M.D.C. Holdings, Inc.

Good day and welcome to MDC Holdings' 2021 Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Derek Kimmerle, Vice President and Corporate Controller. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to MDC Holdings 2021 Fourth Quarter Earnings Conference Call. On the call with me today, I have Larry Meisel, Executive Chairman, David Mandrich, Chief Executive Officer, and Bob Martin, Chief Financial Officer. At this time, all participants are in a listen-only mode. After finishing our prepared remarks, we will conduct a question-and-answer session, at which time we request that participants limit themselves to one question and one follow-up question. 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. Before turning the call over to Larry and David, it should be noted that certain statements made during this conference call, including those related to MDC's business, financial condition, results of operation, cash flows, strategies and prospects, and responses to questions, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties, and other factors that may cause the company's actual results, performance, or achievements to be materially different from the results, performance, or achievements expressed or implied by the forward-looking statements. These and other factors that could impact the company's actual performance are set forth in the company's 2021 Form 10-K, which is expected 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. Meisel for his opening remarks.

Good morning, and thank you for joining us today as we go over our results for the fourth quarter and full year of 2021. give an update on current business conditions and provide some insight into the future of our company. MDC Holdings reported earnings of $2.21 per diluted share in the fourth quarter of 2021, capping a strong year of profitability today. in which earnings per share grew by more than 50% as compared to the previous year. Home sales revenues grew 22% for the quarter on a 4% increase in unit closings and a 17% rise in average selling prices. Home sales gross margins expanded to 23.5% in the quarter, representing a 150 basis point improvement over the prior year quarter. We continue to benefit from the strong demand in our markets, which has allowed us to stay ahead of cost increases, a trend we expect to continue into 2022. Sales activity during the quarter remained consistently above the normal sales patterns for this time of year, resulting in an absorption pace of 4.5 orders per community per month. We continue to see healthy demand from a wide array of buyers in our markets. driven by strong local economies, rising incomes, and favorable demographics. Equally important has been the ongoing lack of existing supply, which has fueled the need for new home construction. According to the National Association of Realtors, total housing inventory at the end of December amounted to 910,000 units, down 14% from one year ago. This amount of unsold inventory represents a 1.8-month supply at the current sales pace, a level that is well below what would be considered equilibrium for a normal housing market. Given this lack of existing supply and favorable demand drivers in place, we believe that the near and long-term outlook for our industry remains positive. MDC is in a great position to take advantage of these positive industry fundamentals as we begin the new year. Thanks to our strong market positioning and our more affordable product focus and our build-to-order operating model, we have historically positioned our company in some of the fastest-growing home building markets in the country, areas that feature steady population growth, expanding employment centers, and rising incomes. While we cater to a wide array of buyers in our markets, we have placed a higher emphasis on the more affordable segments of the market in recent years to address the growing population of first-time buyers and the lack of supply at lower price points. This more affordable product focus has been on a key driver we've seen in our returns and as a result in higher margins and better asset turns. We believe our build to order operating model has also contributed to our improving returns by bolstering our margins and keeping our unsold inventory levels to a minimum. This strategy has also given us great visibility into all of our operations and allows us to better manage cost increases. We ended the year with 7,640 sold homes and backlog, which is 15% higher than the previous year, and represents a large percentage of the homes we expect to deliver in 2022. Another way in which we are well positioned for a strong 2022 is through the investments we've made in our business. We ended the year with 29% more lots under control than we had at the end of the previous year. giving us a solid runway for community count growth in 2022. It has been a challenge to grow our active subdivision count given the faster than expected closeout of existing projects and the delays associated with opening new ones. But we believe this trend will turn positive in 2022 and should be a nice tailwind for our sales efforts as the year progresses. 2021 was a great year for our industry and particularly for our company, as we believe we are positioned to deliver even better results in 2022 thanks to our sizable backlog, the margin profile of those homes and backlogs, and the favorable housing fundamentals we continue to see in our markets. We are achieving record levels of profitability as an industry, and we are doing so with more discipline and risk mitigation than in years past, yet the home building stocks continue to trade at low valuations. We believe MDC presents a compelling investment opportunity for long-term investors who recognize this disconnect and see the value inherent in our stock. Now I'd like to turn it over to David, who will provide more detail on our home building operations.