UBS BUILDING & BUILDING PRODUCTS CEO CONFERENCE

Transcription

1 UBS BUILDING & BUILDING PRODUCTS CEO CONFERENCE FORWARD LOOKING STATEMENTS Certain statements in this Conference Call and Webcast, including statements regarding future home closings, average selling price, revenues, earnings, margins and active subdivision count, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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, including changes in cancellation rates, net home orders, home gross margins, and land and home values; (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. Additional information about the risks and uncertainties applicable to the Company s business is contained in the Company s Form 10-K/A for the year ended December 31, 2005, and Form 10-Q for the quarter ended September 30, 2006, which were filed with the Securities and Exchange Commission. All forwardlooking statements made in this Conference Call and Webcast are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or presentations should be consulted. It should also be noted that SEC Regulation G requires that certain information accompany the use of non-gaap financial measures. Any information required by Regulation G will be posted on our web site. This information can be accessed by entering the MDC web site, clicking on Investor Relations and selecting our Investment Highlights and Profile under Company Reports. 1

2 M.D.C. HOLDINGS, INC. RichmondAmerican.com RICHMOND AMERICAN HOMES HOME GALLERY BY RICHMOND AMERICAN HOMEAMERICAN MORTGAGE CORPORATION AMERICAN HOME TITLE AND ESCROW COMPANY AMERICAN HOME INSURANCE AGENCY, INC. COMPANY PROFILE One of the Nation s Ten Largest Homebuilders, with 15,307 Homes Closed in 2005 ($4.8 Billion in Home Sales Revenues) Delivered More Than 142,000 Homes Since 1977 Operating in 23 Selected Markets in 13 States Top 5 Position in 8 Markets (Top 10 Position in 15 Markets) Balanced Attack Focused on First-Time and First Move-Up Buyers; Average Selling Price of $358,200 in Q Active Communities at 9/30/06 Investment Grade Rating from All Three Rating Agencies 2

3 MARKET PROFILE Jacksonville (FL)* Denver/Boulder (CO) Salt Lake City/Wasatch Front (UT)* Las Vegas (NV) Phoenix (AZ) Baltimore (MD) Colorado Springs (CO)* Tucson (AZ) Los Angeles/Long Beach (CA) South New Jersey Fort Collins/Loveland/Greely (CO) Washington DC (MD,VA,WV) Wilmington/Newark (MD, DE) San Francisco (CA) Central Valley (CA) #1 #2 #2 #3 #3 #3 #4 #4 #6 #6 #7 #7 #8 #9 #10 Source: Meyers Group Builder Market Share Report. Rankings based on LTM net sales of single-family detached homes as of July *Alternative data was used for Colorado Springs/Pueblo, Salt Lake City/Wasatch Front and Jacksonville as Meyers Group data was not available for these markets. Colorado Springs rank is based on LTM July 2006 sales information from Home Builders Research, Salt Lake City/Wasatch Front rank is based on LTM July 2006 sales information from ConstructionMonitor.com and Jacksonville rank is based on LTM July 2006 sales information from Realty Reporting Services. PRODUCT PROFILE VARIED PRODUCT OFFERING FOCUSED ON FIRST TIME AND FIRST MOVE-UP BUYERS Other 18% First Time 38% First Move-Up 44% MDC 3Q 2006 Average Selling Price: $358,200 3

4 CHALLENGING HOMEBUILDING ENVIRONMENT Higher Cancellation Rates and Lower Homebuyer Demand Increased Inventories of New and Resale Homes Concessions and Incentives Continue to Rise Prospective Buyers Display Wait and See Attitude 3 RD QUARTER 2006 RESULTS EPS of $1.06, Down 60% Net Income of $48.7 Million, Down 60% Total Revenues of $1.08 Billion, Down 7% Home Closings of 2,955 Units, Down 20% Home Orders of 2,120 Units, Down 40% 4

5 BALANCE SHEET FOCUS $54 STOCKHOLDERS EQUITY PER SHARE 0.50 RATIO OF NET DEBT TO NET CAPITAL** $46 22% Improvement Y-O-Y Among Industry s Lowest $ $30 9/30/2005 9/30/ Peers* MDC 9/30/2005 MDC 9/30/2006 Rated Investment Grade by all Three Rating Agencies *Based on latest public information as of October 24, 2006 for latest fiscal quarterly period ended in Peers include: PHM, CTX, TOL, RYL,SPF, LEN, HOV, KBH, DHI, BZH and MTH. ** Excludes mortgage lending debt and is net of cash on hand. See page 18 of the Investment Highlights and Profile Book for a calculation of debt excluding mortgage lending debt (Corporate and Homebuilding Debt) and total capital excluding mortgage lending debt. To access this document, please enter the MDC web site, click on Investor Relations and select our Investment Highlights and Profile under Company Reports. BALANCE SHEET FOCUS 1,500 CASH AND AVAILABLE BORROWING CAPACITY 90 OPERATING CASH FLOW 1,300 25% Improvement Y-O-Y 1, $300 Million Improvement Y-O-Y 71 (in millions) 1,100 1,084 (in millions) /30/2005 9/30/ (229) Q Q Preserving Capital for Future Opportunities 5

6 BALANCE SHEET FOCUS 50,000 40,000 43,987 LOTS CONTROLLED 42,264 41,567 36, Months Ago: Tightened Underwriting Standards & Began Renegotiating or Terminating Certain Option Contracts 31,565 30,000 20,000 10,000 25% Decrease in Controlled Lots Year-To-Date Land Investment Decreased by $100 Million in Q3 0 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 Optioned Owned Less Than $60 Million (3% of Equity) at Risk for 11,000 Optioned Lots SIGNIFICANTLY LARGER AND STRONGER ENTERPRISE (dollars in millions, except per share amounts) 12/31/95 9/30/06 Stockholders Equity $ % $2,167 Book Value Per Share Net Debt to Net Capital* Cash/Borrowing Capacity $ $ % -2,800 BP +805% $ $1,357 *Excludes mortgage lending debt and is net of cash on hand. See page 18 of the Investment Highlights and Profile Book for a calculation of debt excluding mortgage lending debt (Corporate and Homebuilding Debt) and total capital excluding mortgage lending debt. To access this document, please enter the MDC web site, click on Investor Relations and select our Investment Highlights and Profile under Company Reports. 6

7 SEASONED, EXPERIENCED MANAGEMENT TEAM Larry Mizel Chairman & CEO David Mandarich President & COO Gary Reece Executive VP & CFO Over 80 Years Experience With MDC Through Multiple Industry Cycles; Control More Than 25% of Company Stock Division Managers Average 20 Years Experience in Homebuilding A SIMPLE OPERATING PHILOSOPHY NO Joint Ventures NO Off Balance Sheet Financing NO Specific Performance NO Goodwill NO Condos NO Mid-Rise NO High-Rise NO Speculative Land; All Active 7

8 CONSERVATIVE INVENTORY MANAGEMENT POLICY Focus on Maintaining Control of Two-Year Land Supply Each Project Limited to Two-Year Duration Purchase Only Entitled Land with Utilities Available Must Control Ability to Obtain Building Permits and COs Prefer to Purchase Finished Lots If Returns Justify Risk, Will Acquire Land for Development Merchant Builder Generally No Master-Planned Community Development No Land Speculation Strict Control Over Specs and Backlog All Land Acquisitions/Takedowns Approved by Senior Management Committee Each Deal Subjected to Extensive Due Diligence Process PREPARING FOR FUTURE SUCCESS Continually Searching for Operational Inefficiencies Focus on Reducing Cycle Times, Controlling Costs and Improving Internal Procedures Developing Our People to Achieve Their Full Potential Creating Additional Value for Our Homebuyers Designing New Products to Meet Buyers Preferences New Customer Experience Initiative Aimed at Improving the Home Buying Process 8

9 MDC s COMPETITIVE ADVANTAGES Seasoned Management Substantial Insider Ownership Positioning for Future Opportunities BALANCE SHEET FOCUSED FOR A CHANGING ENVIRONMENT Strong Positions in Large Markets Disciplined Operating Strategy Conservative, Strategic Risk Profile Investment Grade Company M.D.C. HOLDINGS, INC. - Building and Financing the American Dream RICHMONDAMERICAN.com 9

10 Reconciliation of Debt and Capital, Excluding Mortgage Line of Credit and Net of Cash (in millions) Homebuilding Line of Credit and Senior Notes, net Mortgage Line of Credit Total Debt Stockholders Equity Total Capital Less: Mortgage Line of Credit Total Capital Excluding Mortgage Line of Credit Less: Cash and Cash Equivalents Total Capital Excluding Mortgage Line of Credit, Net of Cash September 30, $ 1,036.2 $ , , , , , , , , , ,025.8 Homebuilding Line of Credit and Senior Notes, net Less: Cash and Cash Equivalents Total Homebuilding Line of Credit and Senior Notes, Net of Cash $ 1, $