SCOTTSDALE, Ariz., Oct. 31, 2018 /PRNewswire/ -- Taylor
Morrison Home Corporation (NYSE: TMHC) today reported third quarter
total revenue of $1,036 million and
home closings gross margin, inclusive of capitalized interest, of
18.9 percent leading to diluted earnings per share of $0.83.
Third Quarter 2018 Highlights:
- Net income was $94 million with
diluted earnings per share of $0.83
- Home closings were 2,115, a 15% increase over the prior year
quarter
- Total revenue was $1,036 million,
a 14% increase over the prior year quarter
- Sales per outlet were 2.2, a 10% increase over the prior year
quarter
- Net sales orders were 1,822, a 3% increase over the prior year
quarter
- Home closings gross margin, inclusive of capitalized interest,
was 18.9 percent, a sequential improvement of 90 basis points from
the second quarter of 2018
"I'm pleased to share that once again we have delivered or
exceeded on all points of our guidance—a direct reflection of our
teams' effort and focus on driving shareholder value," said
Chairman and CEO, Sheryl Palmer.
For the third quarter, net sales orders were 1,822 with an
average community count of 275. The Company ended the quarter
with 4,449 units in backlog with a sales value of more than
$2.3 billion.
"On Oct. 2, we announced the
closing of the AV Homes acquisition, the timing consistent with
what we shared in early June when we made our initial announcement
with the intent to acquire," added Palmer. "We're very
pleased with the purchase at book value and believe it to be the
right strategic transaction, at the right price and time. From that
initial announcement through today, all parties involved have
worked at an accelerated pace to assure that we would be in the
best position for a successful integration. Today, the integration
is further along than I would have imagined by this point and I'm
delighted with our progress."
Palmer also added, "The sales environment has been getting a lot
of coverage this earnings cycle as the industry has seen moderation
in sales paces. We believe there are differing factors at play
including an adjustment period as buyers assess the interest rate
and affordability environment. Looking at the macro data—including
the underbuilding of single-family homes and a healthy U.S.
economy—at this time, we believe this break in momentum is likely a
pause in the extended cycle."
"Our earnings before income taxes were $101 million, or 9.7 percent of revenue.
Home closings gross margin, inclusive of capitalized interest, was
18.9 percent, representing a 30 basis point increase from the third
quarter of 2017 and a 90 basis point increase from the second
quarter of 2018," said Dave Cone,
Executive Vice President and Chief Financial Officer. "Income taxes
were $6 million for the quarter,
representing an effective tax rate of 6.4 percent. This was driven
by a number of one-time tax reductions including accelerated
deductions following an inventory analysis, a favorable conclusion
of a state tax audit and utilization of foreign tax credits
relating to the deemed repatriation of foreign earnings mandated by
tax reform."
Homebuilding inventories were $3.3
billion at the end of the quarter, including 5,478 homes in
inventory, compared to 5,282 homes in inventory at the end of the
prior year quarter. Homes in inventory at the end of the
quarter consisted of 3,478 sold units, 381 model homes and 1,619
inventory units, of which 247 were finished.
The Company finished the quarter with $383 million in cash, total debt of $1.46 billion and a net homebuilding debt to
capitalization ratio of 30.4 percent. The Company purchased
approximately 3 million of its shares for $48 million since the close of the AV Homes
transaction in early October 2018. The remaining balance on
the share repurchase authorization is $48
million, which expires at the end of this year. As of
September 30, 2018, Taylor Morrison
owned or controlled approximately 42,000 lots, representing 5.0
years of supply, and is focused on securing land for 2020 and
beyond.
Earlier this month, the Company announced a corporate structure
reorganization related to the dual class share structure and final
repatriated proceeds from the sale of our Monarch business in
Canada. The latter will result in two fourth quarter
expenses for a total of about $36
million; $20 million will be
in the other expense line and is a non-cash event and the other
approximately $16 million charge will
be in the tax expense line which is factored into the effective tax
rate guidance and it is a cash event. As a result of this
reorganization, the Company will reduce future tax
expense.
Quarterly
Financial Comparison
|
|
|
|
|
|
|
($
thousands)
|
|
|
|
|
|
|
|
|
Q3 2018
|
|
Q3 2017
|
|
Q3 2018 vs. Q3 2017
|
Total
Revenue
|
|
$1,036,379
|
|
$908,027
|
|
14.1
|
%
|
Home Closings
Revenue
|
|
$1,014,168
|
|
$886,249
|
|
14.4
|
%
|
Home Closings Gross
Margin
|
|
$191,218
|
|
$164,612
|
|
16.2
|
%
|
|
18.9
|
%
|
|
18.6
|
%
|
|
30 bps
increase
|
SG&A
% of Home Closings
Revenue
|
|
$100,520
|
|
$94,850
|
|
6.0
|
%
|
|
9.9
|
%
|
|
10.7
|
%
|
|
80 bps
leverage
|
Fourth Quarter and Full Year 2018 Business Outlook Including
AV Homes
Fourth Quarter 2018:
- Average active community count is expected to be approximately
330
- Home closings are expected to be about 3,125
- Home closings gross margin, inclusive of capitalized interest
and purchase accounting, is expected to be in the mid 16 percent
range
- SG&A as a percentage of homebuilding revenue is expected to
be in the low to mid 9 percent range
- Effective tax rate, inclusive of one time charges, is expected
to be between 42 and 44 percent
- Effective tax rate, excluding one time charges, is expected to
be between 23 and 25 percent
- Diluted share count is expected to be about 119 million
Full Year 2018:
- Average active community count is expected to be approximately
300
- Average monthly absorption pace is expected to be about 2.4 per
outlet
- Home closings are expected to be about 8,800
- Home closings gross margin, inclusive of capitalized interest
and purchase accounting, is expected to be in the high 17 percent
range
- SG&A as a percentage of homebuilding revenue is expected to
be in the low 10 percent range
- Income from unconsolidated joint ventures is expected to be
approximately $12 million
- Land and development spend is expected to be approximately
$1.1 billion
- Effective tax rate, inclusive of one time charges, is expected
to be between 22 and 24 percent
- Diluted share count is expected to be about 115 million
Earnings Webcast
A public webcast to discuss the third quarter 2018 earnings will
be held later today at 8:30 a.m. Eastern
time. The participant dial-in is 1 (855) 470-8731 and the
passcode is 5098754. More information can be found on the Company's
investor relations website at investors.taylormorrison.com. A
webcast replay will also be available on the site later today and
will be available for one year from the date of the original
earnings call.
About Taylor Morrison
Taylor Morrison Home Corporation (NYSE: TMHC) is a leading
national homebuilder and developer that has been recognized as the
2016, 2017 and 2018 America's Most Trusted® Home Builder by
Lifestory Research. Based in Scottsdale,
Arizona we operate under two well-established brands, Taylor
Morrison and Darling Homes. We serve a wide array of consumer
groups from coast to coast, including first-time, move-up, luxury,
and 55 plus buyers. In Texas,
Darling Homes builds communities with a focus on individuality and
custom detail while delivering on the Taylor Morrison standard of
excellence.
For more information about Taylor Morrison and Darling Homes
please visit www.taylormorrison.com or www.darlinghomes.com.
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 "believe," "expect," "intend,"
"estimate," "anticipate," "project," "may," "can," "could,"
"might," "will" and similar expressions identify forward-looking
statements, including statements related to expected operating and
performing 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: changes in general and local economic conditions (including
as a result of recent extreme weather conditions); slowdowns or
severe downturns in the housing market; homebuyers' ability to
obtain suitable financing; increases in interest rates, taxes or
government fees; impacts from the recently enacted tax reform
legislation; shortages in, disruptions of and cost of labor;
competition in our industry; any increase in unemployment or
underemployment; inflation or deflation; the seasonality of our
business; our ability to obtain additional performance, payment and
completion surety bonds and letters of credit; higher cancellation
rates; 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; decreases in the market value of our
land inventory; new or changes in government regulations and legal
challenges; our compliance with environmental laws; our ability to
sell mortgages we originate and claims on loans sold to third
parties; governmental regulation applicable to our mortgage
operations and title services business; the loss of any of our
important commercial 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; material
losses in excess of insurance limits; 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 our debt and the
agreements governing such debt; our ability to access the capital
markets; risks related to our structure and organization; the
inherent uncertainty associated with financial or other
projections; and risks related to the integration of Taylor
Morrison and AV Homes and the ability to recognize the anticipated
benefits from the combination of Taylor Morrison and AV Homes. In
addition, other such risks and uncertainties may be found in our
most recent annual report on Form 10-K 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.
CONTACT: Investor Relations
Taylor Morrison Home Corporation
(480) 734-2060
investor@taylormorrison.com
Taylor Morrison
Home Corporation
Condensed
Consolidated Statements of Operations
(In thousands, except
per share amounts, unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Home closings
revenue, net
|
|
$
|
1,014,168
|
|
|
$
|
886,249
|
|
|
$
|
2,703,692
|
|
|
$
|
2,526,830
|
|
Land closings
revenue
|
|
5,170
|
|
|
4,299
|
|
|
18,335
|
|
|
11,419
|
|
Financial services
revenue
|
|
17,041
|
|
|
17,479
|
|
|
47,513
|
|
|
47,362
|
|
Total
revenues
|
|
1,036,379
|
|
|
908,027
|
|
|
2,769,540
|
|
|
2,585,611
|
|
Cost of home
closings
|
|
822,950
|
|
|
721,637
|
|
|
2,202,377
|
|
|
2,062,437
|
|
Cost of land
closings
|
|
3,979
|
|
|
3,002
|
|
|
14,704
|
|
|
7,869
|
|
Financial services
expenses
|
|
10,451
|
|
|
12,070
|
|
|
31,647
|
|
|
30,874
|
|
Total cost of
revenues
|
|
837,380
|
|
|
736,709
|
|
|
2,248,728
|
|
|
2,101,180
|
|
Gross
margin
|
|
198,999
|
|
|
171,318
|
|
|
520,812
|
|
|
484,431
|
|
Sales, commissions
and other marketing costs
|
|
67,504
|
|
|
61,476
|
|
|
185,806
|
|
|
178,609
|
|
General and
administrative expenses
|
|
33,016
|
|
|
33,374
|
|
|
101,795
|
|
|
100,396
|
|
Equity in income of
unconsolidated entities
|
|
(2,514)
|
|
|
(2,787)
|
|
|
(9,777)
|
|
|
(6,943)
|
|
Interest income,
net
|
|
(670)
|
|
|
(135)
|
|
|
(1,289)
|
|
|
(314)
|
|
Other expense,
net
|
|
798
|
|
|
415
|
|
|
4,889
|
|
|
828
|
|
Income before income
taxes
|
|
100,865
|
|
|
78,975
|
|
|
239,388
|
|
|
211,855
|
|
Income tax
provision
|
|
6,424
|
|
|
24,282
|
|
|
38,123
|
|
|
65,631
|
|
Net income before
allocation to non-controlling interests
|
|
94,441
|
|
|
54,693
|
|
|
201,265
|
|
|
146,224
|
|
Net income
attributable to non-controlling interests - joint
ventures
|
|
(159)
|
|
|
(427)
|
|
|
(428)
|
|
|
(625)
|
|
Net income before
non-controlling interests
|
|
94,282
|
|
|
54,266
|
|
|
200,837
|
|
|
145,599
|
|
Net income
attributable to non-controlling interests
|
|
(714)
|
|
|
(21,390)
|
|
|
(4,391)
|
|
|
(76,810)
|
|
Net income available
to Taylor Morrison Home Corporation
|
|
$
|
93,568
|
|
|
$
|
32,876
|
|
|
$
|
196,446
|
|
|
$
|
68,789
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.84
|
|
|
$
|
0.45
|
|
|
$
|
1.75
|
|
|
$
|
1.21
|
|
Diluted
|
|
$
|
0.83
|
|
|
$
|
0.45
|
|
|
$
|
1.73
|
|
|
$
|
1.21
|
|
Weighted average
number of shares of common stock:
|
|
|
|
|
|
|
|
|
Basic
|
|
111,396
|
|
|
72,471
|
|
|
112,449
|
|
|
56,791
|
|
Diluted
|
|
113,440
|
|
|
121,183
|
|
|
116,378
|
|
|
120,991
|
|
Taylor Morrison
Home Corporation Condensed Consolidated Balance
Sheets (In thousands)
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
382,054
|
|
|
$
|
573,925
|
|
Restricted
cash
|
|
1,319
|
|
|
1,578
|
|
Total cash, cash
equivalents, and restricted cash
|
|
383,373
|
|
|
575,503
|
|
Owned
inventory
|
|
3,255,300
|
|
|
2,956,709
|
|
Real estate not
owned
|
|
13,811
|
|
|
2,527
|
|
Total
real estate inventory
|
|
3,269,111
|
|
|
2,959,236
|
|
Land
deposits
|
|
47,855
|
|
|
49,768
|
|
Mortgage loans held
for sale
|
|
83,751
|
|
|
187,038
|
|
Hedging
assets
|
|
2,329
|
|
|
1,584
|
|
Prepaid expenses and
other assets, net
|
|
56,828
|
|
|
72,334
|
|
Other receivables,
net
|
|
98,048
|
|
|
94,488
|
|
Investments in
unconsolidated entities
|
|
179,249
|
|
|
192,364
|
|
Deferred tax assets,
net
|
|
105,356
|
|
|
118,138
|
|
Property and
equipment, net
|
|
38,258
|
|
|
7,112
|
|
Intangible assets,
net
|
|
1,337
|
|
|
2,130
|
|
Goodwill
|
|
66,198
|
|
|
66,198
|
|
Total
assets
|
|
$
|
4,331,693
|
|
|
$
|
4,325,893
|
|
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$
|
124,731
|
|
|
$
|
140,165
|
|
Accrued expenses and
other liabilities
|
|
188,681
|
|
|
201,540
|
|
Income taxes
payable
|
|
—
|
|
|
4,525
|
|
Customer
deposits
|
|
189,116
|
|
|
132,529
|
|
Senior notes,
net
|
|
1,241,514
|
|
|
1,239,787
|
|
Loans payable and
other borrowings
|
|
160,173
|
|
|
139,453
|
|
Revolving credit
facility borrowings
|
|
—
|
|
|
—
|
|
Mortgage warehouse
borrowings
|
|
54,457
|
|
|
118,822
|
|
Liabilities
attributable to real estate not owned
|
|
13,811
|
|
|
2,527
|
|
Total
liabilities
|
|
$
|
1,972,483
|
|
|
$
|
1,979,348
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders'
equity
|
|
2,359,210
|
|
|
2,346,545
|
|
Total liabilities and
stockholders' equity
|
|
$
|
4,331,693
|
|
|
$
|
4,325,893
|
|
Homes Closed and
Home Closings Revenue, Net
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Homes
Closed
|
|
Home Closings
Revenue, Net
|
|
Average Selling
Price
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
953
|
|
776
|
|
22.8
|
%
|
|
$
|
392,767
|
|
|
$
|
311,526
|
|
|
26.1
|
%
|
|
$
|
412
|
|
$
|
401
|
|
2.7
|
%
|
Central
|
|
594
|
|
531
|
|
11.9
|
|
|
272,980
|
|
|
253,556
|
|
|
7.7
|
|
|
460
|
|
478
|
|
(3.8)
|
|
West
|
|
568
|
|
535
|
|
6.2
|
|
|
348,421
|
|
|
321,167
|
|
|
8.5
|
|
|
613
|
|
600
|
|
2.2
|
|
Total
|
|
2,115
|
|
1,842
|
|
14.8
|
%
|
|
$
|
1,014,168
|
|
|
$
|
886,249
|
|
|
14.4
|
%
|
|
$
|
480
|
|
$
|
481
|
|
(0.2)
|
%
|
|
|
Nine Months Ended
September 30,
|
|
|
Homes
Closed
|
|
Home Closings
Revenue, Net
|
|
Average Selling
Price
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
2,528
|
|
2,238
|
|
13.0
|
%
|
|
$
|
1,033,553
|
|
|
$
|
891,740
|
|
|
15.9
|
%
|
|
$
|
409
|
|
$
|
398
|
|
2.8
|
%
|
Central
|
|
1,645
|
|
1,512
|
|
8.8
|
|
|
780,682
|
|
|
723,758
|
|
|
7.9
|
|
|
475
|
|
479
|
|
(0.8)
|
|
West
|
|
1,481
|
|
1,585
|
|
(6.6)
|
|
|
889,457
|
|
|
911,332
|
|
|
(2.4)
|
|
|
601
|
|
575
|
|
4.5
|
|
Total
|
|
5,654
|
|
5,335
|
|
6.0
|
%
|
|
$
|
2,703,692
|
|
|
$
|
2,526,830
|
|
|
7.0
|
%
|
|
$
|
478
|
|
$
|
474
|
|
0.8
|
%
|
Net Sales
Orders:
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Net Sales
Orders
|
|
Sales
Value
|
|
Average Selling
Price
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
710
|
|
777
|
|
(8.6)
|
%
|
|
$
|
289,200
|
|
|
$
|
302,795
|
|
|
(4.5)
|
%
|
|
$
|
407
|
|
$
|
390
|
|
4.4
|
%
|
Central
|
|
617
|
|
521
|
|
18.4
|
|
|
298,111
|
|
|
247,084
|
|
|
20.7
|
|
|
483
|
|
474
|
|
1.9
|
|
West
|
|
495
|
|
463
|
|
6.9
|
|
|
306,004
|
|
|
300,815
|
|
|
1.7
|
|
|
618
|
|
650
|
|
(4.9)
|
|
Total
|
|
1,822
|
|
1,761
|
|
3.5
|
%
|
|
$
|
893,315
|
|
|
$
|
850,694
|
|
|
5.0
|
%
|
|
$
|
490
|
|
$
|
483
|
|
1.4
|
%
|
|
|
Nine Months Ended
September 30,
|
|
|
Net Sales
Orders
|
|
Sales
Value
|
|
Average Selling
Price
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
2,604
|
|
2,923
|
|
(10.9)
|
%
|
|
$
|
1,096,008
|
|
|
$
|
1,132,839
|
|
|
(3.3)
|
%
|
|
$
|
421
|
|
$
|
388
|
|
8.5
|
%
|
Central
|
|
2,204
|
|
1,826
|
|
20.7
|
|
|
1,064,852
|
|
|
864,797
|
|
|
23.1
|
|
|
483
|
|
474
|
|
1.9
|
|
West
|
|
1,799
|
|
1,813
|
|
(0.8)
|
|
|
1,128,763
|
|
|
1,088,661
|
|
|
3.7
|
|
|
627
|
|
600
|
|
4.5
|
|
Total
|
|
6,607
|
|
6,562
|
|
0.7
|
%
|
|
$
|
3,289,623
|
|
|
$
|
3,086,297
|
|
|
6.6
|
%
|
|
$
|
498
|
|
$
|
470
|
|
6.0
|
%
|
Sales Order
Backlog:
|
|
|
|
|
|
As of September
30,
|
|
|
Sold Homes in
Backlog
|
|
Sales
Value
|
|
Average Selling
Price
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
1,589
|
|
1,905
|
|
(16.6)
|
%
|
|
$
|
754,666
|
|
|
$
|
774,001
|
|
|
(2.5)
|
%
|
|
$
|
475
|
|
$
|
406
|
|
17.0
|
%
|
Central
|
|
1,610
|
|
1,272
|
|
26.6
|
|
|
814,173
|
|
|
653,415
|
|
|
24.6
|
|
|
506
|
|
514
|
|
(1.6)
|
|
West
|
|
1,250
|
|
1,182
|
|
5.8
|
|
|
771,135
|
|
|
697,790
|
|
|
10.5
|
|
|
617
|
|
590
|
|
4.6
|
|
Total
|
|
4,449
|
|
4,359
|
|
2.1
|
%
|
|
$
|
2,339,974
|
|
|
$
|
2,125,206
|
|
|
10.1
|
%
|
|
$
|
526
|
|
$
|
488
|
|
7.8
|
%
|
Average Active
Selling Communities:
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
East
|
|
109
|
|
130
|
|
(16.2)
|
%
|
|
119
|
|
127
|
|
(6.3)
|
%
|
Central
|
|
118
|
|
118
|
|
—
|
|
|
119
|
|
118
|
|
0.8
|
|
West
|
|
48
|
|
45
|
|
6.7
|
|
|
50
|
|
51
|
|
(2.0)
|
|
Total
|
|
275
|
|
293
|
|
(6.1)
|
%
|
|
288
|
|
296
|
|
(2.7)
|
%
|
Reconciliation of Non-GAAP Financial Measures
The following tables set forth reconciliations of: (i) EBITDA
and adjusted EBITDA to net income before allocation to
non-controlling interests, (ii) adjusted income tax and (iii) net
homebuilding debt to total capitalization ratio.
Adjusted EBITDA is a non-GAAP financial measure that measures
performance by adjusting net income to exclude interest amortized
to cost of sales and interest income, net, income taxes,
depreciation and amortization, non-cash compensation expense and
loss on extinguishment of debt, if any. Adjusted income tax
is a non-GAAP financial measure that measures our income tax
liabilities by adjusting income taxes payable to exclude a number
of one-time tax reductions including an acceleration of tax
deductions following an inventory analysis, a favorable conclusion
of a state tax audit centered on NOL's and benefit due to a
repatriation of foreign earnings and utilization of foreign tax
credits. Net homebuilding debt to capitalization is a
non-GAAP financial measure we calculate by dividing (i) total debt,
less unamortized debt issuance costs and mortgage warehouse
borrowings, net of unrestricted cash and cash equivalents, by (ii)
total capitalization (the sum of net homebuilding debt and total
stockholders' equity).
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 adjusted EBITDA provides useful information to
investors regarding our results of operations because it allows
investors to evaluate our performance without the effects of
various items we do not believe are characteristic of our ongoing
operations or performance and because it assists 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 non-recurring items. We
believe adjusted income tax provides useful information to
investors because it allows investors to evaluate our income tax
liabilities without the effects of various items we do not believe
are characteristic of our ongoing income tax exposure and because
it assists both investors and management in analyzing and
benchmarking the value of our business. 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.
These non-GAAP financial measures and 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.
Adjusted EBITDA
Reconciliation
|
|
|
Three Months Ended
September 30,
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
Net income before
allocation to non-controlling interests
|
|
$
|
94,441
|
|
$
|
54,693
|
Interest income,
net
|
|
(670)
|
|
(135)
|
Amortization of
capitalized interest
|
|
21,345
|
|
21,789
|
Income tax
provision
|
|
6,424
|
|
24,282
|
Depreciation and
amortization
|
|
985
|
|
896
|
EBITDA
|
|
$
|
122,525
|
|
$
|
101,525
|
Non-cash compensation
expense
|
|
3,591
|
|
3,377
|
Adjusted
EBITDA
|
|
$
|
126,116
|
|
$
|
104,902
|
Adjusted Income
Tax Provision Reconciliation
|
|
|
Three Months
Ended
September 30,
|
(Dollars in
thousands)
|
|
2018
|
|
2017
|
Income tax
provision
|
|
$
|
6,424
|
|
|
$
|
24,282
|
|
Acceleration of tax
deductions related to inventory
|
|
$
|
8,075
|
|
|
$
|
—
|
|
Settlement of state
tax audit
|
|
$
|
7,875
|
|
|
$
|
—
|
|
Utilization of
foreign tax credits related to the repatriation of foreign
earnings
|
|
$
|
3,220
|
|
|
$
|
—
|
|
Adjusted income tax
provision
|
|
$
|
25,594
|
|
|
$
|
24,282
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
25.4
|
%
|
|
30.7
|
%
|
Net Homebuilding
Debt to Capitalization Ratio Reconciliation
|
(Dollars in
thousands)
|
As of
September 30,
2018
|
Total debt
|
$
|
1,456,144
|
|
Unamortized debt
issuance costs
|
8,486
|
|
Less mortgage
warehouse borrowings
|
54,457
|
|
Total homebuilding
debt
|
$
|
1,410,173
|
|
Less cash and cash
equivalents
|
382,054
|
|
Net homebuilding
debt
|
$
|
1,028,119
|
|
Total
equity
|
2,359,210
|
|
Total
capitalization
|
$
|
3,387,329
|
|
|
|
Net homebuilding
debt to capitalization ratio
|
30.4
|
%
|
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SOURCE Taylor Morrison