M/I Homes, Inc. (NYSE:MHO) Q3 2015 Earnings Conference Call Transcript
Oct 22, 2015 • 04:00 pm ET
Ladies and gentlemen, thank you for standing-by and welcome to the M/I Homes Third Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.
Thank you. I would now like to turn today's conference over to Phil Creek. Please go ahead.
Thank you very much and thank you for joining us. Joining me on the call today is Bob Schottenstein, our CEO and President; Tom Mason, EVP; Derek Klutch, COO of our Mortgage company; Ann Marie Hunker, VP and Corporate Controller and Kevin Hake, Senior VP.
First, to address regulation fair disclosure, we encourage you to ask any questions regarding issues that you consider material during this call, because we are prohibited from discussing significant non-public items with you directly. And as to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today's press release also applies to any comments made during this call.Also, be advised that the company undertakes no obligation to update any forward-looking statements made during this call.
With that, I'll turn the call over to Bob.
Thanks, Phil. Good afternoon, everyone. and thank you for joining our call to review our third quarter results.We are very pleased with our third quarter results as we had solid results on many fronts. We achieved continued growth and profitability in the third quarter, with record high third quarter revenue of $363.5 million which is a 10% increase over the third quarter of 2014. Pre-tax income in the third quarter was $26.5 million, a 19% improvement from last year's third quarter. Net income for the quarter was $15.6 million or $0.51 per diluted share, representing a 14% increase over 2014's third quarter.
Our growth in revenue was driven by a 9% increase in our average closing price to $349,000 a home and we delivered 994 homes during the quarter, which is an increase of 1% from last year's third quarter.The increase in average sales price from last year was driven by a combination of the mix in our communities, as well as pricing increases in certain locations.
During the quarter, we achieved gross margins of 21.5%, which is an improvement of 80 basis points from a year ago. As a result, our third quarter operating margin improved to 8.3% from 7.5% a year ago. In a few minutes, Phil will discuss our margins and returns in a little more detail, but at this point let me just say this, our third quarter gross margins of 21.5% were down slightly from the second quarter margins of 21.8% as well as the first quarter margins of 21.7%.
This slight decline was mostly due to mix.During the quarter, our SG&A came in at 13.2% which is the same as a year ago. Year-to-date, we have improved our SG&A ratio by 50 basis points and expect continued improvement going forward as we grow our revenues.
We have continued to