Financial Data and Key Metrics Changes - The company reported net income of $93 million or $1.24 per diluted share for Q2 2023, representing a 51% decrease year-over-year [24][41] - Home sales revenues decreased by 24% year-over-year due to lower closing volume, with total revenues of $1.1 billion [41] - Gross margin from home sales was 16.4%, down from 26.8% in the prior year, primarily due to increased incentives and higher construction costs [13][41] - The company ended the quarter with over $1.8 billion in cash and marketable securities, indicating strong liquidity [35][47] Business Line Data and Key Metrics Changes - The dollar value of net orders increased by 37% year-over-year to $1.21 billion, driven by a 21% increase in gross orders [4] - The company delivered 2,009 homes during the quarter, a 21% decrease year-over-year, but exceeded previous estimates [32][41] - The average selling price of homes delivered decreased by 4% year-over-year to $549,000 [43] Market Data and Key Metrics Changes - The company noted that market conditions remained favorable, with healthy traffic trends and resilient buyer engagement despite higher interest rates [2][3] - Each homebuilding segment saw improvements in sales on both a sequential and year-over-year basis, with the West segment outperforming others [28] Company Strategy and Development Direction - The company is pivoting towards building more spec homes in response to market demand, with a goal of having a mix of to-be-built and spec homes available [64][72] - The company approved the purchase of over 1,300 lots in Q2, enhancing its land pipeline to support growth objectives [26][71] - The strategy includes leveraging curated spec homes to meet demand for quicker move-in options, which is expected to improve margins [68][72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, citing a need for new housing after years of underbuilding [27] - The company anticipates continued improvements in construction cycle times, projecting under-180 days for homes starting today [14][36] - Management noted that the increase in mortgage rates has led homeowners to stay put, creating opportunities for homebuilders [37] Other Important Information - The company ended the quarter with 2,155 unsold homes under construction, indicating a strategic shift towards increased spec inventory [39] - SG&A expenses decreased by $27.1 million year-over-year, primarily due to lower headcount and decreased stock-based compensation [69] Q&A Session Summary Question: Can you elaborate on the gross margin expectations for the back half of the year? - Management expects gross margins in Q3 to be between 18% and 19%, with potential for upside in Q4 based on pricing and incentive activity [74] Question: What drove the outperformance in gross margin this quarter? - The outperformance was influenced by a reduction in incentives and improved pricing as demand strengthened [75] Question: What is the expected level of owned lots? - The company aims for a level of owned lots that aligns with their operational strategy, currently focusing on a mix of finished and developed lots [106]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ FORM 10-Q (Address of principal executive offices) (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-8951 M.D.C. HOLDINGS, INC. (Exact name of Registrant as specifi ...

Financial Data and Key Metrics Changes - The company generated net income of $80.7 million, or $1.08 per diluted share, representing a 46% decrease from the first quarter of 2022 [9] - Gross margin from home sales decreased by 890 basis points year-over-year to 16.8% [12] - Total dollar SG&A expense for the first quarter decreased by $34.3 million from the previous year, driven by decreased general and administrative expenses [13] - The average selling price of homes delivered decreased by 1% to $551,000, below the midpoint of previously provided guidance [11] Business Line Data and Key Metrics Changes - The company delivered 1,851 homes during the quarter, a 17% decrease year-over-year, but exceeded previously estimated guidance [35][122] - The dollar value of net orders decreased by 48% year-over-year to $957.3 million, driven by a 44% decrease in net unit orders [38] - The company started 1,666 homes during the quarter, up 170% sequentially from the fourth quarter [41] Market Data and Key Metrics Changes - The company ended the quarter with over $1.6 billion in cash and short-term investments, total liquidity of $2.8 billion, and no senior note maturities until January 2030 [16] - Existing home inventory remains constrained, with only 980,000 homes for sale nationally, representing a 2.6 months supply [99] Company Strategy and Development Direction - The company plans to maintain a higher level of speculative inventory to appeal to quick move-in buyers, while still believing a build-to-order model is prudent long-term [32] - The company is optimistic about lower incentive levels on spec inventory moving forward, as design teams are enhancing these homes with popular options and upgrades [36] - The strategic decision to build more spec inventory is already paying dividends, with over one-third of first-quarter deliveries sold and closed during the quarter [136] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong balance sheet and positive fundamentals in the homebuilding industry [6] - The company noted a rebound in order activity across homebuilding operations, with all three segments performing well [7] - Management acknowledged heightened risks of underperformance due to increased economic volatility but remains confident in the company's ability to adapt [12][29] Other Important Information - The company has seen a significant improvement in market conditions in the first quarter of 2023 compared to the fourth quarter of 2022, with stabilized mortgage rates and improved buyer confidence [93] - The company has a strong financial position, with stockholders' equity over $3.1 billion and a book value per share of $42.83 [111] Q&A Session Summary Question: What is the outlook for the interest income and its sustainability? - Management indicated that interest income jumped to $13.5 million, implying an 8% annualized yield, and discussed the sustainability of these investments [51] Question: How do you see the level of speculative orders moving forward? - Management noted that two-thirds of orders were started as specs, indicating a preference for quick move-in homes, and this trend is expected to continue [69] Question: Can you elaborate on the gross margin and its future stabilization? - Management acknowledged that gross margin came in below expectations but expressed hope for stabilization and potential improvement as construction costs decrease [145][159] Question: What is the company's strategy regarding land acquisition and pricing? - Management reported seeing softness in land prices and terms, indicating a favorable environment for land acquisition moving forward [55][78]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-8951 M.D.C. HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Delaware 84-0622967 ( ...

Financial Performance - Home sale revenues for 2022 reached $5.59 billion, a 9% increase from $5.10 billion in 2021[107] - Net income for 2022 was $562.1 million, or $7.67 per diluted share, representing a 2% decrease compared to $573.7 million, or $7.83 per diluted share, in 2021[113] - Homebuilding pretax income increased by $31.8 million, or 5%, to $691.5 million in 2022, driven by a 9% increase in home sale revenues[115] - The effective tax rate increased to 26.0% in 2022 from 23.7% in the prior year, impacting net income[113] - Total financial services revenues fell by 13% to $131.7 million in 2022, down from $152.2 million in 2021[145] - Basic Earnings Per Common Share for 2022 was $7.87, a decrease of 3.2% from $8.13 in 2021[291] - Diluted Earnings Per Common Share for 2022 was $7.67, down from $7.83 in 2021, reflecting a slight decline[291] - Net income attributable to common stockholders for 2022 was $559,396, compared to $570,680 in 2021, indicating a decrease of 2.3%[291] Cash Flow and Liquidity - The company ended 2022 with total cash and cash equivalents of $1.28 billion and total liquidity of $2.43 billion[111] - The company generated cash flow from operating activities of $905.6 million in 2022, a significant improvement from a cash outflow of $207.99 million in 2021[107] - For the year ended December 31, 2022, net cash provided by operating activities was $905.6 million, a significant increase from net cash used of $208.0 million in the prior year[172] - Cash used to increase land and land under development decreased to $95.4 million in 2022 from $502.8 million in 2021, driven by the acquisition of 4,377 lots compared to 15,435 lots in the prior year[172] - Net cash used in investing activities was $585.9 million for the year ended December 31, 2022, compared to $27.7 million in the prior year, primarily due to $656.8 million used for the purchase of marketable securities[173] - Net cash used in financing activities was $206.1 million in 2022, a decrease from net cash provided of $335.2 million in the prior year, largely due to the absence of proceeds from the issuance of senior notes[174] Inventory and Deliveries - For the year ended December 31, 2022, total new home deliveries decreased to 9,710 homes, down 3% from 9,982 homes in 2021[119] - The total number of unsold homes completed increased by 1,484% to 396 homes, while homes under construction rose by 241% to 1,063 homes[143] - The total inventories as of December 31, 2022, were approximately $3.516 billion, down from $3.761 billion in 2021, reflecting a decrease of 6.5%[221] - Total inventory impairments for the year ended December 31, 2022, amounted to $121.9 million, significantly higher than $1.6 million in 2021[128] - The average selling price of homes delivered increased to $575.3 thousand in 2022, a 12% increase from $511.2 thousand in 2021[119] Operational Challenges - The company experienced a cancellation rate above historical averages in the second half of 2022, prompting adjustments in pricing and incentives[109] - The cancellation rate increased to 25% in Q4 2022, up from 9% in Q4 2021, indicating a significant rise in cancellations as a percentage of homes in beginning backlog[141] - The company experienced extended construction cycle times due to permitting delays, supply chain disruptions, and labor shortages, impacting new home deliveries[121] Expenses and Costs - General and administrative expenses increased to $292.3 million in 2022, a rise of 18.8% from $246.0 million in 2021[130] - Marketing expenses slightly decreased to $103.3 million in 2022, down from $104.4 million in 2021[131] - Commissions expenses decreased to $140.7 million in 2022, compared to $143.5 million in 2021, reflecting changes in commission structure[131] - Inventory impairments totaled $121.9 million in 2022, contributing to a decrease in gross margin from home sales[115] - Gross margin from home sales decreased by 70 basis points year-over-year, from 23.1% in 2021 to 22.4% in 2022, primarily due to $121.9 million in inventory impairments[126] Assets and Liabilities - The company’s total assets increased to $5.363 billion in 2022, up from $4.964 billion in 2021, marking a growth of 8.0%[226] - The company’s total liabilities decreased to $2.271 billion in 2022 from $2.366 billion in 2021, a reduction of 4.0%[226] - The company had outstanding senior notes totaling $1.5 billion as of December 31, 2022, with future interest payments totaling $1.3 billion[154] Dividends and Shareholder Returns - The company paid dividends of $2.00 per share in 2022, an increase from $1.67 per share in 2021[169] - The company made dividend payments of $142,417 in 2022, compared to $118,529 in 2021, reflecting a 20.1% increase[234] - The company did not repurchase any shares of its common stock under the repurchase program during the year ended December 31, 2022[170] Mortgage and Financing - The average FICO score improved by 1% to 744 in 2022, compared to 740 in 2021[148] - The average combined loan-to-value (LTV) ratio was 81% in 2022, a decrease of 3% from 84% in 2021[148] - Total loan originations decreased by 6% to $5,876 million in 2022 from $6,247 million in 2021, while principal increased by 5% to $2,746,903 million[148] - The company has a total capacity of $300 million under the Mortgage Repurchase Facility as of December 31, 2022[165] - The company utilizes forward sales of mortgage-backed securities to hedge against interest rate fluctuations, with changes in fair value recorded in revenues[267]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-8951 M.D.C. HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Delaware 84-06229 ...

Financial Performance - For the three months ended June 30, 2022, the company reported net income of $189.5 million, or $2.59 per diluted share, a 23% increase from $154.4 million, or $2.11 per diluted share, in the prior year[108]. - Home sale revenues for the three months ended June 30, 2022, were $1,450.8 million, a 6% increase compared to $1,367.8 million in the same period of the previous year[103]. - The gross margin from home sales increased by 370 basis points to 26.8% for the three months ended June 30, 2022, compared to 23.1% in the prior year[103]. - Homebuilding pretax income for the three months ended June 30, 2022, was $240.3 million, an increase of 28% from $187.5 million in the same period last year[114]. - Financial services pretax income for the three months ended June 30, 2022, was $18.7 million, a 4% increase from $18.0 million in the prior year[103]. - The effective income tax rate increased to 26.8% for the three months ended June 30, 2022, compared to 24.9% in the same period of 2021, resulting in an income tax expense of $69.4 million[150]. Sales and Orders - The dollar value of net new home orders decreased by 40% year-over-year, driven by a 48% decrease in the number of net new orders, partially offset by a 16% increase in the average selling price[109]. - The number of net new orders decreased by 48% to 1,404 homes for the three months ended June 30, 2022, compared to 2,714 homes in the same period of 2021[132]. - The cancellation rate increased due to a rise in mortgage interest rates during the first half of 2022, impacting net new orders[131]. - For the three months ended June 30, 2022, the cancellation rate increased to 10% from 6% year-over-year, attributed to rising mortgage interest rates impacting homebuyers[140]. - As of June 30, 2022, the backlog consisted of 7,426 homes valued at $4.44 billion, reflecting a 3% decrease in the number of homes but an 8% increase in dollar value compared to the previous year[141]. Assets and Liquidity - Total cash and cash equivalents at the end of the quarter were $590.2 million, with total liquidity of $1.74 billion and no senior note maturities until 2030[106]. - Total homebuilding assets increased by 7% from December 31, 2021, to June 30, 2022, reaching $4,879.3 million[117]. - The company controlled 33,130 lots at the end of the quarter, representing a 4% decrease from the prior year[106]. - The company maintains a liquidity position with an effective shelf registration statement allowing for the issuance of up to $5.0 billion in securities, with the full amount remaining available[156]. - As of June 30, 2022, the company had outstanding senior notes totaling an aggregate principal amount of $1.5 billion, with future interest payments of $1.3 billion[158]. Operational Challenges - The company experienced production challenges due to supply chain disruptions and labor market tightness, impacting cycle times year-over-year[105]. - The total unsold started homes increased to 653, a 180% rise from 233 in the prior year, primarily due to the increased cancellation rate[142]. - The total owned and optioned lots decreased by 4% year-over-year to 33,130, reflecting a strategic slowdown in land acquisition due to market uncertainty[143]. Financial Services - Financial services revenues for the three months ended June 30, 2022, increased by 9% to $36.2 million, while the pretax income for financial services decreased by 24% to $10.7 million[145]. - Total mortgage loan originations decreased by 3% to 1,517 loans for the three months ended June 30, 2022, with principal amounting to $703.3 million, a 9% increase from the previous year[149]. - The capture rate as a percentage of all homes delivered was 60% for the three months ended June 30, 2022, up from 57% year-over-year[149]. - HomeAmerican's mortgage loans in process with interest rate lock commitments not yet closed totaled an aggregate principal balance of $871.8 million as of June 30, 2022, with $556.6 million not yet committed to a mortgage purchaser[184]. - The company had mortgage loans held-for-sale with an aggregate principal balance of $190.3 million at June 30, 2022, of which $55.1 million had not yet been committed to a mortgage purchaser[184]. Expenses - General and administrative expenses rose by $10.9 million to $72.9 million for the three months ended June 30, 2022, representing 5.0% of home sale revenues[128]. - The total selling, general and administrative expenses increased by $4.99 million to $133.8 million for the three months ended June 30, 2022[128]. - Cash used to increase housing completed or under construction was $468.3 million for the six months ended June 30, 2022, compared to $385.7 million in the prior year[176]. Financing Activities - The company incurred net cash used in financing activities of $164.6 million for the six months ended June 30, 2022, compared to net cash provided of $238.8 million in the prior year[178]. - The Revolving Credit Facility was amended to increase the aggregate commitment from $1.0 billion to $1.2 billion, with a potential increase to $1.7 billion upon request[165]. - As of June 30, 2022, the availability under the Revolving Credit Facility was approximately $1.14 billion[169]. - The company had deposits of $43.6 million in cash and $11.6 million in letters of credit securing option contracts to purchase 7,296 lots for an estimated total purchase price of $743.1 million[159]. Interest Rate Impact - Changes in interest rates do not affect the fair value of fixed-rate debt instruments, but they do impact earnings and cash flows for variable-rate debt[187]. - The company does not have an obligation to prepay its senior notes prior to maturity, mitigating interest rate risk impact on financial position[187].

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) For Q1 2022, M.D.C. Holdings, Inc. reported total assets of **$5.06 billion**, net income of **$148.4 million** (up 34%), and positive operating cash flow of **$118.1 million** | Financial Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $5,059,114 | $4,963,528 | | Total Liabilities | $2,348,032 | $2,366,382 | | Total Stockholders' Equity | $2,711,082 | $2,597,146 | | Income Statement Highlights (Three Months Ended March 31) | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Home Sale Revenues | $1,240,520 | $1,041,858 | | Net Income | $148,421 | $110,690 | | Diluted EPS | $2.02 | $1.51 | | Cash Flow Highlights (Three Months Ended March 31) | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $118,055 | $(57,957) | | Net cash (used in) investing activities | $(6,884) | $(5,749) | | Net cash provided by (used in) financing activities | $(126,280) | $336,342 | - Subsequent to quarter-end, the company agreed to acquire homebuilding assets of The Jones Company of Tennessee, L.L.C. for approximately **$117.3 million** in cash to scale Nashville operations[99](index=99&type=chunk)[100](index=100&type=chunk) [Segment Reporting](index=8&type=section&id=3.%20Segment%20Reporting) The company's Q1 2022 homebuilding revenues increased 19% to **$1.24 billion**, with pretax income up 66% to **$188.5 million**, while financial services pretax income declined 57% to **$13.4 million** | Homebuilding Revenues by Segment | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | West | $707,311 | $616,611 | | Mountain | $335,128 | $324,717 | | East | $198,081 | $100,530 | | **Total** | **$1,240,520** | **$1,041,858** | | Pretax Income by Segment | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Total Homebuilding | $188,499 | $113,507 | | Total Financial Services | $13,383 | $30,805 | | **Total Pretax Income** | **$201,882** | **$144,312** | [Inventories](index=12&type=section&id=6.%20Inventories) Total inventories increased to **$3.93 billion** as of March 31, 2022, primarily driven by a rise in housing completed or under construction, with a minor impairment recorded in the West segment | Inventory Breakdown | March 31, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | Housing completed or under construction | $2,194,303 | $1,917,616 | | Land and land under development | $1,734,515 | $1,843,235 | | **Total Inventories** | **$3,928,818** | **$3,760,851** | - An inventory impairment of **$660,000** was recognized in the West segment for one subdivision during Q1 2022, with no impairments in Q1 2021[49](index=49&type=chunk)[50](index=50&type=chunk) [Commitments and Contingencies](index=20&type=section&id=16.%20Commitments%20and%20Contingencies) As of March 31, 2022, the company had **$383.8 million** in surety bonds, **$205.1 million** in letters of credit, and option contracts for **11,205 lots** with **$58.3 million** in at-risk deposits - The company has option contracts to purchase **11,205 lots**, secured by **$45.0 million** in cash deposits and **$13.3 million** in letters of credit[81](index=81&type=chunk) - Outstanding surety bonds and letters of credit totaled **$383.8 million** and **$205.1 million**, respectively, to support various operational obligations[78](index=78&type=chunk) [Lines of Credit](index=21&type=section&id=18.%20Lines%20of%20Credit) The company maintains a **$1.2 billion** unsecured Revolving Credit Facility with **$1.14 billion** available, and its financial services subsidiary uses a Mortgage Repurchase Facility with a **$178.2 million** obligation - The Revolving Credit Facility has a total commitment of **$1.2 billion**, with **$10.0 million** drawn and **$51.7 million** in letters of credit outstanding, leaving **$1.14 billion** available at March 31, 2022[86](index=86&type=chunk)[90](index=90&type=chunk) - The Mortgage Repurchase Facility had a repurchase obligation of **$178.2 million** at March 31, 2022, down from **$256.3 million** at year-end 2021[92](index=92&type=chunk) [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported a resilient housing market in Q1 2022, with a focus on price increases leading to a **25.7%** gross margin, **$148.4 million** net income, and **$1.73 billion** in liquidity - The company's Q1 strategy focused on raising sales prices to offset cost increases and manage construction capacity, resulting in a **25.7%** gross margin, up **380 basis points** year-over-year[103](index=103&type=chunk) - Net income for Q1 2022 increased **34%** to **$148.4 million**, driven by a **66%** increase in homebuilding pretax income, partially offset by a **57%** decrease in financial services pretax income[107](index=107&type=chunk) - The dollar value of net new home orders increased **12%** year-over-year, driven by a **14%** increase in average selling price, while the number of net new orders decreased by **2%**[108](index=108&type=chunk) - The company ended the quarter with total liquidity of **$1.73 billion** and a debt-to-capital ratio of **35.5%**[105](index=105&type=chunk) [Homebuilding Operations Analysis](index=27&type=section&id=MD%26A%20Homebuilding%20Operations) Homebuilding pretax income surged **66%** to **$188.5 million** on **19%** higher revenues of **$1.24 billion**, driven by increased average selling prices and an expanded gross margin of **25.7%** | Home Deliveries & Revenue (Q1 2022 vs Q1 2021) | Homes Delivered | % Change | Home Sale Revenues ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total** | **2,233** | **3%** | **$1,240.5M** | **19%** | | Net New Orders (Q1 2022 vs Q1 2021) | Homes | % Change | Dollar Value ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total** | **3,151** | **(2)%** | **$1,836.8M** | **12%** | | Backlog (as of March 31) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Homes | 8,558 | 7,686 | 11% | | Dollar Value | $4,947.8M | $3,927.3M | 26% | - Gross margin from home sales increased **380 basis points** to **25.7%** in Q1 2022 from **21.9%** in Q1 2021, driven by price increases across nearly all communities[122](index=122&type=chunk) [Financial Services Operations Analysis](index=32&type=section&id=MD%26A%20Financial%20Services%20Operations) Financial services pretax income significantly decreased by **57%** to **$13.4 million** in Q1 2022, primarily due to mortgage operations' profitability returning to historical levels and a lower mortgage capture rate - Financial services pretax income decreased by **$17.4 million** (**57%**) year-over-year, mainly because mortgage operations profitability returned to more historical levels after a record Q1 2021[140](index=140&type=chunk) | Mortgage Operations Data (Q1) | 2022 | 2021 | | :--- | :--- | :--- | | Total Originations (Principal) | $605.8M | $616.0M | | Capture Rate (% of all homes delivered) | 59% | 72% | [Liquidity and Capital Resources](index=34&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) The company maintains a strong capital position with **$1.5 billion** in senior notes outstanding, **11,205** optioned lots, and **$118.1 million** in positive operating cash flow, ensuring adequate resources for future needs - At March 31, 2022, the company had outstanding senior notes with an aggregate principal of **$1.5 billion**, with no maturities within 12 months[151](index=151&type=chunk) - The company had deposits securing option contracts to purchase **11,205 lots** for a total estimated price of **$1.02 billion**[152](index=152&type=chunk) - Net cash from operating activities was **$118.1 million**, a significant turnaround from a **$58.0 million** use of cash in Q1 2021, primarily driven by net income and changes in working capital[169](index=169&type=chunk) [Market Risk Disclosures](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk, primarily in mortgage operations, which it hedges using derivatives like interest rate lock commitments (**$521.1 million**) and forward sales of mortgage-backed securities (**$378.5 million**) - The company's primary market risk is interest rate fluctuations, which impact its mortgage loans held-for-sale, interest rate lock commitments, and variable-rate debt[177](index=177&type=chunk) - To manage risk, HomeAmerican had **$521.1 million** in interest rate lock commitments and hedged its positions with **$378.5 million** in forward sales of securities at quarter-end[177](index=177&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[182](index=182&type=chunk) - There were no material changes to internal control over financial reporting during the first quarter of 2022[182](index=182&type=chunk) Part II. Other Information [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Management believes ongoing legal actions arising from ordinary business operations will not materially affect the company's financial condition, results, or cash flows - In management's opinion, legal actions arising from the ordinary course of business are not expected to have a material adverse effect on the company's financials[184](index=184&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K were reported - No material changes from the risk factors included in the Company's 2021 Annual Report on Form 10-K were reported[185](index=185&type=chunk) [Share Repurchases and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares under its program in Q1 2022, but withheld **32,926** shares for employee tax obligations related to restricted stock vesting - The company is authorized to repurchase up to **4,000,000** shares of its common stock but made no repurchases under this program during Q1 2022[186](index=186&type=chunk) - **32,926** shares were withheld in February 2022 to satisfy employee tax obligations upon the vesting of restricted stock[186](index=186&type=chunk)

Financial Performance - Home sale revenues for 2021 reached $5.10 billion, a 36% increase from $3.77 billion in 2020[110] - Gross profit for 2021 was $1.18 billion, with a gross margin of 23.1%, up from 20.8% in 2020[110] - The company reported a net income of $573.7 million for 2021, a 56% increase compared to $367.6 million in 2020[116] - Homebuilding pretax income for 2021 was $659.7 million, a 74% increase from $378.5 million in 2020, driven by improved pricing and operating leverage[118] - Total pretax income reached $751,694 thousand in 2021, a 64.2% increase from $457,512 thousand in 2020[293] - Basic earnings per share for 2021 was $8.13, compared to $5.33 in 2020, marking a 52.5% increase[228] - Basic earnings per share (EPS) for 2021 was $8.13, up 52.9% from $5.33 in 2020, while diluted EPS was $7.83, an increase of 51.5% from $5.17 in 2020[296] Sales and Deliveries - For the year ended December 31, 2021, total new home deliveries increased to 9,982 homes, up 22% from 8,158 homes in 2020[122] - The average selling price of homes delivered rose to $511.2 thousand, reflecting an 11% increase from $461.6 thousand in 2020[122] - The average selling price of new home orders increased by 11% year-over-year, contributing to an 11% increase in the dollar value of net new home orders[117] - The West segment delivered 5,732 homes with an average selling price of $517.2 thousand, a 30% increase in homes delivered and an 8% increase in average price from 2020[122] - The Mountain segment saw a 9% increase in homes delivered to 2,770, with an average selling price of $565.8 thousand, up 11% from the previous year[122] - The East segment delivered 1,480 homes, with a 22% increase in homes delivered and a 28% increase in average selling price to $385.5 thousand[122] Backlog and Inventory - The backlog at December 31, 2021, was 7,640 homes valued at $4.30 billion, representing a 15% increase in units and a 32% increase in dollar value from the previous year[114] - Total owned and optioned lots increased by 29% to 38,080 lots as of December 31, 2021, supporting future growth[148] - Homes completed or under construction rose by 31% year-over-year, with sold homes under construction increasing by 33%[147] - Total inventories reached $3,760,851 thousand, up 32.7% from $2,832,230 thousand in 2020[226] Financial Services - Financial services pretax income reached a record $92.0 million in 2021, a 16% increase from $79.0 million in 2020[110] - Financial services revenues grew by $16.4 million, or 12%, driven by a $10.5 million increase in the other financial services segment[149] - Total financial services revenues rose to $152,212 thousand in 2021, compared to $135,832 thousand in 2020, marking a 12.5% increase[293] - Mortgage loan originations increased by 10% to 6,247 loans, with principal amount rising by 23% to $2.62 billion[153] Expenses and Liabilities - Total selling, general and administrative expenses increased to $493.993 million, a rise of 22.5% from $403.218 million in 2020[133] - The company recorded an income tax provision of $178.0 million for 2021, resulting in an effective tax rate of 23.7%[154] - Total liabilities increased to $2,366,382 thousand, a rise of 35.6% from $1,745,008 thousand in 2020[226] - The company reported a loss on retirement of debt of $23,571,000 in 2021, with no such loss reported in 2020[234] Cash Flow and Liquidity - The company ended the year with total liquidity of $1.75 billion, lowering the debt to capital ratio to 36.5%[115] - Net cash used in operating activities was $208.0 million, compared to $23.1 million in the prior year, driven by increased housing inventory and land purchases[178] - Cash used to increase land and land under development was $497.4 million for the year ended December 31, 2021, significantly up from $15.0 million in the prior year, reflecting the acquisition of 15,435 lots[178] - Net cash provided by financing activities was $335.2 million for the year ended December 31, 2021, primarily due to proceeds from the issuance of senior notes totaling $694.7 million[180] Market Conditions and Risks - The average sale-to-close cycle time increased to approximately 36 weeks, up five weeks year-over-year due to supply chain disruptions and labor shortages[122] - The cancellation rate decreased from 19% in 2020 to 17% in 2021, with notable reductions in the East and Mountain regions[143] - The company assesses inventory impairment by comparing estimated future cash flows to carrying value, with significant reliance on Level 3 inputs such as future home sale revenues and construction costs[185] Stockholder Information - Dividends paid increased from $1.29 per share in 2020 to $1.67 per share in 2021, alongside an 8% stock dividend distribution[175] - The company’s dividend payments for 2021 were $118,529,000, compared to $89,008,000 in 2020, representing a 33.2% increase[234] Debt and Financing - The company accelerated the retirement of $250 million in senior notes with a 5.500% interest rate, originally due in January 2024, during the year ended December 31, 2021[162] - The Revolving Credit Facility was amended to increase the aggregate commitment from $1.0 billion to $1.2 billion, with a potential increase to $1.7 billion upon request[166] - As of December 31, 2021, the company had $10.0 million in borrowings and $40.1 million in letters of credit outstanding under the Revolving Credit Facility, leaving a remaining borrowing capacity of $1.15 billion[170]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-8951 Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated fil ...