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M.D.C. Holdings Announces 2020 Fourth Quarter And Full Year Results

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Significant expansion of gross margin from home sales helped drive a 59% year-over-year increase in net income for the quarter, while record fourth quarter home orders drove backlog to an all-time year end high of $3.26 billion.

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 Information1


• 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
December 31,


Year Ended
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,
2020


December 31,
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
outstanding at December 31, 2020 and December 31, 2019, respectively

649



626


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
December 31,


Year Ended
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
Revenues


Average
Price


Homes


Home Sale
Revenues


Average
Price


Homes


Home
Sale
Revenues


Average
Price




















(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
Revenues


Average
Price


Homes


Home Sale
Revenues


Average
Price


Homes


Home
Sale
Revenues


Average
Price




















(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
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

1,453



$

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
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

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
Value


Average
Price


Homes


Dollar
Value


Average
Price


Homes


Dollar
Value


Average
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
Owned


Lots
Optioned


Total


Lots
Owned


Lots
Optioned


Total


Total
% 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
December 31,


Year Ended
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


Cision
Cision

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.