SCOTTSDALE, Ariz., April 23, 2025 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S. homebuilder, reported first quarter results for the period ended March 31, 2025.
| Summary Operating Results (unaudited) (Dollars in thousands, except per share amounts) | |||||||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | % Chg | |||||
| Homes closed (units) | 3,416 | 3,507 | (3)% | ||||
| Home closing revenue | $ | 1,342,104 | $ | 1,466,096 | (8)% | ||
| Average sales price - closings | $ | 393 | $ | 418 | (6)% | ||
| Home orders (units) | 3,876 | 3,991 | (3)% | ||||
| Home order value | $ | 1,558,177 | $ | 1,631,195 | (4)% | ||
| Average sales price - orders | $ | 402 | $ | 409 | (2)% | ||
| Ending backlog (units) | 2,004 | 3,033 | (34)% | ||||
| Ending backlog value | $ | 812,358 | $ | 1,244,257 | (35)% | ||
| Average sales price - backlog | $ | 405 | $ | 410 | (1)% | ||
| Earnings before income taxes | $ | 160,159 | $ | 234,015 | (32)% | ||
| Net earnings | $ | 122,806 | $ | 186,016 | (34)% | ||
| Diluted EPS | $ | 1.69 | $ | 2.53 | (33)% | ||
"Meritage had a healthy start to 2025, selling almost 3,900 homes in the first quarter despite a slower start to the year. We achieved an average absorption pace of 4.4 net sales per month this quarter, overcoming still-elevated mortgage rates and increasing macroeconomic concerns," said Steven J. Hilton, executive chairman of Meritage Homes. "As a result of favorable demographics and the limited supply of homes at affordable price points, the new home market is experiencing sustainable homebuying demand. With our focus on affordability and move-in ready inventory, we believe we are well-positioned to capture additional market share."
"With over 60% of this quarter's closings also sold during this quarter, our backlog conversion rate was yet another all-time high for the company of 221%, reflecting the benefit of our strategic pivot," added Phillippe Lord, chief executive officer of Meritage Homes. "Our 3,416 deliveries this quarter generated home closing revenue of $1.3 billion and we achieved home closing gross margin of 22.0%, which contributed to diluted EPS of $1.69. We increased our book value per share 11% year-over-year and generated a return on equity of 14.5% as of March 31, 2025."*
"We issued $500 million of new debt this quarter as we work to maintain a balance between investing in our growth and returning cash to shareholders. Our land acquisition and development spend totaled $465 million this quarter, as we put nearly 2,200 net new lots under control. We also spent about $76 million on cash dividends and share repurchases," concluded Mr. Lord. "At March 31, 2025, our balance sheet remained strong, with ample liquidity and nothing drawn under our revolving credit facility. We ended the quarter with cash of $1 billion and a net debt-to-capital ratio of 13.7%."
FIRST QUARTER RESULTS
- Orders of 3,876 homes for the first quarter of 2025 decreased 3% year-over-year as a result of a 10% decrease in average absorption pace which was partially offset by a 7% increase in average community count. First quarter 2025 average sales price ("ASP") on orders of $402,000 was down 2% from the first quarter of 2024 due to increased utilization of financing incentives.
- The 8% year-over-year decrease in home closing revenue in the first quarter of 2025 to $1.3 billion was the result of declines in both home closing volume of 3,416 homes and ASP on closings of $393,000 due to increased utilization of financing incentives.
- Home closing gross margin of 22.0% decreased 380 bps in the first quarter of 2025 from 25.8% in the prior year due to increased utilization of financing incentives, reduced leverage of fixed costs on lower home closing revenue, and higher lot costs, all of which were partially offset by savings in direct costs.
- The financial services profit of $4 million included $400,000 in write-offs related to rate buydown expiration costs in the first quarter of 2025. The financial services loss of $1 million in the first quarter of 2024 had $6 million of similar write-offs.
- Selling, general and administrative expenses ("SG&A") as a percentage of first quarter 2025 home closing revenue were 11.3% compared to 10.4% in the first quarter of 2024, primarily as a result of reduced leverage of fixed costs on lower home closing revenue, as well as greater spend on technology and start-up overhead costs for our new Gulf Coast and Huntsville divisions in advance of a full quarter's contribution of home closings. As a percentage of home closing revenue, commissions were relatively flat year-over-year despite the tougher selling environment.
- The first quarter effective income tax rate was 23.3% in 2025 compared to 20.5% in 2024. The higher tax rate in 2025 reflects fewer homes qualifying for energy tax credits under the Inflation Reduction Act, given the new higher construction thresholds required to earn the tax credits this year.
- Net earnings were $123 million ($1.69 per diluted share) for the first quarter 2025, a 34% decrease from $186 million ($2.53 per diluted share) for the first quarter of 2024, mainly resulting from lower home closing revenue and gross margins, as well as a higher tax rate.
- Cash and cash equivalents at March 31, 2025 totaled $1 billion, compared to $652 million at December 31, 2024.
- Land acquisition and development spend, net of land development reimbursements, totaled $465 million and $363 million for the first quarter of 2025 and 2024, respectively.
- Approximately 84,200 lots were owned or controlled as of March 31, 2025, compared to approximately 66,400 total lots as of March 31, 2024. Nearly 2,200 net new lots were added in the first quarter of 2025, representing an estimated 19 future communities.
- First quarter 2025 ending community count was 290 compared to 275 at March 31, 2024 and 292 at December 31, 2024.
- Debt-to-capital and net debt-to-capital ratios were 26.1% and 13.7%, respectively, at March 31, 2025, which compared to 20.6% and 11.7%, respectively, at December 31, 2024.
- On January 2, 2025, we completed a two-for-one stock split (the "Stock Split") of Meritage's common stock in the form of a stock dividend. All share and per share amounts in this press release have been retroactively restated to reflect the Stock Split for the first quarter 2024 period.
- The Company declared and paid quarterly cash dividends of $0.43 per share totaling $31 million in the first quarter of 2025. This compared to $0.375 per share totaling $27 million in the first quarter of 2024.
- During the first quarter of 2025, the Company repurchased 605,316 shares of stock, or 0.8% of shares outstanding at the beginning of the quarter, for $45 million. As of March 31, 2025, $264 million remained available to repurchase under the authorized share repurchase program.
- During the first quarter of 2025, the Company issued $500 million of 5.650% senior notes due 2035.
| The Company is reiterating the following guidance for full year 2025: | |
| Full Year 2025 | |
| Home closing volume | 16,250-16,750 units |
| Home closing revenue | $6.6-6.9 billion |
Management will host a conference call to discuss its first quarter 2025 results at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, April 24, 2025. To listen, please go to Meritage's Investor Relations page for the live webcast or dial in to 1-877-407-6951 US toll free or 1-412-902-0046. A replay will be available on the Investor Relations page.
* The Company's return on equity is calculated as net earnings for the trailing twelve months divided by average total stockholders' equity for the trailing five quarters.
| Meritage Homes Corporation and Subsidiaries Consolidated Income Statements (In thousands, except per share data) (Unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | Change $ | Change % | |||||||||||
| Homebuilding: | ||||||||||||||
| Home closing revenue | $ | 1,342,104 | $ | 1,466,096 | $ | (123,992 | ) | (8 | )% | |||||
| Land closing revenue | 15,421 | 2,305 | 13,116 | 569 | % | |||||||||
| Total closing revenue | 1,357,525 | 1,468,401 | (110,876 | ) | (8 | )% | ||||||||
| Cost of home closings | (1,046,454 | ) | (1,088,138 | ) | (41,684 | ) | (4 | )% | ||||||
| Cost of land closings | (12,256 | ) | (2,298 | ) | 9,958 | 433 | % | |||||||
| Total cost of closings | (1,058,710 | ) | (1,090,436 | ) | (31,726 | ) | (3 | )% | ||||||
| Home closing gross profit | 295,650 | 377,958 | (82,308 | ) | (22 | )% | ||||||||
| Land closing gross profit | 3,165 | 7 | 3,158 | 45,114 | % | |||||||||
| Total closing gross profit | 298,815 | 377,965 | (79,150 | ) | (21 | )% | ||||||||
| Financial Services: | ||||||||||||||
| Revenue | 7,082 | 6,353 | 729 | 11 | % | |||||||||
| Expense | (4,192 | ) | (3,003 | ) | 1,189 | 40 | % | |||||||
| Earnings/(loss) from financial services unconsolidated entities and other, net | 673 | (4,040 | ) | 4,713 | (117 | )% | ||||||||
| Financial services profit/(loss) | 3,563 | (690 | ) | 4,253 | (616 | )% | ||||||||
| Commissions and other sales costs | (94,720 | ) | (101,550 | ) | (6,830 | ) | (7 | )% | ||||||
| General and administrative expenses | (56,997 | ) | (50,732 | ) | 6,265 | 12 | % | |||||||
| Interest expense | - | - | - | - | % | |||||||||
| Other income, net | 9,498 | 9,022 | 476 | 5 | % | |||||||||
| Earnings before income taxes | 160,159 | 234,015 | (73,856 | ) | (32 | )% | ||||||||
| Provision for income taxes | (37,353 | ) | (47,999 | ) | (10,646 | ) | (22 | )% | ||||||
| Net earnings | $ | 122,806 | $ | 186,016 | $ | (63,210 | ) | (34 | )% | |||||
| Earnings per common share: | ||||||||||||||
| Basic | Change $ or shares | Change % | ||||||||||||
| Earnings per common share | $ | 1.71 | $ | 2.56 | $ | (0.85 | ) | (33 | )% | |||||
| Weight
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