10-Q 1 tmhc-20240331.htm 10-Q tmhc-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________
FORM 10-Q
_______________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to
Commission File Number: 001-35873
_______________________________________________________________
TAYLOR MORRISON HOME CORPORATION
(Exact name of registrant as specified in its Charter)
_______________________________________________________________
Delaware83-2026677
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4900 N. Scottsdale Road, Suite 2000
85251
Scottsdale, Arizona
(Address of principal executive offices)(Zip Code)
(480) 840-8100
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par valueTMHCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding as of April 30, 2024
Common stock, $0.00001 par value105,764,423


TAYLOR MORRISON HOME CORPORATION
TABLE OF CONTENTS
TAYLOR MORRISON HOME CORPORATION 10-Q
1

ITEM 1. FINANCIAL STATEMENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
March 31,
2024
December 31,
2023
Assets
Cash and cash equivalents$554,287 $798,568 
Restricted cash3,105 8,531 
Total cash
557,392 807,099 
Real estate inventory:
Owned inventory5,841,924 5,473,828 
Consolidated real estate not owned143,429 71,618 
Total real estate inventory5,985,353 5,545,446 
Land deposits199,043 203,217 
Mortgage loans held for sale216,633 193,344 
Lease right of use assets72,900 75,203 
Prepaid expenses and other assets, net287,507 290,925 
Other receivables, net189,771 184,518 
Investments in unconsolidated entities369,982 346,192 
Deferred tax assets, net67,825 67,825 
Property and equipment, net300,740 295,121 
Goodwill663,197 663,197 
Total assets$8,910,343 $8,672,087 
Liabilities
Accounts payable$276,093 $263,481 
Accrued expenses and other liabilities459,095 549,074 
Lease liabilities81,138 84,999 
Income taxes payable45,848  
Customer deposits357,657 326,087 
Estimated development liabilities27,416 27,440 
Senior notes, net1,469,135 1,468,695 
Loans payable and other borrowings441,190 394,943 
Revolving credit facility borrowings  
Mortgage warehouse borrowings183,174 153,464 
Liabilities attributable to consolidated real estate not owned143,429 71,618 
Total liabilities$3,484,175 $3,339,801 
COMMITMENTS AND CONTINGENCIES (Note 13)
Stockholders’ equity
Total stockholders’ equity5,426,168 5,332,286 
Total liabilities and stockholders’ equity$8,910,343 $8,672,087 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
TAYLOR MORRISON HOME CORPORATION 10-Q
2

ITEM 1. FINANCIAL STATEMENTS
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three Months Ended
March 31,
20242023
Home closings revenue, net$1,636,255 $1,612,595 
Land closings revenue7,225 4,520 
Financial services revenue46,959 35,149 
Amenity and other revenue9,313 9,593 
Total revenue1,699,752 1,661,857 
Cost of home closings1,243,209 1,227,513 
Cost of land closings5,202 4,345 
Financial services expenses25,143 22,148 
Amenity and other expenses9,353 8,285 
Total cost of revenue1,282,907 1,262,291 
Gross margin416,845 399,566 
Sales, commissions and other marketing costs102,600 92,760 
General and administrative expenses67,564 66,261 
Net income from unconsolidated entities(2,751)(1,929)
Interest income, net(43)(1,111)
Other expense/(income), net595 (4,834)
Income before income taxes248,880 248,419 
Income tax provision57,719 57,191 
Net income before allocation to non-controlling interests191,161 191,228 
Net income attributable to non-controlling interests(891)(177)
Net income$190,270 $191,051 
Earnings per common share:
Basic$1.79 $1.76 
Diluted$1.75 $1.74 
Weighted average number of shares of common stock:
Basic106,457108,429
Diluted108,564110,053
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
TAYLOR MORRISON HOME CORPORATION 10-Q
3

ITEM 1. FINANCIAL STATEMENTS
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data, unaudited)
For the three months ended March 31, 2024
Common StockAdditional
Paid-in
Capital
Treasury Stock Stockholders' Equity
Shares AmountAmountSharesAmount Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-
Controlling
Interests
Total
Stockholders’
Equity
Balance – December 31, 2023106,917,636$1 $3,068,597 54,211,879$(1,265,097)$3,510,544 $896 $17,345 $5,332,286 
Net income— — — 190,270 — 891 191,161 
Exercise of stock options and issuance of restricted stock units, net(1)
633,766— (10,856)— — — — (10,856)
Repurchase of common stock(1,491,485)— — 1,491,485(91,649)— — — (91,649)
Stock compensation expense— 5,483 — — — — 5,483 
Distributions to non-controlling interests of consolidated joint ventures
— — — — — (257)(257)
Balance – March 31, 2024106,059,917$1 $3,063,224 55,703,364$(1,356,746)$3,700,814 $896 $17,979 $5,426,168 
(1) Dollar amount includes $4.0 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.
For the three months ended March 31, 2023
Common StockAdditional
Paid-in
Capital
Treasury Stock Stockholders' Equity
Shares AmountAmountSharesAmount Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-
Controlling
Interests
Total
Stockholders’
Equity
Balance – December 31, 2022107,995,262$1 $3,025,489 51,396,923$(1,137,138)$2,741,615 $359 $16,533 4,646,859 
Net income— — — 191,051 — 177 191,228 
Exercise of stock options and issuance of restricted stock units, net(1)
1,148,175— 4,493 — — — — 4,493 
Repurchase of common stock(109,325)— — 109,325(3,568)— — — (3,568)
Stock compensation expense— 7,533 — — — — 7,533 
Changes in non-controlling interests of consolidated joint ventures— — — — — 1 1 
Balance – March 31, 2023109,034,112$1 $3,037,515 51,506,248$(1,140,706)$2,932,666 $359 $16,711 $4,846,546 
(1) Dollar amount includes $13.5 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
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ITEM 1. FINANCIAL STATEMENTS
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended March 31,
20242023
Cash Flows from Operating Activities
Net income before allocation to non-controlling interests$191,161 $191,228 
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Net income from unconsolidated entities(2,751)(1,929)
Stock compensation expense5,483 7,533 
Distributions of earnings from unconsolidated entities2,897 847 
Depreciation and amortization10,250 7,087 
Operating lease expense5,903 7,144 
Debt issuance costs amortization741 868 
Changes in operating assets and liabilities:
Real estate inventory and land deposits(363,923)51,596 
Mortgage loans held for sale, prepaid expenses and other assets(35,783)190,202 
Customer deposits31,570 1,993 
Accounts payable, accrued expenses and other liabilities(22,133)(112,097)
Income taxes payable45,848 2,977 
Net cash (used in)/provided by operating activities
$(130,737)$347,449 
Cash Flows from Investing Activities:
Purchase of property and equipment(9,111)(13,807)
Distributions of capital from unconsolidated entities 350 
Investments of capital into unconsolidated entities(23,936)(11,123)
Net cash used in investing activities$(33,047)$(24,580)
Cash Flows from Financing Activities
Increase in loans payable and other borrowings 2,425 
Repayments on loans payable and other borrowings(11,544)(7,377)
Borrowings on mortgage warehouse facilities713,090 634,404 
Repayments on mortgage warehouse facilities(683,380)(794,142)
Changes in stock option exercises and issuance of restricted stock units, net
(10,856)4,493 
Payment of principal portion of finance lease(1,327)(1,305)
Repurchase of common stock, net(91,649)(3,568)
Cash and distributions to non-controlling interests of consolidated joint ventures
(257) 
Net cash used in financing activities$(85,923)$(165,070)
Net Decrease/Increase in Cash and Cash Equivalents and Restricted Cash$(249,707)$157,799 
Cash, Cash Equivalents, and Restricted Cash — Beginning of period807,099 726,635 
Cash, Cash Equivalents, and Restricted Cash — End of period$557,392 $884,434 
Supplemental Cash Flow Information
Income tax refunds
$120 $1,943 
Supplemental Non-Cash Investing and Financing Activities:
Change in loans payable issued to sellers in connection with land purchase contracts$100,453 $39,865 
Change in inventory not owned$71,811 $(21,676)
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
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ITEM 1. FINANCIAL STATEMENTS
TAYLOR MORRISON HOME CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS
Description of the Business — Taylor Morrison Home Corporation (“TMHC”), through its subsidiaries (together with TMHC referred to herein as “we,” “our,” “the Company” and “us”), owns and operates a residential homebuilding business and is a land developer. We operate in the states of Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. We provide an assortment of homes across a wide range of price points to appeal to an array of consumer groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up, and resort- lifestyle buyers. We are the general contractors for all real estate projects and engage subcontractors for home construction and land development. Our homebuilding segments operate under various brand names including Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, Taylor Morrison Home Funding, INC (“TMHF”), title services through our wholly owned title services subsidiary, Inspired Title Services, LLC (“Inspired Title”), and homeowner’s insurance policies through our insurance agency, Taylor Morrison Insurance Services, LLC (“TMIS”). Our business is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as four reportable segments: East, Central, West, and Financial Services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”). In the opinion of management, the accompanying unaudited Condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full fiscal year.
Joint Ventures - We consolidate certain joint ventures in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation. The income from the percentage of the joint venture not owned by us is presented as “Net income attributable to non-controlling interests” on the unaudited Condensed consolidated statement of operations. The equity from the percentage of the joint ventures not owned by us is presented as “Non-controlling interests” on the unaudited Condensed consolidated statement of stockholders’ equity. The balance of non-controlling interests will fluctuate from period to period as a result of activities within the respective joint ventures which may include the allocation of income or losses and distributions or contributions associated with the partners within the joint venture.
Use of Estimates — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the unaudited Condensed consolidated financial statements and accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of goodwill, valuation of estimated development liabilities, valuation of equity awards, valuation allowance on deferred tax assets, and reserves for warranty and self-insured risks. Actual results could differ from those estimates.
Real Estate Inventory — Inventory consists of raw land, land under development, homes under construction, completed homes, and model homes, all of which are stated at cost. In addition to direct carrying costs, we also capitalize interest, real estate taxes, and related development costs that benefit the entire community, such as field construction supervision and related direct overhead. Home vertical construction costs are accumulated and charged to Cost of home closings at the time of home closing using the specific identification method. Land acquisition, development, interest, and real estate taxes are allocated generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction, and construction utilities are considered overhead costs and allocated on a per unit basis. These costs are capitalized to inventory from the point development begins to the point construction is completed. Changes in estimated costs to be incurred in a community are generally allocated to the remaining lots on a prospective basis.
The life cycle of a typical community generally ranges from two to five years, commencing with the acquisition of unentitled or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery of homes. Actual community duration will vary based on the size of the community, the sales absorption rate and whether we purchased the property as raw land or as finished lots.
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ITEM 1. FINANCIAL STATEMENTS
We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.
We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment. We review our real estate inventory for indicators of impairment on a community-level basis during each reporting period. If indicators of impairment are present for a community, an undiscounted cash flow analysis is generally prepared in order to determine if the carrying value of the assets in that community exceeds the estimated undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, the assets are potentially impaired, requiring a fair value analysis. Our determination of fair value is primarily based on a discounted cash flow model which includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. However, fair value can be determined through other methods, such as appraisals, contractual purchase offers, and other third party opinions of value. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. For the three months ended March 31, 2024 and 2023, no impairment charges were recorded.
In certain cases, we may elect to cease development and/or marketing of an existing community if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow for market conditions to improve. We refer to such communities as long-term strategic assets. The decision may be based on financial and/or operational metrics as determined by us. For those communities that have been temporarily closed or development has been discontinued, we do not allocate interest or other costs to the community's inventory until activity resumes. Such costs are expensed as incurred. In addition, if we decide to cease development, we will evaluate the project for impairment and then cease future development and marketing activity until such a time when we believe that market conditions have improved and economic performance can be maximized. Our assessment of the carrying value of our long-term strategic assets typically includes estimates of future performance, including the timing of when development will recommence, the type of product to be offered, and the margin to be realized. In the future, some of these inactive communities may be re-opened while others may be sold. As of March 31, 2024 and December 31, 2023, we had no long-term strategic assets.
Land held for sale — In some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land. Land is considered held for sale once it meets all criteria in accordance with ASC 360 Property, Plant and Equipment. Land held for sale is recorded at the lower of cost or fair value less costs to sell. In determining the value of land held for sale, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. For the three months ended March 31, 2024 and 2023, we had no material fair value adjustments for land held for sale.
Land banking arrangements — We have land purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the immediate use of funds from our available cash or other financing sources, we transfer our right under certain specific performance agreements to entities owned by third parties (“land banking arrangements”). These entities use equity contributions from their owners and/or incur debt to finance the acquisition and development of the land. We incur interest expense on these arrangements. Interest is based on remaining lots to be purchased and is capitalized for the percentage of lots in each project actively under development, with the remainder expensed and included in Interest income, net on the Condensed consolidated statements of operations. The entities grant us an option to acquire lots in staged takedowns. In consideration for this option, we make a non-significant and non-refundable cash deposit. We are not legally obligated to purchase the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots were not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. As such, these entities are not consolidated. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included in the unaudited Condensed consolidated balance sheets.
Investments in Consolidated and Unconsolidated Entities
Consolidated Entities — In the ordinary course of business, we enter into land purchase contracts, lot option contracts and land banking arrangements in order to procure land or lots for the construction of homes. Such contracts enable us to control significant lot positions with a minimal initial capital investment and substantially reduce the risk associated with land ownership and development. In accordance with ASC Topic 810, Consolidation, when we enter into agreements to acquire land or lots and pay a non-refundable deposit, we evaluate if a Variable Interest Entity (“VIE”) should be created if we are deemed to have provided subordinated financial support that will absorb some or all of an entity’s expected losses if they occur. If we are the primary beneficiary of the VIE, we consolidate the VIE and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, in the unaudited Condensed consolidated balance sheets.
Unconsolidated Joint Ventures — We use the equity method of accounting for entities which we exercise significant influence but do not have a controlling interest over the operating and financial policies of the investee. For unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint venture partners and
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ITEM 1. FINANCIAL STATEMENTS
determined that the partners have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in Net income from unconsolidated entities on the unaudited Condensed consolidated statements of operations when earned and distributions are credited against our Investments in unconsolidated entities on the unaudited Condensed consolidated balance sheets when received.
We evaluate our investments in unconsolidated entities for indicators of impairment semi-annually. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized, if any, is the excess of the investment's carrying amount over its estimated fair value. Additionally, we consider various qualitative factors to determine if a decrease in the value of the investment is other-than-temporary. These factors include age of the venture, stage in its life cycle, intent and ability for us to recover our investment in the entity, financial condition and long-term prospects of the entity, short-term liquidity needs of the unconsolidated entity, trends in the general economic environment of the land, entitlement status of the land held by the unconsolidated entity, overall projected returns on investment, defaults under contracts with third parties (including bank debt), recoverability of the investment through future cash flows and relationships among the entity's partners. If we believe that the decline in the fair value of the investment is temporary, then no impairment is recorded. We recorded no impairment charges related to the investments in unconsolidated entities for the three months ended March 31, 2024 and 2023.
Treasury Stock — We account for treasury stock, including the shares repurchased as part of our Accelerated Share Repurchase program ("ASR"), in accordance with ASC Topic 505-30, Equity—Treasury Stock. Repurchased shares are reflected as a reduction in stockholders' equity. Refer to Note 10 - Stockholders' Equity for additional discussion regarding the ASR.
Revenue Recognition — Revenue is recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). The standard's core principle requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.
Home and land closings revenue
Under Topic 606, the following steps are applied to determine home closings revenue and land closings revenue recognition: (1) identify the contract(s) with our customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions, have one contract, with one performance obligation, with each customer to build and deliver the home purchased (or develop and deliver land). Based on the application of the five steps, the following summarizes the timing and manner of home and land closings revenue:
Revenue from closings of residential real estate is recognized when the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
Revenue from land sales is recognized when a significant down payment is received, title passes and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.
Amenity and other revenue
We own and operate certain amenities such as golf courses, clubhouses, and fitness centers, which require us to provide club members with access to the facilities in exchange for the payment of club dues. We collect club dues and other fees from club members, which are invoiced on a monthly basis. Revenue from our golf club operations is also included in amenity and other revenue. Amenity and other revenue also includes revenue from the sale of assets from our Urban Form operations and Build-to-Rent operations.
Financial services revenue
Mortgage operations and hedging activity related to financial services are not within the scope of Topic 606. Loan origination fees (including title fees, points, and closing costs) are recognized at the time the related real estate transactions are completed, which is usually upon the close of escrow. Generally, loans TMHF originates are sold to third party investors within a short period of time, on a non-recourse basis. Gains and losses from the sale of mortgages are recognized in accordance with ASC Topic 860-20, Sales of Financial Assets. TMHF does not have continuing involvement with the transferred assets; therefore, we derecognize the mortgage loans at time of sale, based on the difference between the selling price and carrying value of the related loans upon sale, recording a gain/loss on sale in the period of sale. Also included in Financial services revenue/expenses is the realized and unrealized gains and losses from hedging instruments. ASC Topic 815-25, Derivatives and Hedging, requires that all hedging instruments be recognized as assets or liabilities on
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ITEM 1. FINANCIAL STATEMENTS
the balance sheet at their fair value. We do not meet the criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the statements of operations in the period in which they occur.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 requires all public entities to report segment information in accordance with Topic 280. The guidance will be effective for the annual reporting period ending December 31, 2024 but entities may early adopt. We are currently evaluating the effect of adopting the new guidance on our consolidated financial statements and related disclosures.
3. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income available to TMHC by the weighted average number of shares of Common Stock (as defined in Note 10) outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if all outstanding dilutive equity awards to issue shares of Common Stock were exercised or settled.
The following is a summary of the components of basic and diluted earnings per share (in thousands, except per share amounts):
Three Months Ended
March 31,
20242023
Numerator:
Net income
$190,270 $191,051 
Denominator:
Weighted average shares – basic106,457 108,429 
Restricted stock units1,112 913 
Stock Options995 711 
Weighted average shares – diluted108,564 110,053 
Earnings per common share – basic:
Net income
$1.79 $1.76 
Earnings per common share – diluted:
Net income
$1.75 $1.74 
The above calculations of weighted average shares exclude 138,521 and 664,145 of anti-dilutive stock options and unvested performance and non-performance restricted stock units ("RSUs") for the three months ended March 31, 2024 and 2023, respectively.
In addition, 155,757 shares relating to our ASR (refer to Note 10 - Stockholders' Equity) were also anti-dilutive and excluded from the above for the three months ended March 31, 2024. There were no ASR transactions in 2023.
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ITEM 1. FINANCIAL STATEMENTS
4. REAL ESTATE INVENTORY
Inventory consists of the following:
As of
(Dollars in thousands)March 31,
2024
December 31,
2023
Real estate developed and under development$4,076,312 $3,855,534 
Real estate held for development or held for sale (1)
46,312 29,317 
Total land inventory4,122,624 3,884,851 
Operating communities (2)
1,542,078 1,414,528 
Capitalized interest177,222 174,449 
Total owned inventory5,841,924 5,473,828 
Consolidated real estate not owned143,429 71,618 
Total real estate inventory$5,985,353 $5,545,446 
(1) Real estate held for development or held for sale includes properties which are not in active production.
(2) Operating communities consist of all vertical construction costs relating to homes in progress and completed homes.
We have land option purchase contracts, land banking arrangements and other controlled lot agreements. We do not have title to the properties, and the property owner and its creditors generally only have recourse against us in the form of retaining any non-refundable deposits. We are also not legally obligated to purchase the balance of the lots. Deposits related to these lots are capitalized when paid and classified as Land deposits until the associated property is purchased.
A summary of owned and controlled lots is as follows:
As of
(Dollars in thousands)March 31, 2024December 31, 2023
Owned lots:
Undeveloped13,321 13,418 
Under development9,708 8,848 
Finished12,177 11,811 
Total owned lots35,206 34,077 
Controlled lots:
Land option purchase contracts8,145 8,621 
Land banking arrangements5,995 5,818 
Other controlled lots(1)
24,836 23,846 
Total controlled lots38,976 38,285 
Total owned and controlled lots74,182 72,362 
Homes in inventory8,578 7,867 
(1) Other controlled lots include single transaction take-downs and lots from our portion of unconsolidated JVs.

Lots which have started vertical construction have been excluded from total owned lots. Controlled lots represent lots in which we have a contractual right, generally through an option contract or land banking arrangement as well as paid a land deposit to a seller for an underlying real estate asset. Homes in inventory include any lots with vertical construction.
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ITEM 1. FINANCIAL STATEMENTS

Capitalized InterestInterest capitalized, incurred and amortized is as follows (in thousands):
Three Months Ended
March 31,
20242023
Interest capitalized - beginning of period$174,449 $190,123 
Interest incurred and capitalized(1)
26,398 34,133 
Interest amortized to cost of home closings(23,625)(27,649)
Interest capitalized - end of period$177,222 $196,607 
(1) Excludes Interest income, net on the unaudited Condensed consolidated statements of operations as such amounts are not capitalizable.
5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES
Unconsolidated Entities
Summarized, unaudited condensed combined financial information of unconsolidated entities that are accounted for by the equity method are as follows (in thousands):
As of
March 31,
2024
December 31,
2023
Assets:
Real estate inventory$1,011,378 $952,223 
Other assets242,828 182,517 
Total assets$1,254,206 $1,134,740 
Liabilities and owners’ equity:
Debt$369,954 $317,224 
Other liabilities63,622 50,739 
Total liabilities$433,576 $367,963 
Owners’ equity:
TMHC$369,982 $346,192 
Others450,648 420,585 
Total owners’ equity$820,630 $766,777 
Total liabilities and owners’ equity$1,254,206 $1,134,740 
Three Months Ended
March 31,
20242023
Revenues$73,767 $19,536 
Costs and expenses(66,643)(14,699)
Net income from unconsolidated entities$7,124 $4,837 
TMHC’s share in net income of unconsolidated entities$2,751 $1,929 
Distributions to TMHC from unconsolidated entities$2,897 $1,197 
Consolidated Entities
As of March 31, 2024, assets of the consolidated joint ventures totaled $266.8 million, of which $35.9 million was cash and cash equivalents, $66.7 million was owned real estate inventory, and $120.8 million was property and equipment, net (primarily related to Urban Form). The majority of the property and equipment, net balance is held for investment as of March 31, 2024. As of December 31, 2023, the assets of the consolidated joint ventures totaled $265.2 million, of which $29.8 million was cash and cash equivalents, $70.2 million was owned real estate inventory, and $121.3 million was property and equipment, net. The liabilities of the consolidated joint ventures totaled $124.1 million and $133.8 million as of
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ITEM 1. FINANCIAL STATEMENTS
March 31, 2024 and December 31, 2023, respectively, and were primarily comprised of loans payable and other borrowings, accounts payable and accrued expenses and other liabilities.
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following (in thousands):
As of
March 31, 2024December 31, 2023
Real estate development costs to complete$45,723 $46,114 
Compensation and employee benefits77,393 149,095 
Self-insurance and warranty reserves186,948 184,448 
Interest payable26,039 31,042 
Property and sales taxes payable
29,442 30,887 
Other accruals93,550 107,488 
Total accrued expenses and other liabilities$459,095 $549,074 


Self-Insurance and Warranty Reserves – We accrue for the expected costs associated with our limited warranty, deductibles and self-insured exposure under our various insurance policies within Beneva Indemnity Company (“Beneva”), a wholly owned subsidiary. A summary of the changes in reserves are as follows (in thousands):
Three Months Ended
March 31,
20242023
Reserve - beginning of period$184,448 $161,675 
Additions to reserves20,666 14,447 
Cost of claims incurred(21,193)(20,508)
Changes in estimates to pre-existing reserves3,027 2,608 
Reserve - end of period$186,948 $158,222 
Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that actual costs could differ from those reserved and such differences could be material, resulting in a change in future estimated reserves.
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ITEM 1. FINANCIAL STATEMENTS
7. DEBT
Total debt consists of the following (in thousands):
As of
March 31, 2024December 31, 2023
PrincipalUnamortized
Debt Issuance (Costs)/
Premium
Carrying
Value
PrincipalUnamortized
Debt Issuance (Costs)/
Premium
Carrying
Value
5.875% Senior Notes due 2027
500,000 (2,476)497,524 500,000 (2,672)497,328 
6.625% Senior Notes due 2027
27,070 950 28,020 27,070 1,022 28,092 
5.75% Senior Notes due 2028
450,000 (2,394)447,606 450,000 (2,551)447,449 
5.125% Senior Notes due 2030
500,000 (4,015)495,985 500,000 (4,174)495,826 
Senior Notes subtotal$1,477,070 $(7,935)$1,469,135 $1,477,070 $(8,375)$1,468,695 
Loans payable and other borrowings441,190  441,190 394,943  394,943 
$1 Billion Revolving Credit Facility(1)(2)
      
$100 Million Revolving Credit Facility(1)(2)
      
Mortgage warehouse borrowings183,174  183,174 153,464  153,464 
Total debt$2,101,434 $(7,935)$2,093,499 $2,025,477 $(8,375)$2,017,102 
(1) Unamortized debt issuance costs are included in the Prepaid expenses and other assets, net on the Condensed consolidated balance sheets.
(2) The $1 Billion Revolving Credit Facility Agreement together with the $100 Million Revolving Credit Facility Agreement, the “Revolving Credit Facilities”.

Debt Instruments
Excluding the debt instruments discussed below, the terms governing all other debt instruments listed in the table above have not substantially changed from the year ended December 31, 2023. For information regarding such instruments, refer to Note 8 - Debt to the Consolidated Financial Statements in our Annual Report. As of March 31, 2024, we were in compliance with all of the covenants in the debt instruments listed in the table above.

$1 Billion Revolving Credit Facility
Our $1 Billion Revolving Credit Facility has a maturity date of March 11, 2027. We had no outstanding borrowings under our $1 Billion Revolving Credit Facility as of March 31, 2024 and December 31, 2023.
As of March 31, 2024 and December 31, 2023, we had $2.7 million and $2.9 million, respectively, of unamortized debt issuance costs relating to our $1 Billion Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the unaudited Condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, we had $59.9 million and $61.2 million, respectively, of utilized letters of credit, resulting in $940.1 million and $938.8 million, respectively, of availability under the $1 Billion Revolving Credit Facility.
As of March 31, 2024, we were in compliance with all of the covenants under the $1 Billion Revolving Credit Facility.
TAYLOR MORRISON HOME CORPORATION 10-Q
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ITEM 1. FINANCIAL STATEMENTS
Mortgage Warehouse Borrowings
The following is a summary of our mortgage warehouse borrowings (in thousands):
As of March 31, 2024
FacilityAmount
Drawn
Facility
Amount
Interest
Rate(2)
Expiration
Date
Collateral (1)
Warehouse A$ $60,000 
Term SOFR + 1.70%
on DemandMortgage Loans
Warehouse C59,603 100,000 
Term SOFR + 1.50%
on DemandMortgage Loans
Warehouse D60,511 100,000 
Daily SOFR + 1.50%
September 4, 2024Mortgage Loans
Warehouse E63,060 100,000 
Term SOFR + 1.60%
on DemandMortgage Loans
Total$183,174 $360,000  
As of December 31, 2023
FacilityAmount
Drawn
Facility
Amount
Interest
Rate(2)
Expiration
Date
Collateral (1)
Warehouse A$13,477 $60,000 
Term SOFR + 1.70%
on DemandMortgage Loans
Warehouse C25,567 100,000 
Term SOFR + 1.65%
on DemandMortgage Loans
Warehouse D56,745 100,000 
Daily SOFR + 1.50%
September 4, 2024Mortgage Loans
Warehouse E57,675 100,000 
Term SOFR + 1.60%
on DemandMortgage Loans
Total$153,464 $360,000 
(1) The mortgage warehouse borrowings outstanding as of March 31, 2024 and December 31, 2023 were collateralized by $216.6 million and $193.3 million, respectively, of mortgage loans held for sale.
(2) Secured Overnight Financing Rate ("SOFR")


Loans Payable and Other Borrowings
Loans payable and other borrowings as of March 31, 2024 and December 31, 2023 consist of project-level debt due to various land sellers and financial institutions for specific communities. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot closings or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0% to 10% and 0% to 9% at March 31, 2024 and December 31, 2023, respectively. We impute interest for loans with no stated interest rates.
8. FAIR VALUE DISCLOSURES
ASC Topic 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:
Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.
Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.
Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.
The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. Derivative assets and liabilities include interest rate lock commitments (“IRLCs”) and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loans, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our mortgage warehouse borrowings, loans payable and other borrowings, and the borrowings under our Revolving Credit Facilities approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our senior notes is derived from quoted market prices by independent dealers in markets that are not active. There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of March 31, 2024, when compared to December 31, 2023.
TAYLOR MORRISON HOME CORPORATION 10-Q
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ITEM 1. FINANCIAL STATEMENTS
The carrying value and fair value of our financial instruments are as follows:
March 31, 2024December 31, 2023
(Dollars in thousands)Level in Fair
Value Hierarchy
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Description:
Mortgage loans held for sale2$216,633 $216,633 $193,344 $193,344 
IRLCs3(795)(795)1,489 1,489 
MBSs2(2,039)(2,039)(5,055)(5,055)
Mortgage warehouse borrowings2183,174 183,174 153,464 153,464 
Loans payable and other borrowings2441,190 441,190 394,943 394,943 
5.875% Senior Notes due 2027 (1)
2497,524 498,790 497,328 502,500 
6.625% Senior Notes due 2027 (1)
228,020 26,393 28,092 26,529 
5.75% Senior Notes due 2028 (1)
2447,606 446,103 447,449 451,571 
5.125% Senior Notes due 2030 (1)
2495,985 475,805 495,826 483,690 
(1) Carrying value for senior notes, as presented, includes unamortized debt issuance costs and premiums. Debt issuance costs are not factored into the fair value calculation for the senior notes.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The fair value of our inventories at March 31, 2024 and December 31, 2023 was not determined as there were no events or circumstances that indicated their carrying value was not recoverable.
9. INCOME TAXES
The effective tax rate for the three months ended March 31, 2024 was 23.2%, compared to 23.0% for the same period in 2023. For the three months ended March 31, 2024, the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to state income taxes, excess tax benefits related to stock-based compensation, and credits related to homebuilding activities.
There were no unrecognized tax benefits as of March 31, 2024 or December 31, 2023.
10. STOCKHOLDERS’ EQUITY
Capital Stock
The Company’s authorized capital stock consists of 400,000,000 shares of common stock, par value $0.00001 per share (the “Common Stock”), and 50,000,000 shares of preferred stock, par value $0.00001 per share.
Stock Repurchase Program
On December 15, 2023 the Board of Directors authorized a renewal of the Company's then-existing stock repurchase program which permits the repurchase up to $500 million of the Company’s common stock through December 31, 2025. Repurchases under the program may occur from time to time through open market purchases, privately negotiated transactions or other transactions.

On March 5, 2024, using the availability under our stock repurchase program, we entered into an ASR agreement and paid $50.0 million to receive an initial delivery of 705,343 shares of our common stock in accordance with the ASR agreement with a third-party financial institution. The final settlement of the ASR is expected to occur no later than the third quarter of 2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number of shares to be delivered. We accounted for the ASR as a common stock repurchase and a forward contract indexed to our own common stock. We determined that the equity classification criteria was met for the forward contract; therefore, it was not accounted for as a derivative instrument.
The following table summarizes share repurchase activity for the periods presented:
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ITEM 1. FINANCIAL STATEMENTS
Three Months Ended March 31,
(Dollars in thousands)20242023
Amount available for repurchase — beginning of period$494,489 $279,138 
Amount repurchased(1)
(91,649)(3,568)
Amount available for repurchase — end of period$402,840 $275,570 
(1) This amount includes $50.0 million of accelerated share repurchase.
We repurchased a total of 1,491,485 and 109,325 shares during the three months ended March 31, 2024 and 2023.
The Inflation Reduction Act was enacted on August 16, 2022 and includes a one percent excise tax on the net repurchase of company stock. This act was effective as of January 1, 2023 and did not have a material impact on our financial statements for the three months ended March 31, 2024. We will continue to assess the impact it may have on our financial results.
11. STOCK BASED COMPENSATION
Equity-Based Compensation
In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “Plan”). The Plan was most recently amended and restated in May 2022. The Plan provides for the grant of stock options, RSUs, performance-based restricted stock units (“PRSUs”), and other equity-based awards deliverable in shares of our Common Stock. As of March 31, 2024, we had an aggregate of 4,898,061 shares of Common Stock available for future grants under the Plan.
The following table provides the outstanding balance of RSUs, PRSUs, and stock options as of March 31, 2024:
RSUs and PRSUsStock Options
Number of Units
Weighted Average
Grant Date Fair
Value
Number of Options
Weighted
Average Exercise
Price Per Share
Balance at March 31, 20241,337,595$37.72 2,236,404$28.44 
The following table provides information regarding the amount and components of stock-based compensation expense, all of which is included in General and administrative expenses in the unaudited Condensed consolidated statements of operations (in thousands):
Three Months Ended
March 31,
20242023
Restricted stock units (1)
$4,772 $6,675 
Stock options711 858 
Total stock compensation$5,483 $7,533 
(1) Includes compensation expense related to time-based RSUs and PRSUs.
At March 31, 2024 and December 31, 2023, the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately $45.2 million and $26.5 million, respectively.
12. OPERATING AND REPORTING SEGMENTS
We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling homes, and providing warranty and customer service. We aggregate our homebuilding operating components into three reporting segments, East, Central, and West, based on similar long-term economic characteristics. The activity from our Build-to-Rent and Urban Form operations are included in our Corporate segment. We also have a Financial Services reporting segment.
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ITEM 1. FINANCIAL STATEMENTS
Our reporting segments are as follows:
EastAtlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
CentralAustin, Dallas, Denver, and Houston
WestBay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial ServicesTaylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services
Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity. Segment information is as follows (in thousands):
Three Months Ended March 31, 2024
East Central West Financial
Services
Corporate
and
Unallocated(1)
Total
Total revenue$547,311 $478,490 $622,829 $46,959 $4,163 $1,699,752 
Gross margin145,888 124,231 123,664 21,816 1,246 416,845 
Selling(2), general and administrative expenses
(46,201)(39,393)(44,748) (39,822)(170,164)
Net (loss)/income from unconsolidated entities (41)(26)2,897 (79)2,751 
Interest and other (expense)/income, net(3)
(827)(2,415)(3,518)730 5,478 (552)
Income/(loss) before income taxes$98,860 $82,382 $75,372 $25,443 $(33,177)$248,880 
(1) Includes the activity from our Build-To-Rent and Urban Form operations.
(2) Includes sales, commissions, and other marketing costs.
(3) Interest and other (expense)/income, net includes pre-acquisition write-offs on terminated projects.
Three Months Ended March 31, 2023
East Central West Financial Services
Corporate
and
Unallocated(1)
Total
Total revenue$610,813 $465,011 $547,906 $35,149 $2,978 $1,661,857 
Gross margin165,707 111,313 108,627 13,001 918 399,566 
Selling(2), general and administrative expenses
(43,047)(36,956)(40,484) (38,534)(159,021)
Net (loss)/income from unconsolidated entities (82)(235)2,275 (29)1,929 
Interest and other (expense)/income, net(3)
(1,212)(1,341)3,779  4,719 5,945 
Income/(loss) before income taxes$121,448 $72,934 $71,687 $15,276 $(32,926)$248,419 
(1) Includes the activity from our Build-To-Rent and Urban Form operations.
(2) Includes sales, commissions, and other marketing costs.
(3) Interest and other (expense)/income, net includes pre-acquisition write-offs on terminated projects.
As of March 31, 2024
EastCentralWestFinancial Services
Corporate
and
Unallocated(1)
Total
Real estate inventory and land deposits$2,172,523 $1,205,995 $2,805,878 $ $ $6,184,396 
Investments in unconsolidated entities63,628 132,007 98,491 5,483 70,373 369,982 
Other assets164,058 221,082 596,523 320,556 1,053,746 2,355,965 
Total assets$2,400,209 $1,559,084 $3,500,892 $326,039 $1,124,119 $8,910,343 
(1) Includes the assets from our Build-To-Rent and Urban Form operations.
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ITEM 1. FINANCIAL STATEMENTS
As of December 31, 2023
EastCentralWestFinancial
Services
Corporate
and
Unallocated(1)
Total
Real estate inventory and land deposits$1,909,084 $1,181,014 $2,658,565 $ $ $5,748,663 
Investments in unconsolidated entities63,628 125,610 88,219 5,483 63,252 346,192 
Other assets177,739 214,685 616,210 298,451 1,270,147 2,577,232 
Total assets$2,150,451 $1,521,309 $3,362,994 $303,934 $1,333,399 $8,672,087 
(1) Includes the assets from our Build-To-Rent and Urban Form operations.
13. COMMITMENTS AND CONTINGENCIES
Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit and surety bonds under these arrangements totaled $1.3 billion as of March 31, 2024 and December 31, 2023. Although significant development and construction activities have been completed related to these site improvements, the bonds are generally not released until all development and construction activities are completed. We do not believe that it is probable that any outstanding bonds as of March 31, 2024 will be drawn upon.
Purchase Commitments —We are subject to the usual obligations associated with entering into contracts (including land option contracts and land banking arrangements) for the purchase, development, and sale of real estate in the routine conduct of our business. We have a number of land purchase option contracts and land banking agreements, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property and the property owner and its creditors generally have no recourse. Our obligations with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits. The aggregate purchase price for land under these contracts was $1.5 billion at March 31, 2024 and December 31, 2023.
Legal Proceedings — We are involved in various litigation and legal claims in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations.
We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss can be reasonably estimated. At March 31, 2024 and December 31, 2023, our legal accruals were $23.2 million and $26.2 million, respectively. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. Predicting the ultimate resolution of the pending matters, the related timing, or the eventual loss associated with these matters is inherently difficult. Accordingly, the liability arising from the ultimate resolution of any matter may exceed the estimate reflected in the accrued liabilities relating to such matter. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.
On April 26, 2017, a class action complaint was filed in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida by Norman Gundel, William Mann, and Brenda Taylor against Avatar Properties, Inc. (an acquired AV Homes entity) ("Avatar"), generally alleging that our collection of club membership fees in connection with the use of one of our amenities in our East homebuilding segment violates various laws relating to homeowner associations and other Florida-specific laws (the "Solivita litigation"). The class action complaint sought an injunction to prohibit future collection of club membership fees. On November 2, 2021, the court determined that the club membership fees were improper and that plaintiffs were entitled to $35.0 million in fee reimbursements. We appealed the court’s ruling to the Sixth District Court of Appeal on November 29, 2021, and the plaintiffs agreed to continue to pay club membership fees pending the outcome of the appeal. On June 23, 2023 the District Court affirmed the trial court judgment in a split decision, with three separate opinions. Recognizing the potential “far-reaching effects on homeowners associations throughout the State,” the District Court certified a question of great public importance to the Florida Supreme Court, and we filed a notice to invoke the discretionary review of the Florida Supreme Court. On November 2, 2023, the Florida Supreme Court declined to exercise jurisdiction.
Following the Florida Supreme Court’s decision, we paid $64.7 million to the plaintiffs during the quarter ended December 31, 2023, which included the amount of the trial court’s judgment, club membership fees received during the pendency of our appeal, pre-judgment interest and post-judgment interest. We expect to incur additional costs with respect to the plaintiff’s legal fees and costs; however, such amount cannot be reasonably estimated. Plaintiffs have also asserted claims for additional pre-judgment interest, for which we believe we have substantial defenses. Hearings on the plaintiff's pre-judgment interest and legal fees have been scheduled for the third quarter of 2024.
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ITEM 1. FINANCIAL STATEMENTS
After reviewing our amenity arrangements in our Florida communities to determine whether such arrangements might subject the Company to liability in light of the outcome of the Solivita litigation described above, we identified one additional community with similar claims. On August 13, 2020, Slade Chelbian, a resident of our Bellalago community in Kissimmee, Florida, filed a purported class action suit against Avatar, AV Homes, Inc. and Taylor Morrison Home Corporation in the Circuit Court of the Ninth Circuit in and for Osceola County, Florida, generally alleging that Avatar cannot earn profits from community members for use of club amenities where membership in the club is mandatory for all residents and failure to pay club membership fees could result in the foreclosure of their homes by Avatar. On February 25, 2022, the court stayed the action pending the resolution of the Solivita litigation. Following the resolution of the Solivita appeal, the court held a case management conference wherein the court scheduled a class certification hearing for the fourth quarter of 2024, but no class has been certified to date. While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, we have recorded an accrual for our estimated liability for this matter, which is reflected in our legal accruals as of March 31, 2024.
Leases — Our leases primarily consist of office space, construction trailers, model home leasebacks, a ground lease, equipment, and storage units. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases. Lease obligations were $81.1 million and $85.0 million as of March 31, 2024 and December 31, 2023, respectively. We recorded lease expense of approximately $5.9 million for the three months ended March 31, 2024, and $7.1 million for the three months ended March 31, 2023, within General and administrative expenses on our unaudited Condensed consolidated statements of operations.
14. MORTGAGE HEDGING ACTIVITIES
The following summarizes derivative instrument assets (liabilities) as of the periods presented:
As of
March 31, 2024December 31, 2023
(Dollars in thousands)Fair Value
Notional Amount (1)
Fair Value
Notional Amount (1)
IRLCs$(795)$271,291 $1,489 $219,129 
MBSs(2,039)481,000 (5,055)285,000 
Total$(2,834)$(3,566)
(1) The notional amounts in the table above include mandatory and best effort mortgages, that have been locked and approved.
Total commitments to originate loans approximated $291.8 million and $242.6 million as of March 31, 2024 and December 31, 2023, respectively. This amount represents the commitments to originate loans that have been locked and approved by underwriting. The notional amounts in the table above includes mandatory and best effort loans that have been locked and approved by underwriting.
We have exposure to credit loss in the event of contractual non-performance by our trading counterparties in derivative instruments that we use in our rate risk management activities. We manage this credit risk by selecting only counterparties that we believe to be financially strong, spreading the risk among multiple counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with counterparties, as appropriate. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon.
TAYLOR MORRISON HOME CORPORATION 10-Q
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For purposes of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “we,” “us,” or “our” refer to Taylor Morrison Home Corporation (“TMHC”) and its subsidiaries. The Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements included elsewhere in this quarterly report.
Forward-Looking Statements
This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business and operations strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “can,” “could,” “might,” “project” or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”) and in our subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”). Although we believe that these forward-looking statements are based upon reasonable assumptions and currently available information, you should be aware that many factors, including those described under the heading “Risk Factors” in the Annual Report and in our subsequent filings with the SEC, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.
Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except as required by applicable law.
Business Overview
Our principal business is residential homebuilding and the development of lifestyle communities with operations across 11 states. We provide an assortment of homes across a wide range of price points to appeal to an array of consumer groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up, and resort-lifestyle buyers. We operate under various brand names including Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand name. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, TMHF, title services through our wholly owned title services subsidiary, Inspired Title, and homeowner’s insurance policies through our wholly owned insurance agency, TMIS. Our business is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as four reportable segments: East, Central, West and Financial Services, as follows:
EastAtlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
CentralAustin, Dallas, Denver, and Houston
WestBay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial ServicesTaylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services
As of March 31, 2024, we employed approximately 2,900 full-time equivalent persons. Of these, approximately 2,500 were engaged in corporate and homebuilding operations, and the remaining approximately 400 were engaged in financial services.
Recent Developments

On April 29, 2024, using cash on hand, we acquired the assets of Pyatt Builders, a privately-held Indianapolis based homebuilder, including access to approximately 1,500 homebuilding lots. The entrance into Indianapolis further diversifies
TAYLOR MORRISON HOME CORPORATION 10-Q
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
our geographic footprint and will be incorporated into our Central region. The fair value of the assets acquired will be determined during the quarter ended June 30, 2024 and reflected in our balance sheet at that time.
First Quarter 2024 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated):
Net sales orders increased 29% to 3,686, driven by a monthly absorption pace of 3.7 per community versus 2.9 a year ago
Home closings revenue of $1.6 billion, driven by 2,731 home closings at an average price of $599,000
Home closings gross margin of 24.0%
74,182 homebuilding lots owned and controlled, representing 6.5 years of total supply, of which 3.1 years was owned
Repurchased 1.5 million common shares for $92 million
Homebuilding debt to capitalization of 26.1% on a gross basis and 20.1% net of $554 million of unrestricted cash
Total liquidity of $1.6 billion
Results of Operations
The following table sets forth our results of operations for the periods presented:
Three Months Ended
March 31,
(Dollars in thousands)20242023
Statements of Operations Data:
Home closings revenue, net$1,636,255 $1,612,595 
Land closings revenue7,225 4,520 
Financial services revenue46,959 35,149 
Amenity and other revenue9,313 9,593 
Total revenue1,699,752 1,661,857 
Cost of home closings1,243,209 1,227,513 
Cost of land closings5,202 4,345 
Financial services expenses25,143 22,148 
Amenity and other expenses9,353 8,285 
Total cost of revenue1,282,907 1,262,291 
Gross margin416,845 399,566 
Sales, commissions and other marketing costs102,600 92,760 
General and administrative expenses67,564 66,261 
Net income from unconsolidated entities(2,751)(1,929)
Interest income, net(43)(1,111)
Other expense/(income), net595 (4,834)
Income before income taxes248,880 248,419 
Income tax provision57,719 57,191 
Net income before allocation to non-controlling interests191,161 191,228 
Net income attributable to non-controlling interests(891)(177)
Net income$190,270 $191,051 
Home closings gross margin24.0 %23.9 %
Sales, commissions and other marketing costs as a percentage of home closings revenue, net
6.3 %5.8 %
General and administrative expenses as a percentage of home closings revenue, net
4.1 %4.1 %
Non-GAAP Measures
In addition to the results reported in accordance with GAAP, we generally provide our investors with supplemental information 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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect net income/(loss), 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, gain/loss on land transfers to joint ventures and extinguishment of debt, net, and legal settlements the Company deems not to be in the ordinary course of business 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), and non-cash compensation expense, if any, inventory impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, gain/loss on land transfers to joint ventures, extinguishment of debt, net, and legal settlements that the Company deems not to be in the ordinary course of business, in each case, as applicable in a given period.

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 (“net homebuilding debt”), by (ii) total capitalization (the sum of net homebuilding debt and total stockholders’ equity).
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 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.
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.

Because the company did not experience any material adjustments applicable to (i) adjusted net income and adjusted earnings per common share; (ii) adjusted income before income taxes and related margin; or (iii) adjusted home closings gross margin during the periods presented that would cause such measures to differ from the comparable GAAP measures, such measures have not been separately presented herein.

A reconciliation of (i) EBITDA and adjusted EBITDA and (ii) net homebuilding debt to capitalization ratio to the comparable GAAP measures is presented below.
TAYLOR MORRISON HOME CORPORATION 10-Q
22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EBITDA and Adjusted EBITDA Reconciliation
Three Months Ended March 31,
(Dollars in thousands)20242023
Net income before allocation to non-controlling interests$191,161 $191,228 
Interest income, net(43)(1,111)
Amortization of capitalized interest23,625 27,649 
Income tax provision57,719 57,191 
Depreciation and amortization3,138 1,790 
EBITDA$275,600 $276,747 
Non-cash compensation expense5,483 7,533 
Adjusted EBITDA$281,083 $284,280 
Total revenue$1,699,752 $1,661,857 
Net income before allocation to non-controlling interests as a percentage of
   total revenue
11.2 %11.5 %
EBITDA as a percentage of total revenue16.2 %16.7 %
Adjusted EBITDA as a percentage of total revenue16.5 %17.1 %
Net Homebuilding Debt to Capitalization Ratio Reconciliation
As of
(Dollars in thousands)March 31, 2024December 31, 2023March 31, 2023
Total debt$2,093,499 $2,017,102 $2,301,878 
Plus: unamortized debt issuance cost, net7,935 8,375 10,193 
Less: mortgage warehouse borrowings(183,174)(153,464)(146,334)
Total homebuilding debt$1,918,260 $1,872,013 $2,165,737 
Total stockholders' equity
5,426,168 5,332,286 4,846,546 
Total capitalization$7,344,428 $7,204,299 $7,012,283 
Total homebuilding debt to capitalization ratio26.1 %26.0 %30.9 %
Total homebuilding debt1,918,260 1,872,013 2,165,737 
Less: cash and cash equivalents(554,287)(798,568)(877,717)
Net homebuilding debt$1,363,973 $1,073,445 $1,288,020 
Total stockholders' equity
$5,426,168 $5,332,286 $4,846,546 
Total capitalization$6,790,141 $6,405,731 $6,134,566 
Net homebuilding debt to capitalization ratio20.1 %16.8 %21.0 %
Three months ended March 31, 2024 compared to three months ended March 31, 2023
Ending Active Selling Communities
As of March 31,Change
20242023
East113 106 6.6 %
Central93 98 (5.1)%
West125 120 4.2 %
Total331 324 2.2 %
The total ending active selling communities increased by seven outlets at March 31, 2024 when compared to March 31, 2023. The increase is primarily due to the timing of community openings, which were partially offset by community close-outs.
TAYLOR MORRISON HOME CORPORATION 10-Q
23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Sales Orders
Three Months Ended March 31,
Net Sales Orders (1)
Sales Value (1)
Average Selling Price
(Dollars in thousands)20242023Change 20242023Change 20242023Change
East1,2951,07920.0 %$776,861 $644,519 20.5 %$600 $597 0.5 %
Central90467434.1 %478,419 384,830 24.3 %529 571 (7.4)%
West1,4871,10135.1 %984,483 756,344 30.2 %662 687 (3.6 %)
Total3,6862,85429.2 %$2,239,763 $1,785,693 25.4 %$608 $626 (2.9 %)
(1) Net sales orders and sales value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.
Net sales orders and sales value increased 29.2% and 25.4% for the three months ended March 31, 2024, compared to the same period in the prior year, respectively. The increases were primarily the result of strong sales in certain, larger communities and fewer cancellations across all segments which we believe is as a result of improved buyer confidence, coupled with stabilizing interest rates. We continue to offer our buyers various incentives, discounts, and financing programs which further contributed to the increase in net sales orders. Average selling prices decreased by 2.9% for three months ended March 31, 2024, compared to the same period in the prior year as a result of an increase in our pricing incentives in certain markets.
Sales Order Cancellations
Cancellation Rate(1)
Three Months Ended March 31,
20242023
East5.8 %9.3 %
Central8.6 %18.0 %
West7.1 %15.8 %
Total Company7.0 %14.0 %
(1) Cancellation rate represents the number of canceled sales orders divided by gross sales orders.
The total company cancellation rate decreased for the three months ended March 31, 2024, compared to the same period in the prior year. We believe the decrease in cancellations is due to improved buyer confidence as a result of stabilizing macro economic factors such as mortgage interest rates and inflation.
Sales Order Backlog
Three Months Ended March 31,
Sold Homes in Backlog (1)
Sales ValueAverage Selling Price
(Dollars in thousands)20242023