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

Rhea-AI Summary

M.D.C. Holdings, Inc. (NYSE: MDC) reported robust third-quarter results for 2021, with home sale revenues surging 26% year-over-year to $1.26 billion. Net income skyrocketed 48% to $146 million, or $1.99 per diluted share. The company experienced a notable 300 basis points increase in gross margin to 23.5%. Additionally, a quarterly cash dividend of $0.50 was declared, marking a 25% increase, payable on November 24, 2021. MDC's strong backlog and expansion into new markets, including Austin and Albuquerque, position it favorably for future growth.

Positive

• Home sale revenues increased by 26% to $1.26 billion.
• Net income rose 48% to $146 million, or $1.99 per diluted share.
• Gross margin improved by 300 basis points to 23.5%.
• Quarterly cash dividend increased by 25% to $0.50 per share.
• Strong backlog valued at $4.24 billion, up 38% year-over-year.

Negative

• Dollar value of net new orders decreased by 21% to $1.30 billion.
• Monthly sales absorption rate declined to 4.1 from 6.1 in the prior quarter.

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:https://www.prnewswire.com/news-releases/mdc-holdings-announces-third-quarter-2021-results-and-quarterly-dividend-increase-301410785.html

SOURCE M.D.C. Holdings, Inc.

FAQ

What are the latest financial results for MDC?

For Q3 2021, MDC reported home sale revenues of $1.26 billion, a 26% increase, and net income of $146 million, or $1.99 per diluted share, representing a 48% growth.

When will MDC's dividend be paid?

MDC's quarterly dividend of $0.50 per share will be paid on November 24, 2021, to shareholders of record on November 10, 2021.

What is MDC's outlook for the future?

MDC anticipates continued growth with a significant backlog, expansion into new markets, and increased lot control by 37% year-over-year.

How has MDC's gross margin changed?

MDC's gross margin from home sales improved by 300 basis points to 23.5% in Q3 2021.

What are the key challenges MDC is facing?

MDC experienced a 21% decline in the dollar value of net new orders and a drop in the monthly sales absorption rate to 4.1.