Meritage Homes(MTH) - 2024 Q4 - Annual Report

Financial Performance - In 2024, the company repurchased 1,464,510 shares, representing 2.0% of the shares outstanding, for $125.9 million and paid dividends totaling$108.6 million[31]. - The inventory grew by 21.3% to $5.7 billion, while cash and cash equivalents decreased to$651.6 million from $921.2 million at the end of 2023[31]. - The debt-to-capital ratio increased to 20.6$629.5 million from $1.1 billion[55]. - The company had$40.0 million in both borrowings and repayments under the Credit Facility during the year ended December 31, 2022[228]. Land Acquisition and Development - The company invested approximately $2.5 billion in land acquisition and development, securing about 37,000 net new lots, an increase from 16,000 in 2023[32]. - The company ended 2024 with 85,613 lots under control, up from 64,313 in 2023, with nearly all designated for entry-level communities[32]. - At December 31, 2024, the company had 53,335 owned lots and 32,278 lots under committed purchase or option contracts, totaling approximately$1.4 billion[39]. Construction and Sales - The company closed 15,611 homes and started construction on 15,824 homes during 2024[32]. - The spec inventory per active community increased to 24.1 or 7,029 units as of December 31, 2024, compared to 21.8 or 5,877 units as of December 31, 2023[53]. - At December 31, 2024, 100% of the 1,544 homes in backlog were under construction, indicating a strong commitment to fulfilling sales contracts[54]. - The company aims for a 100% spec home building strategy, which is reflected in the increase of spec inventory[53]. Customer Engagement and Marketing - The strategic shift in mid-2024 focused on real estate agents as the primary customer, supported by the Agents Rock Rewards program[46]. - The company aims to provide a simplified home buying process with pre-selected design combinations, appealing to first-time buyers[47]. - The company offers various sales incentives, including mortgage-related incentives, to attract buyers based on local market conditions[51]. - The company has implemented extensive online tools, including virtual tours and a dedicated Agent Portal, to enhance the customer experience[10]. Workforce and Company Culture - The company employs 1,898 full-time employees, with 473 in sales and marketing, indicating a robust workforce to support operations[73]. - The company was certified as a Great Place to Work® for the second consecutive year and named as Fortune's Best Workplaces for Construction[74]. - The company has a strategy to maintain good relationships with subcontractors and independent consultants[74]. Financial Instruments and Interest Rates - The company has $1.3 billion in aggregate principal amount of senior and convertible senior notes, all bearing fixed rates of interest[227]. - The weighted average interest rate for the senior and convertible senior notes is 3.236$1,284.4 million[229]. - The company’s operations are sensitive to interest rate changes, which may adversely affect revenue and gross margins[229]. - The company does not intend to enter into derivative interest rate swap financial instruments for trading or speculative purposes[229]. Warranty and Quality Control - The warranty reserves for future structural warranty costs are estimated to range between 0.1% to 0.5% of a home's sale price, reflecting a proactive approach to quality control[60]. Seasonal Trends - The company experienced seasonal variations in quarterly operating results, typically taking more orders in the first half of the fiscal year[75].