M/I Homes (MHO) Q4 2024 earnings summary

Executive summary

• Achieved record performance in 2024 with all-time highs in homes delivered, revenue, and net income, despite choppy demand and rising mortgage rates in the latter part of the year.

• Fourth quarter homes delivered rose 19% year-over-year to 2,402; new contracts up 11% to 1,759.

• Full-year homes delivered increased 12% to 9,055; new contracts up 8% to 8,584.

• Implemented mortgage rate buy-downs to stimulate sales, with nearly 50% of buyers utilizing this incentive in Q4.

• Maintained strong buyer quality, with average credit scores near 750 and average down payments of 18%.

Financial highlights

• Full-year revenue up 12% to $4.5B; Q4 revenue increased 24% to $1.2B.

• Q4 net income increased 27% to $133.5M ($4.71 per diluted share); full-year net income up 21% to $564M ($19.71 per diluted share).

• Gross margin for 2024: 26.6%, up from 25.3% in 2023; Q4 gross margin was 24.6%, down 50 bps year-over-year and 250 bps sequentially, mainly due to rate buy-downs.

• Pre-tax income for the year rose 21% to $734M, representing 16% of revenue.

• Adjusted EBITDA for the year was $767M, up from $648M in 2023.

Outlook and guidance

• Expect continued use of rate buy-downs in 2025 to address affordability and demand.

• Anticipate some gross margin compression in 2025 compared to 2024.

• Project 5% growth in average community count for 2025.

• Effective tax rate expected to be around 23% in 2025.

• Management expects continued industry strength in 2025, citing favorable demographics and housing undersupply.