M D C : ANNOUNCES 2021 FOURTH QUARTER AND FULL YEAR RESULTS - Form 8-K
February 01, 2022 at 06:42 am
Share
M.D.C. HOLDINGS ANNOUNCES 2021 FOURTH QUARTER AND FULL YEAR RESULTS
Strong fourth quarter results help drive record full year home sale revenues
and net income
DENVER, COLORADO, Tuesday, February 1, 2022. 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, 2021.
"MDC delivered another quarter of strong operating results in the fourth quarter of 2021, posting double digit year-over-year increases to both home sale revenues and earnings per share," said MDC's Executive Chairman, Larry A. Mizel. "The fourth quarter also capped an outstanding year for MDC, as we eclipsed the $5 billion mark for home sale revenues and increased our fully diluted earnings per share by over 50% as compared to the previous year. With a record $4.3 billion backlog to end the year and an improving margin profile, we believe we are in a great position to improve on these results in 2022."
Mr. Mizel continued, "The housing industry continues to see healthy demand and pricing power in many markets across the country, driven by strong local economies, rising incomes and favorable demographics. Equally important has been the ongoing lack of existing home supply which has fueled the need for new home construction. We believe these market dynamics will persist for the foreseeable future, creating a favorable fundamental backdrop for our industry and particularly for MDC."
Mr. Mizel concluded, "We made further improvements to our capital structure in the fourth quarter by retiring the remaining $126 million of our 5.500% senior notes due in 2024. Our leverage ratios remain below the industry average, and our credit ratings are among the best in the industry. This financial strength provides us with a cost of capital advantage over many of our peers and allows us to pay the industry-leading annualized dividend of $2.00 per share. It also allows us to better manage our business through a homebuilding cycle, which has been a long-standing hallmark of MDC's strategy."
"Order activity stayed above normal seasonal levels during the quarter as our monthly absorption rate came in at 4.5 sales per community," said David Mandarich, MDC's President and Chief Executive Officer. "The solid demand trends were evident across our geographic footprint, with each of our homebuilding regions posting an absorption rate above third quarter levels. These order results are a testament to the health of the housing market as well as to our dual strategy of adhering to a build-to-order operating model and focusing on the more affordable segments of the market. We believe these demand drivers will continue into the new year, positioning our company for growth in 2022."
1
2021 Fourth Quarter Highlights and Comparisons to 2020 Fourth Quarter
•Home sale revenues increased 22% to $1.44 billion from $1.18 billion
◦Unit deliveries up 4% to 2,663
◦Average selling price of deliveries up 17% to $539,000
•Homebuilding pretax income increased 36% to $193.5 million from $142.3 million
◦Gross margin from home sales increased 150 basis points to 23.5% from 22.0%
◦Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 90 basis points to 9.1%
◦Loss on debt retirement of $11.4 million in the current quarter.
•Net income of $162.7 million, or $2.21 per diluted share, up 10% from $147.5 million or $2.03 per diluted share
◦Effective tax rate of 22.2% vs. 13.9%
•Dollar value of net new orders increased 9% to $1.43 billion from $1.32 billion
◦Monthly sales absorption rate of 4.5 vs. 4.7 in prior period quarter
◦Average selling price of net orders up 12%
2021 Full Year Highlights and Comparisons to 2020 Full Year
•Home sale revenues increased 36% to $5.10 billion from $3.77 billion
◦Unit deliveries up 22% to 9,982
•Homebuilding pretax income increased 74% to $659.7 million from $378.5 million
◦Gross margin from home sales of 23.1% vs. 20.8%
◦SG&A rate improved to 9.7% vs. 10.7%
◦Loss on debt retirement of $23.6 million in the current year
•Financial services pretax income increased 16% to $92.0 million from $79.0 million
•Net income of $573.7 million, or $7.83 per diluted share, up 56% from $367.6 million or $5.17 per diluted share
◦Effective tax rate of 23.7% vs. 19.7%
•Dollar value of net new orders increased 11% to $6.04 billion from $5.46 billion
2022 Outlook and Other Selected Information1
•Backlog dollar value at December 31, 2021 up 32% year-over-year to $4.30 billion
◦Backlog units up 15% to 7,640
•Lots controlled of 38,080 at December 31, 2021, up 29% year-over-year
•Projected home deliveries for the 2022 first quarter between 2,000 and 2,300
◦Projected average selling price for 2022 first quarter unit deliveries between $550,000 and $560,000
◦Projected gross margin from home sales for the 2022 first quarter of approximately 25% (assuming no impairments or warranty adjustments)
•Projected full year 2022 home deliveries between 10,500 and 11,000 assuming no improvements in our average sale-to-close cycle time from those experienced during the fourth quarter of 2021
•Quarterly cash dividend of fifty cents ($0.50) per share declared on January 24, 2022, up 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.
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. 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, 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
December 31,
Year Ended
December 31,
2021
2020
2021
2020
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues
$
1,435,124
$
1,180,987
$
5,102,456
$
3,765,379
Home cost of sales
(1,096,946)
(921,060)
(3,924,093)
(2,982,668)
Inventory impairments
(1,600)
-
(1,600)
-
Total cost of sales
(1,098,546)
(921,060)
(3,925,693)
(2,982,668)
Gross profit
336,578
259,927
1,176,763
782,711
Selling, general and administrative expenses
(130,023)
(117,949)
(493,993)
(403,218)
Loss on debt retirement
(11,421)
-
(23,571)
-
Interest and other income
981
868
5,965
4,233
Other expense
(2,595)
(569)
(5,476)
(5,209)
Homebuilding pretax income
193,520
142,277
659,688
378,517
Financial Services:
Revenues
30,767
44,179
152,212
135,832
Expenses
(16,555)
(16,064)
(64,477)
(52,465)
Other income (expense), net
1,416
902
4,271
(4,372)
Financial services pretax income
15,628
29,017
92,006
78,995
Income before income taxes
209,148
171,294
751,694
457,512
Provision for income taxes
(46,487)
(23,806)
(178,037)
(89,930)
Net income
$
162,661
$
147,488
$
573,657
$
367,582
Comprehensive income
$
162,661
$
147,488
$
573,657
$
367,582
Earnings per share:
Basic
$
2.30
$
2.11
$
8.13
$
5.33
Diluted
$
2.21
$
2.03
$
7.83
$
5.17
Weighted average common shares outstanding:
Basic
70,303,149
69,581,552
70,174,281
68,531,856
Diluted
73,110,624
72,170,707
72,854,601
70,676,581
Dividends declared per share
$
0.50
$
0.37
$
1.67
$
1.29
4
M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
December 31,
2021
December 31,
2020
(Dollars in thousands, except
per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents
$
485,839
$
411,362
Restricted cash
12,799
15,343
Trade and other receivables
98,580
72,466
Inventories:
Housing completed or under construction
1,917,616
1,486,587
Land and land under development
1,843,235
1,345,643
Total inventories
3,760,851
2,832,230
Property and equipment, net
60,561
61,880
Deferred tax asset, net
17,942
11,454
Prepaids and other assets
106,562
101,685
Total homebuilding assets
4,543,134
3,506,420
Financial Services:
Cash and cash equivalents
104,821
77,267
Mortgage loans held-for-sale, net
282,529
232,556
Other assets
33,044
48,677
Total financial services assets
420,394
358,500
Total Assets
$
4,963,528
$
3,864,920
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable
$
149,488
$
98,862
Accrued and other liabilities
370,910
300,735
Revolving credit facility
10,000
10,000
Senior notes, net
1,481,781
1,037,391
Total homebuilding liabilities
2,012,179
1,446,988
Financial Services:
Accounts payable and accrued liabilities
97,903
95,630
Mortgage repurchase facility
256,300
202,390
Total financial services liabilities
354,203
298,020
Total Liabilities
2,366,382
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; 70,668,093 and 64,851,126 issued and outstanding at December 31, 2021 and December 31, 2020, respectively
707
649
Additional paid-in-capital
1,709,276
1,407,597
Retained earnings
887,163
711,666
Total Stockholders' Equity
2,597,146
2,119,912
Total Liabilities and Stockholders' Equity
$
4,963,528
$
3,864,920
5
M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
(Dollars in thousands)
Operating Activities:
Net income
$
162,661
$
147,488
$
573,657
$
367,582
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense
12,823
11,526
39,655
30,062
Depreciation and amortization
7,736
8,285
31,666
27,166
Inventory impairments
1,600
-
1,600
-
Net (gain) loss on marketable equity securities
-
-
-
8,285
Gain on sale of other assets
-
-
(2,014)
-
Loss on retirement of debt
11,421
-
23,571
-
Deferred income tax expense
(1,641)
2,195
(6,488)
10,688
Net changes in assets and liabilities:
Trade and other receivables
30,195
4,697
(25,334)
(12,815)
Mortgage loans held-for-sale, net
(33,608)
(72,050)
(49,973)
(35,535)
Housing completed or under construction
29,179
(62,613)
(431,926)
(449,882)
Land and land under development
(378,602)
(123,742)
(497,364)
(15,032)
Prepaids and other assets
(1,374)
(24,618)
8,545
(44,932)
Accounts payable and accrued liabilities
38,142
56,295
126,415
91,318
Net cash used in operating activities
(121,468)
(52,537)
(207,990)
(23,095)
Investing Activities:
Purchases of marketable securities
-
-
-
(10,804)
Sales of marketable securities
-
-
-
59,266
Proceeds from sale of other assets
-
-
2,014
-
Purchases of property and equipment
(6,665)
(5,892)
(29,693)
(26,777)
Net cash provided by (used in) investing activities
(6,665)
(5,892)
(27,679)
21,685
Financing Activities:
Advances on mortgage repurchase facility, net
40,506
71,529
53,910
52,774
Payments on homebuilding line of credit, net
-
-
-
(5,000)
Payments of senior notes
(140,557)
-
(276,951)
(250,000)
Proceeds from issuance of senior notes
-
-
694,662
298,050
Dividend payments
(35,340)
(25,952)
(118,529)
(89,008)
Payments of deferred debt issuance costs
-
(4,471)
(1,720)
(4,471)
Issuance of shares under stock-based compensation programs, net
(663)
(1,149)
(16,216)
28,825
Net cash provided by (used in) financing activities
(136,054)
39,957
335,156
31,170
Net increase (decrease) in cash, cash equivalents and restricted cash
(264,187)
(18,472)
99,487
29,760
Cash, cash equivalents and restricted cash:
Beginning of period
867,646
522,444
503,972
474,212
End of period
$
603,459
$
503,972
$
603,459
$
503,972
Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents
$
485,839
$
411,362
$
485,839
$
411,362
Restricted cash
12,799
15,343
12,799
15,343
Financial Services:
Cash and cash equivalents
104,821
77,267
104,821
77,267
Total cash, cash equivalents and restricted cash
$
603,459
$
503,972
$
603,459
$
503,972
6
New Home Deliveries
Three Months Ended December 31,
2021
2020
% Change
Homes
Home Sale
Revenues
Average
Price
Homes
Home Sale
Revenues
Average
Price
Homes
Home
Sale
Revenues
Average Price
(Dollars in thousands)
West
1,408
$
770,695
$
547.4
1,389
$
658,307
$
473.9
1
%
17
%
16
%
Mountain
781
462,807
592.6
810
407,160
502.7
(4)
%
14
%
18
%
East
474
201,622
425.4
365
115,520
316.5
30
%
75
%
34
%
Total
2,663
$
1,435,124
$
538.9
2,564
$
1,180,987
$
460.6
4
%
22
%
17
%
Year Ended December 31,
2021
2020
% Change
Homes
Home Sale
Revenues
Average
Price
Homes
Home Sale
Revenues
Average
Price
Homes
Home
Sale
Revenues
Average Price
(Dollars in thousands)
West
5,732
$
2,964,766
$
517.2
4,412
$
2,106,241
$
477.4
30
%
41
%
8
%
Mountain
2,770
1,567,198
565.8
2,530
1,293,779
511.4
9
%
21
%
11
%
East
1,480
570,492
385.5
1,216
365,359
300.5
22
%
56
%
28
%
Total
9,982
$
5,102,456
$
511.2
8,158
$
3,765,379
$
461.6
22
%
36
%
11
%
Net New Orders
Three Months Ended December 31,
2021
2020
% 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
1,424
$
776,984
$
545.6
4.70
1,453
$
712,792
$
490.6
4.75
(2)
%
9
%
11
%
(1)
%
Mountain
704
431,931
613.5
4.27
835
448,908
537.6
4.66
(16)
%
(4)
%
14
%
(8)
%
East
517
225,834
436.8
4.31
420
153,650
365.8
4.41
23
%
47
%
19
%
(2)
%
Total
2,645
$
1,434,749
$
542.4
4.50
2,708
$
1,315,350
$
485.7
4.66
(2)
%
9
%
12
%
(3)
%
Year Ended December31,
2021
2020
% 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
6,238
$
3,417,437
$
547.8
5.25
6,099
$
3,078,584
$
504.8
5.29
2
%
11
%
9
%
(1)
%
Mountain
2,926
1,831,755
626.0
4.33
3,337
1,818,833
545.1
4.46
(12)
%
1
%
15
%
(3)
%
East
1,803
789,810
438.1
4.05
1,576
562,419
356.9
4.27
14
%
40
%
23
%
(5)
%
Total
10,967
$
6,039,002
$
550.7
4.75
11,012
$
5,459,836
$
495.8
4.85
-
%
11
%
11
%
(2)
%
*Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period
7
Active Subdivisions
Average Active Subdivisions
Active Subdivisions
Three Months Ended
Year Ended
December 31,
%
December 31,
%
December 31,
%
2021
2020
Change
2021
2020
Change
2021
2020
Change
West
96
103
(7)
%
101
102
(1)
%
99
96
3
%
Mountain
54
60
(10)
%
55
60
(8)
%
56
62
(10)
%
East
37
31
19
%
40
32
26
%
37
31
19
%
Total
187
194
(4)
%
196
194
1
%
192
189
2
%
Backlog
December 31,
2021
2020
% Change
Homes
Dollar
Value
Average
Price
Homes
Dollar
Value
Average
Price
Homes
Dollar
Value
Average
Price
(Dollars in thousands)
West
4,216
$
2,328,949
$
552.4
3,710
$
1,831,205
$
493.6
14
%
27
%
12
%
Mountain
2,174
1,402,052
644.9
2,018
1,090,557
540.4
8
%
29
%
19
%
East
1,250
567,695
454.2
927
341,439
368.3
35
%
66
%
23
%
Total
7,640
$
4,298,696
$
562.7
6,655
$
3,263,201
$
490.3
15
%
32
%
15
%
Homes Completed or Under Construction (WIP lots)
December 31,
%
2021
2020
Change
Unsold:
Completed
25
48
(48)
%
Under construction
312
131
138
%
Total unsold started homes
337
179
88
%
Sold homes under construction or completed
6,379
4,797
33
%
Model homes under construction or completed
479
498
(4)
%
Total homes completed or under construction
7,195
5,474
31
%
Lots Owned and Optioned (including homes completed or under construction)
December 31, 2021
December 31, 2020
Lots
Owned
Lots
Optioned
Total
Lots
Owned
Lots
Optioned
Total
Total
% Change
West
15,968
4,534
20,502
12,335
3,460
15,795
30
%
Mountain
6,660
4,171
10,831
6,279
2,591
8,870
22
%
East
4,304
2,443
6,747
2,868
1,936
4,804
40
%
Total
26,932
11,148
38,080
21,482
7,987
29,469
29
%
8
Selling, General and Administrative Expenses
Three Months Ended December 31,
Year Ended December 31,
2021
2020
Change
2021
2020
Change
(Dollars in thousands)
General and administrative expenses
$
66,986
$
53,232
$
13,754
$
246,042
$
184,720
$
61,322
General and administrative expenses as apercentage of home sale revenues
4.7
%
4.5
%
20 bps
4.8
%
4.9
%
-10 bps
Marketing expenses
$
26,240
$
26,275
$
(35)
$
104,435
$
95,103
$
9,332
Marketing expenses as a percentage ofhome sale revenues
1.8
%
2.2
%
-40 bps
2.0
%
2.5
%
-50 bps
Commissions expenses
$
36,797
$
38,442
$
(1,645)
$
143,516
$
123,395
$
20,121
Commissions expenses as a percentage ofhome sale revenues
2.6
%
3.3
%
-70 bps
2.8
%
3.3
%
-50 bps
Total selling, general and administrative expenses
$
130,023
$
117,949
$
12,074
$
493,993
$
403,218
$
90,775
Total selling, general and administrativeexpenses as a percentage ofhome sale revenues
9.1
%
10.0
%
-90 bps
9.7
%
10.7
%
-100 bps
Capitalized Interest
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
(Dollars in thousands)
Homebuilding interest incurred
$
18,651
$
14,849
$
72,500
$
61,276
Less: Interest capitalized
(18,651)
(14,849)
(72,500)
(61,276)
Homebuilding interest expensed
$
-
$
-
$
-
$
-
Interest capitalized, beginning of period
$
57,435
$
55,217
$
52,777
$
55,310
Plus: Interest capitalized during period
18,651
14,849
72,500
61,276
Less: Previously capitalized interest included in home cost of sales
(18,032)
(17,289)
(67,223)
(63,809)
Interest capitalized, end of period
$
58,054
$
52,777
$
58,054
$
52,777
9
Attachments
Original Link
Original Document
Permalink
Disclaimer
M.D.C. Holdings Inc. published this content on 01 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 February 2022 11:41:07 UTC.
M.D.C. Holdings, Inc. is engaged in the business of homebuilding and financial services. The Company's segments include West, which includes operations in Arizona, California, Nevada, New Mexico, Oregon, Texas and Washington; Mountain, which includes operations in Colorado, Idaho and Utah, and East, which includes operations in Alabama, Florida, Maryland, Pennsylvania, Tennessee and Virginia. Its homebuilding segments include land acquisition and development, home construction, sales and marketing, and customer service. Its homebuilding subsidiaries build and sells single-family detached homes that are designed to meet local customer preferences. Its financial services operations include mortgage financing, place title insurance and homeowner insurance for its homebuyers, and provides general liability insurance for its subsidiaries and its subcontractors. Its financial services business includes HomeAmerican, Allegiant, StarAmerican, American Home Insurance, and American Home Title.