press release

May 5, 2020, 6:01 a.m. EDT

M.D.C. Holdings Announces First Quarter 2020 Results And Selected Preliminary April 2020 Results

DENVER, May 5, 2020 /PRNewswire/ -- M.D.C Holdings, Inc. /zigman2/quotes/203145113/composite MDC -2.31% , one of the nation's leading homebuilders, announced results for the quarter ended March 31, 2020. In light of recent market volatility and business disruptions caused by the COVID-19 pandemic, the Company also provided selected preliminary April 2020 results.

2020 First Quarter Highlights and Comparisons to 2019 First Quarter


March 31, 2020 Financial Position Highlights


2020 April Highlights and Comparison to 2019 April (preliminary and unaudited)

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "In response to the COVID-19 pandemic, we have adapted our business to protect the health and safety of our employees, subcontractors and customers. For example, we are using technology to help drive compliance with social distancing and shelter-in-place requirements by guiding many customers through the homebuilding process using a virtual environment. Our technology has also enabled hundreds of our employees to work from home. For those who cannot work remotely, we have greatly enhanced our cleaning and sanitizing protocols and implemented screening at our sites and offices across the country, and we have modified our business practices as necessary to allow for social distancing. On behalf of our management team, I would like to express sincere gratitude to our dedicated employees and all others who have supported our Company in adjusting to the new reality brought on by COVID-19."

Mr. Mizel continued, "As our results from the first quarter demonstrate, 2020 was off to an excellent start thanks to a robust job market, elevated consumer confidence and low levels of new and existing home inventory.  This positive fundamental backdrop, coupled with our continued shift to more affordable product offerings, resulted in a 21% increase in our homebuilding pretax income for the quarter, as well as solid order and backlog growth. While demand trends deteriorated significantly at the end of March and into April, we believe the long-term outlook for our industry remains positive due to the ongoing demographic shifts taking place in our country and the lack of available housing supply."

Mr. Mizel concluded, "Although the ultimate impact of COVID-19 on the economy is still unclear, MDC is well-positioned to weather the current economic crisis thanks to our seasoned leadership team, our strong balance sheet and our conservative operating model.  With high liquidity, low leverage and limited speculative inventory, our Company is built to succeed through the entirety of the homebuilding cycle.  We believe that this approach, coupled with our industry-leading dividend, will lead to superior risk-adjusted returns for shareholders over time."

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 205,000 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 and Portland. 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 March 31, 2020, 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,

2020
2019

(Dollars in thousands, except per share amounts)
Homebuilding:




Home sale revenues $ 697,085
$ 647,278
Home cost of sales
(558,647)

(524,552)
Inventory impairments
-

(610)
Total cost of sales
(558,647)

(525,162)
Gross profit
138,438

122,116
Selling, general and administrative expenses
(89,321)

(82,261)
Interest and other income
1,889

2,391
Other expense
(1,337)

(1,191)
Homebuilding pretax income
49,669

41,055






Financial Services:




Revenues
21,886

17,404
Expenses
(10,929)

(8,957)
Other income (expense), net
(12,064)

6,104
Financial services pretax income (loss)
(1,107)

14,551






Income before income taxes
48,562

55,606
Provision for income taxes
(11,802)

(15,056)
Net income $ 36,760
$ 40,550






Comprehensive income $ 36,760
$ 40,550






Earnings per share:




Basic $ 0.58
$ 0.66
Diluted $ 0.56
$ 0.64






Weighted average common shares outstanding:




Basic
62,491,238

60,939,364
Diluted
64,931,225

62,708,334






Dividends declared per share $ 0.33
$ 0.30

 

M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)


March 31,
December 31,

2020
2019
ASSETS (Dollars in thousands, except

Homebuilding:




Cash and cash equivalents $ 386,704
$ 424,186
Restricted cash
15,762

14,279
Trade and other receivables
69,301

65,829
Inventories:




Housing completed or under construction
1,215,214

1,036,191
Land and land under development
1,301,433

1,330,384
Total inventories
2,516,647

2,366,575
Property and equipment, net
62,316

60,414
Deferred tax asset, net
20,660

21,768
Prepaid and other assets
78,002

78,358
Total homebuilding assets
3,149,392

3,031,409
Financial Services:




Cash and cash equivalents
22,159

35,747
Marketable securities
43,985

56,747
Mortgage loans held-for-sale, net
133,921

197,021
Other assets
24,255

17,432
Total financial services assets
224,320

306,947
      Total Assets $ 3,373,712
$ 3,338,356
LIABILITIES AND EQUITY




Homebuilding:




Accounts payable $ 97,980
$ 87,364
Accrued and other liabilities
233,034

245,940
Revolving credit facility
15,000

15,000
Senior notes, net
1,036,900

989,422
Total homebuilding liabilities
1,382,914

1,337,726
Financial Services:




Accounts payable and accrued liabilities
70,977

68,529
Mortgage repurchase facility
108,744

149,616
Total financial services liabilities
179,721

218,145
      Total Liabilities
1,562,635

1,555,871
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; 63,052,495 and 62,574,961 issued and outstanding at March 31, 2020 and December 31, 2019, respectively
631

626
Additional paid-in-capital
1,361,362

1,348,733
Retained earnings
449,084

433,126
Total Stockholders' Equity
1,811,077

1,782,485
Total Liabilities and Stockholders' Equity $ 3,373,712
$ 3,338,356

 

M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)


Three Months Ended

March 31,

2020
2019


(Dollars in thousands)
Operating Activities:




Net income $ 36,760
$ 40,550
Adjustments to reconcile net income to net cash provided by (used in) operating activities:




Stock-based compensation expense
4,440

4,251
Depreciation and amortization
5,152

4,878
Inventory impairments
-

610
Net (gain) loss on marketable equity securities
13,268

(4,840)
Deferred income tax expense
1,131

2,696
Net changes in assets and liabilities:




      Trade and other receivables
(1,611)

(13,771)
      Mortgage loans held-for-sale, net
63,100

38,401
      Housing completed or under construction
(178,873)

2,137
      Land and land under development
29,051

(18,496)
      Prepaid and other assets
(8,460)

1,085
      Accounts payable and accrued liabilities
(1,131)

(3,153)
Net cash provided by (used in) operating activities
(37,173)

54,348






Investing Activities:




Purchases of marketable securities
(9,782)

(4,785)
Sales of marketable securities
9,276

4,737
Purchases of property and equipment
(6,512)

(6,386)
Net cash used in investing activities
(7,018)

(6,434)






Financing Activities:




Payments on mortgage repurchase facility, net
(40,872)

(31,959)
Repayment of senior notes
(250,000)

-
Proceeds from issuance of senior notes
298,050

-
Dividend payments
(20,768)

(17,115)
Issuance of shares under stock-based compensation programs, net
8,194

7,087
Net cash used in financing activities
(5,396)

(41,987)






Net increase (decrease) in cash, cash equivalents and restricted cash
(49,587)

5,927
Cash, cash equivalents and restricted cash:




      Beginning of period
474,212

470,139
      End of period $ 424,625
$ 476,066






Reconciliation of cash, cash equivalents and restricted cash:




Homebuilding:




Cash and cash equivalents $ 386,704
$ 416,374
Restricted cash
15,762

8,136
Financial Services:




Cash and cash equivalents
22,159

51,556
Total cash, cash equivalents and restricted cash $ 424,625
$ 476,066

 

New Home Deliveries



 Three Months Ended March 31, 


2020
2019
 % Change


 Homes
 Home Sale Revenues
 Average Price
 Homes
 Home Sale Revenues
 Average Price
 Homes
 Home Sale Revenues  Average Price


(Dollars in thousands)

West 871
$ 405,498
$ 465.6
752
$ 369,558
$ 491.4
16%
10%
(5)%

Mountain 435

222,858

512.3
409

209,192

511.5
6%
7%
0%

East 241

68,729

285.2
197

68,528

347.9
22%
0%
(18)%

Total 1,547
$ 697,085
$ 450.6
1,358
$ 647,278
$ 476.6
14%
8%
(5)%

 

Net New Orders


 Three Months Ended March 31, 

2020
2019
% Change

Homes
Dollar
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 1,382
$ 655,892
$ 474.6
5.13
965
$ 433,307
$ 449.0
3.82
43%
51%
6%
34%
Mountain 693
339,132
489.4
3.54
719
336,932
468.6
3.52
(4)%
1%
4%
1%
East 324

97,723

301.6
3.66
272

81,179

298.5
4.17
19%
20%
1%
(12)%
Total 2,399
$ 1,092,747
$ 455.5
4.33
1,956
$ 851,418
$ 435.3
3.75
23%
28%
5%
16%

*Calculated as total net new orders 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,
%


2020
2019
Change
2020
2019
Change

West 92
88
5%
90
84
7%

Mountain 64
64
0%
65
69
(6)%

East 29
26
12%
30
22
36%

Total 185
178
4%
185
175
6%

 

Backlog



March 31,


2020
2019
% Change


Homes
Dollar Average Price
Homes
Dollar
Average Price
Homes
Dollar
Average Price


(Dollars in thousands)

West 2,534
$ 1,227,996 $ 484.6
1,736
$ 830,703
$ 478.5
46%
48%
1%

Mountain 1,469

754,155
513.4
1,353

690,623

510.4
9%
9%
1%

East 650

191,972
295.3
445

133,140

299.2
46%
44%
(1)%

Total 4,653
$ 2,174,123 $ 467.3
3,534
$ 1,654,466
$ 468.2
32%
31%
(0)%

 

Homes Completed or Under Construction (WIP lots)



March 31,
%


2020
2019
Change

Unsold:





Completed 160
120
33%

Under construction 216
177
22%

Total unsold started homes 376
297
27%

Sold homes under construction or completed 3,259
2,362
38%

Model homes under construction or completed 502
459
9%

Total homes completed or under construction 4,137
3,118
33%

 

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



March 31, 2020
March 31, 2019



Lots Owned
Lots Optioned
Total
Lots Owned
Lots Optioned
Total
Total % Change

West 9,641
2,393
12,034
7,894
2,462
10,356
16%

Mountain 6,540
4,007
10,547
6,636
2,612
9,248
14%

East 2,410
2,133
4,543
1,989
1,294
3,283
38%

Total 18,591
8,533
27,124
16,519
6,368
22,887
19%

 

Selling, General and Administrative Expenses



Three Months Ended March 31,


2020
2019
Change


(Dollars in thousands)

General and administrative expenses $ 45,089
$ 42,572
$ 2,517

General and administrative expenses as a percentage of home sale revenues
6.5%

6.6%

(10) bps











Marketing expenses $ 21,446
$ 18,296
$ 3,150

Marketing expenses as a percentage of home sale revenues
3.1%

2.8%

30 bps











Commissions expenses $ 22,786
$ 21,393
$ 1,393

Commissions expenses as a percentage of home sale revenues
3.3%

3.3%

0 bps











Total selling, general and administrative expenses $ 89,321
$ 82,261
$ 7,060

Total selling, general and administrative expenses as a percentage of home sale revenues
12.8%

12.7%

10 bps

 

Capitalized Interest



Three Months Ended


March 31,


2020
2019


(Dollars in thousands)

Homebuilding interest incurred $ 16,534
$ 16,031

Less:  Interest capitalized
(16,534)

(16,031)

Homebuilding interest expensed $ -
$ -








Interest capitalized, beginning of period $ 55,310
$ 54,845

Plus: Interest capitalized during period
16,534

16,031

Less: Previously capitalized interest included in home cost of sales
(12,767)

(13,929)

Interest capitalized, end of period $ 59,077
$ 56,947

 

Cision
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SOURCE M.D.C. Holdings, Inc.

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/zigman2/quotes/203145113/composite
US : U.S.: NYSE
$ 42.78
-1.01 -2.31%
Volume: 619,339
Aug. 11, 2020 3:44p
P/E Ratio
10.55
Dividend Yield
3.06%
Market Cap
$2.80 billion
Rev. per Employee
$1.91M
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