Meritage Homes Corporation

Greetings and welcome to Meritage Homes' third quarter 2021 analyst call. At this time, all participants are in a listen-only mode. A question-and-answer session will only follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Emily Tadano, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Doug. Good morning and welcome to our analyst call to discuss our third quarter 2021 and year-to-date results. We issued the press release yesterday after the market closed. You can find it along with the slides we'll refer to during this call on our website at investors.meritagehomes.com or by selecting the investor relations link at the bottom of our homepage. On page 2, please refer to caution you that our statements during this call, as well as the press release and accompanying slides, contain forward-looking statements, including but not limited to our views regarding the health of the housing market, economic conditions and changes in interest rates, community count and absorption, trends in construction costs, supply chain constraints and cycle times, Projected full-year 2021 home closings and revenue, gross margins, tax rates, and diluted earnings per share. Potential disruptions to our business from an epidemic or pandemic, such as COVID-19, as well as others. Those and any other projections represent the current opinions of management, which are subject to change at any time, and we assume no obligation to update them. Any forward-looking statements are inherently uncertain. Our actual results may be materially different than our expectations due to a wide variety of risk factors, which we have identified and listed on this slide, as well as in our press release and most recent filings with the Securities and Exchange Commission, specifically our 2020 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which contain a more detailed discussion of those risks. We have also provided a reconciliation of certain non-GAAP financial measures referred to in our press release as compared to their closest related GAAP measures. With us today to discuss our results are Steve Hilton, Executive Chairman, Phillippe Lord, CEO, and Hilla Sferruzza, Executive Vice President and CFO of Meritage Homes. We expect this call to last about an hour. A replay will be available on our website within approximately two hours after we conclude the call and will remain active through November 11th. I'll now turn it over to Mr. Hilton. Steve?

Thank you, Emily. Welcome to everyone participating in our call. I'll start with a brief discussion about current market trends and provide an overview of year-to-date 2021. Phillippe will cover our strategy and quarterly performance, and Hilla will provide a financial overview of the third quarter and forward-looking guidance. Homebuying activity remains solid during the third quarter. We continue to experience elevated demand, and despite the return of some seasonality in the quarter, monthly demand has improved sequentially from August to September and October. The macro drivers for market demand continue to be what we've experienced all of 2021. Limited housing supply, still extremely low interest rates, and higher home buying activity for millennials and baby boomers who are experiencing life events associated with changes in housing needs. New and existing resale housing supply remains tight, especially for affordable entry-level homes. Mortgage interest rates are still very attractive, as entry-level buyers are typically focused on a monthly payment. The low interest rates continue to offset higher ASPs and we are seeing elevated demand persist. And lastly, we continue to see household formation for millennials and downsizing for baby boomers, both of which create demand for the type of housing that we build. We believe these underlying demographic factors will not fundamentally change in the near future, and although they may be bumpy, if interest rates move materially within a short period of time. This quarter, we leaned We leaned on our deep vendor relations to navigate ongoing industry-wide supply chain challenges. These strategic supply-side partnerships and our operating model focused on spec homes and limited XKUs allowed us to deliver 3,112 homes, which set the company record for the highest third quarter of home closings. We also set two additional quarterly company records, We generated the highest quarterly home grossing gross margin of 29.7% in company history as a result of pricing power more than offsetting the elevated lumber and other commodity costs. And our quarterly diluted EPS of 525 was the highest in our company's history. We grew community accounts sequentially again this quarter as well as year over year. Overcoming municipal delays and supply shortages and land development as well. As of September 30th, 2021, we had 236 Indian communities and remain confident in our ability to achieve our goal of 300 communities by mid-2022. On slide four, I want to touch on the latest milestones we achieved this quarter. The EPA recognized Meridians as a recipient of the 2021 Indoor Air Plus Leader Award Our advanced air filtration, ventilation, and HVAC, as well as spray foam insulation, help minimize indoor exposure to airborne pollutants and contaminants, so it's great to be recognized for these accomplishments nationally. In terms of innovation, we launched self-guided tours in select locations to address customers' changing preferences when it comes to the home buying process. Self-guided tours allow buyers to sign up for a no-contact tour of our model homes on our website and then tour the home after hours at their convenience. We expect to have this program rolled out throughout the country in the coming months. Additionally, we expanded our offering of digital financial services so marriage customers can now receive guaranteed on-demand homeowner's insurance quotes on their selected home on our website. From an ESG perspective, we memorialized our human rights policy, which can now be found on our investor relations website, and stay tuned as we will have more to share on the ESG front before year-end. Overall, it was another successful quarter where our teams and supplier relationships helped Americans deliver 3,112 homes. I'll now turn it over to Phillippe. Thank you, Steve.