MTH

This article first appeared on GuruFocus. Revenue: Group revenue up 1%, or 3% excluding the disposal of the Mercedes truck and van business. Operating Profit: Increased by 4% year on year. Profit Before Tax: Reached ZAR4 billion, the highest in over three years, up 20%. Attributable Profit: Up 19% to ZAR3 billion. Earnings Per Share (EPS): Up 19% to ZAR17.53. Headline Earnings Per Share (HEPS): Up 15% to ZAR17. Dividends: Total dividend up 29% to ZAR7.10 per share, with a final dividend of ZAR4.10. Cash Generation: Cash generated from operations was ZAR8 billion. Working Capital: Reduced by 2% despite adding Tata brand working capital. Core Interest-Bearing Debt: Reduced by 14%. Shareholder Returns: Returned ZAR1.9 billion to shareholders via dividends and share repurchases. SA Retail Vehicle Sales: Dealer channel volumes grew by more than 20%. Chinese and Indian Vehicle Volumes: Tripled (up over 200%) in South Africa. Pre-Owned Vehicle Volumes: Grew by 5% in South Africa despite a down market. SA Profit Before Tax: Grew 31% from the prior year. SA Operating Margin: Increased to 5.7% from 5.4%. Importer and Distributor Revenue: Increased by 13%. Importer and Distributor Operating Profit: Increased by 30%. Importer and Distributor Operating Margin: Increased to 4%. Importer and Distributor Profit Before Tax: Doubled to ZAR385 million. Retail and Rental Operating Profit: Increased by 1%. Retail and Rental Profit Before Tax: Up 25%. Vehicle Rental Revenue: Increased by 6%. Vehicle Rental Operating Profit: Increased by 8%. Vehicle Rental Profit Before Tax: Up 21%. Vehicle Rental Utilization Rate: Increased from 71% to 73%. UK Retail Revenue: Down GBP53 million due to the MTV disposal. UK Retail Operating Profit: Higher by GBP1 million. UK Retail Profit Before Tax: Up GBP11 million. UK Chinese Brand Sales: Increased by more than 300%. Australia Revenue: Increased by ZAR7 million. Australia Operating Profit: Down ZAR6 million. Mobility Solutions Operating Profit: Up 5% to ZAR4 billion. Mobility Solutions Profit Before Tax: Up 5%. Aftermarket Parts Revenue: Increased by 2% globally. Aftermarket Parts Operating Margin: Maintained at about 9%. Aftermarket Parts Profit Before Tax: Increased by 5% to ZAR947 million. SA Aftermarket Parts Revenue: Increased by 2%. SA Aftermarket Parts Unit Volumes: Up 6%. SA Aftermarket Parts Operating Profit: Up 20%. SA Aftermarket Parts Profit Before Tax: Almost doubled to ZAR330 million. UK Aftermarket Parts Wholesale Revenue: Increased by 20%. UK Aftermarket Parts Retail Revenue: Increased by 6%. UK Aftermarket Parts Gross Profit: Increased by 5%. UK Aftermarket Parts Operating Expenses: Increased by 13%. UK Aftermarket Parts Cost Impact: Above-inflationary cost impact of GBP27 million (about ZAR60 million). Net Finance Costs: Significantly reduced. Foreign Exchange Movement: ZAR140 million loss, reduced to ZAR49 million in H2. Effective Tax Rate: 26%. Debt Leverage: Sitting at 1.3 times, with an optimal medium to long-term target of 1.5 to 1.7 times. Cash Generated Since Listing (2018): ZAR38 billion. Warning! GuruFocus has detected 5 Warning Signs with JSE:MTH. Is JSE:MTH fairly valued? Test your thesis with our free DCF calculator. Release Date: September 02, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Q: Do you think that the new vehicle momentum that has kicked off this year is going to continue into the future?A: Ockert Rensburg (CEO) stated that the market's resilience and growth have been surprising, with July and August continuing to show strong growth. He attributes this to the large influx of new entrants, relatively low interest rates, and a closing affordability gap that is attracting new consumers. He believes that as long as there are no significant sales price increases, the momentum is likely to continue, though not necessarily at the very high growth rates seen in the last 18 months. Q: When does Motus expect to come to market with its DMTN bond listing, and what is the size of that?A: Brenda Baijnath (CFO) announced that they will commence debt roadshows from next week, targeting a ticket size of ZAR1.5 billion. She clarified that the DMTN program is not intended to increase debt levels but rather to replace existing debt to further drive down interest costs. Q: Can you give any guidance on whether the balance sheet is going to continue to gear?A: Brenda Baijnath (CFO) stated that the current gearing level is very low, and the optimal net debt to EBITDA remains at 1.5 to 1.7 times. The company will look at smaller, moderate acquisitions, maintain the new dividend policy of 40% of headline earnings per share, and consider value-accretive share repurchases. Q: The Tata relaunch has gone really well this year. Would you consider adding any more brands to your importer portfolio?A: Ockert Rensburg (CEO) acknowledged that launching a brand is not easy but noted that the success of Tata demonstrates their ability to execute a "plug and play" strategy. While there are opportunities, there is nothing imminent, but he hinted that there might be news in the next six months. Q: How did the company manage to achieve such a strong financial performance despite a tough economic environment?A: Brenda Baijnath (CFO) attributed the strong performance to higher sales volumes, improved margins across the board, strict cost discipline, and the successful execution of the strategy. She highlighted the significant increase in Chinese and Indian brand sales volumes (up over 200% in South Africa) and the proactive management of working capital and debt reduction, which led to a 14% reduction in core interest-bearing debt. Q: What is the outlook for the UK aftermarket parts business, which has been under pressure?A: Ockert Rensburg (CEO) explained that the UK retail aftermarket parts business faced pressure primarily from operating expenses, which increased by 13% due to government-driven increases in national insurance and minimum wage. He noted that this cost is now in the base and significant increases are not expected going forward. The company is strengthening the management team and accelerating digital solutions to drive top-line growth and improve profitability. Q: How is Motus navigating the shift towards electric vehicles (EVs) and new energy vehicles (NEVs)?A: Ockert Rensburg (CEO) noted that the NEV trend has started in the UK, surged in Australia, and is coming to South Africa, albeit at a slower pace due to a lack of government support. The company is closely monitoring customer behavior changes and is positioning itself to take advantage of this shift. In Australia, the recent acquisition of the Warrago dealership, which includes Chinese brands, will help service the growing demand for EVs. Q: Can you elaborate on the performance of the South African aftermarket parts business and its growth strategy?A: Brenda Baijnath (CFO) highlighted that the South African aftermarket parts business was a key performer, with operating profit up 20% and profit before tax almost doubling to ZAR330 million. The growth was driven by accessing new, previously underserved informal markets, with the number of active "Kazi mechanics" exceeding the target of 1,000 and reaching 3,300. The company is focused on accelerating top-line growth in the coming year. Q: What is the company's strategy for capital allocation and shareholder returns?A: Brenda Baijnath (CFO) outlined a disciplined financial framework with five priorities: extracting more cash flow, managing debt levels, disciplined capital allocation, responding to economic volatility, and delivering attractive shareholder returns. The company has increased its dividend payout ratio to 40% of headline earnings per share, resulting in a 29% increase in dividends year-on-year. They will continue to look for moderate acquisitions within existing business segments and value-accretive share repurchases. Q: How did the company manage to reduce its foreign exchange losses in the second half of the year?A: Brenda Baijnath (CFO) explained that the company experienced ZAR140 million in foreign exchange movements, but reduced the loss from ZAR91 million in the first half to ZAR49 million in the second half through proactive hedging strategies. They have locked in forward cover for the US Dollar until April next year at 16.68 and for the Euro until March next year at 19.69, providing certainty on gross margins for the next nine months. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

It has been about a month since the last earnings report for Meritage Homes (MTH). Shares have lost about 0.4% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Meritage due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Meritage Homes Corporation before we dive into how investors and analysts have reacted as of late. Meritage Homes reported second-quarter 2026 results, with adjusted earnings surpassing the Zacks Consensus Estimate but total closing revenues missing the same. Year-over-year , both metrics declined. Adjusted earnings were $1.42 per share, down 32.1% year over year but beat the Zacks Consensus Estimate of $1.30. The bottom line surpassed the consensus mark by 9.23%, aided by lower direct construction costs and improved operating leverage from the first quarter.Total revenues (including Total Closing revenues and Financial Services revenues) were $1.408 billion, down 13.3% year over year. Homebuilding: Total home closing revenues were $1.4 billion, down 13.8% year over year and missed the consensus mark of $1.43 billion by 1.8%. Under the Homebuilding umbrella, home closing revenues declined 14.1% year over year to $1.388 billion, reflecting continued affordability pressures, volatile mortgage rates and cautious buyer sentiment. However, Land closing revenues rose to $12.72 million from $8.28 million a year ago.Home closings totaled 3,725 units in the second quarter of 2026, down 11% from the year-ago period as softer selling conditions weighed on delivery volume. Home closing revenues declined 14% year over year to $1.39 billion, reflecting lower closings and a 4% decrease in average sales price. Average sales price on closings fell to $373,000 from $387,000 a year ago, primarily due to geographic mix. Product mix also had an impact, while Meritage Homes used incremental incentives in certain markets to move aged spec inventory. Total home orders declined 9% year over year to 3,575 units. Home order value fell 11% to $1.38 billion, while average absorption pace decreased 19% to 3.5 sales per community per month from 4.3 a year ago. The lower absorption rate was partly offset by a 14% increase in average community count. Management noted that demand remained relatively stable sequentially, with no meaningful deterioration from the first quarter.Meritage Homes ended the quarter with 340 active communities, up 9% year over year but down 1% sequentially as some communities closed earlier than expected and certain planned openings shifted into the third quarter. Quarter-end backlog totaled 1,715 homes, down 2% from the prior-year period, while backlog value declined 5% to $661.9 million.Financial Services: Segment revenues fell 17.4% to $7.78 million, while segment profit slipped to $5.33 million from $5.61 million as results remained closely tied to home closing activity. Home closing gross margin contracted 280 basis points year over year to 18.3%, reflecting lost leverage on lower revenues and higher lot costs. Adjusted home closing gross margin was 18.6% versus 21.4% a year ago, but improved 80 basis points sequentially as direct costs per square foot fell nearly 6% year over year and cycle times stayed below 110 days.SG&A expenses declined 12% to $144 million, though SG&A as a percentage of home closing revenues increased 20 basis points to 10.4%. Net earnings fell 38% to $90.6 million, while the effective tax rate rose to 24.8% from 23.9% because of higher state income taxes. Meritage Homes ended the second quarter with $807 million in cash and cash equivalents, up from $775 million at year-end 2025. The company’s debt-to-capital ratio stood at 26.8%, while net debt-to-capital was 17.1%. Meritage Homes also had no outstanding borrowings under its revolving credit facility, underscoring its solid liquidity position. The company increased the revolver size to $980 million and had $896.9 million available under the facility at quarter-end.MTH returned $131 million to its shareholders through $100 million of share repurchases and $31 million of dividends. Land acquisition and development spending declined to $357 million from $509 million a year ago, while the company controlled 73,233 lots, equal to 5.2 years of supply. For the third quarter of 2026, Meritage Homes expects 3,300-3,600 home closings, home closing revenues of $1.26-$1.35 billion and home closing gross margin of around 18%. Earnings are projected at $1.10-$1.30 per share, with an effective tax rate of 24.5-25%.For full-year 2026, management now expects home closing volume and revenues to be around 5% below 2025 levels, although revenues could trend lower if market conditions require higher incentives. Meritage Homes reiterated its 5-10% year-over-year community count growth target and said second-half volume growth is expected to come from community expansion rather than an improving demand environment. Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -13.23% due to these changes. Currently, Meritage has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Meritage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Meritage is part of the Zacks Building Products - Home Builders industry. Over the past month, NVR (NVR), a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended June 2026 more than a month ago. NVR reported revenues of $2.28 billion in the last reported quarter, representing a year-over-year change of -10.5%. EPS of $83.96 for the same period compares with $108.54 a year ago. For the current quarter, NVR is expected to post earnings of $108.90 per share, indicating a change of -3.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for NVR. Also, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Meritage Homes Corporation (MTH) : Free Stock Analysis Report NVR, Inc. (NVR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

A luxury builder in a soft market has bought back enough stock to outrun three years of shrinking profits, and the question is what happens when land competes for the same cash. Toll Brothers (TOL) has gained 7.7% over the past year but slipped over the last six months, and it trades about 10% below its 52-week high, a quiet year for a builder whose management described the sales environment in August as subdued. Over the last three years, earnings per share rose while net income fell, and what closed that gap was not the business but the share count. Toll Has Bought Itself Back Faster Than Profits Fell Averaged over those three years, net income has fallen 2.8% a year while earnings per share have risen 2.3% a year. Nothing operational explains the difference; it is arithmetic. The company has retired about 5.1% of its shares a year on average across that stretch, and 4.8% in the past twelve months alone, so each remaining owner's claim on a smaller profit pool grew anyway. With the dividend added, the whole payout is a 5.3% shareholder yield, once stock compensation is netted out. A Million-Dollar Buyer, And Upgrades Across The Board That yield is funded by a narrow, wealthy slice of the housing market. The luxury move-up business, where the average home sells for about $1.35 million, was roughly 61% of home sales revenue in fiscal Q3 2026 and carries the highest margin of the company's buyer segments. The spending does not stop at signing: across Toll's buyers as a whole, upgrades, structural options and lot premiums averaged $207,000 a home in the quarter, and management says design studio work of that sort is highly accretive to margin. Pricing holds best where it matters most: the more expensive the home, the smaller the incentive as a share of its price. Growth Gets The Cash Before Shareholders Do Free cash flow covers the buybacks and dividends about 1.6 times over, but the payout is not what that cash is aimed at first. Management puts growth first in the capital-allocation order and funds repurchases out of the operating cash flow that is left, and growth here means land: roughly $452 million spent on land acquisition in fiscal Q3 2026, against $2.65 billion of home sales revenue in that quarter. So far that cash flow has covered both, and the fiscal 2026 repurchase plan was raised to $700 million from $650 million. Net debt runs at about 1.1 times EBITDA, a moderate load rather than a stretched one. Balance sheets of that kind are a standing feature of the Trefis High Quality Portfolio's holdings. Cheap Against Earnings That Still Move With The Cycle At 10.9 times trailing earnings, the market is not asking much for the engine. That is a case for patience rather than a promise. Over three years the stock returned 96% in price, though it was up 119% at its peak and has handed some of that back, and buybacks were only one contributor alongside a moving multiple. The engine is real and funded; the profits it works on have shrunk over the last three years, and management, four years into a difficult housing market, is not yet calling a bottom. Whether the retirement pace survives a leaner year is the open question, and the dividend and buyback record is where the answer shows up first. A Cheap Compounder Is Still One Cyclical Bet An engine that quietly retires stock is worth owning, but it sits inside one industry and one housing cycle. Investors who want that compounding spread across many businesses rather than one builder can start with the Trefis High Quality Portfolio. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Image source: The Motley Fool. Thursday, July 30, 2026 at 11:00 a.m. ET Executive Chairman - Steven J. Hilton CEO - Phillippe Lord Executive Vice President and CFO - Hilla Sferruzza Vice President of Investor Relations and External Communications - Emily Tadano Operator: Thank you for your continued patience. Your meeting will begin shortly. A member of our team will be happy to help you. Please standby, your meeting is about to begin. Greetings, and welcome to the Second Quarter 20 Meritage Homes Analyst Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the call over to Emily Tadano, Vice President of Investor Relations and External Communications. Please go ahead. Emily Tadano: Thank you, operator. Good morning, and welcome to our analyst call to our second quarter 2020 results. We issued the press release yesterday after the market closed. You can find it along with the slides we will refer to during this call on our website at investors.meritagehomes.com or by selecting the Investor Relations link at the bottom of our homepage. Please refer to Slide 2, cautioning you that our statements during this call, as well as in the earnings release and accompanying slides contain forward-looking statements. Those and any other projections represent the current opinions of management which are subject to change at any time, and we assume no obligation to update them. Any forward-looking statements are inherently uncertain. Our actual results may be materially different than our due to a wide variety of risk factors, which we have identified and listed on this slide as well as in our earnings release and most recent filings with the Securities and Exchange Commission. Specifically our 2025 annual report on Form 10-K and Form 10-Q for subsequent quarters. We have also provided a reconciliation of certain non GAAP financial measures referred to in our earnings release as compared to their closest related GAAP measures. With us today to discuss our results are Steven J. Hilton, Executive Chairman; Phillippe Lord, CEO; and Hilla Sferruzza, Executive Vice President and CFO of Meritage Homes. We expect today's call to last about an hour. A replay will be available on our website later today. I will now turn it over to Mr. Hilton. Steven? Steven J. Hilton: Thank you, Emily. Welcome to everyone joining today's call. Today, I will begin with a brief overview of market conditions, and our second quarter results. Philippe will then discuss our strategy and operational progress followed by Hilla's review of our financial performance and 2026 guidance. Consistent with what others have shared about the spring selling season, we also experienced slower than normal selling conditions driving quarterly sales orders of 3.58 thousand which were 9% below prior year. Demand remained relatively stable between Q1 and Q2 this year. With no meaningful sequential deterioration. Its average absorption pace of 3.5 net sales per month this quarter was in line with a 3.6 in the first quarter. Although prospective buyers continue to face affordability pressures, and economic uncertainty, we remain confident in the long term demand for housing at the entry level and first-move-up price points. And we believe that our strategy of having sufficient available home inventory combined with our growing community count, positions us to quickly convert demand into sales this quarter from the brief periods of rate relief. Operationally, we continue to focus on what is within our control delivering a 200% backlog conversion rate further improving cycle times and working down our finished inventory levels. These efforts generated 3.73 thousand home closings and $1.4 billion of home closing revenue in the quarter. Adjusted home closing gross margin was 18.6% and adjusted diluted EPS was $1.42, excluding $3.9 million of real estate inventory impairments and terminated land deal walkaway charges. As of 06/30/2026, book value per share increased 5% year over year And with that, I will now turn it over to Phillippe. Phillippe Lord: Thank you, Steven. Our strategy of pre started inventory streamline operations and go-to-market tenets enables us to be agile in our actions to the current market conditions. We leverage this strategy to generate additional direct cost savings to enhance our returns. As incentives remained elevated this quarter. Our move in ready homes and strong realtor relationships help us compete in an environment where the homebuyer values a quick close through the clarity and certainty in the home buying process. While market conditions remain softer than normal, we continue to position the business for improved financial metrics by managing our WIP inventory. We successfully reduced our finished home position by over 1.1 thousand homes year over year as we replace older inventory with an increased volume of new product with lower direct costs. At the same time, we have kept our cycle time sub-110 calendar days for the fifth consecutive quarter. And even found a few more days of improvement allowing us to start homes later while still supporting our 60-day closing guarantee. These shorter cycle times benefit our carry cost burden and improve liquidity. While allowing us to respond quickly stronger demand materializes. Our active community count of 340 as of June 30, 2026, was up 9% year over year and 1% lower than the 345 in Q1. Due to timing with a few early closeouts and some delayed openings since July. Despite the small dip, we are reiterating our expectation of a 5% to 10% full-year 2026 community count growth year over year. We also achieved another quarter of lower construction cost per foot, as our purchasing teams collaborated with our strategic trades to find incremental savings efficiencies that benefited all parties. We believe these long term partnerships based on pre started homes and limited SKU counts set us apart from our competitors by also providing certainty to our vendors. All of these actions are aligned with our disciplined capital allocation strategy. Although we moderated land spend year over year to $357 million in the second quarter from $59 million last year, we continue to invest in our future communities including the development needed to get our scheduled openings in the second half of 2026 and into 2020. We also returned $131 million this quarter to shareholders through dividends and share repurchases. By maintaining our operational and financial discipline, we believe we are well positioned to navigate uncertainty today uncertainties today while preparing for growth, and increased shareholder returns as the market conditions improve. As part of that longer term plan includes an intentional shift of a portion of our business to first-time move-up homes as we continue to serve 1 of our key buyer demographics, the millennial customer, as they begin to look for their next home purchase. While still continuing to offer our entry level product for Gen-Z and move down customers. This is a return to our long-term stated target of a diversified portfolio of offerings. Which was temporarily on pause over the last couple of years to align with prevailing demand trends. Our goal is to be around a 1-third, 2-thirds mix of first-move-up and entry-level homes consistent with the demographics of The U. S. Population. We are intentionally rebalancing our portfolio to achieve that over time starting with a heavier allocation to the acquisition of land for first-move-up customers. Second quarter 26 orders were 9% lower year over year primarily due to a 19% decline in average absorption pace which was partially offset by a 14% increase in average community count. Cancellation rate of 13% was a little higher than the 11% in Q1 but still remained below typical industry averages as we benefit from a quick sale to close process. Our average absorption pace was 3.5 homes per community per month during the second quarter. Compared to 4.3 a year ago and 3.6 in Q1. Importantly, we have a pragmatic approach to pace and price in the current environment. Focusing on both volume and margin preservation. While our long-term objective remains an average of 4 net sales per month for the year, we will not sacrifice profitability or deplete irreplaceable lot positions by forcing absorptions through higher incentive usage in a highly competitive market where demand is relatively inelastic. ASP on orders this quarter of $385 thousand was down 3% from prior year due to geographic mix shifting from higher ASP West region into the lower ASP East region. Although our incentive utilization remained elevated this quarter, we were able to keep the impact neutral with lower per home incentive costs. We grew our active communities 9% year over year from 312 in the prior year to 340 by June 30. Q2 was 1% lower than 345 active communities in Q1 as timing played a factor this quarter. Our early closeouts occurred as we took advantage of pockets of stronger demand and some anticipated June openings fell into Q3. We brought 27 new communities online across our regions during the quarter, and 67 year to date. In July, we have not seen a meaningful change in the underlying demand environment relative to what we were experiencing during Q2. Although very recent increase in interest and mortgage rates may impact demand in the coming weeks, if they do not pull back. We continue to see highly localized demand patterns with all regions encompassing markets of both strength and weakness in Q2. Although the needed volume incentives varied notably. Parts of Texas, Southern California, Atlanta, Raleigh and Coastal Carolinas were our strongest performers demonstrating more market strength in geographies with limited inventory. We also saw stronger demand across the markets when interest rates temporarily receded. Providing some visibility into a potential path for recovery longer term. In contrast, in locations where affordability pressures or competitive conditions warranted a more measured approach, we deliberately pulled back on sales pace. Demand trends were softer in Orlando, Denver, Salt Lake City and Northern California. Now turning to Slide 6. Q2 starts totaled approximately 3.9 thousand homes, down 4% year over year yet up around 1.4 thousand units sequentially from Q1, ending the quarter with sufficient supply for Q3 and replacing older inventory with newer production with improved cost structures. With nearly 60% of Q2 closings also sold during the quarter, our backlog conversion rate was 200%. Reflecting our quick close strategy and within our targeted range of 175% to 200%. Our ending backlog was approximately 3.7 thousand homes as of 06/30/2026, compared to approximately 4.75 thousand homes as of 06/30/2025. As for the combined total of specs and backlog, we had around 6.8 thousand units at 06/30/2026. 22% less than the approximate 8.7 thousand units of specs and backlog we had at 06/30/2025. Reflecting our intentional efforts to lower the inventory in light of current market conditions, we ended the quarter with approximately 5.1 thousand spec homes, down 27% from approximately 6.9 thousand specs in the prior year and up 7% sequentially from Q1. The 15 specs per store this quarter translated to about 4 months' supply intentionally near the lower end of our target 4 to 6 months' supply due to today's demand environment and our improved cycle times. Comparatively, in the second quarter of 25, we had 22 specs per store or 5 months of supply. We reduced our completed specs to 1.5 thousand units in Q2, which was 42% lower than prior year and 30% of our total specs. Our lowest percentage in 2 years and right around our target of 1-third. This compared to 38% in the prior year and 46% in the first quarter. A balanced approach of reducing aged inventory and ramping up starts allowed us to end the quarter with the appropriate supply of homes per store. Although we are starting Q3 with lower backlog, we believe the spec home inventory provides us the path to achieve our Q3 guidance. With that, I will now turn it over to Hilla to walk through our financial results. Hilla? Hilla Sferruzza: Thank you, Phillippe. Let's turn to Slide 7 and cover our Q2 results in more detail. Second quarter 2026 home closing revenue of $1.4 billion was 14% lower than prior year due to 11% lower home closing volume and a 4% decrease in ASPM closings to $373 thousand. While both our closing volume and ASPs reflected our intentional decision to manage margin and pace, the decline in ASP was primarily due to geographic mix. To a lesser extent, product mix within our communities also impacted ASP, with lower priced homes, outselling higher priced ones, and in certain markets where we had a greater amount of aged spec inventory, we used incremental incentive this quarter to sell those homes. With nearly 60% of our closings generated from intra quarter sales, our results reflect real time demand and incentive trends. During the temporary dips in rate this quarter, we sold and closed homes with lower cost incentives which reduced our per home incentive burden. Looking ahead, incentive costs and utilization will continue to be inversely correlated to interest and mortgage rates which remain highly volatile and move on both domestic and international political developments. Home closing gross margin of 18.3% in the second quarter of 26 was 280 bps lower than prior year's 21.1% as a result of lost leverage on lower home closing revenue and higher lot costs both of which were partially offset by improved direct costs and faster cycle times. Second quarter 2026 home closing gross margin included $3.6 million of real estate inventory impairment and about $300 thousand in terminated land deal walk away charges, compared to no impairment and $4.2 million in terminated land deal walk away charges in the prior year. Excluding these charges, adjusted home closing gross margin was 18.6% and 21.4% for the second quarters of 2026 and 2020, respectively. We are encouraged that the volume of impairments remains relatively limited and we are able to work through homes in most of our communities in slower demand markets at a lower but not impaired sales price. Our current land basis is primarily comprised of higher cost land vintages from the 2022 to 2025 time frame. Although this higher basis will continue to be a margin headwind in the near term we anticipate some margin relief will start at the tail end of 2027 or early into 2028 as lower basis land begins to roll through our P&L, assuming the current impact from oil and gas price increases is not prolonged. In Q2, direct costs per square foot were down nearly 6% year over year, reflecting the disciplined purchasing and vendor negotiations Philippe already covered with savings generated by both labor and materials. As we have noted, our newer starts should benefit from this lower cost basis and will be reflected in our margins in the second half of this year. Sequentially, adjusted gross margin improved 80 bps to 18.6% from 17.8% in Q1, driven primarily by better leverage on home closing revenue and improved direct costs from newer inventory. While we do not anticipate a significant gross margin recovery this year, our long-term target remains 22.5% to 23.5% under normalized market conditions where incentive and interest rates are more in line with historical averages. Selling, general and administrative expenses as a percentage of second quarter 2020 6 home closing revenue were 10.4% compared to 10.2% in the second quarter of 25 as decreased compensation expense and an intentional reduction in discretionary costs nearly offset the lost leverage on lower home closing revenue. Despite the tougher sales environment, we did not increase sales and marketing spend on a per sale basis. Our long standing realtor relationships continue to provide a competitive advantage, generating a consistent level of repeat business from our broker network. External commissions remain stable both year over year and sequentially, while our core book percentage continues to run-in the low-90% range. We remain committed to growing our annual closing volume which should drive operating leverage and support our longer-term SG&A target of 9.5%. The second quarter's effective income tax rate was 24.8% this year, compared to 23.9% for the second quarter of 25 due to higher state income taxes. As a reminder, we expect only a limited impact from the June 2020 expiration of the energy tax credit for the balance of this year and into the future as the higher construction requirements implemented in 2025 had already significantly reduced our eligible credit. Overall, lower home closing revenue and gross profit led to a 33% year over year decrease in second quarter 2020 diluted EPS to $1.37 from $2.04 in 2025. Adjusted diluted EPS for the current quarter was $1.42, excluding impairments and walkaway charges. To highlight the key results for the first half of 2026, on a year over year basis, orders were down 7%, closings were down 12% and our home closing revenue decreased 16% to $2.5 billion Adjusted home closing margin of 18.2% was 350 bps lower than 2025, SG&A as a percentage of home closing revenue was 11%, and net earnings decreased 46% to $146 million Adjusted diluted EPS was $2.24 for the first 6 months of 2026 excluding impairments and walk away charges. Before we turn to the balance sheet, it is worth noting that our customer credit metrics remain healthy and unchanged during the second quarter, FICO scores, DTIs and LTVs all track closely with historical averages, continuing a trend we have seen for several years. Lack of deterioration in customer credit quality validates that in ongoing market volatility, consumer psychology continues to play a strong role alongside affordability concerns and home buying decisions. On to Slide 8. As of 06/30/2026, we maintained a healthy balance sheet supported by $87 million in cash, no outstanding borrowing under our credit facility and a net debt to cap ratio of 17.1%. Additionally, in June, we refinanced our revolving credit facility to increase the facility size to $980 million, extend the maturity from 2030 to 2031 and increase the accordion feature to permit a facility size of up to $1.47 billion We are committed to supporting our long-term growth trajectory while prudently managing our capital and maintaining our investment grade credit rating. As such, our net debt to cap ceiling remains in the mid-20s range. Our capital allocation strategy looks to balance both growth and shareholder returns, As we have been more selective with land deals and timing of land development, our land spend was down 30% year-over-year this quarter, totaling $357 million in Q2. With slower demand, we are focused only on the most attractive land opportunities increasing our land spend for first time move up communities and optimizing development schedules. Our forecasted land acquisition and development spend is expected to be between $1.7 billion and $2 billion for full-year 2026. We returned $131 million to shareholders via buybacks and dividends this quarter, up 74% from $76 million in the same period last year. We bought back over 1.5 million shares, or 2.3% of shares outstanding at the beginning of the quarter for $100 million We repurchased the shares this quarter at an average 16% discount to book. To date, in 2026, we have spent $230 million on buybacks, reducing our 12/31/2025, outstanding share count by nearly 5%. As of 06/30/2026, $284 million was available under the repurchase program. Given the instability of the current environment and with the path for interest rate trends remaining uncertain, we will continue to execute on our share repurchase commitment, but pair it back slightly to a minimum of $55 million per quarter for the balance of the year while continuing to increase that opportunistically, repurchasing incremental shares on cash flows and dips in our stock price. We increased our quarterly cash dividend 12% year-over-year to $0.48 per share in 2026 from $0.43 per share in 2025. Our cash dividend this quarter totaled $31 million and $63 million year to date. For the first half of 2026, we returned $292 million of capital to shareholders or 201% of our total earnings to date this year. Slide 9. In the second quarter of 2026, we secured nearly 1.7 thousand net new lots under control which is inclusive of the impact of about 300 terminated lots. These lots primarily reflect communities for 2028 and beyond as the owner-controlled most of the lots we need to meet our community count targets through 2027. In the second quarter of 25, we put nearly 1.8 thousand net new lots under control. As of 06/30/2026, we owned or controlled a total of about 73.2 thousand lots, equating to a 5.2-year supply based on the last 12 months closings. Slightly above our target of 4- to 5-year supply but reflective of the upcoming community count growth we expect over the next 18 months. We also had approximately 15.3 thousand lots that were still undergoing diligence at the end of the quarter, which is another potential 1 year supply in the pipeline that we can choose to control. We continue to target around a 40% optioned lot ratio, About 69% of our total lot inventory at 06/30/2026, was owned and 31% was optioned. This is essentially consistent with Q1, but slightly lower than the 66% owned and 34% optioned lot position in the prior year, reflecting our terminated lots in late 2025. We review off balance sheet opportunities on a deal by deal basis on their financial merits as we do not believe every land deal can absorb the incremental cost of an off balance sheet structure. Finally, I will direct you to Slide 10. Based on current market conditions and year to date results, we are updating our guidance for full year 2026 home closings and revenues to around 5% below full-year 2025 results although home closing revenue could trend a bit lower if market conditions require higher incentives. For Q3 2026, we are projecting total home closings between 3.3 thousand and 3.6 thousand units, home closing revenue of $1.26 billion to $1.35 billion, home closing gross margin of around 18% and effective tax rate of 24.5% to 25%, and diluted EPS in the range of $1.10 to $1.30 With that, I will turn it back over to Phillippe. Phillippe Lord: Thank you, Hilla. In closing, we believe our second quarter results reflect solid execution in a softer demand environment. We also saw no meaningful deterioration in demand from the first quarter to the second quarter. Throughout this quarter, we remain focused on controlling what we can control, strategically reducing aged inventory as we target the right level of inventory per store. Balancing pace and price and allocating capital thoughtfully. To maximize returns. Looking ahead, with community count expected to grow in the second half of 2026, we believe we have the units to achieve our full year revenue guidance despite ongoing market challenges. Combined with our balanced approach to capital allocation, we believe Meritage is well positioned to navigate the current uncertain environment and deliver strong shareholder value long term. With that, I will now turn the call over to the operator for instructions on the Q&A. Operator? Operator: Thank you. In the interest of time, we ask that you limit yourself So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. And we will take our first question from Trevor Allinson with Wolfe Research. Please go ahead. Your line is open. Trevor Allinson: First 1 is on the better than expected gross margin in the quarter despite rates going higher. Keep on what drove the beat in the quarter? It sounds like maybe you are getting some better cost structure come through. Can you perhaps quantify those tailwinds in the quarter? And then should we expect incremental savings on the cost structure moving forward? Hilla Sferruzza: Thanks, Trevor. I will take the gross margin question. So for us, it is a combination of a couple of things. The improved volume over Q1 obviously helped us leverage the fixed component in the gross margin composition, but we also had that 6% year-over-year improvement on direct costs, which is helpful And then also, we mentioned this, but because such a high percentage of our homes sell and close in the same period, there was a nice dip in interest rates in the middle of the quarter where we were able to sell homes at a lower incentive and still close them in the same quarter. So we saw all of those benefits come together despite the higher the higher lot costs that is still rolling through the financials. We were able to harness all of those benefits together and deliver that 18.6% adjusted gross margin. On a go forward basis, I do not know that we are modeling continuing improvement on direct margin, although the or on direct costs, I should say, but the savings that we have had so far should continue to push through the financial statement. So the rest of the gross margin for the balance of the year and into next year is really a discussion of volume of incentives and overall volume of closings. Trevor Allinson: Okay. Makes sense. Thanks for that, Hilla. And the second question is on your shift back for a portion of your business toward more towards first time move up. I think from a demographic outlook by age cohort, that makes a lot of sense. what is the timeline to make that shift And is it still your expectation you are going to offer a 60 day guaranteed, fully spec model in those homes? Or any changes to your go to market strategy as you serve a little bit higher end buyer? Phillippe Lord: Yes. Great question. Will take a little bit of time because we pivoted pretty meaningfully to entry level during the last 5 years. So as we pivot back to a more balanced 30% to 70%, it is really about sourcing some new land and bringing that land on the market. So more of a 2028 and beyond type of impact. And as it relates to the operating strategy, it is going to be pretty aligned with what we do as it relates to not offering choice and options, but we are going to tweak the go to market when it comes to when we release the homes, We will probably be releasing the homes earlier because many of those folks have homes to sell. And so there will be some tweaks on sort of our focus around the closing ready guarantee. As well as pieces of the realtor strategy. Thank you. Operator: We will take our next question from Stephen Kim with Evercore ISI. Please go ahead. Your line is open. Stephen Kim: Yes. Thanks a lot, guys. Just a follow-up on this shift. So I know you guys, when you first rolled out this very significant shift to the move in ready homes, I mean, it was something that you had spent a lot of time thinking about and preparing for. And so, just wanted to try to understand this pivot or tweak, let's say, to move a third back to the first-time, move up, Was this something that you always envisioned you would eventually do and maybe something maybe advance that a little earlier? Or is there something that fundamentally has changed your thinking about the about maybe being 100% first-time. And so this was not initially contemplated but you are contemplating it now. And what if so, what was that change or this thing that you have seen in the market? Phillippe Lord: Yes. It really was something we have always intended to be. Even when we rolled out our strategy 7 years ago and tweaked our strategy 4 years ago, we always believe that the second consumer segment for us was the first move up Someone still looking for a move in ready home. Someone's still looking for a home that they can move in quickly. But buying their second home, potentially buying their second new home potentially. So it is always been part of our strategy. what is really changed is fundamentally, land market has changed, right? As land has gotten more expensive, prior, we could really underwrite a lot of entry level land. And now there is a more balanced opportunity out there in the market, and we see more opportunities to source 1MU land and that is really the change in the market. I think that is been something that is been happening over time. But this has always been part of our strategy, and now the land market is really lending itself to that opportunity. Hilla Sferruzza: I would add 1 more thing, Steven. We talked a little bit about it in the script, but the shift in the age of the population cohort in The US. Millennials are the largest population cohort that we were initially targeting our efforts towards that group. And as they were buying their first home, they were obviously an entry level buyer. Here we are 10 years later, and they are ready to buy their next home. So we are continuing to follow the same demographic groups across their homebuyer journey. So obviously, as younger cohorts enter their home buying stage, they are continuing the entry level push, but we are also following the millennial buyer and hopefully will be their first and second time home provider. Stephen Kim: Got you. Yeah. Lots of interesting things there. So I guess just I guess following up on that, Phillippe, you said that the land market, I guess, has gotten a little bit looser perhaps at the first time move up. And so you see some opportunities there. And you also indicated that this is something that you contemplated even years in advance that you would eventually do this kind of pivot. But 1 of those sounds opportunistic and could also change back. Right? Next year, like the land markets may become there may be more less opportunity at first time move up and so forth. So I am just trying to understand, how much of this is opportunistic in terms of the land strategy and opening up? And then how much of it is something that regardless of what the land market stratification looks like, you are just going to you just think that this is the right time to move to that higher price point. And you have talked a lot about how the cycle time is reduced and it enables you to build more quickly. I just wanted to see if you could elaborate a little further on maybe some of the tweaks that you are going to make to your product if you are building a bigger product, takes a little longer. I would think the customer, maybe a little more personalization and things of that nature. Could you like, elaborate a little bit more on maybe some of the differences that you see in going after the 1mu customer again? Phillippe Lord: Yeah. I mean, probably 4 questions there, but let me try to answer them all. I think, first of all, this is not opportunistic. This is something that we intentionally had as a goal of our business. But the market's been very different for the last 5 years. And so we have played in the market the way the land market supported. First time land was much more available and priced correctly for the last 5 years. And now that bifurcation is starting to close. And 1NE land is making more sense and is more underwritable. Can that change? Certainly, it can change. We are always going to balance out the business between entry level and first move up based on the inputs in the business. But it is long term, our strategy is to be a 1-third 1MU and 2-thirds entry level. Certain markets will allow us to do more of it, and other markets will allow us to do less of it. So we are glad we have our regional and national footprint to kind of play in the market the right the right way. As it relates to, the tweaks to our operating model, I really feel like it is it is like a tweak. it is it is a modification on the margin. We are not going to start off design studios We are not going to start offering a bunch of personalization. We are just going to build a nicer home. Homes that are 50-foot-wide versus 40-foot-wide do not necessarily take longer to build. You just build in the same way but you might offer some nicer features Maybe those buyers will get nicer cabinets, countertops, flooring, and maybe some other things that we will tweak to make sure we are delivering the right value to that customer because they are looking like you said, for their second home. So I do not see a big change in our kind of core operational strategy, but maybe some things on the margin that we will tweak to make sure we deliver the right value to that customer segment. Stephen Kim: Alright. Great. Thanks so much, guys. Phillippe Lord: Thank you. Operator: We will take our next question from Alan Ratner with Zelman. Please go ahead. Your line is open. Alan Ratner: Hey, guys. Good morning. Thanks for all the detail here. I will not beat the drum on the move up pivot. But I will just ask 1 quick question on that front. It seems like M&A activity has accelerated a bit across the industry. And I am curious if you would consider M&A as an avenue to maybe accelerate that process towards building up the first time move up market share? Phillippe Lord: Yes. We are very encouraged to see that well respected and smart long term investors are investing in the homebuilding industry and really reinforcing the confidence in the sector that we have and the value of scale and repeatable platforms. We look at M&A through a very strategic lens. it is not just about scale at any cost. it is about can we go out and acquire assets that will allow us to play in different markets or consumer channels. So 100%, I think if we were going to do any M&A at the local or private level, we would be looking for some type of move up penetration. Or to get into markets that we are not in that are currently performing well. there is a number of Midwest markets that seem really interesting right now. So for us, it is about a strategic add versus just incremental scale. Alan Ratner: Got it. Makes sense. Second question, you made the comment about intra quarter where rates briefly dipped. That gave you an opportunity to maybe pull back a little bit on incentives. I just wanted to clarify, did you actually reduce the incentives you were offering? Or were you kind of maintaining the same mortgage rate buy down programs that you were offering? It was just costing less to buy down to that rate given what was going on in the market. I just wanted to clarify, is there kind of an ability if we do see further moderation of rates to actually pull back more significantly on incentives or was it just a cost dynamic? Hilla Sferruzza: So it is tranche. So the first step in rates pull back a bit, it is a lower cost offering. We are not if we are offering 4.99% at the right stop, we do not start offering 3.99%, it is just costing us less to offer the same incentive because the differential to the interest rate is still significant, not that it is an interesting incentive. We have seen that when rates drop a second, tick down, the utilization drops. So it kind of comes in waves. First, the cost per rate lock is lower and then the utilization shifts to a different type of discount and more traditional discount in our sector. So it was great to see that when the market started to briefly return to normal, consumer behavior followed. Phillippe Lord: Yeah. And I would just add that from a long term perspective, with inventory levels being down, and BTO builders now pivoting back strongly to BTO and out of spec. We are just seeing a general stability in the incentive environment. Now I cannot predict what is gonna happen with the economy and some consumer psychology things out there. But at least we do not see, the incentive wars happening to the level that they were happening last year and into this year. Alan Ratner: that is great to hear. Thanks a lot. Phillippe Lord: Thank you. Operator: We will take our next question from John Lovallo with UBS. Please go ahead. Your line is open. John Lovallo: The first 1 is the roughly 18% gross margin outlook for the third quarter has clearly spooked some folks out there coming off the 18.6% in the second quarter. And I do not want to get too cute here, but would you consider 18.3%, 18.4%, 18.5% to be around 18%? And if not, what, other than the lower quarter over quarter closings would drive the gross margin down from the second quarter? Phillippe Lord: Yes. I mean, it is primarily leverage. And rates did increase through June. So you saw incentive utilization, rate buy down utilization increase in June, which can hit 18.0% on the margin. We are kind of sitting here around 18.0% depending on what rates do. Is it gonna be a little bit lower or a little bit higher?? It just depends on what happens intra quarter. We guided to around 18% in Q2 and ended up at 18.6% because rates were favorable. So it is just really dependent on that factor. Hilla Sferruzza: Yes. I think the first part of Phillippe's response is also very important. it is the leverage. You can look at the midpoint of our closings guidance and where we ended up Q2 versus Q3 and see that there is going to be maybe 20-30-ish bps that are just a function of leverage. Obviously, looking at our full year guidance, you can extrapolate to what you think Q4 is going to be. there is going be a pickup and an improvement where the leverage will go in the other direction. So it is so tough on these intra quarter kind of discussions, especially when so much of your sales volume is unknown to us and we are closing still 200% of our backlog. So visibility into the units and to the incentive that will be part of those closing units is not as clear, which is why we have shifted our commentary from providing an exact number to kind of staying around a number because there is still a lot of movement in the closing universe for us for Q3. Phillippe Lord: Yes. And rates, again, have been increasing since mid June. They are probably the highest they have been as we roll into July, which is typically the lower seasonal kind of period. John Lovallo: Okay. Yes. No, I think the fourth quarter comment was going to be my next question that we should see the reversal of that gross margin. But let me just ask, the fourth quarter deliveries are implied to be up about 10% year-over-year. And so that was either seem to imply that you are expecting a decent ramp in orders in the third quarter here or that you are willing to work the back backlog down pretty meaningfully as we move through the year? I mean, how should we sort of think about this? And I just want to make sure that the idea here is that you are not going to ramp incentives to try to drive orders to meet that full year delivery. Phillippe Lord: Yes. Again, everything we say is predicated on how this plays out economically and politically over the next 6 months. But the key Q4 guide is mostly predicated on community count growth. So as we have said, we have some still some material community count growth happening into Q3 and Q4. And that is driving the incremental closings for Q4. We are not expecting the market to improve In fact, we are probably pretty conservative about what we think the back half is going to look like from an incentive and absorption standpoint. So it is 100% tied to the community count growth that we expect in the back half of this year. Hilla Sferruzza: And then remember, just for us, the way that we count in active community of the sale And for us, we do not sell until we are ready to close within 60 days. So for us, an active community can start producing closings same quarter. But it becomes active, not just sales in the same quarter that it becomes active. So we have quite a ramp of communities that is coming up. If you look at where we started the year in that 5% to 10% guide on ending community count where all of those will be delivering closing. Phillippe Lord: Yes. that is a great point. Our starts were up because we were starting homes for these communities that we are getting ready to open. And we do not open up communities until we can close homes. John Lovallo: Yes. That makes a lot of sense, guys. Thank you. Phillippe Lord: Thank you. Operator: We will take our next question from Susan Maklari with Goldman Please go ahead. Your line is open. Susan Maklari: Thank you. Good morning, everyone. Thanks for taking the question. Want to start on the cost side. The 6% savings that you have realized is impressive there. Can you talk a bit more about what is driving that and how you are thinking about the ability to realize further incremental benefits in the coming quarters? Phillippe Lord: Yes. So the 6% savings year over year and we are down 2% sequentially. it is both labor and materials. We saw it sort of broad based. We are seeing some savings in both categories. As you Hilla noted in her prepared remarks that our lower cost new starts are replacing aged inventory, which is being captured in the third quarter 26 gross margin guidance. I am not sure we are anticipating further cost savings on new starts that are going to go out in Q3. We are seeing a little bit of headwinds in lumber that may play out here over the next couple of quarters. So due to that factor, we are not modeling any more improvements from here for now. Susan Maklari: Okay. Right. that is helpful. And then maybe as we think out and you reiterated the longer term target for the gross margin, And as you think about the mix shift that will come through as you start to integrate more of the move up product in there. What does that mean in terms of the path for profitability in the business? And how should we think about the shift that will come through and how you can hit that target? Phillippe Lord: Well, I think the long term target of 22.5% to 23.5% is not mix related. it is purely based on the way we underwrite land. So right now, we are not achieving our underwriting because primarily incentives are running extremely hot. We typically underwrite land at a much more normal incentive environment. So the bridge between where we are and the bridge to where we want to be is 100% interest rate and incentive related. Now 1MU land should typically be higher revenue. And you should get more leverage from the higher ASP But we do not really underwrite 1MU land at a higher margin than we underwrite entry level land. And again, this will take some time. We have about 10% of our business is 1MU right now. And there is probably some opportunity to pivot some of our existing land book to 1MU because they are in the right locations. But most of it is gonna come from new land that we are sourcing today. So the impact of the mix to 1MU will not really play out in our P&L until 2029 and beyond. Susan Maklari: Okay. Thank you for the color. Good luck with the quarter. Phillippe Lord: Thank you. Operator: We will take our next question from Rafe Jadrosich from Bank of America. Rafe Jadrosich: Hilla. Good morning. Thanks for taking my question. Just on the following up on John's question earlier, on this second half delivery guidance relative to the first half, I think it is about 1 thousand more deliveries. And if I look at the backlog and completed specs, it is it is sort of flattish. Do starts need to pick up further from here, on that to hit the back half? Delivery guidance? And can you give any color on like the Community Cat count cadence, third quarter versus fourth quarter? Hilla Sferruzza: Yes. I mean we do not give community count cadence. it is just too difficult. A municipality approves something, you drop below or does not approve something, you drop below a certain number of units and then you can no longer con a community's active. So it is just way too refined for us to try to figure out the specific timing on a September 30 versus December 31. So we are still really comfortable with our 5% to 10% growth year over year. And obviously, as you are running a few year model and trying to hit that full year unit number that we are fairly comfortable with at the 5% below full year 2025. Agree, there is a ramp up in volume, as Philippe already mentioned, it is a function of the community count. So you already started to see a little bit from that spec start happening now. Right? Our starts pace is or starts volume increased quite a bit between Q1 and Q2 as we are getting inventory ready for these communities. Again, that 4 to 6 months' supply of available inventory is something that we are very focused on. So I think we mentioned several times during the prepared remarks between the inventory that we are carrying to start Q3 and into Q4 and that sub-110-day cycle time, we feel really confident that we have everything that we need to hit our full year guidance. Rafe Jadrosich: Okay. that is helpful. And then can you just remind us the lag time between when lumber prices move and when that starts to show up in your deliveries? Phillippe Lord: it is staggered. We do not we do not hedge, but we have 30, 60, or 90 day locks. At different points in time throughout the country. So we kind of create natural hedges. So it is a little bit of noise, within 90 days, you should start to see some of it flow through into our construction. And then you should see that flow through into our numbers in about a quarter. So I think a couple of our peers said about 2 quarters and I think that is probably the right number for us as well. Operator: And we will take our last question from Jade Rahmani with KBW. Please go ahead. Your line is open. Jade Rahmani: Thank you very much. Just on the first time move up strategy, have you considered broadening that to beyond first time move up to the broader move up market? Phillippe Lord: No. I think again, we have had this strategy in place for a long time. We feel like with our operating model and the way we want to play in the market and where the demographics are the strongest We want to stay in that 1 MU price point. We do not want to expand beyond that into a 2 MU or a luxury buyer. Those folks typically want choice and customization, which we are not going to offer based on the way we build homes. So for those reasons, it is really mostly a value focused 1MU consumer segment. Jade Rahmani: Thank you very much. And on land banking, I was wondering what you thought the value that it provides is to a company like Meritage when the cost of debt is lower than what firms such as Blackstone are offering in the land banking space? Phillippe Lord: Yeah. I mean, it is a good point. it is why we have not done a lot of land banking. Over the last 5 years. That reason we were sitting on a bunch of cash And then the price of land banking was pretty expensive. And the optionality of land banking had really changed But at some point, as a company of our size, we believe land banking allows us to control more land to allow us to grow our business at a better return. On equity. So at some point, it makes sense when your balance sheet reaches a point where that extension creates that incremental value. So that is how we think about it. it is why we have not done it. A lot. it is why we are trying to get it to 40% over time because we would like to, as we are trying to grow from 15 thousand to 20 thousand units, we want to control more land for less of our balance sheet at play. Jade Rahmani: Makes sense. Thanks. Phillippe Lord: Okay. Well, thank you, everybody. Thank you, operator. I want to thank everyone who joined this call today for your continued interest in Meritage Homes. We hope you have a wonderful rest of your day and a great weekend. Operator: This concludes today's Meritage Homes second quarter 2020 analyst call. Please disconnect your lines at this time, and have a wonderful day. Before you buy stock in Meritage Homes, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meritage Homes wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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Interested in Meritage Homes Corporation? Here are five stocks we like better. Second-quarter results weakened as orders fell 9% year over year to 3,575, while home-closing revenue reached $1.4 billion and adjusted EPS was $1.42. Management said demand was broadly stable sequentially, but affordability pressures, higher rates and elevated incentives weighed on sales and pricing. Meritage reduced finished-home inventory by 27% and benefited from nearly 6% lower direct construction costs per square foot, helping adjusted gross margin improve sequentially to 18.6%. However, reported gross margin declined year over year because of lower revenue leverage and higher land costs. The company maintained its community-growth outlook and raised full-year closing and revenue expectations to roughly 5% below 2025 levels. Meritage also returned $131 million to shareholders in the quarter and plans to repurchase at least $55 million of stock quarterly for the remainder of 2026. Time to Load Up on Home Builders? Meritage Homes (NYSE:MTH) reported lower second-quarter sales, revenue and earnings as affordability pressures and economic uncertainty contributed to a slower-than-normal spring selling season. Still, management said demand was broadly stable sequentially, construction costs improved and the company maintained its full-year outlook for community growth while raising its expectations for 2026 closings and revenue. Executive Chairman Steven Hilton said second-quarter orders totaled 3,575, down 9% from a year earlier. The company’s average absorption pace was 3.5 net sales per community per month, compared with 4.3 a year earlier and 3.6 in the first quarter. Hilton said there was “no meaningful sequential deterioration” in demand between the first and second quarters. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Small-cap surge: Outpacing large caps on hopes for '24 rate cuts Meritage closed 3,725 homes during the quarter and generated $1.4 billion in home closing revenue. Adjusted home closing gross margin was 18.6%, while adjusted diluted earnings per share were $1.42, excluding $3.9 million of inventory impairments and terminated land-deal walkaway charges. Book value per share rose 5% year over year as of June 30. CEO Phillippe Lord said the company continued to encounter highly localized demand conditions. Parts of Texas, Southern California, Atlanta, Raleigh and the Coastal Carolinas were among its strongest markets, particularly where available housing inventory was limited. In contrast, demand was softer in Orlando, Denver, Salt Lake City and Northern California. → Microsoft Just Flipped the AI Spending Narrative Overnight Lord said temporary declines in mortgage rates during the quarter supported stronger demand and allowed Meritage to sell and close homes with lower-cost incentives. However, he noted that more recent increases in interest and mortgage rates could affect demand in the coming weeks if rates do not decline. The company’s cancellation rate rose to 13% from 11% in the first quarter but remained below typical industry averages, according to Lord. Meritage attributed that performance in part to its shorter sale-to-close process and move-in-ready inventory strategy. → Carrier Earnings Could Send the Stock to a New All-Time High Average selling price on orders fell 3% year over year to $385,000, primarily because the company’s geographic mix shifted from higher-priced Western markets toward lower-priced Eastern markets. Home closing average selling price declined 4% to $373,000, also reflecting geographic mix, lower-priced homes selling faster than higher-priced homes within some communities, and incremental incentives on aged inventory in certain markets. Meritage reduced its finished-home inventory by more than 1,100 homes from the prior year, replacing older homes with newer product carrying lower direct costs. The company ended the quarter with about 5,100 spec homes, down 27% from approximately 6,900 a year earlier. Completed specs totaled 1,500 homes, down 42% year over year and representing 30% of total specs. The company’s 15 specs per active community equated to roughly four months of supply, near the low end of its four- to six-month target range. Meritage ended the quarter with approximately 1,720 homes in backlog, compared with roughly 1,750 a year earlier. Combined specs and backlog declined 22% year over year to about 6,800 homes. Meritage started approximately 3,900 homes in the second quarter, down 4% from the prior year but up roughly 1,400 homes from the first quarter. Nearly 60% of quarterly closings were homes sold during the quarter, producing a 200% backlog conversion rate that was within the company’s 175% to 200% target range. Chief Financial Officer Hilla Sferruzza said direct construction costs per square foot declined nearly 6% year over year, with savings coming from both labor and materials. Those cost improvements, faster cycle times and improved leverage on higher sequential revenue helped adjusted gross margin rise 80 basis points from 17.8% in the first quarter. However, reported home closing gross margin fell to 18.3% from 21.1% a year earlier, reflecting lower revenue leverage and higher lot costs, partly offset by lower direct costs and quicker construction cycles. Sferruzza said the company’s land basis remains weighted toward higher-cost land acquired between 2022 and 2025. She said lower-basis land is expected to begin benefiting margins near the end of 2027 or early 2028, assuming oil and gas price increases are not prolonged. Meritage said it intends over time to rebalance its portfolio toward a mix of roughly one-third first-time move-up homes and two-thirds entry-level homes. Lord said the shift reflects the company’s longstanding strategy as well as demographic changes, with Millennial buyers progressing from first homes toward second-home purchases. The change will primarily be driven by new land acquisitions and is expected to affect financial results beginning around 2028 or later, management said. Lord said the company does not plan to move into higher-end move-up or luxury categories that generally require greater buyer customization. Meritage expects to retain its streamlined operating approach, including limited choices and options, while making targeted adjustments for first move-up buyers. Those changes may include offering somewhat larger homes and upgraded features, as well as releasing homes earlier to accommodate customers who may need to sell an existing home. Meritage ended the quarter with $807 million in cash, no borrowings under its credit facility and a net debt-to-capital ratio of 17.1%. In June, the company refinanced its revolving credit facility, increasing its size to $980 million, extending its maturity to 2031 and expanding its accordion feature to permit total capacity of up to $1.47 billion. Second-quarter land spending declined 30% year over year to $357 million. The company expects full-year land acquisition and development spending of $1.7 billion to $2 billion. It controlled approximately 73,200 lots as of June 30, equal to a 5.2-year supply based on trailing 12-month closings. The company returned $131 million to shareholders during the quarter through dividends and share repurchases. It repurchased more than 1.5 million shares for $100 million and raised its quarterly cash dividend 12% year over year to $0.48 per share. Meritage said it will target at least $55 million of quarterly share repurchases for the remainder of 2026, while retaining flexibility to buy additional shares based on cash flow and stock-price movements. For the third quarter, Meritage forecast 3,300 to 3,600 home closings, $1.26 billion to $1.35 billion in home closing revenue, home closing gross margin of about 18%, and diluted EPS of $1.10 to $1.30. For the full year, the company increased its guidance for closings and revenue to approximately 5% below 2025 levels, though it said revenue could be somewhat lower if market conditions require additional incentives. Meritage Homes Corporation is a national homebuilder and residential developer headquartered in Scottsdale, Arizona. Founded in 1985 as Winchester Homes and later rebranded to Meritage Homes, the company specializes in designing, constructing and selling single‐family detached and attached homes. With a focus on energy efficiency and sustainable building practices, Meritage Homes markets its properties under the GreenSmart program, which integrates high‐performance features aimed at reducing long‐term energy and water consumption for homebuyers. The company's core activities encompass land acquisition, residential community planning, home design, construction management and real estate sales. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Meritage Homes Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the 9% year-over-year decline in sales orders to a slower-than-normal spring selling season driven by affordability pressures and economic uncertainty. The company maintained a 'pragmatic approach' to pace and price, choosing to protect margins rather than forcing volume through excessive incentives in an inelastic demand environment. Operational efficiency remained a core driver, with cycle times held below 110 days for the fifth consecutive quarter, enabling a 200% backlog conversion rate. Management is initiating a strategic shift to rebalance the portfolio toward a one-third move-up and two-thirds entry-level mix to follow the aging Millennial demographic. Direct construction costs decreased 6% year-over-year due to disciplined purchasing and vendor negotiations, partially offsetting the impact of elevated sales incentives. Geographic mix shifted toward lower-ASP regions like the East, which contributed to a 3% decline in order ASP despite stable pricing in core markets. Full-year 2026 guidance assumes a 5% to 10% growth in community count, which management expects will drive a volume ramp in the fourth quarter. Q3 2026 gross margin is projected at approximately 18%, reflecting lost leverage on lower closing volumes and the impact of higher interest rates on incentive costs since mid-June. The pivot toward first-time move-up homes is expected to impact the P&L primarily in 2028 and beyond as new land acquisitions roll through production. Management anticipates margin relief starting in late 2027 or early 2028 as lower-basis land vintages replace the current higher-cost 2022-2025 inventory, provided that the current impact from oil and gas price increases is not prolonged. Share repurchases will be maintained at a minimum of $55 million per quarter for the remainder of the year, with opportunistic increases based on cash flow and stock price dips. Real estate inventory impairments and land deal walkaway charges totaled $3.9 million in Q2, which management characterized as relatively limited despite market softness. The expiration of the energy tax credit in June 2020 is expected to have a limited impact due to higher construction requirements already implemented in 2025. Management flagged potential headwinds from recent lumber price increases, which are expected to flow through to financial results in approximately two quarters. Land spend was moderated by 30% year-over-year to $357 million as the company became more selective with new deals in a volatile rate environment. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Hilla Sferruzza explained that the 18.6% margin was supported by a 6% reduction in direct costs and a temporary dip in rates mid-quarter that lowered incentive burdens. Management noted that because 60% of homes sell and close in the same period, they can capture real-time benefits when rates fluctuate favorably. Phillippe Lord clarified that the move-up strategy will not include design studios or high customization, maintaining the core 'move-in ready' spec model. The primary operational tweak will be releasing homes for sale earlier in the construction cycle to accommodate buyers who have existing homes to sell. Management expressed interest in M&A specifically for 'strategic adds' rather than just scale, highlighting Midwest markets as potentially attractive. Acquisitions would be viewed as a tool to accelerate penetration into the move-up segment or enter high-performing new geographies. Phillippe Lord noted that while incentives remain elevated, the 'incentive wars' seen previously have stabilized as competitors pivot away from spec building. Management observed that consumer demand remains highly sensitive to rate movements, with utilization of buy-down programs shifting immediately when rates tick down.

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Meritage Homes Corp (NYSE:MTH) achieved a 200% backlog conversion rate in Q2 2026, reflecting strong operational execution and a quick close strategy. The company reduced its finished spec home inventory by 42% year-over-year, reaching the lowest level in two years and aligning with its target. Direct construction costs per square foot decreased nearly 6% year-over-year, driven by disciplined purchasing and vendor negotiations. Meritage Homes Corp (NYSE:MTH) grew its active community count by 9% year-over-year to 340, supporting future revenue growth. The company returned $131 million to shareholders in Q2 2026 through dividends and share repurchases, up 74% from the prior year. Meritage Homes Corp (NYSE:MTH) reported a 9% decline in quarterly sales orders year-over-year, driven by a 19% drop in average absorption pace. Home closing revenue fell 14% year-over-year in Q2 2026, with adjusted home closing gross margin declining to 18.6% from 21.4%. The company faces ongoing affordability pressures and economic uncertainty, which continue to dampen buyer demand. Higher lot costs from older land vintages are expected to remain a margin headwind through at least early 2028. Meritage Homes Corp (NYSE:MTH) guided Q3 2026 home closing gross margin to around 18%, reflecting lower leverage and elevated incentive costs. Here are the key highlights from the Meritage Homes Corp (NYSE:MTH) Q2 2026 earnings call, presented as summarized Q&A pairs. Warning! GuruFocus has detected 6 Warning Signs with MTH. Is MTH fairly valued? Test your thesis with our free DCF calculator. Q: The gross margin of 18.6% was better than expected despite higher rates. What drove the beat, and should we expect incremental cost savings going forward? A: (Hela Farua, EVP & CFO) The improvement was a combination of higher volume over Q1, which helped leverage fixed costs, a 6% year-over-year improvement in direct costs, and the ability to sell and close homes within the same quarter at lower incentives during temporary rate dips. While we don't model further margin improvement, the direct cost savings should continue to flow through. The rest of the margin story for the year is really about incentive levels and closing volume. Q: You mentioned a strategic shift to allocate a portion of the business to first-time move-up homes. What is the timeline for this shift, and will you use the same 60-day close, spec-only model for these buyers? A: (Philippe Lord, CEO) This shift will take time, with a meaningful impact likely in 2028 and beyond, as it requires sourcing new land. The operating strategy will be very similar, but we will tweak the go-to-market by releasing homes earlier since these buyers often have a home to sell. We will not offer design studios or significant personalization. Q: Was this pivot to first-time move-up always part of the plan, or has something fundamentally changed in your thinking about being 100% entry-level? A: (Philippe Lord, CEO) This was always our long-term intention. The change is driven by the land market, which has become more expensive. Previously, we could underwrite a lot of entry-level land, but now there is a more balanced opportunity, making first-time move-up land more underwritable. We are simply following the millennial demographic as they progress through their home-buying journey. Q: The Q3 gross margin guidance of "around 18%" is down from 18.6% in Q2. What drives that down, and should we expect a reversal in Q4? A: (Hela Farua, EVP & CFO) The primary driver is lower leverage from fewer closings in Q3. Additionally, rates increased through June, which raised incentive utilization. The Q4 improvement is predicated on community count growth, which will drive higher closing volume and provide better leverage. Q: The Q4 delivery guidance implies a significant ramp. Is this dependent on a strong order pace in Q3, or are you willing to work down the backlog? A: (Philippe Lord, CEO) The Q4 guidance is 100% tied to community count growth, not an expectation of market improvement. We have significant community openings planned for Q3 and Q4. Because we don't open a community until we can close homes, these new communities will start producing closings in the same quarter they become active. Q: You mentioned a 6% year-over-year savings on direct costs. What is driving this, and can you realize further benefits? A: (Hela Farua, EVP & CFO) The savings are broad-based across both labor and materials. Lower-cost new starts are replacing older, higher-cost inventory. We are not modeling further improvements from here for now, as we believe the current cost structure is largely captured in our forward guidance. Q: How should we think about the path to your long-term gross margin target of 22.5-23.5% given the shift to more move-up product? A: (Philippe Lord, CEO) The long-term target is not mix-related; it's based on our land underwriting. The bridge from current margins is 100% interest rate and incentive related. Move-up land typically has higher revenue but is not underwritten at a higher margin. The mix impact from this shift won't play out until 2029 and beyond. Q: To hit the back-half delivery guidance, do starts need to pick up further, and can you provide color on the community count cadence? A: (Hela Farua, EVP & CFO) We are comfortable with our 5-10% year-over-year community count growth. Starts volume increased between Q1 and Q2 to get inventory ready for new communities. Between our current inventory and our sub-110-day cycle time, we feel confident we have everything needed to hit our full-year guidance. Q: What is the lag time between lumber price movements and when that shows up in your deliveries? A: (Philippe Lord, CEO) We don't hedge but use 30, 60, or 90-day locks, creating natural hedges. You should start to see cost changes flow through our numbers in about a quarter, which aligns with the two-quarter lag mentioned by some peers. Q: Have you considered broadening your strategy beyond first-time move-up to the broader move-up or luxury market? A: (Philippe Lord, CEO) No. We want to stay in the first-time move-up price point. Buyers in the luxury or second move-up segment typically want choice and customization, which we are not going to offer based on our operating model. Our focus remains on the value-focused consumer. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

For the quarter ended June 2026, Meritage Homes (MTH) reported revenue of $1.4 billion, down 13.8% over the same period last year. EPS came in at $1.42, compared to $2.04 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $1.43 billion, representing a surprise of -1.78%. The company delivered an EPS surprise of +9.23%, with the consensus EPS estimate being $1.30. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Meritage performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Home Closing Revenue - Average sales price - Total: $373.00 versus the nine-analyst average estimate of $377.59. Homes ordered - Total: 3,575 compared to the 3,774 average estimate based on nine analysts. Order Backlog - Total: 1,715 compared to the 1,856 average estimate based on eight analysts. Homes closed - Total: 3,725 compared to the 3,750 average estimate based on eight analysts. Active Communities - Ending - Total: 340 compared to the 351 average estimate based on six analysts. Home Orders - Average sales price - Total: $385.00 versus $379.23 estimated by six analysts on average. Homes Ordered Value - Total: $1.38 billion versus the six-analyst average estimate of $1.43 billion. Order Backlog Value - Total: $661.91 million versus the five-analyst average estimate of $725.24 million. Revenue- Total closing revenue (Homebuilding): $1.4 billion compared to the $1.43 billion average estimate based on nine analysts. The reported number represents a change of -13.8% year over year. Revenue- Home closing: $1.39 billion versus $1.42 billion estimated by nine analysts on average. Compared to the year-ago quarter, this number represents a -14.1% change. Revenue- Land closing: $12.72 million versus the nine-analyst average estimate of $8.5 million. The reported number represents a year-over-year change of +53.7%. Revenue- Financial Services: $7.78 million versus the eight-analyst average estimate of $8.69 million. The reported number represents a year-over-year change of -17.4%. View all Key Company Metrics for Meritage here>>> Shares of Meritage have returned -12.7% over the past month versus the Zacks S&P 500 composite's +1.9% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Meritage Homes Corporation (MTH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

SCOTTSDALE, Ariz., July 29, 2026 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH), the fifth-largest U.S. homebuilder, reported second quarter results for the period ended June 30, 2026. MANAGEMENT COMMENTS "The 2026 spring selling season remained softer than expected this quarter as macroeconomic uncertainty and volatile interest rates continued to pressure buyer psychology. Although below prior year levels, our second quarter 2026 absorptions reflected pockets of solid performance which accelerated community close outs in some markets," said Steven J. Hilton, executive chairman of Meritage Homes. "Our available home inventory and improved cycle times drove a backlog conversion rate of 200% and 3,725 closings this quarter, with nearly 60% generated from intra-quarter sales," added Phillippe Lord, chief executive officer of Meritage Homes. "Second quarter 2026 home closing revenue totaled $1.4 billion which generated adjusted home closing gross margin of 18.6% and adjusted diluted EPS of $1.42, excluding $3.6 million of real estate inventory impairments and $0.3 million in terminated land deal walk-away charges." "We remain committed to a disciplined capital allocation strategy that balances growth and shareholder returns while ensuring sufficient liquidity in a volatile interest rate environment. During the current quarter, we returned $131 million to shareholders via share repurchases and dividends. And while we moderated land spend to $357 million from $509 million in the second quarter of 2025, we are reiterating our prior community count growth expectation of 5-10% year-over-year for full year 2026," concluded Mr. Lord. "We ended the second quarter of 2026 with cash of $807 million, no borrowings under our revolving credit facility and a net debt-to-capital ratio of 17.1%. As of June 30, 2026, our book value per share increased 5% year-over-year." SECOND QUARTER RESULTS Orders of 3,575 homes for the second quarter of 2026 decreased 9% year-over-year mainly as a result of 19% lower average absorption pace, which was partially offset by a 14% increase in average community count. Second quarter 2026 average sales price ("ASP") on orders of $385,000 was down 3% from the second quarter of 2025, primarily due to geographic mix. The 14% year-over-year decrease in home closing revenue in the second quarter of 2026 to $1.4 billion was due to 11% lower closing volume of 3,725 homes combined with a 4% decrease in ASP on closings to $373,000. The closing ASP decline was a function of geographic mix. Home closing gross margin of 18.3% in the second quarter of 2026 was 280 bps lower than 21.1% in the prior year as a result of lost leverage on lower home closing revenue and higher lot costs, which were partially offset by direct cost savings and quicker cycle times. Excluding $3.6 million of real estate inventory impairments and $0.3 million in terminated land deal walk-away charges in the second quarter of 2026, compared to no impairments and $4.2 million in terminated land deal walk-away charges in the prior year, adjusted home closing gross margin was 18.6% and 21.4% for the second quarters of 2026 and 2025, respectively. Selling, general and administrative expenses ("SG&A") as a percentage of second quarter 2026 home closing revenue were 10.4% compared to 10.2% in the second quarter of 2025, as a result of lost leverage on lower home closing revenue, which was partially offset by decreased compensation expense and an intentional pull back in discretionary expenses. The second quarter effective income tax rate was 24.8% in 2026 compared to 23.9% in 2025 due to higher income state tax. Net earnings were $91 million ($1.37 per diluted share) for the second quarter 2026, a 38% decrease from $147 million ($2.04 per diluted share) for the second 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 $1.42 and $2.09 for the second quarters of 2026 and 2025, respectively. YEAR TO DATE RESULTS Total sales orders for the first six months of 2026 decreased 7% year-over-year, reflecting an 18% decrease in average absorption pace partially offset by a 14% increase in average communities compared to the first six months of 2025. The 4% lower ASP on orders for the first six months of 2026 year-over-year was primarily due to geographic mix. Home closing revenue decreased 16% year-over-year in the first six months of 2026 to $2.5 billion, driven by 12% lower home closing volume and a 4% decrease in ASP on closings compared to the first six months of 2025. The 4% lower ASP on closings for the first six months of 2026 compared to prior year reflected geographic mix. Home closing gross margin of 17.9% decreased 360 bps in the first six months of 2026 from 21.5% in the prior year due to lost leverage on lower home closing revenue and higher lot costs, which were partially offset by direct cost savings and quicker cycle times. Excluding $6.0 million of real estate inventory impairments and $1.6 million in terminated land deal walk-away charges in the first six months of 2026, compared to no impairments and $5.6 million in terminated land deal walk-away charges in the prior year, adjusted home closing gross margin was 18.2% and 21.7% for the first six months of 2026 and 2025, respectively. SG&A as a percentage of home closing revenue was 11.0% in the first six months of 2026 compared to 10.7% in the prior year, as a result of lost leverage on lower home closing revenue, which was partially offset by decreased compensation expense and an intentional reduction in discretionary expenses. The effective income tax rate in the first six months of 2026 was 24.4% compared to 23.6% in 2025 due to higher income state tax. Net earnings were $146 million ($2.18 per diluted share) for the first six months of 2026, a 46% decrease from $270 million ($3.73 per diluted share) for the first six 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 $2.27 and $3.79 for the first six months of 2026 and 2025, respectively. BALANCE SHEET & LIQUIDITY Cash and cash equivalents at June 30, 2026 totaled $807 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 $357 million and $509 million for the second quarter of 2026 and 2025, respectively. Approximately 73,200 lots were owned or controlled as of June 30, 2026, compared to approximately 81,900 lots as of June 30, 2025. Nearly 1,700 net new lots were added in the second quarter of 2026, representing an estimated 13 future communities. Second quarter 2026 ending community count of 340 was up 9% compared to prior year and down 1% sequentially from the first quarter of 2026. Debt-to-capital and net debt-to-capital ratios were 26.8% and 17.1%, respectively, at June 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 second quarter of 2026. This compared to $0.43 per share totaling $31 million in the second quarter of 2025. Year-to-date dividends paid were $63 million and $61 million in 2026 and 2025, respectively. During the second quarter of 2026, the Company repurchased 1,528,340 shares of stock, or 2.3% of shares outstanding at the beginning of the quarter, for $100 million. This compared to $45 million in the second quarter of 2025. For the first six months of 2026, the Company repurchased 3,344,160 shares of stock, or 4.9% of shares outstanding at the beginning of the year, for $230 million. This compared to year-to-date 2025 spend of $90 million. As of June 30, 2026, $284 million remained available to repurchase. During the second quarter of 2026, the Company refinanced the revolving credit facility, primarily to increase the facility size to $980 million and extend its maturity from 2030 to 2031. GUIDANCE Based on current market conditions and year-to-date results, we are updating our guidance for full year 2026 home closing volume and revenue to around 5% below full year 2025 results, although home closing revenue could trend lower if market conditions require higher incentives. CONFERENCE CALLManagement will host a conference call to discuss its second quarter 2026 results at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, July 30, 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 SubsidiariesOperating 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 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. 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 210,000 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 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 and our future results including our full year 2026 projected home closing volume, home closing revenue and community count growth. 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 https://investors.meritagehomes.com.