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Press release from PR Newswire

M.D.C. Holdings Announces First Quarter 2010 Results

Friday, April 23, 2010

M.D.C. Holdings Announces First Quarter 2010 Results06:00 EDT Friday, April 23, 2010- Net orders increased 38% to 931 homes - Loss per share improved to $0.45 vs. loss of $0.88 in Q1 2009 - Secured control of 2,246 lots in 39 new communities - Closings decreased 10% to 523 homes - Home gross margin increased 700 basis points to 22.4% - Backlog increased 96% to 1,234 homes at 3/31/10DENVER, April 23 /PRNewswire-FirstCall/ -- M.D.C. Holdings, Inc. (NYSE: MDC) 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 CommentsLarry 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."HighlightsNet 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 MDCSince 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 StatementsCertain 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 RevenueHome sales revenue$ 140,943$ 166,982Land sales revenue152,618Other revenue6,1206,332Total Revenue147,078175,932Costs and ExpensesHome cost of sales109,390141,325Land cost of sales1911,341Asset impairments-14,569Marketing expenses7,0608,832Commission expenses5,1296,358General and administrative expenses40,20338,381Other operating expenses491265Related party expenses95Total Operating Costs and Expenses162,473211,076Loss from Operations(15,395)(35,144)Other income (expense)Interest income4,4284,071Interest expense(10,374)(9,740)Gain (loss) on sale of other assets99(260)Loss before income taxes(21,242)(41,073)Benefit from income taxes, net369220Net Loss$ (20,873)$ (40,853)Loss Per ShareBasic$ � � (0.45)$ � � (0.88)Diluted$ � � (0.45)$ � � (0.88)Dividends Declared Per Share$ � � � 0.25$ � � � 0.25M.D.C. HOLDINGS, INC.Consolidated Balance Sheets(Dollars in thousands, except per share amounts)(Unaudited)March 31,December 31,20102009AssetsCash and cash equivalents$ � �950,139$ � � � �1,234,252Marketable securities830,438327,944Restricted cash594476ReceivablesHome sales receivables13,01310,056Income taxes receivable3,153145,144Other receivables8,8395,844Mortgage loans held-for-sale, net36,70462,315Inventories, netHousing completed or under construction399,606260,324Land and land under development277,276262,860Property and equipment, net39,45138,421Deferred tax asset, net of valuation allowance of $216,292 and $208,144at March 31, 2010 and December 31, 2009, respectively--Related party assets7,8567,856Prepaid expenses and other assets, net77,65673,816Total Assets$ 2,644,725$ � � � �2,429,308LiabilitiesAccounts payable$ � � �63,855$ � � � � � � 36,087Accrued liabilities288,224291,969Related party liabilities1031,000Mortgage repurchase facility4,71429,115Senior notes, net1,242,095997,991Total Liabilities1,598,9911,356,162Commitments and Contingencies--Stockholders' EquityPreferred stock, $0.01 par value; 25,000,000 shares authorized; none issuedor outstanding--Common stock, $0.01 par value; 250,000,000 shares authorized; 47,193,000 and �47,140,000 issued and outstanding, respectively, at March 31, 2010 and47,070,000 and 47,017,000 issued and outstanding, respectively,at December 31, 2009472471Additional paid-in-capital806,765802,675Retained earnings238,002270,659Accumulated other comprehensive income1,154-Treasury stock, at cost; 53,000 shares at March 31, 2010 and December 31, 2009(659)(659)Total Stockholders' Equity1,045,7341,073,146Total Liabilities and Stockholders' Equity$ 2,644,725$ � � � �2,429,308M.D.C. HOLDINGS, INC.Information on Segments(Dollars in thousands)(Unaudited)Three MonthsEnded March 31,20102009REVENUEHomebuildingWest$ � � �57,137$ � � � � � � 74,682Mountain46,68244,117East31,50540,492Other Homebuilding9,03613,683Total Homebuilding144,360172,974Financial Services and Other5,6215,563Corporate-50Intercompany adjustments(2,903)(2,655) � � � � �Consolidated$ � �147,078$ � � � � � 175,932(LOSS) INCOME BEFORE INCOME TAXESHomebuildingWest$ � � � �2,354$ � � � � � (10,303)Mountain1,170(4,811)East(1,519)(2,371)Other Homebuilding(519)(831)Total Homebuilding1,486(18,316)Financial Services and Other1,8461,621Corporate(24,574)(24,378)Consolidated$ � �(21,242)$ � � � � � (41,073)ASSET IMPAIRMENTS � � �West $ � � � � � � � �-$ � � � � � � 13,067 � � �Mountain-254 � � �East -750 � � �Other Homebuilding -284 � � � � �Consolidated$ � � � � � � � �-$ � � � � � � 14,355March 31,December 31,20102009TOTAL ASSETSHomebuildingWest$ � �265,978$ � � � � � 190,204Mountain284,695237,702East147,050112,964Other Homebuilding31,87926,778Total Homebuilding729,602567,648Financial Services and Other107,425133,957Corporate1,810,3551,773,660Intercompany adjustments(2,657)(45,957)Consolidated$ 2,644,725$ � � � �2,429,308M.D.C. HOLDINGS, INC.Selected Financial Data(Dollars in thousands)(Unaudited)Three MonthsEnded March 31,Change20102009Amount%SELECTED FINANCIAL DATAGeneral and Administrative Expenses � � �Homebuilding$ � �17,726$ � 15,779$ � � �1,94712% � � �Financial Services and Other4,0884,498(410)-9% � � �Corporate(1) 18,39818,1092892% � � � � Total $ � �40,212$ � 38,386$ � � �1,8265%SG&A as a % of Home Sales Revenue � � �Homebuilding Segments21.2%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 Revenue2.3%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)$ �248,418Corporate and Homebuilding Interest � �Interest capitalized, beginning of period$ � �28,339$ � 39,239$ � (10,900)-28% � �Interest capitalized, net of interest expense6,6364,8441,79237% � �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 $43.2 million, respectively, of asset impairments.M.D.C. HOLDINGS, INC.Selected Financial Data(Dollars in thousands)(Unaudited)Three MonthsEnded March 31,Change20102009Amount%HOMEAMERICAN OPERATING ACTIVITIESPrincipal amount of mortgage � � �loans originated$ 108,090$ 126,507$ (18,417)-15%Principal amount of mortgage � � �loans brokered $ � � 2,856$ � 12,965$ (10,109)-78%Capture Rate84%82%2% � � �Including brokered loans86%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 31,December 31,March 31,201020092009HOMES COMPLETED OR UNDER CONSTRUCTIONUnsold Home Under Construction - Final 4841293Unsold Home Under Construction - Frame 675389255Unsold Home Under Construction - Foundation 376109100 � Total Unsold Homes Under Construction 1,099539648Sold Homes Under Construction 1,002570471Model Homes 210212274 � Homes Completed or Under Construction 2,3111,3211,393LOTS OWNED (excluding homes completed or under construction)Arizona 1,0401,0751,365California 756581695Nevada 8949661,045 � West 2,6902,6223,105Colorado 2,5492,5142,523Utah 366545621 � Mountain 2,9153,0593,144Delaware Valley 6482110Maryland 94100180Virginia 318241227 � East 476423517Florida 127138242Illinois 141141141 � Other Homebuilding 268279383 � � � �Total 6,3496,3837,149M.D.C. HOLDINGS, INC.Homebuilding Operational Data(Dollars in thousands)(Unaudited)March 31,December 31,March 31,201020092009LOTS CONTROLLED UNDER OPTIONArizona 482328460California 232113149Nevada 42922295 � West 1,143663704Colorado 507537158Utah 145117- � Mountain 652654158Delaware Valley --14Maryland 602575350Virginia 271192620 � East 873767984Florida 713500438Illinois --- � Other Homebuilding 713500438 � � � �Total 3,3812,5842,284NON-REFUNDABLE OPTION DEPOSITSCash $ � � 9,467$ � � � � � �7,654$ � � 5,526Letters of Credit 2,0842,1343,257Total Non-Refundable Option Deposits$ � 11,551$ � � � � � �9,788$ � � 8,783M.D.C. HOLDINGS, INC.Homebuilding Operational Data(Dollars in thousands)(Unaudited)Three MonthsEnded March 31,Change20102009Amount%HOMES CLOSED (UNITS)Arizona 108172(64)-37%California 4659(13)-22%Nevada 98742432% � West 252305(53)-17%Colorado 108911719%Utah 52401230% � Mountain 1601312922%Delaware Valley 419(15)-79%Maryland 2626-0%Virginia 4041(1)-2% � East 7086(16)-19%Florida 4149(8)-16%Illinois -9(9)-100% � Other Homebuilding 4158(17)-29% � � � �Total 523580(57)-10%AVERAGE SELLING PRICES PERHOME CLOSEDArizona $ 203.7$ 192.6$ � � � 11.16%California 351.9398.1(46.2)-12%Colorado 299.8352.3(52.5)-15%Delaware Valley 334.1424.9(90.8)-21%Florida 220.3219.21.11%Illinois N/A 320.4 N/A N/AMaryland 424.5440.6(16.1)-4%Nevada 189.3203.0(13.7)-7%Utah 273.5298.6(25.1)-8%Virginia 477.8508.5(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 MonthsEnded March 31,Change20102009Amount%ORDERS FOR HOMES, NET (UNITS)Arizona 168158106%California 2675(49)-65%Nevada 170957579% � West 3643283611%Colorado 270134136101%Utah 1254184205% � Mountain 395175220126%Delaware Valley 1414-0%Maryland 3337(4)-11%Virginia 66561018% � East 11310766%Florida 595812%Illinois -8(8)-100% � Other Homebuilding 5966(7)-11% � � � �Total 93167625538%Estimated Value of Orders for � Homes, net$ 257,655$ 191,000$ � 66,65535%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)March 31,December 31,March 31,201020092009BACKLOG (UNITS)Arizona 163103144California 567665Nevada 1608874 � West 379267283Colorado 369207115Utah 1679443 � Mountain 536301158Delaware Valley 332322Maryland 11010369Virginia 997351 � East 242199142Florida 775944Illinois --2 � Other Homebuilding 775946 � � � �Total 1,234826629Backlog Estimated Sales Value$ 381,000$ � � � �265,000$ 196,000Estimated Average Selling Price � of Homes in Backlog$ � � 308.8$ � � � � � �320.8$ � � 311.6ACTIVE SUBDIVISIONSArizona 282837California 3316Nevada 171823 � West 484976Colorado 414245Utah 171622 � Mountain 585867Delaware Valley 112Maryland 8812Virginia 7710 � East 161624Florida 10107Illinois --1 � Other Homebuilding 10108 � � � �Total 132133175 � Average for quarter ended132134182SOURCE M.D.C. Holdings, Inc.For further information: Robert N. Martin, Investor Relations of M.D.C. Holdings, Inc., +1-720-977-3431, bob.martin@mdch.com