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Mar 31, 2021
Meritage Homes Q1 2021 Earnings Report
Reported an 88% increase in diluted EPS, 470 bps increase in home closing gross margin and 25% increase in closings over prior year.
Key Takeaways
Meritage Homes reported strong first-quarter results with significant growth in diluted EPS, home closing gross margin, and closings. The company's strategy centered on affordable entry-level and first move-up homes drove the highest first quarter of orders and closings in the company's history.
Total orders increased by 11% year-over-year, driven by a 35% increase in absorption pace.
Home closing revenue increased by 21% year-over-year to $1.1 billion.
Home closing gross margin improved by 470 bps to 24.7%.
Net earnings increased by 85% year-over-year to $131.8 million, with diluted EPS up 88% to $3.44.
Revenue by Geographic Location
Forward Guidance
Based on robust selling conditions and confidence in our ability to deliver our backlog, we are projecting 11,700-12,700 annual home closings and approximately $4.55-4.85 billion in total home closing revenue for 2021. In addition, we anticipate home closing gross margin of approximately 25.0% and an effective tax rate of about 23.0%, and expect to realize diluted EPS in the range of $13.75-14.75.
Positive Outlook
- Projecting 11,700-12,700 annual home closings.
- Anticipating approximately $4.55-4.85 billion in total home closing revenue for 2021.
- Expecting home closing gross margin of approximately 25.0%.
- Expecting an effective tax rate of about 23.0%.
- Projecting diluted EPS in the range of $13.75-14.75.
Challenges Ahead
- Guidance is subject to risks and uncertainties in the housing market.
- Potential changes in interest rates and mortgage availability could impact results.
- Inflation in material costs could affect profitability.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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