Management Discussion
Management Discussion
Table of Contents
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. This 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, 2024 (the "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.
TAYLOR MORRISON HOME CORPORATION 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Overview
Our principal business is residential homebuilding and the development of lifestyle communities with operations across 12 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 own and operate 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 organized as four reportable segments: East, Central, West and Financial Services, as follows:
EastAtlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
CentralAustin, Dallas, Denver, Houston, and Indianapolis
WestBay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial ServicesTaylor Morrison Home Funding, Inspired Title & Escrow Services, and Taylor Morrison Insurance Services
As of March 31, 2025, we employed approximately 3,000 full-time equivalent persons. Of these, approximately 2,600 were engaged in corporate and homebuilding operations, and the remaining approximately 400 were engaged in financial services.
Factors Affecting Comparability of Results
For the three months ended March 31, 2025, we recognized $14.9 million in inventory impairment charges. Inventory impairment charges are recorded to Cost of home closings on the unaudited Condensed consolidated statements of operations. No inventory impairment charges were incurred for the three months ended March 31, 2024.
First Quarter 2025 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated):
•Home closings revenue of $1.8 billion, up 12% year over year
◦3,048 closings, up 12% year over year, at an average price of $600,000
•Home closings gross margin of 24.0% and adjusted home closings gross margin of 24.8%
•Net sales orders of 3,374, down 8.5% from a year ago
◦Monthly absorption pace of 3.3, down from a near-record of 3.7 a year ago
◦Ending outlets of 344, up 4% year over year
•86,266 homebuilding lots owned and controlled
◦59% controlled off balance sheet, up from 53% a year ago
•Total homebuilding land spend of $469 million, of which 46% was development related
•Repurchased 2.2 million common shares for $135 million
•Homebuilding debt-to-capitalization of 24.3% on a gross basis and 20.5% net of $378 million of unrestricted cash
•Total liquidity of $1.3 billion
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth our results of operations for the periods presented:
Three Months EndedMarch 31,
(Dollars in thousands)20252024
Statements of Operations Data:
Home closings revenue, net$1,830,068 $1,636,255
Land closings revenue4,261 7,225
Financial services revenue, net51,193 46,959
Amenity and other revenue10,497 9,313
Total revenue1,896,019 1,699,752
Cost of home closings1,391,360 1,243,209
Cost of land closings3,489 5,202
Financial services expenses28,321 25,143
Amenity and other expenses9,575 9,353
Total cost of revenue1,432,745 1,282,907
Gross margin463,274 416,845
Sales, commissions and other marketing costs109,076 102,600
General and administrative expenses67,548 67,564
Net income from unconsolidated entities(1,975)(2,751)
Interest expense/(income), net8,499 (43)
Other expense, net1,557 595
Income before income taxes278,569 248,880
Income tax provision64,838 57,719
Net income before allocation to non-controlling interests213,731 191,161
Net income attributable to non-controlling interests(265)(891)
Net income$213,466 $190,270
Home closings gross margin24.0 %24.0 %
Sales, commissions and other marketing costs as a percentage of home closings revenue, net
6.0 %6.3 %
General and administrative expenses as a percentage of home closings revenue, net
3.7 %4.1 %
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Measures
In addition to the results reported in accordance with GAAP, we have provided information in this quarterly report relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) adjusted home closings gross margin, (iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to capitalization ratio.
Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding, to the extent applicable in a given period, the impact of inventory or real estate impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net, and legal reserves or settlements that 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 to calculate EBITDA. Adjusted EBITDA further excludes non-cash compensation expense, if any, inventory and real estate impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net and legal reserves or settlements that the Company deems not to be in the ordinary course of business.
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 facilities 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).
Adjusted home closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges.
Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our segments, 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 financial leverage and to evaluate our performance against other companies in the homebuilding industry. In the future, we may include additional adjustments in the above-described non-GAAP financial measures to the extent we deem them appropriate and useful to management and investors.
We believe that adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, as well as EBITDA and adjusted EBITDA, are useful for investors in order to allow them to evaluate our operations without the effects of various items we do not believe are characteristic of our ongoing operations or performance and also because such metrics assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted EBITDA also provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, or unusual items. Because we use the ratio of net homebuilding debt to total capitalization to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. We believe that adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the varying effects of items or transactions we do not believe are characteristic of our ongoing operations or performance.
These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures of our operating performance or liquidity. Although other companies in the homebuilding industry may report similar information, their definitions may differ. We urge investors to understand the methods used by other companies to calculate similarly-titled non-GAAP financial measures before comparing their measures to ours.
A reconciliation of adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, adjusted home closings gross margin, EBITDA, Adjusted EBITDA, and net homebuilding debt to total capitalization ratio to the comparable GAAP measures follows.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Adjusted Net Income and Adjusted Earnings Per Common Share
Three Months Ended March 31,
(Dollars in thousands, except per share data)20252024
Net income $213,466 $190,270
Inventory impairment charges14,878 -
Tax impact of non-GAAP reconciling items(3,463)-
Adjusted net income$224,881 $190,270
Basic weighted average number of shares101,245 106,457
Adjusted earnings per common share - Basic$2.22 $1.79
Diluted weighted average number of shares103,017 108,564
Adjusted earnings per common share - Diluted$2.18 $1.75
Adjusted Income Before Income Taxes and Related Margin
Three Months Ended March 31,
(Dollars in thousands)20252024
Income before income taxes$278,569 $248,880
Inventory impairment charges14,878 -
Adjusted income before income taxes$293,447 $248,880
Total revenue$1,896,019 $1,699,752
Income before income taxes margin14.7 %14.6 %
Adjusted income before income taxes margin15.5 %14.6 %
Adjusted Home Closings Gross Margin
Three Months Ended March 31,
(Dollars in thousands)20252024
Home closings revenue, net$1,830,068 $1,636,255
Cost of home closings1,391,360 1,243,209
Home closings gross margin$438,708 $393,046
Inventory impairment charges14,878 -
Adjusted home closings gross margin$453,586 $393,046
Home closings gross margin as a percentage of home closings revenue24.0 %24.0 %
Adjusted home closings gross margin as a percentage of home closings revenue24.8 %24.0 %
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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)20252024
Net income before allocation to non-controlling interests$213,731 $191,161
Interest expense/(income), net8,499 (43)
Amortization of capitalized interest24,773 23,625
Income tax provision64,838 57,719
Depreciation and amortization1,696 3,138
EBITDA$313,537 $275,600
Non-cash compensation expense7,785 5,483
Inventory impairment charges14,878 -
Adjusted EBITDA$336,200 $281,083
Total revenue$1,896,019 $1,699,752
Net income before allocation to non-controlling interests as a percentage of total revenue11.3 %11.2 %
EBITDA as a percentage of total revenue16.5 %16.2 %
Adjusted EBITDA as a percentage of total revenue17.7 %16.5 %
Net Homebuilding Debt to Capitalization Ratio Reconciliation
(Dollars in thousands)As of March 31, 2025As of December 31, 2024As of March 31, 2024
Total debt$2,083,599 $2,120,483 $2,093,499
Plus: unamortized debt issuance cost, net6,177 6,616 7,935
Less: mortgage warehouse facilities borrowings(175,741)(174,460)(183,174)
Total homebuilding debt$1,914,035 $1,952,639 $1,918,260
Total stockholders' equity
5,957,524 5,878,180 5,426,168
Total capitalization$7,871,559 $7,830,819 $7,344,428
Total homebuilding debt to capitalization ratio24.3 %24.9 %26.1 %
Total homebuilding debt1,914,035 1,952,639 1,918,260
Less: cash and cash equivalents(377,815)(487,151)(554,287)
Net homebuilding debt$1,536,220 $1,465,488 $1,363,973
Total stockholders' equity
$5,957,524 $5,878,180 $5,426,168
Total capitalization$7,493,744 $7,343,668 $6,790,141
Net homebuilding debt to capitalization ratio20.5 %20.0 %20.1 %
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended March 31, 2025 compared to three months ended March 31, 2024
Ending Active Selling Communities
As of March 31,
Change
20252024
East137 113 21.2 %
Central94 93 1.1 %
West113 125 (9.6 %)
Total344 331 3.9 %
The total ending active selling communities increased by 3.9% at March 31, 2025 when compared to March 31, 2024, primarily driven by our East segment which was partially offset by a decrease in the West. The East segment had multiple community openings, including master planned communities, whereas the West closed-out several higher paced communities in certain markets.
Net Sales Orders
Three Months Ended March 31,
Net Sales Orders (1)
Sales Value (1)
Average Selling Price
(Dollars in thousands)20252024Change 20252024Change 20252024Change
East1,3911,2957.4 %$721,027 $776,861 (7.2)%$518 $600 (13.7)%
Central867904(4.1 %)449,363 478,419 (6.1 %)518 529 (2.1)%
West1,1161,487(24.9 %)828,905 984,483 (15.8 %)743 662 12.2 %
Total3,3743,686(8.5 %)$1,999,295 $2,239,763 (10.7 %)$593 $608 (2.5 %)
(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 decreased 8.5% for the three months ended March 31, 2025, compared to the same period in the prior year. Net sales orders for the three months ended March 31, 2024 were the highest first quarter net orders in the Company's history and the net sales orders for the three months ended March 31, 2025 are the second highest first quarter net sales orders. The increase of sales orders in the East is primarily due to new community openings which was offset by a decrease in the West region primarily as a result of community close-outs. We continue to offer our buyers various incentives, discounts, and financing programs to drive sales orders, however economic conditions such as higher mortgage interest rates, led to the overall decrease in the average selling price for the three months ended March 31, 2025, compared to the same period in the prior year.
Sales Order Cancellations
Cancellation Rate(1)
Three Months EndedMarch 31,
20252024
East10.4 %5.8 %
Central9.2 %8.6 %
West13.0 %7.1 %
Total Company11.0 %7.0 %
(1) Cancellation rate represents the number of canceled sales orders divided by gross sales orders.
The total company cancellation rate increased for the three months ended March 31, 2025, compared to the same period in the prior year. We believe the lower cancellation rate for the three months ended March 31, 2024 was as a result of interest
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
rates decreasing in the earlier part of 2024. As interest rates stabilized in the latter half of 2024, our cancellation rate returned to more historic normalized levels which continued into the first quarter of 2025.
Sales Order Backlog
As of March 31,
Sold Homes in Backlog (1)
Sales ValueAverage Selling Price
(Dollars in thousands)20252024Change 20252024Change 20252024Change
East2,0182,433(17.1)%$1,286,197 $1,715,398 (25.0)%$637 $705 (9.6 %)
Central1,0821,371(21.1)%640,443 870,550 (26.4)%592 635 (6.8)%
West1,9682,440(19.3 %)1,434,734 1,662,190 (13.7)%729 681 7.0 %
Total5,0686,244(18.8)%$3,361,374 $4,248,138 (20.9)%$663 $680 (2.5)%
(1) Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of the period (including homes sold but not
yet started). Some of the contracts in our sales order backlog are subject to contingencies including mortgage loan approval and buyers selling their existing
homes, which can result in cancellations.
Total sold homes in backlog and total sales value decreased by 18.8% and 20.9% at March 31, 2025 compared to March 31, 2024, respectively. The decrease in units is primarily due to fewer net sales orders in the current quarter compared to the same period in the prior year as well as improved construction cycle times and more quick-move-in homes which sold and closed during the quarter ended March 31, 2025 compared to the same period in the prior year.
Home Closings Revenue
Three Months Ended March 31,
Homes ClosedHome Closings Revenue, NetAverage Selling Price
(Dollars in thousands)20252024Change 20252024Change 20252024Change
East1,11093319.0 %$625,714 $541,730 15.5 %$564 $581 (2.9 %)
Central8838326.1 %477,494 472,032 1.2 %541 567 (4.6)%
West1,0559669.2 %726,860 622,493 16.8 %689 644 7.0 %
Total3,0482,73111.6 %$1,830,068 $1,636,255 11.8 %$600 $599 0.2 %
The number of homes closed increased by 11.6% for the three months ended March 31, 2025, compared to the same period in the prior year. The increase is generally due to improved cycle times across various markets and the higher number of quick-move-in homes which sold and closed within the same quarter as compared to the same period in the prior year. In addition, the West and East regions had several master plan communities that began closing homes during the current year period.
Segment Home Closings Gross Margins
Three Months Ended March 31,
East Central West Consolidated
(Dollars in thousands)20252024202520242025202420252024
Home closings revenue, net$625,714 $541,730 $477,494 $472,032 $726,860 $622,493 $1,830,068 $1,636,255
Cost of home closings473,553 395,328 361,657 349,161 556,150 498,720 1,391,360 1,243,209
Home closings gross margin$152,161 $146,402 $115,837 $122,871 $170,710 $123,773 $438,708 $393,046
Inventory impairments
14,878 - - - - - 14,878 -
Adjusted home closings gross margin
$167,039 $146,402 $115,837 $122,871 $170,710 $123,773 $453,586 $393,046
Home closings gross margin %24.3 %27.0 %24.3 %26.0 %23.5 %19.9 %24.0 %24.0 %
Consolidated home closings gross margin remained consistent at 24.0% for both the three months ended March 31, 2025 and 2024. The increase in the West region is primarily due to closing product mix which also contributed to an increase in lot premium and option revenues. The West also experienced a decrease in home discounts and incentives on a per unit basis in the three months ended March 31, 2025 compared to the same period in the prior year. The East and Central regions experienced decreases in lot premium and option revenues as well as an increase in finance incentives which further
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
contributed to the changes in home closings gross margin. In addition, for the three months ended March 31, 2025, the East region was negatively impacted by approximately $14.9 million of inventory impairment charges across certain communities as a result of recent pricing decreases.
Financial Services
The following is a summary for the periods presented of our financial services income before income taxes as well as supplemental data:
Three Months EndedMarch 31,
(Dollars in thousands)20252024Change
Mortgage services revenue$40,357 $37,272 8.3 %
Title services and other revenues10,836 9,687 11.9 %
Total financial services revenue51,193 46,959 9.0 %
Financial services net income from unconsolidated entities3,096 2,897 6.9 %
Total revenue54,289 49,856 8.9 %
Financial services expenses28,321 25,143 12.6 %
Financial services income before income taxes$25,968 $24,713 5.1 %
Total originations:
Number of Loans2,121 1,896 11.9 %
Principal$992,299 $876,572 13.2 %
Three Months EndedMarch 31,
20252024
Supplemental data:
Average FICO score751751
Funded origination breakdown:
Government (FHA,VA,USDA)23.7 %21.9 %
Other agency73.4 %75.3 %
Total agency97.1 %97.2 %
Non-agency2.9 %2.8 %
Total funded originations100.0 %100.0 %
Total financial services revenue increased by 9.0% to $51.2 million for the three months ended March 31, 2025 compared to the same period in the prior year. The increase in total financial services revenue was a result of an increase in mortgage originations and title services in the current year period compared to the prior year period.
Sales, Commissions and Other Marketing Costs
Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, decreased to 6.0% from 6.3% for the three months ended March 31, 2025 compared to the same period in the prior year. The decrease was primarily driven by the increase in home closings revenue, net as well as leverage in controllable sales and marketing costs.
General and Administrative Expenses
General and administrative expenses as a percentage of home closings revenue, net, decreased to 3.7% from 4.1% for the three months ended March 31, 2025 compared to the same period in the prior year. The decrease was primarily due to the increase in home closings revenue, net as general and administrative costs remained relatively flat as a result of our continuous efforts to maintain stable operating costs.
Net Income from Unconsolidated Entities
Net income from unconsolidated entities was $2.0 million and $2.8 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in net income from unconsolidated entities was primarily due to new joint ventures which experienced start-up expenses prior to having the opportunity to generate income.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest Expense/(Income), Net
Interest expense, net was $8.5 million for the three months ended March 31, 2025, while interest income, net was $43.0 thousand for the three months ended March 31, 2024. The increase in interest expense, net was primarily due to a decrease in interest income earned on our outstanding cash balances as well as increase in the amount of non-capitalizable interest expense relating to land banking arrangements.
Income Tax Provision
The effective tax rate for the three months ended March 31, 2025 was 23.3%, compared to 23.2% for the same period in 2024. For the three months ended March 31, 2025, the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, excess tax benefits from share-based compensation, and non-deductible executive compensation.
Our income tax rate for the first quarter of 2025 was marginally higher than the same period last year primarily due to a decrease in excess benefits from share-based compensation and credits related to homebuilding activities, offset by a decrease in state taxes.
Net Income
Net income and diluted earnings per share for the three months ended March 31, 2025 was $213.5 million and $2.07, respectively. Net income and diluted earnings per share for the three months ended March 31, 2024 was $190.3 million and $1.75, respectively. The increases in net income and diluted earnings per share from the prior year were primarily attributable to higher home closings revenue, net and higher gross margin dollars.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Liquidity
We finance our operations through the following:
•Cash generated from operations;
•Borrowings under our $1 Billion Revolving Credit Facility;
•Our various series of senior notes;
•Mortgage warehouse facilities;
•Project-level real estate financing (including non-recourse loans, land banking, and joint ventures); and
•Performance, payment and completion surety bonds, and letters of credit.
Cash flows for each of our communities depend on the status of the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash expenditures for land acquisitions, on and off-site development, construction of homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our unaudited Condensed consolidated statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.
The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):
As of
(Dollars in thousands)March 31, 2025December 31, 2024
Total cash, excluding restricted cash$377,815 $487,151
$1 Billion Revolving Credit Facility availability1,000,000 1,000,000
Letters of credit outstanding(65,731)(52,914)
Revolving Credit Facility availability934,269 947,086
Total liquidity$1,312,084 $1,434,237
We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources from borrowings under our $1 Billion Revolving Credit Facility to conduct our operations for the next twelve months. Beyond the next twelve months, our primary demand for funds will be for payments of our long-term debt as it becomes due, land purchases, lot development, home and amenity construction, long-term capital investments, investments in our joint ventures, payments of ongoing operating expenses, and repurchases of our common stock. We believe we will generate sufficient cash from our operations to meet the demands for such funds, however we may also access the capital markets to obtain additional liquidity through debt and equity offerings or refinance debt to secure capital for such long-term demands. As part of our operations, we may also from time to time purchase our outstanding debt or equity through open market purchases, privately negotiated transactions or otherwise. Purchases or retirements of debt and/or purchases of equity, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Cash Flow Activities
Operating Cash Flow Activities
Our net cash provided by operating activities was $77.2 million for the three months ended March 31, 2025, compared to net cash used in operating activities of $130.7 million for the three months ended March 31, 2024. The increase in cash provided by operating activities is primarily due to an increase in net income and the change in spend in real estate inventory and land deposits which were partially offset by the change in accounts payable, accrued expenses and other liabilities.
Investing Cash Flow Activities
Net cash used in investing activities was $45.1 million for the three months ended March 31, 2025, compared to $33.0 million for the three months ended March 31, 2024. The increase in cash used in investing activities was due to an increase in investments of capital into unconsolidated entities for newly formed joint ventures.
Financing Cash Flow Activities
Net cash used in financing activities was $141.2 million for the three months ended March 31, 2025, compared to $85.9 million for the three months ended March 31, 2024. The increase in cash used in financing activities was primarily due to an increase in the repurchase of common stock and a decrease in the net borrowings on our mortgage warehouse facilities.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Debt Instruments
For information regarding our debt instruments, including the terms governing our senior notes and our $1 Billion Revolving Credit Facility, see Note 7 - Debt to the unaudited Condensed consolidated financial statements included in this quarterly report.
Off-Balance Sheet Arrangements as of March 31, 2025
Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities
We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties. Our participation with these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on terms that are as favorable. Our partners in these joint ventures historically have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial or strategic partners have allowed us to combine our homebuilding expertise with access to our partners' capital.
For the three months ended March 31, 2025 and 2024, total cash investments of capital into unconsolidated joint ventures were $36.6 million and $23.9 million, respectively.
Land Option Contracts and Land Banking Agreements
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 our routine 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 creditors of the property owner generally have no recourse to the Company. Our obligations with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits and/or letters of credit provided to obtain the options. The aggregate purchase price for land under these contracts was $2.2 billion and $1.9 billion at March 31, 2025 and December 31, 2024, respectively.
Seasonality
Our business is seasonal. We have historically experienced, and in the future expect to continue to experience, variability in our results on a quarterly basis. We generally have more homes under construction, close more homes and have greater revenue and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are obtained throughout the year, a higher portion of our home closings occur during the third and fourth calendar quarters. Our revenue therefore may fluctuate significantly on a quarterly basis, and we must maintain sufficient liquidity to meet short-term operating requirements. Factors expected to contribute to these fluctuations include, but are not limited to:
•the timing of the introduction and start of construction of new projects;
•the timing of sales;
•the timing of closings of homes, lots and parcels;
•the condition of the real estate market and general economic conditions in the areas in which we operate;
•mix of homes closed;
•construction timetables;
•the timing of receipt of regulatory approvals for development and construction;
•the cost and availability of materials and labor; and
•weather conditions in the markets in which we build.
As a result of seasonal activity, our quarterly results of operations and financial position are not necessarily representative of the results we expect for the full year.
Inflation
We and the homebuilding industry in general may be adversely affected during periods of high inflation, primarily because of higher land, financing, labor and construction material costs. In addition, higher mortgage interest rates can significantly affect the affordability of mortgage financing to prospective homebuyers. We attempt to pass through to our buyers increases in our costs through increased sales prices. However, during periods of soft housing market conditions, we may not be able to offset our cost increases with higher selling prices.
TAYLOR MORRISON HOME CORPORATION 10-Q
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates during the three months ended March 31, 2025 compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.
TAYLOR MORRISON HOME CORPORATION 10-Q