Taylor Morrison Home Corporation · NYSE:TMHC
Taylor Morrison Home — Q3 2021 Earnings Presentation
23 slides from Taylor Morrison Home's earnings presentation, Oct 27, 2021
Slide 1: Investor Presentation Third Quarter 2021
Investor Presentation Third Quarter 2021
Slide 2: Q3 2021 Highlights
Q3 2021 Highlights Closings Gross Margin Average Order Price • Home closings gross margin improved 400 basis points to 21.2 percent due to acquisition synergies, which more than offset cost +400bps +31% pressure from industry-wide supply-side bottlenecks. to 21.2% to $641,000 • Based on strength of
Slide 3: Management's Outlook for Select Financial Metrics
Management’s Outlook for Select Financial Metrics Fourth Quarter 2021 Full Year 2021 Average Active Community Count In Line with Q3 2021 335 to 340 Home Closings ~4,600 ~14,000 GAAP Home Closings Gross Margin ~21 Percent Low-20 Percent Range SG&A % of Home Closings Revenue Not Provided Mid-9 Percent
Slide 4: Strong Gross Margin and ROE Accretion Expected in 2022
Strong Gross Margin and ROE Accretion Expected in 2022 Home Closings Gross Margin(1) Return on Equity(1)(2) Over 22% Over 20% 21.2% Low-20% Range 19.1% 18.3% 18.6% High-Teens Range 17.2% 16.6% 15.4% 15.4% 13.3% 12.2% 10.5% 7.9% 7.9% 6.8% 5.9% 5.4% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 2020 2021 2022 1Q
Slide 5: Post-IPO Journey Delivered Scale and Diversification
Post-IPO Journey Delivered Scale and Diversification Regional M&A and Strategic Refinement Enhanced Public Market Liquidity Large Scale M&A Operational Excellence 2013 2014 2015 2016 2017 2018 2019 2020 2021 Became a fully- floated public Acquired William company following Lyon Homes, Recognized as
Slide 6: Next Leg of Strategic Journey Focused on Operational Excellence
Next Leg of Strategic Journey Focused on Operational Excellence Balanced National Critical Local Gross Margin Asset Overhead Footprint in Strong Operating Scale Enhancement Efficiency Leverage Housing Markets Deep and Experienced Team Expanding Balance Sheet Return-Accretive Diversified Product and
Slide 7: Strategies Aligned to Generate Attractive Long-Term Returns
Strategies Aligned to Generate Attractive Long-Term Returns Operational Efficiency Capital Efficiency Gross Margin Enhancement Return-Accretive Land Investments • Maximize Procurement with Natl. and Local Purchasing Capabilities • Expand Controlled Lot Share to at Least 40% in 2022 • Streamline Oper
Slide 8: Canvas, our Curated Design Package Approach
Canvas, our Curated Design Package Approach • Canvas packages are thoughtfully curated to offer homebuyers an improved, easier design experience than the traditional design center approach • Package collections—which are available at five budget levels—include features with the highest design appeal
Slide 9: Venture, a First-of-its-Kind Digital Community
Venture, a First-of-its-Kind Digital Community
Slide 10: Demand Remains Healthy at Sustainable Levels
Demand Remains Healthy at Sustainable Levels Monthly Absorption Pace per Community Average Community Count 4.3 East Central West 411 393 3.8 378 372 368 366 357 346 345 338 3.4 333 332 3.4 3.3 3.1 297 288 275 2.8 2.8 2.6 2.6 2.6 2.4 2.3 2.2 1.6 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Slide 11: Diverse Product Portfolio Serves All Major Buyer Groups
Diverse Product Portfolio Serves All Major Buyer Groups Net Sales Orders by Consumer Type 20% 27% 55-Plus Lifestyle 49% 45% Move Up 31% 28% Entry Level 3Q20 3Q21 Average Net Sales Order Price (in Thousands) $641 $597 $550 $527 $490 $467 $453 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 11
Slide 12: Balanced Coast-to-Coast Footprint with Local Depth
Mix as of Q3 2021 West Central East Balanced Coast-to-Coast Closings 42% 23% 35% Footprint with Local Depth Closings Revenue 46% 23% 31% Average Closing Price $586,000 $522,000 $476,000 11 Markets 18 Markets Lot Supply 36% 31% 33% Top 5 Builder Top 10 Builder 12 Note: Builder market share rank based
Slide 13: Disciplined Approach to Land Portfolio Management
Disciplined Approach Years of Homebuilding Lots Based on Trailing Twelve-Month Closings to Land Portfolio Total Owned 6.2 Management 5.2 5.5 5.0 4.9 4.7 4.0 3.8 3.7 3.8 3.8 Q3 2021 Highlights 3.2 • Invested $478 million in land acquisition and development • Targeting $2.0 billion in 2021 2016 2017 2
Slide 14: Strong Cash Flow Expected to Drive Further Deleveraging
Strong Cash Flow Net Debt-to-Capital Expected to Fall to Low-30% Range by Year End Expected to Drive 46.8% 46.0% Further Deleveraging 41.6% 38.7% 40.1% 40.5% 41.1% Low-30% Range Q3 2021 Highlights • Net debt-to-capital ratio expected to decline to the low-30 percent range by the end of 2021 1Q20 2Q2
Slide 15: Guided by a Balanced Capital Allocation Philosophy
Guided by a Balanced Capital Allocation Philosophy Allocate Capital for Long-Term Value Creation We aim to enhance the long-term value of our company by allocating capital with a balanced and disciplined approach Balance Sheet Stewardship Reinvest in the Business Return Excess Cash to Evaluate Growt
Slide 16: A Snapshot of Capital Deployment Over the Last Three Years
A Snapshot of Capital Deployment Over the Last Three Years $1.7B generated through $3.7B invested $1.4B cash and equity invested operating cash flow in land and development in M&A $600M reduction in senior notes and $600M spent on share repurchases 27% of shares repurchased revolving credit facility
Slide 17: Financial Services
Financial Services Q3 2021 Highlights Borrower Snapshot Unit Product Mix Suite of Services Benefits • 752 Average FICO Score • 81% Conventional • Mortgage Lending • Pre-Qualification of Nearly All Buyers • 78% Average LTV Ratio • 17% Government • Title Insurance • Valuable Backlog Management • $399,
Slide 18: Committed to Environmental, Social and Governance Values
Committed to Environmental, Social and Governance Values People First Building for the Future Transparency and Accountability 2,700+ 100 percent 6 years team members homes now offer TM LiveWell ® upgraded products America’s Most Trusted® Homebuilder award 7 of 8 3,700+ 100 percent of team members ar
Slide 19: Appendix
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Slide 20: Who We Are
Who We Are Headquartered in Scottsdale, Arizona, Taylor Morrison is the nation’s fifth largest homebuilder and developer with operations in many of the highest-growth housing markets across 11 states. We serve a wide array of homebuyers with our diverse product portfolio, including first-time, move-
Slide 21: Historical Operating Data by Region
Historical Operating Data by Region Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Q3 2021 Average Active Selling Communities East 173 161 153 152 159 144 153 145 139 145 129 126 136 Central 140 137 135 124 134 134 132 122 113 124 106 101 98 West 59 5
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Net Homebuilding Debt to Capitalization Ratio Reconciliation As of ($ in thousands) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 Total Debt $ 3,221,569 $ 3,082,648 $ 3,025,587 $ 2,928,395 $ 3,180
Slide 23: Forward-Looking Statements
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