PR Newswire | Apr 29, 2021 06:55AM EDT

Year-Over-Year Growth to 4.3 Net Sales Orders per Community

04/29 05:55 CDT

Taylor Morrison Reports First Quarter 2021 Results, Including 42% Year-Over-Year Growth to 4.3 Net Sales Orders per Community SCOTTSDALE, Ariz., April 29, 2021

SCOTTSDALE, Ariz., April 29, 2021 /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE: TMHC), the nation's fifth largest homebuilder, announced results for the first quarter ended March 31, 2021. Reported net income of $98 million, or $0.75 per diluted share, compared to a reported net loss of $31 million, or $0.26 per diluted share, in the first quarter of 2020.

The Company's first quarter included the following results, as compared to the prior-year quarter:

* Net sales orders increased 30 percent to 4,492. * Monthly absorptions increased 42 percent to 4.3 net sales orders per community, a company record high. * Home closings gross margin increased 320 basis points to 18.6 percent. * Backlog increased 54 percent to 10,074 sold homes with a sales value of $5.3 billion, up 70 percent. * Homebuilding lot supply increased four percent to approximately 73,000 total lots owned and controlled. * Controlled lots as a percentage of total supply increased approximately 400 basis points to 32 percent.

"Our first quarter results, which included strong year-over-year improvement in many of our key operating metrics, reflect the initial benefits of our enhanced scale and local market depth as we continue to execute our strategic plan," said Sheryl Palmer, Taylor Morrison Chairman and CEO. "We achieved a record absorption level of 4.3 net orders per community-a more than 40 percent year-over-year gain-despite taking steps to maximize our margin opportunity and align sales and production paces, reflecting the resiliency of the current demand environment and strength of our consumer-centric product offerings."

"During the quarter, we successfully ramped our construction starts pace by over 70 percent and raised pricing in excess of inflationary costs amid the supply-side pressures facing our industry, positioning us for strong closings and margin expansion in the back half of the year. As a result, we are raising our 2021 gross margin guidance to the low-19 percent range and reaffirming our closings expectation of 14,500 to 15,000 deliveries," said Dave Cone, Executive Vice President and Chief Financial Officer. "Based on our outlook for strong cash flow generation, we remain on track to achieve our targeted net debt-to-capital ratio in the low-30 percent range by year-end and expect further deleveraging in 2022."

"Combined with remarkable strength in the housing market, our focus on operational excellence and capital efficiency is expected to drive our returns on equity to the mid-teens range in 2021 followed by further expansion in 2022 as we begin to fully capture the synergies from our multiple acquisitions, core strategies and digital innovations. To the latter point, we recently expanded our suite of virtual selling tools with the launch of our industry-first to-be-built online home configuration and reservation system. Our innovative digital capabilities allow us to serve our customers even more efficiently while empowering them to take control of their homebuying journey on their own terms," said Palmer.

Business Highlights (All comparisons are of the current quarter to the prior-year quarter, unless otherwise indicated.)

Homebuilding

* Net sales orders increased 30 percent to 4,492, driven by strength across geographies and consumer segments. * Monthly absorptions increased 42 percent to 4.3 net sales orders per community, a company record high. * Average community count decreased nine percent to 345 due to accelerated close-outs of existing communities from strong sales activity that outpaced new community openings. * Home closings revenue increased eight percent to $1.4 billion, driven by a nearly six percent increase in average sales price to approximately $483,000 and a two percent increase in closings to 2,821. * Home closings gross margin increased 320 basis points to 18.6 percent, driven by operational improvement and the burn-off of transaction-related impacts in the prior-year quarter. * SG&A as a percentage of home closings revenue was flat at 10.8 percent. * Backlog of sold homes at quarter end was 10,074 units, up 54 percent, with a sales value of $5.3 billion, up 70 percent.

Land Portfolio

* The Company invested $552 million in land acquisition and development. * Total homebuilding lot supply equaled approximately 73,000, up four percent. * Controlled lots as a percentage of total lots was 32 percent, up from 28 percent in the prior-year quarter to the highest level since the third quarter of 2018. * Based on trailing twelve-month home closings, the lot position represented 5.8 years of total supply and 4.0 years of owned supply.

Financial Services

* Mortgage capture rate increased to 85 percent from 75 percent in the prior-year quarter and was tied with the company record high of 85 percent in the fourth quarter of 2020.

Balance Sheet

* At quarter end, total available liquidity equaled approximately $1.1 billion, including $393 million of unrestricted cash and $748 million of undrawn capacity on the Company's $800 million corporate revolver. * Net homebuilding debt-to-capital equaled 40.1 percent. The Company continues to anticipate its net debt-to-capital ratio to decline to the low-30 percent range by the end of 2021 and further in 2022. * During the first quarter, the Company repurchased a total of 1.4 million of its outstanding shares for $38 million at an average share price of $26.54.

Business Outlook

Second Quarter 2021

* Average active community count is expected to be approximately 330 * Home closings are expected to be between 3,200 to 3,400 * GAAP home closings gross margin is expected to be generally flat sequentially in the mid-18 percent range * Effective tax rate is expected to be approximately 23.0 percent * Diluted share count is expected to be approximately 130 million

Full Year 2021

* Average active community count is expected to be approximately 330 * Home closings are expected to be between 14,500 to 15,000 * GAAP home closings gross margin is expected to be in the low-19 percent range * SG&A as a percentage of home closings revenue is expected to be in the mid-nine percent range * Effective tax rate is expected to be approximately 23.0 percent * Diluted share count is expected to be approximately 130 million * Land and development spend is expected to be approximately $2.0 billion

Quarterly Financial Comparison

($ in thousands) Q1 2021 Q1 2020 Q1 2021 vs. Q1 2020

Total Revenue $1,417,812 $1,345,699 5.4%

Home Closings Revenue $1,363,429 $1,264,640 7.8 %

Home Closings Gross Margin $253,187 $194,137 30.4%

18.6% 15.4% 320 bps increase

Adjusted Home Closings Gross Margin $253,187 $222,503 13.8%

18.6% 17.6% 100 bps increase

SG&A $147,505 $136,853 7.8%

% of Home Closings Revenue 10.8% 10.8% No change

Earnings Webcast

A public webcast to discuss the first quarter 2021 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 4452459. 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

Headquartered in Scottsdale, Arizona, Taylor Morrison operates under our family of brands-including Taylor Morrison, Esplanade, Darling Homes, William Lyon Signature Series, and Christopher Todd Communities built by Taylor Morrison. We serve a wide array of consumers from coast to coast, including first-time, move-up, luxury and 55-plus active lifestyle buyers. From 2016-2021, Taylor Morrison has been recognized as America's Most Trusted(r) Builder by Lifestory Research. Our unwavering pledge to sustainability, our communities and our team is highlighted in our 2020 Environmental, Social and Governance (ESG) Report.

For more information about Taylor Morrison, please visit www.taylormorrison.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 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: the scale and scope of the COVID-19 (coronavirus) outbreak and resulting pandemic; 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; inflation or deflation; the seasonality of our business; 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 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

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

Three Months Ended March 31,

2021 2020

Home closings revenue, net $ 1,363,429 $ 1,264,640

Land closings revenue 4,889 22,939

Financial services revenue 44,065 28,039

Amenity and other revenue 5,429 30,081

Total revenues 1,417,812 1,345,699

Cost of home closings 1,110,242 1,070,503

Cost of land closings 4,027 27,132

Financial services expenses 23,999 20,647

Amenity and other expense 5,103 29,661

Total cost of revenues 1,143,371 1,147,943

Gross margin 274,441 197,756

Sales, commissions and other marketing costs 85,952 86,327

General and administrative expenses 61,553 50,526

Equity in income of unconsolidated entities (5,661) (2,426)

Interest income, net (119) (560)

Other expense, net 975 6,290

Transaction expenses - 86,374

Income/(loss) before income taxes 131,741 (28,775)

Income tax provision 29,298 781

Net income /(loss) before allocation to 102,443 (29,556)non-controlling interests

Net income attributable to non-controlling (4,422) (1,875)interests - joint ventures

Net income/(loss) available to Taylor Morrison Home $ 98,021 $ (31,431)Corporation

Earnings/(loss) per common share

Basic $ 0.76 $ (0.26)

Diluted $ 0.75 $ (0.26)

Weighted average number of shares of common stock:

Basic 128,883 121,908

Diluted 131,246 121,908

Taylor Morrison Home Corporation

Condensed Consolidated Balance Sheets

(In thousands)

March 31, December 31, 2021 2020

Assets

Cash and cash equivalents $ 392,500 $ 532,843

Restricted cash 976 1,266

Total cash, cash equivalents, and restricted cash 393,476 534,109

Owned inventory 5,567,328 5,209,653

Consolidated real estate not owned 57,857 122,773

Total real estate inventory 5,625,185 5,332,426

Land deposits 124,469 125,625

Mortgage loans held for sale 243,250 201,177

Derivative assets 7,894 5,294

Lease right of use assets 69,435 73,222

Prepaid expenses and other assets, net 243,363 242,744

Other receivables, net 105,915 96,241

Investments in unconsolidated entities 136,105 127,955

Deferred tax assets, net 238,078 238,078

Property and equipment, net 125,118 97,927

Goodwill 663,197 663,197

Total assets $ 7,975,485 $ 7,737,995

Liabilities

Accounts payable $ 258,349 $ 215,047

Accrued expenses and other liabilities 390,301 430,067

Lease liabilities 79,572 83,240

Income taxes payable 46,184 12,841

Customer deposits 421,838 311,257

Estimated development liability 40,233 40,625

Senior notes, net 2,452,354 2,452,365

Loans payable and other borrowings 392,400 348,741

Revolving credit facility borrowings - -

Mortgage warehouse borrowings 180,833 127,289

Liabilities attributable to consolidated real estate 57,857 122,773not owned

Total liabilities $ 4,319,921 $ 4,144,245

Stockholders' Equity

Total stockholders' equity 3,655,564 3,593,750

Total liabilities and stockholders' equity $ 7,975,485 $ 7,737,995

Homes Closed and Home Closings Revenue, Net:

Three Months Ended March 31,

Homes Closed Home Closings Revenue, Net Average Selling Price

($ in 2021 2020 Change 2021 2020 Change 2021 2020 Changethousands)

East 1,052 985 6.8 % $ 445,885 $ 395,716 12.7 % $ 424 $ 402 5.5 %

Central 691 819 (15.6) 320,177 373,024 (14.2) 463 455 1.8

West 1,078 957 12.6 597,367 495,900 20.5 554 518 6.9

Total 2,821 2,761 2.2 % $ 1,363,429 $ 1,264,640 7.8 % $ 483 $ 458 5.5 %

Net Sales Orders:

Three Months Ended March 31,

Net Sales Orders Sales Value Average Selling Price

($ in 2021 2020 Change 2021 2020 Change 2021 2020 Changethousands)

East 1,777 1,361 30.6 % $ 878,584 $ 561,544 56.5 % $ 494 $ 413 19.6 %

Central 1,072 906 18.3 583,482 424,063 37.6 544 468 16.2

West 1,643 1,199 37.0 1,010,767 632,243 59.9 615 527 16.7

Total 4,492 3,466 29.6 % $ 2,472,833 $ 1,617,850 52.8 % $ 550 $ 467 17.8 %

Sales Order Backlog:

As of March 31,

Sold Homes in Backlog Sales Value Average Selling Price

($ in 2021 2020 Change 2021 2020 Change 2021 2020 Changethousands)

East 3,560 2,193 62.3 % $ 1,753,135 $ 957,313 83.1 % $ 492 $ 437 12.6 %

Central 2,779 2,167 28.2 1,463,453 1,041,983 40.4 527 481 9.6

West 3,735 2,205 69.4 2,120,260 1,132,436 87.2 568 514 10.5

Total 10,074 6,565 53.5 % $ 5,336,848 $ 3,131,732 70.4 % $ 530 $ 477 11.1 %

Average Active Selling Communities:

Three Months Ended

March 31,

2021 2020 Change

East 129 144 (10.4) %

Central 106 134 (20.9)

West 110 100 10.0

Total 345 378 (8.7) %

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 have provided information in this press release relating to: (i) adjusted income before income taxes and related margin, (ii) EBITDA and adjusted EBITDA, (iii) adjusted net income and adjusted earnings per share, (iv) net homebuilding debt to capitalization ratio, (v) adjusted home closings gross margin and (vi) adjusted financial services gross margin.

Adjusted income before income taxes (and related margin) is a non-GAAP financial measure that reflects our income/(loss) before income taxes excluding the impact of purchase accounting adjustments and financial services operating loss related to the acquisition of William Lyon Homes ("WLH") and transaction expenses. EBITDA and Adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income/(loss) before allocation to non-controlling interests to exclude interest income/(expense), net, amortization of capitalized interest, income taxes, depreciation and amortization (EBITDA), non-cash compensation expense, if any, purchase accounting adjustments and financial services operating loss relating to the acquisition of WLH and transaction expenses. Adjusted net income and adjusted earnings per share are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding the impact of purchase accounting adjustments and financial services operating loss relating to the acquisition of WLH and, transaction expenses and the tax impact due to such items. Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, less unamortized debt issuance costs/premiums 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). 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 purchase accounting adjustments relating to the acquisition of WLH. Adjusted financial services gross margin is a non-GAAP financial measure calculated based on GAAP financial services margin, excluding financial services operating loss related to the acquisition of WLH.

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. A reconciliation of our forward-looking net homebuilding debt to capitalization ratio to the most directly comparable GAAP financial measure cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. 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 income before income taxes and related margin, adjusted net income and adjusted earnings per share, 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. Similarly, we believe that adjusted financial services gross margin is useful to investors because it allows investors to evaluate the performance of our financial services business 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.

Adjusted Net Income and Adjusted Earnings Per Share

Three Months Ended

March 31,

($ in thousands, except per share data) 2021 2020

Net income/(loss) available to TMHC $ 98,021 $ (31,431)

William Lyon Homes related purchase accounting - 32,717adjustments

William Lyon Homes financial services operating loss - 3,666

Transaction expenses - 86,374

Tax impact due to above non-GAAP reconciling items - (20,880)

Adjusted net income $ 98,021 $ 70,446

Basic weighted average shares 128,883 121,908

Adjusted earnings per common share - Basic $ 0.76 $ 0.58

Diluted weighted average shares 131,246 123,200

Adjusted earnings per common share - Diluted $ 0.75 $ 0.57

Adjusted Income Before Income Taxes and Related Margin

Three Months Ended March 31,

($ in thousands) 2021 2020

Income/(loss) before income taxes $131,741 $(28,775)

William Lyon Homes related purchase accounting - 32,717 adjustments

William Lyon Homes financial services operating - 3,666 loss

Transaction expenses - 86,374

Adjusted income before income taxes $131,741 $93,982



Total revenues $1,417,812$1,345,699



Income before income taxes margin 9.3% (2.1)%

Adjusted income before income taxes margin 9.3% 7.0%

Adjusted Home Closings Gross Margin

Three Months Ended March 31,

($ in thousands) 2021 2020

Home closings revenue $1,363,429 $1,264,640

Cost of home closings $1,110,242 $1,070,503

Home closings gross margin $253,187 $194,137

William Lyon Homes homebuilding related - 28,366 purchase accounting adjustments

Adjusted home closings gross margin $253,187 $222,503

Home closings gross margin as a 18.6 %15.4 %percentage of home closings revenue

Adjusted home closings gross margin as a 18.6 %17.6 %percentage of home closings revenue



Adjusted Financial Services Gross Margin

Three Months Ended March 31,

(Dollars in thousands) 2021 2020

Financial services revenue $44,065 $28,039

Financial services expenses 23,999 20,647

Financial services margin $20,066 $7,392

William Lyon Homes financial services operating loss - 3,666

Adjusted financial services margin $20,066 $11,058

EBITDA and Adjusted EBITDA Reconciliation

Three Months Ended

March 31,

($ in thousands) 2021 2020

Net income/(loss) before allocation to $ 102,443 $ (29,556)non-controlling interests

Interest income, net (119) (560)

Amortization of capitalized interest 27,325 24,298

Income tax provision/(benefit) 29,298 781

Depreciation and amortization 1,910 1,929

EBITDA $ 160,857 $ (3,108)

Non-cash compensation expense 5,682 11,896

William Lyon Homes related purchase accounting - 32,717adjustments

William Lyon Homes financial services operating loss - 3,666

Transaction expenses - 86,374

Adjusted EBITDA $ 166,539 $ 131,545

Total revenues $ 1,417,812 $ 1,345,699

EBITDA as a percentage of total revenues 11.3% (0.2)%

Adjusted EBITDA as a percentage of total revenues 11.7% 9.8%



Net Homebuilding Debt to Capitalization Ratio Reconciliation

As of As of ($ in thousands) March 31, December 31, 2020 2021

Total debt $3,025,587 $2,928,395

Less unamortized debt issuance premiums, 2,354 2,365 net

Less mortgage warehouse borrowings 180,833 127,289

Total homebuilding debt $2,842,400 $2,798,741

Less cash and cash equivalents 392,500 532,843

Net homebuilding debt $2,449,900 $2,265,898

Total equity 3,655,564 3,593,750

Total capitalization $6,105,464 $5,859,648



Net homebuilding debt to capitalization 40.1 %38.7 % ratio



CONTACT: Investor Relations (480) 734-2060 investor@taylormorrison.com

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SOURCE Taylor Morrison