PR Newswire | Oct 28, 2021 06:01AM EDT

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10/28 05:00 CDT

M.D.C. Holdings Announces Third Quarter 2021 Results And Quarterly Dividend IncreaseNet income increased to $146 million driven by home sale revenues growth of 26% and continued gross margin expansion; Quarterly cash dividend increased 25% from the prior quarter to $0.50 per share DENVER, Oct. 28, 2021

DENVER, Oct. 28, 2021 /PRNewswire/ -- M.D.C. Holdings, Inc. (NYSE: MDC), one of the nation's leading homebuilders, announced results for the quarter ended September 30, 2021.

"MDC posted strong results in the third quarter of 2021, as the homebuilding industry continued to thrive," said Larry Mizel, MDC's Executive Chairman. "Home sale revenues grew 26% year-over-year thanks to double digit percentage increases to both deliveries and average selling price. Home sales gross margin rose 300 basis points year-over-year to 23.5%, as price increases more than offset cost inflation in the quarter. Net income came in at $146 million, or $1.99 per diluted share, representing growth of 48% and 44%, respectively, over the third quarter of 2020."

Mr. Mizel continued, "We continued to see healthy demand for our homes in the third quarter, as evidenced by our order pace of 4.1 homes per community per month. This was the second highest third quarter order pace for our company in the last 15 years and resulted in an 18% increase in the number of homes in backlog year-over-year. Average selling prices in backlog also trended higher as compared to last year, which should bode well for future margins."

Mr. Mizel concluded, "MDC is in a great position to close out 2021 with momentum thanks to our sizable backlog, great product profile and excellent capital position. We have laid the foundation for a significant increase in community count next year, with 37% more lots under control at the end of the third quarter than we had at the end of the third quarter of 2020. As a result, we believe the future is bright for MDC."

"On the heels of our expansion into Boise and Nashville, I am pleased to announce that MDC will soon be selling homes in Austin, Texas and Albuquerque, New Mexico," said David Mandarich, MDC's President and Chief Executive Officer. "We feel that these two markets have a great runway for new home construction growth, thanks to a consistent increase in good paying jobs, favorable affordability and an excellent overall quality of life. We believe Austin and Albuquerque will fit nicely into our current geographic footprint and expect these markets to respond well to our more affordably priced, well designed new home offerings."

Dividend Increase

The Company also announced that its board of directors has declared a quarterly cash dividend of fifty cents($0.50) per share on the Company's common stock. This represents a 25% increase over the Company's previous quarterly dividend. The dividend will be paid on Wednesday, November 24, 2021 to shareholders of record on Wednesday, November 10, 2021.

Mr. Mizel said, "Given MDC's strong financial position and increased levels of profitability during the fiscal year, our board has decided to increase our quarterly dividend. Our industry leading dividend remains a priority as we look to return capital to our shareholders and deliver consistent shareholder returns over time."

2021 Third Quarter Highlights and Comparisons to 2020 Third Quarter

? Home sale revenues increased 26% to $1.26 billion from $1.00 billion

* Unit deliveries up 13% to 2,419

* Average selling price of deliveries up 12% to $519,900

? Homebuilding pretax income increased 62% to $165.2 million from $101.7 million

* Gross margin from home sales increased 300 basis points to 23.5% from 20.5%

* Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 80 basis points to 9.6%

* Loss on debt retirement of $12.2 million in current quarter

? Net income of $146.0 million, or $1.99 per diluted share, up 48% from $98.9 million or $1.38 per diluted share*

* Effective tax rate of 24.3% vs. 21.5%

? Dollar value of net new orders decreased 21% to $1.30 billion from $1.65 billion

* Monthly sales absorption rate of 4.1 vs. 6.1 in prior period quarter

* Second highest third quarter monthly sales absorption rate in the last 15 years

* Average selling price of net orders up 16%

? Dollar value of ending backlog up 38% to $4.24 billion from $3.08 billion

* Unit backlog increased 18% to 7,658

* Average selling price of homes in backlog up 17%

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

2021 Outlook and Other Selected Information1

? Projected home deliveries for the 2021 fourth quarter between 2,700 and 3,000

* Average selling price for 2021 fourth quarter unit deliveries between $530,000 and $540,000

* Gross margin from home sales for the 2021 fourth quarter between 23.5% and 24.0% (excluding impairments and warranty adjustments)

? Lots controlled of 36,666 at September 30, 2021, up 37% year-over-year

Quarterly cash dividend of fifty cents ($0.50) per share declared on October? 25, 2021, up 25% from the prior quarter and 35% from the prior year (after adjusting for 8% stock dividend in March 2021)

* 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 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 September 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 Nine Months Ended September 30, September 30,

2021 2020 2021 2020



(Dollars in thousands, except per share amounts)

Homebuilding:

Home sale revenues $1,257,701$1,000,549$3,667,332$2,584,392

Home cost of sales (962,078) (795,172) (2,827,147)(2,061,608)

Gross profit 295,623 205,377 840,185 522,784

Selling, general and administrative expenses(120,116) (103,632) (363,970) (285,269)

Loss on debt retirement (12,150) - (12,150) -

Interest and other income 3,149 756 4,984 3,365

Other expense (1,354) (851) (2,881) (4,640)

Homebuilding pretax income 165,152 101,650 466,168 236,240



Financial Services:

Revenues 43,104 36,803 121,445 91,653

Expenses (16,377) (13,294) (47,922) (36,401)

Other income (expense), net 813 859 2,855 (5,274)

Financial services pretax income 27,540 24,368 76,378 49,978



Income before income taxes 192,692 126,018 542,546 286,218

Provision for income taxes (46,738) (27,080) (131,550) (66,124)

Net income $145,954 $98,938 $410,996 $220,094



Comprehensive income $145,954 $98,938 $410,996 $220,094



Earnings per share:

Basic $2.07 $1.42 $5.83 $3.21

Diluted $1.99 $1.38 $5.62 $3.12



Weighted average common shares outstanding:

Basic 70,301,085 68,977,965 70,130,853 68,179,403

Diluted 72,800,011 71,090,903 72,770,432 70,167,443



Dividends declared per share $0.40 $0.31 $1.17 $0.92

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



September 30, December 31, 2021 2020



(Dollars in thousands, except per share amounts)

ASSETS

Homebuilding:

Cash and cash equivalents $ 761,715 $411,362

Restricted cash 12,047 15,343

Trade and other receivables 125,556 72,466

Inventories:

Housing completed or under construction 1,948,211 1,486,587

Land and land under development 1,464,603 1,345,643

Total inventories 3,412,814 2,832,230

Property and equipment, net 61,590 61,880

Deferred tax asset, net 16,301 11,454

Prepaids and other assets 105,860 101,685

Total homebuilding assets 4,495,883 3,506,420

Financial Services:

Cash and cash equivalents 93,884 77,267

Mortgage loans held-for-sale, net 248,921 232,556

Other assets 35,716 48,677

Total financial services assets 378,521 358,500

Total Assets $ 4,874,404 $3,864,920

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable $ 154,376 $98,862

Accrued and other liabilities 334,712 300,735

Revolving credit facility 10,000 10,000

Senior notes, net 1,607,658 1,037,391

Total homebuilding liabilities 2,106,746 1,446,988

Financial Services:

Accounts payable and accrued liabilities 93,880 95,630

Mortgage repurchase facility 215,794 202,390

Total financial services liabilities 309,674 298,020

Total Liabilities 2,416,420 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; 70,679,612 and 64,851,126 issued and 707 649 outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital 1,697,435 1,407,597

Retained earnings 759,842 711,666

Total Stockholders' Equity 2,457,984 2,119,912

Total Liabilities and Stockholders' Equity $ 4,874,404 $3,864,920

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



Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020



(Dollars in thousands)

Operating Activities:

Net income $145,954$98,938 $410,996$220,094

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

Stock-based compensation expense 7,965 8,608 26,832 18,536

Depreciation and amortization 7,752 7,354 23,930 18,881

Net loss on marketable equity securities - - - 8,285

Gain on sale of other assets (2,014) - (2,014) -

Loss on debt retirement 12,150 - 12,150 -

Deferred income tax expense (1,508) 6,531 (4,847) 8,493

Net changes in assets and liabilities:

Trade and other receivables 1,576 5,933 (55,529) (17,512)

Mortgage loans held-for-sale, net (62,835) 13,061 (16,365) 36,515

Housing completed or under construction (75,407) (153,440)(461,105)(387,269)

Land and land under development (155,141)13,792 (118,762)108,710

Prepaids and other assets 5,224 (21,523) 9,919 (20,314)

Accounts payable and accrued liabilities 17,678 (5,516) 88,273 35,023

Net cash provided by (used in) operating activities (98,606) (26,262) (86,522) 29,442



Investing Activities:

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

Sales of marketable securities - - - 59,266

Proceeds from sale of other assets 2,014 - 2,014 -

Purchases of property and equipment (9,581) (7,917) (23,028) (20,885)

Net cash provided by (used in) investing activities (7,567) (7,917) (21,014) 27,577



Financing Activities:

Payments on mortgage repurchase facility, net 51,113 (11,233) 13,404 (18,755)

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

Repayment of senior notes (136,394)- (136,394)(250,000)

Proceeds from issuance of senior notes 346,937 - 694,662 298,050

Dividend payments (28,276) (21,374) (83,189) (63,056)

Payments of deferred financing costs (901) - (1,720) -

Issuance of shares under stock-based compensation programs, net (19) 28,642 (15,553) 29,974

Net cash provided by (used in) financing activities 232,460 (3,965) 471,210 (8,787)



Net increase (decrease) in cash, cash equivalents and restricted cash 126,287 (38,144) 363,674 48,232

Cash, cash equivalents and restricted cash:

Beginning of period 741,359 560,588 503,972 474,212

End of period $867,646$522,444$867,646$522,444

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



Reconciliation of cash, cash equivalents and restricted cash:

Homebuilding:

Cash and cash equivalents $761,715$432,277$761,715$432,277

Restricted cash 12,047 19,732 12,047 19,732

Financial Services: -

Cash and cash equivalents 93,884 70,435 93,884 70,435

Total cash, cash equivalents and restricted cash $867,646$522,444$867,646$522,444

New Home Deliveries



Three Months Ended September 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 1,376$729,777 $530.41,135$552,319 $486.621 %32 % 9 %

Mountain666 379,041 569.1 677 347,095 512.7 (2)%9 % 11 %

East 377 148,883 394.9 335 101,135 301.9 13 %47 % 31 %

Total 2,419$1,257,701$519.92,147$1,000,549$466.013 %26 % 12 %





Nine Months Ended September 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 4,324$2,194,071$507.43,023$1,447,934$479.043 %52 % 6 %

Mountain1,9891,104,391 555.2 1,720886,619 515.5 16 %25 % 8 %

East 1,006368,870 366.7 851 249,839 293.6 18 %48 % 25 %

Total 7,319$3,667,332$501.15,594$2,584,392$462.031 %42 % 8 %

Net New Orders



Three Months Ended September 30,

2021 2020 % Change

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



(Dollars in thousands)

West 1,437$783,072 $544.94.91 1,955$932,111 $476.86.58 (26)%(16)%14 % (25) %

Mountain505 323,018 639.6 2.99 1,051542,375 516.1 5.70 (52)%(40)%24 % (48) %

East 457 199,985 437.6 3.67 509 176,896 347.5 5.39 (10)%13 %26 % (32) %

Total 2,399$1,306,075$544.44.10 3,515$1,651,382$469.86.10 (32)%(21)%16 % (33) %





Nine Months Ended September 30,

2021 2020 % Change

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



(Dollars in thousands)

West 4,814$2,613,279$542.85.42 4,646$2,265,557$487.65.47 4 %15 %11 % (1) %

Mountain2,2221,375,442 619.0 4.35 2,5021,309,176 523.3 4.39 (11)%5 %18 % (1) %

East 1,286558,716 434.5 3.91 1,156393,913 340.8 4.23 11 %42 %27 % (8) %

Total 8,322$4,547,437$546.44.82 8,304$3,968,646$477.94.91 - %15 %14 % (2) %

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

Active Subdivisions



Average Active Subdivisions Average Active Subdivisions

Active Subdivisions Three Months Ended Nine Months Ended

September 30, % September 30, % September 30, %

2021 2020 Change 2021 2020 Change 2021 2020 Change

West 104 102 2 %98 99 (1) %99 94 5 %

Mountain56 61 (8) %56 62 (10) %57 63 (10)%

East 43 31 39 %42 32 31 %37 30 23 %

Total 203 194 5 %196 193 2 %193 187 3 %





Backlog



September 30,

2021 2020 % Change

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



(Dollars in thousands)

West 4,200$2,295,570$546.6 3,646$1,743,547$478.2 15 % 32 % 14 %

Mountain2,251$1,408,945$625.9 1,993$1,033,264$518.4 13 % 36 % 21 %

East 1,207$537,983 $445.7 872 $298,965 $342.9 38 % 80 % 30 %

Total 7,658$4,242,498$554.0 6,511$3,075,776$472.4 18 % 38 % 17 %

Homes Completed or Under Construction (WIP lots)



September 30, %

2021 2020 Change

Unsold:

Completed 21 74 (72)%

Under construction 345 129 167 %

Total unsold started homes 366 203 80 %

Sold homes under construction or completed 6,4684,54042 %

Model homes under construction or completed490 505 (3) %

Total homes completed or under construction7,3245,24840 %

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



September 30, 2021 September 30, 2020

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

West 14,2095,811 20,020 10,140 3,280 13,420 49 %

Mountain6,258 4,236 10,494 6,217 2,708 8,925 18 %

East 3,824 2,328 6,152 2,716 1,769 4,485 37 %

Total 24,29112,375 36,666 19,073 7,757 26,830 37 %

Selling, General and Administrative Expenses



Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 Change 2021 2020 Change



(Dollars in thousands)

General and administrative expenses $59,935 $45,980 $13,955$179,056 $131,488 $47,568

General and administrative expenses as a percentage 4.8 %4.6 %20 bps 4.9 %5.1 %-20 bps of home sale revenues

Marketing expenses $25,660 $24,725 $935 $78,195 $68,828 $9,367

Marketing expenses as a percentage of home sale 2.0 %2.5 %-50 bps 2.1 %2.7 %-60 bps revenues

Commissions expenses $34,521 $32,927 $1,594 $106,719 $84,953 $21,766

Commissions expenses as a percentage of home sale 2.7 %3.3 %-60 bps 2.9 %3.3 %-40 bps revenues

Total selling, general and administrative expenses $120,116 $103,632 $16,484$363,970 $285,269 $78,701

Total selling, general and administrative expenses as9.6 %10.4 %-80 bps 9.9 %11.0 %-110 bpsa percentage of home sale revenues

Capitalization of Interest



Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020



(Dollars in thousands)

Homebuilding interest incurred $19,108$14,799$53,849$46,427

Less: Interest capitalized (19,108)(14,799)(53,849)(46,427)

Homebuilding interest expensed $- $- $- $-



Interest capitalized, beginning of period $54,351$56,929$52,777$55,310

Plus: Interest capitalized during period 19,108 14,799 53,849 46,427

Less: Previously capitalized interest included in home cost of sales(16,024)(16,511)(49,191)(46,520)

Interest capitalized, end of period $57,435$55,217$57,435$55,217

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SOURCE M.D.C. Holdings, Inc.