Meritage Homes (MTH) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales orders declined 5% year-over-year to 3,664, while home closings fell 13% to 2,967 and home closing revenue dropped 17% to $1.1 billion, reflecting lower volume and a 5% decrease in average sales price due to higher incentives and geographic mix.

• Net earnings declined 55% year-over-year to $55 million ($0.82 per diluted share), mainly from lower revenue and gross profit.

• Backlog conversion rate reached 254%, with nearly 70% of deliveries from intra-quarter orders, benefiting from a 60-day closing guarantee.

• Community count rose 19% year-over-year to a record 345 as of March 31, 2026.

• Market headwinds included a severe winter storm, geopolitical events, higher interest rates, and inflation, impacting consumer confidence and demand.

Financial highlights

• Home closing gross margin was 17.5%, down 400–450 bps year-over-year due to increased incentives, higher lot costs, and lost leverage.

• Diluted EPS was $0.82, a 51% decrease from $1.69 in Q1 2025.

• SG&A as a percentage of revenue rose to 11.8% from 11.3% year-over-year, despite lower discretionary spend and higher technology costs.

• Book value per share increased 6% year-over-year to $76.37.

• Cash and cash equivalents at quarter-end were $767 million.

Outlook and guidance

• Full-year 2026 home closing volume and revenue expected to be at or within 5% of 2025 results.

• Q2 2026 guidance: 3,650–3,900 home closings, $1.37–$1.47 billion revenue, gross margin around 18%, effective tax rate 24.5%–25%, and diluted EPS of $1.18–$1.46.

• Community count growth for 2026 reiterated at 5%–10%.

• Long-term gross margin target remains 22.5%–23.5% in a normalized market.

• Management remains focused on margin preservation, liquidity, and leveraging incentives to drive demand.