Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 25, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
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 $.01 par value | |
Trading Symbol | MTH | |
Security Exchange Name | NYSE | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 37,311,125 | |
Entity Central Index Key | 0000833079 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 562,291 | $ 745,621 |
Other receivables | 148,743 | 98,573 |
Real estate | 3,593,007 | 2,778,039 |
Deposits on real estate under option or contract | 77,987 | 59,534 |
Investments in unconsolidated entities | 3,905 | 4,350 |
Property and equipment, net | 36,595 | 38,933 |
Deferred tax assets, net | 38,850 | 36,040 |
Prepaids, other assets and goodwill | 104,071 | 103,308 |
Total assets | 4,565,449 | 3,864,398 |
Liabilities | ||
Accounts payable | 214,575 | 175,250 |
Accrued liabilities | 324,407 | 296,121 |
Home sale deposits | 40,002 | 25,074 |
Loans payable and other borrowings | 18,985 | 23,094 |
Senior notes, net | 1,142,210 | 996,991 |
Total liabilities | 1,740,179 | 1,516,530 |
Stockholders’ Equity | ||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at September 30, 2021 and December 31, 2020 | 0 | 0 |
Common stock, par value $0.01. Authorized 125,000,000 shares; 37,555,010 and 37,512,127 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 376 | 375 |
Additional paid-in capital | 433,179 | 455,762 |
Retained earnings | 2,391,715 | 1,891,731 |
Total stockholders’ equity | 2,825,270 | 2,347,868 |
Total liabilities and stockholders’ equity | $ 4,565,449 | $ 3,864,398 |
UNAUDITED CONSOLIDATED BALANC_2
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
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) | 37,555,010 | 37,512,127 |
Common stock, shares outstanding (in shares) | 37,555,010 | 37,512,127 |
UNAUDITED CONSOLIDATED INCOME S
UNAUDITED CONSOLIDATED INCOME STATEMENTS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings from financial services unconsolidated entities and other, net | $ 2,878 | $ 2,821 | ||
Commissions and other sales costs | $ (68,952) | $ (73,282) | (210,585) | (204,863) |
General and administrative expenses | (47,192) | (40,737) | (128,297) | (111,083) |
Interest expense | (79) | (55) | (246) | (2,176) |
Other income, net | 1,268 | 1,188 | 3,443 | 3,313 |
Loss on early extinguishment of debt | 0 | 0 | (18,188) | 0 |
Earnings before income taxes | 261,709 | 135,506 | 643,337 | 338,201 |
Provision for income taxes | (60,957) | (26,388) | (143,353) | (67,253) |
Net earnings | $ 200,752 | $ 109,118 | $ 499,984 | $ 270,948 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 5.33 | $ 2.90 | $ 13.26 | $ 7.17 |
Diluted (in dollars per share) | $ 5.25 | $ 2.84 | $ 13.06 | $ 7.04 |
Weighted average number of shares: | ||||
Basic (in shares) | 37,647 | 37,607 | 37,703 | 37,763 |
Diluted (in shares) | 38,229 | 38,405 | 38,285 | 38,491 |
Homebuilding | ||||
Revenue | $ 1,259,905 | $ 1,138,091 | $ 3,621,285 | $ 3,072,183 |
Cost of closings | (887,465) | (894,014) | (2,636,674) | (2,430,115) |
Gross profit | 372,440 | 244,077 | 984,611 | 642,068 |
Home closings | ||||
Revenue | 1,251,435 | 1,133,221 | 3,596,060 | 3,055,229 |
Cost of closings | (879,759) | (889,654) | (2,612,428) | (2,412,606) |
Gross profit | 371,676 | 243,567 | 983,632 | 642,623 |
Land closings | ||||
Revenue | 8,470 | 4,870 | 25,225 | 16,954 |
Cost of closings | (7,706) | (4,360) | (24,246) | (17,509) |
Gross profit | 764 | 510 | 979 | (555) |
Financial Services | ||||
Revenue | 5,208 | 4,939 | 15,624 | 13,329 |
Expense | (2,308) | (2,026) | (6,846) | (5,519) |
Gross profit | 4,224 | 4,315 | 12,599 | 10,942 |
Earnings from financial services unconsolidated entities and other, net | $ 1,324 | $ 1,402 | $ 3,821 | $ 3,132 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net earnings | $ 499,984 | $ 270,948 |
Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities: | ||
Depreciation and amortization | 19,892 | 22,496 |
Stock-based compensation | 14,435 | 15,724 |
Loss on early extinguishment of debt | 18,188 | 0 |
Equity in earnings from unconsolidated entities | (2,878) | (2,821) |
Distributions of earnings from unconsolidated entities | 3,324 | 2,449 |
Other | (3,085) | 1,881 |
Changes in assets and liabilities: | ||
(Increase)/decrease in real estate | (810,731) | 9,080 |
Increase in deposits on real estate under option or contract | (18,453) | (12,910) |
(Increase)/decrease in other receivables, prepaids and other assets | (51,611) | 4,933 |
Increase in accounts payable and accrued liabilities | 67,301 | 60,039 |
Increase in home sale deposits | 14,928 | 1,263 |
Net cash (used in)/provided by operating activities | (248,706) | 373,082 |
Cash flows from investing activities: | ||
Investments in unconsolidated entities | (1) | (4) |
Distributions of capital from unconsolidated entities | 0 | 1,000 |
Purchases of property and equipment | (17,910) | (14,771) |
Proceeds from sales of property and equipment | 404 | 528 |
Maturities/sales of investments and securities | 2,795 | 632 |
Payments to purchase investments and securities | (2,795) | (632) |
Net cash used in investing activities | (17,507) | (13,247) |
Cash flows from financing activities: | ||
Repayments of Other Debt | (6,308) | (8,509) |
Repayment of senior notes | (317,690) | 0 |
Proceeds from issuance of senior notes | 450,000 | 0 |
Payment of debt issuance costs | (6,102) | 0 |
Repurchase of shares | (37,017) | (60,813) |
Net cash provided by/(used in) financing activities | 82,883 | (69,322) |
Net (decrease)/increase in cash and cash equivalents | (183,330) | 290,513 |
Cash and cash equivalents, beginning of period | 745,621 | 319,466 |
Cash and cash equivalents, end of period | $ 562,291 | $ 609,979 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
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 for the first-time and first move-up buyers. 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 financial services reporting segment. In this segment, we offer title and escrow, mortgage, and insurance services. Carefree Title Agency, Inc. ("Carefree Title"), our wholly-owned title company, provides title insurance and closing/settlement services to our homebuyers. Managing our own title operations allows us greater control over the entire escrow and closing cycles in addition to generating additional revenue. Meritage Homes Insurance Agency, Inc. (“Meritage Insurance"), our wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. Our financial services operations also provide mortgage services to our homebuyers through an unconsolidated joint venture. 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. Since that time, we have engaged in homebuilding and related activities and ceased to operate as a real estate investment trust. Meritage Homes Corporation operates as a holding company and has no independent assets or operations. Its homebuilding construction, development and sales activities are conducted through its subsidiaries. Our homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At September 30, 2021, we were actively selling homes in 236 communities, with base prices ranging from approximately $200,000 to $889,000. 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, 2020. 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 $94.3 million and $61.3 million are included in cash and cash equivalents at September 30, 2021 and December 31, 2020, respectively. Real Estate. Real estate is stated at cost unless the community or land 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 sales. 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. Actual results can differ from budgeted amounts for various reasons, including construction and weather delays, labor or material shortages, slower absorptions, 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 All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. If the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. 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. Our analysis is conducted if indication of a decline in value of our land and real estate assets exists. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the asset's carrying amount exceeds its fair value. The impairment of a community is allocated to each lot on a straight-line basis. Deposits. Deposits paid related to land option 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 inventory at the time the deposit is used to offset 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 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 any nonrefundable deposits and any ancillary capitalized costs. Our Deposits on real estate under option or contract were $78.0 million and $59.5 million as of September 30, 2021 and December 31, 2020, 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. ASC 350 states that an entity may assess qualitative factors 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, labor costs, etc., 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, a two-step impairment test 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 sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on the accompanying unaudited consolidated balance sheets. The table below outlines our ROU assets and lease liabilities (in thousands): As of September 30, 2021 December 31, 2020 ROU assets $ 17,159 $ 21,624 Lease liabilities 22,644 28,254 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, optimizing deal structure for the impacted parties and leveraging our capital base, although our participation in such ventures is currently 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 provide surety bonds or letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not wholly released until all 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, 2021 December 31, 2020 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract $ 597,379 $ 331,195 $ 478,788 $ 216,708 Total Sureties $ 597,379 $ 331,195 $ 478,788 $ 216,708 Letters of Credit (“LOCs”): LOCs for land development 71,965 N/A 93,661 N/A LOCs for general corporate operations 3,000 N/A 3,750 N/A Total LOCs $ 74,965 N/A $ 97,411 N/A Accrued Liabilities . Accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following (in thousands): As of September 30, 2021 December 31, 2020 Accruals related to real estate development and construction activities $ 116,351 $ 92,701 Payroll and other benefits 85,959 88,337 Accrued interest 21,528 8,457 Accrued taxes 26,526 34,373 Warranty reserves 26,551 23,743 Lease liabilities 22,644 28,254 Other accruals 24,848 20,256 Total $ 324,407 $ 296,121 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 years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated the reserves for the structural warranty based on the number of homes still under warranty and our historical data and trends for our communities. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or nine months ended September 30, 2021 or 2020. Included in the warranty reserve balances at September 30, 2021 and December 31, 2020 reflected in the table below are case-specific reserves for a warranty matter related to alleged stucco defects in certain homes we constructed between 2006 and 2017 and water drainage issues in a single community in Florida that we developed in 2016. See Note 15 for additional information regarding these case-specific reserves. A summary of changes in our warranty reserves follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Balance, beginning of period $ 25,065 $ 21,578 $ 23,743 $ 22,015 Additions to reserve from new home deliveries 4,442 4,592 12,766 12,620 Warranty claims (2,956) (2,911) (9,958) (11,376) Adjustments to pre-existing reserves — — — — Balance, end of period $ 26,551 $ 23,259 $ 26,551 $ 23,259 Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades 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, 2021 and December 31, 2020. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. Recent Accounting Pronouncements. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which simplifies the accounting for income taxes by eliminating certain exceptions within ASC Topic 740, Income Taxes , and clarifying other areas of existing guidance. ASU 2019-12 was effective for us on January 1, 2021, and the adoption did not have a material impact on our financial statements or financial statement disclosures. |
REAL ESTATE AND CAPITALIZED INT
REAL ESTATE AND CAPITALIZED INTEREST | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 December 31, 2020 Homes under contract under construction (1) $ 1,142,724 $ 873,365 Unsold homes, completed and under construction (1) 397,422 357,861 Model homes (1) 75,239 82,502 Finished home sites and home sites under development (2) (3) 1,977,622 1,464,311 Total $ 3,593,007 $ 2,778,039 (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 represents 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. (3) Includes land held for sale of $47.8 million and $72.7 million as of September 30, 2021 and December 31, 2020, respectively. Subject to sufficient qualifying assets, 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, 2021 2020 2021 2020 Capitalized interest, beginning of period $ 56,710 $ 72,882 $ 58,940 $ 82,014 Interest incurred 15,212 16,103 47,625 50,188 Interest expensed (79) (55) (246) (2,176) Interest amortized to cost of home and land closings (14,550) (21,380) (49,026) (62,476) Capitalized interest, end of period $ 57,293 $ 67,550 $ 57,293 $ 67,550 |
VARIABLE INTEREST ENTITIES AND
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | 9 Months Ended |
Sep. 30, 2021 | |
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 allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. In accordance with ASC 810, Consolidation , we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect such assets and liabilities as Real estate not owned. As a result of our analyses, we determined that as of September 30, 2021 and December 31, 2020, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts. The table below presents a summary of our lots under option at September 30, 2021 (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) 11,433 530,759 43,214 Purchase contracts — non-refundable deposits, committed (1) 11,084 327,738 25,734 Purchase and option contracts —refundable deposits, committed 2,619 86,635 743 Total committed 25,136 945,132 69,691 Purchase and option contracts — refundable deposits, uncommitted (2) 31,655 769,696 8,296 Total lots under contract or option 56,791 $ 1,714,828 $ 77,987 Total purchase and option contracts not recorded on balance sheet (3) 56,791 $ 1,714,828 $ 77,987 (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 the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2021. 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, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our sales and home starts pace needed to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 9 Months Ended |
Sep. 30, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | INVESTMENTS IN UNCONSOLIDATED ENTITIESWe may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital base. While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as critical to the success of our homebuilding operations. Our joint venture partners are generally other homebuilders, land sellers or other real estate investors. We do not always 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, 2021, we had one active equity-method land joint venture with limited operations, and one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers. 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, 2021 December 31, 2020 Assets: Cash $ 3,985 $ 4,656 Real estate 5,732 5,745 Other assets 4,655 5,118 Total assets $ 14,372 $ 15,519 Liabilities and equity: Accounts payable and other liabilities $ 4,641 $ 5,588 Equity of: Meritage (1) 5,184 5,330 Other 4,547 4,601 Total liabilities and equity $ 14,372 $ 15,519 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ 10,070 $ 9,630 $ 29,173 $ 26,903 Costs and expenses (8,171) (8,138) (24,700) (21,945) Net earnings of unconsolidated entities $ 1,899 $ 1,492 $ 4,473 $ 4,958 Meritage’s share of pre-tax earnings (1) (2) $ 1,071 $ 1,129 $ 2,878 $ 2,864 (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 the accompanying 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 the accompanying 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, 2021 | |
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, 2021 December 31, 2020 Other borrowings, real estate notes payable (1) $ 18,985 $ 23,094 $780.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 0.08% at September 30, 2021) plus 1.375% or Prime (3.25% at September 30, 2021) plus 0.375% — — Total $ 18,985 $ 23,094 (1) Reflects balance of non-recourse 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 December 2020, the Credit Facility was amended to extend the maturity date to December 22, 2025 and provide for the replacement of LIBOR in the event such reference rate is no longer available. 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 $1.5 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, 2021. We had no outstanding borrowings under the Credit Facility as of September 30, 2021 and December 31, 2020. There were no borrowings or repayments during the three and nine months ended September 30, 2021. During the first quarter of 2020 we borrowed $500.0 million on our Credit Facility in connection with the perceived potential instability of the financial markets around the COVID-19 pandemic, which we repaid in full during the second quarter of 2020. As of September 30, 2021, we had outstanding letters of credit issued under the Credit Facility totaling $75.0 million, leaving $705.0 million available under the Credit Facility to be drawn. |
SENIOR NOTES, NET
SENIOR NOTES, NET | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
SENIOR NOTES, NET | SENIOR NOTES, NET Senior notes, net consist of the following (in thousands): As of September 30, 2021 December 31, 2020 7.00% senior notes due 2022 $ — $ 300,000 6.00% senior notes due 2025. At September 30, 2021 and December 31, 2020 there was approximately $3,000 and $3,614 in net unamortized premium, respectively. 403,000 403,614 5.125% senior notes due 2027 300,000 300,000 3.875% senior notes due 2029 450,000 — Net debt issuance costs (10,790) (6,623) Total $ 1,142,210 $ 996,991 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, 2021. 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. In April 2021, we completed an offering of $450.0 million aggregate principal amount of 3.875% Senior Notes due 2029. We used a portion of the net proceeds from this offering to redeem all $300.0 million aggregate principal outstanding of our 7.00% Senior Notes due 2022, incurring $18.2 million in early debt extinguishment charges in the nine months ended September 30, 2021, reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, 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. If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. 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, 2021 December 31, 2020 Aggregate Estimated Fair Aggregate Estimated Fair 7.00% senior notes due 2022 $ — $ — $ 300,000 $ 319,758 6.00% senior notes due 2025 $ 400,000 $ 451,000 $ 400,000 $ 451,913 5.125% senior notes due 2027 $ 300,000 $ 333,000 $ 300,000 $ 333,328 3.875% senior notes due 2029 $ 450,000 $ 471,375 $ — $ — 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, 2021 | |
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, 2021 2020 2021 2020 Basic weighted average number of shares outstanding 37,647 37,607 37,703 37,763 Effect of dilutive securities: Unvested restricted stock 582 798 582 728 Diluted average shares outstanding 38,229 38,405 38,285 38,491 Net earnings $ 200,752 $ 109,118 $ 499,984 $ 270,948 Basic earnings per share $ 5.33 $ 2.90 $ 13.26 $ 7.17 Diluted earnings per share $ 5.25 $ 2.84 $ 13.06 $ 7.04 |
ACQUISITIONS AND GOODWILL
ACQUISITIONS AND GOODWILL | 9 Months Ended |
Sep. 30, 2021 | |
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 the accompanying unaudited consolidated balance sheets 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, 2020 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at September 30, 2021 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2020 37,512 $ 375 $ 455,762 $ 1,891,731 $ 2,347,868 Net earnings — — — 131,843 131,843 Stock-based compensation expense — — 5,367 — 5,367 Issuance of stock 435 4 (4) — — Share repurchases (100) (1) (8,384) — (8,385) Balance at March 31, 2021 37,847 $ 378 $ 452,741 $ 2,023,574 $ 2,476,693 Net earnings — — — 167,389 167,389 Stock-based compensation expense — — 3,223 — 3,223 Share repurchases (200) (2) (19,159) — (19,161) Balance at June 30, 2021 37,647 $ 376 $ 436,805 $ 2,190,963 $ 2,628,144 Net earnings — — — 200,752 200,752 Stock-based compensation expense — — 5,845 — 5,845 Issuance of stock 3 — — — — Share repurchases (95) — (9,471) — (9,471) Balance at September 30, 2021 $ 37,555 $ 376 $ 433,179 $ 2,391,715 $ 2,825,270 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 |
STOCK BASED AND DEFERRED COMPEN
STOCK BASED AND DEFERRED COMPENSATION | 9 Months Ended |
Sep. 30, 2021 | |
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 1,050,079 shares remain available for grant at September 30, 2021. 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-year ratable vesting period for employees, a three-year cliff vesting for both non-vested stock and performance-based awards granted to senior executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date. 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, 2021 2020 2021 2020 Stock-based compensation expense $ 5,845 $ 6,130 $ 14,435 $ 15,724 Non-vested shares granted 4,114 2,112 225,666 225,593 Performance-based non-vested shares granted — — 46,593 56,139 Performance-based shares issued in excess of target shares granted (1) — — 37,425 24,054 Restricted stock awards vested (includes performance-based awards) 3,615 8,610 438,344 413,016 (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 compensation plan (dollars in thousands): As of September 30, 2021 December 31, 2020 Unrecognized stock-based compensation cost $ 29,890 $ 22,687 Weighted average years expense recognition period 2.02 2.01 Total equity awards outstanding (1) 910,557 1,098,545 (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, 2021 or 2020, other than minor administrative costs. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 2021 2020 Federal $ 47,955 $ 21,692 $ 115,781 $ 54,594 State 13,002 4,696 27,572 12,659 Total $ 60,957 $ 26,388 $ 143,353 $ 67,253 The effective tax rate for the three and nine months ended September 30, 2021 was 23.3% and 22.3%, and for the three and nine months ended September 30, 2020 was 19.5% and 19.9%, respectively. The higher tax rates for the three and nine months ended September 30, 2021 reflect increased profits in states with higher tax rates and the reduced benefit of credits earned under the Internal Revenue Code ("IRC") §45L new energy efficient homes credit due to greater overall profitability of the Company. At September 30, 2021 and December 31, 2020, 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, 2021. At September 30, 2021, we have income taxes payable of $15.8 million and income taxes receivable of $0.7 million. The income taxes payable primarily consists of current federal and state tax accruals, net of current energy tax credits and estimated tax payments. This amount is recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at September 30, 2021. The income taxes receivable primarily consists of additional energy tax credits claimed by amending prior year tax returns and is recorded in Other receivables on the accompanying unaudited consolidated balance sheets at September 30, 2021. 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 2016. We have no federal or state income tax examinations being conducted at this time. The future 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, 2021 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. |
SUPPLEMENTAL DISCLOSURE OF CASH
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 Cash paid during the year for: Interest, net of interest capitalized $ (14,451) $ (14,756) Income taxes paid $ 152,843 $ 49,103 Non-cash operating activities: Real estate acquired through notes payable $ 2,199 $ 8,664 |
OPERATING AND REPORTING SEGMENT
OPERATING AND REPORTING SEGMENTS | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 2021 2020 Homebuilding revenue (1) : West $ 460,089 $ 434,289 $ 1,305,684 $ 1,198,782 Central 383,206 353,208 1,109,228 909,692 East 416,610 350,594 1,206,373 963,709 Consolidated total $ 1,259,905 $ 1,138,091 $ 3,621,285 $ 3,072,183 Homebuilding segment operating income: West $ 95,167 $ 53,423 $ 238,356 $ 140,059 Central 90,579 52,394 232,537 119,208 East 83,853 37,791 207,509 97,343 Total homebuilding segment operating income 269,599 143,608 678,402 356,610 Financial services segment profit 4,224 4,315 12,599 10,942 Corporate and unallocated costs (2) (13,303) (13,550) (32,673) (30,488) Interest expense (79) (55) (246) (2,176) Other income, net 1,268 1,188 3,443 3,313 Loss on early extinguishment of debt — — (18,188) — Net earnings before income taxes $ 261,709 $ 135,506 $ 643,337 $ 338,201 (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, 2021 2020 2021 2020 Land closing revenue: West $ 8,470 $ — $ 21,426 $ 4,974 Central — 3,301 3,799 7,901 East — 1,569 — 4,079 Total $ 8,470 $ 4,870 $ 25,225 $ 16,954 (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, 2021 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 23,808 $ 12,129 $ 42,050 $ — $ — $ 77,987 Real estate 1,551,248 1,015,779 1,025,980 — — 3,593,007 Investments in unconsolidated entities 206 2,988 — — 711 3,905 Other assets 83,749 (1) 165,693 (2) 85,669 (3) 713 554,726 (4) 890,550 Total assets $ 1,659,011 $ 1,196,589 $ 1,153,699 $ 713 $ 555,437 $ 4,565,449 (1) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and property and equipment. (2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of cash and cash equivalents, goodwill, prepaid expenses and other assets and property and equipment. (4) Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaid expenses and other assets. At December 31, 2020 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 22,493 $ 11,154 $ 25,887 $ — $ — $ 59,534 Real estate 1,154,488 814,919 808,632 — — 2,778,039 Investments in unconsolidated entities 261 3,090 — — 999 4,350 Other assets 51,271 (1) 122,933 (2) 81,601 (3) 612 766,058 (4) 1,022,475 Total assets $ 1,228,513 $ 952,096 $ 916,120 $ 612 $ 767,057 $ 3,864,398 (1) Balance consists primarily of cash and cash equivalents and property and equipment. (2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets. (3) Balance consists primarily of cash and cash equivalents, goodwill, prepaids and other assets and property and equipment. (4) Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESWe are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation 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, 2021 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”, we have case specific reserves within our $26.6 million |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2020. 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 community or land 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 sales. 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. Actual results can differ from budgeted amounts for various reasons, including construction and weather delays, labor or material shortages, slower absorptions, 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 All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. If the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. 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. Our analysis is conducted if indication of a decline in value of our land and real estate assets exists. If an asset is deemed to be impaired, the impairment recognized is measured as the amount by which the asset's carrying amount exceeds its fair value. The impairment of a community is allocated to each lot on a straight-line basis. |
Deposits | Deposits. Deposits paid related to land option 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 inventory at the time the deposit is used to offset 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 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 any nonrefundable 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, optimizing deal structure for the impacted parties and leveraging our capital base, although our participation in such ventures is currently 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 provide surety bonds or letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Bonds are generally not wholly released until all 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 years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated the reserves for the structural warranty based on the number of homes still under warranty and our historical data and trends for our communities. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and |
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, 2021 and December 31, 2020. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which simplifies the accounting for income taxes by eliminating certain exceptions within ASC Topic 740, Income Taxes , and clarifying other areas of existing guidance. ASU 2019-12 was effective for us on January 1, 2021, and the adoption did not have a material impact on our financial statements or financial statement disclosures. |
Variable Interest Entities | In accordance with ASC 810, Consolidation , we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect such assets and liabilities as Real estate not owned. As a result of our analyses, we determined that as of September 30, 2021 and December 31, 2020, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts. |
Fair Value Disclosures | ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, 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. If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. |
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 . 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, |
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, 2021 | |
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, 2021 December 31, 2020 ROU assets $ 17,159 $ 21,624 Lease liabilities 22,644 28,254 |
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, 2021 December 31, 2020 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract $ 597,379 $ 331,195 $ 478,788 $ 216,708 Total Sureties $ 597,379 $ 331,195 $ 478,788 $ 216,708 Letters of Credit (“LOCs”): LOCs for land development 71,965 N/A 93,661 N/A LOCs for general corporate operations 3,000 N/A 3,750 N/A Total LOCs $ 74,965 N/A $ 97,411 N/A |
Schedule of Accrued Liabilities | Accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following (in thousands): As of September 30, 2021 December 31, 2020 Accruals related to real estate development and construction activities $ 116,351 $ 92,701 Payroll and other benefits 85,959 88,337 Accrued interest 21,528 8,457 Accrued taxes 26,526 34,373 Warranty reserves 26,551 23,743 Lease liabilities 22,644 28,254 Other accruals 24,848 20,256 Total $ 324,407 $ 296,121 |
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, 2021 2020 2021 2020 Balance, beginning of period $ 25,065 $ 21,578 $ 23,743 $ 22,015 Additions to reserve from new home deliveries 4,442 4,592 12,766 12,620 Warranty claims (2,956) (2,911) (9,958) (11,376) Adjustments to pre-existing reserves — — — — Balance, end of period $ 26,551 $ 23,259 $ 26,551 $ 23,259 |
REAL ESTATE AND CAPITALIZED I_2
REAL ESTATE AND CAPITALIZED INTEREST (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Real Estate | Real estate consists of the following (in thousands): As of September 30, 2021 December 31, 2020 Homes under contract under construction (1) $ 1,142,724 $ 873,365 Unsold homes, completed and under construction (1) 397,422 357,861 Model homes (1) 75,239 82,502 Finished home sites and home sites under development (2) (3) 1,977,622 1,464,311 Total $ 3,593,007 $ 2,778,039 (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 represents 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. (3) Includes land held for sale of $47.8 million and $72.7 million as of September 30, 2021 and December 31, 2020, respectively. |
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, 2021 2020 2021 2020 Capitalized interest, beginning of period $ 56,710 $ 72,882 $ 58,940 $ 82,014 Interest incurred 15,212 16,103 47,625 50,188 Interest expensed (79) (55) (246) (2,176) Interest amortized to cost of home and land closings (14,550) (21,380) (49,026) (62,476) Capitalized interest, end of period $ 57,293 $ 67,550 $ 57,293 $ 67,550 |
VARIABLE INTEREST ENTITIES AN_2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 (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) 11,433 530,759 43,214 Purchase contracts — non-refundable deposits, committed (1) 11,084 327,738 25,734 Purchase and option contracts —refundable deposits, committed 2,619 86,635 743 Total committed 25,136 945,132 69,691 Purchase and option contracts — refundable deposits, uncommitted (2) 31,655 769,696 8,296 Total lots under contract or option 56,791 $ 1,714,828 $ 77,987 Total purchase and option contracts not recorded on balance sheet (3) 56,791 $ 1,714,828 $ 77,987 (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 the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2021. |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 December 31, 2020 Assets: Cash $ 3,985 $ 4,656 Real estate 5,732 5,745 Other assets 4,655 5,118 Total assets $ 14,372 $ 15,519 Liabilities and equity: Accounts payable and other liabilities $ 4,641 $ 5,588 Equity of: Meritage (1) 5,184 5,330 Other 4,547 4,601 Total liabilities and equity $ 14,372 $ 15,519 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ 10,070 $ 9,630 $ 29,173 $ 26,903 Costs and expenses (8,171) (8,138) (24,700) (21,945) Net earnings of unconsolidated entities $ 1,899 $ 1,492 $ 4,473 $ 4,958 Meritage’s share of pre-tax earnings (1) (2) $ 1,071 $ 1,129 $ 2,878 $ 2,864 (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 the accompanying 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 the accompanying 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, 2021 | |
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, 2021 December 31, 2020 Other borrowings, real estate notes payable (1) $ 18,985 $ 23,094 $780.0 million unsecured revolving credit facility with interest approximating LIBOR (approximately 0.08% at September 30, 2021) plus 1.375% or Prime (3.25% at September 30, 2021) plus 0.375% — — Total $ 18,985 $ 23,094 (1) Reflects balance of non-recourse notes payable in connection with land purchases. |
SENIOR NOTES, NET (Tables)
SENIOR NOTES, NET (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Notes, Net | Senior notes, net consist of the following (in thousands): As of September 30, 2021 December 31, 2020 7.00% senior notes due 2022 $ — $ 300,000 6.00% senior notes due 2025. At September 30, 2021 and December 31, 2020 there was approximately $3,000 and $3,614 in net unamortized premium, respectively. 403,000 403,614 5.125% senior notes due 2027 300,000 300,000 3.875% senior notes due 2029 450,000 — Net debt issuance costs (10,790) (6,623) Total $ 1,142,210 $ 996,991 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 December 31, 2020 Aggregate Estimated Fair Aggregate Estimated Fair 7.00% senior notes due 2022 $ — $ — $ 300,000 $ 319,758 6.00% senior notes due 2025 $ 400,000 $ 451,000 $ 400,000 $ 451,913 5.125% senior notes due 2027 $ 300,000 $ 333,000 $ 300,000 $ 333,328 3.875% senior notes due 2029 $ 450,000 $ 471,375 $ — $ — |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 2021 2020 Basic weighted average number of shares outstanding 37,647 37,607 37,703 37,763 Effect of dilutive securities: Unvested restricted stock 582 798 582 728 Diluted average shares outstanding 38,229 38,405 38,285 38,491 Net earnings $ 200,752 $ 109,118 $ 499,984 $ 270,948 Basic earnings per share $ 5.33 $ 2.90 $ 13.26 $ 7.17 Diluted earnings per share $ 5.25 $ 2.84 $ 13.06 $ 7.04 |
ACQUISITIONS AND GOODWILL (Tabl
ACQUISITIONS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2020 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at September 30, 2021 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 (In thousands) Number of Common Additional Retained Total Balance at December 31, 2020 37,512 $ 375 $ 455,762 $ 1,891,731 $ 2,347,868 Net earnings — — — 131,843 131,843 Stock-based compensation expense — — 5,367 — 5,367 Issuance of stock 435 4 (4) — — Share repurchases (100) (1) (8,384) — (8,385) Balance at March 31, 2021 37,847 $ 378 $ 452,741 $ 2,023,574 $ 2,476,693 Net earnings — — — 167,389 167,389 Stock-based compensation expense — — 3,223 — 3,223 Share repurchases (200) (2) (19,159) — (19,161) Balance at June 30, 2021 37,647 $ 376 $ 436,805 $ 2,190,963 $ 2,628,144 Net earnings — — — 200,752 200,752 Stock-based compensation expense — — 5,845 — 5,845 Issuance of stock 3 — — — — Share repurchases (95) — (9,471) — (9,471) Balance at September 30, 2021 $ 37,555 $ 376 $ 433,179 $ 2,391,715 $ 2,825,270 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 |
STOCK BASED AND DEFERRED COMP_2
STOCK BASED AND DEFERRED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 2021 2020 Stock-based compensation expense $ 5,845 $ 6,130 $ 14,435 $ 15,724 Non-vested shares granted 4,114 2,112 225,666 225,593 Performance-based non-vested shares granted — — 46,593 56,139 Performance-based shares issued in excess of target shares granted (1) — — 37,425 24,054 Restricted stock awards vested (includes performance-based awards) 3,615 8,610 438,344 413,016 |
Summary of Additional Information Regarding Stock Plan | The following table includes additional information regarding our stock compensation plan (dollars in thousands): As of September 30, 2021 December 31, 2020 Unrecognized stock-based compensation cost $ 29,890 $ 22,687 Weighted average years expense recognition period 2.02 2.01 Total equity awards outstanding (1) 910,557 1,098,545 (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, 2021 | |
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, 2021 2020 2021 2020 Federal $ 47,955 $ 21,692 $ 115,781 $ 54,594 State 13,002 4,696 27,572 12,659 Total $ 60,957 $ 26,388 $ 143,353 $ 67,253 |
SUPPLEMENTAL DISCLOSURE OF CA_2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 Cash paid during the year for: Interest, net of interest capitalized $ (14,451) $ (14,756) Income taxes paid $ 152,843 $ 49,103 Non-cash operating activities: Real estate acquired through notes payable $ 2,199 $ 8,664 |
OPERATING AND REPORTING SEGME_2
OPERATING AND REPORTING SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Homebuilding revenue (1) : West $ 460,089 $ 434,289 $ 1,305,684 $ 1,198,782 Central 383,206 353,208 1,109,228 909,692 East 416,610 350,594 1,206,373 963,709 Consolidated total $ 1,259,905 $ 1,138,091 $ 3,621,285 $ 3,072,183 Homebuilding segment operating income: West $ 95,167 $ 53,423 $ 238,356 $ 140,059 Central 90,579 52,394 232,537 119,208 East 83,853 37,791 207,509 97,343 Total homebuilding segment operating income 269,599 143,608 678,402 356,610 Financial services segment profit 4,224 4,315 12,599 10,942 Corporate and unallocated costs (2) (13,303) (13,550) (32,673) (30,488) Interest expense (79) (55) (246) (2,176) Other income, net 1,268 1,188 3,443 3,313 Loss on early extinguishment of debt — — (18,188) — Net earnings before income taxes $ 261,709 $ 135,506 $ 643,337 $ 338,201 (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, 2021 2020 2021 2020 Land closing revenue: West $ 8,470 $ — $ 21,426 $ 4,974 Central — 3,301 3,799 7,901 East — 1,569 — 4,079 Total $ 8,470 $ 4,870 $ 25,225 $ 16,954 (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, 2021 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 23,808 $ 12,129 $ 42,050 $ — $ — $ 77,987 Real estate 1,551,248 1,015,779 1,025,980 — — 3,593,007 Investments in unconsolidated entities 206 2,988 — — 711 3,905 Other assets 83,749 (1) 165,693 (2) 85,669 (3) 713 554,726 (4) 890,550 Total assets $ 1,659,011 $ 1,196,589 $ 1,153,699 $ 713 $ 555,437 $ 4,565,449 (1) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and property and equipment. (2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaid expenses and other assets. (3) Balance consists primarily of cash and cash equivalents, goodwill, prepaid expenses and other assets and property and equipment. (4) Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaid expenses and other assets. At December 31, 2020 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 22,493 $ 11,154 $ 25,887 $ — $ — $ 59,534 Real estate 1,154,488 814,919 808,632 — — 2,778,039 Investments in unconsolidated entities 261 3,090 — — 999 4,350 Other assets 51,271 (1) 122,933 (2) 81,601 (3) 612 766,058 (4) 1,022,475 Total assets $ 1,228,513 $ 952,096 $ 916,120 $ 612 $ 767,057 $ 3,864,398 (1) Balance consists primarily of cash and cash equivalents and property and equipment. (2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets. (3) Balance consists primarily of cash and cash equivalents, goodwill, prepaids and other assets and property and equipment. (4) Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets. |
ORGANIZATION AND BASIS OF PRE_4
ORGANIZATION AND BASIS OF PRESENTATION - Narrative (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021USD ($)regionstatecommunity | Dec. 31, 2020USD ($) | |
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 | 236 | |
Deposits on real estate under option or contract | $ 77,987 | $ 59,534 |
ROU assets | 17,159 | 21,624 |
Lease liabilities | 22,644 | 28,254 |
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 | 94,300 | $ 61,300 |
Minimum [Member] | ||
Organization and Presentation [Line Items] | ||
Base price per house for sale range | $ 200 | |
Community life cycle range | 3 years | |
Maximum [Member] | ||
Organization and Presentation [Line Items] | ||
Base price per house for sale range | $ 889 | |
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, 2021 | Dec. 31, 2020 |
Sureties related to owned projects and lots under contract [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | $ 597,379 | $ 478,788 |
Estimated work remaining to complete | 331,195 | 216,708 |
Sureties [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 597,379 | 478,788 |
Estimated work remaining to complete | 331,195 | 216,708 |
LOCs for land development [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 71,965 | 93,661 |
LOCs for general corporate operations [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | 3,000 | 3,750 |
Revolving credit facility [Member] | Line of Credit [Member] | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 74,965 | $ 97,411 |
ORGANIZATION AND BASIS OF PRE_6
ORGANIZATION AND BASIS OF PRESENTATION - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Accrued Liabilities | ||||||
Accruals related to real estate development and construction activities | $ 116,351 | $ 92,701 | ||||
Payroll and other benefits | 85,959 | 88,337 | ||||
Accrued interest | 21,528 | 8,457 | ||||
Accrued taxes | 26,526 | 34,373 | ||||
Warranty reserves | 26,551 | $ 25,065 | 23,743 | $ 23,259 | $ 21,578 | $ 22,015 |
Lease liabilities | 22,644 | 28,254 | ||||
Other accruals | 24,848 | 20,256 | ||||
Total | $ 324,407 | $ 296,121 |
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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Warranty Reserves | ||||
Balance, beginning of period | $ 25,065 | $ 21,578 | $ 23,743 | $ 22,015 |
Additions to reserve from new home deliveries | 4,442 | 4,592 | 12,766 | 12,620 |
Warranty claims | (2,956) | (2,911) | (9,958) | (11,376) |
Adjustments to pre-existing reserves | 0 | 0 | 0 | 0 |
Balance, end of period | $ 26,551 | $ 23,259 | $ 26,551 | $ 23,259 |
REAL ESTATE AND CAPITALIZED I_3
REAL ESTATE AND CAPITALIZED INTEREST - Schedule of Real Estate (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Real Estate Properties | |||
Homes under contract under construction | [1] | $ 1,142,724 | $ 873,365 |
Unsold homes completed and under construction | [1] | 397,422 | 357,861 |
Model homes | [1] | 75,239 | 82,502 |
Finished home sites and home sites under development | [2] | 1,977,622 | 1,464,311 |
Real estate | 3,593,007 | 2,778,039 | |
Land held for sale | [3] | $ 47,800 | $ 72,700 |
[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 represents 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. | ||
[3] | Includes land held for sale of $47.8 million and $72.7 million as of September 30, 2021 and December 31, 2020, respectively |
REAL ESTATE AND CAPITALIZED I_4
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Summary of capitalized interest | ||||
Capitalized interest, beginning of period | $ 56,710 | $ 72,882 | $ 58,940 | $ 82,014 |
Interest incurred | 15,212 | 16,103 | 47,625 | 50,188 |
Interest expensed | (79) | (55) | (246) | (2,176) |
Interest amortized to cost of home and land closings | (14,550) | (21,380) | (49,026) | (62,476) |
Capitalized interest, end of period | $ 57,293 | $ 67,550 | $ 57,293 | $ 67,550 |
VARIABLE INTEREST ENTITIES AN_3
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED - Summary of Lots Under Option (Details) $ in Thousands | Sep. 30, 2021USD ($)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 | 11,433 | [1] |
Purchase contracts — non-refundable deposits, committed | lot | 11,084 | [1] |
Purchase and option contracts —refundable deposits, committed | lot | 2,619 | |
Total committed | lot | 25,136 | |
Purchase and option contracts — refundable deposits, uncommitted | lot | 31,655 | [2] |
Total lots under contract or option | lot | 56,791 | |
Total purchase and option contracts not recorded on balance sheet | lot | 56,791 | [3] |
Purchase Price | ||
Purchase and option contracts recorded on balance sheet as Real estate not owned | $ 0 | |
Option contracts — non-refundable deposits, committed | 530,759 | [1] |
Purchase contracts — non-refundable deposits, committed | 327,738 | [1] |
Purchase and option contracts —refundable deposits, committed | 86,635 | |
Total committed | 945,132 | |
Purchase and option contracts — refundable deposits, uncommitted | 769,696 | [2] |
Total lots under contract or option | 1,714,828 | |
Total purchase and option contracts not recorded on balance sheet | 1,714,828 | [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 | 43,214 | [1] |
Purchase contracts — non-refundable deposits, committed | 25,734 | [1] |
Purchase and option contracts —refundable deposits, committed | 743 | |
Total committed | 69,691 | |
Purchase and option contracts — refundable deposits, uncommitted | 8,296 | [2] |
Total lots under contract or option | 77,987 | |
Total purchase and option contracts not recorded on balance sheet | $ 77,987 | [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 the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. | |
[4] | Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2021. |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Narrative (Details) $ in Thousands | Sep. 30, 2021USD ($)joint_venture | Dec. 31, 2020USD ($) |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated entities | $ | $ 3,905 | $ 4,350 |
Equity-method land ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | 1 | |
Mortgage joint ventures [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of joint ventures | 1 |
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, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Assets | |||||||||
Cash | $ 562,291 | $ 745,621 | |||||||
Real estate | 3,593,007 | 2,778,039 | |||||||
Other assets | 890,550 | 1,022,475 | |||||||
Total assets | 4,565,449 | 3,864,398 | |||||||
Equity of: | |||||||||
Meritage | 2,825,270 | $ 2,628,144 | $ 2,476,693 | 2,347,868 | $ 2,199,849 | $ 2,084,601 | $ 1,990,766 | $ 1,973,990 | |
Total liabilities and stockholders’ equity | 4,565,449 | 3,864,398 | |||||||
Equity Method Investment, Nonconsolidated Investee | |||||||||
Assets | |||||||||
Cash | 3,985 | 4,656 | |||||||
Real estate | 5,732 | 5,745 | |||||||
Other assets | 4,655 | 5,118 | |||||||
Total assets | 14,372 | 15,519 | |||||||
Liabilities and equity: | |||||||||
Accounts payable and other liabilities | 4,641 | 5,588 | |||||||
Equity of: | |||||||||
Meritage | [1] | 5,184 | 5,330 | ||||||
Other | 4,547 | 4,601 | |||||||
Total liabilities and stockholders’ equity | $ 14,372 | $ 15,519 | |||||||
[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 the accompanying 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, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||
Net earnings of unconsolidated entities | $ 2,878 | $ 2,821 | |||||||
Net earnings | $ 200,752 | $ 167,389 | $ 131,843 | $ 109,118 | $ 90,678 | $ 71,152 | 499,984 | 270,948 | |
Equity Method Investment, Nonconsolidated Investee | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Revenue | 10,070 | 9,630 | 29,173 | 26,903 | |||||
Costs and expenses | (8,171) | (8,138) | (24,700) | (21,945) | |||||
Net earnings of unconsolidated entities | 1,899 | 1,492 | 4,473 | 4,958 | |||||
Net earnings | [1],[2] | $ 1,071 | $ 1,129 | $ 2,878 | $ 2,864 | ||||
[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 the accompanying 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 the accompanying 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, 2021 | Dec. 31, 2020 | ||
Revolving credit facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Description of variable rate basis | LIBOR | ||
Base rate | 0.08% | ||
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] | $ 18,985,000 | $ 23,094,000 |
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 | $ 18,985,000 | $ 23,094,000 | |
[1] | Reflects balance of non-recourse 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, 2021USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($) | |
Line of Credit Facility [Line Items] | ||||
Repayments of outstanding balance | $ 0 | |||
Borrowings | $ 500,000,000 | $ 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 | $ 1,500,000,000 | $ 1,500,000,000 | ||
Leverage ratio | 0.60 | 0.60 | ||
Interest coverage ratio | 1.50 | |||
Outstanding borrowings under Credit Facility | $ 0 | $ 0 | $ 0 | |
Total LOCs | 74,965,000 | 74,965,000 | $ 97,411,000 | |
Remaining borrowing capacity | $ 705,000,000 | $ 705,000,000 |
SENIOR NOTES, NET - Schedule of
SENIOR NOTES, NET - Schedule of Senior Notes, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Apr. 30, 2021 | Apr. 29, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | $ (18,188) | $ 0 | |||
Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Net debt issuance costs | (10,790) | (10,790) | $ (6,623) | ||||
Senior notes, net | 1,142,210 | 1,142,210 | 996,991 | ||||
Senior Notes [Member] | 7.00% senior notes due 2022 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, gross | $ 0 | $ 0 | $ 300,000 | 300,000 | |||
Stated interest rate | 7.00% | 7.00% | 7.00% | ||||
Loss on early extinguishment of debt | $ (18,200) | ||||||
Senior Notes [Member] | 6.00% senior notes due 2025 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, gross | $ 403,000 | $ 403,000 | 403,614 | ||||
Stated interest rate | 6.00% | 6.00% | |||||
Unamortized premium | $ 3,000 | $ 3,000 | 3,614 | ||||
Senior Notes [Member] | 5.125% senior notes due 2027 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, gross | $ 300,000 | $ 300,000 | 300,000 | ||||
Stated interest rate | 5.125% | 5.125% | |||||
Senior Notes [Member] | 3.875% senior notes due 2029 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, gross | $ 450,000 | $ 450,000 | $ 450,000 | $ 0 | |||
Stated interest rate | 3.875% | 3.875% | 3.875% |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Fair Value of Fixed-Rate Debt (Details) - Senior Notes [Member] - USD ($) | Sep. 30, 2021 | Apr. 30, 2021 | Apr. 29, 2021 | Dec. 31, 2020 |
7.00% senior notes due 2022 [Member] | ||||
Fair value of fixed-rate debt | ||||
Stated interest rate | 7.00% | 7.00% | ||
7.00% senior notes due 2022 [Member] | Level 2 [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate Principal | $ 0 | $ 300,000,000 | ||
Fair value of fixed-rate debt | ||||
Estimated Fair Value | $ 0 | 319,758,000 | ||
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 | $ 451,000,000 | 451,913,000 | ||
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 | $ 333,000,000 | 333,328,000 | ||
3.875% senior notes due 2029 [Member] | ||||
Fair value of fixed-rate debt | ||||
Stated interest rate | 3.875% | 3.875% | ||
3.875% senior notes due 2029 [Member] | Level 2 [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate Principal | $ 450,000,000 | 0 | ||
Fair value of fixed-rate debt | ||||
Estimated Fair Value | $ 471,375,000 | $ 0 |
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, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Basic and Diluted Earnings Per Common Share | ||||||||
Basic weighted average number of shares outstanding | 37,647 | 37,607 | 37,703 | 37,763 | ||||
Effect of dilutive securities: | ||||||||
Unvested restricted stock | 582 | 798 | 582 | 728 | ||||
Diluted average shares outstanding | 38,229 | 38,405 | 38,285 | 38,491 | ||||
Net earnings as reported (in dollars) | $ 200,752 | $ 167,389 | $ 131,843 | $ 109,118 | $ 90,678 | $ 71,152 | $ 499,984 | $ 270,948 |
Basic earnings per share (in dollars per share) | $ 5.33 | $ 2.90 | $ 13.26 | $ 7.17 | ||||
Diluted earnings per share (in dollars per share) | $ 5.25 | $ 2.84 | $ 13.06 | $ 7.04 |
ACQUISITIONS AND GOODWILL - Nar
ACQUISITIONS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
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, 2021USD ($) | |
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] | Homebuilding Segment | West [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions | 0 |
Ending balance | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | 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, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance (in shares) | 37,512,127 | 37,512,127 | ||||||
Beginning balance | $ 2,628,144 | $ 2,476,693 | $ 2,347,868 | $ 2,084,601 | $ 1,990,766 | $ 1,973,990 | $ 2,347,868 | $ 1,973,990 |
Net earnings | 200,752 | 167,389 | 131,843 | 109,118 | 90,678 | 71,152 | $ 499,984 | 270,948 |
Stock-based compensation expense | 5,845 | 3,223 | 5,367 | 6,130 | 3,157 | 6,437 | ||
Issuance of stock | 0 | 0 | 0 | 0 | 0 | |||
Share repurchases | $ (9,471) | (19,161) | (8,385) | (60,813) | ||||
Ending balance (in shares) | 37,555,010 | 37,555,010 | ||||||
Ending balance | $ 2,825,270 | $ 2,628,144 | $ 2,476,693 | $ 2,199,849 | $ 2,084,601 | $ 1,990,766 | $ 2,825,270 | $ 2,199,849 |
Common Stock [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance (in shares) | 37,647,000 | 37,847,000 | 37,512,000 | 37,603,000 | 37,597,000 | 38,199,000 | 37,512,000 | 38,199,000 |
Beginning balance | $ 376 | $ 378 | $ 375 | $ 377 | $ 376 | $ 382 | $ 375 | $ 382 |
Issuance of stock (in shares) | 3,000 | 435,000 | 9,000 | 6,000 | 398,000 | |||
Issuance of stock | $ 4 | $ 0 | $ 1 | $ 4 | ||||
Share repurchases (in shares) | (95,000) | (200,000) | (100,000) | (1,000,000) | ||||
Share repurchases | $ (2) | $ (1) | $ (10) | |||||
Ending balance (in shares) | 37,555,000 | 37,647,000 | 37,847,000 | 37,612,000 | 37,603,000 | 37,597,000 | 37,555,000 | 37,612,000 |
Ending balance | $ 376 | $ 376 | $ 378 | $ 377 | $ 377 | $ 376 | $ 376 | $ 377 |
Additional Paid-in Capital [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 436,805 | 452,741 | 455,762 | 454,138 | 450,982 | 505,352 | 455,762 | 505,352 |
Stock-based compensation expense | 5,845 | 3,223 | 5,367 | 6,130 | 3,157 | 6,437 | ||
Issuance of stock | (4) | 0 | (1) | (4) | ||||
Share repurchases | (9,471) | (19,159) | (8,384) | (60,803) | ||||
Ending balance | 433,179 | 436,805 | 452,741 | 460,268 | 454,138 | 450,982 | 433,179 | 460,268 |
Retained Earnings [Member] | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2,190,963 | 2,023,574 | 1,891,731 | 1,630,086 | 1,539,408 | 1,468,256 | 1,891,731 | 1,468,256 |
Net earnings | 200,752 | 167,389 | 131,843 | 109,118 | 90,678 | 71,152 | ||
Ending balance | $ 2,391,715 | $ 2,190,963 | $ 2,023,574 | $ 1,739,204 | $ 1,630,086 | $ 1,539,408 | $ 2,391,715 | $ 1,739,204 |
STOCK BASED AND DEFERRED COMP_3
STOCK BASED AND DEFERRED COMPENSATION - Narrative (Details) | 9 Months Ended |
Sep. 30, 2021shares | |
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) | 1,050,079 |
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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Summary of compensation expense and stock award activity | |||||
Stock-based compensation expense (in dollars) | $ 5,845 | $ 6,130 | $ 14,435 | $ 15,724 | |
Restricted Stock [Member] | |||||
Summary of compensation expense and stock award activity | |||||
Restricted stock awards vested (includes performance-based awards) (in shares) | 3,615 | 8,610 | 438,344 | 413,016 | |
Non-vested shares [Member] | |||||
Summary of compensation expense and stock award activity | |||||
Non-vested shares granted (in shares) | 4,114 | 2,112 | 225,666 | 225,593 | |
Performance-based non-vested shares [Member] | |||||
Summary of compensation expense and stock award activity | |||||
Non-vested shares granted (in shares) | 0 | 0 | 46,593 | 56,139 | |
Shares issued as a result of performance achievement exceeding performance targets (in shares) | [1] | 0 | 0 | 37,425 | 24,054 |
[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 | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | ||
Summary of stock based compensation agreements | |||
Unrecognized stock-based compensation cost | $ 29,890 | $ 22,687 | |
Weighted average years expense recognition period | 2 years 7 days | 2 years 3 days | |
Total stock-based awards outstanding (in shares) | [1] | 910,557 | 1,098,545 |
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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Current Taxes: | ||||
Federal | $ 47,955 | $ 21,692 | $ 115,781 | $ 54,594 |
State | 13,002 | 4,696 | 27,572 | 12,659 |
Total | $ 60,957 | $ 26,388 | $ 143,353 | $ 67,253 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Income Taxes (Textual) [Abstract] | |||||
Effective tax rate | 23.30% | 19.50% | 22.30% | 19.90% | |
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Valuation allowance on deferred tax assets | 0 | 0 | |||
Valuation allowance on net operating loss carryforwards | 0 | 0 | |||
Accrued Liabilities [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
Income taxes payable | 15,800,000 | 15,800,000 | |||
Other Receivables [Member] | |||||
Income Taxes (Textual) [Abstract] | |||||
Income taxes receivable | $ 700,000 | $ 700,000 |
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, 2021 | Sep. 30, 2020 | |
Cash paid during the period for: | ||
Interest, net of interest capitalized | $ (14,451) | $ (14,756) |
Income taxes paid | 152,843 | 49,103 |
Non-cash operating activities: | ||
Real estate acquired through notes payable | $ 2,199 | $ 8,664 |
OPERATING AND REPORTING SEGME_3
OPERATING AND REPORTING SEGMENTS - Narrative (Details) | 9 Months Ended |
Sep. 30, 2021operating_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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Segment Reporting Information [Line Items] | |||||
Corporate and unallocated costs | $ (47,192) | $ (40,737) | $ (128,297) | $ (111,083) | |
Interest expense | (79) | (55) | (246) | (2,176) | |
Other income, net | 1,268 | 1,188 | 3,443 | 3,313 | |
Loss on early extinguishment of debt | 0 | 0 | (18,188) | 0 | |
Earnings before income taxes | 261,709 | 135,506 | 643,337 | 338,201 | |
Operating Segments [Member] | Financial Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 4,224 | 4,315 | 12,599 | 10,942 | |
Operating Segments [Member] | Homebuilding Segment | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 8,470 | 4,870 | 25,225 | 16,954 | |
Operating Income | 269,599 | 143,608 | 678,402 | 356,610 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 95,167 | 53,423 | 238,356 | 140,059 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 90,579 | 52,394 | 232,537 | 119,208 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Operating Income | 83,853 | 37,791 | 207,509 | 97,343 | |
Corporate and Unallocated [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Corporate and unallocated costs | [1] | (13,303) | (13,550) | (32,673) | (30,488) |
Segment Reconciling Items [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense | (79) | (55) | (246) | (2,176) | |
Other income, net | 1,268 | 1,188 | 3,443 | 3,313 | |
Homebuilding | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 1,259,905 | 1,138,091 | 3,621,285 | 3,072,183 | |
Homebuilding | Operating Segments [Member] | Homebuilding Segment | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 1,259,905 | 1,138,091 | 3,621,285 | 3,072,183 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 460,089 | 434,289 | 1,305,684 | 1,198,782 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 383,206 | 353,208 | 1,109,228 | 909,692 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | [2] | 416,610 | 350,594 | 1,206,373 | 963,709 |
Home closings | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 1,251,435 | $ 1,133,221 | $ 3,596,060 | $ 3,055,229 | |
[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, 2021 2020 2021 2020 Land closing revenue: West $ 8,470 $ — $ 21,426 $ 4,974 Central — 3,301 3,799 7,901 East — 1,569 — 4,079 Total $ 8,470 $ 4,870 $ 25,225 $ 16,954 |
OPERATING AND REPORTING SEGME_5
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information, Revenue (Details) - Operating Segments [Member] - Homebuilding Segment - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 8,470 | $ 4,870 | $ 25,225 | $ 16,954 |
Reportable Subsegments [Member] | West [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 8,470 | 0 | 21,426 | 4,974 |
Reportable Subsegments [Member] | Central [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 3,301 | 3,799 | 7,901 |
Reportable Subsegments [Member] | East [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 0 | $ 1,569 | $ 0 | $ 4,079 |
OPERATING AND REPORTING SEGME_6
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | ||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | $ 77,987 | $ 59,534 | ||
Real estate | 3,593,007 | 2,778,039 | ||
Investments in unconsolidated entities | 3,905 | 4,350 | ||
Other assets | 890,550 | 1,022,475 | ||
Total assets | 4,565,449 | 3,864,398 | ||
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 | 713 | 612 | ||
Total assets | 713 | 612 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | West [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 23,808 | 22,493 | ||
Real estate | 1,551,248 | 1,154,488 | ||
Investments in unconsolidated entities | 206 | 261 | ||
Other assets | 83,749 | [1] | 51,271 | [2] |
Total assets | 1,659,011 | 1,228,513 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | Central [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 12,129 | 11,154 | ||
Real estate | 1,015,779 | 814,919 | ||
Investments in unconsolidated entities | 2,988 | 3,090 | ||
Other assets | 165,693 | [3] | 122,933 | [4] |
Total assets | 1,196,589 | 952,096 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding Segment | East [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 42,050 | 25,887 | ||
Real estate | 1,025,980 | 808,632 | ||
Investments in unconsolidated entities | 0 | 0 | ||
Other assets | 85,669 | [5] | 81,601 | [6] |
Total assets | 1,153,699 | 916,120 | ||
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 | 711 | 999 | ||
Other assets | 554,726 | [7] | 766,058 | [8] |
Total assets | $ 555,437 | $ 767,057 | ||
[1] | Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and property and equipment | |||
[2] | Balance consists primarily of cash and cash equivalents and property and equipment | |||
[3] | Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaid expenses and other assets. | |||
[4] | Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets. | |||
[5] | Balance consists primarily of cash and cash equivalents, goodwill, prepaid expenses and other assets and property and equipment. | |||
[6] | Balance consists primarily of cash and cash equivalents, goodwill, prepaids and other assets and property and equipment. | |||
[7] | Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaid expenses and other assets. | |||
[8] | Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Standard product warranty accrual | $ 26,551 | $ 25,065 | $ 23,743 | $ 23,259 | $ 21,578 | $ 22,015 |