News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "Our nation and our industry faced tremendous challenges in 2001. Our Company successfully responded to these challenges, producing the best annual operating results in our 30-year history, concluded by the Company's most profitable quarter ever. As we reflect on the accomplishments of the past year, we measure our success by much more than just the bottom line. Our 2001 operating return on average assets of over 13% and EBIT return on capital of almost 34% exemplify a number of measures of MDC's operating performance that are among the best of our peers. While increasing our home closing volume by 9% and growing our top line revenues by more than 21%, we continued to strengthen our balance sheet and increase our financial flexibility. We closed the year 2001 with more than $490 million in liquidity, with no borrowings outstanding on our $450 million unsecured line of credit and no off-balance-sheet or joint venture debt. As a result, our leverage and interest coverage ratios improved substantially to levels that continue to rank among the strongest in the homebuilding industry. Our performance has been rewarded in 2001 with upgrades in the ratings of our public debt, including the assignment of an investment grade rating by Fitch and the recent upgrade to 'Ba1' by Moody's Investors Service, as well as the assignment of a 'positive' outlook by Standard & Poor's."
Mizel continued, "Our accomplishments in 2001 are attributable to a disciplined operating strategy that we have implemented successfully and refined continually over the last decade. With a conservatively managed supply of lots in some of our country's strongest homebuilding markets, we believe that we can leverage our leading or significant market shares to expand within many of those markets, even when they are contracting. We also have the financial flexibility to pursue strategic and opportunistic expansion into new markets in order to facilitate the continued quality growth of our enterprise. With our strong balance sheet, extensive liquidity and industry-leading credit statistics, we are positioned to pursue growth opportunities that will further our primary objective of maximizing shareowner value."
Highest Homebuilding Profits in Company History
Operating profits from the Company's homebuilding operations reached record levels, increasing to $83.4 million and $279.3 million, respectively, for the quarter and year ended December 31, 2001, compared with $68.3 million and $227.3 million, respectively, for the same periods in 2000. These profit improvements primarily resulted from record home closings and increased average selling prices per home closed, which rose to $274,800 and $254,100, respectively, for the quarter and year ended December 31, 2001, compared with $248,000 and $227,300, respectively, for the same periods in 2000. Home gross margins were 22.2% and 23.2%, respectively, for the quarter and year ended December 31, 2001, compared with 22.3%, for the same periods in 2000.
Operating profits for the quarter and year ended December 31, 2001 were impacted adversely by non-cash, pre-tax asset impairment charges of $4.1 million and $7.0 million, respectively, compared with $3.4 million and $4.2 million, respectively, for the quarter and year ended December 31, 2000. The fourth quarter 2001 charge resulted from the write-down to fair market value of one homebuilding project in Southern California and one homebuilding project in the San Francisco Bay area. With respect to each of these projects, the Company has experienced a much slower than anticipated home order pace, significantly increased sales incentive requirements and, in the case of the Bay area project, substantial reductions in home selling prices by competing projects.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "All of our divisions were profitable in the 2001 fourth quarter and total year, with most reporting improved year-over-year operating results. Contributing to our record performance in the 2001 fourth quarter were double-digit percentage increases in home closings in all markets except the Mid-Atlantic and Southern California, as well as average selling price increases from the 2000 fourth quarter of more than $25,000 in every market but Colorado and Tucson."
Record Mortgage Lending Results
Operating profits from the Company's mortgage lending operations were $6.4 million and $21.1 million, respectively, for the quarter and year ended December 31, 2001, representing the highest level of quarterly 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, 2000 were $4.5 million and $14.3 million, respectively.
The operating profit increases in the 2001 periods primarily resulted from higher origination fees received from record levels of mortgage loans originated and brokered for MDC home buyers, as well as larger gains on sales of mortgage loans and mortgage loan servicing. The Company originated or brokered $1.433 billion in mortgage loans for 85% of MDC's home buyers in 2001, compared with $1.125 billion in mortgage loans for 81% of MDC's home buyers in 2000.
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 2001. MDC reduced its ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA, as adjusted (as defined below), net of cash, at December 31, 2001 to .17 and .43, respectively. The Company's strong 2001 operating results increased stockholders' equity by 36% to $654 million, or $24.59 per outstanding share, at December 31, 2001, compared with December 31, 2000. Further, the Company ended 2001 with $492 million in liquidity, 44% higher than at December 31, 2000.
During the quarter and year ended December 31, 2001, earnings before interest, taxes, depreciation, amortization and non-cash charges ("EBITDA, as adjusted") increased to $98.8 million and $318.0 million, respectively, compared with $79.6 million and $254.9 million, respectively, for the same periods in 2000. These increases in EBITDA, as adjusted, contributed to improvements in the Company's ratios of EBITDA, as adjusted, to interest incurred to 20.3 and 14.1, respectively, for the quarter and year ended December 31, 2001, compared with 11.3 and 10.5, respectively, for the comparable periods in 2000.
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. Richmond American Homes is the largest homebuilder in Colorado; among the top five homebuilders in northern Virginia, Phoenix and Tucson; and among the top ten homebuilders in suburban Maryland, Las Vegas, Southern California and Northern California.
Certain statements in this release, including those related to long-term operating objectives, 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) 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.
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31,
2001 2000
ASSETS
Corporate
Cash and cash equivalents $31,322 $8,411
Property and equipment, net 2,723 3,069
Deferred income taxes 30,081 31,821
Deferred debt issue costs, net 1,947 2,180
Other assets, net 7,597 8,039
73,670 53,520
Homebuilding
Cash and cash equivalents 4,760 5,265
Home sales and other accounts receivable 2,621 4,713
Inventories, net
Housing completed or under construction 456,752 443,512
Land and land under development 450,502 388,711
Prepaid expenses and other assets, net 49,544 51,631
964,179 893,832
Financial Services
Cash and cash equivalents 518 439
Mortgage loans held in inventory 144,971 107,151
Other assets, net 7,618 6,656
153,107 114,246
Total Assets $1,190,956 $1,061,598
LIABILITIES
Corporate
Accounts payable and accrued expenses $61,135 $50,843
Income taxes payable 9,953 9,558
Senior notes, net 174,503 174,444
245,591 234,845
Homebuilding
Accounts payable and accrued expenses 174,955 164,660
Line of credit -- 90,000
174,955 254,660
Financial Services
Accounts payable and accrued expenses 16,937 15,404
Line of credit 99,642 74,459
116,579 89,863
Total Liabilities 537,125 579,368
STOCKHOLDERS' EQUITY
Total Stockholders' Equity 653,831 482,230
Total Liabilities and Stockholders' Equity $1,190,956 $1,061,598
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,
2001 2000 2001 2000
REVENUES
Homebuilding $665,230 $529,790 $2,086,344 $1,721,559
Financial Services 11,146 8,418 38,566 28,925
Corporate 229 293 964 1,061
Total Revenues $676,605 $538,501 $2,125,874 $1,751,545
NET INCOME
Homebuilding $83,436 $68,295 $279,267 $227,319
Financial Services 6,436 4,483 21,116 14,282
Operating Profit 89,872 72,778 300,383 241,601
Corporate general
and administrative
expense, net (12,718) (10,931) (44,996) (38,400)
Income before
income taxes 77,154 61,847 255,387 203,201
Provision for
income taxes (30,090) (22,634) (99,672) (79,898)
Net Income $47,064 $39,213 $155,715 $123,303
EARNINGS PER SHARE
Basic $1.77 $1.54 $5.89 $4.75
Diluted $1.73 $1.49 $5.72 $4.64
WEIGHTED-AVERAGE SHARES
OUTSTANDING
Basic 26,562 25,538 26,421 25,974
Diluted 27,226 26,364 27,232 26,556
DIVIDENDS PAID PER SHARE $.07 $.06 $.27 $.24
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Homebuilding
Home sales $663,686 $528,024 $2,076,807 $1,701,108
Land sales 8 1,159 2,909 6,641
Other revenues 1,536 607 6,628 13,810
Total Homebuilding
Revenues 665,230 529,790 2,086,344 1,721,559
Home cost of sales 516,626 410,407 1,594,412 1,322,185
Land cost of sales 2 1,096 1,105 4,293
Asset impairment
charges 4,141 3,400 7,041 4,200
Marketing 36,096 28,335 114,129 94,412
General and
administrative 24,929 18,257 90,390 69,150
581,794 461,495 1,807,077 1,494,240
Homebuilding
Operating Profit 83,436 68,295 279,267 227,319
Financial Services
Interest revenues 1,188 599 3,544 2,313
Origination fees 5,002 4,378 17,572 13,951
Gains on sales of
mortgage servicing 425 627 3,288 3,162
Gains on sales of
mortgage loans, net 4,285 2,708 13,923 8,951
Mortgage servicing
and other 246 106 239 548
Total Financial
Services Revenues 11,146 8,418 38,566 28,925
General and
administrative 4,710 3,935 17,450 14,643
Financial Services
Operating Profit 6,436 4,483 21,116 14,282
Total Operating Profit 89,872 72,778 300,383 241,601
Corporate
Interest and other
revenues 229 293 964 1,061
General and
administrative (12,947) (11,224) (45,960) (39,461)
Net Corporate Expenses (12,718) (10,931) (44,996) (38,400)
Income Before Income
Taxes $77,154 $61,847 $255,387 $203,201
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
December 31,
2001 2000 1999
BALANCE SHEET DATA
Stockholders' Equity $653,831 $482,230 $389,023
Book Value Per Share Outstanding $24.59 $18.81 $14.40
Homebuilding and Corporate
Debt $174,503 $264,444 $214,389
Ratio of Homebuilding and
Corporate Debt to Equity .27 .55 .55
Total Capital (excluding
mortgage lending debt) $828,334 $746,674 $603,412
Ratio of Homebuilding and
Corporate Debt to Total Capital .21 .35 .36
Ratio of Homebuilding and
Corporate Debt to Total Capital
(net of cash) .17 .34 .31
Ratio of Homebuilding and
Corporate Debt to EBITDA,
as adjusted .55 1.04 1.07
Ratio of Homebuilding and
Corporate Debt (net of cash)
to EBITDA, as adjusted .43 .98 .88
Total Liquidity $491,770 $342,583 $300,539
Total Homebuilding Inventories $907,254 $832,223 $645,709
Interest Capitalized
in Inventories $17,358 $19,417 $17,406
Interest Capitalized as a
Percent of Inventories 1.9% 2.3% 2.7%
Total Lots Owned 13,524 11,633 10,452
Total Lots Under Option 6,059 8,131 8,063
Homes Under Construction
(including models) 2,783 3,230 2,977
Active Subdivisions 137 133 131
Year Ended December 31,
2001 2000 1999
OPERATING DATA
EBITDA, as adjusted
Net income $155,715 $123,303 $89,392
Add:
Income taxes 99,672 79,898 59,061
Interest in home and
land cost of sales 24,557 22,356 30,187
Other fixed charges 3,618 3,362 1,347
Depreciation and
amortization 27,445 21,792 17,845
Asset impairment charges 7,041 4,200 2,242
Total EBITDA, as adjusted $318,048 $254,911 $200,074
Ratio of EBITDA, as adjusted,
to Interest Incurred 14.1 10.5 9.4
Homebuilding and Corporate
SG&A as a Percent of
Home Sales Revenues 12.1% 11.9% 10.8%
Interest Incurred $22,498 $24,367 $21,261
Interest Capitalized $22,498 $24,367 $21,261
Interest in Home Cost of Sales
as a Percent of Home Sales
Revenues 1.2% 1.3% 1.9%
Operating Return on Revenues 7.3% 7.0% 5.7%
Operating Return on Average Assets 13.3% 12.7% 11.1%
Operating Return on Average Equity 27.4% 29.1% 26.2%
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Home Sales Revenues $663,686 $528,024 $2,076,807 $1,701,108
Average Selling Price
Per Home Closed $274.8 $248.0 $254.1 $227.3
Home Gross Margins 22.2% 22.3% 23.2% 22.3%
Excluding Interest
in Home Cost of Sales 23.2% 23.5% 24.4% 23.6%
Orders For Homes, net (Units)
Colorado 515 473 2,616 2,607
California 302 342 1,519 1,614
Arizona 339 363 2,038 1,849
Nevada 96 108 687 739
Virginia 70 124 551 765
Maryland 51 44 290 261
Total 1,373 1,454 7,701 7,835
Homes Closed (Units)
Colorado 818 696 2,806 2,848
California 489 476 1,537 1,363
Arizona 601 460 2,223 1,554
Nevada 211 178 704 678
Virginia 232 230 645 727
Maryland 64 89 259 314
Total 2,415 2,129 8,174 7,484
December 31, December 31,
2001 2000
Backlog (Units)
Colorado 1,195 1,385
California 490 508
Arizona 625 747
Nevada 181 198
Virginia 234 328
Maryland 157 126
Total 2,882 3,292
Backlog Estimated
Sales Value $760,000 $775,000
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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., +1-212-843-8000,
Holdings, Inc.
Website: https://www.richmondamerican.com/
