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

November 01, 2012 | About:
10qk

10qk

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M.D.C. Holdings Inc. (MDC) filed Quarterly Report for the period ended 2012-09-30.

M.d.c. Holdings, Inc. has a market cap of $1.82 billion; its shares were traded at around $38.24 with and P/S ratio of 2.2. The dividend yield of M.d.c. Holdings, Inc. stocks is 2.6%.

Highlight of Business Operations:

For the 2012 third quarter, we reported net income of $20.1 million, or $0.41 per diluted share, compared to a net loss of $31.7 million, or $0.68 per diluted share for the year earlier period. The improvement in our quarterly performance was driven primarily by a 57% increase in home sale revenues, an 860 basis point reduction in our homebuilding selling, general and administrative (SG&A) expenses as a percentage of home sale revenues, a $4.0 million reduction in inventory impairments, a $3.6 million decrease in interest expense and a $9.7 million increase in our financial services segment pretax income.

For the nine months ended September 30, 2012, we reported net income of $33.0 million, or $0.68 per diluted share, compared to a net loss of $79.6 million, or $1.72 per diluted share for the year earlier period. The improvement in our performance was driven primarily by a 33% increase in home sale revenues, a 940 basis point reduction in our homebuilding SG&A expenses as a percentage of home sale revenues, an $18.8 million decrease in interest expense, a $12.7 million reduction in impairments, and a $16.4 million increase in our financial services segment pretax income.

Total home and land sale revenues for the 2012 third quarter increased 56% to $320.7 million compared to $205.6 million for the prior year period. For the nine months ended September 30, 2012, total home and land sales revenues increased 32% to $765.3 million compared to $577.9 million for the prior year period. The increase in revenues for both periods was driven primarily by changes to the number and average price of new home deliveries as shown in the table below.

For the nine months ended September 30, 2012, SG&A expenses decreased 18%, or $25.0 million, to $118.1 million, compared to $143.2 million for same period in 2011. The decrease in SG&A is attributable to a $27.1 million decrease in general and administrative expenses, including $9.8 million in various significant legal recoveries and reductions in salaries and other overhead costs, as well as a $3.7 million decline in our marketing expenses. These items were partially offset by a $5.8 million increase in commission expenses, which was driven by our increase in home sale revenues.

We reported financial services pretax income of $9.3 million and $20.8 million, respectively, for the three and nine months ended September 30, 2012, compared to a pretax loss of $0.5 million and pretax income of $4.4 million, respectively, for the same periods in 2011. The increase in our financial services pretax income was primarily driven by increases of $9.0 million and $15.5 million in our mortgage operations pretax income for the three and nine months ended September 30, 2012, respectively, when compared to the same periods in 2011. The improvement in our mortgage operations profitability was driven largely by year-over-year increases in the gains on sales of mortgage loans and the corresponding servicing rights and higher origination income for the three and nine months ended September 30, 2012 of $6.3 million and $12.6 million, respectively. These increases were due to favorable mortgage market conditions, increases in the volume of loans locked and originated, and a decrease in the level of special financing programs that we offered our homebuyers. Our mortgage operations profitability for the three and nine months ended September 30, 2012 also benefited from a year-over-year decrease in our loan loss reserve expense activity of $2.9 million and $3.7 million, respectively, due to reduced repurchase and indemnity claims received from third-party purchasers of our mortgage loans. The balance of our financial services segments pretax income, which consisted of income from our insurance and title operations, was $1.9 million and $4.3 million for the three and nine months ended September 30, 2012, as compared with $1.2 million and $3.6 million, respectively for the same periods in the prior year.

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