Meritage Homes Corporation

Greetings and welcome to the Meritage Homes Third Quarter 2023 Analyst Call. At this time, all participants are in a listen-only mode. A brief 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 third 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 2, 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 and our most recent 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, Philippe Lord, CEO, and Giles 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 November 14th. I'll now turn it over to Mr. Hilton. Steve?

Thank you, Emily. Welcome to everyone listening on our call. I'll start by touching on what we're experiencing in the market today and recent company achievements. Bleep will cover our operational performance. Hela will provide a financial overview of the third quarter and forward-looking guidance. The home buying environment this quarter was impacted by the same overarching macroeconomic factors that we've been experiencing since mid-2022. Mortgage rates remain elevated and have now increased to nearly 8%. Meanwhile, millennials and baby boomers are still collectively having life events that create need-based housing demand, but they are finding limited inventory due to the chronic shortage of existing home listings in the market, as current homeowners are wary of leaving their below-market mortgages. With this backdrop, home buying demand helped steady in the third quarter of 2023 as we used financing incentives to help customers solve for a monthly payment for our selection of available spec homes. Our third quarter 2023 sales orders increased 50% over last year's third quarter, and we achieved an average absorption pace of 4.1 per month. Further, we achieved a record backlog conversion of 96%, generate our highest third quarter of closings of 3,638 homes and home closing revenue of $1.6 billion. Home closing gross margin for the quarter was 26.7%, which combined with an SGA of 10.1% led to diluted EPS of $5.98. Now on to slide four for our recent milestones. During the quarter, we announced our entry into Jacksonville, Florida, and how long a successful history throughout Florida, throughout our Florida divisions, and with several recent land acquisitions, we're excited to start to generate closings in Jacksonville later in 2024. As a result of our strong workplace culture and employee engagement, Marinergy became certified as a great place to work this quarter. We were humbled to be added to the prestigious group of companies with this designation. We were also proud of the continuing acknowledgement of our corporate citizenship As it relates to sustainability, we received the EPA's 2023 Indoor Air Plus Award for the third consecutive year for building healthy homes and joined Green Builder Media's 2023 Eco Leaders List. We also earned two honors in our headquarters hometown for our social initiatives by making Arizona the most admired companies of 2023 list and being named one of the 2023 Arizona Business Angels honorees. In August, we published our 2022 ESG report with the Enhanced TCFD Task Force on Climate-Related Financial Disclosure data. We have progressed along our ESG journey and encouraged the investor community to learn more about our stakeholder engagement, national vendor survey, and expanded UN Sustainable Development Goals detailed in that report. And with that, I'll now turn it over to Philippe. Thank you, Steve.