Meritage Homes closes out 2022 with record fourth quarter results including a 29% increase in home closings, a 32% increase in home closing revenue and $7.09 of diluted EPS

Rhea-AI Summary

Meritage Homes Corporation (NYSE: MTH) reported its Q4 and full year 2022 results, showing revenue growth despite a decline in home orders. In Q4, homes closed increased by 29% to 4,540 units, generating a home closing revenue of $1.98 billion, a 32% increase year-over-year. However, home orders fell by 46%, totaling 1,808 units, primarily due to a 39% cancellation rate. Full year net earnings rose 35% to $992.2 million ($26.74 per diluted share). The company ended the year with $861 million in cash and a low debt-to-capital ratio of 6.8%. Despite challenges, management remains optimistic about 2023, emphasizing a strategy focused on affordable housing.

Positive

• Net earnings for Q4 increased by 10% to $262.4 million.
• Diluted EPS rose by 13% year-over-year to $7.09 for Q4.
• Full year home closing revenue increased by 22% to $6.2 billion.
• Cash reserves increased to $861.6 million, up from $618.3 million in 2021.
• Low net debt-to-capital ratio of 6.8% indicates strong financial health.

Negative

• Home orders decreased by 46% in Q4, indicating declining demand.
• Cancellation rate rose to 39%, significantly impacting sales.
• Ending backlog fell by 41% to 3,332 units, reflecting weaker future sales potential.
• Average sales price for orders declined by 10% to $389,000.

SCOTTSDALE, Ariz., Feb. 01, 2023 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, today announced fourth quarter and full year results for the periods ended December 31, 2022.

Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)

	Three Months Ended December 31,											Twelve Months Ended December 31,
		2022				2021			% Chg				2022				2021			% Chg
Homes closed (units)		4,540				3,526			29	%			14,106				12,801			10	%
Home closing revenue	$	1,984,063			$	1,498,813			32	%		$	6,207,498			$	5,094,873			22	%
Average sales price - closings	$	437			$	425			3	%		$	440			$	398			11	%
Home orders (units)		1,808				3,367			(46	)%			11,759				13,808			(15	)%
Home order value	$	703,706			$	1,459,060			(52	)%		$	5,255,600			$	5,796,813			(9	)%
Average sales price - orders	$	389			$	433			(10	)%		$	447			$	420			6	%
Ending backlog (units)													3,332				5,679			(41	)%
Ending backlog value												$	1,524,775			$	2,516,164			(39	)%
Average sales price - backlog												$	458			$	443			3	%
Earnings before income taxes	$	342,249			$	311,497			10	%		$	1,289,318			$	954,834			35	%
Net earnings	$	262,365			$	237,460			10	%		$	992,192			$	737,444			35	%
Diluted EPS	$	7.09			$	6.25			13	%		$	26.74			$	19.29			39	%

MANAGEMENT COMMENTS
"As a result of the Meritage team's dedication and exceptional execution, we finished the year strong, delivering 29% more homes and 32% higher home closing revenue in the fourth quarter of 2022 compared to prior year. However, ongoing economic uncertainty continued to impact buyer psychology and undermine housing demand this quarter, generating a 46% decrease in fourth quarter orders," said Steven J. Hilton, executive chairman of Meritage Homes.

"Our closings of 4,540 homes this quarter drove our $2.0 billion fourth quarter 2022 home closing revenue," added Phillippe Lord, chief executive officer of Meritage Homes. "Combined with our home closing gross margin of 25.2% and our SG&A leverage of 8.4%, we generated a 13% year-over-year increase in our diluted EPS from $6.25 to $7.09 this quarter. Excluding nonrecurring items, adjusted fourth quarter 2022 home closing gross margin was 25.7% compared to 29.2% in 2021."

"The fourth quarter 2022 sales orders of 1,808 homes were 46% lower than prior year primarily due to elevated cancellations. The cancellation rate was 39% this quarter as we proactively and aggressively validated every home in our backlog to ensure we are entering 2023 only with buyers committed to close and re-deploying available homes back to the sales team. Quarterly gross sales orders declined a more moderate 22% year-over-year. Our fourth quarter 2022 average absorption pace was 2.2 per month, which was down from 4.5 per month in the fourth quarter of 2021, but gross sales pace was 3.6 per month—at our 3-4 monthly target, affirming that buyer demand is present at the right price in today's market," Mr. Lord continued. "While we are focused on prioritizing pace over price, we let our spec inventory in production reach near-completion before we reset pricing for our supply of available inventory, which coincided with us closing a large portion of our backlog."

"Although favorable demographics and the low supply of new and resale housing inventory should drive long-term demand, we believe they were overshadowed by the macroeconomic factors that drove the slower orders this quarter," said Mr. Lord. "Looking into 2023, we are starting the new year on the right foot. We believe we have the right level of completed and near-completed homes to sell in nearly all of our stores and we are working to find the market clearing price to get back to our target absorption pace of 3-4 net sales per month. As our strategy is centered on affordable, move-in ready product, we believe we can continue to capture market share over the coming year."

"We remain focused on balance sheet discipline, ending the year with over $860 million in cash. While increasing our liquidity, we grew our community count 5% year-over-year to 271 active communities at December 31, 2022, and we expect to continue to open new stores throughout the year and return to our 300 community target over the next several quarters. In the fourth quarter, we continued rightsizing our land positions and did not add any new lots under control while terminating underperforming land deals totaling roughly 3,700 lots with a corresponding $4.2 million in walk-away charges. We spent $351 million on land acquisition and development this quarter, bringing our full year total spend to $1.5 billion," said Mr. Lord. "We had nothing drawn under our credit facility and our net debt-to-capital was just 6.8% at December 31, 2022."

FOURTH QUARTER RESULTS

• Total sales orders of 1,808 homes for the fourth quarter of 2022 were 46% lower than prior year despite a 10% year-over-year increase in average community count. The average absorption pace decreased 51% to 2.2 per month from 4.5 in the prior year primarily due to an elevated cancellation rate of 39% this quarter. Gross sales orders of 2,979 homes declined 22% compared to the fourth quarter of 2021. Entry-level represented 89% of fourth quarter 2022 orders, compared to 82% in the prior year. Average sales price ("ASP") on orders decreased 10% year-over-year to $389,000 in the fourth quarter of 2022 and decreased 8% sequentially from $422,000 in the third quarter of 2022.
• The 32% year-over-year increase in home closing revenue to $2.0 billion for the fourth quarter of 2022 was due to 29% greater home closing volume and 3% higher ASPs on closings compared to prior year.
• The 380 bps deterioration in fourth quarter 2022 home closing gross margin to 25.2% from 29.0% a year ago was the result of greater incentives and higher direct costs as well as several nonrecurring items, including $10.9 million in warranty adjustments related to two specific cases and $4.2 million in terminated land deal walk-away charges, which were partially offset by $5.4 million in retroactive vendor rebates. The fourth quarter of 2021 included $2.5 million in terminated land deal walk-away charges. Excluding these nonrecurring items, adjusted fourth quarter 2022 home closing gross margin of 25.7% compared to adjusted fourth quarter 2021 home closing gross margin of 29.2%.
• Selling, general and administrative expenses ("SG&A") were 8.4% of fourth quarter 2022 home closing revenue, a slight improvement over 8.5% in the prior year resulting from greater leverage of fixed expenses on higher home closing revenue, which was partially offset by higher commissions and advertising costs that reflect our response to the current sales environment. In addition, the fourth quarter of 2021 included a one-time exit payment of $3.6 million to an executive and $1.4 million of equity expense related to a change in the Company's retirement plan.
• The fourth quarter effective income tax rate was 23.3% in 2022 compared to 23.8% in 2021. The 2022 rate benefited from earned eligible energy tax credits on qualifying homes under the Internal Revenue Code new energy-efficient homes credit from the Inflation Reduction Act ("IRA") enacted in August 2022. The 2021 rate similarly benefited from the Taxpayer Certainty and Disaster Tax Relief Act passed in December 2019 ("2019 Act").
• Net earnings were $262.4 million ($7.09 per diluted share) for the fourth quarter of 2022, a 10% increase over $237.5 million ($6.25 per diluted share) for the fourth quarter of 2021. Strong earnings growth primarily reflected higher home closing volume, which combined with a lower outstanding share count in the current quarter, led to a 13% year-over-year improvement in earnings per diluted share.

YEAR TO DATE RESULTS

• Total sales orders of 11,759 homes for the full year 2022 decreased 15% over prior year despite a 23% year-over-year increase in average community count. The full year 2022 average absorption pace declined 29%, primarily due to elevated cancellations in the second half of the year.
• Home closing revenue increased 22% for the full year 2022 to $6.2 billion due to 11% higher ASPs on closings and 10% greater home closing volume.
• The 80 bps improvement for home closing gross margin for the full year 2022 to 28.6% from 27.8% was primarily due to higher margins in the first half of the year and better leveraging of fixed costs on greater home closing revenue, which more than offset rising material and labor costs as well as higher incentives in the second half of the year. The full year 2022 home closing gross margin included nonrecurring items related to $15.8 million in terminated land deal walk-away charges and $10.9 million in warranty adjustments, which were partially offset by $5.4 million of retroactive vendor rebates. The full year 2021 home closing gross margin included $4.5 million in terminated land deal walk-away charges; there were no warranty adjustments or retroactive vendor rebates in the prior year.
• SG&A as a percentage of home closing revenue improved 90 bps year-over-year to 8.3% from 9.2% in 2021, due to greater leverage of overhead expenses on higher home closing revenue and lower full year commissions and advertising costs as a percentage of home closing revenue. In addition, full year 2021 included a one-time exit payment of $3.6 million to an executive and $1.4 million of equity expense related to a change in the Company's retirement plan.
• In 2021, we recognized a loss on the early extinguishment of debt of $18.2 million in connection with the early redemption in April 2021 of our 7.00% senior notes due 2022. There were no such transactions in 2022.
• The effective tax rate for the full year 2022 was 23.0%, compared to 22.8% for the full year 2021. Tax credits were earned on qualifying energy-efficient homes in the current year under the 2022 IRA and in the prior year under the 2019 Act.
• Net earnings were $992.2 million ($26.74 per diluted share) for the full year 2022, a 35% increase over $737.4 million ($19.29 per diluted share) for the full year 2021, primarily reflecting pricing power, expanded gross margin and greater overhead leverage in 2022, as well as a lower outstanding share count in 2022.

BALANCE SHEET

• Cash and cash equivalents at December 31, 2022 totaled $861.6 million, compared to $618.3 million at December 31, 2021, primarily as a result of reduced spend on land, development and home inventory. Real estate assets increased from $3.7 billion at December 31, 2021 to $4.4 billion at December 31, 2022.
• A total of approximately 63,000 lots were owned or controlled as of December 31, 2022 compared to approximately 75,000 total lots at December 31, 2021.
• Debt-to-capital and net debt-to-capital ratios were 22.6% and 6.8%, respectively, at December 31, 2022, which compared to 27.6% and 15.1%, respectively, at December 31, 2021.
• The Company repurchased 1,166,040 shares of stock, or 3.1% of the outstanding balance as of the beginning of the year, for a total of $109.3 million during the full year 2022. There were no share repurchases during the fourth quarter. As of December 31, 2022, $244.1 million remained available to repurchase under our authorized share repurchase program.

CONFERENCE CALL
Management will host a conference call to discuss its fourth quarter 2022 results at 8:00 a.m. Mountain Standard Time (10:00 a.m. Eastern Standard Time) on Thursday, February 2, 2023. The call will be webcast live with an accompanying slideshow available on the "Investor Relations" page of the Company's website at https://investors.meritagehomes.com. Telephone participants will be able to join by dialing in to 1-877-407-6951 US toll free or 1-412-902-0046 on the day of the call.

A replay of the call will be available via webcast beginning at approximately 11:00 a.m. Mountain Standard Time (1:00 p.m. Eastern Standard Time) on February 2, 2023 and extending through February 16, 2023, at https://investors.meritagehomes.com.

Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)

		Three Months Ended December 31,
			2022				2021			Change $				Change %
Homebuilding:
	Home closing revenue	$	1,984,063			$	1,498,813			$	485,250			32	%
	Land closing revenue		7,328				12				7,316			N/M
	Total closing revenue		1,991,391				1,498,825				492,566			33	%
	Cost of home closings		(1,484,071	)			(1,064,068	)			(420,003	)		39	%
	Cost of land closings		(7,600	)			(2,074	)			(5,526	)		266	%
	Total cost of closings		(1,491,671	)			(1,066,142	)			(425,529	)		40	%
	Home closing gross profit		499,992				434,745				65,247			15	%
	Land closing gross loss		(272	)			(2,062	)			1,790			(87	)%
	Total closing gross profit		499,720				432,683				67,037			15	%
Financial Services:
	Revenue		7,357				5,583				1,774			32	%
	Expense		(3,236	)			(2,336	)			(900	)		39	%
	Earnings from financial services unconsolidated entities and other, net		1,918				2,188				(270	)		(12	)%
	Financial services profit		6,039				5,435				604			11	%
Commissions and other sales costs			(110,459	)			(74,818	)			(35,641	)		48	%
General and administrative expenses			(56,614	)			(53,152	)			(3,462	)		7	%
Interest expense			—				(72	)			72			N/M
Other income, net			3,563				1,421				2,142			151	%
Earnings before income taxes			342,249				311,497				30,752			10	%
Provision for income taxes			(79,884	)			(74,037	)			(5,847	)		8	%
Net earnings		$	262,365			$	237,460			$	24,905			10	%
Earnings per common share:
	Basic									Change $ or shares				Change %
	Earnings per common share	$	7.17			$	6.36			$	0.81			13	%
	Weighted average shares outstanding		36,571				37,334				(763	)		(2	)%
	Diluted
	Earnings per common share	$	7.09			$	6.25			$	0.84			13	%
	Weighted average shares outstanding		37,009				37,993				(984	)		(3	)%

Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)

		Twelve Months Ended December 31,
			2022				2021			Change $				Change %
Homebuilding:
	Home closing revenue	$	6,207,498			$	5,094,873			$	1,112,625			22	%
	Land closing revenue		61,229				25,237				35,992			143	%
	Total closing revenue		6,268,727				5,120,110				1,148,617			22	%
	Cost of home closings		(4,434,480	)			(3,676,496	)			(757,984	)		21	%
	Cost of land closings		(49,646	)			(26,320	)			(23,326	)		89	%
	Total cost of closings		(4,484,126	)			(3,702,816	)			(781,310	)		21	%
	Home closing gross profit		1,773,018				1,418,377				354,641			25	%
	Land closing gross profit/(loss)		11,583				(1,083	)			12,666			(1,170	)%
	Total closing gross profit		1,784,601				1,417,294				367,307			26	%
Financial Services:
	Revenue		23,476				21,207				2,269			11	%
	Expense		(11,133	)			(9,182	)			(1,951	)		21	%
	Earnings from financial services unconsolidated entities and other, net		5,951				6,009				(58	)		(1	)%
	Financial services profit		18,294				18,034				260			1	%
Commissions and other sales costs			(323,266	)			(285,403	)			(37,863	)		13	%
General and administrative expenses			(192,984	)			(181,449	)			(11,535	)		6	%
Interest expense			(41	)			(318	)			277			(87	)%
Other income, net			2,714				4,864				(2,150	)		(44	)%
Loss on early extinguishment of debt			—				(18,188	)			18,188			N/A
Earnings before income taxes			1,289,318				954,834				334,484			35	%
Provision for income taxes			(297,126	)			(217,390	)			(79,736	)		37	%
Net earnings		$	992,192			$	737,444			$	254,748			35	%
Earnings per common share:
	Basic									Change $ or shares				Change %
	Earnings per common share	$	27.04			$	19.61			$	7.43			38	%
	Weighted average shares outstanding		36,694				37,610				(916	)		(2	)%
	Diluted
	Earnings per common share	$	26.74			$	19.29			$	7.45			39	%
	Weighted average shares outstanding		37,101				38,233				(1,132	)		(3	)%

Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)

		December 31, 2022				December 31, 2021
Assets:
Cash and cash equivalents		$	861,561			$	618,335
Other receivables			215,019				147,548
Real estate (1)			4,358,263				3,734,408
Real estate not owned			—				8,011
Deposits on real estate under option or contract			76,729				90,679
Investments in unconsolidated entities			11,753				5,764
Property and equipment, net			38,635				37,340
Deferred tax assets, net			45,452				40,672
Prepaids, other assets and goodwill			164,689				124,776
Total assets		$	5,772,101			$	4,807,533
Liabilities:
Accounts payable		$	273,267			$	216,009
Accrued liabilities			360,615				337,277
Home sale deposits			37,961				42,610
Liabilities related to real estate not owned			—				7,210
Loans payable and other borrowings			7,057				17,552
Senior notes, net			1,143,590				1,142,486
Total liabilities			1,822,490				1,763,144
Stockholders' Equity:
Preferred stock			—				—
Common stock			366				373
Additional paid-in capital			327,878				414,841
Retained earnings			3,621,367				2,629,175
Total stockholders’ equity			3,949,611				3,044,389
Total liabilities and stockholders’ equity		$	5,772,101			$	4,807,533
(1) Real estate – Allocated costs:
Homes under contract under construction			822,428			$	1,039,822
Unsold homes, completed and under construction			1,155,543				484,999
Model homes			97,198				81,049
Finished home sites and home sites under development			2,283,094				2,128,538
Total real estate		$	4,358,263			$	3,734,408

Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands)
(unaudited)

		Twelve Months Ended December 31,
			2022				2021
Cash flows from operating activities:
Net earnings		$	992,192			$	737,444
Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities:
Depreciation and amortization			24,748				26,245
Stock-based compensation			22,333				20,069
Loss on early extinguishment of debt			—				18,188
Equity in earnings from unconsolidated entities			(6,093	)			(4,657	)
Distribution of earnings from unconsolidated entities			5,900				4,951
Other			10,863				(2,911	)
Changes in assets and liabilities:
Increase in real estate			(624,522	)			(948,055	)
Decrease/(increase) in deposits on real estate under option or contract			10,463				(31,946	)
Increase receivables, prepaids and other assets			(102,950	)			(65,114	)
Increase in accounts payable and accrued liabilities			76,985				76,158
(Decrease)/increase in home sale deposits			(4,649	)			17,536
Net cash provided by/(used in) operating activities			405,270				(152,092	)
Cash flows from investing activities:
Investments in unconsolidated entities			(5,796	)			(1,708	)
Purchases of property and equipment			(26,971	)			(25,664	)
Proceeds from sales of property and equipment			481				551
Maturities/sales of investments and securities			1,032				2,795
Payments to purchase investments and securities			(1,032	)			(2,795	)
Net cash used in investing activities			(32,286	)			(26,821	)
Cash flows from financing activities:
Repayment of loans payable and other borrowings			(20,455	)			(13,589	)
Repayment of senior notes			—				(317,690	)
Proceeds from issuance of senior notes			—				450,000
Payment of debt issuance costs			—				(6,102	)
Repurchase of shares			(109,303	)			(60,992	)
Net cash (used in)/provided by financing activities			(129,758	)			51,627
Net increase/(decrease) in cash and cash equivalents			243,226				(127,286	)
Beginning cash and cash equivalents			618,335				745,621
Ending cash and cash equivalents		$	861,561			$	618,335

Supplemental Information (Dollars in thousands – unaudited):

	Three Months Ended December 31,								Twelve Months Ended December 31,
		2022				2021				2022				2021
Depreciation and amortization	$	7,203			$	6,353			$	24,748			$	26,245
Summary of Capitalized Interest:
Capitalized interest, beginning of period	$	62,090			$	57,293			$	56,253			$	58,940
Interest incurred		15,036				15,211				60,599				62,836
Interest expensed		—				(72	)			(41	)			(318	)
Interest amortized to cost of home and land closings		(16,957	)			(16,179	)			(56,642	)			(65,205	)
Capitalized interest, end of period	$	60,169			$	56,253			$	60,169			$	56,253

Reconciliation of Non-GAAP Information (Dollars in thousands – unaudited):

This press release and management’s comments and discussion about our operating results included in this press release reflect certain adjustments, including home closing gross profit, home closing gross margin, and debt-to-capital ratios. These are considered non-GAAP financial measures and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe these non-GAAP financial measures are relevant and useful to investors in understanding our operating results and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. We encourage investors to understand the methods used by other companies in the homebuilding industry to calculate these non-GAAP financial measures and any adjustments thereto before comparing to our non-GAAP financial measures.

		Three Months Ended December 31,								Twelve Months Ended December 31,
			2022				2021				2022				2021
Home closing gross profit		$	499,992			$	434,745			$	1,773,018			$	1,418,377
Home closing gross margin			25.2	%			29.0	%			28.6	%			27.8	%
Add: Write-off of terminated land deals			4,203				2,453				15,811				4,478
Add: Warranty adjustments			10,916				—				10,916				—
Less: Retroactive vendor rebates			(5,446	)			—				(5,446	)			—
Adjusted home closing gross profit		$	509,665			$	437,198			$	1,794,299			$	1,422,855
Adjusted home closing gross margin			25.7	%			29.2	%			28.9	%			27.9	%

Reconciliation of Non-GAAP Information, continued (Dollars in thousands – unaudited):

		December 31, 2022				December 31, 2021
Senior notes, net, loans payable and other borrowings		$	1,150,647			$	1,160,038
Stockholders' equity			3,949,611				3,044,389
Total capital			5,100,258				4,204,427
Debt-to-capital			22.6	%			27.6	%
Senior notes, net, loans payable and other borrowings		$	1,150,647			$	1,160,038
Less: cash and cash equivalents			(861,561	)			(618,335	)
Net debt			289,086				541,703
Stockholders’ equity			3,949,611				3,044,389
Total net capital		$	4,238,697			$	3,586,092
Net debt-to-capital			6.8	%			15.1	%

Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)

		Three Months Ended
		December 31, 2022						December 31, 2021
		Homes		Value				Homes		Value
Homes Closed:
Arizona		601		$	250,048			760		$	305,296
California		413			289,379			352			228,774
Colorado		203			123,153			166			96,091
West Region		1,217			662,580			1,278			630,161
Texas		1,417			565,630			1,036			395,253
Central Region		1,417			565,630			1,036			395,253
Florida		775			302,949			417			159,707
Georgia		315			137,262			191			80,262
North Carolina		425			174,754			390			156,721
South Carolina		204			61,557			119			41,626
Tennessee		187			79,331			95			35,083
East Region		1,906			755,853			1,212			473,399
Total		4,540		$	1,984,063			3,526		$	1,498,813
Homes Ordered:
Arizona		198		$	61,632			559		$	238,663
California		246			153,997			242			168,688
Colorado		18			7,853			193			112,344
West Region		462			223,482			994			519,695
Texas		614			208,309			1,127			452,712
Central Region		614			208,309			1,127			452,712
Florida		252			106,688			500			190,426
Georgia		117			44,116			161			70,017
North Carolina		182			64,046			345			140,339
South Carolina		94			24,049			126			42,247
Tennessee		87			33,016			114			43,624
East Region		732			271,915			1,246			486,653
Total		1,808		$	703,706			3,367		$	1,459,060

Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(unaudited)

		Twelve Months Ended
		December 31, 2022						December 31, 2021
		Homes		Value				Homes		Value
Homes Closed:
Arizona		2,200		$	937,575			2,183		$	802,401
California		1,265			887,292			1,242			776,528
Colorado		627			377,242			630			335,490
West Region		4,092			2,202,109			4,055			1,914,419
Texas		4,556			1,835,498			4,165			1,500,682
Central Region		4,556			1,835,498			4,165			1,500,682
Florida		2,076			806,769			1,663			600,554
Georgia		738			328,031			647			249,882
North Carolina		1,421			590,729			1,390			528,840
South Carolina		604			194,412			377			129,367
Tennessee		619			249,950			504			171,129
East Region		5,458			2,169,891			4,581			1,679,772
Total		14,106		$	6,207,498			12,801		$	5,094,873
Homes Ordered:
Arizona		1,540		$	656,263			2,335		$	951,730
California		1,134			796,935			1,191			773,166
Colorado		424			256,958			750			429,499
West Region		3,098			1,710,156			4,276			2,154,395
Texas		3,641			1,501,591			4,413			1,700,744
Central Region		3,641			1,501,591			4,413			1,700,744
Florida		2,040			830,897			1,981			738,132
Georgia		737			324,126			694			283,649
North Carolina		1,197			503,664			1,501			591,193
South Carolina		529			170,149			390			132,779
Tennessee		517			215,017			553			195,921
East Region		5,020			2,043,853			5,119			1,941,674
Total		11,759		$	5,255,600			13,808		$	5,796,813
Order Backlog:
Arizona		485		$	206,136			1,145		$	493,575
California		262			177,954			393			271,383
Colorado		125			75,783			328			198,832
West Region		872			459,873			1,866			963,790
Texas		963			425,371			1,878			772,871
Central Region		963			425,371			1,878			772,871
Florida		832			371,505			868			352,584
Georgia		202			84,575			203			91,781
North Carolina		341			135,528			565			225,854
South Carolina		58			19,198			133			44,673
Tennessee		64			28,725			166			64,611
East Region		1,497			639,531			1,935			779,503
Total		3,332		$	1,524,775			5,679		$	2,516,164

Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)

		Three Months Ended
		December 31, 2022				December 31, 2021
		Ending		Average		Ending		Average
Active Communities:
Arizona		46		49.0		39		38.5
California		31		31.5		22		20.0
Colorado		17		17.5		17		16.5
West Region		94		98.0		78		75.0
Texas		81		77.5		73		70.5
Central Region		81		77.5		73		70.5
Florida		29		29.5		41		39.5
Georgia		19		18.5		15		13.5
North Carolina		29		28.0		26		26.0
South Carolina		10		11.0		14		12.5
Tennessee		9		10.5		12		10.5
East Region		96		97.5		108		102.0
Total		271		273.0		259		247.5

		Twelve Months Ended
		December 31, 2022				December 31, 2021
		Ending		Average		Ending		Average
Active Communities:
Arizona		46		46.6		39		36.2
California		31		28.0		22		19.0
Colorado		17		17.8		17		14.6
West Region		94		92.4		78		69.8
Texas		81		76.6		73		65.4
Central Region		81		76.6		73		65.4
Florida		29		36.4		41		34.8
Georgia		19		16.2		15		11.2
North Carolina		29		28.6		26		24.6
South Carolina		10		13.2		14		8.8
Tennessee		9		11.8		12		9.2
East Region		96		106.2		108		88.6
Total		271		275.2		259		223.8

ABOUT MERITAGE HOMES CORPORATION
Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2021. The Company offers affordable, energy-efficient entry-level and first move-up homes. Operations span across Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

Meritage Homes has delivered over 165,000 homes in its 37-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is an industry leader in energy-efficient homebuilding, a nine-time recipient of the U.S. Environmental Protection Agency’s ("EPA") ENERGY STAR® Partner of the Year for Sustained Excellence Award since 2013 for innovation and industry leadership in energy-efficient homebuilding, and the recipient of the EPA's 2022 Market Leader Award for Certified Homes as well as the EPA's 2022 Indoor airPLUS Leader Award.

For more information, visit www.meritagehomes.com.

The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general; expectations about our future results; the level of our near-completed inventory; our ability to capture market share; our future community count; and projected 2023 home closings.

Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: increases in mortgage interest rates, the availability and pricing of residential mortgages and the potential benefits of rate locks; inflation in the cost of materials used to develop communities and construct homes; supply chain and labor constraints; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the ability of our potential buyers to sell their existing homes; legislation related to tariffs; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our potential exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; the replication of our energy-efficient technologies by our competitors; shortages in the availability and cost of subcontract labor; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations related to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic (such as COVID-19), and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2021 and our Form 10-Q for the quarter ended September 30, 2022 under the caption "Risk Factors," which can be found on our website at https://investors.meritagehomes.com.

Contacts:		Emily Tadano, VP Investor Relations and ESG (480) 515-8979 (office) investors@meritagehomes.com

FAQ

What were the fourth quarter 2022 earnings for Meritage Homes (MTH)?

Meritage Homes reported net earnings of $262.4 million for Q4 2022, translating to a diluted EPS of $7.09.

How did Meritage Homes (MTH) perform in terms of home sales in 2022?

The company closed 14,106 homes in 2022, a 10% increase compared to the previous year, while home closing revenue rose by 22%.

What challenges did Meritage Homes (MTH) face in Q4 2022?

The company faced a 46% decline in home orders and a 39% cancellation rate, significantly impacting sales.

What is the financial outlook for Meritage Homes (MTH) in 2023?

Management is optimistic about 2023, focusing on affordable housing to capture market share despite current challenges.