Exhibit
99.1
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Contacts:
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|
Arizona:
|
|
Texas:
|
|
New
York:
|
|
|
|
Larry Seay
|
|
Jane Hays
|
|
Chris Tofalli
|
|
|
|
CFO & Vice
President-Finance
|
|
Vice President-Corp.
Develop.
|
|
Broadgate Consultants
|
|
|
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(480) 609-3330
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(972) 543-8123
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(212) 232-2222
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Meritage
Homes Corporation Reports 17th Consecutive
Year
of Record Revenue and Net Earnings
Increases 2005 Diluted
EPS Guidance to $6.05 - $6.30
Ahead of 2004 by 20% to 25%
NOTE: ALL SHARE, EPS AND SHARE PRICE AMOUNTS IN
THIS PRESS RELEASE REFLECT A 2-FOR-1 STOCK SPLIT EFFECTIVE JANUARY 7, 2005.
|
FULL-YEAR
RECORDS:
|
|
•
|
HOME CLOSING REVENUE ADVANCED 38% TO $2.0 BILLION
|
|
(%
CHANGES FROM PRIOR YEAR)
|
|
•
|
NET EARNINGS & DILUTED EPS UP 47% TO $139.0 MILLION
AND $5.03, RESPECTIVELY
|
|
|
|
•
|
VALUE OF HOMES ORDERED AHEAD 59% TO $2.6 BILLION
|
|
|
|
•
|
YEAR-END BACKLOG HIGHER BY 86% TO $1.3 BILLION
|
|
|
|
|
|
|
ALL-TIME
QUARTERLY
|
|
•
|
HOME CLOSING REVENUE INCREASED 48% TO $698 MILLION
|
|
RECORDS:
|
|
•
|
NET EARNINGS UP 64% TO $51.8 MILLION
|
|
(%
CHANGES FROM 4Q03)
|
|
•
|
DILUTED EPS AHEAD 66% TO $1.88
|
Scottsdale, Arizona and Dallas
(January 26, 2005) – Meritage Homes Corporation (NYSE: MTH)
today announced 2004 full-year and all-time quarterly records for home closing
revenue, net earnings and diluted earnings per share.
SUMMARY OPERATING RESULTS
(UNAUDITED
- - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
|
|
|
|
2004
|
|
2003
|
|
%
Change
|
|
2004
|
|
2003
|
|
%
Change
|
|
|
Home closing revenue
|
|
$
|
698,254
|
|
$
|
472,086
|
|
48
|
%
|
$
|
2,015,742
|
|
$
|
1,461,981
|
|
38
|
%
|
|
Net earnings
|
|
$
|
51,812
|
|
$
|
31,566
|
|
64
|
%
|
$
|
138,968
|
|
$
|
94,406
|
|
47
|
%
|
|
Diluted EPS
|
|
$
|
1.88
|
|
$
|
1.13
|
|
66
|
%
|
$
|
5.03
|
|
$
|
3.42
|
|
47
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“The year 2004 marked the 17th consecutive
year Meritage has achieved record revenue and net earnings,” said Steven J.
Hilton, Meritage Co-Chairman and CEO. “We
have continued to provide outstanding long-term growth and value to our
stockholders as illustrated by compounded annual growth rates of 43% for home
closing revenue, 49% for net earnings and 67% for diluted earnings per share
over the past five years. It is
gratifying that our operating performance was again reflected in the price of
our shares, which appreciated 70% during the past year, and which contributed
to Forbes magazine recently
ranking Meritage number one for five-year annualized total return in its 2005
Platinum 400 list of America’s Best Managed Big Companies.”
The
Company increased net earnings and diluted earnings per share 64% and 66%,
respectively, to $51.8 million and $1.88 for the fourth quarter of 2004, over
the prior year’s fourth quarter. Home
closing revenue for the quarter was up 48% to $698 million, with the number of
homes closed up 34% to 2,394. For the
full year 2004, net earnings rose 47% over 2003 to $139.0 million. Diluted earnings per share also increased
47%, from $3.42 in 2003 to $5.03 in 2004.
Home closing revenue reached $2.0 billion in 2004, up 38% from $1.5
billion in 2003, with the number of homes closed during 2004 increasing 29% to
7,254. Revenue growth in both the
quarter and the year was led by particularly strong gains in California and
Arizona, and solid progress in Texas.
“Our
pre-tax margin improved 72 basis points from 10.3% in 2003 to 11.0% in
2004. This increase was primarily due to
a 40 basis point reduction in SG&A expenses as a percentage of revenue, a
21 basis point improvement in gross margin and an 11 basis point increase in
other income. Virtually all of the $4.3
million increase in other income for the full year was due to increases in
joint venture income,” said John R. Landon, Meritage Co-Chairman and CEO. “Our fourth quarter performance yielded a 120
basis point improvement in pre-tax margin to 12.0% from 10.8% during the fourth
quarter of 2003. This increase was
primarily due to a 100 basis point increase in gross margin and a net 20 basis
point improvement in SG&A expenses and other income as a percentage of
total revenue. We anticipate that our
2005 pre-tax margin will be relatively stable compared to full-year 2004.”
“For
the full year 2004, we took orders for 9,007 homes valued at $2.6 billion,
increases of 46% and 59%, respectively, over 2003,” said Mr. Hilton. “Our momentum was strong throughout 2004, as
the number of homes ordered during the fourth quarter rose 79% over the same
period of 2003 to 2,055, while the value of those homes advanced 95%. Our average sales price of homes ordered
increased 9% due to price increases in several markets and a shift in mix to
higher priced regions such as California.
The dollar value of homes ordered during the fourth quarter rose an impressive
50% or more in all of our markets, with our California and Nevada divisions
leading the way with increases of 137% and 110%, respectively. Added Hilton, “Demand for our homes was also
very strong during the fourth quarter in Arizona and in the competitive Texas
market, where the dollar value of home orders advanced 84% and 58%,
respectively, over the same period a year ago.
As a result of our record fourth quarter order activity, order backlog
at year-end reached $1.3 billion, up 86% over $711 million at year-end 2003.”
2
“Reflecting our solid
performance in 2004, we were able to generate an after-tax return on average
equity of 30.3% as compared to 26.5% in 2003,” said Mr. Landon. “In addition, our net debt-to-capital ratio
at December 31, 2004, was 44.8%, as compared to 45.7% at December 31,
2003. For the full year, EBITDA
increased 49% to $270.6 million. Our interest
coverage ratio for the four quarters ending December 31, 2003 and 2004 was 6.9
times. Our trailing four quarter
debt-to-EBITDA ratio at December 31, 2004 was 1.7 times versus 1.9 times for
the same period in 2003. Please note
that 2003 ratios and operating statistics in the tables below do not reflect a
change in treatment for model home arrangements that we implemented in
connection with our 2004 year-end financial statements, as discussed in the
footnotes to the tables. During 2004, we
repurchased 1,100,000 shares of our common stock at an average price of $32.20
per share, adjusted for our stock split.
Considering our stock price closed at $62.21 on January 25, 2005, we
believe this repurchase represented an excellent investment for our
stockholders.”
“At the end of 2004, we had approximately 39,000 lots
under control, an increase of 31% over approximately 29,700 at year-end 2003,
representing an approximate 5.4-year supply,” said Mr. Hilton. “Approximately 89% of those lots are
controlled through option contracts, compared to 85% at the end of last
year. This is one of the highest
percentages in the industry, and we believe it allows Meritage to achieve high
returns while reducing the risks associated with owning land. In addition, we were actively selling homes
in 139 communities at December 31, 2004, a 13% increase over December 31,
2003. This year-end count is slightly
less than we had anticipated earlier in the year due to strong demand, which
caused a few of our communities to sell out faster than expected. However, we plan to add a net 11 to 16 new
communities during the first half of 2005 and another net 10 communities during
the second half of the year, bringing our expected community count to about 160
to 165 by year-end 2005, an increase of 15% to 19% over year-end 2004.”
“In addition to entering
the Southern California and Denver markets earlier in 2004, in December we
announced our entry into the fast-growing Florida housing market through a
start-up operation in Orlando,” said Mr. Landon. “With this expansion, we will be operating in
six of the top 10 single-family housing markets in the nation. We anticipate we will begin delivering our
first homes in Denver and Orlando during the latter part of 2005. While organic growth remains our primary
focus at Meritage, we continue to explore acquisition candidates as well as
greenfield start-up operations to supplement our growth.”
“We are very pleased
with our results in 2004 and are excited about our growth potential, both in
our existing markets and in the three new markets we entered last year. Our continued success demonstrates that our
growth strategy and our conservative balance sheet management are working,”
said Mr. Hilton. “Based in part on our
strong order demand during the latter part of 2004 and the resulting record
year-end order backlog, we are raising our 2005 revenue and earnings
guidance. We now expect 2005 revenue to
approximate $2.5 to $2.6 billion, an increase of 23% to 27% over 2004 and an
increase of $300 million over our previous 2005 guidance. We are also raising our diluted EPS guidance
to $6.05
3
to $6.30, an increase of
20% to 25% over 2004 and up from our previous guidance of $5.13 to $5.28. Additionally, we anticipate generating
diluted EPS approximating $1.10 to $1.15 per share during the first quarter of
2005, an increase of 15% to 20% over the same period in 2004.”
Meritage will hold a conference call on Thursday,
January 27, 2005, at 11:00 a.m. EST to discuss its 2004 fourth quarter and
full-year earnings. To participate in the
call, please dial in at least five minutes before the start time. The domestic dial-in number for the call is
1-800-291-3314, and the international dial-in number is 1-706-634-0844. The conference call and presentation can be
accessed through the Company’s website at www.meritagehomes.com. The call may also be accessed through CCBN
for two weeks at www.fulldisclosure.com.
A replay of the call will be available from 12:00 PM EST January 27,
2005, through midnight February 3, 2005.
The domestic replay telephone number is 1-800-642-1687, and the
international replay telephone number is 1-706-645-9291 (refer to Conference ID
# 3131856).
About
Meritage Homes Corporation
Meritage Homes Corporation is one of the nation’s
largest single-family homebuilders, and is traded on the NYSE, symbol:
MTH. The Company is included in the
S&P SmallCap 600 Index and appears on Forbes’
“Platinum 400” list as number one in terms of five-year annualized total
return. Fortune
magazine recently named Meritage to its “Fortune 1000” list of America’s
largest corporations and included the Company as a “top pick from 50 great
investors” in its Investor’s Guide 2004.
Additionally, Meritage is ranked as one of Fortune’s Fastest Growing Companies in America, its fourth
appearance on this list in six years. In
its 18-year history the Company has built approximately 35,000 homes, ranging
from entry-level to semi-custom luxury.
Meritage operates in fast-growing states of the Southern and Western
U.S., including six of the top ten single-family housing markets in the
country. For more information about the
Company, please visit the Meritage website located at www.meritagehomes.com.
4
MERITAGE HOMES CORPORATION AND
SUBSIDIARIES
OPERATING RESULTS
(UNAUDITED - IN THOUSANDS, EXCEPT
PER SHARE DATA)
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
Operating
Results
|
|
|
|
|
|
|
|
|
|
|
Home closing
revenue
|
|
$
|
698,254
|
|
$
|
472,086
|
|
$
|
2,015,742
|
|
$
|
1,461,981
|
|
|
Land closing
revenue
|
|
1,565
|
|
920
|
|
24,262
|
|
9,020
|
|
|
|
|
699,819
|
|
473,006
|
|
2,040,004
|
|
1,471,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home closing
gross profit
|
|
144,193
|
|
92,825
|
|
401,832
|
|
291,282
|
|
|
Land closing
gross profit (loss)
|
|
94
|
|
(6
|
)
|
8,183
|
|
1,235
|
|
|
|
|
144,287
|
|
92,819
|
|
410,015
|
|
292,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and
other sales costs
|
|
(36,647
|
)
|
(28,370
|
)
|
(116,103
|
)
|
(92,904
|
)
|
|
General and
administrative expenses
|
|
(26,585
|
)
|
(15,238
|
)
|
(79,257
|
)
|
(53,929
|
)
|
|
Other income,
net
|
|
2,902
|
|
1,865
|
|
10,103
|
|
5,776
|
|
|
Earnings before
provision for income taxes
|
|
83,957
|
|
51,076
|
|
224,758
|
|
151,460
|
|
|
Provision for
Income taxes
|
|
(32,145
|
)
|
(19,510
|
)
|
(85,790
|
)
|
(57,054
|
)
|
|
Net earnings
|
|
$
|
51,812
|
|
$
|
31,566
|
|
$
|
138,968
|
|
$
|
94,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
$
|
2.01
|
|
$
|
1.20
|
|
$
|
5.33
|
|
$
|
3.62
|
|
|
Weighted average
number of shares
|
|
25,717
|
|
26,243
|
|
26,066
|
|
26,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
$
|
1.88
|
|
$
|
1.13
|
|
$
|
5.03
|
|
$
|
3.42
|
|
|
Weighted average
number of shares
|
|
27,528
|
|
27,946
|
|
27,610
|
|
27,620
|
|
Note: All share, EPS and share price amounts in
this press release reflect a 2-for-1 stock split effective January 7, 2005.
|
|
|
(Unaudited)
|
|
|
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
EBITDA
Reconciliation:(1)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
51,812
|
|
$
|
31,566
|
|
$
|
138,968
|
|
$
|
94,406
|
|
|
Income taxes
|
|
32,145
|
|
19,510
|
|
85,790
|
|
57,054
|
|
|
Interest
|
|
10,821
|
|
7,775
|
|
32,652
|
|
22,287
|
|
|
Depreciation and
amortization
|
|
4,118
|
|
2,804
|
|
13,238
|
|
8,536
|
|
|
EBITDA
|
|
$
|
98,896
|
|
$
|
61,655
|
|
$
|
270,648
|
|
$
|
182,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
coverage ratio:(2)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
$
|
270,648
|
|
$
|
182,283
|
|
|
Interest
incurred
|
|
|
|
|
|
$
|
39,279
|
|
$
|
26,580
|
|
|
Interest
coverage ratio
|
|
|
|
|
|
6.9 times
|
|
6.9 times
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to EBITDA
ratio:(3)
|
|
|
|
|
|
|
|
|
|
|
Notes and loans
payable
|
|
|
|
|
|
$
|
471,415
|
|
$
|
351,491
|
|
|
EBITDA
|
|
|
|
|
|
$
|
270,648
|
|
$
|
182,283
|
|
|
Debt to EBITDA
ratio
|
|
|
|
|
|
1.7 times
|
|
1.9 times
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax return
on equity: (4)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
$
|
138,968
|
|
$
|
94,406
|
|
|
Average equity
|
|
|
|
|
|
$
|
457,951
|
|
$
|
356,590
|
|
|
After-tax return
on equity
|
|
|
|
|
|
30.3
|
%
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
debt-to-capital: (5)
|
|
|
|
|
|
|
|
|
|
|
Notes and loans
payable
|
|
|
|
|
|
$
|
471,415
|
|
$
|
351,491
|
|
|
Less: cash
|
|
|
|
|
|
47,876
|
|
4,799
|
|
|
Net debt
|
|
|
|
|
|
$
|
423,539
|
|
$
|
346,692
|
|
|
Stockholders’
equity
|
|
|
|
|
|
522,555
|
|
411,895
|
|
|
Capital
|
|
|
|
|
|
$
|
946,094
|
|
$
|
758,587
|
|
|
Net
debt-to-capital
|
|
|
|
|
|
44.8
|
%
|
45.7
|
%
|
5
(1) EBITDA represents
earnings before interest expense, interest amortized to cost of sales, income
taxes, depreciation and amortization.
EBITDA is a non-GAAP financial measure.
For purposes of Regulation G, a non-GAAP financial measure is a numerical
measure of a registrant’s historical or future financial performance, financial
position or cash flows that excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP in the
statement of earnings, balance sheet, or statement of cash flows (or equivalent
statements) of the issuer; or includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded from the most
directly comparable measure so calculated and presented. In this regard, GAAP refers to generally
accepted accounting principles in the United States. Pursuant to the requirements of Regulation G,
we have provided a reconciliation of this non-GAAP financial measure to the
most directly comparable GAAP financial measure.
EBITDA is
presented here because it is used by management to analyze and compare Meritage
with other homebuilding companies on the basis of operating performance and we
believe it is a financial measure widely used by investors and analysts in the
homebuilding industry. EBITDA as
presented may not be comparable to similarly titled measures reported by other
companies because not all companies calculate EBITDA in an identical manner
and, therefore, is not necessarily an accurate means of comparison between
companies. EBITDA is not intended to
represent cash flows for the period or funds available for management’s discretionary
use nor has it been presented as an alternative to operating income or as an
indicator of operating performance and it should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles in the United States of America.
(2) Interest coverage
ratio is calculated as the trailing four quarters EBITDA divided by the
trailing four quarters interest incurred.
(3) Debt to EBITDA ratio
is calculated as notes and loans payable divided by the trailing four quarters
EBITDA.
(4) After-tax return on
equity is calculated as the trailing four quarters net earnings divided by the
trailing five quarters average equity.
(5) Net debt-to-capital is
calculated as notes and loans payable less cash divided by notes and loans
payable less cash plus stockholders’ equity.
MERITAGE HOMES CORPORATION AND
SUBSIDIARIES
BALANCE SHEET DATA
(UNAUDITED
- - IN THOUSANDS)
|
|
|
December 31, 2004
|
|
December 31, 2003
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,268,703
|
|
$
|
954,539
|
(2)
|
|
Real estate (1)
|
|
867,218
|
|
678,011
|
(2)
|
|
Cash and cash
equivalents
|
|
47,876
|
|
4,799
|
|
|
Total
liabilities and minority interest
|
|
746,148
|
|
542,644
|
(2)
|
|
Notes and loans
payable (1)
|
|
471,415
|
|
351,491
|
(2)
|
|
Stockholders’
equity
|
|
522,555
|
|
411,895
|
|
|
|
|
|
|
|
|
|
(1) The Company recently determined that costs
associated with models that we use to market our communities and that are built
by us on lots owned by a third party and leased from them during our sales
process, are required to be included in the Company’s financial statements. We do not legally own the models, we are
reimbursed by the owner for our construction costs, and we have the right but
not the obligation to purchase these homes.
For accounting purposes we are deemed to be the owner due to our
“continuing involvement” with these assets.
At December 31, 2004, the amount of real estate and notes and loans
payable relating to such model homes was $53.8 million.
(2) These 2003 amounts would increase by
approximately $26 million if adjusted to be consistent with the 2004 presentation
discussed in (1) above.
6
MERITAGE HOMES CORPORATION AND
SUBSIDIARIES
OPERATING DATA
(UNAUDITED - $ IN THOUSANDS)
|
|
|
For The
Three Months Ended December 31
|
|
As Of And For The
Year Ended December 31
|
|
|
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
|
|
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
|
Homes
Ordered:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
744
|
|
159,041
|
|
458
|
|
100,931
|
|
3,518
|
|
752,770
|
|
2,862
|
|
599,850
|
|
|
Arizona
|
|
713
|
|
195,030
|
|
348
|
|
106,087
|
|
3,490
|
|
884,771
|
|
1,881
|
|
509,913
|
|
|
California
|
|
439
|
|
260,025
|
|
239
|
|
109,687
|
|
1,582
|
|
821,266
|
|
807
|
|
375,105
|
|
|
Nevada
|
|
159
|
|
55,788
|
|
102
|
|
26,543
|
|
417
|
|
146,141
|
|
602
|
|
150,120
|
|
|
Total
|
|
2,055
|
|
669,884
|
|
1,147
|
|
343,248
|
|
9,007
|
|
2,604,948
|
|
6,152
|
|
1,634,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
Closed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
981
|
|
211,390
|
|
840
|
|
172,079
|
|
3,152
|
|
681,099
|
|
2,828
|
|
577,330
|
|
|
Arizona
|
|
917
|
|
244,760
|
|
649
|
|
181,626
|
|
2,331
|
|
585,743
|
|
1,515
|
|
415,709
|
|
|
California
|
|
399
|
|
206,795
|
|
195
|
|
92,963
|
|
1,367
|
|
628,324
|
|
735
|
|
334,677
|
|
|
Nevada
|
|
97
|
|
35,309
|
|
100
|
|
25,418
|
|
404
|
|
120,576
|
|
564
|
|
134,265
|
|
|
Total
|
|
2,394
|
|
698,254
|
|
1,784
|
|
472,086
|
|
7,254
|
|
2,015,742
|
|
5,642
|
|
1,461,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
|
|
|
|
|
|
|
1,485
|
|
313,090
|
|
1,119
|
|
241,419
|
|
|
Arizona
|
|
|
|
|
|
|
|
|
|
1,991
|
|
537,387
|
|
832
|
|
238,359
|
|
|
California *
|
|
|
|
|
|
|
|
|
|
695
|
|
391,271
|
|
405
|
|
177,355
|
|
|
Nevada
|
|
|
|
|
|
|
|
|
|
237
|
|
79,203
|
|
224
|
|
53,638
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
4,408
|
|
1,320,951
|
|
2,580
|
|
710,771
|
|
* In January, 2004, our acquisition of Citation
Homes added 75 sold but not closed homes with a sales value of approximately
$21 million to our California backlog.
# # #
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements include
statements concerning our estimated results for 2005, including our estimated
earnings per share for the first quarter of 2005; the supply of lots we
control; our anticipated pre-tax margins for 2005; the number of communities we
expect to open in 2005; and our anticipation that we will begin delivering
homes in Denver and Orlando during the latter part of 2005.
Such statements are based upon the current
beliefs and expectations of our management and are subject to significant risks
and uncertainties. Actual results may
differ from those set forth in the forward-looking statements.
Meritage’s business is subject to a number of
risks and uncertainties including: the strength and competitive pricing of the
single-family housing market; demand for and acceptance of our homes; changes
in the availability and pricing of real estate in the markets in which we
operate; our ability to continue to acquire additional land or options to
acquire additional land on acceptable terms, particularly in our greenfield
start-up markets; general economic slow downs; consumer confidence, which can
be impacted by economic and other factors such as terrorism, war, or threats
thereof and changes in stock markets; the impact of construction defect and
home warranty claims; the cost and availability of insurance, including the
unavailability of insurance for the presence of mold; interest rates and
changes in the availability and pricing of residential mortgages; our lack of
geographic diversification; our level of indebtedness and our ability to raise
additional capital when and if needed; our ability to take certain actions
because of restrictions contained in the indentures for our senior notes and
the agreement for our senior unsecured credit facility; legislative or other
initiatives that seek to restrain growth in new housing construction or similar
measures; the success of our program to integrate existing operations with any
new operations or those of past or future acquisitions; our success in locating
and negotiating favorably with possible acquisition candidates; our ability to
achieve certain pre-tax margins; our dependence on key personnel and the
availability of satisfactory subcontractors; the impact of inflation; our
potential exposure to natural disasters; the impact of new accounting
principles; and other factors identified in documents filed by us with the
Securities and Exchange Commission, including those set forth in our Form 10-K
for the year ended December 31, 2003 under the caption “Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Factors That
May Affect Our Future Results and Financial Condition” and in Exhibit 99.1 of
Meritage’s Form 10-Q for the quarter ended September 30, 2004. As a result of these and other factors, the
Company’s stock and note prices may fluctuate dramatically. Our 2005 EPS guidance is premised upon the absence
of any new financing events, such as an equity offering or refinancing of our
indebtedness.
# # #
7