M.D.C. Holdings (MDC) Misses Q1 EPS by 15c, Revenues Miss

M.D.C. Holdings (NYSE: MDC) reported Q1 EPS of $0.56, $0.15 worse than the analyst estimate of $0.71. Revenue for the quarter came in at $697.1 million versus the consensus estimate of $730.01 million.

2020 First Quarter Highlights and Comparisons to 2019 First Quarter

• Homebuilding pretax income increased 21% to $49.7 million from $41.1 million
  • Home sale revenues up 8% to $697.1 million from $647.3 million
  • Gross margin from home sales increased 100 basis points to 19.9% from 18.9%
• Mortgage operations pretax income increased 65% to $8.2 million vs. $5.0 million
• Other financial services pretax loss of $9.4 million vs. pretax income of $9.6 million
  • Unrealized losses on equity securities of $13.9 million vs. unrealized gains of $4.6 million
• Net income of $36.8 million, or $0.56 per diluted share, down 9% from $40.6 million or $0.64 per diluted share

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "In response to the COVID-19 pandemic, we have adapted our business to protect the health and safety of our employees, subcontractors and customers. For example, we are using technology to help drive compliance with social distancing and shelter-in-place requirements by guiding many customers through the homebuilding process using a virtual environment. Our technology has also enabled hundreds of our employees to work from home. For those who cannot work remotely, we have greatly enhanced our cleaning and sanitizing protocols and implemented screening at our sites and offices across the country, and we have modified our business practices as necessary to allow for social distancing. On behalf of our management team, I would like to express sincere gratitude to our dedicated employees and all others who have supported our Company in adjusting to the new reality brought on by COVID-19."

Mr. Mizel continued, "As our results from the first quarter demonstrate, 2020 was off to an excellent start thanks to a robust job market, elevated consumer confidence and low levels of new and existing home inventory. This positive fundamental backdrop, coupled with our continued shift to more affordable product offerings, resulted in a 21% increase in our homebuilding pretax income for the quarter, as well as solid order and backlog growth. While demand trends deteriorated significantly at the end of March and into April, we believe the long-term outlook for our industry remains positive due to the ongoing demographic shifts taking place in our country and the lack of available housing supply."

Mr. Mizel concluded, "Although the ultimate impact of COVID-19 on the economy is still unclear, MDC is well-positioned to weather the current economic crisis thanks to our seasoned leadership team, our strong balance sheet and our conservative operating model. With high liquidity, low leverage and limited speculative inventory, our Company is built to succeed through the entirety of the homebuilding cycle. We believe that this approach, coupled with our industry-leading dividend, will lead to superior risk-adjusted returns for shareholders over time."

For earnings history and earnings-related data on M.D.C. Holdings (MDC) click here.

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