M.D.C. Holdings Inc.
11/04/2025 | Press release | Distributed by Public on 11/04/2025 15:40
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with, and is qualified in its entirety by, the Unaudited Consolidated Financial Statements and Notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are based upon management's experiences, observations, and analyses. Actual results may differ materially from those indicated in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q.
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Three Months Ended
September 30, |
Nine Months Ended September 30, |
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| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
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(Dollars in thousands, except per share amounts)
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Homebuilding:
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|||||||||||||||||||||||
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Home sale revenues
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$ | 832,292 | $ | 1,386,655 | $ | 2,911,594 | $ | 4,123,303 | |||||||||||||||
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Home cost of sales
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(707,493) | (1,133,532) | (2,487,150) | (3,372,423) | |||||||||||||||||||
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Inventory impairments
|
(39,850) | (6,300) | (49,600) | (16,750) | |||||||||||||||||||
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Total cost of sales
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(747,343) | (1,139,832) | (2,536,750) | (3,389,173) | |||||||||||||||||||
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Gross profit
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84,949 | 246,823 | 374,844 | 734,130 | |||||||||||||||||||
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Gross margin
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10.2 | % | 17.8 | % | 12.9 | % | 17.8 | % | |||||||||||||||
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Selling, general and administrative expenses
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(109,608) | (129,096) | (348,290) | (479,792) | |||||||||||||||||||
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Interest and other income
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1,028 | 11,115 | 8,690 | 45,688 | |||||||||||||||||||
| Transaction costs | - | (329) | - | (38,595) | |||||||||||||||||||
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Other income (expense)
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(5,427) | (739) | (10,743) | (4,323) | |||||||||||||||||||
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Homebuilding pretax income
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(29,058) | 127,774 | 24,501 | 257,108 | |||||||||||||||||||
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Financial Services:
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Revenues
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23,734 | 43,357 | 81,306 | 112,289 | |||||||||||||||||||
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Expenses
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(15,176) | (21,010) | (51,440) | (59,733) | |||||||||||||||||||
| Other income, net | 3,104 | 5,559 | 10,607 | 15,657 | |||||||||||||||||||
| Financial services pretax income | 11,662 | 27,906 | 40,473 | 68,213 | |||||||||||||||||||
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Income before income taxes
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(17,396) | 155,680 | 64,974 | 325,321 | |||||||||||||||||||
| Benefit (provision) for income taxes | 6,760 | (22,143) | (9,873) | (70,831) | |||||||||||||||||||
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Net income
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$ | (10,636) | $ | 133,537 | $ | 55,101 | $ | 254,490 | |||||||||||||||
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Cash provided by (used in):
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Operating Activities
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$ | (294,093) | $ | 88,721 | $ | (575,438) | $ | 139,096 | |||||||||||||||
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Investing Activities
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$ | (6,576) | $ | 85,390 | $ | (18,447) | $ | (18,963) | |||||||||||||||
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Financing Activities
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$ | 102,019 | $ | (94,161) | $ | (36,473) | $ | (762,303) | |||||||||||||||
-29-
Overview
Industry Conditions and Outlook for SHUS*
The homebuilding industry continued to see softened market conditions and affordability challenges during the third quarter of 2025. The macroeconomic backdrop remains challenging given consumers affordability concerns, continuing uncertainty related to geopolitical issues, and continued elevated mortgage rates. As a result, we experienced a decrease in our sales absorption rate and our gross margin from home sales during the three months ended September 30, 2025 compared to the same period in the prior year.
We believe that we are well equipped to navigate the current market conditions given our strong financial position. We ended the quarter with total cash and cash equivalents of $208.7 million, total liquidity of $1.01 billion, a debt-to-capital ratio of 35.0% and no senior note maturities until 2030.
Three Months Ended September 30, 2025
For the three months ended September 30, 2025, our net income (loss) was $(10.6) million, a 108% decrease compared to net income of $133.5 million for the same period in the prior year. This was driven by a decrease in pretax income of both our homebuilding business and financial services business. Our homebuilding pretax income decreased $156.8 million, or 123% year-over-year. Our financial services business pretax income decreased $16.2 million, or 58%, compared to the same period in the prior year. The decrease in homebuilding pretax income was primarily due to a 40% decrease in home sale revenues, a 760 basis point decrease in gross margins from home sales and a 390 basis point increase in our selling, general and administrative expenses as a percentage of revenue. The decrease in gross margin from home sales was driven largely by $39.9 million in inventory impairments during the three months ended September 30, 2025 compared to $6.3 million in the same period in the prior year, as well as increased incentive levels. The decrease in financial services pretax income was driven by our mortgage operations. The decrease in pretax income for our mortgage operations was driven by decreased loan origination volume due to the decrease in homes closed as well as special financing programs offered on loans locked during the quarter. This was partially offset by an increase in capture rate. Our financial services and homebuilding businesses each saw a decrease in interest income due to decreases in cash and short-term investments year-over-year.
Nine Months Ended September 30, 2025
For the nine months ended September 30, 2025, our net income was $55.1 million, a 78% decrease compared to net income of $254.5 million for the same period in the prior year. Both our homebuilding business and financial services businesses drove the decrease. Our homebuilding pretax income decreased $232.6 million, or 90% year-over-year. Our financial services business pretax income decreased $27.7 million, or 41% year-over-year. The main drivers of the decrease in homebuilding pretax income and financial services pretax income are consistent with the third quarter commentary discussed above.
* See "Forward-Looking Statements"below.
-30-
Homebuilding
Pretax Income (Loss):
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Three Months Ended
|
Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30, |
Change
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September 30, |
Change
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| 2025 | 2024 |
Amount
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%
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2025 | 2024 |
Amount
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%
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(Dollars in thousands)
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West
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$ | (11,965) | $ | 81,270 | $ | (93,235) | (115) | % | $ | 23,503 | $ | 248,004 | $ | (224,501) | (91) | % | |||||||||||||||||||||||||||||||
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Mountain
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11,387 | 36,044 | (24,657) | (68) | % | 43,063 | 101,196 | (58,133) | (57) | % | |||||||||||||||||||||||||||||||||||||
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East
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(15,700) | 12,732 | (28,432) | (223) | % | -17,471 | 38,304 | (55,775) | (146) | % | |||||||||||||||||||||||||||||||||||||
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Corporate
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(12,780) | (2,272) | (10,508) | (463) | % | (24,594) | (130,396) | 105,802 | 81 | % | |||||||||||||||||||||||||||||||||||||
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Total Homebuilding pretax income
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$ | (29,058) | $ | 127,774 | $ | (156,832) | (123) | % | $ | 24,501 | $ | 257,108 | $ | (232,607) | (90) | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2025, we recorded homebuilding pretax income (loss) of $(29.1) million, a decrease of 123% from $127.8 million for the same period in the prior year. The decrease was due to a 40% decrease in home sale revenues, a 760 basis point decrease in gross margin from home sales and a 390 basis point increase in our selling, general and administrative expenses as a percentage of home sale revenues.
Our West segment experienced a $93.2 million year-over-year decrease in pretax income, due to a decrease in gross margin from home sales, which included an increase in inventory impairments of $15.9 million, a 49% decrease in home sale revenues and an increase in the selling, general and administrative expenses as a percentage of home sale revenues. Our Mountain segment experienced a $24.7 million decrease in pretax income from the prior year, as a result of a 13% decrease in home sale revenues, a decrease in gross margin from home sales, which included an increase of $6.8 million of inventory impairments and an increase in the selling, general and administrative expenses as a percentage of home sale revenues. Our East segment experienced a $28.4 million decrease in pretax income from the prior year, due primarily to a decrease in gross margin from home sales, which included an increase of $10.9 million of inventory impairments, a 47% decrease in home sale revenues, and an increase in the selling, general and administrative expenses as a percentage of home sale revenues. Our Corporate segment experienced a $10.5 million decrease in pretax income driven by a decrease in interest income.
For the nine months ended September 30, 2025, we recorded homebuilding pretax income of $24.5 million, a decrease of 90% from $257.1 million for the same period in the prior year. The decrease was due to a 29% decrease in home sale revenues, a 490 basis point decrease in gross margin from home sales and a decrease in interest income year-over-year. These decreases were partially offset by $38.6 million of transaction costs related to the Merger during the nine months ended September 30, 2024. Commentary on the drivers of the decrease in pretax income in our West, Mountain and East homebuilding segments is consistent with the 2025 third quarter discussion above. The increase in the Corporate segment pretax income was driven by the nine months ended September 30, 2024, which included accelerated vesting of equity awards, key executives' transaction bonuses and transaction costs in connection with the closing of the Merger as well as bonus compensation that was historically paid in the form of equity awards that were instead paid in cash. This was partially offset by a decrease in interest income.
Assets:
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September 30, 2025 |
December 31, 2024 |
Change
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Amount
|
%
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(Dollars in thousands)
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West
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$ | 2,649,059 | $ | 2,261,391 | $ | 387,668 | 17 | % | |||||||||||||||
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Mountain
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1,044,454 | 1,055,134 | (10,680) | (1) | % | ||||||||||||||||||
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East
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899,221 | 593,167 | 306,054 | 52 | % | ||||||||||||||||||
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Corporate
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223,432 | 770,099 | (546,667) | (71) | % | ||||||||||||||||||
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Total homebuilding assets
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$ | 4,816,166 | $ | 4,679,791 | $ | 136,375 | 3 | % | |||||||||||||||
Total homebuilding assets increased 3% from December 31, 2024 to September 30, 2025. The decrease in the Corporate segment was driven by a decrease in cash and cash equivalents due to increased land acquisition and development spend during the nine months ended September 30, 2025. Changes in assets within our homebuilding segments were primarily due to changes in land and land under development and housing completed or under construction. Land and land under development increased within our East, Mountain and West homebuilding segments due to increased land acquisition during the current year. Housing
-31-
completed or under construction increased within our East and West homebuilding segments due to an increase in the number of finished homes at period end. The decrease in homebuilding assets in the Mountain segment was due to a larger decrease in housing completed or under construction.
-32-
New Home Deliveries & Home Sale Revenues:
Changes in home sale revenues are impacted by changes in the number of new homes delivered and the average selling price of those delivered homes. Commentary for each of our segments on significant changes in these two metrics is provided below.
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes |
Home Sale Revenues |
Average Price |
Homes |
Home Sale Revenues |
Average Price |
Homes |
Home Sale Revenues |
Average Price | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 705 | $ | 408,574 | $ | 579.5 | 1,413 | $ | 804,561 | $ | 569.4 | (50) | % | (49) | % | 2 | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 479 | 294,767 | 615.4 | 542 | 340,034 | 627.4 | (12) | % | (13) | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||
| East | 272 | 128,951 | 474.1 | 584 | 242,060 | 414.5 | (53) | % | (47) | % | 14 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 1,456 | $ | 832,292 | $ | 571.6 | 2,539 | $ | 1,386,655 | $ | 546.1 | (43) | % | (40) | % | 5 | % | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes |
Home Sale Revenues |
Average Price |
Homes |
Home Sale Revenues |
Average Price |
Homes |
Home Sale Revenues |
Average Price | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 2,634 | $ | 1,483,356 | $ | 563.2 | 4,342 | $ | 2,477,208 | $ | 570.5 | (39) | % | (40) | % | (1) | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 1,586 | 947,612 | 597.5 | 1,628 | 1,016,284 | 624.3 | (3) | % | (7) | % | (4) | % | |||||||||||||||||||||||||||||||||||||||||
| East | 1,093 | 480,626 | 439.7 | 1,497 | 629,811 | 420.7 | (27) | % | (24) | % | 5 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 5,313 | $ | 2,911,594 | $ | 548.0 | 7,467 | $ | 4,123,303 | $ | 552.2 | (29) | % | (29) | % | (1) | % | |||||||||||||||||||||||||||||||||||||
West Segment Commentary
For the three and nine months ended September 30, 2025, the decrease in new home deliveries was due to a decrease in beginning backlog at the beginning of the respective periods and a decrease in net home sales during the respective periods.
Mountain Segment Commentary
For the three and nine months ended September 30, 2025, the decrease in new home deliveries was due to a decrease in beginning backlog at the beginning of the respective periods. For the three months ended September 30, 2025, also contributing to the decrease was a decrease in net home sales. The decrease in average selling price of homes delivered was a result of increased incentive levels.
East Segment Commentary
For the three and nine months ended September 30, 2025, the decrease in new home deliveries was due to a decrease in beginning backlog at the beginning of the respective periods and a decrease in net home sales during the respective periods. The increase in average selling price was due to a shift in mix to more higher priced communities.
Gross Margin from Home Sales:
Our gross margin from home sales for the three months ended September 30, 2025 decreased 760 basis points year-over-year from 17.8% to 10.2%. Our gross margin from home sales for the nine months ended September 30, 2025 decreased 490 basis points year-over-year from 17.8% to 12.9%. The decrease in gross margin from home sales was primarily due to inventory impairments and increased incentive levels, and to a lesser extent, increased land costs.
Our gross margin from home sales are impacted by our historical land buying strategy, where we have targeted an owned and optioned lot supply of approximately two to three years worth of home closings. As a result, our land associated with homes closed are represented by more recent market values.
-33-
Inventory Impairments:
Inventory impairments recognized by segment for the three and nine months ended September 30, 2025 and 2024 are shown in the table below.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
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(Dollars in thousands)
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(Dollars in thousands)
|
|||||||||||||||||||
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Housing Completed or Under Construction:
|
||||||||||||||||||||
| West | $ | 11,574 | $ | 2,520 | $ | 17,363 | $ | 4,851 | ||||||||||||
| Mountain | 1,823 | - | 1,823 | 400 | ||||||||||||||||
| East | 6,009 | 1,042 | 6,759 | 1,922 | ||||||||||||||||
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Subtotal
|
19,406 | 3,562 | 25,945 | 7,173 | ||||||||||||||||
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Land and Land Under Development:
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West
|
8,876 | 2,080 | 12,087 | 6,749 | ||||||||||||||||
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Mountain
|
4,952 | - | 4,952 | - | ||||||||||||||||
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East
|
6,616 | 658 | 6,616 | 2,828 | ||||||||||||||||
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Subtotal
|
20,444 | 2,738 | 23,655 | 9,577 | ||||||||||||||||
| Total Inventory Impairments | $ | 39,850 | $ | 6,300 | $ | 49,600 | $ | 16,750 | ||||||||||||
The table below provides quantitative data, for the periods presented, where applicable, used in determining the fair value of the impaired inventory.
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Impairment Data
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Quantitative Data
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Three Months Ended
|
Number of Subdivisions Impaired |
Inventory
Impairments
|
Fair Value of
Inventory After Impairments
|
Discount Rate
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(Dollars in thousands)
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| September 30, 2025 | 9 | $ | 39,850 | $ | 107,525 | 12% | - | 18% | ||||||||||||||||||||||||||||||
| June 30, 2025 | 6 | $ | 9,750 | $ | 44,309 | 12% | - | 15% | ||||||||||||||||||||||||||||||
| Total | $ | 49,600 | ||||||||||||||||||||||||||||||||||||
| September 30, 2024 | 3 | $ | 6,300 | $ | 27,423 | 15% | ||||||||||||||||||||||||||||||||
| June 30, 2024 | 4 | $ | 4,550 | $ | 27,834 | 12% | - | 15% | ||||||||||||||||||||||||||||||
| March 31, 2024 | 3 | $ | 5,900 | $ | 17,634 | 12% | - | 18% | ||||||||||||||||||||||||||||||
| Total | $ | 16,750 | ||||||||||||||||||||||||||||||||||||
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Selling, General and Administrative Expenses:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 56,953 | $ | 57,362 | $ | (409) | $ | 167,998 | $ | 268,947 | $ | (100,949) | |||||||||||||||||||||||
|
General and administrative expenses as a percentage of home sale revenues
|
6.8 | % | 4.1 | % | 270 bps | 5.8 | % | 6.5 | % | -70 bps | |||||||||||||||||||||||||
| Marketing expenses | $ | 25,785 | $ | 28,994 | $ | (3,209) | $ | 81,705 | $ | 87,406 | $ | (5,701) | |||||||||||||||||||||||
|
Marketing expenses as a percentage of home sale revenues
|
3.1 | % | 2.1 | % | 100 bps | 2.8 | % | 2.1 | % | 70 bps | |||||||||||||||||||||||||
| Commissions expenses | $ | 26,870 | $ | 42,740 | $ | (15,869) | $ | 98,587 | $ | 123,439 | $ | (24,851) | |||||||||||||||||||||||
|
Commissions expenses as a percentage of home sale revenues
|
3.2 | % | 3.1 | % | 10 bps | 3.4 | % | 3.0 | % | 40 bps | |||||||||||||||||||||||||
| Total selling, general and administrative expenses | $ | 109,608 | $ | 129,096 | $ | (19,488) | $ | 348,290 | $ | 479,792 | $ | (131,500) | |||||||||||||||||||||||
|
Total selling, general and administrative expenses as a percentage of home sale revenues
|
13.2 | % | 9.3 | % | 390 bps | 12.0 | % | 11.6 | % | 40 bps | |||||||||||||||||||||||||
General and administrative expenses decreased for the three months ended September 30, 2025 due to a decrease in compensation related costs. The decrease for the nine months ended September 30, 2025 as the prior year periods included accelerated vesting of equity awards, key executives' transaction bonuses and transaction costs in connection with the closing of the Merger as well as bonus compensation that was historically paid in the form of equity awards that were instead paid in cash.
Marketing expenses decreased for the three and nine months ended September 30, 2025 compared to the previous periods driven by decreased deferred selling amortization and master marketing expenses due to a decrease in home closings year over year and decreased salary related expenses driven by a decrease in headcount. This was partially offset by an increase maintenance and utility costs as a result of having more spec homes in inventory.
Commissions expenses decreased for the three and nine months ended September 30, 2025 due to decreases in home sale revenues partially offset by increases in co-broker fees and to a lesser extent an increase in sales performance incentive commissions.
-35-
Other Homebuilding Operating Data
Net New Orders and Active Subdivisions:
Changes in the dollar value of net new orders are impacted by changes in the number of net new orders and the average selling price of those homes. The dollar value and average selling prices of net new orders do not include financing incentives, as these forward commitments are entered into prior to the home sales and are not specific to an individual home. Commentary for each of our segments on significant changes in these two metrics is provided below.
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes |
Dollar Value |
Average Price |
Monthly Absorption Rate * |
Homes | Dollar Value | Average Price |
Monthly Absorption Rate * |
Homes | Dollar Value | Average Price |
Monthly Absorption Rate |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 765 | $ | 463,673 | $ | 606.1 | 2.45 | 963 | $ | 539,761 | $ | 560.5 | 2.85 | (21) | % | (14) | % | 8 | % | (14) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mountain | 470 | 297,166 | 632.3 | 2.49 | 473 | 289,908 | 612.9 | 2.72 | (1) | % | 3 | % | 3 | % | (9) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| East | 264 | 128,271 | 485.9 | 2.10 | 468 | 194,832 | 416.3 | 3.80 | (44) | % | (34) | % | 17 | % | (45) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 1,499 | $ | 889,110 | $ | 593.1 | 2.39 | 1,904 | $ | 1,024,501 | $ | 538.1 | 3.01 | (21) | % | (13) | % | 10 | % | (21) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes |
Dollar Value |
Average Price |
Monthly Absorption Rate * |
Homes | Dollar Value | Average Price |
Monthly Absorption Rate * |
Homes | Dollar Value | Average Price |
Monthly Absorption Rate |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 2,772 | $ | 1,632,850 | $ | 589.1 | 3.05 | 3,667 | $ | 2,070,669 | $ | 564.7 | 3.29 | (24) | % | (21) | % | 4 | % | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mountain | 1,642 | 1,028,023 | 626.1 | 3.04 | 1,533 | 950,243 | 619.9 | 2.89 | 7 | % | 8 | % | 1 | % | 5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| East | 1,137 | 525,690 | 462.3 | 3.16 | 1,442 | 607,546 | 421.3 | 4.01 | (21) | % | (13) | % | 10 | % | (21) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 5,551 | $ | 3,186,563 | $ | 574.1 | 3.07 | 6,642 | $ | 3,628,458 | $ | 546.3 | 3.31 | (16) | % | (12) | % | 5 | % | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
*Calculated as total net new orders (gross orders less cancellations) in period ÷ average active communities during period ÷ number of months in period.
|
Average Active Subdivisions
|
Average Active Subdivisions
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Active Subdivisions
|
Three Months Ended
|
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, |
%
|
September 30, |
%
|
September 30, |
%
|
||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 |
Change
|
2025 | 2024 |
Change
|
2025 | 2024 |
Change
|
|||||||||||||||||||||||||||||||||||||||||||||
|
West
|
110 | 107 | 3 | % | 104 | 112 | (7) | % | 101 | 124 | (19) | % | |||||||||||||||||||||||||||||||||||||||||
|
Mountain
|
66 | 59 | 12 | % | 63 | 58 | 9 | % | 60 | 59 | 2 | % | |||||||||||||||||||||||||||||||||||||||||
|
East
|
45 | 40 | 13 | % | 42 | 41 | 2 | % | 40 | 40 | - | % | |||||||||||||||||||||||||||||||||||||||||
|
Total
|
221 | 206 | 7 | % | 209 | 211 | (1) | % | 201 | 223 | (10) | % | |||||||||||||||||||||||||||||||||||||||||
During 2025, the Company updated its methodology for determining active subdivisions. Previously, a community would become active after its first five net sales. Now, a community is active after its first sale. Prior period disclosures were updated for both active subdivisions, average active subdivisions, and monthly absorption rate to align with the new methodology.
The dollar value and average selling prices of net new orders do not include financing incentives, as these forward commitments are entered into prior to the home sales and are not specific to an individual home.
West Segment Commentary
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For the three and nine months ended September 30, 2025, the decrease in the number of net new orders was primarily the result of a decrease in average active subdivisions and a decrease in the monthly sales absorption rate. The decrease in monthly sales absorption rate is due to decreased demand as a result of current market conditions. The increase in average selling price for the three and nine months ended September 30, 2025 was due to a change in mix to higher priced communities.
Mountain Segment Commentary
For the three months ended September 30, 2025, the decrease in the number of net new orders was a result of a decrease in monthly absorption rate partially offset by an increase in average active subdivisions. The decrease in monthly sales absorption rate is due to decreased demand during the quarter as a result of current market conditions. For the nine months ended September 30, 2025, the increase in the number of net new orders was primarily the result of an increase in monthly absorption rate. The increase in the monthly sales absorption rate was driven by increased sales incentives to increase sales pace, partially offset by decreased demand as a result of current market conditions.
East Segment Commentary
For the three and nine months ended September 30, 2025, the decrease in the number of net new orders was primarily the result of a decrease in monthly absorption rate. The decrease in monthly sales absorption rate is due to decreased demand as a result of current market conditions. The increase in the average selling price for the three and nine months ended September 30, 2025 is due to a change in mix to higher priced communities.
Cancellation Rate:
| Cancellations as a Percentage of Gross Sales | |||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| West | 14 | % | 19 | % | 15 | % | 17 | % | |||||||||||||||||||||
| Mountain | 14 | % | 14 | % | 15 | % | 15 | % | |||||||||||||||||||||
| East | 19 | % | 21 | % | 16 | % | 18 | % | |||||||||||||||||||||
| Total | 15 | % | 19 | % | 15 | % | 17 | % | |||||||||||||||||||||
In light of our pivot to build more spec homes, we believe it is appropriate to view our cancellations as a product of gross sales during the period. Our cancellation rate as a percentage of gross sales decreased year-over-year during the three and nine months ended September 30, 2025 as a result of a decrease in beginning backlog, offset partially by a decrease in gross sales (before cancellations).
Backlog:
| September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes |
Dollar Value |
Average Price |
Homes |
Dollar Value |
Average Price |
Homes |
Dollar Value |
Average Price |
|||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 349 | $ | 223,311 | $ | 639.9 | 597 | $ | 365,888 | $ | 612.9 | (42) | % | (39) | % | 4 | % | |||||||||||||||||||||||||||||||||||||
| Mountain | 151 | 105,856 | 701.0 | 249 | 162,675 | 653.3 | (39) | % | (35) | % | 7 | % | |||||||||||||||||||||||||||||||||||||||||
| East | 128 | 67,567 | 527.9 | 219 | 99,952 | 456.4 | (42) | % | (32) | % | 16 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 628 | $ | 396,734 | $ | 631.7 | 1,065 | $ | 628,515 | $ | 590.2 | (41) | % | (37) | % | 7 | % | |||||||||||||||||||||||||||||||||||||
At September 30, 2025, we had 628 homes in backlog with a total value of $396.7 million. This represented a 41% decrease in the number of homes in backlog and a 37% decrease in the dollar value of those homes in backlog from September 30, 2024. The decrease in the number of homes in backlog was primarily a result of a shift in consumer preference to quick move-in homes and our associated pivot to build more spec homes. The increase in average selling price in each of the homebuilding segments is due to a change in mix to higher priced communities. The dollar value and average selling prices of homes in backlog do not include financing incentives, as these forward commitments are entered into prior to the home sales and are not specific to an individual home.
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Homes Completed or Under Construction (WIP lots):
|
|
September 30, |
%
|
|||||||||||||||
|
|
2025 | 2024 |
Change
|
||||||||||||||
|
Unsold:
|
|||||||||||||||||
|
Completed
|
2,221 | 824 | 170 | % | |||||||||||||
|
Under construction
|
1,651 | 3,075 | (46) | % | |||||||||||||
|
Total unsold started homes
|
3,872 | 3,899 | (1) | % | |||||||||||||
|
Sold homes under construction or completed
|
599 | 1,062 | (44) | % | |||||||||||||
|
Model homes under construction or completed
|
389 | 478 | (19) | % | |||||||||||||
|
Total homes completed or under construction
|
4,860 | 5,439 | (11) | % | |||||||||||||
The decrease in sold homes under construction or completed and increase in unsold homes completed is due to our pivot to build more spec homes and the slower sales pace during the three months ended September 30, 2025 due to current market conditions. The decrease in unsold homes under construction is due to a decrease of home starts during the period.
Lots Owned and Optioned (including homes completed or under construction):
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
|
Lots Owned |
Lots Optioned |
Total |
Lots Owned |
Lots Optioned |
Total |
Total % Change |
|||||||||||||||||||||||||||||||||||
| West | 10,361 | 1,668 | 12,029 | 9,242 | 2,504 | 11,746 | 2 | % | |||||||||||||||||||||||||||||||||
| Mountain | 4,294 | 1,394 | 5,688 | 5,228 | 1,041 | 6,269 | (9) | % | |||||||||||||||||||||||||||||||||
| East | 5,067 | 2,609 | 7,676 | 3,405 | 2,559 | 5,964 | 29 | % | |||||||||||||||||||||||||||||||||
| Total | 19,722 | 5,671 | 25,393 | 17,875 | 6,104 | 23,979 | 6 | % | |||||||||||||||||||||||||||||||||
Our total owned and optioned lots at September 30, 2025 were 25,393, which represented an 6% increase year-over-year. We believe that our total lot supply is sufficient to meet our operating needs. See "Forward-Looking Statements"below.
Financial Services
|
Three Months Ended
|
|
|
Nine Months Ended |
|
|
||||||||||||||||||||||||||||||||||||||||||
| September 30, |
Change
|
September 30, |
Change
|
||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 |
Amount
|
%
|
2025 | 2024 |
Amount
|
%
|
||||||||||||||||||||||||||||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Financial services revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage operations | $ | 10,390 | $ | 26,391 | $ | (16,002) | (61) | % | $ | 39,168 | $ | 69,192 | $ | (30,026) | (43) | % | |||||||||||||||||||||||||||||||
| Other | 13,344 | 16,966 | (3,622) | (21) | % | 42,138 | 43,097 | (959) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Total financial services revenues | $ | 23,734 | $ | 43,357 | $ | (19,623) | (45) | % | $ | 81,306 | $ | 112,289 | $ | (30,983) | (28) | % | |||||||||||||||||||||||||||||||
| Financial services pretax income | |||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage operations | $ | 1,024 | $ | 14,257 | $ | (13,233) | (93) | % | $ | 7,628 | $ | 35,130 | $ | (27,502) | (78) | % | |||||||||||||||||||||||||||||||
| Other | 10,638 | 13,649 | (3,011) | (22) | % | 32,845 | 33,083 | $ | (238) | (1) | % | ||||||||||||||||||||||||||||||||||||
| Total financial services pretax income | $ | 11,662 | $ | 27,906 | $ | (16,244) | (58) | % | $ | 40,473 | $ | 68,213 | $ | (27,740) | (41) | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2025, our financial services pretax income was $11.7 million, a 58% decrease compared to pretax income of $27.9 million for the same period in the prior year. The decrease in financial services pretax income was primarily due to our mortgage operations, which was impacted by special financing programs offered on loans locked during the quarter. Financial services pretax income was also impacted by the decrease in homes closed year-over-year as well as a decrease in interest income due to decreases in cash and short-term investments year-over-year.
For the nine months ended September 30, 2025, our financial services pretax income was $40.5 million, a 41% decrease compared to pretax income of $68.2 million for the same period in the prior year. The main drivers of the decrease in financial services pretax income are consistent with the third quarter commentary discussed above. In addition, our insurance operations
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within other financial services benefited from increased premium revenue resulting from higher renewal rates and profit sharing revenue from third party insurance providers.
The following table sets forth information for our mortgage operations segment relating to mortgage loans originated and capture rate.
| Three Months Ended |
% or Percentage |
Nine Months Ended |
% or Percentage Change |
||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Total Originations (including transfer loans): | |||||||||||||||||||||||||||||||||||
| Loans | 1,147 | 1,949 | (41) | % | 4,312 | 5,588 | (23) | % | |||||||||||||||||||||||||||
| Principal | $ | 582,602 | $ | 892,798 | (35) | % | $ | 2,134,390 | $ | 2,576,867 | (17) | % | |||||||||||||||||||||||
| Capture Rate Data: | |||||||||||||||||||||||||||||||||||
| Capture rate as % of all homes delivered | 79 | % | 77 | % | 2 | % | 81 | % | 75 | % | 6 | % | |||||||||||||||||||||||
| Capture rate as % of all homes delivered (excludes cash sales) | 87 | % | 84 | % | 3 | % | 88 | % | 82 | % | 6 | % | |||||||||||||||||||||||
| Mortgage Loan Origination Product Mix: | |||||||||||||||||||||||||||||||||||
| FHA loans | 29 | % | 32 | % | (3) | % | 33 | % | 31 | % | 2 | % | |||||||||||||||||||||||
| Other government loans (VA & USDA) | 17 | % | 17 | % | - | % | 19 | % | 17 | % | 2 | % | |||||||||||||||||||||||
| Total government loans | 46 | % | 49 | % | (3) | % | 52 | % | 48 | % | 4 | % | |||||||||||||||||||||||
| Conventional loans | 54 | % | 51 | % | 3 | % | 48 | % | 52 | % | (4) | % | |||||||||||||||||||||||
| 100 | % | 100 | % | - | % | 100 | % | 100 | % | - | % | ||||||||||||||||||||||||
| Loan Type: | |||||||||||||||||||||||||||||||||||
| Fixed rate | 83 | % | 100 | % | (17) | % | 95 | % | 94 | % | 1 | % | |||||||||||||||||||||||
| ARM | 17 | % | - | % | 17 | % | 5 | % | 6 | % | (1) | % | |||||||||||||||||||||||
| Credit Quality: | |||||||||||||||||||||||||||||||||||
| Average FICO Score | 744 | 742 | - | % | 740 | 743 | - | % | |||||||||||||||||||||||||||
| Other Data: | |||||||||||||||||||||||||||||||||||
| Average Combined LTV ratio | 86 | % | 83 | % | 3 | % | 86 | % | 84 | % | 2 | % | |||||||||||||||||||||||
| Full documentation loans | 100 | % | 100 | % | - | % | 100 | % | 100 | % | - | % | |||||||||||||||||||||||
| Loans Sold to Third Parties: | |||||||||||||||||||||||||||||||||||
| Loans | 1,140 | 2,093 | (46) | % | 4,470 | 5,652 | (21) | % | |||||||||||||||||||||||||||
| Principal | $ | 575,629 | $ | 960,618 | (40) | % | $ | 2,197,122 | $ | 2,596,284 | (15) | % | |||||||||||||||||||||||
Income Taxes
As a result of the Merger described in Footnote 21, and effective April 20, 2024, the Company is included in the Sekisui House US Holdings ("SHUSH") (parent of SH Residential Holdings, LLC) consolidated tax group for U.S. federal income tax purposes. Although the Company's post-merger results are included in the SHUSH consolidated return, our income tax provision is calculated primarily as though we were a separate taxpayer for the full year. However, under certain circumstances, transactions between the Company and SHUSH are assessed using consolidated tax return rules and any difference in liability between the separate company method will be addressed in a future tax sharing arrangement.
Our overall effective income tax rates were 38.9% and 15.2% for the three and nine months ended September 30, 2025 and 14.2% and 21.8% for the three and nine months ended September 30, 2024, respectively. The rates for the three and nine months ended September 30, 2025 resulted in an income tax benefit (expense) of $6.8 million and $(9.9) million, respectively, compared to $(22.1) million and $(70.8) million for the three and nine months ended September 30, 2024, respectively. The year-over-year increase in the effective tax rate for the three months ended September 30, 2025 is due to the impacts of IRC 45L home energy efficiency credits on income tax benefit for the period. The year-over-year decrease in the effective tax rate for the nine months ended September 30, 2025, is primarily due to a increase in IRC 45L home energy efficiency credits as a percent of pre-tax book income for the period.
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CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Management evaluates such estimates and judgments on an on-going basis and makes adjustments as deemed necessary. Actual results could differ from these estimates if conditions are significantly different in the future. See "Forward-Looking Statements"below.
Our critical accounting estimates and policies have not changed from those reported in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.
LIQUIDITY AND CAPITAL RESOURCES
We use our liquidity and capital resources to (1) support our operations, including the purchase of land, land development and construction of homes; (2) provide working capital; and (3) provide mortgage loans for our homebuyers. Our liquidity includes our cash and cash equivalents, Revolving Credit Facility (as defined below) and Mortgage Repurchase Facility (as defined below).
Material Cash Requirements
We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Consolidated Balance Sheet as of September 30, 2025, while others are considered future commitments. Our contractual obligations primarily consist of long-term debt and related interest payments, payments due on our Mortgage Repurchase Facility, payments due on our Revolving Credit Facility, purchase obligations related to expected acquisition of land under purchase agreements and land development agreements (many of which are secured by letters of credit or surety bonds) and operating leases. Other material cash requirements include land acquisition and development costs not yet contracted for, home construction costs, operating expenses, including our selling, general and administrative expenses, investments and funding of capital improvements and dividend payments.
At September 30, 2025, we had outstanding senior notes with varying maturities totaling an aggregate principal amount of $1.50 billion, with none payable within 12 months. Future interest payments associated with the notes total $1.12 billion, with $64.2 million payable within 12 months. As of September 30, 2025, we had $19.3 million of required operating lease future minimum payments.
At September 30, 2025, we had deposits of $35.3 million in the form of cash and $16.2 million in the form of letters of credit that secured option contracts to purchase 5,671 lots for a total estimated purchase price of $682.5 million.
At September 30, 2025, we had outstanding surety bonds and letters of credit totaling $391.6 million and $180.5 million, respectively, including $148.7 million in letters of credit issued by HomeAmerican. The estimated cost to complete obligations related to these bonds and letters of credit was approximately $236.7 million and $148.4 million, respectively. We expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related performance bonds and letters of credit should be released and we should not have any continuing obligations. However, in the event any such performance bonds or letters of credit are called, our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit. We have made no material guarantees with respect to third-party obligations.
Capital Resources
Our capital structure is primarily a combination of (1) permanent financing, represented by stockholders' equity; (2) long-term financing, represented by our 3.850% senior notes due 2030, 2.500% senior notes due 2031, 6.000% senior notes due 2043, and 3.966% senior notes due 2061; (3) our Revolving Credit Facility; and (4) our Mortgage Repurchase Facility. Because of our current balance of cash and cash equivalents, ability to access the capital markets, and available capacity under both our Revolving Credit Facility and Mortgage Repurchase Facility, we believe that our capital resources are adequate to satisfy our
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short and long-term capital requirements, including meeting future payments on our senior notes as they become due. See "Forward-Looking Statements"below.
We may from time to time seek to retire or purchase our outstanding senior notes through cash purchases, whether through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Senior Notes, Revolving Credit Facility and Mortgage Repurchase Facility
Senior Notes.Our senior notes are not secured and, while the senior note indentures contain some restrictions on secured debt and other transactions, they do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by most of our homebuilding segment subsidiaries. We believe that we are in compliance with the representations, warranties and covenants in the senior note indentures.
Revolving Credit Facility.On November 19, 2024 the Company entered into an unsecured revolving credit agreement ("Revolving Credit Facility") with a group of lenders, which may be used for general corporate purposes. The Revolving Credit Facility supersedes and replaces the Credit Agreement, dated as of December 13, 2013 and as amended as of December 17, 2014, December 18, 2015, September 29, 2017, November 1, 2018, December 28, 2020 and, April 11, 2023 and March 20, 2024. The aggregate commitment within the agreement is up to $900.0 million (the "Commitment"), with a $195.0 million sublimit for letters of credit. The aggregate amount of the commitments may increase to an amount not to exceed $1.40 billion upon our request, subject to receipt of additional commitments from existing or additional lenders and, in the case of additional lenders, the consent of the co-administrative agents. Unless terminated earlier, the Revolving Credit Facility will mature on November 17, 2028.
Borrowings under the Revolving Credit Facility bear interest at a floating rate equal to Term SOFR or Daily Simple SOFR (in each case as defined in the Revolving Credit Facility), plus an applicable margin between 1.125% and 1.625% per annum, or if selected by the Company, a base rate plus an applicable margin between 0.125% and 0.625% per annum. The "applicable margins" described above are determined by a schedule based on the leverage ratio of the Company, as defined in the Revolving Credit Facility. The Revolving Credit Facility also provides for customary fees including commitment fees payable to each lender ranging from 0.15% to 0.30% per annum based on the Company's leverage ratio.
The Revolving Credit Facility is fully and unconditionally guaranteed, jointly and severally, by most of our homebuilding segment subsidiaries. The facility contains various representations, warranties and covenants that we believe are customary for agreements of this type. The financial covenants include a consolidated leverage covenant and interest coverage covenant, along with a consolidated tangible net worth covenant, all as defined in the Revolving Credit Facility.
The Revolving Credit Facility also contains customary events of default, including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, breach of any financial covenant and change of control. Upon the occurrence and during the continuance of any event of default, the Administrative Agent, with the consent or at the direction of the required lenders, may accelerate the payment of the obligations thereunder and exercise various other customary default remedies. We believe we were in compliance with the representations, warranties and covenants included in the Revolving Credit Facility as of September 30, 2025.
We incur costs associated with unused commitment fees pursuant to the terms of the Revolving Credit Facility. At September 30, 2025 and December 31, 2024, there were $24.5 million and $43.6 million, respectively, in letters of credit outstanding, which reduced the amounts available to be borrowed under the Revolving Credit Facility. At September 30, 2025 and December 31, 2024, we had $85.0 million and $0.0 million, respectively, outstanding under the Revolving Credit Facility. As of September 30, 2025, availability under the Revolving Credit Facility was approximately $790.5 million.
Letter of Credit Facility. We maintain an unsecured letter of credit agreement with a financial institution ("LOC Facility") to obtain performance letters of credit from time to time in the ordinary course of operating our business. Under the LOC Facility, which expires on June 5, 2028, we may issue up to $25.0 million of letters of credit. As of September 30, 2025 and December 31, 2024, we had letters of credit outstanding under the LOC Facility of $7.2 million and $0 million, respectively.
Mortgage Repurchase Facility.HomeAmerican entered into the Second Amended and Restated Master Repurchase Agreement (the "Mortgage Repurchase Facility") with U.S. Bank National Association ("USBNA") on September 20, 2024. The
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Mortgage Repurchase Facility provides liquidity to HomeAmerican by providing for the sale of up to an aggregate of $150 million (subject to increase by up to $150 million under certain conditions) of eligible mortgage loans to USBNA with an agreement by HomeAmerican to repurchase the mortgage loans at a future date. Until such mortgage loans are transferred back to HomeAmerican, the documents relating to such loans are held by USBNA, as custodian, pursuant to the Amended and Restated Custody Agreement ("Custody Agreement"), dated as of September 20, 2024, by and between HomeAmerican and USBNA. In the event that an eligible mortgage loan becomes ineligible, as defined under the Mortgage Repurchase Facility, HomeAmerican may be required to repurchase the ineligible mortgage loan immediately. The total capacity of the facility at September 30, 2025 was $150 million. The termination date of the Repurchase Agreement is August 5, 2026.
At September 30, 2025 and December 31, 2024, HomeAmerican had $143.0 million and $177.6 million, respectively, of mortgage loans that HomeAmerican was obligated to repurchase under the Mortgage Repurchase Facility. Mortgage loans that HomeAmerican is obligated to repurchase under the Mortgage Repurchase Facility are accounted for as a debt financing arrangement and are reported as mortgage repurchase facility in the consolidated balance sheets. Pricing under the Mortgage Repurchase Facility is based on SOFR.
Effective April 16, 2025, HomeAmerican entered into a Waiver and Consent agreement with USBNA, in which USBNA as agent waived any events of default under the Mortgage Repurchase Facility arising with respect to an event of default as HomeAmerican was not in compliance by permitting the Adjusted Tangible Net Worth to be less than $21.0 million for the month ending February 28, 2025.
The Mortgage Repurchase Facility contains various representations, warranties and affirmative and negative covenants that we believe are customary for agreements of this type. The negative covenants include, among others, (i) a minimum Adjusted Tangible Net Worth requirement, (ii) a maximum Adjusted Tangible Net Worth ratio, (iii) a minimum adjusted net income requirement, and (iv) a minimum Liquidity requirement. The foregoing capitalized terms are defined in the Mortgage Repurchase Facility. We believe HomeAmerican was in compliance with the representations, warranties and covenants included in the Mortgage Repurchase Facility as of September 30, 2025.
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Consolidated Cash Flow
During the nine months ended September 30, 2025, net cash used in operating activities was $575.4 million compared with net cash provided by operating activities of $139.1 million in the prior year period. During the nine months ended September 30, 2025 and 2024, one of the most significant sources of cash provided by operating activities was net income of $55.1 million and $254.5 million, respectively. During the nine months ended September 30, 2025, included in net income was $49.6 million of inventory impairments, compared to $16.8 million during the prior year period. During the nine months ended September 30, 2025, cash used to increase land and land under development was $588.2 million compared to cash provided by the decrease in land and land under development of $52.9 million. The increase in 2025 was the result of increasing lot acquisitions during the period, compared to starts outnumbering lot acquisitions during 2024. During the nine months ended September 30, 2025, cash used by housing completed or under construction was $176.4 million, compared to $158.9 million during the nine months ended September 30, 2024. Cash used in the nine months ended September 30, 2025 was impacted by an increase in homes completed in inventory while the nine months ended September 30, 2024 was impacted by an increase in the number of homes under construction during the period. Cash used in the increase in trade and other receivables for the nine months ended September 30, 2025 was $9.0 million compared to $28.1 million for the nine months ended September 30, 2024. The increase during the nine months ended September 30, 2025 and 2024 was driven by an decrease of homes closed at the end of the period. The increase during the nine months ended September 30, 2024 was also driven by an increase in taxes receivable as a result of benefits associated with deductible executive compensation. Cash provided by the change in mortgage loans held-for-sale, net for the nine months ended September 30, 2025 was $56.1 compared to $27.5 million for the nine months ended September 30, 2024. The cash provided during the nine months ended September 30, 2025 and 2024 was due to a higher level of loan sales compared to originations. Cash used in accounts receivable due from Parent was $22.2 million during the nine months ended September 30, 2024, driven by payments in connection with the Merger funded by the Company, compared to cash provided by change in accounts receivable due from the Parent of $22.2 million during the nine months ended September 30, 2025 due to repayment from Parent during the period.
During the nine months ended September 30, 2025, net cash used in investing activities was $18.4 million compared to $19.0 million in the same period in the prior year. Our net cash used in investing activities was comprised of purchases of property and equipment during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, net cash of $7.1 million was used to purchase marketable securities as well as $11.8 million of cash used in purchases of property and equipment.
During the nine months ended September 30, 2025 and 2024 net cash used in financing activities was $36.5 million and $762.3 million, respectively. The primary driver of this decrease in net cash used in financing activities was the increase in distribution to Parent of $611.4 million during the nine months ended September 30, 2024 due to the Company's funding of a portion of the consideration of the Merger. Net cash used in dividend payments was $86.8 million during the nine months ended September 30, 2025 compared to $82.6 million during the nine months ended September 30, 2024. Cash used in payments on mortgage repurchase facility, net was $34.6 million compared to $33.8 million during the same period in 2024. The decrease in cash provided by draws on mortgage repurchase facility, net during the nine months ended September 30, 2025 and 2024 was due to decreased mortgage loans held-for-sale at the end of the period. Cash provided by draws on homebuilding line of credit, net was $85.0 million during the nine months ended September 30, 2025 compared to cash used on payments on homebuilding line of credit, net of $9.0 million during the same period in the prior year. This increase during the nine months ended September 30, 2025 was due to increased land acquisition during the period.
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OTHER
Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases, oral statements made by our officials in the course of presentations about the Company and conference calls in connection with quarterly earnings releases, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. These forward-looking statements may be identified by terminology such as "likely," "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained in this Report are reasonable, we cannot guarantee future results. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be considered. Additionally, information about issues that could lead to material changes in performance and risk factors that have the potential to affect us are contained under the caption "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and Item 1A of Part II of this Quarterly Report on Form 10-Q.
M.D.C. Holdings Inc. published this content on November 04, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 04, 2025 at 21:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]