Taylor Morrison Q3 2024 Results

Taylor Morrison (NYSE: TMHC) Home Corporation, a leading national homebuilder and developer, reported strong third-quarter results, overcoming market challenges and natural disasters. The company delivered 3,394 homes at an average price of $598,000, generating over $2 billion in revenue. Earnings per diluted share increased by 50% year-over-year to $2.37, and the book value per share rose by 15% to approximately $54. Despite disruptions from hurricanes, net orders saw a 9% year-over-year increase. Taylor Morrison anticipates continued growth, projecting around 12,725 home closings for the year with a gross margin of approximately 24.3%.

Key Takeaways

• Taylor Morrison delivered 3,394 homes, generating over $2 billion in revenue with a 24.8% gross margin.
• Earnings per diluted share rose to $2.37, a 50% increase year-over-year.
• Net orders increased by 9% year-over-year, despite hurricane disruptions.
• The company's resort lifestyle segment and insurance subsidiary both saw strong performance.
• Taylor Morrison projects approximately 12,725 home closings for the year with a gross margin of around 24.3%.
• The company has a healthy land inventory and plans to control 60%-65% of lot supply.

Company Outlook

• Taylor Morrison expects community count growth into 2025.
• The company aims to maintain strong returns despite market challenges.
• A new $1 billion land banking facility will help achieve targeted lot supply control.
• Management plans a detailed outlook during their Investor Day in Q1.

Bearish Highlights

• The company noted increased competition, particularly in Texas.
• There has been a modest increase in insurance costs in Florida due to storms.
• Land spend increased by approximately 40% year-over-year due to competitive land markets.

Bullish Highlights

• Sales growth was strong in key markets, with Florida and Texas showing significant increases.
• The company has maintained or slightly reduced incentive levels.
• The consensus predicts mortgage rates will drop below 6% in 2025, potentially enhancing affordability.

Misses

• Average closing price declined by 2% to $598,000.
• There has been a marginal impact on margins from land banking due to higher interest rates.

Q&A Highlights

• About one-third of total closings utilize forward commitments.
• A two-week improvement in build times was reported compared to the previous quarter.
• Management addressed buyer hesitance due to election-related concerns, which has not significantly impacted sales.

Taylor Morrison's leadership, led by CEO Sheryl Palmer, remains optimistic about the company's future, citing a balanced portfolio and strategic initiatives that cater to various consumer segments. With a focus on operational efficiencies and anticipated improvements in mortgage rates, the company is poised to sustain its growth trajectory in the evolving housing market.

InvestingPro Insights

Taylor Morrison Home Corporation's (NYSE: TMHC) strong third-quarter performance is reflected in its financial metrics and market position. The company boasts a market capitalization of $6.97 billion, indicating its significant presence in the homebuilding sector. With a P/E ratio of 9.75, TMHC is trading at an attractive valuation compared to its earnings, consistent with the reported 50% year-over-year earnings per diluted share increase.

InvestingPro Tips highlight that TMHC has been highly profitable over the last twelve months, corroborating its strong financial results. The stock has demonstrated a high return over the past year, with an impressive 64.69% total price return. However, investors should consider stock price volatility, evidenced by an 8.51% decline over the past week.

It's worth noting that Taylor Morrison does not pay dividends to shareholders, aligning with its focus on growth and reinvestment.

For investors seeking comprehensive analysis, InvestingPro offers additional tips and insights for TMHC, providing valuable information on the company's prospects and challenges in the current market environment.