Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S.
homebuilder, reported second quarter results for the period ended
June 30, 2023.
Summary Operating Results
(unaudited)(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
% Chg |
|
|
2023 |
|
|
2022 |
|
% Chg |
Homes closed (units) |
|
|
3,490 |
|
|
3,221 |
|
8 |
% |
|
|
6,387 |
|
|
6,079 |
|
5 |
% |
Home closing revenue |
|
$ |
1,543,021 |
|
$ |
1,408,947 |
|
10 |
% |
|
$ |
2,804,944 |
|
$ |
2,654,403 |
|
6 |
% |
Average sales price — closings |
|
$ |
442 |
|
$ |
437 |
|
1 |
% |
|
$ |
439 |
|
$ |
437 |
|
— |
% |
Home orders (units) |
|
|
3,340 |
|
|
3,767 |
|
(11) |
% |
|
|
6,827 |
|
|
7,641 |
|
(11) |
% |
Home order value |
|
$ |
1,474,713 |
|
$ |
1,809,870 |
|
(19) |
% |
|
$ |
2,981,606 |
|
$ |
3,577,580 |
|
(17) |
% |
Average sales price — orders |
|
$ |
442 |
|
$ |
480 |
|
(8) |
% |
|
$ |
437 |
|
$ |
468 |
|
(7) |
% |
Ending backlog (units) |
|
|
|
|
|
|
|
|
3,772 |
|
|
7,241 |
|
(48) |
% |
Ending backlog value |
|
|
|
|
|
|
|
$ |
1,687,536 |
|
$ |
3,438,853 |
|
(51) |
% |
Average sales price — backlog |
|
|
|
|
|
|
|
$ |
447 |
|
$ |
475 |
|
(6) |
% |
Earnings before income taxes |
|
$ |
239,524 |
|
$ |
331,695 |
|
(28) |
% |
|
$ |
404,827 |
|
$ |
617,578 |
|
(34) |
% |
Net earnings |
|
$ |
186,836 |
|
$ |
250,084 |
|
(25) |
% |
|
$ |
318,137 |
|
$ |
467,338 |
|
(32) |
% |
Diluted EPS |
|
$ |
5.02 |
|
$ |
6.77 |
|
(26) |
% |
|
$ |
8.56 |
|
$ |
12.55 |
|
(32) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANAGEMENT COMMENTS
"Homebuying demand in the second quarter of 2023
remained strong as homebuyers acclimated to the higher mortgage
interest rates. The new home market continues to benefit from the
sustained shortage of resale homes and favorable demographic
trends, translating to quarterly sales per community near our
absorption target of 4 net sales per month," said Steven J. Hilton,
executive chairman of Meritage Homes. "In the second quarter of
2023, our nearly 90% backlog conversion driven by our spec strategy
led to our highest second quarter of home closings and home closing
revenue."
"Home closings were 3,490 this quarter, 8% greater
than prior year, highlighting our effort to improve cycle times.
Nearly 1,100 homes were sold and delivered within the quarter from
our available inventory of completed and near-completed homes,"
added Phillippe Lord, chief executive officer of Meritage Homes.
"Our second quarter 2023 home closing revenue of $1.5 billion
combined with a strong home closing gross margin of 24.4% and
SG&A leverage of 9.6% led to diluted EPS of $5.02 this
quarter."
"Given the healthy demand environment, our second
quarter 2023 sales orders totaled 3,340 homes, which was 11% lower
year-over-year. This decline resulted from the pull-forward of
sales in the prior year, as we were one of the first builders at
that time to offer expansive rate locks. In the second quarter of
2022, Meritage was one of only two builders with positive
year-over-year sales order growth,” Mr. Lord continued. “The second
quarter 2023 average absorption pace of 3.9 per month was down from
4.4 per month in the prior year. Timing of community openings and
closings impacted the calculation of the current quarter's sales
orders pace.”
"We ended the quarter with 291 active communities
at June 30, 2023, which was 5% higher sequentially compared to
March 31, 2023, yet 4% lower than prior year's 303 active
communities. During the quarter, we invested in growth, spending
$409 million on land acquisition and development. Approximately
2,800 net new lots were secured, more than doubling year-over-year,
bringing our total lot supply to nearly 60,000 at June 30, 2023 or
4.1 years supply," said Mr. Lord.
"We continue to generate positive cash flow and
return capital to shareholders via our $0.27 per share cash
dividend this quarter," remarked Mr. Lord. "Since we had nothing
drawn under our credit facility, $1.2 billion of cash and a
negative net debt-to-capital of (0.2)% at June 30, 2023, we feel
confident that we have ample liquidity and a strong balance
sheet."
Mr. Lord concluded, "As the housing market
continues to normalize, we are projecting 13,300-13,800 home
closings for full year 2023, which we anticipate will generate home
closing revenue of $5.85-6.07 billion. Home closing gross margin is
projected to be in the low 24% range. With an estimated effective
tax rate of 22.5%, we expect diluted EPS to be in the range of
$19.12-19.80 for full year 2023."
SECOND QUARTER RESULTS
- Orders of 3,340 homes for the second
quarter of 2023 decreased 11% year-over-year, reflecting an 11%
decrease in average absorption pace to 3.9 per month from 4.4 per
month in the second quarter of 2022. Second quarter 2023 average
community count remained consistent with prior year. Entry-level
represented 85% of second quarter 2023 sales orders, which compared
to 86% in the prior year. Average sales price ("ASP") on orders in
the second quarter of 2023 of $442,000 was down 8% from the second
quarter of 2022.
- The 10% year-over-year increase in
home closing revenue to $1.5 billion resulted from 8% higher home
closing volume and a 1% increase in ASP on closings due to a
greater number of closings in higher ASP markets.
- Home closing gross margin declined 720
bps to 24.4% in the second quarter 2023 from 31.6% in the prior
year from greater sales incentives and continued elevated direct
costs. Our use of mortgage rate locks and buy-downs did not begin
to impact our home closing gross margins until the latter half of
2022.
- Selling, general and administrative
expenses ("SG&A") as a percentage of second quarter 2023 home
closing revenue of 9.6% deteriorated 130 bps from 8.3% in the
second quarter of 2022 as a result of higher broker commissions and
marketing costs, which reflect the current sales environment,
although sequentially marketing costs decreased from the first
quarter of 2023.
- Second quarter 2023 other income, net
of $12.9 million increased from an expense of $0.5 million in 2022,
and consists mainly of higher interest income earned on a larger
cash balance.
- The second quarter effective income
tax rate was 22.0% in 2023 compared to 24.6% in 2022. The 2023 rate
benefited from earned eligible energy tax credits on qualifying
homes under the Internal Revenue Code's Inflation Reduction Act
("IRA"). There was no such benefit recognized in the second quarter
of 2022.
- Net earnings were $186.8 million
($5.02 per diluted share) for the second quarter of 2023, a 25%
decrease from $250.1 million ($6.77 per diluted share) for the
second quarter of 2022. Lower gross margin and deleveraging of
overhead were partially offset by increased home closing revenue
and the favorable tax rate, which resulted in a 26% year-over-year
decrease in diluted EPS.
YEAR TO DATE RESULTS
- Total sales orders for the first half
of 2023 decreased 11% over the prior year, driven by an 11%
decrease in average absorption pace and a slight increase in
average communities compared to the first half of 2022.
- Home closing revenue increased 6% in
the first half of 2023 to $2.8 billion due to a 5% increase in home
closing volume and slight increase in ASP on closings due to
geographic mix.
- Home closing gross margin declined 750
bps to 23.5% in the first half of 2023 from 31.0% in the prior year
as a result of greater sales incentives and continued elevated
direct costs. Our use of mortgage rate locks and buy-downs did not
begin to impact our home closing gross margins until the second
half of 2022.
- SG&A expenses of 9.9% of home
closing revenue deteriorated from 8.4% in the prior year given
higher broker commissions and marketing costs.
- The first half 2023 other income, net
of $21.7 million increased from an expense of $0.8 million in 2022,
due to higher interest income earned on a larger cash balance.
- The effective tax rate for the first
half of 2023 was 21.4%, compared to 24.3% for the first half of
2022. The 2023 rate benefited from earned eligible energy tax
credits on qualifying homes under the IRA. There was no such
benefit recognized in the first half of 2022.
- Net earnings were $318.1 million
($8.56 per diluted share) for the first half of 2023, a 32%
decrease from $467.3 million ($12.55 per diluted share) for the
first half of 2022, primarily reflecting lower gross margin and
deleveraging of overhead, partially offset by higher home closing
revenue and the favorable tax rate.
BALANCE SHEET
- Cash and cash
equivalents at June 30, 2023 totaled $1.2 billion, compared to
$861.6 million at December 31, 2022, primarily as a result of
retained cash from earnings over the past year.
- A total of about
60,000 lots were owned or controlled as of June 30, 2023, compared
to approximately 71,000 total lots at June 30, 2022. We added over
2,800 net new lots in the second quarter of 2023, representing an
estimated 26 future communities, all of which are for entry-level
product.
- Debt-to-capital and
net debt-to-capital ratios were 21.4% and (0.2)%, respectively, at
June 30, 2023, which compared to 22.6% and 6.8%, respectively, at
December 31, 2022.
- The Company
declared and paid cash dividends of $0.27 per share in the second
quarter of 2023, totaling $9.9 million. Year to date, $19.9 million
was paid in dividends.
- The Company
repurchased 93,297 shares of stock for a total of $10.0 million
during the first half of 2023. There were no share repurchases
during the current quarter. As of June 30, 2023, $234.1 million
remained available to repurchase under our authorized share
repurchase program.
CONFERENCE CALLManagement will
host a conference call to discuss its second quarter 2023 results
at 8:00 a.m. Pacific Daylight Time (11:00 a.m. Eastern Daylight
Time) on Friday, July 28, 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. Pacific Daylight Time (2:00
p.m. Eastern Daylight Time) on July 28, 2023 and extending through
August 10, 2023, at https://investors.meritagehomes.com.
Meritage Homes Corporation and
SubsidiariesConsolidated Income
Statements(In thousands, except per share
data)(Unaudited) |
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
1,543,021 |
|
|
$ |
1,408,947 |
|
|
$ |
134,074 |
|
|
10 |
% |
|
Land closing revenue |
|
24,379 |
|
|
|
3,434 |
|
|
|
20,945 |
|
|
610 |
% |
|
Total closing revenue |
|
1,567,400 |
|
|
|
1,412,381 |
|
|
|
155,019 |
|
|
11 |
% |
|
Cost of home closings |
|
(1,166,041 |
) |
|
|
(964,208 |
) |
|
|
201,833 |
|
|
21 |
% |
|
Cost of land closings |
|
(24,202 |
) |
|
|
(2,784 |
) |
|
|
21,418 |
|
|
769 |
% |
|
Total cost of closings |
|
(1,190,243 |
) |
|
|
(966,992 |
) |
|
|
223,251 |
|
|
23 |
% |
|
Home closing gross profit |
|
376,980 |
|
|
|
444,739 |
|
|
|
(67,759 |
) |
|
(15) |
% |
|
Land closing gross profit |
|
177 |
|
|
|
650 |
|
|
|
(473 |
) |
|
(73) |
% |
|
Total closing gross profit |
|
377,157 |
|
|
|
445,389 |
|
|
|
(68,232 |
) |
|
(15) |
% |
Financial Services: |
|
|
|
|
|
|
|
|
Revenue |
|
6,210 |
|
|
|
5,139 |
|
|
|
1,071 |
|
|
21 |
% |
|
Expense |
|
(2,972 |
) |
|
|
(2,581 |
) |
|
|
391 |
|
|
15 |
% |
|
(Loss)/earnings from financial services unconsolidated entities and
other, net |
|
(5,795 |
) |
|
|
1,521 |
|
|
|
(7,316 |
) |
|
(481) |
% |
|
Financial services (loss)/profit |
|
(2,557 |
) |
|
|
4,079 |
|
|
|
(6,636 |
) |
|
(163) |
% |
Commissions and other sales costs |
|
(95,798 |
) |
|
|
(69,383 |
) |
|
|
26,415 |
|
|
38 |
% |
General and administrative expenses |
|
(52,140 |
) |
|
|
(47,932 |
) |
|
|
4,208 |
|
|
9 |
% |
Interest expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
Other income/(expense), net |
|
12,862 |
|
|
|
(458 |
) |
|
|
13,320 |
|
|
(2,908) |
% |
Earnings before income taxes |
|
239,524 |
|
|
|
331,695 |
|
|
|
(92,171 |
) |
|
(28) |
% |
Provision for income taxes |
|
(52,688 |
) |
|
|
(81,611 |
) |
|
|
(28,923 |
) |
|
(35) |
% |
Net earnings |
$ |
186,836 |
|
|
$ |
250,084 |
|
|
$ |
(63,248 |
) |
|
(25) |
% |
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
Earnings per common share |
$ |
5.08 |
|
|
$ |
6.82 |
|
|
$ |
(1.74 |
) |
|
(26) |
% |
|
Weighted average shares outstanding |
|
36,765 |
|
|
|
36,647 |
|
|
|
118 |
|
|
— |
% |
|
Diluted |
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
5.02 |
|
|
$ |
6.77 |
|
|
$ |
(1.75 |
) |
|
(26) |
% |
|
Weighted average shares outstanding |
|
37,191 |
|
|
|
36,962 |
|
|
|
229 |
|
|
1 |
% |
Meritage Homes Corporation and
SubsidiariesConsolidated Income
Statements(In thousands, except per share
data)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
2,804,944 |
|
|
$ |
2,654,403 |
|
|
$ |
150,541 |
|
|
6 |
% |
|
Land closing revenue |
|
41,764 |
|
|
|
44,912 |
|
|
|
(3,148 |
) |
|
(7) |
% |
|
Total closing revenue |
|
2,846,708 |
|
|
|
2,699,315 |
|
|
|
147,393 |
|
|
5 |
% |
|
Cost of home closings |
|
(2,145,503 |
) |
|
|
(1,832,015 |
) |
|
|
313,488 |
|
|
17 |
% |
|
Cost of land closings |
|
(40,147 |
) |
|
|
(33,469 |
) |
|
|
6,678 |
|
|
20 |
% |
|
Total cost of closings |
|
(2,185,650 |
) |
|
|
(1,865,484 |
) |
|
|
320,166 |
|
|
17 |
% |
|
Home closing gross profit |
|
659,441 |
|
|
|
822,388 |
|
|
|
(162,947 |
) |
|
(20) |
% |
|
Land closing gross profit |
|
1,617 |
|
|
|
11,443 |
|
|
|
(9,826 |
) |
|
(86) |
% |
|
Total closing gross profit |
|
661,058 |
|
|
|
833,831 |
|
|
|
(172,773 |
) |
|
(21) |
% |
Financial Services: |
|
|
|
|
|
|
|
|
Revenue |
|
11,941 |
|
|
|
9,811 |
|
|
|
2,130 |
|
|
22 |
% |
|
Expense |
|
(6,039 |
) |
|
|
(5,093 |
) |
|
|
946 |
|
|
19 |
% |
|
(Loss)/earnings from financial services unconsolidated entities and
other, net |
|
(5,536 |
) |
|
|
2,695 |
|
|
|
(8,231 |
) |
|
(305) |
% |
|
Financial services profit |
|
366 |
|
|
|
7,413 |
|
|
|
(7,047 |
) |
|
(95) |
% |
Commissions and other sales costs |
|
(178,644 |
) |
|
|
(134,923 |
) |
|
|
43,721 |
|
|
32 |
% |
General and administrative expenses |
|
(99,659 |
) |
|
|
(87,927 |
) |
|
|
11,732 |
|
|
13 |
% |
Interest expense |
|
— |
|
|
|
(41 |
) |
|
|
(41 |
) |
|
(100) |
% |
Other income/(expense), net |
|
21,706 |
|
|
|
(775 |
) |
|
|
22,481 |
|
|
(2,901) |
% |
Earnings before income taxes |
|
404,827 |
|
|
|
617,578 |
|
|
|
(212,751 |
) |
|
(34) |
% |
Provision for income taxes |
|
(86,690 |
) |
|
|
(150,240 |
) |
|
|
(63,550 |
) |
|
(42) |
% |
Net earnings |
$ |
318,137 |
|
|
$ |
467,338 |
|
|
$ |
(149,201 |
) |
|
(32) |
% |
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
Earnings per common share |
$ |
8.67 |
|
|
$ |
12.69 |
|
|
$ |
(4.02 |
) |
|
(32) |
% |
|
Weighted average shares outstanding |
|
36,715 |
|
|
|
36,820 |
|
|
|
(105 |
) |
|
— |
% |
|
Diluted |
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
8.56 |
|
|
$ |
12.55 |
|
|
$ |
(3.99 |
) |
|
(32) |
% |
|
Weighted average shares outstanding |
|
37,149 |
|
|
|
37,239 |
|
|
|
(90 |
) |
|
— |
% |
Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets(In
thousands)(Unaudited) |
|
|
|
June 30, 2023 |
|
December 31, 2022 |
Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,163,243 |
|
$ |
861,561 |
Other receivables |
|
|
210,068 |
|
|
215,019 |
Real estate (1) |
|
|
4,348,600 |
|
|
4,358,263 |
Deposits on real estate under option or contract |
|
|
70,984 |
|
|
76,729 |
Investments in unconsolidated entities |
|
|
12,451 |
|
|
11,753 |
Property and equipment, net |
|
|
47,312 |
|
|
38,635 |
Deferred tax asset, net |
|
|
45,036 |
|
|
45,452 |
Prepaids, other assets and goodwill |
|
|
167,947 |
|
|
164,689 |
Total assets |
|
$ |
6,065,641 |
|
$ |
5,772,101 |
Liabilities: |
|
|
|
|
Accounts payable |
|
$ |
276,123 |
|
$ |
273,267 |
Accrued liabilities |
|
|
336,098 |
|
|
360,615 |
Home sale deposits |
|
|
49,779 |
|
|
37,961 |
Loans payable and other borrowings |
|
|
11,204 |
|
|
7,057 |
Senior notes, net |
|
|
1,144,142 |
|
|
1,143,590 |
Total liabilities |
|
|
1,817,346 |
|
|
1,822,490 |
Stockholders' Equity: |
|
|
|
|
Preferred stock |
|
|
— |
|
|
— |
Common stock |
|
|
368 |
|
|
366 |
Additional paid-in capital |
|
|
328,277 |
|
|
327,878 |
Retained earnings |
|
|
3,919,650 |
|
|
3,621,367 |
Total stockholders’ equity |
|
|
4,248,295 |
|
|
3,949,611 |
Total liabilities and stockholders’ equity |
|
$ |
6,065,641 |
|
$ |
5,772,101 |
(1) Real estate – Allocated costs: |
|
|
|
|
Homes under contract under construction |
|
$ |
987,983 |
|
$ |
822,428 |
Unsold homes, completed and under construction |
|
|
932,984 |
|
|
1,155,543 |
Model homes |
|
|
113,919 |
|
|
97,198 |
Finished home sites and home sites under development |
|
|
2,313,714 |
|
|
2,283,094 |
Total real estate |
|
$ |
4,348,600 |
|
$ |
4,358,263 |
Meritage Homes Corporation and
SubsidiariesConsolidated Statements of Cash
Flows (In thousands)
(Unaudited) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
|
Net earnings |
|
$ |
318,137 |
|
|
$ |
467,338 |
|
Adjustments to reconcile net earnings to net cash provided by/(used
in) operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
11,196 |
|
|
|
11,723 |
|
Stock-based compensation |
|
|
10,401 |
|
|
|
10,045 |
|
Equity in earnings from unconsolidated entities |
|
|
(2,882 |
) |
|
|
(2,145 |
) |
Distribution of earnings from unconsolidated entities |
|
|
3,418 |
|
|
|
2,339 |
|
Other |
|
|
2,148 |
|
|
|
(601 |
) |
Changes in assets and liabilities: |
|
|
|
|
Decrease/(increase) in real estate |
|
|
14,950 |
|
|
|
(729,450 |
) |
Decrease/(increase) in deposits on real estate under option or
contract |
|
|
5,491 |
|
|
|
(7,288 |
) |
Decrease/(increase) in other receivables, prepaids and other
assets |
|
|
8,962 |
|
|
|
(90,419 |
) |
(Decrease)/increase in accounts payable and accrued
liabilities |
|
|
(27,754 |
) |
|
|
113,421 |
|
Increase in home sale deposits |
|
|
11,818 |
|
|
|
18,210 |
|
Net cash provided by/(used in) operating activities |
|
|
355,885 |
|
|
|
(206,827 |
) |
Cash flows from investing activities: |
|
|
|
|
Investments in unconsolidated entities |
|
|
(1,277 |
) |
|
|
(5,653 |
) |
Distributions of capital from unconsolidated entities |
|
|
43 |
|
|
|
— |
|
Purchases of property and equipment |
|
|
(21,134 |
) |
|
|
(12,852 |
) |
Proceeds from sales of property and equipment |
|
|
228 |
|
|
|
247 |
|
Maturities/sales of investments and securities |
|
|
750 |
|
|
|
1,032 |
|
Payments to purchase investments and securities |
|
|
(750 |
) |
|
|
(1,032 |
) |
Net cash used in investing activities |
|
|
(22,140 |
) |
|
|
(18,258 |
) |
Cash flows from financing activities: |
|
|
|
|
Repayment of loans payable and other borrowings |
|
|
(2,209 |
) |
|
|
(11,800 |
) |
Dividends paid |
|
|
(19,854 |
) |
|
|
— |
|
Repurchase of shares |
|
|
(10,000 |
) |
|
|
(109,303 |
) |
Net cash used in financing activities |
|
|
(32,063 |
) |
|
|
(121,103 |
) |
Net increase/(decrease) in cash and cash
equivalents |
|
|
301,682 |
|
|
|
(346,188 |
) |
Beginning cash and cash equivalents |
|
|
861,561 |
|
|
|
618,335 |
|
Ending cash and cash equivalents |
|
$ |
1,163,243 |
|
|
$ |
272,147 |
|
Meritage Homes Corporation and
SubsidiariesOperating
Data(Dollars in thousands)
(Unaudited) |
|
|
|
|
|
Three Months Ended June 30, |
|
|
2023 |
|
2022 |
|
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes Closed: |
|
|
|
|
|
|
|
|
West Region |
|
997 |
|
|
519,217 |
|
925 |
|
|
486,078 |
Central Region |
|
1,094 |
|
|
456,801 |
|
1,048 |
|
|
422,327 |
East Region |
|
1,399 |
|
|
567,003 |
|
1,248 |
|
|
500,542 |
Total |
|
3,490 |
|
$ |
1,543,021 |
|
3,221 |
|
$ |
1,408,947 |
Homes Ordered: |
|
|
|
|
|
|
|
|
West Region |
|
990 |
|
|
515,325 |
|
1,075 |
|
|
632,227 |
Central Region |
|
1,065 |
|
|
440,377 |
|
1,096 |
|
|
491,394 |
East Region |
|
1,285 |
|
|
519,011 |
|
1,596 |
|
|
686,249 |
Total |
|
3,340 |
|
$ |
1,474,713 |
|
3,767 |
|
$ |
1,809,870 |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
2022 |
|
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes Closed: |
|
|
|
|
|
|
|
|
West Region |
|
1,782 |
|
|
936,539 |
|
1,789 |
|
|
949,502 |
Central Region |
|
2,142 |
|
|
881,681 |
|
1,921 |
|
|
770,155 |
East Region |
|
2,463 |
|
|
986,724 |
|
2,369 |
|
|
934,746 |
Total |
|
6,387 |
|
$ |
2,804,944 |
|
6,079 |
|
$ |
2,654,403 |
Homes Ordered: |
|
|
|
|
|
|
|
|
West Region |
|
2,276 |
|
|
1,151,261 |
|
2,180 |
|
|
1,245,576 |
Central Region |
|
2,138 |
|
|
860,898 |
|
2,392 |
|
|
1,039,961 |
East Region |
|
2,413 |
|
|
969,447 |
|
3,069 |
|
|
1,292,043 |
Total |
|
6,827 |
|
$ |
2,981,606 |
|
7,641 |
|
$ |
3,577,580 |
Order Backlog: |
|
|
|
|
|
|
|
|
West Region |
|
1,366 |
|
|
669,636 |
|
2,257 |
|
|
1,259,771 |
Central Region |
|
959 |
|
|
401,601 |
|
2,349 |
|
|
1,042,689 |
East Region |
|
1,447 |
|
|
616,299 |
|
2,635 |
|
|
1,136,393 |
Total |
|
3,772 |
|
$ |
1,687,536 |
|
7,241 |
|
$ |
3,438,853 |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
Active Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
98 |
|
97.0 |
|
107 |
|
94.0 |
|
98 |
|
96.0 |
|
107 |
|
88.7 |
Central Region |
82 |
|
82.0 |
|
80 |
|
77.5 |
|
82 |
|
81.7 |
|
80 |
|
76.1 |
East Region |
111 |
|
105.5 |
|
116 |
|
114.0 |
|
111 |
|
102.4 |
|
116 |
|
112.1 |
Total |
291 |
|
284.5 |
|
303 |
|
285.5 |
|
291 |
|
280.1 |
|
303 |
|
276.9 |
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
Meritage Homes Corporation and
SubsidiariesSupplement and Non-GAAP
information(Unaudited) |
|
Supplemental Information (Dollars in
thousands): |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Depreciation and amortization |
$ |
5,988 |
|
|
$ |
5,964 |
|
|
$ |
11,196 |
|
|
$ |
11,723 |
|
|
|
|
|
|
|
|
|
Summary of Capitalized Interest: |
|
|
|
|
|
|
|
Capitalized interest, beginning of period |
$ |
62,452 |
|
|
$ |
59,082 |
|
|
$ |
60,169 |
|
|
$ |
56,253 |
|
Interest incurred |
|
15,144 |
|
|
|
15,171 |
|
|
|
30,174 |
|
|
|
30,384 |
|
Interest expensed |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
Interest amortized to cost of home and land closings |
|
(16,518 |
) |
|
|
(12,794 |
) |
|
|
(29,265 |
) |
|
|
(25,137 |
) |
Capitalized interest, end of period |
$ |
61,078 |
|
|
$ |
61,459 |
|
|
$ |
61,078 |
|
|
$ |
61,459 |
|
Reconciliation of Non-GAAP Information (Dollars in
thousands): |
|
Debt-to-Capital Ratios |
|
June 30, 2023 |
|
December 31, 2022 |
Senior notes, net, loans payable and other borrowings |
$ |
1,155,346 |
|
|
$ |
1,150,647 |
|
Stockholders' equity |
|
4,248,295 |
|
|
|
3,949,611 |
|
Total capital |
$ |
5,403,641 |
|
|
$ |
5,100,258 |
|
Debt-to-capital |
|
21.4 |
% |
|
|
22.6 |
% |
|
|
|
|
Senior notes, net, loans payable and other borrowings |
$ |
1,155,346 |
|
|
$ |
1,150,647 |
|
Less: cash and cash equivalents |
|
(1,163,243 |
) |
|
|
(861,561 |
) |
Net debt |
$ |
(7,897 |
) |
|
$ |
289,086 |
|
Stockholders’ equity |
|
4,248,295 |
|
|
|
3,949,611 |
|
Total net capital |
$ |
4,240,398 |
|
|
$ |
4,238,697 |
|
Net debt-to-capital (1) |
(0.2)% |
|
|
6.8 |
% |
(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 CorporationMeritage Homes is the fifth-largest
public homebuilder in the United States, based on homes closed in
2022. The Company offers energy-efficient and affordable
entry-level and first move-up homes. Operations span across
Arizona, California, Colorado, Texas, Florida, Georgia, North
Carolina, South Carolina, Tennessee and Utah.
Meritage Homes has delivered over 170,000 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 ten-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 2023 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 and
expectations about our future results, including but not limited
to, our full year projected home closings, home closing revenue,
home closing gross margin, effective tax rate and diluted earnings
per share.
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 and
the availability and pricing of residential mortgages; 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 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,
2022 and our Form 10-Q for the quarter ended March 31, 2023 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 |
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