MDC(US:MDC)2024-08-06 20:46Homebuilding Performance - Homebuilding revenues for Q2 2024 reached $1.41 billion, a 28% increase from $1.10 billion in Q2 2023[105]. - Gross profit for homebuilding was $255.3 million, with a gross margin of 18.1%, up from 16.4% in the prior year[105]. - Homebuilding pretax income decreased by 77% year-over-year to $20.8 million, primarily due to increased selling, general and administrative expenses[113]. - Homebuilding pretax income for the first half of 2024 was $129.3 million, a 29% decrease from $183.1 million in the same period last year[115]. - New home deliveries for the three months ended June 30, 2024, totaled 2,533 homes, generating home sale revenues of $1,411,446, an increase of 26% year-over-year[119]. - The average selling price of homes delivered in the West segment increased by 8% to $570.8 thousand, while the East segment saw a decrease of 6% to $430.6 thousand[120]. - Gross margin from home sales for the three months ended June 30, 2024, increased by 170 basis points year-over-year to 18.1%[121]. - The company experienced an increase in the number of homes under construction, contributing to higher new home deliveries and improved absorption rates[120]. - Total homes in backlog decreased by 44% to 1,700 homes with a total value of $1.01 billion, down from $1.76 billion a year ago[139]. - The total number of unsold started homes increased by 85% to 3,982 homes, while sold homes under construction or completed decreased by 37% to 1,697 homes[140]. - The monthly absorption rate for the total segment was 3.69 homes, with a 20% increase in net new orders compared to the previous year[131]. - The average active subdivisions for the total segment decreased by 15% to 198, indicating a shift in consumer preference[132]. - The average active subdivisions for the West segment decreased by 26% to 105, impacting net new orders[132]. Financial Performance - Net income for Q2 2024 was $25.1 million, a 73% decrease compared to $93.5 million in Q2 2023[110]. - The effective income tax rate increased to 42.1% in Q2 2024 from 17.3% in Q2 2023, impacting net income[110]. - Total liquidity at the end of Q2 2024 was $2.19 billion, with cash and cash equivalents of $1.10 billion[109]. - General and administrative expenses increased to $145.3 million for the three months ended June 30, 2024, compared to $52.2 million in the same period last year[126]. - The total selling, general, and administrative expenses as a percentage of home sale revenues increased to 15.4% for the three months ended June 30, 2024, from 9.7% in the prior year[126]. - For the six months ended June 30, 2024, net cash provided by operating activities was $50.4 million, a significant decrease from $651.9 million in the prior year period[170]. - The net income for the six months ended June 30, 2024, was $121.0 million, compared to $174.2 million in the same period of 2023[170]. - Cash used in financing activities increased to $668.1 million for the six months ended June 30, 2024, primarily due to a distribution to Parent of $611.4 million related to the Merger[172]. Financial Services - Financial services pretax income increased by 8% year-over-year to $22.6 million, driven by other financial services operations[110]. - Financial services revenues for the three months ended June 30, 2024, increased by 15% to $37.58 million compared to $32.62 million in the same period of 2023[143]. - Mortgage operations revenue rose by 2% to $23.15 million, while other financial services revenue surged by 46% to $14.43 million[143]. - Total financial services pretax income increased by 8% to $22.64 million, driven by strong performance in other financial services segments[143]. - Total originations for loans increased by 46% to 1,928 loans in the three months ended June 30, 2024, compared to 1,320 loans in the same period of 2023[145]. - The capture rate as a percentage of all homes delivered improved to 76%, up from 66% year-over-year[145]. - The average FICO score for loans increased to 744, compared to 739 in the same period of 2023[145]. Costs and Expenses - The company incurred $27.6 million in transaction costs related to the merger during Q2 2024[110]. - Marketing expenses for the three months ended June 30, 2024, rose to $29.1 million, driven by increased salary-related expenses due to headcount growth[127]. - Commissions expenses increased to $42.2 million for the three months ended June 30, 2024, reflecting higher home sale revenues[127]. - Total inventory impairments recognized for the three months ended June 30, 2024, amounted to $4.55 million, down from $13.5 million in the prior year[123]. Assets and Liquidity - Total homebuilding assets decreased by $614.1 million, or 12%, from December 31, 2023, to June 30, 2024, primarily due to a decrease in the Corporate Segment[116]. - The company had outstanding senior notes totaling $1.50 billion as of June 30, 2024, with future interest payments of $1.22 billion[153]. - Cash deposits amounted to $35.5 million, with letters of credit securing option contracts for 5,598 lots valued at $664.6 million[153]. - The Revolving Credit Facility was amended to increase the aggregate commitment from $1.0 billion to $1.2 billion, with a maturity extension to December 18, 2025[158]. - As of June 30, 2024, the availability under the Revolving Credit Facility was approximately $1.09 billion, with outstanding letters of credit of $31.1 million[163]. - The Mortgage Repurchase Facility's total capacity was $150 million as of June 30, 2024, with a termination date of August 12, 2024[165]. - HomeAmerican's mortgage loans held-for-sale had an aggregate principal balance of $302.4 million as of June 30, 2024[176]. - Forward sales of securities totaled $500.0 million as of June 30, 2024, used to hedge changes in fair value of interest rate lock commitments[176]. - The Revolving Credit Facility was amended to transition to an interest rate based on the Secured Overnight Financing Rate (SOFR) effective April 11, 2023[159]. - The company believes it was in compliance with the financial covenants of the Revolving Credit Facility as of June 30, 2024[162].