Meritage Homes Overview

Based on the number of homes sold in 2021, Meritage Homes is the seventh-largest public homebuilder in the United States. Meritage has a variety of homes designed with first-time and entry-level buyers in mind. In its 36-year history, the company has built more than 160,000 homes and earned a reputation for its distinctive design, high-quality construction, and award-winning customer service. The company has been building low-cost homes that save energy all over the country. People’s utility bills have decreased by as much as fifty percent in some of their homes, and they are Energy Star certified in every way. It has 19 offices spread out across the United States, with its headquarters in Scottsdale, Arizona.

William W. Cleverly and Steven J. Hilton, both graduates of Arizona State University, founded Monterey Homes in 1985 to construct semi-custom luxury homes in Scottsdale, a wealthy Phoenix suburb. After Dix Corporation, owned by Valley resident Von Dix, the company became only the second Arizona-based company with roots in the region. The following year, the company began operating as a custom builder in Phoenix and the surrounding metropolitan area, competing with approximately 75 other builders in the market. Malouf Bros., a rival, died after purchasing 72 lots at Scottsdale Country Club, where Arnold Palmer designed a golf course. The country club owner Alan Mishkin was so impressed with Cleverly and Hilton’s innovative designs that he not only sold them the lots but also became a major investor in the company, giving them their big break. The company built 113 homes in the gated community known as “7600 Lincoln” in 1993. The business had gradually expanded to include the construction of high-quality move-up homes by 1994. Through a reverse merger with Homeplex Mortgage Investments Corporation, a real estate investment trust, the two related privately owned Arizona homebuilding companies Monterey Homes Arizona II Inc. and Monterey Homes Construction II Inc., owned by Cleverly and Hilton, became a publicly traded company on the New York Stock Exchange on December 31, 1995.

For approximately $11 million, the company sold itself to Homeplex, which changed its name to Monterey Homes Corp. Hilton and Cleverly joined as co-CEOs, with Cleverly becoming chairman and Hilton becoming president. The company made its first acquisition in July, acquiring Legacy Homes Ltd., a privately held Dallas-based builder of entry-level and move-up homes with operations in Austin, Houston, and Dallas/Fort Worth, in a strategic effort to diversify its homebuilding operations. Legacy Enterprises Inc. was acquired in tandem with the acquisition. The merged company, which included Monterey Homes, Legacy Homes, and Sterling Homes, changed its name to Meritage Corporation in the middle of September. It continued to trade on the New York Stock Exchange under the ticker MTH. The company was looking to expand into new markets through start-ups and continued acquisitions, and it had a record year-end backlog as 1998 came to a close. Demand in the company’s existing markets in Arizona and Texas remained robust. And as the company entered the 21st century, it appeared to be strong. In Buckeye, Arizona, in 2011, the company introduced its first net-zero energy homes. The company paid nearly $130 million to acquire Legendary Communities, which owned and operated nearly 4,000 home sites, in July 2014. The company advertised its Sierra Crest development in Fontana, California, as the first net-zero energy community in the state in 2015. In Irvine, California, the company constructed its first zero-net-energy, all-electric townhome community in April 2019. The Wall Street Journal reported in December that big home builders like Meritage were making more affordable entry-level homes for millennials.

As of the time of writing, the Meritage Homes leader group is 27% female and 73% male. 67% of the supervisory crew is White, 14% of the board is Hispanic or Latino, and 11% of the supervisory group is black or African American. The executives include:

• The company has had Steven J. Hilton as its chairman. He previously held the position of company co-chairman from 1996 to 2006. In 1985, he helped found Monterey Homes, which later merged with its predecessor in 1996.
• Since 2021, Phillippe Lord has been the company’s Chief Executive Officer and a Director. From 2015 to 2020, he held the positions of Executive Vice President and Chief Operating Officer.
• Since 2016, Hilla Sferruzz has been the company’s Chief Financial Officer and Executive Vice President.She previously held the positions of Executive Vice President and Chief Financial Officer.
• Since 2021, the company has had Clint Szubinski as its Executive Vice President and Chief Operating Officer. He was previously the company’s south region President from 2018 to 2020.
• Since 2015, Javier Feliciano has served as the company’s Chief People Officer and Executive Vice President. Prior to this, from 2010 to 2013, he held the positions of Director of Human Resources and Vice President of Human Resources for Apollo Education Group.

Meritage Homes is the industry leader in energy efficiency, comfort, and healthy living when it comes to building homes. They have been named an Energy Star Partner for Sustained Excellence six years in a row, and each home they build is Energy Star Certified. Their use of spray foam insulation is largely responsible for this high level of energy efficiency. This method makes homes airtight and prevents pollutants, allergens, hot and cold air, and allergens from entering the house. This improves comfort, health, and customer experience. For entry-level buyers, MTH employs a strategy of being a 100% spec builder. Because it enables the builders to lock in building contracts in advance while hedging against any sudden rise in prices, this business model safeguards the company from an environment of rising costs.

The CEO of MTH has emphasized the significance of affordable housing and his goal of lowering ASP to increase product competitiveness and appeal. By targeting entry-level buyers with its LiVE.NOW product, MTH increased its active community product mix to 75%, significantly more than in previous years. Since these products are built to specific specifications, more of them will be available, resulting in faster deliveries and inventory turnover rates that will improve performance. Additionally, the company gains a significant competitive advantage as a result of its strategic shift to a pure entry-level player in order to absorb the increased demand from the millennial market.  MTH’s valuation multiples trade below its 5-year averages and at the lower end of the homebuilding sector’s averages, despite the company’s high-quality business model and strong growth prospects. This strongly suggests that the business is well-positioned to beat the market in the near future.

• In 2021, Meritage Homes generated $5,147,326 million in total revenue.
• In 2021, Meritage Homes generated an operating income of $968,476 million.
• $737,444 million was generated in 2021 as its net income.
• Meritage Homes employs 1570 people, and the company earns $1,988,152 per employee.

With consecutive profits over the past five years and profit reserves that can be used to finance future capital expenditures, Meritage Homes enjoys a solid financial position. Additionally, it has been able to successfully generate positive returns on the capital expenditures it has made in the past for various projects. Meritage Homes is a brand that has been on the lookout for a really long time, and individuals know about it. Because of this, its brand is well known. Customers still value its products because they are still of high quality and represent good value for the money they pay for them.