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Mar 31, 2023
Meritage Homes Q1 2023 Earnings Report
Meritage Homes' first quarter 2023 performance reflected stabilizing demand, with closings and home closing revenue slightly exceeding the first quarter of 2022.
Key Takeaways
Meritage Homes reported first quarter 2023 results, featuring a slight increase in home closing revenue and closings compared to the prior year. The company's focus on move-in ready homes and strategic use of price cuts and incentives drove sales, while diluted EPS decreased due to lower gross margin and overhead leverage.
Home closing revenue increased by 1% year-over-year to $1.3 billion, driven by a 1% increase in home closing volume.
Orders decreased by 10% year-over-year, primarily due to a decrease in average absorption pace.
Diluted EPS decreased by 39% year-over-year to $3.54, due to lower gross margin and overhead leverage partially offset by a favorable tax rate.
The company initiated a cash dividend of $0.27 per share and repurchased over 93,000 shares for $10 million during the quarter.
Meritage Homes
Meritage Homes
Meritage Homes Revenue by Segment
Revenue by Segment
Land Closing Revenue
CapyFin.com Forward Guidance
Meritage Homes anticipates returning to 300 communities by year-end and plans a full-year land spend of $1.5 billion. They expect the undersupply of new and resale home inventory as well as favorable demographics provide a strong long-term runway for the homebuying market.
Positive Outlook
- Focus on pace over price to capitalize on buyer demand and gain market share.
- Commitment to spec inventory positions the company well.
- Undersupply of new and resale home inventory provides a strong long-term runway.
- Favorable demographics support the homebuying market.
- Expects to return to 300 communities by year end.
Challenges Ahead
- Transformer issues across the country halted some new community openings.
- Lower ending community count than expected.
- Home closing gross margin declined due to greater sales incentives and continued elevated direct costs.
- Selling, general and administrative expenses increased as a percentage of home closing revenue.
- Orders of 3,487 homes decreased 10% year-over-year.