Meritage Homes Reports Third Quarter and Year-to-Date 2008 Results
THIRD QUARTER RESULTS (PERCENT CHANGE 2008 VS. 2007):
-- Net loss of $144M or $(4.69) per share, includes $55M pre-tax real
estate-related charges and a $106M deferred tax asset valuation
allowance; pre-tax loss of $7M excluding these charges
-- Deterioration in credit markets and the effects of Hurricane Ike
evident in declines of 25% in total closings and 29% in net
orders, with cancellation rate of 40%, resulting in lower revenue,
increase in unsold homes and reduced cash flow from operations
in the quarter
YEAR-TO-DATE RESULTS (PERCENT CHANGE 2008 VS. 2007):
-- Reduced general & administrative expenses by $24M, to 4.7% of
total revenue (4.4% in 2007)
-- Reduced spec inventory by 27% and generated $106M cash flow from
operations
-- Ended September with $119M cash and no bank debt; $338M available
under credit facility
-- Maintained asset-light strategy by reducing lot supply to 20,738,
or approximately 3.3 years, with just 1.4 years supply (9,095
lots) owned
-- Reduced net debt-to-capital ratio at September 30 to 46% in 2008,
from 50% in 2007
SCOTTSDALE, Ariz., Oct. 27, 2008 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH) today announced third quarter and year-to-date results for the periods ended September 30, 2008.
Summary Operating Results (Unaudited)
(Dollars in millions, except per share amounts)
---------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 %Chg 2008 2007 %Chg
---------------------------------------------------------------------
Homes closed (units) 1,423 1,894 -25% 4,139 5,548 -25%
Home closing revenue $373 $575 -35% $1,118 $1,719 -35%
---------------------------------------------------------------------
Sales orders (units) 1,013 1,435 -29% 4,120 5,242 -21%
Sales order value $254 $390 -35% $1,061 $1,532 -31%
---------------------------------------------------------------------
Ending backlog (units) 2,269 3,379 -33%
Ending backlog value $613 $1,014 -40%
---------------------------------------------------------------------
Net loss (including
write-offs) $(144) $(119) -21% $(213) $(160) -33%
Adjusted pre-tax (loss)/
earnings* (excluding
write-offs) (7) 24 -127% (12) 83 -115%
Diluted EPS (including
write-offs) $(4.69) $(4.52) -4% $(7.37) $(6.10) -21%
---------------------------------------------------------------------
* see "Operating Results" for non-GAAP reconciliation between net
loss and adjusted pre-tax (loss)/earnings
CONTINUED SLOWING IN HOUSING MARKET RESULTS IN FURTHER IMPAIRMENTS
Meritage reported a net loss of $144 million for the third quarter of 2008, including real estate-related and joint venture charges of $55 million (pre-tax), and a deferred tax asset valuation allowance of $106 million. By comparison, the net loss of $119 million reported for the third quarter of 2007 included $172 million (pre-tax) of real estate-related and joint venture charges, and an additional $45 million (pre-tax) charge to impair goodwill. Excluding these primarily non-cash charges, the third quarter 2008 pre-tax loss was $7 million, compared to pre-tax income of $24 million in the third quarter of 2007, reflecting lower closing volume and revenue, increased use of incentives and reduced margins on homes closed.
Third quarter 2008 home closing revenue declined 35% from the prior year, as a result of 25% lower closings and a 14% decline in average sale prices.
Gross margins excluding impairment charges fell, reflecting lower net sales prices on fewer deliveries, partially offset by construction cost reductions and a lower asset basis on homes closed due to prior impairments. Third quarter gross margins were 12.7% before impairments in 2008, compared to 14.8% before impairments in 2007.
"While Hurricane Ike hurt our Houston operations in early September, the financial crisis and slowing economy have damaged buyers' confidence and resulted in further declines in home sales and asset values," said Steven J. Hilton, chairman and CEO of Meritage. "That prompted us to record further real estate impairments in our third quarter. Based on greater uncertainty as to the timing of an eventual recovery in homebuilding, we concluded this quarter that a valuation allowance against our deferred tax asset was warranted."
Impairments of existing projects accounted for $35 million of the total third quarter real estate-related charges, with additional impairments of $13 million on land held for sale, $6 million of option terminations and $1 million related to joint venture impairments. More than half of the third quarter 2008 real estate impairments were in Arizona, primarily from the four attached home communities that Meritage has in Phoenix. California made up another 20% of the impairments, as housing markets there were further battered by falling prices and an over-supply of new and existing inventory.
Meritage reported a year-to-date net loss of $213 million in 2008, including primarily non-cash real estate-related and joint venture charges of $154 million (pre-tax), and the deferred tax asset valuation allowance of $106 million. By comparison, the year-to-date net loss of $160 million in 2007 included $269 million (pre-tax) of real estate-related and joint venture charges, and a $73 million (pre-tax) charge to impair goodwill. Year-to-date 2008 home closing revenue also declined 35% from the prior year, consistent with the third quarter, as a result of 25% lower closings and a 13% decline in average sale prices.
Meritage controlled overhead costs relative to its decline in revenue, reducing general and administrative expenses by $24 million (31%) year-to-date, to 4.7% of year-to-date revenue in 2008, compared to 4.4% in 2007. Excluding a $10 million benefit in the second quarter 2008 related to a successful legal settlement, year-to-date general and administrative expenses were $63 million, or 5.6% of year-to-date revenue.
SALES INCREASE IN ARIZONA, DECLINES IN ALL OTHER MARKETS
Third quarter net orders declined 29% from 2007 to 2008 after a 40% cancellation rate in the quarter, which was higher than the 27% and 29% rates in the first two quarters of 2008, and in line with 41% in the third quarter of 2007. Arizona sales increased 17% year over year, while the largest percentage declines in sales were experienced in Florida (-74%) and California (-53%).
"We've reported lesser sales declines in the last several quarters than many other homebuilders. However, consistent with what others have reported, we saw a substantial decrease in traffic and sales during September, which has continued in October. Our September net sales were about 30% lower than the July-August pace, and our cancellation rate jumped to 45% that month in the wake of September's crisis in the financial markets," said Mr. Hilton.
He added, "Texas housing markets have been among the strongest through this downturn, due to the state's strong population and employment growth. While orders there had already come down about 30% from the peak in 2006, Hurricane Ike further reduced sales, construction and closings in Houston, our largest market. That, combined with the overall impact of the financial crisis, contributed to a third quarter sales decline of 28% from last year, resulting in a 16% decline year-to-date in Texas."
FOCUSED ON MAINTAINING BALANCE SHEET STRENGTH
Despite being a build-to-order homebuilder, cancellations resulted in a sequential increase of Meritage's inventory of unsold homes, which rose to 809 as of September 30, 2008, from 725 the previous quarter, yet were 34% lower than September 30, 2007.
The Company ended the quarter with $119 million in cash, no bank debt and $338 million available under the terms of its credit facility. Delayed closings and higher inventory levels reduced net cash flow in the third quarter. Despite that, Meritage was modestly cash flow positive for the quarter, and has generated more than $106 million positive cash flow from operations in the first three quarters of 2008.
Meritage's net debt-to-capital ratio was 46% at September 30, 2008, compared to 41% at the end of the previous quarter and 50% at September 30, 2007. The increase this quarter was due to a reduction in shareholders' equity from the net loss, driven primarily by the deferred tax valuation allowance and real estate impairments. Meritage was in compliance with all covenants under its amended credit facility as of September 30, 2008.
The total of 20,738 lots controlled at September 30, 2008, was 62% lower than its peak three years earlier, and down from 21,902 at June 30, 2008. Consistent with management's strategy to reduce risks associated with owning long land positions in depreciating markets, the Company's 1.4-year supply of owned lots (based on trailing twelve months' closings) is one of the lowest in the homebuilding industry.
SUMMARY AND FUTURE OUTLOOK
Mr. Hilton concluded, "We believe that true demand for homes is being depressed by the volatility in the financial markets and the constant barrage of negative news. It appears that this has caused many buyers to defer home purchases until prices and economic conditions stabilize. A few markets such as Sacramento have shown sales increases recently, as buyers have taken advantage of the large selection and lower prices on homes, and brought down inventories despite additional foreclosures. However, those isolated bright spots may not be indicative of the market in general, so we are emphasizing a more defensive strategy going forward.
"We will focus our efforts on reducing Meritage's inventory of unsold homes, reducing construction costs and overhead expenses, generating cash and protecting our balance sheet. We'll be very cautious in acquiring any new lot positions.
"Despite lower sales and current market conditions, we expect to generate positive cash flow for the next several quarters from our continued reduction of inventory and projected collection of roughly $80 million in tax refunds in the first half of 2009.
"We are hopeful that the actions being taken by the federal government and other international leaders will restore faith in the credit markets, ease liquidity and stem the tide of foreclosures. We will continue to focus on protecting our balance sheet, and we believe that we are in markets that will offer some of the best long-term opportunities for homebuilders."
CONFERENCE CALL AND WEBCAST
The Company will host a conference call to discuss these results on October 28, 2008, at 11:00 a.m. Eastern Time. The call will be webcast by B2i Technologies, with an accompanying slideshow on the "Investor Relations" page of the Company's web site at http://www.meritagehomes.com. For telephone participants, the dial-in number is 888-241-0558 with a passcode of "Meritage". Participants are encouraged to dial in five minutes before the call begins. A replay of the call will be available after 4:00 p.m. EDT October 28, 2008, through midnight November 28, 2008 on the websites noted above, or by dialing 800-374-8789, and referencing passcode 64825132.
Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
---- ---- ---- ----
Operating results
Home closing revenue $ 372,907 $ 574,667 $1,118,486 $1,718,530
Land closing revenue 1,859 3,902 5,007 6,156
--------- --------- ---------- ----------
Total closing revenue 374,766 578,569 1,123,493 1,724,686
Home closing gross
profit/(loss) 6,786 (62,283) 31,135 37,456
Land closing loss (13,050) (759) (19,616) (399)
--------- --------- ---------- ----------
Total closing gross
(loss)/profit (6,264) (63,042) 11,519 37,057
Commissions and other
sales costs (33,840) (49,598) (101,274) (145,003)
General and
administrative
expenses(1) (20,735) (21,308) (52,481) (76,385)
Goodwill-related
impairments -- (45,000) -- (72,952)
Interest expense (5,835) (2,319) (17,034) (2,638)
Other income/(loss),
net(2) 5,092 (11,150) (7,256) 918
--------- --------- ---------- ----------
Loss before income taxes (61,582) (192,417) (166,526) (259,003)
(Provision)/benefit for
income taxes (82,431) 73,865 (46,260) 98,991
--------- --------- ---------- ----------
Net loss $(144,013) $(118,552) $ (212,786) $ (160,012)
========= ========= ========== ==========
Loss per share
Basic and Diluted:
Loss per share $ (4.69) $ (4.52) $ (7.37) $ (6.10)
Weighted average shares
outstanding 30,690 26,249 28,872 26,216
Non-GAAP Reconciliations:
Total closing gross
(loss)/profit (6,264) (63,042) 11,519 37,057
Add: Real estate-related
impairments
Terminated lot options
& land held for sale 19,342 48,565 44,939 84,684
Impaired projects 34,670 99,820 88,564 159,600
--------- --------- ---------- ----------
Adjusted closing gross
profit $ 47,748 $ 85,343 $ 145,022 $ 281,341
========= ========= ========== ==========
Loss before income
taxes $ (61,582) $(192,417) $ (166,526) $ (259,003)
Add: Real estate-related
and JV impairments
Terminated lot options
and land sales 19,342 48,565 44,939 84,684
Impaired projects 34,670 99,820 88,564 159,600
Joint venture (JV)
impairments 1,070 23,369 20,759 24,489
Goodwill-related
impairments -- 45,000 -- 72,952
--------- --------- ---------- ----------
Adjusted (loss)/earnings
before income taxes $ (6,500) $ 24,337 $ (12,264) $ 82,722
========= ========= ========== ==========
(1) General and administrative expenses for the nine months ended
September 30, 2008 include a $10.2 million benefit related to a
successful legal settlement.
(2) Other income is net of the Joint Venture (JV) impairments shown
in the "Non-GAAP reconciliations" section.
Meritage Homes Corporation and Subsidiaries
Non-GAAP Financial Disclosures
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
---- ---- ---- ----
EBITDA reconciliation:(1)
Net loss $(144,013) $(118,552) $(212,786) $(160,012)
(Benefit)/provision for
income taxes 82,431 (73,865) 46,260 (98,991)
Interest amortized to cost
of sales & interest
expense 13,068 14,920 40,836 33,058
Depreciation and
amortization 3,221 4,412 9,785 13,456
--------- --------- --------- ---------
EBITDA $ (45,293) $(173,085) $(115,905) $(212,489)
Add back:
Real estate-related
impairments 55,082 171,754 154,262 268,773
Fixed asset impairments -- -- -- --
Goodwill-related
impairments -- 45,000 -- 72,952
--------- --------- --------- ---------
Adjusted EBITDA $ 9,789 $ 43,669 $ 38,357 $ 129,236
========= ========= ========= =========
As of and for the Four
Quarters Ended
September 30,
2008 2007
---- ----
EBITDA reconciliation:(1)
Net loss $ (341,625) $ (150,988)
(Benefit)/provision for income taxes (22,380) (94,394)
Interest amortized to cost of sales & interest
expense 59,185 43,257
Depreciation and
amortization 14,147 21,913
---------- ----------
EBITDA $ (290,673) $ (180,212)
Add back:
Real estate-related impairments 283,787 331,438
Fixed asset impairments 3,124 --
Goodwill-related impairments 57,538 72,952
---------- ----------
Adjusted EBITDA $ 53,776 $ 224,178
========== ==========
Interest coverage ratio:(2)
Adjusted EBITDA $ 53,776 $ 224,178
Interest incurred 52,648 61,109
Interest coverage ratio 1.0 3.7
Net debt-to-capital:(3)
Notes payable and other borrowings $ 629,718 $ 883,927
Less: cash and cash equivalents $ (119,027) $ (45,297)
---------- ----------
Net debt 510,691 838,630
Stockholders' equity 604,891 852,898
---------- ----------
Capital 1,115,582 1,691,528
Net debt-to-capital 45.8% 49.6%
(1) EBITDA and adjusted EBITDA are non-GAAP financial measures
representing net earnings before interest expense amortized to cost of
sales, income taxes, depreciation and amortization, with write-offs
and impairment charges also excluded from adjusted EBITDA. A non-GAAP
financial measure is a numerical measure of a company's historical or
future financial performance, financial position or cash flows that
excludes amounts, or is subject to adjustments that have the effect of
excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP in the
statement of operations, balance sheet, or statement of cash flows (or
equivalent statements) of the Company; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that
are excluded from the most directly comparable measure so calculated
and presented. In this regard, GAAP refers to generally accepted
accounting principles in the United States. We have provided a
reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measure. EBITDA is presented here
because it is used by management to analyze and compare Meritage with
other homebuilding companies on the basis of operating performance and
we believe it is a financial measure widely used by investors and
analysts in the homebuilding industry. Adjusted EBITDA is presented
because it more closely, although not exactly, resembles the
comparable covenant calculations under our revolving credit facility
and senior and senior subordinated note indentures. These measures as
presented may not be comparable to similarly titled measures reported
by other companies because not all companies calculate EBITDA in an
identical manner and, therefore, it is not necessarily an accurate
means of comparison between companies. EBITDA is not intended to
represent cash flows for the period or funds available for
management's discretionary use nor has it been presented as an
alternative to operating income or as an indicator of operating
performance and it should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP.
(2) Interest coverage ratio is calculated as the trailing four
quarters' Adjusted EBITDA divided by the trailing four quarters'
interest incurred. This calculation may differ from our interest
coverage ratio as computed for our credit facility covenant due to
additional non-cash reconciling items, such as stock compensation.
(3) Net debt-to-capital is calculated as notes payable and other
borrowings less cash and cash equivalents, divided by the sum of notes
payable and other borrowings, less cash and cash equivalents, plus
stockholders' equity.
Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Sept. 30, Dec. 31, Sept. 30,
2008 2007 2007
Assets:
Cash and cash equivalents $ 119,027 $ 27,677 $ 45,297
Income tax receivables 60,415 67,424 40,970
Other receivables 38,010 56,079 52,603
Real estate(1) 1,049,530 1,267,879 1,504,137
Investments in unconsolidated
entities 20,788 26,563 57,387
Deferred tax asset, net 31,336 139,057 110,390
Option deposits 69,032 87,191 106,768
Other assets 65,606 76,511 157,916
---------- ---------- ----------
Total assets $1,453,744 $1,748,381 $2,075,468
========== ========== ==========
Liabilities:
Senior notes 478,926 478,802 478,760
Senior subordinated notes 150,000 150,000 150,000
Credit facility -- 82,000 234,500
Other borrowings 792 19,073 20,667
Accounts payable, accrued
liabilities, homebuyer deposits,
and other liabilities 219,135 288,342 338,643
---------- ---------- ----------
Total liabilities 848,853 1,018,217 1,222,570
---------- ---------- ----------
Total equity 604,891 730,164 852,898
---------- ---------- ----------
Total liabilities & equity $1,453,744 $1,748,381 $2,075,468
========== ========== ==========
(1) Real estate consists of the
following:
Homes under contract under
construction $ 316,834 $ 327,416 $ 535,405
Finished homesites/under
development 499,470 596,752 624,098
Unsold homes, completed and
under construction 149,992 236,099 255,334
Model homes 59,928 61,172 59,237
Model home lease program 792 19,073 20,667
Land held for development or
sale 22,514 27,367 9,396
---------- ---------- ----------
Total real estate $1,049,530 $1,267,879 $1,504,137
========== ========== ==========
Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2008 2007
---- ----
Operating results
Net loss $ (212,786) $ (160,012)
Real estate-related impairments 133,503 244,284
Goodwill-related impairments -- 72,952
Decrease/(increase) in deferred taxes 1,496 (81,424)
Deferred tax valuation allowance 106,225 --
Equity in losses from JVs and
distributions of JV earnings, net 22,020 21,724
Decrease/(increase) in real estate
and deposits, net 95,818 (131,410)
Other operating activities (40,124) (128,047)
---------- ----------
Net cash provided by/(used in)
operating activities 106,152 (161,933)
---------- ----------
Cash used in investing activities (16,479) (2,948)
---------- ----------
Net (repayments)/ borrowings under
Credit Facility (82,000) 8,000
Proceeds from issuance of senior
subordinated notes, net -- 144,572
Proceeds from issuance of common
stock, net 82,775 --
Other financing activities 902 896
---------- ----------
Net cash provided by financing
activities 1,677 153,468
---------- ----------
Net increase/(decrease) in cash 91,350 (11,413)
Beginning cash and cash
equivalents 27,677 56,710
---------- ----------
Ending cash and cash equivalents $ 119,027 $ 45,297
========== ==========
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
(Dollars in Thousands)
For the Three Months Ended
September 30,
2008 2007
---------------- ----------------
Homes Value Homes Value
----- ----- ----- -----
Homes Closed:
California 131 $ 52,530 229 $ 104,989
Nevada 71 19,057 71 24,817
----- --------- ----- ---------
West Region 202 71,587 300 129,806
Arizona 297 75,226 373 119,600
Texas 783 186,023 1,038 263,504
Colorado 37 13,342 64 22,669
----- --------- ----- ---------
Central Region 1,117 274,591 1,475 405,773
Florida 104 26,729 119 39,088
----- --------- ----- ---------
East Region 104 26,729 119 39,088
----- --------- ----- ---------
Total 1,423 $ 372,907 1,894 $ 574,667
===== ========= ===== =========
Homes Ordered:
California 85 $ 32,768 180 $ 72,641
Nevada 41 11,780 51 13,629
----- --------- ----- ---------
West Region 126 44,548 231 86,270
Arizona 220 49,314 188 46,366
Texas 609 145,463 850 209,708
Colorado 25 7,943 41 13,408
----- --------- ----- ---------
Central Region 854 202,720 1,079 269,482
Florida 33 7,113 125 34,614
----- --------- ----- ---------
East Region 33 7,113 125 34,614
----- --------- ----- ---------
Total 1,013 $ 254,381 1,435 $ 390,366
===== ========= ===== =========
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
(Dollars in Thousands)
As of and For the Nine Months Ended
September 30,
2008 2007
--------------------------------------
Homes Value Homes Value
----- ----- ----- -----
Homes Closed:
California 456 $ 187,357 631 $ 306,380
Nevada 205 55,174 174 61,743
----- ----------- ----- -----------
West Region 661 242,531 805 368,123
Arizona 772 205,094 1,229 422,624
Texas 2,311 560,634 3,024 759,592
Colorado 101 35,323 125 46,142
----- ----------- ----- -----------
Central Region 3,184 801,051 4,378 1,228,358
Florida 294 74,904 365 122,049
----- ----------- ----- -----------
East Region 294 74,904 365 122,049
----- ----------- ----- -----------
Total 4,139 $ 1,118,486 5,548 $ 1,718,530
===== =========== ===== ===========
Homes Ordered:
California 451 $ 177,913 714 $ 317,032
Nevada 193 50,833 205 69,264
----- ----------- ----- -----------
West Region 644 228,746 919 386,296
Arizona 765 170,216 1,035 303,532
Texas 2,410 581,280 2,854 710,522
Colorado 102 35,493 145 52,377
----- ----------- ----- -----------
Central Region 3,277 786,989 4,034 1,066,431
Florida 199 45,659 289 79,721
----- ----------- ----- -----------
East Region 199 45,659 289 79,721
----- ----------- ----- -----------
Total 4,120 $ 1,061,394 5,242 $ 1,532,448
===== =========== ===== ===========
Order Backlog:
California 159 $ 72,088 309 $ 140,468
Nevada 52 14,319 88 29,246
----- ----------- ----- -----------
West Region 211 86,407 397 169,714
Arizona 383 85,680 711 228,214
Texas 1,571 404,997 2,039 533,093
Colorado 54 18,307 65 25,018
----- ----------- ----- -----------
Central Region 2,008 508,984 2,815 786,325
Florida 50 17,502 167 57,940
----- ----------- ----- -----------
East Region 50 17,502 167 57,940
----- ----------- ----- -----------
Total 2,269 $ 612,893 3,379 $ 1,013,979
===== =========== ===== ===========
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
Year-to-date 2008 Year-to-date 2007
----------------- -----------------
Active Beg. End Beg. End
Communities: ---- --- ---- ---
California 27 15 26 29
Nevada 11 12 5 11
---- ---- ---- ----
West Region 38 27 31 40
Arizona 36 30 42 37
Texas 127 132 121 124
Colorado 6 5 6 7
---- ---- ---- ----
Central Region 169 167 169 168
Florida 13 13 13 13
---- ---- ---- ----
East Region 13 13 13 13
---- ---- ---- ----
Total 220 207 213 221
==== ==== ==== ====
ABOUT MERITAGE HOMES CORPORATION
Meritage Homes Corporation (NYSE:MTH) builds primarily single-family homes across the southern and western United States under the Meritage, Monterey and Legacy brands. Meritage has active communities in Houston, Dallas/Ft. Worth, Austin, San Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California East Bay/Central Valley and Inland Empire, Denver and Orlando. The Company was ranked by Builder magazine in 2007 as the 12th largest homebuilder in the U.S. and ranked #803 on the 2008 Fortune 1000 list. For more information about the Company, visit www.meritagehomes.com.
The Meritage Homes Corporation logo is available at https://www.globenewswire.com/newsroom/prs/?pkgid=2624
Click here to join our email alert list: www.b2i.us/irpass.asp?BzID=1474&to=ea&s=0
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include those regarding the Company's outlook for the homebuilding markets; future strategy and intention to reduce its inventory of unsold homes, construction costs and overhead expenses to protect its balance sheet; strategy with respect to new lot positions; and anticipation that it will generate positive cash flow and collect tax refunds. Such statements are based upon preliminary financial and operating data which are subject to finalization by management and review by our independent registered public accountants, as well as the current beliefs and expectations of Company management, and current market conditions, which are subject to significant risks and uncertainties. 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.
Meritage's business is subject to a number of risks and uncertainties, including: weakness in the homebuilding market resulting from the current economic downturn; interest rates and changes in the availability and pricing of residential mortgages; housing affordability; fluctuations in demand, competition, sales orders, cancellation rates and home prices in our markets; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; investments in land and development joint ventures; the exposure to obligations under performance and surety bonds, performance guarantees and letters of credit; the cost and availability of insurance, including the unavailability of insurance for the presence of mold; the impact of construction defect and home warranty claims; our success in prevailing on contested tax positions and the impact of deferred tax valuation allowances; materials and labor costs; changes in the availability and pricing of real estate in the markets in which the Company operates; the ability to acquire additional land or options to acquire additional land on acceptable terms; general economic slow downs; dependence on key personnel and the availability of satisfactory subcontractors; the Company's lack of geographic diversification; inflation in the cost of materials used to construct homes; fluctuations in quarterly operating results; the Company's financial leverage and level of indebtedness; our ability to take certain actions because of restrictions contained in the indentures for the Company's senior and senior subordinated notes and the agreement for the unsecured credit facility and our ability to raise additional capital when and if needed; success in locating and negotiating potential acquisitions; successful integration of acquired operations with existing operations; legislative or other initiatives that seek to restrain growth or new housing construction or similar measures; consumer confidence, which can be impacted by economic and other factors such as terrorism, war, or threats thereof and changes in energy prices or stock markets; our potential exposure to natural disasters; 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, 2007, and our most recent Form 10-Q, under the caption "Risk Factors." As a result of these and other factors, the Company's stock and note prices may fluctuate dramatically.
CONTACT: Meritage Homes Corporation
Investor Relations:
Brent Anderson, Vice President-Investor Relations
(972) 543-8207
Corporate Communications:
Jane Hays, Vice President-Corporate Communications
(972) 543-8123
Released October 27, 2008