MDC - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to M.D.C. Holdings 2020 First Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be opportunity to ask questions. Please note that this event is being recorded.

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

Derek Kimmerle

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

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

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

it made to certain the may and Before and of be statements cause performance should known may implied results responses and turning financial from the be during within results, Private uncertainties strategies different questions These expressed the statements conference related those noted operation, statements call MDC’s including business, of prospects to call, achievements statements. condition, results, that Larry, to flows, risks, this factors forward-looking that Act cash involve Reform materially and contain other by company’s or Securities the achievements meaning unknown actual the performance to XXXX. or forward-looking or the over of Litigation

Regulation in the measures. be slides. quarter with SEC the that that factors Any requires to on other our It webcast the use first financial website non-GAAP could information G impact noted set the company’s and today. certain posted forth G performance accompany Form Regulation SEC be These is with actual XX-Q, is also information company’s required XXXX filed expected which should by our of that are

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

Larry Mizel

of of today for XXXX our the discuss the joining review first thank state everyone, our as for taking current to on the business. we to COVID-XX outline us morning, steps Good of the pandemic quarter and are we the impact operations you and our results mitigate

emphasize this we I’d First our guidelines and to subcontractors customers. CDC are and employees, to like MDC seriously, foremost, situation protect is using and that the taking

business time. adjusted work to an spread to practices adjust of part how I have provide impressed to our virus. new trying reality everyone, of on been has amount do in healthy combat our have effort environment such times and this to our the a in These very are been We company for the to able short

first backdrop, inventory. existing poised and thanks by results continued consumer the quarter our was a favorable As generated on XXXX, elevated to we evidenced MDC of levels low confidence XXXX, the build momentum economic strong to in of

spread our for of the order virus as this a This particularly price to began our the to homes to strong the need offerings, in up to evident deteriorate nationwide the at momentum pandemic. to unprecedented of deal points. had we it actions take with Demand became buyers that end the positively the escalation at home responded leading was period exceptionally as affordable more quarter

ultimately taken industry While reality new slowdown to many the the in other a and the ones pandemic are of past is has same we thrived. adjust this taking our in has caused we any to unlike the are that steps have downturns the faced, throughout

company in have as industry, this. knowledge the times, provides We distinction the navigate challenging most and history of the teams with perspective our a one that such to experienced management

respond will our are pandemic Although impact we full of to in unclear on I facing. it right the confident challenges and be that economy, am strategy have the to is we the people what the place

the an how any are and prepared unexpected. prepared has you going into always weathering to you put for keys the MDC – one, on how of storm One with is being emphasis

of the most and and consistently end the billion, a $XXX strongest will XX% liquidity company that ended liquidity and leverage, debt-to-capital ratio coming XX%. net investments a this million in one first credit. million and homebuilding debt-to-capital billion remains believe XXXX, for with due under of We at of and of due quarter we MDC the senior cash into stood of time industry. was of $XXX Total first well-capitalized coming a With the $X.X balance at companies notes not our We financially of considerable low availability available of during industry, sound asset $X one – strength sheets be uncertainty. in this the maintain our quarter the ample including line the and

points call MDC with an the adheres exceptional business deal a This build-to-order and operational earnings strategy a home slowdown. sudden standpoint well quarter first from to speculative production. that very limit is points. MDC’s model out positioned to

distressed demand While of anticipation building also we to acknowledge new in that improve inventory sales good bad in margins, depressed up can and can in especially lead times, times. turns but it home asset

believe strategy home have to a the to to a is in that opportunity place home building We before buyers. prudent the buyer personalize attractive more the is and

engaged We likely through in selection process process is therefore, more buyer finishes the cancel. the also that and, believe of a in to the their is less invested who in has been homes homebuilding

we fact and end inventory now the remains March – and the Excluding that April. through even end models, work-in-process of approximately that XX% balance sold was as of – true the of at our remaining

our way our to we a which land that three-year our inventory feel risk through conditions exposure of gives our We presence us limited management level targets when of limiting deteriorate. appropriate our in Another while have this approximately land an is strategy, supply. lots land grow markets downside runway

worse. respect manage flexibility Not the to of gives terms control use a only capital-efficient and lot agreements selling to to this renegotiate additional the way to the agreement with option when our of inventory, to us land. more take have our our also thanks it We a capital, is opportunity the ability turn conditions to

risk-adverse facing though to there unknowns broader better our made entire successful allowed condition And for us has pandemic. comes many to a the still pay our ultimately a yesterday’s team, whatever play industry-leading seasoned how industry about on and to our to closing. financial will leadership believe MDC strategy. our such feel this we our and an equipped prepared yield us to is the business which this has are through summary, we cycle, an currently well mindset next by be X.X% shareholders, homebuilding housing future predicated on adversely also In solid global operation We run economy It out, and handle brought are the translates issues. uncertain all to dividend

will over conditions and Martin, of like financial who Bob? would the details with it handle And additional to that, Bob I turn and state operations. to our

Bob Martin

morning my you, Thank that was published so morning. in will information I this keep time conditions, that Larry. on I more current relatively focus can release including the for market brief our first this on quarter selected April comments information

homebuilding our income million quarter, point XX% to first home sale $XX.X X% the expansion revenues by XXX During in to XX.X%. pretax and by home basis $XXX.X million, driven in a gross increased to sale growth margins

Our pretax to the mortgage earnings successful with in XX% a increase quarter company $X.X million. during was also

stock equity whereas to of securities mortgage on equity the of operations success million. losses the market, had the was of due $X.X an by in year, COVID-XX unrealized on the million prior securities severe $XX.X and gain our impact on we of offset However, homebuilding unrealized

X/X in form our held by the securities companies, reminder, holding of unrealized longer-term is of these portfolio investments and insurance nature part these about align period a equity the by April. insurance companies. intended with Furthermore, recovered As the of first these the held was investment lost to in underlying the value quarter the of reserves

As diluted a unrealized share $X.XX $X.XX result share XXXX. net in of losses, of to quarter income $XX.X diluted million versus decreased million the or first per of for the the first XXXX or $XX.X quarter per

result in homes rate XXXX quarter. primarily XX.X% related options dropped well of tax on tax was during from during as stock to stock quarter non-qualifying Our closed for to exercise the awards XX.X% and a restricted credits windfall decrease first energy as rate The lapse the quarter. the the

percentage for units increase offset for $XXX,XXX. is in first quarter. backlog Code This the was were the delivered a rose benefits X% estimate by We a we by of the our increase XX% deliveries average versus homes lost on approximately to product line as quarter collections more XX% our the slightly by XX% focus from of strategic during we in year in deductible quarter The deliveries XXXX an decrease to Section price period XX by start These COVID-XX. of a with in executive our driven decrease increased decrease caused X,XXX, Homes in to affordability about same ago. Revenue number first offset Internal affordable selling XXX(m). was or to under year-over-year that compensation in a the delivered cancellations of to that amount had partially the delays

those to challenges were addressed and the in-person numerous closing processes, of many our created replace using process homes, of finishing challenges has or technology supplement needed. COVID-XX to as by but

For place of shelter-in-place in deemed even precautionary construction during continued construction is our residential most essential service, with measures an activity markets, activity has orders. so

restrictions footprint, in in residential late were which encountered our March. Within severe the we State, deemed construction most nonessential Washington as

activities restrictions, to deliveries those by related our measures year-over-year to ongoing allowed April. late saw strict the in governor construction place. COVID-XX, Despite the increase in April, resume has we which with XX% still However, in eased challenges safety

due our basis margin from deliveries our to have implemented which deliveries our margin lower home a quarter improved lower gross XX.X%. second XXXX. XXXX, gross percentage spec first in Gross than increases points of to XXX deliveries. build-to-order increase mentioned, As price previously spec half of sales also margin the This was build-to-order home typically and from during benefited by both for year-over-year of the

or pressure persist is home and on conditions there Naturally, increased potential force economic if incentives. for margins price gross difficult reductions a

we However, have to year. and changed the our incentives, margins not since widely the adjusted start prices date, or backlog have of therefore, significantly not

negotiating subcontractors gross are labor protect with margin, given more to costs, a for uncertain demand and to we reductions material Additionally, environment. our

for Marketing higher to XXXX due by during increased quarter. quarter. the general, higher administrative expense impacted and office an due sales compensation-related Our increased SG&A in total dollar expenses is increase active to first expense and driven also million expense headcount to by advertising were up subdivisions. expenses product increase from quarter average $X average due XXXX mostly first the The marketing the was

net about total X% to increase orders unit nearly our mid-March, year-over-year net value and approximately by reductions driven increase Our for the X% presented and positions approximately and first the general by a subsidiaries XXX uncertainties The across increased expense. XX% includes given have eliminated dollar selling price. company in billion, XX% our workforce. a the severance average in Since quarter have to COVID-XX. its $XXX,XXX expense been amounted of of XXXX orders $X.X of of These administrative

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

benefited – past Southern California, is first a nine for The shift highest-priced quarter increase from year-over-year to net price of also subdivisions. in increases active Our months. by price average The average X% in average driven orders mix selling benefited from active increase further was our selling in implemented markets. the a orders which one net price over

On the the including some next on cancellations, of provided we sales detailed April. cadence for monthly and slide, information

noted continuing during because the half and March COVID-XX. of we in activity decline earlier, As experienced significant and of order Larry a April traffic into second

April. decrease and for result, year-over-year a a in saw net we January to increases the year-over-year February As XX% in strong orders faded

you Geographically, As year-over-year accepted We and Northern for directly to occurred decreases estimate the see related the part elevated on activity of order approximately in that net net Nevada, a Washington, for cancellations. April XXX California Florida. decrease COVID-XX. of the was to cancellations can orders in were largest due impact of table, large XXX in the April

orders, For was decrease April the year-over-year for XX%. only gross

encouraging the decrease, showed many earlier peers April significant relative it to contracts see back the turbulent so have a month. still to buyers of already writing as of order a was this many activity half during Although found in such time. in our improvement Also, noted, we

was activity sales drive to not encouraging, additional price the that decreases widely we level have incentives or Additionally, given order gross of used activity.

this in patience Our stems from several area factors.

had country; our level First, a new higher of less a second, build-to-order unsold at the the XX% across we sales of after model, the which finally, speculative units and have inventory low is of March; low home April, given on existing amount lackluster than a inventory the stage April in books, than very we month construction any our in even at overall XXX our end backlog, markets year of in homes ago. of end in X,XXX of was

becoming XXXX, apparent fourth drop first COVID-XX approved we was of a in lots X,XXX increasingly quarter With the from in for purchase March, which only of the XXXX. lots the X,XXX significant impact we approved quarter of during the

land spend to reduce spend time would cash $XXX rate almost decrease based taken to year-over-year our the quarter steps uncertainty. we total up However, XX% of still in outflows I of was on for have this during to QX million. expect

have land coming worked sellers purchases closing in our extend months. the date we of with planned to for the many Specifically, land that were the

for own, Additionally, or delayed cash to the lots term. adjusted we have expenditures activities planned we in development decrease short

same was to supply of lot option. point Our supply XX% the in end XXXX, XX% by quarter the than and the was lot higher at controlled

restrictions. see an as make continues the a is as I take it to to top uncertainty pain view for want continue world. loosening It many COVID-XX and the priority of quarter, people first we shelter-in-place cause into even when up, that optimistic be sum to to we To continue clear will some hard so safety second pandemic across

encouraged have over are been continue the rates developed of We positioning, sheet most strategic on senior our leaders based and supply strong we take reward time to our which housing market shareholders allow and and our attract low However, our experiences customers the long-term. over balance industry. in to us that interest pride to

line my remarks, up for will open the and That prepared concludes now we questions.

Operator

We’ll begin Lovallo, the Instructions] session. First Bank go America. of Please [Operator ahead. comes from now John question-and-answer question

John Lovallo

is my guys, I taking thank doing and for Hey hope you questions, well. everyone

to front. like disciplined But the your you competitors of Has sounds your been pricing from easing of very guys on the it industry have discipline across any seen pricing in begin markets? is, kind question erode? have some of in any first The of any you the

Larry Mizel

because have I more think specs. that become that the adjustments inclined some many so of of have that price to circumstances carrying have you builders inventory probably have where speculative

to specs. foundations through, completion has I’m reasonable will from amount. Bob specs, a is only company As mentioned, comment I of our Bob to the have amount entire think XXX And completion when

So it’s a its business business, run always your strong a you runs matter of did how MDC and backlog. on

As we commented, presold. all WIP our is of XX%

that a So by the markets not compete and a we product superior followed path. basis, we have delivering competitive and are specific, on

John Lovallo

Got it.

I Can Okay, directly think, that’s numbers may – And helpful. this, then understand, of, because is the help XXX mentioned cancellations were here, related us in that you Bob, right to that loss? the Any mortgage because of mean, you have I be terms about if COVID. you that, there have Is in just of I because that have contingency? is would insight job help appreciated. of

Bob Martin

Yes.

we backlog I think always where and just are a it buyers job understood each our hard just to to we was as think our I of do, of we that scrubbed pretty make loss. at, due sure lot

in some had uncertainty. that just this I more think the environment nervous you were given

floating So through. those things kind of we’re that

John Lovallo

Okay. Thanks, guys.

Operator

Thank you.

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

Alan Ratner

Hey hear guys, both good well. afternoon. Glad doing you to are

Can cancellations bit of about going talk but topic on couldn’t you of that job not terms occurred direct the a just by on market necessarily in any the what’s mortgage loss on of your cancellations. loan trends given in because been buyers those last a question, tightening First weeks? maybe – tightening? The the the broadly, FICO terms program below over overlay for cut seeing maybe longer last loan couple off? was doesn’t qualify exist, of you’ve of their And an score what more credit in any little

Larry Mizel

we’ve we one individually. some tightening there jumbos. raising done on we’ve I scores each think and both is credit FICO what know looked was all And at

much in in our most underwriting. by not saw, average fallout are was nature. job would you both and, say, the the all a loss, so I conforming prices employment And markets As sales

in buyers their conservative of with what mortgage quality risk, conditions normally our has out was them carefully any We go operations, unique that backlog. or we have are been other done so a would selling is And there taken where backlog back vetted. and our home circumstances lower we’ve of have again

but construction people, with something risk has closing. we believe dialogue be don’t to to want of unreasonable continue We a we on under

it’s close it, getting far And the quality. have conservative a our out said, it’s and remote to that large and Bob as We we’re been very maintaining as job just we’re And on say. a us, you would as Alan, able technology, successfully as aggressive and activities managing working expect they but done. backlog basis using backlog backlog, fine, as

Alan Ratner

That’s you. very Thank helpful, Larry.

So just didn’t ground. you they enough perhaps interpreting fair characterization? a a on that what homes dollars cancellations additional that chunk were haven’t started yet, process construction either early were into construction of backlog that the in you comfortable said, the good it and you sounds of making or kind sure put Is you scrubbing like felt these where on

Larry Mizel

I characterization. would say it’s reasonable

from in commitment others. company Where not we commitment, that others are homes we we when and in building is or will, outside the the loan a of those they writing from the have had our issued We’re had evaluate, commitments they letters. real information the interested quality mortgage mortgage whether don’t in own from that our and have company, commitments we and we

we’re say, else, someone so much; relying on So of ourselves, might a, course. on double you Relying scrub. doing not

And makes so, in through that proper it therefore, we’re way going a it balanced.

was backlog, XX% We’re with WIP. maintaining that that getting that sold

Alan Ratner

a Thanks and safe. lot. Good That’s helpful. luck stay

Larry Mizel

you. Thank

Operator

Thank you.

Evercore Our ahead. comes Please ISI. Stephen next from question go Kim,

Stephen Kim

guys. much very Thanks

you those that more across calling versus types? move your April, guess, end First bit a also cancellations, but question, about I the portfolio, talk between order products, particularly markets. you be worth gross some what little could up I seasons out the do product about guess, change to see just your would various I’d I was in interested activity. talk On the of be – guess, any in.

Larry Mizel

as – as each is every different in a and evolving to is And can the being attention. and look and little deeper, to model the of that And new to has more have you It the been get able are a it has product. a yourself, market product, also know, modern homes Every market able you affordable we disclosure, addition our and almost the now think products. we in different range And see on you every product. homes exciting that we’ve growth is have see we’re you Stephen, in from these know, on product you’re and bring offerings. different we defined And depth in. market even affordable is new able broader this subdivision. – move what broad as also, during every on to be And our first, continue market. times, will in that building to I focused got product as think individualize, I affordable a probably is the able But increased, more forward. those affordable to we subdivision the the more expanding count focus of into

Stephen Kim

Yes, a saying. been certainly what that’s you’ve of continuation

curious happening that virtual are your because expectation the to whether was of or you secondly, of content, Another there of that as you in the construction greater area on just with is ability to that cycle to curious customers social the didn’t greater ways in co-broker as the look X% on expect not? reduce if have maybe two – play be the kind your much through a commission? is, interaction of of sales, your seeing it with turnover. on to a And then I’m an construction, seen was actual the XQ. I in increase which and One comment like virtually difference reasonable are business, units, a process, you which just impact XQ, distancing, times Would could impact to physical might that. in you any of terms

Larry Mizel

masks the have can very First different the proud be think that big handwashing, requirements I a do to distancing. of implemented the construction, distances, regulatory have And and in to our has compliance. impediment. require and we some that we the you’re of that if didn’t construction that do disinfectants, as there been masks And side, realized you we social get on message testing it’s the say And quick in groups, builders been have the are continue I going don’t subdivisions. and handwashing disinfectants and all, stations, by we need

the on adjustment, It if and for little the get of field one adjustment message. took the little they they bit Sales, paid, want rules pretty it’s when a guys it work awesome. they to you a But our follow then want are rules, I and get the but jobs. think of to took to those in work the

our Our has sales managers better. leads every work every really, skills, on to how I it would valuable required extremely are skills. our is Those managers that sales valuable, individual portals. and really in the say lead as focus learned others, comes that the have they’ve substantially, are them And person division the even to salesperson, and improved through and

in when look say improved might back in effect on very probably would some our by it’ll time, forced by change. believe sales, of market capture I case, period be. have the our being factor to a on skills this So positive rate we we’ve vis-à-vis whatever And this I

lose any lead at to them because one We’re we pay time. a didn’t attention not going of

Stephen Kim

But or you’re on commissions outlook specifically? specific Okay. no seeing co-broker what

Larry Mizel

do the There have So all, have the of consistently as didn’t has that co-broker, been in – participant. co-ops. few brokerage community builders a a first on that, maybe been increased co-broker we

consistent Now with community, are they’ve they’re as brokerage brokerage with community. done always in markets. And the welcome consistent that in we’ve we stayed and our all pricing the we them. and doing And been, the what commissions relationship have,

or whether consistent which issue issue we is of times, good that good our business, bad experience with times or relationship. So that think what application maintain, with is that is to

Stephen Kim

very much, guys. Got you. Thanks

Larry Mizel

you. Thank

Operator

Ken Zener comes Our KeyBanc. next of Please ahead. question go from

Ken Zener

understand preservation, I is you’re for one just which have on on backlog – that. margin focused question,

so There three right be through house. dialogues For are forward continues how environment you versus obviously, versus envision there’s price different to a that vendors, work, framing down? in obviously it step look installation one can the construction, your you with us more on because to painting. you to than given we’re example, pricing or As costs, phases, now around walk if

too Washington able back we discussions? look, been out a Or May trade in get So early, be there’s if essentially going to the have know bounce saying, is to don’t restrictions you have as to of – work around as seeing that give some us that what very much. Denver. Thank opposed Could how you Northern and you’re discussion in you might California thought might out?

Larry Mizel

out for started We maybe six weeks asking ago. The price well. continued efforts. adjustments worked We’ve discussion has those

We are receiving cycle of in we many receive. current that payment concessions the

expect with being We in expect costs the the the many country, the reduction and continue areas of apartments, that of are reducing in reduction to to overall successful and of across reduction of commercial and residential.

that Our last they better, – is trade of have partners some them, of every had now. understand euphoria are month, all the of them, working the of when the not reciprocal things year getting

get a those Maybe working we’ll are they’re concessions. responding by meaningful enhancing adjusting, and concessions as applicable what on slower cases, every some of the in we opportunities And the giving and in in us, pricing. using trades are month, little we’re

our some that happens. amount are in of land is is what it. dollars we sale we risk of land not of regardless – but performance are that mention, you part the have position are land the conservative, And The will, I but other They very discipline extending, acquiring out. of Most sellers of most cases, in a meaningful at since didn’t are all, thing time a that invested never of extending pricing.

So the contracting. we’ve risk our spread in

in source the profit. and, developers, with concessions, need and relationship and flow the large they enhance builders relationships you by cash think, of they land giving some I some very the price are cases, And because the being really that’s time smart their extending,

and I how this concessions we’re point So period, at and say, would the your pay that’s this on it. has current realizing, out many worked stand of working continuously And we’re well, kind purchasing question. we’re on things of on

Ken Zener

appreciate any cash stimulus a there going contractors lack bankrupt Yes, you of lot your due there, concerns? of but issues I with there’s out have all was know I seen any flow to going these Thank the that. liquidity? you. bankrupt due trade to

Larry Mizel

if in they’re that always all, Well, even not. first they’re of assume we trouble,

the can, to joint extent or could maximum check So do them. we we

And than So no a joint traditional shows an bit bit, usually, couple if labor and because material, exposure a a eye and greater partners a trade to of construction very, it’s But that’s paychecks. them person be understand thing risk. if up for and of we the one if have them. a don’t we one meaningful, a provides our close very pay doesn’t little keep on risk the that about days you payment XX could industry, work check little

So the we’re able watch to part part, And labor. subs that quickly. we the the labor document when nail supplied the is And at are we provide found that partners. haven’t part staying of, we of businesses our issues they to just the issue point, with of not credit and trade this that materials an were we on top and and top running that’s on the

Ken Zener

you. Thank

Operator

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

Buck Horne

question it lot back-end with saw cancellation I And more How a playing out Were loaded March, – do just understand Good April? you saw I further, would how closings? April. early timing surge between differential about was a Or early from thanks. feel a you of into to the end-of-the-month if the in that in whole the in May most see there Not you there belabor did for April? of the in but afternoon. immediately cancellations similar want a in cancellations differ May? was potential what the you Hey, mean, fallout I to when

Larry Mizel

you to Bob, answer want that?

Bob Martin

it’s it by Sure. specify of Buck, to with week cancellations, hard week. kind

April part April. of and lot last was our of part half the March, of the the talked about first uncertainty a in I there how back of net and we think orders in improved

something. tells certainly that you So

to as that look the that with we our very conservative starting think to to backlog, hard aren’t be at we backlog I sure make don’t to try sense noted try make and start. Larry earlier, houses

really it of into was going May, May, better, our that To was what we’ll in I that in and what’s So – that, division greater. a bit would next time. And evaluates based on uncertainty week, little the may meets backlog through every May. on be the there’s a upon at cancellation that of wait for extent continues But April, still to uncertainty kind happening the that circumstance. reports say make management the so we earlier goes course, to bit resolved our help to get less here quite call happening have in

Buck Horne

Thank maybe I’m focus Phoenix gross of more helpful. give how But Denver a performed you. more or Orlando curious some the improvement And how a diversified do signs That’s color markets? of in order can on for some started markets Vegas? in Okay. Orlando month. Were on – if your maybe trends Vegas and or extra just or the – of to through the more tourism-related maybe like any recover you those compare maybe like other of relative Or there to versus or markets any contrast some the the you.

Larry Mizel

gambling, say Orlando as I – base at like, obviously, is, and come Yes. I improvement, two with all tourism have your the look Las good tone. two Orlando, mentioned, In you cities those improvement and in first and business would economy. as you broader on builders, you is tourism. you will is the cities and see And point a very of And from the think Vegas, have tourism and needs key which Phoenix a a have is you’ll entertainment reengagement the question look Vegas element. you Denver, at

little have are It’s the you these market. all every But like but feel items didn’t you up of So be tone, week, better And crazy, couple the good. $XXX now, things have fully a discovered. a good. right ago, when feel so a continued yet just it’s stock days to to

lives where have markets, have business except go as individuals more discovery – through and tourism, become So our feel opportunity jobs their people’s a more every to become home. of to buy has has confident are week good tone, continued to a those better but and with transparent, dealing the and

And being opportunity I think And see affordable into and are less and that full it’s a We payment XX for very, cases apartments all mortgages, most wow. are very the new opened. long-term products at as that that than years built to competitive fixed, people three put good. in change great

think this of I the to in all out it’s a little the at in as millennials light So as could the it to have an time. opportunity circumstances going And space have now work backyard. good

Buck Horne

color. Thanks, Really guys. the appreciate

Operator

you. Thank

Our next Michael go Please ahead. question Rehaut comes JPMorgan. of from

Maggie Wellborn

on Hi, Maggie thanks. for actually This Mike. is

was First, what incentive know really could incentive question levels incentives. that but levels. you little have the haven’t I I adjusting you the market those to in a – you to go if yet, and start earlier, a wondering just for adjusted see that bit talk would about you you out on said you

Larry Mizel

at home tell the daily, we we’re think at communications I of would see able have you, net margins every and and beginning daily, they sales profit But the and to quick we’re look incur office it, traffic almost as almost the the between gross traffic see office, to daily day. we I sales able gross process.

not we at remember, necessary. to time. Maggie, specifically as And is a And have at this we’re believe substantial spring adjust found So selling point, we’ll necessary season, in we’ve it this adjustment too.

psychological you’ve emotional recovery. got So and

got selling spring You’ve season.

new a for rates interest low historically lifetime mortgage. got You’ve

to going time a ever buy to one, were good home. if a Maggie, this So you buy is

Maggie Wellborn

Okay, kind saw did the April? I pretty on thank any you earlier kind in of of project of in I about business? apologize of Was the your of like, following improvement the two an between then see products but back even your talk you differences versus half your missed improvement steady it pieces it products, – pace April the you. terms and more the And saw board or traditional all across that question or, certain so this, that of cancellation any of during products? up rates for Or can in you if affordable you on

Larry Mizel

those centric, that, Orlando, these are that tourism think a think going across kind the job. in And market lot that more to Las take at get great right that board Vegas, markets are I’m financing. answer MDC And kind it of a people growth broad, of for at individual every industry, I the million XX saw will that see in reemployed. things of general wanted We we’re I of you we the place were right people course, expect in everyone people looking get time as right a at country, everybody job could the say confident reengages. going for product place unemployed a that in the hopeful we’re but place. and but I’m it’s with I so economy the was takes probably than more as the the because to reopen, would

So going we which is that in expect place. to participate take to

Maggie Wellborn

you. thank Okay,

Larry Mizel

welcome. You’re

Operator

Truman question Instructions] from next [Operator comes Our Fargo. go ahead. Patterson of Please Wells

Trevor Allinson

by a done is Hi, a first pause? this increase demand on is demand taking my Trevor prior option delay mid-margin land in driven given nice questions. slowing? lots. Allinson purchasing the to question that Or Truman. on intentionally We the is for Was there. for you saw that My Thank

Larry Mizel

the That continued the inventory in for structure is the through enough and order And terms push that – rate option which a return, deposit line optionality. reasonable properly, have if was from a comes we believe, absorb done the of in usually transaction lots you best product. to as time intentionally we

and, or would finish hopefully, option lots. added So we prefer to always lots land

don’t our you land, So tie speculate case, the can a buy closer lots. in up we only parcel, we

on is hard to and that lots our achieve your objective on order levels. then in whatever finished first, return So able to business improve optioning to all it you’re push level

Trevor Allinson

little you. thank But I competition Okay, a plan know seeing come land you then less said might I’m spend my little follow-up in Bob, down you that around bit is than thought were probably assuming you XQ. a strategy. there you’re And previously.

maybe that land you aggressive standpoint now what getting couple little And pricing consider more than your is perhaps becoming a a you’re from – more – that so months is little this better would a spend ago? were maybe you because just on pricing

Bob Martin

but deal what now. is, tempting uncertainty step I always to think right our have it’s with exists in, think we strategy I to what

we automatic jump time. So that think an in at I this don’t it’s

out concessions. of think we’re and they’re I we then start in little period focused on position of wholesale we point, a a to sure take going saying see really a making to at that this transactions I right cash, more time. out as acquisitions price just that to sellers generate pushing clarity are lot there bit At move market. the think are that don’t time the a in such with forward now, It’s more for would we really about

Trevor Allinson

Okay, good got you, bye. Thank it.

Operator

question-and-answer concludes ahead. to over Please Mr. I’d the Martin, back conference turn Bob go now session. Officer. This like to Chief our Financial

Bob Martin

on I’d call. our like to thank you for participating all

Our to forward through the continue and with to earnings look we thoughts talking navigate everyone again are as COVID-XX we pandemic, after next announcement. our

Larry Mizel

you. of all Thank

Operator

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

now disconnect. You may

M.D.C. (MDC) 5 May 202020 Q1 Earnings call transcript