Taylor Morrison Reports Fourth Quarter 2022 Results, Including Earnings per Diluted Share of $2.51 and Adjusted Earnings per Diluted Share of $2.93

Rhea-AI Summary

Taylor Morrison Home Corporation (NYSE: TMHC) reported strong fourth quarter results for 2022, with a net income of $275 million or $2.51 per diluted share, and adjusted net income at $321 million or $2.93 per diluted share.

The company experienced an 11% decline in home closings to 3,797 homes, generating $2.4 billion in revenue. Despite lower sales, gross margin improved by 190 basis points to 23.5%. SG&A as a percentage of revenue fell to 7.3%, a record low.

For full-year 2022, total revenue was $8.2 billion, up 9.6% year-over-year, with a 33% increase in book value per share to $42.38.

Positive

• Net income rose to $275 million, or $2.51 per share, driven by strong fourth quarter performance.
• Home closings gross margin improved 190 basis points to 23.5%.
• SG&A as a percentage of home closings revenue fell to a record low of 7.3%.
• Total revenue for full-year 2022 increased by 9.6% to $8.224 billion.
• Book value per share increased 33% to $42.38.

Negative

• Home closings declined 11% in Q4 2022 compared to Q4 2021.
• Net sales orders decreased by 42% to 1,810 homes.
• Cancellations rose to 7.3% of backlog, up from 2.7% a year ago.

SCOTTSDALE, Ariz., Feb. 15, 2023 /PRNewswire/ -- Taylor Morrison Home Corporation (NYSE: TMHC), a leading national land developer and homebuilder, announced results for the fourth quarter ended December 31, 2022. Reported net income in the fourth quarter was $275 million, or $2.51 per diluted share. Adjusted net income was $321 million, or $2.93 per diluted share, after excluding charges related to impairments and pre-acquisition abandonments as well as a gain on an extinguishment of debt.

Fourth quarter 2022 highlights included the following, as compared to the fourth quarter 2021:

• Home closings declined 11 percent to 3,797 homes, which generated revenue of $2.4 billion.
• Home closings gross margin improved 190 basis points to 23.5 percent on a reported basis and 290 basis points to 24.5 percent excluding inventory impairment charges.
• Net sales orders declined 42 percent to 1,810, which represented a monthly absorption pace of 1.9 per community.
• SG&A as a percentage of home closings revenue declined 50 basis points to 7.3 percent.
• Homebuilding lot supply decreased three percent to approximately 75,000 owned and controlled homesites.
• Controlled lots as a percentage of total lot supply increased approximately 300 basis points to 41 percent.

Full-year 2022 highlights included the following, as compared to 2021:

• Home closings declined eight percent to 12,647 homes, which generated revenue of $7.9 billion.
• Home closings gross margin improved 490 basis points to 25.2 percent on a reported basis and 520 basis points to 25.5 percent excluding inventory impairment charges.
• SG&A as a percentage of home closings revenue declined 110 basis points to 8.2 percent.
• Repurchased 14.6 million shares outstanding, or approximately 12 percent, for $376 million.
• Book value per share increased 33 percent to $42.38.
• Return on equity improved 690 basis points to 24.4 percent.

"Our team's strong fourth quarter execution wrapped up a historic year for Taylor Morrison, marked by record levels of profitability and operational performance. Despite the swift change in housing market conditions that unfolded during the year, our teams delivered over 12,600 homes at a record adjusted home closings gross margin of 25.5%, which was up more than 500 basis points, and all-time low SG&A ratio of 8.2% in 2022. This produced a nearly-60% increase in our net income on a 10% increase in total revenue," said Sheryl Palmer, Taylor Morrison Chairman and CEO.

"These earnings drove strong cash flow, which we deployed to further strengthen our balance sheet by significantly reducing our net homebuilding leverage to 24% from 34% at the end of 2021 and repurchase approximately 12% of our shares outstanding, after investing $1.6 billion into our core homebuilding business. As a result, our book value per share increased 33% to more than $42 and our return on equity improved nearly 700 basis points to over 24%. In total, these record results validate the transformational impacts of our successful integrations and operational strategies that have made us a stronger company with enhanced earnings power and increased optionality with which to invest for long-term, profitable growth."

Palmer continued, "we benefit from the well-balanced, diverse mix of our portfolio and operating strategy. Having expanded our market footprint and product positioning in recent years through our acquisitions and smart organic growth, we serve a broad range of consumers in the entry-level, first-and-second move-up and resort lifestyle segments across the country. With each of these consumer groups demanding varying levels of home specification and affordability considerations, we have a dynamic and flexible operating strategy that allows us to best serve each of these segments and respond quickly to market conditions, community by community to maximize our performance. Since interest rates began rising last year, this flexible but prudent approach has driven important shifts in our pricing strategies, starts volume and land investments as we quickly adapted to minimize risk and recalibrate affordability. The success of these strategies was evident in our fourth quarter results and have been even more encouraging thus far in the new year."

Lou Steffens, Executive Vice President and Chief Financial Officer, said "we generated $1.1 billion of cash flow from operations during the year, which was up from $377 million in 2021. In addition, we took several steps to further solidify our strong capital position during the year and ended the quarter with $1.8 billion of total liquidity, leaving us with ample flexibility to take advantage of investment opportunities as the market evolves."

Business Highlights (All comparisons are of the current quarter to the prior-year quarter, unless indicated.)

Homebuilding

• Home closings revenue declined less than one percent to $2.4 billion, driven by an 11 percent decline in home closings to 3,797, offset by a 12 percent increase in average closing price to $626,000.
• Home closings gross margin improved 190 basis points to 23.5 percent on a reported basis and 290 basis points to 24.5 percent adjusted for inventory impairment charges. The improvement was driven by pricing gains achieved in prior quarters and the ongoing benefit of operational enhancements, which offset higher construction costs and the impact from increased incentives and other price adjustments offered in response to weaker market conditions.
• SG&A as a percentage of home closings revenue declined 50 basis points to 7.3 percent, an all-time low, driven by lower performance-based compensation costs as well as enhanced sales and marketing efficiencies.
• Net sales orders of 1,810 were down 42 percent. The decline was driven by a 41 percent reduction in the monthly absorption pace to 1.9 net sales orders per community, increased cancellations and a two percent decline in ending communities.
• The average net sales order price decreased 11 percent to $578,000, driven by an increase in the percentage of spec home sales and entry-level home sales compared to the year-ago period, as well as net pricing adjustments on new orders and homes in backlog.
• Cancellations increased to 7.3% of beginning backlog from 4.3% in the prior quarter and 2.7% a year ago, although this was roughly in-line with the long-term average. As a percentage of gross orders, cancellations increased to 24.4% from 15.6% in the prior quarter and 8.2% a year ago.
• Backlog at the end of the quarter was 5,954 sold homes with a sales value of $4.1 billion, which was backed by a record level of customer deposits at approximately $70,000, or 10% per home.

Land Portfolio

• In the fourth quarter, investment in homebuilding land acquisition and development totaled $373 million, down 23 percent from $482 million a year ago. Development-related spend accounted for 64 percent of the fourth quarter total versus 49 percent a year ago. In 2022, homebuilding land acquisition and development spend totaled $1.6 billion, down from $1.9 billion in 2021.
• Homebuilding lot supply was approximately 75,000 owned and controlled homesites, down three percent.
• Controlled homebuilding lots as a percentage of total lot supply was 41 percent, up from 38 percent.
• Based on trailing twelve-month home closings, total homebuilding lots represented 3.5 years of owned supply and 5.9 years of total supply.

Financial Services

• The mortgage capture rate equaled 78 percent.
• Borrowers had an average credit score of 753 and debt-to-income ratio of 39 percent.

Balance Sheet

• At year end, total available liquidity was approximately $1.8 billion, including $724 million of unrestricted cash and $1.1 billion of capacity on the Company's revolving credit facilities, which were undrawn outside of normal letters of credit.
• The net homebuilding debt-to-capital ratio was 24.0 percent, down from 34.1 percent a year ago. Excluding $724 million of unrestricted cash on hand, the gross homebuilding debt-to-capital ratio was 32.0 percent.
• In the fourth quarter, the Company repurchased 1.6 million of its outstanding shares for $41 million at an average share price of $25.11. In 2022, the Company repurchased a total of 14.6 million of its shares outstanding, representing approximately 12 percent of beginning diluted shares outstanding, for $376 million at an average price of $25.83. At year end, the Company had $279 million remaining on its $500 million share repurchase authorization.

Business Outlook

First Quarter 2023

• Ending active community count is expected to be between 325 to 330
• Home closings are expected to be between 2,300 to 2,400
• Average closing price is expected to be between $630,000 to $640,000
• GAAP home closings gross margin is expected to be approximately 23.5 percent
• SG&A as a percentage of home closings revenue is expected to be approximately 11%
• Effective tax rate is expected to be approximately 25 percent
• Diluted share count is expected to be approximately 110 million

Full Year 2023

• Home closings are expected to be between 10,000 to 11,000
• Effective tax rate is expected to be approximately 25 percent
• Diluted share count is expected to be approximately 110 million
• Homebuilding land and development spend is expected to be similar to 2022

 

Quarterly Financial Comparison
($ in thousands)		Q4 2022		Q4 2021		Q4 2022 vs. Q4 2021
Total Revenue		$2,492,126		$2,505,422		(0.5) %
Home Closings Revenue		$2,378,167		$2,391,130		(0.5) %
Home Closings Gross Margin		$558,457		$515,827		8.3 %
		23.5 %		21.6 %		190 bps increase
Adjusted Home Closings Gross Margin		$583,327		$515,827		13.1 %
		24.5 %		21.6 %		290 bps increase
SG&A % of Home Closings Revenue		$173,357		$185,669		(6.6) %
		7.3 %		7.8 %		50 bps leverage

 

Annual Financial Comparison
($ in thousands)		2022		2021		2022 vs. 2021
Total Revenue		$8,224,917		$7,501,265		9.6 %
Home Closings Revenue		$7,889,371		$7,171,433		10.0 %
Home Closings Gross Margin		$1,984,913		$1,457,528		36.2 %
		25.2 %		20.3 %		490 bps increase
Adjusted Home Closings Gross Margin		$2,009,783		$1,457,528		37.9 %
		25.5 %		20.3 %		520 bps increase
SG&A % of Home Closings Revenue		$643,212		$668,342		(3.8) %
		8.2 %		9.3 %		110 bps leverage

Earnings Conference Call Webcast
A public webcast to discuss the Company's fourth quarter 2022 earnings will be held later today at 8:30 a.m. EST. A live audio webcast of the conference call will be available on the Investor Relations portion of Taylor Morrison's website at www.taylormorrison.com under the Events & Presentations tab.

For call participants, the dial-in number is (844) 200-6205 and conference ID is 324181. The call will be recorded and available for replay on the Company's website later today and will be available for one year from the date of the original earnings call.

About Taylor Morrison
Headquartered in Scottsdale, Arizona, Taylor Morrison is one of the nation's leading homebuilders and developers. We serve a wide array of consumers from coast to coast, including first-time, move-up, luxury and resort lifestyle homebuyers and renters under our family of brands—including Taylor Morrison, Esplanade, Darling Homes Collection by Taylor Morrison and Yardly. From 2016-2023, Taylor Morrison has been recognized as America's Most Trusted® Builder by Lifestory Research. Our strong commitment to sustainability, our communities, and our team is highlighted in our latest Environmental, Social, and Governance (ESG) Report on our website.

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 ""anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "may," "will," "can," "could," "might," "should" and similar expressions identify forward-looking statements, including statements related to expected financial, operating and performance 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: inflation or deflation; changes in general and local economic conditions; slowdowns or severe downturns in the housing market; homebuyers' ability to obtain suitable financing; increases in interest rates, taxes or government fees; shortages in, disruptions of and cost of labor; higher cancellation rates of existing agreements of sale; competition in our industry; any increase in unemployment or underemployment; the scale and scope of the ongoing COVID-19  pandemic; the seasonality of our business; the physical impacts of climate change and the increased focus by third-parties on sustainability issues; our ability to obtain additional performance, payment and completion surety bonds and letters of credit; significant home warranty and construction defect claims; our reliance on subcontractors; failure to manage land acquisitions, inventory and development and construction processes; availability of land and lots at competitive prices; decreases in the market value of our land inventory; new or changing government regulations and legal challenges; our compliance with environmental laws and regulations regarding climate change; our ability to sell mortgages we originate and claims on loans sold to third parties; governmental regulation applicable to our financial services and title services business; the loss of any of our important commercial lender relationships; our ability to use deferred tax assets; raw materials and building supply shortages and price fluctuations; our concentration of significant operations in certain geographic areas; risks associated with our unconsolidated joint venture arrangements; information technology failures and data security breaches; costs to engage in and the success of future growth or expansion of our operations or acquisitions or disposals of businesses; costs associated with our defined benefit and defined contribution pension schemes; damages associated with any major health and safety incident; our ownership, leasing or occupation of land and the use of hazardous materials; existing or future litigation, arbitration or other claims; negative publicity or poor relations with the residents of our communities; failure to recruit, retain and develop highly skilled, competent people; utility and resource shortages or rate fluctuations; constriction of the capital markets; risks related to our substantial debt and the agreements governing such debt, including restrictive covenants contained in such agreements; our ability to access the capital markets; the risks associated with maintaining effective internal controls over financial reporting; provisions in our charter and bylaws that may delay or prevent an acquisition by a third party; and our ability to effectively manage our expanded operations.

In addition, other such risks and uncertainties may be found in our most recent annual report on Form 10-K and our subsequent quarterly reports filed with the Securities and Exchange Commission (SEC) as such factors may be updated from time to time in our periodic filings with the SEC. 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.

Taylor Morrison Home Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
		Three Months Ended December 31,				Twelve Months Ended December 31,
		2022		2021		2022		2021
Home closings revenue, net		$ 2,378,167		$ 2,391,130		$ 7,889,371		$   7,171,433
Land closings revenue		14,419		20,271		81,070		99,444
Financial services revenue		37,072		45,111		135,491		164,615
Amenity and other revenue		62,468		48,910		118,985		65,773
Total revenue		2,492,126		2,505,422		8,224,917		7,501,265
Cost of home closings		1,819,710		1,875,303		5,904,458		5,713,905
Cost of land closings		13,505		15,249		63,644		83,853
Financial services expenses		17,868		25,713		83,960		101,848
Amenity and other expense		41,225		36,871		80,489		53,778
Total cost of revenue		1,892,308		1,953,136		6,132,551		5,953,384
Gross margin		599,818		552,286		2,092,366		1,547,881
Sales, commissions and other marketing costs		118,124		119,678		398,074		400,376
General and administrative expenses		55,232		65,991		245,138		267,966
Net loss/(income) from unconsolidated entities		11,198		(1,861)		14,184		(11,130)
Interest expense, net		3,851		3,197		17,674		3,792
Other expense, net		43,218		22,703		38,497		23,769
Gain on extinguishment of debt, net		(334)		—		(13,876)		—
Income before income taxes		368,529		342,578		1,392,675		863,108
Income tax provision		93,128		59,876		336,428		180,741
Net income before allocation to non-controlling interests		275,401		282,702		1,056,247		682,367
Net income attributable to non-controlling interests - joint ventures		(70)		(9,978)		(3,447)		(19,341)
Net income available to Taylor Morrison Home Corporation		$    275,331		$    272,724		$ 1,052,800		$       663,026
Earnings per common share
Basic		$          2.54		$           2.22		$           9.16		$             5.26
Diluted		$          2.51		$           2.19		$           9.06		$             5.18
Weighted average number of shares of common stock:
Basic		108,277		122,694		114,982		126,077
Diluted		109,643		124,572		116,221		128,019

 

Taylor Morrison Home Corporation
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
		December 31, 2022		December 31, 2021
Assets
Cash and cash equivalents		$            724,488		$             832,821
Restricted cash		2,147		3,519
Total cash, cash equivalents, and restricted cash		726,635		836,340
Owned inventory		5,346,905		5,444,207
Consolidated real estate not owned		23,971		55,314
Total real estate inventory		5,370,876		5,499,521
Land deposits		263,356		229,535
Mortgage loans held for sale		346,364		467,534
Derivative assets		1,090		2,110
Lease right of use assets		90,446		85,863
Prepaid expenses and other assets, net		264,302		314,986
Other receivables, net		191,504		150,864
Investments in unconsolidated entities		282,900		171,406
Deferred tax assets, net		67,656		151,240
Property and equipment, net		202,398		155,181
Goodwill		663,197		663,197
Total assets		$         8,470,724		$         8,727,777
Liabilities
Accounts payable		$            269,761		$             253,348
Accrued expenses and other liabilities		490,253		525,209
Lease liabilities		100,174		96,172
Customer deposits		412,092		485,705
Estimated development liabilities		43,753		38,923
Senior notes, net		1,816,303		2,452,322
Loans payable and other borrowings		361,486		404,386
Revolving credit facility borrowings		—		31,529
Mortgage warehouse borrowings		306,072		413,887
Liabilities attributable to consolidated real estate not owned		23,971		55,314
Total liabilities		$         3,823,865		$         4,756,795
Stockholders' Equity
Total stockholders' equity		4,646,859		3,970,982
Total liabilities and stockholders' equity		$         8,470,724		$         8,727,777

 

Homes Closed and Home Closings Revenue, Net:
		Three Months Ended December 31,
		Homes Closed						Home Closings Revenue, Net						Average Selling Price
($ in thousands)		2022		2021		Change		2022		2021		Change		2022		2021		Change
East		1,612		1,547		4.2 %		$        916,509		$        794,636		15.3 %		$       569		$      514		10.7 %
Central		1,082		1,165		(7.1)		667,040		628,476		6.1		616		539		14.3
West		1,103		1,571		(29.8)		794,618		968,018		(17.9)		720		616		16.9
Total		3,797		4,283		(11.3) %		$     2,378,167		$     2,391,130		(0.5) %		$       626		$      558		12.2 %
		Twelve Months Ended December 31,
		Homes Closed						Home Closings Revenue, Net						Average Selling Price
($ in thousands)		2022		2021		Change		2022		2021		Change		2022		2021		Change
East		4,764		5,011		(4.9) %		$     2,673,951		$     2,358,842		13.4 %		$    561		$  471		19.1 %
Central		3,359		3,411		(1.5)		2,014,869		1,730,157		16.5		600		507		18.3
West		4,524		5,277		(14.3)		3,200,551		3,082,434		3.8		707		584		21.1
Total		12,647		13,699		(7.7) %		$     7,889,371		$     7,171,433		10.0 %		$    624		$  524		19.1 %
Net Sales Orders:
		Three Months Ended December 31,
		Net Sales Orders						Sales Value						Average Selling Price
($ in thousands)		2022		2021		Change		2022		2021		Change		2022		2021		Change
East		939		1,037		(9.5) %		$   527,898		$   606,293		(12.9) %		$          562		$          585		(3.9) %
Central		310		957		(67.6)		184,422		615,908		(70.1)		595		644		(7.6)
West		561		1,130		(50.4)		334,113		802,097		(58.3)		596		710		(16.1)
Total		1,810		3,124		(42.1) %		$  1,046,433		$ 2,024,298		(48.3) %		$          578		$          648		(10.8) %
		Twelve Months Ended December 31,
		Net Sales Orders						Sales Value						Average Selling Price
($ in thousands)		2022		2021		Change		2022		2021		Change		2022		2021		Change
East		4,128		5,395		(23.5) %		$  2,504,696		$ 2,940,724		(14.8) %		$          607		$          545		11.4 %
Central		2,289		3,800		(39.8)		1,478,528		2,277,842		(35.1)		646		599		7.8
West		3,070		5,215		(41.1)		2,212,999		3,482,557		(36.5)		721		668		7.9
Total		9,487		14,410		(34.2) %		$  6,196,223		$ 8,701,123		(28.8) %		$          653		$          604		8.1 %
Sales Order Backlog:
		As of December 31,
		Sold Homes in Backlog						Sales Value						Average Selling Price
($ in thousands)		2022		2021		Change		2022		2021		Change		2022		2021		Change
East		2,583		3,219		(19.8) %		$ 1,733,062		$ 1,902,318		(8.9) %		$        671		$        591		13.5 %
Central		1,717		2,787		(38.4)		1,211,493		1,747,834		(30.7)		706		627		12.6
West		1,654		3,108		(46.8)		1,119,432		2,106,984		(46.9)		677		678		(0.1)
Total		5,954		9,114		(34.7) %		$ 4,063,987		$ 5,757,136		(29.4) %		$        683		$        632		8.1 %

 

Ending Active Selling Communities:
		As of
		December 31, 2022		December 31, 2021		Change
East		106		123		(13.8) %
Central		104		102		2.0
West		114		105		8.6
Total		324		330		(1.8) %

Reconciliation of Non-GAAP Financial Measures
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP"), we have provided information in this press release relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) adjusted home closings gross margin, (iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to capitalization ratio.

Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding, to the extent applicable in a given period, the impact of inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges and gains on land transfers and extinguishment of debt, net, and in the case of adjusted net income and adjusted earnings per common share, the tax impact due to such items.

EBITDA and Adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude interest expense/(income), net, amortization of capitalized interest, income taxes, depreciation and amortization (EBITDA), non-cash compensation expense, if any, inventory impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, and gains on land transfers and extinguishment of debt, net.

Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, plus unamortized debt issuance cost/(premium), net, and less mortgage warehouse borrowings, net of unrestricted cash and cash equivalents, by (ii) total capitalization (the sum of net homebuilding debt and total stockholders' equity).

Adjusted home closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges.

Beginning with the fourth quarter of 2022, we are excluding the impact of pre-acquisition abandonment charges and impairment of investments in unconsolidated entities from our calculation of adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, and Adjusted EBITDA, as we believe such adjustments are not characteristic of our ongoing operations and that such presentation is consistent with other companies in the homebuilding industry, thereby facilitating a comparison of our performance with peers. Prior-period measures have been recast to reflect the revised calculation.

Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our regions, and to set targets for performance-based compensation. We also use the ratio of net homebuilding debt to total capitalization as an indicator of overall leverage and to evaluate our performance against other companies in the homebuilding industry. In the future, we may include additional adjustments in the above-described non-GAAP financial measures to the extent we deem them appropriate and useful to management and investors.

We believe that adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, as well as EBITDA and adjusted EBITDA, are useful for investors in order to allow them to evaluate our operations without the effects of various items we do not believe are characteristic of our ongoing operations or performance and also because such metrics assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted EBITDA also provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, or unusual items. Because we use the ratio of net homebuilding debt to total capitalization to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. We believe that adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the varying effects of items or transactions we do not believe are characteristic of our ongoing operations or performance.

These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures of our operating performance or liquidity. Although other companies in the homebuilding industry may report similar information, their definitions may differ. We urge investors to understand the methods used by other companies to calculate similarly-titled non-GAAP financial measures before comparing their measures to ours.

Adjusted Net Income and Adjusted Earnings Per Common Share
		Three Months Ended December 31,				Twelve Months Ended December 31,
($ in thousands, except per share data)		2022		2021		2022		2021
Net income available to TMHC		$         275,331		$          272,724		$       1,052,800		$         663,026
Inventory impairment charges(1)		24,870		—		24,870		—
Impairment of investment in unconsolidated entities(2)		11,186		—		14,714		—
Pre-acquisition abandonment charges(3)		24,903		5,119		33,240		7,553
Gain on land transfers(3)		—		—		(14,508)		—
Gain on extinguishment of debt, net(4)		(334)		—		(13,876)		—
Tax impact due to above non-GAAP reconciling items		(14,726)		(1,216)		(10,654)		(1,795)
Adjusted net income		$         321,230		$          276,627		$       1,086,586		$         668,784
Basic weighted average number of shares		108,277		122,694		114,982		126,077
Adjusted earnings per common share - Basic		$              2.97		$               2.25		$               9.45		$              5.30
Diluted weighted average number of  shares		109,643		124,572		116,221		128,019
Adjusted earnings per common share - Diluted		$              2.93		$               2.22		$               9.35		$              5.22

(1)	Charge included in Cost of home closings on the Consolidated Statement of Operations
(2)	Charge included in Net loss/(income) from unconsolidated entities on the Consolidated Statement of Operations
(3)	Charge included in Other expense, net on the Consolidated Statement of Operations
(4)	Gain included in Gain on extinguishment of debt, net on the Consolidated Statement of Operations

 

Adjusted Income Before Income Taxes and Related Margin
		Three Months Ended December 31,				Twelve Months Ended December 31,
($ in thousands)		2022		2021		2022		2021
Income before income taxes		$         368,529		$         342,578		$      1,392,675		$         863,108
Inventory impairment charges		24,870		—		24,870		—
Impairment of investment in unconsolidated entities		11,186		—		14,714		—
Pre-acquisition abandonment charges		24,903		5,119		33,240		7,553
Gain on land transfers		—		—		(14,508)		—
Gain on extinguishment of debt, net		(334)		—		(13,876)		—
Adjusted income before income taxes		$         429,154		$         347,697		$       1,437,115		$         870,661
Total revenue		$      2,492,126		$      2,505,422		$      8,224,917		$      7,501,265
Income before income taxes margin		14.8 %		13.7 %		16.9 %		11.5 %
Adjusted income before income taxes margin		17.2 %		13.9 %		17.5 %		11.6 %

 

Adjusted Home Closings Gross Margin
		Three Months Ended December 31,				Twelve Months Ended December 31,
($ in thousands)		2022		2021		2022		2021
Home closings revenue		$        2,378,167		$           2,391,130		$      7,889,371		$       7,171,433
Cost of home closings		$        1,819,710		$           1,875,303		$      5,904,458		$       5,713,905
Home closings gross margin		$          558,457		$              515,827		$      1,984,913		$       1,457,528
Inventory impairment charges		24,870		—		24,870		—
Adjusted home closings gross margin		$          583,327		$              515,827		$      2,009,783		$       1,457,528
Home closings gross margin as a percentage of home closings revenue		23.5 %		21.6 %		25.2 %		20.3 %
Adjusted home closings gross margin as a percentage of home closings revenue		24.5 %		21.6 %		25.5 %		20.3 %

 

EBITDA and Adjusted EBITDA Reconciliation
			Three Months Ended December 31,					Twelve Months Ended December 31,
($ in thousands)			2022		2021			2022				2021
Net income before allocation to non-controlling interests			$            275,401		$            282,702			$         1,056,247				$          682,367
Interest expense, net			3,851		3,197			17,674				3,792
Amortization of capitalized interest			40,836		50,387			138,460				149,733
Income tax provision			93,128		59,876			336,428				180,741
Depreciation and amortization			2,710		1,871			7,565				8,138
EBITDA			$            415,926		$            398,033			$         1,556,374				$         1,024,771
Non-cash compensation expense			9,427		4,815			26,901				19,943
Inventory impairment charges			24,870		—			24,870				—
Impairment of investment in unconsolidated entities			11,186		—			14,714				—
Pre-acquisition abandonment charges			24,903		5,119			33,240				7,553
Gain on land transfers			—		—			(14,508)				—
Gain on extinguishment of debt, net			(334)		—			(13,876)				—
Adjusted EBITDA			$            485,978		$            407,967			$         1,627,715				$         1,052,267
Total revenue			$         2,492,126		$         2,505,422			$         8,224,917				$         7,501,265
Net income before allocation to non-controlling interests as a percentage of total revenue			11.1 %		11.3 %			12.8 %				9.1 %
EBITDA as a percentage of total revenue			16.7 %		15.9 %			18.9 %				13.7 %
Adjusted EBITDA as a percentage of total revenue			19.5 %		16.3 %			19.8 %				14.0 %

 

Debt to Capitalization Ratios Reconciliation
($ in thousands)	As of December 31, 2022					As of September 30, 2022				As of December 31, 2021
Total debt	$                 2,483,861					$              2,729,924				$              3,302,124
Plus: unamortized debt issuance cost/(premium), net	10,767					11,242				(2,322)
Less: mortgage warehouse borrowings	(306,072)					(146,335)				(413,887)
Total homebuilding debt	$                 2,188,556					$              2,594,831				$              2,885,915
Total equity	4,646,859					4,403,466				3,970,982
Total capitalization	$                 6,835,415					$              6,998,297				$              6,856,897
Total homebuilding debt to capitalization ratio	32.0 %					37.1 %				42.1 %
Total homebuilding debt	$                 2,188,556					$              2,594,831				$              2,885,915
Less: cash and cash equivalents	(724,488)					(329,244)				(832,821)
Net homebuilding debt	$                 1,464,068					$              2,265,587				$              2,053,094
Total equity	4,646,859					4,403,466				3,970,982
Total capitalization	$                 6,110,927					$              6,669,053				$              6,024,076
Net homebuilding debt to capitalization ratio	24.0 %					34.0 %				34.1 %

CONTACT:
Mackenzie Aron, VP Investor Relations
(480) 734-2060
investor@taylormorrison.com

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FAQ

What were the Q4 2022 earnings for TMHC?

Taylor Morrison reported Q4 2022 net income of $275 million, or $2.51 per diluted share, with an adjusted net income of $321 million, or $2.93 per diluted share.

How much did home closings decline in Q4 2022 for TMHC?

Home closings declined by 11% to 3,797 homes in Q4 2022.

What was the revenue for TMHC in full-year 2022?

Taylor Morrison's total revenue for full-year 2022 was $8.224 billion, representing a 9.6% increase year-over-year.

What is the expected home closing guidance for Q1 2023 for TMHC?

For Q1 2023, TMHC expects home closings to be between 2,300 to 2,400.

What are the key financial metrics reported for TMHC in 2022?

In 2022, TMHC achieved a book value per share of $42.38, a return on equity of 24.4%, and generated $1.1 billion in cash flow from operations.