Meritage Homes Reports Second Quarter 2021 Results, Including Record Gross Margin of 27.3%, 11% Sequential Quarterly Increase in Community Count to 226 and 83% Increase in Diluted EPS

Dallas, Texas, UNITED STATES


SCOTTSDALE, Ariz., July 28, 2021 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported second quarter results for the period ended June 30, 2021.

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

  Three Months Ended June 30, Six Months Ended June 30,
  2021 2020 % Chg 2021 2020 % Chg
Homes closed (units) 3,273  2,770  18 % 6,163  5,086  21%
Home closing revenue $1,264,643  $1,031,591  23 % $2,344,625  $1,922,008  22%
Average sales price - closings $386  $372  4 % $380  $378  1%
Home orders (units) 3,542  3,597  (2)% 7,000  6,699  4%
Home order value $1,499,672  $1,290,454  16 % $2,848,802  $2,470,391  15%
Average sales price - orders $423  $359  18 % $407  $369  10%
Ending backlog (units)       5,509  4,395  25%
Ending backlog value       $2,317,534  $1,648,451  41%
Average sales price - backlog       $421  $375  12%
Earnings before income taxes $215,651  $115,862  86 % $381,628  $202,695  88%
Net earnings $167,389  $90,678  85 % $299,232  $161,830  85%
Diluted EPS $4.36  $2.38  83 % $7.80  $4.20  86%
                        

MANAGEMENT COMMENTS

“Homebuying demand in the second quarter of 2021 remained strong and steady as macroeconomic conditions improved,” said Steven J. Hilton, executive chairman of Meritage Homes. "Our second quarter 2021 average absorption pace was 5.5 per month, up from 5.0 in the second quarter of 2020 even as we metered our orders pace. Although our orders pace was strong, a 10% decline in average community count resulted in a modest 2% decline in quarterly sales orders to 3,542 homes this quarter, compared to the exceptionally strong sales orders in the second quarter of 2020. Demonstrating our high level of execution and ability to navigate ongoing supply chain challenges, we closed 3,273 homes, the best second quarter of closings in company history which was also 18% greater than prior year, as well as generated the Company's all-time high quarterly gross margin of 27.3%."

Mr. Hilton continued, “As we get closer to attaining our mid-2022 goal of 300 communities, we exceeded our own expectations and had 226 active communities at June 30, 2021, reflecting an 11% sequential quarterly increase from 203 and, we believe, the start of meaningful growth. We opened 45 new communities this quarter and our strong pipeline of community openings over the next four quarters should position us well both to address market demand with a greater volume of affordable entry-level and first move-up homes and to drive continued profitability.”

“Our strategy continues to successfully leverage demographic trends in homebuying for millennials and baby boomers, as well as market conditions of constrained housing supply and sustained lower interest rates,” said Phillippe Lord, chief executive officer of Meritage Homes. “During the quarter, we invested significantly in growth by spending a record $551 million on land acquisition and development. Approximately 9,000 net new lots were secured, a 114% increase over prior year, bringing our total lot supply to over 63,000. Inclusive of this additional spend, our net debt to capital ratio was 15.4% this quarter, as we remain committed to sustained growth, a strong balance sheet, and maintaining liquidity.”

"For the second quarter of 2021, home closing revenue of $1.3 billion was 23% greater than last year," Mr. Lord remarked. "Leveraging strong operational efficiencies and favorable pricing power, our home closing gross margin expanded 590 bps year-over-year from 21.4% to 27.3% this quarter and our diluted EPS increased 83% year-over-year from $2.38 to $4.36 after the impact of $18.2 million of early debt extinguishment."

Mr. Lord added, “Based on our current forecast and confidence in delivering our backlog, we are projecting 2021 home closings of approximately 12,500-13,000 and 2021 home closing revenue in the range of $5.00-5.25 billion. In addition, we anticipate full year home closing gross margin of around 27.5% and an effective tax rate of 22.5-23.0%, which we expect will translate into approximately $18.55-19.45 of diluted EPS for 2021.”

"Housing demand remains strong and we are still able to sell our homes soon after they are released. Looking ahead, we will continue to adjust and maximize prices based on market conditions and to align our orders pace with our production schedule, which is affected by supply chain constraints. With notable lumber price declines over the last couple months, we expect our net construction costs will stay flat or decline over the next couple of quarters. We believe that this improvement coupled with our ongoing community count growth will contribute to strong financial results in the short- and medium-term," concluded Mr. Lord.

SECOND QUARTER RESULTS

  • The total orders of 3,542 for the second quarter of 2021 reflected a decrease of 2% year-over-year, driven by a 9% increase in average absorption pace from 5.0 to 5.5 per month, which was offset by a 10% decrease in average communities. Entry-level represented 81% of second quarter 2021 orders, compared to 70% in the same quarter in 2020. Strong housing demand enabled Meritage to achieve higher average absorptions in the East and Central regions, which were up 25% and 8%, respectively. Average absorption pace in the West region was relatively flat year-over-year. The tight housing supply conditions combined with strong homebuying demand created considerable pricing power in the market, which generated year-over-year increases in average sales price ("ASP") for both orders and backlog. Even as our product mix continued to shift toward entry-level homes, ASP on orders in the second quarter of 2021 exceeded $420,000.

  • The 23% year-over-year increase in home closing revenue to $1.3 billion for the second quarter of 2021 was due to 18% higher home closing volume and a 4% increase in closing ASP, which is primarily attributable to the sustained strength in housing demand and the significant price increases the market has allowed us to push through in recent quarters, despite the product mix shift toward entry-level homes.

  • The 590 bps improvement in second quarter 2021 home closing gross margin to 27.3% from 21.4% a year ago mainly resulted from efficiencies gained from higher ASP and leveraging of our fixed costs on greater home closing volume, which more than offset higher lumber prices and increases in other commodity costs.

  • Selling, general and administrative expenses ("SG&A") were 9.2% of second quarter 2021 home closing revenue, a 110 bps improvement over 10.3% in the prior year. This improvement was due to greater leverage of fixed expenses on higher home closing revenue, in addition to cost savings from technology enhancements, particularly related to our sales and marketing efforts.

  • Loss on early extinguishment of debt of $18.2 million was recognized in the second quarter of 2021 in connection with the early redemption in April 2021 of the 7.00% senior notes due 2022 ("2022 Notes").

  • The second quarter effective income tax rate was 22.4% in 2021 compared to 21.7% in 2020. The reduced rate in both years primarily stems from eligible energy tax credits on qualifying energy-efficient homes closed under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019.

  • Second quarter 2021 pre-tax margin increased 560 bps to 16.8%, compared to 11.2% in the second quarter of 2020. Net earnings were $167.4 million ($4.36 per diluted share) for the second quarter of 2021, an 85% increase over $90.7 million ($2.38 per diluted share) for the second quarter of 2020. Strong earnings growth reflected higher closing volume, pricing power, expanded gross margin and improved overhead leverage, which led to an 83% year-over-year improvement in earnings per diluted share.

YEAR TO DATE RESULTS

  • Total orders for the first half of 2021 increased 4% year-over-year, driven by a 21% increase in absorption pace, partially offset by a 14% decrease in average community count compared to the first half of 2020.

  • Home closing revenue increased 22% in the first half of 2021 to $2.3 billion due to 21% higher home closing volume and a 1% increase in closing ASP given the favorable pricing environment.

  • The 530 bps improvement for home closing gross margin in the first half of 2021 to 26.1% from 20.8% primarily resulted from higher ASP and better leveraging of fixed costs on greater home closing volume.

  • SG&A expenses improved 100 bps year-over-year to 9.5% of home closing revenue, compared to 10.5% in the first half of 2020, due to operating efficiencies and improved leverage of fixed expenses on higher home closing volume and revenue.

  • Loss on early extinguishment of debt of $18.2 million was recognized in the first half of 2021 in connection with the early redemption of the 2022 Notes.

  • The effective tax rate for the first half of 2021 was 21.6%, compared to 20.2% for the first half of 2020. The effective tax rate in both periods benefited from tax credits earned for qualifying energy-efficient homes under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019.

  • Net earnings were $299.2 million ($7.80 per diluted share) for the first half of 2021, an 85% increase over $161.8 million ($4.20 per diluted share) for the first half of 2020, primarily reflecting higher closing volume, pricing power, expanded gross margin and greater overhead leverage in 2021.

BALANCE SHEET

  • Cash and cash equivalents at June 30, 2021 totaled $684.4 million, compared to $745.6 million at December 31, 2020, reflecting investments in real estate and development and share repurchases. Real estate assets increased from $2.8 billion at December 31, 2020 to $3.3 billion at June 30, 2021, reflecting an increase in homes under contract under construction and finished homesites and homesites under development.

  • A total of over 63,000 lots were owned or controlled as of June 30, 2021, compared to approximately 43,000 total lots at June 30, 2020. In the second quarter of 2021, about 9,000 net new lots were added, representing 54 future communities, of which 80% are for entry-level communities.

  • Debt-to-capital and net debt-to-capital ratios were 30.6% and 15.4%, respectively, at June 30, 2021, compared to 30.3% and 10.5%, respectively, at December 31, 2020.

  • In the first half of 2021, we repurchased 300,000 shares of stock for a total of $27.5 million, of which 200,000 shares totaling $19.1 million were repurchased during the second quarter of 2021.

  • On April 15, 2021, the Company closed on its offering of $450 million 3.875% senior notes due 2029 and received approximately $444 million in net proceeds. On March 31, 2021, the company issued a notice of redemption for April 30, 2021 for all of its $300 million aggregate principal amount of the 2022 Notes. The redemption of the 2022 Notes resulted in $18.2 million of early extinguishment of debt charges in the second quarter of 2021.

CONFERENCE CALL
Management will host a conference call to discuss its second quarter results at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) on Thursday, July 29, 2021. The call will be webcast live with an accompanying slideshow available on the "Investor Relations" page of the Company's website at https://investors.meritagehomes.com. Telephone participants will be able to join by dialing in to 1-877-407-6951 US toll free or 1-412-902-0046 on the day of the call.

A replay of the call will be available via webcast beginning at approximately 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on July 29, 2021 and extending through August 12, 2021, at https://investors.meritagehomes.com.


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

  Three Months Ended June 30,
  2021 2020 Change $ Change %
Homebuilding:       
 Home closing revenue$1,264,643   $1,031,591   $233,052   23 %
 Land closing revenue12,956   1,488   11,468   771 %
 Total closing revenue1,277,599   1,033,079   244,520   24 %
 Cost of home closings(919,342)  (810,895)  108,447   13 %
 Cost of land closings(13,288)  (2,936)  10,352   353 %
 Total cost of closings(932,630)  (813,831)  118,799   15 %
 Home closing gross profit345,301   220,696   124,605   56 %
 Land closing gross loss(332)  (1,448)  1,116   (77)%
 Total closing gross profit344,969   219,248   125,721   57 %
Financial Services:       
 Revenue5,665   4,478   1,187   27 %
 Expense(2,367)  (1,758)  609   35 %
 Earnings from financial services unconsolidated entities and other, net1,317   1,069   248   23 %
 Financial services profit4,615   3,789   826   22 %
Commissions and other sales costs(73,889)  (70,408)  3,481   5 %
General and administrative expenses(43,156)  (36,176)  6,980   19 %
Interest expense(77)  (2,105)  (2,028)  (96)%
Other income, net1,377   1,514   (137)  (9)%
Loss on early extinguishment of debt(18,188)     18,188   n/a
Earnings before income taxes215,651   115,862   99,789   86 %
Provision for income taxes(48,262)  (25,184)  23,078   92 %
Net earnings$167,389   $90,678   $76,711   85 %
        
Earnings per common share:       
 Basic    Change $ or shares Change %
 Earnings per common share$4.43   $2.41   $2.02   84 %
 Weighted average shares outstanding37,818   37,599   219   1 %
 Diluted       
 Earnings per common share$4.36   $2.38   $1.98   83 %
 Weighted average shares outstanding38,377   38,169   208   1 %


         
  Six Months Ended June 30,
  2021 2020 Change $ Change %
Homebuilding:       
 Home closing revenue$2,344,625   $1,922,008   $422,617   22 %
 Land closing revenue16,755   12,084   4,671   39 %
 Total closing revenue2,361,380   1,934,092   427,288   22 %
 Cost of home closings(1,732,669)  (1,522,952)  209,717   14 %
 Cost of land closings(16,540)  (13,149)  3,391   26 %
 Total cost of closings(1,749,209)  (1,536,101)  213,108   14 %
 Home closing gross profit611,956   399,056   212,900   53 %
 Land closing gross profit/(loss)215   (1,065)  1,280   120 %
 Total closing gross profit612,171   397,991   214,180   54 %
Financial Services:       
 Revenue10,416   8,390   2,026   24 %
 Expense(4,538)  (3,493)  1,045   30 %
 Earnings from financial services unconsolidated entities and other, net2,497   1,730   767   44 %
 Financial services profit8,375   6,627   1,748   26 %
Commissions and other sales costs(141,633)  (131,581)  10,052   8 %
General and administrative expenses(81,105)  (70,346)  10,759   15 %
Interest expense(167)  (2,121)  (1,954)  (92)%
Other income, net2,175   2,125   50   2 %
Loss on early extinguishment of debt(18,188)     18,188   n/a
Earnings before income taxes381,628   202,695   178,933   88 %
Provision for income taxes(82,396)  (40,865)  41,531   102 %
Net earnings$299,232   $161,830   $137,402   85 %
        
Earnings per common share:       
 Basic    Change $ or shares Change %
 Earnings per common share$7.93   $4.28   $3.65   85 %
 Weighted average shares outstanding37,731   37,842   (111)   %
 Diluted       
 Earnings per common share$7.80   $4.20   $3.60   86 %
 Weighted average shares outstanding38,357   38,512   (155)   %


Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)

  June 30, 2021 December 31, 2020
Assets:    
Cash and cash equivalents $684,374  $745,621 
Other receivables 131,104  98,573 
Real estate (1) 3,251,787  2,778,039 
Deposits on real estate under option or contract 74,397  59,534 
Investments in unconsolidated entities 3,943  4,350 
Property and equipment, net 36,224  38,933 
Deferred tax asset 33,502  36,040 
Prepaids, other assets and goodwill 106,222  103,308 
Total assets $4,321,553  $3,864,398 
Liabilities:    
Accounts payable $215,221  $175,250 
Accrued liabilities 282,762  296,121 
Home sale deposits 33,958  25,074 
Loans payable and other borrowings 19,534  23,094 
Senior notes, net 1,141,934  996,991 
Total liabilities 1,693,409  1,516,530 
Stockholders' Equity:    
Preferred stock    
Common stock 376  375 
Additional paid-in capital 436,805  455,762 
Retained earnings 2,190,963  1,891,731 
Total stockholders’ equity 2,628,144  2,347,868 
Total liabilities and stockholders’ equity $4,321,553  $3,864,398 


(1) Real estate – Allocated costs:
    
Homes under contract under construction $1,069,511  $873,365 
Unsold homes, completed and under construction 353,047  357,861 
Model homes 73,846  82,502 
Finished home sites and home sites under development 1,755,383  1,464,311 
Total real estate $3,251,787  $2,778,039 


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

 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
Depreciation and amortization$6,879   $7,540   $13,414   $14,551  
        
Summary of Capitalized Interest:       
Capitalized interest, beginning of period$57,540   $78,162   $58,940   $82,014  
Interest incurred16,321   17,550   32,413   34,085  
Interest expensed(77)  (2,105)  (167)  (2,121) 
Interest amortized to cost of home and land closings(17,074)  (20,725)  (34,476)  (41,096) 
Capitalized interest, end of period$56,710   $72,882   $56,710   $72,882  
        
 June 30, 2021 December 31, 2020    
Senior notes, net, loans payable and other borrowings$1,161,468   $1,020,085      
Stockholders' equity2,628,144   2,347,868      
Total capital$3,789,612   $3,367,953      
Debt-to-capital30.6 % 30.3 %    
        
Senior notes, net, loans payable and other borrowings$1,161,468   $1,020,085      
Less: cash and cash equivalents(684,374)  (745,621)     
Net debt$477,094   $274,464      
Stockholders’ equity2,628,144   2,347,868      
Total net capital$3,105,238   $2,622,332      
Net debt-to-capital15.4 % 10.5 %    


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

  Six Months Ended June 30,
  2021 2020
Cash flows from operating activities:    
Net earnings $299,232   $161,830  
Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities:    
Depreciation and amortization 13,414   14,551  
Stock-based compensation 8,590   9,594  
Loss on early extinguishment of debt 18,188     
Equity in earnings from unconsolidated entities (1,807)  (1,691) 
Distribution of earnings from unconsolidated entities 2,215   1,491  
Other 2,266   2,548  
Changes in assets and liabilities:    
(Increase)/decrease in real estate (469,733)  9,655  
(Increase)/decrease in deposits on real estate under option or contract (14,863)  2,225  
(Increase)/decrease in other receivables, prepaids and other assets (36,390)  3,469  
Increase in accounts payable and accrued liabilities 26,532   34,772  
Increase/(decrease) in home sale deposits 8,884   (999) 
Net cash (used in)/provided by operating activities (143,472)  237,445  
Cash flows from investing activities:    
Investments in unconsolidated entities (1)  (3) 
Distributions of capital from unconsolidated entities    1,000  
Purchases of property and equipment (10,970)  (10,343) 
Proceeds from sales of property and equipment 292   259  
Maturities/sales of investments and securities 2,697   632  
Payments to purchase investments and securities (2,697)  (632) 
Net cash used in investing activities (10,679)  (9,087) 
Cash flows from financing activities:    
Repayment of loans payable and other borrowings (5,758)  (2,389) 
Repayment of senior notes (317,690)    
Proceeds from issuance of senior notes 450,000     
Payment of debt issuance costs (6,102)    
Repurchase of shares (27,546)  (60,813) 
Net cash provided by/(used in) financing activities 92,904   (63,202) 
Net (decrease)/increase in cash and cash equivalents (61,247)  165,156  
Beginning cash and cash equivalents 745,621   319,466  
Ending cash and cash equivalents  $684,374   $484,622  


Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)

         
  Three Months Ended June 30,
  2021 2020
  Homes Value Homes Value
Homes Closed:        
Arizona 481  $165,990  427  $142,359 
California 318  198,232  247  150,343 
Colorado 145  74,987  184  89,087 
West Region 944  439,209  858  381,789 
Texas 1,154  403,838  914  295,975 
Central Region 1,154  403,838  914  295,975 
Florida 443  160,377  367  138,608 
Georgia 171  62,477  166  58,698 
North Carolina 330  119,838  288  98,738 
South Carolina 81  28,209  98  30,206 
Tennessee 150  50,695  79  27,577 
East Region 1,175  421,596  998  353,827 
Total 3,273  $1,264,643  2,770  $1,031,591 
Homes Ordered:        
Arizona 624  $256,804  737  $231,057 
California 344  217,228  388  224,639 
Colorado 181  104,134  153  70,831 
West Region 1,149  578,166  1,278  526,527 
Texas 1,101  428,375  1,215  392,502 
Central Region 1,101  428,375  1,215  392,502 
Florida 468  176,118  390  136,362 
Georgia 193  77,309  190  65,434 
North Carolina 390  153,032  326  106,383 
South Carolina 88  32,595  95  29,262 
Tennessee 153  54,077  103  33,984 
East Region 1,292  493,131  1,104  371,425 
Total 3,542  $1,499,672  3,597  $1,290,454 


         
  Six Months Ended June 30,
  2021 2020
  Homes Value Homes Value
Homes Closed:        
Arizona 891  $303,258  886  $293,603 
California 595  370,131  455  285,145 
Colorado 320  159,250  370  180,771 
West Region 1,806  832,639  1,711  759,519 
Texas 2,117  722,223  1,688  551,884 
Central Region 2,117  722,223  1,688  551,884 
Florida 860  301,205  603  232,397 
Georgia 317  117,616  281  100,696 
North Carolina 629  226,851  510  178,155 
South Carolina 166  56,055  151  47,611 
Tennessee 268  88,036  142  51,746 
East Region 2,240  789,763  1,687  610,605 
Total 6,163  $2,344,625  5,086  $1,922,008 
         
Homes Ordered:        
Arizona 1,226  $479,239  1,307  $414,428 
California 630  390,619  740  449,571 
Colorado 350  193,913  352  169,296 
West Region 2,206  1,063,771  2,399  1,033,295 
Texas 2,216  820,343  2,274  735,492 
Central Region 2,216  820,343  2,274  735,492 
Florida 947  355,227  707  255,804 
Georgia 357  138,866  346  120,417 
North Carolina 809  310,719  613  207,638 
South Carolina 164  58,997  182  57,176 
Tennessee 301  100,879  178  60,569 
East Region 2,578  964,688  2,026  701,604 
Total 7,000  $2,848,802  6,699  $2,470,391 
         
Order Backlog:        
Arizona 1,328  $520,034  932  $307,302 
California 479  295,198  430  256,694 
Colorado 238  139,437  178  86,158 
West Region 2,045  954,669  1,540  650,154 
Texas 1,729  670,583  1,634  556,787 
Central Region 1,729  670,583  1,634  556,787 
Florida 637  268,971  475  187,241 
Georgia 196  79,207  198  69,559 
North Carolina 634  247,292  322  109,026 
South Carolina 118  44,175  102  34,054 
Tennessee 150  52,637  124  41,630 
East Region 1,735  692,282  1,221  441,510 
Total 5,509  $2,317,534  4,395  $1,648,451 


Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)

         
  Three Months Ended June 30,
  2021 2020
  Ending Average Ending Average
Active Communities:        
Arizona 38  35.5  38  35.5 
California 20  19.5  28  28.5 
Colorado 17  14.5  13  13.0 
West Region 75  69.5  79  77.0 
Texas 64  61.5  68  73.0 
Central Region 64  61.5  68  73.0 
Florida 34  32.0  36  35.0 
Georgia 10  11.0  17  16.0 
North Carolina 26  25.0  21  20.5 
South Carolina 7  6.5  5  6.0 
Tennessee 10  9.0  11  11.5 
East Region 87  83.5  90  89.0 
Total 226  214.5  237  239.0 


         
  Six Months Ended June 30,
  2021 2020
  Ending Average Ending Average
Active Communities:        
Arizona 38  34.6  38  34.5 
California 20  18.3  28  26.0 
Colorado 17  13.3  13  15.5 
West Region 75  66.2  79  76.0 
Texas 64  62.0  68  72.5 
Central Region 64  62.0  68  72.5 
Florida 34  31.6  36  34.5 
Georgia 10  9.7  17  17.5 
North Carolina 26  23.7  21  23.0 
South Carolina 7  6.3  5  7.0 
Tennessee 10  8.3  11  10.0 
East Region 87  79.6  90  92.0 
Total 226  207.8  237  240.5 
             

About Meritage Homes Corporation
Meritage Homes is the sixth-largest public homebuilder in the United States, based on homes closed in 2020. The Company offers a variety of homes that are designed with a focus on entry-level and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

Meritage Homes has delivered over 145,000 homes in its 36-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is the industry leader in energy-efficient homebuilding and an eight-time recipient of the U.S. Environmental Protection Agency’s ENERGY STAR® Partner of the Year for Sustained Excellence Award 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 expectations about the housing market in general; projected 2021 home closings, home closing revenue, gross margins, effective tax rate, diluted earnings per share and future community counts; trends in construction costs; and expectations about our future results.

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, except as required by law, 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. These risks and uncertainties include, but are not limited to, the following: changes in interest rates and the availability and pricing of residential mortgages; inflation in the cost of materials used to develop communities and construct homes; supply chain constraints; our ability to obtain performance and surety bonds in connection with our development work; the ability of our potential buyers to sell their existing homes; legislation related to tariffs; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our potential exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; 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 limited geographic diversification; the replication of our energy-efficient technologies by our competitors; shortages in the availability and cost of subcontract labor; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure to comply with laws and regulations; our compliance with government regulations; negative publicity that affects our reputation; disruptions to our business by COVID-19, fear of a similar event, and measures that federal, state and local governments and/or health authorities implement to address it; 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, 2020 and our Form 10-Q for the quarter ended March 31, 2021 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

Contact:Emily Tadano, VP Investor Relations
 (480) 515-8979 (office)
 investors@meritagehomes.com