M.D.C. Holdings Announces Third Quarter 2021 Results And Quarterly Dividend Increase

Net income increased to $146 million driven by home sale revenues growth of 26% and continued gross margin expansion; Quarterly cash dividend increased 25% from the prior quarter to $0.50 per share
Published: Oct. 28, 2021 at 6:00 AM EDT

DENVER, Oct. 28, 2021 /PRNewswire/ -- M.D.C. Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter ended September 30, 2021.

"MDC posted strong results in the third quarter of 2021, as the homebuilding industry continued to thrive," said Larry Mizel, MDC's Executive Chairman. "Home sale revenues grew 26% year-over-year thanks to double digit percentage increases to both deliveries and average selling price. Home sales gross margin rose 300 basis points year-over-year to 23.5%, as price increases more than offset cost inflation in the quarter. Net income came in at $146 million, or $1.99 per diluted share, representing growth of 48% and 44%, respectively, over the third quarter of 2020."

Mr. Mizel continued, "We continued to see healthy demand for our homes in the third quarter, as evidenced by our order pace of 4.1 homes per community per month. This was the second highest third quarter order pace for our company in the last 15 years and resulted in an 18% increase in the number of homes in backlog year-over-year. Average selling prices in backlog also trended higher as compared to last year, which should bode well for future margins."

Mr. Mizel concluded, "MDC is in a great position to close out 2021 with momentum thanks to our sizable backlog, great product profile and excellent capital position. We have laid the foundation for a significant increase in community count next year, with 37% more lots under control at the end of the third quarter than we had at the end of the third quarter of 2020. As a result, we believe the future is bright for MDC."

"On the heels of our expansion into Boise and Nashville, I am pleased to announce that MDC will soon be selling homes in Austin, Texas and Albuquerque, New Mexico," said David Mandarich, MDC's President and Chief Executive Officer. "We feel that these two markets have a great runway for new home construction growth, thanks to a consistent increase in good paying jobs, favorable affordability and an excellent overall quality of life. We believe Austin and Albuquerque will fit nicely into our current geographic footprint and expect these markets to respond well to our more affordably priced, well designed new home offerings."

Dividend Increase

The Company also announced that its board of directors has declared a quarterly cash dividend of fifty cents ($0.50) per share on the Company's common stock. This represents a 25% increase over the Company's previous quarterly dividend. The dividend will be paid on Wednesday, November 24, 2021 to shareholders of record on Wednesday, November 10, 2021.

Mr. Mizel said, "Given MDC's strong financial position and increased levels of profitability during the fiscal year, our board has decided to increase our quarterly dividend. Our industry leading dividend remains a priority as we look to return capital to our shareholders and deliver consistent shareholder returns over time."

2021 Third Quarter Highlights and Comparisons to 2020 Third Quarter

Home sale revenues increased 26% to $1.26 billion from $1.00 billion


°

Unit deliveries up 13% to 2,419


°

Average selling price of deliveries up 12% to $519,900

Homebuilding pretax income increased 62% to $165.2 million from $101.7 million


°

Gross margin from home sales increased 300 basis points to 23.5% from 20.5%


°

Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 80 basis points to 9.6%


°

Loss on debt retirement of $12.2 million in current quarter

Net income of $146.0 million, or $1.99 per diluted share, up 48% from $98.9 million or $1.38 per diluted share*


°

Effective tax rate of 24.3% vs. 21.5%

Dollar value of net new orders decreased 21% to $1.30 billion from $1.65 billion


°

Monthly sales absorption rate of 4.1 vs. 6.1 in prior period quarter


°

Second highest third quarter monthly sales absorption rate in the last 15 years


°

Average selling price of net orders up 16%

Dollar value of ending backlog up 38% to $4.24 billion from $3.08 billion


°

Unit backlog increased 18% to 7,658


°

Average selling price of homes in backlog up 17%

* Per share amount for the 2020 third quarter has been adjusted for the 8% stock dividend declared and paid in the 2021 first quarter.

2021 Outlook and Other Selected Information1

Projected home deliveries for the 2021 fourth quarter between 2,700 and 3,000


°

Average selling price for 2021 fourth quarter unit deliveries between $530,000 and $540,000


°

Gross margin from home sales for the 2021 fourth quarter between 23.5% and 24.0% (excluding impairments and warranty adjustments)

Lots controlled of 36,666 at September 30, 2021, up 37% year-over-year

Quarterly cash dividend of fifty cents ($0.50) per share declared on October 25, 2021, up 25% from the prior quarter and 35% from the prior year (after adjusting for 8% stock dividend in March 2021)


°

Consistent record of stable or increasing dividends for more than 25 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 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 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, Portland, Boise, Nashville, Austin and Albuquerque. 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 September 30, 2021, 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
September 30,


Nine Months Ended
September 30,


2021


2020


2021


2020










(Dollars in thousands, except per share amounts)

Homebuilding:








Home sale revenues

$

1,257,701



$

1,000,549



$

3,667,332



$

2,584,392


Home cost of sales

(962,078)



(795,172)



(2,827,147)



(2,061,608)


Gross profit

295,623



205,377



840,185



522,784


Selling, general and administrative expenses

(120,116)



(103,632)



(363,970)



(285,269)


Loss on debt retirement

(12,150)





(12,150)




Interest and other income

3,149



756



4,984



3,365


Other expense

(1,354)



(851)



(2,881)



(4,640)


Homebuilding pretax income

165,152



101,650



466,168



236,240










Financial Services:








Revenues

43,104



36,803



121,445



91,653


Expenses

(16,377)



(13,294)



(47,922)



(36,401)


Other income (expense), net

813



859



2,855



(5,274)


Financial services pretax income

27,540



24,368



76,378



49,978










Income before income taxes

192,692



126,018



542,546



286,218


Provision for income taxes

(46,738)



(27,080)



(131,550)



(66,124)


Net income

$

145,954



$

98,938



$

410,996



$

220,094










Comprehensive income

$

145,954



$

98,938



$

410,996



$

220,094










Earnings per share:








Basic

$

2.07



$

1.42



$

5.83



$

3.21


Diluted

$

1.99



$

1.38



$

5.62



$

3.12










Weighted average common shares outstanding:








Basic

70,301,085



68,977,965



70,130,853



68,179,403


Diluted

72,800,011



71,090,903



72,770,432



70,167,443










Dividends declared per share

$

0.40



$

0.31



$

1.17



$

0.92


M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited) 



September 30,
2021


December 31,
2020






(Dollars in thousands, except

per share amounts)

ASSETS




Homebuilding:




Cash and cash equivalents

$

761,715



$

411,362


Restricted cash

12,047



15,343


Trade and other receivables

125,556



72,466


Inventories:




Housing completed or under construction

1,948,211



1,486,587


Land and land under development

1,464,603



1,345,643


Total inventories

3,412,814



2,832,230


Property and equipment, net

61,590



61,880


Deferred tax asset, net

16,301



11,454


Prepaids and other assets

105,860



101,685


Total homebuilding assets

4,495,883



3,506,420


Financial Services:




Cash and cash equivalents

93,884



77,267


Mortgage loans held-for-sale, net

248,921



232,556


Other assets

35,716



48,677


Total financial services assets

378,521



358,500


Total Assets

$

4,874,404



$

3,864,920


LIABILITIES AND EQUITY




Homebuilding:




Accounts payable

$

154,376



$

98,862


Accrued and other liabilities

334,712



300,735


Revolving credit facility

10,000



10,000


Senior notes, net

1,607,658



1,037,391


Total homebuilding liabilities

2,106,746



1,446,988


Financial Services:




Accounts payable and accrued liabilities

93,880



95,630


Mortgage repurchase facility

215,794



202,390


Total financial services liabilities

309,674



298,020


Total Liabilities

2,416,420



1,745,008


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; 70,679,612 and 64,851,126 issued and
   outstanding at September 30, 2021 and December 31, 2020, respectively

707



649


Additional paid-in-capital

1,697,435



1,407,597


Retained earnings

759,842



711,666


Total Stockholders' Equity

2,457,984



2,119,912


Total Liabilities and Stockholders' Equity

$

4,874,404



$

3,864,920


M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

(Unaudited)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2021


2020


2021


2020










(Dollars in thousands)

Operating Activities:








Net income

$

145,954



$

98,938



$

410,996



$

220,094


Adjustments to reconcile net income to net cash provided by operating activities:








Stock-based compensation expense

7,965



8,608



26,832



18,536


Depreciation and amortization

7,752



7,354



23,930



18,881


Net loss on marketable equity securities







8,285


Gain on sale of other assets

(2,014)





(2,014)




Loss on debt retirement

12,150





12,150




Deferred income tax expense

(1,508)



6,531



(4,847)



8,493


Net changes in assets and liabilities:








Trade and other receivables

1,576



5,933



(55,529)



(17,512)


Mortgage loans held-for-sale, net

(62,835)



13,061



(16,365)



36,515


Housing completed or under construction

(75,407)



(153,440)



(461,105)



(387,269)


Land and land under development

(155,141)



13,792



(118,762)



108,710


Prepaids and other assets

5,224



(21,523)



9,919



(20,314)


Accounts payable and accrued liabilities

17,678



(5,516)



88,273



35,023


Net cash provided by (used in) operating activities

(98,606)



(26,262)



(86,522)



29,442










Investing Activities:








Purchases of marketable securities







(10,804)


Sales of marketable securities







59,266


Proceeds from sale of other assets

2,014





2,014




Purchases of property and equipment

(9,581)



(7,917)



(23,028)



(20,885)


Net cash provided by (used in) investing activities

(7,567)



(7,917)



(21,014)



27,577










Financing Activities:








Payments on mortgage repurchase facility, net

51,113



(11,233)



13,404



(18,755)


Payments on homebuilding line of credit, net







(5,000)


Repayment of senior notes

(136,394)





(136,394)



(250,000)


Proceeds from issuance of senior notes

346,937





694,662



298,050


Dividend payments

(28,276)



(21,374)



(83,189)



(63,056)


Payments of deferred financing costs

(901)





(1,720)




Issuance of shares under stock-based compensation programs, net

(19)



28,642



(15,553)



29,974


Net cash provided by (used in) financing activities

232,460



(3,965)



471,210



(8,787)










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

126,287



(38,144)



363,674



48,232


Cash, cash equivalents and restricted cash:








Beginning of period

741,359



560,588



503,972



474,212


End of period

$

867,646



$

522,444



$

867,646



$

522,444


M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows (Continued)

(Unaudited)


Reconciliation of cash, cash equivalents and restricted cash:








Homebuilding:








Cash and cash equivalents

$

761,715



$

432,277



$

761,715



$

432,277


Restricted cash

12,047



19,732



12,047



19,732


Financial Services:



-





Cash and cash equivalents

93,884



70,435



93,884



70,435


Total cash, cash equivalents and restricted cash

$

867,646



$

522,444



$

867,646



$

522,444


New Home Deliveries



Three Months Ended September 30,


2021


2020


% Change


Homes


Home Sale

Revenues


Average

Price


Homes


Home Sale

Revenues


Average

Price


Homes


Home

Sale

Revenues


Average
Price




















(Dollars in thousands)

West

1,376



$

729,777



$

530.4



1,135



$

552,319



$

486.6



21

%


32

%


9

%

Mountain

666



379,041



569.1



677



347,095



512.7



(2)

%


9

%


11

%

East

377



148,883



394.9



335



101,135



301.9



13

%


47

%


31

%

Total

2,419



$

1,257,701



$

519.9



2,147



$

1,000,549



$

466.0



13

%


26

%


12

%




Nine Months Ended September 30,


2021


2020


% Change


Homes


Home Sale

Revenues


Average

Price


Homes


Home Sale

Revenues


Average

Price


Homes


Home

Sale

Revenues


Average
Price




















(Dollars in thousands)

West

4,324



$

2,194,071



$

507.4



3,023



$

1,447,934



$

479.0



43

%


52

%


6

%

Mountain

1,989



1,104,391



555.2



1,720



886,619



515.5



16

%


25

%


8

%

East

1,006



368,870



366.7



851



249,839



293.6



18

%


48

%


25

%

Total

7,319



$

3,667,332



$

501.1



5,594



$

2,584,392



$

462.0



31

%


42

%


8

%

Net New Orders



Three Months Ended September 30,


2021


2020


% 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

1,437



$

783,072



$

544.9



4.91


1,955



$

932,111



$

476.8



6.58


(26)

%


(16)

%


14

%


(25)

%

Mountain

505



323,018



639.6



2.99


1,051



542,375



516.1



5.70


(52)

%


(40)

%


24

%


(48)

%

East

457



199,985



437.6



3.67


509



176,896



347.5



5.39


(10)

%


13

%


26

%


(32)

%

Total

2,399



$

1,306,075



$

544.4



4.10


3,515



$

1,651,382



$

469.8



6.10


(32)

%


(21)

%


16

%


(33)

%




Nine Months Ended September 30,


2021


2020


% 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

4,814



$

2,613,279



$

542.8



5.42


4,646



$

2,265,557



$

487.6



5.47


4

%


15

%


11

%


(1)

%

Mountain

2,222



1,375,442



619.0



4.35


2,502



1,309,176



523.3



4.39


(11)

%


5

%


18

%


(1)

%

East

1,286



558,716



434.5



3.91


1,156



393,913



340.8



4.23


11

%


42

%


27

%


(8)

%

Total

8,322



$

4,547,437



$

546.4



4.82


8,304



$

3,968,646



$

477.9



4.91


%


15

%


14

%


(2)

%

*Calculated as total net new orders 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


Nine Months Ended


September 30,


%


September 30,


%


September 30,


%


2021


2020


Change


2021


2020


Change


2021


2020


Change

West

104



102



2

%


98



99



(1)

%


99



94



5

%

Mountain

56



61



(8)

%


56



62



(10)

%


57



63



(10)

%

East

43



31



39

%


42



32



31

%


37



30



23

%

Total

203



194



5

%


196



193



2

%


193



187



3

%



Backlog



September 30,


2021


2020


% Change


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price


Homes


Dollar

Value


Average

Price




















(Dollars in thousands)

West

4,200



$

2,295,570



$

546.6



3,646



$

1,743,547



$

478.2



15

%


32

%


14

%

Mountain

2,251



$

1,408,945



$

625.9



1,993



$

1,033,264



$

518.4



13

%


36

%


21

%

East

1,207



$

537,983



$

445.7



872



$

298,965



$

342.9



38

%


80

%


30

%

Total

7,658



$

4,242,498



$

554.0



6,511



$

3,075,776



$

472.4



18

%


38

%


17

%

Homes Completed or Under Construction (WIP lots)



September 30,


%


2021


2020


Change

Unsold:






Completed

21



74



(72)

%

Under construction

345



129



167

%

Total unsold started homes

366



203



80

%

Sold homes under construction or completed

6,468



4,540



42

%

Model homes under construction or completed

490



505



(3)

%

Total homes completed or under construction

7,324



5,248



40

%

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



September 30, 2021


September 30, 2020




Lots

Owned


Lots

Optioned


Total


Lots

Owned


Lots

Optioned


Total


Total

% Change

West

14,209



5,811



20,020



10,140



3,280



13,420



49

%

Mountain

6,258



4,236



10,494



6,217



2,708



8,925



18

%

East

3,824



2,328



6,152



2,716



1,769



4,485



37

%

Total

24,291



12,375



36,666



19,073



7,757



26,830



37

%

Selling, General and Administrative Expenses



Three Months Ended September 30,


Nine Months Ended September 30,


2021


2020


Change


2021


2020


Change














(Dollars in thousands)

General and administrative expenses

$

59,935



$

45,980



$

13,955



$

179,056



$

131,488



$

47,568


General and administrative expenses as a percentage
of home sale revenues

4.8

%


4.6

%


20 bps



4.9

%


5.1

%


-20 bps


Marketing expenses

$

25,660



$

24,725



$

935



$

78,195



$

68,828



$

9,367


Marketing expenses as a percentage of home sale
revenues

2.0

%


2.5

%


-50 bps



2.1

%


2.7

%


-60 bps


Commissions expenses

$

34,521



$

32,927



$

1,594



$

106,719



$

84,953



$

21,766


Commissions expenses as a percentage of home sale
revenues

2.7

%


3.3

%


-60 bps



2.9

%


3.3

%


-40 bps


Total selling, general and administrative expenses

$

120,116



$

103,632



$

16,484



$

363,970



$

285,269



$

78,701


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

9.6

%


10.4

%


-80 bps



9.9

%


11.0

%


-110 bps


Capitalization of Interest



Three Months Ended
September 30,


Nine Months Ended
September 30,


2021


2020


2021


2020










(Dollars in thousands)

Homebuilding interest incurred

$

19,108



$

14,799



$

53,849



$

46,427


Less: Interest capitalized

(19,108)



(14,799)



(53,849)



(46,427)


Homebuilding interest expensed

$



$



$



$










Interest capitalized, beginning of period

$

54,351



$

56,929



$

52,777



$

55,310


Plus: Interest capitalized during period

19,108



14,799



53,849



46,427


Less: Previously capitalized interest included in home cost of sales

(16,024)



(16,511)



(49,191)



(46,520)


Interest capitalized, end of period

$

57,435



$

55,217



$

57,435



$

55,217


View original content:

SOURCE M.D.C. Holdings, Inc.

The above press release was provided courtesy of PRNewswire. The views, opinions and statements in the press release are not endorsed by Gray Media Group nor do they necessarily state or reflect those of Gray Media Group, Inc.