MTH - Meritage Homes reports fourth quarter 2019 results including a 27% increase in orders 80 bps increase in home closing gross margin and 39% increase in diluted EPS

January, 29 2020 04:30 PM Meritage Homes Corporation

SCOTTSDALE, Ariz., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2019.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)


Three Months Ended December 31,

Twelve Months Ended December 31,

2019

2018

% Chg

2019

2018

% Chg
Homes closed (units)
2,830


2,505


13
%

9,267


8,531


9
%
Home closing revenue
$
1,103,741


$
996,063


11
%

$
3,604,629


$
3,474,712


4
%
Average sales price - closings
$
390


$
398


(2
)%

$
389


$
407


(4
)%
Home orders (units)
2,093


1,653


27
%

9,616


8,089


19
%
Home order value
$
804,133


$
644,210


25
%

$
3,683,502


$
3,240,091


14
%
Average sales price - orders
$
384


$
390


(1
)%

$
383


$
401


(4
)%
Ending backlog (units)






2,782


2,433


14
%
Ending backlog value






$
1,098,158


$
1,015,918


8
%
Average sales price - backlog






$
395


$
418


(5
)%
Earnings before income taxes
$
110,535


$
91,776


20
%

$
302,945


$
283,254


7
%
Net earnings
$
103,614


$
75,485


37
%

$
249,663


$
227,332


10
%
Diluted EPS
$
2.65


$
1.91


39
%

$
6.42


$
5.58


15
%

MANAGEMENT COMMENTS
“We delivered another quarter of strong results in the fourth quarter, capping off a solid performance for the full year 2019. The housing market remained strong through a traditionally quiet quarter, and with our strategic shift to entry-level fully implemented, Meritage was well positioned to capitalize on healthy demand, growing our sales volume, improving profitability and strengthening our balance sheet, while also positioning the company for long-term growth," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our fourth quarter results continued the momentum we had achieved over the prior three quarters, producing the strongest quarterly year-over-year growth in orders all year; the highest home closing gross margin, which was very close to our underwriting target; the most efficient overhead leverage; and nearly a 40% increase in diluted earnings per share.

“Our total orders for new homes increased 27% in the fourth quarter year-over-year, driven by a 37% increase in absorptions and benefiting from our strategic focus on delivering more affordable homes. Home closing revenue was up 11% and our home closing gross margin improved 80 bps due to the efficiencies we’re realizing from streamlining and simplifying our operations,” he continued. “Total SG&A expenses as a percentage of home closing revenue were 50 bps lower year-over-year and our net earnings increased 37% with the benefit of energy tax credits recognized retroactively for two years after their renewal and extension in December of 2019. We used positive cash flow from operations to retire $300 million of debt, reducing our net debt to capital ratio to 26.2%, while also securing more than 6,800 additional lots in the fourth quarter for future growth and ending the year with $319 million in cash.

“Our LiVE.NOW.® homes for value-conscious buyers and our innovative approach to interior personalization with our Studio M® Design Collections for first move-up buyers are delivering what home buyers want, while also providing efficiencies for Meritage that translate to improved profitability,” Mr. Hilton explained. “Absorptions in our LiVE.NOW. communities are significantly out-pacing traditional move-up communities, with equal or better margins.”

He concluded, “Based on our expectation that economic drivers remain positive for housing demand, and our ability to deliver homes that provide great value at lower price points for the broadest sectors of homebuyers, we feel we are well positioned to drive future growth and success. We secured more than 18,000 new lots in 2019, compared to approximately 10,000 in 2018, greatly expanding our pipeline for community count growth and positioning us to deliver strong volume growth as those communities are opened and begin selling over the next 4-6 quarters. We believe we can grow earnings faster than our top-line growth in 2020, leveraging the operating improvements we’ve made over the past few years while continuing to expand and refine them. For the full year 2020, we are projecting 9,700-10,200 total home closings and ASP’s between $360-370,000, with home closing gross margin in the mid-19’s percent and a tax rate of approximately 22%.”

FOURTH QUARTER RESULTS

Total orders for the fourth quarter of 2019 increased 27% year-over-year, driven by a 37% year-over-year increase in absorptions, largely due to strong demand for Meritage’s entry-level priced LiVE.NOW. homes. Higher absorptions offset an 8% year-over-year decline in average community count for the fourth quarter, resulting from early close-outs of communities in 2019. Absorptions were up 38% in the West region, 46% in the Central and 29% in the East region, demonstrating broad strength across Meritage’s markets. As a result of the Company's strategic product shift to lower-priced homes, fourth quarter average sales price (ASP) on orders and ending backlog were down 1% and 5%, respectively, compared to 2018.
The 11% increase in home closing revenue for the quarter reflected a 13% increase in home closing volume, partially offset by a 2% reduction in ASP due to the Company’s strategic shift toward more affordable homes. Both West and East regions’ home closing revenues were up 19% year-over-year, while Central region home closing revenue was 8% lower in 2019 than 2018, primarily due to fewer active communities open in the fourth quarter of 2019.
Home closing gross margin improved 80 bps to 19.8% from 19.0% a year ago, contributing to a 16% increase in total home closing gross profit over the prior year's fourth quarter. Fourth quarter 2019 gross margin was reduced by $3.1 million of inventory write-downs. Excluding real estate write-downs in both years ($0.9 million in 2018), home closing gross margins were 20.1% for the fourth quarter of 2019 and 19.1% for the fourth quarter of 2018.
Earnings from financial services unconsolidated were $3.7 million lower in the fourth quarter of 2019 compared to 2018 due to a change in the structure of customer incentives offered by the Company's mortgage joint venture. The benefits from those incentives are now captured as part of home closing revenue rather than financial services earnings.
Selling, general and administrative expenses (SG&A) totaled 10.1% of fourth quarter 2019 home closing revenue, a 50 bps reduction compared to 10.6% in the fourth quarter of 2018.
Fourth quarter 2019 also included a $5.6 million loss on early extinguishment of debt related to the early redemption of $300 million notes due 2020.
Fourth quarter 2019 pre-tax earnings margin increased 60 bps to 9.7% compared to 9.1% in 2018, reflecting increases in home closing gross margins and improved overhead leverage.
Income taxes were reduced by approximately $20 million from energy tax credits on qualified homes closed in 2018 and 2019 pursuant to the retroactive renewal and extension of such tax credits through 2020, which was approved by Congress in December 2019.
Net earnings increased 37% to $103.6 million ($2.65 per diluted share) for the fourth quarter of 2019, compared to $75.5 million ($1.91 per diluted share) for the fourth quarter of 2018, also benefiting from retroactive energy tax credits recorded in 2019.

FULL YEAR RESULTS

Total orders for the full year 2019 increased 19% year-over-year, as absorptions increased to 37.3 for the year (approximately 3.1 per month) in 2019, over 31.4 (approximately 2.6 per month) for 2018. The 19% increase in absorptions was primarily driven by the shift toward more entry-level communities, which sell at a higher pace. At year-end 2019, entry-level communities made up 47% of total communities, compared to 33% at the end of 2018.
Home closings for the full year were up 9% over 2018, while ASP on closings was 4% lower than the previous year due to the shift toward more affordable homes, resulting in a net 4% increase in total home closing revenue for the year.
Home closing gross margin increased to 18.9% for the full year 2019 compared to 18.2% in 2018, which drove an 8% increase in total home closing gross profit for the full year of 2019. Excluding real estate write-downs in both years ($3.2 million in 2019 and $2.2 million in 2018), home closing gross margin was 19.0% in 2019 and 18.3% in 2018.
SG&A expenses as a percentage of home closing revenue for the full year were flat at 10.9% in both 2019 and 2018, as leverage and operating efficiencies in 2019 were partially offset by costs associated with the start-up and operation of our Studio M design studios, in addition to severance expenses and accelerated equity compensation expense taken in the first quarter of 2019 as a result of changes in tax rules.
Interest expense increased $7.6 million year-over-year, primarily due to less interest capitalizable to assets under development in 2019, reflecting shortened construction cycle times and faster inventory turnover.
Other income (net) decreased by $1.6 million in 2019 primarily due to 2018 including a $4.8 million favorable legal settlement related to a previous joint venture in Nevada.
Net earnings of $249.7 million ($6.42 per diluted share) increased 10% (15% for diluted EPS) for the full year of 2019, compared to $227.3 million ($5.58 per diluted share) in 2018. Increases in home closing revenue and gross margin year-to-date in 2019 were partially offset by higher interest expense and the $5.6 million charge for early extinguishment of debt in the fourth quarter of 2019, resulting in a net 7% increase in earnings before income taxes. The effective tax rate for the full year 2019 was 18%, compared to 20% in 2018, reflecting the benefit of the retroactive energy tax credits renewed in 2019. Full year diluted EPS also increased due to a 5% reduction in weighted average shares outstanding, as compared to 2018, resulting from share repurchases in late 2018 and early 2019.

BALANCE SHEET

Cash and cash equivalents at December 31, 2019 totaled $319.5 million, compared to $311.5 million at December 31, 2018.
Positive cash flow from operations was used for the early redemption in December 2019 of $300 million of 7.15% senior notes due in 2020.
Total real estate assets was relatively flat at approximately $2.7 billion at December 31, 2019, as homes under construction increased to provide additional entry-level spec inventory for sale and quick move-in, consistent with the Company’s strategy, and were offset by declines in land inventory, which is expected to be replenished with additional newly-contracted lots.
Meritage ended the fourth quarter of 2019 with approximately 41,400 total lots owned or under control, compared to approximately 34,600 total lots at December 31, 2018, with over 6,800 lots added for approximately 46 new communities in the fourth quarter of 2019 alone. Approximately 85% of the lots added during 2019 were in LiVE.NOW. communities for entry-level homes.
Debt-to-capital ratios decreased to 34.0% at December 31, 2019 from 43.2% at December 31, 2018, and net debt-to-capital ratio declined to 26.2% at year-end 2019 from 36.7% at year-end 2018.

CONFERENCE CALL
Management will host a conference call to discuss the results at 7:30 a.m. Arizona Time (9:30 a.m. Eastern Time) on Thursday, January 30. The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants can avoid delays by preregistering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10137933.

Telephone participants who are unable to preregister may dial into 1-866-226-4948 US toll free on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 toll free for Canada.

A replay of the call will be available beginning at approximately 12:00 p.m. ET on January 30 and extending through February 13, 2020, on the website noted above or by dialing 1-877-344-7529 US toll free, 1-412-317-0088 for international or 1-855-669-9658 toll free for Canada, and referencing conference number 10137933.

Contacts:

Brent Anderson, VP Investor Relations

(972) 580-6360 (office)

investors@meritagehomes.com

Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)



Three Months Ended December 31,


2019

2018

Change $

Change %
Homebuilding:








Home closing revenue
$
1,103,741



$
996,063



$
107,678



11
%

Land closing revenue
33,107



12,716



20,391



160
%

Total closing revenue
1,136,848



1,008,779



128,069



13
%

Cost of home closings
(884,778
)


(806,550
)


(78,228
)


10
%

Cost of land closings
(32,750
)


(13,541
)


(19,209
)


142
%

Total cost of closings
(917,528
)


(820,091
)


(97,437
)


12
%

Home closing gross profit
218,963



189,513



29,450



16
%

Land closing gross profit/(loss)
357



(825
)


1,182



143
%

Total closing gross profit
219,320



188,688



30,632



16
%
Financial Services:








Revenue
4,756



4,412



344



8
%

Expense
(1,832
)


(1,618
)


(214
)


13
%

Earnings from financial services unconsolidated entities and other, net
1,340



5,058



(3,718
)


(74
)%

Financial services profit
4,264



7,852



(3,588
)


(46
)%
Commissions and other sales costs
(70,598
)


(68,040
)


(2,558
)


4
%
General and administrative expenses
(40,557
)


(37,474
)


(3,083
)


8
%
Interest expense
(20
)


(552
)


532



(96
)%
Other income, net
3,761



1,302



2,459



189
%
Loss on early extinguishment of debt
(5,635
)


—



(5,635
)


n/a
Earnings before income taxes
110,535



91,776



18,759



20
%
Provision for income taxes
(6,921
)


(16,291
)


9,370



(58
)%
Net earnings
$
103,614



$
75,485



$
28,129



37
%








Earnings per common share:








Basic




Change $ or shares

Change %

Earnings per common share
$
2.71



$
1.93



$
0.78



40
%

Weighted average shares outstanding
38,252



39,026



(774
)


(2
)%

Diluted








Earnings per common share
$
2.65



$
1.91



$
0.74



39
%

Weighted average shares outstanding
39,137



39,575



(438
)


(1
)%

Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)



Twelve Months Ended December 31,


2019

2018

Change $

Change %
Homebuilding:








Home closing revenue
$
3,604,629



$
3,474,712



$
129,917



4
%

Land closing revenue
45,854



38,707



7,147



18
%

Total closing revenue
3,650,483



3,513,419



137,064



4
%

Cost of home closings
(2,923,969
)


(2,842,762
)


(81,207
)


3
%

Cost of land closings
(46,899
)


(41,504
)


(5,395
)


13
%

Total cost of closings
(2,970,868
)


(2,884,266
)


(86,602
)


3
%

Home closing gross profit
680,660



631,950



48,710



8
%

Land closing (loss)/gross profit
(1,045
)


(2,797
)


1,752



63
%

Total closing gross profit
679,615



629,153



50,462



8
%
Financial Services:








Revenue
16,461



15,162



1,299



9
%

Expense
(6,781
)


(6,454
)


(327
)


5
%

Earnings from financial services unconsolidated entities and other, net
10,899



15,336



(4,437
)


(29
)%

Financial services profit
20,579



24,044



(3,465
)


(14
)%
Commissions and other sales costs
(246,728
)


(241,897
)


(4,831
)


2
%
General and administrative expenses
(146,093
)


(138,478
)


(7,615
)


5
%
Interest expense
(8,370
)


(785
)


(7,585
)


n/m
Other income, net
9,577



11,217



(1,640
)


(15
)%
Loss on early extinguishment of debt
(5,635
)


—



(5,635
)


n/a
Earnings before income taxes
302,945



283,254



19,691



7
%
Provision for income taxes
(53,282
)


(55,922
)


2,640



(5
)%
Net earnings
$
249,663



$
227,332



$
22,331



10
%








Earnings per common share:








Basic




Change $ or shares

Change %

Earnings per common share
$
6.55



$
5.67



$
0.88



16
%

Weighted average shares outstanding
38,100



40,107



(2,007
)


(5
)%

Diluted








Earnings per common share
$
6.42



$
5.58



$
0.84



15
%

Weighted average shares outstanding
38,891



40,728



(1,837
)


(5
)%

Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)



December 31, 2019

December 31, 2018
Assets:




Cash and cash equivalents

$
319,466


$
311,466

Other receivables

88,492


77,285

Real estate ⁽¹⁾

2,744,361


2,742,621

Deposits on real estate under option or contract

50,901


51,410

Investments in unconsolidated entities

4,443


17,480

Property and equipment, net

50,606


54,596

Deferred tax asset

25,917


26,465

Prepaids, other assets and goodwill

114,063


84,156

Total assets

$
3,398,249


$
3,365,479

Liabilities:




Accounts payable

$
155,024


$
128,169

Accrued liabilities

226,008


177,862

Home sale deposits

24,246


28,636

Loans payable and other borrowings

22,876


14,773

Senior notes

996,105


1,295,284

Total liabilities

1,424,259


1,644,724

Stockholders' Equity:




Preferred stock

—


—

Common stock

382


381

Additional paid-in capital

505,352


501,781

Retained earnings

1,468,256


1,218,593

Total stockholders’ equity

1,973,990


1,720,755

Total liabilities and stockholders’ equity

$
3,398,249


$
3,365,479

⁽¹⁾ Real estate – Allocated costs:




Homes under contract under construction

$
564,762


$
480,143

Unsold homes, completed and under construction

686,948


644,717

Model homes

121,340


146,327

Finished home sites and home sites under development

1,371,311


1,471,434

Total real estate

$
2,744,361


$
2,742,621

Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):


Three Months Ended December 31,

Twelve Months Ended December 31,

2019

2018

2019

2018
Depreciation and amortization
$
8,370


$
7,508


$
27,923


$
26,966









Summary of Capitalized Interest:







Capitalized interest, beginning of period
$
88,195


$
88,064


$
88,454


$
78,564

Interest incurred
19,629


21,490


83,856


85,278

Interest expensed
(20
)

(552
)

(8,370
)

(785
)
Interest amortized to cost of home and land closings
(25,790
)

(20,548
)

(81,926
)

(74,603
)
Capitalized interest, end of period
$
82,014


$
88,454


$
82,014


$
88,454










December 31, 2019

December 31, 2018




Notes payable and other borrowings
$
1,018,981


$
1,310,057





Stockholders' equity
1,973,990


1,720,755





Total capital
2,992,971


3,030,812





Debt-to-capital
34.0
%

43.2
%












Notes payable and other borrowings
$
1,018,981


$
1,310,057





Less: cash and cash equivalents
(319,466
)

(311,466
)




Net debt
699,515


998,591





Stockholders’ equity
1,973,990


1,720,755





Total net capital
$
2,673,505


$
2,719,346





Net debt-to-capital
26.2
%

36.7
%

Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands) (unaudited)



Twelve Months Ended December 31,


2019

2018
Cash flows from operating activities:




Net earnings

$
249,663



$
227,332

Adjustments to reconcile net earnings to net cash provided by operating activities:




Depreciation and amortization

27,923



26,966

Stock-based compensation

19,607



17,170

Loss on early extinguishment of debt

5,635



—

Equity in earnings from unconsolidated entities

(11,945
)


(16,333
)
Deferred tax asset revaluation

—



(2,741
)
Distribution of earnings from unconsolidated entities

13,438



16,142

Other

9,273



15,847

Changes in assets and liabilities:




Decrease/(increase) in real estate

3,621



(19,426
)
Decrease in deposits on real estate under option or contract

453



12,444

(Increase)/decrease in receivables, prepaids and other assets

(9,112
)


3,042

Increase/(decrease) in accounts payable and accrued liabilities

42,654



(12,820
)
Decrease in home sale deposits

(4,390
)


(5,423
)
Net cash provided by operating activities

346,820



262,200

Cash flows from investing activities:




Investments in unconsolidated entities


(1,113
)



(808
)
Distributions of capital from unconsolidated entities

11,550



597

Purchases of property and equipment

(24,385
)


(33,415
)
Proceeds from sales of property and equipment

459



99

Maturities/sales of investments and securities

754



1,181

Payments to purchase investments and securities

(754
)


(1,181
)
Net cash used in investing activities

(13,489
)


(33,527
)
Cash flows from financing activities:




Repayment of loans payable and other borrowings

(3,676
)


(15,755
)
Repayment of senior notes and senior convertible notes

(305,620
)


(175,000
)
Proceeds from issuance of senior notes

—



206,000

Payment of debt issuance costs

—



(3,198
)
Repurchase of shares

(16,035
)


(100,000
)
Net cash used in financing activities

(325,331
)


(87,953
)
Net increase in cash and cash equivalents

8,000



140,720

Beginning cash and cash equivalents

311,466



170,746

Ending cash and cash equivalents

$
319,466



$
311,466

Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)












Three Months Ended


December 31, 2019

December 31, 2018


Homes

Value

Homes

Value
Homes Closed:








Arizona

581


$
187,670


453


$
141,622

California

285


181,307


206


144,179

Colorado

204


102,989


212


111,461

West Region

1,070


471,966


871


397,262

Texas

800


273,566


836


298,824

Central Region

800


273,566


836


298,824

Florida

372


147,227


317


126,136

Georgia

147


51,052


152


54,732

North Carolina

265


98,769


166


63,078

South Carolina

70


21,858


98


32,011

Tennessee

106


39,303


65


24,020

East Region

960


358,209


798


299,977

Total

2,830


$
1,103,741


2,505


$
996,063










Homes Ordered:








Arizona

354


$
115,404


300


$
98,290

California

231


143,573


109


72,227

Colorado

142


71,276


116


60,398

West Region

727


330,253


525


230,915

Texas

697


232,644


591


209,787

Central Region

697


232,644


591


209,787

Florida

255


97,025


190


79,632

Georgia

106


37,004


94


32,413

North Carolina

207


73,999


149


55,929

South Carolina

49


14,785


66


20,652

Tennessee

52


18,423


38


14,882

East Region

669


241,236


537


203,508

Total

2,093


$
804,133


1,653


$
644,210

Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)



Twelve Months Ended


December 31, 2019

December 31, 2018


Homes

Value

Homes

Value
Homes Closed:








Arizona

1,707


$
556,432


1,505


$
485,867

California

749


486,153


849


588,975

Colorado

711


367,468


628


342,984

West Region

3,167


1,410,053


2,982


1,417,826

Texas

2,976


1,033,755


2,840


1,006,221

Central Region

2,976


1,033,755


2,840


1,006,221

Florida

1,181


468,591


1,078


455,292

Georgia

527


183,492


468


161,969

North Carolina

823


303,635


654


254,207

South Carolina

272


88,371


309


104,622

Tennessee

321


116,732


200


74,575

East Region

3,124


1,160,821


2,709


1,050,665

Total

9,267


$
3,604,629


8,531


$
3,474,712










Homes Ordered:








Arizona

1,875


$
608,795


1,522


$
499,353

California

803


511,767


622


432,134

Colorado

722


361,336


614


331,389

West Region

3,400


1,481,898


2,758


1,262,876

Texas

3,043


1,031,937


2,801


995,473

Central Region

3,043


1,031,937


2,801


995,473

Florida

1,180


466,528


1,004


422,925

Georgia

537


186,735


440


157,706

North Carolina

865


315,572


588


224,552

South Carolina

254


80,325


299


101,426

Tennessee

337


120,507


199


75,133

East Region

3,173


1,169,667


2,530


981,742

Total

9,616


$
3,683,502


8,089


$
3,240,091










Order Backlog:








Arizona

511


$
186,194


343


$
133,567

California

145


92,171


91


66,391

Colorado

196


97,508


185


103,470

West Region

852


375,873


619


303,428

Texas

1,048


372,520


981


372,826

Central Region

1,048


372,520


981


372,826

Florida

371


163,385


372


164,728

Georgia

133


49,742


123


46,344

North Carolina

219


79,446


177


67,316

South Carolina

71


24,427


89


32,333

Tennessee

88


32,765


72


28,943

East Region

882


349,765


833


339,664

Total

2,782


$
1,098,158


2,433


$
1,015,918

Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)












Three Months Ended


December 31, 2019

December 31, 2018


Ending

Average

Ending

Average
Active Communities:








Arizona

31


34.0


40


42.0

California

24


24.0


17


15.5

Colorado

18


19.0


20


20.0

West Region

73


77.0


77


77.5

Texas

77


75.5


95


93.5

Central Region

77


75.5


95


93.5

Florida

33


34.5


31


30.5

Georgia

18


18.0


22


22.0

North Carolina

25


23.5


25


22.5

South Carolina

9


9.5


12


12.0

Tennessee

9


9.0


10


10.0

East Region

94


94.5


100


97.0

Total

244


247.0


272


268.0






Twelve Months Ended


December 31, 2019

December 31, 2018


Ending

Average

Ending

Average
Active Communities:








Arizona

31


35.5


40


39.0

California

24


20.5


17


18.5

Colorado

18


19.0


20


15.5

West Region

73


75.0


77


73.0

Texas

77


86.0


95


93.5

Central Region

77


86.0


95


93.5

Florida

33


32.0


31


29.5

Georgia

18


20.0


22


20.5

North Carolina

25


25.0


25


21.0

South Carolina

9


10.5


12


12.5

Tennessee

9


9.5


10


8.0

East Region

94


97.0


100


91.5

Total

244


258.0


272


258.0

ABOUT MERITAGE HOMES CORPORATION

Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2018. Meritage offers a variety of homes that are designed with a focus on first-time and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

The Company has designed and built over 125,000 homes in its 35-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage is the industry leader in energy-efficient homebuilding and has received the U.S. Environmental Protection Agency's ENERGY STAR® Partner of the Year for Sustained Excellence Award every year since 2013 for innovation and industry leadership in energy efficient homebuilding.

For more information, visit www.meritagehomes.com.

The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's projected full year 2020 home closings, home closing revenue, home closing gross margin and tax rate, as well as expectations regarding new community openings, the U.S. economy and housing market.

Such statements are based on the current beliefs and expectations of Company management, and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update or revise any forward-looking statements to reflect future events or changes in these expectations, except as required by law. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: changes in interest rates and the availability and pricing of residential mortgages; legislation related to tariffs; the availability and cost of finished lots and undeveloped land; shortages in the availability and cost of labor; the success of strategic initiatives; the ability of our potential buyers to sell their existing homes; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; changes in tax laws that adversely impact us or our homebuyers; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest or option deposits; our potential exposure to and impacts from natural disasters or severe weather conditions; home warranty and construction defect claims; failures in health and safety performance; our success in prevailing on contested tax positions; our ability to obtain performance and surety bonds in connection with our development work; the loss of key personnel; failure to comply with laws and regulations; our limited geographic diversification; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our ability to successfully integrate acquired companies and achieve anticipated benefits from these acquisitions; our compliance with government regulations, the effect of legislative and other governmental actions, orders, policies or initiatives that impact housing, labor availability, construction, mortgage availability, our access to capital, the cost of capital or the economy in general, or other initiatives that seek to restrain growth of new housing construction or similar measures; legislation relating to energy and climate change; the replication of our energy-efficient technologies by our competitors; our exposure to information technology failures and security breaches; negative publicity that affects our reputation and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2018 and our Form 10-Q for the quarter ended September 30, 2019 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

Company Name:	Meritage Homes Corporation
Stock Symbol:	MTH
Market:	NYSE
Website:	meritagehomes.com

Twitter