M.D.C. Holdings Announces 2020 Fourth Quarter And Full Year Results
DENVER, Feb. 2, 2021 /PRNewswire/ -- M.D.C Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter and full year ended December 31, 2020.
Larry A. Mizel, MDC's Executive Chairman, stated, "MDC delivered another quarter of significant order growth and strong profitability in the fourth quarter of 2020. The dollar value of our net orders for the quarter increased 92% year-over-year on a 67% improvement in sales pace, as we continued to see broad-based strength in demand from both a geographic and a product standpoint. Net income rose 59% to $147.5 million, based on the significant growth of both our homebuilding and our financial services operations."
Mr. Mizel continued, "The new home industry continues to benefit from a number of tailwinds, including limited existing home inventory, low mortgage rates, pent-up demand resulting from millennials aging into their prime home-buying years and an increased emphasis on single family home ownership brought about by the pandemic. The outlook for each of these drivers appears to be favorable to start 2021, giving us optimism for our industry and our Company. Given this positive outlook, we have taken steps to fortify our financial position, including the expansion of our homebuilding line of credit to $1.2 billion and the recent issuance of $350 million of senior notes at a record low rate of 2.5%. With a positive industry backdrop, a sizable backlog and a strong balance sheet, MDC is well positioned to build on our success from 2020."
David D. Mandarich, MDC's President and Chief Executive Officer, stated, "2020 was an outstanding year for our company as we successfully navigated the challenges brought about by the pandemic and delivered strong returns for our shareholders. Our focus on more-affordable product and our build-to-order operating model proved to be ideally suited for these turbulent times and allowed us to post significant improvements to nearly every relevant operating metric for the year. As we head into 2021, we remain excited about the opportunities available to our Company, including our recent entry into the Boise market. With a proven business model, a seasoned leadership team and an established track record of success, MDC remains well positioned to take advantage of the favorable housing demand we see today."
2020 Fourth Quarter Highlights and
Comparisons to 2019 Fourth Quarter
---
-- Home sale revenues increased 10% to
$1.18 billion from $1.07 billion
-- Unit deliveries up 7% to 2,564
-- Average selling price of
deliveries up 2% to $461,000
-- Gross margin from home sales increased
350 basis points to 22.0% from 18.5%
-- Selling, general and administrative
expenses as a percentage of home sale
revenues ("SG&A rate") of 10.0% vs. 9.8%
-- Homebuilding pretax income increased
52% to $142.3 million from $93.4 million
-- Financial services pretax income
increased 54% to $29.0 million from $18.8
million
-- Net income of $147.5 million, or $2.19
per diluted share, up 59% from $92.6
million or $1.42 per diluted share
-- Effective tax rate of 13.9% vs.
17.5%
-- Dollar value of net new orders
increased 92% to $1.32 billion from
$684.9 million
-- Unit net orders increased 72% to
2,708
-- Average selling price of net
orders up 12%
2020 Full Year Highlights and Comparisons
to 2019 Full Year
---
-- Home sale revenues increased 17% to
$3.77 billion from $3.21 billion
-- Unit deliveries up 17% to 8,158
-- Net income of $367.6 million, or $5.58
per diluted share, up 54% from $238.3
million or $3.72 per diluted share
-- Gross margin from home sales of 20.8%
vs. 18.8%
-- SG&A rate of 10.7% vs. 11.3%
-- Homebuilding pretax income increased
55% to $378.5 million from $244.8 million
-- Effective tax rate of 19.7% vs.
21.9%
-- Financial services pretax income
increased 31% to $79.0 million from $60.2
million
-- Dollar value of net new orders
increased 56% to $5.46 billion from $3.50
billion
-- Unit net orders increased 40% to
11,012
-- Monthly sales absorption pace
increased 36% to 4.85
2021 Outlook and Other Selected
Information
(1)
---
-- Backlog dollar value at December 31,
2020 up 87% year-over-year to $3.26
billion
-- Home deliveries for the 2021 first
quarter between 2,200 and 2,400
-- Average selling price for 2021
first quarter unit deliveries
between $470,000 and $480,000
-- Gross margin from home sales for
the 2021 first quarter of
approximately 21.5% (assuming no
impairments or warranty
adjustments)
-- Full year 2021 home deliveries between
10,000 and 11,000
-- Active subdivision count at December
31, 2020 of 194, up 5% year-over-year
-- Targeting an increase of at
least 10% year-over-year in
ending active subdivision count
for 2021
-- Lots controlled of 29,469 at December
31, 2020, up 8% year-over-year
-- Homebuilding line of credit increased
to $1.20 billion in December 2020
-- Issued $350 million of 10-year senior
notes at 2.500% in January 2021
-- Quarterly cash dividend of forty cents
($0.40) per share declared on January 25,
2021, up 21% from the prior year
-- 8% stock dividend declared on January
25, 2021
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 210,000 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 and Boise. 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. 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-K for the year ended December 31, 2020, 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
Year Ended
December 31, December 31,
---
2020 2019 2020 2019
---
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues $
1,180,987 $
1,074,852 $
3,765,379 $
3,205,248
Home cost of sales (921,060) (876,156) (2,982,668) (2,600,196)
Inventory impairments - (325) (935)
Total cost of sales (921,060) (876,481) (2,982,668) (2,601,131)
Gross profit 259,927 198,371 782,711 604,117
Selling, general and administrative expenses (117,949) (105,101) (403,218) (362,790)
Interest and other income 868 1,579 4,233 9,070
Other expense (569) (1,447) (5,209) (5,635)
Homebuilding pretax income 142,277 93,402 378,517 244,762
Financial Services:
Revenues 44,179 29,616 135,832 88,005
Expenses (16,064) (16,118) (52,465) (45,001)
Other income (expense), net 902 5,346 (4,372) 17,223
Financial services pretax income 29,017 18,844 78,995 60,227
Income before income taxes 171,294 112,246 457,512 304,989
Provision for income taxes (23,806) (19,657) (89,930) (66,677)
Net income $
147,488 $
92,589 $
367,582 $
238,312
Comprehensive income $
147,488 $
92,589 $
367,582 $
238,312
Earnings per share:
Basic $
2.27 $
1.48 $
5.76 $
3.84
Diluted $
2.19 $
1.42 $
5.58 $
3.72
Weighted average common shares outstanding:
Basic 64,427,363 62,192,849 63,455,422 61,616,988
Diluted 66,824,729 64,609,357 65,441,279 63,702,666
Dividends declared per share $
0.40 $
0.30 $
1.39 $
1.18
M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
2020 2019
---
(Dollars in thousands, except
per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents $
411,362 $
424,186
Restricted cash 15,343 14,279
Trade and other receivables 72,466 65,829
Inventories:
Housing completed or under construction 1,486,587 1,036,191
Land and land under development 1,345,643 1,330,384
Total inventories 2,832,230 2,366,575
Property and equipment, net 61,880 60,414
Deferred tax asset, net 11,454 21,768
Prepaids and other assets 101,685 78,358
Total homebuilding assets 3,506,420 3,031,409
Financial Services:
Cash and cash equivalents 77,267 35,747
Marketable securities - 56,747
Mortgage loans held-for-sale, net 232,556 197,021
Other assets 48,677 17,432
Total financial services assets 358,500 306,947
Total Assets $
3,864,920 $
3,338,356
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable $
98,862 $
87,364
Accrued and other liabilities 300,735 245,940
Revolving credit facility 10,000 15,000
Senior notes, net 1,037,391 989,422
Total homebuilding liabilities 1,446,988 1,337,726
Financial Services:
Accounts payable and accrued liabilities 95,630 68,529
Mortgage repurchase facility 202,390 149,616
Total financial services liabilities 298,020 218,145
Total Liabilities 1,745,008 1,555,871
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; 64,851,126 and 62,574,961 issued and 649 626
outstanding at December 31, 2020 and December 31, 2019, respectively
Additional paid-in-capital 1,407,597 1,348,733
Retained earnings 711,666 433,126
Total Stockholders' Equity 2,119,912 1,782,485
Total Liabilities and Stockholders' Equity $
3,864,920 $
3,338,356
M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
Year Ended
December 31, December 31,
2020 2019 2020 2019
---
(Dollars in thousands)
Operating Activities:
Net income $
147,488 $
92,589 $
367,582 $
238,312
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense 11,526 7,838 30,062 26,016
Depreciation and amortization 8,285 7,576 27,166 23,054
Inventory impairments - 325 935
Net (gain) loss on marketable equity securities - (3,863) 8,285 (11,797)
Deferred income tax expense 2,195 4,182 10,688 13,670
Net changes in assets and liabilities:
Trade and other receivables 4,697 (8,315) (12,815) (12,997)
Mortgage loans held-for-sale, net (72,050) (80,001) (35,535) (47,810)
Housing completed or under construction (62,613) 168,265 (449,882) (83,484)
Land and land under development (123,742) (139,116) (15,032) (149,577)
Prepaids and other assets (24,618) (805) (44,932) (4,694)
Accounts payable and accrued liabilities 56,295 42,276 91,318 66,205
Net cash provided by (used in) operating activities (52,537) 90,951 (23,095) 57,833
Investing Activities:
Purchases of marketable securities - (1,368) (10,804) (11,708)
Sales of marketable securities - 1,360 59,266 7,637
Purchases of property and equipment (5,892) (4,586) (26,777) (24,714)
Net cash provided by (used in) investing activities (5,892) (4,594) 21,685 (28,785)
Financing Activities:
Advances on mortgage repurchase facility, net 71,529 59,145 52,774 32,801
Payments on homebuilding line of credit, net - (5,000)
Payments of senior notes - (250,000)
Proceeds from issuance of senior notes - 298,050
Dividend payments (25,952) (18,780) (89,008) (73,117)
Payments of deferred debt issuance costs (4,471) (4,471)
Issuance of shares under stock-based compensation programs, net (1,149) (963) 28,825 15,341
Net cash provided by (used in) financing activities 39,957 39,402 31,170 (24,975)
Net increase (decrease) in cash, cash equivalents and restricted cash (18,472) 125,759 29,760 4,073
Cash, cash equivalents and restricted cash:
Beginning of period 522,444 348,453 474,212 470,139
End of period $
503,972 $
474,212 $
503,972 $
474,212
Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents $
411,362 $
424,186 $
411,362 $
424,186
Restricted cash 15,343 14,279 15,343 14,279
Financial Services:
Cash and cash equivalents 77,267 35,747 77,267 35,747
Total cash, cash equivalents and restricted cash $
503,972 $
474,212 $
503,972 $
474,212
New Home Deliveries
Three Months Ended December 31,
2020 2019
% Change
---
Homes Home Sale Average Homes Home Sale Average Homes Home Average
Revenues Price Revenues Price Sale Price
Revenues
---
(Dollars in thousands)
West 1,389 $
658,307 $
473.9 1,299 $
606,558 $
466.9 7 9 1
% % %
Mountain 810 407,160 502.7 762 $
371,098 487.0 6 10 3
% % %
East 365 115,520 316.5 328 $
97,196 296.3 11 19 7
% % %
Total 2,564 $
1,180,987 $
460.6 2,389 $
1,074,852 $
449.9 7 10 2
% % %
Year Ended December 31,
2020 2019
% Change
--- ---
Homes Home Sale Average Homes Home Sale Average Homes Home Average
Revenues Price Revenues Price Sale Price
Revenues
---
(Dollars in thousands)
West 4,412 $
2,106,241 $
477.4 3,763 $
1,771,061 $
470.7 17 19 1
% % %
Mountain 2,530 1,293,779 511.4 2,242 $
1,131,568 504.7 13 14 1
% % %
East 1,216 365,359 300.5 969 $
302,619 312.3 25 21 (4)
% % %
Total 8,158 $
3,765,379 $
461.6 6,974 $
3,205,248 $
459.6 17 17 0
% % %
Net New Orders
Three Months Ended December 31,
2020 2019
% Change
---
Homes
Dollar Average
Monthly Homes
Dollar Average
Monthly Homes Dollar Average Price Monthly
Value Price Absorption Value Price Absorption Rate * Value Absorption
Rate * Rate
---
(Dollars in thousands)
West 1,453 $
712,792 $
490.6 4.75 884 $
400,147 $
452.7 3.19 64 78
% %
% % 8 49
Mountain 835 448,908 537.6 4.66 436 212,772 488.0 2.21 92 111 10 111
%
% % %
East 420 153,650 365.8 4.41 254 71,950 283.3 2.80 65 114
% %
% % 29 57
Total 2,708 $
1,315,350 $
485.7 4.66 1,574 $
684,869 $
435.1 2.79 72 92
% %
% % 12 67
Year Ended December 31,
2020 2019
% Change
--- ---
Homes
Dollar Average
Monthly Homes
Dollar Average
Monthly Homes Dollar Average Price Monthly
Value Price Absorption Value Price Absorption Value Absorption
Rate * Rate * Rate
---
(Dollars in thousands)
West 6,099 $
3,078,584 $
504.8 5.29 4,263 $
1,963,489 $
460.6 3.91 43 57
% %
% % 10 35
Mountain 3,337 1,818,833 545.1 4.46 2,410 1,189,193 493.4 3.04 38 53
% %
% % 10 47
East 1,576 562,419 356.9 4.27 1,166 342,469 293.7 3.68 35 64
% %
% % 22 16
Total 11,012 $
5,459,836 $
495.8 4.85 7,839 $
3,495,151 $
445.9 3.56 40 56
% %
% % 11 36
*Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period
Active Subdivisions
Average Active Subdivisions
Active Subdivisions
Three Months Ended
Year Ended
December 31, %
December 31, %
December 31, %
2020 2019 Change 2020 2019 Change 2020 2019 Change
---
West 103 89 16 102 92 11 96 90 7
% % %
Mountain 60 65 (8) 60 66 (9) 62 66 (6)
% % %
East 31 31 % 32 30 6 31 27 15
% %
Total 194 185 5 194 188 3 189 183 3
% % %
Backlog
December 31,
2020 2019
% Change
---
Homes
Dollar Average Homes
Dollar Average Homes Dollar Average
Value Price Value Price Value Price
---
(Dollars in thousands)
West 3,710 $
1,831,205 $
493.6 2,023 $
960,057 $
474.6 83 91 4
% % %
Mountain 2,018 1,090,557 540.4 1,211 624,672 515.8 67 75 5
% % %
East 927 341,439 368.3 567 160,618 283.3 63 113 30
% % %
Total 6,655 $
3,263,201 $
490.3 3,801 $
1,745,347 $
459.2 75 87 7
% % %
Homes Completed or Under Construction (WIP lots)
December 31, %
2020 2019 Change
---
Unsold:
Completed 48 122 (61)
%
Under construction 131 255 (49)
%
Total unsold started homes 179 377 (53)
%
Sold homes under construction or completed 4,797 2,779 73
%
Model homes under construction or completed 498 473 5
%
Total homes completed or under construction 5,474 3,629 51
%
Lots Owned and Optioned (including homes completed or under construction)
December 31, 2020
December 31, 2019
Lots Lots Total Lots Lots Total Total
Owned Optioned Owned Optioned % Change
---
West 12,335 3,460 15,795 9,538 2,805 12,343 28
%
Mountain 6,279 2,591 8,870 6,654 3,879 10,533 (16)
%
East 2,868 1,936 4,804 2,313 2,197 4,510 7
%
Total 21,482 7,987 29,469 18,505 8,881 27,386 8
%
Selling, General and Administrative Expenses
Three Months Ended December 31,
Year Ended December 31,
---
2020 2019 Change 2020 2019 Change
---
(Dollars in thousands)
General and administrative expenses $
53,232 $
46,178 $
7,054 $
184,720 $
175,027 $
9,693
General and administrative expenses as a percentage of home sale revenues 4.5
% 4.3
% 20 bps 4.9
% 5.5
% -60 bps
Marketing expenses $
26,275 $
23,349 $
2,926 $
95,103 $
81,615 $
13,488
Marketing expenses as a percentage of home sale revenues 2.2
% 2.2
% 0 bps 2.5
% 2.5
% 0 bps
Commissions expenses $
38,442 $
35,574 $
2,868 $
123,395 $
106,148 $
17,247
Commissions expenses as a percentage of home sale revenues 3.3
% 3.3
% 0 bps 3.3
% 3.3
% 0 bps
Total selling, general and administrative expenses $
117,949 $
105,101 $
12,848 $
403,218 $
362,790 $
40,428
Total selling, general and administrative expenses as a percentage of home sale revenues 10.0 9.8
% 20 bps 10.7 11.3
% % % -60 bps
Capitalized Interest
Three Months Ended
Year Ended
December 31, December 31,
---
2020 2019 2020 2019
---
(Dollars in thousands)
Homebuilding interest incurred $
14,849 $
15,745 $
61,276 $
63,635
Less: Interest capitalized (14,849) (15,745) (61,276) (63,635)
Homebuilding interest expensed
$
$
$
$
Interest capitalized, beginning of period $
55,217 $
59,621 $
55,310 $
54,845
Plus: Interest capitalized during period 14,849 15,745 61,276 63,635
Less: Previously capitalized interest included in home cost of sales (17,289) (20,056) (63,809) (63,170)
Interest capitalized, end of period $
52,777 $
55,310 $
52,777 $
55,310
View original content:http://www.prnewswire.com/news-releases/mdc-holdings-announces-2020-fourth-quarter-and-full-year-results-301219614.html
SOURCE M.D.C. Holdings, Inc.
