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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 1, 2018
_______________________
MERITAGE HOMES CORPORATION
(Exact Name of Registrant as Specified in Charter)
 
 
 
 
 
 
 
 
Maryland
 
1-9977
 
86-0611231
(State or Other Jurisdiction
of Incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)
 
           8800 E. Raintree Drive, Suite 300, Scottsdale, Arizona 85260
 
 
(Address of Principal Executive Offices) (Zip Code)
 
 
 
 
 
(480) 515-8100
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
   o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

 





ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 1, 2018, we announced in a press release information concerning our results for the quarterly and annual period ended December 31, 2017. A copy of this press release, including information concerning forward-looking statements and factors that may affect our future results, is attached as Exhibit 99.1. This press release is being furnished, not filed, under Item 2.02 in this Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1 Press Release dated February 1, 2018






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 1, 2018
 

MERITAGE HOMES CORPORATION
 
 
/s/
HILLA SFERRUZZA
By:
Hilla Sferruzza
 
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1

392001955_mhlogo1linetaga05.jpg
 
 
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
 
(972) 580-6360 (office)
 
 
 
 
investors@meritagehomes.com

Meritage Homes reports 20% order growth and 10% increase in pre-tax earnings
for the fourth quarter, contributing to a 14% increase in 2017 full year pre-tax earnings

SCOTTSDALE, Ariz., February 1, 2018 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2017.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
    
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2017
 
2016
 
% Chg
 
2017
 
2016
 
% Chg
Homes closed (units)
2,253

 
2,117

 
6
 %
 
7,709

 
7,355

 
5
 %
Home closing revenue
$
923,370

 
$
876,094

 
5
 %
 
$
3,186,775

 
$
3,003,426

 
6
 %
Average sales price - closings
$
410

 
$
414

 
(1
)%
 
$
413

 
$
408

 
1
 %
Home orders (units)
1,795

 
1,493

 
20
 %
 
7,957

 
7,290

 
9
 %
Home order value
$
760,340

 
$
635,995

 
20
 %
 
$
3,296,788

 
$
3,001,503

 
10
 %
Average sales price - orders
$
424

 
$
426

 
(1
)%
 
$
414

 
$
412

 
1
 %
Ending backlog (units)
 
 
 
 
 
 
2,875

 
2,627

 
9
 %
Ending backlog value
 
 
 
 
 
 
$
1,245,771

 
$
1,135,758

 
10
 %
Average sales price - backlog


 


 

 
$
433

 
$
432

 
 %
Earnings before income taxes
$
84,090

 
$
76,337

 
10
 %
 
$
247,519

 
$
218,060

 
14
 %
Net earnings
$
35,553

 
$
51,807

 
(31
)%
 
$
143,255

 
$
149,541

 
(4
)%
Diluted EPS
$
0.87

 
$
1.22

 
(29
)%
 
$
3.41

 
$
3.55

 
(4
)%




1



MANAGEMENT COMMENTS
“Strong fourth quarter results helped deliver our seventh consecutive year of annual order growth and our highest pretax earnings in over a decade," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes.
"Fourth quarter 2017 orders were up 20% year-over-year, as we continued to experience robust demand for homes designed to meet the needs of entry-level buyers. They made up nearly 33% of our total 2017 orders, compared to approximately 24% in 2016. Notably, our East region led with a 47% increase in total home orders over the fourth quarter of 2016, demonstrating buyers' acceptance of the plans in our new regional product library and improved execution by our teams in those markets. Our strategic focus on expanding our entry-level business and strengthening our performance in the East region should continue to drive strong results going forward," he continued.
"We generated a 10% increase in pre-tax earnings for the fourth quarter on a 5% increase in home closing revenue, combined with higher home closing gross margins and overhead leverage. Our full year pre-tax earnings increased 14% over 2016, demonstrating the effects of our successful implementation of several strategic initiatives during the year," explained Mr. Hilton. "Based on the lower corporate tax rate that will be effective in 2018, we took a $19.7 million charge in the fourth quarter to reflect a revaluation of our deferred tax asset. Without that charge, our net earnings for the quarter would have been approximately $55.2 million or $1.34 per diluted share."
He continued, “Housing-related economic indicators remain positive, pointing to further growth in new home sales for the next several years. For 2018, we expect a normal seasonal decline in our revenue, margins and overhead leverage for the first quarter, followed by positive trends throughout the remainder of the year. We expect to deliver approximately 8,350-8,750 home closings in 2018 for total home closing revenue of approximately $3.4-3.6 billion, which should drive an 6-13% increase in pre-tax earnings. At this time, we are also projecting a home closing gross margin for the year of approximately 17.5-18%, with an opportunity for additional overhead leverage and the added benefit of a lower effective tax rate of approximately 25%, which should drive strong earnings growth in 2018.”

FOURTH QUARTER RESULTS
Pre-tax earnings increased 10% over the prior year to $84.1 million for the fourth quarter of 2017, from $76.3 million in the fourth quarter of 2016. The earnings growth primarily reflects higher home closing revenue and gross margins, supplemented by cost controls and overhead leverage.

2



Fourth quarter 2017 effective tax rate was 57.7%, compared to 32.1% in 2016. The higher rate in 2017 includes a $19.7 million charge in the fourth quarter of 2017 associated with a revaluation of the Company's deferred tax asset, reflecting the impact of a lower corporate tax rate enacted by the Tax Cuts and Jobs Act in December 2017 and effective beginning in 2018, as well as the expiration of energy tax credits which benefited the Company's effective tax rate in 2016.
As a result of these changes in tax regulations, fourth quarter net earnings were $35.6 million ($0.87 per diluted share) in 2017, compared to $51.8 million ($1.22 per diluted share) in 2016.
Home closing revenue increased 5% over the prior year on 6% higher closing volume. Despite general increases in market prices of homes over 2016, average closing prices for the Company were 1% lower in the fourth quarter of 2017, as a higher percentage of home closings were lower-priced entry-level homes, consistent with the Company’s strategic focus. Texas, Arizona and Florida, which have the greatest concentration of entry-level communities, drove nearly all the increases in closings and revenue.
Home closing gross margin increased to 18.2% for the fourth quarter of 2017, compared to 17.9% in the fourth quarter of 2016 and 18.1% in the third quarter of 2017, due to better margins in new communities as well as management of direct costs in an inflationary environment.
Selling, general and administrative expenses totaled 10.4% of home closing revenue compared to 10.5% in the fourth quarter of 2016, reflecting continued cost controls and slightly greater overhead leverage on higher home closing revenue.
Total orders for the fourth quarter increased 20% year-over-year due to strong demand, evidenced by an 18% increase in absorptions and a 3% increase in average active communities over the fourth quarter of 2016. Orders increased 47% in the East region, 19% in Texas and 5% in the West region. Average active community count in the West was 11% lower year-over-year, while total active community count for the Company was relatively flat at 244 on December 31, 2017, compared to 243 at December 31, 2016.
YEAR TO DATE RESULTS
Pre-tax earnings increased 14% for the year to $247.5 million in 2017, from $218.1 million in 2016, primarily reflecting higher home closing revenue and improved overhead leverage.
Net earnings of $143.3 million ($3.41 per diluted share) for the year 2017 compared to $149.5 million ($3.55 per diluted share) in 2016, reflecting the impact of higher tax expense in 2017 and the deferred tax asset revaluation.

3



The 6% year-over-year increase in 2017 home closing revenue resulted from a 5% increase in home closings and a 1% increase in average closing prices over 2016.
Higher home closing revenue led to a $33.3 million increase in home closing gross profit to $562.1 million in 2017, compared to $528.8 million in 2016. Home closing gross margin remained at 17.6% for the full year, as anticipated, with cost inflation offsetting the appreciation in average sales prices of homes closed in 2017.
Total commissions and selling expenses improved by approximately 20 basis points to 7.0% of 2017 home closing revenue from 7.2% in 2016. In addition, total general and administrative expenses also declined approximately 20 basis points to 3.9% of home closing revenue in 2017, compared to 4.1% in 2016.
BALANCE SHEET
Cash and cash equivalents at December 31, 2017, totaled $170.7 million, compared to $131.7 million at December 31, 2016, primarily reflecting net proceeds from a June 2017 debt issuance, partially offset by the use of cash to fund the purchase and development of lots, as well as additional homes under construction. Proceeds from the issuance of $300 million in new senior notes in June 2017 were primarily used to repay borrowings under the Company’s revolving credit facility and to retire all $126.5 million of the Company's 1.875% convertible senior notes.
A total of $250.3 million was invested in land and development during the fourth quarter of 2017 to meet current demand and position the company for future growth. Total spending on land and development for the full year 2017 was $1.0 billion, compared to $900.7 million in 2016.
Meritage ended 2017 with approximately 34,300 total lots owned or under control, compared to approximately 29,800 total lots at December 31, 2016. During the fourth quarter of 2017, the Company secured approximately 3,200 new lots to meet continued strong demand. Approximately 70% of the newly controlled lots added during the quarter were for entry-level communities.
Debt-to-capital and net debt-to-capital ratios of 44.9% and 41.4%, respectively at December 31, 2017, were maintained within management's target ranges, consistent with 44.2% and 41.2%, respectively at December 31, 2016, even as the Company's total investment in homes and land under development grew commensurate with its current and future growth expectations.
CONFERENCE CALL
Management will host a conference call at 10:00 a.m. Eastern Time (8:00 a.m. in Arizona) today to discuss the Company's results. The call will be webcast with an accompanying slideshow available on the "Investor

4



Relations" page of the Company's website at http://investors.meritagehomes.com. Telephone participants may avoid any 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://dpregister.com/10115673.
Telephone participants who are unable to pre-register may dial in on 866-226-4948 on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 for Canada.
A replay of the call will be available beginning at approximately 12:00 p.m. ET today and extending through February 15, 2018, on the website noted above or by dialing 877-344-7529, 1-412-317-0088 for international or 1-855-669-9658 for Canada, and referencing conference number 10115673.


5




Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
 
2017
 
2016
 
2017
 
2016
Homebuilding:
 
 
 
 
 
 
 
 
 
Home closing revenue
 
$
923,370

 
$
876,094

 
$
3,186,775

 
$
3,003,426

 
Land closing revenue
 
23,055

 
4,614

 
39,997

 
25,801

 
Total closing revenue
 
946,425

 
880,708

 
3,226,772

 
3,029,227

 
Cost of home closings
 
(755,067
)
 
(719,324
)
 
(2,624,636
)
 
(2,474,584
)
 
Cost of land closings
 
(20,133
)
 
(3,946
)
 
(35,637
)
 
(23,431
)
 
Total cost of closings
 
(775,200
)
 
(723,270
)
 
(2,660,273
)
 
(2,498,015
)
 
Home closing gross profit
 
168,303

 
156,770

 
562,139

 
528,842

 
Land closing gross profit
 
2,922

 
668

 
4,360

 
2,370

 
Total closing gross profit
 
171,225

 
157,438

 
566,499

 
531,212

Financial Services:
 
 
 
 
 
 
 
 
 
Revenue
 
4,061

 
3,392

 
14,203

 
12,507

 
Expense
 
(1,552
)
 
(1,435
)
 
(6,006
)
 
(5,587
)
 
Earnings from financial services unconsolidated entities and other, net
 
4,185

 
4,180

 
13,858

 
14,982

 
Financial services profit
 
6,694

 
6,137

 
22,055

 
21,902

Commissions and other sales costs
 
(62,781
)
 
(60,058
)
 
(221,647
)
 
(215,092
)
General and administrative expenses
 
(33,192
)
 
(32,029
)
 
(124,041
)
 
(123,803
)
Earnings from other unconsolidated entities, net
 
1,249

 
3,204

 
2,101

 
4,060

Interest expense
 
(292
)
 
(45
)
 
(3,853
)
 
(5,172
)
Other income, net
 
1,187

 
1,690

 
6,405

 
4,953

Earnings before income taxes
 
84,090

 
76,337

 
247,519

 
218,060

Provision for income taxes
 
(48,537
)
 
(24,530
)
 
(104,264
)
 
(68,519
)
Net earnings
 
$
35,553

 
$
51,807

 
$
143,255

 
$
149,541

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
Earnings per share
 
$
0.88

 
$
1.29

 
$
3.56

 
$
3.74

 
Weighted average shares outstanding
 
40,328

 
40,028

 
40,287

 
39,976

 
Diluted
 
 
 
 
 
 
 
 
 
Earnings per share
 
$
0.87

 
$
1.22

 
$
3.41

 
$
3.55

 
Weighted average shares outstanding
 
41,073

 
42,667

 
42,228

 
42,585





6





Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
 
December 31, 2017
 
December 31, 2016
Assets:
 
 
 
 
Cash and cash equivalents
 
$
170,746

 
$
131,702

Other receivables
 
79,317

 
70,355

Real estate (1)
 
2,731,380

 
2,422,063

Real estate not owned
 
38,864

 

Deposits on real estate under option or contract
 
59,945

 
85,556

Investments in unconsolidated entities
 
17,068

 
17,097

Property and equipment, net
 
33,631

 
33,202

Deferred tax asset
 
35,162

 
53,320

Prepaids, other assets and goodwill
 
85,145

 
75,396

Total assets
 
$
3,251,258

 
$
2,888,691

Liabilities:
 
 
 
 
Accounts payable
 
$
140,516

 
$
140,682

Accrued liabilities
 
181,076

 
170,852

Home sale deposits
 
34,059

 
28,348

Liabilities related to real estate not owned
 
34,978

 

Loans payable and other borrowings
 
17,354

 
32,195

Senior and convertible senior notes
 
1,266,450

 
1,095,119

Total liabilities
 
1,674,433

 
1,467,196

Stockholders' Equity:
 
 
 
 
Preferred stock
 

 

Common stock
 
403

 
400

Additional paid-in capital
 
584,578

 
572,506

Retained earnings
 
991,844

 
848,589

Total stockholders’ equity
 
1,576,825

 
1,421,495

Total liabilities and stockholders’ equity
 
$
3,251,258

 
$
2,888,691

(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
566,474

 
$
508,927

Unsold homes, completed and under construction
 
516,577

 
431,725

Model homes
 
142,026

 
147,406

Finished home sites and home sites under development
 
1,506,303

 
1,334,005

Total real estate
 
$
2,731,380

 
$
2,422,063







7



Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2017
 
2016
 
2017
 
2016
Depreciation and amortization
$
4,633

 
$
4,508

 
$
16,704

 
$
15,978

 
 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
 
 
Capitalized interest, beginning of period
$
76,773

 
$
67,631

 
$
68,196

 
$
61,202

Interest incurred
20,846

 
17,704

 
79,045

 
70,348

Interest expensed
(292
)
 
(45
)
 
(3,853
)
 
(5,172
)
Interest amortized to cost of home and land closings
(18,763
)
 
(17,094
)
 
(64,824
)
 
(58,182
)
Capitalized interest, end of period
$
78,564

 
$
68,196

 
$
78,564

 
$
68,196

 
 
 
 
 
 
 
 
 
December 31, 2017
 
December 31, 2016
 
 
 
 
Notes payable and other borrowings
$
1,283,804

 
$
1,127,314

 
 
 
 
Stockholders' equity
1,576,825

 
1,421,495

 
 
 
 
Total capital
2,860,629

 
2,548,809

 
 
 
 
Debt-to-capital
44.9
%
 
44.2
%
 
 
 
 
Notes payable and other borrowings
$
1,283,804

 
$
1,127,314

 
 
 
 
Less: cash and cash equivalents
(170,746
)
 
(131,702
)
 
 
 
 
Net debt
1,113,058

 
995,612

 
 
 
 
Stockholders’ equity
1,576,825

 
1,421,495

 
 
 
 
Total net capital
$
2,689,883

 
$
2,417,107

 
 
 
 
Net debt-to-capital
41.4
%
 
41.2
%
 
 
 

 



8



Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)
 
 
Twelve Months Ended December 31,
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
143,255

 
$
149,541

Adjustments to reconcile net earnings to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
16,704

 
15,978

Stock-based compensation
 
12,056

 
13,741

Excess income tax provision from stock-based awards
 

 
956

Equity in earnings from unconsolidated entities
 
(15,959
)
 
(19,042
)
Deferred tax asset revaluation
 
19,687

 

Distribution of earnings from unconsolidated entities
 
15,337

 
16,959

Other
 
5,849

 
9,539

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(301,477
)
 
(311,426
)
Decrease in deposits on real estate under option or contract
 
21,355

 
2,337

Increase in receivables, prepaids and other assets
 
(17,775
)
 
(17,513
)
Increase in accounts payable and accrued liabilities
 
8,125

 
43,377

Increase/(decrease) in home sale deposits
 
5,711

 
(7,849
)
Net cash used in operating activities
 
(87,132
)
 
(103,402
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
$
(670
)
 
$
(7,244
)
Distributions of capital from unconsolidated entities
 
1,338

 
3,600

Purchases of property and equipment
 
(18,096
)
 
(16,662
)
Proceeds from sales of property and equipment
 
356

 
200

Maturities/sales of investments and securities
 
1,402

 
746

Payments to purchase investments and securities
 
(1,402
)
 
(746
)
Net cash used in investing activities
 
(17,072
)
 
(20,106
)
Cash flows from financing activities:
 
 
 
 
(Repayments of)/proceeds from Credit Facility, net
 
$
(15,000
)
 
$
15,000

Repayment of loans payable and other borrowings
 
(10,970
)
 
(21,274
)
Repurchase/redemption of convertible senior notes
 
(126,691
)
 

Proceeds from issuance of senior notes
 
300,000

 

Payment of debt issuance costs
 
(4,091
)
 

Excess income tax provision from stock-based awards
 

 
(956
)
Proceeds from stock option exercises
 

 
232

Net cash provided by/(used in) financing activities
 
143,248

 
(6,998
)
Net increase/(decrease) in cash and cash equivalents
 
39,044

 
(130,506
)
Beginning cash and cash equivalents
 
131,702

 
262,208

Ending cash and cash equivalents
 
$
170,746

 
$
131,702


9



Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31, 2017
 
December 31, 2016
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
396

 
$
132,596

 
373

 
$
126,628

California
 
261

 
153,921

 
282

 
171,506

Colorado
 
154

 
89,941

 
160

 
78,278

West Region
 
811

 
376,458

 
815

 
376,412

Texas
 
741

 
267,139

 
567

 
212,587

Central Region
 
741

 
267,139

 
567

 
212,587

Florida
 
296

 
127,880

 
276

 
116,253

Georgia
 
89

 
29,830

 
108

 
37,263

North Carolina
 
163

 
68,432

 
198

 
80,222

South Carolina
 
90

 
29,857

 
97

 
32,274

Tennessee
 
63

 
23,774

 
56

 
21,083

East Region
 
701

 
279,773

 
735

 
287,095

Total
 
2,253

 
$
923,370

 
2,117

 
$
876,094

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
269

 
$
93,143

 
314

 
$
105,397

California
 
248

 
169,593

 
187

 
116,969

Colorado
 
129

 
69,550

 
116

 
64,887

West Region
 
646

 
332,286

 
617

 
287,253

Texas
 
582

 
211,413

 
490

 
185,557

Central Region
 
582

 
211,413

 
490

 
185,557

Florida
 
216

 
90,611

 
159

 
71,559

Georgia
 
102

 
33,407

 
28

 
11,682

North Carolina
 
143

 
54,672

 
108

 
48,959

South Carolina
 
66

 
22,911

 
60

 
19,253

Tennessee
 
40

 
15,040

 
31

 
11,732

East Region
 
567

 
216,641

 
386

 
163,185

Total
 
1,795

 
$
760,340

 
1,493

 
$
635,995


10



Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
 
Twelve Months Ended
 
 
December 31, 2017
 
December 31, 2016
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
1,535

 
$
515,410

 
1,122

 
$
384,767

California
 
963

 
581,016

 
1,020

 
590,340

Colorado
 
571

 
323,318

 
634

 
310,191

West Region
 
3,069

 
1,419,744

 
2,776

 
1,285,298

Texas
 
2,493

 
904,286

 
2,130

 
778,964

Central Region
 
2,493

 
904,286

 
2,130

 
778,964

Florida
 
814

 
353,554

 
895

 
368,564

Georgia
 
312

 
104,690

 
337

 
114,137

North Carolina
 
533

 
233,028

 
672

 
278,747

South Carolina
 
307

 
104,942

 
328

 
103,851

Tennessee
 
181

 
66,531

 
217

 
73,865

East Region
 
2,147

 
862,745

 
2,449

 
939,164

Total
 
7,709

 
$
3,186,775

 
7,355

 
$
3,003,426

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
1,417

 
$
473,602

 
1,249

 
$
428,204

California
 
1,050

 
650,287

 
962

 
559,832

Colorado
 
497

 
284,082

 
575

 
302,124

West Region
 
2,964

 
1,407,971

 
2,786

 
1,290,160

Texas
 
2,582

 
931,069

 
2,119

 
783,504

Central Region
 
2,582

 
931,069

 
2,119

 
783,504

Florida
 
1,007

 
433,365

 
861

 
367,012

Georgia
 
372

 
121,713

 
333

 
114,074

North Carolina
 
583

 
242,355

 
605

 
254,521

South Carolina
 
290

 
99,738

 
356

 
114,376

Tennessee
 
159

 
60,577

 
230

 
77,856

East Region
 
2,411

 
957,748

 
2,385

 
927,839

Total
 
7,957

 
$
3,296,788

 
7,290

 
$
3,001,503

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
326

 
$
119,535

 
444

 
$
161,343

California
 
318

 
222,909

 
231

 
153,638

Colorado
 
199

 
114,848

 
273

 
154,084

West Region
 
843

 
457,292

 
948

 
469,065

Texas
 
1,020

 
381,517

 
931

 
354,734

Central Region
 
1,020

 
381,517

 
931

 
354,734

Florida
 
446

 
196,265

 
253

 
116,454

Georgia
 
151

 
50,386

 
91

 
33,363

North Carolina
 
243

 
96,579

 
193

 
87,252

South Carolina
 
99

 
35,432

 
116

 
40,636

Tennessee
 
73

 
28,300

 
95

 
34,254

East Region
 
1,012

 
406,962

 
748

 
311,959

Total
 
2,875

 
$
1,245,771

 
2,627

 
$
1,135,758



11



Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31, 2017
 
December 31, 2016
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
38

 
39.0

 
42

 
41.0

California
 
20

 
22.0

 
28

 
28.5

Colorado
 
11

 
10.0

 
10

 
10.0

West Region
 
69

 
71.0

 
80

 
79.5

Texas
 
92

 
92.5

 
80

 
77.0

Central Region
 
92

 
92.5

 
80

 
77.0

Florida
 
28

 
28.5

 
27

 
26.5

Georgia
 
19

 
18.0

 
17

 
17.0

North Carolina
 
17

 
17.5

 
17

 
18.0

South Carolina
 
13

 
13.5

 
15

 
15.0

Tennessee
 
6

 
6.0

 
7

 
7.0

East Region
 
83

 
83.5

 
83

 
83.5

Total
 
244

 
247.0

 
243

 
240.0

 
 
Twelve Months Ended
 
 
December 31, 2017
 
December 31, 2016
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
38

 
40.0

 
42

 
41.5

California
 
20

 
24.0

 
28

 
26.0

Colorado
 
11

 
10.5

 
10

 
13.0

West Region
 
69

 
74.5

 
80

 
80.5

Texas
 
92

 
86.0

 
80

 
76.0

Central Region
 
92

 
86.0

 
80

 
76.0

Florida
 
28

 
27.5

 
27

 
29.0

Georgia
 
19

 
18.0

 
17

 
17.0

North Carolina
 
17

 
17.0

 
17

 
21.5

South Carolina
 
13

 
14.0

 
15

 
16.5

Tennessee
 
6

 
6.5

 
7

 
8.0

East Region
 
83

 
83.0

 
83

 
92.0

Total
 
244

 
243.5

 
243

 
248.5




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About Meritage Homes Corporation
Meritage Homes is the eighth-largest public homebuilder in the United States, based on homes closed in 2016. Meritage Homes builds and sells single-family homes for first- time, move-up, active adult and luxury buyers across the Western, Southern and Southeastern United States. Meritage Homes builds in markets including Sacramento, San Francisco Bay area, southern coastal and Inland Empire markets in California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale, Green Valley and Tucson, Arizona; Denver, Colorado; Orlando, Tampa and south Florida; Raleigh and Charlotte, North Carolina; Greenville-Spartanburg and York County, South Carolina; Nashville, Tennessee; and Atlanta, Georgia.
Meritage Homes has designed and built over 100,000 homes in its 32-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage Homes 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 investors.meritagehomes.com.
This press release and the accompanying comments during our analyst call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's belief about expected performance in the Company's East region, first quarter trends in revenue, margin and overhead leverage, as well as its expected 2018 home closings, home closing revenue, pre-tax earnings, gross margins and effective tax rate.
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. 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: potential adverse impacts on our Houston and Florida sales, closings, revenue and costs due to Hurricanes Harvey and Irma; growth in first-time home buyers; the availability and cost of finished lots and undeveloped land; changes in interest rates and the availability and pricing of residential mortgages; the success of strategic initiatives; shortages in the availability and cost of labor; changes in tax laws that adversely impact us or

13



our homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slower absorption (order) rates; impairments of our real estate inventory; 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; competition; construction defect and home warranty 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; enactment of new laws or regulations or our failure to comply with regulations; our limited geographic diversification; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing; 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; 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, 2016 and our subsequent Forms 10-Q, under the caption "Risk Factors," which can be found on our website.





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