MDC Holdings Q1 Loss Narrows On Higher Home Closings, Selling Prices - Update
Homebuilding and financial services provider M.D.C. Holdings, Inc. (MDC: News ) reported Tuesday a narrower-than-expected net loss for its first quarter, mainly driven by higher revenues on increased home closings and selling prices. Meanwhile, the company recorded decline in net orders, which reflected difficult market conditions, coupled with the absence of the federal homebuyer tax credit.
For the quarter, net loss was $19.88 million or $0.43 per share, compared to net loss of $20.87 million or $0.45 per share a year ago.
On average, 14 analysts polled by Thomson Reuters expected loss of $0.44 per share for the quarter. Such estimates typically exclude special items.
However, revenue increased 15 percent to $169.75 million from $147.08 million a year ago, beating Wall Street consensus estimate of $172.33 million.
The increase in revenue was driven primarily by 6 percent growth in home closings to 554 homes and 9 percent year-over-year increase in average selling price to $294,900.
MDC's chairman and chief executive officer Larry Mizel said, "Top-line growth is a key component of the strategy we are executing in an effort to return to profitability. We pursued that growth strategy by entering the Seattle market in April 2011 through the purchase of substantially all of the homebuilding assets of SDC Homes." Meanwhile, net orders decreased 24 percent to 705 homes with an estimated sales value of $205 million, mainly attributable to an increase in cancellation rate for the quarter, which rose to 32 percent from 22 percent in 2010 due to difficult market conditions. The lower net orders also reflected decreased absorptions per community, as the prior year was heavily influenced by the homebuyer tax credit.
Mizel added, "However, we have seen sequential improvement in home orders during each month in 2011 through April, consistent with seasonality."
For the quarter, active subdivisions increased 23 percent to 162.
Home gross margin was 13.7 percent, compared with 22.4 percent a year earlier.
The company ended the quarter with 993 homes under contract with an estimated sales value of $312 million, compared with a backlog of 1,234 homes with an estimated sales value of $381 million a year earlier.
MDC is currently trading at $26.55, down $0.89 or 3.24 percent.
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