M.D.C. HOLDINGS ANNOUNCES FIRST QUARTER 2022 RESULTS
Home sale revenues growth of 19% and a 380 basis point expansion of our gross margin from home sales to 25.7% resulted in a 34% increase in net income for the quarter
"MDC delivered strong results in the first quarter of 2022 both in terms of profitability and order activity," said MDC's' Executive Chairman,
Mr. Mizel continued, "We continued to see solid demand across our homebuilding divisions during the quarter, as evidenced by our sales pace of 5.4 homes per community per month. The combination of favorable demographics, strong local economies and historically low inventory levels in our markets has created an excellent operating environment for our company. We have strategically positioned MDC to address the needs of today's homebuyer and believe this is reflected in our strong results this quarter."
Mr. Mizel concluded, "With a strong balance sheet, a seasoned management team and a sizable quarter-end backlog, MDC is in a great position to deliver on its goals for the year. Our growing presence in high growth markets and focus on more affordable price points has led to record levels of profitability for our company, and we continue to see strong demand at our communities despite the recent rise in interest rates. As a result, we remain positive about the future of MDC."
"Traffic levels at our communities and online remained strong during the first quarter" said
Mr. Mandarich concluded, "We recently announced that we have agreed to acquire substantially all of the homebuilding assets of The Jones Company of
2022 First Quarter Highlights and Comparisons to 2021
• | Home sale revenues increased 19% to | |
◦ | Unit deliveries up 3% to 2,233 | |
◦ | Average selling price of deliveries up 16% to | |
• | Homebuilding pretax income increased 66% to | |
◦ | Gross margin from home sales increased 380 basis points to 25.7% from 21.9% | |
◦ | Inventory impairment and warranty adjustment totaled | |
• | Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 60 basis points to 10.4% | |
• | Net income of | |
◦ | Effective tax rate of 26.5% vs. 23.3% | |
• | Dollar value of net new orders increased 12% to | |
◦ | Average selling price of net orders up 14% | |
◦ | Unit net orders decreased 2% to 3,151 | |
• | Dollar value of ending backlog up 26% to | |
◦ | Unit backlog increased 11% to 8,558 | |
◦ | Average selling price of homes in backlog up 13% |
2022 Outlook and Other Selected Information1, 2
• | Projected home deliveries for the 2022 second quarter between 2,400 and 2,600 | |
◦ | Projected average selling price for 2022 second quarter unit deliveries between | |
◦ | Projected gross margin from home sales for the 2022 second quarter exceeding 26.0% (excluding impairments and warranty adjustments) | |
• | Projected full year 2022 home deliveries between 10,500 and 11,000 | |
• | Projected lots controlled of 37,812 at | |
• | Recently announced acquisition of substantially all of the homebuilding assets of The Jones Company of Tennessee, L.L.C. ("Jones") is expected to close near the end of the second quarter of 2022 | |
◦ | Expected to add approximately 10 selling communities, 1,700 controlled lots and 150 units to backlog | |
• | Quarterly cash dividend of | |
◦ | Consistent dividend program for over 25 years | |
◦ | Quarterly dividend has more than doubled in the past five years | |
1 | See "Forward-Looking Statements" below. | |
2 | Projected metrics do not reflect the impact of the asset acquisition of Jones. Any impact is not expected to be significant. |
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 220,000 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
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
M.D.C. HOLDINGS, INC. Consolidated Statements of Operations and Comprehensive Income (Unaudited) | |||
Three Months Ended | |||
2022 | 2021 | ||
(Dollars in thousands, except per | |||
Homebuilding: | |||
Home sale revenues | $ 1,240,520 | $ 1,041,858 | |
Home cost of sales | (921,378) | (813,888) | |
Inventory impairments | (660) | — | |
Total cost of sales | (922,038) | (813,888) | |
Gross profit | 318,482 | 227,970 | |
Selling, general and administrative expenses | (129,314) | (114,993) | |
Interest and other income | 755 | 967 | |
Other expense | (1,424) | (437) | |
Homebuilding pretax income | 188,499 | 113,507 | |
Financial Services: | |||
Revenues | 29,131 | 45,023 | |
Expenses | (16,935) | (15,105) | |
Other income, net | 1,187 | 887 | |
Financial services pretax income | 13,383 | 30,805 | |
Income before income taxes | 201,882 | 144,312 | |
Provision for income taxes | (53,461) | (33,622) | |
Net income | $ 148,421 | $ 110,690 | |
Comprehensive income | $ 148,421 | $ 110,690 | |
Earnings per share: | |||
Basic | $ 2.09 | $ 1.58 | |
Diluted | $ 2.02 | $ 1.51 | |
Weighted average common shares outstanding: | |||
Basic | 70,766,146 | 69,790,927 | |
Diluted | 72,938,414 | 72,788,177 | |
Dividends declared per share | $ 0.50 | $ 0.37 |
M.D.C. HOLDINGS, INC. Consolidated Balance Sheets (Unaudited) | |||
|
| ||
(Dollars in thousands, except per share amounts) | |||
ASSETS | |||
Homebuilding: | |||
Cash and cash equivalents | $ 474,447 | $ 485,839 | |
Restricted cash | 6,400 | 12,799 | |
Trade and other receivables | 114,823 | 98,580 | |
Inventories: | |||
Housing completed or under construction | 2,194,303 | 1,917,616 | |
Land and land under development | 1,734,515 | 1,843,235 | |
Total inventories | 3,928,818 | 3,760,851 | |
Property and equipment, net | 61,856 | 60,561 | |
Deferred tax asset, net | 17,100 | 17,942 | |
Prepaids and other assets | 114,120 | 106,562 | |
Total homebuilding assets | 4,717,564 | 4,543,134 | |
Financial Services: | |||
Cash and cash equivalents | 107,503 | 104,821 | |
Mortgage loans held-for-sale, net | 187,914 | 282,529 | |
Other assets | 46,133 | 33,044 | |
Total financial services assets | 341,550 | 420,394 | |
Total Assets | $ 5,059,114 | $ 4,963,528 | |
LIABILITIES AND EQUITY | |||
Homebuilding: | |||
Accounts payable | $ 172,134 | $ 149,488 | |
Accrued and other liabilities | 405,140 | 370,910 | |
Revolving credit facility | 10,000 | 10,000 | |
Senior notes, net | 1,481,976 | 1,481,781 | |
Total homebuilding liabilities | 2,069,250 | 2,012,179 | |
Financial Services: | |||
Accounts payable and accrued liabilities | 100,551 | 97,903 | |
Mortgage repurchase facility | 178,231 | 256,300 | |
Total financial services liabilities | 278,782 | 354,203 | |
Total Liabilities | 2,348,032 | 2,366,382 | |
Stockholders' Equity | |||
Preferred stock, | — | — | |
Common stock, | 712 | 707 | |
Additional paid-in-capital | 1,710,369 | 1,709,276 | |
Retained earnings | 1,000,001 | 887,163 | |
Total Stockholders' Equity | 2,711,082 | 2,597,146 | |
Total Liabilities and Stockholders' Equity | $ 5,059,114 | $ 4,963,528 |
M.D.C. HOLDINGS, INC. Consolidated Statement of Cash Flows (Unaudited) | |||
Three Months Ended | |||
2022 | 2021 | ||
(Dollars in thousands) | |||
Operating Activities: | |||
Net income | $ 148,421 | $ 110,690 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Stock-based compensation expense | 14,882 | 9,926 | |
Depreciation and amortization | 6,652 | 7,003 | |
Inventory impairments | 660 | — | |
Deferred income tax expense (benefit) | 842 | (1,348) | |
Net changes in assets and liabilities: | |||
Trade and other receivables | (16,677) | (40,282) | |
Mortgage loans held-for-sale, net | 94,615 | 1,767 | |
Housing completed or under construction | (277,187) | (218,655) | |
Land and land under development | 108,755 | 34,978 | |
Prepaids and other assets | (20,479) | (23,594) | |
Accounts payable and accrued other liabilities | 57,571 | 61,558 | |
Net cash provided by (used in) operating activities | 118,055 | (57,957) | |
Investing Activities: | |||
Purchases of property and equipment | (6,884) | (5,749) | |
Net cash used in investing activities | (6,884) | (5,749) | |
Financing Activities: | |||
Proceeds from (payments on) mortgage repurchase facility, net | (78,069) | 15,092 | |
Proceeds from issuance of senior notes | — | 347,725 | |
Dividend payments | (35,583) | (26,665) | |
Payments of deferred financing costs | — | (819) | |
Issuance of shares under stock-based compensation programs, net | (12,628) | 1,009 | |
Net cash provided by (used in) financing activities | (126,280) | 336,342 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (15,109) | 272,636 | |
Cash, cash equivalents and restricted cash: | |||
Beginning of period | 603,459 | 503,972 | |
End of period | $ 588,350 | $ 776,608 | |
Reconciliation of cash, cash equivalents and restricted cash: | |||
Homebuilding: | |||
Cash and cash equivalents | $ 474,447 | $ 678,194 | |
Restricted cash | 6,400 | 17,314 | |
Financial Services: | |||
Cash and cash equivalents | 107,503 | 81,100 | |
Total cash, cash equivalents and restricted cash | $ 588,350 | $ 776,608 |
New Home Deliveries | |||||||||||||||||
Three Months Ended | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | Homes | Home Sale Revenues | Average Price | |||||||||
(Dollars in thousands) | |||||||||||||||||
West | 1,243 | $ 707,311 | $ 569.0 | 1,276 | $ 616,611 | $ 483.2 | (3)% | 15% | 18% | ||||||||
Mountain | 548 | 335,128 | 611.5 | 612 | 324,717 | 530.6 | (10)% | 3% | 15% | ||||||||
East | 442 | 198,081 | 448.1 | 290 | 100,530 | 346.7 | 52% | 97% | 29% | ||||||||
Total | 2,233 | $ 555.5 | 2,178 | $ 478.4 | 3% | 19% | 16% |
Net New Orders | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
2022 | 2021 | % 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) | |||||||||||||||||||||||
West | 1,704 | $ 587.4 | 5.54 | 1,775 | $ 904,691 | $ 509.7 | 5.80 | (4)% | 11% | 15% | (4)% | ||||||||||||
Mountain | 920 | 581,971 | 632.6 | 5.63 | 1,011 | 562,753 | 556.6 | 5.91 | (9)% | 3% | 14% | (5)% | |||||||||||
East | 527 | 253,850 | 481.7 | 4.78 | 423 | 168,021 | 397.2 | 4.62 | 25% | 51% | 21% | 3% | |||||||||||
Total | 3,151 | $ 582.9 | 5.42 | 3,209 | $ 509.6 | 5.64 | (2)% | 12% | 14% | (4)% | |||||||||||||
*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 | ||||||||||
% | % | ||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
West | 112 | 97 | 15% | 103 | 102 | 1% | |||||
Mountain | 53 | 55 | (4)% | 55 | 57 | (4)% | |||||
East | 35 | 34 | 3% | 37 | 31 | 19% | |||||
Total | 200 | 186 | 8% | 195 | 190 | 3% |
Backlog | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Homes | Dollar Value | Average Price | Homes | Dollar Value | Average Price | Homes | Dollar Value | Average Price | |||||||||
(Dollars in thousands) | |||||||||||||||||
West | 4,677 | $ 566.8 | 4,209 | $ 512.6 | 11% | 23% | 11% | ||||||||||
Mountain | 2,546 | 1,668,048 | 655.2 | 2,417 | 1,355,201 | 560.7 | 5% | 23% | 17% | ||||||||
East | 1,335 | 628,631 | 470.9 | 1,060 | 414,474 | 391.0 | 26% | 52% | 20% | ||||||||
Total | 8,558 | $ 578.1 | 7,686 | $ 511.0 | 11% | 26% | 13% |
Homes Completed or Under Construction (WIP lots) | |||||
% | |||||
2022 | 2021 | Change | |||
Unsold: | |||||
Completed | 19 | 36 | (47)% | ||
Under construction | 313 | 64 | 389% | ||
Total unsold started homes | 332 | 100 | 232% | ||
Sold homes under construction or completed | 7,445 | 5,854 | 27% | ||
Model homes under construction or completed | 513 | 502 | 2% | ||
Total homes completed or under construction | 8,290 | 6,456 | 28% |
Lots Owned and Optioned (including homes completed or under construction) | |||||||||||||
Lots Owned | Lots Optioned | Total | Lots Owned | Lots Optioned | Total | Total % Change | |||||||
West | 15,548 | 4,237 | 19,785 | 12,658 | 3,921 | 16,579 | 19% | ||||||
Mountain | 6,741 | 4,240 | 10,981 | 6,790 | 3,418 | 10,208 | 8% | ||||||
East | 4,318 | 2,728 | 7,046 | 3,088 | 2,148 | 5,236 | 35% | ||||||
Total | 26,607 | 11,205 | 37,812 | 22,536 | 9,487 | 32,023 | 18% |
Selling, General and Administrative Expenses | |||||
Three Months Ended | |||||
2022 | 2021 | Change | |||
(Dollars in thousands) | |||||
General and administrative expenses | $ 71,983 | $ 57,163 | $ 14,820 | ||
General and administrative expenses as a percentage of home sale revenues | 5.8% | 5.5% | 30 bps | ||
Marketing expenses | $ 25,632 | $ 25,703 | $ (71) | ||
Marketing expenses as a percentage of home sale revenues | 2.1% | 2.5% | -40 bps | ||
Commissions expenses | $ 31,699 | $ 32,127 | $ (428) | ||
Commissions expenses as a percentage of home sale revenues | 2.6% | 3.1% | -50 bps | ||
Total selling, general and administrative expenses | $ 14,321 | ||||
Total selling, general and administrative expenses as a percentage of home sale revenues | 10.4% | 11.0% | -60 bps |
Capitalized Interest | |||
Three Months Ended | |||
2022 | 2021 | ||
(Dollars in thousands) | |||
Homebuilding interest incurred | $ 17,258 | $ 17,332 | |
Less: Interest capitalized | (17,258) | (17,332) | |
Homebuilding interest expensed | $ — | $ — | |
Interest capitalized, beginning of period | $ 58,054 | $ 52,777 | |
Plus: Interest capitalized during period | 17,258 | 17,332 | |
Less: Previously capitalized interest included in home cost of sales | (14,844) | (14,841) | |
Interest capitalized, end of period | $ 60,468 | $ 55,268 |
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SOURCE M.D.C. Holdings, Inc.