News

M.D.C. Holdings Announces Second Quarter 2021 Results
Home sales revenue growth of 54% and continued gross margin expansion resulted in an 83% increase in net income for the quarter

DENVER, July 29, 2021 /PRNewswire/ -- M.D.C Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter ended June 30, 2021.

Larry A. Mizel, MDC's Executive Chairman, stated, "MDC posted another quarter of strong operating performance, highlighted by significant year-over year growth to our top and bottom-line results as well as continued momentum with our new home sales efforts. Home sales revenue grew 54% year-over-year thanks to a 43% increase in unit closings and an 8% rise in average selling prices. Our home sales gross margin expanded 290 basis points year-over-year to 23.1%, while our SG&A ratio improved 100 basis points to 9.4% of revenues. Order activity remained strong during the quarter with an average absorption pace of 4.8 homes per community per month, in spite of the price increases we implemented."

Mr. Mizel continued, "We continue to see a favorable landscape for our industry thanks to an improving economy, a motivated buyer population and a need for new housing brought about by the household formations that have and will continue to occur in this country. In light of this positive outlook, we have been actively replenishing our lot pipeline in our existing markets and have also expanded into new markets such as Boise and most recently Nashville. With a considerable runway for growth, a strong balance sheet and a rapidly improving return profile, MDC is in a great position to deliver strong results in the second half of 2021 and beyond."

David Mandarich, MDC's President and Chief Executive Officer stated, "We continue to see buyers respond well to our home offerings, especially those within our more affordably priced collections. We are keenly aware of the rising cost of home ownership in our markets and strive to provide more affordable new home options for our buyers through our value-engineered, high quality floor plans. Buyers have the flexibility to add options and upgrades at our Home Gallery design studios, a feature we believe differentiates us from much of the competition. Value, quality and personalization have all been hallmarks of the Richmond American brand for decades, and this tradition will carry on into the future."

2021 Second Quarter Highlights and Comparisons to 2020 Second Quarter

•  Home sale revenues increased 54% to $1.37 billion from $886.8 million

•  Unit deliveries up 43% to 2,722

•  Average selling price of deliveries up 8% to $502,000

•  Homebuilding pretax income increased 121% to $187.5 million from $84.9 million

•  Gross margin from home sales increased 290 basis points to 23.1% from 20.2%

•  Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 100 basis points to 9.4%

•  Net income of $154.4 million, or $2.11 per diluted share, up 83% from $84.4 million or $1.21 per diluted share*

•  Effective tax rate of 24.9% vs. 24.4%

•  Dollar value of net new orders increased 40% to $1.47 billion from $1.04 billion

•  Unit net orders increased 14% to 2,714

•  Average selling price of net orders up 24%

•  Dollar value of ending backlog up 73% to $4.11 billion from $2.37 billion

•  Unit backlog increased 49% to 7,678

•  Average selling price of homes in backlog up 16%

* Per share amount for the 2020 second quarter has been adjusted for the 8% stock dividend declared and paid in the 2021 first quarter.

2021 Outlook and Other Selected Information1

•  Home deliveries for the 2021 third quarter between 2,500 and 2,700

•  Average selling price for 2021 third quarter unit deliveries between $510,000 and $520,000

•  Gross margin from home sales for the 2021 third quarter of approximately 23.5% (excluding impairments and warranty adjustments)

•  Full year 2021 home deliveries between 10,000 and 11,000

•  Active subdivision count goal of at least 10% growth during 2021 (from December 31, 2020 to December 31, 2021)

•  Lots controlled of 34,400 at June 30, 2021, up 37% year-over-year

•  Quarterly cash dividend of forty cents ($0.40) per share declared on July 26, 2021, up 31% year-over-year (after adjusting for 8% stock dividend in March 2021)

•  Consistent dividend program for over 25 years

•  Quarterly dividend has more than doubled in the past five years

1 See "Forward-Looking Statements" below.

About MDC
M.D.C. Holdings, Inc. was founded in 1972. MDC's homebuilding subsidiaries, which operate under the name Richmond American Homes, have built and financed the American Dream for more than 220,000 homebuyers since 1977.  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 Diego, Orange County, San Francisco Bay Area, Sacramento, Washington D.C., Baltimore, Orlando, Jacksonville, Seattle, Portland, Boise and Nashville. 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 any 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 MDC 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 the impact of the COVID-19 pandemic, changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by MDC, including restrictions on business activities resulting from the COVID-19 pandemic, 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 MDC's investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican Mortgage Corporation'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 MDC 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 and natural disasters; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including orders addressing the COVID-19 pandemic, the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; (16) changes in energy prices; and (17) other factors over which MDC has little or no control. Additional information about the risks and uncertainties applicable to MDC's business is contained in MDC's Form 10-Q for the quarter ended June 30, 2021, 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. MDC 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.

 

 

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2021


2020


2021


2020










(Dollars in thousands, except per share amounts)

Homebuilding:








Home sale revenues

$

1,367,773



$

886,758



$

2,409,631



$

1,583,843


Home cost of sales

(1,051,181)



(707,789)



(1,865,069)



(1,266,436)


Gross profit

316,592



178,969



544,562



317,407


Selling, general and administrative expenses

(128,861)



(92,316)



(243,854)



(181,637)


Interest and other income

868



720



1,835



2,609


Other expense

(1,090)



(2,452)



(1,527)



(3,789)


Homebuilding pretax income

187,509



84,921



301,016



134,590










Financial Services:








Revenues

33,318



32,964



78,341



54,850


Expenses

(16,440)



(12,178)



(31,545)



(23,107)


Other income (expense), net

1,155



5,931



2,042



(6,133)


Financial services pretax income

18,033



26,717



48,838



25,610










Income before income taxes

205,542



111,638



349,854



160,200


Provision for income taxes

(51,190)



(27,242)



(84,812)



(39,044)


Net income

$

154,352



$

84,396



$

265,042



$

121,156










Comprehensive income

$

154,352



$

84,396



$

265,042



$

121,156










Earnings per share:








Basic

$

2.19



$

1.23



$

3.76



$

1.78


Diluted

$

2.11



$

1.21



$

3.62



$

1.73










Weighted average common shares outstanding:








Basic

70,291,057



68,057,093



70,044,326



67,775,735


Diluted

72,715,273



69,207,415



72,754,141



69,701,942










Dividends declared per share

$

0.40



$

0.31



$

0.77



$

0.61


 

 

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited)



June 30,
2021


December 31,
2020






(Dollars in thousands, except

per share amounts)

ASSETS




Homebuilding:




Cash and cash equivalents

$

638,547



$

411,362


Restricted cash

14,158



15,343


Trade and other receivables

133,146



72,466


Inventories:




Housing completed or under construction

1,872,666



1,486,587


Land and land under development

1,309,360



1,345,643


Total inventories

3,182,026



2,832,230


Property and equipment, net

59,664



61,880


Deferred tax asset, net

14,793



11,454


Prepaids and other assets

98,066



101,685


Total homebuilding assets

4,140,400



3,506,420


Financial Services:




Cash and cash equivalents

88,654



77,267


Mortgage loans held-for-sale, net

186,086



232,556


Other assets

43,054



48,677


Total financial services assets

317,794



358,500


Total Assets

$

4,458,194



$

3,864,920


LIABILITIES AND EQUITY




Homebuilding:




Accounts payable

$

135,712



$

98,862


Accrued and other liabilities

330,929



300,735


Revolving credit facility

10,000



10,000


Senior notes, net

1,384,714



1,037,391


Total homebuilding liabilities

1,861,355



1,446,988


Financial Services:




Accounts payable and accrued liabilities

99,599



95,630


Mortgage repurchase facility

164,681



202,390


Total financial services liabilities

264,280



298,020


Total Liabilities

2,125,635



1,745,008


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; 70,619,638 and 64,851,126 issued and outstanding at June 30, 2021 and December 31, 2020, respectively

706



649


Additional paid-in-capital

1,689,689



1,407,597


Retained earnings

642,164



711,666


Total Stockholders' Equity

2,332,559



2,119,912


Total Liabilities and Stockholders' Equity

$

4,458,194



$

3,864,920


 


 

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,


2021


2020


2021


2020










(Dollars in thousands)

Operating Activities:








Net income

$

154,352



$

84,396



$

265,042



$

121,156


Adjustments to reconcile net income to net cash provided by operating activities:








Stock-based compensation expense

8,941



5,488



18,867



9,928


Depreciation and amortization

9,175



6,375



16,178



11,527


Net (gain) loss on marketable equity securities



(4,983)





8,285


Deferred income tax expense

(1,991)



831



(3,339)



1,962


Net changes in assets and liabilities:








Trade and other receivables

(16,823)



(21,834)



(57,105)



(23,445)


Mortgage loans held-for-sale, net

44,703



(39,646)



46,470



23,454


Housing completed or under construction

(167,043)



(54,956)



(385,698)



(233,829)


Land and land under development

1,401



65,867



36,379



94,918


Prepaids and other assets

28,289



9,669



4,695



1,209


Accounts payable and accrued liabilities

9,037



41,670



70,595



40,539


Net cash provided by operating activities

70,041



92,877



12,084



55,704










Investing Activities:








Purchases of marketable securities



(1,022)





(10,804)


Sales of marketable securities



49,990





59,266


Purchases of property and equipment

(7,698)



(6,456)



(13,447)



(12,968)


Net cash provided by (used in) investing activities

(7,698)



42,512



(13,447)



35,494










Financing Activities:








Payments on mortgage repurchase facility, net

(52,801)



33,350



(37,709)



(7,522)


Payments on homebuilding line of credit, net



(5,000)





(5,000)


Repayment of senior notes







(250,000)


Proceeds from issuance of senior notes





347,725



298,050


Dividend payments

(28,248)



(20,914)



(54,913)



(41,682)


Payments of deferred financing costs





(819)




Issuance of shares under stock-based compensation programs, net

(16,543)



(6,862)



(15,534)



1,332


Net cash provided by (used in) financing activities

(97,592)



574



238,750



(4,822)










Net increase (decrease) in cash, cash equivalents and restricted cash

(35,249)



135,963



237,387



86,376


Cash, cash equivalents and restricted cash:








Beginning of period

776,608



424,625



503,972



474,212


End of period

$

741,359



$

560,588



$

741,359



$

560,588










Reconciliation of cash, cash equivalents and restricted cash:








Homebuilding:








Cash and cash equivalents

$

638,547



$

482,702



$

638,547



$

482,702


Restricted cash

14,158



15,668



14,158



15,668


Financial Services:



-





Cash and cash equivalents

88,654



62,218



88,654



62,218


Total cash, cash equivalents and restricted cash

$

741,359



$

560,588



$

741,359



$

560,588


 

New Home Deliveries



Three Months Ended June 30,


2021


2020


% Change


Homes


Home Sale

Revenues


Average

Price


Homes


Home Sale

Revenues


Average

Price


Homes


Home

Sale

Revenues


Average Price




















(Dollars in thousands)

West

1,672



$

847,683



$

507.0



1,017



$

490,117



$

481.9



64

%


73

%


5

%

Mountain

711



400,633



563.5



608



316,666



520.8



17

%


27

%


8

%

East

339



119,457



352.4



275



79,975



290.8



23

%


49

%


21

%

Total

2,722



$

1,367,773



$

502.5



1,900



$

886,758



$

466.7



43

%


54

%


8

%

 


Six Months Ended June 30,


2021


2020


% Change


Homes


Home Sale

Revenues


Average

Price


Homes


Home Sale

Revenues


Average

Price


Homes


Home

Sale

Revenues


Average Price




















(Dollars in thousands)

West

2,948



$

1,464,294



$

496.7



1,888



$

895,615



$

474.4



56

%


63

%


5

%

Mountain

1,323



725,350



548.3



1,043



539,524



517.3



27

%


34

%


6

%

East

629



219,987



349.7



516



148,704



288.2



22

%


48

%


21

%

Total

4,900



$

2,409,631



$

491.8



3,447



$

1,583,843



$

459.5



42

%


52

%


7

%

 

 

Net New Orders



Three Months Ended June 30,


2021


2020


% Change


Homes


Dollar

Value


Average

Price


Monthly

Absorption

Rate *


Homes


Dollar Value


Average Price


Monthly

Absorption Rate *


Homes


Dollar Value


Average Price


Monthly

Absorption

Rate


























(Dollars in thousands)

West

1,602



$

850,742



$

531.0



5.67


1,309



$

574,996



$

439.3



4.62


22

%


48

%


21

%


23

%

Mountain

706



433,793



614.4



4.18


758



362,228



477.9



3.99


(7)

%


20

%


29

%


5

%

East

406



180,205



443.9



3.56


323



106,436



329.5



3.53


26

%


69

%


35

%


1

%

Total

2,714



$

1,464,740



$

539.7



4.80


2,390



$

1,043,660



$

436.7



4.23


14

%


40

%


24

%


13

%




Six Months Ended June 30,


2021


2020


% Change


Homes


Dollar

Value


Average

Price


Monthly

Absorption

Rate *


Homes


Dollar Value


Average Price


Monthly

Absorption

Rate *


Homes


Dollar Value


Average Price


Monthly

Absorption

Rate


























(Dollars in thousands)

West

3,377



$

1,791,809



$

530.6



5.73


2,691



$

1,262,330



$

469.1



4.88


25

%


42

%


13

%


17

%

Mountain

1,717



1,017,585



592.7



5.03


1,451



722,197



497.7



3.76


18

%


41

%


19

%


34

%

East

829



354,950



428.2



4.03


647



206,911



319.8



3.58


28

%


72

%


34

%


13

%

Total

5,923



$

3,164,344



$

534.2



5.21


4,789



$

2,191,438



$

457.6



4.28


24

%


44

%


17

%


22

%

*Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period


 

Active Subdivisions









Average Active Subdivisions


Average Active Subdivisions


Active Subdivisions


Three Months Ended


Six Months Ended


June 30,


%


June 30,


%


June 30,


%


2021


2020


Change


2021


2020


Change


2021


2020


Change

West

91



96



(5)

%


94



95



(1)

%


98



92



7

%

Mountain

55



63



(13)

%


56



63



(11)

%


57



64



(11)

%

East

41



33



24

%


38



31



23

%


34



30



13

%

Total

187



192



(3)

%


188



189



(1)

%


189



186



2

%

 

Backlog



June 30,


2021


2020


% Change


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price




















(Dollars in thousands)

West

4,139



$

2,204,500



$

532.6



2,826



$

1,336,251



$

472.8



46

%


65

%


13

%

Mountain

2,412



$

1,426,496



591.4



1,619



$

816,559



504.4



49

%


75

%


17

%

East

1,127



$

482,736



428.3



698



$

220,362



315.7



61

%


119

%


36

%

Total

7,678



$

4,113,732



$

535.8



5,143



$

2,373,172



$

461.4



49

%


73

%


16

%

 

Homes Completed or Under Construction (WIP lots)



June 30,


%


2021


2020


Change

Unsold:






Completed

19



109



(83)

%

Under construction

214



191



12

%

Total unsold started homes

233



300



(22)

%

Sold homes under construction or completed

6,655



3,573



86

%

Model homes under construction or completed

502



502



%

Total homes completed or under construction

7,390



4,375



69

%

 

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



June 30, 2021


June 30, 2020




Lots

Owned


Lots

Optioned


Total


Lots

Owned


Lots

Optioned


Total


Total

% Change

West

13,265



4,729



17,994



9,364



2,619



11,983



50

%

Mountain

6,599



4,174



10,773



6,076



2,667



8,743



23

%

East

3,636



1,997



5,633



2,260



2,041



4,301



31

%

Total

23,500



10,900



34,400



17,700



7,327



25,027



37

%

 

Selling, General and Administrative Expenses



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


Change


2021


2020


Change














(Dollars in thousands)

General and administrative expenses

$

61,958



$

40,419



$

21,539



$

119,121



$

85,508



$

33,613


General and administrative expenses as a percentage
of home sale revenues

4.5

%


4.6

%


-10 bps


4.9

%


5.4

%


-50 bps

Marketing expenses

$

26,832



$

22,657



$

4,175



$

52,535



$

44,103



$

8,432


Marketing expenses as a percentage of home sale
revenues

2.0

%


2.6

%


-60 bps


2.2

%


2.8

%


-60 bps

Commissions expenses

$

40,071



$

29,240



$

10,831



$

72,198



$

52,026



$

20,172


Commissions expenses as a percentage of home sale
revenues

2.9

%


3.3

%


-40 bps


3.0

%


3.3

%


-30 bps

Total selling, general and administrative expenses

$

128,861



$

92,316



$

36,545



$

243,854



$

181,637



$

62,217


Total selling, general and administrative expenses as
a percentage of
home sale revenues

9.4

%


10.4

%


-100 bps


10.1

%


11.5

%


-140 bps

 

Capitalized Interest



Three Months Ended
June 30,


Six Months Ended
June 30,


2021


2020


2021


2020










(Dollars in thousands)

Homebuilding interest incurred

$

17,409



$

15,094



$

34,741



$

31,628


Less: Interest capitalized

(17,409)



(15,094)



(34,741)



(31,628)


Homebuilding interest expensed

$



$



$



$










Interest capitalized, beginning of period

$

55,268



$

59,077



$

52,777



$

55,310


Plus: Interest capitalized during period

17,409



15,094



34,741



31,628


Less: Previously capitalized interest included in home cost of sales

(18,326)



(17,242)



(33,167)



(30,009)


Interest capitalized, end of period

$

54,351



$

56,929



$

54,351



$

56,929


 

 

SOURCE M.D.C. Holdings, Inc.

For further information: Robert N. Martin, Senior Vice President and Chief Financial Officer, 1-866-424-3395, IR@mdch.com