Taylor Morrison Reports First Quarter 2025 Results

, /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE: TMHC), a leading national land developer and homebuilder, announced results for the first quarter ended March 31, 2025. Reported first quarter net income was $213 million, or $2.07 per diluted share, while adjusted net income was $225 million, or $2.18 per diluted share. First quarter 2025 highlights: Home closings revenue of $1.8 billion, up 12% year over year 3,048 closings, up 12% year over year, at an average price of $600,000 Home closings gross margin of 24.0% and adjusted home closings gross margin of 24.8% Net sales orders of 3,374, down 8% from a year ago Monthly absorption pace of 3.3, down from a near-record of 3.7 a year ago Ending outlets of 344, up 4% year over year 86,266 homebuilding lots owned and controlled 59% controlled off balance sheet, up from 53% a year ago Total homebuilding land spend of $469 million, of which 46% was development related Repurchased 2.2 million common shares for $135 million Homebuilding debt-to-capitalization of 24.3% on a gross basis and 20.5% net of $378 million of unrestricted cash Total liquidity of $1.3 billion "In the first quarter, we delivered 3,048 homes at an average price of $600,000, producing $1.8 billion of home closings revenue, up 12% year over year, with an adjusted home closings gross margin of 24.8%, up 80 basis points year over year. Combined with 70 basis points of SG&A leverage, our adjusted earnings per diluted share increased 25% while our book value per share grew 16% to approximately $58. Once again, each of our operational metrics met or exceeded our prior guidance. These strong top and bottom-line results reflect the benefits of our diversified consumer and product strategy. Especially in volatile market environments, this diversification is a valuable differentiator that we believe contributes to greater volume and margin resiliency," said Sheryl Palmer, Taylor Morrison CEO and Chairman. "From a sales perspective, the slow start in January gave way to stabilization in February and modest growth in March, following the historic pattern, albeit with slightly less velocity than we would have otherwise anticipated during the early spring selling season. In total, our monthly absorption pace increased to 3.3 per community from 2.6 in the fourth quarter but was down from the near-record of 3.7 we achieved a year ago. However, this was still solidly ahead of our pre-COVID historic first quarter average of 2.6 from 2013 to 2019, reflecting our strategic shift into higher-pacing, larger communities. By consumer group, our net sales were fueled by growth in our resort lifestyle segment, driven by strength in Florida, a modest decline in our move-up segment and a steeper reduction in entry-level sales—reinforcing the importance of our broad consumer reach," said Palmer. "Given our diversified portfolio, there is not a singular approach to our pace-versus-price strategy, but rather an ongoing community-specific process that considers each asset's unique competitive dynamics, sales momentum and other market influences. Assuming a continuation of current market conditions as we look out to the remainder of the year, we now expect to deliver between 13,000 to 13,500 homes at a home closings gross margin around 23% in 2025." Palmer continued, "While the current environment has made it challenging to provide near-term guidance with strong conviction, we remain confident in our long-term trajectory on our path to 20,000 closings by 2028. The path there will not be a straight line as we navigate the market—with 2025 now expected to represent a speed bump on our path there; however, we believe our disciplined underwriting and attractive product positioning is strongly supportive of a business capable of generating low-to-mid 20% home closings gross margins and high-teen returns on equity over time. Additionally, we continue to believe the market overall remains under-supplied and demographics supportive of the strong need for new construction. In aspiring to reach 20,000 closings, we will prioritize bottom-line earnings and returns for our shareholders while always maintaining the health of our balance sheet. We are not interested in growth for growth's sake. As our strategy has proven over the last decade-plus, we seek to maximize long-term return potential by thoughtfully balancing both pace and price through a uniquely diversified portfolio that is well positioned to withstand housing's cyclicality." First Quarter Business Highlights (All comparisons are of the current quarter to the prior-year quarter, unless indicated.) Homebuilding Home closings revenue increased 12% to $1.8 billion, driven by a 12% increase in closings to 3,048 homes and a flat average closing price of $600,000. Home closings gross margin was 24.0% on a reported basis and 24.8% on an adjusted basis. This compared to a reported and adjusted home closings gross margin of 24.0% a year ago. Net sales orders declined 8% to 3,374. This was driven by a decline in the monthly absorption pace to 3.3 from the near-record of 3.7 a year ago, which was partially offset by a 4% increase in ending community count to 344 outlets. Cancellations equaled 11.0% of gross orders, up from 7.0% a year ago but consistent with historic norms. SG&A as a percentage of home closings revenue declined 70 basis points to 9.7% from 10.4% a year ago. Backlog at quarter end was 5,068 homes with a sales value of $3.4 billion. Backlog customer deposits averaged approximately $48,000 per home. Land Portfolio Homebuilding land investment totaled $469 million, inclusive of $218 million for development and $251 million for lot acquisitions. Homebuilding land investment totaled $588 million in the first quarter of 2024. Homebuilding lot supply was 86,266 homesites, of which a record 59% was controlled off balance sheet. This compared to total homesites of 74,182 a year ago, of which 53% was controlled. Based on trailing twelve-month home closings, total homebuilding lots represented 6.5 years of supply, of which 2.7 years was owned. Financial Services The mortgage capture rate was 89%, up from 87% a year ago. Borrowers had an average credit score of 751 and average debt-to-income ratio of 40%. Balance Sheet At quarter end, total liquidity was approximately $1.3 billion, including $934 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 24.3%. Including $378 million of unrestricted cash on hand, the net homebuilding debt-to-capital ratio was 20.5%. The Company repurchased 2.2 million shares for $135 million. At quarter end, the remaining share repurchase authorization was $775 million. Business Outlook Second Quarter 2025 Home closings are expected to be approximately 3,200 Average closing price is expected to be around $585,000 Home closings gross margin is expected to be approximately 23% Ending active community count is expected to be around 345 Effective tax rate is expected to be approximately 25% Diluted share count is expected to be approximately 102 million Full Year 2025 Home closings are now expected to be between 13,000 to 13,500 Average closing price is expected to be between $590,000 to $600,000 Home closings gross margin is now expected to be approximately 23% Ending active community count is expected to be at least 355 SG&A as a percentage of home closings revenue is expected to be in the mid-9% range Effective tax rate is expected to be between 24.5% to 25.0% Diluted share count is now expected to be approximately 101 million Homebuilding land acquisition and development investment is now expected to be around $2.4 billion Share repurchases are now expected to be approximately $350 million Quarterly Financial Comparison (Dollars in thousands) Q1 2025 Q1 2024 Q1 2025 vs. Q1 2024 Total Revenue $ 1,896,019 $ 1,699,752 11.5 % Home Closings Revenue, Net $ 1,830,068 $ 1,636,255 11.8 % Home Closings Gross Margin $ 438,708 $ 393,046 11.6 % 24.0 % 24.0 % 0 bps change Adjusted Home Closings Gross Margin $ 453,586 $ 393,046 15.4 % 24.8 % 24.0 % 80 bps increase SG&A $ 176,624 $ 170,164 3.8 % % of Home Closings Revenue 9.7 % 10.4 % 70 bps decrease Earnings Conference Call Webcast Taylor Morrison will hold a conference call to discuss its results today at 8:30 a.m. ET. A live audio webcast of the conference call will be available on Taylor Morrison's website at www.taylormorrison.com on the Investor Relations portion of the site under the Events tab. 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 the Company's website. 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 and resort lifestyle homebuyers and renters under our family of brands—including Taylor Morrison, Esplanade and Yardly. From 2016 to 2025, 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; failure to develop and maintain relationships with suitable land banks; 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, including as a result of tariffs; 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 EndedMarch 31, 2025 2024 Home closings revenue, net $ 1,830,068 $ 1,636,255 Land closings revenue 4,261 7,225 Financial services revenue, net 51,193 46,959 Amenity and other revenue 10,497 9,313 Total revenue 1,896,019 1,699,752 Cost of home closings 1,391,360 1,243,209 Cost of land closings 3,489 5,202 Financial services expenses 28,321 25,143 Amenity and other expenses 9,575 9,353 Total cost of revenue 1,432,745 1,282,907 Gross margin 463,274 416,845 Sales, commissions and other marketing costs 109,076 102,600 General and administrative expenses 67,548 67,564 Net income from unconsolidated entities (1,975) (2,751) Interest expense/(income), net 8,499 (43) Other expense, net 1,557 595 Income before income taxes 278,569 248,880 Income tax provision 64,838 57,719 Net income before allocation to non-controlling interests 213,731 191,161 Net income attributable to non-controlling interests (265) (891) Net income $ 213,466 $ 190,270 Earnings per common share: Basic $ 2.11 $ 1.79 Diluted $ 2.07 $ 1.75 Weighted average number of shares of common stock: Basic 101,245 106,457 Diluted 103,017 108,564 Taylor Morrison Home Corporation Condensed Consolidated Balance Sheets (In thousands, unaudited) March 31,2025 December 31,2024 Assets Cash and cash equivalents $ 377,815 $ 487,151 Restricted cash 288 15 Total cash 378,103 487,166 Owned inventory 6,225,039 6,162,889 Consolidated real estate not owned 126,395 71,195 Total real estate inventory 6,351,434 6,234,084 Land deposits 302,583 299,668 Mortgage loans held for sale 225,100 207,936 Lease right of use assets 64,960 68,057 Prepaid expenses and other assets, net 387,787 370,642 Other receivables, net 212,196 217,703 Investments in unconsolidated entities 475,192 439,721 Deferred tax assets, net 76,248 76,248 Property and equipment, net 247,328 232,709 Goodwill 663,197 663,197 Total assets $ 9,384,128 $ 9,297,131 Liabilities Accounts payable $ 276,526 $ 270,266 Accrued expenses and other liabilities 550,897 632,250 Lease liabilities 75,047 78,998 Income taxes payable 67,057 2,243 Customer deposits 242,718 239,151 Estimated development liabilities 4,365 4,365 Senior notes, net 1,470,893 1,470,454 Loans payable and other borrowings 436,965 475,569 Revolving credit facility borrowings — — Mortgage warehouse facilities borrowings 175,741 174,460 Liabilities attributable to consolidated real estate not owned 126,395 71,195 Total liabilities $ 3,426,604 $ 3,418,951 Stockholders' equity Total stockholders' equity 5,957,524 5,878,180 Total liabilities and stockholders' equity $ 9,384,128 $ 9,297,131 Homes Closed and Home Closings Revenue, Net: Three Months Ended March 31, Homes Closed Home Closings Revenue, Net Average Selling Price (Dollars in thousands) 2025 2024 Change 2025 2024 Change 2025 2024 Change East 1,110 933 19.0 % $ 625,714 $ 541,730 15.5 % $ 564 $ 581 (2.9 %) Central 883 832 6.1 % 477,494 472,032 1.2 % 541 567 (4.6) % West 1,055 966 9.2 % 726,860 622,493 16.8 % 689 644 7.0 % Total 3,048 2,731 11.6 % $ 1,830,068 $ 1,636,255 11.8 % $ 600 $ 599 0.2 % Net Sales Orders: Three Months Ended March 31, Net Sales Orders Sales Value Average Selling Price (Dollars in thousands) 2025 2024 Change 2025 2024 Change 2025 2024 Change East 1,391 1,295 7.4 % $ 721,027 $ 776,861 (7.2 %) $ 518 $ 600 (13.7 %) Central 867 904 (4.1 %) 449,363 478,419 (6.1 %) 518 529 (2.1) % West 1,116 1,487 (24.9 %) 828,905 984,483 (15.8 %) 743 662 12.2 % Total 3,374 3,686 (8.5 %) $ 1,999,295 $ 2,239,763 (10.7 %) $ 593 $ 608 (2.5 %) Sales Order Backlog: As of March 31, Sold Homes in Backlog Sales Value Average Selling Price (Dollars in thousands) 2025 2024 Change 2025 2024 Change 2025 2024 Change East 2,018 2,433 (17.1) % $ 1,286,197 $ 1,715,398 (25.0) % $ 637 $ 705 (9.6 %) Central 1,082 1,371 (21.1) % 640,443 870,550 (26.4) % 592 635 (6.8) % West 1,968 2,440 (19.3 %) 1,434,734 1,662,190 (13.7 %) 729 681 7.0 % Total 5,068 6,244 (18.8) % $ 3,361,374 $ 4,248,138 (20.9) % $ 663 $ 680 (2.5 %) Ending Active Selling Communities: As of March 31, Change 2025 2024 East 137 113 21.2 % Central 94 93 1.1 % West 113 125 (9.6 %) Total 344 331 3.9 % 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 and real estate impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net, and legal reserves or settlements that the Company deems not to be in the ordinary course of business and in the case of adjusted net income and adjusted earnings per common share, the tax impact due to such items. Adjusted home closings gross margin is a non-GAAP financial measure calculated as GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges. 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 and real estate impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net and legal reserves or settlements that the Company deems not to be in the ordinary course of business, in each case, as applicable in a given period. 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 facilities borrowings, net of unrestricted cash and cash equivalents ("net homebuilding debt"), by (ii) total capitalization (the sum of net homebuilding debt and total stockholders' equity). Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our segments, 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 financial leverage and to evaluate 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) 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 to the comparable GAAP measures is presented below. Adjusted Net Income and Adjusted Earnings Per Common Share Three Months Ended March 31, (Dollars in thousands, except per share data) 2025 2024 Net income $ 213,466 $ 190,270 Inventory impairment charges 14,878 — Tax impact of non-GAAP reconciling items (3,463) — Adjusted net income $ 224,881 $ 190,270 Basic weighted average number of shares 101,245 106,457 Adjusted earnings per common share - Basic $ 2.22 $ 1.79 Diluted weighted average number of shares 103,017 108,564 Adjusted earnings per common share - Diluted $ 2.18 $ 1.75 Adjusted Income Before Income Taxes and Related Margin Three Months Ended March 31, (Dollars in thousands) 2025 2024 Income before income taxes $ 278,569 $ 248,880 Inventory impairment charges 14,878 — Adjusted income before income taxes $ 293,447 $ 248,880 Total revenue $ 1,896,019 $ 1,699,752 Income before income taxes margin 14.7 % 14.6 % Adjusted income before income taxes margin 15.5 % 14.6 % Adjusted Home Closings Gross Margin Three Months Ended March 31, (Dollars in thousands) 2025 2024 Home closings revenue, net $ 1,830,068 $ 1,636,255 Cost of home closings 1,391,360 1,243,209 Home closings gross margin $ 438,708 $ 393,046 Inventory impairment charges 14,878 — Adjusted home closings gross margin $ 453,586 $ 393,046 Home closings gross margin as a percentage of home closings revenue 24.0 % 24.0 % Adjusted home closings gross margin as a percentage of home closings revenue 24.8 % 24.0 % EBITDA and Adjusted EBITDA Reconciliation Three Months EndedMarch 31, (Dollars in thousands) 2025 2024 Net income before allocation to non-controlling interests $ 213,731 $ 191,161 Interest expense/(income), net 8,499 (43) Amortization of capitalized interest 24,773 23,625 Income tax provision 64,838 57,719 Depreciation and amortization 1,696 3,138 EBITDA $ 313,537 $ 275,600 Non-cash compensation expense 7,785 5,483 Inventory impairment charges 14,878 — Adjusted EBITDA $ 336,200 $ 281,083 Total revenue $ 1,896,019 $ 1,699,752 Net income before allocation to non-controlling interests as a percentage of total revenue 11.3 % 11.2 % EBITDA as a percentage of total revenue 16.5 % 16.2 % Adjusted EBITDA as a percentage of total revenue 17.7 % 16.5 % Net Homebuilding Debt to Capitalization Ratios Reconciliation (Dollars in thousands) As of March 31, 2025 As of December 31, 2024 As of March 31, 2024 Total debt $ 2,083,599 $ 2,120,483 $ 2,093,499 Plus: unamortized debt issuance cost, net 6,177 6,616 7,935 Less: mortgage warehouse facilities borrowings (175,741) (174,460) (183,174) Total homebuilding debt $ 1,914,035 $ 1,952,639 $ 1,918,260 Total stockholders' equity 5,957,524 5,878,180 5,426,168 Total capitalization $ 7,871,559 $ 7,830,819 $ 7,344,428 Total homebuilding debt to capitalization ratio 24.3 % 24.9 % 26.1 % Total homebuilding debt $ 1,914,035 $ 1,952,639 $ 1,918,260 Less: cash and cash equivalents (377,815) (487,151) (554,287) Net homebuilding debt $ 1,536,220 $ 1,465,488 $ 1,363,973 Total stockholders' equity 5,957,524 5,878,180 5,426,168 Total capitalization $ 7,493,744 $ 7,343,668 $ 6,790,141 Net homebuilding debt to capitalization ratio 20.5 % 20.0 % 20.1 % CONTACT:Mackenzie Aron, VP Investor Relations(407) 906-6262[email protected] SOURCE Taylor Morrison Home Corp. 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Taylor Morrison Reports First Quarter 2025 Results

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