Meritage Homes reports second quarter 2022 results including the achievement of its 300 community goal, a 55% increase in diluted EPS and a 430 bps increase in home closing gross margin over prior year

Dallas, Texas, UNITED STATES


SCOTTSDALE, Ariz., July 27, 2022 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, reported second quarter results for the period ended June 30, 2022.


Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  % Chg  2022  2021  % Chg 
Homes closed (units)  3,221   3,273   (2)%  6,079   6,163   (1)%
Home closing revenue $1,408,947  $1,264,643   11% $2,654,403  $2,344,625   13%
Average sales price - closings $437  $386   13% $437  $380   15%
Home orders (units)  3,767   3,542   6%  7,641   7,000   9%
Home order value $1,809,870  $1,499,672   21% $3,577,580  $2,848,802   26%
Average sales price - orders $480  $423   13% $468  $407   15%
Ending backlog (units)              7,241   5,509   31%
Ending backlog value             $3,438,853  $2,317,534   48%
Average sales price - backlog             $475  $421   13%
Earnings before income taxes $331,695  $215,651   54% $617,578  $381,628   62%
Net earnings $250,084  $167,389   49% $467,338  $299,232   56%
Diluted EPS $6.77  $4.36   55% $12.55  $7.80   61%
                         

MANAGEMENT COMMENTS

“We proudly achieved our long-term goal of 300 communities this quarter, ending June 2022 with 303 communities. This milestone reflects the high level of execution and dedication of our Meritage team amidst longstanding supply chain constraints and delays stemming from COVID-19, and we believe, will position us to expand our market share from incremental order and closing volume,” said Steven J. Hilton, executive chairman of Meritage Homes. “Our agile operating model led to strong second quarter 2022 results, including our highest second quarter sales order volume in company history, a 430 bps year-over-year quarterly home closing gross margin expansion to 31.6% and $1.4 billion in quarterly home closing revenue.”  

“We believe that the ongoing low supply of housing inventory and favorable demographics continue to reflect positive factors for housing demand. However, we acknowledge the market is softening from unprecedented demand levels of the last two years, as rapidly increasing mortgage rates in a short amount of time are challenging affordability and buyer psychology. In addition to concerns about the general economy, greater difficulty to qualify for a mortgage and the return of regular seasonality, we are seeing a high preference for quick move-in inventory that can close in 90 days or less, which is primarily found in the existing home market today. We believe this desire for readily available product is exacerbating cancellations and the slowing in new home demand, and will continue to do so for another quarter or two, until our newly-started spec inventory is also available for a quick move-in,” said Phillippe Lord, chief executive officer of Meritage Homes.

“In the second quarter of 2022, we lifted sales order metering in most of our communities. Quarterly sales orders of 3,767 homes were 6% higher than prior year due to our 33% year-over-year increase in average community count. Despite some slowing demand, our second quarter 2022 average absorption pace was 4.4 per month, which was down from 5.5 per month in the second quarter of 2021 yet higher than our expected normalized average pace of 3-4 sales orders per month,” Mr. Lord continued.

“Our closings of 3,221 homes this quarter were just 52 shy of our highest second quarter of home closings, which occurred in 2021,” Mr. Lord remarked. “Our second quarter 2022 home closing revenue of $1.4 billion was 11% greater than last year, which combined with our record home closing gross margin and SG&A leverage of 8.3%, led to a 55% year-over-year increase in our diluted EPS from $4.36 to $6.77 this quarter.”

“During the quarter, we spent $422 million on land acquisition and development and at June 30, 2022, lot supply totaled about 71,000,” said Mr. Lord. “With our healthy balance sheet and ample liquidity, we believe we have flexibility for evolving market conditions. Our net debt-to-capital was 20.6% at June 30, 2022.”

Mr. Lord concluded, “Due to the lack of visibility into the market at this time, we are not providing full year 2022 guidance.”

SECOND QUARTER RESULTS

  • The total sales orders of 3,767 for the second quarter of 2022 reflect an increase of 6% year-over-year, driven by a 33% increase in average communities that was offset by a 20% decrease in average absorption pace from 5.5 to 4.4 per month. The lower absorption pace reflects both seasonality and slowing market demand. Entry-level represented 86% of second quarter 2022 orders, compared to 81% in the same quarter in 2021. Average sales price ("ASP") on orders surpassed $480,000 in the second quarter of 2022, which was an increase of 13% over the second quarter of 2021.
  • The 11% year-over-year increase in home closing revenue to $1.4 billion for the second quarter of 2022 was due to a 13% increase in ASPs on closings even as we continued our shift of product mix toward entry-level homes. This was partially offset by 2% lower home closing volume. 
  • The 430 bps improvement in second quarter 2022 home closing gross margin to 31.6% from 27.3% a year ago mainly resulted from higher ASPs on closings that were also better leveraging lower cost of land for entry-level homes and other fixed construction costs—all of which more than offset higher commodity costs.
  • Selling, general and administrative expenses ("SG&A") were 8.3% of second quarter 2022 home closing revenue, a 100 bps improvement over 9.3% in the prior year. This improvement was due to greater leverage of fixed expenses on higher home closing revenue as well as lower commissions expense and the benefits of technology in our sales and marketing efforts.
  • In the second quarter of 2021, we recognized a loss on early extinguishment of debt of $18.2 million in connection with the early redemption in April 2021 of our 7.00% senior notes due 2022 ("2022 Notes").  There were no such transactions in the second quarter of 2022.
  • The second quarter effective income tax rate was 24.6% in 2022 compared to 22.4% in 2021. The higher rate in 2022 reflects the expiration of the 2019 Taxpayer Certainty and Disaster Tax Relief Act, under which we earned eligible energy tax credits on qualifying homes closed in 2021.
  • Second quarter 2022 pre-tax margin increased 660 bps to 23.4%, compared to 16.8% in the second quarter of 2021. Net earnings were $250.1 million ($6.77 per diluted share) for the second quarter of 2022, a 49% increase over $167.4 million ($4.36 per diluted share) for the second quarter of 2021. Strong earnings growth reflected pricing power, expanded gross margin and improved overhead leverage, which combined with a lower outstanding share count in the current quarter, led to a 55% year-over-year improvement in earnings per diluted share.

YEAR TO DATE RESULTS

  • Total sales orders for the first half of 2022 increased 9% over the prior year, driven by a 33% increase in average community count, partially offset by an 18% decrease in average absorption pace compared to the first half of 2021. 
  • Home closing revenue increased 13% in the first half of 2022 to $2.7 billion due to a 15% increase in ASPs on closings given the favorable pricing environment on relatively flat home closing volume.
  • The 490 bps improvement for home closing gross margin in the first half of 2022 to 31.0% from 26.1% was primarily due to higher ASPs on closings resulting from favorable pricing and better leveraging of fixed costs on higher home closing revenue.
  • SG&A expenses improved 110 bps year-over-year to 8.4% of home closing revenue, compared to 9.5% in the first half of 2021, due to improved leverage of overhead expenses on higher home closing revenue as well as sales and marketing efficiencies gained from digital innovations.
  • In the first half of 2021, we recognized a loss on early extinguishment of debt of $18.2 million in connection with the early redemption in April 2021 of the 2022 Notes. There were no such transactions in the first half of 2022.
  • The effective tax rate for the first half of 2022 was 24.3%, compared to 21.6% for the first half of 2021. The higher rate in 2022 reflects the expiration of the tax credits available under the 2019 Taxpayer Certainty and Disaster Tax Relief Act.
  • Net earnings were $467.3 million ($12.55 per diluted share) for the first half of 2022, a 56% increase over $299.2 million ($7.80 per diluted share) for the first half of 2021, primarily reflecting pricing power, expanded gross margin and greater overhead leverage in 2022, as well as a lower outstanding share count in the first half of 2022.

BALANCE SHEET

  • Cash and cash equivalents at June 30, 2022 totaled $272.1 million, compared to $618.3 million at December 31, 2021, primarily as a result of investments in real estate and share repurchases. Real estate assets increased from $3.7 billion at December 31, 2021 to $4.5 billion at June 30, 2022.
  • A total of approximately 71,000 lots were owned or controlled as of June 30, 2022, compared to approximately 63,000 total lots at June 30, 2021. We added over 900 net new lots in the second quarter of 2022, representing an estimated 12 future communities, all of which are for entry-level homes.
  • Debt-to-capital and net debt-to-capital ratios were 25.3% and 20.6%, respectively, at June 30, 2022, which compared to 27.6% and 15.1%, respectively, at December 31, 2021.
  • The Company repurchased 1,166,040 shares of stock for a total of $109.3 million during the first half of 2022, of which 128,073 shares totaling $10.0 million were repurchased during the second quarter of 2022. As of June 30, 2022, $244.1 million remained available to repurchase under our authorized share repurchase program.

CONFERENCE CALL

Management will host a conference call to discuss its second quarter results at 8:00 a.m. Pacific Daylight Time (11:00 a.m. Eastern Daylight Time) on Thursday, July 28, 2022. The call will be webcast live with an accompanying slideshow available on the "Investor Relations" page of the company's website at https://investors.meritagehomes.com. Telephone participants will be able to join by dialing in to 1-877-407-6951 US toll free or 1-412-902-0046 on the day of the call.

A replay of the call will be available via webcast beginning at approximately 11:00 a.m. Pacific Daylight Time (2:00 p.m. Eastern Daylight Time) on July 28, 2022 and extending through August 11, 2022, at https://investors.meritagehomes.com.


Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)

  Three Months Ended June 30, 
  2022  2021  Change $  Change % 
Homebuilding:                
Home closing revenue $1,408,947  $1,264,643  $144,304   11%
Land closing revenue  3,434   12,956   (9,522)  (73)%
Total closing revenue  1,412,381   1,277,599   134,782   11%
Cost of home closings  (964,208)  (919,342)  (44,866)  5%
Cost of land closings  (2,784)  (13,288)  10,504   (79)%
Total cost of closings  (966,992)  (932,630)  (34,362)  4%
Home closing gross profit  444,739   345,301   99,438   29%
Land closing gross profit/(loss)  650   (332)  982   (296)%
Total closing gross profit  445,389   344,969   100,420   29%
Financial Services:                
Revenue  5,139   5,665   (526)  (9)%
Expense  (2,581)  (2,367)  (214)  9%
Earnings from financial services unconsolidated entities and other, net  1,521   1,317   204   15%
Financial services profit  4,079   4,615   (536)  (12)%
Commissions and other sales costs  (69,383)  (73,889)  4,506   (6)%
General and administrative expenses  (47,932)  (43,156)  (4,776)  11%
Interest expense     (77)  77   (100)%
Other (expense)/income, net  (458)  1,377   (1,835)  (133)%
Loss on early extinguishment of debt     (18,188)  18,188   (100)%
Earnings before income taxes  331,695   215,651   116,044   54%
Provision for income taxes  (81,611)  (48,262)  (33,349)  69%
Net earnings $250,084  $167,389  $82,695   49%
                 
Earnings per common share:                
Basic         Change $ or
shares
  Change % 
Earnings per common share $6.82  $4.43  $2.39   54%
Weighted average shares outstanding  36,647   37,818   (1,171)  (3)%
Diluted                
Earnings per common share $6.77  $4.36  $2.41   55%
Weighted average shares outstanding  36,962   38,377   (1,415)  (4)%
                 
                 


  Six Months Ended June 30, 
  2022  2021  Change $  Change % 
Homebuilding:                
Home closing revenue $2,654,403  $2,344,625  $309,778   13%
Land closing revenue  44,912   16,755   28,157   168%
Total closing revenue  2,699,315   2,361,380   337,935   14%
Cost of home closings  (1,832,015)  (1,732,669)  (99,346)  6%
Cost of land closings  (33,469)  (16,540)  (16,929)  102%
Total cost of closings  (1,865,484)  (1,749,209)  (116,275)  7%
Home closing gross profit  822,388   611,956   210,432   34%
Land closing gross profit  11,443   215   11,228   5222%
Total closing gross profit  833,831   612,171   221,660   36%
Financial Services:                
Revenue  9,811   10,416   (605)  (6)%
Expense  (5,093)  (4,538)  (555)  12%
Earnings from financial services unconsolidated entities and other, net  2,695   2,497   198   8%
Financial services profit  7,413   8,375   (962)  (11)%
Commissions and other sales costs  (134,923)  (141,633)  6,710   (5)%
General and administrative expenses  (87,927)  (81,105)  (6,822)  8%
Interest expense  (41)  (167)  126   (75)%
Other (expense)/income, net  (775)  2,175   (2,950)  (136)%
Loss on early extinguishment of debt     (18,188)  18,188   (100)%
Earnings before income taxes  617,578   381,628   235,950   62%
Provision for income taxes  (150,240)  (82,396)  (67,844)  82%
Net earnings $467,338  $299,232  $168,106   56%
                 
Earnings per common share:                
Basic         Change $ or s
hares
  Change % 
Earnings per common share $12.69  $7.93  $4.76   60%
Weighted average shares outstanding  36,820   37,731   (911)  (2)%
Diluted                
Earnings per common share $12.55  $7.80  $4.75   61%
Weighted average shares outstanding  37,239   38,357   (1,118)  (3)%
                 
                 

Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)

  June 30, 2022  December 31, 2021 
Assets:        
Cash and cash equivalents $272,147  $618,335 
Other receivables  171,408   147,548 
Real estate (1)  4,474,062   3,734,408 
Real estate not owned  8,011   8,011 
Deposits on real estate under option or contract  97,967   90,679 
Investments in unconsolidated entities  11,223   5,764 
Property and equipment, net  39,030   37,340 
Deferred tax asset, net  41,271   40,672 
Prepaids, other assets and goodwill  192,604   124,776 
Total assets $5,307,723  $4,807,533 
Liabilities:        
Accounts payable $341,717  $216,009 
Accrued liabilities  326,856   337,277 
Home sale deposits  60,820   42,610 
Liabilities related to real estate not owned  7,210   7,210 
Loans payable and other borrowings  15,613   17,552 
Senior notes, net  1,143,038   1,142,486 
  Total liabilities  1,895,254   1,763,144 
Stockholders' Equity:        
Preferred stock      
Common stock  366   373 
Additional paid-in capital  315,590   414,841 
Retained earnings  3,096,513   2,629,175 
  Total stockholders’ equity  3,412,469   3,044,389 
Total liabilities and stockholders’ equity $5,307,723  $4,807,533 
(1) Real estate – Allocated costs:        
Homes under contract under construction $1,527,013  $1,039,822 
Unsold homes, completed and under construction $748,845   484,999 
Model homes $89,539   81,049 
Finished home sites and home sites under development $2,108,665   2,128,538 
  Total real estate $4,474,062  $3,734,408 
 
 

Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands unaudited):

  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
Depreciation and amortization $5,964  $6,879  $11,723  $13,414 
                 
Summary of Capitalized Interest:                
Capitalized interest, beginning of period $59,082  $57,540  $56,253  $58,940 
Interest incurred  15,171   16,321   30,384   32,413 
Interest expensed     (77)  (41)  (167)
Interest amortized to cost of home and land closings  (12,794)  (17,074)  (25,137)  (34,476)
Capitalized interest, end of period $61,459  $56,710  $61,459  $56,710 


  June 30, 2022  December 31,
2021
  
Senior notes, net, loans payable and other borrowings $1,158,651  $1,160,038  
Stockholders' equity  3,412,469   3,044,389  
Total capital $4,571,120  $4,204,427  
Debt-to-capital  25.3%  27.6% 
          
Senior notes, net, loans payable and other borrowings $1,158,651  $1,160,038  
Less: cash and cash equivalents  (272,147)  (618,335) 
Net debt $886,504  $541,703  
Stockholders’ equity  3,412,469   3,044,389  
Total net capital $4,298,973  $3,586,092  
Net debt-to-capital  20.6%  15.1% 
          
          

Meritage Homes Corporation and Subsidiaries 
Consolidated Statements of Cash Flows  
(In thousands) 
(Unaudited)

  Six Months Ended June 30, 
  2022  2021 
Cash flows from operating activities:        
Net earnings $467,338  $299,232 
Adjustments to reconcile net earnings to net cash used in operating activities:        
Depreciation and amortization  11,723   13,414 
Stock-based compensation  10,045   8,590 
Loss on early extinguishment of debt     18,188 
Equity in earnings from unconsolidated entities  (2,145)  (1,807)
Distribution of earnings from unconsolidated entities  2,339   2,215 
Other  (601)  2,266 
Changes in assets and liabilities:        
Increase in real estate  (729,450)  (469,733)
Increase in deposits on real estate under option or contract  (7,288)  (14,863)
Increase in other receivables, prepaids and other assets  (90,419)  (36,390)
Increase in accounts payable and accrued liabilities  113,421   26,532 
Increase in home sale deposits  18,210   8,884 
Net cash used in operating activities  (206,827)  (143,472)
Cash flows from investing activities:        
Investments in unconsolidated entities  (5,653)  (1)
Purchases of property and equipment  (12,852)  (10,970)
Proceeds from sales of property and equipment  247   292 
Maturities/sales of investments and securities  1,032   2,697 
Payments to purchase investments and securities  (1,032)  (2,697)
Net cash used in investing activities  (18,258)  (10,679)
Cash flows from financing activities:        
Repayment of loans payable and other borrowings  (11,800)  (5,758)
Repayment of senior notes     (317,690)
Proceeds from issuance of senior notes     450,000 
Payment of debt issuance costs     (6,102)
Repurchase of shares  (109,303)  (27,546)
Net cash (used in)/provided by financing activities  (121,103)  92,904 
Net decrease in cash and cash equivalents  (346,188)  (61,247)
Cash and cash equivalents, beginning of period  618,335   745,621 
Cash and cash equivalents, end of period $272,147  $684,374 
 
 

Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands)
(Unaudited)

  Three Months Ended June 30, 
  2022  2021 
  Homes  Value  Homes  Value 
Homes Closed:                
Arizona  542  $234,902   481  $165,990 
California  256   173,631   318   198,232 
Colorado  127   77,545   145   74,987 
West Region  925   486,078   944   439,209 
Texas  1,048   422,327   1,154   403,838 
Central Region  1,048   422,327   1,154   403,838 
Florida  437   169,607   443   160,377 
Georgia  179   81,227   171   62,477 
North Carolina  359   148,860   330   119,838 
South Carolina  132   44,365   81   28,209 
Tennessee  141   56,483   150   50,695 
East Region  1,248   500,542   1,175   421,596 
Total  3,221  $1,408,947   3,273  $1,264,643 
Homes Ordered:                
Arizona  560  $257,162   624  $256,804 
California  355   272,601   344   217,228 
Colorado  160   102,464   181   104,134 
West Region  1,075   632,227   1,149   578,166 
Texas  1,096   491,394   1,101   428,375 
Central Region  1,096   491,394   1,101   428,375 
Florida  685   283,291   468   176,118 
Georgia  225   107,388   193   77,309 
North Carolina  391   178,463   390   153,032 
South Carolina  144   50,716   88   32,595 
Tennessee  151   66,391   153   54,077 
East Regions  1,596   686,249   1,292   493,131 
Total  3,767  $1,809,870   3,542  $1,499,672 


  Six Months Ended June 30, 
  2022  2021 
  Homes  Value  Homes  Value 
Homes Closed:                
Arizona  1,000  $432,997   891  $303,258 
California  531   361,041   595   370,131 
Colorado  258   155,464   320   159,250 
West Region  1,789   949,502   1,806   832,639 
Texas  1,921   770,155   2,117   722,223 
Central Region  1,921   770,155   2,117   722,223 
Florida  875   337,682   860   301,205 
Georgia  306   137,661   317   117,616 
North Carolina  656   267,864   629   226,851 
South Carolina  253   84,078   166   56,055 
Tennessee  279   107,461   268   88,036 
East Region  2,369   934,746   2,240   789,763 
Total  6,079  $2,654,403   6,163  $2,344,625 
Homes Ordered:                
Arizona  1,110  $497,169   1,226  $479,239 
California  701   519,944   630   390,619 
Colorado  369   228,463   350   193,913 
West Region  2,180   1,245,576   2,206   1,063,771 
Texas  2,392   1,039,961   2,216   820,343 
Central Region  2,392   1,039,961   2,216   820,343 
Florida  1,257   510,205   947   355,227 
Georgia  445   208,279   357   138,866 
North Carolina  764   341,471   809   310,719 
South Carolina  298   103,372   164   58,997 
Tennessee  305   128,716   301   100,879 
East Region  3,069   1,292,043   2,578   964,688 
Total  7,641  $3,577,580   7,000  $2,848,802 
Order Backlog:                
Arizona  1,255  $557,742   1,328  $520,034 
California  563   430,202   479   295,198 
Colorado  439   271,827   238   139,437 
West Region  2,257   1,259,771   2,045   954,669 
Texas  2,349   1,042,689   1,729   670,583 
Central Region  2,349   1,042,689   1,729   670,583 
Florida  1,250   524,940   637   268,971 
Georgia  342   162,204   196   79,207 
North Carolina  673   299,352   634   247,292 
South Carolina  178   64,015   118   44,175 
Tennessee  192   85,882   150   52,637 
East Region  2,635   1,136,393   1,735   692,282 
Total  7,241  $3,438,853   5,509  $2,317,534 
 
 

Meritage Homes Corporation and Subsidiaries
Operating Data
(Unaudited)

  Three Months Ended June 30, 
  2022  2021 
  Ending  Average  Ending  Average 
Active Communities:                
Arizona  56   48.0   38   35.5 
California  32   27.5   20   19.5 
Colorado  19   18.5   17   14.5 
West Region  107   94.0   75   69.5 
Texas  80   77.5   64   61.5 
Central Region  80   77.5   64   61.5 
Florida  41   41.0   34   32.0 
Georgia  14   14.5   10   11.0 
North Carolina  32   30.5   26   25.0 
South Carolina  17   15.0   7   6.5 
Tennessee  12   13.0   10   9.0 
East Region  116   114.0   87   83.5 
Total  303   285.5   226   214.5 
 


  Six Months Ended June 30, 
  2022  2021 
  Ending  Average  Ending  Average 
Active Communities:                
Arizona  56   45.0   38   34.6 
California  32   25.7   20   18.3 
Colorado  19   18.0   17   13.3 
West Region  107   88.7   75   66.2 
Texas  80   76.1   64   62.0 
Central Region  80   76.1   64   62.0 
Florida  41   41.0   34   31.6 
Georgia  14   14.7   10   9.7 
North Carolina  32   29.0   26   23.7 
South Carolina  17   14.7   7   6.3 
Tennessee  12   12.7   10   8.3 
East Region  116   112.1   87   79.6 
Total  303   276.9   226   207.8 
 

About Meritage Homes Corporation

Meritage Homes is the seventh-largest public homebuilder in the United States, based on homes closed in 2021. The Company offers a variety of homes that are designed with a focus on entry-level and first move-up buyers. Operations span across Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee and Utah.

Meritage Homes has delivered over 155,000 homes in its 36-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is the industry leader in energy-efficient homebuilding and a nine-time recipient of the U.S. Environmental Protection Agency’s ("EPA") ENERGY STAR® Partner of the Year for Sustained Excellence Award since 2013 for innovation and industry leadership in energy-efficient homebuilding, and the recipient of the EPA Indoor airPLUS Leader Award.

For more information, visit www.meritagehomes.com.

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; our spec inventory levels; and expectations about our future results, including our liquidity and market share.

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: changes in interest rates and the availability and pricing of residential mortgages; the potential benefits of rate locks; inflation in the cost of materials used to develop communities and construct homes; supply chain and labor constraints; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the ability of our potential buyers to sell their existing homes; legislation related to tariffs; the adverse effect of slow absorption rates; impairments of our real estate inventory; cancellation rates; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our ability to obtain financing if our credit ratings are downgraded; our potential 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; the replication of our energy-efficient technologies by our competitors; shortages in the availability and cost of subcontract labor; 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 related to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic (such as COVID-19), 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, 2021 and our Form 10-Q for the quarter ended March 31, 2022 under the caption "Risk Factors," which can be found on our website at www.investors.meritagehomes.com.

    
  Contacts:Emily Tadano, VP of Investor Relations and ESG
   (480) 515-8979 (office)
   investors@meritagehomes.com