Exhibit 99.1
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
(972) 580-6360 (office)
 
 
 
investors@meritagehomes.com

Meritage Homes reports a 35% increase in home closing revenue and a 37% increase in net earnings, resulting in diluted EPS of $0.95 for the second quarter 2016

SCOTTSDALE, Ariz., July 28, 2016 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, announced today second quarter results for the period ended June 30, 2016.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
% Chg
 
2016
 
2015
 
% Chg
Homes closed (units)
 
1,950

 
1,556

 
25
%
 
3,438

 
2,891

 
19
%
Home closing revenue
 
$
795,845

 
$
591,027

 
35
%
 
$
1,391,462

 
$
1,108,300

 
26
%
Average sales price - closings
 
$
408

 
$
380

 
7
%
 
$
405

 
$
383

 
6
%
Home orders (units)
 
2,073

 
1,986

 
4
%
 
4,060

 
3,965

 
2
%
Home order value
 
$
845,346

 
$
775,815

 
9
%
 
$
1,649,946

 
$
1,558,627

 
6
%
Average sales price - orders
 
$
408

 
$
391

 
4
%
 
$
406

 
$
393

 
3
%
Ending backlog (units)
 
 
 
 
 
 
 
3,314

 
3,188

 
4
%
Ending backlog value
 
 
 
 
 
 
 
$
1,396,165

 
$
1,296,779

 
8
%
Average sales price - backlog
 


 


 


 
$
421

 
$
407

 
4
%
Net earnings
 
$
39,878

 
$
29,133

 
37
%
 
$
60,847

 
$
45,533

 
34
%
Diluted EPS
 
$
0.95

 
$
0.70

 
36
%
 
$
1.45

 
$
1.10

 
32
%




1


MANAGEMENT COMMENTS
Steven J. Hilton, chairman and chief executive officer of Meritage Homes, said: “We continue to benefit from our focused strategy, as evidenced by our solid performance in the second quarter and the first half of 2016. We delivered strong top-line growth for the quarter, reflecting a significant increase in our backlog conversion rate. In addition, we successfully managed our overhead costs, which combined with our 35% increase in home closing revenue to generate positive year-over-year earnings growth.
“We continue to make efficiency improvements to create a sustainable platform for increased operating leverage as we grow. We reduced our selling, general and administrative expenses for the second quarter by 150 basis points. This, along with a 60 basis point reduction in interest expense, more than offset a 200 basis point decline in our gross margin. As a result, we delivered a 43% increase in pre-tax earnings compared to last year’s second quarter.
“Importantly, many economic and housing drivers remain positive, including continued job growth, historically low interest rates and a 30-year low supply of homes available for sale. These trends are reflected in the 2,073 new homes we sold during the quarter, the most since the first quarter of 2007. We anticipate these positive conditions will translate to Millennial buyers entering the market in growing numbers, and are working to position Meritage to capture the expected increase in demand from those buyers.
“Based on our outlook and the results for the first half of the year, we are reiterating our projections for 2016 full year orders, closings, revenue and diluted earnings per share, while adjusting our expectations for the timing of improvements in gross margin due to limited pricing power to offset rising costs. We are also providing our third quarter projections, including approximately 1,600-1,800 orders, which should result in 7,350-7,550 orders for the year. We also project 1,750-1,850 homes closings in the third quarter for home closing revenue of $740-760 million, and 7,300-7,600 closings for revenue of $2.9-3.1 billion for the year. We expect home closing gross margins of approximately 17.5-18.0% for the third quarter and for the year. With those projections, we expect to deliver diluted EPS of $0.80-0.85 for the third quarter and $3.55-3.85 for the year.”
SECOND QUARTER RESULTS
•
Net earnings of $39.9 million ($0.95 per diluted share) for the second quarter of 2016, compared to prior year net earnings of $29.1 million ($0.70 per diluted share), primarily reflects higher home closing revenues and greater overhead operating leverage.
•
Home closing revenue increased 35% due to a 25% increase in home closings combined with a 7% increase in average price over the prior year period. The West region (California, Colorado and Arizona) led with a 51%

2


increase in home closing revenue over the second quarter of 2015, followed by 30% growth in the East region (Florida, Georgia, the Carolinas and Tennessee) and a 19% growth in the Central region (Texas).
•
Home closing gross profit increased 21% to $137.7 million for the second quarter of 2016, including $2.0 million of real estate impairments, compared to $114.2 million in the second quarter of 2015, which included $1.8 million of impairments. Second quarter home closing gross margin was 17.3% in 2016 (17.6% before impairments), compared to 19.3% in 2015 (19.6% before impairments), primarily reflecting higher land and labor costs, in addition to fewer closings of homes in high-margin communities.
•
Commissions and other sales costs totaled 7.1% of home closing revenue in the second quarter of 2016, compared to 7.6% in the second quarter of 2015, reflecting the impact of recent company initiatives.
•
General and administrative expenses for the second quarter of 2016 also benefited from improved operating leverage on higher revenue, decreasing 100 basis points to 3.6% of total closing revenue in 2016 from 4.6% in 2015.
•
Interest expense declined to $1.7 million or 0.2% of second quarter 2016 revenue from $4.6 million or 0.8% of total second quarter 2015 revenue, due to additional interest capitalized to an increased level of real-estate assets under development.
•
Second quarter effective tax rate increased to 32% in 2016 from 30% in the second quarter of 2015, and consistent with management’s projected 32% for the full year 2016. Meritage benefits from a lower effective tax rate than statutory rates due to energy tax credits captured on its energy-efficient homes (currently approved through the remainder of 2016) and manufacturing credits.
•
Second quarter 2016 orders for new homes increased 4% over the prior year and total order value increased 9% year over year. The total value of homes ordered increased 19% in the East and 15% in the West region, partially offset by a 9% decline in Texas.
•
Total active community count was 241 at June 30, 2016, essentially flat year over year. Average orders per community increased marginally to 8.6 for the second quarter of 2016 from 8.5 in 2015.
YEAR TO DATE RESULTS
•
Net earnings were $60.8 million for the first half of 2016, compared to $45.5 million for the first half of 2015, primarily driven by a 26% increase in home closing revenue.
•
Home closings for the first half of the year increased 19% over 2015, combined with a 6% increase in average prices.

3


•
Home closing gross profit increased 15% to $241.1 million in the first half of 2016 compared to $209.7 million in the first half of 2015.
•
Gross margin was 17.3% in the first half of 2016 compared to 18.9% in 2015, reflecting continued cost and pricing headwinds.
•
Total commissions and selling expenses declined 40 basis points to 7.4% of year-to-date 2016 home closing revenue from 7.8% in 2015, while general and administrative expenses declined 90 basis points to 4.2% of total closing revenue in the first half of 2016, compared to 5.1% in 2015.
BALANCE SHEET
•
Cash and cash equivalents at June 30, 2016, totaled $128.2 million, compared to $262.2 million at December 31, 2015, primarily reflecting investments in real estate to replace lots and position the company for future growth.
•
Real estate assets increased by $203.0 million in the first half of the year, ending at $2.30 billion at June 30, 2016, compared to $2.10 billion at December 31, 2015.
•
Meritage ended the second quarter of 2016 with approximately 28,900 total lots under control, compared to approximately 29,100 total lots at June 30, 2015 and 27,800 at year-end 2015.
•
Net debt-to-capital ratio at June 30, 2016 was 42.6%, compared to 40.4% at December 31, 2015, due to the intended use of cash to replenish the pipeline for land and development, and a growing inventory of homes under construction during the second quarter of 2016.

CONFERENCE CALL
Management will host a conference call today to discuss the Company's results at 10:30 a.m. Eastern Time (7:30 a.m. Arizona 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 registration link: http://dpregister.com/10088999.
Telephone participants who are unable to pre-register may dial in to 866-226-4948 on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 for Canada.
A replay of the call will be available until August 11, 2016, beginning at approximately 12:30 p.m. ET on July 28, 2016 on the website noted above, or by dialing 877-344-7529, 1-412-317-0088 for international or 1-855-669-9658 for Canada, and referencing conference number 10088999.

4



Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Homebuilding:
 
 
 
 
 
 
 
 
Home closing revenue
$
795,845

 
$
591,027

 
$
1,391,462

 
$
1,108,300

 
Land closing revenue
2,051

 
6,774

 
4,200

 
8,213

 
Total closing revenue
797,896

 
597,801

 
1,395,662

 
1,116,513

 
Cost of home closings
(658,099
)
 
(476,790
)
 
(1,150,369
)
 
(898,576
)
 
Cost of land closings
(1,693
)
 
(6,262
)
 
(3,393
)
 
(7,547
)
 
Total cost of closings
(659,792
)
 
(483,052
)
 
(1,153,762
)
 
(906,123
)
 
Home closing gross profit
137,746

 
114,237

 
241,093

 
209,724

 
Land closing gross profit
358

 
512

 
807

 
666

 
Total closing gross profit
138,104

 
114,749

 
241,900

 
210,390

Financial Services:
 
 
 
 
 
 
 
 
Revenue
3,476

 
2,741

 
5,976

 
5,276

 
Expense
(1,508
)
 
(1,362
)
 
(2,754
)
 
(2,661
)
 
Earnings from financial services unconsolidated entities and other, net
3,795

 
2,757

 
6,587

 
5,301

 
Financial services profit
5,763

 
4,136

 
9,809

 
7,916

Commissions and other sales costs
(56,379
)
 
(45,167
)
 
(102,556
)
 
(86,779
)
General and administrative expenses
(28,898
)
 
(27,650
)
 
(58,516
)
 
(57,300
)
Earnings/(loss) from other unconsolidated entities, net
573

 
(169
)
 
416

 
(292
)
Interest expense
(1,672
)
 
(4,621
)
 
(4,960
)
 
(7,775
)
Other income, net
1,545

 
136

 
1,828

 
551

Earnings before income taxes
59,036

 
41,414

 
87,921

 
66,711

Provision for income taxes
(19,158
)
 
(12,281
)
 
(27,074
)
 
(21,178
)
Net earnings
$
39,878

 
$
29,133

 
$
60,847

 
$
45,533

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
Earnings per share
$
1.00

 
$
0.73

 
$
1.52

 
$
1.15

 
Weighted average shares outstanding
40,012

 
39,648

 
39,926

 
39,520

 
Diluted
 
 
 
 
 
 
 
 
Earnings per share
$
0.95

 
$
0.70

 
$
1.45

 
$
1.10

 
Weighted average shares outstanding
42,533

 
42,145

 
42,477

 
42,079





5



Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
 
June 30, 2016
 
December 31, 2015
Assets:
 
 
 
 
Cash and cash equivalents
 
$
128,171

 
$
262,208

Other receivables
 
68,837

 
57,296

Real estate (1)
 
2,301,305

 
2,098,302

Deposits on real estate under option or contract
 
91,444

 
87,839

Investments in unconsolidated entities
 
11,188

 
11,370

Property and equipment, net
 
34,009

 
33,970

Deferred tax asset
 
58,840

 
59,147

Prepaids, other assets and goodwill
 
67,361

 
69,645

Total assets
 
$
2,761,155

 
$
2,679,777

Liabilities:
 
 
 
 
Accounts payable
 
$
126,028

 
$
106,440

Accrued liabilities
 
154,643

 
161,163

Home sale deposits
 
39,646

 
36,197

Loans payable and other borrowings
 
19,889

 
23,867

Senior and convertible senior notes, net
 
1,094,146

 
1,093,173

Total liabilities
 
1,434,352

 
1,420,840

Stockholders' Equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
400

 
397

Additional paid-in capital
 
566,508

 
559,492

Retained earnings
 
759,895

 
699,048

Total stockholders’ equity
 
1,326,803

 
1,258,937

Total liabilities and stockholders’ equity
 
$
2,761,155

 
$
2,679,777


(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
607,390

 
$
456,138

Unsold homes, completed and under construction
 
274,824

 
307,425

Model homes
 
146,707

 
138,546

Finished home sites and home sites under development
 
1,272,384

 
1,196,193

Total real estate
 
$
2,301,305

 
$
2,098,302







6


Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Depreciation and amortization
$
4,198

 
$
3,518

 
$
7,600

 
$
6,729

 
 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
 
 
Capitalized interest, beginning of period
$
64,126

 
$
56,843

 
$
61,202

 
$
54,060

Interest incurred
17,713

 
16,526

 
35,272

 
31,808

Interest expensed
(1,672
)
 
(4,621
)
 
(4,960
)
 
(7,775
)
Interest amortized to cost of home and land closings
(15,485
)
 
(9,878
)
 
(26,832
)
 
(19,223
)
Capitalized interest, end of period
$
64,682

 
$
58,870

 
$
64,682

 
$
58,870

 
 
 
 
 
 
 
 
 
June 30, 2016
 
December 31, 2015
 
 
 
 
Notes payable and other borrowings
$
1,114,035

 
$
1,117,040

 
 
 
 
Stockholders' equity
1,326,803

 
1,258,937

 
 
 
 
Total capital
2,440,838

 
2,375,977

 
 
 
 
Debt-to-capital
45.6
%
 
47.0
%
 
 
 
 
Notes payable and other borrowings
1,114,035

 
1,117,040

 
 
 
 
Less: cash and cash equivalents
$
(128,171
)
 
$
(262,208
)
 
 
 
 
Net debt
985,864

 
854,832

 
 
 
 
Stockholders’ equity
1,326,803

 
1,258,937

 
 
 
 
Total net capital
$
2,312,667

 
$
2,113,769

 
 
 
 
Net debt-to-capital
42.6
%
 
40.4
%
 
 
 

 



7


Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)
 
 
Six Months Ended June 30,
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
60,847

 
$
45,533

Adjustments to reconcile net earnings to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
7,600

 
6,729

Stock-based compensation
 
7,313

 
8,465

Excess income tax provision/(benefit) from stock-based awards
 
526

 
(2,012
)
Equity in earnings from unconsolidated entities
 
(7,003
)
 
(5,009
)
Distribution of earnings from unconsolidated entities
 
7,343

 
5,769

Other
 
3,262

 
424

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(193,981
)
 
(144,450
)
(Increase)/decrease in deposits on real estate under option or contract
 
(3,551
)
 
3,604

Increase in other receivables, prepaids and other assets
 
(9,368
)
 
(10,346
)
Increase in accounts payable and accrued liabilities
 
12,944

 
4,996

Increase in home sale deposits
 
3,449

 
9,349

Net cash used in operating activities
 
(110,619
)
 
(76,948
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
(159
)
 
(282
)
Purchases of property and equipment
 
(7,570
)
 
(7,829
)
Proceeds from sales of property and equipment
 
87

 
62

Maturities/sales of investments and securities
 
645

 
—

Payments to purchase investments and securities
 
(645
)
 
—

Net cash used in investing activities
 
(7,642
)
 
(8,049
)
Cash flows from financing activities:
 
 
 
 
Repayment of loans payable and other borrowings
 
(15,482
)
 
(3,211
)
Proceeds from issuance of senior notes
 
—

 
200,000

Debt issuance costs
 
—

 
(2,955
)
Excess income tax (provision)/benefit from stock-based awards
 
(526
)
 
2,012

Proceeds from stock option exercises
 
232

 
2,839

Net cash (used in)/provided by financing activities
 
(15,776
)
 
198,685

Net (decrease)/increase in cash and cash equivalents
 
(134,037
)
 
113,688

Beginning cash and cash equivalents
 
262,208

 
103,333

Ending cash and cash equivalents
 
$
128,171

 
$
217,021

 


8


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
2016
 
2015
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
279

 
$
94,048

 
229

 
$
71,878

California
 
280

 
156,058

 
176

 
95,763

Colorado
 
169

 
82,472

 
113

 
52,133

West Region
 
728

 
332,578

 
518

 
219,774

Texas
 
556

 
206,907

 
509

 
174,397

Central Region
 
556

 
206,907

 
509

 
174,397

Florida
 
257

 
103,342

 
210

 
91,491

Georgia
 
81

 
27,383

 
42

 
13,057

North Carolina
 
179

 
76,507

 
135

 
50,214

South Carolina
 
88

 
27,748

 
91

 
27,258

Tennessee
 
61

 
21,380

 
51

 
14,836

East Region
 
666

 
256,360

 
529

 
196,856

Total
 
1,950

 
$
795,845

 
1,556

 
$
591,027

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
331

 
$
115,812

 
320

 
$
102,714

California
 
289

 
165,931

 
237

 
131,814

Colorado
 
169

 
84,398

 
181

 
84,421

West Region
 
789

 
366,141

 
738

 
318,949

Texas
 
550

 
202,948

 
635

 
224,195

Central Region
 
550

 
202,948

 
635

 
224,195

Florida
 
267

 
106,913

 
218

 
92,663

Georgia
 
115

 
38,356

 
53

 
16,690

North Carolina
 
159

 
66,944

 
181

 
72,667

South Carolina
 
118

 
38,468

 
99

 
29,473

Tennessee
 
75

 
25,576

 
62

 
21,178

East Region
 
734

 
276,257

 
613

 
232,671

Total
 
2,073

 
$
845,346

 
1,986

 
$
775,815


9


 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2016
 
2015
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
496

 
$
169,047

 
415

 
$
134,479

California
 
487

 
276,778

 
329

 
182,186

Colorado
 
307

 
147,799

 
241

 
109,987

West Region
 
1,290

 
593,624

 
985

 
426,652

Texas
 
1,021

 
366,878

 
949

 
326,984

Central Region
 
1,021

 
366,878

 
949

 
326,984

Florida
 
413

 
166,664

 
387

 
164,322

Georgia
 
146

 
49,397

 
94

 
28,515

North Carolina
 
297

 
126,884

 
224

 
85,189

South Carolina
 
155

 
48,919

 
167

 
51,818

Tennessee
 
116

 
39,096

 
85

 
24,820

East Region
 
1,127

 
430,960

 
957

 
354,664

Total
 
3,438

 
$
1,391,462

 
2,891

 
$
1,108,300

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
590

 
$
205,992

 
608

 
$
193,305

California
 
559

 
316,943

 
547

 
309,911

Colorado
 
338

 
171,024

 
370

 
169,828

West Region
 
1,487

 
693,959

 
1,525

 
673,044

Texas
 
1,141

 
419,013

 
1,192

 
409,327

Central Region
 
1,141

 
419,013

 
1,192

 
409,327

Florida
 
494

 
199,507

 
466

 
201,520

Georgia
 
220

 
73,551

 
130

 
40,908

North Carolina
 
348

 
144,025

 
329

 
134,292

South Carolina
 
225

 
72,689

 
195

 
59,001

Tennessee
 
145

 
47,202

 
128

 
40,535

East Region
 
1,432

 
536,974

 
1,248

 
476,256

Total
 
4,060

 
$
1,649,946

 
3,965

 
$
1,558,627

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
411

 
$
154,851

 
385

 
$
125,044

California
 
361

 
224,311

 
430

 
251,688

Colorado
 
363

 
185,376

 
397

 
181,474

West Region
 
1,135

 
564,538

 
1,212

 
558,206

Texas
 
1,062

 
402,329

 
1,101

 
391,384

Central Region
 
1,062

 
402,329

 
1,101

 
391,384

Florida
 
368

 
150,849

 
316

 
139,768

Georgia
 
169

 
57,580

 
89

 
28,977

North Carolina
 
311

 
128,619

 
290

 
117,271

South Carolina
 
158

 
53,881

 
98

 
33,303

Tennessee
 
111

 
38,369

 
82

 
27,870

East Region
 
1,117

 
429,298

 
875

 
347,189

Total
 
3,314

 
$
1,396,165

 
3,188

 
$
1,296,779



10


Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
2016
 
2015
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
43

 
42.5

 
43

 
43.5

California
 
25

 
24.5

 
20

 
20.5

Colorado
 
12

 
13.0

 
16

 
16.0

West Region
 
80

 
80.0

 
79

 
80.0

Texas
 
73

 
71.5

 
66

 
63.5

Central Region
 
73

 
71.5

 
66

 
63.5

Florida
 
26

 
26.0

 
30

 
28.0

Georgia
 
17

 
17.5

 
16

 
14.5

North Carolina
 
22

 
23.0

 
25

 
24.0

South Carolina
 
16

 
16.0

 
20

 
20.0

Tennessee
 
7

 
8.0

 
4

 
4.5

East Region
 
88

 
90.5

 
95

 
91.0

Total
 
241

 
242.0

 
240

 
234.5


 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2016
 
2015
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
43

 
42.0

 
43

 
42.0

California
 
25

 
24.5

 
20

 
22.0

Colorado
 
12

 
14.0

 
16

 
16.5

West Region
 
80

 
80.5

 
79

 
80.5

Texas
 
73

 
72.5

 
66

 
62.5

Central Region
 
73

 
72.5

 
66

 
62.5

Florida
 
26

 
28.5

 
30

 
29.5

Georgia
 
17

 
17.0

 
16

 
14.5

North Carolina
 
22

 
24.0

 
25

 
23.0

South Carolina
 
16

 
17.0

 
20

 
20.0

Tennessee
 
7

 
8.0

 
4

 
4.5

East Region
 
88

 
94.5

 
95

 
91.5

Total
 
241

 
247.5

 
240

 
234.5




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About Meritage Homes Corporation
Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2015. Meritage Homes builds and sells single-family homes for first-time, move-up, luxury and active adult buyers across the Western, Southern and Southeastern United States. Meritage Homes builds in markets including Sacramento, San Francisco's East Bay, the Central Valley and Orange County, California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale, Green Valley and Tucson, Arizona; Denver and Fort Collins, Colorado; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina; Greenville-Spartanburg and York County, South Carolina; Nashville, Tennessee; and Atlanta, Georgia.
Meritage Homes has designed and built more than 95,000 homes in its 30-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage Homes is the industry leader in energy-efficient homebuilding and has received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award in 2013, 2014, 2015 and 2016 for innovation and industry leadership in energy efficient homebuilding. For more information, visit meritagehomes.com.
This press release and the accompanying comments during our analyst call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's expectations with respect to future revenue and earnings growth, projected orders, home closings and home closing revenue, home closing gross margins, tax rates and diluted earnings per share for the third quarter and full year 2016.
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. These risks and uncertainties include, but are not limited to, the following: the availability and cost of finished lots and undeveloped land; interest rates and changes in the availability and pricing of residential mortgages; fluctuations in the availability and cost of labor; changes in tax laws that adversely impact us or our homebuyers; reversal of the current economic recovery; the ability of our potential buyers to sell their existing homes; cancellation rates; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slower order absorption rates; impairments of our real

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estate inventory; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of option deposits; our potential exposure to natural disasters or severe weather conditions; competition; construction defect and home warranty claims; failures in health and safety performance; our success in prevailing on contested tax positions; our ability to obtain performance bonds in connection with our development work; the loss of key personnel; our failure to comply with laws and regulations; our limited geographic diversification; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing due to a downgrade of our credit ratings; our ability to successfully integrate acquired companies and achieve anticipated benefits from these acquisitions; our compliance with government regulations and the effect of legislative or other initiatives that seek to restrain growth of new housing construction or similar measures; legislation relating to energy and climate change; the replication of our energy-efficient technologies by our competitors; our exposure to information technology failures and security breaches; 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, 2015 and subsequent quarterly reports on Forms 10-Q under the caption "Risk Factors," which can be found on our website.

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