Homebuilding company M.D.C. Holdings, Inc. (MDC), Friday, reported a profit for the fourth quarter, compared to a loss last year, helped by improved home and land sales as well as a significant tax benefit.
For the quarter, net income was $127.16 million or $2.68 per share compared to a loss of $89.03 million or $1.92 per share last year.
On average, 10 analysts polled by Thomson Reuters expected the company to report a loss of $0.39 per share. Analysts' estimates typically exclude special items.
Fourth quarter profit reflected a $142.54 million benefit from income taxes compared to a provision of $2.63 million for the prior-year period.
Before tax, the company had a loss of $15.38 million compared to loss of $86.40 million a year ago. Tax benefit was the result of a recently enacted tax legislation that allowed the company to extend the carryback period of its fiscal 2009 net operating losses from two to five years.
Results for the quarter also included a charge of $13.98 million in asset impairments, while the prior-year fourth quarter included an asset impairment charge of $59.66 million.
Total revenue for the quarter improved to $323.88 million from $296.21 million. Nine analysts were looking for revenues of $269.44 million for the company.
Revenue from home sales was $297.70 million compared to $283.52 million last year, driven by a 17% increase in home closings. Revenues from land sales was $16.74 million compared to $3.35 million last year, mainly due to a significant increase in the number of lots sold as well as an increase in the average price of the lots sold.
Net orders for the quarter improved 82% to 637 homes, with an estimated sales value of $183.0 million, from 350 homes, with an estimated sales value of $100.0 million, last year. The surge was primarily driven by significant increases across all homebuilding segments.
Cancellation rate dropped to 30% from 52% last year, primarily due to a decrease in homebuyer mortgage-related issues and a decline in the number of prospective homebuyers with a contingency to sell an existing home.
Home gross margin improved to 18.8% from 12.9% last year, despite the reduction in average selling price, primarily due to a reduction in construction costs and interest in cost of sales, relative to the average selling price of homes closed.
For the full year, net income was $24.68 million or $0.52 per share compared to a loss of $380.55 million or $8.25 per share last year. Total revenues dropped to $898.30 million from $1.46 billion last year.
Analysts expected the company to report a loss of $2.60 per share on revenues of $834.35 million for the year.
"In the fourth quarter, our offering of more affordable homes that we introduced earlier in the year accounted for more than 30% of our new home orders," said Larry Mizel, chief executive officer.
"After investing a total of $100 million in land acquisitions across our markets during the quarter, we ended the year with $1.56 billion in cash and investments, up 10% from the end of 2008. Shortly after the end of the year, we issued $250 million of 10-year senior notes at a low interest rate, and we expect to receive a $143 million tax refund before the end of the 2010 first quarter," he concluded.
MDC shares closed Thursday's regular trading session at $34.61 per share on the NYSE.
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