Meritage Homes Reports Strong Order Growth of 46% and Revenue Growth of 48% for the Fourth Quarter 2012

Meritage Homes Reports Strong Order Growth of 46% and Revenue Growth of 48%
for the Fourth Quarter 2012

SCOTTSDALE, Ariz., Jan. 31, 2013 (GLOBE NEWSWIRE) -- Meritage Homes
Corporation (NYSE:MTH), a leading U.S. homebuilder, today announced fourth
quarter results for the period ended December 31, 2012.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
                                                                    
                     Three Months Ended December Twelve Months Ended December
                      31,                         31,
                     2012        2011       %Chg 2012         2011       %Chg
Homes closed (units)  1,240       894        39%  4,238        3,268      30%
Home closing revenue  $364,118  $245,730 48%  $1,184,360 $860,884 38%
Average sales price - $294      $275     7%   $279       $263     6%
closings
Home orders (units)   1,094       749        46%  4,795        3,405      41%
Home order value      $353,862  $206,061 72%  $1,414,772 $907,922 56%
Average sales price - $323      $275     18%  $295       $267     11%
orders
Ending backlog                                 1,472        915        61%
(units)
Ending backlog value                           $ 479,266    $ 248,854  93%
Average sales price -                          $ 326        $ 272      20%
backlog
Net income/(loss)     $ 95,128    $ (11,774) n/m  $105,163   $ (21,106) n/m
Diluted EPS           $ 2.49      $ (0.36)   n/m  $ 3.00       $ (0.65)   n/m

Management comments

"We finished 2012 with another quarter of strong growth in orders, as
year-over-year sales remained brisk through the end of the year, lessening the
typical seasonal slowdown we would expect for the fourth quarter," said Steven
J. Hilton, chairman and chief executive officer of Meritage Homes. "We
increased sales by ensuring that we had well-located land for new communities
in high-demand areas, designing and introducing exciting new plans into most
of our markets, and successfully demonstrating the benefits of our
industry-leading energy efficient homes, which enabled us to capitalize on the
general resurgence in new home demand throughout the year.

"Our strong order growth throughout 2012 drove Meritage's total orders for the
year to their highest point since 2007, and translated into the highest annual
pre-tax income we've generated since 2006," said Mr. Hilton. "Net income of
$95 million for the fourth quarter of 2012 was driven by increased home
closings and revenue, greater leverage of overhead expenses, lower interest
expense and a $71.5 million net tax benefit. We earned $0.63 per diluted share
for the quarter even before taking into account the net tax benefit from the
reversal of most of our valuation allowance against our deferred tax assets.
We expect to use the deferred tax asset to offset future income taxes."

Mr. Hilton continued, "While 2012 was the second year of growth in U.S. new
home sales since they bottomed in 2010, and the highest number of new homes
were started since 2007, the absolute level of starts is still far below the
historical average, indicating abundant opportunity for continued growth.

"Based on our expectations for additional growth, we invested approximately
$480 million in land and development during the year, including the purchase
of approximately 9,000 lots. We ended the year with about 20,800 total lots
under control, up from about 16,700 lots at the end of 2011. Additionally, we
have significantly higher backlog, total assets and stockholders' equity than
we had at the end of 2011, with sufficient liquidity to grow as the housing
market continues to recover."

Fourth quarter 2012 operating results compared to 2011

  *Net income increased $106.9 million over 2011 to $95.1 million ($2.49 per
    diluted share) in the fourth quarter of 2012, compared to an $11.8 million
    loss ($0.36 per diluted share) in the prior year. 2012 results included
    $0.4 million of impairments and a net tax benefit of $71.5 million due to
    the reversal of most of the remaining deferred tax asset valuation
    allowance. Prior year results included $13.0 million of real
    estate-related impairments, primarily due to the wind down of operations
    in Las Vegas, and a $0.8 million loss from the sale of Meritage's only two
    golf courses.
  *Home closing revenue increased 48% due to a 39% increase in home closings
    and a 7% increase in average price over the prior year period. California,
    Texas and Florida accounted for the largest portion of the increase in
    total closing revenue. California more than doubled its fourth quarter
    closing revenue with a 117% increase over 2011.
  *Home orders increased 46%, and when combined with an 18% increase in
    average selling price that was primarily mix-driven, resulted in a 72%
    increase in total order value over the fourth quarter of 2011. The fourth
    quarter of 2012 was Meritage's seventh consecutive quarter of
    year-over-year growth in home orders, and the total of 1,094 homes ordered
    was higher than any fourth quarter since 2006. Average sales price for the
    fourth quarter increased to $323,000 from $275,000 in 2011.
  *Orders per average community during the fourth quarter increased 43% over
    the prior year to 7.0 from 4.9 in 2011, and reached their highest fourth
    quarter level since 2005. California achieved the highest orders per
    community for the quarter at 13.9; Colorado averaged 9.8; and Florida,
    8.2.
  *Cancellation rate decreased to 13% in the fourth quarter of 2012, compared
    to 19% in the fourth quarter of 2011, reflecting a high quality backlog
    and greater confidence among buyers, supported by increasing prices and
    expectations of further home value appreciation.
  *Ending backlog of orders was up 61% over the prior year, and the total
    value of orders in backlog was up 93%, aided by a 20% increase in the
    average sales price per home.
  *Home closing gross profit increased 74% over the prior year, and home
    closing gross margin increased to 18.9% in the fourth quarter of 2012
    compared to 16.0% in the fourth quarter of 2011. Margins increased
    primarily due to lower impairments and sales price increases, although
    sales price increases were largely offset by increases in various cost
    components. Excluding impairments from cost of sales, adjusted gross
    margins in the fourth quarter were 19.0% in 2012 and 18.8% in 2011, and
    slightly higher sequentially than 18.7% in the third quarter of 2012.
  *Commissions and selling expenses decreased by 120 basis points from the
    prior year, to 7.4% of home closing revenue in the fourth quarter of 2012,
    compared to 8.6% of home closing revenue in the fourth quarter of 2011, as
    higher closing revenue resulted in greater leverage of the fixed
    components within selling costs.
  *General and administrative expenses for the fourth quarter of 2012
    decreased by 230 basis points to 4.9% of total revenue in 2012, compared
    to 7.2% of total revenue in 2011.
  *Interest expense decreased to $5.5 million or 1.5% of revenue in the
    fourth quarter of 2012, compared to $7.4 million or 3.0% of revenue in the
    fourth quarter of 2011. A greater portion of interest incurred was
    capitalized to assets under development, and interest expense leverage
    improved with increased revenue.

Full year 2012 operating results compared to 2011

  *Net income of $105.2 million for the full year of 2012 included a $5.8
    million loss on early extinguishment of debt and $2.0 million of
    impairments, in addition to an $8.7 million charge related to litigation
    accruals and a $76.3 million net tax benefit primarily due to the reversal
    of most of the deferred tax asset valuation allowance. By comparison, the
    $21.1 million loss for the full year of 2011 included $16.2 million of
    asset impairments, primarily due to $9.2 million of charges related to the
    wind down of the company's operations in Las Vegas, and a tax provision of
    $0.7 million.
  *Home closings and closing revenue increased 30% and 38%, respectively, for
    2012 as compared to 2011.
  *2012 home closing gross margins improved by 130 basis points to 18.4%,
    primarily due to lower impairment charges, compared to 17.1% for 2011.
    Adjusted home closing gross margins excluding impairments were 18.5% in
    2012 and 18.2% in 2011.
  *Net orders for the year increased 41% in 2012 over 2011, and combined with
    an 11% increase in average sales prices, resulted in total order value
    increasing 56% year over year.

Balance sheet

  *Cash and cash equivalents, restricted cash and securities at December 31,
    2012, totaled $295.5 million, compared to $333.2 million at December 31,
    2011, as Meritage invested in additional inventory, as well as land and
    development, to support future growth in orders.
  *During the fourth quarter of 2012, management determined that most of the
    deferred tax asset previously reserved was more likely than not to be used
    within the statutory time limits, and that $79.9 million of the company's
    deferred tax valuation allowance should accordingly be reversed. $8.4
    million of the $79.9 million was used for federal and state taxes in the
    fourth quarter of 2012, resulting in a net tax benefit of $71.5 million
    for the quarter.At year-end, deferred tax assets totaled $78.0 million
    net of $8.7 million of valuation allowances.
  *Real estate assets increased by $297.8 million for the year 2012, ending
    at $1.1 billion at December 31, 2012, compared to $815.4 million at
    December 31, 2011, funded by cash on hand and approximately $209 million
    of additional capital raised during the year.
  *Meritage ended the quarter with approximately 20,800 total lots under
    control, of which 84% were owned, compared to approximately 16,700 at
    December 31, 2011, a net increase of approximately 4,100 lots during the
    year.
  *Net debt-to-capital ratio at December 31, 2012 was 38.1%, compared to
    35.8% at December 31, 2011.

Conference call

Management will host a conference call today to discuss the Company's results
at 10:30 a.m. Eastern Time (7:30 a.m. Pacific Time). The call will be webcast
by Business-to-Investor, Inc. (B2i), with an accompanying slideshow on the
"Investor Relations" page of the Company's web site at
http://investors.meritagehomes.com. For telephone participants, the dial-in
number is 877-317-6789 and the conference number is 10023382. Participants are
encouraged to dial in five minutes before the call begins. A replay of the
call will be available for fifteen days, beginning at 12:00 p.m. ET on January
31, 2013 on the website noted above, or by dialing 877-344-7529, and
referencing conference number 10023382. For more information, visit
meritagehomes.com.

Meritage Homes Corporation and Subsidiaries
Operating Results
(Unaudited)
(In thousands, except per share data)
                                                               
                                                               
                          Three Months Ended        Twelve Months Ended
                           December 31,              December 31,
                          2012         2011         2012          2011
Operating results                                               
Home closing revenue       $364,118   $245,730   $1,184,360  $860,884
Land closing revenue       468          260          9,314         360
Total closing revenue      364,586      245,990      1,193,674     861,244
Home closing gross profit  68,763       39,411       217,976       147,448
Land closing gross         210          (6,222)      223           (6,340)
profit/(loss)
Total closing gross profit 68,973       33,189       218,199       141,108
Commissions and other      (26,883)     (21,036)     (94,833)      (74,912)
sales costs
General and administrative (17,739)     (17,602)     (68,185)      (64,184)
expenses
Interest expense           (5,526)      (7,363)      (24,244)      (30,399)
Loss on extinguishment of  —            —            (5,772)       —
debt
Other income, net (1)      4,775        1,208        3,689         8,011
Income/(loss) before       23,600       (11,604)     28,854        (20,376)
income taxes
Benefit from/(provision    71,528       (170)        76,309        (730)
for) income taxes
Net income/(loss)          $95,128    $ (11,774)   $105,163    $ (21,106)
Income/(loss) per share                                         
Basic:                                                          
Income/(loss) per share    $2.67      $(0.36)    $3.09       $ (0.65)
Weighted average shares    35,595       32,452       34,057        32,382
outstanding
Diluted:                                                        
Income/(loss) per share    $2.49      $ (0.36)     $3.00       $ (0.65)
Weighted average shares    38,308       32,452       35,172        32,382
outstanding
Non-GAAP Reconciliations:                                       
Home closing gross profit  $68,763    $39,411    $217,976    $147,448
Add: Real estate-related   436          6,696        1,340         8,870
impairments
Adjusted home closing      $69,199    $46,107    $219,316    $156,318
gross profit
Income/(loss) before       $23,600    $ (11,604)   $28,854     $ (20,376)
income taxes
Add Real estate-related                                         
impairments:
Terminated lot options and —            8,994        1,015         9,221
land sales
Impaired projects          436          4,029        994           6,103
Fixed asset impairment     —            848          —             848
Increase in litigation     —            —            8,720         —
reserve (1)
Loss on early              —            —            5,772         —
extinguishment of debt
Adjusted income/(loss)     $24,036    $2,267     $45,355     $ (4,204)
before income taxes
                                                               
(1)Other income, net for the full year 2012 includes an $8.7 million charge
to increase litigation reserves.


Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
                                                                
                                                                
                                                    December 31, December 31,
                                                     2012         2011
Assets:                                                          
Cash and cash equivalents                            $170,457   $173,612
Investments and securities                           86,074       147,429
Restricted cash                                      38,938       12,146
Other receivables                                    20,290       14,932
Real estate ^(2)                                    1,113,187    815,425
Deposits on real estate under option or contract     14,351       15,208
Investments in unconsolidated entities               12,085       11,088
Deferred tax assets, net                             77,974       —
Other assets                                         42,206       31,538
Total assets                                         $1,575,562 $1,221,378
Liabilities and Equity:                                          
Accounts payable, accrued liabilities, home sale     $158,555   $126,057
deposits and otherliabilities
Senior notes                                         496,472      480,534
Convertible senior notes                             126,500      —
Senior subordinated notes                            99,825       125,875
Total liabilities                                    881,352      732,466
Total stockholders' equity                           694,210      488,912
Total liabilities and equity                         $1,575,562 $1,221,378
^(2) Real estate – Allocated costs:                              
Homes under contract under construction              $192,948   $101,445
Unsold homes, completed and under construction       107,466      97,246
Model homes                                          62,411       49,892
Finished home sites and home sites under development 634,106      441,242
Land held for development                            56,118       55,143
Land held for sale                                   21,650       29,908
Communities in mothball status                       38,488       40,549
Total allocated costs                                $1,113,187 $815,425


Supplemental Information and Non-GAAP Financial Disclosures (In thousands –
unaudited):
                                                                
                                                                
                                  Three Months Ended  Twelve Months Ended
                                   December 31,        December 31,
                                  2012      2011      2012         2011
Depreciation and amortization      $2,283  $1,911  $8,196     $7,178
                                                                
Summary of Capitalized Interest:                                 
Capitalized interest, beginning of $20,185 $14,115 $14,810    $11,679
period
Interest incurred                  12,316    10,848    46,135       43,393
Interest expensed                  (5,526)   (7,363)   (24,244)     (30,399)
Interest amortized to cost of
home, land closings and            (5,375)   (2,790)   (15,101)     (9,863)
impairments
Capitalized interest, end of       $21,600 $14,810 $21,600    $14,810
period
                                                                
                                                    2012         2011
Notes payable and other borrowings                   $722,797   $606,409
Less: cash and cash equivalents,
restricted cash, and investments                     (295,469)    (333,187)
and securities
Net debt                                             427,328      273,222
Stockholders' equity                                 694,210      488,912
Total capital                                        $1,121,538 $762,134
Net debt-to-capital                                  38.1%        35.8%


Meritage Homes Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
                                                               
                                                               
                           Three Months Ended        Twelve Months Ended
                            December 31,              December 31,
                           2012         2011         2012         2011
Operating results                                               
Net income/(loss)           $95,128    $ (11,774)   $105,163   $ (21,106)
Loss on early               —            —            5,772        —
extinguishment of debt
Real-estate related         436          13,023       2,009        15,324
impairments
Deferred tax valuation      (70,265)     —            (77,974)     —
benefit
Equity in earnings from JVs
and distributions of JV     (77)         (30)         (585)        648
earnings—net
Increase in real estate and (110,044)    (31,851)     (298,361)    (95,697)
deposits, net
Other operating activities  (3,413)      7,709        43,489       26,695
Net cash used in operating  (88,235)     (22,923)     (220,487)    (74,136)
activities
Net cash (used in)/provided (46,900)     38,649       23,844       141,182
by investing activities
Proceeds from issuance of   —            —            426,500      —
new debt
Debt issuance costs         188          —            (9,312)      —
Repayments of senior notes  —            —            (315,080)    —
Net proceeds from issuance  —            —            87,113       —
of common stock
Proceeds from stock option  355          782          4,267        2,613
exercises and other
Net cash provided by        543          782          193,488      2,613
financing activities
Net (decrease)/increase in  (134,592)    16,508       (3,155)      69,659
cash
Beginning cash and cash     305,049      157,104      173,612      103,953
equivalents
Ending cash and cash        $170,457   $173,612   $170,457   $173,612
equivalents (3)
                                                               
(3)Ending cash and cash equivalents as of December31, 2012 and December31,
2011 excludes investments and securities and restricted cash totaling $125
million and $160 million, respectively.


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
                                    
                                    
              Three Months Ended
              December31, 2012 December31, 2011
              Homes  Value      Homes  Value
Homes Closed:                        
Arizona        232    $67,910  176    $50,028
California     243    91,813     127    42,389
Colorado       65     20,991     83     27,338
Nevada         22     4,042      10     2,233
West Region    562    184,756    396    121,988
Texas          465    113,206    391    92,742
Central Region 465    113,206    391    92,742
Carolinas      33     11,375     —      —
Florida        180    54,781     107    31,000
East Region    213    66,156     107    31,000
Total          1,240  $364,118 894    $245,730
Homes Ordered:                       
Arizona        178    $56,426  128    $34,918
California     251    103,275    99     33,813
Colorado       98     35,391     55     18,279
Nevada         9      2,018      1      228
West Region    536    197,110    283    87,238
Texas          389    97,458     341    80,279
Central Region 389    97,458     341    80,279
Carolinas      33     11,772     24     8,616
Florida        136    47,522     101    29,928
East Region    169    59,294     125    38,544
Total          1,094  $353,862 749    $206,061


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
                                     
                                     
              Twelve Months Ended
              December31, 2012  December31, 2011
              Homes Value        Homes  Value
Homes Closed:                         
Arizona        825   $221,100   594    $150,258
California     732   264,388      355    120,319
Colorado       292   96,807       258    83,095
Nevada         61    11,444       59     12,593
West Region    1,910 593,739      1,266  366,265
Texas          1,655 390,642      1,660  395,278
Central Region 1,655 390,642      1,660  395,278
Carolinas      117   41,888       —      —
Florida        556   158,091      342    99,341
East Region    673   199,979      342    99,341
Total          4,238 $1,184,360 3,268  $860,884
Homes Ordered:                        
Arizona        916   $256,684   627    $163,510
California     965   361,328      392    132,672
Colorado       364   123,403      276    89,624
Nevada         70    13,473       52     11,300
West Region    2,315 754,888      1,347  397,106
Texas          1,759 429,465      1,593  377,165
Central Region 1,759 429,465      1,593  377,165
Carolinas      142   50,613       24     8,616
Florida        579   179,806      441    125,035
East Region    721   230,419      465    133,651
Total          4,795 $1,414,772 3,405  $907,922
Order Backlog:                        
Arizona        249   $80,816    158    $45,232
California     315   124,588      82     27,648
Colorado       142   50,089       70     23,493
Nevada         14    3,105        5      1,076
West Region    720   258,598      315    97,449
Texas          500   132,317      396    93,494
Central Region 500   132,317      396    93,494
Carolinas      49    17,341       24     8,616
Florida        203   71,010       180    49,295
East Region    252   88,351       204    57,911
Total          1,472 $479,266   915    $248,854


Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
                                            
                                            
                   Three Months Ended
                   December 31, 2012 December 31, 2011
                   Beg.      End     Beg.      End
Active Communities:                          
Arizona             34        38      37        37
California          19        17      22        20
Colorado            8         12      9         10
Nevada              2         1       3         2
West Region         63        68      71        69
Texas               68        65      65        67
Central Region      68        65      65        67
Carolinas           7         7       —         3
Florida             15        18      13        18
East Region         22        25      13        21
Total               153       158     149       157
                                            
                                            
                   Twelve Months Ended
                   December 31, 2012 December 31, 2011
                   Beg.      End     Beg.      End
Active Communities:                          
Arizona             37        38      32        37
California          20        17      14        20
Colorado            10        12      9         10
Nevada              2         1       4         2
West Region         69        68      59        69
Texas               67        65      82        67
Central Region      67        65      82        67
Carolinas           3         7       —         3
Florida             18        18      10        18
East Region         21        25      10        21
Total               157       158     151       157

About Meritage Homes Corporation

Meritage Homes is the ninth-largest public homebuilder in the United States
based on homes closed in 2011. Meritage builds a variety of homes across the
Southern and Western states to appeal to a wide range of buyers, including
first-time, move-up, luxury and active adults. As of December31, 2012, the
company had 158 actively selling communities in 15 metropolitan areas,
including Northern California, East Bay/Central Valley and Southern
California, Houston, Dallas/Ft. Worth, Austin, San Antonio,
Phoenix/Scottsdale, Tucson, Las Vegas, Denver, Orlando, Tampa and
Raleigh-Durham. In 2012, Meritage also announced its entry into the Charlotte
market.

Meritage is an industry leader in innovation and energy efficiency. Meritage
was the first national homebuilder to be 100 percent ENERGY STAR^® qualified
in every home it builds, and far exceeds ENERGY STAR standards in most of its
communities. 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.

For more information, visit meritagehomes.com.

The Meritage Homes Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=2624

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include
those regarding the Company's expectations for a continued recovery in the
homebuilding industry and for the company's additional growth, the sufficiency
of its liquidity to support future growth, as well as the company's ability to
use its deferred tax asset to offset future income taxes within the statutory
periods, all of which are subject to significant risks and uncertainties. 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; interest rates and
changes in the availability and pricing of residential mortgages; 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; the
availability of finished lots and undeveloped land; our potential exposure to
natural disasters; the liquidity of our joint ventures and the ability of our
joint venture partners to meet their obligations to us and the joint venture;
competition; the success of our strategies in the current homebuilding market
and economic environment; the adverse impacts of cancellations resulting from
small deposits relating to our sales contracts; construction defect and home
warranty claims; the uncertainty of litigation; our success in prevailing on
contested tax positions; our ability to preserve our deferred tax assets and
use them within the statutory time limits; our ability to obtain performance
bonds in connection with our development work; the loss of key personnel; our
failure to comply with laws and regulations; the availability and cost of
materials and labor; our lack of geographic diversification; fluctuations in
quarterly operating results; the Company's financial leverage and level of
indebtedness; our ability to take certain actions because of restrictions
contained in the indentures for the Company's 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 December31,
2011 and most recent 10-Q under the caption "Risk Factors," which can be found
on our website.

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

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