Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 23, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-9977 | |
Entity Registrant Name | Meritage Homes Corp | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 86-0611231 | |
Entity Address, Address Line One | 8800 E. Raintree Drive | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85260 | |
City Area Code | 480 | |
Local Phone Number | 515-8100 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock $.01 par value | |
Trading Symbol | MTH | |
Security Exchange Name | NYSE | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 37,612,127 | |
Entity Central Index Key | 0000833079 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 609,979 | $ 319,466 |
Other receivables | 96,702 | 88,492 |
Real estate | 2,741,016 | 2,744,361 |
Deposits on real estate under option or contract | 62,967 | 50,901 |
Investments in unconsolidated entities | 3,819 | 4,443 |
Property and equipment, net | 42,730 | 50,606 |
Deferred tax asset | 28,425 | 25,917 |
Prepaids, other assets and goodwill | 101,680 | 114,063 |
Total assets | 3,687,318 | 3,398,249 |
Liabilities | ||
Accounts payable | 167,788 | 155,024 |
Accrued liabilities | 274,371 | 226,008 |
Home sale deposits | 25,509 | 24,246 |
Loans payable and other borrowings | 23,031 | 22,876 |
Senior notes, net | 996,770 | 996,105 |
Total liabilities | 1,487,469 | 1,424,259 |
Stockholders’ Equity | ||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at September 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock, par value $0.01. Authorized 125,000,000 shares; 37,612,127 and 38,199,111 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 377 | 382 |
Additional paid-in capital | 460,268 | 505,352 |
Retained earnings | 1,739,204 | 1,468,256 |
Total stockholders’ equity | 2,199,849 | 1,973,990 |
Total liabilities and stockholders’ equity | $ 3,687,318 | $ 3,398,249 |
UNAUDITED CONSOLIDATED BALANC_2
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Common stock, shares issued (in shares) | 37,612,127 | 38,199,111 |
Common Stock, Shares, Outstanding | 37,612,127 | 38,199,111 |
UNAUDITED CONSOLIDATED INCOME S
UNAUDITED CONSOLIDATED INCOME STATEMENTS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings from financial services unconsolidated entities and other, net | $ 2,821 | $ 8,934 | ||
Commissions and other sales costs | $ (73,282) | $ (63,450) | (204,863) | (176,130) |
General and administrative expenses | (40,737) | (37,191) | (111,083) | (105,536) |
Interest expense | (55) | (1,068) | (2,176) | (8,350) |
Other income, net | 1,188 | 2,402 | 3,313 | 5,816 |
Earnings before income taxes | 135,506 | 92,366 | 338,201 | 192,410 |
Provision for income taxes | (26,388) | (22,557) | (67,253) | (46,361) |
Net earnings | $ 109,118 | $ 69,809 | $ 270,948 | $ 146,049 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 2.90 | $ 1.82 | $ 7.17 | $ 3.83 |
Diluted (in dollars per share) | $ 2.84 | $ 1.79 | $ 7.04 | $ 3.76 |
Weighted average number of shares: | ||||
Basic (in shares) | 37,607 | 38,296 | 37,763 | 38,119 |
Diluted (in shares) | 38,405 | 39,079 | 38,491 | 38,841 |
Real Estate [Member] | ||||
Revenue | $ 1,138,091 | $ 940,880 | $ 3,072,183 | $ 2,513,635 |
Cost of closings | (894,014) | (754,789) | (2,430,115) | (2,053,340) |
Gross profit | 244,077 | 186,091 | 642,068 | 460,295 |
Home Building [Member] | ||||
Revenue | 1,133,221 | 939,185 | 3,055,229 | 2,500,888 |
Cost of closings | (889,654) | (753,068) | (2,412,606) | (2,039,191) |
Gross profit | 243,567 | 186,117 | 642,623 | 461,697 |
Land [Member] | ||||
Revenue | 4,870 | 1,695 | 16,954 | 12,747 |
Cost of closings | (4,360) | (1,721) | (17,509) | (14,149) |
Gross profit | 510 | (26) | (555) | (1,402) |
Financial Service [Member] | ||||
Revenue | 4,939 | 4,317 | 13,329 | 11,705 |
Expense | (2,026) | (1,725) | (5,519) | (4,949) |
Gross profit | 4,315 | 5,582 | 10,942 | 16,315 |
Earnings from financial services unconsolidated entities and other, net | $ 1,402 | $ 2,990 | $ 3,132 | $ 9,559 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net earnings | $ 270,948 | $ 146,049 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 22,496 | 19,553 |
Stock-based compensation | 15,724 | 15,719 |
Equity in earnings from unconsolidated entities | (2,821) | (8,934) |
Distributions of earnings from unconsolidated entities | 2,449 | 11,261 |
Other | 1,881 | 3,902 |
Changes in assets and liabilities: | ||
Decrease/(increase) in real estate | 9,080 | (110,295) |
(Increase)/decrease in deposits on real estate under option or contract | (12,910) | 5,773 |
Decrease/(increase) in other receivables, prepaids and other assets | 4,933 | (3,108) |
Increase in accounts payable and accrued liabilities | 60,039 | 84,632 |
Increase in home sale deposits | 1,263 | 2,808 |
Net cash provided by operating activities | 373,082 | 167,360 |
Cash flows from investing activities: | ||
Investments in unconsolidated entities | (4) | (1,112) |
Distributions of capital from unconsolidated entities | 1,000 | 7,250 |
Purchases of property and equipment | (14,771) | (18,376) |
Proceeds from sales of property and equipment | 528 | 267 |
Maturities/sales of investments and securities | 632 | 675 |
Payments to purchase investments and securities | (632) | (675) |
Net cash used in investing activities | (13,247) | (11,971) |
Cash flows from financing activities: | ||
Repayment of loans payable and other borrowings | 8,509 | 3,086 |
Repurchase of shares | (60,813) | (8,957) |
Net cash used in financing activities | (69,322) | (12,043) |
Net increase in cash and cash equivalents | 290,513 | 143,346 |
Cash and cash equivalents, beginning of period | 319,466 | 311,466 |
Cash and cash equivalents, end of period | $ 609,979 | $ 454,812 |
SUPPLEMENTAL DISCLOSURE OF CASH
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 9 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The following table presents certain supplemental cash flow information (in thousands): Nine Months Ended September 30, 2020 2019 Cash paid during the year for: Interest, net of interest capitalized $ (14,756) $ (13,622) Income taxes paid $ 49,103 $ 39,491 Non-cash operating activities: Real estate acquired through notes payable $ 8,664 $ 2,248 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION Organization. Meritage Homes is a leading designer and builder of single-family homes. We primarily build in historically high-growth regions of the United States and offer a variety of homes that are designed to appeal to the first-time and first move-up markets. We have homebuilding operations in three regions: West, Central and East, which are comprised of nine states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee. We also operate a wholly-owned title company, Carefree Title Agency, Inc. ("Carefree Title"). Carefree Title's core business includes title insurance and closing/settlement services we offer to our homebuyers. Beginning in the fourth quarter of 2019, we commenced operations of wholly-owned Meritage Homes Insurance Agency, Inc. (“Meritage Insurance”). Meritage Insurance works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. We commenced our homebuilding operations in 1985 through our predecessor company known as Monterey Homes. Meritage Homes Corporation was incorporated in the state of Maryland in 1988 under the name of Homeplex Mortgage Investments Corporation and merged with Monterey Homes in 1996, at which time our name was changed to Monterey Homes Corporation and later ultimately to Meritage Homes Corporation. Our homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At September 30, 2020, we were actively selling homes in 204 communities, with base prices ranging from approximately $188,000 to $1,300,000. Basis of Presentation . The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited consolidated financial statements include the accounts of Meritage Homes Corporation and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year. Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies or closing agents for home closings of approximately $58.9 million and $54.5 million are included in cash and cash equivalents at September 30, 2020 and December 31, 2019, respectively. Real Estate. Real estate is stated at cost unless the asset is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”) . Inventory includes the costs of land acquisition, land development, home construction, capitalized interest, real estate taxes, and capitalized direct overhead costs incurred during development, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while selling and marketing costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for goods and services that have not yet been paid. An accrued liability to capture such obligations is recorded in connection with the home closing and charged directly to Cost of home closings. We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. It is possible that actual results could differ from budgeted amounts for various reasons, including construction and weather delays, labor or material shortages, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues or delays encountered during construction and development and other factors beyond our control. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs. Typically, a community's life cycle ranges from three five All of our land inventory and related real estate assets are reviewed for recoverability, as our inventory is considered “long-lived” in accordance with GAAP. Impairment charges are recorded to write down an asset to its estimated fair value if the undiscounted cash flows expected to be generated by the asset are lower than its carrying amount. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. Such an analysis is conducted if there is an indication of a decline in value of our land and real estate assets. If an impairment of a community is required, the impairment charges are allocated to each lot on a straight-line basis. Deposits. Deposits paid for land options and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is applied to the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are charged to expense if the land acquisition contract is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of the non-refundable deposits and any ancillary capitalized costs. Our Deposits on real estate under option or contract were $63.0 million and $50.9 million as of September 30, 2020 and December 31, 2019, respectively. Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials and labor costs, and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, impairment testing in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets. Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on our unaudited consolidated balance sheet as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on our unaudited consolidated balance sheet, while lease liabilities are classified within Accrued liabilities on our unaudited consolidated balance sheet. The table below outlines our ROU assets and lease liabilities (in thousands): As of September 30, 2020 December 31, 2019 ROU assets $ 22,881 $ 26,332 Lease liabilities 29,739 34,231 Off-Balance Sheet Arrangements - Joint Ventures . We may participate in land development joint ventures as a means of accessing larger parcels of land and lot positions, expanding our market opportunities, managing our risk profile and leveraging our capital base, although our participation in such ventures is currently very limited. See Note 4 for additional discussion of our investments in unconsolidated entities . Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to option and purchase agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for additional information on these off-balance sheet arrangements. Surety Bonds and Letters of Credit. We may provide surety bonds or letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of completion of our development activities. Bonds are generally not released until all applicable development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon. The table below outlines our surety bond and letter of credit obligations (in thousands): As of September 30, 2020 December 31, 2019 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract $ 428,912 $ 160,639 $ 405,017 $ 186,986 Total Sureties $ 428,912 $ 160,639 $ 405,017 $ 186,986 Letters of Credit (“LOCs”): LOCs for land development 70,860 N/A 57,192 N/A LOCs for general corporate operations 3,750 N/A 3,750 N/A Total LOCs $ 74,610 N/A $ 60,942 N/A Accrued Liabilities . Accrued liabilities at September 30, 2020 and December 31, 2019 consisted of the following (in thousands): As of September 30, 2020 December 31, 2019 Accruals related to real estate development and construction activities $ 97,028 $ 74,448 Payroll and other benefits 64,331 67,734 Accrued interest 23,979 8,758 Accrued taxes 17,311 8,459 Warranty reserves 23,259 22,015 Lease liabilities 29,739 34,231 Other accruals 18,724 10,363 Total $ 274,371 $ 226,008 Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Balance, beginning of period $ 21,578 $ 20,927 $ 22,015 $ 24,552 Additions to reserve from new home deliveries 4,592 4,150 12,620 11,425 Warranty claims (2,911) (3,766) (11,376) (14,666) Adjustments to pre-existing reserves — — — — Balance, end of period $ 23,259 $ 21,311 $ 23,259 $ 21,311 Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves, if any, are included in Cost of home closings within the accompanying unaudited consolidated income statements. We believe that our total reserves, coupled with our contractual relationships and rights with our trade partners and the general liability insurance we maintain, are sufficient to cover our general warranty obligations. However, as unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, future costs could differ significantly from our estimates. Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below: • Revenue from closings of residential real estate is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives. • Revenue from land sales is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow. • Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow. Home closing and land sale revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at September 30, 2020 and December 31, 2019. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. Recent Accounting Pronouncements. In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract ("ASU 2018-15"), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Entities need to consider both the nature of the costs and the phase of development in which the implementation costs are incurred to determine whether the costs should be capitalized or expensed. ASU 2018-15 was effective for us beginning January 1, 2020 on a prospective basis to all implementation costs incurred after the date of adoption. The adoption of ASU 2018-15 did not have a material impact on our financial statement disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies are required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 was effective for us beginning January 1, 2020. As we currently only have Level 2 financial instruments, the adoption of ASU 2018-13 did not have a material impact on our financial statement disclosures. |
REAL ESTATE AND CAPITALIZED INT
REAL ESTATE AND CAPITALIZED INTEREST | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
REAL ESTATE AND CAPITALIZED INTEREST | REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands): As of September 30, 2020 December 31, 2019 Homes under contract under construction (1) $ 967,222 $ 564,762 Unsold homes, completed and under construction (1) 395,151 686,948 Model homes (1) 86,933 121,340 Finished home sites and home sites under development (2) 1,291,710 1,371,311 Total $ 2,741,016 $ 2,744,361 (1) Includes the allocated land and land development costs associated with each lot for these homes. (2) Includes raw land, land held for development and land held for sale, less impairments, if any. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. We capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active real estate when incurred and charged to cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Capitalized interest, beginning of period $ 72,882 $ 88,307 $ 82,014 $ 88,454 Interest incurred 16,103 21,319 50,188 64,227 Interest expensed (55) (1,068) (2,176) (8,350) Interest amortized to cost of home and land closings (21,380) (20,363) (62,476) (56,136) Capitalized interest, end of period $ 67,550 $ 88,195 $ 67,550 $ 88,195 |
VARIABLE INTEREST ENTITIES AND
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | |
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures reduce our financial risk associated with land acquisitions and allow us to better leverage our balance sheet. Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase or option agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all purchase and option agreements for land to determine whether they are a VIE. ASC 810, Consolidation , requires that for each VIE, we assess whether we are the primary beneficiary and, if so, consolidate the VIE in our financial statements and reflect such assets and liabilities as Real estate not owned. The liabilities related to consolidated VIEs are generally excluded from our debt covenant calculations. In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to: the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability of the VIE to acquire additional land or dispose of land not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis to determine if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. In substantially all cases, creditors of the entities with which we have option agreements have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have contracted to complete development at a fixed cost for subsequent purchase, but on behalf of the land owner, and any budget savings or shortfalls are typically borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. The table below presents a summary of our lots under option at September 30, 2020 (dollars in thousands): Projected Number of Lots Purchase Option/ Purchase and option contracts recorded on balance sheet as Real estate not owned — $ — $ — Option contracts — non-refundable deposits, committed (1) 8,740 469,067 36,885 Purchase contracts — non-refundable deposits, committed (1) 9,298 336,146 21,332 Purchase and option contracts —refundable deposits, committed 2,208 59,719 1,075 Total committed 20,246 864,932 59,292 Purchase and option contracts — refundable deposits, uncommitted (2) 15,059 432,573 3,675 Total lots under contract or option 35,305 $ 1,297,505 $ 62,967 Total purchase and option contracts not recorded on balance sheet (3) 35,305 $ 1,297,505 $ 62,967 (4) (1) Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. (2) Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3) Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected on our unaudited consolidated balance sheet in Deposits on real estate under option or contract as of September 30, 2020. Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots each month or quarter, as determined by the respective agreement. Although the pre-established number is typically structured to approximate our expected rate of home construction starts and sales absorptions, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our sales and home starts pace in order to meet the pre-established minimum number of lots or we will work to restructure our original contract to include terms that more accurately reflect our revised orders pace expectations. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | INVESTMENTS IN UNCONSOLIDATED ENTITIES We may enter into land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile and leveraging our capital base. While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as a primary source of land acquisitions. Our joint venture partners are generally other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of each joint venture, it may or may not be consolidated into our results. As of September 30, 2020, we had one active equity-method land venture with limited operations. As of September 30, 2020, we also participated in one mortgage joint venture, which is engaged in mortgage activities and provides services to our homebuyers. Our investment in this mortgage joint venture as of September 30, 2020 and December 31, 2019 was $0.6 million and $0.7 million, respectively. Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): As of September 30, 2020 December 31, 2019 Assets: Cash $ 4,662 $ 6,329 Real estate 6,212 6,654 Other assets 3,599 4,382 Total assets $ 14,473 $ 17,365 Liabilities and equity: Accounts payable and other liabilities $ 4,756 $ 6,580 Equity of: Meritage (1) 5,205 5,678 Other 4,512 5,107 Total liabilities and equity $ 14,473 $ 17,365 Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenue $ 9,630 $ 13,232 $ 26,903 $ 33,076 Costs and expenses (8,138) (7,491) (21,945) (17,206) Net earnings of unconsolidated entities $ 1,492 $ 5,741 $ 4,958 $ 15,870 Meritage’s share of pre-tax earnings (1) (2) $ 1,129 $ 3,106 $ 2,864 $ 8,934 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. (2) Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Other income, net on our unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
LOANS PAYABLE AND OTHER BORROWI
LOANS PAYABLE AND OTHER BORROWINGS | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE AND OTHER BORROWINGS | LOANS PAYABLE AND OTHER BORROWINGS Loans payable and other borrowings consist of the following (in thousands): As of September 30, 2020 December 31, 2019 Other borrowings, real estate notes payable (1) $ 23,031 $ 22,876 $780.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 0.15% at September 30, 2020) plus 1.375% or Prime (3.25% at September 30, 2020) plus 0.375% — — Total $ 23,031 $ 22,876 (1) Reflects non-recourse non-interest bearing notes payable in connection with land purchases. The Company entered into an amended and restated unsecured revolving credit facility ("Credit Facility") in 2014 that has been amended from time to time. In June 2019, the Credit Facility was amended, extending the maturity date to July 2023, along with minor administrative changes. The Credit Facility's aggregate commitment is $780.0 million with an accordion feature permitting the size of the facility to increase to a maximum of $880.0 million, subject to certain conditions, including the availability of additional bank commitments. Borrowings under the Credit Facility are unsecured, but availability is subject to, among other things, a borrowing base. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $1.1 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. In addition, we are required to maintain either (i) an interest coverage ratio (EBITDA to interest expense, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than our consolidated interest incurred during the trailing 12 months. We were in compliance with all Credit Facility covenants as of September 30, 2020. We had no outstanding borrowings under the Credit Facility as of September 30, 2020 and December 31, 2019. During the first quarter of 2020 we borrowed $500.0 million on our Credit Facility, which we repaid in full during the second quarter of 2020. There were no borrowings or repayments during the three months ended September 30, 2020. There were no borrowings or repayments during the three and nine months ended September 30, 2019. As of September 30, 2020, we had outstanding letters of credit issued under the Credit Facility totaling $74.6 million, leaving $705.4 million available under the Credit Facility to be drawn. |
SENIOR NOTES, NET
SENIOR NOTES, NET | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
SENIOR NOTES, NET | SENIOR NOTES, NET Senior notes, net consist of the following (in thousands): As of September 30, 2020 December 31, 2019 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025. At September 30, 2020 and December 31, 2019 there was approximately $3,818 and $4,432 in net unamortized premium, respectively. 403,818 404,432 5.125% senior notes due 2027 300,000 300,000 Net debt issuance costs (7,048) (8,327) Total $ 996,770 $ 996,105 The indentures for all of our senior notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, and limitations on sale and leaseback transactions and mergers. We were in compliance with all such covenants as of September 30, 2020. Obligations to pay principal and interest on the senior notes are guaranteed by substantially all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes Corporation. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor may be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES ASC 820-10 Fair Value Measurement ("ASC 820") defines fair value and establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: • Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. • Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. • Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. Financial Instruments : The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): As of September 30, 2020 December 31, 2019 Aggregate Estimated Fair Aggregate Estimated Fair 7.00% senior notes $ 300,000 $ 318,000 $ 300,000 $ 327,390 6.00% senior notes $ 400,000 $ 444,520 $ 400,000 $ 449,200 5.125% senior notes $ 300,000 $ 333,030 $ 300,000 $ 319,500 Due to the short-term nature of other financial assets and liabilities, including our Loans payable and other borrowings, we consider the carrying amounts of our other short-term financial instruments to approximate fair value. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average number of shares outstanding 37,607 38,296 37,763 38,119 Effect of dilutive securities: Unvested restricted stock 798 783 728 722 Diluted average shares outstanding 38,405 39,079 38,491 38,841 Net earnings $ 109,118 $ 69,809 $ 270,948 $ 146,049 Basic earnings per share $ 2.90 $ 1.82 $ 7.17 $ 3.83 Diluted earnings per share $ 2.84 $ 1.79 $ 7.04 $ 3.76 |
ACQUISITIONS AND GOODWILL
ACQUISITIONS AND GOODWILL | 9 Months Ended |
Sep. 30, 2020 | |
Business Acquisitions and Goodwill [Abstract] | |
ACQUISITIONS AND GOODWILL | ACQUISITIONS AND GOODWILL Goodwill. In prior years, we have entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. As a result of these transactions, we recorded approximately $33.0 million of goodwill. Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combinations , and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on our unaudited consolidated balance sheet in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present. A summary of the carrying amount of goodwill follows (in thousands): West Central East Financial Services Corporate Total Balance at December 31, 2019 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at September 30, 2020 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY A summary of changes in stockholders’ equity is presented below (in thousands): Nine Months Ended September 30, 2020 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2019 38,199 $ 382 $ 505,352 $ 1,468,256 $ 1,973,990 Net earnings — — — 71,152 71,152 Stock-based compensation expense — — 6,437 — 6,437 Issuance of stock 398 4 (4) — — Share repurchases (1,000) (10) (60,803) — (60,813) Balance at March 31, 2020 37,597 $ 376 $ 450,982 $ 1,539,408 $ 1,990,766 Net earnings — — — 90,678 90,678 Stock-based compensation expense — — 3,157 — 3,157 Issuance of stock 6 1 (1) — — Balance at June 30, 2020 37,603 377 454,138 1,630,086 2,084,601 Net earnings — — — 109,118 109,118 Stock-based compensation expense — — 6,130 — 6,130 Issuance of stock 9 — — — — Balance at September 30, 2020 37,612 $ 377 $ 460,268 $ 1,739,204 $ 2,199,849 Nine Months Ended September 30, 2019 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2018 38,073 $ 381 $ 501,781 $ 1,218,593 $ 1,720,755 Net earnings — — — 25,412 25,412 Stock-based compensation expense — — 5,861 — 5,861 Issuance of stock 400 4 (4) — — Share repurchases (209) (2) (8,955) — (8,957) Balance at March 31, 2019 38,264 $ 383 $ 498,683 $ 1,244,005 $ 1,743,071 Net earnings — — — 50,828 50,828 Stock-based compensation expense — — 4,201 — 4,201 Issuance of stock 3 — — — — Balance at June 30, 2019 38,267 383 502,884 1,294,833 1,798,100 Net earnings — — — 69,809 69,809 Stock-based compensation expense — — 5,657 — 5,657 Issuance of stock 32 — — — — Balance at September 30, 2019 38,299 $ 383 $ 508,541 $ 1,364,642 $ 1,873,566 |
STOCK BASED AND DEFERRED COMPEN
STOCK BASED AND DEFERRED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK BASED AND DEFERRED COMPENSATION | STOCK BASED AND DEFERRED COMPENSATION We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants. The 2018 Plan authorizes 6,600,000 shares of stock to be awarded, of which 1,304,796 shares remain available for grant at September 30, 2020. We believe that such awards provide a means of performance-based compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five three three one Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is being expensed straight-line over the service period of the awards. Below is a summary of compensation expense and stock award activity (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock-based compensation expense $ 6,130 $ 5,657 $ 15,724 $ 15,719 Non-vested shares granted 2,112 3,314 225,593 385,328 Performance-based non-vested shares granted — — 56,139 94,152 Performance-based shares issued in excess of target shares granted (1) — — 24,054 — Restricted stock awards vested (includes performance-based awards) 8,610 32,369 413,016 435,292 (1) Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics. The following table includes additional information regarding our Stock Plans (dollars in thousands): As of September 30, 2020 December 31, 2019 Unrecognized stock-based compensation cost $ 26,568 $ 22,341 Weighted average years expense recognition period 2.27 1.70 Total equity awards outstanding (1) 1,101,671 1,240,529 (1) Includes unvested restricted stock, performance-based awards (assuming 100% payout) and restricted stock units. We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three or nine months ended September 30, 2020 or 2019, other than minor administrative costs. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Components of the income tax provision are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Federal $ 21,692 $ 18,644 $ 54,594 $ 38,312 State 4,696 3,913 12,659 8,049 Total $ 26,388 $ 22,557 $ 67,253 $ 46,361 The effective tax rate for the three and nine months ended September 30, 2020 was 19.5% and 19.9%, and for the three and nine months ended September 30, 2019 was 24.4% and 24.1%, respectively. The nine months ended September 30, 2020 tax rate reflects credits earned under the Taxpayer Certainty and Disaster Tax Relief Act of 2019 ("the Act") enacted into law on December 20, 2019. The Act extended eligibility for the Internal Revenue Code ("IRC") §45L new energy efficient homes credit for years 2018 through 2020. For the first nine months of 2020, we recorded a tax benefit from the new law based on estimates for qualifying new energy efficient homes. For the first nine months of 2019, the tax benefit from the new law was not reflected in the tax rate due to the December enactment date. In the first nine months of 2019 and 2020, we recorded tax benefits from vested equity-based compensation for stock awards. These tax benefits have a favorable impact on our effective tax rates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES Act") was enacted into law in response to the widespread economic impact of the COVID-19 pandemic. Although the CARES Act has several provisions which may benefit our company and its employees, these provisions are not expected to have a material impact on our tax rate in 2020. We will continue to monitor the CARES Act and will take advantage of favorable tax-related provisions if and when applicable. At September 30, 2020 and December 31, 2019, we have no unrecognized tax benefits. We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in federal income tax expense. We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes . We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. Companies must assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carry forward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no valuation allowance on our deferred tax assets or NOL carryovers at September 30, 2020. At September 30, 2020, we had no remaining federal NOL carry forward or un-utilized federal tax credits. At September 30, 2020 and December 31, 2019, we had tax benefits for state NOL carry forwards of $0.5 million, net of federal benefit, that begin to expire in 2030. At September 30, 2020, we have income taxes payable of $9.7 million and income taxes receivable of $5.0 million. The income taxes payable primarily consists of current federal and state tax accruals, net of estimated tax payments. This amount is recorded in Accrued liabilities on the accompanying unaudited balance sheet at September 30, 2020. The income taxes receivable primarily consists of energy tax credits and is recorded in Other receivables on the accompanying unaudited balance sheet at September 30, 2020. We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2015. We have one state income tax examination being conducted at this time and do not expect it to have a material outcome. The tax benefits from NOLs, built-in losses, and tax credits would be materially reduced or potentially eliminated if we experience an “ownership change” as defined under IRC §382. Based on our analysis performed as of September 30, 2020 we do not believe that we have experienced an ownership change. As a protective measure, our stockholders held a Special Meeting of Stockholders on February 16, 2009 and approved an amendment to our Articles of Incorporation that restricts certain transfers of our common stock. The amendment is intended to help us avoid an unintended ownership change and thereby preserve the value of any tax benefit for future utilization. |
OPERATING AND REPORTING SEGMENT
OPERATING AND REPORTING SEGMENTS | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
OPERATING AND REPORTING SEGMENTS | OPERATING AND REPORTING SEGMENTS We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting , we have nine homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: West: Arizona, California and Colorado Central: Texas East: Florida, Georgia, North Carolina, South Carolina and Tennessee Management’s evaluation of segment performance is based on segment operating income, which we define as home and land closing revenues less cost of home and land closings, commissions and other sales costs, land development and other land sales costs and other costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. The following segment information is in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Homebuilding revenue (1) : West $ 434,289 $ 366,149 $ 1,198,782 $ 938,117 Central 353,208 279,564 909,692 761,702 East 350,594 295,167 963,709 813,816 Consolidated total $ 1,138,091 $ 940,880 $ 3,072,183 $ 2,513,635 Homebuilding segment operating income: West $ 53,423 $ 41,237 $ 140,059 $ 83,619 Central 52,394 31,979 119,208 72,795 East 37,791 24,326 97,343 53,235 Total homebuilding segment operating income 143,608 97,542 356,610 209,649 Financial services segment profit 4,315 5,582 10,942 16,315 Corporate and unallocated costs (2) (13,550) (12,092) (30,488) (31,020) Interest expense (55) (1,068) (2,176) (8,350) Other income, net 1,188 2,402 3,313 5,816 Net earnings before income taxes $ 135,506 $ 92,366 $ 338,201 $ 192,410 (1) Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Land closing revenue: West $ — $ — $ 4,974 $ 30 Central 3,301 820 7,901 1,513 East 1,569 875 4,079 11,204 Total $ 4,870 $ 1,695 $ 16,954 $ 12,747 (2) Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. At September 30, 2020 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 24,085 $ 12,807 $ 26,075 $ — $ — $ 62,967 Real estate 1,198,314 716,968 825,734 — — 2,741,016 Investments in unconsolidated entities 260 2,987 — — 572 3,819 Other assets 47,869 (1) 113,800 (2) 87,300 (3) 564 629,983 (4) 879,516 Total assets $ 1,270,528 $ 846,562 $ 939,109 $ 564 $ 630,555 $ 3,687,318 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of cash, development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of cash, goodwill (see Note 9), prepaid expenses and other assets and property and equipment. (4) Balance consists primarily of cash, our deferred tax asset and prepaid expenses and other assets. At December 31, 2019 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 10,568 $ 10,963 $ 29,370 $ — $ — $ 50,901 Real estate 1,223,949 708,786 811,626 — — 2,744,361 Investments in unconsolidated entities 260 3,508 — — 675 4,443 Other assets 58,173 (1) 107,791 (2) 83,475 (3) 765 348,340 (4) 598,544 Total assets $ 1,292,950 $ 831,048 $ 924,471 $ 765 $ 349,015 $ 3,398,249 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of goodwill, prepaid expenses and other assets, and property and equipment. (4) Balance consists primarily of cash. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We are involved in various routine legal and regulatory proceedings, including, without limitation, warranty claims and litigation and arbitration proceedings alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to these matters are not considered probable. Historically, most disputes regarding warranty claims are resolved prior to litigation. We believe there are no pending legal or warranty matters as of September 30, 2020 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved. As discussed in Note 1 under the heading “Warranty Reserves”, within our $23.3 million |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited consolidated financial statements include the accounts of Meritage Homes Corporation and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year. |
Cash and Cash Equivalents | Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. |
Real Estate | Real Estate. Real estate is stated at cost unless the asset is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”) . Inventory includes the costs of land acquisition, land development, home construction, capitalized interest, real estate taxes, and capitalized direct overhead costs incurred during development, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while selling and marketing costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for goods and services that have not yet been paid. An accrued liability to capture such obligations is recorded in connection with the home closing and charged directly to Cost of home closings. We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. It is possible that actual results could differ from budgeted amounts for various reasons, including construction and weather delays, labor or material shortages, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues or delays encountered during construction and development and other factors beyond our control. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs. Typically, a community's life cycle ranges from three five All of our land inventory and related real estate assets are reviewed for recoverability, as our inventory is considered “long-lived” in accordance with GAAP. Impairment charges are recorded to write down an asset to its estimated fair value if the undiscounted cash flows expected to be generated by the asset are lower than its carrying amount. Our determination of fair value is based on projections and estimates. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. Such an analysis is conducted if there is an indication of a decline in value of our land and real estate assets. If an impairment of a community is required, the impairment charges are allocated to each lot on a straight-line basis. |
Deposits | Deposits. Deposits paid for land options and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is applied to the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are charged to expense if the land acquisition contract is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of the non-refundable deposits and any ancillary capitalized costs. |
Goodwill | Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other |
Leases | Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases |
Off-Balance Sheet Arrangements | Off-Balance Sheet Arrangements - Joint Ventures . We may participate in land development joint ventures as a means of accessing larger parcels of land and lot positions, expanding our market opportunities, managing our risk profile and leveraging our capital base, although our participation in such ventures is currently very limited. See Note 4 for additional discussion of our investments in unconsolidated entities . Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to option and purchase agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators). See Note 3 for additional information on these off-balance sheet arrangements. Surety Bonds and Letters of Credit. We may provide surety bonds or letters of credit in support of our obligations relating to the development of our projects and other corporate purposes. Surety bonds are generally posted in lieu of letters of credit or cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of completion of our development activities. Bonds are generally not released until all applicable development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon. |
Warranty Reserves | Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two |
Revenue Recognition | Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below: • Revenue from closings of residential real estate is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives. • Revenue from land sales is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow. • Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow. Home closing and land sale revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at September 30, 2020 and December 31, 2019. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract ("ASU 2018-15"), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Entities need to consider both the nature of the costs and the phase of development in which the implementation costs are incurred to determine whether the costs should be capitalized or expensed. ASU 2018-15 was effective for us beginning January 1, 2020 on a prospective basis to all implementation costs incurred after the date of adoption. The adoption of ASU 2018-15 did not have a material impact on our financial statement disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies are required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 was effective for us beginning January 1, 2020. As we currently only have Level 2 financial instruments, the adoption of ASU 2018-13 did not have a material impact on our financial statement disclosures. |
Variable Interest Entities | Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into a purchase or option agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all purchase and option agreements for land to determine whether they are a VIE. ASC 810, Consolidation , requires that for each VIE, we assess whether we are the primary beneficiary and, if so, consolidate the VIE in our financial statements and reflect such assets and liabilities as Real estate not owned. The liabilities related to consolidated VIEs are generally excluded from our debt covenant calculations. In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to: the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability of the VIE to acquire additional land or dispose of land not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis to determine if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. In substantially all cases, creditors of the entities with which we have option agreements have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have contracted to complete development at a fixed cost for subsequent purchase, but on behalf of the land owner, and any budget savings or shortfalls are typically borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. |
Fair Value Disclosures | ASC 820-10 Fair Value Measurement ("ASC 820") defines fair value and establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: • Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. • Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. • Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the company’s own estimates about the assumptions that market participants would use to value the asset or liability. |
Stock-Based Compensation | Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation |
Income Tax Policy | We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes |
Segment Reporting | We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting , we have nine homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows: West: Arizona, California and Colorado Central: Texas East: Florida, Georgia, North Carolina, South Carolina and Tennessee |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Lease, Cost | The table below outlines our ROU assets and lease liabilities (in thousands): As of September 30, 2020 December 31, 2019 ROU assets $ 22,881 $ 26,332 Lease liabilities 29,739 34,231 |
Schedule of Surety Bond and Letter of Credit Obligations | The table below outlines our surety bond and letter of credit obligations (in thousands): As of September 30, 2020 December 31, 2019 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract $ 428,912 $ 160,639 $ 405,017 $ 186,986 Total Sureties $ 428,912 $ 160,639 $ 405,017 $ 186,986 Letters of Credit (“LOCs”): LOCs for land development 70,860 N/A 57,192 N/A LOCs for general corporate operations 3,750 N/A 3,750 N/A Total LOCs $ 74,610 N/A $ 60,942 N/A |
Schedule of Accrued Liabilities | Accrued liabilities at September 30, 2020 and December 31, 2019 consisted of the following (in thousands): As of September 30, 2020 December 31, 2019 Accruals related to real estate development and construction activities $ 97,028 $ 74,448 Payroll and other benefits 64,331 67,734 Accrued interest 23,979 8,758 Accrued taxes 17,311 8,459 Warranty reserves 23,259 22,015 Lease liabilities 29,739 34,231 Other accruals 18,724 10,363 Total $ 274,371 $ 226,008 |
Summary of Changes in Warranty Reserves | A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Balance, beginning of period $ 21,578 $ 20,927 $ 22,015 $ 24,552 Additions to reserve from new home deliveries 4,592 4,150 12,620 11,425 Warranty claims (2,911) (3,766) (11,376) (14,666) Adjustments to pre-existing reserves — — — — Balance, end of period $ 23,259 $ 21,311 $ 23,259 $ 21,311 |
REAL ESTATE AND CAPITALIZED I_2
REAL ESTATE AND CAPITALIZED INTEREST (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Real Estate | Real estate consists of the following (in thousands): As of September 30, 2020 December 31, 2019 Homes under contract under construction (1) $ 967,222 $ 564,762 Unsold homes, completed and under construction (1) 395,151 686,948 Model homes (1) 86,933 121,340 Finished home sites and home sites under development (2) 1,291,710 1,371,311 Total $ 2,741,016 $ 2,744,361 (1) Includes the allocated land and land development costs associated with each lot for these homes. (2) Includes raw land, land held for development and land held for sale, less impairments, if any. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. |
Summary of Capitalized Interest | A summary of our capitalized interest is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Capitalized interest, beginning of period $ 72,882 $ 88,307 $ 82,014 $ 88,454 Interest incurred 16,103 21,319 50,188 64,227 Interest expensed (55) (1,068) (2,176) (8,350) Interest amortized to cost of home and land closings (21,380) (20,363) (62,476) (56,136) Capitalized interest, end of period $ 67,550 $ 88,195 $ 67,550 $ 88,195 |
VARIABLE INTEREST ENTITIES AN_2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] | |
Summary of Lots Under Option | The table below presents a summary of our lots under option at September 30, 2020 (dollars in thousands): Projected Number of Lots Purchase Option/ Purchase and option contracts recorded on balance sheet as Real estate not owned — $ — $ — Option contracts — non-refundable deposits, committed (1) 8,740 469,067 36,885 Purchase contracts — non-refundable deposits, committed (1) 9,298 336,146 21,332 Purchase and option contracts —refundable deposits, committed 2,208 59,719 1,075 Total committed 20,246 864,932 59,292 Purchase and option contracts — refundable deposits, uncommitted (2) 15,059 432,573 3,675 Total lots under contract or option 35,305 $ 1,297,505 $ 62,967 Total purchase and option contracts not recorded on balance sheet (3) 35,305 $ 1,297,505 $ 62,967 (4) (1) Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. (2) Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3) Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected on our unaudited consolidated balance sheet in Deposits on real estate under option or contract as of September 30, 2020. |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures | Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): As of September 30, 2020 December 31, 2019 Assets: Cash $ 4,662 $ 6,329 Real estate 6,212 6,654 Other assets 3,599 4,382 Total assets $ 14,473 $ 17,365 Liabilities and equity: Accounts payable and other liabilities $ 4,756 $ 6,580 Equity of: Meritage (1) 5,205 5,678 Other 4,512 5,107 Total liabilities and equity $ 14,473 $ 17,365 Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenue $ 9,630 $ 13,232 $ 26,903 $ 33,076 Costs and expenses (8,138) (7,491) (21,945) (17,206) Net earnings of unconsolidated entities $ 1,492 $ 5,741 $ 4,958 $ 15,870 Meritage’s share of pre-tax earnings (1) (2) $ 1,129 $ 3,106 $ 2,864 $ 8,934 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. (2) Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Other income, net on our unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
LOANS PAYABLE AND OTHER BORRO_2
LOANS PAYABLE AND OTHER BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable and Other Borrowings | Loans payable and other borrowings consist of the following (in thousands): As of September 30, 2020 December 31, 2019 Other borrowings, real estate notes payable (1) $ 23,031 $ 22,876 $780.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 0.15% at September 30, 2020) plus 1.375% or Prime (3.25% at September 30, 2020) plus 0.375% — — Total $ 23,031 $ 22,876 (1) Reflects non-recourse non-interest bearing notes payable in connection with land purchases. |
SENIOR NOTES, NET (Tables)
SENIOR NOTES, NET (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Notes, Net | Senior notes, net consist of the following (in thousands): As of September 30, 2020 December 31, 2019 7.00% senior notes due 2022 300,000 300,000 6.00% senior notes due 2025. At September 30, 2020 and December 31, 2019 there was approximately $3,818 and $4,432 in net unamortized premium, respectively. 403,818 404,432 5.125% senior notes due 2027 300,000 300,000 Net debt issuance costs (7,048) (8,327) Total $ 996,770 $ 996,105 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Fixed-Rate Debt | The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (level 2 inputs as per the discussion above) and is as follows (in thousands): As of September 30, 2020 December 31, 2019 Aggregate Estimated Fair Aggregate Estimated Fair 7.00% senior notes $ 300,000 $ 318,000 $ 300,000 $ 327,390 6.00% senior notes $ 400,000 $ 444,520 $ 400,000 $ 449,200 5.125% senior notes $ 300,000 $ 333,030 $ 300,000 $ 319,500 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings per Common Share | Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average number of shares outstanding 37,607 38,296 37,763 38,119 Effect of dilutive securities: Unvested restricted stock 798 783 728 722 Diluted average shares outstanding 38,405 39,079 38,491 38,841 Net earnings $ 109,118 $ 69,809 $ 270,948 $ 146,049 Basic earnings per share $ 2.90 $ 1.82 $ 7.17 $ 3.83 Diluted earnings per share $ 2.84 $ 1.79 $ 7.04 $ 3.76 |
ACQUISITIONS AND GOODWILL (Tabl
ACQUISITIONS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Acquisitions and Goodwill [Abstract] | |
Summary of Changes in the Carrying Amount of Goodwill | A summary of the carrying amount of goodwill follows (in thousands): West Central East Financial Services Corporate Total Balance at December 31, 2019 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at September 30, 2020 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Summary of Changes in Shareholders' Equity | A summary of changes in stockholders’ equity is presented below (in thousands): Nine Months Ended September 30, 2020 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2019 38,199 $ 382 $ 505,352 $ 1,468,256 $ 1,973,990 Net earnings — — — 71,152 71,152 Stock-based compensation expense — — 6,437 — 6,437 Issuance of stock 398 4 (4) — — Share repurchases (1,000) (10) (60,803) — (60,813) Balance at March 31, 2020 37,597 $ 376 $ 450,982 $ 1,539,408 $ 1,990,766 Net earnings — — — 90,678 90,678 Stock-based compensation expense — — 3,157 — 3,157 Issuance of stock 6 1 (1) — — Balance at June 30, 2020 37,603 377 454,138 1,630,086 2,084,601 Net earnings — — — 109,118 109,118 Stock-based compensation expense — — 6,130 — 6,130 Issuance of stock 9 — — — — Balance at September 30, 2020 37,612 $ 377 $ 460,268 $ 1,739,204 $ 2,199,849 Nine Months Ended September 30, 2019 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2018 38,073 $ 381 $ 501,781 $ 1,218,593 $ 1,720,755 Net earnings — — — 25,412 25,412 Stock-based compensation expense — — 5,861 — 5,861 Issuance of stock 400 4 (4) — — Share repurchases (209) (2) (8,955) — (8,957) Balance at March 31, 2019 38,264 $ 383 $ 498,683 $ 1,244,005 $ 1,743,071 Net earnings — — — 50,828 50,828 Stock-based compensation expense — — 4,201 — 4,201 Issuance of stock 3 — — — — Balance at June 30, 2019 38,267 383 502,884 1,294,833 1,798,100 Net earnings — — — 69,809 69,809 Stock-based compensation expense — — 5,657 — 5,657 Issuance of stock 32 — — — — Balance at September 30, 2019 38,299 $ 383 $ 508,541 $ 1,364,642 $ 1,873,566 |
STOCK BASED AND DEFERRED COMP_2
STOCK BASED AND DEFERRED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Compensation Expense and Stock Award Activity | Below is a summary of compensation expense and stock award activity (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock-based compensation expense $ 6,130 $ 5,657 $ 15,724 $ 15,719 Non-vested shares granted 2,112 3,314 225,593 385,328 Performance-based non-vested shares granted — — 56,139 94,152 Performance-based shares issued in excess of target shares granted (1) — — 24,054 — Restricted stock awards vested (includes performance-based awards) 8,610 32,369 413,016 435,292 |
Summary of Additional Information Regarding Stock Plan | The following table includes additional information regarding our Stock Plans (dollars in thousands): As of September 30, 2020 December 31, 2019 Unrecognized stock-based compensation cost $ 26,568 $ 22,341 Weighted average years expense recognition period 2.27 1.70 Total equity awards outstanding (1) 1,101,671 1,240,529 (1) Includes unvested restricted stock, performance-based awards (assuming 100% payout) and restricted stock units. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Provision | Components of the income tax provision are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Federal $ 21,692 $ 18,644 $ 54,594 $ 38,312 State 4,696 3,913 12,659 8,049 Total $ 26,388 $ 22,557 $ 67,253 $ 46,361 |
SUPPLEMENTAL DISCLOSURE OF CA_2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | The following table presents certain supplemental cash flow information (in thousands): Nine Months Ended September 30, 2020 2019 Cash paid during the year for: Interest, net of interest capitalized $ (14,756) $ (13,622) Income taxes paid $ 49,103 $ 39,491 Non-cash operating activities: Real estate acquired through notes payable $ 8,664 $ 2,248 |
OPERATING AND REPORTING SEGME_2
OPERATING AND REPORTING SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The following segment information is in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Homebuilding revenue (1) : West $ 434,289 $ 366,149 $ 1,198,782 $ 938,117 Central 353,208 279,564 909,692 761,702 East 350,594 295,167 963,709 813,816 Consolidated total $ 1,138,091 $ 940,880 $ 3,072,183 $ 2,513,635 Homebuilding segment operating income: West $ 53,423 $ 41,237 $ 140,059 $ 83,619 Central 52,394 31,979 119,208 72,795 East 37,791 24,326 97,343 53,235 Total homebuilding segment operating income 143,608 97,542 356,610 209,649 Financial services segment profit 4,315 5,582 10,942 16,315 Corporate and unallocated costs (2) (13,550) (12,092) (30,488) (31,020) Interest expense (55) (1,068) (2,176) (8,350) Other income, net 1,188 2,402 3,313 5,816 Net earnings before income taxes $ 135,506 $ 92,366 $ 338,201 $ 192,410 (1) Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Land closing revenue: West $ — $ — $ 4,974 $ 30 Central 3,301 820 7,901 1,513 East 1,569 875 4,079 11,204 Total $ 4,870 $ 1,695 $ 16,954 $ 12,747 (2) Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. |
Schedule of Segment Assets | At September 30, 2020 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 24,085 $ 12,807 $ 26,075 $ — $ — $ 62,967 Real estate 1,198,314 716,968 825,734 — — 2,741,016 Investments in unconsolidated entities 260 2,987 — — 572 3,819 Other assets 47,869 (1) 113,800 (2) 87,300 (3) 564 629,983 (4) 879,516 Total assets $ 1,270,528 $ 846,562 $ 939,109 $ 564 $ 630,555 $ 3,687,318 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of cash, development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of cash, goodwill (see Note 9), prepaid expenses and other assets and property and equipment. (4) Balance consists primarily of cash, our deferred tax asset and prepaid expenses and other assets. At December 31, 2019 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 10,568 $ 10,963 $ 29,370 $ — $ — $ 50,901 Real estate 1,223,949 708,786 811,626 — — 2,744,361 Investments in unconsolidated entities 260 3,508 — — 675 4,443 Other assets 58,173 (1) 107,791 (2) 83,475 (3) 765 348,340 (4) 598,544 Total assets $ 1,292,950 $ 831,048 $ 924,471 $ 765 $ 349,015 $ 3,398,249 (1) Balance consists primarily of cash and property and equipment. (2) Balance consists primarily of development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of goodwill, prepaid expenses and other assets, and property and equipment. (4) Balance consists primarily of cash. |
ORGANIZATION AND BASIS OF PRE_4
ORGANIZATION AND BASIS OF PRESENTATION - Narrative (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)regioncommunitystate | Dec. 31, 2019USD ($) | |
Organization and Presentation [Line Items] | ||
Entity operations in number of regions | region | 3 | |
Number of states in regions | state | 9 | |
Number of communities in which homes are sold | community | 204 | |
Deposits on real estate under option or contract | $ 62,967 | $ 50,901 |
ROU assets | 22,881 | 26,332 |
Lease liabilities | 29,739 | 34,231 |
Contract asset insurance renewals | 0 | 0 |
Cash and cash equivalents [Member] | ||
Organization and Presentation [Line Items] | ||
Amounts in transit from title companies for home closings | 58,900 | $ 54,500 |
Minimum [Member] | ||
Organization and Presentation [Line Items] | ||
Base price per house for sale range | $ 188 | |
Community life cycle range | 3 years | |
Maximum [Member] | ||
Organization and Presentation [Line Items] | ||
Base price per house for sale range | $ 1,300 | |
Community life cycle range | 5 years | |
Maximum [Member] | Non-Structural Items [Member] | ||
Organization and Presentation [Line Items] | ||
Warranty period following home closings | 2 years | |
Maximum [Member] | Structural [Member] | ||
Organization and Presentation [Line Items] | ||
Warranty period following home closings | 10 years |
ORGANIZATION AND BASIS OF PRE_5
ORGANIZATION AND BASIS OF PRESENTATION - Schedule of Surety Bond and Letter of Credit Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Sureties related to owned projects and lots under contract [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | $ 428,912 | $ 405,017 |
Estimated work remaining to complete | 160,639 | 186,986 |
Sureties [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 428,912 | 405,017 |
Estimated work remaining to complete | 160,639 | 186,986 |
LOCs for land development [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 70,860 | 57,192 |
LOCs for general corporate operations [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 3,750 | 3,750 |
Revolving credit facility [Member] | Line of Credit [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 74,610 | $ 60,942 |
ORGANIZATION AND BASIS OF PRE_6
ORGANIZATION AND BASIS OF PRESENTATION - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities | ||||||
Accruals related to real estate development and construction activities | $ 97,028 | $ 74,448 | ||||
Payroll and other benefits | 64,331 | 67,734 | ||||
Accrued interest | 23,979 | 8,758 | ||||
Accrued taxes | 17,311 | 8,459 | ||||
Warranty reserves | 23,259 | $ 21,578 | 22,015 | $ 21,311 | $ 20,927 | $ 24,552 |
Lease liabilities | 29,739 | 34,231 | ||||
Other accruals | 18,724 | 10,363 | ||||
Total | $ 274,371 | $ 226,008 |
ORGANIZATION AND BASIS OF PRE_7
ORGANIZATION AND BASIS OF PRESENTATION - Summary of Changes in Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Warranty Reserves | ||||
Balance, beginning of period | $ 21,578 | $ 20,927 | $ 22,015 | $ 24,552 |
Additions to reserve from new home deliveries | 4,592 | 4,150 | 12,620 | 11,425 |
Warranty claims | (2,911) | (3,766) | (11,376) | (14,666) |
Adjustments to pre-existing reserves | 0 | 0 | 0 | 0 |
Balance, end of period | $ 23,259 | $ 21,311 | $ 23,259 | $ 21,311 |
REAL ESTATE AND CAPITALIZED I_3
REAL ESTATE AND CAPITALIZED INTEREST - Schedule of Real Estate (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | |
Real Estate Properties | |||
Homes under contract under construction | [1] | $ 967,222 | $ 564,762 |
Unsold homes completed and under construction | [1] | 395,151 | 686,948 |
Model homes | [1] | 86,933 | 121,340 |
Finished home sites and home sites under development | [2] | 1,291,710 | 1,371,311 |
Real estate | $ 2,741,016 | $ 2,744,361 | |
[1] | Includes the allocated land and land development costs associated with each lot for these homes. | ||
[2] | Includes raw land, land held for development and land held for sale, less impairments, if any. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. |
REAL ESTATE AND CAPITALIZED I_4
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Summary of capitalized interest | ||||
Capitalized interest, beginning of period | $ 72,882 | $ 88,307 | $ 82,014 | $ 88,454 |
Interest incurred | 16,103 | 21,319 | 50,188 | 64,227 |
Interest expensed | (55) | (1,068) | (2,176) | (8,350) |
Interest amortized to cost of home and land closings | (21,380) | (20,363) | (62,476) | (56,136) |
Capitalized interest, end of period | $ 67,550 | $ 88,195 | $ 67,550 | $ 88,195 |
VARIABLE INTEREST ENTITIES AN_3
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED - Summary of Lots Under Option (Details) $ in Thousands | Sep. 30, 2020USD ($)lot | |
Projected Number of Lots | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | lot | 0 | |
Option contracts — non-refundable deposits, committed | lot | 8,740 | [1] |
Purchase contracts — non-refundable deposits, committed | lot | 9,298 | [1] |
Purchase and option contracts —refundable deposits, committed | lot | 2,208 | |
Total committed | lot | 20,246 | |
Purchase and option contracts — refundable deposits, uncommitted | lot | 15,059 | [2] |
Total lots under contract or option | lot | 35,305 | |
Total purchase and option contracts not recorded on balance sheet | lot | 35,305 | [3] |
Purchase Price | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | $ 0 | |
Option contracts — non-refundable deposits, committed | 469,067 | [1] |
Purchase contracts — non-refundable deposits, committed | 336,146 | [1] |
Purchase and option contracts —refundable deposits, committed | 59,719 | |
Total committed | 864,932 | |
Purchase and option contracts — refundable deposits, uncommitted | 432,573 | [2] |
Total lots under contract or option | 1,297,505 | |
Total purchase and option contracts not recorded on balance sheet | 1,297,505 | [3] |
Option/ Earnest Money Deposits–Cash | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | 0 | |
Option contracts — non-refundable deposits, committed | 36,885 | [1] |
Purchase contracts — non-refundable deposits, committed | 21,332 | [1] |
Purchase and option contracts —refundable deposits, committed | 1,075 | |
Total committed | 59,292 | |
Purchase and option contracts — refundable deposits, uncommitted | 3,675 | [2] |
Total lots under contract or option | 62,967 | |
Total purchase and option contracts not recorded on balance sheet | $ 62,967 | [3],[4] |
[1] | Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. | |
[2] | Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. | |
[3] | Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. | |
[4] | Amount is reflected on our unaudited consolidated balance sheet in Deposits on real estate under option or contract as of September 30, 2020. |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Narrative (Details) $ in Thousands | Sep. 30, 2020USD ($)joint_venture | Dec. 31, 2019USD ($) |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated entities | $ | $ 3,819 | $ 4,443 |
Equity-method land ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | joint_venture | 1 | |
Mortgage joint ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | joint_venture | 1 | |
Investments in unconsolidated entities | $ | $ 600 | $ 700 |
INVESTMENTS IN UNCONSOLIDATED_4
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Assets Liabilities and Equity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Assets | |||||||||
Cash | $ 609,979 | $ 319,466 | |||||||
Real estate | 2,741,016 | 2,744,361 | |||||||
Other assets | 879,516 | 598,544 | |||||||
Total assets | 3,687,318 | 3,398,249 | |||||||
Equity of: | |||||||||
Meritage | 2,199,849 | $ 2,084,601 | $ 1,990,766 | 1,973,990 | $ 1,873,566 | $ 1,798,100 | $ 1,743,071 | $ 1,720,755 | |
Total liabilities and stockholders’ equity | 3,687,318 | 3,398,249 | |||||||
Equity Method Investment, Nonconsolidated Investee | |||||||||
Assets | |||||||||
Cash | 4,662 | 6,329 | |||||||
Real estate | 6,212 | 6,654 | |||||||
Other assets | 3,599 | 4,382 | |||||||
Total assets | 14,473 | 17,365 | |||||||
Liabilities and equity: | |||||||||
Accounts payable and other liabilities | 4,756 | 6,580 | |||||||
Equity of: | |||||||||
Meritage | [1] | 5,205 | 5,678 | ||||||
Other | 4,512 | 5,107 | |||||||
Total liabilities and stockholders’ equity | $ 14,473 | $ 17,365 | |||||||
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. |
INVESTMENTS IN UNCONSOLIDATED_5
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Revenues and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||
Net earnings of unconsolidated entities | $ 2,821 | $ 8,934 | |||||||
Net earnings | $ 109,118 | $ 90,678 | $ 71,152 | $ 69,809 | $ 50,828 | $ 25,412 | 270,948 | 146,049 | |
Equity Method Investment, Nonconsolidated Investee | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Revenue | 9,630 | 13,232 | 26,903 | 33,076 | |||||
Costs and expenses | 8,138 | 7,491 | 21,945 | 17,206 | |||||
Net earnings of unconsolidated entities | 1,492 | 5,741 | 4,958 | 15,870 | |||||
Net earnings | [1],[2] | $ 1,129 | $ 3,106 | $ 2,864 | $ 8,934 | ||||
[1] | Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. | ||||||||
[2] | Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Other income, net on our unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. |
LOANS PAYABLE AND OTHER BORRO_3
LOANS PAYABLE AND OTHER BORROWINGS - Schedule of Loans Payable and Other Borrowings (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | ||
Revolving credit facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Description of variable rate basis | LIBOR | ||
Base rate | 0.15% | ||
Basis spread on variable rate | 1.375% | ||
Revolving credit facility [Member] | Prime Rate [Member] | |||
Line of Credit Facility [Line Items] | |||
Description of variable rate basis | Prime | ||
Base rate | 3.25% | ||
Basis spread on variable rate | 0.375% | ||
Other borrowings, real estate notes payable [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | [1] | $ 23,031,000 | $ 22,876,000 |
Unsecured revolving credit facility [Member] | Revolving credit facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | 0 | 0 | |
Current borrowing capacity | 780,000,000 | ||
Loans payable and other borrowings total [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | $ 23,031,000 | $ 22,876,000 | |
[1] | Reflects non-recourse non-interest bearing notes payable in connection with land purchases |
LOANS PAYABLE AND OTHER BORRO_4
LOANS PAYABLE AND OTHER BORROWINGS - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | |||||||
Repayments of outstanding balance | $ 0 | $ 500,000,000 | $ 0 | $ 0 | |||
Borrowings | 0 | $ 500,000,000 | $ 0 | $ 0 | |||
Revolving credit facility [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Current borrowing capacity | 780,000,000 | $ 780,000,000 | |||||
Maximum borrowing capacity | 880,000,000 | 880,000,000 | |||||
Minimum tangible net worth | $ 1,100,000,000 | $ 1,100,000,000 | |||||
Leverage ratio | 0.60 | 0.60 | |||||
Interest coverage ratio | 1.50 | ||||||
Outstanding borrowings under Credit Facility | $ 0 | $ 0 | $ 0 | ||||
Total LOCs | 74,610,000 | 74,610,000 | $ 60,942,000 | ||||
Remaining borrowing capacity | $ 705,400,000 | $ 705,400,000 |
SENIOR NOTES, NET - Schedule of
SENIOR NOTES, NET - Schedule of Senior Notes, Net (Details) - Senior Notes [Member] - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Net debt issuance costs | $ (7,048) | $ (8,327) |
Senior notes, net | 996,770 | 996,105 |
7.00% senior notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes, gross | $ 300,000 | 300,000 |
Stated interest rate | 7.00% | |
6.00% senior notes due 2025 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes, gross | $ 403,818 | 404,432 |
Stated interest rate | 6.00% | |
Unamortized premium | $ 3,818 | 4,432 |
5.125% senior notes due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes, gross | $ 300,000 | $ 300,000 |
Stated interest rate | 5.125% |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Fair Value of Fixed-Rate Debt (Details) - Senior Notes [Member] - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
7.00% senior notes due 2022 [Member] | ||
Fair value of fixed-rate debt | ||
Stated interest rate | 7.00% | |
7.00% senior notes due 2022 [Member] | Level 2 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | $ 300,000,000 | $ 300,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | $ 318,000,000 | 327,390,000 |
6.00% senior notes due 2025 [Member] | ||
Fair value of fixed-rate debt | ||
Stated interest rate | 6.00% | |
6.00% senior notes due 2025 [Member] | Level 2 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | $ 400,000,000 | 400,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | $ 444,520,000 | 449,200,000 |
5.125% senior notes due 2027 [Member] | ||
Fair value of fixed-rate debt | ||
Stated interest rate | 5.125% | |
5.125% senior notes due 2027 [Member] | Level 2 [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal | $ 300,000,000 | 300,000,000 |
Fair value of fixed-rate debt | ||
Estimated Fair Value | $ 333,030,000 | $ 319,500,000 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and Diluted Earnings Per Common Share | ||||||||
Basic weighted average number of shares outstanding | 37,607 | 38,296 | 37,763 | 38,119 | ||||
Effect of dilutive securities: | ||||||||
Unvested restricted stock | 798 | 783 | 728 | 722 | ||||
Diluted average shares outstanding | 38,405 | 39,079 | 38,491 | 38,841 | ||||
Net earnings as reported (in dollars) | $ 109,118 | $ 90,678 | $ 71,152 | $ 69,809 | $ 50,828 | $ 25,412 | $ 270,948 | $ 146,049 |
Basic earnings per share (in dollars per share) | $ 2.90 | $ 1.82 | $ 7.17 | $ 3.83 | ||||
Diluted earnings per share (in dollars per share) | $ 2.84 | $ 1.79 | $ 7.04 | $ 3.76 |
ACQUISITIONS AND GOODWILL - Nar
ACQUISITIONS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Business Acquisitions and Goodwill [Abstract] | ||
Goodwill | $ 32,962 | $ 32,962 |
ACQUISITIONS AND GOODWILL - Sum
ACQUISITIONS AND GOODWILL - Summary of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 32,962 |
Additions | 0 |
Ending balance | 32,962 |
Operating Segments [Member] | Financial Services [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | West [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | Central [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | East [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 32,962 |
Additions | 0 |
Ending balance | 32,962 |
Corporate [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | $ 0 |
STOCKHOLDERS' EQUITY - Summary
STOCKHOLDERS' EQUITY - Summary of Changes in Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance (in shares) | 38,199,111 | 38,199,111 | ||||||
Beginning balance | $ 2,084,601 | $ 1,990,766 | $ 1,973,990 | $ 1,798,100 | $ 1,743,071 | $ 1,720,755 | $ 1,973,990 | $ 1,720,755 |
Net earnings | 109,118 | 90,678 | 71,152 | 69,809 | 50,828 | 25,412 | $ 270,948 | 146,049 |
Stock-based compensation expense | $ 6,130 | 3,157 | 6,437 | 5,657 | 4,201 | 5,861 | ||
Issuance of stock | 0 | 0 | 0 | 0 | 0 | |||
Share repurchases | (60,813) | (8,957) | ||||||
Ending balance (in shares) | 37,612,127 | 37,612,127 | ||||||
Ending balance | $ 2,199,849 | $ 2,084,601 | $ 1,990,766 | $ 1,873,566 | $ 1,798,100 | $ 1,743,071 | $ 2,199,849 | $ 1,873,566 |
Common Stock [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance (in shares) | 37,603,000 | 37,597,000 | 38,199,000 | 38,267,000 | 38,264,000 | 38,073,000 | 38,199,000 | 38,073,000 |
Beginning balance | $ 377 | $ 376 | $ 382 | $ 383 | $ 383 | $ 381 | $ 382 | $ 381 |
Issuance of stock (in shares) | 9,000 | 6,000 | 398,000 | 32,000 | 3,000 | 400,000 | ||
Issuance of stock | $ 1 | $ 4 | $ 0 | $ 0 | $ 4 | |||
Share repurchases (in shares) | (1,000,000) | (209,000) | ||||||
Share repurchases | $ (10) | $ (2) | ||||||
Ending balance (in shares) | 37,612,000 | 37,603,000 | 37,597,000 | 38,299,000 | 38,267,000 | 38,264,000 | 37,612,000 | 38,299,000 |
Ending balance | $ 377 | $ 377 | $ 376 | $ 383 | $ 383 | $ 383 | $ 377 | $ 383 |
Additional Paid-in Capital [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 454,138 | 450,982 | 505,352 | 502,884 | 498,683 | 501,781 | 505,352 | 501,781 |
Stock-based compensation expense | 6,130 | 3,157 | 6,437 | 5,657 | 4,201 | 5,861 | ||
Issuance of stock | (1) | (4) | 0 | 0 | (4) | |||
Share repurchases | (60,803) | (8,955) | ||||||
Ending balance | 460,268 | 454,138 | 450,982 | 508,541 | 502,884 | 498,683 | 460,268 | 508,541 |
Retained Earnings [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 1,630,086 | 1,539,408 | 1,468,256 | 1,294,833 | 1,244,005 | 1,218,593 | 1,468,256 | 1,218,593 |
Net earnings | 109,118 | 90,678 | 71,152 | 69,809 | 50,828 | 25,412 | ||
Ending balance | $ 1,739,204 | $ 1,630,086 | $ 1,539,408 | $ 1,364,642 | $ 1,294,833 | $ 1,244,005 | $ 1,739,204 | $ 1,364,642 |
STOCK BASED AND DEFERRED COMP_3
STOCK BASED AND DEFERRED COMPENSATION - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020shares | |
Employees [Member] | Non-vested stock awards [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 5 years |
Senior executive officers and non-employee directors [Member] | Non-vested stock awards and performance-based awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Cliff-vesting period | 3 years |
Non-Employee Director [Member] | Non-vested stock awards and performance-based awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 1 year |
Cliff-vesting period | 3 years |
2018 stock incentive plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares of common stock authorized under stock compensation plan (up to) (in shares) | 6,600,000 |
Remaining shares available for grant (in shares) | 1,304,796 |
STOCK BASED AND DEFERRED COMP_4
STOCK BASED AND DEFERRED COMPENSATION - Summary of Compensation Expense and Stock Award Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |||
Summary of compensation expense and stock award activity | ||||||
Stock-based compensation expense (in dollars) | $ 6,130 | $ 5,657 | $ 15,724 | $ 15,719 | ||
Restricted Stock [Member] | ||||||
Summary of compensation expense and stock award activity | ||||||
Restricted stock awards vested (includes performance-based awards) (in shares) | 8,610 | 32,369 | 413,016 | 435,292 | ||
Non-vested shares [Member] | ||||||
Summary of compensation expense and stock award activity | ||||||
Non-vested shares granted (in shares) | 2,112 | 3,314 | 225,593 | 385,328 | ||
Performance-based non-vested shares [Member] | ||||||
Summary of compensation expense and stock award activity | ||||||
Non-vested shares granted (in shares) | 0 | 0 | 56,139 | 94,152 | ||
Shares issued as a result of performance achievement exceeding performance targets (in shares) | 0 | [1] | 0 | [1] | 24,054 | 0 |
[1] | Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics. |
STOCK BASED AND DEFERRED COMP_5
STOCK BASED AND DEFERRED COMPENSATION - Summary of Additional Information Regarding Stock Plan (Details) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | ||
Summary of stock based compensation agreements | ||||
Unrecognized stock-based compensation cost | $ 26,568 | $ 22,341 | ||
Weighted average years expense recognition period | 1 year 8 months 12 days | 2 years 3 months 7 days | ||
Total stock-based awards outstanding (in shares) | [1] | 1,101,671 | 1,240,529 | |
Payout percentage | 100.00% | |||
[1] | Includes unvested restricted stock, performance-based awards (assuming 100% payout) and restricted stock units. |
INCOME TAXES - Schedule of Comp
INCOME TAXES - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Current Taxes: | ||||
Federal | $ 21,692 | $ 18,644 | $ 54,594 | $ 38,312 |
State | 4,696 | 3,913 | 12,659 | 8,049 |
Total | $ 26,388 | $ 22,557 | $ 67,253 | $ 46,361 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Taxes (Textual) [Abstract] | |||||
Effective tax rate | 19.50% | 24.40% | 19.90% | 24.10% | |
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Valuation allowance on deferred tax assets | 0 | 0 | |||
Valuation allowance on net operating loss carryforwards | 0 | 0 | |||
Federal [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
Tax credits | 0 | 0 | |||
State [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
NOL carryforwards | 500,000 | 500,000 | $ 500,000 | ||
Accrued Liabilities [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
Income taxes payable | 9,700,000 | 9,700,000 | |||
Other Receivables [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
Income taxes receivable | $ 5,000,000 | $ 5,000,000 |
SUPPLEMENTAL DISCLOSURE OF CA_3
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash paid during the period for: | ||
Interest, net of interest capitalized | $ (14,756) | $ (13,622) |
Income taxes paid | 49,103 | 39,491 |
Non-cash operating activities: | ||
Real estate acquired through notes payable | $ 8,664 | $ 2,248 |
OPERATING AND REPORTING SEGME_3
OPERATING AND REPORTING SEGMENTS - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020operating_segmentsegment | |
Segment Reporting [Abstract] | |
Number of business segments | segment | 2 |
Number of operating segments | operating_segment | 9 |
OPERATING AND REPORTING SEGME_4
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Segment Reporting Information [Line Items] | |||||
Corporate and unallocated costs | $ (40,737) | $ (37,191) | $ (111,083) | $ (105,536) | |
Interest expense | (55) | (1,068) | (2,176) | (8,350) | |
Other income, net | 1,188 | 2,402 | 3,313 | 5,816 | |
Earnings before income taxes | 135,506 | 92,366 | 338,201 | 192,410 | |
Operating Segments [Member] | Home Building [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 4,870 | 1,695 | 16,954 | 12,747 | |
Operating Income | 143,608 | 97,542 | 356,610 | 209,649 | |
Operating Segments [Member] | Financial Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 4,315 | 5,582 | 10,942 | 16,315 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | West [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 53,423 | 41,237 | 140,059 | 83,619 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | Central [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 52,394 | 31,979 | 119,208 | 72,795 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | East [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 37,791 | 24,326 | 97,343 | 53,235 | |
Corporate and Unallocated [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Corporate and unallocated costs | [1] | (13,550) | (12,092) | (30,488) | (31,020) |
Segment Reconciling Items [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense | (55) | (1,068) | (2,176) | (8,350) | |
Other income, net | 1,188 | 2,402 | 3,313 | 5,816 | |
Real Estate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 1,138,091 | 940,880 | 3,072,183 | 2,513,635 | |
Real Estate [Member] | Operating Segments [Member] | Home Building [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 1,138,091 | 940,880 | 3,072,183 | 2,513,635 |
Real Estate [Member] | Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | West [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 434,289 | 366,149 | 1,198,782 | 938,117 |
Real Estate [Member] | Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | Central [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 353,208 | 279,564 | 909,692 | 761,702 |
Real Estate [Member] | Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | East [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 350,594 | 295,167 | 963,709 | 813,816 |
Home Building [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 1,133,221 | $ 939,185 | $ 3,055,229 | $ 2,500,888 | |
[1] | Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. | ||||
[2] | Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Land closing revenue: West $ — $ — $ 4,974 $ 30 Central 3,301 820 7,901 1,513 East 1,569 875 4,079 11,204 Total $ 4,870 $ 1,695 $ 16,954 $ 12,747 |
OPERATING AND REPORTING SEGME_5
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information, Revenue (Details) - Operating Segments [Member] - Home Building [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 4,870 | $ 1,695 | $ 16,954 | $ 12,747 |
Reportable Subsegments [Member] | West [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 4,974 | 30 |
Reportable Subsegments [Member] | Central [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 3,301 | 820 | 7,901 | 1,513 |
Reportable Subsegments [Member] | East [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 1,569 | $ 875 | $ 4,079 | $ 11,204 |
OPERATING AND REPORTING SEGME_6
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | ||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | $ 62,967 | $ 50,901 | ||
Real estate | 2,741,016 | 2,744,361 | ||
Investments in unconsolidated entities | 3,819 | 4,443 | ||
Other assets | 879,516 | 598,544 | ||
Total assets | 3,687,318 | 3,398,249 | ||
Operating Segments [Member] | Financial Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other assets | 564 | 765 | ||
Total assets | 564 | 765 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | West [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 24,085 | 10,568 | ||
Real estate | 1,198,314 | 1,223,949 | ||
Investments in unconsolidated entities | 260 | 260 | ||
Other assets | 47,869 | [1] | 58,173 | [2] |
Total assets | 1,270,528 | 1,292,950 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | Central [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 12,807 | 10,963 | ||
Real estate | 716,968 | 708,786 | ||
Investments in unconsolidated entities | 2,987 | 3,508 | ||
Other assets | 113,800 | [3] | 107,791 | [4] |
Total assets | 846,562 | 831,048 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Home Building [Member] | East [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 26,075 | 29,370 | ||
Real estate | 825,734 | 811,626 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other assets | 87,300 | [5] | 83,475 | [6] |
Total assets | 939,109 | 924,471 | ||
Corporate and Unallocated [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 0 | 0 | ||
Real estate | 0 | 0 | ||
Investments in unconsolidated entities | 572 | 675 | ||
Other assets | 629,983 | [7] | 348,340 | [8] |
Total assets | $ 630,555 | $ 349,015 | ||
[1] | Balance consists primarily of cash and property and equipment | |||
[2] | Balance consists primarily of cash and property and equipment | |||
[3] | Balance consists primarily of cash, development reimbursements from local municipalities and prepaid expenses and other assets. | |||
[4] | Balance consists primarily of development reimbursements from local municipalities and prepaid expenses and other assets. | |||
[5] | Balance consists primarily of cash, goodwill (see Note 9), prepaid expenses and other assets and property and equipment. | |||
[6] | Balance consists primarily of goodwill, prepaid expenses and other assets, and property and equipment. | |||
[7] | Balance consists primarily of cash, our deferred tax asset and prepaid expenses and other assets. | |||
[8] | Balance consists primarily of cash. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Standard product warranty accrual | $ 23,259 | $ 21,578 | $ 22,015 | $ 21,311 | $ 20,927 | $ 24,552 |