Exhibit 99.1

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

Meritage Homes Reports Results for the First Quarter of 2013 Including
35% Growth in Orders, 65% Increase in Revenue and Diluted EPS of $0.32

SCOTTSDALE, Ariz., April 24, 2013 (GLOBE NEWSWIRE) – Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced first quarter results for the period ended March 31, 2013.
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
    
 
 
Three Months Ended March 31,
 
 
2013
 
2012
 
%Chg
Homes closed (units)
 
1,052

 
759

 
39
%
Home closing revenue
 
$
330,710

 
$
204,022

 
62
%
Average sales price - closings
 
$
314

 
$
269

 
17
%
Home orders (units)
 
1,547

 
1,144

 
35
%
Home order value
 
$
520,403

 
$
308,329

 
69
%
Average sales price - orders
 
$
336

 
$
270

 
25
%
Ending backlog (units)
 
1,967

 
1,300

 
51
%
Ending backlog value
 
$
668,959

 
$
353,161

 
89
%
Average sales price - backlog
 
$
340

 
$
272

 
25
%
Net income/(loss)
 
$
12,041

 
$
(4,754
)
 
n/m

Diluted EPS
 
$
0.32

 
$
(0.15
)
 
n/m





1


MANAGEMENT COMMENTS
“We continued to achieve significant gains in virtually every key metric we had targeted and across all of our states during the first quarter of 2013,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “We grew our first quarter orders, closings, backlog, average prices, revenue, gross margin and pretax margin significantly over the prior year, with most of those metrics reaching heights we haven't seen for many years. I believe our strong performance is due to sound strategies and operational execution, as well as healthier market conditions evident during this spring selling season.
“Housing demand is greater than the supply of homes available for sale in many of the areas where we operate, causing home prices to increase,” Mr. Hilton explained. “To meet the higher demand, we opened 24 new communities during the first quarter and also grew our active community count to its highest point in almost four years. In addition, our 9.5 orders per average community for the quarter was a 27% increase over 2012 even as we raised prices in many communities. As a result, we received orders for 35% more homes for a 69% increase in total order value compared to the first quarter of 2012. We are pricing our homes and limiting the number of lots we're releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities.”
STRONG GROWTH
•
Meritage ended the quarter with 168 active communities, up from 150 at March 31, 2012, and 158 at the end of 2012.
•
Meritage has established a solid position in its new Carolinas market since opening at the end of 2011, and ended the first quarter of 2013 with 11 actively selling communities, up from four at March 31, 2012.
•
Orders per average community increased to 9.5 for the first quarter of 2013 from 7.5 in the prior year period.
•
Order cancellation rate declined in the first quarter to 11% in 2013, compared to 15% in the first quarter of 2012.
•
Closings and revenue, orders and order value, and ending backlog increased in every state over the first quarter of 2012. California led in most areas with a 172% increase in closing revenue, a 113% increase in total order value, and the company's highest average prices and orders per community for the first quarter of 2013.
•
Average sales prices for home orders reached their highest point since the fourth quarter of 2005, largely reflective of the continuing shift in orders toward the states where Meritage's average home prices are highest, in California, Colorado, the Carolinas and Florida. Those four states made up 45% of the company's first quarter 2013 orders and 55% of the total order value, increasing from 37% of total orders and 45% of total order value in the first quarter last year.
OPERATING LEVERAGE
•
Net income increased by $16.8 million for the first quarter to $12.0 million or $0.32 per diluted share, from a loss of $4.8 million or ($0.15) per share in the first quarter of 2012, primarily due to higher home closing revenue and gross margins, supplemented by leveraging overhead expenses.
•
Home closing revenue increased 62% over the prior year as a result of 39% more closings and a 17% increase in the average price of homes closed during the quarter.

2


•
Home closing gross margin increased to 19.5% in the first quarter of 2013, from 17.2% in the first quarter of 2012 and 18.9% in the fourth quarter of 2012.
•
Commissions and other sales costs in the first quarter decreased as a percentage of home closing revenue to 7.8% in 2013 from 9.3% in 2012.
•
General and administrative expenses declined to 5.9% of first quarter revenue in 2013, from 7.2% in 2012, as revenue grew at nearly twice the rate of increase in general and administrative expenses.
•
Interest expense declined to 1.5% of first quarter revenue in 2013 compared to 3.6% in 2012.
•
As a result, first quarter pre-tax margin increased 710 bps to 4.9% in 2013 from (2.2%) in 2012, or $16.5 million in 2013 pre-tax income compared to a pre-tax loss of $4.6 million in 2012.
BALANCE SHEET STRENGTH
•
Meritage replenished its land pipeline by spending approximately $75 million on land acquisition and development in the first quarter of 2013, and added approximately 1,600 lots under contract during the quarter.
•
Total lot supply at the end of the quarter was approximately 21,000, compared to approximately 17,200 a year earlier. Based on trailing twelve months closings, the March 31, 2013 balance represents a 4.6 year supply of lots.
•
In March, Meritage issued $175 million of 4.50% senior notes due 2018, in anticipation of retiring $100 million of 7.731% notes due 2017, thereby securing $75 million of additional capital for growth with minimal added interest expense. Of the $100 million 7.731% issue, $17 million was retired in the first quarter and the remaining $83 million balance was retired in the second quarter of 2013.
•
The company ended the first quarter of 2013 with $453 million in cash and cash equivalents, restricted cash and securities, an increase of $176 million over the March 31, 2012 total of $277 million. Net debt to total capital ratio decreased to 37.6% at March 31, 2013, from 40.4% at March 31, 2012.
SUMMARY
“We believe job growth in most of our markets has increased demand for homes, and the limited supply of available resale homes has driven more prospective home buyers to new construction. Existing homeowners are also choosing to take advantage of historically low interest rates and very affordable prices to trade up, increasing the demand for new homes in already constrained markets,” said Mr. Hilton. “We expect increasing prices to help regulate orders to some degree, but we believe the homebuilding market is poised for continued growth for years to come, and Meritage is well positioned to capture much of that growth.
“Based on our projections for opening new communities, coupled with a modest increase in average sales per community and higher average sales prices, we are projecting approximately a 40-45% year-over-year increase in home closing revenue for for each of the three remaining quarters of 2013. Assuming some additional improvement in margins -- which are being somewhat constrained by rising construction costs -- and the operating leverage demonstrated in our first quarter results, we would anticipate earnings per diluted share in the range of $2.20-$2.45 for the year, representing approximately a 350%-400% increase in pretax earnings.”



3


CONFERENCE CALL
Management will host a conference call today to discuss the Company's first quarter results at 10:30 a.m. Eastern time (7:30 a.m. Pacific Time). The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.
Conference Call Pre-registration link: http://services.choruscall.com/DiamondPassRegistration/register?confirmationNumber=10027059&linkSecurityString=213bae13e1
Telephone participants who are unable to pre-register may dial in to 888-317-6016 on the day of the call.
A replay of the call will be available for fifteen days, beginning at 12:30 p.m. ET on April 24, 2013 on the website noted above, or by dialing 877-344-7529, and referencing conference number 10027059. For more information, visit meritagehomes.com.



4



Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
 
 
 
 
Three Months Ended March 31,
 
 
 
 
2013
 
2012
 
Homebuilding:
 
 
 
 
 
 
Home closing revenue
 
$
330,710

 
$
204,022

 
 
Land closing revenue
 
5,725

 
328

 
 
Total closing revenue
 
336,435

 
204,350

 
 
Cost of home closings
 
(266,350
)
 
(168,909
)
 
 
Cost of land closings
 
(5,550
)
 
(205
)
 
 
Total cost of closings
 
(271,900
)
 
(169,114
)
 
 
Home closing gross profit
 
64,360

 
35,113

 
 
Land closing gross profit
 
175

 
123

 
 
Total closing gross profit
 
64,535

 
35,236

 
Financial Services:
 
 
 
 
 
 
Revenue
 
842

 
—

 
 
Expense
 
(573
)
 
(25
)
 
 
Earnings from financial services unconsolidated entities and other, net
 
2,787

 
1,606

 
 
Financial services profit
 
3,056

 
1,581

 
Commissions and other sales costs
 
(25,879
)
 
(18,977
)
 
General and administrative expenses
 
(19,724
)
 
(14,721
)
 
Loss from other unconsolidated entities, net
 
(155
)
 
(183
)
 
Interest expense
 
(5,128
)
 
(7,371
)
 
Other income/(expense), net
 
470

 
(139
)
 
Loss on early extinguishment of debt
 
(700
)
 
—

 
Income/(loss) before income taxes
 
16,475

 
(4,574
)
 
Provision for income taxes
 
(4,434
)
 
(180
)
 
Net income/(loss)
 
$
12,041

 
$
(4,754
)
 
 
 
 
 
 
 
Income/(loss) per share:
 
 
 
 
 
 
Basic
 
 
 
 
 
 
Income/(loss) per share
 
$
0.34

 
$
(0.15
)
 
 
Weighted average shares outstanding
 
35,798

 
32,634

 
 
Diluted
 
 
 
 
 
 
Income/(loss) per share
 
$
0.32

 
$
(0.15
)
 
 
Weighted average shares outstanding
 
38,440

 
32,634

 









5




Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
 
March 31, 2013
 
December 31, 2012
Assets:
 
 
 
 
Cash and cash equivalents
 
$
325,021

 
$
170,457

Investments and securities
 
88,901

 
86,074

Restricted cash
 
38,938

 
38,938

Other receivables
 
23,885

 
20,290

Real estate (1)
 
1,152,139

 
1,113,187

Deposits on real estate under option or contract
 
11,321

 
14,351

Investments in unconsolidated entities
 
10,949

 
12,085

Property and equipment, net
 
16,352

 
15,718

Deferred tax asset
 
74,407

 
77,974

Prepaid expenses and other assets
 
29,072

 
26,488

Total assets
 
$
1,770,985

 
$
1,575,562

Liabilities:
 
 
 
 
Accounts payable
 
$
60,283

 
$
49,801

Accrued liabilities
 
100,102

 
96,377

Home sale deposits
 
17,744

 
12,377

Senior, senior subordinated, convertible senior notes and other borrowings
 
881,219

 
722,797

Total liabilities
 
1,059,348

 
881,352

Stockholders' Equity:
 
 
 
 
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at March 31, 2013 and December 31, 2012
 
—

 
—

Common stock, par value $0.01. Authorized 125,000,000 shares; issued 36,010,224 and 35,613,351 shares at March 31, 2013 and December 31, 2012, respectively
 
360

 
356

Additional paid-in capital
 
395,631

 
390,249

Retained earnings
 
315,646

 
303,605

Total stockholders’ equity
 
711,637

 
694,210

Total liabilities and stockholders’ equity
 
$
1,770,985

 
$
1,575,562

(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
247,682

 
$
192,948

Unsold homes, completed and under construction
 
105,094

 
107,466

Model homes
 
64,783

 
62,411

Finished home sites and home sites under development
 
617,507

 
634,106

Land held for development
 
57,081

 
56,118

Land held for sale
 
22,430

 
21,650

Communities in mothball status
 
37,562

 
38,488

Total real estate
 
$
1,152,139

 
$
1,113,187





6




Supplemental Information and Non-GAAP Financial Disclosures (In thousands – unaudited):
 
    
 
 
Three Months Ended March 31,
 
 
 
2013
 
2012
 
Depreciation and amortization
 
$
2,158

 
$
1,693

 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
Capitalized interest, beginning of period
 
$
21,600

 
$
14,810

 
Interest incurred
 
12,726

 
10,847

 
Interest expensed
 
(5,128
)
 
(7,371
)
 
Interest amortized to cost of home, land closings and impairments
 
(5,000
)
 
(2,378
)
 
Capitalized interest, end of period
 
$
24,198

 
$
15,908

 
 
 
 
 
 
 
 
 
March 31, 2013

 
December 31, 2012

 
Notes payable and other borrowings
 
$
881,219

 
$
722,797

 
Less: cash and cash equivalents, restricted cash, and investments and securities
 
(452,860
)
 
(295,469
)
 
Net debt
 
428,359

 
427,328

 
Stockholders’ equity
 
711,637

 
694,210

 
Total capital
 
$
1,139,996

 
$
1,121,538

 
Net debt-to-capital
 
37.6
%
 
38.1
%
 
 



7


Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 
 
 
Three Months Ended March 31,
 
 
2013
 
2012
Cash flows from operating activities:
 
 
 
 
Net income/(loss)
 
$
12,041

 
$
(4,754
)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
 
 
 
 
Depreciation and amortization
 
2,158

 
1,693

Stock-based compensation
 
1,844

 
1,653

Loss on early extinguishment of debt
 
700

 
—

Excess income tax benefit from stock-based awards
 
(464
)
 
—

Equity in earnings from unconsolidated entities
 
(2,632
)
 
(1,423
)
Distribution of earnings from unconsolidated entities
 
3,722

 
1,252

Other
 
3,632

 
313

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(38,876
)
 
(52,722
)
Decrease in deposits on real estate under option or contract
 
3,030

 
99

(Increase)/decrease in receivables and prepaid expenses and other assets
 
(5,312
)
 
1,355

Increase/(decrease) in accounts payable and accrued liabilities
 
14,671

 
(5,210
)
Increase in home sale deposits
 
5,367

 
2,382

Net cash used in operating activities
 
(119
)
 
(55,362
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
(28
)
 
(130
)
Distributions of capital from unconsolidated entities
 
74

 
—

Purchases of property and equipment
 
(2,704
)
 
(2,336
)
Proceeds of sales from property and equipment
 
33

 
350

Maturities of investments and securities
 
43,999

 
50,000

Payments to purchase investments and securities
 
(46,826
)
 
(76,503
)
Increase in restricted cash
 
—

 
(83
)
Net cash used in investing activities
 
(5,452
)
 
(28,702
)
Cash flows from financing activities:
 
 
 
 
Repayments of senior subordinated notes
 
(17,264
)
 
—

Proceeds from issuance of new debt
 
175,000

 
—

Debt issuance costs
 
(1,143
)
 
—

Excess income tax benefit from stock-based awards
 
464

 
—

Proceeds from stock option exercises
 
3,078

 
1,055

Net cash provided by financing activities
 
160,135

 
1,055

Net increase/(decrease) in cash
 
154,564

 
(83,009
)
Beginning cash and cash equivalents
 
170,457

 
173,612

Ending cash and cash equivalents (2)
 
$
325,021

 
$
90,603

 
(2) Ending cash and cash equivalents as of March 31, 2013 and December 31, 2012 excludes investments and securities and restricted cash totaling $128 million and $125 million, respectively.


8


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
 
 
Three Months Ended
 
 
March 31, 2013
 
March 31, 2012
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
192

 
$
57,149

 
142

 
$
38,899

California
 
228

 
90,642

 
97

 
33,306

Colorado
 
94

 
32,204

 
64

 
21,300

Nevada
 
16

 
3,569

 
6

 
1,196

West Region
 
530

 
183,564

 
309

 
94,701

Texas
 
354

 
90,705

 
317

 
71,651

Central Region
 
354

 
90,705

 
317

 
71,651

Carolinas
 
40

 
14,215

 
18

 
6,547

Florida
 
128

 
42,226

 
115

 
31,123

East Region
 
168

 
56,441

 
133

 
37,670

Total
 
1,052

 
$
330,710

 
759

 
$
204,022

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
318

 
$
97,708

 
249

 
$
59,612

California
 
314

 
133,631

 
187

 
62,647

Colorado
 
141

 
56,795

 
91

 
30,313

Nevada
 
23

 
5,506

 
8

 
1,456

West Region
 
796

 
293,640

 
535

 
154,028

Texas
 
503

 
131,130

 
463

 
108,863

Central Region
 
503

 
131,130

 
463

 
108,863

Carolinas
 
69

 
26,886

 
33

 
12,079

Florida
 
179

 
68,747

 
113

 
33,359

East Region
 
248

 
95,633

 
146

 
45,438

Total
 
1,547

 
$
520,403

 
1,144

 
$
308,329

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
375

 
$
121,375

 
265

 
$
65,945

California
 
401

 
167,577

 
172

 
56,989

Colorado
 
189

 
74,680

 
97

 
32,506

Nevada
 
21

 
5,042

 
7

 
1,336

West Region
 
986

 
368,674

 
541

 
156,776

Texas
 
649

 
172,742

 
542

 
130,706

Central Region
 
649

 
172,742

 
542

 
130,706

Carolinas
 
78

 
30,012

 
39

 
14,148

Florida
 
254

 
97,531

 
178

 
51,531

East Region
 
332

 
127,543

 
217

 
65,679

Total
 
1,967

 
$
668,959

 
1,300

 
$
353,161







9


Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
 
 
Three Months Ended
 
 
March 31, 2013
 
March 31, 2012
 
 
Beg.
 
End
 
Beg.
 
End
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
38

 
40

 
37

 
32

California
 
17

 
15

 
20

 
21

Colorado
 
12

 
11

 
10

 
8

Nevada
 
1

 
—

 
2

 
2

West Region
 
68

 
66

 
69

 
63

Texas
 
65

 
69

 
67

 
67

Central Region
 
65

 
69

 
67

 
67

Carolinas
 
7

 
11

 
3

 
4

Florida
 
18

 
22

 
18

 
16

East Region
 
25

 
33

 
21

 
20

Total
 
158

 
168

 
157

 
150

 
 
 
 
 
 
 
 
 
 



10


About Meritage Homes Corporation
Meritage Homes is the ninth-largest public homebuilder in the United States, based on 4,238 homes closed in 2012. Meritage builds and sells single-family homes for first-time, move-up, luxury and active adult buyers across the Western, Southern and Southeastern United States. As of March 31, 2013, the company had 168 actively selling communities in markets including Sacramento, San Francisco's East Bay, the Central Valley and Southern California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale and Tucson, Arizona; Las Vegas, Nevada; Denver, Colorado; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina.
Meritage has designed and built more than 75,000 homes in its 27-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage is the industry leader in energy efficient homebuilding and in 2013, Meritage received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award, for its innovation and industry leadership in energy efficient homebuilding. Meritage was the first national homebuilder to be 100 percent ENERGY STAR® qualified in every home it builds, and far exceeds ENERGY STAR standards today.
For more information, visit meritagehomes.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's expectations that increasing prices will help regulate demand for new homes and maximize profit from communities, that the homebuilding market is poised for years of continued growth, that Meritage is positioned to capture additional market growth, and management's projected revenue, pretax earnings and earnings per share for 2013.
Such statements are based upon 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. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. The risks and uncertainties include but are not limited to the following: weakness in the homebuilding market resulting from an unexpected setback in the current economic recovery; the availability of finished lots and undeveloped land; interest rates and changes in the availability and pricing of residential mortgages; the availability and cost of materials and labor; 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; inflation in the cost of materials used to construct homes; the adverse effect of slower order absorption rates; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; our potential exposure to natural disasters; competition; the adverse impacts of cancellations resulting from small deposits relating to our sales contracts; construction defect and home warranty claims; our success in prevailing on contested tax positions; our ability to preserve our deferred tax assets and use them within the statutory time limits; delays and risks associated with land development; our ability to obtain performance bonds in connection with our development work; the liquidity of our joint ventures and the ability of our joint venture partners to meet their obligations to us and the joint venture; the loss of key personnel; changes in or our failure to comply with laws and regulations; our lack of geographic diversification; fluctuations in quarterly operating results; our financial leverage and level of indebtedness; our ability to take certain actions because of restrictions contained in the indentures for our senior and senior subordinated notes and our ability to raise additional capital when and if needed; our credit ratings; successful integration of future acquisitions; government regulations and legislative or other initiatives that seek to restrain growth or new housing construction or similar measures; acts of war; the replication of our “Green” technologies by our competitors; our exposure to information technology failures and security breaches; 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, 2012 under the caption “Risk Factors,” which can be found on our website.

# # #



11