Taylor Morrison(US:TMHC)2021-10-27 17:59Financial Data and Key Metrics Changes - The company reported a net income of $168 million or $1.334 per diluted share, marking a 54% year-over-year increase [21] - Home closings gross margin improved by 400 basis points year-over-year to 21.2%, exceeding prior guidance of approximately 20% [25][26] - The backlog at quarter end was 10,273 homes, representing a sales value of $6.1 billion, up 63% year-over-year [22] Business Line Data and Key Metrics Changes - The company delivered 3,327 homes in Q3, which was within prior guidance, but adjusted full-year home closings guidance to around 14,000 units, a 5% reduction [6][23] - The 55 plus active lifestyle segment represented 27% of total net sales orders, increasing by 700 basis points year-over-year [21] - Average net order price increased by 31% to $641,000 [21] Market Data and Key Metrics Changes - Demand remained healthy across consumer groups and geographies, with accelerating month-over-month sales momentum [8] - The company experienced a growing share of out-of-state buyers, particularly from high-cost markets like California and New York [12][63] - The company has approximately 78,000 lots under control, representing a strong land pipeline for future community growth [22][27] Company Strategy and Development Direction - The company is focused on operational and capital efficiency, aiming to leverage scale and improve construction efficiency [14][19] - A strategic emphasis on digitizing the home buying process has been implemented, allowing consumers to reserve homes online and design their homes virtually [17][69] - The company plans to continue expanding its premier lifestyle brand Esplanade to meet the growing demand in the 55 plus active lifestyle segment [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in the strength of market fundamentals and operational execution [30] - The company expects to achieve a home closings gross margin in excess of 22% in 2022, reflecting operational enhancements and pricing power [20][68] - Management highlighted the importance of maintaining a disciplined approach to sales releases to manage backlog and maximize return potential [8][10] Other Important Information - The company repurchased approximately 8.6 million shares year-to-date, reflecting a commitment to returning excess capital to shareholders [20][29] - A new Chief Financial Officer, Lou Steffens, has been appointed to succeed Dave Cone following his retirement [31][32] Q&A Session Summary Question: Can you quantify any pressure on gross margins from supply chain constraints? - Management indicated low single-digit increases in direct build costs sequentially, with pricing power helping to offset cost increases [37] Question: Are you still capping sales to the same extent as earlier this year? - Management confirmed that approximately 70% of communities are still under sales restrictions to align with production [38] Question: What gives you confidence in your Q4 closing guidance amid supply constraints? - Management acknowledged material shortages but expressed confidence in their teams' ability to deliver homes, adjusting guidance to account for timing delays [46][47] Question: Can you elaborate on the growth in the 55 plus active lifestyle segment? - Management noted that growth is driven by both legacy and newer communities, with strong brand acceptance and urgency in consumer buying decisions [73] Question: How does the digitization of the home buying process impact consumer adoption? - Management reported strong consumer interest and adoption of digital tools, with conversion rates significantly higher than industry averages [69]