Summary Operating Results (unaudited) (Dollars in thousands, except per share amounts) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | % Chg | ||||||
Homes closed (units) | 3,507 | 2,897 | 21 | % | ||||
Home closing revenue | $ | 1,466,096 | $ | 1,261,923 | 16 | % | ||
Average sales price — closings | $ | 418 | $ | 436 | (4 | )% | ||
Home orders (units) | 3,991 | 3,487 | 14 | % | ||||
Home order value | $ | 1,631,195 | $ | 1,506,893 | 8 | % | ||
Average sales price — orders | $ | 409 | $ | 432 | (5 | )% | ||
Ending backlog (units) | 3,033 | 3,922 | (23 | )% | ||||
Ending backlog value | $ | 1,244,257 | $ | 1,763,832 | (29 | )% | ||
Average sales price — backlog | $ | 410 | $ | 450 | (9 | )% | ||
Earnings before income taxes | $ | 234,015 | $ | 165,303 | 42 | % | ||
Net earnings | $ | 186,016 | $ | 131,301 | 42 | % | ||
Diluted EPS | $ | 5.06 | $ | 3.54 | 43 | % |
MANAGEMENT COMMENTS
“Meritage has had a remarkable start to the year, generating an average absorption pace of 4.9 per month in the first quarter of 2024, which resulted in our highest quarterly sales orders,” said
“Executing on our spec building and streamlined strategy, we delivered 3,507 homes in the first quarter of 2024—of which nearly 50% came from intra-quarter sales orders—and yet another record backlog conversion rate of 138%,” added
“In the first quarter of 2024, we carried out our commitment to growth by putting nearly 6,300 net new lots under control, representing an estimated 43 future communities. We strategically deployed our capital by spending
FIRST QUARTER RESULTS
- Orders of 3,991 homes for the first quarter of 2024 increased 14% year-over-year, due primarily to a 17% increase in the average absorption pace to 4.9 per month from 4.2 per month in the first quarter of 2023, which was partially offset by a 1% decrease in average active communities. Strong demand coupled with the right amount of available inventory during the first quarter of 2024 led to our highest quarterly sales order volume, which benefited from an 8% cancellation rate that was well below the Company's historical average. Entry-level represented 91% of first quarter 2024 sales orders, compared to 87% in the same quarter of 2023. Average sales price ("ASP") on orders in the first quarter of 2024 of
$409,000 was down 5% from the first quarter of 2023 due to both geographic and product mix shift. - The 16% year-over-year increase in home closing revenue to
$1.5 billion was due to 21% higher home closing volume that was partially offset by a 4% decrease in ASP on closings resulting from product mix shift. First quarter 2024 ASP on closings increased sequentially from the fourth quarter of 2023 due to reduced utilization of rate lock financing incentives and price increases. - Home closing gross margin improved 340 bps to 25.8% in the first quarter of 2024 from 22.4% in the prior year due to reduced utilization of rate lock financing incentives, lower direct costs, and greater leverage of fixed costs, which were partially offset by higher lot costs.
- The financial services loss of
$0.7 million included$5.8 million in write-offs related to rate lock unwind costs in the first quarter of 2024. This compared to financial services profit of$2.9 million in the first quarter of 2023 that had$1.9 million in similar write-offs. - Selling, general and administrative expenses ("SG&A") as a percentage of first quarter 2024 home closing revenue were 10.4%, which was relatively in line with 10.3% in the prior year, primarily as a result of higher commissions offsetting the leverage achieved on higher home closing revenue.
- The first quarter effective income tax rate was 20.5% in 2024, in line with 20.6% in 2023. The Company's tax rates benefited from earned eligible energy tax credits on qualifying homes under the Inflation Reduction Act.
- Net earnings were
$186.0 million ($5.06 per diluted share) for the first quarter of 2024, a 42% increase from$131.3 million ($3.54 per diluted share) for the first quarter of 2023 due to higher home closing revenue and gross profit with flat SG&A as a percentage of home closing revenue and tax rates achieved in the first quarter of 2024.
BALANCE SHEET & LIQUIDITY
- Cash and cash equivalents at
March 31, 2024 totaled$905.3 million , compared to$921.2 million atDecember 31, 2023 . - Land acquisition and development spend totaled
$430.4 million for the first quarter of 2024, compared to$310.1 million for the first quarter of 2023. - Approximately 66,400 lots were owned or controlled as of
March 31, 2024 , compared to approximately 60,900 total lots atMarch 31, 2023 . Nearly 6,300 net new lots were added in the first quarter of 2024, representing an estimated 43 future communities. - First quarter 2024 ending community count of 275 was up 2% sequentially compared to the fourth quarter of 2023, and down 1% compared to prior year.
- Debt-to-capital and net debt-to-capital ratios were 17.5% and 2.0%, respectively, at
March 31, 2024 , which compared to 17.9% and 1.9%, respectively, atDecember 31, 2023 . - The Company increased the quarterly cash dividend to
$0.75 per share in the first quarter of 2024, from$0.27 per share in the first quarter of 2023, and paid dividends totaling$27.2 million in the first quarter of 2024. - In the first quarter of 2024, the Company repurchased 362,419 shares of stock, or approximately 1.0% of the outstanding shares at the beginning of the quarter, for
$55.9 million , well exceeding the announced systematic buyback commitment of$15.0 million per quarter. As ofMarch 31, 2024 ,$129.1 million remained available to repurchase under the authorized share repurchase program.
GUIDANCE
The Company is providing the following updated guidance for full year 2024, based on first quarter 2024 results and current market conditions:
Full Year 2024 | |
Home closing volume | 14,500-15,000 units |
Home closing revenue | |
Home closing gross margin | 24.5-25.0% |
Effective tax rate | Approximately 22.5% |
Diluted EPS |
CONFERENCE CALL
Management will host a conference call to discuss its first quarter 2024 results at
* The Company's return on equity is calculated as net income for the trailing twelve months divided by average total stockholders' equity for the trailing five quarters. The Company's book value per share is calculated as total stockholders' equity for the period divided by the shares outstanding as of the last day of the period.
Consolidated Income Statements (In thousands, except per share data) (Unaudited) | |||||||||||||||
Three Months Ended | |||||||||||||||
2024 | 2023 | Change $ | Change % | ||||||||||||
Homebuilding: | |||||||||||||||
Home closing revenue | $ | 1,466,096 | $ | 1,261,923 | $ | 204,173 | 16 | % | |||||||
Land closing revenue | 2,305 | 17,385 | (15,080 | ) | (87 | )% | |||||||||
Total closing revenue | 1,468,401 | 1,279,308 | 189,093 | 15 | % | ||||||||||
Cost of home closings | (1,088,138 | ) | (979,462 | ) | 108,676 | 11 | % | ||||||||
Cost of land closings | (2,298 | ) | (15,945 | ) | (13,647 | ) | (86 | )% | |||||||
Total cost of closings | (1,090,436 | ) | (995,407 | ) | 95,029 | 10 | % | ||||||||
Home closing gross profit | 377,958 | 282,461 | 95,497 | 34 | % | ||||||||||
Land closing gross profit | 7 | 1,440 | (1,433 | ) | (100 | )% | |||||||||
Total closing gross profit | 377,965 | 283,901 | 94,064 | 33 | % | ||||||||||
Financial Services: | |||||||||||||||
Revenue | 6,353 | 5,731 | 622 | 11 | % | ||||||||||
Expense | (3,003 | ) | (3,067 | ) | (64 | ) | (2 | )% | |||||||
(Loss)/earnings from financial services unconsolidated entities and other, net | (4,040 | ) | 259 | (4,299 | ) | N/M | |||||||||
Financial services (loss)/profit | (690 | ) | 2,923 | (3,613 | ) | (124 | )% | ||||||||
Commissions and other sales costs | (101,550 | ) | (82,846 | ) | 18,704 | 23 | % | ||||||||
General and administrative expenses | (50,732 | ) | (47,519 | ) | 3,213 | 7 | % | ||||||||
Interest expense | — | — | — | — | % | ||||||||||
Other income, net | 9,022 | 8,844 | 178 | 2 | % | ||||||||||
Earnings before income taxes | 234,015 | 165,303 | 68,712 | 42 | % | ||||||||||
Provision for income taxes | (47,999 | ) | (34,002 | ) | 13,997 | 41 | % | ||||||||
Net earnings | $ | 186,016 | $ | 131,301 | $ | 54,715 | 42 | % | |||||||
Earnings per common share: | |||||||||||||||
Basic | Change $ or shares | Change % | |||||||||||||
Earnings per common share | $ | 5.12 | $ | 3.58 | $ | 1.54 | 43 | % | |||||||
Weighted average shares outstanding | 36,311 | 36,664 | (353 | ) | (1 | )% | |||||||||
Diluted | |||||||||||||||
Earnings per common share | $ | 5.06 | $ | 3.54 | $ | 1.52 | 43 | % | |||||||
Weighted average shares outstanding | 36,779 | 37,121 | (342 | ) | (1 | )% |
Consolidated Balance Sheets (In thousands) (Unaudited) | |||||
Assets: | |||||
Cash and cash equivalents | $ | 905,298 | $ | 921,227 | |
Other receivables | 243,322 | 266,972 | |||
Real estate (1) | 4,914,512 | 4,721,291 | |||
Deposits on real estate under option or contract | 122,813 | 111,364 | |||
Investments in unconsolidated entities | 18,743 | 17,170 | |||
Property and equipment, net | 47,868 | 48,953 | |||
Deferred tax asset, net | 47,000 | 47,573 | |||
Prepaids, other assets and goodwill | 189,749 | 218,584 | |||
Total assets | $ | 6,489,305 | $ | 6,353,134 | |
Liabilities: | |||||
Accounts payable | $ | 306,150 | $ | 271,650 | |
Accrued liabilities | 418,216 | 424,764 | |||
Home sale deposits | 42,796 | 36,605 | |||
Loans payable and other borrowings | 6,604 | 13,526 | |||
Senior notes, net | 994,966 | 994,689 | |||
Total liabilities | 1,768,732 | 1,741,234 | |||
Stockholders' Equity: | |||||
Preferred stock | — | — | |||
Common stock | 363 | 364 | |||
Additional paid-in capital | 240,852 | 290,955 | |||
Retained earnings | 4,479,358 | 4,320,581 | |||
Total stockholders’ equity | 4,720,573 | 4,611,900 | |||
Total liabilities and stockholders’ equity | $ | 6,489,305 | $ | 6,353,134 | |
(1) Real estate – Allocated costs: | |||||
Homes under contract under construction | $ | 858,943 | $ | 704,206 | |
Unsold homes, completed and under construction | 1,304,633 | 1,260,855 | |||
Model homes | 118,958 | 118,252 | |||
Finished home sites and home sites under development | 2,631,978 | 2,637,978 | |||
Total real estate | $ | 4,914,512 | $ | 4,721,291 |
Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
Three Months Ended | |||||||
2024 | 2023 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 186,016 | $ | 131,301 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 6,038 | 5,208 | |||||
Stock-based compensation | 6,114 | 6,225 | |||||
Equity in earnings from unconsolidated entities | (972 | ) | (1,346 | ) | |||
Distribution of earnings from unconsolidated entities | 985 | 1,776 | |||||
Other | 1,001 | 928 | |||||
Changes in assets and liabilities: | |||||||
(Increase)/decrease in real estate | (193,431 | ) | 2,999 | ||||
(Increase)/decrease in deposits on real estate under option or contract | (11,449 | ) | 10,886 | ||||
Decrease/(increase) in other receivables, prepaids and other assets | 53,769 | (11,749 | ) | ||||
Increase/(decrease) in accounts payable and accrued liabilities | 27,668 | (31,687 | ) | ||||
Increase in home sale deposits | 6,191 | 9,931 | |||||
Net cash provided by operating activities | 81,930 | 124,472 | |||||
Cash flows from investing activities: | |||||||
Investments in unconsolidated entities | (1,586 | ) | — | ||||
Distributions of capital from unconsolidated entities | — | 43 | |||||
Purchases of property and equipment | (6,258 | ) | (8,899 | ) | |||
Proceeds from sales of property and equipment | 79 | 128 | |||||
Net cash used in investing activities | (7,765 | ) | (8,728 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of loans payable and other borrowings | (6,922 | ) | (168 | ) | |||
Dividends paid | (27,239 | ) | (9,927 | ) | |||
Repurchase of shares | (55,933 | ) | (10,000 | ) | |||
Net cash used in financing activities | (90,094 | ) | (20,095 | ) | |||
Net (decrease)/increase in cash and cash equivalents | (15,929 | ) | 95,649 | ||||
Beginning cash and cash equivalents | 921,227 | 861,561 | |||||
Ending cash and cash equivalents | $ | 905,298 | $ | 957,210 |
Operating Data
(Dollars in thousands)
(Unaudited)
We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our three reportable homebuilding segments are as follows:
- West:
Arizona ,California ,Colorado , andUtah - Central:
Texas - East:
Florida ,Georgia ,North Carolina ,South Carolina , andTennessee
Three Months Ended | |||||||||
2024 | 2023 | ||||||||
Homes | Value | Homes | Value | ||||||
Homes Closed: | |||||||||
1,014 | 515,632 | 785 | 417,322 | ||||||
1,167 | 427,565 | 1,048 | 424,880 | ||||||
1,326 | 522,899 | 1,064 | 419,721 | ||||||
Total | 3,507 | $ | 1,466,096 | 2,897 | $ | 1,261,923 | |||
Homes Ordered: | |||||||||
1,170 | 580,805 | 1,286 | 635,936 | ||||||
1,310 | 482,183 | 1,073 | 420,521 | ||||||
1,511 | 568,207 | 1,128 | 450,436 | ||||||
Total | 3,991 | $ | 1,631,195 | 3,487 | $ | 1,506,893 | |||
Order Backlog: | |||||||||
902 | 439,957 | 1,373 | 676,135 | ||||||
911 | 341,691 | 988 | 419,822 | ||||||
1,220 | 462,609 | 1,561 | 667,875 | ||||||
Total | 3,033 | $ | 1,244,257 | 3,922 | $ | 1,763,832 |
Three Months Ended | |||||||
2024 | 2023 | ||||||
Ending | Average | Ending | Average | ||||
Active Communities: | |||||||
83 | 80.5 | 96 | 95.0 | ||||
80 | 84.0 | 82 | 81.5 | ||||
112 | 108.0 | 100 | 98.0 | ||||
Total | 275 | 272.5 | 278 | 274.5 |
Supplemental and Non-GAAP information (Unaudited) Supplemental Information (Dollars in thousands): | |||||||
Three Months Ended | |||||||
2024 | 2023 | ||||||
Depreciation and amortization | $ | 6,038 | $ | 5,208 | |||
Summary of Capitalized Interest: | |||||||
Capitalized interest, beginning of period | $ | 54,516 | $ | 60,169 | |||
Interest incurred | 12,925 | 15,030 | |||||
Interest expensed | — | — | |||||
Interest amortized to cost of home and land closings | (13,214 | ) | (12,747 | ) | |||
Capitalized interest, end of period | $ | 54,227 | $ | 62,452 |
Reconciliation of Non-GAAP Information (Dollars in thousands): | |||||||
Debt-to-Capital Ratios | |||||||
Senior notes, net, loans payable and other borrowings | 1,001,570 | 1,008,215 | |||||
Stockholders' equity | 4,720,573 | 4,611,900 | |||||
Total capital | $ | 5,722,143 | $ | 5,620,115 | |||
Debt-to-capital | 17.5 | % | 17.9 | % | |||
Senior notes, net, loans payable and other borrowings | $ | 1,001,570 | $ | 1,008,215 | |||
Less: cash and cash equivalents | (905,298 | ) | (921,227 | ) | |||
Net debt | $ | 96,272 | $ | 86,988 | |||
Stockholders’ equity | 4,720,573 | 4,611,900 | |||||
Total net capital | $ | 4,816,845 | $ | 4,698,888 | |||
Net debt-to-capital (1) | 2.0 | % | 1.9 | % |
(1) Net debt-to-capital reflects certain adjustments to the debt-to-capital ratio and is defined as net debt (debt less cash and cash equivalents) divided by total capital (net debt plus stockholders' equity). Net debt-to-capital is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe this non-GAAP financial measure is relevant and useful to investors in understanding our operating results and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. We encourage investors to understand the methods used by other companies in the homebuilding industry to calculate non-GAAP financial measures and any adjustments thereto before comparing to our non-GAAP financial measures.
About
For more information, visit www.meritagehomes.com.
The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general and our future results including our full year 2024 projected home closing volume, home closing revenue, home closing margin, effective tax rate and diluted earnings per share.
Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations.
Contacts: | |
(480) 515-8979 (office) | |
investors@meritagehomes.com |
Source:
2024 GlobeNewswire, Inc., source