Taylor Morrison(US:TMHC)2022-02-08 18:28Financial 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]