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M.D.C. Holdings Inc. Reports Operating Results (10-Q)

July 31, 2012 | About:
10qk

10qk

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M.D.C. Holdings Inc. (MDC) filed Quarterly Report for the period ended 2012-06-30.

M.d.c. Holdings, Inc. has a market cap of $1.58 billion; its shares were traded at around $32.92 with and P/S ratio of 1.9. The dividend yield of M.d.c. Holdings, Inc. stocks is 3%.

Highlight of Business Operations:

For the six months ended June 30, 2012, the Company reported net income of $12.9 million, or $0.26 per diluted share, compared to a net loss of $47.9 million, or $1.03 per diluted share for the year earlier period. The improvement in our performance was driven primarily by a 19% increase in home sale revenues, a $23.5 million decrease in our homebuilding SG&A expenses, a $15.2 million decrease in interest expense and an $8.6 million reduction in impairments.

The pretax results for our West segment improved $14.5 million and $19.2 million, respectively, for the three and six months ended June 30, 2012 due to an increase in homebuilding revenues resulting from a 63% and a 59% jump in new home deliveries as well as a reduction in impairment charges. For our Mountain segment, pretax results improved $5.8 million and $9.2 million, respectively, for the three and six months ended June 30, 2012 due to an increase in our gross margin percentage, a reduction of SG&A expenses, and a decrease in impairment charges. For the six month period, these improvements were partially offset by a decrease in homebuilding revenues. Pretax results for our East segment improved $2.8 million and $6.6 million, respectively, for the three and six months ended June 30, 2012, primarily related to a decrease in our SG&A expenses, including a benefit from a sizable legal recovery during the 2012 first quarter, and an increase in our gross margin percentage. For our Other homebuilding segment, pretax results increased $0.6 million and $1.6 million, respectively, for the three and six months ended June 30, 2012 due almost entirely to a reduction of SG&A expenses. Our pretax results for our non-operating Corporate segment improved $12.1 million and $21.9 million, respectively, for the three and six months ended June 30 2012 due to a reduction in both interest and SG&A expenses, which included legal recoveries of $3.8 million and $7.6 million, respectively.

Gross margin from home sales for the 2012 second quarter was 14.2% versus 8.9% for the year earlier period. The primary reason for the increase was a reduction in impairment charges from $8.6 million in the 2011 second quarter to no impairments in the 2012 second quarter. The 2011 second quarter also included a $1.8 million benefit related to a warranty accrual reduction, while the 2012 quarter did not include any warranty accrual adjustments, partially offsetting the decrease in impairments. Interest in cost of sales for the 2012 second quarter was $7.1 million, or 2.8% of home sales revenue, compared to $5.5 million, or 2.6% of home sales revenue, for the 2011 second quarter.

Gross margin from home sales for the six months ended June 30, 2012 was 14.1% versus 11.1% for the year earlier period. The primary reason for the increase was a reduction in impairment charges from $8.6 million in the six months ended June 30, 2011 to no impairment in the same period in 2012. The six months ended June 30, 2011 included a $2.3 million benefit related to a warranty accrual reduction, while the 2012 six months did not include any warranty accrual adjustments, partially offsetting the decrease in impairments. Interest in cost of sales for the six months ended June 30, 2012 was $12.0 million, or 2.7% of home sales revenue, compared to $9.7 million, or 2.6% of home sales revenue, for the six months ended June 30, 2011.

Pretax income from our financial services segment for the three and six months ended June 30, 2012 was $6.7 million and $11.5 million, respectively, compared to $3.1 million and $4.9 million, respectively, for the same periods in 2011 The increase in pretax income primarily reflected increases in our mortgage operations pretax income of $4.4 million and $6.7 million, respectively, for the three and six months ended June 30, 2012. The improvement in our mortgage subsidiarys profitability was driven largely by year-over-year increases in the gains on sales of mortgage loans for the three and six months ended June 30, 2012 of $4.1 million and $5.3 million, respectively, due to favorable mortgage market conditions and a decrease in the level of special financing programs that we offered our homebuyers. The balance of our financial services pretax income, which consisted of income from our insurance and title operations, was $1.0 million and $2.5 million for the three and six months ended June 30, 2012, as compared with $1.7 million and $2.5 million, respectively for the same periods in the prior year.

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