News
M.D.C. Holdings, Inc.
Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We have successfully expanded our presence in our existing markets since the beginning of 2002 to produce the strongest operating results for any quarter and first nine months in our 31-plus year history. While achieving record quarterly levels of home closings, revenues and earnings, we generated a Company-high return on revenues of 8.2% and increased our return on average equity to more than 24%. At the same time, our financial position continued to strengthen, as represented by our quarter-end debt-to-capital ratio of .30 and a 65% year-over-year increase in our unrestricted cash and available borrowing capacity to $514 million. In addition, we are proud to report that we reached a significant milestone for our Company during the 2003 third quarter - the closing of our 100,000th home. This accomplishment stands as a symbol of our experience and expertise in serving the single-family home market for over a quarter century, as well as our long-standing commitment to building the American Dream, one home, one buyer and one dream at a time."
Mizel continued, "The large public homebuilders, including MDC, continued to thrive throughout the 2003 third quarter, despite the unfavorable movement in mortgage interest rates in July and August. Our success in expanding market shares has enabled us to complete nineteen consecutive months of record home orders, including the highest level of net home orders for any third quarter and more home orders during the first nine months of 2003 than for the entire year in 2002. Our resulting backlog of 6,277 homes has positioned us to close as many as 11,100 homes in 2003 and to produce record revenues and net income for the sixth consecutive year. The continued execution of our organic growth strategy, complemented by our recent expansion into new markets in Texas and Florida, should help us achieve our goal of increasing our home closings by 15% and reaching new highs for operating performance in 2004."
Highest Homebuilding Profits in Company History
Homebuilding operating profits for the third quarter and first nine months of 2003 were $118.1 million and $267.9 million, respectively, representing increases of 57% and 38% over profits of $75.5 million and $194.5 million, respectively, for the same periods in 2002. The increases in the 2003 periods primarily are the result of the record levels of home closings and, to a lesser extent, higher home gross margins. As previously reported, the Company closed 3,113 homes and 7,837 homes, respectively, for the three and nine months ended September 30, 2003, 37% and 33% higher, respectively, than home closings for the same periods in 2002. For the third quarter and first nine months of 2003, the Company's home gross margins were 24.8% and 23.7%, respectively, compared with 23.4% and 23.1%, respectively, for the same periods in 2002. Home sales revenues for the three and nine months ended September 30, 2003 increased to $779 million and $2.005 billion, respectively, compared with home sales revenues of $568 million and $1.510 billion for the same periods in 2002.
Paris G. Reece III, MDC's executive vice president and chief financial officer, said, "The geographic diversification of our operations continued to accelerate through the 2003 third quarter, with each of our active homebuilding divisions outside of Colorado realizing significantly improved results. Investments we made in 2002 to expand our active communities in Nevada, Virginia, Arizona and Southern California provided substantial increases in home closings in the third quarter, fueling much of the profit improvements in these markets. A number of these home closings had been expected to close in the fourth quarter, but because of favorable weather conditions and other factors, closed in the third quarter. Increases in our home gross margins in Nevada and Southern California, two of our strongest markets for homebuilding, contributed to improved operating results in both the third quarter and first nine months. In addition, our home gross margins for the 2003 third quarter were increased by almost 100 basis points due to non-recurring insurance recoveries in Colorado in relation to warranty expenses we incurred in prior periods for water intrusion issues, as well as reductions in previous estimates to complete land development and construction in various markets."
Reece continued, "Our expectations for 2003 fourth quarter home closings include the acceleration of certain home closings into the 2003 third quarter, as previously discussed. In addition, we estimate that as many as 100 sold homes that were otherwise expected to close in the fourth quarter in Virginia and Maryland will not close until the first quarter of 2004 due to weather-related delays caused by Hurricane Isabel. These two markets recently have produced some of the highest home gross margins in the Company. These factors may impact our ability to exceed our record-setting third quarter performance in the 2003 fourth quarter. Nevertheless, we believe we will achieve year-over-year increases in fourth quarter home closings, revenues and net income."
Record Financial Services Results
Operating profits from the Company's financial services operations increased to $7.2 million and $23.4 million, respectively, for the quarter and nine months ended September 30, 2003, compared with $5.9 million and $16.1 million, respectively, for the same periods in 2002. The profit improvements in 2003 primarily resulted from increased gains on sales of mortgage loans due to higher volumes of mortgage loan originations and the generally favorable mortgage interest rate environment. Reported gains on sales of mortgage loans may vary significantly from period to period depending on the volatility in the interest rate market. In the quarter and nine months ended September 30, 2003, the Company received $5.8 million and $15.7 million, respectively, of mortgage loan origination income on $406 million and $1.095 billion, respectively, in mortgage loans originated. The record mortgage loan origination income in these periods represented increases of 27% and 23%, compared with mortgage loan origination income of $4.6 million and $12.8 million, respectively, received on $330 million and $867 million, respectively, of originations in the same periods in 2002.
All earnings per share amounts discussed above are on a diluted basis.
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, suburban Maryland, Phoenix, Tucson and Las Vegas; and among the top ten homebuilders in Northern California, Southern California and Salt Lake City. MDC also has a growing presence in Dallas/Fort Worth and has recently entered the Houston, San Antonio, Philadelphia/Delaware Valley, West Florida, Jacksonville and Chicago markets. For more information, please visit www.richmondamerican.com .
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 performance bonds and 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 Statements of Income
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
REVENUES
Homebuilding $782,726 $570,386 $2,011,058 $1,516,318
Financial Services 16,022 11,160 46,348 30,437
Corporate 158 152 584 747
Total Revenues $798,906 $581,698 $2,057,990 $1,547,502
NET INCOME
Homebuilding $118,121 $75,472 $267,923 $194,531
Financial Services 7,242 5,905 23,408 16,120
Operating Profit 125,363 81,377 291,331 210,651
Expenses related to
debt redemption -- -- (9,315) --
Other corporate
expense, net (18,001) (10,346) (43,883) (30,245)
Income before
income taxes 107,362 71,031 238,133 180,406
Provision for
income taxes (41,886) (27,472) (92,926) (70,175)
Net Income $65,476 $43,559 $145,207 $110,231
EARNINGS PER SHARE
Basic $2.25 $1.48 $5.02 $3.74
Diluted $2.16 $1.43 $4.83 $3.60
WEIGHTED-AVERAGE
SHARES OUTSTANDING
Basic 29,066 29,400 28,905 29,495
Diluted 30,303 30,448 30,074 30,647
DIVIDENDS PAID
PER SHARE $.125 $.073 $.280 $.209
M.D.C. HOLDINGS, INC.
Information on Business Segments
(In thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
Homebuilding
Home sales $779,457 $568,195 $2,005,471 $1,510,224
Land sales 1,175 1,485 1,298 2,231
Other revenues 2,094 706 4,289 3,863
Total
Homebuilding
Revenues 782,726 570,386 2,011,058 1,516,318
Home cost of sales 585,970 435,041 1,529,557 1,161,155
Land cost of sales 755 1,237 842 1,741
Marketing 42,453 31,794 115,678 85,139
General and
administrative 35,427 26,842 97,058 73,752
664,605 494,914 1,743,135 1,321,787
Homebuilding
Operating Profit 118,121 75,472 267,923 194,531
Financial Services
Interest revenues 1,264 1,045 3,297 2,994
Origination fees 5,812 4,563 15,706 12,784
Gains on sales of
mortgage servicing 444 408 1,607 1,360
Gains on sales of
mortgage loans, net 7,924 4,902 24,021 12,643
Mortgage servicing
and other 578 242 1,717 656
Total Financial
Services Revenues 16,022 11,160 46,348 30,437
General and
administrative 8,780 5,255 22,940 14,317
Financial Services
Operating Profit 7,242 5,905 23,408 16,120
Total Operating
Profit 125,363 81,377 291,331 210,651
Corporate
Expenses related to
debt redemption -- -- (9,315) --
Interest and other
revenues 158 152 584 747
Other general and
administrative
expenses (18,159) (10,498) (44,467) (30,992)
Income Before
Income Taxes $107,362 $71,031 $238,133 $180,406
M.D.C. HOLDINGS, INC.
Selected Financial Data
(Dollars in thousands, except per share amounts)
September 30, December 31, September 30,
2003 2002 2002
BALANCE SHEET DATA
Stockholders' Equity
Per Share Outstanding $32.16 $27.54 $25.75
Stockholders' Equity $940,986 $800,567 $754,962
Homebuilding and
Corporate Debt 399,611 322,990 429,551
Capital (excluding
mortgage lending
debt) $1,340,597 $1,123,557 $1,184,513
Ratio of Homebuilding and
Corporate Debt to Equity .42 .40 .57
Ratio of Homebuilding and
Corporate Debt to Capital .30 .29 .36
Cash and Cash Equivalents 21,751 28,942 35,243
Unrestricted Cash and
Available Borrowing
Capacity Under Lines
of Credit 513,727 618,774 310,466
Housing Completed or
Under Construction
Inventories 776,951 578,475 675,233
Land and Land Under
Development Inventories 720,385 656,843 604,717
Corporate and Homebuilding
Interest Capitalized
Interest Capitalized in
Inventory at Beginning
of Period 17,783 17,358 17,604
Interest Incurred 20,514 21,116 5,907
Interest in Home and
Land Cost of Sales (18,232) (20,691) (4,568)
Interest Capitalized in
Inventory at End
of Period $20,065 $17,783 $18,943
Interest Capitalized
as a Percent of Inventories 1.3% 1.4% 1.5%
Lots Owned 16,283 16,962 16,975
Lots Under Option 6,663 6,995 6,288
Homes Under Construction
(including models) 5,655 3,751 4,705
Active Subdivisions 198 178 175
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
OPERATING DATA
Interest in Home and
Land Cost of Sales
as a Percent of Home
Sales Revenues 0.9% 0.8% 0.9% 0.9%
Homebuilding and
Corporate SG&A as a
Percent of Homes
Sales Revenues 12.3% 12.2% 12.8% 12.6%
Depreciation and
Amortization 9,388 6,548 25,863 17,366
Average Selling
Price Per
Home Closed $250.4 $249.6 $255.9 $255.7
Home Gross Margins 24.8% 23.4% 23.7% 23.1%
Excluding Interest
in Home Cost
of Sales 25.7% 24.2% 24.6% 24.0%
M.D.C. HOLDINGS, INC.
Homebuilding Operational Data
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Orders For Homes,
Net (Units)
Colorado 525 541 2,008 2,299
California 440 475 1,481 1,699
Nevada 704 359 2,061 977
Arizona 757 755 2,667 2,096
Utah 106 46 292 77
Texas 75 2 194 2
Virginia 218 186 926 604
Maryland 82 75 308 214
Florida 3 -- 3 --
Total 2,910 2,439 9,940 7,968
Homes Closed (Units)
Colorado 736 790 1,970 2,105
California 503 394 1,418 1,048
Nevada 578 306 1,359 694
Arizona 833 550 2,067 1,434
Utah 84 39 193 64
Texas 56 -- 95 --
Virginia 241 134 509 368
Maryland 70 63 214 193
Florida 12 -- 12 --
Total 3,113 2,276 7,837 5,906
September 30, December 31, September 30,
2003 2002 2002
Backlog (Units)
Colorado 995 957 1,389
California 985 922 1,141
Nevada 1,052 350 577
Arizona 1,676 1,076 1,287
Utah 149 50 54
Texas 115 16 2
Virginia 893 476 470
Maryland 282 188 178
Florida * 130 -- --
Total 6,277 4,035 5,098
Backlog Estimated
Sales Value $1,650,000 $1,120,000 $1,350,000
*In September 2003, MDC acquired certain assets of Crawford Homes in
Jacksonville, including 139 homes in backlog.
SOURCE: M.D.C. Holdings, Inc.
CONTACT: Paris G. Reece III, Chief Financial Officer,
+1-303-804-7706,
Director, +1-303-804-7729,
Web site: https://www.richmondamerican.com/
