To survive the housing crash, homebuilders had to slash prices, cut costs and find ways to compete with foreclosures.
Scottsdale-based Meritage Homes is an industry survivor. The company, metro Phoenix's only publicly traded homebuilder, is on track to make a profit this year, CEO Steve Hilton says.
The builder is selling more homes than a year ago, experiencing fewer cancellations from buyers, receiving a hefty tax refund and completed a large financing deal.
Late Tuesday, Meritage Homes closed on a $200 million private-placement offering. The deal allows Meritage to pay off some of its senior notes that are due starting in 2014. Its new senior notes won't mature until 2020.
Meritage will report its first-quarter financials on April 28.
Last week, the homebuilder announced some preliminary results. Meritage expects to report $268 million in net sales on 1,064 homes with an average price of approximately $252,000.
Its first-quarter 2009 results were $232 million in net sales on 987 homes with an average price of approximately $235,000.
The homebuilder expects its cancellation rate to drop to 18 percent during this year's first quarter, from 26 percent a year earlier. Meritage currently is building homes in 153 communities from central California to Texas.
Meritage is getting a tax refund because of an accounting-rule change Congress passed in November. The change lets companies losing money go back five years and get a refund for taxes paid when they were making money.
Earlier this year, Meritage reported it was expecting a $93 million tax refund this year from the change, known as a net operating-loss carry back.
In February, Citigroup analyst Josh Levin said Meritage is one of the nation's homebuilders poised to return to long-term profitability because of how its margins have improved. He noted that the company's stock had outperformed other homebuilders since late December and could reach $24 soon.
Because Meritage's stock was outperforming other builders, Levin changed his rating to "hold" from "buy." Meritage stock closed at $20.07 a share Tuesday.
"The extended and expanded homebuyer tax credit didn't appear to positively impact our sales in the first quarter as much as we'd hoped, but we remain confident in our ability to achieve our goal of returning to profitability in 2010," Hilton said in Meritage's early report last week.
Homebuilder makes strides to profitability
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