MTH - Meritage Homes reports record second quarter 2020 orders 32% higher than prior year; 78% increase in net earnings driven by 20% revenue growth and strong margin improvement

July, 22 2020 04:30 PM Meritage Homes Corporation

SCOTTSDALE, Ariz., July 22, 2020 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported second quarter results for the period ended June 30, 2020.

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


Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

% Chg

2020

2019

% Chg
Homes closed (units)
2,770


2,253


23
%

5,086


4,018


27
%
Home closing revenue
$
1,031,591


$
863,053


20
%

$
1,922,008


$
1,561,703


23
%
Average sales price - closings
$
372


$
383


(3
)%

$
378


$
389


(3
)%
Home orders (units)
3,597


2,735


32
%

6,699


5,265


27
%
Home order value
$
1,290,454


$
1,043,995


24
%

$
2,470,391


$
2,020,974


22
%
Average sales price - orders
$
359


$
382


(6
)%

$
369


$
384


(4
)%
Ending backlog (units)






4,395


3,680


19
%
Ending backlog value






$
1,648,451


$
1,477,007


12
%
Average sales price - backlog






$
375


$
401


(7
)%
Earnings before income taxes
$
115,862


$
67,674


71
%

$
202,695


$
100,044


103
%
Net earnings
$
90,678


$
50,828


78
%

$
161,830


$
76,240


112
%
Diluted EPS
$
2.38


$
1.31


82
%

$
4.20


$
1.97


113
%

MANAGEMENT COMMENTS

“The spring selling season demonstrated remarkable resilience in May and June after a slow start in April due to the global pandemic, resulting in our two highest selling months ever and an all-time company record of nearly 3,600 orders for the quarter,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our absorptions were up 42% over last year's second quarter, averaging approximately five homes per month in roughly 240 communities nationwide.

“Demand for new homes is being driven by historically low mortgage interest rates, a shortage of used homes for sale, and an increased need for homes that can accommodate entire families working from home more than ever before. Many of those families are choosing safe suburban communities rather than crowded urban centers and many often prefer to purchase a home virtually rather than physically,” he explained. “That is exactly what Meritage offers. 100% of our communities are open for both in-person and virtual sales, and our virtual selling capabilities have been very beneficial. More than half of our communities are designed for the entry-level market with a wide selection of affordable homes ready for quick move-in, while our streamlined design selection process in Studio M allows first move-up customers to move quickly into a new home.”

Mr. Hilton continued, “The entire Meritage organization is executing at a high level to drive powerful earnings growth. Our second quarter net earnings increased 78% through the combination of a 20% increase in home closing revenue, our highest gross margin in six years of 21.4% and our fourth consecutive quarter of improving overhead leverage -- to just 10.3% of home closing revenue.

“As a result, we ended the quarter with the strongest balance sheet we’ve ever had, including almost a half billion dollars in cash and the lowest net debt-to-capital ratio in our history, which gives us the flexibility to continue to grow and expand market share while also providing a healthy cushion in the event that conditions weaken,” he added. “We responded to the resurgence in demand since late-April by re-accelerating new home starts to meet demand and securing new land positions to replace communities as they sell out, with almost 6,000 new lots put under control since April.”

Mr. Hilton concluded, “We are encouraged by the health of the housing market and confident in our strategy, while remaining aware of the risks and uncertainties in the economy until the pandemic is brought under control. We have taken necessary precautions to protect our employees, trade partners and customers. In addition, we have recently committed at least $250,000 to support Feed America for those in need.

“Based on our current forecast, we believe we can generate between $4.0-4.3 billion in home closing revenue for the year, including $1.0-1.1 billion for the third quarter, with home closing gross margins around 21% for the third quarter and full year. We estimate that will translate to approximately $8.75-9.25 of diluted earnings per share for the full year, including approximately $2.15-2.35 for the third quarter.”

SECOND QUARTER RESULTS

Total orders for the second quarter of 2020 increased 32% year-over-year, driven by a 42% increase in absorption pace over the prior year’s second quarter. Order trends accelerated through the quarter, with April orders 15% lower than the prior year, followed by year-over-year increases of 44% and 66% in May and June, respectively. Strong demand was broad-based, with Arizona and Texas generating the highest absorptions in the second quarter. Order cancellations rose to 15% from 12% for the second quarter of 2020 compared to 2019.
Entry-level represented 57% of total active communities at June 30, 2020 and 70% of total orders for the second quarter of 2020, compared to 41% of total communities and 51% of orders a year earlier. First move-up made up one-third of communities at June 30 and 26% of second quarter 2020 orders.
Home closing revenue increased 20%, resulting from a 23% increase in home closing volume and a 3% reduction in ASP over the second quarter of 2019 due to Meritage’s strategic shift to the higher-demand entry-level market.
Home closing gross margin increased 300 bps over 2019’s second quarter to 21.4%, reflecting the benefits of Meritage’s strategic streamlining of operations, including efficiencies in purchasing, processes and labor, as well as some temporary cost concessions and leverage from increased closings. Those savings were partially offset by contract termination walk-away charges of $3.3 million in the second quarter of 2020, compared to $0.5 million of related charges in the second quarter of 2019.
Selling, general and administrative (SG&A) expenses were reduced to 10.3% of second quarter 2020 home closing revenue from 11.0% in the second quarter of 2019, attributed to slightly lower selling expenses, greater leverage of fixed expenses on higher home closing revenue and the immediate tightening of overhead expenses in response to the sharp but short-term decline in demand during March and April due to the nationwide spread of the pandemic.
Pre-tax earnings increased 71% year-over-year for the second quarter. Net earnings increased 78% to $90.7 million ($2.38 per diluted share) with a 22% effective tax rate for the second quarter of 2020, compared to $50.8 million ($1.31 per diluted share) and a 25% effective tax rate for the second quarter of 2019. Diluted EPS benefited from the repurchase of one million shares of stock during the first quarter of 2020.

YEAR TO DATE RESULTS

Total orders for the first half of 2020 increased 27% year-over-year, driven by a 40% increase in absorptions, partially offset by a 9% decrease in average community count compared to the first half of 2019.
Net earnings were $161.8 million ($4.20 per diluted share) for the first half of 2020, a 113% increase over $76.2 million ($1.97 per diluted share) for the first half of 2019, primarily reflecting increases in home closing revenue and gross margin, greater overhead leverage, lower interest expense and a lower effective tax rate in 2020.
Home closings for the first half of the year also increased 27% over the prior year with a 3% lower average price on closings, resulting in a 23% increase in home closing revenue.
Home closing gross profit increased 45% to $399.1 million in the first half of 2020 compared to $275.6 million in the first half of 2019, reflecting a 320 bps increase in home closing gross margin primarily due to streamlined operations and additional leverage of construction overhead expenses on higher home closings and revenue.
SG&A expenses decreased 110 bps year-over-year to 10.5% of home closing revenue, compared to 11.6% in the first half of 2019, due to operating efficiencies and improved leverage of fixed expenses on higher closing volume and revenue, in addition to cost reductions taken immediately following the shelter-in-place orders enacted in late March to prevent the spread of Covid-19.
Interest expense decreased $5.2 million year-over-year, primarily due to a reduction in total interest incurred due to the December 2019 early redemption of $300 million 7.15% senior notes due in 2020, partially offset by interest incurred on the $500 million borrowed under the existing credit facility in March to provide financial flexibility within an environment of heightened uncertainty, which was repaid on May 26, 2020.
The effective tax rate for the first half of 2020 was 20%, compared to 24% for the first half of 2019. The 2020 effective tax rate benefited from credits earned for energy-efficient homes under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019.

BALANCE SHEET

Cash and cash equivalents at June 30, 2020 totaled $484.6 million, compared to $319.5 million at December 31, 2019, reflecting positive cash flow from operations of $237.4 million and partially offset by the repayment of the full $500 million borrowed against the Company’s $780 million Revolving Credit Facility in the first quarter of 2020.
Meritage terminated contracts to purchase approximately 1,500 lots in the second quarter, in response to the sharp but short-lived drop in demand from late March through early April. The Company has subsequently put nearly 6,000 new lots under control as demand for its homes rebounded and strengthened through the second quarter, ending with approximately 42,900 total lots owned or under control as of June 30, 2020, compared to approximately 34,700 total lots at June 30, 2019.
Debt-to-capital and net debt-to-capital ratios were 32.8% and 20.4%, respectively, at June 30, 2020, down from 34.0% and 26.2%, respectively, at December 31, 2019.

CONFERENCE CALL

Management will host a conference call to discuss the results at 7:30 a.m. Arizona Time (10:30 a.m. Eastern Time) on Thursday, July 23. The call will be webcast with an accompanying slideshow, both available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com.

For those unable to participate via the webcast, telephone participants can avoid delays by pre-registering for the call using the following link to receive a special dial-in number and PIN. Conference Call registration link: http://services.incommconferencing.com/DiamondPassRegistration/register?confirmationNumber=13706029&linkSecurityString=cb02a52e8. The Participant Access Code is 0774497.

Telephone participants who are unable to pre-register can dial in to 1-877-407-6951 US toll free on the day of the call. International dial-in number is 1-412-902-0046.

A replay of the call will be available beginning at approximately 12:00 p.m. ET on July 23 and extending through August 6, 2020, on the website noted above or by dialing 1-877-660-6853 US toll free, 1-201-612-7415 for international and referencing conference number 13706029.

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


Three Months Ended June 30,

2020

2019

Change $

Change %
Homebuilding:







Home closing revenue
$
1,031,591


$
863,053


$
168,538


20
%
Land closing revenue
1,488


1,557


(69
)

(4
)%
Total closing revenue
1,033,079


864,610


168,469


19
%
Cost of home closings
(810,895
)

(703,935
)

106,960


15
%
Cost of land closings
(2,936
)

(3,299
)

(363
)

(11
)%
Total cost of closings
(813,831
)

(707,234
)

106,597


15
%
Home closing gross profit
220,696


159,118


61,578


39
%
Land closing gross loss
(1,448
)

(1,742
)

294


17
%
Total closing gross profit
219,248


157,376


61,872


39
%
Financial Services:







Revenue
4,478


4,160


318


8
%
Expense
(1,758
)

(1,720
)

38


2
%
Earnings from financial services unconsolidated entities and other, net
1,069


3,591


(2,522
)

(70
)%
Financial services profit
3,789


6,031


(2,242
)

(37
)%
Commissions and other sales costs
(70,408
)

(60,125
)

10,283


17
%
General and administrative expenses
(36,176
)

(34,779
)

1,397


4
%
Interest expense
(2,105
)

(3,197
)

(1,092
)

(34
)%
Other income, net
1,514


2,368


(854
)

(36
)%
Earnings before income taxes
115,862


67,674


48,188


71
%
Provision for income taxes
(25,184
)

(16,846
)

8,338


49
%
Net earnings
$
90,678


$
50,828


$
39,850


78
%








Earnings per common share:







Basic




Change $ or shares

Change %
Earnings per common share
$
2.41


$
1.33


$
1.08


81
%
Weighted average shares outstanding
37,599


38,266


(667
)

(2
)%
Diluted







Earnings per common share
$
2.38


$
1.31


$
1.07


82
%
Weighted average shares outstanding
38,169


38,889


(720
)

(2
)%


Six Months Ended June 30,

2020

2019

Change $

Change %
Homebuilding:







Home closing revenue
$
1,922,008


$
1,561,703


$
360,305


23
%
Land closing revenue
12,084


11,052


1,032


9
%
Total closing revenue
1,934,092


1,572,755


361,337


23
%
Cost of home closings
(1,522,952
)

(1,286,123
)

236,829


18
%
Cost of land closings
(13,149
)

(12,428
)

721


6
%
Total cost of closings
(1,536,101
)

(1,298,551
)

237,550


18
%
Home closing gross profit
399,056


275,580


123,476


45
%
Land closing gross loss
(1,065
)

(1,376
)

311


23
%
Total closing gross profit
397,991


274,204


123,787


45
%
Financial Services:







Revenue
8,390


7,388


1,002


14
%
Expense
(3,493
)

(3,224
)

269


8
%
Earnings from financial services unconsolidated entities and other, net
1,730


6,569


(4,839
)

(74
)%
Financial services profit
6,627


10,733


(4,106
)

(38
)%
Commissions and other sales costs
(131,581
)

(112,680
)

18,901


17
%
General and administrative expenses
(70,346
)

(68,345
)

2,001


3
%
Interest expense
(2,121
)

(7,282
)

(5,161
)

(71
)%
Other income, net
2,125


3,414


(1,289
)

(38
)%
Earnings before income taxes
202,695


100,044


102,651


103
%
Provision for income taxes
(40,865
)

(23,804
)

17,061


72
%
Net earnings
$
161,830


$
76,240


$
85,590


112
%








Earnings per common share:







Basic




Change $ or shares

Change %
Earnings per common share
$
4.28


$
2.00


$
2.28


114
%
Weighted average shares outstanding
37,842


38,136


(294
)

(1
)%
Diluted







Earnings per common share
$
4.20


$
1.97


$
2.23


113
%
Weighted average shares outstanding
38,512


38,789


(277
)

(1
)%

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


June 30, 2020

December 31, 2019
Assets:



Cash and cash equivalents
$
484,622


$
319,466

Other receivables
93,872


88,492

Real estate ⁽¹⁾
2,733,428


2,744,361

Deposits on real estate under option or contract
47,832


50,901

Investments in unconsolidated entities
3,646


4,443

Property and equipment, net
46,299


50,606

Deferred tax asset
26,468


25,917

Prepaids, other assets and goodwill
105,561


114,063

Total assets
$
3,541,728


$
3,398,249

Liabilities:



Accounts payable
$
167,235


$
155,024

Accrued liabilities
249,208


226,008

Home sale deposits
23,247


24,246

Loans payable and other borrowings
20,889


22,876

Senior notes, net
996,548


996,105

Total liabilities
1,457,127


1,424,259

Stockholders' Equity:



Preferred stock
—


—

Common stock
377


382

Additional paid-in capital
454,138


505,352

Retained earnings
1,630,086


1,468,256

Total stockholders’ equity
2,084,601


1,973,990

Total liabilities and stockholders’ equity
$
3,541,728


$
3,398,249





⁽¹⁾ Real estate – Allocated costs:



Homes under contract under construction
$
847,606


$
564,762

Unsold homes, completed and under construction
444,057


686,948

Model homes
101,804


121,340

Finished home sites and home sites under development
1,339,961


1,371,311

Total real estate
$
2,733,428


$
2,744,361

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


Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019
Depreciation and amortization
$
7,540


$
6,549


$
14,551


$
12,381









Summary of Capitalized Interest:







Capitalized interest, beginning of period
$
78,162


$
89,414


$
82,014


$
88,454

Interest incurred
17,550


21,465


34,085


42,908

Interest expensed
(2,105
)

(3,197
)

(2,121
)

(7,282
)
Interest amortized to cost of home and land closings
(20,725
)

(19,375
)

(41,096
)

(35,773
)
Capitalized interest, end of period
$
72,882


$
88,307


$
72,882


$
88,307










June 30, 2020

December 31, 2019




Notes payable and other borrowings
$
1,017,437


$
1,018,981





Stockholders' equity
2,084,601


1,973,990





Total capital
$
3,102,038


$
2,992,971





Debt-to-capital
32.8
%

34.0
%












Notes payable and other borrowings
$
1,017,437


$
1,018,981





Less: cash and cash equivalents
(484,622
)

(319,466
)




Net debt
$
532,815


$
699,515





Stockholders’ equity
2,084,601


1,973,990





Total net capital
$
2,617,416


$
2,673,505





Net debt-to-capital
20.4
%

26.2
%

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


Six Months Ended June 30,

2020

2019
Cash flows from operating activities:



Net earnings
$
161,830


$
76,240

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



Depreciation and amortization
14,551


12,381

Stock-based compensation
9,594


10,062

Equity in earnings from unconsolidated entities
(1,691
)

(5,828
)
Distribution of earnings from unconsolidated entities
1,491


8,508

Other
2,548


4,305

Changes in assets and liabilities:



Decrease in real estate
9,655


5,439

Decrease in deposits on real estate under option or contract
2,225


5,096

Decrease/(increase) in other receivables, prepaids and other assets
3,469


(28
)
Increase/(decrease) in accounts payable and accrued liabilities
34,772


(6,439
)
(Decrease)/increase in home sale deposits
(999
)

3,613

Net cash provided by operating activities
237,445


113,349

Cash flows from investing activities:



Investments in unconsolidated entities
(3
)

(1,112
)
Distributions of capital from unconsolidated entities
1,000


7,250

Purchases of property and equipment
(10,343
)

(12,132
)
Proceeds from sales of property and equipment
259


192

Maturities/sales of investments and securities
632


566

Payments to purchase investments and securities
(632
)

(566
)
Net cash used in investing activities
(9,087
)

(5,802
)
Cash flows from financing activities:



Repayment of loans payable and other borrowings
(2,389
)

(2,629
)
Repurchase of shares
(60,813
)

(8,957
)
Net cash provided by/(used in) financing activities
(63,202
)

(11,586
)
Net increase in cash and cash equivalents
165,156


95,961

Beginning cash and cash equivalents
319,466


311,466

Ending cash and cash equivalents
$
484,622


$
407,427

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


Three Months Ended June 30,

2020

2019

Homes

Value

Homes

Value
Homes Closed:







Arizona
427


$
142,359


389


$
125,388

California
247


150,343


132


83,454

Colorado
184


89,087


169


90,130

West Region
858


381,789


690


298,972

Texas
914


295,975


823


289,839

Central Region
914


295,975


823


289,839

Florida
367


138,608


281


111,736

Georgia
166


58,698


122


43,317

North Carolina
288


98,738


196


70,629

South Carolina
98


30,206


70


23,163

Tennessee
79


27,577


71


25,397

East Region
998


353,827


740


274,242

Total
2,770


$
1,031,591


2,253


$
863,053

Homes Ordered:







Arizona
737


$
231,057


582


$
188,215

California
388


224,639


207


135,519

Colorado
153


70,831


220


110,314

West Region
1,278


526,527


1,009


434,048

Texas
1,215


392,502


827


275,380

Central Region
1,215


392,502


827


275,380

Florida
390


136,362


331


131,958

Georgia
190


65,434


149


51,977

North Carolina
326


106,383


240


89,571

South Carolina
95


29,262


69


22,806

Tennessee
103


33,984


110


38,255

East Region
1,104


371,425


899


334,567

Total
3,597


$
1,290,454


2,735


$
1,043,995


Six Months Ended June 30,

2020

2019

Homes

Value

Homes

Value
Homes Closed:







Arizona
886


$
293,603


686


$
223,842

California
455


285,145


264


169,291

Colorado
370


180,771


338


178,805

West Region
1,711


759,519


1,288


571,938

Texas
1,688


551,884


1,366


481,445

Central Region
1,688


551,884


1,366


481,445

Florida
603


232,397


507


202,560

Georgia
281


100,696


241


85,456

North Carolina
510


178,155


352


127,170

South Carolina
151


47,611


127


42,745

Tennessee
142


51,746


137


50,389

East Region
1,687


610,605


1,364


508,320

Total
5,086


$
1,922,008


4,018


$
1,561,703









Homes Ordered:







Arizona
1,307


$
414,428


1,039


$
333,613

California
740


449,571


374


243,993

Colorado
352


169,296


424


215,562

West Region
2,399


1,033,295


1,837


793,168

Texas
2,274


735,492


1,697


581,645

Central Region
2,274


735,492


1,697


581,645

Florida
707


255,804


632


258,032

Georgia
346


120,417


293


102,204

North Carolina
613


207,638


470


172,556

South Carolina
182


57,176


150


48,020

Tennessee
178


60,569


186


65,349

East Region
2,026


701,604


1,731


646,161

Total
6,699


$
2,470,391


5,265


$
2,020,974









Order Backlog:







Arizona
932


$
307,302


696


$
243,449

California
430


256,694


201


141,196

Colorado
178


86,158


271


140,304

West Region
1,540


650,154


1,168


524,949

Texas
1,634


556,787


1,312


473,968

Central Region
1,634


556,787


1,312


473,968

Florida
475


187,241


497


220,544

Georgia
198


69,559


175


63,158

North Carolina
322


109,026


295


112,808

South Carolina
102


34,054


112


37,672

Tennessee
124


41,630


121


43,908

East Region
1,221


441,510


1,200


478,090

Total
4,395


$
1,648,451


3,680


$
1,477,007

Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)


Three Months Ended June 30,

2020

2019

Ending

Average

Ending

Average
Active Communities:







Arizona
38


35.5


40


37.0

California
28


28.5


20


20.5

Colorado
13


13.0


21


22.0

West Region
79


77.0


81


79.5

Texas
68


73.0


73


78.5

Central Region
68


73.0


73


78.5

Florida
36


35.0


36


34.0

Georgia
17


16.0


21


20.0

North Carolina
21


20.5


23


24.0

South Carolina
5


6.0


9


10.0

Tennessee
11


11.5


11


11.0

East Region
90


89.0


100


99.0

Total
237


239.0


254


257.0


Six Months Ended June 30,

2020

2019

Ending

Average

Ending

Average
Active Communities:







Arizona
38


34.5


40


40.0

California
28


26.0


20


18.5

Colorado
13


15.5


21


20.5

West Region
79


76.0


81


79.0

Texas
68


72.5


73


84.0

Central Region
68


72.5


73


84.0

Florida
36


34.5


36


33.5

Georgia
17


17.5


21


21.5

North Carolina
21


23.0


23


24.0

South Carolina
5


7.0


9


10.5

Tennessee
11


10.0


11


10.5

East Region
90


92.0


100


100.0

Total
237


240.5


254


263.0

About Meritage Homes Corporation
Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2019. 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 130,000 homes in its 35-year history, and has a reputation for its distinctive style, quality construction, and award-winning 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 the statements regarding health of the housing market and the potential adverse impacts of the COVID-19 pandemic, and projected third quarter and full year 2020 home closing revenue, gross margins and diluted earnings per share.

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: disruptions to our business by Covid-19, fear of a similar event, and measures implemented by federal, state and local governments or health authorities to address it; the availability and cost of finished lots and undeveloped land; shortages in the availability and cost of labor; the success of our strategic initiatives to focus on the first- and second-move-up buyer; the ability of our potential buyers to sell their existing homes; changes in interest rates and the availability and pricing of residential mortgages; our exposure to information technology failures and security breaches; legislation related to tariffs; 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; 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, 2019 and our Form 10-Q for the quarter ended March 31, 2020 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

Contacts:

Brent Anderson, VP Investor Relations

(972) 580-6360 (office)

investors@meritagehomes.com

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

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