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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) July 25, 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)
 
 
 
 
 
 N/A
 
 
(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 and 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 pursuant to Section 13 (a) of the Exchange Act. o
 







ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 25, 2018, we announced in a press release information concerning our results for the quarterly period ended June 30, 2018. 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 July 25, 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: July 25, 2018
 

MERITAGE HOMES CORPORATION
 
 
/s/
Hilla Sferruzza
By:
Hilla Sferruzza
 
Executive Vice President and Chief Financial Officer




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
394355940_mhlogo1linetaga09.jpg
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
(972) 580-6360 (office)
 
 
 
investors@meritagehomes.com

Meritage Homes reports second quarter 2018 diluted EPS of $1.31, up 34% over prior year; 13% increase in pre-tax earnings with 9% growth in home closing revenue and 60 bps increase in home closing gross margin;
Strong demand for entry-level homes represented 44% of total orders


SCOTTSDALE, Ariz., July 25, 2018 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported its second quarter results for the period ended June 30, 2018.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
% Chg
 
2018
 
2017
 
% Chg
Homes closed (units)
 
2,139

 
1,906

 
12
 %
 
3,864

 
3,487

 
11
 %
Home closing revenue
 
$
872,383

 
$
797,780

 
9
 %
 
$
1,600,915

 
$
1,458,397

 
10
 %
Average sales price - closings
 
$
408

 
$
419

 
(3
)%
 
$
414

 
$
418

 
(1
)%
Home orders (units)
 
2,250

 
2,153

 
5
 %
 
4,608

 
4,288

 
7
 %
Home order value
 
$
917,996

 
$
878,718

 
4
 %
 
$
1,880,792

 
$
1,771,421

 
6
 %
Average sales price - orders
 
$
408

 
$
408

 
 %
 
$
408

 
$
413

 
(1
)%
Ending backlog (units)
 
 
 
 
 
 
 
3,619

 
3,428

 
6
 %
Ending backlog value
 
 
 
 
 
 
 
$
1,528,756

 
$
1,448,782

 
6
 %
Average sales price - backlog
 


 


 


 
$
422

 
$
423

 
 %
Earnings before income taxes
 
$
71,185

 
$
63,205

 
13
 %
 
$
120,069

 
$
99,974

 
20
 %
Net earnings
 
$
53,838

 
$
41,580

 
29
 %
 
$
97,712

 
$
65,152

 
50
 %
Diluted EPS
 
$
1.31

 
$
0.98

 
34
 %
 
$
2.37

 
$
1.54

 
54
 %




1



MANAGEMENT COMMENTS
“We continued to experience generally healthy demand in our markets, especially for our entry-level LiVE.NOW.® homes, and our second quarter performance reflects the results of our strategy to address that demand, as well as the successful execution of our strategic initiatives to improve profitability,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our overall orders pace was 6% higher in the second quarter than it was in 2017 and is up 8% in the first half of the year. It’s evident that our LiVE.NOW. homes are driving the increases in orders pace, as they made up 44% of our orders this quarter compared to just 35% in last year’s second quarter.
“Our home closing gross margin for the quarter was 60 bps higher than last year’s second quarter, and we are particularly pleased with the improvements in our East region,” Mr. Hilton added. “This was our fifth consecutive quarter of year-over-year gains in home closing gross margin, despite significant increases in materials and labor costs over the last year.”
He continued, “We delivered a 13% increase in pre-tax earnings and our diluted earnings per share for the quarter was up 34% over last year, as the reduction in corporate tax rates for 2018 and our 2017 retirement of convertible notes are also positively impacting our diluted EPS this year.
"We expect continued healthy demand for entry-level homes and are maintaining our projections for full year 2018 home closings and total home closing revenue to grow to approximately 8,450-8,850 and $3.5-3.65 billion, respectively. Considering the improvement in our second quarter home closing gross margin, we are adjusting our expectation for the full year to 18-18.5%, tempered by potential further increases in materials costs due to recently proposed tariffs. Based on our strong second quarter earnings and improved overhead leverage for the year, we are increasing our projection for pre-tax earnings to $295-315 million for the year.'
Mr. Hilton added, “We expect to use part of our free cash flow over the next several quarters to repurchase up to $100 million of Meritage Homes stock under a new share repurchase program authorized by our board, replacing our prior program adopted in 2006. We may begin repurchasing shares as early as this quarter, depending on market and other conditions.”

SECOND QUARTER RESULTS
Net earnings of $53.8 million ($1.31 per diluted share) for the second quarter of 2018, increased 29% and 34%, respectively, compared to $41.6 million ($0.98 per diluted share) for the second quarter of 2017. Earnings before income taxes were up 13% year-over-year, primarily due to increases in home closing revenue and home closing gross margin.
Home closing revenue increased 9% with a 12% increase in closing volume, partially offset by a 3% decrease in average sales price compared to the second quarter of 2017, as demand has shifted more toward entry-level homes. The increases in closings and revenue were led by the East region (Florida, Georgia, North and South Carolina, and Tennessee), which delivered a 30% increase in home closing revenue with 35% more home closings at an average sales price 4% lower than the second quarter of 2017. The Central region (Texas) delivered home closings and revenue growth of 21% and 15%, respectively, with a 5% decrease in average price. West region home closing revenue (California, Colorado and Arizona) was 5% less than last year’s second quarter, as a 9% decline in closing volume reflected 8% fewer communities open on average during the

2



second quarter in 2018 than 2017, but was partially offset by a 4% increase in average price due to additional closings from higher-priced communities in California.
Home closing gross margin increased 60 bps to 18.3% for the second quarter of 2018, compared to 17.7% in the second quarter of 2017, primarily due to improved margins in the East region.
Selling, general and administrative expenses were 10.9% of second quarter 2018 home closing revenue, compared to 2017’s second quarter SG&A of 10.6% of home closing revenue. Approximately 15 bps of the year-over-year increase was due to the recognition of compensation expense in the second quarter of 2018 for certain performance-based equity awards. No comparable expense was incurred in 2017.
Interest expense declined $1.6 million for the second quarter of 2018 compared to 2017. The reduction was due to a greater percentage of interest capitalized to qualified assets under development, despite a $2.1 million increase in total interest incurred from the issuances of new senior notes in June 2017 and March 2018. The net proceeds of those higher-rate issuances were primarily used to retire maturing notes and repay outstanding borrowings under the Company’s revolving credit facility.
Second quarter effective tax rate was approximately 24% in 2018, compared to 34% in 2017, reflecting lower corporate income tax rates enacted for 2018.
Total orders for the second quarter of 2018 increased 5% year-over-year, driven by a 6% increase in orders pace (orders per average active community), partially offset by a 1% year-over-year decline in average active community count. Order growth in the East and Central regions offset a decline in the West region, with a significant 14% year-over-year increase in average orders pace for the East region.

YEAR TO DATE RESULTS
Net earnings were $97.7 million for the first half of 2018, a 50% increase over $65.2 million for the first half of 2017, primarily driven by a 10% increase in home closing revenue and a 70-bps improvement in home closing gross margin, as well as a lower effective tax rate for the first half of 2018 compared to 2017.
Home closings for the first half of the year increased 11% over 2017 and average prices on closings decreased 1% from the previous year.
Home closing gross profit increased 14% to $283.8 million in the first half of 2018 compared to $248.2 million in the first half of 2017, as home closing gross margin increased to 17.7% in the first half of 2018 from 17.0% in the first half of 2017.
Other income increased by $4.1 million in 2018 primarily due to a $4.8 million favorable legal settlement in the first quarter related to a previous joint venture in Nevada.
The effective tax rate for the first half of 2018 was 19%, compared to 35% for the first half of 2017, due to the lower statutory corporate tax rate in 2018, as well as $6.3 million of energy tax credits recorded in the first quarter of 2018 for homes closed in 2017 that qualified for the credits. These energy tax credits were extended

3



by Congress in 2018 for 2017 only, and are expected to reduce the full year 2018 effective tax rate by about 200 basis points.

BALANCE SHEET
Cash and cash equivalents at June 30, 2018, totaled $169.4 million, compared to $170.7 million at December 31, 2017. Real estate assets increased to $2.87 billion at June 30, 2018, compared to $2.73 billion at December 31, 2017. Approximately $191.2 million of the increase related to homes under construction or completed, partially offset by a $52.5 million decrease in finished home sites and land under development.
Under the Company's newly authorized $100 million share repurchase program, repurchases of the Company’s shares may be made in the open market, in privately negotiated transactions, or otherwise. The timing and amount of repurchases, if any, will be determined by the Company’s management at its discretion and be based on a variety of factors such as the market price of the Company’s common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The share repurchase program may be modified, suspended or discontinued at any time. The Company intends to retire any shares repurchased.
Meritage ended the second quarter of 2018 with approximately 33,700 total lots owned or under control, compared to approximately 33,500 total lots at June 30, 2017. Approximately 85% of the nearly 2,600 lots added during the second quarter were in communities planned for entry-level product.
Debt-to-capital ratios were 43.8% at June 30, 2018 and 44.9% at December 31, 2017, with net debt-to-capital ratios of 40.4% and 41.4%, respectively, remaining well within management’s target range for this key ratio.
The Company expanded capacity available under its unsecured revolving credit facility to $780 million during the second quarter of 2018 and extended the maturity date to July 2022, ending the quarter with no borrowings outstanding under the credit facility.

CONFERENCE CALL
Management will host a conference call to discuss the results at 8:00 a.m. Arizona Time (11:00 a.m. Eastern Time) on Thursday, July 26.
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 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/10121676
Telephone participants who are unable to pre-register may dial in to 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 1:00 p.m. ET on July 26 and extending through August 9, 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 10121676.

4




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

 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Homebuilding:
 
 
 
 
 
 
 
 
Home closing revenue
$
872,383

 
$
797,780

 
$
1,600,915

 
$
1,458,397

 
Land closing revenue
5,112

 
4,198

 
19,144

 
16,353

 
Total closing revenue
877,495

 
801,978

 
1,620,059

 
1,474,750

 
Cost of home closings
(712,868
)
 
(656,870
)
 
(1,317,070
)
 
(1,210,219
)
 
Cost of land closings
(5,799
)
 
(4,198
)
 
(21,041
)
 
(13,858
)
 
Total cost of closings
(718,667
)
 
(661,068
)
 
(1,338,111
)
 
(1,224,077
)
 
Home closing gross profit
159,515

 
140,910

 
283,845

 
248,178

 
Land closing gross (loss)/profit
(687
)
 

 
(1,897
)
 
2,495

 
Total closing gross profit
158,828

 
140,910

 
281,948

 
250,673

Financial Services:
 
 
 
 
 
 
 
 
Revenue
3,870

 
3,649

 
6,918

 
6,593

 
Expense
(1,693
)
 
(1,551
)
 
(3,177
)
 
(2,930
)
 
Earnings from financial services unconsolidated entities and other, net
3,474

 
3,459

 
6,130

 
6,184

 
Financial services profit
5,651

 
5,557

 
9,871

 
9,847

Commissions and other sales costs
(60,823
)
 
(54,701
)
 
(113,575
)
 
(103,021
)
General and administrative expenses
(34,205
)
 
(29,591
)
 
(65,098
)
 
(59,213
)
(Loss)/earnings from other unconsolidated entities, net
(156
)
 
570

 
(202
)
 
943

Interest expense
(44
)
 
(1,620
)
 
(180
)
 
(2,445
)
Other income, net
1,934

 
2,080

 
7,305

 
3,190

Earnings before income taxes
71,185

 
63,205

 
120,069

 
99,974

Provision for income taxes
(17,347
)
 
(21,625
)
 
(22,357
)
 
(34,822
)
Net earnings
$
53,838

 
$
41,580

 
$
97,712

 
$
65,152

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
Earnings per share
$
1.32

 
$
1.03

 
$
2.41

 
$
1.62

 
Weighted average shares outstanding
40,647

 
40,317

 
40,568

 
40,248

 
Diluted
 
 
 
 
 
 
 
 
Earnings per share
$
1.31

 
$
0.98

 
$
2.37

 
$
1.54

 
Weighted average shares outstanding
41,164

 
42,781

 
41,193

 
42,836





5




Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
 
June 30, 2018
 
December 31, 2017
Assets:
 
 
 
 
Cash and cash equivalents
 
$
169,426

 
$
170,746

Other receivables
 
78,395

 
79,317

Real estate (1)
 
2,870,047

 
2,731,380

Real estate not owned
 
38,864

 
38,864

Deposits on real estate under option or contract
 
48,880

 
59,945

Investments in unconsolidated entities
 
16,639

 
17,068

Property and equipment, net
 
52,122

 
33,631

Deferred tax asset
 
36,294

 
35,162

Prepaids, other assets and goodwill
 
84,227

 
85,145

Total assets
 
$
3,394,894

 
$
3,251,258

Liabilities:
 
 
 
 
Accounts payable
 
$
154,819

 
$
140,516

Accrued liabilities
 
173,770

 
181,076

Home sale deposits
 
37,130

 
34,059

Liabilities related to real estate not owned
 
34,978

 
34,978

Loans payable and other borrowings
 
16,552

 
17,354

Senior notes, net
 
1,294,705

 
1,266,450

Total liabilities
 
1,711,954

 
1,674,433

Stockholders' Equity:
 
 
 
 
Preferred stock
 

 

Common stock
 
406

 
403

Additional paid-in capital
 
593,561

 
584,578

Retained earnings
 
1,088,973

 
991,844

Total stockholders’ equity
 
1,682,940

 
1,576,825

Total liabilities and stockholders’ equity
 
$
3,394,894

 
$
3,251,258


(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
715,373

 
$
566,474

Unsold homes, completed and under construction
 
562,435

 
516,577

Model homes
 
138,441

 
142,026

Finished home sites and home sites under development
 
1,453,798

 
1,506,303

Total real estate
 
$
2,870,047

 
$
2,731,380






6



Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Depreciation and amortization
$
6,742

 
$
4,202

 
$
12,608

 
$
7,872

 
 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
 
 
Capitalized interest, beginning of period
$
81,828

 
$
70,885

 
$
78,564

 
$
68,196

Interest incurred
21,374

 
19,280

 
42,243

 
37,175

Interest expensed
(44
)
 
(1,620
)
 
(180
)
 
(2,445
)
Interest amortized to cost of home and land closings
(18,715
)
 
(16,218
)
 
(36,184
)
 
(30,599
)
Capitalized interest, end of period
$
84,443

 
$
72,327

 
$
84,443

 
$
72,327

 
 
 
 
 
 
 
 
 
June 30, 2018
 
December 31, 2017
 
 
 
 
Notes payable and other borrowings
$
1,311,257

 
$
1,283,804

 
 
 
 
Stockholders' equity
1,682,940

 
1,576,825

 
 
 
 
Total capital
2,994,197

 
2,860,629

 
 
 
 
Debt-to-capital
43.8
%
 
44.9
%
 
 
 
 
Notes payable and other borrowings
$
1,311,257

 
$
1,283,804

 
 
 
 
Less: cash and cash equivalents
$
(169,426
)
 
$
(170,746
)
 
 
 
 
Net debt
1,141,831

 
1,113,058

 
 
 
 
Stockholders’ equity
1,682,940

 
1,576,825

 
 
 
 
Total net capital
$
2,824,771

 
$
2,689,883

 
 
 
 
Net debt-to-capital
40.4
%
 
41.4
%
 
 
 

 



7



Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands)
(Unaudited)
 
 
Six Months Ended June 30,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
97,712

 
$
65,152

Adjustments to reconcile net earnings to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
12,608

 
7,872

Stock-based compensation
 
8,976

 
5,785

Equity in earnings from unconsolidated entities
 
(5,978
)
 
(7,127
)
Distribution of earnings from unconsolidated entities
 
6,834

 
6,712

Other
 
2,407

 
10

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(155,809
)
 
(211,384
)
Decrease in deposits on real estate under option or contract
 
11,093

 
9,308

Decrease/(increase) in other receivables, prepaids and other assets
 
1,634

 
(9,428
)
Increase/(decrease) in accounts payable and accrued liabilities
 
6,997

 
(5,497
)
Increase in home sale deposits
 
3,071

 
7,849

Net cash used in operating activities
 
(10,455
)
 
(130,748
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
(417
)
 
(408
)
Distributions of capital from unconsolidated entities
 

 
1,250

Purchases of property and equipment
 
(15,726
)
 
(8,322
)
Proceeds from sales of property and equipment
 
92

 
86

Maturities/sales of investments and securities
 
1,065

 
1,258

Payments to purchase investments and securities
 
(1,065
)
 
(1,258
)
Net cash used in investing activities
 
(16,051
)
 
(7,394
)
Cash flows from financing activities:
 
 
 
 
Repayment of Credit Facility, net
 

 
(15,000
)
Repayment of loans payable and other borrowings
 
(2,499
)
 
(5,725
)
Repayment of senior notes and senior convertible notes
 
(175,000
)
 
(52,098
)
Proceeds from issuance of senior notes
 
206,000

 
300,000

Payment of debt issuance costs
 
(3,315
)
 
(3,998
)
Net cash provided by financing activities
 
25,186

 
223,179

Net (decrease)/increase in cash and cash equivalents
 
(1,320
)
 
85,037

Beginning cash and cash equivalents
 
170,746

 
131,702

Ending cash and cash equivalents
 
$
169,426

 
$
216,739

 


8



Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
2018
 
2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
366

 
$
118,272

 
419

 
$
141,015

California
 
206

 
142,019

 
231

 
140,270

Colorado
 
162

 
89,421

 
154

 
88,289

West Region
 
734

 
349,712

 
804

 
369,574

Texas
 
741

 
259,344

 
610

 
225,679

Central Region
 
741

 
259,344

 
610

 
225,679

Florida
 
252

 
110,467

 
187

 
82,448

Georgia
 
104

 
34,835

 
73

 
25,366

North Carolina
 
195

 
77,075

 
132

 
59,560

South Carolina
 
76

 
26,885

 
70

 
23,866

Tennessee
 
37

 
14,065

 
30

 
11,287

East Region
 
664

 
263,327

 
492

 
202,527

Total
 
2,139

 
$
872,383

 
1,906

 
$
797,780

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
416

 
$
135,717

 
397

 
$
129,870

California
 
190

 
131,699

 
274

 
162,597

Colorado
 
166

 
89,818

 
133

 
76,978

West Region
 
772

 
357,234

 
804

 
369,445

Texas
 
766

 
277,556

 
714

 
254,642

Central Region
 
766

 
277,556

 
714

 
254,642

Florida
 
320

 
136,534

 
283

 
120,951

Georgia
 
109

 
41,964

 
99

 
32,865

North Carolina
 
143

 
54,704

 
143

 
61,375

South Carolina
 
88

 
30,652

 
66

 
22,840

Tennessee
 
52

 
19,352

 
44

 
16,600

East Region
 
712

 
283,206

 
635

 
254,631

Total
 
2,250

 
$
917,996

 
2,153

 
$
878,718


9



 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2018
 
2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
641

 
$
209,268

 
715

 
$
241,565

California
 
437

 
301,410

 
441

 
272,364

Colorado
 
256

 
143,807

 
282

 
155,649

West Region
 
1,334

 
654,485

 
1,438

 
669,578

Texas
 
1,283

 
451,089

 
1,105

 
400,388

Central Region
 
1,283

 
451,089

 
1,105

 
400,388

Florida
 
512

 
223,254

 
333

 
148,022

Georgia
 
177

 
59,808

 
128

 
45,841

North Carolina
 
323

 
127,748

 
263

 
116,467

South Carolina
 
142

 
49,006

 
143

 
49,921

Tennessee
 
93

 
35,525

 
77

 
28,180

East Region
 
1,247

 
495,341

 
944

 
388,431

Total
 
3,864

 
$
1,600,915

 
3,487

 
$
1,458,397

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
875

 
$
288,878

 
800

 
$
263,702

California
 
409

 
292,097

 
602

 
356,355

Colorado
 
341

 
186,913

 
276

 
159,073

West Region
 
1,625

 
767,888

 
1,678

 
779,130

Texas
 
1,575

 
557,059

 
1,407

 
506,415

Central Region
 
1,575

 
557,059

 
1,407

 
506,415

Florida
 
583

 
249,204

 
522

 
222,511

Georgia
 
257

 
92,834

 
168

 
55,267

North Carolina
 
300

 
116,189

 
293

 
127,707

South Carolina
 
168

 
59,326

 
138

 
48,378

Tennessee
 
100

 
38,292

 
82

 
32,013

East Region
 
1,408

 
555,845

 
1,203

 
485,876

Total
 
4,608

 
$
1,880,792

 
4,288

 
$
1,771,421

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
560

 
$
199,508

 
529

 
$
183,480

California
 
290

 
213,761

 
392

 
237,629

Colorado
 
284

 
158,019

 
267

 
157,508

West Region
 
1,134

 
571,288

 
1,188

 
578,617

Texas
 
1,312

 
489,106

 
1,233

 
460,761

Central Region
 
1,312

 
489,106

 
1,233

 
460,761

Florida
 
517

 
222,653

 
442

 
190,943

Georgia
 
231

 
83,505

 
131

 
42,789

North Carolina
 
220

 
85,273

 
223

 
98,492

South Carolina
 
125

 
45,805

 
111

 
39,093

Tennessee
 
80

 
31,126

 
100

 
38,087

East Region
 
1,173

 
468,362

 
1,007

 
409,404

Total
 
3,619

 
$
1,528,756

 
3,428

 
$
1,448,782



10



Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
2018
 
2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
40

 
38.5

 
39

 
40.5

California
 
15

 
15.0

 
26

 
27.5

Colorado
 
19

 
18.0

 
10

 
10.0

West Region
 
74

 
71.5

 
75

 
78.0

Texas
 
90

 
93.5

 
92

 
88.5

Central Region
 
90

 
93.5

 
92

 
88.5

Florida
 
30

 
29.0

 
30

 
31.0

Georgia
 
20

 
20.5

 
19

 
18.0

North Carolina
 
20

 
20.0

 
20

 
19.0

South Carolina
 
11

 
11.5

 
14

 
14.5

Tennessee
 
8

 
7.0

 
7

 
7.5

East Region
 
89

 
88.0

 
90

 
90.0

Total
 
253

 
253.0

 
257

 
256.5


 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2018
 
2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
40

 
39.0

 
39

 
40.5

California
 
15

 
17.5

 
26

 
27.0

Colorado
 
19

 
15.0

 
10

 
10.0

West Region
 
74

 
71.5

 
75

 
77.5

Texas
 
90

 
91.0

 
92

 
86.0

Central Region
 
90

 
91.0

 
92

 
86.0

Florida
 
30

 
29.0

 
30

 
28.5

Georgia
 
20

 
19.5

 
19

 
18.0

North Carolina
 
20

 
18.5

 
20

 
18.5

South Carolina
 
11

 
12.0

 
14

 
14.5

Tennessee
 
8

 
7.0

 
7

 
7.0

East Region
 
89

 
86.0

 
90

 
86.5

Total
 
253

 
248.5

 
257

 
250.0




11



About Meritage Homes Corporation
Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2017. Meritage builds and sells single-family homes for entry-level, move-up, and active adult buyers in markets including California, Texas, Arizona, Colorado, Florida, North Carolina, South Carolina, Tennessee and Georgia.
The Company has designed and built over 110,000 homes in its 32-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 home closings, home closing revenue, home closing gross margin and pre-tax earnings for the full year 2018, as well as management's intentions to repurchase shares.
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: the availability and cost of finished lots and undeveloped land; shortages in the availability and cost of labor; changes in interest rates and the availability and pricing of residential mortgages; changes in tax laws that adversely impact us or our homebuyers; inflation in the cost of materials used to develop communities and construct homes; the success of strategic initiatives; the ability of our potential buyers to sell their existing homes; cancellation rates; the adverse effect of slow absorption rates; slowing in the growth of entry-level home buyers; competition; 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; 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, 2017 and Form

12



10-Q for the first quarter ended March 31, 2018 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.


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