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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 10-Q 
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR 
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                
Commission File Number 1-9977
MTH_Logo_Standard_Horizontal_Tagline_RGB narrow white space.jpg
Meritage Homes Corporation
(Exact Name of Registrant as Specified in its Charter)
Maryland 86-0611231
(State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
18655 North Claret Drive, Suite 400, Scottsdale, Arizona 85255
(Address of Principal Executive Offices) (Zip Code)
(480) 515-8100
(Registrant’s telephone number, including area code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock $.01 par valueMTHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒ No  ☐
Indicate by a checkmark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by a checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Common shares outstanding as of July 22, 2024: 36,327,214


MERITAGE HOMES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2024
TABLE OF CONTENTS
 
Items 3-4. Not Applicable










2





PART I - FINANCIAL INFORMATION

Item 1.        Financial Statements

MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
 June 30, 2024December 31, 2023
Assets
Cash and cash equivalents$992,921 $921,227 
Other receivables258,137 266,972 
Real estate5,175,084 4,721,291 
Deposits on real estate under option or contract156,698 111,364 
Investments in unconsolidated entities23,630 17,170 
Property and equipment, net46,585 48,953 
Deferred tax assets, net60,167 47,573 
Prepaids, other assets and goodwill210,758 218,584 
Total assets$6,923,980 $6,353,134 
Liabilities
Accounts payable$299,780 $271,650 
Accrued liabilities388,975 424,764 
Home sale deposits39,380 36,605 
Loans payable and other borrowings9,711 13,526 
Senior and convertible senior notes, net1,303,600 994,689 
Total liabilities2,041,446 1,741,234 
Stockholders’ Equity
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at June 30, 2024 and December 31, 2023
— — 
Common stock, par value $0.01. Authorized 125,000,000 shares; 36,327,214 and 36,425,037 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively
363 364 
Additional paid-in capital198,503 290,955 
Retained earnings4,683,668 4,320,581 
Total stockholders’ equity4,882,534 4,611,900 
Total liabilities and stockholders’ equity$6,923,980 $6,353,134 
See accompanying notes to unaudited consolidated financial statements


3


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
 
Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Homebuilding:
Home closing revenue$1,693,738 $1,543,021 $3,159,834 $2,804,944 
Land closing revenue— 24,379 2,305 41,764 
Total closing revenue1,693,738 1,567,400 3,162,139 2,846,708 
Cost of home closings(1,254,232)(1,166,041)(2,342,370)(2,145,503)
Cost of land closings— (24,202)(2,298)(40,147)
Total cost of closings(1,254,232)(1,190,243)(2,344,668)(2,185,650)
Home closing gross profit439,506 376,980 817,464 659,441 
Land closing gross profit— 177 7 1,617 
Total closing gross profit439,506 377,157 817,471 661,058 
Financial Services:
Revenue8,311 6,210 14,664 11,941 
Expense(3,924)(2,972)(6,927)(6,039)
Earnings/(loss) from financial services unconsolidated entities and other, net450 (5,795)(3,590)(5,536)
Financial services profit/(loss)4,837 (2,557)4,147 366 
Commissions and other sales costs(104,665)(95,798)(206,215)(178,644)
General and administrative expenses(53,184)(52,140)(103,916)(99,659)
Interest expense— — — — 
Other income, net11,498 12,862 20,520 21,706 
Loss on early extinguishment of debt(631)— (631)— 
Earnings before income taxes297,361 239,524 531,376 404,827 
Provision for income taxes(65,806)(52,688)(113,805)(86,690)
Net earnings$231,555 $186,836 $417,571 $318,137 
Earnings per common share:
Basic$6.38 $5.08 $11.50 $8.67 
Diluted$6.31 $5.02 $11.37 $8.56 
Weighted average number of shares:
Basic36,322 36,765 36,317 36,715 
Diluted36,718 37,191 36,738 37,149 

See accompanying notes to unaudited consolidated financial statements


4


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Six Months Ended June 30,
 20242023
Cash flows from operating activities:
Net earnings$417,571 $318,137 
Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities:
Depreciation and amortization12,812 11,196 
Stock-based compensation10,832 10,401 
Equity in earnings from unconsolidated entities (2,627)(2,882)
Distributions of earnings from unconsolidated entities2,778 3,418 
Other4,697 2,148 
Changes in assets and liabilities:
(Increase)/decrease in real estate(450,551)14,950 
(Increase)/decrease in deposits on real estate under option or contract(45,576)5,491 
Decrease in other receivables, prepaids and other assets24,237 8,962 
Decrease in accounts payable and accrued liabilities(12,965)(27,754)
Increase in home sale deposits2,775 11,818 
Net cash (used in)/provided by operating activities(36,017)355,885 
Cash flows from investing activities:
Investments in unconsolidated entities(6,611)(1,277)
Distributions of capital from unconsolidated entities— 43 
Purchases of property and equipment(13,158)(21,134)
Proceeds from sales of property and equipment130 228 
Maturities/sales of investments and securities750 750 
Payments to purchase investments and securities(750)(750)
Net cash used in investing activities(19,639)(22,140)
Cash flows from financing activities:
Repayment of loans payable and other borrowings(7,445)(2,209)
Repayment of senior notes(250,695)— 
Proceeds from issuance of convertible senior notes575,000 — 
Payment of debt issuance costs(17,303)— 
Purchase of capped calls related to issuance of convertible senior notes(61,790)— 
Dividends paid(54,484)(19,854)
Repurchase of shares(55,933)(10,000)
Net cash provided by/(used in) financing activities127,350 (32,063)
Net increase in cash and cash equivalents71,694 301,682 
Cash and cash equivalents, beginning of period921,227 861,561 
Cash and cash equivalents, end of period$992,921 $1,163,243 
See Supplemental Disclosure of Cash Flow Information in Note 13.
See accompanying notes to unaudited consolidated financial statements

5


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION
Organization. Meritage Homes Corporation ("Meritage Homes") is a leading designer and builder of single-family attached and detached homes. We primarily build in historically high-growth regions of the United States and offer a variety of entry-level and first move-up homes. We have operations in three regions: West, Central and East, which are comprised of ten states: Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. We also operate a financial services reporting segment. In this segment, we offer title and escrow, mortgage, and insurance services. Carefree Title Agency, Inc. ("Carefree Title"), our wholly-owned title company, provides title insurance and closing/settlement services to our homebuyers in certain states. Managing our own title operations allows us greater control over the entire escrow and closing cycles in addition to generating additional revenue. Meritage Homes Insurance Agency, Inc. (“Meritage Insurance”), our wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. Our financial services operation also provides mortgage services to our homebuyers through an unconsolidated joint venture.
We commenced our homebuilding operations in 1985 through our predecessor company, Monterey Homes. Meritage Homes Corporation was incorporated in the state of Maryland in 1988 under the name of Emerald Mortgage Investments Corporation. We changed our name to Homeplex Mortgage Investments Corporation in 1990 and merged with Monterey Homes in 1996, at which time our name was changed to Monterey Homes Corporation and later ultimately to Meritage Homes Corporation. Since that time, we have engaged in homebuilding and related activities. Meritage Homes Corporation operates as a holding company and has no independent assets or operations. Its homebuilding construction, development and sales activities are conducted through its subsidiaries. Its homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At June 30, 2024, we were actively selling homes in 287 communities, with base prices ranging from approximately $243,000 to $1,080,000.
Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. The unaudited consolidated financial statements include the accounts of Meritage Homes and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year.
Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies or closing agents for home closings of approximately $75.1 million and $95.7 million are included in Cash and cash equivalents at June 30, 2024 and December 31, 2023, respectively.
Real Estate. Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”). Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.
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We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in cost of closings when the related inventory is closed. Included within our real estate inventory is land held for development and land held for sale. Land held for development primarily represents land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, sales orders absorptions that differ from our expectations, increases in costs that have not yet been contracted, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control, including weather. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs.
Typically, a community's life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the construction, sale and closing of the homes. Actual community lives will vary based on the size of the community, the sales orders absorption rates and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving smaller finished lot purchases may be significantly shorter.
All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. The impairment of a community is allocated to each remaining unstarted lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions, although if financial metrics improve, we do not reverse impairments once recorded. See Note 2 for additional information related to real estate.
Deposits. Deposits paid related to land option and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is used to offset the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are expensed to Cost of home closings if the land acquisition is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of any non-refundable deposits and any related capitalized costs. Our Deposits on real estate under option or contract were $156.7 million and $111.4 million as of June 30, 2024 and December 31, 2023, respectively. See Note 3 for additional information related to Deposits on real estate under option or contract.
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test. ASC 350 states that an entity may first assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets.
Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on
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our balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on the accompanying unaudited consolidated balance sheets.
The table below outlines our ROU assets and lease liabilities (in thousands):
As of
June 30, 2024December 31, 2023
ROU assets$52,460 $51,275 
Lease liabilities55,059 54,040 
Off-Balance Sheet Arrangements - Joint Ventures. We may participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital, although our participation in such ventures is currently limited. See Note 4 for additional discussion of our investments in unconsolidated entities.
Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered. See Note 3 for additional information on these off-balance sheet arrangements.
Surety Bonds and Letters of Credit. We provide surety bonds and letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Surety bonds are generally not wholly released until all development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon.
The table below outlines our surety bond and letter of credit obligations (in thousands):
As of
 June 30, 2024December 31, 2023
 OutstandingEstimated work
remaining to
complete		OutstandingEstimated work
remaining to
complete
Sureties:
Sureties related to owned projects and lots under contract$1,019,779 $779,287 $975,979 $712,421 
Total Sureties$1,019,779 $779,287 $975,979 $712,421 
Letters of Credit (“LOCs”):
LOCs for land development109,708 N/A56,251 N/A
LOCs for general corporate operations5,000 N/A5,000 N/A
Total LOCs$114,708 N/A$61,251 N/A

Accrued Liabilities. Accrued liabilities at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):
As of
 June 30, 2024December 31, 2023
Accruals related to real estate development and construction activities$169,482 $137,489 
Payroll and other benefits84,121 140,734 
Accrued interest6,546 6,331 
Accrued taxes20,103 25,569 
Warranty reserves34,769 37,360 
Lease liabilities55,059 54,040 
Other accruals18,895 23,241 
Total$388,975 $424,764 
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Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical data and trends for our geographies. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or six months ended June 30, 2024 or 2023. Included in the warranty reserve balances at June 30, 2024 and December 31, 2023 are case-specific reserves for warranty matters, as discussed in Note 15.
A summary of changes in our warranty reserves follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Balance, beginning of period$36,364 $37,063 $37,360 $35,575 
Additions to reserve from new home deliveries5,809 5,982 10,642 10,388 
Warranty claims, net of recoveries(7,404)(6,830)(13,233)(9,748)
Adjustments to pre-existing reserves— — — — 
Balance, end of period$34,769 $36,215 $34,769 $36,215 
Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings on the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in regulatory, legislative, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates.
Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below:
•Revenue from home closings is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
•Revenue from land closings is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.
•Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow.
Home closing and land closing revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at June 30, 2024 and December 31, 2023.
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Recent Accounting Pronouncements.
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which aligns interim segment disclosure requirements with existing annual requirements and includes updates to segment reporting, most notably through enhanced disclosures about significant segment expenses and various Chief Operating Decision Maker ("CODM")-related disclosures. ASU 2023-07 is effective for our annual report covering the fiscal year beginning January 1, 2024, and for our interim reports beginning January 1, 2025. ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the disclosure requirements primarily related to the effective tax rate reconciliation and income taxes paid by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for us beginning January 1, 2025 and may be applied either retrospectively or prospectively. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.

NOTE 2 — REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
As of
June 30, 2024December 31, 2023
Homes under contract under construction (1)
$789,961 $704,206 
Unsold homes, completed and under construction (1)
1,487,674 1,260,855 
Model homes (1)
114,185 118,252 
Finished home sites and home sites under development (2)
2,783,264 2,637,978 
Total$5,175,084 $4,721,291 

(1)Includes the allocated land and land development costs associated with each lot for these homes.
(2)Includes raw land, land held for development and land held for sale, less impairments, if any. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active real estate when incurred and charged to Cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Capitalized interest, beginning of period$54,227 $62,452 $54,516 $60,169 
Interest incurred14,327 15,144 27,252 30,174 
Interest expensed— — — — 
Interest amortized to cost of home and land closings(14,227)(16,518)(27,441)(29,265)
Capitalized interest, end of period$54,327 $61,078 $54,327 $61,078 

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NOTE 3 — VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED
We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. In accordance with ASC 810, Consolidation, we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. We determined that as of June 30, 2024 and December 31, 2023, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.
The table below presents a summary of our lots under option at June 30, 2024 (dollars in thousands): 
Projected Number
of Lots
Purchase
Price		Option/
Earnest  Money
Deposits–Cash
Purchase and option contracts recorded on balance sheet as Real estate not owned— $— $— 
Option contracts — non-refundable deposits, committed (1)
7,555 517,409 72,992 
Purchase contracts — non-refundable deposits, committed (1)
15,491 430,972 62,535 
Purchase and option contracts —refundable deposits, committed1,078 42,934 3,365 
Total committed 24,124 991,315 138,892 
Purchase and option contracts — refundable deposits, uncommitted (2)
41,752 1,875,539 17,806 
Total lots under contract or option65,876 $2,866,854 $156,698 
Total purchase and option contracts not recorded on balance sheet (3)
65,876 $2,866,854 $156,698 (4)
 
(1)Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.
(2)Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots.
(3)Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.
(4)Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2024.
Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots on a pre-determined schedule in accordance with each respective agreement. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our expected orders and home starts pace to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract.

NOTE 4 - INVESTMENTS IN UNCONSOLIDATED ENTITIES
We may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as critical to the success of our homebuilding operations. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of these joint ventures, they may or may not be consolidated into our results. As of June 30, 2024, we had one active equity-method land joint venture and one mortgage joint venture, which is engaged in mortgage activities and primarily provides mortgage services to our homebuyers.

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Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
As of
June 30, 2024December 31, 2023
Assets:
Cash
$3,839 $3,546 
Real estate
39,924 28,395 
Other assets
5,491 6,514 
Total assets$49,254 $38,455 
Liabilities and equity:
Accounts payable and other liabilities$5,903 $6,537 
Equity of:
Meritage (1)
22,853 16,279 
Other20,498 15,639 
Total liabilities and equity$49,254 $38,455 
 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Revenue$12,739 $11,710 $23,329 $21,226 
Costs and expenses(10,451)(9,099)(19,588)(17,450)
Net earnings of unconsolidated entities$2,288 $2,611 $3,741 $3,776 
Meritage’s share of pre-tax earnings/(loss) (1) (2)
$1,655 $1,536 $2,627 $2,882 

(1)Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
(2)Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.

NOTE 5 — LOANS PAYABLE AND OTHER BORROWINGS
Loans payable and other borrowings consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
Other borrowings, real estate notes payable (1)
$9,711 $13,526 
$910.0 million unsecured revolving credit facility
— — 
Total$9,711 $13,526 
(1)Reflects balance of non-recourse notes payable in connection with land purchases.
The Company entered into an amended and restated unsecured revolving credit facility agreement ("Credit Facility") in 2014 that has been amended from time to time. In June 2024, the Credit Facility was amended to increase the facility size, amend the accordion feature to permit the facility size to be increased, subject to certain conditions, extended the maturity date from June 2, 2028 to June 12, 2029, and revised the applicable pricing grid. The Credit Facility's aggregate commitment is
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$910.0 million with an accordion feature permitting the size of the facility to increase to a maximum of $1.4 billion, subject to certain conditions, including the availability of additional bank commitments. Borrowings under the Credit Facility bear interest at the Company's option, at either (1) term SOFR (based on 1, 3, or 6 month interest periods, as selected by the Company) plus a 10 basis point adjustment plus an applicable margin (ranging from 110 basis points to 175 basis points (the "applicable margin")) based on the Company's leverage ratio as determined in accordance with a pricing grid, (2) the higher of (i) the prime lending rate ("Prime"), (ii) an overnight bank rate plus 50 basis points and (iii) term SOFR (based on a 1 month interest period) plus a 10 basis point adjustment plus 1%, in each case plus a margin ranging from 10 basis points to 75 basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a 10 basis point adjustment plus the applicable margin. At June 30, 2024, the interest rate on outstanding borrowings under the Credit Facility would have been 6.537% per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR. We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate determined by a tiered fee matrix based on our leverage ratio.
The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of June 30, 2024.
We had no outstanding borrowings under the Credit Facility as of June 30, 2024 and December 31, 2023. There were no borrowings or repayments under the Credit Facility during the three and six months ended June 30, 2024 and 2023. As of June 30, 2024, we had outstanding letters of credit issued under the Credit Facility totaling $114.7 million, leaving $795.3 million available under the Credit Facility to be drawn.

NOTE 6 — SENIOR AND CONVERTIBLE SENIOR NOTES, NET
Senior and convertible senior notes, net consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
6.00% senior notes due 2025 ("2025 Notes"). At December 31, 2023 there was approximately $994 in net unamortized premium.
— 250,994 
5.125% senior notes due 2027 ("2027 Notes")
300,000 300,000 
1.750% convertible senior notes due 2028 ("2028 Convertible Notes")
575,000 — 
3.875% senior notes due 2029 ("2029 Notes")
450,000 450,000 
Net debt issuance costs(21,400)(6,305)
Total$1,303,600 $994,689 
The indentures for our 2027 Notes and 2029 Notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, and limitations on sale and leaseback transactions and mergers. We were in compliance with all such covenants as of June 30, 2024.
Obligations to pay principal and interest on the senior and convertible senior notes are guaranteed by substantially all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes Corporation. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor may be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor.

Convertible Senior Notes due 2028

In May 2024, we issued $575.0 million aggregate principal amount of 1.750% 2028 Convertible Notes pursuant to an Indenture dated as of May 9, 2024 (the “Indenture”). The 2028 Convertible Notes were issued at par and will mature on May 15, 2028, unless converted earlier in accordance with their terms prior to such date. We used a portion of the net proceeds from the offering to pay the cost of entering into the capped calls, as defined and described below, and to redeem all $250.0 million
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aggregate principal then outstanding of our 6.00% 2025 Notes for which we incurred $0.6 million in early debt extinguishment charges in the three and six months ended June 30, 2024, reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

The 2028 Convertible Notes are convertible into shares of the Company’s common stock (“common stock”) at an initial conversion rate of 4.3048 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $232.30 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events specified in the Indenture but will not be adjusted for accrued and unpaid interest or quarterly cash dividends. In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change" as defined in the Indenture. The Company is required to satisfy its conversion obligations by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to February 15, 2028, the holders of the 2028 Convertible Notes may convert their notes only under the following conditions: (1) the sale price of common stock reaches 130% of the applicable conversion price for a specified period during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2024; (2) the trading price of the 2028 Convertible Notes falls below 98% of the product of the last reported sale price of common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate events. On or after February 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

The 2028 Convertible Notes are accounted for in accordance with ASC 470, Debt, and ASC 815, Derivatives and Hedging. The conversion options and the 2028 Convertible Notes are reflected as a single instrument in Senior and convertible senior notes, net on the accompanying unaudited consolidated balance sheets and the conversion options are not bifurcated as a derivative.


Capped Call Transactions

Concurrent with the offering of the 2028 Convertible Notes, we used $61.8 million of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Call counterparties (the counterparties") to provide shares of our common stock to converting debt holders up to a cap price. The Capped Calls each have an initial strike price of approximately $232.30 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Convertible Notes. The Capped Calls have initial cap prices of $350.64 per share, subject to certain adjustments. The Capped Calls will reduce our obligation to settle, in shares or in cash, conversions when our stock price is between $232.30 and $350.64.

The Capped Calls are separate transactions entered into by the Company with each of the counterparties, are not part of the terms of the 2028 Convertible Notes and do not change the holders’ rights under the 2028 Convertible Notes or the Indenture. Holders of the 2028 Convertible Notes do not have any rights with respect to the Capped Calls.

As the Capped Calls are considered indexed to the Company's own stock, they are recorded in stockholders’ equity as a reduction of Additional paid-in capital in the accompanying unaudited consolidated balance sheets, and are not accounted for as derivatives under ASC 815-10, Derivatives and Hedging.


NOTE 7 — FAIR VALUE DISCLOSURES
ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows:
•Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
•Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.
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•Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs.
Financial Instruments: The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (Level 2 inputs as per the discussion above) and is as follows (in thousands):
As of
 June 30, 2024December 31, 2023
 Aggregate
Principal		Estimated  Fair
Value		Aggregate
Principal		Estimated  Fair
Value
6.00% senior notes due 2025
$— $— $250,000 $249,375 
5.125% senior notes due 2027
$300,000 $294,780 $300,000 $295,500 
1.750% convertible senior notes due 2028
$575,000 $579,272 $— $— 
3.875% senior notes due 2029
$450,000 $412,875 $450,000 $411,750 
Other financial assets and liabilities, including our Loans payable and other borrowings, are generally shorter term in nature and the longer term balances are not material to our consolidated balance sheets. Therefore, we consider the carrying amounts of our other financial assets and liabilities to approximate fair value.
Non-Financial Instruments: Our Real estate assets are Level 3 instruments that are required to be recorded at fair value on non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable. Refer to Note 1 for information regarding the valuation of these assets.

NOTE 8 — EARNINGS PER SHARE
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts):
 
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Basic weighted average number of shares outstanding36,322 36,765 36,317 36,715 
Effect of dilutive securities:
Unvested restricted stock396 426 421 434 
Diluted average shares outstanding36,718 37,191 36,738 37,149 
Net earnings$231,555 $186,836 $417,571 $318,137 
Basic earnings per share$6.38 $5.08 $11.50 $8.67 
Diluted earnings per share$6.31 $5.02 $11.37 $8.56 

We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In accordance with ASC 260-10, Earnings Per Share, we calculate the dilutive effect of the 2028 Convertible Notes using the "if-converted" method. As discussed in Note 6, the Company will settle any convertible note conversions by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. As the Company will settle the principal amount of convertible notes in cash upon conversion, the convertible notes only have a dilutive impact when the average share price of the Company’s common stock exceeds the conversion price, in any applicable period.
 

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NOTE 9 — ACQUISITIONS AND GOODWILL
Goodwill. In prior years, we have entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. As a result of these transactions, we recorded approximately $33.0 million of goodwill. Goodwill represents the excess purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combinations, and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on our unaudited consolidated balance sheets in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present.

A summary of the carrying amount of goodwill follows (in thousands):
WestCentralEastFinancial ServicesCorporateTotal
Balance at December 31, 2023
$— $— $32,962 $— $— $32,962 
Additions— — — — — — 
Balance at June 30, 2024$— $— $32,962 $— $— $32,962 

NOTE 10 — STOCKHOLDERS’ EQUITY
A summary of changes in stockholders’ equity is presented below (in thousands): 
 Six Months Ended June 30, 2024
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202336,425 $364 $290,955 $4,320,581 $4,611,900 
Net earnings— — — 186,016 186,016 
Stock-based compensation expense— — 6,114 — 6,114 
Issuance of stock256 3 (3)— — 
Dividends declared— — — (27,239)(27,239)
Share repurchases(362)(4)(56,214)— (56,218)
Balance at March 31, 202436,319 $363 $240,852 $4,479,358 $4,720,573 
Net earnings— — — 231,555 231,555 
Stock-based compensation expense— — 4,718 — 4,718 
Issuance of stock8 — — — — 
Dividends declared— — — (27,245)(27,245)
Capped call transactions, net of tax— — (47,067)— (47,067)
Balance at June 30, 202436,327 $363 $198,503 $4,683,668 $4,882,534 
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 Six Months Ended June 30, 2023
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202236,571 $366 $327,878 $3,621,367 $3,949,611 
Net earnings— — — 131,301 131,301 
Stock-based compensation expense— — 6,225 — 6,225 
Issuance of stock287 3 (3)— — 
Dividends declared— — — (9,927)(9,927)
Share repurchases(93)(1)(9,999)— (10,000)
Balance at March 31, 202336,765 $368 $324,101 $3,742,741 $4,067,210 
Net earnings— — — 186,836 186,836 
Stock-based compensation expense— — 4,176 — 4,176 
Dividends declared— — — (9,927)(9,927)
Balance at June 30, 202336,765 368 328,277 3,919,650 4,248,295 
During the three months ended June 30, 2024 and 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.75 and $0.27 per share, respectively. Quarterly dividends declared and paid during the six months ended June 30, 2024 and 2023, totaled $1.50 and $0.54 per share, respectively. During the three and six months ended June 30, 2024 and 2023, we reflected the applicable excise tax on share repurchases in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability in Accrued liabilities on the accompanying unaudited consolidated balance sheets.

NOTE 11 — STOCK BASED AND DEFERRED COMPENSATION

We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. In May 2023, the Board of Directors and stockholders approved an amendment to the 2018 Plan to increase the number of shares available for issuance by 800,000. The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants. The 2018 Plan authorizes 7,400,000 shares of stock to be awarded, of which 1,151,115 shares remain available for grant at June 30, 2024. We believe that such awards provide a means of long-term compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock units and performance-based awards granted to senior executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date.
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands):
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 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Stock-based compensation expense$4,718 $4,176 $10,832 $10,401 
Non-vested shares granted— 2,100 140,665 180,412 
Performance-based non-vested shares granted — — 37,698 42,964 
Performance-based shares issued in excess of target shares granted (1)
— — 15,978 26,167 
Restricted stock awards vested (includes performance-based awards)8,200 — 248,618 287,171 
(1)Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics.
The following table includes additional information regarding our stock compensation plan (dollars in thousands):
 As of
 June 30, 2024December 31, 2023
Unrecognized stock-based compensation cost$38,819 $27,791 
Weighted average years expense recognition period2.111.94
Total equity awards outstanding (1)
627,937 703,415 
(1)Includes unvested restricted stock units and performance-based awards (assuming 100%/target payout).
We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three and six months ended June 30, 2024 or 2023, other than minor administrative costs.

NOTE 12 — INCOME TAXES
Components of the provision for income taxes are as follows (in thousands): 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Federal$52,340 $41,831 $90,462 $68,271 
State13,466 10,857 23,343 18,419 
Total$65,806 $52,688 $113,805 $86,690 

The effective tax rate for the three and six months ended June 30, 2024 was 22.1% and 21.4%, and for the three and six months ended June 30, 2023 was 22.0% and 21.4%, respectively. The rate for all periods reflects the increased §45L energy-efficient homes federal tax credit on qualifying homes under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") in August 2022.
At June 30, 2024 and December 31, 2023, we have no unrecognized tax benefits. We believe our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in the provision for income taxes.
We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes. We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carry forward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at June 30, 2024.
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At June 30, 2024, we have $7.7 million in income taxes payable and no income taxes receivable. The income taxes payable primarily consists of current federal and state tax accruals, net of current energy tax credits and estimated tax payments and is recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at June 30, 2024.
We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2019. We have no state income tax examinations being conducted at this time.

NOTE 13 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The following table presents certain supplemental cash flow information (in thousands):
Six Months Ended June 30,
20242023
Cash paid during the year for:
Interest, net of interest capitalized$(2,341)$(934)
Income taxes paid$114,054 $86,587 
Non-cash operating activities:
Real estate acquired through notes payable$3,630 $6,356 

NOTE 14 — OPERATING AND REPORTING SEGMENTS
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have ten homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. 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:
Texas
East:
Florida, Georgia, North Carolina, South Carolina and Tennessee
Management’s evaluation of segment performance is based on homebuilding segment operating income, which we define as home and land closing revenue less cost of home and land closings, including land development and other land sales costs, commissions and other sales costs, and other general and administrative costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.
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The following segment information is in thousands:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Homebuilding revenue (1):
West$622,837 $528,977 $1,138,469 $963,114 
Central459,180 458,709 886,745 884,159 
East611,721 579,714 1,136,925 999,435 
Consolidated total$1,693,738 $1,567,400 $3,162,139 $2,846,708 
Homebuilding segment operating income:
West$100,779 $52,283 $172,043 $91,092 
Central82,613 83,491 155,716 148,782 
East110,209 103,517 204,486 164,393 
Total homebuilding segment operating income 293,601 239,291 532,245 404,267 
Financial services segment profit/(loss)4,837 (2,557)4,147 366 
Corporate and unallocated costs (2)
(11,944)(10,072)(24,905)(21,512)
Interest expense— — — — 
Other income, net11,498 12,862 20,520 21,706 
Loss on early extinguishment of debt(631)— (631)— 
Earnings before income taxes$297,361 $239,524 $531,376 $404,827 
 
(1)Homebuilding revenue includes the following land closing revenue, by segment:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Land closing revenue:
West$— $9,760 $— $26,575 
Central— 1,908 — 2,478 
East— 12,711 2,305 12,711 
Total$— $24,379 $2,305 $41,764 
(2)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.
 At June 30, 2024
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$26,295 $19,477 $110,926 $— $— $156,698 
Real estate1,779,125 1,316,282 2,079,677 — — 5,175,084 
Investments in unconsolidated entities— 2,794 20,021 — 815 23,630 
Other assets56,320 (1)275,958 (2)106,846 (3)2,074 1,127,370 (4)1,568,568 
Total assets$1,861,740 $1,614,511 $2,317,470 $2,074 $1,128,185 $6,923,980 

(1)Balance consists primarily of cash and cash equivalents, prepaids and other assets and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
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(4)Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets.
 At December 31, 2023
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$11,695 $10,911 $88,758 $— $— $111,364 
Real estate1,748,732 1,257,054 1,715,505 — — 4,721,291 
Investments in unconsolidated entities— 2,825 13,411 — 934 17,170 
Other assets101,376 (1)272,876 (2)102,425 (3)1,889 1,024,743 (4)1,503,309 
Total assets$1,861,803 $1,543,666 $1,920,099 $1,889 $1,025,677 $6,353,134 
(1)Balance consists primarily of cash and cash equivalents, receivables from title companies and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), prepaids and other assets and property and equipment, net.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.

NOTE 15 — COMMITMENTS AND CONTINGENCIES
We are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential material losses related to these matters are not considered probable. Historically, most disputes regarding warranty claims are resolved prior to litigation. We believe there are no pending legal or warranty matters as of June 30, 2024 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved.

As discussed in Note 1 under the heading “Warranty Reserves”, we have case specific reserves within our $34.8 million of total warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2006 and 2017 and HVAC condensation issues in limited geographies for homes constructed and delivered in 2021 and the first half of 2022. Our review and management of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, historical experience, our judgment and various assumptions and estimates. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves. As of June 30, 2024, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we did not adjust such reserves and we believe our reserves are sufficient to cover the above mentioned matters. See Note 1 for information related to our warranty obligations.

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Special Note of Caution Regarding Forward-Looking Statements
In passing the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Congress encouraged public companies to make “forward-looking statements” by creating a safe-harbor to protect companies from securities law liability in connection with forward-looking statements. We intend to qualify both our written and oral forward-looking statements for protection under the PSLRA.
The words “believe,” “expect,” “anticipate,” “forecast,” “plan,” “intend,” “may,” “will,” “should,” “could,” “estimate,” "target," and “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements in this Quarterly Report include statements concerning our belief that we have ample liquidity; our goals, strategies and strategic initiatives including our all-spec strategy and the anticipated benefits relating thereto; our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up home buyer and housing demand for affordable homes; the benefits of and our intentions to use options to acquire land; our positions and our expected outcome relating to litigation and regulatory proceedings in general; our intentions to pay quarterly dividends; the sustainability of our tax positions; that we may repurchase our debt and equity securities; our non-use of derivative financial instruments; expectations regarding our industry and our business for the remainder of 2024 and beyond; the demand for and the pricing of our homes; our land and lot acquisition strategy (including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or opportunities outside of our existing markets if opportunities arise and the benefits relating thereto); that we may expand into new markets; the availability of labor and materials for our operations; that we may seek additional debt or equity capital; our expectation that existing guarantees, letters of credit and performance and surety bonds will not be drawn on; the sufficiency of our insurance coverage and legal and warranty reserves; the outcome of pending litigation; the sources and sufficiency of our capital resources to support our business strategy; the sufficiency of our land pipeline; the impact of new accounting standards and changes in accounting estimates; trends and expectations concerning future demand for homes, home construction cycle times, sales prices, sales orders, cancellations, construction and materials costs and availability, general and administrative costs, gross margins, land costs, inflation, community counts and profitability and future home supply and inventories; our future cash needs and sources, and the impact of seasonality.

Important factors that could cause actual results to differ materially from those in forward-looking statements, and that could negatively affect our business 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; inflation in the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; 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; shortages in the availability and cost of subcontract labor; the replication of our energy-efficient technologies by our competitors; 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, 2023 under the caption "Risk Factors."
Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain, as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, the investment community is urged not to place undue reliance on forward-looking statements. In addition, we disclaim and undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required by law.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview and Outlook

Demand for new homes was healthy during the second quarter of 2024 despite ongoing volatility in mortgage interest rates impacting mortgage affordability. The demand for our product, primarily entry-level homes, has been spurred by life events within our target demographics of Millennials, Baby Boomers, and now Gen Z, that necessitate a housing change, amid a backdrop of a persistent shortage of existing housing supply. Our spec building strategy and streamlined operations provide us with appropriate levels of available inventory to capitalize on this demand by providing a quick move-in opportunity, one of the most desirable characteristics for our potential customers and creates an offering similar to the missing resale product. We believe that our interest rate buy-downs and other financing incentives provide us with a competitive advantage over resale homes and new home builders that do not offer such incentives, further contributing to our strong results.
We believe that the execution of our strategy has, and will continue to, drive strong performance of the key financial measures of home closing volume, home closing gross margin, selling, general and administrative cost leveraging, balance sheet management and long-term community count growth. Supply chain disruptions that impacted production costs and cycle times in the homebuilding industry as a whole over the last several years began to ease in 2023 and have continued to improve, leading to significant improvements in 2024. We believe that cycle times will approximate normal conditions for the remainder of 2024.
Summary Company Results

We achieved record second quarter home closing revenue and units volume of $1.7 billion on 4,118 homes in the three months ended June 30, 2024, up from $1.5 billion on 3,490 homes in the same prior year period. The 9.8% increase in home closing revenue year-over-year was driven by an 18.0% increase in volume while average sales price ("ASP") on closings decreased 7.0% due primarily to a combination of product mix and geography shift. Second quarter 2024 home closing gross margin improved 150 basis points to 25.9% for home closing gross profit of $439.5 million compared to 24.4% and $377.0 million, respectively, in the second quarter of 2023. The margin improvement is primarily due to lower direct costs and leverage of higher home closing revenue on overhead costs combined with shorter construction cycle times, partially offset by higher lot costs. Financial services profit of $4.8 million in the second quarter of 2024 reflects $2.0 million of charges taken for unused prepaid interest rate locks that expired during the period, as compared to a Financial Services loss of $2.6 million in 2023 that included $7.9 million of similar charges. Commissions and other sales costs of $104.7 million in the three months ended June 30, 2024 increased $8.9 million largely a result of higher home closing revenue. General and administrative expenses of $53.2 million in the three months ended June 30, 2024 were relatively consistent with the same period in 2023 of $52.1 million. Other income, net of $11.5 million decreased $1.4 million due to less interest earned on a lower average cash balance. Earnings before income taxes for the three months ended June 30, 2024 of $297.4 million increased $57.8 million year over year from $239.5 million in 2023. The effective income tax rate of 22.1% and 22.0% for the three months ended June 30, 2024 and 2023, respectively, reflect the benefit from earned eligible energy tax credits on qualifying homes under the Inflation Reduction Act ("IRA"). The increase in year-over-year profitability resulted in net earnings of $231.6 million in the three months ended June 30, 2024 versus $186.8 million in the three months ended June 30, 2023.

Similar to the second quarter, 19.4% higher home closing volume led to a 12.7% improvement in home closing revenue for the six months ended June 30, 2024 versus 2023. Home closing gross margin of 25.9% improved 240 basis points year over year, for a $158.0 million increase in home closing gross profit. Higher gross margin and profitability and an effective tax rate of 21.4% led to net income of $417.6 million for the six months ended June 30, 2024, compared to $318.1 million for the 2023 period.

Home orders of 3,799 for the quarter ended June 30, 2024 were 13.7% higher than the second quarter of 2023 on a relatively flat average active community count. The volume growth in orders reflects a 15.4% increase in orders pace to 4.5 per month compared to 3.9 in 2023. Home order value increased 6.7% year-over-year, to $1.6 billion during the three months ended June 30, 2024, versus $1.5 billion in the same period of 2023, from the higher volume which was partially offset by a 6.2% decrease in ASP on orders primarily due to product and geographic mix. Entry-level homes represented 92% of orders in the second quarter of 2024 compared to 85% in the second quarter of 2023. Our cancellation rate of 10% in the second quarter of 2024 was down slightly from 12% in the second quarter of 2023.

Similar to the second quarter, for the six months ended June 30, 2024, home orders and home order value increased 14.1% and 7.5%, respectively, over the prior year. The cancellation rate of 9% improved from 13% in the prior year period. We ended
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the second quarter of 2024 with 2,714 homes in backlog valued at $1.1 billion, decreases of 28.0% and 34.2%, respectively, from June 30, 2023. The decrease in backlog units is due to a higher backlog conversion rate of 135.8% during the second quarter of 2024, compared to 89.0% in the second quarter of 2023. A higher percentage of spec homes sold later in the construction cycle contributed to the higher backlog conversion rate and resulted in an increased percentage of home orders that converted to closings within the same quarter.

We ended the second quarter of 2024 with 287 active communities, down from 291 at June 30, 2023 although up sequentially from 275 at March 31, 2024. We purchased approximately 8,900 lots for $477.1 million, spent $584.3 million on land development and started construction on 8,461 homes during the six months ended June 30, 2024.

Company Positioning
We believe that the investments in our new communities designed for the first-time and first move-up homebuyer, our commitment to being an all-spec builder, and our offerings of energy-efficient products in our entry-level homes create a differentiated strategy that has aided us in our growth in the highly competitive new home market.

Our focus on growing our community count and market share includes the following strategic initiatives:
•Delivering affordable homes on a shorter timeline through simplification of production processes and maintaining levels of spec inventory that are aligned with our strategy;
•Offering our customers affordable, turnkey, move-in ready homes with a 60-day closing guarantee;
•Embracing external realtor relationships, as we view realtors as a trusted resource for potential customers, particularly for first-time buyers;
•Continuously improving the overall home buying experience through simplification and innovation;
•Leveraging and expanding on technological solutions through digital offerings to our customers, such as our virtual home tours, interactive maps, digital financial services offerings and online warranty portal; and
•Increasing homeowner satisfaction by offering healthier, energy-efficient homes that come equipped with a suite of home automation standard features.
In addition to these strategic initiatives, we also remain committed to the following:
•Achieving or maintaining a top 5 market position in all of our markets;
•Maintaining and where possible, expanding, our home closing gross profit by growing closing volume, allowing us to better leverage our direct overhead;
•Carefully managing our liquidity and a strong balance sheet. We ended the second quarter of 2024 with a 21.2% debt-to-capital ratio and a 6.2% net debt-to-capital ratio, after issuing $575.0 million of convertible senior notes during the second quarter;
•Balancing return of capital to our shareholders with internal growth goals, utilizing both share repurchases and dividend payments;
•Managing construction efficiencies and costs through national and regional vendor relationships with a focus on timely, quality construction and warranty management;
•Promoting a positive environment for our employees through our commitment to foster diversity, equity and inclusion and providing market-competitive benefits in order to develop and motivate our employees, minimize turnover and maximize recruitment efforts; and
•Targeting a strong yet sustainable orders pace through the use of consumer, market and artificial intelligence research to ensure that we build homes that offer our buyers their desired features and amenities.
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Critical Accounting Estimates
The critical accounting estimates that we deem to involve the most difficult, subjective or complex judgments include real estate valuation and cost of home closings, warranty reserves and valuation of deferred tax assets. There have been no significant changes to our critical accounting estimates during the six months ended June 30, 2024 compared to those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2023 Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report").
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Home Closing Revenue, Home Orders and Order Backlog
The composition of our closings, home orders and backlog is constantly changing and is based on a changing mix of communities with various price points between periods as new projects open and existing projects wind down and close-out. Further, individual homes within a community can range significantly in price due to differing square footage, option selections, lot sizes and quality and location of lots (e.g. cul-de-sac, view lots, greenbelt lots). These variations result in a lack of meaningful comparability between our home orders, closings and backlog due to the changing mix between periods. The tables on the following pages present operating and financial data that we consider most critical to managing our operations (dollars in thousands):
Home Closing RevenueThree Months Ended June 30,Quarter over Quarter
 20242023Change $Change %
Total
Dollars$1,693,738 $1,543,021 $150,717 9.8 %
Homes closed4,118 3,490 628 18.0 %
Average sales price$411.3 $442.1 $(30.8)(7.0)%
West Region
Dollars$622,837 $519,217 $103,620 20.0 %
Homes closed1,265 997 268 26.9 %
Average sales price$492.4 $520.8 $(28.4)(5.5)%
Central Region
Dollars$459,180 $456,801 $2,379 0.5 %
Homes closed1,265 1,094 171 15.6 %
Average sales price$363.0 $417.6 $(54.6)(13.1)%
East Region
Dollars$611,721 $567,003 $44,718 7.9 %
Homes closed1,588 1,399 189 13.5 %
Average sales price$385.2 $405.3 $(20.1)(5.0)%
 Six Months Ended June 30,Quarter over Quarter
 20242023Change $Change %
Total
Dollars$3,159,834 $2,804,944 $354,890 12.7 %
Homes closed7,625 6,387 1,238 19.4 %
Average sales price$414.4 $439.2 $(24.8)(5.6)%
West Region
Dollars$1,138,469 $936,539 $201,930 21.6 %
Homes closed2,279 1,782 497 27.9 %
Average sales price$499.5 $525.6 $(26.1)(5.0)%
Central Region
Dollars$886,745 $881,681 $5,064 0.6 %
Homes closed2,432 2,142 290 13.5 %
Average sales price$364.6 $411.6 $(47.0)(11.4)%
East Region
Dollars$1,134,620 $986,724 $147,896 15.0 %
Homes closed2,914 2,463 451 18.3 %
Average sales price$389.4 $400.6 $(11.2)(2.8)%

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Home Orders (1)Three Months Ended June 30,Quarter over Quarter
 20242023Change $Change %
Total
Dollars$1,573,456 $1,474,713 $98,743 6.7 %
Homes ordered3,799 3,340 459 13.7 %
Average sales price$414.2 $441.5 $(27.3)(6.2)%
West Region
Dollars$557,296 $515,325 $41,971 8.1 %
Homes ordered1,114 990 124 12.5 %
Average sales price$500.3 $520.5 $(20.2)(3.9)%
Central Region
Dollars$399,854 $440,377 $(40,523)(9.2)%
Homes ordered1,100 1,065 35 3.3 %
Average sales price$363.5 $413.5 $(50.0)(12.1)%
East Region
Dollars$616,306 $519,011 $97,295 18.7 %
Homes ordered1,585 1,285 300 23.3 %
Average sales price$388.8 $403.9 $(15.1)(3.7)%

 Six Months Ended June 30,Quarter over Quarter
 20242023Change $Change %
Total
Dollars$3,204,651 $2,981,606 $223,045 7.5 %
Homes ordered7,790 6,827 963 14.1 %
Average sales price$411.4 $436.7 $(25.3)(5.8)%
West Region
Dollars$1,138,101 $1,151,261 $(13,160)(1.1)%
Homes ordered2,284 2,276 8 0.4 %
Average sales price$498.3 $505.8 $(7.5)(1.5)%
Central Region
Dollars$882,037 $860,898 $21,139 2.5 %
Homes ordered2,410 2,138 272 12.7 %
Average sales price$366.0 $402.7 $(36.7)(9.1)%
East Region
Dollars$1,184,513 $969,447 $215,066 22.2 %
Homes ordered3,096 2,413 683 28.3 %
Average sales price$382.6 $401.8 $(19.2)(4.8)%

(1)Home orders for any period represent the aggregate sales price of all homes ordered, net of cancellations. We do not include orders contingent upon the sale of a customer’s existing home or a mortgage pre-approval as a sales contract until the contingency is removed.

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 Order Backlog (1)
At June 30,Quarter over Quarter
 20242023Change $Change %
Total
Dollars$1,109,687 $1,687,536 $(577,849)(34.2)%
Homes in backlog2,714 3,772 (1,058)(28.0)%
Average sales price$408.9 $447.4 $(38.5)(8.6)%
West Region
Dollars$367,436 $669,636 $(302,200)(45.1)%
Homes in backlog751 1,366 (615)(45.0)%
Average sales price$489.3 $490.2 $(0.9)(0.2)%
Central Region
Dollars$278,485 $401,601 $(123,116)(30.7)%
Homes in backlog746 959 (213)(22.2)%
Average sales price$373.3 $418.8 $(45.5)(10.9)%
East Region
Dollars$463,766 $616,299 $(152,533)(24.7)%
Homes in backlog1,217 1,447 (230)(15.9)%
Average sales price$381.1 $425.9 $(44.8)(10.5)%

(1)Our backlog represents net home orders that have not closed.

Active Communities and Cancellation Rates
Active CommunitiesThree Months Ended June 30,Six Months Ended June 30,
 2024202320242023
EndingAverageEndingAverageEndingAverageEndingAverage
Total287281.0291284.5287277.2291280.1
West Region8584.09897.08581.99896.0
Central Region7678.08282.07681.38281.7
East Region126119.0111105.5126114.0111102.4

 Cancellation Rates (2)
Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Total10 %12 %9 %13 %
West Region10 %15 %9 %14 %
Central Region12 %11 %10 %14 %
East Region8 %9 %8 %12 %

(2)Cancellation rates are computed as the number of canceled units for the period divided by the gross sales units for the same period.
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Operating Results

Companywide. We reported our highest second quarter home closing revenue and volume in Company history, improving 9.8% and 18.0%, respectively, over prior year, with 4,118 closings valued at $1.7 billion for the three months ended June 30, 2024, compared to 3,490 closings valued at $1.5 billion in 2023. The 7.0% decrease in ASP on closings is primarily the result of product mix shift, with entry-level homes representing 91% of second quarter 2024 closings compared to 83% in the second quarter of 2023, as well as geographic mix. Home closing volume in the three months ended June 30, 2024 increased over the same period in 2023 despite entering the quarter with lower backlog than prior year, due to a higher backlog conversion rate of 135.8%, as compared to 89.0% in the prior second quarter period. Improvements in home order volume in the three months ended June 30, 2024 of 13.7% to 3,799 homes as compared to 3,340 homes in the three months ended June 30, 2023 is primarily tied to a 15.4% higher orders pace of 4.5 per month up from 3.9 per month in the 2023 period. Home order value of $1.6 billion in the three months ended June 30, 2024 increased 6.7% from 2023 resulting from the higher order volume partially offset by 6.2% lower ASP on orders; similar to that of closing ASP, a higher percentage of our home orders being entry-level homes and geographic mix shift drove overall ASP down. Order cancellations of 10% for the three months ended June 30, 2024 were down from 12% in the three months ended June 30, 2023; the current run rate for cancellations across the company is below our historical company average and demonstrates the tightening of overall inventory availability and attractiveness of our financing incentives.

For the six months ended June 30, 2024, home closing volume increased 19.4% to 7,625 closings, which led to home closing revenue of $3.2 billion, up 12.7% from $2.8 billion in the prior year. The increased volume was partially offset by a 5.6% year-over-year decrease in ASP on closings. Similar to the second quarter, home order volume of 7,790 was up 14.1% and home order value of $3.2 billion was up 7.5% from prior year due to higher volume and a 5.8% decrease in ASP on orders. The increase in home order volume was driven entirely from the 14.6% increase in orders pace of 4.7 homes per month, compared to 4.1 in 2023, on a relatively flat average active community count. We ended the second quarter of 2024 with 287 actively selling communities, down from 291 June 30, 2023 but up sequentially from 275 at March 31, 2024. The quarter ended with 2,714 homes in backlog valued at $1.1 billion, compared to 3,772 units valued at $1.7 billion at June 30, 2023. The lower backlog year over year is a result of the significant improvement in our backlog conversion rate, discussed above, as we are selling spec homes later in the construction cycle.
West. The West Region generated $622.8 million in home closing revenue in the three months ended June 30, 2024, a 20.0% increase compared to the $519.2 million in prior year period. The higher revenue was due to the 26.9% higher volume of 1,265 homes in the three months ended June 30, 2024, up from 997 homes in the prior year period. The higher volume of closing revenue was partially offset by lower ASP on closings, down 5.5% year over year due to a product mix shift to more entry-level homes. Home orders in the three months ended June 30, 2024 of 1,114 were up 12.5% from 990 in the prior year, resulting from a 29.4% increase in orders pace to 4.4 homes per month from 3.4 per month in 2023, more than offsetting the 13.4% lower number of average active communities. Although the West Region average active community count is down from 2023, it did increase sequentially from the first quarter of 2024. Home order value of $557.3 million for the second quarter of 2024 increased 8.1% from prior year due to the impact of the higher order volume offset in part by a 3.9% lower ASP. The West Region cancellation rate of 10% in the three months ended June 30, 2024 improved from 15% in the prior year.
For the six months ended June 30, 2024, home closing revenue of $1.1 billion increased 21.6% due to 497 more units closed, while ASP on closings decreased 5.0% compared to prior year due to product mix shift previously mentioned. Home order volume in the West Region of 2,284 was relatively flat with prior year as a 17.5% increase in orders pace of 4.7 homes per month was mostly offset by the 14.7% decrease in the average number of actively selling communities. Home order value of $1.1 billion was down 1.1% due to a 1.5% lower ASP. The year-to-date cancellation rate of 9% declined significantly from 14% in the prior year period. The West Region ended the second quarter of 2024 with 751 homes in backlog valued at $367.4 million, compared to 1,366 units valued at $669.6 million at June 30, 2023, lower backlog is due entirely to a higher backlog conversion rate of 140.2% for the three months ended June 30, 2024 compared to 72.6% in the same period of 2023.
Central. The Central Region closed 1,265 homes in the three months ended June 30, 2024, up 15.6% from 1,094 in the prior year period due to an increase in the backlog conversion rate of 138.9% compared to 110.7% for the same prior year period. Home closing revenue of $459.2 million in the three months ended June 30, 2024 was relatively flat with the prior year period, as the higher volume was offset by a 13.1% decrease in ASP on closings due to product mix shift and higher utilization of incentives. Home order volume increased 3.3% to 1,100 homes in the three months ended June 30, 2024 as orders pace improved 9.3% to 4.7 homes per month in three months ended June 30, 2024, compared to 4.3 homes per month in the same prior year period. Despite the higher order volume, home order value of $399.9 million declined 9.2% from $440.4 million in the prior year quarter as ASP on orders in the three months ended June 30, 2024 decreased $50,000, or 12.1%, from 2023, from more entry-level homes sold in 2024. The Central Region cancellation rate of 12% in the three months ended June 30, 2024 was relatively in line with 11% in the three months ended June 30, 2023.
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Year-to-date home closing results in the Central Region were similar to those of the second quarter. For the six months ended June 30, 2024, home closing revenue of $886.7 million on 2,432 home closings increased and 0.6% and 13.5%, respectively. For the six months ended June 30, 2024, home orders increased 12.7%, partially offset by a 9.1% drop in ASP on orders, which led to a 2.5% overall improvement in home order value of $882.0 million. Order volume was higher due to an 11.4% increase in orders pace to 4.9 homes per month on a relatively flat average active community count. The year-to-date cancellation rate of 10% for the six months ended June 30, 2024 improved from 14% in the prior year period. The Central Region ended the quarter with 746 units in backlog valued at $278.5 million, down 22.2% and 30.7%, respectively, compared to June 30, 2023. The decrease in backlog units is due to the higher backlog conversion rate discussed previously.
East. During the three months ended June 30, 2024, the East Region closed 1,588 homes for $611.7 million, compared to 1,399 closings and $567.0 million in home closing revenue in the comparable prior year period. The 13.5% increase in volume, largely benefiting from the 130.2% backlog conversion rate, was partially offset by 5.0% lower ASP on home closings. Home orders of 1,585 in the three months ended June 30, 2024 increased 23.3% due to the combination of a 12.8% higher average active communities and a 7.3% increase in orders pace to 4.4 homes per month in the three months ended June 30, 2024 compared to 4.1 homes per month in 2023. Order value rose to $616.3 million in the three months ended June 30, 2024, from $519.0 million in the prior year period, from the 23.3% higher volume, partially offset by the 3.7% lower ASP on orders. The cancellation rate of 8% in the three months ended June 30, 2024 remained consistent with 9% in the same prior year period.
The year-to-date results of the East Region were similar to those of the three months ended June 30, 2024, with 18.3% and 15.0% improvements in home closing volume and revenue, respectively, compared to the 2023 period, closing 2,914 homes for $1.1 billion in home closing revenue for the six months ended June 30, 2024. Orders volume increased 28.3% due to an 11.3% increase in average active communities coupled with a 15.4% higher orders pace for the six months ended June 30, 2024. The higher order volume led to a 22.2% increase in home order value of $1.2 billion, as ASP on orders declined 4.8% due to a higher mix of entry-level homes. Year-to-date, the East Region's cancellation rate of 8% saw a significant drop from 12% in the prior year. This Region has experienced our lowest cancellation rates in the Company in 2024 and is well below our historical company average due to overall tightening of inventory in these markets. The East Region ended the second quarter of 2024 with 1,217 homes in backlog valued at $463.8 million, down 15.9% and 24.7%, respectively, from 1,447 homes valued at $616.3 million at June 30, 2023.
Land Closing Revenue and Gross Profit
From time to time, we may sell certain lots or land parcels to other homebuilders, developers or investors if we feel the sale will provide a greater economic benefit to us than continuing home construction or where we are looking to diversify our land positions in a specific geography or divest of assets that no longer align with our strategy. We had no land sales for the three months ending June 30, 2024, and recognized land closing revenue and profit of $24.4 million and $0.2 million, respectively, for the three months ending June 30, 2023. Year-to-date land sales resulted in profit of $7,000 and $1.6 million for 2024 and 2023, respectively.
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Other Operating Information (dollars in thousands)  
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
 DollarsPercent of Home Closing RevenueDollarsPercent of Home Closing RevenueDollarsPercent of Home Closing RevenueDollarsPercent of Home Closing Revenue
Home Closing Gross Profit (1)
Total$439,506 25.9 %$376,980 24.4 %$817,464 25.9 %$659,441 23.5 %
West$148,264 23.8 %$95,548 18.4 %$263,392 23.1 %$169,635 18.1 %
Central$124,654 27.1 %$126,432 27.7 %$241,274 27.2 %$232,142 26.3 %
East$166,588 27.2 %$155,000 27.3 %$312,798 27.6 %$257,664 26.1 %
 
(1)Home closing gross profit represents home closing revenue less cost of home closings, including impairments, if any. Cost of home closings includes land and associated development costs, direct home construction costs, an allocation of common community costs (such as architectural, legal and zoning costs), interest, sales tax, impact fees, warranty, construction overhead and closing costs.
Companywide. Gross profit for the three months ended June 30, 2024 was $439.5 million, with a margin of 25.9%, a 150 basis point improvement from 24.4% in the three months ended June 30, 2023. The margin improvement was due to lower direct costs offset partially by higher lot costs, leverage of higher home closing revenue on overhead costs coupled with shorter construction cycle times. For the six months ended June 30, 2024, gross profit of $817.5 million and margin of 25.9% increased from $659.4 million and 23.5% in six months ended June 30, 2023, for a margin improvement of 240 basis points, also due to lower direct costs, leverage of higher home closing revenue on overhead costs and shorter construction cycle times. For both the three and six month periods, the average per home cost of interest lock incentives was lower, reducing the negative drag on margin year over year.

West. The West Region had a 540 basis point improvement in home closing gross margin of 23.8% for the three months ended June 30, 2024 versus 18.4% in the three months ended June 30, 2023. Similarly, year-to-date gross margin improved 500 basis point to 23.1% in 2024 compared to 18.1% in 2023. The margin improvement in both periods was due to direct cost savings, leverage of higher home closing revenue on overhead costs and shorter construction cycle times, all of which were partially offset by higher lot costs. Additionally, home closing gross margin for both the three and six month periods ended June 30, 2023 were negatively impacted by significant incentives to address affordability concerns caused by years of steep price appreciation as well as elevated direct costs that had just begun to improve.
Central. The Central Region home closing gross margin of 27.1% for the three months ended June 30, 2024, a 60 basis point decrease from 27.7% in the prior year quarter, was due to geographic mix of closings. All divisions benefited from lower direct costs and savings resulting from shorter construction cycle times, which were offset by higher lot costs and increased utilization of interest rate lock incentives in certain markets. Year-to-date, the Central Region gross margin of 27.2% in 2024 improved 90 basis points from 26.3% in 2023 as a result of lower direct costs, leverage of higher home closing revenue on overhead costs, and shorter construction cycle times, which were offset by higher utilization of interest rate lock incentives and higher lot costs.
East. The East Region home closing gross margin of 27.2% for the three months ended June 30, 2024 was consistent with 27.3% for the comparable 2023 period, as savings in direct costs and higher vendor rebates were offset by increased lot costs. For the six months ended June 30, 2024, the East Region home closing gross margin improved 150 basis points to 27.6% due to lower direct costs and leverage of higher home closing revenue on overhead costs, all of which were partially offset by higher lot costs.
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Financial Services Profit/(Loss) (in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Financial services profit/(loss)$4,837 $(2,557)$4,147 $366 
Financial services profit/(loss) represents the net profit/(loss) of our financial services operations, including the operating profit generated by our wholly-owned title and insurance companies, Carefree Title Agency, Inc. and Meritage Homes Insurance Agency, respectively, as well as our portion of earnings from a mortgage joint venture. Financial services profit of $4.8 million in the three months ended June 30, 2024 increased $7.4 million from a loss of $2.6 million in the same prior year period, as the prior year period included $7.9 million in charges related to unused interest rate forward commitments that expired as compared to $2.0 million of similar charges in the second quarter of 2024. Financial services profit for the three months ended June 30, 2024 also increased due to higher profits for both the title and insurance companies as a result of higher home closings volume. Similar to the second quarter results, year-to-date financial services profit increased $3.8 million due to fewer charges related to unused interest rate forward commitments and greater title and insurance company profits resulting from higher home closings volume.
Selling, General and Administrative Expenses and Other Expenses (dollars in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Commissions and other sales costs$(104,665)$(95,798)$(206,215)$(178,644)
Percent of home closing revenue6.2 %6.2 %6.5 %6.4 %
General and administrative expenses$(53,184)$(52,140)$(103,916)$(99,659)
Percent of home closing revenue3.1 %3.4 %3.3 %3.6 %
Interest expense$— $— $— $— 
Other income, net$11,498 $12,862 $20,520 $21,706 
Loss on early extinguishment of debt$(631)$— $(631)$— 
Provision for income taxes$(65,806)$(52,688)$(113,805)$(86,690)

Commissions and Other Sales Costs. Commissions and other sales costs are comprised of internal and external commissions and related sales and marketing expenses such as advertising and sales office costs. These costs increased $8.9 million to $104.7 million in the three months ended June 30, 2024, due to higher home closing revenue and increased costs associated with maintaining higher levels of spec inventory. Commissions and other sales costs were 6.2% of home closing revenue in both second quarter periods. For the six months ended June 30, 2024, commissions and other sales costs of $206.2 million were 6.5% of home closing revenue, increases of $27.6 million and 10 basis points, respectively.

General and Administrative Expenses. General and administrative expenses represent corporate and divisional overhead expenses such as salaries and bonuses, occupancy, insurance and travel expenses. For the three months ended June 30, 2024, general and administrative expenses of $53.2 million were relatively consistent with $52.1 million in the prior year period, and improved 30 basis points to 3.1% of home closing revenue. For the six months ended June 30, 2024, general and administrative expenses of $103.9 million increased $4.3 million, but as a percentage of home closing revenue improved 30 basis points. For both the three and six months ended June 30, 2024 general and administrative expenses declined as a percentage of home closing revenue due to leverage of higher home closing revenue on fixed overhead expenses.
Interest Expense. Interest expense is comprised of interest incurred, but not capitalized, on our senior and convertible senior notes, loans payable and other borrowings, and our revolving credit facility agreement ("Credit Facility"). We recognized no interest expense for the three and six months ended June 30, 2024 and 2023 because all interest was capitalized to qualifying assets.
Other Income, Net. Other income, net, primarily consists of (i) sublease income, (ii) interest earned on our cash and cash equivalents, (iii) payments and awards related to legal settlements and (iv) our portion of pre-tax income or loss from non-financial services joint ventures. Other income, net was $11.5 million and $12.9 million for the three months ended June 30, 2024 and 2023, respectively, and $20.5 million and $21.7 million for the six months ended June 30, 2024 and 2023, respectively.
Loss on Early Extinguishment of Debt. Loss on early extinguishment of debt of $0.6 million for the three and six months ended June 30, 2024 is related to the $250.0 million redemption of our 2025 Notes. There were no similar charges for the three
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and six months ended June 30, 2023. See Note 6 to the unaudited consolidated financial statements included in this report for more information related to the redemption of our 2025 Notes.
Income Taxes. Our effective tax rate was 22.1% and 22.0% for the three months ended June 30, 2024 and 2023, respectively, and 21.4% for each of the six months ended June 30, 2024 and 2023. The rate for all periods reflect energy-efficient homes tax credits on qualifying homes under the Internal Revenue Code ("IRC") §45L energy-efficient homes federal tax credit.


Liquidity and Capital Resources
Overview
We have historically generated cash and funded our operations primarily from cash flows from operating activities. Additional sources of funds may include additional debt or equity financing and borrowing capacity under our Credit Facility. We exercise strict controls and believe we have a prudent strategy for Company-wide cash management, including those related to cash outlays for land acquisition and development and spec home construction. Our principal uses of cash include acquisition and development of land and lots, home construction, operating expenses, share repurchases and the payment of interest, routine liabilities and dividends. We may also opportunistically repurchase our senior and convertible senior notes.
Cash flows for each of our communities depend on their stage of the development cycle, and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, zoning plat and other approvals, community and lot development, and construction of model homes, roads, utilities, landscape and other amenities. Because these costs are a component of our inventory and are not recognized in our income statement until a home closes, we incur significant cash outlays prior to recognition of earnings. In the later stages of a community, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. Similarly, in times of community count growth, we incur significant outlays of cash through the land purchase, development and community opening stages whereas in in times of community count stability, these cash outlays are incurred in a more even-flow cadence with cash inflows from actively selling communities that are contributing closing volume and home closing revenue. Conversely, in a down turn environment, cash outlays for land and community count growth may be scaled back to preserve liquidity and we may curtail community count.
Short-term Liquidity and Capital Resources
Over the course of the next twelve months, we expect that our primary demand for funds will be for the construction of homes, as well as acquisition and development of both new and existing lots, operating expenses, including general and administrative expenses, interest and dividend payments and common stock repurchases. Although we don't anticipate any early redemptions in the near term, we may opportunistically retire or redeem a portion of our senior and convertible senior notes. We expect to meet these short-term liquidity requirements primarily through our cash and cash equivalents on hand and the net cash flows provided by our operations.
Between our cash and cash equivalents on hand combined with the availability of liquidity from our Credit Facility, we believe that we currently have sufficient liquidity. Nevertheless, in the future, we may seek additional capital to strengthen our liquidity position, enable us to acquire additional land inventory in anticipation of improving market conditions, and/or strengthen our long-term capital structure.
Long-term Liquidity and Capital Resources
Beyond the next twelve months, our principal demands for funds will be for the construction of homes, land acquisition and development activities needed to maintain our lot supply and active community count, payments of principal and interest on our senior and convertible senior notes as they become due or mature, share repurchases and dividend payments. We expect our existing and future generated cash will be adequate to fund our ongoing operating activities as well as provide capital for investment in future land purchases and related development activities. To the extent the sources of capital described above are insufficient to meet our long-term cash needs, we may also conduct additional public offerings of our securities, refinance or secure new debt or dispose of certain assets to fund our operating activities. There can be no assurances that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing stockholders or increase our interest costs.
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Material Cash Requirements
We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact both short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on our unaudited consolidated balance sheets as of June 30, 2024, while others are considered future commitments for materials or services not yet provided. Our contractual obligations primarily consist of principal and interest payments on our senior and convertible senior notes, loans payable and other borrowings, including our Credit Facility, letters of credit and surety bonds and operating leases. We have no material debt maturities until 2027. We also have requirements for certain short-term lease commitments, funding working capital needs of our existing unconsolidated joint ventures and other purchase obligations in the normal course of business. Other material cash requirements include land acquisition and development costs, home construction costs and operating expenses, including our selling, general and administrative expenses, as previously discussed. We plan to fund these commitments primarily with cash flows generated by operations, but may also utilize additional debt or equity financing and borrowing capacity under our Credit Facility. Our maximum exposure to loss on our purchase and option agreements is generally limited to non-refundable deposits and capitalized or committed pre-acquisition costs.
For information about our loans payable and other borrowings, including our Credit Facility, senior and convertible senior notes, reference is made to Notes 5 and 6 in the notes to our unaudited consolidated financial statements included in this report and are incorporated by reference herein. For information about our lease obligations, reference is made to Note 4 in the consolidated financial statements included in our Annual Report.
Reference is made to Notes 1, 3, 4, and 15 in the notes to our unaudited consolidated financial statements included in this report and are incorporated by reference herein. These Notes discuss our off-balance sheet arrangements with respect to land acquisition contracts and option agreements, and land development joint ventures, including the nature and amounts of financial obligations relating to these items. In addition, these Notes discuss the nature and amounts of certain types of commitments that arise in connection with the ordinary course of our land development and homebuilding operations, including commitments of land development joint ventures for which we might be obligated, if any.
We do not engage in commodity trading or other similar activities. We had no derivative financial instruments that required derivative accounting under ASC 815-10, Derivatives and Hedging, at June 30, 2024 or December 31, 2023.
Operating Cash Flow Activities
During the six months ended June 30, 2024, net cash used in operating activities totaled $36.0 million, versus net cash provided by operating activities of $355.9 million for the six months ended June 30, 2023. Operating cash flows in the six months ended June 30, 2024 benefited from cash generated by net earnings of $417.6 million, which were offset by a $450.6 million increase in real estate. Operating cash flows in the six months ended June 30, 2023 benefited from cash generated by net earnings of $318.1 million.
Investing Cash Flow Activities
During the six months ended June 30, 2024 and 2023, net cash used in investing activities totaled $19.6 million and $22.1 million. Cash used in investing activities in the first half of 2024 was mainly attributable to purchases of property and equipment of $13.2 million and investments in unconsolidated entities of $6.6 million. Cash used in investing activities in the first half of 2023 was mainly attributable to the purchases of property and equipment.
Financing Cash Flow Activities
During the six months ended June 30, 2024, net cash provided by financing activities totaled $127.4 million as compared to net cash used in financing activities of $32.1 million for the six months ended June 30, 2023. The net cash provided by financing activities in 2024 primarily reflects the net proceeds of $557.7 million from the issuance of our 1.75% Convertible Senior Notes due 2028, offset by the early redemption of our 6.00% Senior Notes due 2025 of $250.0 million principal and $61.8 million for the purchase of capped calls, along with $55.9 million of share repurchases and $54.5 million of dividends paid. The net cash used in financing activities in 2023 includes $19.9 million of dividends paid and $10.0 million in share repurchases. See 'Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds' for more information about our authorized share repurchase program.
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We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. Debt-to-capital and net debt-to-capital are calculated as follows (dollars in thousands):
As of
June 30, 2024December 31, 2023
Senior and convertible senior notes, net, loans payable and other borrowings$1,313,311 $1,008,215 
Stockholders’ equity4,882,534 4,611,900 
Total capital$6,195,845 $5,620,115 
Debt-to-capital (1)
21.2 %17.9 %
Senior and convertible senior notes, net, loans payable and other borrowings$1,313,311 $1,008,215 
Less: cash and cash equivalents(992,921)(921,227)
Net debt320,390 86,988 
Stockholders’ equity4,882,534 4,611,900 
Total net capital$5,202,924 $4,698,888 
Net debt-to-capital (2)
6.2 %1.9 %
 
(1)Debt-to-capital is computed as senior and convertible senior notes, net and loans payable and other borrowings divided by the aggregate of total senior and convertible senior notes, net, loans payable and other borrowings and stockholders' equity.
(2)Net debt-to-capital is considered a non-GAAP financial measure, and is computed as net debt divided by the aggregate of net debt and stockholders' equity. Net debt is comprised of total senior and convertible senior notes, net and loans payable and other borrowings, less cash and cash equivalents. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing.
Dividends
During the three months ended June 30, 2024 and 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.75 and $0.27 per share, respectively. Quarterly dividends declared and paid during the six months ended June 30, 2024 and 2023 totaled $1.50 and $0.54 per share, respectively.
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Credit Facility Covenants
Borrowings under the Credit Facility are unsecured, but availability is subject to, among other things, a borrowing base. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of June 30, 2024. Our actual financial covenant calculations as of June 30, 2024 are reflected in the table below.
Financial Covenant (dollars in thousands):Covenant RequirementActual
Minimum Tangible Net Worth> $2,933,417$4,834,023
Leverage Ratio< 60%5.2%
Investments other than defined permitted investments< $1,475,207$23,630

Seasonality
Historically, we have experienced seasonal variations in our quarterly operating results and capital requirements. We typically take orders for more homes in the first half of the fiscal year than in the second half, which has created additional working capital requirements in the second and third quarters to build our inventories to satisfy seasonally higher closings in the second half of the year. While we expect the seasonal orders pattern to continue over the long term, our higher backlog conversion rate and all-spec strategy may shift the timing of home closings and capital requirements to build our inventories to earlier in the year. Additionally, seasonality may, from time to time, be affected by short-term volatility in the homebuilding industry and in the overall economy.
Recent Accounting Pronouncements
See Note 1 to our unaudited consolidated financial statements included in this report for discussion of recent accounting pronouncements.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
Our fixed rate debt is made up primarily of $1.3 billion in aggregate principal amount of our senior and convertible senior notes. All outstanding senior and convertible senior notes bear fixed rates of interest, and therefore, do not expose us to financial statement risk associated with changes in interest rates. The fair values of senior and convertible senior notes change primarily when interest rates change, and in the case of our convertible senior notes, when the market price of our stock fluctuates. Except in limited circumstances, we do not have an obligation to prepay our senior notes and, as a result, changes in fair value of our senior notes should not have a significant impact until we would be required to repay such debt and access the capital markets to issue new debt. Obligations to prepay our convertible senior notes may be required upon the occurrence of certain limited conversion conditions that are closely related to the fair value of the convertible senior notes, and therefore changes in the fair value of our convertible senior notes should not have a significant impact as conversion is more likely to occur under favorable stock price conditions. Our Credit Facility is subject to interest rate changes as the borrowing rates are based on SOFR or Prime (see Note 5 to our unaudited consolidated financial statements included in this report).

Item 4.Controls and Procedures
In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported on a timely basis, we have developed and implemented disclosure controls and procedures. Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO"), has reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of June 30, 2024 (the “Evaluation Date”). Based on such evaluation, our management has concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules
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and forms, and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
During the fiscal quarter covered by this Form 10-Q, there has not been any change in our internal control over financial reporting that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION
Item 1.Legal Proceedings
See Note 15 to our unaudited consolidated financial statements in this report for a discussion of our legal proceedings.

Item 1A.Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item IA "Risk Factors" in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, financial condition and/or operating results. Except as described below, there have been no material changes in our risk factors as previously disclosed in our Annual Report. Material new risks and material changes in previously disclosed risks are presented in underlined type.

Our level of indebtedness may adversely affect our financial position and prevent us from fulfilling our debt obligations.

The homebuilding industry is capital intensive and requires significant up-front expenditures to secure land and pursue development and construction on such land. Accordingly, we incur substantial indebtedness to finance our homebuilding activities. At June 30, 2024, we had approximately $1.3 billion of indebtedness and $992.9 million of cash and cash equivalents. If we require working capital greater than that provided by our operations and current liquidity position, including the $795.3 million available to be drawn under our credit facility, we may be required to seek additional capital in the form of equity or debt financing from a variety of potential sources, including bank financing, public bonds or off-balance sheet resources. There can be no assurance we would be able to obtain such additional capital on terms acceptable to us, if at all. The level of our indebtedness could have important consequences to our stockholders, including the following:

•our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes could be impaired;
•we could be required to use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness, which would reduce the funds available to us for other purposes such as land and lot acquisition, development and construction activities;
•although we have a relatively low level of indebtedness and a relatively high balance of cash and cash equivalents, some of our competitors may have additional access to capital, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and
•we may be more vulnerable to economic downturns and adverse developments in our business than some of our competitors.

Furthermore, the holders of our 1.75% Convertible Senior Notes due 2028 (the "2028 Convertible Notes") have the right to convert their notes upon the occurrence of certain conversion conditions. Upon conversion, we will be required to make cash payments up to the aggregate principal amount of the 2028 Convertible Notes to be converted and cash, shares of Common Stock or a combination of cash and shares of Common Stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the 2028 Convertible Notes being converted.

We expect to generate cash flow to pay our expenses and to pay the principal and interest on our indebtedness with cash flow from operations or from existing working capital. Our ability to meet our expenses thus depends, to a large extent, on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. If we do not have sufficient funds, we may be required to refinance all or part of our existing debt, sell assets, issue equity or borrow additional funds. We cannot guarantee that we will be able to do so on terms acceptable to us, if at all. In addition, the terms of existing or future debt agreements may restrict or limit us from pursuing any of these alternatives.

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We are subject to counterparty risk with respect to the capped call transactions.

In connection with the issuance of the 2028 Convertible Notes, we entered into certain derivative transactions (the "capped call transactions") with the several capped call counterparties (together with their respective affiliates, the "option counterparties"). The capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of any 2028 Convertible Notes and to offset any cash payments made in excess of the principal amount of converted 2028 Convertible Notes, as the case may be.

Although the option counterparties are investment grade international financial institutions, we will be subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transactions with such option counterparty. Our exposure will depend on many factors. For example, if a market condition existed where our stock increased above the premium but one or more option counterparties defaults under the capped call transactions, we may suffer more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of the option counterparties.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities and Use of Proceeds
As described in Note 6 to our unaudited consolidated financial statements in the report, in May 2024 the Company issued $575.0 million aggregate principal amount of convertible notes due 2028 (the "2028 Convertible Notes"). The 2028 Convertible Notes were issued to the Initial Purchasers in a private placement pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Company offered and sold the 2028 Convertible Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Initial Purchasers initially offered the Notes to persons reasonably believed to be “qualified institutional buyers” pursuant to an exemption from registration provided by Rule 144A under the Securities Act. The Company relied on this exemption from registration based in part on representations made by the Initial Purchasers.

The 2028 Convertible Notes and shares of the Company’s common stock (the “Common Stock”) issuable upon conversion of the 2028 Convertible Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company does not intend to file a registration statement for the resale of the 2028 Convertible Notes or any shares of Common Stock issuable upon conversion of the 2028 Convertible Notes. Initially, a maximum of 3,279,685 shares of Common Stock may be issued upon conversion of the 2028 Convertible Notes, based on a maximum conversion rate of 5.7038 shares of Common Stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.
Issuer Purchases of Equity Securities
On February 13, 2019, our Board of Directors authorized a new stock repurchase program, authorizing the expenditure of up to $100.0 million to repurchase shares of our common stock. On November 13, 2020, the Board of Directors authorized the expenditure of an additional $100.0 million to repurchase shares of our common stock under this program. On August 12, 2021, the Board of Directors authorized the expenditure of an additional $100.0 million to repurchase shares of our common stock under this program, which was announced on August 17, 2021. On May 19, 2022, the Board of Directors authorized the expenditure of an additional $200.0 million to repurchase shares of our common stock under this program, which was announced on May 25, 2022. There is no stated expiration for this program. The repurchases of the Company's shares may be made in the open market, in privately negotiated transactions, or otherwise. The timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The share repurchase program may be modified, suspended or discontinued at any time. As of June 30, 2024 there was $129.1 million available under this program to repurchase shares. There were no share repurchases during the three months ended June 30, 2024.

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Item 5.Other Information
Insider Trading Arrangements
During the fiscal quarter ended June 30, 2024, no director or officer adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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 Item 6.Exhibits
Exhibit
Number
DescriptionPage or Method of Filing
3.1Restated Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3 of Form 8-K dated June 20, 2002
3.1.1Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3.1 of Form 10-Q for the quarter ended September 30, 1998
3.1.2Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3.1 of Form 8-K dated September 15, 2004
3.1.3Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix A of the Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders filed on April 10, 2006
3.1.4Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix B of the Definitive Proxy Statement for the 2008 Annual Meeting of Stockholders filed on April 1, 2008
3.1.5Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix A of the Definitive Proxy Statement filed on January 9, 2009
3.2Meritage Homes Corporation Amended and Restated BylawsIncorporated by reference to Exhibit 3.1 of Form 8-K dated June 14, 2023
4.1Indenture, dated as of May 9, 2024, by among Meritage Homes Corporation, each of the subsidiary guarantors from time to time party thereto and Regions Bank, as TrusteeIncorporated by reference to Exhibit 4.1 of Form 8-K dated May 9, 2024
4.2Form of 1.75% Convertible Senior Notes due 2028 (included as Exhibit A to Exhibit 4.1)Incorporated by reference to Exhibit 4.1 of Form 8-K dated May 9, 2024
10.1Form of Base Capped Call ConfirmationIncorporated by reference to Exhibit 10.1 of Form 8-K dated May 9, 2024
10.2Form of Additional Capped Call ConfirmationIncorporated by reference to Exhibit 10.2 of Form 8-K dated May 9, 2024
10.3Tenth Amendment to Amended and Restated Credit AgreementIncorporated by reference to Exhibit 10.1 of Form 8-K dated June 12, 2024
22List of Guarantor SubsidiariesIncorporated by reference to Exhibit 22 of Form 10-K for the year ended December 31, 2022
31.1Rule 13a-14(a)/15d-14(a) Certification of Phillippe Lord, Chief Executive OfficerFiled herewith
31.2Rule 13a-14(a)/15d-14(a) Certification of Hilla Sferruzza, Chief Financial OfficerFiled herewith
32.1Section 1350 Certification of Chief Executive Officer and Chief Financial OfficerFurnished herewith
101.0
The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q as of and for the three months and six months ended June 30, 2024 were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Income Statements, (iii) Unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Consolidated Financial Statements.
104.0
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL and contained in exhibit 101.

41



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
MERITAGE HOMES CORPORATION,
a Maryland corporation
By:/s/ HILLA SFERRUZZA
Hilla Sferruzza
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Date:July 26, 2024

INDEX OF EXHIBITS
3.1
3.1.1
3.1.2
3.1.3
3.1.4
3.1.5
3.2
4.1 
4.2 
10.1 
10.2 
10.3 
22 
31.1
31.2
32.1
101.0
The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q as of and for the three months and six months ended June 30, 2024 were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Income Statements, (iii) Unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Consolidated Financial Statements.
104.0
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL and contained in exhibit 101.


42

EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Phillippe Lord, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Meritage Homes Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 26, 2024
/s/ Phillippe Lord
Phillippe Lord
Chief Executive Officer
(Principal Executive Officer)



EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Hilla Sferruzza, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Meritage Homes Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 26, 2024
/s/ Hilla Sferruzza
Hilla Sferruzza
Executive Vice President and Chief Financial Officer (Principal Financial Officer)



 
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Meritage Homes Corporation (the “Company”) for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, the undersigned, certify, to the best of our knowledge, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
MERITAGE HOMES CORPORATION,
a Maryland Corporation
By:
 /s/ Phillippe Lord
 
Phillippe Lord
Chief Executive Officer
(Principal Executive Officer)
July 26, 2024
By:
 /s/ Hilla Sferruzza
 
Hilla Sferruzza
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
July 26, 2024




v3.24.2
Cover Page - shares
 6 Months Ended
Jun. 30, 2024
Jul. 22, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 1-9977  
Entity Registrant Name Meritage Homes Corporation  
Entity Incorporation, State or Country Code MD  
Entity Tax Identification Number 86-0611231  
Entity Address, Address Line One 18655 North Claret Drive  
Entity Address, Address Line Two Suite 400  
Entity Address, City or Town Scottsdale  
Entity Address, State or Province AZ  
Entity Address, Postal Zip Code 85255  
City Area Code 480  
Local Phone Number 515-8100  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Title of 12(b) Security Common Stock $.01 par value  
Trading Symbol MTH  
Security Exchange Name NYSE  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   36,327,214
Entity Central Index Key 0000833079  
Amendment Flag false  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Current Fiscal Year End Date --12-31  
v3.24.2
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Assets    
Cash and cash equivalents $ 992,921 $ 921,227
Other receivables 258,137 266,972
Real estate 5,175,084 4,721,291
Deposits on real estate under option or contract 156,698 111,364
Investments in unconsolidated entities 23,630 17,170
Property and equipment, net 46,585 48,953
Deferred tax assets, net 60,167 47,573
Prepaids, other assets and goodwill 210,758 218,584
Total assets 6,923,980 6,353,134
Liabilities    
Accounts payable 299,780 271,650
Accrued liabilities 388,975 424,764
Home sale deposits 39,380 36,605
Loans payable and other borrowings 9,711 13,526
Senior and convertible senior notes, net 1,303,600 994,689
Total liabilities 2,041,446 1,741,234
Stockholders’ Equity    
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at June 30, 2024 and December 31, 2023 0 0
Common stock, par value $0.01. Authorized 125,000,000 shares; 36,327,214 and 36,425,037 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 363 364
Additional paid-in capital 198,503 290,955
Retained earnings 4,683,668 4,320,581
Total stockholders’ equity 4,882,534 4,611,900
Total liabilities and stockholders’ equity $ 6,923,980 $ 6,353,134
v3.24.2
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 125,000,000 125,000,000
Common stock, shares issued (in shares) 36,327,214 36,425,037
Common stock, shares outstanding (in shares) 36,327,214 36,425,037
v3.24.2
UNAUDITED CONSOLIDATED INCOME STATEMENTS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Commissions and other sales costs $ (104,665) $ (95,798) $ (206,215) $ (178,644)
General and administrative expenses (53,184) (52,140) (103,916) (99,659)
Interest expense 0 0 0 0
Other income, net 11,498 12,862 20,520 21,706
Loss on early extinguishment of debt (631) 0 (631) 0
Earnings before income taxes 297,361 239,524 531,376 404,827
Provision for income taxes (65,806) (52,688) (113,805) (86,690)
Net earnings $ 231,555 $ 186,836 $ 417,571 $ 318,137
Earnings per common share:        
Basic (in dollars per share) $ 6.38 $ 5.08 $ 11.50 $ 8.67
Diluted (in dollars per share) $ 6.31 $ 5.02 $ 11.37 $ 8.56
Weighted average number of shares:        
Basic (in shares) 36,322 36,765 36,317 36,715
Diluted (in shares) 36,718 37,191 36,738 37,149
Common Stock, Dividends, Per Share, Declared $ 0.75 $ 0.27 $ 1.50 $ 0.54
Homebuilding        
Revenue $ 1,693,738 $ 1,567,400 $ 3,162,139 $ 2,846,708
Cost of closings (1,254,232) (1,190,243) (2,344,668) (2,185,650)
Gross profit 439,506 377,157 817,471 661,058
Home closings        
Revenue 1,693,738 1,543,021 3,159,834 2,804,944
Cost of closings (1,254,232) (1,166,041) (2,342,370) (2,145,503)
Gross profit 439,506 376,980 817,464 659,441
Land closings        
Revenue 0 24,379 2,305 41,764
Cost of closings 0 (24,202) (2,298) (40,147)
Gross profit 0 177 7 1,617
Financial Services        
Revenue 8,311 6,210 14,664 11,941
Expense (3,924) (2,972) (6,927) (6,039)
Gross profit 4,837 (2,557) 4,147 366
Earnings/(loss) from financial services unconsolidated entities and other, net $ 450 $ (5,795) $ (3,590) $ (5,536)
v3.24.2
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash flows from operating activities:    
Net earnings $ 417,571 $ 318,137
Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities:    
Depreciation and amortization 12,812 11,196
Stock-based compensation 10,832 10,401
Equity in earnings from unconsolidated entities (2,627) (2,882)
Distributions of earnings from unconsolidated entities 2,778 3,418
Other 4,697 2,148
Changes in assets and liabilities:    
(Increase)/decrease in real estate (450,551) 14,950
(Increase)/decrease in deposits on real estate under option or contract (45,576) 5,491
Decrease in other receivables, prepaids and other assets 24,237 8,962
Decrease in accounts payable and accrued liabilities (12,965) (27,754)
Increase in home sale deposits 2,775 11,818
Net cash (used in)/provided by operating activities (36,017) 355,885
Cash flows from investing activities:    
Payments to Acquire Interest in Joint Venture (6,611) (1,277)
Distributions of capital from unconsolidated entities 0 43
Purchases of property and equipment (13,158) (21,134)
Proceeds from sales of property and equipment 130 228
Maturities/sales of investments and securities 750 750
Payments to purchase investments and securities (750) (750)
Net cash used in investing activities (19,639) (22,140)
Cash flows from financing activities:    
Repayment of loans payable and other borrowings (7,445) (2,209)
Repayment of senior notes (250,695) 0
Dividends paid (54,484) (19,854)
Payments of Debt Issuance Costs 17,303 0
Proceeds from Convertible Debt 575,000 0
CashPaidForCappedCall (61,790) 0
Repurchase of shares (55,933) (10,000)
Net cash provided by/(used in) financing activities 127,350 (32,063)
Net increase in cash and cash equivalents 71,694 301,682
Cash and cash equivalents, beginning of period 921,227 861,561
Cash and cash equivalents, end of period $ 992,921 $ 1,163,243
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION AND BASIS OF PRESENTATION
Organization. Meritage Homes Corporation ("Meritage Homes") is a leading designer and builder of single-family attached and detached homes. We primarily build in historically high-growth regions of the United States and offer a variety of entry-level and first move-up homes. We have operations in three regions: West, Central and East, which are comprised of ten states: Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. We also operate a financial services reporting segment. In this segment, we offer title and escrow, mortgage, and insurance services. Carefree Title Agency, Inc. ("Carefree Title"), our wholly-owned title company, provides title insurance and closing/settlement services to our homebuyers in certain states. Managing our own title operations allows us greater control over the entire escrow and closing cycles in addition to generating additional revenue. Meritage Homes Insurance Agency, Inc. (“Meritage Insurance”), our wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. Our financial services operation also provides mortgage services to our homebuyers through an unconsolidated joint venture.
We commenced our homebuilding operations in 1985 through our predecessor company, Monterey Homes. Meritage Homes Corporation was incorporated in the state of Maryland in 1988 under the name of Emerald Mortgage Investments Corporation. We changed our name to Homeplex Mortgage Investments Corporation in 1990 and merged with Monterey Homes in 1996, at which time our name was changed to Monterey Homes Corporation and later ultimately to Meritage Homes Corporation. Since that time, we have engaged in homebuilding and related activities. Meritage Homes Corporation operates as a holding company and has no independent assets or operations. Its homebuilding construction, development and sales activities are conducted through its subsidiaries. Its homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At June 30, 2024, we were actively selling homes in 287 communities, with base prices ranging from approximately $243,000 to $1,080,000.
Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. The unaudited consolidated financial statements include the accounts of Meritage Homes and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year.
Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies or closing agents for home closings of approximately $75.1 million and $95.7 million are included in Cash and cash equivalents at June 30, 2024 and December 31, 2023, respectively.
Real Estate. Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”). Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.
We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in cost of closings when the related inventory is closed. Included within our real estate inventory is land held for development and land held for sale. Land held for development primarily represents land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, sales orders absorptions that differ from our expectations, increases in costs that have not yet been contracted, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control, including weather. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs.
Typically, a community's life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the construction, sale and closing of the homes. Actual community lives will vary based on the size of the community, the sales orders absorption rates and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving smaller finished lot purchases may be significantly shorter.
All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. The impairment of a community is allocated to each remaining unstarted lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions, although if financial metrics improve, we do not reverse impairments once recorded. See Note 2 for additional information related to real estate.
Deposits. Deposits paid related to land option and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is used to offset the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are expensed to Cost of home closings if the land acquisition is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of any non-refundable deposits and any related capitalized costs. Our Deposits on real estate under option or contract were $156.7 million and $111.4 million as of June 30, 2024 and December 31, 2023, respectively. See Note 3 for additional information related to Deposits on real estate under option or contract.
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test. ASC 350 states that an entity may first assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets.
Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on
our balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on the accompanying unaudited consolidated balance sheets.
The table below outlines our ROU assets and lease liabilities (in thousands):
As of
June 30, 2024December 31, 2023
ROU assets$52,460 $51,275 
Lease liabilities55,059 54,040 
Off-Balance Sheet Arrangements - Joint Ventures. We may participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital, although our participation in such ventures is currently limited. See Note 4 for additional discussion of our investments in unconsolidated entities.
Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered. See Note 3 for additional information on these off-balance sheet arrangements.
Surety Bonds and Letters of Credit. We provide surety bonds and letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Surety bonds are generally not wholly released until all development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon.
The table below outlines our surety bond and letter of credit obligations (in thousands):
As of
 June 30, 2024December 31, 2023
 OutstandingEstimated work
remaining to
complete		OutstandingEstimated work
remaining to
complete
Sureties:
Sureties related to owned projects and lots under contract$1,019,779 $779,287 $975,979 $712,421 
Total Sureties$1,019,779 $779,287 $975,979 $712,421 
Letters of Credit (“LOCs”):
LOCs for land development109,708 N/A56,251 N/A
LOCs for general corporate operations5,000 N/A5,000 N/A
Total LOCs$114,708 N/A$61,251 N/A

Accrued Liabilities. Accrued liabilities at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):
As of
 June 30, 2024December 31, 2023
Accruals related to real estate development and construction activities$169,482 $137,489 
Payroll and other benefits84,121 140,734 
Accrued interest6,546 6,331 
Accrued taxes20,103 25,569 
Warranty reserves34,769 37,360 
Lease liabilities55,059 54,040 
Other accruals18,895 23,241 
Total$388,975 $424,764 
Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical data and trends for our geographies. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or six months ended June 30, 2024 or 2023. Included in the warranty reserve balances at June 30, 2024 and December 31, 2023 are case-specific reserves for warranty matters, as discussed in Note 15.
A summary of changes in our warranty reserves follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Balance, beginning of period$36,364 $37,063 $37,360 $35,575 
Additions to reserve from new home deliveries5,809 5,982 10,642 10,388 
Warranty claims, net of recoveries(7,404)(6,830)(13,233)(9,748)
Adjustments to pre-existing reserves— — — — 
Balance, end of period$34,769 $36,215 $34,769 $36,215 
Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings on the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in regulatory, legislative, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates.
Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below:
•Revenue from home closings is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
•Revenue from land closings is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.
•Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow.
Home closing and land closing revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at June 30, 2024 and December 31, 2023.
Recent Accounting Pronouncements.
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which aligns interim segment disclosure requirements with existing annual requirements and includes updates to segment reporting, most notably through enhanced disclosures about significant segment expenses and various Chief Operating Decision Maker ("CODM")-related disclosures. ASU 2023-07 is effective for our annual report covering the fiscal year beginning January 1, 2024, and for our interim reports beginning January 1, 2025. ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the disclosure requirements primarily related to the effective tax rate reconciliation and income taxes paid by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for us beginning January 1, 2025 and may be applied either retrospectively or prospectively. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
v3.24.2
REAL ESTATE AND CAPITALIZED INTEREST
 6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
REAL ESTATE AND CAPITALIZED INTEREST REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
As of
June 30, 2024December 31, 2023
Homes under contract under construction (1)
$789,961 $704,206 
Unsold homes, completed and under construction (1)
1,487,674 1,260,855 
Model homes (1)
114,185 118,252 
Finished home sites and home sites under development (2)
2,783,264 2,637,978 
Total$5,175,084 $4,721,291 

(1)Includes the allocated land and land development costs associated with each lot for these homes.
(2)Includes raw land, land held for development and land held for sale, less impairments, if any. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active real estate when incurred and charged to Cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Capitalized interest, beginning of period$54,227 $62,452 $54,516 $60,169 
Interest incurred14,327 15,144 27,252 30,174 
Interest expensed— — — — 
Interest amortized to cost of home and land closings(14,227)(16,518)(27,441)(29,265)
Capitalized interest, end of period$54,327 $61,078 $54,327 $61,078 
v3.24.2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED
 6 Months Ended
Jun. 30, 2024
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract]  
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED
We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. In accordance with ASC 810, Consolidation, we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. We determined that as of June 30, 2024 and December 31, 2023, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.
The table below presents a summary of our lots under option at June 30, 2024 (dollars in thousands): 
Projected Number
of Lots
Purchase
Price		Option/
Earnest  Money
Deposits–Cash
Purchase and option contracts recorded on balance sheet as Real estate not owned— $— $— 
Option contracts — non-refundable deposits, committed (1)
7,555 517,409 72,992 
Purchase contracts — non-refundable deposits, committed (1)
15,491 430,972 62,535 
Purchase and option contracts —refundable deposits, committed1,078 42,934 3,365 
Total committed 24,124 991,315 138,892 
Purchase and option contracts — refundable deposits, uncommitted (2)
41,752 1,875,539 17,806 
Total lots under contract or option65,876 $2,866,854 $156,698 
Total purchase and option contracts not recorded on balance sheet (3)
65,876 $2,866,854 $156,698 (4)
 
(1)Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.
(2)Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots.
(3)Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.
(4)Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2024.
Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots on a pre-determined schedule in accordance with each respective agreement. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our expected orders and home starts pace to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract.
v3.24.2
INVESTMENTS IN UNCONSOLIDATED ENTITIES
 6 Months Ended
Jun. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN UNCONSOLIDATED ENTITIES INVESTMENTS IN UNCONSOLIDATED ENTITIES
We may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as critical to the success of our homebuilding operations. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of these joint ventures, they may or may not be consolidated into our results. As of June 30, 2024, we had one active equity-method land joint venture and one mortgage joint venture, which is engaged in mortgage activities and primarily provides mortgage services to our homebuyers.
Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
As of
June 30, 2024December 31, 2023
Assets:
Cash
$3,839 $3,546 
Real estate
39,924 28,395 
Other assets
5,491 6,514 
Total assets$49,254 $38,455 
Liabilities and equity:
Accounts payable and other liabilities$5,903 $6,537 
Equity of:
Meritage (1)
22,853 16,279 
Other20,498 15,639 
Total liabilities and equity$49,254 $38,455 
 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Revenue$12,739 $11,710 $23,329 $21,226 
Costs and expenses(10,451)(9,099)(19,588)(17,450)
Net earnings of unconsolidated entities$2,288 $2,611 $3,741 $3,776 
Meritage’s share of pre-tax earnings/(loss) (1) (2)
$1,655 $1,536 $2,627 $2,882 

(1)Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
(2)Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.
v3.24.2
LOANS PAYABLE AND OTHER BORROWINGS
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
LOANS PAYABLE AND OTHER BORROWINGS LOANS PAYABLE AND OTHER BORROWINGS
Loans payable and other borrowings consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
Other borrowings, real estate notes payable (1)
$9,711 $13,526 
$910.0 million unsecured revolving credit facility
— — 
Total$9,711 $13,526 
(1)Reflects balance of non-recourse notes payable in connection with land purchases.
The Company entered into an amended and restated unsecured revolving credit facility agreement ("Credit Facility") in 2014 that has been amended from time to time. In June 2024, the Credit Facility was amended to increase the facility size, amend the accordion feature to permit the facility size to be increased, subject to certain conditions, extended the maturity date from June 2, 2028 to June 12, 2029, and revised the applicable pricing grid. The Credit Facility's aggregate commitment is
$910.0 million with an accordion feature permitting the size of the facility to increase to a maximum of $1.4 billion, subject to certain conditions, including the availability of additional bank commitments. Borrowings under the Credit Facility bear interest at the Company's option, at either (1) term SOFR (based on 1, 3, or 6 month interest periods, as selected by the Company) plus a 10 basis point adjustment plus an applicable margin (ranging from 110 basis points to 175 basis points (the "applicable margin")) based on the Company's leverage ratio as determined in accordance with a pricing grid, (2) the higher of (i) the prime lending rate ("Prime"), (ii) an overnight bank rate plus 50 basis points and (iii) term SOFR (based on a 1 month interest period) plus a 10 basis point adjustment plus 1%, in each case plus a margin ranging from 10 basis points to 75 basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a 10 basis point adjustment plus the applicable margin. At June 30, 2024, the interest rate on outstanding borrowings under the Credit Facility would have been 6.537% per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR. We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate determined by a tiered fee matrix based on our leverage ratio.
The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of June 30, 2024.
We had no outstanding borrowings under the Credit Facility as of June 30, 2024 and December 31, 2023. There were no borrowings or repayments under the Credit Facility during the three and six months ended June 30, 2024 and 2023. As of June 30, 2024, we had outstanding letters of credit issued under the Credit Facility totaling $114.7 million, leaving $795.3 million available under the Credit Facility to be drawn.
v3.24.2
SENIOR NOTES, NET
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
SENIOR NOTES, NET SENIOR AND CONVERTIBLE SENIOR NOTES, NET
Senior and convertible senior notes, net consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
6.00% senior notes due 2025 ("2025 Notes"). At December 31, 2023 there was approximately $994 in net unamortized premium.
— 250,994 
5.125% senior notes due 2027 ("2027 Notes")
300,000 300,000 
1.750% convertible senior notes due 2028 ("2028 Convertible Notes")
575,000 — 
3.875% senior notes due 2029 ("2029 Notes")
450,000 450,000 
Net debt issuance costs(21,400)(6,305)
Total$1,303,600 $994,689 
The indentures for our 2027 Notes and 2029 Notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, and limitations on sale and leaseback transactions and mergers. We were in compliance with all such covenants as of June 30, 2024.
Obligations to pay principal and interest on the senior and convertible senior notes are guaranteed by substantially all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes Corporation. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor may be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor.

Convertible Senior Notes due 2028

In May 2024, we issued $575.0 million aggregate principal amount of 1.750% 2028 Convertible Notes pursuant to an Indenture dated as of May 9, 2024 (the “Indenture”). The 2028 Convertible Notes were issued at par and will mature on May 15, 2028, unless converted earlier in accordance with their terms prior to such date. We used a portion of the net proceeds from the offering to pay the cost of entering into the capped calls, as defined and described below, and to redeem all $250.0 million
aggregate principal then outstanding of our 6.00% 2025 Notes for which we incurred $0.6 million in early debt extinguishment charges in the three and six months ended June 30, 2024, reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

The 2028 Convertible Notes are convertible into shares of the Company’s common stock (“common stock”) at an initial conversion rate of 4.3048 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $232.30 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events specified in the Indenture but will not be adjusted for accrued and unpaid interest or quarterly cash dividends. In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change" as defined in the Indenture. The Company is required to satisfy its conversion obligations by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to February 15, 2028, the holders of the 2028 Convertible Notes may convert their notes only under the following conditions: (1) the sale price of common stock reaches 130% of the applicable conversion price for a specified period during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2024; (2) the trading price of the 2028 Convertible Notes falls below 98% of the product of the last reported sale price of common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate events. On or after February 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

The 2028 Convertible Notes are accounted for in accordance with ASC 470, Debt, and ASC 815, Derivatives and Hedging. The conversion options and the 2028 Convertible Notes are reflected as a single instrument in Senior and convertible senior notes, net on the accompanying unaudited consolidated balance sheets and the conversion options are not bifurcated as a derivative.


Capped Call Transactions

Concurrent with the offering of the 2028 Convertible Notes, we used $61.8 million of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Call counterparties (the counterparties") to provide shares of our common stock to converting debt holders up to a cap price. The Capped Calls each have an initial strike price of approximately $232.30 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Convertible Notes. The Capped Calls have initial cap prices of $350.64 per share, subject to certain adjustments. The Capped Calls will reduce our obligation to settle, in shares or in cash, conversions when our stock price is between $232.30 and $350.64.

The Capped Calls are separate transactions entered into by the Company with each of the counterparties, are not part of the terms of the 2028 Convertible Notes and do not change the holders’ rights under the 2028 Convertible Notes or the Indenture. Holders of the 2028 Convertible Notes do not have any rights with respect to the Capped Calls.

As the Capped Calls are considered indexed to the Company's own stock, they are recorded in stockholders’ equity as a reduction of Additional paid-in capital in the accompanying unaudited consolidated balance sheets, and are not accounted for as derivatives under ASC 815-10, Derivatives and Hedging.
v3.24.2
FAIR VALUE DISCLOSURES
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE DISCLOSURES FAIR VALUE DISCLOSURES
ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows:
•Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
•Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.
•Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs.
Financial Instruments: The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (Level 2 inputs as per the discussion above) and is as follows (in thousands):
As of
 June 30, 2024December 31, 2023
 Aggregate
Principal		Estimated  Fair
Value		Aggregate
Principal		Estimated  Fair
Value
6.00% senior notes due 2025
$— $— $250,000 $249,375 
5.125% senior notes due 2027
$300,000 $294,780 $300,000 $295,500 
1.750% convertible senior notes due 2028
$575,000 $579,272 $— $— 
3.875% senior notes due 2029
$450,000 $412,875 $450,000 $411,750 
Other financial assets and liabilities, including our Loans payable and other borrowings, are generally shorter term in nature and the longer term balances are not material to our consolidated balance sheets. Therefore, we consider the carrying amounts of our other financial assets and liabilities to approximate fair value.
Non-Financial Instruments: Our Real estate assets are Level 3 instruments that are required to be recorded at fair value on non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable. Refer to Note 1 for information regarding the valuation of these assets.
v3.24.2
EARNINGS PER SHARE
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS PER SHARE EARNINGS PER SHARE
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts):
 
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Basic weighted average number of shares outstanding36,322 36,765 36,317 36,715 
Effect of dilutive securities:
Unvested restricted stock396 426 421 434 
Diluted average shares outstanding36,718 37,191 36,738 37,149 
Net earnings$231,555 $186,836 $417,571 $318,137 
Basic earnings per share$6.38 $5.08 $11.50 $8.67 
Diluted earnings per share$6.31 $5.02 $11.37 $8.56 

We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In accordance with ASC 260-10, Earnings Per Share, we calculate the dilutive effect of the 2028 Convertible Notes using the "if-converted" method. As discussed in Note 6, the Company will settle any convertible note conversions by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. As the Company will settle the principal amount of convertible notes in cash upon conversion, the convertible notes only have a dilutive impact when the average share price of the Company’s common stock exceeds the conversion price, in any applicable period.
v3.24.2
ACQUISITIONS AND GOODWILL
 6 Months Ended
Jun. 30, 2024
Business Acquisitions and Goodwill [Abstract]  
ACQUISITIONS AND GOODWILL ACQUISITIONS AND GOODWILL
Goodwill. In prior years, we have entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. As a result of these transactions, we recorded approximately $33.0 million of goodwill. Goodwill represents the excess purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combinations, and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on our unaudited consolidated balance sheets in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present.

A summary of the carrying amount of goodwill follows (in thousands):
WestCentralEastFinancial ServicesCorporateTotal
Balance at December 31, 2023
$— $— $32,962 $— $— $32,962 
Additions— — — — — — 
Balance at June 30, 2024$— $— $32,962 $— $— $32,962 
v3.24.2
STOCKHOLDERS' EQUITY
 6 Months Ended
Jun. 30, 2024
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS’ EQUITY
A summary of changes in stockholders’ equity is presented below (in thousands): 
 Six Months Ended June 30, 2024
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202336,425 $364 $290,955 $4,320,581 $4,611,900 
Net earnings— — — 186,016 186,016 
Stock-based compensation expense— — 6,114 — 6,114 
Issuance of stock256 3 (3)— — 
Dividends declared— — — (27,239)(27,239)
Share repurchases(362)(4)(56,214)— (56,218)
Balance at March 31, 202436,319 $363 $240,852 $4,479,358 $4,720,573 
Net earnings— — — 231,555 231,555 
Stock-based compensation expense— — 4,718 — 4,718 
Issuance of stock8 — — — — 
Dividends declared— — — (27,245)(27,245)
Capped call transactions, net of tax— — (47,067)— (47,067)
Balance at June 30, 202436,327 $363 $198,503 $4,683,668 $4,882,534 
 Six Months Ended June 30, 2023
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202236,571 $366 $327,878 $3,621,367 $3,949,611 
Net earnings— — — 131,301 131,301 
Stock-based compensation expense— — 6,225 — 6,225 
Issuance of stock287 3 (3)— — 
Dividends declared— — — (9,927)(9,927)
Share repurchases(93)(1)(9,999)— (10,000)
Balance at March 31, 202336,765 $368 $324,101 $3,742,741 $4,067,210 
Net earnings— — — 186,836 186,836 
Stock-based compensation expense— — 4,176 — 4,176 
Dividends declared— — — (9,927)(9,927)
Balance at June 30, 202336,765 368 328,277 3,919,650 4,248,295 
During the three months ended June 30, 2024 and 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.75 and $0.27 per share, respectively. Quarterly dividends declared and paid during the six months ended June 30, 2024 and 2023, totaled $1.50 and $0.54 per share, respectively. During the three and six months ended June 30, 2024 and 2023, we reflected the applicable excise tax on share repurchases in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability in Accrued liabilities on the accompanying unaudited consolidated balance sheets.
v3.24.2
STOCK BASED AND DEFERRED COMPENSATION
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK BASED AND DEFERRED COMPENSATION STOCK BASED AND DEFERRED COMPENSATION
We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. In May 2023, the Board of Directors and stockholders approved an amendment to the 2018 Plan to increase the number of shares available for issuance by 800,000. The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants. The 2018 Plan authorizes 7,400,000 shares of stock to be awarded, of which 1,151,115 shares remain available for grant at June 30, 2024. We believe that such awards provide a means of long-term compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock units and performance-based awards granted to senior executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date.
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Stock-based compensation expense$4,718 $4,176 $10,832 $10,401 
Non-vested shares granted— 2,100 140,665 180,412 
Performance-based non-vested shares granted — — 37,698 42,964 
Performance-based shares issued in excess of target shares granted (1)
— — 15,978 26,167 
Restricted stock awards vested (includes performance-based awards)8,200 — 248,618 287,171 
(1)Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics.
The following table includes additional information regarding our stock compensation plan (dollars in thousands):
 As of
 June 30, 2024December 31, 2023
Unrecognized stock-based compensation cost$38,819 $27,791 
Weighted average years expense recognition period2.111.94
Total equity awards outstanding (1)
627,937 703,415 
(1)Includes unvested restricted stock units and performance-based awards (assuming 100%/target payout).
We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three and six months ended June 30, 2024 or 2023, other than minor administrative costs.
v3.24.2
INCOME TAXES
 6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Components of the provision for income taxes are as follows (in thousands): 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Federal$52,340 $41,831 $90,462 $68,271 
State13,466 10,857 23,343 18,419 
Total$65,806 $52,688 $113,805 $86,690 

The effective tax rate for the three and six months ended June 30, 2024 was 22.1% and 21.4%, and for the three and six months ended June 30, 2023 was 22.0% and 21.4%, respectively. The rate for all periods reflects the increased §45L energy-efficient homes federal tax credit on qualifying homes under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") in August 2022.
At June 30, 2024 and December 31, 2023, we have no unrecognized tax benefits. We believe our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in the provision for income taxes.
We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes. We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carry forward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at June 30, 2024.
At June 30, 2024, we have $7.7 million in income taxes payable and no income taxes receivable. The income taxes payable primarily consists of current federal and state tax accruals, net of current energy tax credits and estimated tax payments and is recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at June 30, 2024.
We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2019. We have no state income tax examinations being conducted at this time.
v3.24.2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 6 Months Ended
Jun. 30, 2024
Supplemental Cash Flow Elements [Abstract]  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The following table presents certain supplemental cash flow information (in thousands):
Six Months Ended June 30,
20242023
Cash paid during the year for:
Interest, net of interest capitalized$(2,341)$(934)
Income taxes paid$114,054 $86,587 
Non-cash operating activities:
Real estate acquired through notes payable$3,630 $6,356 
v3.24.2
OPERATING AND REPORTING SEGMENTS
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
OPERATING AND REPORTING SEGMENTS OPERATING AND REPORTING SEGMENTS
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have ten homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. 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:
Texas
East:
Florida, Georgia, North Carolina, South Carolina and Tennessee
Management’s evaluation of segment performance is based on homebuilding segment operating income, which we define as home and land closing revenue less cost of home and land closings, including land development and other land sales costs, commissions and other sales costs, and other general and administrative costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.
The following segment information is in thousands:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Homebuilding revenue (1):
West$622,837 $528,977 $1,138,469 $963,114 
Central459,180 458,709 886,745 884,159 
East611,721 579,714 1,136,925 999,435 
Consolidated total$1,693,738 $1,567,400 $3,162,139 $2,846,708 
Homebuilding segment operating income:
West$100,779 $52,283 $172,043 $91,092 
Central82,613 83,491 155,716 148,782 
East110,209 103,517 204,486 164,393 
Total homebuilding segment operating income 293,601 239,291 532,245 404,267 
Financial services segment profit/(loss)4,837 (2,557)4,147 366 
Corporate and unallocated costs (2)
(11,944)(10,072)(24,905)(21,512)
Interest expense— — — — 
Other income, net11,498 12,862 20,520 21,706 
Loss on early extinguishment of debt(631)— (631)— 
Earnings before income taxes$297,361 $239,524 $531,376 $404,827 
 
(1)Homebuilding revenue includes the following land closing revenue, by segment:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Land closing revenue:
West$— $9,760 $— $26,575 
Central— 1,908 — 2,478 
East— 12,711 2,305 12,711 
Total$— $24,379 $2,305 $41,764 
(2)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.
 At June 30, 2024
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$26,295 $19,477 $110,926 $— $— $156,698 
Real estate1,779,125 1,316,282 2,079,677 — — 5,175,084 
Investments in unconsolidated entities— 2,794 20,021 — 815 23,630 
Other assets56,320 (1)275,958 (2)106,846 (3)2,074 1,127,370 (4)1,568,568 
Total assets$1,861,740 $1,614,511 $2,317,470 $2,074 $1,128,185 $6,923,980 

(1)Balance consists primarily of cash and cash equivalents, prepaids and other assets and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets.
 At December 31, 2023
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$11,695 $10,911 $88,758 $— $— $111,364 
Real estate1,748,732 1,257,054 1,715,505 — — 4,721,291 
Investments in unconsolidated entities— 2,825 13,411 — 934 17,170 
Other assets101,376 (1)272,876 (2)102,425 (3)1,889 1,024,743 (4)1,503,309 
Total assets$1,861,803 $1,543,666 $1,920,099 $1,889 $1,025,677 $6,353,134 
(1)Balance consists primarily of cash and cash equivalents, receivables from title companies and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), prepaids and other assets and property and equipment, net.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.
v3.24.2
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES
We are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential material losses related to these matters are not considered probable. Historically, most disputes regarding warranty claims are resolved prior to litigation. We believe there are no pending legal or warranty matters as of June 30, 2024 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved.
As discussed in Note 1 under the heading “Warranty Reserves”, we have case specific reserves within our $34.8 million of total warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2006 and 2017 and HVAC condensation issues in limited geographies for homes constructed and delivered in 2021 and the first half of 2022. Our review and management of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, historical experience, our judgment and various assumptions and estimates. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves. As of June 30, 2024, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we did not adjust such reserves and we believe our reserves are sufficient to cover the above mentioned matters. See Note 1 for information related to our warranty obligations.
v3.24.2
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure            
Net earnings $ 231,555 $ 186,016 $ 186,836 $ 131,301 $ 417,571 $ 318,137
v3.24.2
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION (Policies)
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. The unaudited consolidated financial statements include the accounts of Meritage Homes and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year.
Cash and Cash Equivalents Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents.
Real Estate
Real Estate. Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”). Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.
We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in cost of closings when the related inventory is closed. Included within our real estate inventory is land held for development and land held for sale. Land held for development primarily represents land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, sales orders absorptions that differ from our expectations, increases in costs that have not yet been contracted, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control, including weather. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs.
Typically, a community's life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the construction, sale and closing of the homes. Actual community lives will vary based on the size of the community, the sales orders absorption rates and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving smaller finished lot purchases may be significantly shorter.
All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. The impairment of a community is allocated to each remaining unstarted lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions, although if financial metrics improve, we do not reverse impairments once recorded. See Note 2 for additional information related to real estate.
Deposits Deposits. Deposits paid related to land option and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is used to offset the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are expensed to Cost of home closings if the land acquisition is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of any non-refundable deposits and any related capitalized costs.
Goodwill Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test. ASC 350 states that an entity may first assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets.
Leases
Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on
our balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on the accompanying unaudited consolidated balance sheets.
Off-Balance Sheet Arrangements
Off-Balance Sheet Arrangements - Joint Ventures. We may participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital, although our participation in such ventures is currently limited. See Note 4 for additional discussion of our investments in unconsolidated entities.
Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered. See Note 3 for additional information on these off-balance sheet arrangements.
Surety Bonds and Letters of Credit. We provide surety bonds and letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Surety bonds are generally not wholly released until all development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon.
Warranty Reserves Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical data and trends for our geographies. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available.Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings on the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in regulatory, legislative, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates.
Revenue Recognition
Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below:
•Revenue from home closings is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
•Revenue from land closings is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.
•Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow.
Home closing and land closing revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at June 30, 2024 and December 31, 2023.
Recent Accounting Pronouncements
Recent Accounting Pronouncements.
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which aligns interim segment disclosure requirements with existing annual requirements and includes updates to segment reporting, most notably through enhanced disclosures about significant segment expenses and various Chief Operating Decision Maker ("CODM")-related disclosures. ASU 2023-07 is effective for our annual report covering the fiscal year beginning January 1, 2024, and for our interim reports beginning January 1, 2025. ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the disclosure requirements primarily related to the effective tax rate reconciliation and income taxes paid by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for us beginning January 1, 2025 and may be applied either retrospectively or prospectively. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
Variable Interest Entities In accordance with ASC 810, Consolidation, we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. We determined that as of June 30, 2024 and December 31, 2023, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.
Fair Value Disclosures
ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows:
•Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
•Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.
•Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs.
Stock-Based Compensation Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards.
Income Tax Policy We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes. We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carry forward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives.
Segment Reporting
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have ten homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. 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:
Texas
East:
Florida, Georgia, North Carolina, South Carolina and Tennessee
Management’s evaluation of segment performance is based on homebuilding segment operating income, which we define as home and land closing revenue less cost of home and land closings, including land development and other land sales costs, commissions and other sales costs, and other general and administrative costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION (Tables)
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Lease, Cost
The table below outlines our ROU assets and lease liabilities (in thousands):
As of
June 30, 2024December 31, 2023
ROU assets$52,460 $51,275 
Lease liabilities55,059 54,040 
Schedule of Surety Bond and Letter of Credit Obligations
The table below outlines our surety bond and letter of credit obligations (in thousands):
As of
 June 30, 2024December 31, 2023
 OutstandingEstimated work
remaining to
complete		OutstandingEstimated work
remaining to
complete
Sureties:
Sureties related to owned projects and lots under contract$1,019,779 $779,287 $975,979 $712,421 
Total Sureties$1,019,779 $779,287 $975,979 $712,421 
Letters of Credit (“LOCs”):
LOCs for land development109,708 N/A56,251 N/A
LOCs for general corporate operations5,000 N/A5,000 N/A
Total LOCs$114,708 N/A$61,251 N/A
Schedule of Accrued Liabilities Accrued liabilities at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):
As of
 June 30, 2024December 31, 2023
Accruals related to real estate development and construction activities$169,482 $137,489 
Payroll and other benefits84,121 140,734 
Accrued interest6,546 6,331 
Accrued taxes20,103 25,569 
Warranty reserves34,769 37,360 
Lease liabilities55,059 54,040 
Other accruals18,895 23,241 
Total$388,975 $424,764 
Summary of Changes in Warranty Reserves
A summary of changes in our warranty reserves follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Balance, beginning of period$36,364 $37,063 $37,360 $35,575 
Additions to reserve from new home deliveries5,809 5,982 10,642 10,388 
Warranty claims, net of recoveries(7,404)(6,830)(13,233)(9,748)
Adjustments to pre-existing reserves— — — — 
Balance, end of period$34,769 $36,215 $34,769 $36,215 
v3.24.2
REAL ESTATE AND CAPITALIZED INTEREST (Tables)
 6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Schedule of Real Estate
Real estate consists of the following (in thousands):
As of
June 30, 2024December 31, 2023
Homes under contract under construction (1)
$789,961 $704,206 
Unsold homes, completed and under construction (1)
1,487,674 1,260,855 
Model homes (1)
114,185 118,252 
Finished home sites and home sites under development (2)
2,783,264 2,637,978 
Total$5,175,084 $4,721,291 

(1)Includes the allocated land and land development costs associated with each lot for these homes.
(2)Includes raw land, land held for development and land held for sale, less impairments, if any. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
Summary of Capitalized Interest A summary of our capitalized interest is as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Capitalized interest, beginning of period$54,227 $62,452 $54,516 $60,169 
Interest incurred14,327 15,144 27,252 30,174 
Interest expensed— — — — 
Interest amortized to cost of home and land closings(14,227)(16,518)(27,441)(29,265)
Capitalized interest, end of period$54,327 $61,078 $54,327 $61,078 
v3.24.2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED (Tables)
 6 Months Ended
Jun. 30, 2024
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract]  
Summary of Lots Under Option
The table below presents a summary of our lots under option at June 30, 2024 (dollars in thousands): 
Projected Number
of Lots
Purchase
Price		Option/
Earnest  Money
Deposits–Cash
Purchase and option contracts recorded on balance sheet as Real estate not owned— $— $— 
Option contracts — non-refundable deposits, committed (1)
7,555 517,409 72,992 
Purchase contracts — non-refundable deposits, committed (1)
15,491 430,972 62,535 
Purchase and option contracts —refundable deposits, committed1,078 42,934 3,365 
Total committed 24,124 991,315 138,892 
Purchase and option contracts — refundable deposits, uncommitted (2)
41,752 1,875,539 17,806 
Total lots under contract or option65,876 $2,866,854 $156,698 
Total purchase and option contracts not recorded on balance sheet (3)
65,876 $2,866,854 $156,698 (4)
 
(1)Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.
(2)Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots.
(3)Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.
(4)Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2024.
v3.24.2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables)
 6 Months Ended
Jun. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures
Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
As of
June 30, 2024December 31, 2023
Assets:
Cash
$3,839 $3,546 
Real estate
39,924 28,395 
Other assets
5,491 6,514 
Total assets$49,254 $38,455 
Liabilities and equity:
Accounts payable and other liabilities$5,903 $6,537 
Equity of:
Meritage (1)
22,853 16,279 
Other20,498 15,639 
Total liabilities and equity$49,254 $38,455 
 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Revenue$12,739 $11,710 $23,329 $21,226 
Costs and expenses(10,451)(9,099)(19,588)(17,450)
Net earnings of unconsolidated entities$2,288 $2,611 $3,741 $3,776 
Meritage’s share of pre-tax earnings/(loss) (1) (2)
$1,655 $1,536 $2,627 $2,882 

(1)Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
(2)Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.
v3.24.2
LOANS PAYABLE AND OTHER BORROWINGS (Tables)
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Loans Payable and Other Borrowings
Loans payable and other borrowings consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
Other borrowings, real estate notes payable (1)
$9,711 $13,526 
$910.0 million unsecured revolving credit facility
— — 
Total$9,711 $13,526 
(1)Reflects balance of non-recourse notes payable in connection with land purchases.
v3.24.2
SENIOR NOTES, NET (Tables)
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Senior Notes, Net enior and convertible senior notes, net consist of the following (in thousands):
As of
June 30, 2024December 31, 2023
6.00% senior notes due 2025 ("2025 Notes"). At December 31, 2023 there was approximately $994 in net unamortized premium.
— 250,994 
5.125% senior notes due 2027 ("2027 Notes")
300,000 300,000 
1.750% convertible senior notes due 2028 ("2028 Convertible Notes")
575,000 — 
3.875% senior notes due 2029 ("2029 Notes")
450,000 450,000 
Net debt issuance costs(21,400)(6,305)
Total$1,303,600 $994,689 
v3.24.2
FAIR VALUE DISCLOSURES (Tables)
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Fair Value of Fixed-Rate Debt The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (Level 2 inputs as per the discussion above) and is as follows (in thousands):
As of
 June 30, 2024December 31, 2023
 Aggregate
Principal		Estimated  Fair
Value		Aggregate
Principal		Estimated  Fair
Value
6.00% senior notes due 2025
$— $— $250,000 $249,375 
5.125% senior notes due 2027
$300,000 $294,780 $300,000 $295,500 
1.750% convertible senior notes due 2028
$575,000 $579,272 $— $— 
3.875% senior notes due 2029
$450,000 $412,875 $450,000 $411,750 
v3.24.2
EARNINGS PER SHARE (Tables)
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Earnings per Common Share
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts):
 
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Basic weighted average number of shares outstanding36,322 36,765 36,317 36,715 
Effect of dilutive securities:
Unvested restricted stock396 426 421 434 
Diluted average shares outstanding36,718 37,191 36,738 37,149 
Net earnings$231,555 $186,836 $417,571 $318,137 
Basic earnings per share$6.38 $5.08 $11.50 $8.67 
Diluted earnings per share$6.31 $5.02 $11.37 $8.56 

We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In accordance with ASC 260-10, Earnings Per Share, we calculate the dilutive effect of the 2028 Convertible Notes using the "if-converted" method. As discussed in Note 6, the Company will settle any convertible note conversions by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. As the Company will settle the principal amount of convertible notes in cash upon conversion, the convertible notes only have a dilutive impact when the average share price of the Company’s common stock exceeds the conversion price, in any applicable period.
v3.24.2
ACQUISITIONS AND GOODWILL (Tables)
 6 Months Ended
Jun. 30, 2024
Business Acquisitions and Goodwill [Abstract]  
Summary of Changes in the Carrying Amount of Goodwill
A summary of the carrying amount of goodwill follows (in thousands):
WestCentralEastFinancial ServicesCorporateTotal
Balance at December 31, 2023
$— $— $32,962 $— $— $32,962 
Additions— — — — — — 
Balance at June 30, 2024$— $— $32,962 $— $— $32,962 
v3.24.2
STOCKHOLDERS' EQUITY (Tables)
 6 Months Ended
Jun. 30, 2024
Stockholders' Equity Note [Abstract]  
Summary of Changes in Shareholders' Equity
A summary of changes in stockholders’ equity is presented below (in thousands): 
 Six Months Ended June 30, 2024
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202336,425 $364 $290,955 $4,320,581 $4,611,900 
Net earnings— — — 186,016 186,016 
Stock-based compensation expense— — 6,114 — 6,114 
Issuance of stock256 3 (3)— — 
Dividends declared— — — (27,239)(27,239)
Share repurchases(362)(4)(56,214)— (56,218)
Balance at March 31, 202436,319 $363 $240,852 $4,479,358 $4,720,573 
Net earnings— — — 231,555 231,555 
Stock-based compensation expense— — 4,718 — 4,718 
Issuance of stock8 — — — — 
Dividends declared— — — (27,245)(27,245)
Capped call transactions, net of tax— — (47,067)— (47,067)
Balance at June 30, 202436,327 $363 $198,503 $4,683,668 $4,882,534 
 Six Months Ended June 30, 2023
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202236,571 $366 $327,878 $3,621,367 $3,949,611 
Net earnings— — — 131,301 131,301 
Stock-based compensation expense— — 6,225 — 6,225 
Issuance of stock287 3 (3)— — 
Dividends declared— — — (9,927)(9,927)
Share repurchases(93)(1)(9,999)— (10,000)
Balance at March 31, 202336,765 $368 $324,101 $3,742,741 $4,067,210 
Net earnings— — — 186,836 186,836 
Stock-based compensation expense— — 4,176 — 4,176 
Dividends declared— — — (9,927)(9,927)
Balance at June 30, 202336,765 368 328,277 3,919,650 4,248,295 
v3.24.2
STOCK BASED AND DEFERRED COMPENSATION (Tables)
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Summary of Compensation Expense and Stock Award Activity Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Stock-based compensation expense$4,718 $4,176 $10,832 $10,401 
Non-vested shares granted— 2,100 140,665 180,412 
Performance-based non-vested shares granted — — 37,698 42,964 
Performance-based shares issued in excess of target shares granted (1)
— — 15,978 26,167 
Restricted stock awards vested (includes performance-based awards)8,200 — 248,618 287,171 
(1)Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics.
Summary of Additional Information Regarding Stock Plan
The following table includes additional information regarding our stock compensation plan (dollars in thousands):
 As of
 June 30, 2024December 31, 2023
Unrecognized stock-based compensation cost$38,819 $27,791 
Weighted average years expense recognition period2.111.94
Total equity awards outstanding (1)
627,937 703,415 
(1)Includes unvested restricted stock units and performance-based awards (assuming 100%/target payout).
v3.24.2
INCOME TAXES (Tables)
 6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Schedule of Components of Income Tax Provision
Components of the provision for income taxes are as follows (in thousands): 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Federal$52,340 $41,831 $90,462 $68,271 
State13,466 10,857 23,343 18,419 
Total$65,806 $52,688 $113,805 $86,690 
v3.24.2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables)
 6 Months Ended
Jun. 30, 2024
Supplemental Cash Flow Elements [Abstract]  
Schedule of Supplemental Cash Flow Information
The following table presents certain supplemental cash flow information (in thousands):
Six Months Ended June 30,
20242023
Cash paid during the year for:
Interest, net of interest capitalized$(2,341)$(934)
Income taxes paid$114,054 $86,587 
Non-cash operating activities:
Real estate acquired through notes payable$3,630 $6,356 
v3.24.2
OPERATING AND REPORTING SEGMENTS (Tables)
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Schedule of Segment Information
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Homebuilding revenue (1):
West$622,837 $528,977 $1,138,469 $963,114 
Central459,180 458,709 886,745 884,159 
East611,721 579,714 1,136,925 999,435 
Consolidated total$1,693,738 $1,567,400 $3,162,139 $2,846,708 
Homebuilding segment operating income:
West$100,779 $52,283 $172,043 $91,092 
Central82,613 83,491 155,716 148,782 
East110,209 103,517 204,486 164,393 
Total homebuilding segment operating income 293,601 239,291 532,245 404,267 
Financial services segment profit/(loss)4,837 (2,557)4,147 366 
Corporate and unallocated costs (2)
(11,944)(10,072)(24,905)(21,512)
Interest expense— — — — 
Other income, net11,498 12,862 20,520 21,706 
Loss on early extinguishment of debt(631)— (631)— 
Earnings before income taxes$297,361 $239,524 $531,376 $404,827 
 
(1)Homebuilding revenue includes the following land closing revenue, by segment:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Land closing revenue:
West$— $9,760 $— $26,575 
Central— 1,908 — 2,478 
East— 12,711 2,305 12,711 
Total$— $24,379 $2,305 $41,764 
(2)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.
Schedule of Segment Assets
 At June 30, 2024
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$26,295 $19,477 $110,926 $— $— $156,698 
Real estate1,779,125 1,316,282 2,079,677 — — 5,175,084 
Investments in unconsolidated entities— 2,794 20,021 — 815 23,630 
Other assets56,320 (1)275,958 (2)106,846 (3)2,074 1,127,370 (4)1,568,568 
Total assets$1,861,740 $1,614,511 $2,317,470 $2,074 $1,128,185 $6,923,980 

(1)Balance consists primarily of cash and cash equivalents, prepaids and other assets and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets.
 At December 31, 2023
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$11,695 $10,911 $88,758 $— $— $111,364 
Real estate1,748,732 1,257,054 1,715,505 — — 4,721,291 
Investments in unconsolidated entities— 2,825 13,411 — 934 17,170 
Other assets101,376 (1)272,876 (2)102,425 (3)1,889 1,024,743 (4)1,503,309 
Total assets$1,861,803 $1,543,666 $1,920,099 $1,889 $1,025,677 $6,353,134 
(1)Balance consists primarily of cash and cash equivalents, receivables from title companies and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), prepaids and other assets and property and equipment, net.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION - Narrative (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
USD ($)
state
region
community
Dec. 31, 2023
USD ($)
Organization and Presentation [Line Items]    
Entity operations in number of regions | region 3  
Number of states in regions | state 10  
Number of communities in which homes are sold | community 287  
Deposits on real estate under option or contract $ 156,698 $ 111,364
ROU assets 52,460 51,275
Lease liabilities 55,059 54,040
Contract asset insurance renewals 0 0
Cash and cash equivalents [Member]    
Organization and Presentation [Line Items]    
Amounts in transit from title companies for home closings 75,100 $ 95,700
Minimum [Member]    
Organization and Presentation [Line Items]    
Base price per house for sale range $ 243  
Community life cycle range 3 years  
Maximum [Member]    
Organization and Presentation [Line Items]    
Base price per house for sale range $ 1,080  
Community life cycle range 5 years  
Maximum [Member] | Non-Structural Items [Member]    
Organization and Presentation [Line Items]    
Warranty period following home closings 2 years  
Maximum [Member] | Structural [Member]    
Organization and Presentation [Line Items]    
Warranty period following home closings 10 years  
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION - Schedule of Surety Bond and Letter of Credit Obligations (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Sureties related to owned projects and lots under contract [Member]    
Loss Contingencies [Line Items]    
Outstanding $ 1,019,779 $ 975,979
Estimated work remaining to complete 779,287 712,421
Sureties [Member]    
Loss Contingencies [Line Items]    
Outstanding 1,019,779 975,979
Estimated work remaining to complete 779,287 712,421
LOCs for land development [Member]    
Loss Contingencies [Line Items]    
Letters of credit outstanding 109,708 56,251
LOCs for general corporate operations [Member]    
Loss Contingencies [Line Items]    
Letters of credit outstanding 5,000 5,000
Revolving credit facility [Member] | Line of Credit [Member]    
Loss Contingencies [Line Items]    
Letters of credit outstanding $ 114,708 $ 61,251
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Accrued Liabilities            
Accruals related to real estate development and construction activities $ 169,482   $ 137,489      
Payroll and other benefits 84,121   140,734      
Accrued interest 6,546   6,331      
Accrued taxes 20,103   25,569      
Warranty reserves 34,769 $ 36,364 37,360 $ 36,215 $ 37,063 $ 35,575
Lease liabilities 55,059   54,040      
Other accruals 18,895   23,241      
Total $ 388,975   $ 424,764      
v3.24.2
ORGANIZATION AND BASIS OF PRESENTATION - Summary of Changes in Warranty Reserves (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Warranty Reserves        
Balance, beginning of period $ 36,364 $ 37,063 $ 37,360 $ 35,575
Additions to reserve from new home deliveries 5,809 5,982 10,642 10,388
Warranty claims, net of recoveries (7,404) (6,830) (13,233) (9,748)
Adjustments to pre-existing reserves 0 0 0 0
Balance, end of period $ 34,769 $ 36,215 $ 34,769 $ 36,215
v3.24.2
REAL ESTATE AND CAPITALIZED INTEREST - Schedule of Real Estate (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Real Estate Properties    
Homes under contract under construction [1] $ 789,961 $ 704,206
Unsold homes completed and under construction [1] 1,487,674 1,260,855
Model homes [1] 114,185 118,252
Finished home sites and home sites under development [2] 2,783,264 2,637,978
Real estate $ 5,175,084 $ 4,721,291
[1] Includes the allocated land and land development costs associated with each lot for these homes.
[2] Includes raw land, land held for development and land held for sale, less impairments, if any. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
v3.24.2
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Summary of capitalized interest        
Capitalized interest, beginning of period $ 54,227 $ 62,452 $ 54,516 $ 60,169
Interest incurred 14,327 15,144 27,252 30,174
Interest expensed 0 0 0 0
Interest amortized to cost of home and land closings (14,227) (16,518) (27,441) (29,265)
Capitalized interest, end of period $ 54,327 $ 61,078 $ 54,327 $ 61,078
v3.24.2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED - Summary of Lots Under Option (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
lot
Projected Number of Lots  
Option contracts — non-refundable deposits, committed | lot 7,555 [1]
Purchase contracts — non-refundable deposits, committed | lot 15,491 [1]
Purchase and option contracts —refundable deposits, committed | lot 1,078
Total committed | lot 24,124
Purchase and option contracts — refundable deposits, uncommitted | lot 41,752 [2]
Total lots under contract or option | lot 65,876
Total purchase and option contracts not recorded on balance sheet | lot 65,876 [3]
Purchase Price  
Option contracts — non-refundable deposits, committed $ 517,409 [1]
Purchase contracts — non-refundable deposits, committed 430,972 [1]
Purchase and option contracts —refundable deposits, committed 42,934
Total committed 991,315
Purchase and option contracts — refundable deposits, uncommitted 1,875,539 [2]
Total lots under contract or option 2,866,854
Total purchase and option contracts not recorded on balance sheet 2,866,854 [3]
Option/ Earnest  Money Deposits–Cash  
Option contracts — non-refundable deposits, committed 72,992 [1]
Purchase contracts — non-refundable deposits, committed 62,535 [1]
Purchase and option contracts —refundable deposits, committed 3,365
Total committed 138,892
Purchase and option contracts — refundable deposits, uncommitted 17,806 [2]
Total lots under contract or option 156,698
Total purchase and option contracts not recorded on balance sheet $ 156,698 [3],[4]
Land Under Purchase Contracts And Options, Recorded, Number Of Lots | lot 0
Land Under Purchase Contracts And Options, Recorded $ 0
Land Under Purchase Contracts And Options, Recorded, Cash Deposits $ 0
[1] Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.
[2] Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots.
[3] Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.
[4] Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2024.
v3.24.2
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Narrative (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
joint_venture
Dec. 31, 2023
USD ($)
Schedule of Equity Method Investments [Line Items]    
Investments in unconsolidated entities | $ $ 23,630 $ 17,170
Equity-method land ventures [Member]    
Schedule of Equity Method Investments [Line Items]    
Number of joint ventures 1  
Mortgage joint ventures [Member]    
Schedule of Equity Method Investments [Line Items]    
Number of joint ventures 1  
v3.24.2
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Assets Liabilities and Equity (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2024
Dec. 31, 2023
Mar. 31, 2023
Dec. 31, 2022
Assets                
Real estate $ 5,175,084   $ 5,175,084     $ 4,721,291    
Other assets 1,568,568   1,568,568     1,503,309    
Total assets 6,923,980   6,923,980     6,353,134    
Equity of:                
Meritage 4,882,534 $ 4,248,295 4,882,534 $ 4,248,295 $ 4,720,573 4,611,900 $ 4,067,210 $ 3,949,611
Total liabilities and stockholders’ equity 6,923,980   6,923,980     6,353,134    
Earnings/(loss) from financial services unconsolidated entities and other, net     2,627 2,882        
Unconsolidated entities                
Equity of:                
Earnings/(loss) from financial services unconsolidated entities and other, net 2,288 $ 2,611 3,741 $ 3,776        
Equity Method Investment, Nonconsolidated Investee                
Assets                
Real estate 39,924   39,924     28,395    
Other assets 5,491   5,491     6,514    
Total assets 49,254   49,254     38,455    
Liabilities and equity:                
Accounts payable and other liabilities 5,903   5,903     6,537    
Equity of:                
Meritage [1] 22,853   22,853     16,279    
Other 20,498   20,498     15,639    
Total liabilities and stockholders’ equity 49,254   49,254     38,455    
Cash 3,839   3,839     3,546    
Cash $ 3,839   $ 3,839     $ 3,546    
[1] Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
v3.24.2
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Revenues and Expenses (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Schedule of Equity Method Investments [Line Items]            
Net earnings of unconsolidated entities         $ 2,627 $ 2,882
Net earnings $ 231,555 $ 186,016 $ 186,836 $ 131,301 417,571 318,137
Equity Method Investment, Nonconsolidated Investee            
Schedule of Equity Method Investments [Line Items]            
Revenue 12,739   11,710   23,329 21,226
Costs and expenses (10,451)   (9,099)   (19,588) (17,450)
Net earnings [1],[2] $ 1,655   $ 1,536   $ 2,627 $ 2,882
[1] Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
[2] Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.
v3.24.2
LOANS PAYABLE AND OTHER BORROWINGS - Schedule of Loans Payable and Other Borrowings (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Other borrowings, real estate notes payable [Member]    
Line of Credit Facility [Line Items]    
Loans payable and other borrowings [1]   $ 13,526,000
Unsecured revolving credit facility [Member] | Revolving credit facility [Member]    
Line of Credit Facility [Line Items]    
Loans payable and other borrowings $ 0 0
Current borrowing capacity 910,000,000  
Loans payable and other borrowings total [Member]    
Line of Credit Facility [Line Items]    
Loans payable and other borrowings $ 9,711,000 $ 13,526,000
[1] Reflects balance of non-recourse notes payable in connection with land purchases
v3.24.2
LOANS PAYABLE AND OTHER BORROWINGS - Narrative (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2024
Dec. 31, 2023
Line of Credit Facility [Line Items]      
Repayments of outstanding balance $ 0    
Borrowings   $ 0  
Revolving credit facility [Member] | Line of Credit [Member]      
Line of Credit Facility [Line Items]      
Current borrowing capacity 910,000,000 910,000,000  
Maximum borrowing capacity 1,400,000,000 1,400,000,000  
Minimum tangible net worth $ 3,300,000,000 $ 3,300,000,000  
Leverage ratio 0.60 0.60  
Outstanding borrowings under Credit Facility $ 0 $ 0 $ 0
Total LOCs 114,708,000 114,708,000 $ 61,251,000
Remaining borrowing capacity $ 795,300,000 $ 795,300,000  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate      
Line of Credit Facility [Line Items]      
Debt Instrument, Interest Rate, Effective Percentage 6.537% 6.537%  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One      
Line of Credit Facility [Line Items]      
Debt Instrument, Variable Rate, Adjustment Spread 0.10%    
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One | Minimum [Member]      
Line of Credit Facility [Line Items]      
Debt Instrument, Basis Spread on Variable Rate, Leverage Benchmark   1.10%  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One | Maximum [Member]      
Line of Credit Facility [Line Items]      
Debt Instrument, Basis Spread on Variable Rate, Leverage Benchmark   1.75%  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three      
Line of Credit Facility [Line Items]      
Debt Instrument, Variable Rate, Adjustment Spread   0.10%  
Basis spread on variable rate   1.00%  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three | Minimum [Member]      
Line of Credit Facility [Line Items]      
Debt Instrument, Basis Spread on Variable Rate, Leverage Benchmark   0.10%  
Revolving credit facility [Member] | Line of Credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three | Maximum [Member]      
Line of Credit Facility [Line Items]      
Debt Instrument, Basis Spread on Variable Rate, Leverage Benchmark   0.75%  
Revolving credit facility [Member] | Line of Credit [Member] | Prime Rate [Member] | Interest Rate Determination Two      
Line of Credit Facility [Line Items]      
Basis spread on variable rate   0.50%  
v3.24.2
SENIOR NOTES, NET - Schedule of Senior Notes, Net (Details)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
May 09, 2024
$ / shares
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Debt Instrument [Line Items]            
Convertible Debt   $ 575,000   $ 575,000   $ 0
Debt Instrument, Convertible, Conversion Price | $ / shares $ 350.64          
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger 130.00%          
Debt Instrument, Convertible, Stock Price Trigger | $ / shares $ 232.30          
CashPaidForCappedCall       (61,790) $ 0  
Loss on early extinguishment of debt   (631) $ 0 $ (631) $ 0  
Debt Instrument, Convertible, Conversion Ratio       0.0043048    
Senior Notes [Member]            
Debt Instrument [Line Items]            
Net debt issuance costs   (21,400)   $ (21,400)   (6,305)
Senior notes, net   1,303,600   1,303,600   994,689
Senior Notes [Member] | 6.00% senior notes due 2025 [Member]            
Debt Instrument [Line Items]            
Senior notes, gross   $ 0   $ 0   250,994
Stated interest rate   6.00%   6.00%    
Unamortized premium           994
Debt Instrument, Repurchased Face Amount   $ 250,000   $ 250,000    
Senior Notes [Member] | 5.125% senior notes due 2027 [Member]            
Debt Instrument [Line Items]            
Senior notes, gross   $ 300,000   $ 300,000   300,000
Stated interest rate   5.125%   5.125%    
Senior Notes [Member] | 3.875% senior notes due 2029 [Member]            
Debt Instrument [Line Items]            
Senior notes, gross   $ 450,000   $ 450,000   $ 450,000
Stated interest rate   3.875%   3.875%    
Senior Notes [Member] | Convertible Senior Notes Due Two Thousand Twenty Eight            
Debt Instrument [Line Items]            
Stated interest rate   1.75%   1.75%    
v3.24.2
FAIR VALUE DISCLOSURES - Schedule of Fair Value of Fixed-Rate Debt (Details) - Senior Notes [Member] - USD ($)
Jun. 30, 2024
Dec. 31, 2023
6.00% senior notes due 2025 [Member]    
Fair value of fixed-rate debt    
Stated interest rate 6.00%  
6.00% senior notes due 2025 [Member] | Level 2 [Member]    
Debt Instrument [Line Items]    
Aggregate Principal $ 0 $ 250,000,000
Fair value of fixed-rate debt    
Estimated Fair Value $ 0 249,375,000
5.125% senior notes due 2027 [Member]    
Fair value of fixed-rate debt    
Stated interest rate 5.125%  
5.125% senior notes due 2027 [Member] | Level 2 [Member]    
Debt Instrument [Line Items]    
Aggregate Principal $ 300,000,000 300,000,000
Fair value of fixed-rate debt    
Estimated Fair Value $ 294,780,000 295,500,000
3.875% senior notes due 2029 [Member]    
Fair value of fixed-rate debt    
Stated interest rate 3.875%  
3.875% senior notes due 2029 [Member] | Level 2 [Member]    
Debt Instrument [Line Items]    
Aggregate Principal $ 450,000,000 450,000,000
Fair value of fixed-rate debt    
Estimated Fair Value $ 412,875,000 411,750,000
Convertible Senior Notes Due Two Thousand Twenty Eight    
Fair value of fixed-rate debt    
Stated interest rate 1.75%  
Convertible Senior Notes Due Two Thousand Twenty Eight | Level 2 [Member]    
Debt Instrument [Line Items]    
Aggregate Principal $ 575,000,000 0
Fair value of fixed-rate debt    
Estimated Fair Value $ 579,272,000 $ 0
v3.24.2
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Basic and Diluted Earnings Per Common Share            
Basic weighted average number of shares outstanding 36,322   36,765   36,317 36,715
Effect of dilutive securities:            
Unvested restricted stock 396   426   421 434
Diluted average shares outstanding 36,718   37,191   36,738 37,149
Net earnings as reported (in dollars) $ 231,555 $ 186,016 $ 186,836 $ 131,301 $ 417,571 $ 318,137
Basic earnings per share (in dollars per share) $ 6.38   $ 5.08   $ 11.50 $ 8.67
Diluted earnings per share (in dollars per share) $ 6.31   $ 5.02   $ 11.37 $ 8.56
v3.24.2
ACQUISITIONS AND GOODWILL - Narrative (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Business Acquisitions and Goodwill [Abstract]    
Goodwill $ 32,962 $ 32,962
v3.24.2
ACQUISITIONS AND GOODWILL - Summary of Changes in the Carrying Amount of Goodwill (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
USD ($)
Goodwill [Roll Forward]  
Beginning balance $ 32,962
Additions 0
Ending balance 32,962
Operating Segments [Member] | Financial Services [Member]  
Goodwill [Roll Forward]  
Beginning balance 0
Additions 0
Ending balance 0
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member]  
Goodwill [Roll Forward]  
Beginning balance 0
Additions 0
Ending balance 0
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member]  
Goodwill [Roll Forward]  
Beginning balance 0
Additions 0
Ending balance 0
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member]  
Goodwill [Roll Forward]  
Beginning balance 32,962
Additions 0
Ending balance 32,962
Corporate [Member]  
Goodwill [Roll Forward]  
Beginning balance 0
Additions 0
Ending balance $ 0
v3.24.2
STOCKHOLDERS' EQUITY - Summary of Changes in Shareholders' Equity (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Beginning balance (in shares)   36,425,037     36,425,037  
Beginning balance $ 4,720,573 $ 4,611,900 $ 4,067,210 $ 3,949,611 $ 4,611,900 $ 3,949,611
Net earnings 231,555 186,016 186,836 131,301 $ 417,571 318,137
Stock-based compensation expense 4,718 6,114 4,176 6,225    
Issuance of stock 0 0   0    
Dividends $ (27,245) (27,239) (9,927) (9,927)    
Share repurchases   (56,218)   (10,000)    
Ending balance (in shares) 36,327,214       36,327,214  
Ending balance $ 4,882,534 $ 4,720,573 $ 4,248,295 $ 4,067,210 $ 4,882,534 $ 4,248,295
Common Stock, Dividends, Per Share, Declared $ 0.75   $ 0.27   $ 1.50 $ 0.54
Common Stock [Member]            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Beginning balance (in shares) 36,319,000 36,425,000 36,765,000 36,571,000 36,425,000 36,571,000
Beginning balance $ 363 $ 364 $ 368 $ 366 $ 364 $ 366
Issuance of stock (in shares) 8,000 256,000   287,000    
Issuance of stock $ 0 $ 3   $ 3    
Share repurchases (in shares)   (362,000)   (93,000)    
Share repurchases   $ (4)   $ (1)    
Ending balance (in shares) 36,327,000 36,319,000 36,765,000 36,765,000 36,327,000 36,765,000
Ending balance $ 363 $ 363 $ 368 $ 368 $ 363 $ 368
Additional Paid-in Capital [Member]            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Beginning balance 240,852 290,955 324,101 327,878 290,955 327,878
Stock-based compensation expense 4,718 6,114 4,176 6,225    
Issuance of stock 0 (3)   (3)    
Share repurchases   (56,214)   (9,999)    
AdjustmentsToAdditionalPaidInCapitalPremiumsPaidForCappedCallConfirmations   47,067        
Ending balance 198,503 240,852 328,277 324,101 198,503 328,277
Retained Earnings [Member]            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Beginning balance 4,479,358 4,320,581 3,742,741 3,621,367 4,320,581 3,621,367
Net earnings 231,555 186,016 186,836 131,301    
Dividends (27,245) (27,239) (9,927) (9,927)    
Ending balance $ 4,683,668 $ 4,479,358 $ 3,919,650 $ 3,742,741 $ 4,683,668 $ 3,919,650
v3.24.2
STOCK BASED AND DEFERRED COMPENSATION - Narrative (Details) - shares
 6 Months Ended
Jun. 30, 2024
May 31, 2023
Employees [Member] | Non-vested stock awards [Member] | Maximum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Vesting period 5 years  
Senior executive officers and non-employee directors [Member] | Non-vested stock awards and performance-based awards [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Cliff-vesting period 3 years  
Non-Employee Director [Member] | Non-vested stock awards and performance-based awards [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Vesting period 1 year  
Cliff-vesting period 3 years  
2018 stock incentive plan [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares of common stock authorized under stock compensation plan (up to) (in shares) 7,400,000 800,000
Remaining shares available for grant (in shares) 1,151,115  
v3.24.2
STOCK BASED AND DEFERRED COMPENSATION - Summary of Compensation Expense and Stock Award Activity (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Summary of compensation expense and stock award activity        
Stock-based compensation expense (in dollars) $ 4,718 $ 4,176 $ 10,832 $ 10,401
Restricted Stock [Member]        
Summary of compensation expense and stock award activity        
Restricted stock awards vested (includes performance-based awards) (in shares) 8,200 0 248,618 287,171
Non-vested shares [Member]        
Summary of compensation expense and stock award activity        
Non-vested shares granted (in shares) 0 2,100 140,665 180,412
Performance-based non-vested shares [Member]        
Summary of compensation expense and stock award activity        
Non-vested shares granted (in shares) 0 0 37,698 42,964
Shares issued as a result of performance achievement exceeding performance targets (in shares) [1] 0 0 15,978 26,167
[1] Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics.
v3.24.2
STOCK BASED AND DEFERRED COMPENSATION - Summary of Additional Information Regarding Stock Plan (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Jun. 30, 2024
Dec. 31, 2023
Summary of stock based compensation agreements      
Unrecognized stock-based compensation cost   $ 38,819 $ 27,791
Weighted average years expense recognition period 1 year 11 months 8 days 2 years 1 month 9 days  
Total stock-based awards outstanding (in shares) [1]   627,937 703,415
Payout percentage   100.00%  
[1] Includes unvested restricted stock units and performance-based awards (assuming 100%/target payout).
v3.24.2
INCOME TAXES - Schedule of Components of Income Tax Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Current Taxes:        
Federal $ 52,340 $ 41,831 $ 90,462 $ 68,271
State 13,466 10,857 23,343 18,419
Total $ 65,806 $ 52,688 $ 113,805 $ 86,690
v3.24.2
INCOME TAXES - Narrative (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Income Taxes (Textual) [Abstract]          
Effective tax rate 22.10% 22.00% 21.40% 21.40%  
Unrecognized tax benefits $ 0   $ 0   $ 0
Valuation allowance on deferred tax assets 0   0    
Valuation allowance on net operating loss carryforwards 0   0    
Income taxes receivable 0   0    
Accrued Liabilities [Member]          
Income Taxes (Textual) [Abstract]          
Income taxes payable $ 7,700,000   $ 7,700,000    
v3.24.2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Schedule of Supplemental Cash Flow Information (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash paid during the period for:    
Interest, net of interest capitalized $ (2,341) $ (934)
Income taxes paid 114,054 86,587
Non-cash operating activities:    
Real estate acquired through notes payable $ 3,630 $ 6,356
v3.24.2
OPERATING AND REPORTING SEGMENTS - Narrative (Details)
 6 Months Ended
Jun. 30, 2024
operating_segment
segment
Segment Reporting [Abstract]  
Number of business segments | segment 2
Number of operating segments | operating_segment 10
v3.24.2
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Segment Reporting Information [Line Items]        
Corporate and unallocated costs $ (53,184) $ (52,140) $ (103,916) $ (99,659)
Interest expense 0 0 0 0
Other income, net 11,498 12,862 20,520 21,706
Earnings before income taxes 297,361 239,524 531,376 404,827
Operating Segments [Member] | Financial Services [Member]        
Segment Reporting Information [Line Items]        
Operating Income 4,837 (2,557) 4,147 366
Operating Segments [Member] | Homebuilding Segment        
Segment Reporting Information [Line Items]        
Revenue 0 24,379 2,305 41,764
Operating Income 293,601 239,291 532,245 404,267
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member]        
Segment Reporting Information [Line Items]        
Operating Income 100,779 52,283 172,043 91,092
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member]        
Segment Reporting Information [Line Items]        
Operating Income 82,613 83,491 155,716 148,782
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member]        
Segment Reporting Information [Line Items]        
Operating Income 110,209 103,517 204,486 164,393
Corporate and Unallocated [Member]        
Segment Reporting Information [Line Items]        
Corporate and unallocated costs [1] (11,944) (10,072) (24,905) (21,512)
Segment Reconciling Items [Member]        
Segment Reporting Information [Line Items]        
Interest expense 0 0 0 0
Other income, net 11,498 12,862 20,520 21,706
Homebuilding        
Segment Reporting Information [Line Items]        
Revenue 1,693,738 1,567,400 3,162,139 2,846,708
Homebuilding | Operating Segments [Member] | Homebuilding Segment        
Segment Reporting Information [Line Items]        
Revenue [2] 1,693,738 1,567,400 3,162,139 2,846,708
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member]        
Segment Reporting Information [Line Items]        
Revenue [2] 622,837 528,977 1,138,469 963,114
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member]        
Segment Reporting Information [Line Items]        
Revenue [2] 459,180 458,709 886,745 884,159
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member]        
Segment Reporting Information [Line Items]        
Revenue [2] 611,721 579,714 1,136,925 999,435
Home closings        
Segment Reporting Information [Line Items]        
Revenue $ 1,693,738 $ 1,543,021 $ 3,159,834 $ 2,804,944
[1] Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.
[2]
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Land closing revenue:
West$— $9,760 $— $26,575 
Central— 1,908 — 2,478 
East— 12,711 2,305 12,711 
Total$— $24,379 $2,305 $41,764 
v3.24.2
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information, Revenue (Details) - Operating Segments [Member] - Homebuilding Segment - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Segment Reporting Information [Line Items]        
Revenue $ 0 $ 24,379 $ 2,305 $ 41,764
Reportable Subsegments [Member] | West [Member]        
Segment Reporting Information [Line Items]        
Revenue 0 9,760 0 26,575
Reportable Subsegments [Member] | Central [Member]        
Segment Reporting Information [Line Items]        
Revenue 0 1,908 0 2,478
Reportable Subsegments [Member] | East [Member]        
Segment Reporting Information [Line Items]        
Revenue $ 0 $ 12,711 $ 2,305 $ 12,711
v3.24.2
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Assets (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract $ 156,698 $ 111,364
Real estate 5,175,084 4,721,291
Investments in unconsolidated entities 23,630 17,170
Other assets 1,568,568 1,503,309
Total assets 6,923,980 6,353,134
Operating Segments [Member] | Financial Services [Member]    
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract 0 0
Real estate 0 0
Investments in unconsolidated entities 0 0
Other assets 2,074 1,889
Total assets 2,074 1,889
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member]    
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract 26,295 11,695
Real estate 1,779,125 1,748,732
Investments in unconsolidated entities 0 0
Other assets 56,320 [1] 101,376 [2]
Total assets 1,861,740 1,861,803
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member]    
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract 19,477 10,911
Real estate 1,316,282 1,257,054
Investments in unconsolidated entities 2,794 2,825
Other assets 275,958 [3] 272,876 [4]
Total assets 1,614,511 1,543,666
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member]    
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract 110,926 88,758
Real estate 2,079,677 1,715,505
Investments in unconsolidated entities 20,021 13,411
Other assets 106,846 [5] 102,425 [6]
Total assets 2,317,470 1,920,099
Corporate and Unallocated [Member]    
Segment Reporting Information [Line Items]    
Deposits on real estate under option or contract 0 0
Real estate 0 0
Investments in unconsolidated entities 815 934
Other assets 1,127,370 [7] 1,024,743 [8]
Total assets $ 1,128,185 $ 1,025,677
[1] Balance consists primarily of cash and cash equivalents, prepaids and other assets and property and equipment, net
[2] Balance consists primarily of cash and cash equivalents, receivables from title companies and property and equipment, net.
[3] Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.
[4] .
[5] Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
[6] .
[7] Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets.
[8] .
v3.24.2
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]            
Standard product warranty accrual $ 34,769 $ 36,364 $ 37,360 $ 36,215 $ 37,063 $ 35,575
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