Company Quick10K Filing
Taylor Morrison Home
Price25.33 EPS2
Shares109 P/E13
MCap2,751 P/FCF18
Net Debt1,907 EBIT278
TEV4,658 TEV/EBIT17
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-02-19
10-Q 2019-09-30 Filed 2019-10-30
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-02-20
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-08-01
10-Q 2018-03-31 Filed 2018-05-02
10-K 2017-12-31 Filed 2018-02-21
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-02
10-Q 2017-03-31 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-02-21
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-03
10-Q 2016-03-31 Filed 2016-05-04
10-K 2015-12-31 Filed 2016-02-25
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-05
10-Q 2014-06-30 Filed 2014-08-05
10-Q 2014-03-31 Filed 2014-05-07
10-K 2013-12-31 Filed 2014-02-24
10-Q 2013-09-30 Filed 2013-11-13
10-Q 2013-06-30 Filed 2013-08-14
10-Q 2013-03-31 Filed 2013-05-15
8-K 2020-05-28 Shareholder Vote
8-K 2020-05-06 Earnings, Exhibits
8-K 2020-04-08 Earnings, Officers, Other Events, Exhibits
8-K 2020-02-28 Other Events, Exhibits
8-K 2020-02-06 Enter Agreement, Off-BS Arrangement, Officers, Other Events, Exhibits
8-K 2020-02-06 Enter Agreement, Leave Agreement, M&A, Off-BS Arrangement, Sale of Shares, Officers, Regulation FD, Other Events, Exhibits
8-K 2020-02-05 Earnings, Exhibits
8-K 2020-01-31 Other Events, Exhibits
8-K 2020-01-30 Shareholder Vote, Other Events, Exhibits
8-K 2020-01-27 Other Events, Exhibits
8-K 2020-01-23 Other Events
8-K 2020-01-17 Other Events, Exhibits
8-K 2020-01-03 Other Events, Exhibits
8-K 2019-12-18 Other Events, Exhibits
8-K 2019-12-05 Other Events, Exhibits
8-K 2019-12-05 Regulation FD, Other Events, Exhibits
8-K 2019-11-05 Enter Agreement, Other Events, Exhibits
8-K 2019-11-05 Other Events, Exhibits
8-K 2019-10-30 Earnings, Exhibits
8-K 2019-08-01 Enter Agreement, Off-BS Arrangement
8-K 2019-07-31 Earnings, Exhibits
8-K 2019-07-18 Earnings, Regulation FD, Exhibits
8-K 2019-07-18 Regulation FD, Exhibits
8-K 2019-06-05 Enter Agreement, Off-BS Arrangement, Regulation FD
8-K 2019-05-29 Shareholder Rights, Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-05-21 Regulation FD, Exhibits
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-03-11 Other Events, Exhibits
8-K 2019-02-13 Earnings, Exhibits
8-K 2019-02-01 Officers, Exhibits
8-K 2018-11-21 Other Events, Exhibits
8-K 2018-10-31 Earnings, Regulation FD, Exhibits
8-K 2018-10-15 Enter Agreement, Other Events, Exhibits
8-K 2018-10-02 Enter Agreement, M&A, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2018-09-19 Other Events, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-07-18 Officers, Exhibits
8-K 2018-06-29 Enter Agreement, Off-BS Arrangement
8-K 2018-06-14 Officers
8-K 2018-06-07 Other Events, Exhibits
8-K 2018-06-07 Enter Agreement, Other Events, Exhibits
8-K 2018-05-30 Shareholder Rights, Amend Bylaw, Shareholder Vote, Exhibits
8-K 2018-05-02 Earnings, Exhibits
8-K 2018-02-07 Earnings, Exhibits
8-K 2018-01-26 Enter Agreement, Off-BS Arrangement
8-K 2018-01-11 Enter Agreement, Officers, Other Events, Exhibits
8-K 2018-01-11 Earnings
8-K 2018-01-03 Enter Agreement, Other Events, Exhibits

TMHC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.3 tmhc-33120xex103q1.htm
EX-10.4 tmhc-33120xex104q1.htm
EX-10.5 tmhc-33120xex105q1.htm
EX-31.1 tmhc-33120xex311q1.htm
EX-31.2 tmhc-33120xex312q1.htm
EX-32.1 tmhc-33120xex321q1.htm
EX-32.2 tmhc-33120xex322q1.htm

Taylor Morrison Home Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
1.51.20.90.60.30.02014201620182020
Rev, G Profit, Net Income
0.50.30.20.0-0.1-0.32012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR

TRANSITION 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)
 
Delaware
 
83-2026677
(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 class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.00001 par value
TMHC
New 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  ý    No  ¨
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  ý    No  ¨
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 Filer
 
  
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
¨
  
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
 
  
 
 
 


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. ¨                                               
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý
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 May 11, 2020
Common stock, $0.00001 par value
  
129,599,966
 



TAYLOR MORRISON HOME CORPORATION
TABLE OF CONTENTS
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts, unaudited)

 
 
March 31,
2020
 
December 31,
2019
Assets
 
 
 
 
Cash and cash equivalents
 
$
507,761

 
$
326,437

Restricted cash
 
3,671

 
2,135

Total cash, cash equivalents, and restricted cash
 
511,432

 
328,572

Owned inventory
 
5,706,335

 
3,967,359

Real estate not owned
 
186,885

 
19,185

Total real estate inventory
 
5,893,220

 
3,986,544

Land deposits
 
167,029

 
39,810

Mortgage loans held for sale
 
208,231

 
190,880

Derivative assets
 
8,711

 
2,099

Lease right of use assets
 
73,790

 
36,663

Prepaid expenses and other assets, net
 
177,372

 
85,515

Other receivables, net
 
115,119

 
70,447

Investments in unconsolidated entities
 
127,367

 
128,759

Deferred tax assets, net
 
268,693

 
140,466

Property and equipment, net
 
98,798

 
85,866

Intangible assets, net
 
531

 
637

Goodwill
 
612,079

 
149,428

Total assets
 
$
8,262,372

 
$
5,245,686

Liabilities
 
 
 
 
Accounts payable
 
$
230,312

 
$
164,580

Accrued expenses and other liabilities
 
398,186

 
325,368

Lease liabilities
 
79,724

 
42,317

Income taxes payable
 
3,127

 
3,719

Customer deposits
 
204,336

 
167,328

Estimated development liability
 
36,393

 
36,705

Senior notes, net
 
2,762,075

 
1,635,008

Loans payable and other borrowings
 
299,184

 
182,531

Revolving credit facility borrowings
 
485,000

 

Mortgage warehouse borrowings
 
154,109

 
123,233

Liabilities attributable to real estate not owned
 
186,885

 
19,185

Total liabilities
 
4,839,331

 
2,699,974

COMMITMENTS AND CONTINGENCIES (Note 16)
 

 

Stockholders’ Equity
 
 
 
 
Total stockholders’ equity
 
3,423,041

 
2,545,712

Total liabilities and stockholders’ equity
 
$
8,262,372

 
$
5,245,686


See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

2


TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
Home closings revenue, net
 
$
1,264,640

 
$
899,881

Land closings revenue
 
22,939

 
4,113

Financial services revenue
 
28,039

 
16,044

Amenity and other revenue
 
30,081

 
5,054

Total revenue
 
1,345,699

 
925,092

Cost of home closings
 
1,070,503

 
735,797

Cost of land closings
 
27,132

 
2,692

Financial services expenses
 
20,647

 
10,721

Amenity and other expenses
 
29,661

 
3,842

Total cost of revenue
 
1,147,943

 
753,052

Gross margin
 
197,756

 
172,040

Sales, commissions and other marketing costs
 
86,327

 
67,429

General and administrative expenses
 
50,526

 
36,454

Equity in income of unconsolidated entities
 
(2,426
)
 
(2,319
)
Interest income, net
 
(560
)
 
(333
)
Other expense/(income), net
 
6,290

 
(1,392
)
Transaction expenses
 
86,374

 
4,129

(Loss)/income before income taxes
 
(28,775
)
 
68,072

Income tax provision
 
781

 
16,791

Net (loss/)income before allocation to non-controlling interests
 
(29,556
)
 
51,281

Net income attributable to non-controlling interests — joint ventures
 
(1,875
)
 
(150
)
Net (loss)/income available to Taylor Morrison Home Corporation
 
$
(31,431
)
 
$
51,131

(Loss)/earnings per common share
 
 
 
 
Basic
 
$
(0.26
)
 
$
0.46

Diluted
 
$
(0.26
)
 
$
0.46

Weighted average number of shares of common stock:
 
 
 
 
Basic
 
121,908

 
110,512

Diluted
 
121,908

 
111,668


See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

3


TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(In thousands, unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
(Loss)/income before non-controlling interests, net of tax
 
$
(29,556
)
 
$
51,281

Post-retirement benefits adjustments, net of tax
 
(13
)
 
(284
)
Comprehensive (loss)/income
 
(29,569
)
 
50,997

Comprehensive loss attributable to non-controlling interests — joint ventures
 
(1,875
)
 
(150
)
Comprehensive (loss)/income available to Taylor Morrison Home Corporation
 
$
(31,444
)
 
$
50,847


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

4


TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands, except share data, unaudited)

For the three months ended March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Stockholders' Equity
 
 
Shares
 
Amount
 
Amount
 
Shares
 
Amount
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Income
 
Non-controlling
Interest - Joint
Venture
 
Total
Stockholders’
Equity
Balance – December 31, 2019
 
105,851,285

 
$
1

 
$
2,097,995

 
19,943,432

 
$
(343,524
)
 
$
782,350

 
$
884

 
$
8,006

 
$
2,545,712

Net (loss)/income
 

 

 

 

 

 
(31,431
)
 

 
1,875

 
(29,556
)
Other comprehensive income
 

 

 

 

 

 

 
(13
)
 

 
(13
)
Exercise of stock options
 
250,149

 

 
4,548

 

 

 

 

 

 
4,548

Issuance of restricted stock units, net of shares withheld for tax
 
602,418

 

 
(7,075
)
 

 

 

 

 

 
(7,075
)
Issuance of restricted stock units and warrants in connection with business combinations
 
28,327,290

 

 
849,920

 

 

 

 

 

 
849,920

Repurchase of common stock
 
(5,436,479
)
 

 

 
5,436,479

 
(90,163
)
 

 

 

 
(90,163
)
Stock compensation expense
 

 

 
11,896

 

 

 

 

 

 
11,896

Stock compensation expense related to WLH acquisition
 
 
 
 
 
5,107

 
 
 
 
 
 
 
 
 
 
 
5,107

WLH equity award accelerations due to change in control
 
 
 
 
 
8,421

 
 
 
 
 
 
 
 
 
 
 
8,421

Distributions to non-controlling interests of consolidated joint ventures
 

 

 

 

 

 

 

 
6,735

 
6,735

Changes in non-controlling interests of consolidated joint ventures
 

 

 

 

 

 

 

 
117,509

 
117,509

Balance – March 31, 2020
 
129,594,663

 
$
1

 
$
2,970,812

 
25,379,911

 
$
(433,687
)
 
$
750,919

 
$
871

 
$
134,125

 
$
3,423,041






















5





TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands, except share data, unaudited)

For the three months ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class A
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Stockholders' Equity
 
 
Shares
 
Amount
 
Amount
 
Shares
 
Amount
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss
 
Non-controlling
Interest - Joint
Venture
 
Total
Stockholders’
Equity
Balance – December 31, 2018
 
112,965,856

 
$
1

 
$
2,071,579

 
11,554,084

 
$
(186,087
)
 
$
527,698

 
$
2,001

 
$
3,543

 
$
2,418,735

Net income
 

 

 

 

 

 
51,131

 

 
150

 
51,281

Other comprehensive loss
 

 

 

 

 

 

 
284

 

 
284

Exercise of stock options
 
3,176

 

 
39

 

 

 

 

 

 
39

Issuance of restricted stock units, net of shares withheld for tax
 
474,567

 

 
(1,493
)
 

 

 

 

 

 
(1,493
)
Exchange of B shares from public offerings
 

 

 
3,417

 

 

 

 

 

 
3,417

Repurchase of common stock

 
(4,376,879
)
 

 

 
4,376,879

 
(77,839
)
 

 

 

 
(77,839
)
Distributions to non-controlling interests of consolidated joint ventures
 

 

 

 

 

 

 

 
(17
)
 
(17
)
Changes in non-controlling interests of consolidated joint ventures
 

 

 

 

 

 

 

 
905

 
905

Balance – March 31, 2019
 
109,066,720

 
$
1

 
$
2,073,542

 
15,930,963

 
$
(263,926
)
 
$
578,829

 
$
2,285

 
$
4,581

 
$
2,395,312

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements





6


TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net (loss)/income before allocation to non-controlling interests
 
$
(29,556
)
 
$
51,281

Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
 

 

Equity in income of unconsolidated entities
 
(2,426
)
 
(2,319
)
Stock compensation expense
 
17,002

 
3,417

Distributions of earnings from unconsolidated entities
 
1,489

 
2,435

Depreciation and amortization
 
8,601

 
7,765

Operating lease expense
 
3,752

 
2,065

Debt issuance costs/premium amortization
 
(406
)
 
(71
)
Land held for sale write-downs
 
4,347

 

Changes in operating assets and liabilities:
 
 
 
 
Real estate inventory and land deposits
 
73,261

 
(133,111
)
Mortgages held for sale, prepaid expenses and other assets
 
1,535

 
42,670

Customer deposits
 
32,516

 
11,470

Accounts payable, accrued expenses and other liabilities
 
(37,422
)
 
(13,896
)
Income taxes payable
 
(592
)
 

Net cash provided by/(used in) operating activities
 
72,101

 
(28,294
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Purchase of property and equipment
 
(6,031
)
 
(6,194
)
Payments for business acquisitions, net of cash acquired
 
(209,446
)
 

Distributions of capital from unconsolidated entities
 
6,713

 
3,180

Investments of capital into unconsolidated entities
 
(3,042
)
 
(1,089
)
Net cash used in investing activities
 
(211,806
)
 
(4,103
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Increase in loans payable and other borrowings
 
18,205

 
2,066

Repayments of loans payable and other borrowings
 
(32,726
)
 
(13,078
)
Borrowings on revolving credit facility
 
695,000

 
35,000

Repayments on revolving credit facility
 
(210,000
)
 

Borrowings on mortgage warehouse
 
432,488

 
159,522

Repayment on mortgage warehouse
 
(446,555
)
 
(230,761
)
Repayments on senior notes
 
(50,000
)
 

Payment of deferred financing costs
 
(3
)
 

Proceeds from stock option exercises
 
4,548

 
39

Payment of principle portion of finance lease
 
(1,325
)
 

Repurchase of common stock, net
 
(90,163
)
 
(77,839
)
Payment of taxes related to net share settlement of equity awards
 
(7,075
)
 
(1,493
)
Changes and distributions to non-controlling interests of consolidated joint ventures, net
 
10,171

 
888

Net cash provided by/(used in) financing activities
 
322,565

 
(125,656
)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
 
$
182,860

 
$
(158,053
)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period
 
328,572

 
331,859

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period
 
$
511,432

 
$
173,806

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
Income taxes refund, net
 
$
325

 
$
(1
)
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
 
Change in loans payable issued to sellers in connection with land purchase contracts
 
$
20,189

 
$
11,120

Change in inventory not owned
 
$
(22,281
)
 
$
(366
)
Issuance of common stock in connection with business acquisition
 
$
867,284

 
$

Net non-cash contributions from non-controlling interests
 
$
6,697

 
$

Non-cash portion of loss on debt extinguishment
 
$
1,723

 
$

Beginning operating lease right of use assets due to adoption of ASU 2016-02
 
$

 
$
27,384

Beginning operating lease right of use liabilities due to adoption of ASU 2016-02
 
$

 
$
30,331




See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

7


TAYLOR MORRISON HOME CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS
Organization and 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 developer of lifestyle communities. As of March 31, 2020, we operated in the states of Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. Our Company serves a wide array of consumer groups from coast to coast, including first time, move-up, luxury, and active adult. Our homebuilding segments operate under our Taylor Morrison, Darling Homes, and William Lyon Signature brand names. 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. The communities in our homebuilding segments generally offer single and multi-family attached and detached homes. We are the general contractors for all real estate projects and retain subcontractors for home construction and land development. We also have an exclusive partnership with Christopher Todd Communities, a growing Phoenix-based developer of innovative, luxury rental communities to operate a “Build-to-Rent” homebuilding business. We serve as a land acquirer, developer, and homebuilder while Christopher Todd Communities provides community design and property management consultation. As part of our acquisition of William Lyon Homes (“WLH”), discussed below, we also acquired Urban Form Development, LLC (“Urban Form”), which primarily develops and constructs multi-use properties consisting of combinations of commercial space, retail, and multifamily units. Our Financial Services segment provides financial services to customers through our wholly owned mortgage subsidiary, operating as Taylor Morrison Home Funding, LLC (“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”).

On February 6, 2020, we completed the acquisition of WLH, one of the nation's largest homebuilders in the Western United States. WLH designs, constructs, markets and sells single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington, Oregon and Texas. Refer to Note 3 - Business Combinations for additional discussion.

On March 11, 2020 the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. Since that time, the COVID-19 pandemic has continued to spread and various state and local governments have issued or extended “shelter-in-place” orders which have impacted and restricted various aspects of our business. As of the date of this filing, all of our operations are functioning, subject to regulated restrictions and safety constraints we have enacted in order to protect our employees, trade contractors, and customers. The impacts of COVID-19 are described throughout this filing.

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, 2019 (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.

Non-controlling interests - 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 - joint ventures” on the Condensed Consolidated Statements of Operations.

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 Condensed Consolidated Financial Statements and accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of acquired assets, valuation of goodwill, valuation of 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.


8


Goodwill — The excess of the purchase price of a business acquisition over the net fair value of assets acquired and liabilities assumed is capitalized as goodwill in accordance with ASC Topic 350, “Intangibles — Goodwill and Other.
ASC 350 requires that goodwill and intangible assets that do not have finite lives not be amortized, but rather assessed for impairment at least annually or more frequently if certain impairment indicators are present. We perform our annual impairment test during the fourth quarter or whenever impairment indicators are present. We did not perform an impairment test during the first quarter of 2020 as indicators of impairment were not present as of March 31, 2020.  However, an impairment of goodwill may occur in future periods as a result of significant impacts from the disruptions caused by the COVID-19 pandemic.

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 sales at the time of home closing using the specific identification method. Land acquisition, development, interest, real estate taxes and overhead are allocated to homes and units generally using the relative sales value method. 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. 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.

We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to cost of sales when the related inventory is charged to cost of sales.

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, we first perform an undiscounted cash flow analysis to determine if the carrying value of the assets in that community exceeds the expected undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, then the assets are deemed to be impaired and are recorded at fair value as of the assessment date. 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. 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, 2020 and 2019, no impairment charges were recorded. However, a significant change in the fair value of our inventory as a result of further disruptions from the impact of the COVID-19 pandemic may result in the recording of impairment charges for one or more communities in future periods.

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. 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 subjective 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, 2020 and December 31, 2019, we had no inactive projects.

In the ordinary course of business, we enter into various specific performance agreements to acquire lots. Real estate not owned under these agreements is consolidated into Real estate not owned with a corresponding liability in Liabilities attributable to real estate not owned in the Condensed Consolidated Balance Sheets. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources, we may transfer our right in certain specific performance agreements acquired in the acquisition of WLH 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. The entities grant us an option to acquire lots in staged takedowns. In consideration for this option, we make a non-refundable deposit of 15% to 25% of the total purchase price. We are not legally obligated to purchase the balance of 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 legal title to these entities or their assets and do not guarantee their liabilities. These land banking arrangements help us manage the financial and market risk associated with land holdings.

We evaluate our investments in unconsolidated and consolidated joint ventures for indicators of impairment. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated

9


entity has occurred which is other-than-temporary. The amount of impairment recognized 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, our intent and ability to recover our investment in the unconsolidated entity, financial condition and long-term prospects of the unconsolidated 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 with the other partners. If the Company believes that the decline in the fair value of the investment is temporary, then no impairment is recorded. We did not record any impairment charges for the three months ended March 31, 2020 and 2019. However, as with our own operations, factors related to the COVID-19 pandemic could impact these unconsolidated entities and could lead to an impairments of our investments therein in future periods.


Revenue Recognition

Topic 606
We recognize revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “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 the proper home closings revenue and land closings revenue recognition: (1) we identify the contract(s) with our customer; (2) we identify the performance obligations in the contract; (3) we determine the transaction price; (4) we allocate the transaction price to the performance obligations in the contract; and (5) we recognize revenue when (or as) we satisfy the performance obligation. For our home sales transactions, we 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 sales revenue:
Revenue from closings of residential real estate is recognized when closings have occurred, 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, which require us to provide club members with access to amenity facilities in exchange for the payment of club dues. We collect club dues and other fees from the 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 which include multi-use properties as part of our new Urban Form 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. All of the 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 are realized and unrealized gains and losses from hedging instruments.

Recently Issued Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for us in our fiscal year beginning

10


January 1, 2021. We are currently evaluating the impact of the adoption of ASU 2019-12 on our condensed consolidated financial statements and disclosures.

3. BUSINESS COMBINATIONS

In accordance with ASC Topic 805, Business Combinations, all assets acquired and liabilities assumed from our acquisition of WLH on February 6, 2020 were measured and recognized at fair value as of the date of the acquisition to reflect the purchase price paid. Total purchase consideration of the WLH acquisition was $1.1 billion, consisting of multiple components: (i) cash of $95.6 million, (ii) the issuance of approximately 30.6 million shares of TMHC Common Stock with a value of $836.1 million, (iii) the repayment of $160.8 million of borrowings under WLH's Revolving Credit Facility, and (iv) the conversion of WLH issued equity instruments consisting of restricted stock units, restricted stock awards, options and warrants to TMHC awards and warrants with a value of $24.1 million.

We performed a preliminary allocation of purchase price as of the acquisition date based on management's estimates of fair value. We determined the preliminary fair value of inventory on a community level basis, using a reasonable range of market comparable gross margins based on the inventory geography and product type. These estimates are significantly impacted by assumptions related to expected average home selling prices and sales incentives, expected sales paces and cancellation rates, expected land development and construction timelines, and anticipated land development, construction, and overhead costs. Such estimates were made for each individual community and varied significantly between communities. We believe our estimates and assumptions are reasonable; however, the preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information is available, but no later than one year from the acquisition date.

The following is a summary of management's estimate of the fair value of assets acquired and liabilities assumed. In addition, we incur various costs and expenses in connection with our acquisitions. For the acquisition of WLH such costs primarily consisted of investment banking fees, severance, compensation, and legal fees, among other items, and for the three months ended March 31, 2020, totaled $86.4 million which are presented in Transaction expenses on the condensed consolidated statement of operations.
(Dollars in thousands)
 
Acquisition Date
February 6, 2020
Assets acquired
 
Real estate inventory
$
2,134,146

Prepaid expenses and other assets(1)
261,651

Deferred tax assets, net
128,226

Goodwill(2)
462,651

Total assets
$
2,986,674

 
 
Less liabilities assumed
 
Accrued expenses and other liabilities
$
447,291

Total debt(3)
1,306,578

Non-controlling interest
116,157

Net assets acquired
$
1,116,648

(1) Includes cash acquired.
(2) Goodwill is not deductible for tax purposes. We allocated $423.5 million and $39.2 million of goodwill to the West and Central homebuilding segments, respectively.
(3) See Note 9 - Debt for discussion relating to acquired debt

Unaudited Pro Forma Results of Business Combinations

The following unaudited pro forma information for the periods presented include the results of operations of our acquisition of WLH as if it had been completed on January 1, 2019. The pro forma results are presented for informational purposes only and do not purport to be indicative of the results of operations or future results that would have been achieved if the acquisition had taken place one year prior to the acquisition year. The pro forma information combines the historical results of the Company with the historical results of WLH for the periods presented.

11



The unaudited pro forma results do not give effect to any synergies, operating efficiencies, or other costs savings that may result from the acquisition, or other significant non-reoccurring expenses or transactions that do not have a continuing impact. Earnings per share utilizes pro forma net income available to TMHC and total weighted average shares of common stock. The pro forma amounts are based on available information and certain assumptions that we believe are reasonable.
 
For the three months ended March 31,
(Dollars in thousands except per share data)
2020
(Pro forma)
 
2019
(Pro forma)
Total revenues
$
1,432,797

 
$
1,380,956

 
 
 
 
Net income/(loss) before allocation to non-controlling interests
$
9,027

 
$
2,339

Net income attributable to non-controlling interests — joint ventures
(988
)
 
(7,165
)
Net income/(loss) available to TMHC
$
8,039

 
$
(4,826
)
 
 
 
 
Weighted average shares - Basic
133,643

 
139,175

Weighted average shares - Diluted
134,935

 
139,175

 
 
 
 
Earnings/(loss) per share - Basic
$
0.06

 
$
(0.03
)
Earnings/(loss) per share - Diluted
$
0.06

 
$
(0.03
)

For the period ended March 31, 2020, total revenue on the condensed consolidated statement of operations included $282.6 million of revenues and loss before income taxes included of $31.7 million from WLH since the date of acquisition.

4. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net (loss)/income available to TMHC by the weighted average number of shares of Common Stock 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,
 
 
2020
 
2019
Numerator:
 
 
 
 
Net (loss)/income available to TMHC
 
$
(31,431
)
 
$
51,131

Denominator:
 
 
 
 
Weighted average shares – basic
 
121,908

 
110,512

Restricted stock units (1)
 

 
922

Stock Options (1)
 

 
234

Warrants (1)
 

 

Weighted average shares – diluted
 
121,908

 
111,668

(Loss)/earnings per common share – basic:
 
 
 
 
Net (loss)/income available to Taylor Morrison Home Corporation
 
$
(0.26
)
 
$
0.46

(Loss)/earnings per common share – diluted:
 
 
 
 
Net (loss)/income available to Taylor Morrison Home Corporation
 
$
(0.26
)
 
$
0.46

(1) Due to a loss for the three months ended March 31, 2020, no incremental shares associated with (1) restricted stock units, (2) stock options and (3) warrants issued in connection with the acquisition of WLH were included because the effect would be antidilutive.



12


We excluded a total weighted average of 2,547,953 and 3,060,096 outstanding anti-dilutive stock options and unvested restricted stock units (“RSUs”) from the calculation of earnings per share for the three months ended March 31, 2020 and 2019, respectively.

5. REAL ESTATE INVENTORY AND LAND DEPOSITS
Inventory consists of the following (in thousands):
 
 
As of
 
 
March 31,
2020
 
December 31, 2019
Real estate developed and under development
 
$
4,060,004

 
$
2,805,506

Real estate held for development or held for sale (1)
 
157,853

 
146,471

Operating communities (2)
 
1,359,608

 
899,789

Capitalized interest
 
128,870

 
115,593

Total owned inventory
 
5,706,335

 
3,967,359

Real estate not owned
 
186,885

 
19,185

Total real estate inventory
 
$
5,893,220

 
$
3,986,544

(1) Real estate held for development or held for sale includes properties which are not in active production. This includes raw land recently purchased or awaiting entitlement, and, if applicable, long-term strategic assets. As of March 31, 2020, there was no held for sale inventory relating to our Chicago operations. As of December 31, 2019, all inventory relating to our Chicago operations were deemed held for sale and included in Total owned inventory on the condensed consolidated balance sheet.
(2) Operating communities consist of all vertical construction costs relating to homes in progress and completed homes for all active inventory.

The development status of our land inventory is as follows (dollars in thousands):
 
 
 
As of
 
 
March 31, 2020
 
December 31, 2019
 
 
Owned Lots
 
Book Value of Land
and Development
 
Owned Lots
 
Book Value of Land
and Development
Raw
 
17,449

 
$
563,228

 
13,804

 
$