M.D.C. Holdings, Inc. (NYSE: MDC), Denver, on Friday reported a net loss for the 2010 first quarter of $20.9 million (-$0.45 per diluted share), compared with a net loss for the 2009 first quarter of $40.9 million (-$0.88 per diluted share). Analysts were expecting a loss of 35 cents a share.
Revenues dropped 16.4% from the 2009 quarter to $147.1 million as home closings fell 10% to 523 and the average selling price fell 6% to $269,500. New orders for the quarter were up 38% to 931, but the average selling price of new orders was down 2% to $276,800. The cancellation rate improved to 22% from 23% in last year's first quarter.
M.D.C. attributed the improvement in net orders to "a 90% increase in the average rate of sales per active community" that was partially offset by a 27% deline in active communities, which fell to 132 from 182 at March 31,2009 and 134 at the end of 2009.
Backlog nearly doubled to 1,234 homes at the end of March, 2010 from 629 a year earlier and from 826 at yearend 2009. Backlog value rose to $381 million from $196 million at the end of the 2009 first quarter. Average selling price of homes in backlog declined to $308,800 from $311,600.
M.D.C. approved the purchase of more than 2,200 lots in 39 new communities and invested a total of $100 million in land acquisition or development activities across its markets during the first quarter. The company's overall lot count rose 3% to 9,730; owned lots at March 31 were down to6,349 from 7,149 a year earlier, but lots under option increased to 3,381 from 2,284. It was the first increase in lot supply for the company since the first quarter of 2006.
The gross margin increased to 22.4% from 15.4% in the first quarter of 2009.SG&A decreased to $52.4 million from $53.6 million for the same period in the prior year as general and administrative expense increased from $38.4 million to $40.2 million and selling costs declined from $142,6 million in last year's quarter to $109.5 million this year. As a percentage of home-sales revenue, SG&A increased from 18.5% in last year's quarter to 22.4% this year.
No asset impairments were incurred during the quarter, compared with $14.6 million incurred in the first quarter of 2009.
M.D.C. ended the quarter with $950.1 million in case, $830.4 million in marketable securities and 594,000 in restricted cash on its balance sheet, compared with $1.23 billion, $327.9 million and 476,000, respectively, at the end of last year's first quarter. Long-term debt rose 24.4% to $1.24 billion as the company issued $250 million of 10-year senior notes at 5.625%. It also netted a $142 million tax refund.
"During the first quarter of 2010, our home orders increased year-over-year for the fourth consecutive quarter," said Larry A. Mizel, M.D.C. chairman and CEO. "While this trend is encouraging, we remain cautious due to the impending expiration of the federal homebuyer tax credit and depressed overall economic conditions."
He continued, "We positioned our inventory to take advantage of a potential increase in demand resulting from the expiration of the tax credit. Because we have held units at drywall, our buyers now have both the opportunity to personalize their homes and to capitalize on the tax credit, which is currently set to expire at the end of the second quarter."
Shares of M.D.C., which builds under the Richmond American Homes brand, were down marginally to $36.96 in early trading Friday.