PR Newswire | Jul 29, 2021 06:00AM EDT

07/29 05:00 CDT

M.D.C. Holdings Announces Second Quarter 2021 ResultsHome sales revenue growth of 54% and continued gross margin expansion resulted in an 83% increase in net income for the quarter DENVER, July 29, 2021

DENVER, July 29, 2021 /PRNewswire/ -- M.D.C Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter ended June 30, 2021.

Larry A. Mizel, MDC's Executive Chairman, stated, "MDC posted another quarter of strong operating performance, highlighted by significant year-over year growth to our top and bottom-line results as well as continued momentum with our new home sales efforts. Home sales revenue grew 54% year-over-year thanks to a 43% increase in unit closings and an 8% rise in average selling prices. Our home sales gross margin expanded 290 basis points year-over-year to 23.1%, while our SG&A ratio improved 100 basis points to 9.4% of revenues. Order activity remained strong during the quarter with an average absorption pace of 4.8 homes per community per month, in spite of the price increases we implemented."

Mr. Mizel continued, "We continue to see a favorable landscape for our industry thanks to an improving economy, a motivated buyer population and a need for new housing brought about by the household formations that have and will continue to occur in this country. In light of this positive outlook, we have been actively replenishing our lot pipeline in our existing markets and have also expanded into new markets such as Boise and most recently Nashville. With a considerable runway for growth, a strong balance sheet and a rapidly improving return profile, MDC is in a great position to deliver strong results in the second half of 2021 and beyond."

David Mandarich, MDC's President and Chief Executive Officer stated, "We continue to see buyers respond well to our home offerings, especially those within our more affordably priced collections. We are keenly aware of the rising cost of home ownership in our markets and strive to provide more affordable new home options for our buyers through our value-engineered, high quality floor plans. Buyers have the flexibility to add options and upgrades at our Home Gallery design studios, a feature we believe differentiates us from much of the competition. Value, quality and personalization have all been hallmarks of the Richmond American brand for decades, and this tradition will carry on into the future."

2021 Second Quarter Highlights and Comparisons to 2020 Second Quarter

? Home sale revenues increased 54% to $1.37 billion from $886.8 million

? Unit deliveries up 43% to 2,722

? Average selling price of deliveries up 8% to $502,000

? Homebuilding pretax income increased 121% to $187.5 million from$84.9 million

? Gross margin from home sales increased 290 basis points to 23.1% from 20.2%

? Selling, general and administrative expenses as a percentage of home salerevenues ("SG&A rate") improved by 100 basis points to 9.4%

? Net income of $154.4 million, or $2.11 per diluted share, up 83% from $84.4million or $1.21 per diluted share*

? Effective tax rate of 24.9% vs. 24.4%

? Dollar value of net new orders increased 40% to $1.47 billion from $1.04billion

? Unit net orders increased 14% to 2,714

? Average selling price of net orders up 24%

? Dollar value of ending backlog up 73% to $4.11 billion from $2.37 billion

? Unit backlog increased 49% to 7,678

? Average selling price of homes in backlog up 16%

* Per share amount for the 2020 second 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 third quarter between 2,500 and 2,700

? Average selling price for 2021 third quarter unit deliveries between$510,000 and $520,000

? Gross margin from home sales for the 2021 third quarter of approximately23.5% (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 (fromDecember 31, 2020 to December 31, 2021)

? Lots controlled of 34,400 at June 30, 2021, up 37% year-over-year

? Quarterly cash dividend of forty cents ($0.40) per share declared on July26, 2021, up 31% year-over-year (after adjusting for 8% stock dividend in March2021)

? Consistent dividend program for over 25 years

? Quarterly dividend has more than doubled in the past five 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 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 and Nashville. 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 June 30, 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.

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



(Dollars in thousands, except per share amounts)

Homebuilding:

Home sale revenues $1,367,773$886,758 $2,409,631$1,583,843

Home cost of sales (1,051,181)(707,789) (1,865,069)(1,266,436)

Gross profit 316,592 178,969 544,562 317,407

Selling, general and administrative (128,861) (92,316) (243,854) (181,637) expenses

Interest and other income 868 720 1,835 2,609

Other expense (1,090) (2,452) (1,527) (3,789)

Homebuilding pretax income 187,509 84,921 301,016 134,590



Financial Services:

Revenues 33,318 32,964 78,341 54,850

Expenses (16,440) (12,178) (31,545) (23,107)

Other income (expense), net 1,155 5,931 2,042 (6,133)

Financial services pretax income 18,033 26,717 48,838 25,610



Income before income taxes 205,542 111,638 349,854 160,200

Provision for income taxes (51,190) (27,242) (84,812) (39,044)

Net income $154,352 $84,396 $265,042 $121,156



Comprehensive income $154,352 $84,396 $265,042 $121,156



Earnings per share:

Basic $2.19 $1.23 $3.76 $1.78

Diluted $2.11 $1.21 $3.62 $1.73



Weighted average common shares outstanding:

Basic 70,291,057 68,057,09370,044,326 67,775,735

Diluted 72,715,273 69,207,41572,754,141 69,701,942



Dividends declared per share $0.40 $0.31 $0.77 $0.61

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited)



June 30, December 31, 2021 2020



(Dollars in thousands, except per share amounts)

ASSETS

Homebuilding:

Cash and cash equivalents $638,547 $411,362

Restricted cash 14,158 15,343

Trade and other receivables 133,146 72,466

Inventories:

Housing completed or under construction 1,872,666 1,486,587

Land and land under development 1,309,360 1,345,643

Total inventories 3,182,026 2,832,230

Property and equipment, net 59,664 61,880

Deferred tax asset, net 14,793 11,454

Prepaids and other assets 98,066 101,685

Total homebuilding assets 4,140,400 3,506,420

Financial Services:

Cash and cash equivalents 88,654 77,267

Mortgage loans held-for-sale, net 186,086 232,556

Other assets 43,054 48,677

Total financial services assets 317,794 358,500

Total Assets $4,458,194$3,864,920

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable $135,712 $98,862

Accrued and other liabilities 330,929 300,735

Revolving credit facility 10,000 10,000

Senior notes, net 1,384,714 1,037,391

Total homebuilding liabilities 1,861,355 1,446,988

Financial Services:

Accounts payable and accrued liabilities 99,599 95,630

Mortgage repurchase facility 164,681 202,390

Total financial services liabilities 264,280 298,020

Total Liabilities 2,125,635 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; 70,619,638 and 64,851,126 issued and 706 649 outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital 1,689,689 1,407,597

Retained earnings 642,164 711,666

Total Stockholders' Equity 2,332,559 2,119,912

Total Liabilities and Stockholders' Equity $4,458,194$3,864,920

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

(Unaudited)



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



(Dollars in thousands)

Operating Activities:

Net income $154,352$84,396 $265,042$121,156

Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation expense 8,941 5,488 18,867 9,928

Depreciation and amortization 9,175 6,375 16,178 11,527

Net (gain) loss on marketable equity securities - (4,983) - 8,285

Deferred income tax expense (1,991) 831 (3,339) 1,962

Net changes in assets and liabilities:

Trade and other receivables (16,823) (21,834) (57,105) (23,445)

Mortgage loans held-for-sale, net 44,703 (39,646) 46,470 23,454

Housing completed or under construction (167,043)(54,956) (385,698)(233,829)

Land and land under development 1,401 65,867 36,379 94,918

Prepaids and other assets 28,289 9,669 4,695 1,209

Accounts payable and accrued liabilities 9,037 41,670 70,595 40,539

Net cash provided by operating activities 70,041 92,877 12,084 55,704



Investing Activities:

Purchases of marketable securities - (1,022) - (10,804)

Sales of marketable securities - 49,990 - 59,266

Purchases of property and equipment (7,698) (6,456) (13,447) (12,968)

Net cash provided by (used in) investing activities (7,698) 42,512 (13,447) 35,494



Financing Activities:

Payments on mortgage repurchase facility, net (52,801) 33,350 (37,709) (7,522)

Payments on homebuilding line of credit, net - (5,000) - (5,000)

Repayment of senior notes - - - (250,000)

Proceeds from issuance of senior notes - - 347,725 298,050

Dividend payments (28,248) (20,914) (54,913) (41,682)

Payments of deferred financing costs (819) -

Issuance of shares under stock-based compensation programs, net (16,543) (6,862) (15,534) 1,332

Net cash provided by (used in) financing activities (97,592) 574 238,750 (4,822)



Net increase (decrease) in cash, cash equivalents and restricted cash (35,249) 135,963 237,387 86,376

Cash, cash equivalents and restricted cash:

Beginning of period 776,608 424,625 503,972 474,212

End of period $741,359$560,588$741,359$560,588



Reconciliation of cash, cash equivalents and restricted cash:

Homebuilding:

Cash and cash equivalents $638,547$482,702$638,547$482,702

Restricted cash 14,158 15,668 14,158 15,668

Financial Services: -

Cash and cash equivalents 88,654 62,218 88,654 62,218

Total cash, cash equivalents and restricted cash $741,359$560,588$741,359$560,588

New Home Deliveries



Three Months Ended June 30,

2021 2020 % Change

Home Home Sale Average Home Sale Average Average Homes Homes HomesSale Price Revenues Price Revenues Price Revenues



(Dollars in thousands)

West 1,672$847,683 $507.01,017$490,117$481.964 %73% 5 %

Mountain711 400,633 563.5 608 316,666 520.8 17 %27% 8 %

East 339 119,457 352.4 275 79,975 290.8 23 %49% 21 %

Total 2,722$1,367,773$502.51,900$886,758$466.743 %54% 8 %

Six Months Ended June 30,

2021 2020 % Change

Home Home Sale Average Home Sale Average Average Homes Homes HomesSale Price Revenues Price Revenues Price Revenues



(Dollars in thousands)

West 2,948$1,464,294$496.71,888$895,615 $474.456 %63 % 5 %

Mountain1,323725,350 548.3 1,043539,524 517.3 27 %34 % 6 %

East 629 219,987 349.7 516 148,704 288.2 22 %48 % 21 %

Total 4,900$2,409,631$491.83,447$1,583,843$459.542 %52 % 7 %

Net New Orders



Three Months Ended June 30,

2021 2020 % Change

Monthly Monthly Monthly Dollar Average Average Dollar Average Homes AbsorptionHomes Dollar ValuePrice Absorption HomesValue Price Absorption Value Price Rate * Rate * Rate



(Dollars in thousands)

West 1,602$850,742 $531.05.67 1,309$574,996 $439.3 4.62 22 %48 %21 % 23 %

Mountain706 433,793 614.4 4.18 758 362,228 477.9 3.99 (7)%20 %29 % 5 %

East 406 180,205 443.9 3.56 323 106,436 329.5 3.53 26 %69 %35 % 1 %

Total 2,714$1,464,740$539.74.80 2,390$1,043,660$436.7 4.23 14 %40 %24 % 13 %





Six Months Ended June 30,

2021 2020 % Change

Monthly Monthly Monthly Dollar Average Average Dollar Average Homes AbsorptionHomes Dollar ValuePrice Absorption HomesValue Price Absorption Value Price Rate * Rate * Rate



(Dollars in thousands)

West 3,377$1,791,809$530.65.73 2,691$1,262,330$469.1 4.88 25 %42 %13 % 17 %

Mountain1,7171,017,585 592.7 5.03 1,451722,197 497.7 3.76 18 %41 %19 % 34 %

East 829 354,950 428.2 4.03 647 206,911 319.8 3.58 28 %72 %34 % 13 %

Total 5,923$3,164,344$534.25.21 4,789$2,191,438$457.6 4.28 24 %44 %17 % 22 %

*Calculated as total net new orders in period / average active communitiesduring period / number of months in period

Active Subdivisions



Average Active Average Active Subdivisions Subdivisions

Active Three Months Ended Six Months Ended Subdivisions

June 30, % June 30, % June 30, %

20212020Change2021 2020 Change 2021 2020 Change

West 91 96 (5) %94 95 (1) %98 92 7 %

Mountain55 63 (13)%56 63 (11) %57 64 (11) %

East 41 33 24 %38 31 23 %34 30 13 %

Total 187192(3) %188 189 (1) %189 186 2 %

Backlog



June 30,

2021 2020 % Change

Dollar Average Dollar Average DollarAverage Homes Homes Homes Value Price Value Price Value Price



(Dollars in thousands)

West 4,139$2,204,500$532.62,826$1,336,251$472.846% 65 % 13 %

Mountain2,412$1,426,496591.4 1,619$816,559 504.4 49% 75 % 17 %

East 1,127$482,736 428.3 698 $220,362 315.7 61% 119% 36 %

Total 7,678$4,113,732$535.85,143$2,373,172$461.449% 73 % 16 %

Homes Completed or Under Construction (WIP lots)



June 30, %

2021 2020 Change

Unsold:

Completed 19 109 (83)%

Under construction 214 191 12 %

Total unsold started homes 233 300 (22)%

Sold homes under construction or completed 6,6553,57386 %

Model homes under construction or completed502 502 - %

Total homes completed or under construction7,3904,37569 %

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



June 30, 2021 June 30, 2020

Lots Lots Lots Lots Total Total Total Owned Optioned Owned Optioned % Change

West 13,2654,729 17,994 9,364 2,619 11,983 50 %

Mountain6,599 4,174 10,773 6,076 2,667 8,743 23 %

East 3,636 1,997 5,633 2,260 2,041 4,301 31 %

Total 23,50010,900 34,400 17,700 7,327 25,027 37 %

Selling, General and Administrative Expenses



Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change



(Dollars in thousands)

General and administrative expenses $61,958 $40,419 $21,539$119,121 $85,508 $33,613

General and administrative expenses as a percentage 4.5 %4.6 %-10 bps 4.9 %5.4 %-50 bps of home sale revenues

Marketing expenses $26,832 $22,657 $4,175 $52,535 $44,103 $8,432

Marketing expenses as a percentage of home sale 2.0 %2.6 %-60 bps 2.2 %2.8 %-60 bps revenues

Commissions expenses $40,071 $29,240 $10,831$72,198 $52,026 $20,172

Commissions expenses as a percentage of home sale 2.9 %3.3 %-40 bps 3.0 %3.3 %-30 bps revenues

Total selling, general and administrative expenses $128,861 $92,316 $36,545$243,854 $181,637 $62,217

Total selling, general and administrative expenses as9.4 %10.4 %-100 bps 10.1 %11.5 %-140 bps a percentage of home sale revenues

Capitalized Interest



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



(Dollars in thousands)

Homebuilding interest incurred $17,409$15,094$34,741$31,628

Less: Interest capitalized (17,409)(15,094)(34,741)(31,628)

Homebuilding interest expensed $- $- $- $-



Interest capitalized, beginning of period $55,268$59,077$52,777$55,310

Plus: Interest capitalized during period 17,409 15,094 34,741 31,628

Less: Previously capitalized interest included in home cost of sales(18,326)(17,242)(33,167)(30,009)

Interest capitalized, end of period $54,351$56,929$54,351$56,929

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SOURCE M.D.C. Holdings, Inc.