Taylor Morrison(TMHC) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Highlights The company delivered strong financial results in Q2 2025, meeting or exceeding expectations through a diversified product portfolio and strategic focus on profitability and capital efficiency Q2 2025 Financial Performance Overview Taylor Morrison achieved $194 million in net income and $1.92 diluted EPS in Q2 2025, with adjusted net income of $204 million and $2.02 adjusted diluted EPS, meeting or exceeding expectations in the current market Q2 2025 Key Financial Metrics | Metric | Amount | | :--- | :--- | | Reported Net Income | $194 Million | | Diluted EPS | $1.92 | | Adjusted Net Income | $204 Million | | Adjusted Diluted EPS | $2.02 | CEO Commentary CEO Sheryl Palmer highlighted the company's diversified product portfolio and balanced strategy, prioritizing price, profit, and returns in a competitive sales environment while creating value through attractive land positions and personalized incentives - The company's performance benefits from a diversified product portfolio, serving a broad and qualified consumer base with custom and ready-to-move-in options, concentrated in core areas to enhance financial resilience[4] - In the current sales environment, the company's strategy prioritizes price, profit, and returns, leveraging attractive land positions, desirable communities, and personalized incentives to create value[5] - Demand for affordable new homes persists, with the company prioritizing capital efficiency and returns, planning accelerated growth upon market stabilization, and returning capital to shareholders through a healthy land pipeline and balance sheet[7] Key Metrics Overview In Q2 2025, home closings revenue grew 2% to $2.0 billion with 4% volume growth, offset by a 2% average price decrease, while net sales orders declined 12% and SG&A leveraged 90 basis points to 9.3% of home closings revenue Q2 2025 Operational and Financial Metrics | Metric | Q2 2025 | YoY Change | | :--- | :--- | :--- | | Home Closings Revenue | $2.0 Billion | +2% | | Closings Volume | 3,340 | +4% | | Average Closing Price | $589,000 | -2% | | Home Closings Gross Margin | 22.3% | - | | Adjusted Home Closings Gross Margin | 23.0% | - | | SG&A as % of Home Closings Revenue | 9.3% | Leveraged 90 bps | | Net Sales Orders | 2,733 | -12% | | Monthly Absorption Pace per Community | 2.6 | Down from 3.0 | | Ending Active Selling Communities | 345 | -1% | | Owned and Controlled Homebuilding Lots | 85,051 | - | | Off-Balance Sheet Control % | 60% | Up from 57% | | Total Homebuilding Land Spend | $612 Million | - | | Common Stock Repurchased | 1.7 Million Shares | - | | Total Liquidity | $1.1 Billion | - | Second Quarter Business Highlights The second quarter saw growth in home closings revenue and strategic land investments, alongside a strong balance sheet and capital allocation efforts Homebuilding Operations In Q2 2025, home closings revenue increased 2% to $2.0 billion driven by 4% volume growth, partially offset by a 2% decrease in average closing price, while net sales orders declined 12% and cancellation rates significantly rose Homebuilding Operational Performance | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Home Closings Revenue | $2.0 Billion | $1.92 Billion | +2% | | Closings Volume | 3,340 | 3,200 | +4% | | Average Closing Price | $589,000 | $600,000 | -2% | | Home Closings Gross Margin | 22.3% | 23.8% | -150 bps | | Adjusted Home Closings Gross Margin | 23.0% | 23.9% | -90 bps | | Net Sales Orders | 2,733 | 3,111 | -12% | | Monthly Absorption Pace | 2.6 | 3.0 | Down | | Ending Community Count | 345 | 347 | -1% | | Cancellation Rate (as % of Gross Orders) | 14.6% | 9.4% | Up | | Cancellation Rate (as % of Beginning Backlog) | 9.2% | 5.2% | Up | | SG&A as % of Home Closings Revenue | 9.3% | 10.2% | Leveraged 90 bps | | Homes in Backlog | 4,461 | 6,256 | -28.7% | | Backlog Sales Value | $2.9 Billion | $4.2 Billion | -30.0% | Land Portfolio The company invested $612 million in homebuilding land, with 43% for development and 57% for acquisitions, increasing total residential lots to 85,051, 60% of which are off-balance sheet controlled, representing a 6.4-year total land supply Land Portfolio Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Homebuilding Land Investment | $612 Million | $611 Million | +0.2% | | Of which: Development-related | $264 Million (43%) | - | - | | Of which: Land Acquisitions | $348 Million (57%) | - | - | | Total Residential Lots | 85,051 | 80,677 | +5.4% | | Off-Balance Sheet Control % | 60% | 57% | +3 Percentage Points | | Total Land Supply (based on LTM closings) | 6.4 Years | - | - | | Owned Land Supply | 2.6 Years | - | - | Financial Services Mortgage capture rate slightly decreased to 87% from 89% year-over-year, with borrowers maintaining strong credit profiles, an average FICO score of 751, and an average debt-to-income ratio of 40% Financial Services Performance | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Mortgage Capture Rate | 87% | 89% | -2 Percentage Points | | Average FICO Score | 751 | - | - | | Average Debt-to-Income Ratio | 40% | - | - | Balance Sheet and Capital Allocation At quarter-end, total liquidity was approximately $1.1 billion, including $952 million in revolving credit capacity, with a homebuilding gross debt-to-capital ratio of 24.2% and net debt-to-capital ratio of 22.9%, alongside $100 million in common stock repurchases Balance Sheet and Capital Allocation Highlights | Metric | Q2 2025 | | :--- | :--- | | Total Liquidity | $1.1 Billion | | Total Revolving Credit Facility Capacity | $952 Million | | Homebuilding Gross Debt-to-Capital Ratio | 24.2% | | Homebuilding Net Debt-to-Capital Ratio | 22.9% | | Common Stock Repurchased (this quarter) | 1.7 Million Shares | | Value of Stock Repurchased (this quarter) | $100 Million | | Remaining Stock Repurchase Authorization | $675 Million | Business Outlook The company provides its outlook for Q3 and full-year 2025, projecting home closings, average prices, gross margins, and capital allocation plans Third Quarter 2025 Outlook Taylor Morrison anticipates Q3 2025 home closings between 3,200 and 3,300 units, an average closing price of approximately $600,000, GAAP home closings gross margin around 22%, and ending active communities between 340 and 345 Q3 2025 Guidance | Metric | Q3 2025 Outlook | | :--- | :--- | | Home Closings Volume | 3,200 - 3,300 | | Average Closing Price | Approx. $600,000 | | GAAP Home Closings Gross Margin | Approx. 22% | | Ending Active Community Count | 340 - 345 | | Effective Tax Rate | Approx. 25% | | Diluted Share Count | Approx. 100 Million Shares | Full Year 2025 Outlook For full-year 2025, the company projects home closings between 13,000 and 13,500 units, average closing prices from $595,000 to $600,000, GAAP home closings gross margin around 22.5%, and at least $350 million in stock repurchases Full Year 2025 Guidance | Metric | Full Year 2025 Outlook | | :--- | :--- | | Home Closings Volume | 13,000 - 13,500 | | Average Closing Price | $595,000 - $600,000 | | GAAP Home Closings Gross Margin | Approx. 22.5% | | Adjusted Home Closings Gross Margin | Approx. 23% | | Ending Active Community Count | Approx. 350 | | SG&A as % of Home Closings Revenue | Mid-to-High 9% Range | | Effective Tax Rate | 24.5% - 25.0% | | Diluted Share Count | Approx. 101 Million Shares | | Homebuilding Land Acquisition and Development Investment | Approx. $2.4 Billion | | Stock Repurchases | At least $350 Million | Financial Statements & Corporate Information This section provides a quarterly financial comparison, details on the earnings conference call, an overview of Taylor Morrison, and important forward-looking statements Quarterly Financial Comparison Q2 2025 total revenue increased 2.0% year-over-year to $2.03 billion, with home closings gross margin decreasing 150 basis points to 22.3%, while SG&A as a percentage of home closings revenue improved 90 basis points to 9.3% Quarterly Income Statement Comparison | (in Thousands) | Q2 2025 | Q2 2024 | Q2 2025 vs. Q2 2024 | | :--- | :--- | :--- | :--- | | Total Revenue | $2,030,070 | $1,991,053 | 2.0% | | Home Closings Revenue, Net | $1,966,100 | $1,920,127 | 2.4% | | Home Closings Gross Margin | $439,200 (22.3%) | $457,421 (23.8%) | (4.0%) (Down 150 bps) | | Adjusted Home Closings Gross Margin | $452,822 (23.0%) | $459,746 (23.9%) | (1.5%) (Down 90 bps) | | Selling, General and Administrative Expenses | $183,044 | $196,735 | (7.0%) | | As % of Home Closings Revenue | 9.3% | 10.2% | Leveraged 90 bps | Earnings Conference Call Webcast Taylor Morrison will host an earnings conference call on July 23, 2025, at 8:30 AM ET to discuss its Q2 2025 results, offering a live audio webcast and requiring registration for dial-in access - The company will host a conference call on July 23, 2025, at 8:30 AM ET to discuss Q2 2025 results, providing a live audio webcast[16] - Participants must register to receive dial-in information, and a replay of the call will be available on the company's website[16] About Taylor Morrison Headquartered in Scottsdale, Arizona, Taylor Morrison is a leading U.S. homebuilder and developer serving diverse buyer segments, recognized as 'America's Most Trusted® Home Builder' for ten consecutive years, and committed to sustainable operations - Taylor Morrison is a leading U.S. homebuilder and developer, serving a broad consumer base including first-time, move-up, and resort lifestyle homebuyers and renters[17] - The company has been recognized by Lifestory Research as 'America's Most Trusted® Home Builder' for ten consecutive years from 2016 to 2025[17] - The company is committed to long-term sustainable operations, as highlighted in its annual Sustainability and Belonging Report[17] Forward-Looking Statements This earnings summary contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, including inflation, economic conditions, housing market downturns, and regulatory changes, with investors advised to consult SEC filings for detailed risk factors - This earnings summary contains forward-looking statements, identifiable by words like 'expect,' 'estimate,' or 'anticipate,' which are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[19] - Risk factors include inflation, economic conditions, housing market downturns, homebuyers' financing ability, rising interest rates, labor shortages, increased cancellation rates, industry competition, climate change impacts, changes in government regulations, and reliance on subcontractors[20][21] - The company undertakes no obligation to update any forward-looking statements unless required by applicable law, advising investors to consult its latest 10-K annual report and subsequent quarterly reports filed with the SEC[22] Condensed Consolidated Financial Statements This section presents the condensed consolidated statements of operations and balance sheets, detailing the company's financial performance and position for the quarter and year-to-date Condensed Consolidated Statements of Operations In Q2 2025, the company reported $2.03 billion in total revenue, $467.5 million in gross profit, $193.6 million in net income, and $1.92 diluted EPS, with six-month totals of $3.926 billion revenue and $407 million net income Condensed Consolidated Statements of Operations | (in Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,030,070 | $1,991,053 | $3,926,089 | $3,690,805 | | Gross Profit | $467,488 | $472,288 | $930,762 | $889,133 | | Income Before Income Taxes | $263,263 | $267,217 | $541,832 | $516,097 | | Net Income | $193,577 | $199,460 | $407,043 | $389,730 | | Diluted Earnings Per Share | $1.92 | $1.86 | $3.99 | $3.61 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $9.451 billion, with total real estate inventory at $6.506 billion, cash and equivalents at $130.2 million, total liabilities at $3.393 billion, and total stockholders' equity at $6.058 billion Condensed Consolidated Balance Sheets | (in Thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $9,450,644 | $9,297,131 | | Cash and Cash Equivalents | $130,174 | $487,151 | | Total Real Estate Inventory | $6,505,862 | $6,234,084 | | Total Liabilities | $3,392,782 | $3,418,951 | | Senior Notes, Net | $1,471,333 | $1,470,454 | | Total Stockholders' Equity | $6,057,862 | $5,878,180 | Operational Data by Segment This section provides a regional breakdown of key operational metrics, including home closings, net sales orders, sales order backlog, and active selling community counts Homes Closed and Home Closings Revenue, Net In Q2 2025, total home closings increased 4.4% year-over-year to 3,340 units, generating $1.966 billion in net revenue, up 2.4%, despite a 1.8% decrease in average selling price to $589,000, with the West segment showing 5.4% revenue growth Homes Closed and Revenue by Segment | Metric (Q2 2025) | Total | East | Central | West | | :--- | :--- | :--- | :--- | :--- | | Homes Closed | 3,340 (+4.4% YoY) | 1,325 (+7.1% YoY) | 925 (+7.1% YoY) | 1,090 (-0.8% YoY) | | Home Closings Revenue, Net | $1,966,100 (+2.4% YoY) | $695,198 (+0.6% YoY) | $481,786 (+0.3% YoY) | $789,116 (+5.4% YoY) | | Average Selling Price | $589 (-1.8% YoY) | $525 (-6.1% YoY) | $521 (-6.3% YoY) | $724 (+6.3% YoY) | Net Sales Orders In Q2 2025, net sales orders decreased 12.2% year-over-year to 2,733 units, with sales value down 17.5% to $1.543 billion, reflecting significant declines in both Central and West segments Net Sales Orders by Segment | Metric (Q2 2025) | Total | East | Central | West | | :--- | :--- | :--- | :--- | :--- | | Net Sales Orders | 2,733 (-12.2% YoY) | 1,147 (-1.1% YoY) | 731 (-10.3% YoY) | 855 (-24.7% YoY) | | Sales Value | $1,543,238 (-17.5% YoY) | $588,529 (-4.6% YoY) | $355,673 (-26.7% YoY) | $599,036 (-22.0% YoY) | | Average Selling Price | $565 (-6.0% YoY) | $513 (-3.6% YoY) | $487 (-18.2% YoY) | $701 (+3.7% YoY) | Sales Order Backlog As of June 30, 2025, total sales order backlog decreased 28.7% year-over-year to 4,461 units, with sales value down 30.0% to $2.939 billion, reflecting significant declines across all regions Sales Order Backlog by Segment | Metric (as of June 30, 2025) | Total | East | Central | West | | :--- | :--- | :--- | :--- | :--- | | Homes in Backlog | 4,461 (-28.7% YoY) | 1,840 (-21.9% YoY) | 888 (-37.6% YoY) | 1,733 (-30.0% YoY) | | Sales Value | $2,938,512 (-30.0% YoY) | $1,179,529 (-28.1% YoY) | $514,330 (-41.2% YoY) | $1,244,653 (-26.0% YoY) | | Average Selling Price | $659 (-1.8% YoY) | $641 (-8.0% YoY) | $579 (-5.9% YoY) | $718 (+5.7% YoY) | Ending Active Selling Communities As of June 30, 2025, the total number of ending active selling communities slightly decreased 0.6% year-over-year to 345, with an increase in the East and slight declines in Central and West regions Ending Active Selling Communities by Region | Region | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | East | 135 | 122 | 10.7% | | Central | 95 | 106 | (10.4%) | | West | 115 | 119 | (3.4%) | | Total | 345 | 347 | (0.6%) | Reconciliation of Non-GAAP Financial Measures This section provides reconciliations for various non-GAAP financial measures, offering additional insights into the company's performance and financial leverage Introduction to Non-GAAP Measures Taylor Morrison provides supplemental non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted income before income taxes, adjusted home closings gross margin, EBITDA, adjusted EBITDA, and homebuilding net debt-to-capitalization ratio, which management uses to assess performance and compare with peers - The company provides various non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted income before income taxes, adjusted home closings gross margin, EBITDA, adjusted EBITDA, and homebuilding net debt-to-capitalization ratio[31] - Management utilizes these non-GAAP metrics to evaluate company and segment performance, set performance-based compensation targets, and as indicators of overall financial leverage and comparability with industry peers[33][34] - These non-GAAP financial measures should be considered supplemental to, and not a substitute for, comparable U.S. GAAP financial measures[35] Adjusted Net Income and Adjusted Earnings Per Common Share In Q2 2025, adjusted net income was $203.7 million, exceeding GAAP net income of $193.6 million due to real estate impairment and warranty adjustments, resulting in $2.02 adjusted diluted EPS versus $1.92 GAAP diluted EPS Adjusted Net Income and Adjusted Earnings Per Common Share Reconciliation | (in Thousands, except per share data) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $193,577 | $199,460 | | Real Estate Impairment Charges | 6,754 | 9,107 | | Warranty Charges | 6,868 | — | | Tax Impact of Non-GAAP Adjustments | (3,481) | (3,878) | | Adjusted Net Income | $203,718 | $210,979 | | Diluted Earnings Per Share | $1.92 | $1.86 | | Adjusted Diluted Earnings Per Share | $2.02 | $1.97 | Adjusted Income Before Income Taxes and Related Margin Q2 2025 adjusted income before income taxes was $276.9 million, exceeding GAAP income of $263.3 million due to real estate impairment and warranty adjustments, resulting in an adjusted pre-tax income margin of 13.6% versus 13.0% GAAP margin Adjusted Income Before Income Taxes Reconciliation | (in Thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income Before Income Taxes | $263,263 | $267,217 | | Real Estate Impairment Charges | 6,754 | 9,107 | | Warranty Charges | 6,868 | — | | Adjusted Income Before Income Taxes | $276,885 | $282,614 | | Income Before Income Taxes Margin | 13.0% | 13.4% | | Adjusted Income Before Income Taxes Margin | 13.6% | 14.2% | Adjusted Home Closings Gross Margin Q2 2025 adjusted home closings gross margin was 23.0%, exceeding GAAP gross margin of 22.3% after excluding inventory impairment and warranty charges, representing a 90 basis point decrease from Q2 2024's adjusted margin of 23.9% Adjusted Home Closings Gross Margin Reconciliation | (in Thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Home Closings Gross Margin | $439,200 | $457,421 | | Inventory Impairment Charges | 6,754 | 2,325 | | Warranty Charges | 6,868 | — | | Adjusted Home Closings Gross Margin | $452,822 | $459,746 | | Home Closings Gross Margin as % of Home Closings Revenue | 22.3% | 23.8% | | Adjusted Home Closings Gross Margin as % of Home Closings Revenue | 23.0% | 23.9% | EBITDA and Adjusted EBITDA Reconciliation In Q2 2025, EBITDA was $304.8 million, and adjusted EBITDA was $326.4 million, representing a slight increase from Q2 2024's $324.5 million and 16.1% of total revenue EBITDA and Adjusted EBITDA Reconciliation | (in Thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income Attributable to Noncontrolling Interests | $195,985 | $199,914 | | EBITDA | $304,760 | $303,057 | | Adjusted EBITDA | $326,397 | $324,526 | | Adjusted EBITDA as % of Total Revenue | 16.1% | 16.3% | Debt to Capitalization Ratios Reconciliation As of June 30, 2025, the homebuilding gross debt-to-capitalization ratio was 24.2%, down from 25.4% year-over-year, while the homebuilding net debt-to-capitalization ratio was 22.9%, slightly above Q2 2024's 22.8% Debt to Capitalization Ratios Reconciliation | (in Thousands) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Homebuilding Total Debt | $1,933,795 | $1,881,312 | | Homebuilding Gross Debt-to-Capitalization Ratio | 24.2% | 25.4% | | Homebuilding Net Debt | $1,803,621 | $1,634,467 | | Homebuilding Net Debt-to-Capitalization Ratio | 22.9% | 22.8% |