Meritage Homes Reports Fourth Quarter and Fiscal Year 2007 Results
Fourth Quarter 2007 Operating Highlights:
-- Generated significant cash flow from operations and reduced debt
by $153M
-- Reduced spec inventory units by 10%, despite a 47% cancellation
rate
-- Reduced total lot supply by 16% from September 30 to 26,115 lots
at year-end, down 52% from peak
-- Reduced G&A costs by $17M to 3.1% of revenue, excluding non-cash
expense of $11M due to stock options tendered and cancelled
-- Operated profitably, excluding primarily non-cash, pre-tax charges
of: $130M for real estate and joint venture valuation adjustments,
$3M impairments of golf course assets held for sale, $58M for
goodwill write-offs and $11M due to stock options tender expense
Full Year 2007 Highlights:
-- Generated significant cash flow in the second half of 2007
-- Maintained compliance with all debt covenants at December 31, 2007
-- Amended credit facility in September 2007 to improve flexibility
-- Net debt-to-capital ratio of 49% at December 31, 2007; available
borrowing capacity of $381M
-- Operated profitably for the year, excluding primarily non-cash,
pre-tax charges of: $398M for real estate and joint venture
valuation adjustments, $130M for goodwill write-offs and other
fourth quarter charges
SCOTTSDALE, Ariz., Jan. 28, 2008 (PRIME NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH) today announced fourth quarter and fiscal year results for the periods ended December 31, 2007.
Summary Operating Results (Unaudited)
(Dollars in thousands, except per share amounts)
----------------------------------------------------------------------
Three Months Ended Dec. 31, Fiscal Years Ended Dec. 31,
2007 2006 % Chg 2007 2006 % Chg
----------------------------------------------------------------------
Homes closed
(units) 2,139 2,601 -18% 7,687 10,487 -27%
Home closing
revenue $615,611 $819,318 -25% $2,334,141 $3,444,286 -32%
----------------------------------------------------------------------
Sales orders
(units) 1,048 1,202 -13% 6,290 7,778 -19%
Sales order
value $271,617 $354,539 -23% $1,804,065 $2,462,747 -27%
----------------------------------------------------------------------
Ending backlog
(units) 2,288 3,685 -38%
Ending backlog
value $669,985 $1,200,061 -44%
----------------------------------------------------------------------
Net (loss)/
earnings*
(including
write-offs) ($128,839) $9,024 n/m ($288,851) $225,354 n/m
Adjusted net
earnings *
(excluding
write-offs) 4,076 $50,540 n/m 55,364 $273,809 n/m
Diluted EPS
(including
write-offs) ($4.91) $0.34 n/m ($11.01) $8.32 n/m
----------------------------------------------------------------------
* See non-GAAP reconciliation between net (loss)/earnings and
adjusted net earnings on "Operating Results" table, page 7.
(n/m = not meaningful)
Fourth quarter operating results
Meritage reported a net loss for the fourth quarter 2007 of $129 million, or ($4.91) per share, compared to net earnings of $9 million, or $0.34 per diluted share, in the fourth quarter 2006. The fourth quarter net loss included $130 million of pre-tax real estate-related and joint venture valuation adjustments ($48 million for terminated projects, $36 million for write-downs of inventory on continuing projects, $12 million for land held for sale, and $34 million for joint venture impairments,) and $58 million of pre-tax goodwill write-offs. The Company also incurred an $11 million non-cash pre-tax charge for the acceleration of expenses related to the cancellation of employee stock options in connection with a tender offer, and a $3 million impairment of golf course assets held for sale. By comparison, the fourth quarter of 2006 included a pre-tax charge of $63 million solely related to real estate-related valuation adjustments.
Fourth quarter 2007 home closing revenue declined 25% year over year due to an 18% decline in homes closed and a 9% decline in average closing price. Arizona had the largest decline in home closings (-44%) due to a reduced active community count, a more competitive selling environment and difficult comparisons to the fourth quarter 2006, when closings in Arizona were only 13% lower than their peak in the fourth quarter 2005. Conversely, home closings in California (-9%), Florida (-20%) and Nevada (+6%) experienced less severe declines (or reflected improvements), benefiting from easier comparisons to the prior year. These markets were some of the first to slow, and reported much larger declines a year ago.
Fourth quarter homebuilding gross margins narrowed due to lower selling prices and real estate-related charges of $84 million in 2007 and $63 million in 2006. Excluding these charges, adjusted homebuilding gross margins contracted to 12.1% in 2007 from 19.8% in 2006, reflecting more aggressive price negotiation. Average sales prices in the fourth quarter of 2007, as compared to the fourth quarter of 2006, declined 20% in Florida, 18% in California, 17% in Nevada and 13% in Arizona, while Texas ASP increased 5% and Colorado increased 14%, reflecting pricing strategies and changes in the mix between higher and lower priced homes.
General and administrative expenses of $30 million in the fourth quarter 2007 included an $11 million non-cash charge related to a stock option tender offer, with no similar expense incurred in 2006. Excluding this item in 2007, management reduced general and administrative expenses by 48% from the fourth quarter 2006, to 3.1% of fourth quarter 2007 total revenue, from 4.4% of fourth quarter 2006 total revenue. To date, Meritage has reduced total headcount by almost 40% since the peak in mid-2006, sizing its operations to reflect current market conditions. Commissions and other selling costs were 14% lower than the prior year, although higher as a percentage of total revenue due to the more competitive selling environment.
Significant progress on plans to strengthen balance sheet and liquidity
"We were very pleased with the progress we made toward strengthening our balance sheet and improving our liquidity during the fourth quarter," said Steven J. Hilton, chairman and CEO of Meritage Homes. "Aggressive sales efforts reduced our spec home inventory by 10% this quarter, despite high cancellation rates that negatively impacted our net sales and inventory reductions, while stronger seasonal closing activity reduced our pre-sold inventory. We reduced lot purchases under options by about $55 million, acquiring approximately 650 fewer lots in the fourth quarter than we did in the third. These purchases were generally in communities that had limited owned lot inventory, and additional lots were needed to continue home sales that are generating acceptable margins. We also reduced our active community count slightly from last quarter to 220 at year end.
"These actions resulted in significant positive cash flow from operations this quarter and allowed us to reduce our bank debt by $153 million, to a balance of $82 million at December 31. We plan to continue aggressively targeting spec sales and limiting lot purchases wherever possible, with a goal of reducing our credit facility debt to a zero balance by the third quarter of this year, and then start accumulating cash reserves."
Mr. Hilton continued, "We cancelled options on almost 4,500 additional lots this quarter, reducing our total lot supply to 26,115 at year-end -- a 52% reduction from our peak in the third quarter 2005. Accordingly, we've reduced our cash option deposits to $87 million -- half of their balance at the end of 2006. A large portion of our lot supply is in Texas, where the homebuilding markets have been stronger than in other parts of the country and where the terms on developer options are more flexible than land bank options. Texas accounts for nearly two-thirds of our optioned lots, almost 40% of option deposits, and more than a third of our owned lots. Of our total lots under control at December 31, 2007, we own about 40% and option about 60%. Our owned percentage has increased mainly as we have reduced the number of our lots controlled through options by almost 70% from peak levels mainly from option terminations as the housing market has slowed.
"Although impairments may continue to occur due to changes in market conditions, based on the relatively stronger Texas market and the significant impairments and option terminations we have already taken in other markets, we believe the great majority of the impairments are behind us.
"We reduced our investment in joint ventures to $27 million at year-end 2007, and believe we have little additional contingent off-balance-sheet exposure in our remaining JV's as their debt is generally non-recourse to us, and because we believe the risks associated with 'bad boy' guarantees are minimal since the triggering event is typically controlled by us, and our exposure under any other guarantees are not significant," he concluded.
The Company was in compliance with all its debt covenants at year-end, and had available borrowing capacity of $381 million under its revolving $800 million credit facility at December 31, 2007, after considering the facility's borrowing base availability and most restrictive covenants. Interest coverage ratio was 2.3 times interest incurred, based on trailing four quarters' adjusted EBITDA.
Net debt-to-capital ratio was 49% as of December 31, 2007, compared to 40% at December 31, 2006, despite a slight reduction in total debt, as the 2007 net loss reduced Meritage's book equity. The Company's credit facility extends through 2011 and the earliest maturity date on its long-term debt bonds is in 2014.
"Our primary focus in 2008 is to strengthen our balance sheet and maintain liquidity," said Mr. Hilton. "Our sales teams are focused on aggressively selling spec inventory, and we plan to further reduce our inventory of owned lots by purchasing fewer lots than our planned sales and starts. We have also received over $24 million in tax refunds thus far in 2008 and expect to receive approximately $52 million of additional tax refunds in the first quarter of this year, as we carry back our 2007 losses and recover taxes paid in 2005. The anticipated tax refund is already reflected in our receivables balance. We expect to trigger the realization, for tax purposes, of our $141 million deferred tax asset in 2008 and beyond, and we currently believe this asset is recoverable. Considering these plans, we look forward to reporting further progress in generating cash and reducing our debt in the coming quarters."
Full year operating results
Meritage reported a net loss of $289 million, or ($11.01) per share, for the full year 2007, compared to net earnings of $225 million, or $8.32 per diluted share, for the full year 2006. The 2007 loss was the result of primarily non-cash pre-tax real estate-related and joint venture valuation adjustments of $398 million, a non-cash $3 million impairment of golf course assets, goodwill-related write-offs of $130 million and a non-cash $11 million charge related to stock options tender expense, which together reduced net earnings by $344 million after the effect of taxes.
Full year home closing revenue for 2007 was $2.3 billion, nearly one-third lower than the all-time record year reported by Meritage in 2006 for home closings and revenue. The decline in home closing revenue was due to an 8% decline in average sale prices, compounding a 27% drop in homes sold. The states that experienced the greatest declines in closings for the year were Nevada (-58%) and Arizona (-49%), while Texas closings declined only 2% year over year and Colorado closings increased 43% as it builds from its start-up in 2006.
Net orders for the full year 2007 fell 19% due to turmoil in the mortgage and credit markets, rising inventories and intense pricing competition. While year over year comparisons were negative, the rates of decline in home sales slowed in most of Meritage's divisions over the last two quarters.
Backlog value was down 44% from 2006 at December 31, 2007, with a 10% decline in average sale price on 38% fewer homes in backlog, reflecting conversions to 2007 closings and high cancellations. Lower homes in backlog in Arizona (-57%), Texas (-33%) and Florida (-40%) accounted for most of the absolute decline in backlog.
Mr. Hilton noted, "We have yet to see signs of stabilization in home prices, which we believe is necessary for buyers to regain confidence that their home purchase will retain its value. We are looking for prices, sales and cancellation rates to hold steady and begin to improve to signal the start of a recovery. Until then, we plan to continue to operate conservatively, protecting our balance sheet and maintaining liquidity to weather the downturn."
Summary and future outlook
"This has been the most difficult year we've experienced in homebuilding in more than 25 years, and we currently expect 2008 will also be challenging," said Mr. Hilton. "Despite the difficult homebuilding environment, I'm proud of the progress we were able to achieve on our operational plans, and on other non-financial objectives. We reduced our spec inventory and lots under control, continued to shrink overhead costs and generated significant positive cash flow in the second half of 2007.
"We also improved our sales training, marketing and customer relations, including significant increases in our customer satisfaction ratings during 2007. We completed the implementation of new management software across all divisions, recognized substantial savings in purchasing, and made many improvements in our human resources and benefits systems. Each of these improved our organizational efficiency or abilities to better serve our customers.
"I appreciate the efforts of our employees who have worked so diligently to address the daily challenges and opportunities we face, with an optimistic attitude toward better times ahead," Mr. Hilton concluded. "We are committed to protecting shareholder value as we manage the Company through this downturn, delivering high quality homes and meeting the expectations of our buyers, to strengthen Meritage's position for the future."
Conference call and webcast
The Company will host a conference call and webcast on January 29, 2008, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to discuss fourth quarter and full year 2007 results. The conference call will be webcast by B2i and available through the "Investor Relations" page of the Company's web site at http://www.meritagehomes.com. For telephone participants, the dial-in number is 800-374-0113 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 3:00 p.m. EST January 29, 2008, through midnight February 29, 2008 on the website noted above, or by dialing 800-642-1687, and referencing passcode 30747642.
Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
Operating results 2007 2006 2007 2006
---- ---- ---- ----
Home closing revenue $ 615,611 $ 819,318 $2,334,141 $3,444,286
Land closing revenue 3,297 1,875 9,453 17,034
--------- --------- ---------- ----------
Total closing revenue 618,908 821,193 2,343,594 3,461,320
Home closing gross
(loss)/profit (9,321) 100,671 28,135 711,988
Land closing gross
(loss)/profit (11,690) (708) (12,089) 642
--------- --------- ---------- ----------
Total closing gross
(loss)/profit (21,011) 99,963 16,046 712,630
Commissions and other
sales costs (51,461) (59,531) (196,464) (216,341)
General and
administrative
expenses(1) (29,776) (36,064) (106,161) (164,477)
Goodwill-related
impairments (57,538) -- (130,490) --
Interest expense (4,601) -- (6,745) --
Other (expense)/income,
net(2) (30,092) 9,253 (29,668) 32,197
--------- --------- ---------- ----------
(Loss)/earnings before
provision for
income taxes (194,479) 13,621 (453,482) 364,009
Benefit/(provision) for
income taxes 65,640 (4,597) 164,631 (138,655)
--------- --------- ---------- ----------
Net (loss)/earnings (128,839) 9,024 (288,851) 225,354
========= ========= ========== ==========
(Loss)/earnings per share
Basic:
(Loss)/earnings per
share $ (4.91) $ 0.35 $ (11.01) $ 8.52
Weighted average shares
outstanding 26,250 26,133 26,225 26,448
Assuming dilution:
(Loss)/earnings per
share $ (4.91) $ 0.34 $ (11.01) $ 8.32
Weighted average shares
outstanding 26,250 26,557 26,225 27,102
(1) General and administrative expenses include the following:
Severance-related
expenses $ 616 $ 599 $ 3,075 $ 13,361
Non-cash stock option
tender expense $ 10,866 $ -- $ 10,866 $ --
(2) Other income includes joint venture and golf course asset
impairments as discussed in the non-GAAP reconciliations on the
following page.
Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
2007 2006 2007 2006
---- ---- ---- ----
Non-GAAP Reconciliations:
Total closing gross (loss)/
profit $ (21,011) $ 99,963 $ 16,046 $712,630
Add: Real estate-related
impairments
Terminated lot options/land
sales 60,068 47,128 144,752 54,598
Impaired projects 36,006 15,537 195,606 23,670
--------- -------- -------- --------
Adjusted closing gross
profit $ 75,063 $162,628 $ 356,404 $790,898
========= ======== ========= ========
(Loss)/earnings before
provision for income taxes $(194,479) $ 13,621 $(453,482) $364,009
Add:
Real estate-related
impairments
Terminated lot options/land
sales 60,068 47,128 144,752 54,598
Impaired projects 36,006 15,537 195,606 23,670
Joint venture impairments 33,451 -- 57,940 --
Impairment of golf course
assets held for sale 3,124 -- 3,124 --
Goodwill-related impairments 57,538 -- 130,490 --
Non-cash stock options tender
expense 10,866 -- 10,866 --
--------- -------- --------- --------
Adjusted earnings before
provision for income taxes 6,574 76,286 89,296 442,277
Adjusted provision for income
taxes (2,498) (25,746) (33,932) (168,468)
--------- -------- --------- --------
Adjusted net earnings $ 4,076 $ 50,540 $ 55,364 $273,809
========= ======== ========= ========
Meritage Homes Corporation and Subsidiaries
Non-GAAP Financial Disclosures
(Unaudited)
(Dollars in thousands)
As of and for the
Three Months Ended Four Quarters Ended
December 31, December 31,
2007 2006 2007 2006
---- ---- ---- ----
EBITDA
reconciliation:
(a)
Net (loss)/
earnings $ (128,839) $ 9,024 $ (288,851) $ 225,354
(Benefit)/
provision for
income taxes (65,640) 4,597 (164,631) 138,655
Interest expensed
or amortized
to cost of sales 18,349 10,199 48,994 42,986
Depreciation and
amortization 4,362 8,457 17,818 23,729
-------------------------------------------------
EBITDA $ (171,768) 32,277 $ (386,670) $ 430,724
Add back:
Real estate-
related
impairments 129,525 $ 62,665 398,298 78,268
Impairment of
golf course
assets held for
sale 3,124 -- 3,124 --
Goodwill-related
impairments 57,538 -- 130,490 --
-------------------------------------------------
Adjusted EBITDA $ 18,419 $ 94,942 $ 145,242 $ 508,992
=================================================
Interest coverage
ratio: (b)
Adjusted EBITDA $ 145,242 $ 508,992
Interest incurred 62,176 52,063
Interest coverage
ratio 2.3 9.8
Net debt-to-
capital: (c)
Notes payable and
other borrowings $ 729,875 $ 733,276
Less: cash and
cash equivalents (27,677) (56,710)
------------------------
Net debt 702,198 676,566
Stockholders'
equity 730,164 1,006,832
------------------------
Capital $ 1,432,362 $ 1,683,398
Net debt-to-
capital 49.0% 40.2%
(a) 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. 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 by investors and analysts in the homebuilding industry.
EBITDA 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. 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.
(b) Interest coverage ratio as presented is calculated as the
trailing four quarters' adjusted EBITDA divided by total
interest incurred for the same period. 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 and tender offer expense.
(c) 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)
Dec. 31, Sept. 30, Dec. 31,
2007 2007 2006
---------- ---------- ----------
(unaudited) (unaudited)
Assets:
Cash and cash equivalents $ 27,677 $ 45,297 $ 56,710
Receivables 118,591 93,573 68,725
Real estate (a) 1,273,746 1,504,137 1,530,602
Investment in unconsolidated
entities 26,563 57,387 114,250
Deferred tax assets 140,970 110,390 28,119
Option deposits 87,191 106,768 167,132
Other assets 76,511 157,916 204,987
------------------------------------
Total Assets $1,751,249 $2,075,468 $2,170,525
====================================
Liabilities:
Senior notes $ 628,802 $ 628,760 $ 478,636
Revolving facility 82,000 234,500 226,500
Other borrowings 19,073 20,667 28,140
Accounts payable, accrued
liabilities, homebuyer
deposits and other
liabilities 291,210 338,643 430,417
------------------------------------
Total liabilities 1,021,085 1,222,570 1,163,693
------------------------------------
Total stockholders' equity 730,164 852,898 1,006,832
------------------------------------
Total liabilities &
stockholders' equity $1,751,249 $2,075,468 $2,170,525
====================================
(a) Real estate assets are
comprised of the following:
Homes under contract under $ 333,533 $ 535,405 $ 589,241
Construction
Finished homesites and
homesites under development 591,289 624,098 592,949
Unsold homes, completed and
under Construction 236,094 255,334 271,559
Model homes 61,171 59,237 39,131
Model home lease program 19,073 20,667 26,831
Land held for development 32,586 9,396 10,891
------------------------------------
Total real estate $1,273,746 $1,504,137 $1,530,602
====================================
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
2007 2006
---------------- ----------------
Homes Value Homes Value
----- ----- ----- -----
Homes Closed:
California 277 $ 114,840 305 $ 154,648
Nevada 87 27,094 82 30,799
----- --------- ----- ---------
West Region 364 141,934 387 185,447
Arizona 489 145,264 880 300,289
Texas 1,140 283,568 1,173 277,343
Colorado 35 13,927 23 8,026
----- --------- ----- ---------
Central Region 1,664 442,759 2,076 585,658
Florida 111 30,918 138 48,213
----- --------- ----- ---------
East Region 111 30,918 138 48,213
----- --------- ----- ---------
Total 2,139 $ 615,611 2,601 $ 819,318
===== ========= ===== =========
Homes Ordered:
California 132 $ 55,904 151 $ 74,127
Nevada 63 16,508 49 28,575
----- --------- ----- ---------
West Region 195 72,412 200 102,702
Arizona 168 37,608 329 91,139
Texas 573 134,826 669 168,256
Colorado 23 7,046 27 9,866
----- --------- ----- ---------
Central Region 764 179,480 1,025 269,261
Florida 89 19,725 (23)* (17,424)*
----- --------- ----- ---------
East Region 89 19,725 (23)* (17,424)*
----- --------- ----- ---------
Total 1,048 $ 271,617 1,202 $ 354,539
===== ========= ===== =========
* Negative balance represents the total unit/value of home orders
cancelled exceeding the unit/value of total home orders taken.
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
(Dollars in thousands)
As of and for the Years Ended December 31,
2007 2006
---------------------- ----------------------
Homes Value Homes Value
----- ----- ----- -----
Homes Closed:
California 908 $ 421,220 1,471 $ 820,583
Nevada 261 88,837 620 244,343
---------- ---------- ---------- ----------
West Region 1,169 510,057 2,091 1,064,926
Arizona 1,718 567,888 3,355 1,102,662
Texas 4,164 1,043,160 4,263 996,739
Colorado 160 60,069 112 40,875
---------- ---------- ---------- ----------
Central Region 6,042 1,671,117 7,730 2,140,276
Florida 476 152,967 666 239,084
---------- ---------- ---------- ----------
East Region 476 152,967 666 239,084
---------- ---------- ---------- ----------
Total 7,687 $2,334,141 10,487 $3,444,286
========== ========== ========== ==========
Homes Ordered:
California 846 $ 372,936 983 $ 529,435
Nevada 268 85,772 328 139,668
---------- ---------- ---------- ----------
West Region 1,114 458,708 1,311 669,103
Arizona 1,203 341,140 1,833 611,266
Texas 3,427 845,348 4,299 1,069,437
Colorado 168 59,423 125 47,836
---------- ---------- ---------- ----------
Central Region 4,798 1,245,911 6,257 1,728,539
Florida 378 99,446 210 65,105
---------- ---------- ---------- ----------
East Region 378 99,446 210 65,105
---------- ---------- ---------- ----------
Total 6,290 $1,804,065 7,778 $2,462,747
========== ========== ========== ==========
Order Backlog:
California 164 $ 81,532 226 $ 129,816
Nevada 64 18,660 57 21,725
---------- ---------- ---------- ----------
West Region 228 100,192 283 151,541
Arizona 390 120,558 905 347,306
Texas 1,472 384,351 2,209 582,163
Colorado 53 18,137 45 18,783
---------- ---------- ---------- ----------
Central Region 1,915 523,046 3,159 948,252
Florida 145 46,747 243 100,268
---------- ---------- ---------- ----------
East Region 145 46,747 243 100,268
---------- ---------- ---------- ----------
Total 2,288 $ 669,985 3,685 $1,200,061
========== ========== ========== ==========
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
Fiscal Year 2007 Fiscal Year 2006
---------------- ----------------
Beg. End Beg. End
Active ---- --- ---- ---
Communities:
California 26 27 20 26
Nevada 5 11 6 5
----- ------ ----- -----
West Region 31 38 26 31
Arizona 42 36 35 42
Texas 121 127 108 121
Colorado 6 6 3 6
----- ------ ----- -----
Central Region 169 169 146 169
Florida 13 13 12 13
----- ------ ----- -----
East Region 13 13 12 13
----- ------ ----- -----
Total 213 220 184 213
===== ====== ===== =====
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 East Bay/Central Valley and Inland Empire of California, Denver and Orlando. The Company is ranked by Builder magazine as the 12th largest homebuilder in the U.S. and ranked #580 on the 2007 Fortune 1000 list. For more information about the Company, visit www.meritagehomes.com.
The Meritage Homes Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2624
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 plans or goals for spec inventory reduction, lot supply reduction, generating positive cash flow and using it for debt reduction, as well as management's intention to operate conservatively, strengthen the balance sheet and improve liquidity to take advantage of future opportunities; management estimates regarding future impairments and joint venture exposure; expectations that 2008 will be just as challenging as 2007; the significance of buyer confidence, home prices, sales and cancellations signaling a turnaround in the market; and expected impact of deferred tax assets on future cash outlays. Such statements are based upon the current beliefs and expectations of Company management and current market conditions, which are subject to change. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update 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: fluctuations in demand, competition, sales orders, cancellation rates and home prices in our markets; potential write-downs or write-offs of assets or deposits; interest rates and changes in the availability and pricing of residential mortgages; housing affordability; our success in locating and negotiating potential acquisitions; successful integration of acquired operations with existing operations; our investments in land and development joint ventures; our dependence on key personnel and the availability of satisfactory subcontractors; materials and labor costs; our ability to take certain actions because of restrictions contained in the indentures for our senior and senior subordinated notes and the agreement for our unsecured credit facility; our lack of geographic diversification; the cost and availability of insurance, including the unavailability of insurance for the presence of mold; our potential exposure to natural disasters; the impact of construction defect and home warranty claims; demand for and acceptance of our homes; changes in the availability and pricing of real estate in the markets in which we operate; our ability to acquire additional land or options to acquire additional land on acceptable terms; our exposure to obligations under performance and surety bonds, performance guarantees and letters of credit; general economic slow downs; 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; inflation in the cost of materials used to construct our homes; our level of indebtedness and our ability to raise additional capital when and if needed; legislative or other initiatives that seek to restrain growth or new housing construction or similar measures and other factors identified in documents filed by us with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2006, and Form 10-Q for the quarter ended September 30, 2007, 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 January 28, 2008