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8-K - FORM 8-K - Taylor Morrison Home Corpd119686d8k.htm

Exhibit 99.1

 

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News Release

 

 

CONTACT: Investor Relations

Taylor Morrison Home Corporation

(480) 734-2060

investor@taylormorrison.com

Taylor Morrison Reports Fourth Quarter Revenue of $970 Million and Earnings per Share of $0.53

 

    Net sales orders increased 11% to 1,440 in the quarter and 17% to 6,681 for the year

 

    Average community count increased 30% to 286 in the quarter

 

    Backlog units at the end of the quarter were 2,932, a 30% increase over the prior year

 

    Home closings increased 5% to 2,068 in the quarter and 12% to 6,311 for the year

 

    Adjusted home closings gross margin was 20.9% for the quarter and 21.3% for the year

 

    On a GAAP basis, home closings gross margin was 18.3% for the quarter and 18.4% for the year

 

    Net income from continuing operations was $65 million for the quarter and $171 million for the year

SCOTTSDALE, Ariz., February 3, 2016 — Taylor Morrison Home Corporation (NYSE:TMHC) today reported fourth quarter total revenue of $970 million, net income of $65 million and earnings per share of $0.53.

“2015 proved to be a transformational year as expected. Our teams delivered a solid fourth quarter and full year. The year began with the sale of our Canadian business, which was quickly followed up with two acquisitions in 2015,” said Taylor Morrison’s President and CEO, Sheryl Palmer. “Through it all, we remained true to our four-pillar strategy of pursuing core locations, building distinctive communities, maintaining a cost efficient culture and balancing price and pace appropriately. And with the recent announcement of our acquisition of Acadia Homes & Neighborhoods, we enter 2016 poised to remain an industry leader.”

4th Quarter 2015 Key Business Highlights

 

    Average community count increased 30% from the prior year quarter to 286 average communities

 

    Net sales orders increased over 11% from the prior year quarter to 1,440

 

    Home closings increased over 5% from the prior year quarter to 2,068

 

    Backlog of homes under contract at the end of the quarter was 2,932 units, with a sales value of $1.4 billion

 

    Average price of homes closed was $452,000

 

    Average monthly absorption pace per community was 1.7 for the quarter

 

    Mortgage operations reported gross profit of $6.9 million on revenue of $14.3 million


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Quarterly Financial Comparison*

($ millions)

      
     Q4 2015     Q4 2014     Q4 2015 vs. Q4 2014  

Total Revenue

   $ 970      $ 1,012        (4.2 )% 

Home Closings Revenue

   $ 935      $ 966        (3.2 )% 

Home Closings Gross Margin

   $ 171      $ 187        (8.6 )% 
     18.3     19.4     (110 ) bps 

Adjusted Home Closings Gross Margin

   $ 195      $ 213        (8.5 )% 
     20.9     22.0     (110 ) bps 

SG&A

% of Home Closings Revenue

   $ 87      $ 78        11.5
     9.3     8.1     120 bps increase   

 

* Excludes discontinued operations in Q4 2014.

Full Year 2015 Key Business Highlights

 

    Average community count increased 26% from the prior year to 259 average communities

 

    Net sales orders increased 17% to 6,681

 

    Home closings increased 12% to 6,311

 

    Average price of homes closed was $458,000

 

    Average monthly absorption pace per community was 2.15 for the year

 

    Mortgage operations reported gross profit of $17.5 million on revenue of $43.1 million

Annual Financial Comparison*

($ millions)       
     2015     2014     2015 vs. 2014  

Total Revenue

   $ 2,977      $ 2,708        9.9

Home Closings Revenue

   $ 2,890      $ 2,620        10.3

Home Closings Gross Margin

   $ 531      $ 537        (1.1 )% 
     18.4     20.5     (210 ) bps 

Adjusted Home Closings Gross Margin

   $ 614      $ 602        2.0
     21.3     23.0     (170 ) bps 

SG&A

% of Home Closings Revenue

   $ 294      $ 250        17.6
     10.2     9.5     70 bps increase   

 

* Excludes discontinued operations in fiscal year 2014.

The Company ended the quarter with homebuilding inventories of $3.1 billion and 3,851 homes in inventory, compared to 2,871 homes at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of 2,096 sold units, 438 model homes and 1,317 inventory units, of which 481 were finished. The Company owned or controlled approximately 43,000 lots at December 31, 2015.


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First Quarter and Full Year 2016 Business Outlook

First Quarter 2016:

 

    Average community count – expected to be between 305 to 315

 

    Home closings – expected to be between 1,250 and 1,350

 

    GAAP home closings gross margin, including capitalized interest – expected to be in the mid-to-high 17% range

 

    Adjusted home closings gross margin, excluding capitalized interest – expected to be in the low 20% range

Full Year 2016:

 

    Average community count – expected to be between 310 to 320

 

    Home closings – year-over-year growth of between 10% to 15%

 

    GAAP home closings gross margin, including capitalized interest – expected to be in the low-to-mid 18% range

 

    Adjusted home closings gross margin, excluding capitalized interest – expected to be in the mid-to-high 20% range

 

    SG&A – expected to be around 10%

 

    Income from unconsolidated joint ventures – expected to be between $10 million and $15 million

 

    Land and development spend – expected to be at or just below $1 billion

 

    Effective tax rate – expected to be between 33% and 35%

Earnings Call Presentation

Company management will refer to a presentation as they discuss the results for Q4 and FY 2015 on the public webcast. This presentation can be found at the Taylor Morrison investor relations website at www.investors.taylormorrison.com under the Events tab at the top.


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Earnings Webcast

A public webcast to discuss the fourth quarter 2015 earnings will be held later today at 8:30 a.m. Eastern time. The participant dial-in is 1(888)771-4371 and the confirmation number is 41610860. 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 based in Scottsdale, Arizona and operates under two well-established brands, Taylor Morrison and Darling Homes. Taylor Morrison builds and develops distinctive communities from coast to coast, serving a wide array of homeowners and aimed mainly at first-time, move-up, luxury and 55 or better customers. Darling Homes builds communities in Texas primarily catering to move-up and luxury homebuyers seeking a personalized building experience.

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: interest rate changes and the availability of mortgage financing; continued volatility in the debt and equity markets; competition within the industries in which we operate; the availability and cost of land and other raw materials used by us in our homebuilding operations; the impact of any changes to our strategy in responding to continuing adverse conditions in the industry, including any changes regarding our land positions; the availability and cost of insurance covering risks associated with our businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in our local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; our ability to successfully integrate acquired assets and businesses; required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. 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. In addition, other such risks and uncertainties may be found in Taylor Morrison Home Corporation’s Form 10-K filed with the Securities and Exchange Commission (SEC).


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Taylor Morrison Home Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2015     2014     2015     2014  

Home closings revenue, net

   $ 934,798      $ 965,668      $ 2,889,968      $ 2,619,558   

Land closings revenue

     21,059        33,462        43,770        53,381   

Mortgage operations revenue

     14,287        12,623        43,082        35,493   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     970,144        1,011,753        2,976,820        2,708,432   

Cost of home closings

     764,131        778,224        2,358,823        2,082,819   

Cost of land closings

     11,397        23,937        24,546        39,696   

Mortgage operations expenses

     7,415        6,030        25,536        19,671   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     782,943        808,191        2,408,905        2,142,186   

Gross margin

     187,201        203,562        567,915        566,246   

Sales, commissions and other marketing costs

     61,950        54,535        198,676        168,897   

General and administrative expenses

     25,063        23,574        95,235        81,153   

Equity in income of unconsolidated entities

     (352     (1,937     (1,759     (5,405

Interest (income) expense, net

     (26     33        (192     1,160   

Other expense, net

     9        7,877        11,634        18,447   

Loss on extinguishment of debt

     —          —          33,317        —     

Gain on foreign currency forward

     —          —          (29,983     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

     100,557        119,480        260,987        301,994   

Income tax provision

     35,568        25,793        90,001        76,395   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

     64,989        93,687        170,986        225,599   

Discontinued operations:

        

Income from discontinued operations

     —          17,243        —          61,786   

Transaction expenses from discontinued operations

     —          —          (9,043     —     

Gain on sale of discontinued operations

     —          —          80,205        —     

Income tax benefit/(expense) from discontinued operations

     1,397        (6,399     (13,103     (19,884
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from discontinued operations

     1,397        10,844        58,059        41,902   

Net income before allocation to non-controlling interests

     66,386        104,531        229,045        267,501   

Net income attributable to non-controlling interests – joint ventures

     (254     (1,262     (1,681     (1,648
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income before non-controlling interests – Principal Equityholders

     66,132        103,269        227,364        265,853   
Net income from continuing operations attributable to non-controlling interests – Principal Equityholders      (47,440     (67,482     (123,909     (163,790
Net income from discontinued operations attributable to non-controlling interests – Principal Equityholders      (1,025     (7,912     (42,406     (30,594
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Taylor Morrison Home Corporation

   $ 17,667      $ 27,875      $ 61,049      $ 71,469   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share – basic:

        

Income from continuing operations

   $ 0.53      $ 0.75      $ 1.38      $ 1.83   

Income from discontinued operations – net of tax

   $ 0.01      $ 0.09      $ 0.47      $ 0.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Taylor Morrison Home Corporation

   $ 0.54      $ 0.84      $ 1.85      $ 2.17   

Earnings per common share – diluted:

        

Income from continuing operations

   $ 0.53      $ 0.75      $ 1.38      $ 1.83   

Income from discontinued operations – net of tax

   $ 0.01      $ 0.09      $ 0.47      $ 0.34   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Taylor Morrison Home Corporation

   $ 0.54      $ 0.84      $ 1.85      $ 2.17   

Weighted average number of shares of common stock:

        

Basic

     32,986        33,060        33,063        32,937   

Diluted

     122,298        122,348        122,384        122,313   


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Taylor Morrison Home Corporation

Condensed Consolidated Balance Sheets

(In thousands)

     December 31,
2015
     December 31,
2014
 
     (Unaudited)         

Assets

     

Cash and cash equivalents

   $ 126,188       $ 234,217   

Restricted cash

     1,280         1,310   

Real estate inventory:

     

Owned inventory

     3,118,866         2,511,623   

Real estate not owned under option agreements

     7,921         6,698   
  

 

 

    

 

 

 

Total real estate inventory

     3,126,787         2,518,321   

Land deposits

     34,113         34,544   

Mortgage loans held for sale

     201,733         191,140   

Prepaid expenses and other assets, net

     95,191         89,210   

Other receivables, net

     120,729         85,274   

Investments in unconsolidated entities

     128,448         110,291   

Deferred tax assets, net

     233,488         258,190   

Property and equipment, net

     7,387         5,337   

Intangible assets, net

     4,248         5,459   

Goodwill

     57,698         23,375   

Assets of discontinued operations

     —           576,445   
  

 

 

    

 

 

 

Total assets

   $ 4,137,290       $ 4,133,113   
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 151,861       $ 122,466   

Accrued expenses and other liabilities

     191,452         200,556   

Income taxes payable

     37,792         50,096   

Customer deposits

     92,319         70,465   

Senior notes

     1,250,000         1,388,840   

Loans payable and other borrowings

     134,824         147,516   

Revolving credit facility borrowings

     115,000         40,000   

Mortgage warehouse borrowings

     183,444         160,750   

Liabilities attributable to consolidated option agreements

     7,921         6,698   

Liabilities of discontinued operations

     —           168,565   
  

 

 

    

 

 

 

Total liabilities

   $ 2,164,613       $ 2,355,952   
  

 

 

    

 

 

 

Stockholders’ Equity

     

Total stockholders’ equity

     1,972,677         1,777,161   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,137,290       $ 4,133,113   
  

 

 

    

 

 

 


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Homes Closed:    Three Months Ended December 31,  
     2015      2014  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     749       $ 290,761         529       $ 211,043   

Central

     654         297,249         748         343,604   

West

     665         346,788         690         411,021   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,068       $ 934,798         1,967       $ 965,668   
  

 

 

    

 

 

    

 

 

    

 

 

 
Net Sales Orders:    Three Months Ended December 31,  
     2015      2014  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     526       $ 208,458         373       $ 143,188   

Central

     392         183,344         502         219,561   

West

     522         279,133         420         200,662   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,440       $ 670,935         1,295       $ 563,411   
  

 

 

    

 

 

    

 

 

    

 

 

 
Homes Closed:    Twelve Months Ended December 31,  
     2015      2014  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     2,065       $ 809,324         1,479       $ 546,045   

Central

     2,140         990,925         2,099         958,096   

West

     2,106         1,089,719         2,064         1,115,417   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     6,311       $ 2,889,968         5,642       $ 2,619,558   
  

 

 

    

 

 

    

 

 

    

 

 

 
Net Sales Orders:    Twelve Months Ended December 31,  
     2015      2014  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     2,124       $ 794,356         1,521       $ 564,338   

Central

     2,018         912,623         2,222         980,658   

West

     2,539         1,262,101         1,985         1,060,129   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     6,681       $ 2,969,080         5,728       $ 2,605,125   
  

 

 

    

 

 

    

 

 

    

 

 

 
Sales Order Backlog:    As of December 31,  
     2015      2014  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     875       $ 358,978         557       $ 259,622   

Central

     1,030         519,251         1,152         547,226   

West

     1,027         514,744         543         292,919   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,932       $ 1,392,973         2,252       $ 1,099,767   
  

 

 

    

 

 

    

 

 

    

 

 

 
Average Active Selling Communities:    Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2015      2014      2015      2014  

East

     102         69         91         65   

Central

     106         93         98         86   

West

     78         58         70         55   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     286         220         259         206   
  

 

 

    

 

 

    

 

 

    

 

 

 


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Average Selling Price of Homes Closed:    Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
(Dollars in thousands)    2015      2014      2015      2014  

East

   $ 388       $ 399       $ 392       $ 369   

Central

     455         459         463         456   

West

     521         596         517         540   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 452       $ 491       $ 458       $ 464   
  

 

 

    

 

 

    

 

 

    

 

 

 


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Reconciliation of Non-GAAP Financial Measures

The following tables set forth a reconciliation between our home closings gross margin and our adjusted home closings gross margin and our net income and adjusted EBITDA. Adjusted home closings gross margin is a non-GAAP financial measure calculated based on home closings gross margin, excluding impairments, if any, and capitalized interest amortization. Adjusted EBITDA is a non-GAAP financial metric that measures performance by adjusting net income from continuing operations to exclude interest, income taxes, depreciation and amortization, and non-cash compensation expenses. Management uses these non-GAAP measures to evaluate our performance on a consolidated basis as well as the performance of our regions. 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 home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the often varying effects of interest costs capitalized. We believe adjusted EBITDA provides useful information to investors regarding our results of operations for similar reasons and also because it assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted EBITDA 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.

These measures are considered non-GAAP financial measures and should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures as a measure of our operating performance. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate net income and gross margins and any adjustments to such amounts before comparing our measures to those of such other companies.

Adjusted Home Closings Gross Margin Reconciliation — Continuing Operations

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
(Dollars in thousands)    2015     2014     2015     2014  

Home closings revenue

   $ 934,798      $ 965,668      $ 2,889,968      $ 2,619,558   

Cost of home closings

     764,131        778,224        2,358,823        2,082,819   
  

 

 

   

 

 

   

 

 

   

 

 

 

Home closings gross margin

     170,667        187,444        531,145        536,739   

Capitalized interest amortization

     24,560        25,382        83,163        65,098   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted home closings gross margin

   $ 195,227      $ 212,826      $ 614,308      $ 601,837   
  

 

 

   

 

 

   

 

 

   

 

 

 
Home closings gross margin as a percentage of home closings revenue      18.3     19.4     18.4     20.5
Adjusted home closings gross margin as a percentage of home closings revenue      20.9     22.0     21.3     23.0


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Adjusted EBITDA Reconciliation

 

     Three Months Ended
December 31,
 
(Dollars in thousands)    2015      2014  

Net income from continuing operations

   $ 64,989       $ 93,687   

Interest expense (income), net

     (26      33   

Amortization of capitalized interest

     24,560         25,449   

Income tax provision

     35,568         25,793   

Depreciation and amortization

     1,180         1,084   
  

 

 

    

 

 

 

EBITDA

   $ 126,271       $ 146,046   

Non-cash compensation expense

     2,169         1,505   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 128,440       $ 147,551