M.D.C. Holdings, Inc. (NYSE:MDC), parent of Richmond American Homes, late Tuesday reported net income for its first quarter ended March 31of $40.6 million, or $0.64 per diluted share, up 5% from $38.8 million or $0.63 per diluted share. Analysts polled by Dow Jones were expecting a gain of $0.61 per share.

Among the results:
- Home sale revenues up 7% to $647.3 million from $607.7 million
- Unit deliveries increased 7% to 1,358
- Average selling price of deliveries nearly unchanged at $476,600
- Pretax income up 10% to $55.6 million from $50.5 million
- Effective tax rate of 27.1% vs. 23.3%
- Gross margin from home sales up 70 basis points to 18.9% from 18.2%
- Selling, general and administrative expenses as a percentage of home sale revenues ("SG&A rate") of 12.7% vs. 11.7%
- Dollar value of net new orders of $851.4 million vs. $863.7 million
- Unit net orders increased 3% to 1,956
- Average selling price of net orders down 4% to $435,300
- Absorption pace of 3.75 homes per community per month
* Per share amount for the 2018 first quarter has been adjusted for the 8% stock dividend declared and paid in the 2019 first quarter
2019 Outlook – Selected Information
- Backlog dollar value at March 31, 2019 down 12% year-over-year to $1.65 billion
- Estimated gross margin from homes in backlog at March 31, 2019 slightly lower than 2019 first quarter closing gross margin of 18.9%
- Backlog conversion ratio (home deliveries divided by beginning backlog) for the second quarter estimated to be in the 41% to 43% range
- Active subdivision count at March 31, 2019 of 178, up 15% year-over-year and 7% from December 31, 2018
- Lots controlled of 22,887 at March 31, 2019, up 7% year-over-year
- Quarterly dividend of $0.30 ($1.20 annualized) declared in April 2019
Larry A. Mizel, MDC's chairman and CEO, stated, "We believe that these results provide further validation of our shift to more affordable product and our adherence to a build-to-order business model."
Mizel continued, "The housing industry continues to benefit from a national economy that is characterized by steady job creation, improving wage growth and low interest rates. A lack of available supply has also resulted in pent up demand, particularly for more affordable housing, which is why we continue to focus our investments in this segment."
Mizel concluded, "MDC is poised for growth as we head into the latter part of the spring selling season, with 15% more active communities open at the end of the first quarter as compared to last year. A majority of these communities cater to buyers seeking more affordable homes, giving us an increased presence in this high growth segment of the homebuilding market. With a great platform for growth, a diverse product offering and a strong balance sheet, MDC is well positioned to sustain the positive momentum generated in the first quarter."

