SCOTTSDALE, Ariz., Oct. 25,
2023 /PRNewswire/ -- Taylor Morrison Home
Corporation (NYSE: TMHC), a leading national land developer and
homebuilder, announced results for the third quarter ended
September 30, 2023. Reported net
income in the third quarter was $171
million, or $1.54 per diluted
share. Adjusted net income in the third quarter was $180 million, or $1.62 per diluted share, excluding the impact of
an inventory impairment and charge related to an extinguishment of
debt.
Third quarter 2023 highlights included the following:
- Home closings revenue of $1.6
billion, driven by 2,639 home closings at an average price
of $611,000.
- GAAP home closings gross margin of 23.1% and 23.9% excluding an
inventory impairment.
- Net sales orders of 2,592, driven by a monthly absorption pace
of 2.7 per community versus 2.1 a year ago.
- 74,000 homebuilding lots owned and controlled at quarter end,
representing 6.1 years of total supply, of which 3.5 years was
owned.
- Homebuilding debt-to-capitalization of 25.9% on a gross basis
and 18.8% net of $614 million of
unrestricted cash. Total liquidity was $1.6
billion.
- Credit rating upgraded by S&P Global to BB+ from BB with a
Stable outlook.
- Book value per share increased 21% year over year to
$46.78.
"In the third quarter, our team once again achieved strong
results, including the delivery of over 2,600 homes at a
better-than-expected adjusted home closings gross margin of 23.9%.
At the same time, we flexed each of our capital allocation
priorities to increase our land investment, retire debt outstanding
and repurchase our shares, all while ending the quarter with a
significant liquidity position of $1.6
billion. In total, this drove a 21% year-over-year increase
in our book value per share to a new high of nearly $47," said Sheryl
Palmer, Taylor Morrison
Chairman and CEO.
"Our core performance was healthy, with margins and returns
remaining well above our historic norms given the meaningful
enhancements to our operating efficiencies over the last several
years that we believe will continue to drive enhanced long-term
performance. However, at the same time, it is important to
recognize that this quarter reflected the temporary impact of last
year's slower starts and sales activity and compared to record
profitability achieved this time last year. We also acknowledge
that the rapid reacceleration in interest rates in September has
once again injected some hesitation into the market alongside
typical seasonal slowing."
Palmer continued, "The strength of our diversified consumer
strategy and balanced product portfolio better equips our
homebuilding and financial services teams to effectively manage
these headwinds. The resiliency of our business is a function of
our diversification across buyer groups, emphasis on high-quality
community locations and return-focused investment strategy that has
been years in the making. Our portfolio meets buyer demand across
entry-level, move-up and resort lifestyle consumers, with the
necessary local and national scale to compete effectively. With
different needs and preferences among these consumer sets, this
approach allows us to operate both a spec and to-be-built operating
model, which offers important strategic advantages, including
production efficiencies, reduced risk and greater margin potential.
These buyers group also respond differently to changes in interest
rates, allowing us to calibrate our sales strategies to optimize
our performance."
"As a result, with exceptional cohesion between our teams and
continued financial strength among our targeted consumers, we will
continue to execute on our core operating strategies, with a focus
on appropriately balancing pace and price by community to drive
bottom-line results and returns. I am pleased that despite the
challenges, we are once again raising our full-year guidance for
home closings and adjusted home closings gross margin," said
Palmer.
Business Highlights (All comparisons are of the
current quarter to the prior-year quarter, unless indicated.)
Homebuilding
- Home closings revenue declined to $1.6
billion, driven by a 14% decrease in home closings to 2,639
and a 6% decrease in average closing price to $611,000.
- On a reported basis, home closings gross margin declined 440
basis points year over year to 23.1% from the record-high of 27.5%
a year ago. Excluding the impact of an impairment charge related to
one community in the West facing a change in scope due to municipal
requirements, adjusted home closings gross margin was 23.9%.
- SG&A as a percentage of home closings revenue increased 300
basis points to 10.4% from the record-low of 7.4% a year ago as the
Company adjusted to the change in market conditions.
- Net sales orders increased 25% to 2,592, driven by a 26%
increase in the monthly absorption pace to 2.7 per community and
flattish ending community count of 325. Average net sales order
price increased 1% to $623,000.
- As a percentage of gross orders, cancellations equaled 11.4%
versus 15.6% a year ago. This was consistent with historic
norms.
- Ending backlog was 6,118 homes with a sales value of
$4.1 billion. Backlog customer
deposits averaged approximately $62,000, or just over 9%, per home.
Land Portfolio
- Homebuilding land acquisition and development spend totaled
$552 million. Development-related
spend accounted for 42% of the total. Year to date, total
homebuilding land acquisition and development spend has been
approximately $1.3 billion.
- Homebuilding lot supply was approximately 74,000 owned and
controlled homesites, down from 80,000.
- Controlled homebuilding lots as a share of total lot supply was
42%, flat from a year ago.
- Based on trailing twelve-month home closings, total
homebuilding lots represented 6.1 years of total supply, of which
3.5 years was owned. This was unchanged from a year ago.
Financial Services
- The mortgage capture rate reached another all-time high of 88%,
up from 68%.
- Borrowers had an average credit score of 753 and debt-to-income
ratio of 39%.
Balance Sheet
- Total liquidity was approximately $1.6
billion, including $614
million of unrestricted cash and $1.1
billion of total capacity on the Company's revolving credit
facilities, which were undrawn outside of normal letters of
credit.
- In September, the Company redeemed the full $350 million principal outstanding related to its
2024 Senior Notes using cash on hand.
- The gross homebuilding debt-to-capital ratio was 25.9%, down
from 37.1% a year ago. Including $614
million of unrestricted cash on hand, the net homebuilding
debt-to-capital ratio was 18.8%, down from 34.0% a year ago.
- In September, the Company received an upgraded credit rating
from S&P Global to BB+ from BB with a Stable outlook in
recognition of its strong operating momentum, earnings performance
and debt reduction.
- During the quarter, the Company repurchased 2.2 million shares
for $100 million at an average price
of approximately $46. At quarter end,
the Company had $176 million
remaining on its share repurchase authorization.
Business Outlook
Fourth Quarter 2023
- Home closings are expected to be approximately 2,950
- Average closing price is expected to be around $615,000
- Home closings gross margin is expected to be approximately
23.0%
- Ending active community count is expected to be between 320 to
325
- Effective tax rate is expected to be approximately 25%
- Diluted share count is expected to be approximately 109
million
Full Year 2023
- Home closings are now expected to be approximately 11,250
- Adjusted home closings gross margin excluding inventory
impairments is now expected to be around 23.7%(1)
- Ending active community count is expected to be between 320 to
325
- SG&A as a percentage of home closings revenue is expected
to be in the high-9% range
- Effective tax rate is expected to be approximately 25%
- Diluted share count is now expected to be approximately 110
million
- Land and development spend is expected to be approximately
$1.8 billion
(1) Note: The adjusted full-year home closings gross margin
guidance excludes an approximate 10 basis point impact related to
the inventory impairment recorded in the third quarter.
Quarterly Financial Comparison
(Dollars in
thousands)
|
|
Q3
2023
|
|
|
Q3
2022
|
|
|
Q3 2023 vs. Q3
2022
|
|
Total
Revenue
|
|
$
|
1,675,545
|
|
|
$
|
2,034,644
|
|
|
|
(17.6)
|
%
|
Home Closings
Revenue
|
|
$
|
1,611,883
|
|
|
$
|
1,983,775
|
|
|
|
(18.7)
|
%
|
Home Closings Gross
Margin
|
|
$
|
372,884
|
|
|
$
|
545,611
|
|
|
|
(31.7)
|
%
|
|
|
|
23.1
|
%
|
|
|
27.5
|
%
|
|
440 bps
decrease
|
|
SG&A
|
|
$
|
167,791
|
|
|
$
|
147,049
|
|
|
|
14.1
|
%
|
% of Home Closings
Revenue
|
|
|
10.4
|
%
|
|
|
7.4
|
%
|
|
300 bps
increase
|
|
Earnings Conference Call Webcast
A public webcast to discuss the Company's earnings will be held
later today at 8:30 a.m. ET.
A live audio webcast of the conference call will be
available on Taylor Morrison's
website at www.taylormorrison.com on the Investor
Relations portion of the site under the Events & Presentations
tab. For call participants, the dial-in number is (833) 470-1428
and conference ID is 524943. The call will be recorded and
available for replay on the Company's website.
About Taylor Morrison
Headquartered in Scottsdale, Arizona, Taylor
Morrison is one of the nation's leading homebuilders and
developers. We serve a wide array of consumers from coast to coast,
including first-time, move-up, luxury and resort lifestyle
homebuyers and renters under our family of brands—including
Taylor Morrison, Esplanade, Darling
Homes Collection by Taylor Morrison
and Yardly. From 2016-2023, Taylor
Morrison has been recognized as America's Most Trusted®
Builder by Lifestory Research. Our strong commitment to
sustainability, our communities, and our team is highlighted in our
latest Environmental, Social, and Governance (ESG) Report on
our website.
Forward-Looking Statements
This earnings summary includes "forward-looking statements."
These statements are subject to a number of risks, uncertainties
and other factors that could cause our actual results, performance,
prospects or opportunities, as well as those of the markets we
serve or intend to serve, to differ materially from those expressed
in, or implied by, these statements. You can identify these
statements by the fact that they do not relate to matters of a
strictly factual or historical nature and generally discuss or
relate to forecasts, estimates or other expectations regarding
future events. Generally, the words ""anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe," "may," "will,"
"can," "could," "might," "should" and similar expressions identify
forward-looking statements, including statements related to
expected financial, operating and performance results, planned
transactions, planned objectives of management, future developments
or conditions in the industries in which we participate and other
trends, developments and uncertainties that may affect our business
in the future.
Such risks, uncertainties and other factors include, among other
things: inflation or deflation; changes in general and local
economic conditions; slowdowns or severe downturns in the housing
market; homebuyers' ability to obtain suitable financing; increases
in interest rates, taxes or government fees; shortages in,
disruptions of and cost of labor; higher cancellation rates of
existing agreements of sale; competition in our industry; any
increase in unemployment or underemployment; the scale and scope of
the ongoing COVID-19 pandemic; the seasonality of our
business; the physical impacts of climate change and the increased
focus by third-parties on sustainability issues; our ability to
obtain additional performance, payment and completion surety bonds
and letters of credit; significant home warranty and construction
defect claims; our reliance on subcontractors; failure to manage
land acquisitions, inventory and development and construction
processes; availability of land and lots at competitive prices;
decreases in the market value of our land inventory; new or
changing government regulations and legal challenges; our
compliance with environmental laws and regulations regarding
climate change; our ability to sell mortgages we originate and
claims on loans sold to third parties; governmental regulation
applicable to our financial services and title services business;
the loss of any of our important commercial lender relationships;
our ability to use deferred tax assets; raw materials and building
supply shortages and price fluctuations; our concentration of
significant operations in certain geographic areas; risks
associated with our unconsolidated joint venture arrangements;
information technology failures and data security breaches; costs
to engage in and the success of future growth or expansion of our
operations or acquisitions or disposals of businesses; costs
associated with our defined benefit and defined contribution
pension schemes; damages associated with any major health and
safety incident; our ownership, leasing or occupation of land and
the use of hazardous materials; existing or future litigation,
arbitration or other claims; negative publicity or poor relations
with the residents of our communities; failure to recruit, retain
and develop highly skilled, competent people; utility and resource
shortages or rate fluctuations; constriction of the capital
markets; risks related to instability in the banking system; risks
associated with civil unrest, acts of terrorism, threats to
national security, the conflicts in Eastern Europe and the Middle East and other geopolitical events; any
failure of lawmakers to agree on a budget or appropriation
legislation to fund the federal government's operations (also known
as a government shutdown), and financial markets' and businesses'
reactions to any such failure; risks related to our substantial
debt and the agreements governing such debt, including restrictive
covenants contained in such agreements; our ability to access the
capital markets; the risks associated with maintaining effective
internal controls over financial reporting; provisions in our
charter and bylaws that may delay or prevent an acquisition by a
third party; and our ability to effectively manage our expanded
operations.
In addition, other such risks and uncertainties may be found in
our most recent annual report on Form 10-K and our subsequent
quarterly reports filed with the Securities and Exchange Commission
(SEC) as such factors may be updated from time to time in our
periodic filings with the SEC. We undertake no duty to update any
forward-looking statement, whether as a result of new information,
future events or changes in our expectations, except as required by
applicable law.
Taylor Morrison Home
Corporation
Consolidated
Statements of Operations
(In thousands, except
per share amounts, unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Home closings revenue,
net
|
|
$
|
1,611,883
|
|
|
$
|
1,983,775
|
|
|
$
|
5,221,225
|
|
|
$
|
5,511,204
|
|
Land closings
revenue
|
|
|
14,291
|
|
|
|
14,225
|
|
|
|
31,439
|
|
|
|
66,651
|
|
Financial services
revenue
|
|
|
40,045
|
|
|
|
27,749
|
|
|
|
117,108
|
|
|
|
98,419
|
|
Amenity and other
revenue
|
|
|
9,326
|
|
|
|
8,895
|
|
|
|
28,194
|
|
|
|
56,517
|
|
Total revenue
|
|
|
1,675,545
|
|
|
|
2,034,644
|
|
|
|
5,397,966
|
|
|
|
5,732,791
|
|
Cost of home
closings
|
|
|
1,238,999
|
|
|
|
1,438,164
|
|
|
|
3,980,749
|
|
|
|
4,084,748
|
|
Cost of land
closings
|
|
|
13,572
|
|
|
|
11,571
|
|
|
|
30,620
|
|
|
|
50,139
|
|
Financial services
expenses
|
|
|
23,128
|
|
|
|
20,395
|
|
|
|
70,618
|
|
|
|
66,092
|
|
Amenity and other
expenses
|
|
|
8,128
|
|
|
|
6,574
|
|
|
|
25,010
|
|
|
|
39,264
|
|
Total cost of revenue
|
|
|
1,283,827
|
|
|
|
1,476,704
|
|
|
|
4,106,997
|
|
|
|
4,240,243
|
|
Gross
margin
|
|
|
391,718
|
|
|
|
557,940
|
|
|
|
1,290,969
|
|
|
|
1,492,548
|
|
Sales, commissions and
other marketing costs
|
|
|
98,797
|
|
|
|
94,692
|
|
|
|
304,591
|
|
|
|
279,950
|
|
General and
administrative expenses
|
|
|
68,994
|
|
|
|
52,357
|
|
|
|
205,904
|
|
|
|
189,905
|
|
Net (income)/loss from
unconsolidated entities
|
|
|
(1,934)
|
|
|
|
1,180
|
|
|
|
(7,049)
|
|
|
|
2,986
|
|
Interest
(income)/expense, net
|
|
|
(5,782)
|
|
|
|
4,382
|
|
|
|
(12,013)
|
|
|
|
13,823
|
|
Other expense/(income),
net
|
|
|
2,968
|
|
|
|
5,751
|
|
|
|
6,683
|
|
|
|
(4,720)
|
|
Loss/(gain) on
extinguishment of debt, net
|
|
|
269
|
|
|
|
(71)
|
|
|
|
269
|
|
|
|
(13,542)
|
|
Income before income
taxes
|
|
|
228,406
|
|
|
|
399,649
|
|
|
|
792,584
|
|
|
|
1,024,146
|
|
Income tax
provision
|
|
|
57,960
|
|
|
|
90,418
|
|
|
|
196,005
|
|
|
|
243,300
|
|
Net income before
allocation to non-controlling interests
|
|
|
170,446
|
|
|
|
309,231
|
|
|
|
596,579
|
|
|
|
780,846
|
|
Net loss/(income)
attributable to non-controlling interests
|
|
|
245
|
|
|
|
548
|
|
|
|
(235)
|
|
|
|
(3,377)
|
|
Net income available
to Taylor Morrison Home Corporation
|
|
$
|
170,691
|
|
|
$
|
309,779
|
|
|
$
|
596,344
|
|
|
$
|
777,469
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.57
|
|
|
$
|
2.75
|
|
|
$
|
5.48
|
|
|
$
|
6.63
|
|
Diluted
|
|
$
|
1.54
|
|
|
$
|
2.72
|
|
|
$
|
5.40
|
|
|
$
|
6.56
|
|
Weighted average number
of shares of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
108,837
|
|
|
|
112,701
|
|
|
|
108,827
|
|
|
|
117,242
|
|
Diluted
|
|
|
110,622
|
|
|
|
113,780
|
|
|
|
110,536
|
|
|
|
118,438
|
|
Taylor Morrison Home
Corporation
Condensed
Consolidated Balance Sheets
(In thousands,
unaudited)
|
|
|
|
September 30,
2023
|
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
613,811
|
|
|
$
|
724,488
|
|
Restricted
cash
|
|
|
765
|
|
|
|
2,147
|
|
Total cash, cash
equivalents, and restricted cash
|
|
|
614,576
|
|
|
|
726,635
|
|
Owned
inventory
|
|
|
5,479,987
|
|
|
|
5,346,905
|
|
Consolidated real
estate not owned
|
|
|
423
|
|
|
|
23,971
|
|
Total real estate
inventory
|
|
|
5,480,410
|
|
|
|
5,370,876
|
|
Land
deposits
|
|
|
206,258
|
|
|
|
263,356
|
|
Mortgage loans held for
sale
|
|
|
241,749
|
|
|
|
346,364
|
|
Lease right of use
assets
|
|
|
76,463
|
|
|
|
90,446
|
|
Prepaid expenses and
other assets, net
|
|
|
305,581
|
|
|
|
265,392
|
|
Other receivables,
net
|
|
|
188,723
|
|
|
|
191,504
|
|
Investments in
unconsolidated entities
|
|
|
329,634
|
|
|
|
282,900
|
|
Deferred tax assets,
net
|
|
|
67,656
|
|
|
|
67,656
|
|
Property and equipment,
net
|
|
|
262,671
|
|
|
|
202,398
|
|
Goodwill
|
|
|
663,197
|
|
|
|
663,197
|
|
Total assets
|
|
$
|
8,436,918
|
|
|
$
|
8,470,724
|
|
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
272,830
|
|
|
$
|
269,761
|
|
Accrued expenses and
other liabilities
|
|
|
487,262
|
|
|
|
490,253
|
|
Lease
liabilities
|
|
|
86,401
|
|
|
|
100,174
|
|
Customer
deposits
|
|
|
380,544
|
|
|
|
412,092
|
|
Estimated development
liabilities
|
|
|
42,271
|
|
|
|
43,753
|
|
Senior notes,
net
|
|
|
1,468,255
|
|
|
|
1,816,303
|
|
Loans payable and other
borrowings
|
|
|
332,177
|
|
|
|
361,486
|
|
Revolving credit
facility borrowings
|
|
|
—
|
|
|
|
—
|
|
Mortgage warehouse
borrowings
|
|
|
191,645
|
|
|
|
306,072
|
|
Liabilities
attributable to consolidated real estate not owned
|
|
|
423
|
|
|
|
23,971
|
|
Total
liabilities
|
|
$
|
3,261,808
|
|
|
$
|
3,823,865
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
5,175,110
|
|
|
|
4,646,859
|
|
Total liabilities and
stockholders' equity
|
|
$
|
8,436,918
|
|
|
$
|
8,470,724
|
|
Homes Closed and
Home Closings Revenue, Net:
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Homes
Closed
|
|
|
Home Closings
Revenue, Net
|
|
|
Average Selling
Price
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
East
|
|
|
996
|
|
|
|
1,118
|
|
|
|
(10.9)
|
%
|
|
$
|
572,971
|
|
|
$
|
638,270
|
|
|
|
(10.2)
|
%
|
|
$
|
575
|
|
|
$
|
571
|
|
|
|
0.7
|
%
|
Central
|
|
|
709
|
|
|
|
835
|
|
|
|
(15.1)
|
%
|
|
|
423,396
|
|
|
|
522,247
|
|
|
|
(18.9)
|
%
|
|
|
597
|
|
|
|
625
|
|
|
|
(4.5)
|
%
|
West
|
|
|
934
|
|
|
|
1,097
|
|
|
|
(14.9)
|
%
|
|
|
615,516
|
|
|
|
823,258
|
|
|
|
(25.2)
|
%
|
|
|
659
|
|
|
|
750
|
|
|
|
(12.1)
|
%
|
Total
|
|
|
2,639
|
|
|
|
3,050
|
|
|
|
(13.5)
|
%
|
|
$
|
1,611,883
|
|
|
$
|
1,983,775
|
|
|
|
(18.7)
|
%
|
|
$
|
611
|
|
|
$
|
650
|
|
|
|
(6.0)
|
%
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
Homes
Closed
|
|
|
Home Closings
Revenue, Net
|
|
|
Average Selling
Price
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
East
|
|
|
3,228
|
|
|
|
3,152
|
|
|
|
2.4
|
%
|
|
$
|
1,906,862
|
|
|
$
|
1,757,444
|
|
|
|
8.5
|
%
|
|
$
|
591
|
|
|
$
|
558
|
|
|
|
5.9
|
%
|
Central
|
|
|
2,376
|
|
|
|
2,277
|
|
|
|
4.3
|
%
|
|
|
1,499,420
|
|
|
|
1,347,828
|
|
|
|
11.2
|
%
|
|
|
631
|
|
|
|
592
|
|
|
|
6.6
|
%
|
West
|
|
|
2,701
|
|
|
|
3,421
|
|
|
|
(21.0)
|
%
|
|
|
1,814,943
|
|
|
|
2,405,932
|
|
|
|
(24.6)
|
%
|
|
|
672
|
|
|
|
703
|
|
|
|
(4.4)
|
%
|
Total
|
|
|
8,305
|
|
|
|
8,850
|
|
|
|
(6.2)
|
%
|
|
$
|
5,221,225
|
|
|
$
|
5,511,204
|
|
|
|
(5.3)
|
%
|
|
$
|
629
|
|
|
$
|
623
|
|
|
|
1.0
|
%
|
|
Net Sales
Orders:
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Net Sales
Orders
|
|
|
Sales
Value
|
|
|
Average Selling
Price
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
East
|
|
|
940
|
|
|
|
1,041
|
|
|
|
(9.7)
|
%
|
|
$
|
559,524
|
|
|
$
|
640,093
|
|
|
|
(12.6)
|
%
|
|
$
|
595
|
|
|
$
|
615
|
|
|
|
(3.3)
|
%
|
Central
|
|
|
641
|
|
|
|
450
|
|
|
|
42.4
|
%
|
|
|
374,224
|
|
|
|
267,681
|
|
|
|
39.8
|
%
|
|
|
584
|
|
|
|
595
|
|
|
|
(1.8)
|
%
|
West
|
|
|
1,011
|
|
|
|
578
|
|
|
|
74.9
|
%
|
|
|
680,666
|
|
|
|
372,223
|
|
|
|
82.9
|
%
|
|
|
673
|
|
|
|
644
|
|
|
|
4.5
|
%
|
Total
|
|
|
2,592
|
|
|
|
2,069
|
|
|
|
25.3
|
%
|
|
$
|
1,614,414
|
|
|
$
|
1,279,997
|
|
|
|
26.1
|
%
|
|
$
|
623
|
|
|
$
|
619
|
|
|
|
0.6
|
%
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
Net Sales
Orders
|
|
|
Sales
Value
|
|
|
Average Selling
Price
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
East
|
|
|
3,066
|
|
|
|
3,189
|
|
|
|
(3.9)
|
%
|
|
$
|
1,786,988
|
|
|
$
|
1,976,798
|
|
|
|
(9.6)
|
%
|
|
$
|
583
|
|
|
$
|
620
|
|
|
|
(6.0)
|
%
|
Central
|
|
|
2,123
|
|
|
|
1,979
|
|
|
|
7.3
|
%
|
|
|
1,248,196
|
|
|
|
1,294,106
|
|
|
|
(3.5)
|
%
|
|
|
588
|
|
|
|
654
|
|
|
|
(10.1)
|
%
|
West
|
|
|
3,280
|
|
|
|
2,509
|
|
|
|
30.7
|
%
|
|
|
2,219,056
|
|
|
|
1,878,886
|
|
|
|
18.1
|
%
|
|
|
677
|
|
|
|
749
|
|
|
|
(9.6)
|
%
|
Total
|
|
|
8,469
|
|
|
|
7,677
|
|
|
|
10.3
|
%
|
|
$
|
5,254,240
|
|
|
$
|
5,149,790
|
|
|
|
2.0
|
%
|
|
$
|
620
|
|
|
$
|
671
|
|
|
|
(7.6)
|
%
|
|
Sales Order
Backlog:
|
|
|
|
As of
September 30,
|
|
|
|
Sold Homes in
Backlog
|
|
|
Sales
Value
|
|
|
Average Selling
Price
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
East
|
|
|
2,421
|
|
|
|
3,256
|
|
|
|
(25.6)
|
%
|
|
$
|
1,613,188
|
|
|
$
|
2,121,673
|
|
|
|
(24.0)
|
%
|
|
$
|
666
|
|
|
$
|
652
|
|
|
|
2.1
|
%
|
Central
|
|
|
1,464
|
|
|
|
2,489
|
|
|
|
(41.2)
|
%
|
|
|
960,269
|
|
|
|
1,694,111
|
|
|
|
(43.3)
|
%
|
|
|
656
|
|
|
|
681
|
|
|
|
(3.7)
|
%
|
West
|
|
|
2,233
|
|
|
|
2,196
|
|
|
|
1.7
|
%
|
|
|
1,523,545
|
|
|
|
1,579,937
|
|
|
|
(3.6)
|
%
|
|
|
682
|
|
|
|
719
|
|
|
|
(5.1)
|
%
|
Total
|
|
|
6,118
|
|
|
|
7,941
|
|
|
|
(23.0)
|
%
|
|
$
|
4,097,002
|
|
|
$
|
5,395,721
|
|
|
|
(24.1)
|
%
|
|
$
|
670
|
|
|
$
|
679
|
|
|
|
(1.3)
|
%
|
Ending Active
Selling Communities:
|
|
|
|
As of
September 30,
|
|
|
Change
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
East
|
|
|
107
|
|
|
|
118
|
|
|
|
(9.3)
|
%
|
Central
|
|
|
94
|
|
|
|
105
|
|
|
|
(10.5)
|
%
|
West
|
|
|
124
|
|
|
|
103
|
|
|
|
20.4
|
%
|
Total
|
|
|
325
|
|
|
|
326
|
|
|
|
(0.3)
|
%
|
Reconciliation of Non-GAAP Financial Measures
In addition to the results reported in accordance with
accounting principles generally accepted in the United States ("GAAP"), we provide our
investors with supplemental information relating to: (i) adjusted
net income and adjusted earnings per common share, (ii) adjusted
income before income taxes and related margin, (iii) adjusted home
closings gross margin; (iv) EBITDA and adjusted EBITDA and (v) net
homebuilding debt to capitalization ratio.
Adjusted net income, adjusted earnings per common share and
adjusted income before income taxes and related margin are non-GAAP
financial measures that reflect the net income/(loss) available to
the Company excluding, to the extent applicable in a given period,
the impact of inventory impairment charges, impairment of
investment in unconsolidated entities, pre-acquisition abandonment
charges, gains/losses on land transfers to joint ventures and
extinguishment of debt, net, and in the case of adjusted net income
and adjusted earnings per common share, the tax impact due to such
items. EBITDA and Adjusted EBITDA are non-GAAP financial measures
that measure performance by adjusting net income before allocation
to non-controlling interests to exclude, as applicable, interest
expense/(income), net, amortization of capitalized interest, income
taxes, depreciation and amortization (EBITDA), non-cash
compensation expense, if any, inventory impairment charges,
impairment of investment in unconsolidated entities,
pre-acquisition abandonment charges, gains/losses on land transfers
to joint ventures and extinguishment of debt, net. Net homebuilding
debt to capitalization ratio is a non-GAAP financial measure we
calculate by dividing (i) total debt, plus unamortized debt
issuance cost/(premium), net, and less mortgage warehouse
borrowings, net of unrestricted cash and cash equivalents ("net
homebuilding debt"), by (ii) total capitalization (the sum of net
homebuilding debt and total stockholders' equity). Adjusted home
closings gross margin is a non-GAAP financial measure based on GAAP
home closings gross margin (which is inclusive of capitalized
interest), excluding inventory impairment charges.
Management uses these non-GAAP financial measures to evaluate
our performance on a consolidated basis, as well as the performance
of our regions, and to set targets for performance-based
compensation. We also use the ratio of net homebuilding debt
to total capitalization as an indicator of overall leverage and to
evaluate our performance against other companies in the
homebuilding industry. In the future, we may include
additional adjustments in the above-described non-GAAP financial
measures to the extent we deem them appropriate and useful to
management and investors.
We believe that adjusted net income, adjusted earnings per
common share, adjusted income before income taxes and related
margin, as well as EBITDA and adjusted EBITDA, are useful for
investors in order to allow them to evaluate our operations without
the effects of various items we do not believe are characteristic
of our ongoing operations or performance and also because such
metrics assist both investors and management in analyzing and
benchmarking the performance and value of our business. Adjusted
EBITDA also provides an indicator of general economic performance
that is not affected by fluctuations in interest rates or effective
tax rates, levels of depreciation or amortization, or unusual
items. Because we use the ratio of net homebuilding debt to total
capitalization to evaluate our performance against other companies
in the homebuilding industry, we believe this measure is also
relevant and useful to investors for that reason. We believe that
adjusted home closings gross margin is useful to investors because
it allows investors to evaluate the performance of our homebuilding
operations without the varying effects of items or transactions we
do not believe are characteristic of our ongoing operations or
performance.
These non-GAAP financial measures should be considered in
addition to, rather than as a substitute for, the comparable U.S.
GAAP financial measures of our operating performance or liquidity.
Although other companies in the homebuilding industry may report
similar information, their definitions may differ. We urge
investors to understand the methods used by other companies to
calculate similarly-titled non-GAAP financial measures before
comparing their measures to ours.
A reconciliation of (i) adjusted net income and adjusted
earnings per common share, (ii) adjusted income before income taxes
and related margin, (iii) adjusted home closings gross margin;
(iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to
capitalization ratio to the comparable GAAP measures is presented
below.
Adjusted Net Income
and Adjusted Earnings Per Common Share
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
(Dollars in
thousands, except per share data)
|
|
2023
|
|
|
2022
|
|
Net income available to
TMHC
|
|
$
|
170,691
|
|
|
$
|
309,779
|
|
Inventory
impairment(1)
|
|
|
11,791
|
|
|
|
—
|
|
Gain on land transfers
to joint ventures(2)
|
|
|
—
|
|
|
|
(808)
|
|
Loss/(gain) on
extinguishment of debt, net(3)
|
|
|
269
|
|
|
|
(71)
|
|
Tax impact due to above
non-GAAP reconciling items
|
|
|
(3,060)
|
|
|
|
205
|
|
Adjusted net
income
|
|
$
|
179,691
|
|
|
$
|
309,105
|
|
Basic weighted average
number of shares
|
|
|
108,837
|
|
|
|
112,701
|
|
Adjusted earnings
per common share - Basic
|
|
$
|
1.65
|
|
|
$
|
2.74
|
|
Diluted weighted
average number of shares
|
|
|
110,622
|
|
|
|
113,780
|
|
Adjusted earnings
per common share – Diluted
|
|
$
|
1.62
|
|
|
$
|
2.72
|
|
|
|
(1)
|
Charge included in Cost
of home closings on the Consolidated Statement of
Operations
|
(2)
|
Charge included in
Other/(income) expense, net on the Consolidated Statement of
Operations
|
(3)
|
Included in Loss/(gain)
on extinguishment of debt, net on the Consolidated Statement of
Operations
|
Adjusted Income
Before Income Taxes and Related Margin
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
Income before income
taxes
|
|
$
|
228,406
|
|
|
$
|
399,649
|
|
Inventory
impairment
|
|
|
11,791
|
|
|
|
—
|
|
Gain on land transfers
to joint ventures
|
|
|
—
|
|
|
|
(808)
|
|
Loss/(gain) on
extinguishment of debt, net
|
|
|
269
|
|
|
|
(71)
|
|
Adjusted income
before income taxes
|
|
$
|
240,466
|
|
|
$
|
398,770
|
|
Total
revenue
|
|
$
|
1,675,545
|
|
|
$
|
2,034,644
|
|
Income before income
taxes margin
|
|
|
13.6
|
%
|
|
|
19.6
|
%
|
Adjusted income
before income taxes margin
|
|
|
14.4
|
%
|
|
|
19.6
|
%
|
|
|
|
|
Adjusted Home
Closings Gross Margin
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
Home closings
revenue
|
|
$
|
1,611,883
|
|
|
$
|
1,983,775
|
|
Cost of home
closings
|
|
$
|
1,238,999
|
|
|
$
|
1,438,164
|
|
Home closings gross
margin
|
|
$
|
372,884
|
|
|
$
|
545,611
|
|
Inventory
impairment
|
|
|
11,791
|
|
|
|
—
|
|
Adjusted home
closings gross margin
|
|
$
|
384,675
|
|
|
$
|
545,611
|
|
Home closings gross
margin as a percentage of home closings revenue
|
|
|
23.1
|
%
|
|
|
27.5
|
%
|
Adjusted home closings
gross margin as a percentage of home closings revenue
|
|
|
23.9
|
%
|
|
|
27.5
|
%
|
|
|
|
|
EBITDA and Adjusted
EBITDA Reconciliation
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
(Dollars in
thousands)
|
|
2023
|
|
|
2022
|
|
Net income before
allocation to non-controlling interests
|
|
$
|
170,446
|
|
|
$
|
309,231
|
|
Interest
(income)/expense, net
|
|
|
(5,782)
|
|
|
|
4,382
|
|
Amortization of
capitalized interest
|
|
|
32,377
|
|
|
|
33,774
|
|
Income tax
provision
|
|
|
57,960
|
|
|
|
90,418
|
|
Depreciation and
amortization
|
|
|
2,728
|
|
|
|
1,484
|
|
EBITDA
|
|
$
|
257,729
|
|
|
$
|
439,289
|
|
Non-cash compensation
expense
|
|
|
5,702
|
|
|
|
5,333
|
|
Inventory
impairment
|
|
|
11,791
|
|
|
|
—
|
|
Gain on land transfers
to joint ventures
|
|
|
—
|
|
|
|
(808)
|
|
Loss/(gain) on
extinguishment of debt, net
|
|
|
269
|
|
|
|
(71)
|
|
Adjusted
EBITDA
|
|
$
|
275,491
|
|
|
$
|
443,743
|
|
Total
revenue
|
|
$
|
1,675,545
|
|
|
$
|
2,034,644
|
|
Net income before
allocation to non-controlling interests as a percentage of
total revenue
|
|
|
10.2
|
%
|
|
|
15.2
|
%
|
EBITDA as a
percentage of total revenue
|
|
|
15.4
|
%
|
|
|
21.6
|
%
|
Adjusted EBITDA as a
percentage of total revenue
|
|
|
16.4
|
%
|
|
|
21.8
|
%
|
Debt to Capitalization Ratios
Reconciliation
|
|
|
|
(Dollars in
thousands)
|
|
As of
September 30, 2023
|
|
|
As of
June 30, 2023
|
|
|
As of
September 30, 2022
|
|
Total debt
|
|
$
|
1,992,077
|
|
|
$
|
2,393,571
|
|
|
$
|
2,729,924
|
|
Plus: unamortized debt
issuance cost, net
|
|
|
8,815
|
|
|
|
9,613
|
|
|
|
11,242
|
|
Less: mortgage
warehouse borrowings
|
|
$
|
(191,645)
|
|
|
|
(249,898)
|
|
|
|
(146,335)
|
|
Total homebuilding
debt
|
|
$
|
1,809,247
|
|
|
$
|
2,153,286
|
|
|
$
|
2,594,831
|
|
Total equity
|
|
|
5,175,110
|
|
|
|
5,095,313
|
|
|
|
4,403,466
|
|
Total
capitalization
|
|
$
|
6,984,357
|
|
|
$
|
7,248,599
|
|
|
$
|
6,998,297
|
|
Total homebuilding
debt to capitalization ratio
|
|
|
25.9
|
%
|
|
|
29.7
|
%
|
|
|
37.1
|
%
|
Total homebuilding
debt
|
|
$
|
1,809,247
|
|
|
$
|
2,153,286
|
|
|
$
|
2,594,831
|
|
Less: cash and cash
equivalents
|
|
|
(613,811)
|
|
|
|
(1,227,264)
|
|
|
|
(329,244)
|
|
Net homebuilding
debt
|
|
$
|
1,195,436
|
|
|
$
|
926,022
|
|
|
$
|
2,265,587
|
|
Total equity
|
|
|
5,175,110
|
|
|
|
5,095,313
|
|
|
|
4,403,466
|
|
Total
capitalization
|
|
$
|
6,370,546
|
|
|
$
|
6,021,335
|
|
|
$
|
6,669,053
|
|
Net homebuilding
debt to capitalization ratio
|
|
|
18.8
|
%
|
|
|
15.4
|
%
|
|
|
34.0
|
%
|
CONTACT:
Mackenzie
Aron, VP Investor Relations
(480) 734-2060
investor@taylormorrison.com
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SOURCE Taylor Morrison