MDC(US:MDC)2025-11-04 21:39Financial Performance - For the three months ended September 30, 2025, the company reported a net loss of $10.6 million, a 108% decrease compared to net income of $133.5 million for the same period in the prior year [127]. - For the nine months ended September 30, 2025, net income was $55.1 million, a 78% decrease compared to $254.5 million for the same period in the prior year [128]. - Financial services pretax income decreased by 58% year-over-year to $11.7 million for the three months ended September 30, 2025 [124]. - Financial services pretax income for the three months ended September 30, 2025, was $11.7 million, a 58% decrease from $27.9 million in the same period of 2024 [166]. - The overall effective income tax rates were 38.9% and 15.2% for the three and nine months ended September 30, 2025, compared to 14.2% and 21.8% for the same periods in 2024 [171]. Home Sales and Revenue - Home sale revenues decreased by 40% year-over-year to $832.3 million for the three months ended September 30, 2025, compared to $1.4 billion in the same period in 2024 [124]. - For the three months ended September 30, 2025, total home sale revenues decreased by 40% to $832.3 million compared to $1.39 billion in the same period of 2024 [136]. - The West segment reported a 50% decrease in home sale revenues for the three months ended September 30, 2025, totaling $408.6 million compared to $804.6 million in 2024 [136]. - The East segment experienced a 53% decrease in home sale revenues for the three months ended September 30, 2025, amounting to $128.9 million compared to $242.1 million in 2024 [136]. - Financial services revenues for the three months ended September 30, 2025, were $23.7 million, a 45% decrease from $43.4 million in the same period of 2024 [166]. Homebuilding Operations - Homebuilding pretax income for the three months ended September 30, 2025, was $(29.1) million, a decrease of 123% from $127.8 million for the same period in the prior year [130]. - The gross margin from home sales dropped by 760 basis points to 10.2% for the three months ended September 30, 2025, down from 17.8% in the prior year [124]. - Gross margin from home sales decreased by 760 basis points year-over-year to 10.2% for the three months ended September 30, 2025, primarily due to inventory impairments and increased incentive levels [143]. - Total inventory impairments for the three months ended September 30, 2025, amounted to $39.85 million, significantly higher than $6.3 million in the same period of 2024 [146]. - The average selling price of homes for the three months ended September 30, 2025, increased by 5% to $571.6 thousand from $546.1 thousand in 2024 [136]. Orders and Absorption Rates - The number of net new orders for the three months ended September 30, 2025, was 1,499, a decrease of 21% from 1,904 in the same period of 2024 [153]. - The average monthly absorption rate for the total segment decreased to 2.39 for the three months ended September 30, 2025, down from 3.01 in 2024 [153]. - The cancellation rate as a percentage of gross sales decreased to 15% for the three months ended September 30, 2025, down from 19% in the same period of 2024 [162]. Assets and Liquidity - Total homebuilding assets increased by 3% from December 31, 2024, to $4.82 billion as of September 30, 2025 [133]. - The company ended the quarter with total cash and cash equivalents of $208.7 million and total liquidity of $1.01 billion [126]. - As of September 30, 2025, the company had outstanding senior notes totaling an aggregate principal amount of $1.50 billion, with future interest payments totaling $1.12 billion [178]. - The company had deposits of $35.3 million in cash and $16.2 million in letters of credit securing option contracts to purchase 5,671 lots for a total estimated purchase price of $682.5 million [179]. - As of September 30, 2025, availability under the Revolving Credit Facility was approximately $790.5 million [189]. Land and Development - The total lots owned and optioned increased by 6% year-over-year to 25,393 as of September 30, 2025 [165]. - During the nine months ended September 30, 2025, cash used to increase land and land under development was $588.2 million, contrasting with cash provided by a decrease of $52.9 million in the prior year [197]. - The total number of average active subdivisions increased by 7% year-over-year to 221 for the three months ended September 30, 2025, while the number of active subdivisions decreased by 10% for the nine months ended September 30, 2025 [154]. Cash Flow and Financing Activities - For the nine months ended September 30, 2025, net cash used in operating activities was $575.4 million, a significant decrease from net cash provided by operating activities of $139.1 million in the prior year [197]. - Net cash used in financing activities decreased significantly to $36.5 million in the nine months ended September 30, 2025, compared to $762.3 million in the same period of 2024, primarily due to a $611.4 million distribution to Parent related to a merger in 2024 [199]. - Cash provided by draws on homebuilding line of credit was $85.0 million for the nine months ended September 30, 2025, a significant increase from cash used of $9.0 million in the prior year, attributed to increased land acquisition [199]. 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 preserve principal [203]. - The company does not have an obligation to prepay senior notes prior to maturity, which mitigates the impact of interest rate risk on financial position and cash flows [208]. - Changes in interest rates affect earnings and cash flows for variable rate debt, such as the Revolving Credit Facility and Mortgage Repurchase Facility, but do not impact the fair value of the outstanding borrowings [208].