Taylor Morrison Reports Second Quarter 2013 Financial Results

  Taylor Morrison Reports Second Quarter 2013 Financial Results

  *Home closings revenue increased 62% while home closings increased 52%
  *Backlog value increased by 55% while backlog units increased by 35%
  *U.S. net sales orders increased 33% and U.S. backlog revenue increased
    119%
  *Home closings gross margin dollars increased 71%

Business Wire

SCOTTSDALE, Ariz. -- August 13, 2013

Taylor Morrison Home Corporation (the “Company” or “Taylor Morrison”) (NYSE:
TMHC) announced today financial results for the second quarter ended June30,
2013.

“We are delighted to report improvement in virtually all key operational
metrics, adding to more than three years of profitability. The results we’re
releasing today continue to reflect a reward for years of diligence in
managing the business during the downturn,” said Sheryl Palmer, President and
CEO. “The quality of our locations and our land development capability drives
the strength of our backlog, home revenue and margin growth. Our team’s
conscientious implementation of our strategy and superior execution has
allowed us to capitalize on the improvement in the housing market in the first
half of 2013.”

Net sales orders increased 26% to 1,596 in the second quarter of 2013 as
compared to 1,267 in the second quarter of last year. Net sales orders in the
Company’s U.S. operations increased 33% in the second quarter of 2013,
partially offset by a 9% sales order decline in its Canadian operations during
the same period. During the quarter, community count increased by 45 % to 172.
The Company’s overall monthly absorption pace was 3.1 net sales orders per
community in the second quarter of 2013 compared to 3.6 for the second quarter
of 2012. During the quarter, the Company intentionally limited releases and
sales pace in order to manage its growing backlog, production and overall
customer expectations while maximizing profitability and efficient use of land
assets.

The Company’s sales order backlog value increased 55% to $1.6 billion at
June30, 2013 from $1.0 billion at June30, 2012, as backlog units increased
35% to 4,127 homes at June30, 2013 compared with 3,053 homes at June30,
2012. The second quarter 2013 cancellation rate, representing cancelled sales
orders divided by gross sales orders, was 12.4 % in the second quarter of
2013, compared to 12.8 % in the second quarter of 2012.

Home closings revenue totaled $496 million in the second quarter of 2013,
benefiting from a 52% increase in homes closed, from 883 in the 2012 quarter
to 1,341 during the 2013 quarter. Adjusted home closings gross margin in the
second quarter of 2013, which is adjusted to exclude capitalized interest,
improved 120 basis points to 22.8% as compared to the second quarter of 2012.
Home closings gross margin in the second quarter of 2013 improved to 20.5%,
compared to 19.4% in the second quarter of 2012. Home closings gross margin
dollars increased 71% to $102 million.

The Company’s mortgage company, Taylor Morrison Home Funding (“TMHF”) and
title operations reported a gross margin of $3.1 million for the quarter. The
mortgage capture rate for TMHF for the quarter was 80%.

Selling, general and administrative expenses were $60.2 million or 12.1% of
home closings revenue for the 2013 second quarter compared to $28.6 million or
9.4% of home closings revenue for the second quarter of 2012. Equity in income
of unconsolidated entities, which represents the Company’s investments in home
building joint ventures, was $8.5 million in the second quarter of 2013 as
compared to $4.6 million in the second quarter of 2012. During the second
quarter, Taylor Morrison in coordination with the Company’s former parent
company reached a settlement with the IRS resulting in a $79.6 million expense
and a substantially offsetting tax benefit.

As adjusted, to exclude certain one-time charges relating to its recent
initial public offering (“IPO”) and the IRS settlement, the Company had
earnings per share of $0.27 for the second quarter of 2013. Adjusted net
income, which eliminates the effect of one-time charges and the IRS
settlement, was $32.9 million for the second quarter of 2013. These
adjustments include a $10 million loss on the early extinguishment of debt
related to the redemption of a portion of the Company’s existing 7.75% senior
notes due 2020 in connection with the IPO, $30 million for the termination of
the management agreement with the Company’s principal equityholders in
connection with the IPO and an $80 million non-cash charge associated with the
reorganization of the Company’s equity structure immediately prior to the IPO.
For the quarter, the Company had GAAP net earnings per share of $0.16 and GAAP
net income of $5.3 million, available to Class A common stockholders.

The Company ended the second quarter of 2013 with $436.2 million of cash,
including $15.0 million of restricted cash. Homebuilding inventories at the
end of the 2013 second quarter totaled $2.1 billion, an increase of 87% from
$1.1 billion in June30, 2012. The Company owned or controlled approximately
45,000 lots at June30, 2013 compared with approximately 32,000lots at
June30, 2012.

IPO and Recent Financing Activities

On April12, 2013, the Company completed its IPO, in which 28,572,000 shares
of the Company’s Class A common stock were sold at $22.00 per share for total
gross proceeds of $628.6 million. In connection with the IPO, the underwriters
exercised their over-allotment option of 4,285,800 shares at $22.00 per share
for additional gross proceeds of $94.3 million. Approximately $204.2 million
of the proceeds from the IPO were used to redeem $189.6 million of the
Company’s 7.75% senior notes due 2020, at a price equal to 103.875% of their
principal amount, plus accrued and unpaid interest. The remaining IPO
proceeds, together with cash on hand were used to purchase equity interests in
the Company’s operating partnership from the Company’s principal equityholders
and to pay IPO-related fees.

Concurrent with the IPO, the Company’s principal operating subsidiaries
entered into a new $400 million unsecured revolving credit facility, maturing
in April 2017, replacing an existing $225 million secured revolving credit
facility. In addition, the Company’s principal operating subsidiaries issued
$550 million aggregate principal amount of 5.25% senior notes due 2021, the
proceeds of which are being used for general corporate purposes.

Earnings Conference Call

A conference call to discuss the Company’s second quarter 2013 earnings will
be held at 4:30 p.m. Eastern Time on Tuesday, August 13, 2013. The call will
be broadcast live on the Internet and can be accessed through the Company’s
website at www.taylormorrison.com. If you are unable to participate in the
conference call, the call will be archived at www.taylormorrison.com for one
year. A replay of the conference call will also be available later today by
calling (888) 843-7419 or (630) 652-3042 and entering 3517 2684# as the
confirmation number.

Forward-Looking Statements

This earnings release includes forward-looking statements. These statements
are subject to a number of risks, uncertainties and other factors that could
cause our actual results, performance, prospects or opportunities, as well as
those of the markets we serve or intend to serve, to differ materially from
those expressed in, or implied by, these statements. You can identify these
statements by the fact that they do not relate to matters of a strictly
factual or historical nature and generally discuss or relate to forecasts,
estimates or other expectations regarding future events. Generally, the words
believe, expect, intend, estimate, anticipate, project, may, can, could,
might, will and similar expressions identify forward-looking statements,
including statements related to expected operating and performing results,
planned transactions, planned objectives of management, future developments or
conditions in the industries in which we participate and other trends,
developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things:
interest rate changes and the availability of mortgage financing; continued
volatility in the debt and equity markets; competition within the industries
in which Taylor Morrison operates; the availability and cost of land and other
raw materials used by Taylor Morrison in its homebuilding operations; the
impact of any changes to our strategy in responding to continuing adverse
conditions in the industry, including any changes regarding our land
positions; the availability and cost of insurance covering risks associated
with Taylor Morrison’s businesses; shortages and the cost of labor; weather
related slowdowns; slow growth initiatives and/or local building moratoria;
governmental regulation directed at or affecting the housing market, the
homebuilding industry or construction activities; uncertainty in the mortgage
lending industry, including revisions to underwriting standards and repurchase
requirements associated with the sale of mortgage loans; the interpretation of
or changes to tax, labor and environmental laws; economic changes nationally
or in Taylor Morrison’s local markets, including inflation, deflation, changes
in consumer confidence and preferences and the state of the market for homes
in general; legal or regulatory proceedings or claims; required accounting
changes; terrorist acts and other acts of war; and other factors of national,
regional and global scale, including those of a political, economic, business
and competitive nature. Taylor Morrison undertakes no duty to update any
forward-looking statement, whether as a result of new information, future
events or changes in Taylor Morrison’s expectations. In addition, other such
risks and uncertainties may be found in Taylor Morrison Home Corporation’s
Registration Statement on FormS-1 and subsequent reports filed with the
Securities and Exchange Commission under the heading “Risk Factors.”

About Taylor Morrison

Headquartered in Scottsdale, Arizona, Taylor Morrison Home Corporation
(NYSE:TMHC) operates in the U.S. under the Taylor Morrison and Darling Homes
brands and in Canada under the Monarch brand. Taylor Morrison is a builder and
developer of single-family detached and attached homes serving a wide array of
customers including first-time, move-up, luxury and active adult customers.
Taylor Morrison divisions operate in Arizona, California, Colorado, Florida
and Texas. Darling Homes serves a variety of consumers from move-up to luxury
homebuyers in Texas. Monarch, Canada’s oldest homebuilder, builds homes for
first-time and move-up buyers in Toronto and Ottawa as well as high rise
condominiums in Toronto.

For more information about Taylor Morrison, Darling Homes or Monarch, please
visit www.taylormorrison.com, www.darlinghomes.com and www.monarchgroup.net.


Taylor Morrison Home Corporation
Consolidated Statements of Operations
(Amounts in thousands except per share data, unaudited)

                   Three Months Ended           Six Months Ended
                     6/30/2013     6/30/2012       6/30/2013     6/30/2012
Home closing         $ 496,033      $ 305,419       $ 862,802      $ 526,322
revenue
Land closing           5,616          7,410           14,470         22,650
revenue
Mortgage
operations            7,216        5,318         13,105       8,601   
revenue
Total revenues         508,865        318,147         890,377        557,573
                                                                     
Cost of home           394,203        246,031         683,035        428,139
closings
Cost of land           5,653          7,472           13,297         18,963
closings
Mortgage
operations            4,069        2,772         7,559        4,801   
expenses
Total cost of          403,925        256,275         703,891        451,903
revenues
                                                                     
Operating gross        104,940        61,872          186,486        105,670
margin
                                                                     
Sales,
commissions and        34,267         18,361          60,209         33,137
other marketing
costs
General and
administrative         25,905         10,206          46,249         27,839
expenses
Equity in net
income of              (8,466   )     (4,608  )       (11,624  )     (7,788  )
unconsolidated
entities
Loss on
extinguishment         10,141         7,853           10,141         (1,601  )
of debt
Interest income,       700            (1,538  )       214            7,853
net
Indemnification
and transaction        189,635        13,906          187,925        12,270
expense
Other (income)        541          (968    )      1,282        (757    )
expense, net
Income (loss)
before income          (147,783 )     18,660          (107,910 )     34,717
taxes
Income tax            (69,496  )    (10,174 )      (53,961  )    (4,676  )
benefit
Income (loss)
before loss
(income)               (78,287  )     28,834          (53,949  )     39,393
attributable to
noncontrolling
interests
Loss (income)
attributable to       83,614       24            59,276       (238    )
noncontrolling
interests
Net income           $ 5,327       $ 28,858       $ 5,327       $ 39,155  
                                                                     
Income per
common share:
Basic                  $0.16                          $0.16
Diluted                $0.16                          $0.16
Weighted average
number of shares
of common stock:
Basic                  32,806                         32,806
Diluted                122,327                        122,327
                                                                     

Taylor Morrison Home Corporation
Condensed Consolidated Balance Sheets
(Amounts in thousands, unaudited)

                                         June 30,      December 30,
                                           2013            2012
Assets                                     (unaudited)
Cash and cash equivalents                  $ 421,147       $  300,602
Restricted cash                              15,042           13,683
Real estate inventory                        2,102,604        1,633,050
Land deposits                                32,817           28,724
Loans receivable                             39,185           48,579
Mortgages receivable                         44,838           84,963
Tax indemnification receivable               28,682           107,638
Prepaid expenses and other assets, net       110,779          101,499
Other receivables, net                       61,044           48,951
Investment in unconsolidated entities        82,230           74,465
Deferred tax assets, net                     274,172          274,757
Property and equipment, net                  5,839            6,423
Intangible assets, net                       22,278           17,954
Goodwill                                    14,594          15,526
Total assets                                 3,255,251        2,756,814
                                                           
Liabilities and equity
Accounts payable                           $ 113,454       $  98,647
Accrued expenses and other liabilities       184,973          213,414
Income taxes payable                         37,858           111,513
Customer deposits                            111,159          82,038
Mortgage borrowings                          39,049           80,360
Loans payable and other borrowings           313,287          215,968
Revolving credit facility borrowings         -                50,000
Senior notes                                1,039,826       681,541
Total liabilities                          $ 1,839,606     $  1,533,481
                                                           
Equity
Total equity                                1,415,645       1,223,333
Total liabilities and equity               $ 3,255,251     $  2,756,814
                                                              

                                                                                
Homes Closed:      Three months ended    Three months ended      Six months ended      Six months ended
                   30-Jun-13             30-Jun-12               30-Jun-13             30-Jun-12
(dollars in                                                     
thousands)
                   Homes  Value        Homes  Value           Homes  Value        Homes  Value
East               729    $ 271,189     431    $ 137,620       1,273  $ 462,568     706    $ 220,202
West               420       166,345     298       100,747       783       296,041     485       165,534
Canada             192     58,499     154     67,052        297     104,193    313     140,586
Subtotal           1,341   $ 496,033     883     $ 305,419       2,353   $ 862,802     1,504   $ 526,322
Unconsolidated     115     36,271     102     28,971        142     45,198     140     40,741
joint ventures
Total              1,456   $ 532,304     985     $ 334,390       2,495   $ 908,000     1,644   $ 567,063
                                                                                               
                                                                                               
Net Sales          Three months ended    Three months ended      Six months ended      Six months ended
Orders:
                   30-Jun-13             30-Jun-12               30-Jun-13             30-Jun-12
(dollars in                                                     
thousands)
                   Homes  Value        Homes  Value           Homes  Value        Homes  Value
East               910     $ 332,377     544     $ 181,206       1,920   $ 698,334     1,071   $ 343,900
West               493       218,188     512       177,140       1,032     447,035     906       300,638
Canada             193     86,612     211     92,395        325     147,273    396     166,022
Subtotal           1,596   $ 637,177     1,267   $ 450,741       3,277   $ 1,292,642   2,373   $ 810,560
Unconsolidated     15      6,065      46      10,119        30      12,912     100     20,670
joint ventures
Total              1,611   $ 643,242     1,313   $ 460,860       3,307   $ 1,305,554   2,473   $ 831,230
                                                                                               
                                                                                               
Sales Order        As of                 As of
Backlog:
                   30-Jun-13             30-Jun-12
(dollars in        
thousands)
                   Homes  Value        Homes  Value
East               1,849   $ 730,461     832     $ 293,917
West               911       399,904     694       223,412
Canada             1,367   442,036    1,527   498,097
Subtotal           4,127   $ 1,572,401   3,053   $ 1,015,426
Unconsolidated     795     269,499    954     325,125
joint ventures
Total              4,922   $ 1,841,900   4,007   $ 1,340,551
                                                                                               
                                                                                               
Average Active
Selling            Three months ended    Six months ended
Communities:
                   June 30,              June 30,
                   
                   2013   2012         2013   2012
East               121.8     72.3        121.3     73.3
West               34.5      32.3        33.0      33.7
Canada             15.8    14.0       15.3    14.5
Subtotal           172.1     118.6       169.6     121.5
Unconsolidated     4.0     7.0        4.3     7.0
joint ventures
Total              176.1     125.6       173.9     128.5
                                                                                               

Reconciliation of Non-GAAP Financial Measures

The following tables set forth a reconciliation between our home closings
gross margin and our adjusted home closings gross margin as well as between
net income and adjusted net income. Adjusted home closings gross margin is a
non-GAAP financial measure calculated based on gross margins, excluding
impairments and capitalized interest amortization. Management uses adjusted
home closings gross margins to evaluate our performance on a consolidated
basis as well as the performance of our regions. Adjusted net income is a
non-GAAP financial measure calculated based on net income, excluding one-time
charges. We believe this adjusted gross margin measure and adjusted net income
are relevant and useful to investors for evaluating our performance. These
measures are considered non- GAAP financial measures and should be considered
in addition to, rather than as a substitute for, the comparable U.S. GAAP
financial measures as a measure of our operating performance. Although other
companies in the homebuilding industry report similar information, the methods
used may differ. We urge investors to understand the methods used by other
companies in the homebuilding industry to calculate net income and gross
margins and any adjustments to such amounts before comparing our measures to
those of such other companies.

Adjusted Gross Margin Reconciliation
For the three months ended June 30,

(in thousands except percentages)                2013          2012
Home closings revenues                             $ 496,033       $ 305,419
Cost of home closings                               394,203       246,031 
Home closings gross margin                           101,830         59,388
Add:
Capitalized interest amortization                   11,477        6,440   
Adjusted home closings gross margin                 113,307       65,828  
Home closings gross margin as a percentage of        20.5    %       19.4    %
home closings revenue
Adjusted home closings gross margin as a             22.8    %       21.6    %
percentage of home closings revenue

For the six months ended June 30,

(in thousands except percentages)                  2013            2012
Home closings revenues                             $ 862,802       $ 526,322
Cost of home closings                               683,035       428,139 
Home closings gross margin                           179,767         98,183
Add:
Capitalized interest amortization                   19,343        11,764  
Adjusted home closings gross margin                 199,110       109,947 
Home closings gross margin as a percentage of        20.8    %       18.7    %
home closings revenue
Adjusted home closings gross margin as a             23.1    %       20.9    %
percentage of home closings revenue
                                                                             

Adjusted Net Income, Non GAAP Reconciliation
(Amounts in thousands except per share data, unaudited)

                                                          Three Months Ended
                                                            June 30, 2013
Home closing revenue                                        $   496,033
Land closing revenue                                            5,616
Mortgage operations revenue                                    7,216      
Total Revenue                                               $   508,865
                                                            
Cost of home closings                                           394,203
Cost of land closings                                           5,653
Mortgage operations expenses                                   4,069      
Total Cost of Revenues                                         403,925    
Gross Margin                                                $   104,940
                                                            
Sales commissions and other marketing costs                     34,267
General and administrative expenses                             25,905
Equity in income of unconsolidated entities                     (8,466     )
Interest expense                                                700
Loss on extinguishment of debt                                  10,141
Other expense                                                   541
Indemnification and transaction expenses                       189,635    
Income Before Taxes                                         $   (147,783   )
                                                            
Income tax benefit                                             (69,496    )
Net Loss                                                    $   (78,287    )
                                                            
Net (income) loss attributable to noncontrolling                (106       )
interests
Net (income) loss attributable to noncontrolling                83,720
interests Principal Equityholders
                                                            
Net Income available to Taylor Morrison Home                $   5,327
Corporation
                                                            
Adjusted Net Income available to Taylor Morrison Home
Corporation:
Net Income available to shareholders                        $   5,327
Early extinguishment of debt expense                            10,141
Tax effect of early extinguishment of tax                       (3,666     )
Indemnification receivable and income tax payable               5,432
reversal
Adjusted income (loss) attributable to Principal               (8,704     )
Equityholders
Adjusted net income available to Taylor Morrison Home       $   8,530
Corporation
                                                            
Net income (loss) attributable to Principal                 $   (83,720    )
Equityholders
Pre IPO (income) attributable solely to Principal
Equityholders
Pre IPO charge related to equity compensation charge            80,189
from reorganization
Pre IPO charge related to termination of managements            29,848
services agreement
Tax effect on pre IPO charge related to termination of          (10,790    )
management services agreement
Adjusted net income attributable to Principal                  8,704      
Equityholders related to post IPO adjustments
Adjusted net income attributable to Principal               $   24,231
Equityholders
                                                            
Diluted net income                                          $   32,761
                                                            
Adjusted Income Per Share:
Income per share, basic                                     $   0.16
Adjusted income per share, basic                            $   0.26
Income per share, diluted                                   $   0.16
Adjusted income per share, diluted                          $   0.27
Basic number of shares of common stock                          32,806
Diluted number of shares of common stock                        122,327

Contact:

Taylor Morrison Home Corporation
Erin Willis, Investor Relations, (480) 734-2060
investor@taylormorrison.com
 
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