Meritage Homes Corporation (MTH) recorded a broader loss of $11.8 million or 36 cents per share in the fourth quarter of 2011 compared with $895 thousand or 3 cents per share in the same quarter of 2010.
Excluding asset impairments and loss on early extinguishment of debt, the company had a profit of $2.1 million or 6 cents per share during the quarter under review, missing the Zacks Consensus Estimate by a penny. This compared with a loss of $295 thousand or 1 cent per share in the fourth quarter of 2010, excluding asset impairments and a tax benefit.
Total closing revenue rose 15% year-over-year to $246.0 million on a total of 894 homes closed in the quarter compared with 837 homes in the fourth quarter of 2010. It compared with the Zacks Consensus Estimate of $243.0 million. Net sales orders grew 5% to 749 units from 713 units in the 2010-quarter.
Home closing revenue increased 14% to $245.7 million driven by a 7% increases in both closing volume and average prices. The average closing price increased to $275 thousand from $256 thousand in the fourth quarter of 2010.
Higher average prices in the quarter reflected a shift in geographic mix, with a greater portion of closings in California, Arizona, Colorado and Florida, where home prices are generally higher, and a smaller portion in Texas, where home prices are generally lower.
Home closing gross profit improved 16% to $39.4 million in the quarter from $34.0 million in the prior-year quarter, driven by greater closing revenue and expanded margins on closings. Home closing gross margins increased to 16.0% from 15.8% in the fourth quarter of 2010, including impairments and to 18.8% from 18.1% in the fourth quarter of 2010, excluding impairments.
For the full year 2011, Meritage reported a loss of $21.1 million or 65 cents per share compared with a profit of $7.2 million or 22 cents per share in 2010. Excluding asset impairments, the company had a loss of $4.9 million or 15 cents per share in the year, which compared with the Zacks Consensus Estimate of a loss of 21 cents per share and the year-ago profit of $12.7 million or 39 cents per share (excluding real estate-related impairment charges, loss on extinguishment of debt and a net tax benefit).
Total closing revenue dipped 8.5% to $861.2 million in 2011, which is higher than the Zacks Consensus Estimate of $860.0 million. The company had 157 active communities as on December 31, 2011 compared with 151 as on December 31, 2010.
Meritage had cash and cash equivalents, restricted cash, investment and securities of $333.2 million as of December 31, 2011 compared with $412.6 million as of December 31, 2010.
Net debt stood at $273.2 million as of December 31, 2011 versus $193.1 million as of December 31, 2010. Net debt to total capital ratio was 35.8% as of December 31, 2011 compared with 27.9% as of December 31, 2010.
Based in Scottsdale, Arizona, Meritage Homes Corporation, which retains a Zacks #3 Rank (short-term Hold rating) stock, builds single-family homes for a broad range of homebuyers. The company also provides residential financial services including mortgage origination services for its homebuyers. Meritage’s key competitors include Lennar Corp. (LEN), KB Home (KBH) and DR Horton Inc. (DHI).
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