Meritage Homes (MTH) Q1 2025 earnings summary

Executive summary

• Delivered 3,416 homes in Q1 2025, generating $1.3B in home closing revenue, down 8–8.5% year-over-year due to lower volume and average sales price, with orders down 2.9–3% to 3,876 homes.

• Net earnings fell 34% year-over-year to $122.8M–$123M ($1.69 per diluted share), mainly due to lower revenue, gross margins, and a higher tax rate.

• Backlog at quarter-end was 2,004 homes valued at $812M, down 34% and 35% year-over-year, respectively, with backlog conversion rate at an all-time high of 221%.

• Active communities increased to 290, with a focus on affordable, move-in ready homes and a 60-day closing commitment.

• Maintained a strong absorption pace of 4.4 net sales per month, supported by move-in ready inventory and attractive financing incentives.

Financial highlights

• Home closing gross margin declined to 22.0% from 25.8% year-over-year, impacted by higher incentives, lower leverage, and higher lot costs.

• SG&A expenses rose to 11.3% of revenue from 10.4% year-over-year, driven by lower revenue leverage and higher technology/start-up costs.

• Cash and cash equivalents rose to $1B–$1.01B at quarter-end, up from $651.6M–$652M at year-end 2024.

• Debt-to-capital ratio increased to 26.1% (from 20.6% at year-end 2024); net debt-to-capital at 13.7%.

• Book value per share increased 11% year-over-year.

Outlook and guidance

• Reiterated full-year 2025 guidance: 16,250–16,750 home closings and $6.6–$6.9B in home closing revenue.

• Q2 2025 guidance: 3,800–4,100 closings, $1.5–$1.65B revenue, gross margin ~21.5%, effective tax rate ~24.5%, and diluted EPS $1.85–$2.10.

• Double-digit year-over-year community count growth expected by year-end, supporting the goal of 20,000 units by 2027.

• Management expects to capture additional market share due to focus on affordability and move-in ready inventory.