Taylor Morrison Home Corporation Q1 FY2026 earnings call

First quarter results reflected the effectiveness of diversified strategy. Early signs heading into spring selling season were positive, March was strongest month. First quarter sales had significant increase in share of to-be-billed orders to 38% from 28% in fourth quarter, began rebuilding backlog which increased 23% to 3,465 homes. Design Center Open Houses had record attendance in first quarter with over 140 events and 23% conversion rate. 2026 plan to open over 125 new communities, roughly 30% more than 2025, with about 40 opened in first quarter and 45 or so scheduled for second quarter, ending community count expected between 365 to 370. Yardley had 16 projects actively leasing and 13 under development, roughly 90% of units controlled off balance sheet. Online reservation system had over 1,000 reservations in first quarter with 58% conversion rate. More than a dozen AI-powered applications in production, adoption more than doubled year-over-year.

In the first quarter, Taylor Morrison delivered 2,268 homes at an average price of $578,000, generating home closings revenue of approximately $1.3 billion. Adjusted home closings gross margin was 20.6%. Adjusted earnings per diluted share was $1.12 and book value per share grew 11% year-over-year to $64. Land and development investment was $503 million, $150 million was invested in share repurchases, and liquidity ended the quarter at $1.6 billion. Net orders in the first quarter totaled 2,914 homes, down 14% year-over-year at an average selling price of $603,000, up 2% vs prior year. Started 2,371 homes in the first quarter. Finished specs declined 30% sequentially to 863 homes, total specs declined 9% to 2,692. Net interest expense was $11.2 million in the first quarter. Financial services team achieved an 88% capture rate.

Reaffirmed full year 2026 guidance including approximately 11,000 home closings at an average closing price of $580,000 to $590,000. Ending community count expected between 365 and 370 by year end. SG&A ratio expected in mid-10% range of home closings revenue. Effective tax rate approximately 25%. Home building land investment expected to be approximately $2 billion. Expect to repurchase approximately $400 million of common stock. For second quarter, expect to deliver between 2,500 to 2,600 closings at an average closing price of approximately $575,000 and a home closing gross margin of at least 20% excluding any inventory related charges. Ending community count expected to increase to around 370. Second quarter effective tax rate expected to be approximately 25.5% and average diluted share count expected to be approximately 95 million.

Geopolitical turmoil, intensified macro uncertainty, shift higher in mortgage rates impacting consumer confidence and affordability. AI-related employment concerns. Regulatory uncertainty for Yardley business. Land banking activity leading to modest increase in net interest expense.

Q: Elizabeth asked about expectations around the cadence of margin with 2Q guide and if margin improvement in back half is one-time step up or sequential.

A: Cheryl and Kurt explained Q1 margin factors, Q2 guide driven by reverse of mix dynamic, inventory clearing, higher interest rates, and gradual margin increase in back half dependent on multiple factors.

Q: Elizabeth followed up on incentives.

A: Cheryl said 100 basis point sequential reduction was due to mix, to-be-built vs inventory homes, disciplined pricing, sales teams holding the line, and expected incentive levels to stabilize but adjust to market.

Q: Chris from Mike asked about start cadence and delivery outlook.

A: Kurt said starts in Q1 aligned with sales, Q2 starts to approximate sales, and back half deliveries even cadence due to improved cycle times.

Q: Michael Riho asked about trends in March and April and buyer segments.

A: Cheryl said April started slower but picked up, Q1 sales consistent with seasonal patterns, West was most resilient, East had varied performance, and shift to core communities.

Q: Jonathan Bettenhausen asked about buyer preferences returning to historical norms.

A: Cheryl said it related to 38% to-be-billed orders increase, design center open houses, and personalization of homes and communities.

Q: Rafe Jadrosich asked about land banking exposure and margin outlook.

A: Eric explained seller financing and land banking impact on P&L, and cost of interest.

Q: James McCandless asked about design center events and land inflation.

A: Cheryl said design center events ramped up, and rebalancing land portfolio to core locations.

Q: Ken Zenner asked about order seasonality.

A: Cheryl said opening cadence aligns with starts and balanced view on specs and to-be-built.

Q: Alan Ratner asked about pace and price strategy.

A: Cheryl said orders in line with expectations, some markets had misses but in line with internal plans.

Q: Paul Brubolinski asked about consumer rebound and AI employment concerns.

A: Cheryl said spring selling season may extend, AI employment concerns not significant factor in cancellations.