Meritage Homes (MTH) investor relations material

Executive summary

• Delivered a record 4,170 home closings in Q2 2025, up 1.3% year-over-year, with 3,914–3,914 net orders and a strong average absorption pace of 4.3 per month, despite challenging market conditions and softening demand.

• Achieved a record-high community count of 312, up 9% year-over-year, with plans for continued double-digit growth through 2025 and into 2026.

• Focused on move-in ready inventory, financing incentives, and partnerships with external realtors to drive sales and provide certainty to buyers amid volatile mortgage rates and affordability concerns.

• Maintained a disciplined, agile land strategy, terminating 1,800 lots in Q2 that no longer fit criteria, and owning/controlling all needed land for the next several quarters.

• Prioritized maximizing returns through flexible operations, reduced land spend, and increased cash returns to shareholders.

Financial highlights

• Q2 2025 home closing revenue was $1.6–$1.62B, down 5% year-over-year, with a 1% increase in closing volume offset by a 6% lower ASP due to increased incentives.

• Adjusted home closing gross margin was 21.4%, excluding $4.2M in terminated land deal charges; reported margin was 21.1%, down 480 bps year-over-year.

• Diluted EPS fell 35%–37% year-over-year to $2.04, with net earnings for Q2 2025 at $146.9–$147M and for the first half at $269.7–$270M, both down 35%–37%.

• SG&A as a percentage of home closing revenue rose to 10.2% from 9.3% in Q2 2024, driven by higher commissions, startup costs, and increased spec inventory expenses.

• Book value per share increased 10% year-over-year to $74.05.

Outlook and guidance

• Q3 2025 guidance: 3,600–3,936 home closings, $1.4–$1.56B in revenue, ~20% gross margin, 24.5% effective tax rate, and diluted EPS of $1.51–$1.86.

• No full-year guidance provided due to high backlog conversion and limited visibility; Q3 expected to be the lowest volume quarter due to seasonality and strategy shift.

• Management believes the move-in ready inventory strategy and affordable pricing will help remain competitive and grow market share.

• Double-digit year-over-year community count growth reiterated for 2025 and expected for 2026.

• No material impact expected from recent tax law changes for the remainder of 2025.