Meritage Homes Corporation

Greetings and welcome to the Meritage Homes second quarter 2023 analyst call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our 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 second quarter 2023 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 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 outlined 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 and recent 10-Q, which contains a more detailed discussion of those risks. We also have 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 Verruza, 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 August 10th. 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. We will then cover our strategy and quarterly performance. and HILA will provide a financial overview of the second quarter and forward-looking guidance. The home buying environment remained healthy in the second quarter of 2023. We made progress on our goals to improve gross margins and increase our available spec inventory sequentially. Our cycle times began to show notable improvement back toward our historical averages, driving backlog conversion to nearly 90%. We generated our highest second quarter of closings of 3,490 homes and home closing revenue of 1.5 billion. Home closing gross margin for the quarter was 24.4%, which combined with SG&A of 9.6% led to diluted EPS of $5.02 per share. Second quarter demand held steady during the spring selling season at 3.9 sales per month, near the top of our 4.0 goal as we continue to focus on affordable price points. Buyers are acclimating to the higher mortgage interest rates and the favorable demographics of millennials and baby boomers looking for entry-level products to provide a large buyer pool for our homes. And lastly, the resale home market remains tight as existing buyers are hesitant to leave their low-rate mortgages, which limits available inventory and helps to increase new home demand. These external factors all contribute to a strong sales pace and the return of some pricing power for builders this quarter. We believe that our strategy of having affordable entry-level move-in ready homes with rate lock or buy-down incentives where needed will result in a higher backlog conversion and a competitive advantage against both resale and other new home inventory in the quarters to come. In keeping with the proud tradition of helping veterans, we teamed up with Operation Homefront for the 10th year this quarter to break ground on a new home that will be donated to military families at our Crescent Lakes community in Babcock Ranch, Florida, which is the first fully solar-powered town in the United States. This quarter, we're also truly honored to have Meredith receive a wide range of recognition related to our social and sustainable initiatives. We received the 2023 Hearthstone Builder Humanitarian Award for our longtime philanthropic efforts. We earned the prestigious Avid Cup production for the second consecutive year, the highest accolade presented to a builder for exceptional customer satisfaction scores. And in terms of energy efficiency, we became the 10-time recipient of the U.S. EPA's 2023 Market Leader for Certified Homes. And lastly, we were one of two builders named to one of America's climate leaders by USA Today. We're proud to be recognized externally for our core values and corporate stewardship. I'll now turn it over to Philippe.