Meritage Homes(MTH)

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Meritage Homes(MTH) - 2024 Q2 - Earnings Call Presentation
2024-07-25 14:18
Financial Performance - Home closings increased by 18% from 3,490 in 2Q23 to 4,118 in 2Q24[22] - Home closing revenue increased by 10% from $1543 million in 2Q23 to $1694 million in 2Q24[22] - Home closing gross profit increased by 17% from $377 million in 2Q23 to $440 million in 2Q24[22] - Diluted EPS increased by 26% from $502 in 2Q23 to $631 in 2Q24[22] Sales and Orders - Net sales orders increased 14% year-over-year[15] - Total orders were 3,799 in 2Q24[7,16] - Average sales price (ASP) on orders decreased by 6% year-over-year to $414K[16] Land and Development - Total lots controlled were 70,822 in 2Q24[33] - Supply of lots is 47 years[33] - Land spend was $631 million in 2Q24[33] Balance Sheet and Capital Structure - The company issued $575 million in new 175% convertible debt due in 2028[25] - The company refinanced its revolving credit facility to increase the size to $910 million[28,30] - Net debt-to-capital ratio is 62%[31] Guidance - The company expects home closings of 14,750-15,500 units for full year 2024[26] - The company expects home closing revenue of $61-63 billion for full year 2024[26]
Meritage (MTH) Reports Q2 Earnings: What Key Metrics Have to Say
ZACKS· 2024-07-24 23:31
Core Insights - Meritage Homes reported revenue of $1.69 billion for the quarter ended June 2024, reflecting an 8.1% increase year-over-year and surpassing the Zacks Consensus Estimate of $1.58 billion by 7.53% [1][3] - The company's EPS for the quarter was $6.31, up from $5.02 in the same quarter last year, exceeding the consensus estimate of $5.17 by 22.05% [1][3] Financial Performance Metrics - Homes ordered totaled 3,799, slightly below the average estimate of 3,925 from 10 analysts [3] - Average sales price for home closing revenue was $411, compared to the estimated $415.03 [3] - Homes closed reached 4,118, exceeding the average estimate of 3,778 [3] - Order backlog stood at 2,714, below the average estimate of 3,186 [3] - Order backlog value was $1.11 billion, compared to the estimated $1.29 billion [3] - Active communities totaled 287, slightly above the estimate of 278 [3] - Average sales price for home orders was $414, compared to the estimated $412.13 [3] - Homes ordered value was $1.57 billion, below the average estimate of $1.61 billion [3] - In the West Region, homes ordered were 1,114, below the average estimate of 1,193 [3] - Total closing revenue from homebuilding was $1.69 billion, reflecting a 9.8% increase year-over-year [3] - Financial services revenue was reported at $8.31 million, exceeding the average estimate of $6.59 million by 33.8% year-over-year [3] Stock Performance - Meritage shares have returned +20.8% over the past month, outperforming the Zacks S&P 500 composite's +1.8% change [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [4]
Meritage Homes (MTH) Beats Q2 Earnings and Revenue Estimates
ZACKS· 2024-07-24 22:40
Core Viewpoint - Meritage Homes reported quarterly earnings of $6.31 per share, exceeding the Zacks Consensus Estimate of $5.17 per share, and showing an increase from $5.02 per share a year ago [1] Earnings Performance - The company has surpassed consensus EPS estimates in all of the last four quarters [2] - The recent quarterly report represents an earnings surprise of 22.05%, with a previous quarter's surprise of 42.94% [7] Revenue Insights - Meritage posted revenues of $1.69 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 7.53%, compared to $1.57 billion in the same quarter last year [11] - The current consensus EPS estimate for the upcoming quarter is $5.19 on revenues of $1.61 billion, and for the current fiscal year, it is $20.27 on revenues of $6.21 billion [5] Stock Performance - Meritage shares have increased by approximately 13.5% since the beginning of the year, while the S&P 500 has gained 16.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market [9] Industry Context - The Building Products - Home Builders industry, to which Meritage belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable outlook [14]
Meritage Homes(MTH) - 2024 Q2 - Quarterly Results
2024-07-24 20:31
[Summary Operating Results](index=1&type=section&id=Summary%20Operating%20Results) Meritage Homes reported strong second-quarter 2024 results, highlighted by an 18% year-over-year increase in home closings and a 26% rise in diluted EPS to $6.31, with home closing revenue growing 10% to $1.7 billion | (Dollars in millions, except per share amounts) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | % Chg | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | % Chg | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Homes closed (units)** | 4,118 | 3,490 | 18% | 7,625 | 6,387 | 19% | | **Home closing revenue** | $1,693.7M | $1,543.0M | 10% | $3,159.8M | $2,804.9M | 13% | | **Home orders (units)** | 3,799 | 3,340 | 14% | 7,790 | 6,827 | 14% | | **Home order value** | $1,573.5M | $1,474.7M | 7% | $3,204.7M | $2,981.6M | 7% | | **Net earnings** | $231.6M | $186.8M | 24% | $417.6M | $318.1M | 31% | | **Diluted EPS** | $6.31 | $5.02 | 26% | $11.37 | $8.56 | 33% | [Management Commentary](index=2&type=section&id=MANAGEMENT%20COMMENTS) Management attributed the strong Q2 performance to their strategy of delivering quick move-in ready homes, resulting in record closings and orders, alongside effective capital management and strategic debt restructuring - The company's focus on affordable, move-in ready inventory is expected to drive continued market share gains despite interest rate volatility[6](index=6&type=chunk) - A high backlog conversion rate of **136%** was achieved, with over **40%** of the quarter's closings coming from intra-quarter sales[6](index=6&type=chunk) - Capital allocation in Q2 included **$631 million** in land acquisition and development, securing over **8,700 new lots**, and returning **$27.2 million** to shareholders via dividends[6](index=6&type=chunk) - The company enhanced its debt structure by issuing **$575.0 million** of new convertible debt and redeeming **$250.0 million** of senior notes due in 2025, ending the quarter with a net debt-to-capital ratio of **6.2%**[6](index=6&type=chunk) [Financial Performance](index=3&type=section&id=Financial%20Performance) The company demonstrated robust financial growth in Q2 and year-to-date 2024, marked by increased home closing revenue, expanded gross margins, and significant net earnings growth [Second Quarter 2024 Results](index=3&type=section&id=SECOND%20QUARTER%20RESULTS) In Q2 2024, home orders rose 14% year-over-year, driven by a 15% increase in absorption pace, with home closing revenue growing 10% to $1.7 billion and net earnings increasing 24% to $231.6 million - Home orders increased **14%** to **3,799 homes**, with the average absorption pace rising to **4.5 per month** from 3.9 in Q2 2023[9](index=9&type=chunk) - Entry-level homes represented **92%** of sales orders, a notable increase from 85% in the prior year, indicating a strategic shift[9](index=9&type=chunk) - Home closing gross margin expanded to **25.9%** from 24.4% year-over-year, driven by lower direct costs, greater leverage of fixed costs, and shorter construction cycle times[9](index=9&type=chunk) - SG&A as a percentage of home closing revenue improved by **30 bps** to **9.3%** due to leverage on higher revenue[9](index=9&type=chunk) [Year-to-Date 2024 Results](index=4&type=section&id=YEAR%20TO%20DATE%20RESULTS) For the first half of 2024, Meritage increased home closing revenue by 13% to $3.2 billion, driven by a 19% rise in closing volume, leading to a 31% increase in net earnings to $417.6 million - Total sales orders for the first half of 2024 increased **14%** year-over-year, driven by a **15%** increase in average absorption pace[12](index=12&type=chunk) - Home closing gross margin improved significantly to **25.9%** from 23.5% in the first half of 2023, benefiting from lower direct costs and operational efficiencies[12](index=12&type=chunk) - Net earnings rose **31%** to **$417.6 million** (**$11.37 per diluted share**) for the first half of 2024, compared to $318.1 million ($8.56 per diluted share) in the prior year period[12](index=12&type=chunk) [Balance Sheet & Liquidity](index=4&type=section&id=BALANCE%20SHEET%20%26%20LIQUIDITY) The company maintained a strong liquidity position, ending Q2 with $992.9 million in cash, accelerating land acquisition and development spending, and strengthening its balance sheet through strategic capital market activities | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $992.9 million | $921.2 million | | Lots owned or controlled | ~71,000 | N/A | | Debt-to-capital ratio | 21.2% | 17.9% | | Net debt-to-capital ratio | 6.2% | 1.9% | - Land acquisition and development spend totaled **$631.1 million** for Q2 2024, a significant increase from **$408.5 million** in Q2 2023[12](index=12&type=chunk) - The company refinanced its revolving credit facility, increasing its size to **$910.0 million** and extending its maturity to 2029[14](index=14&type=chunk) - Quarterly cash dividends were increased to **$0.75 per share**, totaling **$27.2 million** paid in Q2 2024[14](index=14&type=chunk) [Full Year 2024 Guidance](index=5&type=section&id=GUIDANCE) Based on strong first-half results, Meritage Homes updated its full-year 2024 guidance, projecting home closings between 14,750 and 15,500 units, generating $6.1 to $6.3 billion in revenue | Guidance Metric | Full Year 2024 Projection | | :--- | :--- | | Home closing volume | 14,750-15,500 units | | Home closing revenue | $6.1-6.3 billion | | Home closing gross margin | 24.5%-25.0% | | Effective tax rate | Approximately 22.5% | | Diluted EPS | $19.80-21.00 | [Segment Operating Data](index=11&type=section&id=Segment%20Operating%20Data) The East Region was the largest contributor to homes closed and ordered in Q2 and H1 2024, while a significant year-over-year decrease in order backlog reflects the company's high backlog conversion rate | Q2 2024 Performance | West Region | Central Region | East Region | Total | | :--- | :--- | :--- | :--- | :--- | | **Homes Closed (units)** | 1,265 | 1,265 | 1,588 | 4,118 | | **Homes Ordered (units)** | 1,114 | 1,100 | 1,585 | 3,799 | - The total order backlog at the end of Q2 2024 stood at **2,714 units** valued at **$1.11 billion**, a decrease from 3,772 units valued at $1.69 billion at the end of Q2 2023[32](index=32&type=chunk) - The company ended the quarter with **287 active communities**, a slight decrease from 291 in the prior year but up **4%** sequentially from Q1 2024[14](index=14&type=chunk)[33](index=33&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements reflect strong revenue and earnings growth, a strengthened balance sheet with increased assets and strategic debt management, and a shift in cash flow dynamics due to increased real estate investments [Consolidated Income Statements](index=7&type=section&id=Consolidated%20Income%20Statements) The consolidated income statements for Q2 and the first half of 2024 show strong top-line and bottom-line growth, with Q2 home closing revenue up 10% to $1.7 billion and net earnings up 24% to $231.6 million | Three Months Ended June 30, | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | **Home closing revenue** | $1,693.7M | $1,543.0M | 10% | | **Home closing gross profit** | $439.5M | $377.0M | 17% | | **Net earnings** | $231.6M | $186.8M | 24% | | Six Months Ended June 30, | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | **Home closing revenue** | $3,159.8M | $2,804.9M | 13% | | **Home closing gross profit** | $817.5M | $659.4M | 24% | | **Net earnings** | $417.6M | $318.1M | 31% | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, the company's balance sheet reflects growth, with total assets increasing to $6.9 billion from $6.4 billion at year-end 2023, primarily driven by a $454 million increase in real estate assets | (In millions) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total assets** | $6,924.0M | $6,353.1M | | Real estate | $5,175.1M | $4,721.3M | | Cash and cash equivalents | $992.9M | $921.2M | | **Total liabilities** | $2,041.4M | $1,741.2M | | Senior and convertible senior notes, net | $1,303.6M | $994.7M | | **Total stockholders' equity** | $4,882.5M | $4,611.9M | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2024, cash flow from operations was a net use of $36.0 million, mainly due to a significant increase in real estate investments, while financing activities provided $127.4 million in cash | Six Months Ended June 30, (In millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(36.0M) | $355.9M | | Net cash used in investing activities | $(19.6M) | $(22.1M) | | Net cash provided by/(used in) financing activities | $127.4M | $(32.1M) | | **Net increase in cash and cash equivalents** | **$71.7M** | **$301.7M** | - The primary driver for the use of cash in operations was a **$450.6 million** increase in real estate assets during the first half of 2024[30](index=30&type=chunk) [Supplemental and Non-GAAP Information](index=13&type=section&id=Supplement%20and%20Non-GAAP%20information) This section provides a reconciliation of non-GAAP financial measures, specifically focusing on debt-to-capital ratios, which increased due to higher debt levels from recent financing activities | Debt-to-Capital Ratios | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Debt-to-capital | 21.2% | 17.9% | | Net debt-to-capital (Non-GAAP) | 6.2% | 1.9% |
Factors Setting the Tone for Meritage Homes' (MTH) Q2 Earnings
ZACKS· 2024-07-22 15:06
Core Viewpoint - Meritage Homes is expected to report second-quarter 2024 earnings that reflect a mix of challenges and opportunities, with a consensus estimate for EPS showing a slight increase year-over-year, despite pressures from high mortgage rates and changing market conditions [2][7][10]. Financial Performance - The Zacks Consensus Estimate for second-quarter 2024 EPS has risen to $5.17, a 3% increase from the previous year’s $5.02 [2]. - Home closing units are projected to be between 3,600 and 3,800, up from 3,490 units reported a year ago, indicating a positive trend in unit sales [3]. - Home closing revenues are anticipated to be in the range of $1.5 billion to $1.6 billion, slightly up from $1.54 billion in the prior year [3]. Revenue Segmentation - Homebuilding revenues are expected to decline by 1.4% year-over-year to $1.5 billion, while financial services revenues are projected to increase by 12.7% year-over-year to $7 million [4]. - The overall revenue consensus is pegged at $1.58 billion, reflecting a 0.5% year-over-year increase, driven by solid demand for entry-level homes [12]. Margins and Costs - The company expects home closing gross margin to improve to around 24.9%, up from 24.4% in the previous year, indicating a focus on margin enhancement despite rising labor costs [24]. - High labor costs are anticipated to negatively impact margins in the upcoming quarter, although strategic initiatives may help mitigate some of these challenges [10]. Market Dynamics - The average selling price (ASP) for home closings is expected to decrease by 6% year-over-year to $415,790, influenced by a shift in product mix [8]. - Geographically, ASP is expected to decline across various regions, with the West, Central, and East regions seeing decreases of 4.1%, 12.5%, and 3% respectively [13]. Backlogs and Orders - Total backlog is expected to decline by 9.6% to 3,409 units, with the total backlog value falling 16.2% year-over-year to $1.4 billion [14]. - Home orders are projected to decrease in the West and East regions, while the Central region is expected to see a 5.6% increase in orders due to favorable economic conditions [15].
Meritage Homes (MTH) is a Top-Ranked Momentum Stock: Should You Buy?
ZACKS· 2024-07-22 14:57
Company Overview - Meritage Homes Corporation is a leading designer and builder of single-family homes, focusing on entry-level, first-time, move-up, luxury, and active adult buyers in high-growth regions of the United States [9]. Investment Insights - Meritage Homes (MTH) has a Momentum Style Score of B, with shares increasing by 18.7% over the past four weeks, indicating strong momentum [10]. - MTH holds a solid Zacks Rank and top-tier Momentum and VGM Style Scores, making it a candidate for investors' short lists [11]. - The Zacks Consensus Estimate for MTH's fiscal 2024 earnings has risen by $0.31 to $20.27 per share, with two analysts revising their earnings estimates upwards in the last 60 days [22]. Zacks Style Scores - The Zacks Style Scores categorize stocks into four types: Value, Growth, Momentum, and VGM, which help investors identify attractive investment opportunities based on different characteristics [14][15][16][17]. - Stocks rated A or B in the Style Scores, combined with a Zacks Rank of 1 or 2, are considered to have the highest likelihood of success [20].
Why Meritage (MTH) is Poised to Beat Earnings Estimates Again
ZACKS· 2024-07-18 17:15
Core Insights - Meritage Homes reported earnings of $5.06 per share for the most recent quarter, exceeding the expected $3.54 per share, resulting in a surprise of 42.94% [1] - The company has consistently surpassed earnings estimates, averaging a 23.40% beat over the last two quarters [8] Earnings Performance - The previous quarter's earnings were $5.38 per share against an estimate of $5.18, leading to a surprise of 3.86% [1] - Meritage has a positive Earnings ESP of +0.64%, indicating analysts' bullish sentiment regarding its near-term earnings potential [2][7] Future Outlook - The next earnings report for Meritage is anticipated on July 24, 2024, with expectations of another potential earnings beat [2] - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) have historically produced positive surprises nearly 70% of the time [4] Industry Context - Meritage operates within the Zacks Building Products - Home Builders industry, positioning it as a strong candidate for investors looking for stocks that consistently beat earnings estimates [3]
Here's Why Investors Should Add Meritage Homes (MTH) Stock Now
ZACKS· 2024-07-08 16:51
Core Viewpoint - The homebuilding industry is currently facing challenges such as high mortgage rates and rising costs, yet Meritage Homes Corporation (MTH) is positioned to benefit from improved cycle times and a strategic focus on entry-level and first-move-up homes, which is expected to drive higher volume in the future [1][14]. Financial Performance - In the first quarter of 2024, Meritage Homes reported a year-over-year increase in earnings by 42.9% and total closing revenues by 14.5%, attributed to higher deliveries and an adjusted gross margin improvement of 340 basis points [2]. - Home closings rose by 21% year over year, with 3,507 homes delivered, reflecting the effectiveness of the company's spec-building strategy [6]. Strategic Initiatives - The company employs a solid spec strategy, focusing on building homes without prior buyers, which enhances construction efficiency and reduces wait times for buyers, thereby stimulating market demand [5]. - Meritage Homes has aggressively invested in land acquisition and development, spending $430.4 million in the first quarter of 2024, a 39% increase from the previous year, and currently controls 66,400 lots compared to 60,900 lots a year ago [7]. Market Focus - The company is concentrating on the growing demand for entry-level homes, with 91% of sales orders in the first quarter coming from entry-level buyers, up from 87% a year ago [10]. - Meritage Homes has reduced the average sales price by 4% year over year to cater to millennials and baby boomers seeking affordable housing options [11]. Valuation and Estimates - The earnings estimates for 2024 indicate a growth rate of 1.7% year-over-year, with earnings per share revised to $20.27 from $19.99 over the past 60 days, reflecting positive analyst sentiment [12]. - The stock is trading at a forward price-to-earnings ratio of 7.3X, below the industry average of 9.1X, suggesting an attractive valuation for investors [13]. Conclusion - The strategic focus on entry-level and first-move-up homes is expected to enhance Meritage Homes' market share and volume in the future, particularly through digital communities [14].
Meritage Homes Named ENERGY STAR® Partner of the Year For 11th Year & Honored for Highest Homebuyer Ratings in 21st Annual Avid Awards
Newsfilter· 2024-06-18 13:00
Core Insights - Meritage Homes has received multiple national accolades for its commitment to energy efficiency, customer service, and philanthropic efforts [1] Awards and Recognition - Meritage Homes was recognized at the 21st Annual Avid Awards for Top Rated Customer Experience, with thirteen divisions scoring among the top 25% in customer ratings nationwide [11] - The company received the EPA's ENERGY STAR Market Leader Award for its leadership in promoting energy efficiency and reducing energy bills [4] - Meritage was named one of America's Greenest Companies for 2024 by Newsweek and featured on USA Today's list of America's Climate Leaders [6] - The company was highlighted in U.S. News & World Report's Best Companies to Work For in the 'Best in Construction' and 'Best Companies in the West' categories [7] Philanthropic Efforts - Meritage received the President's Volunteer Service Award for its partnership with No Child Hungry, contributing over 1,300 volunteer hours and packing nearly 260,000 meal kits in the past two years [12] Company Performance - Meritage has delivered over 180,000 homes in its 38-year history and is recognized for its distinctive style, quality construction, and award-winning customer experience [9] - The company has been named an ENERGY STAR Partner of the Year by the EPA 11 times and has completed over 126,000 ENERGY STAR certified homes since 2009 [17] - Meritage was included on Forbes' list of 2024 Most Successful Mid-Cap Companies based on sales and earnings growth, return on equity, and total stock return over the last five years [13] Leadership Statement - CEO Phillippe Lord expressed pride in the company's recognition for sustainable construction and customer service, as well as the President's Volunteer Service Award, highlighting the company's core values [14]
Meritage Homes Second Quarter 2024 Earnings Conference Call and Webcast Scheduled for July 25, 2024
Newsfilter· 2024-06-13 13:00
Company Overview - Meritage Homes has delivered over 180,000 homes in its 38-year history, known for distinctive style, quality construction, and award-winning customer experience [4] - The company is recognized as an industry leader in energy-efficient homebuilding, receiving multiple awards from the U.S. Environmental Protection Agency (EPA) [4] Financial Information - Meritage Homes plans to release its second quarter 2024 results on July 24, 2024, after market close, with a conference call scheduled for July 25, 2024, at 8:00 a.m. Pacific Time [5] Market Position - 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 [6] - The company's operations span across several states including Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee [6]