EX-99.1 2 mdc-20221231earningsrelease.htm EX-99.1 Document
Exhibit 99.1
News Release

M.D.C. HOLDINGS ANNOUNCES 2022 FOURTH QUARTER AND FULL YEAR RESULTS

Record full year home sale revenues of $5.59 billion; Over $900 million of cash flow from operating activities; Cash and cash equivalents and marketable securities of $1.28 billion

DENVER, COLORADO, Tuesday, January 31, 2023. 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, 2022.

“MDC generated net income of $562 million for fiscal year 2022, or $7.67 per diluted share, representing one of the most profitable years in our company’s history,” said MDC's Executive Chairman, Larry A. Mizel. “Home sale revenues increased 9% year-over-year helping us generate over $900 million of cash flow from operating activities. We ended the year with a debt to capital ratio of 32.6% and total cash and cash equivalents and marketable securities of $1.28 billion.”

Mr. Mizel continued, “While 2022 was a banner year for our company from a financial perspective, it was a challenging one for new home sales, as the combination of rising mortgage rates and overall economic uncertainty led to a sharp decline in order activity in the second half of the year. We began experiencing slower gross order and increased cancellation activity in the second and third quarters, and this carried into the fourth quarter. We did experience a rebound in order activity in December thanks to a more aggressive approach to pricing and incentives, an encouraging sign that price elasticity exists in our markets.”

Mr. Mizel concluded, “As we head into the spring 2023 selling season, we have modified our strategy to focus more on quick move-in inventory as we believe that the majority of today's buyers want a shorter time between sale and close. In addition, we are requiring higher deposit amounts on build-to-order homes. We feel that these initiatives are the right approach for today’s new home environment and should lead to better net sales results relative to the second half of 2022.”

“Consistent with our operating strategy, we have been diligent in managing our land position to align with current market conditions.” said David Mandarich, MDC's President and Chief Executive Officer. “By acting decisively, we generated considerable cash flow in 2022. This has positioned us well to capitalize on land acquisition opportunities that we believe will emerge during this industry downturn, likely with better pricing and terms than were previously available. As we work to bring these opportunities to fruition, we are also working closely with our trades and suppliers to reduce our build costs in this softer demand environment. By staying vigilant on our costs and land position, we have put ourselves in a position to weather the current slowdown and take advantage of an eventual recovery.”
1



2022 Fourth Quarter Highlights and Comparisons to 2021 Fourth Quarter

Home sale revenues increased 4% to $1.49 billion from $1.44 billion
Average selling price of deliveries up 8% to $582,000
Unit deliveries down 4% to 2,554
Homebuilding pretax income decreased 51% to $94.5 million from $193.5 million
Gross margin from home sales decreased 850 basis points to 15.0% from 23.5%
Inventory impairments of $92.8 million in Q4 2022 vs $1.6 million in Q4 2021
Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 20 basis points to 8.9%
Net income of $79.8 million, or $1.08 per diluted share, down 51% from $162.7 million or $2.21 per diluted share
Effective tax rate of 29.5% vs. 22.2%
Unit gross orders decreased 55% to 1,502 from 3,308
Cancellations as a percentage of beginning backlog increased to 24.6% from 8.7%
Gross order average selling price down approximately 1% to $551,000

2022 Full Year Highlights and Comparisons to 2021 Full Year

Home sale revenues increased 9% to $5.59 billion from $5.10 billion
Unit deliveries down 3% to 9,710
Homebuilding pretax income increased 5% to $691.5 million from $659.7 million
Gross margin from home sales of 22.4% vs. 23.1%
Inventory impairments of $121.9 million vs $1.6 million
SG&A rate improved to 9.6% vs. 9.7%
Net income of $562.1 million, or $7.67 per diluted share, down 2% from $573.7 million or $7.83 per diluted share
Effective tax rate of 26.0% vs. 23.7%
Cash flow from operating activities of $905.6 million compared to cash used in operating activities of $208.0 million
Dollar value of net new orders decreased 50% to $3.01 billion from $6.04 billion

2023 Outlook and Other Selected Information1

Active subdivisions at December 31, 2022 up 20% year-over-year to 225
Projected home deliveries for the 2023 first quarter between 1,500 and 1,600
Projected average selling price for 2023 first quarter unit deliveries between $550,000 and $560,000
Projected gross margin from home sales for the 2023 first quarter of approximately 18% to 19% (assuming no impairments or warranty adjustments)
Quarterly cash dividend of fifty cents ($0.50) per share declared on January 23, 2023
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 230,000 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, Albuquerque and Huntsville. 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, 2022, 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,
2022202120222021
(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues$1,487,279 $1,435,124 $5,586,264 $5,102,456 
Home cost of sales(1,170,989)(1,096,946)(4,214,379)(3,924,093)
Inventory impairments(92,800)(1,600)(121,875)(1,600)
Total cost of sales(1,263,789)(1,098,546)(4,336,254)(3,925,693)
Gross profit223,490 336,578 1,250,010 1,176,763 
Selling, general and administrative expenses(131,797)(130,023)(536,395)(493,993)
Loss on debt retirement— (11,421)— (23,571)
Interest and other income7,046 981 10,843 5,965 
Other expense(4,258)(2,595)(32,991)(5,476)
Homebuilding pretax income94,481 193,520 691,467 659,688 
Financial Services:
Revenues32,262 30,767 131,723 152,212 
Expenses(16,887)(16,555)(71,327)(64,477)
Other income (expense), net3,364 1,416 7,991 4,271 
Financial services pretax income18,739 15,628 68,387 92,006 
Income before income taxes113,220 209,148 759,854 751,694 
Provision for income taxes(33,444)(46,487)(197,715)(178,037)
Net income$79,776 $162,661 $562,139 $573,657 
Comprehensive income$79,776 $162,661 $562,139 $573,657 
Earnings per share:
Basic$1.11 $2.30 $7.87 $8.13 
Diluted$1.08 $2.21 $7.67 $7.83 
Weighted average common shares outstanding:
Basic71,646,237 70,303,149 71,035,558 70,174,281 
Diluted73,179,135 73,110,624 72,943,844 72,854,601 
Dividends declared per share$0.50 $0.50 $2.00 $1.67 

4



M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
December 31,
2022
December 31,
2021
(Dollars in thousands, except
per share amounts)
ASSETS
Homebuilding:
Cash and cash equivalents$696,075 $485,839 
Restricted cash3,143 12,799 
Marketable securities443,712 — 
Trade and other receivables116,364 98,580 
Inventories:
Housing completed or under construction1,722,061 1,917,616 
Land and land under development1,793,718 1,843,235 
Total inventories3,515,779 3,760,851 
Property and equipment, net63,730 60,561 
Deferred tax assets, net49,252 17,942 
Prepaids and other assets70,007 106,562 
Total homebuilding assets4,958,062 4,543,134 
Financial Services:
Cash and cash equivalents17,877 104,821 
Marketable securities117,388 — 
Mortgage loans held-for-sale, net229,513 282,529 
Other assets40,432 33,044 
Total financial services assets405,210 420,394 
Total Assets$5,363,272 $4,963,528 
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable$109,218 $149,488 
Accrued and other liabilities383,406 370,910 
Revolving credit facility10,000 10,000 
Senior notes, net1,482,576 1,481,781 
Total homebuilding liabilities1,985,200 2,012,179 
Financial Services:
Accounts payable and accrued liabilities110,536 97,903 
Mortgage repurchase facility175,752 256,300 
Total financial services liabilities286,288 354,203 
Total Liabilities2,271,488 2,366,382 
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; 72,585,596 and 70,668,093 issued and outstanding at December 31, 2022 and December 31, 2021, respectively726 707 
Additional paid-in-capital1,784,173 1,709,276 
Retained earnings1,306,885 887,163 
Total Stockholders' Equity3,091,784 2,597,146 
Total Liabilities and Stockholders' Equity$5,363,272 $4,963,528 
5



M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2022202120222021
(Dollars in thousands)
Operating Activities:
Net income$79,776 $162,661 $562,139 $573,657 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense10,637 12,823 60,985 39,655 
Depreciation and amortization7,088 7,736 27,751 31,666 
Inventory impairments92,800 1,600 121,875 1,600 
Project abandonment costs4,371 2,510 33,129 5,417 
Gain on sale of other assets— — — (2,014)
Amortization of discount of marketable debt securities(3,208)— (4,290)— 
Loss on retirement of debt— 11,421 — 23,571 
Deferred income tax expense(27,130)(1,641)(31,310)(6,488)
Net changes in assets and liabilities:
Trade and other receivables(2,463)30,195 (21,784)(25,334)
Mortgage loans held-for-sale, net(38,680)(33,608)53,016 (49,973)
Housing completed or under construction505,348 29,179 186,265 (431,926)
Land and land under development(75,662)(381,112)(95,402)(502,781)
Prepaids and other assets39,786 (1,374)31,736 8,545 
Accounts payable and accrued liabilities(30,970)38,142 (18,464)126,415 
Net cash provided by (used in) operating activities561,693 (121,468)905,646 (207,990)
Investing Activities:
Purchases of marketable securities(365,684)— (656,810)— 
Maturities of marketable securities100,000 — 100,000 — 
Proceeds from sale of other assets— — — 2,014 
Purchases of property and equipment(7,646)(6,665)(29,075)(29,693)
Net cash provided by (used in) investing activities(273,330)(6,665)(585,885)(27,679)
Financing Activities:
Advances on mortgage repurchase facility, net(20,462)40,506 (80,548)53,910 
Payments of senior notes— (140,557)— (276,951)
Proceeds from issuance of senior notes— — — 694,662 
Dividend payments(35,632)(35,340)(142,417)(118,529)
Payments of deferred debt issuance costs— — — (1,720)
Issuance of shares under stock-based compensation programs, net28,385 (663)16,840 (16,216)
Net cash provided by (used in) financing activities(27,709)(136,054)(206,125)335,156 
Net increase (decrease) in cash, cash equivalents and restricted cash260,654 (264,187)113,636 99,487 
Cash, cash equivalents and restricted cash:
Beginning of period456,441 867,646 603,459 503,972 
End of period$717,095 $603,459 $717,095 $603,459 
Reconciliation of cash, cash equivalents and restricted cash:
Homebuilding:
Cash and cash equivalents$696,075 $485,839 $696,075 $485,839 
Restricted cash3,143 12,799 3,143 12,799 
Financial Services:
Cash and cash equivalents17,877 104,821 17,877 104,821 
Total cash, cash equivalents and restricted cash$717,095 $603,459 $717,095 $603,459 
6




New Home Deliveries
Three Months Ended December 31,
20222021% Change
HomesHome Sale
Revenues
Average
Price
HomesHome Sale
Revenues
Average
Price
HomesHome
Sale
Revenues
Average Price
(Dollars in thousands)
West1,308 $756,109 $578.1 1,408 $770,695 $547.4 (7)%(2)%%
Mountain756 492,850 651.9 781 462,807 592.6 (3)%%10 %
East490 238,320 486.4 474 201,622 425.4 %18 %14 %
Total2,554 $1,487,279 $582.3 2,663 $1,435,124 $538.9 (4)%%%

Year Ended December 31,
20222021% Change
HomesHome Sale
Revenues
Average
Price
HomesHome Sale
Revenues
Average
Price
HomesHome
Sale
Revenues
Average Price
(Dollars in thousands)
West5,234 $3,024,056 $577.8 5,732 $2,964,766 $517.2 (9)%%12 %
Mountain2,616 1,689,376 645.8 2,770 1,567,198 565.8 (6)%%14 %
East1,860 872,832 469.3 1,480 570,492 385.5 26 %53 %22 %
Total9,710 $5,586,264 $575.3 9,982 $5,102,456 $511.2 (3)%%13 %

Net New Orders
Three Months Ended December 31,
20222021% Change
HomesDollar
Value
Average
Price
Monthly
Absorption
Rate *
HomesDollar ValueAverage PriceMonthly
Absorption Rate *
HomesDollar ValueAverage PriceMonthly
Absorption
Rate
(Dollars in thousands)
West155 $67,710 $436.8 0.391,424 $776,984 $545.6 4.70(89)%(91)%(20)%(92)%
Mountain(37)(25,924)700.6 (0.24)704 431,931 613.5 4.27(105)%(106)%14 %(106)%
East72 32,649 453.5 0.64517 225,834 436.8 4.31(86)%(86)%%(85)%
Total190 $74,435 $391.8 0.292,645 $1,434,749 $542.4 4.50(93)%(95)%(28)%(94)%

Year Ended December31,
20222021% Change
HomesDollar
Value
Average
Price
Monthly
Absorption
Rate *
HomesDollar ValueAverage PriceMonthly
Absorption
Rate *
HomesDollar ValueAverage PriceMonthly
Absorption
Rate
(Dollars in thousands)
West2,909 $1,735,202 $596.5 2.016,238 $3,417,437 $547.8 5.25(53)%(49)%%(62)%
Mountain1,157 788,734 681.7 1.852,926 1,831,755 626.0 4.33(60)%(57)%%(57)%
East978 489,946 501.0 2.251,803 789,810 438.1 4.05(46)%(38)%14 %(44)%
Total5,044 $3,013,882 $597.5 2.0210,967 $6,039,002 $550.7 4.75(54)%(50)%%(57)%
        *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 SubdivisionsThree Months EndedYear Ended
December 31,%December 31,%December 31,%
20222021Change20222021Change20222021Change
West134 96 40 %133 101 32 %120 99 21 %
Mountain53 54 (2)%51 55 (7)%52 56 (7)%
East38 37 %37 40 (7)%36 37 (3)%
Total225 187 20 %222 196 13 %208 192 %

Backlog

December 31,
20222021% Change
HomesDollar
Value
Average
Price
HomesDollar
Value
Average
Price
HomesDollar
Value
Average
Price
(Dollars in thousands)
West1,891 $1,049,805 $555.2 4,216 $2,328,949 $552.4 (55)%(55)%— %
Mountain715 515,460 720.9 2,174 1,402,052 644.9 (67)%(63)%12 %
East368 187,629 509.9 1,250 567,695 454.2 (71)%(67)%12 %
Total2,974 $1,752,894 $589.4 7,640 $4,298,696 $562.7 (61)%(59)%%

Homes Completed or Under Construction (WIP lots)

 December 31,%
 20222021Change
Unsold:
Completed396 25 1,484 %
Under construction1,063 312 241 %
Total unsold started homes1,459 337 333 %
Sold homes under construction or completed2,756 6,379 (57)%
Model homes under construction or completed555 479 16 %
Total homes completed or under construction4,770 7,195 (34)%

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

 December 31, 2022December 31, 2021 
 Lots
Owned
Lots
Optioned
TotalLots
Owned
Lots
Optioned
TotalTotal
% Change
West12,667 687 13,354 15,968 4,534 20,502 (35)%
Mountain5,398 1,561 6,959 6,660 4,171 10,831 (36)%
East3,534 1,455 4,989 4,304 2,443 6,747 (26)%
Total21,599 3,703 25,302 26,932 11,148 38,080 (34)%
8



Selling, General and Administrative Expenses

Three Months Ended December 31,Year Ended December 31,
20222021Change20222021Change
(Dollars in thousands)
General and administrative expenses$66,614 $66,986 $(372)$292,349 $246,042 $46,307 
General and administrative expenses as a percentage of home sale revenues
4.5 %4.7 %-20 bps5.2 %4.8 %40 bps
Marketing expenses$25,308 $26,240 $(932)$103,330 $104,435 $(1,105)
Marketing expenses as a percentage of home sale revenues
1.7 %1.8 %-10 bps1.8 %2.0 %-20 bps
Commissions expenses$39,875 $36,797 $3,078 $140,716 $143,516 $(2,800)
Commissions expenses as a percentage of home sale revenues
2.7 %2.6 %10 bps2.5 %2.8 %-30 bps
Total selling, general and administrative expenses$131,797 $130,023 $1,774 $536,395 $493,993 $42,402 
Total selling, general and administrative expenses as a percentage of home sale revenues
8.9 %9.1 %-20 bps9.6 %9.7 %-10 bps

Capitalized Interest

Three Months Ended
December 31,
Year Ended
December 31,
2022202120222021
(Dollars in thousands)
Homebuilding interest incurred$17,419 $18,651 $69,450 $72,500 
Less: Interest capitalized(17,419)(18,651)(69,450)(72,500)
Homebuilding interest expensed$— $— $— $— 
Interest capitalized, beginning of period$63,583 $57,435 $58,054 $52,777 
Plus: Interest capitalized during period17,419 18,651 69,450 72,500 
Less: Previously capitalized interest included in home and land cost of sales(21,081)(18,032)(67,583)(67,223)
Interest capitalized, end of period$59,921 $58,054 $59,921 $58,054 
9