Quarterly earnings season for public home builders continued with six companies—M/I Homes, Dream Finders Homes, LGI Homes, Beazer Homes, Green Brick Partners, and Landsea Homes—reporting results during the week of July 29.
Similar to the six companies who reported for the week of July 22, the reporting companies generated significant year-over-year growth in home sales revenues and home closings. The public companies remained optimistic about the remainder of 2024 despite continued challenges related to affordability, consumer sentiment, and mortgage rates.
M/I Homes
M/I Homes, the 13th largest company on the 2024 Builder 100 list, recorded a second quarter record level of income and year-over-year growth in deliveries, contracts, and revenue.
“Given our first-half performance, along with the strength of our balance sheet, low debt levels, diverse product offerings, and well-located communities, we are positioned to have a very strong 2024,” CEO and president Robert Schottenstein said.
The home builder reported a net income of $146.7 million, or $5.12 per share, a significant improvement from an income of $118.0 million, or $4.12 per share, in the second quarter of 2023. The results bested the Zacks Consensus Estimate of $4.60 per share. The builder’s Dallas, Columbus, Tampa, Chicago, Orlando, and Cincinnati divisions were top contributors to income in the second quarter.
M/I Homes delivered 2,224 homes in the second quarter, an increase of 12% on a year-over-year basis. New contracts for the quarter increased 3% to 2,255 in the quarter while backlog units decreased 2% to 3,422 homes. According to the builder, 53% of second quarter sales were to first-time buyers and 60% of sales in the quarter were inventory homes.
At the end of the quarter, M/I Homes had 211 active communities, up from 195 communities at the end of the second quarter of 2023. The company’s quarterly cancellation rate was 10% in the quarter, flat from the second quarter of 2023.
M/I Homes had 49,452 total owned and controlled lots at the end of the second quarter, up from 41,332 at the end of the second quarter 2023. Approximately 47% of the company’s lots were owned.
Dream Finders Homes
Despite continued challenges related to affordability and interest rates, Dream Finders Homes turned in positive second quarter results, growing home building revenues, closings, and net new orders on a year-over-year basis.
“Our home building revenues for the quarter of $1.1 billion, represented a 12% increase over the prior year quarter, and a second quarter company record,” chairman and CEO Patrick Zalupski said. “Our focus on profitability was evident in our record second quarter net income attributable to DFH shareholders of $81 million and earnings per share of $0.83, increases of 18% and 19%, respectively, compared to the year ago quarter.”
Dream Finders Homes, the No. 14 company on the 2024 Builder 100, grew the average sales price of homes closed in the quarter to $514,833 from $504,683 in the second quarter of 2023. Home closings increased 10% to 2,031 while net new orders increased 3% to 1,712 in the quarter. The company reported an improvement of 240 basis points in its cancellation rate to 13.2%.
At quarter’s end, Dream Finders Homes had a backlog of 4,205 homes valued at $2.1 billion, compared to 4,524 homes valued at $2.3 billion at the end of the second quarter of 2023. The home builder had a controlled lot pipeline of 40,678 at the end of the quarter.
“We are also pleased to announce that subsequent to quarter end, we completed the acquisition of Jet HomeLoans for $9.3 million, our sixth acquisition in five years,” Zalupksi said. “We are confident this transaction will enhance overall profitability for DFH and drive significant shareholder value. Jet HomeLoans generated $20 million of pre-tax earnings in 2023 and $13 million year to date through June 30, 2024.”
LGI Homes
LGI Homes delivered strong second quarter results, highlighted by continued community count growth and “outstanding profitability” metrics that exceeded the high end of the home builder’s guidance.
During the quarter, LGI Homes delivered 1,655 homes at an average sales price of $364,047, resulting in $602.5 million in revenue. In the second quarter of 2023, LGI Homes delivered 1,854 homes and generated revenue of $645.3 million.
“In May, we hit a new record of 130 communities and ended June with 128 communities, up 25.5% over last year and right on track to reach our goal of 150 communities by year end,” said chairman and CEO Eric Lipar.
The No. 15 company on the 2024 Builder 100 list generated net income of $58.6 million, or $2.48 per share, outperforming Wall Street expectations for the quarter.
“On the momentum of these results, we now turn our attention to the remainder of 2024. Based on our performance to date, current backlog, and view on the inventory available to close this year, we are adjusting our guidance,” Lipar said. “We now expect to close between 6,400 and 7,200 homes this year at a higher average selling price of between $360,000 and $370,000.”
Beazer Homes
Shifting consumer sentiment and affordability concerns challenged fiscal third quarter quarter results for Beazer Homes. Despite these headwinds, the home builder is continuing to make progress towards its long-term goals increasing its controlled lot positions, growing community count, and increasing the number of its Zero Energy Ready homes.
“During the quarter we significantly increased our controlled lot position—primarily through options—providing clear visibility into our community count growth,” chairman and CEO Allan Merrill said. “Additionally, related to our Zero Energy Ready pledge, over 90% of our quarterly starts met this standard.”
Net income for Beazer Homes—the 23rd ranked company on the 2024 Builder 100—reported net profits of $27.2 million, or $0.88 per share, down from profits of $43.8 million, or $1.42 per share, in the same quarter of 2023. Home building revenue was $589.6 million, up 3.3% year-over-year, driven by a 4.5% increase in home closings to 1,167. Revenue growth was partially offset by a 1.1% decrease in average selling price to $505,300.
Net new orders decreased 10.8% to 1,070 in the quarter, driven by a 23.9% decrease in orders per community per month to 2.4. The decrease was partially offset by a 17.2% increase in average community count to 146. At quarter’s end, Beazer Homes had 1,949 homes in backlog, essentially flat compared to 1,941 homes in the same period a year ago.
Beazer allocated $201.1 million towards land acquisition and land development, up 52.7% from the same period a year ago. Controlled lots increased 24.9% to 28,365; as a percentage of total lots, Beazer Homes controlled 55.5% of its total active lots.
Green Brick Partners
Green Brick Partners, the No. 29 company on the 2024 Builder 100 list, reported record home closings revenue and 26.1% growth in home closings during its fiscal second quarter.
“As we exited the spring selling season, demand remained healthy throughout the second quarter,” co-founder and CEO Jim Brickman said. “Net new orders grew 4.0% year-over-year to 855 units with average incentives of 4.5%. Year-to-date, we have now sold 1,926 homes, delivered 1,808 homes, and started 1,980 homes, which increased our backlog by 15.5%.”
Green Brick Partners reported 20.4% growth in home closings revenue to a quarterly record of $547 million. The company closed 987 homes, a 26.1% improvement from the second quarter of 2023. The builder generated net profits of $105.4 million, or $2.32 per share, up from profits of $75.3 million, or $1.63 per share, in the prior-year period. Brickman said Green Brick Partners added over 2,500 additional future home sites to enhance its runway for future growth.
“Thanks to the superior markets in which we operate, Green Brick is poised to continue capitalizing on what we believe are long-term secular demographic shifts,” Brickman said. “This positioning is further strengthened by supply shortages in our infill and infill adjacent submarkets due to the ‘golden handcuffs’ effect of low-rate mortgages.”
Landsea Homes
Landsea Homes delivered strong second quarter results, headlined by 43.5% growth in home sales revenue, 34.5% growth in net new orders, and deliveries “well in excess” of its stated guidance, according to CEO John Ho.
“The strong year-over-year growth we experienced in both sales and closings this quarter was the direct result of our strategic efforts to grow our company and achieve better economies of scale,” Ho said. “Average community count for the quarter was up 47% year-over-year, thanks to the investments we’ve made in our markets and the acquisitions we’ve completed to growth our company. We are a much bigger and more diversified company than we were a year ago, and we expect to reap the benefits of our larger home building platform as our volumes increase.”
The 42nd largest company on the 2024 Builder 100 reported net profit of $13.3 million, or $0.36 per share, up from profits of $13.0 million, or $0.33 per share. Landsea Homes generated total revenue of $431.1 million in the quarter, driven by a 41% increase in homes closed to 760 and a 2% increase in average sales price to $555,000. Net new home orders increased to 760 homes, representing a monthly absorption rate of 3.0 sales per active community. The builder’s cancellation rate was flat at 11%. Landsea controlled 57% of its lots and grew its total lot count to 12,357 from 11,008 a year ago.
“Given the improvements we’ve seen in build times and the number of homes we currently have in backlog, I believe we are on track to achieve [our delivery] goals,” Ho said.
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