2 Certain statements in this release, including any statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of MDC to be materially different from any future results, performan ...

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]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and management's analysis for the quarter ended March 31, 2023 [Item 1. Unaudited Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2023, detailing financial position, performance, cash flows, and comprehensive accounting notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time Consolidated Balance Sheet Summary (in thousands) | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Total Assets | $5,315,821 | $5,363,272 | | Total Liabilities | $2,185,700 | $2,271,488 | | Total Stockholders' Equity | $3,130,121 | $3,091,784 | | Homebuilding Cash & Equivalents | $781,738 | $696,075 | | Homebuilding Inventories | $3,257,775 | $3,515,779 | | Mortgage loans held-for-sale, net | $166,252 | $229,513 | [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This statement details the company's revenues, expenses, and net income over a specific period, reflecting operational performance Consolidated Statements of Operations Summary (in thousands) | Metric | 3 Months Ended March 31, 2023 (in thousands) | 3 Months Ended March 31, 2022 (in thousands) | | :----------------------------------- | :------------------------------------------- | :------------------------------------------- | | Home sale revenues | $1,020,016 | $1,240,520 | | Homebuilding Gross profit | $171,469 | $318,482 | | Homebuilding pretax income | $90,999 | $188,499 | | Financial services revenues | $29,486 | $29,131 | | Financial services pretax income | $17,970 | $13,383 | | Net income | $80,700 | $148,421 | | Basic EPS | $1.10 | $2.09 | | Diluted EPS | $1.08 | $2.02 | | Dividends declared per share | $0.50 | $0.50 | [Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement outlines changes in equity components, including net income, other comprehensive income, and dividends, over a period Consolidated Statements of Changes in Stockholders' Equity Summary (in thousands) | Metric | 3 Months Ended March 31, 2023 (in thousands) | 3 Months Ended March 31, 2022 (in thousands) | | :----------------------------------- | :------------------------------------------- | :------------------------------------------- | | Balance at beginning of period | $3,091,784 | $2,597,146 | | Net income | $80,700 | $148,421 | | Other comprehensive income (loss) | $323 | $0 | | Shares issued under stock-based compensation programs, net | $(11,740) | $(12,628) | | Cash dividends declared | $(36,543) | $(35,583) | | Stock-based compensation expense | $5,597 | $13,726 | | Balance at end of period | $3,130,121 | $2,711,082 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities over a period Consolidated Statements of Cash Flows Summary (in thousands) | Metric | 3 Months Ended March 31, 2023 (in thousands) | 3 Months Ended March 31, 2022 (in thousands) | | :------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $426,164 | $118,055 | | Net cash used in investing activities | $(244,760) | $(6,884) | | Net cash used in financing activities | $(93,508) | $(126,280) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $87,896 | $(15,109) | | Cash, cash equivalents and restricted cash, end of period | $804,991 | $588,350 | [Notes to Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the consolidated financial statements - The financial statements are unaudited and prepared in accordance with SEC rules, reflecting normal and recurring adjustments[21](index=21&type=chunk) - Forward-looking statements are included, highlighting known and unknown risks that could materially affect results[22](index=22&type=chunk) [1. Basis of Presentation](index=7&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and rules used in preparing the unaudited consolidated financial statements - The unaudited consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, reflecting all necessary adjustments[21](index=21&type=chunk) [2. Recently Issued Accounting Standards](index=7&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Standards) This note discusses the impact of recently issued accounting standards on the company's financial reporting - The company plans to adopt ASU 2020-04 (Reference Rate Reform) in Q2 2023, but does not expect a **material impact** on its financial statements[24](index=24&type=chunk) [3. Segment Reporting](index=8&type=section&id=Note%203.%20Segment%20Reporting) This note provides financial information for the company's operating segments, including homebuilding and financial services Homebuilding Revenues by Segment (in thousands) | Segment | 2023 (in thousands) | 2022 (in thousands) | | :-------- | :------------------ | :------------------ | | West | $577,933 | $707,311 | | Mountain | $301,155 | $335,128 | | East | $140,928 | $198,081 | | **Total** | **$1,020,016** | **$1,240,520** | Financial Services Revenues by Segment (in thousands) | Segment | 2023 (in thousands) | 2022 (in thousands) | | :------------------ | :------------------ | :------------------ | | Mortgage operations | $18,419 | $17,601 | | Other | $11,067 | $11,530 | | **Total** | **$29,486** | **$29,131** | Total Pretax Income by Segment (in thousands) | Segment | 2023 (in thousands) | 2022 (in thousands) | | :------------------ | :------------------ | :------------------ | | Homebuilding | $90,999 | $188,499 | | Financial Services | $17,970 | $13,383 | | **Total** | **$108,969** | **$201,882** | [4. Earnings Per Share](index=10&type=section&id=Note%204.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share for common stockholders EPS Calculation Summary (in thousands, except per share data) | Metric | 2023 | 2022 | | :------------------------------------------------- | :----- | :----- | | Net income attributable to common stockholders (basic) | $80,254 | $147,665 | | Numerator for diluted EPS | $80,258 | $147,681 | | Weighted-average common shares outstanding (basic) | 72,647,659 | 70,766,146 | | Denominator for diluted EPS | 74,021,989 | 72,938,414 | | **Basic Earnings Per Common Share** | **$1.10** | **$2.09** | | **Diluted Earnings Per Common Share** | **$1.08** | **$2.02** | [5. Fair Value Measurements](index=10&type=section&id=Note%205.%20Fair%20Value%20Measurements) This note describes the valuation methodologies and fair value hierarchy for financial instruments Fair Value of Financial Instruments (in thousands) | Financial Instrument | Hierarchy | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :-------- | :------------------------------ | :------------------------------- | | Debt securities (available-for-sale) | Level 1 | $809,377 | $561,100 | | Mortgage loans held-for-sale, net | Level 2 | $166,252 | $229,513 | Senior Notes Carrying Amount vs. Fair Value (in thousands) | Senior Notes | Carrying Amount (Mar 31, 2023) | Fair Value (Mar 31, 2023) | Carrying Amount (Dec 31, 2022) | Fair Value (Dec 31, 2022) | | :--------------------------------------- | :----------------------------- | :-------------------------- | :----------------------------- | :-------------------------- | | 3.850% due Jan 2030 | $298,012 | $256,148 | $297,949 | $246,236 | | 2.500% due Jan 2031 | $347,486 | $272,690 | $347,413 | $255,374 | | 6.000% due Jan 2043 | $491,176 | $432,430 | $491,120 | $414,017 | | 3.966% due Aug 2061 | $346,105 | $205,959 | $346,094 | $204,014 | | **Total** | **$1,482,779** | **$1,167,227** | **$1,482,576** | **$1,119,641** | - Loss on mortgage loans held-for-sale, net, was **$2.3 million** for Q1 2023, compared to **$5.0 million** for the same period in the prior year[38](index=38&type=chunk) [6. Inventories](index=12&type=section&id=Note%206.%20Inventories) This note provides a breakdown of inventory types and details related to inventory impairments Total Inventories by Type (in thousands) | Inventory Type | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Housing completed or under construction | $1,585,951 | $1,722,061 | | Land and land under development | $1,671,824 | $1,793,718 | | **Total inventories** | **$3,257,775** | **$3,515,779** | Total Inventory Impairments (in thousands) | Inventory Type | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Housing Completed or Under Construction | $664 | $660 | | Land and Land Under Development | $7,136 | $0 | | **Total Inventory Impairments** | **$7,800** | **$660** | - The fair value of impaired inventory after impairments was **$13,016 thousand** in Q1 2023, with a discount rate of **18%**[50](index=50&type=chunk) [7. Capitalization of Interest](index=14&type=section&id=Note%207.%20Capitalization%20of%20Interest) This note explains the company's policy and amounts related to the capitalization of homebuilding interest Homebuilding Interest Activity (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :------------------------------------------------ | :------------------ | :------------------ | | Homebuilding interest incurred | $17,454 | $17,258 | | Interest capitalized during period | $17,454 | $17,258 | | Previously capitalized interest included in home cost of sales | $(16,065) | $(14,844) | | Interest capitalized, end of period | $61,310 | $60,468 | - All homebuilding interest incurred was capitalized for the three months ended March 31, 2023 and 2022, as qualified assets exceeded homebuilding debt[51](index=51&type=chunk) [8. Leases](index=15&type=section&id=Note%208.%20Leases) This note provides details on the company's operating lease arrangements, including costs and liabilities Net Lease Cost (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :---------------- | :------------------ | :------------------ | | Operating lease cost | $2,156 | $2,131 | | Sublease income | $(144) | $(83) | | **Net lease cost** | **$2,012** | **$2,048** | - Weighted-average remaining lease term for operating leases was **3.8 years** at March 31, 2023, with a weighted-average discount rate of **5.5%**[57](index=57&type=chunk) - Present value of operating lease liabilities was **$25,671 thousand** at March 31, 2023[58](index=58&type=chunk) [9. Homebuilding Prepaids and Other Assets](index=16&type=section&id=Note%209.%20Homebuilding%20Prepaids%20and%20Other%20Assets) This note details the composition of homebuilding prepaids and other assets, including land option deposits Homebuilding Prepaids and Other Assets (in thousands) | Asset Type | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------------------------ | :------------------------------ | :------------------------------- | | Land option deposits | $20,058 | $19,539 | | Operating lease right-of-use asset | $24,559 | $25,636 | | Prepaids | $11,073 | $13,333 | | **Total prepaids and other assets** | **$66,721** | **$70,007** | [10. Homebuilding Accrued and Other Liabilities and Financial Services Accounts Payable and Accrued Liabilities](index=17&type=section&id=Note%2010.%20Homebuilding%20Accrued%20and%20Other%20Liabilities%20and%20Financial%20Services%20Accounts%20Payable%20and%20Accrued%20Liabilities) This note provides a breakdown of accrued liabilities for both homebuilding and financial services segments Homebuilding Accrued and Other Liabilities (in thousands) | Liability Type | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Accrued compensation and related expenses | $57,040 | $100,653 | | Customer and escrow deposits | $47,191 | $42,296 | | Warranty accrual | $46,666 | $46,857 | | Lease liability | $25,426 | $26,574 | | Accrued interest | $14,889 | $30,934 | | Income taxes payable | $49,461 | $23,880 | | **Total accrued and other liabilities** | **$342,167** | **$383,406** | Financial Services Accounts Payable and Accrued Liabilities (in thousands) | Liability Type | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Insurance reserves | $82,815 | $84,108 | | Accounts payable and other accrued liabilities | $18,061 | $26,428 | | **Total accounts payable and accrued liabilities** | **$100,876** | **$110,536** | [11. Warranty Accrual](index=18&type=section&id=Note%2011.%20Warranty%20Accrual) This note details the activity and balance of the warranty accrual, reflecting changes in home closings and expenditures Warranty Accrual Activity (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :------------------------ | :------------------ | :------------------ | | Balance at beginning of period | $46,857 | $37,491 | | Expense provisions | $5,635 | $5,832 | | Cash payments | $(5,826) | $(4,817) | | Adjustments | $0 | $2,440 | | **Balance at end of period** | **$46,666** | **$40,946** | - The warranty accrual decreased in Q1 2023 due to increased cash payments and fewer home closings, contrasting with an increase in Q1 2022 due to higher general warranty related expenditures[65](index=65&type=chunk) [12. Insurance and Construction Defect Claim Reserves](index=19&type=section&id=Note%2012.%20Insurance%20and%20Construction%20Defect%20Claim%20Reserves) This note outlines the company's reserves for insurance and construction defect claims, based on actuarial studies Insurance and Construction Defect Claim Reserves Activity (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :------------------------ | :------------------ | :------------------ | | Balance at beginning of period | $94,574 | $82,187 | | Expense provisions | $3,789 | $4,432 | | Cash payments, net of recoveries | $(5,226) | $(2,195) | | **Balance at end of period** | **$93,137** | **$84,424** | - Reserves are based on actuarial studies considering historical trends, claim patterns, and regulatory environments[67](index=67&type=chunk)[68](index=68&type=chunk) [13. Income Taxes](index=19&type=section&id=Note%2013.%20Income%20Taxes) This note explains the effective income tax rate and income tax expense, highlighting factors influencing changes - The effective income tax rate decreased to **25.9%** for Q1 2023 from **26.5%** for Q1 2022, primarily due to energy tax credits benefiting 2023[71](index=71&type=chunk) - Income tax expense was **$28.3 million** for Q1 2023, down from **$53.5 million** in Q1 2022[71](index=71&type=chunk) [14. Senior Notes](index=20&type=section&id=Note%2014.%20Senior%20Notes) This note provides details on the company's senior unsecured notes, including carrying values and guarantees Carrying Values of Senior Notes (in thousands) | Senior Notes | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | 3.850% due Jan 2030, net | $298,012 | $297,949 | | 2.500% due Jan 2031, net | $347,486 | $347,413 | | 6.000% due Jan 2043, net | $491,176 | $491,120 | | 3.966% due Aug 2061, net | $346,105 | $346,094 | | **Total** | **$1,482,779** | **$1,482,576** | - Senior notes are unsecured, fully and unconditionally guaranteed by most homebuilding segment subsidiaries, and do not contain financial covenants[73](index=73&type=chunk) [15. Stock-Based Compensation](index=20&type=section&id=Note%2015.%20Stock-Based%20Compensation) This note details the types and amounts of stock-based compensation expense, explaining factors for changes Stock-Based Compensation Expense (in thousands) | Expense Type | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Stock option grants expense | $157 | $587 | | Restricted stock awards expense | $3,562 | $2,587 | | Performance share units expense | $1,779 | $11,708 | | **Total stock-based compensation** | **$5,498** | **$14,882** | - The decrease in total stock-based compensation was primarily due to lower performance share units (PSUs) expense, as 2020 PSU awards vested and 2021 PSU expense was adjusted based on performance target probability[74](index=74&type=chunk)[75](index=75&type=chunk) [16. Commitments and Contingencies](index=20&type=section&id=Note%2016.%20Commitments%20and%20Contingencies) This note outlines the company's various commitments and potential liabilities, including surety bonds and option contracts - Outstanding surety bonds totaled **$359.1 million** and letters of credit totaled **$116.0 million** at March 31, 2023, supporting land development and other obligations[76](index=76&type=chunk) - Estimated cost to complete obligations related to these bonds and letters of credit were approximately **$157.3 million** and **$75.1 million**, respectively[76](index=76&type=chunk) - Cash deposits, capitalized costs, and letters of credit at risk for lot option contracts totaled **$19.2 million**, **$2.6 million**, and **$2.2 million**, respectively, for **2,951 lots**[80](index=80&type=chunk) [17. Derivative and Financial Instruments](index=22&type=section&id=Note%2017.%20Derivative%20and%20Financial%20Instruments) This note describes the company's use of derivative instruments to manage market risks, including interest rate fluctuations Notional Amounts and Fair Value of Derivative and Financial Instruments (in thousands) | Instrument | Notional Value (Mar 31, 2023) | Derivatives, Net (Mar 31, 2023) | Notional Value (Dec 31, 2022) | Derivatives, Net (Dec 31, 2022) | | :--------------------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Interest rate lock commitments | $391,487 | $2,682 | $394,004 | $(1,678) | | Forward sales of mortgage backed securities | $362,500 | $(2,349) | $323,000 | $(5,269) | | Mandatory delivery forward loan sale commitments | $106,607 | $(81) | $105,060 | $79 | | Best-effort delivery forward loan sale commitments | $11,237 | $3 | $139,972 | $1,970 | - The company recorded net losses on these derivative and financial instruments of **$(3.8) million** for Q1 2023, compared to net gains of **$17.5 million** for Q1 2022[84](index=84&type=chunk) [18. Lines of Credit](index=23&type=section&id=Note%2018.%20Lines%20of%20Credit) This note details the company's revolving credit facility and mortgage repurchase facility, including available capacity and terms - The Revolving Credit Facility has an aggregate commitment of **$1.2 billion**, extendable to **$1.7 billion**, with approximately **$1.14 billion** available at March 31, 2023[86](index=86&type=chunk)[90](index=90&type=chunk) - The Revolving Credit Facility was amended effective April 11, 2023, to transition from a eurocurrency-based interest rate to a Secured Overnight Financing Rate (SOFR) based interest rate[87](index=87&type=chunk) - HomeAmerican's Mortgage Repurchase Facility has a total capacity of **$230 million** at March 31, 2023, with **$130.5 million** of mortgage loans obligated to repurchase[91](index=91&type=chunk)[92](index=92&type=chunk) [19. Related Party Transactions](index=24&type=section&id=Note%2019.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including a sublease agreement with an entity associated with an executive - The company has a sublease agreement with CVentures, Inc., where Larry A. Mizel, the Executive Chairman, is the President[94](index=94&type=chunk) [20. Supplemental Guarantor Information](index=25&type=section&id=Note%2020.%20Supplemental%20Guarantor%20Information) This note provides information on subsidiaries that guarantee the company's senior notes and intercompany balances - Most homebuilding segment subsidiaries fully and unconditionally guarantee the company's senior notes[96](index=96&type=chunk) - Amounts due to non-guarantor subsidiaries from the Obligor Group totaled **$46.7 million** at March 31, 2023[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operational results, highlighting market challenges and strategic responses [Overview](index=27&type=section&id=Overview) This overview summarizes key financial highlights, including net income, segment performance, and liquidity position - Net income for Q1 2023 was **$80.7 million** (**$1.08 diluted EPS**), a **46% decrease** year-over-year, primarily driven by a **52% decrease** in homebuilding pretax income[104](index=104&type=chunk) - Financial services pretax income increased by **34%** year-over-year, partially offsetting the decline in homebuilding[104](index=104&type=chunk) - Net orders decreased **44%** and net order value decreased **48%** in Q1 2023 compared to Q1 2022, reflecting challenging housing market conditions[101](index=101&type=chunk) - The company ended the quarter with **$1.61 billion** in cash, cash equivalents, and marketable securities, and **$2.79 billion** in total liquidity, maintaining a debt-to-capital ratio of **32.3%**[103](index=103&type=chunk) [Homebuilding](index=28&type=section&id=Homebuilding) This section analyzes the performance of the homebuilding segment, including pretax income, assets, deliveries, and sales metrics [Pretax Income (Loss)](index=28&type=section&id=Homebuilding%20Pretax%20Income%20(Loss)) This section details the homebuilding segment's pretax income by region, highlighting factors contributing to changes Homebuilding Pretax Income by Segment (in thousands) | Segment | 2023 (in thousands) | 2022 (in thousands) | Change | % Change | | :-------- | :------------------ | :------------------ | :----- | :------- | | West | $43,200 | $130,526 | $(87,326) | (67)% | | Mountain | $25,036 | $50,506 | $(25,470) | (50)% | | East | $15,309 | $31,394 | $(16,085) | (51)% | | Corporate | $7,454 | $(23,927) | $31,381 | 131 % | | **Total** | **$90,999** | **$188,499** | **$(97,500)** | **(52)%** | - The decrease in homebuilding pretax income was due to an **18% decrease** in home sale revenues and an **890 basis point decrease** in gross margin from home sales[106](index=106&type=chunk) - Corporate segment pretax income increased due to decreased compensation-related costs and increased interest income[107](index=107&type=chunk) [Assets](index=28&type=section&id=Homebuilding%20Assets) This section reviews the composition and changes in homebuilding assets across different segments Total Homebuilding Assets by Segment (in thousands) | Segment | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change | % Change | | :-------- | :------------------------------ | :------------------------------- | :----- | :------- | | West | $2,098,329 | $2,275,144 | $(176,815) | (8)% | | Mountain | $898,227 | $1,005,622 | $(107,395) | (11)% | | East | $407,046 | $427,926 | $(20,880) | (5)% | | Corporate | $1,574,847 | $1,249,370 | $325,477 | 26 % | | **Total** | **$4,978,449** | **$4,958,062** | **$20,387** | **0 %** | - Total homebuilding assets remained relatively flat, with an increase in Corporate segment assets (cash and marketable securities) offsetting decreases in West and Mountain segment assets (receivables, land, and housing inventory)[108](index=108&type=chunk) [New Home Deliveries & Home Sale Revenues](index=29&type=section&id=New%20Home%20Deliveries%20%26%20Home%20Sale%20Revenues) This section presents data on new home deliveries, home sale revenues, and average selling prices by segment New Home Deliveries & Home Sale Revenues (in thousands, except homes) | Metric | 2023 Homes | 2023 Home Sale Revenues (in thousands) | 2023 Average Price (in thousands) | 2022 Homes | 2022 Home Sale Revenues (in thousands) | 2022 Average Price (in thousands) | % Change Homes | % Change Revenues | % Change Average Price | | :------- | :--------- | :------------------------------------- | :-------------------------------- | :--------- | :------------------------------------- | :-------------------------------- | :--------------- | :---------------- | :-------------------- | | West | 1,064 | $577,933 | $543.2 | 1,243 | $707,311 | $569.0 | (14)% | (18)% | (5)% | | Mountain | 487 | $301,155 | $618.4 | 548 | $335,128 | $611.5 | (11)% | (10)% | 1 % | | East | 300 | $140,928 | $469.8 | 442 | $198,081 | $448.1 | (32)% | (29)% | 5 % | | **Total** | **1,851** | **$1,020,016** | **$551.1** | **2,233** | **$1,240,520** | **$555.5** | **(17)%** | **(18)%** | **(1)%** | - The decrease in new home deliveries was due to a lower backlog at the beginning of the period, partially offset by an increase in backlog conversion rates from quick move-in inventory[110](index=110&type=chunk) - Average selling price in the West segment decreased due to a mix shift from California to Arizona divisions, while the East segment saw an increase due to a mix shift to higher-priced communities in Florida[112](index=112&type=chunk)[116](index=116&type=chunk) [Gross Margin from Home Sales](index=30&type=section&id=Gross%20Margin%20from%20Home%20Sales) This section analyzes the gross margin from home sales, identifying key factors influencing its change - Gross margin from home sales decreased by **890 basis points** to **16.8%** in Q1 2023 (from **25.7%** in Q1 2022)[118](index=118&type=chunk) - The decrease was largely driven by increases in both incentives and construction costs, and **$7.8 million** of inventory impairments[118](index=118&type=chunk) [Inventory Impairments](index=30&type=section&id=Inventory%20Impairments) This section details the amounts and types of inventory impairments recognized during the period Total Inventory Impairments (in thousands) | Inventory Type | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Housing Completed or Under Construction | $664 | $660 | | Land and Land Under Development | $7,136 | $0 | | **Total Inventory Impairments** | **$7,800** | **$660** | - Total inventory impairments increased significantly to **$7.8 million** in Q1 2023 from **$0.7 million** in Q1 2022, with the majority in land and land under development in the Mountain segment[120](index=120&type=chunk) [Selling, General and Administrative Expenses](index=31&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section reviews selling, general, and administrative expenses, including their components and impact on revenues Selling, General and Administrative Expenses (in thousands) | Expense Type | 2023 (in thousands) | 2022 (in thousands) | % of Home Sale Revenues (2023) | % of Home Sale Revenues (2022) | | :------------------------------------------ | :------------------ | :------------------ | :------------------------------- | :------------------------------- | | General and administrative expenses | $42,776 | $71,983 | 4.2 % | 5.8 % | | Marketing expenses | $23,096 | $25,632 | 2.3 % | 2.1 % | | Commissions expenses | $29,116 | $31,699 | 2.9 % | 2.6 % | | **Total SG&A expenses** | **$94,988** | **$129,314** | **9.3 %** | **10.4 %** | - Total SG&A expenses decreased by **$34.3 million**, and as a percentage of home sale revenues, decreased by **110 basis points** to **9.3%**, primarily due to lower compensation-related costs and reduced headcount[122](index=122&type=chunk) [Other Homebuilding Operating Data](index=32&type=section&id=Other%20Homebuilding%20Operating%20Data) This section provides additional operational metrics for the homebuilding segment, including orders, cancellations, and inventory [Net New Orders and Active Subdivisions](index=32&type=section&id=Net%20New%20Orders%20and%20Active%20Subdivisions) This section presents data on net new home orders, their dollar value, and the number of active subdivisions Net New Orders (in thousands, except homes) | Metric | 2023 Homes | 2023 Dollar Value (in thousands) | 2023 Average Price (in thousands) | 2022 Homes | 2022 Dollar Value (in thousands) | 2022 Average Price (in thousands) | % Change Homes | % Change Dollar Value | % Change Average Price | | :------- | :--------- | :------------------------------- | :-------------------------------- | :--------- | :------------------------------- | :-------------------------------- | :--------------- | :-------------------- | :-------------------- | | West | 1,012 | $566,909 | $560.2 | 1,704 | $1,000,954 | $587.4 | (41)% | (43)% | (5)% | | Mountain | 410 | $237,546 | $579.4 | 920 | $581,971 | $632.6 | (55)% | (59)% | (8)% | | East | 345 | $152,809 | $442.9 | 527 | $253,850 | $481.7 | (35)% | (40)% | (8)% | | **Total** | **1,767** | **$957,264** | **$541.7** | **3,151** | **$1,836,775** | **$582.9** | **(44)%** | **(48)%** | **(7)%** | - Monthly absorption rate decreased by **53%** to **2.56 homes** per community per month in Q1 2023[126](index=126&type=chunk) - Average active subdivisions increased by **18%** to **230** in Q1 2023[127](index=127&type=chunk) [Cancellation Rate](index=33&type=section&id=Cancellation%20Rate) This section reports on home cancellation rates, reflecting changes in market demand and buyer confidence Cancellation Rates | Metric | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Cancellations as a Percentage of Homes in Beginning Backlog | 25 % | 8 % | | Cancellations as a Percentage of Gross Sales | 30 % | 17 % | - Increased cancellation rates reflect softening housing market demand and homebuyer sentiment[132](index=132&type=chunk) [Backlog](index=33&type=section&id=Backlog) This section details the home backlog in terms of homes and dollar value, and factors influencing its changes Backlog (in thousands, except homes) | Metric | 2023 Homes | 2023 Dollar Value (in thousands) | 2023 Average Price (in thousands) | 2022 Homes | 2022 Dollar Value (in thousands) | 2022 Average Price (in thousands) | % Change Homes | % Change Dollar Value | % Change Average Price | | :------- | :--------- | :------------------------------- | :-------------------------------- | :--------- | :------------------------------- | :-------------------------------- | :--------------- | :-------------------- | :-------------------- | | West | 1,839 | $1,020,206 | $554.8 | 4,677 | $2,651,123 | $566.8 | (61)% | (62)% | (2)% | | Mountain | 638 | $444,681 | $697.0 | 2,546 | $1,668,048 | $655.2 | (75)% | (73)% | 6 % | | East | 413 | $197,034 | $477.1 | 1,335 | $628,631 | $470.9 | (69)% | (69)% | 1 % | | **Total** | **2,890** | **$1,661,921** | **$575.1** | **8,558** | **$4,947,802** | **$578.1** | **(66)%** | **(66)%** | **(1)%** | - The decrease in backlog was primarily a result of lower net new orders and a shift in consumer preference to quick move-in homes, leading to a focus on speculative construction starts[133](index=133&type=chunk) [Homes Completed or Under Construction (WIP lots)](index=34&type=section&id=Homes%20Completed%20or%20Under%20Construction%20(WIP%20lots)) This section provides data on the number of homes completed or under construction, distinguishing between sold and unsold units Homes Completed or Under Construction | Metric | 2023 | 2022 | % Change | | :------------------------------------ | :----- | :----- | :------- | | Unsold: Completed | 255 | 19 | 1,242 % | | Unsold: Under construction | 1,277 | 313 | 308 % | | **Total unsold started homes** | **1,532** | **332** | **361 %** | | Sold homes under construction or completed | 2,493 | 7,445 | (67)% | | Model homes under construction or completed | 560 | 513 | 9 % | | **Total homes completed or under construction** | **4,585** | **8,290** | **(45)%** | - The significant increase in total unsold started homes is due to higher cancellation rates and a strategic pivot to focus more on speculative construction starts[134](index=134&type=chunk) [Lots Owned and Optioned (including homes completed or under construction)](index=34&type=section&id=Lots%20Owned%20and%20Optioned%20(including%20homes%20completed%20or%20under%20construction)) This section details the total number of lots owned and optioned, reflecting land acquisition strategies Lots Owned and Optioned | Segment | 2023 Lots Owned | 2023 Lots Optioned | 2023 Total | 2022 Lots Owned | 2022 Lots Optioned | 2022 Total | Total % Change | | :-------- | :-------------- | :----------------- | :--------- | :-------------- | :----------------- | :--------- | :------------- | | West | 11,766 | 422 | 12,188 | 15,548 | 4,237 | 19,785 | (38)% | | Mountain | 4,944 | 1,034 | 5,978 | 6,741 | 4,240 | 10,981 | (46)% | | East | 3,281 | 1,495 | 4,776 | 4,318 | 2,728 | 7,046 | (32)% | | **Total** | **19,991** | **2,951** | **22,942** | **26,607** | **11,205** | **37,812** | **(39)%** | - Total owned and optioned lots decreased by **39%** year-over-year, reflecting an intentional slowdown in land acquisition and approval activity due to market uncertainty[135](index=135&type=chunk) - The company aims to maintain a **two to three-year supply** of land[135](index=135&type=chunk) [Financial Services](index=34&type=section&id=Financial%20Services) This section analyzes the performance of the financial services segment, including revenues, pretax income, and mortgage operations data Financial Services Revenues and Pretax Income (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | Total financial services revenues | $29,486 | $29,131 | 1 % | | Total financial services pretax income | $17,970 | $13,383 | 34 % | - Financial services pretax income increased by **34%** due to decreased salary-related expenses (lower headcount) and an increased capture rate in mortgage operations, and higher interest income from insurance operations[136](index=136&type=chunk) Mortgage Operations Data | Metric | 2023 | 2022 | % or Percentage Change | | :------------------------------------------ | :----- | :----- | :--------------------- | | Total Originations (Loans) | 1,221 | 1,314 | (7)% | | Total Originations (Principal) | $555,608 | $605,800 | (8)% | | Capture rate as % of all homes delivered | 66 % | 59 % | 7 % | | Capture rate as % of all homes delivered (excludes cash sales) | 72 % | 62 % | 10 % | | FHA loans as % of product mix | 17 % | 12 % | 5 % | | Conventional loans as % of product mix | 64 % | 68 % | (4)% | | Loans Sold to Third Parties (Loans) | 1,354 | 1,527 | (11)% | | Loans Sold to Third Parties (Principal) | $620,329 | $691,358 | (10)% | [Income Taxes](index=35&type=section&id=Income%20Taxes) This section discusses the effective income tax rate and its drivers for the reporting period - The overall effective income tax rate was **25.9%** for Q1 2023, down from **26.5%** in Q1 2022, primarily due to energy tax credits benefiting 2023[139](index=139&type=chunk) [Critical Accounting Estimates and Policies](index=36&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) This section confirms the consistency of critical accounting estimates and policies and the nature of management's judgments - The company's critical accounting estimates and policies have not changed from those reported in its 2022 Annual Report on Form 10-K[142](index=142&type=chunk) - Management's estimates and judgments are based on historical experience and other reasonable factors, with actual results potentially differing if future conditions vary significantly[141](index=141&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations and fund operations through available capital [Material Cash Requirements](index=36&type=section&id=Material%20Cash%20Requirements) This section outlines significant future cash obligations, including debt payments, lease payments, and option contracts - Outstanding senior notes totaled **$1.5 billion** in principal, with no maturities within 12 months; future interest payments total **$1.3 billion**, with **$64.2 million** due within 12 months[146](index=146&type=chunk) - Required operating lease future minimum payments were **$28.5 million** at March 31, 2023[146](index=146&type=chunk) - The company had **$20.1 million** in cash deposits and **$2.7 million** in letters of credit securing option contracts to purchase **2,951 lots** for an estimated **$332.8 million**[147](index=147&type=chunk) - Outstanding surety bonds and letters of credit totaled **$359.1 million** and **$116.0 million**, respectively, with estimated completion costs of **$157.3 million** and **$75.1 million**[148](index=148&type=chunk) [Capital Resources](index=36&type=section&id=Capital%20Resources) This section describes the components of the company's capital structure and its adequacy for future needs - The company's capital structure includes stockholders' equity, long-term senior notes, a Revolving Credit Facility, and a Mortgage Repurchase Facility[149](index=149&type=chunk) - Management believes current capital resources, including cash, marketable securities, and available credit, are adequate to satisfy short and long-term capital requirements[149](index=149&type=chunk)[150](index=150&type=chunk) [Senior Notes, Revolving Credit Facility and Mortgage Repurchase Facility](index=37&type=section&id=Senior%20Notes,%20Revolving%20Credit%20Facility%20and%20Mortgage%20Repurchase%20Facility) This section provides details on the company's debt instruments and credit facilities, including terms and covenants - Senior notes are unsecured, guaranteed by homebuilding subsidiaries, and do not contain financial covenants[152](index=152&type=chunk) - The Revolving Credit Facility, with **$1.14 billion** available at March 31, 2023, was amended to a SOFR-based interest rate and is subject to financial covenants (consolidated tangible net worth and leverage tests)[154](index=154&type=chunk)[155](index=155&type=chunk)[157](index=157&type=chunk) - The Mortgage Repurchase Facility provides liquidity to HomeAmerican with a total capacity of **$230 million** and is currently under negotiation for extension[158](index=158&type=chunk) [Dividends](index=38&type=section&id=Dividends) This section reports on cash dividends declared and paid per share during the reporting periods - Cash dividends of **$0.50 per share** were paid for the three months ended March 31, 2023 and 2022[161](index=161&type=chunk) [MDC Common Stock Repurchase Program](index=38&type=section&id=MDC%20Common%20Stock%20Repurchase%20Program) This section details the company's common stock repurchase authorization and any activity under the program - The company is authorized to repurchase up to **4.0 million shares** of common stock but did not repurchase any shares under this program during Q1 2023[162](index=162&type=chunk) - **47,131 shares** were withheld in February 2023 to cover withholding taxes due upon the vesting of restricted stock award shares[181](index=181&type=chunk) [Consolidated Cash Flow](index=39&type=section&id=Consolidated%20Cash%20Flow) This section analyzes the changes in cash flows from operating, investing, and financing activities - Net cash provided by operating activities significantly increased to **$426.2 million** in Q1 2023 (from **$118.1 million** in Q1 2022), driven by a decrease in housing inventory and trade receivables[164](index=164&type=chunk) - Net cash used in investing activities increased to **$244.8 million** in Q1 2023 (from **$6.9 million** in Q1 2022), primarily due to **$434.4 million** in marketable securities purchases, partially offset by **$195.0 million** in maturities[165](index=165&type=chunk) - Net cash used in financing activities decreased to **$93.5 million** in Q1 2023 (from **$126.3 million** in Q1 2022), mainly due to lower net payments on the mortgage repurchase facility[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, particularly interest rate fluctuations, and its use of financial instruments for mitigation - The company is exposed to market risks related to fluctuations in interest rates on mortgage loans held-for-sale, mortgage interest rate lock commitments (IRLCs), marketable securities, and debt[172](index=172&type=chunk) - Forward sales of mortgage-backed securities are the predominant derivative and financial instruments used to minimize market risk during the period from interest rate lock to loan commitment/sale[84](index=84&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - At March 31, 2023, HomeAmerican had **$385.7 million** in IRLCs and **$53.8 million** in mortgage loans held-for-sale not yet committed to a mortgage purchaser, hedged by **$362.5 million** in forward sales of securities[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures, reporting no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[177](index=177&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2023[177](index=177&type=chunk) [Part II. Other Information](index=42&type=section&id=Part%20II.%20Other%20Information) This section provides additional disclosures on legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses legal actions in the ordinary course of business, with management expecting no material adverse financial impact - The company is named as defendants in various claims and legal actions arising in the ordinary course of the homebuilding business, including product liability and sales/financing claims[179](index=179&type=chunk) - Management believes the outcome of these matters will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[179](index=179&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - There are no material changes from the risk factors included in the Company's 2022 Annual Report on Form 10-K[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no common stock repurchases under the program, though shares were withheld for restricted stock vesting taxes - The company did not repurchase any shares of its common stock under its publicly announced repurchase program during the three months ended March 31, 2023[181](index=181&type=chunk) - **47,131 shares** of common stock were withheld in February 2023 to cover withholding taxes due upon the vesting of restricted stock award shares[181](index=181&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, plans, certifications, and iXBRL financial statements - Exhibits include the Credit Agreement amendment (April 11, 2023), First Amendment to the 2021 Equity Incentive Plan, Subsidiary Guarantors list, Section 302 and 906 certifications, and iXBRL financial statements[185](index=185&type=chunk) [Signatures](index=43&type=section&id=Signatures) This section contains the official signatures of authorized officers, confirming the submission of the Form 10-Q - The report was signed by Robert N. Martin, Senior Vice President and Chief Financial Officer, and Derek R. Kimmerle, Vice President, Controller and Chief Accounting Officer, on May 2, 2023[185](index=185&type=chunk)

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]