MTH posted excellent Q1 earnings, but offered a very cautious 2020 outlook .... I think eventually the homebuilders will see a strong rebound in demand helped by city dwellers migrating to the suburbs for better social distancing - 2020 would have been a great year were it not for the pandemic, but the associated pent up demand should be evident in 2021.
I've been accumulating CCS, MHO, TMHC, MTH and KBH. They've already rebounded strongly from the March lows but remain way below their 52wk highs.
briefing -
Meritage beats by $0.56, beats on revs (48.33 +3.65) :
Reports Q1 (Mar) earnings of $1.83 per share, $0.56 better than the S&P Capital IQ Consensus of $1.27; revenues rose 27.4% year/year to $890.42 mln vs the $855.54 mln S&P Capital IQ Consensus.
Total orders for the first quarter of 2020 increased 23% year-over-year, driven by a 35% year-over-year increase in absorptions. Order trends during the quarter, compared to a year ago, were up 38% in January and 51% in February, but down 8% in March.
Home closing gross margin improved 330 bps to 20.0% from 16.7% a year ago, contributing to a 53% increase in total home closing gross profit over the prior year's first quarter.
Cash and cash equivalents at March 31, 2020 totaled $797.3 million, compared to $319.5 million at December 31, 2019, including $500 million borrowed against the Company's $780 million Revolving Credit Facility to provide additional flexibility during this period of uncertainty.
"We reported select preliminary operating results for the first quarter of 2020 on April 6, which reflected stronger-than anticipated market demand through early March, followed by significant declines through the end of the month, which have continued to deteriorate in April as the coronavirus pandemic spread across the U.S. and severely impacted the economy," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. "Though our net earnings for the first quarter more than doubled and every key operating metric showed significant year-over-year growth, we are expecting much weaker results for at least the next couple of quarters due to large parts of the economy being shut down, causing record job losses, fear and uncertainty about the future. Our hearts go out to all those impacted directly and indirectly."...He explained, "With shelter-in-place orders in effect across most of our markets, we are seeing customers either virtually or by appointment in our sales offices and Studio M design centers. Those we see tend to be serious buyers ready to commit to a new home purchase, so while our traffic has understandably decreased, our conversion rates on the traffic we do see have increased."
