Meritage Homes Corporation (NYSE:MTH) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 10:00 am ET


Meritage Homes Corporation (NYSE:MTH) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning and welcome to the Meritage Homes Fourth Quarter Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note that this event is being recorded.

And I would now like to turn the conference over to Mr. Brent Anderson, VP of IR, Meritage Homes. Please go ahead.

Brent Anderson

Good morning, everyone. Welcome to our analyst conference call today. Our fourth quarter 2014 ended on December 31, and we issued our press release this morning before the market opened. If you need a copy of the release or the slides that will accompany our webcast today, you can find them on our web site at or by selecting the Investors link at the bottom of our homepage.

Please refer to slide two of our presentation. (Forward-Looking Cautionary Statements)

With me today to discuss our results are Steve Hilton, Chairman and CEO of Meritage Homes; and Larry Seay, our EVP and CFO. We expect the call to run about an hour, and a replay of the call will be available on our Web site within an hour or so after we conclude the call. It will remain active for 30 days.

I'll now turn it over to Mr. Hilton to review our fourth quarter results. Steve?

Steve Hilton

Welcome everyone on this call, and thank you for your continued interest in Meritage Homes.

After an exceptionally strong rebound, the US housing market in 2013, 2014 grew at a more reasonable rate, and we saw greater variability between markets as opposed to the broad-based recovery we saw earlier in the cycle.

Home price inflation slowed even in higher-demand market, and incentives returned in some markets where prices had been rapidly increasing over the last couple of years. One such market was Phoenix, which we've seen stabilizing most recently. The home prices were more muted than last year. Our average prices rose due to a combination of selling larger homes and more desirable communities as well as some market appreciation.

As a result, we generated increases in total home closing revenues, order value, and backlog value that exceeded our unit volume growth. Anticipating that price inflation would subside and be lesser of a driver of our future revenue growth and profitability. We focus on expanding an additional high-quality market to further diversify and broaden our community base. We acquired Legendary Communities in August 2014. With then we gained a solid position in the Atlanta, Georgia market, and the number one position in the Greenville, South Carolina market. Those two additional markets have great long-term growth potential for Meritage as the fifth and sixth new markets we've entered through 2011. Those new markets added to our community count, and we entered the year with a total of 229 active communities, representing a 22% growth over 2013.

Those strategic investments directly contributed to our significant increase in orders, closings, backlog, revenue, gross profit, and net earnings for both the fourth quarter and the full year 2014, and have much more potential for future growth. We