Financial Performance - In 2025, the company repurchased 4,289,984 shares, representing 6.0% of the shares outstanding at the beginning of the year, for $295.0 million and paid dividends totaling $121.1 million[32]. - The company ended 2025 with cash and cash equivalents totaling $775.2 million, up from $651.6 million at the end of 2024, while growing inventory by 4.5% to $6.0 billion[32]. - The debt-to-capital ratio was 26.0% and the net debt-to-capital ratio was 16.9% at December 31, 2025, compared to 20.6% and 11.7% in 2024[32]. - The company recorded costs of $8.4 million related to a workforce reduction initiative executed in early 2026[77]. - The company had $5.0 million in borrowings under the Credit Facility during the year ended December 31, 2025, with no borrowings in the previous two years[235]. Land Acquisition and Development - The company invested approximately $1.9 billion in land acquisition and development, securing about 5,500 net new lots, compared to 37,000 in 2024, ending the year with 77,625 lots under control[33]. - At December 31, 2025, the company had 21,764 lots under committed purchase or option contracts with a total purchase price of approximately $1.3 billion[41]. - The company has three active land development joint ventures and one mortgage business joint venture, MTH Mortgage, which provides services to homebuyers[54]. Home Construction and Sales - The company closed 15,026 homes and started construction on 13,450 homes during 2025, with approximately 72% of controlled lots owned at year-end[33]. - The average construction cycle time for homes is currently under 110 calendar days, with homes typically completed within three to five months from the start of construction[45]. - More than 90% of the company's closings in 2025 were co-broke, which is significantly higher than the industry average[51]. - The backlog decreased by 24.4% to 1,168 units at December 31, 2025, from 1,544 units at December 31, 2024, with a 30.0% decrease in backlog value to $440.6 million from $629.5 million[57]. - As of December 31, 2025, 50% of the total unsold spec homes in inventory were under construction, while the other 50% were completed[56]. - The company aims to deliver substantially all homes in backlog at December 31, 2025, during 2026 under existing contracts or replacement sales contracts[56]. - The spec inventory per active community decreased to 17.4 or 5,838 units as of December 31, 2025, compared to 24.1 or 7,029 units as of December 31, 2024[55]. - The company has a commitment to a 100% spec home building strategy for all homes[55]. Marketing and Strategy - The company has implemented a marketing strategy focusing on real estate agents as primary customers, supported by various digital tools and incentives[46]. - The company believes its product offerings and strategic locations provide long-term competitive advantages in the market[65]. Financial Instruments and Interest Rates - The company has $1.8 billion in aggregate principal amount of senior and convertible senior notes, all bearing fixed interest rates, mitigating financial statement risk from interest rate changes[234]. - As of December 31, 2025, the fair value of senior and convertible senior notes is estimated at $1.82 billion, with a weighted average interest rate of 3.897%[236]. - The company’s long-term debt obligations include $1.825 billion in fixed-rate senior and convertible senior notes, with maturities extending to 2030[236]. - The average interest rate for loans payable and other borrowings is 1.117%[236]. - The company is sensitive to interest rate changes, which could adversely affect revenue, gross margins, earnings, and cancellation rates[234]. - A significant increase in mortgage interest rates may negatively impact homebuyers' ability to secure financing[234]. - The company does not intend to enter into derivative interest rate swap financial instruments for trading or speculative purposes[234]. - There were no material interest charges from intraperiod borrowings during the years ended December 31, 2025, 2024, and 2023[235]. - The company’s Credit Facility borrowing rates are based on the Secured Overnight Financing Rate (SOFR) or Prime[234].

Group 1 - The individual investor focuses on managing personal capital accumulated over the years, utilizing a diverse range of investment strategies including fundamental, technical, and momentum investing [1] - The investor aims to leverage the strengths of various investment approaches to refine their investment process [1] - The purpose of writing on Seeking Alpha is to track the performance of investment ideas and connect with like-minded investors [1] Group 2 - There is no stock, option, or similar derivative position held by the analyst in any mentioned companies, nor are there plans to initiate such positions in the next 72 hours [2] - The article reflects the author's personal opinions and is not compensated beyond contributions to Seeking Alpha [2] - Seeking Alpha does not provide recommendations or advice regarding the suitability of investments for particular investors [3]

Company Overview - Meritage Homes Corporation (NYSE:MTH) is a real estate development company based in Scottsdale, Arizona, specializing in the construction of single-family detached homes across the United States. The company was founded in 1985 and is currently pursuing measured growth amid a cautious housing market [4]. Financial Performance - In its Q4 2025 earnings call, Meritage Homes reported a 15% year-over-year increase in ending community count, reaching a record 336 communities. The company opened 35 new communities in the fourth quarter and over 160 for the full year, indicating a strategic focus on expanding geographic reach and product availability [3]. - Management anticipates a further 5%–10% increase in community count in 2026, positioning the platform to capture demand as market conditions recover [3]. - Meritage Homes returned approximately $179 million to shareholders in the fourth quarter through a combination of buybacks and dividends, underscoring a commitment to shareholder value [3]. Analyst Insights - Keefe Bruyette analyst Jade Rahmani lowered the firm's price target on Meritage Homes to $76 from $78 while maintaining a Market Perform rating, citing the challenging homebuilding environment and near-term industry headwinds [1].

Financial Data and Key Metrics Changes - In Q4 2025, home closing revenue was $1.4 billion, a 12% decrease year-over-year due to a 7% lower home closing volume and a 5% decrease in average selling price (ASP) to $375,000 per home [23][30] - Adjusted diluted EPS decreased by 30% year-over-year to $1.67 from $2.39 in Q4 2024 [30] - The company completed $150 million in share buybacks, returning nearly $180 million in total capital to shareholders this quarter [9][33] Business Line Data and Key Metrics Changes - Q4 2025 sales orders totaled 3,224, with an average absorption pace of 3.2 net sales per month, reflecting a pullback in buyer urgency [8] - The cancellation rate increased to 14%, slightly below the historical average [15] - The average community count grew by 15% year-over-year to 336 communities, with 35 new communities brought online in Q4 [15][16] Market Data and Key Metrics Changes - Demand patterns were localized, with stronger absorption in markets like Dallas and Houston, while facing lower demand in Austin and parts of Florida [17][18] - The ASP on orders decreased by 6% year-over-year, influenced by increased incentives and geographic mix [17] - The company anticipates continued challenges from elevated mortgage rates and job security concerns, but long-term housing demand remains supported by favorable demographics [10] Company Strategy and Development Direction - The company is focused on a balanced approach to capital allocation, terminating certain land deals to redeploy capital towards share repurchases and acquiring new land [11][12] - A multi-year technology initiative aims to improve back-office productivity and operational efficiency [13] - The company plans to redeploy $400 million towards share buybacks in 2026, indicating a belief that the stock is undervalued [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain challenging in the near term but expressed optimism for improved demand in the spring selling season [10][68] - The company is cautious about the current economic environment but believes it is well-positioned to capture market share as conditions improve [16][38] - Management highlighted the importance of consumer confidence as a key factor influencing demand [61] Other Important Information - The company ended Q4 2025 with approximately 7,000 specs and backlog units, down from about 8,600 units a year prior [20] - The balance sheet remained healthy with cash of $775 million and no debt drawn on the credit facility [32] - The company plans to maintain a net debt to cap ceiling in the mid-20% range [32][91] Q&A Session Summary Question: 2026 outlook and absorption pace - Management indicated that while they aim for an average of 4 net sales per month, they are willing to operate below that temporarily due to current market conditions [41][43] Question: Specs per community - Management stated that they are close to their target of 17 specs per community but would like to adjust the ratio of finished specs to improve efficiency [46][48] Question: Community count guidance - The company clarified that the 5%-10% growth in community count is based on the year-end count, not an average [53] Question: Margin guidance and seasonality - Management acknowledged typical seasonal margin pressure and indicated that Q1 guidance reflects this [55][56] Question: Demand trends in January - Management expressed optimism for improved demand in January compared to Q4, citing better realtor feedback and reduced discounting [68][69] Question: Share repurchase strategy - Management emphasized the importance of balancing share repurchases with operational growth and returning capital to shareholders [73][74] Question: Delivery outlook and community conversions - Management noted that while community count growth has been strong, conversions in new communities have been modest compared to historical trends [83][85]

Financial Data and Key Metrics Changes - In Q4 2025, home closing revenue was $1.4 billion, a 12% decrease year-over-year due to a 7% decline in home closing volume and a 5% decrease in average selling price (ASP) to $375,000 per home [23][30] - Adjusted diluted EPS for Q4 2025 was $1.67, down 30% from $2.39 in Q4 2024 [30] - Full year 2025 home closing revenue decreased 9% to $5.8 billion, with orders flat and closings down 4% [30] Business Line Data and Key Metrics Changes - Q4 2025 sales orders totaled 3,224, with an average absorption pace of 3.2 net sales per month, reflecting a pullback in buyer urgency [8] - The cancellation rate increased to 14% in Q4 2025, slightly below the historical average [15] - The average selling price on orders in Q4 was $374,000, down 6% from the prior year [17] Market Data and Key Metrics Changes - Demand patterns were localized, with stronger absorption in markets like Dallas and Houston, while facing lower demand in Austin and parts of Florida [17] - The ending community count reached an all-time high of 336, up 15% year-over-year [15] - The company expects community count growth of 5% to 10% in 2026 [53] Company Strategy and Development Direction - The company is focused on a balanced approach to capital allocation, terminating certain land deals to redeploy capital towards share repurchases and acquiring new land [11] - A commitment to redeploy $400 million towards share buybacks in 2026 was announced, indicating the stock is viewed as undervalued [13] - The strategy includes maintaining a competitive edge through a 60-day closing guarantee and strong realtor engagement [38] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued challenges from elevated mortgage rates and geopolitical uncertainties, but long-term housing demand remains supported by favorable demographics [10] - There is optimism for improved demand in the spring selling season, with early signs of better conditions in January compared to Q4 [68] - The company aims to achieve an average of four net sales per month, although it may temporarily operate below this target due to current market conditions [41][45] Other Important Information - The company repurchased approximately 2.2 million shares in Q4 2025, spending nearly four times more than the same period last year [33] - The balance sheet remained healthy with cash of $775 million and no debt drawn on the credit facility [32] - The effective income tax rate for Q4 2025 was 18.5%, down from 22.1% in Q4 2024, reflecting tax credits received [28] Q&A Session Summary Question: 2026 outlook and absorption pace - Management indicated that the absorption pace may dip below historical levels due to the current incentive environment, but they expect improvements in Q1 and Q2 [41][43] Question: Specs per community - The company aims to have about one-third of specs finished and is close to the target of 17 specs per community, with expectations for further adjustments based on market conditions [46][48] Question: Community count guidance - The growth in community count is based on year-end figures, indicating continued expansion rather than flatlining [53] Question: Margin guidance and seasonality - Management acknowledged typical seasonal margin pressure and indicated that Q1 guidance reflects this, with expectations for stabilization in the spring [55][59] Question: Demand trends and share repurchase strategy - Management expressed optimism for improved demand in January and emphasized the importance of balancing share repurchases with operational growth [71][73]

Financial Data and Key Metrics Changes - In Q4 2025, home closing revenue was $1.4 billion, a 12% decrease year-over-year due to a 7% lower home closing volume and a 5% decrease in average selling price (ASP) to $375,000 per home [20][27] - Adjusted diluted EPS decreased by 30% year-over-year to $1.67 from $2.39 in Q4 2024 [27] - The company achieved a 19.3% adjusted home closing gross margin, down from 23.3% in Q4 2024 [21][27] - Full year 2025 home closing revenue decreased by 9% to $5.8 billion [27] Business Line Data and Key Metrics Changes - Q4 2025 sales orders totaled 3,224, reflecting a 2% decrease year-over-year, primarily due to an 18% decline in average absorption rates [12] - The cancellation rate increased to 14%, slightly below the historical average [12] - The average absorption pace for the full year 2025 was 3.9, better than broader market trends [7] Market Data and Key Metrics Changes - Demand patterns in Q4 were localized, with stronger performance in Dallas, Houston, and North and South Carolina, while facing lower demand in Austin, San Antonio, and parts of Florida [15] - The company anticipates continued impact from elevated mortgage interest rates and job security concerns in the near term [8] Company Strategy and Development Direction - The company is focused on a balanced approach to capital allocation, including share repurchases and land acquisitions [9] - A commitment to redeploy $400 million towards share buybacks in 2026 was announced, indicating the stock is viewed as undervalued [11] - The strategy includes maintaining a competitive edge through a 60-day closing guarantee and realtor engagement [34] Management's Comments on Operating Environment and Future Outlook - Management noted that long-term housing demand is supported by favorable demographics and an undersupply of affordable homes [8] - The company expects the spring selling season to improve compared to Q4 2025, with signs of better demand in January [48] - Management remains cautious about the impact of consumer confidence and affordability on future sales [44] Other Important Information - The company returned $179 million to shareholders in Q4 2025 through buybacks and dividends, significantly up from $67 million in the same period last year [30] - The balance sheet remained healthy with cash of $775 million and no debt drawn on the credit facility [29] Q&A Session Summary Question: 2026 outlook and absorption pace - Management indicated a temporary refocus on margin rather than chasing incentives due to elevated inventory levels in Q4, with expectations for improved returns in Q1 and Q2 [35][36] Question: Specs and inventory management - Approximately 50% of specs are nearing completion, with a target to have one-third ready for quick move-in [39] Question: Community count guidance - The 5%-10% community count growth is based on year-end figures, indicating continued expansion [40] Question: Margin guidance and seasonality - Management acknowledged typical seasonal margin pressure and expects a flattish margin guide for Q1 [41] Question: Demand trends and selling season expectations - Management expressed optimism for improved demand in the spring selling season compared to Q4, with indications of increased buyer activity in January [48][49] Question: Share repurchase strategy - The company balances share repurchases with operational growth, emphasizing the importance of returning capital to shareholders when stock is undervalued [51]

FOURTH QUARTER 2025 ANALYST CONFERENCE CALL JANUARY 29, 2026 Safe Harbor The information included in this presentation 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 market share, our full year 2026 projected share repurchases, home closing volume and home closing revenue, and first quarter 2026 projected home closi ...

Core Insights - Meritage Homes reported a revenue of $1.43 billion for the quarter ended December 2025, reflecting an 11.5% decrease year-over-year and falling short of the Zacks Consensus Estimate of $1.51 billion, resulting in a surprise of -5.16% [1] - The company's earnings per share (EPS) was $1.67, significantly lower than the $4.72 reported in the same quarter last year, but exceeded the consensus EPS estimate of $1.55, yielding a surprise of +8.06% [1] Financial Performance Metrics - Homes ordered totaled 3,224, which was below the average estimate of 3,521 by eight analysts [4] - Home closing revenue's average sales price was $375.00, compared to the estimated $385.51, indicating a shortfall [4] - The order backlog stood at 1,168 homes, lower than the average estimate of 1,333 [4] - Homes closed totaled 3,755, again below the average estimate of 3,887 [4] - The order backlog's average sales price was $377.00, compared to the estimated $407.72 [4] - Active communities at the end of the period totaled 336, slightly above the estimate of 332 [4] - The order backlog value was $440.56 million, significantly lower than the average estimate of $547.9 million [4] - Home orders' average sales price was $374.00, compared to the estimated $388.63 [4] - Total closing revenue from homebuilding was $1.43 billion, below the average estimate of $1.51 billion, marking an 11.5% year-over-year decline [4] - Home closing revenue was $1.41 billion, compared to the estimated $1.5 billion, reflecting an 11.9% decrease year-over-year [4] - Financial services revenue was $8.24 million, slightly below the estimated $8.65 million, representing a 2.3% decline year-over-year [4] - Land closing revenue was $21.07 million, exceeding the average estimate of $10.73 million, with a year-over-year increase of 21.4% [4] Stock Performance - Meritage shares have returned +4.8% over the past month, outperforming the Zacks S&P 500 composite, which saw a +0.8% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]

分组1 - Meritage Homes reported quarterly earnings of $1.67 per share, exceeding the Zacks Consensus Estimate of $1.55 per share, but down from $4.72 per share a year ago, representing an earnings surprise of +8.06% [1] - The company posted revenues of $1.43 billion for the quarter ended December 2025, missing the Zacks Consensus Estimate by 5.16%, and down from $1.61 billion year-over-year [2] - Meritage shares have increased by approximately 5.7% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $1.28 on revenues of $1.34 billion, and for the current fiscal year, it is $6.64 on revenues of $6.15 billion [7] - The Building Products - Home Builders industry is currently ranked in the bottom 2% of over 250 Zacks industries, indicating a challenging outlook for the sector [8]

Financial Performance - Home closing revenue for Q4 2025 was $1.4 billion, a 12% decrease year-over-year, driven by a 7% decline in home closing volume to 3,755 units and a 5% drop in average sales price to $375,000[9] - The home closing gross margin for Q4 2025 was 16.5%, down 670 basis points from 23.2% in Q4 2024, primarily due to non-recurring charges and increased lot costs[9] - Net earnings for Q4 2025 were $84.0 million, or $1.20 per diluted share, reflecting a 51% decrease from $172.6 million, or $2.36 per diluted share, in Q4 2024[9] - Net earnings for the twelve months ended December 31, 2025, were $453,013, a decrease of 42% compared to $786,186 in 2024[19] - Basic earnings per share for Q4 2025 were $1.21, down 49% from $2.39 in Q4 2024, with diluted earnings per share at $1.20, also down 49% from $2.36[17] - Adjusted net earnings for the twelve months ended December 31, 2025, were $503,074,000, a decrease from $791,249,000 in 2024, with adjusted diluted earnings per share at $7.05 compared to $10.79 in the previous year[37] Sales and Orders - Total sales orders for full year 2025 were 14,650 homes, essentially flat year-over-year, with a 9% decline in average absorption pace offset by a 12% increase in average communities[9] - Homes ordered in Q4 2025 totaled 3,224 with a value of $1,206,142,000, compared to 3,304 homes valued at $1,320,440,000 in Q4 2024, showing a decrease of 2.4% in homes ordered and 9.6% in value[27] - In Q4 2025, the total homes closed were 3,755 with a total value of $1,406,449,000, compared to 4,044 homes closed valued at $1,595,920,000 in Q4 2024, representing a decrease of 7.1% in homes closed and 12.0% in total value[27] - For the twelve months ended December 31, 2025, total homes closed were 15,026 with a total value of $5,763,597,000, compared to 15,611 homes closed valued at $6,341,546,000 in 2024, indicating a decrease of 3.7% in homes closed and 9.1% in total value[28] - The order backlog at December 31, 2025, was 1,168 homes valued at $440,562,000, down from 1,544 homes valued at $629,549,000 in 2024, reflecting a decrease of 24.4% in homes and 30.0% in value[30] Investments and Assets - The company invested $416 million in land acquisition and development during Q4 2025, a decrease from $689 million in Q4 2024, reflecting a strategic response to market conditions[11] - Total assets increased to $7,622,287 as of December 31, 2025, compared to $7,162,654 in 2024, reflecting a growth of 6.4%[22] - Cash and cash equivalents at the end of Q4 2025 were $775,157, up from $651,555 at the end of Q4 2024, marking an increase of 19%[22] Margins and Costs - The company reported a total closing gross profit of $231,431 for Q4 2025, a decline of 38% from $373,144 in Q4 2024[16] - Home closing gross profit for Q4 2025 was $232,257,000, down from $369,814,000 in Q4 2024, resulting in a gross margin of 16.5%, compared to 23.2% in the prior year[36] - The cost of home closings decreased by 4% to $1,174,192 in Q4 2025 from $1,226,114 in Q4 2024[16] Shareholder Actions - The company repurchased 2,238,534 shares for $150 million during Q4 2025, with a total of 4,289,984 shares repurchased for $295 million throughout the year[14] - The weighted average shares outstanding decreased by 4% to 69,254 in Q4 2025 from 72,188 in Q4 2024[17] Market Outlook - The company anticipates full year 2026 home closing volume and revenue to be consistent with full year 2025 results, assuming no further deterioration in market conditions[12] - The effective tax rate for full year 2025 was 22.5%, compared to 21.6% in 2024, influenced by fewer homes qualifying for energy tax credits[11] Company Overview - The company has a strong presence in the U.S. housing market, operating in multiple states including Arizona, California, Colorado, and Texas, and is recognized for its energy-efficient homebuilding practices[40] - Meritage Homes has delivered over 210,000 homes in its 40-year history, emphasizing its commitment to quality construction and customer experience[41]