Major home builder MDC Holdings Inc. today announced a growth in net orders during the third quarter this year, a 21 percent year-over-year increase.
The company, with subsidiaries that build homes under the name Richmond American Homes, received orders, net of cancellations, for 3,551 homes and 12,929 homes, respectively, during the third quarter and first nine months of 2005, compared with net orders for 2,925 homes and 11,586 homes during the same periods in 2004.
Home orders in the third quarter of 2005 increased from 2004 levels in most of the company’s markets, particularly Nevada and California, mainly due to year-over-year increases in active subdivisions and the continued strong demand for new homes in these two states, according to a company announcement this week.
MDC received 604 net home orders in third-quarter 2005 from its newer markets in Florida, Philadelphia/Delaware Valley, Utah and Illinois, compared with 286 home orders during the same period in 2004. These increases partially were offset by lower home orders in Virginia, due in part to a temporary decline in the number of active subdivisions, and in Arizona, compared with the exceptional order level experienced during the same period in 2004 in this market.
As previously reported, aggregate home orders for July and August 2005 increased 33 percent from the same period in 2004. However, September 2005 home orders were 3 percent lower than September 2004 orders. The difference in order comparisons in September from July and August resulted in part from the more difficult comparison created by the 20 percent year-over-year increase in home orders achieved in September 2004, following three straight months of year-over-year order decreases, the company reported.
In addition, while September 2005 home orders increased significantly year-over-year in Nevada and California, the rate of increase was slower than experienced in July and August 2005, primarily due to a number of communities nearing sell-out before September, thereby limiting the number of homes for sale.
MDC ended August 2005 with 280 active subdivisions, up 23 percent from the 228 active subdivisions at Aug. 31, 2004. Growth in active subdivisions during the third quarter of 2005 has been impacted by the strong home orders in Nevada and California, which resulted in a number of subdivisions in these markets selling out earlier than anticipated. In addition, the company has experienced delays in the development of new subdivisions in several of its markets, particularly in Arizona, Virginia and California. Information regarding active subdivisions at Sept. 30, 2005, will be provided with the release of the company’s 2005 third-quarter earnings.
During the quarter and nine months ended Sept. 30, 2005, MDC closed 3,686 and 10,356 homes, respectively, representing increases of 4 percent and 8 percent from the 3,558 and 9,553 home closings, respectively, for the same periods in 2004. The company ended the third quarter of 2005 with a backlog of 9,078 homes with an estimated sales value of $3.29 billion, 11 percent and 33 percent greater, respectively, than the backlog of 8,166 homes with an estimated sales value of $2.48 billion at Sept. 30, 2004.
The company stated in the announcement that its earnings per share for the 2005 third quarter should be higher than 2004 third-quarter earnings per share of $2.36, and that its earnings per share for full year 2005 should exceed the consensus analyst estimate at the time of MDC’s previous release of $10.44. The company’s expectations assume no material change in overall market conditions, MDC reported.
The company plans to release its 2005 third-quarter earnings after the market closes on Monday, Oct. 17. A synchronized slide show and audio presentation will be broadcast over the Internet at 10 a.m. EDT on Tuesday, Oct. 18 in conjunction with its conference call. The presentation can be accessed at www.richmondamerican.com, clicking on “Investors” and selecting “MDC Holdings 2005 Third Quarter Conference Call.” If problems are experienced while listening to the broadcast, send an e-mail message to: firstname.lastname@example.org.
The home-building company also provides mortgage financing, primarily for MDC’s home buyers, through its wholly owned subsidiary HomeAmerican Mortgage Corp. MDC is the largest home builder in Colorado; among the top five home builders in Northern Virginia, suburban Maryland, Phoenix, Tucson, Las Vegas, Jacksonville and Salt Lake City; and among the top 10 home builders in Northern California and Southern California. MDC also has established operating divisions in Dallas/Fort Worth, Houston, West Florida, Philadelphia/Delaware Valley and Chicago.
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