M/I Homes (MHO) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01A deterioration in homebuilding industry conditions or in broader economic conditions could have adverse effects on our business and results of operations
2. 02Our financial services business is closely related to our homebuilding business, as it originates mortgage loans principally on behalf of purchasers of the homes we build. If demand for our homes declines in the future, the financial results of our financial services segment will also decline
3. 03Increased competition in the homebuilding and mortgage lending industries could reduce our new contracts and homes delivered, decrease the average sales prices of homes delivered and decrease mortgage originations, which would have a negative impact on our results of operations
4. 04Further reduction in the availability of mortgage financing or continued increases in mortgage interest rates or down payment requirements could adversely affect our business
5. 05In addition, any reduction in the availability of the financing provided by Fannie Mae and Freddie Mac could adversely affect interest rates, mortgage availability and our sales of new homes and origination of mortgage loans
6. 06Even if potential customers do not need financing, changes in the availability of mortgage products may make it harder for them to sell their current homes to potential buyers who need financing, which may reduce demand for new homes
7. 07If land is unavailable at reasonable prices or terms, our homes sales revenue and results of operations could be negatively impacted and/or we could be required to scale back our operations in a given market
8. 08Our land investment exposes us to significant risks, including potential impairment charges, that could negatively impact our profits if the market value of our inventory declines
9. 09Supply shortages and risks related to the demand for labor and building materials could increase costs and delay deliveries
10. 10Tax law changes could make home ownership more expensive and/or less attractive
11. 11We may not be able to offset the impact of inflation through price increases
12. 12Our limited geographic diversification could adversely affect us if the demand for new homes in our markets declines
13. 13We may write off intangible assets, such as goodwill
14. 14Homebuilding is subject to construction defect, product liability and warranty claims that can be significant and costly
15. 15Our subcontractors can expose us to warranty and other risks
16. 16subcontractors, materials suppliers and insurers

Risks Related to Indebtedness and Financing

1. 17The terms of our indebtedness may restrict our ability to operate and, if our financial performance declines, we may be unable to maintain compliance with the covenants in the documents governing our indebtedness
2. 18Our indebtedness could adversely affect our financial condition, and we and our subsidiaries may incur additional indebtedness, which could increase the risks created by our indebtedness
3. 19In the ordinary course of business, we are required to obtain performance bonds from surety companies, the unavailability of which could adversely affect our results of operations and/or cash flows
4. 20The M/I Financial repurchase facility will expire in 2025
5. 21We have financial needs that we meet through the capital markets, including the debt and secondary mortgage markets, and disruptions in these markets could have an adverse impact on our results of operations, financial condition and/or cash flows
6. 22Mortgage investors could seek to have us buy back loans or compensate them for losses incurred on mortgages we have sold based on claims that we breached our limited representations or warranties
7. 23If our ability to resell mortgages to investors is impaired, we may be required to broker loans
8. 24The inability of our lenders to satisfy their obligations under our credit facilities could adversely affect our liquidity and financial condition

Regulatory and Legal Risks

1. 25We can be injured by failures of persons who act on our behalf to comply with applicable regulations and guidelines
2. 26We could be adversely affected by efforts to impose joint employer liability on us for labor law violations committed by our subcontractors
3. 27We are subject to extensive government regulations, which could restrict our business and cause us to incur significant expense
4. 28Changes in U.S. trade policies and retaliatory responses from other countries may substantially increase the costs or limit supplies of building materials and products used in our homes
5. 29Our results of operations, financial condition and cash flows could be adversely affected if pending or future legal claims against us are not resolved in our favor
6. 30Because of the seasonal nature of our business, our quarterly operating results can fluctuate
7. 31Damage to our corporate reputation or brand from negative publicity could adversely affect our business, financial results and/or stock price
8. 32Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for homes in affected areas
9. 33Information technology failures and data security breaches could harm our business
10. 34We depend on the services of certain key employees, and the loss of their services could hurt our business
11. 35Our business could be materially and adversely disrupted by an epidemic, pandemic or similar public health issue, or fear of such an event, and the measures that international, federal, state and local public health and governmental authorities implement to address it