SOURCE: Meritage Homes Corp.

February 05, 2014 08:15 ET

Meritage Homes Reports Results for the Fourth Quarter and Full Year 2013

Fourth Quarter EPS of $1.19 Reflects 47% Increase in Home Closing Revenue and 12% Pre-Tax Margin; Full Year Home Closing Revenue Increases 51% and Total Order Value Increases 40% Over 2012

SCOTTSDALE, AZ--(Marketwired - Feb 5, 2014) - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter results for the period ended December 31, 2013.

   
Summary Operating Results (unaudited)  
(Dollars in thousands, except per share amounts)  
   
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    2013   2012   %Chg   2013   2012   %Chg
Homes closed (units)     1,468     1,240   18 %     5,259     4,238   24 %
Home closing revenue   $ 533,492   $ 364,118   47 %   $ 1,783,389   $ 1,184,360   51 %
Average sales price - closings   $ 363   $ 294   24 %   $ 339   $ 279   21 %
Home orders (units)     1,131     1,094   3 %     5,615     4,795   17 %
Home order value   $ 414,584   $ 353,862   17 %   $ 1,982,303   $ 1,414,772   40 %
Average sales price - orders   $ 367   $ 323   13 %   $ 353   $ 295   20 %
Ending backlog (units)                       1,853     1,472   26 %
Ending backlog value                     $ 686,672   $ 479,266   43 %
Average sales price - backlog                     $ 371   $ 326   14 %
Net earnings   $ 46,089   $ 95,128   (52) %   $ 124,464   $ 105,163   18 %
Diluted EPS   $ 1.19   $ 2.49   (52) %   $ 3.25   $ 3.00   8 %
                                     

MANAGEMENT COMMENTS

"2013 was another year of strong revenue growth and earnings acceleration for Meritage Homes, and the fourth quarter was our eleventh consecutive quarter of year-over-year growth in orders," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. "Our orders and closing volumes grew due to strong demand and a 19% increase in our active communities open at year-end. In addition, rising home prices pushed our total order value and closing revenue to their highest levels in more than five years. Price appreciation also contributed to our home closing gross margins expanding to 22.0% for the year and 23.2% in the fourth quarter.

"With those margin gains, we produced an 80% increase in full year home closing gross profit and grew our annual pre-tax earnings by a multiple of six times on a 51% increase in home closing revenue in 2013," he explained. "Our growth was less evident in our net earnings and earnings per share, as our 2012 annual results included a $76.3 million net tax benefit, while 2013 results included a provision for tax expense of $53.2 million."

Mr. Hilton continued, "The homebuilding market strengthened in 2013 as jobs, improved buyer confidence and a shortage of homes for sale drove housing starts higher," continued Mr. Hilton. "We believe market conditions remain positive for continued growth in 2014 and beyond. Based on our positive outlook, we invested approximately $565 million during the year in land and development, and contracted for approximately 11,200 new lots in great locations at attractive prices, ending the year with about 25,700 total lots under control. We raised approximately $280 million during 2013 through the issuance of senior unsecured notes and completed a $110 million stock offering in January 2014 to further solidify our balance sheet and fund additional growth.

"We closed 2013 with significantly higher backlog, total assets and stockholders' equity than we had at the end of 2012, and believe we have sufficient liquidity to grow as the housing market continues to improve," concluded Mr. Hilton. "At this time, we expect to grow our community count to 210-220 by the end of 2014."

FOURTH QUARTER RESULTS

  • Net earnings of $46.1 million ($1.19 per diluted share) were net of a $19.8 million provision for income taxes, while prior year net earnings of $95.1 million ($2.49 per diluted share) included a $71.5 million net tax benefit primarily due to the reversal of a majority of our deferred tax asset valuation allowances.
  • Home closing revenue increased 47% due to an 18% increase in home closings combined with a 24% increase in average price over the prior year period. The strongest growth was in the expanded East Region (Florida, the Carolinas and Tennessee), which grew closings and home closing revenue by 58% and 116%, respectively, compared to 31% growth in home closing revenue in both the West and Central Regions.
  • The total value of homes ordered increased 17%, primarily due to a 13% increase in average selling price combined with a 3% increase in order volume. Average sales price for the fourth quarter increased to $367,000 from $323,000 in 2012. The fourth quarter of 2013 was Meritage's eleventh consecutive quarter of year-over-year growth in home orders, and monthly sales improved sequentially every month throughout the quarter, before including the Company's new Tennessee division, which added 26 orders in the fourth quarter of 2013.
  • An average of 6.2 orders per community during the fourth quarter 2013 was the second highest fourth quarter in the last eight years, exceeded only by 2012's 7.0 average orders per community. California and Colorado sold the highest number of homes per average community.
  • Cancellation rates increased to 15% in the fourth quarter of 2013, compared to 13% in the fourth quarter of 2012, but still remained well below historical rates for the Company.
  • Ending backlog of orders was up 26% over the prior year, and the total value of orders in backlog was up 43%, aided by a 14% increase in the average sales price per home.
  • Home closing gross profit increased 80% over the prior year, and home closing gross margin increased by 430 basis points to 23.2% in the fourth quarter of 2013 compared to 18.9% in the fourth quarter of 2012. Increased margins reflected the Company's success in managing smaller increases in its cost of sales relative to rising home prices.
  • Commissions and selling expenses decreased by 60 basis points from the prior year, to 6.8% of home closing revenue in the fourth quarter of 2013, compared to 7.4% of home closing revenue in the fourth quarter of 2012, as higher closing revenue resulted in greater leverage of the fixed components within selling costs.
  • General and administrative expenses for the fourth quarter of 2013 decreased by 30 basis points to 4.6% of total closing revenue in 2013, compared to 4.9% of total closing revenue in 2012, despite increasing by $7.2 million over the prior year, primarily due to hiring of additional employees and higher compensation expense.
  • Interest expense decreased to $2.0 million or 0.4% of closing revenue in the fourth quarter of 2013, compared to $5.5 million or 1.5% of closing revenue in the fourth quarter of 2012, as more interest was capitalized to assets under development.
  • Earnings before income taxes increased 179% to $65.9 million from $23.6 million in the fourth quarters of 2013 and 2012, respectively. Pretax margin for the fourth quarter increased 570 basis points to 12.2% in 2013 compared to 6.5% in 2012.

FULL YEAR RESULTS

  • Net income of $124.5 million for the full year of 2013 included a $53.2 provision for income taxes and a $3.8 million loss on early extinguishment of debt, compared to 2012's net income of $105.2 million, which included a net tax benefit of $76.3 million and a $5.8 million loss on early extinguishment of debt.
  • Home closings and closing revenue increased 24% and 51%, respectively, for 2013 as compared to 2012.
  • 2013 home closing gross margins improved by 360 basis points to 22.0% compared to 18.4% for 2012.
  • Net orders for the year increased 17% in 2013 over 2012, and total order value increased 40% year over year, aided by a 20% increase in average sales prices.
  • The total value of orders in backlog at year-end 2013 was 43% higher than the prior year's ending backlog.

BALANCE SHEET

  • Cash and cash equivalents, restricted cash and securities at December 31, 2013, totaled $363.8 million, compared to $295.5 million at December 31, 2012. During 2013, Meritage received approximately $280 million from the sale of $175 million of 4.50% senior notes due 2018 and $100 million of its 7.15% senior notes due 2020 (sold at a premium of $106.699 for a yield of 5.875%). Approximately $100 million of the capital raised was used to fully retire the Company's 7.731% senior subordinated notes due 2017. In January 2014, the company also issued approximately 2.53 million shares of common stock for net proceeds of approximately $110 million.
  • Meritage Homes expanded into the Nashville, Tennessee market through the acquisition of Phillips Builders in August 2013, which added approximately 500 lots to Meritage's total lot inventory.
  • Real estate assets increased by $292.1 million for the year 2012, ending at $1.4 billion at December 31, 2013, compared to $1.1 billion at December 31, 2012. Approximately 61% of the increase was in finished home sites (lots) and home sites under development, as Meritage acquired and developed lots for new communities in growing markets.
  • Meritage ended the quarter with approximately 25,700 total lots under control, of which 74% were owned and 26% controlled under option and purchase contracts, compared to approximately 20,800 total lots at December 31, 2012. Based on its trailing twelve months' closings, Meritage controlled a 4.9 year supply of lots at the end of 2013.
  • Net debt-to-capital ratio at December 31, 2013 was 39.1%, compared to 38.1% at December 31, 2012. Giving effect to the January equity offering, Meritage's pro forma net debt-to-capital ratio would have been 31.2%.
  • The Company increased the borrowing capacity under its revolving credit facility to $200 million from $135 million during the fourth quarter, providing additional liquidity for working capital and growth, while also eliminating all restrictions on cash previously required under its letters of credit facilities. 

CONFERENCE CALL

Management will host a conference call today to discuss the Company's results at 10:30 a.m. Eastern Time (7:30 a.m. Pacific Time). The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10038596.

Telephone participants who are unable to pre-register may dial in to 888-317-6016 on the day of the call. International dial-in number is 1-412-317-6016.

A replay of the call will be available for fifteen days, beginning at 12:30 p.m. ET on February 5, 2014 on the website noted above, or by dialing 877-344-7529, and referencing conference number 10038596. For more information, visit meritagehomes.com.

   
Meritage Homes Corporation and Subsidiaries  
Operating Results  
(Unaudited)  
(In thousands, except per share data)  
   
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    2013     2012     2013     2012  
Homebuilding:                                
  Home closing revenue   $ 533,492     $ 364,118     $ 1,783,389     $ 1,184,360  
  Land closing revenue     2,702       468       31,270       9,314  
    Total closing revenue     536,194       364,586       1,814,659       1,193,674  
  Cost of home closings     (409,918 )     (295,355 )     (1,391,475 )     (966,384 )
  Cost of land closings     (2,627 )     (258 )     (26,766 )     (9,091 )
    Total cost of closings     (412,545 )     (295,613 )     (1,418,241 )     (975,475 )
  Home closing gross profit     123,574       68,763       391,914       217,976  
  Land closing gross profit     75       210       4,504       223  
    Total closing gross profit     123,649       68,973       396,418       218,199  
Financial Services:                                
  Revenue     2,077       526       6,037       779  
  Expense     (1,037 )     (497 )     (3,266 )     (981 )
  Earnings from financial services unconsolidated entities and other, net     3,399       3,483       13,183       10,457  
    Financial services profit     4,439       3,512       15,954       10,255  
Commissions and other sales costs     (36,190 )     (26,883 )     (126,716 )     (94,833 )
General and administrative expenses     (24,923 )     (17,739 )     (91,510 )     (68,185 )
Earnings/(loss) from other unconsolidated entities, net     (149 )     124       (378 )     (224 )
Interest expense     (1,979 )     (5,526 )     (15,092 )     (24,244 )
Other income/(loss), net     1,032       1,139       2,792       (6,342 )
Loss on early extinguishment of debt     --       --       (3,796 )     (5,772 )
Earnings before income taxes     65,879       23,600       177,672       28,854  
(Provision for)/benefit from income taxes     (19,790 )     71,528       (53,208 )     76,309  
Net earnings   $ 46,089     $ 95,128     $ 124,464     $ 105,163  
                                 
Earnings per share:                                
  Basic                                
    Earnings per share   $ 1.27     $ 2.67     $ 3.45     $ 3.09  
    Weighted average shares outstanding     36,240       35,595       36,105       34,057  
  Diluted                                
    Earnings per share   $ 1.19     $ 2.49     $ 3.25     $ 3.00  
    Weighted average shares outstanding     38,905       38,308       38,801       35,172  
                                     
                                     
                                     
Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
    December 31, 2013   December 31, 2012
Assets:            
  Cash and cash equivalents   $ 274,136   $ 170,457
  Investments and securities     89,687     86,074
  Restricted cash     --     38,938
  Other receivables     38,983     20,290
  Real estate (1)     1,405,299     1,113,187
  Real estate not owned     289     --
  Deposits on real estate under option or contract     51,595     14,351
  Investments in unconsolidated entities     11,638     12,085
  Property and equipment, net     22,099     15,718
  Deferred tax asset     70,404     77,974
  Prepaid, other assets and goodwill     39,231     26,488
    Total assets   $ 2,003,361   $ 1,575,562
Liabilities:            
  Accounts payable   $ 68,018   $ 49,801
  Accrued liabilities     166,611     96,377
  Home sale deposits     21,996     12,377
  Liabilities related to real estate not owned     289     --
  Senior, senior subordinated, convertible senior notes and other borrowings     905,055     722,797
      Total liabilities     1,161,969     881,352
Stockholders' Equity:            
  Preferred stock, par value $0.01     --     --
  Common stock, par value $0.01     362     356
  Additional paid-in capital     412,961     390,249
  Retained earnings     428,069     303,605
      Total stockholders' equity     841,392     694,210
    Total liabilities and stockholders' equity   $ 2,003,361   $ 1,575,562
(1)Real estate - Allocated costs:            
  Homes under contract under construction   $ 262,633   $ 192,948
  Unsold homes, completed and under construction     147,889     107,466
  Model homes     81,541     62,411
  Finished home sites and home sites under development     813,135     634,106
  Land held for development     52,100     56,118
  Land held for sale     19,112     21,650
  Communities in mothball status     28,889     38,488
      Total real estate   $ 1,405,299   $ 1,113,187
                   
                   
                   
Supplemental Information and Non-GAAP Financial Disclosures (In thousands - unaudited):  
   
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    2013     2012     2013     2012  
Depreciation and amortization   $ 2,765     $ 2,283     $ 9,934     $ 8,196  
                                 
Summary of Capitalized Interest:                                
Capitalized interest, beginning of period   $ 28,998     $ 20,185     $ 21,600     $ 14,810  
Interest incurred     13,276       12,316       51,152       46,135  
Interest expensed     (1,979 )     (5,526 )     (15,092 )     (24,244 )
Interest amortized to cost of home, land closings and impairments     (7,303 )     (5,375 )     (24,668 )     (15,101 )
Capitalized interest, end of period   $ 32,992     $ 21,600     $ 32,992     $ 21,600  
                                 
      December 31, 2013       December 31, 2012       Proforma Dec 31, 2013
(includes Jan 2014 equity offering)
         
Notes payable and other borrowings   $ 905,055     $ 722,797     $ 905,055          
Stockholders' equity     841,392       694,210       951,731          
Total capital     1,746,447       1,417,007       1,856,786          
Debt-to-capital     51.8 %     51.0 %     48.7 %        
                                 
Notes payable and other borrowings   $ 905,055     $ 722,797     $ 905,055          
  Less: cash and cash equivalents, restricted cash, and investments and securities     (363,823 )     (295,469 )     (474,162 )        
Net debt     541,232       427,328       430,893          
Stockholders' equity     841,392       694,210       951,731          
Total net capital   $ 1,382,624     $ 1,121,538     $ 1,382,624          
Net debt-to-capital     39.1 %     38.1 %     31.2 %        
                                 
                                 
                                 
Meritage Homes Corporation and Subsidiaries  
Consolidated Statements of Cash Flows  
(In thousands) (unaudited)  
   
    Twelve Months Ended December 31,  
    2013     2012  
Cash flows from operating activities:                
  Net earnings   $ 124,464     $ 105,163  
  Adjustments to reconcile net earnings to net cash used in operating activities:                
    Depreciation and amortization     9,934       8,196  
    Stock-based compensation     9,483       8,319  
    Loss on early extinguishment of debt     3,796       5,772  
    Equity in earnings from unconsolidated entities     (12,805 )     (10,233 )
    Deferred tax asset valuation benefit     (8,666 )     (77,974 )
    Distribution of earnings from unconsolidated entities     13,013       9,648  
    Other     15,851       2,380  
  Changes in assets and liabilities:                
    Increase in real estate     (281,944 )     (299,185 )
    (Increase)/decrease in deposits on real estate under option or contract     (36,974 )     824  
    Increase in receivables and prepaid expenses and other assets     (18,429 )     (6,301 )
    Increase in accounts payable and accrued liabilities     86,604       29,385  
    Increase in home sale deposits     9,397       3,519  
    Net cash used in operating activities     (86,276 )     (220,487 )
Cash flows from investing activities:                
  Purchases of property and equipment     (15,783 )     (10,863 )
  Maturities of investments and securities     163,012       198,201  
  Payments to purchase investments and securities     (166,619 )     (136,823 )
  Cash paid for acquisitions     (18,624 )     --  
  Decrease/(increase) in restricted cash     38,938       (26,792 )
  Other     107       121  
    Net cash provided by investing activities     1,031       23,844  
Cash flows from financing activities:                
  Repayments of senior and senior subordinated notes     (102,822 )     (315,080 )
  Proceeds from issuance of senior notes     281,699       426,500  
  Proceeds from sale of common stock, net     --       87,113  
  Other     10,047       (5,045 )
    Net cash provided by financing activities     188,924       193,488  
Net increase in cash and cash equivalents     103,679       (3,155 )
Beginning cash and cash equivalents     170,457       173,612  
Ending cash and cash equivalents (2)   $ 274,136     $ 170,457  
(2) Ending cash and cash equivalents as of December 31, 2013 and December 31, 2012 excludes investments and securities and restricted cash totaling $89.7 million and $125.0 million, respectively.
 
 
 
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)
 
    Three Months Ended
    December 31, 2013   December 31, 2012
    Homes   Value   Homes   Value
Homes Closed:                    
  Arizona   297   $ 96,408   232   $ 67,910
  California   205     98,472   243     91,813
  Colorado   107     46,555   65     20,991
  Nevada   --     --   22     4,042
  West Region   609     241,435   562     184,756
  Texas   522     148,853   465     113,206
  Central Region   522     148,853   465     113,206
  Carolinas   86     35,361   33     11,375
  Florida   235     102,220   180     54,781
  Tennessee   16     5,623   --     --
  East Region   337     143,204   213     66,156
  Total   1,468   $ 533,492   1,240   $ 364,118
Homes Ordered:                    
  Arizona   184   $ 62,139   178   $ 56,426
  California   169     78,828   251     103,275
  Colorado   107     46,837   98     35,391
  Nevada   --     --   9     2,018
  West Region   460     187,804   536     197,110
  Texas   437     133,608   389     97,458
  Central Region   437     133,608   389     97,458
  Carolinas   80     31,626   33     11,772
  Florida   128     53,801   136     47,522
  Tennessee   26     7,745   --     --
  East Region   234     93,172   169     59,294
  Total   1,131   $ 414,584   1,094   $ 353,862
                       
                       
                       
    Twelve Months Ended
    December 31, 2013   December 31, 2012
    Homes   Value   Homes   Value
Homes Closed:                    
  Arizona   1,041   $ 329,855   825   $ 221,100
  California   989     427,886   732     264,388
  Colorado   405     158,793   292     96,807
  Nevada   38     8,900   61     11,444
  West Region   2,473     925,434   1,910     593,739
  Texas   1,834     492,777   1,655     390,642
  Central Region   1,834     492,777   1,655     390,642
  Carolinas   239     93,210   117     41,888
  Florida   691     264,066   556     158,091
  Tennessee   22     7,902   --     --
  East Region   952     365,178   673     199,979
  Total   5,259   $ 1,783,389   4,238   $ 1,184,360
Homes Ordered:                    
  Arizona   1,070   $ 346,278   916   $ 256,684
  California   899     410,761   965     361,328
  Colorado   465     201,088   364     123,403
  Nevada   24     5,795   70     13,473
  West Region   2,458     963,922   2,315     754,888
  Texas   2,126     606,115   1,759     429,465
  Central Region   2,126     606,115   1,759     429,465
  Carolinas   298     119,087   142     50,613
  Florida   696     282,328   579     179,806
  Tennessee   37     10,851   --     --
  East Region   1,031     412,266   721     230,419
  Total   5,615   $ 1,982,303   4,795   $ 1,414,772
                     
Order Backlog:                    
  Arizona   278   $ 97,239   249   $ 80,816
  California   225     107,463   315     124,588
  Colorado   202     92,384   142     50,089
  Nevada   --     --   14     3,105
  West Region   705     297,086   720     258,598
  Texas   792     245,655   500     132,317
  Central Region   792     245,655   500     132,317
  Carolinas   108     43,218   49     17,341
  Florida   208     89,272   203     71,010
  Tennessee   40     11,441   --     --
  East Region   356     143,931   252     88,351
  Total   1,853   $ 686,672   1,472   $ 479,266
                       
                       
                       
Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
    Three Months Ended
    December 31, 2013   December 31, 2012
    Beg.   End   Beg.   End
Active Communities:                
  Arizona   39   40   34   38
  California   18   22   19   17
  Colorado   12   14   8   12
  Nevada   --   --   2   1
  West Region   69   76   63   68
  Texas   73   70   68   65
  Central Region   73   70   68   65
  Carolinas   15   17   7   7
  Florida   19   20   15   18
  Tennessee   3   5   --   --
  East Region   37   42   22   25
  Total   179   188   153   158
                 
    Twelve Months Ended
    December 31, 2013   December 31, 2012
    Beg.   End   Beg.   End
Active Communities:                
  Arizona   38   40   37   38
  California   17   22   20   17
  Colorado   12   14   10   12
  Nevada   1   --   2   1
  West Region   68   76   69   68
  Texas   65   70   67   65
  Central Region   65   70   67   65
  Carolinas   7   17   3   7
  Florida   18   20   18   18
  Tennessee   --   5   --   --
  East Region   25   42   21   25
  Total   158   188   157   158
                   

About Meritage Homes Corporation

Meritage Homes is the ninth-largest public homebuilder in the United States, based on homes closed in 2012. Meritage builds and sells single-family homes for first-time, move-up, luxury and active adult buyers across the Western, Southern and Southeastern United States. As of December 31, 2013, the company had 188 actively selling communities in markets including Sacramento, San Francisco's East Bay, the Central Valley and Orange County, California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale, Green Valley and Tucson, Arizona; Denver, Colorado; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina; York County, South Carolina and Nashville, Tennessee.

Meritage has designed and built more than 80,000 homes in its 28-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage is the industry leader in energy efficient homebuilding and in 2013, Meritage received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award, for its innovation and industry leadership in energy efficient homebuilding. Meritage was the first national homebuilder to be 100 percent ENERGY STAR® qualified in every home it builds, and far exceeds ENERGY STAR standards today.

For more information, visit meritagehomes.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's expectations for positive housing market conditions, its plans to grow as the market improves and belief that it has sufficient liquidity to fund additional growth, and its projected community count by the end of 2014.

Such statements are based upon the current beliefs and expectations of Company management, and current market conditions, which are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, 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. The risks and uncertainties include but are not limited to the following: weakness in the homebuilding market resulting from an unexpected setback in the current economic recovery; the availability of finished lots and undeveloped land; interest rates and changes in the availability and pricing of residential mortgages; the availability and cost of materials and labor; adverse changes in tax laws that benefit our homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates and home prices in our markets; inflation in the cost of materials used to construct homes; the adverse effect of slower order absorption rates; potential write-downs or write-offs of assets, including pre-acquisition costs and deposits; our potential exposure to natural disasters; competition; the adverse impacts of cancellations resulting from small deposits relating to our sales contracts; construction defect and home warranty claims; our success in prevailing on contested tax positions; our ability to preserve our deferred tax assets and use them within the statutory time limits; delays and risks associated with land development; our ability to obtain performance bonds in connection with our development work; the liquidity of our joint ventures and the ability of our joint venture partners to meet their obligations to us and the joint venture; the loss of key personnel; changes in or our failure to comply with laws and regulations; our lack of geographic diversification; fluctuations in quarterly operating results; our financial leverage and level of indebtedness; our ability to take certain actions because of restrictions contained in the indentures for our senior notes and our ability to raise additional capital when and if needed; our credit ratings; successful integration of future acquisitions; government regulations and legislative or other initiatives that seek to restrain growth or new housing construction or similar measures; acts of war; the replication of our "Green" technologies by our competitors; our exposure to information technology failures and security breaches; 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, 2012 under the caption "Risk Factors," which can be found on our website.

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