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 60-day closing commitment, with a record 145% backlog conversion rate.

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

• The acquisition of Elliott Homes in the Gulf Coast added over 5,500 lots and is expected to contribute to volume in 2025 and beyond.

• Corporate governance initiatives included board declassification and the addition of a new board member with technology and financial expertise.

• Recognized for workplace excellence and ESG leadership, including EPA and Fortune awards.

Financial highlights

• Q3 2024 home closing revenue was $1.59–$1.6B, down 1.5–2% 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.

• Net earnings for Q3 2024 were $196.0M ($5.34 per diluted share), down 11–12% year-over-year.

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

• Year-to-date, orders rose 10%, closings up 15%, home closing revenue up 7% to $4.7B, and net earnings up 14% to $613.5M.

Outlook and guidance

• Q4 2024 guidance: 3,750–3,950 closings, $1.5–$1.59B revenue, 22.5–23.5% gross margin, EPS $4.10–$4.60, effective tax rate ~22.5%.

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

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

• Management expects cycle times to approximate normal conditions for the remainder of 2024, with continued focus on affordable, move-in ready homes.