Meritage Homes Corporation (MTH) Q3 EPS Guidance Falls Short, FY Guidance Reduced

In advance of an investor conference this week where Meritage (NYSE: MTH) management will be speaking with investors, the company updated its projected EPS for 2015 and provided guidance for the third quarter.

Management revised its full-year guidance for earnings per diluted share to $3.30-3.75, including estimated earnings per diluted share of $0.70-0.85 for the third quarter. The company had previously projected 2015 earnings of $3.60-3.90 per diluted share. By comparison, Meritage earned $0.79 per diluted share in the third quarter of 2014 and $3.46 per diluted share for the full year 2014.

(Street sees FY EPS of $3.64 and Q3 EPS of $1.55)

The estimate revisions are due to a combination of factors including delays in home closings that are expected to reduce revenue, increased labor costs impacting home closing margins, and slower than anticipated realization of benefits from the company’s newer divisions in the Southeast.

“There are shortages of skilled labor in many markets as subcontractors struggle to catch up with the increased demand of a continued recovery in homebuilding,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Competition for labor has resulted in increased costs and longer construction times, intensified by the impact of severe spring weather in certain Texas and Colorado markets. While we have taken steps to deal with the labor pressures on our short-term results, we are encouraged that they illustrate a recovering homebuilding market.”

Mr. Hilton further added, “The expected contributions from some of our newer markets in the Southeast have not materialized as quickly as we previously projected and we have made operational changes to improve their performance. We remain optimistic about the longer term potential of those newer markets.”

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