Meritage Homes Corporation

Greetings. Welcome to the Meritage Homes first quarter 2022 analyst call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Vice President of Investor Relations, Emily Tadano. You may begin.

Thank you, operator. Good morning and welcome to our analyst call to discuss our first quarter 2022 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. Please refer to slide two, cautioning 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, changes in interest rates, the potential benefits of rate locks, community count and absorption, trends in construction costs, Supply chain and labor constraints and cycle time, projected second quarter and full year 2022 home closings and revenue, gross margins, tax rates and diluted earnings per share. Potential future distractions to our business from an epidemic or pandemic, such as cobit 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 2021 annual report on Form 10-K, which contained a more detailed discussion of those risks. We've 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, Philippe Lord, CEO, and Gila Zarruza, 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 May 12th. I'll now turn it over to Mr. Hilton. Steve?

Thank you, Emily. Welcome to everyone participating on our call. I'll start with a brief discussion about current market trends and provide an overview of our recent results. Philipp will cover our strategy and quarterly performance. He will provide a financial overview of the first quarter and forward-looking guidance for 2022. It's well documented that the continuing labor and supply chain constraints increase cycle times and costs across all aspects of home building operations in the first quarter of 2022. Yet despite these industry-wide issues, The start of the spring selling season has been robust. The new company records, including our highest quarterly sales order volume, our second highest first quarter of home closings, and our highest quarterly home closing gross margin, which broke the 30% threshold, our highest first quarter of home closing revenue, as well as our best quarterly SG&A leverage in our company's history. The first quarter of 2022, was also our fifth sequential quarter of community count growth. We believe that today's sustained demand reflects the desire for homeownership for millennials and downsizing for baby boomers, all driven by life event milestones that is further amplified by the low supply of new and resale housing inventory in the market. The rising interest rates over the last couple of months and a series of additional telegraph fed funds rates increases anticipated for the rest of this year may likely change the dynamics of what product will be purchased. But we believe the underlying demand for these demographic groups will remain solid. We continue to sell homes shortly after releasing them, so far in April, and we are still metering sales in many communities. Now on to slide four for recent events. We recognize that the recent surge in interest rates and six quarters of strong pricing power will eventually impact both buyer psychology and affordability. To alleviate some uncertainties for our customers, in March, Meritage purchased retroactive interest rate locks on all eligible floating rate loans for homes in our backlog that are scheduled to close in the second half of 2022. We want to help our buyers remain confident and comfortable with their decision to purchase a Meritage home and relieve concerns around the high cost of ownership since their home purchase decision. He will dive deeper in the details of our bulk rate locks later. In February, we announced our expansion to the Salt Lake City market. With the first three land acquisitions approved and more identified in the pipeline, the new division expands our west region operations into an area with steady growth and solid in migration. We will start our marketing campaign this summer ahead of the first openings of our affordable entry-level community before year-end. Last week, we reported that Melissa Clinton started as our new general counsel. With nearly three decades of legal experience, she brings extensive expertise managing risk, ethics, compliance, and governance matters. Welcome to the team, Melissa. And as April is Earth Month, this year we announced a national partnership with the Arbor Day Foundation and have kicked off our tree planting program with them to support urban tree populations. We will have planning events in each of our markets during the spring and fall planning season, and we'll plant over 1,300 trees this year. Our Community Trees Campaign aligns our employees' contributions and our corporate charitable work with our ESG initiatives, and will help enhance the sustainability of the markets in which we operate. And with that, I'll now turn it over to Philippe.