M.D.C. Holdings Inc (MDC) Reports Q3 2023 Earnings
M.D.C. Holdings Inc (NYSE:MDC) posted a net income of $107.3 million for Q3 2023, with earnings of $1.40 per diluted share.
Home sale revenues were reported at $1.09 billion, with new home deliveries of 1,968 at an average sales price of $552,000.
The company's gross margin from home sales improved to 19.2%, and SG&A as a percent of home sale revenues improved to 9.3%.
Net new orders improved significantly from the prior year period, thanks to a reduction in cancellations and the use of financing incentives.
Released on October 26, 2023, M.D.C. Holdings Inc (NYSE:MDC)'s third-quarter earnings report reveals a strong performance despite the challenges of a high-interest-rate environment. The company's net income reached $107.3 million, or $1.40 per diluted share, for the third quarter of 2023. Home sale revenues were $1.09 billion on new home deliveries of 1,968 at an average sales price of $552,000.
Financial Highlights
According to MDC's Executive Chairman, Larry Mizel, the company's gross margin from home sales improved 280 basis points from the second quarter of 2023 to 19.2%. Additionally, SG&A as a percent of home sale revenues improved on both a sequential and year-over-year basis to 9.3%. These results demonstrate MDC's ability to deliver solid profitability in a high-interest-rate environment.
Net new orders improved considerably from the prior year period, thanks to a significant reduction in cancellations and the company's use of financing incentives that lessened the impact of higher mortgage rates for buyers. The sales pace for the quarter was 2.4 homes per community per month and was fairly consistent across the company's homebuilding footprint.
Company Outlook
Despite the challenges that higher interest rates present, the company remains confident in its outlook. The US economy has shown great resilience in terms of GDP growth and job creation, while home prices nationally have held firm. The new home market continues to benefit from a lack of existing home supply, and large public builders like MDC are poised to gain market share. The company plans on taking advantage of this opportunity in the coming quarters and has therefore increased its land acquisition efforts.
Financial Tables Summary
Home sale revenues for Q3 2023 were $1.09 billion, compared to $1.41 billion in Q3 2022. Unit deliveries were 1,968, compared to 2,387 in the same period last year. The average selling price of deliveries was $552,000, compared to $590,000 in Q3 2022. Homebuilding pretax income was $127.4 million, compared to $168.2 million in the same period last year. The company's net income was $107.3 million, or $1.40 per diluted share, compared to $144.4 million, or $1.98 per diluted share, in Q3 2022.
The company's cash and marketable securities balance at the end of the quarter stood at $1.78 billion, providing ample liquidity to reinvest in operations and pay an industry-leading dividend of $2.20 on an annualized basis.
Conclusion
M.D.C. Holdings Inc (NYSE:MDC) has demonstrated a strong performance in Q3 2023, despite the challenges of a high-interest-rate environment. The company's strategic use of financing incentives, reduction in cancellations, and consistent sales pace across its homebuilding footprint have contributed to its solid profitability. With a strong cash position and a confident outlook, MDC is well-positioned to continue its growth trajectory in the coming quarters.
Explore the complete 8-K earnings release (here) from M.D.C. Holdings Inc for further details.
This article first appeared on GuruFocus.
