Meritage Homes Reports Results for the Second Quarter of 2013
21% Growth in Orders, 55% Increase in Home Closing Revenue, 21.5% Home Closing Gross Margin and Diluted EPS of $0.74
(firmenpresse) - SCOTTSDALE, AZ -- (Marketwired) -- 07/24/13 -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced second quarter results for the period ended June 30, 2013.
"The second quarter of 2013 was another quarter of strong growth, with continued significant improvements across our operating metrics," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. "This was our ninth consecutive quarter of positive year-over-year growth in orders and our seventh consecutive quarter of growth in closing revenue year over year.
"More importantly, our earnings continued to grow at a much higher rate than our revenue. Our gross margin on home closings increased to 21.5%, and our additional operating leverage drove year-over-year net earnings growth of 252% on a 55% increase in home closing revenue.
"Despite the recent rise in interest rates and home prices, affordability remains excellent and demand for new homes continues to be strong in our markets, as evidenced by our pace of orders increasing over last quarter's pace and well above the second quarter of 2012," Mr. Hilton explained.
"In a competitive land market, I am also pleased with our ability to acquire new lot positions for additional growth. We increased our total lot supply by more than 1,500 lots during the quarter, putting more than 3,500 new lots under control, which was the second highest number of lots we have acquired over the last six quarters. We continue to seek new opportunities to expand our footprint while also allocating capital to grow within our existing markets."
Total order value in the second quarter increased 49% year over year due to a 23% increase in average price and a 21% increase in total orders. Total order value and backlog grew in every state except Nevada, where the company has now ceased operations. The average sales price of approximately $350,000 on orders was the highest for Meritage in more than eight years, reflecting the combination of a greater portion of orders in higher-priced communities in addition to home price appreciation.
Ending backlog value increased 76% over the second quarter of 2012, combining a 24% increase in average sales price with 42% growth in units. Colorado, the Carolinas and Florida led with growth in backlog value of 164%, 127% and 99%, respectively, over the prior year. Meritage's expansion into Charlotte early last year accounted for some of the growth in the Carolinas.
Orders per average community increased to 9.8 for the second quarter of 2013 from 9.0 in the second quarter of 2012 and 9.5 in the first quarter of 2013.
Meritage ended the quarter with 165 active communities, up from 151 at June 30, 2012.
Order cancellation rate fell to 11% in the second quarter of 2013, compared to 13% in the prior year.
Net earnings for the second quarter increased 252% year over year to $28.1 million or $0.74 per diluted share in 2013, compared to $8.0 million or $0.24 per diluted share in 2012, primarily due to higher home closing revenue and gross margins, coupled with overhead expense leverage.
Home closing revenue increased 55% year over year due to a 22% increase in average price on top of a 27% increase in total homes closed in the second quarter. Every state grew over the prior year in closings, revenue and average prices.
Home closing gross margin increased to 21.5% in the second quarter of 2013, a year-over-year improvement of 300 bps compared to 18.5% in the second quarter of 2012, and a sequential improvement of 200 bps compared to 19.5% in the first quarter of 2013. The significant margin growth reflects both home price appreciation and the effects of improved management of direct costs.
Commissions and other sales costs in the second quarter improved 100 bps due to operating leverage, decreasing as a percentage of home closing revenue to 7.2% in 2013 from 8.2% in 2012.
General and administrative expenses also improved 90 bps due to operating leverage, declining to 5.0% of second quarter revenue in 2013, from 5.9% in 2012. The majority of the $5.9 million increase over last year was the result of additional hiring and compensation expense.
Interest expense improved 120 bps, declining to 1.0% of second quarter revenue in 2013 compared to 2.2% in 2012, as more interest was capitalized to additional land under development and homes under construction.
Second quarter pre-tax margin increased 750 bps to 8.5% in 2013 from 1.0% in 2012, or $38.5 million in 2013 pre-tax income compared to $2.8 million in 2012.
Net earnings of $40.2 million for the first half of 2013 included a $3.8 million loss on early extinguishment of debt and a tax provision of $14.8 million, compared to net earnings of $3.3 million for the first half of 2012, which included a $5.8 million loss on early extinguishment of debt and a $5.0 million tax benefit.
Home closings and closing revenue for the first half of the year increased 32% and 58%, respectively, for 2013 over 2012, reflecting the combination of a greater portion of sales in higher-priced communities in addition to home price appreciation.
Year-to-date home closing gross margin improved by 270 basis points to 20.6% for 2013, compared to 17.9% for 2012, as a result of home price appreciation and improved management of direct costs.
Total selling, general and administrative expenses decreased 250 basis points as a percentage of revenue to 12.6% in the first half of 2013 compared to 15.1% in 2012, reflecting operating leverage.
Net orders for the first half of the year increased 28% in 2013 over 2012, and combined with a 24% increase in average sales prices, resulting in total order value increasing 58% year over year.
Meritage replenished its land pipeline by spending approximately $156 million on land acquisition and development in the second quarter of 2013, and added approximately 3,500 new lots under contract during the quarter.
Total lot supply at the end of the quarter was approximately 22,600, compared to approximately 17,600 a year earlier. Based on trailing twelve months closings, the June 30, 2013 balance represents a 4.7 year supply of lots.
The company ended the second quarter of 2013 with $353 million in cash and cash equivalents, restricted cash and securities, an increase of $148 million over the June 30, 2012 total of $205 million. Net debt to total capital ratio decreased to 37.2% at June 30, 2013, from 44.1% at June 30, 2012 and 38.1% at December 31, 2012, despite a $75.4 million increase in debt this year.
"Most housing metrics have been moving in a positive direction over the last year, albeit from historically depressed levels. As the U.S. economy improves and creates jobs, demand for new homes should remain strong, especially in light of the shortage of used homes listed for sale," said Mr. Hilton. "Nearly every major housing market is experiencing price appreciation, which is good for both existing homeowners and homebuilders, and is helping to drive our revenue growth well in excess of our growth in orders and closings. Buyers may conclude that they missed the absolute bottom of the market in terms of prices and interest rates, but they also recognize that both are still a bargain in terms of the amount of house you can buy at a given income level.
"Assuming continued growth in the market due to those factors, and based on our better than expected second quarter performance and subsequently revised projections, we are projecting home closing revenue of approximately $1.7-1.8 billion for 2013, resulting in projected earnings per diluted share in the range of $2.65-$2.85 for the year."
Management will host a conference call today to discuss the Company's second quarter results at 10:30 a.m. Eastern time (7:30 a.m. Pacific Time). The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at . 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 Pre-registration link: .
Telephone participants who are unable to pre-register may dial in to 888-317-6016 on the day of the call.
A replay of the call will be available for fifteen days, beginning at 12:30 p.m. ET on July 24, 2013 on the website noted above, or by dialing 877-344-7529, and referencing conference number 10030804. For more information, visit meritagehomes.com.
Meritage Homes is the ninth-largest public homebuilder in the United States, based on 4,238 homes closed in 2012. Meritage builds and sells single-family homes for first-time, move-up, luxury and active adult buyers across the Western, Southern and Southeastern United States. As of June 30, 2013, the company had 165 actively selling communities in markets including Sacramento, San Francisco's East Bay, the Central Valley and Southern California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale and Tucson, Arizona; Nevada; Denver, Colorado; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina.
Meritage has designed and built more than 75,000 homes in its 27-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 in 2013, Meritage received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award, for its innovation and industry leadership in energy efficient homebuilding. Meritage was the first national homebuilder to be 100 percent ENERGY STAR® qualified in every home it builds, and far exceeds ENERGY STAR standards today.
For more information, visit meritagehomes.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's plans to expand the Company's footprint and allocate capital to existing markets, and management's projected home closing revenue and earnings per diluted share for 2013.
Such statements are based upon 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 an unexpected setback in the current economic recovery; the availability of finished lots and undeveloped land; interest rates and changes in the availability and pricing of residential mortgages; the availability and cost of materials and labor; 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 order absorption rates; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; our potential exposure to natural disasters; competition; 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; our ability to preserve our deferred tax assets and use them within the statutory time limits; delays and risks associated with land development; our ability to obtain performance bonds in connection with our development work; the liquidity of our joint ventures and the ability of our joint venture partners to meet their obligations to us and the joint venture; the loss of key personnel; changes in or our failure to comply with laws and regulations; our lack of geographic diversification; fluctuations in quarterly operating results; our financial leverage and level of indebtedness; our ability to take certain actions because of restrictions contained in the indentures for our 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; 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, 2012 under the caption "Risk Factors," which can be found on our website.
Brent Anderson
VP Investor Relations
(972) 580-6360 (office)
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Datum: 24.07.2013 - 05:00 Uhr
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