Ironhorse Phoenix, AZ

Transcription

1 Ironhorse Phoenix, AZ FOURTH QUARTER REPORT 2018

2 DISCLAIMER The statements made by representatives of the Company during the course of this presentation that are not historical facts are forward-looking statements. Although the Company believes that the assumptions underlying these statements are reasonable, individuals considering such statements for any purpose are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the Company s business prospects and performance, causing actual results to differ from those discussed during the presentation. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in the Company s reports filed with the Securities and Exchange Commission (SEC). Any forward-looking statements made are subject to risks and uncertainties, many of which are beyond management s control. These risks include the risks described in the Company s reports filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company s actual results and plans could differ materially from those expressed in any forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements are made only as of the date hereof. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events. The information in this presentation should be considered together with all information included in the Company s reports filed with the SEC, including the Risk Factors described therein. 2

3 COMPANY OVERVIEW Ivy Oak Dublin, CA

4 Taylor Morrison is passionate about creating and designing superior communities and building quality homes that our customers aspire to live in while driving long-term shareholder value We are committed to our four-pillar strategy: OPPORTUNISTIC LAND ACQUISITION of PRIME ASSETS in CORE LOCATIONS DISTINCTIVE COMMUNITIES DRIVEN by CONSUMER PREFERENCES CULTURE of STRONG COST EFFICIENCY OPTIMIZING PROFITABILITY WHILE ACHIEVING DESIRED SALES PACES

5 A LEADING BUILDER AND DEVELOPER Taylor Wimpey sells North American homebuilding business, Taylor Morrison, to equity consortium $722M IPO, largest homebuilding IPO in NYSE history Acquisition of Darling Homes in Houston and Dallas markets Sale of Canadian operations Expansion into Atlanta market through acquisition of JEH homes Expansion into Charlotte, Raleigh and Chicago markets through acquisition of three divisions from Orleans Homes Further expansion and price point diversification in Atlanta through acquisition of Acadia homes Awarded America s Most Trusted Homebuilder Public float increased to 70% from 25% through private equity sponsors divestiture of 51.5M shares Awarded America s Most Trusted Homebuilder Sheryl Palmer named Chairman effective May Acquisition of AV Homes completed October 2 nd Sponsors sell remaining ownership, public float 100% Awarded America s Most Trusted Homebuilder Operations in 10 U.S. markets $0.7B total revenue (1) Operations in 20 U.S. markets $3.6B total revenue Operations in 21 U.S. markets $4.2B total revenue 2019 Awarded America s Most Trusted Homebuilder for the fourth year in a row Selected for Bloomberg s Gender-Equality Index Named by Fortune Magazine as one of the World s Most Admired Companies 5

6 COMPANY SNAPSHOT AND KEY HIGHLIGHTS OPERATING MARKETS 21 markets in eight states Includes seven of the top ten markets based on YTD starts FY 2018 HIGHLIGHTS SALES PER OUTLET 2.3 SALES ORDERS 8,400 AVG. COMMUNITIES 307 HOME CLOSINGS 8,760 TOTAL REVENUE $4.2 BILLION PORTFOLIO OF BRANDS 6

7 LAND PORTOLIO MANAGEMENT ADHERENCE TO METHODICAL PORTFOLIO PERSPECTIVE Local market strategic plans Strategic entitled land positions to support future growth Maintain/grow market relevance Finished lots available for near term homebuilding operations Company level portfolio analyses Focus on prospective markets & strategic alternatives Segmentation 7

8 LAND PORTFOLIO Lot supply and deal structure opportunistically managed through full-cycle Approximately 57,000 lots owned or controlled, representing 5.5 years of supply Focused on land primarily for 2020 deliveries and beyond Allows selective and balanced approach in land acquisitions BOOK VALUE OF LAND BY STATUS ($ in inventory) Finished 58% Raw 16% Under Development 26% PORTFOLIO VINTAGE (# of lots) AV 2018 * 32% TM % 2014 & Earlier 16% 2015/2016 9% % *Entire AV book value reset as part of 2018 acquisition. TOTAL LOTS & YEARS OF SUPPLY Q LOT INVENTORY Lots Owned Lots Controlled Total Lots Years Supply East 26,369 6,187 32, Central 9,267 3,662 12, West 8,028 3,327 11, Total 43,664 13,176 56, Total Lots ('000) YoS 8

9 COMMUNITY COUNT Average community count grew at a 19% CAGR from FY 2012 to FY 2018 Q average community count of 366 AVERAGE ACTIVE COMMUNITIES (U.S. consolidated portfolio, excludes JVs) 3 YEAR AVERAGE ACTIVE COMMUNITY COUNT CAGR (as of most recent reported quarter) % 10% 9% % 3% 108 0% 0% -1% MHO PHM TOL MTH NVR BZH KBH FY 2018 HIGHLIGHTS 307 AVERAGE ACTIVE COMMUNITIES 2.3 AVERAGE MONTHLY ABSORPTION $470,000 AVERAGE CLOSING PRICE ~$135K - $3.1M PRICE RANGES 9

10 CONSUMER-CENTRICITY HOME SALES BY PRICE POINT & PRODUCT TYPE Distinctive communities and floor plans driven by consumer preferences FY 2018 % OF SALES ENTRY LEVEL 22% 1 ST MOVE-UP 2 ND MOVE-UP 55+ / ACTIVE LIFESTYLE URBAN INFILL Q % OF SALES 28% 39% 12% 20% 1% 45% 14% 17% 2% 10

11 CONSUMER-CENTRIC LIFESTYLE BUILDER Core locations where supply and demand characteristics assist in mitigating risk of market ebbs and flows Research-based approach to underwriting and consumer segmentation Developer of master plan communities with lifestyle component Community amenities fitness centers, facilitated lifestyle with classes and activities, wellness centers, golf, restaurants 11

12 AMERICA S MOST TRUSTED NATIONAL HOME BUILDER 4th consecutive year Taylor Morrison has been recognized as America s Most Trusted Home Builder by Lifestory Research Based on opinions of 30,000+ home shoppers actively looking for a new home in the top housing markets in the U.S. Recognizes brand awareness, perceptions of quality, product satisfaction and experience and opinions of trust 3rd consecutive year with #2 rank as Lifestory Research 2019, 2018 and 2017 America s Most Trusted Active Adult Resort Builder Lifestory Research 2016 America's Most Trusted National Home Builder Rank National Home Builder 1 Taylor Morrison 2 John Wieland Homes 3 Ashton Woods 4 Toll Brothers 5 Shea Homes Lifestory Research 2017 America's Most Trusted National Home Builder Rank National Home Builder 1 Taylor Morrison 2 Richmond Lifestory American Research 2018 America's Most Trusted 3 K. Hovnanian Homes National Home Builder 4 Toll Brothers 5 Shea Homes Rank National Home Builder 1 Taylor Morrison 2 Toll Brothers Lifestory Research 2019 America's Most Trusted 3 William Lyon Homes National Home Builder 4 Richmond American Rank 5 TriPointe Homes National Home Builder 1 Taylor Morrison 2 William Lyon Homes 3 Toll Brothers 4 Woodside Homes 5 Brookfield Homes 12

13 55+ & ACTIVE LIFESTYLE COMMUNITY PORTFOLIO Boutique, hyper-local 55+ and Active Lifestyle communities less capital intensive than more traditional competitors Discretionary buyer outspends traditional buyers on options, upgrades and lot premiums Florida Texas Arizona North Carolina Esplanade at Highland Ranch Esplanade at Hacienda Lakes Esplanade Golf & Country Club of Naples Esplanade at Artisan Lakes Bellacina by Casey Key Esplanade Golf & Country Club at Lakewood Ranch Bonterra at Woodforest Bonterra at Cross Creek Heritage at Vizcaya Waterford Point at the Tribute Sweetwater at Light Farms Victory at Verrado Canta Mia Encore at Eastmark Grandin Trace Creekside at Bethpage Esplanade at Starkey Ranch Esplanade of Tampa Esplanade on Palmer Ranch Sol y Mar California Skyestone Colorado Legacy Estates at Esplanade on Palmer Ranch Solivita Vitalia at Tradition 13

14 TAYLOR MORRISON HOME FUNDING TMHF PLATFORM Prequalification of all our buyers prior to acceptance of contract Provides valuable pipeline management and mitigation of risk in backlog Integrated mortgage, sales and construction process to facilitate ease in closing Able Ready Own - a qualification improvement program used to increase purchasing power As of Q4 2018, there have been 1,900 graduates of the program since inception with an average credit score improvement of 43 points The highest score improvement was 183 points, and the average time enrolled is 77 days Q4 CREDIT WORTHINESS OF CUSTOMERS 748 AVERAGE FICO $354K AVERAGE LOAN AMOUNT 75% LTV 71% MORTGAGE CAPTURE 14

15 FINANCIAL OVERVIEW Cypress Chase Tampa, FL

16 Q RESULTS Q Q YoY Growth YTD 2018 YTD 2017 YoY Growth Operating Statistics Average Active Selling Communities % % Net Sales Orders 1,793 1,835-2% 8,400 8,397 0% Sales per Community per Month % % Cancellations 20% 14% 650bps 13% 12% 140bps Closings 3,106 2,697 15% 8,760 8,032 9% ASP of Homes Closed $454 $472-4% $470 $473-1% Backlog - Units 4,158 3,496 19% 4,158 3,496 19% Backlog - $mm $2,080 $1,702 22% $2,080 $1,702 22% Financial Statistics ($ in millions except EPS) Home Closings Revenue $1,412 $1,272 11% $4,115 $3,799 8% Total Revenue $1,458 $1,300 12% $4,227 $3,885 9% Home Closings Gross Margin % 19.0% -460bps 17.1% 18.6% -150bps SG&A % of Home Closings Revenue 9.2% 8.8% 40bps 10.1% 10.3% -20bps Net Income $9 $31-70% $210 $176 19% EPS (Diluted) $0.08 $ % $1.83 $ % Financial Statistics Adjusted for Unusual Items ($ in millions except EPS) 2 Home Closings Gross Margin % 19.0% -170bps 18.2% 18.6% -40bps Net Income $101 $94 7% $306 $240 27% EPS (Diluted) $0.86 $ % $2.65 $ % (1) (1) Home Closings Gross Margin Inclusive of Capitalized Interest (2) (2) See slides for reconciliation of unusual items 16

17 OPERATING RESULTS CLOSINGS TOTAL REVENUE ($MM) 2,068 2,425 2,697 3,106 $970 $1,197 $1,300 $1,458 ASP ($000s) Q4.15 Q4.16 Q4.17 Q4.18 $458 $468 $481 $480 Q4.15 Q4.16 Q4.17 Q4.18 GROSS PROFIT ($MM) TOTAL STOCKHOLDERS EQUITY ($MM) $187 $223 $254 $258* $217 $1,973 $2,160 $2,347 $2,419 (1) *Adjusted for unusual items Q4.15 Q4.16 Q4.17 Q4.18 Q4.15 Q4.16 Q4.17 Q

18 STRONG BALANCE SHEET Balance sheet remains strong after AV acquisition Net debt / total book cap of 41.9% CONSERVATIVE CAPITALIZATION (as of most recent reported period) 64.8% Significant liquidity of $867 million at 12/31/ % 52.4% $330 million unrestricted cash $537 million availability under credit facility 22.0% 25.5% 28.2% 33.1% 33.2% 36.7% 41.6% 41.9% No senior notes maturing before 2021 $1.65 billion of debt with interest rates between 5.25% % DHI MDC PHM LEN TOL MTH KBH TM MHO CCS BZH SIGNIFICANT DEBT MATURITY RUNWAY ATTRACTIVE COST OF DEBT $867 $550 $600 $400 $350 $350 (as of most recent reported period) 5.0% 5.0% 5.1% 4.0% 4.1% 5.5% 5.8% 5.8% 6.2% 6.3% 6.3% 6.3% 7.3% Net Liquidity 12/31/2018 $200 $112 $ Loans payable Senior Notes Revolving Credit Facility 364 Day Facility NVR DHI TOL LEN TPH PMH TM MDC MHO KBH MTH CCS BZR (1) Excludes convertible notes, revolving credit facility and other debt instruments 18

19 CAPITAL ALLOCATION STRATEGY We maintain a disciplined approach to capital allocation MAINTAIN STRONG LIQUIDITY Targeted leverage under 50% - Above 50% on a short term basis for the right M&A transaction Significant capacity on $600M revolver CAPITAL DEPLOYMENT PHILOSOPHY REINVEST IN THE BUSINESS Disciplined due diligence and research process for targeting and underwriting land acquisitions in existing markets and organically entering new markets EVALUATE M&A OPPORTUNITIES Increase diversification through accretive transactions in new markets EVALUATE LEVERAGE Use of excess cash to opportunistically refinance or pay down debt RETURN EXCESS CASH TO SHAREHOLDERS $345M of share repurchases in

20 FOCUS ON OPERATIONAL EFFICIENCIES Enhance CRM technology Leverage customer and competitor data to inform better decisions Build pipeline capabilities Improve lead generations Enhanced sales paces Strategic procurement capabilities Ensure benefits from increased scale of organization Maximize local, regional and national contracts Enhance national product library Top seller plan re-use Labor environment Sale to start efficiency Optimize structural and design options Geo-Pod scheduling Optimize building efficiency Enhance predictability of cycle time from subcontractors Speculative inventory Reduce finished spec inventory to <1 per community Increased asset turns Minimal impact on margins Just-in-time inventory 2016 Investment 2017 Beginning of value recognition 2018 Full year impact 20

21 APPENDIX Chapel Creek Frisco, TX

22 Q4 and FY FINANCIAL DATA ($ in millions) Q Q YoY Growth YTD 2018 YTD 2017 YoY Growth Home Closings Revenue $1,412 $1,272 11% $4,115 $3,799 8% Land Closings Revenue $22 $6 280% $40 $17 133% Financial Services Revenue $20 $22-7% $68 $69-2% Amenity and other revenue $4 $0 $4 $0 Total Revenues $1,458 $1,300 12% $4,227 $3,885 9% Cost of Home Closings $1,208 $1,030 17% $3,411 $3,093 10% Cost of Land Closings $19 $4 354% $33 $12 179% Financial Services Expenses $10 $11-9% $41 $42 0% Amenity and other expense $3 $0 $3 $0 Total Cost of Revenues $1,240 $1,045 19% $3,489 $3,146 11% Total Gross Profit $217 $254-15% $738 $739 0% Total Gross Margin 14.9% 19.6% -467bps 17.5% 19.0% -156bps Sales, Commissions and Other Marketing Costs $93 $81 14% $278 $260 7% General and Administrative Expense $37 $30 21% $138 $131 6% Equity in Income of Unconsolidated Entities ($4) ($2) 87% ($13) ($9) 51% Other Expense $57 $1 4824% $61 $2 3537% Income before Income Taxes $34 $144-76% $274 $356-23% Income Tax Provision $25 $113-78% $63 $179-65% Net Income before allocation to non-controlling interests $9 $30-70% $210 $177 19% Net Income attributable to non-controlling interests - joint ventures ($0) $0-154% ($1) ($0) 24% Net Income before non-controlling interests $9 $31-70% $210 $176 19% Net Income before non-controlling interests excluding unusual items 1 $101 $94 7% $306 $240 27% Note: Amounts may not appear to foot due to rounding 1) (1) See slide 26 for reconciliation of unusual items 22

23 HISTORICAL DATA BY SEGMENT Q Q Q Q FY 2016 Q Q Q Q FY 2017 Q Q Q Q FY 2018 Avg. Active Selling Communities: East Central West TMHC Net Sales Orders: East ,158 1,050 1, ,766 1, ,471 Central , , ,697 West , , ,232 TMHC 1,828 2,025 1,950 1,701 7,504 2,425 2,376 1,761 1,835 8,397 2,443 2,342 1,822 1,793 8,400 Homes Closed: East ,028 2, ,235 3, ,533 4,061 Central , , ,380 West , , ,319 TMHC 1,391 1,816 1,737 2,425 7,369 1,630 1,863 1,842 2,697 8,032 1,547 1,992 2,115 3,106 8,760 Home Closings Revenue ($ in MM's): East $182 $267 $274 $397 $1,119 $263 $317 $312 $486 $1,378 $284 $356 $393 $610 $1,643 Central $216 $269 $264 $351 $1,100 $203 $267 $254 $378 $1,102 $213 $294 $273 $346 $1,126 West $231 $294 $274 $407 $1,206 $285 $305 $321 $408 $1,319 $235 $306 $348 $456 $1,346 TMHC $629 $830 $812 $1,154 $3,426 $751 $889 $886 $1,272 $3,799 $733 $957 $1,014 $1,412 $4,115 Home Closings Gross Margin: East 20.8% 20.1% 21.1% 19.4% 20.2% 20.3% 21.4% 20.2% 20.4% 20.6% 18.4% 18.2% 18.0% 15.0% 17.0% Central 18.2% 17.4% 17.6% 18.6% 18.0% 17.9% 18.1% 18.4% 18.9% 18.4% 18.9% 17.8% 17.0% 5.2% 14.0% West 16.2% 17.0% 18.0% 15.5% 16.6% 16.0% 15.9% 17.1% 17.5% 16.7% 19.3% 17.9% 21.3% 20.5% 19.9% TMHC 18.2% 18.1% 18.9% 17.8% 18.2% 18.0% 18.5% 18.6% 19.0% 18.6% 18.8% 18.0% 18.9% 14.4% 17.1% Sales Order Backlog: East 1,204 1,360 1,478 1,220 1,220 1,589 1,905 1,905 1,513 1,513 1,813 1,832 1,589 1,638 1,638 Central 1,214 1,200 1, ,162 1,282 1,272 1,051 1,051 1,372 1,587 1,610 1,420 1,420 West 1,014 1,082 1, ,176 1,254 1, ,207 1,323 1,250 1,100 1,100 TMHC 3,432 3,642 3,855 3,131 3,131 3,927 4,441 4,359 3,496 3,496 4,392 4,742 4,449 4,158 4,158 Backlog Value ($ in MM's): East $510 $578 $609 $524 $524 $676 $772 $774 $635 $635 $781 $825 $755 $725 $725 Central $614 $612 $613 $494 $494 $589 $656 $653 $533 $533 $676 $779 $814 $732 $732 West $524 $568 $650 $513 $513 $660 $713 $698 $535 $535 $728 $820 $771 $623 $623 TMHC $1,648 $1,759 $1,872 $1,532 $1,532 $1,925 $2,141 $2,125 $1,702 $1,702 $2,185 $2,424 $2,340 $2,080 $2,080 23

24 HISTORICAL OPERATING & FINANCIAL DATA ($ in millions, except per unit data) FY 2015 FY 2016 FY 2017 FY 2018 Operating Data Average Active Selling Communities Net Sales Orders 6,681 7,504 8,397 8,400 Sales per Community per Month Cancellations 14% 14% 12% 14% Closings 6,311 7,369 8,032 8,760 ASP of Homes Closed $458 $465 $473 $470 Backlog - Units 2,932 3,131 3,496 4,158 Backlog - $mm $1,393 $1,532 $1,702 $2,080 Financial Data Home Closings Revenue $2,890 $3,426 $3,799 $4,115 Land Closings Revenue $44 $65 $17 $40 Financial Services Revenue $43 $60 $69 $68 Amenity and Other Revenue $0 $0 $0 $5 Total Revenues $2,977 $3,550 $3,885 $4,227 Cost of Home Closings $2,359 $2,802 $3,093 $3,411 Cost of Land Closings $25 $36 $12 $33 Financial Services Expenses $26 $32 $42 $41 Amenity and Other Expense $0 $0 $0 $3 Total Cost of Revenues $2,409 $2,870 $3,146 $3,489 Total Gross Profit $568 $680 $739 $738 Total Gross Margin 19.1% 19.2% 19.0% 17.5% Sales, Commissions and Other Marketing Costs $199 $240 $260 $278 General and Administrative Expense $95 $122 $131 $138 Equity in Income of Unconsolidated Entities ($2) ($7) ($9) ($13) Other Expense $15 $12 $2 $61 Income from Continuing Operations before Income Taxes $261 $314 $356 $274 Income Tax Provision $90 $108 $179 $63 Net Income from Continuing Operations $171 $207 $177 $210 Income from Discontinued Operations - net of tax $58 $0 $0 $0 Net Income before allocation to non-controlling interests $229 $207 $177 $210 Net income attributable to non-controlling interests - joint ventures ($2) ($1) ($0) ($1) Net income before non-controlling interests $227 $205 $176 $210 Net Income before NCI - Excluding Unusual Items 1 $227 $205 $240 $306 Notes: Amounts may not appear to foot due to rounding (1) (1) See slide 26 for reconciliation of unusual items in 2017 and

25 UNUSUAL ITEM RECONCILIATION (Dollars in thousands) Home closings revenue $ 1,411,524 $ 1,272,231 $ 4,115,216 $ 3,799,061 Cost of home closings 1,208,476 1,030,267 3,410,853 3,092,704 Home closings gross margin $ 203,048 $ 241,964 $ 704,363 $ 706,357 Impairment charge Warranty charge Adjusted Home Closings Gross Margin Three Months Ended December 31, Twelve Months Ended December 31, ,631 9,631 36,833 39,333 Purchase accounting adjustments (5,478 ) (5,478 ) Adjusted home closings gross margin $ 244,034 $ 241,964 $ 747,849 $ 706,357 Home closings gross margin as a % of home closings revenue 14.4 % 19.0 % 17.1 % 18.6 % Adjusted home closings gross margin as a % of home closings revenue 17.3 % 19.0 % 18.2 % 18.6 % 25

26 UNUSUAL ITEM RECONCILIATION Adjusted Net Income and Adjusted Earnings Per Share Reconciliation Three Months Ended December 31, Twelve Months Ended December 31, (Dollars in thousands, except per share data) Income before income taxes $ 34,128 $ 143,801 $ 273,516 $ 355,656 Significant and unusual transactions 42,200 44,700 Transaction and corporate reorganization expense $ 49,428 $ $ 50,889 $ Adjusted Income before income taxes $ 125,756 $ 143,801 $ 369,105 $ 355,656 Net income available to TMHC $ 9,055 $ 19,966 $ 206,364 $ 91,220 Net income attributable to non-controlling interests - Former Principal Equityholders Loss fully attributable to public holding company Net income - Diluted $ ,301 $ 10,655 2,840 33,461 $ 3, ,487 $ 85,000 3, ,348 Significant and unusual transactions Transaction and corporate reorganization expense Tax impact due to significant and unusual transactions and corporate reorganization expenses Tax reform impact due to the revaluation of deferred assets and liabilities Tax reform impact due to the mandatory deemed repatriation of foreign earnings 42,200 49, ,425 3,553 44,700 50,889 (571) 57,425 3,553 Adjusted net income - Diluted $ 101,313 $ 94,439 $ 305,505 $ 240,326 Diluted weighted average shares 118, , , ,915 Adjusted earnings per common share - Diluted $ 0.86 $ 0.77 $ 2.65 $