EX-99.1 2 mth20181231exhibit991q4ear.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

mhlogo1linetaga11.jpg
 
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
 
(972) 580-6360 (office)
 
 
 
 
investors@meritagehomes.com

Meritage Homes reports diluted EPS of $5.58 for 2018, with 14% increase in pre-tax earnings on 11% growth in home closings

Completed previously authorized $100 million share repurchase program

SCOTTSDALE, Ariz., January 30, 2019 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2018.


Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2018
 
2017
 
% Chg
 
2018
 
2017
 
% Chg
Homes closed (units)
2,505

 
2,253

 
11
 %
 
8,531

 
7,709

 
11
 %
Home closing revenue
$
996,063

 
$
923,370

 
8
 %
 
$
3,474,712

 
$
3,186,775

 
9
 %
Average sales price - closings
$
398

 
$
410

 
(3
)%
 
$
407

 
$
413

 
(1
)%
Home orders (units)
1,653

 
1,795

 
(8
)%
 
8,089

 
7,957

 
2
 %
Home order value
$
644,210

 
$
760,340

 
(15
)%
 
$
3,240,091

 
$
3,296,788

 
(2
)%
Average sales price - orders
$
390

 
$
424

 
(8
)%
 
$
401

 
$
414

 
(3
)%
Ending backlog (units)
 
 
 
 
 
 
2,433

 
2,875

 
(15
)%
Ending backlog value
 
 
 
 
 
 
$
1,015,918

 
$
1,245,771

 
(18
)%
Average sales price - backlog


 


 

 
$
418

 
$
433

 
(4
)%
Earnings before income taxes
$
91,776

 
$
84,090

 
9
 %
 
$
283,254

 
$
247,519

 
14
 %
Net earnings
$
75,485

 
$
35,553

 
112
 %
 
$
227,332

 
$
143,255

 
59
 %
Diluted EPS
$
1.91

 
$
0.87

 
120
 %
 
$
5.58

 
$
3.41

 
64
 %

1


MANAGEMENT COMMENTS
“2018 was a year of growth and transition for Meritage as well as the broader housing market. Our home closings grew 11% for the year and we increased diluted earnings per share by 64% over 2017, with a 60 bps improvement in our home closing gross margin. The strong demand early in the year waned in the later months of 2018 as rising interest rates and home prices caused buyers to delay their home purchasing decisions,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “This was most evident in higher-priced communities, while the demand for affordable entry-level homes continued to outpace the move-up market.
“We made additional progress in aligning our strategy of streamlining and driving efficiency to ultimately better serve our customers, especially the growing number of first-time buyers. Our LiVE.NOW.® communities are targeted at this large and under-served demographic of homebuyers,” explained Mr. Hilton. “The construction and operating efficiencies we’re achieving are allowing us to offer more affordable homes while also generating greater profitability. Our increased home closing gross margin was a primary driver of the 59% growth in net earnings for the year and exceeded our initial expectation for 2018.
He added, "We also strengthened our balance sheet, reducing our net debt-to-capital ratio by almost 500 bps, while returning capital to our investors through the repurchase of $100 million of our outstanding shares.
“As a result of the pause in home buying activity during the latter part of 2018, our orders for the fourth quarter were down 8% from the strong fourth quarter of 2017. Despite the order declines in the second half of the year, our full year orders were up 2% over 2017. Orders for more affordable entry-level homes expanded approximately 25% to 41% of our full year orders for 2018, up from approximately one-third of orders a year ago," he continued. “Markets like California, Denver and Dallas, which had experienced the strongest orders pace and home price appreciation over the last few years, were among those most impacted by reduced affordability and changing buyer preferences, as reflected in our fourth quarter year-over-year order trends, and we are in the process of ramping up our entry-level communities in those markets.
"As we continue the transition to more entry-level communities for the Millennial generation, as well as Baby Boomers looking to move down into a new home, we believe we’re well positioned to address what is expected to be the strongest part of the market for the next decade," concluded Mr. Hilton. “While the near-term outlook is less clear, we’re confident in the longer-term opportunities, considering the underlying drivers for housing demand remain strong. Economic and job growth, household formations, higher incomes and strong consumer confidence, combined with relatively low inventories of homes for sale and the prospect of interest rates stabilizing, should continue to drive demand. We expect to share our projections for the full year 2019 next quarter after we assess market conditions with the benefit of the spring selling season.”

2


FOURTH QUARTER RESULTS
•
Pre-tax earnings increased 9% over the prior year to $91.8 million for the fourth quarter of 2018, from $84.1 million in the fourth quarter of 2017. Pre-tax earnings growth primarily reflects higher home closing revenue and gross margins. Fourth quarter net earnings were $75.5 million ($1.91 per diluted share) in 2018, compared to $35.6 million ($0.87 per diluted share) in 2017. The 120% increase in diluted EPS reflects the benefit of an effective tax rate of 18% in 2018, compared to 58% in the fourth quarter of 2017, which included a $19.7 million charge resulting from a revaluation of the Company's deferred tax asset based on lower corporate tax rates enacted in 2017 and effective in 2018, as well as a 1.5 million reduction in diluted share count primarily due to the repurchase of shares in the fourth quarter of 2018.
•
Home closing revenue increased 8% over the prior year on 11% higher closing volume. Average closing prices for homes were 3% lower in the fourth quarter of 2018, reflecting a mix shift toward more entry-level homes. Fourth quarter closings grew year-over-year in all states but California, where a 21% decline in closings resulted from lower absorptions and fewer communities on average in the fourth quarter of 2018 compared to 2017.
•
Home closing gross margin increased to 19.0% for the fourth quarter of 2018, its highest level since 2015, and compared to 18.2% in the fourth quarter of 2017. The improved margins reflect efficiencies in operations and cost controls within an inflationary environment.
•
Land closing gross profit of $2.9 million in the fourth quarter of 2017 benefited the prior year's net earnings, while 2018 land closings included $2.2 million of impairments, resulting in a net loss of $825,000.
•
Selling, general and administrative expenses totaled 10.6% of home closing revenue compared to 10.4% in the fourth quarter of 2017. Additional marketing costs and sales commissions were incurred in an effort to stimulate orders in the fourth quarter of 2018, which combined with lower than expected closings and resulted in a loss of leverage of overhead expenses.
•
Total orders for the fourth quarter were 8% lower than 2017, which benefited from a rebound in Florida and Houston orders following the hurricanes during the third quarter of 2017. Those events contributed to an unusually strong fourth quarter of 2017 with 20% orders growth and an 18% increase in absorptions over 2016. Traffic levels and gross sales in the fourth quarter of 2018 were on par or better than the previous year, though cancellations increased to 21% of orders from 16% in the prior year, reflecting heightened caution among buyers due to uncertain market conditions. This was especially pronounced in California and Colorado, where absorptions came down to near the company average in 2018, compared to their highly elevated levels in 2017.


3


YEAR TO DATE RESULTS
•
Pre-tax earnings increased 14% for the year to $283.3 million in 2018, from $247.5 million in 2017, primarily reflecting higher home closing revenue and home closing gross margin, similar to fourth quarter comparisons.
•
Net earnings of $227.3 million ($5.58 per diluted share) for the year 2018 compared to $143.3 million ($3.41 per diluted share) in 2017, also reflected the benefit of a 20% effective tax rate in 2018 compared to 42% in 2017, and a 1.5 million reduction in diluted shares for the year.
•
A 9% increase in home closing revenue over 2017 was due to an 11% increase in home closing volume, partially offset by a 1% decrease in average closing price, due to an intentional shift toward more entry-level communities with higher absorptions.
•
A 60 bps improvement in home closing gross margin – 18.2% in 2018 compared to 17.6% in 2017 -- combined with the 9% increase in home closing revenue, drove a 12% increase in home closing gross profit and the 14% increase in pre-tax earnings.
•
Total selling, general and administrative expenses were relatively flat at 10.9% and 10.8% of home closing revenue in 2018 and 2017, respectively.
•
Total orders for the year increased 2% over 2017, with a 2% decline in total orders value, reflecting a 3% reduction in ASP (average sales price) for the year, as the overall mix shifted more towards lower-priced entry-level homes.

BALANCE SHEET
•
Cash and cash equivalents at December 31, 2018, totaled $311.5 million, compared to $170.7 million at December 31, 2017. The increase was primarily due to a $209 million reduction in total land and development spending in 2018, primarily due to lower average lot cost of new entry-level lots and constrained spending in the second half of the year, partially offset by $100 million of share repurchases.
•
A total of $195 million was invested in land and development during the fourth quarter of 2018 to meet expected demand and maintain an adequate supply of lots. Total spending on land and development for the full year 2018 was $812 million, compared to $1.02 billion in 2017.
•
Meritage ended 2018 with approximately 34,600 total lots owned or under control, in line with approximately 34,300 total lots at December 31, 2017, translating to 4.1 and 4.5 years supply, respectively, based on trailing twelve months closings. Management targets maintaining a 4-5 year supply of lots. Approximately 69% of total controlled lots were owned and 85% of newly controlled lots in 2018 are intended for entry-level communities.

4


•
The Company repurchased and retired approximately 2.58 million shares (approximately 6.4% of outstanding common stock at the beginning of the year) for $100 million during 2018, completing the full amount previously authorized by the Company’s Board of Directors.
•
Debt-to-capital and net debt-to-capital ratios of 43.2% and 36.7%, respectively at December 31, 2018, were reduced from 44.9% and 41.4%, respectively at December 31, 2017, strengthening the Company's balance sheet and providing greater flexibility to respond to dynamic market conditions.

CONFERENCE CALL
Management will host a conference call to discuss the results at 8:00 a.m. Arizona Time (10:00 a.m. Eastern Time) on Thursday, January 31. The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants can avoid delays by 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/10127573
Telephone participants who are unable to pre-register may dial in to 1-866-226-4948 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 on January 31 and extending through February 14, 2019, on the website noted above or by dialing 1-877-344-7529, 1-412-317-0088 for international or 1-855-669-9658 for Canada, and referencing conference number 10127573.

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,
 
 
 
2018
 
2017
 
2018
 
2017
Homebuilding:
 
 
 
 
 
 
 
 
 
Home closing revenue
 
$
996,063

 
$
923,370

 
$
3,474,712

 
$
3,186,775

 
Land closing revenue
 
12,716

 
23,055

 
38,707

 
39,997

 
Total closing revenue
 
1,008,779

 
946,425

 
3,513,419

 
3,226,772

 
Cost of home closings
 
(806,550
)
 
(755,067
)
 
(2,842,762
)
 
(2,624,636
)
 
Cost of land closings
 
(13,541
)
 
(20,133
)
 
(41,504
)
 
(35,637
)
 
Total cost of closings
 
(820,091
)
 
(775,200
)
 
(2,884,266
)
 
(2,660,273
)
 
Home closing gross profit
 
189,513

 
168,303

 
631,950

 
562,139

 
Land closing (loss)/gross profit
 
(825
)
 
2,922

 
(2,797
)
 
4,360

 
Total closing gross profit
 
188,688

 
171,225

 
629,153

 
566,499

Financial Services:
 
 
 
 
 
 
 
 
 
Revenue
 
4,412

 
4,061

 
15,162

 
14,203

 
Expense
 
(1,618
)
 
(1,552
)
 
(6,454
)
 
(6,006
)
 
Earnings from financial services unconsolidated entities and other, net
 
5,058

 
4,185

 
15,336

 
13,858

 
Financial services profit
 
7,852

 
6,694

 
24,044

 
22,055

Commissions and other sales costs
 
(68,040
)
 
(62,781
)
 
(241,897
)
 
(221,647
)
General and administrative expenses
 
(37,474
)
 
(33,192
)
 
(138,478
)
 
(124,041
)
(Loss)/earnings from other unconsolidated entities, net
 
(91
)
 
1,249

 
601

 
2,101

Interest expense
 
(552
)
 
(292
)
 
(785
)
 
(3,853
)
Other income, net
 
1,393

 
1,187

 
10,616

 
6,405

Earnings before income taxes
 
91,776

 
84,090

 
283,254

 
247,519

Provision for income taxes
 
(16,291
)
 
(48,537
)
 
(55,922
)
 
(104,264
)
Net earnings
 
$
75,485

 
$
35,553

 
$
227,332

 
$
143,255

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
Earnings per share
 
$
1.93

 
$
0.88

 
$
5.67

 
$
3.56

 
Weighted average shares outstanding
 
39,026

 
40,328

 
40,107

 
40,287

 
Diluted
 
 
 
 
 
 
 
 
 
Earnings per share
 
$
1.91

 
$
0.87

 
$
5.58

 
$
3.41

 
Weighted average shares outstanding
 
39,575

 
41,073

 
40,728

 
42,228



6




Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
 
December 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
Cash and cash equivalents
 
$
311,466

 
$
170,746

Other receivables
 
77,285

 
79,317

Real estate (1)
 
2,742,621

 
2,731,380

Real estate not owned
 
—

 
38,864

Deposits on real estate under option or contract
 
51,410

 
59,945

Investments in unconsolidated entities
 
17,480

 
17,068

Property and equipment, net
 
54,596

 
33,631

Deferred tax asset
 
26,465

 
35,162

Prepaids, other assets and goodwill
 
84,156

 
85,145

Total assets
 
$
3,365,479

 
$
3,251,258

Liabilities:
 
 
 
 
Accounts payable
 
$
128,169

 
$
140,516

Accrued liabilities
 
177,862

 
181,076

Home sale deposits
 
28,636

 
34,059

Liabilities related to real estate not owned
 
—

 
34,978

Loans payable and other borrowings
 
14,773

 
17,354

Senior notes
 
1,295,284

 
1,266,450

Total liabilities
 
1,644,724

 
1,674,433

Stockholders' Equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
381

 
403

Additional paid-in capital
 
501,781

 
584,578

Retained earnings
 
1,218,593

 
991,844

Total stockholders’ equity
 
1,720,755

 
1,576,825

Total liabilities and stockholders’ equity
 
$
3,365,479

 
$
3,251,258

(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
480,143

 
$
566,474

Unsold homes, completed and under construction
 
644,717

 
516,577

Model homes
 
146,327

 
142,026

Finished home sites and home sites under development
 
1,471,434

 
1,506,303

Total real estate
 
$
2,742,621

 
$
2,731,380




7





Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
Depreciation and amortization
$
7,508

 
$
4,633

 
$
26,966

 
$
16,704

 
 
 
 
 
 
 
 
Summary of Capitalized Interest:
 
 
 
 
 
 
 
Capitalized interest, beginning of period
$
88,064

 
$
76,773

 
$
78,564

 
$
68,196

Interest incurred
21,490

 
20,846

 
85,278

 
79,045

Interest expensed
(552
)
 
(292
)
 
(785
)
 
(3,853
)
Interest amortized to cost of home and land closings
(20,548
)
 
(18,763
)
 
(74,603
)
 
(64,824
)
Capitalized interest, end of period
$
88,454

 
$
78,564

 
$
88,454

 
$
78,564

 
 
 
 
 
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
Notes payable and other borrowings
$
1,310,057

 
$
1,283,804

 
 
 
 
Stockholders' equity
1,720,755

 
1,576,825

 
 
 
 
Total capital
3,030,812

 
2,860,629

 
 
 
 
Debt-to-capital
43.2
%
 
44.9
%
 
 
 
 
Notes payable and other borrowings
$
1,310,057

 
$
1,283,804

 
 
 
 
Less: cash and cash equivalents
(311,466
)
 
(170,746
)
 
 
 
 
Net debt
998,591

 
1,113,058

 
 
 
 
Stockholders’ equity
1,720,755

 
1,576,825

 
 
 
 
Total net capital
$
2,719,346

 
$
2,689,883

 
 
 
 
Net debt-to-capital
36.7
%
 
41.4
%
 
 
 

 



8


Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)
 
 
Twelve Months Ended December 31,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
227,332

 
$
143,255

Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities:
 
 
 
 
Depreciation and amortization
 
26,966

 
16,704

Stock-based compensation
 
17,170

 
12,056

Equity in earnings from unconsolidated entities
 
(16,333
)
 
(15,959
)
Deferred tax asset revaluation
 
(2,741
)
 
19,687

Distribution of earnings from unconsolidated entities
 
16,142

 
15,337

Other
 
15,847

 
5,849

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(19,426
)
 
(301,477
)
Decrease in deposits on real estate under option or contract
 
12,444

 
21,355

Decrease/(increase) in receivables, prepaids and other assets
 
3,042

 
(17,775
)
(Decrease)/increase in accounts payable and accrued liabilities
 
(12,820
)
 
8,125

(Decrease)/increase in home sale deposits
 
(5,423
)
 
5,711

Net cash provided by/(used in) operating activities
 
262,200

 
(87,132
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
$
(808
)
 
$
(670
)
Distributions of capital from unconsolidated entities
 
597

 
1,338

Purchases of property and equipment
 
(33,415
)
 
(18,096
)
Proceeds from sales of property and equipment
 
99

 
356

Maturities/sales of investments and securities
 
1,181

 
1,402

Payments to purchase investments and securities
 
(1,181
)
 
(1,402
)
Net cash used in investing activities
 
(33,527
)
 
(17,072
)
Cash flows from financing activities:
 
 
 
 
Repayments of Credit Facility, net
 
$
—

 
$
(15,000
)
Repayment of loans payable and other borrowings
 
(15,755
)
 
(10,970
)
Repayment of senior notes and senior convertible notes
 
(175,000
)
 
(126,691
)
Proceeds from issuance of senior notes
 
206,000

 
300,000

Payment of debt issuance costs
 
(3,198
)
 
(4,091
)
Repurchase of shares
 
(100,000
)
 
—

Net cash (used in)/provided by financing activities
 
(87,953
)
 
143,248

Net increase in cash and cash equivalents
 
140,720

 
39,044

Beginning cash and cash equivalents
 
170,746

 
131,702

Ending cash and cash equivalents
 
$
311,466

 
$
170,746


9


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31, 2018
 
December 31, 2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
453

 
$
141,622

 
396

 
$
132,596

California
 
206

 
144,179

 
261

 
153,921

Colorado
 
212

 
111,461

 
154

 
89,941

West Region
 
871

 
397,262

 
811

 
376,458

Texas
 
836

 
298,824

 
741

 
267,139

Central Region
 
836

 
298,824

 
741

 
267,139

Florida
 
317

 
126,136

 
296

 
127,880

Georgia
 
152

 
54,732

 
89

 
29,830

North Carolina
 
166

 
63,078

 
163

 
68,432

South Carolina
 
98

 
32,011

 
90

 
29,857

Tennessee
 
65

 
24,020

 
63

 
23,774

East Region
 
798

 
299,977

 
701

 
279,773

Total
 
2,505

 
$
996,063

 
2,253

 
$
923,370

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
300

 
$
98,290

 
269

 
$
93,143

California
 
109

 
72,227

 
248

 
169,593

Colorado
 
116

 
60,398

 
129

 
69,550

West Region
 
525

 
230,915

 
646

 
332,286

Texas
 
591

 
209,787

 
582

 
211,413

Central Region
 
591

 
209,787

 
582

 
211,413

Florida
 
190

 
79,632

 
216

 
90,611

Georgia
 
94

 
32,413

 
102

 
33,407

North Carolina
 
149

 
55,929

 
143

 
54,672

South Carolina
 
66

 
20,652

 
66

 
22,911

Tennessee
 
38

 
14,882

 
40

 
15,040

East Region
 
537

 
203,508

 
567

 
216,641

Total
 
1,653

 
$
644,210

 
1,795

 
$
760,340


10


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
 
Twelve Months Ended
 
 
December 31, 2018
 
December 31, 2017
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
1,505

 
$
485,867

 
1,535

 
$
515,410

California
 
849

 
588,975

 
963

 
581,016

Colorado
 
628

 
342,984

 
571

 
323,318

West Region
 
2,982

 
1,417,826

 
3,069

 
1,419,744

Texas
 
2,840

 
1,006,221

 
2,493

 
904,286

Central Region
 
2,840

 
1,006,221

 
2,493

 
904,286

Florida
 
1,078

 
455,292

 
814

 
353,554

Georgia
 
468

 
161,969

 
312

 
104,690

North Carolina
 
654

 
254,207

 
533

 
233,028

South Carolina
 
309

 
104,622

 
307

 
104,942

Tennessee
 
200

 
74,575

 
181

 
66,531

East Region
 
2,709

 
1,050,665

 
2,147

 
862,745

Total
 
8,531

 
$
3,474,712

 
7,709

 
$
3,186,775

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
1,522

 
$
499,353

 
1,417

 
$
473,602

California
 
622

 
432,134

 
1,050

 
650,287

Colorado
 
614

 
331,389

 
497

 
284,082

West Region
 
2,758

 
1,262,876

 
2,964

 
1,407,971

Texas
 
2,801

 
995,473

 
2,582

 
931,069

Central Region
 
2,801

 
995,473

 
2,582

 
931,069

Florida
 
1,004

 
422,925

 
1,007

 
433,365

Georgia
 
440

 
157,706

 
372

 
121,713

North Carolina
 
588

 
224,552

 
583

 
242,355

South Carolina
 
299

 
101,426

 
290

 
99,738

Tennessee
 
199

 
75,133

 
159

 
60,577

East Region
 
2,530

 
981,742

 
2,411

 
957,748

Total
 
8,089

 
$
3,240,091

 
7,957

 
$
3,296,788

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
343

 
$
133,567

 
326

 
$
119,535

California
 
91

 
66,391

 
318

 
222,909

Colorado
 
185

 
103,470

 
199

 
114,848

West Region
 
619

 
303,428

 
843

 
457,292

Texas
 
981

 
372,826

 
1,020

 
381,517

Central Region
 
981

 
372,826

 
1,020

 
381,517

Florida
 
372

 
164,728

 
446

 
196,265

Georgia
 
123

 
46,344

 
151

 
50,386

North Carolina
 
177

 
67,316

 
243

 
96,579

South Carolina
 
89

 
32,333

 
99

 
35,432

Tennessee
 
72

 
28,943

 
73

 
28,300

East Region
 
833

 
339,664

 
1,012

 
406,962

Total
 
2,433

 
$
1,015,918

 
2,875

 
$
1,245,771


11


Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
December 31, 2018
 
December 31, 2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
40

 
42.0

 
38

 
39.0

California
 
17

 
15.5

 
20

 
22.0

Colorado
 
20

 
20.0

 
11

 
10.0

West Region
 
77

 
77.5

 
69

 
71.0

Texas
 
95

 
93.5

 
92

 
92.5

Central Region
 
95

 
93.5

 
92

 
92.5

Florida
 
31

 
30.5

 
28

 
28.5

Georgia
 
22

 
22.0

 
19

 
18.0

North Carolina
 
25

 
22.5

 
17

 
17.5

South Carolina
 
12

 
12.0

 
13

 
13.5

Tennessee
 
10

 
10.0

 
6

 
6.0

East Region
 
100

 
97.0

 
83

 
83.5

Total
 
272

 
268.0

 
244

 
247.0

 
 
Twelve Months Ended
 
 
December 31, 2018
 
December 31, 2017
 
 
Ending
 
Average
 
Ending
 
Average
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
40

 
39.0

 
38

 
40.0

California
 
17

 
18.5

 
20

 
24.0

Colorado
 
20

 
15.5

 
11

 
10.5

West Region
 
77

 
73.0

 
69

 
74.5

Texas
 
95

 
93.5

 
92

 
86.0

Central Region
 
95

 
93.5

 
92

 
86.0

Florida
 
31

 
29.5

 
28

 
27.5

Georgia
 
22

 
20.5

 
19

 
18.0

North Carolina
 
25

 
21.0

 
17

 
17.0

South Carolina
 
12

 
12.5

 
13

 
14.0

Tennessee
 
10

 
8.0

 
6

 
6.5

East Region
 
100

 
91.5

 
83

 
83.0

Total
 
272

 
258.0

 
244

 
243.5




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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 120,000 homes in its 33-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 expectations regarding the entry-level market and macroeconomic housing demand drivers.
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: 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

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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; legislation related to tariffs 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 10-Q for the third quarter ended September 30, 2018 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

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