Meritage Homes reverses year-ago 2nd-qtr loss on lower charges, higher home closings

Tuesday, July 27, 2010

Meritage Homes swings to 2Q profit

SCOTTSDALE, Ariz. — Meritage Homes Corp. said Tuesday it reversed a year-ago loss in the second quarter as the homebuilder booked smaller charges on land and other assets and home closing revenue jumped 32 percent.

Still, Meritage Chairman and CEO Steven J. Hilton said the builder’s new home orders fell more sharply than anticipated after a federal homebuyer tax credit expired in April.

“Based on our second quarter sales, we are anticipating lower third quarter closings and are looking for improving sales in the latter part of the year,” Hilton said.

The builder’s new home orders fell 22 percent in the quarter versus the same period last year, partly because the company has fewer open communities than a year ago.

Meritage said net income was $4.2 million, or 13 cents a share, in the three months ended in June. That compares with a loss of $73.6 million, or $2.37 a share, during the same period last year.

The results from the latest period included pretax charges of $300,000, compared with $66.6 million in charges in the same quarter last year.

Excluding the impact of the charges and other special items, the company’s adjusted earnings for the quarter were $8.1 million and its year-ago loss was $11.9 million, the company said.

Meritage reported home and land closing revenue of $291.4 million, up from $221.5 million a year earlier.

Analysts surveyed by Thomson Reuters, who generally exclude one-time items, were expecting a profit of 12 cents a share on revenue of $255.7 million.

The homebuilder closed 36 percent more homes during the quarter as many homebuyers raced to wrap up deals in time to qualify for federal tax credits. The government incentives expired April 30, but buyers initially had until June 30 to close on their home purchase. Lawmakers later extended the deadline through Sept. 30.

New home orders for the quarter totaled 900, down 22 percent from a year earlier. Home closings, meanwhile, jumped 36 percent to 1,207.

The average home sales price was roughly $254,000, up from $229,700 in the prior-year quarter.

Meritage’s shares added 28 cents to $18.25 in aftermarket trading after falling 23 cents to $17.97 during the regular session.

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