News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to report the strongest first quarter operating performance in the Company's 29-year history, representing the sixteenth consecutive quarter of year-over-year increases in operating results. The continued success of our operating strategy has enabled us to achieve several important milestones during the first quarter of 2001, which include exceeding $1 billion sales value in backlog, approaching a 12-month return on assets of 13% and achieving a return on equity of almost 30%. We also are pleased that the rating agencies continue to acknowledge the soundness of our operating strategy and our position as an industry leader in financial performance, capital stability and interest coverage. After having received ratings upgrades from all three major rating agencies between December 1999 and September 2000, Standard & Poor's recently upgraded its outlook for MDC to 'positive,' and Fitch IBCA, Duff & Phelps has assigned an investment grade rating of 'BBB-' to the Company's senior debt."
Record Homebuilding and Mortgage Lending Results
Operating profits from the Company's homebuilding operations for the first quarter of 2001 increased to $53.9 million. These profits are the highest for any first quarter in the Company's history, and 49% higher than homebuilding profits for the same period in 2000, excluding the investment gains discussed above of $9.3 million on a pre-tax basis. This increase in operating profits primarily resulted from a 13% increase in first quarter home closings to 1,759 units, a $20,500 higher average selling price per home closed and a 220 basis point improvement in home gross margins.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "We realized substantially improved operating results from each of our major homebuilding divisions. Our home closings in the 2001 first quarter increased 53% and 30%, respectively, over the 2000 first quarter in Arizona and Las Vegas, and average selling prices were higher by more than $27,000 in each of our other markets. In addition, we improved our home gross margins by more than 150 basis points in every market except Arizona, as a result of our disciplined approach to controlling construction costs, our continued ability to raise selling prices as a partial offset to rising land costs, the continued improvement in design center revenues and margins, and lower incentive costs."
The Company's mortgage lending operations reported operating profits of $4.2 million for the three months ended March 31, 2001, compared with $2.4 million for the same period in 2000. The significant improvement in operating profits primarily was due to a $1.2 million increase in gains from sales of mortgage loan servicing in the first quarter of 2001. In addition, mortgage loan origination fees in the 2001 first quarter were $3.7 million, compared with $2.8 million in the 2000 first quarter. The Company originated or brokered a record $293 million in mortgage loans for 83% of the MDC's home buyers in the 2001 first quarter, compared with $224 million in mortgage loans for 80% of MDC's home buyers for the same period in 2000.
Strengthened Balance Sheet and Improved Operating Efficiency
The Company continued to strengthen its balance sheet and improve the efficiency of its operations in the first quarter of 2001. This success is represented by the achievement of ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at March 31, 2001 of .35 and 1.07, respectively. In addition, MDC improved its returns on average assets and average equity for the 12 months ended March 31, 2001 to 12.9% and 29.2%, respectively. Each of these ratios and returns rank among the best in the homebuilding industry. The Company's strong operating results over the past year have increased MDC's stockholders equity by 34% to $522 million, or $22.04 per outstanding share, at March 31, 2001. Further, notwithstanding higher inventory levels needed to support the Company's expanded homebuilding operations, the Company ended the first quarter 2001 with liquidity of $341 million, 30% higher than at March 31, 2000.
First quarter 2001 earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 23% to $59.9 million, compared with $48.8 million for the same period in 2000. This EBITDA increase enabled the Company to maintain an EBITDA interest coverage of approximately ten times for the quarter and 12 months ended March 31, 2001, which is second highest among all the major public homebuilders.
MDC, whose subsidiaries build homes under the name "Richmond American Homes," is one of the largest homebuilders in the United States. The Company's wholly owned subsidiary HomeAmerican Mortgage Corporation provides mortgage financing primarily for MDC's home buyers. MDC is a major regional homebuilder with a significant presence in some of the country's best housing markets. Richmond American Homes is the largest homebuilder in metropolitan Denver; among the top five homebuilders in northern Virginia, suburban Maryland, Phoenix, Tucson and Colorado Springs; and among the top ten homebuilders in Las Vegas, Southern California and Northern California.
All earnings per share amounts discussed above are on a diluted basis.
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2001 2000
ASSETS
Corporate
Cash and cash equivalents $9,724 $8,411
Property and equipment, net 3,286 3,069
Deferred income taxes 35,684 31,821
Deferred debt issue costs, net 2,123 2,180
Other assets, net 7,415 8,039
58,232 53,520
Homebuilding
Cash and cash equivalents 5,219 5,265
Home sales and other accounts receivable 13,732 4,713
Inventories, net
Housing completed or under construction 486,616 443,512
Land and land under development 386,307 388,711
Prepaid expenses and other assets, net 57,604 51,631
949,478 893,832
Financial Services
Cash and cash equivalents 410 439
Mortgage loans held in inventory 112,560 107,151
Other assets, net 6,674 6,656
119,644 114,246
Total Assets $1,127,354 $1,061,598
LIABILITIES
Corporate
Accounts payable and accrued expenses $37,978 $50,843
Income taxes payable 22,548 9,558
Senior notes, net 174,458 174,444
234,984 234,845
Homebuilding
Accounts payable and accrued expenses 168,315 164,660
Line of credit 110,000 90,000
278,315 254,660
Financial Services
Accounts payable and accrued expenses 27,400 15,404
Line of credit 64,693 74,459
92,093 89,863
Total Liabilities 605,392 579,368
STOCKHOLDERS' EQUITY
Total Stockholders' Equity 521,962 482,230
Total Liabilities and Stockholders' Equity $1,127,354 $1,061,598
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended
March 31,
2001 2000
REVENUES
Homebuilding $411,096 $341,009
Financial Services 8,341 5,874
Corporate 285 275
Total Revenues $419,722 $347,158
NET INCOME
Homebuilding $53,931 $45,471
Financial Services 4,204 2,449
Operating Profit 58,135 47,920
Corporate general and administrative
expense, net (10,121) (8,279)
Income before income taxes 48,014 39,641
Provision for income taxes (18,731) (18,620)
Net Income $29,283 $21,021
EARNINGS PER SHARE
Basic $1.24 $.86
Diluted $1.20 $.85
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic 23,575 24,321
Diluted 24,489 24,587
DIVIDENDS PAID PER SHARE $.06 $.06
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months
Ended March 31,
2001 2000
Homebuilding
Home sales $409,720 $329,451
Land sales 346 1,493
Other revenues 1,030 10,065
Total Homebuilding Revenues 411,096 341,009
Home cost of sales 314,437 259,827
Land cost of sales 263 999
Marketing 22,853 18,684
General and administrative 19,612 16,028
357,165 295,538
Homebuilding Operating Profit 53,931 45,471
Financial Services
Interest revenues 541 492
Origination fees 3,685 2,796
Gains on sales of mortgage servicing 1,683 457
Gains on sales of mortgage loans, net 2,574 2,000
Mortgage servicing and other (142) 129
Total Financial Services Revenues 8,341 5,874
General and administrative 4,137 3,425
Financial Services Operating Profit 4,204 2,449
Total Operating Profit 58,135 47,920
Corporate
Interest and other revenues 285 275
General and administrative (10,406) (8,554)
Net Corporate Expenses (10,121) (8,279)
Income Before Income Taxes $48,014 $39,641
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
March 31, December 31, March 31,
2001 2000 2000
BALANCE SHEET DATA
Stockholders' Equity $521,962 $482,230 $390,904
Book Value Per Share Outstanding $22.04 $20.69 $16.49
Homebuilding and Corporate Debt $284,458 $264,444 $234,402
Ratio of Homebuilding and
Corporate Debt to Equity .54 .55 .60
Total Capital (excluding
mortgage lending debt) $806,420 $746,674 $625,306
Ratio of Homebuilding and
Corporate Debt to Total Capital .35 .35 .37
Ratio of Homebuilding and
Corporate Debt to EBITDA 1.07 1.04 1.09
Total Liquidity $341,380 $342,583 $263,173
Total Homebuilding Inventories $872,923 $832,223 $694,603
Interest Capitalized in
Inventories $19,770 $19,417 $17,615
Interest Capitalized as a
Percent of Inventories 2.3% 2.3% 2.5%
Total Lots Owned 11,453 11,633 10,340
Total Lots Under Option 9,703 8,131 8,727
Homes Under Construction 3,459 3,230 3,399
Active Subdivisions 138 133 128
Three Months Ended
March 31,
2001 2000
OPERATING DATA
EBITDA
Net Income $29,283 $21,021
Add:
Income taxes 18,731 18,620
Interest in home and
land cost of sales 5,679 4,572
Other fixed charges 876 771
Depreciation and
amortization 5,376 3,776
Total EBITDA $59,945 $48,760
Ratio of EBITDA, to Interest
Incurred 9.9 10.2
Homebuilding and Corporate
SG&A as a Percent of
Home Sales Revenues 12.9% 13.1%
Interest Incurred $6,032 $4,781
Interest Capitalized $6,032 $4,781
Interest in Home Cost of
Sales as a Percent of
Home Sales Revenues 1.3% 1.4%
Operating Return on Revenues 7.0% 6.1%
Operating Return on Average Assets* 12.9% 11.5%
Operating Return on Average Equity* 29.2% 26.9%
*Rolling 12 months Ended March 31
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended
March 31,
2001 2000
Home Sales Revenues $409,720 $329,451
Average Selling Price Per Home Closed $232.9 $212.4
Home Gross Margins 23.3% 21.1%
Excluding Interest in
Home Cost of Sales 24.6% 22.5%
Orders For Homes, net (Units)
Colorado 968 851
California 441 412
Arizona 732 457
Nevada 268 233
Virginia 220 278
Maryland 98 86
Total 2,727 2,317
Homes Closed (Units)
Colorado 629 652
California 240 219
Arizona 498 325
Nevada 159 122
Virginia 170 164
Maryland 63 69
Total 1,759 1,551
March 31, December 31, March 31,
2001 2000 2000
Backlog (Units)
Colorado 1,724 1,385 1,825
California 709 508 450
Arizona 1,044* 747 584
Nevada 307 198 248
Virginia 378 328 404
Maryland 161 126 196
Total 4,323 3,292 3,707
Backlog Estimated Sales Value $1,075,000 $775,000 $775,000
*In February 2001, MDC acquired certain assets of KE&G, LLC, a Tucson
area homebuilder, including 63 homes in backlog, 17 of which closed and
46 of which were in backlog at March 31, 2001.
SOURCE: M.D.C. Holdings, Inc.
Contact: Paris G. Reece III, Chief Financial Officer, 303-804-7706,
212-843-8007,
Website: https://www.richmondamerican.com/
