Taylor Morrison Home Corp Reports Resilient 2023 Financial Results Amid Market Headwinds

• Net Income: $769 million for FY 2023; Q4 net income of $173 million.

• Diluted EPS: $6.98 for FY 2023; Q4 diluted EPS of $1.58.

• Revenue: $7.2 billion in homebuilding revenue for FY 2023; Q4 total revenue of $2.02 billion, a 19% decrease year-over-year.

• Gross Margin: Adjusted home closings gross margin of 24.0% for FY 2023.

• Share Repurchases: $889 million over the last four years, aiming for $300 million in 2024.

• Book Value: Increased to $49 per share, up 15% from the previous year.

• Land Investment: $1.8 billion in 2023, with a planned spend of $2.3 to $2.5 billion in 2024.

On February 14, 2024, Taylor Morrison Home Corp (NYSE:TMHC) released its 8-K filing, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a leading national land developer and homebuilder, reported a net income of $173 million, or $1.58 per diluted share for the fourth quarter, and a net income of $769 million, or $6.98 per diluted share for the full year.

Taylor Morrison Home Corp, headquartered in Scottsdale, Arizona, operates across a broad spectrum of the residential construction market, including single-family homes and communities in key regions of the United States. The company's mortgage operations segment also provides financing services to its homebuyers.

Performance Amid Challenges

Despite facing significant headwinds such as rising interest rates, economic uncertainty, and global unrest, Taylor Morrison Home Corp demonstrated resilience and strategic foresight. The company's diversified portfolio, which caters to entry-level, move-up, and resort lifestyle buyer groups, along with its focus on high-quality community locations, has been pivotal in mitigating risks and capitalizing on market opportunities.

Chairman and CEO Sheryl Palmer attributed the company's robust performance to strong execution in the fourth quarter, which concluded a remarkable year for Taylor Morrison. Palmer emphasized the company's operational efficiency and growth potential, which are expected to drive at least 12,000 home closings in 2024 with a gross margin of 23.0% to 23.5%, followed by approximately 10% closings growth in 2025 and beyond.

Financial Highlights and Metrics

The company's financial achievements, such as the $889 million in share repurchases over the past four years and the increase in book value per share to a new high of $49, underscore its commitment to shareholder returns and financial strength. These accomplishments are particularly noteworthy in the homebuilding and construction industry, where market conditions can fluctuate significantly.

Key financial metrics from the earnings report include a total revenue of $7.4 billion for 2023, a decrease of 9.8% from 2022. Home closings revenue also saw a decrease of 9.3% year-over-year. The adjusted home closings gross margin for the full year was 24.0%, a 150 basis point decrease from the previous year. Selling, general, and administrative expenses (SG&A) as a percentage of home closings revenue increased by 160 basis points.

"Our top priority as we move ahead is reaccelerating our growth now that we believe that we have firmly established the operational efficiency required for outsized market share gains," said Sheryl Palmer, Chairman and CEO of Taylor Morrison.

The balance sheet remains strong with total assets of $8.7 billion as of December 31, 2023, and a net income attributable to non-controlling interests of $768.9 million for the full year.

Analysis and Outlook

Taylor Morrison Home Corp's performance in 2023 reflects a company adept at navigating a challenging economic landscape while laying the groundwork for future growth. The company's strategic land investments and share repurchase plans for 2024 indicate a forward-looking approach aimed at capitalizing on market recovery and expansion opportunities.

For the upcoming year, Taylor Morrison Home Corp anticipates continued growth in home closings and a disciplined approach to land spending, with a focus on enhancing shareholder returns through stock repurchases. The company's strong balance sheet and operational efficiencies position it well to achieve these objectives despite ongoing market volatility.

Investors and stakeholders can look forward to a detailed discussion of the company's earnings during the webcast scheduled for later today at 8:30 a.m. ET, accessible through Taylor Morrison's website.

Explore the complete 8-K earnings release (here) from Taylor Morrison Home Corp for further details.

This article first appeared on GuruFocus.