Meritage Homes (MTH) Q4 2025 earnings summary

Executive summary

• Fourth quarter 2025 saw 3,755 home closings and $1.4 billion in home closing revenue, both down year-over-year due to lower volume, average sales price, and softer market conditions, with a 2% decline in sales orders and a focus on margin over volume.

• Full year 2025 sales orders were flat at 14,650 homes, with a 15% increase in community count to 336, offsetting slower demand and a 9% decline in absorption pace.

• The company maintained a competitive advantage with a strong supply of move-in ready homes, a 60-day closing guarantee, and a focus on affordable, entry-level, and first move-up homes.

• Returned $416 million to shareholders in 2025, including $179 million in Q4, via buybacks and dividends, and repurchased 6% of outstanding shares for the year.

• Net earnings for Q4 were $84 million ($1.20 per diluted share), down 51% year-over-year; adjusted diluted EPS was $1.67, both within guidance.

Financial highlights

• Q4 home closing revenue was $1.4 billion, down 12% year-over-year due to 7% lower volume and a 5% decrease in ASP to $375,000.

• Adjusted home closing gross margin for Q4 was 19.3%, excluding $38.9 million in non-recurring charges; Q4 gross margin was 16.5%.

• Q4 adjusted diluted EPS was $1.67, down 30% year-over-year, with $42.9 million in non-recurring charges.

• Full year 2025 adjusted gross margin was 20.8%, down 420–520 bps from 2024, and adjusted diluted EPS was $7.05, down from $10.79.

• SG&A as a percentage of revenue was 10.6% in Q4 and 10.7% for the year, reflecting higher commissions and technology costs.

Outlook and guidance

• 2026 guidance projects closings and revenue in line with 2025, assuming stable market conditions.

• Q1 2026 guidance: 3,000–3,300 closings, $1.13–$1.24 billion revenue, 18–19% gross margin, 24% tax rate, and $0.87–$1.13 diluted EPS.

• Community count expected to grow 5–10% in 2026 from year-end 2025 levels.

• Committed to $400 million in share buybacks in 2026, with $100 million planned per quarter, subject to market conditions.