M/I Homes Net Income Falls 39% to $67.8M in Q1 2026 as Revenue Slips

M/I Homes, Inc. (NYSE: MHO), a residential homebuilder operating in northern and southern U.S. markets, reported net income of $67.8 million for the three months ended March 31, 2026, down 39% from $111.2 million in the same quarter of 2025. Revenue fell 5.7% to $920.7 million from $976.1 million. Read more earnings reports.

Diluted earnings per share dropped to $2.55 from $3.98, while basic earnings per share declined to $2.61 from $4.07. The lower per-share figures reflect both reduced profitability and a smaller share count — diluted weighted average shares outstanding fell to 26.6 million from 27.9 million as the company repurchased 359,000 shares during the quarter for $50.1 million.

Income before taxes totaled $89.2 million, down 39% from $146.1 million. The provision for income taxes was $21.3 million compared to $34.9 million in the prior-year quarter.

Revenue Breakdown by Segment

Northern homebuilding revenue declined 8.2% to $376.9 million from $410.4 million, while southern homebuilding revenue fell 4% to $512.6 million from $534.2 million. Financial services revenue dipped slightly to $31.2 million from $31.5 million.

The company delivered 1,914 homes during the quarter at an average sales price of $459,000, compared to 1,976 homes at $476,000 in the prior year. Northern region deliveries fell to 752 homes from 826, while southern region deliveries rose to 1,162 from 1,150.

Operating Income Weakens Across Regions

Northern homebuilding operating income dropped 29% to $42.9 million from $60.6 million. Southern homebuilding operating income fell 43% to $45.9 million from $80.4 million. Financial services operating income declined 11% to $16.7 million from $18.8 million.

Total operating income was $86.1 million, down 39% from $140.9 million. Cost of sales rose slightly to $718.1 million from $723.3 million, but as a percentage of revenue increased as the top line contracted.

Costs Rise Despite Lower Revenue

General and administrative expenses increased to $61.2 million from $59.1 million. Selling expenses rose to $55.3 million from $52.8 million. Net interest income was $3.1 million compared to $5.2 million in the prior year.

Backlog Contracts Decline

Net new contracts totaled 2,350 homes, up 2.5% from 2,292 in the prior year. However, backlog at quarter-end stood at 2,245 homes valued at $1.2 billion, down from 2,847 homes valued at $1.6 billion a year earlier. The average sales price of homes in backlog was $536,000 compared to $548,000.

Northern region backlog fell to 1,110 homes from 1,375, with aggregate sales value dropping to $633.1 million from $764.6 million. Southern region backlog declined to 1,135 homes from 1,472, with sales value falling to $571.1 million from $794.6 million.

Balance Sheet and Cash Flow

Total assets stood at $4.79 billion at March 31, 2026, up slightly from $4.78 billion at December 31, 2025. Shareholders' equity increased to $3.19 billion from $3.17 billion. Inventory rose to $3.40 billion from $3.38 billion.

Cash, cash equivalents and restricted cash totaled $767.4 million at quarter-end, up from $689.2 million. The company held $261.8 million in mortgage loans for sale, down from $309.1 million.

Operating activities generated $135.7 million in cash, more than double the $64.9 million in the prior year. The improvement came despite lower profitability, driven by favorable working capital changes including a $41.8 million reduction in inventory compared to a $107.3 million increase in the prior year.

The company repaid $16.7 million in bank borrowings for its financial services operations, compared to $58.2 million in the prior year. Combined with share repurchases, financing activities used $62.6 million in cash compared to $107.2 million.

M/I Homes carried $400 million in senior notes due 2028 and $300 million in senior notes due 2030. Notes payable for financial services operations totaled $260.2 million, down from $276.9 million at year-end.

Key Financials