Meritage Homes targeting full-year profitability, CEO says

By Jennifer Lanning Drey

Savannah, Ga., Oct. 7 - Meritage Homes Corp. was profitable in the first two quarters of 2010 and has a goal of being profitable for the full year, Steven Hilton, its chief executive officer, said during a Thursday presentation at the Deutsche Bank Leveraged Finance Conference in Phoenix.

"One primary reason we've become profitable this year is due to the land positions we've acquired since the beginning of last year," Hilton said.

Meritage acquired 84 new communities between Jan. 1, 2009 and June 20, most of which are outperforming their original pro forma projections, he said.

"As credit markets have tightened, the well-capitalized builders have been able to acquire lots in good locations, primarily from banks," Hilton said.

As one of those builders, Meritage has focused on adding new communities in areas where prices have stabilized, he said.

The company believes margins on its newer communities will continue to outpace those of older communities. Meritage expects to return to normal margins over time as it replaces its older communities, he said.

At the same time, Hilton also noted that, in general, the company's sales slowed considerably after April when the homebuyer tax credits expired. Sales have not rebounded to levels seen in the spring, he said.

"Our sales have been slow since May, and we believe we have to see improved consumer confidence and employment statistics before sales get appreciably better," Hilton said.

Meritage is a homebuilder based in Scottsdale, Ariz.

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