TMHC 10-Q Quarterly Report March 31, 2023 | Alphaminr
Taylor Morrison Home Corp
ALPHAMINR

TMHC 10-Q Quarter ended March 31, 2023

Balance Sheet
Cash Flow
Income Statement
Debt
TAYLOR MORRISON HOME CORP
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10-Q
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35873

TAYLOR MORRISON HOME CORP ORATION

(Exact name of registrant as specified in its Charter)

Delaware

83-2026677

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4900 N. Scottsdale Road , Suite 2000

85251

Scottsdale ,

Arizona

(Address of principal executive offices)

(Zip Code)

( 480 ) 840-8100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00001 par value

TMHC

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding as of April 26, 2023

Common stock, $0.00001 par value

109,112,512

Table of Contents

TAYLOR MORRISON HOME CORPORATION

TABLE OF CONTENTS

Part I

FINANCIAL INFORMATION

2

ITEM 1.

Financial Statements of Taylor Morrison Home Corporation (Unaudited)

2

Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022

4

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022

5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022

6

Notes to the Unaudited Condensed Consolidated Financial Statements

19

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

31

ITEM 4.

Controls and Procedures

Part II

OTHER INFORMATION

32

ITEM 1.

Legal Proceedings

32

ITEM 1A.

Risk Factors

33

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

ITEM 3.

Defaults Upon Senior Securities

33

ITEM 4.

Mine Safety Disclosures

33

ITEM 5.

Other Information

34

ITEM 6.

Exhibits

35

SIGNATURES

TAYLOR MORRISON HOME CORPORATION 10-Q

1

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

March 31,
2023

December 31,
2022

Assets

Cash and cash equivalents

$

877,717

$

724,488

Restricted cash

6,717

2,147

Total cash, cash equivalents, and restricted cash

884,434

726,635

Real estate inventory:

Owned inventory

5,330,548

5,346,905

Consolidated real estate not owned

2,295

23,971

Total real estate inventory

5,332,843

5,370,876

Land deposits

228,117

263,356

Mortgage loans held for sale

186,194

346,364

Lease right of use assets

84,052

90,446

Prepaid expenses and other assets, net

225,381

265,392

Other receivables, net

196,184

191,504

Investments in unconsolidated entities

294,755

282,900

Deferred tax assets, net

67,656

67,656

Property and equipment, net

213,374

202,398

Goodwill

663,197

663,197

Total assets

$

8,376,187

$

8,470,724

Liabilities

Accounts payable

$

247,887

$

269,761

Accrued expenses and other liabilities

424,619

490,253

Lease liabilities

92,895

100,174

Income taxes payable

2,977

—

Customer deposits

414,085

412,092

Estimated development liabilities

43,005

43,753

Senior notes, net

1,816,877

1,816,303

Loans payable and other borrowings

338,667

361,486

Mortgage warehouse borrowings

146,334

306,072

Liabilities attributable to consolidated real estate not owned

2,295

23,971

Total liabilities

$

3,529,641

$

3,823,865

COMMITMENTS AND CONTINGENCIES (Note 13)

Stockholders’ equity

Total stockholders’ equity

4,846,546

4,646,859

Total liabilities and stockholders’ equity

$

8,376,187

$

8,470,724

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION 10-Q

2

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

Three Months Ended
March 31,

2023

2022

Home closings revenue, net

$

1,612,595

$

1,644,409

Land closings revenue

4,520

15,610

Financial services revenue

35,149

35,199

Amenity and other revenue

9,593

7,906

Total revenue

1,661,857

1,703,124

Cost of home closings

1,227,513

1,264,974

Cost of land closings

4,345

14,364

Financial services expenses

22,148

24,214

Amenity and other expenses

8,285

6,444

Total cost of revenue

1,262,291

1,309,996

Gross margin

399,566

393,128

Sales, commissions and other marketing costs

92,760

89,123

General and administrative expenses

66,261

68,142

Net income from unconsolidated entities

( 1,929

)

( 1,831

)

Interest (income)/expense, net

( 1,111

)

4,252

Other (income)/expense, net

( 4,834

)

542

Income before income taxes

248,419

232,900

Income tax provision

57,191

54,439

Net income before allocation to non-controlling interests

191,228

178,461

Net income attributable to non-controlling interests

( 177

)

( 1,758

)

Net income available to Taylor Morrison Home Corporation

$

191,051

$

176,703

Earnings per common share

Basic

$

1.76

$

1.46

Diluted

$

1.74

$

1.44

Weighted average number of shares of common stock:

Basic

108,429

121,186

Diluted

110,053

122,657

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION 10-Q

3

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CO NDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)

For the three months ended March 31, 2023

Common Stock

Additional
Paid-in
Capital

Treasury Stock

Stockholders' Equity

Shares

Amount

Amount

Shares

Amount

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Non-
controlling
Interest

Total
Stockholders’
Equity

Balance – December 31, 2022

107,995,262

$

1

$

3,025,489

51,396,923

$

( 1,137,138

)

$

2,741,615

$

359

$

16,533

$

4,646,859

Net income

—

—

—

—

—

191,051

—

177

191,228

Exercise of stock options and issuance of restricted stock units, net (1)

1,148,175

—

4,493

—

—

—

—

—

4,493

Repurchase of common stock

( 109,325

)

—

—

109,325

( 3,568

)

—

—

—

( 3,568

)

Stock compensation expense

—

—

7,533

—

—

—

—

—

7,533

Changes in non-controlling interests of consolidated
joint ventures

—

—

—

—

—

—

—

1

1

Balance – March 31, 2023

109,034,112

$

1

$

3,037,515

51,506,248

$

( 1,140,706

)

$

2,932,666

$

359

$

16,711

$

4,846,546

(1)
Dollar amount includes $ 13.5 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

For the three months ended March 31, 2022

Common Stock

Additional
Paid-in
Capital

Treasury Stock

Stockholders' Equity

Shares

Amount

Amount

Shares

Amount

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Non-
controlling
Interest

Total
Stockholders’
Equity

Balance – December, 2021

121,833,649

$

1

$

2,997,211

36,828,559

$

( 760,863

)

$

1,688,815

$

689

$

45,129

$

3,970,982

Net income

—

—

—

—

—

176,703

—

1,758

178,461

Exercise of stock options and issuance of restricted stock units, net (1)

479,928

—

( 1,265

)

—

—

—

—

—

( 1,265

)

Repurchase of common stock

( 1,948,187

)

—

—

1,948,187

( 58,029

)

—

—

—

( 58,029

)

Stock compensation expense

—

—

6,863

—

—

—

—

—

6,863

Distributions to non-controlling interests of
consolidated joint ventures

—

—

—

—

—

—

—

( 1,752

)

( 1,752

)

Changes in non-controlling interests of consolidated
joint ventures

—

—

—

—

—

—

—

( 462

)

( 462

)

Balance – March 31, 2022

120,365,390

$

1

$

3,002,809

38,776,746

$

( 818,892

)

$

1,865,518

$

689

$

44,673

$

4,094,798

(1)
Dollar amount includes $ 2.4 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION 10-Q

4

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

C ONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Three Months Ended March 31,

2023

2022

Cash Flows from Operating Activities

Net income before allocation to non-controlling interests

$

191,228

$

178,461

Adjustments to reconcile net income to net cash provided by operating activities:

Net income from unconsolidated entities

( 1,929

)

( 1,831

)

Stock compensation expense

7,533

6,863

Distributions of earnings from unconsolidated entities

847

2,058

Depreciation and amortization

7,087

8,841

Operating lease expense

7,144

6,913

Debt issuance costs amortization

868

191

Changes in operating assets and liabilities:

Real estate inventory and land deposits

51,596

( 286,828

)

Mortgages held for sale, prepaid expenses and other assets

190,202

171,618

Customer deposits

1,993

55,211

Accounts payable, accrued expenses and other liabilities

( 112,097

)

( 138,247

)

Income taxes payable

2,977

54,211

Net cash provided by operating activities

347,449

57,461

Cash Flows from Investing Activities:

Purchase of property and equipment

( 13,807

)

( 5,389

)

Distributions of capital from unconsolidated entities

350

—

Investments of capital into unconsolidated entities

( 11,123

)

( 2,052

)

Net cash used in investing activities

( 24,580

)

( 7,441

)

Cash Flows from Financing Activities

Increase in loans payable and other borrowings

2,425

18,287

Repayments on loans payable and other borrowings

( 7,377

)

( 26,688

)

Borrowings on revolving credit facilities

—

32,548

Repayments on revolving credit facilities

—

( 64,077

)

Borrowings on mortgage warehouse facilities

634,404

562,024

Repayments on mortgage warehouse facilities

( 794,142

)

( 775,249

)

Proceeds from stock option exercises and issuance of restricted stock units, net

4,493

( 1,265

)

Payment of principal portion of finance lease

( 1,305

)

( 1,332

)

Repurchase of common stock, net

( 3,568

)

( 58,029

)

Cash and distributions to non-controlling interests of consolidated joint ventures, net

—

( 1,752

)

Net cash used in financing activities

( 165,070

)

( 315,533

)

Net Increase/Decrease in Cash and Cash Equivalents and Restricted Cash

$

157,799

$

( 265,513

)

Cash, Cash Equivalents, and Restricted Cash — Beginning of period

726,635

836,340

Cash, Cash Equivalents, and Restricted Cash — End of period

$

884,434

$

570,827

Supplemental Cash Flow Information

Income tax refunds/(payments)

$

1,943

$

( 228

)

Supplemental Non-Cash Investing and Financing Activities:

Change in loans payable issued to sellers in connection with land purchase contracts

$

39,865

$

59,830

Change in inventory not owned

$

( 21,676

)

$

( 11,896

)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TAYLOR MORRISON HOME CORPORATION 10-Q

5

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

Description of the Business — Taylor Morrison Home Corporation (“TMHC”), through its subsidiaries (together with TMHC referred to herein as “we,” “our,” “the Company” and “us”), owns and operates a residential homebuilding business and is a land developer. We operate in the states of Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. 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 55-plus active lifestyle buyers. We are the general contractors for all real estate projects and retain subcontractors for home construction and land development. Our homebuilding segments operate under our Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade brand names. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, Taylor Morrison Home Funding, INC (“TMHF”), title services through our wholly owned title services subsidiary, Inspired Title Services, LLC (“Inspired Title”), and homeowner’s insurance policies through our wholly owned insurance agency, Taylor Morrison Insurance Services, LLC (“TMIS”). Our business is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as four reportable segments: East, Central, West, and Financial Services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”). Certain prior year amounts have been reclassified to conform to current year presentation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full fiscal year.

Joint Ventures - We consolidate certain joint ventures in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation. The income from the percentage of the joint venture not owned by us is presented as “Net income attributable to non-controlling interests” on the unaudited Condensed Consolidated Statement of Operations. The equity from the percentage of the joint ventures not owned by us is presented as “Non-controlling interests” on the unaudited Condensed Consolidated Statement of Stockholders’ Equity. The balance of Non-Controlling interests will fluctuate from period to period as a result of activities within the respective joint ventures which may include the allocation of income or losses, distributions or contributions associated with the partners within the joint venture.

Use of Estimates — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the unaudited Condensed Consolidated Financial Statements and these accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of acquired assets, valuation of goodwill, valuation of development liabilities, valuation of equity awards, valuation allowance on deferred tax assets, and reserves for warranty and self-insured risks. Actual results could differ from those estimates.

Real Estate Inventory — Inventory consists of raw land, land under development, homes under construction, completed homes, and model homes, all of which are stated at cost. In addition to direct carrying costs, we also capitalize interest, real estate taxes, and related development costs that benefit the entire community, such as field construction supervision and related direct overhead. Home vertical construction costs are accumulated and charged to Cost of home closings at the time of home closing using the specific identification method. Land acquisition, development, interest, and real estate taxes are allocated to homes and units generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction of a home, and construction utilities are considered overhead costs and allocated on a per unit basis. These costs are capitalized to inventory from the point development begins to the point construction is completed. Changes in estimated costs to be incurred in a community are generally allocated to the remaining lots on a prospective basis.

The life cycle of a typical community generally ranges from two to five years , commencing with the acquisition of unentitled or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery of homes. Actual

TAYLOR MORRISON HOME CORPORATION 10-Q

6

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

community duration will vary based on the size of the community, the sales absorption rate and whether we purchased the property as raw land or as finished lots.

We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.

We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment . We review our real estate inventory for indicators of impairment on a community-level basis during each reporting period. If indicators of impairment are present for a community, an undiscounted cash flow analysis is generally prepared in order to determine if the carrying value of the assets in that community exceeds the estimated undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, the assets are potentially impaired, requiring a fair value analysis. Our determination of fair value is primarily based on a discounted cash flow model which includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. However, fair value can be determined through other methods, such as appraisals, contractual purchase offers, and other third party opinions of value. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. For the three months ended March 31, 2023 and 2022 , no impairment charges were recorded.

In certain cases, we may elect to cease development and/or marketing of an existing community if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow for market conditions to improve. We refer to such communities as long-term strategic assets. The decision may be based on financial and/or operational metrics as determined by us. For those communities that have been temporarily closed or development has been discontinued, we do not allocate interest or other costs to the community's inventory until activity resumes. Such costs are expensed as incurred. In addition, if we decide to cease development, we will evaluate the project for impairment and then cease future development and marketing activity until such a time when we believe that market conditions have improved and economic performance can be maximized. Our assessment of the carrying value of our long-term strategic assets typically includes estimates of future performance, including the timing of when development will recommence, the type of product to be offered, and the margin to be realized. In the future, some of these inactive communities may be re-opened while others may be sold. As of March 31, 2023 and December 31, 2022, we had no inactive projects.

In the ordinary course of business, we enter into various option agreements to acquire lots in staged takedowns which may require a significant cash deposit. We are not legally obligated to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots are not purchased. Real estate not owned under these agreements is reflected in Consolidated real estate not owned with a corresponding liability in Liabilities attributable to consolidated real estate not owned in the unaudited Condensed Consolidated Balance Sheets.

Land held for sale — In some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land. Land is considered held for sale once management intends to actively sell a parcel within the next 12 months or the parcel is under contract to sell. Land held for sale is recorded at the lower of cost or fair value less costs to sell. In determining the value of land held for sale, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record fair value adjustments for land held for sale within Cost of land closings on the unaudited Condensed Consolidated Statements of Operations.

Land banking arrangements — We have land purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources, we may transfer our right under certain specific performance agreements to entities owned by third parties (“land banking arrangements”). These entities use equity contributions from their owners and/or incur debt to finance the acquisition and development of the land. The entities grant us an option to acquire lots in staged takedowns. In consideration for this option, we make a non-refundable deposit. We are not legally obligated to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots were not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included in the unaudited Condensed Consolidated Balance Sheets.

Investments in Consolidated and Unconsolidated Entities

Consolidated Entities — In the ordinary course of business, we enter into land purchase contracts, lot option contracts and land banking arrangements in order to procure land or lots for the construction of homes. Such contracts enable us to control significant lot positions with a minimal initial capital investment and substantially reduce the risk associated with land ownership and development. In accordance with ASC Topic 810, Consolidation , when we enter into agreements to acquire land or lots and pay a non-refundable deposit, we evaluate if a Variable Interest Entity (“VIE”) should be created if we are deemed to have provided subordinated financial support that will absorb some or all of an entity’s expected losses if they occur. If we are the primary beneficiary of the VIE, we

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consolidate the VIE and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, in the unaudited Condensed Consolidated Balance Sheets.

Unconsolidated Joint Ventures — We use the equity method of accounting for entities which we exercise significant influence but do not have a controlling interest over the operating and financial policies of the investee. For unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint venture partners and determined that the partners have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in Net income/loss from unconsolidated entities on the unaudited Condensed Consolidated Statement of Operations when earned and distributions are credited against our Investments in unconsolidated entities on the unaudited Condensed Consolidated Balance Sheets when received.

We evaluate our investments in unconsolidated entities for indicators of impairment semi-annually. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized, if any, is the excess of the investment's carrying amount over its estimated fair value. Additionally, we consider various qualitative factors to determine if a decrease in the value of the investment is other-than-temporary. These factors include age of the venture, stage in its life cycle, intent and ability for us to recover our investment in the entity, financial condition and long-term prospects of the entity, short-term liquidity needs of the unconsolidated entity, trends in the general economic environment of the land, entitlement status of the land held by the unconsolidated entity, overall projected returns on investment, defaults under contracts with third parties (including bank debt), recoverability of the investment through future cash flows and relationships with the other partners. If we believe that the decline in the fair value of the investment is temporary, then no impairment is recorded. We recorded no material impairment charges related to the investments in unconsolidated entities for the three months ended March 31, 2023 and 2022 .

Revenue Recognition — Revenue is recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) . The standard's core principle requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Home and land closings revenue

Under Topic 606, the following steps are applied to determine home closings revenue and land closings revenue recognition: (1) identify the contract(s) with our customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions, have one contract, with one performance obligation, with each customer to build and deliver the home purchased (or develop and deliver land). Based on the application of the five steps, the following summarizes the timing and manner of the recognition of home and land sales revenue:

•
Revenue from closings of residential real estate is recognized when the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
•
Revenue from land sales is recognized when a significant down payment is received, title passes and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.

Amenity and other revenue

We own and operate certain amenities such as golf courses, club houses, and fitness centers, which require us to provide club members with access to the facilities in exchange for the payment of club dues. We collect club dues and other fees from club members, which are invoiced on a monthly basis. Revenue from our golf club operations is also included in amenity and other revenue. Amenity and other revenue also includes revenue from the sale of assets from our Urban Form operations and Build-to-Rent operations.

Financial services revenue

Mortgage operations and hedging activity related to financial services are not within the scope of Topic 606. Loan origination fees (including title fees, points, and closing costs) are recognized at the time the related real estate transactions are completed, which is usually upon the close of escrow. All of the loans TMHF originates are sold to third party investors within a short period of time, on a non-recourse basis. Gains and losses from the sale of mortgages are recognized in accordance with ASC Topic 860-20, Sales of Financial Assets. TMHF does not have continuing involvement with the transferred assets; therefore, we derecognize the mortgage

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loans at time of sale, and based on the difference between the selling price and carrying value of the related loans upon sale, record a gain/loss on sale in the period of sale. Also included in Financial services revenue/expenses are realized and unrealized gains and losses from hedging instruments. ASC Topic 815-25, Derivatives and Hedging , requires that all hedging instruments be recognized as assets or liabilities on the balance sheet at their fair value. We do not meet the criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the statement of operations in the period in which they occur.

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to TMHC by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if all outstanding dilutive equity awards to issue shares of Common Stock were exercised or settled.

The following is a summary of the components of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended
March 31,

2023

2022

Numerator:

Net income available to TMHC

$

191,051

$

176,703

Denominator:

Weighted average shares – basic

108,429

121,186

Restricted stock units

913

801

Stock Options

711

670

Weighted average shares – diluted

110,053

122,657

Earnings per common share – basic:

Net income available to Taylor Morrison Home Corporation

$

1.76

$

1.46

Earnings per common share – diluted:

Net income available to Taylor Morrison Home Corporation

$

1.74

$

1.44

The above calculations of weighted average shares exclude 664,145 and 1,045,290 of anti-dilutive stock options and unvested restricted stock units (“RSUs”) for the three months ended March 31, 2023 and 2022, respectively.

4. REAL ESTATE INVENTORY AND LAND DEPOSITS

Inventory consists of the following (in thousands):

As of

March 31,
2023

December 31,
2022

Real estate developed and under development

$

3,618,428

$

3,607,227

Real estate held for development or held for sale (1)

48,881

43,314

Total owned lots

3,667,309

3,650,541

Operating communities (2)

1,466,632

1,506,241

Capitalized interest

196,607

190,123

Total owned inventory

5,330,548

5,346,905

Consolidated real estate not owned

2,295

23,971

Total real estate inventory

$

5,332,843

$

5,370,876

(1)
Real estate held for development or held for sale includes properties which are not in active production.
(2)
Operating communities consist of all vertical construction costs relating to homes in progress and completed homes.

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The development status of our land inventory is as follows (dollars in thousands):

As of

March 31, 2023

December 31, 2022

Owned Lots

Book Value
of Land and
Development

Owned Lots

Book Value
of Land and
Development

Homebuilding owned lots

Undeveloped

14,248

$

465,215

14,985

$

522,594

Under development

10,694

1,175,219

10,716

1,106,751

Finished

17,783

2,024,986

18,366

2,018,062

Total homebuilding owned lots

42,725

3,665,420

44,067

3,647,407

Other assets (1)

—

1,889

—

3,134

Total owned lots

42,725

$

3,667,309

44,067

$

3,650,541

(1)
The remaining book value of land and development relates to parcels of commercial assets which are . excluded from the owned lots presented in the table.

Undeveloped lots are those where no phase specific development work has commenced. Under development lots include land where phase specific development has commenced. Finished lots are fully developed. This classification allows for multi-phase or master planned communities to be presented in more than one lot status based on their development.

We have land option purchase contracts, land banking arrangements and other controlled lot agreements. We do not have title to the properties, and the property owner and its creditors generally only have recourse against us in the form of retaining any non-refundable deposits. We are also not legally obligated to purchase the balance of the lots. Deposits related to these lots are capitalized when paid and classified as Land deposits until the associated property is purchased. The table below presents a summary of our controlled lots for the following periods (dollars in thousands):

As of

March 31, 2023

December 31, 2022

Controlled Lots

Purchase Price

Land Deposits (1)

Controlled Lots

Purchase Price

Land Deposits (1)

Homebuilding controlled lots

Land option purchase contracts

7,169

$

484,988

$

40,346

6,582

$

428,612

$

47,678

Land banking arrangements

7,073

1,020,063

147,584

7,369

1,057,065

156,653

Other controlled lots

16,415

1,018,841

34,235

16,891

956,712

50,218

Total controlled lots

30,657

$

2,523,892

$

222,165

30,842

$

2,442,389

$

254,549

(1)
Land deposits are non-refundable and represent exposure to loss related to our contracts with third parties, unconsolidated entities, and land banking arrangements. . In addition, at March 31, 2023 and December 31, 2022 we had refundable deposits of $ 6.0 million and $ 8.8 million respectively.

Capitalized Interest — Interest capitalized, incurred and amortized is as follows (in thousands):

Three Months Ended
March 31,

2023

2022

Interest capitalized - beginning of period

$

190,123

$

168,670

Interest incurred and capitalized (1)

34,133

39,729

Interest amortized to cost of home closings

( 27,649

)

( 30,430

)

Interest capitalized - end of period

$

196,607

$

177,969

(1)
Excludes Interest expense, net on the unaudited Condensed Consolidated Statement of Operations as such amounts are not capitalizable.

5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

Unconsolidated Entities

We have investments in a number of joint ventures with third parties. These entities are generally involved in real estate development, homebuilding, Build-to-Rent, and/or mortgage lending activities. The primary activity of the real estate development joint ventures is development and sale of lots to joint venture partners and/or unrelated builders. Our share of the joint venture profit relating to lots we purchase from the joint ventures is deferred until homes are delivered by us and title passes to a homebuyer.

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Summarized, unaudited condensed combined financial information of unconsolidated entities that are accounted for by the equity method are as follows (in thousands):

As of

March 31,
2023

December 31,
2022

Assets:

Real estate inventory

$

786,053

$

749,942

Other assets

177,855

146,770

Total assets

$

963,908

$

896,712

Liabilities and owners’ equity:

Debt

$

275,878

$

238,263

Other liabilities

35,168

31,824

Total liabilities

$

311,046

$

270,087

Owners’ equity:

TMHC

$

294,755

$

282,900

Others

358,107

343,725

Total owners’ equity

$

652,862

$

626,625

Total liabilities and owners’ equity

$

963,908

$

896,712

Three Months Ended
March 31,

2023

2022

Revenues

$

19,536

$

30,401

Costs and expenses

( 14,699

)

( 25,694

)

Net income from unconsolidated entities

$

4,837

$

4,707

TMHC’s share in net income of unconsolidated entities

$

1,929

$

1,831

Distributions to TMHC from unconsolidated entities

$

1,197

$

2,058

Consolidated Entities

We have several joint ventures for the purpose of real estate development and homebuilding activities, which we have determined to be VIEs. As the managing member, we oversee the daily operations and have the power to direct the activities of the VIEs, or joint ventures. For this specific subset of joint ventures, based upon the allocation of income and loss per the applicable joint venture agreements and certain performance guarantees, we have potentially significant exposure to the risks and rewards of the joint ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and the entities are consolidated.

As of March 31, 2023 , the assets of the consolidated joint ventures totaled $ 277.2 million, of which $ 31.3 million was cash and cash equivalents, $ 72.4 million was owned inventory and $ 123.3 million was fixed assets (primarily related to Urban Form). The majority of the fixed asset balance is held for sale as of March 31, 2023. As of December 31, 2022 , the assets of the consolidated joint ventures totaled $ 277.6 million, of which $ 38.9 million was cash and cash equivalents, $ 72.0 million was owned inventory and $ 123.2 million was fixed assets. The liabilities of the consolidated joint ventures totaled $ 154.1 million and $ 155.5 million as of March 31, 2023 and December 31, 2022 , respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.

6. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following (in thousands):

As of
March 31, 2023

As of
December 31, 2022

Real estate development costs to complete

$

52,589

$

53,155

Compensation and employee benefits

68,029

112,294

Self-insurance and warranty reserves

158,222

161,675

Interest payable

26,558

37,434

Property and sales taxes payable

24,069

30,046

Other accruals

95,152

95,649

Total accrued expenses and other liabilities

$

424,619

$

490,253

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Self-Insurance and Warranty Reserves – We accrue for the expected costs associated with our limited warranty, deductibles and self-insured exposure under our various insurance policies within Beneva Indemnity Company (“Beneva”), a wholly owned subsidiary. A summary of the changes in reserves are as follows (in thousands):

Three Months Ended
March 31,

2023

2022

Reserve - beginning of period

$

161,675

$

141,839

Additions to reserves

14,447

8,884

Cost of claims incurred

( 20,508

)

( 12,473

)

Changes in estimates to pre-existing reserves

2,608

2,720

Reserve - end of period

$

158,222

$

140,970

7. DEBT

Total debt consists of the following (in thousands):

As of

March 31, 2023

December 31, 2022

Principal

Unamortized
Debt Issuance (Costs)/
Premium

Carrying
Value

Principal

Unamortized
Debt Issuance (Costs)/
Premium

Carrying
Value

5.625 % Senior Notes due 2024

350,000

( 494

)

349,506

350,000

( 628

)

349,372

5.875 % Senior Notes due 2027

500,000

( 3,264

)

496,736

500,000

( 3,459

)

496,541

6.625 % Senior Notes due 2027 (1)

27,070

1,238

28,308

27,070

1,310

28,380

5.75 % Senior Notes due 2028

450,000

( 3,025

)

446,975

450,000

( 3,183

)

446,817

5.125 % Senior Notes due 2030

500,000

( 4,648

)

495,352

500,000

( 4,807

)

495,193

Senior Notes subtotal

$

1,827,070

$

( 10,193

)

$

1,816,877

$

1,827,070

$

( 10,767

)

$

1,816,303

Loans payable and other borrowings

338,667

—

338,667

361,486

—

361,486

$ 1 Billion Revolving Credit Facility (2)(3)

—

—

—

—

—

—

$ 100 Million Revolving Credit Facility (2)(3)

—

—

—

—

—

—

Mortgage warehouse borrowings

146,334

—

146,334

306,072

—

306,072

Total debt

$

2,312,071

$

( 10,193

)

$

2,301,878

$

2,494,628

$

( 10,767

)

$

2,483,861

(1)
Unamortized Debt Issuance (Cost)/Premium for such notes is reflective of fair value adjustments as a result of purchase accounting.
(2)
Unamortized debt issuance costs are included in the Prepaid expenses and other assets, net on the Consolidated Balance Sheets.
(3)
The $ 1 Billion Revolving Credit Facility Agreement together with the $ 100 Million Revolving Credit Facility Agreement, the “Revolving Credit Facilities”.

Debt Instruments

Excluding the debt instruments discussed below, the terms governing all other debt instruments listed in the table above have not substantially changed from the year ended December 31, 2022. For information regarding such instruments, refer to Note 8 to the Consolidated Financial Statements in our Annual Report. As of March 31, 2023, we were in compliance with all of the covenants in the debt instruments listed in the table above.

$ 1 Billion Revolving Credit Facility

Our $ 1 Billion Revolving Credit Facility has a maturity date of March 11, 2027 . We had no outstanding borrowings under our $ 1 Billion Revolving Credit Facility as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022 , we had $ 3.6 million and $ 3.8 million, respectively, of unamortized debt issuance costs relating to our $ 1 Billion Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the unaudited Condensed Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022 , we had $ 70.2 million and $ 69.2 million, respectively, of utilized letters of credit, resulting in $ 929.8 million and $ 930.8 million, respectively, of availability under the $ 1 Billion Revolving Credit Facility.

The $ 1 Billion Revolving Credit Facility contains certain “springing” financial covenants, requiring us and our subsidiaries to comply with a maximum debt to capitalization ratio of not more than 0.60 to 1.00 and a minimum consolidated tangible net worth level, currently of at least $ 3.0 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $ 1 Billion Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal

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quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the $ 1 Billion Revolving Credit Facility in an aggregate amount greater than $ 40.0 million or unreimbursed letters of credit issued under the $ 1 Billion Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the $ 1 Billion Revolving Credit Facility provides that we may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to our capital that will, upon the contribution of such cash to the borrower, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall.

The $ 1 Billion Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, the payment of dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The $ 1 Billion Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control.

As of March 31, 2023 , we were in compliance with all of the covenants under the $ 1 Billion Revolving Credit Facility.

Mortgage Warehouse Borrowings

The following is a summary of our mortgage warehouse borrowings (in thousands):

As of March 31, 2023

Facility

Amount
Drawn

Facility
Amount

Interest
Rate

Expiration
Date

Collateral (1)

Warehouse A

$

39,608

$

60,000

Daily SOFR + 1.70 %

on Demand

Mortgage Loans

Warehouse B

27,747

75,000

BSBY 1M + 1.65 %

on Demand

Mortgage Loans

Warehouse C

31,614

75,000

Term SOFR + 1.65 %

on Demand

Mortgage Loans & Pledged Cash

Warehouse D

17,077

70,000

Daily SOFR + 1.50 %

September 6, 2023

Mortgage Loans

Warehouse E

30,288

70,000

Term SOFR + 1.60 %

on Demand

Mortgage Loans

Total

$

146,334

$

350,000

As of December 31, 2022

Facility

Amount
Drawn

Facility
Amount

Interest
Rate

Expiration
Date

Collateral (1)

Warehouse A

$

29,066

$

60,000

Daily SOFR + 1.70 %

On Demand

Mortgage Loans

Warehouse B

94,258

150,000

BSBY 1M + 1.65 %

On Demand

Mortgage Loans

Warehouse C

53,607

75,000

Term SOFR + 1.65 %

On Demand

Mortgage Loans & Restricted Cash

Warehouse D

83,259

140,000

Daily SOFR + 1.50 %

September 6, 2023

Mortgage Loans

Warehouse E

45,882

70,000

Term SOFR + 1.60 %

On Demand

Mortgage Loans

Total

$

306,072

$

495,000

(1)
The mortgage warehouse borrowings outstanding as of March 31, 2023 and December 31, 2022 were collateralized by $ 186.2 million and $ 346.4 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage loans held for sale, and approximately $ 6.7 million and $ 2.1 million, respectively, of restricted cash on our unaudited Condensed Consolidated Balance Sheets.

Loans Payable and Other Borrowings

Loans payable and other borrowings as of March 31, 2023 and December 31, 2022 consist of project-level debt due to various land sellers and financial institutions for specific projects. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot closings or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0 % to 9 % and 0 % to 8 % at each of March 31, 2023 and December 31, 2022 , respectively. We impute interest for loans with no stated interest rates.

8. FAIR VALUE DISCLOSURES

ASC Topic 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.

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Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.

Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. The fair value of derivative assets and liabilities includes interest rate lock commitments (“IRLCs”) and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loans, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our mortgage warehouse borrowings, loans payable and other borrowings, and the borrowings under our Revolving Credit Facilities approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The fair value of our Equity Security Investment in a public company is based upon quoted prices for identical assets in an active market. There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of March 31, 2023, when compared to December 31, 2022.

The carrying value and fair value of our financial instruments are as follows:

March 31, 2023

December 31, 2022

(Dollars in thousands)

Level in Fair
Value Hierarchy

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

Description:

Mortgage loans held for sale

2

$

186,194

$

186,194

$

346,364

$

346,364

IRLCs

3

4,571

4,571

2,386

2,386

MBSs

2

( 3,190

)

( 3,190

)

1,090

1,090

Mortgage warehouse borrowings

2

146,334

146,334

306,072

306,072

Loans payable and other borrowings

2

338,667

338,667

361,486

361,486

5.625 % Senior Notes due 2024 (1)

2

349,506

347,519

349,372

347,375

5.875 % Senior Notes due 2027 (1)

2

496,736

490,515

496,541

480,060

6.625 % Senior Notes due 2027 (1)

2

28,308

25,920

28,380

26,123

5.75 % Senior Notes due 2028 (1)

2

446,975

442,652

446,817

421,358

5.125 % Senior Notes due 2030 (1)

2

495,352

461,540

495,193

434,330

Equity Security

1

460

460

460

460

(1)
Carrying value for Senior Notes, as presented, includes unamortized debt issuance costs and premiums. Debt issuance costs are not factored into the fair value calculation for the Senior Notes.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value for our inventories measured at fair value on a nonrecurring basis:

(Dollars in thousands)

Level in Fair
Value Hierarchy

As of
December 31, 2022

Description:

Real estate inventories

3

$

48,360

As of March 31, 2023 , the fair value for such inventories was not determined as there were no events and circumstances that indicated their carrying value was not recoverable.

9. INCOME TAXES

The effective tax rate for the three months ended March 31, 2023 was 23.0 %, compared to 23.4 % for the same period in 2022. For the three months ended March 31, 2023 and 2022 the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, and special deductions and credits relating to homebuilding activities.

At both March 31, 2023 and December 31, 2022 , there were no unrecognized tax benefits.

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ITEM 1. FINANCIAL STATEMENTS

10. STOCKHOLDERS’ EQUITY

Capital Stock

The Company’s authorized capital stock consists of 400,000,000 shares of common stock, par value $ 0.00001 per share (the “Common Stock”), and 50,000,000 shares of preferred stock, par value $ 0.00001 per share.

Stock Repurchase Program

The following table summarizes share repurchase activity for the periods presented:

Three Months Ended March 31,

(Dollars in thousands)

2023

2022

Amount available for repurchase — beginning of period

$

279,138

$

230,413

Amount repurchased

( 3,568

)

( 58,029

)

Amount available for repurchase — end of period

$

275,570

$

172,384

The Company repurchased 109,325 and 1,948,187 shares under the share repurchase program during the three months ended March 31, 2023 and 2022, respectively.

The Inflation Reduction Act was enacted on August 16, 2022 and includes an excise tax on the net repurchase of company stock. This act was effective as of January 1, 2023 and did not have a material impact on our financial statements for the quarter ended March 31, 2023. We will continue to assess the impact it may have on our financial results.

11. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “Plan”). The Plan was most recently amended and restated in May 2022. The Plan provides for the grant of stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), and other equity-based awards deliverable in shares of our Common Stock. As of March 31, 2023 , we had an aggregate of 4,998,916 shares of Common Stock available for future grants under the Plan.

The following table provides the outstanding balance of time-based and performance based RSUs and stock options as of March 31, 2023:

Restricted Stock Units
(time and performance)

Stock Options

Units

Weighted Average
Grant Date Fair
Value

Units

Weighted
Average Exercise
Price Per Share

Balance at March 31, 2023

1,495,712

$

29.85

2,845,081

$

25.90

The following table provides information regarding the amount and components of stock-based compensation expense, all of which is included in General and administrative expenses in the unaudited Condensed Consolidated Statements of Operations (in thousands):

Three Months Ended
March 31,

2023

2022

Restricted stock units (1)

$

6,675

$

5,780

Stock options

858

1,083

Total stock compensation

$

7,533

$

6,863

(1)
Includes compensation expense related to time-based RSUs and PRSUs.

At March 31, 2023 and December 31, 2022 , the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately $ 43.1 million and $ 27.1 million, respectively.

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ITEM 1. FINANCIAL STATEMENTS

12. REPORTING SEGMENTS

We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling homes, and providing warranty and customer service. We aggregate our homebuilding operating components into three reporting segments, East, Central, and West, based on similar long-term economic characteristics. The activity from our Build-to-Rent and Urban Form operations are included in our Corporate segment. We also have a Financial Services reporting segment. We have no inter-segment sales as all sales are to external customers.

Our reporting segments are as follows:

East

Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa

Central

Austin, Dallas, Denver, and Houston

West

Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California

Financial Services

Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

Segment information is as follows (in thousands):

Three Months Ended March 31, 2023

East

Central

West

Financial
Services

Corporate
and
Unallocated (1)

Total

Total revenue

$

610,813

$

465,011

$

547,906

$

35,149

$

2,978

$

1,661,857

Gross margin

165,707

111,313

108,627

13,001

918

399,566

Selling, general and administrative expenses

( 43,047

)

( 36,956

)

( 40,484

)

—

( 38,534

)

( 159,021

)

Net (loss)/income from unconsolidated entities

—

( 82

)

( 235

)

2,275

( 29

)

1,929

Interest and other (expense)/income, net

( 1,212

)

( 1,341

)

3,779

—

4,719

5,945

Income/(loss) before income taxes

$

121,448

$

72,934

$

71,687

$

15,276

$

( 32,926

)

$

248,419

(1)
Includes the activity from our Build-To-Rent and Urban Form operations.

Three Months Ended March 31, 2022

East

Central

West

Financial Services

Corporate
and
Unallocated (1)

Total

Total revenue

$

525,121

$

370,735

$

770,210

$

35,199

$

1,859

$

1,703,124

Gross margin

125,691

74,008

181,531

10,985

913

393,128

Selling, general and administrative expenses

( 40,326

)

( 29,440

)

( 43,519

)

—

( 43,980

)

( 157,265

)

Net (loss)/income from unconsolidated entities

—

85

( 312

)

2,058

—

1,831

Interest and other income/(expense), net

( 432

)

( 1,860

)

( 1,966

)

—

( 536

)

( 4,794

)

Income/(loss) before income taxes

$

84,933

$

42,793

$

135,734

$

13,043

$

( 43,603

)

$

232,900

(1)
Includes the activity from our Build-To-Rent and Urban Form operations.

As of March 31, 2023

East

Central

West

Financial Services

Corporate
and
Unallocated (1)

Total

Real estate inventory and land deposits

$

1,837,715

$

1,292,465

$

2,430,780

$

—

$

—

$

5,560,960

Investments in unconsolidated entities

49,359

108,706

80,958

6,711

49,021

294,755

Other assets

158,939

255,225

589,270

271,726

1,245,312

2,520,472

Total assets

$

2,046,013

$

1,656,396

$

3,101,008

$

278,437

$

1,294,333

$

8,376,187

(1)
Includes the assets from our Build-To-Rent and Urban Form operations.

As of December 31, 2022

East

Central

West

Financial
Services

Corporate
and
Unallocated (1)

Total

Real estate inventory and land deposits

$

1,820,765

$

1,359,805

$

2,453,662

$

—

$

—

$

5,634,232

Investments in unconsolidated entities

46,629

104,070

80,310

5,283

46,608

282,900

Other assets

216,816

251,727

613,029

431,535

1,040,485

2,553,592

Total assets

$

2,084,210

$

1,715,602

$

3,147,001

$

436,818

$

1,087,093

$

8,470,724

(1)
Includes the assets from our Build-To-Rent and Urban Form operations.

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ITEM 1. FINANCIAL STATEMENTS

13. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit and surety bonds under these arrangements totaled $ 1.3 billion as of March 31, 2023 and $ 1.2 billion as of December 31, 2022. Although significant development and construction activities have been completed related to these site improvements, the bonds are generally not released until all development and construction activities are completed. We do not believe that it is probable that any outstanding bonds as of March 31, 2023 will be drawn upon.

Purchase Commitments —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 the routine conduct of our 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 property owner and its creditors generally have no recourse. Our obligations with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits. At both March 31, 2023 and December 31, 2022 , the aggregate purchase price for these land option contracts and land banking arrangements was $ 1.5 billion.

Legal Proceedings — We are involved in various litigation and legal claims in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations.

We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss can be reasonably estimated. At March 31, 2023 and December 31, 2022 , our legal accruals were $ 17.5 million and $ 20.6 million, respectively. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. Predicting the ultimate resolution of the pending matters, the related timing, or the eventual loss associated with these matters is inherently difficult. Accordingly, the liability arising from the ultimate resolution of any matter may exceed the estimate reflected in the recorded reserves relating to such matter. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.

On April 26, 2017, a class action complaint was filed in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida by Norman Gundel, William Mann, and Brenda Taylor against Avatar Properties, Inc. (an acquired AV Homes entity), generally alleging that our collection of club membership fees in connection with the use of one of our amenities in our East homebuilding segment violates various laws relating to homeowner associations and other Florida-specific laws. The class action complaint seeks an injunction to prohibit future collection of club membership fees. On November 2, 2021, the court determined that the club membership fees were improper and that plaintiffs were entitled to $ 35.0 million in fee reimbursements. We appealed the court’s ruling to the Second District Court of Appeal on November 29, 2021, and as of March 31, 2023, our appeal remained pending. Subsequent to March 31, 2023, oral arguments have been scheduled for May 2023.

Plaintiffs have agreed to continue to pay club membership fees pending the outcome of the appeal. We believe, based on our assessment and the opinion of external legal counsel, that the court’s legal interpretation constitutes legal error and the court incorrectly ruled on this matter. In accordance with ASC Topic 450, Contingencies , we evaluated the range of loss and the likelihood of each potential amount of loss within the range.

While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, in evaluating the potential outcomes, we believe the more likely outcome is that we win the appeal. This belief is based on our review of the legal merit of the judgement, as well as the opinion of external legal counsel. Accordingly, in assessing the range of possible loss, we believe the more likely outcome is that we win on appeal and will have zero liability.

Leases — Our leases primarily consist of office space, construction trailers, model home leasebacks, a ground lease, equipment, and storage units. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases . Lease obligations were $ 92.9 million and $ 100.2 million as of March 31, 2023 and December 31, 2022 , respectively. We recorded lease expense of approximately $ 7.1 million and $ 6.9 million for the three months ended March 31, 2023 , and 2022, within General and administrative expenses on our unaudited Condensed Consolidated Statement of Operations .

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ITEM 1. FINANCIAL STATEMENTS

14. MORTGAGE HEDGING ACTIVITIES

The following summarizes derivative instrument assets (liabilities) as of the periods presented:

As of

March 31, 2023

December 31, 2022

(Dollars in thousands)

Fair Value

Notional Amount (1)

Fair Value

Notional Amount (1)

IRLCs

$

4,571

$

445,752

$

2,386

$

375,030

MBSs

( 3,190

)

502,000

1,090

504,000

Total

$

1,381

$

3,476

(1)
The notional amounts in the table above include mandatory and best effort mortgages, that have been locked and approved.

Total commitments to originate loans approximated $ 496.5 million and $ 419.6 million as of March 31, 2023 and December 31, 2022, respectively. This amount represents the commitments to originate loans that have been locked and approved by underwriting. The notional amounts in the table above includes mandatory and best effort loans that have been locked and approved by underwriting.

We have exposure to credit loss in the event of contractual non-performance by our trading counterparties in derivative instruments that we use in our rate risk management activities. We manage this credit risk by selecting only counterparties that we believe to be financially strong, spreading the risk among multiple counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with counterparties, as appropriate. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon.

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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. The 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, 2022 (“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.

Business Overview

Our principal business is residential homebuilding and the development of lifestyle communities with operations across 11 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 55-plus active 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 develop and construct multi-use properties consisting of 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 as of March 31, 2023 is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as four reportable segments: East, Central, West and Financial Services, as follows:

East

Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa

Central

Austin, Dallas, Denver, and Houston

West

Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California

Financial Services

Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

As of March 31, 2023, we employed approximately 2,700 full-time equivalent persons. Of these, approximately 2,300 were engaged in corporate and homebuilding operations, and the remaining approximately 400 were engaged in financial services.

First Quarter 2023 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated):

•
Home closings declined eight percent to 2,541 homes, which generated revenue of $1.6billion.
•
Home closings gross margin improved 80 basis points to 23.9 percent.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•
Net sales orders declined seven percent to 2,854, which represented a monthly absorption pace of 2.9 per community versus 3.1 a year ago.
•
SG&A as a percentage of home closings revenue increased 30 basis points to 9.9 percent.
•
Homebuilding lots decreased five percent to approximately 73,000 homesites, or 5.9 years of supply, of which 3.4 years was owned.
•
Controlled lots as a percentage of total lot supply increased approximately 300 basis points to 42 percent.
•
Book value per share increased 32 percent to $44.04.
•
Return on equity improved 480 basis points to 23.9 percent.

Results of Operations

The following table sets forth our results of operations for the periods presented:

Three Months Ended
March 31,

(Dollars in thousands)

2023

2022

Statements of Operations Data:

Home closings revenue, net

$

1,612,595

$

1,644,409

Land closings revenue

4,520

15,610

Financial services revenue

35,149

35,199

Amenity and other revenue

9,593

7,906

Total revenue

1,661,857

1,703,124

Cost of home closings

1,227,513

1,264,974

Cost of land closings

4,345

14,364

Financial services expenses

22,148

24,214

Amenity and other expenses

8,285

6,444

Total cost of revenue

1,262,291

1,309,996

Gross margin

399,566

393,128

Sales, commissions and other marketing costs

92,760

89,123

General and administrative expenses

66,261

68,142

Net income from unconsolidated entities

(1,929

)

(1,831

)

Interest (income)/expense, net

(1,111

)

4,252

Other (income)/expense, net

(4,834

)

542

Income before income taxes

248,419

232,900

Income tax provision

57,191

54,439

Net income before allocation to non-controlling interests

191,228

178,461

Net income attributable to non-controlling interests

(177

)

(1,758

)

Net income available to Taylor Morrison Home Corporation

$

191,051

$

176,703

Home closings gross margin

23.9

%

23.1

%

Sales, commissions and other marketing costs as a percentage of
home closings revenue, net

5.8

%

5.4

%

General and administrative expenses as a percentage of home
closings revenue, net

4.1

%

4.2

%

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we provide our investors with supplemental information 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 impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains on land transfers and extinguishment of debt, net, 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, as applicable, interest expense/(income), net, amortization of capitalized interest, income taxes, depreciation and amortization (EBITDA), non-cash compensation expense, if any, inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

on land transfers and extinguishment of debt, net. 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 borrowings, net of unrestricted cash and cash equivalents, 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 regions, 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 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 (i) EBITDA and adjusted EBITDA and (ii) net homebuilding debt to capitalization ratio to the comparable GAAP measures is presented below. Because the company did not experience any material adjustments applicable to (i) adjusted net income and adjusted earnings per common share; (ii) adjusted income before income taxes and related margin; or (iii) adjusted home closings gross margin during the periods presented that would cause such measures to differ from the comparable GAAP measures, such measures have not been separately presented herein.

EBITDA and Adjusted EBITDA Reconciliation

Three Months Ended March 31,

(Dollars in thousands)

2023

2022

Net income before allocation to non-controlling interests

$

191,228

$

178,461

Interest (income)/expense, net

(1,111

)

4,252

Amortization of capitalized interest

27,649

30,430

Income tax provision

57,191

54,439

Depreciation and amortization

1,790

1,930

EBITDA

$

276,747

$

269,512

Non-cash compensation expense

7,533

6,863

Adjusted EBITDA

$

284,280

$

276,375

Total revenue

$

1,661,857

$

1,703,124

Net income before allocation to non-controlling interests as a percentage of
total revenue

11.5

%

10.5

%

EBITDA as a percentage of total revenue

16.7

%

15.8

%

Adjusted EBITDA as a percentage of total revenue

17.1

%

16.2

%

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Homebuilding Debt to Capitalization Ratio Reconciliation

($ in thousands)

As of
March 31, 2023

As of
December 31, 2022

As of
March 31, 2022

Total debt

$

2,301,878

$

2,483,861

$

3,048,373

Plus: unamortized debt issuance cost/(premium), net

10,193

10,767

(2,311

)

Less: mortgage warehouse borrowings

$

(146,334

)

(306,072

)

(200,662

)

Total homebuilding debt

$

2,165,737

$

2,188,556

$

2,845,400

Total equity

4,846,546

4,646,859

4,094,798

Total capitalization

$

7,012,283

$

6,835,415

$

6,940,198

Total homebuilding debt to capitalization ratio

30.9

%

32.0

%

41.0

%

Total homebuilding debt

$

2,165,737

$

2,188,556

$

2,845,400

Less: cash and cash equivalents

(877,717

)

(724,488

)

(569,249

)

Net homebuilding debt

$

1,288,020

$

1,464,068

$

2,276,151

Total equity

4,846,546

4,646,859

4,094,798

Total capitalization

$

6,134,566

$

6,110,927

$

6,370,949

Net homebuilding debt to capitalization ratio

21.0

%

24.0

%

35.7

%

Three months ended March 31, 2023 compared to three months ended March 31, 2022

The results for the three months ended March 31, 2023 and 2022 were impacted by various macro economic conditions. The results for the three months ended March 31, 2022 were benefited from the increased housing demand and significant price appreciation which began in the second half of 2020, whereas the results for the three months ended March 31, 2023 were negatively impacted by reduced demand for housing. We believe the shift in housing demand has been driven by a rapid increase in mortgage interest rates, which followed significant home inflation in 2020 and 2021. Higher housing costs, as well as the speed of change in mortgage interest rates caused by the Federal Reserve’s actions to slow inflation, created affordability constraints for some consumers and reduced overall consumer confidence. This resulted in a reduction in net sales orders, as well as an increase in cancellations. In response, we began to adjust pricing, primarily by offering finance incentives, as well as discounts and other net pricing reductions. These pricing adjustments helped to drive an increase in gross sales orders and a gradual normalization in cancellations beginning in the quarter ended March 31, 2023. Because of enhanced operational efficiencies and the balanced mix of our sales between to-be-built and spec home sales, we have maintained a strong home closings gross margin even after reducing net pricing. Operational information related to each period is presented below:

Ending Active Selling Communities

As of March 31,

Change

2023

2022

East

106

121

(12.4

)%

Central

98

106

(7.5

)%

West

120

97

23.7

%

Total

324

324

—

The total ending active selling communities remained flat at March 31, 2023 compared to March 31, 2022. The increase in the West is due to several master planned community openings. The East and Central regions experienced community close outs which were not more than offset by new community openings.

Net Sales Orders

Three Months Ended March 31,

Net Sales Orders (1)

Sales Value (1)

Average Selling Price

(Dollars in thousands)

2023

2022

Change

2023

2022

Change

2023

2022

Change

East

1,079

1,027

5.1

%

$

644,519

$

606,210

6.3

%

$

597

$

590

1.2

%

Central

674

887

(24.0

)%

384,830

583,279

(34.0

)%

571

658

(13.2

)%

West

1,101

1,140

(3.4

)%

756,344

895,730

(15.6

)%

687

786

(12.6

)%

Total

2,854

3,054

(6.5

)%

$

1,785,693

$

2,085,219

(14.4

)%

$

626

$

683

(8.3

)%

(1)
Net sales orders and sales value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net sales orders and sales value decreased by 6.5% and 14.4%, for the three months ended March 31, 2023 compared to the same period in the prior year, respectively. We believe the decreases were primarily the result of the change in economic conditions and home buyer apprehensions due to rising mortgage interest rates over the past year. In addition, the decrease in average selling price is a result of an increase in our pricing incentives and/or discounts in certain markets which caused the overall average selling price to decrease for the three months ended March 31, 2023 compared to the same period in the prior year.

Sales Order Cancellations

Cancellation Rate (1)

Three Months Ended March 31,

2023

2022

East

9.3

%

4.8

%

Central

18.0

%

6.6

%

West

15.8

%

7.5

%

Total Company

14.0

%

6.4

%

(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, 2023 compared to the same period in the prior year. The increase in cancellations is due primarily to increases in mortgage interest rates and buyer apprehensions given elevated macroeconomic uncertainty and affordability constraints for some consumers.

Sales Order Backlog

Three Months Ended March 31,

Sold Homes in Backlog (1)

Sales Value

Average Selling Price

(Dollars in thousands)

2023

2022

Change

2023

2022

Change

2023

2022

Change

East

2,658

3,309

(19.7

)%

$

1,775,970

$

2,002,530

(11.3

)%

$

668

$

605

10.4

%

Central

1,660

3,010

(44.9

)%

1,132,928

1,962,538

(42.3

)%

682

652

4.6

%

West

1,949

3,081

(36.7

)%

1,328,187

2,232,878

(40.5

)%

681

725

(6.1

)%

Total

6,267

9,400

(33.3

)%

$

4,237,085

$

6,197,946

(31.6

)%

$

676

$

659

2.6

%

(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 33.3% and 31.6% at March 31, 2023 compared to March 31, 2022, respectively. The decrease in sold homes in backlog is primarily the result of a decrease in net sales as well as an increase in cancellations. The average selling price of homes in backlog increased by 2.6% as a result of sales price appreciation over the past year, but is partially offset by the pricing incentives and/or discounts we began offering in the latter half of 2022.

Home Closings Revenue

Three Months Ended March 31,

Homes Closed

Home Closings Revenue, Net

Average Selling Price

(Dollars in thousands)

2023

2022

Change

2023

2022

Change

2023

2022

Change

East

1,004

937

7.2

%

$

601,611

$

505,998

18.9

%

$

599

$

540

10.9

%

Central

731

664

10.1

%

463,394

368,575

25.7

%

634

555

14.2

%

West

806

1,167

(30.9

)%

547,590

769,836

(28.9

)%

679

660

2.9

%

Total

2,541

2,768

(8.2

)%

$

1,612,595

$

1,644,409

(1.9

)%

$

635

$

594

6.9

%

The number of homes closed and homes closing revenue, net decreased by 8.2% and 1.9% for the three months ended March 31, 2023, compared to the same period in the prior year, respectively. The decrease in the number of homes closed is primarily due to less sales order backlog and an increase in cancellations in the current year period compared to the prior year period. Average selling price increased by 6.9% as a result of sales price appreciation which partially offset the impact of the decrease of home closings revenue, net, for the three months ended March 31, 2023, compared to the same period in the prior year.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Land Closings Revenue

Three Months Ended March 31,

(Dollars in thousands)

2023

2022

Change

East

$

2,903

$

13,440

$

(10,537

)

Central

1,617

2,160

(543

)

West

—

10

(10

)

Total

$

4,520

$

15,610

$

(11,090

)

We generally purchase land and lots with the intent to build and sell homes. However, in some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land. Land and lot sales occur at various intervals and varying degrees of profitability. Therefore, the revenue and gross margin from land closings will fluctuate from period to period, depending upon market opportunities and our land management strategy. The land closings revenue in the East for the three months ended March 31, 2022 was due to the sale of certain commercial assets as well as the sale of residential lots in our Florida market.

Amenity and Other Revenue

Three Months Ended March 31,

(Dollars in thousands)

2023

2022

Change

East

$

6,299

$

5,683

$

616

Central

—

—

—

West

316

364

(48

)

Corporate

2,978

1,859

1,119

Total

$

9,593

$

7,906

$

1,687

Several of our communities operate amenities such as golf courses, club houses, and fitness centers. We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region also includes the activity relating to our Build-To-Rent and Urban Form operations.

Home Closings Gross Margin

Three Months Ended March 31,

East

Central

West

Consolidated

(Dollars in thousands)

2023

2022

2023

2022

2023

2022

2023

2022

Home closings revenue, net

$

601,611

$

505,998

$

463,394

$

368,575

$

547,590

$

769,836

$

1,612,595

$

1,644,409

Cost of home closings

436,446

381,946

352,229

295,057

438,838

587,971

1,227,513

1,264,974

Home closings gross margin

$

165,165

$

124,052

$

111,165

$

73,518

$

108,752

$

181,865

$

385,082

$

379,435

Home closings gross margin %

27.5

%

24.5

%

24.0

%

19.9

%

19.9

%

23.6

%

23.9

%

23.1

%

Home closings gross margin increased 80 basis points to 23.9% for the three months ended March 31, 2023, compared to 23.1% in the comparable prior year period. We maintained an overall strong margin as a result of our mix of between to-be-built and spec home closings. The East and Central regions experienced price appreciation over the past several quarters which resulted in an increase in home closings gross margin which was partially offset by an increase in pricing incentives and/or discounts. The West region experienced a decrease in home closings gross margin as a result of pricing incentives or discounts above the company average. These pricing incentives or discounts were partially offset by limited price appreciation across several divisions in the region.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 Ended
March 31,

(Dollars in thousands)

2023

2022

Change

Mortgage services revenue

$

25,603

$

27,715

(7.6

)%

Title services and other revenues

9,546

7,484

27.6

%

Total financial services revenue

35,149

35,199

(0.1

)%

Financial services net income from unconsolidated entities

2,275

2,058

10.5

%

Total revenue

37,424

37,257

0.4

%

Financial services expenses

22,148

24,214

(8.5

)%

Financial services income before income taxes

$

15,276

$

13,043

17.1

%

Total originations:

Number of Loans

1,531

1,582

(3.2

)%

Principal

$

718,279

$

688,665

4.3

%

Three Months Ended
March 31,

2023

2022

Supplemental data:

Average FICO score

756

753

Funded origination breakdown:

Government (FHA,VA,USDA)

15.5

%

16.6

%

Other agency

79.8

%

80.0

%

Total agency

95.3

%

96.6

%

Non-agency

4.7

%

3.4

%

Total funded originations

100.0

%

100.0

%

Total financial services revenue was approximately $35 million for both the three months ended March 31, 2023 and 2022. Mortgage services revenue decreased for the three months ended March 31, 2023 compared to the same period in the prior year, which was nearly fully offset by an increase in title services and other revenues. The decrease in mortgage services revenue was due to fewer home mortgage originations, while an increase in the average selling price of homes closed increased title services revenue as title revenue is based on the home's sales price.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, increased to 5.8% from 5.4% for the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily due to the decrease in home closings revenue, net, and an increase in external commissions costs.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, remained relatively flat for the three months ended March 31, 2023 compared to the same period in the prior year as a result of our continuous efforts to maintain stable operating costs.

Net Income from Unconsolidated Entities

Net income from unconsolidated entities was $1.9 million and $1.8 million for the three months ended March 31, 2023 and 2022, respectively. Our joint ventures relating to our financial services segment experienced an increase in income for the three months ended March 31, 2023 compared to the same period in the prior year.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest (Income)/Expense, Net

Interest income, net was $1.1 million for the three months ended March 31, 2023 and interest expense, net was $4.3 million for the three months ended March 31, 2022 . The net interest income for the three months ended March 31, 2023 was primarily due to an increase in interest income as a result of higher cash balances and an increase in the interest rates earned on such balances.

Other (Income)/Expense, Net

Other income, net was $4.8 million for the three months ended March 31, 2023 and other expense, net was $0.5 million for the three months ended March 31, 2022. The net other income in the current period was primarily related to a recovery on a previously written-off deposit as well as other income earned from non-core operations.

Income Tax Provision

The effective tax rate for the three months ended March 31, 2023 was 23.0%, compared to 23.4% for the same period in 2022. For the three months ended March 31, 2023 and 2022 the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, and special deductions and credits relating to homebuilding activities.

Net Income

Net income and diluted earnings per share for the three months ended March 31, 2023 was $191.1 million and $1.74, respectively. Net income and diluted earnings per share for the three months ended March 31, 2022 was $176.7 million and $1.44, respectively. The increases in net income and diluted earnings per share from the prior year were primarily attributable to higher gross margin, higher interest and other income, and lower general and administrative expenses.

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

•
Cash generated from operations;

•
Mortgage warehouse facilities;
•
Borrowings under our Revolving Credit Facilities;

•
Project-level real estate financing (including non-recourse loans, land banking, and joint ventures); and
•
Our various series of Senior Notes;

•
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 model homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

The three month period ended March 31, 2023 witnessed significant disruptions to the banking system and financial market volatility resulting from certain bank failures. While we maintained no accounts at any failed banks, substantially all of our cash currently on deposit with other major financial institutions exceeds insured limits. We limit exposure relating to our short-term financial instruments by diversifying these financial instruments among various counterparties, which consist of major financial institutions. Generally, deposits may be redeemed on demand and are maintained with financial institutions with reputable credit.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):

As of

(Dollars in thousands)

March 31, 2023

December 31, 2022

Total cash, excluding restricted cash

$

877,717

$

724,488

$1 Billion Revolving Credit Facility availability

1,000,000

1,000,000

$100 Million Revolving Credit Facility availability

100,000

100,000

Letters of credit outstanding

(70,154

)

(69,249

)

Revolving Credit Facilities availability

1,029,846

1,030,751

Total liquidity

$

1,907,563

$

1,755,239

We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources from borrowings under our Revolving Credit Facilities 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, and repurchases of common stock. We believe we will generate sufficient cash from our operations to meet the demands for such payments, 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 retirement of debt and/or purchases or 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 $347.4 million for the three months ended March 31, 2023, compared to $57.5 million for the three months ended March 31, 2022. The increase in cash provided by operating activities is primarily driven by an increase in net income and a decrease in spend on real estate inventory and land deposits.

Investing Cash Flow Activities

Net cash used in investing activities was $24.6 million for the three months ended March 31, 2023, compared to $7.4 million for the three months ended March 31, 2022. The increase in cash used in investing activities was primarily due to an increase in capital investments into unconsolidated entities and an increase in the purchase of property and equipment.

Financing Cash Flow Activities

Net cash used in financing activities was $165.1 million for the three months ended March 31, 2023, compared to $315.5 million for the three months ended March 31, 2022. The decrease in cash used in financing activities was primarily due to lower net repayments on our Revolving Credit Facilities and mortgage warehouse facilities during the three months ended March 31, 2023 compared to the same period in the prior year as well as lower repurchases of common stock during the three months ended March 31, 2023 compared to the same period in the prior year.

Debt Instruments

For information regarding our debt instruments, including the terms governing our Senior Notes and our Credit Facilities, see Note 7 - Debt to the Unaudited Condensed Consolidated Financial Statements included in this quarterly report.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Off-Balance Sheet Arrangements as of March 31, 2023

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 partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.

In certain of our unconsolidated joint ventures, the joint ventures enter into loan agreements, whereby we or one of our subsidiaries will provide the joint venture lenders with customary guarantees, including completion, indemnity and environmental guarantees subject to usual non-recourse terms.

For the three months ended March 31, 2023 and 2022, total cash contributions to unconsolidated joint ventures were $11.1 million and $2.1 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 exposure 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. At both March 31, 2023 and December 31, 2022, the aggregate purchase price for land under these contracts was $1.5 billion.

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 revenues 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:

•
the timing of the introduction and start of construction of new projects;

•
mix of homes closed;
•
the timing of sales;

•
construction timetables;
•
the timing of closings of homes, lots and parcels;

•
the cost and availability of materials and labor; and
•
the timing of receipt of regulatory approvals for development and construction;

•
weather conditions in the markets in which we build.

•
the condition of the real estate market and general economic conditions in the areas in which we operate;

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 customers 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.

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, 2023 compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. Q UANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate and variable rate debt. At March 31, 2023, approximately 94% of our debt was fixed rate and 6% was variable rate. None of our market sensitive instruments were entered into for trading purposes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt instrument but may affect our future earnings and cash flows, and may also impact our variable rate borrowing costs, which principally relate to any borrowings under our Revolving Credit Facilities and to borrowings by TMHF under its various mortgage warehouse facilities. As of March 31, 2023, we had no outstanding borrowings under our Revolving Credit Facilities. We had approximately $1.0 billion of additional availability for borrowings under the Credit Facilities including $129.8 million of additional availability for letters of credit under our $1 Billion Revolving Credit Facility as of March 31, 2023 (giving effect to $70.2 million of letters of credit outstanding as of such date).

The London Interbank Offered Rate (“LIBOR”) was the primary basis for determining interest payments on borrowings under each of our mortgage warehouse facilities and our Revolving Credit Facilities. On March 5, 2021, ICE Benchmark Administration (“IBA”) confirmed it would cease publication of Overnight, 1, 3, 6 and 12 month US Dollar LIBOR settings immediately following the LIBOR publication on June 30, 2023. The Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the New York Federal Reserve, has identified the Secured Overnight Financing Rate (“SOFR”) as the recommended risk-free alternative rate for US Dollar LIBOR. In response to the planned discontinuation of LIBOR, our warehouse facilities agreements for facilities A, C, D, and E as well as our Revolving Credit Facilities have been restructured to begin using SOFR as the basis for determining interest rates. The agreement for warehouse facility B was also restructured to use the Bloomberg Short-Term Bank Yield Index (“BSBY”) as the primary basis for determining interest payments. The BSBY index is a proprietary index calculated daily as a credit sensitive supplement to manage the spread between funding costs and earned interest on loans. At this time, it is not possible to predict the full effect that the anticipated discontinuance of LIBOR, or the establishment of alternative reference rates such as SOFR and BSBY, will have on us or our borrowing costs. SOFR and BSBY are relatively new reference rates and their composition and characteristics are not the same as LIBOR. Given the limited history of these rates and potential volatility as compared to other benchmark or market rates, the future performance of these rates cannot be predicted based on historical performance. The consequences of using SOFR and BSBY could include an increase in the cost of our variable rate indebtedness.

We are required to offer to purchase all of our outstanding senior unsecured notes, as described in Note 7, Debt to the unaudited Condensed Consolidated Financial Statements included in this quarterly report, at 101% of their aggregate principal amount plus accrued and unpaid interest upon the occurrence of specified change of control events. Other than in those circumstances, we do not have an obligation to prepay fixed rate debt prior to maturity and, as a result, we would not expect interest rate risk and changes in fair value to have a significant impact on our cash flows related to our fixed rate debt until such time as we are required to refinance, repurchase or repay such debt.

The following table sets forth principal payments by scheduled maturity and effective weighted average interest rates and estimated fair value of our debt obligations as of March 31, 2023. The interest rate for our variable rate debt represents the interest rate on our mortgage warehouse facilities. Because the mortgage warehouse facilities are secured by certain mortgage loans held for sale which are typically sold within approximately 20 - 30 days, its outstanding balance is included as a variable rate maturity in the most current period presented.

Expected Maturity Date

(In millions, except percentage data)

2023

2024

2025

2026

2027

Thereafter

Total

Fair
Value

Fixed Rate Debt

$

152.5

$

422.8

$

60.2

$

33.2

$

538.9

$

958.1

$

2,165.7

$

2,106.8

Weighted average interest rate (1)

2.9

%

5.1

%

2.9

%

2.9

%

5.5

%

5.6

%

5.2

%

Variable Rate Debt (2)

$

146.3

$

—

$

—

$

—

$

—

$

—

$

146.3

$

146.3

Weighted average interest rate

6.4

%

—

—

—

—

—

6.4

%

(1)
Represents the coupon rate of interest on the full principal amount of the debt.
(2)
Based upon the amount of variable rate debt outstanding at March 31, 2023, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $1.5 million per year.

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ITEM 4. CONTROLS AND PROCEDURES

ITE M 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer and principal accounting officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, as of March 31, 2023 our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective in alerting them in a timely manner to material information required to be disclosed in our periodic and other reports filed with the SEC.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

PA RT II — OTHER INFORMATION

The information required with respect to this item can be found in Note 13 - Commitments and Contingencies under “Legal Proceedings” in the Notes to the unaudited Condensed Consolidated Financial Statements included in this quarterly report.

IT EM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report. These risk factors may materially affect our business, financial condition or results of operations. You should carefully consider the risk factors set forth in our Annual Report and the other information set forth elsewhere in this quarterly report. You should be aware that these risk factors and other information may not describe every risk facing our Company.

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PART II — OTHER INFORMATION

IT EM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information regarding repurchases by the Company of its Common Stock during the three months ended March 31, 2023.

Period

Total
number of
shares
purchased

Average price paid
per share

Total number of shares
purchased as part of
publicly announced
plans or programs

Approximate dollar
value of shares that may
yet be purchased under
the plans or programs
(in thousands)

January 1 to January 31, 2023

102,725

$

32.58

102,725

$

275,791

February 1 to February 28, 2023

6,600

33.56

6,600

275,570

March 1 to March 31, 2023

—

—

—

275,570

Total

109,325

109,325

On May 31, 2022, we announced that our Board of Directors had authorized the repurchase of up to $500.0 million of the Company's Common Stock through December 31, 2023. Repurchases of the Company's Common Stock under the program will occur from time to time, if at all, in open market purchases, privately negotiated transactions or other transactions.

Any stock repurchase program is subject to prevailing market conditions and other considerations, including our liquidity, the terms of our debt instruments, statutory requirements, planned land investment and development spending, acquisition and other investment opportunities and ongoing capital requirements. The program does not require us to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

On March 1, 2023, our board of directors approved an amendment and restatement of our By-laws. Among other things, the amendments update certain provisions of Article 3, Sections 3.3 and 3.4 regarding the procedure and disclosure required in connection with stockholder director nominations, including to address newly adopted Rule 14a-19 of the Exchange Act, as amended. Such updates include, without limitation, requiring a nominating stockholder to represent whether it intends to solicit proxies in accordance with Rule 14a-19 and to provide reasonable evidence that it has satisfied Rule 14a-19, along with background information and disclosures regarding, among other things, nominating stockholders, proposed director candidates, and other persons related to a stockholder’s solicitation of proxies.

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ITEM 6. EXHIBITS

ITEM 6. EXHIBITS

Exhibit

No.

Description

3.1

Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 30, 2019).

3.2

Amended and Restated By-laws (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 7, 2023).

31.1*

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

31.2*

Certification of Louis Steffens, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.

32.1**

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

32.2**

Certification of Louis Steffens, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

101.INS*

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in inline XBRL (and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them other than for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized .

TAYLOR MORRISON HOME CORPORATION

Registrant

DATE:

April 26, 2023

/s/ Sheryl D. Palmer

Sheryl D. Palmer

Chairman of the Board of Directors and Chief Executive Officer

(Principal Executive Officer)

/s/ Louis Steffens

Louis Steffens

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

/s/ Joseph Terracciano

Joseph Terracciano

Chief Accounting Officer

(Principal Accounting Officer)

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