UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): January 31, 2019
M.D.C. Holdings, Inc. | ||
(Exact name of registrant as specified in its charter) |
Delaware |
1-8951 |
84-0622967 |
(State or other |
(Commission file number) |
(I.R.S. employer |
jurisdiction of |
identification no.) |
|
incorporation) |
4350 South Monaco Street, Suite 500, Denver, Colorado 80237
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (303) 773-1100
Not Applicable | |||
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 31, 2019, M.D.C. Holdings, Inc. issued a press release reporting its results of operations for the fourth quarter and the fiscal year ended 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.
The information in Item 2.02 of this Current Report, including the press release, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
The following exhibit is furnished as part of this Current Report on Form 8-K.
EXHIBIT INDEX
Exhibit Number | Description | |
Exhibit 99.1 | Press Release dated January 31, 2019 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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M.D.C. HOLDINGS, INC. |
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Dated: January 31, 2019 |
By: |
/s/ Joseph H. Fretz |
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Joseph H. Fretz |
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Secretary and Corporate Counsel |
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2
Exhibit 99.1
News Release
M.D.C. HOLDINGS ANNOUNCES 2018 FOURTH QUARTER AND FULL YEAR RESULTS
Full year home sales revenues increased 19%, home sales gross margins expanded 170 basis points and pretax income rose to its highest level in over a decade.
DENVER, COLORADO, Thursday, January 31, 2019. M.D.C Holdings, Inc. (NYSE: MDC) announced results for the quarter and full year ended December 31, 2018.
Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “2018 was a banner year for MDC as home sales revenues increased 19%, home sales gross margins expanded 170 basis points, and pretax income rose to its highest level in over a decade. In addition, we ended the year in excellent financial condition, with a homebuilding debt to capital ratio of 39% and enhanced liquidity following the increase of our homebuilding line of credit from $700 million to $1.0 billion in the fourth quarter. Furthermore, we delivered on our goal of 10% active community count growth to start 2019.”
Mr. Mizel continued, “The fourth quarter marked a strong end to the year as we made significant year-over-year improvements to our top and bottom line. However, order activity during the quarter was not as robust as it was last year, a sign that buyers are being patient with their purchase decisions. Years of price appreciation coupled with recent uncertainty about mortgage rates have understandably made some buyers cautious and have resulted in a slower sales pace for our industry. Fortunately, we have adjusted our strategy over the past few years to address the rising cost of home ownership by bringing down the price points of our homes. Our more affordable home offerings were well received in 2018, and we anticipate the same will be true in 2019.”
Mr Mizel concluded, “We continue to believe that the outlook for our industry remains favorable, with rising wages, continuing job growth and positive consumer sentiment providing a healthy economic backdrop. MDC is in a great position to capitalize on these fundamentals thanks to our more affordable product focus, our strong balance sheet and our seasoned management team. As a result, we are optimistic about our company’s future as we enter the spring selling season.”
2018 Fourth Quarter Highlights and Comparisons to 2017 Fourth Quarter
● |
Home sale revenues up 22% to $858.5 million from $702.6 million |
o |
Average selling price of homes delivered up 4% to $469,900 |
● |
Pretax income up 34% to $69.3 million from $51.8 million |
o |
$6.9 million loss on investments in 2018 fourth quarter vs. $0.1 million loss in 2017 fourth quarter |
● |
Net income of $54.7 million, or $0.95 per diluted share, up 123% from $24.6 million, or $0.43 per diluted share |
o |
Effective tax rate of 21.0% in 2018 fourth quarter vs 52.6% in 2017 fourth quarter |
● |
Gross margin from home sales up 80 basis points to 18.1% from 17.3% |
o |
$10.0 million impairment charge in 2018 fourth quarter vs. $0.6 million in 2017 fourth quarter |
o |
Excluding impairments, gross margins increased 190 basis points to 19.3% from 17.4% |
● |
Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 70 basis points to 10.9% from 11.6% |
● |
Dollar value of net new orders of $453.3 million vs. $574.3 million in 2017 fourth quarter |
2018 Full Year Highlights and Comparisons to 2017 Full Year
● |
Home sale revenues up 19% to $2.98 billion from $2.50 billion |
o |
Average selling price of homes delivered up 7% to $481,200 |
● |
Pretax income up 15% to $263.9 million from $229.7 million |
o |
$3.7 million loss on investments in 2018 vs $53.7 million gain in 2017 |
● |
Net income of $210.8 million, or $3.66 per diluted share, up 49% from $141.8 million, or $2.48 per diluted share |
o |
Effective tax rate of 20.1% in 2018 vs 38.3% in 2017 |
● |
Gross margin from home sales up 170 basis points to 18.3% from 16.6% |
o |
$21.9 million impairment charge in 2018 vs. $10.0 million in 2017 |
o |
Excluding impairments, gross margins increased 200 basis points to 19.0% from 17.0% |
● |
Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") improved by 40 basis points to 11.1% from 11.5% |
● |
Dollar value of net new orders of $2.77 billion, up 3% from $2.70 billion |
o |
Average selling price of net new orders consistent with 2017 |
Other Selected Information
● |
Backlog dollar value at December 31, 2018 down 11% year-over-year to $1.43 billion |
o |
Gross margin from home sales in backlog at 12/31/2018 comparable to 2018 full year closing gross margin (excluding impairments) of 19.0% |
o |
Backlog conversion ratio (home deliveries divided by beginning backlog) for the 2019 first quarter estimated to be in the 42% to 44% range |
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Active subdivision count at 12/31/2018 of 166, up 10% year-over-year and 5% from 9/30/2018 |
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Lots controlled of 23,187 at 12/31/2018, up 20% year-over-year |
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Quarterly cash dividend of $0.30 ($1.20 annualized) and 8% stock dividend declared in January 2019 |
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 200,000 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-K for the year ended December 31, 2018, 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 |
M.D.C. HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended |
Year Ended |
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December 31, |
December 31, |
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2018 |
2017 |
2018 |
2017 |
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(Dollars in thousands, except per share amounts) |
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Homebuilding: |
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Home sale revenues |
$ | 858,488 | $ | 702,649 | $ | 2,981,811 | $ | 2,498,695 | ||||||||
Land sale revenues |
- | 1,609 | - | 4,547 | ||||||||||||
Total home and land sale revenues |
858,488 | 704,258 | 2,981,811 | 2,503,242 | ||||||||||||
Home cost of sales |
(692,856 | ) | (580,667 | ) | (2,415,139 | ) | (2,073,833 | ) | ||||||||
Land cost of sales |
- | (1,768 | ) | - | (4,440 | ) | ||||||||||
Inventory impairments |
(10,002 | ) | (620 | ) | (21,850 | ) | (10,010 | ) | ||||||||
Total cost of sales |
(702,858 | ) | (583,055 | ) | (2,436,989 | ) | (2,088,283 | ) | ||||||||
Gross margin |
155,630 | 121,203 | 544,822 | 414,959 | ||||||||||||
Selling, general and administrative expenses |
(93,366 | ) | (81,379 | ) | (329,801 | ) | (287,488 | ) | ||||||||
Interest and other income |
2,132 | 1,614 | 7,718 | 7,714 | ||||||||||||
Net realized gains from the sales of marketable securities |
- | - | - | 17,775 | ||||||||||||
Realized gain from the sale of metropolitan district bond securities (related party) |
- | - | - | 35,847 | ||||||||||||
Other expense |
(2,683 | ) | (1,182 | ) | (5,245 | ) | (2,817 | ) | ||||||||
Other-than-temporary impairment of marketable securities |
- | - | - | (51 | ) | |||||||||||
Homebuilding pretax income |
61,713 | 40,256 | 217,494 | 185,939 | ||||||||||||
Financial Services: |
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Revenues |
23,387 | 19,856 | 83,405 | 74,372 | ||||||||||||
Expenses |
(10,350 | ) | (9,287 | ) | (38,200 | ) | (34,534 | ) | ||||||||
Interest and other income |
1,409 | 1,048 | 4,900 | 4,190 | ||||||||||||
Net loss on marketable equity securities |
(6,873 | ) | - | (3,745 | ) | - | ||||||||||
Other-than-temporary impairment of marketable securities |
- | (75 | ) | - | (235 | ) | ||||||||||
Financial services pretax income |
7,573 | 11,542 | 46,360 | 43,793 | ||||||||||||
Income before income taxes |
69,286 | 51,798 | 263,854 | 229,732 | ||||||||||||
Provision for income taxes |
(14,561 | ) | (27,246 | ) | (53,074 | ) | (87,897 | ) | ||||||||
Net income |
$ | 54,725 | $ | 24,552 | $ | 210,780 | $ | 141,835 | ||||||||
Other comprehensive income (loss) related to available for sale securities, net of tax |
- | 1,166 | - | (18,079 | ) | |||||||||||
Comprehensive income |
$ | 54,725 | $ | 25,718 | $ | 210,780 | $ | 123,756 | ||||||||
Earnings per share |
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Basic |
$ | 0.97 | $ | 0.44 | $ | 3.74 | $ | 2.54 | ||||||||
Diluted |
$ | 0.95 | $ | 0.43 | $ | 3.66 | $ | 2.48 | ||||||||
Weighted average common shares outstanding |
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Basic |
56,263,535 | 55,802,550 | 56,084,373 | 55,663,908 | ||||||||||||
Diluted |
57,141,245 | 57,235,959 | 57,250,704 | 56,901,461 | ||||||||||||
Dividends declared per share |
$ | 0.30 | $ | 0.23 | $ | 1.20 | $ | 0.93 |
M.D.C. HOLDINGS, INC.
Consolidated Balance Sheets
(Unaudited)
December 31, |
December 31, |
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2018 |
2017 |
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(Dollars in thousands, except |
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per share amounts) |
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ASSETS | ||||||||
Homebuilding: |
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Cash and cash equivalents |
$ | 414,724 | $ | 472,957 | ||||
Marketable securities |
- | 49,634 | ||||||
Restricted cash |
6,363 | 8,812 | ||||||
Trade and other receivables |
52,982 | 53,362 | ||||||
Inventories: |
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Housing completed or under construction |
952,436 | 936,685 | ||||||
Land and land under development |
1,180,558 | 893,051 | ||||||
Total inventories |
2,132,994 | 1,829,736 | ||||||
Property and equipment, net |
58,167 | 26,439 | ||||||
Deferred tax assets, net |
37,178 | 41,480 | ||||||
Prepaid and other assets |
45,794 | 75,666 | ||||||
Total homebuilding assets |
2,748,202 | 2,558,086 | ||||||
Financial Services: |
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Cash and cash equivalents |
49,052 | 32,471 | ||||||
Marketable securities |
40,879 | 42,004 | ||||||
Mortgage loans held-for-sale, net |
149,211 | 138,114 | ||||||
Other assets |
13,733 | 9,617 | ||||||
Total financial services assets |
252,875 | 222,206 | ||||||
Total Assets |
$ | 3,001,077 | $ | 2,780,292 | ||||
LIABILITIES AND EQUITY |
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Homebuilding: |
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Accounts payable |
$ | 50,505 | $ | 39,655 | ||||
Accrued liabilities |
196,247 | 166,312 | ||||||
Revolving credit facility |
15,000 | 15,000 | ||||||
Senior notes, net |
987,967 | 986,597 | ||||||
Total homebuilding liabilities |
1,249,719 | 1,207,564 | ||||||
Financial Services: |
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Accounts payable and accrued liabilities |
58,543 | 53,101 | ||||||
Mortgage repurchase facility |
116,815 | 112,340 | ||||||
Total financial services liabilities |
175,358 | 165,441 | ||||||
Total Liabilities |
1,425,077 | 1,373,005 | ||||||
Stockholders' Equity |
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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; 56,615,352 and 56,123,228 issued and outstanding at December 31, 2018 and December 31, 2017, respectively |
566 | 561 | ||||||
Additional paid-in-capital |
1,168,442 | 1,144,570 | ||||||
Retained earnings |
406,992 | 258,164 | ||||||
Accumulated other comprehensive income |
- | 3,992 | ||||||
Total Stockholders' Equity |
1,576,000 | 1,407,287 | ||||||
Total Liabilities and Stockholders' Equity |
$ | 3,001,077 | $ | 2,780,292 |
M.D.C. HOLDINGS, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended |
Year Ended |
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December 31, |
December 31, |
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2018 |
2017 |
2018 |
2017 |
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(Dollars in thousands) |
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Operating Activities: |
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Net income |
$ | 54,725 | $ | 24,552 | $ | 210,780 | $ | 141,835 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Stock-based compensation expense |
5,517 | 2,757 | 14,017 | 5,857 | ||||||||||||
Depreciation and amortization |
5,920 | 1,116 | 21,326 | 5,321 | ||||||||||||
Inventory impairments |
10,002 | 620 | 21,850 | 10,010 | ||||||||||||
Other-than-temporary impairment of marketable securities |
- | 75 | - | 286 | ||||||||||||
Net gain on sale of available-for-sale marketable securities |
- | - | - | (18,122 | ) | |||||||||||
Net loss on marketable equity securities |
6,873 | - | 3,745 | - | ||||||||||||
Gain on sale of metropolitan district bond securities (related party) |
- | - | - | (35,847 | ) | |||||||||||
Amortization of discount / premiums on marketable debt securities |
- | - | (366 | ) | - | |||||||||||
Deferred income tax expense |
(363 | ) | 21,992 | 3,729 | 44,787 | |||||||||||
Net changes in assets and liabilities: |
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Trade and other receivables |
2,411 | (13,882 | ) | (4,638 | ) | (13,763 | ) | |||||||||
Mortgage loans held-for-sale |
(34,375 | ) | (48,310 | ) | (11,097 | ) | 660 | |||||||||
Housing completed or under construction |
119,575 | 32,449 | (12,082 | ) | (69,548 | ) | ||||||||||
Land and land under development |
(154,287 | ) | (30,055 | ) | (304,250 | ) | (10,169 | ) | ||||||||
Prepaid expenses and other assets |
12,083 | (1,892 | ) | (245 | ) | (13,121 | ) | |||||||||
Accounts payable and accrued liabilities |
23,259 | 6,975 | 49,325 | 22,320 | ||||||||||||
Net cash provided by (used in) operating activities |
51,340 | (3,603 | ) | (7,906 | ) | 70,506 | ||||||||||
Investing Activities: |
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Purchases of marketable securities |
(1,667 | ) | (49,635 | ) | (18,850 | ) | (67,239 | ) | ||||||||
Maturities of marketable securities |
- | - | 50,000 | - | ||||||||||||
Sales of marketable securities |
2,920 | - | 16,230 | 83,315 | ||||||||||||
Proceeds from sale of metropolitan district bond securities (related party) |
- | - | - | 44,253 | ||||||||||||
Purchases of property and equipment |
(7,267 | ) | (622 | ) | (27,166 | ) | (2,539 | ) | ||||||||
Net cash provided by (used in) investing activities |
(6,014 | ) | (50,257 | ) | 20,214 | 57,790 | ||||||||||
Financing Activities: |
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Advances (payments) on mortgage repurchase facility, net |
26,031 | 47,237 | 4,475 | (2,145 | ) | |||||||||||
Proceeds from issuance of senior notes |
- | 146,463 | - | 146,463 | ||||||||||||
Dividend payments |
(16,985 | ) | (13,104 | ) | (67,718 | ) | (51,897 | ) | ||||||||
Payments of deferred financing costs |
(3,026 | ) | (35 | ) | (3,026 | ) | (2,665 | ) | ||||||||
Proceeds from exercise of stock options |
1 | 998 | 9,860 | 9,501 | ||||||||||||
Net cash provided by (used in) financing activities |
6,021 | 181,559 | (56,409 | ) | 99,257 | |||||||||||
Net increase (decrease) in cash and cash equivalents |
51,347 | 127,699 | (44,101 | ) | 227,553 | |||||||||||
Cash and cash equivalents: |
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Beginning of period |
418,792 | 386,541 | 514,240 | 286,687 | ||||||||||||
End of period |
$ | 470,139 | $ | 514,240 | $ | 470,139 | $ | 514,240 | ||||||||
Reconciliation of cash, cash equivalents and restricted cash: |
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Homebuilding: |
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Cash and cash equivalents |
$ | 414,724 | $ | 472,957 | $ | 414,724 | $ | 472,957 | ||||||||
Restricted cash |
6,363 | 8,812 | 6,363 | 8,812 | ||||||||||||
Financial Services: |
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Cash and cash equivalents |
49,052 | 32,471 | 49,052 | 32,471 | ||||||||||||
Total cash, cash equivalents and restricted cash |
$ | 470,139 | $ | 514,240 | $ | 470,139 | $ | 514,240 |
New Home Deliveries
Three Months Ended December 31, |
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2018 |
2017 |
% Change |
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Homes |
Dollar |
Average Price |
Homes |
Dollar |
Average Price |
Homes |
Dollar Value |
Average Price |
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(Dollars in thousands) |
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West |
958 | $ | 446,825 | $ | 466.4 | 810 | $ | 356,428 | $ | 440.0 | 18 | % | 25 | % | 6 | % | ||||||||||||||||||||
Mountain |
645 | 330,313 | 512.1 | 501 | 240,024 | 479.1 | 29 | % | 38 | % | 7 | % | ||||||||||||||||||||||||
East |
224 | 81,350 | 363.2 | 245 | 106,197 | 433.5 | (9 | )% | (23 | )% | (16 | )% | ||||||||||||||||||||||||
Total |
1,827 | $ | 858,488 | $ | 469.9 | 1,556 | $ | 702,649 | $ | 451.6 | 17 | % | 22 | % | 4 | % |
Year Ended December 31, |
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2018 |
2017 |
% Change |
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Homes |
Dollar |
Average Price |
Homes |
Dollar |
Average Price |
Homes |
Dollar |
Average Price |
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(Dollars in thousands) |
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West |
3,244 | $ | 1,567,141 | $ | 483.1 | 2,990 | $ | 1,316,069 | $ | 440.2 | 8 | % | 19 | % | 10 | % | ||||||||||||||||||||
Mountain |
2,118 | 1,080,475 | 510.1 | 1,691 | 801,644 | 474.1 | 25 | % | 35 | % | 8 | % | ||||||||||||||||||||||||
East |
835 | 334,195 | 400.2 | 860 | 380,982 | 443.0 | (3 | )% | (12 | )% | (10 | )% | ||||||||||||||||||||||||
Total |
6,197 | $ | 2,981,811 | $ | 481.2 | 5,541 | $ | 2,498,695 | $ | 450.9 | 12 | % | 19 | % | 7 | % |
Net New Orders
Three Months Ended December 31, |
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2018 |
2017 |
% Change |
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Homes |
Dollar |
Average Price |
Monthly |
Homes |
Dollar Value |
Average Price |
Monthly |
Homes |
Dollar Value |
Average Price |
Monthly |
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(Dollars in thousands) |
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West |
573 | $ | 250,647 | $ | 437.4 | 2.51 | 651 | $ | 299,738 | $ | 460.4 | 2.91 | (12 | )% | (16 | )% | (5 | )% | (14 | )% | ||||||||||||||||||||||||||||
Mountain |
315 | 149,583 | 474.9 | 1.60 | 413 | 204,706 | 495.7 | 2.49 | (24 | )% | (27 | )% | (4 | )% | (36 | )% | ||||||||||||||||||||||||||||||||
East |
171 | 53,028 | 310.1 | 2.78 | 188 | 69,817 | 371.4 | 2.72 | (9 | )% | (24 | )% | (17 | )% | 2 | % | ||||||||||||||||||||||||||||||||
Total |
1,059 | $ | 453,258 | $ | 428.0 | 2.18 | 1,252 | $ | 574,261 | $ | 458.7 | 2.73 | (15 | )% | (21 | )% | (7 | )% | (20 | )% |
Year Ended December 31, |
||||||||||||||||||||||||||||||||||||||||||||||||
2018 |
2017 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||
Homes |
Dollar |
Average Price |
Monthly |
Homes |
Dollar Value |
Average Price |
Monthly |
Homes |
Dollar Value |
Average Price |
Monthly |
|||||||||||||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||||||||||||||||
West |
3,316 | $ | 1,535,438 | $ | 463.0 | 3.71 | 3,094 | $ | 1,435,474 | $ | 464.0 | 3.47 | 7 | % | 7 | % | (0 | )% | 7 | % | ||||||||||||||||||||||||||||
Mountain |
1,908 | 972,826 | 509.9 | 2.63 | 1,876 | 919,875 | 490.3 | 3.05 | 2 | % | 6 | % | 4 | % | (14 | )% | ||||||||||||||||||||||||||||||||
East |
750 | 262,518 | 350.0 | 2.78 | 846 | 343,148 | 405.6 | 2.37 | (11 | )% | (23 | )% | (14 | )% | 17 | % | ||||||||||||||||||||||||||||||||
Total |
5,974 | $ | 2,770,782 | $ | 463.8 | 3.16 | 5,816 | $ | 2,698,497 | $ | 464.0 | 3.12 | 3 | % | 3 | % | (0 | )% | 1 | % |
*Calculated as total net new orders in period ÷ average active communicates during period ÷ number of months in period
Active Subdivisions
Average Active Subdivisions |
||||||||||||||||||||||||||||||||||||
Active Subdivisions |
Three Months Ended |
Year Ended |
||||||||||||||||||||||||||||||||||
December 31, |
% |
December 31, |
% |
December 31, |
% |
|||||||||||||||||||||||||||||||
2018 |
2017 |
Change |
2018 |
2017 |
Change |
2018 |
2017 |
Change |
||||||||||||||||||||||||||||
West |
79 | 73 | 8 | % | 76 | 75 | 1 | % | 75 | 75 | 0 | % | ||||||||||||||||||||||||
Mountain |
67 | 56 | 20 | % | 65 | 55 | 18 | % | 60 | 52 | 15 | % | ||||||||||||||||||||||||
East |
20 | 22 | (9 | )% | 21 | 22 | (5 | )% | 22 | 29 | (24 | )% | ||||||||||||||||||||||||
Total |
166 | 151 | 10 | % | 162 | 152 | 7 | % | 157 | 156 | 1 | % |
Backlog
At December 31, |
||||||||||||||||||||||||||||||||||||
2018 |
2017 |
% Change |
||||||||||||||||||||||||||||||||||
Homes |
Dollar |
Average Price |
Homes |
Dollar |
Average Price |
Homes |
Dollar |
Average Price |
||||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||||
West |
1,523 | $ | 756,335 | $ | 496.6 | 1,451 | $ | 774,182 | $ | 533.6 | 5 | % | (2 | )% | (7 | )% | ||||||||||||||||||||
Mountain |
1,043 | 550,329 | 527.6 | 1,253 | 637,995 | 509.2 | (17 | )% | (14 | )% | 4 | % | ||||||||||||||||||||||||
East |
370 | 119,303 | 322.4 | 455 | 190,315 | 418.3 | (19 | )% | (37 | )% | (23 | )% | ||||||||||||||||||||||||
Total |
2,936 | $ | 1,425,967 | $ | 485.7 | 3,159 | $ | 1,602,492 | $ | 507.3 | (7 | )% | (11 | )% | (4 | )% |
Homes Completed or Under Construction (WIP lots)
December 31, |
||||||||||||
2018 |
2017 |
% Change |
||||||||||
Unsold: |
||||||||||||
Completed |
179 | 95 | 88 | % | ||||||||
Under construction |
263 | 215 | 22 | % | ||||||||
Total unsold started homes |
442 | 310 | 43 | % | ||||||||
Sold homes under construction or completed |
2,219 | 2,345 | (5 | )% | ||||||||
Model homes under construction or completed |
407 | 338 | 20 | % | ||||||||
Total homes completed or under construction |
3,068 | 2,993 | 3 | % |
Lots Owned and Optioned (including homes completed or under construction)
December 31, 2018 |
December 31, 2017 |
|||||||||||||||||||||||||||
Lots Owned |
Lots Optioned |
Total |
Lots Owned |
Lots Optioned |
Total |
Total % Change |
||||||||||||||||||||||
West |
8,093 | 3,004 | 11,097 | 6,607 | 2,101 | 8,708 | 27 | % | ||||||||||||||||||||
Mountain |
6,305 | 2,477 | 8,782 | 4,905 | 2,930 | 7,835 | 12 | % | ||||||||||||||||||||
East |
1,899 | 1,409 | 3,308 | 1,486 | 1,283 | 2,769 | 19 | % | ||||||||||||||||||||
Total |
16,297 | 6,890 | 23,187 | 12,998 | 6,314 | 19,312 | 20 | % |
Selling, General and Administrative Expenses
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||||||||||
2018 |
2017 |
Change |
2018 |
2017 |
Change |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
General and administrative expenses |
$ | 45,317 | $ | 39,843 | $ | 5,474 | $ | 161,679 | $ | 137,674 | $ | 24,005 | ||||||||||||
General and administrative expenses as a percentage of home sale revenues |
5.3 | % | 5.7 | % |
(40) bps |
5.4 | % | 5.5 | % |
(10) bps |
||||||||||||||
Marketing expenses |
$ | 19,234 | $ | 17,843 | $ | 1,391 | $ | 70,122 | $ | 66,388 | $ | 3,734 | ||||||||||||
Marketing expenses as a percentage of home sale revenues |
2.2 | % | 2.5 | % |
(30) bps |
2.4 | % | 2.7 | % |
(30) bps |
||||||||||||||
Commissions expenses |
$ | 28,815 | $ | 23,693 | $ | 5,122 | $ | 98,000 | $ | 83,426 | $ | 14,574 | ||||||||||||
Commissions expenses as a percentage of home sale revenues |
3.4 | % | 3.4 | % |
0 bps |
3.3 | % | 3.3 | % |
0 bps |
||||||||||||||
Total selling, general and administrative expenses |
$ | 93,366 | $ | 81,379 | $ | 11,987 | $ | 329,801 | $ | 287,488 | $ | 42,313 | ||||||||||||
Total selling, general and administrative expenses as a percentage of home sale revenues (SG&A Rate) |
10.9 | % | 11.6 | % |
(70) bps |
11.1 | % | 11.5 | % |
(40) bps |
Capitalized Interest
Three Months Ended |
Year Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Homebuilding interest incurred |
$ | 15,726 | $ | 15,576 | $ | 62,631 | $ | 55,170 | ||||||||
Less: Interest capitalized |
(15,726 | ) | (15,576 | ) | (62,631 | ) | (55,170 | ) | ||||||||
Homebuilding interest expensed |
$ | - | $ | - | $ | - | $ | - | ||||||||
Interest capitalized, beginning of period |
$ | 57,232 | $ | 60,216 | $ | 57,541 | $ | 68,085 | ||||||||
Plus: Interest capitalized during period |
15,726 | 15,576 | 62,631 | 55,170 | ||||||||||||
Less: Previously capitalized interest included in home and land cost of sales |
(18,113 | ) | (18,251 | ) | (65,327 | ) | (65,714 | ) | ||||||||
Interest capitalized, end of period |
$ | 54,845 | $ | 57,541 | $ | 54,845 | $ | 57,541 |
Reconciliation of Non-GAAP Financial Measures
Below is a reconciliation of gross margin from home sales to gross margin from home sales excluding inventory impairments, warranty adjustments and interest in cost of sales. The table below reconciles each of these non-GAAP financial measures to gross margin as calculated based on GAAP. We believe this information is relevant and meaningful as it provides our investors and analysts with the impact that interest, warranty and impairments 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 |
||||||||||||||||
December 31, 2018 |
Gross Margin % |
December 31, 2017 |
Gross Margin % |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Gross Margin |
$ | 155,630 | 18.1 | % | $ | 121,203 | 17.2 | % | ||||||||
Less: Land Sale Revenues |
- | (1,609 | ) | |||||||||||||
Add: Land Cost of Sales |
- | 1,768 | ||||||||||||||
Gross Margin from Home Sales |
155,630 | 18.1 | % | 121,362 | 17.3 | % | ||||||||||
Add: Inventory Impairments |
10,002 | 620 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments |
165,632 | 19.3 | % | 121,982 | 17.4 | % | ||||||||||
Add: Warranty Adjustments |
307 | 1,716 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments |
165,939 | 19.3 | % | 123,698 | 17.6 | % | ||||||||||
Add: Interest in Cost of Sales |
18,113 | 18,251 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments, |
||||||||||||||||
Warranty Adjustments and Interest in Cost of Sales |
$ | 184,052 | 21.4 | % | $ | 141,949 | 20.2 | % |
Year Ended |
||||||||||||||||
December 31, 2018 |
Gross Margin % |
December 31, 2017 |
Gross Margin % |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Gross Margin |
$ | 544,822 | 18.3 | % | $ | 414,959 | 16.6 | % | ||||||||
Less: Land Sale Revenues |
- | (4,547 | ) | |||||||||||||
Add: Land Cost of Sales |
- | 4,440 | ||||||||||||||
Gross Margin from Home Sales |
544,822 | 18.3 | % | 414,852 | 16.6 | % | ||||||||||
Add: Inventory Impairments |
21,850 | 10,010 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments |
566,672 | 19.0 | % | 424,862 | 17.0 | % | ||||||||||
Add: Warranty Adjustments |
3,413 | 1,341 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments and Warranty Adjustments |
570,085 | 19.1 | % | 426,203 | 17.1 | % | ||||||||||
Add: Interest in Cost of Sales |
65,327 | 65,714 | ||||||||||||||
Gross Margin from Home Sales Excluding Inventory Impairments, |
||||||||||||||||
Warranty Adjustments and Interest in Cost of Sales |
$ | 635,412 | 21.3 | % | $ | 491,917 | 19.7 | % |
10