Taylor Morrison(US:TMHC)2025-04-23 20:34Part I Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Taylor Morrison Home Corporation, including balance sheets, statements of operations, cash flows, and accompanying notes, for the period ended March 31, 2025 Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased slightly to $9.38 billion from $9.30 billion at year-end 2024, driven by a rise in real estate inventory, while total liabilities remained stable and total stockholders' equity grew to $5.96 billion Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Total cash | $378,103 | $487,166 | | Total real estate inventory | $6,351,434 | $6,234,084 | | Total assets | $9,384,128 | $9,297,131 | | Liabilities & Equity | | | | Total liabilities | $3,426,604 | $3,418,951 | | Total stockholders' equity | $5,957,524 | $5,878,180 | | Total liabilities and stockholders' equity | $9,384,128 | $9,297,131 | Condensed Consolidated Statements of Operations For the first quarter of 2025, the company reported an 11.5% year-over-year increase in total revenue to $1.90 billion, driven by higher home closings revenue, with net income rising to $213.5 million and diluted earnings per share increasing to $2.07 Q1 2025 vs. Q1 2024 Performance (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Home closings revenue, net | $1,830,068 | $1,636,255 | | Total revenue | $1,896,019 | $1,699,752 | | Gross margin | $463,274 | $416,845 | | Income before income taxes | $278,569 | $248,880 | | Net income | $213,466 | $190,270 | | Diluted EPS | $2.07 | $1.75 | Condensed Consolidated Statements of Cash Flows For the first quarter of 2025, net cash provided by operating activities was $77.2 million, a significant improvement from the $130.7 million used in the same period of 2024, primarily due to higher net income and lower cash usage for real estate inventory Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $77,231 | $(130,737) | | Net cash used in investing activities | $(45,105) | $(33,047) | | Net cash used in financing activities | $(141,189) | $(85,923) | | Net Decrease in Cash | $(109,063) | $(249,707) | Notes to the Unaudited Condensed Consolidated Financial Statements The notes provide crucial context to the financial statements, detailing the company's business operations, accounting policies, and specific financial items, including inventory impairment, lot details, debt, share repurchases, and legal proceedings - The company operates as a residential homebuilder and land developer across 12 states, with brands like Taylor Morrison, Darling Homes, Esplanade, Yardly (Build-to-Rent), and Urban Form (multi-use properties), also providing financial services through subsidiaries20 - In Q1 2025, the company recorded a $14.9 million inventory impairment charge related to certain communities in the East segment due to recent price decreases, with no impairment recorded in Q1 202428 Owned and Controlled Lots Summary | Lot Type | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Total owned lots | 35,089 | 36,718 | | Total controlled lots | 51,177 | 49,435 | | Total owned and controlled lots | 86,266 | 86,153 | - The company repurchased 2.24 million shares for $136.1 million in Q1 2025. As of March 31, 2025, approximately $775.0 million remained available under the stock repurchase program1672176 - Regarding the 'Solivita litigation', a court awarded plaintiffs $22.5 million for attorneys' fees and other costs in November 2024, which the company has appealed and accrued for its estimated liability86 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the financial results for Q1 2025, highlighting a 12% increase in home closings revenue to $1.8 billion, stable gross margin, decreased net sales orders, and a strong liquidity position First Quarter 2025 Highlights The first quarter of 2025 was marked by strong revenue growth and shareholder returns, with home closings revenue up 12% to $1.8 billion and significant share repurchases - Home closings revenue: $1.8 billion (up 12% YoY)100 - Home closings gross margin: 24.0%100 - Net sales orders: 3,374 (down 8.5% YoY)100 - Share repurchases: 2.2 million shares for $135 million100 - Total liquidity: $1.3 billion100 Results of Operations In Q1 2025, net sales orders decreased by 8.5% while home closings increased by 11.6%, maintaining a consolidated gross margin of 24.0% and improving SG&A efficiency Net Sales Orders by Segment (Q1 2025 vs Q1 2024) | Segment | Net Sales Orders 2025 | Net Sales Orders 2024 | Change | | :--- | :--- | :--- | :--- | | East | 1,391 | 1,295 | 7.4% | | Central | 867 | 904 | (4.1%) | | West | 1,116 | 1,487 | (24.9%) | | Total | 3,374 | 3,686 | (8.5%) | - The total company cancellation rate increased to 11.0% in Q1 2025 from 7.0% in Q1 2024, returning to more historic normalized levels as interest rates stabilized128130 - Sales order backlog decreased 18.8% in units and 20.9% in value year-over-year, primarily due to fewer net sales orders and improved construction cycle times allowing more homes to close within the quarter131 - Consolidated home closings gross margin was 24.0%, consistent with the prior year. The West segment's margin improved to 23.5% from 19.9%, while the East segment's margin fell to 24.3% from 27.0%, partly due to a $14.9 million inventory impairment133135 Non-GAAP Measures The company uses non-GAAP measures like adjusted net income and gross margin, with adjusted home closings gross margin at 24.8% and net homebuilding debt to capitalization at 20.5% for Q1 2025 Adjusted Home Closings Gross Margin Reconciliation (Q1 2025, in thousands) | Metric | Amount | | :--- | :--- | | Home closings gross margin (GAAP) | $438,708 | | Inventory impairment charges | $14,878 | | Adjusted home closings gross margin (Non-GAAP) | $453,586 | | Home closings gross margin % (GAAP) | 24.0% | | Adjusted home closings gross margin % (Non-GAAP) | 24.8% | Net Homebuilding Debt to Capitalization Ratio Reconciliation (as of March 31, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Total homebuilding debt | $1,914,035 | | Less: cash and cash equivalents | ($377,815) | | Net homebuilding debt | $1,536,220 | | Total stockholders' equity | $5,957,524 | | Total capitalization | $7,493,744 | | Net homebuilding debt to capitalization ratio | 20.5% | Liquidity and Capital Resources As of March 31, 2025, the company maintained strong liquidity of $1.31 billion, comprising cash and available credit, and generated $77.2 million in cash from operations Liquidity Summary (in thousands) | Component | As of March 31, 2025 | | :--- | :--- | | Total cash, excluding restricted cash | $377,815 | | Revolving Credit Facility availability | $934,269 | | Total liquidity | $1,312,084 | - Net cash from operating activities improved to a $77.2 million inflow in Q1 2025 from a $130.7 million outflow in Q1 2024, mainly due to higher net income and changes in inventory spend148 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's debt is primarily fixed-rate, with 92% fixed and 8% variable, limiting the impact of interest rate fluctuations on earnings - As of March 31, 2025, approximately 92% of the company's debt was fixed-rate and 8% was variable-rate164 - A hypothetical 1% increase in interest rates would increase annual interest expense by approximately $1.8 million, based on the variable rate debt outstanding at March 31, 2025168 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2025170 - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2025171 Part II Item 1. Legal Proceedings The company is involved in various legal claims, with details on ongoing litigation and related accruals provided in Note 13 of the financial statements - This section incorporates by reference the legal proceedings information from Note 13 of the financial statements173 Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K were reported for the quarter - No material changes to the risk factors set forth in the company's Annual Report were reported for the quarter174 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company continued its stock repurchase program in Q1 2025, buying back 2.24 million shares for $137.2 million, with $775.0 million remaining available Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 763,452 | $61.96 | | February 2025 | 898,725 | $61.09 | | March 2025 | 581,818 | $60.32 | | Total | 2,243,995 | $61.19 | - As of March 31, 2025, approximately $775.0 million remained available under the company's stock repurchase program, which is authorized through December 31, 2026176 Item 5. Other Information Chairman and CEO Sheryl Palmer adopted a Rule 10b5-1 trading plan for the potential sale of up to 100,000 shares of Common Stock - Chairman and CEO Sheryl Palmer adopted a Rule 10b5-1 trading plan for the sale of up to 100,000 shares of Common Stock181