Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S.
homebuilder, reported third quarter results for the period ended
September 30, 2023.
Summary Operating Results
(unaudited)(Dollars in thousands, except per share
amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
% Chg |
|
|
2023 |
|
|
2022 |
|
% Chg |
Homes closed (units) |
|
3,638 |
|
|
3,487 |
|
4 |
|
% |
|
|
10,025 |
|
|
9,566 |
|
5 |
|
% |
Home closing revenue |
$ |
1,610,317 |
|
$ |
1,569,032 |
|
3 |
|
% |
|
$ |
4,415,261 |
|
$ |
4,223,435 |
|
5 |
|
% |
Average sales price —
closings |
$ |
443 |
|
$ |
450 |
|
(2 |
) |
% |
|
$ |
440 |
|
$ |
442 |
|
— |
|
% |
Home orders (units) |
|
3,474 |
|
|
2,310 |
|
50 |
|
% |
|
|
10,301 |
|
|
9,951 |
|
4 |
|
% |
Home order value |
$ |
1,495,542 |
|
$ |
974,314 |
|
53 |
|
% |
|
$ |
4,477,148 |
|
$ |
4,551,894 |
|
(2 |
) |
% |
Average sales price —
orders |
$ |
430 |
|
$ |
422 |
|
2 |
|
% |
|
$ |
435 |
|
$ |
457 |
|
(5 |
) |
% |
Ending backlog (units) |
|
|
|
|
|
|
|
|
|
3,608 |
|
|
6,064 |
|
(41 |
) |
% |
Ending backlog value |
|
|
|
|
|
|
|
|
$ |
1,558,637 |
|
$ |
2,826,759 |
|
(45 |
) |
% |
Average sales price —
backlog |
|
|
|
|
|
|
|
|
$ |
432 |
|
$ |
466 |
|
(7 |
) |
% |
Earnings before income
taxes |
$ |
285,734 |
|
$ |
329,491 |
|
(13 |
) |
% |
|
$ |
690,561 |
|
$ |
947,069 |
|
(27 |
) |
% |
Net earnings |
$ |
221,760 |
|
$ |
262,489 |
|
(16 |
) |
% |
|
$ |
539,897 |
|
$ |
729,827 |
|
(26 |
) |
% |
Diluted EPS |
$ |
5.98 |
|
$ |
7.10 |
|
(16 |
) |
% |
|
$ |
14.55 |
|
$ |
19.65 |
|
(26 |
) |
% |
MANAGEMENT COMMENTS
"Homebuying demand held steady in the third quarter of 2023
despite the elevated interest rate environment, as we continued to
offer a full range of incentives to help buyers solve for a monthly
payment. With the backdrop of life events creating a housing need
for millennials and baby boomers and the ongoing shortage of
existing home inventory for sale, Meritage’s average absorption
pace reached 4.1 net orders per month this quarter," said Steven J.
Hilton, executive chairman of Meritage Homes. "In the third quarter
of 2023, cycle time improvement and the commitment to our spec
building strategy led to a record 96% backlog conversion and our
highest third quarter of home closings and home closing
revenue."
"Home closings were 3,638 this quarter, 4% greater than prior
year, of which about a third of the homes were sold and closed
intra-quarter from our available move-in ready inventory," added
Phillippe Lord, chief executive officer of Meritage Homes. "Our
third quarter 2023 home closing revenue of $1.6 billion combined
with a strong home closing gross margin of 26.7% and SG&A
leverage of 10.1% led to diluted EPS of $5.98 this quarter."
"Buoyed by our financing incentives including rate locks and
buy-downs, our sales orders of 3,474 homes this quarter increased
50% year-over-year,” Mr. Lord continued. “The third quarter 2023
average absorption pace of 4.1 per month improved from 2.7 per
month in the prior year.”
"In addition to generating positive cash flow, we returned
capital to our shareholders during the third quarter of 2023 by
repurchasing $45.0 million of common stock and maintaining our
quarterly cash dividends. We also completed a redemption of $150.0
million of our 6.00% senior notes due 2025," remarked Mr. Lord. "We
achieved this balance of internal and investor capital
distributions while ending the quarter with nothing drawn under our
credit facility, $1.0 billion of cash and negative net
debt-to-capital of (1.0)% at September 30, 2023."
"Third quarter 2023 average community count of 282 was 3% below
prior year and down 1% sequentially compared to the second quarter
of 2023, as our accelerated orders pace resulted in some early
community close outs. During the quarter, we spent $537 million on
land acquisition and development. Approximately 5,000 net new lots
were secured, bringing our total lot supply to nearly 60,700 at
September 30, 2023, a bit higher than where we started this quarter
and representing 4.2 years supply of lots," said Mr. Lord.
Mr. Lord concluded, "We believe housing market demand will
remain steady in the near future and we expect to continue to
invest in land inventory and steadily increase our community count
over the next year or two. We are projecting 3,500-3,700 home
closings for the fourth quarter of 2023, which we anticipate will
generate quarterly home closing revenue of $1.45-1.53 billion. Home
closing gross margin is projected to be 25-26%. With an estimated
effective tax rate of about 23%, we expect diluted EPS to be in the
range of $4.84-5.43 for the fourth quarter of 2023."
THIRD QUARTER RESULTS
- Orders of 3,474 homes for the third quarter of 2023 increased
50% year-over-year, reflecting a 52% increase in average absorption
pace to 4.1 per month from 2.7 per month in the third quarter of
2022 and a 3% decrease in average communities. Entry-level
represented 88% of sales in both third quarter periods. Average
sales price ("ASP") on orders in the third quarter of 2023 of
$430,000 was up 2% from the third quarter of 2022 due to geographic
mix.
- The 3% year-over-year increase in home closing revenue to $1.6
billion resulted from 4% higher home closing volume partially
offset by a 2% decrease in ASP on closings due to more costly
financing incentives in 2023.
- Home closing gross margin of 26.7% in the third quarter 2023
was down 200 bps from 28.7% in the prior year mainly due to higher
financing incentives, partially offset by savings from shortening
cycle times as costs held relatively steady year-over-year. In the
third quarter of 2022, there were $8.8 million in write-offs
related to the lot option deposits and diligence costs from
terminated land deals. There were nominal inventory-related
write-offs in 2023.
- Selling, general and administrative expenses ("SG&A") as a
percentage of third quarter 2023 home closing revenue were 10.1%,
200 bps higher than 8.1% in the third quarter of 2022, primarily as
a result of higher commissions, reflecting the current sales
environment, and increased compensation costs.
- Third quarter 2023 other income, net of $13.3 million increased
from an expense of $0.1 million in 2022, and consists mainly of
higher interest income earned on a larger cash balance.
- In the third quarter of 2023, we recognized a loss on early
extinguishment of debt of $0.9 million in connection with the
$150.0 million partial redemption of our 6.00% senior notes due
2025 (the "2025 Notes"). There were no such redemptions in
2022.
- The third quarter effective income tax rate was 22.4% in 2023
compared to 20.3% 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"). The third quarter
2022 rate reflected the cumulative earned eligible energy tax
credits on qualifying homes delivered in the first nine months of
2022, as the IRA enacted in August 2022 retroactively extended the
Internal Revenue Code's §45L new energy-efficient homes
credit.
- Net earnings were $221.8 million ($5.98 per diluted share) for
the third quarter of 2023, a 16% decrease from $262.5 million
($7.10 per diluted share) for the third quarter of 2022. Lower
gross margin, greater overhead costs and a higher tax rate were
partially offset by increased home closing revenue, which resulted
in a 16% year-over-year decrease in diluted EPS.
YEAR TO DATE RESULTS
- Total sales orders for the first nine months of 2023 increased
4% over the prior year, driven by a 3% increase in average
absorption pace and a 1% increase in average communities compared
to the first nine months of 2022.
- Home closing revenue increased 5% in the first nine months of
2023 to $4.4 billion due to a 5% increase in home closing volume.
ASP on closings remained essentially flat year-over-year.
- Home closing gross margin declined 540 bps to 24.7% in the
first nine months of 2023 from 30.1% in the prior year, primarily
from greater financing incentives. The year to date 2023 home
closing gross margin included $2.1 million of write-offs from
terminated land deals related to lot option deposits and diligence
costs compared to $11.6 million in the prior year.
- SG&A expenses as a percentage of home closing revenue of
10.0% increased from 8.3% in the prior year as a result of higher
commissions and marketing costs, reflecting the current sales
environment, and increased compensation and technology spend.
- Other income, net of $35.0 million in the first nine months of
2023 increased from an expense of $0.8 million in 2022, due to
higher interest income earned on a larger cash balance.
- In the first nine months of 2023, we recognized a loss on early
extinguishment of debt of $0.9 million in connection with the
$150.0 million partial redemption of our 2025 Notes. There were no
such redemptions in 2022.
- The effective tax rate for the first nine months of 2023 was
21.8%, compared to 22.9% for the first nine months of 2022. The
rate in both periods benefited from earned eligible energy tax
credits on qualifying homes under the IRA. The lower rate for 2023
reflected the increased per-home energy efficiency credit amount
starting in 2023.
- Net earnings were $539.9 million ($14.55 per diluted share) for
the first nine months of 2023, a 26% decrease from $729.8 million
($19.65 per diluted share) for the first nine months of 2022,
mainly reflecting lower gross margin and greater overhead
costs.
BALANCE SHEET
- Cash and cash equivalents at
September 30, 2023 totaled $1.0 billion, compared to $861.6 million
at December 31, 2022, primarily as a result of retained cash from
earnings over the past year.
- About 60,700 total lots were owned
or controlled as of September 30, 2023, compared to approximately
66,000 total lots as of September 30, 2022. We added nearly 5,000
net new lots in the third quarter of 2023, representing an
estimated 37 future communities, all of which are for entry-level
product.
- Debt-to-capital and net
debt-to-capital ratios were 18.5% and (1.0)%, respectively, at
September 30, 2023, which compared to 22.6% and 6.8%, respectively,
at December 31, 2022.
- The Company repurchased 319,716
shares of stock, or 0.9% of shares outstanding at the beginning of
the quarter, for $45.0 million in the third quarter of 2023. For
the first nine months of 2023, 413,013 shares of stock, or 1.1% of
shares outstanding at the beginning of the year, were repurchased,
totaling $55.0 million. As of September 30, 2023, $189.1 million
remained available to repurchase under the authorized share
repurchase program.
- The Company declared and paid cash
dividends of $0.27 per share in the third quarter of 2023, totaling
$9.8 million. Year to date, cash dividend payments totaled $29.7
million.
- During the third quarter of 2023,
the Company redeemed $150.0 million of its 2025 Notes, of which
$250.0 million remains outstanding as of September 30, 2023.
CONFERENCE CALL
Management will host a conference call to discuss its third
quarter 2023 results at 8:00 a.m. Pacific Daylight Time (11:00 a.m.
Eastern Daylight Time) on Wednesday, November 1, 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 U.S. 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 November 1, 2023 and extending through November
14, 2023, at https://investors.meritagehomes.com.
Meritage Homes Corporation and
SubsidiariesConsolidated Income
Statements(In thousands, except per share
data)(Unaudited)
|
|
Three Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
1,610,317 |
|
|
$ |
1,569,032 |
|
|
$ |
41,285 |
|
|
3 |
|
% |
|
Land closing revenue |
|
2,783 |
|
|
|
8,989 |
|
|
|
(6,206 |
) |
|
(69 |
) |
% |
|
Total closing revenue |
|
1,613,100 |
|
|
|
1,578,021 |
|
|
|
35,079 |
|
|
2 |
|
% |
|
Cost of home closings |
|
(1,180,742 |
) |
|
|
(1,118,394 |
) |
|
|
62,348 |
|
|
6 |
|
% |
|
Cost of land closings |
|
(2,535 |
) |
|
|
(8,577 |
) |
|
|
(6,042 |
) |
|
(70 |
) |
% |
|
Total cost of closings |
|
(1,183,277 |
) |
|
|
(1,126,971 |
) |
|
|
56,306 |
|
|
5 |
|
% |
|
Home closing gross profit |
|
429,575 |
|
|
|
450,638 |
|
|
|
(21,063 |
) |
|
(5 |
) |
% |
|
Land closing gross profit |
|
248 |
|
|
|
412 |
|
|
|
(164 |
) |
|
(40 |
) |
% |
|
Total closing gross profit |
|
429,823 |
|
|
|
451,050 |
|
|
|
(21,227 |
) |
|
(5 |
) |
% |
Financial
Services: |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
6,109 |
|
|
|
6,308 |
|
|
|
(199 |
) |
|
(3 |
) |
% |
|
Expense |
|
(2,871 |
) |
|
|
(2,804 |
) |
|
|
67 |
|
|
2 |
|
% |
|
Earnings from financial
services unconsolidated entities and other, net |
|
2,462 |
|
|
|
1,338 |
|
|
|
1,124 |
|
|
84 |
|
% |
|
Financial services profit |
|
5,700 |
|
|
|
4,842 |
|
|
|
858 |
|
|
18 |
|
% |
Commissions and
other sales costs |
|
(99,122 |
) |
|
|
(77,884 |
) |
|
|
21,238 |
|
|
27 |
|
% |
General and
administrative expenses |
|
(63,091 |
) |
|
|
(48,443 |
) |
|
|
14,648 |
|
|
30 |
|
% |
Interest
expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
% |
Other
income/(expense), net |
|
13,331 |
|
|
|
(74 |
) |
|
|
13,405 |
|
|
(18,115 |
) |
% |
Loss on early
extinguishment of debt |
|
(907 |
) |
|
|
— |
|
|
|
907 |
|
|
n/a |
|
|
Earnings before
income taxes |
|
285,734 |
|
|
|
329,491 |
|
|
|
(43,757 |
) |
|
(13 |
) |
% |
Provision for
income taxes |
|
(63,974 |
) |
|
|
(67,002 |
) |
|
|
(3,028 |
) |
|
(5 |
) |
% |
Net earnings |
$ |
221,760 |
|
|
$ |
262,489 |
|
|
$ |
(40,729 |
) |
|
(16 |
) |
% |
|
|
|
|
|
|
|
|
Earnings
per common share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
Earnings per common share |
$ |
6.06 |
|
|
$ |
7.18 |
|
|
$ |
(1.12 |
) |
|
(16 |
) |
% |
|
Weighted average shares outstanding |
|
36,603 |
|
|
|
36,569 |
|
|
|
34 |
|
|
— |
|
% |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
5.98 |
|
|
$ |
7.10 |
|
|
$ |
(1.12 |
) |
|
(16 |
) |
% |
|
Weighted average shares outstanding |
|
37,078 |
|
|
|
36,946 |
|
|
|
132 |
|
|
— |
|
% |
Meritage Homes Corporation and
SubsidiariesConsolidated Income
Statements(In thousands, except per share
data)(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
4,415,261 |
|
|
$ |
4,223,435 |
|
|
$ |
191,826 |
|
|
5 |
|
% |
|
Land closing revenue |
|
44,547 |
|
|
|
53,901 |
|
|
|
(9,354 |
) |
|
(17 |
) |
% |
|
Total closing revenue |
|
4,459,808 |
|
|
|
4,277,336 |
|
|
|
182,472 |
|
|
4 |
|
% |
|
Cost of home closings |
|
(3,326,245 |
) |
|
|
(2,950,409 |
) |
|
|
375,836 |
|
|
13 |
|
% |
|
Cost of land closings |
|
(42,682 |
) |
|
|
(42,046 |
) |
|
|
636 |
|
|
2 |
|
% |
|
Total cost of closings |
|
(3,368,927 |
) |
|
|
(2,992,455 |
) |
|
|
376,472 |
|
|
13 |
|
% |
|
Home closing gross profit |
|
1,089,016 |
|
|
|
1,273,026 |
|
|
|
(184,010 |
) |
|
(14 |
) |
% |
|
Land closing gross profit |
|
1,865 |
|
|
|
11,855 |
|
|
|
(9,990 |
) |
|
(84 |
) |
% |
|
Total closing gross profit |
|
1,090,881 |
|
|
|
1,284,881 |
|
|
|
(194,000 |
) |
|
(15 |
) |
% |
Financial
Services: |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
18,050 |
|
|
|
16,119 |
|
|
|
1,931 |
|
|
12 |
|
% |
|
Expense |
|
(8,910 |
) |
|
|
(7,897 |
) |
|
|
1,013 |
|
|
13 |
|
% |
|
(Loss)/earnings from financial
services unconsolidated entities and other, net |
|
(3,074 |
) |
|
|
4,033 |
|
|
|
(7,107 |
) |
|
(176 |
) |
% |
|
Financial services profit |
|
6,066 |
|
|
|
12,255 |
|
|
|
(6,189 |
) |
|
(51 |
) |
% |
Commissions and
other sales costs |
|
(277,766 |
) |
|
|
(212,807 |
) |
|
|
64,959 |
|
|
31 |
|
% |
General and
administrative expenses |
|
(162,750 |
) |
|
|
(136,370 |
) |
|
|
26,380 |
|
|
19 |
|
% |
Interest
expense |
|
— |
|
|
|
(41 |
) |
|
|
(41 |
) |
|
(100 |
) |
% |
Other
income/(expense), net |
|
35,037 |
|
|
|
(849 |
) |
|
|
35,886 |
|
|
(4,227 |
) |
% |
Loss on early
extinguishment of debt |
|
(907 |
) |
|
|
— |
|
|
|
907 |
|
|
n/a |
|
|
Earnings before
income taxes |
|
690,561 |
|
|
|
947,069 |
|
|
|
(256,508 |
) |
|
(27 |
) |
% |
Provision for
income taxes |
|
(150,664 |
) |
|
|
(217,242 |
) |
|
|
(66,578 |
) |
|
(31 |
) |
% |
Net earnings |
$ |
539,897 |
|
|
$ |
729,827 |
|
|
$ |
(189,930 |
) |
|
(26 |
) |
% |
|
|
|
|
|
|
|
|
|
|
Earnings
per common share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
|
|
Earnings per common share |
$ |
14.72 |
|
|
$ |
19.87 |
|
|
$ |
(5.15 |
) |
|
(26 |
) |
% |
|
Weighted average shares outstanding |
|
36,677 |
|
|
|
36,736 |
|
|
|
(59 |
) |
|
— |
|
% |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
14.55 |
|
|
$ |
19.65 |
|
|
$ |
(5.10 |
) |
|
(26 |
) |
% |
|
Weighted average shares outstanding |
|
37,109 |
|
|
|
37,136 |
|
|
|
(27 |
) |
|
— |
|
% |
Meritage Homes Corporation and
Subsidiaries Consolidated Balance
Sheets(In
thousands)(Unaudited)
|
September 30, 2023 |
|
December 31, 2022 |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
1,048,755 |
|
$ |
861,561 |
Other receivables |
|
228,852 |
|
|
215,019 |
Real estate (1) |
|
4,501,358 |
|
|
4,358,263 |
Deposits on real estate under option or contract |
|
93,501 |
|
|
76,729 |
Investments in unconsolidated entities |
|
15,062 |
|
|
11,753 |
Property and equipment, net |
|
50,822 |
|
|
38,635 |
Deferred tax asset, net |
|
45,932 |
|
|
45,452 |
Prepaids, other assets and goodwill |
|
197,588 |
|
|
164,689 |
Total assets |
$ |
6,181,870 |
|
$ |
5,772,101 |
Liabilities: |
|
|
|
Accounts payable |
$ |
294,183 |
|
$ |
273,267 |
Accrued liabilities |
|
413,092 |
|
|
360,615 |
Home sale deposits |
|
48,133 |
|
|
37,961 |
Loans payable and other borrowings |
|
11,008 |
|
|
7,057 |
Senior notes, net |
|
994,412 |
|
|
1,143,590 |
Total liabilities |
|
1,760,828 |
|
|
1,822,490 |
Stockholders'
Equity: |
|
|
|
Preferred stock |
|
— |
|
|
— |
Common stock |
|
364 |
|
|
366 |
Additional paid-in capital |
|
289,109 |
|
|
327,878 |
Retained earnings |
|
4,131,569 |
|
|
3,621,367 |
Total stockholders’ equity |
|
4,421,042 |
|
|
3,949,611 |
Total liabilities and stockholders’ equity |
$ |
6,181,870 |
|
$ |
5,772,101 |
(1) Real estate –
Allocated costs: |
|
|
|
Homes under contract under construction |
$ |
931,820 |
|
$ |
822,428 |
Unsold homes, completed and under construction |
|
1,027,352 |
|
|
1,155,543 |
Model homes |
|
112,306 |
|
|
97,198 |
Finished home sites and home sites under development |
|
2,429,880 |
|
|
2,283,094 |
Total real estate |
$ |
4,501,358 |
|
$ |
4,358,263 |
Meritage Homes Corporation and
SubsidiariesConsolidated Statements of Cash
Flows (In thousands)
(Unaudited)
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
Net earnings |
$ |
539,897 |
|
|
$ |
729,827 |
|
Adjustments to reconcile net earnings to net cash provided by/(used
in) operating activities: |
|
|
|
Depreciation and amortization |
|
17,576 |
|
|
|
17,545 |
|
Stock-based compensation |
|
16,557 |
|
|
|
16,897 |
|
Loss on early extinguishment of debt |
|
907 |
|
|
|
— |
|
Equity in earnings from unconsolidated entities |
|
(4,651 |
) |
|
|
(3,703 |
) |
Distribution of earnings from unconsolidated entities |
|
5,158 |
|
|
|
3,785 |
|
Other |
|
1,408 |
|
|
|
11,154 |
|
Changes in assets and liabilities: |
|
|
|
Increase in real estate |
|
(137,543 |
) |
|
|
(990,106 |
) |
(Increase)/decrease in deposits on real estate under option or
contract |
|
(17,027 |
) |
|
|
176 |
|
Increase in other receivables, prepaids and other assets |
|
(9,447 |
) |
|
|
(89,177 |
) |
Increase in accounts payable and accrued liabilities |
|
37,085 |
|
|
|
118,636 |
|
Increase in home sale deposits |
|
10,172 |
|
|
|
15,157 |
|
Net cash provided by/(used in) operating activities |
|
460,092 |
|
|
|
(169,809 |
) |
Cash flows from
investing activities: |
|
|
|
Investments in unconsolidated entities |
|
(3,859 |
) |
|
|
(5,674 |
) |
Distributions of capital from unconsolidated entities |
|
43 |
|
|
|
— |
|
Purchases of property and equipment |
|
(31,221 |
) |
|
|
(19,537 |
) |
Proceeds from sales of property and equipment |
|
334 |
|
|
|
328 |
|
Maturities/sales of investments and securities |
|
750 |
|
|
|
1,032 |
|
Payments to purchase investments and securities |
|
(750 |
) |
|
|
(1,032 |
) |
Net cash used in investing activities |
|
(34,703 |
) |
|
|
(24,883 |
) |
Cash flows from
financing activities: |
|
|
|
Repayment of loans payable and other borrowings |
|
(2,616 |
) |
|
|
(14,953 |
) |
Repayment of senior notes |
|
(150,884 |
) |
|
|
— |
|
Dividends paid |
|
(29,695 |
) |
|
|
— |
|
Repurchase of shares |
|
(55,000 |
) |
|
|
(109,303 |
) |
Net cash used in financing activities |
|
(238,195 |
) |
|
|
(124,256 |
) |
Net
increase/(decrease) in cash and cash equivalents |
|
187,194 |
|
|
|
(318,948 |
) |
Beginning cash and
cash equivalents |
|
861,561 |
|
|
|
618,335 |
|
Ending cash and cash
equivalents |
$ |
1,048,755 |
|
|
$ |
299,387 |
|
Meritage Homes Corporation and
SubsidiariesOperating
Data(Dollars in thousands)
(Unaudited)
|
Three Months Ended September 30, |
|
2023 |
|
2022 |
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes
Closed: |
|
|
|
|
|
|
|
West Region |
1,172 |
|
|
606,833 |
|
1,086 |
|
|
590,027 |
Central Region |
1,102 |
|
|
452,687 |
|
1,218 |
|
|
499,713 |
East Region |
1,364 |
|
|
550,797 |
|
1,183 |
|
|
479,292 |
Total |
3,638 |
|
$ |
1,610,317 |
|
3,487 |
|
$ |
1,569,032 |
Homes
Ordered: |
|
|
|
|
|
|
|
West Region |
985 |
|
|
521,049 |
|
456 |
|
|
241,098 |
Central Region |
1,099 |
|
|
425,165 |
|
635 |
|
|
253,321 |
East Region |
1,390 |
|
|
549,328 |
|
1,219 |
|
|
479,895 |
Total |
3,474 |
|
$ |
1,495,542 |
|
2,310 |
|
$ |
974,314 |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes
Closed: |
|
|
|
|
|
|
|
West Region |
2,954 |
|
|
1,543,372 |
|
2,875 |
|
|
1,539,529 |
Central Region |
3,244 |
|
|
1,334,368 |
|
3,139 |
|
|
1,269,868 |
East Region |
3,827 |
|
|
1,537,521 |
|
3,552 |
|
|
1,414,038 |
Total |
10,025 |
|
$ |
4,415,261 |
|
9,566 |
|
$ |
4,223,435 |
Homes
Ordered: |
|
|
|
|
|
|
|
West Region |
3,261 |
|
|
1,672,310 |
|
2,636 |
|
|
1,486,674 |
Central Region |
3,237 |
|
|
1,286,063 |
|
3,027 |
|
|
1,293,282 |
East Region |
3,803 |
|
|
1,518,775 |
|
4,288 |
|
|
1,771,938 |
Total |
10,301 |
|
$ |
4,477,148 |
|
9,951 |
|
$ |
4,551,894 |
Order
Backlog: |
|
|
|
|
|
|
|
West Region |
1,179 |
|
|
579,787 |
|
1,627 |
|
|
905,080 |
Central Region |
956 |
|
|
370,279 |
|
1,766 |
|
|
790,227 |
East Region |
1,473 |
|
|
608,571 |
|
2,671 |
|
|
1,131,452 |
Total |
3,608 |
|
$ |
1,558,637 |
|
6,064 |
|
$ |
2,826,759 |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
Active
Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
84 |
|
91.0 |
|
102 |
|
104.5 |
|
84 |
|
93.1 |
|
102 |
|
92.1 |
Central Region |
82 |
|
82.0 |
|
74 |
|
77.0 |
|
82 |
|
81.8 |
|
74 |
|
75.6 |
East Region |
106 |
|
108.5 |
|
99 |
|
107.5 |
|
106 |
|
103.5 |
|
99 |
|
109.0 |
Total |
272 |
|
281.5 |
|
275 |
|
289.0 |
|
272 |
|
278.4 |
|
275 |
|
276.7 |
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 September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Depreciation and
amortization |
$ |
6,380 |
|
|
$ |
5,822 |
|
|
$ |
17,576 |
|
|
$ |
17,545 |
|
|
|
|
|
|
|
|
|
Summary of Capitalized
Interest: |
|
|
|
|
|
|
|
Capitalized interest,
beginning of period |
$ |
61,078 |
|
|
$ |
61,459 |
|
|
$ |
60,169 |
|
|
$ |
56,253 |
|
Interest incurred |
|
14,740 |
|
|
|
15,179 |
|
|
|
44,914 |
|
|
|
45,563 |
|
Interest expensed |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
Interest amortized to cost of
home and land closings |
|
(17,342 |
) |
|
|
(14,548 |
) |
|
|
(46,607 |
) |
|
|
(39,685 |
) |
Capitalized interest, end of
period |
$ |
58,476 |
|
|
$ |
62,090 |
|
|
$ |
58,476 |
|
|
$ |
62,090 |
|
Reconciliation of Non-GAAP Information
(Dollars in thousands):
Debt-to-Capital Ratios |
|
September 30, 2023 |
|
December 31, 2022 |
Senior notes, net, loans payable and other borrowings |
$ |
1,005,420 |
|
|
$ |
1,150,647 |
|
Stockholders' equity |
|
4,421,042 |
|
|
|
3,949,611 |
|
Total capital |
$ |
5,426,462 |
|
|
$ |
5,100,258 |
|
Debt-to-capital |
|
18.5% |
|
|
|
22.6% |
|
|
|
|
|
Senior notes, net, loans
payable and other borrowings |
$ |
1,005,420 |
|
|
$ |
1,150,647 |
|
Less: cash and cash equivalents |
|
(1,048,755 |
) |
|
|
(861,561 |
) |
Net debt |
$ |
(43,335 |
) |
|
$ |
289,086 |
|
Stockholders’ equity |
|
4,421,042 |
|
|
|
3,949,611 |
|
Total net capital |
$ |
4,377,707 |
|
|
$ |
4,238,697 |
|
Net debt-to-capital (1) |
|
(1.0)% |
|
|
|
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 Corporation
Meritage 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 175,000 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 2023 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; our intention to
increase our community count; and expectations about our future
results, including but not limited to, our projected fourth quarter
2023 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 June 30, 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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