Exhibit
99.1
|
Contacts:
|
|
Investor
Relations:
|
|
Corporate
Communications:
|
|
|
|
Brent
Anderson
|
|
Jane
Hays
|
|
|
|
Vice
President-Investor Relations
|
|
Vice
President-Corporate Communications
|
|
|
|
(972)
543-8207
|
|
(972)
543-8123
|
MERITAGE HOMES REPORTS FOURTH QUARTER AND
FISCAL YEAR 2007 RESULTS
FOURTH QUARTER 2007 OPERATING HIGHLIGHTS:
|
·
|
Generated significant
cash flow from operations and reduced debt by $153M
|
|
·
|
Reduced spec inventory
units by 10%, despite a 47% cancellation rate
|
|
·
|
Reduced total lot
supply by 16% from September 30 to 26,115 lots at year-end, down 52%
from peak
|
|
·
|
Reduced G&A costs
by $17M to 3.1% of revenue, excluding non-cash expense of $11M due to stock
options tendered and cancelled
|
|
·
|
Operated profitably,
excluding primarily non-cash, pre-tax charges of: $130M for real estate and
joint venture valuation adjustments, $3M impairments of golf course assets
held for sale, $58M for goodwill write-offs and $11M due to stock options
tender expense
|
FULL YEAR 2007 HIGHLIGHTS:
|
·
|
Generated significant
cash flow in the second half of 2007
|
|
·
|
Maintained compliance
with all debt covenants at December 31, 2007
|
|
·
|
Amended credit facility
in September 2007 to improve flexibility
|
|
·
|
Net debt-to-capital
ratio of 49% at December 31, 2007; available borrowing capacity of $381M
|
|
·
|
Operated profitably for
the year, excluding primarily non-cash, pre-tax charges of: $398M for real
estate and joint venture valuation adjustments, $130M for goodwill write-offs
and other fourth quarter charges
|
|
|
|
|
|
Scottsdale,
Arizona (January 28, 2008) – Meritage Homes Corporation (NYSE: MTH)
today announced fourth quarter and fiscal year results for the periods ended December 31,
2007.
Summary Operating Results
(Unaudited)
(Dollars in thousands, except per
share amounts)
|
|
|
Three Months Ended Dec. 31,
|
|
Fiscal Years Ended Dec. 31,
|
|
|
|
|
2007
|
|
2006
|
|
% Chg
|
|
2007
|
|
2006
|
|
% Chg
|
|
|
Homes closed (units)
|
|
2,139
|
|
2,601
|
|
-18
|
%
|
7,687
|
|
10,487
|
|
-27
|
%
|
|
Home closing revenue
|
|
$
|
615,611
|
|
$
|
819,318
|
|
-25
|
%
|
$
|
2,334,141
|
|
$
|
3,444,286
|
|
-32
|
%
|
|
Sales orders (units)
|
|
1,048
|
|
1,202
|
|
-13
|
%
|
6,290
|
|
7,778
|
|
-19
|
%
|
|
Sales order value
|
|
$
|
271,617
|
|
$
|
354,539
|
|
-23
|
%
|
$
|
1,804,065
|
|
$
|
2,462,747
|
|
-27
|
%
|
|
Ending backlog (units)
|
|
|
|
|
|
|
|
2,288
|
|
3,685
|
|
-38
|
%
|
|
Ending backlog value
|
|
|
|
|
|
|
|
$
|
669,985
|
|
$
|
1,200,061
|
|
-44
|
%
|
|
Net (loss)/earnings* (including write-offs)
|
|
$
|
(128,839
|
)
|
$
|
9,024
|
|
n/m
|
|
$
|
(288,851
|
)
|
$
|
225,354
|
|
n/m
|
|
|
Adjusted net earnings * (excluding write-offs)
|
|
4,076
|
|
$
|
50,540
|
|
n/m
|
|
55,364
|
|
$
|
273,809
|
|
n/m
|
|
|
Diluted EPS (including write-offs)
|
|
$
|
(4.91
|
)
|
$
|
0.34
|
|
n/m
|
|
$
|
(11.01
|
)
|
$
|
8.32
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See
non-GAAP reconciliation between net (loss)/earnings and adjusted net earnings
on “Operating Results” table, page 7.
(n/m =
not meaningful)
Fourth
quarter operating results
Meritage reported a net loss for the fourth quarter 2007 of $129
million, or ($4.91) per share, compared to net earnings of $9 million, or $0.34
per diluted share, in the fourth quarter 2006. The fourth quarter net loss
included $130 million of pre-tax real estate-related and joint venture
valuation adjustments ($48 million for terminated projects, $36 million for
write-downs of inventory on continuing projects, $12 million for land held for sale,
and $34 million for joint venture impairments,) and $58 million of pre-tax
goodwill write-offs. The Company also incurred an $11 million non-cash pre-tax
charge for the acceleration of expenses related to the cancellation of employee
stock options in connection with a tender offer, and a $3 million impairment of
golf course assets held for sale. By comparison, the fourth quarter of 2006
included a pre-tax charge of $63 million solely related to real estate-related
valuation adjustments.
Fourth quarter 2007 home closing revenue declined 25% year over year
due to an 18% decline in homes closed and a 9% decline in average closing price.
Arizona had the largest decline in home closings
(-44%) due to a reduced active community count, a more competitive selling environment and
difficult comparisons to the fourth quarter 2006, when closings in Arizona were
only 13% lower than their peak in the fourth quarter 2005. Conversely, home
closings in California (-9%), Florida (-20%) and Nevada (+6%) experienced less
severe declines (or reflected improvements), benefiting from easier comparisons
to the prior year. These markets were some of the first to slow, and reported
much larger declines a year ago.
Fourth quarter homebuilding gross margins narrowed due to lower selling
prices and real estate-related charges of $84 million in 2007 and $63 million
in 2006. Excluding these charges, adjusted homebuilding gross margins contracted
to 12.1% in 2007 from 19.8% in 2006, reflecting more aggressive price
negotiation. Average sales prices in the
fourth quarter of 2007, as compared to the fourth quarter of 2006 declined 20%
in Florida, 18% in California, 17% in Nevada and 13% in Arizona, while Texas
ASP increased 5% and Colorado increased 14%, reflecting lower pricing strategy
and changes in the mix between higher and lower priced homes.
General and administrative expenses of $30 million in the fourth
quarter 2007 included an $11 million non-cash charge related to a stock option
tender offer, with no similar expense incurred in 2006. Excluding this item in
2007, management reduced general and administrative expenses by 48% from the
fourth quarter 2006, to 3.1% of fourth quarter 2007 total revenue, from 4.4% of
fourth quarter 2006 total revenue. To date, Meritage has reduced total
headcount by almost 40% since the peak in mid-2006, sizing its operations to
reflect current market conditions. Commissions
and other selling costs were 14% lower than the prior year, although higher as
a percentage of total revenue due to the more competitive selling environment.
2
Significant
progress on plans to strengthen balance sheet and liquidity
“We were very pleased with the progress we made toward strengthening
our balance sheet and improving our liquidity during the fourth quarter,” said
Steven J. Hilton, chairman and CEO of Meritage Homes. “Aggressive sales efforts
reduced our spec home inventory by 10% this quarter, despite high cancellation
rates that negatively impacted our net sales and inventory reductions, while
stronger seasonal closing activity reduced our pre-sold inventory. We reduced lot
purchases under options by about $55 million, acquiring approximately 650 fewer
lots in the fourth quarter than we did in the third. These purchases were generally in communities
that had limited owned-lot inventory, and additional lots were needed to
continue home sales that are generating acceptable margins. We also reduced our
active community count slightly from last quarter to 220 at year end.”
“These actions resulted in significant positive cash flow from
operations this quarter and allowed us to reduce our bank debt by $153 million,
to a balance of $82 million at December 31. We plan to continue aggressively
targeting spec sales and limiting lot purchases wherever possible, with a goal
of reducing our credit facility debt to a zero balance by the third quarter of
this year, and then start accumulating cash reserves.”
Mr. Hilton continued, “We cancelled options on almost 4,500
additional lots this quarter, reducing our total lot supply to 26,115 at
year-end — a 52% reduction from our peak in the third quarter 2005.
Accordingly, we’ve reduced our cash option deposits to $87 million — half of their
balance at the end of 2006. A large portion of our lot supply is in Texas, where
the homebuilding markets have been stronger than in other parts of the country
and where the terms on developer options are more flexible than land bank
options. Texas accounts for nearly two-thirds
of our optioned lots, almost 40% of option deposits, and more than a third of
our owned lots. Of our total lots under
control at December 31, 2007, we own about 40% and option about 60%. Our owned percentage has increased mainly as
we have reduced the number of our lots controlled through options by almost 70%
from peak levels mainly from option terminations as the housing market has
slowed.
“Although impairments may continue to occur due to changes in market
conditions, based on the relatively stronger Texas market and the significant
impairments and option terminations we have already taken in other markets, we
believe the great majority of the impairments are behind us.
“We reduced our investment in joint ventures to $27 million at year-end
2007, and believe we have little additional contingent off-balance-sheet exposure
in our remaining JV’s as their debt is generally non-recourse to us, and because
we believe the risks associated with ‘bad boy’ guarantees are minimal since the
triggering event is typically controlled by us, and our exposure under other
guarantees is not significant,” he concluded.
The Company was in compliance with all its debt covenants at year-end,
and had available borrowing capacity of $381 million under its revolving $800
million credit facility at December 31, 2007, after considering the
facility’s borrowing base availability and most restrictive covenants. Interest
coverage ratio was 2.3 times interest incurred, based on trailing four quarters’
adjusted EBITDA.
3
Net debt-to-capital ratio was 49% as of December 31, 2007,
compared to 40% at December 31, 2006, despite a slight reduction in total
debt, as the 2007 net loss reduced Meritage’s book equity. The Company’s credit
facility extends through 2011 and the earliest maturity date on its long-term
debt bonds is in 2014.
“Our primary focus in 2008 is to strengthen our balance sheet and
maintain liquidity,” said Mr. Hilton. “Our sales teams are focused on aggressively
selling spec inventory, and we plan to further reduce our inventory of owned
lots by purchasing fewer lots than our planned sales and starts. We have also received
over $24 million in tax refunds thus far in 2008 and expect to receive approximately
$52 million of additional tax refunds in the first quarter of this year, as we carry
back our 2007 losses and recover taxes paid in 2005. The anticipated tax refund
is already reflected in our receivables balance. We expect to trigger the
realization, for tax purposes, of our $141 million deferred tax asset in 2008
and beyond, and we currently believe this asset is recoverable. Considering
these plans, we look forward to reporting further progress in generating cash
and reducing our debt in the coming quarters.”
Full year
operating results
Meritage reported a net loss of $289 million, or ($11.01) per share,
for the full year 2007, compared to net earnings of $225 million, or $8.32 per
diluted share, for the full year 2006. The 2007 loss was the result of primarily
non-cash pre-tax real estate-related and joint venture valuation adjustments of
$398 million, a non-cash $3 million impairment of golf course assets,
goodwill-related write-offs of $130 million and a non-cash $11 million charge related
to stock options tender expense, which together reduced net earnings by $344
million after the effect of taxes.
Full year home closing revenue for 2007 was $2.3 billion, nearly
one-third lower than the all-time record year reported by Meritage in 2006 for
home closings and revenue. The decline in home closing revenue was due to an 8%
decline in average sale prices, compounding a 27% drop in homes sold. The
states that experienced the greatest declines in closings for the year were Nevada (-58%) and Arizona (-49%), while
Texas closings declined only 2% year over year and Colorado closings increased
43% as it builds from its start-up in 2006.
Net orders for the full year 2007 fell 19% due to turmoil in the mortgage
and credit markets, rising inventories and intense pricing competition. While
year over year comparisons were negative, the rates of decline in home sales
slowed in most of Meritage’s divisions over the last two quarters.
Backlog value was down 44% from 2006 at December 31, 2007, with a
10% decline in average sale price on 38% fewer homes in backlog, reflecting
conversions to 2007 closings and high cancellations. Lower homes in backlog in
Arizona (-57%), Texas (-33%) and Florida (-40%) accounted for most of the
absolute decline in backlog.
Mr. Hilton noted, “We have yet to see signs of stabilization in
home prices, which we believe is necessary for buyers to regain confidence that
their home purchase will retain its value. We are looking for prices, sales and
cancellation rates to hold steady and begin to improve to signal the start of a
recovery.
4
Until then, we plan to
continue to operate conservatively, protecting our balance sheet and maintaining
liquidity to weather the downturn.”
Summary
and future outlook
“This has been the most difficult year we’ve experienced in
homebuilding in more than 25 years, and we currently expect 2008 will also be
challenging,” said Mr. Hilton. “Despite the difficult homebuilding
environment, I’m proud of the progress we were able to achieve on our operational
plans, and on other non-financial objectives. We reduced our spec inventory and
lots under control, continued to shrink overhead costs and generated significant
positive cash flow in the second half of 2007.
“We also improved our sales training, marketing and customer relations,
including significant increases in our customer satisfaction ratings during
2007. We completed the implementation of new management software across all
divisions, recognized substantial savings in purchasing, and made many
improvements in our human resources and benefits systems. Each of these
improved our organizational efficiency or abilities to better serve our
customers.
“I appreciate the efforts of our employees who have worked so
diligently to address the daily challenges and opportunities we face, with an
optimistic attitude toward better times ahead,” Mr. Hilton concluded. “We
are committed to protecting shareholder value as we manage the Company through
this downturn, delivering high quality homes and meeting the expectations of
our buyers, to strengthen Meritage’s position for the future.”
Conference
call and webcast
The Company will host a conference call and webcast on January 29,
2008, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to discuss
fourth quarter and full year 2007 results. The conference call will be webcast
by B2i and available through the “Investor Relations” page of the Company’s
web site at http://www.meritagehomes.com. For telephone participants, the
dial-in number is 800-374-0113 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 3:00 p.m. EST January 29, 2008, through
midnight February 29, 2008 on the website noted above, or by dialing
800-642-1687, and referencing passcode 30747642.
5
Meritage
Homes Corporation and Subsidiaries
Operating
Results
(Unaudited)
(In
thousands, except per share data)
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
|
Home closing revenue
|
|
$
|
615,611
|
|
$
|
819,318
|
|
$
|
2,334,141
|
|
$
|
3,444,286
|
|
|
Land closing revenue
|
|
3,297
|
|
1,875
|
|
9,453
|
|
17,034
|
|
|
Total closing revenue
|
|
618,908
|
|
821,193
|
|
2,343,594
|
|
3,461,320
|
|
|
Home closing gross (loss)/profit
|
|
(9,321
|
)
|
100,671
|
|
28,135
|
|
711,988
|
|
|
Land closing gross (loss)/profit
|
|
(11,690
|
)
|
(708
|
)
|
(12,089
|
)
|
642
|
|
|
Total closing gross (loss)/profit
|
|
(21,011
|
)
|
99,963
|
|
16,046
|
|
712,630
|
|
|
Commissions and other sales costs
|
|
(51,461
|
)
|
(59,531
|
)
|
(196,464
|
)
|
(216,341
|
)
|
|
General and administrative expenses (1)
|
|
(29,776
|
)
|
(36,064
|
)
|
(106,161
|
)
|
(164,477
|
)
|
|
Goodwill-related impairments
|
|
(57,538
|
)
|
—
|
|
(130,490
|
)
|
—
|
|
|
Interest expense
|
|
(4,601
|
)
|
—
|
|
(6,745
|
)
|
—
|
|
|
Other (expense)/income, net (2)
|
|
(30,092
|
)
|
9,253
|
|
(29,668
|
)
|
32,197
|
|
|
(Loss)/earnings before provision for income taxes
|
|
(194,479
|
)
|
13,621
|
|
(453,482
|
)
|
364,009
|
|
|
Benefit/(provision) for income taxes
|
|
65,640
|
|
(4,597
|
)
|
164,631
|
|
(138,655
|
)
|
|
Net (loss)/earnings
|
|
(128,839
|
)
|
9,024
|
|
(288,851
|
)
|
225,354
|
|
|
(Loss)/earnings per share
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share
|
|
$
|
(4.91
|
)
|
$
|
0.35
|
|
$
|
(11.01
|
)
|
$
|
8.52
|
|
|
Weighted average shares outstanding
|
|
26,250
|
|
26,133
|
|
26,225
|
|
26,448
|
|
|
Assuming dilution:
|
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share
|
|
$
|
(4.91
|
)
|
$
|
0.34
|
|
$
|
(11.01
|
)
|
$
|
8.32
|
|
|
Weighted average shares outstanding
|
|
26,250
|
|
26,557
|
|
26,225
|
|
27,102
|
|
|
(1)
|
General
and administrative expenses include the following:
|
|
Severance-related expenses
|
|
$
|
616
|
|
$
|
599
|
|
$
|
3,075
|
|
$
|
13,361
|
|
|
Non-cash stock option tender expense
|
|
$
|
10,866
|
|
$
|
—
|
|
$
|
10,866
|
|
$
|
—
|
|
|
(2)
|
Other
income includes joint venture and golf course asset impairments as discussed
in the non-GAAP reconciliations on the following page.
|
6
Meritage
Homes Corporation and Subsidiaries
Operating
Results
(Unaudited)
(In
thousands, except per share data)
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
Non-GAAP Reconciliations:
|
|
|
|
|
|
|
|
|
|
|
Total closing gross (loss)/profit
|
|
$
|
(21,011
|
)
|
$
|
99,963
|
|
$
|
16,046
|
|
$
|
712,630
|
|
|
Add: Real estate-related impairments
|
|
|
|
|
|
|
|
|
|
|
Terminated lot options/land sales
|
|
60,068
|
|
47,128
|
|
144,752
|
|
54,598
|
|
|
Impaired projects
|
|
36,006
|
|
15,537
|
|
195,606
|
|
23,670
|
|
|
Adjusted closing gross profit
|
|
$
|
75,063
|
|
$
|
162,628
|
|
$
|
356,404
|
|
$
|
790,898
|
|
|
(Loss)/earnings before provision for income taxes
|
|
$
|
(194,479
|
)
|
$
|
13,621
|
|
$
|
(453,482
|
)
|
$
|
364,009
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Real estate-related impairments
|
|
|
|
|
|
|
|
|
|
|
Terminated lot options/land sales
|
|
60,068
|
|
47,128
|
|
144,752
|
|
54,598
|
|
|
Impaired projects
|
|
36,006
|
|
15,537
|
|
195,606
|
|
23,670
|
|
|
Joint venture impairments
|
|
33,451
|
|
—
|
|
57,940
|
|
—
|
|
|
Impairment of golf course assets held for sale
|
|
3,124
|
|
—
|
|
3,124
|
|
—
|
|
|
Goodwill-related impairments
|
|
57,538
|
|
—
|
|
130,490
|
|
—
|
|
|
Non-cash stock options tender expense
|
|
10,866
|
|
—
|
|
10,866
|
|
—
|
|
|
Adjusted earnings before provision for income taxes
|
|
6,574
|
|
76,286
|
|
89,296
|
|
442,277
|
|
|
Adjusted provision for income taxes
|
|
(2,498
|
)
|
(25,746
|
)
|
(33,932
|
)
|
(168,468
|
)
|
|
Adjusted net earnings
|
|
$
|
4,076
|
|
$
|
50,540
|
|
$
|
55,364
|
|
$
|
273,809
|
|
7
Meritage
Homes Corporation and Subsidiaries
Non-GAAP
Financial Disclosures
(Unaudited)
(Dollars
in thousands)
|
|
|
Three Months Ended
|
|
As of and for the Four Quarters
Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
EBITDA reconciliation: (1)
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/earnings
|
|
$
|
(128,839
|
)
|
$
|
9,024
|
|
$
|
(288,851
|
)
|
$
|
225,354
|
|
|
(Benefit)/provision for income taxes
|
|
(65,640
|
)
|
4,597
|
|
(164,631
|
)
|
138,655
|
|
|
Interest expensed or amortized to cost of sales
|
|
18,349
|
|
10,199
|
|
48,994
|
|
42,986
|
|
|
Depreciation and amortization
|
|
4,362
|
|
8,457
|
|
17,818
|
|
23,729
|
|
|
EBITDA
|
|
$
|
(171,768
|
)
|
$
|
32,277
|
|
$
|
(386,670
|
)
|
$
|
430,724
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
Real estate-related impairments
|
|
129,525
|
|
62,665
|
|
398,298
|
|
78,268
|
|
|
Impairment of golf course assets held for sale
|
|
3,124
|
|
—
|
|
3,124
|
|
—
|
|
|
Goodwill-related impairments
|
|
57,538
|
|
—
|
|
130,490
|
|
—
|
|
|
Adjusted EBITDA
|
|
$
|
18,419
|
|
$
|
94,942
|
|
$
|
145,242
|
|
$
|
508,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio: (2)
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
$
|
145,242
|
|
$
|
508,992
|
|
|
Interest incurred
|
|
|
|
|
|
62,176
|
|
52,063
|
|
|
Interest coverage ratio
|
|
|
|
|
|
2.3
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt-to-capital: (3)
|
|
|
|
|
|
|
|
|
|
|
Notes payable and other borrowings
|
|
|
|
|
|
$
|
729,875
|
|
$
|
733,276
|
|
|
Less: cash and cash equivalents
|
|
|
|
|
|
(27,677
|
)
|
(56,710
|
)
|
|
Net debt
|
|
|
|
|
|
702,198
|
|
676,566
|
|
|
Stockholders’ equity
|
|
|
|
|
|
730,164
|
|
1,006,832
|
|
|
Capital
|
|
|
|
|
|
$
|
1,432,362
|
|
$
|
1,683,398
|
|
|
Net debt-to-capital
|
|
|
|
|
|
49.0
|
%
|
40.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
EBITDA and adjusted EBITDA are non-GAAP financial measures,
representing net earnings before interest expense amortized to cost of sales,
income taxes, depreciation and amortization, with write-offs and impairment
charges also excluded from adjusted EBITDA. 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 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, it 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 GAAP. Adjusted EBITDA
is presented because it more closely, although not exactly, resembles the
comparable covenant calculations under our revolving credit facility and
senior and senior subordinated note indentures.
|
|
|
(2)
|
Interest coverage ratio as presented is calculated as the trailing
four quarters’ adjusted EBITDA divided by total interest incurred for the
same period. This calculation may differ from our interest coverage ratio as
computed for our credit facility covenant due to additional non-cash
reconciling items, such as stock compensation and tender offer expense.
|
|
|
|
(3)
|
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.
|
8
Meritage
Homes Corporation and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
December 31, 2007
|
|
2007
|
|
December 31, 2006
|
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
27,677
|
|
$
|
45,297
|
|
$
|
56,710
|
|
|
Receivables
|
|
118,591
|
|
93,573
|
|
68,725
|
|
|
Real estate (1)
|
|
1,273,746
|
|
1,504,137
|
|
1,530,602
|
|
|
Investment in unconsolidated entities
|
|
26,563
|
|
57,387
|
|
114,250
|
|
|
Deferred tax assets
|
|
140,970
|
|
110,390
|
|
28,119
|
|
|
Option deposits
|
|
87,191
|
|
106,768
|
|
167,132
|
|
|
Other assets
|
|
76,511
|
|
157,916
|
|
204,987
|
|
|
Total Assets
|
|
$
|
1,751,249
|
|
$
|
2,075,468
|
|
$
|
2,170,525
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Senior notes
|
|
$
|
628,802
|
|
$
|
628,760
|
|
$
|
478,636
|
|
|
Revolving facility
|
|
82,000
|
|
234,500
|
|
226,500
|
|
|
Other borrowings
|
|
19,073
|
|
20,667
|
|
28,140
|
|
|
Accounts payable, accrued liabilities, homebuyer
deposits and other liabilities
|
|
291,210
|
|
338,643
|
|
430,417
|
|
|
Total liabilities
|
|
1,021,085
|
|
1,222,570
|
|
1,163,693
|
|
|
Total stockholders’ equity
|
|
730,164
|
|
852,898
|
|
1,006,832
|
|
|
Total liabilities & stockholders’ equity
|
|
$
|
1,751,249
|
|
$
|
2,075,468
|
|
$
|
2,170,525
|
|
(1) Real
estate assets are comprised of the following:
|
Homes under contract under Construction
|
|
$
|
333,533
|
|
$
|
535,405
|
|
$
|
589,241
|
|
|
Finished homesites and homesites under development
|
|
591,289
|
|
624,098
|
|
592,949
|
|
|
Unsold homes, completed and under Construction
|
|
236,094
|
|
255,334
|
|
271,559
|
|
|
Model homes
|
|
61,171
|
|
59,237
|
|
39,131
|
|
|
Model home lease program
|
|
19,073
|
|
20,667
|
|
26,831
|
|
|
Land held for development
|
|
32,586
|
|
9,396
|
|
10,891
|
|
|
Total real estate
|
|
$
|
1,273,746
|
|
$
|
1,504,137
|
|
$
|
1,530,602
|
|
9
Meritage
Homes Corporation and Subsidiaries
Operating
Data (Unaudited)
(Dollars
in thousands)
|
|
|
For the Three Months Ended December 31,
|
|
|
|
|
2007
|
|
2006
|
|
|
|
|
Homes
|
|
Value
|
|
Homes
|
|
Value
|
|
|
Homes Closed:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
277
|
|
$
|
114,840
|
|
305
|
|
$
|
154,648
|
|
|
Nevada
|
|
87
|
|
27,094
|
|
82
|
|
30,799
|
|
|
West Region
|
|
364
|
|
141,934
|
|
387
|
|
185,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
489
|
|
145,264
|
|
880
|
|
300,289
|
|
|
Texas
|
|
1,140
|
|
283,568
|
|
1,173
|
|
277,343
|
|
|
Colorado
|
|
35
|
|
13,927
|
|
23
|
|
8,026
|
|
|
Central Region
|
|
1,664
|
|
442,759
|
|
2,076
|
|
585,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
111
|
|
30,918
|
|
138
|
|
48,213
|
|
|
East Region
|
|
111
|
|
30,918
|
|
138
|
|
48,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,139
|
|
$
|
615,611
|
|
2,601
|
|
$
|
819,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Ordered:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
132
|
|
$
|
55,904
|
|
151
|
|
$
|
74,127
|
|
|
Nevada
|
|
63
|
|
16,508
|
|
49
|
|
28,575
|
|
|
West Region
|
|
195
|
|
72,412
|
|
200
|
|
102,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
168
|
|
37,608
|
|
329
|
|
91,139
|
|
|
Texas
|
|
573
|
|
134,826
|
|
669
|
|
168,256
|
|
|
Colorado
|
|
23
|
|
7,046
|
|
27
|
|
9,866
|
|
|
Central Region
|
|
764
|
|
179,480
|
|
1,025
|
|
269,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
89
|
|
19,725
|
|
(23
|
)*
|
(17,424
|
)*
|
|
East Region
|
|
89
|
|
19,725
|
|
(23
|
)*
|
(17,424
|
)*
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,048
|
|
$
|
271,617
|
|
1,202
|
|
$
|
354,539
|
|
* Negative
balance represents the total unit/value of home orders cancelled exceeding the unit/value
of total home orders taken.
10
Meritage
Homes Corporation and Subsidiaries
Operating
Data (Unaudited)
(Dollars
in thousands)
|
|
|
As of and for the Years Ended December 31,
|
|
|
|
|
2007
|
|
2006
|
|
|
|
|
Homes
|
|
Value
|
|
Homes
|
|
Value
|
|
|
Homes Closed:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
908
|
|
$
|
421,220
|
|
1,471
|
|
$
|
820,583
|
|
|
Nevada
|
|
261
|
|
88,837
|
|
620
|
|
244,343
|
|
|
West Region
|
|
1,169
|
|
510,057
|
|
2,091
|
|
1,064,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
1,718
|
|
567,888
|
|
3,355
|
|
1,102,662
|
|
|
Texas
|
|
4,164
|
|
1,043,160
|
|
4,263
|
|
996,739
|
|
|
Colorado
|
|
160
|
|
60,069
|
|
112
|
|
40,875
|
|
|
Central Region
|
|
6,042
|
|
1,671,117
|
|
7,730
|
|
2,140,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
476
|
|
152,967
|
|
666
|
|
239,084
|
|
|
East Region
|
|
476
|
|
152,967
|
|
666
|
|
239,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
7,687
|
|
$
|
2,334,141
|
|
10,487
|
|
$
|
3,444,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes Ordered:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
846
|
|
$
|
372,936
|
|
983
|
|
$
|
529,435
|
|
|
Nevada
|
|
268
|
|
85,772
|
|
328
|
|
139,668
|
|
|
West Region
|
|
1,114
|
|
458,708
|
|
1,311
|
|
669,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
1,203
|
|
341,140
|
|
1,833
|
|
611,266
|
|
|
Texas
|
|
3,427
|
|
845,348
|
|
4,299
|
|
1,069,437
|
|
|
Colorado
|
|
168
|
|
59,423
|
|
125
|
|
47,836
|
|
|
Central Region
|
|
4,798
|
|
1,245,911
|
|
6,257
|
|
1,728,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
378
|
|
99,446
|
|
210
|
|
65,105
|
|
|
East Region
|
|
378
|
|
99,446
|
|
210
|
|
65,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
6,290
|
|
$
|
1,804,065
|
|
7,778
|
|
$
|
2,462,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order Backlog:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
164
|
|
$
|
81,532
|
|
226
|
|
$
|
129,816
|
|
|
Nevada
|
|
64
|
|
18,660
|
|
57
|
|
21,725
|
|
|
West Region
|
|
228
|
|
100,192
|
|
283
|
|
151,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
390
|
|
120,558
|
|
905
|
|
347,306
|
|
|
Texas
|
|
1,472
|
|
384,351
|
|
2,209
|
|
582,163
|
|
|
Colorado
|
|
53
|
|
18,137
|
|
45
|
|
18,783
|
|
|
Central Region
|
|
1,915
|
|
523,046
|
|
3,159
|
|
948,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
145
|
|
46,747
|
|
243
|
|
100,268
|
|
|
East Region
|
|
145
|
|
46,747
|
|
243
|
|
100,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,288
|
|
$
|
669,985
|
|
3,685
|
|
$
|
1,200,061
|
|
11
Meritage Homes Corporation and Subsidiaries
Operating Data (Unaudited)
|
|
|
Fiscal Year 2007
|
|
Fiscal Year 2006
|
|
|
|
|
Beg.
|
|
End
|
|
Beg.
|
|
End
|
|
|
Active
|
|
|
|
|
|
|
|
|
|
|
Communities:
|
|
|
|
|
|
|
|
|
|
|
California
|
|
26
|
|
27
|
|
20
|
|
26
|
|
|
Nevada
|
|
5
|
|
11
|
|
6
|
|
5
|
|
|
West Region
|
|
31
|
|
38
|
|
26
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona
|
|
42
|
|
36
|
|
35
|
|
42
|
|
|
Texas
|
|
121
|
|
127
|
|
108
|
|
121
|
|
|
Colorado
|
|
6
|
|
6
|
|
3
|
|
6
|
|
|
Central Region
|
|
169
|
|
169
|
|
146
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
13
|
|
13
|
|
12
|
|
13
|
|
|
East Region
|
|
13
|
|
13
|
|
12
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
213
|
|
220
|
|
184
|
|
213
|
|
12
About
Meritage Homes Corporation
Meritage Homes Corporation (NYSE:MTH) builds
primarily single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has active communities
in Houston, Dallas/Ft. Worth, Austin, San Antonio, Phoenix/Scottsdale, Tucson,
Las Vegas, the East Bay/Central Valley and Inland Empire of California, Denver
and Orlando. The Company is ranked by
Builder magazine as the 12th largest homebuilder in the U.S. and ranked #580 on
the 2007 Fortune 1000 list. For more information about the Company, visit
www.meritagehomes.com.
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 Company’s plans or goals for
spec inventory reduction, lot supply reduction, generating positive cash flow
and using it for debt reduction, as well as management’s intention to operate
conservatively, strengthen the balance sheet and improve liquidity to take
advantage of future opportunities; management estimates regarding future
impairments and joint venture exposure; expectations that 2008 will be just as
challenging as 2007; the significance of buyer confidence, home prices, sales
and cancellations signaling a turnaround in the market; and expected impact of
deferred tax assets on future cash outlays. Such statements are based upon the
current beliefs and expectations of Company management and current market
conditions, which are subject to change. Actual results may differ from those set
forth in the forward-looking statements. The Company makes no commitment, and
disclaims any duty, to update 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, competition, sales
orders, cancellation rates and home prices in our markets; potential
write-downs or write-offs of assets or deposits; interest rates and changes in
the availability and pricing of residential mortgages; housing affordability;
our success in locating and negotiating potential acquisitions; successful
integration of acquired operations with existing operations; our investments in
land and development joint ventures; our dependence on key personnel and the
availability of satisfactory subcontractors; materials and labor costs; our
ability to take certain actions because of restrictions contained in the indentures
for our senior and senior subordinated 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
construction defect and home warranty claims; 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; our exposure to obligations under
performance and surety bonds, performance guarantees and letters of credit;
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, 2006, and Form 10-Q for the quarter ended September 30,
2007, under the caption “Risk Factors.” As a result of these and other factors,
the Company’s stock and note prices may fluctuate dramatically.
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