MDC - Earnings call transcript Q4 2021

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Operator

Good day. And welcome to the MDC Holdings 2021 Fourth Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I now would like to turn the conference over to Derek Kimmerle, Vice President and Corporate Controller. ahead. go Please

Derek Kimmerle

morning, MDC Good gentlemen, welcome and Thank XXXX ladies Fourth the Holdings Call. Quarter to you. and Earnings Conference

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

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

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

Larry Mizel

for us you Good morning. today. thank And joining

go grew XXXX, per on results compared into business of as gross quarter Holdings to some prices. the quarter selling we than of year Home quarter share over an in to and the previous update representing average XX.X% over $X.XX expanded provide share earnings conditions revenues diluted full which insight quarter. earnings per and year XXX reported in of fourth MDC by capping the XX% company. increase of year unit our As point Home a current for X% the margins prior grew sales a the the XX% a year. in profitability the rise sales in closings for our and XXXX fourth in more on future give improvement XX% basis quarter, strong

an absorption demand the for month. during continue patterns the increases, We cost expect resulting markets, our of pace activity in quarter ahead above us Sales of which to benefit community in from a year, X.X normal we time per into to XXXX. has stay continue consistently this per sales allowed strong remained orders the of to trend

National below a normal unsold equilibrium what considered the inventory inventory been home We driven This fueled amounted represents demographics. strong is amount be units end the is Realtors, X.X year of at at would the construction. by which continue from existing a to work. see wide to XX% supply, total level economies, rising housing for buyers the incomes of current important array Association XXX,XXX, and that supply healthy in pace, our According local for Equally of month demand to has one need of markets, from new ongoing sales favorable lack housing December down a ago. the of well

favorable and in our place, employment take markets the supply historically existing positioning, our remains our operating great some of order we steady products strong population a growing and Areas build believe growth, to is advantage industry rising outlook affordable the position of demand home lack the year. company new focus Thanks begin positive positive. near and income. in our model, we positioned more for these to MDC this that drivers our fastest of we and market feature country. fundamentals in as have in the building that to expanding long-term in Given industry centers

large supply to lack on margins While manage affordable better we a in sold delivered lower improving great in XXXX. markets, operating our increases. in key with result population order by returns. of has time all of affordable our address We and costs of the a ended we market product we and keeping more emphasis to homes recent year growing in levels price than into unsold asset have the has a returns in of the years array strategy operations, visibility higher to the first margins in been given a XX% to and This And also contributed buyers seen we've cater segments previous the also more on backlog homes buyers, our as our and represents of is focus X,XXX has year, the us churns. the driver model to a at We placed This us our build to inventory our bolstering minimum. our and the points. percentage higher expected wide a believe higher which allows better of

we've through year solid a than lots subdivision has under count, we XX% ended more strong existing for a and with the challenge positive runway projects, in count industry, associated efforts will for positioned end the growth us active year giving year, of to as It in we But the XXXX. thanks the ones. close previous sales a nice a of in positioned company new opening and markets. is the be XXXX, should great grow out faster way for had particularly expected this control business, given was backlog delays XXXX at than our progresses. community the the tailwind and to to we Another which sizable the year with we deliver XXXX we well believe our are investments as in in made in for for margin XXXX trend the we turn homes a our believe are better profile see results backlog, favorable even continue in to and housing of our those we our fundamentals been

to discipline valuations. presents We record inherent this years stocks investors industry recognize our a who investment and profitability opportunity risk at believe mitigation an we with for doing value in We of past trade in compelling are low achieving and see MDC the so levels the homebuilding more stock. continue and than as disconnect are long-term yet,

like to David, to it provide I'd operations. turn who more will our Now, detail over on homebuilding

David Mandarich

today. continuation Thanks, to XXXX. quarter us a on Larry. demand call strong, the We And the strong in experienced joining everybody fourth trends throughout strong from earlier of of morning good the year

motivated County. markets were paces home, As an of Orlando, absorption the was as and Phoenix, own The buyers Riverside per best demand during X.X per the each based broad the month. pace the absorption orders community with a quarter remain to above Denver regions post

in margin, terms with divisions profitability, gross delivered In being of California highest west or notably Arizona average and Nevada, our region a the standout.

stay we We generate solid way in allowing us us recent and given our experience existing rise on slowdown demand we in As focus outsized supply. the interest one product of rate not have while Larry translate And has lack our in longer demand the so the given houses. it more for far, negative expansion. into impact all margin for ahead stock, a markets, our demand seen a pricing of power to these of increases has had homes mentioned, a our to cost and affordable believe for continue

to While the the be of of level, material sales supply the construction to issues, a chain business business shortages continues challenged and run delays. with the side side municipal at high continues

cycle in relative the we third fourth as roughly Our disruptions to weeks at process. extended quarter ongoing the stages quarter various build experienced the of times by two

the today, to find for solutions future. process based possible. and expect job we expedite the issues trade Our have we working our with persist done on a where the partners in teams great build market see these to what But

of fall we delays. as Fortunately, few buyers seen these a closing of backlog result out have very

Each their very yearend year. of bringing our operations, are more the to of the regions market quarter the owned the west count over of at total mount land and building in growth fourth adding in lot end XX%. acquiring the and a home east to for XX% now We adding primed lot region XX,XXX with lots active XXXX region lots count per lots X,XXX over our XX% are controlled

in Bob the results of in quarter year. with homes this full the first quarter way market our provide scheduled the for will in new selling to homes first we turn that, the to Nashville the progressing the the with quarter, detail year. who second in Austin started markets and the first this start our this We in is with Our December to quarter expansion the year. of into scheduled open in expect Boise community to delivering community open past in And into of With and in heading you second fourth positioned quarter to Overall, company performance I'd our nicely are the and over XXXX. our pleased it is on fourth more like new year.

Robert Martin

pretax morning, margin increase XXX million, income good to $XX.X XX% billion by And as our million. gross our XXXX with everyone. revenues, ended sale which driven XX% from as by from David. points $XXX.X well to homebuilding $X.XX to operations home as sales, XX.X%. the strong or by home quarter This another year-over-year improved was basis from rose Thanks prior quarter increased We which

notes, accelerated a XXXX. of remaining January homebuilding due is of resulted $XXX.X in During $XX.X pretax loss million, retirement our unsecured the income. the quarter, fourth which we million in of included The retirement in the

to market. million income mortgage increased headcount as per increased $XX.X or be pretax services service financial homebuyers. levels $XXX.X competition our Compensation decreased to order share. increased net of increasing business the of diluted in income increased mortgage its impacted mortgage $X.XX Overall, our to for costs XX% quarter also Our to number continued year-over-year business by our primary related has as million, in the

we XX% prior and year largest For which the the million, increase is history. MDC’s a the full represents of over in amount year, net income $XXX.X generated

increase estimated the from fourth efficient energy to concurrent energy home quarter, in a XXXX the credits be in tax an XX.X% larger the from the rate tax quarter XX.X% to increase rate increased fourth federal in of received. benefit due Our tax with amount primarily was for XXXX to credits

credit in effective discrete tax credits XXXX, Federal credits. has I deliver estimate Legislation the its at basis we start items, tax of of driven homes rate any quarter. XXXX, extended If which approximately our XXL which rate level, year. any the tax of represented or roughly been would changes from the rates increased points. an the impacted is the increase prior in by yet homes extending This at homes in potential X,XXX X% XX.X%, energy section current building XXX tax enacted. not over We policy a would tax increase effective excludes quarter, backlog be impacts favorably For the number had during by any energy was favorable tax to for efficient availability XXXX

Our levels, rate imbalance due continue in building disruption supply primarily the by below ongoing remains experience backlog of conversion shortages tightness to demand we to pandemic. labor materials, the caused as and markets, and historical

We delivered relative seen a to year, labor to California. the $XXX,XXX. of improve we to and from during result land as have past the price The was not of result, in increases homes our and expect Arizona do about development This Southern as to our XX% construction near material a quarter. or shift increased of average price the implemented in mix selling quarter conditions the year-over-year over extend well times the the increase significantly closings term. prior As both

$XXX,XXX. to We for expect home between of of and and XXXX of the units, these first and deliveries are the $XXX,XXX anticipating be between we units X,XXX average X,XXX quarter price selling

year-over-year quarter, those experienced from For assuming no year, to between to cycle XXX the sale fourth XX.X%. time home close Gross points we to XX,XXX our deliveries during reach XXXX sales are from in by XXX forecasting home improved the units. improvement average andXX, full basis margin

of to the increases which continue inflation, in cost resulted the increase price these in end a return year-over-year. pressures, outpaced healthy we backlog rising margins quarter lumber our our including While experience through cost costs, the of

expansion in continued into sales As we a home we anticipate from result, gross move margins XXXX. our as

XXXX warranty We are adjustments. gross XX% from home our increase for impairments or expecting to to margin assuming sales no first the approximately quarter

on the increase second sequential quarter for a in margin of that based gross currently is believe backlog. we the Additionally, likely homes

quarter dollar and from the fourth administrative fourth expense increased turned increase Our XXXX million $XX.X expenses. XXXX SG&A total for by the general quarter

a an spent currently total estimate expenses XXXX. expenses as sale home a revenues compensation. higher. dollars home as deferred quarter administrative Our of $XX from points $XX will as an year-over-year year-over-year as to $XX.X that leverage. little for revenues headcount, sale percentage and percentage as SG&A This the We general as and revenues continue in even first basis increased year moved expenses increase be decreased salary million we XX average to benefit expenses as stock-based from $XX to expense changed, and million. increase between decreased commissioned of home the to of to our million Marketing administrative higher prior million in and operating from related increase X.X% General improved due primarily resulted quarter notably well was and sale

able given The our net the We of demand throughout $X.XX housing. have selling dollar effectively price. our to XX% average costs strong been year-over-year XXXX X% a these new billion, value orders of increased to increase driven in backdrop by for control

quarter higher year. the Cancellation While orders XX% community of orders X.X the current remained quarter to low for beginning and our prior per each homebuilding the fourth increased to new monthly sales to backlog, sales X.X% during our segments, relative unseasonably fourth homes. XXXX relative pace slightly underscores the of within demand strong from quarter, rates and actually pace at modestly Sales this the month. throughout sequentially quarter year-over-year third our gross decreased than absorption strong per demand remain

We XXXX. saw January. we in to with order were pleased the activity Moving

increased seasonal was when However, an of quarter XXXX see did of the quarter we ended to increase represented highest end not the year We sales typical much our the only dollar homes from see yearend fourth of in not XX% like backlog expect X,XXX the jump do the last highest dollar the but in year, fourth estimated first year-over-year $X.X of to XX% reported backlog value we ever. off value This as quarter to which highest XXXX not a quarter was backlog comparing in unit level period. typical in fourth the history, with since yearend XXXX seasonal of billion. ever in drop quarter. and our The homes of backlog any

goals. support full a backlog our great current Our provides base to growth year XXXX

the As highlighted number verge close had legacy last a of quarter, of communities out. on we

out Our previously the subdivision quarter further impacted count active in was the during communities resulting mentioned, by unseasonably than anticipated. strong closing pace certain sooner order

near in remain municipal are With resources said, on currently active to openings community the to New available more current environment open development for than the the to challenging due the we which the that first communities work. new and approvals, in strain end delays quarter term. of complete of first prior in projecting sale achieve to push and XXXX, should our XX their count order higher community

subdivisions inactive growth percentage digit double during forecasting XXXX. are we While

on quarter We committee scheduled bringing the We we lots the of lots in until more quarter, total of an openings year. activity. spend will year have to lots and XX,XXX. wait quarter, occur over the acquired development of X,XXX timing land metric to during approved $XXX fourth during to for This the X,XXX acquisition of the over total XX% this the later provide visibility as in increase the XXXX to year for for further acquisition approval million. number represents resulting approved guidance We full

in to year, $X.X the full $X.X previous in acquisition compared and land the invested billion development year. For we billion

our year representing increase end. exceeded total of XX,XXX lots, the from acquisition, end a supply prior our land XX% and result a the lot As year activity, approval to

the of under X,XXX controlled to an addition via at various lots that additional we diligence. XX,XXX option, had contract In are lots stages due

lots While need goals. control asset XXXX these being currently committee current of our provide our the lots management to pipeline. picture our anticipated still that our prior require they count, of delivery a all approval we within We reach land fuller by own to block reflected

despite XXX the growth points we Continuing pressures homebuilding without we full expand community cycle year, achieving during not including control was an revenues profit which own XX.X% year-over-year also that on as believe to construction count to record In times. as several while challenges, XXXX lot XXXX consolidated significant delivering its sale home growth driving organization, year. necessary margin, our well. or achieve increased summary, levels We to dollar to full year into drive year milestones the and able for basis income record now minimal record backlog net were XXXX despite full the value continued

states year our and with markets. the expansion our In Nashville, to Boise, XX into during Albuquerque Austin addition, we cover expanded footprint geographic strategic the

if forward XXXX, Looking backlog on would dollar the housing even our thank in their believe margin to incredible gross based XXXX. my prepared employees the has ongoing I achieve to stronger demand this current take be board and strength an year, to the potential for all it great year to and directors of and role our didn't of accomplishments of an concludes helping our of I all instrumental remarks. we of remiss value That and be during the opportunity in our market.

the now will questions. open up for We line

Operator

question comes [Operator Instructions] from The Raghavan Wells Fargo. Deepa with first

Deepa Raghavan

everyone. the taking good question. Hi, for morning, Thanks

Or categories? array Are you of activity wide a any maybe you serve strengthened array wide a these mentioned any of of, You demographics. across concerns? seeing buyer

Robert Martin

across we've is your I buyer any This differences that our don't really I noticed I Bob. caught question. Deepa. categories. if don't Yes, know quite Hi, significant know

there. move to level do or the line. we new You're different But product same even nothing buyers, from service, whether entry it's buyers, sometimes buyers, right, really note a lot down of

David Mandarich

with on time first out across add consistent board, or whether Bob demand what up. first really just the seeing a move David, is this we're it's Yes, said,

really board. broad the I what pretty happy recovery So with based a across call we're

pretty divisions. across it's limited big of think I'll we every all supply you resale that think in, one got we're is tell of as really there's a points the strong of I really So demands. And lot And theme our market houses.

So question. our really we Great feel footprint. good about really

Deepa Raghavan

is follow on My Thanks. supply up chain. the

year still meaningful cycle at a assuming You chain couple probably peers, looks And Omicron some are don't the content help has last completely the mentioned table supply in extended in by production you most for including worse the if front could in your quarter, of XXXX weeks. there. any which the yourself drivers not of all, that it versus chain like some think supply potential are do maybe this But turn here? there we off should all? take mid-year Or improvements any from get at things improvement

David Mandarich

just COVID out now in we I on right at have stay think we the that XXXX. improve just improving see things another we're that now, this right favor. resurgence, too to that don't in times which not cycle do if much why there's assuming conservative why like always the our is there's point. I will does That's possibility, especially not make go we things But uncertainty much visibility Certainly, there, end. the think

Operator

next Morgan. J.P. with Rehaut question from The Michael comes

Maggie Wellborn

from this Maggie is Mike. Hi, on

And also just on XXX,XXX and are kind think quarter. pricing for expecting to for thinking of plan I that ASP the the question you first you that First ahead to I continue of believe you're XXX,XXX increases. stay to you know said about cost how year, I

for quarters. been last relatively average It's the so price looking I'm at flat. As or three the order

on you're the in how price and thinking, wondering for about necessity ASP year we I'm the should for thinking how further potential later increases. So be

David Mandarich

of on a start call a But house. it's is our time going of of over not to and over first and it focusing kind the I'll more pricing David, really turn I flat lot bunch Bob. think Maggie, then

sales some we're down, to And actually it's like an price very average price. so But like, that has markets can. we're average of which drive if the active sales in, California, got we our we'd

add what that? focusing what seeing you us house. to is So you're Bob, really have consequences time really intended do first to of on

Robert Martin

that's and Yes, chunk would now, $X.X on price this backlog right And I of billion at total $XXX,XXX and a be said in talked XXXX think XXX backlog think in about you and we're big about, which XXX of we backlog, I QX. to revenues. average

more with although, ASP. I just helping that to got think cost we pricing the good the supply always are imbalance. for ASP David during shot could those So make notes, would opportunities that our a now, like business, think continue achieving to we're I levels our the demand, this to that Right using the guess chance of affordable. say help And including as is, continued during it's products we've at our year, last manage occur I offset of thing increases XXXX. I looking to

Maggie Wellborn

levels that that you And XQ from year? XQ. just of comments. expectation a Thank digit have count to be has you're fair from think were thinking said step all And around growth up you clarification there term, should Go last assume you. it looking believe bit even there quarters And comments of increase, I then levels might the second for just it. be so Is may and of kind quarter, think I community an XXXX. the XQ end out? fair question, that near across been kind that strong prior the a increase be double in I that the remained original this pushed the because by an might increase then demand

Robert Martin

QX, with the think to us some Yes, earlier and But end because close enter count season. that's and QX, we great nuances. as position year. we in community hedge spring the I I than having increasing from than during what's a a there's of have that scheduled the gives going XXXX. anticipated we're of our selling A crazy things more our first just bit, lot those lot the in certainly, where a we of sale little caused were have a guess volatility happened shot on, expected, were we at great in at that including XX to communities sales

Operator

The next question comes from ISI. Stephen Evercore Kim with

Stephen Kim

of don't three options. right actually under lot year's think realize have the Bob, you that count worth guys. I Yes, you thanks us refundable appreciate refundable, the was a most lots I quarters before option. that that really adds that with or particularly case And lot, of giving people a pandemic.

guess is guess you that fair would in with it would diligence were these to -- is be right hit? the much those options? pandemic would just subsequent all the say struck you guess of it my you those Would things this optimistic? on before So That like good that pandemic maybe too on due a be pretty is to options actually pandemic fair Or acted to that question. the before was refundable be and

Robert Martin

cancelled I pandemic guess kind temporarily to before those when a back have then two matter to and with of most them would three lot process were we're demand Because going in so right came in in that some or just push the I deals the think put Certainly back of I of hold. we think them. out been got months. but quickly able proceed we on cases

that's thought. think what I you're asking I

Stephen Kim

they the and or on reflect what right. deposits asking, land land lot some didn't holdings. have cheap an [Indiscernible] much, That tied you of think And there's much people MDC well, to sort not at in including like I impact there up, by is pandemic Yes, your beginning they exactly say, your as as refundable largely, I'm actually, land count. doesn't have

that's So great.

maybe some continue little could you sort there That that going down things the things initiatives your this you possible fact the quarter. I'm combined overhead were your in resulted curious rate? like next there thinking your Or I'm closings G&A in a year, very SG&A that on selling. some to, lighter good is SG&A in broker about a were seeing that? which relates talking is, this were and guess control I'm question things the the that that not of your actually I side. there's other rates of And environment, co Second like one benefiting to as SG&A coming lower took despite plus to whether you're on of it or commission was your

David Mandarich

David. Steve, morning. Yes. this is Good

XX broker board. we've commissions industry pretty change reduced in months And last the think outside reduced I call the much commissions sales think too. the what we I across I pretty overall, to seen much

Stephen Kim

that that it not to Yes, is back. there's was, going Great. are Right? those and your no, expectation come

David Mandarich

I this think we're where consistent current market, now. right going think I at we're with be to pretty

Stephen Kim

And the the on seen That’s a late real then the in we've and then, started last -- as down part over in early again, of place, the gross they Bob, winter, or Yes. now winter, XXX. there, one all for lumber problem margin, me, the to a that the back futures encouraging. quick going concern, becoming flash

And bit in right, are then to and of us is margin can of a Just frequent a amid so, sense pressured a it kind maybe how through? buying market? my handle again, XQ And Do guess, to you it your that to question lumber you and remind such a for in understand lumber? it just how you XQ, give think little volatile right futures in lumber, us how your help will doing flows you have kind lock on is, very benefit basis? XQ us get lower from you

David Mandarich

in for Bob, going do pass to and just to say And either it don't goods. of you the on XX be, David, or it we're market, anything lumber, on of try got again, hit level, than add better we're which to we're a perfectly. and in to lock trying what consistent speculating XX I'll days. is Steve, on you this through be we I not but, division we've call policy that? high in, not we don't depending And have cost give we try kind we're

Robert Martin

that's be front. at some try just one point, it or have think know real to relatively accurate. I that time. No, on we're way the hedge wrong we made other, absolutely And not because to It's the decision active going we to

Stephen Kim

on impact for gross the the the And margin year?

David Mandarich

is increases I seeing with peak previous the increase, some which QX think, they going we're through saw times, margins of part for cycle of I into the why where QX. we the coming Yes, bigger, think some reason are, in some better

Operator

Patterson question comes from with Wolfe next Research. The Truman

Truman Patterson

taking Hey, Thanks for questions. my everyone. good morning,

give some can give mortgage up and so the market. us pool. strong your commentary hold are can bps cycle prior you like or potential investors Larry fears Fed rate look or think might you First, of see the of short just and XX not the fearful picture, interest trends. bigger buyer half cycles. that, now thoughts this raising of right now the have give and replay that the But look, we'll year you year depth clearly order some can sensitivity demand the grabbed they're strong, rates. cancellations XXXX to XX of us the rate of I whether I'm you looks is think hoping backlog hoping a hoping some I different to David, clearly compared that as back just in about And mentioned to

David Mandarich

is this mortgage Bob get demand. to years, it And people to clearly but now rates XX of a buy when up want in start I'll and a see generally and and rates. locked and start I, price moving come hey, off say, a Truman, turn little Larry a they down bit house we over the get lot David.

we stress other backlog. our test the On side,

work there what rates lock with to an Bob, know rate. and got that we some add people they we have our in on the to interest increase can they're can in their we've them you house. on afford so what that backlog so So are take close, to that? And do if

Robert Martin

Yes, nothing this David. point, at

you think yes. it captured well, I

David Mandarich

Great question, Truman.

Truman Patterson

I'm then the quarter might just cycle metros product your that on the below times you us hoping a quarter. or regions major in guide, Okay. understand or categories can have little bit Thanks further the throughout fourth for extend to any came closings help caused And that.

David Mandarich

doing up. to our has a our was but It houses get cycle everything absolutely are in superintendents, and will our out in our presidents And say little there a sure was I people, moved ready, is full and little which get our what move and of and Richmond time it division the punched broad really good based. call which suppliers, all can they subcontractors, And, on depending here done, shape. market make we done

good really So though the end missed even a process, at the of we few feel about quarter. closings we the

Operator

Associates. comes The with next Ratner & question Alan from Zelman

Alan Ratner

questions. taking guys, Hey, my for thanks

have a able that, from as I quarter really writing were experience contract strong up extend orders buyer times I to standpoint, during might even in days point within necessarily house said your you start cycle to to a think sequentially, perspective. or you your XX, And So be admittedly intentionally aim well I because from the was of sales, as as weren't think last to limiting as quarter, see XX they cost a but and surprised fourth Bob, quarter. the you a did

process. now selling towards could in thought the So higher of kind XX,XX, within later about the construction I'm houses. that's talk delays, XX starting where the or, Are you sell are more seeing necessarily days, not aren't of stages little of curious a you range, kind it And the of in your the maybe you to you're where bit homes that end that are maybe process? if ability limiting

David Mandarich

pick XX minus house This plus in to to it is kind turn really, process we'd and David, a one like I'll And of Bob. But or days. start to over of done start we off XX our our is city. things of building the a that to shorten a either or is permit the have houses of up lot pre-planned of from time period the kind county that we

a more, days Bob, do that? pretty that is products sharper what or got watch our have and which little have that be I you any quicker, limited. So are we a add sold little not topside, think could to really but to processes started XX

Robert Martin

Yes, I right. think that's

the what a around that, stage to for we them you achieved of a a those houses of if Because XX% our of of But some front, end we that's able in we're saw I range, the on really story fairly midpoint look our the start better. closings that QX, limitations. project were alluded were projecting you we convert really, on at have right think Alan, end, close quarter. Whereas we're we why that going construction, year this we've about XX%. below the to on range, And or back low frame the only to as it's actually the of been little ago, bit start able good time. been to

the QX see of even So a and we beyond versus those close you year of to can that many expect frame ago. kind gotten shift how have in

David Mandarich

municipal add I'd COVID. on of other with inspections. is slowdowns one that what David, call us all thing to this I experiencing Alan, are is builders Especially like

there it the that a frame is So, cycle little across whatever from down the slowed lock, a or finals board time And we're our from slower. or seeing being -- the bit municipalities the bit. certainly little

Alan Ratner

Right. And from color the that. both I appreciate helpful. of you on That's

drill market. in love terms land of question, to bit I'd the little seeing Second what a in in you're

the four know, the growth running from that. in a that lot you had XX%, at lot quarters. year-over-year. up slow little mentioned been count did five or bit there's the lumpiness Sequentially, what a last of You I

But of the about it's So too much et assumptions, are the seeing? you inflation you rates, cycle I'm your What changed into not it's absorption of whether that. given higher changes we've any you marketplace, land And underwriting of times, in type reading any cetera? are underwriting how today? have seen whether thinking

David Mandarich

over changed I today's and I'll let better years. we this, to whole at builders margin And deal the our cost. a but think on lot Bob there. decent the ’XX we're based up disciplined think looking And industry on a seeing we flow saw add is in flow what deal the not for builder underwriting in what I I today's couple call than Certainly, have absorptions last in And is are And years. ’XX. more

good is I So I real disciplines, pretty the mean, think which I industry about. damn feel

Alan Ratner

perspective. absorptions historical to I or on would absorptions have strong today's are guess response Dave, the phase question comment, are I the incredibly that just from

does if for but What deals what remain as maybe absolute of standpoint, that still absorptions at mean, that does these in from remain healthy they levels, the not on So perform? an mean deals, these how terms these -- are as if strong today? don't performance

David Mandarich

is we're robust. a Well, going what some absorbing though that seeing eight And even say okay. not and that fourth month, try ourselves, are absorptions to we're we do pretty to a month, absorb we're

very a what call quarters. not we couple nice I a So absorption And rate, the what have disciplined. you a might at stay call take I look and in try crazy absorption last that rate

Alan Ratner

is absorption longer maybe you today's of so few years, a today bit over last term mean? little Okay, the a

David Mandarich

bit. come in that our we're underwriting. cycle down a by other time. bit. we try in longer times flatten thing assuming And did that's And doing decrease the out is little cycle And you Yes, hope a you accompanied would also to the it to see a rates extent absorption little we're somewhat of

So if some those as figures. some I gives there's takes of the think moves forward, you normalization see market of there and and

Operator

Jay Securities. next Wedbush with McCanless from question The comes

Jay McCanless

community during another taking ups of outlook Is guess based I higher all David Or Have your that for one Hey, fourth on of you had Bob, the may the because just a down traffic the year. with And you kind demand my community thanks rates? traffic and talking orders you surge hesitancy has count pull the for on than in strong questions. really quarter? was all what of it coming and this your about close that capital seen amount anticipated? faster and

Robert Martin

online plus But that's, I in going. good the about XX in saw with a count good don't active QX that pretty I is coming know level a with. where communities community feel January, level we think pleased we're we

Jay McCanless

you and quarter of other just price ’XX? stay from you you guys you percentage in Okay. can communities efficiently are if price that gave price but I lumber as as the increases or race Do able feeling coming you about then enough raise into about your pricing on to that stat other how what apologize not the are already to during some we of the were inputs? And out, pricing, think front suppliers, feel move and like

David Mandarich

thirds beginning price during We quarter a which increased pretty of quarter. kind good the in of about is darn count two our community for fourth probably communities’

Jay McCanless

feel do in how you're with current to those pricing and these ability price contracts your incremental that just and that stay then of about Okay, front increases ex taking? you lumber

David Mandarich

I increase thrown around think communities in of average X%. the kind those

XX,XXX XX,XXX. call So it or

some So that's I amount a manage increase going think forward. of to good cost increases

Jay McCanless

the are small this as type matter maybe you just number sales small to and last too organic any and point? you Or to at closings see, as in to increase the of gross account, margin this just these too move then one, it expecting of headwind going be made is And communities? the community you

David Mandarich

When you that say these organic. sales and the in closings

Jay McCanless

newer sorry, Albuquerque, the Yes, cetera. I Nashville, markets, am et

David Mandarich

it's typically, start, think to the of small from small get our it'll lower level markets, newer and point, too too in it’s at margins increase I to matter think there some typically you'll I then this whole. to against matter but

Operator

Housing with Research next The question Center. comes Alex from Barron

Alex Barron

the way on of to to you get to of to we great I guys, the a or and rates playbook quarter. moving rates? somewhat the what's XXXX houses offset some here. mortgage introduce repeat Do lower affordable increase were with up in job have Thanks if the wanted ask more

David Mandarich

this Alex, David. is

what square square interest maybe well, think can maybe was look I really they X,XXX I a and house. when is we're they in, somebody X,XXX seeing at foot comes say, maybe they looking rates, foot and house, live maybe with at listen,

we're that. rates in subdivisions more think driving seeing more really are of frankly, a where and little these And these that's so affordable. increases. I And But on doing modest pretty quite interest Florida we're affordable as more product

good achieving know And, feel don't what have Bob, if to you about we're add we here. pretty So anything I that. to

Robert Martin

our rise of we're about incomes lot I things other the consumers mean, I I Yes, for well. think seeing a is think as

not naturally, helps to of out So your a -- offset natural relative that a there's including to there, vacuum incomes. housing, inflation in it's lot but

think say, the seeing kind pretty I I still there's people size selling smaller that and end not to go to alluded lower square look footages. the So of and into a house David we're of average then house consistent right at we that the now, it's when skewed we're really would

of gone of our has out there. bottom to the like terms barrel, not affordability already it's So the that's for product in consumer

David Mandarich

saying, condo they're to a The up other have we thing want is even I single houses, they're townhouse, if hey, who or house. seen some family inflation a we're seeing existing in people and have move on a to

a people seeing some So real we're That's moving. equity good that's point.

Alex Barron

now, so in four much those or my second was talking in year these now community the now? everybody's or has I markets, what I of But might have. question X points been see like that five, Texas, what the good in a ramp and newer you from ahead, guess Idaho, impact guys do Yes, like raising Fed seven about just the being what up wasn't are XX kind since happened and thinking year-to-date. But months meaning from times

David Mandarich

we're and Well, I'll good getting in We new but like XXXX it's that flow. more markets, these feel Bob be start going XXXX. meaningful follow then I hoping up. for think And small started. XXXX. pretty and earlier, it's And deal we're I'll to let for said But about real Bob

Robert Martin

market, the active all with if between we think four Yes, finished markets, insert plus those. across for and done some and lead development lot the communities to, communities I I get all XX guess of the combined work times those getting just for markets, given

So end those by markets combined, happy we'd the this year. be pretty of

Alex Barron

year have Okay, start what then do just one a the was quarter number to last happen one. ago? it for the and you Bob,

Robert Martin

just do, that I moment. I up. pulled one

So we're for X,XXX. was XXXX, of QX X.XXX. a ago, at it And year

Operator

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

Robert Martin

today. the look again. our for Thank XXXX being on on you to forward QX, all call the report earnings. We call After we you having

Operator

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

You may now disconnect.

M.D.C. (MDC) 2 Feb 222021 Q4 Earnings call transcript