News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to report another quarter of significant growth and profitability, exceeding consensus analyst estimates by 10%. We particularly are proud of our home orders in the quarter, which were 40% higher than in the second quarter of 2001, enabling us to achieve an all-time high quarter-end backlog of almost 5,000 homes with a sales value of $1.3 billion at June 30th. These increased orders reflect the 20% increase in our active subdivisions, as well as the Company's success in getting model homes open in our new communities in Colorado. We also have benefited from the strength in demand for new homes in growth markets, which has been driven by historically low mortgage rates and a general constraint on the supply of new homes."
Mizel continued, "Equally gratifying to us are the strides we made during this period to facilitate top line and bottom line growth of our Company in 2003 and beyond. We have continued organic expansion in our existing markets, and we have extended our operating model to include the opportunistic entry into new markets. Our recent acquisitions from W.L. Homes LLC (d/b/a John Laing Homes) in Las Vegas and Northern Virginia have accelerated our growth in these markets. In April, we entered the Salt Lake City market by acquiring assets and hiring employees from John Laing Homes as well. Further, our newly formed Dallas/Fort Worth division already has acquired control of over 300 lots in three subdivisions in that market. These accomplishments should contribute to an additional 20% increase in our active subdivision count by the end of 2002, positioning us to close more than 10,000 homes and generate record revenues and profitability in 2003. This anticipated growth will mark the first step toward the achievement of our goal of doubling the size of our Company in five years or less."
Net income for the six months ended June 30, 2002 was $66.7 million, or $2.39 per share, on $966 million in total revenues. Net income for the first six months of 2001 was $68.1 million, or $2.51 per share, on total revenues of $928 million.
Strong Homebuilding and Mortgage Lending Results
Operating profits from the Company's homebuilding operations for the quarter and six months ended June 30, 2002 were $61.2 million and $119.1 million, respectively, on home sales revenues of $497 million and $942 million, respectively. Homebuilding operating profits for the quarter and six months ended June 30, 2001 were $70.0 million and $123.9 million, respectively, on home sales revenues of $497 million and $907 million, respectively. For the second quarter and first six months of 2002, the Company's average selling prices were $254,000 and $259,500, respectively, and home gross margins were 22.5% and 22.9%, respectively. Average selling prices were $258,500 and $246,300, respectively, for the second quarter and first six months of 2001, and the Company posted home gross margins of 23.7% and 23.5%, respectively.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Our home gross margins for the three and six months ended June 30, 2002 were impacted adversely by the rising cost of land, combined with minimal home price increases and higher incentives on homes sold in most of our markets during the last half of 2001 and the beginning of 2002. Additionally, we realized lower margins on homes closed in subdivisions acquired from John Laing Homes. These factors will continue to adversely affect MDC's home gross margins for the balance of this year. Over the last several months, we have experienced a greater degree of pricing power and lower incentives offered with respect to homes sold in all of our markets. These improvements have enabled us to keep pace with continued increases in the cost of buildable lots."
Operating profits from the Company's mortgage lending operations were $5.2 million and $10.2 million, respectively, for the quarter and six months ended June 30, 2002, compared with profits of $4.7 million and $8.9 million, respectively, for the same periods in 2001. The profit improvements in 2002 primarily resulted from increased gains on sales of mortgage loans.
Strengthened Balance Sheet and Improved Operating Efficiency
The Company continued to strengthen its balance sheet and improve the efficiency of its operations in the second quarter of 2002. This success is represented by the achievement of ratios of homebuilding and corporate debt-to-capital and debt-to-EBITDA (as defined below) at June 30, 2002 of .32 and 1.09, respectively. Both of these ratios are among the lowest in the industry. In addition, the Company's strong operating results over the past year have increased MDC's stockholders' equity by 28% to $730 million, or $27.01 per outstanding share, at June 30, 2002. Further, the Company ended the second quarter of 2002 with liquidity of $308 million.
Second quarter and first half 2002 earnings before interest, taxes, depreciation and amortization ("EBITDA") was $67.2 million and $130.9 million, respectively, compared with $76.4 million and $136.4 million, respectively, for the same periods in 2001. Reduced interest incurred, primarily resulting from lower interest rates, raised the Company's 2002 second quarter and first half ratios of EBITDA to interest incurred to 13.7 and 14.6, respectively, from 13.3 and 11.6, respectively, for the comparable 2001 periods.
MDC, whose subsidiaries build homes under the name "Richmond American Homes," is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's homebuyers, 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 Colorado; among the top five homebuilders in Northern Virginia, Phoenix, Tucson and Las Vegas; among the top ten homebuilders in suburban Maryland, Northern California and Southern California; and has recently entered the Salt Lake City and Dallas/Fort Worth markets.
Certain statements in this release 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) the availability and cost of insurance covering risks associated with our business; (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)
June 30, December 31,
2002 2001
ASSETS
Corporate
Cash and cash equivalents $16,150 $31,322
Property and equipment, net 9,770 2,723
Deferred income taxes 29,669 30,081
Deferred debt issue costs, net 1,822 1,947
Other assets, net 6,016 7,597
63,427 73,670
Homebuilding
Cash and cash equivalents 5,776 4,760
Home sales and other accounts receivable 11,700 2,621
Inventories, net
Housing completed or under construction 587,568 456,752
Land and land under development 582,385 450,502
Prepaid expenses and other assets, net 57,186 49,544
1,244,615 964,179
Financial Services
Cash and cash equivalents 695 518
Mortgage loans held in inventory 104,103 144,971
Other assets, net 4,073 7,618
108,871 153,107
Total Assets $1,416,913 $1,190,956
LIABILITIES
Corporate
Accounts payable and accrued expenses $50,972 $61,135
Income taxes payable 11,248 9,953
Senior notes, net 174,535 174,503
236,755 245,591
Homebuilding
Accounts payable and accrued expenses 206,941 174,955
Line of credit 165,000 --
Notes payable 117 --
372,058 174,955
Financial Services
Accounts payable and accrued expenses 26,823 16,937
Line of credit 50,949 99,642
77,772 116,579
Total Liabilities 686,585 537,125
STOCKHOLDERS' EQUITY
Total Stockholders' Equity 730,328 653,831
Total Liabilities and Stockholders' Equity $1,416,913 $1,190,956
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,
2002 2001 2002 2001
REVENUES
Homebuilding $499,171 $499,010 $945,932 $910,106
Financial Services 9,896 8,998 19,277 17,339
Corporate 363 227 595 512
Total Revenues $509,430 $508,235 $965,804 $927,957
NET INCOME
Homebuilding $61,215 $69,986 $119,059 $123,917
Financial Services 5,185 4,726 10,215 8,930
Operating Profit 66,400 74,712 129,274 132,847
Corporate general and
administrative
expense, net (10,071) (11,283) (19,899) (21,404)
Income before income
taxes 56,329 63,429 109,375 111,443
Provision for income
taxes (21,993) (24,586) (42,703) (43,317)
Net Income $34,336 $38,843 $66,672 $68,126
EARNINGS PER SHARE
Basic $1.27 $1.47 $2.48 $2.60
Diluted $1.22 $1.42 $2.39 $2.51
WEIGHTED-AVERAGE SHARES
OUTSTANDING
Basic 27,001 26,468 26,858 26,202
Diluted 28,102 27,316 27,949 27,132
DIVIDENDS PAID PER SHARE $.08 $.07 $.15 $.13
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Homebuilding
Home sales $496,862 $497,406 $942,029 $907,126
Land sales 746 413 746 759
Other revenues 1,563 1,191 3,157 2,221
Total Homebuilding
Revenues 499,171 499,010 945,932 910,106
Home cost of sales 385,053 379,572 726,114 694,009
Land cost of sales 504 194 504 457
Marketing 27,682 27,064 53,345 49,917
General and
administrative 24,717 22,194 46,910 41,806
437,956 429,024 826,873 786,189
Homebuilding Operating
Profit 61,215 69,986 119,059 123,917
Financial Services
Interest revenues 941 914 1,949 1,455
Origination fees 3,992 4,467 8,221 8,152
Gains on sales of
mortgage servicing 481 719 952 2,402
Gains on sales of
mortgage loans, net 4,280 2,936 7,741 5,510
Mortgage servicing and
other 202 (38) 414 (180)
Total Financial
Services Revenues 9,896 8,998 19,277 17,339
General and
administrative 4,711 4,272 9,062 8,409
Financial Services
Operating Profit 5,185 4,726 10,215 8,930
Total Operating Profit 66,400 74,712 129,274 132,847
Corporate
Interest and other
revenues 363 227 595 512
General and
administrative (10,434) (11,510) (20,494) (21,916)
Net Corporate
Expenses (10,071) (11,283) (19,899) (21,404)
Income Before Income
Taxes $56,329 $63,429 $109,375 $111,443
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
June 30, December 31, June 30,
2002 2001 2001
BALANCE SHEET DATA
Stockholders' Equity $730,328 $653,831 $571,897
Book Value Per Share Outstanding $27.01 $24.59 $21.46
Homebuilding and Corporate Debt $339,652 $174,503 $321,473
Ratio of Homebuilding and
Corporate Debt to Equity .47 .27 .56
Total Capital (excluding mortgage
lending debt) $1,069,980 $828,334 $893,370
Ratio of Homebuilding and
Corporate Debt to Total Capital .32 .21 .36
Ratio of Homebuilding and
Corporate Debt to Total Capital
(net of cash) .30 .17 .34
Ratio of Homebuilding and
Corporate Debt to EBITDA* 1.09 .55 1.14
Ratio of Homebuilding and
Corporate Debt (net of cash) to
EBITDA* 1.01 .43 1.03
Total Liquidity $308,201 $491,770 $350,201
Total Homebuilding Inventories $1,169,953 $907,254 $960,565
Interest Capitalized in
Inventories $17,604 $17,358 $19,503
Interest Capitalized as a Percent
of Inventories 1.5% 1.9% 2.0%
Total Lots Owned 16,773 13,524 12,439
Total Lots Under Option 6,403 6,059 7,746
Homes Under Construction
(including models) 4,118 2,783 3,999
Active Subdivisions 165 137 137
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
OPERATING DATA
EBITDA
Net income $34,336 $38,843 $66,672 $68,126
Add:
Income taxes 21,993 24,586 42,703 43,317
Interest in home
and land cost of
sales 4,248 5,994 8,710 11,673
Other fixed
charges 1,029 827 1,992 1,703
Depreciation and
amortization 5,569 6,165 10,818 11,541
Total EBITDA $67,175 $76,415 $130,895 $136,360
Ratio of EBITDA to
Interest Incurred 13.7 13.3 14.6 11.6
Homebuilding and
Corporate SG&A as a
Percent of Home Sales
Revenues 12.7% 12.2% 12.8% 12.5%
Interest Incurred $4,915 $5,727 $8,956 $11,759
Interest Capitalized $4,915 $5,727 $8,956 $11,759
Interest in Home Cost
of Sales as a Percent
of Home Sales Revenues .9% 1.2% .9% 1.3%
Operating Return on
Revenues 6.7% 7.6% 6.9% 7.3%
Operating Return on
Average Assets* 12.2% 13.0%
Operating Return on
Average Equity* 23.7% 29.1%
EBIT Return on Capital* 25.7% 28.1%
*Rolling 12 months ended June 30
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Home Sales Revenues $496,862 $497,406 $942,029 $907,126
Average Selling Price Per
Home Closed $254.0 $258.5 $259.5 $246.3
Home Gross Margins 22.5% 23.7% 22.9% 23.5%
Excluding Interest in
Home Cost of Sales 23.4% 24.9% 23.8% 24.8%
Orders For Homes, Net (Units)
Colorado 757 639 1,758 1,607
Utah 31 -- 31 --
California 633 414 1,224 855
Arizona 671 534 1,341 1,266
Nevada 411 162 618 430
Virginia 176 144 418 364
Maryland 74 80 139 178
Total 2,753 1,973 5,529 4,700
Homes Closed (Units)
Colorado 706 671 1,315 1,300
Utah 25 -- 25 --
California 362 375 654 615
Arizona 446 513 884 1,011
Nevada 247 169 388 328
Virginia 104 136 234 306
Maryland 66 60 130 123
Total 1,956 1,924 3,630 3,683
June 30, December 31, June 30,
2002 2001 2001
Backlog (Units)
Colorado 1,638 1,195 1,692
Utah 47 -- --
California 1,060 490 748
Arizona 1,082 625 1,065
Nevada 524 181 300
Virginia 418 234 386
Maryland 166 157 181
Total 4,935 2,882 4,372
Backlog Estimated
Sales Value $1,300,000 $760,000 $1,110,000
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., +1-212-843-8282,
Holdings, Inc.
Web site: https://www.richmondamerican.com/
