M/I HomesMHO

The company reported mixed results for the second quarter. While total revenue fell 9 percent to about $1.1 billion because it finished and handed over fewer homes, demand for new ones was high. New contracts rose 15 percent to a record 2,387, which suggests the company is successfully finding buyers despite high mortgage rates.

Profitability remained healthy with gross margins, the money left after paying for land and construction, at 22 percent. The company also used $50 million to buy back its own shares, which increases the slice of the business owned by each remaining shareholder. Overall, the business is staying profitable and building up its future work even in a tough housing market.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• New contracts reaching records: New contracts, which are signed agreements to buy a home, increased 15% to a second quarter record of 2,387 homes. This growth suggests that demand for the company's homes remains strong even as the broader housing market faces higher interest rates.
• Closing prices sliding lower: The average price of a home delivered in the quarter fell to $459,000, a decrease from $479,000 a year ago. This move toward lower priced homes helped the company move 2,206 units during the period.
• Profit margins holding steady: Gross margin, a measure of profit after building costs, stayed flat at 22% compared to the first quarter. Maintaining this level is a sign of good cost control, especially since the company absorbed $4.2 million in inventory charges for land value adjustments.
• Financial strength improving: The company ended the quarter with $736 million in cash and a debt to capital ratio of 18%, which measures how much of the business is funded by loans. This conservative balance sheet earned the company a credit rating upgrade to BB+ from S and P, a major rating agency.
• Optimistic full year outlook: Management stated they are well positioned to have a solid 2026 based on their record shareholders' equity of $3.2 billion and a land position of 49,050 lots. While they did not give a specific dollar range for earnings, they emphasized that their diversity of products and geographic footprint will help them navigate the current market.

Our take: A resilient quarter that shows the company can still find buyers by adjusting its prices. While revenue fell 9% as the average home price dropped, the record number of new contracts proves that their smaller and more affordable homes are hitting the mark. This strategy protects the long term case for the stock by keeping the business moving through a tough cycle.