SECURITIES AND EXCHANGE COMMISSION



Delaware		~~90-0907433~~ 83-2026677
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



4900 N. Scottsdale Road, Suite 2000 ~~Scottsdale, Arizona~~		85251
Scottsdale,	Arizona
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value	TMHC	New York Stock Exchange

Indicate by check mark whether the ~~Registrant:~~registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yesý☒No¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).Yesý☒No¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large ~~accelerated filer~~Accelerated Filer	¨ ☒	Accelerated filer	ý ☐

Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	¨ ☐	Smaller reporting company	¨ ☐

		Emerging growth company	¨ ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ¨☐Noý

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding as of ~~November 1, 2017~~July 26, 2023
~~Class A common~~ Common stock, $0.00001 par value		~~72,364,924~~
~~Class B common stock, $0.00001 par value~~		~~47,193,672~~ 109,448,089

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,
2017 December 31,
2016
Assets
Cash and cash equivalents $ 264,862
$ 300,179
Restricted cash 1,315
1,633
Total cash, cash equivalents, and restricted cash 266,177
301,812
Owned inventory 3,240,664
3,010,967
Real estate not owned under option agreements 3,107
6,252
Total real estate inventory 3,243,771
3,017,219
Land deposits 50,879
37,233
Mortgage loans held for sale 107,665
233,184
Derivative assets 2,037
2,291
Prepaid expenses and other assets, net 72,546
73,425
Other receivables, net 98,948
115,246
Investments in unconsolidated entities 184,817
157,909
Deferred tax assets, net 215,666
206,634
Property and equipment, net 6,229
6,586
Intangible assets, net 2,395
3,189
Goodwill 66,198
66,198
Total assets $ 4,317,328
$ 4,220,926
Liabilities
Accounts payable $ 146,263
$ 136,636
Accrued expenses and other liabilities 190,384
209,202
Income taxes payable 15,019
10,528
Customer deposits 185,604
111,573
Senior notes, net 1,239,211
1,237,484
Loans payable and other borrowings 161,798
150,485
Revolving credit facility borrowings —
—
Mortgage warehouse borrowings 61,292
198,564
Liabilities attributable to real estate not owned under option agreements 3,107
6,252
Total liabilities 2,002,678
2,060,724
COMMITMENTS AND CONTINGENCIES (Note 16)

Stockholders’ Equity
Class A common stock, $0.00001 par value, 400,000,000 shares authorized,
75,356,556 and 33,340,291 shares issued, 72,307,299 and 30,486,858 shares outstanding as of September 30, 2017 and December 31, 2016, respectively 1
—
Class B common stock, $0.00001 par value, 200,000,000 shares authorized,
47,249,127 and 88,942,052 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively —
1
Preferred stock, $0.00001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016 —
—
Additional paid-in capital 1,142,210
384,709
Treasury stock at cost; 3,049,257 and 2,853,433 shares as of September 30, 2017 and December 31, 2016, respectively (47,622 ) (43,524 )
Retained earnings 297,402
228,613
Accumulated other comprehensive loss (17,989 ) (17,989 )
Total stockholders’ equity attributable to Taylor Morrison Home Corporation 1,374,002
551,810
Non-controlling interests – joint ventures 1,858
1,525
Non-controlling interests – Principal Equityholders 938,790
1,606,867
Total stockholders’ equity 2,314,650
2,160,202
Total liabilities and stockholders’ equity $ 4,317,328
$ 4,220,926


	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	1,227,264	$	724,488
Restricted cash		765		2,147
Total cash, cash equivalents, and restricted cash		1,228,029		726,635
Real estate inventory:
Owned inventory		5,232,853		5,346,905
Consolidated real estate not owned		892		23,971
Total real estate inventory		5,233,745		5,370,876
Land deposits		207,946		263,356
Mortgage loans held for sale		287,001		346,364
Lease right of use assets		80,578		90,446
Prepaid expenses and other assets, net		261,070		265,392
Other receivables, net		189,455		191,504
Investments in unconsolidated entities		306,265		282,900
Deferred tax assets, net		67,656		67,656
Property and equipment, net		223,847		202,398
Goodwill		663,197		663,197
Total assets	$	8,748,789	$	8,470,724
Liabilities
Accounts payable	$	281,583	$	269,761
Accrued expenses and other liabilities		462,032		490,253
Lease liabilities		89,310		100,174
Income taxes payable		3,012		—
Customer deposits		380,724		412,092
Estimated development liabilities		42,352		43,753
Senior notes, net		1,817,457		1,816,303
Loans payable and other borrowings		326,216		361,486
Mortgage warehouse borrowings		249,898		306,072
Liabilities attributable to consolidated real estate not owned		892		23,971
Total liabilities	$	3,653,476	$	3,823,865
COMMITMENTS AND CONTINGENCIES (Note 13)
Stockholders’ equity
Total stockholders’ equity		5,095,313		4,646,859
Total liabilities and stockholders’ equity	$	8,748,789	$	8,470,724

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts, unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Home closings revenue, net $ 886,249
$ 812,185
$ 2,526,830
$ 2,271,154
Land closings revenue 4,299
27,418
11,419
44,957
Mortgage operations revenue 17,479
13,814
47,362
36,951
Total revenues 908,027
853,417
2,585,611
2,353,062
Cost of home closings 721,637
658,507
2,062,437
1,852,724
Cost of land closings 3,002
8,179
7,869
20,497
Mortgage operations expenses 12,070
7,877
30,874
22,594
Total cost of revenues 736,709
674,563
2,101,180
1,895,815
Gross margin 171,318
178,854
484,431
457,247
Sales, commissions and other marketing costs 61,476
58,277
178,609
165,300
General and administrative expenses 33,374
29,944
100,396
91,078
Equity in income of unconsolidated entities (2,787 ) (1,646 ) (6,943 ) (4,734 )
Interest income, net (135 ) (47 ) (314 ) (149 )
Other expense, net 415
1,935
828
8,602
Income before income taxes 78,975
90,391
211,855
197,150
Income tax provision 24,282
31,707
65,631
66,698
Net income before allocation to non-controlling interests 54,693
58,684
146,224
130,452
Net income attributable to non-controlling interests — joint ventures (427 ) (376 ) (625 ) (856 )
Net income before non-controlling interests — Principal Equityholders 54,266
58,308
145,599
129,596
Net income attributable to non-controlling interests — Principal Equityholders (21,390 ) (43,471 ) (76,810 ) (96,261 )
Net income available to Taylor Morrison Home Corporation $ 32,876
$ 14,837
$ 68,789
$ 33,335
Earnings per common share
Basic $ 0.45
$ 0.49
$ 1.21
$ 1.07
Diluted $ 0.45
$ 0.49
$ 1.21
$ 1.07
Weighted average number of shares of common stock:
Basic 72,471
30,427
56,791
31,300
Diluted 121,183
120,103
120,991
120,870


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Home closings revenue, net	$	1,996,747		$	1,883,020		$	3,609,342		$	3,527,429
Land closings revenue		12,628			36,816			17,148			52,426
Financial services revenue		41,914			35,471			77,063			70,670
Amenity and other revenue		9,275			39,716			18,868			47,622
Total revenue		2,060,564			1,995,023			3,722,421			3,698,147
Cost of home closings		1,514,237			1,381,610			2,741,750			2,646,584
Cost of land closings		12,703			24,204			17,048			38,568
Financial services expenses		25,342			21,483			47,490			45,697
Amenity and other expenses		8,597			26,246			16,882			32,690
Total cost of revenue		1,560,879			1,453,543			2,823,170			2,763,539
Gross margin		499,685			541,480			899,251			934,608
Sales, commissions and other marketing costs		113,034			96,135			205,794			185,258
General and administrative expenses		70,649			69,407			136,910			137,549
Net (income)/loss from unconsolidated entities		(3,186	)		3,637			(5,115	)		1,806
Interest (income)/expense, net		(5,120	)		5,189			(6,231	)		9,441
Other expense/(income), net		8,549			(11,014	)		3,715			(10,472	)
Gain on extinguishment of debt, net		—			(13,471	)		—			(13,471	)
Income before income taxes		315,759			391,597			564,178			624,497
Income tax provision		80,854			98,443			138,045			152,882
Net income before allocation to non-controlling interests		234,905			293,154			426,133			471,615
Net income attributable to non-controlling interests		(303	)		(2,167	)		(480	)		(3,925	)
Net income available to Taylor Morrison Home Corporation	$	234,602		$	290,987		$	425,653		$	467,690
Earnings per common share
Basic	$	2.15		$	2.47		$	3.91		$	3.91
Diluted	$	2.12		$	2.45		$	3.85		$	3.87
Weighted average number of shares of common stock:
Basic		109,210			117,932			108,822			119,550
Diluted		110,856			118,931			110,466			120,796

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)

Dollar amount includes $8.9 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

Three Months Ended September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Income before non-controlling interests, net of tax $ 54,693
$ 58,684
$ 146,224
$ 130,452
Other comprehensive loss, net of tax:
Post-retirement benefits adjustments, net of tax —
—
—
(447 )
Other comprehensive loss, net of tax —
—
—
(447 )
Comprehensive income 54,693
58,684
146,224
130,005
Comprehensive income attributable to non-controlling interests — joint ventures (427 ) (376 ) (625 ) (856 )
Comprehensive income attributable to non-controlling interests — Principal Equityholders (21,390 ) (43,471 ) (76,810 ) (95,932 )
Comprehensive income available to Taylor Morrison Home Corporation $ 32,876
$ 14,837
$ 68,789
$ 33,217
(1)

Dollar amount includes $0.6 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

(1)

Dollar amount includes $22.4 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

(1)

Dollar amount includes $2.9 million of stock options exercised netted with the value of shares withheld for taxes on the issuance of restricted stock units.

CASH FLOWS

(In thousands, ~~except share data,~~ unaudited)

Common Stock
Class A Class B
Additional
Paid-in
Capital
Treasury Stock Stockholders' Equity
Shares Amount Shares Amount Amount Shares Amount
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Non-controlling
Interest - Joint
Venture

Non-controlling
Interest - Principal
Equityholders

Total
Stockholders’
Equity
Balance – December 31, 2016 30,486,858
$ —
88,942,052
$ 1
$ 384,709
2,853,433
$ (43,524 ) $ 228,613
$ (17,989 ) $ 1,525
$ 1,606,867
$ 2,160,202
Net income —
—
—
—
—
—
—
68,789
—
625
76,810
146,224
Exchange of New TMM Units and corresponding number of Class B Common Stock 191,333
—
(191,333 ) —
—
—
—
—
—
—
—
—
Cancellation of forfeited New TMM Units and corresponding number of Class B Common Stock —
—
(1,592 ) —
—
—
—
—
—
—
—
—
Exercise of stock options 265,167
—
—
—
4,791
—
—
—
—
—
—
4,791
Issuance of restricted stock units, net of shares withheld for tax 59,765
—
—
—
—
—
—
—
(307 ) —
—
—
—
—
—
—
—
—
—
—
—
—
(307 )
Repurchase of common stock (195,824 ) —
—
—
—
195,824
(4,098 ) —
—
—
—
(4,098 )
Exchange of (repurchase) of B shares from secondary offerings 41,500,000
1
—
—
748,096
—
—
—
—
—
—
748,097
Repurchase of New TMM Units from principal equityholders —
—
(41,500,000 ) (1 ) —
—
—
—
—
—
(750,193 ) (750,194 )
Share based compensation —
—
—
—
4,921
—
—
—
—
—
5,306
10,227
Changes in non-controlling interests of consolidated joint ventures —
—
—
—
—
—
—
—
—
(292 ) —
(292 )
Balance – September 30, 2017 72,307,299
$ 1
47,249,127
$ —
$ 1,142,210
3,049,257
$ (47,622 ) $ 297,402
$ (17,989 ) $ 1,858
$ 938,790
$ 2,314,650


	Six Months Ended June 30,
	2023			2022
Cash Flows from Operating Activities
Net income before allocation to non-controlling interests	$	426,133		$	471,615
Adjustments to reconcile net income to net cash provided by operating activities:
Net (income)/loss from unconsolidated entities		(5,115	)		1,806
Stock compensation expense		12,804			12,141
Gain on extinguishment of debt, net		—			(13,471	)
Gain on land transfers		—			(13,700	)
Distributions of earnings from unconsolidated entities		5,534			4,252
Depreciation and amortization		14,478			17,758
Operating lease expense		13,512			13,632
Debt issuance costs amortization		1,744			544
Change in Urban Form assets due to sale		—			11,675
Changes in operating assets and liabilities:
Real estate inventory and land deposits		169,462			(667,846	)
Mortgage loans held for sale, prepaid expenses and other assets		46,618			305,465
Customer deposits		(31,368	)		94,240
Accounts payable, accrued expenses and other liabilities		(49,703	)		(44,476	)
Income taxes payable		3,012			1,855
Net cash provided by operating activities		607,111			195,490
Cash Flows from Investing Activities:
Purchase of property and equipment		(21,045	)		(12,801	)
Distributions of capital from unconsolidated entities		350			86,576
Investments of capital into unconsolidated entities		(24,134	)		(69,582	)
Net cash (used in)/provided by investing activities		(44,829	)		4,193
Cash Flows from Financing Activities
Increase in loans payable and other borrowings		2,426			29,877
Repayments on loans payable and other borrowings		(15,346	)		(45,226	)
Borrowings on revolving credit facilities		—			182,548
Repayments on revolving credit facilities		—			(64,077	)
Borrowings on mortgage warehouse facilities		1,503,098			1,193,232
Repayments on mortgage warehouse facilities		(1,559,272	)		(1,427,564	)
Repayments on senior notes		—			(264,111	)
Proceeds from stock option exercises and issuance of restricted stock units, net		13,084			(733	)
Payment of principal portion of finance lease		(1,310	)		(1,335	)
Repurchase of common stock, net		(3,568	)		(230,413	)
Cash and distributions to non-controlling interests of consolidated joint ventures, net		—			(28,928	)
Net cash used in financing activities		(60,888	)		(656,730	)
Net Increase/Decrease in Cash and Cash Equivalents and Restricted Cash	$	501,394		$	(457,047	)
Cash, Cash Equivalents, and Restricted Cash — Beginning of period		726,635			836,340
Cash, Cash Equivalents, and Restricted Cash — End of period	$	1,228,029		$	379,293
Supplemental Cash Flow Information
Income tax payments	$	(78,877	)	$	(112,167	)
Supplemental Non-Cash Investing and Financing Activities:
Change in loans payable issued to sellers in connection with land purchase contracts	$	84,445		$	159,637
Change in inventory not owned	$	(23,079	)	$	15,503
Investments of land in unconsolidated joint ventures, net	$	—		$	143,206

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

~~(In thousands, unaudited)~~

Nine Months Ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests $ 146,224
$ 130,452
Adjustments to reconcile net income to net cash provided by operating activities:

Equity in income of unconsolidated entities (6,943 ) (4,734 )
Stock compensation expense 10,227
8,959
Distributions of earnings from unconsolidated entities 4,666
2,538
Depreciation and amortization 2,994
3,000
Debt issuance costs amortization 2,864
2,888
Contingent consideration 766
3,520
Deferred income taxes (9,032 ) (969 )
Changes in operating assets and liabilities:

Real estate inventory and land deposits (243,343 ) (103,758 )
Mortgages held for sale, prepaid expenses and other assets 141,813
76,281
Customer deposits 74,031
44,780
Accounts payable, accrued expenses and other liabilities 4,017
(9,415 )
Income taxes payable 4,491
(11,119 )
Net cash provided by operating activities 132,775
142,423
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment (1,843 ) (934 )
Payments for business acquisitions —
(52,819 )
Distributions of capital from unconsolidated entities 4,223
3,546
Investments of capital into unconsolidated entities (28,854 ) (24,509 )
Net cash (used in) investing activities (26,474 ) (74,716 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Increase in loans payable and other borrowings 8,644
55,720
Repayments of loans payable and other borrowings (11,305 ) (65,075 )
Borrowings on revolving credit facility —
255,000
Payments on revolving credit facility —
(155,000 )
Borrowings on mortgage warehouse 567,922
782,001
Repayment on mortgage warehouse (705,194 ) (874,279 )
Payment of contingent consideration —
(3,100 )
Proceeds from stock option exercises 4,791
—
Proceeds from issuance of shares from secondary offerings 882,306
—
Repurchase of shares from principal equity holders (884,403 ) —
Repurchase of common stock, net (4,098 ) (28,543 )
Payment of taxes related to net share settlement of equity awards (307 ) —
Distributions to non-controlling interests of consolidated joint ventures, net (292 ) (60 )
Net cash (used in) financing activities (141,936 ) (33,336 )
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS $ (35,635 ) $ 34,371
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 301,812
127,468
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period $ 266,177
$ 161,839
SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid, net $ (70,172 ) $ (78,786 )
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

Change in loans payable issued to sellers in connection with land purchase contracts $ 55,151
$ 55,720
Change in inventory not owned $ (3,145 ) $ (7,309 )
Original accrual of contingent consideration for business combinations

$ —
$ 380

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements~~

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Organization and~~

Description of the Business - — Taylor Morrison Home Corporation ~~(referred~~(“TMHC”), through its subsidiaries (together with TMHC referred to herein as ~~“TMHC,”~~ “we,” “our,” “the Company” and “us”), ~~through its divisions and segments,~~ owns and operates a residential homebuilding business and is a ~~developer~~land developer. We operate in the states of ~~lifestyle communities. As of September 30, 2017, we operated in~~ Arizona, California, Colorado, Florida, Georgia, ~~Illinois,~~Nevada, North and South Carolina, Oregon, Texas, and ~~Texas. Our Company serves~~Washington. We provide an assortment of homes across a wide range of price points to appeal to an array of consumer ~~groups from coast to coast, including first time,~~groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up, ~~luxury,~~ and ~~55 plus~~resort-lifestyle buyers. Our homebuilding company operates under our Taylor Morrison and Darling Homes brand names. Our business is organized into multiple homebuilding operating components, and a mortgage operating component, all of which are managed as four reportable segments: East, Central, West, and Mortgage Operations. The communities in our homebuilding segments offer single family attached and detached homes. We are the general contractors for all real estate projects and retain subcontractors for home construction and ~~site~~land development. Our ~~Mortgage Operations reportable segment provides~~homebuilding segments operate under our various brand names including Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, ~~operating as~~ Taylor Morrison Home Funding, ~~LLC~~INC (“TMHF”), ~~and~~ title services through our wholly owned title services subsidiary, Inspired Title Services, LLC (“Inspired Title”), and homeowner’s insurance policies through our wholly owned insurance agency, Taylor Morrison Insurance Services, LLC (“TMIS”).

~~During the quarter ended March 31, 2017, we realigned our~~ Our business is organized into multiple homebuilding operating ~~divisions within our existing segments based on geographic location~~components, and ~~management's long term strategic plans. As~~ a ~~result,~~financial services component, all ~~historical periods presented in the segment information have been reclassified to give effect to this segment realignment.~~of which are managed as four reportable segments: East, Central, West, and Financial Services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Unless otherwise stated, amounts are shown~~

Joint Ventures -We consolidate certain joint ventures in ~~U.S. dollars. Assets and liabilities recorded in foreign currencies are translated at~~accordance with Accounting Standards Codification (“ASC”) Topic810, Consolidation. The income from the ~~exchange rate~~percentage of the joint venture not owned by us is presented as “Net income attributable to non-controlling interests” on the balance sheet date, and revenues and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from this process are recorded to accumulated other comprehensive loss in the unaudited Condensed Consolidated ~~Balance Sheets and~~ Statement of Operations. The equity from the percentage of the joint ventures not owned by us is presented as “Non-controlling interests” on the unaudited Condensed Consolidated Statement of Stockholders’ Equity.

~~Non-controlling~~ The balance of Non-Controlling interests – In connection with a series of transactions consummated at the time of the Company’s IPO (the “Reorganization Transactions”), the Company became the sole owner of the general partner of TMM Holdings II Limited Partnership (“New TMM”). As the sole owner of the general partner of New TMM, the Company exercises exclusive and complete control over New TMM. Consequently, the Company consolidates New TMM and records a non-controlling interest in the Condensed Consolidated Balance Sheets for the economic interests in New TMM, that are directly or indirectly held by a consortium of investors comprised of affiliates of TPG Global, LLC (the “TPG Entities” or “TPG”), investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”) or their respective subsidiaries (the “Oaktree Entities”), and affiliates of JH Investments, Inc. (“JH” and together with the TPG Entities and Oaktree Entities, the “Principal Equityholders”) or by members of management and members of the Board of Directors. Refer will fluctuate from period to ~~Note 11- Stockholders' Equity~~ ~~for discussion regarding our equity offering transactions during the nine months ended September 30, 2017.~~

~~Reclassifications~~ ~~- Prior~~ period ~~amounts for cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows have been reclassified to conform with current period financial statement presentation~~ as a result of ~~adopting Accounting Standards Update ("ASU") 2016-18, Statement~~activities within the respective joint ventures which may include the allocation of ~~Cash Flows (Topic 230): Restricted Cash.~~income or losses, distributions or contributions associated with the partners within the joint venture.

Use of Estimates — The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the unaudited Condensed Consolidated Financial Statements and these accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of acquired assets, valuation of goodwill, valuation of development liabilities, valuation of equity awards, valuation allowance on deferred tax assets, and reserves for warranty and self-insured risks. Actual results could differ from those estimates.

~~Non-controlling Interests – Principal Equityholders~~

Real Estate Inventory — ~~Immediately prior~~Inventory consists of raw land, land under development, homes under construction, completed homes, and model homes, all of which are stated at cost. In addition to ~~our IPO,~~direct carrying costs, we also capitalize interest, real estate taxes, and related development costs that benefit the entire community, such as ~~part~~field construction supervision and related direct overhead. Home vertical construction costs are accumulated and charged to Cost of home closings at the time of home closing using the specific identification method. Land acquisition, development, interest, and real estate taxes are allocated to homes and units generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction of a home, and construction utilities are considered overhead costs and allocated on a per unit basis. These costs are capitalized to inventory from the point development begins to the point construction is completed. Changes in estimated costs to be incurred in a community are generally allocated to the remaining lots on a prospective basis.

The life cycle of a typical community generally ranges from two to five years, commencing with the acquisition of unentitled or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery of homes. Actual

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community duration will vary based on the size of the ~~Reorganization Transactions,~~community, the existing holders of limited partnership interests of TMM Holdings Limited Partnership (“TMM Holdings”) exchanged their limited partnership interests for limited partnership interests of New TMM (“New TMM Units”). For each New TMM Unit received in the exchange, the holders of New TMM Units also received a corresponding number of shares of our Class B Common Stock (the “Class B Common Stock”). Our Class B Common Stock has voting rights but no economic rights. One share of Class B Common Stock, together with one New TMM Unit, is exchangeable into one share of our Class A Common Stock in accordance with the terms of the Exchange Agreement, dated as of April 9, 2013, among the Company, New TMMsales absorption rate and ~~the holders of Class B Common Stock and New TMM Units.~~

During the nine months ended September 30, 2017, we completed multiple sales of our Class A Common Stock in registered public offerings, totaling 41.5 million shares. We used all of the net proceeds from the public offerings to purchase partnership units in New TMM, our direct subsidiary, along with shares of our Class B Common Stock, held by our Principal Equityholders. As a result of all net proceeds being distributed to our Principal Equityholders, we adjusted Non-controlling interests - Principal Equityholders and Additional paid-in capital on the Condensed Consolidated Balance Sheets and Condensed Consolidated Statement of Stockholders' Equity to reflect the change in ownership. The aggregate number of partnership units and corresponding shares of Class B Common Stockwhether we purchased ~~was equal~~the property as raw land or as finished lots.

We capitalize qualifying interest costs to ~~the number of shares of Class A Common Stock sold in the public offerings. Refer to~~ ~~Note 11- Stockholders' Equity~~ ~~for discussion regarding our equity offering transactions~~inventory during the ~~nine months ended September 30, 2017.~~

~~Real Estate Inventory~~ ~~—We~~development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.

We assess the recoverability of our ~~land~~ inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment. We review our real estate inventory for indicators of impairment ~~by community~~on a community-level basis during each reporting period. If indicators of impairment are present for a community, ~~we first perform~~ an undiscounted cash flow analysis is generally prepared in order to determine if the carrying value of the assets in that community exceeds the ~~expected~~estimated undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, ~~then~~ the assets are ~~deemed to be~~potentially impaired, ~~and are recorded at~~requiring a fair value ~~as of the assessment.~~analysis. Our determination of fair value is primarily based on a discounted cash flow model which includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. However, fair value can be determined through other methods, such as appraisals, contractual purchase offers, and other third party opinions of value. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~ 2022, no impairment charges to our real estate inventory were recorded.

In certain cases, we may elect to cease development and/or marketing of an existing community if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow for market conditions to improve. We refer to such communities as long-term strategic assets. The decision may be based on financial and/or operational metrics as determined by us. For those communities that have been temporarily closed or development has been discontinued, we do not allocate interest or other costs to the community's inventory until activity resumes. Such costs are expensed as incurred. In addition, if we decide to cease development, we will evaluate the project for impairment and then cease future development and marketing activity until such a time when we believe that market conditions have improved and economic performance can be maximized. Our assessment of the carrying value of our long-term strategic assets typically includes estimates of future performance, including the timing of when development will recommence, the type of product to be offered, and the margin to be realized. In the future, some of these inactive communities may be re-opened while others may be sold. As of June 30, 2023 and December 31, 2022, we had no inactive projects.

In the ordinary course of business, we enter into various option agreements to acquire lots in staged takedowns which may require a significant cash deposit. We are not legally obligated to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots are not purchased. Real estate not owned under these agreements is reflected in Consolidated real estate not owned with a corresponding liability in Liabilities attributable to consolidated real estate not owned in the unaudited Condensed Consolidated Balance Sheets.

Land held for sale — In some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land. Land is considered held for sale once management intends to actively sell a parcel within the next 12 months or the parcel is under contract to sell. Land held for sale is recorded at the lower of cost or fair value less costs to sell. In determining the value of land held for sale, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record fair value adjustments for land held for sale within Cost of land closings on the unaudited Condensed Consolidated Statements of Operations.

Land banking arrangements — We have land purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources, we may transfer our right under certain specific performance agreements to entities owned by third parties (“land banking arrangements”). These entities use equity contributions from their owners and/or incur debt to finance the acquisition and development of the land. The entities grant us an option to acquire lots in staged takedowns. In consideration for this option, we make a non-refundable deposit. We are not legally obligated to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots were not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included in the unaudited Condensed Consolidated Balance Sheets.

Investments in Consolidated and Unconsolidated Entities

Consolidated Entities— In the ordinary course of business, we enter into land purchase contracts, lot option contracts and land banking arrangements in order to procure land or lots for the construction of homes. Such contracts enable us to control significant lot positions with a minimal initial capital investment and substantially reduce the risk associated with land ownership and development. In accordance with ASC Topic 810, Consolidation, when we enter into agreements to acquire land or lots and pay a non-refundable deposit, we evaluate if a Variable Interest Entity (“VIE”) should be created if we are deemed to have provided subordinated financial support that will absorb some or all of an entity’s expected losses if they occur. If we are the primary beneficiary of the VIE, we

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consolidate the VIE and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, in the unaudited Condensed Consolidated Balance Sheets.

Unconsolidated Joint Ventures — We use the equity method of accounting for entities which we exercise significant influence but do not have a controlling interest over the operating and financial policies of the investee. For unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint venture partners and determined that the partners have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in Net income/loss from unconsolidated entities on the unaudited Condensed Consolidated Statement of Operations when earned and distributions are credited against our Investments in unconsolidated entities on the unaudited Condensed Consolidated Balance Sheets when received.

We evaluate our investments in unconsolidated entities for indicators of ~~impairment.~~impairment semi-annually. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized, if any, is the excess of the ~~investment’s~~investment's carrying amount over its estimated fair value. Additionally, we consider various qualitative factors to determine if a decrease in the value of the investment is other-than-temporary. These factors include age of the venture, stage in its life cycle, ~~our~~ intent and ability for us to recover our investment in the ~~unconsolidated~~ entity, financial condition and long-term prospects of the ~~unconsolidated~~ entity, short-term liquidity needs of the unconsolidated entity, trends in the general economic environment of the land, entitlement status of the land held by the unconsolidated entity, overall projected returns on investment, defaults under contracts with third parties (including bank debt), recoverability of the investment through future cash flows and relationships ~~with~~among the ~~other~~entity's partners. If ~~the Company believes~~we believe that the decline in the fair value of the investment is temporary, then no impairment is recorded. We ~~did not record any~~recorded a $3.5 million impairment ~~charges~~charge related to an investment in one of our unconsolidated entities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022. No such charges were recorded for the three or ~~2016.~~six months ended June 30, 2023.

— Revenue is recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). The standard's core principle requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Home and land closings revenue

Under Topic 606, the following steps are applied to determine home closings revenue ~~net~~ ~~— Home~~and land closings revenue recognition: (1) identify the contract(s) with our customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions, have one contract, with one performance obligation, with each customer to build and deliver the home purchased (or develop and deliver land). Based on the application of the five steps, the following summarizes the timing and manner of the recognition of home and land sales revenue:

•

Revenue from closings of residential real estate is ~~recorded using~~recognized when the ~~completed-contract method~~buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ~~accounting at the time each home is delivered, title and possession~~ownership are transferred to the buyer, and we have no ~~significant~~ continuing involvement with the ~~home, risk~~property, which is generally upon the close of ~~loss has transferred, the buyer has demonstrated sufficient investment in the property, and the receivable, if any, from the homeowner or escrow agent~~escrow. Revenue is ~~not subject to future subordination.~~

We typically grant our homebuyers certain sales incentives, including cash discounts, incentives on options included in the home, option upgrades, and seller-paid financing or closing costs. Incentives and discounts are accounted for as a reduction in the sales price of the home and home closings revenue is shownreported net of ~~discounts. We also receive rebates from certain vendors~~any discounts and ~~these rebates are accounted for as a reduction to cost of home closings.~~incentives.

•

~~Land closings revenue~~ — Revenue from land sales is recognized when a significant down payment is received, title passes and collectability of the receivable, if any, is ~~transferred~~reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.

sale of assets from our Urban Form and Build-to-Rent operations.

Financial services revenue

Mortgage operations ~~revenue~~ —and hedging activity related to financial services are not within the scope of Topic 606. Loan origination fees (including title fees, points, and closing costs) are recognized at the time the related real estate transactions are completed, which is usually upon the close of escrow. ~~All of the~~Generally, loans TMHF originates are sold to third party investors within a short period of time, on a non-recourse basis. Gains and losses from the sale of mortgages are recognized in accordance with ASC Topic 860-20, Sales of Financial Assets. TMHF does not have continuing involvement with the transferred ~~assets,~~assets; therefore, we derecognize the mortgage loans at time of sale, and based on the difference between the selling price and carrying value of the related loans upon sale, ~~recording~~record a

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gain/loss on sale in the period of sale. Also included in ~~mortgage operations~~Financial services revenue/expenses ~~is the~~are realized and unrealized gains and ~~loss~~losses from hedging instruments.

~~Recently Issued Accounting Pronouncements~~ ~~— In January 2017,~~ ASC Topic 815-25, Derivatives and Hedging, requires that all hedging instruments be recognized as assets or liabilities on the ~~Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ~~(“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test. This change will allow an entity to avoid calculating the implied~~balance sheet at their fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination, thus reducing the cost and complexity of evaluating goodwill for impairment. This amendment will be effective for us in our fiscal year beginning January 1, 2020.value. We do not ~~believe~~meet the ~~adoption of ASU 2017-04 will have a material impact on our condensed consolidated financial statements and disclosures.~~

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ ~~("ASU 2017-01"). ASU 2017-01 provides clarification~~criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the ~~definition~~statement of a business by providing a screen to determine when a set of assets is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets is not a business. This screen is expected to reduce the number of transactions that need to be further evaluated. This amendment will be effective for us in our fiscal year beginning January 1, 2018. As ASU 2017-01 is not retroactive, we do not believe such guidance will have a significant impact on our condensed consolidated financial statements and disclosures. Once adopted, we will evaluate the impact ASU 2017-01 will have on our condensed consolidated financial statements and disclosuresoperations in the ~~event of future acquisitions.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 primarily impacts off-balance sheet operating leases and will require such leases, with the exception of short-term leases, to be recorded on the balance sheet. Lessor accounting is not significantly impacted by the new guidance, however certain updates were made to align lessee and lessor treatment. ASU 2016-02 will be effective for usperiod in ~~our fiscal year beginning January 1, 2019. We do not believe the adoption of ASU 2016-02 will have a material impact on our condensed consolidated financial statements and disclosures.~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2014-09”),~~ which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in ASC Topic 605, ~~Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in ASC Subtopic 605-35,~~ ~~Revenue Recognition-Construction-Type and Production-Type Contracts~~. The standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In doing so, entities will generally need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 has been deferred and will be effective beginning January 1, 2018 and, at that time, we will adopt the new standard under the modified retrospective approach.

We do not believe the adoption of this pronouncement will have a material impact on our condensed consolidated financial statements and disclosures. We will have new disclosures as required by the new standard. We believe the guidance relating to the cost to obtain a contract component of the new standard will have an impact on our condensed consolidated financial statements and disclosures. We also believe the adoption of this pronouncement will not materially affect our post-adoption revenue recognition since we have limited circumstances where we have separate performance obligations within our contracts.

~~3. BUSINESS COMBINATIONS~~

On January 8, 2016, we acquired Acadia Homes, an Atlanta based homebuilder, for total consideration of $83.6 million (including $19.7 million of seller financing holdbacks and contingent consideration). In accordance with ASC Topic 805~~, Business Combinations~~, all material assets and liabilities, including contingent consideration were measured and recognized at fair value as of the date of the acquisition to reflect the purchase price paid, which resulted in goodwill for the transaction.

~~Unaudited pro forma results of the business combination as if Acadia Homes had been acquired on January 1, 2016 have not been provided as~~ they ~~are immaterial to the total Company's consolidated results of operations.~~

We determined the estimated fair value of real estate inventory on a community-by-community basis primarily using the sales comparison and income approaches. The sales comparison approach was used for all inventory in process. The income approach derives a value using a discounted cash flow for income-producing real property. This approach was used exclusively for finished lots. The income approach using discounted cash flows was also used to value lot option contracts acquired. These estimated cash flows and ultimate valuation are significantly affected by the discount rate, estimates related to expected average selling prices and sales incentives, expected sales paces and cancellation rates, expected land development and construction timelines, and anticipated land development, construction, and overhead costs, all of which may vary significantly between communities.

The Company has completed a final allocation of purchase price as of the acquisition date for Acadia Homes. The following is a summary of the fair value of assets acquired, liabilities assumed, and liabilities created:

(In thousands) Acadia Homes
Acquisition Date January 8, 2016
Assets acquired
Real estate inventory $ 76,152
Land deposits 984
Prepaid expenses and other assets 816
Property and equipment 204
Goodwill ⁽¹⁾
8,500
Total assets $ 86,656

Less liabilities assumed
Accrued expenses and other liabilities $ 2,562
Customer deposits 463
Net assets acquired $ 83,631

⁽¹⁾~~Goodwill is fully deductible for tax purposes. The goodwill was allocated to our East homebuilding segment.~~

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to TMHC by the weighted average number of shares of ~~Class A~~ Common Stock (as defined in Note 10) outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if all ~~shares of Class B Common Stock and their corresponding New TMM Units were exchanged for shares of Class A Common Stock and if all~~ outstanding dilutive equity awards to issue shares of ~~Class A~~ Common Stock were exercised or settled.

Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016
Numerator:
Net income available to TMHC – basic $ 32,876
$ 14,837
$ 68,789
$ 33,335
Net income attributable to non-controlling interest – Principal Equityholders 21,390
43,471
76,810
96,261
Loss fully attributable to public holding company 136
19
288
191
Net income – diluted $ 54,402
$ 58,327
$ 145,887
$ 129,787
Denominator:
Weighted average shares – basic (Class A) 72,471
30,427
56,791
31,300
Weighted average shares – Principal Equityholders’ non-controlling interest (Class B) 47,253
89,053
62,842
89,089
Restricted stock units 1,121
522
1,026
463
Stock Options 338
101
332
18
Weighted average shares – diluted 121,183
120,103
120,991
120,870
Earnings per common share – basic:
Net income available to Taylor Morrison Home Corporation $ 0.45
$ 0.49
$ 1.21
$ 1.07
Earnings per common share – diluted:
Net income available to Taylor Morrison Home Corporation $ 0.45
$ 0.49
$ 1.21
$ 1.07

~~We excluded a total~~

The above calculations of weighted average ~~of 1,685,938~~shares - diluted exclude 347,052 and ~~1,602,509 outstanding~~267,531 of anti-dilutive stock options and unvested restricted stock units (“RSUs”) ~~and 1,926,836 and 1,578,969 outstanding stock options and unvested RSUs from the calculation of earnings per share~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, respectively, and ~~2016,~~2,176,897 and 1,462,766 of anti-dilutive stock options and RSUs for the three and six months ended June 30, 2022, respectively.

The shares of Class B Common Stock have voting rights but do not have economic rights or rights to dividends or distributions on liquidation and therefore are not participating securities. Accordingly, Class B Common Stock is not included in basic earnings per share.

4. REAL ESTATE INVENTORY AND LAND DEPOSITS

As of
September 30,
2017 December 31, 2016
Real estate developed and under development $ 2,171,670
$ 2,074,651
Real estate held for development or held for sale⁽¹⁾
143,585
183,638
Operating communities ⁽²⁾
825,946
650,036
Capitalized interest 99,463
102,642
Total owned inventory 3,240,664
3,010,967
Real estate not owned under option agreements 3,107
6,252
Total real estate inventory $ 3,243,771
$ 3,017,219

⁽¹⁾Real estate held for development or held for sale includes properties which are not in active production. ~~This includes raw land recently purchased or awaiting entitlement, future phases of current projects that will be developed as prior phases sell out and long-term strategic assets.~~

⁽²⁾

Operating communities consist of all vertical construction costs relating to homes in progress and completed ~~homes for all active production~~homes.

The development status of our land inventory is as follows (dollars in thousands):

As of
September 30, 2017 December 31, 2016
Owned Lots
Book Value of Land
and Development
Owned Lots
Book Value of Land
and Development
Raw 7,922
$ 349,467
7,142
$ 403,902
Partially developed 5,526
526,904
8,037
501,496
Finished 12,828
1,426,683
11,318
1,336,709
Long-term strategic assets 893
12,201
1,489
16,182
Total 27,169
$ 2,315,255
27,986
$ 2,258,289

~~Land Deposits~~ ~~— We provide deposits related~~The remaining book value of land and development relates to ~~land options and land purchase contracts,~~parcels of commercial assets which are ~~capitalized when paid and classified as~~. excluded from the owned lots presented in the table.

~~As of September 30, 2017 and December 31, 2016, we had the right~~where phase specific development has commenced. Finished lots are fully developed. This classification allows for multi-phase or master planned communities to ~~purchase 7,049 and 7,583 lots under~~be presented in more than one lot status based on their development.

We have land option purchase contracts, ~~respectively, for an aggregate purchase price of $520.8 million~~land banking arrangements and ~~$542.6 million as of September 30, 2017 and December 31, 2016, respectively.~~other controlled lot agreements. We do not have title to the properties, and the property owner and its creditors generally only have no recourse against us in the ~~Company. As~~form of ~~September 30, 2017~~retaining any non-refundable deposits. We are also not legally obligated to purchase the balance of the lots. Deposits related to these lots are capitalized when paid and ~~December 31, 2016,~~classified as Land deposits until the associated property is purchased. The table below presents a summary of our controlled lots for the following periods (dollars in thousands):


	As of
	June 30, 2023						December 31, 2022
	Controlled Lots		Purchase Price		Land Deposits (1)		Controlled Lots		Purchase Price		Land Deposits (1)
Homebuilding controlled lots
Land option purchase contracts		5,946	$	455,581	$	38,547		6,582	$	428,612	$	47,678
Land banking arrangements		6,816		991,636		145,817		7,369		1,057,065		156,653
Other controlled lots		18,272		923,510		19,667		16,891		956,712		50,218
Total controlled lots		31,034	$	2,370,727	$	204,031		30,842	$	2,442,389	$	254,549

(1)

Land deposits are non-refundable and represent exposure to loss related to our ~~option~~ contracts with third parties, ~~and~~ unconsolidated entities, ~~consist~~and land banking arrangements.. In addition, at June 30, 2023 and December 31, 2022 we had refundable deposits of ~~non-refundable option deposits totaling $50.9~~$3.9 million and ~~$37.2~~$8.8 million ~~respectively, in land deposits related to land options and land purchase contracts.~~respectively.

Capitalized Interest — Interest capitalized, incurred and amortized is as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Interest capitalized - beginning of period	$	196,607		$	177,969		$	190,123		$	168,670
Interest incurred and capitalized(1)		32,049			40,815			66,182			80,544
Interest amortized to cost of home closings		(37,352	)		(33,420	)		(65,001	)		(63,850	)
Interest capitalized - end of period	$	191,304		$	185,364		$	191,304		$	185,364

(1)

Excludes Interest expense, net on the unaudited Condensed Consolidated Statement of Operations as such amounts are not capitalizable.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest capitalized - beginning of period $ 100,490
$ 111,063
$ 102,642
$ 105,148
Interest incurred 20,762
21,851
62,187
66,296
Interest amortized to cost of home closings (21,789 ) (21,502 ) (65,366 ) (60,032 )
Interest capitalized - end of period $ 99,463
$ 111,412
$ 99,463
$ 111,412

5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

Unconsolidated Entities

We have investments in a number of joint ventures with ~~related and unrelated~~ third ~~parties, with ownership interests up to 50.0%.~~parties. These entities are generally involved in real estate development, homebuilding, ~~and~~Build-to-Rent, and/or mortgage lending activities. ~~Some~~The primary activity of ~~these~~the real estate development joint ventures ~~develop land for the sole use~~is development and sale of ~~the~~lots to joint venture ~~participants, including us, and others develop land for sale to the joint venture participants and to~~partners and/or unrelated builders. Our share of the joint venture profit relating to lots we purchase from the joint ventures is deferred until homes are delivered by us and title passes to a homebuyer.

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Summarized, unaudited condensed combined financial information of unconsolidated entities that are accounted for by the equity method isare as follows (in thousands):


	As of
	June 30, 2023		December 31, 2022
Assets:
Real estate inventory	$	833,192	$	749,942
Other assets		168,072		146,770
Total assets	$	1,001,264	$	896,712
Liabilities and owners’ equity:
Debt	$	277,282	$	238,263
Other liabilities		44,792		31,824
Total liabilities	$	322,074	$	270,087
Owners’ equity:
TMHC	$	306,265	$	282,900
Others		372,925		343,725
Total owners’ equity	$	679,190	$	626,625
Total liabilities and owners’ equity	$	1,001,264	$	896,712


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues	$	32,100		$	94,166		$	51,637		$	124,567
Costs and expenses		(24,067	)		(94,086	)		(38,766	)		(119,016	)
Net income from unconsolidated entities	$	8,033		$	80		$	12,871		$	5,551
TMHC’s share in net income/(loss) of unconsolidated entities	$	3,186		$	(3,637	)	$	5,115		$	(1,806	)
Distributions to TMHC from unconsolidated entities	$	4,687		$	88,770		$	5,884		$	90,828

Consolidated Entities

We have several joint ventures for the purpose of real estate development and homebuilding activities, which we have determined to be VIEs. As the managing member, we oversee the daily operations and have the power to direct the activities of the VIEs, or joint ventures. For this specific subset of joint ventures, based upon the allocation of income and loss per the applicable joint venture agreements and certain performance guarantees, we have potentially significant exposure to the risks and rewards of the joint ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and the entities are consolidated.

As of June 30, 2023, the assets of the consolidated joint ventures totaled $273.9 million, of which $23.9 million was cash and cash equivalents, $75.9 million was owned inventory and $123.0 million was fixed assets (primarily related to Urban Form). The majority of the fixed asset balance which was previously classified as held for sale, has been reclassified as held for investment as of June 30, 2023. As of December 31, 2022, the assets of the consolidated joint ventures totaled $277.6 million, of which $38.9 million was cash and cash equivalents, $72.0 million was owned inventory and $123.2 million was fixed assets. The liabilities of the consolidated joint ventures totaled $149.1 million and $155.5 million as of June 30, 2023 and December 31, 2022, respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.

As of
September 30,
2017 December 31,
2016
Assets:
Real estate inventory $ 736,746
$ 614,441
Other assets 122,036
171,216
Total assets $ 858,782
$ 785,657
Liabilities and owners’ equity:
Debt $ 298,347
$ 277,934
Other liabilities 25,585
22,603
Total liabilities 323,932
300,537
Owners’ equity:
TMHC 184,817
157,909
Others 350,033
327,211
Total owners’ equity 534,850
485,120
Total liabilities and owners’ equity $ 858,782
$ 785,657

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenues $ 60,020
$ 45,219
$ 147,273
$ 94,881
Costs and expenses (47,505 ) (38,618 ) (118,546 ) (78,838 )
Income of unconsolidated entities $ 12,515
$ 6,601
$ 28,727
$ 16,043
TMHC’s share in income of unconsolidated entities $ 2,787
$ 1,646
$ 6,943
$ 4,734
Distributions from unconsolidated entities $ 2,098
$ 2,755
$ 8,889
$ 6,084

6. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following (in thousands):


	As of June 30, 2023		As of December 31, 2022
Real estate development costs to complete	$	50,915	$	53,155
Compensation and employee benefits		91,333		112,294
Self-insurance and warranty reserves		160,326		161,675
Interest payable		37,064		37,434
Property and sales taxes payable		24,233		30,046
Other accruals		98,161		95,649
Total accrued expenses and other liabilities	$	462,032	$	490,253

As of
September 30, 2017 As of
December 31, 2016
Real estate development costs to complete $ 9,597
$ 15,156
Compensation and employee benefits 53,065
63,802
Self-insurance and warranty reserves 51,536
50,550
Interest payable 24,454
17,233
Property and sales taxes payable 11,486
17,231
Other accruals 40,246
45,230
Total accrued expenses and other liabilities $ 190,384
$ 209,202

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ITEM 1. FINANCIAL STATEMENTS

Self-Insurance and Warranty Reserves – We accrue for the expected costs associated with ~~the~~our limited ~~one year~~ warranty, deductibles and self-insured ~~amounts~~exposure under our various insurance policies within Beneva Indemnity Company ~~("Beneva"~~(“Beneva”), a wholly owned subsidiary. A summary of the changes in ~~our~~ reserves are as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reserve - beginning of period	$	158,222		$	140,970		$	161,675		$	141,839
Additions to reserves		24,887			23,519			39,334			32,403
Cost of claims incurred		(23,318	)		(27,729	)		(43,826	)		(40,202	)
Changes in estimates to pre-existing reserves		535			731			3,143			3,451
Reserve - end of period	$	160,326		$	137,491		$	160,326		$	137,491

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Reserve - beginning of period $ 54,084
$ 44,342
$ 50,550
$ 43,098
Additions to reserves 6,403
8,902
17,446
19,685
Costs and claims incurred (8,203 ) (5,173 ) (18,131 ) (17,720 )
Change in estimates to existing reserves (748 ) (1,590 ) 1,671
1,418
Reserve - end of period $ 51,536
$ 46,481
$ 51,536
$ 46,481

7. DEBT

~~8. DEBT~~

Total debt consists of the following (in thousands):


	As of
	June 30, 2023							December 31, 2022
	Principal		Unamortized Debt Issuance (Costs)/ Premium			Carrying Value		Principal		Unamortized Debt Issuance (Costs)/ Premium			Carrying Value
5.625% Senior Notes due 2024		350,000		(359	)		349,641		350,000		(628	)		349,372
5.875% Senior Notes due 2027		500,000		(3,063	)		496,937		500,000		(3,459	)		496,541
6.625% Senior Notes due 2027(1)		27,070		1,166			28,236		27,070		1,310			28,380
5.75% Senior Notes due 2028		450,000		(2,867	)		447,133		450,000		(3,183	)		446,817
5.125% Senior Notes due 2030		500,000		(4,490	)		495,510		500,000		(4,807	)		495,193
Senior Notes subtotal	$	1,827,070	$	(9,613	)	$	1,817,457	$	1,827,070	$	(10,767	)	$	1,816,303
Loans payable and other borrowings		326,216		—			326,216		361,486		—			361,486
$1 Billion Revolving Credit Facility(2)(3)		—		—			—		—		—			—
$100 Million Revolving Credit Facility(2)(3)		—		—			—		—		—			—
Mortgage warehouse borrowings		249,898		—			249,898		306,072		—			306,072
Total debt	$	2,403,184	$	(9,613	)	$	2,393,571	$	2,494,628	$	(10,767	)	$	2,483,861

(1)

Unamortized Debt Issuance (Cost)/Premium for such notes is reflective of fair value adjustments as a result of purchase accounting.

As of
September 30, 2017 December 31, 2016
Principal Unamortized Debt Issuance Costs Carrying Value Principal Unamortized Debt Issuance Costs Carrying Value
5.25% Senior Notes due 2021, unsecured $ 550,000
$ 4,192
$ 545,808
$ 550,000
$ 5,089
$ 544,911
5.875% Senior Notes due 2023, unsecured 350,000
3,143
346,857
350,000
3,569
346,431
5.625% Senior Notes due 2024, unsecured 350,000
3,454
346,546
350,000
3,858
346,142
Senior Notes subtotal 1,250,000
10,789
1,239,211
1,250,000
12,516
1,237,484
Loans payable and other borrowings 161,798
—
161,798
150,485
—
150,485
Revolving Credit Facility —
—
—
—
—
—
Mortgage warehouse borrowings 61,292
—
61,292
198,564
—
198,564
Total Senior Notes and bank financing $ 1,473,090
$ 10,789
$ 1,462,301
$ 1,599,049
$ 12,516
$ 1,586,533

(2)

~~2021 Senior Notes~~

~~On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021 Senior Notes”).~~

~~The 2021 Senior Notes mature on April 15, 2021. The 2021 Senior Notes~~Unamortized debt issuance costs are guaranteed by TMM Holdings, Taylor Morrison Holdings, Inc., Taylor Morrison Communities II, Inc. and their homebuilding subsidiaries (collectively, the “Guarantors”), which are all subsidiaries directly or indirectly of TMHC. The 2021 Senior Notes and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indenture for the 2021 Senior Notes contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate transactions, (vi) the incurrence of liens, (vii) prohibitions on payments and asset transfers among the issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2021 Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within specified deadlines, we will be required to offer to repurchase the 2021 Senior Notes at par (plus accrued and unpaid interest) with such proceeds. We are also required to offer to repurchase the 2021 Senior Notes at a price equal to 101% of their aggregate principal amount (plus accrued and unpaid interest) upon certain change of control events.

~~The 2021 Senior Notes are redeemable at scheduled redemption prices, currently at 102.625%, of their principal amount (plus accrued and unpaid interest).~~

~~There are no financial maintenance covenants for the 2021 Senior Notes.~~

~~2023 Senior Notes and Redemption of 2020 Senior Notes~~

On April 16, 2015, we issued $350.0 million aggregate principal amount of 5.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes and the related guarantees are senior unsecured obligations and are not subject to registration rights.

The 2023 Senior Notes mature on April 15, 2023. The 2023 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 Senior Notes. The indenture governing the 2023 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions. The indenture governing the 2023 Senior Notes contains events of default that are similar to those containedincluded in the ~~indenture governing~~Prepaid expenses and other assets, net on the ~~2021 Senior Notes.~~ Condensed Consolidated Balance Sheets.

(3)

The change of control provisions in the indenture governing the 2023 Senior Notes are similar to those contained in the indenture governing the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change of control before the repurchase offer requirement is triggered for the 2023 Senior Notes.

Prior to January 15, 2023, the 2023 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through January 15, 2023 (plus accrued and unpaid interest). Beginning January 15, 2023, the 2023 Senior Notes are redeemable at par (plus accrued and unpaid interest).

~~There are no financial maintenance covenants for the 2023 Senior Notes.~~

~~2024 Senior Notes~~

~~On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024 Senior Notes”).~~

~~The 2024 Senior Notes mature on March~~ $1 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 and 2023 Senior Notes. The 2024 Senior Notes and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions similar to the 2023 Senior Notes. The indenture governing the 2024 Senior Notes contains events of default that are similar to those contained in the indenture governing the 2021 and 2023 Senior Notes. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indenture governing the 2023 Senior Notes.

Prior to December 1, 2023, the 2024 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through December 1, 2023 (plus accrued and unpaid interest). Beginning on December 1, 2023, the 2024 Senior Notes are redeemable at par (plus accrued and unpaid interest).

~~There are no financial maintenance covenants for the 2024 Senior Notes.~~

~~Revolving Credit Facility~~

~~Our $500.0 million~~ Billion Revolving Credit Facility ~~matures on April 12, 2019. The~~Agreement together with the $100 Million Revolving Credit Facility ~~is guaranteed by~~Agreement, the ~~same Guarantors that guarantee~~“Revolving Credit Facilities”.

December 31, 2022.

As of June 30, 2023 and December 31, 2022, we had $3.3 million and $3.8 million, respectively, of unamortized debt issuance costs relating to our $1 Billion Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the unaudited Condensed Consolidated Balance Sheets. As of June 30, 2023 and December 31, 2022, we had $71.9 million and $69.2 million, respectively, of utilized letters of credit, resulting in $928.1 million and $930.8 million, respectively, of availability under the $1 Billion Revolving Credit Facility.

The $1 Billion Revolving Credit Facility contains certain “springing” financial covenants, requiring us and our subsidiaries to comply with a maximum debt to capitalization ratio of not more than 0.60 to 1.00 and a minimum consolidated tangible net worth level, currently of at least ~~$1.6~~$3.2 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $1 Billion Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal

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ITEM 1. FINANCIAL STATEMENTS

quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the $1 Billion Revolving Credit Facility in an aggregate amount greater than ~~$40.0~~$40.0 million or unreimbursed letters of credit issued under the $1 Billion Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the $1 Billion Revolving Credit Facility provides that we may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to our capital that will, upon the contribution of such cash, ~~to the borrower,~~ be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall.

The $1 Billion Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, the payment of dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The $1 Billion Revolving Credit Facility contains customary events of

default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control.

As of ~~September~~June 30, ~~2017,~~2023, we were in compliance with all of the covenants under the $1 Billion Revolving Credit Facility.

Mortgage Warehouse Borrowings

As of September 30, 2017
Facility Amount Drawn Facility Amount Interest Rate Expiration Date
Collateral ⁽¹⁾
Flagstar $ 2,703
$ 20,000
LIBOR + 2.5% 30 days written notice Mortgage Loans
Comerica 23,290
50,000
LIBOR + 2.25% November 16, 2017 Mortgage Loans
J.P. Morgan 35,299
100,000
LIBOR + 2.375% September 26, 2018 Mortgage Loans and Pledged Cash
Total $ 61,292
$ 170,000

As of December 31, 2016
Facility Amount Drawn Facility Amount Interest Rate Expiration Date
Collateral ⁽¹⁾
Flagstar $ 37,093
$ 55,000
LIBOR + 2.5% 30 days written notice Mortgage Loans
Comerica 57,875
85,000
LIBOR + 2.25% November 16, 2017 Mortgage Loans
J.P. Morgan 103,596
125,000
LIBOR + 2.375% to 2.5% September 26, 2017 Mortgage Loans and Pledged Cash
Total $ 198,564
$ 265,000

⁽¹⁾The mortgage warehouse borrowings outstanding as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 were collateralized by ~~a) $107.7~~$287.0 million and ~~$233.2~~$346.4 million, respectively, of mortgage loans held for sale, which ~~comprised~~comprise the balance of mortgage loans held for sale, and b) approximately ~~$1.3~~$0.8 million and ~~$1.6~~$2.1 million, respectively, of ~~cash which are included in~~ restricted cash ~~in the accompanying~~on our unaudited Condensed Consolidated Balance Sheets.

(2)

Beginning October 1, 2023, the lender for Warehouse B will discontinue providing mortgage warehouse facility financing to the industry in general. However, the line will not be terminated until all loans are sold or transferred. We expect to replace the liquidity provided by Warehouse B by expanding the size of other facilities, and do not believe the termination of Warehouse B will have a significant impact on our liquidity or mortgage operations.

(3)

We intend on renewing this warehouse facility upon expiration.

Loans payable and other borrowings as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consist of project-level debt due to various land sellers and ~~seller financing notes from current and prior year acquisitions.~~financial institutions for specific projects. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot ~~sales~~closings or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0%0% to 8%9% and 0% to 8% at ~~September~~each of June 30, ~~2017~~2023 and December 31, ~~2016.~~2022, respectively. We impute interest for loans with no stated interest rates.

8. FAIR VALUE DISCLOSURES

~~We have adopted ASC Topic 820,~~ ~~Fair Value Measurements,~~ ~~for valuation of financial instruments.~~

ASC Topic 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.

Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.

Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. ~~The fair value of derivative~~Derivative assets ~~includes~~and liabilities include interest rate lock commitments (“IRLCs”) and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage ~~loan,~~loans, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our mortgage warehouse borrowings, loans payable and other borrowings, and the borrowings under our Revolving Credit ~~Facility~~Facilities approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The fair value of ~~the contingent consideration liability related to previous acquisitions was estimated using~~our Equity Security Investment in a ~~Monte Carlo simulation model under the option pricing method. As the measurement of the contingent consideration~~public company is based ~~primarily on significant inputs not observable~~upon quoted prices for identical assets in ~~the market, it represents a Level 3 measurement.~~an active market. There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of ~~September~~June 30, ~~2017,~~2023, when compared to December 31, ~~2016.~~

The carrying value and fair value of our financial instruments are as follows:


		June 30, 2023						December 31, 2022
(Dollars in thousands)	Level in Fair Value Hierarchy	Carrying Value			Estimated Fair Value			Carrying Value		Estimated Fair Value
Description:
Mortgage loans held for sale	2	$	287,001		$	287,001		$	346,364	$	346,364
IRLCs	3		(77	)		(77	)		2,386		2,386
MBSs	2		1,166			1,166			1,090		1,090
Mortgage warehouse borrowings	2		249,898			249,898			306,072		306,072
Loans payable and other borrowings	2		326,216			326,216			361,486		361,486
5.625% Senior Notes due 2024 (1)	2		349,641			347,375			349,372		347,375
5.875% Senior Notes due 2027 (1)	2		496,937			491,095			496,541		480,060
6.625% Senior Notes due 2027 (1)	2		28,236			26,778			28,380		26,123
5.75% Senior Notes due 2028 (1)	2		447,133			435,119			446,817		421,358
5.125% Senior Notes due 2030 (1)	2		495,510			461,745			495,193		434,330
Equity Security	1		460			460			460		460

September 30, 2017 December 31, 2016
(Dollars in thousands)
Level in Fair
Value Hierarchy

Carrying
Value

Estimated
Fair
Value

Carrying
Value

Estimated
Fair
Value
Description:
Mortgage loans held for sale 2 $ 107,665
$ 107,665
$ 233,184
$ 233,184
Derivative assets 2 2,037
2,037
2,291
2,291
Mortgage warehouse borrowings 2 61,292
61,292
198,564
198,564
Loans payable and other borrowings 2 161,798
161,798
150,485
150,485
5.25% Senior Notes due 2021 ⁽¹⁾
2 545,808
564,465
544,911
563,750
5.875% Senior Notes due 2023 ⁽¹⁾
2 346,857
371,000
346,431
355,250
5.625% Senior Notes due 2024 ⁽¹⁾
2 346,546
364,000
346,142
353,500
Revolving Credit Facility 2 —
—
—
—
Contingent consideration liability 3 5,358
5,358
17,200
17,200

⁽¹⁾Carrying value for Senior Notes, as presented, includes unamortized debt issuance ~~costs.~~costs and premiums. Debt issuance costs are not factored into the fair value calculation for the Senior Notes.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value for our inventories measured at fair value on a nonrecurring ~~basis as of December 31, 2016.~~basis:


(Dollars in thousands)	Level in Fair Value Hierarchy		As of December 31, 2022
Description:
Real estate inventories		3	$	48,360

(Dollars in thousands)
Description: Level in
Fair Value
Hierarchy Fair Value at December 31, 2016
Inventories ⁽¹⁾
3 $ 3,778

⁽¹⁾ ~~During the year ended December 31, 2016, we recorded $3.5 million of impairment charges.~~

As of ~~September~~ June 30, ~~2017,~~2023, the fair value for such inventories was not determined as there were no events and circumstances that indicated their carrying value was not recoverable.

~~10.~~

9. INCOME TAXES

~~Our~~

The effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~30.7%~~25.6% and ~~31.0%~~24.5%, respectively, compared to ~~35.1%~~25.1% and ~~33.8%~~24.5%, respectively, for the same periods in ~~2016, respectively.~~ 2022.

For the three ~~and nine~~ months ended ~~September~~June 30, ~~2017 and 2016,~~2023 the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to stock-based compensation, and amounts attributable to non-controlling interests in joint ventures.

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ITEM 1. FINANCIAL STATEMENTS

For the six months ended June 30, 2023, the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, excess tax benefits related to stock-based compensation, non-deductible executive compensation, and special deductions and credits relating to homebuilding ~~activities, uncertain~~activities. The effective tax ~~positions,~~rate benefited from the extension of the federal §45L energy-efficient homes tax credits. The tax credit provisions were extended and ~~discrete~~modified by the Inflation Reduction Act ("IRA") enacted in August 2022 and applies to homes closed in 2022-2032.

For the three and six months ended June 30, 2022 the effective tax ~~adjustments~~rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to

~~certain deferred~~ stock-based compensation and special deductions and credits relating to prior homebuilding activities.

The IRA also created a 15% corporate alternative minimum tax. The corporate alternative minimum tax ~~assets~~had no material impact on our consolidated financial statements for the three and ~~liabilities.~~

~~At September~~six months ended June 30, ~~2017 and December 31, 2016, we had $12.9 million and $7.8 million of cumulative gross~~2023.

There were no unrecognized tax benefits respectively. All unrecognized tax benefits, if recognized, would affect our effective tax rate. We had $0.9 million and $0.4 million of gross interest and penalties related to unrecognized tax positions accrued as of ~~September~~June 30, ~~2017 and~~2023 or December 31, ~~2016, respectively.~~2022.

~~11.~~

10. STOCKHOLDERS’ EQUITY

Capital Stock — ~~Holders~~

The Company’s authorized capital stock consists of Class A Common Stock and Class B Common Stock are entitled to one vote for each share held on all matters submitted to stockholders for their vote or approval. The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to stockholders for their vote or approval, except with respect to the amendment of certain provisions of the amended and restated Certificate of Incorporation that would alter or change the powers, preferences or special rights of the Class B Common Stock so as to affect them adversely. Such amendments must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise required by applicable law. The voting power of the outstanding Class B Common Stock (expressed as a percentage of the total voting power of all Common Stock) is equal to the percentage of partnership interests in New TMM not held directly or indirectly by TMHC.

During the nine months ended September 30, 2017, we completed multiple sales of our Class A Common Stock in registered public offerings. We used all of the net proceeds from these public offerings to purchase partnership units in New TMM, our direct subsidiary, along with400,000,000 shares of our Class B Common Stock, held by our Principal Equityholders. As a result of net proceeds being distributed to our Principal Equityholders, we adjusted Non-controlling interests - Principal Equityholderscommon stock, par value $0.00001 per share (the “Common Stock”), and ~~Additional paid-in capital on the Condensed Consolidated Balance Sheets to reflect the change in ownership. The aggregate number of partnership units and corresponding~~50,000,000 shares of ~~Class B Common Stock we purchased was equal to the number of shares of Class A Common Stock sold in the public offerings.~~

~~The following is a summary of the completed sales of our Class A Common Stock in registered public offerings.~~

(Shares presented in thousands)
Closing date Number of shares Net purchase price per share
February 6, 2017 11,500
$ 18.2875
March 27, 2017 10,000
20.7800
May 5, 2017 10,000
23.1200
June 27, 2017 10,000
23.3000

~~The components and respective voting power of outstanding TMHC Common Stock including the effects of the secondary offerings at September 30, 2017 are as follows:~~

Shares
Outstanding
Percentage
Class A Common Stock 72,307,299
60.5 %
Class B Common Stock 47,249,127
39.5 %
Total 119,556,426
100 %

preferred stock, par value $0.00001 per share.

Stock Repurchase Program

~~September~~ June 30, ~~2017, we repurchased 195,824~~2022, respectively.

The Inflation Reduction Act was enacted on August 16, 2022 and includes a one percent excise tax on the net repurchase of company stock. This act was effective as of January 1, 2023 and did not have a material impact on our financial statements for ~~$4.1 million . During~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, we repurchased 247,366 and 1,918,999 for $3.8 million and $28.5 million, respectively. As of September 30, 2017, there was $95.9 million available~~2023. We will continue to ~~be used for repurchases.~~assess the impact it may have on our financial results.

~~12.~~

11. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the ~~"Plan"~~“Plan”). The Plan was most recently amended and restated in May ~~2017.~~2022. The Plan provides for the grant of stock options, RSUs, performance-based restricted stock units (“PRSUs”), and other equity-based awards deliverable in shares of our ~~Class A~~ Common Stock. As of ~~September~~June 30, ~~2017,~~2023, we had an aggregate of ~~8,989,860~~5,123,541 shares of ~~Class A~~ Common Stock available for future grants under the Plan.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

The following table provides the outstanding balance of RSUs, PRSUs, and stock options as of June 30, 2023:


	Restricted Stock Units (time and performance)				Stock Options
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Exercise Price Per Share
Balance at June 30, 2023		1,489,690	$	30.20		2,429,418	$	26.50

The following table provides information regarding the amount and components of stock-based compensation expense, all of which is included in ~~general~~General and administrative expenses in the ~~accompanying~~unaudited Condensed Consolidated Statements of Operations (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Restricted stock units (1)	$	4,212	$	4,137	$	10,887	$	9,918
Stock options		1,059		1,141		1,917		2,223
Total stock compensation	$	5,271	$	5,278	$	12,804	$	12,141

(1)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Restricted stock units ⁽¹⁾
$ 2,157
$ 1,810
$ 6,348
$ 4,948
Stock options 1,162
1,056
3,308
3,074
New TMM units 58
176
571
937
Total stock compensation $ 3,377
$ 3,042
$ 10,227
$ 8,959

⁽¹⁾Includes compensation expense related to time-based RSUs and ~~performance-based RSUs. Outstanding performance-based RSUs reflected in the table above are reported at target level of performance.~~PRSUs.

At ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately ~~$23.4~~$38.4 million and ~~$18.8~~$27.1 million, respectively.

~~Restricted Stock Units~~ ~~– The following table summarizes the time-based RSU and performance-based RSU activity for the nine months ended September 30, 2017:~~

Shares
Weighted Average
Grant Date Fair
Value
Balance at December 31, 2016 1,358,701
$ 13.39
Granted 647,354
18.06
Vested (78,221 ) 17.43
Forfeited (53,892 ) 13.95
Balance at September 30, 2017 1,873,942
$ 14.82

~~During the three and nine months ended September 30, 2017, we issued time-based RSU awards and performance-based RSU awards to certain employees and members of the Board of Directors of the Company.~~

Our time-based RSUs consist of awards that settle in shares of Class A Common Stock and have been awarded to our employees and members of our Board of Directors. Vesting of these RSUs is subject to continued employment with TMHC or an affiliate, or continued service on the Board of Directors, through the applicable vesting dates. Time-based RSUs granted to employees generally become vested with respect to 33% of the RSUs on the second, third, and fourth anniversaries of the grant date. Time-based RSUs granted to members of the Board of Directors generally become vested on the first anniversary of the grant date.

Additionally, we issued performance-based RSUs to certain employees of the Company. These awards will vest in full based on the achievement of certain performance goals over a three-year performance period, subject to the employee’s continued employment through the date the Compensation Committee certifies the applicable level of performance achieved and will be settled in shares of our Class A Common Stock. The number of shares that may be issued in settlement of the performance-based RSUs to the award recipients may be greater or lesser than the target award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

~~Stock Options –~~ ~~The following table summarizes the stock option activity for the nine months ended September 30, 2017:~~

Shares
Weighted
Average Exercise
Price Per Share
Outstanding at December 31, 2016 2,431,347
$ 17.09
Granted 790,651
19.05
Exercised (265,167 ) 18.07
Canceled/Forfeited (74,811 ) 18.01
Outstanding at September 30, 2017 2,882,020
$ 17.52
Options exercisable at September 30, 2017 933,259
$ 19.63

Options granted to employees vest and become exercisable ratably on the second, third, fourth and fifth anniversary of the date of grant. Options granted to members of the Board of Directors vest and become exercisable ratably on the first, second and third anniversary of the date of grant. Vesting of the options is subject to continued employment with TMHC or an affiliate, or continued service on the Board of Directors, through the applicable vesting dates, and options expire within ten years from the date of grant.

~~New TMM Units –~~ Certain members of management and certain members of the Board of Directors were issued Class M partnership units in TMM Holdings. Those units were subject to both time and performance vesting conditions.

Pursuant to the Reorganization Transactions, the time-vesting Class M Units in TMM Holdings were exchanged for New TMM Units with vesting terms substantially the same as the Class M Units surrendered for exchange. One New TMM Unit together with a corresponding share of Class B Common Stock is exchangeable for one share of Class A Common Stock. The shares of Class B Common Stock/New TMM Units held by members of management and members of our Board of Directors as of September 30, 2017 were as follows:

Class B Shares/New
TMM Units

Weighted
Average Grant Date
Fair Value
Balance at December 31, 2016 1,146,357
$ 5.58
Exchanges ⁽¹⁾
(191,333 ) 5.36
Forfeited ⁽²⁾
(1,592 ) 8.52
Balance at September 30, 2017 ⁽³⁾
953,432
$ 5.62

⁽¹⁾~~Exchanges during the period represent the exchange of a vested New TMM Unit along with the corresponding share of Class B Common Stock for a newly issued share of Class A Common Stock.~~

⁽²⁾Awards forfeited during the period represent the unvested portion of New TMM Unit awards for employees who have terminated employment with the Company and for which the New TMM Unit and the corresponding Class B Share have been canceled.

⁽³⁾ ~~The number of vested and unexchanged New TMM Units as of~~ ~~September 30, 2017 was 931,462.~~

~~13. RELATED-PARTY TRANSACTIONS~~

From time to time, we may engage in transactions with entities or persons that are affiliated with us or one or more of the Principal Equityholders. Such transactions with related parties are typically conducted in the normal course of operations and are generally executed at arm’s length, as they are entered into at terms comparable to those entered into with unrelated third parties. For the nine months ended September 30, 2017, we engaged in multiple equity offering transactions with our principal equityholders. Refer to ~~Note 11 - Stockholders' Equity~~ for discussion regarding such transactions. During the nine months ended September 30, 2017, we entered into a contract to purchase 140 home lots in Tustin, California for a total purchase price of $30.0 million from Intracorp Companies, which is owned and controlled by a member of the Board of Directors. For the three and nine months ended September 30, 2016 there were no related-party transactions.

~~14. ACCUMULATED OTHER COMPREHENSIVE INCOME~~

The table below provides the components of accumulated other comprehensive income (loss) (“AOCI”) for the periods presented (in thousands). There was no activity in the three months ended September 30, 2017 and 2016, therefore they are not presented.

Nine Months Ended September 30, 2017

Total Post-
Retirement
Benefits
Adjustments

Foreign
Currency
Translation
Adjustments

Non-controlling
Interest - Principal
Equityholders
Reclassification
Total
Balance, beginning of period $ 2,061
$ (79,927 ) $ 59,877
$ (17,989 )
Gross amounts reclassified within accumulated other comprehensive income —
27,968
(27,968 ) —
Balance, end of period $ 2,061
$ (51,959 ) $ 31,909
$ (17,989 )

Nine Months Ended September 30, 2016

Total Post-
Retirement
Benefits
Adjustments

Foreign
Currency
Translation
Adjustments

Non-controlling
Interest - Principal
Equityholders
Reclassification
Total
Balance, beginning of period $ 2,305
$ (79,927 ) $ 59,625
$ (17,997 )
Other comprehensive income before reclassifications (447 ) —
—
(447 )
Other comprehensive income, net of tax $ (447 ) $ —
$ —
$ (447 )
Gross amounts reclassified within accumulated other comprehensive income —
—
329
329
Balance, end of period $ 1,858
$ (79,927 ) $ 59,954
$ (18,115 )

~~Reclassifications for the amortization of the employee retirement plans are included in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations.~~

~~15.~~

12. REPORTING SEGMENTS

We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling ~~those~~ homes, and providing warranty and customer service. We aggregate our homebuilding operating components into three reporting segments, East, Central, and West, based on similar long-term economic characteristics. The activity from our Build-to-Rent and Urban Form operations are included in our Corporate segment. We also have a ~~mortgage and title services~~Financial Services reporting segment. We have no inter-segment sales as all sales are to external customers.

During the quarter ended March 31, 2017, we realigned our homebuilding operating divisions within our existing segments based on geographic location and management's long term strategic plans. As a result, all historical periods presented in the segment information have been reclassified to give effect to this segment realignment.

Our reporting segments are as follows:



East		Atlanta, Charlotte, ~~Chicago,~~Jacksonville, Naples, Orlando, Raleigh, ~~Southwest Florida~~Sarasota, and Tampa
Central		Austin, Dallas, Denver, and Houston ~~(both include a Taylor Morrison division and a Darling Homes division) and Denver~~
West		Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
~~Mortgage Operations~~ Financial Services		Taylor Morrison Home Funding, ~~and~~ Inspired Title Services, and Taylor Morrison Insurance Services

Segment information is as follows (in thousands):


	Three Months Ended June 30, 2023
	East			Central			West			Financial Services			Corporate and Unallocated(1)			Total
Total revenue	$	740,064		$	623,207		$	652,257		$	41,914		$	3,122		$	2,060,564
Gross margin		203,165			160,485			119,113			16,572			350			499,685
Selling, general and administrative expenses		(47,904	)		(45,390	)		(47,101	)		(91	)		(43,197	)		(183,683	)
Net income/(loss) from unconsolidated entities		—			100			(173	)		3,259			—			3,186
Interest and other (expense)/income, net (2)		(1,136	)		(1,520	)		(3,007	)		—			2,234			(3,429	)
Income/(loss) before income taxes	$	154,125		$	113,675		$	68,832		$	19,740		$	(40,613	)	$	315,759

(1)

Includes the activity from our Build-To-Rent and Urban Form operations.

(2)

Interest and other income/(expense), net includes pre-acquisition write-offs of terminated projects.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 1. FINANCIAL STATEMENTS


	Three Months Ended June 30, 2022
	East			Central			West			Financial Services		Corporate and Unallocated(1)			Total
Total revenue	$	635,862		$	457,512		$	832,274		$	35,471	$	33,904		$	1,995,023
Gross margin		174,535			117,356			222,687			13,988		12,914			541,480
Selling, general and administrative expenses		(44,589	)		(33,499	)		(42,374	)		—		(45,080	)		(165,542	)
Net (loss)/income from unconsolidated entities		—			(39	)		(5,793	)		2,195		—			(3,637	)
Interest and other income/(expense), net (2)		10,110			(1,076	)		(3,703	)		—		494			5,825
Gain on extinguishment of debt, net		—			—			—			—		13,471			13,471
Income/(loss) before income taxes	$	140,056		$	82,742		$	170,817		$	16,183	$	(18,201	)	$	391,597

(1)

Includes the activity from our Build-To-Rent and Urban Form operations.

(2)

Interest and other income/(expense), net includes pre-acquisition write-offs of terminated projects.


	Six Months Ended June 30, 2023
	East			Central			West			Financial Services			Corporate and Unallocated(1)			Total
Total revenue	$	1,350,877		$	1,088,219		$	1,200,162		$	77,063		$	6,100		$	3,722,421
Gross margin		368,872			271,798			227,741			29,573			1,267			899,251
Selling, general and administrative expenses		(90,951	)		(82,346	)		(87,585	)		(91	)		(81,731	)		(342,704	)
Net income/(loss) from unconsolidated entities		—			19			(408	)		5,534			(30	)		5,115
Interest and other (expense)/income, net(2)		(2,348	)		(2,861	)		772			—			6,953			2,516
Income/(loss) before income taxes	$	275,573		$	186,610		$	140,520		$	35,016		$	(73,541	)	$	564,178

(1)

Includes the activity from our Build-To-Rent and Urban Form operations

(2)

Interest and other income/(expense), net includes pre-acquisition write-offs of terminated projects.

(3)


	Six Months Ended June 30, 2022
	East			Central			West			Financial Services		Corporate and Unallocated(1)			Total
Total revenue	$	1,160,983		$	828,247		$	1,602,484		$	70,670	$	35,763		$	3,698,147
Gross margin		300,226			191,364			404,218			24,973		13,827			934,608
Selling, general and administrative expenses		(84,915	)		(62,939	)		(85,893	)		—		(89,060	)		(322,807	)
Net income/(loss) from unconsolidated entities		—			46			(6,105	)		4,253		0			(1,806	)
Interest and other income/(expense), net(2)		9,678			(2,936	)		(5,669	)		—		(42	)		1,031
Gain on extinguishment of debt, net		—			—			—			—		13,471			13,471
Income/(loss) before income taxes	$	224,989		$	125,535		$	306,551		$	29,226	$	(61,804	)	$	624,497

Three Months Ended September 30, 2017
East Central West
Mortgage
Operations

Corporate
and
Unallocated
Total
Total revenues $ 312,539
$ 256,842
$ 321,167
$ 17,479
$ —
$ 908,027

Gross margin 63,188
47,797
54,924
5,409
—
171,318
Selling, general and administrative expenses (28,469 ) (25,108 ) (19,087 ) —
(22,186 ) (94,850 )
Equity in income of unconsolidated entities —
693
924
1,170
—
2,787
Interest and other (expense)/income, net (7 ) (87 ) 46
—
(232 ) (280 )
Income/(loss) before income taxes $ 34,712
$ 23,295
$ 36,807
$ 6,579
$ (22,418 ) $ 78,975

(1)

Includes the activity from our Build-To-Rent and Urban Form operations.

Three Months Ended September 30, 2016
East Central West
Mortgage
Operations

Corporate
and
Unallocated
Total
Total revenues $ 288,639
$ 273,095
$ 277,869
$ 13,814
$ —
$ 853,417

Gross margin 70,026
51,267
51,624
5,937
—
178,854
Selling, general and administrative expenses (26,866 ) (24,842 ) (18,507 ) —
(18,006 ) (88,221 )
Equity in income of unconsolidated entities 132
331
319
864
—
1,646
Interest and other (expense)/income, net (1,260 ) (1,148 ) 162
4
354
(1,888 )
Income/(loss) before income taxes $ 42,032
$ 25,608

$ 33,598

$ 6,805

$ (17,652 )
$ 90,391

(2)

Interest and other income/(expense), net includes pre-acquisition write-offs of terminated projects.

Includes the assets from our Build-To-Rent and Urban Form operations.

Nine Months Ended September 30, 2016
East Central West
Mortgage
Operations

Corporate
and
Unallocated
Total
Total revenues $ 737,550
$ 767,825
$ 810,736
$ 36,951
$ —
$ 2,353,062

Gross margin 161,437
138,647
142,806
14,357
—
457,247
Selling, general and administrative expenses (76,027 ) (71,727 ) (54,276 ) —
(54,348 ) (256,378 )
Equity in income of unconsolidated entities 440
110
1,303
2,881
—
4,734
Interest and other (expense)/income, net (3,821 ) (3,140 ) (250 ) 14
(1,256 ) (8,453 )
Income/(loss) before income taxes $ 82,029
$ 63,890
$ 89,583
$ 17,252
$ (55,604 ) $ 197,150

Includes the assets from our Build-To-Rent and Urban Form operations.

As of September 30, 2017
East Central West
Mortgage
Operations

Corporate
and
Unallocated
Total
Real estate inventory and land deposits $ 1,236,731
$ 906,024
$ 1,151,895
$ —
$ —
$ 3,294,650
Investments in unconsolidated entities 27,593
32,695
120,914
3,615
—
184,817
Other assets 58,004
126,162
51,277
153,728
448,690
837,861
Total assets $ 1,322,328
$ 1,064,881
$ 1,324,086
$ 157,343
$ 448,690
$ 4,317,328

As of December 31, 2016
East Central West
Mortgage
Operations

Corporate
and
Unallocated
Total
Real estate inventory and land deposits $ 1,110,340
$ 829,354
$ 1,114,758
$ —
$ —
$ 3,054,452
Investments in unconsolidated entities 25,923
30,146
98,625
3,215
—
157,909
Other assets 80,320
139,383
43,304
269,131
476,427
1,008,565
Total assets $ 1,216,583
$ 998,883
$ 1,256,687
$ 272,346
$ 476,427
$ 4,220,926

~~16.~~

13. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit and surety bonds under these arrangements totaled ~~$317.8 million and $302.8 million~~$1.3 billion as of ~~September~~June 30, ~~2017~~2023 and $1.2 billion as of December 31, ~~2016, respectively.~~2022. Although significant development and construction activities have been completed related to these site improvements, the bonds are generally not released until all development and construction activities are completed. We do not believe that it is probable that any outstanding bonds as of ~~September~~June 30, ~~2017~~2023 will be drawn upon.

Purchase Commitments —We are subject to the usual obligations associated with entering into contracts (including land option contracts and land banking arrangements) for the purchase, development, and sale of real estate in the routine conduct of our business. We have a number of land purchase option contracts and land banking agreements, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property and the property owner and its creditors generally have no recourse. Our obligations with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits. At June 30, 2023 and December 31, 2022, the aggregate purchase price for land under these contracts was $1.4 billion and $1.5 billion, respectively.

Legal Proceedings — We are involved in various litigation and legal claims in the normal course of ~~our~~ business, ~~operations,~~ including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations.

We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss iscan be reasonably ~~estimable.~~estimated. At ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, our legal accruals were ~~$2.7~~$19.0 million and ~~$4.4~~$20.6 million, respectively. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. ~~In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict~~Predicting the ultimate resolution of the pending matters, the related timing, or the eventual ~~loss.~~loss associated with these matters is inherently difficult. Accordingly, the liability arising from the ultimate resolution of any matter may exceed the estimate reflected in the recorded reserves relating to such matter. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. ~~However,~~

On April 26, 2017, a class action complaint was filed in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida by Norman Gundel, William Mann, and Brenda Taylor against Avatar Properties, Inc. (an acquired AV Homes entity), generally alleging that our collection of club membership fees in connection with the use of one of our amenities in our East homebuilding segment violates various laws relating to homeowner associations and other Florida-specific laws. The class action complaint seeks an injunction to prohibit future collection of club membership fees. On November 2, 2021, the trial court determined that the club membership fees were improper and that plaintiffs were entitled to $35.0 million in fee reimbursements. We appealed the court’s ruling to the ~~extent~~Sixth District Court of Appeal on November 29, 2021, and on June 23, 2023 the ~~liability arising from~~District Court affirmed the trial court judgment in a split decision, with three separate opinions. Recognizing the potential “far-reaching effects on homeowners associations throughout the State,” the District Court certified a question of great public importance to the Florida Supreme Court. We have since filed a notice to invoke the discretionary review of the Florida Supreme Court.

Plaintiffs have agreed to continue to pay club membership fees pending the outcome of the appeal to the Florida Supreme Court. We believe, based on our assessment and the opinion of external legal counsel, that the trial and District Court’s legal interpretation constitutes legal error and the courts incorrectly ruled on this matter. In accordance with ASC Topic 450, Contingencies, we evaluated the range of loss and the likelihood of each potential amount of loss within the range.

While the ultimate ~~resolution~~outcome and the costs associated with litigation are inherently uncertain and difficult to predict, in evaluating the potential outcomes, we believe the more likely outcome is that we win the appeal to the Florida Supreme Court. This belief is based on our review of ~~any matter exceeds~~ the ~~estimates reflected~~legal merit of the judgment and the opinions of the trial and District Courts, as well as the opinion of external legal counsel. Accordingly, in assessing the range of possible loss, we believe the more likely outcome is that we win on appeal to the Florida Supreme Court and will have zero liability.

~~17.~~

14. MORTGAGE HEDGING ACTIVITIES

We enter into IRLCs to originate residential mortgage loans held for sale, at specified interest rates and within a specified period of time (generally between 30 and 60 days), with customers who have applied for a loan and meet certain credit and underwriting criteria. These IRLCs meet the definition of a derivative and are reflected on the balance sheet at fair value with changes in fair value recognized in mortgage operations revenue/expenses on the statement of operations and other comprehensive income. Unrealized gains and losses on the IRLCs, reflected as derivative assets, are measured based on the fair value of the underlying mortgage loan, quoted Agency MBS prices, estimates of the fair value of the mortgage servicing rights (“MSRs”) and the probability that the mortgage loan will fund within the terms of the IRLC, net of commission expense and broker fees. The fair value of the forward loan sales commitment and mandatory delivery commitments being used to hedge the IRLCs and mortgage loans held for sale not committed to be purchased by investors are based on quoted Agency MBS prices.

The following summarizes derivative instrument assets (liabilities) as of the periods presented:

The notional amounts in the table above include mandatory and best effort mortgages, that have been locked and approved.

As of
September 30, 2017 December 31, 2016
(Dollars in thousands) Fair Value Notional Amount Fair Value Notional Amount
IRLCs $ 1,752
$ 75,739
$ 1,987
$ 61,655
MBSs 285
101,000
304
97,000
Total $ 2,037
$ 2,291

Total commitments to originate loans approximated ~~$119.7~~$307.4 million and $419.6 million as of ~~September~~June 30, ~~2017.~~2023 and December 31, 2022, respectively. This amount represents the commitments to originate ~~loans for both best efforts and mandatory~~ loans that have been locked and approved by underwriting. The notional ~~amount~~amounts in the table above includes ~~only~~ mandatory and best effort loans that have been locked and approved by underwriting.

We have exposure to credit loss in the event of contractual non-performance by our trading counterparties in derivative instruments that we use in our rate risk management activities. We manage this credit risk by selecting only counterparties that we believe to be financially strong, spreading the risk among multiple counterparties, by placing contractual limits on the amount of unsecured credit extended to any single counterparty, and by entering into netting agreements with counterparties, as appropriate. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon.

TAYLOR MORRISON HOME CORPORATION 10-Q

~~18. SUBSEQUENT EVENTS~~

~~On October 12, 2017 we completed the purchase~~Table of 112 acres of land in South Carolina for $10.5 million. The land was purchased from IOTA Doby Bridge, LLC which is managed and partly owned by Gibralter Capital and Asset Managment, LLC, a fund managed by one of our principal equityholders, Oaktree Capital.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For purposes of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “we,” “us,” or “our” refer to Taylor Morrison Home Corporation (“TMHC”) and its subsidiaries. The Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements included elsewhere in this quarterly report.

Forward-Looking Statements

This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our ~~or management’s~~ intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business and operations strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “can,” “could,” “might,” “project” or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016 (the “Annual~~2022 (“Annual Report”) ~~filed~~and in our subsequent filings with the U.S. Securities and Exchange Commission ~~(“SEC”~~(the “SEC”). Although we believe that these forward-looking statements are based upon reasonable assumptions and currently available information, you should be aware that many factors, including those described under the heading “Risk Factors” in the Annual Report and in our subsequent filings with the SEC, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.

Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except as required by applicable law.

Our principal business is residential homebuilding and the development of lifestyle communities with operations ~~in Arizona, California, Colorado, Florida, Georgia, Illinois, North Carolina and Texas. Our Company serves~~across 11 states. We provide an assortment of homes across a wide range of price points to appeal to an array of consumer ~~groups from coast to coast,~~groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up, and resort-lifestyle buyers. We operate under various brand names including ~~first time, move-up, luxury and 55 plus buyers. Our homebuilding business operates under our~~Taylor Morrison, Darling Homes Collection by Taylor Morrison, and ~~Darling Homes~~Esplanade. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand ~~names.~~name. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand name. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, TMHF, title services through our wholly owned title services subsidiary, Inspired Title, and homeowner’s insurance policies through our wholly owned insurance agency, TMIS. Our business as of June 30, 2023 is organized into multiple homebuilding operating components, and a ~~mortgage operating~~financial services component, all of which are managed as four reportable segments: East, Central, West and ~~Mortgage Operations,~~Financial Services, as follows:



East		Atlanta, Charlotte, ~~Chicago,~~Jacksonville, Naples, Orlando, Raleigh, ~~Southwest Florida~~Sarasota, and Tampa
Central		Austin, Dallas, Denver, and Houston ~~(both include a Taylor Morrison division and a Darling Homes division), and Denver~~
West		Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
~~Mortgage Operations~~ Financial Services		Taylor Morrison Home Funding, (“~~TMHF~~”~~) and~~ Inspired Title Services, ~~LLC (~~“~~Inspired Title~~”) and Taylor Morrison Insurance Services

~~During the quarter ended March 31, 2017,~~

As of June 30, 2023, we ~~realigned our~~employed approximately 2,700 full-time equivalent persons. Of these, approximately 2,300 were engaged in corporate and homebuilding operating divisions within our existing segments based on geographic location and management's long term strategic plans. As a result, all historical periods presented in the segment information have been reclassified to give effect to this segment realignment.

We offer single family attached and detached homes, and revenue is recognized when the homes are completed and delivered to the buyers. Our primary costs are the acquisition of land in various stages of developmentoperations, and the ~~construction costs~~remaining approximately 400 were engaged in financial services.

Factors Affecting Comparability of Results

For the ~~homes~~three and six months ended June 30, 2022, we ~~sell.~~

Our Mortgage Operations reportable segment provides mortgage services to customers through our wholly owned mortgage subsidiary, TMHF, and title services through our wholly owned title services subsidiary, Inspired Title. Revenues from loan origination are recognized ~~at the time the related real estate transactions are completed, usually upon the close of escrow.~~

~~Recent Developments~~

During the third quarter of 2017, our results of operations were affected by two hurricanes, Harvey and Irma, which primarily impacted our divisional operations in Houston and certain areas of Florida. As a ~~result, approximately 40% of our communities were closed for at least a week and~~$13.7 million gain on land development and construction were delayed by approximately two to three weeks, putting downward pressure on sales and absorption pace for the third quarter. As a result of the storms, we estimate that 130 home closings were pushed out of the third quarter of 2017, reducing our homebuilding revenue on a period over period comparative basis.

Actual storm remediation costs incurred in the third quarter of 2017 were immaterial, however, additional costs are expected to be incurred in the fourth quarter and early part of 2018. We believe most of these costs will be covered by insurance. We also expect the storms to have a future impact on materials and labor, as these resources become constrained, which will addtransfers relating to our ~~construction inventory costs.~~

~~Third Quarter 2017 Highlights:~~

~~Key financial results as~~unconsolidated joint ventures which is included in Other expense/(income), net on the Condensed Consolidated Statements of ~~and~~Operations. In addition, for the three and six months ended ~~September~~June 30, ~~2017, as compared~~2022, we recognized a $13.5 million net gain on extinguishment of debt relating to our

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partial redemption of the ~~same period~~6.625% Senior Notes due 2027 which is included in ~~2016,~~Gain on extinguishment of debt, net on our Condensed Consolidated Statements of Operations. We did not recognize similar gains for the three or six months ended June 30, 2023.

Second Quarter 2023 Highlights(all comparisons are ~~as follows:~~

•

Closings increased 3% to 3,125 homes at an average price of $639,000, which generated home closings revenue of $2.0 billion.

~~Total revenue was $908 million, a 6% increase from the prior year quarter~~

~~GAAP home~~Home closings gross margin ~~inclusive~~declined 240 basis points year over year but increased 30 basis points sequentially to 24.2%.

•

Net sales orders increased 18% to 3,023, driven by a monthly absorption pace of ~~capitalized interest, was 18.6%~~3.1 per community versus 2.6 a year ago.

~~Net income for~~•

Ended the quarter with approximately 72,000 homebuilding lots owned and controlled, representing 5.8 years of total supply, of which 3.3 years was ~~$54 million~~owned.

•

Total liquidity reached an all-time high of $2.3 billion.

•

Homebuilding debt-to-capitalization declined to 29.7% on a gross basis and 15.4% net of $1.2 billion of unrestricted cash.

•

The Company’s credit rating was upgraded by Moody’s to Ba2 from Ba3 with ~~diluted earnings~~a Stable outlook.

•

Book value per share ~~of $0.45~~increased 30% to $45.96.

~~Backlog units at the end of the quarter were 4,359 with a sales value of $2.1 billion, a 13% increase from the prior year quarter~~

Results of Operations

The following table sets forth our results of operations for the periods presented:

Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017
(Dollars in thousands)
2017 2016 2017 2016
Statements of Operations Data:
Home closings revenue, net $ 886,249
$ 812,185
$ 2,526,830
$ 2,271,154
Land closings revenue 4,299
27,418
11,419
44,957
Mortgage operations revenue 17,479
13,814
47,362
36,951
Total revenues 908,027
853,417
2,585,611
2,353,062
Cost of home closings 721,637
658,507
2,062,437
1,852,724
Cost of land closings 3,002
8,179
7,869
20,497
Mortgage operations expenses 12,070
7,877
30,874
22,594
Gross margin 171,318
178,854
484,431
457,247
Sales, commissions and other marketing costs 61,476
58,277
178,609
165,300
General and administrative expenses 33,374
29,944
100,396
91,078
Equity in income of unconsolidated entities (2,787 ) (1,646 ) (6,943 ) (4,734 )
Interest income, net (135 ) (47 ) (314 ) (149 )
Other expense, net 415
1,935
828
8,602
Income before income taxes 78,975
90,391
211,855
197,150
Income tax provision 24,282
31,707
65,631
66,698
Net income before allocation to non-controlling interests 54,693
58,684
146,224
130,452
Net income attributable to non-controlling interests – joint ventures (427 ) (376 ) (625 ) (856 )
Net income before non-controlling interests – Principal Equityholders 54,266
58,308
145,599
129,596
Net income from continuing operations attributable to non-controlling interests – Principal Equityholders (21,390 ) (43,471 ) (76,810 ) (96,261 )
Net income available to Taylor Morrison Home Corporation $ 32,876
$ 14,837
$ 68,789
$ 33,335
Home closings gross margin 18.6 % 18.9 % 18.4 % 18.4 %
Sales, commissions and other marketing costs as a percentage of home closings revenue 6.9 % 7.2 % 7.1 % 7.3 %
General and administrative expenses as a percentage of home closings revenue 3.8 % 3.7 % 4.0 % 4.0 %
Average sales price per home closed $ 481
$ 468
$ 474
$ 459


	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023			2022			2023			2022
Statements of Operations Data:
Home closings revenue, net	$	1,996,747		$	1,883,020		$	3,609,342		$	3,527,429
Land closings revenue		12,628			36,816			17,148			52,426
Financial services revenue		41,914			35,471			77,063			70,670
Amenity and other revenue		9,275			39,716			18,868			47,622
Total revenue		2,060,564			1,995,023			3,722,421			3,698,147
Cost of home closings		1,514,237			1,381,610			2,741,750			2,646,584
Cost of land closings		12,703			24,204			17,048			38,568
Financial services expenses		25,342			21,483			47,490			45,697
Amenity and other expenses		8,597			26,246			16,882			32,690
Total cost of revenue		1,560,879			1,453,543			2,823,170			2,763,539
Gross margin		499,685			541,480			899,251			934,608
Sales, commissions and other marketing costs		113,034			96,135			205,794			185,258
General and administrative expenses		70,649			69,407			136,910			137,549
Net (income)/loss from unconsolidated entities		(3,186	)		3,637			(5,115	)		1,806
Interest (income)/expense, net		(5,120	)		5,189			(6,231	)		9,441
Other expense/(income), net		8,549			(11,014	)		3,715			(10,472	)
Gain on extinguishment of debt, net		—			(13,471	)		—			(13,471	)
Income before income taxes		315,759			391,597			564,178			624,497
Income tax provision		80,854			98,443			138,045			152,882
Net income before allocation to non-controlling interests		234,905			293,154			426,133			471,615
Net income attributable to non-controlling interests		(303	)		(2,167	)		(480	)		(3,925	)
Net income available to Taylor Morrison Home Corporation	$	234,602		$	290,987		$	425,653		$	467,690
Home closings gross margin		24.2	%		26.6	%		24.0	%		25.0	%
Sales, commissions and other marketing costs as a percentage of home closings revenue, net		5.7	%		5.1	%		5.7	%		5.3	%
General and administrative expenses as a percentage of home closings revenue, net		3.5	%		3.7	%		3.8	%		3.9	%

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we provide our investors with supplemental information relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) adjusted home closings gross margin; (iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to capitalization ratio.

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Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding, to the extent applicable in a given period, the impact of inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers and extinguishment of debt, net, and in the case of adjusted net income and adjusted earnings per common share, the tax impact due to such items. EBITDA and Adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude, as applicable, interest expense/(income), net, amortization of capitalized interest, income taxes, depreciation and amortization (EBITDA), non-cash compensation expense, if any, inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, gains/losses on land transfers and extinguishment of debt, net. Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, plus unamortized debt issuance cost/(premium), net, and less mortgage warehouse borrowings, net of unrestricted cash and cash equivalents (“net homebuilding debt”), by (ii) total capitalization (the sum of net homebuilding debt and total stockholders’ equity). Adjusted home closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges.

Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our regions, and to set targets for performance-based compensation. We also use the ratio of net homebuilding debt to total capitalization as an indicator of overall leverage and to evaluate our performance against other companies in the homebuilding industry. In the future, we may include additional adjustments in the above-described non-GAAP financial measures to the extent we deem them appropriate and useful to management and investors.

We believe that adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, as well as EBITDA and adjusted EBITDA, are useful for investors in order to allow them to evaluate our operations without the effects of various items we do not believe are characteristic of our ongoing operations or performance and also because such metrics assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted EBITDA also provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, or unusual items. Because we use the ratio of net homebuilding debt to total capitalization to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. We believe that adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the varying effects of items or transactions we do not believe are characteristic of our ongoing operations or performance.

These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures of our operating performance or liquidity. Although other companies in the homebuilding industry may report similar information, their definitions may differ. We urge investors to understand the methods used by other companies to calculate similarly-titled non-GAAP financial measures before comparing their measures to ours.

A reconciliation of (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) EBITDA and adjusted EBITDA and (iv) net homebuilding debt to capitalization ratio to the comparable GAAP measures is presented below. Because the company did not experience any material adjustments applicable to adjusted home closings gross margin during the periods presented that would cause such measure to differ from the comparable GAAP measure, such measure has not been separately presented herein.

Adjusted Net Income and Adjusted Earnings Per Common Share


	Three Months Ended June 30,
(Dollars in thousands, except per share data)	2023		2022
Net income available to TMHC	$	234,602	$	290,987
Gain on land transfers		—		(13,700	)
Gain on extinguishment of debt, net		—		(13,471	)
Tax impact due to above non-GAAP reconciling items		—		6,749
Adjusted net income	$	234,602	$	270,565
Basic weighted average number of shares		109,210		117,932
Adjusted earnings per common share - Basic	$	2.15	$	2.29
Diluted weighted average number of shares		110,856		118,931
Adjusted earnings per common share - Diluted	$	2.12	$	2.27

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Adjusted Income Before Income Taxes and Related Margin


	Three Months Ended June 30,
(Dollars in thousands)	2023			2022
Income before income taxes	$	315,759		$	391,597
Gain on land transfers		—			(13,700	)
Gain on extinguishment of debt, net		—			(13,471	)
Adjusted income before income taxes	$	315,759		$	364,426
Total revenue	$	2,060,564		$	1,995,023
Income before income taxes margin		15.3	%		19.6	%
Adjusted income before income taxes margin		15.3	%		18.3	%

EBITDA and Adjusted EBITDA Reconciliation


	Three Months Ended June 30,
(Dollars in thousands)	2023			2022
Net income before allocation to non-controlling interests	$	234,905		$	293,154
Interest (income)/expense, net		(5,120	)		5,189
Amortization of capitalized interest		37,352			33,420
Income tax provision		80,854			98,443
Depreciation and amortization		1,540			1,442
EBITDA	$	349,531		$	431,648
Non-cash compensation expense		5,271			5,278
Gain on land transfers		—			(13,700	)
Gain on extinguishment of debt, net		—			(13,471	)
Adjusted EBITDA	$	354,802		$	409,755
Total revenue	$	2,060,564		$	1,995,023
Net income before allocation to non-controlling interests as a percentage of total revenue		11.4	%		14.7	%
EBITDA as a percentage of total revenue		17.0	%		21.6	%
Adjusted EBITDA as a percentage of total revenue		17.2	%		20.5	%

Net Homebuilding Debt to Capitalization Ratio Reconciliation


(Dollars in thousands)	As of June 30, 2023			As of March 31, 2023			As of June 30, 2022
Total debt	$	2,393,571		$	2,301,878		$	2,950,744
Plus: unamortized debt issuance cost, net		9,613			10,193			11,891
Less: mortgage warehouse borrowings	$	(249,898	)		(146,334	)		(179,555	)
Total homebuilding debt	$	2,153,286		$	2,165,737		$	2,783,080
Total equity		5,095,313			4,846,546			4,193,895
Total capitalization	$	7,248,599		$	7,012,283		$	6,976,975
Total homebuilding debt to capitalization ratio		29.7	%		30.9	%		39.9	%
Total homebuilding debt	$	2,153,286		$	2,165,737		$	2,783,080
Less: cash and cash equivalents		(1,227,264	)		(877,717	)		(378,340	)
Net homebuilding debt	$	926,022		$	1,288,020		$	2,404,740
Total equity		5,095,313			4,846,546			4,193,895
Total capitalization	$	6,021,335		$	6,134,566		$	6,598,635
Net homebuilding debt to capitalization ratio		15.4	%		21.0	%		36.4	%

Three and ~~Nine Months Ended September~~six months ended June 30, ~~2017 Compared~~2023 compared to ~~Three~~three and ~~Nine Months Ended September~~six months ended June 30, ~~2016~~

~~Average~~2022

Our results continue to be impacted by various macroeconomic conditions. Demand for housing increased significantly beginning in the second half of 2020 and, simultaneously, the industry experienced significant labor and supply shortages. As a result, we saw market price appreciation across many of our markets as well as an increase in housing costs and extended build cycle times. At a macro level, inflation continued to rise and the Federal Reserve took action to slow inflation by increasing interest rates. We believe the increase in mortgage interest rates created affordability constraints for some consumers and reduced overall consumer confidence. While the three and six months ended June 30, 2022 benefited from the increased housing demand and significant price appreciation, the results in more recent quarters were negatively impacted. During the second half of 2022, our net sales orders began to slow which also negatively impacted sales order backlog and our cancellations increased. In response, we began to adjust pricing, primarily by offering finance incentives, as well as home discounts and other pricing reductions. These pricing adjustments helped to drive an increase in sales orders and a gradual normalization in cancellations beginning in 2023. Operational information related to each period is presented below:

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Ending Active Selling Communities

Three Months Ended September 30,
2017 2016 Change
East 130
132
(1.5 )%
Central 118
116
1.7
West 45
61
(26.2 )
Total 293
309
(5.2 )%

Nine Months Ended September 30,
2017 2016 Change
East 127
131
(3.1 )%
Central 118
118
—
West 51
63
(19.0 )
Total 296
312
(5.1 )%

~~Average~~


	As of June 30,				Change
	2023		2022
East		103		117		(12.0	)%
Central		103		104		(1.0	)%
West		121		102		18.6	%
Total		327		323		1.2	%

The total ending active selling communities ~~for the three and nine months ended September~~increased by 1.2% at June 30, ~~2017 decreased by 5.2% and 5.1%, respectively, when~~2023 compared to ~~the same periods in the prior year.~~June 30, 2022. The ~~decreases were primarily driven by our West region, which experienced higher sales orders resulting in an~~ increase in the ~~number of close outs~~West was due to several master planned community openings, which was partially offset by community closeouts in the three months ended September 30, 2017, compared to the prior year. For the nine months ended September 30, 2017, the decrease in average active selling communities was also due to higher than expected netEast region.

Net Sales Orders


	Three Months Ended June 30,
	Net Sales Orders (1)							Sales Value (1)							Average Selling Price
(Dollars in thousands)	2023		2022		Change			2023		2022		Change			2023		2022		Change
East		1,047		1,121		(6.6	)%	$	582,944	$	730,495		(20.2	)%	$	557	$	652		(14.6	)%
Central		808		642		25.9	%		489,142		443,146		10.4	%		605		690		(12.3	)%
West		1,168		791		47.7	%		782,046		610,932		28.0	%		670		772		(13.2	)%
Total		3,023		2,554		18.4	%	$	1,854,132	$	1,784,573		3.9	%	$	613	$	699		(12.3	)%


	Six Months Ended June 30,
	Net Sales Orders (1)							Sales Value (1)							Average Selling Price
(Dollars in thousands)	2023		2022		Change			2023		2022		Change			2023		2022		Change
East		2,126		2,148		(1.0	)%	$	1,227,463	$	1,336,705		(8.2	)%	$	577	$	622		(7.2	)%
Central		1,482		1,529		(3.1	)%		873,972		1,026,426		(14.9	)%		590		671		(12.1	)%
West		2,269		1,931		17.5	%		1,538,390		1,506,663		2.1	%		678		780		(13.1	)%
Total		5,877		5,608		4.8	%	$	3,639,825	$	3,869,794		(5.9	)%	$	619	$	690		(10.3	)%

(1)

Net sales orders ~~in the first~~ and ~~second quarters of 2017, resulting in an increase in community close outs. The timing of new community openings in our East region and higher than expected net~~ sales order pace also led to increased community close-outs in the three and nine months ended September 30, 2017. During the period from October 2016 to September 2017, we closed approximately 70 communities and opened approximately 50 communities throughout the Company.

~~Net Sales Orders~~

Three Months Ended September 30,

Net Sales Orders ⁽¹⁾

Sales Value ⁽¹⁾
Average Selling Price
(Dollars in thousands) 2017 2016 Change 2017 2016 Change 2017 2016 Change
East 777
795
(2.3 )% $ 302,795
$ 302,363
0.1 % $ 390
$ 380
2.6 %
Central 521
550
(5.3 ) 247,084
261,971
(5.7 ) 474
476
(0.4 )
West 463
605
(23.5 ) 300,815
354,281
(15.1 ) 650
586
10.9
Total 1,761
1,950
(9.7 )% $ 850,694
$ 918,615
(7.4 )% $ 483
$ 471
2.5 %

Nine Months Ended September 30,

Net Sales Orders ⁽¹⁾

Sales Value ⁽¹⁾
Average Selling Price
(Dollars in thousands) 2017 2016 Change 2017 2016 Change 2017 2016 Change
East 2,923
2,388
22.4 % $ 1,132,839
$ 919,861
23.2 % $ 388
$ 385
0.8 %
Central 1,826
1,599
14.2
864,797
753,454
14.8
474
471
0.6
West 1,813
1,816
(0.2 ) 1,088,661
1,012,717
7.5
600
558
7.5
Total 6,562
5,803
13.1 % $ 3,086,297
$ 2,686,032
14.9 % $ 470
$ 463
1.5 %

⁽¹⁾~~Net sales orders~~value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.

~~East:~~

~~The number of net~~

Net sales orders ~~decreased by 2.3%, while the sales value of homes remained relatively flat,~~increased 18.4% for the three months ended ~~September~~June 30, ~~2017~~2023 and 4.8% for the six months ended June 30, 2023, compared to the same periods in the prior ~~year.~~year, respectively. The ~~decrease~~increase in ~~units~~net sales orders was primarily driven by our West region as a result of new community openings. Average selling prices decreased for both the three and six months ended June 30, 2023 compared to the same periods in the prior year as a result of an increase in our pricing incentives and/or discounts in certain markets. Total sales value increased 3.9% for the three months ended ~~September~~June 30, ~~2017 is~~

~~primarily driven by an interruption~~2023 compared to the ~~business~~same period in ~~our Florida markets as a result of a hurricane that occurred during~~ the ~~period. The number of~~prior year due to the increase in net sales orders ~~and~~more than offsetting the decrease in the average selling price; however for the six months ended June 30, 2023, total sales value ~~of homes increased~~decreased by ~~22.4% and 23.2%, respectively, for~~5.9% as the ~~nine months ended September 30, 2017 compared to the prior year period. Our markets~~decrease in ~~Florida continued to experience favorable demand especially in active adult communities; however,~~average selling prices more than offset the increase in units and sales value for the nine months ended September 30, 2017 compared to the prior year is primarily driven by other divisions in the East region, particularly in our Atlanta market where demand for first-time homebuyer communities with lower average selling prices remains high.

~~Central:~~

The number of sales orders and sales value of homes decreased by 5.3% and 5.7%, respectively, for the three months ended September 30, 2017 compared to the prior year. The decrease in units and sales value for the three months ended September 30, 2017 is primarily driven by an interruption to the business in our Houston market as a result of a hurricane that occurred during the period. The number of sales orders and sales value of homes increased by 14.2% and 14.8%, respectively, for the nine months ended September 30, 2017. A significant portion of the increase in units and sales value for the nine months ended September 30, 2017 reflects the improvement in the Houston market from the prior year's soft economic environment. Other markets within this region continue to strengthen their performance and contributed to the overall increase in units and dollars for the segment as well.

~~West:~~

The average selling price increased by 10.9% and 7.5%, respectively, for the three and nine months ended September 30, 2017 compared to the prior year. The markets in this region are showing continued strength as evidenced by an increase in sales pace for both the three and nine months ended September 30, 2017. The number of sales orders and sales value of homes decreased by 23.5% and 15.1%, respectively, for the three months ended September 30, 2017 compared to the prior year which is in line with expectations, considering the increased focus on turn times and as result of the increase in the number close outs which limited our product availability. The value of net sales ~~orders increased by 7.5% for the nine months ended September 30, 2017, while the number of homes sold remained relatively flat.~~

orders.

Sales Order Cancellations


	Cancellation Rate(1)
	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
East		7.3	%		7.8	%		8.5	%		6.4	%
Central		15.8	%		13.2	%		17.1	%		9.5	%
West		11.3	%		12.9	%		13.6	%		9.8	%
Total Company		11.2	%		10.8	%		12.8	%		8.5	%

Cancellation Rate⁽¹⁾

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
East 11.8 % 13.5 % 10.1 % 12.2 %
Central 14.4
12.8
12.2
15.4
West 11.1
15.1
11.6
13.2
Total Company 12.4 % 13.7 % 11.1 % 13.4 %

⁽¹⁾

Cancellation rate represents the number of canceled sales orders divided by gross sales orders.

~~Favorable market conditions coupled with increased demand for new housing has led to lower~~

The total company cancellation ~~rates across all of our regions~~rate increased for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~

2023 compared to the same periods in the prior year. We believe cancellations have increased over the past several quarters due to increases in mortgage interest rates and buyer apprehensions given elevated macroeconomic uncertainty and affordability constraints for some consumers.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sales Order Backlog


	As of June 30,
	Sold Homes in Backlog (1)							Sales Value							Average Selling Price
(Dollars in thousands)	2023		2022		Change			2023		2022		Change			2023		2022		Change
East		2,477		3,333		(25.7	)%	$	1,626,635	$	2,119,850		(23.3	)%	$	657	$	636		3.3	%
Central		1,532		2,874		(46.7	)%		1,009,441		1,948,678		(48.2	)%		659		678		(2.8	)%
West		2,156		2,715		(20.6	)%		1,458,395		2,030,972		(28.2	)%		676		748		(9.6	)%
Total		6,165		8,922		(30.9	)%	$	4,094,471	$	6,099,500		(32.9	)%	$	664	$	684		(2.9	)%

(1)

As of September 30,

Sold Homes in Backlog ⁽¹⁾
Sales Value Average Selling Price
(Dollars in thousands) 2017 2016 Change 2017 2016 Change 2017 2016 Change
East 1,905
1,478
28.9 % $ 774,001
$ 608,840
27.1 % $ 406
$ 412
(1.5 )%
Central 1,272
1,202
5.8
653,415
612,840
6.6
514
510
0.8
West 1,182
1,175
0.6
697,790
650,197
7.3
590
553
6.7
Total 4,359
3,855
13.1 % $ 2,125,206
$ 1,871,877
13.5 % $ 488
$ 486
0.4 %

⁽¹⁾Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of the period (including homes sold but not yet started). Some of the contracts in our sales order backlog are subject to contingencies including mortgage loan approval and buyers selling their existing homes, which can result in cancellations.

Total sold homes in backlog ~~units~~ and total sales value ~~increased~~decreased by ~~13.1%~~30.9% and ~~13.5%~~32.9% at ~~September~~June 30, ~~2017~~2023 compared to ~~September~~June 30, ~~2016,~~2022, respectively. The ~~increase~~sold homes in backlog ~~units~~at June 30, 2022 reflected the strong selling market from 2021 and ~~total sales value is primarily a result~~first half of ~~the combination of increased~~2022 along with extended cycle times. The sold homes in backlog at June 30, 2023 reflected home closings outpacing net sales orders ~~and average selling price and lower cancellation rates.~~

~~Home Closings Revenue~~

Three Months Ended September 30,
Homes Closed Home Closings Revenue, Net Average Selling Price
(Dollars in thousands) 2017 2016 Change 2017 2016 Change 2017 2016 Change
East 776
677
14.6 % $ 311,526
$ 273,928
13.7 % $ 401
$ 405
(1.0 )%
Central 531
548
(3.1 ) 253,556
263,852
(3.9 ) 478
481
(0.6 )
West 535
512
4.5
321,167
274,405
17.0
600
536
11.9
Total 1,842
1,737
6.0 % $ 886,249
$ 812,185
9.1 % $ 481
$ 468
2.8 %

Nine Months Ended September 30,
Homes Closed Home Closings Revenue, Net Average Selling Price
(Dollars in thousands) 2017 2016 Change 2017 2016 Change 2017 2016 Change
East 2,238
1,874
19.4 % $ 891,740
$ 722,814
23.4 % $ 398
$ 386
3.1 %
Central 1,512
1,566
(3.4 ) 723,758
748,712
(3.3 ) 479
478
0.2
West 1,585
1,504
5.4
911,332
799,628
14.0
575
532
8.1
Total 5,335
4,944
7.9 % $ 2,526,830
$ 2,271,154
11.3 % $ 474
$ 459
3.3 %

~~East:~~

~~The number of homes closed increased by 14.6% and 19.4%, respectively,~~ for the ~~three and nine~~trailing twelve months ended September 30, 2017 compared to the prior year. Home closings revenue, net increased by 13.7% and 23.4%, respectively, for the same comparative periods. Our Florida markets were the primary drivers for both units and dollarsprimarily as a result of ~~increased net sales during the first half of the year. In addition, other divisions in the East region continued to gain momentum in the~~improved cycle times.

Home Closings Revenue


	Three Months Ended June 30,
	Homes Closed							Home Closings Revenue, Net							Average Selling Price
(Dollars in thousands)	2023		2022		Change			2023		2022		Change			2023		2022		Change
East		1,228		1,097		11.9	%	$	732,279	$	613,176		19.4	%	$	596	$	559		6.6	%
Central		936		778		20.3	%		612,630		457,006		34.1	%		655		587		11.6	%
West		961		1,157		(16.9	)%		651,838		812,838		(19.8	)%		678		703		(3.6	)%
Total		3,125		3,032		3.1	%	$	1,996,747	$	1,883,020		6.0	%	$	639	$	621		2.9	%


	Six Months Ended June 30,
	Homes Closed							Home Closings Revenue, Net							Average Selling Price
(Dollars in thousands)	2023		2022		Change			2023		2022		Change			2023		2022		Change
East		2,232		2,034		9.7	%	$	1,333,890	$	1,119,172		19.2	%	$	598	$	550		8.7	%
Central		1,667		1,442		15.6	%		1,076,025		825,582		30.3	%		645		573		12.6	%
West		1,767		2,324		(24.0	)%		1,199,427		1,582,675		(24.2	)%		679		681		(0.3	)%
Total		5,666		5,800		(2.3	)%	$	3,609,342	$	3,527,429		2.3	%	$	637	$	608		4.8	%

The number of homes closed for the nine months ended September 30, 2017, compared to the prior year. Certain economic market improvements, as well as a continued favorable homebuyer reception of newer products and newer communities throughout the region, contributed to the increase in net home closings revenue.

~~Central:~~

~~For the three and nine months ended September 30, 2017 we experienced a decrease in both~~ homes closed and home closings revenue, net ~~partially as a result of the hurricane that occurred during the period in Houston, which pushed some closings to future periods.~~

~~West:~~

~~The number of homes closed~~ increased by ~~4.5%~~3.1% and ~~5.4%~~6.0% for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017, and home closing revenue, net increased by 17.0% and 14.0%, respectively, for~~2023, compared to the same ~~comparative periods.~~period in the prior year, respectively. The increases are primarily driven by ~~strong~~the East and Central regions which experienced longer cycle times during 2022, moving closings to the first half of 2023. Several markets in these regions also experienced market appreciation in the prior year which increased the average selling price and home closings revenue, net.

The number of homes closed decreased by 2.3% for the six months ended June 30, 2023 compared to the same period in the prior year, primarily due to less sales order backlog and an increase in ~~our Phoenix division and markets within Northern California which continue~~cancellations in the current year period compared to ~~experience strong consumer demand~~the prior year period. Average selling price increased by 4.8% as a result of ~~increased job growth~~sales price appreciation which more than offset the impact of the decrease of homes closed, resulting in ~~those areas.~~

an overall increase in home closing revenue, net of 2.3% for the six months ended June 30, 2023, compared to the same period in the prior year.

Land Closings Revenue

Three Months Ended September 30,
(Dollars in thousands)

2017 2016 Change
East $ 1,013
$ 14,711
$ (13,698 )
Central 3,286
9,243
(5,957 )
West —
3,464
(3,464 )
Total $ 4,299
$ 27,418
$ (23,119 )

Nine Months Ended September 30,
(Dollars in thousands) 2017 2016 Change
East $ 4,518
$ 14,736
$ (10,218 )
Central 6,901
19,113
(12,212 )
West —
11,108
(11,108 )
Total $ 11,419
$ 44,957
$ (33,538 )


	Three Months Ended June 30,
(Dollars in thousands)	2023		2022		Change
East	$	2,051	$	17,310	$	(15,259	)
Central		10,577		506		10,071
West		—		19,000		(19,000	)
Total	$	12,628	$	36,816	$	(24,188	)


	Six Months Ended June 30,
(Dollars in thousands)	2023		2022		Change
East	$	4,954	$	30,751	$	(25,797	)
Central		12,194		2,665		9,529
West		—		19,010		(19,010	)
Total	$	17,148	$	52,426	$	(35,278	)

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We generally purchase land and lots with the intent to build and sell homes. However, in some locations where we act as a

developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or

government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots

or land parcels to manage our land and lot supply on larger tracts of land. ~~As a developer, we may include land sales in our~~

~~underwriting strategies in many of our master plan communities where we may mitigate risk, enhance our returns or pursue~~

~~opportunities allowing access to new land positions.~~ Land and lot sales occur at various intervals and varying degrees of

profitability. Therefore, the revenue and gross margin from land closings will fluctuate from period to period, depending upon

market ~~opportunities.~~opportunities and our land management strategy. The prior year ~~period included sales~~had certain large non-routine land transactions, which were not experienced during 2023. The land closings revenue in the East for the three and six months ended June 30, 2022 was due to the sale of ~~legacy land that we had held for either appreciation or tax purposes. As~~certain commercial assets as well as the sale of ~~the third quarter of 2016, the tax holding period for certain land assets expired, creating certain tax benefits, thus resulting~~residential lots in our ~~significant~~Florida market. The land ~~sales~~closing revenue in the ~~prior year.~~

~~Segment~~ West for the three and six months ended June 30, 2022 was due to the sale of a certain project in our Oregon market.

Amenity and Other Revenue


	Three Months Ended June 30,
(Dollars in thousands)	2023		2022		Change
East	$	5,734	$	5,376	$	358
Central		—		—		—
West		419		436		(17	)
Corporate		3,122		33,904		(30,782	)
Total	$	9,275	$	39,716	$	(30,441	)


	Six Months Ended June 30,
(Dollars in thousands)	2023		2022		Change
East	$	12,033	$	11,060	$	973
Central		—		—		—
West		735		799		(64	)
Corporate		6,100		35,763		(29,663	)
Total	$	18,868	$	47,622	$	(28,754	)

Several of our communities operate amenities such as golf courses, club houses, and fitness centers. We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region also includes the activity relating to our Build-To-Rent and Urban Form operations. The amenity and other revenue in Corporate for the three and six months ended June 30, 2022 is due to the sale of an asset relating to our Urban Form operations.

Home Closings Gross Margin

Three Months Ended September 30,
East Central West Consolidated
(Dollars in thousands) 2017 2016 2017 2016 2017 2016 2017 2016
Home closings revenue, net $ 311,526
$ 273,928
$ 253,556
$ 263,852
$ 321,167
$ 274,405
$ 886,249
$ 812,185
Cost of home closings 248,455
216,049
206,939
217,526
266,243
224,932
721,637
658,507
Home closings gross margin 63,071
57,879
46,617
46,326
54,924
49,473
164,612
153,678
Home closings gross margin % 20.2 % 21.1 % 18.4 % 17.6 % 17.1 % 18.0 % 18.6 % 18.9 %

Nine Months Ended September 30,
East Central West Consolidated
(Dollars in thousands) 2017 2016 2017 2016 2017 2016 2017 2016
Home closings revenue, net $ 891,740
$ 722,814
$ 723,758
$ 748,712
$ 911,332
$ 799,628
$ 2,526,830
$ 2,271,154
Cost of home closings 707,614
573,493
592,482
616,418
762,341
662,813
2,062,437
1,852,724
Home closings gross margin 184,126
149,321
131,276
132,294
148,991
136,815
464,393
418,430
Home closings gross margin % 20.6 % 20.7 % 18.1 % 17.7 % 16.3 % 17.1 % 18.4 % 18.4 %

~~East:~~

~~Home~~


	Three Months Ended June 30,
	East						Central						West						Consolidated
(Dollars in thousands)	2023			2022			2023			2022			2023			2022			2023			2022
Home closings revenue, net	$	732,279		$	613,176		$	612,630		$	457,006		$	651,838		$	812,838		$	1,996,747		$	1,883,020
Cost of home closings		528,792			445,587			452,799			339,768			532,646			596,255			1,514,237			1,381,610
Home closings gross margin	$	203,487		$	167,589		$	159,831		$	117,238		$	119,192		$	216,583		$	482,510		$	501,410
Home closings gross margin %		27.8	%		27.3	%		26.1	%		25.7	%		18.3	%		26.6	%		24.2	%		26.6	%


	Six Months Ended June 30,
	East						Central						West						Consolidated
(Dollars in thousands)	2023			2022			2023			2022			2023			2022			2023			2022
Home closings revenue, net	$	1,333,890		$	1,119,172		$	1,076,025		$	825,582		$	1,199,427		$	1,582,675		$	3,609,342		$	3,527,429
Cost of home closings		965,237			827,534			805,028			634,825			971,485			1,184,225			2,741,750			2,646,584
Home closings gross margin	$	368,653		$	291,638		$	270,997		$	190,757		$	227,942		$	398,450		$	867,592		$	880,845
Home closings gross margin %		27.6	%		26.1	%		25.2	%		23.1	%		19.0	%		25.2	%		24.0	%		25.0	%

Consolidated home closings gross margin ~~percentage remained flat~~decreased to 24.2% from 26.6% for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2023, compared to the same period in ~~2016~~the prior year and decreased to ~~20.2%~~24.0% from ~~21.1%~~25.0% for the ~~three~~six months ended ~~September~~June 30, ~~2017 and 2016. The primary driver for these decreases is due~~2023 compared to ~~increased land and development costs in several of our divisions~~the same period in the ~~East region.~~

~~Central:~~

~~Home~~prior year. The West region experienced a decrease in home closings gross margin percentage increased to 18.4% from 17.6% for the three months ended September 30, 2017 and 2016, respectively, and to 18.1% from 17.7% for the nine months ended September 30, 2017 and 2016, respectively. The increase is primarily due to geographical mix within the region.

~~West:~~

Home closings gross margin percentage decreased to 17.1% from 18.0% for the three months ended September 30, 2017 and 2016 respectively, and to 16.3% from 17.1%, for the nine months ended September 30, 2017 and 2016, respectively. The decrease is primarily due to product mix and an increase in land and development costs of the homes closed in 2017 compared to those closed in 2016.

~~Mortgage Operations~~

Our Mortgage Operations segment provides mortgage lending through our subsidiary, TMHF, and title services through our subsidiary, Inspired Title. The following details the number of loans closed, net income per closed loan, the aggregate value and capture rate on our loans for the following periods:

Closed
Loans
Profit Per Closed Loan
Aggregate
Loan Volume
(in millions)
Capture Rate Average FICO
Three Months Ended September 30, 2017 1,102
$ 5,088
$ 374.1
76 % 745
Three Months Ended September 30, 2016 1,068
$ 4,598
$ 357.0
81 % 744

Closed
Loans Profit Per Closed Loan Aggregate
Loan Volume
(in millions) Capture Rate Average FICO
Nine Months Ended September 30, 2017 3,162
$ 5,324
$ 1,075.0
76 % 744
Nine Months Ended September 30, 2016 2,965
$ 4,626
$ 992.0
80 % 743

~~Our net income per closed loan increased~~ for both the three and ~~nine months~~six month periods ended ~~September~~June 30, ~~2017~~2023 compared to the same periods in the prior year ~~primarily due to the increase in the average loan amount which is~~as a result of pricing incentives and discounts above the ~~increase in average selling~~company average. These pricing incentives and discounts were partially offset by limited price ~~of homes closed. The increase in net income per closed loan is also partially attributable to improvements~~appreciation across several divisions in the ~~gain on sale of loans due to better investor pricing from our mandatory loan commitments model.~~

~~Our mortgage capture rate represents~~region. The increases in home closings gross margin in the ~~percentage of our homes sold to a home purchaser that utilized a mortgage~~East and ~~for which the borrower obtained such mortgage from TMHF or one of our preferred third party lenders. The decrease in capture rate~~Central regions for both the three and ~~nine months~~six month periods ended ~~September~~June 30, ~~2017~~2023 compared to the same periods in the prior year are as a result of price appreciation in several of the markets at the time the homes were sold (late 2021 and 2022).

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Services

The following is a summary for the periods presented of our financial services income before income taxes as well as supplemental data:


	Three Months Ended June 30,							Six Months Ended June 30,
(Dollars in thousands)	2023		2022		Change			2023		2022		Change
Mortgage services revenue	$	30,945	$	25,786		20.0	%	$	56,548	$	53,500		5.7	%
Title services and other revenues		10,969		9,685		13.3	%		20,515		17,170		19.5	%
Total financial services revenue		41,914		35,471		18.2	%		77,063		70,670		9.0	%
Financial services net income from unconsolidated entities		3,259		2,195		48.5	%		5,534		4,253		30.1	%
Total revenue		45,173		37,666		19.9	%		82,597		74,923		10.2	%
Financial services expenses		25,342		21,483		18.0	%		47,490		45,697		3.9	%
Financial services income before income taxes	$	19,831	$	16,183		22.5	%	$	35,107	$	29,226		20.1	%
Total originations:
Number of Loans		2,018		1,595		26.5	%		3,549		3,177		11.7	%
Principal	$	968,590	$	718,133		34.9	%	$	1,686,869	$	1,406,799		19.9	%


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Supplemental data:
Average FICO score		753			755			754			754
Funded origination breakdown:
Government (FHA,VA,USDA)		20	%		17	%		18	%		17	%
Other agency		75	%		77	%		77	%		78	%
Total agency		95	%		94	%		95	%		95	%
Non-agency		5	%		6	%		5	%		5	%
Total funded originations		100	%		100	%		100	%		100	%

Total financial services revenue increased by 18.2% and 9.0% for the three and six months ended June 30, 2023 compared to the same periods in the prior year, respectively, primarily due to ~~increased competition for new home mortgages.~~

an increase in mortgage originations as well as an increase in the average amount borrowed per loan.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, ~~decreased~~increased to ~~6.9%~~5.7% from ~~7.2%~~5.1% and to ~~7.1%~~5.7% from ~~7.3% respectively,~~5.3% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the same periods in ~~2016. This decrease is primarily a result of efficient marketing and advertising. In addition,~~ the prior ~~year period had higher sales and marketing costs as a result of our acquired divisions and~~year. The increase was primarily due to an increase in ~~new communities which typically have incremental startup~~external commissions costs ~~during their early stages.~~

as well as increased advertising costs in an effort to generate sales interest.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, ~~remained relatively flat~~decreased to 3.5% from 3.7% and to 3.8% from 3.9% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023 compared to the same periods in the prior year. ~~We continue~~The decrease was primarily due to ~~utilize our scalable platform, providing leverage with existing infrastructure~~the increase in ~~an effort~~home closings revenue, net, while general and administrative expenses remained relatively consistent due to ~~maintain stable operating costs.~~

~~Equity in Income of~~operational efficiencies.

Net (Income)/Loss from Unconsolidated Entities

~~Equity in~~

Net income offrom unconsolidated entities was ~~$2.8~~$3.2 million and ~~$1.6~~$5.1 million for the three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2023, respectively, ~~and $6.9~~while net loss from unconsolidated entities was $3.6 million and ~~$4.7~~$1.8 million for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2022, respectively. ~~The increase is primarily due~~Our joint ventures relating to our financial services segment experienced an increase in ~~active~~income for the six months ended June 30, 2023 compared to the same period in the prior year. In addition, the three and six months ended June 30, 2022 included impairment for one of our unconsolidated joint ventures. ~~We had six active unconsolidated joint ventures at September 30, 2017 compared to five active unconsolidated joint ventures at September 30, 2016.~~

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest ~~Income,~~(Income)/Expense, Net

Interest income, net was ~~$135 thousand~~$5.1 million and ~~$47 thousand~~$6.2 million for the three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2023, respectively, and ~~$314 thousand~~interest expense, net was $5.2 million and ~~$149 thousand~~$9.4 million for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2022 . The net interest income for the three and ~~2016, respectively. Interest income, net includes~~six months ended June 30, 2023 was primarily due to higher cash balances and an increase in the interest rates earned on ~~cash balances offset by interest incurred but not capitalized on our long-term debt and other borrowings.~~

such balances.

Other ~~Expense,~~Expense/(Income), Net

Other expense, net was ~~$0.4~~$8.5 million and ~~$1.9~~$3.7 million for the three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2023, respectively, and ~~$0.8~~other income, net was $11.0 million and ~~$8.6~~$10.5 million for the nine months ended September 30, 2017 and 2016, respectively. The three and nine months ended September 30, 2016 included higher accruals for contingent consideration relating to our acquisitions during 2016, earn out accruals for our previous Darling Homes acquisition, and pre-acquisition costs on abandoned land projects.

~~Income Tax Provision~~

~~Our effective tax rate~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, respectively. The net expense in the current period was ~~30.7% and 31%, respectively, compared~~primarily related to ~~35.1% and 33.8%~~an increase in self-insurance reserves for the ~~same periods~~first half of the year. For the three and six months ended June 30, 2022, net other income was primarily related to gains on land transferred at fair value as part of investments in ~~2016, respectively.~~ two joint ventures with third parties.

Gain on Extinguishment of Debt, Net

Gain on extinguishment of debt, net was $13.5 million for the three and six months ended June 30, 2022. This gain is due to the tender offer and purchase of our 6.625% Senior Notes due 2027 in June 2022. We had no such gains for the three and six months ended June 30, 2023.

Income Tax Provision

The effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~favorably impacted by discrete~~25.6% and 24.5%, respectively, compared to 25.1% and 24.5%, respectively, for the same periods in 2022.

For the three months ended June 30, 2023 the effective tax ~~adjustments~~rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to ~~certain deferred~~stock-based compensation, and amounts attributable to non-controlling interests in joint ventures.

For the six months ended June 30, 2023, the effective tax ~~assets~~rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, excess tax benefits related to stock-based compensation, non-deductible executive compensation, and ~~liabilities~~special deductions and credits relating to homebuilding activities. The effective tax rate benefited from the extension of the federal ~~energy~~§45L energy-efficient homes tax ~~credits earned from building energy efficient homes, which~~credits. The tax credit provisions were ~~recorded~~extended and modified by the Inflation Reduction Act ("IRA") enacted in ~~the current period but are associated with~~August 2022 and applies to homes closed in 2022-2032.

For the three and six months ended June 30, 2022 the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, non-deductible executive compensation, excess tax benefits related to stock-based compensation and special deductions and credits relating to prior ~~to 2017.~~

homebuilding activities.

Net Income

Net income ~~before allocation to Principal Equityholders~~ and diluted earnings per share for the three months ended ~~September~~June 30, ~~2017~~2023 was ~~$54.3~~$234.6 million and ~~$0.45,~~$2.12, respectively. Net income ~~before allocation to Principal Equityholders~~ and diluted earnings per share for the three months ended ~~September~~June 30, ~~2016~~2022 was ~~$58.3~~$291.0 million and ~~$0.49,~~$2.45, respectively. The ~~decrease~~decreases in net income and diluted earnings per share from the prior year iswere primarily attributable to lower gross margin, ~~due to~~combined with higher ~~costs~~sales, commissions, and marketing expenses and other expenses.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of goods sold as well as lower land sale gross margin during the three months ended September 30, 2017. However, these decreases in gross margin were partially offset by a lower effective tax rate for the three months ended September 30, 2017 compared to the same period in the prior year.

Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

~~Borrowings under our Revolving Credit Facility (as defined below);~~

~~Our various series of Senior Notes (as defined below);~~

~~Mortgage warehouse facilities;~~

~~Project-level financing (including non-recourse loans);~~

~~Performance, payment and completion surety bonds, and letters of credit; and~~

~~Cash generated from operations.~~

~~We believe that we can fund our current and foreseeable liquidity needs for the next 12 months from:~~

~~Cash generated from operations; and~~

~~Borrowings under our Revolving Credit Facility.~~

We may also access the capital markets to obtain additional liquidity through debt and equity offerings on an opportunistic basis. Our principal uses of capital for the nine months ended September 30, 2017 and 2016 were land purchases, lot development, home construction, operating expenses, payment of debt service, income taxes, investments in joint ventures, stock repurchases, and the payment of various liabilities. In addition, all net proceeds from our four equity offerings during the nine months ended September 30, 2017, were used to purchase partnership units in New TMM, our direct subsidiary, along with shares of our Class B common stock, held by our Principal Equityholders.


• Cash generated from operations;		• Mortgage warehouse facilities;
• Borrowings under our Revolving Credit Facilities;		• Project-level real estate financing (including non-recourse loans, land banking, and joint ventures); and
• Our various series of senior notes;		• Performance, payment and completion surety bonds, and letters of credit.

Cash flows for each of our communities depend on the status of the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash expenditures for land acquisitions, on and off-site development, construction of model homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

During the first half of 2023, several bank failures led to significant disruptions to the banking system and financial market volatility. While we maintained no accounts at any failed banks, substantially all of our cash currently on deposit with other major financial institutions exceeds insured limits. We limit exposure relating to our short-term financial instruments by diversifying these financial instruments among various counterparties, which consist of major financial institutions. Generally, deposits may be redeemed on demand and are maintained with financial institutions with reputable credit.

The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):

As of
(Dollars in thousands) September 30, 2017 December 31, 2016
Total Cash, excluding Restricted Cash $ 264,862
$ 300,179

Total Revolving Credit Facility 500,000
500,000
Letters of Credit Outstanding (33,158 ) (31,903 )
Revolving Credit Facility Borrowings Outstanding
—
—
Revolving Credit Facility Availability 466,842
468,097

Total Liquidity $ 731,704
$ 768,276


	As of
(Dollars in thousands)	June 30, 2023			December 31, 2022
Total cash and cash equivalents, excluding restricted cash	$	1,227,264		$	724,488
$1 Billion Revolving Credit Facility availability		1,000,000			1,000,000
$100 Million Revolving Credit Facility availability		100,000			100,000
Letters of credit outstanding		(71,877	)		(69,249	)
Revolving Credit Facilities availability		1,028,123			1,030,751
Total liquidity	$	2,255,387		$	1,755,239

We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources under our Revolving Credit Facilities to conduct our operations for the next twelve months. Beyond the next twelve months, our primary demand for funds will be for payments of our long-term debt as it becomes due, land purchases, lot development, home and amenity construction, long-term capital investments, investments in our joint ventures, payments of ongoing operating expenses, and repurchases of common stock. We believe we will generate sufficient cash from our operations to meet the demands for such payments, however we may also access the capital markets to obtain additional liquidity through debt and equity offerings or refinance debt to secure capital for such long-term demands. As part of our operations, we may also from time to time purchase our outstanding debt or equity through open market purchases, privately negotiated transactions or otherwise. Purchases or retirement of debt and/or purchases or equity, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Cash Flow Activities

Operating Cash Flow Activities

Our net cash provided by operating activities was ~~$132.8~~$607.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, compared to ~~$142.4~~$195.5 million ~~provided by operating activities~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The ~~primary driver of the decrease~~increase in cash provided by operating activities is primarily driven by a decrease in ~~the current period is increased spending~~spend on real estate inventory and land deposits partially offset by ~~an increase in the number of homes closed, resulting in higher net income and an increase in customer deposits as a result of higher sales volume.~~

reduced cash provided by mortgages held for sale.

Investing Cash Flow Activities

Net cash used in investing activities was ~~$26.5~~$44.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017, as~~2023, compared to net cash provided by investing activities of $4.2 million for the six months ended June 30, 2022. The increase in cash used in investing activities was primarily due to a net investment of ~~$74.7~~$23.8 million ~~for~~of capital into unconsolidated entities in the ~~nine~~six months ended ~~September~~June 30, ~~2016. The primary driver~~2023 compared to a net distribution of $17.0 million of capital from unconsolidated entities in the ~~change between periods was the 2016 acquisition~~prior year period.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of ~~Acadia Homes for $52.8 million.~~

Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financing Cash Flow Activities

Net cash used in financing activities was ~~$141.9~~$60.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017, as~~2023, compared to ~~net~~$656.7 million for the six months ended June 30, 2022. The decrease in cash used in financing activities ~~of $33.3 million for~~was primarily due to lower net repayments on our Revolving Credit Facilities and mortgage warehouse facilities during the ~~nine~~six months ended ~~September~~June 30, ~~2016. The cash used in financing activities in 2017 and 2016 was primarily attributable~~2023 compared to ~~repayments on~~ the ~~mortgage warehouse lines exceeding borrowings stemming from the seasonal decline in mortgage receivables, offset by net borrowings on the Revolving Credit Facility~~same period in the prior ~~year. As~~year as well as repayment of ~~September~~senior notes during the six months ended June 30, ~~2017, we did not have any borrowings outstanding under~~2022 combined with significantly lower repurchases of Common Stock during the six months ended June 30, 2023 compared to the same period in the prior year.

Debt Instruments

For information regarding our debt instruments, including the terms governing our senior notes and our Revolving Credit ~~Facility.~~

Facilities, see Note 7 - Debt ~~Instruments~~

~~Senior Notes:~~

~~The following table summarizes our outstanding senior unsecured notes (collectively, the “Senior Notes”) as of September 30, 2017.~~

(Dollars in thousands) Date Issued
Principal
Amount

Initial Offering
Price
Interest Rate
Original Net
Proceeds

Original Debt
Issuance
Cost
Senior Notes due 2021 April 16, 2013 550,000
100.0 % 5.250 % 541,700
8,300
Senior Notes due 2023 April 16, 2015 350,000
100.0 % 5.875 % 345,500
4,500
Senior Notes due 2024 March 5, 2014 350,000
100.0 % 5.625 % 345,300
4,700
Total $ 1,250,000
$ 1,232,500
$ 17,500

~~2021 Senior Notes~~

~~On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021 Senior Notes”).~~

The 2021 Senior Notes mature on April 15, 2021. The 2021 Senior Notes are guaranteed by TMM Holdings, Taylor Morrison Holdings, Inc., Taylor Morrison Communities II, Inc. and their homebuilding subsidiaries (collectively, the “Guarantors”) which are all subsidiaries directly or indirectly of TMHC. The 2021 Senior Notes and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indenture for the 2021 Senior Notes contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate transactions, (vi) the incurrence of liens, (vii) prohibitions on payments and asset transfers among the issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2021 Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within specified deadlines, we will be required to offer to repurchase the 2021 Senior Notes at par (plus accrued and unpaid interest) with such proceeds. We are also required to offer to repurchase the 2021 Senior Notes at a price equal to 101% of their aggregate principal amount (plus accrued and unpaid interest) upon certain change of control events.

~~The 2021 Senior Notes are redeemable at scheduled redemption prices, currently at 102.625%, of their principal amount (plus accrued and unpaid interest).~~

~~There are no financial maintenance covenants for the 2021 Senior Notes.~~

~~2023 Senior Notes and Redemption of 2020 Senior Notes~~

The 2023 Senior Notes mature on April 15, 2023. The 2023 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 Senior Notes. The indenture governing the 2023 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions. The indenture governing the 2023 Senior Notes contains events of default that are similar to those contained in the indenture governing the 2021 Senior Notes. The change of control provisions in the indenture governing the 2023 Senior Notes are similar to those contained in the indenture governing the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change of control before the repurchase offer requirement is triggered for the 2023 Senior Notes.

~~There are no financial maintenance covenants for the 2023 Senior Notes.~~

~~2024 Senior Notes~~

~~On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024 Senior Notes”).~~

The 2024 Senior Notes mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that guarantee the 2021 and 2023 Senior Notes. The 2024 Senior Notes and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions similar to the 2023 Senior Notes. The indenture governing the 2024 Senior Notes contains events of default that are similar to those contained in the indenture governing the 2021 and 2023 Senior Notes. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indenture governing the 2023 Senior Notes.

~~There are no financial maintenance covenants for the 2024 Senior Notes.~~

~~TMHC Compared to TMM Holdings~~

TMM Holdings is a parent guarantor of certain of our debt facilities. The financial information of TMHC is substantially identical to the financial performance and operations of TMM Holdings except for certain SEC and regulatory fees which are attributable to TMHC.

~~Revolving Credit Facility~~

~~Our $500.0 millionRevolving Credit Facility matures on April 12, 2019. The Revolving Credit Facility is guaranteed by the same Guarantors that guarantee the 2021, 2023, and 2024 Senior Notes.~~

The Revolving Credit Facility contains certain “springing” financial covenants, requiring us and our subsidiaries to comply with a maximum debt to capitalization ratio of not more than 0.60 to 1.00 and a minimum consolidated tangible net worth level of at least $1.6 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the Revolving Credit Facility provides that we may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to our capital that will, upon the contribution of such cash to the borrower, beUnaudited Condensed Consolidated Financial Statements included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall.

The Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control. As of September 30, 2017, we were in compliance with all of the covenants under the Revolving Credit Facility.

~~Mortgage Warehouse Borrowings~~

~~The following is a summary of our mortgage subsidiary warehouse borrowings:~~

(Dollars in thousands) As of September 30, 2017
Facility Amount Drawn Facility Amount Interest Rate Expiration Date
Collateral ⁽¹⁾
Flagstar $ 2,703
$ 20,000
LIBOR + 2.5% 30 days written notice Mortgage Loans
Comerica 23,290
50,000
LIBOR + 2.25%
November 16, 2017⁽²⁾
Mortgage Loans
J.P. Morgan 35,299
100,000
LIBOR + 2.375% September 26, 2018 Mortgage Loans and Pledged Cash
Total $ 61,292

$ 170,000

⁽¹⁾ The mortgage warehouse borrowings outstanding as of September 30, 2017 and December 31, 2016 were collateralized by a) $107.7 million and $233.2 million, respectively, of mortgage loans held for sale, which comprised the balance of mortgage loans held for sale and b) approximately $1.3 million and $1.6 million, respectively, of cash which are included in restricted cash in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾ ~~We expect to renew the Comerica facility during the fourth quarter of 2017.~~

~~Loans Payable and Other Borrowings~~

Loans payable and other borrowings as of September 30, 2017 consist of project-level debt due to various land sellers and seller financing notes from current and prior year acquisitions. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot sales or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0% to 8% at September 30, 2017 and December 31, 2016. We impute interest for loans with no stated interest rates.

~~Letters of Credit, Surety Bonds and Financial Guarantees~~

~~The following table summarizes our letters of credit and surety bonds as of the dates indicated:~~

As of
(Dollars in thousands) September 30, 2017 December 31, 2016
Letters of credit ⁽¹⁾
$ 33,158
$ 31,903
Surety bonds 284,617
270,943
Total outstanding letters of credit and surety bonds $ 317,775
$ 302,846

⁽¹⁾~~As of September 30, 2017 and December 31, 2016, there was $200 million total capacity of letters of credit available under our Revolving Credit Facility.~~

this quarterly report.

Off-Balance Sheet Arrangements as of ~~September~~June 30, ~~2017~~

2023

Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities

We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties. ~~The use of~~Our participation with these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on terms that are as favorable. Our partners in these joint ventures historically have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.

In certain of our unconsolidated joint ventures, wethe joint ventures enter into loan agreements, whereby we or one of our subsidiaries will provide the joint venture lenders with customary guarantees, including completion, indemnity and environmental guarantees subject to usual non-recourse terms.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023 and 2022, total ~~net capital invested in~~cash contributions to unconsolidated joint ventures ~~was $28.9 million.~~

were $24.1 million and $69.6 million, respectively.

Land ~~Purchase~~Option Contracts and Land ~~Option Contracts~~

Banking Agreements

We ~~enter~~are subject to the usual obligations associated with entering into contracts (including land option contracts and land banking arrangements) for the purchase, development, and sale of real estate in our routine business. We have a number of land purchase ~~and~~ option contracts and land banking agreements, generally through cash deposits, for the right to ~~procure~~purchase land or lots ~~for~~at a future point in time with predetermined terms. We do not have title to the ~~construction~~property and the creditors of ~~homes in~~ the ~~ordinary course of business. Lot option contracts enable us~~property owner generally have no recourse to ~~control significant lot positions with a minimal initial capital investment and~~

~~substantially reduce~~ the risks associated with land ownership and development. As of September 30, 2017, we had outstanding land purchase and lot option contracts of $520.8 million. We are obligated to close the transaction under our land purchase contracts. However, our obligationsCompany. Our exposure with respect to ~~the option~~such contracts are generally limited to the forfeiture of the related non-refundable cash deposits and/or letters of credit provided to obtain the options. At ~~September~~June 30, ~~2017, we had non-refundable deposits totaling $50.9 million.~~

2023 and December 31, 2022, the aggregate purchase price for land under these contracts was $1.4 billion and $1.5 billion, respectively.

Seasonality

Our business is seasonal. We have historically experienced, and in the future expect to continue to experience, variability in our results on a quarterly basis. We generally have more homes under construction, close more homes and have greater revenues and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are obtained throughout the year, a higher portion of our home closings occur during the third and fourth calendar quarters. Our revenue therefore may fluctuate significantly on a quarterly basis, and we must maintain sufficient liquidity to meet short-term operating requirements. Factors expected to contribute to these fluctuations include:


• the timing of the introduction and start of construction of new projects;		• mix of homes closed;
• the timing of sales;		• construction timetables;
• the timing of closings of homes, lots and parcels;		• the cost and availability of materials and labor; and
• the timing of receipt of regulatory approvals for development and construction;		• weather conditions in the markets in which we build.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of ~~the introduction and start of construction of new projects;~~

~~the timing of project sales;~~

~~the timing of closings of homes, lots and parcels;~~

~~the timing of receipt of regulatory approvals for development and construction;~~

~~the condition of the real estate market and general economic conditions in the areas in which we operate;~~

~~mix of homes closed;~~

~~construction timetables;~~

~~the prevailing interest rates and the availability of financing, both for us and for the purchasers of our homes;~~

~~the cost and availability of materials and labor; and~~

~~weather conditions in the markets in which we build.~~

Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


• the condition of the real estate market and general economic conditions in the areas in which we operate;

As a result of seasonal activity, our quarterly results of operations and financial position are not necessarily representative of the results we expect for the full year.

Inflation

We and the homebuilding industry in general may be adversely affected during periods of high inflation, primarily because of higher land, financing, labor and construction material costs. In addition, higher mortgage interest rates can significantly affect the affordability of ~~permanent~~ mortgage financing to prospective homebuyers. We attempt to pass through to our customers increases in our costs through increased sales prices. However, during periods of soft housing market conditions, we may not be able to offset our cost increases with higher selling prices.

Critical Accounting Policies

and Estimates

There have been no significant changes to our critical accounting policies and estimates during the ~~nine~~six months ended ~~September~~June 30, ~~2017 as~~2023 compared to those we disclosed in ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.

TAYLOR MORRISON HOME CORPORATION 10-Q

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate and variable rate debt. At ~~September~~June 30, ~~2017,~~2023, approximately ~~96%~~90% of our debt was fixed rate and 4%10% was variable rate. None of our market sensitive instruments were entered into for trading purposes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not impact the fair value of the debt instrument but may affect our future earnings and cash flows, and may also impact our variable rate borrowing costs, which principally relate to any borrowings under our Revolving Credit ~~Facility~~Facilities and to borrowings by TMHF under its various mortgage warehouse facilities. As of ~~September~~June 30, ~~2017,~~2023, we had no outstanding borrowings under our Revolving Credit ~~Facility.~~Facilities. We had ~~$466.8 million~~approximately $1.0 billion of additional availability for borrowings ~~and $166.8~~under the Revolving Credit Facilities including $128.1 million of additional availability for letters of credit under our $1 Billion Revolving Credit Facility as of June 30, 2023 (giving effect to ~~$33.2~~$71.9 million of letters of credit outstanding as of such date). ~~Our~~

The London Interbank Offered Rate (“LIBOR”) was the primary basis for determining interest payments on borrowings under each of our mortgage warehouse facilities and our Revolving Credit Facilities. On March 5, 2021, ~~Senior Notes~~ICE Benchmark Administration (“IBA”) confirmed it would cease publication of Overnight, 1, 3, 6 and 12 month US Dollar LIBOR settings immediately following the LIBOR publication on June 30, 2023. The Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the New York Federal Reserve, has identified the Secured Overnight Financing Rate (“SOFR”) as the recommended risk-free alternative rate for US Dollar LIBOR. In response to the planned discontinuation of LIBOR, our warehouse facilities agreements for facilities A, C, D, and E as well as our Revolving Credit Facilities have been restructured to begin using SOFR as the basis for determining interest rates. The agreement for warehouse facility B was restructured to use the Bloomberg Short-Term Bank Yield Index (“BSBY”) as the primary basis for determining interest payments. The BSBY index is a proprietary index calculated daily as a credit sensitive supplement to manage the spread between funding costs and earned interest on loans. At this time, it is not possible to predict the full effect that the anticipated discontinuance of LIBOR, or the establishment of alternative reference rates such as SOFR and BSBY, will have on us or our borrowing costs. SOFR and BSBY are ~~subject~~relatively new reference rates and their composition and characteristics are not the same as LIBOR. Given the limited history of these rates and potential volatility as compared to ~~a requirement that we offer to purchase such notes at par with certain proceeds~~other benchmark or market rates, the future performance of ~~asset sales (to~~these rates cannot be predicted based on historical performance. The consequences of using SOFR and BSBY could include an increase in the ~~extent not otherwise applied in accordance with the indenture governing such notes).~~ cost of our variable rate indebtedness.

We are ~~also~~ required to offer to purchase all of our outstanding ~~Senior Notes~~senior unsecured notes, as described in Note 7- Debtto the Unaudited Condensed Consolidated Financial Statements included in this quarterly report, at 101% of their aggregate principal amount plus accrued and unpaid interest upon the occurrence of specified change of control events. Other than in those circumstances, we do not have an obligation to prepay fixed rate debt prior to maturity and, as a result, we would not expect interest rate risk and changes in fair value to have a significant impact on our cash flows related to our fixed rate debt until such time as we are required to refinance, repurchase or repay such debt.

We are not materially exposed to interest rate risk associated with TMHF’s mortgage loan origination business because at the time any loan is originated, TMHF has identified the investor who will agree to purchase the loan on the interest rate terms that are locked in with the borrower at the time the loan is originated.

The following table sets forth principal ~~cash flows~~payments by scheduled maturity and effective weighted average interest rates and estimated fair value of our debt obligations as of ~~September~~June 30, ~~2017.~~2023. The interest rate for our variable rate debt represents the ~~weighted average~~ interest rate on ~~our borrowings under~~ our mortgage warehouse facilities. Because the mortgage warehouse facilities are secured by certain mortgage loans held for sale which are typically sold within approximately 20 - 30 days, its outstanding balance is included as a variable rate maturity in the most current period presented.


	Expected Maturity Date
(In millions, except percentage data)	2023			2024			2025			2026			2027			Thereafter			Total			Fair Value
Fixed Rate Debt	$	69.3		$	479.1		$	71.5		$	35.3		$	540.6		$	957.5		$	2,153.3		$	2,088.3
Weighted average interest rate(1)		2.7	%		4.8	%		2.7	%		2.7	%		5.5	%		5.6	%		5.2	%
Variable Rate Debt(2)	$	249.9		$	—		$	—		$	—		$	—		$	—		$	249.9		$	249.9
Weighted average interest rate		6.7	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		6.7	%

(1)

Expected Maturity Date
Fair
Value
(In millions, except percentage data) 2017 2018 2019 2020 2021 Thereafter Total
Fixed Rate Debt $ 47.5
$ 61.8
$ 40.5
$ 5.5
$ 552.6
$ 703.9
$ 1,411.8
$ 1,461.3
Weighted average interest rate⁽¹⁾
3.5 % 3.5 % 3.5 % 3.5 % 5.5 % 5.5 % 5.3 %
Variable Rate Debt⁽²⁾
$ 61.3
$ —
$ —
$ —
$ —
$ —
$ 61.3
$ 61.3
Weighted average interest rate 3.3 % — % — % — % — % — % 3.3 %

⁽¹⁾Represents the coupon rate of interest on the full principal amount of the debt.

⁽²⁾

Based upon the amount of variable rate debt outstanding at ~~September~~June 30, ~~2017,~~2023, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately ~~$0.6~~$2.5 million per year.

TAYLOR MORRISON HOME CORPORATION 10-Q

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer and principal accounting officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”))~~, as of September 30, 2017.~~. Based on this evaluation, as of June 30, 2023 our principal executive officer, principal financial officer and principal accounting officer concluded that ~~as of September 30, 2017, the Company’s~~our disclosure controls and procedures were effective in alerting them in a timely manner to ~~accomplish their objectives at~~material information required to be disclosed in our periodic and other reports filed with the ~~reasonable assurance level.~~

SEC.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting ~~(as defined in Rule 13a-15(f) under the Exchange Act)~~ during the quarter ended ~~September~~June 30, ~~2017~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

TAYLOR MORRISON HOME CORPORATION 10-Q

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~We are involved~~

The information required with respect to this item can be found in ~~various litigation~~Note 13 - Commitments and ~~legal claims~~Contingencies under “Legal Proceedings” in the normal course of our business operations, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations. We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any potential loss is reasonably estimable. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing or the eventual loss. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. However,Notes to the ~~extent the liability arising from the ultimate resolution of any matter exceeds the estimates reflected~~Unaudited Condensed Consolidated Financial Statements included in ~~the recorded reserves relating to such matter, we could incur additional charges that could be significant.~~

this quarterly report.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in Part I, Item ~~1A.~~1A of our Annual Report. These risk factors may materially affect our business, financial condition or results of operations. You should carefully consider the risk factors set forth in our Annual Report and the other information set forth elsewhere in this quarterly report. You should be aware that these risk factors and other information may not describe every risk facing our Company.

TAYLOR MORRISON HOME CORPORATION 10-Q

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PART II — OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Issuer Purchases of Equity Securities~~

~~During the three months ended September 30, 2017,~~

On May 31, 2022, we ~~repurchased the following number of shares of~~announced that our ~~Class A Common Stock:~~

Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs
Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands) ^(a)

July 1 to July 31, 2017 —
$ —
—
$ 56,427
August 1 to August 31, 2017 —
$ —
—
$ 56,427
September 1 to September 30, 2017 195,824
$ 20.93
195,824
$ 95,898
Total 195,824
195,824

^(a) ~~Our~~ Board of Directors ~~has~~had authorized the repurchase of up to ~~$100.0~~$500.0 million of the ~~Company’s Class A~~Company's Common Stock through December 31, ~~2018~~2023. As of June 30, 2023, we had approximately $275.6 million of available capacity remaining under the repurchase program. Repurchases of the Company's Common Stock under the program will occur from time to time, if at all, in open market purchases, privately negotiated transactions or other transactions. ~~The~~We did not repurchase any of our Common Stock during the three months ended June 30, 2023.

Any stock repurchase program is subject to prevailing market conditions and other considerations, including our liquidity, the terms of our debt instruments, statutory requirements, planned land investment and development spending, acquisition and other investment opportunities and ongoing capital requirements.

The program does not require us to repurchase any specific number of shares of Common Stock, and the program may be suspended, extended, modified or discontinued at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~

As previously disclosed, Taylor Morrison Home Corporation (the “Company”) appointed Curt VanHyfte as the Company’s Interim Chief Financial Officer effective May 1, 2023. On July 24, 2023, the Board of Directors of the Company (the “Board”) approved Mr. VanHyfte’s appointment as Executive Vice President and Chief Financial Officer, on a permanent basis, effective immediately.

Mr. VanHyfte, 55, joined the Company in connection with the Company’s acquisition of William Lyon Homes (“WLH”) in February 2020, and has served as Interim Chief Financial Officer since the May 2023. Prior to serving as Interim Chief Financial Officer, Mr. VanHyfte served as the Company’s West Area President since November 2020. In such role, he was responsible for overseeing and driving operational excellence and growth for Western markets, including those in Arizona, California, Washington and Oregon. While at WLH from 2019 to 2020, Mr. VanHyfte served as Division President of the Arizona division, where he led overall homebuilding operations in the Phoenix market. Prior to joining WLH, Mr. VanHyfte served at M/I Homes, Inc. as Area President, Chicago Division, responsible for homebuilding operations in the area. During his nearly 30-year career in homebuilding, he has held division, regional and national roles in finance and spent time as a Division President in Chicago, St. Louis, Houston and Phoenix for several homebuilders. Mr. VanHyfte earned a B.S. in accounting with a minor in business management from St. John’s University in Minnesota.

In connection with Mr. VanHyfte’s appointment, the Compensation Committee of the Board of Directors (the “Committee”) approved an Amended and Restated Employment Agreement for Mr. VanHyfte, dated as of July 24, 2023 and effective as of such date (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. VanHyfte employment with the Company will continue in effect until terminated by the Company or by Mr. VanHyfte, and Mr. VanHyfte will be entitled to receive (i) an annual base salary of $550,000, retroactive to May 1, 2023; (ii) a target annual cash bonus award equal to 150% of Mr. VanHyfte’s base salary pursuant the Company’s annual bonus plan; and (iii) equity-based compensation awards under the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “2013 Omnibus Plan”), as determined by the Board or Committee in its sole discretion.

TAYLOR MORRISON HOME CORPORATION 10-Q

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PART II — OTHER INFORMATION

In addition, in connection with his appointment as Chief Financial Officer, the Committee granted the following equity awards to Mr. VanHyfte, effective July 31, 2023: (i) stock options with a grant date fair value of $48,000 and an exercise price per share equal to the closing price of a share of Common Stock on the grant date, which shall vest over a four-year period, with approximately 25% of the stock options granted vesting on each of the first, second, third, and fourth anniversaries of the grant date, subject to continued employment through the applicable vesting date; (ii) service-based restricted stock units (“RSUs”) with a grant date fair value of $96,000, which shall vest over a three-year period, with approximately 33 1/3% of the RSUs granted vesting on each of the first, second and third anniversaries of the grant date, subject to continued employment through the applicable vesting date; and (iii) performance-based restricted stock units with a grant date fair value of $96,000, 50% of which shall vest based on the Company’s return on net assets and a relative TSR modifier and 50% of which vest based on the Company’s revenue and a relative TSR modifier, in each case, as measured over a three-year performance period ending December 31, 2025.

Under the Employment Agreement, upon a termination of Mr. VanHyfte’s employment without “cause” or a resignation for “good reason” (each as defined in the Employment Agreement and referred to herein as a “Qualifying Termination”), in addition to receiving his unpaid base salary, benefits, vacation pay, reimbursable expenses, and annual bonus earned but not paid in respect of a prior year, Mr. VanHyfte would be entitled to receive, subject to execution of a release of claims, (a) severance payments equal to a multiple of 1.5 times the sum of his base salary and the higher of his target bonus or average annual bonus paid in or payable in respect of (whichever results in a higher average) the three completed calendar years that preceded the date of termination payable over an 18-month period, (b) a 12-month COBRA subsidy, (c) a prorated annual bonus for the year of termination, based on actual performance, and (d) up to 12 months of outplacement assistance. However, if such termination occurs at any time (x) following the execution of a definitive agreement with a third party that, if consummated, would result in a “change in control” (as defined in the 2013 Omnibus Plan), but before such transaction is consummated (and subject to such consummation) or (y) within 24 months following a “change in control” (each, a “CIC Qualifying Termination”) then Mr. VanHyfte would be entitled to (i) a lump sum payment equal to a multiple of 2.0 times the sum of his base salary and the higher of his target bonus or average annual bonus paid in or payable in respect of (whichever results in a higher average) the three completed calendar years that preceded the date of termination; and (ii) a prorated portion of the annual profit sharing program bonus payable with respect to the calendar year in which such termination occurs, determined on a daily basis, based solely on the actual level of achievement of the applicable performance goals for such year, and payable if and when annual profit sharing program bonuses are paid to other senior executives of the Company with respect to such year.

With respect to equity awards, the Employment Agreement provides that Mr. VanHyfte’s time-based equity awards will vest in full upon a CIC Qualifying Termination or upon Mr. VanHyfte’s death or disability. For equity awards subject to a performance condition, upon a change in control, all performance goals applicable to awards that vest based on both the completion of a period of service and the satisfaction of a performance condition will be deemed achieved at the “target” level, and Mr. VanHyfte will be eligible to vest in the performance award on the last date of the applicable service period, subject to his continued employment. However, if Mr. VanHyfte experiences a CIC Qualifying Termination, then he will vest in the performance award on the date of termination (or the date of the change in control, if later). In the event of Mr. VanHyfte’s death or disability, then Mr. VanHyfte (or his beneficiary) will remain eligible to vest in a pro-rated portion of his unvested performance awards based on a fraction, the numerator of which is the number of completed months in the applicable performance period at the time of such termination and the denominator of which is the number of months in the applicable performance period, multiplied by the number of shares of common stock which are finally determined to be earned and subject to the performance award following the completion of the performance period. The portion of each performance award eligible to vest shall be based on actual results for the applicable performance period and shall be determined in accordance with the terms of the applicable award agreement(s).

The Employment Agreement includes restrictive covenants pertaining to confidential information, nondisparagement and intellectual property, as well as covenants relating to non-solicitation of employees and non-solicitation of customers and suppliers during the term of employment and surviving for two years following the end of the term of employment.

TAYLOR MORRISON HOME CORPORATION 10-Q

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ITEM 6. EXHIBITS



Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation ~~(included as~~(incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on ~~April 15, 2013, and incorporated herein by reference)~~May 30, 2019).
3.2
~~3.2~~		Amended and Restated By-laws ~~(included as~~(incorporated herein by reference to Exhibit ~~3.2~~3.1 to the Company’s Current Report on Form 8-K filed on ~~April 15, 2013, and incorporated herein by reference)~~March 7, 2023).
10.1*†		Form of Omnibus Amendment to Restricted Stock Unit Agreements and Employee Nonqualified Option Award Agreements under the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan
31.1* 10.2*†		Amended and Restated Employment Agreement, dated April 25, 2023, between Taylor Morrison, Inc. and Louis Steffens
31.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
31.2*
31.2*		Certification of ~~C. David Cone,~~Curt VanHyfte, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.
32.1**
32.1*		Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
32.2**
32.2*		Certification of ~~C. David Cone,~~Curt VanHyfte, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
~~101.INS~~ 101.SCH*		~~XBRL Instance Document.~~

~~101.SCH~~		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
~~101.CAL~~		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
~~101.DEF~~		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
~~101.LAB~~		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
~~101.PRE~~		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in inline XBRL (and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

† Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them other than for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

TAYLOR MORRISON HOME CORPORATION 10-Q

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly ~~authorized.~~

authorized.



		TAYLOR MORRISON HOME CORPORATION
		Registrant
DATE:	~~November 1, 2017~~ July 26, 2023
		/s/ Sheryl D. Palmer
		Sheryl D. Palmer
		Chairman ~~President~~of the Board of Directors and Chief Executive Officer (Principal Executive Officer)

		/s/ ~~C. David Cone~~ Curt VanHyfte
		~~C. David Cone~~ Curt VanHyfte
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

		/s/ Joseph Terracciano
		Joseph Terracciano
		Chief Accounting Officer (Principal Accounting Officer)

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~No.~~		~~Description~~

~~3.1~~		~~Amended and Restated Certificate of Incorporation (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).~~

~~3.2~~		~~Amended and Restated By-laws (included as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).~~

31.1*		~~Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.~~

31.2*		~~Certification of C. David Cone, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley Act of 2002.~~

32.1*		~~Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.~~

32.2*		~~Certification of C. David Cone, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.~~

~~101.INS~~		~~XBRL Instance Document.~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document.~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

* Filed herewith

TAYLOR MORRISON HOME CORPORATION 10-Q


	As of
	June 30, 2023				December 31, 2022
	Owned Lots		Book Value of Land Developed and Under Development		Owned Lots		Book Value of Land Developed and Under Development
Homebuilding owned lots
Undeveloped		13,585	$	453,893		14,985	$	522,594
Under development		8,671		924,530		10,716		1,106,751
Finished		19,154		2,289,534		18,366		2,018,062
Total homebuilding owned lots		41,410		3,667,957		44,067		3,647,407
Other assets(1)		—		1,889		—		3,134
Total owned lots		41,410	$	3,669,846		44,067	$	3,650,541



ý ☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨ ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	~~Page~~
Part I		~~PART I.~~ FINANCIAL INFORMATION
	2
ITEM 1.	~~Item 1.~~ Financial Statements of Taylor Morrison Home Corporation (Unaudited)	2
	2
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022	2
	3
	Condensed Consolidated Statements of Operations for the three and ~~nine month periods~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022	3
	4
	Condensed Consolidated Statements ~~of Comprehensive Income for the three and nine month periods ended September 30, 2017 and 2016~~	4

~~Condensed Consolidated Statement~~ of Stockholders’ Equity for the ~~nine month period~~three and six months ended ~~September~~June 30, ~~2017~~2023 and 2022	5
	6
	Condensed Consolidated Statements of Cash Flows for the ~~nine month period~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022	6
	7
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
	21
ITEM 2.	~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	33
ITEM 3.	~~Item 3.~~ Quantitative and Qualitative Disclosures About Market Risk	38
	34
ITEM 4.	~~Item 4.~~ Controls and Procedures	39

~~PART II. OTHER INFORMATION~~
Part II		OTHER INFORMATION
	35	ITEM 1.	~~Item 1.~~ Legal Proceedings	40
	35	ITEM 1A.	Risk Factors
~~Item 1A. Risk Factors~~	40
36	ITEM 2.
~~Item 2.~~ Unregistered Sales of Equity Securities and Use of Proceeds	40
	36
ITEM 3.	~~Item 3.~~ Defaults Upon Senior Securities	40
	36
ITEM 4.	~~Item 4.~~ Mine Safety Disclosures	40
	36	ITEM 5.	Other Information
~~Item 5. Other Information~~	38	ITEM 6.	40Exhibits

~~Item 6. Exhibits~~	41
39
SIGNATURES	42



	September 30, 2017			December 31, 2016
Assets
Cash and cash equivalents	$	264,862		$	300,179
Restricted cash	1,315			1,633
Total cash, cash equivalents, and restricted cash	266,177			301,812
Owned inventory	3,240,664			3,010,967
Real estate not owned under option agreements	3,107			6,252
Total real estate inventory	3,243,771			3,017,219
Land deposits	50,879			37,233
Mortgage loans held for sale	107,665			233,184
Derivative assets	2,037			2,291
Prepaid expenses and other assets, net	72,546			73,425
Other receivables, net	98,948			115,246
Investments in unconsolidated entities	184,817			157,909
Deferred tax assets, net	215,666			206,634
Property and equipment, net	6,229			6,586
Intangible assets, net	2,395			3,189
Goodwill	66,198			66,198
Total assets	$	4,317,328		$	4,220,926
Liabilities
Accounts payable	$	146,263		$	136,636
Accrued expenses and other liabilities	190,384			209,202
Income taxes payable	15,019			10,528
Customer deposits	185,604			111,573
Senior notes, net	1,239,211			1,237,484
Loans payable and other borrowings	161,798			150,485
Revolving credit facility borrowings	—			—
Mortgage warehouse borrowings	61,292			198,564
Liabilities attributable to real estate not owned under option agreements	3,107			6,252
Total liabilities	2,002,678			2,060,724
COMMITMENTS AND CONTINGENCIES (Note 16)
Stockholders’ Equity
Class A common stock, $0.00001 par value, 400,000,000 shares authorized, 75,356,556 and 33,340,291 shares issued, 72,307,299 and 30,486,858 shares outstanding as of September 30, 2017 and December 31, 2016, respectively	1			—
Class B common stock, $0.00001 par value, 200,000,000 shares authorized, 47,249,127 and 88,942,052 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	—			1
Preferred stock, $0.00001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016	—			—
Additional paid-in capital	1,142,210			384,709
Treasury stock at cost; 3,049,257 and 2,853,433 shares as of September 30, 2017 and December 31, 2016, respectively	(47,622		)	(43,524		)
Retained earnings	297,402			228,613
Accumulated other comprehensive loss	(17,989		)	(17,989		)
Total stockholders’ equity attributable to Taylor Morrison Home Corporation	1,374,002			551,810
Non-controlling interests – joint ventures	1,858			1,525
Non-controlling interests – Principal Equityholders	938,790			1,606,867
Total stockholders’ equity	2,314,650			2,160,202
Total liabilities and stockholders’ equity	$	4,317,328		$	4,220,926



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Home closings revenue, net	$	886,249		$	812,185		$	2,526,830		$	2,271,154
Land closings revenue	4,299			27,418			11,419			44,957
Mortgage operations revenue	17,479			13,814			47,362			36,951
Total revenues	908,027			853,417			2,585,611			2,353,062
Cost of home closings	721,637			658,507			2,062,437			1,852,724
Cost of land closings	3,002			8,179			7,869			20,497
Mortgage operations expenses	12,070			7,877			30,874			22,594
Total cost of revenues	736,709			674,563			2,101,180			1,895,815
Gross margin	171,318			178,854			484,431			457,247
Sales, commissions and other marketing costs	61,476			58,277			178,609			165,300
General and administrative expenses	33,374			29,944			100,396			91,078
Equity in income of unconsolidated entities	(2,787		)	(1,646		)	(6,943		)	(4,734		)
Interest income, net	(135		)	(47		)	(314		)	(149		)
Other expense, net	415			1,935			828			8,602
Income before income taxes	78,975			90,391			211,855			197,150
Income tax provision	24,282			31,707			65,631			66,698
Net income before allocation to non-controlling interests	54,693			58,684			146,224			130,452
Net income attributable to non-controlling interests — joint ventures	(427		)	(376		)	(625		)	(856		)
Net income before non-controlling interests — Principal Equityholders	54,266			58,308			145,599			129,596
Net income attributable to non-controlling interests — Principal Equityholders	(21,390		)	(43,471		)	(76,810		)	(96,261		)
Net income available to Taylor Morrison Home Corporation	$	32,876		$	14,837		$	68,789		$	33,335
Earnings per common share
Basic	$	0.45		$	0.49		$	1.21		$	1.07
Diluted	$	0.45		$	0.49		$	1.21		$	1.07
Weighted average number of shares of common stock:
Basic	72,471			30,427			56,791			31,300
Diluted	121,183			120,103			120,991			120,870


	Common Stock				Additional Paid-in Capital		Treasury Stock					Stockholders' Equity
	Shares		Amount		Amount		Shares		Amount			Retained Earnings		Accumulated Other Comprehensive Income		Non- controlling Interest		Total Stockholders’ Equity
Balance – March 31, 2023		109,034,112	$	1	$	3,037,515		51,506,248	$	(1,140,706	)	$	2,932,666	$	359	$	16,711	$	4,846,546
Net income		—		—		—		—		—			234,602		—		303		234,905
Exercise of stock options and issuance of restricted stock units, net(1)		409,672		—		8,591		—		—			—		—		—		8,591
Stock compensation expense		—		—		5,271		—		—			—		—		—		5,271
Balance – June 30, 2023		109,443,784	$	1	$	3,051,377		51,506,248	$	(1,140,706	)	$	3,167,268	$	359	$	17,014	$	5,095,313



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Income before non-controlling interests, net of tax	$	54,693		$	58,684		$	146,224		$	130,452
Other comprehensive loss, net of tax:
Post-retirement benefits adjustments, net of tax	—			—			—			(447		)
Other comprehensive loss, net of tax	—			—			—			(447		)
Comprehensive income	54,693			58,684			146,224			130,005
Comprehensive income attributable to non-controlling interests — joint ventures	(427		)	(376		)	(625		)	(856		)
Comprehensive income attributable to non-controlling interests — Principal Equityholders	(21,390		)	(43,471		)	(76,810		)	(95,932		)
Comprehensive income available to Taylor Morrison Home Corporation	$	32,876		$	14,837		$	68,789		$	33,217



	Common Stock
	Class A						Class B							Additional Paid-in Capital				Treasury Stock						Stockholders' Equity
	Shares			Amount			Shares			Amount				Amount				Shares		Amount				Retained Earnings			Accumulated Other Comprehensive Loss				Non-controlling Interest - Joint Venture				Non-controlling Interest - Principal Equityholders				Total Stockholders’ Equity
Balance – December 31, 2016	30,486,858			$	—		88,942,052			$	1			$	384,709			2,853,433		$	(43,524	)		$	228,613		$	(17,989	)		$	1,525			$	1,606,867			$	2,160,202
Net income	—			—			—			—				—				—		—				68,789			—				625				76,810				146,224
Exchange of New TMM Units and corresponding number of Class B Common Stock	191,333			—			(191,333	)		—				—				—		—				—			—				—				—				—
Cancellation of forfeited New TMM Units and corresponding number of Class B Common Stock	—			—			(1,592	)		—				—				—		—				—			—				—				—				—
Exercise of stock options	265,167			—			—			—				4,791				—		—				—			—				—				—				4,791
Issuance of restricted stock units, net of shares withheld for tax	59,765		—	—		—	—		—	—			—	(307		)	—	—	—	—			—	—		—	—			—	—			—	—			—	(307		)
Repurchase of common stock	(195,824	)		—			—			—				—				195,824		(4,098		)		—			—				—				—				(4,098		)
Exchange of (repurchase) of B shares from secondary offerings	41,500,000			1			—			—				748,096				—		—				—			—				—				—				748,097
Repurchase of New TMM Units from principal equityholders	—			—			(41,500,000	)		(1		)		—				—		—				—			—				—				(750,193		)		(750,194		)
Share based compensation	—			—			—			—				4,921				—		—				—			—				—				5,306				10,227
Changes in non-controlling interests of consolidated joint ventures	—			—			—			—				—				—		—				—			—				(292		)		—				(292		)
Balance – September 30, 2017	72,307,299			$	1		47,249,127			$	—			$	1,142,210			3,049,257		$	(47,622	)		$	297,402		$	(17,989	)		$	1,858			$	938,790			$	2,314,650



	Nine Months Ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests	$	146,224		$	130,452
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of unconsolidated entities	(6,943		)	(4,734		)
Stock compensation expense	10,227			8,959
Distributions of earnings from unconsolidated entities	4,666			2,538
Depreciation and amortization	2,994			3,000
Debt issuance costs amortization	2,864			2,888
Contingent consideration	766			3,520
Deferred income taxes	(9,032		)	(969		)
Changes in operating assets and liabilities:
Real estate inventory and land deposits	(243,343		)	(103,758		)
Mortgages held for sale, prepaid expenses and other assets	141,813			76,281
Customer deposits	74,031			44,780
Accounts payable, accrued expenses and other liabilities	4,017			(9,415		)
Income taxes payable	4,491			(11,119		)
Net cash provided by operating activities	132,775			142,423
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,843		)	(934		)
Payments for business acquisitions	—			(52,819		)
Distributions of capital from unconsolidated entities	4,223			3,546
Investments of capital into unconsolidated entities	(28,854		)	(24,509		)
Net cash (used in) investing activities	(26,474		)	(74,716		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable and other borrowings	8,644			55,720
Repayments of loans payable and other borrowings	(11,305		)	(65,075		)
Borrowings on revolving credit facility	—			255,000
Payments on revolving credit facility	—			(155,000		)
Borrowings on mortgage warehouse	567,922			782,001
Repayment on mortgage warehouse	(705,194		)	(874,279		)
Payment of contingent consideration	—			(3,100		)
Proceeds from stock option exercises	4,791			—
Proceeds from issuance of shares from secondary offerings	882,306			—
Repurchase of shares from principal equity holders	(884,403		)	—
Repurchase of common stock, net	(4,098		)	(28,543		)
Payment of taxes related to net share settlement of equity awards	(307		)	—
Distributions to non-controlling interests of consolidated joint ventures, net	(292		)	(60		)
Net cash (used in) financing activities	(141,936		)	(33,336		)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	$	(35,635	)	$	34,371
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	301,812			127,468
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	266,177		$	161,839
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net	$	(70,172	)	$	(78,786	)
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in loans payable issued to sellers in connection with land purchase contracts	$	55,151		$	55,720
Change in inventory not owned	$	(3,145	)	$	(7,309	)
Original accrual of contingent consideration for business combinations	$	—		$	380



(In thousands)	Acadia Homes
Acquisition Date	January 8, 2016
Assets acquired
Real estate inventory	$	76,152
Land deposits	984
Prepaid expenses and other assets	816
Property and equipment	204
Goodwill ⁽¹⁾	8,500
Total assets	$	86,656

Less liabilities assumed
Accrued expenses and other liabilities	$	2,562
Customer deposits	463
Net assets acquired	$	83,631



	As of
	September 30, 2017		December 31, 2016
Real estate developed and under development	$	2,171,670	$	2,074,651
Real estate held for development or held for sale⁽¹⁾	143,585		183,638
Operating communities ⁽²⁾	825,946		650,036
Capitalized interest	99,463		102,642
Total owned inventory	3,240,664		3,010,967
Real estate not owned under option agreements	3,107		6,252
Total real estate inventory	$	3,243,771	$	3,017,219



	As of
	September 30, 2017			December 31, 2016
	Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development
Raw	7,922	$	349,467	7,142	$	403,902
Partially developed	5,526	526,904		8,037	501,496
Finished	12,828	1,426,683		11,318	1,336,709
Long-term strategic assets	893	12,201		1,489	16,182
Total	27,169	$	2,315,255	27,986	$	2,258,289



	As of September 30, 2017		As of December 31, 2016
Real estate development costs to complete	$	9,597	$	15,156
Compensation and employee benefits	53,065		63,802
Self-insurance and warranty reserves	51,536		50,550
Interest payable	24,454		17,233
Property and sales taxes payable	11,486		17,231
Other accruals	40,246		45,230
Total accrued expenses and other liabilities	$	190,384	$	209,202



(Shares presented in thousands)
Closing date	Number of shares	Net purchase price per share
February 6, 2017	11,500	$	18.2875
March 27, 2017	10,000	20.7800
May 5, 2017	10,000	23.1200
June 27, 2017	10,000	23.3000



	Shares Outstanding	Percentage
Class A Common Stock	72,307,299	60.5	%
Class B Common Stock	47,249,127	39.5	%
Total	119,556,426	100	%



	Shares		Weighted Average Grant Date Fair Value
Balance at December 31, 2016	1,358,701		$	13.39
Granted	647,354		18.06
Vested	(78,221	)	17.43
Forfeited	(53,892	)	13.95
Balance at September 30, 2017	1,873,942		$	14.82



	Shares		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2016	2,431,347		$	17.09
Granted	790,651		19.05
Exercised	(265,167	)	18.07
Canceled/Forfeited	(74,811	)	18.01
Outstanding at September 30, 2017	2,882,020		$	17.52
Options exercisable at September 30, 2017	933,259		$	19.63



	Class B Shares/New TMM Units		Weighted Average Grant Date Fair Value
Balance at December 31, 2016	1,146,357		$	5.58
Exchanges ⁽¹⁾	(191,333	)	5.36
Forfeited ⁽²⁾	(1,592	)	8.52
Balance at September 30, 2017 ⁽³⁾	953,432		$	5.62



	Nine Months Ended September 30, 2017
	Total Post- Retirement Benefits Adjustments		Foreign Currency Translation Adjustments			Non-controlling Interest - Principal Equityholders Reclassification			Total
Balance, beginning of period	$	2,061	$	(79,927	)	$	59,877		$	(17,989	)
Gross amounts reclassified within accumulated other comprehensive income	—		27,968			(27,968		)	—
Balance, end of period	$	2,061	$	(51,959	)	$	31,909		$	(17,989	)



	Nine Months Ended September 30, 2016
	Total Post- Retirement Benefits Adjustments			Foreign Currency Translation Adjustments			Non-controlling Interest - Principal Equityholders Reclassification		Total
Balance, beginning of period	$	2,305		$	(79,927	)	$	59,625	$	(17,997	)
Other comprehensive income before reclassifications	(447		)	—			—		(447		)
Other comprehensive income, net of tax	$	(447	)	$	—		$	—	$	(447	)
Gross amounts reclassified within accumulated other comprehensive income	—			—			329		329
Balance, end of period	$	1,858		$	(79,927	)	$	59,954	$	(18,115	)



	Three Months Ended September 30, 2017
	East			Central			West			Mortgage Operations		Corporate and Unallocated			Total
Total revenues	$	312,539		$	256,842		$	321,167		$	17,479	$	—		$	908,027

Gross margin	63,188			47,797			54,924			5,409		—			171,318
Selling, general and administrative expenses	(28,469		)	(25,108		)	(19,087		)	—		(22,186		)	(94,850		)
Equity in income of unconsolidated entities	—			693			924			1,170		—			2,787
Interest and other (expense)/income, net	(7		)	(87		)	46			—		(232		)	(280		)
Income/(loss) before income taxes	$	34,712		$	23,295		$	36,807		$	6,579	$	(22,418	)	$	78,975



	Three Months Ended September 30, 2016
	East			Central			West			Mortgage Operations		Corporate and Unallocated			Total
Total revenues	$	288,639		$	273,095		$	277,869		$	13,814	$	—		$	853,417

Gross margin	70,026			51,267			51,624			5,937		—			178,854
Selling, general and administrative expenses	(26,866		)	(24,842		)	(18,507		)	—		(18,006		)	(88,221		)
Equity in income of unconsolidated entities	132			331			319			864		—			1,646
Interest and other (expense)/income, net	(1,260		)	(1,148		)	162			4		354			(1,888		)
Income/(loss) before income taxes	$	42,032		$	25,608		$	33,598		$	6,805	$	(17,652	)	$	90,391


	As of June 30, 2023
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Real estate inventory and land deposits	$	1,811,595	$	1,153,486	$	2,476,610	$	—	$	—	$	5,441,691
Investments in unconsolidated entities		49,359		114,867		82,656		5,283		54,100		306,265
Other assets		164,370		231,157		600,774		373,674		1,630,858		3,000,833
Total assets	$	2,025,324	$	1,499,510	$	3,160,040	$	378,957	$	1,684,958	$	8,748,789


	As of December 31, 2022
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Real estate inventory and land deposits	$	1,820,765	$	1,359,805	$	2,453,662	$	—	$	—	$	5,634,232
Investments in unconsolidated entities		46,629		104,070		80,310		5,283		46,608		282,900
Other assets		216,816		251,727		613,029		431,535		1,040,485		2,553,592
Total assets	$	2,084,210	$	1,715,602	$	3,147,001	$	436,818	$	1,087,093	$	8,470,724



	As of September 30, 2017
	East		Central		West		Mortgage Operations		Corporate and Unallocated		Total
Real estate inventory and land deposits	$	1,236,731	$	906,024	$	1,151,895	$	—	$	—	$	3,294,650
Investments in unconsolidated entities	27,593		32,695		120,914		3,615		—		184,817
Other assets	58,004		126,162		51,277		153,728		448,690		837,861
Total assets	$	1,322,328	$	1,064,881	$	1,324,086	$	157,343	$	448,690	$	4,317,328



	As of December 31, 2016
	East		Central		West		Mortgage Operations		Corporate and Unallocated		Total
Real estate inventory and land deposits	$	1,110,340	$	829,354	$	1,114,758	$	—	$	—	$	3,054,452
Investments in unconsolidated entities	25,923		30,146		98,625		3,215		—		157,909
Other assets	80,320		139,383		43,304		269,131		476,427		1,008,565
Total assets	$	1,216,583	$	998,883	$	1,256,687	$	272,346	$	476,427	$	4,220,926



	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
(Dollars in thousands)	2017			2016			2017			2016
Statements of Operations Data:
Home closings revenue, net	$	886,249		$	812,185		$	2,526,830		$	2,271,154
Land closings revenue	4,299			27,418			11,419			44,957
Mortgage operations revenue	17,479			13,814			47,362			36,951
Total revenues	908,027			853,417			2,585,611			2,353,062
Cost of home closings	721,637			658,507			2,062,437			1,852,724
Cost of land closings	3,002			8,179			7,869			20,497
Mortgage operations expenses	12,070			7,877			30,874			22,594
Gross margin	171,318			178,854			484,431			457,247
Sales, commissions and other marketing costs	61,476			58,277			178,609			165,300
General and administrative expenses	33,374			29,944			100,396			91,078
Equity in income of unconsolidated entities	(2,787		)	(1,646		)	(6,943		)	(4,734		)
Interest income, net	(135		)	(47		)	(314		)	(149		)
Other expense, net	415			1,935			828			8,602
Income before income taxes	78,975			90,391			211,855			197,150
Income tax provision	24,282			31,707			65,631			66,698
Net income before allocation to non-controlling interests	54,693			58,684			146,224			130,452
Net income attributable to non-controlling interests – joint ventures	(427		)	(376		)	(625		)	(856		)
Net income before non-controlling interests – Principal Equityholders	54,266			58,308			145,599			129,596
Net income from continuing operations attributable to non-controlling interests – Principal Equityholders	(21,390		)	(43,471		)	(76,810		)	(96,261		)
Net income available to Taylor Morrison Home Corporation	$	32,876		$	14,837		$	68,789		$	33,335
Home closings gross margin	18.6		%	18.9		%	18.4		%	18.4		%
Sales, commissions and other marketing costs as a percentage of home closings revenue	6.9		%	7.2		%	7.1		%	7.3		%
General and administrative expenses as a percentage of home closings revenue	3.8		%	3.7		%	4.0		%	4.0		%
Average sales price per home closed	$	481		$	468		$	474		$	459



	Three Months Ended September 30,
	Net Sales Orders ⁽¹⁾				Sales Value ⁽¹⁾						Average Selling Price
(Dollars in thousands)	2017	2016	Change		2017		2016		Change		2017		2016		Change
East	777	795	(2.3	)%	$	302,795	$	302,363	0.1	%	$	390	$	380	2.6	%
Central	521	550	(5.3	)	247,084		261,971		(5.7	)	474		476		(0.4	)
West	463	605	(23.5	)	300,815		354,281		(15.1	)	650		586		10.9
Total	1,761	1,950	(9.7	)%	$	850,694	$	918,615	(7.4	)%	$	483	$	471	2.5	%



	Cancellation Rate⁽¹⁾
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
East	11.8	%	13.5	%	10.1	%	12.2	%
Central	14.4		12.8		12.2		15.4
West	11.1		15.1		11.6		13.2
Total Company	12.4	%	13.7	%	11.1	%	13.4	%

(Dollars in thousands)

Description:

Level in
Fair Value
Hierarchy

Fair Value at December 31, 2016

Inventories ⁽¹⁾