MDC Holdings Inc. (NYSE:MDC) Q3 2015 Earnings Conference Call Transcript
Oct 27, 2015 • 12:30 pm ET
Good afternoon. We are ready to begin the MDC Holdings Incorporated Third Quarter Earnings Conference Call. I will now turn the call over to Kevin McCarty, VP of Finance and Corporate Controller. Sir, you may begin your call.
Thank you. Good morning, ladies and gentleman, and welcome to the MDC Holdings 2015 third quarter earnings conference call. On the call with me today I have Larry Mizel, Chairman and CEO; and Bob Martin, CFO. At this time, all participants are in a listen-only mode. After finishing our prepared remarks, we will conduct a question-and-answer session. (Operator Instructions) Please note that this conference is being recorded and will be available for replay. For information on how to access the replay, please visit our website at mdcholdings.com.
(Forward-Looking Cautionary Statements)
These and other factors that could impact the Company's actual performance are set forth in the Company's third quarter 2015 Form 10-Q, which is scheduled to be filed with the SEC today. It should also be noted that SEC Regulation G requires that certain information accompany the use of non-GAAP financial measures. Any information required by regulation G is posted on our website with our webcast slides.
And now, I will turn the call over to Mr. Mizel for his opening remarks.
Good morning. This morning, we announced our 2015 third-quarter net income of $14.8 million, or $0.30 per share. The industry demand continues to be supported by improving or already strong ratings for many key economic indicators. Such as employment levels, consumer confidence, household formation and income growth.
In addition, anticipated interest rate increases have not yet materialized supporting affordability for our homebuyers, even as prices rise. From a supply standpoint, both new and existing single-family home inventories have remained at historic lows. While the favorable supply demand dynamics are encouraging for our long-term growth prospects, they also have hindered our ability to convert backlog into deliveries in the short term.
With builders across the industry continuing to ramp up reduction during the quarter, we saw closings delayed because of limited subcontractor availability. Plus, we are delivering more dirt homes now than a year ago, which has increased our overall sales to close cycle time.
While the pressure on our subcontractor brace should decrease over time, we expect that this dynamic will have a continued impact on our conversion rate, at least for the next few quarters. However, I am pleased to see that operational improvements in several of our key performance indicators for our business.
Our pre-impairment gross margin percentage has continued in a positive direction. Increasing notably both year-over-year, and from the 2015 second quarter. Furthermore, when coupled with a robust increase in the average sales price of our homes delivered, our pre-impairment gross margin per home closed for the quarter was just over $70,000 per home, our highest level since 2006.
From a sales standpoint, we experienced an 8% year-over-year increase in our monthly sales absorption rate. Despite the price increases, we have implemented many of our communities throughout