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M.D.C. Holdings Posts 4th Quarter 2013 Financial Results

February 16, 2014

M.D.C. Holdings, Inc. announced results for the quarter ended Dec. 31, 2013.

In a release on Feb. 5, the Company noted 2013 fourth quarter highlights and comparisons to 2012 fourth quarter:

-Net income of $30.7 million, or $0.62 per diluted share vs. $29.7 million, or $0.59 per diluted share

-Pretax income of $34.3 million, up 15 percent from $29.9 million

-Home sale revenues of $460.9 million, up 18 percent

-Gross margin from home sales of 17.4 percent vs. 16.7 percent, up 70 basis points

-SG&A expenses as a percentage of home sale revenues of 12.0 percent, a 60 basis point improvement

-Ending active community count of 146 vs. 148

-Up 9 percent from 134 at September 30, 2013

-Net new orders of 752 homes, down 13 percent on an 8 percent decrease in average active community count

-Dollar value down 2 percent to $285.2 million

-Backlog dollar value of $506.0 million, down 13 percent

-Lots owned and optioned of 15,786, up 38 percent

-Total liquidity of $1.24 billion at December 31, 2013, including amount available under new $450 million line of credit

-Issued $250 million 10-year 5? percent senior unsecured notes in January 2014

2013 Full Year Highlights and Comparisons to 2012 Full Year

-Net income of $314.4 million, or $6.34 per diluted share vs. $62.7 million, or $1.29 per diluted share

-Excluding the $187.6 million reversal of the deferred tax asset valuation allowance in the second quarter, net income was $126.7 million*, or $2.56* per diluted share

-Home sale revenues of $1.63 billion, up 41 percent

-Home deliveries of 4,710 homes, up 26 percent

-Gross margin from home sales of 17.8 percent vs. 15.4 percent, up 240 basis points

-SG&A expenses as a percentage of home sale revenues of 13.1 percent vs. 14.5 percent, a 140 basis point improvement

-Net new orders of 4,327 homes vs. 4,342 in 2012

-Acquired 7,887 lots in 168 communities, including 128 new communities

-Total land acquisition spend of $632.6 million

Larry A. Mizel, MDC's Chairman and Chief Executive Officer, said: "I am pleased to announce fourth quarter net income of $0.62 per diluted share, our eighth consecutive quarterly operating profit. For the full year, our net income improved by more than $250 million. Included in this was the reversal of most of our deferred tax asset valuation allowance during the second quarter, stemming from our return to consistent profitability and an improving housing market. Excluding the tax benefit from the allowance reversal, our income nearly doubled in 2013 on the strength of more than 40 percent top-line growth and significant expansion of our operating margin."

Mizel continued, "Our net home orders declined year-over-year in the fourth quarter, largely due to a lower average active community count. Our orders also appear to have been affected by an increase in mortgage interest rates from historically low levels and the economic uncertainty created by the discussion surrounding the tapering of federal stimulus in the later part of the year. While it is difficult to discern a trend in the fourth quarter, which is typically our seasonally slow period, we continue to believe that the current housing recovery is progressing and should continue into 2014. We believe we are well-prepared to capture incremental demand from an improving market, especially given that our active community count increased sequentially by 9 percent in the fourth quarter, our highest increase in the last eight quarters and just in time for the historically strong spring selling season."

Mizel concluded, "We have worked to strengthen our financial position during 2013 not only by increasing profits, but also by accessing the capital markets. During the first half of the year, we issued $350 million of 30-year 6 percent senior unsecured notes, and in the fourth quarter, we finalized a new 5-year, $450 million unsecured line of credit. In doing so, we increased our overall liquidity by more than 70 percent to over $1.2 billion at the end of 2013, even after investing more than $600 million in acquiring new communities during the year. Furthermore, to start 2014, we issued $250 million of 10-year 5? percent senior unsecured notes. We believe that this financing activity, coupled with the equity added by our strong earnings in 2013 and our expectation of further sequential improvement in active community count during the first half of 2014, positions us well as we pursue continued growth and address near-term debt maturities."

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 Corp., American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively.

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