Meritage Homes Corp., Scottsdale, Ariz. (NYSE:MTH) on Tuesday morning reported preliminary results for the first quarter that included a 7.8% in net orders but a 13.3% decline in home closings. The results indicated that, for Meritage, the tax-credit fueled spring selling season was, through March, disappointing.
The company said it expects to report home-closing revenue of $201 million on 808 homes with an average price of approximately $248,000 for the quarter of 2010 compared to revenue of $231 million on 932 homes with an average price of approximately $248,000 the first quarter of 2009.
New orders, however, were taken on 1,064 homes with an aggregate value of$268 million and an average price of $252,000. That compares with orders for987 homes with a value of $232 million and an average price of $235,000. The cancellation rate improved to 18% in this year's quarter versus 26% in the same quarter of last year.
The new orders pushed up ending backlog, which at March 31, 2010, included1,351 homes with an aggregate value of $355 million, compared to 1,336 homes with a value of $339 million at the end of March, 2009.
"The 2010 spring selling season started out better than last year, with sales increasing sequentially each month throughout the first quarter of 2010, although our expectations coming into the quarter were more optimistic," said Steven J. Hilton, chairman and CEO. "The extended and expanded home buyer tax credit didn't appear to positively impact our sales in the first quarter as much as we'd hoped. Also, by comparison to last year, the abnormally wet and cold winter weather we experienced during the quarter also took a toll on both our sales and closings, but we remain confident in our ability to achieve our goal of returning to profitability in 2010."
The company said it would report first-quarter earnings after market close on April 28.
Separately, Meritage said it will turn to the bond market for a private offering of at least $200 million by April 19, 2010 to fund cash tender offers to purchase up to $195 million principal amount of near-term senior notes. Under separate offers, the company will buy back any and all of $130 million in its its 2014 7% notes and up to $65 million of its 6.25% notes due in 2015. Holders of the 2014 notes would receive $1,025 per $1,000 principal; those with the 2015 notes are being offered a range between $960 and $1,000, including a $20 early tender premium, at Dutch auction.
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. will serve as dealer managers. The offers close May 3.