News
- Record 2002 net income of $167.3 million
- Highest quarterly and annual home closings and revenues in Company
history
- Fourth quarter home orders up 41%; active subdivisions 30% higher
- Year-end backlog of 4,035 homes with sales value of $1.120 billion,
a 40% increase
- Net debt-to-capital ratio of .27; net debt-to-EBITDA ratio of .90
- Annual interest coverage increased to 15.5 from 14.1; 17.9 in
fourth quarter
- EBIT return on capital of 28.8%; net operating return on assets of
12.0%
DENVER, Jan. 9 /PRNewswire-FirstCall/ -- M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to announce the completion of our ninth consecutive year of record revenues and fifth consecutive year of record operating earnings. In 2002, we posted the strongest operating results in our almost 31 years in business, punctuated by a fourth quarter performance that ranks as the best for any quarter in our history. We recorded quarterly and annual highs for revenues, home closings, mortgage originations, and profits from both our homebuilding and mortgage lending businesses. We concluded 2002 with ten consecutive months of record home orders, as well as a year-end backlog that exceeds our previous high, at the end of 2000, by more than 22%. Our 2002 returns on revenues, assets and capital of 7%, 12% and 29%, respectively, rank among the leaders in our industry. And our continued focus on the balance sheet produced leverage and interest coverage ratios that stand among the strongest of our peers."
Mizel continued, "In 2002, we significantly enhanced our liquidity and financial flexibility with the extension and expansion of our unsecured homebuilding credit facility, which this week was increased to its full capacity of $600 million. In addition, in the fourth quarter, we issued $150 million of 7%, ten-year senior notes to an investment community that has recognized our operating successes and financial strength. The proceeds of this issuance and our strong December home closings enabled us to end the year with over $600 million in liquidity for the first time, including no outstanding borrowings on our homebuilding credit facility. This liquidity, combined with our strong balance sheet, record year-end backlog, 30% year- over-year increase in active communities and expanding presence in our growth markets, has positioned us to meet our 2003 objectives of closing more than 10,500 homes and reaching new Company highs for revenues and earnings. These results would keep us on track to achieve our goal, stated at the beginning of 2002, of doubling the size of our Company in less than five years, assuming a stable housing market."
Highest Homebuilding Profits in Company History
Operating profits from the Company's homebuilding operations reached record levels in the quarter and year ended December 31, 2002, increasing to $101.1 million and $295.6 million, respectively, compared with $83.4 million and $279.3 million, respectively, for the same periods in 2001. The increases in 2002 primarily were attributable to record home closings. MDC closed 2,994 homes and 8,900 homes, respectively, in the fourth quarter and year ended December 31, 2002, representing increases of 24% and 9% from the 2,415 homes and 8,174 homes, respectively, closed in the same periods in 2001. In addition, no asset impairment charges were taken in the 2002 fourth quarter and full year, while operating profits in the comparable 2001 periods were reduced by non-cash, pre-tax asset impairment charges of $4.1 million and $7.0 million, respectively. The profit increases in the 2002 fourth quarter partially were offset by the impact of the decrease in average selling price to $250,500 in the 2002 fourth quarter from $274,800 for the same period in 2001. Home gross margins were 22.6% and 23.0%, respectively, for the quarter and year ended December 31, 2002, compared with 22.2% and 23.2% for the same periods in 2001.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "Consistent with the sources of our year-over-year increases in home closings, our higher fourth quarter homebuilding profits primarily are attributable to improved results in Northern and Southern California, Phoenix and Las Vegas, reflecting our successful expansion in these markets. The results achieved by our California divisions and Phoenix also were enhanced by significantly improved home gross margins, which, in California, more than offset the impact of lower average selling prices realized in connection with our focus on lower-priced, more-affordable homes. This focus also resulted in lower quarterly year-over-year average selling prices in Las Vegas, Tucson and Colorado, and contributed to prices averaging less than $180,000 for product offerings in our new Salt Lake City and Dallas/Fort Worth markets."
Record Home Orders and Backlog
The Company received orders, net of cancellations, for 1,931 homes and 9,899 homes, respectively, during the fourth quarter and total year 2002. These home orders were the highest for any fourth quarter and full year in the Company's history and represent increases of 41% and 29% from net orders for 1,373 homes and 7,701 homes, respectively, for the same periods in 2001.
The Company's active subdivisions increased 30% to 178 at December 31, 2002 from 137 at December 31, 2001, including an additional 20 in Phoenix, 11 in Nevada and nine in Virginia. These additional subdivisions, combined with the strong demand for new homes in these markets, contributed to year- over-year increases in fourth quarter home orders of 195% in Nevada, 177% in Virginia and 120% in Phoenix. An improved demand for new homes also contributed to a 41% year-over-year increase in fourth quarter home orders in Southern California from a consistent level of active subdivisions. In Colorado, home orders were lower in the fourth quarter of 2002, compared with the same period in 2001, primarily due to a more challenging economic environment in this market.
In December 2002, the Company received 522 net home orders, compared with net orders for 454 homes received in December 2001. December 2002 home orders particularly were strong in Nevada, Virginia and Phoenix (up 185%, 63% and 58%, respectively), as well as in Maryland and Southern California (with orders up 15% and 13%). In Colorado, the Company received net orders for 86 homes in December 2002, compared with 166 home orders received in December 2001, from the same number of active subdivisions.
Record home orders in each of the last four quarters enabled the Company to end 2002 with a record year-end backlog of 4,035 homes with an estimated sales value of $1.120 billion, compared with a backlog of 2,882 homes with an estimated sales value of $760 million at December 31, 2001.
Mortgage Lending Operations Achieve Record Results
Operating profits from the Company's mortgage lending operations were $8.1 million and $24.2 million, respectively, for the quarter and year ended December 31, 2002, representing the highest 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, 2001 were $6.4 million and $21.1 million, respectively. The operating profit improvements in the 2002 periods primarily resulted from higher gains on sales of mortgage loans and increased origination fees received from record levels of mortgage loans originated and brokered for MDC home buyers. The Company originated or brokered a total of $514.6 million and $1.543 billion, respectively, in mortgage loans in the three and twelve months ended December 31, 2002, compared with $460.5 million and $1.499 billion, respectively, in mortgage loans in the same periods in 2001.
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 2002. MDC concluded 2002 with ratios of homebuilding and corporate net debt-to-capital and net debt-to-EBITDA, as adjusted (as defined below), of .27 and .90, respectively. The Company's strong 2002 operating results increased stockholders' equity by 22% to $801 million, or $30.29 per outstanding share, at December 31, 2002. This stockholders' equity amount also reflects the repurchase during 2002 of 789,000 shares of MDC common stock for an aggregate price of $29.4 million. Further, the Company ended 2002 with $619 million in liquidity, 26% higher than at December 31, 2001.
During the quarter and year ended December 31, 2002, earnings before interest, taxes, depreciation, amortization and non-cash charges ("EBITDA, as adjusted") increased to $111.8 million and $326.2 million, respectively, compared with $98.8 million and $318.0 million, respectively, for the same periods in 2001. The increased EBITDA, as adjusted, contributed to the improvement in the Company's ratio of EBITDA, as adjusted, to interest incurred to 15.5 for the year ended December 31, 2002 from 14.1 for 2001.
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) 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)
December 31,
2002 2001
ASSETS
Corporate
Cash and cash equivalents $23,164 $31,322
Property and equipment, net 10,851 2,723
Deferred income taxes 25,980 30,081
Deferred debt issue costs, net 3,305 1,947
Other assets, net 6,708 7,597
70,008 73,670
Homebuilding
Cash and cash equivalents 4,686 4,760
Home sales and other accounts receivable 3,519 2,621
Inventories, net
Housing completed or under construction 578,475 456,752
Land and land under development 656,843 450,502
Prepaid expenses and other assets, net 65,936 49,544
1,309,459 964,179
Financial Services
Cash and cash equivalents 1,092 518
Mortgage loans held in inventory 207,938 144,971
Other assets, net 6,683 7,618
215,713 153,107
Total Assets $1,595,180 $1,190,956
LIABILITIES
Corporate
Accounts payable and accrued expenses $63,871 $61,135
Income taxes payable 21,571 9,953
Senior notes, net 322,990 174,503
408,432 245,591
Homebuilding
Accounts payable and accrued expenses 210,601 174,955
Line of credit -- --
210,601 174,955
Financial Services
Accounts payable and accrued expenses 21,506 16,937
Line of credit 154,074 99,642
175,580 116,579
Total Liabilities 794,613 537,125
STOCKHOLDERS' EQUITY
Total Stockholders' Equity 800,567 653,831
Total Liabilities and Stockholders' Equity $1,595,180 $1,190,956
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,
2002 2001 2002 2001
REVENUES
Homebuilding $755,877 $665,230 $2,272,195 $2,086,344
Financial Services 14,919 11,146 45,356 38,566
Corporate 226 229 973 964
Total Revenues $771,022 $676,605 $2,318,524 $2,125,874
NET INCOME
Homebuilding $101,073 $83,436 $295,604 $279,267
Financial Services 8,074 6,436 24,194 21,116
Operating Profit 109,147 89,872 319,798 300,383
Corporate general
and administrative
expense, net (15,509) (12,718) (45,754) (44,996)
Income before
income taxes 93,638 77,154 274,044 255,387
Provision for
income taxes (36,564) (30,090) (106,739) (99,672)
Net Income $57,074 $47,064 $167,305 $155,715
EARNINGS PER SHARE
Basic $2.14 $1.77 $6.25 $5.89
Diluted $2.08 $1.73 $6.03 $5.72
WEIGHTED-AVERAGE SHARES
OUTSTANDING
Basic 26,626 26,562 26,767 26,421
Diluted 27,379 27,226 27,754 27,232
DIVIDENDS PAID
PER SHARE $.08 $.07 $.31 $.27
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Homebuilding
Home sales $750,067 $663,686 $2,260,291 $2,076,807
Land sales 3,791 8 6,022 2,909
Other revenues 2,019 1,536 5,882 6,628
Total Homebuilding
Revenues 755,877 665,230 2,272,195 2,086,344
Home cost of sales 580,294 516,626 1,741,449 1,594,412
Land cost of sales 2,859 2 4,600 1,105
Asset impairment
charges -- 4,141 -- 7,041
Marketing 39,921 36,096 125,060 114,129
General and
administrative 31,730 24,929 105,482 90,390
654,804 581,794 1,976,591 1,807,077
Homebuilding
Operating Profit 101,073 83,436 295,604 279,267
Financial Services
Net interest income 1,354 1,188 4,348 3,544
Origination fees 5,987 5,002 18,771 17,572
Gains on sales of
mortgage servicing 413 425 1,773 3,288
Gains on sales of
mortgage loans, net 6,944 4,285 19,587 13,923
Mortgage servicing
and other 221 246 877 239
Total Financial
Services Revenues 14,919 11,146 45,356 38,566
General and
administrative 6,845 4,710 21,162 17,450
Financial Services
Operating Profit 8,074 6,436 24,194 21,116
Total Operating
Profit 109,147 89,872 319,798 300,383
Corporate
Interest and other
revenues 226 229 973 964
General and
administrative (15,735) (12,947) (46,727) (45,960)
Net Corporate
Expenses (15,509) (12,718) (45,754) (44,996)
Income Before
Income Taxes $93,638 $77,154 $274,044 $255,387
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
December 31,
2002 2001 2000
BALANCE SHEET DATA
Stockholders' Equity $800,567 $653,831 $482,230
Book Value Per Share Outstanding $30.29 $24.59 $18.81
Homebuilding and Corporate Debt $322,990 $174,503 $264,444
Ratio of Homebuilding and
Corporate Debt to Equity .40 .27 .55
Total Capital (excluding mortgage
lending debt) $1,123,557 $828,334 $746,674
Ratio of Homebuilding and
Corporate Debt to Total Capital .29 .21 .35
Ratio of Homebuilding and Corporate
Debt to Total Capital (net of cash) .27 .17 .34
Ratio of Homebuilding and Corporate
Debt to EBITDA, as adjusted .99 .55 1.04
Ratio of Homebuilding and Corporate
Debt (net of cash) to EBITDA,
as adjusted .90 .43 .98
Total Liquidity $618,774 $491,770 $342,583
Total Homebuilding Inventories $1,235,318 $907,254 $832,223
Interest Capitalized in
Inventories $17,783 $17,358 $19,417
Interest Capitalized as a
Percent of Inventories 1.4% 1.9% 2.3%
Total Lots Owned 16,962 13,524 11,633
Total Lots Under Option 6,995 6,059 8,131
Homes Under Construction
(including models) 3,751 2,783 3,230
Active Subdivisions 178 137 133
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
OPERATING DATA
EBITDA, as adjusted
Net income $57,074 $47,064 $167,305 $155,715
Add:
Income taxes 36,564 30,090 106,739 99,672
Interest in home
and land cost
of sales 7,413 6,963 20,691 24,557
Other fixed charges 1,218 936 4,516 3,618
Depreciation and
amortization 9,541 9,556 26,907 27,445
Asset impairment
charges -- 4,141 -- 7,041
Total EBITDA,
as adjusted $111,810 $98,750 $326,158 $318,048
Ratio of EBITDA,
as adjusted to
Interest Incurred 17.9 20.3 15.5 14.1
Homebuilding and
Corporate SG&A as
a Percent of Home
Sales Revenues 11.7% 11.2% 12.3% 12.1%
Homebuilding and
corporate interest
incurred $6,253 $4,860 $21,116 $22,498
Interest Capitalized $6,253 $4,860 $21,116 $22,498
Interest in Home Cost
of Sales as a Percent
of Home Sales Revenues .9% 1.0% .9% 1.2%
Operating Return
on Revenues 7.4% 7.0% 7.2% 7.3%
Operating Return on
Average Assets N/A N/A 12.0% 13.3%
Operating Return on
Average Equity N/A N/A 23.0% 27.4%
EBIT Return on Capital N/A N/A 28.8% 33.3%
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Home Sales Revenues $750,067 $663,686 $2,260,291 $2,076,807
Average Selling Price
Per Home Closed $250.5 $274.8 $254.0 $254.1
Home Gross Margins 22.6% 22.2% 23.0% 23.2%
Excluding Interest in
Home Cost of Sales 23.5% 23.2% 23.9% 24.4%
Orders For Homes, net
(Units)
Colorado 382 515 2,681 2,616
Utah 34 -- 111 --
California 387 302 2,086 1,519
Arizona 573 339 2,669 2,038
Nevada 283 96 1,260 687
Virginia 194 70 798 551
Maryland 63 51 277 290
Texas 15 -- 17 --
Total 1,931 1,373 9,899 7,701
Homes Closed (Units)
Colorado 814 818 2,919 2,806
Utah 38 -- 102 --
California 606 489 1,654 1,537
Arizona 784 601 2,218 2,223
Nevada 510 211 1,204 704
Virginia 188 232 556 645
Maryland 53 64 246 259
Texas 1 -- 1 --
Total 2,994 2,415 8,900 8,174
December 31, December 31,
2002 2001
Backlog (Units)
Colorado 957 1,195
Utah 50 --
California 922 490
Arizona 1,076 625
Nevada 350 181
Virginia 476 234
Maryland 188 157
Texas 16 --
Total 4,035 2,882
Backlog Estimated
Sales Value $1,120,000 $760,000
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., +1-212-843-8000,
Holdings, Inc.
Web site: https://www.richmondamerican.com/
