Meritage Homes reports second quarter 2024 results
Meritage Homes (NYSE: MTH) reported its Q2 2024 results with notable growth. Home closings increased by 18% year-over-year (YoY) to 4,118 units, generating $1.7 billion in revenue, up 10%. Despite a 7% decrease in average sales price (ASP) on closings to $411K due to product and geographic mix, gross margins improved to 25.9%, driven by lower costs and shorter construction cycles.
Net earnings rose 24% YoY to $231.6 million, translating to diluted EPS of $6.31 (+26%). Orders increased by 14% YoY to 3,799 units. The ending backlog fell 28% YoY to 2,714 units. Meritage's effective tax rate was 22.1%, benefiting from energy tax credits.
For the first half of 2024, home closing revenue increased by 13% to $3.2 billion, and net earnings rose 31% to $417.6 million. The company ended Q2 with cash of $992.9 million, and a net debt-to-capital ratio of 6.2%.
The company updated its 2024 guidance, expecting home closing revenue of $6.1-6.3 billion and diluted EPS of $19.80-21.00.
- 18% increase in home closings YoY.
- 10% rise in home closing revenue to $1.7 billion.
- Gross margin improved to 25.9%.
- Net earnings up 24% YoY to $231.6 million.
- Diluted EPS increased by 26% to $6.31.
- Orders up 14% YoY to 3,799 units.
- Strong cash position with $992.9 million.
- Updated guidance: home closing revenue of $6.1-6.3 billion, diluted EPS of $19.80-21.00.
- 7% decrease in ASP on closings to $411K.
- Ending backlog fell 28% YoY to 2,714 units.
Insights
Meritage Homes' Q2 2024 results demonstrate strong performance and growth in a challenging housing market environment. Key highlights include:
- Home closings increased
18% year-over-year to 4,118 units - Home closing revenue grew
10% to$1.69 billion - Home closing gross margin improved 150 basis points to
25.9% - Diluted EPS increased
26% to$6.31
The company's focus on affordable move-in ready homes appears to be paying off, with a
Financially, Meritage maintains a strong balance sheet with
Looking ahead, Meritage raised its full-year 2024 guidance, now expecting 14,750-15,500 home closings and diluted EPS of
Meritage Homes' Q2 results offer valuable insights into the current state of the U.S. housing market:
- Strong demand for affordable homes, with entry-level representing
92% of Q2 sales orders - Average sales price (ASP) on orders decreased
6% to$414,000 , reflecting a shift towards more affordable products - Utilization of financing incentives increased, indicating ongoing affordability challenges for buyers
- Community count remained relatively stable year-over-year but increased
3% sequentially, suggesting cautious land investment
The
Meritage's focus on spec homes and quick move-in inventory appears well-aligned with current market conditions, allowing for faster inventory turns and better adaption to changing buyer preferences. The company's ability to improve gross margins in this environment is noteworthy, indicating effective cost management and pricing strategies.
The increase in lots controlled to 71,000 suggests Meritage is positioning itself for future growth, albeit cautiously. This approach may prove advantageous if market conditions improve, allowing the company to quickly ramp up production to meet demand.
SCOTTSDALE, Ariz., July 24, 2024 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S. homebuilder, reported second quarter results for the period ended June 30, 2024.
| Summary Operating Results (unaudited) (Dollars in thousands, except per share amounts) | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| 2024 | 2023 | % Chg | 2024 | 2023 | % Chg | |||||||||||||
| Homes closed (units) | 4,118 | 3,490 | 18 | % | 7,625 | 6,387 | 19 | % | ||||||||||
| Home closing revenue | $ | 1,693,738 | $ | 1,543,021 | 10 | % | $ | 3,159,834 | $ | 2,804,944 | 13 | % | ||||||
| Average sales price — closings | $ | 411 | $ | 442 | (7) | % | $ | 414 | $ | 439 | (6) | % | ||||||
| Home orders (units) | 3,799 | 3,340 | 14 | % | 7,790 | 6,827 | 14 | % | ||||||||||
| Home order value | $ | 1,573,456 | $ | 1,474,713 | 7 | % | $ | 3,204,651 | $ | 2,981,606 | 7 | % | ||||||
| Average sales price — orders | $ | 414 | $ | 442 | (6) | % | $ | 411 | $ | 437 | (6) | % | ||||||
| Ending backlog (units) | 2,714 | 3,772 | (28) | % | ||||||||||||||
| Ending backlog value | $ | 1,109,687 | $ | 1,687,536 | (34) | % | ||||||||||||
| Average sales price — backlog | $ | 409 | $ | 447 | (9) | % | ||||||||||||
| Earnings before income taxes | $ | 297,361 | $ | 239,524 | 24 | % | $ | 531,376 | $ | 404,827 | 31 | % | ||||||
| Net earnings | $ | 231,555 | $ | 186,836 | 24 | % | $ | 417,571 | $ | 318,137 | 31 | % | ||||||
| Diluted EPS | $ | 6.31 | $ | 5.02 | 26 | % | $ | 11.37 | $ | 8.56 | 33 | % | ||||||
MANAGEMENT COMMENTS
“Meritage’s strong second quarter 2024 performance reflected the progress we are making on delivering quick turning move-in ready homes, resulting in
“With over
“Managing our capital with a focus toward long-term shareholder value, in the second quarter of 2024, we accelerated growth in the business by spending
SECOND QUARTER RESULTS
- Orders of 3,799 homes for the second quarter of 2024 increased
14% year-over-year, primarily reflecting a15% increase in average absorption pace to 4.5 per month from 3.9 per month in the second quarter of 2023. Second quarter 2024 average community count remained relatively consistent with prior year, but increased3% sequentially. Average sales price ("ASP") on orders in the second quarter of 2024 of$414,000 was down6% from the second quarter of 2023 due to product and geographic mix shift. Entry-level represented92% of second quarter 2024 sales orders, compared to85% in the prior year.
- The
10% year-over-year increase in home closing revenue to$1.7 billion was the result of18% higher home closing volume partially offset by a7% decrease in ASP on closings due to product and geographic mix. Entry-level represented91% of second quarter 2024 home closings, compared to83% in the prior year. Second quarter 2024 ASP on closings reflected selective price increases and a slight pullback in rate lock financing incentive costs, although utilization of such incentives went up both sequentially and year-over-year.
- Home closing gross margin improved 150 bps to
25.9% in the second quarter 2024 from24.4% in the prior year due to lower direct costs, greater leverage of fixed costs and shorter construction cycle times, which were partially offset by higher lot costs.
- The financial services profit of
$4.8 million included$2.0 million in write-offs related to rate lock unwind costs in the second quarter of 2024. This compared to financial services loss of$2.6 million in the second quarter of 2023 that had$7.9 million in similar write-offs.
- Selling, general and administrative expenses ("SG&A") as a percentage of second quarter 2024 home closing revenue of
9.3% improved 30 bps from9.6% in the second quarter of 2023, primarily due to leverage achieved on higher home closing revenue.
- In the second quarter of 2024, we recognized a loss on early extinguishment of debt of
$0.6 million in connection with the$250.0 million redemption of the6.00% senior notes due 2025 (the "2025 Notes"). There were no such redemptions in the second quarter of 2023.
- The second quarter effective income tax rate was
22.1% in 2024 compared to22.0% in 2023. The Company's tax rates in both periods benefited from earned eligible energy tax credits on qualifying homes under the Inflation Reduction Act ("IRA").
- Net earnings were
$231.6 million ($6.31 per diluted share) for the second quarter of 2024, a24% increase from$186.8 million ($5.02 per diluted share) for the second quarter of 2023, resulting from higher home closing revenue and gross profit as well as lower SG&A as a percentage of home closing revenue.
YEAR TO DATE RESULTS
- Total sales orders for the first half of 2024 increased
14% over the prior year, driven by a15% increase in average absorption pace and a slight decrease in average communities compared to the first half of 2023.
- Home closing revenue increased
13% in the first half of 2024 to$3.2 billion , reflecting a19% increase in home closing volume that was partially offset by a6% decrease in ASP on closings due to product and geographic mix. ASP on closings for the first half of 2024 reflected selective price increases and a slight pullback in rate lock financing incentive costs, although utilization of such incentives went up.
- Home closing gross margin improved 240 bps to
25.9% in the first half of 2024 from23.5% in the prior year, resulting from lower direct costs, greater leverage of fixed costs and shorter construction cycle times, which were partially offset by higher lot cost.
- The financial services profit of
$4.1 million included$7.8 million in write-offs related to rate lock unwind costs in the first half of 2024. This compared to financial services profit of$0.4 million in the first half of 2023 that had$9.8 million in similar write-offs.
- SG&A expenses of
9.8% of home closing revenue were relatively consistent with9.9% in the prior year as improved leverage on higher home closing revenue was mostly offset by higher commissions.
- In the first half of 2024, we recognized a loss on early extinguishment of debt of
$0.6 million in connection with the$250.0 million redemption of the 2025 Notes. There were no such redemptions in the first half of 2023.
- The effective tax rate for both the first half of 2024 and 2023 was
21.4% . The Company's tax rates in both periods benefited from earned eligible energy tax credits on qualifying homes under the IRA.
- Net earnings were
$417.6 million ($11.37 per diluted share) for the first half of 2024, a31% increase from$318.1 million ($8.56 per diluted share) for the first half of 2023, primarily reflecting higher home closing revenue and gross profit, as well as lower SG&A as a percentage of home closing revenue.
BALANCE SHEET & LIQUIDITY
- Cash and cash equivalents at June 30, 2024 totaled
$992.9 million , compared to$921.2 million at December 31, 2023. - Land acquisition and development spend totaled
$631.1 million for the second quarter of 2024, compared to$408.5 million for the second quarter of 2023. - Approximately 71,000 lots were owned or controlled as of June 30, 2024, compared to approximately 60,000 total lots as of June 30, 2023. Over 8,700 net new lots were added in the second quarter of 2024, representing an estimated 63 future communities.
- Second quarter 2024 ending community count of 287 was up
4% sequentially compared to the first quarter of 2024, and down1% compared to prior year. - Debt-to-capital and net debt-to-capital ratios were
21.2% and6.2% , respectively, at June 30, 2024, which compared to17.9% and1.9% , respectively, at December 31, 2023. - In the second quarter of 2024, the Company issued
$575.0 million of1.75% convertible senior notes due 2028 (the "2028 Convertible Notes") and used a portion of the proceeds for the$250.0 million redemption of the 2025 Notes. - The Company refinanced the revolving credit facility in the second quarter of 2024 to increase the facility size to
$910.0 million , extend its maturity from 2028 to 2029, and reduce its pricing grid to align with the Company's investment grade credit rating. - The Company declared and paid quarterly cash dividends of
$0.75 per share totaling$27.2 million in the second quarter of 2024, up from$0.27 per share totaling$9.9 million in the second quarter of 2023. Year-to-date dividends paid were$54.5 million and$19.9 million in 2024 and 2023, respectively. - There were no share repurchases during the second quarter of 2024 due to the customary lock-out restrictions associated with the 2028 Convertible Notes issuance. For the first half of 2024, the Company repurchased 362,419 shares of stock for a total of
$55.9 million . As of June 30, 2024,$129.1 million remained available to repurchase under the authorized share repurchase program.
GUIDANCE
The Company is providing the following updated guidance for full year 2024, based on first half 2024 results and current market conditions:
| Full Year 2024 | ||
| Home closing volume | 14,750-15,500 units | |
| Home closing revenue | ||
| Home closing gross margin | ||
| Effective tax rate | Approximately | |
| Diluted EPS |
CONFERENCE CALL
Management will host a conference call to discuss its second quarter 2024 results at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, July 25, 2024. To listen, please go to Meritage's Investor Relations page for the live webcast or dial in to 1-877-407-6951 US toll free or 1-412-902-0046. A replay will be available on the Investor Relations page.
* The Company's return on equity is calculated as net income for the trailing twelve months divided by average total stockholders' equity for the trailing five quarters. The Company's book value per share is calculated as total stockholders' equity for the period divided by the shares outstanding as of the last day of the period.
| Meritage Homes Corporation and Subsidiaries Consolidated Income Statements (In thousands, except per share data) (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | Change $ | Change % | ||||||||||||
| Homebuilding: | |||||||||||||||
| Home closing revenue | $ | 1,693,738 | $ | 1,543,021 | $ | 150,717 | 10 | % | |||||||
| Land closing revenue | — | 24,379 | (24,379 | ) | (100) | % | |||||||||
| Total closing revenue | 1,693,738 | 1,567,400 | 126,338 | 8 | % | ||||||||||
| Cost of home closings | (1,254,232 | ) | (1,166,041 | ) | 88,191 | 8 | % | ||||||||
| Cost of land closings | — | (24,202 | ) | (24,202 | ) | (100) | % | ||||||||
| Total cost of closings | (1,254,232 | ) | (1,190,243 | ) | 63,989 | 5 | % | ||||||||
| Home closing gross profit | 439,506 | 376,980 | 62,526 | 17 | % | ||||||||||
| Land closing gross profit | — | 177 | (177 | ) | (100) | % | |||||||||
| Total closing gross profit | 439,506 | 377,157 | 62,349 | 17 | % | ||||||||||
| Financial Services: | |||||||||||||||
| Revenue | 8,311 | 6,210 | 2,101 | 34 | % | ||||||||||
| Expense | (3,924 | ) | (2,972 | ) | 952 | 32 | % | ||||||||
| Earnings/(loss) from financial services unconsolidated entities and other, net | 450 | (5,795 | ) | 6,245 | (108) | % | |||||||||
| Financial services profit/(loss) | 4,837 | (2,557 | ) | 7,394 | (289) | % | |||||||||
| Commissions and other sales costs | (104,665 | ) | (95,798 | ) | 8,867 | 9 | % | ||||||||
| General and administrative expenses | (53,184 | ) | (52,140 | ) | 1,044 | 2 | % | ||||||||
| Interest expense | — | — | — | — | % | ||||||||||
| Other income, net | 11,498 | 12,862 | (1,364 | ) | (11) | % | |||||||||
| Loss on early extinguishment of debt | (631 | ) | — | 631 | n/a | ||||||||||
| Earnings before income taxes | 297,361 | 239,524 | 57,837 | 24 | % | ||||||||||
| Provision for income taxes | (65,806 | ) | (52,688 | ) | 13,118 | 25 | % | ||||||||
| Net earnings | $ | 231,555 | $ | 186,836 | $ | 44,719 | 24 | % | |||||||
| Earnings per common share: | |||||||||||||||
| Basic | Change $ or shares | Change % | |||||||||||||
| Earnings per common share | $ | 6.38 | $ | 5.08 | $ | 1.30 | 26 | % | |||||||
| Weighted average shares outstanding | 36,322 | 36,765 | (443 | ) | (1) | % | |||||||||
| Diluted | |||||||||||||||
| Earnings per common share | $ | 6.31 | $ | 5.02 | $ | 1.29 | 26 | % | |||||||
| Weighted average shares outstanding | 36,718 | 37,191 | (473 | ) | (1) | % | |||||||||
| Meritage Homes Corporation and Subsidiaries Consolidated Income Statements (In thousands, except per share data) (Unaudited) | |||||||||||||||
| Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | Change $ | Change % | ||||||||||||
| Homebuilding: | |||||||||||||||
| Home closing revenue | $ | 3,159,834 | $ | 2,804,944 | $ | 354,890 | 13 | % | |||||||
| Land closing revenue | 2,305 | 41,764 | (39,459 | ) | (94) | % | |||||||||
| Total closing revenue | 3,162,139 | 2,846,708 | 315,431 | 11 | % | ||||||||||
| Cost of home closings | (2,342,370 | ) | (2,145,503 | ) | 196,867 | 9 | % | ||||||||
| Cost of land closings | (2,298 | ) | (40,147 | ) | (37,849 | ) | (94) | % | |||||||
| Total cost of closings | (2,344,668 | ) | (2,185,650 | ) | 159,018 | 7 | % | ||||||||
| Home closing gross profit | 817,464 | 659,441 | 158,023 | 24 | % | ||||||||||
| Land closing gross profit | 7 | 1,617 | (1,610 | ) | (100) | % | |||||||||
| Total closing gross profit | 817,471 | 661,058 | 156,413 | 24 | % | ||||||||||
| Financial Services: | |||||||||||||||
| Revenue | 14,664 | 11,941 | 2,723 | 23 | % | ||||||||||
| Expense | (6,927 | ) | (6,039 | ) | 888 | 15 | % | ||||||||
| (Loss)/earnings from financial services unconsolidated entities and other, net | (3,590 | ) | (5,536 | ) | (1,946 | ) | (35) | % | |||||||
| Financial services profit | 4,147 | 366 | 3,781 | 1,033 | % | ||||||||||
| Commissions and other sales costs | (206,215 | ) | (178,644 | ) | 27,571 | 15 | % | ||||||||
| General and administrative expenses | (103,916 | ) | (99,659 | ) | 4,257 | 4 | % | ||||||||
| Interest expense | — | — | — | — | % | ||||||||||
| Other income, net | 20,520 | 21,706 | (1,186 | ) | (5) | % | |||||||||
| Loss on early extinguishment of debt | (631 | ) | — | 631 | n/a | ||||||||||
| Earnings before income taxes | 531,376 | 404,827 | 126,549 | 31 | % | ||||||||||
| Provision for income taxes | (113,805 | ) | (86,690 | ) | 27,115 | 31 | % | ||||||||
| Net earnings | $ | 417,571 | $ | 318,137 | $ | 99,434 | 31 | % | |||||||
| Earnings per common share: | |||||||||||||||
| Basic | Change $ or shares | Change % | |||||||||||||
| Earnings per common share | $ | 11.50 | $ | 8.67 | $ | 2.83 | 33 | % | |||||||
| Weighted average shares outstanding | 36,317 | 36,715 | (398 | ) | (1) | % | |||||||||
| Diluted | |||||||||||||||
| Earnings per common share | $ | 11.37 | $ | 8.56 | $ | 2.81 | 33 | % | |||||||
| Weighted average shares outstanding | 36,738 | 37,149 | (411 | ) | (1) | % | |||||||||
| Meritage Homes Corporation and Subsidiaries Consolidated Balance Sheets (In thousands) (Unaudited) | ||||||
| June 30, 2024 | December 31, 2023 | |||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 992,921 | $ | 921,227 | ||
| Other receivables | 258,137 | 266,972 | ||||
| Real estate(1) | 5,175,084 | 4,721,291 | ||||
| Deposits on real estate under option or contract | 156,698 | 111,364 | ||||
| Investments in unconsolidated entities | 23,630 | 17,170 | ||||
| Property and equipment, net | 46,585 | 48,953 | ||||
| Deferred tax asset, net | 60,167 | 47,573 | ||||
| Prepaids, other assets and goodwill | 210,758 | 218,584 | ||||
| Total assets | $ | 6,923,980 | $ | 6,353,134 | ||
| Liabilities: | ||||||
| Accounts payable | $ | 299,780 | $ | 271,650 | ||
| Accrued liabilities | 388,975 | 424,764 | ||||
| Home sale deposits | 39,380 | 36,605 | ||||
| Loans payable and other borrowings | 9,711 | 13,526 | ||||
| Senior and convertible senior notes, net | 1,303,600 | 994,689 | ||||
| Total liabilities | 2,041,446 | 1,741,234 | ||||
| Stockholders' Equity: | ||||||
| Preferred stock | — | — | ||||
| Common stock | 363 | 364 | ||||
| Additional paid-in capital | 198,503 | 290,955 | ||||
| Retained earnings | 4,683,668 | 4,320,581 | ||||
| Total stockholders’ equity | 4,882,534 | 4,611,900 | ||||
| Total liabilities and stockholders’ equity | $ | 6,923,980 | $ | 6,353,134 | ||
| (1)Real estate – Allocated costs: | ||||||
| Homes under contract under construction | $ | 789,961 | $ | 704,206 | ||
| Unsold homes, completed and under construction | 1,487,674 | 1,260,855 | ||||
| Model homes | 114,185 | 118,252 | ||||
| Finished home sites and home sites under development | 2,783,264 | 2,637,978 | ||||
| Total real estate | $ | 5,175,084 | $ | 4,721,291 | ||
| Meritage Homes Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) (Unaudited) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 417,571 | $ | 318,137 | ||||
| Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities: | ||||||||
| Depreciation and amortization | 12,812 | 11,196 | ||||||
| Stock-based compensation | 10,832 | 10,401 | ||||||
| Equity in earnings from unconsolidated entities | (2,627 | ) | (2,882 | ) | ||||
| Distribution of earnings from unconsolidated entities | 2,778 | 3,418 | ||||||
| Other | 4,697 | 2,148 | ||||||
| Changes in assets and liabilities: | ||||||||
| (Increase)/decrease in real estate | (450,551 | ) | 14,950 | |||||
| (Increase)/decrease in deposits on real estate under option or contract | (45,576 | ) | 5,491 | |||||
| Decrease in other receivables, prepaids and other assets | 24,237 | 8,962 | ||||||
| Decrease in accounts payable and accrued liabilities | (12,965 | ) | (27,754 | ) | ||||
| Increase in home sale deposits | 2,775 | 11,818 | ||||||
| Net cash (used in)/provided by operating activities | (36,017 | ) | 355,885 | |||||
| Cash flows from investing activities: | ||||||||
| Investments in unconsolidated entities | (6,611 | ) | (1,277 | ) | ||||
| Distributions of capital from unconsolidated entities | — | 43 | ||||||
| Purchases of property and equipment | (13,158 | ) | (21,134 | ) | ||||
| Proceeds from sales of property and equipment | 130 | 228 | ||||||
| Maturities/sales of investments and securities | 750 | 750 | ||||||
| Payments to purchase investments and securities | (750 | ) | (750 | ) | ||||
| Net cash used in investing activities | (19,639 | ) | (22,140 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of loans payable and other borrowings | (7,445 | ) | (2,209 | ) | ||||
| Repayment of senior notes | (250,695 | ) | — | |||||
| Proceeds from issuance of convertible senior notes | 575,000 | — | ||||||
| Payment of debt issuance costs | (17,303 | ) | — | |||||
| Purchase of capped calls related to issuance of convertible senior notes | (61,790 | ) | — | |||||
| Dividends paid | (54,484 | ) | (19,854 | ) | ||||
| Repurchase of shares | (55,933 | ) | (10,000 | ) | ||||
| Net cash provided by/(used in) financing activities | 127,350 | (32,063 | ) | |||||
| Net increase in cash and cash equivalents | 71,694 | 301,682 | ||||||
| Beginning cash and cash equivalents | 921,227 | 861,561 | ||||||
| Ending cash and cash equivalents | $ | 992,921 | $ | 1,163,243 | ||||
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)
We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our three reportable homebuilding segments are as follows:
- West: Arizona, California, Colorado, and Utah
- Central: Texas
- East: Florida, Georgia, North Carolina, South Carolina, and Tennessee
| Three Months Ended June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Homes | Value | Homes | Value | |||||||
| Homes Closed: | ||||||||||
| West Region | 1,265 | 622,837 | 997 | 519,217 | ||||||
| Central Region | 1,265 | 459,180 | 1,094 | 456,801 | ||||||
| East Region | 1,588 | 611,721 | 1,399 | 567,003 | ||||||
| Total | 4,118 | $ | 1,693,738 | 3,490 | $ | 1,543,021 | ||||
| Homes Ordered: | ||||||||||
| West Region | 1,114 | 557,296 | 990 | 515,325 | ||||||
| Central Region | 1,100 | 399,854 | 1,065 | 440,377 | ||||||
| East Region | 1,585 | 616,306 | 1,285 | 519,011 | ||||||
| Total | 3,799 | $ | 1,573,456 | 3,340 | $ | 1,474,713 | ||||
| Six Months Ended June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Homes | Value | Homes | Value | |||||||
| Homes Closed: | ||||||||||
| West Region | 2,279 | 1,138,469 | 1,782 | 936,539 | ||||||
| Central Region | 2,432 | 886,745 | 2,142 | 881,681 | ||||||
| East Region | 2,914 | 1,134,620 | 2,463 | 986,724 | ||||||
| Total | 7,625 | $ | 3,159,834 | 6,387 | $ | 2,804,944 | ||||
| Homes Ordered: | ||||||||||
| West Region | 2,284 | 1,138,101 | 2,276 | 1,151,261 | ||||||
| Central Region | 2,410 | 882,037 | 2,138 | 860,898 | ||||||
| East Region | 3,096 | 1,184,513 | 2,413 | 969,447 | ||||||
| Total | 7,790 | 3,204,651 | 6,827 | 2,981,606 | ||||||
| Order Backlog: | ||||||||||
| West Region | 751 | 367,436 | 1,366 | 669,636 | ||||||
| Central Region | 746 | 278,485 | 959 | 401,601 | ||||||
| East Region | 1,217 | 463,766 | 1,447 | 616,299 | ||||||
| Total | 2,714 | $ | 1,109,687 | 3,772 | $ | 1,687,536 | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Ending | Average | Ending | Average | Ending | Average | Ending | Average | ||||||||
| Active Communities: | |||||||||||||||
| West Region | 85 | 84.0 | 98 | 97.0 | 85 | 81.9 | 98 | 96.0 | |||||||
| Central Region | 76 | 78.0 | 82 | 82.0 | 76 | 81.3 | 82 | 81.7 | |||||||
| East Region | 126 | 119.0 | 111 | 105.5 | 126 | 114.0 | 111 | 102.4 | |||||||
| Total | 287 | 281.0 | 291 | 284.5 | 287 | 277.2 | 291 | 280.1 | |||||||
Meritage Homes Corporation and Subsidiaries
Supplement and Non-GAAP information
(Unaudited)
Supplemental Information (Dollars in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Depreciation and amortization | $ | 6,774 | $ | 5,988 | $ | 12,812 | $ | 11,196 | |||||||
| Summary of Capitalized Interest: | |||||||||||||||
| Capitalized interest, beginning of period | $ | 54,227 | $ | 62,452 | $ | 54,516 | $ | 60,169 | |||||||
| Interest incurred | 14,327 | 15,144 | 27,252 | 30,174 | |||||||||||
| Interest expensed | — | — | — | — | |||||||||||
| Interest amortized to cost of home and land closings | (14,227 | ) | (16,518 | ) | (27,441 | ) | (29,265 | ) | |||||||
| Capitalized interest, end of period | $ | 54,327 | $ | 61,078 | $ | 54,327 | $ | 61,078 | |||||||
Reconciliation of Non-GAAP Information (Dollars in thousands):
| Debt-to-Capital Ratios | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| Senior and convertible senior notes, net, loans payable and other borrowings | $ | 1,313,311 | $ | 1,008,215 | |||
| Stockholders' equity | 4,882,534 | 4,611,900 | |||||
| Total capital | $ | 6,195,845 | $ | 5,620,115 | |||
| Debt-to-capital | 21.2 | % | 17.9 | % | |||
| Senior and convertible senior notes, net, loans payable and other borrowings | $ | 1,313,311 | $ | 1,008,215 | |||
| Less: cash and cash equivalents | (992,921 | ) | (921,227 | ) | |||
| Net debt | $ | 320,390 | $ | 86,988 | |||
| Stockholders’ equity | 4,882,534 | 4,611,900 | |||||
| Total net capital | $ | 5,202,924 | $ | 4,698,888 | |||
| Net debt-to-capital (1) | 6.2 | % | 1.9 | % | |||
| (1) | Net debt-to-capital reflects certain adjustments to the debt-to-capital ratio and is defined as net debt (debt less cash and cash equivalents) divided by total capital (net debt plus stockholders' equity). Net debt-to-capital is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe this non-GAAP financial measure is 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 non-GAAP financial measures and any adjustments thereto before comparing to our non-GAAP financial measures. |
About Meritage Homes Corporation
Meritage is the fifth-largest public homebuilder in the United States, based on homes closed in 2023. The Company offers energy-efficient and affordable entry-level and first move-up homes. Operations span across Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.
Meritage has delivered over 185,000 homes in its 38-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, an eleven-time recipient of the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® Partner of the Year for Sustained Excellence Award and Residential New Construction Market Leader Award, as well as a three-time recipient of the EPA's 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 and our future results including our ability to increase our market share and our full year 2024 projected home closing volume, home closing revenue, home closing gross margin, effective tax rate and diluted EPS.
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 interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; inflation in the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; impairments of our real estate inventory; 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 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; shortages in the availability and cost of subcontract labor; the replication of our energy-efficient technologies by our competitors; 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; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, 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, 2023 and our Form 10-Q for subsequent quarters 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
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