Meritage Stock Earnings Reports

Meritage reported Q3 2025 results characterized by resilient volume but margin pressure from elevated incentives and some land-related charges. Orders rose 4% YoY to 3,636 units driven by a 14% increase in average community count; deliveries were 3,685 homes with a very strong 211% backlog conversion (benefiting from the company's 60-day closing-ready guarantee and faster cycle times ~105 days). Reported home-closing revenue was $1.4 billion (down 12% YoY); reported gross margin was 19.1% (down 570 bps YoY) and adjusted gross margin excluding $14.5M of inventory impairments/walkaways was 20.1%. Adjusted diluted EPS for the quarter was $1.55 (reported EPS $1.39). The company ended the quarter with a record 334 communities (up 20% YoY) while intentionally moderating starts (-19% YoY) and cutting land spend (~14% YoY) to preserve liquidity. Cash on hand was $729M, net debt-to-cap 17.2%, and the company returned $85M to shareholders in Q3 (including $55M in buybacks); the Board approved an additional $500M repurchase authorization. Guidance for Q4 2025: 3,800–4,000 closings, $1.46–1.54B revenue, 19–20% home-closing gross margin, and EPS $1.51–1.70. Management reiterated a long-term gross margin target of 22.5–23.5% but said reaching it depends largely on normalization of incentive levels and stabilization of land costs (expected improvement more meaningfully in 2027–2028). Key investor risks: weak consumer confidence/affordability driving higher incentive loads, elevated land development costs in the current vintage, and the potential for continued margin pressure near-term.