Meritage Homes CORP - Quarter Report: 2025 June (Form 10-Q)

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MERITAGE HOMES CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 30, 2025

December 31, 2024

Assets

Cash and cash equivalents

Other receivables

Real estate

Deposits on real estate under option or contract

Investments in unconsolidated entities

Property and equipment, net

Deferred tax assets, net

Prepaids, other assets and goodwill

Total assets

Liabilities

Accounts payable

Accrued liabilities

Home sale deposits

Loans payable and other borrowings

Senior and convertible senior notes, net

Total liabilities

Stockholders’ Equity

Preferred stock, par value $. Authorized shares; issued and outstanding at June 30, 2025 and December 31, 2024

Common stock, par value $. Authorized shares; and shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes to unaudited consolidated financial statements

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,
	2025	2024	2025	2024
Homebuilding:
Home closing revenue	$	$	$	$
Land closing revenue
Total closing revenue
Cost of home closings	()	()	()	()
Cost of land closings	()		()	()
Total cost of closings	()	()	()	()
Home closing gross profit
Land closing gross (loss)/profit	()
Total closing gross profit
Financial Services:
Revenue
Expense	()	()	()	()
Earnings/(loss) from financial services unconsolidated entities and other, net				()
Financial services profit
Commissions and other sales costs	()	()	()	()
General and administrative expenses	()	()	()	()

Interest expense
Other income, net
Loss on early extinguishment of debt		()		()
Earnings before income taxes
Provision for income taxes	()	()	()	()
Net earnings	$	$	$	$
Earnings per common share: (1)
Basic	$	$	$	$
Diluted	$	$	$	$
Weighted average number of shares: (1)
Basic
Diluted

(1) Share and per share amounts have been retroactively adjusted to reflect the 2-for-1 stock split that was effective on January 2, 2025. See Note 1.

See accompanying notes to unaudited consolidated financial statements

MERITAGE HOMES CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended June 30,
	2025	2024
Cash flows from operating activities:
Net earnings	$	$
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization
Stock-based compensation

Equity in earnings from unconsolidated entities	()	()

Distributions of earnings from unconsolidated entities
Other
Changes in assets and liabilities:
Increase in real estate	()	()
Increase in deposits on real estate under option or contract	()	()
(Increase)/decrease in other receivables, prepaids and other assets	()
Decrease in accounts payable and accrued liabilities	()	()
(Decrease)/increase in home sale deposits	()
Net cash used in operating activities	()	()
Cash flows from investing activities:
Investments in unconsolidated entities	()	()

Purchases of property and equipment	()	()
Proceeds from sales of property and equipment
Maturities/sales of investments and securities
Payments to purchase investments and securities	()	()
Net cash used in investing activities	()	()
Cash flows from financing activities:

Repayment of loans payable and other borrowings	()	()
Repayment of senior notes		()
Proceeds from issuance of senior notes
Payment of debt issuance costs	()	()
Purchase of capped calls related to issuance of convertible senior notes		()
Dividends paid	()	()
Repurchase of shares	()	()
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period	$	$

See Supplemental Disclosure of Cash Flow Information in Note 13.

See accompanying notes to unaudited consolidated financial statements

MERITAGE HOMES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 —

regions: West, Central and East, which are comprised of states: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina. 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 Homeplex Mortgage Investments Corporation 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. Meritage Homes' homebuilding construction, development and sales activities are conducted through its subsidiaries. Our homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At June 30, 2025, we were actively selling homes in communities, with base prices ranging from approximately $ to $.

-for-one stock split (the "Stock Split") of Meritage’s common stock in the form of a stock dividend. Each stockholder of record at the close of business on December 31, 2024 received one additional share of common stock for each share of common stock held, payable after the close of market on January 2, 2025. Trading began on a split-adjusted basis on January 3, 2025. There was no adjustment to the number of authorized shares or the par value. As required by Accounting Standards Codification ("ASC") 260, Earnings Per Share, all share and per share amounts in the accompanying unaudited consolidated financial statements have been retroactively adjusted to reflect the Stock Split for all periods presented, inclusive of dividends and share repurchases.

Amounts in transit from title companies or closing agents for home closings of approximately $ million and $ million are included in Cash and cash equivalents at June 30, 2025 and December 31, 2024, respectively.

, 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.

Our Deposits on real estate under option or contract were $ million and $ million as of June 30, 2025 and December 31, 2024, respectively. See Note 3 for additional information related to Deposits on real estate under option or contract.

$ Lease liabilities $ $ $ Total Sureties$ $ $ $ Letters of Credit (“LOCs”):LOCs for land development N/A N/ALOCs for general corporate operations N/A N/ATotal LOCs$ N/A$ N/A

$ Payroll and other benefits Accrued interest Accrued taxes Warranty reserves Lease liabilities Other accruals Total$ $

after the close of the home and a structural warranty that typically extends up to 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, 2025 or 2024. Included in the warranty reserve balances at June 30, 2025 and December 31, 2024 are case-specific warranty reserves, as discussed in Note 15.

$ $ $ Additions to reserve from new home deliveries Warranty claims, net of recoveries()()()()Adjustments to pre-existing reserves Balance, end of period$ $ $ $ $ $ (4)

(1)

(2)

(3)

(4)

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 -

active equity-method land joint ventures and mortgage joint venture.

Real estate

Other assets

Total assets$ $ Liabilities and equity:Accounts payable and other liabilities$ $ Equity of:

Meritage (1)

Other Total liabilities and equity$ $


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Revenue	$	$	$	$
Costs and expenses	()	()	()	()
Net earnings of unconsolidated entities	$	$	$	$
Meritage’s share of pre-tax earnings (1) (2)	$	$	$	$

(1)

(2)

NOTE 5 —

$ million unsecured revolving credit facility

Total$ $

(1).

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. See Note 16 for details on the amendment entered into subsequent to June 30, 2025. The Credit Facility's aggregate commitment is $ million with an accordion feature permitting the size of the facility to increase to a maximum of $ billion, subject to certain conditions, including the availability of additional bank

basis point adjustment plus an applicable margin (ranging from basis points to 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 basis points and (iii) term SOFR (based on a 1 month interest period) plus a basis point adjustment plus %, in each case plus a margin ranging from basis points to basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a basis point adjustment plus the applicable margin. At June 30, 2025, the interest rate on outstanding borrowings under the Credit Facility would have been % 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 $ 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 %. We were in compliance with all Credit Facility covenants as of June 30, 2025.

We had outstanding borrowings under the Credit Facility as of June 30, 2025 and December 31, 2024. There were borrowings or repayments under the Credit Facility during the three months ended June 30, 2025, and $ million of borrowings and repayments under the Credit Facility during the six months ended June 30, 2025. There were borrowings or repayments under the Credit Facility during the three and six months ended June 30, 2024. As of June 30, 2025, we had outstanding letters of credit issued under the Credit Facility totaling $ million, leaving $ million available under the Credit Facility to be drawn.

NOTE 6 —

% senior notes due 2027 ("2027 Notes")

% convertible senior notes due 2028 ("2028 Convertible Notes")

% senior notes due 2029 ("2029 Notes")

% senior notes due 2035 ("2035 Notes"). At June 30, 2025, there was $ in net unamortized discount.

Net debt issuance costs()()Total$ $

The indentures for our 2027 Notes, 2029 Notes and 2035 Notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, on sale and leaseback transactions and on mergers. We were in compliance with all such covenants as of June 30, 2025.

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 % owned by Meritage Homes. 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 Homes (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, and accordingly, the assets, liabilities and results of operations of Meritage Homes Corporation and the Guarantor Subsidiaries are not materially different than the corresponding amounts presented in the unaudited consolidated financial statements of Meritage Homes.

In March 2025, we completed an offering of $ million aggregate principal amount of % 2035 Notes. The 2035 Notes were issued at a discount of % of the principal amount and the net proceeds are intended to be used for general corporate purposes.

million aggregate principal amount of % 2028 Convertible Notes. 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 $ million aggregate principal then outstanding of our % Senior Notes due 2025 for which we incurred $ 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 at an initial conversion rate of 8.6096 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $ per share and is subject to adjustment in certain circumstances. In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change". 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 upon satisfaction of certain circumstances. During the three and six months ended June 30, 2025, the circumstances allowing holders of the 2028 Convertible Notes to convert were not met. 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.

For additional details related to our 2028 Convertible Notes and Capped Calls, see Note 6 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Capped Call Transactions

Concurrent with the offering of the 2028 Convertible Notes, we used a portion of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Calls 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 $ 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 $ 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 $ and $.

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 note holders’ rights under the 2028 Convertible Notes or the indenture governing the 2028 Convertible Notes. 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 —

Financial Instruments: % 2027 Notes

$ $ $ $

% 2028 Convertible Notes

$ $ $ $

% 2029 Notes

$ $ $ $

% 2035 Notes

$ $ $ $

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 only if events and circumstances indicate that the carrying value may not be recoverable. See Note 1 for additional information regarding the valuation of these assets.

NOTE 8 —

Effect of dilutive securities:Unvested restricted stock Diluted average shares outstanding Net earnings$ $ $ $ Basic earnings per share$ $ $ $ Diluted earnings per share$ $ $ $

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.

Share and per share amounts have been retroactively adjusted to reflect the Stock Split that was effective on January 2, 2025. See Note 1.

NOTE 9 —

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 the accompanying 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. $ $ $ $ $ Additions Balance at June 30, 2025$ $ $ $ $ $

NOTE 10 —

$ $ $ $ Stock Split effective January 2, 2025 (See Note 8)— ()— — Net earnings— — — Stock-based compensation expense— — — Issuance of stock ()— Dividends declared— — — ()()Share repurchases()()()— ()Balance at March 31, 2025 $ $ $ $ Net earnings— — — Stock-based compensation expense— — — Dividends declared— — — ()()Share repurchases()()()— ()Balance at June 30, 2025 $ $ $ $

Six Months Ended June 30, 2024

(In thousands)

Number of

Shares (1)

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Total

Balance at December 31, 2023

Net earnings

—

Stock-based compensation expense

—

Issuance of stock

()

—

Dividends declared

—

()

Share repurchases

()

—

()

Balance at March 31, 2024

Net earnings

—

Stock-based compensation expense

—

Issuance of stock

—

Dividends declared

—

()

Share repurchases

—

Capped call transactions, net of tax

—

()

—

()

Balance at June 30, 2024

(1) Share amounts have been retroactively adjusted to reflect the Stock Split that was effective on January 2, 2025. See Note 1.

During the three months ended June 30, 2025 and 2024, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ and $ per share, respectively. Quarterly dividends declared and paid during the six months ended June 30, 2025 and 2024, totaled $ and $ per share, respectively. During the three and six months ended June 30, 2025 and 2024, 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 —

. 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 shares of stock to be awarded, of which shares remain available for grant at June 30, 2025. 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 ratable vesting period for employees, a cliff vesting for both restricted stock units and performance-based awards granted to executive officers and either a cliff vesting or vesting for non-employee directors, dependent on their appointment date.

$ $ $ Non-vested shares granted Performance-based non-vested shares granted

Performance-based shares issued in excess of target shares granted (1)

Restricted stock awards vested (includes performance-based awards)

$ Weighted average years expense recognition period

Total equity awards outstanding (1)

(1)%/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, 2025 or 2024, other than minor administrative costs.

NOTE 12 —

$ $ $ State Total$ $ $ $

The effective tax rate for the three and six months ended June 30, 2025 was % and %, respectively, and for the three and six months ended June 30, 2024 was % and %, respectively. The increase in the effective tax rate for the three and six months ended June 30, 2025 reflects fewer homes qualifying for the §45L energy-efficient homes federal tax credit under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") due to higher construction thresholds required to earn these tax credits beginning in 2025.

At June 30, 2025 and December 31, 2024, we have unrecognized tax benefits. We believe our current income tax filing positions and deductions will be sustained on audit and we 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 have no NOLs or credit carryovers, and determined that valuation allowance on our deferred tax assets is necessary at June 30, 2025.

At June 30, 2025, we had $ million income taxes payable and income taxes receivable. The income taxes payable primarily consists of 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, 2025.

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 2020. We do not have any Federal or state income tax examinations pending resolution at this time.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which includes several significant corporate tax changes. The legislation modifies or extends provisions originally enacted under the Tax Cuts and Jobs Act of 2017, including but not limited to the reinstatement of immediate expensing for research and development expenditures and the restoration of 100% bonus depreciation for qualified property. In addition, OBBBA introduces new provisions, including the repeal of the §45L energy-efficient home credit for homes acquired after June 30, 2026, and a new 1% floor on charitable contribution deductions. We are currently evaluating the full impact of the legislation, but do not expect it to have a material effect on our effective tax rate for the year ending December 31, 2025.

NOTE 13 —

)$()Income taxes paid, net$ $ Non-cash operating activities:Real estate acquired through notes payable$ $ Non-cash investing and financing activities:Distributions of real estate from unconsolidated joint ventures, net$ $

NOTE 14 —

principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have 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:			Tennessee and Texas
			East:			Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina

We define our segments based on the way in which internally reported financial information is regularly provided and reviewed by the CODM to analyze financial performance, make decisions, and allocate resources. Our CODM is the chief executive officer. The CODM’s evaluation of the homebuilding segment performance is based on segment home closing revenue, home closing gross profit and gross margin, total gross profit, commissions and other sales costs, general and administrative expenses incurred by or allocated to each segment, including impairments, and operating income. The CODM uses these performance metrics predominantly in the annual budget and forecasting process and considers budget-to-actual variances on a quarterly basis for these measures when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses these data points to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees. The CODM also reviews financial services profits and losses to evaluate the performance of the financial services segment and make decisions about allocation of resources and financial services related product offerings.

Effective January 1, 2025, we realigned our internal organizational structure and resources following continued growth and recent entry into new markets. As a result of the change in our organizational structure, the Tennessee homebuilding operating segment was reclassified from the East reporting segment to the Central reporting segment for the purpose of making operational and resource decisions and assessing financial performance. Prior period balances have been retroactively adjusted to reflect this reclassification.

$ $ $ Land closing revenue Total closing revenue Cost of home closings Cost of land closings Total cost of closings Home closing gross profit Land closing gross (loss)/profit () ()Total closing gross profit Home closing gross margin%%%%Commissions and other sales costs General and administrative expenses Homebuilding segment operating income Financial services segment profit Corporate and unallocated costs (1)()Interest expense Other income, net Earnings before income taxes$

(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.

$ $ $ Land closing revenue Total closing revenue Cost of home closings$ $ $ $ Cost of land closings Total cost of closings Home closing gross profit Land closing gross profit Total closing gross profit Home closing gross margin%%%%Commissions and other sales costs General and administrative expenses Homebuilding segment operating income Financial services segment profit Corporate and unallocated costs (1)()Interest expense Other income, net Loss on early extinguishment of debt()Earnings before income taxes$

(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.

$ $ $ Land closing revenue Total closing revenue Cost of home closings Cost of land closings Total cost of closings Home closing gross profit Land closing gross profit/(loss) () Total closing gross profit Home closing gross margin%%%%Commissions and other sales costs General and administrative expenses Homebuilding segment operating income Financial services segment profit Corporate and unallocated costs (1)()Interest expense Other income, net Earnings before income taxes$

(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.

$ $ $ Land closing revenue Total closing revenue Cost of home closings Cost of land closings Total cost of closings Home closing gross profit Land closing gross profit Total closing gross profit Home closing gross margin%%%%Commissions and other sales costs General and administrative expenses Homebuilding segment operating income Financial services segment profit Corporate and unallocated costs (1)()Interest expense Other income, net Loss on early extinguishment of debt()Earnings before income taxes$

(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.

$ $ $ $ $ Real estate Investments in unconsolidated entities Other assets (1) (2) (3) (4) Total assets$ $ $ $ $ $

(1).

(2)

(3)

(4)

$ $ $ $ $ Real estate Investments in unconsolidated entities Other assets (1) (2) (3) (4) Total assets$ $ $ $ $ $

(1)

(2)Balance consists primarily of development reimbursements from local municipalities, property and equipment, goodwill (see Note 9), and prepaid expenses 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, prepaid expenses and other assets

NOTE 15 —

million 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.

NOTE 16 —

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 may include statements concerning our belief that we have ample liquidity; our goals, strategies and strategic initiatives including our 60-day closing ready commitment, our use of interest rate buy-downs and other financing incentives, our partnership with external realtors, 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 2025 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 incentives, sales orders, cancellations, construction and materials costs and availability, general and administrative costs, mortgage interest rates, gross margins, land costs, inflation, and community counts; 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; the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; shortages in the availability and cost of subcontract labor; 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; 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, 2024 and this Quarterly Report on Form 10-Q 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.


Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview and Outlook

The macroeconomic landscape in the second quarter of 2025 created a tougher backdrop for the homebuilding sector, with elevated mortgage interest rates, an increase in the supply of resale inventory available and diminished consumer confidence. We were able to navigate these challenging conditions by leaning in to our strategy to more effectively compete with the resale market with a sufficient inventory of affordable, move-in ready homes with a 60-day closing ready commitment and a willingness to work with third party brokers, who facilitate most residential real estate transactions in the U.S. This strategy allows us to meet the demand for immediately available homes with a comfortable monthly mortgage payment. Although we expect that mortgage rates will remain volatile and macroeconomic concerns will continue to impact consumer psychology for the near to mid-term, we believe that our interest rate buy-downs, other financing incentives and affordable price points provide us with a competitive advantage, particularly over resale homes as individual home sellers are not typically able to provide such incentives.

Land costs remain elevated following several years of historically high land development activity and have negatively impacted our margins, although we have seen offsetting improvements in margin due to construction cycle times and material costs returning to normalized levels in the second quarter of 2025 after stabilizing in late 2024.

We believe that our strategy has, and will continue to drive strong performance of key financial measures, including home closing volume, home closing gross margin, selling, general and administrative cost leveraging, balance sheet management and long-term community count growth.

Summary Company Results

We achieved our highest second quarter home closing units volume of 4,170 homes in the three months ended June 30, 2025 increasing 1.3% from 4,118 homes in the same prior year period. The higher closing volume was offset with a 5.8% decrease in average sales price ("ASP") on closings for $1.6 billion in home closing revenue, a 4.6% decline from $1.7 billion in the three months ended June 30, 2024. The lower ASP is a result of increased utilization of incentives and contributed to the second quarter 2025 home closing gross margin decline of 480 basis points to 21.1%, compared to 25.9% in the prior year period. The decrease in home closing gross margin was a result of higher lot costs as well as charges incurred related to terminated land contracts, all of which were partially offset by savings in direct costs, leading to Home closing gross profit of $341.3 million in the second quarter 2025 compared to $439.5 million in the prior year period. Land closing gross loss was a nominal $0.7 million in the second quarter of 2025, and there was no land closing activity in the second quarter of 2024. Financial services profit of $5.6 million in the three months ended June 30, 2025 increased compared to $4.8 million in 2024. Commissions and other sales costs of $108.8 million in the three months ended June 30, 2025 increased $4.2 million due primarily to higher commission rates and higher maintenance and utility costs of having more spec homes in inventory. General and administrative expenses of $55.2 million in the three months ended June 30, 2025 increased $2.0 million from $53.2 million in the same period of 2024 due primarily to incremental start-up costs for our new divisions in Alabama and Mississippi. Earnings before income taxes for the three months ended June 30, 2025 of $193.1 million decreased $104.3 million year over year from $297.4 million in the same period of 2024. The effective income tax rate of 23.9% for the three months ended June 30, 2025 increased from 22.1% in 2024 due to fewer homes qualifying for energy tax credits under the Inflation Reduction Act ("IRA") in 2025. The decrease in year-over-year profitability resulted in net earnings of $146.9 million in the three months ended June 30, 2025 versus $231.6 million in the three months ended June 30, 2024.

For the six months ended June 30, 2025, home closing units volume was relatively flat with prior year and home closing revenue decreased 6.4% due to a 5.9% lower ASP on closings. Home closing gross margin of 21.5% decreased 440 basis points year over year, for a $180.5 million decrease in Home closing gross profit due to greater utilization of financing incentives, higher lot costs, reduced leverage of fixed costs on lower Home closing revenue, and increased charges incurred related to terminated land contracts, all of which were partially offset by savings in direct costs and improved construction cycle times. Year to date, Commissions and other sales costs were 6.9% of home closing revenue, 40 basis points higher than the comparable 2024 period, for the same reasons noted above. General and administrative expenses for the six months ended June 30, 2025 as a percentage of Home closing revenue were 50 basis points higher than the six months ended June 30, 2024 due to reduced leverage of fixed costs on lower Home closing revenue and greater spend on new technology. Lower gross

margin and profitability and a higher effective tax rate of 23.6% led to net income of $269.7 million for the six months ended June 30, 2025, compared to $417.6 million for the comparable 2024 period.

Home orders of 3,914 for the three months ended June 30, 2025 increased 3.0% from 3,799 home orders in the prior year quarter due to a 7.1% increase in average active communities, which was partially offset by a decrease in orders pace of 4.3 net homes per month in the second quarter of 2025 from 4.5 in the prior year period. While this decrease reflects the tougher selling environment, it is still above our targeted orders pace of 4.0 net homes per month. Home order value during the three months ended June 30, 2025 of $1.5 billion decreased 1.7% year-over-year, as the higher order volume was offset by a 4.5% decrease in ASP on orders. Reduced ASP is a result of the financing incentives as discussed previously. Our cancellation rate of 10% in the second quarter of 2025 was consistent with the second quarter of 2024 and below the Company's historical average. We ended the second quarter of 2025 with 1,748 homes in backlog valued at $695.5 million, decreases of 35.6% and 37.3%, respectively, from June 30, 2024. The lower backlog units is directly tied to the backlog conversion rate of 208% during the second quarter of 2025, compared to 136% in the same quarter of 2024. The decrease in backlog and higher backlog conversion rate is a direct output of our strategy of offering move-in ready homes with a 60-day closing ready commitment, as we are selling homes later in the construction cycle and are therefore able to shorten the time between home sale and home closing. Of the homes closed in second quarter of 2025, approximately 58% were sold within the same quarter, compared to approximately 41% in the prior year period.

We ended the second quarter of 2025 with 312 active communities, up from 287 at June 30, 2024. We purchased approximately 4,600 lots for $234.0 million, spent $275.4 million on land development, net of reimbursements, and started construction on 7,684 homes during the six months ended June 30, 2025.

Company Positioning

We believe that the investments in our new communities designed for the first-time and first move-up homebuyer, our move-in ready homes with a 60-day closing ready commitment, and our partnership with external realtors 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, move-in ready homes with a 60-day closing ready commitment;

•Embracing external realtor relationships, as we view realtors as a strategic partner who assists with sourcing homebuyers, particularly first-time homebuyers who view the realtor as a trusted advisor;

•Continuously improving the overall home buying experience through simplification and innovation; and

•Increasing homeowner satisfaction by offering 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, and maintaining our status as a top 5 national builder (based on homes closed in 2024);

•Targeting a strong, yet sustainable, orders pace through the use of consumer and market research to ensure that we build homes that offer our buyers their desired features and amenities;

•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 maintaining a strong balance sheet. We ended the second quarter of 2025 with a 25.8% debt-to-capital ratio and a 14.6% net debt-to-capital ratio, after issuing $500.0 million of senior notes during the first quarter of 2025;

•Balancing return of capital to our stockholders 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; and

•Promoting a positive environment for our employees through our commitment to inclusion, culture, and belonging, and providing market-competitive benefits in order to develop and motivate our employees, minimize turnover and maximize recruitment efforts.

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 and warranty reserves. There have been no significant changes to our critical accounting estimates during the six months ended June 30, 2025 compared to those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2024 Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report").

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. As previously disclosed in Note 1, effective January 1, 2025, all segment information included in this Quarterly Report on Form 10-Q has been recast for all periods presented to reflect Tennessee in the Central Region. 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 Revenue	Three Months Ended June 30,				Quarter over Quarter
	2025		2024		Change $		Change %
Total
Dollars	$	1,615,709	$	1,693,738	$	(78,029)	(4.6)	%
Homes closed	4,170		4,118		52		1.3	%
Average sales price	$	387.5	$	411.3	$	(23.8)	(5.8)	%
West Region













Dollars	$	549,205	$	622,837	$	(73,632)	(11.8)	%
Homes closed	1,165		1,265		(100)		(7.9)	%
Average sales price	$	471.4	$	492.4	$	(21.0)	(4.3)	%
Central Region

Dollars	$	480,425	$	528,380	$	(47,955)	(9.1)	%
Homes closed	1,374		1,440		(66)		(4.6)	%
Average sales price	$	349.7	$	366.9	$	(17.2)	(4.7)	%
East Region





















Dollars	$	586,079	$	542,521	$	43,558	8.0	%
Homes closed	1,631		1,413		218		15.4	%
Average sales price	$	359.3	$	383.9	$	(24.6)	(6.4)	%


	Six Months Ended June 30,				Quarter over Quarter
	2025		2024		Change $		Change %
Total
Dollars	$	2,957,813	$	3,159,834	$	(202,021)	(6.4)	%
Homes closed	7,586		7,625		$	(39)	(0.5)	%
Average sales price	$	389.9	$	414.4	$	(24.5)	(5.9)	%
West Region













Dollars	$	1,028,841	$	1,138,469	$	(109,628)	(9.6)	%
Homes closed	2,163		2,279		$	(116)	(5.1)	%
Average sales price	$	475.7	$	499.5	$	(23.8)	(4.8)	%
Central Region

Dollars	$	892,962	$	1,012,150	$	(119,188)	(11.8)	%
Homes closed	2,561		2,735		$	(174)	(6.4)	%
Average sales price	$	348.7	$	370.1	$	(21.4)	(5.8)	%
East Region





















Dollars	$	1,036,010	$	1,009,215	$	26,795	2.7	%
Homes closed	2,862		2,611		$	251	9.6	%
Average sales price	$	362.0	$	386.5	$	(24.5)	(6.3)	%


Home Orders (1)	Three Months Ended June 30,				Quarter over Quarter
	2025		2024		Change $		Change %
Total
Dollars	$	1,547,438	$	1,573,456	$	(26,018)	(1.7)	%
Homes ordered	3,914		3,799		115		3.0	%
Average sales price	$	395.4	$	414.2	$	(18.8)	(4.5)	%
West Region













Dollars	$	484,756	$	557,296	$	(72,540)	(13.0)	%
Homes ordered	1,001		1,114		(113)		(10.1)	%
Average sales price	$	484.3	$	500.3	$	(16.0)	(3.2)	%
Central Region

Dollars	$	475,275	$	471,064	$	4,211	0.9	%
Homes ordered	1,298		1,274		24		1.9	%
Average sales price	$	366.2	$	369.8	$	(3.6)	(1.0)	%
East Region





















Dollars	$	587,407	$	545,096	$	42,311	7.8	%
Homes ordered	1,615		1,411		204		14.5	%
Average sales price	$	363.7	$	386.3	$	(22.6)	(5.9)	%


	Six Months Ended June 30,				Quarter over Quarter
	2025		2024		Change $		Change %
Total
Dollars	$	3,105,615	$	3,204,651	$	(99,036)	(3.1)	%
Homes ordered	7,790		7,790		—		—	%
Average sales price	$	398.7	$	411.4	$	(12.7)	(3.1)	%
West Region













Dollars	$	1,024,350	$	1,138,101	$	(113,751)	(10.0)	%
Homes ordered	2,094		2,284		(190)		(8.3)	%
Average sales price	$	489.2	$	498.3	$	(9.1)	(1.8)	%
Central Region

Dollars	$	964,435	$	1,027,223	$	(62,788)	(6.1)	%
Homes ordered	2,663		2,774		(111)		(4.0)	%
Average sales price	$	362.2	$	370.3	$	(8.1)	(2.2)	%
East Region





















Dollars	$	1,116,830	$	1,039,327	$	77,503	7.5	%
Homes ordered	3,033		2,732		301		11.0	%
Average sales price	$	368.2	$	380.4	$	(12.2)	(3.2)	%

(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.


Order Backlog (1)	At June 30,				Quarter over Quarter
	2025		2024		Change $		Change %
Total
Dollars	$	695,476	$	1,109,687	$	(414,211)	(37.3)	%
Homes in backlog	1,748		2,714		(966)		(35.6)	%
Average sales price	$	397.9	$	408.9	$	(11.0)	(2.7)	%
West Region













Dollars	$	182,308	$	367,436	$	(185,128)	(50.4)	%
Homes in backlog	366		751		(385)		(51.3)	%
Average sales price	$	498.1	$	489.3	$	8.8	1.8	%
Central Region

Dollars	$	220,889	$	329,377	$	(108,488)	(32.9)	%
Homes in backlog	583		880		(297)		(33.8)	%
Average sales price	$	378.9	$	374.3	$	4.6	1.2	%
East Region





















Dollars	$	292,279	$	412,874	$	(120,595)	(29.2)	%
Homes in backlog	799		1,083		(284)		(26.2)	%
Average sales price	$	365.8	$	381.2	$	(15.4)	(4.0)	%

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

Active Communities and Cancellation Rates


Active Communities	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	Ending	Average	Ending	Average	Ending	Average	Ending	Average
Total	312	301.0	287	281.0	312	297.8	287	277.2




West Region	85	85.0	85	84.0	85	87.0	85	81.9

Central Region	85	83.5	90	92.0	85	85.6	90	94.3






East Region	142	132.5	112	105.0	142	125.2	112	101.0


Cancellation Rates (2)	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Total	10	%	10	%	9	%	9	%




West Region	9	%	10	%	8	%	9	%

Central Region	11	%	12	%	10	%	10	%






East Region	10	%	8	%	10	%	8	%

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

Operating Results

Companywide. In the three months ended June 30, 2025, we closed 4,170 homes, up 1.3% from 4,118 closings in the three months ended June 30, 2024. The decrease in home closing volume combined with a 5.8% lower ASP on closings led to $1.6 billion in home closing revenue for the three months ended June 30, 2025, 4.6% lower than the same period in 2024. Home order volume in the three months ended June 30, 2025 of 3,914 homes was 3.0% higher than 3,799 homes in the three months ended June 30, 2024, due to a 7.1% increase in average active communities, which was partially offset by a 4.4% lower orders pace of 4.3 net homes per month in the three months ended June 30, 2025 compared to 4.5 in the same period in 2024. The improvement in home order volume offset by a 4.5% lower ASP on orders led to home order value of $1.5 billion for the three months ended June 30, 2025, down by 1.7% from the prior year period. The decline in ASP on both closings and orders was caused by increased utilization of financing incentives. Order cancellations of 10% for the three months ended June 30, 2025 was consistent year over year. The current run rate for cancellations across the company is below our historical company average and we believe that this demonstrates the benefits of a shorter timeline between home order and home closing that is a product of our move-in ready homes with a 60-day closing ready commitment.

For the six months ended June 30, 2025, home closing volume of 7,586 closings was relatively flat year over year, and ASP on closings decreased 5.9%, leading to home closing revenue of $3.0 billion, down 6.4% from $3.2 billion in the prior year period. Home order volume of 7,790 for the six months ended June 30, 2025 was consistent with the prior year period, which with a 3.1% lower ASP on orders led to a 3.1% decrease in home order value of $3.1 billion. We ended the second quarter of 2025 with 312 actively selling communities, up from 287 at June 30, 2024. The quarter ended with 1,748 homes in backlog valued at $695.5 million, compared to 2,714 units valued at $1.1 billion at June 30, 2024. The lower backlog year over year is a result of the significant improvement in our backlog conversion rate of 208% compared to 136% in the prior year period, as we are selling spec homes later in the construction cycle.

West. The West Region generated $549.2 million in home closing revenue in the three months ended June 30, 2025, a 11.8% decrease compared to the $622.8 million in the prior year period. The lower revenue was driven by lower ASP on closings coupled with 7.9% lower closing volume of 1,165 homes in the three months ended June 30, 2025, compared to 1,265 homes in the prior year period. Home orders for the three months ended June 30, 2025 of 1,001 were down 10.1% from 1,114 in the prior year period, resulting from an 11.4% decrease in orders pace to 3.9 net homes per month, reflecting the tougher selling environment, with a relatively flat average active community count year over year. Home order value of $484.8 million for the second quarter of 2025 decreased 13.0% due to the lower order volume and a 3.2% lower ASP on orders. The decline in ASP on both closings and orders was the combined effect of increased utilization of financing incentives and a shift in geographic mix within the region. The West Region cancellation rate of 9% in the three months ended June 30, 2025 improved from 10% in the prior year.

For the six months ended June 30, 2025, home closing revenue of $1.0 billion decreased 9.6% due to a 5.1% decrease in home closing volume and a 4.8% lower ASP on closings resulting from the same reasons as noted above for the second quarter. Home order volume in the West Region of 2,094 decreased 8.3% as a 14.9% decrease in orders pace to 4.0 net homes per month, reflecting the tougher selling environment, was partially offset by a 6.2% increase in the number of average actively selling communities. Home order value of $1.0 billion was down 10.0% due the lower volume and a 1.8% decrease in ASP. The year-to-date cancellation rate of 8% improved from 9% in the prior year period. The West Region ended the second quarter of 2025 with 366 homes in backlog valued at $182.3 million, compared to 751 units valued at $367.4 million at June 30, 2024. The lower backlog is due to a higher backlog conversion rate of 220% for the three months ended June 30, 2025 compared to 140% in the same period of 2024, and lower orders pace in 2025 year to date.

Central. The Central Region closed 1,374 homes in the three months ended June 30, 2025, down 4.6% from 1,440 in the prior year period. Home closing revenue of $480.4 million in the three months ended June 30, 2025 was 9.1% lower from $528.4 million in the prior year period, due to the combined impact of lower home closing volume and a 4.7% decrease in ASP on closings. The decline in ASP on closings is a result of higher utilization of incentives. Home order volume increased 1.9% to 1,298 homes in the three months ended June 30, 2025 as a 13.0% improvement in orders pace of 5.2 homes per month more than offset the 9.2% drop in average active community count. Home order value of $475.3 million in the three months ended June 30, 2025 was relatively flat with the prior year period. The Central Region cancellation rate of 11% in the three months ended June 30, 2025 was down from 12% in the prior year period.

The Central Region had home closing revenue of $893.0 million for the six months ended June 30, 2025, 11.8% lower than the prior year due to a 6.4% decline in closing volume of 2,561 and a 5.8% decrease in ASP on closings. ASP on closings decreased due to increased use of financing incentives during the six months ended June 30, 2025. Home order volume decreased 4.0%, combined with a 2.2% drop in ASP on orders, leading to a 6.1% decrease in home order value of $964.4 million compared to $1.0 billion for the prior year period. Order volume decreased as a result of a 9.2% decrease in average

active communities, which was partially offset by a 6.1% increase in orders pace to 5.2 net homes per month. The year-to-date cancellation rate of 10% for the six months ended June 30, 2025 was consistent with the prior year period. The Central Region ended the quarter with 583 units in backlog valued at $220.9 million, down 33.8% and 32.9%, respectively, compared to June 30, 2024, due to a higher backlog conversion rate of 209% in the second quarter of 2025 compared to 138% in the comparable prior year quarter, as well as lower order volume.

East. During the three months ended June 30, 2025, the East Region closed 1,631 homes for $586.1 million, up 15.4% and 8.0%, respectively from 1,413 closings and $542.5 million in home closing revenue in the comparable prior year period. The higher closing volume was the result of a 26.2% higher average active community count in the second quarter of 2025 and a shorter order to close timeline. The higher volume was partially offset by a 6.4% lower ASP on home closings, resulting from greater utilization of financing incentives. The East Region improved home order volume over prior year by 14.5%, with orders of 1,615 for the three months ended June 30, 2025, due entirely to the higher average active community count, which was partially offset by an 8.9% lower orders pace of 4.1 net homes per month compared to 4.5 in the prior year. Order value of $587.4 million in the three months ended June 30, 2025 increased 7.8% from $545.1 million in the prior year period due to the higher volume offset by a 5.9% decrease in ASP on orders year over year caused by increased use of financing incentives and geographic mix within the region. The East Region cancellation rate of 10% in the three months ended June 30, 2025 was up from 8% in the same prior year period but remains lower than our historical company average.

For the six months ended June 30, 2025, the East Region saw improvements in home closing volume and revenue of 9.6% and 2.7%, respectively, compared to the 2024 period, closing 2,862 homes for $1.0 billion in home closing revenue for the six months ended June 30, 2025. Home order volume increased 11.0% due to a 24.0% increase in average active communities, partially offset by an 11.1% lower orders pace of 4.0 net homes per month for the six months ended June 30, 2025, and includes our first orders from the new divisions in Alabama and Mississippi. The higher order volume led to a 7.5% increase in home order value of $1.1 billion. ASP on closing and orders both declined due to the increased use of financing incentives and geographic mix within the region. Similar to the second quarter, the East Region's cancellation rate of 10% increased from 8% in the prior year. The East Region ended the second quarter of 2025 with 799 homes in backlog valued at $292.3 million, down 26.2% and 29.2%, respectively, from 1,083 homes valued at $412.9 million at June 30, 2024. The East Region had a backlog conversion rate of 200% in the second quarter of 2025 compared to 130% in the prior year quarter.

Land Closing Revenue and Gross (Loss)/Profit (in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Land closing revenue	$	8,277	$	—	$	23,698	$	2,305
Land closing gross (loss)/profit	$	(719)	$	—	$	2,446	$	7

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. Therefore, the timing of land closings is not typically consistent between periods.

Other Operating Information (dollars in thousands)


	Three Months Ended June 30,								Six Months Ended June 30,
	2025				2024				2025				2024
	Dollars		Percent of Home Closing Revenue		Dollars		Percent of Home Closing Revenue		Dollars		Percent of Home Closing Revenue		Dollars		Percent of Home Closing Revenue
Home Closing Gross Profit (1)
Total	$	341,328	21.1	%	$	439,506	25.9	%	$	636,978	21.5	%	$	817,464	25.9	%

West	$	114,462	20.8	%	$	148,264	23.8	%	$	219,433	21.3	%	$	263,392	23.1	%

Central	$	106,587	22.2	%	$	143,113	27.1	%	$	197,316	22.1	%	$	276,512	27.3	%

East	$	120,279	20.5	%	$	148,129	27.3	%	$	220,229	21.3	%	$	277,560	27.5	%

(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. Home closing gross profit for the three months ended June 30, 2025 was $341.3 million, with a home closing gross margin of 21.1%, down 480 basis points from 25.9% in the three months ended June 30, 2024. The margin decline in all regions was due to the combined impact of increased utilization of financing incentives that resulted in lower ASPs, and higher lot costs, which were partially offset by savings in direct costs and improved construction cycle time. Home closing gross margin was also negatively impacted in the three months ended June 30, 2025 by $4.2 million of charges related to terminated land contracts, compared to $1.4 million of charges in the three months ended June 30, 2024. Excluding the charges related to terminated land contracts, adjusted home closing gross margin was 21.4% and 26.0%, for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, home closing gross profit was $637.0 million, or 21.5%, down 440 basis points from 25.9% in the three months ended June 30, 2024. The lower margin for in all regions for the six months ended June 30, 2025 resulted from the combined effect of increased utilization of financing incentives, reduced leverage of overhead costs on lower home closing revenue, and higher lot costs, which were partially offset by savings in direct costs. Similar to the second quarter of 2025, the home closing gross margin for the six months ended June 30, 2025 included $5.6 million of charges related to terminated land deals, compared to $1.9 million in the same period of the prior year. Excluding the charges related to terminated land contracts, adjusted home closing gross margin was 21.7% and 25.9%, for the six months ended June 30, 2025 and 2024, respectively.

Financial Services Profit (in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Financial services profit	$	5,611	$	4,837	$	9,174	$	4,147

Financial services profit 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, Inc., respectively, as well as our portion of earnings from a mortgage joint venture. Financial services profit of $5.6 million in the three months ended June 30, 2025 increased $0.8 million from the prior year due to new divisions being serviced by our title company. Financial services profit of $9.2 million for the six months ended June 30, 2025 increased $5.0 million from $4.1 million in the same prior year period. The favorable variance year over year is entirely attributable to $7.8 million of charges related to expired interest rate forward commitments in the prior year period, compared to $2.1 million in the current period.

Selling, General and Administrative Expenses and Other Expenses (dollars in thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Commissions and other sales costs	$	(108,830)		$	(104,665)		$	(203,550)		$	(206,215)
Percent of Home closing revenue	6.7		%	6.2		%	6.9		%	6.5		%
General and administrative expenses	$	(55,183)		$	(53,184)		$	(112,180)		$	(103,916)
Percent of Home closing revenue	3.4		%	3.1		%	3.8		%	3.3		%

250,000,000

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, 2025 there was $219.1 million available under this program to repurchase shares. We repurchased 674,124 shares under the program during the three months ended June 30, 2025.


Period	Total Number of Shares Purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
April 1, 2025 - April 30, 2025	145,965	$	67.88	145,965	$	254,170,806
May 1, 2025 - May 31, 2025	528,159	$	66.44	528,159	$	219,078,895
June 1, 2025 - June 30, 2025	—	$	—	—	$	219,078,895
Total	674,124			674,124


Item 5.			Other Information

Insider Trading Arrangements

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, and no independent director a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement. During the fiscal quarter ended June 30, 2025, our officers adopted Rule 10b5-1 trading arrangements, as follows:


Name and Title	Date Adopted	Duration of Trading Arrangement	Description of the Aggregate Number of Securities to be Sold Pursuant to the Arrangement
			Sell sufficient shares to cover taxes due on vesting of equity awards that were granted on February 20, 2023 and vest on February 20, 2026.
			Sell sufficient shares to cover taxes due on vesting of equity awards that were granted on February 20, 2023 and vest on February 20, 2026.
			Sell sufficient shares to cover taxes due on vesting of equity awards that were granted on February 20, 2023 and vest on February 20, 2026.
			Sell sufficient shares to cover taxes due on vesting of equity awards that were granted on February 20, 2023 and vest on February 20, 2026.
			Sell sufficient shares to cover taxes due on vesting of equity awards that were granted on February 20, 2023 and vest on February 20, 2026.


Item 6.			Exhibits


Exhibit Number	Description	Page or Method of Filing
3.1	Restated Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Exhibit 3 of Form 8-K dated June 20, 2002

3.1.1	Amendment to Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Exhibit 3.1 of Form 10-Q for the quarter ended September 30, 1998

3.1.2	Amendment to Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Exhibit 3.1 of Form 8-K dated September 15, 2004

3.1.3	Amendment to Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Appendix A of the Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders filed on April 10, 2006

3.1.4	Amendment to Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Appendix B of the Definitive Proxy Statement for the 2008 Annual Meeting of Stockholders filed on April 1, 2008

3.1.5	Amendment to Articles of Incorporation of Meritage Homes Corporation	Incorporated by reference to Appendix A of the Definitive Proxy Statement filed on January 9, 2009

3.1.6	Amendment to Articles of Incorporation of Meritage Homes Corporation	Filed herewith

3.2	Meritage Homes Corporation Amended and Restated Bylaws	Incorporated by reference to Exhibit 3.1 of Form 8-K dated May 22, 2025

10.1	Representative Form of Non-Employee Director Equity Deferral Program *	Filed herewith

10.2	Eleventh Amendment to Amended and Restated Credit Agreement	Incorporated by reference to Exhibit 10.1 of Form 8-K dated July 9, 2025

22	List of Guarantor Subsidiaries	Incorporated by reference to Exhibit 22 of Form 10-K for the year ended December 31, 2024

31.1	Rule 13a-14(a)/15d-14(a) Certification of Phillippe Lord, Chief Executive Officer	Filed herewith

31.2	Rule 13a-14(a)/15d-14(a) Certification of Hilla Sferruzza, Chief Financial Officer	Filed herewith

32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer	Furnished herewith

101.0	The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2025 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, 2025, formatted in Inline XBRL and contained in exhibit 101.


*			Indicates a management contract or compensation plan.

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 25, 2025

INDEX OF EXHIBITS


3.1						Restated Articles of Incorporation of Meritage Homes Corporation

3.1.1						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.1.2						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.1.3						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.1.4						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.1.5						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.1.6						Amendment to Articles of Incorporation of Meritage Homes Corporation

3.2						Meritage Homes Corporation Amended and Restated Bylaws

10.1						Representative Form of Non-Employee Director Equity Deferral Program *

10.2						Eleventh Amendment to Amended and Restated Credit Agreement

22						List of Guarantor Subsidiaries

31.1						Rule 13a-14(a)/15d-14(a) Certification of Phillippe Lord, Chief Executive Officer

31.2						Rule 13a-14(a)/15d-14(a) Certification of Hilla Sferruzza, Chief Financial Officer

32.1						Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

101.0						The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2025 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, 2025, formatted in Inline XBRL and contained in exhibit 101.


*			Indicates a management contract or compensation plan.

Meritage Homes CORP - Quarter Report: 2025 June (Form 10-Q)

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