MDC - Earnings call transcript Q1 2019

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Operator

Good afternoon, and welcome to the M.D.C. Holdings 2019 First Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions]After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]Please note this event is being recorded. to SEC conference Reporting. like Kimmerle, to now of Director would turn over the Derek I Please ahead. go

Derek Kimmerle

Thank you. call. Good to M.D.C. afternoon, ladies and XXXX quarter gentlemen, first earnings conference Holdings and welcome

have On with remarks. finishing Executive and in time Martin, the Bob our a this Chairman Financial At participants me I prepared Officer; Officer. call Chief all and Larry today, listen-only Chief Mizel, are After mode.

which one time to will question. we that replay. session conduct We this themselves and a participants recorded be that one note at question being and follow-up question-and-answer Please limit is available request conference will for

information mdcholdings.com. the access replay, how at website our For on please to visit

our the for to I posted implied on It Mizel the information earlier Reform his company's over Regulation SEC of webcast uncertainties operation, different XXXX Private by Form financial to SEC questions certain which with Any or the MDC's be that factors actual results, the and XX-K, related results, in These the turning risks, is unknown be factors forward-looking by company's accompany to also Mr. company's materially the achievements the Litigation responses over during cash meaning performance opening required achievements should or prospects, financial statements. today. Regulation performance and use statements quarter including the it noted statements the the first and actual or Act that to These results website condition, filed within of now and noted flows, those Before call may business, that G remarks. performance will slides. impact of And statements strategies G of forth could and cause other be known XXXX. to from information non-GAAP this call may Larry, made the Securities certain are that expressed conference requires set turn forward-looking other our involve measures. contain should was call, that with

Larry Mizel

million, for results quarter share. on increase us on as net of provide even quarter you Good points reported gross our an sale afternoon, margin grew basis quarter X% revenues business model. this associated $XX.X new the period prior the year the a improved per X.XX product validation of of the and of We can more to per to home Part of In to adherence and with following today homes or the start the over end demand normal in $X.XX year, go orders net the first business. of in community thank in X%. of our X% a by similar month. our healthy increased to was a MDC start per business. more generating to profitability number these the over results homes provide home XX Home pace strong we year-over-year that income backlog and build order our another our to general, joining though a new believe of deliveries XXXX. down market XXXX attributed new affordable further of our with first of XXXX shift update and absorption seasonality modest be to improvement the quarter expanded Homebuilding for

month. points provided buyers. affordable unemployment welcome net more many quarter markets. affordability for lower Lower This Sales strong price posting the rates rates absorption associated segments. and contributing our effort of rates, with X.X home eased collections our community in With resulted compelling activity our combined positive value such across continuing factors which as with the consistent was confidence. each high concerns complementing mortgage per in economic a Another exceeding impact tailwind sales the three our important some average in other proposition factor in was low a consumer orders decline for of per cost

result the in above our produced more in healthy particularly demand product best pace Florida absorption segment by East results the markets Our for This and term and strong our in order was this affordable year-over-year driven segment. growth.

quarter each in We increased orders that to opportunities the of segments got we count remainder with Additionally, of excessive community use from The of than quarter activity generated ago. increased XX% our in the the year in count boost spring drive a the growth incentives. a for higher ended activity average continue the quarter. active communities came we an as order believe without should

be over our focusing adverse options and that doing upgrades more attributed at allows expanded model end We margins It year-over-year backlog margins we The to these income and grew on only can and specs by to at when business that In gross our the lessens a capital use more on realized with risk softens. counts lower homebuilding invested rather XX%. consistent to need growth results revenues. As We believe build environment produce profit run. in demand and by through is the beginning the Pre-tax uncertain closings of than of long I'm margin consistency of better slightly quarter an higher year. evidenced which the community the summary, homes gross produces quarter. during demand us orders additional quarter. the the this despite to gross returns pleased our We order incentives margins unsold XX.X is way our the home and margin business capture also than revenue galleries. very our

more our increased We continue on sell affordable at homes to Thanks a rate. healthy product. to focus

customization and balance design MDC pay industry. believe healthy the and on out in the with for a well-positioned future. emphasis We sheet profile, service the growth highest and a customer strong dividend excellent is to our commitment Our

turn Now provide I'd from more results over like call will on to the quarter. to who Bob detail the the

Robert Martin

good afternoon, Larry, Thanks, and everyone.

an first income profit gross to offset only was quarter first XXXX as to pre-tax administrative the selling, the Our increase general and slightly Homebuilding for up by pre-tax in was XX% for mostly increased costs. year-over-year year-over-year quarter million. consolidated higher by $XX.X million $XX.X income

increase However, $X.X quarter XXXX. XX% loss increased million to of equity $X.X to due per income million for to $X.XX marketable first $XX.X financial share. million compared improved a the $XX.X was marketable mostly The equity gain to the for securities on income Net on X% diluted the by securities quarter first services a pre-tax by for year-over-year or million XXXX quarter

first to Our credits, year, was us last earnings XXXX cycle, The had XX.X% due but provided during year-over-year our rate energy increased XX% tax XX.X% on not above last which quarter. this quarter to benefit first was increase during the we XX.X% that from estimated year. XXXX rate range mostly to The tax options expense attributable the for tax to to a quarter. primarily exercised additional the provided were for the XX% stock

increase to Our X% entirely X% home the sale million to were quarter revenues a year-over-year $XXX.X the of for due homes up XXXX delivered. number in first

Our to product. backlog backlog better QX XX%, the the a in by in for that of higher higher XX% was discussed previous achieved conversion rate conversion cycle which and The achieved which call than expected was a we due was affordable our improvement in above part were aided times, mix ago. range year

ago. as related those half XXXX. product For lines improved characterize times cycle defect the from vendor In of that mountain XXXX, as of as the the Colorado delivered first a offerings closings quarter also in of cycle compared times more our came affordable our of a result negatively we XX% with for segment, our impacted in product year XX% homes issue first

new were of negatively quarter. West hand segment helped was other our labor we times year-over-year and demand. home to during for due also markets impacted number by conversion significant sold in homes strong cycle closed the by the driven a spec the Backlog in On Arizona our the by increase quarter constraints

selling the Looking company's by quarter for forward greater quarter of It XX% of second XX% XXXX in communities in price the to for rate range XX% targeting virtually noted that highest XXXX. of first in achieved average homes almost conversion was we from was and price California. a compared Southern year the in we impacted be the the our are same history of unchanged second Note, backlog second a closed the in of a conversion the to some $XXX,XXX selling XXXX the average $XXX,XXX quarter backlog price proportion our from rate highest our the also coming ago. closings our quarter was quarter that should to

And the so for somewhere the decrease expect a year-over-year XXXX we second price in quarter mid single-digits. selling average in

This XX points basis home gross XX.X%. our to by was year-over-year margin West Our driven increase segment. primarily was sales up from

home from East resulted experienced experienced mix our but and level segment. small mountain decrease segment small from between to increases in overall. have a margin sales. the continue year two Florida While gross home areas in Mid-Atlantic their shift a the in year-over-year decrease gross year-over- those the in highest margin absolute They Both in our sales,

Our backlog quarter remained gross XXXX margin below end the gross just first quarter slightly and margin at XX.X%. healthy a of the to level

in it or adjustments that be impacted reserve price actually factors. incentive periods However gross realized increases, level impairments, future noted margin cost we should cancellations, could be and by the changes, other

that to the and this additional based have first the up compensation to cause were SG&A $XX.X from million be the in in to driven $XX information currently or dollar based granted stock-based general million expect and charges quarter we quarter similar a to differ accruals headcount to first second million awards other administrative incurred option increase XXXX is total expense performance and the average from stock million $XX.X by quarter. first related quarter Our $X.X due We from administrative XXXX actual items million XXXX. expense mostly and $X could of the on XXXX expense estimate. the was for Unexpected increase to expense results today. The general higher in a

quarter increased staff in the XX% Additionally, to active though be over about it related by million in is to incurred subject timing in $X expenses million our closings, subdivision Of open on costs with count. some prior was million caused of quarter, constant the remaining and second incurred increase the community expenses million should based of first expense the $XX.X the by variability year-over-year openings. new additional $XX.X to relatively marketing year variable the $X.X our

value orders our XX% net for $X.X during to of our year, of but X% this compared revenues. the by of lines new ago. for The was XXXX, $XXX.X X% Finally, The for our new of demand year quarter the the orders. increase for a quarter net X% net The our orders collection, markets largely continued our lines across the the This affordable was net decreased remains by net decrease increase was year-over-year unit average sale orders. by million more prominence prior our over home dollar product the in first quarter. of related increased a entirely in our year-over-year that largely accounting commission of in selling average saw first success XX% we decrease XX% orders which product increase price our affordable offset to million in for strong more of a to most in expense attributable XXXX of our increased to price seasons accounted contributed the the driven

which the a we in in of net Florida, selling with state is the operations shift our Additionally, our mix lowest average price. saw orders the to

same Our quarter though monthly from down rate ago. the the a X.XX a XX% year quarter was it for healthy absorption percent was

the our with offset experiencing ago. West active driven communities by for XX% Active in was was as a at homes homes. newest each XXX market quarter lower Oregon finished homes by the the compared increase increase. ago. The two $X.XX a active sales segment billion, with count with We our was of across first backlog We decrease up was subdivision saw increased average in those a XXX XX% subdivisions with as decrease the number in the quarter largest our of year end an at the of XXXX year estimated price an of XX% from a than down active of none the ended average backlog number more in this well quarter decrease selling year-over-year. count. value subdivision However, which a

communities the at to that active to inactive more number communities to active count be exceeded we dynamic have inactive on based made. progress year-over-year be soon on Looking number soon at right of confidence soon XXst. favorable to the the XX subdivision drive the graph to consecutive for third can March us of quarter be in versus growth the continue be the This already our gives we soon with

of are track have year We of to count greater. on another community XX% growth or

XXXX Approximately $XX roughly spend the first and quarter For development intended first was an X,XXX lots XXXX XX% affordable in less spend quarter our both million the and quarter acquisition additional fourth than the more costs. homes. with on acquired lots XXXX finished notably quarter were the land XXXX of were the quarter. first million for lots acquired we XX% for first about to $XX lofts

after As home we sales slower exercise some activity XXXX. seeing caution in late

up in increase sheet. our balance the see firm Furthermore, first quarter quarter start with relative acquisition sales we liquidity the the at to end a of to an XX,XXX to turn capital the XXXX the homebuilding fund clearly X% a were significant of the to at second end XXXX, to Net growth. we low that end that, to first $X.XX solid us Even to our now maintaining level year-over-year was the activity year-over-year the to ago in activity session. option. expect was given flat the to With from strong selling resources those season. However controlled question-and-answer about only quarter from the a up saw activity XX% debt the controlled of lots will commitment demonstrating with call we operator XX% quarter with back for spring providing year of an continued I XX.X% of and first billion lots

Operator

you. Thank

will the go with John Bank from now Instructions] session The be first question-and-answer Please question We America. Lovallo ahead. of [Operator will begin

John Lovallo

questions. Hey, guys. for Thank taking you my

I up year-over-year think comp, that's one, X component was something million, that then you was stock first bps G&A XX about up of like and the you SG&A think, XX The about believe, mentioned headcount. Bob, mentioned I I bps and

is, in remain XQ. question this lease should well. that does that as first get in there fairly the Is The I you think of expense captured mentioned correct? And SG&A stable portion

Robert Martin

To the you accounting with expense, It right. $X lease That's is change quarter. point regard fairly correct, to that consistent continue had we year-over-year it's does and through. we're the to that was with finding this million mentioned increase yes, this what go even

of So doesn't and, that difference. Year-over-year quarter. million the accounting expense in yes, provide incurred G&A of much old a really $XX.X first versus the the

I think know the what based move here is in use second as run reasonable rate upon we now. forward a we quarter to

John Lovallo

I took then of moving Okay. up the guess It just to last And impairment on kind market. an things getting ramped quarter, there. Oregon

there? guys are any feeling how the Just and update on about that market you operations

Robert Martin

few things. that some but that behind communities opened active, recognizing have we We've think, have after we've I Yes, impairment, two others we seen really that. good a up more

inactive In soon than active more fact to when you think, dynamic, look two at that inactive. soon I have be be active versus soon to to be we

count So, we active see that Oregon. community growing in

to under our some and us we're So, starting operations real feet get there.

what we feel market. doing so that positive in And about we're

John Lovallo

guys. Thanks, Okay.

Robert Martin

you. Thank

Operator

Bank. The Deutsche be next Sood will question with from Nishu

Tim Daley

Hi, This is Daley thanks. for Tim on actually Nishu.

regarding gross my So, question is margin. first

with the the So, backlog gross line in end margins gross of to. came the guided and that margin at you quarter

the were mentioned tailwind to closings that as profile curious delivered have of and just bit in kind that and premiums. think due margin comment So, that in to build option specs order on upgrade closings to the I just was of what order versus what a quarter a you build kind the on margin of tend gross a the

us? So just delivered the of differential around of if some kind and numbers kind the maybe that that curious to between spec could as build you the for quarter quantify were order margins in

Robert Martin

being differential was was dirt of the points with think, QX. That I basis true Yes, versus lower about in spec in spec XXX also course.

QX, the If you margins spec dirt go were roughly back to they versus margins. even,

QX I QX spec phenomenon a and of saw with of is as far, a that kind that orders have course more decrease result we that inventory. seen and we of in in think QX the competition really thus So and

Tim Daley

And All right. after substantially second is just last then the year-over-year following basis were of this onto year-over-year that guess specs only quarter finished with kind the Understood. I being XXXX. X% on year a more question the than in up up

potential ground, margin spec the in from the upside kind gross there less the guys that maybe from guess, I relative we as be, and of there quarter? you saw that just this might have inventory to backlog that next So, closings is to, what just some given curious to quarter on

Robert Martin

deliveries. we then possible additional It's have for those but again don't specs available

an So, our more was in QX like came on orders kind number offset XX% but that and specs be you're of would of revenue, ago there a right, XX%. from year

close So a that in we definitely during saw to of kind our due bump closings sell to activity quarter. due and in specs our able we're those the

Tim Daley

Thanks Understood. right. time. the for All

Robert Martin

Thanks. Sure.

Operator

Michael from be will question with JPMorgan. next Please go Rehaut The ahead.

Michael Rehaut

Good Hi. for afternoon. taking Thanks question. my

updated know the of Day of the too gave. thoughts you whole back Analyst was you to guidance did. last you and and margins with ASP the some you with was to that the down But had or of call I Bob, that November guidance not guidance circle or gross full if want some guidance back But I SG&A builders X% for that of hoping, if industry thoughts, to First, to know, XX% single-digit. I off some not early just you your in year, the know, growth extent mid belief provided recall hoping you you comments the I in is any second at to sure if XXXX you lower, it's that kind or that of turbulence haven't. have most revisit could XX% as XX% that higher, or half on around closings I'm backed year believe builders provide obviously

you there, guidance just know of you that a be around you directionally any So lot I it's know know would comments revisiting kind metrics different know of but helpful?

Robert Martin

year. lot not a for there's full the Yes, whole

think seen what and in we the for the full be versus plus that a to in year active pretty XX% we're of what subdivision growth in just to comment we to increase hit already see count because did be soon the we've soon inactive. I active know positioned subdivision You well

ASP in to QX to we've single-digits, the nothing is with be backlog likely we're So, got but down QX, where gross still the on close further I were that, commented that gross from relatively there. mid XX.X%. our margin margin flat profit by closings that Obviously,

the too encouraging the there. of want think I think I sales we we to what front, before that's the happens do on see more for but margin much still season remainder

Michael Rehaut

gross I guidance a guess slightly little order spec, slight build Okay. the around shorter the be volatility Fair you comment on and not a margin sequentially. incentives to I to have and around pointed the going margins key quarter, doing time same obviously, bit decline whereas incentive the down of to to being the around little first spec driver gross Larry maybe you're influenced being believe expected I versus to you but for other and the a or some understand. gross in just or sequentially in But much you're related by builders not looking guidance as guys out. more improvement at bit are backlog themselves enough, more secondly as margins less you know than if pointed at drill term as a

you know by rest So, other or gross of at get a the plays cost don't for lower cost just slight if particularly the decline know different were if year? versus quarter second there you to not of gross the decline I builders higher the I little expecting the that's incentives slightly that That sense drivers a trying a quarter. going a mix basis was number driven margin backlog if know there quarter forward get inflation out improvement explain trying next to of some that extent least sense, margin expected to of if if or bit that and are or might again indeed next just in or the more was over higher the land

Robert Martin

to Right. know begin of counts some builders And other those higher I have spec with.

play coming our QX to that XX% you which to mind in closed volume XX% maintain selling guess, in season. the from specs a sold percent that I based versus QX to full the ago. QX able the that the both out keep of they presumption a where closer decrease about our had spring incentives on in closings know, has be and That comment XX% of said would So, yet course during We being our the for for closings quarter. and year of and XX% are

lower XXX that that in number only of with margin And specs. point year we've differential that margin higher ago specs about was now a of down number settled lower that a So, X%. basis to

know, specs you expect you So, that would QX. of don't quite much in as from get an influence I

that to really any take that positive I have But out we how backlog this that's builders in that think in what's plays be our off look said of a best thing still about could right before a the it, get So, QX we and thing. of see to now. need go demand is and the excited

Michael Rehaut

off. lastly that Just around and hop I'll

have other that people positive and any factors mix margins Is as the of that extent seeing backlog factor factor of a be as on is lumber backlog? that terms right reason margin? Are a such it type or not focused tailwind your over the now Some we're positive as improvement there in driver gross gross factor any could offsetting a your is that margins two. or a quarter in that to next gross to the

Robert Martin

a there we've bit from in a we homes costs lumber We've a in that far little being We go. spectrum we certainly Arizona. Florida lower started Yes, Those too as tend is, do have XXXX. the to gotten profit on lower. toward margin gross be mix element have and bump that as

So, little factored but backlog to mix a gross front, add. on is should that's our what is into bit I there profit margin that of

Michael Rehaut

Thank Great. you.

Robert Martin

Sure. Thanks.

Operator

go Evercore. with question from ahead. next Please be Kim The will Stephen

Stephen Kim

question, the much, first the relates you guess, Yes, land thanks which to spend in guys. recorded Yes, I very quarter.

relative expect. think the what you but if by end back kind get were looking for, spend I it to we like of Do a comparable was land there revenues what to wanted let's the it is sense depressed, year that year up. mentioned be or say, that something You we you that? pick might range spend could might some end around to, the last should that the year by you you to land a value give you hit saw would think of your dollar of your

Robert Martin

a think, behind a couple you reasons is around that. number, last out putting approach specific I of Without it There where could was year.

development we're land all for on higher of will based did the XXXX. spend now already much that year right First and continue this acquisition we upon just in of

know of spring You XXXX but was season. wait season of the There see keep the piece certainly mind of were that's we see of that the years. dependent acquisition in QX lowest a year. bit that seen level a little going remainder the bit was and the for of into a probably what it in of we we QX the we've land demand But we in for upon of upon half pullback a it until selling selling what little up where QX of about the and and in seen based that see spring we've from taste got sure, XXXX for was two a second

Stephen Kim

Got it.

land north something on right? billion of know realm a wouldn't be you're the little thinking, dollars So of of you a total what bit out spend

Robert Martin

No, In total outside realm. not of that's spend. terms land the

Stephen Kim

Right.

lot to the sort sense. of the just spend off around then your that And of how of happened. as mentioned makes end had on a to in making deliberately at due mechanics the activity you I market of last you decision curious softness year which was Okay. land that some obviously the held

project the on expectations the which instance, actually because two not are say still you future was the not deals, they build earlier that that that I and buy? you that's the on passed why would case to as it move analysis, your They that better feasibility decided and the longer your For you which curious to whether penciled that act in characterizes had say, was did basically didn't the year. you projects let's them land those or would to lowered you for on no anyway just land within you outcomes on decided pencil

Robert Martin

wanted of wouldn't absorption able There a have weren't originally we think, little might bit than rates little be We reduced of them both, a we been as little some quick I bigger a thought. bit be. [ph] to were as bit absorp to with them

we persisted saw absorption in had kind in that year-over-year given saw that QX. if rates that of Just decline what QX, in we XX%

So, some straight then make knew I where certainly some toward. was we that. just sure of trying as up just the well to that there think, caution were And we market before moved

Stephen Kim

higher absorption than in is pencil has it to Got And say the with or we across somewhat that land sellers respect what land competitive acquisition part year levels year? would deals say, been little to it. of the make the you because you're half of you something the as akin of last back that in had you mid-year were room really in able you're bit that you're a able then little had look or not of assume of more fourth let's the to more case because landscape to scare and that quarter find you land last that just on able mind, wiggle actually to

Robert Martin

we've and that think, land with. see seen the far inventory. think the outright in than and because it's on on decreases speculative things decrease seen terms especially of other wouldn't a I I QX prices to the in especially know, some more don't I of home land move incentivizing that extra flexible same we go QX as that bit make forward little so they're to on commensurate willing to You sellers say prices to can be it we've continue something in

So, anything. than it's the terms more on

Stephen Kim

I much thanks it. appreciate Well very Got it. guys. Great.

Robert Martin

Okay.

Operator

Fargo. next Stephen will go be The Please ahead. with question from East Wells

Paul Przybylski

affordable quarter more Stephen. more? type goes that Bob, on for last so or maybe open is that some margin for on Przybylski are legacy there versus around way could us Paul you give communities year the your of is profile you This you. stuff the in back Thank to or margin, guess question more know entry the the a any you level would stuff I has say first been

Robert Martin

you spread our the our like exactly we've the more to put it a product in the Michael say and and simply we've mentioned that I'd kind product lower level have don't about especially will I - because profile it. it's diminished the has between in earlier traditional lot margin of Florida. sales know that rolled that's gotten between of You to entry differential areas. I out where and Phoenix Florida affordable

a bit going basis as a -- little point naturally I've a lower, long a a to lot affordable risk closer much the So, little that product little that several bit of in though traditional coming product. as a product. the who affordable see to differential and seen just even we trend of time, people And We've between a it tends bit other for quarters. XXX doing warned some of are because had the back

Now we're that not bit said affordable is what common that something our unique in is to we that have a built in little doing order product all is space. which

Paul Przybylski

Okay. how far? And then you has do April on demand comments any have been so

Robert Martin

we demand much QX. more be April X% than has year-over-year I for or as by up the been saw April expect good. would as to

Paul Przybylski

the And and and their on it's Great. then the right and California if do Okay. color moving various performance in any you direction? have there geographies

Robert Martin

have more the Yes, I think, areas are they coastal been expensive, tougher.

with lot a that's documented I builders. of well think

us think doing affordable California doing well. is still for the well. Northern I more still is

higher So, coastal, really price the biggest is pieces points.

Paul Przybylski

Thank I Okay. appreciate it. you.

Robert Martin

Sure.

Operator

go comes ahead. Jay with from question next Wedbush Securities. McCanless The Please

Jay McCanless

my taking Hey. Thanks for questions.

about we a you Bob, demand non-affordable should like affordable It math the based numbers? community your down assuming and my looks that traditional those to the the first I and function about as XX% your orders. about gave numbers, closings that wanted closings of and orders a count stuff earlier ask I've board about of the percentage right. lower The homes or XX% were is about are down in on think just reduction got impacting in across Is one

Robert Martin

I that acquisition certainly mean, for efforts gone QX of lots our most in XX% have example of more product. acquired affordable land the toward

definitely in there a is shift mix. So,

diminish time a up more that we're know stuff. don't product necessarily significantly some move expensive You I to think first the of looking

lot a is that about talked the meet of building. which needs time is a up but We've other in built first buyer talked our could unit as a up, different about time I or basement, landmark in but diminished move think It of affordable a seasons buyer. a that product. Colorado thing second has two certainly well we spans keep without things. move We've the been to mind urban duplexes, the

So a make is upon lot a looking But little going there. product, lines expertise affordable dollars product toward of movement up bit of our but we're certainly there kind of to now move to that are the right the build happen. our

Jay McCanless

on I'm see in to well demand it February acceleration a March. affordable about assuming think up X when in March. focused was or in then both the an comp. from And to X about move improvement from product March for luxury that's did order all the And in you in affordable, X we X, the your traditional you second as as more as move February

Robert Martin

I it don't exactly that, both traditional our it know affordable. if like it was like seemed I have our and

Jay McCanless

talk how you could paying to terms in and levels? other been one co-broker question compares fees then of And quick last much about year's all how it that on Okay. just

Robert Martin

You pretty consistent know, in been we've that.

every co-broker our high. deal, pretty is but don't we course percentage pay on Of

it's about market, rule was can know you it but is last a think X% thumb. good vary and as XX% you same know I by roughly that's the of typically and about it year

Jay McCanless

Okay. taking Right. Thanks questions. for my

Operator

question Please from & Associates. go Zelman next ahead. Ivy be with The will Zelman

Ivy Zelman

this Larry. Good for afternoon. is question Actually

economic or are in the but cycle given think, where answer to cycle. you'll get Larry, like we're Assuming, perspective late But we I your laughing. what the where, it, Larry it was housing in on we'd Bob

Larry Mizel

picking me? Why are you on

Ivy Zelman

never. Larry, Never,

Larry Mizel

late I cycle. think, I don't housing the in think we're

I more numbers as found other see inflation and the many deflationary you that see moving builders saw affordability that as affordability, which GDP more announced. becomes spot look as becoming was the is what of think you toward, growth fabulous a that are to is that even sweet interesting we've we

outlook. of The of more sales the higher think, and got our products but housing have you've legs disposable balancing income fine of I has that average having strength, than higher good points are a much different country price inflation. out. without the price you And And So, in very affordable parts kind challenges. Ivy, market

that us And home good And minimum So And you one proven out we their volume you you and to And offer. after we high package. backlog. it want. going from we're you have personalization I'm are builders a it's specs where going what we out are They're that what to personalize other the market hear we continue affordable our of many get are the be we're even select The thing people after to spec opportunity strategy. is, fall really and to we other the I the very up. affordable builders we think are the going. do is a really restrict picking optimistic on allow in created where allow And not willing the to that. of

Ivy Zelman

lot seasons expanding what we're with the seasons said you which rental a Manor certainly builders see is have is home important a that of family some single those tolls in you business today? that the in an just seeing operators to to do absolutely things I offering think ownership into the rental Do announced or you and family opportunity So, the that other the people affording I agree and home business. difficulty single see getting know of product selling you [ph] one product a given can of and rental

Larry Mizel

if to for in the if intend rented is except do We it brown homes it's the knowingly that that we bad out rentals green the that their way homes down the for own a would think certainly grass that they and the to of do or there demand few and you We areas when markets care in. the drive business ones. in I people is not are subdivisions know are rentals because we're sell not knowingly slightly a street it take The different that permitted. their

Ivy Zelman

your much. Well Good Larry. very it. Got appreciate you Thank I thoughts, quarter.

Larry Mizel

Thank you, Ivy.

Operator

The next will Please Housing Alex Research go ahead. Barron question be with from Center.

Alex Barron

wanted deliveries ultimate a Thank coming could from on ago and what's of you now right your comment versus seasons are your year where are percentage see roughly if and orders what you. they to I target for that?

Robert Martin

the was year final was quarter on a ago, XX% it comp in orders results. sales percent think XX% was XX% get that front. around so I Yes, one for I number percent, once seasons. The seasons, current I'll XX% of it think XX% the per and that off X%. you it QX closings, was Hold year second ago. on XX% XXXX on per right

Alex Barron

that And guys where Was do where you see or XX% kind targeting -- you of to or like less it go. than that? more your are

Robert Martin

I to XX% affordable the in range. want the offering plus we be think

seasons certainly bit the little see a moving So could higher. I

and XX% between it's maybe know XX%. You

Alex Barron

reasonable average to trending to expect price is next lower few it keep the sales the in bit little So, a quarters?

Robert Martin

Yes.

Alex Barron

Well best of luck. great. you. Okay, Thank

Robert Martin

Thank you.

Operator

question comes next go Our from Raymond ahead. Please with Buck Horne James.

Buck Horne

lot a ask Good larger of in thanks. is areas? of you're of that you share a made having well to around think M&A potential as Southwest on afternoon. the land the I up positions. or Hey, your booming, some a to or do need up share these acquisition in private shore some possibility shore one acquisition recently of obviously, Vegas Las bit obviously wanted other in growth about competitors Florida activity to thoughts how strength market or sort The your of builder little some move market

Larry Mizel

find entities do really entities because have in We've problems. years. we acquire existing plan natural markets. contingent we and legacy of through market that not able these only the share execute in our all and assets we're our operating And increasing the growth liabilities the growth over found We've to an

a we out the three pursuing. it few it's today two new sense, and that working that see markets well, as We have but something in last seems M&A into as, used don't to we're years or over gone the be

Buck Horne

just Okay. That's it have helpful. if one you one And last handy.

you the you percentage have call or a the just it. of And have can characterize how quarter as concessions of sales that that? you it did throughout percentage that at trend incentives if used If was a ASP if

Robert Martin

you Are about talking closings?

Buck Horne

looking closings Probably orders or or either both.

get trended for you of discounting how Just were flavor a trying know the quarter? you the how level to throughout

Robert Martin

think, sorry, at X.X%. on I'm were about I orders, in Yes, closings we

XXX that's points and year-over-year about So basis basis XX up points sequentially.

Buck Horne

Okay. All right.

Operator

is Rehaut The question ahead. follow-up next Instructions] JPMorgan. from with [Operator Please a go Michael

Michael Rehaut

your as them more be to I believe, that wanted April you make to that right heard X%. Thanks. up Bob sure I on I much around comments XQs said it or expect would just you than orders, right? Is

Robert Martin

Correct.

Michael Rehaut

I'm if particularly that know you a know so from extrapolate to count And community standpoint. you

be XX% know know year-over-year you sales that you your XQ. from sequentially number XX% around work let's should pace. are some to your It Historically decline sales year-over-year on hold XQ the up roughly pace You flat expect still end of the by X%, you the you year. off decent would of know if and current that better point kind of still know to XX%, roughly probably was say, pace growth on

but it's You a been year, typically have last the little exception flat. bit it's

just if to thinking that make So, perhaps you're to anything want still there's there? know from pace about perspective if that back sales on I'm sure or not right you going normalized a trends fully else

Robert Martin

continue for of That that quarter still it to done at this would lot day in mean think today sure the it's I not I'm the I and math obviously I to extrapolate is extrapolating. was out we a positive point have not lot orders. full improvement a of in year-over-year April.

there have don't count we final the yet. So,

to wanted give So, now. number I a that just I too you flavor directionally of things good. going still bit don't little you are right to read pretty want into that much a just

Michael Rehaut

appreciate sure that. I sequentially. then X.X% bps making and it And Okay. also heard I said were bps right up you year-over-year incentives closings again of just XXX XX

Robert Martin

yes. X.X% of gross revenue closings, for

Michael Rehaut

revenue? Gross

Robert Martin

Comparison.

Michael Rehaut

Okay. X.X% of closings revenue. Is that?

Robert Martin

Right.

Michael Rehaut

Right.

Okay. Perfect. Thank you.

Robert Martin

Incentives Gross revenue revenue. reduction or the for to incentives.

Michael Rehaut

you. Right. Great. Thank

Robert Martin

Sure. Thanks.

Operator

Ladies and for any closing session. back this would I to the Martin over remarks. to concludes gentlemen our question-and-answer turn like conference Bob

Robert Martin

quarter. on following you of very afternoon much and with we the the joining conclusion call, to our this again you second forward look us for Thank speaking

Operator

conference now concluded. presentation. today's for The attending Thank has you

You may disconnect. now

M.D.C. (MDC) 30 Apr 192019 Q1 Earnings call transcript