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Last updated on April 18, 2014 at 7:13 EDT

M.D.C. Holdings Announces 2013 Third Quarter Results

October 29, 2013

DENVER, Oct. 29, 2013 /PRNewswire/ — M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended September 30, 2013.

2013 Third Quarter Highlights and Comparisons to 2012 Third Quarter

    --  Net income of $36.3 million, or $0.73 per diluted share vs. net income
        of $20.1 million, or $0.41 per diluted share
    --  Pretax income of $34.9 million, up 79% from $19.5 million
        --  Homebuilding pretax income of $26.7 million vs. $10.2 million
        --  Pretax operating margin of 7.8%, up 200 basis points from 5.8%
    --  Home sale revenues of $433.7 million, up 35%
        --  Homes delivered of 1,257, up 21%
        --  Average selling price of $345,000, up 12%
        --  Gross margin from home sales of 18.1% vs. 15.5%, up 260 basis points
    --  SG&A expenses as a percentage of home sale revenues of 13.3% vs. 14.0%,
        a 70 basis point improvement
    --  Monthly net home order absorption pace of 2.3 homes per active
        community, up 14%
        --  Net new orders of 924 homes, down 8%; dollar value up 2% to $325.5
            million
    --  Backlog dollar value of $676.8 million, up 1%
        --  Backlog units of 1,762, down 12%
    --  Acquired 2,117 lots in 55 communities, including 31 new communities
        --  Total land acquisition spend of $162.0 million
    --  Cash and investments of $797.5 million at September 30, 2013

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “I am pleased to announce we earned a third quarter profit of $0.73 per diluted share, our seventh consecutive quarterly operating profit, with net income improving by $16.1 million over the prior year and our pretax operating margin increasing by 200 basis points year-over-year. These improvements were again driven by the performance of our homebuilding business, on the strength of both volume and gross margin gains.”

Mr. Mizel continued, “The recent increase in mortgage interest rates from historically low levels, combined with economic uncertainty created by the government shutdown, debt ceiling debates, and the potential for tapering of federal stimulus, has temporarily dampened housing demand. In spite of these factors, we increased the pace of our new home sales during the 2013 third quarter as our monthly absorption rate increased by 14% year-over-year to 2.3 net new home orders per active community. Our active community count decreased both year-over-year and sequentially due to the selling out of communities quicker than anticipated and delays encountered with various municipalities, all of which contributed to lower net new orders for the quarter. However, based on our land acquisition activity over the past year, we are confident that our active community count will start growing again before the spring selling season.”

Mr. Mizel concluded, “We continue to believe that a solid housing recovery is ongoing, supported by attractive affordability levels and a low inventory of available-for-sale housing. Our confidence in the market is evidenced by our continued land acquisition activity in the 2013 third quarter, as we purchased approximately 2,100 lots and ended the quarter with more than 15,800 lots owned and controlled, an increase of 52% year-over-year. We believe that this lot supply can provide us the opportunity to drive meaningful gains in both closings volume and profitability for 2014. At the same time, we have balanced our land acquisition efforts with continued discipline in our approach to managing our balance sheet, ending the quarter with nearly $800 million in cash and investments, maintaining an industry leading net leverage ratio, and adhering to a conservative land supply strategy. We believe this approach is valuable for our Company, not only in providing us the liquidity we need to drive growth and take advantage of market opportunities, but also in protecting us in the event that the housing market experiences more volatility.”

Homebuilding

Home sale revenues for the 2013 third quarter increased 35% to $433.7 million compared to $320.6 million for the prior year period. The increase in revenues resulted from a 21% increase in homes delivered to 1,257 homes as compared to 1,039 in the prior year and a 12% increase in our average selling price to $345,000. The increase in average selling price was largely due to price appreciation and lower incentives in many of our markets.

Gross margin from home sales for the 2013 third quarter increased to 18.1% from 15.5% for the year-earlier period. The increase was attributable to our continued focus on increasing pricing and decreasing incentives as its markets improved since the start of 2012. On a sequential basis, our 2013 third quarter gross margin from home sales was flat as compared to 18.1% for the 2013 second quarter. Excluding inventory impairments, warranty accrual adjustments and previously capitalized interest in cost of sales, adjusted gross margin from home sales was 21.8%* for the 2013 third quarter, compared to 18.2%* for the 2012 third quarter and 21.3%* for the 2013 second quarter.

SG&A expenses as a percentage of home sales revenues decreased by 70 basis points to 13.3% for the 2013 third quarter versus 14.0% for the same period in 2012. The improvement was the result of operating leverage created by a year-over-year increase in home sale revenues, which outpaced a year-over-year increase in our absolute level of SG&A expenses, and was slightly offset by a year-over-year increase in legal expenses driven by various significant legal recoveries in the 2012 third quarter which did not recur in the 2013 third quarter.

Net new orders for the 2013 third quarter decreased 8% to 924 homes, compared to 1,008 homes during the same period in 2012, largely due to a 19% decrease in our average active community count. However, our monthly sales absorption rate for the 2013 third quarter rose 14% to 2.3 per community, compared to 2.0 per community for the 2012 third quarter. Our cancellation rate for the 2013 third quarter was 26% versus 27% in the prior year third quarter.

We ended the 2013 third quarter with 1,762 homes in backlog, with an estimated sales value of $676.8 million, compared with a backlog of 1,997 homes with an estimated sales value of $667.0 million at September 30, 2012.

At September 30, 2013, we had 134 active subdivisions, down 19% from September 30, 2012. As a result of the significant increase in our land acquisition activity in the fourth quarter of 2012 and the first nine months of 2013, our lots owned and under option increased by 52% year-over-year to over 15,800 lots.

Financial Services

Income before taxes from our financial services operations for the 2013 third quarter was $8.2 million, compared to $9.3 million for the 2012 third quarter. The decrease in pretax income primarily reflected a $1.5 million decrease in pretax income for our mortgage operations to $5.9 million in the 2013 third quarter, compared to $7.4 million in the 2012 third quarter, despite higher loan volumes. The decrease in our mortgage profitability was mostly driven by lower per unit origination income and gains on loans locked and sold compared to a year ago resulting primarily from a more competitive mortgage market and higher interest rates. Additionally, our mortgage operations experienced increases in overhead and loan loss reserve expenses.

About MDC

Since 1972, MDC’s subsidiary companies have built and financed the American dream for more than 175,000 homebuyers. MDC’s commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Francisco Bay Area, Washington D.C., Baltimore, Philadelphia, Jacksonville, Orlando, South Florida and Seattle. The Company’s subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol “MDC.” For more information, visit www.mdcholdings.com.

Forward-Looking Statements

Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, land and home values and subdivision counts; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican’s sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; and (16) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company’s business is contained in the Company’s Form 10-Q for the quarter ended September 30, 2013, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or webcasts should be consulted.

* Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.


                                                                                                               M.D.C. HOLDINGS, INC.

                                                                                          Consolidated Statements of Operations and Comprehensive Income

                                           Three Months Ended                                      Nine Months Ended

                                              September 30,                                          September 30,
                                              -------------                                          -------------

                                                         2013                                        2012                                         2013   2012
                                                         ----                                        ----                                         ----   ----

                                                       (Dollars in thousands, except per share amounts)

                                                                          (Unaudited)

    Homebuilding:

    Home sale revenues                                                                $433,693                                                $320,647        $1,165,768    $761,857

    Land sale revenues                                                                      25                                                      15             1,832       3,420
                                                                                           ---                                                     ---             -----       -----

    Total home and land sale revenues                                                  433,718                                                 320,662         1,167,600     765,277
                                                                                       -------                                                 -------         ---------     -------

    Home cost of sales                                                                (354,889)                                               (271,067)         (956,892)   (649,941)

    Land cost of sales                                                                     (35)                                                     (2)           (1,470)     (3,210)

    Inventory impairments                                                                 (350)                                                      -              (350)          -
                                                                                          ----                                                     ---              ----         ---

    Total cost of sales                                                               (355,274)                                               (271,069)         (958,712)   (653,151)
                                                                                      --------                                                --------          --------    --------

    Gross margin                                                                        78,444                                                  49,593           208,888     112,126
                                                                                        ------                                                  ------           -------     -------

    Selling, general and administrative
     expenses                                                                          (57,753)                                                (44,788)         (157,862)   (118,135)

    Interest income                                                                      6,460                                                   5,365            21,146      16,651

    Interest expense                                                                         -                                                       -            (1,726)       (808)

    Other income (expense)                                                                (488)                                                     16               853         592
                                                                                          ----                                                     ---               ---         ---

    Homebuilding pretax income                                                          26,663                                                  10,186            71,299      10,426
                                                                                        ------                                                  ------            ------      ------

    Financial Services:

    Revenues                                                                            14,282                                                  13,668            40,672      31,974

    Expenses                                                                            (6,921)                                                 (5,155)          (19,144)    (13,459)

    Interest and other income                                                              885                                                     785             2,680       2,323
                                                                                           ---                                                     ---             -----       -----

    Financial services pretax income                                                     8,246                                                   9,298            24,208      20,838
                                                                                         -----                                                   -----            ------      ------

    Income before income taxes                                                          34,909                                                  19,484            95,507      31,264

    Benefit from income taxes                                                            1,342                                                     642           188,169       1,765
                                                                                         -----                                                     ---           -------       -----

    Net income                                                                         $36,251                                                 $20,126          $283,676     $33,029
                                                                                       =======                                                 =======          ========     =======

    Other comprehensive income related to
     available for sale securities, net of
     tax                                                                                 1,960                                                   5,095             2,500      10,945
                                                                                         -----                                                   -----             -----      ------

    Comprehensive income                                                               $38,211                                                 $25,221          $286,176     $43,974
                                                                                       =======                                                 =======          ========     =======

    Earnings per share:

    Basic                                                                                $0.73                                                   $0.41             $5.76       $0.69

    Diluted                                                                              $0.73                                                   $0.41             $5.71       $0.68

    Weighted average common shares
     outstanding

    Basic                                                                           48,492,588                                              47,761,307        48,438,154  47,499,429

    Diluted                                                                         48,767,834                                              47,940,038        48,867,055  47,610,195

    Dividends declared per share                            $                                -                                                   $0.25      $          -       $0.75


                                                      M.D.C. HOLDINGS, INC.

                                                   Consolidated Balance Sheets

                                                September 30,                             December 31,

                                                                 2013                             2012
                                                                 ----                             ----

                         ASSETS         (Dollars in thousands, except

                                              per share amounts)

    Homebuilding:                                (Unaudited)

    Cash and cash equivalents                                                    $149,580                $129,535

    Marketable securities                                                         578,441                 519,465

    Restricted cash                                                                 2,186                   1,859

    Trade and other receivables                                                    29,488                  28,163

    Inventories:

    Housing completed or under
     construction                                                                 634,159                 512,949

    Land and land under development                                               699,974                 489,572
                                                                                  -------                 -------

    Total inventories                                                           1,334,133               1,002,521

    Property and equipment, net                                                    31,608                  33,125

    Deferred tax asset, net of
     valuation allowance of $25,046
     and $248,306

    at September 30, 2013 and
     December 31, 2012, respectively                                              184,986                       -

    Metropolitan district bond
     securities (related party)                                                    14,167                   5,818

    Other assets                                                                   50,937                  38,959
                                                                                   ------                  ------

    Total homebuilding assets                                                   2,375,526               1,759,445

    Financial Services:

    Cash and cash equivalents                                                      47,706                  30,560

    Marketable securities                                                          21,816                  32,473

    Mortgage loans held-for-sale, net                                              74,340                 119,953

    Other assets                                                                    8,693                   3,010
                                                                                    -----                   -----

    Total financial services assets                                               152,555                 185,996
                                                                                  -------                 -------

          Total Assets                                                         $2,528,081              $1,945,441
                                                                               ==========              ==========

                 LIABILITIES AND EQUITY

    Homebuilding:

    Accounts payable                                                              $20,030                 $73,055

    Accrued liabilities                                                           135,434                 118,456

    Senior notes, net                                                           1,095,421                 744,842
                                                                                ---------                 -------

    Total homebuilding liabilities                                              1,250,885                 936,353

    Financial Services:

    Accounts payable and accrued
     liabilities                                                                   57,852                  51,864

    Mortgage repurchase facility                                                   38,912                  76,327
                                                                                   ------                  ------

    Total financial services
     liabilities                                                                   96,764                 128,191
                                                                                   ------                 -------

          Total Liabilities                                                     1,347,649               1,064,544

    Stockholders' Equity

    Preferred stock, $0.01 par value;
     25,000,000 shares authorized;
     none issued

    or outstanding                                                                      -                       -

    Common stock, $0.01 par value;
     250,000,000 shares authorized;

    48,874,476 and 48,698,757 issued
     and outstanding at September 30,
     2013

    and December 31, 2012,
     respectively                                                                     489                     487

    Additional paid-in-capital                                                    910,218                 896,861

    Retained earnings (accumulated
     deficit)                                                                     262,387                 (21,289)

    Accumulated other comprehensive
     income                                                                         7,338                   4,838
                                                                                    -----                   -----

    Total Stockholders' Equity                                                  1,180,432                 880,897
                                                                                ---------                 -------

    Total Liabilities and
     Stockholders' Equity                                                      $2,528,081              $1,945,441
                                                                               ==========              ==========


                                                                                                M.D.C. HOLDINGS, INC.

                                                                                        Consolidated Statements of Cash Flows

                                   Three Months Ended                          Nine Months Ended

                                   September 30, 2013                          September 30, 2013
                                   ------------------                          ------------------

                                                 2013                            2012                                    2013  2012
                                                 ----                            ----                                    ----  ----

                                                      (Dollars in thousands)

                                                            (Unaudited)

    Operating Activities:

    Net income                                                        $36,251                                         $20,126       $283,676   $33,029

    Adjustments to reconcile net
     income to net cash

    used in operating activities:

    Stock-based compensation
     expense                                                            3,026                                           4,907          8,240    12,628

    Depreciation and amortization                                         888                                           1,052          2,960     3,708

    Inventory impairments and
     write-offs of land option
     deposits                                                           1,125                                             103          1,624       414

    Amortization of discount
     (premiums) on marketable debt
     securities                                                          (607)                                            430            816       279

    Deferred income tax benefit                                        (2,014)                                              -       (189,657)        -

    Net changes in assets and
     liabilities:

    Restricted cash                                                       493                                             176           (327)   (1,417)

    Trade and other receivables                                         6,967                                           4,660         (1,599)  (13,685)

    Mortgage loans held-for-sale                                       18,123                                         (20,961)        45,613    (8,313)

    Housing completed or under
     construction                                                     (65,078)                                        (66,607)      (121,165) (202,994)

    Land and land under
     development                                                      (71,709)                                         21,358       (210,218)  112,406

    Other assets                                                       (6,924)                                         (4,509)       (15,307)     (553)

    Accounts payable and accrued
     liabilities                                                         (158)                                          4,400        (30,516)   14,043
                                                                         ----                                           -----        -------    ------

    Net cash used in operating
     activities                                                       (79,617)                                        (34,865)      (225,860)  (50,455)
                                                                      -------                                         -------       --------   -------

    Investing Activities:

    Purchases of marketable
     securities                                                       (57,792)                                       (104,379)      (369,887) (397,167)

    Maturities of marketable
     securities                                                        45,477                                               -        132,492   106,000

    Sales of marketable securities                                     50,016                                          59,355        187,083   285,056

    Purchases of property and
     equipment                                                           (280)                                           (290)        (1,278)     (958)
                                                                         ----                                            ----         ------      ----

    Net cash used in investing
     activities                                                        37,421                                         (45,314)       (51,590)   (7,069)
                                                                       ------                                         -------        -------    ------

    Financing Activities:

    Payments on mortgage
     repurchase facility                                              (60,201)                                        (47,120)      (195,760) (137,529)

    Advances on mortgage
     repurchase facility                                               50,265                                          61,348        158,345   135,715

    Dividend payments                                                       -                                         (12,056)             -   (36,046)

    Proceeds from issuance of
     senior notes                                                           -                                               -        346,938         -

    Proceeds from exercise of
     stock options                                                          -                                          15,680          5,118    15,820
                                                                          ---                                          ------          -----    ------

    Net cash provided by (used in)
     financing activities                                              (9,936)                                         17,852        314,641   (22,040)
                                                                       ------                                          ------        -------   -------

    Net increase (decrease) in
     cash and cash equivalents                                        (52,132)                                        (62,327)        37,191   (79,564)

    Cash and cash equivalents:

    Beginning of period                                               249,418                                         326,124        160,095   343,361
                                                                      -------                                         -------        -------   -------

    End of period                                                    $197,286                                        $263,797       $197,286  $263,797
                                                                     ========                                        ========       ========  ========


                                                                                                       M.D.C. HOLDINGS, INC.

                                                                                                   Homebuilding Operational Data

    New Home Deliveries

                                                                    Three Months Ended September 30,
                                                                    --------------------------------

                                                               2013                                              2012                    % Change
                                                               ----                                              ----                    --------

                                          Homes           Dollar      Average Price                   Homes                      Dollar           Average Price    Homes       Dollar       Average Price
                                                            Value                                                                  Value                                         Value
                                                                                                                                                                                                      ---

                                   (Dollars in thousands)

    Arizona                             173                 $42,029                     $242.9                    203                      $44,877              $221.1   (15%)         (6%)                10%

    California                          156                  57,852                      370.8                    131                       46,580               355.6     19%          24%                 4%

    Nevada                              187                  53,017                      283.5                    178                       37,679               211.7      5%          41%                34%

                        Washington      110                  35,558                      323.3                     63                       18,894               299.9     75%          88%                 8%
                                        ---                  ------                      -----                    ---                       ------               -----

         West                           626                 188,456                      301.0                    575                      148,030               257.4      9%          27%                17%
                                        ---                 -------                      -----                    ---                      -------               -----

    Colorado                            320                 120,402                      376.3                    229                       81,706               356.8     40%          47%                 5%

    Utah                                 45                  14,565                      323.7                     53                       14,632               276.1   (15%)         (0%)                17%
                                        ---                  ------                      -----                    ---                       ------               -----

         Mountain                       365                 134,967                      369.8                    282                       96,338               341.6     29%          40%                 8%
                                        ---                 -------                      -----                    ---                       ------               -----

    Maryland                            100                  43,574                      435.7                     65                       29,382               452.0     54%          48%               (4%)

    Virginia                             90                  46,866                      520.7                     67                       34,069               508.5     34%          38%                 2%

    Florida                              76                  19,830                      260.9                     50                       12,828               256.6     52%          55%                 2%
                                        ---                  ------                      -----                    ---                       ------               -----

    East                                266                 110,270                      414.5                    182                       76,279               419.1     46%          45%               (1%)
                                        ---                 -------                      -----                    ---                       ------               -----

              Total                   1,257                $433,693                     $345.0                  1,039                     $320,647              $308.6     21%          35%                12%
                                      =====                ========                     ======                  =====                     ========              ======


                                                   Nine Months Ended September 30,
                                                   -------------------------------

                                            2013                                         2012      % Change
                                            ----                                         ----      --------

                                Homes Dollar Value       Average Price             Homes      Dollar Value         Average Price        Homes      Dollar Value Average Price
                                ----- ------------       -------------             -----      ------------         -------------        -----      ------------ -------------

                                                        (Dollars in thousands)

    Arizona                 443         $105,662                        $238.5            418              $89,920               $215.1         6%       18%       11%

    California              469          168,640                         359.6            319              107,768                337.8        47%       56%        6%

    Nevada                  481          127,612                         265.3            439               87,735                199.9        10%       45%       33%

    Washington              269           86,034                         319.8            166               48,060                289.5        62%       79%       10%
                            ---           ------                         -----            ---               ------                -----

         West             1,662          487,948                         293.6          1,342              333,483                248.5        24%       46%       18%
                          -----          -------                         -----          -----              -------                -----

    Colorado                933          347,210                         372.1            539              192,923                357.9        73%       80%        4%

    Utah                    171           53,097                         310.5            151               41,874                277.3        13%       27%       12%
                            ---           ------                         -----            ---               ------                -----

         Mountain         1,104          400,307                         362.6            690              234,797                340.3        60%       70%        7%
                          -----          -------                         -----            ---              -------                -----

    Maryland                237          100,685                         424.8            156               67,953                435.6        52%       48%      (2%)

    Virginia                248          123,335                         497.3            196               92,395                471.4        27%       33%        5%

    Florida                 207           53,493                         258.4            133               32,678                245.7        56%       64%        5%

    Illinois                  -                -                             -              2                  551                275.5       N/M       N/M       N/M
                            ---              ---                           ---            ---                  ---                -----

         East               692          277,513                         401.0            487              193,577                397.5        42%       43%        1%
                            ---          -------                         -----            ---              -------                -----

              Total       3,458       $1,165,768                        $337.1          2,519             $761,857               $302.4        37%       53%       11%
                          =====       ==========                        ======          =====             ========               ======

     N/M = Not meaningful


                                                                                                                            M.D.C. HOLDINGS, INC.

                                                                                                                        Homebuilding Operational Data

    Net New Orders

                                                                                   Three Months Ended September 30,
                                                                                   --------------------------------

                                                          2013                                                                          2012                                % Change
                                                          ----                                                                          ----                                --------

                    Homes        Dollar          Average Price            Monthly                 Homes             Dollar Value              Average Price            Monthly       Homes  Dollar Value Average Price             Monthly
                           Value                               Absorption                                                                                   Absorption                                                  Absorption
                                                                 Rate *                                                                                       Rate *                                                       Rate *

                                                                                   (Dollars in thousands)

    Arizona            185               $49,009                            $264.9                    3.11                   136                               $30,441               $223.8         2.96            36%                      61%  18%    5%

    California          91                37,654                             413.8                    2.81                   173                                56,507                326.6         3.15          (47%)                    (33%)  27% (11%)

    Nevada             119                39,276                             330.1                    2.87                   131                                30,944                236.2         2.50           (9%)                      27%  40%   15%

    Washington          75                24,596                             327.9                    2.17                    71                                21,998                309.8         2.06             6%                      12%   6%    5%
                       ---                ------                             -----                    ----                   ---                                ------                -----         ----

         West          470               150,535                             320.3                    2.81                   511                               139,890                273.8         2.73           (8%)                       8%  17%    3%
                       ---               -------                             -----                    ----                   ---                               -------                -----         ----

    Colorado           251               101,385                             403.9                    2.23                   251                                84,575                337.0         1.81             0%                      20%  20%   23%

    Utah                28                 8,481                             302.9                    2.17                    66                                20,220                306.4         1.33          (58%)                    (58%) (1%)   63%
                       ---                 -----                             -----                    ----                   ---                                ------                -----         ----

         Mountain      279               109,866                             393.8                    2.22                   317                               104,795                330.6         1.68          (12%)                       5%  19%   32%
                       ---               -------                             -----                    ----                   ---                               -------                -----         ----

    Maryland            50                23,459                             469.2                    0.94                    39                                18,031                462.3         0.72            28%                      30%   1%   31%

    Virginia            48                22,262                             463.8                    1.55                    88                                42,554                483.6         2.29          (45%)                    (48%) (4%) (32%)

    Florida             77                19,363                             251.5                    2.23                    53                                12,918                243.7         1.26            45%                      50%   3%   77%
                       ---                ------                             -----                    ----                   ---                                ------                -----         ----

         East          175                65,084                             371.9                    1.48                   180                                73,503                408.4         1.34           (3%)                    (11%) (9%)   10%
                       ---                ------                             -----                    ----                   ---                                ------                -----         ----

              Total    924              $325,485                            $352.3                    2.25                 1,008                              $318,188               $315.7         1.98           (8%)                       2%  12%   14%
                       ===              ========                            ======                    ====                 =====                              ========               ======         ====


                                                                                        Nine Months Ended September 30,
                                                                                        -------------------------------

                                                                 2013                                                                  2012                                      % Change
                                                                 ----                                                                  ----                                      --------

                         Homes  Dollar Value            Average Price Monthly Absorption Rate *                  Homes    Dollar Value      Average Price            Monthly Absorption Rate * Homes  Dollar Value Average Price  Monthly Absorption Rate
                         -----  ------------            ------------- ------------------------                   -----    ------------      -------------            ------------------------  -----  ------------ -------------  -----------------------

                                                                                             (Dollars in thousands)

    Arizona                 508                $129,469                                  $254.9                      3.28          569                      $124,723                           $219.2         3.24          (11%)                       4%  16%   1%

    California              451                 178,424                                   395.6                      4.18          511                       175,533                            343.5         3.10          (12%)                       2%  15%  35%

    Nevada                  441                 134,717                                   305.5                      4.15          522                       114,823                            220.0         3.07          (16%)                      17%  39%  35%

    Washington              262                  84,668                                   323.2                      2.67          216                        64,040                            296.5         2.26            21%                      32%   9%  18%
                            ---                  ------                                   -----                      ----          ---                        ------                            -----         ----

         West             1,662                 527,278                                   317.3                      3.56        1,818                       479,119                            263.5         3.00           (9%)                      10%  20%  19%
                          -----                 -------                                   -----                      ----        -----                       -------                            -----         ----

    Colorado              1,050                 392,728                                   374.0                      3.02          797                       276,767                            347.3         1.89            32%                      42%   8%  60%

    Utah                    137                  43,644                                   318.6                      1.98          203                        60,491                            298.0         1.28          (33%)                    (28%)   7%  55%
                            ---                  ------                                   -----                      ----          ---                        ------                            -----         ----

         Mountain         1,187                 436,372                                   367.6                      2.85        1,000                       337,258                            337.3         1.73            19%                      29%   9%  65%
                          -----                 -------                                   -----                      ----        -----                       -------                            -----         ----

    Maryland                252                 115,425                                   458.0                      1.51          235                       103,079                            438.6         1.45             7%                      12%   4%   4%

    Virginia                231                 115,473                                   499.9                      2.23          276                       136,740                            495.4         2.16          (16%)                    (16%)   1%   3%

    Florida                 243                  62,163                                   255.8                      2.14          142                        33,502                            235.9         1.07            71%                      86%   8% 100%

    Illinois                  -                       -                                       -                         -            2                           550                            275.0            -           N/M                      N/M  N/M  N/M
                            ---                     ---                                     ---                       ---          ---                           ---                            -----          ---

         East               726                 293,061                                   403.7                      1.89          655                       273,871                            418.1         1.55            11%                       7% (3%)  22%
                            ---                 -------                                   -----                      ----          ---                       -------                            -----         ----

              Total       3,575              $1,256,711                                  $351.5                      2.82        3,473                    $1,090,248                           $313.9         2.16             3%                      15%  12%  31%
                          =====              ==========                                  ======                      ====        =====                    ==========                           ======         ====

    N/M = Not meaningful


                                  M.D.C. HOLDINGS, INC.

                              Homebuilding Operational Data

    Active Subdivisions

                                  September 30,              %
                                  -------------

                                 2013                   2012   Change
                                 ----                   ----   ------

    Arizona                        19                     14            36%

    California                     11                     18          (39%)

    Nevada                         15                     16           (6%)

    Washington                     11                     12           (8%)
                                  ---                    ---

         West                      56                     60           (7%)
                                  ---                    ---

    Colorado                       37                     45          (18%)

    Utah                            5                     16          (69%)
                                  ---                    ---

         Mountain                  42                     61          (31%)
                                  ---                    ---

    Maryland                       16                     17           (6%)

    Virginia                        9                     13          (31%)

    Florida                        11                     15          (27%)
                                  ---                    ---

         East                      36                     45          (20%)
                                  ---                    ---

              Total               134                    166          (19%)
                                  ===                    ===

              Average for
               quarter ended      137                    170          (19%)
                                  ===                    ===

              Average for the
               nine months
               ended              141                    179          (21%)
                                  ===                    ===


    Backlog

                                                               September 30,
                                                               -------------

                                               2013                                          2012           % Change
                                               ----                                          ----           --------

                                     Homes   Dollar              Average Price        Homes          Dollar          Average Price Homes            Dollar         Average Price

                                           Value                                                  Value                                         Value
                                           -----                                                  -----                                         -----

                                                    (Dollars in thousands)

    Arizona                      215        $58,313                            $271.2         279                        $62,902         $225.5        (23%)  (7%)               20%

    California                   211         87,963                             416.9         310                        104,825          338.1        (32%) (16%)               23%

    Nevada                       164         57,521                             350.7         239                         56,902          238.1        (31%)    1%               47%

                    Washington    72         25,119                             348.9         104                         33,885          325.8        (31%) (26%)                7%
                                 ---         ------                             -----         ---                         ------          -----

         West                    662        228,916                             345.8         932                        258,514          277.4        (29%) (11%)               25%
                                 ---        -------                             -----         ---                        -------          -----

    Colorado                     587        227,335                             387.3         491                        179,779          366.1          20%   26%                6%

    Utah                          47         15,387                             327.4         120                         35,745          297.9        (61%) (57%)               10%
                                 ---         ------                             -----         ---                         ------          -----

         Mountain                634        242,722                             382.8         611                        215,524          352.7           4%   13%                9%
                                 ---        -------                             -----         ---                        -------          -----

    Maryland                     198         94,175                             475.6         192                         80,876          421.2           3%   16%               13%

    Virginia                     168         84,867                             505.2         183                         91,993          502.7         (8%)  (8%)                0%

    Florida                      100         26,081                             260.8          79                         20,052          253.8          27%   30%                3%
                                 ---         ------                             -----         ---                         ------          -----

         East                    466        205,123                             440.2         454                        192,921          424.9           3%    6%                4%
                                 ---        -------                             -----         ---                        -------          -----

              Total            1,762       $676,761                            $384.1       1,997                       $666,959         $334.0        (12%)    1%               15%
                               =====       ========                            ======       =====                       ========         ======


                                                  M.D.C. HOLDINGS, INC.

                                              Homebuilding Operational Data

    Homes Completed or Under Construction (WIP lots):

                                                   September 30,              %
                                                   -------------

                                                  2013                   2012   Change
                                                  ----                   ----   ------

    Unsold:

    Completed                                      202                    137          47%

    Under construction                             940                    624          51%
                                                   ---                    ---

    Total unsold started
     homes                                       1,142                    761          50%
                                                 -----                    ---

    Sold homes under
     construction or
     completed                                   1,459                  1,463           0%

    Model homes                                    229                    229           0%
                                                   ---                    ---

    Total homes completed
     or under construction                       2,830                  2,453          15%
                                                 =====                  =====




    Lots Owned and Optioned (including homes completed or under construction):

                                                 September 30, 2013                                September 30, 2012
                                                 ------------------                                ------------------

                                             Lots Owned                        Lots Optioned                 Total          Lots Owned      Lots Optioned       Total        Total % Change
                                             ----------                        -------------                 -----          ----------      -------------       -----        --------------

    Arizona                                              2,888                                 134                    3,022             938                  63        1,001                202%

    California                                           1,546                                  64                    1,610           1,065                 112        1,177                 37%

    Nevada                                               1,514                                 265                    1,779             994                  61        1,055                 69%

    Washington                                             518                                 154                      672             524                 212          736                (9%)
                                                           ---                                 ---                      ---             ---                 ---          ---

         West                                            6,466                                 617                    7,083           3,521                 448        3,969                 78%
                                                         -----                                 ---                    -----           -----                 ---        -----

    Colorado                                             4,372                               1,014                    5,386           3,325                 433        3,758                 43%

    Utah                                                   546                                   -                      546             557                  13          570                (4%)
                                                           ---                                 ---                      ---             ---                 ---          ---

         Mountain                                        4,918                               1,014                    5,932           3,882                 446        4,328                 37%
                                                         -----                               -----                    -----           -----                 ---        -----

    Maryland                                               522                                 325                      847             584                 358          942               (10%)

    Virginia                                               415                                 294                      709             547                 103          650                  9%

    Florida                                                716                                 521                    1,237             321                  95          416                197%

    Illinois                                                 -                                   -                        -             123                   -          123                N/M
                                                           ---                                 ---                      ---             ---                 ---          ---

         East                                            1,653                               1,140                    2,793           1,575                 556        2,131                 31%
                                                         -----                               -----                    -----           -----                 ---        -----

              Total                                     13,037                               2,771                   15,808           8,978               1,450       10,428                 52%
                                                        ======                               =====                   ======           =====               =====       ======

    N/M = Not meaningful


                                                                                                                                                            M.D.C. HOLDINGS, INC.

                                                                                                                                                Reconciliation of Non-GAAP Financial Measures

    Adjusted Gross Margin from Home Sales

    Adjusted gross margin from home sales is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that inventory impairments, warranty adjustments and interest have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.

                                                        Three Months Ended September 30,                                       Nine Months Ended September 30,                          Three Months Ended June 30,
                                                        --------------------------------                                       -------------------------------                          ---------------------------

                                                    2013                   Gross Margin %                      2012                   Gross Margin %                      2013                    Gross Margin %                      2012                     Gross Margin %                     2013             Gross Margin %
                                                    ----                    -------------                       ----                    -------------                       ----                     -------------                       ----                      -------------                      ----              -------------

                                                                                                                             (Dollars in thousands)

    Gross Margin                                            $78,444                   18.1%                              $49,593                   15.5%                              $208,888                   17.9%                               $112,126                   14.7%                             $72,772                      18.1%

    Less: Land Sales Revenue                         (25)                                                         (15)                                                      (1,832)                                                       (3,420)                                                       (1,807)

    Add: Land Cost of Sales                           35                                                            2                                                        1,470                                                         3,210                                                         1,435
                                                     ---                                                          ---                                                        -----                                                         -----                                                         -----

    Gross Margin from Home
     Sales                                                  $78,454                   18.1%                              $49,580                   15.5%                              $208,526                   17.9%                               $111,916                   14.7%                             $72,400                      18.1%

    Add: Inventory Impairments                       350                                                            -                                                          350                                                             -                                                             -

    Add: Interest in Cost of Sales                15,567                                                        8,655                                                       38,121                                                        20,654                                                        12,680

    Add: Warranty Adjustments                          -                                                            -                                                          300                                                             -                                                             -
                                                     ---                                                          ---                                                          ---                                                           ---                                                           ---
     Adjusted Gross Margin from Home
      Sales
                                                            $94,371                   21.8%                              $58,235                   18.2%                              $247,297                   21.2%                               $132,570                   17.4%                             $85,080                      21.3%
                                                            =======                                                      =======                                                      ========                                                       ========                                                     =======

SOURCE M.D.C. Holdings, Inc.


Source: PR Newswire