News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to report the thirteenth consecutive quarter of year-over-year increases in operating results. We have leveraged our profit improvement and efficiency initiatives to produce the highest level of operating profits for any quarterly and first-half period in the 28-year history of our Company. Our continued earnings successes have enabled us to maintain our return on equity above 26% and to further strengthen our position as an industry leader in operating performance, capital stability and interest coverage measures. Our financial flexibility recently has been enhanced through the expansion of our five-year unsecured line of credit to $350 million from $300 million, as two existing members of our bank group increased their participations and we welcomed SunTrust Bank as a new participant. These financial achievements, combined with our record backlog value and our growing share in some of the strongest homebuilding markets in the country, have positioned us to close more than 7,600 homes and to establish new records for revenues and profitability for the year 2000."
Net income for the six months ended June 30, 2000 was $49.8 million, or $2.26 per share, 29% higher than the $38.7 million, or $1.71 per share, for the same period in 1999. Total revenues for the six months ended June 30, 2000 reached a record $767 million, representing an increase of 10%, compared with revenues of $697 million for the first six months of 1999.
Record Homebuilding Profits and Improved Mortgage Lending Results
Operating profits from the Company's homebuilding operations increased to $52.4 million and $97.8 million, respectively, for the three and six months ended June 30, 2000, representing increases of 19% and 41%, respectively, compared with $44.0 million and $69.2 million, respectively, for the same periods in 1999. These profit improvements primarily resulted from significant increases in home gross margins and average selling prices (up $10,100 and $11,500, respectively, in the 2000 second quarter and first half). Home gross margins improved to 22.2% and 21.7%, respectively, for the second quarter and first half of 2000, compared with 19.8% and 19.3%, respectively, for the same periods in 1999. Home sales revenues of $407 million and $737 million for the second quarter and first half of 2000 were the highest for comparable periods in the Company's history.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Our improved second quarter operating results are directly related to significant year-over-year increases in operating profits from most of our divisions, particularly Colorado, Virginia, Nevada and Northern California. These increases partially were offset by lower profits from our Southern California and Phoenix operations, primarily due to reduced home closings during the 2000 second quarter from fewer active subdivisions in each of these markets during the latter half of 1999 and the first quarter of 2000. Our active subdivisions subsequently have increased to 19 and 20, respectively, in Southern California and Phoenix at June 30, 2000, compared with 14 and 11, respectively, at June 30, 1999. These increased stores will provide the opportunity to improve our year-over-year home orders and home closings in these two markets during the balance of 2000 and into 2001."
Reece continued, "Our operating initiatives for increasing revenues, controlling costs and reducing expenses have more than offset cost increases we have seen thus far in land, materials and labor. As a result, in the 2000 second quarter, we achieved increases in home gross margins of more than 200 basis points in every market except Southern California and Colorado. Looking forward to the balance of this year, we currently anticipate that home gross margins for the third and fourth quarters may be lower than the level realized in the 2000 second quarter, but should exceed margins reported for the comparable periods in 1999."
Operating profits from the Company's mortgage lending operations were $4.0 million and $6.4 million, respectively, for the quarter and six months ended June 30, 2000, compared with $3.3 million and $6.8 million, respectively, for the same periods in 1999. The second quarter improvement in operating profits primarily resulted from decreased general and administrative expenses and increased gains on sales of mortgage loans and loan servicing.
Strengthened Balance Sheet and Improved Operating Efficiency
During the second quarter and first six months of 2000, the Company continued its strategy of strengthening its balance sheet and improving its financial position. Homebuilding and corporate debt at June 30, 2000 increased by only 15% to $264 million, compared with June 30, 1999 debt levels, despite a $148 million increase in work-in-process and land inventories related to the Company's expanding homebuilding activity. The Company's strong operating results over the past year, partially offset by $23 million in MDC stock repurchases during the first half of 2000, increased stockholders' equity by 22% to $415 million, or $19.42 per outstanding share, at June 30, 2000. These factors contributed to a reduction in the Company's ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at June 30, 2000 to .39 and 1.2, respectively, from .40 and 1.4, respectively, at June 30, 1999. In addition, the Company ended the 2000 second quarter with $281 million in liquidity.
Second quarter and first half 2000 earnings before interest, taxes, depreciation and amortization ("EBITDA") increased to $60.0 million and $108.8 million, respectively, compared with $53.9 million and $87.7 million, respectively, for the same periods in 1999. These EBITDA increases raised the Company's ratios of EBITDA to interest incurred to 10.5 and 10.4, respectively, compared with 10.3 and 8.8, respectively, for the comparable 1999 periods.
MDC is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's home buyers, 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 metropolitan Denver; among the top five homebuilders in Northern Virginia, suburban Maryland, Tucson and Colorado Springs; and among the top ten homebuilders in Phoenix, Las Vegas, Southern California and the San Francisco Bay area.
All earnings per share amounts discussed above are on a diluted basis.
Certain statements in this press release, including those related to projected home order and closing levels, revenues, home gross margins and earnings, may 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 (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) demographic changes; (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; and (14) other factors over which the Company has little or no control.
M.D.C. HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 2000 1999 ASSETS Corporate Cash and cash equivalents $12,343 $33,637 Property and equipment, net 3,029 2,909 Deferred income taxes 26,841 21,201 Deferred debt issue costs, net 2,289 2,393 Other assets, net 5,835 6,771 50,337 66,911 Homebuilding Cash and cash equivalents 5,943 4,935 Home sales and other accounts receivable 8,039 3,496 Inventories, net Housing completed or under construction 448,519 337,029 Land and land under development 314,281 308,680 Prepaid expenses and other assets, net 61,264 58,156 838,046 712,296 Financial Services Cash and cash equivalents 497 358 Mortgage loans held in inventory 75,903 89,953 Other assets, net 7,305 7,490 83,705 97,801 Total Assets $972,088 $877,008 LIABILITIES Corporate Accounts payable and accrued expenses $44,327 $46,721 Income taxes payable 22,660 18,291 Senior notes, net 174,416 174,389 241,403 239,401 Homebuilding Accounts payable and accrued expenses 157,902 152,488 Line of credit 90,000 40,000 247,902 192,488 Financial Services Accounts payable and accrued expenses 10,380 5,862 Line of credit 57,571 50,234 67,951 56,096 Total Liabilities 557,256 487,985 STOCKHOLDERS' EQUITY Total Stockholders' Equity 414,832 389,023 Total Liabilities and Stockholders' Equity $972,088 $877,008 M.D.C. HOLDINGS, INC. Condensed Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 REVENUES Homebuilding $411,942 $391,130 $752,951 $681,010 Financial Services 7,430 7,011 13,304 13,925 Corporate 275 1,618 550 1,949 Total Revenues $419,647 $399,759 $766,805 $696,884 NET INCOME Homebuilding $52,358 $43,996 $97,829 $69,150 Financial Services 3,980 3,297 6,429 6,845 Operating Profit 56,338 47,293 104,258 75,995 Corporate general and administrative expense, net (8,240) (6,041) (16,519) (12,015) Corporate and homebuilding interest expense -- -- -- -- Income before income taxes 48,098 41,252 87,739 63,980 Provision for income taxes (19,289) (16,295) (37,909) (25,272) Net Income $28,809 $24,957 $49,830 $38,708 EARNINGS PER SHARE Basic $1.34 1.12 2.29 1.74 Diluted $1.32 1.10 2.26 1.71 WEIGHTED-AVERAGE SHARES OUTSTANDING Basic 21,477 22,274 21,790 22,189 Diluted 21,822 22,695 22,084 22,630 DIVIDENDS PAID PER SHARE $.06 $.05 $.12 $.10 M.D.C. HOLDINGS, INC. Information on Business Segments (In thousands) Three Months Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 Homebuilding Home sales $407,459 $389,144 $736,910 $677,228 Land sales 3,050 1,439 4,543 2,825 Other revenues 1,433 547 11,498 957 Total Homebuilding Revenues 411,942 391,130 752,951 681,010 Home cost of sales 317,067 312,065 576,894 546,813 Land cost of sales 1,356 984 2,355 2,023 Asset impairment charges 800 -- 800 -- Marketing 23,163 21,226 41,847 38,109 General and administrative 17,198 12,859 33,226 24,915 359,584 347,134 655,122 611,860 Homebuilding Operating Profit 52,358 43,996 97,829 69,150 Financial Services Interest revenues 571 616 1,063 1,277 Origination fees 3,242 3,217 6,038 5,720 Gains on sales of mortgage servicing 1,372 1,026 1,829 2,289 Gains on sales of mortgage loans, net 2,092 2,010 4,092 4,350 Mortgage servicing and other 153 142 282 289 Total Financial Services Revenues 7,430 7,011 13,304 13,925 General and administrative 3,450 3,714 6,875 7,080 Financial Services Operating Profit 3,980 3,297 6,429 6,845 Total Operating Profit 56,338 47,293 104,258 75,995 Corporate Interest and other revenues 275 1,618 550 1,949 General and administrative (8,515) (7,659) (17,069) (13,964) Net Corporate Expenses (8,240) (6,041) (16,519) (12,015) Income Before Income Taxes $48,098 $41,252 $87,739 $63,980 M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands, except per share amounts) June 30, December 31, June 30, 2000 1999 1999 BALANCE SHEET DATA Stockholders' Equity $414,832 $389,023 $340,121 Book Value Per Share Outstanding $19.42 $17.43 $15.27 Homebuilding and Corporate Debt $264,416 $214,389 $230,408 Ratio of Homebuilding and Corporate Debt to Equity .64 .55 .68 Total Capital (excluding mortgage lending debt) $679,248 $603,412 $570,529 Ratio of Homebuilding and Corporate Debt to Total Capital .39 .36 .40 Ratio of Homebuilding and Corporate Debt to EBITDA, as Adjusted 1.2 1.1 1.4 Total Liquidity $280,939 $300,539 $273,535 Total Homebuilding Inventories $762,800 $645,709 $614,935 Interest Capitalized in Inventories $18,037 $17,406 $22,183 Interest Capitalized as a Percent of Inventories 2.4% 2.7% 3.6% Total Lots Owned 10,400 10,452 9,191 Total Lots Under Option 8,314 8,063 7,950 Active Subdivisions 129 131 122 Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 OPERATING DATA EBITDA, As Adjusted Net Income $28,809 $24,957 $49,830 $38,708 Add: Income taxes 19,289 16,295 37,909 25,272 Interest in home and land cost of sales 5,289 7,581 9,861 14,100 Other fixed 895 229 1,666 527 charges Depreciation and amortization 4,915 4,865 8,691 9,092 Asset impairment charges 800 -- 800 -- Total EBITDA, As Adjusted $59,997 $53,927 $108,757 $87,699 Ratio of EBITDA, As Adjusted, to Interest Incurred 10.5 10.3 10.4 8.8 Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues 12.0% 10.7% 12.5% 11.4% Interest Incurred $5,711 $5,231 $10,492 $9,951 Interest Capitalized $5,711 $5,231 $10,492 $9,951 Interest in Home Cost of Sales as a Percent of Home Sales Revenues 1.2% 2.0% 1.3% 2.0% M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 Home Sales Revenues $407,459 $389,144 $736,910 $677,228 Average Selling Price Per Home Closed $218.9 $208.8 $216.0 $204.5 Home Gross Margins 22.2% 19.8% 21.7% 19.3% Excluding Interest in Home Cost of Sales 23.4% 21.8% 23.0% 21.3% Orders For Homes, Net (Units) Colorado 615 759 1,466 1,604 California 445 407 857 800 Arizona 456 413 913 938 Nevada 199 146 432 274 Virginia 186 194 464 461 Maryland 71 110 157 198 Total 1,972 2,029 4,289 4,275 Homes Closed (Units) Colorado 798 691 1,450 1,193 California 299 317 518 540 Arizona 364 469 689 855 Nevada 166 115 288 256 Virginia 158 190 322 310 Maryland 76 82 145 157 Total 1,861 1,864 3,412 3,311 June 30, December 31, June 30, 2000 1999 1999 Backlog (Units) Colorado 1,642 1,626 1,766 California 596 257 586 Arizona 676 452 779 Nevada 281 137 164 Virginia 432 290 405 Maryland 191 179 194 Total 3,818 2,941 3,894 Estimated Sales Value $840,000 $600,000 $800,000
SOURCE: M.D.C. Holdings, Inc.
Contact: Financial Information: Paris G. Reece III, Chief Financial
Officer, 303-804-7706, or General Information: Daniel S. Japha, Director,
Investor Relations, 303-804-7730, both of M.D.C. Holdings, Inc.
Website: https://www.richmondamerican.com/