DENVER, (Hanley-Wood News Service) - M.D.C. Holdings Inc. (NYSE: MDC; PCX) ( www.RichmondAmerican.com ), whose subsidiaries build homes under the name ''Richmond American Homes,'' today announced net income for the quarter ended December 31, 2001 of $47.1 million, or $1.73 per share -- the highest quarterly net income in the company's history and 20% higher than net income of $39.2 million, or $1.49 per share, for the same period in 2000. Net income for the year ended December 31, 2001 was a record $155.7 million, or $5.72 per share, compared with $123.3 million, or $4.64 per share, for 2000. MDC achieved record revenues for the quarter and year ended December 31, 2001 of $677 million and $2.126 billion, respectively, compared with $539 million and $1.752 billion, respectively, for the same periods in 2000. Larry A. Mizel, MDC's chairman and CEO, 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 Home Building 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 home builders in suburban Maryland, Las Vegas, Southern California and Northern California.