Exhibit 99.1
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FOR IMMEDIATE RELEASE
Contacts: | Brent Anderson (972) 580-6360 (office) Brent.Anderson@meritagehomes.com Nancy Newton (602) 417-0684 (office) (602) 697-7785 (mobile) NNewton@c-k.com |
Meritage Homes Reports 28% Increase in Third Quarter 2011 Sales Orders
Scottsdale, Ariz. (October 27, 2011) — Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced third quarter results for the period ended September 30, 2011.
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
(Dollars in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2011 | 2010 | %Chg | 2011 | 2010 | %Chg | |||||||||||||||||||
Homes closed (units) | 840 | 848 | -1 | % | 2,374 | 2,863 | -17 | % | ||||||||||||||||
Home closing revenue | $ | 217,534 | $ | 233,803 | -7 | % | $ | 615,154 | $ | 725,790 | -15 | % | ||||||||||||
Sales orders (units) | 906 | 706 | 28 | % | 2,656 | 2,670 | -1 | % | ||||||||||||||||
Sales order value | $ | 245,235 | $ | 183,571 | 34 | % | $ | 701,861 | $ | 680,666 | 3 | % | ||||||||||||
Ending backlog (units) | 1,060 | 902 | 18 | % | ||||||||||||||||||||
Ending backlog value | $ | 288,523 | $ | 242,411 | 19 | % | ||||||||||||||||||
Net (loss)/income — incl. impairments | $ | (3,235 | ) | $ | 1,219 | n/m | $ | (9,332 | ) | $ | 8,045 | n/m | ||||||||||||
Adjusted pre-tax (loss)/income* —excl. impairments and loss on early extinguishment of debt | (2,028 | ) | 1,523 | n/m | (6,471 | ) | 12,995 | n/m | ||||||||||||||||
Diluted EPS (including impairments) | $ | (0.10 | ) | $ | 0.04 | n/m | $ | (0.29 | ) | $ | 0.25 | n/m |
* | See non-GAAP reconciliations of net (loss)/income to adjusted pre-tax (loss)/income on “Operating Results” statement. |
ADDITIONAL THIRD QUARTER SELECTED RESULTS:
• | Total order value up 34% over 2010 on 4% higher average sales prices combined with 28% more orders | |
• | Acquired approximately 1,300 lots in 17 well-located communities during the quarter | |
• | Total cash and securities of $357M at September 30, 2011 | |
• | Net debt to capital ratio of 33.4% at September 30, 2011 | |
• | Opened 18 new communities during the quarter and ended with 149 active communities at September 30; first community in Raleigh-Durham division opened in October 2011 |
MANAGEMENT COMMENTS
“We achieved strong growth in sales and backlog this quarter compared to 2010, and I commend our team for helping buyers decide that this is the right time to buy, and demonstrating the value a new Meritage home offers that you won’t find in most homes,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “I am encouraged that we maintained healthy traffic levels despite the recent macroeconomic concerns, and believe we’ll continue to show year-over-year sales improvement next quarter with the help of our energy-efficient homes and new community locations.
“We were disappointed that we did not remain above break-even for the quarter — it has been a challenge to maintain or improve profitability when the housing market is still bumping along the bottom,” he continued. “We are focused on improving our top line while managing our costs and overhead. We remain confident in the long-term demographics supporting the homebuilding industry, and believe it’s just a matter of time before the market improves. We believe Meritage is one of the best positioned homebuilders to benefit when it does.”
NET EARNINGS
Meritage reported a net loss of $3.2 million or ($0.10) per diluted share for the third quarter of 2011, compared to net income of $1.2 million or $0.04 per diluted share for the third quarter of 2010. The $4.4 million net change from 2010 to 2011 was primarily due to a 7% decline in home closing revenue caused by a change in the geographic mix of closings. The revenue decline resulted in $4.5 million less home closing gross profit in the third quarter of 2011 compared to the third quarter of 2010, on relatively flat closings. The Company closed 840 homes representing 85% of beginning backlog in the third quarter of 2011, compared to 848 or 81% of beginning backlog in the third quarter of 2010.
Home closing revenue was lower in 2011 due to a 6% decline in average closing prices year-over-year, mainly attributable to a $15 million decline in closing revenue from California caused by reduced prices and fewer closings. That decline was only partially offset by higher closings in Texas, Colorado and Florida, where average prices are typically lower than California’s.
Average home closing gross margins for the third quarter were 17.5% in 2011 and 18.2% in 2010, reflecting the impact of price declines from the prior year in most markets. Home closing gross margins excluding impairments were 17.9% in 2011 and 18.5% in 2010.
Additional spending on marketing efforts designed to improve sales increased total selling, general and administrative expenses during the third quarter.
Combined with its loss in the first half of the year, Meritage reported a cumulative year-to-date net loss of $9.3 million or ($0.29) per diluted share in 2011, compared to year-to-date net income of $8.0 million or $0.25 per diluted share in 2010.
SALES ORDERS
Net sales orders increased 28% over the prior year’s third quarter, and combined with a 4% increase in average sales price for a 34% increase in total order value over 2010. Meritage achieved sales order gains in every state except Nevada. Sales more than doubled year over year in Florida and Colorado, where average sales per community for the quarter were 11.2 and 9.4, respectively. The Company’s average sales per community improved to 6.2 in the third quarter, compared to 4.7 in the prior year. Meritage had 149 active communities at September 30, 2011 compared to 150 a year earlier. Cancellations remained low at 17% of gross sales in the third quarter 2011, compared to 24% in 2010.
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Year-to-date orders were flat year over year, as the increase in third quarter sales offset lower sales in the first half of 2011 compared to last year’s sales assisted by the home buyer tax credit. Total order value increased 3% due to a higher average sales price in 2011, reflecting a greater proportion of sales within move-up communities compared to 2010.
Meritage increased the number of homes in backlog by 18% year over year and 7% sequentially from the second quarter, ending with 1,060 homes valued at $289 million as of September 30, 2011, compared to 902 homes valued at $242 million as of September 30, 2010.
After starting a new division in the top-ranked housing market of Raleigh-Durham, North Carolina, during the second quarter of 2011, Meritage opened its first community there in October and will report its first sales there during the fourth quarter of 2011.
BALANCE SHEET
The Company contracted for approximately 1,300 lots during the third quarter of 2011 and controls approximately 16,000 total lots, equivalent to a five-year supply based on trailing twelve months closings.
Meritage ended the quarter with a strong balance sheet including $357 million in cash and cash equivalents, restricted cash, investments and securities, and a net debt to total capital ratio of 33.4% at September 30, 2011, compared to of 27.1% at September 30, 2010.
CONFERENCE CALL
Management will host a conference call to discuss these results on Thursday, October 27, 2011 at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time.) The call will be webcast by Business-to-Investor, Inc. (B2i), with an accompanying slideshow on the “Investor Relations” page of the Company’s web site at http://investors.meritagehomes.com. For telephone participants, the dial-in number is 877-317-6789 and the conference number is 10005091. Participants are encouraged to dial in five minutes before the call begins. A replay of the call will be available after 12:00 p.m. ET, October 27, 2011 on the website noted above, or by dialing 877-344-7529, and referencing conference number 10005091. For more information, visit meritagehomes.com.
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Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
Operating Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating results | ||||||||||||||||
Home closing revenue | $ | 217,534 | $ | 233,803 | $ | 615,154 | $ | 725,790 | ||||||||
Land closing revenue | — | — | 100 | 1,222 | ||||||||||||
Total closing revenue | 217,534 | 233,803 | 615,254 | 727,012 | ||||||||||||
Home closing gross profit | 38,070 | 42,561 | 108,037 | 133,455 | ||||||||||||
Land closing gross (loss)/profit | (127 | ) | — | (118 | ) | 258 | ||||||||||
Total closing gross profit | 37,943 | 42,561 | 107,919 | 133,713 | ||||||||||||
Commissions and other sales costs | (19,708 | ) | (19,624 | ) | (53,876 | ) | (58,452 | ) | ||||||||
General and administrative expenses | (16,466 | ) | (15,678 | ) | (46,582 | ) | (47,100 | ) | ||||||||
Interest expense | (7,517 | ) | (8,425 | ) | (23,036 | ) | (25,273 | ) | ||||||||
Loss on extinguishment of debt | — | — | — | (3,454 | ) | |||||||||||
Other income, net | 2,673 | 1,897 | 6,803 | 8,469 | ||||||||||||
(Loss)/income before income taxes | (3,075 | ) | 731 | (8,772 | ) | 7,903 | ||||||||||
(Provision)/benefit for income taxes | (160 | ) | 488 | (560 | ) | 142 | ||||||||||
Net (loss)/income | $ | (3,235 | ) | $ | 1,219 | $ | (9,332 | ) | $ | 8,045 | ||||||
(Loss)/income per share | ||||||||||||||||
Basic: | ||||||||||||||||
(Loss)/income per share | $ | (0.10 | ) | $ | 0.04 | $ | (0.29 | ) | $ | 0.25 | ||||||
Weighted average shares outstanding | 32,417 | 32,095 | 32,358 | 32,038 | ||||||||||||
Diluted: | ||||||||||||||||
(Loss)/income per share | $ | (0.10 | ) | $ | 0.04 | $ | (0.29 | ) | $ | 0.25 | ||||||
Weighted average shares outstanding | 32,417 | 32,297 | 32,358 | 32,277 | ||||||||||||
Non-GAAP Reconciliations: | ||||||||||||||||
Home closing gross profit | $ | 38,070 | $ | 42,561 | $ | 108,037 | $ | 133,455 | ||||||||
Add: Real estate-related impairments | 920 | 680 | 2,174 | 1,526 | ||||||||||||
Adjusted home closing gross profit | $ | 38,990 | $ | 43,241 | $ | 110,211 | $ | 134,981 | ||||||||
(Loss)/income before income taxes | $ | (3,075 | ) | $ | 731 | $ | (8,772 | ) | $ | 7,903 | ||||||
Add: Real estate-related and joint venture (JV) impairments | ||||||||||||||||
Terminated lot options and land sales | 225 | — | 227 | — | ||||||||||||
Impaired projects | 822 | 680 | 2,074 | 1,526 | ||||||||||||
JV impairments | — | 112 | — | 112 | ||||||||||||
Loss on early extinguishment of debt | — | — | — | 3,454 | ||||||||||||
Adjusted (loss)/income before income taxes | $ | (2,028 | ) | $ | 1,523 | $ | (6,471 | ) | $ | 12,995 | ||||||
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Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
September 30, 2011 | December 31, 2010 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 157,104 | $ | 103,953 | ||||
Investments and securities | 188,996 | 299,345 | ||||||
Restricted cash | 11,109 | 9,344 | ||||||
Other receivables | 19,617 | 20,835 | ||||||
Real estate(1) | 798,057 | 738,928 | ||||||
Investments in unconsolidated entities | 10,783 | 10,987 | ||||||
Deposits on real estate under option or contract | 13,318 | 10,359 | ||||||
Other assets | 34,559 | 31,187 | ||||||
Total assets | $ | 1,233,543 | $ | 1,224,938 | ||||
Liabilities and Equity: | ||||||||
Accounts payable, accrued liabilities, home sale deposits and other liabilities | 129,582 | 119,163 | ||||||
Senior notes | 480,377 | 479,905 | ||||||
Senior subordinated notes | 125,875 | 125,875 | ||||||
Total liabilities | 735,834 | 724,943 | ||||||
Total stockholders’ equity | 497,709 | 499,995 | ||||||
Total liabilities and equity | $ | 1,233,543 | $ | 1,224,938 | ||||
(1) Real estate — Allocated costs: | ||||||||
Homes under contract under construction | $ | 123,347 | $ | 96,844 | ||||
Unsold homes, completed and under construction | 85,346 | 86,869 | ||||||
Model homes | 46,472 | 36,966 | ||||||
Finished home sites and home sites under development | 473,807 | 454,718 | ||||||
Land held for development or sale | 69,085 | 63,531 | ||||||
Total allocated costs | $ | 798,057 | $ | 738,928 | ||||
Supplemental Information and Non-GAAP Financial Disclosures (in thousands — unaudited):
Three Months Ended Sept 30, | Twelve Months Ended Sept 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest amortized to cost of sales and interest expense | $ | 9,938 | $ | 11,608 | $ | 40,916 | $ | 48,992 | ||||||||
Depreciation and amortization | $ | 1,694 | $ | 2,111 | $ | 7,102 | $ | 8,435 | ||||||||
Sept 30, 2011 | Dec 31, 2010 | Sept 30, 2010 | ||||||||||
Notes payable and other borrowings | $ | 606,252 | $ | 605,780 | $ | 605,623 | ||||||
Less: cash and cash equivalents, restricted cash, and investments and securities | (357,209 | ) | (412,642 | ) | (419,843 | ) | ||||||
Net debt | 249,043 | 193,138 | 185,780 | |||||||||
Stockholders’ equity | 497,709 | 499,995 | 499,302 | |||||||||
Total capital | $ | 746,752 | $ | 693,133 | $ | 685,082 | ||||||
Net debt-to-capital | 33.4 | % | 27.9 | % | 27.1 | % |
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Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net (loss)/income | $ | (3,235 | ) | $ | 1,219 | $ | (9,332 | ) | $ | 8,045 | ||||||
Loss on early extinguishment of debt | — | — | — | 3,454 | ||||||||||||
Real-estate related impairments | 1,047 | 680 | 2,301 | 1,526 | ||||||||||||
Equity in earnings from JVs and distributions of JV earnings, net | 158 | 637 | 678 | 1,404 | ||||||||||||
Increase in real estate and deposits, net | (24,153 | ) | (29,301 | ) | (63,846 | ) | (71,921 | ) | ||||||||
Other operating activities | 7,705 | 6,083 | 18,986 | 95,655 | ||||||||||||
Net cash (used in)/provided by operating activities | (18,478 | ) | (20,682 | ) | (51,213 | ) | 38,163 | |||||||||
Cash provided by/(used in) investing activities | 7,981 | 9,174 | 102,533 | (138,464 | ) | |||||||||||
Proceeds from issuance of new debt | — | — | — | 195,134 | ||||||||||||
Debt issuance costs | — | (98 | ) | — | (3,067 | ) | ||||||||||
Repayments of senior notes | — | — | — | (197,543 | ) | |||||||||||
Proceeds from issuance of common stock, net | 33 | 261 | 1,831 | 1,770 | ||||||||||||
Net cash provided by/ (used in) financing activities | 33 | 163 | 1,831 | (3,706 | ) | |||||||||||
Net (decrease)/increase in cash and cash equivalents | (10,464 | ) | (11,345 | ) | 53,151 | (104,007 | ) | |||||||||
Beginning cash and cash equivalents | 167,568 | 156,669 | 103,953 | 249,331 | ||||||||||||
Ending cash and cash equivalents (1) | $ | 157,104 | $ | 145,324 | $ | 157,104 | $ | 145,324 | ||||||||
(1) | Ending “cash and cash equivalents” as of September 30 excludes “investments and securities” and “restricted cash” totaling $200 million in 2011 and $275 million in 2010. Since the fourth quarter of 2009, Meritage has sought to increase yields earned on its excess cash by investing a portion of that cash in government-guaranteed investments and securities which have maturities of up to eighteen months. Due to their longer maturity structure, these investments are not classified as “cash and cash equivalents” on our Balance Sheets or in the Statements of Cash Flows. |
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Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
Operating Data
(Dollars in thousands)
(unaudited)
For the Three Months Ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Homes | Value | Homes | Value | |||||||||||||
Homes Closed: | ||||||||||||||||
California | 83 | $ | 28,708 | 112 | $ | 43,803 | ||||||||||
Nevada | 19 | 4,222 | 17 | 3,404 | ||||||||||||
West Region | 102 | 32,930 | 129 | 47,207 | ||||||||||||
Arizona | 137 | 33,314 | 167 | 41,387 | ||||||||||||
Texas | 440 | 102,121 | 425 | 107,663 | ||||||||||||
Colorado | 68 | 21,500 | 39 | 12,608 | ||||||||||||
Central Region | 645 | 156,935 | 631 | 161,658 | ||||||||||||
Florida | 93 | 27,669 | 88 | 24,938 | ||||||||||||
East Region | 93 | 27,669 | 88 | 24,938 | ||||||||||||
Total | 840 | $ | 217,534 | 848 | $ | 233,803 | ||||||||||
Homes Ordered: | ||||||||||||||||
California | 121 | $ | 41,146 | 86 | $ | 29,614 | ||||||||||
Nevada | 10 | 2,182 | 11 | 2,279 | ||||||||||||
West Region | 131 | 43,328 | 97 | 31,893 | ||||||||||||
Arizona | 189 | 52,684 | 156 | 39,214 | ||||||||||||
Texas | 361 | 82,758 | 347 | 82,584 | ||||||||||||
Colorado | 80 | 26,715 | 39 | 12,603 | ||||||||||||
Central Region | 630 | 162,157 | 542 | 134,401 | ||||||||||||
Florida | 145 | 39,750 | 67 | 17,277 | ||||||||||||
East Region | 145 | 39,750 | 67 | 17,277 | ||||||||||||
Total | 906 | $ | 245,235 | 706 | $ | 183,571 | ||||||||||
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Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
Operating Data
(Dollars in thousands)
(unaudited)
For the Nine Months Ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Homes | Value | Homes | Value | |||||||||||||
Homes Closed: | ||||||||||||||||
California | 228 | $ | 77,930 | 323 | $ | 114,498 | ||||||||||
Nevada | 49 | 10,360 | 65 | 12,628 | ||||||||||||
West Region | 277 | 88,290 | 388 | 127,126 | ||||||||||||
Arizona | 418 | 100,230 | 548 | 119,147 | ||||||||||||
Texas | 1,269 | 302,536 | 1,578 | 382,592 | ||||||||||||
Colorado | 175 | 55,757 | 110 | 32,721 | ||||||||||||
Central Region | 1,862 | 458,523 | 2,236 | 534,460 | ||||||||||||
Florida | 235 | 68,341 | 239 | 64,204 | ||||||||||||
East Region | 235 | 68,341 | 239 | 64,204 | ||||||||||||
Total | 2,374 | $ | 615,154 | 2,863 | $ | 725,790 | ||||||||||
Homes Ordered: | ||||||||||||||||
California | 293 | $ | 98,859 | 312 | $ | 108,156 | ||||||||||
Nevada | 51 | 11,072 | 59 | 11,651 | ||||||||||||
West Region | 344 | 109,931 | 371 | 119,807 | ||||||||||||
Arizona | 499 | 128,592 | 560 | 126,743 | ||||||||||||
Texas | 1,252 | 296,886 | 1,375 | 330,582 | ||||||||||||
Colorado | 221 | 71,345 | 118 | 36,903 | ||||||||||||
Central Region | 1,972 | 496,823 | 2,053 | 494,228 | ||||||||||||
Florida | 340 | 95,107 | 246 | 66,631 | ||||||||||||
East Region | 340 | 95,107 | 246 | 66,631 | ||||||||||||
Total | 2,656 | $ | 701,861 | 2,670 | $ | 680,666 | ||||||||||
Order Backlog: | ||||||||||||||||
California | 110 | $ | 36,224 | 78 | $ | 27,980 | ||||||||||
Nevada | 14 | 3,081 | 8 | 1,694 | ||||||||||||
West Region | 124 | 39,305 | 86 | 29,674 | ||||||||||||
Arizona | 206 | 60,342 | 159 | 39,706 | ||||||||||||
Texas | 446 | 105,957 | 512 | 129,554 | ||||||||||||
Colorado | 98 | 32,552 | 47 | 15,638 | ||||||||||||
Central Region | 750 | 198,851 | 718 | 184,898 | ||||||||||||
Florida | 186 | 50,367 | 98 | 27,839 | ||||||||||||
East Region | 186 | 50,367 | 98 | 27,839 | ||||||||||||
Total | 1,060 | $ | 288,523 | 902 | $ | 242,411 | ||||||||||
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Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
Operating Data
(unaudited)
Third Quarter 2011 | Third Quarter 2010 | |||||||||||||||
Beg. | End | Beg. | End | |||||||||||||
Active Communities: | ||||||||||||||||
California | 18 | 22 | 12 | 13 | ||||||||||||
Nevada | 3 | 3 | 5 | 5 | ||||||||||||
West Region | 21 | 25 | 17 | 18 | ||||||||||||
Arizona | 35 | 37 | 33 | 32 | ||||||||||||
Texas | 68 | 65 | 78 | 82 | ||||||||||||
Colorado | 8 | 9 | 7 | 8 | ||||||||||||
Central Region | 111 | 111 | 118 | 122 | ||||||||||||
Florida | 13 | 13 | 13 | 10 | ||||||||||||
East Region | 13 | 13 | 13 | 10 | ||||||||||||
Total | 145 | 149 | 148 | 150 | ||||||||||||
First Nine Months 2011 | First Nine Months 2010 | |||||||||||||||
Beg. | End | Beg. | End | |||||||||||||
Active Communities: | ||||||||||||||||
California | 14 | 22 | 7 | 13 | ||||||||||||
Nevada | 4 | 3 | 6 | 5 | ||||||||||||
West Region | 18 | 25 | 13 | 18 | ||||||||||||
Arizona | 32 | 37 | 26 | 32 | ||||||||||||
Texas | 82 | 65 | 98 | 82 | ||||||||||||
Colorado | 9 | 9 | 6 | 8 | ||||||||||||
Central Region | 123 | 111 | 130 | 122 | ||||||||||||
Florida | 10 | 13 | 10 | 10 | ||||||||||||
East Region | 10 | 13 | 10 | 10 | ||||||||||||
Total | 151 | 149 | 153 | 150 | ||||||||||||
ABOUT MERITAGE HOMES CORPORATION
Meritage Homes is one of the top 10 homebuilders in the United States based on homes closed. Meritage builds a variety of homes across the Southern and Western states to appeal to a wide range of buyers, including first-time, move-up, luxury and active adults. As of September 30, 2011, the Company had 149 actively selling communities in 12 metropolitan areas, including Houston, Dallas/Ft. Worth, Austin, San Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, Denver, Orlando, and the East Bay/Central Valley and Southern California. Meritage also opened its first communities in the Raleigh-Durham market during October 2011.
Meritage has designed and built more than 70,000 homes in its 26-year history, and has a reputation for its distinctive style, quality construction and positive customer experience. In 2010, Meritage launched its new Simply Smart Series™ of homes and its 99-day guaranteed completion program in certain communities. Meritage was the first large national homebuilder to be 100 percent ENERGY STAR® qualified in every home started since January 1, 2010.
Meritage Homes is listed on the NYSE under the symbol MTH.
For more information about the Company, visit http://investors.meritagehomes.com
Click here to join our email alert list: http://www.b2i.us/irpass.asp?BzID=1474&to=ea&s=0
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FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management’s belief that the Company will show year-over-year sales improvement in the fourth quarter; management’s confidence in long-term demographics in the homebuilding industry; that the homebuilding market will improve and that the Company is well positioned to benefit from such improvement; and that Meritage will record sales in its North Carolina division in the fourth quarter.
Such statements are based upon preliminary financial and operating data which are subject to finalization by management and review by Meritage’s independent registered public accounting firm, as well as the current beliefs and expectations of Company management, and current market conditions, which are subject to significant risks and uncertainties. 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.
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. The risks and uncertainties include but are not limited to the following: weakness in the homebuilding market resulting from the current economic downturn; interest rates and changes in the availability and pricing of residential mortgages; adverse changes in tax laws that benefit our homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates and home prices in our markets; inflation in the cost of materials used to construct homes; the adverse effect of slower sales absorption rates; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; our potential exposure to natural disasters; the liquidity of our joint ventures and the ability of our joint venture partners to meet their obligations to us and the joint venture; competition; the success of our strategies in the current homebuilding market and economic environment; the adverse impacts of cancellations resulting from small deposits relating to our sales contracts; construction defect and home warranty claims; our success in prevailing on contested tax positions; the impact of deferred tax valuation allowances and our ability to preserve our operating loss carryforwards; our ability to obtain performance bonds in connection with our development work; the loss of key personnel; our failure to comply with laws and regulations; the availability and cost of materials and labor; our lack of geographic diversification; fluctuations in quarterly operating results; the Company’s financial leverage and level of indebtedness; our ability to take certain actions because of restrictions contained in the indentures for the Company’s senior and senior subordinated notes and our ability to raise additional capital when and if needed; our credit ratings; successful integration of future acquisitions; government regulations and legislative or other initiatives that seek to restrain growth or new housing construction or similar measures; acts of war; the replication of our “Green” technologies by our competitors; 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, 2010 under the caption “Risk Factors,” and updated in our most recent Quarterly Report on Form 10-Q, all of which can be found on our website.
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