Investor Relations

Press Release

Meritage Homes reports fourth quarter 2019 results including a 27% increase in orders, 80 bps increase in home closing gross margin and 39% increase in diluted EPS

Company Release - 1/29/2020 4:30 PM ET

SCOTTSDALE, Ariz., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2019.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)

 Three Months Ended December 31, Twelve Months Ended December 31,
 2019 2018 % Chg 2019 2018 % Chg
Homes closed (units)2,830  2,505  13 9,267  8,531  9
Home closing revenue$1,103,741  $996,063  11 $3,604,629  $3,474,712  4
Average sales price - closings$390  $398  (2)% $389  $407  (4)%
Home orders (units)2,093  1,653  27 9,616  8,089  19
Home order value$804,133  $644,210  25 $3,683,502  $3,240,091  14
Average sales price - orders$384  $390  (1)% $383  $401  (4)%
Ending backlog (units)      2,782  2,433  14
Ending backlog value      $1,098,158  $1,015,918  8
Average sales price - backlog      $395  $418  (5)%
Earnings before income taxes$110,535  $91,776  20 $302,945  $283,254  7
Net earnings$103,614  $75,485  37 $249,663  $227,332  10
Diluted EPS$2.65  $1.91  39 $6.42  $5.58  15

MANAGEMENT COMMENTS
“We delivered another quarter of strong results in the fourth quarter, capping off a solid performance for the full year 2019. The housing market remained strong through a traditionally quiet quarter, and with our strategic shift to entry-level fully implemented, Meritage was well positioned to capitalize on healthy demand, growing our sales volume, improving profitability and strengthening our balance sheet, while also positioning the company for long-term growth," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our fourth quarter results continued the momentum we had achieved over the prior three quarters, producing the strongest quarterly year-over-year growth in orders all year; the highest home closing gross margin, which was very close to our underwriting target; the most efficient overhead leverage; and nearly a 40% increase in diluted earnings per share.

“Our total orders for new homes increased 27% in the fourth quarter year-over-year, driven by a 37% increase in absorptions and benefiting from our strategic focus on delivering more affordable homes. Home closing revenue was up 11% and our home closing gross margin improved 80 bps due to the efficiencies we’re realizing from streamlining and simplifying our operations,” he continued. “Total SG&A expenses as a percentage of home closing revenue were 50 bps lower year-over-year and our net earnings increased 37% with the benefit of energy tax credits recognized retroactively for two years after their renewal and extension in December of 2019. We used positive cash flow from operations to retire $300 million of debt, reducing our net debt to capital ratio to 26.2%, while also securing more than 6,800 additional lots in the fourth quarter for future growth and ending the year with $319 million in cash. 

“Our LiVE.NOW.® homes for value-conscious buyers and our innovative approach to interior personalization with our Studio M® Design Collections for first move-up buyers are delivering what home buyers want, while also providing efficiencies for Meritage that translate to improved profitability,” Mr. Hilton explained. “Absorptions in our LiVE.NOW. communities are significantly out-pacing traditional move-up communities, with equal or better margins.”

He concluded, “Based on our expectation that economic drivers remain positive for housing demand, and our ability to deliver homes that provide great value at lower price points for the broadest sectors of homebuyers, we feel we are well positioned to drive future growth and success. We secured more than 18,000 new lots in 2019, compared to approximately 10,000 in 2018, greatly expanding our pipeline for community count growth and positioning us to deliver strong volume growth as those communities are opened and begin selling over the next 4-6 quarters. We believe we can grow earnings faster than our top-line growth in 2020, leveraging the operating improvements we’ve made over the past few years while continuing to expand and refine them. For the full year 2020, we are projecting 9,700-10,200 total home closings and ASP’s between $360-370,000, with home closing gross margin in the mid-19’s percent and a tax rate of approximately 22%.”

FOURTH QUARTER RESULTS

  • Total orders for the fourth quarter of 2019 increased 27% year-over-year, driven by a 37% year-over-year increase in absorptions, largely due to strong demand for Meritage’s entry-level priced LiVE.NOW. homes. Higher absorptions offset an 8% year-over-year decline in average community count for the fourth quarter, resulting from early close-outs of communities in 2019. Absorptions were up 38% in the West region, 46% in the Central and 29% in the East region, demonstrating broad strength across Meritage’s markets. As a result of the Company's strategic product shift to lower-priced homes, fourth quarter average sales price (ASP) on orders and ending backlog were down 1% and 5%, respectively, compared to 2018.

  • The 11% increase in home closing revenue for the quarter reflected a 13% increase in home closing volume, partially offset by a 2% reduction in ASP due to the Company’s strategic shift toward more affordable homes. Both West and East regions’ home closing revenues were up 19% year-over-year, while Central region home closing revenue was 8% lower in 2019 than 2018, primarily due to fewer active communities open in the fourth quarter of 2019.

  • Home closing gross margin improved 80 bps to 19.8% from 19.0% a year ago, contributing to a 16% increase in total home closing gross profit over the prior year's fourth quarter. Fourth quarter 2019 gross margin was reduced by $3.1 million of inventory write-downs. Excluding real estate write-downs in both years ($0.9 million in 2018), home closing gross margins were 20.1% for the fourth quarter of 2019 and 19.1% for the fourth quarter of 2018.

  • Earnings from financial services unconsolidated were $3.7 million lower in the fourth quarter of 2019 compared to 2018 due to a change in the structure of customer incentives offered by the Company's mortgage joint venture. The benefits from those incentives are now captured as part of home closing revenue rather than financial services earnings.

  • Selling, general and administrative expenses (SG&A) totaled 10.1% of fourth quarter 2019 home closing revenue, a 50 bps reduction compared to 10.6% in the fourth quarter of 2018.

  • Fourth quarter 2019 also included a $5.6 million loss on early extinguishment of debt related to the early redemption of $300 million notes due 2020.

  • Fourth quarter 2019 pre-tax earnings margin increased 60 bps to 9.7% compared to 9.1% in 2018, reflecting increases in home closing gross margins and improved overhead leverage.

  • Income taxes were reduced by approximately $20 million from energy tax credits on qualified homes closed in 2018 and 2019 pursuant to the retroactive renewal and extension of such tax credits through 2020, which was approved by Congress in December 2019.

  • Net earnings increased 37% to $103.6 million ($2.65 per diluted share) for the fourth quarter of 2019, compared to $75.5 million ($1.91 per diluted share) for the fourth quarter of 2018, also benefiting from retroactive energy tax credits recorded in 2019.

FULL YEAR RESULTS

  • Total orders for the full year 2019 increased 19% year-over-year, as absorptions increased to 37.3 for the year (approximately 3.1 per month) in 2019, over 31.4 (approximately 2.6 per month) for 2018. The 19% increase in absorptions was primarily driven by the shift toward more entry-level communities, which sell at a higher pace. At year-end 2019, entry-level communities made up 47% of total communities, compared to 33% at the end of 2018.

  • Home closings for the full year were up 9% over 2018, while ASP on closings was 4% lower than the previous year due to the shift toward more affordable homes, resulting in a net 4% increase in total home closing revenue for the year.

  • Home closing gross margin increased to 18.9% for the full year 2019 compared to 18.2% in 2018, which drove an 8% increase in total home closing gross profit for the full year of 2019. Excluding real estate write-downs in both years ($3.2 million in 2019 and $2.2 million in 2018), home closing gross margin was 19.0% in 2019 and 18.3% in 2018.

  • SG&A expenses as a percentage of home closing revenue for the full year were flat at 10.9% in both 2019 and 2018, as leverage and operating efficiencies in 2019 were partially offset by costs associated with the start-up and operation of our Studio M design studios, in addition to severance expenses and accelerated equity compensation expense taken in the first quarter of 2019 as a result of changes in tax rules.

  • Interest expense increased $7.6 million year-over-year, primarily due to less interest capitalizable to assets under development in 2019, reflecting shortened construction cycle times and faster inventory turnover.

  • Other income (net) decreased by $1.6 million in 2019 primarily due to 2018 including a $4.8 million favorable legal settlement related to a previous joint venture in Nevada.

  • Net earnings of $249.7 million ($6.42 per diluted share) increased 10% (15% for diluted EPS) for the full year of 2019, compared to $227.3 million ($5.58 per diluted share) in 2018. Increases in home closing revenue and gross margin year-to-date in 2019 were partially offset by higher interest expense and the $5.6 million charge for early extinguishment of debt in the fourth quarter of 2019, resulting in a net 7% increase in earnings before income taxes. The effective tax rate for the full year 2019 was 18%, compared to 20% in 2018, reflecting the benefit of the retroactive energy tax credits renewed in 2019. Full year diluted EPS also increased due to a 5% reduction in weighted average shares outstanding, as compared to 2018, resulting from share repurchases in late 2018 and early 2019.

BALANCE SHEET

  • Cash and cash equivalents at December 31, 2019 totaled $319.5 million, compared to $311.5 million at December 31, 2018.

  • Positive cash flow from operations was used for the early redemption in December 2019 of $300 million of 7.15% senior notes due in 2020.

  • Total real estate assets was relatively flat at approximately $2.7 billion at December 31, 2019, as homes under construction increased to provide additional entry-level spec inventory for sale and quick move-in, consistent with the Company’s strategy, and were offset by declines in land inventory, which is expected to be replenished with additional newly-contracted lots.

  • Meritage ended the fourth quarter of 2019 with approximately 41,400 total lots owned or under control, compared to approximately 34,600 total lots at December 31, 2018, with over 6,800 lots added for approximately 46 new communities in the fourth quarter of 2019 alone. Approximately 85% of the lots added during 2019 were in LiVE.NOW. communities for entry-level homes.

  • Debt-to-capital ratios decreased to 34.0% at December 31, 2019 from 43.2% at December 31, 2018, and net debt-to-capital ratio declined to 26.2% at year-end 2019 from 36.7% at year-end 2018.

CONFERENCE CALL
Management will host a conference call to discuss the results at 7:30 a.m. Arizona Time (9:30 a.m. Eastern Time) on Thursday, January 30. The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants can avoid delays by preregistering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10137933.

Telephone participants who are unable to preregister may dial into 1-866-226-4948 US toll free on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 toll free for Canada.

A replay of the call will be available beginning at approximately 12:00 p.m. ET on January 30 and extending through February 13, 2020, on the website noted above or by dialing 1-877-344-7529 US toll free, 1-412-317-0088 for international or 1-855-669-9658 toll free for Canada, and referencing conference number 10137933.

Contacts:Brent Anderson, VP Investor Relations
 (972) 580-6360 (office)
 investors@meritagehomes.com 
  


Meritage Homes Corporation and Subsidiaries

Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)

  Three Months Ended December 31,
  2019 2018 Change $ Change %
Homebuilding:       
 Home closing revenue$1,103,741   $996,063   $107,678   11
 Land closing revenue33,107   12,716   20,391   160
 Total closing revenue1,136,848   1,008,779   128,069   13
 Cost of home closings(884,778)  (806,550)  (78,228)  10
 Cost of land closings(32,750)  (13,541)  (19,209)  142
 Total cost of closings(917,528)  (820,091)  (97,437)  12
 Home closing gross profit218,963   189,513   29,450   16
 Land closing gross profit/(loss)357   (825)  1,182   143
 Total closing gross profit219,320   188,688   30,632   16
Financial Services:       
 Revenue4,756   4,412   344   8
 Expense(1,832)  (1,618)  (214)  13
 Earnings from financial services unconsolidated entities and other, net1,340   5,058   (3,718)  (74)%
 Financial services profit4,264   7,852   (3,588)  (46)%
Commissions and other sales costs(70,598)  (68,040)  (2,558)  4
General and administrative expenses(40,557)  (37,474)  (3,083)  8
Interest expense(20)  (552)  532   (96)%
Other income, net3,761   1,302   2,459   189
Loss on early extinguishment of debt(5,635)     (5,635)  n/a 
Earnings before income taxes110,535   91,776   18,759   20
Provision for income taxes(6,921)  (16,291)  9,370   (58)%
Net earnings$103,614   $75,485   $28,129   37
        
Earnings per common share:       
 Basic    Change $ or
shares
 Change %
 Earnings per common share$2.71   $1.93   $0.78   40%
 Weighted average shares outstanding38,252   39,026   (774)  (2)%
 Diluted       
 Earnings per common share$2.65   $1.91   $0.74   39%
 Weighted average shares outstanding39,137   39,575   (438)  (1)%
                

Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)

  Twelve Months Ended December 31,
  2019 2018 Change $ Change %
Homebuilding:       
 Home closing revenue$3,604,629   $3,474,712   $129,917   4
 Land closing revenue45,854   38,707   7,147   18
 Total closing revenue3,650,483   3,513,419   137,064   4
 Cost of home closings(2,923,969)  (2,842,762)  (81,207)  3
 Cost of land closings(46,899)  (41,504)  (5,395)  13
 Total cost of closings(2,970,868)  (2,884,266)  (86,602)  3
 Home closing gross profit680,660   631,950   48,710   8
 Land closing (loss)/gross profit(1,045)  (2,797)  1,752   63
 Total closing gross profit679,615   629,153   50,462   8
Financial Services:       
 Revenue16,461   15,162   1,299   9
 Expense(6,781)  (6,454)  (327)  5
 Earnings from financial services unconsolidated entities and other, net10,899   15,336   (4,437)  (29)%
 Financial services profit20,579   24,044   (3,465)  (14)%
Commissions and other sales costs(246,728)  (241,897)  (4,831)  2
General and administrative expenses(146,093)  (138,478)  (7,615)  5
Interest expense(8,370)  (785)  (7,585)  n/m 
Other income, net9,577   11,217   (1,640)  (15)%
Loss on early extinguishment of debt(5,635)     (5,635)  n/a 
Earnings before income taxes302,945   283,254   19,691   7
Provision for income taxes(53,282)  (55,922)  2,640   (5)%
Net earnings$249,663   $227,332   $22,331   10
        
Earnings per common share:       
 Basic    Change $ or
shares
 Change %
 Earnings per common share$6.55   $5.67   $0.88   16%
 Weighted average shares outstanding38,100   40,107   (2,007)  (5)%
 Diluted       
 Earnings per common share$6.42   $5.58   $0.84   15%
 Weighted average shares outstanding38,891   40,728   (1,837)  (5)%
                


Meritage Homes Corporation and Subsidiaries

 Consolidated Balance Sheets
(In thousands)
(unaudited)

  December 31, 2019 December 31, 2018
Assets:    
Cash and cash equivalents $319,466   $311,466  
Other receivables 88,492   77,285  
Real estate (1) 2,744,361   2,742,621  
Deposits on real estate under option or contract 50,901   51,410  
Investments in unconsolidated entities 4,443   17,480  
Property and equipment, net 50,606   54,596  
Deferred tax asset 25,917   26,465  
Prepaids, other assets and goodwill 114,063   84,156  
Total assets $3,398,249   $3,365,479  
Liabilities:    
Accounts payable $155,024   $128,169  
Accrued liabilities 226,008   177,862  
Home sale deposits 24,246   28,636  
Loans payable and other borrowings 22,876   14,773  
Senior notes 996,105   1,295,284  
Total liabilities 1,424,259   1,644,724  
Stockholders' Equity:    
Preferred stock —   —  
Common stock 382   381  
Additional paid-in capital 505,352   501,781  
Retained earnings 1,468,256   1,218,593  
Total stockholders’ equity 1,973,990   1,720,755  
Total liabilities and stockholders’ equity $3,398,249   $3,365,479  
(1)Real estate – Allocated costs:    
Homes under contract under construction $564,762   $480,143  
Unsold homes, completed and under construction 686,948   644,717  
Model homes 121,340   146,327  
Finished home sites and home sites under development 1,371,311   1,471,434  
Total real estate $2,744,361   $2,742,621  
         


Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):

 Three Months Ended December 31, Twelve Months Ended December 31,
 2019 2018 2019 2018
Depreciation and amortization$8,370  $7,508  $27,923  $26,966 
        
Summary of Capitalized Interest:       
Capitalized interest, beginning of period$88,195  $88,064  $88,454  $78,564 
Interest incurred19,629  21,490  83,856  85,278 
Interest expensed(20) (552) (8,370) (785)
Interest amortized to cost of home and land closings(25,790) (20,548) (81,926) (74,603)
Capitalized interest, end of period$82,014  $88,454  $82,014  $88,454 
        
 December 31,
2019
 December 31,
2018
    
Notes payable and other borrowings$1,018,981  $1,310,057     
Stockholders' equity1,973,990  1,720,755     
Total capital2,992,971  3,030,812     
Debt-to-capital34.0 43.2%    
        
Notes payable and other borrowings$1,018,981  $1,310,057     
Less: cash and cash equivalents(319,466) (311,466)    
Net debt699,515  998,591     
Stockholders’ equity1,973,990  1,720,755     
Total net capital$2,673,505  $2,719,346     
Net debt-to-capital26.2% 36.7%    
          


Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)

  Twelve Months Ended December 31,
  2019 2018
Cash flows from operating activities:    
Net earnings $249,663   $227,332 
Adjustments to reconcile net earnings to net cash provided by operating activities:    
Depreciation and amortization 27,923   26,966 
Stock-based compensation 19,607   17,170 
Loss on early extinguishment of debt 5,635    
Equity in earnings from unconsolidated entities (11,945)  (16,333)
Deferred tax asset revaluation    (2,741)
Distribution of earnings from unconsolidated entities 13,438   16,142 
Other 9,273   15,847 
Changes in assets and liabilities:    
Decrease/(increase) in real estate 3,621   (19,426)
Decrease in deposits on real estate under option or contract 453   12,444 
(Increase)/decrease in receivables, prepaids and other assets (9,112)  3,042 
Increase/(decrease) in accounts payable and accrued liabilities 42,654   (12,820)
Decrease in home sale deposits (4,390)  (5,423)
Net cash provided by operating activities 346,820   262,200  
Cash flows from investing activities:    
Investments in unconsolidated entities  (1,113)   (808)
Distributions of capital from unconsolidated entities 11,550   597 
Purchases of property and equipment (24,385)  (33,415)
Proceeds from sales of property and equipment 459   99 
Maturities/sales of investments and securities 754   1,181 
Payments to purchase investments and securities (754)  (1,181)
Net cash used in investing activities (13,489)  (33,527)
Cash flows from financing activities:    
Repayment of loans payable and other borrowings (3,676)  (15,755)
Repayment of senior notes and senior convertible notes (305,620)  (175,000)
Proceeds from issuance of senior notes    206,000 
Payment of debt issuance costs    (3,198)
Repurchase of shares (16,035)  (100,000)
Net cash used in financing activities (325,331)  (87,953)
Net increase in cash and cash equivalents 8,000   140,720 
Beginning cash and cash equivalents 311,466   170,746 
Ending cash and cash equivalents $319,466   $311,466 
          


Meritage Homes Corporation and Subsidiaries

Operating Data
(Dollars in thousands)
(unaudited)

         
  Three Months Ended
  December 31, 2019 December 31, 2018
  Homes Value Homes Value
Homes Closed:        
Arizona 581  $187,670  453  $141,622 
California 285  181,307  206  144,179 
Colorado 204  102,989  212  111,461 
West Region 1,070  471,966  871  397,262 
Texas 800  273,566  836  298,824 
Central Region 800  273,566  836  298,824 
Florida 372  147,227  317  126,136 
Georgia 147  51,052  152  54,732 
North Carolina 265  98,769  166  63,078 
South Carolina 70  21,858  98  32,011 
Tennessee 106  39,303  65  24,020 
East Region 960  358,209  798  299,977 
Total 2,830  $1,103,741  2,505  $996,063 
         
Homes Ordered:        
Arizona 354  $115,404  300  $98,290 
California 231  143,573  109  72,227 
Colorado 142  71,276  116  60,398 
West Region 727  330,253  525  230,915 
Texas 697  232,644  591  209,787 
Central Region 697  232,644  591  209,787 
Florida 255  97,025  190  79,632 
Georgia 106  37,004  94  32,413 
North Carolina 207  73,999  149  55,929 
South Carolina 49  14,785  66  20,652 
Tennessee 52  18,423  38  14,882 
East Region 669  241,236  537  203,508 
Total 2,093  $804,133  1,653  $644,210 
               


Meritage Homes Corporation and Subsidiaries

Operating Data
(Dollars in thousands)
(unaudited)

  Twelve Months Ended
  December 31, 2019 December 31, 2018
  Homes Value Homes Value
Homes Closed:        
Arizona 1,707  $556,432  1,505  $485,867 
California 749  486,153  849  588,975 
Colorado 711  367,468  628  342,984 
West Region 3,167  1,410,053  2,982  1,417,826 
Texas 2,976  1,033,755  2,840  1,006,221 
Central Region 2,976  1,033,755  2,840  1,006,221 
Florida 1,181  468,591  1,078  455,292 
Georgia 527  183,492  468  161,969 
North Carolina 823  303,635  654  254,207 
South Carolina 272  88,371  309  104,622 
Tennessee 321  116,732  200  74,575 
East Region 3,124  1,160,821  2,709  1,050,665 
Total 9,267  $3,604,629  8,531  $3,474,712 
         
Homes Ordered:        
Arizona 1,875  $608,795  1,522  $499,353 
California 803  511,767  622  432,134 
Colorado 722  361,336  614  331,389 
West Region 3,400  1,481,898  2,758  1,262,876 
Texas 3,043  1,031,937  2,801  995,473 
Central Region 3,043  1,031,937  2,801  995,473 
Florida 1,180  466,528  1,004  422,925 
Georgia 537  186,735  440  157,706 
North Carolina 865  315,572  588  224,552 
South Carolina 254  80,325  299  101,426 
Tennessee 337  120,507  199  75,133 
East Region 3,173  1,169,667  2,530  981,742 
Total 9,616  $3,683,502  8,089  $3,240,091 
         
Order Backlog:        
Arizona 511  $186,194  343  $133,567 
California 145  92,171  91  66,391 
Colorado 196  97,508  185  103,470 
West Region 852  375,873  619  303,428 
Texas 1,048  372,520  981  372,826 
Central Region 1,048  372,520  981  372,826 
Florida 371  163,385  372  164,728 
Georgia 133  49,742  123  46,344 
North Carolina 219  79,446  177  67,316 
South Carolina 71  24,427  89  32,333 
Tennessee 88  32,765  72  28,943 
East Region 882  349,765  833  339,664 
Total 2,782  $1,098,158  2,433  $1,015,918 
               


Meritage Homes Corporation and Subsidiaries

Operating Data
(unaudited)

         
  Three Months Ended
  December 31, 2019 December 31, 2018
  Ending Average Ending Average
Active Communities:        
Arizona 31   34.0   40   42.0  
California 24   24.0   17   15.5  
Colorado 18   19.0   20   20.0  
West Region 73   77.0   77   77.5  
Texas 77   75.5   95   93.5  
Central Region 77   75.5   95   93.5  
Florida 33   34.5   31   30.5  
Georgia 18   18.0   22   22.0  
North Carolina 25   23.5   25   22.5  
South Carolina   9.5   12   12.0  
Tennessee   9.0   10   10.0  
East Region 94   94.5   100   97.0  
Total 244   247.0   272   268.0  


   
  Twelve Months Ended
  December 31, 2019 December 31, 2018
  Ending Average Ending Average
Active Communities:        
Arizona 31   35.5   40   39.0  
California 24   20.5   17   18.5  
Colorado 18   19.0   20   15.5  
West Region 73   75.0   77   73.0  
Texas 77   86.0   95   93.5  
Central Region 77   86.0   95   93.5  
Florida 33   32.0   31   29.5  
Georgia 18   20.0   22   20.5  
North Carolina 25   25.0   25   21.0  
South Carolina   10.5   12   12.5  
Tennessee   9.5   10   8.0  
East Region 94   97.0   100   91.5  
Total 244   258.0   272   258.0  
             

ABOUT MERITAGE HOMES CORPORATION

Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2018. Meritage offers a variety of homes that are designed with a focus on first-time and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

The Company has designed and built over 125,000 homes in its 35-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage is the industry leader in energy-efficient homebuilding and has received the U.S. Environmental Protection Agency's ENERGY STAR® Partner of the Year for Sustained Excellence Award every year since 2013 for innovation and industry leadership in energy efficient homebuilding.

For more information, visit www.meritagehomes.com.

The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's projected full year 2020 home closings, home closing revenue, home closing gross margin and tax rate, as well as expectations regarding new community openings, the U.S. economy and housing market.

Such statements are based on the current beliefs and expectations of Company management, and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update or revise any forward-looking statements to reflect future events or changes in these expectations, except as required by law. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: changes in interest rates and the availability and pricing of residential mortgages; legislation related to tariffs; the availability and cost of finished lots and undeveloped land; shortages in the availability and cost of labor; the success of strategic initiatives; the ability of our potential buyers to sell their existing homes; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; changes in tax laws that adversely impact us or our homebuyers; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest or option deposits; our potential exposure to and impacts from natural disasters or severe weather conditions; home warranty and construction defect claims; failures in health and safety performance; our success in prevailing on contested tax positions; our ability to obtain performance and surety bonds in connection with our development work; the loss of key personnel; failure to comply with laws and regulations; our limited geographic diversification; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our ability to successfully integrate acquired companies and achieve anticipated benefits from these acquisitions; our compliance with government regulations, the effect of legislative and other governmental actions, orders, policies or initiatives that impact housing, labor availability, construction, mortgage availability, our access to capital, the cost of capital or the economy in general, or other initiatives that seek to restrain growth of new housing construction or similar measures; legislation relating to energy and climate change; the replication of our energy-efficient technologies by our competitors; our exposure to information technology failures and security breaches; negative publicity that affects our reputation and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2018 and our Form 10-Q for the quarter ended September 30, 2019 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com

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Source: Meritage Homes Corporation