Meritage Homes(MTH)

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Meritage Homes(MTH) - 2020 Q4 - Earnings Call Transcript
2021-01-28 21:21
Financial Data and Key Metrics Changes - In Q4 2020, Meritage Homes achieved home closing revenue of $1.4 billion, a 28% increase year-over-year, driven by a 32% increase in home closings [16][28][35] - The home closing gross margin improved by 420 basis points to 24% from 19.8% in the prior year, marking the best quarterly margin since 2006 [17][28] - The diluted EPS for Q4 2020 was $3.97, reflecting a 50% increase year-over-year compared to $2.65 in Q4 2019 [35] Business Line Data and Key Metrics Changes - The company sold 3,174 homes in Q4 2020, which was 52% higher than the same quarter in 2019 [16] - Entry-level homes comprised almost 70% of total orders for the quarter, up from 55% in Q4 2019 [19] - The absorption rate increased to 5.3 homes per month in Q4 2020, an 87% year-over-year increase [18] Market Data and Key Metrics Changes - The East Region led order growth with a 76% improvement over Q4 2019, while the Central Region saw a 46% increase [20][21] - The West Region experienced a 34% increase in orders, driven by a 65% increase in absorptions [22] - Overall, the housing market remained robust due to low interest rates and limited supply, with a shift in buyer preferences towards single-family homes [20] Company Strategy and Development Direction - The company focuses on entry-level and first move-up markets, aiming to offer affordable yet high-quality homes [15] - Meritage Homes plans to achieve 300 active communities by mid-2022, with a strong emphasis on land acquisition and development [38][41] - The company intends to sustain and replenish its community growth beyond 2022, with anticipated annual spending of over $1.5 billion on land and development [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued strength of the housing market, driven by favorable macroeconomic factors and demographic trends [14][41] - The company is closely monitoring affordability as a key concern, given rising land prices and construction costs [57] - Management expects to maintain strong margins in 2021 despite higher commodity costs [32] Other Important Information - Meritage Homes donated over $0.5 million to non-profits focused on COVID-19 relief and racial equity initiatives [12][13] - The company achieved a net debt-to-capital ratio of 10.5%, reflecting a strong balance sheet [37] Q&A Session Summary Question: Insights on land prices and inflation - Management noted that land prices were flat in 2020 but began to rise modestly in Q4 as demand for housing strengthened [49] Question: Concerns about competition from single-family rentals - Management believes that homeownership remains appealing and does not see significant competition from rental projects in their target markets [54] Question: Confidence in achieving 300 communities by mid-2022 - Management expressed strong confidence in reaching the 300 community goal, supported by land acquisitions and community development plans [60][61] Question: Labor procurement concerns - Management indicated that labor availability is not a major concern, but municipal approvals could pose challenges [64] Question: Pricing strategies and absorption control - Management emphasized the importance of maintaining both pricing power and sales pace, successfully balancing the two [78]
Meritage Homes(MTH) - 2020 Q4 - Earnings Call Presentation
2021-01-28 20:20
Financial Performance & Growth - Meritage Homes achieved all-time highest annual volume of sales orders and home closings[11] - The company experienced a 47% increase in net earnings in 4Q20, reaching $152.5 million[31] - Home closing revenue for 4Q20 increased by 28% to $1,409.2 million compared to $1,103.7 million in 4Q19[31] - Home closing gross profit for 4Q20 increased by 54% to $337.8 million[31] - Full year 2020 net earnings increased by 70% to $423.5 million[31] - Diluted EPS for 4Q20 increased by 50% to $3.97[31] Operational Highlights - Average absorption pace reached 5.2 per month, the best since 2005[11] - Home closings increased by 32% in 4Q20, with 3,744 closings compared to 2,830 in 4Q19[31] - SG&A expenses as a percentage of home closing revenue decreased by 80 bps to 9.3% in 4Q20[31] - Land and development spending significantly increased to $506 million in 4Q20 from $245 million in 4Q19[39] Balance Sheet & Capital Allocation - Net debt-to-capital ratio decreased to 10.5% as of December 31, 2020, compared to 26.2% the previous year[35] - The company had $746 million in cash and cash equivalents as of December 31, 2020[35, 36] - The company repurchased 100,000 shares totaling $8.8 million in 4Q20[36] Forward Guidance - The company projects 11,500-12,500 home closings for full year 2021[41] - The company projects $4.2-4.6 billion in home closing revenue for full year 2021[41]
Meritage Homes(MTH) - 2020 Q3 - Quarterly Report
2020-10-27 13:57
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-9977 Meritage Homes Corporation (Exact Name of Registrant as Specified in its Charter) Maryland 86-0611231 (State or Other Jur ...
Meritage Homes(MTH) - 2020 Q3 - Earnings Call Transcript
2020-10-22 21:06
Financial Data and Key Metrics Changes - Meritage Homes reported a 56% year-over-year earnings growth in Q3 2020, with a 21% increase in closing revenue and a 170 basis points improvement in home closing gross margin [35][39][48] - The company achieved record quarterly closing revenue and gross margins, despite high lumber prices, and maintained the lowest net debt to capital ratio in its history at 15.7% [13][44] - Year-to-date results showed an 86% increase in net earnings and a 40% rise in orders [43] Business Line Data and Key Metrics Changes - The company delivered 3,851 homes in Q3 2020, a 71% increase compared to Q3 2019, with entry-level homes representing 60% of average active communities [14][22] - Absorption rates for entry-level communities were 75% higher than the previous year, while first move-up communities saw an 86% increase in absorption [23][30] - The company put approximately 16,000 new lots under control in the first nine months of 2020, translating to about 123 new communities [26] Market Data and Key Metrics Changes - The central region, particularly Texas, led order growth with an 82% increase year-over-year, while California saw a 158% growth in orders [30][32] - All regions experienced solid year-over-year performance, with the East region showing a 63% increase in orders [34] Company Strategy and Development Direction - The company is focused on increasing its community count to 300 by early to mid-2022, with a strategy emphasizing affordable entry-level homes [18][53] - Meritage Homes plans to ramp up land investments, having spent nearly $300 million in Q3 2020, the highest in its history [46][125] - The company aims to maintain a nimble land acquisition strategy to adapt to market conditions [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on current market demand, citing favorable macroeconomic factors such as low mortgage rates and increased demand for new homes [15][52] - The company anticipates continued strength in Q4 2020, but acknowledges potential impacts from election uncertainty and COVID-19 [48] Other Important Information - The effective tax rate for Q3 2020 was 19.5%, down from 24.4% the previous year, contributing to improved earnings per share [42] - The company has a strong liquidity position with $610 million in cash and no drawn credit facility [44] Q&A Session Summary Question: Concerns about builders needing to slow activity pace - Management acknowledged the need for long-term focus, indicating that while short-term fluctuations may occur, the company is well-positioned for future growth [60][64] Question: Community count decline and market growth - Management noted that while community count is a concern, they are focused on backlog and spec counts to drive sales in 2021 [78][82] Question: Gross margin outlook for 2020 - Management indicated that gross margins are expected to improve due to pricing and operational efficiencies, despite some cost pressures from lumber [97][100] Question: LiVE.NOW brand penetration and future opportunities - Management highlighted the importance of maintaining affordability and noted that they are actively pursuing larger land deals to support growth [145][116]
Meritage Homes(MTH) - 2020 Q3 - Earnings Call Presentation
2020-10-22 16:06
Financial Performance - The company reported a 56% increase in net earnings in 3Q20, reaching $109 million, compared to $70 million in 3Q19 [24, 26] - Diluted EPS increased by 59% to $2.84 in 3Q20, compared to $1.79 in 3Q19 [26] - Home closing revenue increased by 21% to $1.133 billion in 3Q20, compared to $939 million in 3Q19 [26] - Home closing gross margin improved by 170 bps to 21.5% in 3Q20, compared to 19.8% in 3Q19 [26] Sales and Orders - Orders increased by 71% in 3Q20 [11] - The company secured approximately 9,000 new lots in 3Q20 [15, 20] Balance Sheet and Liquidity - The company's net debt-to-capital ratio was 15.7% as of September 30, 2020, compared to 26.2% as of December 31, 2019 [30] - The company had $610 million in cash as of September 30, 2020 [28, 31] Land Investment - Land and development spending was $299 million in 3Q20, compared to $275 million in 3Q19 [34] - The company controlled 47,875 total lots as of September 30, compared to 37,300 in 3Q19 [34] Guidance - The company projects 11,200-11,500 home closings for full year 2020 [37] - The company projects $4.2-4.4 billion in home closing revenue for full year 2020 [37]
Meritage Homes(MTH) - 2020 Q2 - Quarterly Report
2020-07-27 17:50
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-9977 Meritage Homes Corporation (Exact Name of Registrant as Specified in its Charter) Maryland 86-0611231 (State or Other Jurisdic ...
Meritage Homes(MTH) - 2020 Q2 - Earnings Call Transcript
2020-07-24 01:05
Financial Data and Key Metrics Changes - The company reported a 78% increase in earnings for Q2 2020 compared to 2019, with home closing revenue growing by 20% [20] - Gross margins improved by 300 basis points, and SG&A leverage improved by 70 basis points [20] - The second quarter diluted EPS was $2.38, benefiting from a share repurchase of one million shares completed in Q1 [22] Business Line Data and Key Metrics Changes - 70% of total orders in Q2 2020 were entry-level homes, a significant increase from 51% in the same quarter last year [11] - The company sold an average of five homes per month in its communities, which is 42% higher than the same quarter last year [16] - Absorption rates in entry-level communities were over 19 homes per community on average, 37% higher than Q2 2019 [16] Market Data and Key Metrics Changes - Orders in the West region increased by 27% year-over-year, with Arizona showing the highest absorptions [18] - California experienced the largest year-over-year growth in orders at 87% for the quarter [18] - The East region saw a 23% increase in orders, with Georgia and the Carolinas posting the strongest gains [19] Company Strategy and Development Direction - The company focuses exclusively on entry-level and first move-up homes, which has proven to be a successful strategy [11] - A robust pipeline for land acquisition is in place, with plans to open 300 communities by the end of 2021, although this may be delayed into early 2022 due to COVID-related shutdowns [13] - The company is investing in virtual capabilities for selling and delivering homes, which is expected to change certain aspects of the industry permanently [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the housing market's strength despite high unemployment and ongoing pandemic challenges [28] - The company anticipates continued strength in the housing market and has updated its guidance for the year, projecting home closings between 10,850 and 11,350 units [26] - Management noted that they are prepared to adjust their strategy quickly if market conditions change [35] Other Important Information - The company ended Q2 with approximately $485 million in cash and the lowest net debt-to-cap leverage in its history at 20.4% [23] - The company spent approximately $214 million on land and development in Q2 2020, almost $40 million higher than the previous year [24] - The company is seeing competitive pressure in the land market, with land prices increasing in hotter markets [74] Q&A Session Summary Question: Guidance for the back half of the year and supply constraints - Management indicated they are ramping up spec inventory and do not foresee significant supply constraints despite some COVID-related issues [31][32] Question: Community count outlook and potential changes - Management stated that they are optimistic about community count growth and have a robust pipeline, with no immediate concerns dampening their enthusiasm for growth [34] Question: Changes in consumer behavior due to COVID - Management reported no signs of retreat in demand, particularly in Arizona, and noted that buyers are well-qualified [37][39] Question: Labor savings and land price appreciation - Management confirmed that temporary labor savings from renegotiated contracts are expected to revert, and land prices are increasing due to competition [72][74]
Meritage Homes(MTH) - 2020 Q2 - Earnings Call Presentation
2020-07-23 18:08
Financial Performance - Second quarter 2020 home closings increased by 23% to 2,770 compared to 2,253 in 2019[25] - Home closing revenue increased by 20% to $1032 million from $863 million in 2019[25] - Net earnings increased by 78% to $91 million, compared to $51 million in 2019[25] - Diluted EPS increased by 82% to $238, compared to $131 in 2019[25] - Home closing gross margin increased by 300 bps to 214% from 184% in 2019[25] Orders and Demand - Total orders increased by 32% in the second quarter[10] - Record orders were achieved in April, May and June[8] - Entry-level homes are outperforming other product types, representing 70% of orders in 2Q20[19] Balance Sheet and Liquidity - The company has the strongest balance sheet in its history[26] - Net debt-to-capital is at 204%[34] - The company paid off $500 million of its Revolving Credit Facility in May[37] Land and Development - Land and development spending increased to $214 million in 2Q20 from $175 million in 2Q19[41] - Total lots controlled are 42,851[41] Guidance - Full year 2020 home closing revenue is projected to be $40-43 billion[44] - Full year 2020 diluted EPS is projected to be $875-925[44]
Meritage Homes(MTH) - 2020 Q1 - Quarterly Report
2020-05-01 18:07
FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-9977 Meritage Homes Corporation (Exact Name of Registrant as Specified in its Charter) Maryland 86-0611231 (State or Other Jurisdi ...
Meritage Homes(MTH) - 2020 Q1 - Earnings Call Transcript
2020-04-29 21:59
Financial Data and Key Metrics Changes - The company reported a 180% earnings growth in Q1 2020 compared to the same period last year, driven by a 27% increase in home closing revenue and a 31% increase in closings [35][36][42] - Home closing gross margins increased by 330 basis points to 20% for Q1 2020, benefiting from pricing power and construction efficiencies [36][42] - SG&A expenses decreased to 10.7% from 12.3% year-over-year, indicating improved operational efficiency [39] Business Line Data and Key Metrics Changes - Entry-level orders increased by 69% year-over-year, representing 61% of total orders for Q1 2020, up from 45% in Q1 2019 [25][36] - Spec inventory at the end of the quarter was up 23% year-over-year, with 48% of homes completed [26] - The company experienced a 23% order growth overall, with 70% of that growth coming from spec inventory [12][24] Market Data and Key Metrics Changes - Orders in the West region increased by 35% year-over-year, with California seeing total orders and order value more than double compared to Q1 2019 [28] - Arizona reported a 25% order growth for the quarter, with absorption rates up 44% year-over-year [29] - The East region experienced an 11% year-over-year order growth, driven by a 20% increase in absorption [30] Company Strategy and Development Direction - The company is focused on entry-level and first move-up homes, which make up 90% of their communities, and is adapting operations to leverage technology for remote sales [11][19][56] - The management emphasized maintaining a competitive edge by managing spec starts and inventory effectively, while also curtailing discretionary spending [57][58] - The company plans to continue its strategy of simplifying operations and reducing costs to enhance affordability for buyers [55][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of COVID-19 on operations but expressed confidence in the company's strong balance sheet and liquidity to weather the uncertainty [10][43] - The management noted that demand for homes remains strong, particularly in entry-level segments, and that the company is well-positioned to capture market share during the downturn [54][56] - The company is monitoring market conditions closely and is prepared to adjust pricing and inventory strategies as necessary [38][99] Other Important Information - The company has suspended share repurchases indefinitely due to current economic conditions, with $23 million remaining authorized for repurchases [42] - The company reported a solid backlog with limited cancellations, expecting most to close quickly [32][44] - The management highlighted a new charitable initiative contributing $250,000 to feed America during the pandemic [59] Q&A Session Summary Question: Can you provide context on recent activity and year-over-year declines? - Management noted a significant slowdown in early April but observed improvement in the latter half of the month, with declines expected to be around 25% to 30% [63][64] Question: What percentage of orders came from virtual tours? - Approximately 15% of net orders came from virtual tours, with buyers typically needing to visit the home before closing [67][68] Question: How is the company adjusting its strategy in response to changing market conditions? - The company is actively managing spec starts and land acquisitions, with a focus on maintaining inventory for quick sales [76][78] Question: Are there differences in demand across different markets? - Management expressed concerns about Orlando and California but noted strong sales in Houston and Arizona [82][84] Question: What would trigger the company to reengage the land market? - The company is reviewing its land pipeline and will strategically engage based on market conditions and opportunities [88][90]