DENVER, May 9, 2017 /PRNewswire/ -- M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the first quarter ended March 31, 2017.

2017 First Quarter Highlights and Comparisons to 2016 First Quarter

  • Net income up 133% to $22.2 million, or $0.43 per diluted share, from $9.6 million or $0.19 per diluted share*
  • Home sale revenues up 43% to $563.5 million from $394.4 million
  • Selling, general and administrative expenses as a percentage of home sale revenues ('SG&A rate') improved 250 basis points from 14.3% to 11.8%
  • Dollar value of net new orders up 3% to $750.0 million from $726.0 million
    • Monthly sales absorption pace of 3.5, up 8%
  • Ending backlog dollar value up 11% to $1.59 billion from $1.43 billion
  • Continued industry-leading dividend payment of $0.25 per share
  • Outlook upgraded by Standard & Poor's in April

*Per share amount for 2016 first quarter has been adjusted for the 5% stock dividend declared and paid in the 2016 fourth quarter.

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, 'We advanced the efficiency of our build-to-order operating model during the first quarter, as demonstrated by the strength of our financial results. An improved conversion rate, coupled with a larger backlog to start the quarter, drove a 43% year-over-year increase in home sale revenues and a significant gain in operating leverage. As a result, our first quarter net income increased to $22.2 million, more than double the level of the same quarter a year ago.'

Mr. Mizel continued, 'Strong performance from both our homebuilding and financial services operations has greatly benefited our returns, with our last twelve months return on equity for the 2017 first quarter expanding by 350 basis points year-over-year to 8.9%. We achieved this improvement in returns without losing focus on the balance sheet, which features a unique combination of low leverage, carefully managed exposure to homebuilding assets, and liquidity of nearly $1.0 billion. Our efforts directed at prudently managing our financial position were recently recognized with an upgrade to our ratings outlook from Standard & Poor's in April.'

Mr. Mizel concluded, 'Our more affordable collections of home plans continue to be a key focus as we look to expand in most of our markets across the country. The demand for this product is encouraging, bolstering our view that first-time homebuyers should serve as a significant source of growth for new home sales nationwide. Some uncertainty remains because of potential changes in policy from the new administration, but we remain optimistic about the future of the homebuilding industry, supported by a solid macroeconomic environment and favorable dynamics in the balance between housing supply and demand.'

Homebuilding

Home sale revenues for the 2017 first quarter increased 43% to $563.5 million, primarily driven by a 38% increase in deliveries, which was mostly the result of a 24% year-over-year increase in our homes in beginning backlog and a 500 basis point year-over-year increase in our backlog conversion rate.

For the 2017 first quarter, our gross margin from home sales was 15.9% a 40 basis point decrease from 16.3% in the prior year period. The 2017 first quarter included $4.9 million of inventory impairments while our 2016 first quarter included $3.0 million of expense to adjust our warranty accrual.

Selling, general and administrative ('SG&A') expenses for the 2017 first quarter were $66.3 million, up $10.0 million from $56.3 million for the same period in 2016. Our SG&A rate improved by 250 basis points to 11.8% for the 2017 first quarter from 14.3% in the 2016 first quarter. This decrease in our SG&A rate was primarily the result of our increase in home sale revenues and, to a lesser extent, a $2.5 million decrease in stock-based compensation.

The dollar value of net new orders for the 2017 first quarter increased 3% year-over-year to $750.0 million. The improvement was the result of a 3% increase net new order activity as our monthly sales absorption pace increased 8% year-over-year. Strong demand for our more affordable home plans was one of the key drivers of the increase in absorption pace. The positive impact of our improved monthly sales absorption pace was partially offset by a 4% year-over-year decrease in our average active community count.

Our backlog value at the end of the 2017 first quarter was up 11% year-over-year to $1.59 billion. The improvement was due mostly to an 8% increase in the number of units in backlog, which was primarily the result of (1) strong sales activity over the last-twelve months and, (2) slightly extended cycle times in certain of our larger markets.

Financial Services

Income before taxes for our financial services operations for the 2017 first quarter was $11.0 million, a $5.4 million increase from $5.6 million in the 2016 first quarter. This improvement was primarily driven by our mortgage operations segment, which had (1) year-over-year increases in the dollar value of loans locked, originated, and sold, and (2) higher gains on loans locked and originated.

Income Taxes

For the three months ended March 31, 2017 and 2016, we had effective income tax rates of 38.8% and 33.0%, respectively. The year-over-year increase in our effective tax rate was primarily the result of (1) our 2016 first quarter estimate of our full year effective tax rate including an estimate for energy credits whereas our estimate for the 2017 full year includes no such estimate as a credit for 2017 has not been approved by the U.S. Congress and (2) establishment of a valuation allowance against certain state net operating loss carryforwards where realization is more uncertain at this 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 190,000 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, Northern Colorado, 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, South Florida and Seattle. MDC'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. MDC's 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 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 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 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, 2017, 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

Three Months Ended

March 31,

2017

2016

(Dollars in thousands, except per

share amounts)

(Unaudited)

Homebuilding:

Home sale revenues

$

563,479

$

394,420

Land sale revenues

247

2,324

Total home and land sale revenues

563,726

396,744

Home cost of sales

(468,942)

(330,026)

Land cost of sales

(211)

(1,663)

Inventory impairments

(4,850)

-

Total cost of sales

(474,003)

(331,689)

Gross margin

89,723

65,055

Selling, general and administrative expenses

(66,298)

(56,277)

Interest and other income

2,327

1,850

Other expense

(351)

(1,541)

Other-than-temporary impairment of marketable securities

(50)

(431)

Homebuilding pretax income

25,351

8,656

Financial Services:

Revenues

17,979

11,017

Expenses

(7,898)

(6,241)

Interest and other income

979

841

Other-than-temporary impairment of marketable securities

(51)

-

Financial services pretax income

11,009

5,617

Income before income taxes

36,360

14,273

Provision for income taxes

(14,111)

(4,710)

Net income

$

22,249

$

9,563

Other comprehensive income related to available for sale securities, net of tax

1,986

1,948

Comprehensive income

$

24,235

$

11,511

Earnings per share:

Basic

$

0.43

$

0.19

Diluted

$

0.43

$

0.19

Weighted average common shares outstanding

Basic

51,340,890

51,269,370

Diluted

51,590,017

51,275,117

Dividends declared per share

$

0.25

$

0.24

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

March 31,

December 31,

2017

2016

ASSETS

(Dollars in thousands, except

per share amounts)

Homebuilding:

(Unaudited)

Cash and cash equivalents

$

296,731

$

259,087

Marketable securities

62,316

59,770

Restricted cash

4,229

3,778

Trade and other receivables

36,210

42,492

Inventories:

Housing completed or under construction

890,883

874,199

Land and land under development

855,208

884,615

Total inventories

1,746,091

1,758,814

Property and equipment, net

27,984

28,041

Deferred tax asset, net

70,451

74,888

Metropolitan district bond securities (related party)

31,004

30,162

Prepaid and other assets

63,419

60,463

Total homebuilding assets

2,338,435

2,317,495

Financial Services:

Cash and cash equivalents

23,331

23,822

Marketable securities

37,549

36,436

Mortgage loans held-for-sale, net

97,373

138,774

Other assets

9,860

12,062

Total financial services assets

168,113

211,094

Total Assets

$

2,506,548

$

2,528,589

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable

$

52,351

$

42,088

Accrued liabilities

141,707

144,566

Revolving credit facility

15,000

15,000

Senior notes, net

841,937

841,646

Total homebuilding liabilities

1,050,995

1,043,300

Financial Services:

Accounts payable and accrued liabilities

51,401

50,734

Mortgage repurchase facility

70,542

114,485

Total financial services liabilities

121,943

165,219

Total Liabilities

1,172,938

1,208,519

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; 51,649,695 and 51,485,090 issued and outstanding at March 31, 2017 and December 31, 2016, respectively

516

515

Additional paid-in-capital

985,733

983,532

Retained earnings

323,304

313,952

Accumulated other comprehensive income

24,057

22,071

Total Stockholders' Equity

1,333,610

1,320,070

Total Liabilities and Stockholders' Equity

$

2,506,548

$

2,528,589

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

Three Months Ended

March 31,

2017

2016

(Dollars in thousands)

(Unaudited)

Operating Activities:

Net income

$

22,249

$

9,563

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

Stock-based compensation expense

595

2,987

Depreciation and amortization

1,328

1,073

Inventory impairments

4,850

-

Other-than-temporary impairment of marketable securities

101

431

Loss (gain) on sale of marketable securities

(561)

915

Deferred income tax expense

3,220

1,788

Net changes in assets and liabilities:

Restricted cash

(451)

401

Trade and other receivables

7,326

(15,251)

Mortgage loans held-for-sale

41,401

33,477

Housing completed or under construction

(20,866)

(115,357)

Land and land under development

29,030

68,311

Prepaid expenses and other assets

(2,407)

911

Accounts payable and accrued liabilities

8,071

(4,234)

Net cash provided by (used in) operating activities

93,886

(14,985)

Investing Activities:

Purchases of marketable securities

(5,361)

(5,482)

Sales of marketable securities

4,983

20,600

Purchases of property and equipment

(1,122)

(1,944)

Net cash provided by (used in) investing activities

(1,500)

13,174

Financing Activities:

Payments on mortgage repurchase facility, net

(43,943)

(28,390)

Dividend payments

(12,897)

(12,252)

Proceeds from exercise of stock options

1,607

-

Net cash used in financing activities

(55,233)

(40,642)

Net increase (decrease) in cash and cash equivalents

37,153

(42,453)

Cash and cash equivalents:

Beginning of period

282,909

180,988

End of period

$

320,062

$

138,535

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries

Three Months Ended March 31,

2017

2016

% Change

Homes

Dollar
Value

Average

Price

Homes

Dollar
Value

Average

Price

Homes

Dollar
Value

Average

Price

(Dollars in thousands)

Arizona

188

$

55,676

$

296.1

160

$

45,062

$

281.6

18%

24%

5%

California

229

136,483

596.0

125

75,530

604.2

83%

81%

(1)%

Nevada

187

66,133

353.7

107

38,426

359.1

75%

72%

(2)%

Washington

101

50,788

502.9

74

32,357

437.3

36%

57%

15%

West

705

309,080

438.4

466

191,375

410.7

51%

62%

7%

Colorado

336

160,187

476.7

249

121,575

488.3

35%

32%

(2)%

Utah

33

12,704

385.0

39

14,575

373.7

(15)%

(13)%

3%

Mountain

369

172,891

468.5

288

136,150

472.7

28%

27%

(1)%

Maryland

35

16,603

474.4

34

15,806

464.9

3%

5%

2%

Virginia

50

26,529

530.6

40

20,154

503.9

25%

32%

5%

Florida

97

38,376

395.6

79

30,935

391.6

23%

24%

1%

East

182

81,508

447.8

153

66,895

437.2

19%

22%

2%

Total

1,256

$

563,479

$

448.6

907

$

394,420

$

434.9

38%

43%

3%

Net New Orders

Three Months Ended March 31,

2017

2016

% Change

Homes

Dollar
Value

Average

Price

Monthly

Absorption

Rate *

Homes

Dollar

Value

Average

Price

Monthly

Absorption

Rate *

Homes

Dollar

Value

Average

Price

Monthly

Absorption

Rate

(Dollars in thousands)

Arizona

216

$

66,146

$

306.2

2.80

223

$

65,566

$

294.0

2.38

(3)%

1%

4%

18%

California

243

151,023

621.5

4.05

229

140,369

613.0

3.72

6%

8%

1%

9%

Nevada

295

97,496

330.5

4.80

229

77,446

338.2

3.59

29%

26%

(2)%

34%

Washington

139

72,734

523.3

4.03

124

58,639

472.9

3.01

12%

24%

11%

34%

West

893

387,399

433.8

3.83

805

342,020

424.9

3.09

11%

13%

2%

24%

Colorado

501

233,286

465.6

4.31

493

229,119

464.7

4.11

2%

2%

0%

5%

Utah

56

22,806

407.3

2.02

66

23,794

360.5

2.84

(15)%

(4)%

13%

(29)%

Mountain

557

256,092

459.8

3.87

559

252,913

452.4

3.90

(0)%

1%

2%

(1)%

Maryland

51

21,996

431.3

1.79

89

46,760

525.4

2.58

(43)%

(53)%

(18)%

(31)%

Virginia

64

33,531

523.9

3.28

85

41,378

486.8

3.33

(25)%

(19)%

8%

(2)%

Florida

131

50,985

389.2

2.30

108

42,907

397.3

2.57

21%

19%

(2)%

(11)%

East

246

106,512

433.0

2.34

282

131,045

464.7

2.76

(13)%

(19)%

(7)%

(15)%

Total

1,696

$

750,003

$

442.2

3.52

1,646

$

725,978

$

441.1

3.26

3%

3%

0%

8%

* Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions

Average Active Subdivisions

Active Subdivisions

Three Months Ended

March 31,

%

March 31,

%

2017

2016

Change

2017

2016

Change

Arizona

27

30

(10)%

26

31

(16)%

California

19

21

(10)%

20

21

(5)%

Nevada

21

23

(9)%

21

21

0%

Washington

10

12

(17)%

12

14

(14)%

West

77

86

(10)%

79

87

(9)%

Colorado

40

40

0%

39

40

(3)%

Utah

8

8

0%

9

8

13%

Mountain

48

48

0%

48

48

0%

Maryland

9

13

(31)%

10

12

(17)%

Virginia

5

7

(29)%

7

9

(22)%

Florida

21

15

40%

19

14

36%

East

35

35

0%

36

35

3%

Total

160

169

(5)%

163

170

(4)%

Backlog

March 31,

2017

2016

% Change

Homes

Dollar
Value

Average

Price

Homes

Dollar
Value

Average

Price

Homes

Dollar
Value

Average

Price

(Dollars in thousands)

Arizona

350

$

116,984

$

334.2

384

$

116,646

$

303.8

(9)%

0%

10%

California

495

331,926

670.6

446

297,790

667.7

11%

11%

0%

Nevada

415

140,611

338.8

317

107,850

340.2

31%

30%

(0)%

Washington

275

144,055

523.8

229

109,733

479.2

20%

31%

9%

West

1,535

733,576

477.9

1,376

632,019

459.3

12%

16%

4%

Colorado

1,129

548,614

485.9

1,066

516,264

484.3

6%

6%

0%

Utah

127

52,179

410.9

135

48,215

357.1

(6)%

8%

15%

Mountain

1,256

600,793

478.3

1,201

564,479

470.0

5%

6%

2%

Maryland

108

50,837

470.7

145

70,575

486.7

(26)%

(28)%

(3)%

Virginia

125

68,933

551.5

146

76,790

526.0

(14)%

(10)%

5%

Florida

300

132,845

442.8

203

89,046

438.7

48%

49%

1%

East

533

252,615

473.9

494

236,411

478.6

8%

7%

(1)%

Total

3,324

$

1,586,984

$

477.4

3,071

$

1,432,909

$

466.6

8%

11%

2%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots)

March 31,

%

2017

2016

Change

Unsold:

Completed

82

133

(38)%

Under construction

212

266

(20)%

Total unsold started homes

294

399

(26)%

Sold homes under construction or completed

2,322

2,169

7%

Model homes under construction or completed

324

296

9%

Total homes completed or under construction

2,940

2,864

3%

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

March 31, 2017

March 31, 2016

Lots

Owned

Lots

Optioned

Total

Lots

Owned

Lots

Optioned

Total

Total %

Change

Arizona

1,736

271

2,007

1,575

247

1,822

10%

California

1,526

245

1,771

1,754

232

1,986

(11)%

Nevada

1,827

251

2,078

2,234

-

2,234

(7)%

Washington

762

-

762

892

19

911

(16)%

West

5,851

767

6,618

6,455

498

6,953

(5)%

Colorado

4,265

1,398

5,663

3,892

819

4,711

20%

Utah

350

49

399

403

72

475

(16)%

Mountain

4,615

1,447

6,062

4,295

891

5,186

17%

Maryland

196

79

275

354

199

553

(50)%

Virginia

336

-

336

528

152

680

(51)%

Florida

845

739

1,584

1,035

194

1,229

29%

East

1,377

818

2,195

1,917

545

2,462

(11)%

Total

11,843

3,032

14,875

12,667

1,934

14,601

2%

M.D.C. HOLDINGS, INC.

Other Financial Data

Selling, General and Administrative Expense

Three Months Ended March 31,

2017

2016

Change

(Dollars in thousands)

General and administrative expenses

$

32,369

$

31,465

$

904

General and administrative expenses as a percentage of home sale revenues

5.7%

8.0%

(230) bps

Marketing expenses

$

15,124

$

12,034

$

3,090

Marketing expenses as a percentage of home sale revenues

2.7%

3.1%

(40) bps

Commissions expenses

$

18,805

$

12,778

$

6,027

Commissions expenses as a percentage of home sale revenues

3.3%

3.2%

10 bps

Total selling, general and administrative expenses

$

66,298

$

56,277

$

10,021

Total selling, general and administrative expenses as a percentage of homesale revenues (SG&A Rate)

11.8%

14.3%

(250) bps

Capitalized Interest

Three Months Ended

March 31,

2017

2016

(Dollars in thousands)

Homebuilding interest incurred

$

13,188

$

13,218

Less: Interest capitalized

(13,188)

(13,218)

Homebuilding interest expensed

$

-

$

-

Interest capitalized, beginning of period

$

68,085

$

77,541

Plus: Interest capitalized during period

13,188

13,218

Less: Previously capitalized interest included in home and land cost of sales

(15,197)

(10,976)

Interest capitalized, end of period

$

66,076

$

79,783

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mdc-holdings-announces-2017-first-quarter-results-300453803.html

SOURCE M.D.C. Holdings, Inc.

M.D.C. Holdings Inc. published this content on 09 May 2017 and is solely responsible for the information contained herein.
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