MDC(US:MDC)2023-10-26 18:55Financial Performance - Home sale revenues for Q3 2023 were $1,087.1 million, a 23% decrease from $1,407.6 million in Q3 2022[100] - Gross profit for Q3 2023 was $208.2 million, with a gross margin of 19.2%, down from 22.7% in Q3 2022, reflecting a 350 basis point decrease[100] - Net income for Q3 2023 was $107.3 million, or $1.40 per diluted share, a 26% decrease compared to $144.4 million, or $1.98 per diluted share, in Q3 2022[105] - The homebuilding pretax income for Q3 2023 was $127.4 million, a 24% decrease from $168.2 million in Q3 2022, primarily due to a 23% decline in home sale revenues[107] - For the nine months ended September 30, 2023, net income was $281.5 million, or $3.73 per diluted share, a 42% decrease from $482.4 million, or $6.59 per diluted share, in the same period of the prior year[106] Revenue and Sales Trends - For the three months ended September 30, 2023, total home sale revenues decreased by 18% to $1,087,050,000 compared to $1,407,642,000 in the same period of 2022[113] - The West segment reported a 9% decrease in home sale revenues to $651,472,000, while the Mountain and East segments saw decreases of 32% and 23%, respectively[113] - For the nine months ended September 30, 2023, total home sale revenues decreased by 19% to $3,210,536,000 from $4,098,985,000 in the prior year[113] - The average selling price of homes delivered decreased by 6% to $552,400 from $589,700 year-over-year[113] - The average selling price for homes in the West segment decreased to $539,100, while the Mountain and East segments reported average prices of $634,900 and $462,300, respectively[113] Orders and Backlog - The company experienced a 467% increase in net orders in Q3 2023 compared to the prior year quarter, driven by strong demand for quick move-in homes[101] - As of September 30, 2023, the company had 2,775 homes in backlog valued at $1.66 billion, representing a 48% decrease in both the number and dollar value of homes in backlog from September 30, 2022[136] - The cancellation rate as a percentage of gross sales decreased to 24% for the three months ended September 30, 2023, down from 81% in the same period of 2022, indicating improved demand[133] Construction and Inventory - The number of new homes delivered decreased by 18% to 1,968 homes for the three months ended September 30, 2023, compared to 2,387 homes in 2022[113] - The total number of unsold started homes increased to 2,681 as of September 30, 2023, a 148% increase compared to 1,082 in the same period of 2022[137] - The number of homes completed or under construction decreased by 13% to 5,818 as of September 30, 2023, compared to 6,708 in the same period of 2022[137] - The company experienced a 173% increase in homes under construction, rising to 2,445 as of September 30, 2023, compared to 895 in the same period of 2022[137] Financial Services - For the three months ended September 30, 2023, total financial services revenues decreased by 30% to $23.8 million compared to $34.1 million in the same period of 2022[139] - Mortgage operations pretax income for the three months ended September 30, 2023, decreased by 45% to $3.1 million from $5.7 million in Q3 2022[139] - Total originations of mortgage loans for the three months ended September 30, 2023, decreased by 15% to 1,225 loans compared to 1,447 loans in the same period of 2022[142] - For the nine months ended September 30, 2023, financial services pretax income increased by 3% to $51.4 million compared to $49.6 million in the prior year period[140] Cash and Liquidity - The company reported a total cash and cash equivalents and marketable securities of $1.78 billion, with total liquidity of $2.93 billion as of Q3 2023[104] - During the nine months ended September 30, 2023, net cash provided by operating activities was $623.1 million, compared to $344.0 million in the prior year period[170] - Net cash used in financing activities decreased to $123.6 million for the nine months ended September 30, 2023, from $178.4 million in the same period of 2022[172] - The company had forward sales of securities totaling $366.0 million as of September 30, 2023, compared to $323.0 million at December 31, 2022[178] Debt and Capital Structure - The company ended Q3 2023 with a debt-to-capital ratio of 31.2% and no senior note maturities until 2030[104] - The company had outstanding senior notes totaling $1.5 billion as of September 30, 2023, with no payments due within the next 12 months[152] - The company has an effective shelf registration statement allowing it to issue up to $5.0 billion in equity, debt, or hybrid securities, with the full amount remaining available[150] - The availability under the Revolving Credit Facility was approximately $1.14 billion as of September 30, 2023[163] Operational Efficiency - Total selling, general and administrative expenses for the three months ended September 30, 2023 decreased by $40,124,000 to $101,311,000 compared to $141,435,000 in 2022[125] - Inventory impairments recognized for the three months ended September 30, 2023 totaled $6,200,000, down from $28,415,000 in the same period of 2022[123] - Backlog conversion rates improved due to an increase in the number of homes sold and closed, aided by a decrease in construction cycle times year-over-year[113] - The average monthly absorption rate for the total segment was 2.39 for the three months ended September 30, 2023, compared to 0.46 in the same period of 2022, indicating a significant increase in sales activity[129]