Meritage Homes reports Q1 EPS $5.06, consensus $3.52

Reports Q1 revenue $1.47B, consensus $1.29B. Orders of 3,991 homes for the first quarter of 2024 increased 14% year-over-year, due primarily to a 17% increase in the average absorption pace to 4.9 per month from 4.2 per month in the first quarter of 2023, which was partially offset by a 1% decrease in average active communities. “Meritage has had a remarkable start to the year, generating an average absorption pace of 4.9 per month in the first quarter of 2024, which resulted in our highest quarterly sales orders,” said Steven J. Hilton, executive chairman of Meritage Homes. “We entered the spring selling season with a healthy supply of available inventory and were able to capitalize on strong current market conditions stemming from the increasing need for housing from Millennials, Gen Z and the move-down Baby Boomers, all finding limited existing housing supply. Executing on our spec building and streamlined strategy, we delivered 3,507 homes in the first quarter of 2024-of which nearly 50% came from intra-quarter sales orders-and yet another record backlog conversion rate of 138%,” added Phillippe Lord, chief executive officer of Meritage Homes. “Home closing revenue of $1.5 billion in the first quarter of 2024 combined with home closing gross margin of 25.8% and SG&A leverage of 10.4% generated $5.06 in diluted EPS. We increased our book value per share 17% year-over-year to $129.98 and generated a return on equity of 18.0% as of March 31, 2024. In the first quarter of 2024, we carried out our commitment to growth by putting nearly 6,300 net new lots under control, representing an estimated 43 future communities. We strategically deployed our capital by spending $430 million on land acquisition and development and returning $83 million back to shareholders in the form of share repurchases and dividends. We achieved this balanced long-term value creation, while maintaining cash of over $905 million and a net debt-to-capital ratio of 2.0% at March 31, 2024.”