Meritage Expecting Profit in 2010

Meritage executives are expecting the company's earnings to turn positive in 2010.

For the first time since 2006, the company's most recent earnings marked a balance sheet swing from red to black.

For 4Q2009, Meritage posted a net profit of $43 million, or $1.35 per diluted share.

Significantly offseting the charges that the company booked during the quarter, including $39 million in land impairments and option walkaways plus roughly $12 million in charges related to drywall mediation, litigation, and lease abandonment accruals, driving most of the positive performance was a $93 million tax benefit resulting from the extended net operating loss (NOL) tax carryback law.

Management focused on restocking the company's lot pipeline with lower-priced, better-located land.

It spent about $182 million on lot purchases, growing its owned lot count by an estimated 4,000 lots to around 10,000 total lots, in 2009.

The system essentially earmarks land opportunities by identifying and analyzing geographic areas where a number of positive market metrics, such as decreased risk of house price decline and declining inventory, for example, converge.

Including the launch of the company's Simply Smart value-oriented product line, expected to drive absorptions are a number of new marketing and sales initiatives, its commitment to building 100% of its homes to Energy Star standards through its Meritage Green program, and its 99-day guaranteed home delivery program.

Source: builderonline.com