Home builder MDC Holdings, Inc. (MDC) Friday reported a narrower net loss for the third quarter, reflecting lower operating and impairment costs and improvement in home orders. The company said its outlook remains cautious because of employment situation and overall uncertain economic conditions.
For the third quarter, the Denver, Colorado-based company's net loss was $32.05 million or $0.69 per share as compared with a loss of $117.97 million or $2.55 per share in the prior-year quarter. MDC said the quarter's results included asset impairment charges amounting to $1.20 million compared with $95.39 million in the year-ago period, and a $11.8 million increase in deferred tax valuation allowance.
On an average, 10 analysts polled by Thomson Reuters expected the company to report a loss of $0.37 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the period fell to $203.23 million from $362.70 million in the third quarter of fiscal 2008. Analysts expected MDC to generate revenues of $228.25 million during the quarter.
On a segmental basis, revenues from West homebuilding were $94.08 million versus $194.75 million last year, revenues from Mountain homebuilding fell to $61.95 million from $72.57 million a year earlier. East homebuilding segment generated revenues of $33.03 million compared with $61.95 million in the corresponding period last year, and revenues from other homebuilding segments slumped to $10.91 million from $28.83 million in 2008-year period. Revenues from financial services and other segments were $6.58 million versus $8.50 million last year.
MDC attributed the decline homebuilding revenues to the result of a year-over-year decline in home closings and average selling price of 41% and 6%, respectively. Home sales revenues for the period dropped to $186.82 million from $336.74 million, and revenues from land sales were $9.41 million, down from $15.85 million in the previous year.
During the three-month period, the total operating costs and expenses incurred by MDC were $228.06 million versus $478.22 million in the corresponding period prior year. The company's interest income plunged to $2.72 million from $9.32 million in the last-year period.
Home gross margins during the period rose to 18.9% from 15.3% in the third quarter of 2008, reflecting a $10.8 million reduction in warranty reserve compared with a $3.2 million reduction in the previous year.
Commenting on the results, chairman and chief executive officer Larry Mizel said, "During the third quarter, an increasing national unemployment rate overshadowed an improvement in overall homebuilding industry conditions."
As at September 30, 2009, MDC had a total backlog of 1,298 units with an estimated sales value of $383.00 million as compared to 1,127 units with a value of $173.00 million a year ago. Net orders for the third quarter surged to 1,016 homes from 667 homes in the third quarter of fiscal 2008.
During the quarter, the company's cancellation rate dropped to 23% from 46% in the prior-year period, reflecting decrease in mortgage-related issues and a decline in number of prospective homebuyers with a contingency to sell an existing home.
In the preceding second quarter, MDC had reported a net loss of $29.58 million or $0.64 per share compared with a loss of $100.73 million or $2.18 per share in the 2008-year period. The company's total revenues for the second quarter had fallen to $195.27 million from $403.42 million last year.
For the nine-month period, MDC's net loss was $102.48 million or $2.20 per share versus a loss of $291.52 million or $6.32 per share in the same period last year. Year-to-date revenues plummeted to $574.42 million from $1.16 billion in the corresponding period prior year.
MDC closed Thursday's regular trading session at $33.85 per share on the New York Stock Exchange. In the past 52-week period, the stock has been trading in a range of $20.89 to $39.20.
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