Taylor Morrison Reports First Quarter 2013 Financial Summary

Taylor Morrison Reports First Quarter 2013 Financial Summary

  • Net income of $24.3 million increased 136%

  • U.S. net sales orders increased 68% and U.S. backlog revenue increased 150%

  • Home closing revenue increased 66%

  • Adjusted homebuilding gross margin increased 340 basis points to 23.4%

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- Taylor Morrison Home Corporation (NYS: TMHC) announced today financial results for the first quarter ended March 31, 2013. Our results for the first quarter represent the combined results of our subsidiaries Taylor Morrison Communities, Inc. and Monarch Communities Inc. (collectively "the Company"). Net income for the quarter was $24.3 million, compared to net income of $10.3 million for the first quarter of 2012.

"We started the year in a position of strength, with a 136% increase in net income, continuing our track record of solid financial performance and adding to our trend of more than three consecutive years of profitability," said Sheryl Palmer, President and CEO. "We are pleased to demonstrate continued quarter-over-quarter improvements in key operational and financial metrics. The results we're releasing today are the manifestation of years of preparation and demonstrate the value around the Company's land strategy during the downturn. Our opportunistic land strategy continues to be conscious and calculated and the foundation of our success."


Net sales orders increased 52% to 1,681 in the first quarter of 2013 as compared to 1,106 in the first quarter of last year. Net sales orders in the Company's U.S. operations increased 68%, partially offset by a 29% sales order decline in its Canadian operations. As expected, community count increased 31% to 167 from 124 in the first quarter of last year, primarily due to our acquisition of Darling Homes based in Texas. The Company's overall monthly absorption pace increased to 3.4 net sales orders per community in the first quarter of 2013 compared to 3.0 for the first quarter of 2012.

The Company's sales order backlog of homes under contract increased 45% to 3,872 homes with a sales value of $1.4 billion at March 31, 2013 compared with 2,669 homes with a sales value of $884 million as of March 31, 2012. The Company's U.S. backlog of homes under contract increased 109% to 2,506 homes with a sales value of $993 million at March 31, 2013 compared with 1,199 homes with a sales value of $398 million at March 31, 2012. The first quarter 2013 cancellation rate, representing cancelled sales orders divided by gross sales orders, was 11% in both the first quarter of 2012 and 2013.

Home closings revenue totaled $366.8 million in the first quarter of 2013, an increase of 66%, benefiting from a 63% increase in homes closed to 1,012 during the quarter. Gross profit margin on home closings in the first quarter of 2013 improved to 21.2%, compared to 17.6% in the first quarter of 2012. Adjusted gross profit margin on home closings in the first quarter 2013, excluding interest expense, improved 340 basis points to 23.4% compared to 20.0% for the first quarter 2012.

For the first quarter, the Company's mortgage and title operations reported gross profit of $2.4 million. The mortgage capture rate for the Company's U.S. operations for the quarter was 81%.

Selling, general and administrative expenses were $46.3 million, or 12.6% of home closing revenues for the 2013 first quarter compared to $32.4 million, or 14.7% of home closing revenues for the first quarter of 2012. Equity in income of unconsolidated entities, which represents the Company's investments in home building joint ventures, was $3.2 million in both the first quarter of 2012 and 2013.

The Company ended the first quarter of 2013 with $251.2 million of cash, including $13.2 million of restricted cash. Homebuilding inventories at the end of the 2013 first quarter totaled $1.7 billion. The Company owned and controlled approximately 45,100 lots at March 31, 2013 compared with approximately 31,000 lots at March 31, 2012.

Financing Activities

On April 12, 2013, we completed our initial public offering ("IPO") and sold 28,572,000 shares at $22.00 per share for a total of $628.5 million. Subsequent to the offering, the underwriters exercised their over-allotment option of 4,285,800 shares at $22.00 per share for $94.3 million. Approximately $204.3 million of the proceeds from the IPO were used to redeem $189.6 million of the 7.75% senior notes due 2020, issued by two of our subsidiaries at a price equal to 103.875% their principal amount, plus accrued and unpaid interest. The remainder of the IPO proceeds was used to purchase equity interests from the principal equity holders and pay IPO-related fees.

Concurrent with the IPO, our subsidiaries entered into a new $400 million unsecured revolving credit facility, maturing in April 2017, replacing an existing $225 million secured revolving credit facility. In addition, two of our subsidiaries issued $550 million aggregate principal amount of 5.25% senior notes due 2021, the proceeds of which will be used for general corporate purposes.

Earnings Conference Call

A conference call to discuss our first quarter 2013 earnings will be held at 4:30 p.m. Eastern Time on Tuesday, May 14, 2013. The call will be broadcast live on the Internet and can be accessed through the Company's website at www.taylormorrison.com. If you are unable to participate in the conference call, the call will be archived at www.taylormorrison.com for 30 days. A replay of the conference call will also be available later today by calling (888) 843-7419 or (630) 652-3042 and entering 3477 4239# as the confirmation number.

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 Taylor Morrison operates; the availability and cost of land and other raw materials used by Taylor Morrison in its 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 Taylor Morrison's 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 Taylor Morrison's 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. Taylor Morrison undertakes no duty to update any forward-looking statement, whether as a result of new information, future events or changes in Taylor Morrison's expectations. In addition, other such risks and uncertainties may be found in Taylor Morrison Home Corporation's Registration Statement on Form S-1 filed with the Securities and Exchange Commission (SEC) under the heading "Risk Factors." Such registration statement has not yet been declared effective by the SEC and does not constitute an offer to sell or the solicitation of an offer to buy any of the securities described therein.

About Taylor Morrison

Headquartered in Scottsdale, Arizona, Taylor Morrison Home Corporation (NYS: TMHC) operates in the U.S. under the Taylor Morrison and Darling Homes brands and in Canada under the Monarch brand. Taylor Morrison is a builder and developer of single-family detached and attached homes serving a wide array of customers from first-time buyers and move-up families to luxury and active adult customers. Taylor Morrison divisions operate in Arizona, California, Colorado, Florida and Texas. Darling Homes serves move-up families and luxury homebuyers in Texas. Monarch, Canada's oldest homebuilder builds homes for first-time buyers and move-up families in Toronto and Ottawa as well as high rise condominiums in Toronto.

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

TMM Holdings Limited Partnership

Consolidated Statements of Operations

(in thousands except per unit data, unaudited)

Three Months

Three Months

Ended

Ended

3/31/2013

3/31/2012

Home closing revenue

$

366,769

$

220,903

Land closing revenue

8,854

15,240

Mortgage operations revenue

5,889

3,283

Total revenues

381,512

239,426

Cost of home closings

288,831

182,108

Cost of land closings

7,644

11,491

Mortgage operations expenses

3,491

2,029

Total cost of revenues

299,966

195,628

Gross margin

81,546

43,798

Sales, commissions and other marketing costs

25,942

14,776

General and administrative expenses

20,344

17,633

Equity in net income of unconsolidated entities

(3,158

)

(3,180

)

Interest income, net

(486

)

(63

)

Indemnification income

(1,710

)

(1,636

)

Other expense, net

742

211

Income before income taxes

39,872

16,057

Income tax provision

15,535

5,498

Net income

24,337

10,559

Income attributable to noncontrolling interests

(78

)

(262

)

Net income attributable to Owners

$

24,259

$

10,297

TMM Holdings Limited Partnership

Consolidated Balance Sheets

(in thousands, unaudited)

March 31,

December 31,

2013

2012

Assets

Cash and cash equivalents

$

237,963

$

300,567

Restricted cash

13,206

13,683

Real estate inventory

1,737,849

1,633,050

Land deposits

29,595

28,724

Loans receivable

43,997

48,685

Mortgage receivables

40,055

84,963

Tax indemnification receivable

109,231

107,638

Prepaid expenses and other assets, net

118,174

101,427

Other receivables, net

50,561

48,951

Investments in unconsolidated entities

77,469

74,465

Deferred tax assets, net

274,723

274,757

Property and equipment, net

6,162

6,423

Intangible assets, net

24,124

17,954

Goodwill

14,594

15,526

Total assets

$

2,777,703

$

2,756,813

Liabilities

Accounts payable

$

92,883

$

98,647

Accrued expenses and other liabilities

184,681

213,413

Income taxes payable

116,142

111,513

Customer deposits

99,777

82,038

Mortgage borrowings

37,351

80,360

Loans payable and other borrowings

256,696

215,968

Revolving credit facility borrowings

88,000

50,000

Senior notes

681,318

681,541

Total liabilities

1,556,847

1,533,480

Equity

Net owners' equity

1,255,804

1,231,050

Accumulated other comprehensive loss

(42,810

)

(34,365

)

Total owners' equity

1,212,994

1,196,685

Non controlling interests

7,862

26,648

Total equity

1,220,856

1,223,333

Total liabilities and equity

$

2,777,703

$

2,756,813

TMM Holdings Limited Partnership

Segment Data

(Dollars in thousands)

(Unaudited)

Three months ended

Three months ended

Homes Closed:

March 31, 2013

March 31, 2012

Avg. Sales

Avg. Sales

Homes

Value

Price

Homes

Value

Price

East

544

$191,379

$ 352

275

$82,582

$ 300

West

363

129,696

357

187

64,787

346

Canada

105

45,694

435

159

73,534

462

Subtotal

1,012

366,769

$ 362

621

220,903

$ 356

Unconsolidated joint ventures (A)

27

8,927

331

39

11,770

306

Total

1,039

375,696

$ 362

660

232,673

$ 353

(A) Includes only our proportionate share of unconsolidated joint ventures.

Three months ended

Three months ended

Net Sales Orders:

March 31, 2013

March 31, 2012

Homes

Value

Homes

Value

East

1,010

$365,957

527

$162,694

West

539

228,847

394

123,498

Canada

132

60,661

185

73,627

Subtotal

1,681

655,465

1,106

359,819

Unconsolidated joint ventures (B)

15

6,847

55

10,551

Total

1,696

662,312

1,161

370,370

(B) Includes only our proportionate share of unconsolidated joint ventures.

As of

As of

Sales Order Backlog:

March 31, 2013

March 31, 2012

Homes

Value

Homes

Value

East

1,668

$651,117

719

$250,094

West

838

342,097

480

147,784

Canada

1,366

428,812

1,470

486,087

Subtotal

3,872

$1,422,026

2,669

$883,965

Unconsolidated joint ventures (C)

895

305,807

1,010

341,257

Total

4,767

$1,727,833

3,679

$1,225,222

(C) Includes our proportionate share of unconsolidated joint ventures.

Three months ended

Average Active Selling Communities:

March 31,

2013