Core Insights - Meritage Homes Corporation reported third quarter results for 2024, showing a slight increase in home orders and a decrease in average sales price, reflecting a strategic pivot towards affordable homes [1][3][4] Summary of Operating Results - Homes closed in Q3 2024 totaled 3,942 units, an 8% increase from 3,638 units in Q3 2023 [2] - Home closing revenue decreased by 2% to $1.585 billion from $1.610 billion year-over-year [2] - Average sales price for closings fell by 9% to $402,000 compared to $443,000 in the previous year [2] - Home orders increased by 1% to 3,512 units from 3,474 units in Q3 2023 [2] - Home order value decreased by 5% to $1.426 billion from $1.496 billion year-over-year [2] Financial Performance - Net earnings for Q3 2024 were $196 million, down 12% from $222 million in Q3 2023, resulting in diluted EPS of $5.34, a decrease of 11% from $5.98 [2][9] - Earnings before income taxes were $250 million, a 13% decrease from $286 million in the prior year [2][9] - Home closing gross margin was 24.8%, down from 26.7% in Q3 2023, attributed to higher lot costs and increased financing incentives [6] Management Strategy - The company emphasized a shift towards affordable, quick-turning move-in ready homes, which contributed to achieving the highest third quarter closing volume [3] - Management noted that nearly 45% of this quarter's closings were also sold within the same quarter, leading to a record backlog conversion rate of 145% [3] Capital Allocation and Liquidity - Land acquisition and development spending totaled $659.4 million in Q3 2024, with nearly 7,800 net new lots acquired [3][18] - The company ended the quarter with cash of $831.6 million and a net debt-to-capital ratio of 8.8% [3][20] Year-to-Date Results - For the first nine months of 2024, total sales orders increased by 10%, driven by a 10% increase in average absorption pace [10] - Home closing revenue for the first nine months rose by 7% to $4.746 billion, reflecting a 15% increase in home closing volume [11] - Net earnings for the first nine months were $614 million, a 14% increase from $540 million in the same period of 2023 [17] Guidance - The company provided guidance for Q4 2024, projecting home closing volume between 3,750 and 3,950 units, with expected home closing revenue of $1.50 to $1.59 billion [22]

Core Points - Meritage Homes has appointed Erin Lantz as an independent director to its Board of Directors, effective October 14, 2024, increasing the board size to 11 directors [1] - The appointment reflects the company's commitment to board refreshment and diversity of thought [4] - The Board plans to consider Ms. Lantz for committee appointments in upcoming meetings [1] Company Background - Meritage Homes is the fifth-largest public homebuilder in the U.S., focusing on energy-efficient and affordable homes [10] - The company has delivered over 185,000 homes in its 38-year history and is recognized for quality construction and customer experience [11] Erin Lantz's Experience - Ms. Lantz has over 20 years of leadership experience in technology-related offerings, currently serving as Chief Revenue Officer for Ethos [2] - She has held significant positions at Zillow Group and Bank of America, bringing valuable insights to the board [2][3] - Her public company director experience includes roles at Blend Labs, TrueCar, and Washington Federal [3] Board Declassification Proposal - The Board has approved a proposal to declassify the Board of Directors, which will be presented to stockholders at the 2025 annual meeting [5] - This move is in response to stockholder feedback favoring annually elected boards for increased accountability [5] - The declassification aligns with the company's refreshment initiative to transition longer-tenured directors over time [5] Governance and Communication - The company plans to file a proxy statement with the SEC regarding the Declassification Proposal, urging stockholders to review the materials [6] - Key participants in the solicitation of proxies include the executive chairman and other directors [7][8]

Group 1 - The homebuilding market is experiencing renewed interest due to the potential return to low interest rates, which could positively impact housing demand [1] - Crude Value Insights focuses on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] Group 2 - Subscribers to Crude Value Insights gain access to a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2] - The service includes live chat discussions about the oil and gas sector, enhancing community engagement and information sharing [2]

Company Performance - Meritage Homes (MTH) shares have increased by 4.3% over the past month, reaching a new 52-week high of $211.01 [1] - Year-to-date, Meritage has gained 16.3%, compared to 21.2% for the Zacks Construction sector and 29.4% for the Zacks Building Products - Home Builders industry [1] Earnings and Revenue - Meritage has consistently exceeded earnings expectations, reporting EPS of $6.31 against a consensus estimate of $5.17 in its last earnings report [2] - For the current fiscal year, Meritage is projected to achieve earnings of $21.14 per share on revenues of $6.29 billion, reflecting a 6.07% increase in EPS and a 2.93% increase in revenues [3] - The next fiscal year forecasts earnings of $22.09 per share on $6.72 billion in revenues, indicating year-over-year changes of 4.48% and 6.77%, respectively [3] Valuation Metrics - Meritage has a Value Score of B, with Growth and Momentum Scores of D and B, respectively, resulting in a VGM Score of B [6] - The stock trades at 9.6X current fiscal year EPS estimates, below the peer industry average of 10.3X, and at 9.7X trailing cash flow compared to an average of 11X for peers [6] Zacks Rank - Meritage holds a Zacks Rank of 2 (Buy), supported by favorable earnings estimate revisions from analysts [7] - The stock aligns with the recommendation for investors to select stocks with Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, suggesting potential for further gains [7] Industry Comparison - M/I Homes, Inc. (MHO), a peer in the industry, has a Zacks Rank of 1 (Strong Buy) and is expected to post earnings of $19.76 per share on revenues of $4.42 billion for the current fiscal year [8][9] - MHO shares have increased by 8.2% over the past month, trading at a forward P/E of 8.46X and a P/CF of 9.65X [10] - The Building Products - Home Builders industry is performing well, ranking in the top 17% of all industries, indicating favorable conditions for both MTH and MHO [10]

Core Viewpoint - Meritage Homes Corporation, the fifth largest public homebuilder in the U.S., is set to release its third quarter 2024 results on October 29, 2024, with a conference call scheduled for October 30, 2024 [1]. Company Overview - Meritage Homes is recognized as the fifth-largest public homebuilder in the United States based on homes closed in 2023 [3]. - The company specializes in energy-efficient and affordable entry-level and first move-up homes, operating in multiple states including Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee [3]. - Over its 38-year history, Meritage Homes has delivered more than 185,000 homes and is known for its distinctive style, quality construction, and award-winning customer experience [4]. Industry Leadership - Meritage Homes is an industry leader in energy-efficient homebuilding, having received the U.S. Environmental Protection Agency's ENERGY STAR® Partner of the Year for Sustained Excellence Award eleven times, along with other notable awards [4].

Company Overview - Meritage Homes is the fifth-largest public homebuilder in the United States based on homes closed in 2023, offering energy-efficient and affordable entry-level and first move-up homes [4] - The company has delivered over 185,000 homes in its 38-year history and is recognized for its distinctive style, quality construction, and award-winning customer experience [5] - Meritage Homes is an industry leader in energy-efficient homebuilding, having received multiple awards from the U.S. Environmental Protection Agency, including the ENERGY STAR® Partner of the Year for Sustained Excellence Award [5] Community Engagement - Meritage Homes, in partnership with Operation Homefront, is donating mortgage-free energy-efficient homes to veterans, with two families selected to receive homes in Texas and North Carolina [1][2] - The initiative aims to support veterans in establishing strong foundations and thriving in their communities, highlighting the company's commitment to social responsibility [2][3] - Each family will enter Operation Homefront's Permanent Homes for Veterans program, which provides support for homeownership and financial success [3] Operation Homefront - Operation Homefront is a national nonprofit organization focused on building strong, stable, and secure military families, ensuring they thrive in their communities [7] - The organization allocates 83 percent of its expenditures directly to programs supporting military families, providing critical financial assistance, housing, and family support services [7] - The partnership with Meritage Homes enhances Operation Homefront's mission by providing veterans with the opportunity to pursue dreams that seemed beyond their reach [3]

Core Viewpoint - Meritage Homes Corporation (MTH) has experienced a stock rally of 8.8% over the past month, outperforming both the Zacks Building Products - Home Builders industry and the S&P 500 Index, indicating strong market performance and investor interest [1][2]. Group 1: Company Performance - The company benefits from resilient housing demand and its strategy of delivering quick-turn, affordable move-in-ready homes, which aligns with current market trends [2][4]. - MTH stock is trading above its 50-day and 200-day moving averages, indicating positive technical momentum [3]. - The company achieved an average of 4.5 net sales per month in Q2 2024, exceeding its target of 4 net sales per month, showcasing strong sales performance [8]. Group 2: Strategic Advantages - Meritage Homes employs a dynamic strategy focused on nearly complete homes before sale, akin to a just-in-time inventory model, which effectively meets consumer demand for immediate occupancy [4][7]. - The 60-day closing guarantee is a key highlight of this strategy, appealing to buyers in a fast-paced market [5]. - By targeting entry-level and first-move-up homebuyers, the company positions itself to cater to the largest segment of homebuyer demand, enhancing its market appeal [6]. Group 3: Market Context - The U.S. housing market shows signs of strength, with new single-family home sales reaching a seasonally adjusted annual rate of 739,000 units in July 2024, marking a 10.6% increase [10]. - Existing home sales also exceeded expectations in July, reversing a four-month decline, indicating a potential market rebound [11]. Group 4: Valuation and Estimates - MTH stock has a forward 12-month price-to-earnings ratio of 9.13X, below the industry average of 11.53X, suggesting an attractive valuation for investors [12]. - Analysts have revised earnings estimates upward for MTH, with current and next year estimates at $21.09 and $21.98, reflecting year-over-year growth rates of 5.8% and 4.2% respectively [14].

Core Insights - Meritage Homes published its 2023 ESG Report, highlighting its commitment to sustainability and social initiatives as a key aspect of its operations [1][3]. Environmental Initiatives - Delivered 13,308 ENERGY STAR® certified homes [4] - Reported an average HERS Index energy efficiency score of 52 [4] - Recognized as an eleven-time recipient of the U.S. Environmental Protection Agency's ENERGY STAR® Partner of the Year [4] Social Initiatives - Achieved Great Place to Work® Certified status for the first time [4] - Launched inaugural employee resource groups [4] - Received the Avid Cup – Production award for the third consecutive year, recognizing high customer satisfaction [4] - Earned the Hearthstone BUILDER Humanitarian Award for philanthropic efforts [4] Company Overview - Meritage Homes is the fifth-largest public homebuilder in the U.S., focusing on energy-efficient and affordable homes [6] - The company has delivered over 185,000 homes in its 38-year history and is recognized for quality construction and customer experience [7]

Core Viewpoint - Meritage Homes reported strong second-quarter 2024 results, with earnings and revenues exceeding expectations and showing year-over-year growth [2][4]. Financial Performance - Earnings per share (EPS) reached $6.31, surpassing the Zacks Consensus Estimate by 22.1% and increasing 26% from $5.02 in the previous year [5]. - Total revenues amounted to $1.7 billion, reflecting an 8.3% increase from $1.57 billion in the same quarter last year [5]. - Homebuilding revenues were $1.69 billion, up 7.6% year-over-year, exceeding the consensus estimate by 7.5% [6]. Operational Highlights - The company closed 4,118 homes, an 18% increase from 3,490 units in the prior year [7]. - Total home orders rose 14% year-over-year to 3,799 homes, with a dollar value increase of 7% to $1.57 billion [8]. - The backlog at quarter-end totaled 2,714 units, down 28% year-over-year, with a backlog value decrease of 34% to $1.11 billion [9]. Strategic Initiatives - Meritage invested $631 million in land acquisition and development, controlling over 71,000 lots compared to about 60,000 a year ago [3][11]. - The company achieved a backlog conversion rate of 136% and a return on equity of 18.3% during the quarter [4]. Outlook and Guidance - The company raised its 2024 outlook, now expecting 14,750-15,500 home closings and revenues between $6.1 billion and $6.3 billion [14]. - For Q3, Meritage anticipates 3,650-3,850 home closings, generating revenues of $1.5 billion to $1.6 billion, with EPS expected between $4.60 and $5.05 [16]. Industry Context - Meritage Homes is part of the Zacks Building Products - Home Builders industry, which has seen competitors like D.R. Horton report a revenue increase of 2.5% year-over-year [21].

Group 1 - Meritage Homes (MTH) is identified as a stock with a buy rank and strong income characteristics for investors [1] - The Zacks Consensus Estimate for Meritage Homes' current year earnings has increased by 5.1% over the last 60 days [1] - Meritage Homes has a Zacks Rank of 1 (Strong Buy) and offers a dividend yield of 1.7%, which is significantly higher than the industry average of 0.0% [1]