Taylor Morrison Home Corporation (TMHC) has emerged as a dominant force in the homebuilding industry, solidifying its reputation as America's Most Trusted Homebuilder for an unprecedented 10 consecutive years. With a strong presence across 12 states, the company has leveraged its diversified consumer strategy and strategic land investments to navigate the volatile housing market, delivering consistent financial performance and shareholder value.
Business Overview
Taylor Morrison Home Corporation (TMHC) is a leading national homebuilder and land developer in the United States. The company was founded in 2011 through the merger of Taylor Woodrow and Morrison Homes. Prior to the merger, Taylor Woodrow and Morrison Homes were both well-established homebuilding companies with roots dating back to the 1920s and 1940s respectively.
TMHC operates through three main reportable segments: East, Central, and West. The company also operates under various brand names including Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade. Additionally, TMHC has a Build-to-Rent homebuilding business under the Yardly brand name and develops commercial, retail, and multi-family properties under the Urban Form brand.
History
In the early years following the merger, TMHC focused on integrating the two legacy companies and establishing a cohesive operational and cultural identity as the "new" Taylor Morrison. This process involved streamlining business practices, realigning regional divisions, and investing in technology to drive efficiency. One key milestone during this time was the company's initial public offering in 2013, which provided additional capital to support growth initiatives.
Over the next several years, TMHC embarked on a strategic expansion, both organically and through targeted acquisitions. In 2018, the company acquired AV Homes, a Florida-based homebuilder, significantly bolstering its presence in the Southeastern United States. This was followed by the 2021 acquisition of William Lyon Homes, adding scale and further diversifying TMHC's geographic footprint.
Navigating market cycles has been an ongoing challenge for TMHC, as the homebuilding industry is inherently cyclical. The company weathered the housing downturn of the late 2000s, emerging as a financially stronger and more operationally disciplined organization. More recently, TMHC has had to adapt to rapidly changing market conditions, including volatile interest rates, supply chain disruptions, and shifting consumer preferences - all while maintaining its reputation for quality, innovation, and customer service.
Through these ups and downs, TMHC has remained committed to its core business model of acquiring strategic land positions, developing master-planned communities, and building a diverse range of homes to serve a broad spectrum of customers, from first-time buyers to luxury resort-style homeowners. The company's consistent execution and focus on operational excellence have been instrumental in establishing it as one of the most trusted and respected homebuilders in the industry.
Land Acquisition Strategy
One of the key factors contributing to Taylor Morrison's success is its prudent and disciplined land acquisition strategy. The company has consistently allocated capital towards prime assets in core locations, ensuring a balanced portfolio that can withstand multiple economic cycles. As of December 31, 2024, Taylor Morrison's owned and controlled lot inventory stood at 86,153 homebuilding lots, with 57% of these lots controlled via options and off-balance sheet structures. This strategic approach has allowed the company to mitigate risk and enhance capital efficiency, while positioning itself for long-term growth.
Financial Performance
Taylor Morrison's financial performance has been equally impressive. For the fiscal year ended December 31, 2024, the company reported total revenue of $8.17 billion, a 10.1% increase from the previous year. Net income attributable to Taylor Morrison reached $883.31 million, or $8.27 per diluted share, reflecting a 15.0% year-over-year growth. The company's adjusted earnings per diluted share, which excludes certain one-time items, climbed 29.0% to $8.72, highlighting the strength of its underlying business operations.
The company's diversified consumer strategy has been a key driver of its financial success. During the fourth quarter of 2024, Taylor Morrison's net sales orders increased 11% year-over-year, with a strong absorption pace of 2.6 homes per community per month, up from 2.4 a year ago. This performance was achieved despite the challenging interest rate environment, underscoring the resilience of the company's customer base and its ability to adapt to changing market conditions.
Financials
Taylor Morrison's financial services segment, which includes its wholly-owned mortgage subsidiary, Taylor Morrison Home Funding, and title services subsidiary, Inspired Title, has been a valuable complement to its homebuilding operations. In the fourth quarter of 2024, the financial services segment generated $54 million in revenue with a gross margin of 48%, highlighting the synergies between the company's various business lines.
For the fiscal year 2024, TMHC reported annual operating cash flow of $210.08 million and annual free cash flow of $173.75 million. The company's most recent quarter (Q4 2024) saw revenue of $2.36 billion, up 16.7% year-over-year, and net income of $242.45 million. The increase in revenue was driven by a 12% increase in home closings to 3,571 homes at an average selling price of $608,000.
TMHC's performance across its three main segments for the year ended December 31, 2024, was as follows:
East Segment The East segment, which includes operations in Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa, reported home closings revenue of $2.83 billion, up 7.9% year-over-year. The segment's home closings gross margin was 26.9%, down from 27.4% in the prior year, primarily due to closing product mix and a decrease in lot premium and option revenue, as well as an increase in finance incentives at the time of closing. The East segment ended the year with 124 active selling communities, up 14.8% compared to 2023.
Central Segment The Central segment, covering Austin, Dallas, Denver, Houston, and Indianapolis, saw home closings revenue of $1.97 billion in 2024, up 1.8% year-over-year. Home closings gross margin decreased to 24.5% from 25.4% in 2023, impacted by impairment charges and a decline in lot premium and option revenue, as well as higher finance incentives. The Central segment grew its active selling communities to 99 by the end of 2024, an increase of 6.5% compared to the prior year.
West Segment The West segment, which includes operations in the Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California, reported home closings revenue of $2.96 billion in 2024, up 13.6% year-over-year. Home closings gross margin improved to 21.9% from 19.1% in 2023, driven by closing product mix and a decrease in incentives and discounts. The West segment ended the year with 116 active selling communities, down 7.9% compared to 2023 due to the close-out of several higher paced communities in certain markets.
Financial Services Segment TMHC's Financial Services segment, which includes mortgage lending, title services, and homeowners insurance, generated revenue of $199.5 million in 2024, up 24.4% year-over-year. This increase was driven by an increase in mortgage loan originations and favorable operating conditions. Financial services income before income taxes was $99.8 million, an increase of 32.2% compared to 2023.
Liquidity
As of December 31, 2024, Taylor Morrison maintained a strong liquidity position with $487.15 million in cash and cash equivalents. The company's debt-to-equity ratio stood at 0.37, reflecting a conservative capital structure. TMHC also has access to a $1 billion revolving credit facility, of which $947.09 million was available as of December 31, 2024, after $52.91 million in letters of credit were outstanding. The company's current ratio of 9.95 and quick ratio of 1.70 further underscore its solid financial footing.
Future Outlook
Looking ahead, Taylor Morrison remains well-positioned to capitalize on the long-term growth opportunities in the housing market. The company's recently announced Investor Day showcased its commitment to sustainable growth, with plans to achieve at least 10% annual home closings growth and maintain long-term gross margins above its historic averages in the low to mid-20% range.
For 2025, TMHC has provided detailed guidance across key metrics. The company expects 13,500 to 14,000 home closings with an average closing price of $590,000 to $600,000 per home. Home closings gross margin is projected to be between 23% to 24%, including the high 23% range in Q1 2025. TMHC also anticipates its SG&A ratio to improve to the mid 9% range in 2025 from 9.9% in 2024. Additionally, the company is targeting $300 million to $350 million in share repurchases for 2025.
Despite the industry's cyclical nature and the ongoing macroeconomic uncertainties, Taylor Morrison's focus on strategic land investments, operational efficiency, and customer-centric approach has consistently set it apart from its peers. The homebuilding industry is expected to see a compound annual growth rate (CAGR) of approximately 5-7% over the next 5 years as housing supply continues to lag demand. As TMHC continues to solidify its position as America's Most Trusted Homebuilder, it remains a compelling investment opportunity for those seeking exposure to the resilient and evolving U.S. housing market.