Financial Performance - Total revenue for 2022 was $8,224,917, an increase of 9.6% from $7,501,265 in 2021[330]. - Home closings revenue reached $7,889,371, up 10% from $7,171,433 in the previous year[330]. - Net income attributable to Taylor Morrison Home Corporation for 2022 was $1,052,800, representing a 58.7% increase from $663,026 in 2021[330]. - Earnings per share (EPS) for 2022 were $9.16 (basic), compared to $5.26 in 2021, reflecting a 74.3% increase[330]. - The company reported a gross margin of $2,092,366 for 2022, an increase of 35.2% from $1,547,881 in 2021[330]. - The net income for the year ended December 31, 2022, was $1,056,247,000, compared to $1,052,800,000 in 2021, indicating a slight increase of about 0.4%[334]. - Net income for the year ended December 31, 2022, was $1,056,247, a 55% increase from $682,367 in 2021[337]. - The company reported an income before income taxes of $1,392,675,000 for 2022, compared to $863,108,000 in 2021, representing an increase of approximately 61.2%[463]. Share Repurchase and Dividends - The company intends to use future earnings for business development, working capital, debt repayment, and possibly share repurchases, with no cash dividends anticipated in the foreseeable future[201]. - In 2022, the company repurchased a total of 14,568,364 shares of Common Stock, compared to 9,918,104 shares in 2021, reflecting a significant increase in share repurchase activity[202]. - The company has authorized a $500 million renewal of its stock repurchase program until December 31, 2023, replacing a prior $250 million authorization[203]. - As of December 31, 2022, the amount available for repurchase was $279.1 million, after repurchasing 14,568,364 shares at a cost of $376.3 million[452]. Debt and Financing - As of December 31, 2022, approximately 88% of the company's debt was fixed rate, while 12% was variable rate, indicating a strong preference for fixed-rate debt[305]. - The company had approximately $1.0 billion of additional availability for borrowings under its Credit Facilities, including $130.8 million for letters of credit as of December 31, 2022[305]. - Total debt as of December 31, 2022, is $2,494.6 million, a decrease from $3,299.8 million in 2021, reflecting a reduction of approximately 24.4%[403]. - The company redeemed its 5.875% Senior Notes due 2023 in full on October 31, 2022, resulting in a net loss on extinguishment of debt of $0.8 million for the year ended December 31, 2022[405]. - The company had $361.5 million in loans payable and other borrowings as of December 31, 2022, compared to $404.4 million in 2021, indicating a decrease of approximately 10.6%[403]. - The company transitioned its mortgage warehouse borrowings from LIBOR to SOFR and BSBY, with total mortgage warehouse borrowings of $306.1 million as of December 31, 2022[431][438]. Assets and Liabilities - Total assets decreased to $8,470,724 in 2022 from $8,727,777 in 2021, a decline of 2.9%[328]. - Total liabilities reduced to $3,823,865 in 2022, down 19.6% from $4,756,795 in 2021[328]. - Total accrued expenses and other liabilities decreased to $490,253 as of December 31, 2022, down from $525,209 in 2021, representing a reduction of 6.7%[401]. - The present value of lease liabilities as of December 31, 2022, was $100.2 million, comprising $75.8 million for operating leases and $24.3 million for finance leases[350]. Real Estate and Inventory - Total owned inventory as of December 31, 2022, was $5,346.9 million, a slight decrease from $5,444.2 million in 2021[389]. - Real estate developed or under development as of December 31, 2022, was $3,607.2 million, down from $3,895.7 million in 2021[389]. - Total real estate inventory as of December 31, 2022, was $5,370.9 million, compared to $5,499.5 million in 2021[389]. - The company had outstanding letters of credit and surety bonds totaling $1.2 billion as of December 31, 2022, consistent with the previous year[466]. Taxation - The provision for income taxes for the year ended December 31, 2022, totaled $336.4 million, significantly higher than $180.7 million in 2021[441]. - The effective tax rate for the year ended December 31, 2022, was 24.2%, an increase from 20.9% in 2021, influenced by state income taxes and energy tax credits[442]. - Total deferred tax assets decreased from $248.6 million in 2021 to $215.0 million in 2022, primarily due to reductions in real estate inventory and accruals[444]. Other Financial Metrics - The company reported capitalized interest of $190,123 for the year ended December 31, 2022, an increase of 12.5% from $168,670 in 2021[394]. - The company recognized PRSU expense of $12,642,000 in 2022, up from $8,125,000 in 2021, reflecting a year-over-year increase of approximately 55.5%[459]. - Stock-based compensation expense for the year ended December 31, 2022, totaled $26.9 million, an increase from $19.9 million in 2021[454].

Financial Data and Key Metrics Changes - In Q4 2022, the company delivered over 12,600 homes with a record adjusted home closings gross margin of 25.5%, up more than 500 basis points year-over-year, and an all-time low SG&A ratio of 8.2% [4][5] - Net income increased nearly 60% on a 10% increase in total revenue, with earnings of $2.51 per diluted share, or $2.93 after adjustments [5][22] - The company reduced net home building leverage to 24% from 34% at the end of 2021, and book value per share increased 33% to over $42 [5][31] Business Line Data and Key Metrics Changes - The company reported that 64% of Q4 gross sales orders were for spec homes, up from 47% a year ago, indicating a shift in consumer preference [12] - Average closing price for homes delivered in Q4 was $626,000, generating home closings revenue of $2.4 billion [23] - The average cycle times for home deliveries extended several days due to supply chain challenges, particularly in Florida and the Southeast [23] Market Data and Key Metrics Changes - The company noted a positive momentum in sales activity and shopper sentiment since mid-January, with gross sales orders improving to a normalized pace of approximately three per month [8] - The cancellation rate trended into the mid-teens, with net sales pace at 2.5 compared to 1.9 in Q4 [8][9] - The average deposit from customers in backlog was nearly $70,000 per home, with a capture rate of 78% for buyers financed by Taylor Morrison Home Funding [9] Company Strategy and Development Direction - The company emphasized a balanced and diverse portfolio, serving various consumer segments including entry-level, move-up, and resort lifestyle [6] - Strategic pricing adjustments were made to drive sales and protect backlog value, with a focus on mortgage incentives and selective base price adjustments [7][10] - The company is pursuing cost rationalization opportunities and has moderated starts volume to align with sales activity [11][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that housing market conditions remain below peak levels, but expressed confidence in the enduring demand for home ownership [10] - The company expects to deliver between 2,300 to 2,400 homes in Q1 and between 10,000 to 11,000 homes for the full year [25] - Management highlighted the importance of operational flexibility and innovation in sales programs to navigate the current market [14] Other Important Information - The company was named America’s Most Trusted Homebuilder for the eighth consecutive year and recognized for gender equality in the workplace [33] - The launch of a new build-to-rent brand, Yardly, was announced, focusing on cottage-style homes in branded communities [20] Q&A Session Summary Question: Clarification on normalized net order absorption pace and land spend - Management confirmed that the normalized net order absorption pace was about 2.5 per month and discussed the impact of reduced land spend on future community openings [35][36] Question: Future margin performance relative to peers - Management indicated that while there are challenges, they expect strong margins due to a solid backlog and operational enhancements [40][42] Question: Changes in product mix for 2023 - Management does not anticipate significant changes in the mix between entry-level, move-up, and resort lifestyle products [45] Question: Trends in average selling prices (ASPs) - Management clarified that gross order ASPs were over $600,000, with some adjustments affecting the reported figures [56] Question: Insights on luxury and active adult buyers - Management noted strong engagement from luxury buyers and improvements in active adult segments, particularly in markets like Florida [58][60] Question: Inventory impairment charges and future expectations - Management stated that the impairment charges were expected and attributed to a specific non-core community, with no systemic issues anticipated [67][68] Question: Future incentives and pricing adjustments - Management confirmed a reduction in incentives and a selective approach to base price adjustments, focusing on finance incentives [51][70]

Taylor Morrison Home Corporation (NYSE:TMHC) Q3 2022 Earnings Conference Call October 26, 2022 8:30 AM ET Company Participants Mackenzie Aron - Vice President of Investor Relations Sheryl Palmer - Chairman and Chief Executive Officer Erik Heuser - Chief Corporate Operations Officer Lou Steffens - Chief Financial Officer Conference Call Participants Carl Reichardt - BTIG Elizabeth Langan - Barclays Alan Ratner - Zelman and Associates Doug Wardlaw - JPMorgan Alex Rygiel - B. Riley Securities Paul Przybylski - ...

Q2 2022 Performance Highlights - Home closings revenue increased by 15% to $1.9 billion[2] - Home closings gross margin improved by 750 basis points to a record high of 26.6%[2] - SG&A as a percentage of home closings revenue improved by 140 basis points to a second quarter record low of 8.8%[2] - Backlog value increased by 6% to $6.1 billion[2] - Total revenue increased by 16% to $2.0 billion[2] - Reported diluted EPS increased by 158% to $2.45[2] Land and Lots - Homebuilding lot supply increased by 8% to approximately 82,000 homesites, with 41% controlled[2] - Invested $451 million in land acquisition and development, with 52% development-related[11] Financial Position - Repurchased 6.8 million shares outstanding for $172 million[2] - Return on equity improved by 1,090 basis points to a record high of 23.1%[2] Outlook - The company is targeting around $2 billion in homebuilding land investment in 2022[11]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements%20of%20Taylor%20Morrison%20Home%20Corporation%20(Unaudited)) Presents unaudited condensed consolidated financial statements for the periods ended June 30, 2022, and 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total cash, cash equivalents, and restricted cash | $379,293 | $836,340 | | Total real estate inventory | $6,046,368 | $5,499,521 | | Total assets | $8,650,223 | $8,727,777 | | **Liabilities & Equity** | | | | Senior notes, net | $2,173,998 | $2,452,322 | | Total liabilities | $4,456,328 | $4,756,795 | | Total stockholders' equity | $4,193,895 | $3,970,982 | | Total liabilities and stockholders' equity | $8,650,223 | $8,727,777 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,995,023 | $1,719,280 | $3,698,147 | $3,137,092 | | Gross margin | $541,480 | $328,703 | $934,608 | $603,144 | | Income before income taxes | $391,597 | $163,224 | $624,497 | $294,965 | | Net income available to TMHC | $290,987 | $124,147 | $467,690 | $222,168 | | Diluted EPS | $2.45 | $0.95 | $3.87 | $1.70 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $195,490 | $(97,594) | | Net cash provided by/(used in) investing activities | $4,193 | $(22,034) | | Net cash used in financing activities | $(656,730) | $(46,360) | | **Net decrease in cash** | **$(457,047)** | **$(165,988)** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - The company operates a residential homebuilding and community development business across 11 states, serving various buyer segments and offering financial services[24](index=24&type=chunk) Total Real Estate Inventory (in thousands) | Inventory Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total owned inventory | $5,975,551 | $5,444,207 | | Consolidated real estate not owned | $70,817 | $55,314 | | **Total real estate inventory** | **$6,046,368** | **$5,499,521** | - In June 2022, the company purchased **$264.1 million** of its 6.625% Senior Notes due 2027 through a cash tender offer, resulting in a net gain on debt extinguishment of approximately **$13.5 million**[64](index=64&type=chunk) - A new stock repurchase program of up to **$500.0 million** was authorized on May 31, 2022, and during Q2 2022, the company repurchased **6.8 million shares** for **$172.4 million**[86](index=86&type=chunk)[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes financial performance for Q2 2022, highlighting revenue growth and margin expansion amid market challenges - Key highlights for Q2 2022 include a **15% increase in home closings revenue** to $1.9 billion and a **750 basis point improvement in gross margin** to 26.6%[114](index=114&type=chunk) - Net sales orders for Q2 2022 **decreased 25.4%** to 2,554 units, attributed to rising mortgage rates and inflation, partially offset by a **17.1% increase in average selling price**[133](index=133&type=chunk)[134](index=134&type=chunk) - The sales order cancellation rate **more than doubled to 10.8%** in Q2 2022 from 5.2% in Q2 2021, driven by higher interest rates and extended build times[135](index=135&type=chunk) - Home closings gross margin **increased to 26.6%** in Q2 2022 from 19.1% in Q2 2021, reflecting strong pricing power that outpaced cost pressures[141](index=141&type=chunk) Total Liquidity (in thousands) | Component | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total cash, excluding restricted cash | $378,340 | $832,821 | | Revolving credit facilities availability | $683,686 | $809,733 | | **Total liquidity** | **$1,062,026** | **$1,642,554** | [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's exposure to market risks, primarily interest rate risk from its variable-rate debt - The company's operations are sensitive to interest rates, with approximately **89% of its debt being fixed-rate** as of June 30, 2022, limiting the impact of rate changes[167](index=167&type=chunk) - A hypothetical **1% increase in interest rates** would increase annual interest incurred on variable-rate debt by approximately **$3.3 million**[169](index=169&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls - The company's principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of June 30, 2022[171](index=171&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the quarter ended June 30, 2022[172](index=172&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Discloses a key class action lawsuit regarding club membership fees, for which a $35.0 million judgment is under appeal - For details on legal proceedings, the report refers to Note 13 in the Notes to the Consolidated Financial Statements[174](index=174&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the Annual Report on Form 10-K - There have been **no material changes** to the risk factors set forth in the company's Annual Report[175](index=175&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchases in Q2 2022 and the authorization of a new $500 million program Share Repurchases in Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | 833,421 | $26.86 | | May 2022 | 2,746,436 | $27.31 | | June 2022 | 3,199,641 | $23.44 | | **Total** | **6,779,498** | **N/A** | - On May 31, 2022, the Board of Directors authorized a new stock repurchase program of up to **$500.0 million**, effective through December 31, 2023[177](index=177&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) Discloses amendments to executive employment agreements regarding bonus payments after a change in control - On July 26, 2022, the company amended employment agreements for its named executive officers to provide for a **prorated annual bonus payment** in the event of a "Change in Control Qualifying Termination"[182](index=182&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including required executive certifications - A list of exhibits filed with the report is provided, including officer certifications under Sarbanes-Oxley Sections 302 and 906[184](index=184&type=chunk)

Financial Data and Key Metrics Changes - The company achieved record profitability with a home closings gross margin of 26.6%, up 750 basis points from 19.1% a year ago and more than 1,100 basis points from two years ago [9][11][47] - Earnings per diluted share reached a new high of $2.45, with adjusted earnings per share at $2.27, reflecting a 139% increase year-over-year [11][43] - Return on equity improved by over 1,000 basis points year-over-year to just over 23% [12] Business Line Data and Key Metrics Changes - The company delivered 3,032 homes at an average selling price of $621,000, generating home closings revenue of $1.9 billion, which is a 15% increase year-over-year [44] - Monthly sales absorption pace moderated to 2.6 net orders per community, down from record levels experienced during the previous year [16] - The cancellation rate increased to 10.8% of gross orders, but remains below the long-term run rate [21] Market Data and Key Metrics Changes - The company noted a decline in sales activity in July, with signs of improvement in web traffic and mortgage pre-qualification volume since mid-June [25][26] - The entry-level segment showed the greatest reduction in sales pace, while the move-up and active lifestyle segments displayed greater resiliency [16][72] - The company reported that over half of its business in markets like Florida and Nevada comes from out-of-state buyers, indicating strong migration trends [134] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet and being selective in land investments, with a well-vintage land pipeline of 82,000 home sites [29][37] - The strategic allocation of incentive dollars is emphasized over price adjustments to protect profitability and long-term community value [20] - The company plans to invest approximately $2 billion in home building land acquisition and development this year, down from prior expectations, reflecting a more opportunistic stance [37][122] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of higher interest rates and geopolitical tensions on consumer confidence and home buying demand [14] - Despite current challenges, management remains optimistic about long-term demand drivers and the company's ability to navigate uncertainties [28] - The company expects to close approximately 13,500 homes for the full year, with an average price of at least $625,000 [46] Other Important Information - The company repurchased 6.8 million shares for $172 million, marking the highest level of repurchase activity since 2018 [54] - The company ended the quarter with $1.1 billion in total liquidity, including $378 million in unrestricted cash [50] Q&A Session Summary Question: Current incentives compared to historical levels - Management noted that Q2 incentives were lower than Q1 and all of last year, emphasizing the effectiveness of financing incentives over price reductions [68][70] Question: Trends among different buyer groups - The entry-level buyer segment experienced the greatest reduction in sales pace, while active adult buyers showed more resilience [72][74] Question: Percentage of orders on build-to-order versus specs - Management reported that 45% of orders were build-to-order, an increase from 37% in the previous quarter [87][89] Question: Cancellations differentiation between to-be-built versus pre-started - Cancellations were more heavily weighted towards spec sales, with 75% of cancellations written this year [92][94] Question: Land banking terms and costs - Management indicated that terms for land banking deals remain favorable, with no unusual terms affecting their strategy [100][102] Question: Municipal delays affecting cycle times - Management confirmed that while back-end delays persist, there are signs of improvement on the front-end of the build process [105][107] Question: Trends in incentives in hotter markets - Management acknowledged a reduction in incentives in markets like Texas and Florida, with expectations for this trend to continue [146]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table provides a snapshot of the company's assets, liabilities, and equity at specific points in time, highlighting key changes | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Total assets | $8,517,975 | $8,727,777 | -$209,802 | | Total liabilities | $4,423,177 | $4,756,795 | -$333,618 | | Total stockholders' equity | $4,094,798 | $3,970,982 | +$123,816 | | Cash and cash equivalents | $569,249 | $832,821 | -$263,572 | | Total real estate inventory | $5,743,127 | $5,499,521 | +$243,606 | | Mortgage loans held for sale | $229,651 | $467,534 | -$237,883 | | Mortgage warehouse borrowings | $200,662 | $413,887 | -$213,225 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table details the company's revenues, expenses, and net income over specific periods, showing profitability trends | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Total revenue | $1,703,124 | $1,417,812 | +$285,312 | | Home closings revenue, net | $1,644,409 | $1,363,429 | +$280,980 | | Gross margin | $393,128 | $274,441 | +$118,687 | | Income before income taxes | $232,900 | $131,741 | +$101,159 | | Net income available to Taylor Morrison Home Corporation | $176,703 | $98,021 | +$78,682 | | Basic EPS | $1.46 | $0.76 | +$0.70 | | Diluted EPS | $1.44 | $0.75 | +$0.69 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This table presents the total comprehensive income, encompassing net income and other comprehensive income items | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Comprehensive Income available to Taylor Morrison Home Corporation | $176,703 | $98,021 | +$78,682 | [Condensed Consolidated Statement of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) This table outlines changes in the company's equity, including net income and share repurchase activities | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Total Stockholders' Equity | $4,094,798 | $3,970,982 | +$123,816 | | Net income | $176,703 | $98,021 | +$78,682 | | Repurchase of common stock | $(58,029) | $(38,418) | -$19,611 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes the cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Net cash provided by/(used in) operating activities | $57,461 | $(144,308) | +$201,769 | | Net cash used in investing activities | $(7,441) | $(13,475) | +$6,034 | | Net cash (used in)/provided by financing activities | $(315,533) | $17,150 | -$332,683 | | Net decrease in cash and cash equivalents and restricted cash | $(265,513) | $(140,633) | -$124,880 | | Cash, cash equivalents, and restricted cash — End of period | $570,827 | $393,476 | +$177,351 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's business, significant accounting policies, and specific financial statement line items [1. BUSINESS](index=9&type=section&id=1.%20BUSINESS) This note describes the company's core operations as a residential homebuilder and developer, including its diverse market segments and financial services - Taylor Morrison Home Corporation operates a residential homebuilding business and develops lifestyle communities across **11 states**: Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington[20](index=20&type=chunk) - The company serves diverse consumer groups including entry-level, move-up, and 55-plus active lifestyle buyers, building single and multi-family homes under brands like Taylor Morrison, Darling Homes Collection, and Esplanade[20](index=20&type=chunk) - Beyond homebuilding, the company has an exclusive partnership for 'Build-to-Rent' homebuilding with Christopher Todd Communities, operates 'Urban Form' for multi-use properties, and provides financial services through its subsidiaries (mortgage, title, and insurance)[20](index=20&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements, including consolidation, inventory valuation, and revenue recognition - The financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, consolidating certain joint ventures where the company is the primary beneficiary[21](index=21&type=chunk)[22](index=22&type=chunk)[34](index=34&type=chunk) - Goodwill is assessed for impairment annually; no impairment test was performed in Q1 2022 as no indicators were present. Real estate inventory is stated at cost, including capitalized interest and development costs, with no impairment charges recorded for Q1 2022 or Q1 2021[24](index=24&type=chunk)[25](index=25&type=chunk)[29](index=29&type=chunk) - Revenue from home and land closings is recognized upon closing, transfer of title, and risks/rewards, while financial services revenue is recognized when related real estate transactions are completed[40](index=40&type=chunk) [3. EARNINGS PER SHARE](index=12&type=section&id=3.%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share, reflecting the company's profitability on a per-share basis | Metric | Three Months Ended March 31, 2022 (in thousands, except EPS) | Three Months Ended March 31, 2021 (in thousands, except EPS) | Change (YoY, except EPS) | | :--------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :----------------------- | | Net income available to TMHC | $176,703 | $98,021 | +$78,682 | | Weighted average shares – basic | 121,186 | 128,883 | -7,697 | | Weighted average shares – diluted | 122,657 | 131,246 | -8,589 | | Basic EPS | $1.46 | $0.76 | +$0.70 | | Diluted EPS | $1.44 | $0.75 | +$0.69 | [4. REAL ESTATE INVENTORY AND LAND DEPOSITS](index=13&type=section&id=4.%20REAL%20ESTATE%20INVENTORY%20AND%20LAND%20DEPOSITS) This note provides details on the company's real estate holdings, including owned inventory, capitalized interest, and controlled land lots | Metric | March 31, 2022 (in thousands, except lots) | December 31, 2021 (in thousands, except lots) | Change (YoY, except lots) | | :----------------------------------- | :----------------------------------------- | :------------------------------------------ | :------------------------ | | Total owned inventory | $5,699,709 | $5,444,207 | +$255,502 | | Total real estate inventory | $5,743,127 | $5,499,521 | +$243,606 | | Capitalized interest | $177,969 | $168,670 | +$9,299 | | Total homebuilding owned lots | 47,169 | 48,013 | -844 | | Total controlled lots | 29,714 | 28,762 | +952 | | Controlled lots purchase price | $2,762,098 | $2,595,258 | +$166,840 | | Land deposits (non-refundable) | $238,409 | $213,780 | +$24,629 | - Interest incurred and capitalized for the three months ended March 31, 2022, was **$39.7 million**, up from **$37.7 million** in 2021[46](index=46&type=chunk) [5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES](index=14&type=section&id=5.%20INVESTMENTS%20IN%20CONSOLIDATED%20AND%20UNCONSOLIDATED%20ENTITIES) This note details the company's investments in joint ventures, distinguishing between consolidated and unconsolidated entities and their financial impact Unconsolidated Entities (Equity Method) Financial Information | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Total assets | $552,894 | $533,677 | +$19,217 | | Total liabilities | $199,708 | $184,087 | +$15,621 | | TMHC's share in income of unconsolidated entities (3 months) | $1,831 | $5,661 | -$3,830 | | Distributions to TMHC from unconsolidated entities (3 months) | $2,058 | $10,613 | -$8,555 | - Consolidated joint ventures (VIEs) had total assets of **$260.0 million** and liabilities of **$141.2 million** as of March 31, 2022, down from **$291.8 million** and **$165.1 million**, respectively, at December 31, 2021[51](index=51&type=chunk) [6. ACCRUED EXPENSES AND OTHER LIABILITIES](index=15&type=section&id=6.%20ACCRUED%20EXPENSES%20AND%20OTHER%20LIABILITIES) This note provides a breakdown of various accrued expenses and other liabilities, including compensation, interest, and warranty reserves | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------------------ | :------------------------------- | :----------- | | Total accrued expenses and other liabilities | $416,881 | $525,209 | -$108,328 | | Compensation and employee benefits | $78,849 | $166,272 | -$87,423 | | Interest payable | $39,241 | $48,551 | -$9,310 | | Self-insurance and warranty reserves | $140,970 | $141,839 | -$869 | - Self-insurance and warranty reserves saw **$8.9 million** in additions and **$12.5 million** in claims incurred for Q1 2022[52](index=52&type=chunk) [7. DEBT](index=16&type=section&id=7.%20DEBT) This note details the company's debt structure, including senior notes, loans, and revolving credit facilities, and their respective changes | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Total debt | $3,048,373 | $3,302,124 | -$253,751 | | Senior Notes subtotal | $2,452,311 | $2,452,322 | -$11 | | Loans payable and other borrowings | $395,400 | $404,386 | -$8,986 | | Revolving credit facility borrowings | $0 | $31,529 | -$31,529 | | Mortgage warehouse borrowings | $200,662 | $413,887 | -$213,225 | - The **$800 million** Revolving Credit Facility's maturity date was extended to March 11, 2027, with reduced pricing for lower capitalization ratios. No outstanding borrowings were reported under this facility as of March 31, 2022[71](index=71&type=chunk)[72](index=72&type=chunk) - The **$100 million** Revolving Credit Facility (for Build-to-Rent operations) had no outstanding borrowings as of March 31, 2022, down from **$31.5 million** at December 31, 2021. The company was in compliance with all debt covenants[77](index=77&type=chunk)[80](index=80&type=chunk) [8. FAIR VALUE DISCLOSURES](index=20&type=section&id=8.%20FAIR%20VALUE%20DISCLOSURES) This note explains the fair value hierarchy for financial instruments and their categorization into Level 1, 2, or 3 based on input observability - The company categorizes financial instruments into a three-level fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[84](index=84&type=chunk)[85](index=85&type=chunk) - Mortgage loans held for sale, MBSs, mortgage warehouse borrowings, loans payable, and Senior Notes are primarily Level 2, while Interest Rate Lock Commitments (IRLCs) are Level 3. Equity Security Investment is Level 1[86](index=86&type=chunk)[87](index=87&type=chunk) - There were no changes to or transfers between the levels of the fair value hierarchy for any financial instruments as of March 31, 2022, compared to December 31, 2021[86](index=86&type=chunk) [9. INCOME TAXES](index=21&type=section&id=9.%20INCOME%20TAXES) This note details the company's effective tax rate and the factors contributing to its deviation from the U.S. federal statutory rate | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :---------------- | :-------------------------------- | :-------------------------------- | :----------- | | Effective tax rate | 23.4% | 22.2% | +1.2% | - The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to stock-based compensation, and special deductions/credits[88](index=88&type=chunk) - No unrecognized tax benefits were reported at March 31, 2022, or December 31, 2021[89](index=89&type=chunk) [10. STOCKHOLDERS' EQUITY](index=21&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) This note outlines changes in stockholders' equity, including details on share repurchase programs and amounts available for future repurchases | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Amount available for repurchase — end of period | $172,384 | $48,413 | +$123,971 | | Amount repurchased | $(58,029) | $(38,418) | -$19,611 | - The company repurchased **1,948,187 shares** under its share repurchase program during the three months ended March 31, 2022[91](index=91&type=chunk) - A **$250.0 million** renewal of the stock repurchase program was authorized on December 13, 2021, expiring on June 30, 2024[168](index=168&type=chunk) [11. STOCK BASED COMPENSATION](index=21&type=section&id=11.%20STOCK%20BASED%20COMPENSATION) This note details the stock-based compensation expense recognized, including restricted stock units and stock options, and the unrecognized value of awards | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :--------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Total stock compensation expense | $6,863 | $5,682 | +$1,181 | | Restricted stock units expense | $5,780 | $4,748 | +$1,032 | | Stock options expense | $1,083 | $934 | +$149 | - The aggregate unrecognized value of all outstanding stock-based compensation awards was approximately **$43.2 million** at March 31, 2022[92](index=92&type=chunk) [12. REPORTING SEGMENTS](index=23&type=section&id=12.%20REPORTING%20SEGMENTS) This note provides a breakdown of the company's financial performance by its homebuilding and financial services segments across different geographic regions - The company aggregates its homebuilding operations into three reporting segments: East (Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, Tampa), Central (Austin, Dallas, Denver, Houston), and West (Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, Southern California), plus a Financial Services segment[93](index=93&type=chunk)[94](index=94&type=chunk) Segment Revenue (Q1 2022 vs Q1 2021, in thousands) | Segment | 2022 Revenue | 2021 Revenue | Change | | :------ | :----------- | :----------- | :----- | | East | $525,121 | $453,362 | +$71,759 | | Central | $370,735 | $322,612 | +$48,123 | | West | $770,210 | $597,730 | +$172,480 | | Financial Services | $35,199 | $44,065 | -$8,866 | | Corporate and Unallocated | $1,859 | $43 | +$1,816 | | **Total** | **$1,703,124** | **$1,417,812** | **+$285,312** | Segment Income Before Taxes (Q1 2022 vs Q1 2021, in thousands) | Segment | 2022 Income | 2021 Income | Change | | :------ | :---------- | :---------- | :----- | | East | $84,933 | $46,511 | +$38,422 | | Central | $42,793 | $36,183 | +$6,610 | | West | $135,734 | $64,768 | +$70,966 | | Financial Services | $13,043 | $23,809 | -$10,766 | | Corporate and Unallocated | $(43,603) | $(39,530) | -$4,073 | | **Total** | **$232,900** | **$131,741** | **+$101,159** | [13. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's various financial commitments, including letters of credit, land option contracts, and legal proceedings - The company has **$1.2 billion** in outstanding letters of credit and surety bonds and **$1.5 billion** in aggregate purchase price for land option contracts and land banking agreements as of March 31, 2022[96](index=96&type=chunk)[97](index=97&type=chunk) - Legal accruals for various claims totaled **$23.1 million** as of March 31, 2022. A class action lawsuit regarding club membership fees resulted in a **$35.0 million** judgment against the company, which is currently under appeal, with the company believing it will win[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) - Lease obligations amounted to **$94.4 million** as of March 31, 2022, with lease expense of approximately **$6.9 million** for the three months ended March 31, 2022[103](index=103&type=chunk) [14. MORTGAGE HEDGING ACTIVITIES](index=25&type=section&id=14.%20MORTGAGE%20HEDGING%20ACTIVITIES) This note describes the company's use of derivative instruments like IRLCs and MBSs to manage interest rate risk in mortgage loan origination - The company utilizes Interest Rate Lock Commitments (IRLCs) and Mortgage Backed Securities (MBSs) as derivative instruments to manage interest rate risk in its residential mortgage loan origination activities[104](index=104&type=chunk) Derivative Instrument Assets (Fair Value, in thousands) | Instrument | March 31, 2022 | December 31, 2021 | | :--------- | :------------- | :---------------- | | IRLCs | $420 | $2,110 | | MBSs | $5,080 | $(449) | | **Total** | **$5,500** | **$1,661** | - Total commitments to originate loans approximated **$417.7 million** as of March 31, 2022[105](index=105&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, condition, and future outlook for the three months ended March 31, 2022, compared to the prior year. It highlights strong housing demand, effective pricing strategies, and challenges such as supply chain disruptions and labor shortages, while detailing operational results and liquidity management [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements subject to uncertainties and disclaims any obligation to update them - This report contains forward-looking statements that are subject to numerous uncertainties and factors relating to the company's operations and business environment, many of which are beyond its control[108](index=108&type=chunk) - Readers should not place undue reliance on these statements, as actual results could differ materially due to various risks, including those described in the Annual Report[108](index=108&type=chunk) - The company expressly disclaims any obligation to update or revise any forward-looking statements, except as required by applicable law[109](index=109&type=chunk) [Business Overview](index=26&type=section&id=Business%20Overview) This section describes Taylor Morrison's core business as a residential homebuilder and developer, its diverse market segments, and its financial services operations - Taylor Morrison is a residential homebuilder and developer of lifestyle communities operating in **11 states**, serving entry-level, move-up, and 55-plus active lifestyle buyers[110](index=110&type=chunk) - The company's operations include homebuilding under Taylor Morrison, Darling Homes Collection, and Esplanade brands, a 'Build-to-Rent' partnership with Christopher Todd Communities, Urban Form Development for multi-use properties, and financial services (mortgage, title, insurance)[110](index=110&type=chunk) - As of March 31, 2022, the company employed approximately **3,062 full-time equivalent persons**, with **2,568** in homebuilding and corporate operations and **494** in financial services[113](index=113&type=chunk) [First Quarter 2022 Highlights](index=27&type=section&id=First%20Quarter%202022%20Highlights) This section summarizes key financial and operational achievements for Q1 2022, including revenue growth, margin improvements, and strategic initiatives - Home closings revenue increased **21% to $1.6 billion**, and home closings gross margin improved **450 basis points to 23.1%**[114](index=114&type=chunk) - SG&A as a percentage of home closings revenue improved **120 basis points to 9.6%**[114](index=114&type=chunk) - Backlog decreased **7% to 9,400 homes**, but the average sales price increased **24% to $659,000**. Homebuilding lot supply increased **5% to approximately 77,000 total lots**, with controlled lots rising **700 basis points to 39% of total supply**[114](index=114&type=chunk) - The company repurchased **1.9 million shares for $58 million**, and return on equity improved **860 basis points to 19.1%**[114](index=114&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's operational performance, including revenue, gross margin, and net income, highlighting factors influencing these results | Metric | Three Months Ended March 31, 2022 (in thousands, except percentages) | Three Months Ended March 31, 2021 (in thousands, except percentages) | Change (YoY, except percentages) | | :--------------------------------------- | :--------------------------------------------------------- | :--------------------------------------------------------- | :------------------------------- | | Total revenue | $1,703,124 | $1,417,812 | +$285,312 | | Home closings revenue, net | $1,644,409 | $1,363,429 | +$280,980 | | Gross margin | $393,128 | $274,441 | +$118,687 | | Income before income taxes | $232,900 | $131,741 | +$101,159 | | Net income available to Taylor Morrison Home Corporation | $176,703 | $98,021 | +$78,682 | | Home closings gross margin % | 23.1% | 18.6% | +4.5% | | Sales, commissions and other marketing costs as % of home closings revenue, net | 5.4% | 6.3% | -0.9% | | General and administrative expenses as % of home closings revenue, net | 4.2% | 4.5% | -0.3% | - Strong housing demand allowed for pricing strategies that partially mitigated increased costs, despite market-wide supply chain disruptions, trade labor shortages, and inflationary impacts[125](index=125&type=chunk) - The company strategically metered sales releases and shifted to selling more spec homes to manage supply chain and labor constraints and maximize profits[125](index=125&type=chunk) [Non-GAAP Measures](index=28&type=section&id=Non-GAAP%20Measures) This section presents non-GAAP financial metrics like EBITDA, Adjusted EBITDA, and net homebuilding debt to capitalization ratio, used for performance evaluation and industry benchmarking - The company uses non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and net homebuilding debt to capitalization ratio, to evaluate performance, set compensation targets, and benchmark against industry peers[116](index=116&type=chunk)[118](index=118&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2022 (in thousands, except percentages) | Three Months Ended March 31, 2021 (in thousands, except percentages) | Change (YoY, except percentages) | | :--------------------------------------- | :--------------------------------------------------------- | :--------------------------------------------------------- | :------------------------------- | | Net income before allocation to non-controlling interests | $178,461 | $102,443 | +$76,018 | | EBITDA | $269,512 | $160,857 | +$108,655 | | Adjusted EBITDA | $276,375 | $166,539 | +$109,836 | | Adjusted EBITDA as a percentage of total revenues | 16.2% | 11.7% | +4.5% | Net Homebuilding Debt to Capitalization Ratio Reconciliation (in thousands) | Metric | March 31, 2022 (in thousands, except percentages) | December 31, 2021 (in thousands, except percentages) | Change (YoY, except percentages) | | :--------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------- | | Net homebuilding debt | $2,276,151 | $2,053,094 | +$223,057 | | Total equity | $4,094,798 | $3,970,982 | +$123,816 | | Total capitalization | $6,370,949 | $6,024,076 | +$346,873 | | Net homebuilding debt to capitalization ratio | 35.7% | 34.1% | +1.6% | [Three months ended March 31, 2022 Compared to Three months ended March 31, 2021](index=30&type=section&id=Three%20months%20ended%20March%2031%2C%202022%20Compared%20to%20Three%20months%20ended%20March%2031%2C%202021) This section provides a detailed comparative analysis of the company's financial and operational performance for the first quarter of 2022 versus 2021 [Ending Active Selling Communities](index=30&type=section&id=Ending%20Active%20Selling%20Communities) This table shows the number of active selling communities by region, indicating changes in the company's market presence | Region | March 31, 2022 | December 31, 2021 | Change (%) | | :------- | :------------- | :---------------- | :--------- | | East | 121 | 123 | (1.6)% | | Central | 106 | 102 | 3.9% | | West | 97 | 105 | (7.6)% | | **Total** | **324** | **330** | **(1.8)%** | [Net Sales Orders](index=30&type=section&id=Net%20Sales%20Orders) This section analyzes changes in net sales orders, sales value, and average selling price, reflecting market demand and pricing strategies | Metric | Three Months Ended March 31, 2022 (in thousands, except orders and price) | Three Months Ended March 31, 2021 (in thousands, except orders and price) | Change (%) | | :-------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | :--------- | | Net Sales Orders | 3,054 | 4,492 | (32.0)% | | Sales Value (in thousands) | $2,085,219 | $2,472,833 | (15.7)% | | Average Selling Price | $683 | $550 | 24.2% | - Decreases in net sales orders and sales value were primarily due to fewer active selling communities, increasing interest rates, and inflationary impacts, partially offset by a **24.2% increase in average selling prices**[127](index=127&type=chunk) - The company strategically metered sales releases and shifted to spec home sales to manage supply chain and labor constraints[127](index=127&type=chunk) [Sales Order Cancellations](index=30&type=section&id=Sales%20Order%20Cancellations) This section examines the sales order cancellation rate and the factors contributing to its changes, such as build times and interest rates | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :---------------- | :-------------------------------- | :-------------------------------- | :----------- | | Total Company Cancellation Rate | 6.4% | 6.0% | +0.4% | - The increase in cancellation rate was attributed to extended build cycle times and recent increases in interest rates[129](index=129&type=chunk) [Sales Order Backlog](index=31&type=section&id=Sales%20Order%20Backlog) This section details the company's sales order backlog, including the number of homes and total sales value, and the impact of average selling prices | Metric | March 31, 2022 (in thousands, except homes and price) | March 31, 2021 (in thousands, except homes and price) | Change (%) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Sold Homes in Backlog | 9,400 | 10,074 | (6.7)% | | Sales Value (in thousands) | $6,197,946 | $5,336,848 | 16.1% | | Average Selling Price | $659 | $530 | 24.3% | - The decrease in sold homes in backlog was due to fewer active selling communities, increasing interest rates, and inflationary impacts, while the total sales value increased due to a **24.3% rise in average selling prices**[130](index=130&type=chunk) [Home Closings Revenue](index=31&type=section&id=Home%20Closings%20Revenue) This section analyzes the revenue generated from home closings, highlighting the impact of average selling prices despite a slight decrease in units closed | Metric | Three Months Ended March 31, 2022 (in thousands, except homes and price) | Three Months Ended March 31, 2021 (in thousands, except homes and price) | Change (%) | | :-------------------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | :--------- | | Homes Closed | 2,768 | 2,821 | (1.9)% | | Home Closings Revenue, Net (in thousands) | $1,644,409 | $1,363,429 | 20.6% | | Average Selling Price | $594 | $483 | 23.0% | - The **20.6% increase** in home closings revenue was primarily driven by a **23.0% higher average sales price**, despite a slight decrease in the number of homes closed[131](index=131&type=chunk) [Land Closings Revenue](index=31&type=section&id=Land%20Closings%20Revenue) This section details revenue from land closings, noting fluctuations based on market opportunities and land management strategies, particularly in the East region | Region | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change | | :------- | :----------------------------------------------- | :----------------------------------------------- | :----- | | East | $13,440 | $2,454 | +$10,986 | | Central | $2,160 | $2,435 | -$275 | | West | $10 | $0 | +$10 | | **Total** | **$15,610** | **$4,889** | **+$10,721** | - Land closings revenue fluctuates based on market opportunities and land management strategy. The increase in the East region was due to the sale of commercial assets and residential lots in Florida[132](index=132&type=chunk)[133](index=133&type=chunk) [Amenity and Other Revenue](index=32&type=section&id=Amenity%20and%20Other%20Revenue) This section covers revenue from club dues, amenity fees, and Urban Form operations, which develops multi-use properties | Region | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change | | :-------- | :----------------------------------------------- | :----------------------------------------------- | :----- | | East | $5,683 | $5,023 | +$660 | | Corporate | $1,859 | $43 | +$1,816 | | **Total** | **$7,906** | **$5,429** | **+$2,477** | - Revenue includes club dues and fees from amenities (golf courses, club houses, fitness centers) and activity from Urban Form operations, which develops multi-use properties[134](index=134&type=chunk) [Home Closings Gross Margin](index=32&type=section&id=Home%20Closings%20Gross%20Margin) This section analyzes the consolidated and regional home closings gross margin, highlighting factors like operational enhancements, acquisition synergies, and pricing power | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Home closings gross margin % | 24.5% (East) / 19.9% (Central) / 23.6% (West) / 23.1% (Consolidated) | 18.8% (East) / 20.2% (Central) / 17.5% (West) / 18.6% (Consolidated) | +4.5% (Consolidated) | - The consolidated home closings gross margin increased **450 basis points to 23.1%**, reflecting operational enhancements, acquisition synergies, and pricing power that exceeded inflationary cost pressure[135](index=135&type=chunk) - Strategic metering of sales and an emphasis on spec homes helped maximize profits and protect margins amidst extended build cycle times due to supply chain issues and labor shortages[135](index=135&type=chunk) [Financial Services](index=33&type=section&id=Financial%20Services) This section details the financial performance of the company's financial services segment, including revenue, income, and loan origination volumes | Metric | Three Months Ended March 31, 2022 (in thousands, except loans) | Three Months Ended March 31, 2021 (in thousands, except loans) | Change (%) | | :--------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :--------- | | Total financial services revenue | $35,199 | $44,065 | (20.1)% | | Financial services income before income taxes | $13,043 | $23,735 | (45.0)% | | Number of Loans Originated | 1,582 | 2,128 | (25.7)% | | Principal Originated (in thousands) | $688,665 | $809,746 | (15.0)% | - The decrease in total financial services revenue and income was a result of lower home closings during the period[137](index=137&type=chunk) [Sales, Commissions and Other Marketing Costs](index=33&type=section&id=Sales%2C%20Commissions%20and%20Other%20Marketing%20Costs) This section analyzes the company's sales, commissions, and marketing costs as a percentage of home closings revenue, highlighting efficiency improvements - Sales, commissions, and other marketing costs as a percentage of home closings revenue, net, decreased to **5.4%** for Q1 2022 from **6.3%** in Q1 2021[138](index=138&type=chunk) - This decrease was primarily driven by leverage from an increase in home closings revenue and sustained efficiency in sales and marketing functions[138](index=138&type=chunk) [General and Administrative Expenses](index=33&type=section&id=General%20and%20Administrative%20Expenses) This section examines general and administrative expenses as a percentage of home closings revenue, noting improvements due to increased revenue - General and administrative expenses as a percentage of home closings revenue, net, decreased to **4.2%** for Q1 2022 from **4.5%** in Q1 2021[139](index=139&type=chunk) - The decrease was primarily due to the increase in home closings revenue while general and administrative expenses remained relatively consistent[139](index=139&type=chunk) [Equity in Income of Unconsolidated Entities](index=33&type=section&id=Equity%20in%20Income%20of%20Unconsolidated%20Entities) This section reports the company's share of income from unconsolidated entities, noting a decrease due to lower income from financial services joint ventures | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----- | | Equity in income of unconsolidated entities | $1,831 | $5,661 | -$3,830 | - The decrease was due to lower income from financial services joint ventures and those nearing close-out[140](index=140&type=chunk) [Other Expense, Net](index=34&type=section&id=Other%20Expense%2C%20Net) This table presents the net other expenses incurred by the company for the reporting periods | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change | | :---------------- | :----------------------------------------------- | :----------------------------------------------- | :----- | | Other expense, net | $542 | $975 | -$433 | [Income Tax Provision](index=34&type=section&id=Income%20Tax%20Provision) This section details the company's income tax provision and effective tax rate, explaining the factors influencing tax rate differences | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :---------------- | :-------------------------------- | :-------------------------------- | :----------- | | Effective tax rate | 23.4% | 22.2% | +1.2% | - The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to stock-based compensation, and special deductions/credits[142](index=142&type=chunk) [Net Income](index=34&type=section&id=Net%20Income) This section reports the company's net income and diluted earnings per share, attributing increases to higher homebuilding revenues and gross margin | Metric | Three Months Ended March 31, 2022 (in thousands, except EPS) | Three Months Ended March 31, 2021 (in thousands, except EPS) | Change (in thousands, except EPS) | | :--------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :-------------------------------- | | Net income | $176,703 | $98,021 | +$78,682 | | Diluted earnings per share | $1.44 | $0.75 | +$0.69 | - The increases in net income and diluted earnings per share were primarily attributable to higher homebuilding revenues and gross margin dollars[143](index=143&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial flexibility, including cash, credit facilities, and long-term funding demands, to support ongoing operations and growth [Liquidity](index=34&type=section&id=Liquidity) This section details the company's available cash and credit facility capacity, affirming sufficient resources for operations and debt refinancing | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change | | :-------------------------------- | :------------------------------ | :------------------------------- | :----- | | Total cash, excluding restricted cash | $569,249 | $832,821 | -$263,572 | | Revolving credit facilities availability | $847,062 | $809,733 | +$37,329 | | **Total liquidity** | **$1,416,311** | **$1,642,554** | **-$226,243** | - The company believes it has adequate capital resources from operations and sufficient access to external financing (Revolving Credit Facilities) to conduct operations for the next twelve months, including refinancing its **5.875% Senior Notes due 2023**[145](index=145&type=chunk) - Primary long-term demands for funds include debt payments, land purchases, lot development, home and amenity construction, long-term capital investments, joint venture investments, and common stock repurchases[145](index=145&type=chunk) [Cash Flow Activities](index=35&type=section&id=Cash%20Flow%20Activities) This section analyzes the company's cash flows from operating, investing, and financing activities, highlighting significant changes and their drivers - Net cash provided by operating activities was **$57.5 million** for Q1 2022, a significant improvement from **$144.3 million** used in Q1 2021, driven by a decrease in the cash flow effect from real estate inventory and land deposits, increased net income, and decreased mortgage loans held for sale[146](index=146&type=chunk) - Net cash used in investing activities decreased to **$7.4 million** for Q1 2022 from **$13.5 million** in Q1 2021, primarily due to decreased investments in unconsolidated entities and fewer property and equipment purchases[147](index=147&type=chunk) - Net cash used in financing activities was **$315.5 million** for Q1 2022, compared to **$17.2 million** provided in Q1 2021, mainly due to repayment of the **$100 million** Revolving Credit Facility, reduced mortgage warehouse borrowings, and common stock repurchases[148](index=148&type=chunk) [Debt Instruments](index=35&type=section&id=Debt%20Instruments) This section refers to Note 7 for detailed information on the company's debt instruments, including Senior Notes and Revolving Credit Facilities - Detailed information regarding debt instruments, including Senior Notes and Revolving Credit Facilities, is provided in Note 7 to the Unaudited Condensed Consolidated Financial Statements[149](index=149&type=chunk) [Off-Balance Sheet Arrangements as of March 31, 2022](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements%20as%20of%20March%2031%2C%202022) This section describes the company's off-balance sheet commitments, including joint ventures and land option contracts, and their associated financial obligations - The company participates in strategic land development and homebuilding joint ventures (unconsolidated entities) to acquire land and manage risk, contributing **$2.1 million** in cash to these ventures in Q1 2022[150](index=150&type=chunk)[151](index=151&type=chunk) - Land option contracts and land banking agreements had an aggregate purchase price of **$1.5 billion** as of March 31, 2022, with obligations generally limited to the forfeiture of non-refundable cash deposits[152](index=152&type=chunk) [Seasonality](index=35&type=section&id=Seasonality) This section explains the seasonal nature of the company's business, with higher activity and financial results typically concentrated in the latter half of the year - The business is seasonal, with more homes under construction, closings, revenues, and operating income typically occurring in the third and fourth quarters of the year[154](index=154&type=chunk) - Quarterly results of operations and financial position are not necessarily representative of the results expected for the full year[155](index=155&type=chunk) [Inflation](index=37&type=section&id=Inflation) This section discusses the adverse impact of high inflation on the company's costs and affordability, and its strategies to mitigate these effects - The company is adversely affected by high inflation due to increased land, financing, labor, and construction material costs, as well as higher mortgage interest rates impacting affordability[156](index=156&type=chunk) - Efforts are made to pass cost increases to customers through higher sales prices, but this may be challenging during soft housing market conditions[156](index=156&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no significant changes to the company's critical accounting policies and estimates during the quarter - There have been no significant changes to the company's critical accounting policies and estimates during the three months ended March 31, 2022, compared to those disclosed in the Annual Report[157](index=157&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=38&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to interest rate risk, with a majority of its debt being fixed rate. While fixed-rate debt changes affect fair value, variable-rate debt changes can impact future earnings and cash flows. The company monitors this exposure and has significant availability under its revolving credit facilities - The company's operations are interest rate sensitive, with approximately **93%** of its debt being fixed rate and **7%** variable rate as of March 31, 2022[159](index=159&type=chunk) - Changes in interest rates generally affect the fair value of fixed-rate debt but not earnings or cash flows, while for variable-rate debt, they may affect future earnings and cash flows[159](index=159&type=chunk) - As of March 31, 2022, the company had no outstanding borrowings under its **$800 million** or **$100 million** Revolving Credit Facilities, with **$847.1 million** of additional availability[159](index=159&type=chunk) Debt Obligations by Expected Maturity (in millions) | Debt Type | 2022 (in millions) | 2023 (in millions) | 2024 (in millions) | 2025 (in millions) | 2026 (in millions) | Thereafter (in millions) | Total (in millions) | Fair Value (in millions) | | :---------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------------- | :------------------ | :----------------------- | | Fixed Rate | $162.4 | $487.7 | $392.8 | $30.9 | $14.3 | $1,757.3 | $2,845.4 | $2,892.1 | | Variable Rate | $200.7 | $0 | $0 | $0 | $0 | $0 | $200.7 | $200.7 | [ITEM 4. CONTROLS AND PROCEDURES](index=39&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The company's management, including the principal executive, financial, and accounting officers, evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of March 31, 2022. No material changes in internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated and concluded to be effective at the reasonable assurance level as of March 31, 2022[162](index=162&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2022[163](index=163&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional disclosures not covered in the financial information, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 13 of the financial statements for detailed information regarding the company's legal proceedings and commitments - Information required for this item is found in Note 13 - Commitments and Contingencies under 'Legal Proceedings' in the Notes to the Consolidated Financial Statements[165](index=165&type=chunk) [ITEM 1A. RISK FACTORS](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously outlined in the company's Annual Report. Readers are advised to carefully consider these existing risk factors, as they could significantly impact the company's business, financial condition, or results of operations - No material changes to the risk factors set forth in Part I, Item 1A of the Annual Report have occurred[166](index=166&type=chunk) - Readers should carefully consider the risk factors from the Annual Report and other information in this quarterly report, as they may materially affect the company's business, financial condition, or results of operations[166](index=166&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=40&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During the first quarter of 2022, the company repurchased 1.9 million shares of its common stock for $58.0 million under its renewed $250.0 million stock repurchase program, which is active until June 2024 Share Repurchase Activity (Q1 2022) | Period | Total shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in thousands) | | :-------------------------- | :--------------------- | :--------------------------- | :------------------------------------------------------------------------ | | January 1 to January 31, 2022 | 157,166 | $34.44 | $225,000 | | February 1 to February 28, 2022 | 1,106,334 | $28.62 | $193,335 | | March 1 to March 31, 2022 | 684,687 | $30.60 | $172,384 | | **Total** | **1,948,187** | | | - On December 13, 2021, the Board of Directors authorized a **$250.0 million** renewal of the company's stock repurchase program, which expires on June 30, 2024[168](index=168&type=chunk) - The program does not require the repurchase of any specific number of shares and may be suspended, extended, modified, or discontinued at any time, subject to market conditions and other considerations[169](index=169&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=40&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[170](index=170&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=40&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company reported no mine safety disclosures for the period - No mine safety disclosures were reported[171](index=171&type=chunk) [ITEM 5. OTHER INFORMATION](index=40&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reported no other information for the period - No other information was reported[172](index=172&type=chunk) [ITEM 6. EXHIBITS](index=41&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and certifications required by the Sarbanes-Oxley Act, along with XBRL-related documents - Exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated By-laws, and the Amended and Restated Credit Agreement[173](index=173&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes–Oxley Act of 2002 are filed/furnished[173](index=173&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also included[173](index=173&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) The report is officially signed by the company's principal executive officer, principal financial officer, and chief accounting officer, affirming its submission in accordance with the Securities Exchange Act of 1934 - The report is signed by Sheryl D. Palmer (Chairman of the Board of Directors and Chief Executive Officer), Louis Steffens (Executive Vice President and Chief Financial Officer), and Joseph Terracciano (Chief Accounting Officer)[176](index=176&type=chunk)

Financial Data and Key Metrics Changes - The company reported first-quarter earnings of $1.44 per diluted share, a 92% increase year-over-year, driven by strong revenue growth and improved gross margins [29] - Home closings gross margin improved by 450 basis points year-over-year to 23.1%, with expectations to reach at least 24.5% for the full year, up over 400 basis points from 2021 [33][8] - SG&A as a percentage of home closings revenue decreased by 120 basis points year-over-year to 9.6%, with expectations to improve to the mid- to high 8% range in 2022 [34] Business Line Data and Key Metrics Changes - The company delivered 2,768 homes in the first quarter, with a 23% increase in average closing price to $594,000, generating home closings revenue of $1.6 billion [29] - The backlog consists of 9,400 sold homes, with strong embedded equity and a cancellation rate of approximately 6%, among all-time lows [12][8] - The company expects to deliver between 14,000 to 15,000 homes in 2022, including 3,000 to 3,200 homes in the second quarter [32] Market Data and Key Metrics Changes - The average net sales order price increased by 24% year-over-year, reflecting strong demand across markets [9] - The company ended the quarter with a monthly absorption pace of 3.1 net sales orders per community, with strong demand exceeding this level [10] - The average credit score of borrowers in the backlog is at an all-time high of 752, with average down payments of 24% higher than a year ago [12] Company Strategy and Development Direction - The company is focused on operational priorities to leverage market scale, prime land positions, and consumer-centric products, aiming for long-term structural improvements [7] - A disciplined investment strategy is in place, with a robust land pipeline of approximately 77,000 owned and controlled homebuilding lots, representing 5.6 years of total supply [22] - The company is increasing its share of land spend on development, with over 50% of first-quarter land investment dedicated to land development [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook despite rising interest rates and geopolitical issues, focusing on delivering a record year of financial performance [8] - The company is closely monitoring the impact of rising mortgage rates on consumer behavior, particularly among entry-level buyers [11] - Management highlighted the strength of their buyers and the quality of their land positions, indicating resilience in demand [12] Other Important Information - The company published its fourth annual environmental, social, and governance report, emphasizing sustainable business practices and community contributions [39][40] - The company has introduced a new extended rate loss program to help maintain strong mortgage capture rates amid rising interest rates [16] Q&A Session Summary Question: Performance of different buyer segments - Management noted robust demand across all consumer segments, with no significant differences observed in April compared to the first quarter [47] Question: Sales restrictions and home release timing - Management indicated that sales restrictions are still in place, but they expect to have a more open environment by the latter part of the quarter [49] Question: Impact of rising rates on land acquisition strategy - Management confirmed that the overall mix of the business remains intentional, with no significant changes in land acquisition strategy due to rising rates [62] Question: Land market conditions - Management stated that there has not been meaningful capitulation in the land market yet, with a typical 9-month lag expected before any significant changes occur [78] Question: Supply chain and SKU rationalization - Management confirmed that SKU rationalization has been beneficial, leading to improved gross margins while maintaining customer customization options [82]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 001-35873 TAYLOR MORRISON HOME CORPORATION (Exact name of registrant as specified in its charter) Delaware 83-2026677 (State or oth ...

Financial Data and Key Metrics Changes - In Q4 2021, the company reported net income of $273 million, or $2.19 per diluted share, representing a 204% year-over-year increase [46] - The pre-tax income margin improved by 610 basis points to 13.7% [46] - Home closing revenue increased by 61% year-over-year to $2.4 billion, driven by an average selling price of $558,000 [47] - The gross margin for home closings improved by 330 basis points year-over-year to 21.6% [50] - The company expects a gross margin of at least 23.5% for the full year 2022, up from 20.3% in 2021 [51][62] Business Line Data and Key Metrics Changes - Home closings increased by 9% to 13,699 homes in 2021, with revenue from home closings expanding by 22% to nearly $7.2 billion [11] - The gross margin for home closings improved by 370 basis points to 20.3% in 2021 [11] - The company plans to deliver between 14,000 to 15,000 homes in 2022, with a gross margin of at least 23.5% [14] Market Data and Key Metrics Changes - The move-up segment represented slightly more than half of total sales, showing year-over-year growth in both net orders and absorption pace [22] - The 55-plus Active Lifestyle segment continued to show strong momentum, with consistent monthly sales pace [23] - Approximately 75% of communities needed sales activity during Q4, contributing to a 23% increase in average net order price [24] Company Strategy and Development Direction - The company is focused on operational and capital efficiency, with a strategic emphasis on enhancing gross margins and asset efficiency [15][20] - The introduction of the Canvas option program aims to streamline production and improve profitability [18] - The company is expanding its Build-to-Rent operations, targeting a significant portion of its overall business [34][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving significant growth in revenue and profitability in 2022 despite supply chain challenges [13] - The company anticipates strong demand supported by demographic trends and limited availability of new and resale supply [23] - Management remains cautious about the impact of rising home prices and interest rates on affordability, particularly for first-time homebuyers [30][32] Other Important Information - The company was recognized as the only homebuilder on Bloomberg's Gender-Equality Index for the fourth consecutive year [32] - The company has a robust pipeline of approximately 77,000 owned and controlled homebuilding lots, representing 5.6 years of total supply [57] Q&A Session Summary Question: Mix and Community Count Adjustments - Management expects a slight increase in first-time buyer communities over the next quarters, with regional variations in buyer demographics [68] Question: Build Cycle Time Improvements - Early data indicates a 20-day improvement in cycle time for Canvas packages compared to traditional builds [71] Question: Gross Margin Confidence - Confidence in achieving a gross margin of 23.5% is supported by a backlog of over 9,100 sold homes and strong pricing visibility [79] Question: Buyer Preferences and Affordability - No significant changes in buyer preferences have been observed, although first-time buyers are experiencing more affordability pressure [82] Question: Bulk Sales and Build-to-Rent - Bulk sales will be on the balance sheet for Taylor Morrison, leveraging the Christopher Todd brand for build-to-rent projects [94] Question: Cancellation Rates - The cancellation rate in Q4 was 8.2%, slightly up from 7.9% in the previous year, indicating strong pre-qualification processes [98] Question: Lot Count and Land Acquisition - The average lot count in new contracts is up about 25%, with a focus on core locations for land acquisition [99]