Meritage Homes (MTH) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 sales orders of 3,799 homes and 4,118 home closings, with home closing revenue of $1.7B, up 10%–18% year-over-year, driven by strong demand and a strategic focus on move-in-ready, entry-level homes comprising 91%–92% of closings.

• Diluted EPS increased 26% to $6.31, with net earnings for Q2 up 23.9%–26% year-over-year, and book value per share rising 16% to $134.41; return on equity reached 18.3%.

• Recognized for customer satisfaction, sustainability, and workplace excellence, including the EPA's ENERGY STAR Market Leader Award and Avid Cup.

Financial highlights

• Q2 2024 home closing revenue reached $1.7B, up 9.8%–18% year-over-year, with gross margin improving 150 bps to 25.9% due to lower direct costs and greater leverage.

• Net earnings for H1 2024 up 31% to $418M; diluted EPS for six months was $11.37, up from $8.56.

• SG&A as a percentage of revenue improved to 9.3% in Q2.

• Cash and cash equivalents at June 30, 2024 totaled $992.9M.

Outlook and guidance

• Full-year 2024 guidance: 14,750–15,500 home closings, $6.1B–$6.3B revenue, gross margin 24.5%–25%, EPS $19.80–$21.00, and effective tax rate around 22.5%.

• Q3 2024 guidance: 3,650–3,850 closings, $1.5B–$1.6B revenue, gross margin 23.5%–24%, EPS $4.60–$5.05.

• Expect slower absorption and lower closing volume in H2 due to seasonality and higher backlog conversion in H1.