News
M.D.C. Holdings, Inc. today reported a net loss for the 2010 first quarter of $20.9 million, or $0.45 per diluted share, compared with a net loss for the 2009 first quarter of $40.9 million, or $0.88 per diluted share. The improvement in operating results was driven primarily by an increase in home gross margin and a decrease in impairments, partially offset by declines in home closings and average selling price.
Management Comments
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "During the first quarter of 2010, our home orders increased year-over-year for the fourth consecutive quarter. While this trend is encouraging, we remain cautious due to the impending expiration of the federal homebuyer tax credit and depressed overall economic conditions."
Mizel continued, "We ended the quarter with 1,234 homes in backlog, nearly double that of a year ago. In addition, we positioned our inventory to take advantage of a potential increase in demand resulting from the expiration of the tax credit. Because we have held units at drywall, our buyers now have both the opportunity to personalize their homes and to capitalize on the tax credit, which is currently set to expire at the end of the second quarter."
Mizel concluded, "We ended the quarter with $1.78 billion in cash and investments, up 14% since the end of 2009, primarily due to our issuance of $250 million of 10-year senior notes at a 5.625% interest rate and our receipt of a $142 million tax refund. We also made further investments in land assets during the first quarter as we approved the purchase of more than 2,200 lots in 39 new communities and invested a total of $100 million in land acquisition or development activities across our markets. These land investments allowed us to increase our lot supply year-over-year for the first time since the first quarter of 2006."
Highlights
Net orders for the first quarter ended March 31, 2010 improved to 931 homes with an estimated sales value of $257.7 million, compared with net orders for 676 homes with an estimated sales value of $191.0 million during the same period in 2009. The improvement in net orders is attributable to a 90% increase in the average rate of sales per active community, partially offset by a 27% decline in the average number of active communities. During the first quarter of 2010, the Company's cancellation rate decreased to 22% compared with 23% during the same period in 2009. We ended the 2010 first quarter with 1,234 homes under contract with an estimated sales value of $381.0 million, compared with a backlog of 629 homes with an estimated sales value of $196.0 million at March 31, 2009.
Total revenue for the first quarter of 2010 was $147.1 million, compared with revenue of $175.9 million for the same period in 2009. The decrease in revenue was primarily driven by a 10% decline in home closings, combined with a 6% year-over-year decrease in average selling price.
Home gross margin during the first quarter of 2010 increased to 22.4% from 15.4% in the first quarter of 2009, primarily due to a reduction in construction costs and interest in cost of sales relative to home sales revenue, partially offset by an increase in land costs relative to home sales revenue.
SG&A decreased to $52.4 million for the quarter ended March 31, 2010, compared with $53.6 million for the same period in the prior year, as an increase in general and administrative expense was more than offset by a decline in selling costs. No asset impairments were incurred during the quarter, compared with $14.6 million incurred in the first quarter of 2009.
About MDC
Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 160,000 families. MDC's commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding divisions across the country, including Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, California, Northern Virginia, Maryland, Philadelphia/Delaware Valley and Jacksonville. The Company's subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.com.
Forward-Looking Statements
Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking 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 any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, and land and home values; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) the relative stability of debt and equity markets; (5) competition; (6) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (7) the availability and cost of performance bonds and insurance covering risks associated with our business; (8) shortages and the cost of labor; (9) weather related slowdowns; (10) slow growth initiatives; (11) building moratoria; (12) governmental regulation, including the interpretation of tax, labor and environmental laws; (13) changes in consumer confidence and preferences; (14) terrorist acts and other acts of war; and (15) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Form 10-Q for the quarter ended March 31, 2010, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.
M.D.C. HOLDINGS, INC. Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, --------------- 2010 2009 --- --- Revenue Home sales revenue $140,943 $166,982 Land sales revenue 15 2,618 Other revenue 6,120 6,332 ----- ----- Total Revenue 147,078 175,932 ------- ------- Costs and Expenses Home cost of sales 109,390 141,325 Land cost of sales 191 1,341 Asset impairments - 14,569 Marketing expenses 7,060 8,832 Commission expenses 5,129 6,358 General and administrative expenses 40,203 38,381 Other operating expenses 491 265 Related party expenses 9 5 --- --- Total Operating Costs and Expenses 162,473 211,076 ------- ------- Loss from Operations (15,395) (35,144) Other income (expense) Interest income 4,428 4,071 Interest expense (10,374) (9,740) Gain (loss) on sale of other assets 99 (260) --- ---- Loss before income taxes (21,242) (41,073) ------- ------- Benefit from income taxes, net 369 220 --- --- Net Loss $(20,873) $(40,853) ======== ======== Loss Per Share Basic $(0.45) $(0.88) ====== ====== Diluted $(0.45) $(0.88) ====== ====== Dividends Declared Per Share $0.25 $0.25 ===== ===== M.D.C. HOLDINGS, INC. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) (Unaudited) March 31, December 31, 2010 2009 ---- ---- Assets Cash and cash equivalents $950,139 $1,234,252 Marketable securities 830,438 327,944 Restricted cash 594 476 Receivables Home sales receivables 13,013 10,056 Income taxes receivable 3,153 145,144 Other receivables 8,839 5,844 Mortgage loans held-for-sale, net 36,704 62,315 Inventories, net Housing completed or under construction 399,606 260,324 Land and land under development 277,276 262,860 Property and equipment, net 39,451 38,421 Deferred tax asset, net of valuation allowance of $216,292 and $208,144 at March 31, 2010 and December 31, 2009, respectively - - Related party assets 7,856 7,856 Prepaid expenses and other assets, net 77,656 73,816 ------ ------ Total Assets $2,644,725 $2,429,308 ========== ========== Liabilities Accounts payable $63,855 $36,087 Accrued liabilities 288,224 291,969 Related party liabilities 103 1,000 Mortgage repurchase facility 4,714 29,115 Senior notes, net 1,242,095 997,991 --------- ------- Total Liabilities 1,598,991 1,356,162 --------- --------- Commitments and Contingencies - - Stockholders' Equity Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding - - Common stock, $0.01 par value; 250,000,000 shares authorized; 47,193,000 and 47,140,000 issued and outstanding, respectively, at March 31, 2010 and 47,070,000 and 47,017,000 issued and outstanding, respectively, at December 31, 2009 472 471 Additional paid-in-capital 806,765 802,675 Retained earnings 238,002 270,659 Accumulated other comprehensive income 1,154 - Treasury stock, at cost; 53,000 shares at March 31, 2010 and December 31, 2009 (659) (659) ---- ---- Total Stockholders' Equity 1,045,734 1,073,146 --------- --------- Total Liabilities and Stockholders' Equity $2,644,725 $2,429,308 ========== ========== M.D.C. HOLDINGS, INC. Information on Segments (Dollars in thousands) (Unaudited) Three Months Ended March 31, --------------- 2010 2009 ---- ---- REVENUE Homebuilding West $57,137 $74,682 Mountain 46,682 44,117 East 31,505 40,492 Other Homebuilding 9,036 13,683 ----- ------ Total Homebuilding 144,360 172,974 Financial Services and Other 5,621 5,563 Corporate - 50 Intercompany adjustments (2,903) (2,655) ------ ------ Consolidated $147,078 $175,932 ======== ======== (LOSS) INCOME BEFORE INCOME TAXES Homebuilding West $2,354 $(10,303) Mountain 1,170 (4,811) East (1,519) (2,371) Other Homebuilding (519) (831) ---- ---- Total Homebuilding 1,486 (18,316) Financial Services and Other 1,846 1,621 Corporate (24,574) (24,378) ------- ------- Consolidated $(21,242) $(41,073) ======== ======== ASSET IMPAIRMENTS West $- $13,067 Mountain - 254 East - 750 Other Homebuilding - 284 --- --- Consolidated $- $14,355 === ======= March 31, December 31, 2010 2009 ---- ---- TOTAL ASSETS Homebuilding West $265,978 $190,204 Mountain 284,695 237,702 East 147,050 112,964 Other Homebuilding 31,879 26,778 ------ ------ Total Homebuilding 729,602 567,648 Financial Services and Other 107,425 133,957 Corporate 1,810,355 1,773,660 Intercompany adjustments (2,657) (45,957) ------ ------- Consolidated $2,644,725 $2,429,308 ========== ========== M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands) (Unaudited) Three Months Ended March 31, Change --------------- ------ 2010 2009 Amount % ---- ---- ------ --- SELECTED FINANCIAL DATA General and Administrative Expenses Homebuilding $17,726 $15,779 $1,947 12% Financial Services and Other 4,088 4,498 (410) -9% Corporate(1) 18,398 18,109 289 2% ------ ------ --- Total $40,212 $38,386 $1,826 5% ======= ======= ====== SG&A as a % of Home Sales Revenue Homebuilding Segments 21.2% 18.5% 2.7% Corporate Segment(1) 13.1% 10.8% 2.3% Depreciation and Amortization(2) $2,932 $3,893 $(961) -25% Home Gross Margins (3) 22.4% 15.4% 7.0% Interest in Home Cost of Sales as a % of Home Sales Revenue 2.3% 4.8% -2.5% Cash Provided by (Used in) Operating Activities $11,516 $239,493 $(227,977) Investing Activities $(501,767) $82,690 $(584,457) Financing Activities $206,138 $(42,280) $248,418 Corporate and Homebuilding Interest Interest capitalized, beginning of period $28,339 $39,239 $(10,900) -28% Interest capitalized, net of interest expense 6,636 4,844 1,792 37% Previously capitalized interest included in home cost of sales (3,202) (8,033) 4,831 -60% ------ ------ ----- Interest capitalized, end of period $31,773 $36,050 $(4,277) -12% ======= ======= ======= (1) Includes related party expenses. (2) Includes depreciation and amortization of long-lived assets and amortization of deferred marketing costs. (3) Home sales revenue less home cost of sales (excluding commissions, amortization of deferred marketing, project cost write offs and asset impairments) as a percent of home sales revenue. During the three months ended March 31, 2010 and March 31, 2009, we closed homes on lots for which we had previously recorded $31.0 million and $43.2 million, respectively, of asset impairments. M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands) (Unaudited) Three Months Ended March 31, Change --------------- ------ 2010 2009 Amount % ---- ---- ------ --- HOMEAMERICAN OPERATING ACTIVITIES Principal amount of mortgage loans originated $108,090 $126,507 $(18,417) -15% Principal amount of mortgage loans brokered $2,856 $12,965 $(10,109) -78% Capture Rate 84% 82% 2% Including brokered loans 86% 90% -4% Mortgage products (% of mortgage loans originated) Fixed rate 95% 100% -5% Adjustable rate - other 5% 0% 5% Prime loans (4) 26% 42% -16% Government loans (5) 74% 58% 16% (4) Prime loans generally are defined as loans with Fair, Isaac and Company ("FICO") scores greater than 620 and that comply with the documentation standards of the government sponsored enterprise guidelines. (5) Government loans are loans either insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs. M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) (Unaudited) March March 31, December 31, 31, 2010 2009 2009 ---- ---- ---- HOMES COMPLETED OR UNDER CONSTRUCTION Unsold Home Under Construction - Final 48 41 293 Unsold Home Under Construction - Frame 675 389 255 Unsold Home Under Construction - Foundation 376 109 100 --- --- --- Total Unsold Homes Under Construction 1,099 539 648 Sold Homes Under Construction 1,002 570 471 Model Homes 210 212 274 --- --- --- Homes Completed or Under Construction 2,311 1,321 1,393 ===== ===== ===== LOTS OWNED (excluding homes completed or under construction) Arizona 1,040 1,075 1,365 California 756 581 695 Nevada 894 966 1,045 --- --- ----- West 2,690 2,622 3,105 ----- ----- ----- Colorado 2,549 2,514 2,523 Utah 366 545 621 --- --- --- Mountain 2,915 3,059 3,144 ----- ----- ----- Delaware Valley 64 82 110 Maryland 94 100 180 Virginia 318 241 227 --- --- --- East 476 423 517 --- --- --- Florida 127 138 242 Illinois 141 141 141 --- --- --- Other Homebuilding 268 279 383 --- --- --- Total 6,349 6,383 7,149 ===== ===== ===== M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) (Unaudited) March March 31, December 31, 31, 2010 2009 2009 ---- ---- ---- LOTS CONTROLLED UNDER OPTION Arizona 482 328 460 California 232 113 149 Nevada 429 222 95 --- --- --- West 1,143 663 704 ----- --- --- Colorado 507 537 158 Utah 145 117 - --- --- --- Mountain 652 654 158 --- --- --- Delaware Valley - - 14 Maryland 602 575 350 Virginia 271 192 620 --- --- --- East 873 767 984 --- --- --- Florida 713 500 438 Illinois - - - --- --- --- Other Homebuilding 713 500 438 --- --- --- Total 3,381 2,584 2,284 ===== ===== ===== NON-REFUNDABLE OPTION DEPOSITS Cash $9,467 $7,654 $5,526 Letters of Credit 2,084 2,134 3,257 ----- ----- ----- Total Non-Refundable Option Deposits $11,551 $9,788 $8,783 ======= ====== ====== M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) (Unaudited) Three Months Ended March 31, Change --------------- ------ 2010 2009 Amount % ---- ---- ------ --- HOMES CLOSED (UNITS) Arizona 108 172 (64) -37% California 46 59 (13) -22% Nevada 98 74 24 32% --- --- --- West 252 305 (53) -17% --- --- --- Colorado 108 91 17 19% Utah 52 40 12 30% --- --- --- Mountain 160 131 29 22% --- --- --- Delaware Valley 4 19 (15) -79% Maryland 26 26 - 0% Virginia 40 41 (1) -2% --- --- --- East 70 86 (16) -19% --- --- --- Florida 41 49 (8) -16% Illinois - 9 (9) -100% --- --- --- Other Homebuilding 41 58 (17) -29% --- --- --- Total 523 580 (57) -10% === === === AVERAGE SELLING PRICES PER HOME CLOSED Arizona $203.7 $192.6 $11.1 6% California 351.9 398.1 (46.2) -12% Colorado 299.8 352.3 (52.5) -15% Delaware Valley 334.1 424.9 (90.8) -21% Florida 220.3 219.2 1.1 1% Illinois N/A 320.4 N/A N/A Maryland 424.5 440.6 (16.1) -4% Nevada 189.3 203.0 (13.7) -7% Utah 273.5 298.6 (25.1) -8% Virginia 477.8 508.5 (30.7) -6% Company Average $269.5 $287.9 $(18.4) -6% M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) (Unaudited) Three Months Ended March 31, Change --------------- ------ 2010 2009 Amount % ---- ---- ------ --- ORDERS FOR HOMES, NET (UNITS) Arizona 168 158 10 6% California 26 75 (49) -65% Nevada 170 95 75 79% --- --- --- West 364 328 36 11% --- --- --- Colorado 270 134 136 101% Utah 125 41 84 205% --- --- --- Mountain 395 175 220 126% --- --- --- Delaware Valley 14 14 - 0% Maryland 33 37 (4) -11% Virginia 66 56 10 18% --- --- --- East 113 107 6 6% --- --- --- Florida 59 58 1 2% Illinois - 8 (8) -100% --- --- --- Other Homebuilding 59 66 (7) -11% --- --- --- Total 931 676 255 38% === === === Estimated Value of Orders for Homes, net $257,655 $191,000 $66,655 35% Estimated Average Selling Price of Orders for Homes, net $276.8 $282.5 $(5.7) -2% Cancellation Rate(6) 22% 23% -1% (6) We define "Cancellation Rate" as the approximate number of cancelled home order contracts during a reporting period as a percent of total home orders received during such reporting period. M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) (Unaudited) December March 31, 31, March 31, 2010 2009 2009 ---- ---- ---- BACKLOG (UNITS) Arizona 163 103 144 California 56 76 65 Nevada 160 88 74 --- --- --- West 379 267 283 --- --- --- Colorado 369 207 115 Utah 167 94 43 --- --- --- Mountain 536 301 158 --- --- --- Delaware Valley 33 23 22 Maryland 110 103 69 Virginia 99 73 51 --- --- --- East 242 199 142 --- --- --- Florida 77 59 44 Illinois - - 2 --- --- --- Other Homebuilding 77 59 46 --- --- --- Total 1,234 826 629 ===== === === Backlog Estimated Sales Value $381,000 $265,000 $196,000 ======== ======== ======== Estimated Average Selling Price of Homes in Backlog $308.8 $320.8 $311.6 ====== ====== ====== ACTIVE SUBDIVISIONS Arizona 28 28 37 California 3 3 16 Nevada 17 18 23 --- --- --- West 48 49 76 --- --- --- Colorado 41 42 45 Utah 17 16 22 --- --- --- Mountain 58 58 67 --- --- --- Delaware Valley 1 1 2 Maryland 8 8 12 Virginia 7 7 10 --- --- --- East 16 16 24 --- --- --- Florida 10 10 7 Illinois - - 1 --- --- --- Other Homebuilding 10 10 8 --- --- --- Total 132 133 175 === === === Average for quarter ended 132 134 182 === === ===
First Call Analyst:
FCMN Contact: bnmartin@mdch.com
SOURCE: M.D.C. Holdings, Inc.
CONTACT: Robert N. Martin, Investor Relations of M.D.C. Holdings, Inc.,
+1-720-977-3431,
Web Site: http://www.mdcholdings.com/