Form 8-K M.D.C. HOLDINGS, INC. For: Apr 28

April 28, 2022 6:25 AM EDT

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Exhibit 99.1
News Release

M.D.C. HOLDINGS ANNOUNCES FIRST QUARTER 2022 RESULTS

Home sale revenues growth of 19% and a 380 basis point expansion of our gross margin from home sales to 25.7% resulted in a 34% increase in net income for the quarter

DENVER, COLORADO, Thursday, April 28, 2022. M.D.C Holdings, Inc. (NYSE: MDC), one of the nation’s leading homebuilders, announced results for the quarter ended March 31, 2022.

“MDC delivered strong results in the first quarter of 2022 both in terms of profitability and order activity,” said MDC's’ Executive Chairman, Larry Mizel. “We generated earnings of $2.02 per diluted share for the quarter, representing a 34% improvement over the first quarter of 2021. This significant increase to our bottom-line results was largely driven by a 19% year-over-year rise in home sale revenues and a 380-basis point improvement in our home sale gross margin to 25.7%. Our teams did an excellent job delivering homes in a timely manner this quarter in what continues to be a challenging supply chain environment, as we came in near the high-end of our stated guidance with total new home deliveries of 2,233 units.”

Mr. Mizel continued, “We continued to see solid demand across our homebuilding divisions during the quarter, as evidenced by our sales pace of 5.4 homes per community per month. The combination of favorable demographics, strong local economies and historically low inventory levels in our markets has created an excellent operating environment for our company. We have strategically positioned MDC to address the needs of today’s homebuyer and believe this is reflected in our strong results this quarter.”

Mr. Mizel concluded, “With a strong balance sheet, a seasoned management team and a sizable quarter-end backlog, MDC is in a great position to deliver on its goals for the year. Our growing presence in high growth markets and focus on more affordable price points has led to record levels of profitability for our company, and we continue to see strong demand at our communities despite the recent rise in interest rates. As a result, we remain positive about the future of MDC.”

“Traffic levels at our communities and online remained strong during the first quarter” said David Mandarich, MDC’s President and Chief Executive Officer. “Traffic conversion rates also stayed at high levels despite the higher mortgage rate environment, as the ongoing imbalance between housing demand and supply continued to create a sense of urgency with prospective buyers. We believe that this is a testament to the strength of the housing market as well as our approach to the business, which focuses on a build-to-order operating model that allows for personalization. It is also a testament to our teams’ ability to successfully adapt and adjust to changing market conditions.”

Mr. Mandarich concluded, "We recently announced that we have agreed to acquire substantially all of the homebuilding assets of The Jones Company of Tennessee, L.L.C. We believe that this transaction, combined with the organic land pipeline we have secured since starting in Nashville approximately one year ago, has the potential to launch MDC into a leadership position in the Nashville market."
1




2022 First Quarter Highlights and Comparisons to 2021 First Quarter

Home sale revenues increased 19% to $1.24 billion from $1.04 billion
Unit deliveries up 3% to 2,233
Average selling price of deliveries up 16% to $556,000
Homebuilding pretax income increased 66% to $188.5 million from $113.5 million
Gross margin from home sales increased 380 basis points to 25.7% from 21.9%
Inventory impairment and warranty adjustment totaled $3.1 million in Q1 2022
Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 60 basis points to 10.4%
Net income of $148.4 million, or $2.02 per diluted share, up 34% from $110.7 million or $1.51 per diluted share
Effective tax rate of 26.5% vs. 23.3%
Dollar value of net new orders increased 12% to $1.84 billion from $1.64 billion
Average selling price of net orders up 14%
Unit net orders decreased 2% to 3,151
Dollar value of ending backlog up 26% to $4.95 billion from $3.93 billion
Unit backlog increased 11% to 8,558
Average selling price of homes in backlog up 13%


2022 Outlook and Other Selected Information1, 2

Projected home deliveries for the 2022 second quarter between 2,400 and 2,600
Projected average selling price for 2022 second quarter unit deliveries between $560,000 and $570,000
Projected gross margin from home sales for the 2022 second quarter exceeding 26.0% (excluding impairments and warranty adjustments)
Projected full year 2022 home deliveries between 10,500 and 11,000
Projected lots controlled of 37,812 at March 31, 2022, up 18% year-over-year
Recently announced acquisition of substantially all of the homebuilding assets of The Jones Company of Tennessee, L.L.C. ("Jones") is expected to close near the end of the second quarter of 2022
Expected to add approximately 10 selling communities, 1,700 controlled lots and 150 units to backlog
Quarterly cash dividend of fifty cents ($0.50) per share declared on April 25, 2022, up 25% year-over-year
Consistent dividend program for over 25 years
Quarterly dividend has more than doubled in the past five years

1 See "Forward-Looking Statements" below.
2 Projected metrics do not reflect the impact of the asset acquisition of Jones. Any impact is not expected to be significant.
2



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 220,000 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 and Albuquerque. The Company'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-Q for the quarter ended March 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.

Contact:    Robert N. Martin
    Senior Vice President and Chief Financial Officer
    1-866-424-3395
IR@mdch.com
3



M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)

Three Months Ended
March 31,
20222021
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues$1,240,520 $1,041,858 
Home cost of sales(921,378)(813,888)
Inventory impairments(660)— 
Total cost of sales(922,038)(813,888)
Gross profit318,482 227,970 
Selling, general and administrative expenses(129,314)(114,993)
Interest and other income755 967 
Other expense(1,424)(437)
Homebuilding pretax income188,499 113,507 
Financial Services:
Revenues29,131 45,023 
Expenses(16,935)(15,105)
Other income, net1,187 887 
Financial services pretax income13,383 30,805 
Income before income taxes201,882 144,312 
Provision for income taxes(53,461)(33,622)
Net income$148,421 $110,690 
Comprehensive income$148,421 $110,690 
Earnings per share:
Basic$2.09 $1.58 
Diluted$2.02 $1.51 
Weighted average common shares outstanding:
Basic70,766,146 69,790,927 
Diluted72,938,414 72,788,177 
Dividends declared per share$0.50 $0.37 

4



M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
March 31,
2022
December 31,
2021
(Dollars in thousands, except
per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents$474,447 $485,839 
Restricted cash6,400 12,799 
Trade and other receivables114,823 98,580 
Inventories:
Housing completed or under construction2,194,303 1,917,616 
Land and land under development1,734,515 1,843,235 
Total inventories3,928,818 3,760,851 
Property and equipment, net61,856 60,561 
Deferred tax asset, net17,100 17,942 
Prepaids and other assets114,120 106,562 
Total homebuilding assets4,717,564 4,543,134 
Financial Services:
Cash and cash equivalents107,503 104,821 
Mortgage loans held-for-sale, net187,914 282,529 
Other assets46,133 33,044 
Total financial services assets341,550 420,394 
Total Assets$5,059,114 $4,963,528 
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable$172,134 $149,488 
Accrued and other liabilities405,140 370,910 
Revolving credit facility10,000 10,000 
Senior notes, net1,481,976 1,481,781 
Total homebuilding liabilities2,069,250 2,012,179 
Financial Services:
Accounts payable and accrued liabilities100,551 97,903 
Mortgage repurchase facility178,231 256,300 
Total financial services liabilities278,782 354,203 
Total Liabilities2,348,032 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; 71,162,245 and 70,668,093 issued and outstanding at March 31, 2022 and December 31, 2021, respectively
712 707 
Additional paid-in-capital1,710,369 1,709,276 
Retained earnings1,000,001 887,163 
Total Stockholders' Equity2,711,082 2,597,146 
Total Liabilities and Stockholders' Equity$5,059,114 $4,963,528 

5



M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
20222021
(Dollars in thousands)
Operating Activities:
Net income$148,421 $110,690 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense14,882 9,926 
Depreciation and amortization6,652 7,003 
Inventory impairments660 — 
Deferred income tax expense (benefit)842 (1,348)
Net changes in assets and liabilities:
Trade and other receivables(16,677)(40,282)
Mortgage loans held-for-sale, net94,615 1,767 
Housing completed or under construction(277,187)(218,655)
Land and land under development108,755 34,978 
Prepaids and other assets(20,479)(23,594)
Accounts payable and accrued other liabilities57,571 61,558 
Net cash provided by (used in) operating activities118,055 (57,957)
Investing Activities:
Purchases of property and equipment(6,884)(5,749)
Net cash used in investing activities(6,884)(5,749)
Financing Activities:
Proceeds from (payments on) mortgage repurchase facility, net(78,069)15,092 
Proceeds from issuance of senior notes— 347,725 
Dividend payments(35,583)(26,665)
Payments of deferred financing costs— (819)
Issuance of shares under stock-based compensation programs, net(12,628)1,009 
Net cash provided by (used in) financing activities(126,280)336,342 
Net increase (decrease) in cash, cash equivalents and restricted cash(15,109)272,636 
Cash, cash equivalents and restricted cash:
Beginning of period603,459 503,972 
End of period$588,350 $776,608 
Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents$474,447 $678,194 
Restricted cash6,400 17,314 
Financial Services:
Cash and cash equivalents107,503 81,100 
Total cash, cash equivalents and restricted cash$588,350 $776,608 
6




New Home Deliveries
Three Months Ended March 31,
20222021% Change
HomesHome Sale
Revenues
Average
Price
HomesHome Sale
Revenues
Average
Price
HomesHome
Sale
Revenues
Average Price
(Dollars in thousands)
West1,243 $707,311 $569.0 1,276 $616,611 $483.2 (3)%15 %18 %
Mountain548 335,128 611.5 612 324,717 530.6 (10)%%15 %
East442 198,081 448.1 290 100,530 346.7 52 %97 %29 %
Total2,233 $1,240,520 $555.5 2,178 $1,041,858 $478.4 %19 %16 %

Net New Orders

Three Months Ended March 31,
20222021% Change
HomesDollar
Value
Average
Price
Monthly
Absorption
Rate *
HomesDollar ValueAverage PriceMonthly
Absorption Rate *
HomesDollar ValueAverage PriceMonthly
Absorption
Rate
(Dollars in thousands)
West1,704 $1,000,954 $587.4 5.541,775 $904,691 $509.7 5.80(4)%11 %15 %(4)%
Mountain920 581,971 632.6 5.631,011 562,753 556.6 5.91(9)%%14 %(5)%
East527 253,850 481.7 4.78423 168,021 397.2 4.6225 %51 %21 %%
Total3,151 $1,836,775 $582.9 5.423,209 $1,635,465 $509.6 5.64(2)%12 %14 %(4)%
        *Calculated as total net new orders (gross orders less cancellations) in period ÷ average active communities during period ÷ number of months in period

Active Subdivisions

Average Active Subdivisions
Active SubdivisionsThree Months Ended
March 31,%March 31,%
20222021Change20222021Change
West112 97 15 %103 102 %
Mountain53 55 (4)%55 57 (4)%
East35 34 %37 31 19 %
Total200 186 %195 190 %


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Backlog

March 31,
20222021% Change
HomesDollar
Value
Average
Price
HomesDollar
Value
Average
Price
HomesDollar
Value
Average
Price
(Dollars in thousands)
West4,677 $2,651,123 $566.8 4,209 $2,157,618 $512.6 11 %23 %11 %
Mountain2,546 1,668,048 655.2 2,417 1,355,201 560.7 %23 %17 %
East1,335 628,631 470.9 1,060 414,474 391.0 26 %52 %20 %
Total8,558 $4,947,802 $578.1 7,686 $3,927,293 $511.0 11 %26 %13 %

Homes Completed or Under Construction (WIP lots)

 March 31,%
 20222021Change
Unsold:
Completed19 36 (47)%
Under construction313 64 389 %
Total unsold started homes332 100 232 %
Sold homes under construction or completed7,445 5,854 27 %
Model homes under construction or completed513 502 %
Total homes completed or under construction8,290 6,456 28 %

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

 March 31, 2022March 31, 2021 
 Lots
Owned
Lots
Optioned
TotalLots
Owned
Lots
Optioned
TotalTotal
% Change
West15,548 4,237 19,785 12,658 3,921 16,579 19 %
Mountain6,741 4,240 10,981 6,790 3,418 10,208 %
East4,318 2,728 7,046 3,088 2,148 5,236 35 %
Total26,607 11,205 37,812 22,536 9,487 32,023 18 %
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Selling, General and Administrative Expenses

Three Months Ended March 31,
20222021Change
(Dollars in thousands)
General and administrative expenses$71,983 $57,163 $14,820 
General and administrative expenses as a percentage of home sale revenues
5.8 %5.5 %30 bps
Marketing expenses$25,632 $25,703 $(71)
Marketing expenses as a percentage of home sale revenues
2.1 %2.5 %-40 bps
Commissions expenses$31,699 $32,127 $(428)
Commissions expenses as a percentage of home sale revenues
2.6 %3.1 %-50 bps
Total selling, general and administrative expenses$129,314 $114,993 $14,321 
Total selling, general and administrative expenses as a percentage of home sale revenues
10.4 %11.0 %-60 bps

Capitalized Interest

Three Months Ended
March 31,
20222021
(Dollars in thousands)
Homebuilding interest incurred$17,258 $17,332 
Less: Interest capitalized(17,258)(17,332)
Homebuilding interest expensed$— $— 
Interest capitalized, beginning of period$58,054 $52,777 
Plus: Interest capitalized during period17,258 17,332 
Less: Previously capitalized interest included in home cost of sales(14,844)(14,841)
Interest capitalized, end of period$60,468 $55,268 
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