MDC(US:MDC)2025-05-06 20:22Financial Performance - For the three months ended March 31, 2025, the company's net income was $40.1 million, a 58% decrease compared to $95.8 million for the same period in the prior year[124]. - Home sale revenues decreased by 27% year-over-year to $972.9 million, down from $1.3 billion in the same quarter of 2024[120][124]. - The gross margin from home sales decreased by 200 basis points to 15.5%, primarily due to increased incentive levels[138]. - Homebuilding pretax income was $38.3 million, a decrease of 65% from $108.6 million in the prior year, driven by lower revenues and increased expenses[124][127]. - Financial services pretax income decreased by 38% to $11.0 million, impacted by mortgage operations and special financing programs[124]. Home Sales and Inventory - The company closed 1,785 homes during the quarter, with 83% sold and closed in the same period, and only 390 homes in backlog at the beginning of the period[122]. - The total number of homes in backlog decreased by 55% to 884 homes, with a total value of $512.4 million, a 57% decrease from the previous year[156]. - Total unsold started homes increased by 24% to 4,285 homes, while sold homes under construction or completed decreased by 54% to 881 homes[158]. - The East segment saw a 14% decrease in home sale revenues, while the West segment experienced a 38% decrease[131][128]. Expenses and Cost Management - General and administrative expenses decreased by $12,526 thousand to $53,787 thousand, representing 5.5% of home sale revenues, an increase of 50 basis points from 5.0% in the previous year[142]. - Marketing expenses decreased by $2,254 thousand to $27,049 thousand, accounting for 2.8% of home sale revenues, an increase of 60 basis points from 2.2% in the previous year[143]. - Total selling, general and administrative expenses decreased by $19,858 thousand to $114,292 thousand, which is 11.7% of home sale revenues, an increase of 160 basis points from 10.1% in the previous year[142]. Cash Flow and Liquidity - Total cash and cash equivalents at the end of the quarter were $533.6 million, with total liquidity of $1.46 billion and a debt-to-capital ratio of 33.2%[123]. - Net cash used in operating activities for the three months ended March 31, 2025, was $365.7 million, compared to net cash provided of $177.5 million in the prior year[189]. - Cash used in the increase in land and land under development was $133.4 million for the three months ended March 31, 2025, compared to cash provided by a decrease of $120.4 million in the same period of 2024[189]. - Net cash provided by financing activities was $66.2 million for the three months ended March 31, 2025, compared to cash used of $73.2 million in the same period of 2024[191]. Debt and Financial Obligations - The company had outstanding senior notes totaling $1.50 billion as of March 31, 2025, with future interest payments totaling $1.16 billion[172]. - As of March 31, 2025, the company had $243.8 million of mortgage loans obligated to repurchase under the Mortgage Repurchase Facility[186]. - The Revolving Credit Facility has an aggregate commitment of up to $900 million, which may increase to $1.40 billion upon request[179]. - The estimated cost to complete obligations related to outstanding surety bonds and letters of credit was approximately $129.5 million and $139.2 million, respectively[174]. Mortgage Operations - Mortgage operations revenues fell by 51% to $9,687 thousand, while other financial services revenues increased by 29% to $15,085 thousand[160]. - The capture rate for mortgage loans as a percentage of all homes delivered increased by 9% to 80%[163]. - HomeAmerican had mortgage loans in process with an aggregate principal balance of $243.4 million, all of which had not yet been committed to a mortgage purchaser[197]. - HomeAmerican's mortgage loans held-for-sale totaled $316.8 million at March 31, 2025, with $241.2 million not yet committed to a mortgage purchaser[197]. Risk Management - The company utilizes a cash and investment policy that includes U.S. government securities, commercial bank deposits, and money market funds to manage risk and achieve investment returns[195]. - HomeAmerican employs forward sales of mortgage-backed securities for non-trading purposes to economically hedge price risk due to fluctuations in interest rates[198]. - 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 such as the Revolving Credit Facility[200]. - HomeAmerican's financial instruments include forward sales of mortgage-backed securities and commitments to originate mortgage loans, with changes in fair value recorded in revenues[198].