Meritage Homes reports first quarter 2025 results
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)% | ||
MANAGEMENT COMMENTS
“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.
BALANCE SHEET & LIQUIDITY
- 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.
GUIDANCE
| 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 |
CONFERENCE CALL
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 | )% | |||||
| Weighted average shares outstanding | 71,915 | 72,622 | (707 | ) | (1 | )% | ||||||||
| Diluted | ||||||||||||||
| Earnings per common share | $ | 1.69 | $ | 2.53 | $ | (0.84 | ) | (33 | )% | |||||
| Weighted average shares outstanding | 72,650 | 73,558 | (908 | ) | (1 | )% | ||||||||
| Meritage Homes Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) (Unaudited) | |||||
| March 31, 2025 | December 31, 2024 | ||||
| Assets: | |||||
| Cash and cash equivalents | $ | 1,011,652 | $ | 651,555 | |
| Other receivables | 262,103 | 256,282 | |||
| Real estate (1) | 5,800,954 | 5,728,775 | |||
| Deposits on real estate under option or contract | 254,546 | 192,405 | |||
| Investments in unconsolidated entities | 31,288 | 28,735 | |||
| Property and equipment, net | 47,015 | 47,285 | |||
| Deferred tax asset, net | 54,145 | 54,524 | |||
| Prepaids, other assets and goodwill | 238,515 | 203,093 | |||
| Total assets | $ | 7,700,218 | $ | 7,162,654 | |
| Liabilities: | |||||
| Accounts payable | $ | 229,845 | $ | 212,477 | |
| Accrued liabilities | 422,711 | 452,213 | |||
| Home sale deposits | 17,650 | 20,513 | |||
| Loans payable and other borrowings | 35,183 | 29,343 | |||
| Senior and convertible senior notes, net | 1,800,085 | 1,306,535 | |||
| Total liabilities | 2,505,474 | 2,021,081 | |||
| Stockholders’ Equity: | |||||
| Preferred stock | — | — | |||
| Common stock, par value $0.01. Authorized 125,000,000 shares; 71,830,262 and 71,921,972 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | 718 | 360 | |||
| Additional paid-in capital | 103,930 | 143,036 | |||
| Retained earnings | 5,090,096 | 4,998,177 | |||
| Total stockholders’ equity | 5,194,744 | 5,141,573 | |||
| Total liabilities and stockholders’ equity | $ | 7,700,218 | $ | 7,162,654 | |
| (1) Real estate – Allocated costs: | |||||
| Homes completed and under construction | $ | 2,454,275 | $ | 2,375,639 | |
| Finished home sites and home sites under development | 3,346,679 | 3,353,136 | |||
| Total real estate | $ | 5,800,954 | $ | 5,728,775 | |
| Meritage Homes Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Cash flows from operating activities: | |||||||
| Net earnings | $ | 122,806 | $ | 186,016 | |||
| Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities: | |||||||
| Depreciation and amortization | 5,949 | 6,038 | |||||
| Stock-based compensation | 6,325 | 6,114 | |||||
| Equity in earnings from unconsolidated entities | (626 | ) | (972 | ) | |||
| Distribution of earnings from unconsolidated entities | 588 | 985 | |||||
| Other | 1,922 | 1,001 | |||||
| Changes in assets and liabilities: | |||||||
| Increase in real estate | (60,821 | ) | (193,431 | ) | |||
| Increase in deposits on real estate under option or contract | (62,179 | ) | (11,449 | ) | |||
| (Increase)/decrease in other receivables, prepaids and other assets | (37,636 | ) | 53,769 | ||||
| (Decrease)/increase in accounts payable and accrued liabilities | (16,041 | ) | 27,668 | ||||
| (Decrease)/increase in home sale deposits | (2,863 | ) | 6,191 | ||||
| Net cash (used in)/provided by operating activities | (42,576 | ) | 81,930 | ||||
| Cash flows from investing activities: | |||||||
| Investments in unconsolidated entities | (5,850 | ) | (1,586 | ) | |||
| Purchases of property and equipment | (5,592 | ) | (6,258 | ) | |||
| Proceeds from sales of property and equipment | 29 | 79 | |||||
| Net cash used in investing activities | (11,413 | ) | (7,765 | ) | |||
| Cash flows from financing activities: | |||||||
| Repayment of loans payable and other borrowings | (2,150 | ) | (6,922 | ) | |||
| Proceeds from issuance of senior notes | 497,195 | — | |||||
| Payment of debt issuance costs | (5,073 | ) | — | ||||
| Dividends paid | (30,887 | ) | (27,239 | ) | |||
| Repurchase of shares | (44,999 | ) | (55,933 | ) | |||
| Net cash provided by/(used in) financing activities | 414,086 | (90,094 | ) | ||||
| Net increase/(decrease) in cash and cash equivalents | 360,097 | (15,929 | ) | ||||
| Beginning cash and cash equivalents | 651,555 | 921,227 | |||||
| Ending cash and cash equivalents | $ | 1,011,652 | $ | 905,298 | |||
| Meritage Homes Corporation and Subsidiaries 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. Effective January 1, 2025, the Tennessee homebuilding operating segment has been reclassified from the East reporting segment to the Central reporting segment for the purpose of making operational and resource decisions and assessing financial performance. Prior period balances have been retroactively adjusted to reflect this reclassification. Our three reportable homebuilding segments are as follows:
- West: Arizona, California, Colorado, and Utah
- Central: Tennessee and Texas
- East: Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina
| Three Months Ended March 31, | |||||||||
| 2025 | 2024 | ||||||||
| Homes | Value | Homes | Value | ||||||
| Homes Closed: | |||||||||
| West Region | 998 | $ | 479,636 | 1,014 | $ | 515,632 | |||
| Central Region | 1,187 | 412,537 | 1,295 | 483,770 | |||||
| East Region | 1,231 | 449,931 | 1,198 | 466,694 | |||||
| Total | 3,416 | $ | 1,342,104 | 3,507 | $ | 1,466,096 | |||
| Homes Ordered: | |||||||||
| West Region | 1,093 | $ | 539,594 | 1,170 | $ | 580,805 | |||
| Central Region | 1,365 | 489,160 | 1,500 | 556,159 | |||||
| East Region | 1,418 | 529,423 | 1,321 | 494,231 | |||||
| Total | 3,876 | $ | 1,558,177 | 3,991 | $ | 1,631,195 | |||
| Order Backlog: | |||||||||
| West Region | 530 | $ | 262,627 | 902 | $ | 439,957 | |||
| Central Region | 659 | 242,919 | 1,046 | 390,848 | |||||
| East Region | 815 | 306,812 | 1,085 | 413,452 | |||||
| Total | 2,004 | $ | 812,358 | 3,033 | $ | 1,244,257 | |||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Ending | Average | Ending | Average | ||||
| Active Communities: | |||||||
| West Region | 85 | 88.0 | 83 | 80.5 | |||
| Central Region | 82 | 86.0 | 94 | 96.5 | |||
| East Region | 123 | 117.0 | 98 | 95.5 | |||
| Total | 290 | 291.0 | 275 | 272.5 | |||
| Meritage Homes Corporation and Subsidiaries Supplement and Non-GAAP information (Unaudited) Supplemental Information (Dollars in thousands): | |||||||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Depreciation and amortization | $ | 5,949 | $ | 6,038 | |||
| Summary of Capitalized Interest: | |||||||
| Capitalized interest, beginning of period | $ | 53,678 | $ | 54,516 | |||
| Interest incurred | 14,714 | 12,925 | |||||
| Interest expensed | — | — | |||||
| Interest amortized to cost of home and land closings | (11,285 | ) | (13,214 | ) | |||
| Capitalized interest, end of period | $ | 57,107 | $ | 54,227 | |||
| (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. |
| Reconciliation of Non-GAAP Information (Dollars in thousands): | |||||||
| Debt-to-Capital Ratios | |||||||
| March 31, 2025 | December 31, 2024 | ||||||
| Senior and convertible senior notes, net, loans payable and other borrowings | $ | 1,835,268 | $ | 1,335,878 | |||
| Stockholders’ equity | 5,194,744 | 5,141,573 | |||||
| Total capital | $ | 7,030,012 | $ | 6,477,451 | |||
| Debt-to-capital | 26.1 | % | 20.6 | % | |||
| Senior and convertible senior notes, net, loans payable and other borrowings | $ | 1,835,268 | $ | 1,335,878 | |||
| Less: cash and cash equivalents | (1,011,652 | ) | (651,555 | ) | |||
| Net debt | $ | 823,616 | $ | 684,323 | |||
| Stockholders’ equity | 5,194,744 | 5,141,573 | |||||
| Total net capital | $ | 6,018,360 | $ | 5,825,896 | |||
| Net debt-to-capital (1) | 13.7 | % | 11.7 | % | |||
About Meritage Homes Corporation
Meritage is the fifth-largest public homebuilder in the United States, based on homes closed in 2024. The Company offers energy-efficient and affordable entry-level and first move-up homes. Operations span across Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina.
Meritage has delivered almost 200,000 homes in its 40-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is an industry leader in energy-efficient homebuilding, an eleven-time recipient of the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® Partner of the Year for Sustained Excellence Award and Residential New Construction Market Leader Award, as well as a four-time recipient of the EPA’s Indoor airPLUS Leader Award.
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 ability to increase our market share and our full year 2025 projected home closing volume and home closing revenue.
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. Meritage’s business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company’s stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our exposure to counterparty risk with respect to our capped calls; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; shortages in the availability and cost of subcontract labor; the replication of our energy-efficient technologies by our competitors; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2024 under the caption “Risk Factors,” which can be found on our website at https://investors.meritagehomes.com.
| Contacts: | Emily Tadano, VP Investor Relations and External Communications (480) 515-8979 (office) investors@meritagehomes.com |
