M.D.C. Holdings (NYSE: MDC), parent of Richmond American Homes, reported a net loss for the fourth quarter ended December 31, 2008 of $89.0 million, ($-1.92 per share), including pre-tax charges of $59.7 million for asset impairments and a $19.2 million increase in its deferred tax asset valuation allowance. The loss was substantially narrower than the $281.1 million shortfall posted in the year-earlier period.
Net loss for the year ended Dec. 31, 2008 was $380.5 million, ($-8.24 per share), including pre-tax charges of $298.2 million for asset impairments and a $134.3 million increase in the deferred tax asset valuation allowance. The net loss for the 2007 full year was $636.9 million ($-13.94 per share).
For the quarter, revenue declined 61.6% to $296.2 million as home closings fell 57% from the prior year's fourth quarter to 944 and the average selling price fell 8% to $300,300. New orders fell 53.2% to 350 home orders with an estimated sales value of $99.0 million during the quarter, compared with net orders for 748 homes with an estimated sales value of $187.0 million during the same period in 2007. The drop in net orders was partially due to a 30% year-over-year decline in average active subdivisions to 191 and a decrease in the average number of orders received per subdivision. The cancellation rate fell to 52% from 65% in the prior year's fourth quarter.
Backlog at quarter's end was down 72.6% from the same period a year before to 533 homes with an estimated sales value of $173 million, down from $650 million.
Total unsold homes under construction was 821, down from 1,400 in the 2007 fourth quarter. Model homes were down from 730 last year to 387 at the end of the 2008 quarter. Owned lots fell 34.2% to 7,577. Controlled lots fell 34.7% to 2,358.
During the quarter, M.D.C. generated cash flow from operations of $51.2 million and ended the quarter with $1.42 billion in cash and cash equivalents and no borrowings on homebuilding line of credit. The company cut SG&A expenses by 38.5% during the quarter to $71.9 million.
"During 2008, we faced extraordinary conditions in the homebuilding industry and the overall economy," Larry A. Mizel, M.D.C.'s chairman and CEO said in a statement. "Increasing unemployment levels, deteriorating consumer confidence, rising foreclosures and faltering conditions in the mortgage and banking industries all contributed to continued deterioration in the housing market."
Shares of M.D.C. were down nearly 9% to $32.26 in late-morning trading on the NYSE.