M.D.C. HOLDINGS ANNOUNCES SECOND QUARTER 2023 RESULTS

M.D.C. HOLDINGS ANNOUNCES SECOND QUARTER 2023 RESULTS

DENVER, July 27, 2023 /PRNewswire/ — M.D.C Holdings, Inc. (NYSE: MDC), one of the nation’s leading homebuilders, announced results for the quarter ended June 30, 2023.

“MDC delivered another quarter of strong results in the second quarter of 2023, generating net income of $93 million, or $1.24 per diluted share, on home sale revenues of $1.1 billion,” said MDC’s Executive Chairman, Larry Mizel. “Net new orders increased on both a sequential and year-over-year basis in the quarter, thanks in large part to a sales pace of 3.1 homes per community per month. We feel that these results reflect both the health of the new home industry and the strength of our operations.”

“The new home market continues to benefit from a lack of existing home supply, which has created a real opportunity for homebuilders to take market share and has helped to stabilize pricing,” said David Mandarich, MDC’s President and Chief Executive Officer. “We believe this dynamic can continue as long as rates stay at these higher levels, and existing homeowners opt to stay in their current homes. MDC is well positioned to take advantage of these conditions thanks to our focus on affordability and our strong presence in some of the best housing markets in the country.”

“Given this favorable industry outlook, we have become more active in the land market, approving the purchase of over 1,300 lots in the second quarter,” said Mr. Mizel. “These lots will help us in achieving our growth objectives and improving our size and scale in our markets. With over $1.8 billion in cash and marketable securities at the end of the quarter, we have ample liquidity to both expand our homebuilding operations and continue to fund our industry-leading quarterly dividend, which we just increased to $0.55 per share based on the strength of our results.”

Mr. Mizel concluded, “For the first time in over two years, MDC achieved a sequential improvement in the average construction build time for those homes that closed in the quarter. Supply chain conditions and material availability have improved considerably since the pandemic, as we are now projecting a construction build time of under 180 days on homes that we are starting today. The improvement in building conditions, coupled with our increased emphasis on spec inventory, should result in better inventory turns and improved capital efficiency for our company.” 

2023 Second Quarter Highlights and Comparisons to 2022 Second Quarter

Home sale revenues of $1.10 billion compared to $1.45 billion



Unit deliveries of 2,009 vs. 2,536



Average selling price of deliveries of $549,000 vs. $572,000


Homebuilding pretax income of $92.1 million compared to $240.3 million



Gross margin from home sales of 16.4% vs. 26.8%



Inventory impairments of $13.5 million in the second quarter of 2023



Selling, general and administrative expenses as a percentage of home sale revenues (“SG&A rate”) of 9.7% vs. 9.2%



Project abandonment expense of $0.1 million vs $15.5 million


Financial services pretax income of $21.0 million compared to $18.7 million


Net income of $93.5 million, or $1.24 per diluted share, compared to $189.5 million, or $2.59 per diluted share



Effective tax rate of 17.3% vs 26.8%


Dollar value of net new orders increased 37% to $1.21 billion from $882.1 million



Unit gross orders increased 21% to 2,717 from 2,237



Cancellations as a percentage of gross orders of 20.2% vs. 37.2%



Average selling price of gross orders decreased 10% to $552,000 from $617,000


Cash flow from operating activities of $225.8 million compared to $53.0 million


2023 Outlook and Other Selected Information1

Projected home deliveries for the 2023 third quarter between 1,850 and 2,000



Projected average selling price for 2023 third quarter unit deliveries of approximately $555,000



Projected gross margin from home sales for the 2023 third quarter between 18.0% and 19.0%  (assuming no impairments or warranty adjustments)


Projected home deliveries for the 2023 full year of at least 8,000


Active subdivision count at June 30, 2023 of 232, up 12% year-over-year


Lots controlled of 22,309 at June 30, 2023, down 33% year-over-year


Quarterly cash dividend of fifty-five cents ($0.55) per share declared on July 24, 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 240,000 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 June 30, 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
June 30,


Six Months Ended
June 30,


2023


2022


2023


2022










(Dollars in thousands, except per share amounts)

Homebuilding:








Home sale revenues

$      1,103,470


$      1,450,823


$      2,123,486


$      2,691,343

Home cost of sales

(908,991)


(1,062,016)


(1,749,738)


(1,983,394)

Inventory impairments

(13,500)



(21,300)


(660)

Total cost of sales

(922,491)


(1,062,016)


(1,771,038)


(1,984,054)

Gross profit

180,979


388,807


352,448


707,289

Selling, general and administrative expenses

(106,733)


(133,849)


(201,721)


(263,163)

Interest and other income

17,939


822


31,398


1,577

Other expense

(127)


(15,509)


932


(16,933)

Homebuilding pretax income

92,058


240,271


183,057


428,770









Financial Services:








Revenues

32,619


36,229


62,105


65,360

Expenses

(15,487)


(18,801)


(30,737)


(35,736)

Other income, net

3,860


1,264


7,594


2,451

Financial services pretax income

20,992


18,692


38,962


32,075









Income before income taxes

113,050


258,963


222,019


460,845

Provision for income taxes

(19,557)


(69,421)


(47,826)


(122,882)

Net income

$           93,493


$         189,542


$         174,193


$         337,963









Other comprehensive income (loss) net of tax:








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

(233)



90


Other comprehensive income (loss)

(233)



90


Comprehensive income

$           93,260


$         189,542


$         174,283


$         337,963









Earnings per share:








Basic

$               1.28


$               2.66


$               2.38


$               4.75

Diluted

$               1.24


$               2.59


$               2.33


$               4.61









Weighted average common shares outstanding:








Basic

72,934,920


70,841,476


72,793,951


70,804,019

Diluted

74,956,026


72,881,012


74,500,489


72,945,748









Dividends declared per share

$               0.50


$               0.50


$               1.00


$               1.00

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


June 30,
2023


December 31,
2022






(Dollars in thousands, except

per share amounts)

ASSETS




Homebuilding:




Cash and cash equivalents

$      1,011,748


$         696,075

Restricted cash

3,503


3,143

Marketable securities

597,152


443,712

Trade and other receivables

67,497


116,364

Inventories:




Housing completed or under construction

1,733,515


1,722,061

Land and land under development

1,411,753


1,793,718

Total inventories

3,145,268


3,515,779

Property and equipment, net

63,014


63,730

Deferred tax asset, net

46,607


49,252

Prepaids and other assets

68,073


70,007

Total homebuilding assets

5,002,862


4,958,062

Financial Services:




Cash and cash equivalents

140,615


17,877

Marketable securities

79,413


117,388

Mortgage loans held-for-sale, net

158,746


229,513

Other assets

31,895


40,432

Total financial services assets

410,669


405,210

Total Assets

$      5,413,531


$      5,363,272

LIABILITIES AND EQUITY




Homebuilding:




Accounts payable

$         133,190


$         109,218

Accrued and other liabilities

341,773


383,406

Revolving credit facility

10,000


10,000

Senior notes, net

1,482,985


1,482,576

Total homebuilding liabilities

1,967,948


1,985,200

Financial Services:




Accounts payable and accrued liabilities

101,329


110,536

Mortgage repurchase facility

123,151


175,752

Total financial services liabilities

224,480


286,288

Total Liabilities

2,192,428


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; 74,544,221 and 72,585,596 issued and
outstanding at June 30, 2023 and December 31, 2022, respectively

745


726

Additional paid-in-capital

1,812,299


1,784,173

Retained earnings

1,407,969


1,306,885

Accumulated other comprehensive income

90


Total Stockholders’ Equity

3,221,103


3,091,784

Total Liabilities and Stockholders’ Equity

$      5,413,531


$      5,363,272

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


Three Months Ended
June 30,


Six Months Ended
June 30,


2023


2022


2023


2022










(Dollars in thousands)

Operating Activities:








Net income

$       93,493


$     189,542


$     174,193


$     337,963

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








Stock-based compensation expense

4,787


9,911


10,285


24,793

Depreciation and amortization

5,953


7,251


11,453


13,903

Inventory impairments

13,500



21,300


660

Project abandonment costs

130


15,515


(918)


16,949

Amortization of discount of marketable debt securities

(10,384)



(18,856)


Deferred income tax benefit (expense)

(1)


365


2,616


1,207

Net changes in assets and liabilities:








Trade and other receivables

1,353


(5,655)


57,221


(22,332)

Mortgage loans held-for-sale, net

7,506


(2,156)


70,767


92,459

Housing completed or under construction

(149,176)


(191,114)


(13,595)


(468,301)

Land and land under development

248,259


2,030


364,133


109,351

Prepaids and other assets

(2,207)


14,704


1,263


(5,775)

Accounts payable and accrued and other liabilities

12,552


12,612


(27,933)


70,183

Net cash provided by operating activities

225,765


53,005


651,929


171,060









Investing Activities:








Purchases of marketable securities

(231,116)



(665,490)


Maturities of marketable securities

374,000




569,000


Purchases of property and equipment

(5,164)


(6,814)


(10,550)


(13,698)

Net cash provided by (used in) investing activities

137,720


(6,814)


(107,040)


(13,698)









Financing Activities:








Payments on mortgage repurchase facility, net

(7,376)


(2,666)


(52,601)


(80,735)

Dividend payments

(36,566)


(35,580)


(73,109)


(71,163)

Issuance of shares under stock-based compensation programs, net

31,332


(58)


19,592


(12,686)

Net cash used in financing activities

(12,610)


(38,304)


(106,118)


(164,584)









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

350,875


7,887


438,771


(7,222)

Cash, cash equivalents and restricted cash:








Beginning of period

804,991


588,350


717,095


603,459

End of period

$  1,155,866


$     596,237


$  1,155,866


$     596,237









Reconciliation of cash, cash equivalents and restricted cash:








Homebuilding:








Cash and cash equivalents

$  1,011,748


$     475,254


$  1,011,748


$     475,254

Restricted cash

3,503


5,994


3,503


5,994

Financial Services:








Cash and cash equivalents

140,615


114,989


140,615


114,989

Total cash, cash equivalents and restricted cash

$  1,155,866


$     596,237


$  1,155,866


$     596,237

New Home Deliveries


Three Months Ended June 30,


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

1,162


$   616,559


$       530.6


1,371


$   788,279


$       575.0


(15) %


(22) %


(8) %

Mountain

539


346,070


642.1


665


437,001


657.1


(19) %


(21) %


(2) %

East

308


140,841


457.3


500


225,543


451.1


(38) %


(38) %


1 %

Total

2,009


$  1,103,470


$       549.3


2,536


$  1,450,823


$       572.1


(21) %


(24) %


(4) %


Six Months Ended June 30,


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

2,226


$  1,194,492


$       536.6


2,614


$  1,495,590


$       572.1


(15) %


(20) %


(6) %

Mountain

1,026


647,225


630.8


1,213


772,129


636.5


(15) %


(16) %


(1) %

East

608


281,769


463.4


942


423,624


449.7


(35) %


(33) %


3 %

Total

3,860


$  2,123,486


$       550.1


4,769


$  2,691,343


$       564.3


(19) %


(21) %


(3) %

Net New Orders


Three Months Ended June 30,


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

1,341


$  761,926


$  568.2


3.20


857


$   543,584


$     634.3


2.45


56 %


40 %


(10) %


31 %

Mountain

474


286,350


604.1


2.85


277


196,340


708.8


1.79


71 %


46 %


(15) %


59 %

East

352


158,164


449.3


3.17


270


142,221


526.7


2.63


30 %


11 %


(15) %


21 %

Total

2,167


$  1,206,440


$  556.7


3.10


1,404


$   882,145


$     628.3


2.31


54 %


37 %


(11) %


34 %


Six Months Ended June 30,


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

2,353


$  1,337,435


$  568.4


2.84


2,561


$ 1,574,372


$     614.7


3.91


(8) %


(15) %


(8) %


(27) %

Mountain

884


528,139


597.4


2.66


1,197


799,482


667.9


3.76


(26) %


(34) %


(11) %


(29) %

East

697


313,257


449.4


3.12


797


399,780


501.6


3.73


(13) %


(22) %


(10) %


(17) %

Total

3,934


$  2,178,831


$  553.8


2.85


4,555


$ 2,773,634


$     608.9


3.83


(14) %


(21) %


(9) %


(26) %

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


Average Active Subdivisions


Active Subdivisions


Three Months Ended


Six Months Ended


June 30,


%


June 30,


%


June 30,


%


2023


2022


Change


2023


2022


Change


2023


2022


Change

West

142


122


16 %


140


117


20 %


138


109


27 %

Mountain

56


51


10 %


56


52


8 %


55


53


4 %

East

34


34


— %


37


34


9 %


37


36


3 %

Total

232


207


12 %


233


203


15 %


230


198


16 %

Backlog


June 30,


2023


2022


% Change


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price




















(Dollars in thousands)

West

2,018


$  1,163,697


$       576.7


4,163


$  2,438,184


$       585.7


(52) %


(52) %


(2) %

Mountain

573


385,027


671.9


2,158


1,450,194


672.0


(73) %


(73) %


— %

East

457


214,658


469.7


1,105


549,721


497.5


(59) %


(61) %


(6) %

Total

3,048


$  1,763,382


$       578.5


7,426


$  4,438,099


$       597.6


(59) %


(60) %


(3) %

Homes Completed or Under Construction (WIP lots)


June 30,


%


2023


2022


Change

Unsold:






Completed

184


46


300 %

Under construction

1,971


607


225 %

Total unsold started homes

2,155


653


230 %

Sold homes under construction or completed

2,691


7,007


(62) %

Model homes under construction or completed

558


524


6 %

Total homes completed or under construction

5,404


8,184


(34) %

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


June 30, 2023


June 30, 2022




Lots

Owned


Lots

Optioned


Total


Lots

Owned


Lots

Optioned


Total


Total

% Change

West

10,795


687


11,482


15,027


1,963


16,990


(32) %

Mountain

4,552


1,637


6,189


6,696


2,961


9,657


(36) %

East

3,197


1,441


4,638


4,111


2,372


6,483


(28) %

Total

18,544


3,765


22,309


25,834


7,296


33,130


(33) %

Selling, General and Administrative Expenses


Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


Change


2023


2022


Change


(Dollars in thousands)

General and administrative expenses

$    52,205


$    72,894


$      (20,689)


$    94,981


$   144,877


$      (49,896)

General and administrative expenses as a percentage of
home sale revenues

4.7 %


5.0 %


-30 bps


4.5 %


5.4 %


-90 bps

Marketing expenses

$    22,637


$    26,035


$        (3,398)


$    45,733


$    51,667


$        (5,934)

Marketing expenses as a percentage of home sale
revenues

2.1 %


1.8 %


30 bps


2.2 %


1.9 %


30 bps

Commissions expenses

$    31,891


$    34,920


$        (3,029)


$    61,007


$    66,619


$        (5,612)

Commissions expenses as a percentage of home sale
revenues

2.9 %


2.4 %


50 bps


2.9 %


2.5 %


40 bps

Total selling, general and administrative expenses

$   106,733


$   133,849


$      (27,116)


$   201,721


$   263,163


$      (61,442)

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

9.7 %


9.2 %


50 bps


9.5 %


9.8 %


-30 bps

Capitalized Interest


Three Months Ended
June 30,


Six Months Ended
June 30,


2023


2022


2023


2022










(Dollars in thousands)

Homebuilding interest incurred

$            17,450


$          17,382


$         34,904


$         34,640

Less: Interest capitalized

(17,450)


(17,382)


(34,904)


(34,640)

Homebuilding interest expensed

$                  —


$                —


$               —


$                —









Interest capitalized, beginning of period

$            61,310


$          60,468


$         59,921


$         58,054

Plus: Interest capitalized during period

17,450


17,382


34,904


34,640

Less: Previously capitalized interest included in home cost of sales

(16,807)


(15,681)


(32,872)


(30,525)

Interest capitalized, end of period

$            61,953


$          62,169


$         61,953


$         62,169

SOURCE M.D.C. Holdings, Inc.

Originally published at https://www.prnewswire.com/news-releases/mdc-holdings-announces-second-quarter-2023-results-301886982.html

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American Healthcare REIT to Present at Nareit’s REITweek: 2024 Investor Conference

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Pay your Local Business Tax

small business ownerIt’s now easier than ever for business owners to access their local business tax receipt. After making your payment, you can access your...

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Fall Cycle Grants Program Deadlines for the FY 2024-2025 Available

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