Meritage Homes (MTH) risk factors, FY2025 10-K

Risks Related to the Homebuilding Industry and Economy

1. 01Increases in interest rates or decreases in mortgage availability may make purchasing a home more difficult or less desirable and may negatively impact the ability to sell new and existing homes
2. 02Our future operations may be adversely impacted by high inflation or deflation
3. 03Shortages in the availability of subcontract labor may delay construction schedules and increase our costs
4. 04Legislation related to tariffs could increase the cost to construct our homes
5. 05High cancellation rates may negatively impact our business21% rewritten
6. 06Supply shortages and other risks could materially disrupt our operations and increase costs27% rewritten
7. 07If home prices decline, potential buyers may not be able to sell their existing homes, which may negatively impact our sales
8. 08A reduction in our orders absorption levels may force us to incur and absorb additional community-level costs
9. 09Our ability to acquire and develop raw or partially finished lots may be negatively impacted if we are unable to secure performance bonds
10. 10The value of our real estate inventory may decline, leading to impairments and reduced profitability
11. 11If we are unable to successfully compete in the highly competitive housing industry, our financial results and growth may suffer
12. 12We are subject to home warranty and construction defect claims arising in the ordinary course of business, which may lead to additional reserves or expenses
13. 13A major safety incident relating to our operations could be costly in terms of potential liabilities and reputational damage
14. 14We experience fluctuations and variability in our operating results, as a result, our historical performance may not be a meaningful indicator of future results
15. 15Our level of indebtedness may adversely affect our financial position and prevent us from fulfilling our debt obligations
16. 16We are subject to counterparty risk with respect to the capped call transactions
17. 17Our ability to obtain third-party financing may be negatively affected by any downgrade of our credit rating from one or more rating agencies
18. 18The physical impacts of natural disasters or extreme weather events, which may be caused or exacerbated by climate change, could increase our costs and adversely affect our operations

Risks Related to Our Strategy

1. 19Our long-term success depends on the availability of lots and land that meet our land investment criteria
2. 20If our current strategies are not successful, it could have negative consequences on our operations, financial position and cash flows
3. 21Reduced levels of sales or a deterioration in land values may cause us to re-evaluate the viability of existing land option contracts, resulting in a potential termination of these contracts which may lead to impairment charges43% rewritten
4. 22Our lack of geographic diversification could adversely affect us if the homebuilding industry in our markets decline30% rewritten
5. 23Our disclosures related to sustainability matters expose us to risks that could adversely affect our reputation and performance57% rewritten

Operational Risks

1. 24Information technology failures and data security breaches could harm our business70% rewritten
2. 25The loss of key personnel may negatively impact us

Regulatory Risks

1. 26Expirations, amendments or changes to tax laws, incentives or credits currently available to us and our homebuyers may negatively impact our business35% rewritten
2. 27Our income tax provision and other tax liabilities may be insufficient if taxing authorities initiate and are successful in asserting tax positions that are contrary to our position
3. 28Failure to comply with laws and regulations by our employees or representatives may harm us
4. 29We are subject to extensive government regulations that could cause us to incur significant liabilities or restrict our business activities
5. 30Our financial services operations are subject to extensive regulations that could cause us to incur significant liabilities or restrict our business activities
6. 31Negative publicity could adversely affect our reputation and our business, financial results and stock price
7. 32Our business could be materially disrupted by an epidemic or pandemic, or fear of such an event, and the measures that federal, state and local governments and/or health authorities implement to address it
8. 33Special Note of Caution Regarding Forward-Looking Statements