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M.D.C. HOLDINGS ANNOUNCES 2022 FOURTH QUARTER AND FULL YEAR RESULTS

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January 31, 2023 6:00 AM EST

Record full year home sale revenues of $5.59 billion; Over $900 million of cash flow from operating activities; Cash and cash equivalents and marketable securities of $1.28 billion

DENVER, Jan. 31, 2023 /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, 2022.

"MDC generated net income of $562 million for fiscal year 2022, or $7.67 per diluted share, representing one of the most profitable years in our company's history," said MDC's Executive Chairman, Larry A. Mizel. "Home sale revenues increased 9% year-over-year helping us generate over $900 million of cash flow from operating activities. We ended the year with a debt to capital ratio of 32.6% and total cash and cash equivalents and marketable securities of $1.28 billion."

Mr. Mizel continued, "While 2022 was a banner year for our company from a financial perspective, it was a challenging one for new home sales, as the combination of rising mortgage rates and overall economic uncertainty led to a sharp decline in order activity in the second half of the year. We began experiencing slower gross order and increased cancellation activity in the second and third quarters, and this carried into the fourth quarter. We did experience a rebound in order activity in December thanks to a more aggressive approach to pricing and incentives, an encouraging sign that price elasticity exists in our markets."

Mr. Mizel concluded, "As we head into the spring 2023 selling season, we have modified our strategy to focus more on quick move-in inventory as we believe that the majority of today's buyers want a shorter time between sale and close. In addition, we are requiring higher deposit amounts on build-to-order homes. We feel that these initiatives are the right approach for today's new home environment and should lead to better net sales results relative to the second half of 2022."

"Consistent with our operating strategy, we have been diligent in managing our land position to align with current market conditions." said David Mandarich, MDC's President and Chief Executive Officer. "By acting decisively, we generated considerable cash flow in 2022. This has positioned us well to capitalize on land acquisition opportunities that we believe will emerge during this industry downturn, likely with better pricing and terms than were previously available. As we work to bring these opportunities to fruition, we are also working closely with our trades and suppliers to reduce our build costs in this softer demand environment. By staying vigilant on our costs and land position, we have put ourselves in a position to weather the current slowdown and take advantage of an eventual recovery."

2022 Fourth Quarter Highlights and Comparisons to 2021 Fourth Quarter

  • Home sale revenues increased 4% to $1.49 billion from $1.44 billion
    • Average selling price of deliveries up 8% to $582,000
    • Unit deliveries down 4% to 2,554
  • Homebuilding pretax income decreased 51% to $94.5 million from $193.5 million
    • Gross margin from home sales decreased 850 basis points to 15.0% from 23.5%
    • Inventory impairments of $92.8 million in Q4 2022 vs  $1.6 million in Q4 2021
    • Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 20 basis points to 8.9%
  • Net income of $79.8 million, or $1.08 per diluted share, down 51% from $162.7 million or $2.21 per diluted share
    • Effective tax rate of 29.5% vs. 22.2%
  • Unit gross orders decreased 55% to 1,502 from 3,308
    • Cancellations as a percentage of beginning backlog increased to 24.6% from 8.7%
    • Gross order average selling price down approximately 1% to $551,000

2022 Full Year Highlights and Comparisons to 2021 Full Year

  • Home sale revenues increased 9% to $5.59 billion from $5.10 billion
    • Unit deliveries down 3% to 9,710
  • Homebuilding pretax income increased 5% to $691.5 million from $659.7 million
    • Gross margin from home sales of 22.4% vs. 23.1%
    • Inventory impairments of $121.9 million vs $1.6 million
    • SG&A rate improved to 9.6% vs. 9.7%
  • Net income of $562.1 million, or $7.67 per diluted share, down 2% from $573.7 million or $7.83 per diluted share
    • Effective tax rate of 26.0% vs. 23.7%
  • Cash flow from operating activities of $905.6 million compared to cash used in operating activities of $208.0 million
  • Dollar value of net new orders decreased 50% to $3.01 billion from $6.04 billion

2023 Outlook and Other Selected Information1

  • Active subdivisions at December 31, 2022 up 20% year-over-year to 225
  • Projected home deliveries for the 2023 first quarter between 1,500 and 1,600
    • Projected average selling price for 2023 first quarter unit deliveries between $550,000 and $560,000
    • Projected gross margin from home sales for the 2023 first quarter of approximately 18% to 19% (assuming no impairments or warranty adjustments)
  • Quarterly cash dividend of fifty cents ($0.50) per share declared on January 23, 2023
    • Consistent record of stable or increasing dividends for more than 25 years

1 See "Forward-Looking Statements" below.

About MDCM.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 230,000 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, Boise, Nashville, Austin, Albuquerque and Huntsville. 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, 2022, 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 EndedDecember 31,

Year EndedDecember 31,

2022

2021

2022

2021

(Dollars in thousands, except per share amounts)

Homebuilding:

Home sale revenues

$      1,487,279

$      1,435,124

$      5,586,264

$      5,102,456

Home cost of sales

(1,170,989)

(1,096,946)

(4,214,379)

(3,924,093)

Inventory impairments

(92,800)

(1,600)

(121,875)

(1,600)

Total cost of sales

(1,263,789)

(1,098,546)

(4,336,254)

(3,925,693)

Gross profit

223,490

336,578

1,250,010

1,176,763

Selling, general and administrative expenses

(131,797)

(130,023)

(536,395)

(493,993)

Loss on debt retirement

—

(11,421)

—

(23,571)

Interest and other income

7,046

981

10,843

5,965

Other expense

(4,258)

(2,595)

(32,991)

(5,476)

Homebuilding pretax income

94,481

193,520

691,467

659,688

Financial Services:

Revenues

32,262

30,767

131,723

152,212

Expenses

(16,887)

(16,555)

(71,327)

(64,477)

Other income (expense), net

3,364

1,416

7,991

4,271

Financial services pretax income

18,739

15,628

68,387

92,006

Income before income taxes

113,220

209,148

759,854

751,694

Provision for income taxes

(33,444)

(46,487)

(197,715)

(178,037)

Net income

$           79,776

$         162,661

$         562,139

$         573,657

Comprehensive income

$           79,776

$         162,661

$         562,139

$         573,657

Earnings per share:

Basic

$               1.11

$               2.30

$               7.87

$               8.13

Diluted

$               1.08

$               2.21

$               7.67

$               7.83

Weighted average common shares outstanding:

Basic

71,646,237

70,303,149

71,035,558

70,174,281

Diluted

73,179,135

73,110,624

72,943,844

72,854,601

Dividends declared per share

$               0.50

$               0.50

$               2.00

$               1.67

 

M.D.C. HOLDINGS, INC.Consolidated Balance Sheets(Unaudited)

December 31,2022

December 31,2021

(Dollars in thousands, except

per share amounts)

ASSETS

Homebuilding:

Cash and cash equivalents

$         696,075

$         485,839

Restricted cash

3,143

12,799

Marketable securities

443,712

—

Trade and other receivables

116,364

98,580

Inventories:

Housing completed or under construction

1,722,061

1,917,616

Land and land under development

1,793,718

1,843,235

Total inventories

3,515,779

3,760,851

Property and equipment, net

63,730

60,561

Deferred tax assets, net

49,252

17,942

Prepaids and other assets

70,007

106,562

Total homebuilding assets

4,958,062

4,543,134

Financial Services:

Cash and cash equivalents

17,877

104,821

Marketable securities

117,388

—

Mortgage loans held-for-sale, net

229,513

282,529

Other assets

40,432

33,044

Total financial services assets

405,210

420,394

Total Assets

$      5,363,272

$      4,963,528

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable

$         109,218

$         149,488

Accrued and other liabilities

383,406

370,910

Revolving credit facility

10,000

10,000

Senior notes, net

1,482,576

1,481,781

Total homebuilding liabilities

1,985,200

2,012,179

Financial Services:

Accounts payable and accrued liabilities

110,536

97,903

Mortgage repurchase facility

175,752

256,300

Total financial services liabilities

286,288

354,203

Total Liabilities

2,271,488

2,366,382

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; 72,585,596 and 70,668,093 issued andoutstanding at December 31, 2022 and December 31, 2021, respectively

726

707

Additional paid-in-capital

1,784,173

1,709,276

Retained earnings

1,306,885

887,163

Total Stockholders' Equity

3,091,784

2,597,146

Total Liabilities and Stockholders' Equity

$      5,363,272

$      4,963,528

 

 

M.D.C. HOLDINGS, INC.Consolidated Statement of Cash Flows(Unaudited)

Three Months EndedDecember 31,

Year EndedDecember 31,

2022

2021

2022

2021

(Dollars in thousands)

Operating Activities:

Net income

$       79,776

$     162,661

$     562,139

$     573,657

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

Stock-based compensation expense

10,637

12,823

60,985

39,655

Depreciation and amortization

7,088

7,736

27,751

31,666

Inventory impairments

92,800

1,600

121,875

1,600

Project abandonment costs

4,371

2,510

33,129

5,417

Gain on sale of other assets

—

—

—

(2,014)

Amortization of discount of marketable debt securities

(3,208)

—

(4,290)

—

Loss on retirement of debt

—

11,421

—

23,571

Deferred income tax expense

(27,130)

(1,641)

(31,310)

(6,488)

Net changes in assets and liabilities:

Trade and other receivables

(2,463)

30,195

(21,784)

(25,334)

Mortgage loans held-for-sale, net

(38,680)

(33,608)

53,016

(49,973)

Housing completed or under construction

505,348

29,179

186,265

(431,926)

Land and land under development

(75,662)

(381,112)

(95,402)

(502,781)

Prepaids and other assets

39,786

(1,374)

31,736

8,545

Accounts payable and accrued liabilities

(30,970)

38,142

(18,464)

126,415

Net cash provided by (used in) operating activities

561,693

(121,468)

905,646

(207,990)

Investing Activities:

Purchases of marketable securities

(365,684)

—

(656,810)

—

Maturities of marketable securities

100,000

—

100,000

—

Proceeds from sale of other assets

—

—

—

2,014

Purchases of property and equipment

(7,646)

(6,665)

(29,075)

(29,693)

Net cash provided by (used in) investing activities

(273,330)

(6,665)

(585,885)

(27,679)

Financing Activities:

Advances on mortgage repurchase facility, net

(20,462)

40,506

(80,548)

53,910

Payments of senior notes

—

(140,557)

—

(276,951)

Proceeds from issuance of senior notes

—

—

—

694,662

Dividend payments

(35,632)

(35,340)

(142,417)

(118,529)

Payments of deferred debt issuance costs

—

—

—

(1,720)

Issuance of shares under stock-based compensation programs, net

28,385

(663)

16,840

(16,216)

Net cash provided by (used in) financing activities

(27,709)

(136,054)

(206,125)

335,156

Net increase (decrease) in cash, cash equivalents and restricted cash

260,654

(264,187)

113,636

99,487

Cash, cash equivalents and restricted cash:

Beginning of period

456,441

867,646

603,459

503,972

End of period

$     717,095

$     603,459

$     717,095

$     603,459

Reconciliation of cash, cash equivalents and restricted cash:

Homebuilding:

Cash and cash equivalents

$     696,075

$     485,839

$     696,075

$     485,839

Restricted cash

3,143

12,799

3,143

12,799

Financial Services:

Cash and cash equivalents

17,877

104,821

17,877

104,821

Total cash, cash equivalents and restricted cash

$     717,095

$     603,459

$     717,095

$     603,459

 

New Home Deliveries

Three Months Ended December 31,

2022

2021

% Change

Homes

Home Sale

Revenues

Average

Price

Homes

Home Sale

Revenues

Average

Price

Homes

Home

Sale

Revenues

Average

Price

(Dollars in thousands)

West

1,308

$  756,109

$      578.1

1,408

$  770,695

$      547.4

(7) %

(2) %

6 %

Mountain

756

492,850

651.9

781

462,807

592.6

(3) %

6 %

10 %

East

490

238,320

486.4

474

201,622

425.4

3 %

18 %

14 %

Total

2,554

$  1,487,279

$      582.3

2,663

$  1,435,124

$      538.9

(4) %

4 %

8 %

Year Ended December 31,

2022

2021

% Change

Homes

Home Sale

Revenues

Average

Price

Homes

Home Sale

Revenues

Average

Price

Homes

Home

Sale

Revenues

Average

Price

(Dollars in thousands)

West

5,234

$  3,024,056

$      577.8

5,732

$  2,964,766

$      517.2

(9) %

2 %

12 %

Mountain

2,616

1,689,376

645.8

2,770

1,567,198

565.8

(6) %

8 %

14 %

East

1,860

872,832

469.3

1,480

570,492

385.5

26 %

53 %

22 %

Total

9,710

$  5,586,264

$      575.3

9,982

$  5,102,456

$      511.2

(3) %

9 %

13 %

 

Net New Orders

Three Months Ended December 31,

2022

2021

% 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

155

$     67,710

$  436.8

0.39

1,424

$ 776,984

$  545.6

4.70

(89) %

(91) %

(20) %

(92) %

Mountain

(37)

(25,924)

700.6

(0.24)

704

431,931

613.5

4.27

(105) %

(106) %

14 %

(106) %

East

72

32,649

453.5

0.64

517

225,834

436.8

4.31

(86) %

(86) %

4 %

(85) %

Total

190

$     74,435

$  391.8

0.29

2,645

$  1,434,749

$  542.4

4.50

(93) %

(95) %

(28) %

(94) %

Year Ended December31,

2022

2021

% 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

2,909

$  1,735,202

$   596.5

2.01

6,238

$  3,417,437

$   547.8

5.25

(53) %

(49) %

9 %

(62) %

Mountain

1,157

788,734

681.7

1.85

2,926

1,831,755

626.0

4.33

(60) %

(57) %

9 %

(57) %

East

978

489,946

501.0

2.25

1,803

789,810

438.1

4.05

(46) %

(38) %

14 %

(44) %

Total

5,044

$  3,013,882

$   597.5

2.02

10,967

$  6,039,002

$   550.7

4.75

(54) %

(50) %

9 %

(57) %

 *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,

%

2022

2021

Change

2022

2021

Change

2022

2021

Change

West

134

96

40 %

133

101

32 %

120

99

21 %

Mountain

53

54

(2) %

51

55

(7) %

52

56

(7) %

East

38

37

3 %

37

40

(7) %

36

37

(3) %

Total

225

187

20 %

222

196

13 %

208

192

8 %

 

Backlog

December 31,

2022

2021

% Change

Homes

Dollar

Value

Average

Price

Homes

Dollar

Value

Average

Price

Homes

Dollar

Value

Average

Price

(Dollars in thousands)

West

1,891

$  1,049,805

$      555.2

4,216

$  2,328,949

$      552.4

(55) %

(55) %

— %

Mountain

715

515,460

720.9

2,174

1,402,052

644.9

(67) %

(63) %

12 %

East

368

187,629

509.9

1,250

567,695

454.2

(71) %

(67) %

12 %

Total

2,974

$  1,752,894

$      589.4

7,640

$  4,298,696

$      562.7

(61) %

(59) %

5 %

 

Homes Completed or Under Construction (WIP lots)

December 31,

%

2022

2021

Change

Unsold:

Completed

396

25

1,484 %

Under construction

1,063

312

241 %

Total unsold started homes

1,459

337

333 %

Sold homes under construction or completed

2,756

6,379

(57) %

Model homes under construction or completed

555

479

16 %

Total homes completed or under construction

4,770

7,195

(34) %

 

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

December 31, 2022

December 31, 2021

Lots

Owned

Lots

Optioned

Total

Lots

Owned

Lots

Optioned

Total

Total

% Change

West

12,667

687

13,354

15,968

4,534

20,502

(35) %

Mountain

5,398

1,561

6,959

6,660

4,171

10,831

(36) %

East

3,534

1,455

4,989

4,304

2,443

6,747

(26) %

Total

21,599

3,703

25,302

26,932

11,148

38,080

(34) %

 

Selling, General and Administrative Expenses

Three Months Ended December 31,

Year Ended December 31,

2022

2021

Change

2022

2021

Change

(Dollars in thousands)

General and administrative expenses

$    66,614

$    66,986

$          (372)

$  292,349

$  246,042

$       46,307

General and administrative expenses as a percentage of home sale revenues

4.5 %

4.7 %

-20 bps

5.2 %

4.8 %

40 bps

Marketing expenses

$    25,308

$    26,240

$          (932)

$  103,330

$  104,435

$       (1,105)

Marketing expenses as a percentage of home sale revenues

1.7 %

1.8 %

-10 bps

1.8 %

2.0 %

-20 bps

Commissions expenses

$    39,875

$    36,797

$         3,078

$  140,716

$  143,516

$       (2,800)

Commissions expenses as a percentage of home sale revenues

2.7 %

2.6 %

10 bps

2.5 %

2.8 %

-30 bps

Total selling, general and administrative expenses

$  131,797

$  130,023

$         1,774

$  536,395

$  493,993

$       42,402

Total selling, general and administrative expenses as a percentage of home sale revenues

8.9 %

9.1 %

-20 bps

9.6 %

9.7 %

-10 bps

 

Capitalized Interest

Three Months EndedDecember 31,

Year EndedDecember 31,

2022

2021

2022

2021

(Dollars in thousands)

Homebuilding interest incurred

$           17,419

$         18,651

$        69,450

$         72,500

Less: Interest capitalized

(17,419)

(18,651)

(69,450)

(72,500)

Homebuilding interest expensed

$                  —

$                —

$               —

$                —

Interest capitalized, beginning of period

$           63,583

$         57,435

$        58,054

$         52,777

Plus: Interest capitalized during period

17,419

18,651

69,450

72,500

Less: Previously capitalized interest included in home and land cost of sales

(21,081)

(18,032)

(67,583)

(67,223)

Interest capitalized, end of period

$           59,921

$         58,054

$        59,921

$         58,054

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/mdc-holdings-announces-2022-fourth-quarter-and-full-year-results-301734045.html

SOURCE M.D.C. Holdings, Inc.


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