News

M.D.C. Holdings Announces 2013 First Quarter Results
PR Newswire
DENVER

DENVER, May 2, 2013 /PRNewswire/ -- M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended March 31, 2013.

2013 First Quarter Highlights and Comparisons to 2012 First Quarter

  • Net income of $22.5 million, or $0.45 per diluted share vs. net income of $2.3 million, or $0.04 per diluted share
  • Net new orders of 1,300 homes, up 22%
  • Backlog of 1,927 homes, up 30%; backlog dollar value up 45% to $693.1 million
  • Home sale revenues of $331.7 million, up 80%
  • Homes delivered of 1,018, up 64%
  • Gross margin from home sales of 17.4% vs. 14.1%, a 330 basis point increase
    • Improvement of 70 basis points vs. 16.7% in 2012 fourth quarter
  • SG&A expenses as a percentage of home sale revenues of 14.5% vs. 18.5%, a 400 basis point improvement
  • Homebuilding pretax income of $14.8 million vs. loss of $2.7 million
  • Financial services segment pretax profit of $7.7 million vs. pretax profit of $4.9 million
  • Acquired 1,652 lots in 53 communities, including 28 new communities
    • Total land acquisition spend of $118.0 million

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "I am pleased to announce a first quarter profit of $0.45 per diluted share, our fifth consecutive quarterly operating profit, with net income improving by $20.3 million over the prior year. Our favorable results were mostly attributable to significantly improved operating profits from our homebuilding segment, which continued to benefit from strong execution by our management team amidst improving market conditions, leading to increased volume and margin."

Mr. Mizel continued, "Even after achieving significant order growth throughout 2012, during the first quarter of 2013 we realized a further 22% year-over-year increase on the strength of a monthly absorption rate of 3.0 net new home orders per active community, our highest level since 2006. The continued strengthening of our sales pace occurred even as we increased prices in most of our active subdivisions, reflecting an environment of improving demand for and low supply of single-family housing. Our focus on pricing has allowed us to again improve our gross margin percentage on both a sequential and year-over-year basis. Going forward, even though we expect increases in land and building costs based on improving demand, we continue to believe that it is a reasonable goal for our Company to improve gross margins on a sequential basis for the remainder of 2013."

Mr. Mizel concluded, "The improvement in our gross margin during the quarter complemented a year-over-year increase in our home sale revenues of 80%, thereby driving significant operating leverage for our Company, as evidenced by a 600 basis point expansion in our homebuilding pretax operating margin to 4.5%.  Based on the strength of our backlog, which ended the quarter with a sales value up 45% from a year ago, we believe that we are in a strong position to drive revenue increases to improve our operating leverage further in future periods. Given the expanding volume for our business, we remain focused on controlling land for our future and ended the first quarter with more than 12,700 lots controlled, an increase of 11% from the end of the 2012 fourth quarter. Furthermore, many of the new subdivisions we have acquired over the past few quarters have recently opened, giving us the opportunity to increase our active subdivision count in the second quarter on a sequential basis for the first time in six quarters."

Homebuilding

Home sale revenues for the 2013 first quarter increased 80% to $331.7 million compared to $184.7 million for the prior year period.  The increase in revenues resulted primarily from a 64% increase in homes delivered to 1,018 homes as compared to 619 in the prior year. The Company's average selling price for homes closed was $325,900, up 9% year-over-year compared to $298,300 for the prior year period, largely due to price appreciation and lower incentives in many of our markets.

Gross margin from home sales for the 2013 first quarter increased to 17.4% from 14.1% for the year-earlier period. On a sequential basis, our 2013 first quarter gross margin from home sales was up 70 basis points as compared to 16.7% for the 2012 fourth quarter.  The increase was attributable to the Company's continued increases in pricing and decreased incentives in most of its markets over the prior 12 months.

SG&A expenses as a percentage of home sales revenues decreased by 400 basis points to 14.5% for the 2013 first quarter versus 18.5% for the same period in 2012. The improvement was the result of operating leverage created by the Company's 80% year-over-year increase in home sale revenues, which far outpaced a year-over-year increase in the Company's absolute level of SG&A expenses.

Net new orders for the 2013 first quarter increased 22% to 1,300 homes, compared to 1,063 homes during the same period in 2012.  The Company's monthly sales absorption rate for the 2013 first quarter rose 60% to 3.0 per community, compared to 1.9 per community for the 2012 first quarter.  The Company's cancellation rate for the 2013 first quarter was 18% versus 21% in the prior year first quarter and 24% in the 2012 fourth quarter.

The Company ended the 2013 first quarter with 1,927 homes in backlog, with an estimated sales value of $693.1 million, compared with a backlog of 1,487 homes with an estimated sales value of $477.1 million at March 31, 2012.

At March 31, 2013, we had 139 active subdivisions, down 6% from December 31, 2012, however, our lots owned and under option increased by 11% since December 31, 2012 to more than 12,700 lots.  While we accelerated our land acquisition activity in the latter half of 2012 and into 2013, higher than expected sales rates over the past year resulted in various subdivisions selling out more quickly than anticipated.  Additionally, many of the new subdivisions acquired over the past few quarters have recently opened, but did not yet meet our internal definition of an "active community" as of the end of the 2013 first quarter.  As a result, at the end of the 2013 first quarter, the number of subdivisions classified as "soon to be active" exceeded the number classified as "soon to be inactive" for the first time in six quarters.

Financial Services

Income before taxes from our financial services operations for the 2013 first quarter was $7.7 million, compared to $4.9 million for the 2012 first quarter.  The increase in pretax income primarily reflected a $2.7 million increase in our mortgage operations pretax income to $6.0 million for the 2013 first quarter, compared to $3.3 million in the 2012 first quarter.  The improvement in our mortgage profitability was driven primarily by year-over-year increases in the volume of loans locked and originated.

About MDC

Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 170,000 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, land and home values and subdivision counts; (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 March 31, 2013, 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" at the end of this release.

 

 

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income



















Three Months









Ended March 31,









2013


2012









(Dollars in thousands, except per share amounts)



Homebuilding:



(Unaudited)




Home sale revenues




$     331,748


$     184,678




Land sale revenues




-


1,590





Total home sale and land revenues




331,748


186,268




Home cost of sales




(274,076)


(158,654)




Land cost of sales




-


(1,490)





Total cost of sales




(274,076)


(160,144)





      Gross margin




57,672


26,124





      Gross margin %




17.4%


14.0%




Selling, general and administrative expenses




(48,201)


(34,124)




Interest income




6,182


5,913




Interest expense




(817)


(808)




Other income (expense), net




11


158





      Homebuilding pretax income (loss)



14,847


(2,737)














Financial Services:










Revenues




12,506


7,720




Expenses




(5,642)


(3,665)




Interest and other income




875


807





      Financial services pretax income



7,739


4,862














Income before income taxes




22,586


2,125



Benefit from (provision for) income taxes




(70)


140



Net income




$       22,516


$         2,265














Other comprehensive income:









Unrealized gain related to









available for sales securities




2,535


6,548



Tax effect




-


-



Comprehensive income




$       25,051


$         8,813














Earnings per share:











Basic




$           0.46


$           0.04





Diluted




$           0.45


$           0.04














Weighted average common shares outstanding:











Basic



48,342,145


47,311,840





Diluted



48,922,335


47,382,921














Dividends declared per share




$                 -


$           0.25













 

 

 

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets








March 31, 


December 31, 



2013


2012

ASSETS

(Dollars in thousands, except per share amounts)

Homebuilding:


(Unaudited)



Cash and cash equivalents


$       183,236


$      129,535

Marketable securities


626,707


519,465

Restricted cash


2,526


1,859

Trade and other receivables


31,885


28,163

Inventories:





Housing completed or under construction


521,661


512,949

Land and land under development


534,438


489,572

Total inventories


1,056,099


1,002,521

Property and equipment, net


33,056


33,125

Deferred tax asset, net of valuation allowance of $238,795 and $248,306 at March 31, 2013 and December 31, 2012, respectively






-


-

Other assets


52,274


44,777

Total homebuilding assets


1,985,783


1,759,445

Financial Services:





Cash and cash equivalents


32,444


30,560

Marketable securities


33,292


32,473

Mortgage loans held-for-sale, net


86,429


119,953

Other assets


4,386


3,010

Total financial services assets


156,551


185,996

      Total Assets


$    2,142,334


$   1,945,441






LIABILITIES AND EQUITY




Homebuilding:





Accounts payable 


$         21,712


$        73,055

Accrued liabilities


115,139


118,456

Senior notes, net


995,032


744,842

Total homebuilding liabilities


1,131,883


936,353






Financial Services:





Accounts payable and accrued liabilities


54,540


51,864

Mortgage repurchase facility


41,468


76,327

Total financial services liabilities


96,008


128,191

      Total Liabilities


1,227,891


1,064,544






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;  48,869,726 issued and outstanding at March 31, 2013 and 48,698,757 issued and outstanding, respectively, at December 31, 2012










489


487

Additional paid-in-capital


905,354


896,861

Retained earnings


1,227


(21,289)

Accumulated other comprehensive income (loss)


7,373


4,838

Total Stockholders' Equity


914,443


880,897

Total Liabilities and Stockholders' Equity


$    2,142,334


$   1,945,441






 

 

 

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows




 Three Months Ended March 31, 


2013


2012


(Dollars in thousands)


(Unaudited)

Operating Activities:




Net income

$   22,516


$     2,265

Adjustments to reconcile net income to net cash




provided by (used in) operating activities:




Stock-based compensation expense

3,376


2,611

Depreciation and amortization 

1,078


1,307

Write-offs of land option deposits

226


82

Amortization of discount (premiums) on marketable debt securities

619


(152)

    Net changes in assets and liabilities:




      Restricted cash

(667)


(413)

      Trade and other receivables

(3,970)


(11,062)

      Mortgage loans held-for-sale

33,524


23,345

      Housing completed or under construction

(8,618)


(45,875)

      Land and land under development

(44,770)


17,000

      Other assets

(6,696)


3,394

      Accounts payable and accrued liabilities

(52,036)


(11,315)

Net cash used in operating activities

(55,418)


(18,813)

Investing Activities:




Purchase of marketable securities

(150,811)


(185,610)

Sale of marketable securities

44,668


182,021

Purchase of property and equipment

(926)


(364)

Net cash used in investing activities

(107,069)


(3,953)

Financing Activities:




Payments on mortgage repurchase facility

(79,769)


(53,625)

Advances on mortgage repurchase facility

44,910


30,763

Dividend payments

-


(11,994)

Proceeds from issuance of senior notes

247,813


-

Proceeds from exercise of stock options

5,118


-

Net cash provided by (used in) financing activities

218,072


(34,856)

Net increase (decrease) in cash and cash equivalents

55,585


(57,622)

Cash and cash equivalents:




      Beginning of period

160,095


343,361

      End of period

$ 215,680


$ 285,739

 

 

 

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data


New Home Deliveries:




















 Three Months Ended March 31, 


2013


2012


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

140


$   33,161


$ 236.9


88


$   17,957


$ 204.1


59%


85%


16%

California 

146


49,589


339.7


55


17,993


327.1


165%


176%


4%

Nevada 

133


32,745


246.2


106


21,596


203.7


25%


52%


21%

Washington

61


19,484


319.4


44


11,996


272.6


39%


62%


17%

West 

480


134,979


281.2


293


69,542


237.3


64%


94%


18%

Colorado 

304


113,488


373.3


125


44,963


359.7


143%


152%


4%

Utah 

67


19,889


296.9


52


14,100


271.2


29%


41%


9%

Mountain 

371


133,377


359.5


177


59,063


333.7


110%


126%


8%

Maryland 

54


21,704


401.9


44


18,794


427.1


23%


15%


-6%

Virginia 

63


29,119


462.2


59


26,155


443.3


7%


11%


4%

Florida 

50


12,569


251.4


46


11,124


241.8


9%


13%


4%

East 

167


63,392


379.6


149


56,073


376.3


12%


13%


1%

Total 

1,018


$ 331,748


$ 325.9


619


$ 184,678


$ 298.3


64%


80%


9%


Net New Orders:




















 Three Months Ended March 31, 


2013


2012


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

127


$   30,293


$  238.5


187


$   38,174


$  204.1


-32%


-21%


17%

California 

164


60,401


368.3


121


40,131


331.7


36%


51%


11%

Nevada 

170


47,042


276.7


166


33,716


203.1


2%


40%


36%

Washington

93


28,546


306.9


76


22,696


298.6


22%


26%


3%

West 

554


166,282


300.1


550


134,717


244.9


1%


23%


23%

Colorado 

418


147,589


353.1


235


84,147


358.1


78%


75%


-1%

Utah 

65


20,238


311.4


68


18,804


276.5


-4%


8%


13%

Mountain 

483


167,827


347.5


303


102,951


339.8


59%


63%


2%

Maryland 

90


38,450


427.2


83


34,607


417.0


8%


11%


2%

Virginia 

93


48,656


523.2


90


41,358


459.5


3%


18%


14%

Florida 

80


19,981


249.8


36


8,134


225.9


122%


146%


11%

Illinois

-


-


-


1


235


235.0


N/M


N/M


N/M

East 

263


107,087


407.2


210


84,334


401.6


25%


27%


1%

Total 

1,300


$ 441,196


$  339.4


1,063


$ 322,002


$  302.9


22%


37%


12%



















N/M - Not meaningful











 


Active Subdivisions:


 March 31, 




2013


2012


% Change

Arizona 

16


22


-27%

California 

12


18


-33%

Nevada 

9


20


-55%

Washington

12


11


9%

West 

49


71


-31%

Colorado 

36


48


-25%

Utah 

9


17


-47%

Mountain 

45


65


-31%

Maryland 

19


18


6%

Virginia 

12


16


-25%

Florida 

14


16


-13%

East

45


50


-10%

Total 

139


186


-25%

Average for quarter ended

143


187


-24%

Backlog:


March 31,


2013


2012


% Change


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 (Dollars in thousands) 



Arizona 

137


$   32,224


$ 235.2


227


$   48,990


$ 215.8


-40%


-34%


9%

California 

247


89,688


363.1


184


61,745


335.6


34%


45%


8%

Nevada 

241


64,216


266.5


216


42,517


196.8


12%


51%


35%

Washington

111


36,118


325.4


86


25,900


301.2


29%


39%


8%

West 

736


222,246


302.0


713


179,152


251.3


3%


24%


20%

Colorado 

584


212,109


363.2


343


127,092


370.5


70%


67%


-2%

Utah 

79


25,556


323.5


84


23,705


282.2


-6%


8%


15%

Mountain 

663


237,665


358.5


427


150,797


353.2


55%


58%


2%

Maryland 

219


95,970


438.2


152


64,121


421.8


44%


50%


4%

Virginia 

215


111,823


520.1


134


67,095


500.7


60%


67%


4%

Florida 

94


25,350


269.7


60


15,725


262.1


57%


61%


3%

Illinois

-


-


-


1


245


245.0


N/M


N/M


N/M

East

528


233,143


441.6


347


147,186


424.2


52%


58%


4%

Total 

1,927


$ 693,054


$ 359.7


1,487


$ 477,135


$ 320.9


30%


45%


12%



















N/M - Not meaningful





 


Homes Completed or Under Construction (WIP lots):








March 31,




2013


2012


 % Change 

Unsold






Completed

222


147


51%

Under construction

514


380


35%

Total unsold started homes 

736


527


40%

Sold homes under construction or completed

1,345


872


54%

Model homes 

221


236


-6%

Total homes completed or under construction

2,302


1,635


41%

      

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
















March 31, 2013


March 31, 2012




Lots Owned


Lots Optioned


Total


Lots Owned


Lots Optioned


Total


Total % Change

Arizona 

2,146


40


2,186


872


118


990


121%

California 

997


-


997


1,329


-


1,329


-25%

Nevada 

1,442


39


1,481


1,030


75


1,105


34%

Washington

493


168


661


439


97


536


23%

West

5,078


247


5,325


3,670


290


3,960


34%

Colorado 

3,336


1,327


4,663


3,128


363


3,491


34%

Utah 

465


13


478


528


-


528


-9%

Mountain

3,801


1,340


5,141


3,656


363


4,019


28%

Maryland 

592


297


889


653


400


1,053


-16%

Virginia 

507


287


794


649


156


805


-1%

Florida 

479


113


592


289


255


544


9%

Illinois 

-


-


-


125


-


125


N/M

East

1,578


697


2,275


1,716


811


2,527


-10%

Total 

10,457


2,284


12,741


9,042


1,464


10,506


21%















N/M - Not meaningful

SOURCE M.D.C. Holdings, Inc.