Meritage Homes(MTH)

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Meritage Homes (MTH) Reports Next Week: Wall Street Expects Earnings Growth
Zacks Investment Research· 2024-04-17 15:07
Wall Street expects a year-over-year increase in earnings on higher revenues when Meritage Homes (MTH) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on April 24, 2024, might help the stock move higher if these key numbers are better than exp ...
Meritage Homes(MTH) - 2023 Q4 - Annual Report
2024-02-14 21:15
Financial Performance - In 2023, the company repurchased 437,882 shares for $59.1 million and paid dividends totaling $39.5 million, ending the year with cash and cash equivalents of $921.2 million, up from $861.6 million in 2022[31]. - The debt-to-capital ratio improved to 17.9% at December 31, 2023, down from 22.6% in 2022, while the net debt-to-capital ratio decreased to 1.9% from 6.8%[31]. - As of December 31, 2023, the company has $1.0 billion in fixed-rate senior notes, with no outstanding borrowings under its Credit Facility[219]. - The average interest rate for the company's long-term debt obligations is 1.492% as of December 31, 2023[220]. - The company had $40.0 million in borrowings and repayments under the Credit Facility during the year ended December 31, 2022, with no borrowings in 2021 or 2023[219]. Land Acquisition and Development - The company invested approximately $1.9 billion in land acquisition and development, securing about 16,000 net new lots, a significant increase from 2,000 net new lots in 2022[32]. - As of December 31, 2023, the company had 64,313 lots under control, compared to 63,182 in 2022, maintaining a 4.6-year supply of lots based on 2023 closings[32]. - Approximately 72% of the controlled lots were owned by the company at the end of 2023, slightly down from 73% in 2022[32]. - The company had 18,019 lots under committed purchase or option contracts with a total purchase price of approximately $914.1 million, secured by $97.8 million in cash deposits[39]. - The company has two active land development joint ventures and one mortgage business joint venture to manage risk and expand market opportunities[49]. Home Sales and Construction - The company closed 13,976 homes in 2023 and started construction on 14,524 homes during the same period[32]. - As of December 31, 2023, the backlog decreased by 23.5% to 2,549 units from 3,332 units at the same date in 2022, with a 28.6% decrease in backlog value to $1.1 billion from $1.5 billion[53]. - Approximately 97% of the 2,549 homes in backlog were under construction as of December 31, 2023[51]. - At December 31, 2023, 81% of the total unsold homes in inventory were under construction, while 19% were completed[52]. - The spec inventory per active community increased to 21.8 or 5,877 units as of December 31, 2023, compared to 18.0 or 4,891 units as of December 31, 2022[51]. Marketing and Sales Strategy - The marketing strategy includes a focus on digital media campaigns and the use of model homes to demonstrate the advantages of the company's designs and features[45]. - The company had approximately 492 full-time sales and marketing personnel at the end of 2023, ensuring extensive knowledge of homes and energy-efficient features among the sales force[47]. - The company provides various sales incentives to attract buyers, including mortgage-related incentives and price concessions, depending on economic conditions[1]. - The company has implemented extensive digital tools, including virtual tours and a chatbot, to enhance the homebuying experience[1]. Workforce and Diversity - The company employed approximately 910 full-time construction and warranty employees as of December 31, 2023[41]. - As of December 31, 2023, the company employed 1,838 full-time employees, with 41% being female and 27% minorities, reflecting its commitment to diversity and inclusion[69]. Economic and Market Conditions - The company experienced unprecedented demand through mid-2022, which was impacted by supply chain constraints and rising interest rates[71]. - A significant increase in mortgage interest rates may negatively affect homebuyers' ability to secure financing, impacting the company's revenue and gross margins[221]. - The company’s operations are sensitive to interest rate changes, which could increase variable rate borrowing costs on its Credit Facility[221]. - Historical seasonality in home sales is expected to continue, although it may be affected by short-term volatility in the homebuilding industry[71]. - The company has experienced historical cycles that returned in the latter half of 2022, indicating a potential stabilization in the market[71]. Warranty and Risk Management - The company has established warranty reserves ranging from 0.1% to 0.5% of a home's sale price to cover future structural warranty costs[58]. - The company typically sells more homes in the first half of the fiscal year, leading to increased working capital requirements in the second and third quarters[71]. - The company does not intend to enter into derivative interest rate swap financial instruments for trading or speculative purposes[221].
Meritage Homes(MTH) - 2023 Q4 - Earnings Call Transcript
2024-02-01 20:14
Financial Data and Key Metrics Changes - Home closing gross margin for Q4 2023 was 25.2%, with diluted EPS of $5.38, reflecting a 24% year-over-year decline [10][53] - Book value per share increased by 17% year-over-year to $126.61, with a return on equity of 17% for the full year 2023 [10] - Fourth quarter 2023 home closing revenue was $1.6 billion, a 13% decrease in home closing volume and a 5% decrease in average selling prices (ASPs) compared to the prior year [24][53] Business Line Data and Key Metrics Changes - Average sales price (ASP) on orders for Q4 2023 was $415,000, up 6% from the prior year, with a cancellation rate of 13% [14] - The company opened 28 new communities in Q4 2023 and 111 new communities throughout the year, achieving a backlog conversion rate of 110% [16][21] - The average absorption pace improved to 3.6 homes per month in Q4 2023, up from 2.2 in the prior year [14] Market Data and Key Metrics Changes - The Central region had the highest average absorption pace of 4.1 homes per month, compared to 2.6 last year, while the East region had the lowest cancellation rate [17][19] - The West region's average absorption pace increased to 3.0 homes per month, an 88% increase from the prior year [44] - The company is focusing on high-growth, lower ASP markets in the East region, which is expected to generate a greater share of business [19] Company Strategy and Development Direction - The company aims to grow its community count mid to high-single digits year-over-year by the end of 2024, with a focus on affordable entry-level homes [42][59] - A disciplined capital allocation strategy is in place, with $654 million spent on land acquisition and development in Q4 2023, the highest quarterly spend ever [28][30] - The company plans to leverage land banking relationships to support growth while maintaining liquidity [58][113] Management's Comments on Operating Environment and Future Outlook - Management noted that home buying demand remained healthy as mortgage rates fell below 7% in December, with expectations for rates to stabilize or decrease further in 2024 [34][36] - The company anticipates a reduction in ASP to the low $400,000 range in 2024, aligning with long-term business objectives [59] - Management expressed confidence in the spring selling season, citing a strong start in January and positive buyer sentiment [87] Other Important Information - The company received recognition for its DE&I efforts and was listed among the Best Companies to Work For [37] - The effective income tax rate for Q4 2023 was 23.2%, slightly down from 23.3% in 2022 [53] - The company plans to reset the 2024 quarterly cash dividend amount, with $185 million remaining under the buyback authorization program [56][81] Q&A Session Summary Question: What is embedded in the 2024 gross margin guidance? - Management indicated that the guidance reflects new land coming online at a higher basis and does not assume a pullback in incentives yet [63] Question: How will SG&A expenses trend in 2024? - Management expects SG&A to decrease, driven by restructuring performance-based compensation and controlling discretionary spending [66][79] Question: What are the expectations for cash flow and buyback programs? - The company plans to maintain its share repurchase strategy while increasing land acquisition spending, with a focus on balancing growth and shareholder returns [92][113]
Meritage Homes(MTH) - 2023 Q3 - Quarterly Report
2023-11-01 20:32
Financial Performance - In Q3 2023, the company achieved record home closing revenue of $1.6 billion from 3,638 homes, representing a year-over-year increase of 4.3% in volume and 2.6% in revenue[91]. - For the nine months ended September 30, 2023, home closing revenue increased by 4.5% to $4.4 billion, with a home closing volume of 10,025 units, up 4.8% year-over-year[92]. - Company-wide home closing gross profit for Q3 2023 was $429.6 million, with a gross margin of 26.7%, down from 28.7% in Q3 2022, attributed to increased buyer financing incentives and higher land development costs[120]. - The effective income tax rate for Q3 2023 was 22.4%, up from 20.3% in the previous year, impacting net earnings which decreased to $221.8 million from $262.5 million[91]. - Financial services profit for Q3 2023 was $5.7 million, an increase from $4.8 million in Q3 2022, driven by higher home closing volume[125]. Home Sales and Orders - Home orders for Q3 2023 increased by 50.4% year-over-year to 3,474, with a cancellation rate improving to 11% from 30% in Q3 2022[93]. - Total home orders for Q3 2023 reached $1.5 billion, a 53.5% increase from $974.3 million in Q3 2022, with homes ordered rising to 3,474 from 2,310[109]. - The average sales price (ASP) for homes ordered in Q3 2023 was $430.5 thousand, up 2.1% from $421.8 thousand in Q3 2022[109]. - The cancellation rate improved to 11% in Q3 2023 from 30% in Q3 2022, contributing to a 50.4% increase in home order volume[109][107]. Backlog and Inventory - The company ended Q3 2023 with a backlog of 3,608 homes valued at $1.6 billion, reflecting a decrease of 40.5% in units and 44.9% in value compared to the previous year[95]. - The backlog at the end of Q3 2023 was valued at $1.6 billion, down 44.9% from $2.8 billion at the end of Q3 2022, with homes in backlog decreasing to 3,608 from 6,064[105]. - The East Region's backlog at the end of Q3 2023 consisted of 1,473 homes valued at $608.6 million, down 44.9% from 2,671 homes valued at $1.1 billion in the prior year[116]. Regional Performance - The West Region saw home closing revenue of $606.8 million in Q3 2023, a 2.8% increase from $590.0 million in Q3 2022, with home orders up 116.0%[111]. - The Central Region's home order volume increased by 73.1% in Q3 2023, reaching 1,099 homes, while the cancellation rate dropped to 13% from 37%[113]. - The East Region closed 1,364 homes in Q3 2023, generating $550.8 million in revenue, a 14.9% increase from the prior year[115]. - For the nine months ended September 30, 2023, the East Region reported 3,827 home closings generating $1.5 billion in revenue, reflecting increases of 7.7% and 8.7% year-over-year, respectively[116]. Cost and Expenses - Home closing gross margin for Q3 2023 was 26.7%, down from 28.7% in Q3 2022, primarily due to increased incentives and higher land development costs[91]. - General and administrative expenses for Q3 2023 rose to $63.1 million, up $14.6 million from $48.4 million in 2022, reflecting higher compensation costs and increased spending on technology[127]. - The West Region's home closing gross margin for Q3 2023 was 23.3%, a decline of 330 basis points from 26.6% in the prior year, impacted by higher incentives and land development costs[122]. Cash Flow and Financing - As of September 30, 2023, the company reported net cash provided by operating activities of $460.1 million, a significant increase compared to a net cash used in operations of $169.8 million during the same period in 2022[142]. - The company utilized $34.7 million in investing activities during the nine months ended September 30, 2023, compared to $24.9 million in the same period of 2022, primarily for property and equipment purchases[143]. - Net cash used in financing activities totaled $238.2 million for the nine months ended September 30, 2023, which included $150.0 million for the partial redemption of 2025 Notes and $55.0 million in share repurchases[144]. - The company's debt-to-capital ratio improved to 18.5% as of September 30, 2023, down from 22.6% at the end of 2022[145]. Market Strategy and Outlook - The company aims to maintain at least a 5% market share in all markets and is focused on delivering affordable homes through simplified production processes[99]. - The company anticipates primary demand for funds over the next twelve months will be for home construction and land acquisition, supported by cash and cash equivalents on hand[135]. - The company plans to fund its material cash requirements primarily through cash flows generated by operations, with potential additional debt or equity financing[138]. - The company has no debt maturities until 2025, indicating a stable short-term liquidity position[138]. - The company’s operations are sensitive to interest rate changes, which could adversely affect revenue and borrowing costs[153].
Meritage Homes(MTH) - 2023 Q3 - Earnings Call Transcript
2023-11-01 19:34
Financial Data and Key Metrics Changes - The diluted EPS for Q3 2023 was $5.98, reflecting a 16% year-over-year decline, with a book value per share of $121.29, up 20% year-over-year [145] - The ending backlog at September 30, 2023, totaled approximately 3,600 homes, down from about 6,100 in the prior year [134] - The company expects Q4 2023 diluted EPS to range from $4.84 to $5.43, with home closing revenue projected between $1.45 billion and $1.53 billion [153] Business Line Data and Key Metrics Changes - Sales orders for Q3 2023 were 3,474 homes, with 88% of the volume coming from entry-level homes, representing a 50% year-over-year increase [13] - The average selling price (ASP) on orders this quarter was $430,000, up 2% from the prior year [9] - The average absorption pace for the West region was 3.6 per month, compared to 1.5 per month for the same period in 2022, indicating a significant improvement [4] Market Data and Key Metrics Changes - The average community count was 282, down 3% year-over-year and down 1% sequentially from Q2 2023 [132] - The Central region had the highest absorption pace of 4.5 per month, compared to 2.7 last year, driven by job growth and in-migration [14] - The cancellation rate for the quarter was 11%, below historical averages, indicating strong demand [13] Company Strategy and Development Direction - The company plans to replenish its spec inventory by starting around 4,000 homes to ensure sufficient move-in ready inventory for the 2024 spring selling season [11] - The strategy of "pace over price" has led to improved sales across all geographies [14] - The company aims to grow its community count by 10% to 15% annually, with a target of exceeding 300 communities [140][147] Management's Comments on Operating Environment and Future Outlook - Management noted that the home buyer environment is impacted by elevated mortgage rates, which have increased to nearly 8% [2] - The company expects Q4 demand to remain steady, although traditional seasonal patterns are anticipated to return [9] - Management expressed optimism about the spring selling season based on current demand trends [40] Other Important Information - The company has been recognized for its corporate citizenship and sustainability efforts, receiving multiple awards [137] - The company plans to spend over $2 billion on land acquisition and development in the coming years [147] - The company redeemed $150 million of its senior notes due 2025, maintaining a strong balance sheet [148] Q&A Session Summary Question: What is the average rate customers are getting through your finance company? - The average rate is about 3%, with some markets like Texas slightly above that [20] Question: What is the expected growth for community count next year? - Growth is expected to be predominantly driven by community count, with a focus on maintaining absorption rates [22][27] Question: Can you break down the cost components between land, labor, and materials? - Costs have been stable year-over-year, with higher land costs impacting margins as new communities are opened [37] Question: What are the key constraints preventing a return to pre-pandemic levels? - Constraints include municipal delays and slow land development processes [73] Question: How do you expect SG&A to trend in the coming quarters? - SG&A is expected to move to high single digits over time, but will see some incremental overhead in the short term due to community count growth [76]
Meritage Homes(MTH) - 2023 Q3 - Earnings Call Presentation
2023-11-01 16:00
HOMES® LIFE. BUILT. BETTER: THIRD QUARTER 2023 ANALYST CONFERENCE CALL NOVEMBER 1, 2023 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, our sales pace, backlog conversion rate, level of spec starts, SG&A as a percentage of home closing revenue, landbanking utilization and cash spend on land investments, share repur ...
Meritage Homes(MTH) - 2023 Q2 - Earnings Call Presentation
2023-08-01 06:09
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; expectations about our future results, including but not limited to, our full year and 3Q23 projected home closings, home closing revenue, home closing gross margins, effective tax rate and diluted earnings per share. These risks and uncertainties include, but are not ...
Meritage Homes(MTH) - 2023 Q2 - Earnings Call Transcript
2023-08-01 06:02
Financial Data and Key Metrics Changes - The company reported home closing revenue of $1.5 billion for Q2 2023, an increase of 10% year-over-year, driven by an 8% increase in home closing volume and a 1% increase in average selling prices (ASPs) [40][42] - The diluted EPS for Q2 2023 was $5.02, reflecting a 26% year-over-year decline, attributed to lower gross margins and increased overhead costs [16][42] - The effective income tax rate decreased to 22.0% in 2023 from 24.6% in 2022, benefiting from energy tax credits [16] Business Line Data and Key Metrics Changes - Sales orders for the quarter totaled 3,340 homes, with entry-level homes representing 85% of orders, down 11% year-over-year [11] - The backlog conversion rate improved significantly from 48% last year to 89% this quarter, indicating better sales performance [13] - The company ended the quarter with approximately 3,800 homes in backlog and nearly 4,500 spec homes in inventory, up 6% sequentially [17][45] Market Data and Key Metrics Changes - The West region had the lowest average absorption pace at 3.4 sales per month, while the Central region led with an average of 4.3 sales per month [7] - The East region showed strong demand with an average absorption pace of 4.1 sales per month, prompting the company to focus on replenishing inventory [7] - The company added over 2,800 net new lots during the quarter, maintaining a total of approximately 60,000 lots owned or controlled [18] Company Strategy and Development Direction - The company aims to maintain a high level of spec starts to ensure sufficient move-in ready inventory for the remainder of the year [38] - The strategy focuses on affordable entry-level homes, leveraging rate lock or buydown incentives to enhance backlog conversion and competitive advantage [35] - The company plans to accelerate land acquisition and development spending, projecting to exceed $2 billion in 2024 and beyond [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sales pace targets for the remainder of the year, citing a healthy market and strong demand for new homes [23][55] - The company anticipates a strong back half of the year, driven by improved inventory turns and pricing power [21] - Management noted that while incentives remain elevated, they are moderating from previous extremes, contributing to improved margins [40] Other Important Information - The company received a double upgrade to investment grade from S&P, reflecting a strong focus on maintaining a healthy balance sheet and liquidity [17] - The company returned $9.9 million to shareholders in the form of dividends and has $234 million available for share repurchases [43] Q&A Session Summary Question: Demand and Absorption Rates - Management indicated that the market remains healthy, with expectations for stable absorption rates despite potential seasonality [23][24] Question: Pricing Power and Backlog Turnover - Management confirmed that demand is consistent across their footprint, with expectations for meaningful community count growth in the future [26] Question: Gross Margins and Incentives - Management explained that the sequential increase in margins was due to reduced incentives and improved pricing power, with expectations for stable margins in the back half of the year [60][63] Question: Community Count and Future Growth - Management projected significant community count growth as land acquisition ramps up, with a focus on maintaining a strong pipeline for future developments [76] Question: Generational Wealth and Down Payment Assistance - Management noted an increase in down payment assistance, indicating that while generational wealth transfer is not directly observed, support for first-time buyers is evident [82]
Meritage Homes(MTH) - 2023 Q2 - Quarterly Report
2023-07-28 20:26
Financial Performance - Second quarter 2023 home closing revenue reached $1.5 billion on 3,490 homes, a 9.5% increase from $1.4 billion on 3,221 homes in Q2 2022[92] - The company achieved a home closing gross margin of 24.4% in Q2 2023, down from 31.6% in Q2 2022, attributed to increased incentives[92] - For the six months ended June 30, 2023, home closing revenue totaled $2.8 billion, up 5.7% from $2.7 billion in the prior year[107] - The company's gross profit for Q2 2023 was $377.0 million, with a margin of 24.4%, down from 31.6% in Q2 2022 due to increased sales incentives and elevated costs[119] - Other income for Q2 2023 was $12.9 million, compared to a net expense of $0.5 million in Q2 2022, driven by higher interest earned on cash balances[129] Home Orders and Backlog - Home orders for Q2 2023 totaled 3,340, an 11.3% decrease year-over-year, with home order value declining 18.5% to $1.5 billion[94] - The company ended Q2 2023 with a backlog of 3,772 homes valued at $1.7 billion, representing decreases of 47.9% and 50.9% year-over-year[95] - Total home orders for Q2 2023 decreased by 11.3% to 3,340 homes compared to 3,767 homes in Q2 2022, with a total order value of $1.5 billion, down 18.5% year-over-year[106] - The order backlog at June 30, 2023, was valued at $1.7 billion, down 50.9% from $3.4 billion at June 30, 2022, with homes in backlog decreasing by 47.9% to 3,772 units[102] Sales and Pricing - Average sales price (ASP) on closings improved by 1.1% to $442.1 thousand despite increased incentives, driven by a favorable mix of closings in higher-priced markets[92] - The average sales price (ASP) for homes ordered in Q2 2023 was $441.5 thousand, a decrease of 8.1% from $480.5 thousand in Q2 2022[106] - The West Region reported home closing revenue of $519.2 million for Q2 2023, up 6.8% from $486.1 million in Q2 2022, despite a decrease in ASP on closings[108] - The Central Region saw a 4.4% increase in home closings to 1,094 homes in Q2 2023, with revenue rising 8.2% to $456.8 million[110] Cancellation and Construction - The cancellation rate returned to a normalized 12% in Q2 2023, down from 15% in Q1 2023 and 13% in Q2 2022[94] - The cancellation rate for Q2 2023 was 12%, slightly improved from 13% in Q2 2022, aligning with historical averages[106][104] - Construction cycle time was reduced by over three weeks for new home starts in Q2 2023 compared to Q1 2023, nearing historical averages[91] Financial Services - Financial services reported a loss of $2.6 million in Q2 2023, compared to a profit of $4.1 million in Q2 2022, primarily due to $7.9 million in charges for expired interest rate locks[92] - Financial services reported a loss of $2.6 million in Q2 2023, primarily due to $7.9 million in charges related to unused prepaid interest rate locks[124] Tax and Expenses - The effective income tax rate decreased to 22.0% in Q2 2023 from 24.6% in 2022, benefiting from energy tax credits under the Inflation Reduction Act[92] - The effective tax rate decreased to 22.0% in Q2 2023 from 24.6% in Q2 2022, reflecting energy-efficient homes tax credits introduced in 2022[130] - Commissions and other sales costs increased to $95.8 million in Q2 2023, representing 6.2% of home closing revenue, up from 4.9% in the prior year[126] - General and administrative expenses for Q2 2023 were $52.1 million, maintaining 3.4% of home closing revenue, consistent with the previous year[127] Cash Flow and Liquidity - Net cash provided by operating activities for the six months ended June 30, 2023, totaled $355.9 million, compared to a net cash used in operations of $206.8 million for the same period in 2022[141] - The company expects to meet short-term liquidity requirements primarily through cash and cash equivalents on hand and net cash flows from operations[134] - Net cash used in financing activities for the six months ended June 30, 2023, was $32.1 million, significantly lower than $121.1 million for the same period in 2022[143] Debt and Capital - As of June 30, 2023, the debt-to-capital ratio was 21.4%, down from 22.6% as of December 31, 2022[144] - The company had no debt maturities until 2025, with maximum exposure to loss on purchase agreements generally limited to non-refundable deposits[137] - The minimum tangible net worth requirement under the Credit Facility is $2.8 billion, with the actual net worth reported at $4.25 billion as of June 30, 2023[147] - The leverage ratio as of June 30, 2023, was reported at (0.1)%, indicating compliance with the maximum leverage covenant of 60%[148] Dividends - The company paid a quarterly cash dividend of $0.27 per share during the three months ended June 30, 2023, totaling $0.54 per share for the six months ended June 30, 2023[145]
Meritage Homes(MTH) - 2023 Q1 - Quarterly Report
2023-04-28 20:32
Financial Performance - In Q1 2023, the company achieved home closing revenue of $1.3 billion on 2,897 homes, a 1.3% increase from $1.2 billion on 2,858 homes in Q1 2022[87]. - The gross margin for home closings declined by 790 basis points to 22.4%, resulting in a gross profit of $282.5 million, down from $377.6 million in Q1 2022[87]. - The company reported financial services profit of $2.9 million for Q1 2023, down from $3.3 million in the prior year[109]. - Operating cash flow for Q1 2023 was $124.5 million, a significant increase from $12.2 million in Q1 2022, driven by net earnings of $131.3 million[125]. - Commissions and other sales costs increased to $82.8 million, representing 6.6% of home closing revenue, up from 5.3% in the previous year[110]. - General and administrative expenses rose to $47.5 million, accounting for 3.8% of home closing revenue, an increase from 3.2% in Q1 2022[111]. Home Orders and Backlog - Home orders totaled 3,487, a 10.0% decrease year-over-year, with a cancellation rate improving to 15% from 39% in Q4 2022[88]. - The company ended Q1 2023 with a backlog of 3,922 homes valued at $1.8 billion, representing a 41.4% decrease in units and a 42.0% decrease in value from March 31, 2022[88]. - Homes ordered in Q1 2023 totaled 3,487, down by 387 units or 10.0% from 3,874 in Q1 2022[96]. - The order backlog as of March 31, 2023, was $1,763,832, down $1,275,095 or 42.0% from $3,038,927 in the previous year[98]. - Homes in backlog decreased to 3,922, a reduction of 2,773 homes or 41.4% compared to 6,695 homes in Q1 2022[98]. - The total cancellation rate increased to 15% in Q1 2023, up from 10% in Q1 2022[97]. Sales Performance - The average sales price (ASP) for home closings was flat at $435.6 thousand, while ASP on orders decreased by 5.3%[87][88]. - The average sales price for homes in Q1 2023 was $432.1, a decline of $24.2 or 5.3% from $456.3 in Q1 2022[96]. - The average sales price in the East Region increased by 2.9% to $427.9 in Q1 2023, compared to $415.9 in Q1 2022[98]. - The average sales price in the West Region decreased by 6.8% to $492.5 in Q1 2023, down from $528.6 in Q1 2022[98]. Regional Performance - The West Region saw a 9.1% decrease in home closing volume to 785 homes, with revenue down 9.9% to $417.3 million[100]. - The Central Region experienced a 20.0% increase in volume to 1,048 homes, resulting in a 22.2% increase in revenue to $424.9 million[101]. - The East Region closed 1,064 homes for $419.7 million, a 3.3% decrease in revenue despite a 1.9% increase in ASP[102]. - The Central Region's backlog decreased by 56.9% to $419,822 in Q1 2023, down from $973,828 in Q1 2022[98]. Operational Efficiency - The construction cycle time improved by approximately one week compared to the same period last year, despite ongoing labor and supply chain challenges[86]. - Active communities increased to 278 in Q1 2023, compared to 268 in Q1 2022, reflecting a growth of 3.7%[97]. Financial Position and Strategy - The company maintains a debt-to-capital ratio of 22.1% and a net debt-to-capital ratio of 4.5% as of the end of Q1 2023[93]. - The company plans to fund its material cash requirements primarily through cash flows generated by operations, with potential additional debt or equity financing if necessary[121]. - As of March 31, 2023, the debt-to-capital ratio was 22.1%, slightly down from 22.6% at the end of 2022[128]. - The net debt-to-capital ratio improved to 4.5% as of March 31, 2023, compared to 6.8% at the end of 2022[128]. - The leverage ratio was reported at 3.8%, well below the maximum covenant limit of 60%[130]. - The interest coverage ratio stood at 21.33, significantly above the required minimum of 1.50[130]. Recognition and Future Plans - The company was awarded the 2023 ENERGY STAR® Partner of the Year for Sustained Excellence, marking its tenth recognition since 2013[91]. - The company plans to leverage technological solutions and expand its energy efficiency program to enhance market differentiation[93]. - Seasonal variations in home sales are expected, with higher sales typically occurring in the first half of the fiscal year, impacting working capital needs[131].