Meritage Homes reports fourth quarter 2023 results
31 Janeiro 2024 - 6:30PM
Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder,
today announced fourth quarter and full year results for the
periods ended December 31, 2023.
Summary Operating Results
(unaudited)(Dollars in thousands, except per share
amounts) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2023 |
|
2022 |
|
% Chg |
|
2023 |
|
2022 |
|
% Chg |
Homes closed (units) |
|
3,951 |
|
|
|
4,540 |
|
|
(13 |
)% |
|
|
13,976 |
|
|
|
14,106 |
|
|
(1 |
)% |
Home closing revenue |
$ |
1,641,523 |
|
|
$ |
1,984,063 |
|
|
(17 |
)% |
|
$ |
6,056,784 |
|
|
$ |
6,207,498 |
|
|
(2 |
)% |
Average sales price -
closings |
$ |
415 |
|
|
$ |
437 |
|
|
(5 |
)% |
|
$ |
433 |
|
|
$ |
440 |
|
|
(2 |
)% |
Home orders (units) |
|
2,892 |
|
|
|
1,808 |
|
|
60 |
% |
|
|
13,193 |
|
|
|
11,759 |
|
|
12 |
% |
Home order value |
$ |
1,198,744 |
|
|
$ |
703,706 |
|
|
70 |
% |
|
$ |
5,675,892 |
|
|
$ |
5,255,600 |
|
|
8 |
% |
Average sales price -
orders |
$ |
415 |
|
|
$ |
389 |
|
|
6 |
% |
|
$ |
430 |
|
|
$ |
447 |
|
|
(4 |
)% |
Ending backlog (units) |
|
|
|
|
|
|
|
2,549 |
|
|
|
3,332 |
|
|
(23 |
)% |
Ending backlog value |
|
|
|
|
|
|
$ |
1,088,137 |
|
|
$ |
1,524,775 |
|
|
(29 |
)% |
Average sales price -
backlog |
|
|
|
|
|
|
$ |
427 |
|
|
$ |
458 |
|
|
(7 |
)% |
Earnings before income
taxes |
$ |
258,869 |
|
|
$ |
342,249 |
|
|
(24 |
)% |
|
$ |
949,430 |
|
|
$ |
1,289,318 |
|
|
(26 |
)% |
Net earnings |
$ |
198,851 |
|
|
$ |
262,365 |
|
|
(24 |
)% |
|
$ |
738,748 |
|
|
$ |
992,192 |
|
|
(26 |
)% |
Diluted EPS |
$ |
5.38 |
|
|
$ |
7.09 |
|
|
(24 |
)% |
|
$ |
19.93 |
|
|
$ |
26.74 |
|
|
(25 |
)% |
MANAGEMENT COMMENTS"Healthy homebuying demand
in the fourth quarter of 2023 led to Meritage's strong orders
finish to the year, as interest rates retreated below 7% and
consumer confidence started to recover. The underlying macro
fundamentals indicate favorable need-based demand for millennials
and now Generation Z right behind them, which together with the
continuing shortage of existing homes for sale, are driving buyers
to new homes. We capitalized on these market conditions utilizing
our available move-in ready inventory to grow our orders
year-over-year by 60% for the fourth quarter of 2023 and 12% for
full year 2023," said Steven J. Hilton, executive chairman of
Meritage Homes.
"The Meritage team's exceptional execution in the fourth quarter
of 2023 and our spec building strategy resulted in 3,951 homes
delivered, our second highest quarterly home closings in company
history, and a record 110% quarterly backlog conversion," added
Phillippe Lord, chief executive officer of Meritage Homes. "Home
closing revenue of $1.6 billion in the fourth quarter of 2023
combined with home closing gross margin of 25.2% and SG&A
leverage of 10.7% generated $5.38 in diluted EPS. We increased our
book value per share 17% year-over-year to $126.61 at December 31,
2023 and generated a return on equity of 17% for full year
2023."*
Mr. Lord concluded, "Thank you to our employees for achieving
yet another great year, generating value for our shareholders. As
the economy stabilizes, we believe entry-level buyers will continue
to gain confidence that now is the right time to buy a home. With
our growing spec inventory levels, Meritage is well-positioned to
take advantage of this positive demand environment."
FOURTH QUARTER RESULTS
- Orders of 2,892 homes for the fourth
quarter of 2023 increased 60% year-over-year due to a 64% increase
in average absorption pace to 3.6 per month from 2.2 per month in
the fourth quarter of 2022 and a 1% decrease in average
communities. Entry-level made up 88% of total sales orders in the
fourth quarter 2023, relatively consistent with the prior year
quarter. Fourth quarter 2023 average sales price ("ASP") on orders
of $415,000 was up 6% year-over-year. With an elevated quarterly
cancellation rate of 39% in the fourth quarter of 2022, the prior
year quarterly results were muted in both volume and ASP due to the
greater amount of cancelled homes with higher ASPs that were sold
earlier in 2022. The fourth quarter 2023 cancellation rate was
13%.
- The 17% year-over-year decrease in
home closing revenue to $1.6 billion for the fourth quarter of 2023
reflected 13% lower home closing volume totaling 3,951 units and 5%
lower ASPs on closings to $415,000, compared to prior year. The
decrease in ASPs on closings was due to more costly financing
incentives and geographic mix.
- Home closing gross margin was 25.2%
in both fourth quarter periods. The fourth quarter 2023 home
closing gross margin benefited from improved cycle time and lower
lumber costs, which partially offset increased financing incentives
and higher lot costs. Fourth quarter 2023 home closing gross margin
included $3.2 million in terminated land deal walk-away charges,
compared to $4.2 million in the prior year. Prior year fourth
quarter homes closing gross margin also included a nonrecurring
charge of $10.9 million in warranty adjustments related to two
specific cases, which was partially offset by $5.4 million in
retroactive vendor rebates. There were no similar items in the
fourth quarter of 2023. Excluding the terminated land deal
walk-away charges and the nonrecurring items, adjusted home closing
gross margin was 25.4% and 25.7% for fourth quarter 2023 and 2022,
respectively.
- Selling, general and administrative
expenses ("SG&A") were 10.7% of fourth quarter 2023 home
closing revenue, which was 230 bps higher than 8.4% in the prior
year, primarily as a result of increased performance-based
compensation costs, higher commission rates and reduced leverage
from lower home closing revenue.
- Fourth quarter 2023 other income,
net was $12.9 million, a $9.3 million increase from $3.6 million in
2022, due to higher interest income earned on a larger cash
balance.
- The fourth quarter effective income
tax rate was 23.2% in 2023, compared to 23.3% in 2022. The rate in
both periods benefited from eligible energy tax credits earned on
qualifying homes under the Internal Revenue Code's Inflation
Reduction Act ("IRA"). The rate for 2023 also reflected the
increased per-home energy efficiency credit amount that started in
2023.
- Net earnings were $198.9 million
($5.38 per diluted share) for the fourth quarter of 2023, a 24%
decrease from $262.4 million ($7.09 per diluted share) for the
fourth quarter of 2022. Lower home closing revenue and higher
selling, general and administrative expenses led to a 24%
year-over-year decrease in earnings per diluted share.
YEAR TO DATE RESULTS
- Total sales orders of 13,193 homes
for full year 2023 increased 12% over prior year due to an 11%
year-over-year increase in average absorption pace to 4.0 per month
in 2023 while average community count remained essentially
flat.
- Home closing revenue decreased 2%
for full year 2023 to $6.1 billion due to 2% decline in ASPs on
closings and 1% lower home closing volume year-over-year.
- Full year 2023 home closing gross
margin of 24.8% was down 380 bps from 28.6% for full year 2022, due
to more costly financing incentives, higher lot costs, and slightly
higher full year direct costs, although direct costs per square
foot decreased sequentially in the second, third and fourth
quarters of 2023, ending the year lower than 2022. Full year 2023
home closing gross margin included $5.3 million in terminated land
deal walk-away charges, compared to $15.8 million in 2022. Prior
year home closing gross margin also included a nonrecurring charge
of $10.9 million in warranty adjustments, which was partially
offset by $5.4 million of retroactive vendor rebates. There were no
such nonrecurring items in 2023. Excluding the terminated land deal
walk-away charges and the nonrecurring items, adjusted home closing
gross margin was 24.9% and 28.9% for 2023 and 2022,
respectively.
- SG&A as a percentage of home
closing revenue of 10.2% was 190 bps higher year-over-year from
8.3% in 2022, as a result of higher commissions and marketing
costs, reflecting the current sales environment, increased
performance-based compensation and insurance spend, and a greater
investment in technology.
- Other income, net was $47.9 million
in 2023, up $45.2 million from $2.7 million in 2022, due to higher
interest income earned on a larger cash balance.
- The Company recognized a loss on
early extinguishment of debt of $0.9 million in 2023 in connection
with the $150.0 million partial redemption of its 6.00% senior
notes due 2025. There were no such redemptions in 2022.
- The effective tax rate for full year
2023 was 22.2%, compared to 23.0% for full year 2022. The rate in
both periods benefited from eligible energy tax credits earned on
qualifying homes under the IRA. The lower rate in 2023 is primarily
due to the increased per-home energy efficiency credit amount that
started in 2023.
- Net earnings were $738.7 million
($19.93 per diluted share) for full year 2023, a 26% decrease from
$992.2 million ($26.74 per diluted share) for full year 2022,
primarily reflecting lower home closing revenue and greater
overhead costs in 2023.
BALANCE SHEET & LIQUIDITY
- Cash and cash equivalents at
December 31, 2023 totaled $921.2 million, compared to $861.6
million at December 31, 2022.
- Land acquisition and development
spend totaled $653.5 million for the fourth quarter of 2023,
compared to $350.6 million for the fourth quarter of 2022. Full
year 2023 land spend was $1.9 billion compared to $1.5 billion in
the prior year.
- Approximately 64,300 total lots were
owned or controlled as of December 31, 2023, a 2% increase from
approximately 63,200 total lots as of December 31, 2022. Over 7,600
net new lots were added in the fourth quarter of 2023, representing
an estimated 43 future communities, all of which are for
entry-level product. In the prior year fourth quarter, no new lots
were put under control and roughly 3,700 lots related to
underperforming land deals were terminated.
- Fourth quarter 2023 average
community count of 271 was essentially flat to prior year and down
4% sequentially compared to the third quarter of 2023.
- Debt-to-capital and net
debt-to-capital ratios were 17.9% and 1.9%, respectively as of
December 31, 2023, compared to 22.6% and 6.8%, respectively as of
December 31, 2022.
- In the fourth quarter of 2023, the
Company repurchased 24,869 shares of stock, or 0.1% of the
outstanding shares at the beginning of the quarter, for $4.1
million. For full year 2023, the Company repurchased 437,882 shares
of stock, or 1.2% of the outstanding shares at the beginning of the
year, for $59.1 million. As of December 31, 2023, $185.0 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 fourth quarter of 2023,
totaling $9.8 million. For full year 2023, cash dividend payments
totaled $39.5 million.
CONFERENCE CALLManagement will host a
conference call to discuss its fourth quarter 2023 results at 8:00
a.m. Mountain Standard Time (10:00 a.m. Eastern Standard Time) on
Thursday, February 1, 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 shareholders'
equity for the trailing five quarters. The Company's book value per
share is calculated as shareholders' equity for the period divided
by the shares outstanding as of the last day of the period.
Meritage Homes Corporation and SubsidiariesConsolidated
Income Statements(In thousands, except per share
data)(unaudited) |
|
|
|
Three Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
1,641,523 |
|
|
$ |
1,984,063 |
|
|
$ |
(342,540 |
) |
|
(17 |
)% |
|
Land closing revenue |
|
11,682 |
|
|
|
7,328 |
|
|
|
4,354 |
|
|
59 |
% |
|
Total closing revenue |
|
1,653,205 |
|
|
|
1,991,391 |
|
|
|
(338,186 |
) |
|
(17 |
)% |
|
Cost of home closings |
|
(1,228,426 |
) |
|
|
(1,484,071 |
) |
|
|
255,645 |
|
|
(17 |
)% |
|
Cost of land closings |
|
(9,104 |
) |
|
|
(7,600 |
) |
|
|
(1,504 |
) |
|
20 |
% |
|
Total cost of closings |
|
(1,237,530 |
) |
|
|
(1,491,671 |
) |
|
|
254,141 |
|
|
(17 |
)% |
|
Home closing gross profit |
|
413,097 |
|
|
|
499,992 |
|
|
|
(86,895 |
) |
|
(17 |
)% |
|
Land closing gross
profit/(loss) |
|
2,578 |
|
|
|
(272 |
) |
|
|
2,850 |
|
|
(1048 |
)% |
|
Total closing gross profit |
|
415,675 |
|
|
|
499,720 |
|
|
|
(84,045 |
) |
|
(17 |
)% |
Financial
Services: |
|
|
|
|
|
|
|
|
Revenue |
|
7,200 |
|
|
|
7,357 |
|
|
|
(157 |
) |
|
(2 |
)% |
|
Expense |
|
(3,218 |
) |
|
|
(3,236 |
) |
|
|
18 |
|
|
(1 |
)% |
|
Earnings from financial
services unconsolidated entities and other, net |
|
2,418 |
|
|
|
1,918 |
|
|
|
500 |
|
|
26 |
% |
|
Financial services profit |
|
6,400 |
|
|
|
6,039 |
|
|
|
361 |
|
|
6 |
% |
Commissions and
other sales costs |
|
(107,145 |
) |
|
|
(110,459 |
) |
|
|
3,314 |
|
|
(3 |
)% |
General and
administrative expenses |
|
(68,972 |
) |
|
|
(56,614 |
) |
|
|
(12,358 |
) |
|
22 |
% |
Interest
expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
Other income,
net |
|
12,911 |
|
|
|
3,563 |
|
|
|
9,348 |
|
|
262 |
% |
Earnings before
income taxes |
|
258,869 |
|
|
|
342,249 |
|
|
|
(83,380 |
) |
|
(24 |
)% |
Provision for
income taxes |
|
(60,018 |
) |
|
|
(79,884 |
) |
|
|
19,866 |
|
|
(25 |
)% |
Net earnings |
$ |
198,851 |
|
|
$ |
262,365 |
|
|
$ |
(63,514 |
) |
|
(24 |
)% |
|
|
|
|
|
|
|
|
Earnings
per common share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
Earnings per common share |
$ |
5.46 |
|
|
$ |
7.17 |
|
|
$ |
(1.71 |
) |
|
(24 |
)% |
|
Weighted average shares outstanding |
|
36,446 |
|
|
|
36,571 |
|
|
|
(125 |
) |
|
— |
% |
|
Diluted |
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
5.38 |
|
|
$ |
7.09 |
|
|
$ |
(1.71 |
) |
|
(24 |
)% |
|
Weighted average shares outstanding |
|
36,947 |
|
|
|
37,009 |
|
|
|
(62 |
) |
|
— |
% |
Meritage Homes Corporation and SubsidiariesConsolidated
Income Statements(In thousands, except per share
data)(unaudited) |
|
|
|
Twelve Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change $ |
|
Change % |
Homebuilding: |
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
6,056,784 |
|
|
$ |
6,207,498 |
|
|
$ |
(150,714 |
) |
|
(2 |
)% |
|
Land closing revenue |
|
56,229 |
|
|
|
61,229 |
|
|
|
(5,000 |
) |
|
(8 |
)% |
|
Total closing revenue |
|
6,113,013 |
|
|
|
6,268,727 |
|
|
|
(155,714 |
) |
|
(2 |
)% |
|
Cost of home closings |
|
(4,554,671 |
) |
|
|
(4,434,480 |
) |
|
|
(120,191 |
) |
|
3 |
% |
|
Cost of land closings |
|
(51,786 |
) |
|
|
(49,646 |
) |
|
|
(2,140 |
) |
|
4 |
% |
|
Total cost of closings |
|
(4,606,457 |
) |
|
|
(4,484,126 |
) |
|
|
(122,331 |
) |
|
3 |
% |
|
Home closing gross profit |
|
1,502,113 |
|
|
|
1,773,018 |
|
|
|
(270,905 |
) |
|
(15 |
)% |
|
Land closing gross profit |
|
4,443 |
|
|
|
11,583 |
|
|
|
(7,140 |
) |
|
(62 |
)% |
|
Total closing gross profit |
|
1,506,556 |
|
|
|
1,784,601 |
|
|
|
(278,045 |
) |
|
(16 |
)% |
Financial
Services: |
|
|
|
|
|
|
|
|
Revenue |
|
25,250 |
|
|
|
23,476 |
|
|
|
1,774 |
|
|
8 |
% |
|
Expense |
|
(12,128 |
) |
|
|
(11,133 |
) |
|
|
(995 |
) |
|
9 |
% |
|
(Loss)/earnings from financial
services unconsolidated entities and other, net |
|
(656 |
) |
|
|
5,951 |
|
|
|
(6,607 |
) |
|
(111 |
)% |
|
Financial services profit |
|
12,466 |
|
|
|
18,294 |
|
|
|
(5,828 |
) |
|
(32 |
)% |
Commissions and
other sales costs |
|
(384,911 |
) |
|
|
(323,266 |
) |
|
|
(61,645 |
) |
|
19 |
% |
General and
administrative expenses |
|
(231,722 |
) |
|
|
(192,984 |
) |
|
|
(38,738 |
) |
|
20 |
% |
Interest
expense |
|
— |
|
|
|
(41 |
) |
|
|
41 |
|
|
(100 |
)% |
Other income,
net |
|
47,948 |
|
|
|
2,714 |
|
|
|
45,234 |
|
|
1667 |
% |
Loss on early
extinguishment of debt |
|
(907 |
) |
|
|
— |
|
|
|
(907 |
) |
|
N/A |
Earnings before
income taxes |
|
949,430 |
|
|
|
1,289,318 |
|
|
|
(339,888 |
) |
|
(26 |
)% |
Provision for
income taxes |
|
(210,682 |
) |
|
|
(297,126 |
) |
|
|
86,444 |
|
|
(29 |
)% |
Net earnings |
$ |
738,748 |
|
|
$ |
992,192 |
|
|
$ |
(253,444 |
) |
|
(26 |
)% |
|
|
|
|
|
|
|
|
Earnings
per common share: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
|
Earnings per common share |
$ |
20.17 |
|
|
$ |
27.04 |
|
|
$ |
(6.87 |
) |
|
(25 |
)% |
|
Weighted average shares outstanding |
|
36,619 |
|
|
|
36,694 |
|
|
|
(75 |
) |
|
— |
% |
|
Diluted |
|
|
|
|
|
|
|
|
Earnings per common share |
$ |
19.93 |
|
|
$ |
26.74 |
|
|
$ |
(6.81 |
) |
|
(25 |
)% |
|
Weighted average shares outstanding |
|
37,069 |
|
|
|
37,101 |
|
|
|
(32 |
) |
|
— |
% |
Meritage Homes Corporation and SubsidiariesConsolidated
Balance Sheets(In thousands)(unaudited) |
|
|
|
December 31, 2023 |
|
December 31, 2022 |
Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
921,227 |
|
|
$ |
861,561 |
|
Other receivables |
|
|
266,972 |
|
|
|
215,019 |
|
Real estate (1) |
|
|
4,721,291 |
|
|
|
4,358,263 |
|
Deposits on real estate under option or contract |
|
|
111,364 |
|
|
|
76,729 |
|
Investments in unconsolidated entities |
|
|
17,170 |
|
|
|
11,753 |
|
Property and equipment, net |
|
|
48,953 |
|
|
|
38,635 |
|
Deferred tax assets, net |
|
|
47,573 |
|
|
|
45,452 |
|
Prepaids, other assets and goodwill |
|
|
218,584 |
|
|
|
164,689 |
|
Total assets |
|
$ |
6,353,134 |
|
|
$ |
5,772,101 |
|
Liabilities: |
|
|
|
|
Accounts payable |
|
$ |
271,650 |
|
|
$ |
273,267 |
|
Accrued liabilities |
|
|
424,764 |
|
|
|
360,615 |
|
Home sale deposits |
|
|
36,605 |
|
|
|
37,961 |
|
Loans payable and other borrowings |
|
|
13,526 |
|
|
|
7,057 |
|
Senior notes, net |
|
|
994,689 |
|
|
|
1,143,590 |
|
Total liabilities |
|
|
1,741,234 |
|
|
|
1,822,490 |
|
Stockholders'
Equity: |
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
Common stock |
|
|
364 |
|
|
|
366 |
|
Additional paid-in capital |
|
|
290,955 |
|
|
|
327,878 |
|
Retained earnings |
|
|
4,320,581 |
|
|
|
3,621,367 |
|
Total stockholders’ equity |
|
|
4,611,900 |
|
|
|
3,949,611 |
|
Total liabilities and stockholders’ equity |
|
$ |
6,353,134 |
|
|
$ |
5,772,101 |
|
(1) Real estate –
Allocated costs: |
|
|
|
|
Homes under contract under construction |
|
|
704,206 |
|
|
$ |
822,428 |
|
Unsold homes, completed and under construction |
|
|
1,260,855 |
|
|
|
1,155,543 |
|
Model homes |
|
|
118,252 |
|
|
|
97,198 |
|
Finished home sites and home sites under development |
|
|
2,637,978 |
|
|
|
2,283,094 |
|
Total real estate |
|
$ |
4,721,291 |
|
|
$ |
4,358,263 |
|
Meritage Homes Corporation and SubsidiariesConsolidated
Statements of Cash Flows (In
thousands)(unaudited) |
|
|
|
Twelve Months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
|
Net earnings |
|
$ |
738,748 |
|
|
$ |
992,192 |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
25,334 |
|
|
|
24,748 |
|
Stock-based compensation |
|
|
22,511 |
|
|
|
22,333 |
|
Loss on early extinguishment of debt |
|
|
907 |
|
|
|
— |
|
Equity in earnings from unconsolidated entities |
|
|
(6,371 |
) |
|
|
(6,093 |
) |
Distribution of earnings from unconsolidated entities |
|
|
6,792 |
|
|
|
5,900 |
|
Other |
|
|
4,115 |
|
|
|
10,863 |
|
Changes in assets and liabilities: |
|
|
|
|
Increase in real estate |
|
|
(357,408 |
) |
|
|
(624,522 |
) |
(Increase)/decrease in deposits on real estate under option or
contract |
|
|
(36,140 |
) |
|
|
10,463 |
|
Increase receivables, prepaids and other assets |
|
|
(64,169 |
) |
|
|
(102,950 |
) |
Increase in accounts payable and accrued liabilities |
|
|
22,609 |
|
|
|
76,985 |
|
Decrease in home sale deposits |
|
|
(1,356 |
) |
|
|
(4,649 |
) |
Net cash provided by operating activities |
|
|
355,572 |
|
|
|
405,270 |
|
Cash flows from
investing activities: |
|
|
|
|
Investments in unconsolidated entities |
|
|
(5,991 |
) |
|
|
(5,796 |
) |
Distributions of capital from unconsolidated entities |
|
|
137 |
|
|
|
— |
|
Purchases of property and equipment |
|
|
(38,192 |
) |
|
|
(26,971 |
) |
Proceeds from sales of property and equipment |
|
|
423 |
|
|
|
481 |
|
Maturities/sales of investments and securities |
|
|
750 |
|
|
|
1,032 |
|
Payments to purchase investments and securities |
|
|
(750 |
) |
|
|
(1,032 |
) |
Net cash used in investing activities |
|
|
(43,623 |
) |
|
|
(32,286 |
) |
Cash flows from
financing activities: |
|
|
|
|
Repayment of loans payable and other borrowings |
|
|
(2,798 |
) |
|
|
(20,455 |
) |
Repayment of senior notes |
|
|
(150,884 |
) |
|
|
— |
|
Dividends paid |
|
|
(39,534 |
) |
|
|
— |
|
Repurchase of shares |
|
|
(59,067 |
) |
|
|
(109,303 |
) |
Net cash used in financing activities |
|
|
(252,283 |
) |
|
|
(129,758 |
) |
Net increase in cash
and cash equivalents |
|
|
59,666 |
|
|
|
243,226 |
|
Cash and cash
equivalents, beginning of period |
|
|
861,561 |
|
|
|
618,335 |
|
Cash and cash
equivalents, end of period |
|
$ |
921,227 |
|
|
$ |
861,561 |
|
Meritage Homes Corporation and SubsidiariesOperating
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 December 31, |
|
|
2023 |
|
2022 |
|
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes
Closed: |
|
|
|
|
|
|
|
|
West Region |
|
1,155 |
|
|
563,723 |
|
1,217 |
|
|
662,580 |
Central Region |
|
1,242 |
|
|
464,571 |
|
1,417 |
|
|
565,630 |
East Region |
|
1,554 |
|
|
613,229 |
|
1,906 |
|
|
755,853 |
Total |
|
3,951 |
|
$ |
1,641,523 |
|
4,540 |
|
$ |
1,984,063 |
|
|
|
|
|
|
|
|
|
Homes
Ordered: |
|
|
|
|
|
|
|
|
West Region |
|
722 |
|
|
373,941 |
|
462 |
|
|
223,482 |
Central Region |
|
1,054 |
|
|
392,421 |
|
614 |
|
|
208,309 |
East Region |
|
1,116 |
|
|
432,382 |
|
732 |
|
|
271,915 |
Total |
|
2,892 |
|
$ |
1,198,744 |
|
1,808 |
|
$ |
703,706 |
|
|
Twelve months ended December 31, |
|
|
2023 |
|
2022 |
|
|
Homes |
|
Value |
|
Homes |
|
Value |
Homes
Closed: |
|
|
|
|
|
|
|
|
West Region |
|
4,109 |
|
|
2,107,095 |
|
4,092 |
|
|
2,202,109 |
Central Region |
|
4,486 |
|
|
1,798,939 |
|
4,556 |
|
|
1,835,498 |
East Region |
|
5,381 |
|
|
2,150,750 |
|
5,458 |
|
|
2,169,891 |
Total |
|
13,976 |
|
$ |
6,056,784 |
|
14,106 |
|
$ |
6,207,498 |
|
|
|
|
|
|
|
|
|
Homes
Ordered: |
|
|
|
|
|
|
|
|
West Region |
|
3,983 |
|
|
2,046,251 |
|
3,098 |
|
|
1,710,156 |
Central Region |
|
4,291 |
|
|
1,678,484 |
|
3,641 |
|
|
1,501,591 |
East Region |
|
4,919 |
|
|
1,951,157 |
|
5,020 |
|
|
2,043,853 |
Total |
|
13,193 |
|
$ |
5,675,892 |
|
11,759 |
|
$ |
5,255,600 |
|
|
|
|
|
|
|
|
|
Order
Backlog: |
|
|
|
|
|
|
|
|
West Region |
|
746 |
|
|
379,785 |
|
872 |
|
|
459,873 |
Central Region |
|
768 |
|
|
289,375 |
|
963 |
|
|
425,371 |
East Region |
|
1,035 |
|
|
418,977 |
|
1,497 |
|
|
639,531 |
Total |
|
2,549 |
|
$ |
1,088,137 |
|
3,332 |
|
$ |
1,524,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
Active
Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
78 |
|
81.0 |
|
94 |
|
98.0 |
|
78 |
|
90.0 |
|
94 |
|
92.4 |
Central Region |
|
88 |
|
85.0 |
|
81 |
|
77.5 |
|
88 |
|
83.0 |
|
81 |
|
76.6 |
East Region |
|
104 |
|
105.0 |
|
96 |
|
97.5 |
|
104 |
|
103.4 |
|
96 |
|
106.2 |
Total |
|
270 |
|
271.0 |
|
271 |
|
273.0 |
|
270 |
|
276.4 |
|
271 |
|
275.2 |
Meritage Homes Corporation and SubsidiariesSupplemental and
Non-GAAP information(Unaudited) |
|
Supplemental Information (Dollars in
thousands): |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Depreciation and
amortization |
$ |
7,758 |
|
|
$ |
7,203 |
|
|
$ |
25,334 |
|
|
$ |
24,748 |
|
|
|
|
|
|
|
|
|
Summary of Capitalized
Interest: |
|
|
|
|
|
|
|
Capitalized interest,
beginning of period |
$ |
58,476 |
|
|
$ |
62,090 |
|
|
$ |
60,169 |
|
|
$ |
56,253 |
|
Interest incurred |
|
12,845 |
|
|
|
15,036 |
|
|
|
57,759 |
|
|
|
60,599 |
|
Interest expensed |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
Interest amortized to cost of
home and land closings |
|
(16,805 |
) |
|
|
(16,957 |
) |
|
|
(63,412 |
) |
|
|
(56,642 |
) |
Capitalized interest, end of
period |
$ |
54,516 |
|
|
$ |
60,169 |
|
|
$ |
54,516 |
|
|
$ |
60,169 |
|
Reconciliation of Non-GAAP Information
(Dollars in thousands):
This press release and management’s comments and
discussion about our operating results included in this press
release reflect certain adjustments, including home closing gross
profit, home closing gross margin, and debt-to-capital ratios.
These are considered non-GAAP financial measures and should be
considered in addition to, rather than as a substitute for, the
comparable GAAP financial measures. We believe these non-GAAP
financial measures are relevant and useful to investors in
understanding our operating results and may be helpful in comparing
the Company with other companies in the homebuilding industry to
the extent they provide similar information. We encourage investors
to understand the methods used by other companies in the
homebuilding industry to calculate these non-GAAP financial
measures and any adjustments thereto before comparing to our
non-GAAP financial measures.
Home Closing Gross Margin |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Home closing gross profit |
|
$ |
413,097 |
|
|
$ |
499,992 |
|
|
$ |
1,502,113 |
|
|
$ |
1,773,018 |
|
Home closing gross margin |
|
25.2 |
% |
|
25.2 |
% |
|
24.8 |
% |
|
28.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Write-off of terminated land deals |
|
3,211 |
|
|
4,203 |
|
|
5,308 |
|
|
15,811 |
|
Add: Warranty adjustments |
|
— |
|
|
10,916 |
|
|
— |
|
|
10,916 |
|
Less: Retroactive vendor rebates |
|
— |
|
|
(5,446 |
) |
|
— |
|
|
(5,446 |
) |
Adjusted home closing gross profit |
|
$ |
416,308 |
|
|
$ |
509,665 |
|
|
$ |
1,507,421 |
|
|
$ |
1,794,299 |
|
Adjusted home closing gross margin |
|
25.4 |
% |
|
25.7 |
% |
|
24.9 |
% |
|
28.9 |
% |
|
Debt-to-Capital Ratios |
|
December 31, 2023 |
|
December 31, 2022 |
Senior notes, net, loans payable and other borrowings |
$ |
1,008,215 |
|
|
$ |
1,150,647 |
|
Stockholders' equity |
|
4,611,900 |
|
|
|
3,949,611 |
|
Total capital |
$ |
5,620,115 |
|
|
$ |
5,100,258 |
|
Debt-to-capital |
|
17.9 |
% |
|
|
22.6 |
% |
|
|
|
|
Senior notes, net, loans
payable and other borrowings |
$ |
1,008,215 |
|
|
$ |
1,150,647 |
|
Less: cash and cash equivalents |
|
(921,227 |
) |
|
|
(861,561 |
) |
Net debt |
$ |
86,988 |
|
|
$ |
289,086 |
|
Stockholders’ equity |
|
4,611,900 |
|
|
|
3,949,611 |
|
Total net capital |
$ |
4,698,888 |
|
|
$ |
4,238,697 |
|
Net debt-to-capital |
|
1.9 |
% |
|
|
6.8 |
% |
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, Utah, Texas, Florida,
Georgia, North Carolina, South Carolina and Tennessee.
Meritage Homes has delivered over 175,000 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, a ten-time
recipient of both the U.S. Environmental Protection Agency’s
("EPA") ENERGY STAR® Partner of the Year for Sustained Excellence
Award and ENERGY STAR® Residential New Construction Market Leader
Award, as well as a three-time recipient of 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.
Such statements are based on the current beliefs and
expectations of Company management and current market conditions,
which are subject to significant uncertainties and fluctuations.
Actual results may differ from those set forth in the
forward-looking statements. The Company makes no commitment, and
disclaims any duty, except as required by law, to update or revise
any forward-looking statements to reflect future events or changes
in these expectations. Meritage's business is subject to a number
of risks and uncertainties. As a result of those risks and
uncertainties, the Company's stock and note prices may fluctuate
dramatically. These risks and uncertainties include, but are not
limited to, the following: changes in 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, 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 September 30, 2023 under the caption
"Risk Factors," which can be found on our website at
https://investors.meritagehomes.com.
ContactEmily Tadano, VP Investor Relations and ESG(480)
515-8979investors@meritagehomes.com
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