Meritage Homes Corp. has a market cap of $604.5 million; its shares were traded at around $18.81 with and P/S ratio of 0.6. MTH is in the portfolios of Arnold Schneider of Schneider Capital Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Total home closing revenue was $233.8 million and $725.8 million for the three and nine months ended September 30, 2010, respectively, increasing 0.9% and 6.2% from the same periods last year. We generated net income of $1.2 million and $8.0 million for the three- and nine-month periods ended September 30, 2010 as compared to loss of $(17.8) and $(109.7) million for the same periods in 2009. Quarter-over-quarter home closing revenue remained relatively consistent; however, our results reflected a 20.7% increase in average sales price, primarily due to changes in geographic mix and increased sales in our higher-priced in-fill communities, offset by a 16.5% decrease in closing units in line with our 12.4% decrease in the average number of active communities in the third quarter of 2010 as compared to 2009. The net income improvements both quarter- and year-to-date are the result of fewer real-estate-related impairments recorded, with only $792,000 (pre-tax) in the third quarter of 2010 as compared to $13.2 million in the same period in 2009 and $1.6 million versus $90.3 million year-to-date 2010 and 2009, respectively. Our year-to-date 2010 results also include $3.5 million of losses from early extinguishment of debt, while the nine months ending September 30, 2009 include $9.4 million of gains from early extinguishment of debt.
At September 30, 2010, our backlog of $242.4 million reflects a decrease of 40.1% or $162.4 million when compared to the backlog at September 30, 2009 and a $50.2 million or 17.2% decrease from our June 30, 2010 balance of $292.6 million. We believe the decline is mainly due to the expiration of the federal homebuyer tax credit program, which negatively impacted sales volume for the past several months and the decrease in average actively selling communities as discussed. In the third quarter of 2010, our cancellation rate on sales orders increased to 24% of gross orders as compared to 20% in the same period a year ago, which is in line with our historical rate of mid 20s.
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