Exhibit 99.1
News Release
M.D.C. HOLDINGS ANNOUNCES THIRD QUARTER 2022 RESULTS
DENVER, COLORADO, Thursday, October 27, 2022. M.D.C Holdings, Inc. (NYSE: MDC), one of the nation’s leading homebuilders, announced results for the quarter ended September 30, 2022.
“MDC posted strong top line growth in the third quarter of 2022, with home sale revenues increasing 12% year-over-year to $1.4 billion,” said MDC’s Executive Chairman, Larry A. Mizel. “Home sale gross margins were 22.7%, while net income came in at $144 million, or $1.98 per diluted share for the quarter. Excluding impairments, home sale gross margins expanded 120 basis points year-over-year to 24.7%. These results are a testament to the solid execution of our teams in the field and our organization’s ability to deliver homes in a challenging market environment.”
Mr. Mizel continued, “Interest rate volatility and overall economic uncertainty took a toll on our sales efforts in the third quarter, as we experienced a slowdown in demand coupled with a sharp increase in cancellations. Buyer psychology continued to be adversely affected by the negative news flow surrounding housing market conditions and the overall economy, leading to a disappointing net order result for the quarter. While we believe that the long-term outlook for new home construction is positive and that there is a strong desire to own a home in this country, we expect near-term demand trends to remain challenged until interest rates stabilize.”
Mr. Mizel concluded, “In light of these developments, MDC has increasingly shifted its focus to cash flow generation, balance sheet preservation and cost rationalization, while making adjustments to our sales efforts to stay competitive in the market. Our company is led by seasoned operators who have been through several market corrections and who know how to navigate challenging market environments. While there is a lot of uncertainty in today’s market, I am confident that MDC has the operational discipline and balance sheet strength for what comes next.”
“MDC demonstrated solid execution in the third quarter of 2022, as we once again delivered on our stated guidance for home closings, home sales gross margin excluding impairments and average closing prices for the quarter,” said David Mandarich, MDC’s President and Chief Executive Officer. “As we worked tirelessly to complete and close homes in backlog during the quarter, we also focused our sales efforts on inventory that can close this year, which is consistent with our focus on cash flow, and we anticipate that this will remain the case through the end of the year. However, we are offering great opportunities for our build-to-order buyers, such as long-term interest rate lock programs and other special incentives. As we close more of our legacy backlog and open new communities ahead of the spring selling season, we will continue to evaluate market conditions and remain committed to taking actions that support the health of our sales pace, our backlog and our balance sheet.”
1
2022 Third Quarter Highlights and Comparisons to 2021 Third Quarter
•Home sale revenues increased 12% to $1.41 billion from $1.26 billion
◦Average selling price of deliveries up 13% to $590,000
◦Unit deliveries down 1% to 2,387
•Homebuilding pretax income increased 2% to $168.2 million from $165.2 million
◦Gross margin from home sales decreased 80 basis points to 22.7% from 23.5%
◦Project abandonment expense of $11.8 million in Q3 2022 vs. $1.4 million in Q3 2021
◦Inventory impairments of $28.4 million in Q3 2022
•Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") increased by 40 basis points to 10.0%
•Net income of $144.4 million, or $1.98 per diluted share, down 1% from $146.0 million or $1.99 per diluted share
◦Effective tax rate of 22.3% vs. 24.3%
•Dollar value of net new orders decreased 88% to $152.8 million from $1.31 billion
◦Unit gross orders decreased 47% to 1,569
◦Cancellations as a percentage of beginning backlog increased 970 basis points to 17.1% from 7.4%
◦Gross order average selling price up approximately 4% to $583,000
•Dollar value of ending backlog down 25% to $3.20 billion from $4.24 billion
◦Average selling price of homes in backlog up 8% to $599,000
◦Unit backlog decreased 30% to 5,338
2022 Outlook and Other Selected Information1
•Projected home deliveries for the 2022 fourth quarter between 2,200 and 2,500
◦Projected average selling price for 2022 fourth quarter unit deliveries between $570,000 and $580,000
◦Projected gross margin from home sales for the 2022 fourth quarter between 20.0% and 22.0% (excluding impairments and warranty adjustments)
•Active subdivision count at September 30, 2022 of 220, up 8% year-over-year
•Lots controlled of 29,256 at September 30, 2022, down 20% year-over-year
•Quarterly cash dividend of fifty cents ($0.50) per share declared on October 24, 2022
◦Consistent dividend program for over 25 years
◦Quarterly dividend has doubled over the past five years
1 See "Forward-Looking Statements" below.
2
About MDC
M.D.C. Holdings, Inc. was founded in 1972. MDC's homebuilding subsidiaries, which operate under the name Richmond American Homes, have built and financed the American Dream for more than 230,000 homebuyers since 1977. MDC's commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Diego, Orange County, San Francisco Bay Area, Sacramento, Washington D.C., Baltimore, Orlando, Jacksonville, Seattle, Portland, Boise, Nashville, Austin, Albuquerque and Huntsville. The Company's subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.com.
Forward-Looking Statements
Certain statements in this release, including any statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of MDC to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including the impact of the COVID-19 pandemic, changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by MDC, including restrictions on business activities resulting from the COVID-19 pandemic, cancellation rates, net home orders, home gross margins, land and home values and subdivision counts; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of MDC’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican Mortgage Corporation’s sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by MDC in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns and natural disasters; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including orders addressing the COVID-19 pandemic, the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; (16) changes in energy prices; and (17) other factors over which MDC has little or no control. Additional information about the risks and uncertainties applicable to MDC's business is contained in MDC's Form 10-Q for the quarter ended September 30, 2022, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. MDC undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or webcasts should be consulted.
Contact: Robert N. Martin
Senior Vice President and Chief Financial Officer
1-866-424-3395
IR@mdch.com
3
M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||||
| Homebuilding: | |||||||||||||||||||||||
| Home sale revenues | $ | 1,407,642 | $ | 1,257,701 | $ | 4,098,985 | $ | 3,667,332 | |||||||||||||||
| Home cost of sales | (1,059,996) | (962,078) | (3,043,390) | (2,827,147) | |||||||||||||||||||
| Inventory impairments | (28,415) | — | (29,075) | — | |||||||||||||||||||
| Total cost of sales | (1,088,411) | (962,078) | (3,072,465) | (2,827,147) | |||||||||||||||||||
| Gross profit | 319,231 | 295,623 | 1,026,520 | 840,185 | |||||||||||||||||||
| Selling, general and administrative expenses | (141,435) | (120,116) | (404,598) | (363,970) | |||||||||||||||||||
| Loss on debt retirement | — | (12,150) | — | (12,150) | |||||||||||||||||||
| Interest and other income | 2,220 | 3,149 | 3,797 | 4,984 | |||||||||||||||||||
| Other expense | (11,800) | (1,354) | (28,733) | (2,881) | |||||||||||||||||||
| Homebuilding pretax income | 168,216 | 165,152 | 596,986 | 466,168 | |||||||||||||||||||
| Financial Services: | |||||||||||||||||||||||
| Revenues | 34,101 | 43,104 | 99,461 | 121,445 | |||||||||||||||||||
| Expenses | (18,704) | (16,377) | (54,440) | (47,922) | |||||||||||||||||||
| Other income, net | 2,176 | 813 | 4,627 | 2,855 | |||||||||||||||||||
| Financial services pretax income | 17,573 | 27,540 | 49,648 | 76,378 | |||||||||||||||||||
| Income before income taxes | 185,789 | 192,692 | 646,634 | 542,546 | |||||||||||||||||||
| Provision for income taxes | (41,389) | (46,738) | (164,271) | (131,550) | |||||||||||||||||||
| Net income | $ | 144,400 | $ | 145,954 | $ | 482,363 | $ | 410,996 | |||||||||||||||
| Comprehensive income | $ | 144,400 | $ | 145,954 | $ | 482,363 | $ | 410,996 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 2.03 | $ | 2.07 | $ | 6.78 | $ | 5.83 | |||||||||||||||
| Diluted | $ | 1.98 | $ | 1.99 | $ | 6.59 | $ | 5.62 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 70,880,405 | 70,301,085 | 70,829,761 | 70,130,853 | |||||||||||||||||||
| Diluted | 72,729,453 | 72,800,011 | 72,892,635 | 72,770,432 | |||||||||||||||||||
| Dividends declared per share | $ | 0.50 | $ | 0.40 | $ | 1.50 | $ | 1.17 | |||||||||||||||
4
M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
| September 30, 2022 | December 31, 2021 | ||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||
| ASSETS | |||||||||||
| Homebuilding: | |||||||||||
| Cash and cash equivalents | $ | 417,298 | $ | 485,839 | |||||||
| Restricted cash | 4,657 | 12,799 | |||||||||
| Marketable securities | 198,016 | — | |||||||||
| Trade and other receivables | 118,180 | 98,580 | |||||||||
| Inventories: | |||||||||||
| Housing completed or under construction | 2,233,908 | 1,917,616 | |||||||||
| Land and land under development | 1,808,526 | 1,843,235 | |||||||||
| Total inventories | 4,042,434 | 3,760,851 | |||||||||
| Property and equipment, net | 63,333 | 60,561 | |||||||||
| Deferred tax asset, net | 22,122 | 17,942 | |||||||||
| Prepaids and other assets | 78,821 | 106,562 | |||||||||
| Total homebuilding assets | 4,944,861 | 4,543,134 | |||||||||
| Financial Services: | |||||||||||
| Cash and cash equivalents | 34,486 | 104,821 | |||||||||
| Marketable securities | 94,192 | — | |||||||||
| Mortgage loans held-for-sale, net | 190,833 | 282,529 | |||||||||
| Other assets | 67,441 | 33,044 | |||||||||
| Total financial services assets | 386,952 | 420,394 | |||||||||
| Total Assets | $ | 5,331,813 | $ | 4,963,528 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Homebuilding: | |||||||||||
| Accounts payable | $ | 153,003 | $ | 149,488 | |||||||
| Accrued and other liabilities | 364,284 | 370,910 | |||||||||
| Revolving credit facility | 10,000 | 10,000 | |||||||||
| Senior notes, net | 1,482,374 | 1,481,781 | |||||||||
| Total homebuilding liabilities | 2,009,661 | 2,012,179 | |||||||||
| Financial Services: | |||||||||||
| Accounts payable and accrued liabilities | 116,734 | 97,903 | |||||||||
| Mortgage repurchase facility | 196,214 | 256,300 | |||||||||
| Total financial services liabilities | 312,948 | 354,203 | |||||||||
| Total Liabilities | 2,322,609 | 2,366,382 | |||||||||
| Stockholders' Equity | |||||||||||
| Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding | — | — | |||||||||
| Common stock, $0.01 par value; 250,000,000 shares authorized; 71,254,143 and 70,668,093 issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 713 | 707 | |||||||||
| Additional paid-in-capital | 1,745,750 | 1,709,276 | |||||||||
| Retained earnings | 1,262,741 | 887,163 | |||||||||
| Total Stockholders' Equity | 3,009,204 | 2,597,146 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 5,331,813 | $ | 4,963,528 | |||||||
5
M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Operating Activities: | |||||||||||||||||||||||
| Net income | $ | 144,400 | $ | 145,954 | $ | 482,363 | $ | 410,996 | |||||||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||||||||
| Stock-based compensation expense | 25,555 | 7,965 | 50,348 | 26,832 | |||||||||||||||||||
| Depreciation and amortization | 6,760 | 7,752 | 20,663 | 23,930 | |||||||||||||||||||
| Inventory impairments | 28,415 | — | 29,075 | — | |||||||||||||||||||
| Gain on sale of other assets | — | (2,014) | — | (2,014) | |||||||||||||||||||
| Amortization of discount of marketable debt securities | (1,082) | — | (1,082) | — | |||||||||||||||||||
| Loss on debt retirement | — | 12,150 | — | 12,150 | |||||||||||||||||||
| Deferred income tax benefit | (5,387) | (1,508) | (4,180) | (4,847) | |||||||||||||||||||
| Net changes in assets and liabilities: | |||||||||||||||||||||||
| Trade and other receivables | 3,011 | 1,576 | (19,321) | (55,529) | |||||||||||||||||||
| Mortgage loans held-for-sale, net | (763) | (62,835) | 91,696 | (16,365) | |||||||||||||||||||
| Housing completed or under construction | 149,218 | (75,407) | (319,083) | (461,105) | |||||||||||||||||||
| Land and land under development | (117,282) | (155,141) | 9,018 | (118,762) | |||||||||||||||||||
| Prepaids and other assets | (2,275) | 5,224 | (8,050) | 9,919 | |||||||||||||||||||
| Accounts payable and accrued other liabilities | (57,677) | 17,678 | 12,506 | 88,273 | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 172,893 | (98,606) | 343,953 | (86,522) | |||||||||||||||||||
| Investing Activities: | |||||||||||||||||||||||
| Purchases of marketable securities | (291,126) | — | (291,126) | — | |||||||||||||||||||
| Proceeds from sale of other assets | — | 2,014 | — | 2,014 | |||||||||||||||||||
| Purchases of property and equipment | (7,731) | (9,581) | (21,429) | (23,028) | |||||||||||||||||||
| Net cash (used in) investing activities | (298,857) | (7,567) | (312,555) | (21,014) | |||||||||||||||||||
| Financing Activities: | |||||||||||||||||||||||
| Proceeds from (payments on) mortgage repurchase facility, net | 20,649 | 51,113 | (60,086) | 13,404 | |||||||||||||||||||
| Repayment of senior notes | — | (136,394) | — | (136,394) | |||||||||||||||||||
| Proceeds from issuance of senior notes | — | 346,937 | — | 694,662 | |||||||||||||||||||
| Dividend payments | (35,622) | (28,276) | (106,785) | (83,189) | |||||||||||||||||||
| Payments of deferred financing costs | — | (901) | — | (1,720) | |||||||||||||||||||
| Issuance of shares under stock-based compensation programs, net | 1,141 | (19) | (11,545) | (15,553) | |||||||||||||||||||
| Net cash provided by (used in) financing activities | (13,832) | 232,460 | (178,416) | 471,210 | |||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (139,796) | 126,287 | (147,018) | 363,674 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash: | |||||||||||||||||||||||
| Beginning of period | 596,237 | 741,359 | 603,459 | 503,972 | |||||||||||||||||||
| End of period | $ | 456,441 | $ | 867,646 | $ | 456,441 | $ | 867,646 | |||||||||||||||
| Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||||||||||||||
| Homebuilding: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 417,298 | $ | 761,715 | $ | 417,298 | $ | 761,715 | |||||||||||||||
| Restricted cash | 4,657 | 12,047 | 4,657 | 12,047 | |||||||||||||||||||
| Financial Services: | |||||||||||||||||||||||
6
| Cash and cash equivalents | 34,486 | 93,884 | 34,486 | 93,884 | |||||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 456,441 | $ | 867,646 | $ | 456,441 | $ | 867,646 | |||||||||||||||
7
New Home Deliveries
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 1,312 | $ | 772,356 | $ | 588.7 | 1,376 | $ | 729,777 | $ | 530.4 | (5) | % | 6 | % | 11 | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 647 | 424,397 | 655.9 | 666 | 379,041 | 569.1 | (3) | % | 12 | % | 15 | % | |||||||||||||||||||||||||||||||||||||||||
| East | 428 | 210,889 | 492.7 | 377 | 148,883 | 394.9 | 14 | % | 42 | % | 25 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 2,387 | $ | 1,407,642 | $ | 589.7 | 2,419 | $ | 1,257,701 | $ | 519.9 | (1) | % | 12 | % | 13 | % | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 3,926 | $ | 2,267,946 | $ | 577.7 | 4,324 | $ | 2,194,071 | $ | 507.4 | (9) | % | 3 | % | 14 | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 1,860 | 1,196,526 | 643.3 | 1,989 | 1,104,391 | 555.2 | (6) | % | 8 | % | 16 | % | |||||||||||||||||||||||||||||||||||||||||
| East | 1,370 | 634,513 | 463.1 | 1,006 | 368,870 | 366.7 | 36 | % | 72 | % | 26 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 7,156 | $ | 4,098,985 | $ | 572.8 | 7,319 | $ | 3,667,332 | $ | 501.1 | (2) | % | 12 | % | 14 | % | |||||||||||||||||||||||||||||||||||||
Net New Orders
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes | Dollar Value | Average Price 1 | Monthly Absorption Rate 2 | Homes | Dollar Value | Average Price 1 | Monthly Absorption Rate 2 | Homes | Dollar Value | Average Price | Monthly Absorption Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 193 | $ | 93,481 | $ | 484.4 | 0.51 | 1,437 | $ | 783,072 | $ | 544.9 | 4.91 | (87) | % | (88) | % | (11) | % | (90) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mountain | (3) | 2,838 | N/A | (0.02) | 505 | 323,018 | 639.6 | 2.99 | (101) | % | (99) | % | N/A | (101) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| East | 109 | 56,514 | 518.5 | 1.01 | 457 | 199,985 | 437.6 | 3.67 | (76) | % | (72) | % | 18 | % | (73) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 299 | $ | 152,833 | $ | 511.1 | 0.46 | 2,399 | $ | 1,306,075 | $ | 544.4 | 4.10 | (88) | % | (88) | % | (6) | % | (89) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
1 Gross order average selling price for the three months ended September 30, 2022 increased approximately 4% year-over-year to $583,000.
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes | Dollar Value | Average Price | Monthly Absorption Rate 2 | Homes | Dollar Value | Average Price | Monthly Absorption Rate 2 | Homes | Dollar Value | Average Price | Monthly Absorption Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 2,754 | $ | 1,677,039 | $ | 608.9 | 2.66 | 4,814 | $ | 2,613,279 | $ | 542.8 | 5.42 | (43) | % | (36) | % | 12 | % | (51) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mountain | 1,194 | 811,860 | 679.9 | 2.52 | 2,222 | 1,375,442 | 619.0 | 4.35 | (46) | % | (41) | % | 10 | % | (42) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| East | 906 | 457,919 | 505.4 | 2.80 | 1,286 | 558,716 | 434.5 | 3.91 | (30) | % | (18) | % | 16 | % | (28) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 4,854 | $ | 2,946,818 | $ | 607.1 | 2.64 | 8,322 | $ | 4,547,437 | $ | 546.4 | 4.82 | (42) | % | (35) | % | 11 | % | (45) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
2 Calculated as total net new orders (gross orders less cancellations) in period ÷ average active communities during period ÷ number of months in period
8
Active Subdivisions
| Average Active Subdivisions | Average Active Subdivisions | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Active Subdivisions | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, | % | September 30, | % | September 30, | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| West | 132 | 104 | 27 | % | 127 | 98 | 30 | % | 115 | 99 | 16 | % | |||||||||||||||||||||||||||||||||||||||||
| Mountain | 51 | 56 | (9) | % | 52 | 56 | (7) | % | 53 | 57 | (7) | % | |||||||||||||||||||||||||||||||||||||||||
| East | 37 | 43 | (14) | % | 36 | 42 | (14) | % | 36 | 37 | (3) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 220 | 203 | 8 | % | 215 | 196 | 10 | % | 204 | 193 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
Backlog
| September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes | Dollar Value | Average Price | Homes | Dollar Value | Average Price | Homes | Dollar Value | Average Price | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 3,044 | $ | 1,762,858 | $ | 579.1 | 4,200 | $ | 2,295,570 | $ | 546.6 | (28) | % | (23) | % | 6 | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 1,508 | 1,038,037 | 688.4 | 2,251 | 1,408,945 | 625.9 | (33) | % | (26) | % | 10 | % | |||||||||||||||||||||||||||||||||||||||||
| East | 786 | 396,406 | 504.3 | 1,207 | 537,983 | 445.7 | (35) | % | (26) | % | 13 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 5,338 | $ | 3,197,301 | $ | 599.0 | 7,658 | $ | 4,242,498 | $ | 554.0 | (30) | % | (25) | % | 8 | % | |||||||||||||||||||||||||||||||||||||
Homes Completed or Under Construction (WIP lots)
| September 30, | % | ||||||||||||||||
| 2022 | 2021 | Change | |||||||||||||||
| Unsold: | |||||||||||||||||
| Completed | 187 | 21 | 790 | % | |||||||||||||
| Under construction | 895 | 345 | 159 | % | |||||||||||||
| Total unsold started homes | 1,082 | 366 | 196 | % | |||||||||||||
| Sold homes under construction or completed | 5,094 | 6,468 | (21) | % | |||||||||||||
| Model homes under construction or completed | 532 | 490 | 9 | % | |||||||||||||
| Total homes completed or under construction | 6,708 | 7,324 | (8) | % | |||||||||||||
Lots Owned and Optioned (including homes completed or under construction)
| September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||
| Lots Owned | Lots Optioned | Total | Lots Owned | Lots Optioned | Total | Total % Change | |||||||||||||||||||||||||||||||||||
| West | 13,893 | 914 | 14,807 | 14,209 | 5,811 | 20,020 | (26) | % | |||||||||||||||||||||||||||||||||
| Mountain | 6,151 | 2,458 | 8,609 | 6,258 | 4,236 | 10,494 | (18) | % | |||||||||||||||||||||||||||||||||
| East | 3,848 | 1,992 | 5,840 | 3,824 | 2,328 | 6,152 | (5) | % | |||||||||||||||||||||||||||||||||
| Total | 23,892 | 5,364 | 29,256 | 24,291 | 12,375 | 36,666 | (20) | % | |||||||||||||||||||||||||||||||||
9
Selling, General and Administrative Expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 80,858 | $ | 59,935 | $ | 20,923 | $ | 225,735 | $ | 179,056 | $ | 46,679 | |||||||||||||||||||||||
General and administrative expenses as a percentage of home sale revenues | 5.7 | % | 4.8 | % | 90 bps | 5.5 | % | 4.9 | % | 60 bps | |||||||||||||||||||||||||
| Marketing expenses | $ | 26,355 | $ | 25,660 | $ | 695 | $ | 78,022 | $ | 78,195 | $ | (173) | |||||||||||||||||||||||
Marketing expenses as a percentage of home sale revenues | 1.9 | % | 2.0 | % | -10 bps | 1.9 | % | 2.1 | % | -20 bps | |||||||||||||||||||||||||
| Commissions expenses | $ | 34,222 | $ | 34,521 | $ | (299) | $ | 100,841 | $ | 106,719 | $ | (5,878) | |||||||||||||||||||||||
Commissions expenses as a percentage of home sale revenues | 2.4 | % | 2.7 | % | -30 bps | 2.5 | % | 2.9 | % | -40 bps | |||||||||||||||||||||||||
| Total selling, general and administrative expenses | $ | 141,435 | $ | 120,116 | $ | 21,319 | $ | 404,598 | $ | 363,970 | $ | 40,628 | |||||||||||||||||||||||
Total selling, general and administrative expenses as a percentage of home sale revenues | 10.0 | % | 9.6 | % | 40 bps | 9.9 | % | 9.9 | % | 0 bps | |||||||||||||||||||||||||
Capitalized Interest
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Homebuilding interest incurred | $ | 17,391 | $ | 19,108 | $ | 52,031 | $ | 53,849 | |||||||||||||||
| Less: Interest capitalized | (17,391) | (19,108) | (52,031) | (53,849) | |||||||||||||||||||
| Homebuilding interest expensed | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Interest capitalized, beginning of period | $ | 62,169 | $ | 54,351 | $ | 58,054 | $ | 52,777 | |||||||||||||||
| Plus: Interest capitalized during period | 17,391 | 19,108 | 52,031 | 53,849 | |||||||||||||||||||
| Less: Previously capitalized interest included in home cost of sales | (15,977) | (16,024) | (46,502) | (49,191) | |||||||||||||||||||
| Interest capitalized, end of period | $ | 63,583 | $ | 57,435 | $ | 63,583 | $ | 57,435 | |||||||||||||||
10
Reconciliation of Non-GAAP Financial Measures
“Gross Margin from Home Sales Excluding Inventory Impairments,” “Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments” and “Gross Margin from Home Sales Excluding Inventory Impairments, Warranty Adjustments, and Interest in Cost of Sales” are non-GAAP financial measures, and should not be considered in isolation or as an alternative to performance measures prescribed by GAAP. The table below reconciles each of these non-GAAP financial measures to gross margin as calculated based on GAAP. We believe this information is relevant and meaningful as it provides our investors and analysts with the impact that interest, warranty and impairments have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.
| Three Months Ended | |||||||||||||||||||||||||||||
| Gross | Gross | ||||||||||||||||||||||||||||
| September 30, | Margin | September 30, | Margin | ||||||||||||||||||||||||||
| 2022 | % | 2021 | % | ||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Gross Margin from Home Sales | $ | 319,231 | 22.7 | % | $ | 295,623 | 23.5 | % | |||||||||||||||||||||
| Add: Inventory Impairments | 28,415 | — | |||||||||||||||||||||||||||
| Gross Margin from Home Sales Excluding Inventory Impairments | 347,646 | 24.7 | % | 295,623 | 23.5 | % | |||||||||||||||||||||||
| Add: Warranty Adjustments | 523 | 319 | |||||||||||||||||||||||||||
| Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments | 348,169 | 24.7 | % | 295,942 | 23.5 | % | |||||||||||||||||||||||
| Add: Interest in Cost of Sales | 15,977 | 16,024 | |||||||||||||||||||||||||||
| Gross Margin from Home Sales Excluding Inventory Impairments, Warranty Adjustments and Interest in Cost of Sales | $ | 364,146 | 25.9 | % | $ | 311,966 | 24.8 | % | |||||||||||||||||||||
11