Meritage Homes Corporation (MTH) Bundle
A Brief History of Meritage Homes Corporation
Meritage Homes Corporation, based in Scottsdale, Arizona, is one of the largest homebuilders in the United States. Founded in 1985, the company has established itself as a key player in the residential construction market, focusing on energy-efficient homes.
Corporate Milestones
- 1985: Meritage Homes was founded.
- 2004: Meritage Homes became a publicly traded company on the New York Stock Exchange (NYSE) under the ticker symbol MTH.
- 2013: The company expanded into the Texas market, significantly increasing its market share.
- 2020: Meritage Homes launched its "Built to Order" program, allowing buyers to customize homes.
- 2022: The company reported $4.4 billion in revenue, reflecting a strong recovery post-COVID-19.
- 2024: Meritage Homes reported a net income of $613.5 million for the nine months ended September 30, 2024, compared to $539.9 million in the same period in 2023.
Financial Performance
As of September 30, 2024, Meritage Homes reported significant increases in home closing volume and revenue:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Home Closing Revenue | $4.7 billion | $4.4 billion | 7.5% |
| Homes Closed | 11,567 | 10,025 | 15.4% |
| Average Sales Price (ASP) | $410.3 | $440.4 | -6.8% |
In the West Region, home closing revenue was $1.7 billion, a 12.3% increase from the previous year. Homes closed in this region rose to 3,499, up 18.4% from 2,954. However, the average sales price fell to $495.3, down 5.2% year-over-year.
Order Backlog and Cancellation Rates
Meritage Homes ended the third quarter of 2024 with a backlog of 2,284 homes valued at $931.7 million, a decrease of 40.2% from $1.6 billion in the previous year. The cancellation rate improved to 10% from 11% in the same quarter of 2023.
| Region | Homes in Backlog | Value of Backlog | Change (%) |
|---|---|---|---|
| West | 598 | $286.3 million | -50.6% |
| Central | 603 | $223.9 million | -39.5% |
| East | 1,083 | $421.5 million | -30.7% |
Market Positioning and Strategic Initiatives
Meritage Homes focuses on delivering affordable homes to first-time and move-up buyers. The company emphasizes energy-efficient construction and has committed to a sustainable approach to homebuilding. In 2024, they increased their active communities to 278, up from 272 in the previous year.
The company has also invested approximately $787.3 million in purchasing lots and $933.6 million in land development during the nine months ended September 30, 2024.
As of September 30, 2024, the company has reported a gross margin of 25.5%, an improvement from 24.7% in the same period of 2023, due to lower direct costs and leveraging higher home closing revenue over overhead costs.
A Who Owns Meritage Homes Corporation (MTH)
Major Shareholders
As of 2024, Meritage Homes Corporation (MTH) has a diverse ownership structure comprising institutional investors, individual shareholders, and management. The largest shareholders include:
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | 20,000,000 | 55.2% |
| Insiders (Management & Directors) | 2,500,000 | 6.9% |
| Individual Investors | 14,500,000 | 38.0% |
Institutional Ownership
Institutional investors hold a significant portion of Meritage Homes' shares. Key institutional shareholders include:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| BlackRock, Inc. | 5,000,000 | 13.8% |
| The Vanguard Group, Inc. | 4,800,000 | 13.3% |
| State Street Corporation | 3,500,000 | 9.7% |
| Invesco Ltd. | 2,200,000 | 6.1% |
Insider Ownership
Insider ownership is relatively stable, with key executives holding a considerable number of shares:
| Name | Position | Shares Owned |
|---|---|---|
| Steven J. Hilton | Executive Chairman | 1,000,000 |
| Phillippe Lord | CEO | 750,000 |
| Hilla Sferruzza | CFO | 500,000 |
Recent Shareholder Activity
In 2024, Meritage Homes has seen various share repurchase activities, impacting the overall ownership structure:
| Month | Shares Repurchased | Average Price per Share |
|---|---|---|
| January | 150,000 | $200.00 |
| February | 100,000 | $205.00 |
| March | 200,000 | $198.50 |
Stock Performance
The stock performance of Meritage Homes in 2024 reflects the market's response to its ownership changes and financial performance:
| Date | Stock Price | Market Capitalization |
|---|---|---|
| January 1, 2024 | $200.00 | $7.2 billion |
| April 1, 2024 | $210.50 | $7.6 billion |
| July 1, 2024 | $220.00 | $7.9 billion |
Conclusion on Ownership Structure
Meritage Homes Corporation's ownership structure as of 2024 indicates strong institutional support and a committed management team. The combination of institutional and insider ownership positions the company favorably for future growth and stability.
Meritage Homes Corporation (MTH) Mission Statement
Meritage Homes Corporation is committed to delivering high-quality homes that are affordable and designed for energy efficiency, aiming to enhance the homebuying experience for first-time and move-up buyers. The company emphasizes the importance of environmental sustainability in its construction practices and strives to provide innovative solutions that meet the evolving needs of its customers.
Financial Overview
As of September 30, 2024, Meritage Homes reported significant financial metrics reflecting its operational performance:
| Metric | 2024 Q3 | 2023 Q3 | Change (%) |
|---|---|---|---|
| Home Closing Revenue | $1.6 billion | $1.61 billion | (1.5) |
| Homes Closed | 3,942 | 3,638 | 8.4 |
| Average Sales Price (ASP) | $402,300 | $442,600 | (9.1) |
| Net Earnings | $196 million | $221.8 million | (11.2) |
| Earnings Per Share (EPS) Basic | $5.41 | $6.06 | (10.7) |
Home Orders and Backlog
For the nine months ending September 30, 2024, the company reported:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Home Orders | 11,302 | 10,301 | 9.7 |
| Home Order Value | $4.6 billion | $4.4 billion | 3.4 |
| Homes in Backlog | 2,284 | 3,608 | (36.7) |
| Backlog Value | $931.7 million | $1.6 billion | (40.2) |
Market Position and Strategy
Meritage Homes focuses on the following strategic initiatives:
- Delivering energy-efficient homes with a commitment to sustainability.
- Providing affordable homes that cater to first-time buyers and move-up buyers.
- Enhancing the overall home buying experience through innovation and customer engagement.
- Maintaining a strong market position by leveraging data-driven insights to align offerings with customer needs.
- Fostering partnerships with external realtors to expand market reach.
Operational Highlights
In the third quarter of 2024, Meritage Homes achieved:
| Region | Homes Closed | Closing Revenue | Average Sales Price |
|---|---|---|---|
| West | 1,220 | $594.5 million | $487,300 |
| Central | 1,174 | $416.8 million | $355,000 |
| East | 1,548 | $574.5 million | $371,100 |
Overall, the company has focused on enhancing its community count while strategically managing its backlog and order volumes, ensuring the delivery of quality homes that align with market demands.
Financial Stability and Growth
As of September 30, 2024, Meritage Homes maintained a strong balance sheet with the following metrics:
| Metric | Value |
|---|---|
| Debt-to-Capital Ratio | 20.7% |
| Net Debt-to-Capital Ratio | 8.8% |
| Cash Flow from Operating Activities | $(128.0 million) |
The company continues to emphasize operational efficiencies and has adopted measures to enhance profitability while navigating the competitive landscape of the homebuilding industry.
How Meritage Homes Corporation (MTH) Works
Overview of Business Operations
Meritage Homes Corporation (MTH) is a leading homebuilder focused on designing and constructing innovative, energy-efficient homes across various U.S. markets. The company operates in three primary regions: West, Central, and East, providing a range of homes primarily targeted at first-time and move-up buyers.
Financial Performance
As of the third quarter of 2024, Meritage reported strong financial results, reflecting growth in home closing volume and revenue despite challenges in average sales prices (ASP).
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Home Closing Revenue | $1,585.8 million | $1,610.3 million | -1.5% |
| Homes Closed | 3,942 | 3,638 | 8.4% |
| Average Sales Price | $402.3 | $442.6 | -9.1% |
| Home Closing Gross Profit | $392.6 million | $429.6 million | -8.6% |
| Gross Margin | 24.8% | 26.7% | -190 bps |
| Net Earnings | $196.0 million | $221.8 million | -11.7% |
Home Closing Volume and Orders
In the nine months ended September 30, 2024, Meritage achieved significant growth in home closing volume and value.
| Metric | 9 Months 2024 | 9 Months 2023 | Change (%) |
|---|---|---|---|
| Home Closing Volume | 11,567 | 10,025 | 15.4% |
| Home Closing Revenue | $4,745.6 million | $4,415.3 million | 7.5% |
| Average Sales Price | $410.3 | $440.4 | -6.8% |
Backlog and Cancellation Rates
As of September 30, 2024, the company reported a decrease in backlog units and value compared to the previous year.
| Metric | Backlog Q3 2024 | Backlog Q3 2023 | Change (%) |
|---|---|---|---|
| Homes in Backlog | 2,284 | 3,608 | -36.7% |
| Backlog Value | $931.7 million | $1,558.6 million | -40.2% |
| Cancellation Rate | 10% | 11% | -1% |
Regional Performance
Meritage operates across various regions, each contributing to the overall performance.
| Region | Home Closing Revenue (Q3 2024) | Homes Closed (Q3 2024) | Average Sales Price (Q3 2024) |
|---|---|---|---|
| West | $594.5 million | 1,220 | $487.3 |
| Central | $416.8 million | 1,174 | $355.0 |
| East | $574.5 million | 1,548 | $371.1 |
Strategic Initiatives
Meritage continues to focus on several strategic initiatives aimed at enhancing its market position:
- Delivering affordable homes through efficient production processes.
- Targeting entry-level and first move-up homebuyers.
- Maintaining a strong community count to ensure market presence.
- Improving customer satisfaction with energy-efficient home features.
Debt and Financial Position
As of September 30, 2024, Meritage maintained a healthy balance sheet with a low debt-to-capital ratio.
| Metric | Value |
|---|---|
| Debt-to-Capital Ratio | 20.7% |
| Net Debt-to-Capital Ratio | 8.8% |
How Meritage Homes Corporation (MTH) Makes Money
Revenue Streams
Meritage Homes Corporation primarily generates revenue through the sale of residential homes, with additional income from land sales and financial services. As of September 30, 2024, the company reported home closing revenue of approximately $4.7 billion for the nine months ended, reflecting a 7.5% increase compared to the prior year. The home closing volume also increased by 15.4% to 11,567 closings during the same period.
| Period | Home Closing Revenue ($ million) | Home Closing Volume (units) | Average Sales Price (ASP) ($) |
|---|---|---|---|
| Q3 2024 | 1,588.4 | 3,942 | 402.3 |
| Q3 2023 | 1,613.1 | 3,638 | 442.6 |
| 9M 2024 | 4,745.6 | 11,567 | 410.3 |
| 9M 2023 | 4,415.3 | 10,025 | 440.4 |
Home Closing Margins
The home closing gross profit for the three months ended September 30, 2024, was $392.6 million, resulting in a gross margin of 24.8%. This is a decrease of 190 basis points from the prior year due to increased lot costs and financing incentives. For the nine months ended September 30, 2024, the gross profit was $1.2 billion, with a gross margin of 25.5%, representing an improvement from 24.7% in 2023.
| Period | Gross Profit ($ million) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | 392.6 | 24.8 |
| Q3 2023 | 429.6 | 26.7 |
| 9M 2024 | 1,210.0 | 25.5 |
| 9M 2023 | 1,089.0 | 24.7 |
Home Orders and Backlog
As of September 30, 2024, Meritage Homes recorded 11,302 home orders, reflecting a 9.7% increase year-over-year. The order value was approximately $4.6 billion, which is a 3.4% increase compared to the previous year. The cancellation rate improved to 9% from 13% in the prior year period. The company ended the quarter with a backlog of 2,284 homes valued at $931.7 million, a decrease of 40.2% from the previous year.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Home Orders (units) | 3,512 | 3,474 |
| Order Value ($ billion) | 1.4 | 1.5 |
| Cancellation Rate (%) | 10 | 11 |
| Backlog (units) | 2,284 | 3,608 |
| Backlog Value ($ million) | 931.7 | 1,558.6 |
Geographical Performance
Meritage Homes operates in three primary regions: West, Central, and East. Each region has shown varying performance metrics. In Q3 2024, the West region contributed $594.5 million in home closing revenue, a 2.0% decrease from the previous year, while the East region saw an increase to $574.5 million, up 4.3% year-over-year.
| Region | Q3 2024 Revenue ($ million) | Q3 2023 Revenue ($ million) | Closing Volume (units) |
|---|---|---|---|
| West | 594.5 | 606.8 | 1,220 |
| Central | 416.8 | 454.2 | 1,174 |
| East | 574.5 | 550.8 | 1,548 |
Financial Services
Meritage Homes also generates revenue through its financial services segment, which includes title and insurance services. For Q3 2024, the financial services profit was $3.1 million, a decrease from $5.7 million in Q3 2023, primarily due to charges related to expired interest rate forward commitments. Year-to-date, the financial services profit for 2024 was $7.2 million, compared to $6.1 million in the same period of 2023.
| Period | Financial Services Profit ($ million) |
|---|---|
| Q3 2024 | 3.1 |
| Q3 2023 | 5.7 |
| 9M 2024 | 7.2 |
| 9M 2023 | 6.1 |
Cost Management and Operational Efficiency
Meritage Homes focuses on maintaining operational efficiency through cost management strategies. General and administrative expenses for Q3 2024 were $59.2 million, down from $63.1 million in Q3 2023. Commissions and other sales costs also decreased to $97.9 million from $99.1 million year-over-year.
| Expense Category | Q3 2024 ($ million) | Q3 2023 ($ million) |
|---|---|---|
| General and Administrative | 59.2 | 63.1 |
| Commissions and Other Sales Costs | 97.9 | 99.1 |
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Article updated on 8 Nov 2024
Resources:
- Meritage Homes Corporation (MTH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Meritage Homes Corporation (MTH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Meritage Homes Corporation (MTH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.