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TM

Taylor Morrison Home Corp (TMHC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered revenue of $2.096B and diluted EPS of $2.01, with adjusted diluted EPS of $2.11; home closings gross margin was 22.1% (22.4% adjusted) and SG&A leveraged to 9.0% of home closings revenue .
  • Results exceeded Wall Street consensus on EPS ($2.01 vs $1.92*) and revenue ($2.096B vs $2.034B*); EBITDA also beat ($314.0M vs $279.0M*) — driven by faster cycle times and favorable mix of to‑be‑built closings offsetting a high spec mix; management guided Q4 GM to ~21.5% as spec penetration rises .
  • Orders fell 13% YoY to 2,468 and cancellations rose (15.4% of gross orders; 10.1% of beginning backlog), reflecting softer buyer sentiment; monthly absorption pace moderated to 2.4 per community despite sequential improvement through the quarter .
  • Full‑year guidance lowered for deliveries (12,800–13,000 from 13,000–13,500) and land investment (~$2.3B from ~$2.4B) while ASP, tax rate, SG&A and margin targets were maintained/tightened; Q4 guide: 3,100–3,300 closings, ASP ~$590K, GM ~21.5% .
  • Tactical catalysts: visible consensus beat, continued buybacks ($75M in Q3; YTD $310M), liquidity of ~$1.3B, cycle‑time improvements, and off‑balance sheet lot control at 60%; watch margin trajectory as spec closings increase and incentives remain elevated .

What Went Well and What Went Wrong

  • What Went Well

    • “We once again met or exceeded our guidance on all key metrics, including home closings volume, price and gross margin,” supported by diversified portfolio and careful calibration of pricing and pace .
    • Cycle times improved by ~10 days sequentially; ~30 days faster than a year ago and ~90 days faster than two years ago, supporting production flexibility and contributing to margin outperformance vs guide .
    • SG&A leverage of 80 bps YoY to 9.0% driven by lower payroll and commissions; financial services capture 88% with gross margin of 52.5% (up from 45%), helping manage incentives effectively .

  • What Went Wrong

    • Net sales orders declined 13% YoY to 2,468; absorption pace fell to 2.4 from 2.8 a year ago as buyer urgency waned amid macro uncertainty .
    • Cancellations rose to 15.4% of gross orders and 10.1% of beginning backlog, with drivers including contingent home sales falling through and competitive incentive-driven switching .
    • Q4 margin guide implies mix headwind from higher spec penetration (specs were 72% of Q3 sales but 61% of closings), pressuring GAAP gross margin to ~21.5% in Q4 .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$1,896.0 $2,030.1 $2,095.8
Diluted EPS ($)$2.07 $1.92 $2.01
Adjusted Diluted EPS ($)$2.18 $2.02 $2.11
Home Closings Gross Margin (%)24.0% 22.3% 22.1%
Adjusted Home Closings Gross Margin (%)24.8% 23.0% 22.4%
SG&A (% of Home Closings Revenue)9.7% 9.3% 9.0%
Closings (Units)3,048 3,340 3,324
ASP ($USD Thousands)$600 $589 $602
Net Sales Orders (Units)3,374 2,733 2,468
Absorption Pace (per community)3.3 2.6 2.4

YoY comparison:

MetricQ3 2024Q3 2025
Total Revenue ($USD Millions)$2,120.8 $2,095.8
Diluted EPS ($)$2.37 $2.01
Home Closings Gross Margin (%)24.8% 22.1%
Adjusted Home Closings Gross Margin (%)25.0% 22.4%
SG&A (% of Home Closings Revenue)9.8% 9.0%

Segment breakdown (Closings, Revenue, ASP):

MetricQ3 2024Q3 2025
East Closings (Units)1,320 1,361
East Revenue ($USD Millions)$758.2 $740.3
East ASP ($USD Thousands)$574 $544
Central Closings (Units)932 749
Central Revenue ($USD Millions)$515.6 $382.9
Central ASP ($USD Thousands)$553 $511
West Closings (Units)1,142 1,214
West Revenue ($USD Millions)$755.3 $877.7
West ASP ($USD Thousands)$661 $723

Operational KPIs:

KPIQ1 2025Q2 2025Q3 2025
Ending Active Communities (Outlets)344 345 349
Backlog (Homes)5,068 4,461 3,605
Backlog Sales Value ($USD Millions)$3,361.4 $2,938.5 $2,337.6
Cancellations (% of Gross Orders)11.0% 14.6% 15.4%
Cancellations (% of Beginning Backlog)—9.2% 10.1%
Financial Services Capture Rate (%)89% 87% 88%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Home Closings (Units)FY 202513,000–13,500 12,800–13,000 Lowered
Average Closing Price (ASP)FY 2025$595K–$600K ~$595K Tightened to low end
GAAP Home Closings Gross MarginFY 2025~22.5% ~22.5% Maintained
Adjusted Home Closings Gross MarginFY 2025~23%* ~23%* Maintained
Ending Active CommunitiesFY 2025~350 ~345 Lowered
SG&A (% of Home Closings Revenue)FY 2025Mid‑9% Mid‑9% Maintained
Effective Tax RateFY 202524.5%–25.0% 24.5%–25.0% Maintained
Diluted Share CountFY 2025~101M ~101M Maintained
Land Acquisition & Development InvestmentFY 2025~$2.4B ~$2.3B Lowered
Share RepurchasesFY 2025≥$350M ≥$350M Maintained
Home Closings (Units)Q4 2025—3,100–3,300 New
Average Closing Price (ASP)Q4 2025—~$590K New
GAAP Home Closings Gross MarginQ4 2025—~21.5% New
Effective Tax RateQ4 2025—~25% New
Diluted Share CountQ4 2025—~99M New
Ending Active CommunitiesQ4 2025—~345 New

Note: Adjusted margin guidance excludes impairment and certain warranty charges; reconciliation cannot be provided prospectively .

Earnings Call Themes & Trends

TopicQ1 2025 (Prev.)Q2 2025 (Prev.)Q3 2025 (Current)Trend
AI/Technology initiativesEmphasis on digital sales environment and cost savings Continued focus on digital tools to drive SG&A efficiency Launched industry‑first AI‑powered digital assistant to guide home shoppers and boost conversion Increasing adoption
Spec vs To‑Be‑Built MixBalanced approach; resort lifestyle strength Spec sales reached 71% of sales; higher spec closings expected to pressure margins Spec homes 72% of sales; 61% of closings; spec penetration to rise near term Spec mix rising
Supply chain / Cycle timesOngoing improvements supporting deliveries >2 weeks sequential cycle‑time savings ~10 days sequential savings; ~30 days faster YoY; ~90 days faster vs two years ago Improving
Tariffs/MacroMacro uncertainty weighed on early spring pace Tariff impacts modest; development cost inflation trending lower Buyer sentiment cautious; macro/regulatory topics (immigration/H‑1B, SALT cap) influencing confidence Mixed; sentiment cautious
Regional trendsFlorida strength; resort lifestyle outsized East performed better; West ASP >$1M market cautious but stable Florida “green shoots,” Orlando strongest paces; Texas competitive; core locations outperform Stabilizing in FL; competitive in TX
Land strategy / Off‑balance sheetOff‑balance sheet control at record 59% 60% controlled off balance sheet; renegotiated ~3,400 lots; 8% average price reduction 60% controlled; ongoing renegotiations and land‑lighter financing tools; aiming ≥65% controlled Strengthening asset‑lighter approach
SG&A / CommissionsSG&A 9.7% SG&A 9.3%; leverage from payroll/commissions; broker impact monitored SG&A 9.0%; brokers may lift Q4 commissions; reservation system driving SG&A leverage Efficient but watch Q4

Management Commentary

  • “Driven by our diversified portfolio and team’s careful calibration of inventory, pricing and pace… we once again met or exceeded our guidance on all key metrics.” — Sheryl Palmer, CEO .
  • “In the third quarter we realized another roughly 10 days of sequential savings, leaving us about 30 days faster than a year ago and 90 days faster than two years ago.” — CFO Curt VanHyfte .
  • “With spec homes accounting for 72% of third quarter sales but 61% of closings, we expect our spec closing penetration to increase in the near term… home closings gross margin… ~21.5% in the fourth quarter.” — CFO Curt VanHyfte .
  • “We are focused on deploying innovative and compelling incentives and pricing offers to drive buyer confidence and improve affordability… leaning into… spec and to‑be‑built offerings.” — Sheryl Palmer .
  • “At quarter end, total liquidity was approximately $1.3 billion… net homebuilding debt‑to‑capital ratio was 21.3%.” — CFO Curt VanHyfte .

Q&A Highlights

  • Incentives strategy: Mix of buy‑downs, ARMs, proprietary programs (including nine‑month forward lock) tailored to buyer needs; resort buyers favor options/lot premium concessions .
  • Spec vs backlog trajectory: Elevated spec inventory to bridge near‑term demand; backlog down ~40% YoY in dollars, with starts aligned to sales and community‑specific pacing into spring 2026 .
  • Regional color: Florida improving (Orlando strongest paces); Texas competitive at entry level; core locations in Carolinas and Phoenix outperform; Bay Area stable with ASP >$1M .
  • Land renegotiations: ~3,400 lots renegotiated in Q3 with ~8% price cuts and ~6‑month deferrals; mix of seller financing, land banking, and structural changes; some deals walked away when terms didn’t improve .
  • SG&A: Leverage aided by reservation system and centralized contracts; potential Q4 broker commission uptick noted .

Estimates Context

  • Q3 2025 vs S&P Global consensus:
    • EPS (Primary/Diluted): Estimate $1.92* (5 estimates), Actual $2.01 — beat .
    • Revenue: Estimate $2.034B* (4 estimates), Actual $2.096B — beat .
    • EBITDA: Estimate $279.0M*, Actual $314.0M — beat .
    • Consensus Target Price: $73.63* (8 estimates).
      Values with asterisks retrieved from S&P Global.
MetricQ3 2025 Estimate*Q3 2025 Actual (Company)
Primary EPS Consensus Mean ($)1.92*2.01
Revenue Consensus Mean ($USD Billions)2.034*2.096
EBITDA Consensus Mean ($USD Millions)279.0*314.0 (EBITDA)

Note: Company also reported adjusted diluted EPS of $2.11 .

Key Takeaways for Investors

  • Strong execution and cost control drove a clean beat on EPS and revenue; watch Q4 gross margin mix headwind as spec closings rise — near‑term margin compression likely before stabilizing in 2026 .
  • Orders and backlog continue to normalize; cancellations increased but remain below industry averages, supported by ~$45K average deposits and robust pre‑qualification .
  • Asset‑lighter land strategy advancing (60% off‑balance sheet control), with tangible renegotiation wins; FY land spend trimmed to ~$2.3B, improving capital efficiency and optionality .
  • Liquidity and buybacks provide downside support (YTD $310M repurchases; $600M authorization remaining); diluted shares ~101M FY and ~99M in Q4 .
  • Regional performance bifurcation persists: West and Florida (core submarkets) show resilience; entry‑level remains most incentive‑sensitive (Texas competitive), supporting a spec‑weighted near‑term mix .
  • Technology investments (AI‑assistant) and sales process innovations should support lead conversion and SG&A efficiency — a structural margin lever beyond rate cycles .
  • Setup: Tactical buy on weakness if shares pull back on Q4 margin guide; medium‑term thesis intact on cycle‑time gains, capital discipline, and diversified consumer mix .

Financial Appendices

Backlog, cancellations, and communities:

MetricQ1 2025Q2 2025Q3 2025
Backlog (Homes)5,068 4,461 3,605
Backlog ($USD Millions)$3,361.4 $2,938.5 $2,337.6
Cancellations (% of Gross Orders)11.0% 14.6% 15.4%
Cancellations (% of Beginning Backlog)—9.2% 10.1%
Ending Active Communities344 345 349

Balance sheet and capital:

MetricQ3 2025
Liquidity ($USD Billions)~$1.3
Net Homebuilding Debt / Capital (%)21.3%
Share Repurchases (Q3)1.3M shares; $75M
YTD Repurchases5.3M shares; ~$310M
Remaining Authorization$600M

Non‑GAAP reconciliations (Q3 2025):

MetricQ3 2025
Adjusted Net Income ($USD Millions)$210.9
Adjusted Diluted EPS ($)$2.11
Adjusted EBITDA ($USD Millions)$333.1
Adjusted Home Closings GM (%)22.4%

S&P Global estimates note: Values marked with asterisk (*) are retrieved from S&P Global.