Earnings call transcript Q2 2023

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Operator

Hello, and welcome to the M.D.C. Holdings 2023 Second Quarter Earnings Call. [Operator Instructions] I would now like to turn the conference over to Derek Kimmerle Vice President and Chief Accounting Officer at M.D.C. Please go ahead.

Derek Kimmerle

Thank you. gentlemen, to and ladies morning, and M.D.C. welcome Good Conference XXXX Second Earnings Quarter Holdings Call.

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

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

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

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

Larry Mizel

income market go we our the M.D.C. us XXXX outlook today, some quarter Thank of provide for over and as and second current homes for for reported our second for you joining of billion. million home X,XXX conditions the driven the quarter total results into over company. resulting insight $X.XX diluted share net per revenues by in of a of of $X.X sales the $XX delivery XXXX, or

Order a basis. the activity generated on X.X net orders sales homes on improved per pace a of sequential month. per year-over-year and We community new X,XXX

increase share. in giving We also liquidity ended to billion the by the industry-leading to $X.XX XX% our per securities, and dividend us with quarter cash marketable reinvest necessary $X.X over quarterly business our and in

provides Market resulted existing conditions have adjusted remained healthy favorable during new market higher of home a low combination to much the environment the that in come in resilient have quality and and way supply as economy mortgage rate our at customization the construction, communities. second trends to home of quarter traffic realize as to Buyers and market. existing functionality more the the may home compared a

we consistently many implemented the have in the where demand begun to the the has of strong patterns quarter us And traffic raise incentives allowed communities, we on year. scale The in earlier to strongest. prices during been back

positive conditions. building in a Another quarter during noticeable the development was improvement

have built we the quarters now starting closed in chain as projecting construction we on a For pandemic, in sequential the homes are of build we days considerably conditions the that on time achieved average the Supply those several and improved time quarter. are improvement the first under-XXX construction in that today. availability since homes for a material

quarter, light our better have inventory company. demand capital turns we and giving in dependable purchase industry, growth for us seen we A necessary chain, lead more streamlined impact second active the and both improved more become achieve efficiency which of a improvements will have building way and of X,XXX objectives. have lots, should over conditions, In pipeline a we approved to In land go towards the the our supply a the in our significant market. long in and to land

we with market local size, benefiting that We rely to access competitive, on market. well intent from market will trend. from scale the believe edge While our from who lenders. existing capital builders, is this public smaller builders significant home gain provides that continue a on believe M.D.C. project as the builders smaller financing and And land remains private over share to as us

momentum housing advantage front is take well improved and as opportunity chain M.D.C. increase compelled, homeowners their the current healthy sheet, see creating fill on our for to order markets. stay solid the to has we existing in put With real The positive homebuilders void. a fundamentals, of balance to mortgage positioned in supply homes, and in a the rates

in is years there great addition need building, In of the after country this a Recession. new for housing following under

outlook in our and of As M.D.C. very a the about are industry particular. we result, optimistic

the provide to over like to more call I'd David? who detail this turn David, performance operation our on will Now, quarter.

David Mandarich

quarter gross in Thank activity fairly and a slight June. and throughout May orders to in the by our quarter. being execution rebound results chain our Order for order of a With strong solid strongest perspective, second the followed was month April you, a slowdown a M.D.C. consistent favorable healthy conditions from Thanks Larry. by supply demand XXXX. in delivered environment, homebuilding more teams.

with have East improvements the the typical our line year, Orders Mountain expectations. segment on in trend both of basis both our for time the a Each the their and the sales saw and been West segments. and so segments with far base of sequential homebuilding in during outperforming this in quarter, July, year-over-year

results sales Nashville. and newer in strong Boise, experienced Albuquerque markets also our including We

was Our home sales from in quarter the XX.X%. margins gross

of gross our the at impairments, with Excluding consistent was from home margins XX.X%. sales first XXXX quarter

we market-wide the incentive instances. balance than margin the experienced us higher second As allowing prices and our backlog quarter curtail projections improved the in giving are pricing in year. for in the Gross confidence as of raised we in Larry our saw currently quarter, mentioned, to activity progressed, many margins us

We spec switch of of inventory This ended the construction, seen prior a from quarter we've broader in part response our marketplace. unsold strategy from homes with year the to in company increased significant is the that level X,XXX under increase changes the period. a

Most move-in a sale found quicker. than time, associated buyers between These home today to a shorter we order and time cancellation forgo sale reduces are to with personalization, with want and perspective, to turns. our some home. builder in a inventory shorter willing their helps buyers From close our also get

studios not To build-to-order we abandoned be have have business. our moved away clear, leveraging we design Gallery our nor Home from

homes our communities. furnished curated With more all to-be-built of is options spec professional goal upgrades design with and available at some of Our to homes of our a spec the have mix amenities teams. by and popular

allow Home to deliver timely to Gallery will a our shift this that typically manner believe associated homes while offerings. still customers, with benefits more margin us in gross our getting We the

about own Buyers good the higher and remained we our motivated home a interest home engaged heading positioning and feel Overall, rates. new into of the to company's the market despite year. back half

first-time the product be today's While market. and our job efficiently successful homes more in have creation with to and the our our right right place we strategy to the business past. I in in we most to deliver to practices cater homes of adjusted these the to communities to economic right In believe short, buyers markets and be have homebuyer the favorable, growth designed have in continue

it to like results over I'd more this that, Bob who on With quarter. detail to our provide turn will financial

Bob Martin

Thanks, David, and everyone. morning good

increased quarter the a quarter second decrease representing a the costs $XX.X sales pre-tax revenues the $XX.X incentives represented that those was on income to decrease during as as of second sale a million impairments closing decrease also XX% the homebuilding XX% During result home during the net from XX% per $XX.X from of partly diluted well of quarter, was from XXXX. income was generated our Pre-tax period lower by share, second due The margin we of quarter a and from in higher which construction largely or This a for inventory the million, as $X.XX homes home due operations million lower period. recognized XXXX. of incurred closed decrease caused gross volume. to

of costs from to was services financial in incentives. allocation the headcount and the increase XXXX income $XX during The our Our associated business compensation lower and our second due homebuilding of revenue quarter by increase rate to pre-tax driven financing lower capture increased million. with

in services and income recognized the $XX.X compared only from quarter. homebuilding quarter, income quarter. our On income pre-tax with financial second interest the basis, $XXX,XXX benefited consolidated year prior Both during interest the during million increased we a of

benefit quarter. the lesser Our tax the into have or extended was were and decrease primarily second to XXXX as not XXXX to vested credits quarter decreased that extent to equity yet rate XX.X% tax second the on exercised quarter quarter. a for not awards of due did The that as energy windfall the from they during XXXX year XX.X% prior been

now tax or result, changes be we policies. As expect any effective to tax any the full items potential roughly rates This in additional include does estimate a discrete not XX%. year rate our or for

decrease homes We which during XXXX represented delivered the quarter, year-over-year. XX% a

of continued strategy, construction exceeded we our previously Closings the quarter our execution for for However, to estimated of our from range X,XXX cycle as benefited in as spec improvements our well quarter the X,XXX closings. times.

under times of in of to cycle based times on our half expect the improve cycle year the We second the to homes projected continue our construction.

X,XXX currently homes and we in year-over-year of of result homes. $XXXXXX. the stated XXXX XXXX. anticipate for was This during between X,XXX with consistent and a first quarter to The average quarter quarter for with our previously delivered guidance quarter price of the the third the As decreased X% selling deliveries line

of quarter We XXXX in approximately to price expect $XX,XXX. the the be average selling delivered third homes

the the Gross quarter. prior quarter in margin from home year XX.X% compared for XX.X% was to sales

home from homes, largely an Excluding driven were higher Current original were majority quarter closings of sales gross by spec was were inventory home contented the in compared two-thirds to by quarter prior quarter the impairments, as decrease which homebuyer. construction XX.X%. costs incentives the with as burdened our closings for during the This year. increase of also margin the was

to an introduced or These spec our members and continue Gallery curated have Home of collection. design we by team geography. our to pivot we selected operations home number include plans As by of homes finished prioritize increased recently the to specific details homes, professional

in on to allows capitalize given to design move to buyers. collection designed built-to-order thoughtfully homes deliver homes quick experience our curated expertise with us Our our

more from see we of costs, from curated of margin way improve our construction the closing further move into and its population gross should work inventory we levels. we see peak spec recent away period As our

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

a to was year decreased prior quarter. million the in total represented as This a decrease decreased and and XXXX expense was administrative compensation expenses from general SG&A $XXX.X due driven stock-based expenses. $XX.X million, deferred which quarter the decrease decrease for by Our second dollar primarily headcount as well of

a We a of also improved closings the a saw decrease decrease expense due expenses selling the decrease marketing as in and in to result environment. and demand home commissions' in

While percentage our decrease revenues XX%. prior the in currently rate home SG&A the of increased quarter. a for expenses on the below past compared year the $XX to allowed million SG&A be our will implemented our keep quarter administrative third of that home estimate $XX due equity of the to XXXX year initiatives sale during and timing over We awards us million quarter and the between our savings depending revenues, expense general to sale cost as slightly have

quarter driven gross billion has Gross to normal of $X.XX value quarter in second net that levels. and which spec increased of our increase two-thirds activity homes. orders an a XXXX. is second quarter of dollar XX% our The during for XX% returned gross by the to orders current from more were for XXXX orders the orders cancellation Approximately XXXX the were year-over-year of increase

recent Our elevated quarter the orders. was more as through our work This cancellation gross XX% compares in backlog of we build-to-order XXXX of quarters rate of to for homes. second levels

to from result second increases of The gross sequential XX% a orders half due of of pricing of orders $XXX,XXX the average a sales in XXXX. reduced X% sales the incentives. the base price On year, as base first of average and to this quarter decreased during gross year-over-year price basis, pricing in increased decreases

a count year Active XXX at from XXX to Our subdivision end quarter was the ago. up XX%

in soon-to-be graph number soon the This at the that the indicates of subdivision Looking June increasing the count our of XXXX. soon-to-be at active on likely to communities continues is exceed communities number right, the term. -- XX, to inactive active near continue

in During the we $XX and quarter resulting lots, second million land spend land development acquisition total $XX acquired incurred of of costs. XXX million

light in more land market Larry As industry active we conditions. mentioned, in have of the improving become

X,XXX approved over and diligence. management for quarter at we with lots acquisition ended to count. noted lots be XX,XXX stages each additional of lots an various lots second We within the our homebuilding across in of due X,XXX controlled require During are that quarter, that XX still the committee controlled asset by communities block should prior reflected It our our approval these segments. being

quarter short-term and the XXXX. over senior with ended investments, over We billion total until $X.X billion no January of maturities note cash liquidity $X.X of and

Our and to our exceed debt-to-capital cash XX.X% quarter was end. investments quarter of and ratio at the continue debt the end our short-term homebuilding as of

We to homes continue increase putting in to work second our effort we our of X,XXX inventory quarter, spec capital the during an started as homes.

homes. we with X,XXX result, ended the quarter spec a As

continue from in work we million flow one generate XXXX inventory our compared spec spec in second of $XX with million with However, our inventory of of quarter to completed less strong per the than the of XXXX. during inflows completed community. operations remains with quarter, the Even into low active cash second in investments process with quarter homes $XXX

continue we decision summary, successfully inventory. execute In spec on build to more our to strategic

Our have increase X.X even majority came community. record to decreased lows been an ideal the causing We move-in homes per ended with by homes teams. levels to existing home pivot our for these professional inventory curated active demand further. spec time quick the have homes design And at of as the quarter spec homes to

periods. on now closings. full we of believe homes construction worst of spec projecting at represents times we our a XXXX with recent days are where cycle our which we seen X,XXX construction make time provide These of improvements addition, that now In year improvement should we least starting from been the in us with have strategy coupled build-time way have through inventory under-XXX significant a homes. today, their inventory deliveries for home We're sufficient cycle

remarks. call prepared I to will over our to operator back the start turn Q&A concludes That our now the session.

Operator

from ahead. question comes [Operator Michael Rehaut Go Instructions] of JPMorgan. Our first

Michael Rehaut

Hi, everyone. of could some the than wanted maybe you're the give questions. just margins Thank back half Anything maybe presume and the you to on us maybe a maybe on expecting. I sequential you more Congrats XQ quarter. if on XQ. I for ask, would if you increase gross can taking of puts there? my expand takes; in

Bob Martin

Then upside quarter have the start Sure. I'll the reiterate I to guide beyond think in that third with just XX% do XX% to QX. we that. for in the potential

least We it. XX% we XX% the for activity saw to But incentive-wise haven't quantified the pricing-wise in that QX. at upon based potential QX that progress from in

Michael Rehaut

buckets drove margin if And what main outperformance gross that were you could in the quarter? the quantify this

Bob Martin

expected. as base I activity, as And we as of through think during closed the quarter. then increases. away we sales progressed that into we've QX. sold we That the I in continued first didn't towards sold have we QX quite to end quarter given much guess on great of give units the really and those QX and went closed we have quarter upside did some the as some price that all

Michael Rehaut

all pass you. it Thank I'll for me. Got it. on. That's

Bob Martin

you. Thank

Operator

Our Wolfe comes Przybylski Research. Paul next of question from

Paul Przybylski

start I build-to-order guess what now following do you margin Bob off the normalized you the margin gross a stuff? operating think spec given margin on strategy the shift specs? your is just right are to and seeing to prior between What and type differential of gross question.

Bob Martin

point from that guess words, it. I important was of in the dirt versus the that that a of were by specs we But XXX ourselves. spec. the Yes. probably designed multipronged to question. not It's differential specs we more cancellations ones In like are recognize kind came other it's that basis curated influenced that quarter versus

better doing cancellation. seeing lot a those that from ones the than resulted actually specs curated are that are We

they're In our our really once not far the we going margins terribly from what's house. into in off fact, get dirt too designers involved

So it's a great fact for us.

started since us gives progress continued specs many some this those given think year. really at have in we that confidence that point curated for closed just our this I not additional program of that margins

we're that margins. will to give XX% our for or So around with be model. take us in underwriting gross a somewhere profit And business typically target continue

Paul Przybylski

in to I And the goal achieved think -- of then I quarter. you little past, of you've a normal And guess July. in this absorptions three Dave which seasonality, you alluded mentioned Okay. bit a

are take seasonality As the with maybe quarter, happy third or you would price a that at quarter? pause stop third normal look try three you those the you absorption in the increases to or fourth the on and and maintain

Bob Martin

the with with Yes, market this think low seasonality normal we're I supply. happy in

chance a can it those we summer end so up all the schedules, things. seasonality. with better much certainly a there's normal think you vacations fight I little the that bit only But school than

it So we beyond push try to its limits. not

Paul Przybylski

it. Thank you. Appreciate

Operator

question ahead. Zener of Ken next Go from comes Partners. Seaport Our Research

Ken Zener

everybody. Hello

Bob Martin

Hey, Ken.

Ken Zener

talked million to fair community change? Is or G&A or be whatever of clarify, your Just $XX tied that XQ. be essentially on million should run I the what the think a growth in you the count growth or expense that going rate forward, will $XX fixed kind to

Bob Martin

A couple things. of

by all expected awards. timing First bit of a influenced of equity it's

there. the minor of We some there's count correlation to a think really from at upper kind part And So to point, the a then increase creating would equity because haven't the count versus number. that of of through the the firm the increase there of at the the in you subdivision so on extent this growing the just in timing But the year. awards. level firmly I been determined excluding there, tie the from haven't equity of $XX count the start necessarily end from G&A is, of that million awards, community base in of we're number range it given end which be

Ken Zener

run kind times roughly it's to million structurally fixed that the opposed $XXX seeing correct? should certainly, annual XX-plus say, in four, of range because we were XXXX as I rate it's But Okay. in

Bob Martin

Correct.

Ken Zener

it's that. And industry is starts you're you the a Realizing, of perspective that from doing macro a Obviously, highlighted can't level concerns. the seeing XX volatile seasonality. I and been think avoid appreciate I you just the of months. said some demand you XQ Okay. variance the in

you you now as there slowdown rise realizing just will probably in because But to that trying level that seeing decelerate historically, you something won't hold of that are XQ, pace much XQ, from kind XQ didn't about I'm you're likely a is from much. to low as starts lesson an a going you more of understanding decisions get trying to X,XXX. took affected have months where production? starts kind now -- your if the that how your And by you of that's here you're down there's or decisions XX at were might experienced last challenges for to XXX, guide

Bob Martin

Yes.

are specs. giving clearly Like is popular the But the XXX up of we the to was said, going time reflective we're order. that on recognized is focused low. in recently think The supply build time on we be to shift be go do specs paradigm for in you uncertainty. a more a period XXX to given million think more know way to of very so not just our I more acknowledged And that defensive I that. of

here So, winter the back in thinking our start certainly some houses may about in to bit when half we're markets. be specs tougher that a we recognize it of

we're those we're We ready And making sure specs up final guess some to So, tool is pressure specs. with want replace downward for there'll spring. the that leg be keep I do there. then selling the of and those

ready spring. for ample inventory have We

feel up more environment pretty Given of at of supply economy the XX% think associate that Given seems into that do and so all the kind for starting QX demand about we be account good we specs of orders we to it were moment. our of holding those low of way. for that from taken need orders we're to What starts kind that houses? already the is level about things coming

So, we about that's how think it.

Ken Zener

a from we you article And when I haven't David met. was perhaps Good. house. I built the the But -- think reading a if earlier an not XXXXs, little

if recall two a that. in or think you I day

to guys continue you on I'm improve So your can sure cycle-time.

David Mandarich

And And to you these through a XXXXs, in a you're the we house down housing good a it was cycle. housing cycles. in into archives. Well, did build look we've able the day. or have all a But memory been

the proceeds I to we think of Colorado. Hospital all proud we're the that fact gave in Children's

to different of think And all been cycles. kind I through so ability our move it's

Ken Zener

is would The Okay. going options say more not capital realizing have your working have dramatically. do last lot improve you I've I was question that a to land. been needs that I asking of builders

are finished? that what much. Can exposure or explored to path contracted percent you or you in then you going to be of to lots, talk options been specifically you've capital thinking seeing terms your there as have what avoid the out of finished guys to regards very And Thank to your land? raw

Bob Martin

was at this percentage. about a latest XX% fairly lot supply total of think quarter our I were we so options small

-- one due we Just or is in was on sometimes additional thing builders' there XXXX note are doing is that lots to is that diligence other actively there reflected numbers.

in one as in just small option recent actually it quarter. big a there. pretty we developed until number it's on of We number don't in management we versus believe relative committee. versus number reflect numbers option officially so our our I approvals finished were approved a is far asset And under finished that developed have I XX-XX. But our to point as most by this what relatively then think

land as the less become to it's finished heats the up get harder development of happens Typically contracts what market more project. lot

the develop buy to to flip it But continue finished. look for have wouldn't that it that lots. we surprise versus if more see me lots we'll lots you to So, finished we

imagine something before. that is get to to That used of expensive more going transactions not something I those interest about that's we've get finished Naturally, rate that's get there land a a know done even types to very And can this But mechanism lots. well only to is kind possibility in done. you of banking. environment been it's

where getting of tell focused be that majority we the can't the on future. going can. it's So, to loss But you we're we I in what finished do

Ken Zener

you. Thank

Bob Martin

Sure.

Operator

Jesse from Zelman comes Associates. Please Lederman question next go Our ahead. Instructions] of [Operator &

Jesse Lederman

question. thanks And quarter. strong the on for taking Congrats my Hi.

gross a elaborate on your what's a here with and guidance third then the regard quarter improvement improve costs. for maybe talk bit more improvement construction embedded embedded in can guidance? sequential briefly Just the within quarter of in what's margin fourth or as you Could Are are holding within your they time alongside cycle to you of well continued expecting to kind costs improvements, you or about that? flat, hoping

Bob Martin

flat this point. at more it's think I

costs cost continuing by through to large down lumber coming go think will in land sales the a of our are increase Its to little probably an a that I P&L. bit degree continue. and in costs offset of

So net-net pretty it's neutral.

Jesse Lederman

it. a Got quick just follow-up And on that.

You starts don't your expect any market reacceleration in will competitors' resale from of costs. tight think ramping because reacceleration costs be given kind you the you and in of maybe advantage size take your to of some insulated

You the of steady hold next couple relatively to expect over quarters? those

Bob Martin

steady. it the think months Right demand of up. subcontractors. There's go we higher use supply chain issues did ago higher costs doubt that ago. I that we months But could always now risk XX that have will don't be No XX

point this So tame if we activity see at and a more to continue system. come construction do great I it the be bit will even great through think demand

Jesse Lederman

That's just of you where has strongest. helpful. your Thanks. ability is My to price talked about demand in your some communities been next the raise question

you're You incentives been the trying pushed West markets troublesome to quantify the find you're region Are push for the where seen there's you other you of price either have maybe which some that regions across you've market. strongest back even demand. or of strongest to have any West the or been and maybe highlighted on particular still which to able out the the communities able price? in pull if And in to percentage was

more you elaborate If a bit on as those can little well.

Bob Martin

Yeah.

that something I been XX% out guess have on increase of average we pricing From communities price our increased thinking about stat we we've X%. So standpoint, able about do percentage put to a we the that a in. to

doing were the points side to better incentive relative basis we in doing On XXX what QX. about we're probably

to points it's to vast sales improvement relative or basis have less. some of that communities incentive. it's price whether imagine the price So XXX majority the of level have I

us back a to really in environment care and on for QX. incentives So the price great increased

In markets terms great stood activity. of We out. that saw

everywhere little a bit They I Phoenix sales quite a really inventory. standpoint. think about a just had from we bit accelerated more

West in that saw of that? all in So for David, good to markets. add us one was we our but anything the to a good really activity

David Mandarich

No. Bob. I agree with

what we're recovery. really to seeing mortgages. think I range this market the think rate that I that is accustomed more also call We're of what consumers year broad kind seeing I a are

of So and plus think the houses. I undersupply resale

overall our I are across think I think pretty So markets good the board.

Jesse Lederman

I the you. Thank appreciate inside.

Operator

comes Our Kim ahead. Stephen Evercore. next Go of question from

Stephen Kim

Great. Thanks, had guys. I overall quarter. in of the the you level had specs that a about question

in going over to need to likely guess community was I go? or Xs wondering strategy. ended this is you to nine is at where nine continue spec per this last you where of a three little level per rise? you like number of Do XQ I to sort feel It understand at like much think community. be, you're year. high the like the I pretty in like and I'm But

Bob Martin

that's a a close, community I internally, just think, general talk XX Steve. We lot we're per but about guideline.

a lot X,XXX done of think It I specs. good was we've work.

in I we started think QX.

so imagine, will that bit lot not in higher preparation QX. in probably little of that only it half it So do already. sure that stages we back inventory we spring. have spec the for I sell work part of And can the a available. flow want inventory in to really But close in of is and construction, really a good spec make just we've a latter year that done of the

Stephen Kim

be happened really other of here. my like about thinking you this to in to wasn't like point over you're of more would optimized. kind words, And have getting the where And inform what taken specs have our probably specs few orders level I'm sounds In I'm what you of -- or It will for quarter. think the it like quite the -- could about felt than the your thinking you -- that sounds -- this pretty entering XQ leads if could because the wondering, orders if for spec like Right. you already. follow-up if it much now was the how you more it when course situation quarter next did. optimized quarters

So, it way about sort in is absorptions and that of really did XQ reflect not yet a fair orders that thinking optimized an spec assortment? of

Bob Martin

there's think truth to that. I some

I But data a that our the stage. set. to it's between and generate seen number brain specs ability have orders beyond have think, we limited we of a the correlation

In allude story. to And part better think than fact, the was orders the it somewhere, were that I June we of May.

Stephen Kim

margins. then And you great. That's about the talked Yes.

that couple relatively like I be guesstimated why or not on BTOs. a theoretical as you that? might generating where a just about what period, of could able sure be margins of a a a could XXX those specs, reason how there than this similar is in during so that would lower curated talking something pretty the from make that resale I actually to to a will margin a think to to higher on low specs Is want I than curated actually to being Today, convenience quarters curated inclined quickly. respect higher? Have basis ago seem curious maybe you think points margin And with BTO. be I'm got hold inventory and would BTOs move right. customers explored had then, these I that you're to spec for the pay bit premium

Bob Martin

not. know is reason there that don't why it a I could

those the that something we've ability more in great supply/demand They've a margins their market their sold points, earlier generate a cycle. curated just to the get life have dynamics But to in as you certainly described, there this it's if the of some advanced tended get started are are closer the age program. finish we meaning units. there, bit Steve little really to SPEC as in to you might As possibility

Stephen Kim

later That's I'll right. all great. Okay, follow up that. on

for owned is amount Lastly the me of lots.

you you the a think level sort I'm talked what you -- the worth about I something curious optimal like refundable little of or see Where about of Is owned that? years' and refunds the options kind X.X bit for deposits. do guys? like the actual with lots. is But it of level

Bob Martin

-- I guess to would just closer the tends Yes, if maybe X.X% say, say be I to talking to it's you're the mark. two about I to would owned it piece, closer three.

Stephen Kim

much very Thanks great. That’s guys. Perfect. Okay.

Bob Martin

You bet.

Operator

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

Bob Martin

us of third for release following Look call quarter with again appreciate to today. joining earnings. everyone forward We the the our you speaking

Operator

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

You disconnect. may now

M.D.C. (MDC) 27 Jul 232023 Q2 Earnings call transcript