M.D.C. Holdings, Inc. MDC

NYS: MDC | ISIN: US5526761086   27/03/2024
62,87 USD (+0,06%)
(+0,06%)   27/03/2024

M.d.c. Holdings Announces First Quarter 2023 Results

DENVER, May 2, 2023 /PRNewswire/ -- M.D.C Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter ended March 31, 2023.

"2023 is off to a great start," said MDC's Executive Chairman, Larry A. Mizel, "thanks to a combination of improved market conditions and strategic pricing initiatives, we have seen a rebound in homebuying activity to start the year. Net new orders in the first quarter increased significantly relative to the fourth quarter of 2022, as buyers returned to the market for the start of the spring selling season. Order momentum built as the quarter progressed, and we saw order totals increase on a sequential basis each month."

Mr. Mizel continued, "It was also a successful quarter from a delivery standpoint, as we closed 1,851 homes for the three-month period, well ahead of our stated guidance. Our teams did an excellent job overcoming supply chain obstacles and municipal delays to close homes in backlog in a timely manner. We also benefited from having more specs available for sale during the quarter, which led to an increase in quick move-in closings."

Mr. Mizel concluded, "We reported $81 million in net income for the first quarter, or $1.08 per diluted share. We also generated significant cash flow from operations, which boosted our cash and marketable securities balance at the end of the quarter to over $1.6 billion. We believe this puts us in a great position to continue our disciplined approach to growth while simultaneously funding our industry-leading dividend payout of $2.00 per share on an annualized basis."

"We continue to see several favorable fundamental and demographic trends in our markets driving new home demand," said David Mandarich, MDC's President and Chief Executive Officer. "Existing home inventory, which serves as competition for the new home market, remains scarce in most of our markets. Employment trends have been resilient, giving potential buyers the stable income and confidence needed to purchase a new home. In addition, many of the markets in which we build are seeing outsized growth, thanks to an influx of jobs and high-wage earners from other parts of the country. These industry positives, coupled with our more affordable product focus and strong balance sheet, give me confidence in the long-term outlook for MDC."

2023 First Quarter Highlights and Comparisons to 2022 First Quarter

Home sale revenues of $1.02 billion compared to $1.24 billion


Unit deliveries of 1,851 vs. 2,233


Average selling price of deliveries of $551,000 vs. $556,000

Homebuilding pretax income of $91.0 million compared to $188.5 million


Gross margin from home sales of 16.8% vs. 25.7%


Inventory impairments of $7.8 million vs. $0.6 million


Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") of 9.3% vs. 10.4%

Financial services pretax income of $18.0 million compared to $13.4 million

Net income of $80.7 million, or $1.08 per diluted share, compared to $148.4 million, or $2.02 per diluted share


Effective tax rate of 25.9% vs 26.5%

Dollar value of net new orders of $957.3 million compared to $1.84 billion


Unit gross orders of 2,520 vs. 3,781


Cancellations as a percentage gross sales of 29.9% vs. 16.7%


Unit net orders of 1,767 vs. 3,151

Cash flow from operating activities of $426.2 million compared to $118.1 million

 2023 Outlook and Other Selected Information1

Projected home deliveries for the 2023 second quarter between 1,600 and 1,700


Projected average selling price for 2023 second quarter unit deliveries of approximately $550,000


Projected gross margin from home sales for the 2023 second quarter of approximately 17.0%  (assuming no impairments or warranty adjustments)

Active subdivision count at March 31, 2023 of 236, up 18% year-over-year

Lots controlled of 22,942 at March 31, 2023, down 39% year-over-year

Quarterly cash dividend of fifty cents ($0.50) per share declared on April 17, 2023


Consistent record of stable or increasing dividends for nearly 30 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 helped more than 230,000 homebuyers achieve the American Dream since 1977. One of the largest homebuilders in the nation, MDC is committed to quality and value that is reflected in each home its subsidiaries build. The Richmond American companies have operations in Alabama, Arizona, California, Colorado, Florida, Idaho, Maryland, Nevada, New Mexico, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia and Washington. Mortgage lending, insurance and title services are offered by the following MDC subsidiaries, respectively: HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company. M.D.C. Holdings, Inc. stock 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, changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by MDC, 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 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 March 31, 2023, 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
March 31,


2023


2022






(Dollars in thousands, except per share amounts)

Homebuilding:




Home sale revenues

$      1,020,016


$      1,240,520

Home cost of sales

(840,747)


(921,378)

Inventory impairments

(7,800)


(660)

Total cost of sales

(848,547)


(922,038)

Gross profit

171,469


318,482

Selling, general and administrative expenses

(94,988)


(129,314)

Interest and other income

13,459


755

Other expense

1,059


(1,424)

Homebuilding pretax income

90,999


188,499





Financial Services:




Revenues

29,486


29,131

Expenses

(15,250)


(16,935)

Other income, net

3,734


1,187

Financial services pretax income

17,970


13,383





Income before income taxes

108,969


201,882

Provision for income taxes

(28,269)


(53,461)

Net income

$           80,700


$         148,421





Other comprehensive income (loss) net of tax:




Unrealized gain (loss) related to available-for-sale debt securities

323


Other comprehensive income (loss)

323


Comprehensive income

$           81,023


$         148,421





Earnings per share:




Basic

$               1.10


$               2.09

Diluted

$               1.08


$               2.02





Weighted average common shares outstanding:




Basic

72,647,659


70,766,146

Diluted

74,021,989


72,938,414





Dividends declared per share

$               0.50


$               0.50

 

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited) 



March 31,
2023


December 31,
2022






(Dollars in thousands, except

per share amounts)

ASSETS




Homebuilding:




Cash and cash equivalents

$         781,738


$         696,075

Restricted cash

2,268


3,143

Marketable securities

691,767


443,712

Trade and other receivables

67,865


116,364

Inventories:




Housing completed or under construction

1,585,951


1,722,061

Land and land under development

1,671,824


1,793,718

Total inventories

3,257,775


3,515,779

Property and equipment, net

63,787


63,730

Deferred tax asset, net

46,528


49,252

Prepaids and other assets

66,721


70,007

Total homebuilding assets

4,978,449


4,958,062

Financial Services:




Cash and cash equivalents

20,985


17,877

Marketable securities

117,610


117,388

Mortgage loans held-for-sale, net

166,252


229,513

Other assets

32,525


40,432

Total financial services assets

337,372


405,210

Total Assets

$      5,315,821


$      5,363,272

LIABILITIES AND EQUITY




Homebuilding:




Accounts payable

$         119,351


$         109,218

Accrued and other liabilities

342,167


383,406

Revolving credit facility

10,000


10,000

Senior notes, net

1,482,779


1,482,576

Total homebuilding liabilities

1,954,297


1,985,200

Financial Services:




Accounts payable and accrued liabilities

100,876


110,536

Mortgage repurchase facility

130,527


175,752

Total financial services liabilities

231,403


286,288

Total Liabilities

2,185,700


2,271,488

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; 73,087,335 and 72,585,596 issued and
   outstanding at March 31, 2023 and December 31, 2022, respectively

731


726

Additional paid-in-capital

1,778,025


1,784,173

Retained earnings

1,351,042


1,306,885

Accumulated other comprehensive income

323


Total Stockholders' Equity

3,130,121


3,091,784

Total Liabilities and Stockholders' Equity

$      5,315,821


$      5,363,272

 

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

(Unaudited)



Three Months Ended
March 31,


2023


2022






(Dollars in thousands)

Operating Activities:




Net income

$       80,700


$     148,421

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




Stock-based compensation expense

5,498


14,882

Depreciation and amortization

5,500


6,652

Inventory impairments

7,800


660

Project abandonment costs

(1,048)


1,434

Amortization of discount of marketable debt securities

(8,472)


Deferred income tax benefit

2,617


842

Net changes in assets and liabilities:




Trade and other receivables

55,868


(16,677)

Mortgage loans held-for-sale, net

63,261


94,615

Housing completed or under construction

135,581


(277,187)

Land and land under development

115,874


107,321

Prepaids and other assets

3,470


(20,479)

Accounts payable and accrued other liabilities

(40,485)


57,571

Net cash provided by (used in) operating activities

426,164


118,055





Investing Activities:




Purchases of marketable securities

(434,374)


Maturities of marketable securities

195,000


Purchases of property and equipment

(5,386)


(6,884)

Net cash used in investing activities

(244,760)


(6,884)





Financing Activities:




Proceeds from (payments on) mortgage repurchase facility, net

(45,225)


(78,069)

Dividend payments

(36,543)


(35,583)

Issuance of shares under stock-based compensation programs, net

(11,740)


(12,628)

Net cash provided by (used in) financing activities

(93,508)


(126,280)





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

87,896


(15,109)

Cash, cash equivalents and restricted cash:




Beginning of period

717,095


603,459

End of period

$     804,991


$     588,350





Reconciliation of cash, cash equivalents and restricted cash:




Homebuilding:




Cash and cash equivalents

$     781,738


$     474,447

Restricted cash

2,268


6,400

Financial Services:




Cash and cash equivalents

20,985


107,503

Total cash, cash equivalents and restricted cash

$     804,991


$     588,350

 

New Home Deliveries



Three Months Ended March 31,


2023


2022


% Change


Homes


Home Sale

Revenues


Average

Price


Homes


Home Sale

Revenues


Average

Price


Homes


Home

Sale

Revenues


Average Price




















(Dollars in thousands)

West

1,064


$   577,933


$       543.2


1,243


$   707,311


$       569.0


(14) %


(18) %


(5) %

Mountain

487


301,155


618.4


548


335,128


611.5


(11) %


(10) %


1 %

East

300


140,928


469.8


442


198,081


448.1


(32) %


(29) %


5 %

Total

1,851


$  1,020,016


$       551.1


2,233


$  1,240,520


$       555.5


(17) %


(18) %


(1) %

 

Net New Orders



Three Months Ended March 31,


2023


2022


% Change


Homes


Dollar

Value


Average

Price 


Monthly

Absorption

Rate 1


Homes


Dollar Value


Average Price 


Monthly

Absorption Rate 1


Homes


Dollar Value


Average Price


Monthly

Absorption

Rate


























(Dollars in thousands)

West

1,012


$  566,909


$  560.2


2.47


1,704


$ 1,000,954


$     587.4


5.54


(41) %


(43) %


(5) %


(55) %

Mountain

410


237,546


579.4


2.47


920


581,971


632.6


5.63


(55) %


(59) %


(8) %


(56) %

East

345


152,809


442.9


3.03


527


253,850


481.7


4.78


(35) %


(40) %


(8) %


(37) %

Total

1,767


$  957,264


$  541.7


2.56


3,151


$ 1,836,775


$     582.9


5.42


(44) %


(48) %


(7) %


(53) %


1 Calculated as total net new orders (gross orders less cancellations) in period ÷ average active communities during period ÷ number of months in period

 

Active Subdivisions









Average Active Subdivisions


Active Subdivisions


Three Months Ended


March 31,


%


March 31,


%


2023


2022


Change


2023


2022


Change

West

141


112


26 %


137


103


33 %

Mountain

56


53


6 %


55


55


— %

East

39


35


11 %


38


37


3 %

Total

236


200


18 %


230


195


18 %

 

Backlog



March 31,


2023


2022


% Change


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price




















(Dollars in thousands)

West

1,839


$  1,020,206


$       554.8


4,677


$  2,651,123


$       566.8


(61) %


(62) %


(2) %

Mountain

638


444,681


697.0


2,546


1,668,048


655.2


(75) %


(73) %


6 %

East

413


197,034


477.1


1,335


628,631


470.9


(69) %


(69) %


1 %

Total

2,890


$  1,661,921


$       575.1


8,558


$  4,947,802


$       578.1


(66) %


(66) %


(1) %

 

Homes Completed or Under Construction (WIP lots)



March 31,


%


2023


2022


Change

Unsold:






Completed

255


19


1,242 %

Under construction

1,277


313


308 %

Total unsold started homes

1,532


332


361 %

Sold homes under construction or completed

2,493


7,445


(67) %

Model homes under construction or completed

560


513


9 %

Total homes completed or under construction

4,585


8,290


(45) %

 

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



March 31, 2023


March 31, 2022




Lots

Owned


Lots

Optioned


Total


Lots

Owned


Lots

Optioned


Total


Total

% Change

West

11,766


422


12,188


15,548


4,237


19,785


(38) %

Mountain

4,944


1,034


5,978


6,741


4,240


10,981


(46) %

East

3,281


1,495


4,776


4,318


2,728


7,046


(32) %

Total

19,991


2,951


22,942


26,607


11,205


37,812


(39) %

 

Selling, General and Administrative Expenses



Three Months Ended March 31,


2023


2022


Change








(Dollars in thousands)

General and administrative expenses

$    42,776


$    71,983


$      (29,207)

General and administrative expenses as a percentage of home sale revenues

4.2 %


5.8 %


-160 bps

Marketing expenses

$    23,096


$    25,632


$        (2,536)

Marketing expenses as a percentage of home sale revenues

2.3 %


2.1 %


20 bps

Commissions expenses

$    29,116


$    31,699


$        (2,583)

Commissions expenses as a percentage of home sale revenues

2.9 %


2.6 %


30 bps

Total selling, general and administrative expenses

$    94,988


$   129,314


$      (34,326)

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

9.3 %


10.4 %


-110 bps

 

Capitalized Interest



Three Months Ended
March 31,


2023


2022






(Dollars in thousands)

Homebuilding interest incurred

$            17,454


$          17,258

Less: Interest capitalized

(17,454)


(17,258)

Homebuilding interest expensed

$                  —


$                —





Interest capitalized, beginning of period

$            59,921


$          58,054

Plus: Interest capitalized during period

17,454


17,258

Less: Previously capitalized interest included in home cost of sales

(16,065)


(14,844)

Interest capitalized, end of period

$            61,310


$          60,468

 

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SOURCE M.D.C. Holdings, Inc.

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