Meritage Homes delivered a solid QQ3 2024 performance driven by its strategic pivot toward affordable move-in ready homes and robust backlog conversion. Orders of 3,512 and an average absorption of 4.1 per month culminated in a company‑record backlog conversion of 145%, producing 3,942 home deliveries and home closing revenue of approximately $1.6 billion. Diluted earnings per share (EPS) reached $5.34, with a home closing gross margin of 24.8% and SG&A leverage yielding an operating margin of 15.1%. The quarter benefited from rate buydowns and a fall in mortgage rates in September, which supported demand, though margins faced headwinds from higher financing incentives and land costs. Net income was $196 million, and ROE stood at 17.2%, underscoring the company’s effectiveness in deploying its capital base amidst a volatile macro backdrop.
Management signaled a continued emphasis on speed to close and affordability, with the 60‑day closing commitment gaining momentum across communities. The company announced the Elliott Homes acquisition (Gulf Coast), which adds ~5,500 lots and is expected to contribute meaningfully to 2025 volumes; management described the deal as margin accretive, not dilutive. Near‑term guidance implies a sequential margin step down in Q4 2024 to 22.5%–23.5%, reflecting elevated incentives and mix, but the longer‑term margin target remains intact. For 2025, Meritage guided to 16,500–17,500 closings and $6.7–$7.1 billion in home closing revenue, inclusive of Elliott, implying double‑digit year‑over‑year growth at the midpoint. The narrative emphasizes continued demand, favorable demographics, and ongoing under‑supply of entry‑level homes, tempered by rate volatility and land availability constraints.
Overall, the QQ3 2024 results and the new guidance framework suggest a company poised to gain market share through its scale, integrated land strategy, and operational discipline, while remaining exposed to interest‑rate dynamics, incentives, and the cadence of Gulf Coast integration. Investors should monitor mortgage rate movements, Elliott integration progress, and land development timelines as key drivers of the 2025 growth trajectory.