and Bob whatever, I don’t plus in doing our lot specifically, so in any strong, hitting we then the May that would like

think issues get We second cycle to there be some will the challenges of inch But, is focused we margins on slower you with is, different. will out half But we supply a the the have I that part of of issue every definitely try are, profitability market times, little that some into price probably up. are there, our a a Jay, laser is way. are be continue big business little

Jay McCanless

versus just was year? Absolutely. be actually, they that where times now is cycle question last where And going you other were my to

Phillip Creek

range overall. couple of range, There year. if they Look days are a XXX more last a XXX you to company compared up but to overall average, are to series, days are couple XXX than XXX at is a look, the they smart

Jay McCanless

for okay. taking again thanks Alright, my congrats and questions.

Robert Schottenstein

Thanks Jay.

Operator

questions We from further phones. the have no

Phillip Creek

Thank for joining you us.

quarter. you to We’re next talking looking to forward

Operator

conference today’s This call. concludes

You may now disconnect.

Robert Schottenstein	President and Chief Executive Officer
Phillip Creek	Executive Vice President and Chief Financial Officer
Thomas Mason	Executive Vice President and Chief Legal Officer
Derek Klutch	President of Mortgage Company
Ann Marie Hunker	Vice President, Corporate Controller
Kevin Hake	Senior Vice President
Alan Ratner	Zelman and Associates
Aaron Hecht	JMP Securities
Arthur Winston	Pilot Advisories
Jay McCanless	Wedbush Securities

M/I Homes (MHO) 29 Jul 202020 Q2 Earnings call transcript