Taylor Morrison Reports Third Quarter Revenue of $796 Million and Earnings per Share of $0.37

- Net sales orders increased 18% from the prior year quarter to 1,635

- Average community count grew 29% from the prior year quarter to 276 average communities

- Home closings revenue was $779 million, a 27% increase from the prior year quarter

- Net income for the quarter was $46 million and earnings per share was $0.37

- Home closings gross margin was 21.2% adjusted for capitalized interest and 18.4% on a GAAP basis

Nov 04, 2015, 06:55 ET from Taylor Morrison Home Corporation

SCOTTSDALE, Ariz., Nov. 4, 2015 /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE: TMHC) today reported third quarter total revenue of $796 million, net income of $46 million and earnings per share of $0.37.

"We entered the third quarter with significant momentum - specifically following the acquisition of our three new divisions - and I'm proud that we were able to continue to perform remarkably well by closing the quarter having met or exceeded our guidance in every metric," said Taylor Morrison's President and CEO, Sheryl Palmer. "I'm encouraged by the long-term market fundamentals, which continue to support a positive and sustained trajectory in our industry. Although conditions may vary market-by-market and quarter-by-quarter on both a micro and macroeconomic level, we believe that these issues are manageable, that concerns over labor constraints will subside over time, and that the strength of the underlying market fundamentals will emerge as we look to the end of the year and into 2016."

3rd Quarter 2015 Key Business Highlights

  • Average community count increased 29% from the prior year quarter to 276 average communities
  • Net sales orders increased over 18% to 1,635
  • Home closings increased 28% to 1,700
  • Backlog of homes under contract at the end of the quarter was 3,560 units, with a sales value of $1.6 billion
  • Cancellations as a percentage of gross sales orders were 15%, compared to 14% in the prior year quarter
  • Average price of homes closed was $458,000
  • Average monthly absorption pace per community was 2.0 for the quarter
  • Mortgage operations reported gross profit of $4.4 million on revenue of $11.3 million

 

Quarterly Financial Comparison*

($ millions)

Q3 2015

Q3 2014

Q3 2015 vs. Q3 2014

Total Revenue

$796

$629

26.6%

Home Closings Revenue

$779

$616

26.5%

Home Closings Gross Margin

$143

$127

12.4%

18.4%

20.7%

(230) bps

Adjusted Home Closings Gross Margin

$165

$143

15.4%

21.2%

23.2%

(200) bps

SG&A

% of Home Closings Revenue

$79

$61

29.5%

10.1%

9.8%

30 bps increase

*Excludes discontinued operations in Q3 2014.

The Company ended the quarter with homebuilding inventories of $3.1 billion and 4,525 homes in inventory, compared to 3,701 homes at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of 2,699 sold units, 412 model homes and 1,414 inventory units, of which 384 were finished. The Company owned or controlled approximately 43,000 lots at September 30, 2015. Unrestricted cash at the end of the third quarter was approximately $158 million.

Full Year 2015 Business Outlook

  • Average community count – expected to be between 255 to 265
  • Home closings – expected to be between 6,300 and 6,500
  • Adjusted home closings gross margin – expected to be in the low to mid 21% range
  • SG&A – expected to be about 10%
  • Income from unconsolidated joint ventures – expected to be between $2 million and $3 million
  • Land and development spend – expected to be approximately $1 billion (without giving effect to recently acquired markets)
  • Effective tax rate – expected to be between 33% and 35%

Earnings Webcast

A public webcast to discuss the third quarter 2015 earnings will be held later today at 8:30 a.m. Eastern time. The participant dial-in is 1(800)708-4539 and the confirmation number is 40977483. 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).

Taylor Morrison Home Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited

Three Months Ended  September 30,

Nine Months Ended  September 30,

2015

2014

2015

2014

Home closings revenue, net

$

779,190

$

615,736

$

1,955,170

$

1,653,890

Land closings revenue

5,782

5,027

22,712

19,919

Mortgage operations revenue

11,316

8,433

28,794

22,870

Total revenues

796,288

629,196

2,006,676

1,696,679

Cost of home closings

635,935

488,250

1,594,691

1,304,595

Cost of land closings

3,919

3,938

13,152

15,759

Mortgage operations expenses

6,962

5,057

18,120

13,641

Total cost of revenues

646,816

497,245

1,625,963

1,333,995

Gross margin

149,472

131,951

380,713

362,684

Sales, commissions and other marketing costs

53,482

41,432

136,724

114,362

General and administrative expenses

25,264

19,114

70,171

57,579

Equity in loss/(income) of unconsolidated entities

120

(1,231)

(1,408)

(3,468)

Interest (income) expense, net

(33)

345

(165)

1,127

Other expense, net

2,393

3,241

11,625

10,570

Loss on extinguishment of debt

33,317

Gain on foreign currency forward

(29,983)

Income from continuing operations before income taxes

68,246

69,050

160,432

182,514

Income tax provision

22,452

19,541

54,434

50,602

Net income from continuing operations

45,794

49,509

105,998

131,912

Discontinued operations:

Income from discontinued operations

23,970

44,543

Transaction expenses from discontinued operations

(9,043)

Gain on sale of discontinued operations

80,205

Income tax expense from discontinued operations

(7,304)

(14,500)

(13,485)

Net income from discontinued operations

16,666

56,662

31,058

Net income before allocation to non-controlling interests

45,794

66,175

162,660

162,970

Net income attributable to non-controlling interests - joint ventures

(138)

(47)

(1,427)

(386)

Net income before non-controlling interests - Principal Equityholders

45,656

66,128

161,233

162,584

Net income from continuing operations attributable to non-controlling interests - Principal Equityholders

(33,312)

(36,122)

(76,470)

(96,308)

Net income from discontinued operations attributable to non-controlling interests - Principal Equityholders

(12,160)

(41,381)

(22,682)

Net income available to Taylor Morrison Home Corporation

$

12,344

$

17,846

$

43,382

$

43,594

Earnings per common share - basic:

Income from continuing operations

$

0.37

$

0.40

$

0.85

$

1.07

Income from discontinued operations - net of tax

$

$

0.14

$

0.46

$

0.26

Net income available to Taylor Morrison Home Corporation

$

0.37

$

0.54

$

1.31

$

1.33

Earnings per common share - diluted:

Income from continuing operations

$

0.37

$

0.40

$

0.85

$

1.07

Income from discontinued operations - net of tax

$

$

0.14

$

0.46

$

0.26

Net income available to Taylor Morrison Home Corporation

$

0.37

$

0.54

$

1.31

$

1.33

Weighted average number of shares of common stock:

Basic

33,122

32,956

33,088

32,896

Diluted

122,458

122,338

122,412

122,345

 

Taylor Morrison Home Corporation

Condensed Consolidated Balance Sheets

(In thousands)

September 30,  2015

December 31, 2014

(Unaudited)

Assets

Cash and cash equivalents

$

158,279

$

234,217

Restricted cash

1,280

1,310

Real estate inventory:

Owned inventory

3,127,510

2,511,623

Real estate not owned under option agreements

1,683

6,698

Total real estate inventory

3,129,193

2,518,321

Land deposits

35,356

34,544

Mortgage loans held for sale

104,094

191,140

Prepaid expenses and other assets, net

118,220

89,210

Other receivables, net

128,131

85,274

Investments in unconsolidated entities

126,359

110,291

Deferred tax assets, net

252,341

258,190

Property and equipment, net

5,821

5,337

Intangible assets, net

4,896

5,459

Goodwill

57,698

23,375

Assets of discontinued operations

576,445

Total assets

$

4,121,668

$

4,133,113

Liabilities

Accounts payable

$

164,253

$

122,466

Accrued expenses and other liabilities

203,833

200,556

Income taxes payable

30,775

50,096

Customer deposits

101,997

70,465

Senior notes

1,250,000

1,388,840

Loans payable and other borrowings

145,589

147,516

Revolving credit facility borrowings

230,000

40,000

Mortgage warehouse borrowings

74,128

160,750

Liabilities attributable to consolidated option agreements

1,683

6,698

Liabilities of discontinued operations

168,565

Total liabilities

$

2,202,258

$

2,355,952

Stockholders' Equity

Total stockholders' equity

1,919,410

1,777,161

Total liabilities and stockholders' equity

$

4,121,668

$

4,133,113

 

Homes Closed:

Three Months Ended September 30,

2015

2014

(Dollars in thousands)

Homes

Value

Homes

Value

East

1,100

$

473,243

800

$

341,038

West

600

305,947

531

274,698

Total

1,700

$

779,190

1,331

$

615,736

Net Sales Orders:

Three Months Ended September 30,

2015

2014

(Dollars in thousands)

Homes

Value

Homes

Value

East

1,016

$

402,606

938

$

385,937

West

619

306,149

446

247,642

Total

1,635

$

708,755

1,384

$

633,579

Sales Order Backlog:

As of September 30,

2015

2014

(Dollars in thousands)

Homes

Value

Homes

Value

East

2,390

$

1,058,329

2,111

$

978,999

West

1,170

581,268

813

494,671

Total

3,560

$

1,639,597

2,924

$

1,473,670

Average Active Selling Communities:

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

East

202

159

196

148

West

74

55

72

53

Total

276

214

268

201

Average Selling Price of Homes Closed:

Three Months Ended September 30,

Nine Months Ended September 30,

(Dollars in thousands)

2015

2014

2015

2014

East

$

430

$

426

$

433

$

413

West

510

517

516

513

Total

$

458

$

463

$

461

$

450

Homes Closed:

Nine Months Ended September 30,

2015

2014

(Dollars in thousands)

Homes

Value

Homes

Value

East

2,802

$

1,212,239

2,301

$

949,494

West

1,441

742,931

1,374

704,396

Total

4,243

$

1,955,170

3,675

$

1,653,890

Net Sales Orders:

Nine Months Ended September 30,

2015

2014

(Dollars in thousands)

Homes

Value

Homes

Value

East

3,224

$

1,315,176

2,868

$

1,182,247

West

2,017

982,968

1,565

859,467

Total

5,241

$

2,298,144

4,433

$

2,041,714

 

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 September 30,

Nine Months Ended September 30,

(Dollars in thousands)

2015

2014

2015

2014

Home closings revenue

$

779,190

$

615,736

$

1,955,170

$

1,653,890

Cost of home closings

635,935

488,250

1,594,691

1,304,595

Home closings gross margin

143,255

127,486

360,479

349,295

Capitalized interest amortization

21,886

15,227

58,603

39,715

Adjusted home closings gross margin

$

165,141

$

142,713

$

419,082

$

389,010

Home closings gross margin as a percentage of home closings revenue

18.4

%

20.7

%

18.4

%

21.1

%

Adjusted home closings gross margin as a percentage of home closings revenue

21.2

%

23.2

%

21.4

%

23.5

%

 

Adjusted EBITDA Reconciliation

Three Months Ended September 30,

(Dollars in thousands)

2015

2014

Net income from continuing operations

$

45,794

$

49,509

Interest expense (income), net

(33)

345

Amortization of capitalized interest

21,886

15,227

Income tax provision

22,452

19,541

Depreciation and amortization

1,075

1,015

EBITDA

$

91,174

$

85,637

Non-cash compensation expense

2,127

1,507

Adjusted EBITDA

$

93,301

$

87,144

 

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SOURCE Taylor Morrison Home Corporation



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