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M.D.C. Holdings Announces 2012 Second Quarter Results

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DENVER, July 31, 2012 /PRNewswire/ --  M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended June 30, 2012.

2012 Second Quarter Highlights and Comparisons to 2011 Second Quarter

  • Net income of $10.6 million, or $0.22 per diluted share, vs. net loss of $28.0 million, or $0.60 per diluted share
  • 1,402 net new orders, up 32%
  • Backlog of 2,028 homes, up 42%; backlog dollar value up 52% to $657.5 million
  • Home sale revenues of $256.5 million, up 24%
  • 861 homes closed, up 21%
  • Gross margin from home sales of 14.2% vs. 8.9%
    • No inventory impairment charges versus $8.6 million for the 2011 second quarter
    • Home gross margin before impairment charges, interest and warranty adjustments improved 200 basis points to 16.9%*
  • Homebuilding SG&A expenses of $39.2 million, a decrease of $9.9 million, or 20%
    • SG&A as a percentage of home sale revenues of 15.3%, an 850 basis point improvement
    • G&A expense included $3.8 million in litigation recoveries

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, stated, "I am pleased to announce a second quarter profit of $0.22 per share, with net income improving by nearly $40 million over the prior year. We believe that our favorable results are largely attributable to our implementation of several key strategic initiatives, which we announced over the past few quarters, combined with modest improvements in homebuilding and overall market conditions."

Mizel continued, "We dramatically improved our operating leverage in the second quarter by accelerating our sales absorption pace and reducing overhead costs. These efforts drove a 21% year-over-year increase in new home deliveries and a 20% year-over-year reduction in our homebuilding SG&A costs. In addition, our interest expense decreased by $7.3 million for the second quarter, largely due to the debt reduction we undertook during the last half of 2011, and our impairment charges fell $8.6 million against a backdrop of stabilizing new home prices. As a result, our homebuilding segment achieved an operating profit for the first time in five years."

Mr. Mizel concluded, "As the overall housing market has continued to show signs of recovery over the last several quarters, our efforts to improve our sales process, product offering and cancellation rate have helped us improve sales results.  During the second quarter, net new orders increased 32% year-over-year to a five-year second quarter high, driven by a 24% improvement in our absorption pace per community and a 900 basis point reduction in our cancellation rate. With our quarter-end backlog up 42% over the prior year, we are well-positioned to achieve continued gains in operating leverage during the second half of 2012 and achieve our goal of reaching profitability for 2012."

Homebuilding
Home sale revenues for the 2012 second quarter increased 24% to $256.5 million compared to $206.2 million for the prior year period.  The increase in revenues resulted primarily from a 21% increase in homes closed to 861 homes as compared to 709 in the prior year. The Company's average selling price for homes closed was $297,900, up 2% year-over-year compared to $290,800 for the prior year period, due to increases in most markets.

Gross margin from home sales for the 2012 second quarter was 14.2% versus 8.9% for the year earlier period.  The 2012 second quarter did not include any inventory impairments or benefits related to warranty accrual adjustments. However, the 2011 second quarter included $8.6 million in inventory impairments and a $1.8 million benefit related to a warranty accrual reduction. 

Excluding inventory impairments, warranty accrual adjustments and previously capitalized interest in cost of sales, adjusted gross margin from home sales was 16.9%* for the 2012 second quarter, compared to 14.9%* for the 2011 second quarter and up marginally compared to 16.7%* for the 2012 first quarter. The 200 basis point year-over-year improvement in the Company's adjusted gross margin from home sales was driven by closing a significantly higher percentage of homes started with buyers under contract, which historically have been more profitable than homes started without a buyer under contract. In addition, our gross margin percentage benefited from a meaningful year-over-year reduction in incentives, partially offset by reduced customer spending on home upgrades, as we are including a higher level of upgrades in our base home price in communities across the country.

The Company's 2012 second quarter homebuilding selling, general and administrative ("SG&A") expenses decreased 20% to $39.2 million, compared to $49.2 million for 2011 second quarter, down 850 basis points as a percentage of home sale revenues to 15.3% versus 23.8% for the 2011 second quarter. The lower level of SG&A expenses and SG&A rate was primarily attributable to various cost reduction efforts, including lower compensation expense due to lower headcount, higher operating leverage from increased revenues and $3.8 million in legal recoveries.

Net new orders for the 2012 second quarter increased 32% to 1,402 homes, compared to 1,064 homes during the same period in 2011.  The Company's monthly sales absorption rate for the 2012 second quarter was 2.6 per community, compared to 2.1 per community for the 2011 second quarter.  The Company's cancellation rate for the 2012 second quarter was 20% versus 29% in the prior year second quarter.

The Company ended the 2012 second quarter with 2,028 homes in backlog, its highest backlog level since the 2007 third quarter, with an estimated sales value of $657.5 million, compared with a backlog of 1,424 homes with an estimated sales value of $433.5 million at June 30, 2011.

Financial Services
Income before taxes from our financial services segment for the 2012 second quarter was $6.7 million, compared to $3.1 million for the 2011 second quarter.  The increase in pretax income primarily reflected a $4.4 million increase in our mortgage operations pretax income from $1.3 million in the 2011 second quarter to $5.7 million for the 2012 second quarter.  The improvement in our mortgage profitability was driven largely by a $4.1 million increase in the gains on sales of mortgage loans due to favorable mortgage market conditions and a decrease in the level of special financing programs that we offered our homebuyers. 

About MDC
Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 165,000 homebuyers. 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 Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville and Seattle. 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 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 the Company 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 changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, and land and home values; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company's investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican'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 the Company 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; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; and (16) other factors over which the Company has little or no control.  Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Form 10-Q for the quarter ended June 30, 2012, 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.  The Company 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.

 * Please see "Reconciliation of Non-GAAP Financial Measures" on page 12.

 

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






Three Months


Six Months  


Ended June 30,


Ended June 30,


2012


2011


2012


2011


(Dollars in thousands, except per share amounts)

Homebuilding:

(Unaudited)


Home sale revenues

$   256,532


$   206,163


$   441,210


$   369,546


Land sale revenues

1,815


2,565


3,405


2,769



Total home sale and land revenues

258,347


208,728


444,615


372,315


Home cost of sales

(220,220)


(179,097)


(378,874)


(320,078)


Land cost of sales

(1,718)


(1,741)


(3,208)


(1,758)


Inventory impairments

-


(8,633)


-


(8,633)



Total cost of sales

(221,938)


(189,471)


(382,082)


(330,469)




Gross margin

36,409


19,257


62,533


41,846


Selling, general and administrative expenses

(39,223)


(49,158)


(73,347)


(96,811)


Interest income

5,373


6,986


11,286


13,474


Interest expense

-


(7,334)


(808)


(16,001)


Other income (expense)

418


(2,643)


576


(884)




Homebuilding pretax income (loss)

2,977


(32,892)


240


(58,376)













Financial Services:










Revenues


10,587


6,731


18,306


12,434


Expenses


(3,909)


(3,642)


(6,766)


(7,565)




Financial services pretax income

6,678


3,089


11,540


4,869













Income (loss) before income taxes

9,655


(29,803)


11,780


(53,507)

Benefit (provision) for income taxes

983


1,823


1,123


5,648

Net income (loss)

$     10,638


$   (27,980)


$     12,903


$   (47,859)

Other comprehensive income (loss):









Unrealized gain related to available-for-sale securities

(698)


(1,971)


5,850


1,332

Comprehensive income (loss)

$       9,940


$   (29,951)


$     18,753


$   (46,527)













Earnings (loss) per share:









Basic

$         0.22


$       (0.60)


$         0.27


$       (1.03)


Diluted

$         0.22


$       (0.60)


$         0.26


$       (1.03)













Weighted Average Common Shares Outstanding:









Basic

47,398,088


46,719,233


47,367,051


46,717,408


Diluted

47,752,729


46,719,233


47,677,067


46,717,408













Dividends declared per share

$         0.25


$         0.25


$         0.50


$         0.50

 

M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets








June 30, 


December 31, 



2012


2011



(Dollars in thousands, except per share amounts)

ASSETS


(Unaudited)

Homebuilding:





Cash and cash equivalents


$    298,274


$      316,418

Marketable securities


454,775


485,434

Restricted cash


2,260


667

Trade and other receivables


40,341


21,593

Inventories:





Housing completed or under construction


437,287


300,714

Land and land under development


414,466


505,338

Property and equipment, net


34,471


36,277

Deferred tax asset, net of valuation allowance of $273,828 and $281,178

  at June 30, 2012 and December 31, 2011, respectively


-


-

Prepaid expenses and other assets


44,272


50,423

Total homebuilding assets


1,726,146


1,716,864

Financial Services:





Cash and cash equivalents


27,850


26,943

Marketable securities


32,256


34,509

Mortgage loans held-for-sale, net


65,687


78,335

Prepaid expenses and other assets


3,975


2,074

Total financial services assets


129,768


141,861

      Total Assets


$ 1,855,914


$   1,858,725






LIABILITIES AND EQUITY





Homebuilding:





Accounts payable 


$      42,829


$        25,645

Accrued liabilities


111,730


119,188

Senior notes, net


744,470


744,108

Total homebuilding liabilities


899,029


888,941






Financial Services:





Accounts payable and accrued liabilities


52,965


52,446

Mortgage repurchase facility


32,660


48,702

Total financial services liabilities


85,625


101,148

      Total Liabilities


984,654


990,089






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; 





47,990,975 issued and outstanding at June 30, 2012 and 48,017,108

and 47,957,196 issued and outstanding, respectively, at December 31, 2011


480


480

Additional paid-in-capital


870,331


863,128

Retained earnings


1,839


12,927

Accumulated other comprehensive income (loss)


(1,390)


(7,240)

Treasury stock, at cost; no shares at June 30, 2012 and 59,912

  at December 31, 2011


-


(659)

Total Stockholders' Equity


871,260


868,636

Total Liabilities and Stockholders' Equity


$ 1,855,914


$   1,858,725

 

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






 Three Months 


 Six Months 


 Ended June 30, 


 Ended June 30, 


2012


2011


2012


2011


(Dollars in thousands)


(Unaudited)

Operating Activities:








Net income (loss)

$ 10,638


$(27,980)


$  12,903


$(47,859)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:








Stock-based compensation expense

5,110


3,559


7,721


6,680

Depreciation and amortization 

1,349


1,627


2,656


3,217

Inventory impairments and write-offs of land option deposits

229


11,244


311


12,305

Amortization of (premium) discount on marketable debt securities

1


476


(151)


912

    Net changes in assets and liabilities:








      Restricted cash

(1,180)


(185)


(1,593)


(184)

      Trade and other receivables

(7,283)


19,717


(18,345)


18,935

      Mortgage loans held-for-sale

(10,697)


(1,503)


12,648


25,914

      Housing completed or under construction

(90,512)


24,618


(136,387)


51,590

      Land and land under development

74,048


(35,115)


91,048


(108,622)

      Prepaid expenses and other assets

562


(2,220)


3,956


(1,376)

      Accounts payable

9,377


5,935


17,169


(5,910)

      Accrued liabilities

11,581


(11,729)


(7,526)


(24,859)

Net cash provided by (used in) operating activities

3,223


(11,556)


(15,590)


(69,257)

Investing Activities:








Purchase of marketable securities

(107,178)


(142,997)


(292,788)


(258,423)

Maturity of marketable securities

54,500


305,000


106,000


451,000

Sale of marketable securities

95,180


54,727


225,701


129,677

Purchase of property and equipment and other

(304)


(28,812)


(668)


(29,295)

Net cash provided by (used in) investing activities

42,198


187,918


38,245


292,959

Financing Activities:








Payments on mortgage repurchase facility

(36,784)


(21,681)


(90,409)


(47,115)

Advances on mortgage repurchase facility

43,604


23,933


74,367


30,669

Dividend payments

(11,996)


(11,868)


(23,990)


(23,692)

Proceeds from exercise of stock options

140


46


140


46

Net cash provided by (used in) financing activities

(5,036)


(9,570)


(39,892)


(40,092)

Net increase (decrease) in cash and cash equivalents

40,385


166,792


(17,237)


183,610

Cash and cash equivalents:








      Beginning of period

285,739


589,043


343,361


572,225

      End of period

$326,124


$755,835


$326,124


$755,835

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data


















New Home Deliveries:




































 Three Months Ended June 30, 


2012


2011


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

127


$ 27,086


$213.3


98


$  18,299


$186.7


30%


48%


14%

California 

133


43,195


324.8


62


19,704


317.8


115%


119%


2%

Nevada 

155


28,460


183.6


80


14,731


184.1


94%


93%


0%

Washington

59


17,170


291.0


51


13,779


270.2


16%


25%


8%

West 

474


115,911


244.5


291


66,513


228.6


63%


74%


7%

Colorado 

185


66,254


358.1


182


60,047


329.9


2%


10%


9%

Utah 

46


13,142


285.7


66


17,876


270.8


-30%


-26%


5%

Mountain 

231


79,396


343.7


248


77,923


314.2


-7%


2%


9%

Maryland 

47


19,777


420.8


49


20,267


413.6


-4%


-2%


2%

Virginia 

70


32,171


459.6


72


30,573


424.6


-3%


5%


8%

East 

117


51,948


444.0


121


50,840


420.2


-3%


2%


6%

Florida 

37


8,726


235.8


48


10,594


220.7


-23%


-18%


7%

Illinois 

2


551


275.5


1


293


293.0


100%


88%


-6%

Other Homebuilding 

39


9,277


237.9


49


10,887


222.2


-20%


-15%


7%

Total 

861


$256,532


$297.9


709


$206,163


$290.8


21%


24%


2%




















 Six Months Ended June 30, 


2012


2011


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

215


$  45,043


$209.5


175


$  31,911


$182.3


23%


41%


15%

California 

188


61,188


325.5


110


34,671


315.2


71%


76%


3%

Nevada 

261


50,056


191.8


146


27,763


190.2


79%


80%


1%

Washington

103


29,166


283.2


51


13,777


270.1


102%


112%


5%

West 

767


185,453


241.8


482


108,122


224.3


59%


72%


8%

Colorado 

310


111,217


358.8


348


115,022


330.5


-11%


-3%


9%

Utah 

98


27,242


278.0


120


32,473


270.6


-18%


-16%


3%

Mountain 

408


138,459


339.4


468


147,495


315.2


-13%


-6%


8%

Maryland 

91


38,571


423.9


106


44,486


419.7


-14%


-13%


1%

Virginia 

129


58,326


452.1


115


48,791


424.3


12%


20%


7%

East 

220


96,897


440.4


221


93,277


422.1


0%


4%


4%

Florida 

83


19,850


239.2


91


20,359


223.7


-9%


-3%


7%

Illinois 

2


551


275.5


1


293


293.0


100%


88%


-6%

Other Homebuilding 

85


20,401


240.0


92


20,652


224.5


-8%


-1%


7%

Total 

1,480


$441,210


$298.1


1,263


$369,546


$292.6


17%


19%


2%

 

  

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data


















Net New Orders:




































 Three Months Ended June 30, 


2012


2011


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

246


$ 56,108


$228.1


164


$ 32,465


$198.0


50%


73%


15%

California 

217


78,895


363.6


117


34,358


293.7


85%


130%


24%

Nevada 

225


50,163


222.9


154


29,138


189.2


46%


72%


18%

Washington

69


19,346


280.4


26


6,727


258.7


165%


188%


8%

West 

757


204,512


270.2


461


102,688


222.8


64%


99%


21%

Colorado 

311


108,045


347.4


232


76,945


331.7


34%


40%


5%

Utah 

69


21,467


311.1


109


30,948


283.9


-37%


-31%


10%

Mountain 

380


129,512


340.8


341


107,893


316.4


11%


20%


8%

Maryland 

113


50,441


446.4


74


29,011


392.0


53%


74%


14%

Virginia 

98


52,828


539.1


95


41,429


436.1


3%


28%


24%

East 

211


103,269


489.4


169


70,440


416.8


25%


47%


17%

Florida 

53


12,450


234.9


91


19,813


217.7


-42%


-37%


8%

Illinois 

1


315


315.0


2


580


290.0


-50%


-46%


9%

Other 

54


12,765


236.4


93


20,393


219.3


-42%


-37%


8%

Total 

1,402


$450,058


$321.0


1,064


$301,414


$283.3


32%


49%


13%




















 Six Months Ended June 30, 


2012


2011


 % Change 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


(Dollars in thousands)

Arizona 

433


$ 94,282


$217.7


286


$ 54,880


$191.9


51%


72%


13%

California 

338


119,026


352.2


194


56,815


292.9


74%


109%


20%

Nevada 

391


83,879


214.5


242


46,036


190.2


62%


82%


13%

Washington

145


42,042


289.9


26


6,727


258.7


458%


525%


12%

West 

1,307


339,229


259.5


748


164,458


219.9


75%


106%


18%

Colorado 

546


192,192


352.0


413


138,748


336.0


32%


39%


5%

Utah 

137


40,271


293.9


176


48,550


275.9


-22%


-17%


7%

Mountain 

683


232,463


340.4


589


187,298


318.0


16%


24%


7%

Maryland 

196


85,048


433.9


120


50,448


420.4


63%


69%


3%

Virginia 

188


94,186


501.0


163


70,083


430.0


15%


34%


17%

East 

384


179,234


466.8


283


120,531


425.9


36%


49%


10%

Florida 

89


20,584


231.3


142


31,960


225.1


-37%


-36%


3%

Illinois 

2


550


275.0


7


2,041


291.6


-71%


-73%


-6%

Other 

91


21,134


232.2


149


34,001


228.2


-39%


-38%


2%

Total 

2,465


$772,060


$313.2


1,769


$506,288


$286.2


39%


52%


9%

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data







Active Subdivisions:







 June 30, 




2012


2011


% Change

Arizona 

17


30


-43%

California 

19


16


19%

Nevada 

19


17


12%

Washington

11


9


22%

West 

66


72


-8%

Colorado 

47


40


18%

Utah 

17


21


-19%

Mountain 

64


61


5%

Maryland 

19


13


46%

Virginia 

12


12


0%

East 

31


25


24%

Florida 

12


17


-29%

Illinois 

-


1


-100%

Other Homebuilding 

12


18


-33%

Total 

173


176


-2%

Average for quarter ended

180


167


8%

      

Backlog:



















June 30,


2012


2011


% Change


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 Homes 


 Dollar Value 


 Average Price 


 (Dollars in thousands) 



Arizona 

346


$ 76,564


$221.3


195


$ 39,644


$203.3


77%


93%


9%

California 

268


92,161


343.9


163


48,420


297.1


64%


90%


16%

Nevada 

286


63,283


221.3


172


35,382


205.7


66%


79%


8%

Washington

96


30,438


317.1


51


13,778


270.2


88%


121%


17%

West 

996


262,446


263.5


581


137,224


236.2


71%


91%


12%

Colorado 

469


171,862


366.4


338


118,124


349.5


39%


45%


5%

Utah 

107


30,116


281.5


125


34,518


276.1


-14%


-13%


2%

Mountain 

576


201,978


350.7


463


152,642


329.7


24%


32%


6%

Maryland 

218


90,570


415.5


140


61,170


436.9


56%


48%


-5%

Virginia 

162


82,723


510.6


118


53,098


450.0


37%


56%


13%

East 

380


173,293


456.0


258


114,268


442.9


47%


52%


3%

Florida 

76


19,734


259.7


115


27,203


236.5


-34%


-27%


10%

Illinois 

-


-


 N/A 


7


2,138


305.4


-100%


-100%


N/A

Other Homebuilding 

76


19,734


259.7


122


29,341


240.5


-38%


-33%


8%

Total 

2,028


$657,451


$324.2


1,424


$433,475


$304.4


42%


52%


7%

 

M.D.C. HOLDINGS, INC.
Homebuilding Operational Data







Homes Completed or Under Construction (WIP lots):













June 30,




2012


2011


 % Change 

Unsold






Completed

138


42


229%

Under construction - frame

264


353


-25%

Under construction - foundation 

215


101


113%

Total unsold started homes 

617


496


24%

Sold homes under construction or completed

1,392


843


65%

Model homes 

221


231


-4%

Total homes completed or under construction

2,230


1,570


42%

 

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

















June 30, 2012


June 30, 2011


Lots Owned


Lots
Optioned


Total


Lots Owned


Lots
Optioned


Total

Arizona 

774


108


882


1,292


108


1,400

California 

1,196


-


1,196


1,568


-


1,568

Nevada 

966


27


993


1,366


398


1,764

Washington

397


161


558


324


42


366

West

3,333


296


3,629


4,550


548


5,098

Colorado 

3,236


584


3,820


3,626


602


4,228

Utah 

492


13


505


689


298


987

Mountain

3,728


597


4,325


4,315


900


5,215

Maryland 

607


399


1,006


514


795


1,309

Virginia 

596


121


717


713


234


947

East

1,203


520


1,723


1,227


1,029


2,256

Florida 

285


133


418


381


480


861

Illinois 

123


-


123


133


-


133

Other

408


133


541


514


480


994

Total 

8,672


1,546


10,218


10,606


2,957


13,563

 

M.D.C. HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures


Adjusted gross margin from home sales is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that inventory impairments, warranty adjustments and interest have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.


















 Three Months Ended 


 Six Months Ended 


June 30, 2012


 Gross Margin % 


June 30, 2011


 Gross Margin % 


June 30, 2012


 Gross Margin % 


June 30, 2011


 Gross Margin % 


(Dollars in thousands)


(Dollars in thousands)

Gross Margin

$36,409


14.1%


$19,257


9.2%


$62,533


14.1%


$41,846


11.2%

Less: Land Sales Revenue

(1,815)




(2,565)




(3,405)




(2,769)



Add: Land Cost

  of Sales

1,718




1,741




3,208




1,758



Gross Margin from

   Home Sales

$36,312


14.2%


$18,433


8.9%


$62,336


14.1%


$40,835


11.1%

Add: Inventory

  Impairments

-




8,633




-




8,633



Add: Interest in

  Cost of Sales

7,105




5,454




11,999




9,657



Less: Warranty

  Adjustments

-




(1,832)




-




(2,263)



Adjusted Gross

  Margin from

  Home Sales

$43,417


16.9%


$30,688


14.9%


$74,335


16.8%


$56,862


15.4%

SOURCE M.D.C. Holdings, Inc.



RELATED LINKS
http://www.mdcholdings.com

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