Meritage Homes reports second quarter 2025 results
SCOTTSDALE, Ariz., July 23, 2025 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH), the fifth-largest U.S. homebuilder, reported second quarter results for the period ended June 30, 2025.
Summary Operating Results (unaudited)(Dollars in thousands, except per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
% Chg
2025
2024
% Chg
Homes closed (units)
4,170
4,118
1
%
7,586
7,625
(1)
%
Home closing revenue
$
1,615,709
$
1,693,738
(5)
%
$
2,957,813
$
3,159,834
(6)
%
Average sales price, closings
$
387
$
411
(6)
%
$
390
$
414
(6)
%
Home orders (units)
3,914
3,799
3
%
7,790
7,790
0
%
Home order value
$
1,547,438
$
1,573,456
(2)
%
$
3,105,615
$
3,204,651
(3)
%
Average sales price, orders
$
395
$
414
(5)
%
$
399
$
411
(3)
%
Ending backlog (units)
1,748
2,714
(36)
%
Ending backlog value
$
695,476
$
1,109,687
(37)
%
Average sales price, backlog
$
398
$
409
(3)
%
Earnings before income taxes
$
193,060
$
297,361
(35)
%
$
353,219
$
531,376
(34)
%
Net earnings
$
146,879
$
231,555
(37)
%
$
269,685
$
417,571
(35)
%
Diluted EPS
$
2.04
$
3.15
(35)
%
$
3.73
$
5.68
(34)
%
MANAGEMENT COMMENTS
"Meritage delivered a solid performance in the second quarter of 2025 with 3,914 homes sold generating a strong average absorption pace of 4.3 net sales per month on our improved average community count of 301. We were able to navigate the challenging selling conditions despite elevated mortgage interest rates and weakened consumer confidence," said Steven J. Hilton, executive chairman of Meritage Homes. "We believe our go-to market strategy of move-in ready inventory will allow us to remain competitive in the changing environment and focus on growing market share."
"Our improved cycle times and spec strategy drove 4,170 closings this quarter, with more than half of these deliveries coming from intra-quarter sales, translating to a backlog conversion rate of 208%," added Phillippe Lord, chief executive officer of Meritage Homes. "We generated home closing revenue of $1.6 billion and achieved home closing gross margin of 21.4% excluding $4.2 million in terminated land deal charges, which contributed to diluted EPS of $2.04. We increased our book value per share 10% year-over-year and generated a return on equity of 12.5% for the twelve months ended June 30, 2025."*
"Aligning our capital allocation with the current market conditions, we reduced our land acquisition and development spend to $509 million this quarter, targeting around $2.0 billion for the full year, down from $2.5 billion previously. We also increased our return of cash to shareholders beyond our guidance to $76 million in second quarter 2025 spend on cash dividends and share repurchases—tripling our quarterly buyback commitment," concluded Mr. Lord. "We believe we were well-positioned from a liquidity perspective at June 30, 2025 with cash of $930 million and a net debt-to-capital ratio of 14.6%."
SECOND QUARTER RESULTS
Orders of 3,914 homes for the second quarter of 2025 increased 3% year-over-year as a result of a 7% increase in average community count and partially offset by a 4% decrease in average absorption pace. Second quarter 2025 average sales price ("ASP") on orders of $395,000 was down 5% from the second quarter of 2024 due to increased utilization of financing incentives.
The 5% year-over-year decrease in home closing revenue in the second quarter of 2025 to $1.6 billion was the result of a 6% decrease in ASP on closings to $387,000, which was partially offset by a 1% higher home closing volume of 4,170 homes. ASP on closings were primarily impacted by greater utilization of financing incentives this year.
Home closing gross margin of 21.1% decreased 480 bps in the second quarter of 2025 from 25.9% in the prior year due to increased utilization of financing incentives as well as higher lot costs and terminated land deal walk-away charges, all of which were partially offset by savings in direct costs. Second quarter 2025 home closing gross margin included $4.2 million in terminated land deal walk-away charges, compared to $1.4 million in the prior year. Excluding the terminated land deal walk-away charges, adjusted home closing gross margin was 21.4% and 26.0% for second quarters of 2025 and 2024, respectively.
Selling, general and administrative expenses ("SG&A") as a percentage of second quarter 2025 home closing revenue were 10.2% compared to 9.3% in the second quarter of 2024, primarily as a result of higher commissions, start-up overhead costs of newer divisions and maintenance costs related to increased spec inventory, as well as reduced leverage of fixed costs on lower home closing revenue.
The second quarter effective income tax rate was 23.9% in 2025 compared to 22.1% in 2024. The higher tax rate in 2025 reflects fewer homes qualifying for energy tax credits under the Inflation Reduction Act, given the new higher construction thresholds required to earn the tax credits this year.
Net earnings were $147 million ($2.04 per diluted share) for the second quarter 2025, a 37% decrease from $232 million ($3.15 per diluted share) for the second quarter of 2024, mainly resulting from lower gross margins as well as higher SG&A and tax rates.
YEAR TO DATE RESULTS
Total sales orders for the first six months of 2025 were flat year-over-year, reflecting a 7% increase in average communities and a 6% decrease in average absorption pace compared to the first half of 2024.
Home closing revenue decreased 6% in the first six months of 2025 to $3.0 billion, mainly driven by a 6% decrease in ASP on closings and a 1% decline in home closing volume. ASP on closings for the first six months of 2025 reflected greater utilization of financing incentives compared to prior year.
Home closing gross margin of 21.5% decreased 440 bps in the first half of 2025 from 25.9% in the prior year due to greater utilization of financing incentives, higher lot costs, reduced leverage of fixed costs on lower home closing revenue, and increased terminated land deal walk-away charges, all of which were partially offset by savings in direct costs. Year to date 2025 home closing gross margin included $5.6 million in terminated land deal walk-away charges, compared to $1.9 million in the prior year. Excluding the terminated land deal walk-away charges, adjusted home closing gross margin was 21.7% and 25.9% for the first half 2025 and 2024, respectively.
SG&A as a percentage of home closing revenue was 10.7% in the first half of 2025 compared to 9.8% in the prior year, primarily as a result of higher commissions and maintenance costs related to increased spec inventory as well as reduced leverage of fixed costs on lower home closing revenue.
The effective income tax rate in the first six months of 2025 was 23.6% compared to 21.4% in 2024. The higher tax rate in 2025 reflects fewer homes qualifying for energy tax credits under the Inflation Reduction Act, given the new higher construction thresholds required to earn the tax credits this year.
Net earnings were $270 million ($3.73 per diluted share) for the first six months of 2025, a 35% decrease from $418 million ($5.68 per diluted share) for the first six months of 2024, primarily reflecting lower home closing revenue and gross margins, as well as higher SG&A and tax rates.
BALANCE SHEET & LIQUIDITY
Cash and cash equivalents at June 30, 2025 totaled $930 million, reflecting $492 million of net proceeds from the issuance of senior notes in the first quarter of 2025. This compared to cash and cash equivalents of $652 million at December 31, 2024.
Land acquisition and development spend, net of land development reimbursements, totaled $509 million and $576 million for the second quarter of 2025 and 2024, respectively.
Approximately 81,900 lots were owned or controlled as of June 30, 2025, compared to approximately 70,800 total lots as of June 30, 2024. Nearly 1,800 net new lots were added in the second quarter of 2025, representing an estimated 16 future communities. During the quarter, we terminated nearly 1,800 lots, compared to approximately 1,000 lots in the second quarter of 2024.
Second quarter 2025 ending community count of 312 was up 9% compared to prior year and up 8% compared to the first quarter of 2025.
Debt-to-capital and net debt-to-capital ratios were 25.8% and 14.6%, respectively, at June 30, 2025, which compared to 20.6% and 11.7%, respectively, at December 31, 2024.
The Company declared and paid quarterly cash dividends of $0.43 per share totaling $31 million in the second quarter of 2025. This compared to $0.375 per share totaling $27 million in the second quarter of 2024. Year-to-date dividends paid were $61 million and $54 million in 2025 and 2024, respectively.
During the second quarter of 2025, the Company repurchased 674,124 shares of stock, or 0.9% of shares outstanding at the beginning of the quarter, for $45 million. For the first six months of 2025, the Company repurchased 1,279,440 shares of stock, or 1.8% of shares outstanding at the beginning of the year, for $90 million. As of June 30, 2025, $219 million remained available to repurchase under the authorized share repurchase program.
Subsequent to the second quarter of 2025, the Company refinanced the revolving credit facility to extend its maturity from 2029 to 2030.
On January 2, 2025, we completed a two-for-one stock split (the "Stock Split") of Meritage's common stock in the form of a stock dividend. All share and per share amounts in this press release have been retroactively restated to reflect the Stock Split for the second quarter of 2024 and the first half of 2024.
CONFERENCE CALLManagement will host a conference call to discuss its second quarter 2025 results at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, July 24, 2025. To listen, please go to Meritage's Investor Relations page for the live webcast or dial in to 1-877-407-6951 US toll free or 1-412-902-0046. A replay will be available on the Investor Relations page.
* The Company's return on equity is calculated as net earnings for the trailing twelve months divided by average total stockholders' equity for the trailing five quarters.
Meritage Homes Corporation and SubsidiariesConsolidated Income Statements(In thousands, except per share data)(Unaudited)
Three Months Ended June 30,
2025
2024
Change $
Change %
Homebuilding:
Home closing revenue
$
1,615,709
$
1,693,738
$
(78,029
)
(5)
%
Land closing revenue
8,277
—
8,277
n/a
Total closing revenue
1,623,986
1,693,738
(69,752
)
(4)
%
Cost of home closings
(1,274,381
)
(1,254,232
)
20,149
2
%
Cost of land closings
(8,996
)
—
8,996
n/a
Total cost of closings
(1,283,377
)
(1,254,232
)
29,145
2
%
Home closing gross profit
341,328
439,506
(98,178
)
(22)
%
Land closing gross loss
(719
)
—
(719
)
n/a
Total closing gross profit
340,609
439,506
(98,897
)
(23)
%
Financial Services:
Revenue
9,425
8,311
1,114
13
%
Expense
(4,656
)
(3,924
)
732
19
%
Earnings from financial services unconsolidated entities and other, net
842
450
392
87
%
Financial services profit
5,611
4,837
774
16
%
Commissions and other sales costs
(108,830
)
(104,665
)
4,165
4
%
General and administrative expenses
(55,183
)
(53,184
)
1,999
4
%
Interest expense
—
—
—
—
%
Other income, net
10,853
11,498
(645
)
(6)
%
Loss on early extinguishment of debt
—
(631
)
(631
)
n/a
Earnings before income taxes
193,060
297,361
(104,301
)
(35)
%
Provision for income taxes
(46,181
)
(65,806
)
(19,625
)
(30)
%
Net earnings
$
146,879
$
231,555
$
(84,676
)
(37)
%
Earnings per common share:
Basic
Change $ or shares
Change %
Earnings per common share
$
2.06
$
3.19
$
(1.13
)
(35)
%
