Meritage Homes Corporation

Greetings and welcome to the Meritage Homes first quarter 2023 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Emily Tadano, Vice President of Investor Relations and ESG. Thank you. You may begin.

Thank you, operator. Good morning and welcome to our analyst call to discuss our first quarter 2023 results. We issued the press release yesterday after the market closed. You can find it along with our 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 in the earnings release and accompanying slides contain forward-looking statements. 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 earnings release and most recent filings with the Securities and Exchange Commission, specifically our 2022 Annual Report on Form 10-K, which contains 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 Gilles Ferruza, Executive Vice President and CFO of Meritage Homes. We expect today's 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 11th. 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 what we are seeing in the market and provide an overview of recent company milestones. Fleet will cover our strategy and quarterly performance. Hilo will provide a financial overview of the first quarter and forward-looking guidance. In the first quarter of 2023, we leaned into our spec strategy and achieved a net sales pace of over four per month by offering our move-in ready inventory with the right mix of lower pricing and incentives. We also successfully managed back-end production, generating our highest first quarter closings of 2,897 homes with home closing revenue of $1.3 billion, both of which slightly exceeded prior year. Home closing gross margin for the quarter was 22.4%, which combined with SG&A of 10.3% led to diluted EPS of $3.54. The start of the spring selling season has been stronger than anticipated despite ongoing economic uncertainty. The regional banking turmoil and continuing volatility in interest rates. We saw demand begin to stabilize as buyers started to acclimate to a 6% to 7% mortgage interest rates as the new normal. The true shortage of readily available new inventory, coupled with extremely limited resale inventory, persisted throughout the U.S. in the first quarter and doesn't show any material signs of loosening in the near term. We expect this continuing housing undersupply, as well as favorable demographics for the millennial and move-down buyer, will provide a strong inventory runway for a strong long-term runway, I'm sorry, for future home buying demand. Now on to slide four. It gives me great pride to announce that Meritage is now a top five builder in the United States based on home closings in 2022. The milestone is a result of our focus on affordable entry-level homes and our spec building strategy combined with our team's consistent exceptional performance. This quarter we were also recognized as one of the most admired home builders by Fortune magazine, which is based on feedback from executives and the board of directors regarding customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength. We are honored to join other best in class organizations on this list. Additionally, we became a 10-time recipient of the US EPA's Energy Star Partner of the Year Sustained Excellence Award. Given our longstanding commitment starting in 2009 to build 100% energy-efficient homes, we have completed over 112,000 Meritage Energy Star certified homes and are proud to be an innovator in the sustainability space. These achievements are aligned with our corporate values and further our goal to continue to grow our responsible corporate stewardship. And with that, I'll now turn it over to Philippe. Thank you, Steve.