Meritage Homes reports second quarter 2024 results
24 Juillet 2024 - 10:30PM
Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S.
homebuilder, reported second quarter results for the period ended
June 30, 2024.
|
Summary Operating Results (unaudited)(Dollars in
thousands, except per share amounts) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2024 |
|
2023 |
|
% Chg |
|
2024 |
|
2023 |
|
% Chg |
|
Homes closed (units) |
|
|
4,118 |
|
|
3,490 |
|
18 |
% |
|
|
7,625 |
|
|
6,387 |
|
19 |
% |
|
Home closing revenue |
|
$ |
1,693,738 |
|
$ |
1,543,021 |
|
10 |
% |
|
$ |
3,159,834 |
|
$ |
2,804,944 |
|
13 |
% |
|
Average sales price — closings |
|
$ |
411 |
|
$ |
442 |
|
(7) |
% |
|
$ |
414 |
|
$ |
439 |
|
(6) |
% |
|
Home orders (units) |
|
|
3,799 |
|
|
3,340 |
|
14 |
% |
|
|
7,790 |
|
|
6,827 |
|
14 |
% |
|
Home order value |
|
$ |
1,573,456 |
|
$ |
1,474,713 |
|
7 |
% |
|
$ |
3,204,651 |
|
$ |
2,981,606 |
|
7 |
% |
|
Average sales price — orders |
|
$ |
414 |
|
$ |
442 |
|
(6) |
% |
|
$ |
411 |
|
$ |
437 |
|
(6) |
% |
|
Ending backlog (units) |
|
|
|
|
|
|
|
|
2,714 |
|
|
3,772 |
|
(28) |
% |
|
Ending backlog value |
|
|
|
|
|
|
|
$ |
1,109,687 |
|
$ |
1,687,536 |
|
(34) |
% |
|
Average sales price — backlog |
|
|
|
|
|
|
|
$ |
409 |
|
$ |
447 |
|
(9) |
% |
|
Earnings before income taxes |
|
$ |
297,361 |
|
$ |
239,524 |
|
24 |
% |
|
$ |
531,376 |
|
$ |
404,827 |
|
31 |
% |
|
Net earnings |
|
$ |
231,555 |
|
$ |
186,836 |
|
24 |
% |
|
$ |
417,571 |
|
$ |
318,137 |
|
31 |
% |
|
Diluted EPS |
|
$ |
6.31 |
|
$ |
5.02 |
|
26 |
% |
|
$ |
11.37 |
|
$ |
8.56 |
|
33 |
% |
MANAGEMENT COMMENTS
“Meritage’s strong second quarter 2024 performance
reflected the progress we are making on delivering quick turning
move-in ready homes, resulting in $1.7 billion of home closing
revenue and our highest second quarter closings," said Steven J.
Hilton, executive chairman of Meritage Homes. "We achieved an
average absorption pace of 4.5 per month this quarter while
increasing community count sequentially from the first quarter,
which generated our highest second quarter orders volume of 3,799
homes. With the resiliency in homebuying demand stemming from
favorable demographics and an under built supply of homes in the
market, we believe our focus on affordable move-in ready inventory
will enable us to continue increasing our market share, despite
ongoing mortgage interest rate volatility.”
“With over 40% of this quarter's closings from
intra-quarter sales, our backlog conversion rate was 136%," added
Phillippe Lord, chief executive officer of Meritage Homes. "Our
4,118 deliveries this quarter combined with home closing gross
margin of 25.9% and SG&A leverage of 9.3% contributed to
diluted EPS of $6.31. We increased our book value per share 16%
year-over-year to $134.41 and generated a return on equity of 18.3%
as of June 30, 2024."*
“Managing our capital with a focus toward long-term
shareholder value, in the second quarter of 2024, we accelerated
growth in the business by spending $631 million on land acquisition
and development and putting over 8,700 net new lots under control,
as well as returned $27.2 million back to shareholders in the form
of cash dividends," continued Mr. Lord. "This quarter, we enhanced
our debt structure by issuing $575.0 million of new convertible
debt, extending our existing revolving credit facility and
redeeming the remaining $250.0 million of the senior notes due
2025. We ended the quarter with cash of $992.9 million and a net
debt-to-capital ratio of 6.2%.”
SECOND QUARTER
RESULTS
- Orders of 3,799 homes for the second
quarter of 2024 increased 14% year-over-year, primarily reflecting
a 15% increase in average absorption pace to 4.5 per month from 3.9
per month in the second quarter of 2023. Second quarter 2024
average community count remained relatively consistent with prior
year, but increased 3% sequentially. Average sales price ("ASP") on
orders in the second quarter of 2024 of $414,000 was down 6% from
the second quarter of 2023 due to product and geographic mix shift.
Entry-level represented 92% of second quarter 2024 sales orders,
compared to 85% in the prior year.
- The 10% year-over-year increase in
home closing revenue to $1.7 billion was the result of 18% higher
home closing volume partially offset by a 7% decrease in ASP on
closings due to product and geographic mix. Entry-level represented
91% of second quarter 2024 home closings, compared to 83% in the
prior year. Second quarter 2024 ASP on closings reflected selective
price increases and a slight pullback in rate lock financing
incentive costs, although utilization of such incentives went up
both sequentially and year-over-year.
- Home closing gross margin improved 150
bps to 25.9% in the second quarter 2024 from 24.4% in the prior
year due to lower direct costs, greater leverage of fixed costs and
shorter construction cycle times, which were partially offset by
higher lot costs.
- The financial services profit of $4.8
million included $2.0 million in write-offs related to rate lock
unwind costs in the second quarter of 2024. This compared to
financial services loss of $2.6 million in the second quarter of
2023 that had $7.9 million in similar write-offs.
- Selling, general and administrative
expenses ("SG&A") as a percentage of second quarter 2024 home
closing revenue of 9.3% improved 30 bps from 9.6% in the second
quarter of 2023, primarily due to leverage achieved on higher home
closing revenue.
- In the second quarter of 2024, we
recognized a loss on early extinguishment of debt of $0.6 million
in connection with the $250.0 million redemption of the 6.00%
senior notes due 2025 (the "2025 Notes"). There were no such
redemptions in the second quarter of 2023.
- The second quarter effective income
tax rate was 22.1% in 2024 compared to 22.0% in 2023. The Company's
tax rates in both periods benefited from earned eligible energy tax
credits on qualifying homes under the Inflation Reduction Act
("IRA").
- Net earnings were $231.6 million
($6.31 per diluted share) for the second quarter of 2024, a 24%
increase from $186.8 million ($5.02 per diluted share) for the
second quarter of 2023, resulting from higher home closing revenue
and gross profit as well as lower SG&A as a percentage of home
closing revenue.
YEAR TO DATE RESULTS
- Total sales orders for the first half
of 2024 increased 14% over the prior year, driven by a 15% increase
in average absorption pace and a slight decrease in average
communities compared to the first half of 2023.
- Home closing revenue increased 13% in
the first half of 2024 to $3.2 billion, reflecting a 19% increase
in home closing volume that was partially offset by a 6% decrease
in ASP on closings due to product and geographic mix. ASP on
closings for the first half of 2024 reflected selective price
increases and a slight pullback in rate lock financing incentive
costs, although utilization of such incentives went up.
- Home closing gross margin improved 240
bps to 25.9% in the first half of 2024 from 23.5% in the prior
year, resulting from lower direct costs, greater leverage of fixed
costs and shorter construction cycle times, which were partially
offset by higher lot cost.
- The financial services profit of $4.1
million included $7.8 million in write-offs related to rate lock
unwind costs in the first half of 2024. This compared to financial
services profit of $0.4 million in the first half of 2023 that had
$9.8 million in similar write-offs.
- SG&A expenses of 9.8% of home
closing revenue were relatively consistent with 9.9% in the prior
year as improved leverage on higher home closing revenue was mostly
offset by higher commissions.
- In the first half of 2024, we
recognized a loss on early extinguishment of debt of $0.6 million
in connection with the $250.0 million redemption of the 2025 Notes.
There were no such redemptions in the first half of 2023.
- The effective tax rate for both the
first half of 2024 and 2023 was 21.4%. The Company's tax rates in
both periods benefited from earned eligible energy tax credits on
qualifying homes under the IRA.
- Net earnings were $417.6 million
($11.37 per diluted share) for the first half of 2024, a 31%
increase from $318.1 million ($8.56 per diluted share) for the
first half of 2023, primarily reflecting higher home closing
revenue and gross profit, as well as lower SG&A as a percentage
of home closing revenue.
BALANCE SHEET & LIQUIDITY
- Cash and cash
equivalents at June 30, 2024 totaled $992.9 million, compared
to $921.2 million at December 31, 2023.
- Land acquisition
and development spend totaled $631.1 million for the second quarter
of 2024, compared to $408.5 million for the second quarter of
2023.
- Approximately
71,000 lots were owned or controlled as of June 30, 2024,
compared to approximately 60,000 total lots as of June 30,
2023. Over 8,700 net new lots were added in the second quarter of
2024, representing an estimated 63 future communities.
- Second quarter 2024
ending community count of 287 was up 4% sequentially compared to
the first quarter of 2024, and down 1% compared to prior year.
- Debt-to-capital and
net debt-to-capital ratios were 21.2% and 6.2%, respectively, at
June 30, 2024, which compared to 17.9% and 1.9%, respectively,
at December 31, 2023.
- In the second
quarter of 2024, the Company issued $575.0 million of 1.75%
convertible senior notes due 2028 (the "2028 Convertible Notes")
and used a portion of the proceeds for the $250.0 million
redemption of the 2025 Notes.
- The Company
refinanced the revolving credit facility in the second quarter of
2024 to increase the facility size to $910.0 million, extend its
maturity from 2028 to 2029, and reduce its pricing grid to align
with the Company's investment grade credit rating.
- The Company
declared and paid quarterly cash dividends of $0.75 per share
totaling $27.2 million in the second quarter of 2024, up from $0.27
per share totaling $9.9 million in the second quarter of 2023.
Year-to-date dividends paid were $54.5 million and $19.9 million in
2024 and 2023, respectively.
- There were no share
repurchases during the second quarter of 2024 due to the customary
lock-out restrictions associated with the 2028 Convertible Notes
issuance. For the first half of 2024, the Company repurchased
362,419 shares of stock for a total of $55.9 million. As of
June 30, 2024, $129.1 million remained available to repurchase
under the authorized share repurchase program.
GUIDANCEThe Company is providing
the following updated guidance for full year 2024, based on first
half 2024 results and current market conditions:
| |
|
Full Year 2024 |
|
Home closing volume |
|
14,750-15,500 units |
|
Home closing revenue |
|
$6.1-6.3 billion |
|
Home closing gross margin |
|
24.5%-25.0% |
|
Effective tax rate |
|
Approximately 22.5% |
|
Diluted EPS |
|
$19.80-21.00 |
CONFERENCE CALLManagement will
host a conference call to discuss its second quarter 2024 results
at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday,
July 25, 2024. To listen, please go to Meritage's Investor
Relations page for the live webcast or dial in to 1-877-407-6951 US
toll free or 1-412-902-0046. A replay will be available on the
Investor Relations page.
* The Company's return on equity is calculated as
net income for the trailing twelve months divided by average total
stockholders' equity for the trailing five quarters. The Company's
book value per share is calculated as total stockholders' equity
for the period divided by the shares outstanding as of the last day
of the period.
|
Meritage Homes Corporation and
SubsidiariesConsolidated Income Statements(In
thousands, except per share
data)(Unaudited) |
|
|
| |
|
Three Months Ended June 30, |
| |
|
|
2024 |
|
|
|
2023 |
|
|
Change $ |
|
Change % |
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
1,693,738 |
|
|
$ |
1,543,021 |
|
|
$ |
150,717 |
|
|
10 |
% |
| |
Land closing revenue |
|
— |
|
|
|
24,379 |
|
|
|
(24,379 |
) |
|
(100) |
% |
| |
Total closing revenue |
|
1,693,738 |
|
|
|
1,567,400 |
|
|
|
126,338 |
|
|
8 |
% |
| |
Cost of home closings |
|
(1,254,232 |
) |
|
|
(1,166,041 |
) |
|
|
88,191 |
|
|
8 |
% |
| |
Cost of land closings |
|
— |
|
|
|
(24,202 |
) |
|
|
(24,202 |
) |
|
(100) |
% |
| |
Total cost of closings |
|
(1,254,232 |
) |
|
|
(1,190,243 |
) |
|
|
63,989 |
|
|
5 |
% |
| |
Home closing gross profit |
|
439,506 |
|
|
|
376,980 |
|
|
|
62,526 |
|
|
17 |
% |
| |
Land closing gross profit |
|
— |
|
|
|
177 |
|
|
|
(177 |
) |
|
(100) |
% |
| |
Total closing gross profit |
|
439,506 |
|
|
|
377,157 |
|
|
|
62,349 |
|
|
17 |
% |
|
Financial Services: |
|
|
|
|
|
|
|
| |
Revenue |
|
8,311 |
|
|
|
6,210 |
|
|
|
2,101 |
|
|
34 |
% |
| |
Expense |
|
(3,924 |
) |
|
|
(2,972 |
) |
|
|
952 |
|
|
32 |
% |
| |
Earnings/(loss) from financial services unconsolidated entities and
other, net |
|
450 |
|
|
|
(5,795 |
) |
|
|
6,245 |
|
|
(108) |
% |
| |
Financial services profit/(loss) |
|
4,837 |
|
|
|
(2,557 |
) |
|
|
7,394 |
|
|
(289) |
% |
|
Commissions and other sales costs |
|
(104,665 |
) |
|
|
(95,798 |
) |
|
|
8,867 |
|
|
9 |
% |
|
General and administrative expenses |
|
(53,184 |
) |
|
|
(52,140 |
) |
|
|
1,044 |
|
|
2 |
% |
|
Interest expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
|
Other income, net |
|
11,498 |
|
|
|
12,862 |
|
|
|
(1,364 |
) |
|
(11) |
% |
|
Loss on early extinguishment of debt |
|
(631 |
) |
|
|
— |
|
|
|
631 |
|
|
n/a |
|
Earnings before income taxes |
|
297,361 |
|
|
|
239,524 |
|
|
|
57,837 |
|
|
24 |
% |
|
Provision for income taxes |
|
(65,806 |
) |
|
|
(52,688 |
) |
|
|
13,118 |
|
|
25 |
% |
|
Net earnings |
$ |
231,555 |
|
|
$ |
186,836 |
|
|
$ |
44,719 |
|
|
24 |
% |
| |
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
| |
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
| |
Earnings per common share |
$ |
6.38 |
|
|
$ |
5.08 |
|
|
$ |
1.30 |
|
|
26 |
% |
| |
Weighted average shares outstanding |
|
36,322 |
|
|
|
36,765 |
|
|
|
(443 |
) |
|
(1) |
% |
| |
Diluted |
|
|
|
|
|
|
|
| |
Earnings per common share |
$ |
6.31 |
|
|
$ |
5.02 |
|
|
$ |
1.29 |
|
|
26 |
% |
| |
Weighted average shares outstanding |
|
36,718 |
|
|
|
37,191 |
|
|
|
(473 |
) |
|
(1) |
% |
|
Meritage Homes Corporation and
SubsidiariesConsolidated Income
Statements(In thousands, except per share
data)(Unaudited) |
|
|
| |
|
Six Months Ended June 30, |
| |
|
|
2024 |
|
|
|
2023 |
|
|
Change $ |
|
Change % |
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
Home closing revenue |
$ |
3,159,834 |
|
|
$ |
2,804,944 |
|
|
$ |
354,890 |
|
|
13 |
% |
| |
Land closing revenue |
|
2,305 |
|
|
|
41,764 |
|
|
|
(39,459 |
) |
|
(94) |
% |
| |
Total closing revenue |
|
3,162,139 |
|
|
|
2,846,708 |
|
|
|
315,431 |
|
|
11 |
% |
| |
Cost of home closings |
|
(2,342,370 |
) |
|
|
(2,145,503 |
) |
|
|
196,867 |
|
|
9 |
% |
| |
Cost of land closings |
|
(2,298 |
) |
|
|
(40,147 |
) |
|
|
(37,849 |
) |
|
(94) |
% |
| |
Total cost of closings |
|
(2,344,668 |
) |
|
|
(2,185,650 |
) |
|
|
159,018 |
|
|
7 |
% |
| |
Home closing gross profit |
|
817,464 |
|
|
|
659,441 |
|
|
|
158,023 |
|
|
24 |
% |
| |
Land closing gross profit |
|
7 |
|
|
|
1,617 |
|
|
|
(1,610 |
) |
|
(100) |
% |
| |
Total closing gross profit |
|
817,471 |
|
|
|
661,058 |
|
|
|
156,413 |
|
|
24 |
% |
|
Financial Services: |
|
|
|
|
|
|
|
| |
Revenue |
|
14,664 |
|
|
|
11,941 |
|
|
|
2,723 |
|
|
23 |
% |
| |
Expense |
|
(6,927 |
) |
|
|
(6,039 |
) |
|
|
888 |
|
|
15 |
% |
| |
(Loss)/earnings from financial services unconsolidated entities and
other, net |
|
(3,590 |
) |
|
|
(5,536 |
) |
|
|
(1,946 |
) |
|
(35) |
% |
| |
Financial services profit |
|
4,147 |
|
|
|
366 |
|
|
|
3,781 |
|
|
1,033 |
% |
|
Commissions and other sales costs |
|
(206,215 |
) |
|
|
(178,644 |
) |
|
|
27,571 |
|
|
15 |
% |
|
General and administrative expenses |
|
(103,916 |
) |
|
|
(99,659 |
) |
|
|
4,257 |
|
|
4 |
% |
|
Interest expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
|
Other income, net |
|
20,520 |
|
|
|
21,706 |
|
|
|
(1,186 |
) |
|
(5) |
% |
|
Loss on early extinguishment of debt |
|
(631 |
) |
|
|
— |
|
|
|
631 |
|
|
n/a |
|
Earnings before income taxes |
|
531,376 |
|
|
|
404,827 |
|
|
|
126,549 |
|
|
31 |
% |
|
Provision for income taxes |
|
(113,805 |
) |
|
|
(86,690 |
) |
|
|
27,115 |
|
|
31 |
% |
|
Net earnings |
$ |
417,571 |
|
|
$ |
318,137 |
|
|
$ |
99,434 |
|
|
31 |
% |
| |
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
| |
Basic |
|
|
|
|
Change $ or shares |
|
Change % |
| |
Earnings per common share |
$ |
11.50 |
|
|
$ |
8.67 |
|
|
$ |
2.83 |
|
|
33 |
% |
| |
Weighted average shares outstanding |
|
36,317 |
|
|
|
36,715 |
|
|
|
(398 |
) |
|
(1) |
% |
| |
Diluted |
|
|
|
|
|
|
|
| |
Earnings per common share |
$ |
11.37 |
|
|
$ |
8.56 |
|
|
$ |
2.81 |
|
|
33 |
% |
| |
Weighted average shares outstanding |
|
36,738 |
|
|
|
37,149 |
|
|
|
(411 |
) |
|
(1) |
% |
|
Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets(In
thousands)(Unaudited) |
|
|
| |
|
June 30, 2024 |
|
December 31, 2023 |
|
Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
992,921 |
|
$ |
921,227 |
|
Other receivables |
|
|
258,137 |
|
|
266,972 |
|
Real estate(1) |
|
|
5,175,084 |
|
|
4,721,291 |
|
Deposits on real estate under option or contract |
|
|
156,698 |
|
|
111,364 |
|
Investments in unconsolidated entities |
|
|
23,630 |
|
|
17,170 |
|
Property and equipment, net |
|
|
46,585 |
|
|
48,953 |
|
Deferred tax asset, net |
|
|
60,167 |
|
|
47,573 |
|
Prepaids, other assets and goodwill |
|
|
210,758 |
|
|
218,584 |
|
Total assets |
|
$ |
6,923,980 |
|
$ |
6,353,134 |
|
Liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
299,780 |
|
$ |
271,650 |
|
Accrued liabilities |
|
|
388,975 |
|
|
424,764 |
|
Home sale deposits |
|
|
39,380 |
|
|
36,605 |
|
Loans payable and other borrowings |
|
|
9,711 |
|
|
13,526 |
|
Senior and convertible senior notes, net |
|
|
1,303,600 |
|
|
994,689 |
|
Total liabilities |
|
|
2,041,446 |
|
|
1,741,234 |
|
Stockholders' Equity: |
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
— |
|
Common stock |
|
|
363 |
|
|
364 |
|
Additional paid-in capital |
|
|
198,503 |
|
|
290,955 |
|
Retained earnings |
|
|
4,683,668 |
|
|
4,320,581 |
|
Total stockholders’ equity |
|
|
4,882,534 |
|
|
4,611,900 |
|
Total liabilities and stockholders’ equity |
|
$ |
6,923,980 |
|
$ |
6,353,134 |
|
(1)Real estate – Allocated costs: |
|
|
|
|
|
Homes under contract under construction |
|
$ |
789,961 |
|
$ |
704,206 |
|
Unsold homes, completed and under construction |
|
|
1,487,674 |
|
|
1,260,855 |
|
Model homes |
|
|
114,185 |
|
|
118,252 |
|
Finished home sites and home sites under development |
|
|
2,783,264 |
|
|
2,637,978 |
|
Total real estate |
|
$ |
5,175,084 |
|
$ |
4,721,291 |
|
Meritage Homes Corporation and
SubsidiariesConsolidated Statements of Cash
Flows (In thousands)
(Unaudited) |
|
|
| |
|
Six Months Ended June 30, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
Cash flows from operating activities: |
|
|
|
|
|
Net earnings |
|
$ |
417,571 |
|
|
$ |
318,137 |
|
|
Adjustments to reconcile net earnings to net cash (used
in)/provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
12,812 |
|
|
|
11,196 |
|
|
Stock-based compensation |
|
|
10,832 |
|
|
|
10,401 |
|
|
Equity in earnings from unconsolidated entities |
|
|
(2,627 |
) |
|
|
(2,882 |
) |
|
Distribution of earnings from unconsolidated entities |
|
|
2,778 |
|
|
|
3,418 |
|
|
Other |
|
|
4,697 |
|
|
|
2,148 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
(Increase)/decrease in real estate |
|
|
(450,551 |
) |
|
|
14,950 |
|
|
(Increase)/decrease in deposits on real estate under option or
contract |
|
|
(45,576 |
) |
|
|
5,491 |
|
|
Decrease in other receivables, prepaids and other assets |
|
|
24,237 |
|
|
|
8,962 |
|
|
Decrease in accounts payable and accrued liabilities |
|
|
(12,965 |
) |
|
|
(27,754 |
) |
|
Increase in home sale deposits |
|
|
2,775 |
|
|
|
11,818 |
|
|
Net cash (used in)/provided by operating activities |
|
|
(36,017 |
) |
|
|
355,885 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
Investments in unconsolidated entities |
|
|
(6,611 |
) |
|
|
(1,277 |
) |
|
Distributions of capital from unconsolidated entities |
|
|
— |
|
|
|
43 |
|
|
Purchases of property and equipment |
|
|
(13,158 |
) |
|
|
(21,134 |
) |
|
Proceeds from sales of property and equipment |
|
|
130 |
|
|
|
228 |
|
|
Maturities/sales of investments and securities |
|
|
750 |
|
|
|
750 |
|
|
Payments to purchase investments and securities |
|
|
(750 |
) |
|
|
(750 |
) |
|
Net cash used in investing activities |
|
|
(19,639 |
) |
|
|
(22,140 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
Repayment of loans payable and other borrowings |
|
|
(7,445 |
) |
|
|
(2,209 |
) |
|
Repayment of senior notes |
|
|
(250,695 |
) |
|
|
— |
|
|
Proceeds from issuance of convertible senior notes |
|
|
575,000 |
|
|
|
— |
|
|
Payment of debt issuance costs |
|
|
(17,303 |
) |
|
|
— |
|
|
Purchase of capped calls related to issuance of convertible senior
notes |
|
|
(61,790 |
) |
|
|
— |
|
|
Dividends paid |
|
|
(54,484 |
) |
|
|
(19,854 |
) |
|
Repurchase of shares |
|
|
(55,933 |
) |
|
|
(10,000 |
) |
|
Net cash provided by/(used in) financing activities |
|
|
127,350 |
|
|
|
(32,063 |
) |
|
Net increase in cash and cash equivalents |
|
|
71,694 |
|
|
|
301,682 |
|
|
Beginning cash and cash equivalents |
|
|
921,227 |
|
|
|
861,561 |
|
|
Ending cash and cash equivalents |
|
$ |
992,921 |
|
|
$ |
1,163,243 |
|
Meritage Homes Corporation and
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 June 30, |
|
|
|
2024 |
|
2023 |
|
|
|
Homes |
|
Value |
|
Homes |
|
Value |
|
Homes Closed: |
|
|
|
|
|
|
|
|
|
West Region |
|
1,265 |
|
|
622,837 |
|
997 |
|
|
519,217 |
|
Central Region |
|
1,265 |
|
|
459,180 |
|
1,094 |
|
|
456,801 |
|
East Region |
|
1,588 |
|
|
611,721 |
|
1,399 |
|
|
567,003 |
|
Total |
|
4,118 |
|
$ |
1,693,738 |
|
3,490 |
|
$ |
1,543,021 |
|
Homes Ordered: |
|
|
|
|
|
|
|
|
|
West Region |
|
1,114 |
|
|
557,296 |
|
990 |
|
|
515,325 |
|
Central Region |
|
1,100 |
|
|
399,854 |
|
1,065 |
|
|
440,377 |
|
East Region |
|
1,585 |
|
|
616,306 |
|
1,285 |
|
|
519,011 |
|
Total |
|
3,799 |
|
$ |
1,573,456 |
|
3,340 |
|
$ |
1,474,713 |
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
2023 |
|
|
|
Homes |
|
Value |
|
Homes |
|
Value |
|
Homes Closed: |
|
|
|
|
|
|
|
|
|
West Region |
|
2,279 |
|
|
1,138,469 |
|
1,782 |
|
|
936,539 |
|
Central Region |
|
2,432 |
|
|
886,745 |
|
2,142 |
|
|
881,681 |
|
East Region |
|
2,914 |
|
|
1,134,620 |
|
2,463 |
|
|
986,724 |
|
Total |
|
7,625 |
|
$ |
3,159,834 |
|
6,387 |
|
$ |
2,804,944 |
|
Homes Ordered: |
|
|
|
|
|
|
|
|
|
West Region |
|
2,284 |
|
|
1,138,101 |
|
2,276 |
|
|
1,151,261 |
|
Central Region |
|
2,410 |
|
|
882,037 |
|
2,138 |
|
|
860,898 |
|
East Region |
|
3,096 |
|
|
1,184,513 |
|
2,413 |
|
|
969,447 |
|
Total |
|
7,790 |
|
|
3,204,651 |
|
6,827 |
|
|
2,981,606 |
|
Order Backlog: |
|
|
|
|
|
|
|
|
|
West Region |
|
751 |
|
|
367,436 |
|
1,366 |
|
|
669,636 |
|
Central Region |
|
746 |
|
|
278,485 |
|
959 |
|
|
401,601 |
|
East Region |
|
1,217 |
|
|
463,766 |
|
1,447 |
|
|
616,299 |
|
Total |
|
2,714 |
|
$ |
1,109,687 |
|
3,772 |
|
$ |
1,687,536 |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Ending |
|
Average |
|
Active Communities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
85 |
|
84.0 |
|
98 |
|
97.0 |
|
85 |
|
81.9 |
|
98 |
|
96.0 |
|
Central Region |
76 |
|
78.0 |
|
82 |
|
82.0 |
|
76 |
|
81.3 |
|
82 |
|
81.7 |
|
East Region |
126 |
|
119.0 |
|
111 |
|
105.5 |
|
126 |
|
114.0 |
|
111 |
|
102.4 |
|
Total |
287 |
|
281.0 |
|
291 |
|
284.5 |
|
287 |
|
277.2 |
|
291 |
|
280.1 |
Meritage Homes Corporation and
SubsidiariesSupplement and Non-GAAP
information(Unaudited)
Supplemental Information (Dollars in
thousands):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Depreciation and amortization |
$ |
6,774 |
|
|
$ |
5,988 |
|
|
$ |
12,812 |
|
|
$ |
11,196 |
|
| |
|
|
|
|
|
|
|
|
Summary of Capitalized Interest: |
|
|
|
|
|
|
|
|
Capitalized interest, beginning of period |
$ |
54,227 |
|
|
$ |
62,452 |
|
|
$ |
54,516 |
|
|
$ |
60,169 |
|
|
Interest incurred |
|
14,327 |
|
|
|
15,144 |
|
|
|
27,252 |
|
|
|
30,174 |
|
|
Interest expensed |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Interest amortized to cost of home and land closings |
|
(14,227 |
) |
|
|
(16,518 |
) |
|
|
(27,441 |
) |
|
|
(29,265 |
) |
|
Capitalized interest, end of period |
$ |
54,327 |
|
|
$ |
61,078 |
|
|
$ |
54,327 |
|
|
$ |
61,078 |
|
Reconciliation of Non-GAAP Information
(Dollars in thousands):
|
Debt-to-Capital Ratios |
|
|
June 30, 2024 |
|
December 31, 2023 |
|
Senior and convertible senior notes, net, loans payable and other
borrowings |
$ |
1,313,311 |
|
|
$ |
1,008,215 |
|
|
Stockholders' equity |
|
4,882,534 |
|
|
|
4,611,900 |
|
|
Total capital |
$ |
6,195,845 |
|
|
$ |
5,620,115 |
|
|
Debt-to-capital |
|
21.2 |
% |
|
|
17.9 |
% |
| |
|
|
|
|
Senior and convertible senior notes, net, loans payable and other
borrowings |
$ |
1,313,311 |
|
|
$ |
1,008,215 |
|
|
Less: cash and cash equivalents |
|
(992,921 |
) |
|
|
(921,227 |
) |
|
Net debt |
$ |
320,390 |
|
|
$ |
86,988 |
|
|
Stockholders’ equity |
|
4,882,534 |
|
|
|
4,611,900 |
|
|
Total net capital |
$ |
5,202,924 |
|
|
$ |
4,698,888 |
|
|
Net debt-to-capital (1) |
|
6.2 |
% |
|
|
1.9 |
% |
|
(1) |
Net
debt-to-capital reflects certain adjustments to the debt-to-capital
ratio and is defined as net debt (debt less cash and cash
equivalents) divided by total capital (net debt plus stockholders'
equity). Net debt-to-capital is considered a non-GAAP financial
measure and should be considered in addition to, rather than as a
substitute for, the comparable GAAP financial measures. We believe
this non-GAAP financial measure is relevant and useful to investors
in understanding our operating results and may be helpful in
comparing the Company with other companies in the homebuilding
industry to the extent they provide similar information. We
encourage investors to understand the methods used by other
companies in the homebuilding industry to calculate non-GAAP
financial measures and any adjustments thereto before comparing to
our non-GAAP financial measures. |
About Meritage Homes
CorporationMeritage is the fifth-largest public
homebuilder in the United States, based on homes closed in 2023.
The Company offers energy-efficient and affordable entry-level and
first move-up homes. Operations span across Arizona, California,
Colorado, Utah, Texas, Florida, Georgia, North Carolina, South
Carolina and Tennessee.
Meritage has delivered over 185,000 homes in its
38-year history, and has a reputation for its distinctive style,
quality construction, and award-winning customer experience. The
Company is an industry leader in energy-efficient homebuilding, an
eleven-time recipient of the U.S. Environmental Protection Agency’s
(EPA) ENERGY STAR® Partner of the Year for Sustained Excellence
Award and Residential New Construction Market Leader Award, as well
as a three-time recipient of the EPA's Indoor airPLUS Leader
Award.
For more information, visit
www.meritagehomes.com.
The information included in this press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
include expectations about the housing market in general and our
future results including our ability to increase our market share
and our full year 2024 projected home closing volume, home closing
revenue, home closing gross margin, effective tax rate and diluted
EPS.
Such statements are based on the current beliefs
and expectations of Company management and current market
conditions, which are subject to significant uncertainties and
fluctuations. Actual results may differ from those set forth in the
forward-looking statements. The Company makes no commitment, and
disclaims any duty, except as required by law, to update or revise
any forward-looking statements to reflect future events or changes
in these expectations. Meritage's business is subject to a number
of risks and uncertainties. As a result of those risks and
uncertainties, the Company's stock and note prices may fluctuate
dramatically. These risks and uncertainties include, but are not
limited to, the following: increases in interest rates or decreases
in mortgage availability, and the cost and use of rate locks and
buy-downs; inflation in the cost of materials used to develop
communities and construct homes; cancellation rates; supply chain
and labor constraints; the ability of our potential buyers to sell
their existing homes; our ability to acquire and develop lots may
be negatively impacted if we are unable to obtain performance and
surety bonds; the adverse effect of slow absorption rates;
legislation related to tariffs; impairments of our real estate
inventory; competition; home warranty and construction defect
claims; failures in health and safety performance; fluctuations in
quarterly operating results; our level of indebtedness; our ability
to obtain financing if our credit ratings are downgraded; our
exposure to and impacts from natural disasters or severe weather
conditions; the availability and cost of finished lots and
undeveloped land; the success of our strategy to offer and market
entry-level and first move-up homes; a change to the feasibility of
projects under option or contract that could result in the
write-down or write-off of earnest money or option deposits; our
limited geographic diversification; shortages in the availability
and cost of subcontract labor; the replication of our
energy-efficient technologies by our competitors; our exposure to
information technology failures and security breaches and the
impact thereof; the loss of key personnel; changes in tax laws that
adversely impact us or our homebuyers; our inability to prevail on
contested tax positions; failure of our employees and
representatives to comply with laws and regulations; our compliance
with government regulations; liabilities or restrictions resulting
from regulations applicable to our financial services operations;
negative publicity that affects our reputation; potential
disruptions to our business by an epidemic or pandemic, and
measures that federal, state and local governments and/or health
authorities implement to address it; and other factors identified
in documents filed by the Company with the Securities and Exchange
Commission, including those set forth in our Form 10-K for the year
ended December 31, 2023 and our Form 10-Q for subsequent quarters
under the caption "Risk Factors," which can be found on our website
at https://investors.meritagehomes.com.
| Contacts: |
Emily Tadano, VP Investor
Relations and ESG |
| |
(480) 515-8979 (office) |
| |
investors@meritagehomes.com |
Meritage Homes (NYSE:MTH)
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Meritage Homes (NYSE:MTH)
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