Exhibit
99.1
|
Contacts:
|
Arizona:
|
Texas:
|
New
York:
|
|
|
Larry Seay
|
Jane Hays
|
Chris Tofalli
|
|
|
Chief Financial Officer
|
Vice President-Corp.
Develop.
|
Broadgate Consultants
|
|
|
(480) 609-3330
|
(972) 543-8123
|
(212) 232-2222
|
MERITAGE HOMES CORPORATION
REPORTS ALL-TIME EARNINGS RECORDS
ALL-TIME
QUARTERLY RECORDS
• 140% INCREASE IN NET
EARNINGS OVER 2ND QTR 2004 TO $59.2 MILLION
• 130% RISE IN DILUTED
EPS OVER 2ND QTR 2004 TO $2.05
• 44% ADVANCE IN VALUE
OF SALES ORDERS OVER 2ND QTR 2004 TO $1.0 BILLION
Scottsdale, Arizona and Dallas (July 27,
2005) – Meritage Homes Corporation (NYSE: MTH) today
announced all-time quarterly records for net earnings, diluted earnings per
share and the dollar value of sales orders.
SUMMARY OPERATING RESULTS
(UNAUDITED)
(IN
THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
2005
|
|
2004
|
|
% Change
|
|
2005 *
|
|
2004
|
|
% Change
|
|
|
Home closing revenue
|
|
$
|
651,783
|
|
$
|
431,275
|
|
51
|
%
|
$
|
1,202,730
|
|
$
|
854,777
|
|
41
|
%
|
|
Net earnings
|
|
$
|
59,239
|
|
$
|
24,637
|
|
140
|
%
|
$
|
83,435
|
|
$
|
51,556
|
|
62
|
%
|
|
Diluted EPS
|
|
$
|
2.05
|
|
$
|
0.89
|
|
130
|
%
|
$
|
2.92
|
|
$
|
1.84
|
|
59
|
%
|
* Includes a first quarter bond
refinancing charge related to repurchasing $276.8 million of our 9.75% senior
notes due 2011. The funds to repurchase
these bonds came from our new $350.0 million 6.25% senior notes due 2015. This bond refinancing charge reduced pre-tax
earnings by $31.3 million, reduced net earnings by $19.5 million and reduced
diluted EPS by $0.69.
“Meritage’s
exceptional performance during the second quarter of 2005 reflects the
successful execution of our growth strategy.
It supports our belief that among the country’s largest public builders,
we have a unique potential for growth,” said Steven J. Hilton, Meritage
Co-Chairman and CEO. “We are now
operating coast-to-coast in many of America’s most robust housing markets and
believe we still have room for growth within our existing markets and many opportunities
for expansion into untapped markets.”
The
Company increased net earnings and diluted earnings per share 140% and 130%, respectively,
to $59.2 million and $2.05 for the second quarter of 2005 over the prior year’s
second quarter. Home closing revenue for
the quarter was up 51% to $652 million, with the number of homes closed up 29%
to 2,095. The number of homes ordered
during the second quarter of 2005 rose 15% over the same period a year ago to
2,931, while the dollar value of those homes advanced 44% to $1.0 billion. For the first half of 2005, net earnings were
up 62% over the same period a year ago to $83.4 million. Diluted earnings per share increased 59% over
the first half of 2004 to $2.92 in the first half of 2005. Home closing revenue reached $1.2 billion in the
first six months of 2005, up 41% from the same period a year ago. For the first half of 2005, Meritage took
orders for 5,570 homes valued at $1.9 billion, increases of 17% and 46%,
respectively.
“This quarter has indeed been outstanding for Meritage,”
said John R. Landon, Meritage Co-Chairman and CEO. “Demand for our homes continues to be very
strong and our earnings growth and margin expansion are robust. For the first time in our Company’s history we
eclipsed $1.0 billion in sales orders for a quarter. In addition, our gross margin increased 500
basis points over the second quarter of 2004 to 23.4% and pre-tax margin rose
532 basis points to 14.5%. This margin
expansion is the result of our ability to raise home prices while managing our
construction costs and leveraging our SG&A expenses.”
“Second quarter home closing revenue in California and
Arizona rose 84% and 68%, respectively, over the second quarter of 2004 as
those housing markets continue to expand,” added Mr. Hilton. “In Texas, where the housing market remains
very competitive, we are pleased with a 15% increase in home closing
revenue. In Nevada, where our closings
have been down somewhat recently due to communities closing out earlier than
anticipated, new home orders rose 112% during the first half of 2005 over the
first half of 2004. We anticipate
generating growth in closings in Nevada during the second half of 2005.”
“We are also very excited to report that during the
second quarter we took orders for our first homes in our recently established
start-up operations in Denver and Orlando,” said Mr. Landon. “In addition, order demand in our Fort
Myers/Naples, Florida division has exceeded our expectations thus far. We anticipate that we will deliver our first
homes in Orlando and Denver in the fourth quarter of this year.”
The Company’s balance sheet
shows a net debt-to-capital ratio* of 43% at June 30, 2005, compared to 50%
at June 30, 2004. For the second
quarter of 2005, EBITDA* increased 117% over the second quarter of 2004 to $108.6
million. For the twelve months ending June 30,
2005, EBITDA rose 53%, resulting in an interest coverage ratio* of 7.9 times as
compared to 6.7 times for the comparable period a year earlier. For the twelve months preceding June 30,
2005, our debt to EBITDA ratio* was 1.7 times, an improvement from 2.2 times a
year ago. At June 30, 2005, the
Company had $38 million outstanding on its bank credit facility and $301
million available to borrow after considering the facility’s most restrictive
debt covenants. (*A definition and
discussion of Meritage’s use of non-GAAP measures are included with the summary financial
information at the end of this release).
2
“In order to support our future growth, we increased our
actively selling community count to 163 at June 30, 2005, a rise of 19%
over June 30, 2004 and 17% higher than at the end of 2004,” continued Mr. Landon. “At the end of the second quarter 2005, we
had approximately 50,200 lots under control, of which 90% were controlled
through option contracts. This level of
lot supply represents about a 5.5 year supply based on our anticipated 2005
closings and is 41% higher than a year ago at this time. Much of this increase was the result of
adding lots in our newer markets, particularly in Florida, to drive their rapid
growth,” added Mr. Landon. “Our
strong earnings growth thus far this year has also yielded stronger returns for
our shareholders. For the four quarters
ended June 30, 2005, our after-tax return on average equity was 31.1%, up
from 26.9% a year ago, and our after-tax return on average assets was 12.8%, up
from 11.0% for the same period a year earlier.”
“We are very encouraged by our results during the
first half of 2005 and are excited about the growth in our existing markets, as
well as the new markets we’ve entered recently,” added Mr. Hilton. “As a result of our excellent order activity
during the first half of 2005, order backlog at June 30, 2005 reached $2.1
billion, up 83% over $1.2 billion at June 30, 2004, providing strong
earnings visibility for the balance of the year. Accordingly, we are raising our full year
2005 diluted EPS guidance by approximately 25% from a range of $6.15 to $6.40**
to a range of $7.75 to $8.00**, on our previously announced revenue guidance of
$2.9 to $3.0 billion. This level of
diluted EPS also represents an increase of 54% to 59% over the full year 2004. We also anticipate our third quarter 2005
diluted EPS to approximate $2.20 to $2.30, an increase of 69% to 76% over the
prior year’s third quarter,” concluded Mr. Hilton. (**These amounts include the impact of the first
quarter bond refinancing charge of $0.69).
Meritage will hold its second quarter earnings call on
Thursday, July 28, 2005, at 10 a.m. EST. 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 800-291-3314,
and the international dial-in number is 706-634-0844. The conference call and presentation can be
accessed through the Company’s website at www.meritagehomes.com and through
CCBN for two weeks at www.fulldisclosure.com.
A replay of the call will be available from 11 a.m. EST July 28,
2005, through midnight August 4, 2005.
The domestic replay telephone number is 800-642-1687, and
the international replay telephone number is 706-645-9291 (passcode
7630526).
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 appears on Forbes’ “Platinum 400” list as number one
in terms of five-year annualized total return, and is included in the S&P
SmallCap 600 Index. Fortune magazine recently ranked Meritage
747th in 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
3
this list in six years. The
Company has built approximately 39,000 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
10 single-family housing markets in the country. For more information about the Company,
please visit the Meritage website located at www.meritagehomes.com.
MERITAGE
HOMES CORPORATION AND SUBSIDIARIES
OPERATING
RESULTS
(UNAUDITED)
(IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
|
Operating Results
|
|
|
|
|
|
|
|
|
|
|
Home closing revenue
|
|
$
|
651,783
|
|
$
|
431,275
|
|
$
|
1,202,730
|
|
$
|
854,777
|
|
|
Land closing revenue
|
|
1,788
|
|
2,660
|
|
2,009
|
|
2,660
|
|
|
|
|
653,571
|
|
433,935
|
|
1,204,739
|
|
857,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home closing gross profit
|
|
152,703
|
|
79,067
|
|
272,028
|
|
162,230
|
|
|
Land closing gross profit
|
|
462
|
|
929
|
|
471
|
|
929
|
|
|
|
|
153,165
|
|
79,996
|
|
272,499
|
|
163,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and other sales costs
|
|
(35,869
|
)
|
(26,356
|
)
|
(67,340
|
)
|
(52,189
|
)
|
|
General and administrative expenses
|
|
(25,072
|
)
|
(16,794
|
)
|
(47,069
|
)
|
(32,850
|
)
|
|
Other income, net
|
|
2,769
|
|
2,980
|
|
6,904
|
|
5,169
|
|
|
Loss on extinguishment of debt
|
|
(197
|
)
|
—
|
|
(31,477
|
)
|
—
|
|
|
Earnings before provision for income taxes
|
|
94,796
|
|
39,826
|
|
133,517
|
|
83,289
|
|
|
Provision for income taxes
|
|
(35,557
|
)
|
(15,189
|
)
|
(50,082
|
)
|
(31,733
|
)
|
|
Net earnings
|
|
$
|
59,239
|
|
$
|
24,637
|
|
$
|
83,435
|
|
$
|
51,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
$
|
2.19
|
|
$
|
0.94
|
|
$
|
3.13
|
|
$
|
1.95
|
|
|
Weighted average shares outstanding
|
|
27,110
|
|
26,292
|
|
26,664
|
|
26,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
$
|
2.05
|
|
$
|
0.89
|
|
$
|
2.92
|
|
$
|
1.84
|
|
|
Weighted average shares outstanding
|
|
28,906
|
|
27,824
|
|
28,545
|
|
27,964
|
|
4
MERITAGE
HOMES CORPORATION AND SUBSIDIARIES
NON-GAAP
FINANCIAL DISCLOSURES
(UNAUDITED)
(DOLLARS
IN THOUSANDS)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
Trailing Twelve Months Ended
June 30,
|
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
|
EBITDA Reconciliation:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
59,239
|
|
$
|
24,637
|
|
$
|
83,435
|
|
$
|
51,556
|
|
$
|
170,847
|
|
$
|
108,877
|
|
|
Provision for income taxes
|
|
35,557
|
|
15,189
|
|
50,082
|
|
31,733
|
|
104,139
|
|
66,202
|
|
|
Interest amortized to cost of sales
|
|
9,582
|
|
7,217
|
|
17,511
|
|
13,899
|
|
35,840
|
|
27,326
|
|
|
Depreciation and amortization
|
|
4,270
|
|
3,017
|
|
8,024
|
|
5,764
|
|
15,492
|
|
10,554
|
|
|
EBITDA
|
|
$
|
108,648
|
|
$
|
50,060
|
|
$
|
159,052
|
|
$
|
102,952
|
|
$
|
326,318
|
|
$
|
212,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio:(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
|
|
|
|
$
|
326,318
|
|
$
|
212,959
|
|
|
Interest incurred
|
|
|
|
|
|
|
|
|
|
$
|
41,508
|
|
$
|
31,734
|
|
|
Interest coverage ratio
|
|
|
|
|
|
|
|
|
|
7.9 times
|
|
6.7 times
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to EBITDA ratio:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable and other borrowings
|
|
|
|
|
|
|
|
|
|
$
|
561,502
|
|
$
|
466,935
|
|
|
EBITDA
|
|
|
|
|
|
|
|
|
|
$
|
326,318
|
|
$
|
212,959
|
|
|
Debt to EBITDA ratio
|
|
|
|
|
|
|
|
|
|
1.7 times
|
|
2.2 times
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax stockholder returns: (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
$
|
170,847
|
|
$
|
108,877
|
|
|
Average assets
|
|
|
|
|
|
|
|
|
|
$
|
1,329,804
|
|
$
|
986,484
|
|
|
Average equity
|
|
|
|
|
|
|
|
|
|
$
|
549,514
|
|
$
|
405,299
|
|
|
After-tax return on assets
|
|
|
|
|
|
|
|
|
|
12.8
|
%
|
11.0
|
%
|
|
After-tax return on equity
|
|
|
|
|
|
|
|
|
|
31.1
|
%
|
26.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt-to-capital: (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable and other Borrowings
|
|
|
|
|
|
|
|
|
|
$
|
561,502
|
|
$
|
466,935
|
|
|
Less: cash and cash Equivalents
|
|
|
|
|
|
|
|
|
|
34,104
|
|
11,735
|
|
|
Net debt
|
|
|
|
|
|
|
|
|
|
$
|
527,398
|
|
$
|
455,200
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
688,659
|
|
447,438
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
$
|
1,216,057
|
|
$
|
902,638
|
|
|
Net debt-to-capital
|
|
|
|
|
|
|
|
|
|
43.4
|
%
|
50.4
|
%
|
(1) EBITDA represents net earnings before interest amortized to cost of
sales, income taxes, depreciation and amortization. EBITDA is a non-GAAP financial measure. A non-GAAP financial measure is a numerical
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. 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 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.
5
(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
payable and other borrowings divided by the trailing four quarters EBITDA.
(4) After-tax return on assets and equity are
calculated as the trailing four quarters net earnings divided by the trailing
four quarters average assets and equity, respectively.
(5) Net
debt-to-capital is calculated as notes payable and other borrowings less cash
divided by notes payable and other borrowings.
MERITAGE
HOMES CORPORATION AND SUBSIDIARIES
BALANCE
SHEET DATA
(UNAUDITED)
(DOLLARS
IN THOUSANDS)
|
|
|
June 30, 2005
|
|
December 31, 2004
|
|
|
Total assets
|
|
$
|
1,603,197
|
|
$
|
1,265,394
|
|
|
Real estate
|
|
1,184,206
|
|
867,218
|
|
|
Cash and cash equivalents
|
|
34,104
|
|
47,876
|
|
|
Consolidated real estate not owned
|
|
6,272
|
|
18,344
|
|
|
Total liabilities and minority interests
|
|
914,538
|
|
742,839
|
|
|
Notes and loans payable
|
|
561,502
|
|
471,415
|
|
|
Liabilities related to real estate not owned
|
|
5,429
|
|
14,780
|
|
|
Stockholders’ equity
|
|
688,659
|
|
522,555
|
|
|
|
|
|
|
|
|
|
MERITAGE
HOMES CORPORATION AND SUBSIDIARIES
OPERATING
DATA
(UNAUDITED)
(DOLLARS
IN THOUSANDS)
|
|
|
For The
|
|
As Of And For The
|
|
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
|
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
Homes
|
|
$
|
|
|
Homes Ordered:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
1,067
|
|
243,490
|
|
1,022
|
|
220,056
|
|
2,040
|
|
456,091
|
|
1,969
|
|
419,913
|
|
|
Arizona
|
|
973
|
|
313,146
|
|
1,056
|
|
262,004
|
|
1,898
|
|
585,995
|
|
1,863
|
|
470,392
|
|
|
California
|
|
563
|
|
320,027
|
|
387
|
|
185,725
|
|
1,037
|
|
608,233
|
|
752
|
|
345,556
|
|
|
Nevada
|
|
221
|
|
80,788
|
|
91
|
|
32,357
|
|
350
|
|
127,644
|
|
165
|
|
56,280
|
|
|
Florida
|
|
99
|
|
45,138
|
|
—
|
|
—
|
|
237
|
|
105,972
|
|
—
|
|
—
|
|
|
Colorado
|
|
8
|
|
3,022
|
|
—
|
|
—
|
|
8
|
|
3,022
|
|
—
|
|
—
|
|
|
Total
|
|
2,931
|
|
1,005,611
|
|
2,556
|
|
700,142
|
|
5,570
|
|
1,886,957
|
|
4,749
|
|
1,292,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Closed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
856
|
|
184,229
|
|
741
|
|
160,377
|
|
1,573
|
|
340,184
|
|
1,471
|
|
317,649
|
|
|
Arizona
|
|
745
|
|
194,108
|
|
473
|
|
115,535
|
|
1,344
|
|
348,063
|
|
854
|
|
213,467
|
|
|
California
|
|
379
|
|
228,412
|
|
294
|
|
123,840
|
|
724
|
|
422,899
|
|
601
|
|
254,710
|
|
|
Nevada
|
|
66
|
|
25,493
|
|
112
|
|
31,523
|
|
154
|
|
56,682
|
|
263
|
|
68,951
|
|
|
Florida
|
|
49
|
|
19,541
|
|
—
|
|
—
|
|
87
|
|
34,902
|
|
—
|
|
—
|
|
|
Total
|
|
2,095
|
|
651,783
|
|
1,620
|
|
431,275
|
|
3,882
|
|
1,202,730
|
|
3,189
|
|
854,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
|
|
|
|
|
|
|
1,952
|
|
428,997
|
|
1,617
|
|
343,683
|
|
|
Arizona
|
|
|
|
|
|
|
|
|
|
2,545
|
|
775,319
|
|
1,841
|
|
495,284
|
|
|
California
|
|
|
|
|
|
|
|
|
|
1,008
|
|
576,605
|
|
631
|
|
289,175
|
|
|
Nevada
|
|
|
|
|
|
|
|
|
|
433
|
|
150,165
|
|
126
|
|
40,967
|
|
|
Florida *
|
|
|
|
|
|
|
|
|
|
517
|
|
200,916
|
|
—
|
|
—
|
|
|
Colorado
|
|
|
|
|
|
|
|
|
|
8
|
|
3,022
|
|
—
|
|
—
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
6,463
|
|
2,135,024
|
|
4,215
|
|
1,169,109
|
|
* The
number and dollar value of homes closed and order backlog include the effect of
the Colonial Homes of Florida acquisition, which closed in February 2005.
6
|
|
|
2nd Qtr 2005
|
|
2nd Qtr 2004
|
|
|
|
|
Beg.
|
|
End
|
|
Beg.
|
|
End
|
|
|
Active
|
|
|
|
|
|
|
|
|
|
|
Communities:
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
90
|
|
98
|
|
81
|
|
87
|
|
|
Arizona
|
|
25
|
|
30
|
|
31
|
|
30
|
|
|
California
|
|
19
|
|
22
|
|
16
|
|
17
|
|
|
Nevada
|
|
7
|
|
6
|
|
1
|
|
3
|
|
|
Florida
|
|
6
|
|
6
|
|
n/a
|
|
n/a
|
|
|
Colorado
|
|
n/a
|
|
1
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
147
|
|
163
|
|
129
|
|
137
|
|
# # #
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 perceptions about our growth potential in existing and new markets; that we
will generate growth in home closing revenue in Nevada during the second half
of 2005; the timing of home deliveries in Orlando and Denver; the amount of our
lot supply and our estimated revenue and earnings per share in 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: interest rates and changes in the availability and
pricing of residential mortgages; our success in locating and negotiating
favorably with possible acquisition candidates; the success of our program to
integrate existing operations with any new operations or those of past or
future acquisitions, including Colonial Homes of Florida; our dependence on key
personnel and the availability of satisfactory subcontractors; our ability to
take certain actions because of restrictions contained in the indentures for
our senior notes and the agreement for our unsecured credit facility; our lack
of geographic diversification; the cost and availability of insurance,
including the unavailability of insurance for the presence of mold; our
potential exposure to natural disasters; the impact of inflation; the impact of
construction defect and home warranty claims; 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 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; our level of indebtedness and our ability
to raise additional capital when and if needed; legislative or other
initiatives that seek to restrain growth or new housing construction or similar
measures; 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, 2004 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 March 31, 2005. As a result of these and other factors, the
Company’s stock and note prices may fluctuate dramatically.
# # #
7