Meritage Homes (MTH) reported $1.47 billion in revenue for the quarter ended March 2024, representing a year-over-year increase of 14.8%. EPS of $5.06 for the same period compares to $3.54 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.28 billion, representing a surprise of +14.54%. The company delivered an EPS surprise of +42.94%, with the consensus EPS estimate being $3.54.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall ...

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Meritage Homes reported a strong first quarter for 2024, achieving record-high quarterly sales orders, a home closing gross margin of 25.8%, and a significant 43% year-over-year increase in diluted EPS to $5.06 - The company announced **record-high quarterly sales orders**, a home closing gross margin of **25.8%**, and a **43% increase in diluted EPS** for Q1 2024[3](index=3&type=chunk) Q1 2024 Summary Operating Results (vs. Q1 2023) | Indicator | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Homes closed (units) | 3,507 | 2,897 | 21% | | Home closing revenue | $1,466.1 million | $1,261.9 million | 16% | | Home orders (units) | 3,991 | 3,487 | 14% | | Home order value | $1,631.2 million | $1,506.9 million | 8% | | Ending backlog (units) | 3,033 | 3,922 | (23)% | | Ending backlog value | $1,244.3 million | $1,763.8 million | (29)% | | Net earnings | $186.0 million | $131.3 million | 42% | | Diluted EPS | $5.06 | $3.54 | 43% | [Management Commentary](index=2&type=section&id=MANAGEMENT%20COMMENTS) Management attributed the record-breaking quarter to strong market demand and a successful spec-building strategy, enabling a 138% backlog conversion rate while maintaining a strong balance sheet and returning capital to shareholders - Executive Chairman Steven J. Hilton noted that the company capitalized on strong market conditions and housing needs from various demographics, leading to the **highest quarterly sales orders**[7](index=7&type=chunk) - CEO Phillippe Lord highlighted the success of the spec building strategy, which resulted in a **record backlog conversion rate of 138%** and nearly **50% of deliveries coming from intra-quarter sales**[7](index=7&type=chunk) - In Q1 2024, the company spent **$430 million on land acquisition and development**, added nearly **6,300 net new lots**, and returned **$83 million to shareholders** via repurchases and dividends[7](index=7&type=chunk) [Detailed Quarterly Performance Analysis](index=2&type=section&id=Detailed%20Quarterly%20Performance%20Analysis) The company's Q1 2024 performance saw increased home orders and revenue, improved gross margin, and a strong financial position with significant cash and low leverage, supported by strategic land investments and capital returns [Operating Results](index=2&type=section&id=FIRST%20QUARTER%20RESULTS) Home orders grew 14% year-over-year to 3,991 units, driving a 16% rise in home closing revenue to $1.5 billion, with gross margin expanding to 25.8% and net earnings increasing 42% to $186.0 million - Home orders increased **14% year-over-year to 3,991**, primarily due to a **17% increase in average absorption pace to 4.9 per month**[9](index=9&type=chunk) - Home closing gross margin improved by **340 bps to 25.8%** from 22.4% in Q1 2023, due to reduced rate lock financing incentives and lower direct costs[9](index=9&type=chunk) - SG&A expenses were **10.4% of home closing revenue**, nearly flat compared to 10.3% in the prior year[11](index=11&type=chunk) - Net earnings rose **42% to $186.0 million** ($5.06 per diluted share) from $131.3 million ($3.54 per diluted share) in Q1 2023[11](index=11&type=chunk) [Balance Sheet, Liquidity, and Capital Allocation](index=3&type=section&id=BALANCE%20SHEET%20%26%20LIQUIDITY) The company ended Q1 2024 with strong liquidity, holding $905.3 million in cash and maintaining a low net debt-to-capital ratio of 2.0%, while investing $430.4 million in land and returning $83.1 million to shareholders - Ended Q1 2024 with **$905.3 million in cash and cash equivalents**[11](index=11&type=chunk) - Land acquisition and development spend totaled **$430.4 million**, a significant increase from $310.1 million in Q1 2023, with total lots owned or controlled growing to approximately **66,400**[11](index=11&type=chunk) - Debt-to-capital and net debt-to-capital ratios were **17.5% and 2.0%**, respectively, as of March 31, 2024[11](index=11&type=chunk) - Returned capital to shareholders by increasing the quarterly dividend to **$0.75 per share** and repurchasing **362,419 shares for $55.9 million**[11](index=11&type=chunk) [Full Year 2024 Guidance](index=4&type=section&id=GUIDANCE) Meritage Homes updated its full-year 2024 guidance, projecting home closings between 14,500 and 15,000 units, revenue of $6.0 to $6.2 billion, a gross margin of 24.5-25.0%, and diluted EPS of $19.20 to $20.70 Full Year 2024 Guidance | Metric | Full Year 2024 Projection | | :--- | :--- | | Home closing volume | 14,500-15,000 units | | Home closing revenue | $6.0-6.2 billion | | Home closing gross margin | 24.5-25.0% | | Effective tax rate | Approximately 22.5% | | Diluted EPS | $19.20-20.70 | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2024, showing a 42% increase in net earnings to $186.0 million, total assets of $6.5 billion, and $81.9 million in cash from operations [Consolidated Income Statement](index=5&type=section&id=Consolidated%20Income%20Statements) For Q1 2024, home closing revenue increased 16% to $1.47 billion, driving a 34% rise in gross profit to $378.0 million, with net earnings growing 42% to $186.0 million and diluted EPS up 43% to $5.06 Q1 2024 Income Statement Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Home closing revenue | $1,466,096 thousand | $1,261,923 thousand | 16% | | Total closing gross profit | $377,965 thousand | $283,901 thousand | 33% | | Earnings before income taxes | $234,015 thousand | $165,303 thousand | 42% | | Net earnings | $186,016 thousand | $131,301 thousand | 42% | Q1 2024 Earnings Per Share | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Basic EPS | $5.12 | $3.58 | 43% | | Diluted EPS | $5.06 | $3.54 | 43% | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, Meritage Homes reported total assets of $6.49 billion, including $905.3 million in cash and $4.91 billion in real estate, with total liabilities at $1.77 billion and stockholders' equity at $4.72 billion Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $905,298 thousand | $921,227 thousand | | Real estate | $4,914,512 thousand | $4,721,291 thousand | | **Total assets** | **$6,489,305 thousand** | **$6,353,134 thousand** | | Total liabilities | $1,768,732 thousand | $1,741,234 thousand | | Total stockholders' equity | $4,720,573 thousand | $4,611,900 thousand | | **Total liabilities and stockholders' equity** | **$6,489,305 thousand** | **$6,353,134 thousand** | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2024, the company generated $81.9 million in cash from operations, but net cash used in financing activities, primarily share repurchases and dividends, led to a $15.9 million net decrease in cash for the quarter Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,930 thousand | $124,472 thousand | | Net cash used in investing activities | ($7,765) thousand | ($8,728) thousand | | Net cash used in financing activities | ($90,094) thousand | ($20,095) thousand | | **Net (decrease)/increase in cash** | **($15,929) thousand** | **$95,649 thousand** | [Segment and Supplemental Data](index=8&type=section&id=Segment%20and%20Supplemental%20Data) This section details operational metrics by region, showing the East Region's strong performance in homes closed and ordered, and provides a reconciliation of the company's low 2.0% net debt-to-capital ratio [Segment Operating Data](index=8&type=section&id=Operating%20Data) In Q1 2024, the East Region led in homes closed and ordered, while the Central Region showed strong order growth, with total active communities remaining stable year-over-year Q1 2024 Homes Closed by Region | Region | Homes Closed | Value (in thousands) | | :--- | :--- | :--- | | West | 1,014 | $515,632 thousand | | Central | 1,167 | $427,565 thousand | | East | 1,326 | $522,899 thousand | | **Total** | **3,507** | **$1,466,096 thousand** | Q1 2024 Homes Ordered by Region | Region | Homes Ordered | Value (in thousands) | | :--- | :--- | :--- | | West | 1,170 | $580,805 thousand | | Central | 1,310 | $482,183 thousand | | East | 1,511 | $568,207 thousand | | **Total** | **3,991** | **$1,631,195 thousand** | [Supplemental and Non-GAAP Information](index=9&type=section&id=Supplemental%20and%20Non-GAAP%20information) This section reconciles the non-GAAP net debt-to-capital ratio, showing a GAAP debt-to-capital ratio of 17.5% and a net debt-to-capital ratio of 2.0% as of March 31, 2024, reflecting the company's low net leverage Debt-to-Capital Ratios Reconciliation (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Debt | $1,001,570 thousand | $1,008,215 thousand | | Total Stockholders' Equity | $4,720,573 thousand | $4,611,900 thousand | | **Total Capital** | **$5,722,143 thousand** | **$5,620,115 thousand** | | **Debt-to-capital** | **17.5%** | **17.9%** | | Less: Cash | ($905,298) thousand | ($921,227) thousand | | **Net Debt** | **$96,272 thousand** | **$86,988 thousand** | | **Net debt-to-capital (Non-GAAP)** | **2.0%** | **1.9%** | [Corporate Profile and Forward-Looking Statements](index=10&type=section&id=About%20Meritage%20Homes%20Corporation) Meritage Homes, the fifth-largest public homebuilder in the U.S., specializes in energy-efficient homes across ten states, with the report including a standard disclaimer on forward-looking statements and associated market risks - Meritage Homes is the **fifth-largest public homebuilder in the U.S.** (based on 2023 homes closed) and specializes in energy-efficient and affordable homes[31](index=31&type=chunk) - The company is an **eleven-time recipient of the EPA's ENERGY STAR® Partner of the Year for Sustained Excellence Award**, highlighting its leadership in energy-efficient homebuilding[32](index=32&type=chunk) - The press release contains forward-looking statements regarding 2024 guidance, which are subject to risks including interest rate increases, inflation, cancellation rates, and supply chain constraints[33](index=33&type=chunk)[34](index=34&type=chunk)

The Good Brigade/DigitalVision via Getty Images One of the things that I love most about home building companies is that they tend to provide plenty of financial metrics that show not only where they are today, but also where they seem to be headed. When you pair this up with economic data and make sure that you buy the stocks at a cheap enough price, upside is very difficult to avoid. One firm that I believe does offer some really great upside at this point in time is Meritage Homes (NYSE:MTH). Since initi ...

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 ...

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].

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]

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].

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]

Financial Performance - Home closings increased by 4% to 3,638 in 3Q23 compared to 3,487 in 3Q22[30] - Home closing revenue increased by 3% to $1.61 billion in 3Q23 compared to $1.569 billion in 3Q22[30] - Home closing gross margin decreased by 200 bps to 26.7% in 3Q23 compared to 28.7% in 3Q22[30] - Net earnings decreased by 16% to $222 million in 3Q23 compared to $262 million in 3Q22[30] - Diluted EPS decreased by 16% to $5.98 in 3Q23 compared to $7.10 in 3Q22[30] Sales and Orders - Net sales orders increased 50% year-over-year[10] - Total orders increased to 3,474 in 3Q23[11] - Entry-level homes accounted for 88% of total orders in 3Q23[13] - Absorption per month increased by 52% year-over-year to 4.1 in 3Q23[12] Land and Capital - Land spend totaled $537 million in 3Q23, with a year-to-date spend of $1.3 billion[33] - The company repurchased over 319,000 shares for $45 million in 3Q23[33] - The company redeemed $150 million of 6.00% senior notes due in 2025[33] - Total lots controlled were 60,662, with a supply of 4.2 years[34]

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 ...