Yahoo Finance MDC Beats on Q2 Earnings & Revenue, Gives Solid Q3 Guidance
M.D.C. Holdings, Inc.’s MDC shares dropped 0.66% on Jul 28 despite reporting strong second-quarter 2022 results. Earnings and revenues topped their respective Zacks Consensus Estimate and rose year over year, owing to strong pricing trends in many markets served. Also, its build-to-order strategy and a limited speculative inventory added to the positive.
However, it noted that the company experienced a noticeable decline in sales activity in the second quarter due to a rapid rise in mortgage rates and reduced consumer confidence. The trend is likely to continue in the rest of 2022.
MDC's executive chairman, Larry A. Mizel, said, "We experienced a year-over-year decline in net orders during the quarter, driven by a slowdown in demand, an uptick in cancellations and difficult order comparisons from the prior year period. The sharp increase in interest rates combined with a more uncertain economic outlook has taken a toll on consumer confidence, which is reflected in our net orders in the quarter. We believe these headwinds may persist for at least the remainder of the year and we are actively adjusting our operations to reflect this new reality."
Earnings & Revenue Discussion
The company reported quarterly earnings of $2.59 per share, which surpassed the consensus estimate of $2.43 by 6.6% and grew 23% from the year-ago figure of $2.11. The upside was owing to higher home sale revenues and housing gross margin.
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
Total revenues (including Home sale revenues and Financial Services revenues) of $1.49 billion topped the consensus mark of $1.43 billion by 4% and increased 6.1% on a year-over-year basis, backed by solid pricing.
Segment Details
Homebuilding: Home sale revenues of $1.45 billion increased 6% from the prior-year period’s levels, backed by solid pricing. Units delivered were down 7% from the year-ago level to 2,536 homes. New home deliveries were down in West and Mountain, while East grew a notable 47%. The average selling price or ASP rose 14% from a year ago to $572,000, backed by growth across the regions served.
Net new orders fell 29% from the prior-year quarter to 2,237 homes. The value of net orders also declined 40% from the year-ago quarter’s levels to $882.1 million, despite a 16% higher ASP of net orders. Cancellations, as a percentage of beginning backlog, increased 400 basis points to 9.7% from 5.7%
Quarter-end backlog totaled 7,426 homes, down 3% from a year ago. Potential housing revenues from backlog rose 8% from the prior-year period’s levels to $4.44 billion on a 12% higher ASP of homes in backlog.
Housing gross margin registered an improvement of 370 basis points (bps) year over year to 26.8%. Selling, general and administrative expenses — as a percentage of housing revenues — improved 20 bps from the year-ago figure to 9.2%.
Financial Services revenues rose 8.7% year over year to $36.2 million.
Financial Position
MDC had cash and cash equivalents of $475.3 million in the Homebuilding segment and $115 million in the Financial Services unit as of Jun 30, 2022. This compares favorably with 2021-end numbers of $12.8 million and $104.8 million, respectively. It had total liquidity of $1.74 billion and no senior note maturities due until 2030.
Inventories rose to $4.1 billion from $3.76 billion at the 2021-end. Lots controlled of 33,130 at Jun 30 was down 4% year-over-year
Net cash provided by operations was $53 million for the second quarter compared with $70 million a year ago.
Guidance
For third-quarter 2022, the company expects home deliveries of between 2,200 and 2,500 units. This indicates a rise from 2,419 units reported in third-quarter 2021 (considering the mid-point of the guidance). The average selling price is likely to be within $580,000-$590,000, indicating a significant rise from $519,900 reported a year ago. Housing gross margin (assuming no impairments and warranty adjustments) is anticipated between 24.5% and 25.5%, suggesting growth from 23.5% 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 #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Rentals, Inc. URI posted better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues and stronger pricing boosted profit.
URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the year.
Martin Marietta Materials, Inc. MLM reported impressive second-quarter 2022 results. Earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by improved pricing across businesses and higher demand.
Despite increased inflationary pressure from rising input costs and a challenging macroeconomic and geopolitical environment, solid execution of its strategic business plan and resilient aggregates-led business drove the result.
Masco Corporation MAS reported results for second-quarter 2022, with earnings and revenues missing the Zacks Consensus Estimate after beating it in the preceding quarter.
Masco’s top line increased, whereas the bottom line remained flat year over year.
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