SCOTTSDALE, Ariz., April 24, 2024 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH), the fifth-largest U.S. homebuilder, reported first quarter results for the period ended March 31, 2024. Summary Operating Results (unaudited)(Dollars in thousands, except per share amounts)       Three Months Ended March 31,   2024   2023   % Chg Homes closed (units)   3,507     2,897   21 % Home closing revenue $ 1,466,096   $ 1,261,923   16 % Average sales price — closings $ 418   $ 436   (4 )% Home orders (units)   3,991     3,487   14 % Home order value $ 1,631,195   $ 1,506,893   8 % Average sales price — orders $ 409   $ 432   (5 )% Ending backlog (units)   3,033     3,922   (23 )% Ending backlog value $ 1,244,257   $ 1,763,832   (29 )% Average sales price — backlog $ 410   $ 450   (9 )% Earnings before income taxes $ 234,015   $ 165,303   42 % Net earnings $ 186,016   $ 131,301   42 % Diluted EPS $ 5.06   $ 3.54   43 % MANAGEMENT COMMENTS "Meritage has had a remarkable start to the year, generating an average absorption pace of 4.9 per month in the first quarter of 2024, which resulted in our highest quarterly sales orders," said Steven J. Hilton, executive chairman of Meritage Homes. "We entered the spring selling season with a healthy supply of available inventory and were able to capitalize on strong current market conditions stemming from the increasing need for housing from Millennials, Gen Z and the move-down Baby Boomers, all finding limited existing housing supply." "Executing on our spec building and streamlined strategy, we delivered 3,507 homes in the first quarter of 2024—of which nearly 50% came from intra-quarter sales orders—and yet another record backlog conversion rate of 138%," added Phillippe Lord, chief executive officer of Meritage Homes. "Home closing revenue of $1.5 billion in the first quarter of 2024 combined with home closing gross margin of 25.8% and SG&A leverage of 10.4% generated $5.06 in diluted EPS. We increased our book value per share 17% year-over-year to $129.98 and generated a return on equity of 18.0% as of March 31, 2024."* "In the first quarter of 2024, we carried out our commitment to growth by putting nearly 6,300 net new lots under control, representing an estimated 43 future communities. We strategically deployed our capital by spending $430 million on land acquisition and development and returning $83 million back to shareholders in the form of share repurchases and dividends. We achieved this balanced long-term value creation, while maintaining cash of over $905 million and a net debt-to-capital ratio of 2.0% at March 31, 2024." FIRST QUARTER RESULTS Orders of 3,991 homes for the first quarter of 2024 increased 14% year-over-year, due primarily to a 17% increase in the average absorption pace to 4.9 per month from 4.2 per month in the first quarter of 2023, which was partially offset by a 1% decrease in average active communities. Strong demand coupled with the right amount of available inventory during the first quarter of 2024 led to our highest quarterly sales order volume, which benefited from an 8% cancellation rate that was well below the Company's historical average. Entry-level represented 91% of first quarter 2024 sales orders, compared to 87% in the same quarter of 2023. Average sales price ("ASP") on orders in the first quarter of 2024 of $409,000 was down 5% from the first quarter of 2023 due to both geographic and product mix shift. The 16% year-over-year increase in home closing revenue to $1.5 billion was due to 21% higher home closing volume that was partially offset by a 4% decrease in ASP on closings resulting from product mix shift. First quarter 2024 ASP on closings increased sequentially from the fourth quarter of 2023 due to reduced utilization of rate lock financing incentives and price increases. Home closing gross margin improved 340 bps to 25.8% in the first quarter of 2024 from 22.4% in the prior year due to reduced utilization of rate lock financing incentives, lower direct costs, and greater leverage of fixed costs, which were partially offset by higher lot costs. The financial services loss of $0.7 million included $5.8 million in write-offs related to rate lock unwind costs in the first quarter of 2024. This compared to financial services profit of $2.9 million in the first quarter of 2023 that had $1.9 million in similar write-offs. Selling, general and administrative expenses ("SG&A") as a percentage of first quarter 2024 home closing revenue were 10.4%, which was relatively in line with 10.3% in the prior year, primarily as a result of higher commissions offsetting the leverage achieved on higher home closing revenue. The first quarter effective income tax rate was 20.5% in 2024, in line with 20.6% in 2023. The Company's tax rates benefited from earned eligible energy tax credits on qualifying homes under the Inflation Reduction Act. Net earnings were $186.0 million ($5.06 per diluted share) for the first quarter of 2024, a 42% increase from $131.3 million ($3.54 per diluted share) for the first quarter of 2023 due to higher home closing revenue and gross profit with flat SG&A as a percentage of home closing revenue and tax rates achieved in the first quarter of 2024. BALANCE SHEET & LIQUIDITY Cash and cash equivalents at March 31, 2024 totaled $905.3 million, compared to $921.2 million at December 31, 2023. Land acquisition and development spend totaled $430.4 million for the first quarter of 2024, compared to $310.1 million for the first quarter of 2023. Approximately 66,400 lots were owned or controlled as of March 31, 2024, compared to approximately 60,900 total lots at March 31, 2023. Nearly 6,300 net new lots were added in the first quarter of 2024, representing an estimated 43 future communities. First quarter 2024 ending community count of 275 was up 2% sequentially compared to the fourth quarter of 2023, and down 1% compared to prior year. Debt-to-capital and net debt-to-capital ratios were 17.5% and 2.0%, respectively, at March 31, 2024, which compared to 17.9% and 1.9%, respectively, at December 31, 2023. The Company increased the quarterly cash dividend to $0.75 per share in the first quarter of 2024, from $0.27 per share in the first quarter of 2023, and paid dividends totaling $27.2 million in the first quarter of 2024. In the first quarter of 2024, the Company repurchased 362,419 shares of stock, or approximately 1.0% of the outstanding shares at the beginning of the quarter, for $55.9 million, well exceeding the announced systematic buyback commitment of $15.0 million per quarter. As of March 31, 2024, $129.1 million remained available to repurchase under the authorized share repurchase program. GUIDANCEThe Company is providing the following updated guidance for full year 2024, based on first quarter 2024 results and current market conditions:   Full Year 2024 Home closing volume 14,500-15,000 units Home closing revenue $6.0-6.2 billion Home closing gross margin 24.5-25.0% Effective tax rate Approximately 22.5% Diluted EPS $19.20-20.70 CONFERENCE CALLManagement will host a conference call to discuss its first quarter 2024 results at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) on Thursday, April 25, 2024. 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 income for the trailing twelve months divided by average total stockholders' equity for the trailing five quarters. The Company's book value per share is calculated as total stockholders' equity for the period divided by the shares outstanding as of the last day of the period. Meritage Homes Corporation and SubsidiariesConsolidated Income Statements(In thousands, except per share data)(Unaudited)           Three Months Ended March 31,       2024       2023     Change $   Change % Homebuilding:                 Home closing revenue $ 1,466,096     $ 1,261,923     $ 204,173     16 %   Land closing revenue   2,305       17,385       (15,080 )   (87 )%   Total closing revenue   1,468,401       1,279,308       189,093     15 %   Cost of home closings   (1,088,138 )     (979,462 )     108,676     11 %   Cost of land closings   (2,298 )     (15,945 )     (13,647 )   (86 )%   Total cost of closings   (1,090,436 )     (995,407 )     95,029     10 %   Home closing gross profit   377,958       282,461       95,497     34 %   Land closing gross profit   7       1,440       (1,433 )   (100 )%   Total closing gross profit   377,965       283,901       94,064     33 % Financial Services:                   Revenue   6,353       5,731       622     11 %   Expense   (3,003 )     (3,067 )     (64 )   (2 )%   (Loss)/earnings from financial services unconsolidated entities and other, net   (4,040 )     259       (4,299 )   N/M     Financial services (loss)/profit   (690 )     2,923