Exhibit 99.1
|
Contacts:
|
|
Investor Relations:
|
|
Corporate Communications:
|
|
|
|
Brent Anderson
|
|
Jane Hays
|
|
|
|
Director Investor Relations
|
|
Vice President-Corp. Develop.
|
|
|
|
(972) 543-8207
|
|
(972) 543-8123
|
MERITAGE HOMES REPORTS RECORD FIRST QUARTER
2006 RESULTS
NET
EARNINGS GREW 82% TO $80 MILLION OR $2.86 DILUTED EPS
REVENUE AND EPS GUIDANCE FOR 2006 REAFFIRMED
HIGHLIGHTS OF THE QUARTER:
• HOME CLOSING REVENUE, NET EARNINGS AND DILUTED EPS
SET FIRST QUARTER RECORDS
• BACKLOG OF $2.17 BILLION INCREASED 22%
YEAR-OVER-YEAR
• COMPANY REPURCHASED 856,000 SHARES DURING THE
QUARTER, REPRESENTING 3% OF TOTAL
OUTSTANDING SHARES
• COMPANY PROJECTS 19TH CONSECUTIVE RECORD
YEAR AND REAFFIRMS GUIDANCE OF $3.8-$3.9 BILLION IN REVENUE AND $11.25-$11.50
IN DILUTED EPS FOR 2006
Scottsdale, Arizona and Dallas (April 25,
2006) – Meritage Homes Corporation (NYSE: MTH) today
announced first-quarter record results for the period ended March 31, 2006.
Home closing revenue increased 54% year-over-year to $846 million, net earnings
increased 82%* to $80 million, and diluted earnings per share (EPS) increased
85%* to $2.86, each setting new first quarter records for Meritage.
Summary Operating Results (Unaudited)
(dollars in thousands, except per share amounts)
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2006
|
|
2005
|
|
% Change
|
|
|
Homes
closed (units)
|
|
2,528
|
|
1,787
|
|
41
|
%
|
|
Home
closing revenue
|
|
$
|
846,374
|
|
$
|
550,947
|
|
54
|
%
|
|
Sales
orders (units)
|
|
2,590
|
|
2,639
|
|
-2
|
%
|
|
Sales
orders
|
|
$
|
832,618
|
|
$
|
881,346
|
|
-6
|
%
|
|
Ending
order backlog
|
|
$
|
2,167,844
|
|
$
|
1,781,196
|
|
22
|
%
|
|
Including
one-time charge:
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
79,736
|
|
$
|
24,196
|
|
230
|
%
|
|
Diluted
EPS
|
|
$
|
2.86
|
|
$
|
0.86
|
|
233
|
%
|
|
Excluding
one-time charge:
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
79,736
|
|
$
|
43,742
|
*
|
82
|
%
|
|
Diluted
EPS
|
|
$
|
2.86
|
|
$
|
1.55
|
*
|
85
|
%
|
* Excludes one-time charge of $19.5 million after-tax related to first
quarter 2005 debt refinancing. (See “Operating Results” statement for
reconciliation.)
Record home closing revenue was driven by a 41%
increase in homes closed, coupled with a 9% increase in average selling price
(ASP). Meritage closed 2,528 homes in the first quarter 2006, compared to 1,787
in the first quarter last year, reflecting the Company’s expansion into new
markets and robust order demand in 2005. ASPs on home closings increased to
approximately $335,000 from $308,000 year-over-year as a result of strong
demand for homes in 2005 and a greater portion of closings in higher-priced
markets.
Home closing gross margin increased to 25.3%, from
21.7% in the first quarter 2005, driven by record sales in 2005 and effective
cost management. Pre-tax margin grew similarly to 15.5% from 12.7% a year ago,
excluding a one-time charge related to refinancing of long-term debt in the
first quarter 2005.
“Our revenue and earnings in recent quarters reflect
the robust selling conditions and positive mix of high-margin markets in 2005,”
said Steven J. Hilton, Meritage co-chairman and chief executive officer. “Our
strategy of focusing on markets in the South and West has allowed us to benefit
from the positive homebuilding environment in recent years and deliver record
results to our stockholders. We are positioned today in some of the best
housing markets in the country even as certain markets have softened in recent
months.”
Aggregate orders in the first quarter of 2006 nearly
matched those from the first quarter of 2005, when Meritage experienced a 49%
increase in order value over the first quarter of 2004. Of particular note,
total order value in Texas climbed 48% this quarter, lead by especially strong
sales in Houston. The gains in Texas helped offset declines in Northern
California and Phoenix, where speculative activity and high price appreciation
in 2005 has recently contributed to higher-than-average cancellation rates in
those markets.
“Our diversification strategy is proving to be
effective in positioning us to better weather the ebb and flow of housing
market conditions in various markets,” added John R. Landon, Meritage
co-chairman and chief executive officer. “We believe we’re located in many of the
best states for long-term homebuilding opportunities, and are optimistic about
our prospects for the future. We now operate coast to coast across the South
and West in 14 markets in six states, whereas we were in seven markets in three
states just four years ago.”
The change in first quarter order ASP from approximately
$334,000 in 2005 to $321,000 in 2006 primarily reflects a mix shift with more
sales in Texas and fewer in California. Texas includes Houston and Dallas/Fort
Worth, two of the Company’s largest four divisions. The relative affordability
of Texas and strong underlying economy has helped improve housing demand and
margins there.
“We believe it is important to maintain our relatively
low-risk management strategies as some of our markets adjust to more
sustainable levels,” concluded Mr. Hilton. “We continue to manage our
strong balance sheet very carefully, which has both enabled our growth and
affords us flexibility as we face the challenges and opportunities in a dynamic
marketplace.”
2
The Company reported a net-debt-to-capital ratio of 40.5%
at March 31, 2006, a 331 basis-point improvement over 43.8% at March 31,
2005. Meritage also reported significant improvements in its interest coverage and
debt to EBITDA ratios, and continued to produce some of the best returns in the
industry. After-tax return on assets improved to 17.4% from 11.2%, and return
on equity improved to 40.8% from 27.3%, based on trailing four quarters’
results this year compared to a year ago. Citing these factors and the Company’s
relatively low inventory levels, high inventory turnover and option strategy
for controlling land, S&P Rating Services upgraded its outlook for Meritage
from stable to positive and affirmed the Company’s debt ratings of BB-.
Also during the first quarter of 2006, Meritage
repurchased 856,000 shares of its stock, representing approximately 3% of the
Company’s outstanding shares, at an aggregate cost of $49.3 million or an average
price of $57.59 per share. Approximately $86.3 million remains available for additional
share repurchases under the Company’s current authorization.
“Our solid increase in first-quarter earnings, a healthy
backlog, and the increase in active communities positions us to achieve further
growth in 2006 despite a slowing pace of sales in some of our markets,” stated Mr. Landon.
Order backlog value held steady during the quarter at approximately $2.2
billion, a 22% increase year-over-year at March 31, and equates to more
than 70% of the Company’s projected revenue for the remainder of 2006. “A good
portion of our spring selling season lies ahead, and Meritage is well
positioned with 26% more actively selling communities and a more diversified
base than we had one year ago.”
“We continue to monitor and evaluate market conditions.
Based on current conditions, we expect home closing revenue to be up 35-40% on
a year-over-year basis in the second quarter this year, which contributes to reaching
our $3.8-$3.9 billion estimate for the full year, and represents 27-30% growth
over 2005.” Mr. Landon continued, “As prices moderate in certain markets,
and a greater mix of our sales comes from markets with lower margins, we expect
our average margins to trend lower toward more historic levels. Therefore, we
currently project diluted EPS in the range of $2.70-$2.80 next quarter, and maintain
our guidance of $11.25-$11.50 for the year, translating to our 19th consecutive
record year for revenue and net earnings in 2006.”
A conference call will be held Wednesday, April 26,
2006, at 10:00 a.m. EDT to discuss the results of the quarter. The dial-in
number is 800-510-0178, and participants are encouraged to dial in five minutes
before the call begins. A webcast of the call and accompanying materials will
be accessible on the “Investor Relations” page of the Company’s website at
http://www.meritagehomes.com.
A replay of the call will be available after 12:00 p.m.
EDT April 26, 2006, through midnight May 26, 2006, by dialing 888-286-8010,
and referencing passcode 57700829. The webcast replay will be available on the “Investor
Relations” page of the Company’s website, and through CCBN for two weeks
at www.fulldisclosure.com.
3
Meritage
Homes Corporation and Subsidiaries
Operating
Results
(Unaudited)
(In
thousands, except per share data)
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Results
|
|
|
|
|
|
|
Home closing revenue
|
|
$
|
846,374
|
|
$
|
550,947
|
|
|
Land closing revenue
|
|
51
|
|
221
|
|
|
Total closing revenue
|
|
846,425
|
|
551,168
|
|
|
|
|
|
|
|
|
|
Home closing gross
profit
|
|
$
|
214,063
|
|
$
|
119,325
|
|
|
Land closing gross
profit (loss)
|
|
(22
|
)
|
9
|
|
|
Total closing gross
profit
|
|
214,041
|
|
119,334
|
|
|
|
|
|
|
|
|
|
Commissions and other
sales costs
|
|
(48,027
|
)
|
(31,471
|
)
|
|
General and
administrative expenses *
|
|
(42,722
|
)
|
(21,997
|
)
|
|
Other income, net
|
|
7,499
|
|
4,135
|
|
|
Loss on extinguishment
of debt
|
|
—
|
|
(31,280
|
)
|
|
Earnings before
provision for income taxes
|
|
130,791
|
|
38,721
|
|
|
Provision for income taxes
|
|
(51,055
|
)
|
(14,525
|
)
|
|
Net earnings
|
|
$
|
79,736
|
|
$
|
24,196
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Earnings per share
|
|
$
|
2.96
|
|
$
|
0.92
|
|
|
Weighted average shares
outstanding
|
|
26,974
|
|
26,218
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
Earnings per share
|
|
$
|
2.86
|
|
$
|
0.86
|
|
|
Weighted average shares
outstanding
|
|
27,876
|
|
28,184
|
|
|
|
|
|
|
|
|
|
Reconciliation
to exclude one-time charge **:
|
|
|
|
|
|
|
Earnings before
provision for income taxes
|
|
|
|
$
|
38,721
|
|
|
Add: Loss on
extinguishment of debt
|
|
|
|
31,280
|
|
|
Adjusted amounts:
|
|
|
|
|
|
|
Earnings before
provision of income taxes
|
|
|
|
70,001
|
|
|
Provision for income
taxes
|
|
|
|
(26,259
|
)
|
|
Net earnings
|
|
|
|
$
|
43,742
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
$
|
1.67
|
|
|
Diluted earnings per
share
|
|
|
|
$
|
1.55
|
|
* 2006 includes approximately $2.7 million of stock-based compensation
expense related to implementing FAS123R which was not effective in 2005.
** First quarter 2005 bond
refinancing charge related to our repurchase of $276.8 million of our 9.75%
senior notes due 2011. The funds to repurchase these bonds came from our
concurrent issuance of $350.0 million 6.25% senior notes due 2015.
4
Meritage Homes Corporation and
Subsidiaries
Non-GAAP Financial Disclosures
(Unaudited)
(Dollars in Thousands)
|
|
|
Three Months Ended March 31,
|
|
Four Quarters Ended March 31,
|
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
|
EBITDA Reconciliation:(1)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
79,736
|
|
$
|
24,196
|
|
$
|
311,205
|
|
$
|
136,245
|
|
|
Provision for income taxes
|
|
51,055
|
|
14,525
|
|
197,090
|
|
83,771
|
|
|
Interest amortized to cost of sales
|
|
10,744
|
|
7,928
|
|
41,612
|
|
33,473
|
|
|
Depreciation and amortization
|
|
4,873
|
|
3,754
|
|
18,326
|
|
14,240
|
|
|
EBITDA
|
|
$
|
146,408
|
|
$
|
50,403
|
|
$
|
568,233
|
|
$
|
267,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio:(2)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
$
|
568,233
|
|
$
|
267,729
|
|
|
Interest incurred
|
|
|
|
|
|
$
|
44,389
|
|
$
|
40,792
|
|
|
Interest coverage ratio
|
|
|
|
|
|
12.8
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to EBITDA ratio:(3)
|
|
|
|
|
|
|
|
|
|
|
Loans payable and other borrowings
|
|
|
|
|
|
$
|
648,413
|
|
$
|
528,524
|
|
|
EBITDA
|
|
|
|
|
|
$
|
568,233
|
|
$
|
267,729
|
|
|
Debt to EBITDA ratio
|
|
|
|
|
|
1.1
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax stockholder returns: (4)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
$
|
311,205
|
|
$
|
136,245
|
|
|
Average assets
|
|
|
|
|
|
$
|
1,785,990
|
|
$
|
1,213,247
|
|
|
Average equity
|
|
|
|
|
|
$
|
762,744
|
|
$
|
499,955
|
|
|
After-tax return on
assets
|
|
|
|
|
|
17.4
|
%
|
11.2
|
%
|
|
After-tax return on
equity
|
|
|
|
|
|
40.8
|
%
|
27.3
|
%
|
|
|
|
|
|
|
|
March 31, 2006
|
|
March 31, 2005
|
|
|
Net
debt-to-capital: (5)
|
|
|
|
|
|
|
|
|
|
|
Loans payable and other
borrowings
|
|
|
|
|
|
$
|
648,413
|
|
$
|
528,524
|
|
|
Less: cash and cash
equivalents
|
|
|
|
|
|
41,662
|
|
44,828
|
|
|
Net debt
|
|
|
|
|
|
$
|
606,751
|
|
$
|
483,696
|
|
|
Stockholders’ equity
|
|
|
|
|
|
891,540
|
|
620,595
|
|
|
Capital
|
|
|
|
|
|
$
|
1,498,291
|
|
$
|
1,104,291
|
|
|
Net debt-to-capital
|
|
|
|
|
|
40.5
|
%
|
43.8
|
%
|
(1) EBITDA is a non-GAAP
financial measure and represents net earnings before interest expense amortized
to cost of sales, income taxes, depreciation and amortization. A non-GAAP
financial measure is a numerical measure of a company’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 Company; 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.
5
(note 1 continued)
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.
(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) Return on assets is defined as net earnings
for the trailing four quarters divided by the average of beginning and ending
total assets for the same period. Return on equity is defined as net earnings
for the trailing four quarters divided by the average of beginning and ending
stockholders’ equity for the same period.
(5) Net debt-to-capital is calculated as notes
payable and other borrowings less cash and cash equivalents, divided by the sum
of notes payable and other borrowings, less cash and cash equivalents, plus
stockholders’ equity.
Meritage
Homes Corporation and Subsidiaries
Balance
Sheet Data
(Unaudited)
(Dollars
in Thousands)
|
|
|
March 31, 2006
|
|
December 31, 2005
|
|
|
Total assets
|
|
$
|
2,043,826
|
|
$
|
1,971,357
|
|
|
Real estate
|
|
1,502,109
|
|
1,390,803
|
|
|
Cash and cash equivalents
|
|
41,662
|
|
65,812
|
|
|
Total liabilities
|
|
1,152,286
|
|
1,120,352
|
|
|
Loans payable and other borrowings
|
|
648,413
|
|
592,124
|
|
|
Stockholders’ equity
|
|
891,540
|
|
851,005
|
|
|
|
|
|
|
|
|
|
6
Meritage Homes Corporation and Subsidiaries
Operating Data — Unaudited
(in thousands)
|
|
|
As of and for the Three Months
Ended March 31,
|
|
|
|
|
2006
|
|
2005
|
|
|
|
|
Homes
|
|
Value
|
|
Homes
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Closed:
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
952
|
|
$
|
219,084
|
|
717
|
|
$
|
155,955
|
|
|
Arizona
|
|
736
|
|
225,859
|
|
599
|
|
153,955
|
|
|
California
|
|
423
|
|
246,883
|
|
345
|
|
194,487
|
|
|
Nevada
|
|
189
|
|
74,156
|
|
88
|
|
31,189
|
|
|
Florida *
|
|
212
|
|
74,302
|
|
38
|
|
15,361
|
|
|
Colorado
|
|
16
|
|
6,090
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
2,528
|
|
$
|
846,374
|
|
1,787
|
|
$
|
550,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Ordered:
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
1,312
|
|
$
|
315,147
|
|
973
|
|
$
|
212,601
|
|
|
Arizona
|
|
733
|
|
259,810
|
|
925
|
|
272,849
|
|
|
California
|
|
237
|
|
137,356
|
|
474
|
|
288,206
|
|
|
Nevada
|
|
129
|
|
49,408
|
|
129
|
|
46,856
|
|
|
Florida *
|
|
137
|
|
53,903
|
|
138
|
|
60,834
|
|
|
Colorado
|
|
42
|
|
16,994
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
2,590
|
|
$
|
832,618
|
|
2,639
|
|
$
|
881,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order Backlog:
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
2,533
|
|
$
|
605,528
|
|
1,741
|
|
$
|
369,736
|
|
|
Arizona
|
|
2,424
|
|
872,653
|
|
2,317
|
|
656,281
|
|
|
California
|
|
528
|
|
311,437
|
|
824
|
|
484,990
|
|
|
Nevada
|
|
289
|
|
101,652
|
|
278
|
|
94,870
|
|
|
Florida *
|
|
624
|
|
253,848
|
|
467
|
|
175,319
|
|
|
Colorado
|
|
58
|
|
22,726
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
6,456
|
|
$
|
2,167,844
|
|
5,627
|
|
$
|
1,781,196
|
|
|
|
|
1st Qtr 2006
|
|
1st Qtr 2005
|
|
|
|
|
Beg.
|
|
End
|
|
Beg.
|
|
End
|
|
|
Active Communities:
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
108
|
|
100
|
|
89
|
|
90
|
|
|
Arizona
|
|
35
|
|
36
|
|
26
|
|
25
|
|
|
California
|
|
20
|
|
23
|
|
18
|
|
19
|
|
|
Nevada
|
|
6
|
|
6
|
|
6
|
|
7
|
|
|
Florida *
|
|
12
|
|
15
|
|
n/a
|
|
6
|
|
|
Colorado
|
|
3
|
|
5
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
184
|
|
185
|
|
139
|
|
147
|
|
* Results for Florida for the quarter ended March 31,
2005 do not include Greater Homes, acquired in September 2005, and include
Colonial Homes only since acquisition in February 2005.
7
About
Meritage Homes Corporation
Meritage Homes Corporation (NYSE:MTH) is a leader in
the homebuilding industry. The Company is ranked by Builder
magazine as the 13th largest homebuilder in the U.S.; was named to Forbes’ “Platinum 400 - Best Big Companies in America” for
the third consecutive year; moved up the FORTUNE 1000
list the last three years and been on FORTUNE’s “Fastest
Growing Companies in America” list five of the last seven years; and is an
S&P SmallCap 600 company. Meritage operates in fast-growing states of the
southern and western United States, including six of the top 10 single-family
housing markets in the country, and has reported 18 consecutive years of record
revenue and net earnings. For more information about the Company, visit
www.meritagehomes.com. Meritage is a member of the Public Home Builders Council
of America (www.phbca.org).
This press release contains
forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements
include statements concerning S&P’s positive outlook for Meritage, our
expectations of record results In 2006, our estimated revenue, earnings and
diluted EPS for the second quarter and full year 2006, our expectations of
margin trends, our expectation of beneficial results from our diversification
strategy and increased number of communities, and our prospects for the future.
Such statements are based upon a number of assumptions, which are subject to significant risks and uncertainties. These
assumptions may change at any time, and actual results may differ
from those set forth in the forward-looking statements. As
disclosed in this press release and our Form 10-K, demand has moderated in
some of our markets with respect to orders and sales prices, order
cancellations in certain markets have increased, and we expect prices in some
of our other more robust markets will moderate during the remainder of 2006 and
beyond. We are monitoring these developments and potential impacts. To the
extent there is a continued or more pronounced slowdown in one or more of our
significant markets, it could have a material adverse effect on our projections
and results of operations. The Company makes no commitment, and disclaims any
duty, to update or revise any forward-looking statements to reflect future
events or changes in these expectations.
Meritage’s business is subject to a number
of risks and uncertainties, including: fluctuations in demand, pace of sales
orders, cancellation rates and home prices in our markets; interest rates and
changes in the availability and pricing of residential mortgages; a decline in
housing affordability; 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 and Greater Homes, Inc.;
our increased investments in land acquisitions and development joint ventures;
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 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 energy prices or stock
markets; inflation in the cost of materials used to construct our homes; 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, 2005
under the caption “Risk Factors.” As a result of these and other factors, the
Company’s stock and note prices may fluctuate dramatically.
###
8