Meritage Homes’ Q1 Revenue Drops 17%, EPS Plunges 51% as Shares Repurchased
Meritage Homes’ first-quarter home closing revenue fell 17% year-over-year to $1.11 billion, driving net earnings down 55% to $55.3 million with diluted EPS of $0.82. Gross margin contracted by 450 basis points to 17.5% as the company repurchased $130 million of shares and maintained a 17.4% net debt-to-capital ratio.
1. Operating Results
Meritage Homes delivered 2,967 homes in Q1 2026, generating $1.11 billion in closing revenue, down 17% from last year, and reported net earnings of $55.3 million, a 55% decline, with diluted EPS of $0.82 compared to $1.69 a year ago.
2. Margin Pressure & Incentives
Home closing gross margin contracted to 17.5%, down 450 basis points, driven by higher incentive utilization, increased lot costs, lower revenue leverage and $2.4 million of inventory impairments, partially offset by cost savings and faster cycle times.
3. Order and Backlog Trends
New home orders fell 5% to 3,664 units with average order price down 5% to $382,000 due to incentives and mix shifts. Ending backlog declined 7% to 1,865 homes valued at $711 million, with a backlog conversion rate of 254%.
4. Balance Sheet & Shareholder Returns
The company ended the quarter with $767 million cash, net debt-to-capital of 17.4%, opened 40 new communities for a total of 345, repurchased $130 million of stock and paid $32 million in dividends, while leaving its revolving credit facility undrawn.