Meritage Homes Corporation

Hello, and welcome to the Meritage Homes fourth quarter 2023 analyst call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Emily Tadano, Vice President, Investor Relations and ESG. Please go ahead, Emily.

Thank you so much. Good morning and welcome to our analyst call to discuss our fourth 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 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 most recent 10-Q. We have also provided a reconciliation of certain non-GAAP financial measures referred to in our earnings 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 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 later today. I'll now turn it over to Mr. Hilton. Steve?

Thank you, Emily. Welcome to everyone listening in on our call. I'll start with a brief discussion covering market trends and provide an overview of our recent company achievements. Philippe will cover how our strategy drove our results and highlights of our operational performance. Edel will provide a financial overview of the fourth quarter and 2024 forward-looking guidance. Homebuying demand this quarter was healthy as rates retrieved below 7% in December. As we previously discussed, two of the largest population cohorts, the millennials and recently Gen Zs, are having life events leading to increased levels of need-based housing that currently cannot be met by the constrained resale home supply in the market. These macro conditions are shifting buyer demand for move-in ready inventory into the new home space. giving us a competitive advantage with these consumer segments. Our fourth quarter 2023 sales orders increased 60% over last year's fourth quarter as we pushed through the tougher months of October and November and capitalized on market conditions in December when interest rates loosened. We delivered 3,951 homes in the fourth quarter of 2023, our second highest quarterly closings and achieved a record backlog conversion of 110%, which led to home closing revenue of $1.6 billion. Home closing gross margin for the quarter was 25.2%, which combined with SG&A of 10.7% resulted in diluted EPS of $5.38. We increased our book value per share 17% year-over-year to $126.61 at December 31, 2023, and generated a return on equity of 17 percent for the full year 2023. Even with our higher ending book value, our price to book increased 56 percent year over year from 0.9 times to 1.4 times, reflecting impressive growth in shareholder value. As is well documented, mortgage rates have moderated recently, and the general market expectation is for rates to either hold steady or move further down as the economy stabilizes into the balance of 2024. We believe this will make housing more affordable and continue to give people confidence that now is the right time to buy a home. Now onto slide four, our recent milestones. We continue to focus on our DE&I efforts, and with the feedback we gathered from our employees, we launched our first three employee resource groups this past quarter, starting with a focus on multicultural women and family structures. We hope that over time these employee-led groups will create inclusive and collaborative environments within the greater Meritage culture and spur additional resource groups. While we pursue these DE&I initiatives for our team members, it is also humbling to see these efforts recognized externally as well. And in the fourth quarter, we joined the list of the U.S. News & World Report's best companies to work for and the Phoenix Business Journal's best places to work, an honor for us in our hometown. Given our long-standing tradition to make a company-wide impact on philanthropic causes, we continue to work with two specific nonprofits for a second year in a row. During the quarter, we packed over 250,000 meals for No Child Hungry and completed our tree planting program with Arbor Day Foundation. And to cap off the year, we received the Arizona Housing Fund's Partner of the Year Award, which is focused on addressing the homelessness crisis in Arizona. Lastly, in addition to earning a spot on Newsweek's list of America's Greenest Companies, For 2024, we were excited to move into our newly built LEED-certified corporate headquarters in Scottsdale this quarter. With that, I'll now turn it over to Philippe.