Meritage Homes Reports Third Quarter 2026 Results
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2026 | 2025 | % Chg | 2026 | 2025 | % Chg | |||||||||||||||
| Homes closed (units) | 3,187 | 3,685 | (14)% | 9,879 | 11,271 | (12)% | ||||||||||||||
| Home closing revenue | $ | 1,162,352 | $ | 1,399,335 | (17)% | $ | 3,658,085 | $ | 4,357,148 | (16)% | ||||||||||
| Average sales price - closings | $ | 365 | $ | 380 | (4)% | $ | 370 | $ | 387 | (4)% | ||||||||||
| Home orders (units) | 3,083 | 3,636 | (15)% | 10,322 | 11,426 | (10)% | ||||||||||||||
| Home order value | $ | 1,179,266 | $ | 1,415,089 | (17)% | $ | 3,956,044 | $ | 4,520,704 | (12)% | ||||||||||
| Average sales price - orders | $ | 383 | $ | 389 | (2)% | $ | 383 | $ | 396 | (3)% | ||||||||||
| Ending backlog (units) | 1,611 | 1,699 | (5)% | |||||||||||||||||
| Ending backlog value | $ | 637,167 | $ | 670,007 | (5)% | |||||||||||||||
| Average sales price - backlog | $ | 396 | $ | 394 | 1% | |||||||||||||||
| Home closing gross margin | 17.4% | 19.1% | (170) bps | 17.8% | 20.7% | (290) bps | ||||||||||||||
| Earnings before income taxes | $ | 84,815 | $ | 128,248 | (34)% | $ | 277,903 | $ | 481,467 | (42)% | ||||||||||
| Net earnings | $ | 67,784 | $ | 99,297 | (32)% | $ | 213,723 | $ | 368,982 | (42)% | ||||||||||
| Diluted EPS | $ | 1.04 | $ | 1.39 | (25)% | $ | 3.22 | $ | 5.13 | (37)% |
MANAGEMENT COMMENTS
"In the third quarter of 2026, we navigated an increasingly challenging homebuying environment marked by rising mortgage interest rates and persistent geopolitical and macroeconomic uncertainty. Constrained affordability weighed on consumer sentiment, which was reflected in our 15% year-over-year decline in third quarter orders despite achieving an average absorption pace of 3.0 net sales per month per store," said Steven J. Hilton, executive chairman of Meritage Homes. "In light of current market conditions, we intentionally focused on preserving margins rather than pursuing a higher sales pace."
"We were able to convert nearly 190% of our backlog this quarter, delivering 3,187 homes across our larger footprint of 348 communities," added Phillippe Lord, chief executive officer of Meritage Homes. "Third quarter 2026 home closing revenue of $1.2 billion generated adjusted home closing gross margin of 17.9%, excluding $6.0 million of real estate inventory impairments and terminated land deal walk-away charges, and SG&A as a percentage of home closing revenue of 11.0%, nearly in line with the prior year period as we were able to leverage our larger size and cost control initiatives to maximize profitability."
"In today's volatile market, prudently managing capital is a key priority, as we continue to focus on maintaining sufficient liquidity. During the quarter, we pulled back our land investments by almost 40% year-over-year to $329 million and returned $86 million to shareholders via share repurchases and dividends. We are confident that the strength of our balance sheet and prudence around cash preservation will be a differentiator, as we expect market conditions to continue to be unpredictable over the next several quarters. In the first nine months of 2026, we have returned nearly $380 million of capital to shareholders, representing 177% of total earnings so far this year," concluded Mr. Lord. "We ended the third quarter of 2026 with cash of $677 million, no borrowings under our revolving credit facility, and a net debt-to-capital ratio of 18.9%. As of September 30, 2026, our book value per share increased 4% year-over-year."
THIRD QUARTER RESULTS
- Orders of 3,083 homes for the third quarter of 2026 decreased 15% year-over-year as a result of 21% lower average absorption pace, which was partially offset by a 7% increase in average community count. Third quarter 2026 average sales price ("ASP") on orders of $383,000 was down 2% from the third quarter of 2025, primarily due to higher utilization of incentives and related costs including rate buy-downs, as well as geographic mix.
- The 17% year-over-year decrease in home closing revenue in the third quarter of 2026 to $1.2 billion was due to 14% lower closing volume of 3,187 homes combined with a 4% decrease in ASP on closings to $365,000. The year-over-year decline in ASP on closings was primarily due to higher utilization of incentives and related costs including rate buy-downs, as well as geographic mix.
- Home closing gross margin of 17.4% in the third quarter of 2026 was 170 bps lower than 19.1% in the prior year as a result of higher lot and incentive costs coupled with lost leverage on lower home closing revenue, which were partially offset by direct cost savings and lower performance-based compensation expense. Excluding $6.6 million of real estate inventory impairments and a $0.6 million net credit related to terminated land deal walk-away charges in the third quarter of 2026, and $8.7 million of real estate inventory impairments and $5.8 million in terminated land deal walk-away charges in the prior year, adjusted home closing gross margin was 17.9% and 20.1% for the third quarters of 2026 and 2025, respectively. In the third quarter of 2026, we incurred $0.9 million of terminated land deal walk-away charges, which were more than offset by $1.5 million of recoveries related to previously incurred walk-away charges.
- Selling, general and administrative expenses ("SG&A") as a percentage of third quarter 2026 home closing revenue were 11.0% compared to 10.8% in the third quarter of 2025, as a result of lost leverage on lower home closing revenue and higher technology costs, which were partially offset by an intentional pull back in discretionary expenses and decreased performance-based compensation expense.
The third quarter effective income tax rate was 20.1% in 2026 compared to 22.6% in 2025. The 2026 tax rate reflected acquired below-market transferable clean fuel production tax credits.
- Net earnings were $68 million ($1.04 per diluted share) for the third quarter of 2026, a 32% decrease from $99 million ($1.39 per diluted share) for the third quarter of 2025, mainly resulting from lower home closing revenue and gross profit. Excluding quarterly impairments and walk-away charges for each period, adjusted diluted EPS was $1.11 and $1.55 for the third quarters of 2026 and 2025, respectively.
YEAR TO DATE RESULTS
- Total sales orders for the first nine months of 2026 decreased 10% year-over-year, reflecting a 20% decrease in average absorption pace partially offset by a 12% increase in average communities compared to the first nine months of 2025. The 3% lower ASP on orders for the first nine months of 2026 compared to prior year was primarily due to higher utilization of incentives and related costs including rate buy-downs, as well as geographic mix.
- Home closing revenue decreased 16% year-over-year in the first nine months of 2026 to $3.7 billion, driven by 12% lower home closing volume and a 4% decrease in ASP on closings compared to the first nine months of 2025. The year-over-year decline in ASP on closings reflected higher utilization of incentives and related costs including rate buy-downs, as well as geographic mix.
- Home closing gross margin of 17.8% decreased 290 bps in the first nine months of 2026 from 20.7% in the prior year due to higher lot and incentive costs coupled with lost leverage on lower home closing revenue, which were partially offset by direct cost savings and lower performance-based compensation expense. Excluding $12.6 million of real estate inventory impairments and $1.0 million in terminated land deal walk-away charges in the first nine months of 2026 and $8.7 million of real estate inventory impairments and $11.4 million in terminated land deal walk-away charges in the prior year, adjusted home closing gross margin was 18.1% and 21.2% for the first nine months of 2026 and 2025, respectively.
- SG&A as a percentage of home closing revenue was 11.0% in the first nine months of 2026 compared to 10.7% in the prior year, as a result of lost leverage on lower home closing revenue and higher technology costs, which were partially offset by an intentional pull back in discretionary expenses and decreased performance-based compensation expense.
- The effective income tax rate in the first nine months of 2026 was 23.1% compared to 23.4% in 2025.
- Net earnings were $214 million ($3.22 per diluted share) for the first nine months of 2026, a 42% decrease from $369 million ($5.13 per diluted share) for the first nine months of 2025, primarily reflecting lower home closing revenue and gross margins. Excluding year-to-date impairments and walk-away charges for each period, adjusted diluted EPS was $3.38 and $5.35 for the first nine months of 2026 and 2025, respectively.
BALANCE SHEET & LIQUIDITY
- Cash and cash equivalents at September 30, 2026 totaled $677 million. This compared to cash and cash equivalents of $775 million at December 31, 2025. Land acquisition and development spend, net of land development reimbursements, totaled $329 million and $528 million for the third quarter of 2026 and 2025, respectively. Approximately 71,800 lots were owned or controlled as of September 30, 2026, compared to approximately 80,800 lots as of September 30, 2025. Nearly 2,000 net new lots were added in the third quarter of 2026, representing an estimated 21 future communities. Third quarter 2026 ending community count of 348 was up 4% compared to prior year and up 2% sequentially from the second quarter of 2026. Debt-to-capital and net debt-to-capital ratios were 26.9% and 18.9%, respectively, at September 30, 2026, which compared to 26.0% and 16.9%, respectively, at December 31, 2025. The Company declared and paid quarterly cash dividends of $0.48 per share totaling $31 million in the third quarter of 2026. This compared to $0.43 per share totaling $30 million in the third quarter of 2025. Year-to-date dividends paid were $94 million and $92 million in 2026 and 2025, respectively. During the third quarter of 2026, the Company repurchased 757,128 shares of stock, or 1.2% of shares outstanding at the beginning of the quarter, for $55 million, consistent with the third quarter of 2025. For the first nine months of 2026, the Company repurchased 4,101,288 shares of stock, or 6.0% of shares outstanding at the beginning of the year, for $285 million, up 97% compared to prior year of $145 million. As of September 30, 2026, $229 million remained available to repurchase.
CONFERENCE CALL
Management will host a conference call to discuss its third quarter 2026 results at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, October 29, 2026. To listen, please go to Meritage's Investor Relations page for the live webcast or dial in to 1-800-445-7795 US toll free or 1-785-424-1699. A replay will be available on the Investor Relations page.
Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | Change $ | Change % | |||||||||||
| Homebuilding: | ||||||||||||||
| Home closing revenue | $ | 1,162,352 | $ | 1,399,335 | $ | (236,983 | ) | (17)% | ||||||
| Land closing revenue | 6,081 | 16,068 | (9,987 | ) | (62)% | |||||||||
| Total closing revenue | 1,168,433 | 1,415,403 | (246,970 | ) | (17)% | |||||||||
| Cost of home closings | (959,746 | ) | (1,132,378 | ) | (172,632 | ) | (15)% | |||||||
| Cost of land closings | (5,957 | ) | (15,876 | ) | (9,919 | ) | (62)% | |||||||
| Total cost of closings | (965,703 | ) | (1,148,254 | ) | (182,551 | ) | (16)% | |||||||
| Home closing gross profit | 202,606 | 266,957 | (64,351 | ) | (24)% | |||||||||
| Land closing gross profit | 124 | 192 | (68 | ) | (35)% | |||||||||
| Total closing gross profit | 202,730 | 267,149 | (64,419 | ) | (24)% | |||||||||
| Financial Services: | ||||||||||||||
| Revenue | 7,497 | 8,460 | (963 | ) | (11)% | |||||||||
| Expense | (3,982 | ) | (4,311 | ) | (329 | ) | (8)% | |||||||
| Earnings from financial services unconsolidated entities and other, net | 1,244 | 331 | 913 | 276% | ||||||||||
| Financial services profit | 4,759 | 4,480 | 279 | 6% | ||||||||||
| Commissions and other sales costs | (82,441 | ) | (99,722 | ) | (17,281 | ) | (17)% | |||||||
| General and administrative expenses | (45,170 | ) | (51,787 | ) | (6,617 | ) | (13)% | |||||||
| Interest expense | (1,352 | ) | - | 1,352 | N/A | |||||||||
| Other income, net | 6,289 | 8,128 | (1,839 | ) | (23)% | |||||||||
| Earnings before income taxes | 84,815 | 128,248 | (43,433 | ) | (34)% | |||||||||
| Provision for income taxes | (17,031 | ) | (28,951 | ) | (11,920 | ) | (41)% | |||||||
| Net earnings | $ | 67,784 | $ | 99,297 | $ | (31,513 | ) | (32)% | ||||||
| Earnings per common share: | ||||||||||||||
| Basic | Change $ or shares | Change % | ||||||||||||
| Earnings per common share | $ | 1.05 | $ | 1.40 | $ | (0.35 | ) | (25)% | ||||||
| Weighted average shares outstanding | 64,698 | 70,680 | (5,982 | ) | (8)% | |||||||||
| Diluted | ||||||||||||||
| Earnings per common share | $ | 1.04 | $ | 1.39 | $ | (0.35 | ) | (25)% | ||||||
| Weighted average shares outstanding | 65,127 | 71,188 | (6,061 | ) | (9)% |
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | Change $ | Change % | |||||||||||
| Homebuilding: | ||||||||||||||
| Home closing revenue | $ | 3,658,085 | $ | 4,357,148 | $ | (699,063 | ) | (16)% | ||||||
| Land closing revenue | 28,162 | 39,766 | (11,604 | ) | (29)% | |||||||||
| Total closing revenue | 3,686,247 | 4,396,914 | (710,667 | ) | (16)% | |||||||||
| Cost of home closings | (3,008,068 | ) | (3,453,213 | ) | (445,145 | ) | (13)% | |||||||
| Cost of land closings | (27,783 | ) | (37,128 | ) | (9,345 | ) | (25)% | |||||||
| Total cost of closings | (3,035,851 | ) | (3,490,341 | ) | (454,490 | ) | (13)% | |||||||
| Home closing gross profit | 650,017 | 903,935 | (253,918 | ) | (28)% | |||||||||
| Land closing gross profit | 379 | 2,638 | (2,259 | ) | (86)% | |||||||||
| Total closing gross profit | 650,396 | 906,573 | (256,177 | ) | (28)% | |||||||||
| Financial Services: | ||||||||||||||
| Revenue | 21,566 | 24,967 | (3,401 | ) | (14)% | |||||||||
| Expense | (11,746 | ) | (13,159 | ) | (1,413 | ) | (11)% | |||||||
| Earnings from financial services unconsolidated entities and other, net | 3,759 | 1,846 | 1,913 | 104% | ||||||||||
| Financial services profit | 13,579 | 13,654 | (75 | ) | (1)% | |||||||||
| Commissions and other sales costs | (253,718 | ) | (303,272 | ) | (49,554 | ) | (16)% | |||||||
| General and administrative expenses | (148,952 | ) | (163,967 | ) | (15,015 | ) | (9)% | |||||||
| Interest expense | (4,126 | ) | - | 4,126 | N/A | |||||||||
| Other income, net | 20,724 | 28,479 | (7,755 | ) | (27)% | |||||||||
| Earnings before income taxes | 277,903 | 481,467 | (203,564 | ) | (42)% | |||||||||
| Provision for income taxes | (64,180 | ) | (112,485 | ) | (48,305 | ) | (43)% | |||||||
| Net earnings | $ | 213,723 | $ | 368,982 | $ | (155,259 | ) | (42)% | ||||||
| Earnings per common share: | ||||||||||||||
| Basic | Change $ or shares | Change % | ||||||||||||
| Earnings per common share | $ | 3.24 | $ | 5.17 | $ | (1.93 | ) | (37)% | ||||||
| Weighted average shares outstanding | 65,941 | 71,346 | (5,405 | ) | (8)% | |||||||||
| Diluted | ||||||||||||||
| Earnings per common share | $ | 3.22 | $ | 5.13 | $ | (1.91 | ) | (37)% | ||||||
| Weighted average shares outstanding | 66,312 | 71,879 | (5,567 | ) | (8)% |
Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
| September 30, 2026 | December 31, 2025 | |||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 677,498 | $ | 775,157 | ||
| Other receivables | 345,535 | 306,956 | ||||
| Real estate (1) | 6,014,511 | 5,987,120 | ||||
| Deposits on real estate under option or contract | 170,777 | 174,170 | ||||
| Investments in unconsolidated entities | 64,225 | 57,268 | ||||
| Property and equipment, net | 45,057 | 46,647 | ||||
| Deferred tax asset, net | 44,427 | 53,293 | ||||
| Prepaids, other assets and goodwill | 227,614 | 221,676 | ||||
| Total assets | $ | 7,589,644 | $ | 7,622,287 | ||
| Liabilities: | ||||||
| Accounts payable | $ | 209,249 | $ | 200,679 | ||
| Accrued and other liabilities | 476,658 | 387,698 | ||||
| Home sale deposits | 7,627 | 9,213 | ||||
| Loans payable and other borrowings | 42,351 | 24,328 | ||||
| Senior and convertible senior notes, net | 1,809,401 | 1,804,726 | ||||
| Total liabilities | 2,545,286 | 2,426,644 | ||||
| Stockholders' Equity: | ||||||
| Preferred stock | - | - | ||||
| Common stock, par value $0.01. Authorized 125,000,000 shares; 64,423,225 and 68,168,923 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | 644 | 682 | ||||
| Additional paid-in capital | - | - | ||||
| Retained earnings | 5,043,714 | 5,194,961 | ||||
| Total stockholders' equity | 5,044,358 | 5,195,643 | ||||
| Total liabilities and stockholders' equity | $ | 7,589,644 | $ | 7,622,287 | ||
| (1) Real estate – Allocated costs: | ||||||
| Homes completed and under construction | $ | 2,045,060 | $ | 2,069,548 | ||
| Finished home sites and home sites under development | 3,842,767 | 3,917,572 | ||||
| Consolidated real estate not owned | 126,684 | - | ||||
| Total real estate | $ | 6,014,511 | $ | 5,987,120 |
Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 213,723 | $ | 368,982 | ||||
| Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities: | ||||||||
| Depreciation and amortization | 16,973 | 18,603 | ||||||
| Real estate and land impairments | 12,648 | 9,292 | ||||||
| Write-off of terminated land deals | 1,006 | 11,437 | ||||||
| Stock-based compensation | 16,788 | 14,780 | ||||||
| Equity in earnings from unconsolidated entities | (2,941 | ) | (3,133 | ) | ||||
| Distribution of earnings from unconsolidated entities | 3,325 | 3,732 | ||||||
| Other | 8,972 | 7,415 | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease/(increase) in real estate | 58,676 | (413,224 | ) | |||||
| Increase in deposits on real estate under option or contract | (1,431 | ) | (9,010 | ) | ||||
| Increase in other receivables, prepaids and other assets | (42,770 | ) | (77,840 | ) | ||||
| Decrease in accounts payable and accrued and other liabilities | (23,860 | ) | (45,326 | ) | ||||
| Decrease in home sale deposits | (1,586 | ) | (11,093 | ) | ||||
| Net cash provided by/(used in) operating activities | 259,523 | (125,385 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Investments in unconsolidated entities | (21,270 | ) | (21,080 | ) | ||||
| Distributions of capital from unconsolidated entities | 350 | - | ||||||
| Purchases of property and equipment | (13,917 | ) | (20,145 | ) | ||||
| Proceeds from sales of property and equipment | 234 | 184 | ||||||
| Maturities/sales of investments and securities | - | 1,750 | ||||||
| Payments to purchase investments and securities | - | (1,750 | ) | |||||
| Net cash used in investing activities | (34,603 | ) | (41,041 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of loans payable and other borrowings | (3,302 | ) | (11,522 | ) | ||||
| Proceeds from issuance of senior notes | - | 497,195 | ||||||
| Payment of debt issuance costs | - | (5,106 | ) | |||||
| Proceeds from liabilities related to consolidated real estate not owned | 59,947 | - | ||||||
| Dividends paid | (94,224 | ) | (91,759 | ) | ||||
| Repurchase of shares | (285,000 | ) | (145,000 | ) | ||||
| Net cash (used in)/provided by financing activities | (322,579 | ) | 243,808 | |||||
| Net (decrease)/increase in cash and cash equivalents | (97,659 | ) | 77,382 | |||||
| Beginning cash and cash equivalents | 775,157 | 651,555 | ||||||
| Ending cash and cash equivalents | $ | 677,498 | $ | 728,937 | ||||
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)
We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our three reportable homebuilding segments are as follows:
- West: Arizona, California, Colorado, and Utah Central: Tennessee and Texas East: Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina
| Three Months Ended September 30, | ||||||||||
| 2026 | 2025 | |||||||||
| Homes | Value | Homes | Value | |||||||
| Homes Closed: | ||||||||||
| West Region | 710 | $ | 341,836 | 883 | $ | 420,658 | ||||
| Central Region | 1,170 | 383,964 | 1,260 | 443,086 | ||||||
| East Region | 1,307 | 436,552 | 1,542 | 535,591 | ||||||
| Total | 3,187 | $ | 1,162,352 | 3,685 | $ | 1,399,335 | ||||
| Homes Ordered: | ||||||||||
| West Region | 706 | $ | 352,026 | 867 | $ | 426,509 | ||||
| Central Region | 1,132 | 396,999 | 1,289 | 468,690 | ||||||
| East Region | 1,245 | 430,241 | 1,480 | 519,890 | ||||||
| Total | 3,083 | $ | 1,179,266 | 3,636 | $ | 1,415,089 |
| Nine Months Ended September 30, | ||||||||||
| 2026 | 2025 | |||||||||
| Homes | Value | Homes | Value | |||||||
| Homes Closed: | ||||||||||
| West Region | 2,221 | $ | 1,078,774 | 3,046 | $ | 1,449,499 | ||||
| Central Region | 3,586 | 1,206,990 | 3,821 | 1,336,048 | ||||||
| East Region | 4,072 | 1,372,321 | 4,404 | 1,571,601 | ||||||
| Total | 9,879 | $ | 3,658,085 | 11,271 | $ | 4,357,148 | ||||
| Homes Ordered: | ||||||||||
| West Region | 2,366 | $ | 1,187,516 | 2,961 | $ | 1,450,859 | ||||
| Central Region | 3,707 | 1,294,180 | 3,952 | 1,433,125 | ||||||
| East Region | 4,249 | 1,474,348 | 4,513 | 1,636,720 | ||||||
| Total | 10,322 | $ | 3,956,044 | 11,426 | $ | 4,520,704 |
| At September 30, | ||||||||||
| 2026 | 2025 | |||||||||
| Homes | Value | Homes | Value | |||||||
| Order Backlog: | ||||||||||
| West Region | 330 | $ | 170,668 | 350 | $ | 176,493 | ||||
| Central Region | 578 | 217,191 | 612 | 232,018 | ||||||
| East Region | 703 | 249,308 | 737 | 261,496 | ||||||
| Total | 1,611 | $ | 637,167 | 1,699 | $ | 670,007 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Ending | Average | Ending | Average | Ending | Average | Ending | Average | ||||||||
| Active Communities | |||||||||||||||
| West Region | 92 | 90.5 | 85 | 85.0 | 92 | 88.2 | 85 | 86.7 | |||||||
| Central Region | 104 | 101.5 | 97 | 91.0 | 104 | 105.6 | 97 | 88.6 | |||||||
| East Region | 152 | 152.0 | 152 | 147.0 | 152 | 149.2 | 152 | 132.2 | |||||||
| Total | 348 | 344.0 | 334 | 323.0 | 348 | 343.0 | 334 | 307.5 |
Meritage Homes Corporation and Subsidiaries
Supplement and Non-GAAP information
(Unaudited)
Supplemental Information (Dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Depreciation and amortization | $ | 5,522 | $ | 5,991 | $ | 16,973 | $ | 18,603 | |||||||
| Summary of Capitalized Interest: | |||||||||||||||
| Capitalized interest, beginning of period | $ | 86,737 | $ | 63,814 | $ | 77,064 | $ | 53,678 | |||||||
| Interest incurred | 20,218 | 20,050 | 60,337 | 54,759 | |||||||||||
| Interest expensed | (1,352 | ) | - | (4,126 | ) | - | |||||||||
| Interest amortized to cost of home and land closings | (13,434 | ) | (12,663 | ) | (41,106 | ) | (37,236 | ) | |||||||
| Capitalized interest, end of period | $ | 92,169 | $ | 71,201 | $ | 92,169 | $ | 71,201 |
Reconciliation of Non-GAAP Information (Dollars in thousands):
This press release includes comments and discussion about our operating results that reflect certain adjustments, including to home closing gross profit, home closing gross margin, earnings before income taxes, net earnings, diluted earnings per common share, and debt-to-capital ratios. These are considered non-GAAP financial measures and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe these non-GAAP financial measures are relevant and useful to investors in understanding our operating results and may be helpful in comparing our company with other companies in the homebuilding and other industries to the extent they provide similar information. We encourage investors to understand the methods used by other companies to calculate these non-GAAP financial measures and any adjustments thereto before comparing to our non-GAAP financial measures.
| Home Closing Gross Profit and Home Closing Gross Margin | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Home closing gross profit | $ | 202,606 | $ | 266,957 | $ | 650,017 | $ | 903,935 | ||||||||
| Home closing gross margin | 17.4 | % | 19.1 | % | 17.8 | % | 20.7 | % | ||||||||
| Add: Real estate-related impairments | 6,639 | 8,693 | 12,648 | 8,693 | ||||||||||||
| Add: Write-off of terminated land deals | (643 | ) | 5,799 | 1,006 | 11,437 | |||||||||||
| Adjusted home closing gross profit | $ | 208,602 | $ | 281,449 | $ | 663,671 | $ | 924,065 | ||||||||
| Adjusted home closing gross margin | 17.9 | % | 20.1 | % | 18.1 | % | 21.2 | % |
| Earnings before income taxes, Net earnings and Diluted earnings per common share | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Earnings before income taxes | $ | 84,815 | $ | 128,248 | $ | 277,903 | $ | 481,467 | ||||||||
| Add: Real estate-related impairments | 6,845 | 8,693 | 12,884 | 8,693 | ||||||||||||
| Add: Write-off of terminated land deals | (643 | ) | 5,799 | 1,006 | 11,437 | |||||||||||
| Adjusted earnings before income taxes | $ | 91,017 | $ | 142,740 | $ | 291,793 | $ | 501,597 | ||||||||
| Incremental tax rate | 24.1 | % | 22.6 | % | 24.5 | % | 23.4 | % | ||||||||
| Adjusted provision for income tax | (18,526 | ) | (32,259 | ) | (67,583 | ) | (117,374 | ) | ||||||||
| Adjusted net earnings | 72,491 | 110,481 | 224,210 | 384,223 | ||||||||||||
| Diluted earnings per common share | $ | 1.04 | $ | 1.39 | $ | 3.22 | $ | 5.13 | ||||||||
| Adjusted diluted earnings per common share | $ | 1.11 | $ | 1.55 | $ | 3.38 | $ | 5.35 |
| Debt-to-Capital Ratios | |||||||
| September 30, 2026 | December 31, 2025 | ||||||
| Senior and convertible senior notes, net and loans payable and other borrowings | $ | 1,851,752 | $ | 1,829,054 | |||
| Stockholders' equity | 5,044,358 | 5,195,643 | |||||
| Total capital | $ | 6,896,110 | $ | 7,024,697 | |||
| Debt-to-capital | 26.9 | % | 26.0 | % | |||
| Senior and convertible senior notes, net and loans payable and other borrowings | $ | 1,851,752 | $ | 1,829,054 | |||
| Less: cash and cash equivalents | (677,498 | ) | (775,157 | ) | |||
| Net debt | $ | 1,174,254 | $ | 1,053,897 | |||
| Stockholders' equity | 5,044,358 | 5,195,643 | |||||
| Total net capital | $ | 6,218,612 | $ | 6,249,540 | |||
| Net debt-to-capital | 18.9 | % | 16.9 | % |
About Meritage Homes Corporation
Meritage is the fifth-largest public homebuilder in the United States, based on homes closed in 2025. The Company offers energy-efficient and affordable entry-level and first move-up homes. Operations span across Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina.
Meritage has delivered over 220,000 homes in its 41-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is an industry leader in energy-efficient homebuilding, an eleven-time recipient of the U.S. Environmental Protection Agency's (EPA) ENERGY STAR® Partner of the Year for Sustained Excellence Award and Residential New Construction Market Leader Award, as well as a four-time recipient of the EPA's Indoor airPLUS Leader Award.
For more information, visit .
The information included in this press release 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 and the strength of our balance sheet.
Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; the cost of materials used to develop communities and construct homes; shortages in the availability and cost of subcontract labor; legislation related to tariffs; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; the adverse effect of slow absorption rates; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our exposure to counterparty risk with respect to our capped calls; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; sustainability matters and disclosures; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2025 and our subsequent Form 10-Qs under the caption "Risk Factors," which can be found on our website at .
| Contacts: | Emily Tadano, VP Investor Relations and External Communications | |
| (480) 515-8979 (office) | ||
| ... |
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