Meritage Homes reports fourth quarter 2025 results

Core Insights - Meritage Homes Corporation reported a challenging financial performance for the fourth quarter and full year 2025, with significant declines in home closing revenue and net earnings compared to the previous year [1][4][5]. Financial Performance - For Q4 2025, homes closed decreased by 7% to 3,755 units, while home closing revenue fell by 12% to $1.4 billion [3][9]. - The average sales price for homes closed was $375,000, down 5% from the previous year [3][9]. - The company reported a home closing gross margin of 16.5%, a decrease of 670 basis points from 23.2% in Q4 2024 [3][9]. - Net earnings for Q4 2025 were $84 million ($1.20 per diluted share), a 51% decrease from $172.6 million ($2.36 per diluted share) in Q4 2024 [3][9]. Full Year Results - For the full year 2025, total home closing revenue decreased by 9% to $5.8 billion, driven by a 4% decline in average sales price to $384,000 and a 4% decrease in home closing volume to 15,026 units [3][9]. - Net earnings for the full year were $453 million ($6.35 per diluted share), down 42% from $786 million ($10.72 per diluted share) in 2024 [3][9]. Operational Highlights - The company maintained full year sales orders at 14,650 homes, consistent with the prior year, despite a challenging market environment [4][5]. - The ending backlog decreased by 24% to 1,168 units, with a backlog value down 30% to $440.6 million [3][9]. - Meritage Homes achieved a backlog conversion rate of 221%, with 63% of Q4 deliveries coming from intra-quarter sales [4][5]. Management Strategy - The company plans to accelerate share repurchases, anticipating $400 million in buybacks during 2026, assuming stable market conditions [5][6]. - Meritage Homes is focusing on cost-cutting measures and technological efficiencies in response to broader macroeconomic challenges [5][6]. Balance Sheet and Liquidity - As of December 31, 2025, the company had a cash balance of $775 million and a net debt-to-capital ratio of 16.9% [6][10]. - Total capital returned to shareholders in 2025 exceeded $416 million, representing 92% of the year's total earnings [6][10].