Taylor Morrison Home Corporation Q3 FY2025 earnings call

• Driven by a diversified portfolio, the company met or exceeded guidance on key metrics despite challenging market conditions. • Balanced operating strategy allowed maintaining healthy performance with adjusted pricing and incentives, especially in entry-level. • Utilized land lighter financing tools and effective cost management to generate strong earnings, cash flow, and returns. • Launched an industry-first AI-powered digital assistant on taylormorrison.com for better customer engagement. • Monthly net absorption paces improved during the quarter, with September pacing at the strongest level since May. • Controlled 84,564 homebuilding lots, with a core location strategy partially insulating from elevated inventory in some markets. • Transferred non-JV projects from the balance sheet into the Build to Rent vehicle for capital relief and optionality. • Realized cycle time savings, improving flexibility to start and close homes, and continued cost management efforts including supplier negotiations and value engineering.

In the third quarter, the mix of orders by buyer groups was relatively consistent sequentially at 30% entry-level, 51% move-up, and 19% resort lifestyle. The Premier Esplanade segment accounts for just over 10% of portfolio orders. Approximately 70% of the portfolio serves move-up and resort lifestyle homebuyers. The entry-level segment saw adjustments in pricing and incentives, while move-up and resort lifestyle communities had a more patient approach to protect values given distinct locations and product offerings. The Esplanade segment, with an affluent customer base, had improved shopper engagement during the quarter with consumers exploring multiple communities.

• Anticipates well over 100 communities to open in 2026, resulting in mid to high single-digit outlet growth. • Expect to deliver between 3,100 to 3,300 homes in the fourth quarter, updating full-year home delivery target to 12,800 to 13,000 homes. • For the fourth quarter, expects a modest mix headwind from higher penetration of spec home closings, with home closings gross margin excluding charges expected to be approximately 21.5%. • Full-year home closing gross margin expected to be approximately 22.5% on a reported basis and roughly 23% on an adjusted basis. • Still too early to provide 2026 guidance but emphasized strategic priorities like community openings, cycle time savings, and balancing to-be-built and spec homes based on customer demand.

• Macro-economic and political uncertainty weighing on buyer urgency and shopper sentiment. • Competitive dynamics in the marketplace affecting consumer purchase decisions. • Land market challenges including elevated inventory in some markets and tough negotiations with land sellers. • Potential impact of tariffs on costs, though efforts are being made to mitigate through cost reduction strategies. • Uncertainty related to H-1B policy and immigration changes impacting nonresident buyer activity in certain markets.

Q: Views on potential administration action to encourage volume and conversations with the administration A: Discussions are about overcoming housing shortages and making housing more affordable. Taylor Morrison wants to be part of the solution, and will continue to make decisions community by community based on submarket dynamics Q: Recent demand trends and difference by consumer segment A: Demand has been broad-based. Entry-level traffic has picked up, and move-up and resort lifestyle traffic has also increased with tools to convert traffic to action Q: Incentives and how they differ by consumer segment A: Incentives vary by consumer group. First-time buyers may need more financial service incentives, while resort lifestyle buyers may have different options like lot premium reductions. Incentives are a combination of different strategies depending on customer needs Q: Spec inventory and impact on gross margins A: Spec inventory remains elevated, causing a dip in 4Q gross margins. It's a balancing act to work through inventory while monitoring new community openings and aligning sales with starts. The overhang is expected to dissipate based on market trends and sales opportunity Q: New communities opening in 2026 and Esplanade expansion A: Over 100 communities expected to open in 2026, broadly across the country. Three new Esplanade communities to open in the first quarter with amenities like golf courses, but details on mix expansion will be provided later Q: SG&A leverage and cost control A: SG&A ratio improved 80 basis points year over year to 9% of home closings revenue. Driven by lower payroll-related costs and commission expenses. Continues to track to mid-nine percent range for the year with focus on cost control through various initiatives like centralized contracts and reservation system improvements Q: Land renegotiation and margin impact A: Approximately 3,400 lots renegotiated in the quarter with deferrals and some price reductions. Adjustments are being made to maintain original gross margin and return production expectations, with benefits expected to roll through over time Q: Incentive breakdown and margin impact A: Incentives vary by consumer group. Most expensive incentives are for first-time buyers, and incentives for move-up and resort lifestyle buyers include different strategies. Incentives are a combination of financial services, options, and price adjustments, with financial services accounting for a portion of incentives