Exhibit 99.1
mhlogo1linetaga12.jpg
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
(972) 580-6360 (office)
 
 
 
investors@meritagehomes.com

Meritage Homes reports third quarter 2018 diluted EPS of $1.33;
with a 13% increase in pre-tax earnings on 9% growth in home closing revenue;
Continued expansion into entry-level market represents one-third of communities
and 43% of third quarter orders

SCOTTSDALE, Ariz., October 24, 2018 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported its third quarter results for the period ended September 30, 2018.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
% Chg
 
2018
 
2017
 
% Chg
Homes closed (units)
 
2,162

 
1,969

 
10
 %
 
6,026

 
5,456

 
10
 %
Home closing revenue
 
$
877,734

 
$
805,008

 
9
 %
 
$
2,478,649

 
$
2,263,405

 
10
 %
Average sales price - closings
 
$
406

 
$
409

 
(1
)%
 
$
411

 
$
415

 
(1
)%
Home orders (units)
 
1,828

 
1,874

 
(2
)%
 
6,436

 
6,162

 
4
 %
Home order value
 
$
715,089

 
$
765,027

 
(7
)%
 
$
2,595,881

 
$
2,536,448

 
2
 %
Average sales price - orders
 
$
391

 
$
408

 
(4
)%
 
$
403

 
$
412

 
(2
)%
Ending backlog (units)
 
 
 
 
 
 
 
3,285

 
3,333

 
(1
)%
Ending backlog value
 
 
 
 
 
 
 
$
1,367,006

 
$
1,408,801

 
(3
)%
Average sales price - backlog
 


 


 


 
$
416

 
$
423

 
(2
)%
Earnings before income taxes
 
$
71,409

 
$
63,455

 
13
 %
 
$
191,478

 
$
163,429

 
17
 %
Net earnings
 
$
54,135

 
$
42,550

 
27
 %
 
$
151,847

 
$
107,702

 
41
 %
Diluted EPS
 
$
1.33

 
$
1.02

 
30
 %
 
$
3.69

 
$
2.55

 
45
 %




1


MANAGEMENT COMMENTS
“We delivered another quarter of strong earnings performance with a 13% increase in pre-tax earnings, largely due to the success of our shift into the entry-level market over the past couple of years,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “That performance resulted from a 10% increase in our third quarter home closings -- the second highest number of homes we’ve delivered in more than a decade -- and our ability to hold margins through increased efficiencies that helped offset higher costs.
“The combination of higher home prices and interest rates have clearly impacted recent home buying activity, especially at higher price points, which we anticipated two years ago when we undertook our strategy to build more affordable homes to cater to the expanding entry-level and move-down markets,” explained Mr. Hilton. “We’ve made tremendous progress in shifting toward more affordably-priced homes, which represented one-third of our communities and 43% of our total orders in the third quarter. The fact that these communities are selling at a faster pace than higher-end move-up communities reinforces our confidence and commitment to furthering that strategy.”
He continued, “Underlying economic and housing market fundamentals remain strong. Employment is high, wages are growing, consumer confidence is high and inventories of affordable homes are low. These conditions offer opportunities for Meritage and the entry-level LiVE.NOW.® communities we have in our pipeline.
"We expect continued demand for entry-level homes will exceed that for move-up homes over the long term, though the next couple of quarters may be more challenging, and we have therefore adjusted our expectations for the remainder of 2018 based on the recent softness we’ve seen in the overall market,” said Mr. Hilton. “We are now projecting approximately 8,300-8,500 home closings and total home closing revenue of $3.375-3.475 billion for the full year 2018. We also expect home closing gross margin for the full year to be approximately 18% and are projecting pre-tax earnings of $265-285 million for the year."
Mr. Hilton added, “We announced an authorization by our board last quarter to repurchase up to $100 million of Meritage Homes stock. We have purchased more than $29 million from cash on hand so far and we expect to complete additional repurchases over the coming quarters.”

THIRD QUARTER RESULTS
•
Net earnings of $54.1 million ($1.33 per diluted share) for the third quarter of 2018, increased 27% and 30%, respectively, compared to $42.6 million ($1.02 per diluted share) for the third quarter of 2017. Earnings before income taxes were up 13% year-over-year, primarily due to increased home closing revenue.

2


•
Home closing revenue increased 9% with a 10% increase in closing volume, partially offset by a 1% decrease in average sales price compared to the third quarter of 2017, as demand continued to shift to entry-level homes. The increases in closings and revenue were led by the East region, which delivered a 31% increase in home closing revenue with 32% more home closings at an average sales price 1% lower than the third quarter of 2017. The Central region delivered home closings and revenue growth of 11% and 8%, respectively, with a 3% decrease in average price. West region home closing revenue was 2% less than last year’s third quarter, as a 5% decline in closing volume was partially offset by a 3% increase in average closing prices for the region.
•
Home closing gross margin for the third quarter of 2018 was 18.1%, or 18.4% excluding a $2.6 million charge to terminate a purchase agreement for land in California that is no longer consistent with the Company’s strategy. That compared to 18.1% in the third quarter of 2017, or 18.3% excluding $1.8 million of charges incurred for asset write-offs.
•
Selling, general and administrative expenses totaled 11.0% of third quarter 2018 home closing revenue, in line with 10.9% in the prior year.
•
Interest expense declined $1.1 million for the third quarter of 2018 compared to 2017. The reduction was due to a greater percentage of interest capitalized to qualified assets under development.
•
Third quarter effective tax rate was approximately 24% in 2018, compared to 33% in 2017, reflecting lower corporate income tax rates enacted for 2018.
•
Total orders for the third quarter of 2018 were 2% below 2017’s third quarter, primarily reflecting a 42% decrease in average active communities in California, which have produced among the highest absorptions over the past year. Though average active community count company-wide for the third quarter was 2% higher in 2018 than 2017, this included several communities near close-out with limited inventory, which contributed to a 4% decline in total orders pace year-over-year.

YEAR TO DATE RESULTS
•
Net earnings were $151.8 million for the first nine months of 2018, a 41% increase over $107.7 million for the first nine months of 2017, primarily driven by a 10% increase in home closing revenue, combined with a 40 basis point improvement in home closing gross margin and a lower effective tax rate for the first nine months of 2018 compared to 2017.
•
Home closings for the first nine months of the year increased 10% over 2017, driven by a 32% increase in the East region and 14% increase in the Central region.

3


•
Home closing gross profit increased 12% to $442.4 million in the first nine months of 2018 compared to $393.8 million in the first nine months of 2017, as year-to-date home closing gross margin improved to 17.8% in 2018 from 17.4% in 2017, or 18.0% compared to 17.6%, excluding $2.7 million and $3.6 million of charges incurred on asset write-offs in both years, respectively. East region home closing gross margins were the primary contributor, as they improved 210 basis points year-over-year for the first nine months of the year, or 120 basis points excluding the asset write-offs in the prior year.
•
Other income for the first nine months of the year increased by $4.0 million in 2018 primarily due to a $4.8 million favorable legal settlement in the first quarter of 2018 related to a previous joint venture in Nevada.
•
The effective tax rate for the first nine months of 2018 was 21%, compared to 34% for the first nine months of 2017, due to the lower statutory corporate tax rate in 2018, as well as $6.3 million of energy tax credits recorded in the first quarter of 2018 for homes closed in 2017 that qualified for the credits. These energy tax credits were extended only for 2017 and are expected to reduce the full year 2018 effective tax rate by at least 200 basis points.

BALANCE SHEET
•
Cash and cash equivalents at September 30, 2018, totaled $205.8 million, compared to $170.7 million at December 31, 2017. Real estate assets increased to $2.89 billion at September 30, 2018, compared to $2.73 billion at December 31, 2017. Homes under construction or completed increased by $224.6 million, reflecting a higher level of spec inventory for entry-level communities, while finished home sites and land under development decreased by $63.0 million.
•
The Company repurchased and retired approximately $29.4 million of its outstanding stock during the third quarter of 2018 under the Company's authorized $100 million share repurchase program.
•
Meritage ended the third quarter of 2018 with approximately 34,400 total lots owned or under control, compared to approximately 33,300 total lots at September 30, 2017. Approximately 80% of the lots added during the third quarter were in communities planned for entry-level product.
•
Debt-to-capital ratio was reduced to 43.4% at September 30, 2018 from 44.9% at December 31, 2017, with net debt-to-capital ratio reduced further to 39.2% and 41.4%, respectively.

CONFERENCE CALL
Management will host a conference call to discuss the results at 8:00 a.m. Arizona Time (11:00 a.m. Eastern Time) on Thursday, October 25.

4


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/10124467.
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 beginning at approximately 1:00 p.m. ET on October 26 and extending through November 9, 2018, 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 10124467.

5



Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)

 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Homebuilding:
 
 
 
 
 
 
 
 
Home closing revenue
$
877,734

 
$
805,008

 
$
2,478,649

 
$
2,263,405

 
Land closing revenue
6,847

 
589

 
25,991

 
16,942

 
Total closing revenue
884,581

 
805,597

 
2,504,640

 
2,280,347

 
Cost of home closings
(719,142
)
 
(659,350
)
 
(2,036,212
)
 
(1,869,569
)
 
Cost of land closings
(6,922
)
 
(1,646
)
 
(27,963
)
 
(15,504
)
 
Total cost of closings
(726,064
)
 
(660,996
)
 
(2,064,175
)
 
(1,885,073
)
 
Home closing gross profit
158,592

 
145,658

 
442,437

 
393,836

 
Land closing gross (loss)/profit
(75
)
 
(1,057
)
 
(1,972
)
 
1,438

 
Total closing gross profit
158,517

 
144,601

 
440,465

 
395,274

Financial Services:
 
 
 
 
 
 
 
 
Revenue
3,832

 
3,549

 
10,750

 
10,142

 
Expense
(1,659
)
 
(1,524
)
 
(4,836
)
 
(4,454
)
 
Earnings from financial services unconsolidated entities and other, net
4,148

 
3,489

 
10,278

 
9,673

 
Financial services profit
6,321

 
5,514

 
16,192

 
15,361

Commissions and other sales costs
(60,282
)
 
(55,845
)
 
(173,857
)
 
(158,866
)
General and administrative expenses
(35,906
)
 
(31,636
)
 
(101,004
)
 
(90,849
)
Earnings/(loss) from other unconsolidated entities, net
894

 
(91
)
 
692

 
852

Interest expense
(53
)
 
(1,116
)
 
(233
)
 
(3,561
)
Other income, net
1,918

 
2,028

 
9,223

 
5,218

Earnings before income taxes
71,409

 
63,455

 
191,478

 
163,429

Provision for income taxes
(17,274
)
 
(20,905
)
 
(39,631
)
 
(55,727
)
Net earnings
$
54,135

 
$
42,550

 
$
151,847

 
$
107,702

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
Earnings per share
$
1.34

 
$
1.06

 
$
3.75

 
$
2.67

 
Weighted average shares outstanding
40,283

 
40,323

 
40,472

 
40,273

 
Diluted
 
 
 
 
 
 
 
 
Earnings per share
$
1.33

 
$
1.02

 
$
3.69

 
$
2.55

 
Weighted average shares outstanding
40,855

 
42,011

 
41,100

 
42,585





6



Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
 
September 30, 2018
 
December 31, 2017
Assets:
 
 
 
 
Cash and cash equivalents
 
$
205,762

 
$
170,746

Other receivables
 
79,573

 
79,317

Real estate (1)
 
2,887,293

 
2,731,380

Real estate not owned
 
36,562

 
38,864

Deposits on real estate under option or contract
 
49,893

 
59,945

Investments in unconsolidated entities
 
16,294

 
17,068

Property and equipment, net
 
53,371

 
33,631

Deferred tax asset
 
36,674

 
35,162

Prepaids, other assets and goodwill
 
82,837

 
85,145

Total assets
 
$
3,448,259

 
$
3,251,258

Liabilities:
 
 
 
 
Accounts payable
 
$
156,772

 
$
140,516

Accrued liabilities
 
200,445

 
181,076

Home sale deposits
 
34,159

 
34,059

Liabilities related to real estate not owned
 
32,676

 
34,978

Loans payable and other borrowings
 
16,669

 
17,354

Senior notes, net
 
1,295,054

 
1,266,450

Total liabilities
 
1,735,775

 
1,674,433

Stockholders' Equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
400

 
403

Additional paid-in capital
 
568,976

 
584,578

Retained earnings
 
1,143,108

 
991,844

Total stockholders’ equity
 
1,712,484

 
1,576,825

Total liabilities and stockholders’ equity
 
$
3,448,259

 
$
3,251,258


(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
660,944

 
$
566,474

Unsold homes, completed and under construction
 
646,709

 
516,577

Model homes
 
136,291

 
142,026

Finished home sites and home sites under development
 
1,443,349

 
1,506,303

Total real estate
 
$
2,887,293

 
$
2,731,380






7


Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Depreciation and amortization
$
6,850

 
$
4,199

 
$
19,458

 
$
12,071

 
 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
 
 
Capitalized interest, beginning of period
$
84,443

 
$
72,327

 
$
78,564

 
$
68,196

Interest incurred
21,545

 
21,024

 
63,788

 
58,199

Interest expensed
(53
)
 
(1,116
)
 
(233
)
 
(3,561
)
Interest amortized to cost of home and land closings
(17,871
)
 
(15,462
)
 
(54,055
)
 
(46,061
)
Capitalized interest, end of period
$
88,064

 
$
76,773

 
$
88,064

 
$
76,773

 
 
 
 
 
 
 
 
 
September 30, 2018
 
December 31, 2017
 
 
 
 
Notes payable and other borrowings
$
1,311,723

 
$
1,283,804

 
 
 
 
Stockholders' equity
1,712,484

 
1,576,825

 
 
 
 
Total capital
3,024,207

 
2,860,629

 
 
 
 
Debt-to-capital
43.4
%
 
44.9
%
 
 
 
 
Notes payable and other borrowings
$
1,311,723

 
$
1,283,804

 
 
 
 
Less: cash and cash equivalents
$
(205,762
)
 
$
(170,746
)
 
 
 
 
Net debt
1,105,961

 
1,113,058

 
 
 
 
Stockholders’ equity
1,712,484

 
1,576,825

 
 
 
 
Total net capital
$
2,818,445

 
$
2,689,883

 
 
 
 
Net debt-to-capital
39.2
%
 
41.4
%
 
 
 

 



8


Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands)
(Unaudited)
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
151,847

 
$
107,702

Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities:
 
 
 
 
Depreciation and amortization
 
19,458

 
12,071

Stock-based compensation
 
13,737

 
9,898

Equity in earnings from unconsolidated entities
 
(11,160
)
 
(10,525
)
Distribution of earnings from unconsolidated entities
 
11,898

 
10,410

Other
 
2,197

 
1,265

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(161,816
)
 
(336,069
)
Decrease in deposits on real estate under option or contract
 
10,080

 
13,633

Decrease/(increase) in other receivables, prepaids and other assets
 
1,686

 
(15,207
)
Increase in accounts payable and accrued liabilities
 
35,625

 
21,298

Increase in home sale deposits
 
100

 
11,098

Net cash provided by/(used in) operating activities
 
73,652

 
(174,426
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
(551
)
 
(404
)
Distributions of capital from unconsolidated entities
 
597

 
1,250

Purchases of property and equipment
 
(23,754
)
 
(12,038
)
Proceeds from sales of property and equipment
 
107

 
251

Maturities/sales of investments and securities
 
1,065

 
1,297

Payments to purchase investments and securities
 
(1,065
)
 
(1,297
)
Net cash used in investing activities
 
(23,601
)
 
(10,941
)
Cash flows from financing activities:
 
 
 
 
Proceeds from Credit Facility, net
 
—

 
10,000

Repayment of loans payable and other borrowings
 
(13,484
)
 
(10,491
)
Repayment of senior notes and senior convertible notes
 
(175,000
)
 
(126,691
)
Proceeds from issuance of senior notes
 
206,000

 
300,000

Payment of debt issuance costs
 
(3,198
)
 
(3,986
)
Repurchase of shares
 
(29,353
)
 
—

Net cash (used in)/provided by financing activities
 
(15,035
)
 
168,832

Net increase/(decrease) in cash and cash equivalents
 
35,016

 
(16,535
)
Beginning cash and cash equivalents
 
170,746

 
131,702

Ending cash and cash equivalents
 
$
205,762

 
$
115,167

 


9


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
 
2018
 
2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
411

 
$
134,977

 
424

 
$
141,249

California
 
206

 
143,386

 
261

 
154,731

Colorado
 
160

 
87,716

 
135

 
77,728

West Region
 
777

 
366,079

 
820

 
373,708

Texas
 
721

 
256,308

 
647

 
236,759

Central Region
 
721

 
256,308

 
647

 
236,759

Florida
 
249

 
105,902

 
185

 
77,652

Georgia
 
139

 
47,429

 
95

 
29,019

North Carolina
 
165

 
63,381

 
107

 
48,129

South Carolina
 
69

 
23,605

 
74

 
25,164

Tennessee
 
42

 
15,030

 
41

 
14,577

East Region
 
664

 
255,347

 
502

 
194,541

Total
 
2,162

 
$
877,734

 
1,969

 
$
805,008

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
347

 
$
112,185

 
348

 
$
116,757

California
 
104

 
67,810

 
200

 
124,339

Colorado
 
157

 
84,078

 
92

 
55,459

West Region
 
608

 
264,073

 
640

 
296,555

Texas
 
635

 
228,627

 
593

 
213,241

Central Region
 
635

 
228,627

 
593

 
213,241

Florida
 
231

 
94,089

 
269

 
120,243

Georgia
 
89

 
32,459

 
102

 
33,039

North Carolina
 
139

 
52,434

 
147

 
59,976

South Carolina
 
65

 
21,448

 
86

 
28,449

Tennessee
 
61

 
21,959

 
37

 
13,524

East Region
 
585

 
222,389

 
641

 
255,231

Total
 
1,828

 
$
715,089

 
1,874

 
$
765,027


10


 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
1,052

 
$
344,245

 
1,139

 
$
382,814

California
 
643

 
444,796

 
702

 
427,095

Colorado
 
416

 
231,523

 
417

 
233,377

West Region
 
2,111

 
1,020,564

 
2,258

 
1,043,286

Texas
 
2,004

 
707,397

 
1,752

 
637,147

Central Region
 
2,004

 
707,397

 
1,752

 
637,147

Florida
 
761

 
329,156

 
518

 
225,674

Georgia
 
316

 
107,237

 
223

 
74,860

North Carolina
 
488

 
191,129

 
370

 
164,596

South Carolina
 
211

 
72,611

 
217

 
75,085

Tennessee
 
135

 
50,555

 
118

 
42,757

East Region
 
1,911

 
750,688

 
1,446

 
582,972

Total
 
6,026

 
$
2,478,649

 
5,456

 
$
2,263,405

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
1,222

 
$
401,063

 
1,148

 
$
380,459

California
 
513

 
359,907

 
802

 
480,694

Colorado
 
498

 
270,991

 
368

 
214,532

West Region
 
2,233

 
1,031,961

 
2,318

 
1,075,685

Texas
 
2,210

 
785,686

 
2,000

 
719,656

Central Region
 
2,210

 
785,686

 
2,000

 
719,656

Florida
 
814

 
343,293

 
791

 
342,754

Georgia
 
346

 
125,293

 
270

 
88,306

North Carolina
 
439

 
168,623

 
440

 
187,683

South Carolina
 
233

 
80,774

 
224

 
76,827

Tennessee
 
161

 
60,251

 
119

 
45,537

East Region
 
1,993

 
778,234

 
1,844

 
741,107

Total
 
6,436

 
$
2,595,881

 
6,162

 
$
2,536,448

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
496

 
$
176,843

 
453

 
$
158,988

California
 
188

 
138,274

 
331

 
207,237

Colorado
 
281

 
154,451

 
224

 
135,239

West Region
 
965

 
469,568

 
1,008

 
501,464

Texas
 
1,226

 
461,628

 
1,179

 
437,243

Central Region
 
1,226

 
461,628

 
1,179

 
437,243

Florida
 
499

 
211,063

 
526

 
233,534

Georgia
 
181

 
68,605

 
138

 
46,809

North Carolina
 
194

 
74,405

 
263

 
110,339

South Carolina
 
121

 
43,678

 
123

 
42,378

Tennessee
 
99

 
38,059

 
96

 
37,034

East Region
 
1,094

 
435,810

 
1,146

 
470,094

Total
 
3,285

 
$
1,367,006

 
3,333

 
$
1,408,801



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Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
 
2018
 
2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
44

 
42.0

 
40

 
39.5

California
 
14

 
14.5

 
24

 
25.0

Colorado
 
20

 
19.5

 
9

 
9.5

West Region
 
78

 
76.0

 
73

 
74.0

Texas
 
92

 
91.0

 
93

 
92.5

Central Region
 
92

 
91.0

 
93

 
92.5

Florida
 
30

 
30.0

 
29

 
29.5

Georgia
 
22

 
21.0

 
17

 
18.0

North Carolina
 
20

 
20.0

 
18

 
19.0

South Carolina
 
12

 
11.5

 
14

 
14.0

Tennessee
 
10

 
9.0

 
6

 
6.5

East Region
 
94

 
91.5

 
84

 
87.0

Total
 
264

 
258.5

 
250

 
253.5


 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
44

 
41.0

 
40

 
41.0

California
 
14

 
17.0

 
24

 
26.0

Colorado
 
20

 
15.5

 
9

 
9.5

West Region
 
78

 
73.5

 
73

 
76.5

Texas
 
92

 
92.0

 
93

 
86.5

Central Region
 
92

 
92.0

 
93

 
86.5

Florida
 
30

 
29.0

 
29

 
28.0

Georgia
 
22

 
20.5

 
17

 
17.0

North Carolina
 
20

 
18.5

 
18

 
17.5

South Carolina
 
12

 
12.5

 
14

 
14.5

Tennessee
 
10

 
8.0

 
6

 
6.5

East Region
 
94

 
88.5

 
84

 
83.5

Total
 
264

 
254.0

 
250

 
246.5




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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 2017. Meritage builds and sells single-family homes for entry-level, move-up, and active adult buyers in markets including California, Texas, Arizona, Colorado, Florida, North Carolina, South Carolina, Tennessee and Georgia.
The Company has designed and built over 110,000 homes in its 32-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 has received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award every year since 2013 for innovation and industry leadership in energy efficient homebuilding.
For more information, visit www.meritagehomes.com.
The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's projected home closings, home closing revenue, home closing gross margin and pre-tax earnings for the full year 2018, as well as management's expectation for entry-level demand and its intention to repurchase additional shares.
Such statements are based on the current beliefs and expectations of Company management, and current market conditions, which are subject to significant uncertainties and fluctuations. 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, except as required by law. 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; shortages in the availability and cost of labor; changes in interest rates and the availability and pricing of residential mortgages; changes in tax laws that adversely impact us or our homebuyers; inflation in the cost of materials used to develop communities and construct homes; the success of strategic initiatives; the ability of our potential buyers to sell their existing homes; cancellation rates; the adverse effect of slow absorption rates; slowing in the growth of entry-level home buyers; competition; impairments of our real estate inventory; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest or option deposits; our potential exposure to and impacts from natural disasters or severe weather conditions; home warranty and construction defect claims; failures in health and safety performance; our success in prevailing on contested tax positions; our ability to obtain performance and surety bonds in connection with our development work; the loss of key personnel;

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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 if our credit ratings are downgraded; our ability to successfully integrate acquired companies and achieve anticipated benefits from these acquisitions; our compliance with government regulations, the effect of legislative and other governmental actions, orders, policies or initiatives that impact housing, labor availability, construction, mortgage availability, our access to capital, the cost of capital or the economy in general, 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; negative publicity that affects our reputation; legislation related to tariffs 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, 2017 and Form 10-Q for the second quarter ended June 30, 2018 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.


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