Financial Data and Key Metrics Changes - In Q4 2024, Meritage Homes delivered 4,044 homes, achieving a home closing gross margin of 23.2% and a diluted EPS of $4.72, marking a 12% year-over-year decrease in diluted EPS from $5.38 in Q4 2023 [10][47] - The full-year 2024 home closing revenue reached $6.3 billion, a 5% increase from 2023, with a closing gross margin of 24.9%, slightly up from 24.8% in 2023 [11][48] - The company reported a book value per share of $143.98, reflecting a 21% compounded annual growth rate over three years [12] Business Line Data and Key Metrics Changes - Sales orders for Q4 2024 totaled 3,304 homes, with 91% from entry-level homes, up from 88% the previous year, and a cancellation rate of 10% [23] - The average sales price (ASP) for orders was $400,000, down 4% year-over-year due to increased financing incentives and a shift in product and geographic mix [24] - The ending community count increased to 292, a 5% rise from Q3 2024 and an 8% increase from Q4 2023 [25] Market Data and Key Metrics Changes - The average absorption pace improved across all regions, with the central region (Texas) showing the highest at 4.7% per month [27] - The East region had an average absorption pace of 3.8%, while the West region experienced a 10% year-over-year growth in absorption pace to 3.3% [29] - The company anticipates a double-digit year-over-year increase in community count by the end of 2025, driven by favorable demographics and undersupply of homes [30] Company Strategy and Development Direction - Meritage Homes is focused on increasing market share by delivering affordable, move-in ready homes, with a goal of 20,000 units by 2027 [26][60] - The company has expanded its operations into new markets, including Alabama, and is committed to maintaining a strong land position to support growth [19][58] - The company plans to utilize off-balance sheet land financing to enhance capital efficiency, particularly in California [118][126] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the spring selling season, despite a slower start in January, and believes they can achieve their full-year closing guidance [70] - The company is prepared to adjust incentives based on market conditions, with a focus on maintaining margins while achieving volume targets [78][80] - Management remains confident in the long-term growth trajectory, citing strong demand for affordable homes despite current economic challenges [60][134] Other Important Information - Meritage Homes has returned nearly $0.5 billion to shareholders through share buybacks and dividends since 2022 [15] - The company completed a 2-for-1 stock split on January 2, 2025, reflecting confidence in its long-term growth [55] - The effective income tax rate for Q4 2024 was 22.1%, down from 23.2% in Q4 2023, benefiting from energy tax credits [45] Q&A Session Summary Question: Drivers of gross margin trajectory and expectations for 2025 - Management indicated that gross margin is primarily influenced by incentives and that improvements could occur if demand increases and financing costs stabilize [66] Question: Ability to meet full-year closings guidance - Management expressed confidence in meeting guidance, citing current market conditions and inventory levels [71] Question: Strategy regarding volume and margin balance - Management stated they are willing to adjust margins based on market conditions, with a focus on achieving volume targets [78] Question: Community count growth and regional performance - Management noted that community count growth is expected to be steady, with a focus on the Southeast region [111] Question: Long-term land strategy and joint ventures - Management confirmed the initiation of a joint venture for land financing in California, aiming for increased capital efficiency [118][126]

Financial Performance - Home closings increased by 2% in 4Q24, totaling 4,044 units, and by 12% for the full year 2024, reaching 15,611 units[21] - Home closing revenue decreased by 3% to $1.596 billion in 4Q24, but increased by 5% to $6.341 billion for the full year 2024[21] - The average selling price (ASP) on closings decreased by 5% to $395,000 in 4Q24 and by 6% to $406,000 for the full year 2024[21] - Home closing gross profit decreased by 10% to $370 million in 4Q24, but increased by 5% to $1.580 billion for the full year 2024[21] - Diluted EPS decreased by 12% to $4.72 in 4Q24, but increased by 8% to $21.44 for the full year 2024[21] Sales and Orders - Net sales orders increased by 14% year-over-year in 4Q24, reaching 3,304 orders[7,8] - The average absorption pace improved by 8% year-over-year to 3.9 in 4Q24[9,10] - Entry-level homes accounted for 91% of total orders in 4Q24[11,12] Land and Inventory - Total lots controlled increased to 85,613, representing a 5.5-year supply[25] - Of the total lots controlled, 62% are owned and 38% are optioned[25] - Land spend was $808 million, representing 92% of total capital allocation spend[24] Guidance - For the first quarter of 2025, the company projects home closings between 3,200 and 3,500 units and home closing revenue between $1.26 billion and $1.40 billion[28] - The company anticipates a home closing gross margin of around 22% and an effective tax rate of about 24% for the first quarter of 2025[28] - Diluted earnings per common share are projected to be between $1.59 and $1.83 for the first quarter of 2025[28] - For the full year 2025, the company projects home closings between 16,250 and 16,750 units and home closing revenue between $6.6 billion and $6.9 billion[28]

Earnings and Revenue Performance - Earnings per share (EPS) of $4.72 beat the Zacks Consensus Estimate by 113.6% but declined 12% year over year from $5.38 [4] - Total revenues of $1.62 billion decreased 2.3% year over year from $1.66 billion [4] - Total closing revenues of $1.61 billion declined 2% year over year but exceeded the consensus estimate of $1.57 billion by 2.8% [5] - Home closing revenues under the Homebuilding segment fell 3% year over year to $1.595 billion due to lower average sales prices (ASPs) [5] - Land closing revenues increased 49% year over year to $17.4 million [5] Operational Metrics - Homes closed increased 2% year over year to 4,044 units, with ASPs declining 5% to $395,000 [6] - Total home orders rose 14% year over year to 3,304 homes, with dollar value increasing 10% to $1.32 billion [7] - Entry-level buyers accounted for 91% of sales orders, up from 88% in the prior-year period [8] - Backlog units decreased 39% year over year to 1,544, with backlog value down 42% to $629.5 million [8] - Average absorption pace improved 8% year over year to 3.9 homes per month [7] Margins and Expenses - Home closing gross margin contracted 200 basis points (bps) to 23.2%, driven by higher lot costs and financing incentives [9] - Selling, general, and administrative expenses as a percentage of home closing revenues increased 10 bps to 10.8% [10] - Financial Services segment revenues grew 17% year over year to $8.4 million [10] Full-Year 2024 Highlights - Total revenues for 2024 increased 4.2% year over year to $6.4 billion [12] - EPS rose 8% year over year to $21.44 [12] - Homes delivered increased 12% to 15,611, with ASPs declining 6% to $406,000 [12] - Gross margins improved 10 bps to 24.9% [12] Financial Position - Cash and cash equivalents decreased to $651.6 million from $921.2 million at the end of 2023 [13] - Total lots owned or controlled increased to 65,600, including 5,500 from the Elliott Homes acquisition [13] - Total debt to capital rose to 20.6% from 17.9% at the end of 2023, while net debt to capital increased to 11.7% from 1.9% [13] - Net cash used by operating activities was $227.6 million, compared to $355.6 million provided in 2023 [14] - The company paid $108.6 million in dividends and repurchased 732,255 shares for $125.9 million [14] 2025 Guidance - The company expects to close between 16,250 and 16,750 homes, up from 15,611 in 2024 [15] - Revenue is projected to be between $6.6 billion and $6.9 billion, reflecting continued demand for affordable housing [15] Peer Performance - D R Horton reported Q1 fiscal 2025 earnings and revenues beating estimates but declining year over year [16] - D R Horton leveraged mortgage rate buydowns and smaller floor plans to address affordability challenges [17] - KB Home posted strong Q4 2024 results, with revenues and earnings surpassing expectations and increasing year over year [18] - KB Home's strategy focused on faster build times and strong homeownership demand despite mortgage rate pressures [19] - NVR reported Q4 2024 earnings and Homebuilding revenues exceeding estimates, with both metrics increasing year over year [20] - NVR saw strong growth in settlements despite a decline in new orders [21]

Financial Performance - Revenue for Q4 2024 was $1.61 billion, a 2.4% decrease year-over-year [1] - EPS for Q4 2024 was $4.72, a significant increase from $2.69 in the year-ago quarter [1] - Revenue exceeded the Zacks Consensus Estimate by 2.80%, with EPS surpassing estimates by 113.57% [1] Key Metrics Analysis - Home Closing Revenue - Average sales price was $395, slightly below the 10-analyst average estimate of $402.77 [4] - Homes closed totaled 4,044, exceeding the 10-analyst average estimate of 3,885 [4] - Homes ordered were 3,304, slightly below the 10-analyst average estimate of 3,352 [4] - Order Backlog was 1,544, below the nine-analyst average estimate of 1,759 [4] - Active Communities - Ending - Total was 292, below the eight-analyst average estimate of 303 [4] - Order Backlog - Average sales price was $408, slightly above the eight-analyst average estimate of $406 [4] - Order Backlog Value was $629.55 million, below the seven-analyst average estimate of $708.57 million [4] - Homes Ordered Value was $1.32 billion, slightly below the six-analyst average estimate of $1.35 billion [4] Revenue Breakdown - Total closing revenue (Homebuilding) was $1.61 billion, exceeding the 11-analyst average estimate of $1.57 billion, with a year-over-year change of -2.4% [4] - Home closing revenue was $1.60 billion, exceeding the 11-analyst average estimate of $1.56 billion, with a year-over-year change of -2.8% [4] - Land closing revenue was $17.36 million, significantly above the 10-analyst average estimate of $6.15 million, with a year-over-year change of +48.6% [4] - Financial Services revenue was $8.43 million, above the 10-analyst average estimate of $7.43 million, with a year-over-year change of +17.1% [4] Stock Performance - Shares of Meritage returned +5.2% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently has a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Company Performance - Meritage Homes reported quarterly earnings of $4.72 per share, significantly exceeding the Zacks Consensus Estimate of $2.21 per share, and up from $2.69 per share a year ago, representing an earnings surprise of 113.57% [1] - The company achieved revenues of $1.61 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.80%, although this is a slight decrease from year-ago revenues of $1.65 billion [2] - Over the last four quarters, Meritage has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Outlook - The immediate price movement of Meritage shares will largely depend on management's commentary during the earnings call, with shares having increased by about 5.2% since the beginning of the year, compared to the S&P 500's gain of 3.2% [3] - Current consensus EPS estimate for the upcoming quarter is $1.90 on revenues of $1.33 billion, and for the current fiscal year, it is $10.52 on revenues of $6.84 billion [7] Industry Context - The Building Products - Home Builders industry, to which Meritage belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Meritage's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Home Closings and Revenue - In Q4 2024, Meritage Homes closed 4,044 homes, a 2% increase from 3,951 homes in Q4 2023, while full year closings reached 15,611 homes, up 12% year-over-year[4] - Home closing revenue for Q4 2024 was $1.6 billion, a 3% decrease from $1.64 billion in Q4 2023, with full year revenue at $6.34 billion, reflecting a 5% increase from $6.06 billion in 2023[4] - The average sales price for home closings in Q4 2024 was $395,000, down 5% from $415,000 in Q4 2023, while the full year average sales price decreased by 6% to $406,000[4] - Home orders in Q4 2024 totaled 3,304 units, a 14% increase year-over-year, with a total of 14,606 orders for the full year, up 11% from 2023[4] - In Q4 2024, the total homes closed reached 4,044 with a total value of $1,595,928, compared to 3,951 homes closed valued at $1,641,520 in Q4 2023, reflecting a 2.3% increase in homes closed but a 2.8% decrease in total value[25] - For the twelve months ended December 31, 2024, homes closed totaled 15,611 with a value of $6,341,546, up from 13,976 homes closed valued at $6,056,784 in 2023, indicating an increase of 11.7% in homes closed and 4.7% in total value[25] Financial Performance - Net earnings for Q4 2024 were $172.6 million, a 13% decrease from $198.9 million in Q4 2023, resulting in diluted EPS of $4.72, down 12% from $5.38[4] - Net earnings for the twelve months ended December 31, 2024, rose by 6% to $786,186 compared to $738,748 in 2023[18] - Earnings per common share for 2024 was $21.70, an increase of 8% from $20.17 in 2023[19] - Financial services revenue increased by 23% to $31,163 in 2024 from $25,250 in 2023[18] - The company reported a total cost of closings of $4,780,012 for the twelve months ended December 31, 2024, an increase of 4% from $4,606,457 in 2023[18] - The company experienced a gross profit margin of 25% on home closings for the twelve months ended December 31, 2024[18] Backlog and Orders - The ending backlog for Q4 2024 was 1,544 units, a 39% decrease from 2,549 units in Q4 2023, with a backlog value of $629.5 million, down 42% from $1.09 billion[4] - Homes ordered in Q4 2024 totaled 3,304 with a value of $1,320,447, compared to 2,892 homes ordered valued at $1,198,740 in Q4 2023, representing a 14.2% increase in homes ordered and a 10.1% increase in value[25] - The order backlog as of December 31, 2024, was 1,544 homes valued at $629,549, down from 2,549 homes valued at $1,088,137 in 2023, indicating a 39.4% decrease in backlog homes and a 42.1% decrease in value[25] Land Acquisition and Development - The company’s land acquisition and development spend in Q4 2024 was $741.5 million, compared to $653.5 million in Q4 2023, with a total of $2.5 billion spent for the full year[11] - Meritage Homes completed the acquisition of Elliott Homes, adding approximately 5,500 lots, contributing to a total of 85,600 lots owned or controlled as of December 31, 2024, a 33% increase from 64,300 lots in 2023[11] Dividends and Share Repurchase - The company declared a quarterly cash dividend of $0.75 per share in Q4 2024, totaling $27 million, up from $0.27 per share in Q4 2023, with full year dividends of $108.6 million[11] - The company repurchased shares worth $125,932 during the twelve months ended December 31, 2024[23] Assets and Liabilities - Total assets as of December 31, 2024, were $7,162,654, up from $6,353,134 in 2023[21] - Cash and cash equivalents decreased to $651,555 as of December 31, 2024, from $921,227 in 2023[21] - The company reported a debt-to-capital ratio of 20.6% as of December 31, 2024, compared to 17.9% in 2023, reflecting an increase in leverage[30] Community and Market Position - Active communities increased to 292 in Q4 2024 from 270 in Q4 2023, showing a growth of 8.1% year-over-year[26] - The average active communities for the twelve months ended December 31, 2024, was 280.4, compared to 276.4 in 2023, indicating a slight increase of 1.4%[26] - Meritage Homes Corporation is the fifth-largest public homebuilder in the U.S., focusing on energy-efficient and affordable homes across multiple states[32] - The company has delivered nearly 200,000 homes in its 39-year history, emphasizing its commitment to quality construction and customer experience[33]

Core Viewpoint - Meritage Homes Corporation reported a record-setting year in 2024, achieving the highest annual closing volume and home closing revenue despite a decline in average sales prices. The company is well-positioned to capture demand in the upcoming spring selling season due to favorable demographics and an undersupply of homes at their price points [4][10]. Financial Performance - In Q4 2024, homes closed increased by 2% year-over-year to 4,044 units, while home closing revenue decreased by 3% to $1.6 billion. The average sales price for closings fell by 5% to $395,000 [2][9]. - For the full year 2024, home closing revenue rose by 5% to $6.3 billion, driven by a 12% increase in home closing volume to 15,611 units, despite a 6% decline in average sales prices [2][5]. - Net earnings for Q4 2024 were $172.6 million, a 13% decrease from the previous year, resulting in diluted EPS of $4.72, down 12% year-over-year. However, full year net earnings increased by 6% to $786.2 million, with diluted EPS rising to $21.44 [2][9][10]. Orders and Backlog - Home orders in Q4 2024 increased by 14% year-over-year to 3,304 units, with an average monthly absorption pace of 3.9 homes. The total home orders for the full year reached 14,606, an 11% increase from 2023 [5][6]. - The ending backlog decreased by 39% to 1,544 units, with a backlog value of $629.5 million, down 42% from the previous year [2][5]. Cost and Margins - The home closing gross margin for Q4 2024 was 23.2%, down from 25.2% in Q4 2023, attributed to higher lot costs and increased financing incentives [9][10]. - Selling, general and administrative expenses as a percentage of home closing revenue were 10.8% for Q4 2024, slightly up from 10.7% in the previous year [9]. Capital Allocation and Liquidity - The company invested $741.5 million in land acquisition and development in Q4 2024, including the acquisition of Elliott Homes, and ended the year with cash of $651.6 million [4][13]. - Meritage Homes declared and paid quarterly cash dividends of $0.75 per share in Q4 2024, totaling $27 million, an increase from $0.27 per share in the same quarter of 2023 [13][10]. Guidance - For full year 2025, the company projects home closing volume between 16,250 and 16,750 units and home closing revenue of $6.6 to $6.9 billion [10].

Earnings Report and Estimates - Meritage Homes Corporation (MTH) is scheduled to report Q4 2024 results on Jan 29, after market close [1] - The Zacks Consensus Estimate for Q4 2024 EPS decreased to $2.25 from $2.27 in the past 30 days, indicating a 16.4% YoY decrease from $2.69 [3] - The consensus mark for revenues is pegged at $1.57 billion, indicating a 5.1% YoY decrease [3] Quarterly Performance and Factors - Total closing revenues decreased 2% YoY in the last reported quarter [2] - Q4 earnings and revenues are expected to decrease YoY due to affordability pressures and increased use of incentives [4] - The company expects home closings to be in the range of 3,750-3,950 units, down from 3,951 units a year ago [5] - Home closing revenues are anticipated to be in the $1.5-$1.59 billion range, down from $1.64 billion YoY [5] Segment-wise Performance - Homebuilding segment, which contributed 99.6% to total revenues in 2023, is predicted to drop 5.3% YoY to $1.57 billion [7] - Financial services revenues, which contributed 0.4% to total revenues in 2023, are expected to increase 8.8% YoY to $7.8 million [7] Margins and Incentives - Gross margins are forecasted to be in the range of 22.5% to 23.5%, down from Q3's 24.8% and the prior year's 25.2% [8] - Increased use of financing incentives, including rate buydowns, has weighed on the company's ASP [8] Backlogs and Home Orders - Home orders are expected to grow 24% to 3,587 units in Q4 2024 [9] - Total backlog is expected to decline 22% to 1,988 units, with the total backlog value decreasing 25% YoY to $816.2 million [9] Integration and Market Focus - Meritage Homes is integrating Elliott Homes, a private builder with a strong presence in the Gulf Coast markets [5] - The company's focus on the entry-level market, which remains structurally undersupplied, should continue to provide a steady stream of buyers [4] Earnings ESP and Zacks Rank - MTH has an Earnings ESP of -1.27% and a Zacks Rank 3, indicating no predicted earnings beat for the quarter [10] Other Companies in the Sector - Weyerhaeuser (WY) has an Earnings ESP of +1.01% and a Zacks Rank of 1, with expected Q4 2024 earnings to decrease 56.3% [11] - Sterling Infrastructure, Inc. (STRL) has an Earnings ESP of +2.99% and a Zacks Rank of 3, with expected Q4 2024 earnings to increase 3.1% [12] - PulteGroup, Inc. (PHM) has an Earnings ESP of +2.36% and a Zacks Rank of 3, with expected Q4 2024 earnings to decrease 2.1% [13]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Meritage Homes (MTH) due to lower revenues, with a focus on how actual results compare to estimates [1][2]. Earnings Expectations - Meritage is expected to report quarterly earnings of $2.45 per share, reflecting an 8.9% decrease year-over-year, and revenues are projected to be $1.57 billion, down 5.1% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 11.78% higher in the last 30 days, indicating a positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +5.97%, indicating a likelihood of beating the consensus EPS estimate [10][11]. Historical Performance - Meritage has consistently beaten consensus EPS estimates, achieving this in the last four quarters, with a notable surprise of +5.53% in the most recent quarter [12][13]. Conclusion - Meritage is positioned as a strong candidate for an earnings beat, but investors should consider other influencing factors beyond earnings results [14][16].

Earnings Performance and Estimates - Meritage Homes has consistently beaten earnings estimates, with an average surprise of 13.77% over the last two quarters [1] - For the most recent quarter, Meritage reported earnings of $2.67 per share, beating the estimate of $2.53 per share by 5.53% [4] - In the previous quarter, the company reported $3.16 per share, surpassing the consensus estimate of $2.59 per share by 22.01% [4] Earnings ESP and Zacks Rank - Stocks with a positive Earnings ESP and a Zacks Rank 3 (Hold) or better have a 70% chance of producing a positive earnings surprise [2] - Meritage currently has an Earnings ESP of +81.61%, indicating analysts are bullish on its earnings prospects [8] - The combination of a positive Earnings ESP and a Zacks Rank 3 suggests another earnings beat is likely for Meritage [8] Analyst Estimates and Predictive Power - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the former being more accurate due to recent analyst revisions [5] - Recent estimates for Meritage have been moving higher, further supporting the likelihood of an earnings beat [7] - A negative Earnings ESP does not necessarily indicate an earnings miss but reduces the predictive power of the metric [3]