M/I Homes, Inc. (NYSE:MHO) on Tuesday reported net income of $32.4 million, or $1.15 per diluted share, for its fourth quarter ended December 31, 2018.. This compares to net income of $15.9 million, or $0.53 per diluted share, for the fourth quarter of 2017. Analysts were expecting a gain of $1.17 per share.

Net income in the fourth quarter of 2018 included $4.4 million of after-tax impairment charges ($0.15 per diluted share) and $0.5 million of after-tax purchase accounting charges ($0.02 per diluted share), while 2017’s fourth quarter net income included $4.9 million of after-tax impairment charges ($0.16 per diluted share). In addition, 2017’s fourth quarter net income included a tax charge of $6.5 million ($0.21 per share) related to the Tax Cuts and Jobs Act. Excluding the impairment charges, purchase accounting charges and the tax charge in 2017’s fourth quarter, adjusted net income increased 36% to $37.3 million, and diluted earnings per share increased 47% to $1.32 per share from $0.90 per share in 2017.

For the year ended December 31, 2018, the company reported net income to common shareholders of $107.7 million, or $3.70 per diluted share, compared to net income to common shareholders of $66.2 million or $2.26 per diluted share in 2017. Net income to common shareholders in 2018 included $4.4 million of after-tax impairment charges ($0.15 per diluted share) and $5.2 million of after-tax acquisition-related charges ($0.18 per diluted share). Net income to common shareholders in 2017 includes the impact of a deferred tax asset re-measurement of $6.5 million ($0.21 per diluted share), a $2.3 million equity adjustment ($0.07 per diluted share) related to the redemption of preferred shares in the third quarter of 2017, $5.4 million of after-tax stucco-related repair costs ($0.18 per diluted share) and $4.9 million of after-tax impairment charges ($0.16 per diluted share). Exclusive of these charges, net income to common shareholders increased 37% to $117.3 million compared to $85.3 million in 2017, and diluted earnings per share increased 40% to $4.03 compared to $2.88 per share in 2017.

Homes delivered in 2018’s fourth quarter reached an all-time quarterly record of 1,825, increasing 15% compared to 1,584 deliveries in 2017’s fourth quarter. Homes delivered for the twelve months ended December 31, 2018 increased 14% to a record-high 5,778 from 2017’s deliveries of 5,089. New contracts for 2018’s fourth quarter decreased 4% to 1,173 from 1,220 new contracts in 2017’s fourth quarter. For 2018, new contracts reached a record- high of 5,845 a 10% increase over 2017’s new contracts of 5,299. Homes in backlog increased 9% at December 31, 2018 to 2,194 units, with a sales value of $897 million, a 13% increase over last year, and the average sales price in backlog increased 4% to a record-high of $409,000. At December 31, 2017, the sales value of the 2,014 homes in backlog was $791 million, with an average sales price of $393,000. M/I Homes had 209 active communities at December 31, 2018 compared to 188 a year ago. The Company’s cancellation rate was 18% in 2018’s fourth quarter and 15% for the year.

Robert H. Schottenstein, CEO and president, commented, “2018 was a strong year for M/I Homes, highlighted by record levels of revenue, homes delivered, and new contracts, along with a 17% increase in pre-tax income and a 49% increase in net income. While our fourth quarter results also featured a record number of homes delivered and record revenue, the 4% decline we experienced in our new contracts reflected more challenging housing conditions and affordability pressures. These conditions also impacted our gross margins, though we are pleased with the 70 basis point improvement in our annual overhead expense ratio.”

Schottenstein continued, “Our home building debt to capital ratio at year-end was 44%. During the second half of the year, we repurchased 1.07 million of our common shares. Though housing conditions continue to be choppy, we enter 2019 with a very strong backlog and balance sheet, and are well positioned for the year with a significant number of planned new community openings.”