• Home Closings Revenue: $1.8 billion, up 12% year over year.
• Adjusted Home Closings Gross Margin: 24.8%, up 80 basis points year over year.
• Adjusted Earnings Per Diluted Share: Increased 25%.
• Book Value Per Share: Grew 16% to approximately $58.
• Net Income: $213 million or $2.07 per diluted share; adjusted net income was $225 million or $2.18 per diluted share.
• Closings Volume: 3,048 homes, up 12% year over year.
• Average Closing Price: $600,000, roughly flat from a year ago.
• Monthly Absorption Pace: Increased to 3.3 per community from 2.6 in the fourth quarter.
• SG&A as a Percentage of Home Closings Revenue: 9.7%, down 70 basis points from a year ago.
• Financial Services Revenue: $51 million with a gross margin of 44.7%.
• Liquidity: Approximately $1.3 billion, including $378 million of unrestricted cash.
• Net Homebuilding Debt to Capitalization Ratio: 20.5% at quarter end.
• Share Repurchases: 2.2 million shares for $135 million; targeting $350 million for 2025.

• Warning! GuruFocus has detected 5 Warning Signs with RRC.

Release Date: April 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Taylor Morrison Home Corp (NYSE:TMHC) delivered 3,048 homes at an average price of $600,000, generating $1.8 billion in home closings revenue, up 12% year over year.
• The company's adjusted earnings per diluted share increased by 25%, and book value per share grew 16% to approximately $58.
• TMHC's diversified consumer and product strategy contributed to volume and margin resiliency, with a strong performance in the resort lifestyle segment.
• The company effectively used personalized finance incentives, with 42% of first-quarter closings utilizing a forward commitment, aiding first-time home buyers.
• TMHC maintained a strong balance sheet with over $1 billion in liquidity and a net homebuilding debt to capitalization ratio of 20.5%.

Negative Points

• The monthly absorption pace decreased to 3.3 per community from 3.7 a year ago, indicating a slowdown in sales velocity.
• Entry-level sales declined steeply by 21%, reflecting challenges in this consumer segment.
• Finished inventory at quarter-end was elevated, leading to a higher anticipated spec penetration in the second quarter.
• The company expects incentives to rise more meaningfully in the second quarter, impacting margins.
• TMHC revised its home closings gross margin forecast to around 23% for the year, down from previous expectations.

Q & A Highlights

Q: Can you provide insights into the demand changes in Texas and Florida markets over the past few months? A: Sheryl Palmer, CEO, noted that Florida showed strong year-over-year sales growth, particularly in Orlando and Naples, despite market headwinds. In Texas, Austin showed signs of recovery with reduced cancellation rates, while Dallas experienced significant growth and Houston saw a repositioning with lower ASPs and discounts.

Q: What are your thoughts on M&A in the current environment, and how is the Indianapolis integration progressing? A: Sheryl Palmer, CEO, mentioned an increase in M&A packages due to market challenges, with valuations becoming more rational but not fully aligned yet. The Indianapolis integration is mostly complete, with strong sales performance and plans to grow in core markets.

Q: Can you discuss the order trends and incentive strategies through the first quarter and into April? A: Sheryl Palmer, CEO, reported consistent sales growth in Q1, with a 10% increase in February and 13% in March. April sales were expected to peak but have been volatile, with incentives being adjusted daily based on market conditions.

Q: What are the main drivers for the expected gross margin decline in the second half of the year? A: Curtis Vanhyfte, CFO, explained that higher spec home penetration, land cost inflation, and increased incentives are key factors. Tariffs are impacting costs, particularly in metals, but are expected to affect margins more significantly in 2026.

Q: How are you approaching pricing and incentives in the current market environment? A: Sheryl Palmer, CEO, emphasized the use of mortgage incentives over price cuts, particularly for to-be-built homes. Price adjustments are considered a last resort, with a focus on personalized finance incentives to meet customer needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.