Taylor Morrison Reports Fourth Quarter U.S. Revenue of $1 Billion, Net Income of $103 Million and Earnings per Share of $0.84

  • U.S. revenue increased 58% to $1 billion for the quarter and 41% to $2.7 billion for the year
  • Diluted earnings per share were $0.84 on net income of $103 million for the quarter
  • U.S. home closings revenue increased 56% to $966 million for the quarter
  • U.S. home closings increased 35% to 1,967 in the quarter and 20% to 5,642 for the year
  • U.S. average price of homes closed increased 16% to $491,000 in the quarter
  • U.S. net sales orders increased 24% to 1,295 in the quarter and 14% to 5,728 for the year

SCOTTSDALE, Ariz.--()--Taylor Morrison Home Corporation (NYSE:TMHC) today reported fourth quarter revenue of $1 billion, net income of $103 million and earnings per share of $0.84.

“Our results this quarter and for the whole of 2014 continue to demonstrate that our long-term strategy, anchored on the pillars of prime locations, consumer focus, cost efficiency and maximizing shareholder value, is a profitable one and has proven successful”

“Our results this quarter and for the whole of 2014 continue to demonstrate that our long-term strategy, anchored on the pillars of prime locations, consumer focus, cost efficiency and maximizing shareholder value, is a profitable one and has proven successful,” said Taylor Morrison President and CEO Sheryl Palmer. “It was a record year for Taylor Morrison in several metrics including sales, closings, revenue, community openings, SG&A and net operating profit. I believe we will show ongoing strength in our existing operations and have a pivotal year ahead with an operating team solely focused on opportunities in the United States.”

On January 28, 2015, the Company closed the sale of its Canadian operations generating proceeds of approximately CAD $570 million, subject to certain customary post-closing adjustments. As the sale was pending at December 31, 2014, the financial results for the Canadian operations are shown as discontinued operations in the condensed consolidated statements of operations and condensed consolidated balance sheets included in this release.

4th Quarter 2014 Key Business Highlights

  • U.S. community count increased 33% to 220 average communities from 166 from the prior year quarter
  • Net sales orders in the U.S. increased 24% to 1,295
  • Home closings in our U.S. operations increased 35% to 1,967
  • U.S. backlog increased 4% in units and 11% in value
  • U.S. backlog of homes under contract was 2,252 units with a sales value of $1.1 billion as of December 31, 2014
  • U.S. cancellations as a percentage of gross sales orders was 15.4%, a 6% improvement from the prior year quarter
  • Average price of homes closed in the U.S. increased 16% to $491,000
  • U.S. average monthly absorption pace was 2.0 compared to 2.1 in the prior year quarter
  • Mortgage operations reported gross profit of $6.6 million on revenue of $12.6 million
 

U.S. Quarterly Financial Comparison

($ millions)                        
       

Q4 2014

     

Q4 2013

     

Q4 2014 vs. Q4 2013

                         
Total Revenue       $1,012       $639       58%
Home Closings Revenue       $966       $621       56%
Total Home Closings Gross Margin       $187       $146       29%
        19.4%       23.5%       (410) bps
Adjusted Home Closings Gross Margin $213 $156 37%
        22.0%       25.1%       (310) bps
SG&A $78 $58 34%
% of Home Closings Revenue       8.1%       9.4%       130 bps improvement
Equity in Income of Unconsolidated Entities       $1.9       $1.2       62%
 

Full Year 2014 Key Business Highlights

  • U.S. community count increased 30% to 206 average communities from 158 year-over-year
  • Net sales orders in the U.S. increased 14% to 5,728
  • U.S. average monthly absorption pace was 2.3 compared to 2.6 in the prior year
  • U.S. cancellations as a percentage of gross sales orders was 13.2% compared to 14.3% in the prior year
  • Home closings in our U.S. operations increased 20% to 5,642
  • Average price of homes closed in the U.S. increased 18% to $464,000
  • Mortgage operations reported gross profit of $16 million on revenue of $35 million
 

U.S. Annual Financial Comparison

($ millions)                        
       

2014

     

2013

     

2014 vs. 2013

                         
Total Revenue       $2,708       $1,916       41%
Home Closings Revenue       $2,620       $1,858       41%
Total Home Closings Gross Margin       $537       $400       34%
        20.5%       21.6%       (110) bps
Adjusted Home Closings Gross Margin $602 $435 38%
        23.0%       23.4%       (40) bps
SG&A $250 $205 22%
% of Home Closings Revenue       9.5%       11.0%       150 bps improvement
Equity in Income of Unconsolidated Entities       $5.4       $2.9       87%
 

The Company ended the quarter with U.S. home building inventories of $2.5 billion. The Company had 2,871 homes in inventory compared to 2,611 homes at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of: 1,517 sold units, 318 model homes and 1,036 inventory units, of which 332 were finished.

The Company ended the fourth quarter of 2014 with $234 million of cash, excluding $1 million of restricted cash and $228 million of cash in Canada. The Company owned or controlled approximately 38,854 lots at December 31, 2014.

First Quarter and Full Year 2015 Business Outlook

First Quarter 2015:

  • Average community count – expected to be flat at 220
  • Home closings – expected between 1,000 and 1,100
  • Adjusted home closings margin – expected between 21.0 – 21.5%

Full Year 2015:

  • Average community count – expected between 230 and 240 communities
  • Home closings – up slightly from 2014
  • Home closings margins – expected around 22%
  • SG&A – expected to be in the mid 9% range
  • Income from unconsolidated joint ventures – expected between $2-4 million
  • Land spend – expected to be approximately $1 billion

Earnings Webcast

A public webcast to discuss fourth quarter 2014 earnings will be held later today at 8:30 a.m. Eastern Time Wednesday, February 4, 2015 on the Company’s investor relations website at investors.taylormorrison.com. A webcast replay will also be available on the site later today.

About Taylor Morrison

Taylor Morrison Home Corporation (NYSE:TMHC) is a leading national builder and developer based in Scottsdale, Arizona and operates under two well-established brands, Taylor Morrison and Darling Homes. Taylor Morrison builds and develops distinctive communities from coast to coast, serving a wide array of homeowners and aimed mainly at first-time, move-up, luxury and 55 or better customers. Darling Homes builds communities in Texas, catering to move-up and luxury homebuyers seeking a personalized building experience.

For more information about Taylor Morrison and Darling Homes please visit www.taylormorrison.com or www.darlinghomes.com.

Forward-Looking Statements

This earnings summary includes "forward-looking statements." These statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these statements. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "may," "can," "could," "might," "will" and similar expressions identify forward-looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; continued volatility in the debt and equity markets; competition within the industries in which we operate; the availability and cost of land and other raw materials used by us in our homebuilding operations; the impact of any changes to our strategy in responding to continuing adverse conditions in the industry, including any changes regarding our land positions; the availability and cost of insurance covering risks associated with our businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in our local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our expectations, except as required by applicable law. In addition, other such risks and uncertainties may be found in Taylor Morrison Home Corporation’s Form 10-K filed with the Securities and Exchange Commission (SEC).

 
 
Taylor Morrison Home Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

                   
Three Months Ended

December 31,

Year Ended

December 31,

2014 2013 2014 2013
Home closings revenue $ 965,668 $ 620,638 $ 2,619,558 $ 1,857,950
Land closings revenue 33,462 8,887 53,381 27,760
Mortgage operations revenue   12,623   9,475   35,493   30,371
Total revenues 1,011,753 639,000 2,708,432 1,916,081
 
Cost of home closings 778,224 475,049 2,082,819 1,457,454
Cost of land closings 23,937 7,242 39,696 26,316
Mortgage operations expenses   6,030   4,501   19,671   16,446
Total cost of revenues 808,191 486,792 2,142,186 1,500,216
 
Gross margin 203,562 152,208 566,246 415,865
 
Sales, commissions and other marketing costs 54,535 40,533 168,897 127,419
General and administrative expenses 23,574 17,684 81,153 77,198
Equity in income of unconsolidated entities (1,937) (1,197) (5,405) (2,895)
Interest expense, net 33 684 1,160 842
Other expense (income), net 7,877 (201) 18,447 2,842
Loss on extinguishment of debt - - - 10,141
Indemnification and transaction expenses   -   10,508   -   195,773
Income from continuing operations before income taxes 119,480 84,197 301,994 4,545
Income tax provision (benefit)   25,793   15,452   76,395   (23,810)
Net income from continuing operations 93,687 68,745 225,599 28,355
Income from discontinued operations - net of tax   10,844   27,441   41,902   66,513
Net income before allocation to non-controlling interests 104,531 96,186 267,501 94,868
Net (income) loss attributable to non-controlling interests - joint ventures   (1,262)   (156)   (1,648)   131
Net income before non-controlling interests - Principal Equityholders 103,269 96,030 265,853 94,999
Net (income) loss from continuing operations attributable to non-controlling interests - Principal Equityholders (67,482) (50,131) (163,790) 1,442
Net income from discontinued operations attributable to non-controlling interests - Principal Equityholders   (7,912)   (20,069)   (30,594)   (51,021)
Net income available to Taylor Morrison Home Corporation $ 27,875 $ 25,830 $ 71,469 $ 45,420
 
Earnings per common share - basic:
Net income from continuing operations $ 0.75 $ 0.57 $ 1.83 $ 0.91
Discontinued operations - net of tax $ 0.09 $ 0.22 $ 0.34 $ 0.47
Net income available to Taylor Morrison Home Corporation $ 0.84 $ 0.79 $ 2.17 $ 1.38
 
Earnings per common share - diluted:
Net income from continuing operations $ 0.75 $ 0.57 $ 1.83 $ 0.91
Discontinued operations - net of tax $ 0.09 $ 0.22 $ 0.34 $ 0.47
Net income available to Taylor Morrison Home Corporation $ 0.84 $ 0.79 $ 2.17 $ 1.38
 
Weighted average number of shares of common stock:
Basic 33,060 32,858 32,937 32,840
Diluted 122,348 122,326 122,313 122,319
             
 
Taylor Morrison Home Corporation

Condensed Consolidated Balance Sheets

(In thousands)
December 31, December 31,
2014 2013

Assets

(Unaudited)
Cash and cash equivalents $ 234,217 $ 193,518
Restricted cash 1,310 3,807
Real estate inventory:
Owned inventory 2,511,623 1,993,985
Real estate not owned under option agreements   6,698   18,595
Total real estate inventory 2,518,321 2,012,580
Land deposits 34,544 38,011
Mortgages receivable 191,140 95,718
Prepaid expenses and other assets, net 89,210 79,921
Other receivables, net 85,274 50,592
Investments in unconsolidated entities 110,291 21,435
Deferred tax assets, net 258,190 242,656
Property and equipment, net 5,337 4,502
Intangible assets, net 5,459 9,325
Goodwill 23,375 23,375
Assets of discontinued operations   576,445   663,118
Total assets $ 4,133,113 $ 3,438,558
 

Liabilities

Accounts payable $ 122,466 $ 101,732
Accrued expenses and other liabilities 200,556 162,044
Income taxes payable 50,096 35,512
Customer deposits 70,465 62,033
Senior notes 1,388,840 1,039,497
Loans payable and other borrowings 147,516 143,341
Revolving credit facility borrowings 40,000 -
Mortgage borrowings 160,750 74,892
Liabilities attributable to consolidated option agreements 6,698 18,595
Liabilities of discontinued operations   168,565   256,011
Total liabilities $ 2,355,952 $ 1,893,657
 

Stockholders' Equity

Total stockholders' equity   1,777,161   1,544,901
Total liabilities and stockholders' equity $ 4,133,113 $ 3,438,558
             
 
Total Revenues:

Three Months Ended
December 31,

Total Revenues:

Year Ended
December 31,

(Dollars in thousands) 2014   2013   (Dollars in thousands) 2014   2013    
East

$588,109

$365,674 East $1,556,598 $1,117,298
West

411,021

263,851 West 1,116,341 768,412
Mortgage Operations 12,623   9,475 Mortgage Operations 35,493   30,371
Subtotal U.S. $1,011,753 639,000 Subtotal U.S. $2,708,432 $1,916,081
Discontinued operations 155,722   159,419 Discontinued operations 395,070   407,156
Total $1,167,475 $798,419 Total $3,103,502 $2,323,237
 
 
Homes Closed: Three Months Ended December 31, Homes Closed: Year Ended December 31,
2014 2013 2014 2013
(Dollars in thousands) Homes   Value   Homes Value (Dollars in thousands) Homes   Value   Homes   Value
East 1,277 $554,647 927 $356,787 East 3,578 $1,504,141 2,913 $1,094,578
West 690   411,021   535   263,851 West 2,064   1,115,417   1,803   763,372
Subtotal U.S. 1,967 $965,668 1,462 620,638 Subtotal U.S. 5,642 $2,619,558 4,716 $1,857,950
Discontinued operations 483   155,722   408   159,419 Discontinued operations 1,154   391,890   1,113   407,035
Subtotal 2,450 $1,121,390 1,870 780,057 Subtotal 6,796 $3,011,448 5,829 $2,264,985
Unconsolidated joint ventures discontinued operations 6   2,795   207   61,674 Unconsolidated joint ventures discontinued operations 177   65,568   441   132,525
Total 2,456 $1,124,185 2,077 $841,731 Total 6,973 $3,077,016 6,270 $2,397,510
 
 
Net Sales Orders: Three Months Ended December 31, Net Sales Orders: Year Ended December 31,
2014 2013 2014 2013
(Dollars in thousands) Homes   Value   Homes Value (Dollars in thousands) Homes   Value   Homes   Value
East 875 $362,749 637 $267,849 East 3,743 $1,544,996 3,255 $1,266,461
West 420   200,662   411   234,752 West 1,985   1,060,129   1,763   839,764
Subtotal U.S. 1,295 $563,411 1,048 $502,601 Subtotal U.S. 5,728 $2,605,125 5,018 $2,106,225
Discontinued operations 136   60,131   126   50,344 Discontinued operations 665   300,970   596   265,367
Subtotal 1,431 $623,542 1,174 $552,945 Subtotal 6,393 $2,906,095 5,614 $2,371,592
Unconsolidated joint ventures discontinued operations 9   3,081   22   6,384 Unconsolidated joint ventures discontinued operations 36   13,042   83   30,812
Total 1,440 $626,623 1,196 $559,329 Total 6,429 $2,919,137 5,697 $2,402,404
 
 
Sales Order Backlog: As of December 31,
2014 2013
(Dollars in thousands) Homes   Value   Homes Value
East 1,709 $806,848 1,544 $667,725
West 543   292,919   622   320,029
Subtotal U.S. 2,252 $1,099,767 2,166 $987,754
Discontinued operations 333   158,562   822   259,352
Subtotal 2,585 $1,258,329 2,988 $1,247,106
Unconsolidated joint ventures discontinued operations 406   130,077   548   195,979
Total 2,991 $1,388,406 3,536 $1,443,085
 
 
Average Active Selling Communities: Three Months Ended Year Ended
December 31, December 31,
2014   2013 2014   2013
East 162 121 151 121
West 58   45   55   37
Subtotal U.S. 220 166 206 158
Discontinued operations 13   14   13   15
Subtotal 233 180 219 173
Unconsolidated joint ventures discontinued operations 3   3   3   4
Total 236   183   222   177
 
 
 
Average Selling Price of Homes Closed: Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2014   2013   2014   2013
East $434 $385 $420 $376
West 596 493 540 423
Subtotal U.S. $491 $425 $464 $394
Discontinued operations 322 391 340 366
Subtotal $458 $417 $443 $389
Unconsolidated joint ventures discontinued operations 466 298 370 301
Total $458 $405 $441 $382
 
 

Reconciliation of Non-GAAP Financial Measures

The following table sets forth a reconciliation between our home closings gross margin and our adjusted home closings gross margin. Adjusted home closings gross margin is a non-GAAP financial measure calculated based on gross margins, excluding impairments and capitalized interest amortization. Management uses adjusted home closings gross margins to evaluate our performance on a consolidated basis as well as the performance of our regions. We believe adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the often varying effects of interest costs capitalized.

This measure is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures as a measure of our operating performance. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate net income and gross margins and any adjustments to such amounts before comparing our measures to those of such other companies.

 
Adjusted Gross Margin Reconciliation - Continuing Operations
     
Three Months Ended December 31,
(Dollars in thousands) 2014     2013
Home closings revenue $ 965,668 $ 620,638
Cost of home closings   778,224     475,049  
Home closings gross margin 187,444 145,589
Add:
Capitalized interest amortization   25,382     10,029  
Adjusted home closings gross margin $ 212,826   $ 155,618  
Home closings gross margin as a percentage of home closings revenue 19.4 % 23.5 %
Adjusted home closings gross margin as a percentage of home closings revenue 22.0 % 25.1 %
 
Year Ended December 31,
(Dollars in thousands) 2014 2013
Home closings revenue $ 2,619,558 $ 1,857,950
Cost of home closings   2,082,819     1,457,454  
Home closings gross margin 536,739 400,496
Add:
Capitalized interest amortization   65,098     34,147  
Adjusted home closings gross margin $ 601,837   $ 434,643  
Home closings gross margin as a percentage of home closings revenue 20.5 % 21.6 %
Adjusted home closings gross margin as a percentage of home closings revenue 23.0 % 23.4 %
 

Contacts

Taylor Morrison Home Corporation
Erin Willis, (480) 734-2060
investor@taylormorrison.com

Taylor Morrison Home Corporation