M.D.C. HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - M.D.C. HOLDINGS, INC.	mdc20171031_8k.htm

Exhibit 99.1

News Release

M.D.C. HOLDINGS ANNOUNCES 2017 THIRD QUARTER RESULTS

DENVER, COLORADO, Thursday, November 2, 2017. M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended September 30, 2017.

2017 Third Quarter Highlights and Comparisons to 2016 Third Quarter

●

Net income up 132% to $61.2 million, or $1.16 per diluted share, from $26.4 million or $0.51 per diluted share*

Pretax gain of $52.2 million on investment sales

●

Home sale revenues up 2% to $584.9 million from $575.7 million

●

Gross margin from home sales percentage up 80 basis points from 15.5% to 16.3%

●

Selling, general and administrative expenses as a percentage of home sale revenues (“SG&A rate”) of 11.8% versus 10.8%

●

Dollar value of net new orders of $596.7 million, up 6% from $563.9 million

●

Ending backlog dollar value up 6% to $1.71 billion from $1.61 billion

●

Lot purchase approvals up 83% to 2,489 lots in 37 communities

●

Last twelve months return on equity improved 500 basis points to 11.8%

●

Increased homebuilding line of credit from $550 million to $700 million

●

Announced entry into Portland market

●

Added $150 million to our senior notes due January 2043 subsequent to quarter end

*Per share amount for 2016 third quarter has been adjusted for the 5% stock dividend declared and paid in the 2016 fourth quarter.

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “Despite the challenges presented to our Florida operations by Hurricane Irma and our Colorado operations by the Weyerhaeuser joist issue, we increased revenues, net order value and ending backlog value year-over-year for the 2017 third quarter. In addition, we recognized significant gains from the opportunistic sale of several investments during the quarter, which drove a 132% increase in our net income.”

Mr. Mizel continued, “Solid economic fundamentals continue to support the homebuilding industry, driving robust demand for new homes, especially in the first-time homebuyer segment. To meet this growing demand, we have taken a number of steps to grow community count. First, we substantially increased our approvals of future lots for purchase. Through the first nine months of 2017, we approved the purchase of over 7,800 lots, more than double the approvals from the same period a year ago. An increasing percentage of our lot approvals are focused on the first-time homebuyer segment, which has responded favorably to one of our newest product lines, the Seasons™ collection.”

Mr. Mizel continued, “Also, we announced in September that we will commence operations in the greater Portland area, giving us additional exposure to the Pacific Northwest, where we have experienced solid results.”

Mr. Mizel concluded, “Lastly, we expanded the capacity under our line of credit at the end of the third quarter from $550 million to $700 million and extended its maturity by two years to December 2022. In addition, at the start of the fourth quarter, we added $150 million to our senior notes due January 2043. We ended our 2017 third quarter with liquidity of almost $1.1 billion, an increase of 40% over the prior year. The higher liquidity provides us with additional resources to fund our increased lot approval activity, providing us the foundation for community count growth in 2018.”

Homebuilding

Home sale revenues for the 2017 third quarter increased 2% to $584.9 million, primarily driven by a 2% improvement in deliveries, which was mostly the result of a 2% year-over-year increase in our homes in beginning backlog. However, deliveries were negatively impacted by the Weyerhaeuser joist issue in Colorado and Hurricane Irma in Florida. The deliveries of approximately 115 homes that were previously scheduled to close during the 2017 third quarter were delayed to later quarters as a result of these issues.

For the 2017 third quarter, our gross margin from home sales percentage was 16.3%, an 80 basis point improvement from 15.5% in the prior year period. During the 2017 and 2016 third quarters, we recorded inventory impairments of $4.5 million and $4.7 million, respectively. The impairments recorded for each period negatively impacted gross margin by 80 basis points. Additionally, during the 2016 third quarter, we recorded adjustments of $1.8 million (a 30 basis point negative impact to gross margins) to increase our warranty accrual while for our 2017 third quarter, we recorded an adjustment to decrease our warranty accrual by $0.4 million (a 10 basis point positive impact to gross margins).

Our interest and other income for the three months ended September 30, 2017 and 2016 was $54.5 million and $1.9 million, respectively. The year-over-year increase was driven by a $52.2 million gain from investment sales in the 2017 third quarter. The majority of the gain relates to the sale of the Company's metropolitan district bond securities, which we held for the past ten years and relate to a master-planned community being developed by one of our homebuilding subsidiaries.

Selling, general and administrative expenses for the 2017 third quarter were $69.1 million, up $7.2 million from $61.9 million for the same period in 2016. As we continued to plan for future growth of our business, we increased headcount, resulting in higher compensation-related expenses. Our SG&A rate was up 100 basis points year-over-year to 11.8%. However, absent the Weyerhaeuser joist issue and Hurricane Irma issues discussed above, we estimate that our SG&A rate might have increased by only 40 basis points year-over-year.

The dollar value of net new orders for the 2017 third quarter increased 6% year-over-year to $596.7 million, as an 8% increase in the average selling price of net new orders was slightly offset by a 2% decline in the number of net new orders. The year-over-year change in our average selling price of net new orders was driven by price increases in existing communities due to robust demand and the mix of sales between markets, partially offset by an increase in the percentage of sales coming from our more affordable product lines. The slight decline in the number of net new orders was caused by a 4% decrease in our average active community count, partially offset by a 2% increase in our monthly sales absorption rate.

Our backlog value at the end of the 2017 third quarter was up 6% year-over-year to $1.71 billion, due mostly to a 6% increase in the average selling price of homes in backlog. The change in average selling price is consistent with that explained for our net new orders.

Financial Services

Income before taxes for our financial services operations for the 2017 third quarter was $9.5 million, a $0.9 million decline from $10.4 million in the 2016 third quarter. The change in average selling price is consistent with the explanation provided above for our net new orders.

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 190,000 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, South Florida, Seattle and Portland. 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 changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by MDC, including 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 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, 2017, 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:	Kevin McCarty
	Vice President of Finance and Corporate Controller
	1-866-424-3395 / 720-977-3395
	IR@mdch.com

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(Dollars in thousands, except per share amounts)
	(Unaudited)
Homebuilding:
Home sale revenues	$	584,947		$	575,722		$	1,796,046		$	1,541,337
Land sale revenues		1,340			2,290			2,938			4,930
Total home and land sale revenues		586,287			578,012			1,798,984			1,546,267
Home cost of sales		(485,147	)		(481,511	)		(1,493,166	)		(1,287,373	)
Land cost of sales		(1,259	)		(2,318	)		(2,672	)		(4,197	)
Inventory impairments		(4,540	)		(4,700	)		(9,390	)		(6,300	)
Total cost of sales		(490,946	)		(488,529	)		(1,505,228	)		(1,297,870	)
Gross margin		95,341			89,483			293,756			248,397
Selling, general and administrative expenses		(69,102	)		(61,904	)		(206,109	)		(182,621	)
Interest and other income		54,548			1,869			59,722			5,358
Other expense		(618	)		(1,558	)		(1,635	)		(2,463	)
Other-than-temporary impairment of marketable securities		-			(215	)		(51	)		(934	)
Homebuilding pretax income		80,169			27,675			145,683			67,737

Financial Services:
Revenues		17,464			17,408			54,516			44,248
Expenses		(8,849	)		(7,955	)		(25,247	)		(21,739	)
Interest and other income		925			1,035			3,142			2,648
Other-than-temporary impairment of marketable securities		(29	)		(111	)		(160	)		(111	)
Financial services pretax income		9,511			10,377			32,251			25,046

Income before income taxes		89,680			38,052			177,934			92,783
Provision for income taxes		(28,517	)		(11,693	)		(60,651	)		(29,948	)
Net income	$	61,163		$	26,359		$	117,283		$	62,835

Other comprehensive income (loss) related to available for sale securities, net of tax		(23,175	)		1,028			(19,245	)		3,871
Comprehensive income	$	37,988		$	27,387		$	98,038		$	66,706

Earnings per share:
Basic	$	1.18		$	0.51		$	2.27		$	1.22
Diluted	$	1.16		$	0.51		$	2.23		$	1.22

Weighted average common shares outstanding:
Basic		51,650,360			51,297,132			51,502,986			51,286,844
Diluted		52,601,118			51,460,446			52,248,377			51,297,765

Dividends declared per share	$	0.25		$	0.24		$	0.75		$	0.72

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

	September 30,		December 31,
	2017		2016
ASSETS	(Dollars in thousands, except
	per share amounts)
Homebuilding:	(Unaudited)
Cash and cash equivalents	$	351,399	$	259,087
Marketable securities		-		59,770
Restricted cash		8,723		3,778
Trade and other receivables		42,904		42,492
Inventories:
Housing completed or under construction		969,419		874,199
Land and land under development		863,002		884,615
Total inventories		1,832,421		1,758,814
Property and equipment, net		26,304		28,041
Deferred tax asset, net		64,164		74,888
Metropolitan district bond securities (related party)		-		30,162
Prepaid and other assets		72,808		60,463
Total homebuilding assets		2,398,723		2,317,495
Financial Services:
Cash and cash equivalents		26,419		23,822
Marketable securities		40,221		36,436
Mortgage loans held-for-sale, net		89,804		138,774
Other assets		11,135		12,062
Total financial services assets		167,579		211,094
Total Assets	$	2,566,302	$	2,528,589
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	49,390	$	42,088
Accrued liabilities		151,661		144,566
Revolving credit facility		15,000		15,000
Senior notes, net		842,532		841,646
Total homebuilding liabilities		1,058,583		1,043,300
Financial Services:
Accounts payable and accrued liabilities		51,697		50,734
Mortgage repurchase facility		65,103		114,485
Total financial services liabilities		116,800		165,219
Total Liabilities		1,175,383		1,208,519
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; 51,933,969 and 51,485,090 issued and outstanding at September 30, 2017 and December 31, 2016, respectively		519		515
Additional paid-in-capital		995,132		983,532
Retained earnings		392,442		313,952
Accumulated other comprehensive income		2,826		22,071
Total Stockholders' Equity		1,390,919		1,320,070
Total Liabilities and Stockholders' Equity	$	2,566,302	$	2,528,589

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(Dollars in thousands)
	(Unaudited)
Operating Activities:
Net income	$	61,163		$	26,359		$	117,283		$	62,835
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense		1,062			473			3,100			6,636
Depreciation and amortization		1,501			1,335			4,205			3,702
Inventory impairments		4,540			4,700			9,390			6,300
Other-than-temporary impairment of marketable securities		29			326			211			1,045
Gain on sale of marketable securities		(16,364	)		(649	)		(18,122	)		(911	)
Gain on sale of metropolitan district bond securities (related party)		(35,847	)		-			(35,847	)		-
Deferred income tax expense		12,762			3,484			22,795			11,357
Net changes in assets and liabilities:
Restricted cash		(3,696	)		(675	)		(4,945	)		(871	)
Trade and other receivables		(5,300	)		4,556			119			(21,679	)
Mortgage loans held-for-sale		5,479			710			48,970			(2,319	)
Housing completed or under construction		(62,290	)		(42,934	)		(101,997	)		(229,739	)
Land and land under development		(17,635	)		18,430			19,886			141,131
Prepaid expenses and other assets		(3,627	)		(1,598	)		(11,229	)		(4,573	)
Accounts payable and accrued liabilities		6,500			(1,334	)		15,345			18,183
Net cash provided by (used in) operating activities		(51,723	)		13,183			69,164			(8,903	)

Investing Activities:
Purchases of marketable securities		(5,561	)		(12,846	)		(17,604	)		(28,272	)
Sales of marketable securities		71,865			6,108			83,315			56,873
Proceeds from sale of metropolitan district bond securities (related party)		44,253			-			44,253			-
Purchases of property and equipment		(553	)		(748	)		(1,917	)		(3,865	)
Net cash provided by (used in) investing activities		110,004			(7,486	)		108,047			24,736

Financing Activities:
Advances (payments) on mortgage repurchase facility, net		(4,024	)		(1,286	)		(49,382	)		3,400
Dividend payments		(12,984	)		(12,259	)		(38,793	)		(36,763	)
Payments of deferred financing costs		(2,630	)		-			(2,630	)		-
Proceeds from exercise of stock options		1,199			-			8,503			-
Net cash used in financing activities		(18,439	)		(13,545	)		(82,302	)		(33,363	)

Net increase (decrease) in cash and cash equivalents		39,842			(7,848	)		94,909			(17,530	)
Cash and cash equivalents:
Beginning of period		337,976			171,306			282,909			180,988
End of period	$	377,818		$	163,458		$	377,818		$	163,458

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries

	Three Months Ended September 30,
	2017						2016						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		186	$	58,640	$	315.3		221	$	64,314	$	291.0		(16	)%		(9	)%		8	%
California		223		135,745		608.7		195		125,602		644.1		14	%		8	%		(5	)%
Nevada		240		81,483		339.5		177		59,601		336.7		36	%		37	%		1	%
Washington		98		50,936		519.8		75		35,072		467.6		31	%		45	%		11	%
West		747		326,804		437.5		668		284,589		426.0		12	%		15	%		3	%
Colorado		314		146,883		467.8		343		169,858		495.2		(8	)%		(14	)%		(6	)%
Utah		45		18,843		418.7		55		20,728		376.9		(18	)%		(9	)%		11	%
Mountain		359		165,726		461.6		398		190,586		478.9		(10	)%		(13	)%		(4	)%
Maryland		41		21,506		524.5		61		27,297		447.5		(33	)%		(21	)%		17	%
Virginia		68		33,537		493.2		78		39,795		510.2		(13	)%		(16	)%		(3	)%
Florida		102		37,374		366.4		88		33,455		380.2		16	%		12	%		(4	)%
East		211		92,417		438.0		227		100,547		442.9		(7	)%		(8	)%		(1	)%
Total		1,317	$	584,947	$	444.2		1,293	$	575,722	$	445.3		2	%		2	%		(0	)%

	Nine Months Ended September 30,
	2017						2016						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		586	$	183,258	$	312.7		582	$	170,352	$	292.7		1	%		8	%		7	%
California		662		403,974		610.2		512		319,116		623.3		29	%		27	%		(2	)%
Nevada		642		223,303		347.8		432		149,861		346.9		49	%		49	%		0	%
Washington		290		149,106		514.2		234		106,665		455.8		24	%		40	%		13	%
West		2,180		959,641		440.2		1,760		745,994		423.9		24	%		29	%		4	%
Colorado		1,064		510,211		479.5		945		463,534		490.5		13	%		10	%		(2	)%
Utah		126		51,409		408.0		145		53,238		367.2		(13	)%		(3	)%		11	%
Mountain		1,190		561,620		471.9		1,090		516,772		474.1		9	%		9	%		(0	)%
Maryland		140		65,870		470.5		178		84,742		476.1		(21	)%		(22	)%		(1	)%
Virginia		171		92,432		540.5		193		98,572		510.7		(11	)%		(6	)%		6	%
Florida		304		116,483		383.2		251		95,257		379.5		21	%		22	%		1	%
East		615		274,785		446.8		622		278,571		447.9		(1	)%		(1	)%		(0	)%
Total		3,985	$	1,796,046	$	450.7		3,472	$	1,541,337	$	443.9		15	%		17	%		2	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders

	Three Months Ended September 30,
	2017								2016								% 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)
Arizona		192	$	64,765	$	337.3		2.53		225	$	67,424	$	299.7		2.56		(15	)%		(4	)%		13	%		(1	)%
California		250		164,265		657.1		4.17		260		152,901		588.1		4.08		(4	)%		7	%		12	%		2	%
Nevada		184		70,130		381.1		3.23		175		58,443		334.0		2.75		5	%		20	%		14	%		17	%
Washington		66		37,570		569.2		2.84		83		38,061		458.6		2.26		(20	)%		(1	)%		24	%		26	%
West		692		336,730		486.6		3.20		743		316,829		426.4		2.95		(7	)%		6	%		14	%		8	%
Colorado		333		162,725		488.7		2.45		321		146,911		457.7		3.82		4	%		11	%		7	%		(36	)%
Utah		48		23,041		480.0		2.29		35		14,718		420.5		1.41		37	%		57	%		14	%		62	%
Mountain		381		185,766		487.6		2.43		356		161,629		454.0		3.27		7	%		15	%		7	%		(26	)%
Maryland		39		17,006		436.1		2.00		50		22,612		452.2		1.42		(22	)%		(25	)%		(4	)%		41	%
Virginia		44		20,984		476.9		3.45		52		26,869		516.7		2.04		(15	)%		(22	)%		(8	)%		69	%
Florida		114		36,229		317.8		2.20		95		35,938		378.3		1.74		20	%		1	%		(16	)%		26	%
East		197		74,219		376.7		2.35		197		85,419		433.6		1.71		0	%		(13	)%		(13	)%		37	%
Total		1,270	$	596,715	$	469.9		2.78		1,296	$	563,877	$	435.1		2.72		(2	)%		6	%		8	%		2	%

	Nine Months Ended September 30,
	2017								2016								% 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)
Arizona		638	$	209,547	$	328.4		2.76		684	$	207,456	$	303.3		2.52		(7	)%		1	%		8	%		10	%
California		727		465,164		639.8		4.21		797		476,341		597.7		4.36		(9	)%		(2	)%		7	%		(3	)%
Nevada		746		265,691		356.2		4.17		634		220,799		348.3		3.31		18	%		20	%		2	%		26	%
Washington		332		184,112		554.6		3.80		325		156,546		481.7		2.82		2	%		18	%		15	%		35	%
West		2,443		1,124,514		460.3		3.64		2,440		1,061,142		434.9		3.20		0	%		6	%		6	%		14	%
Colorado		1,292		627,845		485.9		3.40		1,227		583,309		475.4		4.00		5	%		8	%		2	%		(15	)%
Utah		171		77,114		451.0		2.41		178		67,394		378.6		2.47		(4	)%		14	%		19	%		(2	)%
Mountain		1,463		704,959		481.9		3.24		1,405		650,703		463.1		3.71		4	%		8	%		4	%		(13	)%
Maryland		122		54,468		446.5		1.65		208		96,590		464.4		1.89		(41	)%		(44	)%		(4	)%		(13	)%
Virginia		171		88,600		518.1		3.58		210		108,779		518.0		2.75		(19	)%		(19	)%		0	%		30	%
Florida		365		128,091		350.9		2.22		325		133,533		410.9		2.19		12	%		(4	)%		(15	)%		1	%
East		658		271,159		412.1		2.30		743		338,902		456.1		2.22		(11	)%		(20	)%		(10	)%		4	%
Total		4,564	$	2,100,632	$	460.3		3.24		4,588	$	2,050,747	$	447.0		3.11		(1	)%		2	%		3	%		4	%

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

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions

								Average Active Subdivisions							Average Active Subdivisions
	Active Subdivisions							Three Months Ended							Nine Months Ended
	September 30,				%			September 30,				%			September 30,				%
	2017		2016		Change			2017		2016		Change			2017		2016		Change
Arizona		27		30		(10	)%		25		29		(14	)%		26		30		(13	)%
California		23		21		10	%		20		21		(5	)%		19		20		(5	)%
Nevada		19		20		(5	)%		19		21		(10	)%		20		21		(5	)%
Washington		7		14		(50	)%		8		12		(33	)%		10		13		(23	)%
West		76		85		(11	)%		72		83		(13	)%		75		84		(11	)%
Colorado		48		28		71	%		45		28		61	%		42		34		24	%
Utah		7		9		(22	)%		7		8		(13	)%		8		8		0	%
Mountain		55		37		49	%		52		36		44	%		50		42		19	%
Maryland		5		11		(55	)%		7		12		(42	)%		8		12		(33	)%
Virginia		4		8		(50	)%		4		9		(56	)%		5		9		(44	)%
Florida		14		18		(22	)%		17		18		(6	)%		18		17		6	%
East		23		37		(38	)%		28		39		(28	)%		31		38		(18	)%
Total		154		159		(3	)%		152		158		(4	)%		156		164		(5	)%

Backlog

	At September 30,
	2017						2016						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		374	$	133,074	$	355.8		423	$	132,929	$	314.3		(12	)%		0	%		13	%
California		546		378,448		693.1		627		389,622		621.4		(13	)%		(3	)%		12	%
Nevada		411		151,726		369.2		397		139,731		352.0		4	%		9	%		5	%
Washington		279		156,974		562.6		270		133,367		494.0		3	%		18	%		14	%
West		1,610		820,222		509.5		1,717		795,649		463.4		(6	)%		3	%		10	%
Colorado		1,192		595,675		499.7		1,104		530,662		480.7		8	%		12	%		4	%
Utah		149		67,830		455.2		141		53,180		377.2		6	%		28	%		21	%
Mountain		1,341		663,505		494.8		1,245		583,842		468.9		8	%		14	%		6	%
Maryland		74		34,102		460.8		120		56,837		473.6		(38	)%		(40	)%		(3	)%
Virginia		111		58,225		524.5		118		64,228		544.3		(6	)%		(9	)%		(4	)%
Florida		327		132,238		404.4		248		111,499		449.6		32	%		19	%		(10	)%
East		512		224,565		438.6		486		232,564		478.5		5	%		(3	)%		(8	)%
Total		3,463	$	1,708,292	$	493.3		3,448	$	1,612,055	$	467.5		0	%		6	%		6	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots)

	September 30,				%
	2017		2016		Change
Unsold:
Completed		78		81		(4	)%
Under construction		218		298		(27	)%
Total unsold started homes		296		379		(22	)%
Sold homes under construction or completed		2,591		2,626		(1	)%
Model homes under construction or completed		319		293		9	%
Total homes completed or under construction		3,206		3,298		(3	)%

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

	September 30, 2017						September 30, 2016
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total		Total % Change
Arizona		1,971		761		2,732		1,515		269		1,784		53	%
California		1,454		679		2,133		1,753		75		1,828		17	%
Nevada		2,150		401		2,551		2,051		200		2,251		13	%
Washington		655		64		719		853		-		853		(16	)%
West		6,230		1,905		8,135		6,172		544		6,716		21	%
Colorado		4,622		2,960		7,582		4,051		1,347		5,398		40	%
Utah		456		132		588		380		-		380		55	%
Mountain		5,078		3,092		8,170		4,431		1,347		5,778		41	%
Maryland		122		48		170		261		143		404		(58	)%
Virginia		282		30		312		429		15		444		(30	)%
Florida		941		1,231		2,172		962		455		1,417		53	%
East		1,345		1,309		2,654		1,652		613		2,265		17	%
Total		12,653		6,306		18,959		12,255		2,504		14,759		28	%

M.D.C. HOLDINGS, INC.

Other Financial Data

Selling, General and Administrative Expenses

	Three Months Ended September 30,									Nine Months Ended September 30,
	2017			2016			Change			2017			2016			Change
	(Dollars in thousands)
General and administrative expenses	$	33,170		$	27,758		$	5,412		$	97,831		$	90,638		$	7,193
General and administrative expenses as a percentage of home sale revenues		5.7	%		4.8	%		90	bps		5.4	%		5.9	%		(50	) bps

Marketing expenses	$	16,445		$	15,262		$	1,183		$	48,545		$	41,728		$	6,817
Marketing expenses as a percentage of home sale revenues		2.8	%		2.7	%		10	bps		2.7	%		2.7	%		0	bps

Commissions expenses	$	19,487		$	18,884		$	603		$	59,733		$	50,255		$	9,478
Commissions expenses as a percentage of home sale revenues		3.3	%		3.3	%		0	bps		3.3	%		3.3	%		0	bps

Total selling, general and administrative expenses	$	69,102		$	61,904		$	7,198		$	206,109		$	182,621		$	23,488
Total selling, general and administrative expenses as a percentage of home sale revenues		11.8	%		10.8	%		100	bps		11.5	%		11.8	%		(30	) bps

Capitalized Interest

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(Dollars in thousands)
Homebuilding interest incurred	$	13,212		$	13,187		$	39,594		$	39,511
Less: Interest capitalized		(13,212	)		(13,187	)		(39,594	)		(39,511	)
Homebuilding interest expensed	$	-		$	-		$	-		$	-

Interest capitalized, beginning of period	$	62,091		$	77,150		$	68,085		$	77,541
Plus: Interest capitalized during period		13,212			13,187			39,594			39,511
Less: Previously capitalized interest included in home and land cost of sales		(15,087	)		(15,922	)		(47,463	)		(42,637	)
Interest capitalized, end of period	$	60,216		$	74,415		$	60,216		$	74,415

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M.D.C. HOLDINGS, INC. Reports