Exhibit 99.1

NEWS BULLETIN

M.D.C. HOLDINGS, INC.

FOR IMMEDIATE RELEASE

TUESDAY, MAY 10, 2011

 

 

 

Contact:		Robert N. Martin
		Investor Relations
		(720) 977-3431
		bob.martin@mdch.com

M.D.C. HOLDINGS ANNOUNCES FIRST QUARTER 2011 RESULTS

 

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Revenue increased 15% to $169.7 million

 

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Closings increased 6% to 554 homes

 

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Net loss of $19.9 million or $0.43 per share

 

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Net orders decreased 24% to 705 homes

 

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Active subdivisions increased 23% to 162

 

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Entered Seattle market in April via acquisition of assets from SDC Homes

DENVER, Tuesday, May 10, 2011 - M.D.C. Holdings, Inc. (NYSE: MDC) today reported a net loss for the 2011 first quarter of $19.9 million, or $0.43 per share, compared with net loss for the 2010 first quarter of $20.9 million, or $0.45 per share. Revenue increased 15% to $169.7 million, compared with $147.1 million a year ago.

Management Comments

Larry A. Mizel, MDC’s chairman and chief executive officer, stated, “Difficult market conditions, coupled with the absence of the federal homebuyer tax credit, resulted in a reduction in net home orders during the three months ended March 31, 2011 compared with the same period during 2010. However, we have seen sequential improvement in home orders during each month in 2011 through April, consistent with seasonality.”

Mizel continued, “Top-line growth is a key component of the strategy we are executing in an effort to return to profitability. We pursued that growth strategy by entering the Seattle market in April 2011 through the purchase of substantially all of the homebuilding assets of SDC Homes, which ranked as Seattle’s third largest builder. We have also dedicated substantial resources towards increasing market share in our current footprint, as shown by a 23% year-over-year increase in our active subdivision count at the end of the 2011 first quarter.”

 

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“Our home gross margins have come under pressure over the past few quarters for several reasons. First, our land costs have increased significantly, as the market for acquiring finished residential lots in prime locations has been very competitive, despite the continuing overall weakness in the market for new homes. However, we believe our current land costs are consistent with our historical costs. Furthermore, first quarter home gross margins in our newer projects, which accounted for more than 50% of closings, exceeded the home gross margins we achieved in older projects.”

Mizel concluded, “Second, we have accepted lower gross margins to reduce our excess supply of unsold units under construction. Given that our land costs have returned to a level consistent with our historical average and we have substantially reduced our unsold inventory, we believe we have an opportunity to stabilize our home gross margins near current levels, if demand does not deteriorate further.”

First Quarter Highlights

Home closings for the first quarter ended March 31, 2011 increased to 554 homes with an average selling price of $294,900, compared with home closings of 523 homes with an average selling price of $269,500 during the same period in 2010.

Total revenue for the first quarter of 2011 was $169.7 million, compared with revenue of $147.1 million for the same period in 2010. The increase in revenue was driven primarily by the 6% increase in home closings and the 9% year-over-year increase in average selling price.

Net orders for the first quarter ended March 31, 2011 decreased to 705 homes with an estimated sales value of $205 million, compared with net orders for 931 homes with an estimated sales value of $258 million during the same period in 2010. The decrease in net orders is attributable to an increase in our cancellation rate for the quarter, which rose to 32% from 22% during the first quarter of 2010, in addition to decreased absorptions per community, as the first quarter of 2010 was heavily influenced by the homebuyer tax credit.

We ended the 2011 first quarter with 993 homes under contract with an estimated sales value of $312 million, compared with a backlog of 1,234 homes with an estimated sales value of $381 million at March 31, 2010.

Home gross margin in the 2011 first quarter was 13.7% as compared with 22.4% in the 2010 first quarter. Excluding interest expense and warranty adjustments, home gross margin was 16.0% in the first quarter of 2011 as compared with 21.9% in the first quarter of 2010.

Looking at the trend in backlog, our estimated home gross margin at the end of the first quarter was roughly equal to the estimated home gross margin to start the quarter.

 

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General and administrative expenses decreased to $36.8 million for the quarter ended March 31, 2011, compared with $40.2 million for the same period in the prior year. The decrease was driven primarily by lower legal costs and employee compensation expense.

Marketing costs were $9.8 million in the first quarter of 2011, compared with $7.1 million in the first quarter of 2010, primarily due to the year-over-year increase in our community count. Commission costs were $5.8 million as compared with $5.1 million in the same quarter last year, inline with the increase in revenue.

About MDC

Since 1972, MDC’s subsidiary companies have built and financed the American dream for more than 165,000 families. 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 Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, California, Northern Virginia, Maryland, Philadelphia/Delaware Valley, 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) changes in consumer confidence and preferences; (16)

 

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terrorist acts and other acts of war; and (17) 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 March 31, 2011, 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.

 

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended March 31,
		2011				2010
Revenue
Home sales revenue		$	163,383			$	140,943
Land sales revenue			204				15
Other revenue			6,160				6,120
Total Revenue			169,747				147,078
Costs and Expenses
Home cost of sales			140,981				109,390
Land cost of sales			17				191
Asset impairments			279				—
Marketing expenses			9,833				7,060
Commission expenses			5,767				5,129
General and administrative expenses			36,752				40,203
Other operating expenses			(1,550	)			491
Related party expenses			4				9
Total Operating Costs and Expenses			192,083				162,473
Loss from Operations			(22,336	)			(15,395	)
Other income (expense)
Interest income			7,326				4,428
Interest expense			(8,730	)			(10,374	)
Gain (loss) on sale of other assets			36				99
Loss before Income Taxes			(23,704	)			(21,242	)
Benefit from income taxes, net			3,825				369
Net Loss		$	(19,879	)		$	(20,873	)
Loss Per Share
Basic		$	(0.43	)		$	(0.45	)
Diluted		$	(0.43	)		$	(0.45	)
Dividends Declared Per Share		$	0.25			$	0.25

 

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M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

		March 31, 2011				December 31, 2010
Assets
Cash and cash equivalents		$	589,043			$	572,225
Marketable securities			866,072				968,729
Restricted cash			419				420
Receivables
Home sales receivables			10,051				8,530
Income taxes receivable			13,442				2,048
Other receivables			8,388				9,432
Mortgage loans held-for-sale, net			37,697				65,114
Inventories, net
Housing completed or under construction			345,554				372,422
Land and land under development			488,887				415,237
Property and equipment, net			39,711				40,826
Deferred tax asset, net of valuation allowance of $239,012 and $231,379 at March 31, 2011 and December 31, 2010, respectively			—				—
Related party assets			7,393				7,393
Prepaid expenses and other assets, net			47,882				85,393
Total Assets		$	2,454,539			$	2,547,769
Liabilities
Accounts payable		$	23,173			$	35,018
Accrued liabilities			210,053				260,729
Related party liabilities			107				90
Mortgage repurchase facility			6,736				25,434
Senior notes, net			1,243,062				1,242,815
Total Liabilities			1,483,131				1,564,086
Commitments and Contingencies			—				—
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; 47,351,000 and 47,295,000 issued and outstanding, respectively, at March 31, 2011 and 47,198,000 and 47,142,000 issued and outstanding, respectively, at December 31, 2010			474				472
Additional paid-in-capital			836,360				820,237
Retained earnings			127,046				158,749
Accumulated other comprehensive income			8,187				4,884
Treasury stock, at cost; 56,000 shares at March 31, 2011 and December 31, 2010			(659	)			(659	)
Total Stockholders’ Equity			971,408				983,683
Total Liabilities and Stockholders’ Equity		$	2,454,539			$	2,547,769

 

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M.D.C. HOLDINGS, INC.

Information on Segments

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended March 31,
		2011				2010
REVENUE
Homebuilding
West		$	42,483			$	57,137
Mountain			71,124				46,682
East			43,092				31,505
Other Homebuilding			9,859				9,036
Total Homebuilding			166,558				144,360
Financial Services and Other			5,703				5,621
Corporate			—				—
Intercompany adjustments			(2,514	)			(2,903	)
Consolidated		$	169,747			$	147,078
(LOSS) INCOME BEFORE INCOME TAXES
Homebuilding
West		$	(4,560	)		$	2,354
Mountain			(1,232	)			1,170
East			(1,956	)			(1,519	)
Other Homebuilding			(776	)			(519	)
Total Homebuilding			(8,524	)			1,486
Financial Services and Other			1,780				1,846
Corporate			(16,960	)			(24,574	)
Consolidated		$	(23,704	)		$	(21,242	)
		March 31, 2011				December 31, 2010
TOTAL ASSETS
Homebuilding
West		$	328,225			$	300,652
Mountain			315,103				311,833
East			205,502				188,693
Other Homebuilding			39,138				40,554
Total Homebuilding			887,968				841,732
Financial Services and Other			110,206				135,286
Corporate			1,459,182				1,573,408
Intercompany adjustments			(2,817	)			(2,657	)
Consolidated		$	2,454,539			$	2,547,769

 

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M.D.C. HOLDINGS, INC.

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

		Three Months
		Ended March 31,								Change
		2011				2010				Amount				%
SELECTED FINANCIAL DATA
General and Administrative Expenses
Homebuilding		$	14,959			$	17,726			$	(2,767	)			-16	%
Financial Services and Other			4,699				4,088				611				15	%
Corporate (1)			17,098				18,398				(1,300	)			-7	%
Total		$	36,756			$	40,212			$	(3,456	)			-9	%
SG&A as a % of Home Sales Revenue
Homebuilding Segments			18.7	%			21.2	%			-2.5	%
Corporate Segment (1)			10.5	%			13.1	%			-2.6	%
Depreciation and Amortization (2)		$	3,729			$	2,932			$	797				27	%
Home Gross Margins (3)			13.7	%			22.4	%			-8.7	%
Interest in Home Cost of Sales as a % of Home Sales Revenue			2.6	%			2.3	%			0.3	%
Cash Provided by (Used in)
Operating Activities		$	(57,701	)		$	11,516			$	(69,217	)
Investing Activities		$	105,041			$	(501,767	)		$	606,808
Financing Activities		$	(30,522	)		$	206,138			$	(236,660	)
Corporate and Homebuilding Interest
Interest capitalized, beginning of period		$	38,446			$	28,339			$	10,107				36	%
Interest capitalized, net of interest expense			9,519				6,636				2,883				43	%
Previously capitalized interest included in home cost of sales			(4,203	)			(3,202	)			(1,001	)			31	%
Interest capitalized, end of period		$	43,762			$	31,773			$	11,989				38	%

 

(1)	Includes related party expenses.

(2)	Includes depreciation and amortization of long-lived assets and amortization of deferred marketing costs.

(3)	Home sales revenue less home cost of sales (excluding commissions, amortization of deferred marketing, project cost write offs and asset impairments) as a percent of home sales revenue.

 

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M.D.C. HOLDINGS, INC.

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended March 31,								Change
		2011				2010				Amount				%
HOMEAMERICAN OPERATING ACTIVITIES
Principal amount of mortgage loans originated		$	115,380			$	108,090			$	7,290				7	%
Principal amount of mortgage loans brokered		$	719			$	2,856			$	(2,137	)			-75	%
Capture Rate			75	%			80	%			-5	%
Including brokered loans			76	%			82	%			-6	%
Mortgage products (% of mortgage loans originated)
Fixed rate			97	%			95	%			2	%
Adjustable rate - other			3	%			5	%			-2	%
Prime loans (4)			30	%			26	%			4	%
Government loans (5)			70	%			74	%			-4	%

 

(4)	Prime loans generally are defined as loans with Fair, Isaac and Company (“FICO”) scores greater than 620 and that comply with the documentation standards of the government sponsored enterprise guidelines.

(5)	Government loans are loans either insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs.

 

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)

 

		March 31, 2011				December 31, 2010				March 31, 2010
HOMES COMPLETED OR UNDER CONSTRUCTION
Unsold Home Under Construction - Final			67				119				48
Unsold Home Under Construction - Frame			570				722				675
Unsold Home Under Construction - Foundation			37				103				376
Total Unsold Homes Under Construction			674				944				1,099
Sold Homes Under Construction			641				609				1,002
Model Homes			246				242				210
Homes Completed or Under Construction			1,561				1,795				2,311
LOTS OWNED (excluding homes completed or under construction)
Arizona			1,219				1,257				1,040
California			1,499				1,201				756
Nevada			1,087				991				894
West			3,805				3,449				2,690
Colorado			2,985				2,919				2,549
Utah			619				594				366
Mountain			3,604				3,513				2,915
Maryland			339				319				158
Virginia			599				414				318
East			938				733				476
Florida			232				210				127
Illinois			128				130				141
Other Homebuilding			360				340				268
Total			8,707				8,035				6,349

 

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)

 

		March 31, 2011				December 31, 2010				March 31, 2010
LOTS CONTROLLED UNDER OPTION
Arizona			241				408				482
California			17				222				232
Nevada			724				838				429
West			982				1,468				1,143
Colorado			845				688				507
Utah			369				393				145
Mountain			1,214				1,081				652
Maryland			822				745				602
Virginia			128				132				271
East			950				877				873
Florida			606				733				713
Illinois			—				—				—
Other Homebuilding			606				733				713
Total			3,752				4,159				3,381
AT RISK OPTION DEPOSITS
Cash		$	10,283			$	9,019			$	9,467
Letters of Credit			5,264				4,467				2,084
Total At Risk Option Deposits		$	15,547			$	13,486			$	11,551

 

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)

 

		Three Months
		Ended March 31,								Change
		2011				2010				Amount				%
HOMES CLOSED (UNITS)
Arizona			77				108				(31	)			-29	%
California			48				46				2				4	%
Nevada			66				98				(32	)			-33	%
West			191				252				(61	)			-24	%
Colorado			166				108				58				54	%
Utah			54				52				2				4	%
Mountain			220				160				60				38	%
Maryland			57				30				27				90	%
Virginia			43				40				3				8	%
East			100				70				30				43	%
Florida			43				41				2				5	%
Illinois			—				—				—				N/A
Other Homebuilding			43				41				2				5	%
Total			554				523				31				6	%
AVERAGE SELLING PRICES PER HOME CLOSED
Arizona		$	180.0			$	203.7			$	(23.7	)			-12	%
California			317.3				351.9				(34.6	)			-10	%
Colorado			336.8				299.8				37.0				12	%
Florida			229.0				220.3				8.7				4	%
Illinois			N/A				N/A				N/A				N/A
Maryland			428.4				412.4				16.0				4	%
Nevada			201.5				189.3				12.2				6	%
Utah			274.9				273.5				1.4				1	%
Virginia			430.0				477.8				(47.8	)			-10	%
Company Average		$	294.9			$	269.5			$	25.4				9	%

 

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)

 

		Three Months
		Ended March 31,								Change
		2011				2010				Amount				%
ORDERS FOR HOMES, NET (UNITS)
Arizona			122				168				(46	)			-27	%
California			77				26				51				196	%
Nevada			88				170				(82	)			-48	%
West			287				364				(77	)			-21	%
Colorado			181				270				(89	)			-33	%
Utah			67				125				(58	)			-46	%
Mountain			248				395				(147	)			-37	%
Maryland			46				47				(1	)			-2	%
Virginia			68				66				2				3	%
East			114				113				1				1	%
Florida			51				59				(8	)			-14	%
Illinois			5				—				5				N/A
Other Homebuilding			56				59				(3	)			-5	%
Total			705				931				(226	)			-24	%
Estimated Value of Orders for Homes, net		$	205,000			$	258,000			$	(53,000	)			-21	%
Estimated Average Selling Price of Orders for Homes, net		$	290.8			$	277.1			$	13.7				5	%
Cancellation Rate(6)			32	%			22	%			10	%

 

(6)	We define “Cancellation Rate” as the approximate number of cancelled home order contracts during a reporting period as a percent of total home orders received during such reporting period.

 

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M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

(Dollars in thousands)

(Unaudited)

 

		March 31, 2011				December 31, 2010				March 31, 2010
BACKLOG (UNITS)
Arizona			129				84				163
California			108				79				56
Nevada			98				76				160
West			335				239				379
Colorado			288				273				369
Utah			82				69				167
Mountain			370				342				536
Maryland			115				126				143
Virginia			95				70				99
East			210				196				242
Florida			72				64				77
Illinois			6				1				—
Other Homebuilding			78				65				77
Total			993				842				1,234
Backlog Estimated Sales Value		$	312,000			$	269,000			$	381,000
Estimated Average Selling Price of Homes in Backlog		$	314.2			$	319.5			$	308.8
ACTIVE SUBDIVISIONS
Arizona			29				26				28
California			16				13				3
Nevada			19				18				17
West			64				57				48
Colorado			42				39				41
Utah			18				19				17
Mountain			60				58				58
Maryland			14				14				9
Virginia			10				8				7
East			24				22				16
Florida			13				11				10
Illinois			1				—				—
Other Homebuilding			14				11				10
Total			162				148				132
Average for quarter ended			155				145				133

 

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M.D.C. HOLDINGS, INC.

Reconciliation of Non-GAAP Financial Measure

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended March 31,
		2011				2010
Home Sales Revenue - As reported		$	163,383			$	140,943
Home Cost of Sales - As reported		$	140,981			$	109,390
Warranty Adjustments			(431	)			(3,929	)
Interest in Cost of Sales			4,203				3,202
Home Cost of Sales - Excluding Warranty Adjustments and Interest		$	137,209			$	110,117
Home Gross Margins - Excluding Warranty Adjustments and Interest (7)			16.0	%			21.9	%

 

(7)	“Home Gross Margins - Excluding Warranty Adjustments and Interest” is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that warranty adjustments and interest have on our Home Gross Margins.

 

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