MDC shares jump 5% on Q1 earnings and revenue


MDC Holdings, Inc.MDC shares jumped 5% on April 28, following the release of first-quarter 2022 results. Earnings and revenue topped their respective Zacks consensus estimate and rose year-over-year, driven by favorable demand and pricing trends in many markets served, driven by strong local economies, rising incomes and favorable demographics. Additionally, the lack of supply of existing homes – which has fueled the need for new home construction – is expected to persist going forward, supporting a favorable fundamental backdrop for the industry and MDC.

Looking ahead, MDC Executive Chairman Larry A. Mizel said, “With a strong balance sheet, a seasoned management team and a strong backlog at quarter-end, MDC is well positioned to achieve its objectives. for the year. our presence in high-growth markets and a focus on more affordable pricing has enabled our business to reach record levels of profitability, and we continue to see strong demand in our communities despite the recent rise in interest rates. ‘interest. the future of the MDC.”

Profit and revenue discussion

The company reported quarterly earnings of $2.02 per share, which beat the consensus estimate of $1.90 by 6.3% and was up 34% from the US’s figure of $1.51. last year. The rise was due to higher revenue from home sales and gross margin on housing.

Total revenue of $1.27 billion was 4% above the consensus mark of $1.22 billion and was up 16.8% year-over-year, supported by strong pricing.

MDC Holdings, Inc. Price, Consensus, and EPS Surprise

MDC Holdings, Inc. price-consensus-eps-surprise-chart | Quote from MDC Holdings, Inc.

Segment details

construction of houses: Home sales revenue of $1.24 billion was up 19.1% from the prior year period, supported by strong prices. Units delivered were up 3% from the level a year ago to 2,233 homes. The average selling price or ASP also rose 16% from a year ago to $556,000. New home deliveries were down in all regions served (except the East).

Net new orders fell 2% from the year-ago quarter to 3,151 homes. Nonetheless, net order value increased 12% from the prior year quarter to $1.84 billion, supported by a 14% increase in net order ASP.

The quarter-end backlog totaled 8,558 homes, up 11% from a year ago. Potential housing revenue from the backlog also rose 26% from the prior year period to $4.95 billion.

Housing gross margin improved 380 basis points (bps) year over year to 25.7%. Selling, general and administrative expenses – as a percentage of housing revenue – fell 60 basis points from a year ago to 10.4%.

Financial services revenue fell 35.3% year over year to $29.1 million.

Financial situation

MDC had cash and cash equivalents of $474.4 million in the residential construction segment and $107.5 million in the financial services unit as of March 31, 2022. This compares favorably to the numbers end-2021 of $12.8 million and $104.8 million, respectively. Inventories rose to $3.93 billion from $3.76 billion at the end of 2021.

Net cash provided by operations was $118.1 million for the first quarter, compared to cash used in operations of $58 million a year ago.

Orientation

For the second quarter of 2022, the company expects home deliveries between 2,400 and 2,600 units. This indicates a decrease from the 2,722 units reported in the second quarter of 2021. The average sale price is expected to be between $560,000 and $570,000, indicating an increase from the $502,000 reported a year ago. . Housing gross margin (assuming no write-downs and collateral adjustments) is expected to be above 26%, suggesting growth from the 23.1% recorded in the period of the previous year.

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 full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some recent build versions

United Rentals, Inc. URI announced better than expected first quarter 2022 results. Improved fleet productivity thanks to widespread rental demand in the construction and industrial verticals, higher total and rental income as well as higher prices helped the company start 2022 on a high note. stronger.

URI also raised its full-year guidance for total revenue, adjusted EBITDA and free cash flow, given customer sentiment and solid project activity.

NVR, Inc. NVR reported its first quarter 2022 results, with earnings and revenue above Zacks’ respective consensus estimate and growing year-over-year.

NVR’s first quarter results benefited from a higher average settlement price and lower lumber prices.

Pulte Group Inc. PHM reported strong results for the first quarter of 2022. Earnings and revenue beat Zacks’ consensus estimate and improved year-over-year.

PHM benefited from revenue gains, improved gross margin and overhead leverage.

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