Meritage Homes(US:MTH)2025-04-25 20:31Financial Performance - Home closing revenue for Q1 2025 was $1.3 billion, a decrease of 8.5% year-over-year, with home closing units down 2.6% to 3,416 homes [109]. - The average sales price (ASP) for home closings decreased by 6.0% to $392.9 thousand, attributed to increased utilization of incentives [109]. - Home orders totaled 3,876 for Q1 2025, down 2.9% from the prior year, with a 10.2% decrease in orders pace [110]. - Home closing gross margin declined by 380 basis points to 22.0% in Q1 2025, compared to 25.8% in the prior year, due to lower revenue and higher lot costs [109]. - Earnings before income taxes for Q1 2025 were $160.2 million, a decrease of $73.9 million from $234.0 million in Q1 2024 [109]. - The company generated net earnings of $122.8 million during the three months ended March 31, 2025, down from $186.0 million in the same period of 2024 [143]. Backlog and Cancellations - The cancellation rate remained stable at 9% in Q1 2025, compared to 8% in Q1 2024, which is below the company's historical average [110]. - The backlog at the end of Q1 2025 was valued at $812.4 million, a decrease of 34.7% year-over-year, with 2,004 homes in backlog, down 33.9% [116]. - The cancellation rate for Q1 2025 was 9%, slightly up from 8% in Q1 2024, but below the historical average, indicating improved order-to-closing timelines [118][119]. - The backlog at the end of Q1 2025 was 2,004 homes valued at $812.4 million, down from 3,033 homes valued at $1.2 billion in Q1 2024, reflecting a higher backlog conversion rate [119]. Regional Performance - The West Region reported home closing revenue of $479.6 million in Q1 2025, a 7.0% decrease from $515.6 million in the prior year, with a cancellation rate improvement from 9% to 7% [120]. - The Central Region's home closing revenue decreased by 14.7% to $412.5 million in Q1 2025, with a closing volume drop of 8.3% to 1,187 homes [121]. - The East Region saw a 2.8% increase in home closings to 1,231 homes, but revenue decreased by 3.6% to $449.9 million due to a 6.2% lower ASP [122]. Debt and Liquidity - The company ended Q1 2025 with a debt-to-capital ratio of 26.1% and a net debt-to-capital ratio of 13.7% after issuing $500 million in senior notes [114]. - The company's debt-to-capital ratio increased to 26.1% as of March 31, 2025, compared to 20.6% at the end of 2024 [146]. - The net debt-to-capital ratio as of March 31, 2025, was 13.7%, up from 11.7% at the end of 2024 [147]. - The company has no material debt maturities until 2027, indicating a stable short-term liquidity position [139]. - The company had $1.0 billion in cash and cash equivalents and $770.6 million available under its Credit Facility as of March 31, 2025, totaling approximately $1.8 billion in available capacity [135]. Strategic Initiatives - The company aims to maintain a top 5 market position in all markets and expand community count through strategic initiatives [112]. - Total active communities increased to 290 in Q1 2025 from 275 in Q1 2024, with an average of 291.0 compared to 272.5 [117]. - The company purchased approximately 2,900 lots for $222.1 million and started construction on 3,601 homes during Q1 2025 [111]. Cash Flow and Dividends - As of March 31, 2025, the company reported net cash used in operating activities of $42.6 million, a decrease from net cash provided of $81.9 million for the same period in 2024 [143]. - Net cash provided by financing activities totaled $414.1 million for the three months ended March 31, 2025, primarily due to proceeds from the issuance of 5.650% Senior Notes due 2035 [145]. - The company paid a quarterly cash dividend of $0.43 per share for the three months ended March 31, 2025, compared to $0.375 per share in the same period of 2024 [148]. Seasonal Variations - The company experienced seasonal variations in operating results, typically taking more orders in the first half of the year, which may affect working capital requirements [151].