News

M.D.C. Holdings Announces 2012 Second Quarter Results
PR Newswire
DENVER

DENVER, July 31, 2012 /PRNewswire/ --  M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended June 30, 2012.

2012 Second Quarter Highlights and Comparisons to 2011 Second Quarter

  • Net income of $10.6 million, or $0.22 per diluted share, vs. net loss of $28.0 million, or $0.60 per diluted share
  • 1,402 net new orders, up 32%
  • Backlog of 2,028 homes, up 42%; backlog dollar value up 52% to $657.5 million
  • Home sale revenues of $256.5 million, up 24%
  • 861 homes closed, up 21%
  • Gross margin from home sales of 14.2% vs. 8.9%
    • No inventory impairment charges versus $8.6 million for the 2011 second quarter
    • Home gross margin before impairment charges, interest and warranty adjustments improved 200 basis points to 16.9%*
  • Homebuilding SG&A expenses of $39.2 million, a decrease of $9.9 million, or 20%
    • SG&A as a percentage of home sale revenues of 15.3%, an 850 basis point improvement
    • G&A expense included $3.8 million in litigation recoveries

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "I am pleased to announce a second quarter profit of $0.22 per share, with net income improving by nearly $40 million over the prior year. We believe that our favorable results are largely attributable to our implementation of several key strategic initiatives, which we announced over the past few quarters, combined with modest improvements in homebuilding and overall market conditions."

Mizel continued, "We dramatically improved our operating leverage in the second quarter by accelerating our sales absorption pace and reducing overhead costs. These efforts drove a 21% year-over-year increase in new home deliveries and a 20% year-over-year reduction in our homebuilding SG&A costs. In addition, our interest expense decreased by $7.3 million for the second quarter, largely due to the debt reduction we undertook during the last half of 2011, and our impairment charges fell $8.6 million against a backdrop of stabilizing new home prices. As a result, our homebuilding segment achieved an operating profit for the first time in five years."

Mr. Mizel concluded, "As the overall housing market has continued to show signs of recovery over the last several quarters, our efforts to improve our sales process, product offering and cancellation rate have helped us improve sales results.  During the second quarter, net new orders increased 32% year-over-year to a five-year second quarter high, driven by a 24% improvement in our absorption pace per community and a 900 basis point reduction in our cancellation rate. With our quarter-end backlog up 42% over the prior year, we are well-positioned to achieve continued gains in operating leverage during the second half of 2012 and achieve our goal of reaching profitability for 2012."

Homebuilding
Home sale revenues for the 2012 second quarter increased 24% to $256.5 million compared to $206.2 million for the prior year period.  The increase in revenues resulted primarily from a 21% increase in homes closed to 861 homes as compared to 709 in the prior year. The Company's average selling price for homes closed was $297,900, up 2% year-over-year compared to $290,800 for the prior year period, due to increases in most markets.

Gross margin from home sales for the 2012 second quarter was 14.2% versus 8.9% for the year earlier period.  The 2012 second quarter did not include any inventory impairments or benefits related to warranty accrual adjustments. However, the 2011 second quarter included $8.6 million in inventory impairments and a $1.8 million benefit related to a warranty accrual reduction. 

Excluding inventory impairments, warranty accrual adjustments and previously capitalized interest in cost of sales, adjusted gross margin from home sales was 16.9%* for the 2012 second quarter, compared to 14.9%* for the 2011 second quarter and up marginally compared to 16.7%* for the 2012 first quarter. The 200 basis point year-over-year improvement in the Company's adjusted gross margin from home sales was driven by closing a significantly higher percentage of homes started with buyers under contract, which historically have been more profitable than homes started without a buyer under contract. In addition, our gross margin percentage benefited from a meaningful year-over-year reduction in incentives, partially offset by reduced customer spending on home upgrades, as we are including a higher level of upgrades in our base home price in communities across the country.

The Company's 2012 second quarter homebuilding selling, general and administrative ("SG&A") expenses decreased 20% to $39.2 million, compared to $49.2 million for 2011 second quarter, down 850 basis points as a percentage of home sale revenues to 15.3% versus 23.8% for the 2011 second quarter. The lower level of SG&A expenses and SG&A rate was primarily attributable to various cost reduction efforts, including lower compensation expense due to lower headcount, higher operating leverage from increased revenues and $3.8 million in legal recoveries.

Net new orders for the 2012 second quarter increased 32% to 1,402 homes, compared to 1,064 homes during the same period in 2011.  The Company's monthly sales absorption rate for the 2012 second quarter was 2.6 per community, compared to 2.1 per community for the 2011 second quarter.  The Company's cancellation rate for the 2012 second quarter was 20% versus 29% in the prior year second quarter.

The Company ended the 2012 second quarter with 2,028 homes in backlog, its highest backlog level since the 2007 third quarter, with an estimated sales value of $657.5 million, compared with a backlog of 1,424 homes with an estimated sales value of $433.5 million at June 30, 2011.

Financial Services
Income before taxes from our financial services segment for the 2012 second quarter was $6.7 million, compared to $3.1 million for the 2011 second quarter.  The increase in pretax income primarily reflected a $4.4 million increase in our mortgage operations pretax income from $1.3 million in the 2011 second quarter to $5.7 million for the 2012 second quarter.  The improvement in our mortgage profitability was driven largely by a $4.1 million increase in the gains on sales of mortgage loans due to favorable mortgage market conditions and a decrease in the level of special financing programs that we offered our homebuyers. 

About MDC
Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 165,000 homebuyers. 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 operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville and Seattle. 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) changes in the market value of the Company's investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican's sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; and (16) 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 June 30, 2012, 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 webcasts should be consulted.

 * Please see "Reconciliation of Non-GAAP Financial Measures" on page 12.

 

M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Income



Three Months

Six Months  

Ended June 30,

Ended June 30,

2012

2011

2012

2011

(Dollars in thousands, except per share amounts)

Homebuilding:

(Unaudited)

Home sale revenues

$   256,532

$   206,163

$   441,210

$   369,546

Land sale revenues

1,815

2,565

3,405

2,769

Total home sale and land revenues

258,347

208,728

444,615

372,315

Home cost of sales

(220,220)

(179,097)

(378,874)

(320,078)

Land cost of sales

(1,718)

(1,741)

(3,208)

(1,758)

Inventory impairments

-

(8,633)

-

(8,633)

Total cost of sales

(221,938)

(189,471)

(382,082)

(330,469)

Gross margin

36,409

19,257

62,533

41,846

Selling, general and administrative expenses

(39,223)

(49,158)

(73,347)

(96,811)

Interest income

5,373

6,986

11,286

13,474

Interest expense

-

(7,334)

(808)

(16,001)

Other income (expense)

418

(2,643)

576

(884)

Homebuilding pretax income (loss)

2,977

(32,892)

240

(58,376)










Financial Services:








Revenues

10,587

6,731

18,306

12,434

Expenses

(3,909)

(3,642)

(6,766)

(7,565)

Financial services pretax income

6,678

3,089

11,540

4,869










Income (loss) before income taxes

9,655

(29,803)

11,780

(53,507)

Benefit (provision) for income taxes

983

1,823

1,123

5,648

Net income (loss)

$     10,638

$   (27,980)

$     12,903

$   (47,859)

Other comprehensive income (loss):







Unrealized gain related to available-for-sale securities

(698)

(1,971)

5,850

1,332

Comprehensive income (loss)

$       9,940

$   (29,951)

$     18,753

$   (46,527)










Earnings (loss) per share:







Basic

$         0.22

$       (0.60)

$         0.27

$       (1.03)

Diluted

$         0.22

$       (0.60)

$         0.26

$       (1.03)










Weighted Average Common Shares Outstanding:







Basic

47,398,088

46,719,233

47,367,051

46,717,408

Diluted

47,752,729

46,719,233

47,677,067

46,717,408










Dividends declared per share

$         0.25

$         0.25

$         0.50

$         0.50

 

M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets





June 30, 

December 31, 

2012

2011

(Dollars in thousands, except per share amounts)

ASSETS

(Unaudited)

Homebuilding:



Cash and cash equivalents

$    298,274

$      316,418

Marketable securities

454,775

485,434

Restricted cash

2,260

667

Trade and other receivables

40,341

21,593

Inventories:



Housing completed or under construction

437,287

300,714

Land and land under development

414,466

505,338

Property and equipment, net

34,471

36,277

Deferred tax asset, net of valuation allowance of $273,828 and $281,178

  at June 30, 2012 and December 31, 2011, respectively

-

-

Prepaid expenses and other assets

44,272

50,423

Total homebuilding assets

1,726,146

1,716,864

Financial Services:



Cash and cash equivalents

27,850

26,943

Marketable securities

32,256

34,509

Mortgage loans held-for-sale, net

65,687

78,335

Prepaid expenses and other assets

3,975

2,074

Total financial services assets

129,768

141,861

      Total Assets

$ 1,855,914

$   1,858,725



LIABILITIES AND EQUITY



Homebuilding:



Accounts payable 

$      42,829

$        25,645

Accrued liabilities

111,730

119,188

Senior notes, net

744,470

744,108

Total homebuilding liabilities

899,029

888,941



Financial Services:



Accounts payable and accrued liabilities

52,965

52,446

Mortgage repurchase facility

32,660

48,702

Total financial services liabilities

85,625

101,148

      Total Liabilities

984,654

990,089



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; 



47,990,975 issued and outstanding at June 30, 2012 and 48,017,108

and 47,957,196 issued and outstanding, respectively, at December 31, 2011

480

480

Additional paid-in-capital

870,331

863,128

Retained earnings

1,839

12,927

Accumulated other comprehensive income (loss)

(1,390)

(7,240)

Treasury stock, at cost; no shares at June 30, 2012 and 59,912

  at December 31, 2011

-

(659)

Total Stockholders' Equity

871,260

868,636

Total Liabilities and Stockholders' Equity

$ 1,855,914

$   1,858,725

 

M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows



 Three Months 

 Six Months 

 Ended June 30, 

 Ended June 30, 

2012

2011

2012

2011

(Dollars in thousands)

(Unaudited)

Operating Activities:






Net income (loss)

$ 10,638

$(27,980)

$  12,903

$(47,859)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:






Stock-based compensation expense

5,110

3,559

7,721

6,680

Depreciation and amortization 

1,349

1,627

2,656

3,217

Inventory impairments and write-offs of land option deposits

229

11,244

311

12,305

Amortization of (premium) discount on marketable debt securities

1

476

(151)

912

    Net changes in assets and liabilities:






      Restricted cash

(1,180)

(185)

(1,593)

(184)

      Trade and other receivables

(7,283)

19,717

(18,345)

18,935

      Mortgage loans held-for-sale

(10,697)

(1,503)

12,648

25,914

      Housing completed or under construction

(90,512)

24,618

(136,387)

51,590

      Land and land under development

74,048

(35,115)

91,048

(108,622)

      Prepaid expenses and other assets

562

(2,220)

3,956

(1,376)

      Accounts payable

9,377

5,935

17,169

(5,910)

      Accrued liabilities

11,581

(11,729)

(7,526)

(24,859)

Net cash provided by (used in) operating activities

3,223

(11,556)

(15,590)

(69,257)

Investing Activities:






Purchase of marketable securities

(107,178)

(142,997)

(292,788)

(258,423)

Maturity of marketable securities

54,500

305,000

106,000

451,000

Sale of marketable securities

95,180

54,727

225,701

129,677

Purchase of property and equipment and other

(304)

(28,812)

(668)

(29,295)

Net cash provided by (used in) investing activities

42,198

187,918

38,245

292,959

Financing Activities:






Payments on mortgage repurchase facility

(36,784)

(21,681)

(90,409)

(47,115)

Advances on mortgage repurchase facility

43,604

23,933

74,367

30,669

Dividend payments

(11,996)

(11,868)

(23,990)

(23,692)

Proceeds from exercise of stock options

140

46

140

46

Net cash provided by (used in) financing activities

(5,036)

(9,570)

(39,892)

(40,092)

Net increase (decrease) in cash and cash equivalents

40,385

166,792

(17,237)

183,610

Cash and cash equivalents:






      Beginning of period

285,739

589,043

343,361

572,225

      End of period

$326,124

$755,835

$326,124

$755,835

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data















New Home Deliveries:


































 Three Months Ended June 30, 

2012

2011

 % Change 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

(Dollars in thousands)

Arizona 

127

$ 27,086

$213.3

98

$  18,299

$186.7

30%

48%

14%

California 

133

43,195

324.8

62

19,704

317.8

115%

119%

2%

Nevada 

155

28,460

183.6

80

14,731

184.1

94%

93%

0%

Washington

59

17,170

291.0

51

13,779

270.2

16%

25%

8%

West 

474

115,911

244.5

291

66,513

228.6

63%

74%

7%

Colorado 

185

66,254

358.1

182

60,047

329.9

2%

10%

9%

Utah 

46

13,142

285.7

66

17,876

270.8

-30%

-26%

5%

Mountain 

231

79,396

343.7

248

77,923

314.2

-7%

2%

9%

Maryland 

47

19,777

420.8

49

20,267

413.6

-4%

-2%

2%

Virginia 

70

32,171

459.6

72

30,573

424.6

-3%

5%

8%

East 

117

51,948

444.0

121

50,840

420.2

-3%

2%

6%

Florida 

37

8,726

235.8

48

10,594

220.7

-23%

-18%

7%

Illinois 

2

551

275.5

1

293

293.0

100%

88%

-6%

Other Homebuilding 

39

9,277

237.9

49

10,887

222.2

-20%

-15%

7%

Total 

861

$256,532

$297.9

709

$206,163

$290.8

21%

24%

2%

















 Six Months Ended June 30, 

2012

2011

 % Change 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

(Dollars in thousands)

Arizona 

215

$  45,043

$209.5

175

$  31,911

$182.3

23%

41%

15%

California 

188

61,188

325.5

110

34,671

315.2

71%

76%

3%

Nevada 

261

50,056

191.8

146

27,763

190.2

79%

80%

1%

Washington

103

29,166

283.2

51

13,777

270.1

102%

112%

5%

West 

767

185,453

241.8

482

108,122

224.3

59%

72%

8%

Colorado 

310

111,217

358.8

348

115,022

330.5

-11%

-3%

9%

Utah 

98

27,242

278.0

120

32,473

270.6

-18%

-16%

3%

Mountain 

408

138,459

339.4

468

147,495

315.2

-13%

-6%

8%

Maryland 

91

38,571

423.9

106

44,486

419.7

-14%

-13%

1%

Virginia 

129

58,326

452.1

115

48,791

424.3

12%

20%

7%

East 

220

96,897

440.4

221

93,277

422.1

0%

4%

4%

Florida 

83

19,850

239.2

91

20,359

223.7

-9%

-3%

7%

Illinois 

2

551

275.5

1

293

293.0

100%

88%

-6%

Other Homebuilding 

85

20,401

240.0

92

20,652

224.5

-8%

-1%

7%

Total 

1,480

$441,210

$298.1

1,263

$369,546

$292.6

17%

19%

2%

 

  

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data


















Net New Orders:


































 Three Months Ended June 30, 

2012

2011

 % Change 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

(Dollars in thousands)

Arizona 

246

$ 56,108

$228.1

164

$ 32,465

$198.0

50%

73%

15%

California 

217

78,895

363.6

117

34,358

293.7

85%

130%

24%

Nevada 

225

50,163

222.9

154

29,138

189.2

46%

72%

18%

Washington

69

19,346

280.4

26

6,727

258.7

165%

188%

8%

West 

757

204,512

270.2

461

102,688

222.8

64%

99%

21%

Colorado 

311

108,045

347.4

232

76,945

331.7

34%

40%

5%

Utah 

69

21,467

311.1

109

30,948

283.9

-37%

-31%

10%

Mountain 

380

129,512

340.8

341

107,893

316.4

11%

20%

8%

Maryland 

113

50,441

446.4

74

29,011

392.0

53%

74%

14%

Virginia 

98

52,828

539.1

95

41,429

436.1

3%

28%

24%

East 

211

103,269

489.4

169

70,440

416.8

25%

47%

17%

Florida 

53

12,450

234.9

91

19,813

217.7

-42%

-37%

8%

Illinois 

1

315

315.0

2

580

290.0

-50%

-46%

9%

Other 

54

12,765

236.4

93

20,393

219.3

-42%

-37%

8%

Total 

1,402

$450,058

$321.0

1,064

$301,414

$283.3

32%

49%

13%

















 Six Months Ended June 30, 

2012

2011

 % Change 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

(Dollars in thousands)

Arizona 

433

$ 94,282

$217.7

286

$ 54,880

$191.9

51%

72%

13%

California 

338

119,026

352.2

194

56,815

292.9

74%

109%

20%

Nevada 

391

83,879

214.5

242

46,036

190.2

62%

82%

13%

Washington

145

42,042

289.9

26

6,727

258.7

458%

525%

12%

West 

1,307

339,229

259.5

748

164,458

219.9

75%

106%

18%

Colorado 

546

192,192

352.0

413

138,748

336.0

32%

39%

5%

Utah 

137

40,271

293.9

176

48,550

275.9

-22%

-17%

7%

Mountain 

683

232,463

340.4

589

187,298

318.0

16%

24%

7%

Maryland 

196

85,048

433.9

120

50,448

420.4

63%

69%

3%

Virginia 

188

94,186

501.0

163

70,083

430.0

15%

34%

17%

East 

384

179,234

466.8

283

120,531

425.9

36%

49%

10%

Florida 

89

20,584

231.3

142

31,960

225.1

-37%

-36%

3%

Illinois 

2

550

275.0

7

2,041

291.6

-71%

-73%

-6%

Other 

91

21,134

232.2

149

34,001

228.2

-39%

-38%

2%

Total 

2,465

$772,060

$313.2

1,769

$506,288

$286.2

39%

52%

9%

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data




Active Subdivisions:





 June 30, 


2012

2011

% Change

Arizona 

17

30

-43%

California 

19

16

19%

Nevada 

19

17

12%

Washington

11

9

22%

West 

66

72

-8%

Colorado 

47

40

18%

Utah 

17

21

-19%

Mountain 

64

61

5%

Maryland 

19

13

46%

Virginia 

12

12

0%

East 

31

25

24%

Florida 

12

17

-29%

Illinois 

-

1

-100%

Other Homebuilding 

12

18

-33%

Total 

173

176

-2%

Average for quarter ended

180

167

8%

      

Backlog:

















June 30,

2012

2011

% Change

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 Homes 

 Dollar Value 

 Average Price 

 (Dollars in thousands) 

Arizona 

346

$ 76,564

$221.3

195

$ 39,644

$203.3

77%

93%

9%

California 

268

92,161

343.9

163

48,420

297.1

64%

90%

16%

Nevada 

286

63,283

221.3

172

35,382

205.7

66%

79%

8%

Washington

96

30,438

317.1

51

13,778

270.2

88%

121%

17%

West 

996

262,446

263.5

581

137,224

236.2

71%

91%

12%

Colorado 

469

171,862

366.4

338

118,124

349.5

39%

45%

5%

Utah 

107

30,116

281.5

125

34,518

276.1

-14%

-13%

2%

Mountain 

576

201,978

350.7

463

152,642

329.7

24%

32%

6%

Maryland 

218

90,570

415.5

140

61,170

436.9

56%

48%

-5%

Virginia 

162

82,723

510.6

118

53,098

450.0

37%

56%

13%

East 

380

173,293

456.0

258

114,268

442.9

47%

52%

3%

Florida 

76

19,734

259.7

115

27,203

236.5

-34%

-27%

10%

Illinois 

-

-

 N/A 

7

2,138

305.4

-100%

-100%

N/A

Other Homebuilding 

76

19,734

259.7

122

29,341

240.5

-38%

-33%

8%

Total 

2,028

$657,451

$324.2

1,424

$433,475

$304.4

42%

52%

7%

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data




Homes Completed or Under Construction (WIP lots):











June 30,


2012

2011

 % Change 

Unsold




Completed

138

42

229%

Under construction - frame

264

353

-25%

Under construction - foundation 

215

101

113%

Total unsold started homes 

617

496

24%

Sold homes under construction or completed

1,392

843

65%

Model homes 

221

231

-4%

Total homes completed or under construction

2,230

1,570

42%

 

Lots Owned and Optioned (including homes completed or under construction):















June 30, 2012

June 30, 2011

Lots Owned

Lots
Optioned

Total

Lots Owned

Lots
Optioned

Total

Arizona 

774

108

882

1,292

108

1,400

California 

1,196

-

1,196

1,568

-

1,568

Nevada 

966

27

993

1,366

398

1,764

Washington

397

161

558

324

42

366

West

3,333

296

3,629

4,550

548

5,098

Colorado 

3,236

584

3,820

3,626

602

4,228

Utah 

492

13

505

689

298

987

Mountain

3,728

597

4,325

4,315

900

5,215

Maryland 

607

399

1,006

514

795

1,309

Virginia 

596

121

717

713

234

947

East

1,203

520

1,723

1,227

1,029

2,256

Florida 

285

133

418

381

480

861

Illinois 

123

-

123

133

-

133

Other

408

133

541

514

480

994

Total 

8,672

1,546

10,218

10,606

2,957

13,563

 

M.D.C. HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures


Adjusted gross margin from home sales is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that inventory impairments, warranty adjustments and interest have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.















 Three Months Ended 

 Six Months Ended 

June 30, 2012

 Gross Margin % 

June 30, 2011

 Gross Margin % 

June 30, 2012

 Gross Margin % 

June 30, 2011

 Gross Margin % 

(Dollars in thousands)

(Dollars in thousands)

Gross Margin

$36,409

14.1%

$19,257

9.2%

$62,533

14.1%

$41,846

11.2%

Less: Land Sales Revenue

(1,815)


(2,565)


(3,405)


(2,769)

Add: Land Cost

  of Sales

1,718


1,741


3,208


1,758

Gross Margin from

   Home Sales

$36,312

14.2%

$18,433

8.9%

$62,336

14.1%

$40,835

11.1%

Add: Inventory

  Impairments

-


8,633


-


8,633

Add: Interest in

  Cost of Sales

7,105


5,454


11,999


9,657

Less: Warranty

  Adjustments

-


(1,832)


-


(2,263)

Adjusted Gross

  Margin from

  Home Sales

$43,417

16.9%

$30,688

14.9%

$74,335

16.8%

$56,862

15.4%

SOURCE M.D.C. Holdings, Inc.