- Earnings call transcript Q3 2022

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Operator

Good day, and welcome to M.D.C. Holdings Third Quarter 2022 Earnings 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, Holdings Good gentlemen, welcome and Thank third ladies quarter M.D.C. XXXX earnings to you. and conference call.

with David Officer; listen-only mode. On our time, all Financial call me finishing in have this I the a are Larry Officer. Executive At Chairman; Bob our Mandarich, and Executive After participants question. Chief Martin, Chief this to today, Mizel, 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 to replay, the mdcholdings.com. our please visit on how at Web site access

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

Larry Mizel

diluted Good morning, generated quarter provide of thank we as income current go quarter $XXX MDC or conditions. of for joining and home for today third increased were sales the an per year-over-year $X.XX you billion the gross XXXX. and share over to quarter XX.X%. update in market the margins million revenues of net results $X.X the for sales our XX% on third and XXXX us Home

in came excellent margins update, as XXX quarterly Excluding delivering of home homes to home mortgage to rates maintaining Since markets. points, environment. impairments, have per an price be at equated integrity quarter what and risen demand year-over-year to in job sales points on home for backlog our basis in strain did the affordability team orders third last month. expanded basis putting difficult gross X.X which additional our and an X,XXX pace absorption XX.X, our another market community a of XXX for new Gross in continues homes

believe the in the in total their led news We of interest the confidence to steady economy stream of future below our combination perspective the for spike overall order a of homebuyers eroded quarter to and our housing the purchase. came due reconsider However, and the rising significantly and of cancellations, rates expectations. surrounding net negative them

on for order aggressively period seasonal the a typically chasing that delivering strategic than rather during in was to sales shortfall focus contributed factor Another our backlog homes decision industry. to lower

that remain to positive driving new that a and home to the home a term this construction We continue long country. own strong is there desire fundamentals in believe

rates. ended net We debt business. to and the the cash industry and a there our of headwinds, $XXX is have will out light environment capital XX.X% balance clarity capital securities, more cash on to expect the marketable interest quarter generating the future refocused we a efforts we sheet remain these of in However, sales In until cost with debt around equivalents ratio third near of term taking cash [orderfying] challenging ratio and million the and XX.X%. of

new year-over-year control walked XX% $XX lot quarter, as over Our we million option declined approved count during virtually deals land costs. preacquisition and in deposits no from away the and

delivering For These or terms backlog the those homes the the actions, can rightsizing our have cost and focus in option strong structure renegotiated of coupled position end. put place of in at us year agreements with we we financial agreements. a many renegotiating still have of we're our process on in very at

has industry healthy when capitalized do our being our those in the perspective broad natural for team navigate our usually to well careers, a Market lead been occurrence are difficult builders and often gains corrections the things to over giving market Our housing through environments. course on how a company of accordingly. and times plan share our downturns several of leadership us operating in We one improve. builders positioning on

single this coming no the remainder of decade, maturities We from XXXX, uncertainty. us during delivery fulfill and have allowing operate pipeline to position period projections this a of the in lots strength through note enough our due to of

strength per basis. industry financial give to should also our investors on confidence at Our ability leading annualized share dividend, our currently $X which in stands pay an

David to for be over continue our on like As about company. turn a this call provide will that to result, I'd long our quarter. optimistic more outlook to who operating the term detail performance With I

David Mandarich

delivery generating guidance on Jacksonville XXX Phoenix, lead and gross everyone. and able end on quarter to closing best morning the post our third and company, to growth feat small conditions price issues, labor improving act and an California as was times delays of the experience for XX.X. gross its MDC the impairments a year-over-year to continue the headwinds deliver but margin was long that average the municipal of This Larry, for no and shortages stated by once X,XXX delays end. considering industry. homebuilding Similar process, you, homes chain at Phoenix, quarter, our last we on supply front continued Utah good to saw to before while margins. back for the Northern generated highest of homebuilding the and Sacramento Thank construction sales

working the vendors time these find are suppliers We in see into over to to slowdown as with and some availability. solutions improvement and issues to order diligently our trade trade expect activity better translates

As for demand experienced quarter, disappointing and third net softer in Larry the order cancellations mentioned, we a in the increased total resulting period.

in be felt Cancellation more September the by seem month. in increase than factors due to who second monthly to affordability mortgage activity by of mirrored order the psychological to net largely purchase activity was sudden difficult our could movement issues in with Cancellation driven buyers being Our with most rates, results cancel. mortgage as afford a rates. financial forward ones, to at in quarters driven compelled rates move the higher their percentage third quarter still

aimed the offering spur earned prospective homes the approximately Protecting year-over-year financing community, the our points many a year. dollar fourth percentage increased the XXX lowering incentives incentives at incentives second goal to house We at for remainder monthly the gross payment. new In orders value of of including possible demand XXXX. currently are a quarter XXX the as third primary quarter as delivering basis and quarter remains as our basis and the versus backlog in point of

business However, ahead pace be will communities backlog. season, an the selling more of our the the and close side focus spring emphasis our rebuilding with as new we of on of sales the along backlog with open legacy sales

metrics some call Now and key like over will forward-looking I'd who turn on results the our quarterly more guidance Bob, business. provide for to to detail on our

Bob Martin

Thanks good everyone. David, and morning

rose $X.XX diluted $X.X the During income from we quarter third X% generated sale the of to from decrease share, XXXX. year-over-year XX% quarter revenues, million. third per of by $XXX.X $X.XX rose XXXX representing our or operations X% of a or third home by million $XXX.X was This quarter, driven to net increase from million homebuilding billion. the income Pretax which

scheduled our The opening East mostly the increase largely segment. to offset $XX.X and communities gross in within for related was impairments West due impairments communities XX gross to was communities margin our fourth decrease point margin the sale seven well decline sales XX.X%. quarter. our primarily already by communities couple impacting for segment two inventory an home million, open However, The to a as from as during within of basis

was of operations, as mortgage the pretax return Our to with loan the $XX.X market. decreased services income our level mortgage partially revenue our number quarter primary mortgage which primarily utilized per The the competition locked, locked captive saw closed loans increased by significantly higher due benefited in have insurance in long profitability XXXX. our during term we quarter to quarter of million. XXXX our increased decrease second seen insurance of a This Further, third premium financial mortgage to in third we within to of decrease in more levels, due a decrease operations and within sold historical was business, from of the interest rate locks the volume the operations, offset during companies.

to was rate tax XX.X% quarter by which price home our X% during quarter. of X,XXX primarily result executive the year-over-year for Our to implemented of X,XXX quarter, rate energy credits offset decreased closings. of during increase but X,XXX tax XX.X% federal increases an a exceeded $XXX,XXX. the decrease range represented homes nondeductible by decrease driven compensation. to XX% We estimated increased the past for delivered quarter in of the extension over This selling of years. average third was two delivered The the from which the in midpoint was the previously quarter, efficient XXXX the price the The during partially the homes

a times of be and times expect term. the materially for Gross due of in volatility said, be home XX currently between year-over-year relative and basis cycle quarter. extended close cycle the from to the X,XXX this of potential have XXXX There be for foreclosed $XXX,XXX a XXXX fourth we homes these quarter our X,XXX selling conditions. volume units in catalyst to remain and points decreased $XXX,XXX. and to sales With to longer anticipate economic and price risk units are improve to forecasts the to by home sale underperformance continues XX.X%. deliveries to to of quarter Our between and fourth increased We margin average closing that unlikely improve heightened we the positive believe industry

the inventory previously mentioned, due recognized the As was during decrease to primarily quarter. impairments

of the as these rates. as tool as points the XXX by about financing well offered use to a our as incentives increased mortgage related costs year-over-year, of mortgage in Incentives incentives which likely XX contributed to to building higher also brought basis decline. homes points level The to increase in increase concerns we incentives address an through affordability continue on increased closed incentives financing However, basis company. will near term

having years. segment the our Excluding inventory absolute impairments, of increases were each committees across year-over-year sales our These largest level implemented gross across margin our in highest the home the West having nearly increase. past improved price with two from segment over all segments by of East improvements our driven our

We between expecting margin currently no for home are XX% impairments XXXX, adjustments. or gross of fourth warranty assuming and XX% quarter from the sales

quarter expense, General quarter. revenues. the This $XX.X SG&A related third SG&A third million general XXXX $XX awards sale based from the year to an and quarter home compensation expenses. equity our $XX.X by for XX driven granted stock total percentage point recognized Our increase expense expenses increase to resulted increased a expense increased a from in the we primarily quarter in administrative from in resulted million XXXX $XX.X expense and This as of million. during increased of the as dollar prior million basis increase administrative

have Larry noted, general reduce to moving administrative taken and As we forward. our steps expenses

million. its additional net of orders. during were prior due than from an have expense to decreased for decrease from more evaluate to XX% quarter fourth negatively number cancellations. million cancellations the quarter, X,XXX seen quarter the will headcount earlier currently in $XXX.X end to our orders year-over-year other cost the unit peak XX% decrease dollar Net unit impacted year net of XX% our the estimate year doubled which approximately orders of value and our $XX be administrative to by continue that XXXX opportunities and savings. this general We for We The

XXXX. backlog. Given during beginning occurred cancellations X.X%, were and In it term coming over is build order from compared of percentage that to longer average we of analyze of with XXXX, quarter third of XX, our the quarter best XX March the the cancellations as business In the as the quarterly prior occurred cancellations quarter a to years that to of orders run and our XX.X%. to prior prior a past XX.X% of to up part mortgage orders were quarter rates beginning our from large backlog that model, the third XX% cancellations believe percentage

the As from higher cancellations their of buyers third higher XX% buyer afford purchase to cancellations the equated we still who percentage David This the at also no percentage buyer during of those that quarter with of were could during type the third for attributable strictly was contrast, move approximately greatest In a mentioned, a qualifying forward of mortgage. longer to compared saw for to to quarter cancellations to quarter cancellations rates. during of mortgage. who a the qualified XX% the quarter, no due second longer during

activity order XXXX. the XX% XX% About inventory. of XX% down was spec for from gross Before third quarter activity quarter cancellations, was of year-over-year third gross second and quarter our order our the

cancellations highest seem go, orders to the quarter gross similar lowest With with than month a saw Looking of will number at monthly orders and of for the the the and in having cadence they October the cancellations cancellations to the each we quarter. for gross gross the recorded before, third number activity, September. of days few September the be more orders fewer number like of of and month numbers

was cancellation at to we of a selling to and an approximately decreased gross a in new orders of as base the of order from of sales on our quarter analyze The this second metric price activity our in the new Looking basis magnitude basis, and due X% given as On decrease prior decrease our in this second of the communities. XXXX X% sales average compared well pricing quarter. price as incentives, average year increase as the quarter gross during year. orders, increased to compared certain for a approximately price the average mix

increase count East up segments active ago. our our the end a Our by entirely West subdivision year-over-year with was X% at and from This driven was XXX XXX both quarter experiencing segment year decreases. Mountain to

saw community a active California new markets Our largest XX the total in year-over-year increase Arizona net and of count, adding communities.

of million We quarter, to million remainder expect count spend down total into We community land to the continue acquired our selling during lots of year the XXX spring quarter. $XXX the XX% the in XXXX and resulting $XX acquisition active through in season. XXXX third increase the from

We same $XX.X from million charges that million last non planned of year. in no recognized also $XXX quarter, spend the up We were viable modestly market. development had charges deposits resulting million of longer in during refundable the is the $XX.X project abandonment in from $XXX quarter. land largely current transactions of XXXX the charge quarter in third incurred on This million addition to second abandonment the project

$X.X option. risk As at we associated lots of in the cash deposits with letters million million end, $XX.X under and currently in of credit had X,XXX quarter

year-over-year of resulted in This decrease one During the XX just a new XX,XXX XX% approved with over third coupled with land a we lot supply six number lots. for quarter, acquisition. to lots deal controlled projects months in last activity minimal the abandoned our

years but of or With months acquisition sufficient balances two supply $XXX XXXX. year during approximately during our yield, a to securities with for duration operating $XX.X to of six fund US initial These used enhanced flow securities less. we first quarter, of short quarter. XXXX has increasing to activities upon of believe this we the three purchased land months the have cash compared with cash With maintaining to months activities several year, the are third of marketable nine needs our nine operating purchase first lower with treasury philosophy increased for of cash maturities operating a consistent our million million the meet $XXX the so for of million supply However, of land. far is

$XXX end the Our process the overall work despite our second of million speculative inventory in in the quarter its inventory. has decreased from peak year at increase this

liquidity quarter $XX.XX. of XXth, book the spec the in with is remain experience XXX and production to of new homes in As maturities growth of given summary, over per ended XXXX units the term to for a In decade, we of the total share complete. likely for with X,XXX until which had value homes under while headwinds of September past no long we the senior prospects near term. the units, billion demand industry the We only confident $X.XX note were new continue

I in cash will fourth the As backlog our mentioned to be key balance metrics. last uncertainty has key sheet position cash great a our in quarter, and better remain with position could strong homes Furthermore, been transactions focus will economic sheet quarter financial especially pricing unclear. our Delivering flow for new better company. persists, which us believe available, a for to us, will remains we balance land pursue liquidity and be opportunity and/or the and the the flow that picture recently put in continued a improvement to during as terms as market than

at Our also dividend which remarks. established consistent quarterly strong level week, of per continued approved dividend, prepared was by payment this That our supports again or dating the financial our of payments $X.XX our concludes position Board the record our share increasing to back long XXXX. continuing

open now will for the questions. line We up

Operator

ISI. from Today's with first comes question Kim Stephen Evercore

Stephen Kim

under you're I end and a be helpful. locked of just completed the the looking development, percent But -- you I that up, the of and also item. to the point you backlog at under this wanted those what construction XQ? if at and your ask breakout, housekeeping land versus have is have about to rate land inventory land wanted if that -- that housing Do you inventory and was what Bob, land would

Bob Martin

XX% are closer was but this, The overall, prior I have around right probably the neighborhood and we're I'll we specifically, check think it overall. QX quarter, somewhere in to for XX%. Steve XX% locked to on probably I rate of think I guess

Stephen Kim

kind And an Because sort some -- you be those of of psychological we’re earnest with uncertainty in that why are earnest effective effects the proactively folks also, you these you Are sort we've mitigate lot put the you percentage that on why the money and back higher? way keeping is mentioned cancellations. money the in those And to to your your -- might wouldn't deposit a earnest things that take actually have that of just then you're mitigate were all had theoretically these and are with volatility situations, the low those of could more And it cancellation you're money? of commentary. down? side, and numbers the levers. noticed cancellations just with seek of wouldn't you the if and wondering looking numbers and some These wondering that to up of whether like your seems experience, market, get pulling the

Bob Martin

So answer as I'll to I can as couple things, a much try remember.

are that billion X.X WIP billion of in to both and as ones cash And to So billion account longer have But you close We we're all, between ahead. for those lock rate quickest they lock interest situation. that. would is housekeeping the within just ones closing And do the the it's is rate in of interest on September I item, quarter were at lock of also of the interested on and asking land release, that to one. first speaking think on that locking the of a are I flows, try about term quickest, a consumers side your focused if the quarter. XXth. split total the Two, priority WIP That's have speaking just going in in our the on was the I the coming X least available say, lock folks certainly, inventory. are main things, so for land. X.X programs that

changing and I continue that other terms reviewed In the have that heard policy. the comfortable of we much everything to policy thing We to the in made market, deposit changes policy. that was deposit to a some of policy. feel like we our we But pretty other changes have make items, about else

Then feel it's again, sure a comfortable market as well. we the want course, make balance, entering to into because at the sure looking backlog contracts what we So is want of is of that to doing. new And buyers secure. rest a we're our bit of make

market. we're reviewing certainly, to very on of operate volatile lot very a as our focused So continue through we practices

Stephen Kim

sales And how for were versus you sales quarter? then lastly the net sales of your in me, many spec would say dirt

Bob Martin

split if it on meaningful guess But the net, in I not course out about third the maybe gross from QX gross we I’m the basis. less can which in was of basis, net XX% up is add, is a XX%, it's the quarter. a and about XX%. ago gross. it's XX, bit year a sure Derek where little on

Stephen Kim

sales higher you're So saying sales, gross gross were of is that XX% it was dirt the your being sales share that sales, before? gross than of and sales dirt

Bob Martin

the of spec No, percentage sales.

Operator

question today from Wolfe our next Truman Patterson, Research. And comes

Truman Patterson

a you just multiple it as $XX some First, that of when to region vintage color, single to can well the I of color give there. could bought? specific hoping was was million deal communities? inventory or I'm give the kind impairment was hoping land on also hoping related concentrated as land metro it charge, or Was you

Bob Martin

bag Yes, bit a of fronts. it's on a all mixed

nine it think I was communities. different overall

As area Pennsylvania, it West. in. in we East a newer the in were seven actually in East, on two the that The was call, the were operating two said the in we

encountered that costs. was where So some we case, area in unexpected it an

a that were animal Pennsylvania. So one's out But those two in there. different

we you Vegas, had of out one We little and west, Phoenix Then was elsewhere. in California. for the the If kind biggest smattering look Southern areas for a impairments had example.

this course, at environment, cost pretty dealing we're high higher of with levels we're still of incentives. levels of And in overall. naturally, So

So triggers few a that of tripped in a areas. couple

came that number So did up and we the the analysis with. we that's

were And on. thorough analysis. what's today's that in we we we used really with sure assumptions made So very going

contracted. different I periods of point again, vintage different specific kind scoop to, don't kind the but was that's one have vintages. So were time those originally it of to that

Truman Patterson

base time you incentives the third in for I'm cuts incentives could in been rate Bob, have I kind heard about October period? order give level closings. of quarter you kind and price where combined September, just exit the might or quarter, hoping earlier your then what third of commentary of the give And was

Bob Martin

as X% Of incentives they the think we sales as as that? looked base got think at go, overall, second, to X%, number. more quarter me we can page was what So we far were as up so quarter trending price about decreases, the for but were end. hang I I get you I for for the with Derek, one a exact towards

Derek Kimmerle

small range… price are Base decreases pretty relative

Bob Martin

was, a It I can get incentives, I think relatively but minimis exact… X% number or X% de that of overall kind to the relative

Truman Patterson

for And that? we're relatively through behind a one Are you're then out call any you you final regions metros, there level the any just numbers whenever me and seeing put elevated know where thinking could of way incentives. some level to markets,

Bob Martin

of price decreases? terms In

Truman Patterson

the incentives… order just of Yes, level

Bob Martin

Probably, you're most getting some markets. in

that's call line areas one bit I outer you, to an a that but percentage Phoenix exact the for would I those might of of have don't Some little out. be more relative numbers. elevated

Operator

JPMorgan. question our And with Michael next today from Rehaut comes

Unidentified Analyst

on is This build cycle -- not there? spoke to detail improving. just I any [indiscernible] could in Mike. I Dan there future? relief around you you color ask, really of any kind know that times. was you for the materially more QX give see wanted Anymore to

David Mandarich

more we and little maybe that be that's going the a to that front house. at, the expect, start we days We're or on to I bit third during even And including than in the that XXX it's houses the closed level time quarter sale end close, in QX. the at think, before

the seen actual in yet, but we So period of going time less some be for of is in to through houses simply finish, working house expect there pipeline. start relief that we that to we from a ton could the there terms construction less XXXX opportunity the there know time I because the started, we of don't have the be

the finished are plenty I busy. still trades think

So there really haven't relief yet. seen we any

under our So it times. were this we to on is point, sale quantification this time, at this we close I as say. I'm went XXX, dirt before say just hesitant on period other to should put to cycle houses, sale than any And of through

recent the we in So levels low. have at we that's been in that terms much saying but necessarily time. in lower there XXXX past can cycle get of not the Certainly,

Unidentified Analyst

I the I I then cutting initiatives. guys could on expand about remarks, heard something in you And think to you saying cost wanted all. see that prepared if at

David Mandarich

about as where that our XX%. from -- does staff proactively. didn't peak And of that that position. think of of headcount, reduced down includes more the I quarter, And where then left end attrition replace terms includes situations in and couple our some are the we Yes, we we a folks

Unidentified Analyst

And change any you strategy, less Is there in then entry color go-to-market more from or one any are me. the there? any on focused level

David Mandarich

past a say the spectrum good of on have got still of few We much bit pretty focused a I would as affordable the more been realm, years. products. we're we have over the course

Operator

with Zelman next Alan and comes today Associates. from Ratner question our And

Alan Ratner

in And but figure this impairments terms impaired quarter, know, of list incentives others terms been not active larger. might guess, probably a but You in be some that you back communities and here. might used of bit have do an of the in the Bob, watch have have disclose figure forward you relevant impairments. updated that potential been have my disclosed impairments? communities the I'm that's might to I'm I day, a to you going indicators to guessing First, revisiting believe shown and of communities, mentioned price do a more might net adjustment a triggered type second. for those those I guessing wide, the happen what company

David Mandarich

for end the going quarter. to of I doing don't say, at have clearly we in I a the be the more list deterioration, will same you. watch impairment we're this see market, if analysis

So of impairments are always wake changing possible industry in the conditions.

do analysis every impairment we'll report the to So and back. quarter continue

is the terms I the stick decreases think, pretty the cases, those in prices inventory if of selling say term showing significance. of point. spec for spec of we and communities deal asset, wasn't the clear impairments. hard looking And I terms what that community are it's mentioned current But facts have the circumstances of at year is not couple a those Whether some trend, kind magnitude, where when the drove going maybe each or to direct to with just there open time it's only even or or longer can it. different whether a that inventory, big In comps, fiscal the was their see at not In that yet. of we we're we at

took information calculation. available and we So was the made the that

Alan Ratner

across Second increasing question have on been the industry. cancellations, obviously,

place sure those kind is You mentioned line your and to homes of you finish that have get making possible. priority as as the that closing backlog many in that of the

rate than at higher a average, what a of least was [can] we've far backlog. percentage as seen so the Your group bit

price So to you whether you did of incentives versus buyers still in kind forward. confidence/pricing of because mention it keep results afford backlog in think to is further had Where sounds type difference could order when those and offer to and place of I'm like some of it have curious, point and look walk, the of draw canceled was compared you units? where to what what What decision reselling in price buyers a backlog the to you good the was or do equation there. originally of line the chunk them you more discount for? move like letting you the a margin It can about those them

Bob Martin

those taking a we we're backlog. think in communicating get I cancelling them are important buyers least and -- at with can at most shot mean, if keep seeing thing is I that the that

that past, presidents those just gotten where to else someone we've manager we have had to want consumers, sales we every So of have the or have I think point conversations in division our whereas conversation. the the one with may even

group we skilled and payment. just them we've there. lot else. use. there it out We've locks They're interest making have In at and or managers it's a got out got really great. having of prices, the for something increased down decision, cases, below are cases, in they're those business some of comes a current which conversations it's a tools But rate of So division market to lot a to incentive an

them a just it, certainly and down again of point in we And the still lot maybe fresh settle But bit. bit to not those in things who can this little much concerned a little when do a bring afford keep relationship market. so And they're that there's back. on we try really cases, can

pretty In terms a record on would that. specs, we've of had say of I resale good

XX% of certainty some what gross the out for You to the house us. demand that can number gets know see heard that relatively we can is. a related and get specs, there's of when somebody I overall quickly orders I that our certainly that's terms in payment recent there, my high And

done a have those think our I of job management great results. So getting teams

Alan Ratner

had to you would would have if have, perhaps keep is maybe are that met of price on lower original where than just forward and or so are does the event better in of a reselling coming going the the place? terms And inform any you've getting point, price that at in the buyer bidder you in it it feel you achieved, Bob, to buyers you like if decisions would you kind look that in that have you you in was Or where than a you discount price situation you're maybe, backlog?

Bob Martin

I is of aware think how are and current house division the what is, that already mangers our the backlog. to buyer in that's pricing trade the relates current well what

good think versus they're kind can I what post they So of job against cancels. cancellation get could would they what before it say of doing get they a managing

all taking that account. they're So into

Operator

from Alex Center. And Barron our from next Housing question Research comes

Alex Barron

involved the to it many them? Bob, that this what's or ask, what quarter? how the is triggers think thing margin, gross impairment, But triggers the the heard it margin that impairments. is the And operating the into markets communities I I wanted roughly impaired got I

Bob Martin

basis then discounting community, cash determines impairment operating what really and one go communities it you did say. on But the within on it's what look that nine I you to undiscounted and is. margin operating so have flows, was flow you it's you the trigger should go at. you an that's once the negative And really level that cash on negative, and and expected It if $X

Alex Barron

you going past homes some your And model. know to the But within you builders you starts number didn't speaking, how guys forward? missed of you in about have other or guys the if that? spec can to been it changing also, order thinking I'm not give. sure I are And happen Do starts if quarter? I that the philosophically in towards XX on demand years, for close I'm days? few that saying XX to inclined to that build wondering have are go So more is there's perspective

Bob Martin

a need are optionality sheet we lot have in point. regard changed start you're haven't this example, for spec it a warrant. I flow. of great specs, And the good at I cash conditions to you really With when we say will position, the if start think generated gives questions. philosophy, good you anything if balance to, those to

come we So evaluate. a that's to. a be a continue place to want house a something But can where to for order that bill to buyer still we'll

So and that we'll balance kind assess of a to it's we continue go. as

I look at of what the was the for terms XXX at right happened just think As during in quarter, we're around the quarter. starts we number

Alex Barron

what's newer just again, like looking you you're homes triggering cutting some these existing getting actually communities that's this of on at you said comps, of, communities it with and terms in mainly prices And or impairments? there? Is are

Bob Martin

there in higher hadn't area unexpected couple we communities the where just had we in some I that operated example have the communities of some mentioned a So we it’s that Pennsylvania with. were before, older much of are but costs in costs. hit

that take us directly We going for that's and there cash different flows. cases, in that there, it was to some some account whether different is into the communities. fact a it's the or out discounting Certainly, through on So things related competitor. it run

Operator

Jay Our with McCanless next comes Wedbush Instructions] from Securities. question [Operator

Jay McCanless

first cancel one, did cancellations thought of get driven proactively to decide were line? guess the finish guys people or out the majority in some the quarter might the I you that you the not customer

Bob Martin

we a earlier because buyer a have as more remorse we on category. in that that combination it David if and to mentioned guess don't who were going But it's I hit I backlog find Yes, proactively. constantly. is think just saw And will we to make coming are we conversation it, our that as well, we

more to where that's comes So back proactively us. buyer the

And they at to really proceed this just so want didn't point.

number mixed being two bag, category, that number being So a financing. remorse one

Jay McCanless

think And that signed, Bob normal vintage just had who a before I on the to that suggest drop going are because you day have? if XQ Does from said you're 'XX people March XXst of cancellation take 'XX the so gap cycle. XQ of you to closings and for XXX than that a steeper

Bob Martin

XQ did XQ, you say XXXX?

Jay McCanless

into 'XX 'XX. XQ

Just volume look from think the that? ramifications about trying like to

Bob Martin

that's to QX, closings your information mean for on X,XXX range X,XXX put best there. out for I we so our

of haven't means when We QX. get close any But say and you do quarter even year, into got to maybe or have dates back that back guidance within you out it put for of QX sell can a will us last I you that course, QX QX. and cancellation potentially or the

So a if periods in we to lot had cancel to period. the of future those additive even units them will be current

Jay McCanless

ahead some last then to in tougher this seems you not you're in apart communities when priced you that or pick the more California, those and lower question had go this more entry affordably quarter And that because majority opening and of is are it to areas? the strategy. But like openings I said level had, land were open, Arizona of

Bob Martin

lot little rate as increase out lower, we cases, think, going expected, have bit In more closeouts. so counts is count. open the continue just In in up fewer communities. because two ones you than those the community had greatest community I bit stuck our markets, sales of the to little some a a that a

strategic fairly a a supply of standpoint, from got land. limited we've So

and don't then cash the to And sense. later mindset we're going convert readily available. to think in the short just the to it open sit we're with the become ready they're market land makes them when reinvest going we supply, on of and to that communities, I So on we're as ability have easily

we'll that's the really ready continue as they're communities online. to strategy to So and come open

Operator

question And our comes with David Longfellow. from Stuehr next

David Stuehr

A emphasized, few my liquidity have rather this be pressing at overall the kind what on in There's that in doing potential a on certainly, that been definitely solid they thought But prior just acquisition would and this is look terms wrong, conference you've at this viewpoint is you a was industry cycle shelf So And typically on no I've the if space? conspiracy of substantial terms always behind time? in more back, calls, of months you great. filing. firm's of Were do, curious color what theory ends curious of down consolidation your kind shelf and taking a just filed once on this you and registration maturities. bond call here.

Bob Martin

There's think incremental really much did there activity don't versus any of involved particular I that anticipated shelf. kind or doing two when that with was transactional no work we one. cost versus five

enough of in industry kind might So where was you But one things to consolidation, as figure it out. I'm that's well. those terms not of of what smart

more aware there out than been that's us. who been think I'm nothing that cooking. there's there of lot I right of a out acquisitive a lot others now there's have And

David Stuehr

would you some look, figure? that's from point, that I clearly, I something mean, mean, I to a take would perspective strategic a entertain, at But

Bob Martin

Well, and in interest along I the shareholders. come as the look do think of any things company, public what's company has best they to at

Operator

and the answer management ladies like any final I'd conference session. remarks. to concludes to and our turn gentlemen, this over the And team for question back

Bob Martin

to on our forward being And on look you again appreciate jump and year we the we today. We after QX you closes our earnings call with speaking call.

Operator

concludes conference We today's all presentation. This thank for you Thank call. attending you, everyone. today's

You may wonderful now a have and disconnect your lines, day.

M.D.C. (MDC) 27 Oct 222022 Q3 Earnings call transcript