Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 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 Number: 001-35873 TAYLOR MORRISON HOME CORPORATION (Exact name of registrant as specified in its Charter) Delaware 83 ...

Investor Presentation Third Quarter 2020 TaylorMorrison. H The Making of the Fifth Largest Homebuilder 2015 Sold Canadian operations Acquired JEH Homes (Atlanta) and three divisions of Orleans Homes (Charlotte, Raleigh and Chicago) 2016 Acquired Acadia Homes (Atlanta) 2018 Taylor Morrison became a fully floated public company following the exit of our former private equity owners Acquired AV Homes (NASDAQ: AVHI), adding scale to AZ, TX and Carolinas markets and entrance into Jacksonville 2019 Taylor Morriso ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Taylor Morrison Home Corporation, detailing financial performance and position impacted by the William Lyon Homes acquisition and COVID-19 as of June 30, 2020 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2020, reflects a significant increase in total assets to **$8.3 billion** and total liabilities to **$4.9 billion**, primarily due to the William Lyon Homes acquisition Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $674,685 | $326,437 | | Total real estate inventory | $5,771,661 | $3,986,544 | | Goodwill | $637,440 | $149,428 | | **Total Assets** | **$8,322,334** | **$5,245,686** | | **Liabilities** | | | | Senior notes, net | $2,760,718 | $1,635,008 | | Revolving credit facility borrowings | $485,000 | $— | | **Total Liabilities** | **$4,897,594** | **$2,699,974** | | **Total Stockholders' Equity** | **$3,424,740** | **$2,545,712** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2020, total revenue increased to **$1.53 billion**, but net income decreased to **$65.7 million** due to William Lyon Homes acquisition expenses and lower gross margins, with similar trends for the six-month period Key Operating Results (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,526,685 | $1,265,426 | $2,872,384 | $2,190,518 | | Gross Margin | $244,178 | $233,774 | $441,934 | $405,814 | | Transaction Expenses | $18,712 | $1,750 | $105,086 | $5,879 | | Net Income Available to TMHC | $65,674 | $81,851 | $34,242 | $132,982 | | Diluted EPS | $0.50 | $0.76 | $0.27 | $1.21 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash provided by operating activities significantly improved to **$323.2 million**, while investing activities used **$278.8 million** primarily for the William Lyon Homes acquisition, resulting in a net cash increase of **$348.3 million** Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $323,204 | $145,674 | | Net cash used in investing activities | ($278,788) | ($1,440) | | Net cash provided by/(used in) financing activities | $303,915 | ($277,866) | | **Net Increase/(Decrease) in Cash** | **$348,331** | **($133,632)** | | **Cash, Cash Equivalents, and Restricted Cash - End of period** | **$676,903** | **$198,227** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies, the significant impact of the William Lyon Homes acquisition, debt structure, segment reporting, and subsequent debt refinancing events - The company operates as a residential homebuilder and developer of lifestyle communities across 11 states, serving various consumer groups under the Taylor Morrison, Darling Homes, and William Lyon Signature brands[26](index=26&type=chunk) - On February 6, 2020, the company completed the acquisition of William Lyon Homes (WLH), a major homebuilder in the Western U.S[27](index=27&type=chunk) - The COVID-19 outbreak was declared a global pandemic on March 11, 2020, impacting business operations, though all operations are currently functioning subject to restrictions[28](index=28&type=chunk) - Subsequent to the quarter end, on July 22, 2020, the company issued **$500.0 million** in new Senior Notes and used the proceeds to redeem parts of its 2023 and 2025 notes[29](index=29&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, emphasizing the impacts of the COVID-19 pandemic and the William Lyon Homes acquisition, which significantly increased community count and sales but also led to substantial transaction expenses and purchase accounting adjustments - The acquisition of William Lyon Homes on February 6, 2020, and the COVID-19 pandemic are the primary factors affecting the comparability of results[166](index=166&type=chunk) - Despite an initial slowdown in March, the company saw a recovery in net sales orders in May and June, with June being the best sales month in company history[167](index=167&type=chunk) - The company incurred **$105.1 million** in transaction expenses for the first six months of 2020 related to the William Lyon Homes acquisition, and an unfavorable purchase accounting adjustment of **$60.5 million** to Cost of home closings[172](index=172&type=chunk) - The company had over **$900 million** in available liquidity as of June 30, 2020, through cash on hand and its revolving credit facility[169](index=169&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) The company's Q2 and H1 2020 operational results were heavily influenced by the William Lyon Homes acquisition, leading to increased sales orders and home closings but a decline in home closings gross margin due to purchase accounting adjustments and higher cancellation rates Q2 2020 Operational Highlights vs. Q2 2019 | Metric | Q2 2020 | Q2 2019 | Change | | :--- | :--- | :--- | :--- | | Average Active Selling Communities | 411 | 357 | +15.1% | | Net Sales Orders | 3,453 | 2,810 | +22.9% | | Home Closings | 3,212 | 2,594 | +23.8% | | Home Closings Gross Margin % | 15.4% | 18.0% | -260 bps | | Adjusted Home Closings Gross Margin % | 17.6% | 18.0% | -40 bps | - The increase in the total company cancellation rate to **18.6%** in Q2 2020 from **12.0%** in Q2 2019 is attributed to the impact of COVID-19 and decreased consumer confidence[207](index=207&type=chunk) - Sales order backlog increased **34.7%** in units and **31.5%** in value at June 30, 2020, compared to the prior year, primarily due to the WLH acquisition which contributed approximately **1,400** backlog units[210](index=210&type=chunk) [Non-GAAP Measures](index=46&type=section&id=Non-GAAP%20Measures) The company provides non-GAAP measures, including adjusted net income of **$103.8 million** and an adjusted home closings gross margin of **17.6%** for Q2 2020, to offer a clearer view of performance excluding acquisition-related impacts Q2 2020 Non-GAAP Reconciliation Highlights (in thousands) | Metric | Q2 2020 | Q2 2019 | | :--- | :--- | :--- | | Net Income Available to TMHC (GAAP) | $65,674 | $81,851 | | William Lyon Homes purchase accounting adjustments | $32,138 | $— | | Transaction expenses | $18,712 | $1,750 | | **Adjusted Net Income** | **$103,815** | **$84,787** | Adjusted Home Closings Gross Margin (Q2 2020) | Metric | Amount (in thousands) | % of Revenue | | :--- | :--- | :--- | | Home Closings Gross Margin (GAAP) | $226,770 | 15.4% | | WLH purchase accounting adjustments | $32,138 | 2.2% | | **Adjusted Home Closings Gross Margin** | **$258,908** | **17.6%** | - The net homebuilding debt to capitalization ratio was **46.0%** as of June 30, 2020[198](index=198&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q2 2020 with total liquidity of **$910.8 million**, including **$674.7 million** in cash, and subsequently issued **$500 million** in new Senior Notes to redeem higher-cost debt Total Liquidity (in thousands) | Component | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash, excluding restricted cash | $674,685 | $326,437 | | Revolving credit facility availability | $236,096 | $522,281 | | **Total liquidity** | **$910,781** | **$848,718** | - As a precautionary measure during the COVID-19 pandemic, the company borrowed **$485.0 million** on its Revolving Credit Facility in Q1 2020[240](index=240&type=chunk) - In July 2020, the company issued **$500.0 million** of 5.125% Senior Notes due 2030 and used proceeds plus cash on hand to redeem portions of its 6.00% 2023 Notes and 5.875% 2025 Notes[241](index=241&type=chunk)[244](index=244&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, with approximately **83%** of its debt being fixed-rate, and a hypothetical **1%** increase in rates would raise annual interest expense by approximately **$6.3 million** on variable-rate debt - As of June 30, 2020, approximately **83%** of the company's debt was fixed-rate and **17%** was variable-rate[260](index=260&type=chunk) - A **1%** increase in interest rates would increase annual interest incurred by approximately **$6.3 million**, based on the variable-rate debt outstanding at June 30, 2020[263](index=263&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2020, excluding the newly acquired William Lyon Homes, which is currently undergoing integration - The company's disclosure controls and procedures were deemed effective as of June 30, 2020[265](index=265&type=chunk) - Management excluded the internal control over financial reporting for the newly acquired William Lyon Homes from its assessment, as permitted, and is in the process of integrating its internal controls[265](index=265&type=chunk)[267](index=267&type=chunk) [PART II. OTHER INFORMATION](index=70&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the normal course of business, with legal accruals totaling **$25.9 million** as of June 30, 2020, which management does not expect to materially impact financial position - The company is involved in various legal proceedings in the normal course of business[268](index=268&type=chunk) - Legal accruals were **$25.9 million** as of June 30, 2020, compared to **$12.7 million** as of December 31, 2019[149](index=149&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, primarily focusing on the significant and uncertain adverse impacts of the COVID-19 pandemic on global economies, consumer confidence, and the housing market - The primary updated risk factor relates to the unknown scale, scope, and duration of the COVID-19 pandemic and its potential material adverse impact on the business[270](index=270&type=chunk) - COVID-19 may heighten existing risks, including decreased consumer confidence, unfavorable economic conditions, higher cancellation rates, and disruptions to the supply chain and financial services[272](index=272&type=chunk)[276](index=276&type=chunk) - Despite market volatility, the company assessed its goodwill for impairment as of June 30, 2020, and concluded there were no indicators of impairment[274](index=274&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company renewed its stock repurchase program for up to **$100 million** until December 31, 2020, with no shares repurchased in Q2 2020 but **5,436,479** shares repurchased for the six months ended June 30, 2020 - The company renewed its stock repurchase program for up to **$100 million**, effective until December 31, 2020[276](index=276&type=chunk) - No shares were repurchased in the three months ended June 30, 2020[277](index=277&type=chunk) - For the six months ended June 30, 2020, the company repurchased **5,436,479** shares of Common Stock[124](index=124&type=chunk) [Item 3. Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[278](index=278&type=chunk) [Item 4. Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - None[279](index=279&type=chunk) [Item 5. Other Information](index=72&type=section&id=Item%205.%20Other%20Information) No other information was reported - None[280](index=280&type=chunk) [Item 6. Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including merger agreements and officer certifications - Lists exhibits filed with the Form 10-Q, including merger agreements and officer certifications[282](index=282&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income of $104 million and diluted earnings per share of $0.80 when adjusted for acquisition-related expenses, while GAAP net income was $66 million with diluted earnings per share of $0.50 [44] - Total revenues for the quarter were $1.53 billion, with homebuilding revenues exceeding $1.47 billion, marking a 20% increase from the prior year [45] - The net debt to capital ratio at the end of the second quarter was 46%, with expectations to reduce it to the low to mid-40% range by year-end [43] Business Line Data and Key Metrics Changes - The company achieved 3,453 net sales in the quarter, representing a 23% year-over-year growth, with a significant rebound in sales from April's low point [11] - Closings for the quarter totaled 3,212, an increase of 24% compared to the same quarter last year [16] - Financial services generated approximately $40 million in revenue, with a mortgage capture rate of 81%, up from 72% in the same quarter of 2019 [49] Market Data and Key Metrics Changes - The company noted strong sales growth in states with higher COVID-19 infection rates, such as Arizona, Texas, and Florida, indicating robust consumer demand despite the pandemic [59] - The active adult group showed slower recovery, with sales slightly better than flat year-over-year, while in-state sales in Florida increased by over 50% [14][59] Company Strategy and Development Direction - The company plans to introduce the "Live Well" product enhancements in all new construction starts, focusing on health and wellness features [22] - A strong emphasis on virtual sales experiences and digital capabilities has been established, with significant engagement in self-service features and online home reservations [26][30] - The company aims to continue enhancing its cash position and managing debt effectively, with a recent refinancing effort expected to save about $10 million in annualized interest [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current interest rate environment, which is seen as a strong driver for home sales [18] - The company anticipates that the trend of moving from urban to suburban areas will continue, driven by consumer preferences for more space [19][33] - Management remains cautious about potential disruptions from COVID-19 but is encouraged by the resilience shown in sales and operations [10][32] Other Important Information - The company has approximately 67,000 homebuilding lots owned and controlled, with an average land bank supply of about 4.9 years [53] - The company expects to spend approximately $1.4 billion to $1.5 billion on land and development for the year [57] Q&A Session Summary Question: Clarification on guidance regarding margins - Management indicated that the purchase accounting impact for Q3 is likely around 100 basis points, with expectations for Q4 around 50 basis points [67] Question: Thoughts on geographic and consumer mix post-acquisition - Management expressed satisfaction with the current geographic footprint and consumer mix, noting a strong bias towards entry-level buyers [69][70] Question: Balance sheet and debt repayment strategy - Management clarified that the remaining balance on the 2023 and 2025 bonds is about $185 million, and the recent refinancing will save approximately $10 million in interest [74] Question: Impact of virtual sales on SG&A - Management acknowledged the significant advancements in virtual sales and its potential long-term impact on SG&A, including reduced advertising costs [76][80] Question: Orders breakdown between to-be-built and spec homes - Management reported that orders were close to half for to-be-built homes, with delivery timelines varying based on municipality regulations [103] Question: Trends in active adult buyer segments - Management noted a recovery in the more affordable active adult segment, which took longer to re-engage compared to luxury buyers [109]

Ironhorse | Phoenix, AZ TaylorMorrison. SECOND QUARTER REPORT 2020 1 DISCLAIMER The statements made by representatives of the Company during the course of this presentation that are not historical facts are forward-looking statements. Although the Company believes that the assumptions underlying these statements are reasonable, individuals considering such statements for any purpose are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 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 Number: 001-35873 TAYLOR MORRISON HOME CORPORATION (Exact name of registrant as specified in its Charter) (State or other ...

Taylor Morrison Home Corporation (NYSE:TMHC) Q1 2020 Earnings Conference Call May 6, 2020 8:30 AM ET Company Participants Jason Lenderman - VP, IR, and Treasury Sheryl Palmer - Chairman and CEO Dave Cone - EVP and CFO Conference Call Participants Jack Micenko - SIG Ivy Zelman - Zelman & Associates Michael Rehaut - JPMorgan Jay McCanless - Wedbush Mike Dahl - RBC Capital Markets Matthew Bouley - Barclays Alex Barron - Housing Research Operator Good morning, and welcome to Taylor Morrison's First Quarter 2020 ...

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, 2019 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) (State or other jurisdiction of i ...

Financial Data and Key Metrics Changes - For 2019, adjusted net income was $323 million, and adjusted diluted earnings per share was $2.98, while GAAP net income was $255 million and diluted earnings per share was $2.35 [33] - Total revenues for the year were nearly $4.8 billion, with homebuilding revenues exceeding $4.6 billion, marking a year-over-year increase of just over 12% [33] - The company delivered 9,964 closings, nearly 14% higher than the previous year, and achieved a gross margin of 18.2% when adjusted for unusual charges [31][35] Business Line Data and Key Metrics Changes - The company reported a sales pace of 2.5 for the year, with Q4 sales orders up 42% year-over-year, and a sales pace of 2.6 for Q4, the strongest in company history [12][31] - Financial services generated approximately $93 million in revenue for the year, with a gross profit of about $42 million, achieving the highest profit per unit in company history during Q4 [36] Market Data and Key Metrics Changes - The company ended the year with 4,711 units in backlog, representing a sales value of approximately $2.3 billion, which is a 13% increase in units and a 9% increase in sales value compared to the previous year [42] - The entry-level consumer segment saw the highest sales pace during Q4, with all consumer segments experiencing at least a 50% increase in sales orders [16] Company Strategy and Development Direction - The company is optimistic about the market landscape, citing strong economic indicators such as low unemployment and rising personal income, which contribute to consumer confidence [11] - The acquisition of William Lyon Homes is seen as transformational, allowing the company to increase scale in existing markets and enter new ones, while enhancing entry-level exposure [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of William Lyon Homes and the anticipated benefits from previous acquisitions, emphasizing the importance of having the right people and effective communication during the integration process [90][94] - The company plans to provide annual guidance on the combined business during the first quarter call in late April, with expectations for continued growth in the build-to-rent strategy [47][53] Other Important Information - The company was named America's most trusted homebuilder for the fifth consecutive year and recognized as one of the best places to work by Glassdoor [56][57] - The company is expanding its build-to-rent strategy into additional markets, including Dallas, Charlotte, and Orlando, with plans for continued growth in this area [53][54] Q&A Session Summary Question: Thoughts on the new organizational structure and SG&A targets - Management confirmed that long-term goals for SG&A leverage remain unchanged, with expectations for flat to slightly improved performance as integration progresses [71][72] Question: Pricing strategy in light of strong order growth - Management indicated that there is still pricing power across all segments, particularly in entry-level markets, while being cautious not to overextend [76][77] Question: Share repurchase strategy post-acquisition - Management stated that share repurchases are part of the overall strategy, but will wait until after the acquisition closes to seek new authorization [80] Question: Brand positioning in the entry-level market - Management highlighted a focus on serving both affordable first-time buyers and professional first-time buyers, with an expected increase in entry-level market penetration post-acquisition [84][85] Question: Integration challenges and success factors - Management emphasized the importance of having the right team and effective communication during the integration process, drawing on lessons learned from previous acquisitions [90][94]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Taylor Morrison Home Corporation's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, with detailed notes on accounting policies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2019, shows total assets of $5.34 billion, a slight increase from $5.26 billion at year-end 2018, driven by real estate inventory growth, with liabilities stable and equity increasing to $2.49 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$5,339,860** | **$5,264,441** | | Total cash, cash equivalents, and restricted cash | $223,796 | $331,859 | | Total real estate inventory | $4,253,674 | $3,980,565 | | **Total Liabilities** | **$2,853,882** | **$2,845,706** | | Senior notes, net | $1,634,176 | $1,653,746 | | **Total Stockholders' Equity** | **$2,485,978** | **$2,418,735** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2019 total revenue increased to $1.11 billion from $1.04 billion, driven by home closings, but net income decreased to $67.0 million from $93.6 million due to debt extinguishment loss and higher tax provision, resulting in diluted EPS of $0.63 Q3 2019 vs Q3 2018 Performance (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Total Revenue | $1,105,105 | $1,036,379 | | Gross Margin | $211,074 | $198,999 | | Income Before Income Taxes | $90,421 | $100,865 | | Net Income Available to TMHC | $67,012 | $93,568 | | Diluted EPS | $0.63 | $0.83 | Nine Months Ended 2019 vs 2018 Performance (in thousands, except per share data) | Metric | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | | Total Revenue | $3,295,623 | $2,769,540 | | Gross Margin | $616,888 | $520,812 | | Income Before Income Taxes | $268,512 | $239,388 | | Net Income Available to TMHC | $199,994 | $196,446 | | Diluted EPS | $1.84 | $1.73 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly improved to $153.4 million for the nine months ended September 30, 2019, while financing activities used $254.3 million, leading to a net cash decrease of $108.1 million and period-end cash of $223.8 million Cash Flow Summary (Nine Months Ended, in thousands) | Cash Flow Activity | Sep 30, 2019 | Sep 30, 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $153,377 | $55,996 | | Net Cash from Investing Activities | ($7,147) | $4,270 | | Net Cash from Financing Activities | ($254,293) | ($252,396) | | **Net Decrease in Cash** | **($108,063)** | **($192,130)** | | **Cash at End of Period** | **$223,796** | **$383,373** | - The primary use of cash in financing activities for the nine months ended September 30, 2019, was the repurchase of common stock (**$157.4 million**) and net repayments on senior notes and mortgage warehouse borrowings[23](index=23&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies and financial statement components, covering business description, AV Homes acquisition, revenue recognition, real estate inventory, debt, stock-based compensation, and segment reporting across homebuilding and financial services - The company's business is organized into four reportable segments: East, Central, West, and Financial Services. The homebuilding segments operate under the Taylor Morrison and Darling Homes brand names[27](index=27&type=chunk) - The company finalized the purchase price allocation for the AV Homes acquisition during Q3 2019, with real estate inventory valued at **$782.4 million** and goodwill at **$83.2 million**[50](index=50&type=chunk)[51](index=51&type=chunk) - During the nine months ended September 30, 2019, the company repurchased **8,389,348 shares** of common stock, fully utilizing its **$100 million** stock repurchase authorization[107](index=107&type=chunk) - In 2019, the company redeemed its 5.25% Senior Notes due 2021 and 6.625% Senior Notes due 2022, issuing new 5.875% Senior Notes due 2027 and 5.75% Senior Notes due 2028. This resulted in a total loss on extinguishment of debt of **$5.8 million** for the nine-month period[67](index=67&type=chunk)[69](index=69&type=chunk)[78](index=78&type=chunk)[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and nine-month 2019 financial performance, highlighting increased sales orders and home closings driven by the AV Homes acquisition, but noting net income decline due to lower gross margins, debt extinguishment costs, and higher tax rates, alongside liquidity and debt management [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q3 2019 total revenue grew 7% to $1.1 billion with an 8.6% increase in home closings and a 39.4% surge in net sales orders, though gross margin compressed to 18.5% and net income fell to $67.0 million due to debt extinguishment and higher taxes Q3 2019 Key Performance Indicators | Metric | Q3 2019 | Q3 2018 | % Change | | :--- | :--- | :--- | :--- | | Net Sales Orders (units) | 2,540 | 1,822 | 39.4% | | Home Closings (units) | 2,296 | 2,115 | 8.6% | | Total Revenue | $1.1 billion | $1.04 billion | 6.6% | | Home Closings Gross Margin % | 18.5% | 18.9% | (0.4) p.p. | | Net Income | $67.0 million | $93.6 million | (28.2)% | | Diluted EPS | $0.63 | $0.83 | (24.1)% | - The increase in net sales orders was primarily driven by additional active selling communities from the AV Homes acquisition, with the East region seeing a **63.5%** increase in orders[146](index=146&type=chunk)[147](index=147&type=chunk) - The total company sales order cancellation rate for Q3 2019 improved to **11.8%** from **13.6%** in Q3 2018, indicating stabilization in the mortgage rate environment[150](index=150&type=chunk)[151](index=151&type=chunk) - The decrease in net income was largely attributable to a higher effective tax rate (**25.9%** vs **6.4%** in Q3 2018) and a **$3.6 million** loss on extinguishment of debt[175](index=175&type=chunk)[176](index=176&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, the company maintained a strong liquidity position of $739.4 million, with operating activities generating $153.4 million in cash, while financing activities included new senior note issuances, common stock repurchases, and subsequent repayment of the 364-Day Credit Agreement Liquidity Position (in thousands) | Component | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash (excluding Restricted) | $222,049 | $329,645 | | Revolving Credit Facility Availability | $517,388 | $537,685 | | **Total Liquidity** | **$739,437** | **$867,330** | - Net cash from operating activities improved to **$153.4 million** for the nine months ended Sep 30, 2019, compared to **$56.0 million** in the prior year period, mainly due to lower spending on real estate inventory[181](index=181&type=chunk) - The company actively managed its debt profile by redeeming the 2021 and 2022 Senior Notes and issuing new notes due in 2027 and 2028[187](index=187&type=chunk)[188](index=188&type=chunk) - On October 1, 2019, the company repaid its **$200.0 million** 364-Day Credit Agreement using funds from its Revolving Credit Facility[131](index=131&type=chunk)[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations, with 88% of debt fixed-rate, and a hypothetical 1% increase in rates on variable-rate debt would increase annual interest expense by approximately $2.6 million - As of September 30, 2019, **88%** of the company's debt carried a fixed interest rate, while **12%** was variable rate[224](index=224&type=chunk) - A **1%** increase in interest rates would result in an estimated **$2.6 million** annual increase in interest expense based on the variable-rate debt balance at September 30, 2019[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2019, excluding AV Homes' internal controls, with no material changes to internal control over financial reporting during the quarter - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of September 30, 2019[229](index=229&type=chunk) - The evaluation of internal controls excluded the recently acquired AV Homes, which represented **9.4%** of consolidated total assets and **15.4%** of consolidated homebuilding revenues for the quarter[229](index=229&type=chunk) - No material changes were made to the internal control over financial reporting during the third quarter of 2019[230](index=230&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims in the normal course of business, but management does not anticipate a material adverse impact on financial position, results of operations, or cash flows - The company is subject to various legal claims and regulatory matters in the ordinary course of business[232](index=232&type=chunk) - Management believes that the resolution of pending legal matters will not have a material adverse impact on the company's financial condition or results[232](index=232&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K, which investors should consider - No material changes to the risk factors disclosed in the Annual Report have occurred during the period[233](index=233&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including merger agreements, corporate governance documents, debt indentures, and CEO/CFO certifications - Key exhibits filed include the indenture for the **5.75%** Senior Notes due 2028 and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[239](index=239&type=chunk)