News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to report that our operating strategy has proven successful in enabling MDC to produce the highest level of second quarter and six-month operating results in our Company's history. Our capital allocation and operating disciplines have enabled MDC to increase its return on equity to more than 29%, raise our quarterly interest coverage to more than 13 times and build one of the strongest and most liquid balance sheets in the industry. Our financial flexibility recently has been enhanced through the expansion of our unsecured credit facility to $450 million, as we welcomed Wachovia Bank, N.A. and Compass Bank as new participants. These financial achievements, together with our record backlog of 4,372 homes with a sales value of over $1.1 billion, have positioned MDC in 2001 to close more than 8,200 homes and to generate the highest levels of revenues and earnings for any of the Company's 30 years in business."
Net income for the six months ended June 30, 2001 was $68.1 million, or $2.76 per share, 37% higher than the $49.8 million, or $2.05 per share, for the same period in 2000. Net income for the 2000 six-month period included realized, non-recurring after-tax gains of $3.4 million, or $.14 per share, from the sale of certain investments by MDC's captive insurance subsidiary. Total revenues for the six months ended June 30, 2001 reached a record $928 million, representing an increase of 21% from revenues of $767 million for the first six months of 2000.
Record Homebuilding and Mortgage Lending Results
Operating profits from the Company's homebuilding operations increased to $70.0 million and $123.9 million, respectively, for the three and six months ended June 30, 2001, representing increases of 34% and 27%, respectively, compared with $52.4 million and $97.8 million, respectively, for the same periods in 2000. These profit improvements primarily resulted from significant increases in home gross margins and average selling prices (up $39,600 and $30,300, respectively, in the 2001 second quarter and first half). Home gross margins improved to 23.7% and 23.5%, respectively, for the second quarter and first half of 2001, compared with 22.2% and 21.7%, respectively, for the same periods in 2000. Home sales revenues of $497 million and $907 million for the second quarter and first half of 2001 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, "Most of our homebuilding divisions reported significantly improved operating profits in the second quarter and first six months of 2001, compared with 2000. Increased home closings in Phoenix and both Northern and Southern California, as well as substantially higher average selling prices in virtually every market, contributed to these strong profit improvements. In addition, home gross margin increases of more than 250 basis points in every market except Southern California and Arizona raised our average home gross margins before interest to almost 25%. Higher profit contributions from our design centers, increased savings from our national purchasing initiatives and the continued ability to increase selling prices in most of our markets enabled us to mitigate the impact of the rising cost of land."
Reece continued, "Looking forward to the balance of 2001, we anticipate home gross margins in the third and fourth quarters to exceed 22%, although they may not reach the record 23.7% level achieved in the 2001 second quarter."
Operating profits from the Company's mortgage lending operations were $4.7 million and $8.9 million, respectively, for the quarter and six months ended June 30, 2001, compared with $4.0 million and $6.4 million, respectively, for the same periods in 2000. The second quarter improvement in operating profits primarily resulted from increased mortgage loan origination fees and increased gains on sales of mortgage loans, partially offset by lower gains from the sale of mortgage servicing. The Company originated or brokered a record $369 million in mortgage loans for 86% of MDC's home buyers in the 2001 second quarter, compared with $275 million of mortgage loans for 79% of MDC's home buyers in the same period in 2000.
Strengthened Balance Sheet and Improved Operating Efficiency
MDC has one of the strongest balance sheets in the homebuilding industry. The Company's continued success in strengthening its balance sheet and improving its financial position is represented by the achievement of ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at June 30, 2001 of .36 and 1.14, respectively. Both of these ratios are among the lowest in the industry. In addition, the Company's strong operating results over the past year increased stockholders' equity by 38% to $572 million, or $23.61 per outstanding share, at June 30, 2001. Further, notwithstanding higher inventory levels needed to support the Company's expanded homebuilding operations, the Company ended the second quarter of 2001 with liquidity of $350 million, 25% higher than at June 30, 2000.
Second quarter and first half 2001 earnings before interest, taxes, depreciation and amortization ("EBITDA") increased to $76.4 million and $136.4 million, respectively, compared with $60.0 million and $108.8 million, respectively, for the same periods in 2000. These EBITDA increases raised the Company's 2001 second quarter and first half ratios of EBITDA to interest incurred to 13.3 and 11.6, respectively, compared with 10.5 and 10.4, respectively, for the comparable 2000 periods.
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, Phoenix, Tucson and Colorado Springs; and among the top ten homebuilders in suburban Maryland, Las Vegas, Southern California and Northern California.
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) public utility availability; (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)
June 30, December 31,
2001 2000
ASSETS
Corporate
Cash and cash equivalents $25,313 $8,411
Property and equipment, net 3,113 3,069
Deferred income taxes 35,639 31,821
Deferred debt issue costs, net 2,066 2,180
Other assets, net 7,584 8,039
73,715 53,520
Homebuilding
Cash and cash equivalents 5,826 5,265
Home sales and other accounts receivable 7,670 4,713
Inventories, net
Housing completed or under construction 562,861 443,512
Land and land under development 397,704 388,711
Prepaid expenses and other assets, net 51,727 51,631
1,025,788 893,832
Financial Services
Cash and cash equivalents 449 439
Mortgage loans held in inventory 116,216 107,151
Other assets, net 3,601 6,656
120,266 114,246
Total Assets $1,219,769 $1,061,598
LIABILITIES
Corporate
Accounts payable and accrued expenses $46,676 $50,843
Income taxes payable 2,021 9,558
Senior notes, net 174,473 174,444
223,170 234,845
Homebuilding
Accounts payable and accrued expenses 186,582 164,660
Line of credit 147,000 90,000
333,582 254,660
Financial Services
Accounts payable and accrued expenses 21,313 15,404
Line of credit 69,807 74,459
91,120 89,863
Total Liabilities 647,872 579,368
STOCKHOLDERS' EQUITY
Total Stockholders' Equity 571,897 482,230
Total Liabilities and Stockholders' Equity $1,219,769 $1,061,598
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,
2001 2000 2001 2000
REVENUES
Homebuilding $499,010 $411,942 $910,106 $752,951
Financial Services 8,998 7,430 17,339 13,304
Corporate 227 275 512 550
Total Revenues $508,235 $419,647 $927,957 $766,805
NET INCOME
Homebuilding $69,986 $52,358 $123,917 $97,829
Financial Services 4,726 3,980 8,930 6,429
Operating Profit 74,712 56,338 132,847 104,258
Corporate general and
administrative
expense, net (11,283) (8,240) (21,404) (16,519)
Income before income
taxes 63,429 48,098 111,443 87,739
Provision for income
taxes (24,586) (19,289) (43,317) (37,909)
Net Income $38,843 $28,809 $68,126 $49,830
EARNINGS PER SHARE
Basic $1.61 $1.22 $2.86 $2.08
Diluted $1.56 $1.20 $2.76 $2.05
WEIGHTED-AVERAGE SHARES
OUTSTANDING
Basic 24,062 23,625 23,820 23,969
Diluted 24,832 24,004 24,665 24,292
DIVIDENDS PAID PER SHARE $.07 $.06 $.13 $.12
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
Homebuilding
Home sales $497,406 $407,459 $907,126 $736,910
Land sales 413 3,050 759 4,543
Other revenues 1,191 1,433 2,221 11,498
Total Homebuilding
Revenues 499,010 411,942 910,106 752,951
Home cost of sales 379,572 317,067 694,009 576,894
Land cost of sales 194 1,356 457 2,355
Asset impairment
charges -- 800 -- 800
Marketing 27,064 23,163 49,917 41,847
General and
administrative 22,194 17,198 41,806 33,226
429,024 359,584 786,189 655,122
Homebuilding
Operating Profit 69,986 52,358 123,917 97,829
Financial Services
Interest revenues 914 571 1,455 1,063
Origination fees 4,467 3,242 8,152 6,038
Gains on sales of
mortgage servicing 719 1,372 2,402 1,829
Gains on sales of
mortgage loans, net 2,936 2,092 5,510 4,092
Mortgage servicing and
other (38) 153 (180) 282
Total Financial
Services Revenues 8,998 7,430 17,339 13,304
General and
administrative 4,272 3,450 8,409 6,875
Financial Services
Operating Profit 4,726 3,980 8,930 6,429
Total Operating Profit 74,712 56,338 132,847 104,258
Corporate
Interest and other
revenues 227 275 512 550
General and
administrative (11,510) (8,515) (21,916) (17,069)
Net Corporate
Expenses (11,283) (8,240) (21,404) (16,519)
Income Before Income
Taxes $63,429 $48,098 $111,443 $87,739
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
June 30, December 31, June 30,
2001 2000 2000
BALANCE SHEET DATA
Stockholders' Equity $571,897 $482,230 $414,832
Book Value Per Share Outstanding $23.61 $20.69 $17.66
Homebuilding and Corporate Debt $321,473 $264,444 $264,416
Ratio of Homebuilding and
Corporate Debt to Equity .56 .55 .64
Total Capital (excluding mortgage
lending debt) $893,370 $746,674 $679,248
Ratio of Homebuilding and Corporate
Debt to Total Capital .36 .35 .39
Ratio of Homebuilding and Corporate
Debt (net of cash) to Total Capital .34 .34 .37
Ratio of Homebuilding and Corporate
Debt to EBITDA* 1.14 1.04 1.20
Ratio of Homebuilding and Corporate
Debt (net of cash) to EBITDA* 1.03 .98 1.11
Total Liquidity $350,201 $342,583 $280,939
Total Homebuilding Inventories $960,565 $832,223 $762,800
Interest Capitalized in
Inventories $19,503 $19,417 $18,037
Interest Capitalized as a Percent
of Inventories 2.0% 2.3% 2.4%
Total Lots Owned 12,439 11,633 10,400
Total Lots Under Option 7,746 8,131 8,314
Homes Under Construction
(including models) 3,999 3,230 3,724
Active Subdivisions 137 133 129
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
OPERATING DATA
EBITDA
Net income $38,843 $28,809 $68,126 $49,830
Add:
Income taxes 24,586 19,289 43,317 37,909
Interest in home
and land cost of
sales 5,994 5,289 11,673 9,861
Other fixed
charges 827 895 1,703 1,666
Depreciation and
amortization 6,165 4,915 11,541 8,691
Asset impairment
charges -- 800 -- 800
Total EBITDA $76,415 $59,997 $136,360 $108,757
Ratio of EBITDA to
Interest Incurred 13.3 10.5 11.6 10.4
Homebuilding and Corporate
SG&A as a Percent of
Home Sales Revenues 12.2% 12.0% 12.5% 12.5%
Interest Incurred $5,727 $5,711 $11,759 $10,492
Interest Capitalized $5,727 $5,711 $11,759 $10,492
Interest in Home Cost
of Sales as a Percent
of Home Sales Revenues 1.2% 1.2% 1.3% 1.3%
Operating Return on
Revenues 7.6% 6.9% 7.3% 6.5%
Operating Return on
Average Assets* -- -- 13.0% 11.3%
Operating Return on
Average Equity* -- -- 29.1% 26.5%
*Rolling 12 months ended
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Home Sales Revenues $497,406 $407,459 $907,125 $736,910
Average Selling Price
Per Home Closed $258.5 $218.9 $246.3 $216.0
Home Gross Margins 23.7% 22.2% 23.5% 21.7%
Excluding Interest in
Home Cost of Sales 24.9% 23.4% 24.8% 23.0%
Orders For Homes, Net (Units)
Colorado 639 615 1,607 1,466
California 414 445 855 857
Arizona 534 456 1,266 913
Nevada 162 199 430 432
Virginia 144 186 364 464
Maryland 80 71 178 157
Total 1,973 1,972 4,700 4,289
Homes Closed (Units)
Colorado 671 798 1,300 1,450
California 375 299 615 518
Arizona 513 364 1,011 689
Nevada 169 166 328 288
Virginia 136 158 306 322
Maryland 60 76 123 145
Total 1,924 1,861 3,683 3,412
June 30, December 31, June 30,
2001 2000 2000
Backlog (Units)
Colorado 1,692 1,385 1,642
California 748 508 596
Arizona 1,065 747 676
Nevada 300 198 281
Virginia 386 328 432
Maryland 181 126 191
Total 4,372 3,292 3,818
Backlog Estimated
Sales Value $1,110,000 $775,000 $840,000
SOURCE: M.D.C. Holdings, Inc.
Contact: Paris G. Reece III, Chief Financial Officer of M.D.C. Holdings,
Inc., +1-303-804-7706,
Associates, Inc., +1-212-843-8007,
Holdings, Inc.
Website: https://www.richmondamerican.com/
