M.D.C. Holdings, Inc. (NYSE: MDC), Denver, on Friday morning reported net income for the 2009 fourth quarter of $127.2 million ($2.68 per diluted share), based on the impact of a $142.6 million benefit from income taxes that was recognized due to recently enacted tax legislation that allowed the Company to extend the carryback period of its 2009 net operating losses from two to five years.
The gain compared with a net loss for the 2008 fourth quarter of $89 million(-$1.92 per diluted share) and included $14 million in impairments. Analysts were expecting a loss of 39 cents a share. Without the tax benefit, the company, parent of Richmond American Homes, posted a $15.4 million loss.
For the 2009 year, net income was $24.7 million ($0.52 per diluted share), compared with a net loss for 2008 of $380.5 million (-$8.25 per diluted share). Without the tax benefit, the company would have reported a loss of$81.1 million.
Home building revenue for the quarter increased to $320.0 million, compared with $291.3 million in the fourth quarter of 2008, due to a 17% increase in home closings to 1,109 and partially offset by an 11% year-over-year decrease in average selling price to $268,400. Land sales revenue for the quarter increased by $13.4 million year-over-year due to a significant increase in the number of lots sold as well as an increase in the average price of the lots sold. Home building revenue for the year ended Dec. 31 was $885.0 million, compared with $1.44 billion for the same period in 2008.
New orders shot up 82% to 637 homes with an estimated sales value of $183 million, compared with net orders for 350 homes with an estimated sales value of $100 million during the comparable quarter in 2008. The cancellation rate dropped to 30% from 52% during the same period in 2008.New orders for the year ended Dec. 31 totaled 3,306 homes with an estimated sales value of $935.0 million, compared with net orders for 3,074 homes with an estimated sales value of $885.0 million during 2008.
Backlog at yearend was 826 homes with an estimated sales value of $265.0 million, up 55% from 533 homes with an estimated sales value of $173.0 million a year earlier.
Community count was down to 133 at yearend 2009 from 191 a year earlier. Lot count at yearend was down to 8,697, 6,383 owned, from 9,935, 7,577 owned, at yearend 2008. The company added
M.D.C.'s gross margin increased to 18.8% during the quarter from 12.9% in the fourth quarter of 2008, despite the reduction in average selling price.For the full year, home building gross margin rose from 12.8% in 2008 to 17.9% in 2009.
Homebuilding SG&A decreased to $40.9 million for the quarter compared with $43.3 million for the same period in the prior year, due to cost cuts including a 23% reduction in home building headcount over the past year and a significant reduction in sales office and model home expense. For the full year, home building SG&A declined to $133.7 million in 2009, compared with $221.1 million in 2008.
Income before taxes from the company's financial services segment for the quarter was $6.1 million compared with income of $3.6 million for the same period in 2008. For the year, however, it fell to $6.0 million from $11.7 million in 2008.
The company ended the quarter, and the year, with $1.56 billion in cash and investments, up 10% from the end of 2008. It listed $998 million in senior debt on its balance sheet.
"In the fourth quarter, our offering of more affordable homes that we introduced earlier in the year accounted for more than 30% of our new home orders," said Larry A. Mizel, MDC's chairman and CEO. "Furthermore, we enhanced the mix of the product we have available for sale by decreasing our exposure to finished speculative homes by more than 90% in 2009 and by strategically increasing our supply of homes available for personalization by 35% during the same period."
Mizel continued, "Generally, we now stop construction on unsold units at the drywall stage. Once construction is restarted, these homes typically can close within 45 days, in direct competition with finished homes on the market. By holding the units at drywall, we offer our buyers the opportunity to personalize their homes at one of our Home Galleries. We believe that this policy will continue to benefit us going forward as we attempt to increase our market share in a highly competitive homebuilding environment in 2010."
Mizel also said the company invested $100 million in 2,700 lots in 52 new communities during the quarter.