M/I HOMES, INC.

M/I Homes, Inc. is one of the nation’s leading builders of single-family homes, having sold over 168,200 homes since commencing homebuilding activities in 1976. The Company operates in two distinct operations: homebuilding and financial services. The homebuilding operations are aggregated into two reporting segments — the Northern and Southern regions — and the financial services operations support homebuilding by providing mortgage loans and title services to customers. As of December 31, 2025, the Company offered homes for sale in 232 communities located in ten states and operated within 17 markets. The homebuilding industry is fragmented and highly competitive, and the Company competes with numerous national, regional, and local homebuilders in each geographic area, as well as with previously owned homes and rental housing. During 2025, the housing market was challenged by affordability concerns including persistent inflation and elevated mortgage rates, and the Company offered various incentives and mortgage rate buydowns throughout the year to help stimulate homebuyer traffic and sales.

The Company operates as a top ten builder in the majority of its markets. It competes primarily on the basis of price, location, design, quality, service, and reputation. The Company believes it distinguishes itself from competitors by offering homes in select areas with a high level of design and construction quality, providing superior customer service, and offering mortgage and title services to fully serve its customers. The Company’s financial services operations compete with other mortgage lenders on pricing, mortgage loan terms, underwriting criteria, mortgage interest rates, and customer service.

The Company generates revenue through two distinct operations: homebuilding and financial services. Homebuilding operations comprise the most significant portion of the business, representing 97% of consolidated revenue in 2025 and 2024. The Company designs, markets, constructs, and sells single-family homes and attached townhomes to first-time, move-up, empty-nester, and luxury buyers, and also generates revenue from the sale of land and lots. Financial services operations generate revenue primarily from originating and selling mortgages and collecting fees for title insurance and closing services, accounting for 3% of consolidated revenues in 2025 and 2024.

The Company’s homebuilding operations offer homes ranging from a base sales price of approximately $190,000 to $1,250,000 and from approximately 1,100 to 5,500 square feet. The Company offers a variety of home types including single-family detached homes and attached townhomes. The “Smart Series” product line, which targets entry-level and move-down buyers, represented approximately 52% of total homes sold for the year ended December 31, 2025. The Company also offers a “Ready Now Homes” program which offers homebuyers the opportunity to close on certain new homes in 90 days or less. Across all divisions, the Company currently offers about 600 different floor plans. The Company’s financial services operations, through M/I Financial, LLC, provide mortgage banking services to homebuyers, offering conventional financing options along with FHA, VA, USDA, and state housing bond agency programs. Title services are provided through 100%-owned subsidiaries TransOhio Residential Title Agency Ltd., M/I Title Agency Ltd., and M/I Title LLC in all housing markets except North Carolina and Nashville.

During 2025, the Company recorded an aggregate charge of $47.7 million that included $11.8 million of write-offs of land deposits and pre-acquisition costs for land no longer intended to purchase and $35.9 million of inventory impairments. Of these charges, $6.7 million and $41.0 million were attributable to the Northern homebuilding operating segment and the Southern homebuilding operating segment, respectively. The Company also recorded $11.2 million in additional warranty claims in two communities in Florida primarily relating to attic ventilation issues. During 2025, the Company repurchased 1.6 million outstanding common shares under its share repurchase programs at an aggregate purchase price of $202.0 million. In November 2025, the Company announced a new share repurchase program authorizing the purchase of up to $250 million of its outstanding common shares. The Company opened 81 new communities and closed 69 communities during 2025, ending the year with a total of 232 communities, compared to 220 at the end of 2024.

For the year ended December 31, 2025, total revenue was $4.42 billion, a decrease of 2% compared to 2024. Net income was $402.9 million, a decrease of 29% from $563.7 million in 2024. Diluted earnings per share were $14.74, compared to $19.71 in the prior year. Pre-tax income decreased 28% to $526.6 million, representing 11.9% of revenue. The annual gross margin percentage declined 360 basis points to 23.0%. Homes delivered decreased 1% to 8,921, and the average sales price of homes delivered was $479,000. Shareholders’ equity increased 8% to $3.2 billion, an all-time record high, and book value per common share increased to a record high of $123 per share. The homebuilding debt to capital ratio improved to 18%.

Looking ahead to 2026, management expects housing affordability challenges, elevated mortgage interest rates, and tepid homebuyer sentiment to continue to put pressure on homebuyer demand. The Company anticipates that affordability challenges are likely to persist until consumer incomes, housing prices, and financing costs are more aligned. In this environment, the Company may experience further margin pressure as it continues to promote targeted incentives at the community level, including mortgage interest rate buydowns, to stimulate homebuyer demand. The Company intends to manage land spending consistent with its long-term growth objectives and focus on opportunities that meet its operating returns and location requirements. The Company expects to grow its 2026 average community count by about 5% compared to 2025.

The Company plans to continue land acquisition and development investments in 2026 to support future growth, subject to market conditions and return requirements. During 2025, the Company invested $523.7 million in land acquisitions and $645.6 million in land development. The Company ended 2025 with approximately 50,000 lots under control, which represents a 5.6-year supply of lots based on 2025 homes delivered, including certain lots that the Company anticipates selling to third parties. The Company opened 81 new communities during 2025 and expects to open additional new communities during 2026. The Company’s inventory home strategy, construction cadence, and efforts to improve overhead efficiency will remain central to its operating approach.

The Company’s homebuilding gross margin percentage declined 390 basis points from 24.7% in the prior year to 20.8% in 2025. The decline in gross margin dollars primarily resulted from decreases in homes delivered and average sales price, which included a $53.3 million increase in mortgage interest rate buydowns offered, $64.9 million increase in lot costs, $47.7 million for inventory charges, and $11.2 million in warranty claims in two Florida communities. Selling, general and administrative expense increased $17.9 million and increased as a percentage of revenue to 11.6% in 2025 from 10.9% in 2024. The Company intends to manage overhead, control land and development spending, and offer incentives judiciously.

The Company remains focused on managing land spend and inventory levels by balancing development activity with construction pace. The Company ended 2025 with approximately 4,500 homes under construction compared to approximately 4,700 at the end of last year. The Company’s ability to continue development activities over the long-term will depend upon, among other things, a suitable economic environment and its continued ability to locate suitable parcels of land, enter into options or agreements to purchase such land, obtain governmental approvals for such land, and consummate the acquisition and development of such land. The Company expects to continue managing its balance sheet and liquidity carefully in 2026 by managing spending on land acquisition and development and construction of inventory homes, as well as overhead expenditures, relative to its ongoing volume of home deliveries.

The Company’s capital allocation strategy includes growing profitability, improving balance sheet efficiency, and generating returns above its cost of capital. During 2025, the Company repurchased 1.6 million outstanding common shares under its share repurchase programs at an aggregate purchase price of $202.0 million. As of December 31, 2025, $220 million remained available for repurchase under the Second 2025 Share Repurchase Program. The Company expects to continue repurchasing shares during 2026 based on current market conditions, expected capital needs and availability, and the current market price of the Company’s common shares. The Company does not disclose specific R&D spending or capital expenditure plans in the filing.

Demand for new homes remains uncertain due to affordability pressures, inflation, low consumer confidence, labor and material costs, and interest rate volatility. These factors could negatively impact future operations and financial results. The Company may experience further margin pressure as it continues to promote targeted incentives at the community level, including mortgage interest rate buydowns, to stimulate homebuyer demand. The Company’s ability to achieve its strategic objectives and performance goals for 2026 and beyond may be limited if macroeconomic conditions continue to negatively impact homebuyer demand.

A deterioration in homebuilding industry conditions or broader economic conditions could have adverse effects on the Company’s business and results of operations. The Company recorded an aggregate charge of $47.7 million ¹ during 2025 that included $11.8 million ² of write-offs of land deposits and pre-acquisition costs and $35.9 million ³ of inventory impairments. Increased mortgage interest rates have made it difficult for potential customers to qualify for financing, and the Company’s use of incentives and mortgage rate buydowns negatively impacted sales prices and gross margins in 2025. The Company’s limited geographic diversification could adversely affect it if demand for new homes in its current markets declines, as there may not be a balancing opportunity in a stronger market in other geographic regions. The Company recorded $11.2 million ⁴ in additional warranty claims in 2025 in two communities in Florida primarily relating to attic ventilation issues, highlighting the risk of construction defect and warranty claims. The terms of the Company’s indebtedness, including the $900 million unsecured revolving credit facility and the indentures governing the 3.95% Senior Notes due 2030 and the 4.95% Senior Notes due 2028, impose restrictions on operations and activities, and failure to comply could result in defaults and acceleration of obligations.

Management’s message emphasizes that despite challenging conditions facing the housing industry in 2025, the Company had strong cash flow and liquidity and ended the year with low leverage. Key themes include a focus on maximizing profitability, continuing to expand market share through more affordable and move-up product designs, and being selective in land and land development investment opportunities. Management’s strategic priorities for 2026 include employing incentives to promote sales, managing inventory home levels to meet homebuyer demand, managing land spend and maintaining disciplined cost management, opening new communities aligned with long-term growth objectives, maintaining a strong balance sheet and liquidity levels and low leverage, and continuing to emphasize product quality, customer service, and premier community locations. Management states that the Company expects to grow its 2026 average community count by about 5% compared to 2025.