M/I Homes, Inc. (NYSE:MHO) Q4 2023 Earnings Call Transcript

Phillip Creek: And then, a couple more things, we are focused on as far as trying to improve returns and so forth. We talked about cycle time. We have made dramatic improvements. We still think there is some improvement there we can make. Also sales pace, again, make sure we have a very focused product, who are the buyers that we provide the products they want? Best trained sales team, et cetera, but when you look at sales pace, cycle time, big impact on overall returns.

Bob Schottenstein: Phil, and I are playing off of each other here. Just on the cycle time, in many of our markets right now, our cycle time is approaching pre-COVID levels, which is where it needs to be. And we still have a little bit of room to run there in some other markets, but 60-day improvement on average year-over-year in 2023, I think was heroic. That was our goal. I thought we thought it was a stretch goal, but we hit it. And as I said in my primary comments, cycle time remains a very, very intense area of focus for us. And that contributes to margins as well and returns.

Phillip Creek: And you also know, Jay, I mean, we’re just getting started in Nashville. We closed our first house in Nashville in the fourth quarter. We just opened for sale our second community in Nashville. So, we’re excited about that. Our new Fort Myers Naples division, also getting additional stores opened for sales and closings. So, we’re excited about those two markets contributing to our results.

Jay McCanless: Got you. Then one more and I’ll turn it over. When you think about an attached home versus a detached home, just rough average, is there a gross margin differential on a perfect basis between those two?

Bob Schottenstein: No.

Jay McCanless: Okay.

Bob Schottenstein: No, no. The underwriting, we haven’t changed our approach in underwriting. Every community is underwritten to hit certain thresholds, and we’re not doing attached product at lower margins. That’s not the goal. If anything, hopefully with pace and so forth, it will be at least equal to, if not better than what we get with single family. We’ve had all the — and I don’t want to let this go unsaid either, we have a lot of move-up product that’s very successful for us. And so, it’s — we’re not just — we don’t have all our eggs in one basket, but about half of our business is designed to be very affordable.

Jay McCanless: Got you. Okay. I’ll jump back in the queue. Thanks guys.

Bob Schottenstein: Thanks, Jay.

Phillip Creek: Thanks, Jay.

Operator: [Operator Instructions] There are no further questions at this time. Mr. Creek, please proceed with your closing remarks.

Phillip Creek: Thank you for joining us. Look forward to talking to you next quarter.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.