Meritage (MTH) Q3 2026 Earnings Report

The call reflected a cautious and pressured operating environment. Meritage reported substantial declines in orders, closings, revenue, margins, and earnings, alongside higher mortgage rates, elevated incentives, inventory impairments, and limited visibility that led management to withdraw near-term guidance. Offsetting factors included strong liquidity, low leverage, disciplined cost and inventory management, stable buyer credit quality, selected regional strength, and a flexible land and operating model. However, the magnitude of the year-over-year financial declines and the expectation of continued near-term market and margin pressure make the overall tone negative.

Management said it does not believe it is prudent to provide Q4 or preliminary 2026 guidance at this time, but reiterated 5%-10% full year 2026 community count growth year over year, expects full-year land acquisition and development spend below $1.5 billion, and targets 175%-200% backlog conversion, four to six months of supply, and a 22.5%-23.5% long-term adjusted gross margin under normalized market conditions; over a 12-month period, it will try to operate between three and four net sales per month, does not think it would operate below 3.0 over an extended period of time, plans to be on the low end of the four to six months of sales range for 2027, maintains a four to five year land supply target, an off-balance sheet target still around 40%, and targets net debt to cap in the low 20s while continuing to pay its dividend; first move-up product is expected to represent about one-third of the overall portfolio, with a higher mix of first move-up sales, orders, and closings beginning in the back half of 2028 and into 2029.