M.D.C. Holdings Announces 2014 Second Quarter Results

PR Newswire

DENVER, July 29, 2014 /PRNewswire/ -- M.D.C. Holdings, Inc. (MDC) announced results for the quarter ended June 30, 2014.

2014 Second Quarter Highlights and Comparisons to 2013 Second Quarter

  • Net income of $21.5 million, or $0.44 per diluted share vs. net income of $224.9 million, or $4.55 per diluted share
    • Tax expense of $12.5 million vs. tax benefit of $186.9 million, which included the reversal of a substantial portion of the deferred tax asset valuation allowance of $187.6 million, or $3.84 per share
  • Pretax income of $34.0 million vs. $38.0 million
  • Net new orders up 5% to 1,419 homes
    • Dollar value of net new orders of $544.8 million, up 12%
  • Ending backlog dollar value of $761.5 million vs. $784.2 million
  • Home sale revenues of $430.7 million, up 8% vs. $400.3 million
    • Average sales price increase of $33,600 per home, or 10%, to $372,000
    • Homes delivered of 1,158 down slightly from 1,183
  • Ending active community count of 159, up 14% from 140
  • Gross margin from home sales of 17.1% vs. 18.1%
    • Gross margin excluding interest and impairments of 21.1%* vs. 21.3%*
  • SG&A expenses as a percentage of home sale revenues of 11.6% vs. 13.0%, a 140 basis point improvement
  • Lots owned and under option of 16,706, up 13% year-over-year

Our net income for the 2014 second quarter was $21.5 million, or $0.44 per diluted share, compared to net income of $224.9 million, or $4.55 per diluted share, for the year earlier period. Our 2013 second quarter included a $187.6 million benefit from the reversal of our deferred tax asset valuation allowance, while we had no such benefit for the 2014 second quarter and recognized $12.5 million of income tax expense. Pretax income for the 2014 second quarter was $34.0 million, compared to $38.0 million for the same period in the prior year.

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "For the homebuilding industry as a whole, the spring selling season was modestly slower than a year ago, highlighting volatile conditions in the short-term as the industry continues down a broader path of long-term growth. We saw hesitation from some potential buyers, especially in the first-time buyer segment, following a significant run-up in home prices in 2013 and tepid economic trends that have persisted for much of the past year. However, our net new home orders improved year-over-year in the 2014 second quarter for the first time in five quarters on the strength of a year-over-year increase in our average active community count."

Mr. Mizel continued, "Additionally, during the quarter we benefited from our prior decision to increase spec homes available for quick delivery, which supported our operations by allowing us to convert backlog to deliveries at a quicker rate than a year ago. Our increased conversion rate, coupled with a 10% increase in average selling price, helped to drive a year-over-year increase in our home sale revenues, offsetting the impact of higher land, material and labor costs. The higher revenues also helped us achieve better leverage on our overhead, as our SG&A rate dropped meaningfully year-over-year for the 2014 second quarter."

Mr. Mizel concluded, "As the second quarter ended, we saw significant improvements in employment levels and consumer confidence, which supports our long-term view that the homebuilding industry is poised for growth in the coming years. We continue our preparations to embrace this growth, as evidenced by the 14% increase in our active subdivision count, the 13% increase in our controlled lot supply and the 20% increase in our available liquidity to $1.1 billion at the end of the quarter, all of which position us well to grow our earnings in future periods."

Homebuilding

Home sale revenues for the 2014 second quarter increased 8% to $430.7 million, compared to $400.3 million for the prior year period.  The increase in revenues resulted primarily from a 10% increase in average selling price to $372,000, as compared to $338,400 in the prior year. The increase in average selling price was due to price increases achieved during much of 2013 and a shift to higher-priced homes in certain markets.

Gross margin from home sales decreased to 17.1% from 18.1% for the year-earlier period. The decrease was due primarily to higher interest costs, cost increases from vendors and land sellers, and additional incentives offered in certain markets to spur demand in a slower homebuilding environment. Gross margin from home sales excluding interest and impairments was nearly flat from the year-earlier period at 21.1%* for the second quarter 2014, compared to 21.3%* for the 2013 second quarter.

SG&A expenses as a percentage of home sales revenues decreased by 140 basis points to 11.6% for the 2014 second quarter versus 13.0% for the same period in 2013. The improvement was the result of operating leverage created by the Company's 8% year-over-year increase in home sale revenues, lower incentive and stock-based compensation expenses, and lower legal expenses, including a $1.4 million net legal recovery.

The dollar value of net new orders for the 2014 second quarter increased 12% to $544.8 million from the same period in 2013.  The increase in net new orders was driven by a 14% increase in active communities to 159 from 140 in the same period in the prior year, which was partially offset by a slight decrease in our monthly sales absorption pace. Our cancellation rate for the 2014 second quarter was essentially flat at 18% versus 19% in the prior year second quarter.

We ended the 2014 second quarter with 1,886 homes in backlog with an estimated sales value of $761.5 million, compared to a backlog of 2,095 homes with an estimated sales value of $784.2 million at June 30, 2013.

Interest and other income of $4.6 million for the 2014 second quarter decreased by $5.6 million from the same period last year primarily due to lower interest income as overall cash and investment balances decreased to fund an increase in our investment in real estate inventories.

Financial Services

Income before taxes from our financial services operations for the 2014 second quarter was $6.6 million, compared to $8.2 million for the 2013 second quarter.  The decrease was primarily driven by lower pretax income from our mortgage operations segment for both periods due to reduced volumes, origination income per unit and gains on loans locked and sold compared to a year ago resulting primarily from a more competitive mortgage market.

Income Taxes

During the 2014 second quarter, we recognized $12.5 million of income tax expense resulting in an effective tax rate of 36.7%.  For the 2013 second quarter, we recognized a $186.9 million income tax benefit, driven almost entirely by our reversal of a substantial portion of our deferred tax asset valuation allowance.  

About MDC

Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 175,000 homebuyers. 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, Philadelphia, Orlando, Jacksonville, South Florida and Seattle. 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 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 the Company 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 the Company, 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 the Company's investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican'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 the Company 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; (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; and (16) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Form 10-Q for the quarter ended June 30, 2014, 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. The Company 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.

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

 

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income














Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(Dollars in thousands, except per share amounts)


(Unaudited)

Homebuilding:












Home sale revenues

$

430,743


$

400,327


$

749,277


$

732,075

Land sale revenues


518



1,807



518



1,807

Total home and land sale revenues


431,261



402,134



749,795



733,882

Home cost of sales


(356,175)



(327,927)



(615,653)



(602,003)

Land cost of sales


(522)



(1,435)



(522)



(1,435)

Inventory impairments


(850)



-



(850)



-

Total cost of sales


(357,547)



(329,362)



(617,025)



(603,438)

Gross margin


73,714



72,772



132,770



130,444

Selling, general and administrative expenses


(49,798)



(51,908)



(98,140)



(100,109)

Interest and other income


4,613



10,200



18,162



16,749

Interest expense


-



(909)



(685)



(1,726)

Other expense


(1,080)



(366)



(1,693)



(722)

Loss on early extinguishment of debt


-



-



(9,412)



-

Homebuilding pretax income


27,449



29,789



41,002



44,636













Financial Services:












Revenues


11,491



13,884



20,714



26,390

Expenses


(5,615)



(6,581)



(10,539)



(12,223)

Interest and other income


701



920



1,489



1,795

Financial services pretax income


6,577



8,223



11,664



15,962













Income before income taxes


34,026



38,012



52,666



60,598

Benefit from (provision for) income taxes


(12,484)



186,897



(19,620)



186,827

Net income

$

21,542


$

224,909


$

33,046


$

247,425













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













2,327



(1,995)



(1,719)



540

Comprehensive income

$

23,869


$

222,914


$

31,327


$

247,965













Earnings per share:












Basic

$

0.44


$

4.60


$

0.68


$

5.06

Diluted

$

0.44


$

4.55


$

0.67


$

5.01













Weighted average common shares outstanding












Basic


48,640,979



48,478,076



48,613,521



48,410,486

Diluted


48,852,696



48,946,055



48,842,527



48,916,988













Dividends declared per share

$

0.25


$

-


$

0.50


$

-

    

    

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets








June 30,


December 31,


2014


2013

ASSETS

(Dollars in thousands, except


per share amounts)

Homebuilding:

(Unaudited)




Cash and cash equivalents

$

100,150


$

148,634

Marketable securities


492,498



569,021

Restricted cash


2,188



2,195

Trade and other receivables


27,250



23,407

Inventories:






Housing completed or under construction


758,392



636,700

Land and land under development


837,889



774,961

Total inventories


1,596,281



1,411,661

Property and equipment, net


30,765



31,248

Deferred tax asset, net 


160,872



176,262

Metropolitan district bond securities (related party)


14,291



12,729

Prepaid and other assets


65,374



53,525

Total homebuilding assets


2,489,669



2,428,682

Financial Services:






Cash and cash equivalents


29,881



50,704

Marketable securities


13,390



19,046

Mortgage loans held-for-sale, net


58,377



92,578

Other assets


5,244



4,439

Total financial services assets


106,892



166,767

      Total Assets

$

2,596,561


$

2,595,449

LIABILITIES AND EQUITY






Homebuilding:






Accounts payable

$

34,266


$

15,046

Accrued liabilities


145,290



152,821

Revolving credit facility


10,000



-

Senior notes, net


1,096,112



1,095,620

Total homebuilding liabilities


1,285,668



1,263,487

Financial Services:






Accounts payable and accrued liabilities


56,086



55,639

Mortgage repurchase facility


32,198



63,074

Total financial services liabilities


88,284



118,713

      Total Liabilities


1,373,952



1,382,200

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; 48,816,639 and 48,788,887 issued and outstanding at June 30, 2014 and December 31, 2013, respectively







488



488

Additional paid-in-capital


910,535



908,090

Retained earnings


301,730



293,096

Accumulated other comprehensive income


9,856



11,575

Total Stockholders' Equity


1,222,609



1,213,249

Total Liabilities and Stockholders' Equity

$

2,596,561


$

2,595,449

    

    

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows














Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(Dollars in thousands)


(Unaudited)

Operating Activities:












Net income

$

21,542


$

224,909


$

33,046


$

247,425

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























Loss on early extinguishment of debt


-



-



9,412



-

Stock-based compensation expense


1,258



1,838



2,550



5,214

Depreciation and amortization


999



994



1,933



2,072

Loss (gain) on sale of marketable securities


549



-



(6,356)



-

Amortization of discount / premiums on marketable debt securities


512



804



422



1,423

Deferred income tax expense (benefit)


12,451



(187,643)



19,554



(187,643)

Net changes in assets and liabilities:












      Restricted cash


(683)



(153)



7



(820)

      Trade and other receivables


302



(4,596)



(8,409)



(8,566)

      Mortgage loans held-for-sale


6,423



(6,034)



34,201



27,490

      Housing completed or under construction


(47,178)



(47,469)



(122,368)



(56,087)

      Land and land under development


972



(93,739)



(62,746)



(138,509)

      Prepaid expenses and other assets


(2,734)



(1,414)



(9,615)



(7,884)

      Accounts payable and accrued liabilities


30,468



21,678



12,097



(30,358)

Net cash provided by (used in) operating activities


24,881



(90,825)



(96,272)



(146,243)













Investing Activities:












Purchases of marketable securities


(25,992)



(161,284)



(382,279)



(312,095)

Maturities of marketable securities


26,065



87,015



159,789



87,015

Sales of marketable securities


20,414



92,399



306,769



137,067

Purchases of property and equipment


(809)



(72)



(1,354)



(998)

Net cash provided by (used in) investing activities


19,678



18,058



82,925



(89,011)













Financing Activities:












Payments on mortgage repurchase facility, net


(7,142)



7,380



(30,876)



(27,479)

Proceeds from issuance of senior notes


-



99,125



248,375



346,938

Repayment of senior notes


-



-



(259,118)



-

Advances on revolving credit facility, net


10,000



-



10,000



-

Dividend payments


(12,205)



-



(24,412)



-

Proceeds from exercise of stock options


-



-



71



5,118

Net cash provided by (used in) financing activities


(9,347)



106,505



(55,960)



324,577













Net increase (decrease) in cash and cash equivalents


35,212



33,738



(69,307)



89,323

Cash and cash equivalents:












      Beginning of period


94,819



215,680



199,338



160,095

      End of period

$

130,031


$

249,418


$

130,031


$

249,418

    

    

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries


























Three Months Ended June 30,



2014


2013


% Change



Homes


Dollar

Value


Average Price


Homes


Dollar

Value


Average Price


Homes


Dollar

Value


Average Price



(Dollars in thousands)


Arizona

184


$

47,413


$

257.7


130


$

30,472


$

234.4


42%


56%


10%


California

143



70,898



495.8


167



61,199



366.5


(14)%


16%


35%


Nevada

144



42,782



297.1


161



41,850



259.9


(11)%


2%


14%


Washington

78



28,568



366.3


98



30,992



316.2


(20)%


(8)%


16%


West

549



189,661



345.5


556



164,513



295.9


(1)%


15%


17%


Colorado

328



132,004



402.5


309



113,320



366.7


6%


16%


10%


Utah

44



14,143



321.4


59



18,643



316.0


(25)%


(24)%


2%


Mountain

372



146,147



392.9


368



131,963



358.6


1%


11%


10%


Maryland

81



36,351



448.8


83



35,407



426.6


(2)%


3%


5%


Virginia

67



35,023



522.7


95



47,350



498.4


(29)%


(26)%


5%


Florida

89



23,561



264.7


81



21,094



260.4


10%


12%


2%


East

237



94,935



400.6


259



103,851



401.0


(8)%


(9)%


(0)%


Total

1,158


$

430,743


$

372.0


1,183


$

400,327


$

338.4


(2)%


8%


10%

















































Six Months Ended June 30,



2014


2013


% Change



Homes


Dollar

Value


Average Price


Homes


Dollar

Value


Average Price


Homes


Dollar Value


Average Price



(Dollars in thousands)


Arizona

309


$

80,085


$

259.2


270


$

63,633


$

235.7


14%


26%


10%


California

235



111,998



476.6


313



110,788



354.0


(25)%


1%


35%


Nevada

264



82,719



313.3


294



74,595



253.7


(10)%


11%


23%


Washington

142



51,281



361.1


159



50,476



317.5


(11)%


2%


14%


West

950



326,083



343.2


1,036



299,492



289.1


(8)%


9%


19%


Colorado

576



225,387



391.3


613



226,808



370.0


(6)%


(1)%


6%


Utah

68



21,705



319.2


126



38,532



305.8


(46)%


(44)%


4%


Mountain

644



247,092



383.7


739



265,340



359.1


(13)%


(7)%


7%


Maryland

158



73,256



463.6


137



57,111



416.9


15%


28%


11%


Virginia

124



62,290



502.3


158



76,469



484.0


(22)%


(19)%


4%


Florida

155



40,556



261.7


131



33,663



257.0


18%


20%


2%


East

437



176,102



403.0


426



167,243



392.6


3%


5%


3%


Total

2,031


$

749,277


$

368.9


2,201


$

732,075


$

332.6


(8)%


2%


11%
























    

    

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders:






























Three Months Ended June 30,


2014


2013


% 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

262


$

74,051


$

282.6


2.65


196


$

48,825


$

249.1


3.84


34%


52%


13%


(31)%

California

214



101,695



475.2


4.14


196



79,196



404.1


5.23


9%


28%


18%


(21)%

Nevada

180



57,456



319.2


3.75


152



49,085



322.9


4.94


18%


17%


(1)%


(24)%

Washington

74



27,960



377.8


2.67


94



31,016



330.0


2.72


(21)%


(10)%


14%


(2)%

West

730



261,162



357.8


3.22


638



208,122



326.2


4.15


14%


25%


10%


(22)%

Colorado

410



171,001



417.1


3.67


381



143,754



377.3


3.30


8%


19%


11%


11%

Utah

55



17,517



318.5


3.06


44



14,582



331.4


2.10


25%


20%


(4)%


46%

Mountain

465



188,518



405.4


3.58


425



158,336



372.6


3.11


9%


19%


9%


15%

Maryland

77



37,877



491.9


1.71


112



53,091



474.0


1.84


(31)%


(29)%


4%


(7)%

Virginia

64



31,305



489.1


2.59


90



43,830



487.0


2.50


(29)%


(29)%


0%


4%

Florida

83



25,966



312.8


1.78


86



22,080



256.7


2.25


(3)%


18%


22%


(21)%

East

224



95,148



424.8


1.93


288



119,001



413.2


2.13


(22)%


(20)%


3%


(9)%

Total

1,419


$

544,828


$

384.0


3.00


1,351


$

485,459


$

359.3


3.18


5%


12%


7%


(6)%






























Six Months Ended June 30,


2014


2013


% 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

453


$

127,560


$

281.6


2.50


323


$

79,760


$

246.9


3.36


40%


60%


14%


(26)%

California

367



178,119



485.3


4.12


360



140,358



389.9


4.77


2%


27%


24%


(14)%

Nevada

330



102,618



311.0


3.50


322



95,267



295.9


4.94


2%


8%


5%


(29)%

Washington

166



62,212



374.8


2.69


187



59,942



320.5


2.91


(11)%


4%


17%


(8)%

West

1,316



470,509



357.5


3.09


1,192



375,327



314.9


3.96


10%


25%


14%


(22)%

Colorado

806



333,920



414.3


3.60


799



291,343



364.6


3.40


1%


15%


14%


6%

Utah

98



32,219



328.8


2.86


109



35,179



322.7


1.99


(10)%


(8)%


2%


44%

Mountain

904



366,139



405.0


3.50


908



326,522



359.6


3.13


(0)%


12%


13%


12%

Maryland

145



69,515



479.4


1.51


202



91,526



453.1


1.76


(28)%


(24)%


6%


(14)%

Virginia

123



61,485



499.9


2.21


183



92,714



506.6


2.51


(33)%


(34)%


(1)%


(12)%

Florida

167



52,490



314.3


1.97


166



42,626



256.8


2.11


1%


23%


22%


(7)%

East

435



183,490



421.8


1.84


551



226,866



411.7


2.07


(21)%


(19)%


2%


(11)%

Total

2,655


$

1,020,138


$

384.2


2.88


2,651


$

928,715


$

350.3


3.09


0%


10%


10%


(7)%


* 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











June 30,


%




2014


2013


Change



Arizona

34


19


79%



California

20


11


82%



Nevada

16


13


23%



Washington

8


12


(33)%



West

78


55


42%



Colorado

36


38


(5)%



Utah

6


4


50%



Mountain

42


42


0%



Maryland

14


20


(30)%



Virginia

8


11


(27)%



Florida

17


12


42%



East

39


43


(9)%



Total

159


140


14%



Average for quarter ended

158


142


11%



Average for the six months ended

153


143


7%


    

Backlog















































June 30,



2014


2013


% Change



Homes


Dollar

Value


Average Price


Homes


Dollar

Value


Average Price


Homes


Dollar

Value


Average Price



(Dollars in thousands)


Arizona

304


$

90,028


$

296.1


203


$

50,836


$

250.4


50%


77%


18%


California

279



135,197



484.6


276



107,950



391.1


1%


25%


24%


Nevada

206



66,713



323.8


232



71,488



308.1


(11)%


(7)%


5%


Washington

70



26,127



373.2


107



36,118



337.6


(35)%


(28)%


11%


West

859



318,065



370.3


818



266,392



325.7


5%


19%


14%


Colorado

647



278,643



430.7


656



246,797



376.2


(1)%


13%


14%


Utah

56



18,583



331.8


64



21,576



337.1


(13)%


(14)%


(2)%


Mountain

703



297,226



422.8


720



268,373



372.7


(2)%


11%


13%


Maryland

116



58,674



505.8


248



113,824



459.0


(53)%


(48)%


10%


Virginia

102



49,381



484.1


210



109,180



519.9


(51)%


(55)%


(7)%


Florida

106



38,120



359.6


99



26,470



267.4


7%


44%


34%


East

324



146,175



451.2


557



249,474



447.9


(42)%


(41)%


1%


Total

1,886


$

761,466


$

403.7


2,095


$

784,239


$

374.3


(10)%


(3)%


8%

    

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data


Homes Completed or Under Construction (WIP lots)











June 30,


%




2014


2013


Change



Unsold:








Completed

419


185


126%



Under construction

725


628


15%



Total unsold started homes

1,144


813


41%



Sold homes under construction or completed

1,422


1,652


(14)%



Model homes

263


207


27%



Total homes completed or under construction

2,829


2,672


6%


    

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



















June 30, 2014


June 30, 2013






Lots Owned


Lots Optioned


Total


Lots Owned


Lots Optioned


Total


Total % Change



Arizona

2,683


50


2,733


2,707


239


2,946


(7)%



California

1,655


132


1,787


971


-


971


84%



Nevada

1,534


434


1,968


1,573


136


1,709


15%



Washington

756


226


982


477


141


618


59%



West

6,628


842


7,470


5,728


516


6,244


20%



Colorado

4,439


983


5,422


4,174


1,079


5,253


3%



Utah

553


163


716


468


-


468


53%



Mountain

4,992


1,146


6,138


4,642


1,079


5,721


7%



Maryland

409


434


843


551


358


909


(7)%



Virginia

569


499


1,068


491


284


775


38%



Florida

803


384


1,187


648


424


1,072


11%



East

1,781


1,317


3,098


1,690


1,066


2,756


12%



Total

13,401


3,305


16,706


12,060


2,661


14,721


13%


    

M.D.C. HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures


Gross Margin from Homes Sales Excluding Interest and Impairments (Unaudited)


Gross Margin from Home Sales Excluding Interest and Impairments is a non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that interest and impairments have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.

    










































Three Months Ended June 30,


Six Months Ended June 30,


2014


Gross Margin %


2013


Gross Margin %


2014


Gross Margin %


2013


Gross Margin %



(Dollars in thousands)

Gross Margin

$

73,714


17.1%


$

72,772


18.1%


$

132,770


17.7%


$

130,444


17.8%

Less: Land Sales Revenue


(518)





(1,807)





(518)





(1,807)



Add: Land Cost of Sales


522





1,435





522





1,435



Gross Margin from Home Sales


73,718


17.1%



72,400


18.1%



132,774


17.7%



130,072


17.8%

Add: Inventory Impairments


850





-





850





-



Gross Margin from Home Sales




















Excluding Impairments


74,568


17.3%



72,400


18.1%



133,624


17.8%



130,072


17.8%

Add: Interest in Cost of Sales


16,522





12,680





28,246





22,554



Gross Margin from Home Sales




















Excluding Impairments and Interest

$

91,090


21.1%


$

85,080


21.3%


$

161,870


21.6%


$

152,626


20.8%

 

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