Meritage Homes(US:MTH)2024-10-31 20:25Home Closing Performance - Home closing units volume increased by 8.4% to 3,942 homes in Q3 2024 compared to 3,638 homes in Q3 2023[108] - Home closing revenue decreased by 1.5% to $1.6 billion in Q3 2024, primarily due to a 9.1% decrease in average sales price (ASP) to $402.3 thousand[108] - Home closing gross margin for Q3 2024 was 24.8%, a decrease of 190 basis points from 26.7% in Q3 2023, resulting in a gross profit of $392.6 million[108] - Home orders for Q3 2024 were 3,512, slightly up from 3,474 in the prior year, with a home order value of $1.4 billion, down 4.7% year-over-year[110] - Total home orders for the three months ended September 30, 2024, were $1.4 billion, a decrease of 4.7% from $1.5 billion in the same period of 2023[130] - Home order volume for the nine months ended September 30, 2024, was 11,302, an increase of 9.7% from 10,301 in the prior year[131] Backlog and Cancellation Rates - The cancellation rate improved to 10% in Q3 2024 from 11% in Q3 2023[112] - The company ended Q3 2024 with a backlog of 2,284 homes valued at $0.9 billion, a decrease of 36.7% from the previous year[113] - The backlog at September 30, 2024, was valued at $931.7 million, down 40.2% from $1.6 billion at the same time in 2023[126] - Homes in backlog decreased by 36.7% to 2,284 units at September 30, 2024, compared to 3,608 units in 2023[126] - The year-to-date cancellation rate improved to 10% from 14% in the prior year period[133] - The East Region's cancellation rate dropped to 8% from 11% in the prior year[138] Financial Performance - Net income for the nine months ended September 30, 2024, was $613.5 million, up from $539.9 million in the same period of 2023, reflecting a 13.7% increase[109] - For the nine months ended September 30, 2024, home closing revenue reached $1.7 billion, a 12.3% increase driven by an 18.4% rise in home closing volume[133] - Financial services profit for Q3 2024 was $3.1 million, a decrease of $2.6 million from $5.7 million in the same prior year period[146] - The Central Region closed 1,174 homes in Q3 2024, a 6.5% increase, but home closing revenue decreased by 7.9% to $416.8 million due to a 13.6% drop in ASP[136] - The East Region saw a 16.6% increase in home closing volume and an 11.2% increase in revenue, closing 4,462 homes for $1.7 billion in revenue for the nine months ended September 30, 2024[138] Sales and Marketing Expenses - Commissions and other sales costs decreased by $1.2 million to $97.9 million for the three months ended September 30, 2024, representing 6.2% of home closing revenue[147] - General and administrative expenses for the three months ended September 30, 2024, were $59.2 million, a decrease of $3.9 million from the prior year, improving to 3.7% of home closing revenue[148] Tax and Debt Management - The effective income tax rate for Q3 2024 was 21.6%, benefiting from energy tax credits under the Inflation Reduction Act[108] - The effective tax rate was 21.6% for the three months ended September 30, 2024, compared to 22.4% for the same period in 2023[153] - The company maintains a debt-to-capital ratio of 20.7% and a net debt-to-capital ratio of 8.8% as of Q3 2024[115] - The debt-to-capital ratio increased to 20.7% as of September 30, 2024, compared to 17.9% at the end of 2023[165] - Net debt increased to $482.7 million as of September 30, 2024, from $86.99 million at the end of 2023[165] Cash Flow and Capital Management - Net cash used in operating activities totaled $128.0 million for the nine months ended September 30, 2024, compared to net cash provided of $460.1 million for the same period in 2023[161] - Net cash provided by financing activities was $69.8 million for the nine months ended September 30, 2024, compared to net cash used of $238.2 million in the prior year[163] - Total capital increased to $6.34 billion as of September 30, 2024, from $5.62 billion at the end of 2023[165] - The company has a minimum tangible net worth requirement of $3.3 billion, with an actual net worth of $4.98 billion as of September 30, 2024[169] Regional Performance - The West Region generated $594.5 million in home closing revenue for Q3 2024, a decrease of 2.0% from $606.8 million in Q3 2023[132] - The average sales price in the West Region decreased by 5.9% year-over-year due to a shift towards more entry-level homes[132] - The West Region ended Q3 2024 with 598 homes in backlog valued at $286.3 million, down from 1,179 units valued at $579.8 million at September 30, 2023[133] Other Financial Metrics - Other income, net, was $10.7 million for the three months ended September 30, 2024, down from $13.3 million in the prior year period[150] - Seasonal variations in quarterly operating results are expected, with higher orders typically in the first half of the fiscal year[170] - The company is in compliance with all Credit Facility covenants as of September 30, 2024[168] - The company has $1.3 billion in fixed rate debt, primarily consisting of senior and convertible senior notes, which do not expose it to interest rate risk[172] - The Credit Facility is subject to interest rate changes based on SOFR or Prime rates[172] - Recent accounting pronouncements are discussed in the unaudited consolidated financial statements[171]