Meritage Homes reports third quarter 2024 results

Core Insights - Meritage Homes Corporation reported third quarter results for 2024, showing a slight increase in home orders and a decrease in average sales price, reflecting a strategic pivot towards affordable homes [1][3][4] Summary of Operating Results - Homes closed in Q3 2024 totaled 3,942 units, an 8% increase from 3,638 units in Q3 2023 [2] - Home closing revenue decreased by 2% to $1.585 billion from $1.610 billion year-over-year [2] - Average sales price for closings fell by 9% to $402,000 compared to $443,000 in the previous year [2] - Home orders increased by 1% to 3,512 units from 3,474 units in Q3 2023 [2] - Home order value decreased by 5% to $1.426 billion from $1.496 billion year-over-year [2] Financial Performance - Net earnings for Q3 2024 were $196 million, down 12% from $222 million in Q3 2023, resulting in diluted EPS of $5.34, a decrease of 11% from $5.98 [2][9] - Earnings before income taxes were $250 million, a 13% decrease from $286 million in the prior year [2][9] - Home closing gross margin was 24.8%, down from 26.7% in Q3 2023, attributed to higher lot costs and increased financing incentives [6] Management Strategy - The company emphasized a shift towards affordable, quick-turning move-in ready homes, which contributed to achieving the highest third quarter closing volume [3] - Management noted that nearly 45% of this quarter's closings were also sold within the same quarter, leading to a record backlog conversion rate of 145% [3] Capital Allocation and Liquidity - Land acquisition and development spending totaled $659.4 million in Q3 2024, with nearly 7,800 net new lots acquired [3][18] - The company ended the quarter with cash of $831.6 million and a net debt-to-capital ratio of 8.8% [3][20] Year-to-Date Results - For the first nine months of 2024, total sales orders increased by 10%, driven by a 10% increase in average absorption pace [10] - Home closing revenue for the first nine months rose by 7% to $4.746 billion, reflecting a 15% increase in home closing volume [11] - Net earnings for the first nine months were $614 million, a 14% increase from $540 million in the same period of 2023 [17] Guidance - The company provided guidance for Q4 2024, projecting home closing volume between 3,750 and 3,950 units, with expected home closing revenue of $1.50 to $1.59 billion [22]