Meritage Homes Profit Up, Lifts FY Outlook

(RTTNews) - U.S home builder Meritage Homes Corp. (MTH), Wednesday reported a surge in profit for the third quarter, driven largely by higher gross margins and home closing revenues. Earnings for the quarter came in ahead of analysts' estimates, but revenues fell short of expectations.

Meritage reported a third-quarter profit of $38.19 million or $0.99 per share, up from $6.78 million or $0.19 per share last year. On average, 16 analysts polled by Thomson Reuters expected a profit of $0.80 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the quarter include a tax provision of $18.6 million, compared to $0.2 million in the prior year. Last year results also included an $8.7 million charge related to litigation surrounding a Nevada joint venture.

Chief Executive Steven Hilton said, "We are pleased with the strong operating results we achieved again this quarter, including our highest level of home closings and closing revenue in the last five years, and our highest gross margin in more than seven years, with a 44 percent increase in home closing revenue and a 420 basis point improvement in home closing gross margin."

Total closing revenues rose to $492.08 million from $342.64 million a year ago. Analysts expected revenues of $505.15 million for the quarter.

Home closing revenue increased 44 percent largely due to 18 percent increase in home closings and a 22 percent increase in average sales price over the prior year period.

Home closing gross margin increased to 22.8 percent in the third quarter from 18.6 a year ago.

The company also lifted its financial outlook for the full year 2013, and now expects earnings of $2.95 to $3.05 per share with home closing revenue of about $1.8 billion. Analysts currently expect earning of $2.76 per share on revenues of $1.83 billion for the year.

Previously, the company expected earnings of $2.65 to $2.85 per share and home closing revenues of about $1.7 billion 1.8 billion.

MTH is currently trading at $45.42, up $1.95 or 4.49%, on the NYSE.