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Form 8-K M.D.C. HOLDINGS, INC. For: Apr 29

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April 29, 2021 6:16 AM EDT
Exhibit 99.1
News Release

M.D.C. HOLDINGS ANNOUNCES FIRST QUARTER 2021 RESULTS

201% increase in net income driven by home sale revenues growth of 49% and a 200 basis point expansion to our gross margin from home sales to 21.9%

DENVER, COLORADO, Thursday, April 29, 2021. M.D.C Holdings, Inc. (NYSE: MDC), one of the nation’s leading homebuilders, announced results for the quarter ended March 31, 2021.

Larry A. Mizel, MDC's Executive Chairman, stated, “MDC delivered another quarter of strong profitability, generating net income of $111 million, or $1.51 per diluted share. Home sale revenues grew 49% year-over-year on a 41% increase in closings and 6% rise in average selling prices. We continue to see heightened demand for our homes, as evidenced by the 34% year-over-year increase to unit orders for the quarter. The only constraint to our sales efforts are ones that we are imposing on ourselves, in an effort to balance orders and pricing to best manage our backlog. These efforts resulted in a 200 basis point expansion to our gross margin from home sales in the quarter to 21.9%. We have also been successful in leveraging our overhead expenses, lowering our SG&A ratio by 180 basis points in the quarter to 11.0%. Given the size of our quarter-ending backlog and the current state of the housing market, we believe MDC is in a great position to deliver excellent results for the full year.”

Mr. Mizel continued, “We continue to run our business in a prudent manner by focusing on steady growth in each of our markets while maintaining a strong capital position. This focus was recognized by S&P Global Ratings earlier this month, which upgraded our credit rating to investment grade. We believe this is validation for our long-term approach to the business and the strength of our balance sheet, which we feel benefits both debt and equity investors over time.”

David D. Mandarich, MDC’s President and Chief Executive Officer stated, “While the entire industry is benefiting from the ongoing imbalance between housing supply and demand, we believe MDC is uniquely positioned to succeed in today’s market thanks to our continued focus on more affordable price points and our build-to-order model. There is a real need for additional housing in this country, especially for people looking to buy their first home, and a majority of our communities cater to these buyers. There is also a desire for new home customization among these buyers, which is another benefit that our business model offers. We believe these two trends will be in place for the foreseeable future, giving us a great runway for continued success.”

1



2021 First Quarter Highlights and Comparisons to 2020 First Quarter

•Home sale revenues increased 49% to $1.04 billion from $697.1 million
◦Unit deliveries up 41% to 2,178
◦Average selling price of deliveries up 6% to $478,000
•Homebuilding pretax income increased 129% to $113.5 million from $49.7 million
◦Gross margin from home sales increased 200 basis points to 21.9% from 19.9%
◦Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 180 basis points to 11.0%
•Financial services pretax income increased $31.9 million to $30.8 million, compared to a pretax loss of $1.1 million in the first quarter of 2020
•Net income of $110.7 million, or $1.51 per diluted share, up 201% from $36.8 million or $0.52 per diluted share*
◦Effective tax rate of 23.3% vs. 24.3%
•Dollar value of net new orders increased 50% to $1.64 billion from $1.09 billion
◦Unit net orders increased 34% to 3,209
◦Average selling price of net orders up 12%
•Dollar value of ending backlog up 81% to $3.93 billion from $2.17 billion
◦Unit backlog increased 65% to 7,686
◦Average selling price of homes in backlog up 9%

* Per share amount for the 2020 first quarter has been adjusted for the 8% stock dividend declared and paid in the 2021 first quarter.

2021 Outlook and Other Selected Information1

•Home deliveries for the 2021 second quarter between 2,500 and 2,700
◦Average selling price for 2021 second quarter unit deliveries of approximately $500,000
◦Gross margin from home sales for the 2021 second quarter of approximately 22.5% (excluding impairments and warranty adjustments)
•Full year 2021 home deliveries between 10,000 and 11,000
•Active subdivision count goal of at least 10% growth during 2021 (from December 31, 2020 to December 31, 2021)
•Lots controlled of 32,023 at March 31, 2021, up 18% year-over-year
•Quarterly cash dividend of forty cents ($0.40) per share declared on April 26, 2021, up 31% year-over-year (after adjusting for 8% stock dividend in March 2021)

1 See "Forward-Looking Statements" below.
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 210,000 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 and Boise. 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, 2021, 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,
20212020
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues$1,041,858 $697,085 
Home cost of sales(813,888)(558,647)
Gross profit227,970 138,438 
Selling, general and administrative expenses(114,993)(89,321)
Interest and other income967 1,889 
Other expense(437)(1,337)
Homebuilding pretax income113,507 49,669 
Financial Services:
Revenues45,023 21,886 
Expenses(15,105)(10,929)
Other income (expense), net887 (12,064)
Financial services pretax income (loss)30,805 (1,107)
Income before income taxes144,312 48,562 
Provision for income taxes(33,622)(11,802)
Net income$110,690 $36,760 
Comprehensive income$110,690 $36,760 
Earnings per share:
Basic$1.58 $0.54 
Diluted$1.51 $0.52 
Weighted average common shares outstanding:
Basic69,790,927 67,490,537 
Diluted72,788,177 70,125,723 
Dividends declared per share$0.37 $0.31 

4


M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
March 31,
2021		December 31,
2020
(Dollars in thousands, except
per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents$678,194 $411,362 
Restricted cash17,314 15,343 
Trade and other receivables107,823 72,466 
Inventories:
Housing completed or under construction1,705,424 1,486,587 
Land and land under development1,310,721 1,345,643 
Total inventories3,016,145 2,832,230 
Property and equipment, net60,394 61,880 
Deferred tax asset, net12,802 11,454 
Prepaids and other assets107,428 101,685 
Total homebuilding assets4,000,100 3,506,420 
Financial Services:
Cash and cash equivalents81,100 77,267 
Mortgage loans held-for-sale, net230,789 232,556 
Other assets70,941 48,677 
Total financial services assets382,830 358,500 
Total Assets$4,382,930 $3,864,920 
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable$120,496 $98,862 
Accrued and other liabilities333,880 300,735 
Revolving credit facility10,000 10,000 
Senior notes, net1,384,475 1,037,391 
Total homebuilding liabilities1,848,851 1,446,988 
Financial Services:
Accounts payable and accrued liabilities101,725 95,630 
Mortgage repurchase facility217,482 202,390 
Total financial services liabilities319,207 298,020 
Total Liabilities2,168,058 1,745,008 
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; 70,265,205 and 64,851,126 issued and outstanding at March 31, 2021 and December 31, 2020, respectively
703 649 
Additional paid-in-capital1,698,109 1,407,597 
Retained earnings516,060 711,666 
Total Stockholders' Equity2,214,872 2,119,912 
Total Liabilities and Stockholders' Equity$4,382,930 $3,864,920 

5


M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
20212020
(Dollars in thousands)
Operating Activities:
Net income$110,690 $36,760 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense9,926 4,440 
Depreciation and amortization7,003 5,152 
Net (gain) loss on marketable equity securities— 13,268 
Deferred income tax expense(1,348)1,131 
Net changes in assets and liabilities:
Trade and other receivables(40,282)(1,611)
Mortgage loans held-for-sale, net1,767 63,100 
Housing completed or under construction(218,655)(178,873)
Land and land under development34,978 29,051 
Prepaids and other assets(23,594)(8,460)
Accounts payable and accrued liabilities61,558 (1,131)
Net cash used in operating activities(57,957)(37,173)
Investing Activities:
Purchases of marketable securities— (9,782)
Sales of marketable securities— 9,276 
Purchases of property and equipment(5,749)(6,512)
Net cash used in investing activities(5,749)(7,018)
Financing Activities:
Payments on mortgage repurchase facility, net15,092 (40,872)
Repayment of senior notes— (250,000)
Proceeds from issuance of senior notes347,725 298,050 
Dividend payments(26,665)(20,768)
Payments of deferred financing costs(819)— 
Issuance of shares under stock-based compensation programs, net1,009 8,194 
Net cash provided by (used in) financing activities336,342 (5,396)
Net increase (decrease) in cash, cash equivalents and restricted cash272,636 (49,587)
Cash, cash equivalents and restricted cash:
Beginning of period503,972 474,212 
End of period$776,608 $424,625 
Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents$678,194 $386,704 
Restricted cash17,314 15,762 
Financial Services:
Cash and cash equivalents81,100 22,159 
Total cash, cash equivalents and restricted cash$776,608 $424,625 
6



New Home Deliveries
Three Months Ended March 31,
20212020% Change
HomesHome Sale
Revenues		Average
Price		HomesHome Sale
Revenues		Average
Price		HomesHome
Sale
Revenues		Average Price
(Dollars in thousands)
West1,276 $616,611 $483.2 871 $405,498 $465.6 46 %52 %4 %
Mountain612 324,717 530.6 435 222,858 512.3 41 %46 %4 %
East290 100,530 346.7 241 68,729 285.2 20 %46 %22 %
Total2,178 $1,041,858 $478.4 1,547 $697,085 $450.6 41 %49 %6 %

Net New Orders

Three Months Ended March 31,
20212020% Change
HomesDollar
Value		Average
Price		Monthly
Absorption
Rate *		HomesDollar ValueAverage PriceMonthly
Absorption Rate *		HomesDollar ValueAverage PriceMonthly
Absorption
Rate
(Dollars in thousands)
West1,775 $904,691 $509.7 5.801,382 $655,892 $474.6 5.1328 %38 %7 %13 %
Mountain1,011 562,753 556.6 5.91693 339,132 489.4 3.5446 %66 %14 %67 %
East423 168,021 397.2 4.62324 97,723 301.6 3.6631 %72 %32 %26 %
Total3,209 $1,635,465 $509.6 5.642,399 $1,092,747 $455.5 4.3334 %50 %12 %30 %
        *Calculated as total net new orders 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,%
20212020Change20212020Change
West97 92 5 %102 90 13 %
Mountain55 64 (14)%57 65 (12)%
East34 29 17 %31 30 3 %
Total186 185 1 %190 185 3 %


7


Backlog

March 31,
20212020% Change
HomesDollar
Value		Average
Price		HomesDollar
Value		Average
Price		HomesDollar
Value		Average
Price
(Dollars in thousands)
West4,209 $2,157,618 $512.6 2,534 $1,227,996 $484.6 66 %76 %6 %
Mountain2,417 $1,355,201 560.7 1,469 $754,155 513.4 65 %80 %9 %
East1,060 $414,474 391.0 650 $191,972 295.3 63 %116 %32 %
Total7,686 $3,927,293 $511.0 4,653 $2,174,123 $467.3 65 %81 %9 %

Homes Completed or Under Construction (WIP lots)

 March 31,%
 20212020Change
Unsold:
Completed36 160 (78)%
Under construction64 216 (70)%
Total unsold started homes100 376 (73)%
Sold homes under construction or completed5,854 3,259 80 %
Model homes under construction or completed502 502 — %
Total homes completed or under construction6,456 4,137 56 %

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

 March 31, 2021March 31, 2020 
 Lots
Owned		Lots
Optioned		TotalLots
Owned		Lots
Optioned		TotalTotal
% Change
West12,658 3,921 16,579 9,641 2,393 12,034 38 %
Mountain6,790 3,418 10,208 6,540 4,007 10,547 (3)%
East3,088 2,148 5,236 2,410 2,133 4,543 15 %
Total22,536 9,487 32,023 18,591 8,533 27,124 18 %
8


Selling, General and Administrative Expenses

Three Months Ended March 31,
20212020Change
(Dollars in thousands)
General and administrative expenses$57,163 $45,089 $12,074 
General and administrative expenses as a percentage of home sale revenues
5.5 %6.5 %-100 bps
Marketing expenses$25,703 $21,446 $4,257 
Marketing expenses as a percentage of home sale revenues
2.5 %3.1 %-60 bps
Commissions expenses$32,127 $22,786 $9,341 
Commissions expenses as a percentage of home sale revenues
3.1 %3.3 %-20 bps
Total selling, general and administrative expenses$114,993 $89,321 $25,672 
Total selling, general and administrative expenses as a percentage of home sale revenues
11.0 %12.8 %-180 bps

Capitalized Interest

Three Months Ended
March 31,
20212020
(Dollars in thousands)
Homebuilding interest incurred$17,332 $16,534 
Less: Interest capitalized(17,332)(16,534)
Homebuilding interest expensed$— $— 
Interest capitalized, beginning of period$52,777 $55,310 
Plus: Interest capitalized during period17,332 16,534 
Less: Previously capitalized interest included in home cost of sales(14,841)(12,767)
Interest capitalized, end of period$55,268 $59,077 
9


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