Meritage Homes Q1 2023 Earnings Report
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
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.