Meritage Homes Reports Second Quarter 2010 Results
Second Consecutive Quarter of Positive Pre-Tax Earnings on Higher Closings and Significant Year-Over-Year Margin Improvement Driven by New Communities
SECOND QUARTER 2010 SELECTED RESULTS (COMPARISONS TO SECOND QUARTER 2009):
-- Generated net income of $4M against prior year net loss of $74M, marking
the second consecutive quarter of positive pre-tax earnings and third
quarter of positive reported net income
-- Closed 36% more homes resulting in 32% greater home closing revenue over
the prior year
-- Improved gross margin to 18.2% from (17.7)% in the prior year (18.3% vs
12.3%, excluding impairments)
-- Opened eight new communities with recently acquired lots - including a
state of the art, super energy efficient community in Arizona
-- Contracted for approximately 2,400 new lots representing 22 new
communities and 6 new phases for existing communities, maintaining a
3.4-year supply of lots
YEAR TO DATE 2010 SELECTED RESULTS:
-- Reported net income of $7M for the first half of 2010, against a net
loss of $92M in the prior year
-- Reduced net debt/capital ratio to 24.8% from 32.6% in the prior year
SCOTTSDALE, Ariz., July 27, 2010 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH), a leading U.S. homebuilder, today announced second quarter results for the period ended June 30, 2010.
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended June
30, Six Months Ended June 30,
2010 2009 %Chg 2010 2009 %Chg
------------------------------------------ -------- --------- ---- -------- --------- ----
Homes closed (units) 1,207 890 36% 2,015 1,822 11%
Home closing revenue $291,405 $220,414 32% $491,987 $451,392 9%
------------------------------------------ -------- --------- ---- -------- --------- ----
Sales orders (units) 900 1,147 -22% 1,964 2,134 -8%
Sales order value $228,627 $263,493 -13% $497,095 $495,616 0%
------------------------------------------ -------- --------- ---- -------- --------- ----
Ending backlog (units) 1,044 1,593 -34%
Ending backlog value $292,643 $382,255 -23%
--------------------------------------------------------------------- -------- --------- ----
Net income/(loss) -- incl. impairments $4,166 $(73,602) n/a $6,826 $(91,957) n/a
Adjusted pre-tax income/(loss)* -- excl.
impairments &
(loss)/gain on early extinguishment of
debt $8,149 (11,880) n/a 11,472 (22,486) n/a
Diluted EPS (including impairments) $0.13 $(2.37) n/a $0.21 $(2.97) n/a
------------------------------------------ -------- --------- ---- -------- --------- ----
* See non-GAAP reconciliations of net income/(loss) to adjusted pre-tax income/(loss) on
"Operating Results" statement.
HOME CLOSINGS, REVENUE AND INCOME
After being one of the first publicly-traded homebuilders to return to operating profitability in the first quarter of this year, Meritage reported another profitable quarter with net income of $4.2 million or $0.13 per diluted share for the second quarter of 2010, compared to a net loss of $73.6 million or $2.37 per share in the same quarter of 2009. The second quarter results included pre-tax charges due to real estate-related impairments of $0.3 million in 2010, compared to $66.6 million of impairments in 2009.
Net income in 2010 was reduced by a $3.5 million loss on early extinguishment of debt, while the same period of 2009 benefitted from a $6.6 million gain on early extinguishment of debt.
Excluding the effects of impairments and extinguishment of debt, Meritage's pre-tax income for the second quarter was $8.1 million in 2010, compared with the prior year's pre-tax loss of $11.9 million.
"Our number one goal for 2010 was to return to profitability as soon as possible and to be profitable for the entire year," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. "We are pleased to report another profitable quarter as we continue to successfully execute our strategy toward achieving our goal for the year."
The second quarter net income was largely driven by an increased number of home closings coupled with improved margins on homes built on recently acquired lower-cost lots in good locations, as well as savings in construction costs. The Company closed 36% more homes which generated 32% greater revenue in the second quarter of 2010, compared to 2009, partially due to some additional sales and an acceleration of closings to meet the June 30 deadline for the home buyer tax credit.
Mr. Hilton continued, "Approximately 20% of our second quarter 2010 closings and related revenue came from our newer communities. Our margins on those homes were approximately 500-600 basis points higher than the margins we earned in our older communities, demonstrating the continued success of our strategies to improve profitability."
Second quarter total gross margin excluding impairments increased to 18.3% in 2010, from 12.3% in 2009; or 18.2% versus (17.7)% for 2010 and 2009, respectively, after impairments. Meritage generated $52.9 million in gross profit in the second quarter 2010, compared to a gross loss of $39.2 million in the prior year's second quarter. Before impairments, the gross profit in 2010 was nearly double the $27.2 million gross profit in the prior year.
SALES
Net home sales in the second quarter were 22% lower than the prior year, partially due to a 15% decline in average active communities between the second quarters of 2009 and 2010. Average community count in Texas was 25% lower year over year. As part of the Company's plan to improve margins and profitability, Meritage has been closing out communities with lower margins and redeploying assets to new communities which are achieving higher margins. Many of the best opportunities to purchase deeply discounted lots in the last 18 months have been found in California, Florida and Arizona, resulting in some rebalancing of active communities from Texas to the Company's other markets.
Home sales in Texas were 30% less than the prior year's second quarter, primarily reflecting the 25% lower community count. Accordingly, Texas comprised 51% of the Company's total homes sold, compared to 57% a year earlier, while California and Florida sales represented larger percentages of the total homes sold in the quarter.
Average sales per community for the second quarter of 2010 was 6.1, down slightly from a 6.6 average in 2009 and 7.0 in the first quarter of 2010. California and Florida achieved the highest absorption rates, where nearly all of the Meritage communities in those markets are recently acquired lot positions with redesigned product lines.
"The decline in sales following the April 30, 2010 contract deadline for the home buyer tax credit was more significant than we expected, and surprising because we didn't experience a significant increase in spring sales until the last few weeks of April," said Mr. Hilton. "However, we are hopeful for a relatively short hangover effect, similar to what the auto industry experienced with the 'cash for clunkers' program. Based on our second quarter sales, we are anticipating lower third quarter closings and are looking for improving sales in the latter part of the year."
"Despite external factors which are beyond our control, we are continuing to execute on our proven strategy by opening new communities in good locations, differentiating Meritage Homes as an industry leader in energy-efficient home construction, ensuring that our plan selections and model presentations are inviting and appropriately match our target buyers' preferences, and training and equipping our sales teams to be the best in the business," Mr. Hilton stated. "Although we can't predict when the market will improve, we are confident that it will improve, and we are positioning Meritage Homes to be one of the best in the business, both now and in the future."
An 11% increase in average sales prices partially offset the 22% decline in orders, resulting in total order value decreasing by only 13% year over year. The average sales price for the second quarter of 2010 was approximately $254,000, compared to $229,700 in 2009. The increase in average sales prices reflects a larger share of sales from newer closer-in communities that command higher prices than many older communities, as well as from growth in Meritage's higher average priced markets like California and Florida.
YEAR TO DATE RESULTS
For the first half of 2010, home closings were 11% higher with 9% higher closing revenue than in 2009, and gains achieved in every state except Nevada, despite 15% fewer average communities.
Meritage reported net income of $6.8 million or $0.21 per share for the first half of 2010, compared to a net loss of $92.0 million or $2.97 per share in the first half of 2009. Beginning in the third quarter of 2009, the Company has fully reserved its tax assets, which totaled $89.3 million as of June 30, 2010. These tax assets are available to offset federal and state income tax liabilities on an estimated $234 million of future taxable income.
Year-to-date net income included less than one million dollars of pre-tax real estate-related impairment charges and a $3.5 million loss on the early extinguishment of debt in 2010, compared to $77.1 million of impairments and a $9.4 million gain on early extinguishment of debt in 2009. Before those items, adjusted pre-tax income was $11.5 million for the first half of 2010, compared to a pre-tax loss of $22.5 million for the first half of 2009.
CASH FLOW AND LOT SUPPLIES
Meritage generated $15 million of cash flow from operations during the second quarter of 2010, after using $54.9 million to purchase approximately 1,100 lots during the quarter. The Company ended the quarter with $442.1 million in total cash and cash equivalents, restricted cash and short-term investments, which reduced the Company's net debt to total capital ratio to 24.8% at June 30, 2010, from 32.6% at June 30, 2009.
"We continue to find and acquire new communities in healthy sub-markets using our leading market research and experienced land managers, which we believe is a strategic advantage for Meritage," said Mr. Hilton. "While increased competition has driven lot prices up from the historically very low prices we encountered last year, we are still finding an adequate supply of available lots in good locations, and are acquiring lots at prices we believe will allow us to earn near-normal margins and attractive returns, without assuming inflation in home prices."
Meritage has contracted for more than 8,800 new lots since the beginning of 2009, and now controls approximately 14,450 total lots, equivalent to a 3.4 year supply based on trailing twelve months closings.
Mr. Hilton continued, "Since we have a relatively small lot supply, and approximately 45% of those lots have been acquired in the last eighteen months at greatly reduced prices, we are achieving higher margins while at the same time lowering our risk and maintaining flexibility to respond to changing market conditions. We believe this differentiates Meritage from other builders who are carrying larger supplies of lots at higher legacy prices, which may constrain their margins and ability to grow profits, while reducing their returns on assets."
FINANCING ACTIVITIES
In April 2010, Meritage issued $200 million of 7.15% senior notes due in 2020 and used the proceeds to retire its $130 million outstanding principal amount of notes due in 2014 and $65 million of its 2015 notes. The new debt effectively extended the maturity of Meritage's long-term debt at attractive rates for an additional five to six years, and resulted in a $3.5 million loss on early extinguishment of debt, as stated above.
OTHER NEWS -- LATEST ENERGY EFFICIENT COMMUNITY OPENED
In June of 2010, Meritage opened a new community at Lyon's Gate in Gilbert, Arizona, incorporating the latest energy efficient technology in every home at no additional charge to the buyer, with prices starting under $180,000. The homes are designed to save homeowners up to 80% on their home utility bills, compared to a typical existing home as published by the U.S. Department of Energy. All homes in this community will include the following state of the art materials and equipment as standard features:
-- an advanced solar-electric and thermal system that generates over twice
the energy per square foot as compared to conventional solar panels;
-- a high-performance wall system that is 3.5 times more energy efficient
than standard wall assemblies;
-- spray foam insulation throughout the home that seals in air conditioning
while keeping dirt and pollution out;
-- an electronic home management system that allows homeowners to monitor
and control their home's electrical systems through a smart phone or
computer from anywhere in the world; and
-- weather-sensing irrigation and water management systems that comply with
the EPA's latest WaterSense Program.
Every home will be tested and certified by third party certified energy inspectors.
The community is a prototype for future communities to be opened by Meritage in other locations. Strong initial sales are proving the demand for such homes and providing competitive differentiation for Meritage.
SUMMARY
"We've been executing a very deliberate set of strategies designed to get us back to profitability and position the company best for the long term," said Mr. Hilton:
-- "Our Meritage Forward initiative encompasses continuous improvement
processes designed to improve quality, reduce cycle times and further
reduce our costs, in addition to utilizing industry-leading market
research and analysis to drive more intelligent decisions regarding
where to buy lots, how much to pay, and which plans or options to offer
at prices where we believe we can earn our target margins.
-- Our new Simply Smart(TM) series of homes are more efficient to build at
lower costs to compete effectively with resale homes. We are marketing
them to first-time buyers with 'no tricks' all-inclusive monthly
payments that make it easy to compare monthly house payments to rents.
-- Our 99-day guarantee offers a quick move-in solution to offset one of
the perceived advantages to buying a used home, by offering a guaranteed
closing date. It is the result of dramatic reductions in our cycle
times, which lower our total cost and the risk of cancellation, and
increases our return on assets.
-- And with our Meritage Green(TM) initiative, we're building more
energy-efficient homes that already far exceed industry standards. We
are the only public homebuilder to be 100% ENERGY STAR(R) qualified in
every new home we build as of January 1st this year."
"We believe that these strategies provide sustainable competitive advantages," he continued. "We have already seen positive results from our strategic initiatives:
-- We were one of the first public homebuilders to return to profitability
in 2010;
-- We have managed a strong balance sheet with a relatively light supply of
land and no near-term debt maturities, providing us the flexibility to
reload with lower-priced lots as opportunities arise;
-- We have reduced our direct costs and introduced a new series of homes
that are more efficient to build, allowing us to earn near-normal
margins while pricing our homes to compete effectively with used homes
and foreclosures; and
-- We have reduced our incentives while maintaining prices, thereby
expanding our margins, while our sales velocity has increased within our
newer communities.
We just wrapped up our 2010 Meritage Leadership Institute, where more than 100 of our leaders gathered to assess our progress, set new goals, share best practices and ensure alignment throughout our organization. Based on what I saw and heard, I am confident that we have some of the best talent in the industry at Meritage, and I am very excited about the successes we will achieve in the future."
Management will host a conference call to discuss these results on Wednesday, July 28, 2010 at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time.) The call will be webcast by Business-to-Investor, Inc. (B2i), with an accompanying slideshow on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. For telephone participants, the dial-in number is 877-485-3104 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 12:30 p.m. ET, July 28, 2010 on the website noted above, or by dialing 877-660-6853, and referencing account 356, replay ID 35834.
Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------- --------- -------- ---------
Operating results
Home closing revenue $291,405 $220,414 $491,987 $451,392
Land closing revenue -- 1,125 1,222 1,285
-------- --------- -------- ---------
Total closing revenue 291,405 221,539 493,209 452,677
Home closing gross profit/(loss) 52,896 (39,084) 90,894 (21,734)
Land closing gross profit/(loss) -- (141) 258 (169)
-------- --------- -------- ---------
Total closing gross profit/(loss) 52,896 (39,225) 91,152 (21,903)
Commissions and other sales costs (21,606) (18,098) (38,828) (37,243)
General and administrative expenses (16,729) (13,775) (31,422) (27,644)
Interest expense (8,553) (11,332) (16,848) (19,662)
(Loss)/gain on extinguishment of debt (3,454) 6,585 (3,454) 9,390
Other income, net (1) 1,837 3,951 6,572 6,899
-------- --------- -------- ---------
Income/(loss) before income taxes 4,391 (71,894) 7,172 (90,163)
Provision for income taxes (225) (1,708) (346) (1,794)
-------- --------- -------- ---------
Net income/(loss) $4,166 $(73,602) $6,826 $(91,957)
======== ========= ======== =========
Income/(loss) per share
Basic:
Income/(loss) per share $0.13 $(2.37) $0.21 $(2.97)
Weighted average shares outstanding 32,077 31,055 32,009 30,933
Diluted:
Income/(loss) per share $0.13 $(2.37) $0.21 $(2.97)
Weighted average shares outstanding 32,287 31,055 32,258 30,933
Non-GAAP Reconciliations:
Total closing gross profit/(loss) $52,896 $(39,225) $91,152 $(21,903)
Add: Real estate-related impairments
Terminated lot options and land
sales -- 61,480 -- 62,714
Impaired projects 304 4,900 846 14,134
-------- --------- -------- ---------
Adjusted closing gross profit $53,200 $27,155 $91,998 $54,945
======== ========= ======== =========
Income/(loss) before income taxes $4,391 $(71,894) $7,172 $(90,163)
Add: Real estate-related and joint
venture (JV) impairments
Terminated lot options and land
sales -- 61,480 -- 62,714
Impaired projects 304 4,900 846 14,134
JV impairments -- 219 -- 219
Loss/(gain) on early extinguishment
of debt 3,454 (6,585) 3,454 (9,390)
-------- --------- -------- ---------
Adjusted income/(loss) before income
taxes $8,149 $(11,880) $11,472 $(22,486)
======== ========= ======== =========
(1) Other income includes Joint Venture (JV) income/(loss) and JV impairments,
if any.
Meritage Homes Corporation and
Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
December
June 30, 31,
2010 2009
---------- ----------
Assets:
Cash and cash
equivalents $156,669 $249,331
Investments
and
securities 270,666 125,699
Restricted
cash 14,766 16,348
Income tax
receivable 1,691 92,509
Other
receivables 35,591 22,934
Real estate
(1) 714,248 675,037
Investments
in
unconsolidate
d entities 11,768 11,882
Deposits on
real estate
under option
or contract 12,152 8,636
Other assets 38,035 40,291
---------- ----------
Total
assets $1,255,586 $1,242,667
========== ==========
Liabilities
and Equity:
Accounts
payable,
accrued
liabilities,
Home sale
deposits and
other
liabilities $153,864 $152,233
Senior notes 479,591 479,134
Senior
subordinated
notes 125,875 125,875
---------- ----------
Total
liabilities 759,330 757,242
Total
stockholders'
equity 496,256 485,425
---------- ----------
$1,255,586 $1,242,667
============== ==========
(1) Real estate -- Allocated costs:
$136,149 $114,769
Finished home
sites and
home sites
under
development 392,336 407,592
Unsold homes,
completed and
under
construction 92,533 73,442
Model homes 39,344 37,601
Land held for
development
or sale 53,886 41,633
---------- ----------
Total
allocated
costs $714,248 $675,037
========== ==========
Supplemental Information and Non-GAAP Financial Disclosures (in thousands -- unaudited):
------------------------------------------------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
June 30, June 30,
2010 2009 2010 2009
--------------------------------------------------------------------------------------------------
Interest amortized to
cost of sales
and interest expense 11,983 16,557 49,742 63,399
Depreciation and
amortization 2,081 2,120 8,326 13,650
December
June 30, 31, June 30,
2010 2009 2009
--------------------------------------------------------------------
Notes payable and
other borrowings $605,466 $605,009 $604,926
Less: cash and cash
equivalents,
restricted cash,
and investments and
securities (442,101) (391,378) (385,310)
--------------------------------------------------------------------
Net debt 163,365 213,631 219,616
Stockholders' equity 496,256 485,425 454,495
--------------------------------------------------------------------
Total capital $659,621 $699,056 $674,111
Net debt-to-capital 24.8% 30.6% 32.6%
Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
--------- --------- --------- ---------
Operating results
Net income/(loss) $4,166 $(73,602) $6,826 $(91,957)
(Loss)/gain on early extinguishment of
debt 3,454 (6,584 3,454 (9,390)
Real-estate related impairments 304 66,380 846 76,848
Equity in earnings from JVs and
distributions
of JV earnings, net 230 698 767 1,656
Decrease/(increase) in real estate and
deposits, net 8,362 32,225 (42,620) 110,073
Other operating activities (1,608) 20,518 89,572 91,024
--------- --------- --------- ---------
Net cash provided by operating
activities 14,908 39,635 58,845 178,254
Cash used in investing activities (95,715) (1,357) (147,638) (1,500)
--------- --------- --------- ---------
Proceeds from issuance of new debt 195,134 -- 195,134 --
Debt issuance costs (2,969) -- (2,969) --
Repayments of senior notes (197,543) -- (197,543) --
Proceeds from issuance of common stock,
net 174 2,633 1,509 2,633
--------- --------- --------- ---------
Net cash (used in)/provided by financing
activities (5,204) 2,633 (3,869) 2,633
--------- --------- --------- ---------
Net (decrease)/increase in cash (86,011) 40,911 (92,662) 179,387
Beginning cash and cash equivalents 242,680 344,399 249,331 205,923
--------- --------- --------- ---------
Ending cash and cash equivalents (1) $156,669 $385,310 $156,669 $385,310
========= ========= ========= =========
(1) Ending cash and cash equivalents as of June 30, 2010 excludes investments and
securities and restricted cash totaling $285.4 million
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
For the Three Months Ended June
30,
2010 2009
---------------- ---------------
Homes Value Homes Value
------ -------- ----- --------
Homes Closed:
California 106 $33,610 64 $22,299
Nevada 26 4,905 41 8,221
------ -------- ----- --------
West Region 132 38,515 105 30,520
Arizona 213 43,808 152 30,786
Texas 725 173,570 552 137,473
Colorado 41 11,492 30 10,196
------ -------- ----- --------
Central Region 979 228,870 734 178,455
Florida 96 24,020 51 11,439
------ -------- ----- --------
East Region 96 24,020 51 11,439
------ -------- ----- --------
Total 1,207 $291,405 890 $220,414
====== ======== ===== ========
Homes Ordered:
California 111 $37,413 103 $31,352
Nevada 23 4,627 40 7,524
------ -------- ----- --------
West Region 134 42,040 143 38,876
Arizona 171 39,521 241 46,510
Texas 455 108,090 654 147,878
Colorado 38 11,757 46 14,085
------ -------- ----- --------
Central Region 664 159,368 941 208,473
Florida 102 27,219 63 16,144
------ -------- ----- --------
East Region 102 27,219 63 16,144
------ -------- ----- --------
Total 900 $228,627 1,147 $263,493
====== ======== ===== ========
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
For the Six Months Ended June 30,
2010 2009
---------------- ---------------
Homes Value Homes Value
------ -------- ----- --------
Homes Closed:
California 211 $70,695 156 $55,723
Nevada 48 9,224 79 17,089
------ -------- ----- --------
West Region 259 79,919 235 72,812
Arizona 381 77,760 350 72,446
Texas 1,153 274,929 1,068 260,838
Colorado 71 20,113 69 22,070
------ -------- ----- --------
Central
Region 1,605 372,802 1,487 355,354
Florida 151 39,266 100 23,226
------ -------- ----- --------
East Region 151 39,266 100 23,226
------ -------- ----- --------
Total 2,015 $491,987 1,822 $451,392
====== ======== ===== ========
Homes Ordered:
California 226 $78,542 157 $53,205
Nevada 48 9,372 66 12,912
------ -------- ----- --------
West Region 274 87,914 223 66,117
Arizona 404 87,529 409 78,805
Texas 1,028 247,998 1,302 296,777
Colorado 79 24,300 72 22,568
------ -------- ----- --------
Central
Region 1,511 359,827 1,783 398,150
Florida 179 49,354 128 31,349
------ -------- ----- --------
East Region 179 49,354 128 31,349
------ -------- ----- --------
Total 1,964 $497,095 2,134 $495,616
====== ======== ===== ========
Order Backlog:
California 104 $42,169 88 $31,392
Nevada 14 2,819 12 2,276
------ -------- ----- --------
West Region 118 44,988 100 33,668
Arizona 170 41,879 249 48,570
Texas 590 154,633 1,121 266,094
Colorado 47 15,643 47 13,763
------ -------- ----- --------
Central
Region 807 212,155 1,417 328,427
Florida 119 35,500 76 20,160
------ -------- ----- --------
East Region 119 35,500 76 20,160
------ -------- ----- --------
Total 1,044 $292,643 1,593 $382,255
====== ======== ===== ========
Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
Second Quarter Second Quarter
2010 2009
--------------- ---------------
Beg. End Beg. End
------- --- ------- ---
Active Communities:
California 9 12 9 12
Nevada 5 5 12 12
------- --- ------- ---
West Region 14 17 21 24
Arizona 32 33 28 31
Texas 83 78 107 108
Colorado 7 7 3 4
------- --- ------- ---
Central
Region 122 118 138 143
Florida 13 13 11 11
------- --- ------- ---
East Region 13 13 11 11
------- --- ------- ---
Total 149 148 170 178
======= === ======= ===
First Half First Half
2010 2009
------------- -------------
Beg. End Beg. End
----- --- ----- ---
Active Communities:
California 7 12 12 12
Nevada 6 5 12 12
----- --- ----- ---
West Region 13 17 24 24
Arizona 26 33 31 31
Texas 98 78 109 108
Colorado 6 7 3 4
----- --- ----- ---
Central
Region 130 118 143 143
Florida 10 13 11 11
----- --- ----- ---
East Region 10 13 11 11
----- --- ----- ---
Total 153 148 178 178
===== === ===== ===
About Meritage Homes Corporation
Meritage Homes Corporation (NYSE:MTH) builds primarily single-family homes across the western and southern 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 2008 as the 10th 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.
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This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include those regarding achievement of our goal of profitability for 2010 ; that closings will be lower in the third quarter followed by improving sales in the latter part of the year; favorable trends in the homebuilding market; our ability to continue to acquire land in favorable locations at favorable prices; trends and predictions about our future margins and returns; the benefits of, and our ability to execute our new strategies, including, but not limited to, our Meritage Forward initiative, our Simply Smart initiative, our 99-day guarantee and our Meritage Green initiative. 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; adverse changes in tax laws that benefit our homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates and home prices in our markets; the adverse effect of slower sales absorption rates; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; the liquidity of our joint ventures and the ability of our joint venture partners to meet their obligations to us and the joint venture; competition; the success of our strategies in the current homebuilding market and economic environment; the propensity of homebuyers to cancel purchase orders with us; construction defect and home warranty claims; our success in prevailing on contested tax positions; the impact of deferred tax valuation allowances and our ability to preserve our operating loss carryforwards; fluctuations in housing demand, and the cost and availability of real estate and other matters that are outside of our control; out ability to obtain performance bonds in connection with our development work; the loss of key personnel; our failure to comply with laws and regulations; the availability and cost of materials and labor; our 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 our ability to raise additional capital when and if needed; our credit ratings; the impact of future capital raising transactions we may engage in; successful integration of future acquisitions; government regulations and 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 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, 2009 under the caption "Risk Factors," as updated in our Quarterly Report on Form 10-Q for the period ended March 31, 2010. 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) 580-6360
Corporate Communications:
Jane Hays, Vice President-Corporate Marketing/ Communications
(972) 580-6353
Released July 27, 2010