Taylor Morrison Home Corporation (NYSE:TMHC) today reported third quarter total revenue of $853 million, net income of $58 million and earnings per share of $0.49.
Third Quarter Highlights:
Net sales orders were 1,950, a 19% increase from the prior year quarter
Average active community count increased 12% from the prior year quarter to 309
Total revenue was $853 million, a 7% increase from the prior year quarter
GAAP home closings gross margin, inclusive of capitalized interest, was 18.9%, up 50 basis points from prior year quarter
Earnings before tax as a percent of revenue was 10.6%, a 200 basis points increase from prior year quarter
Net income for the quarter was $58 million, a 28% increase from prior year, with earnings per share of $0.49
“We’re extremely pleased with the organization’s strong performance in the third quarter,” said Sheryl Palmer, President and CEO of Taylor Morrison. “Most notably, our net sales orders increased 19% from the prior year quarter to 1,950, which is on top of last year’s same quarter year-over-year sales growth of 18%. We are also quite pleased with our October sales performance up about 23% year-over-year. Our home closings gross margin was 50 basis points higher than the prior year quarter coming in at 18.9%.”
“The housing recovery continues at its measured pace in an upward trajectory. Our belief in this recovery remains intact, despite any external factors that may produce short-term choppiness in individual markets. We continue to take a longer-term view when evaluating the industry and believe that this approach keeps us focused on the right things that will produce the long-term results we expect. Taylor Morrison is well positioned to mature with the cycle and drive efficiencies from our strategic foundation.”
Backlog of homes under contract at the end of the quarter was 3,855 units, a growth of 8% from the prior year. Homes in backlog had a sales value of $1.9 billion, or a growth of 14% from the prior year. Homebuilding gross margin, including capitalized interest, was 18.9% compared to 18.4% in the third quarter of last year. The year-over-year increase was driven by the West and East regions, with some offset coming from the Central region. The improvement was driven by both mix and rate coupled with lower capitalized interest per unit as compared to the prior year. Land closings revenue generated over $19 million in margin primarily from the sale of long-term held assets.
SG&A as a percentage of homebuilding revenue was 10.9% for the quarter, which was impacted by both a shift of closings into Q4 and a pull forward of some 2017 investment into the business. “Now that we’re nearing completion of the integration of our new markets, we’re shifting our focus towards optimizing our operating model in order to maximize the benefit from the Company’s significant growth since the IPO in 2013,” stated Ms. Palmer. “We believe the investments we’re making in our people, processes, and tools will lead to accretive returns in the coming quarters.”
Earnings before tax as a percent of revenue was 10.6% for the quarter, representing an increase of 200 basis points from the prior year’s quarter. Net income was $58 million and earnings per share was $0.49, representing a 28% and 32% increase from last year’s quarter, respectively.
The Company ended the quarter with $161 million in cash and a net homebuilding debt to capitalization ratio of 41.0%.
Homebuilding inventories were $3.3 billion at the end of the quarter with 4,747 homes in inventory, compared to 4,525 homes at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of 3,078 sold units, 442 model homes and 1,227 inventory units, of which 228 were finished. The Company owned or controlled approximately 39,000 lots at September 30, 2016.
During the third quarter, the Company repurchased Class A common stock for $3.8 million, or an average price of about $15.50 per share. At September 30, 2016, the Company had $56.4 million remaining under its existing share repurchase program.
A public webcast to discuss the third quarter 2016 earnings will be held later today at 8:30 a.m. Eastern time. The participant dial-in is 1(888)771-4371 and the confirmation number is 43541634. More information can be found on the Company’s investor relations website at investors.taylormorrison.com. A webcast replay will also be available on the site later today and will be available for one year from the date of the original earnings call.
About Taylor Morrison
Taylor Morrison Home Corporation (NYSE:TMHC) is a leading national homebuilder and developer that was recently recognized as America’s Most TrustedTM Home Builder for 2016 by Lifestory Research. Based in Scottsdale, Arizona we operate under two well-established brands, Taylor Morrison and Darling Homes. We serve a wide array of consumer groups from coast to coast, including first-time, move-up, luxury, and 55 plus buyers. In Texas, Darling Homes builds communities with a focus on individuality and custom detail while delivering on the Taylor Morrison standard of excellence.