News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "Our outstanding performance over the last three months marks the eleventh consecutive quarter that we have established new records for operating earnings for comparable quarters. This serves as a fitting conclusion to the most profitable year in the 29-year history of our Company. Our successes in 2000 extended well beyond the bottom line, as we continued to improve upon our position at or near the top of the homebuilding industry in measures of financial strength and stability. These measures include a return on average equity of 29%, a ratio of debt-to-capital of .35 and interest coverage of almost 11 times."
Mizel noted that MDC was recently named to the "Forbes Platinum List" of the 400 best big companies in America, and commented, "We attribute our achievements this year to the disciplined operating strategy and sound fundamental business practices which we have applied consistently throughout much of the past decade. These strategies and practices, combined with our strong balance sheet, our extensive liquidity, our growing share of some of the best housing markets in the country, and a record year-end backlog, have positioned our Company to meet the challenges of the changing economic environment in 2001."
Highest Homebuilding Profits in Company History
Operating profits from the Company's homebuilding operations reached record levels, increasing to $68.3 million and $227.3 million, respectively, for the quarter and year ended December 31, 2000, compared with $47.3 million and $162.3 million, respectively, for the same periods in 1999. These profit improvements primarily resulted from record home closings and significantly higher home gross margins, which improved to 22.3% for the quarter and year ended December 31, 2000, compared with 19.0% and 19.3%, respectively, for the same periods in 1999. In addition, the Company's average selling price per home closed for the quarter and year ended December 31, 2000 increased to $248,000 and $227,300, respectively, from $221,400 and $211,400, respectively, for the same periods in 1999. Operating profits for the quarter and year ended December 31, 2000 were impacted adversely by non-cash, pre-tax asset impairment charges of $3.4 million and $4.2 million, respectively, compared with an impairment charge of $2.2 million for the quarter and year ended December 31, 1999. The fourth quarter 2000 charge resulted from the write-down to fair market value of one homebuilding project in Southern California which has experienced a much slower than anticipated home order pace and significantly increased sales incentive requirements.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Each of our homebuilding divisions was profitable in the 2000 fourth quarter, excluding the impact of the impairment charge, and all divisions except Phoenix recorded year-over-year improvements in operating results. Each of the improving divisions realized significant increases in average selling prices, lead by Southern California and Northern California, where average selling prices exceeded $325,000. Home gross margins also improved substantially for these divisions, increasing by more than 500 basis points in Virginia, Northern California and Nevada, and by more than 300 basis points in every other market except Southern California. These margin improvements are a direct result of our cost reduction and efficiency initiatives, increased contributions from our design centers, and our ability to increase selling prices and reduce incentives in most of our markets."
Record Mortgage Lending Results
Operating profits from the Company's mortgage lending operations were $4.5 million and $14.3 million, respectively, for the quarter and year ended December 31, 2000, representing the highest level of fourth quarter and total year operating profits from mortgage lending in the Company's history. Mortgage lending operating profits for the quarter and year ended December 31, 1999 were $3.4 million and $13.2 million, respectively.
The operating profit increases in the 2000 periods primarily resulted from higher origination fees received from record levels of mortgage loans originated and brokered for MDC home buyers. Operating profits for the 2000 fourth quarter also were favorably impacted by higher gains on sales of mortgage loans and mortgage loan servicing, compared with the fourth quarter of 1999. The Company originated or brokered $1.133 billion in mortgage loans for 81% of MDC's home buyers in 2000, compared with $1.032 billion in mortgage loans for 81% of MDC's home buyers in 1999.
Increased Balance Sheet Strength and Improved Operating Efficiency
MDC maintains one of the strongest balance sheets in the homebuilding industry, and the Company's financial position continued to strengthen throughout 2000. MDC reduced its ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at December 31, 2000 to .35 and 1.04, respectively. These ratios are not only the lowest levels achieved in MDC's history, they are among the lowest in the entire industry. The Company's strong 2000 operating results, partially offset by MDC's repurchase of 1,932,000 shares of its common stock for $30.8 million during the year, increased stockholders' equity by 24% to $482 million, or $22.76 per outstanding share, at December 31, 2000. Further, the Company ended 2000 with $343 million in liquidity, 14% higher than at December 31, 1999, although inventory levels increased throughout the year in support of the Company's expanded homebuilding operations.
During the quarter and year ended December 31, 2000, earnings before interest, taxes, depreciation, amortization and non-cash charges ("EBITDA, as adjusted") increased to $79.6 million and $254.9 million, respectively, compared with $58.3 million and $200.1 million, respectively, for the same periods in 1999. These increases in EBITDA, as adjusted, contributed to improvements in the Company's ratios of EBITDA, as adjusted, to interest incurred to 11.3 and 10.5, respectively, for the quarter and year ended December 31, 2000, compared with 9.8 and 9.4, respectively, for the comparable periods in 1999.
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 Northern California.
All earnings per share amounts discussed above are on a diluted basis.
Certain statements in this release, including those related to the Company's anticipated earnings and analysts' estimates, 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) demographic changes; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) the availability of public utilities in certain markets; (10) slow growth initiatives; (11) building moratoria; (12) governmental regulation, including the interpretation of tax, labor and environmental laws; (13) changes in consumer confidence and preferences; (14) required accounting changes; and (15) other factors over which the Company has little or no control.
M.D.C. HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands) December 31, 2000 1999 ASSETS Corporate Cash and cash equivalents $8,411 $33,637 Property and equipment, net 3,069 2,909 Deferred income taxes 31,821 21,201 Deferred debt issue costs, net 2,180 2,393 Other assets, net 8,039 6,771 53,520 66,911 Homebuilding Cash and cash equivalents 5,265 4,935 Home sales and other accounts receivable 4,713 3,496 Inventories, net Housing completed or under construction 443,512 337,029 Land and land under development 388,711 308,680 Prepaid expenses and other assets, net 51,631 58,156 893,832 712,296 Financial Services Cash and cash equivalents 439 358 Mortgage loans held in inventory 107,151 89,953 Other assets, net 6,656 7,490 114,246 97,801 Total Assets $1,061,598 $877,008 LIABILITIES Corporate Accounts payable and accrued expenses $50,843 $46,721 Income taxes payable 9,558 18,291 Senior notes, net 174,444 174,389 234,845 239,401 Homebuilding Accounts payable and accrued expenses 164,660 152,488 Line of credit 90,000 40,000 254,660 192,488 Financial Services Accounts payable and accrued expenses 15,404 5,862 Line of credit 74,459 50,234 89,863 56,096 Total Liabilities 579,368 487,985 STOCKHOLDERS' EQUITY Total Stockholders' Equity 482,230 389,023 Total Liabilities and Stockholders' Equity $1,061,598 $877,008 M.D.C. HOLDINGS, INC. Condensed Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2000 1999 2000 1999 REVENUES Homebuilding $529,790 $453,358 $1,721,559 $1,537,563 Financial Services 8,418 6,796 28,925 27,460 Corporate 293 474 1,061 2,615 Total Revenues $538,501 $460,628 $1,751,545 $1,567,638 NET INCOME Homebuilding $68,295 $47,276 $227,319 $162,258 Financial Services 4,483 3,397 14,282 13,169 Operating Profit 72,778 50,673 241,601 175,427 Corporate general and administrative expense, net (10,931) (6,432) (38,400) (26,974) Income before income taxes 61,847 44,241 203,201 148,453 Provision for income taxes (22,634) (17,697) (79,898) (59,061) Net Income $39,213 $26,544 $123,303 $89,392 EARNINGS PER SHARE Basic $1.86 $1.19 $5.74 $4.02 Diluted $1.80 $1.17 $5.62 $3.95 WEIGHTED-AVERAGE SHARES OUTSTANDING Basic 21,106 22,316 21,466 22,247 Diluted 21,789 22,629 21,947 22,656 DIVIDENDS PAID PER SHARE $.06 $.05 $.24 $.20 M.D.C. HOLDINGS, INC. Information on Business Segments (In thousands) Three Months Ended Year Ended December 31, December 31, 2000 1999 2000 1999 Homebuilding Home sales $528,024 $450,458 $1,701,108 $1,526,519 Land sales 1,159 2,377 6,641 8,114 Other revenues 607 523 13,810 2,930 Total Homebuilding Revenues 529,790 453,358 1,721,559 1,537,563 Home cost of sales 410,407 365,089 1,322,185 1,231,922 Land cost of sales 1,096 1,341 4,293 5,767 Asset impairment charges 3,400 2,242 4,200 2,242 Marketing 28,335 22,500 94,412 80,545 General and administrative 18,257 14,910 69,150 54,829 461,495 406,082 1,494,240 1,375,305 Homebuilding Operating Profit 68,295 47,276 227,319 162,258 Financial Services Interest revenues 599 832 2,313 2,844 Origination fees 4,378 3,424 13,951 12,459 Gains on sales of mortgage servicing 627 282 3,162 3,114 Gains on sales of mortgage loans, net 2,708 2,095 8,951 8,456 Mortgage servicing and other 106 163 548 587 Total Financial Services Revenues 8,418 6,796 28,925 27,460 General and administrative 3,935 3,399 14,643 14,291 Financial Services Operating Profit 4,483 3,397 14,282 13,169 Total Operating Profit 72,778 50,673 241,601 175,427 Corporate Interest and other revenues 293 474 1,061 2,615 General and administrative (11,224) (6,906) (39,461) (29,589) Net Corporate Expenses (10,931) (6,432) (38,400) (26,974) Income Before Income Taxes $61,847 $44,241 $203,201 $148,453 M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands, except per share amounts) December 31, 2000 1999 1998 BALANCE SHEET DATA Stockholders' Equity $482,230 $389,023 $298,131 Book Value Per Share Outstanding $22.76 $17.43 $13.56 Homebuilding and Corporate Debt $264,444 $214,389 $197,076 Ratio of Homebuilding and Corporate Debt to Equity .55 .55 .66 Total Capital (excluding mortgage lending debt) $746,674 $603,412 $495,207 Ratio of Homebuilding and Corporate Debt to Total Capital .35 .36 .40 Ratio of Homebuilding and Corporate Debt to EBITDA, As Adjusted 1.04 1.07 1.36 Total Liquidity $342,583 $300,539 $298,334 Total Homebuilding Inventories $832,223 $645,709 $511,284 Interest Capitalized in Inventories $19,417 $17,406 $26,332 Interest Capitalized as a Percent of Inventories 2.3% 2.7% 5.2% Total Lots Owned 11,633 10,452 8,925 Total Lots Under Option 8,131 8,063 7,729 Active Subdivisions 133 131 130 Year Ended December 31, 2000 1999 1998 OPERATING DATA EBITDA, As Adjusted Net income $123,303 $89,392 $51,568 Add: Income taxes 79,898 59,061 32,284 Interest in home and land cost of sales 22,356 30,187 34,184 Other fixed charges 3,362 1,347 953 Depreciation and amortization 21,792 17,845 20,228 Asset impairment charges 4,200 2,242 5,300 Total EBITDA, As Adjusted $254,911 $200,074 $144,517 Ratio of EBITDA, As Adjusted, to Interest Incurred 10.5 9.4 6.4 Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues 11.9% 10.8% 11.5% Interest Incurred $24,367 $21,261 $22,525 Interest Capitalized $24,367 $21,261 $22,525 Interest in Home Cost of Sales as a Percent of Home Sales Revenues 1.3% 1.9% 2.6% Operating Return on Revenues 7.0% 5.7% 4.1% Operating Return on Average Assets 12.7% 11.1% 7.5% Operating Return on Average Equity 29.1% 26.2% 20.8% M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands) Three Months Ended Year Ended December 31, December 31, 2000 1999 2000 1999 Home Sales Revenues $528,024 $450,458 $1,701,108 $1,526,519 Average Selling Price Per Home Closed $248.0 $221.4 $227.3 $211.4 Home Gross Margins 22.3% 19.0% 22.3% 19.3% Excluding Interest in Home Cost of Sales 23.5% 20.4% 23.6% 21.2% Orders For Homes, net (Units) Colorado 473 496 2,607 2,755 California 342 267 1,614 1,396 Arizona 363 256 1,849 1,455 Nevada 108 127 739 552 Virginia 124 127 765 738 Maryland 44 68 261 336 Total 1,454 1,341 7,835 7,232 Homes Closed (Units) Colorado 696 638 2,848 2,484 California 476 544 1,363 1,465 Arizona 460 400 1,554 1,699 Nevada 178 154 678 561 Virginia 230 209 727 702 Maryland 89 90 314 310 Total 2,129 2,035 7,484 7,221 December 31, December 31, 2000 1999 Backlog (Units) Colorado 1,385 1,626 California 508 257 Arizona 747 452 Nevada 198 137 Virginia 328 290 Maryland 126 179 Total 3,292 2,941 Estimated Sales Value $775,000 $600,000
SOURCE: M.D.C. Holdings, Inc.
Contact: Paris G. Reece III, Chief Financial Officer of M.D.C. Holdings,
Inc., 303-804-7706,
Associates, Inc., 212-843-8007,
Inc.
Website: https://www.richmondamerican.com/