PR Newswire
SCOTTSDALE, Ariz., April 26, 2023
SCOTTSDALE, Ariz., April 26, 2023 /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE: TMHC), a leading national land developer and homebuilder, announced results for the first quarter ended March 31, 2023. Reported net income in the first quarter was $191 million, or $1.74 per diluted share. This was up from $177 million, or $1.44 per diluted share, in the first quarter of 2022.
First quarter 2023 highlights included the following, as compared to the first quarter 2022:
"I am pleased to share the results of our first quarter, which outperformed our expectations across all key metrics due to our team's strong execution and stabilizing market dynamics. We delivered 2,541 homes at a strong home closings gross margin of 23.9% and efficient SG&A ratio of just 9.9%. Most notably, this gross margin was up 80 basis points year over year due to our ongoing focus on operational enhancements and our balanced approach to to-be-built and spec home sales," said Sheryl Palmer, Taylor Morrison Chairman and CEO.
"Despite the modest decline in revenue, our focus on improving operating margins through strategic efficiencies allowed us to deliver a more than 20% increase in diluted earnings to $1.74 per share and 32% growth in our book value to $44 per share. These strong results drove a nearly 500 basis point increase in our return on equity to approximately 24%. We ended the quarter with approximately $2 billion in total liquidity and our homebuilding net debt-to-capital ratio declined further to an all-time low of 21%, leaving us with significant financial flexibility to invest in our business to drive returns as we move forward."
Palmer continued, "Following a strong early start to the year, positive sales momentum accelerated further into March, consistent with typical seasonal patterns despite the uncertainties facing the market. In total, during the quarter, our gross sales orders improved to a healthy monthly pace of 3.4 per community, the highest level since the third quarter of 2021, while our cancellation rate declined to more normalized levels at 14% of gross orders. This drove our monthly net sales pace to 2.9 per community as compared to 1.9 in the fourth quarter and 3.1 a year ago. This momentum has carried through the first three weeks of April, with our sales running at a pace of approximately 3.1 net orders per community. Meanwhile, leading indicators—including sales traffic, mortgage pre-qualifications and digital home reservations, which remained our top conversion source at a rate of 40% in the first quarter—point to continued strength."
"While we are greatly encouraged by the recent improvement in sales and consumer sentiment, we also recognize the uncertainty surrounding interest rates and economic conditions. Given our balanced portfolio, scale and financial strength, we believe we are well positioned to navigate the near-term market volatility while remaining grounded in our long-term approach to disciplined capital allocation and market positioning. Our leadership and field teams are accustomed to operating within these dynamic market conditions, and our playbook will continue to emphasize smart growth, operational efficiencies and an exceptional customer experience," said Palmer.
Business Highlights (All comparisons are of the current quarter to the prior-year quarter, unless indicated.)
Homebuilding
Land Portfolio
Financial Services
Balance Sheet
Business Outlook
Second Quarter 2023
Full Year 2023
Quarterly Financial Comparison | ||||||||||||||||
($ in thousands) | Q1 2023 | Q1 2022 | Q1 2023 vs. Q1 | |||||||||||||
Total Revenue | $ | 1,661,857 | $ | 1,703,124 | (2.4) | % | ||||||||||
Home Closings Revenue | $ | 1,612,595 | $ | 1,644,409 | (1.9) | % | ||||||||||
Home Closings Gross Margin | $ | 385,082 | $ | 379,435 | 1.5 | % | ||||||||||
23.9 | % | 23.1 | % | 80 bps increase | ||||||||||||
SG&A | $ | 159,021 | $ | 157,265 | 1.1 | % | ||||||||||
% of Home Closings Revenue | 9.9 | % | 9.6 | % | 30 bps increase | |||||||||||
CFO Transition
Taylor Morrison announced today that its Board of Directors approved a request from Louis Steffens, EVP and Chief Financial Officer, to step down from his CFO responsibilities, effective May 1, to attend to family needs that will require him to relocate out of Arizona. Mr. Steffens will remain with the Company as EVP of Strategic and Operational Initiatives and assist in the CFO transition.
Curt VanHyfte, the Company's West Area President, will serve as Interim Chief Financial Officer as we commence a search for Mr. Steffens' permanent successor. Mr. VanHyfte joined Taylor Morrison in connection with its acquisition of William Lyon Homes in February 2020. In his current role, he oversees and drives operational excellence and growth for Western markets, including those in Arizona, California, Colorado, Washington and Oregon. During his nearly 30-year career in homebuilding, he has held division, regional and national roles in finance and spent time as a Division President in Chicago, St. Louis, Houston and Phoenix for several homebuilders. Mr. VanHyfte earned a B.S. in accounting with a minor in business management from St. John's University in Minnesota.
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 the Investor Relations portion of Taylor Morrison's website at www.taylormorrison.com under the Events & Presentations tab.
For call participants, the dial-in number is (844) 200-6205 and conference ID is 833200. The call will be recorded and available for replay on the Company's website later today and will be available for one year from the date of the original earnings call.
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 as a result of several recent bank failures; 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.
Consolidated Statements of Operations (In thousands, except per share amounts, unaudited) | ||||||||
Three Months Ended | ||||||||
2023 | 2022 | |||||||
Home closings revenue, net | $ | 1,612,595 | $ | 1,644,409 | ||||
Land closings revenue | 4,520 | 15,610 | ||||||
Financial services revenue | 35,149 | 35,199 | ||||||
Amenity and other revenue | 9,593 | 7,906 | ||||||
Total revenue | 1,661,857 | 1,703,124 | ||||||
Cost of home closings | 1,227,513 | 1,264,974 | ||||||
Cost of land closings | 4,345 | 14,364 | ||||||
Financial services expenses | 22,148 | 24,214 | ||||||
Amenity and other expenses | 8,285 | 6,444 | ||||||
Total cost of revenue | 1,262,291 | 1,309,996 | ||||||
Gross margin | 399,566 | 393,128 | ||||||
Sales, commissions and other marketing costs | 92,760 | 89,123 | ||||||
General and administrative expenses | 66,261 | 68,142 | ||||||
Net income from unconsolidated entities | (1,929) | (1,831) | ||||||
Interest (income)/expense, net | (1,111) | 4,252 | ||||||
Other (income)/expense, net | (4,834) | 542 | ||||||
Income before income taxes | 248,419 | 232,900 | ||||||
Income tax provision | 57,191 | 54,439 | ||||||
Net income before allocation to non-controlling interests | 191,228 | 178,461 | ||||||
Net income attributable to non-controlling interests | (177) | (1,758) | ||||||
Net income available to Taylor Morrison Home Corporation | $ | 191,051 | $ | 176,703 | ||||
Earnings per common share | ||||||||
Basic | $ | 1.76 | $ | 1.46 | ||||
Diluted | $ | 1.74 | $ | 1.44 | ||||
Weighted average number of shares of common stock: | ||||||||
Basic | 108,429 | 121,186 | ||||||
Diluted | 110,053 | 122,657 |
Taylor Morrison Home Corporation Condensed Consolidated Balance Sheets (In thousands, unaudited) | ||||||||
March 31, | December 31, | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 877,717 | $ | 724,488 | ||||
Restricted cash | 6,717 | 2,147 | ||||||
Total cash, cash equivalents, and restricted cash | 884,434 | 726,635 | ||||||
Owned inventory | 5,330,548 | 5,346,905 | ||||||
Consolidated real estate not owned | 2,295 | 23,971 | ||||||
Total real estate inventory | 5,332,843 | 5,370,876 | ||||||
Land deposits | 228,117 | 263,356 | ||||||
Mortgage loans held for sale | 186,194 | 346,364 | ||||||
Lease right of use assets | 84,052 | 90,446 | ||||||
Prepaid expenses and other assets, net | 225,381 | 265,392 | ||||||
Other receivables, net | 196,184 | 191,504 | ||||||
Investments in unconsolidated entities | 294,755 | 282,900 | ||||||
Deferred tax assets, net | 67,656 | 67,656 | ||||||
Property and equipment, net | 213,374 | 202,398 | ||||||
Goodwill | 663,197 | 663,197 | ||||||
Total assets | $ | 8,376,187 | $ | 8,470,724 | ||||
Liabilities | ||||||||
Accounts payable | $ | 247,887 | $ | 269,761 | ||||
Accrued expenses and other liabilities | 424,619 | 490,253 | ||||||
Lease liabilities | 92,895 | 100,174 | ||||||
Income taxes payable | 2,977 | — | ||||||
Customer deposits | 414,085 | 412,092 | ||||||
Estimated development liabilities | 43,005 | 43,753 | ||||||
Senior notes, net | 1,816,877 | 1,816,303 | ||||||
Loans payable and other borrowings | 338,667 | 361,486 | ||||||
Revolving credit facility borrowings | — | — | ||||||
Mortgage warehouse borrowings | 146,334 | 306,072 | ||||||
Liabilities attributable to consolidated real estate not owned | 2,295 | 23,971 | ||||||
Total liabilities | $ | 3,529,641 | $ | 3,823,865 | ||||
Stockholders' Equity | ||||||||
Total stockholders' equity | 4,846,546 | 4,646,859 | ||||||
Total liabilities and stockholders' equity | $ | 8,376,187 | $ | 8,470,724 |
Homes Closed and Home Closings Revenue, Net: | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
Homes Closed | Home Closings Revenue, Net | Average Selling Price | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||
East | 1,004 | 937 | 7.2 | % | $ | 601,611 | $ | 505,998 | 18.9 | % | $ | 599 | $ | 540 | 10.9 | % | ||||||||||||||||||||
Central | 731 | 664 | 10.1 | % | 463,394 | 368,575 | 25.7 | % | 634 | 555 | 14.2 | % | ||||||||||||||||||||||||
West | 806 | 1,167 | (30.9) | % | 547,590 | 769,836 | (28.9) | % | 679 | 660 | 2.9 | % | ||||||||||||||||||||||||
Total | 2,541 | 2,768 | (8.2) | % | $ | 1,612,595 | $ | 1,644,409 | (1.9) | % | $ | 635 | $ | 594 | 6.9 | % |
Net Sales Orders: | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
Net Sales Orders | Sales Value | Average Selling Price | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||
East | 1,079 | 1,027 | 5.1 | % | $ | 644,519 | $ | 606,210 | 6.3 | % | $ | 597 | $ | 590 | 1.2 | % | ||||||||||||||||||||
Central | 674 | 887 | (24.0) | % | 384,830 | 583,279 | (34.0) | % | 571 | 658 | (13.2) | % | ||||||||||||||||||||||||
West | 1,101 | 1,140 | (3.4) | % | 756,344 | 895,730 | (15.6) | % | 687 | 786 | (12.6) | % | ||||||||||||||||||||||||
Total | 2,854 | 3,054 | (6.5) | % | $ | 1,785,693 | $ | 2,085,219 | (14.4) | % | $ | 626 | $ | 683 | (8.3) | % |
Sales Order Backlog: | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
Sold Homes in Backlog | Sales Value | Average Selling Price | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||
East | 2,658 | 3,309 | (19.7) | % | $ | 1,775,970 | $ | 2,002,530 | (11.3) | % | $ | 668 | $ | 605 | 10.4 | % | ||||||||||||||||||||
Central | 1,660 | 3,010 | (44.9) | % | 1,132,928 | 1,962,538 | (42.3) | % | 682 | 652 | 4.6 | % | ||||||||||||||||||||||||
West | 1,949 | 3,081 | (36.7) | % | 1,328,187 | 2,232,878 | (40.5) | % | 681 | 725 | (6.1) | % | ||||||||||||||||||||||||
Total | 6,267 | 9,400 | (33.3) | % | $ | 4,237,085 | $ | 6,197,946 | (31.6) | % | $ | 676 | $ | 659 | 2.6 | % |
Ending Active Selling Communities: | ||||||||||||
As of March 31, | Change | |||||||||||
2023 | 2022 | |||||||||||
East | 106 | 121 | (12.4) | % | ||||||||
Central | 98 | 106 | (7.5) | % | ||||||||
West | 120 | 97 | 23.7 | % | ||||||||
Total | 324 | 324 | — |
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 on land transfers 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 on land transfers 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, 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 evaluation 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) EBITDA and adjusted EBITDA and (ii) net homebuilding debt to capitalization ratio to the comparable GAAP measures is presented below. Because the company did not experience any material adjustments applicable to (i) adjusted net income and adjusted earnings per common share; (ii) adjusted income before income taxes and related margin; or (iii) adjusted home closings gross margin during the periods presented that would cause such measures to differ from the comparable GAAP measures, such measures have not been separately presented herein.
EBITDA and Adjusted EBITDA Reconciliation | ||||||||
Three Months Ended March 31, | ||||||||
(Dollars in thousands) | 2023 | 2022 | ||||||
Net income before allocation to non-controlling interests | $ | 191,228 | $ | 178,461 | ||||
Interest (income)/expense, net | (1,111) | 4,252 | ||||||
Amortization of capitalized interest | 27,649 | 30,430 | ||||||
Income tax provision | 57,191 | 54,439 | ||||||
Depreciation and amortization | 1,790 | 1,930 | ||||||
EBITDA | $ | 276,747 | $ | 269,512 | ||||
Non-cash compensation expense | 7,533 | 6,863 | ||||||
Adjusted EBITDA | $ | 284,280 | $ | 276,375 | ||||
Total revenue | $ | 1,661,857 | $ | 1,703,124 | ||||
Net income before allocation to non-controlling interests as a percentage of | 11.5 | % | 10.5 | % | ||||
EBITDA as a percentage of total revenue | 16.7 | % | 15.8 | % | ||||
Adjusted EBITDA as a percentage of total revenue | 17.1 | % | 16.2 | % |
Debt to Capitalization Ratios Reconciliation | ||||||||||||
($ in thousands) | As of | As of | As of | |||||||||
Total debt | $ | 2,301,878 | $ | 2,483,861 | $ | 3,048,373 | ||||||
Plus: unamortized debt issuance cost/(premium), net | 10,193 | 10,767 | (2,311) | |||||||||
Less: mortgage warehouse borrowings | $ | (146,334) | (306,072) | (200,662) | ||||||||
Total homebuilding debt | $ | 2,165,737 | $ | 2,188,556 | $ | 2,845,400 | ||||||
Total equity | 4,846,546 | 4,646,859 | 4,094,798 | |||||||||
Total capitalization | $ | 7,012,283 | $ | 6,835,415 | $ | 6,940,198 | ||||||
Total homebuilding debt to capitalization ratio | 30.9 | % | 32.0 | % | 41.0 | % | ||||||
Total homebuilding debt | $ | 2,165,737 | $ | 2,188,556 | $ | 2,845,400 | ||||||
Less: cash and cash equivalents | (877,717) | (724,488) | (569,249) | |||||||||
Net homebuilding debt | $ | 1,288,020 | $ | 1,464,068 | $ | 2,276,151 | ||||||
Total equity | 4,846,546 | 4,646,859 | 4,094,798 | |||||||||
Total capitalization | $ | 6,134,566 | $ | 6,110,927 | $ | 6,370,949 | ||||||
Net homebuilding debt to capitalization ratio | 21.0 | % | 24.0 | % | 35.7 | % |
CONTACT:
Mackenzie Aron, VP Investor Relations
(480) 734-2060
[email protected]
View original content to download multimedia:https://www.prnewswire.com/news-releases/taylor-morrison-reports-first-quarter-2023-results-including-earnings-per-diluted-share-of-1-74--301807317.html
SOURCE Taylor Morrison
We use cookies to tailor your experience, measure site performance and present relevant offers and advertisements. By clicking ‘Accept’ or any content on this site, you agree that cookies can be placed on your browser. You can view our privacy policy to learn more.
If you would like to get more data, alerts and access to Real Vision videos, join us as an Insider Tracking Advantage Ultra member