MDC, the nation’s 10th-largest home builder and parent of Richmond American Homes posted a net loss of $100.7 million, or $2.18 a share, in the second quarter, slightly better than the $106.1 million, or $2.32 a share, a year earlier. Revenue was down 43 percent, to $411.9 million.
"While the issues in the housing market have received a significant amount of attention from the government, highlighted by the recent approval of housing rescue legislation, we cannot assume that a recovery is imminent," MDC CEO Larry Mizel told Wall Street analysts Thursday.
Faced with a sector so battered by bad news, however, investors bid up MDC’s stock. It closed at $41.52, up 1.7 percent.
Most of the second-quarter loss was a pre-tax $88.3 million charge to write down the value of its unsold land and homes – about 3,500 lots in 110 subdivisions, the company said.
The company chose to highlight its cash position. MDC had positive operating cash flow of $91.6 million and total cash on the balance sheet of $1.3 billion at quarter-end.
Mizel said the company bolstered its cash by selling off lots at a loss.
The company is saving money by cutting employees. It now employs 1,650, down from 1,850 three months ago and 2,725 a year ago.
I have absolutely no sympathy for this company and I’m glad to see they’re feeling the pinch. When you pay your top 2 executives (Mizel and Mandarich) $20+ million dollars each in bonuses almost every year, build on every open plot of land in Colorado and then complain about the bad news and lay off employees…..please. They have only one goal: to increase their stock price. They don’t care about building quality homes or providing good customer service, although where would their stock price be without their customers?!? It’s unfortunate that they don’t understand that. Too bad they couldn’t "save money" by keeping most of those employees they laid off and maybe decreasing the executive bonuses to, I don’t know, $5 million each? I know it would hurt the executives financially, but I have a feeling they would survive. I think their new slogan should be "It’s not about you." or "We really don’t care."
**I own a Richmond home and have sold several new homes to clients. Just like any builder, they have advantages and disadvantages, but that doesn’t change my view of the company.