Taylor Morrison(US:TMHC)2021-05-02 13:24Financial Data and Key Metrics Changes - The company generated net income of $98 million or $0.75 per diluted share compared to a net loss of $31 million or $0.26 per diluted share in Q1 2020 [24] - Net sales orders increased 30% year-over-year to 4,492, the highest quarterly level in company history [24] - Monthly absorption pace increased 42% year-over-year to 4.3 net sales orders per community, also an all-time company high [24][25] - Ending backlog increased 54% year-over-year to 10,074 homes, representing a sales value of $5.3 billion [26] Business Line Data and Key Metrics Changes - The home closings gross margin was 18.6%, up 320 basis points from Q1 2020 [30] - The average community count was 345, with expectations to moderate to approximately 330 for the full year [28] - The production pace of 4.1 starts per community was up more than 70% year-over-year [22] Market Data and Key Metrics Changes - The central region, including Texas and Colorado, experienced the strongest year-over-year increase in monthly absorption pace [17] - Active adult segment drove the highest year-over-year gains in net sales orders and absorption pace [18] - The company reported a significant influx of homebuyers from California, with their share of Texas sales orders doubling pre-COVID levels [17] Company Strategy and Development Direction - The company aims to improve gross margins, increase asset efficiency, and optimize the balance sheet [8] - Expansion of the Esplanade brand into new markets, including California and North Carolina, is expected to enhance profitability [19] - The company is focused on maintaining a diverse mix of homebuyers while managing affordability risks [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strength in consumer demand for housing, supported by historically low interest rates [13] - The company anticipates a significant ramp in deliveries in the second half of the year, driving full-year deliveries to the range of 14,500 to 15,000 [29] - Management acknowledged challenges in the supply chain, including labor shortages and material allocations, but expressed confidence in navigating these issues [73] Other Important Information - The company invested approximately $552 million in land acquisition and development in Q1 2021, up from $317 million in Q1 2020 [33] - The total liquidity at quarter-end was $1.1 billion, including $393 million in cash [36] - The company repurchased 1.4 million shares for $38 million, bringing cumulative repurchases to approximately $690 million since 2015 [37] Q&A Session Summary Question: Can you talk about your estimates around cost inflation and what assumptions on pricing and costs you're embedding in the gross margin guide? - Management indicated that cost increases for the rest of the year are expected to be around 400 basis points, with pricing expected to stay ahead of costs [44][45] Question: How do you expect the community count to change between different product types and geographies? - Management noted that there would not be a dramatic change in consumer groups, but some geographic shifts are occurring, particularly in Texas [49][51] Question: Can you discuss the land market and pricing trends? - Management observed erratic pricing in some markets but emphasized a disciplined approach to land acquisition, focusing on key locations [52][54] Question: Can you elaborate on the average order price increase and its impact on gross margin? - Management confirmed that the average order price increased by 18% year-over-year, with expectations for further pricing power in the back half of the year [56][60] Question: What are the expectations for G&A expense moving forward? - Management indicated that G&A expenses were impacted by timing and lower closings, but they expect to end the year in the mid-9% range [78] Question: How does the active adult expansion impact buyer types? - Management expects the active adult segment to grow in line with the rest of the business, maintaining a buyer mix of 15% to 20% [72][73]