Meritage Homes (MTH) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw an 8% year-over-year increase in home closings to a record 3,942 units, driven by a strategic focus on affordable, move-in ready homes and a 145% backlog conversion rate, resulting in $1.6 billion in home closing revenue.

• Entry-level homes comprised 93% of Q3 closings and 92% of sales orders, reflecting a continued shift toward affordability and quick-turn inventory.

• The acquisition of Elliott Homes in the Gulf Coast marks the first acquisition since 2014, adding over 5,500 lots and expected to contribute meaningfully in 2025 and beyond.

• Corporate governance enhancements and ESG achievements were highlighted, including multiple workplace and sustainability recognitions.

• Maintained a diversified geographic footprint with 282.5 average active communities and balanced absorption rates.

Financial highlights

• Q3 2024 home closing revenue was $1.6 billion, down 2% year-over-year, with 8% higher closing volume offset by a 9% decrease in ASP due to mix and incentives.

• Home closing gross margin was 24.8%, down 190 bps year-over-year, reflecting higher lot costs and increased incentives.

• Diluted EPS for Q3 2024 was $5.34, down 11% from $5.98 in Q3 2023; net earnings for Q3 2024 were $196.0 million, down 12% year-over-year.

• Year-to-date, net earnings increased 14% to $613.5 million, with diluted EPS of $16.72.

• Book value per share rose 15% year-over-year to $139.02; return on equity was 17.2%.

Outlook and guidance

• Q4 2024 guidance: 3,750–3,950 closings, $1.5–$1.59 billion in revenue, gross margin of 22.5%–23.5%, EPS of $4.10–$4.60.

• Full year 2025 guidance: 16,500–17,500 closings and $6.7–$7.1 billion in revenue, including Elliott Homes.

• Double-digit year-over-year growth expected at the midpoint of Q4 2024 and 2025 guidance.