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/
