Scottsdale-based Meritage Homes said Thursday one of its chief executives resigned to pursue other business interests, a surprising move given the company’s recent financial performance and rosy outlook.
John Landon, the homebuilder’s co-chairman and co-CEO, has been with Meritage since 1997.
Steven Hilton, who oversees the company with Landon, will continue as chairman and CEO.
On Wednesday, the company held its annual shareholders meeting, but Hilton did not mention Landon’s pending departure during an update of the company’s finances.
Larry Seay, Meritage chief financial officer, said the board took formal action during its meeting after the shareholders meeting. He said there was no friction that led to Landon’s departure. The company is unusual in that it operates from two locations, Dallas and Scottsdale.
“The directors also felt it was a good business move to bring all of these divisions together under one person with a single mission and single strategy,” Seay said. “That will allow the company to move on and grow.”
Hilton ran about half the company and Landon the other half, Seay said. Now all of the company’s regional division presidents will report to Hilton.
Hilton started Monterrey Homes in Scottsdale in the mid-1980s. The company was taken public in 1996. In 1997, Monterrey merged with Legacy Homes, a Dallas-based company that was led by Landon. The two merged to form Meritage Homes.
Thursday, Hilton credited Landon with “invaluable leadership, helping to build Meritage into the 13th largest homebuilder in the United States.” The company listed accomplishments during Landon’s tenure, including a 45 percent compounded annual growth rate in its revenue over the period from 2000-05.
“Meritage has been very fortunate to have two talented leaders for the past several years,” Peter Ax, Meritage lead director, said in a statement. “We are highly confident in Mr. Hilton’s ability to lead the company going forward, especially with the support of very capable managers that we have at all levels in the organization.”
In a statement, Landon said he was proud of his contributions in helping the company grow.
“I am grateful to have led many outstanding employees, many of whom I worked with for almost 20 years,” he said. “I wish them and Meritage continued success. At the same time, I look forward to pursuing my other business interests.”
Meritage, the only public homebuilder based in the Valley, is coming off boffo first-quarter earnings despite a slowing housing market. Late last month, the company reported first-quarter net earnings increased 82 percent, or $80 million, from the same time in 2005, while revenue rose 54 percent to $846 million.
Meritage closed 2,528 homes in the first quarter 2006, compared with 1,787 in the first quarter last year. Average sales prices on home closings increased to about $335,000 from $308,000 year over year as a result of strong demand and a greater portion of closings in higher-priced markets.
Hilton told investors that 2005 was a phenomenal year for the company. The homebuilder diversified its business by entering several markets in Florida, Colorado and Nevada. It’s now in 14 markets in six states and it has homes in six of the hottest 10 markets. The company also increased its multifamily and higherdensity building.
During 2005, homes closed increased 30 percent, revenue was up 49 percent and net earnings were up 84 percent from the year earlier, excluding a one-time refinancing charge in the first quarter 2005, Hilton said.
Home orders slowed in the fourth quarter last year and were flat during the first quarter compared with the year before. Growth in Texas has offset a decline in orders in northern California, Florida and the Valley, Hilton said.
“We’re expecting to have another record year for the company,” he said, adding revenue will go from $3 billion in 2005 to $3.8 billion or $3.9 billion this year.