Meritage Homes Reports Second Quarter 2021 Results, Including Record Gross Margin of 27.3%, 11% Sequential Quarterly Increase in Community Count to 226 and 83% Increase in Diluted EPS

Rhea-AI Summary

Meritage Homes Corporation (NYSE: MTH) reported strong second quarter results for 2021, highlighting a significant 85% increase in net earnings to $167.4 million ($4.36 per diluted share). Home closing revenue surged by 23% year-over-year to $1.3 billion, aided by an 18% rise in closed homes to 3,273 units. The average sales price for closing transactions rose 4% to $386,000. Despite a 2% drop in home orders to 3,542 units, the company secured a backlog of 5,509 homes valued at $2.3 billion, marking a 41% increase. Meritage anticipates home closing revenues between $5.00-5.25 billion for 2021.

Positive

• Net earnings increased by 85% year-over-year to $167.4 million.
• Home closing revenue rose 23% to $1.3 billion.
• Closed homes reached 3,273, up 18% from the previous year.
• Ending backlog value rose 41% to $2.3 billion.

Negative

• Home orders decreased by 2% year-over-year to 3,542 units.

SCOTTSDALE, Ariz., July 28, 2021 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported second quarter results for the period ended June 30, 2021.

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

		Three Months Ended June 30,												Six Months Ended June 30,
		2021				2020				% Chg				2021				2020				% Chg
Homes closed (units)		3,273				2,770				18		%		6,163				5,086				21	%
Home closing revenue		$	1,264,643			$	1,031,591			23		%		$	2,344,625			$	1,922,008			22	%
Average sales price - closings		$	386			$	372			4		%		$	380			$	378			1	%
Home orders (units)		3,542				3,597				(2	)	%		7,000				6,699				4	%
Home order value		$	1,499,672			$	1,290,454			16		%		$	2,848,802			$	2,470,391			15	%
Average sales price - orders		$	423			$	359			18		%		$	407			$	369			10	%
Ending backlog (units)														5,509				4,395				25	%
Ending backlog value														$	2,317,534			$	1,648,451			41	%
Average sales price - backlog														$	421			$	375			12	%
Earnings before income taxes		$	215,651			$	115,862			86		%		$	381,628			$	202,695			88	%
Net earnings		$	167,389			$	90,678			85		%		$	299,232			$	161,830			85	%
Diluted EPS		$	4.36			$	2.38			83		%		$	7.80			$	4.20			86	%

MANAGEMENT COMMENTS

“Homebuying demand in the second quarter of 2021 remained strong and steady as macroeconomic conditions improved,” said Steven J. Hilton, executive chairman of Meritage Homes. "Our second quarter 2021 average absorption pace was 5.5 per month, up from 5.0 in the second quarter of 2020 even as we metered our orders pace. Although our orders pace was strong, a 10% decline in average community count resulted in a modest 2% decline in quarterly sales orders to 3,542 homes this quarter, compared to the exceptionally strong sales orders in the second quarter of 2020. Demonstrating our high level of execution and ability to navigate ongoing supply chain challenges, we closed 3,273 homes, the best second quarter of closings in company history which was also 18% greater than prior year, as well as generated the Company's all-time high quarterly gross margin of 27.3%."

Mr. Hilton continued, “As we get closer to attaining our mid-2022 goal of 300 communities, we exceeded our own expectations and had 226 active communities at June 30, 2021, reflecting an 11% sequential quarterly increase from 203 and, we believe, the start of meaningful growth. We opened 45 new communities this quarter and our strong pipeline of community openings over the next four quarters should position us well both to address market demand with a greater volume of affordable entry-level and first move-up homes and to drive continued profitability.”

“Our strategy continues to successfully leverage demographic trends in homebuying for millennials and baby boomers, as well as market conditions of constrained housing supply and sustained lower interest rates,” said Phillippe Lord, chief executive officer of Meritage Homes. “During the quarter, we invested significantly in growth by spending a record $551 million on land acquisition and development. Approximately 9,000 net new lots were secured, a 114% increase over prior year, bringing our total lot supply to over 63,000. Inclusive of this additional spend, our net debt to capital ratio was 15.4% this quarter, as we remain committed to sustained growth, a strong balance sheet, and maintaining liquidity.”

"For the second quarter of 2021, home closing revenue of $1.3 billion was 23% greater than last year," Mr. Lord remarked. "Leveraging strong operational efficiencies and favorable pricing power, our home closing gross margin expanded 590 bps year-over-year from 21.4% to 27.3% this quarter and our diluted EPS increased 83% year-over-year from $2.38 to $4.36 after the impact of $18.2 million of early debt extinguishment."

Mr. Lord added, “Based on our current forecast and confidence in delivering our backlog, we are projecting 2021 home closings of approximately 12,500-13,000 and 2021 home closing revenue in the range of $5.00-5.25 billion. In addition, we anticipate full year home closing gross margin of around 27.5% and an effective tax rate of 22.5-23.0%, which we expect will translate into approximately $18.55-19.45 of diluted EPS for 2021.”

"Housing demand remains strong and we are still able to sell our homes soon after they are released. Looking ahead, we will continue to adjust and maximize prices based on market conditions and to align our orders pace with our production schedule, which is affected by supply chain constraints. With notable lumber price declines over the last couple months, we expect our net construction costs will stay flat or decline over the next couple of quarters. We believe that this improvement coupled with our ongoing community count growth will contribute to strong financial results in the short- and medium-term," concluded Mr. Lord.

SECOND QUARTER RESULTS

• The total orders of 3,542 for the second quarter of 2021 reflected a decrease of 2% year-over-year, driven by a 9% increase in average absorption pace from 5.0 to 5.5 per month, which was offset by a 10% decrease in average communities. Entry-level represented 81% of second quarter 2021 orders, compared to 70% in the same quarter in 2020. Strong housing demand enabled Meritage to achieve higher average absorptions in the East and Central regions, which were up 25% and 8%, respectively. Average absorption pace in the West region was relatively flat year-over-year. The tight housing supply conditions combined with strong homebuying demand created considerable pricing power in the market, which generated year-over-year increases in average sales price ("ASP") for both orders and backlog. Even as our product mix continued to shift toward entry-level homes, ASP on orders in the second quarter of 2021 exceeded $420,000.
  
  
• The 23% year-over-year increase in home closing revenue to $1.3 billion for the second quarter of 2021 was due to 18% higher home closing volume and a 4% increase in closing ASP, which is primarily attributable to the sustained strength in housing demand and the significant price increases the market has allowed us to push through in recent quarters, despite the product mix shift toward entry-level homes.
  
  
• The 590 bps improvement in second quarter 2021 home closing gross margin to 27.3% from 21.4% a year ago mainly resulted from efficiencies gained from higher ASP and leveraging of our fixed costs on greater home closing volume, which more than offset higher lumber prices and increases in other commodity costs.
  
  
• Selling, general and administrative expenses ("SG&A") were 9.2% of second quarter 2021 home closing revenue, a 110 bps improvement over 10.3% in the prior year. This improvement was due to greater leverage of fixed expenses on higher home closing revenue, in addition to cost savings from technology enhancements, particularly related to our sales and marketing efforts.
  
  
• Loss on early extinguishment of debt of $18.2 million was recognized in the second quarter of 2021 in connection with the early redemption in April 2021 of the 7.00% senior notes due 2022 ("2022 Notes").
  
  
• The second quarter effective income tax rate was 22.4% in 2021 compared to 21.7% in 2020. The reduced rate in both years primarily stems from eligible energy tax credits on qualifying energy-efficient homes closed under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019.
  
  
• Second quarter 2021 pre-tax margin increased 560 bps to 16.8%, compared to 11.2% in the second quarter of 2020. Net earnings were $167.4 million ($4.36 per diluted share) for the second quarter of 2021, an 85% increase over $90.7 million ($2.38 per diluted share) for the second quarter of 2020. Strong earnings growth reflected higher closing volume, pricing power, expanded gross margin and improved overhead leverage, which led to an 83% year-over-year improvement in earnings per diluted share.
  

YEAR TO DATE RESULTS

• Total orders for the first half of 2021 increased 4% year-over-year, driven by a 21% increase in absorption pace, partially offset by a 14% decrease in average community count compared to the first half of 2020.
  
  
• Home closing revenue increased 22% in the first half of 2021 to $2.3 billion due to 21% higher home closing volume and a 1% increase in closing ASP given the favorable pricing environment.
  
  
• The 530 bps improvement for home closing gross margin in the first half of 2021 to 26.1% from 20.8% primarily resulted from higher ASP and better leveraging of fixed costs on greater home closing volume.
  
  
• SG&A expenses improved 100 bps year-over-year to 9.5% of home closing revenue, compared to 10.5% in the first half of 2020, due to operating efficiencies and improved leverage of fixed expenses on higher home closing volume and revenue.
  
  
• Loss on early extinguishment of debt of $18.2 million was recognized in the first half of 2021 in connection with the early redemption of the 2022 Notes.
  
  
• The effective tax rate for the first half of 2021 was 21.6%, compared to 20.2% for the first half of 2020. The effective tax rate in both periods benefited from tax credits earned for qualifying energy-efficient homes under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019.
  
  
• Net earnings were $299.2 million ($7.80 per diluted share) for the first half of 2021, an 85% increase over $161.8 million ($4.20 per diluted share) for the first half of 2020, primarily reflecting higher closing volume, pricing power, expanded gross margin and greater overhead leverage in 2021.
  

BALANCE SHEET

• Cash and cash equivalents at June 30, 2021 totaled $684.4 million, compared to $745.6 million at December 31, 2020, reflecting investments in real estate and development and share repurchases. Real estate assets increased from $2.8 billion at December 31, 2020 to $3.3 billion at June 30, 2021, reflecting an increase in homes under contract under construction and finished homesites and homesites under development.
  
  
• A total of over 63,000 lots were owned or controlled as of June 30, 2021, compared to approximately 43,000 total lots at June 30, 2020. In the second quarter of 2021, about 9,000 net new lots were added, representing 54 future communities, of which 80% are for entry-level communities.
  
  
• Debt-to-capital and net debt-to-capital ratios were 30.6% and 15.4%, respectively, at June 30, 2021, compared to 30.3% and 10.5%, respectively, at December 31, 2020.
  
  
• In the first half of 2021, we repurchased 300,000 shares of stock for a total of $27.5 million, of which 200,000 shares totaling $19.1 million were repurchased during the second quarter of 2021.
  
  
• On April 15, 2021, the Company closed on its offering of $450 million 3.875% senior notes due 2029 and received approximately $444 million in net proceeds. On March 31, 2021, the company issued a notice of redemption for April 30, 2021 for all of its $300 million aggregate principal amount of the 2022 Notes. The redemption of the 2022 Notes resulted in $18.2 million of early extinguishment of debt charges in the second quarter of 2021.
  

CONFERENCE CALL
Management will host a conference call to discuss its second quarter results at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) on Thursday, July 29, 2021. 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. Pacific Time (2:00 p.m. Eastern Time) on July 29, 2021 and extending through August 12, 2021, at https://investors.meritagehomes.com.

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

		Three Months Ended June 30,
		2021					2020					Change $					Change %
Homebuilding:
	Home closing revenue	$	1,264,643				$	1,031,591				$	233,052				23		%
	Land closing revenue	12,956					1,488					11,468					771		%
	Total closing revenue	1,277,599					1,033,079					244,520					24		%
	Cost of home closings	(919,342		)			(810,895		)			108,447					13		%
	Cost of land closings	(13,288		)			(2,936		)			10,352					353		%
	Total cost of closings	(932,630		)			(813,831		)			118,799					15		%
	Home closing gross profit	345,301					220,696					124,605					56		%
	Land closing gross loss	(332		)			(1,448		)			1,116					(77	)	%
	Total closing gross profit	344,969					219,248					125,721					57		%
Financial Services:
	Revenue	5,665					4,478					1,187					27		%
	Expense	(2,367		)			(1,758		)			609					35		%
	Earnings from financial services unconsolidated entities and other, net	1,317					1,069					248					23		%
	Financial services profit	4,615					3,789					826					22		%
Commissions and other sales costs		(73,889		)			(70,408		)			3,481					5		%
General and administrative expenses		(43,156		)			(36,176		)			6,980					19		%
Interest expense		(77		)			(2,105		)			(2,028		)			(96	)	%
Other income, net		1,377					1,514					(137		)			(9	)	%
Loss on early extinguishment of debt		(18,188		)			—					18,188					n/a
Earnings before income taxes		215,651					115,862					99,789					86		%
Provision for income taxes		(48,262		)			(25,184		)			23,078					92		%
Net earnings		$	167,389				$	90,678				$	76,711				85		%
Earnings per common share:
	Basic											Change $ or shares					Change %
	Earnings per common share	$	4.43				$	2.41				$	2.02				84		%
	Weighted average shares outstanding	37,818					37,599					219					1		%
	Diluted
	Earnings per common share	$	4.36				$	2.38				$	1.98				83		%
	Weighted average shares outstanding	38,377					38,169					208					1		%

		Six Months Ended June 30,
		2021					2020					Change $					Change %
Homebuilding:
	Home closing revenue	$	2,344,625				$	1,922,008				$	422,617				22		%
	Land closing revenue	16,755					12,084					4,671					39		%
	Total closing revenue	2,361,380					1,934,092					427,288					22		%
	Cost of home closings	(1,732,669		)			(1,522,952		)			209,717					14		%
	Cost of land closings	(16,540		)			(13,149		)			3,391					26		%
	Total cost of closings	(1,749,209		)			(1,536,101		)			213,108					14		%
	Home closing gross profit	611,956					399,056					212,900					53		%
	Land closing gross profit/(loss)	215					(1,065		)			1,280					120		%
	Total closing gross profit	612,171					397,991					214,180					54		%
Financial Services:
	Revenue	10,416					8,390					2,026					24		%
	Expense	(4,538		)			(3,493		)			1,045					30		%
	Earnings from financial services unconsolidated entities and other, net	2,497					1,730					767					44		%
	Financial services profit	8,375					6,627					1,748					26		%
Commissions and other sales costs		(141,633		)			(131,581		)			10,052					8		%
General and administrative expenses		(81,105		)			(70,346		)			10,759					15		%
Interest expense		(167		)			(2,121		)			(1,954		)			(92	)	%
Other income, net		2,175					2,125					50					2		%
Loss on early extinguishment of debt		(18,188		)			—					18,188					n/a
Earnings before income taxes		381,628					202,695					178,933					88		%
Provision for income taxes		(82,396		)			(40,865		)			41,531					102		%
Net earnings		$	299,232				$	161,830				$	137,402				85		%
Earnings per common share:
	Basic											Change $ or shares					Change %
	Earnings per common share	$	7.93				$	4.28				$	3.65				85		%
	Weighted average shares outstanding	37,731					37,842					(111		)			—		%
	Diluted
	Earnings per common share	$	7.80				$	4.20				$	3.60				86		%
	Weighted average shares outstanding	38,357					38,512					(155		)			—		%

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

		June 30, 2021				December 31, 2020
Assets:
Cash and cash equivalents		$	684,374			$	745,621
Other receivables		131,104				98,573
Real estate (1)		3,251,787				2,778,039
Deposits on real estate under option or contract		74,397				59,534
Investments in unconsolidated entities		3,943				4,350
Property and equipment, net		36,224				38,933
Deferred tax asset		33,502				36,040
Prepaids, other assets and goodwill		106,222				103,308
Total assets		$	4,321,553			$	3,864,398
Liabilities:
Accounts payable		$	215,221			$	175,250
Accrued liabilities		282,762				296,121
Home sale deposits		33,958				25,074
Loans payable and other borrowings		19,534				23,094
Senior notes, net		1,141,934				996,991
Total liabilities		1,693,409				1,516,530
Stockholders' Equity:
Preferred stock		—				—
Common stock		376				375
Additional paid-in capital		436,805				455,762
Retained earnings		2,190,963				1,891,731
Total stockholders’ equity		2,628,144				2,347,868
Total liabilities and stockholders’ equity		$	4,321,553			$	3,864,398
(1) Real estate – Allocated costs:
Homes under contract under construction		$	1,069,511			$	873,365
Unsold homes, completed and under construction		353,047				357,861
Model homes		73,846				82,502
Finished home sites and home sites under development		1,755,383				1,464,311
Total real estate		$	3,251,787			$	2,778,039

Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):

	Three Months Ended June 30,										Six Months Ended June 30,
	2021					2020					2021					2020
Depreciation and amortization	$	6,879				$	7,540				$	13,414				$	14,551
Summary of Capitalized Interest:
Capitalized interest, beginning of period	$	57,540				$	78,162				$	58,940				$	82,014
Interest incurred	16,321					17,550					32,413					34,085
Interest expensed	(77		)			(2,105		)			(167		)			(2,121		)
Interest amortized to cost of home and land closings	(17,074		)			(20,725		)			(34,476		)			(41,096		)
Capitalized interest, end of period	$	56,710				$	72,882				$	56,710				$	72,882
	June 30, 2021					December 31, 2020
Senior notes, net, loans payable and other borrowings	$	1,161,468				$	1,020,085
Stockholders' equity	2,628,144					2,347,868
Total capital	$	3,789,612				$	3,367,953
Debt-to-capital	30.6			%		30.3			%
Senior notes, net, loans payable and other borrowings	$	1,161,468				$	1,020,085
Less: cash and cash equivalents	(684,374		)			(745,621		)
Net debt	$	477,094				$	274,464
Stockholders’ equity	2,628,144					2,347,868
Total net capital	$	3,105,238				$	2,622,332
Net debt-to-capital	15.4			%		10.5			%

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

		Six Months Ended June 30,
		2021					2020
Cash flows from operating activities:
Net earnings		$	299,232				$	161,830
Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities:
Depreciation and amortization		13,414					14,551
Stock-based compensation		8,590					9,594
Loss on early extinguishment of debt		18,188					—
Equity in earnings from unconsolidated entities		(1,807		)			(1,691		)
Distribution of earnings from unconsolidated entities		2,215					1,491
Other		2,266					2,548
Changes in assets and liabilities:
(Increase)/decrease in real estate		(469,733		)			9,655
(Increase)/decrease in deposits on real estate under option or contract		(14,863		)			2,225
(Increase)/decrease in other receivables, prepaids and other assets		(36,390		)			3,469
Increase in accounts payable and accrued liabilities		26,532					34,772
Increase/(decrease) in home sale deposits		8,884					(999		)
Net cash (used in)/provided by operating activities		(143,472		)			237,445
Cash flows from investing activities:
Investments in unconsolidated entities		(1		)			(3		)
Distributions of capital from unconsolidated entities		—					1,000
Purchases of property and equipment		(10,970		)			(10,343		)
Proceeds from sales of property and equipment		292					259
Maturities/sales of investments and securities		2,697					632
Payments to purchase investments and securities		(2,697		)			(632		)
Net cash used in investing activities		(10,679		)			(9,087		)
Cash flows from financing activities:
Repayment of loans payable and other borrowings		(5,758		)			(2,389		)
Repayment of senior notes		(317,690		)			—
Proceeds from issuance of senior notes		450,000					—
Payment of debt issuance costs		(6,102		)			—
Repurchase of shares		(27,546		)			(60,813		)
Net cash provided by/(used in) financing activities		92,904					(63,202		)
Net (decrease)/increase in cash and cash equivalents		(61,247		)			165,156
Beginning cash and cash equivalents		745,621					319,466
Ending cash and cash equivalents		$	684,374				$	484,622

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

		Three Months Ended June 30,
		2021							2020
		Homes			Value				Homes			Value
Homes Closed:
Arizona		481			$	165,990			427			$	142,359
California		318			198,232				247			150,343
Colorado		145			74,987				184			89,087
West Region		944			439,209				858			381,789
Texas		1,154			403,838				914			295,975
Central Region		1,154			403,838				914			295,975
Florida		443			160,377				367			138,608
Georgia		171			62,477				166			58,698
North Carolina		330			119,838				288			98,738
South Carolina		81			28,209				98			30,206
Tennessee		150			50,695				79			27,577
East Region		1,175			421,596				998			353,827
Total		3,273			$	1,264,643			2,770			$	1,031,591
Homes Ordered:
Arizona		624			$	256,804			737			$	231,057
California		344			217,228				388			224,639
Colorado		181			104,134				153			70,831
West Region		1,149			578,166				1,278			526,527
Texas		1,101			428,375				1,215			392,502
Central Region		1,101			428,375				1,215			392,502
Florida		468			176,118				390			136,362
Georgia		193			77,309				190			65,434
North Carolina		390			153,032				326			106,383
South Carolina		88			32,595				95			29,262
Tennessee		153			54,077				103			33,984
East Region		1,292			493,131				1,104			371,425
Total		3,542			$	1,499,672			3,597			$	1,290,454

		Six Months Ended June 30,
		2021							2020
		Homes			Value				Homes			Value
Homes Closed:
Arizona		891			$	303,258			886			$	293,603
California		595			370,131				455			285,145
Colorado		320			159,250				370			180,771
West Region		1,806			832,639				1,711			759,519
Texas		2,117			722,223				1,688			551,884
Central Region		2,117			722,223				1,688			551,884
Florida		860			301,205				603			232,397
Georgia		317			117,616				281			100,696
North Carolina		629			226,851				510			178,155
South Carolina		166			56,055				151			47,611
Tennessee		268			88,036				142			51,746
East Region		2,240			789,763				1,687			610,605
Total		6,163			$	2,344,625			5,086			$	1,922,008
Homes Ordered:
Arizona		1,226			$	479,239			1,307			$	414,428
California		630			390,619				740			449,571
Colorado		350			193,913				352			169,296
West Region		2,206			1,063,771				2,399			1,033,295
Texas		2,216			820,343				2,274			735,492
Central Region		2,216			820,343				2,274			735,492
Florida		947			355,227				707			255,804
Georgia		357			138,866				346			120,417
North Carolina		809			310,719				613			207,638
South Carolina		164			58,997				182			57,176
Tennessee		301			100,879				178			60,569
East Region		2,578			964,688				2,026			701,604
Total		7,000			$	2,848,802			6,699			$	2,470,391
Order Backlog:
Arizona		1,328			$	520,034			932			$	307,302
California		479			295,198				430			256,694
Colorado		238			139,437				178			86,158
West Region		2,045			954,669				1,540			650,154
Texas		1,729			670,583				1,634			556,787
Central Region		1,729			670,583				1,634			556,787
Florida		637			268,971				475			187,241
Georgia		196			79,207				198			69,559
North Carolina		634			247,292				322			109,026
South Carolina		118			44,175				102			34,054
Tennessee		150			52,637				124			41,630
East Region		1,735			692,282				1,221			441,510
Total		5,509			$	2,317,534			4,395			$	1,648,451

Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)

		Three Months Ended June 30,
		2021						2020
		Ending			Average			Ending			Average
Active Communities:
Arizona		38			35.5			38			35.5
California		20			19.5			28			28.5
Colorado		17			14.5			13			13.0
West Region		75			69.5			79			77.0
Texas		64			61.5			68			73.0
Central Region		64			61.5			68			73.0
Florida		34			32.0			36			35.0
Georgia		10			11.0			17			16.0
North Carolina		26			25.0			21			20.5
South Carolina		7			6.5			5			6.0
Tennessee		10			9.0			11			11.5
East Region		87			83.5			90			89.0
Total		226			214.5			237			239.0

		Six Months Ended June 30,
		2021						2020
		Ending			Average			Ending			Average
Active Communities:
Arizona		38			34.6			38			34.5
California		20			18.3			28			26.0
Colorado		17			13.3			13			15.5
West Region		75			66.2			79			76.0
Texas		64			62.0			68			72.5
Central Region		64			62.0			68			72.5
Florida		34			31.6			36			34.5
Georgia		10			9.7			17			17.5
North Carolina		26			23.7			21			23.0
South Carolina		7			6.3			5			7.0
Tennessee		10			8.3			11			10.0
East Region		87			79.6			90			92.0
Total		226			207.8			237			240.5

About Meritage Homes Corporation
Meritage Homes is the sixth-largest public homebuilder in the United States, based on homes closed in 2020. The Company offers a variety of homes that are designed with a focus on entry-level and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.

Meritage Homes has delivered over 145,000 homes in its 36-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is the industry leader in energy-efficient homebuilding and an eight-time recipient of the U.S. Environmental Protection Agency’s ENERGY STAR® Partner of the Year for Sustained Excellence Award since 2013 for innovation and industry leadership in energy efficient homebuilding.

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; projected 2021 home closings, home closing revenue, gross margins, effective tax rate, diluted earnings per share and future community counts; trends in construction costs; and expectations about our future results.

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: changes in interest rates and the availability and pricing of residential mortgages; inflation in the cost of materials used to develop communities and construct homes; supply chain constraints; our ability to obtain performance and surety bonds in connection with our development work; 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 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 to comply with laws and regulations; our compliance with government regulations; negative publicity that affects our reputation; disruptions to our business by COVID-19, fear of a similar event, 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, 2020 and our Form 10-Q for the quarter ended March 31, 2021 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

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

FAQ

What were Meritage Homes' second quarter 2021 earnings results?

Meritage Homes reported net earnings of $167.4 million, or $4.36 per diluted share, reflecting an 85% increase from the second quarter of 2020.

How much did Meritage Homes' home closing revenue increase in Q2 2021?

Home closing revenue increased by 23% year-over-year to $1.3 billion in the second quarter of 2021.

What was the change in home orders for Meritage Homes in Q2 2021?

Home orders for the second quarter of 2021 decreased by 2% to a total of 3,542 units compared to the same quarter in 2020.

What is the value of Meritage Homes' backlog as of June 30, 2021?

The backlog value for Meritage Homes was $2.3 billion as of June 30, 2021, representing a 41% increase year-over-year.

What are the projected home closing revenues for Meritage Homes in 2021?

Meritage Homes projects home closing revenues to be between $5.00 billion and $5.25 billion for the full year of 2021.