April 19, 2006

M.D.C. Holdings Announces 12% Increase in First Quarter Diluted Earnings per Share; Reports Quarterly Home Orders and Quarter-End Backlog

  • Diluted earnings per share of $2.08 vs. $1.86 in 2005
  • Net income of $95.4 million, a 13% increase over 2005
  • Total revenue of $1.14 billion, up 22%
  • Closed 3,198 homes at an average selling price of $350,000
  • Financial services profits of $8.3 million, up 192%
  • Homebuilding and corporate debt-to-capital ratio, net of cash, of 0.31
  • Net orders for 3,800 homes valued at $1.36 billion
  • Quarter-end backlog of 7,134 homes valued at $2.70 billion, up 11%

DENVER, April 19 /PRNewswire-FirstCall/ -- M.D.C. Holdings, Inc. (NYSE: MDC; PCX) today announced net income for the quarter ended March 31, 2006 of $95.4 million, or $2.08 per share, compared with net income of $84.6 million, or $1.86 per share, for the same period in 2005. Total revenue for the first quarter reached $1.14 billion, up 22% from the same period in 2005.

"We are pleased to announce growth in our net income and earnings per share for the 15th consecutive quarter," said Larry A. Mizel, MDC's chairman and chief executive officer. "During our 2006 first quarter, we again were recognized as one of America's premier companies. We achieved a ranking of #437 on the FORTUNE 500 list, up 29 spots from the prior year, we were included for the first time in the S&P MidCap 400 Index, and we were named to the Forbes Platinum 400 as one of 'America's Best Big Companies' for the eighth consecutive year."

Mizel continued, "Our disciplined approach to managing homes under construction and a relatively short lot supply has contributed to our continued high level of cash and borrowing capacity, which reached its highest level ever of $1.27 billion at the end of the 2006 first quarter. We reached this capacity by increasing the commitment under our five-year, unsecured credit facility by nearly 20% to $1.25 billion, with the ability to further increase this amount by $500 million, subject to increases in bank commitments. This gives us flexibility to allocate capital between alternative investments that we expect to produce the highest risk-adjusted returns for our Company. Consistent with this objective, during the first quarter, we continued to reallocate our financial and human capital away from Texas to markets such as Salt Lake City, where recently we acquired certain assets of Salisbury Homes to strengthen our position as a leading builder in one of our fastest growing markets."

Mizel concluded, "Our record first quarter financial performance has positioned us for another successful year in 2006. While proud of these accomplishments, we are keenly aware that the homebuilding environment has weakened. Because the level of our success in 2006 will hinge largely on our ability to generate net home orders in this environment over the balance of the year, we are not in a position to predict whether our revenues and earnings for the full year 2006 will exceed our 2005 performance. Nevertheless, we are optimistic that generally strong economic conditions will help our more challenged markets return to sustainable, healthy levels of demand for new homes. At the same time, we are confident that we have the right disciplines and strategy to make the most of the opportunities presented by this changing homebuilding environment to further our primary objective of maximizing long-term value for our shareowners."

Please refer to the last paragraph of this release for a discussion of factors that may impact the Company's estimates of revenue and earnings.

Growth in Homebuilding Profits

Homebuilding operating profits for the quarter ended March 31, 2006 were $173.8 million, representing an increase of 7% over profits of $162.5 million for the same period in 2005. This increase primarily resulted from higher average selling prices, which reached an average of $350,000 for the quarter ended March 31, 2006, up $59,700 from the first quarter of 2005. The Company closed 3,198 homes in the 2006 first quarter, compared with 3,158 home closings in the same period in 2005, and home gross margins were 27.2%, compared with 28.4% for the comparable period in 2005.

Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "During the first quarter of 2006, we once again improved our homebuilding profits, realizing year-over-year increases in many of our markets, most notably in Arizona, Florida and Maryland. Each of these markets benefited from increased average selling prices and home gross margins, though none experienced a year-over-year increase in home closings. The first quarter home gross margin increases recorded in these markets, as well as in Utah and Virginia, were more than offset by lower home gross margins in Nevada and California. As in the prior three quarters, our home gross margins eased in Nevada from the extraordinary levels realized in the comparable periods of the previous year. In addition, our home gross margins in California moderated from the levels achieved in the first quarter of 2005, due in part to the earlier close-out of certain high margin subdivisions in both Los Angeles and the Bay Area."

Improved Financial Services Results

Operating profits from the Company's financial services business for the first quarter of 2006 nearly tripled from the 2005 first quarter, increasing to $8.3 million. The profit improvement primarily was due to higher gains on sales of mortgage loans, compared with the same period in 2005. Increased volumes of mortgage loan originations and mortgage loans sold drove the higher gains. The Company achieved these increased originations by expanding the offering of mortgage loan products that it could originate directly for its customers, thereby decreasing the need for less profitable loans brokered to outside lenders.

Home Orders and Backlog

MDC received orders, net of cancellations, for 3,800 homes with a sales value of $1.36 billion during the 2006 first quarter, compared with net orders for 4,546 homes with a sales value of $1.48 billion during the same period in 2005. The Company ended the first quarter of 2006 with a backlog of 7,134 homes, compared with a backlog of 7,893 homes at March 31, 2005. The estimated sales value of backlog at the end of the 2006 first quarter was $2.70 billion, 11% higher than the $2.43 billion estimated sales value of backlog at March 31, 2005.

"While our net home orders received in most of our markets have slowed from their strong and, in some cases, unsustainable levels over the past few years, we have been encouraged by the number of gross home order contracts, exclusive of cancellations, that we have taken during the 2006 first quarter," said Reece. "In fact, we received higher year-over-year gross home orders in all markets except Colorado, Virginia and Texas, and our total gross home orders excluding Texas in the 2006 first quarter actually were higher than in the first quarter of 2005. However, almost all of our markets experienced higher home order cancellations, contributing to lower net home orders per active subdivision in every market except Utah, which has continued to show strength."

Similar to the last three quarterly periods, net home orders received in the 2006 first quarter were lower year-over-year in Arizona. This decline primarily resulted from a reduction in the number of gross home orders received per active subdivision from record first quarter order levels in 2005, combined with a significant increase in home order cancellations. The increase in cancellations in this market, as well as in Florida and Virginia, was driven in part by what appears to be the exit of speculators from these markets, along with other factors related to higher mortgage interest rates. In addition, an increased supply of homes available to be purchased in these three markets, as well as in Colorado, resulted in an elevated number of order cancellations from prospective homebuyers who were unable to sell their existing homes in a more competitive sales environment. Home orders in Virginia also were impacted by a decline in the number of active subdivisions during the 2006 first quarter, compared with the same period in 2005. Texas experienced the largest year-over-year decline in net home orders in the 2006 first quarter, as a result of our decision not to purchase additional lots in this market.

The Company realized a 37% year-over-year increase in net home orders received in Utah in the 2006 first quarter, primarily due to the continued strong demand for new homes in this market. MDC also experienced first quarter increases in the number of net home orders received in Nevada and California. In these markets, the declines in the number of net home orders received per active subdivision were more than offset by increases in the number of subdivisions in which the company was actively selling homes during the first quarter of 2006, compared with the same period in 2005.

MDC, whose subsidiaries build homes under the name "Richmond American Homes," is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's homebuyers, through its wholly owned subsidiary HomeAmerican Mortgage Corporation. MDC is a major regional homebuilder with a significant presence in some of the country's best housing markets. The Company is the largest homebuilder in Colorado; among the top five homebuilders in Northern Virginia, suburban Maryland, Phoenix, Tucson, Las Vegas, Jacksonville and Salt Lake City; and among the top ten homebuilders in Northern California and Southern California. MDC also has established operating divisions in West Florida, Delaware Valley, Chicago, Dallas/Fort Worth and Houston. For more information about our Company, please visit www.richmondamerican.com.

Forward-Looking Statements

Certain statements in this release, including statements regarding future home closings, revenue and earnings, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward- looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of performance bonds and insurance covering risks associated with our business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives; (10) building moratoria; (11) governmental regulation, including the interpretation of tax, labor and environmental laws; (12) changes in consumer confidence and preferences; (13) required accounting changes; (14) terrorist acts and other acts of war; and (15) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2005, which was filed with the Securities and Exchange Commission. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted.



                            M.D.C. HOLDINGS, INC.
                 Condensed Consolidated Statements of Income
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                                      Three Months Ended
                                                           March 31,
                                                      2006           2005
    REVENUE
      Homebuilding                                $1,124,854       $921,330
      Financial Services                              17,408         11,598
      Corporate                                          432            988
         Total Revenue                             1,142,694        933,916

    COSTS AND EXPENSES
      Homebuilding                                   951,085        758,820
      Financial Services                               9,095          8,751
      Corporate                                       28,357         30,316
      Related Party Expenses                           1,676            100
         Total Costs and Expenses                    990,213        797,987

    Income before income taxes                       152,481        135,929
    Provision for income taxes                       (57,060)       (51,298)

    NET INCOME                                        95,421         84,631

    EARNINGS PER SHARE
         Basic                                         $2.13          $1.95
         Diluted                                       $2.08          $1.86

    WEIGHTED-AVERAGE SHARES OUTSTANDING
         Basic                                        44,820         43,458
         Diluted                                      45,970         45,564

    DIVIDENDS DECLARED PER SHARE                        $.25           $.15



                            M.D.C. HOLDINGS, INC.
                       Information on Business Segments
                                (In thousands)
                                 (Unaudited)

                                                      Three Months Ended
                                                           March 31,
                                                      2006           2005
    HOMEBUILDING
      Home sales                                  $1,119,308       $916,831
      Land sales                                       1,837          1,296
      Other revenue                                    3,709          3,203
         Total Homebuilding Revenue                1,124,854        921,330

      Home cost of sales                             814,589        656,780
      Land cost of sales                               2,374            790
      Marketing expenses                              29,035         22,318
      Commission expenses                             32,843         25,846
      General and administrative expenses             72,244         53,086
         Total Homebuilding Expenses                 951,085        758,820
           HOMEBUILDING OPERATING PROFIT             173,769        162,510

    FINANCIAL SERVICES
      Net interest income                                856            527
      Broker fees                                      2,080          2,168
      Gains on sales of mortgage loans, net           13,027          7,898
      Other revenue                                    1,445          1,005
         Total Financial Services Revenue             17,408         11,598
         General and Administrative Expenses           9,095          8,751
           FINANCIAL SERVICES OPERATING PROFIT         8,313          2,847

    TOTAL OPERATING PROFIT                           182,082        165,357

    CORPORATE
      Interest and other revenue                         432            988
      Related party expenses                          (1,676)          (100)
      Other general and administrative expenses      (28,357)       (30,316)
    INCOME BEFORE INCOME TAXES                      $152,481       $135,929



                            M.D.C. HOLDINGS, INC.
                           Selected Financial Data
               (Dollars in thousands, except per share amounts)
                                 (Unaudited)

                                         March 31,  December 31,  March 31,
                                            2006        2005        2005
    BALANCE SHEET DATA
    Calculation of Corporate and
     Homebuilding Debt (net of cash)
       Total Debt                       $1,221,931  $1,152,829    $821,203
       Less: Financial Services Debt      (125,540)   (156,532)    (74,811)
         Corporate and
          Homebuilding Debt              1,096,391     996,297     746,392
       Less: Cash and Cash Equivalents
        and Restricted Cash               (173,388)   (221,273)   (226,834)
         Corporate and Homebuilding
          Debt (net of cash)              $923,003    $775,024    $519,558

    Calculation of Capital (excluding
     mortgage lending debt and net
     of cash)
       Total Debt                       $1,221,931  $1,152,829    $821,203
       Stockholders' Equity              2,055,208   1,952,109   1,516,458
         Total Capital                   3,277,139   3,104,938   2,337,661
       Less: Financial Services Debt      (125,540)   (156,532)    (74,811)
          Capital (excluding mortgage
           lending debt)                 3,151,599   2,948,406   2,262,850
       Less: Cash and Cash Equivalents
        and Restricted Cash               (173,388)   (221,273)   (226,834)
         Capital (excluding mortgage
           lending debt and net
           of cash)                     $2,978,211  $2,727,133  $2,036,016

    Stockholders' Equity Per Share
     Outstanding                            $45.76      $43.74      $34.72

    Cash and Available Borrowing
     Capacity Under Lines of Credit(1)  $1,267,845  $1,245,540  $1,216,362

    Ratio of Homebuilding and
     Corporate Debt to Equity(2)               .53         .51         .49
    Ratio of Homebuilding and
     Corporate Debt to Capital(2)              .35         .34         .33
    Ratio of Homebuilding and
     Corporate Debt to Equity
     (net of cash)(2)                          .45         .40         .34
    Ratio of Homebuilding and
     Corporate Debt to Capital
     (net of cash)(2)                          .31         .28         .26

    Housing Completed or Under
     Construction Inventories           $1,346,057  $1,266,901    $904,474
    Land and Land Under Development
     Inventories                        $1,814,612  $1,656,198  $1,307,240


    Corporate and Homebuilding
     Interest Capitalized                  Quarter    Full Year    Quarter
       Interest Capitalized in
        Inventories at Beginning of
        Period                             $41,999     $24,220     $24,220
          Interest Incurred During
           the Period                       14,841      51,872      10,815
          Interest in Home and
           Land Cost of Sales for
           the Period                       (9,618)    (34,093)     (7,294)
       Interest Capitalized in
        Inventories at End of Period       $47,222     $41,999     $27,741
       Interest Capitalized as a
        Percent of Inventories                 1.5%        1.4%        1.3%


    (1) Aggregate commitment amount under our homebuilding and mortgage lines
        of credit and consolidated cash and cash equivalents less principal
        amounts outstanding and letters of credit issued under our lines of
        credit.

    (2) Corporate and Homebuilding Debt (net of cash) and Capital (excluding
        mortgage lending debt and net of cash) are non-GAAP measures used to
        calculate the Ratio of Homebuilding and Corporate Debt to Capital (net
        of cash) and the Ratio of Homebuilding and Corporate Debt to Equity
        (net of cash).  A reconciliation of these two terms is provided above.
        MDC's management tracks these terms, and their associated ratios, on a
        regular basis in order to assess its debt and capital positions.  The
        presentation of this additional information is not meant to be
        considered in isolation or as a substitute for total debt or total
        capital determined in accordance with GAAP.



                            M.D.C. HOLDINGS, INC.
                           Selected Financial Data
               (Dollars in thousands, except per share amounts)
                                 (Unaudited)

                                                      Three Months Ended
                                                           March 31,
                                                      2006           2005
    OPERATING DATA
      Interest in Home Cost of Sales as a
       Percent of Home Sales Revenue                    0.9%           0.8%
      Homebuilding and Corporate SG&A as a
       Percent of Home Sales Revenue                   14.7%          14.4%
      Depreciation and Amortization                 $13,628         $9,994

      Home Gross Margins(3)                            27.2%          28.4%

      Cash Used in Operating Activities           $(108,443)     $(118,333)
      Cash Used in Investing Activities             $(1,638)       $(4,663)
      Cash Provided by (Used in) Financing
       Activities                                   $61,289      $(59,145)

    After-Tax Return on Total Revenue                   8.4%           9.1%
    After-Tax Return on Average Assets(4)              15.1%          16.8%
    After-Tax Return on Average Equity(4)              29.0%          32.3%


    (3) Home sales revenue less home cost of sales as a percent of home sales
        revenue.

    (4) Based on last twelve months data.



                            M.D.C. HOLDINGS, INC.
                        Homebuilding Operational Data
                            (Dollars in thousands)
                                 (Unaudited)

                                           March 31, December 31,  March 31,
                                             2006        2005        2005
    LOTS OWNED AND CONTROLLED
      Lots Owned                            24,263      23,445      24,021
      Lots Under Option                     17,304      18,819      16,895
      Homes Completed or Under
       Construction (including models)       6,781       6,891       6,056

    LOTS OWNED AND CONTROLLED BY MARKET
      (excluding homes under construction)
      Arizona                               11,278      11,035      10,814
      California                             5,543       5,372       4,064
      Colorado                               5,572       5,837       5,581
      Delaware Valley                        1,679       1,754         923
      Florida                                4,144       4,403       3,979
      Illinois                                 566         616         873
      Maryland                               1,772       1,852       1,803
      Nevada                                 4,804       5,455       5,464
      Utah                                   1,749       1,382       1,385
      Virginia                               4,015       4,007       3,880
         Subtotal                           41,122      41,713      38,766
      Texas                                    445         551       2,150
         Total Company                      41,567      42,264      40,916

    ACTIVE SUBDIVISIONS
      Arizona                                   58          54          42
      California                                42          34          28
      Colorado                                  50          57          55
      Delaware Valley                            8           7           4
      Florida                                   26          19          18
      Illinois                                   7           8           4
      Maryland                                  15          11          14
      Nevada                                    41          43          34
      Utah                                      21          18          18
      Virginia                                  25          20          24
         Subtotal                              293         271         241
      Texas                                     18          21          24
         Total Company                         311         292         265
         Average for Quarter Ended             299         287         252



                            M.D.C. HOLDINGS, INC.
                        Homebuilding Operational Data
                            (Dollars in Thousands)
                                 (Unaudited)

                                            Three Months Ended
                                                 March 31,
    AVERAGE SELLING PRICE                    2006        2005
    PER HOME CLOSED
      Arizona                               $285.2      $203.3
      California                             533.3       518.5
      Colorado                               296.5       282.5
      Delaware Valley                        412.0          --
      Florida                                297.7       186.4
      Illinois                               363.3       401.9
      Maryland                               570.3       423.7
      Nevada                                 323.1       288.8
      Texas                                  169.0       155.1
      Utah                                   260.7       212.9
      Virginia                               596.2       484.2
         Company Average                    $350.0      $290.3
         Company Average (Without Texas)    $358.2      $297.8



                                             Three Months Ended
                                                  March 31,
                                              2006        2005

    ORDERS FOR HOMES, NET (UNITS)
      Arizona                                  919       1,152
      California                               544         531
      Colorado                                 451         664
      Delaware Valley                           39          43
      Florida                                  272         320
      Illinois                                  44          29
      Maryland                                 152         145
      Nevada                                   779         750
      Utah                                     339         248
      Virginia                                 194         343
         Subtotal                            3,733       4,225
      Texas                                     67         321
         Total                               3,800       4,546

    Estimated Value of Orders
     for Homes, net                     $1,360,000  $1,480,000
    Estimated Average Selling Price of
     Orders for Homes, net                  $357.9      $325.6

    Orders for Homes, Gross Before
     Cancellations (Units)                   5,504       5,700
    Orders for Homes, Gross Before
     Cancellations (Units, Without Texas)    5,360       5,212

    Order Cancellation Rate(5)               31.0%       20.2%


    (5) Order Cancellation Rate is calculated as total cancelled home order
        contracts during a specified period of time as a percent of total home
        orders received during such time period.



                              M.D.C. HOLDINGS, INC.
                          Homebuilding Operational Data
                              (Dollars in Thousands)
                                   (Unaudited)

                                            Three Months Ended
                                                  March 31,

    HOMES CLOSED (UNITS)                      2006        2005
    Arizona                                    778         796
    California                                 464         386
    Colorado                                   399         448
    Delaware Valley                             31          --
    Florida                                    252         295
    Illinois                                    36           5
    Maryland                                    74          74
    Nevada                                     675         609
    Utah                                       173         168
    Virginia                                   177         212
       Subtotal                              3,059       2,993
    Texas                                      139         165
       Total                                 3,198       3,158


                                           March 31,  December 31, March 31,
    BACKLOG (UNITS)                           2006        2005        2005

      Arizona                                2,240       2,099       2,499
      California                               845         765         952
      Colorado                                 629         577         908
      Delaware Valley                          189         181          66
      Florida                                  619         599         663
      Illinois                                  88          80          42
      Maryland                                 329         251         296
      Nevada                                 1,127       1,023         887
      Utah                                     504         338         369
      Virginia                                 398         381         799
         Subtotal                            6,968       6,294       7,481
      Texas                                    166         238         412
         Total                               7,134       6,532       7,893
    Backlog Est. Sales Value            $2,700,000  $2,440,000  $2,430,000
    Estimated Average Selling Price
     of Homes in Backlog                    $378.5      $373.5      $307.9

SOURCE: M.D.C. Holdings, Inc.
04/19/2006
CONTACT:
Paris G. Reece III,
Chief Financial Officer,
+1-303-804-7706,
greece@mdch.com,
or
Robert N. Martin,
Investor Relations,
+1-720-977-3431,
bob.martin@mdch.com,
Alison Schuller,
Corporate Communications,
+1-720-977-3554,
alison.schuller@mdch.com,
all of M.D.C. Holdings, Inc.
Web site: http://www.richmondamerican.com
(MDC)


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