59001AAR3 Filings — Meritage Homes Corporation - FilingSpy
59001AAR3
Meritage Homes Corporation
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One of the largest U.S. homebuilders, Meritage builds move-in-ready, energy-efficient homes for first-time and first move-up buyers across a dozen states, pairing them with its own mortgage, title, and insurance services. It started in 1985 in Scottsdale, Arizona, as Monterey Homes and took its current name in 1998 after merging with Legacy Homes. The name blends "merit" and "heritage," much like the winemaking term for a blend of grapes.
Q2 2026 home closing gross margin fell to 18.3% as revenue dropped 14.1% to $1.4B
contracted to 18.3%, the lowest in the recent quarterly sequence. fell 14.1% to $1.4B and rose 67.1% to $1.37 from Q1 but fell 32.8% , driven by lower volumes, weaker average prices, and higher lot costs and incentives. The company is managing through a persistent margin squeeze with $807.3M cash and no new risk factors flagged.
Key takeaways
contracted 280 to 18.3%, pressured by lower average sales prices, higher lot costs, and reduced fixed-cost , partially offset by direct cost savings.
Home closing decreased 14.1% to $1.4B, driven by a 10.7% drop in closings to 3,725 homes and a 3.8% decline in average sales price to $372.6K.
Net orders fell 8.7% to 3,575 homes with an 18.6% decline in to 3.5 per month, while the rose to 13% from 10%.
Section summaries
Management's Discussion and Analysis
Q2 2026 home closing revenue fell 14.1% to $1.4B on 10.7% lower volume and 3.8% lower ASP, with gross margin down 280 bps to 18.3%.
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Home closing decreased 14.1% to $1.4B, driven by a 10.7% drop in closings to 3,725 homes and a 3.8% decline in average sales price to $372.6K.
Home closing contracted 280 to 18.3%, pressured by lower ASPs, higher lot costs, and reduced fixed-cost , partially offset by direct cost savings.
rose 66.2% to $120.6M and rose 63.9% to $90.6M from Q1, though both fell 37.6% and 38.3% respectively versus Q2 2025.
rose 87.0% to $189.5M from Q1 and 1,282.9% , as lower real estate growth offset lower earnings.
Liquidity stood at $807.3M cash plus $896.9M available under the ; debt-to-capital was 26.8% and -to-capital 17.1%.
What changed
Q2 2026 came in at 18.3%, extending the decline from 19.7% at FY2025 year-end and 17.5% in Q1 2026 — the flagged watch item held and the margin did not stabilize.
Net orders fell 8.7% to 3,575 with at 13% versus 10% in Q2 2025, confirming the slowed pace and rising cancellations flagged after the Q1 drop.
was not reported this quarter, continuing the move-in ready strategy that reduced reported backlog through 2025.
Real estate charges were not disclosed for Q2; FY2025 recorded $18.1M versus zero in 2024, the trend remains open.
No material changes to risk factors from the annual report were disclosed in this 10-Q.
What to watch
Q3 2026 to see if 18.3% holds or falls further as lot costs and incentives persist
Q3 2026 net orders and after the 8.7% order drop and 13% cancellation level
units and conversion rate at next disclosure after the move-in ready strategy suppressed reported backlog
Real estate charges in coming quarters after $18.1M in FY2025 versus zero in FY2024
Net orders fell 8.7% to 3,575 homes with an 18.6% decline in to 3.5 per month, while the cancellation rate rose to 13% from 10%.
General and administrative expenses decreased $2.8M to $52.4M due to lower compensation and discretionary spending, but rose as a percentage of to 3.8% from 3.4%.
Liquidity remained strong with $807.3M in cash and $896.9M available under the ; the was 26.8% and -to-capital was 17.1%.
Management expects the challenging environment to persist, requiring higher incentive utilization while prioritizing margin preservation and asset optimization.
Quantitative and Qualitative Disclosures About Market Risk
Our fixed rate debt is made up primarily of $1.8 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 associ…
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Our fixed rate debt is made up primarily of $1.8 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 settle our convertible senior notes by conversion 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 term SOFR or Prime (see Note 5 to our unaudited consolidated financial statements included in this report).
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 ou…
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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 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. There have been no material changes in our risk factors as previously disclosed in our Annual Report.