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8-K - 8-K - Taylor Morrison Home Corpd433588d8k.htm
LOGO    Exhibit 99.1

News Release

CONTACT: Investor Relations

Taylor Morrison Home Corporation

(480) 734-2060

investor@taylormorrison.com

Taylor Morrison Reports Second Quarter Sales per Outlet of 2.7, an Increase of 29%, Sales Orders of 2,376, Revenue of

$908 Million and Diluted Earnings per Share of $0.46

SCOTTSDALE, Ariz., Aug. 2, 2017 — Taylor Morrison Home Corporation (NYSE:TMHC) today reported second quarter total revenue of $908 million, net income of $56 million and diluted earnings per share of $0.46.

Second Quarter 2017 Highlights:

 

  Sales per outlet were 2.7, a 29% increase from the prior year quarter

 

  Net sales orders were 2,376, a 17% increase from the prior year quarter

 

  Home closings were 1,863, a 3% increase from the prior year quarter

 

  Total revenue was $908 million, a 6% increase from the prior year quarter

 

  GAAP home closings gross margin, inclusive of capitalized interest, was 18.5%

 

  Net income for the quarter was $56 million with diluted earnings per share of $0.46, increases of 23% and 24% from the prior year quarter, respectively

“I’m very pleased with our results for the second quarter where we finished with 2.7 sales per outlet, nearly a 30 percent increase over the prior year quarter, and total sales of 2,376,” said Sheryl Palmer, Chairman, President and CEO of Taylor Morrison. “For the first six months of the year, our sales success represented about 25 percent in year-over-year growth and has put us in a strong position to achieve an exceptional 2017. Earnings per share were 46 cents, a 24 percent increase, and earnings before tax increased 16 percent compared to the same quarter last year.”

“We’ve positioned ourselves well through the initiatives we’ve put in place and our responsible approach to growth,” added Palmer. “While I am extremely excited about what we’ve been able to do so far this year, it is our future that is truly encouraging. I’m optimistic about the health of our industry and the economy, our markets, our focus on being a return-driven business, and our team’s ability to continue to drive significant results.”

The Company finished the quarter with home closings of 1,863, representing a 3 percent year-over-year increase and a two-year growth rate of more than 25 percent.


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“Home closings gross margin, inclusive of capitalized interest, was 18.5 percent, and was slightly higher than guidance and our second quarter of last year,” said Dave Cone, Executive Vice President and Chief Financial Officer. “We continue to believe the full year margin will be accretive year-over-year.”

Backlog of homes under contract at the end of the quarter was 4,441 units with a sales value of $2.1 billion, both representing growth of 22 percent from the prior year quarter.

The Company ended the quarter with $246 million in cash and a net homebuilding debt to capitalization ratio of 33.8 percent.

Homebuilding inventories were $3.2 billion at the end of the quarter, including 5,188 homes in inventory, compared to 4,607 homes in inventory at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of 3,333 sold units, 395 model homes and 1,460 inventory units, of which 259 were finished. The Company owned or controlled approximately 38,500 lots at June 30, 2017, representing 5.0 years of supply and is focused on securing land for 2019 and beyond.

Quarterly Financial Comparison

 

($ thousands)                     
     Q2 2017      Q2 2016      Q2 2017 vs. Q2 2016  

Total Revenue

   $ 908,494      $ 854,316        6.3%  

Home Closings Revenue

   $ 889,096      $ 829,882        7.1%  

Home Closings Gross Margin

   $ 164,591      $ 150,197        9.6%  
     18.5%        18.1%        40 bps improvement  

SG&A

   $ 95,410      $ 90,892        5.0%  

% of Home Closings Revenue

     10.7%        11.0%        30 bps leverage  

Third Quarter and Full Year 2017 Business Outlook

Third Quarter 2017:

 

  Average active community count is expected to be between 295 and 300

 

  Home closings are expected to be between 1,875 and 1,975

 

  GAAP home closings gross margin, inclusive of capitalized interest, is expected to be in the mid 18% range

Full Year 2017:

 

  Average active community count is expected to be about 300

 

  Monthly absorption pace is expected to be 2.3 to 2.4 per outlet

 

  Home closings are expected to be between 7,850 and 8,150

 

  GAAP home closings gross margin, inclusive of capitalized interest, is expected to be accretive to 2016 and be in the mid 18% range


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  SG&A as a percentage of homebuilding revenue is expected to leverage year-over-year and be in the low-to-mid 10% range

 

  Income from unconsolidated joint ventures is expected to be about $10 million

 

  Land and development spend is expected to be approximately $1 billion

 

  Effective tax rate expected to be between 34% and 35%

Operating Division Realignment Within Our Segments

As of March 31, 2017 we realigned our homebuilding operating divisions within our existing segments based on geographic location and management’s long-term strategic plans. As a result, historical periods in the segment information have been reclassified to align to these changes.

Earnings Webcast

A public webcast to discuss the second quarter 2017 earnings will be held later today at 8:30 a.m. Eastern time. The participant dial-in is 1 (855) 470-8731 and the confirmation number is 52237654. 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 and 2017 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.


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Such risks, uncertainties and other factors include, among other things: changes in general and local economic conditions; slowdowns or severe downturns in the housing market; homebuyers’ ability to obtain suitable financing; shortages in, disruptions of and cost of labor; competition in our industry; any increase in unemployment or underemployment; increases in interest rates, taxes or government fees; 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 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; and risks related to our structure and organization. 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). 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.


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Taylor Morrison Home Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 

 

 

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2017     2016     2017     2016  

Home closings revenue, net

   $ 889,096     $ 829,882     $ 1,640,581     $ 1,458,969  

Land closings revenue

     3,764       10,936       7,120       17,540  

Mortgage operations revenue

     15,634       13,498       29,883       23,136  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     908,494       854,316       1,677,584       1,499,645  

Cost of home closings

     724,505       679,685       1,340,800       1,194,217  

Cost of land closings

     2,467       6,686       4,867       12,318  

Mortgage operations expenses

     10,102       8,193       18,804       14,717  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     737,074       694,564       1,364,471       1,221,252  

Gross margin

     171,420       159,752       313,113       278,393  

Sales, commissions and other marketing costs

     61,516       59,182       117,133       107,023  

General and administrative expenses

     33,894       31,710       67,022       61,134  

Equity in income of unconsolidated entities

     (3,071     (2,305     (4,156     (3,087

Interest income, net

     (89     (15     (179     (102

Other expense, net

     764       3,412       413       6,666  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     78,406       67,768       132,880       106,759  

Income tax provision

     22,476       22,104       41,349       34,991  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income before allocation to non-controlling interests

     55,930       45,664       91,531       71,768  

Net income attributable to non-controlling interests - joint ventures

     (207     (296     (198     (480
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income before non-controlling interests - Principal Equityholders

     55,723       45,368       91,333       71,288  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interests - Principal Equityholders

     (28,322     (33,683     (54,164     (52,790
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to Taylor Morrison Home Corporation

   $ 27,401     $ 11,685     $ 37,169     $ 18,498  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share

        

Basic

   $ 0.46     $ 0.37     $ 0.76     $ 0.58  

Diluted

   $ 0.46     $ 0.37     $ 0.76     $ 0.58  

Weighted average number of shares of common stock:

        

Basic

     58,977       31,574       48,822       31,742  

Diluted

     121,061       121,052       120,895       121,217  


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Taylor Morrison Home Corporation

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

 

     June 30,
2017
     December 31,
2016
 
     (Unaudited)         

Assets

     

Cash and cash equivalents

   $ 246,477      $ 300,179  

Restricted cash

     1,611        1,633  
  

 

 

    

 

 

 

Total cash, cash equivalents, and restricted cash

     248,088        301,812  

Owned inventory

     3,196,024        3,010,967  

Real estate not owned under option agreements

     4,003        6,252  
  

 

 

    

 

 

 

Total real estate inventory

     3,200,027        3,017,219  

Land deposits

     52,977        37,233  

Mortgage loans held for sale

     110,906        233,184  

Hedging assets

     1,797        2,291  

Prepaid expenses and other assets, net

     76,244        73,425  

Other receivables, net

     101,453        115,246  

Investments in unconsolidated entities

     178,878        157,909  

Deferred tax assets, net

     212,925        206,634  

Property and equipment, net

     5,933        6,586  

Intangible assets, net

     2,660        3,189  

Goodwill

     66,198        66,198  
  

 

 

    

 

 

 

Total assets

   $ 4,258,086      $ 4,220,926  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 168,568      $ 136,636  

Accrued expenses and other liabilities

     175,561        209,202  

Income taxes payable

     12,035        10,528  

Customer deposits

     182,440        111,573  

Senior notes, net

     1,238,635        1,237,484  

Loans payable and other borrowings

     152,762        150,485  

Revolving credit facility borrowings

     —          —    

Mortgage warehouse borrowings

     63,150        198,564  

Liabilities attributable to real estate not owned under option agreements

     4,003        6,252  
  

 

 

    

 

 

 

Total liabilities

   $ 1,997,154      $ 2,060,724  
  

 

 

    

 

 

 

Stockholders’ Equity

     

Total stockholders’ equity

     2,260,932        2,160,202  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,258,086      $ 4,220,926  
  

 

 

    

 

 

 


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Homes Closed:    Three Months Ended June 30,  
     2017      2016  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     780      $ 317,113        701      $ 267,162  

Central

     557        266,738        572        268,896  

West

     526        305,245        543        293,824  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,863      $ 889,096        1,816      $ 829,882  
  

 

 

    

 

 

    

 

 

    

 

 

 
Net Sales Orders:    Three Months Ended June 30,  
     2017      2016  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     1,096      $ 418,001        856      $ 330,619  

Central

     677        328,658        558        261,218  

West

     603        357,319        611        337,847  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,376      $ 1,103,978        2,025      $ 929,684  
  

 

 

    

 

 

    

 

 

    

 

 

 
Homes Closed:    Six Months Ended June 30,  
     2017      2016  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     1,462      $ 580,214        1,197      $ 448,887  

Central

     981        470,203        1,018        484,860  

West

     1,050        590,164        992        525,222  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,493      $ 1,640,581        3,207      $ 1,458,969  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Net Sales Orders:    Six Months Ended June 30,  
     2017      2016  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     2,146      $ 830,044        1,593      $ 617,499  

Central

     1,305        617,713        1,049        491,484  

West

     1,350        787,846        1,211        658,436  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,801      $ 2,235,603        3,853      $ 1,767,419  
  

 

 

    

 

 

    

 

 

    

 

 

 
Sales Order Backlog:    As of June 30,  
     2017      2016  
(Dollars in thousands)    Homes      Value      Homes      Value  

East

     1,905      $ 772,244        1,360      $ 578,497  

Central

     1,282        655,956        1,200        612,279  

West

     1,254        712,816        1,082        567,901  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,441      $ 2,141,016        3,642      $ 1,758,677  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Average Active Selling Communities:    Three Months
Ended

June 30,
     Six Months
Ended

June 30,
 
     2017      2016      2017      2016  

East

     127        132        126        128  

Central

     117        118        117        120  

West

     50        65        54        65  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     294        315        297        313  
  

 

 

    

 

 

    

 

 

    

 

 

 


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Average Selling Price of Homes Closed:    Three Months
Ended
June 30,
     Six Months
Ended
June 30,
 
(Dollars in thousands)    2017      2016      2017      2016  

East

   $ 407      $ 381      $ 397      $ 375  

Central

     479        470        479        476  

West

     580        541        562        529  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 477      $ 457      $ 470      $ 455  
  

 

 

    

 

 

    

 

 

    

 

 

 


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Reconciliation of Non-GAAP Financial Measures

The following tables set forth a reconciliation between our net income and EBITDA and adjusted EBITDA, and a reconciliation of our 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. Net homebuilding debt to capitalization, which 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), is a non-GAAP financial measure. Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis as well as the performance of our regions. We use the ratio of net homebuilding debt to total capitalization as an indicator of overall leverage. 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 also 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 use the ratio of net homebuilding debt to total capitalization to evaluate our performance against other companies in the homebuilding industry and believe it is also relevant and useful to investors for that reason.

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 or liquidity. 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, gross margins and total debt to capitalization and any adjustments to such amounts before comparing our measures to those of such other companies.


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Adjusted EBITDA Reconciliation

 

 
     Three Months Ended
June 30,
 
(Dollars in thousands)    2017     2016  

Net income before allocation to non-controlling interests

   $ 55,930     $ 45,664  

Interest income, net

     (89     (15

Amortization of capitalized interest

     23,280       22,100  

Income tax provision

     22,476       22,104  

Depreciation and amortization

     1,026       896  
  

 

 

   

 

 

 

EBITDA

   $ 102,623     $ 90,749  

Non-cash compensation expense

     3,839       3,197  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 106,462     $ 93,946  
  

 

 

   

 

 

 

Net Homebuilding Debt to Capitalization Ratio Reconciliation

 

(Dollars in thousands)    As of
June 30,
2017
 

Total debt

   $ 1,454,547  

Unamortized debt issuance costs

     11,365  

Less mortgage warehouse borrowings

     63,150  
  

 

 

 

Total homebuilding debt

   $ 1,402,762  

Less cash and cash equivalents

     246,477  
  

 

 

 

Net homebuilding debt

   $ 1,156,285  

Total equity

     2,260,932  
  

 

 

 

Total capitalization

   $ 3,417,217  
  

 

 

 

Net homebuilding debt to capitalization ratio

     33.8%