Taylor Morrison Reports Third Quarter 2024 Results
SCOTTSDALE, Ariz., Oct. 23, 2024 /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE:TMHC), a leading national land developer and homebuilder, announced results for the third quarter ended September 30, 2024. Reported third quarter net income was $251 million, or $2.37 per diluted share, as compared to $171 million, or $1.54 per diluted share, in the prior-year quarter.
Third quarter 2024 highlights included the following, as compared to the third quarter of 2023:
Diluted EPS increased 54% to $2.37
Net sales orders increased 9% to 2,830
Home closings revenue of $2.0 billion, driven by 3,394 closings at an average price of $598,000
Home closings gross margin of 24.8%, up from 23.1% a year ago
83,579 homebuilding lots owned and controlled, of which a record 58% was controlled off balance sheet
Share repurchases totaled $61 million during the quarter and $258 million year to date
Total liquidity of $1.2 billion; no senior debt maturities until 2027
"In the third quarter, our team delivered better-than-expected results, which clearly demonstrated the benefits of our diversified consumer and geographic strategy, as well as our team's impressive execution in the face of continued interest rate volatility, economic uncertainty and hurricane-related disruptions," said Sheryl Palmer, Taylor Morrison CEO and Chairman. "Led by strong top-line growth and improved margins, our results generated over-50% year-over-year growth in our earnings per diluted share to $2.37 and a 15% year-over-year increase in our book value per share to approximately $54."
Palmer continued, "By meeting the needs of well-qualified homebuyers with appropriate product offerings in prime community locations, we continue to benefit from healthy demand and pricing resiliency across our portfolio. On the sales front, our net orders increased 9% year over year, driven by a monthly absorption pace of 2.8 per community. As I shared on our second quarter call, we had begun to see traffic recover in June and July, which translated into improving order volume throughout the third quarter, with sales activity ending on a high note in September. While still early in October, demand has generally been healthy and consistent with seasonal trends, even with the impact of yet another hurricane in Florida."
"Since expanding our company's scale and refining our operational capabilities over the last many years, we believe that our ability to generate accretive growth and attractive returns has been permanently strengthened. This is reflected in the long-term targets that we introduced earlier this year, each of which are meaningfully stronger than our historic norms. These targets include: 10% annual home closings growth, an annualized low-three absorption pace, low-to-mid 20% home closings gross margins, and mid-to-high teens returns on equity."
"This year, with just over two months to go, we expect to meet or exceed each of these metrics with anticipated double-digit closings growth to approximately 12,725 homes at a home closings gross margin of around 24.3% as 2024 has shaped up to be another milestone year for our company. As we head into 2025, we are confident that our long-standing emphasis on capital-efficient growth will yield another year of strong performance, supported by tailwinds driving the need for new construction and our favorable positioning as a diversified homebuilder," said Palmer.
Business Highlights (All comparisons are of the current quarter to the prior-year quarter, unless indicated.)
Homebuilding
Home closings revenue increased 26% to $2.0 billion, driven by a 29% increase in closings to 3,394 homes, which was partially offset by a 2% decrease in the average price to $598,000.
The home closings gross margin was 24.8%, which was up 170 basis points from 23.1% in the prior-year quarter.
Net sales orders increased 9% to 2,830, driven by a 5% increase in ending community count to 340 outlets and a 4% increase in the monthly absorption pace to 2.8 per community.
SG&A as a percentage of home closings revenue decreased to 9.8% from 10.4% a year ago.
Cancellations equaled 9.3% of gross orders, down from 11.4% a year ago.
Backlog at quarter end was 5,692 homes with a sales value of $3.8 billion. Backlog customer deposits averaged approximately $54,000 per home.
Land Portfolio
Homebuilding land acquisition and development spend totaled $593 million, up from $552 million a year ago. Development-related spend accounted for 46% of the total versus 42% a year ago.
Homebuilding lot supply was 83,579 homesites, of which a record 58% was controlled off balance sheet.
Based on trailing twelve-month home closings, total homebuilding lots represented 6.6 years of supply, of which 2.7 years was owned.
Financial Services
The mortgage capture rate was 88%, unchanged from a year ago.
Borrowers had an average credit score of 754 and average debt-to-income ratio of 40%.
Balance Sheet
At quarter end, total liquidity was approximately $1.2 billion, including $946 million of total capacity on the Company's revolving credit facility, which was undrawn outside of normal letters of credit.
The gross homebuilding debt to capital ratio was 25.1%. Including $256 million of unrestricted cash on hand, the net homebuilding debt-to-capital ratio was 22.5%.
The Company repurchased 1.0 million shares for $61 million, bringing the year-to-date total to 4.2 million shares for $258 million. At quarter end, the remaining share repurchase authorization was $237 million. Subsequent to quarter end, our Board of Directors authorized an expanded share repurchase authorization of up to $1 billion, effective through December 31, 2026.
Business Outlook
Fourth Quarter 2024
Home closings are expected to be approximately 3,400
Average closing price is expected to be approximately $610,000
Home closings gross margin is expected to be around 24.5%
Ending active community count is expected to be between 330 to 340
Effective tax rate is expected to be approximately 25%
Diluted share count is expected to be approximately 106 million
Full Year 2024
Home closings are now expected to be approximately 12,725
Average closing price is now expected to be approximately $600,000
Home closings gross margin is now expected to be approximately 24.3%
Ending active community count is expected to be between 330 to 340
SG&A as a percentage of home closings revenue is expected to be in the high-9% range
Effective tax rate is now expected to be between 24.5% to 25.0%
Diluted share count is expected to be approximately 107 million
Land and development spend is now expected to be around $2.5 billion
Share repurchases are expected to total approximately $300 million
Quarterly Financial Comparison
(Dollars in thousands)
Q3 2024
Q3 2023
Q3 2024 vs. Q3 2023
Total Revenue
$ 2,120,842
$ 1,675,545
26.6 %
Home Closings Revenue
$ 2,029,134
$ 1,611,883
25.9 %
Home Closings Gross Margin
$ 503,309
$ 372,884
35.0 %
24.8 %
23.1 %
170 bps increase
SG&A
$ 199,341
$ 167,791
18.8 %
% of Home Closings Revenue
9.8 %
10.4 %
60 bps decrease
Earnings Conference Call Webcast
A public webcast to discuss the Company's earnings will be held later today at 8:30 a.m. ET. Call participants are asked to register for the event here to receive a unique passcode and dial-in information. The call will be recorded and available for replay on Taylor Morrison's website at www.taylormorrison.com on the Investor Relations portion of the site under the Events & Presentations tab.
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 and Yardly. From 2016-2024, Taylor Morrison has been recognized as America's Most Trusted® Builder by Lifestory Research. Our long-standing commitment to sustainable operations is highlighted in our annual Sustainability and Belonging 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 ""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 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; the scale and scope of current and future public health events, including pandemics and epidemics; 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
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Home closings revenue, net
$ 2,029,134
$ 1,611,883
$ 5,585,516
$ 5,221,225
Land closings revenue
27,820
14,291
48,279
31,439
Financial services revenue
49,654
40,045
145,529
117,108
Amenity and other revenue
14,234
9,326
32,323
28,194
Total revenue
2,120,842
1,675,545
5,811,647
5,397,966
Cost of home closings
1,525,825
1,238,999
4,231,740
3,980,749
Cost of land closings
27,010
13,572
50,915
30,620
Financial services expenses
27,304
23,128
80,553
70,618
Amenity and other expenses
9,634
8,128
28,237
25,010
Total cost of revenue
1,589,773
1,283,827
4,391,445
4,106,997
Gross margin
531,069
391,718
1,420,202
1,290,969
Sales, commissions and other marketing costs
117,714
98,797
334,270
304,591
General and administrative expenses
81,627
68,994
231,970
205,904
Net income from unconsolidated entities
(707)
(1,934)
(6,086)
(7,049)
Interest expense/(income), net
3,379
(5,782)
7,423
(12,013)
Other (income)/expense, net
(3,635)
2,968
3,837
6,683
Loss on extinguishment of debt, net
—
269
—
269
Income before income taxes
332,691
228,406
848,788
792,584
Income tax provision
81,219
57,960
206,241
196,005
Net income before allocation to non-controlling interests
251,472
170,446
642,547
596,579
Net (income)/loss attributable to non-controlling interests
(346)
