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Meritage Homes reports fourth quarter 2019 results including a 27% increase in orders, 80 bps increase in home closing gross margin and 39% increase in diluted EPS

SCOTTSDALE, Ariz., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2019.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)

  Three Months Ended December 31,   Twelve Months Ended December 31,
  2019   2018   % Chg   2019   2018   % Chg
Homes closed (units) 2,830     2,505     13   9,267     8,531     9
Home closing revenue $ 1,103,741     $ 996,063     11   $ 3,604,629     $ 3,474,712     4
Average sales price - closings $ 390     $ 398     (2 )%   $ 389     $ 407     (4 )%
Home orders (units) 2,093     1,653     27   9,616     8,089     19
Home order value $ 804,133     $ 644,210     25   $ 3,683,502     $ 3,240,091     14
Average sales price - orders $ 384     $ 390     (1 )%   $ 383     $ 401     (4 )%
Ending backlog (units)             2,782     2,433     14
Ending backlog value             $ 1,098,158     $ 1,015,918     8
Average sales price - backlog             $ 395     $ 418     (5 )%
Earnings before income taxes $ 110,535     $ 91,776     20   $ 302,945     $ 283,254     7
Net earnings $ 103,614     $ 75,485     37   $ 249,663     $ 227,332     10
Diluted EPS $ 2.65     $ 1.91     39   $ 6.42     $ 5.58     15

MANAGEMENT COMMENTS
“We delivered another quarter of strong results in the fourth quarter, capping off a solid performance for the full year 2019. The housing market remained strong through a traditionally quiet quarter, and with our strategic shift to entry-level fully implemented, Meritage was well positioned to capitalize on healthy demand, growing our sales volume, improving profitability and strengthening our balance sheet, while also positioning the company for long-term growth," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our fourth quarter results continued the momentum we had achieved over the prior three quarters, producing the strongest quarterly year-over-year growth in orders all year; the highest home closing gross margin, which was very close to our underwriting target; the most efficient overhead leverage; and nearly a 40% increase in diluted earnings per share.

“Our total orders for new homes increased 27% in the fourth quarter year-over-year, driven by a 37% increase in absorptions and benefiting from our strategic focus on delivering more affordable homes. Home closing revenue was up 11% and our home closing gross margin improved 80 bps due to the efficiencies we’re realizing from streamlining and simplifying our operations,” he continued. “Total SG&A expenses as a percentage of home closing revenue were 50 bps lower year-over-year and our net earnings increased 37% with the benefit of energy tax credits recognized retroactively for two years after their renewal and extension in December of 2019. We used positive cash flow from operations to retire $300 million of debt, reducing our net debt to capital ratio to 26.2%, while also securing more than 6,800 additional lots in the fourth quarter for future growth and ending the year with $319 million in cash. 

“Our LiVE.NOW.® homes for value-conscious buyers and our innovative approach to interior personalization with our Studio M® Design Collections for first move-up buyers are delivering what home buyers want, while also providing efficiencies for Meritage that translate to improved profitability,” Mr. Hilton explained. “Absorptions in our LiVE.NOW. communities are significantly out-pacing traditional move-up communities, with equal or better margins.”

He concluded, “Based on our expectation that economic drivers remain positive for housing demand, and our ability to deliver homes that provide great value at lower price points for the broadest sectors of homebuyers, we feel we are well positioned to drive future growth and success. We secured more than 18,000 new lots in 2019, compared to approximately 10,000 in 2018, greatly expanding our pipeline for community count growth and positioning us to deliver strong volume growth as those communities are opened and begin selling over the next 4-6 quarters. We believe we can grow earnings faster than our top-line growth in 2020, leveraging the operating improvements we’ve made over the past few years while continuing to expand and refine them. For the full year 2020, we are projecting 9,700-10,200 total home closings and ASP’s between $360-370,000, with home closing gross margin in the mid-19’s percent and a tax rate of approximately 22%.”

FOURTH QUARTER RESULTS

  • Total orders for the fourth quarter of 2019 increased 27% year-over-year, driven by a 37% year-over-year increase in absorptions, largely due to strong demand for Meritage’s entry-level priced LiVE.NOW. homes. Higher absorptions offset an 8% year-over-year decline in average community count for the fourth quarter, resulting from early close-outs of communities in 2019. Absorptions were up 38% in the West region, 46% in the Central and 29% in the East region, demonstrating broad strength across Meritage’s markets. As a result of the Company's strategic product shift to lower-priced homes, fourth quarter average sales price (ASP) on orders and ending backlog were down 1% and 5%, respectively, compared to 2018.

  • The 11% increase in home closing revenue for the quarter reflected a 13% increase in home closing volume, partially offset by a 2% reduction in ASP due to the Company’s strategic shift toward more affordable homes. Both West and East regions’ home closing revenues were up 19% year-over-year, while Central region home closing revenue was 8% lower in 2019 than 2018, primarily due to fewer active communities open in the fourth quarter of 2019.

  • Home closing gross margin improved 80 bps to 19.8% from 19.0% a year ago, contributing to a 16% increase in total home closing gross profit over the prior year's fourth quarter. Fourth quarter 2019 gross margin was reduced by $3.1 million of inventory write-downs. Excluding real estate write-downs in both years ($0.9 million in 2018), home closing gross margins were 20.1% for the fourth quarter of 2019 and 19.1% for the fourth quarter of 2018.

  • Earnings from financial services unconsolidated were $3.7 million lower in the fourth quarter of 2019 compared to 2018 due to a change in the structure of customer incentives offered by the Company's mortgage joint venture. The benefits from those incentives are now captured as part of home closing revenue rather than financial services earnings.

  • Selling, general and administrative expenses (SG&A) totaled 10.1% of fourth quarter 2019 home closing revenue, a 50 bps reduction compared to 10.6% in the fourth quarter of 2018.

  • Fourth quarter 2019 also included a $5.6 million loss on early extinguishment of debt related to the early redemption of $300 million notes due 2020.

  • Fourth quarter 2019 pre-tax earnings margin increased 60 bps to 9.7% compared to 9.1% in 2018, reflecting increases in home closing gross margins and improved overhead leverage.

  • Income taxes were reduced by approximately $20 million from energy tax credits on qualified homes closed in 2018 and 2019 pursuant to the retroactive renewal and extension of such tax credits through 2020, which was approved by Congress in December 2019.

  • Net earnings increased 37% to $103.6 million ($2.65 per diluted share) for the fourth quarter of 2019, compared to $75.5 million ($1.91 per diluted share) for the fourth quarter of 2018, also benefiting from retroactive energy tax credits recorded in 2019.

FULL YEAR RESULTS

  • Total orders for the full year 2019 increased 19% year-over-year, as absorptions increased to 37.3 for the year (approximately 3.1 per month) in 2019, over 31.4 (approximately 2.6 per month) for 2018. The 19% increase in absorptions was primarily driven by the shift toward more entry-level communities, which sell at a higher pace. At year-end 2019, entry-level communities made up 47% of total communities, compared to 33% at the end of 2018.

  • Home closings for the full year were up 9% over 2018, while ASP on closings was 4% lower than the previous year due to the shift toward more affordable homes, resulting in a net 4% increase in total home closing revenue for the year.

  • Home closing gross margin increased to 18.9% for the full year 2019 compared to 18.2% in 2018, which drove an 8% increase in total home closing gross profit for the full year of 2019. Excluding real estate write-downs in both years ($3.2 million in 2019 and $2.2 million in 2018), home closing gross margin was 19.0% in 2019 and 18.3% in 2018.

  • SG&A expenses as a percentage of home closing revenue for the full year were flat at 10.9% in both 2019 and 2018, as leverage and operating efficiencies in 2019 were partially offset by costs associated with the start-up and operation of our Studio M design studios, in addition to severance expenses and accelerated equity compensation expense taken in the first quarter of 2019 as a result of changes in tax rules.

  • Interest expense increased $7.6 million year-over-year, primarily due to less interest capitalizable to assets under development in 2019, reflecting shortened construction cycle times and faster inventory turnover.

  • Other income (net) decreased by $1.6 million in 2019 primarily due to 2018 including a $4.8 million favorable legal settlement related to a previous joint venture in Nevada.

  • Net earnings of $249.7 million ($6.42 per diluted share) increased 10% (15% for diluted EPS) for the full year of 2019, compared to $227.3 million ($5.58 per diluted share) in 2018. Increases in home closing revenue and gross margin year-to-date in 2019 were partially offset by higher interest expense and the $5.6 million charge for early extinguishment of debt in the fourth quarter of 2019, resulting in a net 7% increase in earnings before income taxes. The effective tax rate for the full year 2019 was 18%, compared to 20% in 2018, reflecting the benefit of the retroactive energy tax credits renewed in 2019. Full year diluted EPS also increased due to a 5% reduction in weighted average shares outstanding, as compared to 2018, resulting from share repurchases in late 2018 and early 2019.

BALANCE SHEET

  • Cash and cash equivalents at December 31, 2019 totaled $319.5 million, compared to $311.5 million at December 31, 2018.

  • Positive cash flow from operations was used for the early redemption in December 2019 of $300 million of 7.15% senior notes due in 2020.

  • Total real estate assets was relatively flat at approximately $2.7 billion at December 31, 2019, as homes under construction increased to provide additional entry-level spec inventory for sale and quick move-in, consistent with the Company’s strategy, and were offset by declines in land inventory, which is expected to be replenished with additional newly-contracted lots.

  • Meritage ended the fourth quarter of 2019 with approximately 41,400 total lots owned or under control, compared to approximately 34,600 total lots at December 31, 2018, with over 6,800 lots added for approximately 46 new communities in the fourth quarter of 2019 alone. Approximately 85% of the lots added during 2019 were in LiVE.NOW. communities for entry-level homes.

  • Debt-to-capital ratios decreased to 34.0% at December 31, 2019 from 43.2% at December 31, 2018, and net debt-to-capital ratio declined to 26.2% at year-end 2019 from 36.7% at year-end 2018.

CONFERENCE CALL
Management will host a conference call to discuss the results at 7:30 a.m. Arizona Time (9:30 a.m. Eastern Time) on Thursday, January 30. 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 preregistering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10137933.

Telephone participants who are unable to preregister may dial into 1-866-226-4948 US toll free on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 toll free for Canada.

A replay of the call will be available beginning at approximately 12:00 p.m. ET on January 30 and extending through February 13, 2020, on the website noted above or by dialing 1-877-344-7529 US toll free, 1-412-317-0088 for international or 1-855-669-9658 toll free for Canada, and referencing conference number 10137933.

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


Meritage Homes Corporation and Subsidiaries

Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)

    Three Months Ended December 31,
    2019   2018   Change $   Change %
Homebuilding:              
  Home closing revenue $ 1,103,741       $ 996,063       $ 107,678       11
  Land closing revenue 33,107       12,716       20,391       160
  Total closing revenue 1,136,848       1,008,779       128,069       13
  Cost of home closings (884,778 )     (806,550 )     (78,228 )     10
  Cost of land closings (32,750 )     (13,541 )     (19,209 )     142
  Total cost of closings (917,528 )     (820,091 )     (97,437 )     12
  Home closing gross profit 218,963       189,513       29,450       16
  Land closing gross profit/(loss) 357       (825 )     1,182       143
  Total closing gross profit 219,320       188,688       30,632       16
Financial Services:              
  Revenue 4,756       4,412       344       8
  Expense (1,832 )     (1,618 )     (214 )     13
  Earnings from financial services unconsolidated entities and other, net 1,340       5,058       (3,718 )     (74 )%
  Financial services profit 4,264       7,852       (3,588 )     (46 )%
Commissions and other sales costs (70,598 )     (68,040 )     (2,558 )     4
General and administrative expenses (40,557 )     (37,474 )     (3,083 )     8
Interest expense (20 )     (552 )     532       (96 )%
Other income, net 3,761       1,302       2,459       189
Loss on early extinguishment of debt (5,635 )           (5,635 )     n/a 
Earnings before income taxes 110,535       91,776       18,759       20
Provision for income taxes (6,921 )     (16,291 )     9,370       (58 )%
Net earnings $ 103,614       $ 75,485       $ 28,129       37
               
Earnings per common share:              
  Basic         Change $ or
shares
  Change %
  Earnings per common share $ 2.71       $ 1.93       $ 0.78       40 %
  Weighted average shares outstanding 38,252       39,026       (774 )     (2 )%
  Diluted              
  Earnings per common share $ 2.65       $ 1.91       $ 0.74       39 %
  Weighted average shares outstanding 39,137       39,575       (438 )     (1 )%
                               

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

    Twelve Months Ended December 31,
    2019   2018   Change $   Change %
Homebuilding:              
  Home closing revenue $ 3,604,629       $ 3,474,712       $ 129,917       4
  Land closing revenue 45,854       38,707       7,147       18
  Total closing revenue 3,650,483       3,513,419       137,064       4
  Cost of home closings (2,923,969 )     (2,842,762 )     (81,207 )     3
  Cost of land closings (46,899 )     (41,504 )     (5,395 )     13
  Total cost of closings (2,970,868 )     (2,884,266 )     (86,602 )     3
  Home closing gross profit 680,660       631,950       48,710       8
  Land closing (loss)/gross profit (1,045 )     (2,797 )     1,752       63
  Total closing gross profit 679,615       629,153       50,462       8
Financial Services:              
  Revenue 16,461       15,162       1,299       9
  Expense (6,781 )     (6,454 )     (327 )     5
  Earnings from financial services unconsolidated entities and other, net 10,899       15,336       (4,437 )     (29 )%
  Financial services profit 20,579       24,044       (3,465 )     (14 )%
Commissions and other sales costs (246,728 )     (241,897 )     (4,831 )     2
General and administrative expenses (146,093 )     (138,478 )     (7,615 )     5
Interest expense (8,370 )     (785 )     (7,585 )     n/m 
Other income, net 9,577       11,217       (1,640 )     (15 )%
Loss on early extinguishment of debt (5,635 )           (5,635 )     n/a 
Earnings before income taxes 302,945       283,254       19,691       7
Provision for income taxes (53,282 )     (55,922 )     2,640       (5 )%
Net earnings $ 249,663       $ 227,332       $ 22,331       10
               
Earnings per common share:              
  Basic         Change $ or
shares
  Change %
  Earnings per common share $ 6.55       $ 5.67       $ 0.88       16 %
  Weighted average shares outstanding 38,100       40,107       (2,007 )     (5 )%
  Diluted              
  Earnings per common share $ 6.42       $ 5.58       $ 0.84       15 %
  Weighted average shares outstanding 38,891       40,728       (1,837 )     (5 )%
                               


Meritage Homes Corporation and Subsidiaries

 Consolidated Balance Sheets
(In thousands)
(unaudited)

    December 31, 2019   December 31, 2018
Assets:        
Cash and cash equivalents   $ 319,466      $ 311,466   
Other receivables   88,492      77,285   
Real estate (1)   2,744,361      2,742,621   
Deposits on real estate under option or contract   50,901      51,410   
Investments in unconsolidated entities   4,443      17,480   
Property and equipment, net   50,606      54,596   
Deferred tax asset   25,917      26,465   
Prepaids, other assets and goodwill   114,063      84,156   
Total assets   $ 3,398,249      $ 3,365,479   
Liabilities:        
Accounts payable   $ 155,024      $ 128,169   
Accrued liabilities   226,008      177,862   
Home sale deposits   24,246      28,636   
Loans payable and other borrowings   22,876      14,773   
Senior notes   996,105      1,295,284   
Total liabilities   1,424,259      1,644,724   
Stockholders' Equity:        
Preferred stock   —      —   
Common stock   382      381   
Additional paid-in capital   505,352      501,781   
Retained earnings   1,468,256      1,218,593   
Total stockholders’ equity   1,973,990      1,720,755   
Total liabilities and stockholders’ equity   $ 3,398,249      $ 3,365,479   
(1) Real estate – Allocated costs:        
Homes under contract under construction   $ 564,762      $ 480,143   
Unsold homes, completed and under construction   686,948      644,717   
Model homes   121,340      146,327   
Finished home sites and home sites under development   1,371,311      1,471,434   
Total real estate   $ 2,744,361      $ 2,742,621   
                 


Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):

  Three Months Ended December 31,   Twelve Months Ended December 31,
  2019   2018   2019   2018
Depreciation and amortization $ 8,370     $ 7,508     $ 27,923     $ 26,966  
               
Summary of Capitalized Interest:              
Capitalized interest, beginning of period $ 88,195     $ 88,064     $ 88,454     $ 78,564  
Interest incurred 19,629     21,490     83,856     85,278  
Interest expensed (20 )   (552 )   (8,370 )   (785 )
Interest amortized to cost of home and land closings (25,790 )   (20,548 )   (81,926 )   (74,603 )
Capitalized interest, end of period $ 82,014     $ 88,454     $ 82,014     $ 88,454  
               
  December 31,
2019
  December 31,
2018
       
Notes payable and other borrowings $ 1,018,981     $ 1,310,057          
Stockholders' equity 1,973,990     1,720,755          
Total capital 2,992,971     3,030,812          
Debt-to-capital 34.0   43.2 %        
               
Notes payable and other borrowings $ 1,018,981     $ 1,310,057          
Less: cash and cash equivalents (319,466 )   (311,466 )        
Net debt 699,515     998,591          
Stockholders’ equity 1,973,990     1,720,755          
Total net capital $ 2,673,505     $ 2,719,346          
Net debt-to-capital 26.2 %   36.7 %        
                   


Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)

    Twelve Months Ended December 31,
    2019   2018
Cash flows from operating activities:        
Net earnings   $ 249,663       $ 227,332  
Adjustments to reconcile net earnings to net cash provided by operating activities:        
Depreciation and amortization   27,923       26,966  
Stock-based compensation   19,607       17,170  
Loss on early extinguishment of debt   5,635        
Equity in earnings from unconsolidated entities   (11,945 )     (16,333 )
Deferred tax asset revaluation         (2,741 )
Distribution of earnings from unconsolidated entities   13,438       16,142  
Other   9,273       15,847  
Changes in assets and liabilities:        
Decrease/(increase) in real estate   3,621       (19,426 )
Decrease in deposits on real estate under option or contract   453       12,444  
(Increase)/decrease in receivables, prepaids and other assets   (9,112 )     3,042  
Increase/(decrease) in accounts payable and accrued liabilities   42,654       (12,820 )
Decrease in home sale deposits   (4,390 )     (5,423 )
Net cash provided by operating activities   346,820       262,200   
Cash flows from investing activities:        
Investments in unconsolidated entities     (1,113 )       (808 )
Distributions of capital from unconsolidated entities   11,550       597  
Purchases of property and equipment   (24,385 )     (33,415 )
Proceeds from sales of property and equipment   459       99  
Maturities/sales of investments and securities   754       1,181  
Payments to purchase investments and securities   (754 )     (1,181 )
Net cash used in investing activities   (13,489 )     (33,527 )
Cash flows from financing activities:        
Repayment of loans payable and other borrowings   (3,676 )     (15,755 )
Repayment of senior notes and senior convertible notes   (305,620 )     (175,000 )
Proceeds from issuance of senior notes         206,000  
Payment of debt issuance costs         (3,198 )
Repurchase of shares   (16,035 )     (100,000 )
Net cash used in financing activities   (325,331 )     (87,953 )
Net increase in cash and cash equivalents   8,000       140,720  
Beginning cash and cash equivalents   311,466       170,746  
Ending cash and cash equivalents   $ 319,466       $ 311,466  
                   


Meritage Homes Corporation and Subsidiaries

Operating Data
(Dollars in thousands)
(unaudited)

                 
    Three Months Ended
    December 31, 2019   December 31, 2018
    Homes   Value   Homes   Value
Homes Closed:                
Arizona   581     $ 187,670     453     $ 141,622  
California   285     181,307     206     144,179  
Colorado   204     102,989     212     111,461  
West Region   1,070     471,966     871     397,262  
Texas   800     273,566     836     298,824  
Central Region   800     273,566     836     298,824  
Florida   372     147,227     317     126,136  
Georgia   147     51,052     152     54,732  
North Carolina   265     98,769     166     63,078  
South Carolina   70     21,858     98     32,011  
Tennessee   106     39,303     65     24,020  
East Region   960     358,209     798     299,977  
Total   2,830     $ 1,103,741     2,505     $ 996,063  
                 
Homes Ordered:                
Arizona   354     $ 115,404     300     $ 98,290  
California   231     143,573     109     72,227  
Colorado   142     71,276     116     60,398  
West Region   727     330,253     525     230,915  
Texas   697     232,644     591     209,787  
Central Region   697     232,644     591     209,787  
Florida   255     97,025     190     79,632  
Georgia   106     37,004     94     32,413  
North Carolina   207     73,999     149     55,929  
South Carolina   49     14,785     66     20,652  
Tennessee   52     18,423     38     14,882  
East Region   669     241,236     537     203,508  
Total   2,093     $ 804,133     1,653     $ 644,210  
                             


Meritage Homes Corporation and Subsidiaries

Operating Data
(Dollars in thousands)
(unaudited)

    Twelve Months Ended
    December 31, 2019   December 31, 2018
    Homes   Value   Homes   Value
Homes Closed:                
Arizona   1,707     $ 556,432     1,505     $ 485,867  
California   749     486,153     849     588,975  
Colorado   711     367,468     628     342,984  
West Region   3,167     1,410,053     2,982     1,417,826  
Texas   2,976     1,033,755     2,840     1,006,221  
Central Region   2,976     1,033,755     2,840     1,006,221  
Florida   1,181     468,591     1,078     455,292  
Georgia   527     183,492     468     161,969  
North Carolina   823     303,635     654     254,207  
South Carolina   272     88,371     309     104,622  
Tennessee   321     116,732     200     74,575  
East Region   3,124     1,160,821     2,709     1,050,665  
Total   9,267     $ 3,604,629     8,531     $ 3,474,712  
                 
Homes Ordered:                
Arizona   1,875     $ 608,795     1,522     $ 499,353  
California   803     511,767     622     432,134  
Colorado   722     361,336     614     331,389  
West Region   3,400     1,481,898     2,758     1,262,876  
Texas   3,043     1,031,937     2,801     995,473  
Central Region   3,043     1,031,937     2,801     995,473  
Florida   1,180     466,528     1,004     422,925  
Georgia   537     186,735     440     157,706  
North Carolina   865     315,572     588     224,552  
South Carolina   254     80,325     299     101,426  
Tennessee   337     120,507     199     75,133  
East Region   3,173     1,169,667     2,530     981,742  
Total   9,616     $ 3,683,502     8,089     $ 3,240,091  
                 
Order Backlog:                
Arizona   511     $ 186,194     343     $ 133,567  
California   145     92,171     91     66,391  
Colorado   196     97,508     185     103,470  
West Region   852     375,873     619     303,428  
Texas   1,048     372,520     981     372,826  
Central Region   1,048     372,520     981     372,826  
Florida   371     163,385     372     164,728  
Georgia   133     49,742     123     46,344  
North Carolina   219     79,446     177     67,316  
South Carolina   71     24,427     89     32,333  
Tennessee   88     32,765     72     28,943  
East Region   882     349,765     833     339,664  
Total   2,782     $ 1,098,158     2,433     $ 1,015,918  
                             


Meritage Homes Corporation and Subsidiaries

Operating Data
(unaudited)

                 
    Three Months Ended
    December 31, 2019   December 31, 2018
    Ending   Average   Ending   Average
Active Communities:                
Arizona   31      34.0      40      42.0   
California   24      24.0      17      15.5   
Colorado   18      19.0      20      20.0   
West Region   73      77.0      77      77.5   
Texas   77      75.5      95      93.5   
Central Region   77      75.5      95      93.5   
Florida   33      34.5      31      30.5   
Georgia   18      18.0      22      22.0   
North Carolina   25      23.5      25      22.5   
South Carolina       9.5      12      12.0   
Tennessee       9.0      10      10.0   
East Region   94      94.5      100      97.0   
Total   244      247.0      272      268.0   


     
    Twelve Months Ended
    December 31, 2019   December 31, 2018
    Ending   Average   Ending   Average
Active Communities:                
Arizona   31      35.5      40      39.0   
California   24      20.5      17      18.5   
Colorado   18      19.0      20      15.5   
West Region   73      75.0      77      73.0   
Texas   77      86.0      95      93.5   
Central Region   77      86.0      95      93.5   
Florida   33      32.0      31      29.5   
Georgia   18      20.0      22      20.5   
North Carolina   25      25.0      25      21.0   
South Carolina       10.5      12      12.5   
Tennessee       9.5      10      8.0   
East Region   94      97.0      100      91.5   
Total   244      258.0      272      258.0   
                         

ABOUT MERITAGE HOMES CORPORATION

Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2018. Meritage offers a variety of homes that are designed with a focus on first-time and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

The Company has designed and built over 125,000 homes in its 35-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 full year 2020 home closings, home closing revenue, home closing gross margin and tax rate, as well as expectations regarding new community openings, the U.S. economy and housing market.

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: changes in interest rates and the availability and pricing of residential mortgages; legislation related to tariffs; the availability and cost of finished lots and undeveloped land; shortages in the availability and cost of labor; the success of strategic initiatives; the ability of our potential buyers to sell their existing homes; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; changes in tax laws that adversely impact us or our homebuyers; 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, 2018 and our Form 10-Q for the quarter ended September 30, 2019 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com