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SEC filingMeritage Homes reported Q1 2026 results with home closing revenue of $1.1 billion, net earnings of $55 million, and diluted EPS of $0.82, all down significantly year-over-year amid challenging market conditions.
Meritage Homes' Q1 2026 results reflect a challenging start to the year, marked by a 17% decline in home closing revenue to $1.1 billion, driven by 13% fewer closings at 2,967 units and a 5% drop in average sales price to $373,000. Gross margin compressed 450 basis points to 17.5%, pressured by elevated incentive usage, higher lot costs, and reduced fixed cost leverage on lower volumes, though partially mitigated by direct cost savings and faster cycle times. Impairments of $2.4 million and $1.4 million in land walk-away charges added headwinds. SG&A rose to 11.8% of revenue from lost leverage and higher tech spend, contributing to a 55% plunge in pre-tax earnings to $72.5 million and diluted EPS to $0.82.
Management highlighted improved spring demand with 3.6 net sales per month and 3,664 orders, but noted impacts from a January winter storm and mid-quarter military operations in Iran hurting sentiment and rates. Cycle time improvements enabled 254% backlog conversion, supporting closings, while opening 40 new communities lifted the count to a record 345. Balance sheet strength persisted with $767 million cash, zero revolver draws, and a 17.4% net debt-to-capital ratio. Shareholder returns accelerated via $130 million in repurchases (1.8 million shares) and $32 million dividends at $0.48/share.
Guidance tempers expectations, pegging FY2026 closings and revenue at or within 5% of 2025, signaling caution amid macro uncertainty. Land spend deliberately cut to $326 million, trimming lots to 75,500. Regional data shows balanced weakness, with East leading orders but all areas down YoY. Investors should watch incentive trends and absorption as summer progresses.