MDC - Earnings call transcript Q4 2019

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Operator

Good day, and welcome to M.D.C Holdings 2019 Fourth Quarter Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Derek Kimmerle, Director of SEC Reporting. Please go ahead.

Derek Kimmerle

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

Bob Officer. On have are prepared and and remarks, Larry call in Mizel, Chief the with After Chairman Chief me a listen-only Executive finishing all this time, At today, mode. I Martin, participants recorded Financial our we that follow-up to being themselves and one will participants question. conference a note, and one session this which at for question-and-answer conduct available limit will time request that Please replay. we be question is Officer;

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

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

over now his Mizel remarks. the will turn for Mr. And I to call opening

Larry Mizel

and the generating forward. our a Good fourth quarter, moving results prior market for earnings strategy increase us and note, morning. insight the on XXXX. Update year per you MDC strong XX% over our on go current period. a as diluted the today into quarter over for full joining And year representing ended year for the conditions share we of fourth some thank $X.XX of fully provide you

new active elevated XX% Net selling quarter what orders the increased year-over-year per demand in a typically as less season. remained is to

spring. well this buying the a We carry showing starting whole into and for New that in rather noticeable have our momentum the process industry Year home believe home as for our bodes shoppers This interest obviously waiting until a now, seen than are company. and

the strong homes to month readings six typical Realtors continues year. below enter confidence consumer new in the began to the employment supply. The the at for reflected into three the was and XXXX. been sales health have see This of December the markets, years. demand the We in lack we supply tracking and the end demand home level be existing priced as New States positioning months' sale which in of lowest demand current or our XXXX. The future optimism we below since homes homes head economy, six continue for months the well the which home this reinforce equates inventory National marked the million homes straight Year. of our X.X figure of favorable declines business the Association for of our as of drivers inventory the data to is should rate, in year-over-year United remain a for is for the The our median at where existing help the to domestic of company strongest in the several supply we elevated

confidence these price Sentiment market Purchase housing fourth quarter communities the in strategy. approvals remain for regarding Mae's time some the our level highs. basis Home confident considerably The our and more in in ages a for decade, believe in all affordable of approvals increasingly to December the empty for bulk optimism nesters, over reflecting our reached were on also are highest operating all-time as remains demand rose consumers for Lot and of according the time Fannie millennials, near buyers Index, favorable and their the come. first The which market, housing year-over-year in to outlets we a will

XXXX, we've last important that far more While focused rather Since on realize than emphasize we have XXX in think in a seen return going investors what's XXX% gross over happen, basis point to improvement pre-tax and points equity years. are in basis the XXX a five to I increase in and deliveries, what's XX% it's I increase on in come growth income. how home happened, already margins

balance and SG&A our time accomplished our of strongest dividend We period. leverage reduced cycle highest homebuilding this peers peers. sheets delivering the industry also the payout -- one in improved our and the over trading while maintaining among public that We traded

for We a believe our and deliver and manner structure Based operations to the of profitable return outlook accomplishments. that are grow we our in we these cost our can industry, on capital. on proud continue further to improvements

outlook approach. in a positive follow for opportunity long-term we While is presenting trajectory path, will compelling MDC lineal and the not for a a with investors always believe

who that, provide over to With details year. the the will turn and results to full Bob, like it on from I'd quarter more our

Bob Martin

and morning Larry, good everyone. Thanks,

revenues to $XX.X XX% a net increased and during the the by see surge diluted share. increased backlog from XX% million quarter, on and fourth last to our more predicted As in by billion, home income we to $X orders per or $X.XX our began recent significant than benefit call, as sale

XX.X% for XXXX-XXXX December XXXX Our extended tax was of to credits, the cover rate tax dropped which The quarter. the XX% XXXX of efficient the to rate in energy from XXL tax decrease years fourth and result mostly were XXXX. during

XXXX expect closings. home benefit to for receive to million from During credits the the qualify recorded XXXX we an quarter, these $X.X of we fourth and in estimate related

home increase of number result the the sale as rates a increased homes homes in as by in backlog we increase increase of had the the start revenues of year-over-year number times. conversion to in due quarter, XX% were backlog a an improved well to delivered, driven cycle Our in XX%

the year XX% call XX% conversion Our fourth discussed than for was backlog the previous estimate quarter higher the including our a and of rate that XX% we achieved in ago.

selling compared our decrease we contributed product characterize This Geographic strategic increase and of these the ago. The a the order price XX% percentage had was increase average year markets, coming a XXXX $XXX,XXX. focus. offset delivered closings as as throughout of our backlog in prices, quarter Phoenix was about to the our in forecasted in markets. in an for selling of as XX% result conversion average well more mix we affordable selling both is to the units strong price by which a line level from lines, Orlando came quarter slightly in higher with company decrease activity from also And X% below This closings saw the decreased our in average average. fourth the with offerings

during conversion units, between result are a range activity, is but primarily these as the fourth are quarter experienced of XX% potential close in of the XXXX. The result conversion the of first quarter the unlikely our quarter-end the most rate a XX% strong sales X,XXX to backlog rate to conversion to we backlog roughly would and home closings, we lower targeting a backlog which quarter the are we in in achieved first the compared for forward rate, units X,XXX first homes in quarter. XX% XXXX, in to Looking

should price based above of fourth our mix consistent believe $XXX,XXX on assumption of we selling first with average closings for quarter that quarter. the remain relatively remain Additionally, should the an our XXXX

million see driven sales you year-over-year by inventory improved can X, margin margins our markets, California XX that slide increase markets in by gross the points closing a home average. mix to company This year-over-year below reduction to gross in by lower impairments, and was to our offset shift Turning basis XX.X%. in and Orlando our a had QX from partially Phoenix which margins $X.X

seen this said, XXXX, shift. increased as of margin the that demand, homes in gross a we backlog in an in Phoenix with improving of due end margins result, that markets for especially these exceeded mix affordable have homes. average And particular, from With benefited our more company market to has average.

Relative to our to to XX Similar decrease basis margin attributed to by points. shift QX, California performance, be in our Phoenix in our margins markets and market. year-over-year our the can gross decreased lower mix a

closings that order our estimate end adjustments. second gross communities. XXXX, quarter our of home in XX.X% which modestly for and in activity reach increase of estimated XXXX, margin backlog and QX us to first pricing the allowed half of homes as the for warranty excluding increase of a between of of to gross is should from result the QX impairments The average of sign XX.X% XXXX, expected majority than the margin higher strong XXXX, during end For at XXXX. encouraging the an our At was which the we

gross the other be cancellations, by realize margin future actually we cost or level, factors. that impacted reserve note the and always, impairments, incentive adjustments, could price As in increases, periods changes,

home significantly our leverage operating year-over-year. our revenues, in improved sale increase XX% the With

Specifically, points SG&A X.X%. basis as to XXX percent decreased revenues of a sales home

million SG&A due increase the Our of up fourth total to expense, XXXX quarter the primarily quarter. XXXX for This was dollar in our as from components commission expense a million such $XX.X fourth our $X.X was SG&A increase expense. variable

million, and Our deferred higher marketing the at $X.X piece, costs by increased part are which least of amortization was driven in master expense due closings. by marketing marketing of home which to largely both

estimate about expense fourth we be in of recognized XXXX, Looking with million, quarter just the expense we roughly $XX our forward currently be administrative would which first to quarter. general the the and even to

for variety of result million selling such in could of and by in increase net and a increase the reasons, value However, a dollar differ accruals. XX% amount $XXX changes The our quarter XX% for the increased this in a driven average price. year-over-year net orders timing to actual of various estimate X% as orders unit first our from

year XXXX, a our more our of XX% of net XX% ago. year for which new product during Seasons lines orders with strong the to demand was ago. XX% XXXX This increase quarter continued fourth a net of new Collection, the attributable remain accounted affordable for largely accounting our the for with XX% fourth The compared success orders, compared our in quarter of

rate product absorption monthly of occurred absorption and was the XXXX. Southern and largest the traditional fourth improvement Colorado both pace quarter fourth were highest XXXX was from and percentage Phoenix, affordable in increase XX% California. increases both and our Seattle, more and in The a Northern categories quarter since Our X.X year-over-year

increase quarter a benefited orders Our from in fourth XX% net average year-over-year further subdivisions. active

we was saw exceeded to earlier, estimated the activity point is backlog sales year-over-year driven decreases significant similar year. year-over-year new January with As in in once in half our complete. anticipate price of an which was most the home the sales of January with value about this on ended average selling XX% what half of X% in during Larry year-over-year We homes for alluded our strength for We month to our the expectations. billion, up down focus. backlog the order second has more our markets in line the back $X.XX activity to growth XXXX by of in our quarter The affordable

in end XXXX, earlier, which from XXX I at encouraging year. to our of XX% Active end the an is backlog set quarter of with a the was the beginning line count than end XXXX, gross expectation mentioned modestly of the margin the XXX higher XXXX. was the subdivision at XXXX for homes estimated ago, As average sign we of year the at in of fourth

an subdivision past we increase of ended during As calls, first opportunity where we the the in XXXX, active half count couple for see of don't our to I'd mentioned XXXX. for much relative

already we However, land the XXXX second for about of growth on we potential based control. the optimistic in half are that

and we uncertain. goal is a community number at potential time, ending lots, count quarter the our drive increase but higher in active third this approved of to The magnitude for is this year increased XXXX, a consecutive Our conditions fourth of XXX% quarter over of year, our to during our market the was the acceleration reflects of certain. activity continuing by focus less business Whereas, confidence grow on our last our direction business. of This year-over-year. in

lot year more and in than XX% these of number of level controlled we highest the a was its strength total end decade. of a year the lots the at the ago, than higher On at approvals,

of balance we the was and homebuilding to a For $XXX X,XXX capital XXXX quarter liquidity to continued the end lots. a was we the fourth fourth spent for growth. history. million us XX% the firm lowest costs. our development Net notes acquired issuance for the to significant end XX-year start of on fourth even lots our lots at rate XX.X% resources strong quarter, Approximately the the the of $XXX And Furthermore, XXXX, acquired senior quarter more million commitments additional to an with $X.XX at to XXXX in million quarter providing were $XXX debt a senior we've roughly on sheet sheet. maintaining billion, finished fourth notes balance demonstrating fund improved our in with at X.XX%,

through the Earlier the on made on significant MDC. right is put higher net us shareholders increased XXXX. active a Notably, a metrics gross year our for year increase highest to variety community count over across position ago. line Larry bottom a record call, to and dividend past top point third in with performance XXXX five MDC of income higher to mentioned progress the and a has days the our was the the years. value, reward backlog potential all in start outlook the in margin declared for results just backlog XX% higher few That And

With that, call to operator turn back will the the session. for I question-and-answer our now

Operator

from session. the Stephen We Instructions] speaker from go Kim ahead. question-and-answer First Please [Operator Evercore. will now begin is

Stephen Kim

Evercore. Steve Good quarter. Kim,

First, I are that And clarify housekeeping, that thought Bob. million $X.X just registered that $X.X -- to XXXX. what in was you tax The XXXX? and million for credit for just looking million, you $X.X said a you you XXXX for want think

Bob Martin

and the come will I And accounts was where come closings million I on the XXXX guess Yes, on both income for in through. depend line will what guess -- and impact the really that be XXXX. aggregate, and XXXX impact tax on really $X.X they through

Stephen Kim

is million I to Right. $X assume. But million pretty $X probably range something the in reasonable,

Bob Martin

Yes. would All reasonable. else equal, that be

Stephen Kim

you pretty flip-side caused of your Can as in of what margins expectation guide that us for the you ago. to looking is help the kind are inflation, Maybe labor worth And about sort gross with how -- miss just if months up gross in can with to that you of trend a margin materials curious good. particular, look moderating either obviously by or terms or talk about for us us picking the gave sharing few of I'm components there's what, anything talking of and the the you was then land.

Bob Martin

closings at last greater. QX, just higher being clear backlog be backlog call, talked and profit that the we QX. today profit that on differential end ended gross what fact, we of the Yes. in and where we had continues The about And year is the margin relative margin to than the the recognized the in even is gross to

take we to that to further XX.X% based up So going for think step saying range definitively now. did XX.X% right quarter what go we upon it's this we see to that QX a

increase of I what and think XX% as we've far closings, XX% year-over-year at our in our for in all, reasoning our with as a when first you the it, had significant increase look happened closings, has revenues.

we a of XXX basis because thing great extra operating a points leverage. So got

big especially that increase past part what and bit few in Orlando, Phoenix just relative and of occurring in markets been Nevada. little smaller that happens is a we've the to like a where Now Colorado years,

the So are margins temporarily margins little little because but news in a market in We're bit they a becoming to the relevant margins a been those is It markets the has have caused in bit average our in our good think little markets. in markets scale. have lower dip for of And markets, than thing because bit a getting are lower a overall. improving company those those I which been operations great those better more those is us. share

gross the earlier, Phoenix, well excess on is backlog example, now the in And average. as I of profit for company margin in commented

be So no longer as it on will else all we a equal, sit drag our margins, today. here

we're from would markets I think I we're more say are in is So in positive revenues where topic. and that's that a those coming that accelerate. it our that Overall, margins each what seeing of on the diversity seeing really

Stephen Kim

within Is some the land, think labor cost, maybe Yes, little I on bit your encouraging. components, addressed really that's it you maybe call And about materials. talk that you a out increasing into could you labor commentary? tightness, side, labor, the land what to be is -- Can there? pull if whether really anything there the you think

Bob Martin

it that, a I in Yes, we've through of lot see for XXXX, doing there I not don't about lot industry the increased a mean, of see potential yet. whole with clearly yet. that the well but builders and talking come activity, is

bit or little seen have municipalities not development this driven with costs for We work. our point. but fees various requirements started year a widespread higher have to at the increased That's increased

Stephen Kim

thanks Great, guys.

Bob Martin

Sure.

Operator

question from ahead. of Bank America. Lovallo comes John Please next from The go

John Lovallo

taking Thank you my questions. for

first look give first The from standpoint? like order January more strength, get quarter, you the mean it the for encouraging. February, a and it I one, like the just challenging Bob, impressive Can a was little that feel bit March, us clearly sounds on what the pretty comps in monthly

Bob Martin

just last Yes, what give me of look -- you kind through of I'll March let January like. year

we XXX So was January, versus and XXX XXX XXX XXX. XXXX, XXXX it February, in then versus are XXX. March in

whereas were went in as year-over-year comparisons the So decrease did last tougher you XXXX. year, increases in that was through February-March January those that year-over-year, get

John Lovallo

I to then Got just to just And back sure, going perfect, want Phoenix margin That's maybe understand in the I okay. and make you. gross Orlando, this.

or quarter, that happened there optimized a margin not gross is was experienced some in which scale? in discounting being there mean it margins due I that lower else regions previously, those on was scale, lower, have anything maybe function those to but inefficiencies just the being there of resulted in was the would to really we So earlier do that increased

Bob Martin

all think that is the that buyer, scale, of I in out function have little a of a To Orlando. a only that's I bit extra I in in seasons you probably would financing are particular. sometimes Orlando, lesser example. think we I and certainly a requires for incentive of in think Phoenix, would that but it lot call thing extent,

John Lovallo

guys. thanks Okay,

Operator

ahead. comes Ratner Zelman next Alan Associates. go from from Please The question &

Alan Ratner

perhaps market. on on for -- you taking stronger mix on year your my you questions. Was the some of on not perhaps scale. as growth reporting? chose sub-optimal an I that more 'XX was a where be volume, perhaps the guess these the impressive other order there where Good is you pushing Thanks to little have a I question And optimal builders afternoon. little strong explain bit as level expensive hoping the maybe would those identify impact at scale comments went on the had bit markets, given incentives Bob, or get And that look aggressive much a in kind margin are you to my of markets expand to maybe very strategy to perhaps lowering as perhaps very than obviously margin. price

Bob Martin

reports talking quite appropriate. of But prices still about I do strong subdivisions some you activity there other. looking to That was as really the actually would and at bit, Alan, I I We're we local the thing. Yes, increasing say little an I where is remember to very market binary. in don't think truth that thinking just I past, there that. individual your due because have is reports and that about is one importance a think it's scale

the and activity bit more of getting see future a to our more lower have our on that certainly it's think upon you and based order we in So, markets and MDC and of get scale as backlog. to scale scale have that improve that of unique more are that and opportunity can we're we more the a something that I variety little that

to is So, fair. pointing I you're think what

Alan Ratner

about future That's I this that. turn thinking count now, book Bob, it. did the a Got great others your increasing appreciate quarter. I guess And you obviously and than you of lot your job land helpful. just faster

look recent underwriting embedded A, more land what like, bit purchases, a look it curious land So is within those assumptions the out does composition as I'm just perhaps spread the the you of that little Is in better delivering? fact have of it across smaller markets given the than your markets what underlying these? margin And these within what's some assumptions currently or line you're at evenly grown?

Bob Martin

of of than currently I as in-line anywhere get the we're there's saying, say margin assumptions delivering. loss put where as are I the hey already are would the we're occurring, grown I activity think really better pretty that much brake And we've far dispersion the or what I those don't on, we enough. think approved. everywhere in where let's we've think terms underlying acquisitions

I of just us as the the larger the well ones think capital for of smaller markets, receiving some So are. are as are markets our that each

Alan Ratner

example, at business I that piece are you and with guess was what ago. if you those of mentioned grew where I or Denver Orlando this outsize markets now like those was a your look say the to you is Bob getting compared year would year, a Phoenix bigger an two

of current is So more your the business going forward think mix about geographically? appropriate to

Bob Martin

Yes.

mix As QX, assumptions as a which similar based of some we've like did QX contribution at and higher QX, places like for that contribution you Orlando. from you a lower upon for I to laid the from places and Phoenix Colorado include mentioned, out are look

Alan Ratner

got Okay, guys, Thanks luck. good it.

Operator

question comes Morgan. from ahead. go The Michael from Rehaut Please JP next

Maggie Roth

on Mike. guys, Maggie for Hi this is

a broader on margins. gross First, question I have

prior of and the impacted product the how far to of years. couple future, into improvement seen how the about quarters. so quarters, last you've geographic the as are you of But thinking talked last look term kind had over longer medium about couple last and that's you couple in mean, last of margins? quarters you the on of I affordable the the of So impact mix, nice couple

you do feel of market state from of affordable lines you've further the margin a any you would So driven? that more where there improvement do steady upside see be kind the reached expansion your additional or

Bob Martin

It's this if more to was traditional that's in I margin And quarters six, at affordable a bit. ago, go you products. product seven the point. think similar Well, back really our come higher quite in

that drive units we're wouldn't the QX. doing in the is, could one go And the or what's of product talked to more room So of margin affordable it overall higher affordable least deliveries way percentage bit already at that, from we're XX% about, we the in necessarily is other. there I product at whole the what increase our of with but not of little maybe go a much our in much there mix that see right a lot as necessarily of now. as how terms than XX%, Previously, represents

So having see impact I it big in don't a isolation. margin on

Maggie Roth

thanks. that I Okay, were your able to you think mentioned prices raise And this communities you in the majority quarter. of

you could on So maybe of a or bit little price percentage percentage what elaborate on that communities, the average? increased

Bob Martin

was the quarter. it's And did obviously prices Well, the raise actually, typically lower in our quarter, half Keep it's fourth in of communities the on comment mind, half quarter. just fourth in the the about in activity XXXX. majority fourth back of the we

about we not communities, that's And call. as talked XX% as keep our in pricing. on Also anticipated our QX, on selling increases much focused in season we So XXXX, then the like last increase the we started spring focused in as increased up. mind prices of price coming again that we we more

to I approached it. think you see kind how together have data those So points at we've look of all to

Maggie Roth

Okay, you. thank

Operator

Przybylski from go Paul next from The Wells ahead. question Please Fargo. comes

Paul Przybylski

along or any Orlando the that line, that E-swaps Thank you a Was relation believe Florida wondering in margins gross driven your was up I mentioned tailwind. where were add XX% Orlando quarter. could stand gross you. Phoenix Bob, And margin around then Mid-Atlantic? if you the versus in to were I company the color average? now

Bob Martin

the the of backlog, of probably margins a the Phoenix. first Orlando on as look average course the still much you are at So our of pie backlog company in a it's Orlando question, smaller of and third was size piece below

more be the will point. think impactful Phoenix your this at got I I don't then part So of And second question.

Paul Przybylski

in region think that Was East was Mid-Atlantic lot that was I mainly count, up growth? Florida or XX%. your Yes,

Bob Martin

was Florida. think I it mostly

Paul Przybylski

down Okay. into as year-over-year, any specs selling A that back bring head then season? the spring of were XX% we if plans kind to your up

Bob Martin

No.

Paul Przybylski

have any then you And rates seen this? increased moderating, in Okay. designs with

Bob Martin

Nothing material.

Paul Przybylski

Okay, you. all right, appreciate Thank it.

Bob Martin

thing. Sure

Operator

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

Bob Martin

Jay. Hey,

Operator

on line your is Jay, mute?

Bob Martin

Jay. We can't you, hear

Jay McCanless

hear you Can me now?

Bob Martin

that's better. Yes,

Jay McCanless

Perfect.

move-up that. what what guys about up strength the what product that were are about you other the but into Just competitors… like and [Technical you has Sorry seeing incentives or move on January demand doing Difficulty] in of additive talk for standpoint that then the also continued

Bob Martin

I quarter product as that sure do moderate doing see other over the really keep move trends for fourth Phoenix, up those and we're you talk the pretty don't in from we color seeing much mind, in have this plus just from January but I at products, we're think have some on we've that incentives standpoint, not to away but in about big like were I decreased a an not incentives incentives that ability the product exact of decreased be past product on as foot incentives the the the of markets about anymore. year. move product, think when And up when whole moved point, have either, lot positive I'm of talk the I X,XXX details square

different not buyer, luxury a of of more of the certainly, on segment. well; as that bit segment little middle that on move-up a focused it's market of focused more So, the

Jay McCanless

is also had I I understand year. is, that the guys two-parter on; function you then, then to [Technical -- the question if units at we first of [Technical But a guess one this going And between your give or of think affordable to Difficulty] community to somewhere that count is XX% be year, the community the about be Difficulty]? this count XX% aren't Is Difficulty]. producing end still I to going there think a [Technical of what willing you end

Bob Martin

kind on sometimes that -- we is we active. short-term I to outlook, of to count, soon community the gave that the soon versus for the see is number number inactive think I be Yes, think be that, -- a

soon active. we've more inactive So three be be soon about to got to versus

tells whole have was short-term, communities activity lot of a started ago. XXX year going what Longer movement. a roughly no of there's and kind term, be we to that a that's So yet, not XXX that are

that increase in going about those to got we online. communities So longer-term are XX% come

for optimism second us year. half gives that's the So of what the

In see there terms I in of at split lot the of difference whole this point. don't a mix,

depending you upon it fast think and right, what's can influence whole I how selling the equation. are that sells,

So for the reason that's caution. part the of

Jay McCanless

Got it. mix [indiscernible]? The

Bob Martin

Correct.

Jay McCanless

my taking question. for Thanks

Bob Martin

Sure thing.

Operator

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

Buck Horne

Seasons you talk spec the now to guys. wanted your about make up earlier the Good a get the strategy two of you given season? on success bit do of visibility time potentially afternoon, and the the strong -- selling ground results. and think spring obviously in I the the toggle the back just spring, higher year Thanks. your it starts and in accelerated right absorption home little going starts or land sense into of ahead the Congrats the about demand the maybe spring putting to the how into more you And rate. spend have Would

Bob Martin

units backlog ago. to know, in fact, the than start, think the in is You right started we've that houses lower are now of got to little a start year, our bit percentage I we plenty of year in that backlog need a

who backlog. to So It to diminish of I what the extent subcontractors. of spec that the employ our only might strategy try top for in serve work And I provides to getting plenty think for those that. are think already that we're we on

or conversion think to times backlog whether for not our strategy rate. increase in stick on really focus I we're improve and can cycle our So buyers going and we with those backlog our

Buck Horne

for in year the the certainly of is much And higher. success backlogs be having helpful. that's you would Okay, --

sort for think think As stock for about incentive or should that that significantly XXXX, about would in comp the the we year-over-year? we be higher outlook plans SG&A coming Anything year? any of

Bob Martin

that right not entire that I XXXX committee has leads finalized to the know year that compensation for yet. think I me believe for the those plans nothing is now. there

that's asterisk statement. So that an to

Buck Horne

thoughts do sneak Okay, tax just tax in, last I XXXX, you with extended? one can the rate thanks. If effective one have any credits for on the

Bob Martin

think without kind in range. to I of Well, tax type credits, be XX% that you the might of XX%

estimate best entire we of is Kim's probably can item. gross of kind $X impact without be consider going you So back that those credits year items million that tax the a over million tax discrete at $X Steve to earlier use question course of And the discrete point. to to the this that

Buck Horne

Okay. All right, thanks.

Bob Martin

thing. Sure

Operator

Center. The from Alex Research next from ahead. Instructions] comes Barron go Housing question Please [Operator

Alex Barron

I it trend the expected year Bob, Yes, to mix expect average high be it price this your kind move toward lower thanks. you more of to ask; for to as quarter. and continues Is the us this homes? gave range would reasonable wanted for a could affordable

Bob Martin

-- don't already too know, seen below having some with moving It You but down in might slightly, as And quarter it to already mix and Orlando. far affordable. XX% Phoenix see we shift fourth XXX. move it was

Alex Barron

Got it.

And so, okay.

were entry-level said you it XX%. is now So affordable,

Okay.

for got I you. all that's Thank now. think I

Bob Martin

you. Thank

Operator

concludes session. any Martin, like question-and-answer Bob conference Chief over the remarks. to would This back turn Financial our I to closing Officer for

Larry Mizel

of day, great with our who our call. possible in speaking behalf thank Board, This the following and is quarter thank everyone. to Have our release earnings. to everyone our for employees, our of On a like management We success stakeholders, made forward other to our again, everyone XXXX MDC's first of XXXX. look like joining earnings fourth quarter I Larry. I'd subcontractors team, our would all

Operator

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

You may disconnect. now

M.D.C. (MDC) 30 Jan 202019 Q4 Earnings call transcript