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

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Taylor Morrison Home Corporation

Nov 04, 2015, 06:55 ET

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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