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FIRST QUARTER 2024 ANALYST CONFERENCE CALL APRIL 25, 2024
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Safe Harbor The information included in this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general, our sales pace, backlog conversion rate, level of spec starts, SG&A as a percentage of home closing revenue, rate locks, financing incentive utilization, rate lock unwind cost write-offs, landbanking utilization and cash spend on land investments, share repurchases and cash dividends; our intention to increase our community count; expectations about our future results, including but not limited to our 2Q24 and FY2024 projected home closings, home closing revenue, home closing gross margins, effective tax rate and diluted earnings per share. Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; inflation in the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; shortages in the availability and cost of subcontract labor; the replication of our energy- efficient technologies by our competitors; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2023 under the caption "Risk Factors," which can be found on our website at https://investors.meritagehomes.com. 2
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Speakers Steven J. Hilton – Executive Chairman Phillippe Lord – Chief Executive Officer Hilla Sferruzza – EVP & Chief Financial Officer Emily Tadano – VP of Investor Relations and ESG 3
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4 1Q24 Company Milestones Sustainability Philanthropy Strong ROE and TSR for Past 5 Years • 11th time recipient of the EPA’s ENERGY STAR ® Partner of the Year for Sustained Excellence • Named to Newsweek’s 2024 America’s Greenest Companies list • Received the President’s Volunteer Service Award – a civil award bestowed by the U.S. president and the highest civilian honor available for volunteerism with No Child Hungry • Enhanced capital allocation strategy with systematic share repurchases and nearly tripling prior year’s cash dividends • Joined Forbe’s 2024 Most Successful Mid-Cap Companies
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5 Average Absorption Pace & Y/Y % Total Orders & Y/Y % 4.2 3.9 4.1 3.6 4.9 1Q23 2Q23 3Q23 4Q23 1Q24 -11% -14% 52% 64% 17% 3,487 3,340 3,474 2,892 3,991 1Q23 2Q23 3Q23 4Q23 1Q24 -11%-10% 60% 14%50% Ending Community Count by Product Type & Entry-Level % of Total 218 226 247 45 49 275 3 1 1Q22 1Q23 1Q24 Other 1MU Entry Level 268 275 81% 278 90%81% Net Sales Orders Increased 14% Year-Over-Year Orders by Product Type & Entry-Level % of Total 3,222 3,018 3,627 604 457 34848 12 16 1Q22 1Q23 1Q24 Other 1MU Entry Level 3,874 91%87%83% 3,487 3,991
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Steady Performance Across Our Diversified Geographic Footprint 6 West Region Central Region East Region Total Average Active Communities 80.5 84.0 108.0 272.5 Average Active Communities Y/Y(%) (15)% 3% 10% (1)% Entry-level % Average Communities 88% 91% 88% 89% Absorption per month 4.8 5.2 4.7 4.9 Absorption per month Y/Y(%) 7% 18% 24% 17% Orders 1,170 1,310 1,511 3,991 Orders Y/Y(%) (9)% 22% 34% 14% ASP on Orders $496K $368K $376K $409K ASP on Orders Y/Y(%) 0% (6)% (6)% (5)% Order Value Y/Y(%) (9)% 15% 26% 8% Our three reportable homebuilding segments are as follows: West: Arizona, California, Colorado, and Utah Central: Texas East: Florida, Georgia, North Carolina, South Carolina, and Tennessee
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2,462 4,096 3,989 3,977 4,142 1000 2000 3000 4000 5000 6000 1Q23 2Q23 3Q23 4Q23 1Q24 Increasing Our Supply of Move-In Ready Homes is Our Competitive Advantage 7 3,922 3,772 3,608 2,549 3,033 -500 500 1500 2500 3500 4500 5500 6500 7500 1Q23 2Q23 3Q23 4Q23 1Q24 13.9 15.4 18.0 21.8 21.8 1Q23 2Q23 3Q23 4Q23 1Q24 25% 18% 16% 19% 22% 1Q23 2Q23 3Q23 4Q23 1Q24 Completed Under Construction 5,991 4,905 4,473 5,877 3,865 Spec Starts Total Specs & % of Completed Specs Average Specs Per Community Ending Backlog Units
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1Q24 Financial Performance 8 ($ Millions except EPS & ASP) 1Q24 1Q23 %Chg Home closings 3,507 2,897 21% ASP (closings) $418K $436K (4)% Home closing revenue $1,466 $1,262 16% Home closing gross profit $378 $282 34% Home closing gross margin 25.8% 22.4% 340 bps SG&A expenses $152 $130 17% SG&A % of home closing revenue 10.4% 10.3% 10 bps Earnings before taxes $234 $165 42% Tax rate 20.5% 20.6% (10) bps Net earnings $186 $131 42% Diluted EPS $5.06 $3.54 43% 1Q24 Highlights: • Lower ASPs on closings due to product mix shift • Home closing gross margin benefited from reduced utilization of rate locks, lower direct costs, and greater leverage of fixed costs, partially offset by higher lot costs • SG&A % impacted by higher commissions, partially offset by greater leverage
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Accelerated Capital Spend Activities Due To Strong Balance Sheet 9 Capital Structure – Non-GAAP Reconciliation ($ Millions) Mar 31, 2024 Dec 31, 2023 Notes payable & other borrowings $1,002 $1,008 Stockholders’ equity $4,721 $4,612 Total capital $5,722 $5,620 Debt-to-capital 17.5% 17.9% Less: cash & cash equivalents ($905) ($921) Net debt $96 $87 Total net capital $4,817 $4,699 Net debt-to-capital 2.0% 1.9% Book value per share $129.98 $126.61 Capital Allocation Spend 1Q24 Breakdown ($ Millions) Share Repurchases 11% Land Spend 84% Cash Dividends 5% $514 million total 1Q24 capital spend
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Momentum in Land & Development Investment 10 1Q24 1Q23 Total lots controlled 66,434 60,942 Supply of lots (years) 4.6 4.3 - Owned 69% 75% - Optioned 31% 25% Land Acquisition and Development ($ Millions) Net Newly Controlled Lots & Net Contracted Future New Communities 1 0 1,725 2,837 4,968 7,627 6,2630 17 26 37 43 43 0 25 50 75 0 2000 4000 6000 8000 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Net Newly Controlled Lots Estimated Net Contracted Future New Communities (1) Refers to gross new lots put under control and the related future new communities 1 Lots Detail $78 $89 $153 $244 $347 $162 $273 $221 $256 $293 $307 $268 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Development Acqusition $351 $310 $409 $537 $654 $430
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Guidance 11 Second Quarter 2024 Full Year 2024 Home closings 3,600-3,800 units 14,500-15,000 units Home closing revenue $1.5-1.6 billion $6.0-6.2 billion Home closing gross margin 24.5-25.0% 24.5-25.0% Effective tax rate About 22.5% About 22.5% Diluted earnings per common share $4.70-5.30 $19.20-20.70
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Positioned for Growing Market Share 12 Well-positioned with entry-level and first move-up focus Move-in ready homes strategy Prioritize pace over price Focused on growing community count