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Jun 30, 2020
Meritage Homes Q2 2020 Earnings Report
Meritage Homes reported record orders and increased net earnings driven by revenue growth and margin improvement.
Key Takeaways
Meritage Homes reported a strong second quarter with record orders, a 20% increase in revenue, and a 78% increase in net earnings. The company's strategic focus on the entry-level market and efficient operations drove significant improvements in gross margin and overhead leverage, resulting in a strong balance sheet.
Total orders increased 32% year-over-year, driven by a 42% increase in absorption pace.
Home closing revenue increased 20% due to a 23% increase in home closing volume.
Home closing gross margin increased 300 bps to 21.4% due to streamlined operations and cost efficiencies.
Net earnings increased 78% to $90.7 million, or $2.38 per diluted share.
Revenue by Geographic Location
Forward Guidance
Meritage Homes anticipates generating between $4.0-4.3 billion in home closing revenue for the year, including $1.0-1.1 billion for the third quarter, with home closing gross margins around 21% for the third quarter and full year. This is expected to translate to approximately $8.75-9.25 of diluted earnings per share for the full year, including approximately $2.15-2.35 for the third quarter.
Positive Outlook
- Projected home closing revenue between $4.0-4.3 billion for the year.
- Expected home closing revenue of $1.0-1.1 billion for the third quarter.
- Anticipated home closing gross margins around 21% for the third quarter and full year.
- Estimated diluted earnings per share between $8.75-9.25 for the full year.
- Projected diluted earnings per share between $2.15-2.35 for the third quarter.
Challenges Ahead
- Risks and uncertainties in the economy until the pandemic is brought under control.
- Potential adverse impacts of the COVID-19 pandemic.
- Fluctuations in quarterly operating results.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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