Exhibit 99.1
meritage homes reports third quarter 2010 results
significant year-over-year margin improvement drives positive earnings for the third
consecutive quarter, with eps of $0.04
third quarter 2010 selected results (comparisons to third quarter 2009):
|
|
Generated positive pre-tax income despite lower closing volumes, as a result of margin improvements |
|
|
|
Average closing price increased 21%, resulting in 1% higher closing revenue on 16% fewer
closings, with an average of 12% fewer actively selling communities |
|
|
|
Improved home closing gross margin to 18.2% from 10.0% in the prior year (18.5% vs 14.5%,
excluding impairments) |
|
|
|
Opened 16 new communities for sales on recently acquired lots, including several
state-of-the-art extreme energy-efficient communities in Arizona |
year to date 2010 selected results:
|
|
Reported positive earnings for three consecutive quarters, with total net income of $8M
for the first nine months of 2010, compared to a net loss of $110M for the first three
quarters of 2009 |
|
|
|
Reduced net debt/capital ratio to 27% from 35% in the prior year |
|
|
|
Issued $200M of 7.15% senior notes due in 2020 and retired $195M of notes due in 2014 and 2015 |
Scottsdale, Ariz. (October 27, 2010) Meritage Homes Corporation (NYSE: MTH), a leading U.S.
homebuilder, today announced third quarter results for the period ended September 30, 2010.
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
%Chg |
|
|
2010 |
|
|
2009 |
|
|
%Chg |
|
Homes closed (units) |
|
|
848 |
|
|
|
1,015 |
|
|
|
-16 |
% |
|
|
2,863 |
|
|
|
2,837 |
|
|
|
1 |
% |
Home closing revenue |
|
$ |
233,803 |
|
|
$ |
231,816 |
|
|
|
1 |
% |
|
$ |
725,790 |
|
|
$ |
683,208 |
|
|
|
6 |
% |
Sales orders (units) |
|
|
706 |
|
|
|
1,098 |
|
|
|
-36 |
% |
|
|
2,670 |
|
|
|
3,232 |
|
|
|
-17 |
% |
Sales order value |
|
$ |
183,571 |
|
|
$ |
254,347 |
|
|
|
-28 |
% |
|
$ |
680,666 |
|
|
$ |
749,963 |
|
|
|
-9 |
% |
Ending backlog (units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
902 |
|
|
|
1,676 |
|
|
|
-46 |
% |
Ending backlog value |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
242,411 |
|
|
$ |
404,786 |
|
|
|
-40 |
% |
Net income/(loss)
incl. impairments |
|
$ |
1,219 |
|
|
$ |
(17,785 |
) |
|
|
n/a |
|
|
$ |
8,045 |
|
|
$ |
(109,742 |
) |
|
|
n/a |
|
Adjusted pre-tax
income/(loss)*
excl. impairments
and (loss)/gain on
early extinguishment
of debt |
|
|
1,523 |
|
|
|
(4,393 |
) |
|
|
n/a |
|
|
|
12,995 |
|
|
|
(26,879 |
) |
|
|
n/a |
|
Diluted EPS
(including
impairments) |
|
$ |
0.04 |
|
|
$ |
(0.56 |
) |
|
|
n/a |
|
|
$ |
0.25 |
|
|
$ |
(3.52 |
) |
|
|
n/a |
|
|
|
|
* |
|
See non-GAAP reconciliations of net income/(loss) to adjusted pre-tax income/(loss) on
Operating Results statement. |
MTH 3Q10 results/ 2
third quarter home closings, revenue and income
Meritage continued to be profitable for the third consecutive quarter of 2010, reporting net
income of $1.2 million or $0.04 per diluted share, compared to a net loss of $17.8 million or $0.56
per share in 2009. The results included pre-tax charges for real estate-related impairments of $0.8
million in 2010, compared to $13.2 million of such impairments in 2009. Excluding the effects of
impairments in both years, Meritages pre-tax income for the quarter was $1.5 million in 2010,
compared with a pre-tax loss of $4.4 million in 2009.
Home closing revenue increased 1% due to a 21% increase in average prices despite 16% fewer
home closings. Average closing price for the quarter was $275,700 in 2010, compared to $228,400 in
2009, reflecting shifts in the mix of sales rather than price appreciation. California and Florida
made up a greater percentage of 2010 closings than in the prior year, with a smaller percentage in
Texas, where house prices are generally lower. Additionally, over the last several quarters, the
Company has acquired many well-priced lots in highly desirable in-fill locations, which support a
greater mix of move-up communities that command higher prices relative to entry-level communities.
Over the last few years many builders have moved their product offerings down the
price-spectrum, believing there is less opportunity in the move-up market at this time, said
Steven J. Hilton, chairman and chief executive officer of Meritage Homes. While we also pursued
this strategy, recently we have had good success acquiring close-in move-up lots in A locations,
which other builders may have passed up. Due to our low acquisition price and construction costs,
we are currently able to sell homes in those communities at dramatically lower prices than were
available just a few years ago, offering tremendous value and opportunity to home buyers.
Gross profit increased to $42.6 million in 2010 from $22.9 million in 2009, as quarterly
margins improved year over year due to system-wide cost reductions and relatively stronger margins
achieved in new Meritage communities. Home closing gross margins were 18.2% in 2010 versus 10.0% in
2009, after impairments of $680,000 in 2010 and $10.4 million in 2009. Excluding impairments,
adjusted margins were 18.5% compared to 14.5% in the prior year.
We made continued progress replacing our older communities with newer ones opened on the lots
weve acquired since the beginning of last year, said Steven J. Hilton, chairman and chief
executive officer of Meritage Homes. Homes closed in our newer communities generated approximately
600 basis points higher margins in the third quarter than we averaged in our older communities.
Approximately 44% of our sales and 31% of our closings in the quarter came from communities weve
acquired since the beginning of last year.
The improved margins were achieving in our new communities are the result of successes in
each of our major initiatives. Our lot costs are lower due to excellent acquisitions based on
strategic market research. Our construction costs are lower due to simplified designs, improvements
in purchasing and construction efficiencies, which have reduced both material and labor costs. Our
homes offer lasting value because they are more energy-efficient. And our new plans allow us to
build and deliver homes faster, without sacrificing quality.
MTH 3Q10 results/ 3
sales
Net home sales in the third quarter were 36% lower than the prior year, partially due to a 12%
decline in average active communities, from an average of 170 in the third quarter of 2009 to 149
in the third quarter of 2010. Sluggish sales pace throughout the quarter was reflected in average
sales per community falling to 4.7 from 6.1 in the prior quarter and 6.5 in the prior year.
Mr. Hilton explained, Our sales pace is well short of where wed like it to be, and
represents our greatest opportunity to increase earnings by leveraging our current infrastructure.
While home sales have been slow in many areas across the country, we believe Meritage provides
differentiated value as compared to other new or used homes in our markets. We offer some of the
best new community locations, great value-priced homes in our Simply Smart series, a 99-day
delivery guarantee in many communities, and 100% of our homes are ENERGY STAR® qualified, which
provides significant energy savings to reduce the monthly cost of ownership.
He continued, We know that our homes can compete successfully with both used homes and other
new homes. Our marketing and sales training is targeted at equipping our sales people with the best
tools to help them demonstrate to buyers the many advantages of owning a new Meritage home, over
other homes they may be considering.
additional extreme energy-efficiency communities opened with strong sales
As a leader in advancing energy-efficient homebuilding, Meritage opened its first community of
extreme energy-efficient green homes in Gilbert, Arizona, in June this year. The Company opened
several similar communities in Arizona during the third quarter.
The communities are the first of their kind built by a production homebuilder, and offer up to
80% energy savings over the average existing home in the U.S. by incorporating the latest
energy-efficient technologies, designed into every home at no additional charge to the buyer.
Collectively, these have been some of our best-selling communities since they opened, selling
at a significantly higher average sales pace than our other communities in the first few months
after they opened, said Mr. Hilton. The way that weve designed and marketed these homes is a
clear differentiator for Meritage, and one that we believe offers a competitive advantage for us.
Additionally, we believe this technology could revolutionize the homebuilding industry by
expediting broader adoption of high energy-efficiency in new home construction.
cash flow and lot supplies
After purchasing approximately 1,600 lots for a total of $65 million during the quarter,
Meritage ended the quarter with $419.8 million in total cash and cash equivalents, restricted cash
and short-term investments. The Companys net debt to total capital ratio improved to 27.1% at
September 30, 2010, from 35.2% at September 30, 2009.
MTH 3Q10 results/ 4
Meritage controlled approximately 14,500 total lots at September 30, 2010, equivalent to a
3.6-year supply based on trailing twelve months closings. Approximately half of those were acquired
since the beginning of 2009, and about a third of Meritages total 150 active communities are on
recently-acquired lots. The
Company already owns or has under contract 29 additional new communities that it plans to open
over the next several quarters.
year to date results
For the first nine months of 2010, home closing revenue climbed 6% as home closings increased
1% and average sales prices were 5% higher. Significant closing gains were achieved in California
and Florida, where the sales pace was stronger due to a large percentage of new communities in
those divisions.
Meritage reported net income of $8.0 million or $0.25 per diluted share for the first nine
months of 2010, compared to a net loss of $109.7 million or $3.52 per share in the first nine
months of 2009. Year-to-date net income included $1.6 million of pre-tax real estate-related
impairment charges and a $3.5 million loss on the early extinguishment of debt in 2010, compared to
$90.3 million of impairments and a $9.4 million gain on early extinguishment of debt in 2009.
Excluding those items, adjusted pre-tax income was $13.0 million for the first nine months of 2010,
compared to a pre-tax loss of $26.9 million for the first nine months of 2009.
The Companys fully reserved deferred tax assets totaled $88.4 million as of September 30,
2010. These tax assets may be available to offset federal and state income tax liabilities on
approximately $230 million of future taxable income.
summary
We are confident in our strategy and pleased with our accomplishments through this most
challenging time for homebuilders, said Mr. Hilton. We have a strong balance sheet with a
relatively light supply of land, no near-term debt maturities and significant liquidity, which is
enabling us to replace communities with lower-priced lots as we close out of older communities. We
have reduced our direct costs and are offering a new series of value-priced homes that we can build
much faster, to compete more successfully with existing home sales. At the same time, we are
achieving higher margins and sales velocity in our new communities. And I can confidently say that
we are leading the industry with the most energy-efficient homes available from a production
homebuilder today.
He added, Given the lower sales levels weve experienced in the last couple of quarters and
our lack of visibility, we are anticipating lower closing revenue in the fourth quarter. We have
taken additional steps to control both our direct and indirect costs, while retaining the
organizational talent necessary to advance our strategic initiatives. Even so, it will be
challenging to maintain our profitability for the quarter with lower revenues, but we expect to be
around break-even, and to meet our goal of being profitable for the full year.
It is difficult to predict when buyer confidence will return and the market will strengthen,
but we are optimistic that well see some improvement in 2011, Mr. Hilton concluded. Meritage is
well positioned to be a strong competitor in the homebuilding industry, and we believe the
successful execution of our strategic initiatives is driving sustainable competitive advantages for
Meritage.
MTH 3Q10 results/ 5
analyst call and webcast
Management will host a conference call to discuss these results on Thursday, October 28, 2010
at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time.) The call will be webcast by
Business-to-Investor, Inc. (B2i), with an accompanying slideshow on the Investor Relations page
of the Companys web site at http://investors.meritagehomes.com. For telephone
participants, the dial-in number is 877-485-3104 with a passcode of Meritage. Participants are
encouraged to dial in five minutes before the call begins. A replay of the call will be available
after 12:00 p.m. ET, October 28, 2010 on the website noted above, or by dialing 877-660-6853, and
referencing account 356, replay ID 358701.
|
|
|
Contacts:
|
|
Investor Relations: |
|
|
Brent Anderson |
|
|
Vice President-Investor Relations |
|
|
(972)580-6360 |
MTH 3Q10 results/ 6
Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Operating results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home closing revenue |
|
$ |
233,803 |
|
|
$ |
231,816 |
|
|
$ |
725,790 |
|
|
$ |
683,208 |
|
Land closing revenue |
|
|
|
|
|
|
|
|
|
|
1,222 |
|
|
|
1,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total closing revenue |
|
|
233,803 |
|
|
|
231,816 |
|
|
|
727,012 |
|
|
|
684,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home closing gross profit |
|
|
42,561 |
|
|
|
23,183 |
|
|
|
133,455 |
|
|
|
1,449 |
|
Land closing gross (loss)/profit |
|
|
|
|
|
|
(281 |
) |
|
|
258 |
|
|
|
(450 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total closing gross profit |
|
|
42,561 |
|
|
|
22,902 |
|
|
|
133,713 |
|
|
|
999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and other sales costs |
|
|
(19,624 |
) |
|
|
(18,382 |
) |
|
|
(58,452 |
) |
|
|
(55,625 |
) |
General and administrative expenses |
|
|
(15,678 |
) |
|
|
(14,269 |
) |
|
|
(47,100 |
) |
|
|
(41,913 |
) |
Interest expense |
|
|
(8,425 |
) |
|
|
(8,853 |
) |
|
|
(25,273 |
) |
|
|
(28,515 |
) |
(Loss)/gain on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
(3,454 |
) |
|
|
9,390 |
|
Other income, net (1) |
|
|
1,897 |
|
|
|
963 |
|
|
|
8,469 |
|
|
|
7,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes |
|
|
731 |
|
|
|
(17,639 |
) |
|
|
7,903 |
|
|
|
(107,802 |
) |
Benefit/(provision) for income taxes |
|
|
488 |
|
|
|
(146 |
) |
|
|
142 |
|
|
|
(1,940 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) |
|
$ |
1,219 |
|
|
$ |
(17,785 |
) |
|
$ |
8,045 |
|
|
$ |
(109,742 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share |
|
$ |
0.04 |
|
|
$ |
(0.56 |
) |
|
$ |
0.25 |
|
|
$ |
(3.52 |
) |
Weighted average shares outstanding |
|
|
32,095 |
|
|
|
31,718 |
|
|
|
32,038 |
|
|
|
31,197 |
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) per share |
|
$ |
0.04 |
|
|
$ |
(0.56 |
) |
|
$ |
0.25 |
|
|
$ |
(3.52 |
) |
Weighted average shares outstanding |
|
|
32,297 |
|
|
|
31,718 |
|
|
|
32,277 |
|
|
|
31,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total closing gross profit |
|
$ |
42,561 |
|
|
$ |
22,902 |
|
|
$ |
133,713 |
|
|
$ |
999 |
|
Add: Real estate-related impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated lot options and land sales |
|
|
|
|
|
|
3,505 |
|
|
|
|
|
|
|
66,219 |
|
Impaired projects |
|
|
680 |
|
|
|
7,130 |
|
|
|
1,526 |
|
|
|
21,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted closing gross profit |
|
$ |
43,241 |
|
|
$ |
33,537 |
|
|
$ |
135,239 |
|
|
$ |
88,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes |
|
$ |
731 |
|
|
$ |
(17,639 |
) |
|
$ |
7,903 |
|
|
$ |
(107,802 |
) |
Add: Real estate-related and joint venture
(JV) impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated lot options and land sales |
|
|
|
|
|
|
3,505 |
|
|
|
|
|
|
|
66,219 |
|
Impaired projects |
|
|
680 |
|
|
|
7,130 |
|
|
|
1,526 |
|
|
|
21,264 |
|
JV impairments |
|
|
112 |
|
|
|
2,611 |
|
|
|
112 |
|
|
|
2,830 |
|
Loss/(gain) on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
3,454 |
|
|
|
(9,390 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income/(loss) before income taxes |
|
$ |
1,523 |
|
|
$ |
(4,393 |
) |
|
$ |
12,995 |
|
|
$ |
(26,879 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other income includes Joint Venture (JV) income/(loss) and JV impairments, if any. |
MTH 3Q10 results/ 7
Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
December 31, 2009 |
|
Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
145,324 |
|
|
$ |
249,331 |
|
Investments and securities |
|
|
265,571 |
|
|
|
125,699 |
|
Restricted cash |
|
|
8,948 |
|
|
|
16,348 |
|
Income tax receivable |
|
|
|
|
|
|
92,509 |
|
Other receivables |
|
|
20,782 |
|
|
|
22,934 |
|
Real estate (1) |
|
|
744,808 |
|
|
|
675,037 |
|
Investments in unconsolidated entities |
|
|
11,196 |
|
|
|
11,882 |
|
Deposits on real estate under option or contract |
|
|
10,887 |
|
|
|
8,636 |
|
Other assets |
|
|
33,145 |
|
|
|
40,291 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,240,661 |
|
|
$ |
1,242,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity: |
|
|
|
|
|
|
|
|
Accounts payable, accrued liabilities,
home sale deposits and other
liabilities |
|
$ |
135,736 |
|
|
$ |
152,233 |
|
Senior notes |
|
|
479,748 |
|
|
|
479,134 |
|
Senior subordinated notes |
|
|
125,875 |
|
|
|
125,875 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
741,359 |
|
|
|
757,242 |
|
Total stockholders equity |
|
|
499,302 |
|
|
|
485,425 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
1,240,661 |
|
|
$ |
1,242,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Real estate Allocated costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes under contract under construction |
|
$ |
114,363 |
|
|
$ |
114,769 |
|
Finished home sites and home sites under development |
|
|
431,341 |
|
|
|
407,592 |
|
Unsold homes, completed and under construction |
|
|
101,998 |
|
|
|
73,442 |
|
Model homes |
|
|
39,938 |
|
|
|
37,601 |
|
Land held for development or sale |
|
|
57,168 |
|
|
|
41,633 |
|
|
|
|
|
|
|
|
Total allocated costs |
|
$ |
744,808 |
|
|
$ |
675,037 |
|
|
|
|
|
|
|
|
Supplemental Information and Non-GAAP Financial Disclosures (in thousands unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sept 30, |
|
|
Twelve Months Ended Sept 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Interest amortized to cost
of sales and interest
expense |
|
$ |
11,432 |
|
|
$ |
12,891 |
|
|
$ |
48,283 |
|
|
$ |
63,222 |
|
Depreciation and amortization |
|
$ |
2,111 |
|
|
$ |
2,002 |
|
|
$ |
8,435 |
|
|
$ |
12,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept 30, 2010 |
|
|
December 31, 2009 |
|
|
Sept 30, 2009 |
|
Notes payable and other
borrowings |
|
|
|
|
|
$ |
605,623 |
|
|
$ |
605,009 |
|
|
$ |
604,968 |
|
Less: cash and cash
equivalents, restricted
cash, and investments and
securities |
|
|
|
|
|
|
(419,843 |
) |
|
|
(391,378 |
) |
|
|
(365,555 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt |
|
|
|
|
|
|
185,780 |
|
|
|
213,631 |
|
|
|
239,413 |
|
Stockholders equity |
|
|
|
|
|
|
499,302 |
|
|
|
485,425 |
|
|
|
440,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
|
|
|
|
|
$ |
685,082 |
|
|
$ |
699,056 |
|
|
$ |
679,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt-to-capital |
|
|
|
|
|
|
27.1 |
% |
|
|
30.6 |
% |
|
|
35.2 |
% |
MTH 3Q10 results/ 8
Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Operating results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) |
|
$ |
1,219 |
|
|
$ |
(17,785 |
) |
|
$ |
8,045 |
|
|
$ |
(109,742 |
) |
Loss/(gain) on early
extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
3,454 |
|
|
|
(9,390 |
) |
Real-estate related impairments |
|
|
680 |
|
|
|
10,635 |
|
|
|
1,526 |
|
|
|
87,483 |
|
Equity in earnings from JVs and
distributions of JV earnings, net |
|
|
637 |
|
|
|
2,335 |
|
|
|
1,404 |
|
|
|
3,991 |
|
(Increase)/decrease in real
estate and deposits, net |
|
|
(29,301 |
) |
|
|
(15,353 |
) |
|
|
(71,921 |
) |
|
|
94,720 |
|
Other operating activities |
|
|
6,083 |
|
|
|
(652 |
) |
|
|
95,655 |
|
|
|
90,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)/provided by
operating activities |
|
|
(20,682 |
) |
|
|
(20,820 |
) |
|
|
38,163 |
|
|
|
157,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by/(used in)
investing activities |
|
|
9,174 |
|
|
|
(19,169 |
) |
|
|
(138,464 |
) |
|
|
(20,669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of new debt |
|
|
|
|
|
|
|
|
|
|
195,134 |
|
|
|
|
|
Debt issuance costs |
|
|
(98 |
) |
|
|
|
|
|
|
(3,067 |
) |
|
|
|
|
Repayments of senior notes |
|
|
|
|
|
|
|
|
|
|
(197,543 |
) |
|
|
|
|
Proceeds from issuance of common
stock, net |
|
|
261 |
|
|
|
1,630 |
|
|
|
1,770 |
|
|
|
4,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/ (used in)
financing activities |
|
|
163 |
|
|
|
1,630 |
|
|
|
(3,706 |
) |
|
|
4,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash |
|
|
(11,345 |
) |
|
|
(38,359 |
) |
|
|
(104,007 |
) |
|
|
141,028 |
|
Beginning cash and cash
equivalents |
|
|
156,669 |
|
|
|
385,310 |
|
|
|
249,331 |
|
|
|
205,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending cash and cash equivalents
(1) |
|
$ |
145,324 |
|
|
$ |
346,951 |
|
|
$ |
145,324 |
|
|
$ |
346,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Ending cash and cash equivalents as of September 30, 2010 excludes investments and
securities and restricted cash totaling $274.5 million. Since the fourth quarter of
2009, Meritage has sought to increase yields earned on its excess cash by investing a
portion of that cash in government guaranteed investments and securities which have
maturities of up to eighteen months. Due to their longer maturity structure, these
investments are not classified as cash and cash equivalents on our Balance Sheet or in
the Statement of Cash Flows. |
MTH 3Q10 results/ 9
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Homes |
|
|
Value |
|
|
Homes |
|
|
Value |
|
Homes Closed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
112 |
|
|
$ |
43,803 |
|
|
|
62 |
|
|
$ |
20,319 |
|
Nevada |
|
|
17 |
|
|
|
3,404 |
|
|
|
33 |
|
|
|
6,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
129 |
|
|
|
47,207 |
|
|
|
95 |
|
|
|
26,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
167 |
|
|
|
41,387 |
|
|
|
213 |
|
|
|
38,617 |
|
Texas |
|
|
425 |
|
|
|
107,663 |
|
|
|
611 |
|
|
|
142,697 |
|
Colorado |
|
|
39 |
|
|
|
12,608 |
|
|
|
36 |
|
|
|
10,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
631 |
|
|
|
161,658 |
|
|
|
860 |
|
|
|
192,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
88 |
|
|
|
24,938 |
|
|
|
60 |
|
|
|
12,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
88 |
|
|
|
24,938 |
|
|
|
60 |
|
|
|
12,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
848 |
|
|
$ |
233,803 |
|
|
|
1,015 |
|
|
$ |
231,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Ordered: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
86 |
|
|
$ |
29,614 |
|
|
|
130 |
|
|
$ |
40,483 |
|
Nevada |
|
|
11 |
|
|
|
2,279 |
|
|
|
33 |
|
|
|
6,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
97 |
|
|
|
31,893 |
|
|
|
163 |
|
|
|
47,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
156 |
|
|
|
39,214 |
|
|
|
212 |
|
|
|
40,490 |
|
Texas |
|
|
347 |
|
|
|
82,584 |
|
|
|
597 |
|
|
|
134,948 |
|
Colorado |
|
|
39 |
|
|
|
12,603 |
|
|
|
35 |
|
|
|
10,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
542 |
|
|
|
134,401 |
|
|
|
844 |
|
|
|
185,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
67 |
|
|
|
17,277 |
|
|
|
91 |
|
|
|
21,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
67 |
|
|
|
17,277 |
|
|
|
91 |
|
|
|
21,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
706 |
|
|
$ |
183,571 |
|
|
|
1,098 |
|
|
$ |
254,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MTH 3Q10 results/ 10
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Homes |
|
|
Value |
|
|
Homes |
|
|
Value |
|
Homes Closed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
323 |
|
|
$ |
114,498 |
|
|
|
218 |
|
|
$ |
76,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nevada |
|
|
65 |
|
|
|
12,628 |
|
|
|
112 |
|
|
|
23,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
388 |
|
|
|
127,126 |
|
|
|
330 |
|
|
|
99,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
548 |
|
|
|
119,147 |
|
|
|
563 |
|
|
|
111,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas |
|
|
1,578 |
|
|
|
382,592 |
|
|
|
1,679 |
|
|
|
403,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado |
|
|
110 |
|
|
|
32,721 |
|
|
|
105 |
|
|
|
33,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
2,236 |
|
|
|
534,460 |
|
|
|
2,347 |
|
|
|
547,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
239 |
|
|
|
64,204 |
|
|
|
160 |
|
|
|
35,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
239 |
|
|
|
64,204 |
|
|
|
160 |
|
|
|
35,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,863 |
|
|
$ |
725,790 |
|
|
|
2,837 |
|
|
$ |
683,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Ordered: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
312 |
|
|
$ |
108,156 |
|
|
|
287 |
|
|
$ |
93,688 |
|
Nevada |
|
|
59 |
|
|
|
11,651 |
|
|
|
99 |
|
|
|
19,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
371 |
|
|
|
119,807 |
|
|
|
386 |
|
|
|
113,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
560 |
|
|
|
126,743 |
|
|
|
621 |
|
|
|
119,295 |
|
Texas |
|
|
1,375 |
|
|
|
330,582 |
|
|
|
1,899 |
|
|
|
431,725 |
|
Colorado |
|
|
118 |
|
|
|
36,903 |
|
|
|
107 |
|
|
|
32,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
2,053 |
|
|
|
494,228 |
|
|
|
2,627 |
|
|
|
583,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
246 |
|
|
|
66,631 |
|
|
|
219 |
|
|
|
52,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
246 |
|
|
|
66,631 |
|
|
|
219 |
|
|
|
52,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,670 |
|
|
$ |
680,666 |
|
|
|
3,232 |
|
|
$ |
749,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order Backlog: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
78 |
|
|
$ |
27,980 |
|
|
|
156 |
|
|
$ |
51,556 |
|
Nevada |
|
|
8 |
|
|
|
1,694 |
|
|
|
12 |
|
|
|
2,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MTH 3Q10 results/ 11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Homes |
|
|
Value |
|
|
Homes |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
86 |
|
|
|
29,674 |
|
|
|
168 |
|
|
|
53,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
159 |
|
|
|
39,706 |
|
|
|
248 |
|
|
|
50,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas |
|
|
512 |
|
|
|
129,554 |
|
|
|
1,107 |
|
|
|
258,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado |
|
|
47 |
|
|
|
15,638 |
|
|
|
46 |
|
|
|
13,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
718 |
|
|
|
184,898 |
|
|
|
1,401 |
|
|
|
321,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
98 |
|
|
|
27,839 |
|
|
|
107 |
|
|
|
28,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
98 |
|
|
|
27,839 |
|
|
|
107 |
|
|
|
28,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
902 |
|
|
$ |
242,411 |
|
|
|
1,676 |
|
|
$ |
404,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MTH 3Q10 results/ 12
Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2010 |
|
|
Third Quarter 2009 |
|
|
|
Beg. |
|
|
End |
|
|
Beg. |
|
|
End |
|
Active Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
12 |
|
|
|
13 |
|
|
|
12 |
|
|
|
9 |
|
Nevada |
|
|
5 |
|
|
|
5 |
|
|
|
12 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
17 |
|
|
|
18 |
|
|
|
24 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
33 |
|
|
|
32 |
|
|
|
31 |
|
|
|
28 |
|
Texas |
|
|
78 |
|
|
|
82 |
|
|
|
108 |
|
|
|
102 |
|
Colorado |
|
|
7 |
|
|
|
8 |
|
|
|
4 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
118 |
|
|
|
122 |
|
|
|
143 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
13 |
|
|
|
10 |
|
|
|
11 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
13 |
|
|
|
10 |
|
|
|
11 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
148 |
|
|
|
150 |
|
|
|
178 |
|
|
|
162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Nine Months 2010 |
|
|
First Nine Months 2009 |
|
|
|
Beg. |
|
|
End |
|
|
Beg. |
|
|
End |
|
Active Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California |
|
|
7 |
|
|
|
13 |
|
|
|
12 |
|
|
|
9 |
|
Nevada |
|
|
6 |
|
|
|
5 |
|
|
|
12 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
13 |
|
|
|
18 |
|
|
|
24 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona |
|
|
26 |
|
|
|
32 |
|
|
|
31 |
|
|
|
28 |
|
Texas |
|
|
98 |
|
|
|
82 |
|
|
|
109 |
|
|
|
102 |
|
Colorado |
|
|
6 |
|
|
|
8 |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Region |
|
|
130 |
|
|
|
122 |
|
|
|
143 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
|
10 |
|
|
|
10 |
|
|
|
11 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
10 |
|
|
|
10 |
|
|
|
11 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
153 |
|
|
|
150 |
|
|
|
178 |
|
|
|
162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Meritage Homes Corporation
Meritage Homes Corporation is the 9th largest homebuilder in the U.S. based on homes closed.
Meritage offers a variety of homes across the Southern and Western states designed to appeal to a
wide range of home buyers, including first-time, move-up, luxury and active adult buyers, with base
prices starting from under $100,000. As of September 30, 2010, the Company had 150 actively
selling communities in 12 metropolitan areas including Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, Denver, Orlando, and the East Bay/Central Valley
and Inland Empire of California. Meritage Homes and its predecessor companies have delivered more
than 65,000 homes since the Company was founded in 1985.
In 2010, Meritage is celebrating its 25th Anniversary, and is the only large national
homebuilder to be 100% ENERGY STAR® qualified in every home started in 2010. The Company has
launched a new Simply Smart Series and a 99-day guaranteed completion program in certain
communities. Meritage has designed and built
more than 65,000 homes in its 25-year history, and has a reputation for its distinctive style,
quality construction and positive customer experience. To find a Meritage community near you, go to
www.meritagehomes.com.
MTH 3Q10 results/ 13
Meritage Homes is listed on the NYSE under the symbol MTH.
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 benefits of,
and our ability to execute our strategic initiatives including, but not limited to Meritage
Forward, our Simply Smart series of homes, our 99-day guarantee and our Meritage Green initiative;
the profitability and sales pace of our new communities; that closings and revenue may be lower in
the fourth quarter, and that well be around break-even for the quarter, but profitable for the
year 2010; our ability to continue to acquire land in favorable locations at favorable prices; our
ability to compete successfully with existing homes and other new homes; our ability to retain
organizational talent and be a strong competitor in the homebuilding industry; the opportunity for
us to increase earnings by leveraging our current overhead infrastructure; the number of
communities we expect to open in the next several quarters; and expectations that well see market
improvements in 2011. Such statements are based upon preliminary financial and operating data which
are subject to finalization by management and review by our independent registered public
accountants, as well as the current beliefs and expectations of Company management, and current
market conditions, which are subject to significant risks and uncertainties. Actual results may
differ from those set forth in the forward-looking statements. The Company makes no commitment, and
disclaims any duty, to update or revise any forward-looking statements to reflect future events or
changes in these expectations.
Meritages business is subject to a number of risks and uncertainties, including: weakness in
the homebuilding market resulting from the current economic downturn; interest rates and changes in
the availability and pricing of residential mortgages; adverse changes in tax laws that benefit our
homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates
and home prices in our markets; the adverse effect of slower sales absorption rates; potential
write-downs or write-offs of assets, including pre-acquisition costs and deposits; the liquidity of
our joint ventures and the ability of our joint venture partners to meet their obligations to us
and the joint venture; competition; the success of our strategies in the current homebuilding
market and economic environment; the propensity of homebuyers to cancel purchase orders with us;
construction defect and home warranty claims; our success in prevailing on contested tax positions;
the impact of deferred tax valuation allowances and our ability to preserve our operating loss
carryforwards; fluctuations in housing demand, and the cost and availability of real estate and
other matters that are outside of our control; out ability to obtain performance bonds in
connection with our development work; the loss of key personnel; our failure to comply with laws
and regulations; the availability and cost of materials and labor; our lack of geographic
diversification; inflation in the cost of materials used to construct homes; fluctuations in
quarterly operating results; the Companys financial leverage and level of indebtedness; our
ability to take certain actions because of restrictions contained in the indentures for the
Companys senior and senior subordinated notes and our ability to raise additional
MTH 3Q10 results/ 14
capital when and
if needed; our credit ratings; the impact of future capital raising transactions we may engage in;
successful integration of future acquisitions; government regulations and legislative or other
initiatives that seek to restrain growth or new housing construction or similar measures; consumer
confidence, which can be impacted by economic and other factors such as terrorism, war, or threats
thereof and our potential exposure to natural disasters; and other factors identified
in documents filed by the Company with the Securities and Exchange Commission, including those
set forth in our Form 10-K for the year ended December 31, 2009 under the caption Risk Factors,
and updated in our most recent Quarterly Report on Form 10-Q, all of which can be found on our
website. As a result of these and other factors, the Companys stock and note prices may fluctuate
dramatically.
For more information about the Company, visit http://investors.meritagehomes.com
Click here to join our email alert list: http://www.b2i.us/irpass.asp?BzID=1474&to=ea&s=0
The Meritage Homes Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=2624
# # #