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M.D.C. Holdings, Inc.’s (MDC - Free Report) shares jumped 5% on Apr 28, after it reported first-quarter 2022 results. Earnings and revenues topped their respective Zacks Consensus Estimate and grew year over year, thanks to favorable demand and pricing trends in many markets served, driven by strong local economies, rising income and favorable demographics. Also, a lack of existing home supply — which fueled the need for new home construction — is likely to persist in the future, supporting a favorable fundamental backdrop for the industry and MDC.
Looking forward, MDC's executive chairman, Larry A. Mizel, said, "With a strong balance sheet, a seasoned management team and a sizable quarter-end backlog, MDC is in a great position to deliver on its goals for the year. Our growing presence in high growth markets and focus on more affordable price points has led to record levels of profitability for our company, and we continue to see strong demand at our communities despite the recent rise in interest rates. As a result, we remain positive about the future of MDC."
Earnings & Revenue Discussion
The company reported quarterly earnings of $2.02 per share, which surpassed the consensus estimate of $1.90 by 6.3% and grew 34% from the year-ago figure of $1.51. The upside was owing to higher home sale revenues and housing gross margin.
Total revenues of $1.27 billion topped the consensus mark of $1.22 billion by 4% and improved 16.8% on a year-over-year basis, backed by solid pricing.
M.D.C. Holdings, Inc. Price, Consensus and EPS Surprise
Homebuilding: Home sale revenues of $1.24 billion increased 19.1% from the prior-year period backed by solid pricing. Units delivered were up 3% from the year-ago level to 2,233 homes. Average selling price or ASP also grew 16% from a year ago to $556,000. New home deliveries were down across the regions served (barring East).
Net new orders fell 2% from the prior-year quarter to 3,151 homes. Nonetheless, the value of net orders rose 12% from the year-ago quarter to $1.84 billion, backed by 14% higher ASP of net orders.
Quarter-end backlog totaled 8,558 homes, up 11% from a year ago. Potential housing revenues from backlog also grew 26% from the prior-year period to $4.95 billion.
Housing gross margin registered an improvement of 380 basis points (bps) year over year to 25.7%. Selling, general and administrative expenses — as a percentage of housing revenues — declined 60 bps from the year-ago figure to 10.4%.
Financial Services revenues fell 35.3% year over year to $29.1 million.
Financial Position
MDC had cash and cash equivalents of $474.4 million in the Homebuilding segment and $107.5 million in the Financial Services unit as of Mar 31, 2022. This compares favorably with 2021-end numbers of $12.8 million and $104.8 million, respectively. Inventories rose to $3.93 billion from $3.76 billion at 2021-end.
Net cash provided by operations was $118.1 million for the first quarter compared with cash used in operations of $58 million a year ago.
Guidance
For second-quarter 2022, the company expects home deliveries between 2,400 and 2,600 units. This indicates a fall from 2,722 units reported in second-quarter 2021. The average selling price is likely to be within $560,000-$570,000, indicating a rise from $502,000 reported a year ago. Housing gross margin (assuming no impairments and warranty adjustments) is anticipated to be more than 26%, suggesting growth from 23.1% reported in the prior-year period.
For 2022, it expects home deliveries between 10,500 and 11,000 units, implying an increase from 9,982 units in 2021.
United Rentals, Inc. (URI - Free Report) reported better-than-expected first-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company start 2022 on a stronger note.
URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given customer sentiments and solid project activity.
NVR, Inc. (NVR - Free Report) reported first-quarter 2022 results, with earnings and revenues beating the respective Zacks Consensus Estimate and increasing year over year.
NVR’s first-quarter results benefited from a higher average price of settlements and lower lumber prices.
PulteGroup Inc. (PHM - Free Report) reported solid results for first-quarter 2022. Both earnings and revenues topped the Zacks Consensus Estimate as well as improved year over year.
PHM benefited from gains in revenues, improved gross margin and overhead leverage.
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MDC Shares Jump 5% on Q1 Earnings & Revenue Beat
M.D.C. Holdings, Inc.’s (MDC - Free Report) shares jumped 5% on Apr 28, after it reported first-quarter 2022 results. Earnings and revenues topped their respective Zacks Consensus Estimate and grew year over year, thanks to favorable demand and pricing trends in many markets served, driven by strong local economies, rising income and favorable demographics. Also, a lack of existing home supply — which fueled the need for new home construction — is likely to persist in the future, supporting a favorable fundamental backdrop for the industry and MDC.
Looking forward, MDC's executive chairman, Larry A. Mizel, said, "With a strong balance sheet, a seasoned management team and a sizable quarter-end backlog, MDC is in a great position to deliver on its goals for the year. Our growing presence in high growth markets and focus on more affordable price points has led to record levels of profitability for our company, and we continue to see strong demand at our communities despite the recent rise in interest rates. As a result, we remain positive about the future of MDC."
Earnings & Revenue Discussion
The company reported quarterly earnings of $2.02 per share, which surpassed the consensus estimate of $1.90 by 6.3% and grew 34% from the year-ago figure of $1.51. The upside was owing to higher home sale revenues and housing gross margin.
Total revenues of $1.27 billion topped the consensus mark of $1.22 billion by 4% and improved 16.8% on a year-over-year basis, backed by solid pricing.
M.D.C. Holdings, Inc. Price, Consensus and EPS Surprise
M.D.C. Holdings, Inc. price-consensus-eps-surprise-chart | M.D.C. Holdings, Inc. Quote
Segment Details
Homebuilding: Home sale revenues of $1.24 billion increased 19.1% from the prior-year period backed by solid pricing. Units delivered were up 3% from the year-ago level to 2,233 homes. Average selling price or ASP also grew 16% from a year ago to $556,000. New home deliveries were down across the regions served (barring East).
Net new orders fell 2% from the prior-year quarter to 3,151 homes. Nonetheless, the value of net orders rose 12% from the year-ago quarter to $1.84 billion, backed by 14% higher ASP of net orders.
Quarter-end backlog totaled 8,558 homes, up 11% from a year ago. Potential housing revenues from backlog also grew 26% from the prior-year period to $4.95 billion.
Housing gross margin registered an improvement of 380 basis points (bps) year over year to 25.7%. Selling, general and administrative expenses — as a percentage of housing revenues — declined 60 bps from the year-ago figure to 10.4%.
Financial Services revenues fell 35.3% year over year to $29.1 million.
Financial Position
MDC had cash and cash equivalents of $474.4 million in the Homebuilding segment and $107.5 million in the Financial Services unit as of Mar 31, 2022. This compares favorably with 2021-end numbers of $12.8 million and $104.8 million, respectively. Inventories rose to $3.93 billion from $3.76 billion at 2021-end.
Net cash provided by operations was $118.1 million for the first quarter compared with cash used in operations of $58 million a year ago.
Guidance
For second-quarter 2022, the company expects home deliveries between 2,400 and 2,600 units. This indicates a fall from 2,722 units reported in second-quarter 2021. The average selling price is likely to be within $560,000-$570,000, indicating a rise from $502,000 reported a year ago. Housing gross margin (assuming no impairments and warranty adjustments) is anticipated to be more than 26%, suggesting growth from 23.1% reported in the prior-year period.
For 2022, it expects home deliveries between 10,500 and 11,000 units, implying an increase from 9,982 units in 2021.
Zacks Rank
MDC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
United Rentals, Inc. (URI - Free Report) reported better-than-expected first-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company start 2022 on a stronger note.
URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given customer sentiments and solid project activity.
NVR, Inc. (NVR - Free Report) reported first-quarter 2022 results, with earnings and revenues beating the respective Zacks Consensus Estimate and increasing year over year.
NVR’s first-quarter results benefited from a higher average price of settlements and lower lumber prices.
PulteGroup Inc. (PHM - Free Report) reported solid results for first-quarter 2022. Both earnings and revenues topped the Zacks Consensus Estimate as well as improved year over year.
PHM benefited from gains in revenues, improved gross margin and overhead leverage.