Meritage Homes Corporation · NYSE:MTH
Meritage Homes — Q2 2022 Earnings Presentation
12 slides from Meritage Homes's earnings presentation, Jul 28, 2022
Slide 1: Second Quarter 2022 Analyst Conference Call
SECOND QUARTER 2022 ANALYST CONFERENCE CALL JULY 28, 2022
Slide 2: Safe Harbor
SAFE HARBOR The information included in this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general; projected 3Q 2022 home closings, home closing revenue, h
Slide 3: Speakers
SPEAKERS Steven J. Hilton – Executive Chairman Phillippe Lord – Chief Executive Officer Hilla Sferruzza – EVP & Chief Financial Officer Emily Tadano – VP of Investor Relations and ESG 3
Slide 4: Recent Achievements
RECENT ACHIEVEMENTS First-time recipient of the Avid Cup – Production, a Achieved our long-term 300 prestigious honor given to only community count goal one builder in North America each year Held annual Purchasing Renewed partnership with Recipient of EPA Awards Summit to strengthen Operation Homef
Slide 5: Expanded Orders Units Through Community Count Growth
EXPANDED ORDERS UNITS THROUGH COMMUNITY COUNT GROWTH Average community count by Orders by product type Absorptions per month product type & Y/Y% 239 215 286 3,597 3,542 3,767 23 9% 5 8 148 89 5.5 24 -15% -16% 497 49 595 -14% 46 5.0 4.9 938 -20% 4.5 4.4 87 Other 1MU Entry Level 3247 232 2,858 161 2,5
Slide 6: East Region's Order Volume Increase Due to Slower Pullback on Absorption Pace
EAST REGION’S ORDER VOLUME INCREASE DUE TO SLOWER PULLBACK ON ABSORPTION PACE STATES & REGIONS Y/Y (%) changes 2Q22 vs 2Q21 Central AZ CA CO West FL GA NC SC TN East (TX) 48.0 27.5 18.5 94.0 77.5 41.0 14.5 30.5 15.0 13.0 114.0 Average Active Communities 35% 41% 28% 35% 26% 28% 32% 22% 131% 44% 37% E
Slide 7: Grew Specs Per Community to Try to Replenish Spec Supply
GREW SPECS PER COMMUNITY TO TRY TO REPLENISH SPEC SUPPLY Home Closings Ending Backlog Units 2Q21 Closings 2Q22 Closings 7,241 7500 6,695 6500 5,509 5,838 5,679 5500 Dirt Start, 26% 4500 Dirt Start, 26% 3500 Spec Inventory, 2500 74% Spec Inventory, 1500 74% 500 -500 2Q21 3Q21 4Q21 1Q22 2Q22 Average S
Slide 8: Strong Performance in 2Q22
STRONG PERFORMANCE IN 2Q22 ($ Millions 2Q22 2Q21 %Chg YTD2022 YTD2021 %Chg 2Q22 HIGHLIGHTS: except EPS & ASP) • ASPs on closings year-over-year growth due to Home closings 3,221 3,273 (2)% 6,079 6,163 (1)% sustained pricing power over the last year ASP (closings) $437K $386K 13% $437K $380K 15% • Hi
Slide 9: Strong Balance Sheet Provides Flexibility
STRONG BALANCE SHEET PROVIDES FLEXIBILITY Net Debt-to-Capital Reconciliation ($ Millions) Ample liquidity at June 30, 2022: (non-GAAP reconciliation) June 30, 2022 Dec 31, 2021 • $272M of cash Notes payable & other borrowings $1,159 $1,160 • Nothing drawn under $780M credit facility • Continued low
Slide 10: Land & Development Investment
LAND & DEVELOPMENT INVESTMENT Real Estate Assets 2Q22 2Q21 Active Ending Community Count 303 305 295 Land & development spending $422M $551M 285 275 268 265 259 255 245 236 235 226 225 As of period ended Jun-30: 215 203 205 195 185 175 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Total lots controlled 71,096 63,33
Slide 11: Guidance
GUIDANCE • 3,500-3,700 home closings • $1.575-1.675 billion home closing revenue 3Q • Home closing gross margin between 27.5-28.5% 2022 • Effective tax rate of approximately 25.0% • Diluted EPS $6.00-6.80 11
Slide 12: Well Positioned in a Rising Rate Environment
WELL POSITIONED IN A RISING RATE ENVIRONMENT Focus on entry-level & first move-up Resilient business model that is dynamic based on changing market conditions Providing buyers certainty with our below-market fixed rate locks Low land residual and prudent land playbook Flexible balance sheet 12