Taylor Morrison Home Corporation Q4 FY2025 earnings call

• 2025 results met or exceeded expectations across key operational metrics despite challenging market conditions, with 13,000 homes delivered, 23% adjusted home closings gross margin, and 40 basis points of SG&A expense leverage.
• Portfolio is focused on move-up and resort lifestyle customers, with a unique concentration helping navigate market headwinds. Develops thoughtfully designed communities with amenities in prime locations.
• Innovation across the organization with proprietary digital sales tools and AI-enabled processes to enhance efficiency and manage cost. For example, a proprietary AI-powered platform spans various functions.
• Yardley build-to-rent platform with around 10,400 home sites across nine markets, supported by a $3 billion land bank.
• Land inventory: Ended 2025 with 78,835 home-building lots, 54% controlled off-balance sheet; land investment in 2025 was ~$2.2 billion, with ~$2 billion expected in 2026 focusing on move-up and resort lifestyle positions.

In the fourth quarter, the premier Esplanade resort lifestyle communities experienced 7% year-over-year net order growth. Move-up sales had a low single-digit decline, while non-Esplanade resort lifestyle and level orders were down in the mid to high single digits. On a mixed basis, orders by buyer group stayed relatively consistent quarter-over-quarter at 31% entry-level, 49% move-up, and 20% resort lifestyle. For 2025, the company delivered nearly 13,000 homes with an adjusted home closings gross margin of 23% and generated 40 basis points of SG&A expense leverage on essentially flat home closings revenue.

• 2026 expected to be a solid year, with over 100 new communities planned, including over 20 new Esplanade outlets. Backlog at start of 2026 was just over 2,800 homes.
• Expect Q1 closings around 60 communities, average closing price ~$580,000 in Q1 and ~$580,000 to $590,000 for full year. Home closings gross margin expected to be ~20% in Q1, then gradually improve throughout the year.
• SG&A ratio expected to be in the mid-10% range in 2026. Net interest expense expected to increase modestly in 2026. Plan to repurchase approximately $400 million of common stock in 2026.

• Industry-wide inventory levels remain elevated.
• Consumers are highly attuned to competitive dynamics, closely weighing incentives, pricing, and spec offerings.
• Affordability improved but consumer confidence in broader economic and political outlook critical for demand recovery.
• Incremental land investment in non-core submarkets for entry-level buyers has compressed margin opportunities.

Q: Regarding the entry-level mix and geographic focus, where does Taylor Morrison see the entry-level mix going over time and which geographies to lean into/ deemphasize?

A: Sheryl Palmer noted the first-time buyer mix may come down, refocusing on core geographies and not buying land in tertiary locations; continued investment in Florida, Texas, Phoenix, etc., with pullback in some California areas.

Q: On spec versus to-be-built mix, intention to get back to 50% and timeline?

A: Sheryl Palmer said they're seeing consumer shift towards to-be-built with 700 basis points increase in January, not sure on 50% in 2026 but encouraged by trend, with plan to work through spec inventory and balance with to-be-built sales from new outlets.

Q: On Esplanade mix and absorptions in new communities relative to legacy?

A: Sheryl Palmer said Esplanade communities' absorptions are generally consistent with other communities, with 20 new Esplanade outlets planned, and new communities showing strong pace with interest lists.