M.D.C. Holdings (MDC) Misses Q3 EPS by 18c

M.D.C. Holdings (NYSE: MDC) reported Q3 EPS of $0.32, $0.18 worse than the analyst estimate of $0.50. Revenue for the quarter came in at $407.7 million versus the consensus estimate of $502.91 million.

Net new orders up 17% to 1,081 homes.

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "Against the backdrop of an uneven recovery for housing and overall economic conditions, we are pleased that we have consistently produced profitable results since the beginning of 2012. However, the volatility of the housing market recovery was evident in our third quarter results, as elevated land and construction costs, combined with our use of additional incentives to stimulate demand for new homes, have pressured our homebuilding gross margins."

Mr. Mizel continued, "While we believe that the housing recovery remains on solid footing, it is evident that certain obstacles, such as Qualified Mortgage Standards and reduced Federal Housing Authority loan limits, have taken their toll on housing demand, especially for the first time buyer segment. Additionally, on the production side of our business, we have seen a negative impact from tighter subcontractor availability and adverse weather conditions in certain markets, as well as an elongated mortgage approval process. We believe the impact of many of these factors will diminish over time, allowing us to return to more robust levels of demand as overall economic conditions continue to improve."

Mr. Mizel concluded, "In the meantime, we have set the stage for growth at our Company by expanding our footprint, with an increase in our quarter-end active community count by more than 25% year-over-year. The expansion of our active community count has already produced positive results, driving a 17% year-over-year increase in our net new home orders as well as our first year-over-year increase in quarter-end backlog since the second quarter of 2013. These improvements provide us with the opportunity for top and bottom line expansion in future periods, in spite of the obstacles that may remain for the housing market."

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

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