Taylor Morrison(US:TMHC)2020-02-05 19:00Financial Data and Key Metrics Changes - For 2019, adjusted net income was $323 million, and adjusted diluted earnings per share was $2.98, while GAAP net income was $255 million and diluted earnings per share was $2.35 [33] - Total revenues for the year were nearly $4.8 billion, with homebuilding revenues exceeding $4.6 billion, marking a year-over-year increase of just over 12% [33] - The company delivered 9,964 closings, nearly 14% higher than the previous year, and achieved a gross margin of 18.2% when adjusted for unusual charges [31][35] Business Line Data and Key Metrics Changes - The company reported a sales pace of 2.5 for the year, with Q4 sales orders up 42% year-over-year, and a sales pace of 2.6 for Q4, the strongest in company history [12][31] - Financial services generated approximately $93 million in revenue for the year, with a gross profit of about $42 million, achieving the highest profit per unit in company history during Q4 [36] Market Data and Key Metrics Changes - The company ended the year with 4,711 units in backlog, representing a sales value of approximately $2.3 billion, which is a 13% increase in units and a 9% increase in sales value compared to the previous year [42] - The entry-level consumer segment saw the highest sales pace during Q4, with all consumer segments experiencing at least a 50% increase in sales orders [16] Company Strategy and Development Direction - The company is optimistic about the market landscape, citing strong economic indicators such as low unemployment and rising personal income, which contribute to consumer confidence [11] - The acquisition of William Lyon Homes is seen as transformational, allowing the company to increase scale in existing markets and enter new ones, while enhancing entry-level exposure [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of William Lyon Homes and the anticipated benefits from previous acquisitions, emphasizing the importance of having the right people and effective communication during the integration process [90][94] - The company plans to provide annual guidance on the combined business during the first quarter call in late April, with expectations for continued growth in the build-to-rent strategy [47][53] Other Important Information - The company was named America's most trusted homebuilder for the fifth consecutive year and recognized as one of the best places to work by Glassdoor [56][57] - The company is expanding its build-to-rent strategy into additional markets, including Dallas, Charlotte, and Orlando, with plans for continued growth in this area [53][54] Q&A Session Summary Question: Thoughts on the new organizational structure and SG&A targets - Management confirmed that long-term goals for SG&A leverage remain unchanged, with expectations for flat to slightly improved performance as integration progresses [71][72] Question: Pricing strategy in light of strong order growth - Management indicated that there is still pricing power across all segments, particularly in entry-level markets, while being cautious not to overextend [76][77] Question: Share repurchase strategy post-acquisition - Management stated that share repurchases are part of the overall strategy, but will wait until after the acquisition closes to seek new authorization [80] Question: Brand positioning in the entry-level market - Management highlighted a focus on serving both affordable first-time buyers and professional first-time buyers, with an expected increase in entry-level market penetration post-acquisition [84][85] Question: Integration challenges and success factors - Management emphasized the importance of having the right team and effective communication during the integration process, drawing on lessons learned from previous acquisitions [90][94]