By a News Reporter-Staff News Editor at Investment Weekly News -- Taylor Morrison Home Corporation (the "Company" or "Taylor Morrison") (NYSE: TMHC) announced financial results for the fourth quarter and year ended December 31, 2013. Earnings per share were $0.79 on net income for the quarter of $96.0 million, which includes certain tax benefits related to the reversal of a portion of the valuation allowance on deferred tax assets and a tax indemnification settlement. Excluding these items, earnings per share as adjusted was $0.72.
"This has been a remarkable year for Taylor Morrison," said Sheryl Palmer, President and Chief Executive Officer. "We successfully executed against our strategy of first identifying and then developing and building in core locations within high-growth markets to continue our trend of strong results and more than four years of operating profit."
"As we look ahead to 2015 and beyond, our opportunistic investment in our land bank portfolio has uniquely positioned us for success. We own or control most of what we need to execute in 2015, and we believe our disciplined investments in high-growth markets will ensure that we are able to maintain quality lots in core locations in order to meet future demand in 2016 and beyond," Palmer concluded.
Net sales orders in the Company's U.S. operations increased 23.1% in the fourth quarter of 2013 with a continued focus on move-up buyers. Net sales orders in the Company's Canadian operations were down 3.8% in the fourth quarter of 2013. Net sales orders on a Company-wide basis increased 19.6% to 1,174 in the fourth quarter of 2013, as compared to 982 in the fourth quarter of last year. During the quarter, average community count increased by 48% to 180. Consistent with the third quarter, the Company's overall monthly absorption pace was 2.2 net sales orders per community in the fourth quarter of 2013.
The sales order backlog value in the U.S. increased 37.9% to $987.8 million at December 31, 2013 from $716.0 million at December 31, 2012 and units in backlog increased by 16.2% to 2,166 homes at December 31, 2013 as compared to 1,864 homes at December 31, 2012. The Company's consolidated sales order backlog value increased 9.8% to approximately $1.25 billion at December 31, 2013 from $1.14 billion at December 31, 2012, and with the delivery of two wholly owned high-rise towers in Canada, backlog units decreased 6.7% to 2,988 homes at December 31, 2013 compared with 3,203 homes at December 31, 2012. The fourth quarter 2013 cancellation rate, representing cancelled sales orders divided by gross sales orders, was 15.2%, as compared to 11.5% in the fourth quarter of 2012.
Home closings revenue totaled $780.1 million in the fourth quarter of 2013, benefiting from a 33.6% increase in homes closed, from 1,400 in the 2012 quarter to 1,870 during the 2013 quarter. Consolidated average home closing price increased 8.1% to $417,000, while average home closing price in the U.S. increased 18.3% to nearly $425,000 year-over-year. Adjusted home closings gross margin in the fourth quarter of 2013, which excludes capitalized interest, was 24.8%, an improvement of 100 basis points from the third quarter of 2013. Adjusted home closings gross margin declined 60 basis points as compared to the fourth quarter of 2012. Home closings gross margin dollars increased 40.9% to $193.4 million in the 2013 fourth quarter as compared to the prior year quarter. Home closings gross margin in the fourth quarter of 2013 declined to 22.8%, compared to 23.4% in the fourth quarter of 2012.
The Company's mortgage company, Taylor Morrison Home Funding ("TMHF"), reported a gross margin of $5.0 million on financial services revenue of $9.5 million for the quarter. The mortgage capture rate for TMHF was 78% for both the fourth quarter and full year 2013.
Selling, general and administrative expenses were $68.2 million, or 8.7% of home closings revenue for the 2013 fourth quarter, compared to $48.0 million or 8.9% of home closings revenue for the fourth quarter of 2012. Equity in income of unconsolidated entities, which represents the Company's investments in joint ventures, was $16.5 million in the fourth quarter of 2013 as compared to $11.5 million in the fourth quarter of 2012.
The Company ended the fourth quarter of 2013 with $414.0 million of cash, including $24.8 million of restricted cash. Our net debt to capital ratio was 38.1% at the end of the quarter, and we had no borrowings under our $400 million unsecured revolving credit facility. Homebuilding inventories at the end of the 2013 totaled $2.26 billion, an increase of 41.0% from $1.60 billion at December 31, 2012. The Company owned or controlled more than 45,000 lots, excluding unconsolidated joint ventures, at December 31, 2013, compared with approximately 40,000 lots at December 31, 2012.
"As we look towards 2014, we anticipate our community count to increase 25% to 30% and closings to increase by 15% to 20%," said Dave Cone, Vice President and Chief Financial Officer. "We anticipate home closings margin to be flat relative to 2013 with accretion expected in the US operations being offset by the decline in the Canadian home closings margin. We anticipate continued leverage in SG&A, as a percentage of homebuilding revenue and be under 10%. Income from unconsolidated joint ventures is expected to be approximately $16 million to $20 million."
Keywords for this news article include: Mortgage, Real Estate, Investment and Finance, Taylor Morrison Home Corporation.
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