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Sep 30, 2022
Meritage Homes Q3 2022 Earnings Report
Meritage Homes reported third quarter results, achieving highest quarterly home closing revenue and record SG&A leverage.
Key Takeaways
Meritage Homes reported a strong third quarter with a 35% increase in diluted EPS, driven by record home closing revenue and SG&A leverage. Despite a challenging housing market, the company achieved significant growth in earnings and maintained a healthy balance sheet.
Home closing revenue increased by 25% year-over-year to $1.6 billion.
Diluted EPS rose by 35% year-over-year, reaching $7.10.
SG&A leverage improved by 120 bps to 8.1% of home closing revenue.
Sales orders decreased by 33% year-over-year due to elevated cancellations.
Meritage Homes
Meritage Homes
Meritage Homes Revenue by Segment
Revenue by Segment
Homebuilding Revenue
CapyFin.comLand Closing Revenue
CapyFin.com Forward Guidance
Meritage Homes projects 4,300-4,700 home closings for the fourth quarter of 2022, generating $1.85-2.10 billion in revenue with a gross margin around 25%. Diluted EPS is expected to be in the range of $6.50-7.40.
Positive Outlook
- Projecting 4,300-4,700 home closings.
- Anticipating quarterly home closing revenue of $1.85-2.10 billion.
- Projecting an effective tax rate of 23.5%.
- Expecting diluted EPS to be in the range of $6.50-7.40.
- Committed to growing Meritage's market share and maximizing shareholder return.
Challenges Ahead
- Home closing gross margin is projected to be around 25%, reflecting increased incentives.
- Continuation of rapidly increasing mortgage interest rates.
- Expectations of further significant increases to come.
- Inflation and uncertainty in the economy.
- Building materials and labor shortages are still delaying a return to normal cycle times.
Revenue & Expenses
Visualization of income flow from segment revenue to net income