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Press release from PR Newswire

M.D.C. Holdings Announces 2013 First Quarter Results

Thursday, May 02, 2013

M.D.C. Holdings Announces 2013 First Quarter Results

06:00 EDT Thursday, May 02, 2013

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.

For further information: Robert N. Martin, Vice President of Finance and Corporate Controller, (720) 977-3431, bob.martin@mdch.com

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