Meritage Homes Corporation · NYSE:MTH
Meritage Homes — Q3 2022 Earnings Presentation
12 slides from Meritage Homes's earnings presentation, Oct 26, 2022
Slide 1: Third Quarter 2022 Analyst Conference Call
THIRD QUARTER 2022 ANALYST CONFERENCE CALL OCTOBER 27, 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 fourth quarter 2022 home closings, home closin
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 Events
RECENT EVENTS Post Hurricane Ian, all Recipient of 2022 EPA’s employees and homeowners Indoor airPLUS Leader Award in Florida were safe Issued inaugural Task Force Joined approx. 3,900 other Released 2021 ESG Report on Climate-Related Financial institutions to become an Disclosures (TCFD) report off
Slide 5: Decline in Order Volume Due to Elevated Cancellations
DECLINE IN ORDER VOLUME DUE TO ELEVATED CANCELLATIONS Gross Sales Orders Cancellation Rate Sales Order Volume 5000 35% 4500 4500 4,287 4,326 30% 4000 3,874 30% 3,767 4000 3,833 3,833 3,441 3500 3,367 25% 3500 3,291 3000 3000 20% 2500 2,310 2500 2000 15% 2000 13% 12% 10% 10% 1500 1500 10% 1000 1000 5
Slide 6: East Region Outperforming Compared to West and Texas Regions
EAST REGION OUTPERFORMING COMPARED TO WEST AND TEXAS REGIONS STATES & REGIONS Y/Y (%) changes 3Q22 vs 3Q21 Central AZ CA CO West FL GA NC SC TN East (TX) 54.0 32.0 18.5 104.5 77.0 35.5 16.0 29.5 14.5 12.0 107.5 Average Active Communities 42% 68% 12% 42% 17% -1% 45% 13% 61% 26% 17% Entry-level % Aver
Slide 7: Grew Specs per Community to Try to Replenish Spec Supply
GREW SPECS PER COMMUNITY TO TRY TO REPLENISH SPEC SUPPLY Spec Starts Ending Backlog Units 7,241 6000 7500 6,695 5500 6500 5,838 6,064 5,019 5,679 5000 5500 4500 4,020 4500 4000 3,718 3,407 3500 3500 2500 3000 2,722 1500 2500 500 2000 3Q21 4Q21 1Q22 2Q22 3Q22 -500 3Q21 4Q21 1Q22 2Q22 3Q22 Average Spe
Slide 8: 3Q22 Financial Performance
3Q22 FINANCIAL PERFORMANCE ($ Millions 3Q22 3Q21 %Chg YTD2022 YTD2021 %Chg 3Q22 HIGHLIGHTS: except EPS & ASP) • Lowest quarterly SG&A due to higher leveraging Home closings 3,487 3,112 12% 9,566 9,275 3% of fixed costs and lower commissions as a ASP (closings) $450K $402K 12% $442K $388K 14% percent
Slide 9: Strong Balance Sheet Provides Flexibility
STRONG BALANCE SHEET PROVIDES FLEXIBILITY Net Debt-to-Capital Reconciliation ($ Millions) Ample liquidity at September 30, 2022: (non-GAAP reconciliation) Sept 30, 2022 Dec 31, 2021 • $299M of cash Notes payable & other borrowings $1,156 $1,160 • Nothing drawn on $780M credit facility Stockholders’
Slide 10: Land & Development Investment
LAND & DEVELOPMENT INVESTMENT Active Ending Community Count As of period ended Sept-30: 3Q22 3Q21 303 305 295 285 275 275 268 259 Total lots controlled 66,348 69,767 265 255 245 236 235 226 225 215 205 195 185 175 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Supply of lots (years) 5.1 5.4 Ending Active Communities
Slide 11: Guidance
GUIDANCE • 4,300-4,700 home closings • $1.85-2.10 billion home closing revenue 4Q • Home closing gross margin around 25% 2022 • Effective tax rate of approximately 23.5% • Diluted EPS $6.50-7.40 11
Slide 12: Positioned for Growing Market Share
POSITIONED FOR GROWING MARKET SHARE Focus on entry-level & first move-up Resilient business model that is dynamic based on changing market conditions Prioritizing pace over price to achieve a 3-4 net sales per month target Managing supply chain constraints to close out our backlog and get more move-