Meritage Homes Corporation · NYSE:MTH
Meritage Homes — Q3 2020 Earnings Presentation
14 slides from Meritage Homes's earnings presentation, Oct 22, 2020
Slide 1: Third Quarter 2020 Analyst Conference Call
Third Quarter 2020 Analyst Conference Call October 22, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements The information included in this presentation and the accompanying comments from management contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the health of the housin
Slide 3: Management Representatives
Management Representatives Steven J. Hilton – Chairman & CEO Phillippe Lord – EVP & Chief Operating Officer Hilla Sferruzza – EVP & Chief Financial Officer Emily Tadano – VP Investor Relations 3
Slide 4: Delivered Highest Quarterly Orders
Delivered Highest Quarterly Orders Record orders for the quarter and all Demand Drivers for New Homes months of 3Q20 Orders and Y/Y % +71% 4,000 3,851 • AFFORDABILITY – historically-low mortgage interest rates • Low INVENTORIES of existing and new 3,000 homes 2,258 • Desire for HEALTHIER and SAFER s
Slide 5: Positioned for Growth
Positioned for Growth Pace and Price Accelerated Land Balance Sheet Strength Investment and Flexibility • Closing revenue growth • Investing aggressively in • Ample liquidity and low benefits from current land / lots (~4k new lots net debt to capital to higher absorptions and in 2Q, ~9k new lots in
Slide 6: Strong Performance in Both Entry-Level and First Move-Up
Strong Performance in Both Entry-Level and First Move-Up Average community count by Orders by product Absorptions per month product type type & Y/Y% 259 252 221 1,828 2,258 3,851 94% 19 187 217 34 229 5.8 51 42% 990 5.0 35% 70 853 Other 4.3 112 809 121 1MU 27% 37% 3.0 Entry Level 2.8 2644 132 1,218
Slide 7: Replenishing the Pipeline to Grow Community Count and Orders
Replenishing the Pipeline to Grow Community Count and Orders Aggressively securing new lots Record near 9,000 in 3Q20 Strong pipeline of community openings in 2021 >150 in 2021 Larger land positions with more lots per community on average 130 lots per community on average for YTD 9/30/20 Longer lot
Slide 8: Broad Strength Everywhere, Exceptional Performance in Texas and California
Broad Strength Everywhere, Exceptional Performance in Texas and California STATES & REGIONS Y/Y (%) changes 3Q20 vs 3Q19 AZ CA CO West TX FL GA NC SC TN East 37 24 12 73 63 35 14 21 5 10 85 Average Active Communities (5)% 9% (41)% (10)% (14)% (3)% (28)% (9)% (42)% 0% (13)% Entry-level % Average 58%
Slide 9: 56% Earnings Growth in 3Q20
56% Earnings Growth in 3Q20 ($ Millions 3Q20 3Q19 %Chg YTD2020 YTD2019 %Chg 3Q20 HIGHLIGHTS: except EPS & ASP) Home closings 3,004 2,419 +24% 8,090 6,437 +26% • Record quarterly closing revenue ASP (closings) $377K $388K (3)% $378K $389K (3)% • Our best quarterly closing gross Home closing revenue $
Slide 10: Strong Balance Sheet Provides Flexibility
Strong Balance Sheet Provides Flexibility 3Q20 HIGHLIGHTS: Net Debt-to-Capital Reconciliation ($ Millions) • Ample liquidity at September 30, (non-GAAP reconciliation) Sep 30, 2020 Dec 31, 2019 2020 give Notes payable and other $1,020 $1,019 • $610M of cash borrowings • Nothing drawn on the $780M Le
Slide 11: Accelerated Land & Development Investment
Accelerated Land & Development Investment 69 Real Assets 3Q20 3Q19 Land & development $299M $275M spending 46 As of period ended 43 Sep-30: 34 Total lots controlled 47,875 37,300 32 22 Years supply of lots 4.4 4.2 - Owned 58% 66% 11 3,822 1,222 5,468 6,460 2,858 4,198 8,931 - Optioned 42% 34% 1Q19 2
Slide 12: Guidance
Guidance • 11,200-11,500 home closings FULL • $4.2-4.4 billion home closing revenue YEAR • Home closing gross margin ~21.0-21.5% 2020 • Effective tax rate ~20-21% • Diluted EPS $10.25 - $10.50 12
Slide 13: Summary
Summary • Strong demand for new homes • Well-positioned with entry-level & 1st move-up • Executing at a high level • Strategy to grow • Earnings power from volume, margins and leverage 13
Slide 14: Life. Built. Better.