COVER PAGE
COVER PAGE - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 08, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 1-9977 | ||
Entity Registrant Name | Meritage Homes Corporation | ||
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 | ||
Title of 12(b) Security | Common Stock $.01 par value | ||
Trading Symbol | MTH | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.7 | ||
Entity Common Stock, Shares Outstanding | 36,571,393 | ||
Documents Incorporated by Reference | Portions from the registrant’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders have been incorporated by reference into Part III, Items 10, 11, 12, 13 and 14. | ||
Entity Central Index Key | 0000833079 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | DELOITTE & TOUCHE LLP |
Auditor Location | Tempe, Arizona |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 861,561 | $ 618,335 |
Other receivables | 215,019 | 147,548 |
Real estate | 4,358,263 | 3,734,408 |
Real estate not owned | 0 | 8,011 |
Deposits on real estate under option or contract | 76,729 | 90,679 |
Investments in unconsolidated entities | 11,753 | 5,764 |
Property and equipment, net | 38,635 | 37,340 |
Deferred tax assets, net | 45,452 | 40,672 |
Prepaids, other assets and goodwill | 164,689 | 124,776 |
Total assets | 5,772,101 | 4,807,533 |
Liabilities | ||
Accounts payable | 273,267 | 216,009 |
Accrued liabilities | 360,615 | 337,277 |
Home sale deposits | 37,961 | 42,610 |
Liabilities related to real estate not owned | 0 | 7,210 |
Loans payable and other borrowings | 7,057 | 17,552 |
Senior notes, net | 1,143,590 | 1,142,486 |
Total liabilities | 1,822,490 | 1,763,144 |
Stockholders’ Equity | ||
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at December 31, 2022 and 2021 | 0 | 0 |
Common stock, par value $0.01. Authorized 125,000,000 shares; 36,571,393 and 37,340,855 shares issued and outstanding at December 31, 2022 and 2021, respectively | 366 | 373 |
Additional paid-in capital | 327,878 | 414,841 |
Retained earnings | 3,621,367 | 2,629,175 |
Total stockholders’ equity | 3,949,611 | 3,044,389 |
Total liabilities and stockholders’ equity | $ 5,772,101 | $ 4,807,533 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
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) | 36,571,393 | 37,340,855 |
Common stock, shares outstanding (in shares) | 36,571,393 | 37,340,855 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commissions and other sales costs | $ (323,266) | $ (285,403) | $ (287,901) |
General and administrative expenses | (192,984) | (181,449) | (159,020) |
Interest expense | (41) | (318) | (2,177) |
Other income, net | 2,714 | 4,864 | 6,662 |
Loss on early extinguishment of debt | 0 | (18,188) | 0 |
Earnings before income taxes | 1,289,318 | 954,834 | 533,566 |
Provision for income taxes | (297,126) | (217,390) | (110,091) |
Net earnings | $ 992,192 | $ 737,444 | $ 423,475 |
Earnings per common share: | |||
Basic (in dollars per share) | $ 27.04 | $ 19.61 | $ 11.23 |
Diluted (in dollars per share) | $ 26.74 | $ 19.29 | $ 11 |
Weighted average number of shares: | |||
Basic (in shares) | 36,694 | 37,610 | 37,718 |
Diluted (in shares) | 37,101 | 38,233 | 38,484 |
Homebuilding | |||
Revenue | $ 6,268,727 | $ 5,120,110 | $ 4,482,120 |
Cost of goods and services sold | (4,484,126) | (3,702,816) | (3,522,506) |
Total closing gross profit | 1,784,601 | 1,417,294 | 959,614 |
Home closings | |||
Revenue | 6,207,498 | 5,094,873 | 4,464,389 |
Cost of goods and services sold | (4,434,480) | (3,676,496) | (3,483,981) |
Total closing gross profit | 1,773,018 | 1,418,377 | 980,408 |
Land | |||
Revenue | 61,229 | 25,237 | 17,731 |
Cost of goods and services sold | (49,646) | (26,320) | (38,525) |
Total closing gross profit | 11,583 | (1,083) | (20,794) |
Financial Service | |||
Revenue | 23,476 | 21,207 | 19,097 |
Cost of revenue | (11,133) | (9,182) | (7,797) |
Total closing gross profit | 18,294 | 18,034 | 16,388 |
Earnings from financial services unconsolidated entities and other, net | $ 5,951 | $ 6,009 | $ 5,088 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2019 | 38,199,000 | |||
Beginning balance at Dec. 31, 2019 | $ 1,973,990 | $ 382 | $ 505,352 | $ 1,468,256 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 423,475 | 423,475 | ||
Issuance of stock (in shares) | 413,000 | |||
Issuance of stock | 0 | $ 4 | (4) | |
Equity award compensation expense | 19,995 | 19,995 | ||
Share repurchases (in shares) | (1,100,000) | |||
Share repurchases | (69,592) | $ (11) | (69,581) | |
Ending balance (in shares) at Dec. 31, 2020 | 37,512,000 | |||
Ending balance at Dec. 31, 2020 | 2,347,868 | $ 375 | 455,762 | 1,891,731 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 737,444 | 737,444 | ||
Issuance of stock (in shares) | 468,000 | |||
Issuance of stock | 0 | $ 4 | (4) | |
Equity award compensation expense | 20,069 | 20,069 | ||
Share repurchases (in shares) | (639,000) | |||
Share repurchases | $ (60,992) | $ (6) | (60,986) | |
Ending balance (in shares) at Dec. 31, 2021 | 37,340,855 | 37,341,000 | ||
Ending balance at Dec. 31, 2021 | $ 3,044,389 | $ 373 | 414,841 | 2,629,175 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net earnings | 992,192 | 992,192 | ||
Issuance of stock (in shares) | 396,000 | |||
Issuance of stock | 0 | $ 4 | (4) | |
Equity award compensation expense | 22,333 | 22,333 | ||
Share repurchases (in shares) | (1,166,000) | |||
Share repurchases | $ (109,303) | $ (11) | (109,292) | |
Ending balance (in shares) at Dec. 31, 2022 | 36,571,393 | 36,571,000 | ||
Ending balance at Dec. 31, 2022 | $ 3,949,611 | $ 366 | $ 327,878 | $ 3,621,367 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net earnings | $ 992,192 | $ 737,444 | $ 423,475 |
Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities: | |||
Depreciation and amortization | 24,748 | 26,245 | 31,052 |
Stock-based compensation | 22,333 | 20,069 | 19,995 |
Loss on early extinguishment of debt | 0 | 18,188 | 0 |
Equity in earnings from unconsolidated entities | (6,093) | (4,657) | (4,496) |
Distributions of earnings from unconsolidated entities | 5,900 | 4,951 | 3,594 |
Other | 10,863 | (2,911) | 14,406 |
Changes in assets and liabilities: | |||
Increase in real estate | (624,522) | (948,055) | (40,089) |
Decrease/(increase) in deposits on real estate under option or contract | 10,463 | (31,946) | (9,477) |
(Increase)/decrease in receivables, prepaids and other assets | (102,950) | (65,114) | 2,130 |
Increase in accounts payable and accrued liabilities | 76,985 | 76,158 | 88,942 |
(Decrease)/increase in home sale deposits | (4,649) | 17,536 | 828 |
Net cash provided by/(used in) operating activities | 405,270 | (152,092) | 530,360 |
Cash flows from investing activities: | |||
Investments in unconsolidated entities | (5,796) | (1,708) | (5) |
Distributions of capital from unconsolidated entities | 0 | 0 | 1,000 |
Purchases of property and equipment | (26,971) | (25,664) | (19,932) |
Proceeds from sales of property and equipment | 481 | 551 | 703 |
Maturities/sales of investments and securities | 1,032 | 2,795 | 2,489 |
Payments to purchase investments and securities | (1,032) | (2,795) | (2,489) |
Net cash used in investing activities | (32,286) | (26,821) | (18,234) |
Cash flows from financing activities: | |||
Repayment of loans payable and other borrowings | (20,455) | (13,589) | (16,379) |
Repayment of senior notes | 0 | (317,690) | 0 |
Proceeds from issuance of senior notes | 0 | 450,000 | 0 |
Payment of debt issuance costs | 0 | (6,102) | 0 |
Repurchase of shares | (109,303) | (60,992) | (69,592) |
Net cash (used in)/provided by financing activities | (129,758) | 51,627 | (85,971) |
Net increase/(decrease) in cash and cash equivalents | 243,226 | (127,286) | 426,155 |
Cash and cash equivalents, beginning of year | 618,335 | 745,621 | 319,466 |
Cash and cash equivalents, end of year | $ 861,561 | $ 618,335 | $ 745,621 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization. Meritage Homes Corporation ("Meritage Homes") is a leading designer and builder of single-family attached and detached homes. We primarily build in historically high-growth regions of the United States and offer a variety of entry-level and first move-up homes. We have homebuilding operations in three regions: West, Central and East, which are comprised of ten states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Utah. These three regions are our principal homebuilding reporting segments. 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 (“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 provides mortgage services to our homebuyers through an unconsolidated joint venture. We commenced our homebuilding operations in 1985 through our predecessor company, 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. 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 December 31, 2022, we were actively selling homes in 271 communities, with base prices ranging from approximately $250,000 to $1,400,000. Basis of Presentation . The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and 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. 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 $161.5 million and $95.4 million are included in Cash and cash equivalents at December 31, 2022 and 2021, respectively. Real Estate. Real estate inventory 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 and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, 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. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings. We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in cost of closings when the related inventory is closed. Included within our real estate inventory is land held for development and land held for sale. 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 these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. 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 delays, labor or material shortages, absorptions that differ from our expectations, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues, including weather, 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. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and 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. The impairment of a community is allocated to each remaining lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined. 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. See Note 2 for additional information related to real estate and impairments. 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 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 expensed to Cost of home closings 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 non-refundable deposits and any ancillary capitalized costs. Our Deposits on real estate under option or contract were $76.7 million and $90.7 million as of December 31, 2022 and December 31, 2021, 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 first 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 10 for additional information on our goodwill assets. Property and Equipment, net. Property and equipment, net consists of computer and office equipment, model home furnishings and capitalized sales office costs. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the assets, which range from three At December 31, 2022 2021 Computer and office equipment $ 66,027 $ 62,806 Model home furnishings and capitalized sales office costs 57,229 61,112 Gross property and equipment 123,256 123,918 Accumulated depreciation (84,621) (86,578) Total $ 38,635 $ 37,340 Deferred Costs. At December 31, 2022 and 2021, deferred costs representing debt issuance costs related to our revolving credit facility of approximately $3.8 million and $3.6 million, net of accumulated amortization, are recorded on our consolidated balance sheets within Prepaids, other assets and goodwill. The costs are primarily amortized to interest expense using the straight line method which approximates the effective interest method. See Note 7 for additional information related to net debt issuance costs associated with our senior notes. Investments in Unconsolidated Entities . We use the equity method of accounting for investments in unconsolidated entities over which we exercise significant influence but do not have a controlling interest. Under the equity method, our share of the unconsolidated entities’ pre-tax earnings or loss is included in Other (expense)/income net, or Earnings from financial services unconsolidated entities and other, net, in our consolidated income statements. We use the cost method of accounting for investments in unconsolidated entities over which we do not have significant influence, if any. We track cumulative earnings and distributions from each of our ventures. For cash flow classification, to the extent distributions do not exceed cumulative earnings, we designate such distributions as return on capital. Distributions in excess of cumulative earnings are treated as return of capital. We evaluate our investments in unconsolidated entities for impairment when events that trigger an evaluation of recoverability present themselves. See Note 5 for additional information related to investments in unconsolidated entities. Accrued Liabilities . Accrued liabilities at December 31, 2022 and 2021 consisted of the following (in thousands): At December 31, 2022 2021 Accruals related to real estate development and construction activities $ 139,447 $ 115,214 Payroll and other benefits 110,338 102,773 Accrued interest 7,026 5,556 Accrued taxes 25,182 37,297 Warranty reserves 35,575 26,264 Lease liabilities (1) 22,782 26,171 Other accruals 20,265 24,002 Total $ 360,615 $ 337,277 (1) Refer to Note 4 for additional information related to our leases. 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 obligation. The performance obligation 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 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 sale contract assets consist of cash from home closings that are in transit from title companies, which are considered cash in transit and are classified as cash on our accompanying consolidated balance sheets. See "Cash and Cash Equivalents" in this Note 1 for further information. Contract liabilities include home sale deposit liabilities related to sold but unclosed homes, and are classified as Home sale deposits in our accompanying consolidated balance sheets. Substantially all of our home sales are scheduled to close and be recorded as revenue within one year from the date of receiving a customer deposit. Revenue expected to be recognized in any future year related to remaining performance obligations (if any) and contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, are 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 December 31, 2022 and 2021. Our three sources of revenue are disaggregated by type in the accompanying consolidated income statements. Cost of Home Closings . Cost of home closings includes direct home construction costs, closing costs, land acquisition and development costs, development period interest and common costs, and impairments, if any. Direct construction costs are accumulated during the period of construction and charged to Cost of home closings under specific identification methods, as are closing costs. Land development, acquisition and common costs are allocated to each lot based on the number of lots remaining to close. Estimates of costs incurred or to be incurred but not paid are accrued and expensed at the time of closing. Income Taxes. We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of both temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. We record deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available objectively verifiable positive and negative evidence, including scheduled reversals of deferred tax liabilities, whether we are in a cumulative loss position, projected future taxable income, tax planning strategies and recent financial operations. If we determine that we will not be able to realize our deferred tax assets in the future, we will record a valuation allowance, which increases the provision for income taxes. We recognize interest and penalties related to unrecognized tax benefits within Provision for income taxes in the accompanying consolidated income statements. Accrued interest and penalties are included within Accrued liabilities in the accompanying consolidated balance sheets. See Note 12 for additional information related to income taxes. Advertising Costs. We expense advertising costs as they are incurred. Advertising expense was approximately $12.1 million, $8.2 million and $10.5 million in fiscal 2022, 2021 and 2020, respectively. Earnings Per Share. We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In periods of net losses, no dilution is computed. See Note 9 for additional information related to earnings per share. Stock-Based Compensation . We account for stock-based compensation in accordance with ASC 718-10, Compensation—Stock Compensation ("ASC 718"). As allowed by ASC 718, we have elected to estimate forfeitures in calculating the expense related to stock-based compensation. Awards with either a graded or cliff vesting are expensed on a straight-line basis over the life of the award. See Note 11 for additional information on stock-based compensation. 401(k) Retirement Plan. We have a 401(k) plan for all full-time Meritage employees. We match portions of employees’ voluntary contributions, and contributed to the plan approximately $6.0 million, $5.3 million and $4.7 million for the years ended 2022, 2021 and 2020, respectively. Off-Balance Sheet Arrangements - Joint Ventures . We may participate in land development 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, although our participation in such ventures is currently limited. See Note 5 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 purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and may have staggered purchase schedules. See Note 3 for additional information on these off-balance sheet arrangements. Surety Bonds and Letters of Credit. We provide surety bonds and 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): At December 31, 2022 2021 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract 926,928 616,028 620,297 352,152 Total Sureties $ 926,928 $ 616,028 $ 620,297 $ 352,152 Letters of Credit (“LOCs”): LOCs for land development 49,442 N/A 57,396 N/A LOCs for general corporate operations 5,000 N/A 5,000 N/A Total LOCs $ 54,442 N/A $ 62,396 N/A 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 these reserves for the structural warranty based on the number of homes still under warranty and 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 recorded an adjustment to our reserve balance of $10.9 million in the twelve months ended December 31, 2022, primarily related to specific case reserves, as discussed in Note 16. No adjustment was recorded to the warranty reserve balance during the twelve months ended December 31, 2021. A summary of changes in our warranty reserves follows (in thousands): Years Ended December 31, 2022 2021 Balance, beginning of year $ 26,264 $ 23,743 Additions to reserve from new home deliveries 22,198 17,883 Warranty claims (23,803) (1) (15,362) Adjustments to pre-existing reserves 10,916 — Balance, end of year $ 35,575 $ 26,264 (1) Net of recoveries in 2022 for costs incurred over several prior years on a foundation design and performance matter that affected a single community in Texas. Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying 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, unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates. Recent Accounting Pronouncements. There are no recent accounting pronouncements that are expected to have a material impact on our financial statements or financial statement disclosures. |
REAL ESTATE AND CAPITALIZED INT
REAL ESTATE AND CAPITALIZED INTEREST | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
REAL ESTATE AND CAPITALIZED INTEREST | REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands): At December 31, 2022 2021 Homes under contract under construction (1) $ 822,428 $ 1,039,822 Unsold homes, completed and under construction (1) 1,155,543 484,999 Model homes (1) 97,198 81,049 Finished home sites and home sites under development (2) (3) 2,283,094 2,128,538 $ 4,358,263 $ 3,734,408 (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. 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 $66.8 million and $62.1 million as of December 31, 2022 and 2021, respectively. As previously noted, in accordance with ASC 360-10, each of our land inventory and related real estate assets is reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. ASC 360-10 requires impairment charges to be recorded if the asset is not deemed recoverable and the fair value of such assets is less than their carrying amounts. Our determination of fair value is based on projections and estimates. In communities where impairment indicators are present, we may also evaluate alternative product offerings or other strategies for the land, such as pausing development, selling, or holding the land for sale. We recorded impairment charges of approximately $0.2 million, $2.1 million and $24.9 million for the years ended December 31, 2022, 2021 and 2020, respectively, primarily as a result of dispositions of certain assets that no longer fit our strategy of entry-level and first move-up communities. 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): Years Ended December 31, 2022 2021 2020 Capitalized interest, beginning of year $ 56,253 $ 58,940 $ 82,014 Interest incurred 60,599 62,836 66,289 Interest expensed (41) (318) (2,177) Interest amortized to cost of home and land closings (56,642) (65,205) (87,186) Capitalized interest, end of year (1) $ 60,169 $ 56,253 $ 58,940 (1) Approximately $208,000, $208,000 and $217,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2022, 2021 and 2020, respectively. |
VARIABLE INTEREST ENTITIES AND
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | 12 Months Ended |
Dec. 31, 2022 | |
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. Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into an option or purchase agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all option and purchase agreements and amendments for land to determine whether they are a VIE. ASC 810, Consolidation , requires that for each VIE, we assess whether we are the primary beneficiary. 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 its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. The liabilities related to consolidated VIEs are generally excluded from our debt covenant calculations. In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis by determining if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. In substantially all cases, creditors of the entities with which we have option agreements have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have typically contracted to complete development at a fixed cost on behalf of the land owner and any budget savings or shortfalls are borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. The table below presents a summary of our lots under option that are not recorded on the balance sheet at December 31, 2022 (dollars in thousands): Projected Number Purchase Option/ Purchase and option contracts recorded on balance sheet as Real estate not owned — $ — $ — Option contracts — non-refundable deposits, committed (1) 9,188 528,836 53,550 Purchase contracts — non-refundable deposits, committed (1) 6,016 174,209 12,444 Purchase and option contracts —refundable deposits, committed 1,661 35,429 1,050 Total committed 16,865 738,474 67,044 Purchase and option contracts — refundable deposits, uncommitted (2) 19,474 675,347 9,685 Total lots under contract or option 36,339 $ 1,413,821 $ 76,729 Total purchase and option contracts not recorded on balance sheet (3) 36,339 $ 1,413,821 $ 76,729 (4) (1) Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. (2) Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3) Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected in our consolidated balance sheets in the line item “Deposits on real estate under option or contract” as of December 31, 2022. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
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 ("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. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Some of our leases contain renewal options and in accordance with ASC 842, our lease terms include those renewals only to the extent that they are reasonably certain to be exercised. The exercise of these lease renewal options is generally at our discretion. In accordance with ASC 842, the lease liability is equal to the present value of the remaining lease payments while the right of use ("ROU") asset is based on the lease liability, subject to adjustment, such as for lease incentives. Our leases do not provide a readily determinable implicit interest rate and therefore, we must estimate our incremental borrowing rate. In determining our incremental borrowing rate, we consider the lease period, market interest rates, current interest rates on our senior notes and the effects of collateralization. Our lease population at December 31, 2022 is comprised of operating leases where we are the lessee and these leases are primarily for office space for our corporate and division offices, in addition to leases of certain equipment. As allowed by ASC 842, we do not record leases with lease terms of twelve months or less on the consolidated balance sheets. Lease cost included in our consolidated income statements in General and administrative expenses and Commissions and other sales costs is in the table below (in thousands). Our short-term lease costs and sublease income are de minimis. Years Ended December 31, 2022 2021 Operating lease expense $ 7,819 $ 7,613 Non-cash lease expense $ 5,802 $ 6,342 Cash payments on lease liabilities $ 9,162 $ 9,065 ROU assets obtained in exchange for new operating lease obligations $ 4,878 $ 5,756 ROU assets are classified within Prepaids, other assets and goodwill Accrued liabilities At December 31, 2022 2021 ROU assets $ 19,129 $ 21,038 Lease liabilities $ 22,782 $ 26,171 Weighted-average remaining lease term 4.5 years 4.1 years Weighted-average discount rate (incremental borrowing rate) 4.44 % 4.76 % Maturities of our operating lease liabilities as of December 31, 2022 are as follows (in thousands): Year ended December 31, 2023 $ 8,129 2024 5,500 2025 4,223 2026 2,844 2027 1,471 Thereafter 2,940 Total payments 25,107 Less: imputed interest (2,325) Present value of lease liabilities $ 22,782 |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 12 Months Ended |
Dec. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | INVESTMENTS IN UNCONSOLIDATED ENTITIES We 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. 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 generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with, or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of these joint ventures, they may or may not be consolidated into our results. As of December 31, 2022, we had two active equity-method land joint ventures 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): At December 31, 2022 2021 Assets: Cash $ 3,389 $ 7,983 Real estate 17,965 7,989 Other assets 11,653 3,903 Total assets $ 33,007 $ 19,875 Liabilities and equity: Accounts payable and other liabilities $ 11,397 $ 7,899 Equity of: Meritage (1) 10,356 4,752 Other 11,254 7,224 Total liabilities and equity $ 33,007 $ 19,875 Years Ended December 31, 2022 2021 2020 Revenue $ 46,264 $ 41,929 $ 39,823 Costs and expenses (36,565) (34,693) (31,918) Net earnings of unconsolidated entities $ 9,699 $ 7,236 $ 7,905 Meritage’s share of pre-tax earnings (1) (2) $ 6,140 $ 4,667 $ 4,559 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our 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/(loss) from our mortgage joint venture is recorded in Earnings from financial services unconsolidated entities and other, net on the accompanying consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other (expense)/income, net, on the accompanying 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. Our total investment in all of these joint ventures is $11.8 million as of December 31, 2022. We believe these ventures are in compliance with their respective debt agreements, if applicable, and such debt is non-recourse to us. |
LOANS PAYABLE AND OTHER BORROWI
LOANS PAYABLE AND OTHER BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE AND OTHER BORROWINGS | LOANS PAYABLE AND OTHER BORROWINGS Loans payable and other borrowings consist of the following (in thousands): At December 31, 2022 2021 Other borrowings, secured real estate note payable (1) $ 7,057 $ 17,552 $780.0 million unsecured revolving credit facility — — Total $ 7,057 $ 17,552 (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 agreement ("Credit Facility") in 2014 that has been amended from time to time. In December 2021, the Credit Facility was amended to extend the maturity date to December 22, 2026 and replace LIBOR as the benchmark interest rate with the Secured Overnight Financing Rate ("SOFR") as described below. 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 bear interest at the Company's option, at either (1) term SOFR (based on 1, 3, or 6 month interest periods, as selected by the Company) plus a 10 basis point adjustment plus an applicable margin (ranging from 125 basis points to 175 basis points (the "applicable margin")) based on the Company's leverage ratio as determined in accordance with a pricing grid, (2) the higher of (i) the prime lending rate ("Prime"), (ii) an overnight bank rate plus 50 basis points and (iii) term SOFR (based on a 1 month interest period) plus a 10 basis point adjustment plus 1%, in each case plus a margin ranging from 25 basis points to 75 basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a 10 basis point adjustment plus the applicable margin. At December 31, 2022, the interest rate on outstanding borrowings under the Credit Facility would have been 5.71% per annum, calculated in accordance with option (1) discussed previously and using the 1 month term SOFR. We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate equal to the applicable margin then in effect. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $1.9 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 December 31, 2022. We had no outstanding borrowings under the Credit Facility as of December 31, 2022 and December 31, 2021. During the twelve months ended December 31, 2022, we had $40.0 million gross borrowings and repayments. During the twelve months ended December 31, 2021 we had no borrowings and repayments, and during the twelve months ended December 31, 2020 we had $500.0 million of gross borrowings and repayments. As of December 31, 2022 we had outstanding letters of credit issued under the Credit Facility totaling $54.4 million, leaving $725.6 million available under the Credit Facility to be drawn. |
SENIOR NOTES, NET
SENIOR NOTES, NET | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
SENIOR NOTES, NET | SENIOR NOTES, NET Senior notes, net consist of the following (in thousands): At December 31, 2022 2021 6.00% senior notes due 2025. At December 31, 2022 and 2021 there was approximately $1,977 and $2,795 in net unamortized premium, respectively. (1) 401,977 402,795 5.125% senior notes due 2027 300,000 300,000 3.875% senior notes due 2029 450,000 450,000 Net debt issuance costs (8,387) (10,309) Total $ 1,143,590 $ 1,142,486 (1) $200.0 million of the total $400.0 million of 6.00% Senior Notes due 2025 outstanding at December 31, 2022 was issued at par and had no unamortized premium. 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 December 31, 2022. 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 2012, we completed an offering of $300.0 million aggregate principal amount of 7.00% Senior Notes due 2022 (the "2022 Notes"). In April 2021, we completed an offering of $450.0 million aggregate principal amount of 3.875% Senior Notes due 2029 (the "2029 Notes"). We used a portion of the net proceeds from this offering to redeem all $300.0 million aggregate principal outstanding of the 2022 Notes, incurring $18.2 million in early debt extinguishment during the year ended December 31, 2021, reflected as Loss on early extinguishment of debt in the accompanying consolidated income statements. In June 2015, we completed an offering of $200.0 million aggregate principal amount of 6.00% Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes were issued at par, and the proceeds were used for general corporate obligations and future land spend. In March 2018, the Company completed an offering of $200.0 million aggregate principal amount of additional 2025 Notes (the "Additional Notes"). The Additional Notes were issued as an add-on to the existing 2025 Notes that were issued in June 2015 which resulted in a combined $400.0 million aggregate principal amount of 6.00% Senior Notes due 2025 outstanding as of December 31, 2022. The Additional Notes were issued at a premium of 103% of the principal amount. In June 2017, we completed an offering of $300.0 million aggregate principal amount of 5.125% Senior Notes due 2027 (the "2027 Notes"). The 2027 notes were issued at par. Using the proceeds from the 2027 Notes offering, we retired all $126.5 million of our then outstanding convertible senior notes through a repurchase of $51.9 million in privately negotiated transactions and a redemption of the remaining $74.6 million through a combination of holder redemptions and an exercise of our call option at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest. Scheduled principal maturities of our senior notes as of December 31, 2022 follow (in thousands): Year Ended December 31, 2023 — 2024 — 2025 400,000 2026 — 2027 300,000 Thereafter 450,000 Total $ 1,150,000 |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended |
Dec. 31, 2022 | |
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): At December 31, 2022 2021 Aggregate Estimated Fair Aggregate Estimated Fair 6.00% senior notes $ 400,000 $ 397,520 $ 400,000 $ 446,520 5.125% senior notes $ 300,000 $ 283,500 $ 300,000 $ 329,640 3.875% senior notes $ 450,000 $ 380,610 $ 450,000 $ 472,500 Due to the short-term nature of other financial assets and liabilities including our Loans payable and other borrowings, we consider the carrying amounts of our other short-term financial instruments to approximate fair value. Non-Financial Instruments : Our Real estate assets are Level 3 instruments that are required to be recorded at fair value on non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable. Refer to Notes 1 and 2 for information regarding the valuation of these assets. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
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): Years Ended December 31, 2022 2021 2020 Basic weighted average number of shares outstanding 36,694 37,610 37,718 Effect of dilutive securities: Unvested restricted stock 407 623 766 Diluted average shares outstanding 37,101 38,233 38,484 Net earnings $ 992,192 $ 737,444 $ 423,475 Basic earnings per share $ 27.04 $ 19.61 $ 11.23 Diluted earnings per share $ 26.74 $ 19.29 $ 11.00 |
ACQUISITIONS AND GOODWILL
ACQUISITIONS AND GOODWILL | 12 Months Ended |
Dec. 31, 2022 | |
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 purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combination s 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 in our 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 January 1, 2021 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at December 31, 2021 — — 32,962 — — 32,962 Additions — — — — — — Balance at December 31, 2022 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCK BASED AND DEFERRED COMPEN
STOCK BASED AND DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
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 731,405 shares remain available for grant at December 31, 2022. 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 restricted 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. Summary of Nonvested (Restricted) Shares and Units Activity: We grant time-based and performance-based restricted shares or units. Performance-based restricted shares and units are only granted to executive officers. All performance share awards only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors. The number of shares that may be issued to the award recipients may be greater or lesser than the target award amount depending on actual performance achieved as compared to the performance targets set forth in the awards. Nonvested Weighted Nonvested Weighted Outstanding at January 1, 2020 834,620 $ 41.25 405,909 $ 40.20 Granted (1) 225,593 72.51 80,193 61.06 Vested (Earned/Released) (1) (234,842) 38.80 (178,174) 34.10 Forfeited (2) (34,754) 46.31 — — Outstanding as of December 31, 2020 790,617 50.67 307,928 49.16 Granted (3) 226,936 85.19 86,384 65.91 Vested (Earned/Released) (3) (264,513) 46.09 (203,561) 44.92 Forfeited (2) (60,511) 60.96 — — Outstanding at December 31, 2021 692,529 62.94 190,751 61.68 Granted (4) 278,340 94.12 80,472 59.67 Vested (Earned/Released) (4) (270,022) 49.42 (126,556) 43.28 Forfeited (2) (41,745) 80.71 — — Outstanding at December 31, 2022 659,102 $ 80.52 144,667 $ 71.33 (1) Performance-based shares granted and earned/released for the year ended December 31, 2020 includes 24,054 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2017. These shares vested in February 2020. (2) Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are the result of failing to attain certain goals as outlined in our executive officers' compensation agreements. (3) Performance-based shares granted and earned/released for the year ended December 31, 2021 includes 37,425 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2018. These shares vested in March 2021. Performance-based shares granted for the year ended December 31, 2021 also includes 1,670 shares and 696 shares that were issued to our former General Counsel, who retired on December 15, 2021, as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the years ended December 31, 2019 and 2018, respectively. These shares vested in December 2021 in accordance with his employment agreement. (4) Performance-based shares granted and earned/released for the year ended December 31, 2022 includes 37,146 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2019. These shares vested in March 2022. 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 expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (in thousands): Years Ended December 31, 2022 2021 2020 Stock-based compensation expense $ 22,333 $ 20,069 $ 19,995 The following table includes additional information regarding our stock compensation plan (dollars in thousands): At December 31, 2022 2021 Unrecognized stock-based compensation cost $ 29,187 $ 25,007 Weighted average years expense recognition period 1.98 1.97 Total equity awards outstanding (1) 803,769 883,280 (1) Includes unvested restricted stock awards, restricted stock units and performance-based awards (assuming 100%/target payout). 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 years ended December 31, 2022, 2021 and 2020, other than minor administrative costs. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Components of the income tax provision are as follows (in thousands): Years Ended December 31, 2022 2021 2020 Current taxes: Federal $ 246,077 $ 180,469 $ 99,174 State 54,576 39,930 21,012 300,653 220,399 120,186 Deferred taxes: Federal (4,573) (4,033) (9,725) State 1,046 1,024 (370) (3,527) (3,009) (10,095) Total $ 297,126 $ 217,390 $ 110,091 Income taxes for the years ended December 31, 2022, 2021 and 2020, differ from the expected amounts computed using the federal statutory income tax rate of 21% as a result of the following (in thousands): Years Ended December 31, 2022 2021 2020 Expected taxes at current federal statutory income tax rate $ 270,757 $ 200,515 $ 112,049 State income taxes, net of federal tax benefit 43,941 31,967 16,307 Federal tax credits (19,676) (20,872) (16,523) Non-deductible costs and other 2,104 5,780 (1,742) Income tax expense $ 297,126 $ 217,390 $ 110,091 The effective tax rate was 23.0%, 22.8%, and 20.6% for 2022, 2021 and 2020, respectively. The rate in all three years reflect a benefit from Internal Revenue Code ("IRC") §45L energy efficient homes credits. Deferred tax assets and liabilities are netted on our balance sheet by tax jurisdiction. Net overall deferred tax assets for all jurisdictions are grouped and included as a separate asset. Net overall deferred tax liabilities for all jurisdictions are grouped and included in Accrued liabilities. At December 31, 2022, we have a net deferred tax asset of $45.5 million. We also have net deferred tax liabilities of $7.4 million. Deferred tax assets and liabilities are comprised of timing differences (in thousands) as follows: At December 31, 2022 2021 Deferred tax assets: Real estate $ 24,199 $ 25,960 Warranty reserve 8,489 6,273 Wages payable 8,240 5,834 Equity-based compensation 6,597 5,465 Accrued expenses 114 199 Other 8,650 7,836 Total deferred tax assets 56,289 51,567 Deferred tax liabilities: Goodwill 2,473 1,611 Prepaids 1,282 2,498 Fixed assets 7,082 6,786 Total deferred tax liabilities 10,837 10,895 Deferred tax assets, net 45,452 40,672 Other deferred tax liabilities - state franchise taxes 7,351 6,099 Net deferred tax assets and liabilities $ 38,101 $ 34,573 At December 31, 2022 and December 31, 2021, we have no unrecognized tax benefits. We believe 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 the provision for income taxes. We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes ("ASC 740" ) . 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 and no NOL carryovers at December 31, 2022. The Taxpayer Certainty and Disaster Relief Act of 2020 extended IRC §45L energy efficient homes credit (the "energy tax credit") through the end of 2021. On August 16, 2022, the Inflation Reduction Act of 2022 ("the IRA") retroactively extended the energy tax credit to homes delivered from January 1, 2022 through December 31, 2032. Under ASC 740, the effects of the new legislation are recognized in the period that includes the date of enactment, regardless of the retroactive benefit. In accordance with this guidance, we recorded a tax benefit of $18.9 million during the year ended December 31, 2022, based on our estimate for qualifying new energy efficient homes that we closed in the year. The estimated tax effected benefit is reflected in our effective tax rate reconciliation as the benefit from federal tax credits. The IRA also modifies the energy standards required to qualify for the tax credit and increases the per-home credit amount starting in 2023, creates a 15% corporate alternative minimum tax on certain profits and creates a 1% excise tax on stock repurchases. These provisions will be effective for us on January 1, 2023, and we do not expect them to have a material impact on our consolidated financial statements. Our future deferred tax asset realization depends on sufficient taxable income in the carryforward periods under existing tax laws. Federal NOL carryforwards may be used to offset future taxable income indefinitely. State NOL carryforwards may be used to offset future taxable income for a period ranging from 5 to 20 years, depending on the state jurisdiction. At December 31, 2022, we had no remaining un-utilized federal NOL carryforward, federal tax credits, or state NOL carryforwards. At December 31, 2022, we have no current income taxes receivable and current income taxes payable of $12.1 million, which 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 consolidated balance sheets at December 31, 2022. 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 2018. 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 December 31, 2022, 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 | 12 Months Ended |
Dec. 31, 2022 | |
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): Years Ended December 31, 2022 2021 2020 Cash paid during the year for: Interest, net of interest capitalized $ (2,279) $ (249) $ 355 Income taxes paid $ 311,725 $ 221,103 $ 84,739 Non-cash operating activities: Real estate not owned (decrease)/increase $ (8,011) $ 8,011 $ — Real estate acquired through notes payable $ 9,960 $ 8,047 $ 16,597 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSFrom time to time, in the normal course of business, we have transacted with related or affiliated companies and with certain of our officers and directors. We believe that the terms and fees negotiated for all transactions listed below are no less favorable than those that could be negotiated in arm’s length transactions.We charter aircraft services from companies that use the private plane of Steven Hilton, our Executive Chairman and former CEO, although Mr. Hilton does not have an ownership interest in the charter companies. Payments made to these charter companies were approximately $383,000, $535,000 and $408,000 for the years ended December 31, 2022, 2021 and 2020, respectively. |
OPERATING AND REPORTING SEGMENT
OPERATING AND REPORTING SEGMENTS | 12 Months Ended |
Dec. 31, 2022 | |
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 ten 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, Colorado and Utah 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 revenue less cost of home and land closings, including land development and other land sales costs, commissions and other sales costs, and other general and administrative costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Business and Summary of Significant Accounting Policies.” 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: Years Ended December 31, 2022 2021 2020 Homebuilding revenue (1): West $ 2,250,083 $ 1,935,845 $ 1,800,223 Central 1,846,153 1,504,481 1,282,339 East 2,172,491 1,679,784 1,399,558 Consolidated total 6,268,727 5,120,110 4,482,120 Homebuilding segment operating income: West 466,916 379,093 213,918 Central 376,734 319,435 185,202 East 465,059 302,487 157,971 Total homebuilding segment operating income 1,308,709 1,001,015 557,091 Financial services segment profit 18,294 18,034 16,388 Corporate and unallocated costs (2) (40,358) (50,573) (44,398) Interest expense (41) (318) (2,177) Other income, net 2,714 4,864 6,662 Loss on early extinguishment of debt — (18,188) — Net earnings before income taxes $ 1,289,318 $ 954,834 $ 533,566 (1) Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31, Land closing revenue: 2022 2021 2020 West $ 47,974 $ 21,426 $ 4,974 Central 10,655 3,799 8,678 East 2,600 12 4,079 Total $ 61,229 $ 25,237 $ 17,731 (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 December 31, 2022 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 21,599 $ 8,992 $ 46,138 $ — $ — $ 76,729 Real estate 1,775,879 1,298,455 1,283,929 — — 4,358,263 Investments in unconsolidated entities 110 2,866 7,503 — 1,274 11,753 Other assets 99,267 (1) 241,470 (2) 132,181 (3) 1,536 850,902 (4) 1,325,356 Total assets $ 1,896,855 $ 1,551,783 $ 1,469,751 $ 1,536 $ 852,176 $ 5,772,101 (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, 2021 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 26,687 $ 11,132 $ 52,860 $ — $ — $ 90,679 Real estate 1,571,477 1,076,300 1,086,631 — — 3,734,408 Investments in unconsolidated entities 87 2,974 1,707 — 996 5,764 Other assets 66,897 (1) 199,791 (2) 102,073 (3) 610 607,311 (4) 976,682 Total assets $ 1,665,148 $ 1,290,197 $ 1,243,271 $ 610 $ 608,307 $ 4,807,533 (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, real estate not owned, 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We 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 December 31, 2022 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 $35.6 million of total warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2006 and 2017 and HVAC condensation issues for homes constructed and delivered in 2021 and the first half of 2022. Our review and handling of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, our judgment and various assumptions and estimates. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves. As of December 31, 2022, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we believe our reserves are sufficient to cover the above mentioned matter. See Note 1 for information related to our warranty obligations. See Note 4 for information related to our leases. |
BUSINESS AND SUMMARY OF SIGNI_2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and 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. |
Cash and Cash Equivalents | Liquid investments with an initial maturity of three months or less are classified as cash equivalents. |
Real Estate | Real estate inventory 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 and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, 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. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings. we plan to build out over several years. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. 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 delays, labor or material shortages, absorptions that differ from our expectations, increases in costs that have not yet been committed, changes in governmental requirements, or other unanticipated issues, including weather, 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. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and 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. The impairment of a community is allocated to each remaining lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined. 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. See Note 2 for additional information related to real estate and impairments. |
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 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 expensed to Cost of home closings 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 non-refundable deposits and any ancillary capitalized costs. |
Goodwill | In accordance with ASC 350, Intangibles, Goodwill and Other |
Property and Equipment, net | Property and equipment, net consists of computer and office equipment, model home furnishings and capitalized sales office costs. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the assets, which range from three |
Deferred Costs | The costs are primarily amortized to interest expense using the straight line method which approximates the effective interest method. |
Investments in Unconsolidated Entities | We use the equity method of accounting for investments in unconsolidated entities over which we exercise significant influence but do not have a controlling interest. Under the equity method, our share of the unconsolidated entities’ pre-tax earnings or loss is included in Other (expense)/income net, or Earnings from financial services unconsolidated entities and other, net, in our consolidated income statements. We use the cost method of accounting for investments in unconsolidated entities over which we do not have significant influence, if any. We track cumulative earnings and distributions from each of our ventures. For cash flow classification, to the extent distributions do not exceed cumulative earnings, we designate such distributions as return on capital. Distributions in excess of cumulative earnings are treated as return of capital. We evaluate our investments in unconsolidated entities for impairment when events that trigger an evaluation of recoverability present themselves. See Note 5 for additional information related to investments in unconsolidated entities. |
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 obligation. The performance obligation 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 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 sale contract assets consist of cash from home closings that are in transit from title companies, which are considered cash in transit and are classified as cash on our accompanying consolidated balance sheets. See "Cash and Cash Equivalents" in this Note 1 for further information. Contract liabilities include home sale deposit liabilities related to sold but unclosed homes, and are classified as Home sale deposits in our accompanying consolidated balance sheets. Substantially all of our home sales are scheduled to close and be recorded as revenue within one year from the date of receiving a customer deposit. Revenue expected to be recognized in any future year related to remaining performance obligations (if any) and contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, are 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 December 31, 2022 and 2021. Our three sources of revenue are disaggregated by type in the accompanying consolidated income statements. Cost of Home Closings . Cost of home closings includes direct home construction costs, closing costs, land acquisition and development costs, development period interest and common costs, and impairments, if any. Direct construction costs are accumulated during the period of construction and charged to Cost of home closings under specific identification methods, as are closing costs. Land development, acquisition and common costs are allocated to each lot based on the number of lots remaining to close. Estimates of costs incurred or to be incurred but not paid are accrued and expensed at the time of closing. |
Income Taxes | We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of both temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. We record deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available objectively verifiable positive and negative evidence, including scheduled reversals of deferred tax liabilities, whether we are in a cumulative loss position, projected future taxable income, tax planning strategies and recent financial operations. If we determine that we will not be able to realize our deferred tax assets in the future, we will record a valuation allowance, which increases the provision for income taxes. We recognize interest and penalties related to unrecognized tax benefits within Provision for income taxes in the accompanying consolidated income statements. Accrued interest and penalties are included within Accrued liabilities in the accompanying consolidated balance sheets. See Note 12 for additional information related to income taxes. We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes ("ASC 740" ) |
Advertising Costs | We expense advertising costs as they are incurred. |
Earnings Per Share | We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In periods of net losses, no dilution is computed. See Note 9 for additional information related to earnings per share. |
Stock-Based Compensation | We account for stock-based compensation in accordance with ASC 718-10, Compensation—Stock Compensation ("ASC 718"). As allowed by ASC 718, we have elected to estimate forfeitures in calculating the expense related to stock-based compensation. Awards with either a graded or cliff vesting are expensed on a straight-line basis over the life of the award. See Note 11 for additional information on 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 |
401(k) Retirement Plan | We have a 401(k) plan for all full-time Meritage employees. We match portions of employees’ voluntary contributions |
Off-Balance Sheet Arrangements | We may participate in land development 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, although our participation in such ventures is currently limited. See Note 5 for additional discussion of our investments in unconsolidated entities.In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and may have staggered purchase schedules. See Note 3 for additional information on these off-balance sheet arrangements. We provide surety bonds and 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 | 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 these reserves for the structural warranty based on the number of homes still under warranty and 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.Warranty reserves are included in Accrued liabilities on the accompanying consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying 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, unanticipated changes in legal, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates. |
Recently Accounting Pronouncements | There are no recent accounting pronouncements that are expected to have a material impact on our financial statements or financial statement disclosures |
Variable Interest Entities | Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into an option or purchase agreement to acquire land or lots from an entity, a variable interest entity, or “VIE”, may be created. We evaluate all option and purchase agreements and amendments for land to determine whether they are a VIE. ASC 810, Consolidation , requires that for each VIE, we assess whether we are the primary beneficiary. 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 its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. The liabilities related to consolidated VIEs are generally excluded from our debt covenant calculations. In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis by determining if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. In substantially all cases, creditors of the entities with which we have option agreements have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have typically contracted to complete development at a fixed cost on behalf of the land owner and any budget savings or shortfalls are borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. |
Fair Value Measurement | 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. |
Segment Reporting | We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting , we have ten 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, Colorado and Utah Central: Texas East: Florida, Georgia, North Carolina, South Carolina and Tennessee |
BUSINESS AND SUMMARY OF SIGNI_3
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Property and Equipment, net | At December 31, 2022 and 2021, property and equipment, net consisted of the following (in thousands): At December 31, 2022 2021 Computer and office equipment $ 66,027 $ 62,806 Model home furnishings and capitalized sales office costs 57,229 61,112 Gross property and equipment 123,256 123,918 Accumulated depreciation (84,621) (86,578) Total $ 38,635 $ 37,340 |
Schedule of Accrued Liabilities | Accrued liabilities at December 31, 2022 and 2021 consisted of the following (in thousands): At December 31, 2022 2021 Accruals related to real estate development and construction activities $ 139,447 $ 115,214 Payroll and other benefits 110,338 102,773 Accrued interest 7,026 5,556 Accrued taxes 25,182 37,297 Warranty reserves 35,575 26,264 Lease liabilities (1) 22,782 26,171 Other accruals 20,265 24,002 Total $ 360,615 $ 337,277 |
Schedule of Surety Bond and Letter of Credit Obligations | The table below outlines our surety bond and letter of credit obligations (in thousands): At December 31, 2022 2021 Outstanding Estimated work Outstanding Estimated work Sureties: Sureties related to owned projects and lots under contract 926,928 616,028 620,297 352,152 Total Sureties $ 926,928 $ 616,028 $ 620,297 $ 352,152 Letters of Credit (“LOCs”): LOCs for land development 49,442 N/A 57,396 N/A LOCs for general corporate operations 5,000 N/A 5,000 N/A Total LOCs $ 54,442 N/A $ 62,396 N/A |
Summary of Changes in Warranty Reserves | A summary of changes in our warranty reserves follows (in thousands): Years Ended December 31, 2022 2021 Balance, beginning of year $ 26,264 $ 23,743 Additions to reserve from new home deliveries 22,198 17,883 Warranty claims (23,803) (1) (15,362) Adjustments to pre-existing reserves 10,916 — Balance, end of year $ 35,575 $ 26,264 |
REAL ESTATE AND CAPITALIZED I_2
REAL ESTATE AND CAPITALIZED INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Real Estate | Real estate consists of the following (in thousands): At December 31, 2022 2021 Homes under contract under construction (1) $ 822,428 $ 1,039,822 Unsold homes, completed and under construction (1) 1,155,543 484,999 Model homes (1) 97,198 81,049 Finished home sites and home sites under development (2) (3) 2,283,094 2,128,538 $ 4,358,263 $ 3,734,408 (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. 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 $66.8 million and $62.1 million as of December 31, 2022 and 2021, respectively. |
Summary of Capitalized Interest | A summary of our capitalized interest is as follows (in thousands): Years Ended December 31, 2022 2021 2020 Capitalized interest, beginning of year $ 56,253 $ 58,940 $ 82,014 Interest incurred 60,599 62,836 66,289 Interest expensed (41) (318) (2,177) Interest amortized to cost of home and land closings (56,642) (65,205) (87,186) Capitalized interest, end of year (1) $ 60,169 $ 56,253 $ 58,940 (1) Approximately $208,000, $208,000 and $217,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2022, 2021 and 2020, respectively. |
VARIABLE INTEREST ENTITIES AN_2
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 that are not recorded on the balance sheet at December 31, 2022 (dollars in thousands): Projected Number Purchase Option/ Purchase and option contracts recorded on balance sheet as Real estate not owned — $ — $ — Option contracts — non-refundable deposits, committed (1) 9,188 528,836 53,550 Purchase contracts — non-refundable deposits, committed (1) 6,016 174,209 12,444 Purchase and option contracts —refundable deposits, committed 1,661 35,429 1,050 Total committed 16,865 738,474 67,044 Purchase and option contracts — refundable deposits, uncommitted (2) 19,474 675,347 9,685 Total lots under contract or option 36,339 $ 1,413,821 $ 76,729 Total purchase and option contracts not recorded on balance sheet (3) 36,339 $ 1,413,821 $ 76,729 (4) (1) Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. (2) Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3) Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4) Amount is reflected in our consolidated balance sheets in the line item “Deposits on real estate under option or contract” as of December 31, 2022. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Lease, Cost | Our short-term lease costs and sublease income are de minimis. Years Ended December 31, 2022 2021 Operating lease expense $ 7,819 $ 7,613 Non-cash lease expense $ 5,802 $ 6,342 Cash payments on lease liabilities $ 9,162 $ 9,065 ROU assets obtained in exchange for new operating lease obligations $ 4,878 $ 5,756 ROU assets are classified within Prepaids, other assets and goodwill Accrued liabilities At December 31, 2022 2021 ROU assets $ 19,129 $ 21,038 Lease liabilities $ 22,782 $ 26,171 Weighted-average remaining lease term 4.5 years 4.1 years Weighted-average discount rate (incremental borrowing rate) 4.44 % 4.76 % |
Lessee, Operating Lease, Liability, Maturity | Maturities of our operating lease liabilities as of December 31, 2022 are as follows (in thousands): Year ended December 31, 2023 $ 8,129 2024 5,500 2025 4,223 2026 2,844 2027 1,471 Thereafter 2,940 Total payments 25,107 Less: imputed interest (2,325) Present value of lease liabilities $ 22,782 |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): At December 31, 2022 2021 Assets: Cash $ 3,389 $ 7,983 Real estate 17,965 7,989 Other assets 11,653 3,903 Total assets $ 33,007 $ 19,875 Liabilities and equity: Accounts payable and other liabilities $ 11,397 $ 7,899 Equity of: Meritage (1) 10,356 4,752 Other 11,254 7,224 Total liabilities and equity $ 33,007 $ 19,875 Years Ended December 31, 2022 2021 2020 Revenue $ 46,264 $ 41,929 $ 39,823 Costs and expenses (36,565) (34,693) (31,918) Net earnings of unconsolidated entities $ 9,699 $ 7,236 $ 7,905 Meritage’s share of pre-tax earnings (1) (2) $ 6,140 $ 4,667 $ 4,559 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our 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/(loss) from our mortgage joint venture is recorded in Earnings from financial services unconsolidated entities and other, net on the accompanying consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other (expense)/income, net, on the accompanying 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) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable and Other Borrowings | Loans payable and other borrowings consist of the following (in thousands): At December 31, 2022 2021 Other borrowings, secured real estate note payable (1) $ 7,057 $ 17,552 $780.0 million unsecured revolving credit facility — — Total $ 7,057 $ 17,552 (1) Reflects balance of non-recourse notes payable in connection with land purchases. |
SENIOR NOTES, NET (Tables)
SENIOR NOTES, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Senior and Convertible Senior Notes | Senior notes, net consist of the following (in thousands): At December 31, 2022 2021 6.00% senior notes due 2025. At December 31, 2022 and 2021 there was approximately $1,977 and $2,795 in net unamortized premium, respectively. (1) 401,977 402,795 5.125% senior notes due 2027 300,000 300,000 3.875% senior notes due 2029 450,000 450,000 Net debt issuance costs (8,387) (10,309) Total $ 1,143,590 $ 1,142,486 (1) $200.0 million of the total $400.0 million of 6.00% Senior Notes due 2025 outstanding at December 31, 2022 was issued at par and had no unamortized premium. |
Schedule of Principal Maturities of Senior and Senior Convertible Notes | Scheduled principal maturities of our senior notes as of December 31, 2022 follow (in thousands): Year Ended December 31, 2023 — 2024 — 2025 400,000 2026 — 2027 300,000 Thereafter 450,000 Total $ 1,150,000 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): At December 31, 2022 2021 Aggregate Estimated Fair Aggregate Estimated Fair 6.00% senior notes $ 400,000 $ 397,520 $ 400,000 $ 446,520 5.125% senior notes $ 300,000 $ 283,500 $ 300,000 $ 329,640 3.875% senior notes $ 450,000 $ 380,610 $ 450,000 $ 472,500 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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): Years Ended December 31, 2022 2021 2020 Basic weighted average number of shares outstanding 36,694 37,610 37,718 Effect of dilutive securities: Unvested restricted stock 407 623 766 Diluted average shares outstanding 37,101 38,233 38,484 Net earnings $ 992,192 $ 737,444 $ 423,475 Basic earnings per share $ 27.04 $ 19.61 $ 11.23 Diluted earnings per share $ 26.74 $ 19.29 $ 11.00 |
ACQUISITIONS AND GOODWILL (Tabl
ACQUISITIONS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 January 1, 2021 $ — $ — $ 32,962 $ — $ — $ 32,962 Additions — — — — — — Balance at December 31, 2021 — — 32,962 — — 32,962 Additions — — — — — — Balance at December 31, 2022 $ — $ — $ 32,962 $ — $ — $ 32,962 |
STOCK BASED AND DEFERRED COMP_2
STOCK BASED AND DEFERRED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Nonvested (Restricted) Shares and Units Activity | We grant time-based and performance-based restricted shares or units. Performance-based restricted shares and units are only granted to executive officers. All performance share awards only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors. The number of shares that may be issued to the award recipients may be greater or lesser than the target award amount depending on actual performance achieved as compared to the performance targets set forth in the awards. Nonvested Weighted Nonvested Weighted Outstanding at January 1, 2020 834,620 $ 41.25 405,909 $ 40.20 Granted (1) 225,593 72.51 80,193 61.06 Vested (Earned/Released) (1) (234,842) 38.80 (178,174) 34.10 Forfeited (2) (34,754) 46.31 — — Outstanding as of December 31, 2020 790,617 50.67 307,928 49.16 Granted (3) 226,936 85.19 86,384 65.91 Vested (Earned/Released) (3) (264,513) 46.09 (203,561) 44.92 Forfeited (2) (60,511) 60.96 — — Outstanding at December 31, 2021 692,529 62.94 190,751 61.68 Granted (4) 278,340 94.12 80,472 59.67 Vested (Earned/Released) (4) (270,022) 49.42 (126,556) 43.28 Forfeited (2) (41,745) 80.71 — — Outstanding at December 31, 2022 659,102 $ 80.52 144,667 $ 71.33 (1) Performance-based shares granted and earned/released for the year ended December 31, 2020 includes 24,054 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2017. These shares vested in February 2020. (2) Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are the result of failing to attain certain goals as outlined in our executive officers' compensation agreements. (3) Performance-based shares granted and earned/released for the year ended December 31, 2021 includes 37,425 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2018. These shares vested in March 2021. Performance-based shares granted for the year ended December 31, 2021 also includes 1,670 shares and 696 shares that were issued to our former General Counsel, who retired on December 15, 2021, as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the years ended December 31, 2019 and 2018, respectively. These shares vested in December 2021 in accordance with his employment agreement. (4) Performance-based shares granted and earned/released for the year ended December 31, 2022 includes 37,146 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2019. These shares vested in March 2022. |
Summary of Compensation Expense and Stock Award Activity | Below is a summary of stock-based compensation expense and stock award activity (in thousands): Years Ended December 31, 2022 2021 2020 Stock-based compensation expense $ 22,333 $ 20,069 $ 19,995 |
Summary of Additional Information Regarding Stock Plan | The following table includes additional information regarding our stock compensation plan (dollars in thousands): At December 31, 2022 2021 Unrecognized stock-based compensation cost $ 29,187 $ 25,007 Weighted average years expense recognition period 1.98 1.97 Total equity awards outstanding (1) 803,769 883,280 (1) Includes unvested restricted stock awards, restricted stock units and performance-based awards (assuming 100%/target payout). |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | Components of the income tax provision are as follows (in thousands): Years Ended December 31, 2022 2021 2020 Current taxes: Federal $ 246,077 $ 180,469 $ 99,174 State 54,576 39,930 21,012 300,653 220,399 120,186 Deferred taxes: Federal (4,573) (4,033) (9,725) State 1,046 1,024 (370) (3,527) (3,009) (10,095) Total $ 297,126 $ 217,390 $ 110,091 |
Schedule of Income Tax Reconciliation | Income taxes for the years ended December 31, 2022, 2021 and 2020, differ from the expected amounts computed using the federal statutory income tax rate of 21% as a result of the following (in thousands): Years Ended December 31, 2022 2021 2020 Expected taxes at current federal statutory income tax rate $ 270,757 $ 200,515 $ 112,049 State income taxes, net of federal tax benefit 43,941 31,967 16,307 Federal tax credits (19,676) (20,872) (16,523) Non-deductible costs and other 2,104 5,780 (1,742) Income tax expense $ 297,126 $ 217,390 $ 110,091 |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities are comprised of timing differences (in thousands) as follows: At December 31, 2022 2021 Deferred tax assets: Real estate $ 24,199 $ 25,960 Warranty reserve 8,489 6,273 Wages payable 8,240 5,834 Equity-based compensation 6,597 5,465 Accrued expenses 114 199 Other 8,650 7,836 Total deferred tax assets 56,289 51,567 Deferred tax liabilities: Goodwill 2,473 1,611 Prepaids 1,282 2,498 Fixed assets 7,082 6,786 Total deferred tax liabilities 10,837 10,895 Deferred tax assets, net 45,452 40,672 Other deferred tax liabilities - state franchise taxes 7,351 6,099 Net deferred tax assets and liabilities $ 38,101 $ 34,573 |
SUPPLEMENTAL DISCLOSURE OF CA_2
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | The following table presents certain supplemental cash flow information (in thousands): Years Ended December 31, 2022 2021 2020 Cash paid during the year for: Interest, net of interest capitalized $ (2,279) $ (249) $ 355 Income taxes paid $ 311,725 $ 221,103 $ 84,739 Non-cash operating activities: Real estate not owned (decrease)/increase $ (8,011) $ 8,011 $ — Real estate acquired through notes payable $ 9,960 $ 8,047 $ 16,597 |
OPERATING AND REPORTING SEGME_2
OPERATING AND REPORTING SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The following segment information is in thousands: Years Ended December 31, 2022 2021 2020 Homebuilding revenue (1): West $ 2,250,083 $ 1,935,845 $ 1,800,223 Central 1,846,153 1,504,481 1,282,339 East 2,172,491 1,679,784 1,399,558 Consolidated total 6,268,727 5,120,110 4,482,120 Homebuilding segment operating income: West 466,916 379,093 213,918 Central 376,734 319,435 185,202 East 465,059 302,487 157,971 Total homebuilding segment operating income 1,308,709 1,001,015 557,091 Financial services segment profit 18,294 18,034 16,388 Corporate and unallocated costs (2) (40,358) (50,573) (44,398) Interest expense (41) (318) (2,177) Other income, net 2,714 4,864 6,662 Loss on early extinguishment of debt — (18,188) — Net earnings before income taxes $ 1,289,318 $ 954,834 $ 533,566 (1) Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31, Land closing revenue: 2022 2021 2020 West $ 47,974 $ 21,426 $ 4,974 Central 10,655 3,799 8,678 East 2,600 12 4,079 Total $ 61,229 $ 25,237 $ 17,731 (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 Land Closing Revenue | Homebuilding revenue includes the following land closing revenue, by segment: Years Ended December 31, Land closing revenue: 2022 2021 2020 West $ 47,974 $ 21,426 $ 4,974 Central 10,655 3,799 8,678 East 2,600 12 4,079 Total $ 61,229 $ 25,237 $ 17,731 |
Schedule of Segment Assets | At December 31, 2022 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 21,599 $ 8,992 $ 46,138 $ — $ — $ 76,729 Real estate 1,775,879 1,298,455 1,283,929 — — 4,358,263 Investments in unconsolidated entities 110 2,866 7,503 — 1,274 11,753 Other assets 99,267 (1) 241,470 (2) 132,181 (3) 1,536 850,902 (4) 1,325,356 Total assets $ 1,896,855 $ 1,551,783 $ 1,469,751 $ 1,536 $ 852,176 $ 5,772,101 (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, 2021 West Central East Financial Services Corporate and Total Deposits on real estate under option or contract $ 26,687 $ 11,132 $ 52,860 $ — $ — $ 90,679 Real estate 1,571,477 1,076,300 1,086,631 — — 3,734,408 Investments in unconsolidated entities 87 2,974 1,707 — 996 5,764 Other assets 66,897 (1) 199,791 (2) 102,073 (3) 610 607,311 (4) 976,682 Total assets $ 1,665,148 $ 1,290,197 $ 1,243,271 $ 610 $ 608,307 $ 4,807,533 (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, real estate not owned, 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. |
BUSINESS AND SUMMARY OF SIGNI_4
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) region state community | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Organization and Presentation [Line Items] | |||
Entity operations in number of regions | region | 3 | ||
Number of states in regions | state | 10 | ||
Number of communities in which homes are sold | community | 271 | ||
Deposits on real estate under option or contract | $ 76,729 | $ 90,679 | |
Depreciation expense | 23,000 | 15,300 | $ 18,900 |
Debt issuance costs related to credit facility, net | 3,800 | 3,600 | |
Advertising expense | 12,100 | 8,200 | 10,500 |
Contribution to the 401(K) Retirement Plan | 6,000 | 5,300 | $ 4,700 |
Increase (decrease) to warranty reserve balance | 10,916 | 0 | |
Right of use asset | 19,129 | 21,038 | |
Present value of lease liabilities | $ 22,782 | 26,171 | |
Non-Structural Items [Member] | |||
Organization and Presentation [Line Items] | |||
Warranty period following home closings | 2 years | ||
Cash and Cash Equivalents [Member] | |||
Organization and Presentation [Line Items] | |||
Amounts in transit from title companies for home closings | $ 161,500 | $ 95,400 | |
Minimum [Member] | |||
Organization and Presentation [Line Items] | |||
Base price per house for sale range | $ 250 | ||
Community life cycle range | 3 years | ||
Property and equipment useful life | 3 years | ||
Maximum [Member] | |||
Organization and Presentation [Line Items] | |||
Base price per house for sale range | $ 1,400 | ||
Community life cycle range | 5 years | ||
Property and equipment useful life | 7 years | ||
Maximum [Member] | Structural [Member] | |||
Organization and Presentation [Line Items] | |||
Warranty period following home closings | 10 years |
BUSINESS AND SUMMARY OF SIGNI_5
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Property and Equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 123,256 | $ 123,918 |
Accumulated depreciation | (84,621) | (86,578) |
Total | 38,635 | 37,340 |
Real estate | 4,358,263 | 3,734,408 |
Computer and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 66,027 | 62,806 |
Model home furnishings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 57,229 | $ 61,112 |
BUSINESS AND SUMMARY OF SIGNI_6
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Liabilities | |||
Accruals related to real estate development and construction activities | $ 139,447 | $ 115,214 | |
Payroll and other benefits | 110,338 | 102,773 | |
Accrued interest | 7,026 | 5,556 | |
Accrued taxes | 25,182 | 37,297 | |
Total warranty reserves | 35,575 | 26,264 | $ 23,743 |
Lease liabilities | 22,782 | 26,171 | |
Other accruals | 20,265 | 24,002 | |
Total | $ 360,615 | $ 337,277 | |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Total | Total |
BUSINESS AND SUMMARY OF SIGNI_7
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Surety Bond and Letter of Credit Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loss Contingencies [Line Items] | ||
Total LOCs | $ 54,442 | $ 62,396 |
Sureties related to owned projects and lots under contract [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 926,928 | 620,297 |
Estimated work remaining to complete (unaudited) | 616,028 | 352,152 |
Total Sureties [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding | 926,928 | 620,297 |
Estimated work remaining to complete (unaudited) | 616,028 | 352,152 |
LOCs for land development [Member] | ||
Loss Contingencies [Line Items] | ||
Total LOCs | 49,442 | 57,396 |
LOCs for general corporate operations [Member] | ||
Loss Contingencies [Line Items] | ||
Total LOCs | $ 5,000 | $ 5,000 |
BUSINESS AND SUMMARY OF SIGNI_8
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Changes in Warranty Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Warranty Reserves | ||
Balance, beginning of year | $ 26,264 | $ 23,743 |
Additions to reserve from new home deliveries | 22,198 | 17,883 |
Warranty claims | (23,803) | (15,362) |
Adjustments to pre-existing reserves | 10,916 | 0 |
Balance, end of year | $ 35,575 | $ 26,264 |
REAL ESTATE AND CAPITALIZED I_3
REAL ESTATE AND CAPITALIZED INTEREST - Schedule of Real Estate (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | |
Real Estate Properties | |||
Homes under contract under construction | [1] | $ 822,428 | $ 1,039,822 |
Unsold homes, completed and under construction | [1] | 1,155,543 | 484,999 |
Model homes | [1] | 97,198 | 81,049 |
Finished home sites and home sites under development | [2] | 2,283,094 | 2,128,538 |
Real estate | 4,358,263 | 3,734,408 | |
Land held for sale | $ 66,800 | $ 62,100 | |
[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. 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 $66.8 million and $62.1 million as of December 31, 2022 and 2021, respectively. |
REAL ESTATE AND CAPITALIZED I_4
REAL ESTATE AND CAPITALIZED INTEREST - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Real Estate [Abstract] | |||
Impairment of real estate | $ 200 | $ 2,100 | $ 24,900 |
REAL ESTATE AND CAPITALIZED I_5
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||||
Summary of capitalized interest | ||||||
Capitalized interest, beginning of year | $ 56,253 | [1] | $ 58,940 | [1] | $ 82,014 | |
Interest incurred | 60,599 | 62,836 | 66,289 | |||
Interest expensed | (41) | (318) | (2,177) | |||
Interest amortized to cost of home and land closings | (56,642) | (65,205) | (87,186) | |||
Capitalized interest, end of year | [1] | $ 60,169 | $ 56,253 | $ 58,940 | ||
[1]Approximately $208,000, $208,000 and $217,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2022, 2021 and 2020, respectively. |
REAL ESTATE AND CAPITALIZED I_6
REAL ESTATE AND CAPITALIZED INTEREST - Summary of Capitalized Interest (Footnote) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |||
Schedule of Equity Method Investments [Line Items] | |||||||
Capitalized interest | $ 60,169 | [1] | $ 56,253 | [1] | $ 58,940 | [1] | $ 82,014 |
Equity-method land ventures | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Capitalized interest | $ 208 | $ 208 | $ 217 | ||||
[1]Approximately $208,000, $208,000 and $217,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2022, 2021 and 2020, respectively. |
VARIABLE INTEREST ENTITIES AN_3
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED - Summary of Lots Under Option (Details) $ in Thousands | Dec. 31, 2022 USD ($) lot | Dec. 31, 2021 USD ($) | |
Projected Number of Lots (unaudited) | |||
Purchase and option contracts recorded on balance sheet as Real estate not owned | lot | 0 | ||
Option contracts — non-refundable deposits, committed | lot | [1] | 9,188 | |
Purchase contracts — non-refundable deposits, committed | lot | [1] | 6,016 | |
Purchase and option contracts —refundable deposits, committed | lot | 1,661 | ||
Total committed | lot | 16,865 | ||
Purchase and option contracts — refundable deposits, uncommitted | lot | [2] | 19,474 | |
Total lots under contract or option | lot | 36,339 | ||
Total purchase and option contracts not recorded on balance sheet (3) | lot | 36,339 | ||
Purchase Price (unaudited) | |||
Real estate not owned | $ 0 | $ 8,011 | |
Option contracts — non-refundable deposits, committed | [1] | 528,836 | |
Purchase contracts — non-refundable deposits, committed | [1] | 174,209 | |
Purchase and option contracts —refundable deposits, committed | 35,429 | ||
Total committed | 738,474 | ||
Purchase and option contracts — refundable deposits, uncommitted | [2] | 675,347 | |
Total lots under contract or option | 1,413,821 | ||
Total purchase and option contracts not recorded on balance sheet (3) | 1,413,821 | ||
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 | [1] | 53,550 | |
Purchase contracts — non-refundable deposits, committed | [1] | 12,444 | |
Purchase and option contracts —refundable deposits, committed | 1,050 | ||
Total committed | 67,044 | ||
Purchase and option contracts — refundable deposits, uncommitted | [2] | 9,685 | |
Total lots under contract or option | 76,729 | ||
Total purchase and option contracts not recorded on balance sheet (3) | [3] | $ 76,729 | |
[1]Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.[2]Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3) Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expense | $ 7,819 | $ 7,613 |
Non-cash lease expense | 5,802 | 6,342 |
Cash payments on lease liabilities | 9,162 | 9,065 |
ROU assets obtained in exchange for new operating lease obligations | 4,878 | 5,756 |
ROU assets | 19,129 | 21,038 |
Lease liabilities | $ 22,782 | $ 26,171 |
Weighted-average remaining lease term | 4 years 6 months | 4 years 1 month 6 days |
Weighted-average discount rate (incremental borrowing rate) | 4.44% | 4.76% |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Prepaids, other assets and goodwill | Prepaids, other assets and goodwill |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities | Accrued Liabilities |
LEASES - Schedule of Operating
LEASES - Schedule of Operating Lease Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2023 | $ 8,129 | |
2024 | 5,500 | |
2025 | 4,223 | |
2026 | 2,844 | |
2027 | 1,471 | |
Thereafter | 2,940 | |
Total payments | 25,107 | |
Less: imputed interest | (2,325) | |
Present value of lease liabilities | $ 22,782 | $ 26,171 |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Narrative (Details) $ in Thousands | Dec. 31, 2022 USD ($) joint_venture | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | |||
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in unconsolidated entities | $ 11,753 | $ 5,764 | |||||
Capitalized interest | $ 60,169 | [1] | 56,253 | [1] | $ 58,940 | [1] | $ 82,014 |
Equity-method land ventures | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of joint ventures | joint_venture | 2 | ||||||
Capitalized interest | $ 208 | $ 208 | $ 217 | ||||
Mortgage joint ventures [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of joint ventures | joint_venture | 1 | ||||||
[1]Approximately $208,000, $208,000 and $217,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2022, 2021 and 2020, respectively. |
INVESTMENTS IN UNCONSOLIDATED_4
INVESTMENTS IN UNCONSOLIDATED ENTITIES - Summary of Condensed Financial Information Related to Unconsolidated Equity Method Joint Ventures, Assets Liabilities and Equity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Assets | |||||
Real estate | $ 4,358,263 | $ 3,734,408 | |||
Other assets | 1,325,356 | 976,682 | |||
Total assets | 5,772,101 | 4,807,533 | |||
Equity of: | |||||
Meritage | 3,949,611 | 3,044,389 | $ 2,347,868 | $ 1,973,990 | |
Total liabilities and stockholders’ equity | 5,772,101 | 4,807,533 | |||
Equity Method Investment, Nonconsolidated Investee or Group of Investees | |||||
Assets | |||||
Cash | 3,389 | 7,983 | |||
Real estate | 17,965 | 7,989 | |||
Other assets | 11,653 | 3,903 | |||
Total assets | 33,007 | 19,875 | |||
Liabilities and equity: | |||||
Accounts payable and other liabilities | 11,397 | 7,899 | |||
Equity of: | |||||
Meritage | [1] | 10,356 | 4,752 | ||
Other | 11,254 | 7,224 | |||
Total liabilities and stockholders’ equity | $ 33,007 | $ 19,875 | |||
[1]Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our 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 | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Financial information related to unconsolidated joint ventures, Operations | ||||
Net earnings of unconsolidated entities | $ 6,093 | $ 4,657 | $ 4,496 | |
Net earnings | 992,192 | 737,444 | 423,475 | |
Meritage Homes | ||||
Financial information related to unconsolidated joint ventures, Operations | ||||
Net earnings of unconsolidated entities | 9,699 | 7,236 | 7,905 | |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||||
Financial information related to unconsolidated joint ventures, Operations | ||||
Revenue | 46,264 | 41,929 | 39,823 | |
Costs and expenses | (36,565) | (34,693) | (31,918) | |
Net earnings | [1],[2] | $ 6,140 | $ 4,667 | $ 4,559 |
[1]Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our 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/(loss) from our mortgage joint venture is recorded in Earnings from financial services unconsolidated entities and other, net on the accompanying consolidated income statements. Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other (expense)/income, net, on the accompanying 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 ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Other borrowings, real estate note payable [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans payable and other borrowings | [1] | $ 7,057,000 | $ 17,552,000 |
Line of credit [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 | $ 7,057,000 | $ 17,552,000 | |
[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) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Line of Credit Facility [Line Items] | |||
Repayments | $ 40,000,000 | $ 0 | |
Proceeds from lines of credit | 40,000,000 | 0 | $ 500,000,000 |
Total LOCs | 54,442,000 | 62,396,000 | |
Revolving credit facility [Member] | Line of credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Current borrowing capacity | 780,000,000 | ||
Maximum borrowing capacity | 880,000,000 | ||
Minimum tangible net worth | $ 1,900,000,000 | ||
Leverage ratio | 0.60 | ||
Interest coverage ratio | 1.50 | ||
Outstanding borrowings under Credit Facility | $ 0 | $ 0 | |
Total LOCs | 54,400,000 | ||
Line of credit facility, remaining borrowing capacity | $ 725,600,000 | ||
Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||
Line of Credit Facility [Line Items] | |||
Effective percentage of debt instrument | 5.71% | ||
Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis point adjustment spread | 0.10% | ||
Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis point adjustment spread | 0.10% | ||
Basis spread on variable rate | 1% | ||
Revolving credit facility [Member] | Line of credit [Member] | Prime Rate [Member] | Interest Rate Determination Two [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
Minimum [Member] | Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread, leverage benchmark | 1.25% | ||
Minimum [Member] | Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread, leverage benchmark | 0.25% | ||
Maximum [Member] | Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination One [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread, leverage benchmark | 1.75% | ||
Maximum [Member] | Revolving credit facility [Member] | Line of credit [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Interest Rate Determination Three [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread, leverage benchmark | 0.75% |
SENIOR NOTES, NET - Schedule of
SENIOR NOTES, NET - Schedule of Senior and Convertible Senior Notes (Details) - Senior Notes [Member] - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2018 | Apr. 30, 2012 | |
Debt Instrument [Line Items] | |||||
Net debt issuance costs | $ (8,387) | $ (10,309) | |||
Senior and convertible senior notes, net | 1,143,590 | 1,142,486 | |||
7.00% senior notes due 2022 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, stated rate | 7% | ||||
6.00% senior notes due 2025 | |||||
Debt Instrument [Line Items] | |||||
Senior and convertible senior notes, gross | [1] | $ 401,977 | $ 402,795 | ||
Debt instrument, stated rate | 6% | 6% | |||
5.125% senior notes due 2027 [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior and convertible senior notes, gross | $ 300,000 | $ 300,000 | |||
Debt instrument, stated rate | 5.125% | 5.125% | 5.125% | ||
3.875% senior notes due 2029 [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior and convertible senior notes, gross | $ 450,000 | $ 450,000 | |||
Debt instrument, stated rate | 3.875% | 3.875% | |||
[1]$200.0 million of the total $400.0 million of 6.00% Senior Notes due 2025 outstanding at December 31, 2022 was issued at par and had no unamortized premium. |
SENIOR NOTES, NET - Schedule _2
SENIOR NOTES, NET - Schedule of Senior and Convertible Senior Notes (Descriptors) (Details) - Senior Notes [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2016 |
6.00% senior notes due 2025 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | $ 200,000,000 | $ 200,000,000 | |
Debt instrument, stated rate | 6% | 6% | 6% |
Unamortized premium | $ 0 | ||
Senior Notes Due Two Thousand Twenty Five, Combined Amount [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate Principal | $ 400,000,000 | ||
Debt instrument, stated rate | 6% | 6% | |
Unamortized premium | $ 1,977,000 | $ 2,795,000 |
SENIOR NOTES, NET - Narrative (
SENIOR NOTES, NET - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2017 | Mar. 31, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 30, 2021 | Jun. 30, 2018 | Jun. 30, 2016 | Apr. 30, 2012 | |
Debt Instrument [Line Items] | |||||||||
Percentage of wholly owned subsidiary | 100% | ||||||||
Loss on early extinguishment of debt | $ 0 | $ 18,188,000 | $ 0 | ||||||
Senior Notes [Member] | 7.00% senior notes due 2022 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 300,000,000 | ||||||||
Debt instrument, stated rate | 7% | ||||||||
Unamortized premium | $ 300,000,000 | ||||||||
Loss on early extinguishment of debt | $ (18,200,000) | ||||||||
Senior Notes [Member] | 6.00% senior notes due 2025 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 200,000,000 | $ 200,000,000 | |||||||
Debt instrument, stated rate | 6% | 6% | 6% | ||||||
Unamortized premium | $ 0 | ||||||||
Senior Notes [Member] | Senior Notes Due 2025, Additional Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 200,000,000 | ||||||||
Debt issuance price, percentage | 103% | ||||||||
Senior Notes [Member] | Senior Notes Due Two Thousand Twenty Five, Combined Amount [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 400,000,000 | ||||||||
Debt instrument, stated rate | 6% | 6% | |||||||
Unamortized premium | $ 1,977,000 | $ 2,795,000 | |||||||
Senior Notes [Member] | 5.125% senior notes due 2027 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 300,000,000 | ||||||||
Debt instrument, stated rate | 5.125% | 5.125% | 5.125% | ||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount repurchased | $ 126,500,000 | ||||||||
Percentage of principal in the event of a repurchase | 100% | ||||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | Privately negotiated transactions | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount repurchased | 51,900,000 | ||||||||
Senior Notes [Member] | 1.875% convertible senior notes due 2032 [Member] | Remaining redemptions | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount repurchased | $ 74,600,000 | ||||||||
Senior Notes [Member] | 3.875% senior notes due 2029 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of offering | $ 450,000,000 | ||||||||
Debt instrument, stated rate | 3.875% | 3.875% |
SENIOR NOTES, NET - Schedule _3
SENIOR NOTES, NET - Schedule of Principal Maturities of Senior and Senior Convertible Notes (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Thereafter | $ 450,000 |
Senior Notes [Member] | Senior and senior convertible notes [Member] | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2023 | 0 |
2024 | 0 |
2025 | 400,000 |
2026 | 0 |
2027 | 300,000 |
Total | $ 1,150,000 |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Fair Value of Fixed-Rate Debt (Details) - Senior Notes [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2018 | Jun. 30, 2016 |
6.00% senior notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate Principal | $ 200,000,000 | $ 200,000,000 | ||
Fair value of fixed-rate debt | ||||
Debt instrument, stated rate | 6% | 6% | 6% | |
6.00% senior notes [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 | $ 397,520,000 | $ 446,520,000 | ||
5.125% senior notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate Principal | $ 300,000,000 | |||
Fair value of fixed-rate debt | ||||
Debt instrument, stated rate | 5.125% | 5.125% | 5.125% | |
5.125% senior notes [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 | $ 283,500,000 | 329,640,000 | ||
3.875% senior notes [Member] | ||||
Fair value of fixed-rate debt | ||||
Debt instrument, stated rate | 387.50% | |||
3.875% senior notes [Member] | Level 2 [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate Principal | $ 450,000,000 | 450,000,000 | ||
Fair value of fixed-rate debt | ||||
Estimated Fair Value | $ 380,610,000 | $ 472,500,000 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Basic and Diluted (Loss)/Earnings Per Common Share | |||
Basic weighted average number of shares outstanding (in shares) | 36,694 | 37,610 | 37,718 |
Effect of dilutive securities: | |||
Stock options and unvested restricted stock (in shares) | 407 | 623 | 766 |
Diluted average shares outstanding (in shares) | 37,101 | 38,233 | 38,484 |
Net earnings as reported (in dollars) | $ 992,192 | $ 737,444 | $ 423,475 |
Basic earnings per share (in dollars per share) | $ 27.04 | $ 19.61 | $ 11.23 |
Diluted earnings per share (in dollars per share) | $ 26.74 | $ 19.29 | $ 11 |
ACQUISITIONS AND GOODWILL - Nar
ACQUISITIONS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Business Acquisitions and Goodwill [Abstract] | |||
Goodwill | $ 32,962 | $ 32,962 | $ 32,962 |
ACQUISITIONS AND GOODWILL - Sum
ACQUISITIONS AND GOODWILL - Summary of Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 32,962 | $ 32,962 |
Additions | 0 | 0 |
Ending balance | 32,962 | 32,962 |
Operating Segments [Member] | Financial Services [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | West [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | Central [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | 0 | 0 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | East [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 32,962 | 32,962 |
Additions | 0 | 0 |
Ending balance | 32,962 | 32,962 |
Corporate [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Additions | 0 | 0 |
Ending balance | $ 0 | $ 0 |
STOCK BASED AND DEFERRED COMP_3
STOCK BASED AND DEFERRED COMPENSATION - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Employees [Member] | Non-vested stock awards [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period for non-vested stock awards and stock options | 5 years |
Senior executive officers and non-employee directors [Member] | Non-vested stock and performance-based awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period for non-vested stock awards and stock options | 3 years |
Non-Employee Director [Member] | Non-vested stock and performance-based awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period for non-vested stock awards and stock options | 3 years |
Award cliff vesting period | 1 year |
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 (in shares) | 6,600,000 |
Remaining shares available for grant (in shares) | 731,405 |
STOCK BASED AND DEFERRED COMP_4
STOCK BASED AND DEFERRED COMPENSATION - Summary of Nonvested (Restricted) Shares and Units Activity (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Nonvested Restricted Share Activity (time-based) [Member] | ||||
Nonvested Restricted Share Activity (time-based and performance-based), Number of Shares [Roll Forward] | ||||
Outstanding at beginning of year (in shares) | 692,529 | 790,617 | 834,620 | |
Granted (in shares) | 278,340 | 226,936 | 225,593 | |
Vested (Earned/Released) (in shares) | (270,022) | (264,513) | (234,842) | |
Forfeited (in shares) | [1] | (41,745) | (60,511) | (34,754) |
Outstanding at end of year (in shares) | 659,102 | 692,529 | 790,617 | |
Nonvested Restricted Share Activity (time-based and performance-based), Weighted Average Grant Date Fair Value [Roll Forward] | ||||
Outstanding at beginning of year (in dollars per share) | $ 62.94 | $ 50.67 | $ 41.25 | |
Granted (in dollars per share) | 94.12 | 85.19 | 72.51 | |
Vested (Earned/Released) (in dollars per share) | 49.42 | 46.09 | 38.80 | |
Forfeited (in dollars per share) | [1] | 80.71 | 60.96 | 46.31 |
Outstanding at end of year (in dollars per share) | $ 80.52 | $ 62.94 | $ 50.67 | |
Nonvested Restricted Share Activity (performance- based) [Member] | ||||
Nonvested Restricted Share Activity (time-based and performance-based), Number of Shares [Roll Forward] | ||||
Outstanding at beginning of year (in shares) | 190,751 | 307,928 | 405,909 | |
Granted (in shares) | 80,472 | 86,384 | 80,193 | |
Vested (Earned/Released) (in shares) | (126,556) | (203,561) | (178,174) | |
Forfeited (in shares) | [1] | 0 | 0 | 0 |
Outstanding at end of year (in shares) | 144,667 | 190,751 | 307,928 | |
Nonvested Restricted Share Activity (time-based and performance-based), Weighted Average Grant Date Fair Value [Roll Forward] | ||||
Outstanding at beginning of year (in dollars per share) | $ 61.68 | $ 49.16 | $ 40.20 | |
Granted (in dollars per share) | 59.67 | 65.91 | 61.06 | |
Vested (Earned/Released) (in dollars per share) | 43.28 | 44.92 | 34.10 | |
Forfeited (in dollars per share) | [1] | 0 | 0 | 0 |
Outstanding at end of year (in dollars per share) | $ 71.33 | $ 61.68 | $ 49.16 | |
Shares issued as a result of performance achievement (in shares) | 37,146 | 37,425 | 24,054 | |
Nonvested Restricted Share Activity (performance- based) [Member] | General Counsel | ||||
Nonvested Restricted Share Activity (time-based and performance-based), Weighted Average Grant Date Fair Value [Roll Forward] | ||||
Shares issued as a result of performance achievement (in shares) | 1,670 | 696 | ||
[1] (1) Performance-based shares granted and earned/released for the year ended December 31, 2020 includes 24,054 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2017. These shares vested in February 2020. (2) Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are the result of failing to attain certain goals as outlined in our executive officers' compensation agreements. (3) Performance-based shares granted and earned/released for the year ended December 31, 2021 includes 37,425 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2018. These shares vested in March 2021. Performance-based shares granted for the year ended December 31, 2021 also includes 1,670 shares and 696 shares that were issued to our former General Counsel, who retired on December 15, 2021, as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the years ended December 31, 2019 and 2018, respectively. These shares vested in December 2021 in accordance with his employment agreement. (4) Performance-based shares granted and earned/released for the year ended December 31, 2022 includes 37,146 shares that were issued as a result of the performance achievement exceeding the performance targets related to grants to our executive officers for the year ended December 31, 2019. These shares vested in March 2022. |
STOCK BASED AND DEFERRED COMP_5
STOCK BASED AND DEFERRED COMPENSATION - Summary of Compensation Expense and Stock Award Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of compensation expense and stock award activity | |||
Stock-based compensation expense | $ 22,333 | $ 20,069 | $ 19,995 |
STOCK BASED AND DEFERRED COMP_6
STOCK BASED AND DEFERRED COMPENSATION - Summary of Additional Information Regarding Stock Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of stock based compensation agreements | ||
Unrecognized stock-based compensation cost | $ 29,187 | $ 25,007 |
Weighted average years expense recognition period | 1 year 11 months 23 days | 1 year 11 months 19 days |
Total equity awards outstanding (in shares) | 803,769 | 883,280 |
Payout percentage | 100% |
INCOME TAXES - Schedule of Comp
INCOME TAXES - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current taxes: | |||
Federal | $ 246,077 | $ 180,469 | $ 99,174 |
State | 54,576 | 39,930 | 21,012 |
Current income taxes | 300,653 | 220,399 | 120,186 |
Deferred taxes: | |||
Federal | (4,573) | (4,033) | (9,725) |
State | 1,046 | 1,024 | (370) |
Deferred income taxes | (3,527) | (3,009) | (10,095) |
Income tax expense | $ 297,126 | $ 217,390 | $ 110,091 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) examination | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Statutory federal income tax rate | 21% | 21% | 21% |
Effective tax rate | 23% | 22.80% | 20.60% |
Deferred tax assets, net | $ 45,452,000 | $ 40,672,000 | |
Deferred tax liabilities | 7,351,000 | 6,099,000 | |
Unrecognized tax benefits | 0 | $ 0 | |
Deferred tax assets, valuation allowance | 0 | ||
Tax benefit recognized for energy efficient homes credit | 18,900,000 | ||
NOL carryforwards | $ 0 | ||
Internal Revenue Service (IRS) [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Number of income tax examinations pending | examination | 0 | ||
State [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Number of income tax examinations pending | examination | 0 | ||
Other Receivables [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Current tax receivable | $ 0 | ||
Accrued Liabilities [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Current tax payable | $ 12,100,000 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income Tax Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
Statutory federal income tax rate | 21% | 21% | 21% |
Expected taxes at current federal statutory income tax rate | $ 270,757 | $ 200,515 | $ 112,049 |
State income taxes, net of federal tax benefit | 43,941 | 31,967 | 16,307 |
Federal tax credits | (19,676) | (20,872) | (16,523) |
Non-deductible costs and other | 2,104 | 5,780 | (1,742) |
Income tax expense | $ 297,126 | $ 217,390 | $ 110,091 |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Real estate | $ 24,199 | $ 25,960 |
Warranty reserve | 8,489 | 6,273 |
Wages payable | 8,240 | 5,834 |
Equity-based compensation | 6,597 | 5,465 |
Accrued expenses | 114 | 199 |
Other | 8,650 | 7,836 |
Total deferred tax assets | 56,289 | 51,567 |
Deferred tax liabilities: | ||
Goodwill | 2,473 | 1,611 |
Prepaids | 1,282 | 2,498 |
Fixed assets | 7,082 | 6,786 |
Total deferred tax liabilities | 10,837 | 10,895 |
Deferred tax assets, net | 45,452 | 40,672 |
Other deferred tax liabilities - state franchise taxes | 7,351 | 6,099 |
Net deferred tax assets and liabilities | $ 38,101 | $ 34,573 |
SUPPLEMENTAL DISCLOSURE OF CA_3
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid during the year for: | |||
Interest, net of interest capitalized | $ (2,279) | $ (249) | $ 355 |
Income taxes paid | 311,725 | 221,103 | 84,739 |
Non-cash operating activities: | |||
Real estate not owned (decrease)/increase | (8,011) | 8,011 | 0 |
Real estate acquired through notes payable | $ 9,960 | $ 8,047 | $ 16,597 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Payments to aviation charter [Member] | Steve Hilton, Chairman and CEO [Member] | |||
Related Party Transaction [Line Items] | |||
Payments to related parties | $ 383 | $ 535 | $ 408 |
OPERATING AND REPORTING SEGME_3
OPERATING AND REPORTING SEGMENTS - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 segment operating_segment | |
Segment Reporting [Abstract] | |
Number of business segments | segment | 2 |
Number of operating segments | operating_segment | 10 |
OPERATING AND REPORTING SEGME_4
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Homebuilding segment operating income: | ||||
Corporate and unallocated costs | $ (192,984) | $ (181,449) | $ (159,020) | |
Interest expense | (41) | (318) | (2,177) | |
Other income, net | 2,714 | 4,864 | 6,662 | |
Loss on early extinguishment of debt | 0 | (18,188) | 0 | |
Net earnings before income taxes | 1,289,318 | 954,834 | 533,566 | |
Operating Segments [Member] | Homebuilding | ||||
Homebuilding segment operating income: | ||||
Operating Income | 1,308,709 | 1,001,015 | 557,091 | |
Operating Segments [Member] | Financial Services [Member] | ||||
Homebuilding segment operating income: | ||||
Operating Income | 18,294 | 18,034 | 16,388 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | West [Member] | ||||
Homebuilding segment operating income: | ||||
Operating Income | 466,916 | 379,093 | 213,918 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | Central [Member] | ||||
Homebuilding segment operating income: | ||||
Operating Income | 376,734 | 319,435 | 185,202 | |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | East [Member] | ||||
Homebuilding segment operating income: | ||||
Operating Income | 465,059 | 302,487 | 157,971 | |
Corporate and Unallocated [Member] | ||||
Homebuilding segment operating income: | ||||
Corporate and unallocated costs | [1] | (40,358) | (50,573) | (44,398) |
Segment Reconciling Items [Member] | ||||
Homebuilding segment operating income: | ||||
Interest expense | (41) | (318) | (2,177) | |
Other income, net | 2,714 | 4,864 | 6,662 | |
Homebuilding | ||||
Homebuilding revenue: | ||||
Revenue | 6,268,727 | 5,120,110 | 4,482,120 | |
Homebuilding | Operating Segments [Member] | Homebuilding | ||||
Homebuilding revenue: | ||||
Revenue | [2] | 6,268,727 | 5,120,110 | 4,482,120 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | West [Member] | ||||
Homebuilding revenue: | ||||
Revenue | [2] | 2,250,083 | 1,935,845 | 1,800,223 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | Central [Member] | ||||
Homebuilding revenue: | ||||
Revenue | [2] | 1,846,153 | 1,504,481 | 1,282,339 |
Homebuilding | Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | East [Member] | ||||
Homebuilding revenue: | ||||
Revenue | [2] | $ 2,172,491 | $ 1,679,784 | $ 1,399,558 |
[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: Years Ended December 31, Land closing revenue: 2022 2021 2020 West $ 47,974 $ 21,426 $ 4,974 Central 10,655 3,799 8,678 East 2,600 12 4,079 Total $ 61,229 $ 25,237 $ 17,731 |
OPERATING AND REPORTING SEGME_5
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Information, Revenue (Details) - Land - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 61,229 | $ 25,237 | $ 17,731 |
Operating Segments [Member] | Homebuilding | |||
Segment Reporting Information [Line Items] | |||
Revenue | 61,229 | 25,237 | 17,731 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | West [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 47,974 | 21,426 | 4,974 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | Central [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 10,655 | 3,799 | 8,678 |
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | East [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 2,600 | $ 12 | $ 4,079 |
OPERATING AND REPORTING SEGME_6
OPERATING AND REPORTING SEGMENTS - Schedule of Segment Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | ||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | $ 76,729 | $ 90,679 | ||
Real estate | 4,358,263 | 3,734,408 | ||
Investments in unconsolidated entities | 11,753 | 5,764 | ||
Other assets | 1,325,356 | 976,682 | ||
Total assets | 5,772,101 | 4,807,533 | ||
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 | 1,536 | 610 | ||
Total assets | 1,536 | 610 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | West [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 21,599 | 26,687 | ||
Real estate | 1,775,879 | 1,571,477 | ||
Investments in unconsolidated entities | 110 | 87 | ||
Other assets | [1] | 99,267 | 66,897 | |
Total assets | 1,896,855 | 1,665,148 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | Central [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 8,992 | 11,132 | ||
Real estate | 1,298,455 | 1,076,300 | ||
Investments in unconsolidated entities | 2,866 | 2,974 | ||
Other assets | [2] | 241,470 | 199,791 | |
Total assets | 1,551,783 | 1,290,197 | ||
Operating Segments [Member] | Reportable Subsegments [Member] | Homebuilding | East [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Deposits on real estate under option or contract | 46,138 | 52,860 | ||
Real estate | 1,283,929 | 1,086,631 | ||
Investments in unconsolidated entities | 7,503 | 1,707 | ||
Other assets | 132,181 | [3] | 102,073 | |
Total assets | 1,469,751 | 1,243,271 | ||
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 | 1,274 | 996 | ||
Other assets | 850,902 | [4] | 607,311 | |
Total assets | $ 852,176 | $ 608,307 | ||
[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. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||
Total warranty reserves | $ 35,575 | $ 26,264 | $ 23,743 |