Meritage Homes(US:MTH)2026-02-13 21:24Financial Performance - In 2025, the company repurchased 4,289,984 shares, representing 6.0% of the shares outstanding at the beginning of the year, for $295.0 million and paid dividends totaling $121.1 million[32]. - The company ended 2025 with cash and cash equivalents totaling $775.2 million, up from $651.6 million at the end of 2024, while growing inventory by 4.5% to $6.0 billion[32]. - The debt-to-capital ratio was 26.0% and the net debt-to-capital ratio was 16.9% at December 31, 2025, compared to 20.6% and 11.7% in 2024[32]. - The company recorded costs of $8.4 million related to a workforce reduction initiative executed in early 2026[77]. - The company had $5.0 million in borrowings under the Credit Facility during the year ended December 31, 2025, with no borrowings in the previous two years[235]. Land Acquisition and Development - The company invested approximately $1.9 billion in land acquisition and development, securing about 5,500 net new lots, compared to 37,000 in 2024, ending the year with 77,625 lots under control[33]. - At December 31, 2025, the company had 21,764 lots under committed purchase or option contracts with a total purchase price of approximately $1.3 billion[41]. - The company has three active land development joint ventures and one mortgage business joint venture, MTH Mortgage, which provides services to homebuyers[54]. Home Construction and Sales - The company closed 15,026 homes and started construction on 13,450 homes during 2025, with approximately 72% of controlled lots owned at year-end[33]. - The average construction cycle time for homes is currently under 110 calendar days, with homes typically completed within three to five months from the start of construction[45]. - More than 90% of the company's closings in 2025 were co-broke, which is significantly higher than the industry average[51]. - The backlog decreased by 24.4% to 1,168 units at December 31, 2025, from 1,544 units at December 31, 2024, with a 30.0% decrease in backlog value to $440.6 million from $629.5 million[57]. - As of December 31, 2025, 50% of the total unsold spec homes in inventory were under construction, while the other 50% were completed[56]. - The company aims to deliver substantially all homes in backlog at December 31, 2025, during 2026 under existing contracts or replacement sales contracts[56]. - The spec inventory per active community decreased to 17.4 or 5,838 units as of December 31, 2025, compared to 24.1 or 7,029 units as of December 31, 2024[55]. - The company has a commitment to a 100% spec home building strategy for all homes[55]. Marketing and Strategy - The company has implemented a marketing strategy focusing on real estate agents as primary customers, supported by various digital tools and incentives[46]. - The company believes its product offerings and strategic locations provide long-term competitive advantages in the market[65]. Financial Instruments and Interest Rates - The company has $1.8 billion in aggregate principal amount of senior and convertible senior notes, all bearing fixed interest rates, mitigating financial statement risk from interest rate changes[234]. - As of December 31, 2025, the fair value of senior and convertible senior notes is estimated at $1.82 billion, with a weighted average interest rate of 3.897%[236]. - The company’s long-term debt obligations include $1.825 billion in fixed-rate senior and convertible senior notes, with maturities extending to 2030[236]. - The average interest rate for loans payable and other borrowings is 1.117%[236]. - The company is sensitive to interest rate changes, which could adversely affect revenue, gross margins, earnings, and cancellation rates[234]. - A significant increase in mortgage interest rates may negatively impact homebuyers' ability to secure financing[234]. - The company does not intend to enter into derivative interest rate swap financial instruments for trading or speculative purposes[234]. - There were no material interest charges from intraperiod borrowings during the years ended December 31, 2025, 2024, and 2023[235]. - The company’s Credit Facility borrowing rates are based on the Secured Overnight Financing Rate (SOFR) or Prime[234].