UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June~~September 30, 2021


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

For the transition period from to

Commission File Number: 001-35873

TAYLOR MORRISON HOME CORPORATION

(Exact name of registrant as specified in its Charter)


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


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

(480) 840-8100

(Registrant’s telephone number, including area code)

N/A

(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: (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. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ý 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

☐

Non-accelerated filer

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

Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

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 ~~July 29,~~October 27, 2021
Common stock, $0.00001 par value						~~125,289,090~~122,890,811

Table of Contents

TAYLOR MORRISON HOME CORPORATION

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements of Taylor Morrison Home Corporation (Unaudited)			2

Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2021 and December 31, 2020			2

Condensed Consolidated Statements of Operations for the three and ~~six~~nine month periods ended ~~June~~September 30, 2021 and 2020			3

Condensed Consolidated Statements of Comprehensive Income for the three and ~~six~~nine month periods ended ~~June~~S e ptember 30, 2021 and 2020			4

Condensed Consolidated Statement of Stockholders’ Equity for the three and ~~six~~nine month periods ended ~~June~~September 30, 2021 and 2020			5

Condensed Consolidated Statements of Cash Flows for the ~~six~~nine month periods ended ~~June~~Septe mber 30, 2021 and 2020			7

Notes to the Unaudited Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2627

Item 3. Quantitative and Qualitative Disclosures About Market Risk			42

Item 4. Controls and Procedures			43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			44

Item 1A. Risk Factors			44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44

Item 3. Defaults Upon Senior Securities			44

Item 4. Mine Safety Disclosures			44

Item 5. Other Information			44

Item 6. Exhibits			45

SIGNATURES			46

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	366,267	$	532,843	Cash and cash equivalents	$	373,407	$	532,843
Restricted cash	Restricted cash	1,854		1,266		Restricted cash	1,578		1,266
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	368,121		534,109		Total cash, cash equivalents, and restricted cash	374,985		534,109

Owned inventory	Owned inventory	5,692,753		5,209,653		Owned inventory	5,845,767		5,209,653
Consolidated real estate not owned	Consolidated real estate not owned	63,717		122,773		Consolidated real estate not owned	58,429		122,773
Total real estate inventory	Total real estate inventory	5,756,470		5,332,426		Total real estate inventory	5,904,196		5,332,426
Land deposits	Land deposits	126,015		125,625		Land deposits	163,730		125,625
Mortgage loans held for sale	Mortgage loans held for sale	277,017		201,177		Mortgage loans held for sale	286,006		201,177
Derivative assets	Derivative assets	3,687		5,294		Derivative assets	3,638		5,294
Lease right of use assets	Lease right of use assets	68,490		73,222		Lease right of use assets	71,261		73,222
Prepaid expenses and other assets, net	Prepaid expenses and other assets, net	278,806		242,744		Prepaid expenses and other assets, net	277,768		242,744
Other receivables, net	Other receivables, net	100,969		96,241		Other receivables, net	127,947		96,241
Investments in unconsolidated entities	Investments in unconsolidated entities	130,044		127,955		Investments in unconsolidated entities	145,780		127,955
Deferred tax assets, net	Deferred tax assets, net	238,078		238,078		Deferred tax assets, net	238,078		238,078
Property and equipment, net	Property and equipment, net	127,869		97,927		Property and equipment, net	146,463		97,927

Goodwill	Goodwill	663,197		663,197		Goodwill	663,197		663,197

Total assets	Total assets	$	8,138,763	$	7,737,995	Total assets	$	8,403,049	$	7,737,995
Liabilities	Liabilities					Liabilities
Accounts payable	Accounts payable	$	269,924	$	215,047	Accounts payable	$	210,920	$	215,047
Accrued expenses and other liabilities	Accrued expenses and other liabilities	435,466		430,067		Accrued expenses and other liabilities	488,516		430,067
Lease liabilities	Lease liabilities	78,814		83,240		Lease liabilities	81,642		83,240
Income taxes payable	Income taxes payable	18,677		12,841		Income taxes payable	36,395		12,841
Customer deposits	Customer deposits	481,312		311,257		Customer deposits	520,547		311,257
Estimated development liability	Estimated development liability	39,356		40,625		Estimated development liability	39,135		40,625
Senior notes, net	Senior notes, net	2,452,344		2,452,365		Senior notes, net	2,452,333		2,452,365
Loans payable and other borrowings	Loans payable and other borrowings	415,074		348,741		Loans payable and other borrowings	406,859		348,741
Revolving credit facility borrowings	Revolving credit facility borrowings	0		0		Revolving credit facility borrowings	126,692		—
Mortgage warehouse borrowings	Mortgage warehouse borrowings	215,230		127,289		Mortgage warehouse borrowings	235,685		127,289
Liabilities attributable to consolidated real estate not owned	Liabilities attributable to consolidated real estate not owned	63,717		122,773		Liabilities attributable to consolidated real estate not owned	58,429		122,773

Total liabilities	Total liabilities	$4,469,914		$4,144,245		Total liabilities	$4,657,153		$4,144,245
COMMITMENTS AND CONTINGENCIES (Note 14)	COMMITMENTS AND CONTINGENCIES (Note 14)	0		0		COMMITMENTS AND CONTINGENCIES (Note 14)	0		0
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity

Total stockholders’ equity	Total stockholders’ equity	3,668,849		3,593,750		Total stockholders’ equity	3,745,896		3,593,750
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	8,138,763	$	7,737,995	Total liabilities and stockholders’ equity	$	8,403,049	$	7,737,995

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Home closings revenue, net	Home closings revenue, net	$	1,644,380	$	1,470,994	$	3,007,809	$	2,735,634	Home closings revenue, net	$	1,772,495	$	1,640,584	$	4,780,304	$	4,376,218
Land closings revenue	Land closings revenue	32,057		10,546		36,946		33,485		Land closings revenue	42,228		6,756		79,174		40,241
Financial services revenue	Financial services revenue	37,392		40,297		81,457		68,336		Financial services revenue	38,046		47,451		119,503		115,787
Amenity and other revenue	Amenity and other revenue	5,451		4,848		10,880		34,929		Amenity and other revenue	5,982		4,643		16,862		39,572
Total revenue	Total revenue	1,719,280		1,526,685		3,137,092		2,872,384		Total revenue	1,858,751		1,699,434		4,995,843		4,571,818
Cost of home closings	Cost of home closings	1,331,041		1,244,224		2,441,283		2,314,727		Cost of home closings	1,397,319		1,358,196		3,838,602		3,672,923
Cost of land closings	Cost of land closings	28,138		10,287		32,165		37,419		Cost of land closings	36,439		5,217		68,604		42,636
Financial services expenses	Financial services expenses	25,935		22,796		49,934		43,443		Financial services expenses	26,202		22,207		76,136		65,650
Amenity and other expenses	Amenity and other expenses	5,463		5,200		10,566		34,861		Amenity and other expenses	6,341		4,125		16,907		38,986
Total cost of revenue	Total cost of revenue	1,390,577		1,282,507		2,533,948		2,430,450		Total cost of revenue	1,466,301		1,389,745		4,000,249		3,820,195
Gross margin	Gross margin	328,703		244,178		603,144		441,934		Gross margin	392,450		309,689		995,594		751,623
Sales, commissions and other marketing costs	Sales, commissions and other marketing costs	97,560		94,038		183,512		180,365		Sales, commissions and other marketing costs	97,185		102,015		280,697		282,380
General and administrative expenses	General and administrative expenses	69,997		51,112		131,550		101,638		General and administrative expenses	70,425		45,152		201,975		146,790
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	(2,126)		(3,495)		(7,787)		(5,921)		Equity in income of unconsolidated entities	(1,482)		(2,957)		(9,269)		(8,878)
Interest expense/(income), net	Interest expense/(income), net	3		(337)		(116)		(897)		Interest expense/(income), net	710		(347)		594		(1,244)
Other expense/(income), net		45		(696)		1,020		5,595
Other expense, net										Other expense, net	47		1,830		1,067		7,424
Transaction expenses	Transaction expenses	0		18,712		0		105,086		Transaction expenses	—		4,791		—		109,877

Loss on extinguishment of debt, net										Loss on extinguishment of debt, net	—		10,247		—		10,247

Income before income taxes	Income before income taxes	163,224		84,844		294,965		56,068		Income before income taxes	225,565		148,958		520,530		205,027
Income tax provision	Income tax provision	38,469		17,622		67,767		18,403		Income tax provision	53,098		33,759		120,865		52,162

Net income before allocation to non-controlling interests	Net income before allocation to non-controlling interests	124,755		67,222		227,198		37,665		Net income before allocation to non-controlling interests	172,467		115,199		399,665		152,865
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	(608)		(1,548)		(5,030)		(3,423)		Net income attributable to non-controlling interests	(4,333)		(422)		(9,363)		(3,845)

Net income available to Taylor Morrison Home Corporation	Net income available to Taylor Morrison Home Corporation	$	124,147	$	65,674	$	222,168	$	34,242	Net income available to Taylor Morrison Home Corporation	$	168,134	$	114,777	$	390,302	$	149,020
Earnings per common share	Earnings per common share									Earnings per common share
Basic	Basic	$	0.97	$	0.51	$	1.73	$	0.27	Basic	$	1.35	$	0.88	$	3.07	$	1.17
Diluted	Diluted	$	0.95	$	0.50	$	1.70	$	0.27	Diluted	$	1.34	$	0.87	$	3.02	$	1.16
Weighted average number of shares of common stock:	Weighted average number of shares of common stock:									Weighted average number of shares of common stock:
Basic	Basic	128,440		129,629		128,661		125,768		Basic	124,378		129,775		127,217		127,113
Diluted	Diluted	130,259		130,364		130,766		126,726		Diluted	125,770		131,433		129,043		128,081

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

~~.TAYLOR~~TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Income before non-controlling interests, net of tax	Income before non-controlling interests, net of tax	$	124,755	$	67,222	$	227,198	$	37,665	Income before non-controlling interests, net of tax	$	172,467	$	115,199	$	399,665	$	152,865

Post-retirement benefits adjustments, net of tax	Post-retirement benefits adjustments, net of tax	0		0		0		(13)		Post-retirement benefits adjustments, net of tax	—		—		—		(13)
Comprehensive income	Comprehensive income	124,755		67,222		227,198		37,652		Comprehensive income	172,467		115,199		399,665		152,852
Comprehensive income attributable to non-controlling interests	Comprehensive income attributable to non-controlling interests	(608)		(1,548)		(5,030)		(3,423)		Comprehensive income attributable to non-controlling interests	(4,333)		(422)		(9,363)		(3,845)

Comprehensive income available to Taylor Morrison Home Corporation	Comprehensive income available to Taylor Morrison Home Corporation	$	124,147	$	65,674	$	222,168	$	34,229	Comprehensive income available to Taylor Morrison Home Corporation	$	168,134	$	114,777	$	390,302	$	149,007

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands, except share data, unaudited)


For the three months ended June 30, 2021
For the three months ended September 30, 2021																	For the three months ended September 30, 2021

		Common Stock			Additional Paid-in Capital	Treasury Stock			Stockholders' Equity									Common Stock								Additional Paid-in Capital	Treasury Stock				Stockholders' Equity
		Shares	Amount			Amount		Shares	Amount		Retained Earnings		Accumulated Other Comprehensive Loss		Non-controlling Interest					Total Stockholders’ Equity					Shares	Amount					Amount			Shares			Amount			Retained Earnings			Accumulated Other Comprehensive Loss	Non-controlling Interest			Total Stockholders’ Equity
Balance – March 31, 2021		128,736,493	$	1		$	2,934,111	27,332,065	$	(485,274)	$	1,123,810	$	(1,166)	$	84,082				$	3,655,564
Balance – June 30, 2021																	Balance – June 30, 2021		125,910,318				$	1				$	2,977,269	32,167,192		$	(624,615)		$	1,247,957		$	(1,166)		$	69,403			$	3,668,849
Net income	Net income	—	—			—		—	—		124,147		—		608					124,755		Net income			—						—			—			—			168,134			—	4,333			172,467

Exercise of stock options	Exercise of stock options	281,951	—			6,113		—	—		—		—		—					6,113		Exercise of stock options			276,595						5,778			—			—			—			—	—			5,778
Issuance of restricted stock units, net of shares withheld for tax(1)	Issuance of restricted stock units, net of shares withheld for tax(1)	22,796	—			(193)		—	—		—		—		—					(193)		Issuance of restricted stock units, net of shares withheld for tax(1)			8,789						(13)			—			—			—			—	—			(13)
Warrant exercises		1,704,205	—			32,584		—	—		—		—		—					32,584

Repurchase of common stock	Repurchase of common stock	(3,809,428)	—			—		3,809,428	(106,754)		—		—		—					(106,754)		Repurchase of common stock			(3,309,196)						—			3,309,196			(91,659)			—			—	—			(91,659)
Common stock surrendered in connection with warrant exercise		(1,025,699)	—			—		1,025,699	(32,587)		—		—		—					(32,587)

Stock compensation expense	Stock compensation expense	—	—			4,654		—	—		—		—		—					4,654		Stock compensation expense			—						4,793			—			—			—			—	—			4,793

Distributions to non-controlling interests of consolidated joint ventures	Distributions to non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		(16,883)					(16,883)		Distributions to non-controlling interests of consolidated joint ventures			—						—			—			—			—			—	(14,311)			(14,311)
Changes in non-controlling interests of consolidated joint ventures	Changes in non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		1,596					1,596		Changes in non-controlling interests of consolidated joint ventures			—						—			—			—			—			—	(8)			(8)
Balance – June 30, 2021		125,910,318	$	1		$	2,977,269	32,167,192	$	(624,615)	$	1,247,957	$	(1,166)	$	69,403				$	3,668,849
Balance – September 30, 2021																	Balance – September 30, 2021		122,886,506				$	1				$	2,987,827	35,476,388		$	(716,274)		$	1,416,091		$	(1,166)		$	59,417			$	3,745,896

(1) Dollar amount represents the value of shares withheld for taxes.


For the three months ended June 30, 2020
For the three months ended September 30, 2020																	For the three months ended September 30, 2020

		Common Stock			Additional Paid-in Capital	Treasury Stock			Stockholders' Equity									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					Shares	Amount					Amount			Shares			Amount			Retained Earnings			Accumulated Other Comprehensive Income	Non-controlling Interest			Total Stockholders’ Equity
Balance – March 31, 2020		129,594,663	$	1		$	2,970,812	25,379,911	$	(433,687)	$	750,919	$	871	$	134,125				$	3,423,041
Net (loss)/ income		—	—			—		—	—		65,674		—		1,548					67,222
Balance – June 30, 2020																	Balance – June 30, 2020		129,678,751				$	1				$	2,915,702	25,379,911		$	(433,687)		$	816,593		$	871		$	125,260			$	3,424,740
Net income																	Net income		—				—					—		—		—			114,777			—			422				115,199

Exercise of stock options	Exercise of stock options	52,373	—			823		—	—		—		—		—					823		Exercise of stock options			137,553	—					2,507			—			—			—			—	—			2,507
Issuance of restricted stock units, net of shares withheld for tax(1)	Issuance of restricted stock units, net of shares withheld for tax(1)	31,715	—			(177)		—	—		—		—		—					(177)		Issuance of restricted stock units, net of shares withheld for tax(1)			49,122	—					(1,403)			—			—			—			—	—			(1,403)
Issuance of equity in connection with business combinations	Issuance of equity in connection with business combinations	—	—			(60,742)		—	—		—		—		—					(60,742)		Issuance of equity in connection with business combinations			—	—					(1,301)			—			—			—			—	—			(1,301)

Stock compensation expense	Stock compensation expense	—	—			4,986		—	—		—		—		—					4,986		Stock compensation expense			—	—					5,272			—			—			—			—	—			5,272

Distributions to non-controlling interests of consolidated joint ventures	Distributions to non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		(30,408)					(30,408)		Distributions to non-controlling interests of consolidated joint ventures			—	—					—			—			—			—			—	(12,628)			(12,628)
Changes in non-controlling interests of consolidated joint ventures	Changes in non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		19,995					19,995		Changes in non-controlling interests of consolidated joint ventures			—	—					—			—			—			—			—	9,749			9,749
Balance – June 30, 2020		129,678,751	$	1		$	2,915,702	25,379,911	$	(433,687)	$	816,593	$	871	$	125,260				$	3,424,740
Balance – September 30, 2020																	Balance – September 30, 2020		129,865,426				$	1				$	2,920,777	25,379,911		$	(433,687)		$	931,370		$	871		$	122,803			$	3,542,135

(1) Dollar amount represents the value of shares withheld for taxes.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents


For the six months ended June 30, 2021
For the nine months ended September 30, 2021																For the nine months ended September 30, 2021
		Common Stock			Additional Paid-in Capital		Treasury Stock			Stockholders' Equity										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						Shares	Amount						Amount				Shares			Amount				Retained Earnings				Accumulated Other Comprehensive Income		Non-controlling Interest				Total Stockholders’ Equity
Balance – December 31, 2020	Balance – December 31, 2020	129,476,914	$	1	$	2,926,773	25,884,756	$	(446,856)	$	1,025,789	$	(1,166)	$	89,209			$	3,593,750		Balance – December 31, 2020			129,476,914	$	1					$	2,926,773			25,884,756			$	(446,856)			$	1,025,789			$	(1,166)	$	89,209			$	3,593,750
Net income	Net income	—	—		—		—	—		222,168		—		5,030				227,198			Net income			—	—						—				—			—				390,302				—		9,363				399,665

Exercise of stock options	Exercise of stock options	631,626	—		12,434		—	—		—		—		—				12,434			Exercise of stock options			908,221	—						18,212				—			—				—				—		—				18,212
Issuance of restricted stock units, net of shares withheld for tax(1)	Issuance of restricted stock units, net of shares withheld for tax(1)	380,009	—		(4,857)		—	—		—		—		—				(4,857)			Issuance of restricted stock units, net of shares withheld for tax(1)			388,798	—						(4,870)				—			—				—				—		—				(4,870)
Warrant exercises	Warrant exercises	1,704,205	—		32,584		—	—		—		—		—				32,584			Warrant exercises			1,704,205	—						32,584				—			—				—				—		—				32,584

Repurchase of common stock	Repurchase of common stock	(5,256,737)	—				5,256,737	(145,172)		—		—		—				(145,172)			Repurchase of common stock			(8,565,933)	—										8,565,933			(236,831)				—				—		—				(236,831)
Common stock surrendered in connection with warrant exercise	Common stock surrendered in connection with warrant exercise	(1,025,699)	—		—		1,025,699	(32,587)		—		—		—				(32,587)			Common stock surrendered in connection with warrant exercise			(1,025,699)	—						—				1,025,699			(32,587)				—				—		—				(32,587)
Stock compensation expense	Stock compensation expense	—	—		10,335		—	—		—		—		—				10,335			Stock compensation expense			—	—						15,128				—			—				—				—		—				15,128

Distributions to non-controlling interests of consolidated joint ventures	Distributions to non-controlling interests of consolidated joint ventures	—	—		—		—	—		—		—		(24,844)				(24,844)			Distributions to non-controlling interests of consolidated joint ventures			—	—						—				—			—				—				—		(39,155)				(39,155)
Changes in non-controlling interests of consolidated joint ventures		—	—		—		—	—		—		—		8				8
Balance – June 30, 2021		125,910,318	$	1	$	2,977,269	32,167,192	$	(624,615)	$	1,247,957	$	(1,166)	$	69,403			$	3,668,849

Balance – September 30, 2021																Balance – September 30, 2021	122,886,506					$	1				$	2,987,827		35,476,388			$	(716,274)		$	1,416,091			$	(1,166)			$	59,417					$	3,745,896

(1) Dollar amount represents the value of shares withheld for taxes


For the six months ended June 30, 2020
For the nine months ended September 30, 2020																			For the nine months ended September 30, 2020
		Common Stock			Additional Paid-in Capital	Treasury Stock				Stockholders' Equity									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					Shares	Amount						Amount				Shares			Amount				Retained Earnings				Accumulated Other Comprehensive Income		Non-controlling Interest				Total Stockholders’ Equity
Balance – December 31, 2019	Balance – December 31, 2019	105,851,285	$	1			$	2,097,995	19,943,432		$	(343,524)	$	782,350	$	884	$	8,006			$	2,545,712	Balance – December 31, 2019			105,851,285	$	1					$	2,097,995			19,943,432			$	(343,524)			$	782,350			$	884	$	8,006			$	2,545,712
Net income	Net income	—	—				—		—		—		34,243		—		3,423				37,666		Net income			—	—						—				—			—				149,020				—		3,845				152,865
Other comprehensive income	Other comprehensive income	—					—						—		(13)		—				(13)		Other comprehensive income			—							—											—				(13)		—				(13)
Exercise of stock options	Exercise of stock options	302,522	—				5,371		—		—		—		—		—				5,371		Exercise of stock options			440,075	—						7,878				—			—				—				—		—				7,878
Issuance of restricted stock units, net of shares withheld for tax(1)	Issuance of restricted stock units, net of shares withheld for tax(1)	634,133	—				(7,252)		—		—		—		—		—				(7,252)		Issuance of restricted stock units, net of shares withheld for tax(1)			683,255	—						(8,655)				—			—				—				—		—				(8,655)
Issuance of equity in connection with business combinations	Issuance of equity in connection with business combinations	28,327,290	—				789,179		—		—		—		—		—				789,179		Issuance of equity in connection with business combinations			28,327,290	—						787,877				—			—				—				—		—				787,877
Repurchase of common stock	Repurchase of common stock	(5,436,479)	—						5,436,479		(90,163)		—		—		—				(90,163)		Repurchase of common stock			(5,436,479)	—						—				5,436,479			(90,163)				—				—		—				(90,163)
Stock compensation expense	Stock compensation expense	—	—				16,882		—		—		—		—		—				16,882		Stock compensation expense			—	—						22,154				—			—				—				—		—				22,154
Stock compensation expense related to WLH acquisition	Stock compensation expense related to WLH acquisition	—	—				5,106		—		—		—		—		—				5,106		Stock compensation expense related to WLH acquisition			—	—						5,107				—			—				—				—		—				5,107
WLH equity award accelerations due to change in control	WLH equity award accelerations due to change in control	—	—				8,421		—		—		—		—		—				8,421		WLH equity award accelerations due to change in control			—	—						8,421				—			—				—				—		—				8,421
Distributions to non-controlling interests of consolidated joint ventures	Distributions to non-controlling interests of consolidated joint ventures	—	—				—		—		—		—		—		(23,673)				(23,673)		Distributions to non-controlling interests of consolidated joint ventures			—	—						—				—			—				—				—		(36,301)				(36,301)
Changes in non-controlling interests of consolidated joint ventures	Changes in non-controlling interests of consolidated joint ventures	—	—				—		—		—		—		—		137,504				137,504		Changes in non-controlling interests of consolidated joint ventures			—	—						—				—			—				—				—		147,253				147,253
Balance – June 30, 2020		129,678,751	$	1			$	2,915,702	25,379,911		$	(433,687)	$	816,593	$	871	$	125,260			$	3,424,740
Balance – September 30, 2020																			Balance – September 30, 2020	129,865,426				$	1				$	2,920,777		25,379,911			$	(433,687)		$	931,370			$	871			$	122,803					$	3,542,135

(1) Dollar amount represents the value of shares withheld for taxes

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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TAYLOR MORRISON HOME CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Six Months Ended June 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests $ 227,198 $ 37,665
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Equity in income of unconsolidated entities (7,787) (5,921)
Stock compensation expense 10,335 21,988
Distributions of earnings from unconsolidated entities 7,210 6,209
Depreciation and amortization 19,798 17,617
Operating lease expense 7,958 8,591
Debt issuance costs/(premium) amortization 236 (1,631)
Land held for sale write-downs 0 4,347
Changes in operating assets and liabilities:
Real estate inventory and land deposits (483,490) 165,354
Mortgages held for sale, prepaid expenses and other assets (149,748) (5,926)
Customer deposits 170,055 26,943
Accounts payable, accrued expenses and other liabilities 94,805 28,934
Income taxes payable 5,836 19,034
Net cash (used in)/provided by operating activities (97,594) 323,204
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (20,523) (17,051)
Payments for business acquisitions, net of cash acquired 0 (279,193)
Distributions of capital from unconsolidated entities 13,132 22,046
Investments of capital into unconsolidated entities (14,643) (4,590)
Net cash used in investing activities (22,034) (278,788)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable and other borrowings 72,295 48,234
Repayments of loans payable and other borrowings (44,231) (60,937)
Borrowings on revolving credit facility 0 695,000
Repayments on revolving credit facility 0 (210,000)
Borrowings on mortgage warehouse 1,499,258 1,061,089
Repayments on mortgage warehouse (1,411,317) (1,079,481)
Repayments on senior notes 0 (50,000)
Payment of deferred financing costs 0 (3)
Proceeds from stock option exercises 12,434 5,371
Payment of principle portion of finance lease (1,325) (1,325)
Repurchase of common stock, net (145,172) (90,163)
Payment of taxes related to net share settlement of equity awards (5,483) (7,252)
Changes and distributions to non-controlling interests of consolidated joint ventures, net (22,819) (6,618)
Net cash (used in)/provided by financing activities (46,360) 303,915
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $ (165,988) $ 348,331
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 534,109 328,572
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period $ 368,121 $ 676,903
SUPPLEMENTAL CASH FLOW INFORMATION:
Income tax payments/(refund), net $ (61,404) $ 520
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in loans payable issued to sellers in connection with land purchase contracts $ 121,380 $ 117,345
Change in inventory not owned $ (59,056) $ (33,456)
Issuance of common stock in connection with business acquisition $ 0 $ 798,863
Net non-cash (distributions)/contributions from non-controlling interests $ (2,025) $ 6,376
Non-cash portion of loss on debt extinguishment $ 0 $ 1,723
Common stock surrendered in connection with warrant exercises $ 32,587 $ 0
Common stock issued in connection with warrant exercises $ (32,584) $ 0



	Nine Months Ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests	$	399,665	$	152,865
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Equity in income of unconsolidated entities	(9,269)		(8,878)
Stock compensation expense	15,128		27,260
Loss on extinguishment of debt	—		10,247
Distributions of earnings from unconsolidated entities	9,050		9,251
Depreciation and amortization	29,726		26,939
Operating lease expense	12,167		12,918
Debt issuance costs/(premium) amortization	355		(1,970)


Land held for sale write-downs	4,590		4,347

Deferred income taxes	—		11,696
Changes in operating assets and liabilities:
Real estate inventory and land deposits	(678,809)		439,842
Mortgages held for sale, prepaid expenses and other assets	(216,121)		20,129
Customer deposits	209,290		84,475
Accounts payable, accrued expenses and other liabilities	97,129		(31,303)
Income taxes payable	23,554		40,211
Net cash (used in)/provided by operating activities	(103,545)		798,029
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(15,698)		(25,276)
Payments for business acquisitions, net of cash acquired	—		(279,048)
Distributions of capital from unconsolidated entities	14,237		30,853
Investments of capital into unconsolidated entities	(31,843)		(24,011)
Investments in equity securities	(10,000)		—
Net cash used in investing activities	(43,304)		(297,482)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable and other borrowings	103,805		72,848
Repayments on loans payable and other borrowings	(89,635)		(110,177)
Borrowings on revolving credit facilities	126,692		830,000
Repayments on revolving credit facilities	—		(545,000)
Borrowings on mortgage warehouse facilities	2,287,791		1,750,669
Repayments on mortgage warehouse facilities	(2,179,395)		(1,809,252)
Proceeds from the issuance of senior notes	—		500,000
Repayments on senior notes	—		(861,775)
Payment of deferred financing costs	—		(6,202)

Proceeds from stock option exercises	18,212		7,877




Payment of principle portion of finance lease	(1,325)		(1,325)
Repurchase of common stock, net	(236,831)		(90,163)
Payment of taxes related to net share settlement of equity awards	(5,494)		(8,654)
Cash and distributions to non-controlling interests of consolidated joint ventures, net	(36,095)		(8,905)
Net cash used in financing activities	(12,275)		(280,059)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	(159,124)	$	220,488
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	534,109		328,572
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	374,985	$	549,060
SUPPLEMENTAL CASH FLOW INFORMATION:
Income tax payments, net	$	(96,753)	$	(2,490)
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in loans payable issued to sellers in connection with land purchase contracts	$	174,297	$	136,803
Change in inventory not owned	$	(64,344)	$	(86,390)


Issuance of common stock in connection with business acquisition	$	—	$	797,970
Net non-cash (distributions)/contributions from non-controlling interests	$	(3,060)	$	5,784
Non-cash portion of loss on debt extinguishment	$	—	$	1,723
Common stock surrendered in connection with warrant exercises	$	32,587	$	—
Common stock issued in connection with warrant exercises	$	(32,584)	$	—

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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TAYLOR MORRISON HOME CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

Description of the Business — Taylor Morrison Home Corporation “TMHC” through its subsidiaries (together with TMHC referred to herein as “we,” “our,” “the Company” and “us”), owns and operates a residential homebuilding business and is a developer of lifestyle communities. We operate in the states of Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. Our Company serves a wide array of consumer groups from coast to coast, including first time, move-up, luxury, and ~~50 plus~~55-plus active lifestyle (formerly referred to as active adult). Our homebuilding segments operate under our Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade brand names. Our business is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as 4 reportable segments: East, Central, West, and Financial Services. The communities in our homebuilding segments generally offer single and multi-family attached and detached homes. We are the general contractors for all real estate projects and retain subcontractors for home construction and land development. We have an exclusive partnership with Christopher Todd Communities, a ~~growing~~ Phoenix-based developer of innovative, luxury rental communities to operate a “Build-to-Rent” homebuilding business. Build-to-Rent serves as a land acquirer, developer, and homebuilder, while Christopher Todd Communities provides community design and property management consultation. We also operate Urban Form Development, LLC (“Urban Form”), which primarily develops and constructs multi-use properties consisting of commercial space, retail, and multi-family units. Our Financial Services segment provides financial services to customers through our wholly owned mortgage subsidiary, operating as Taylor Morrison Home Funding, ~~LLC~~INC (“TMHF”), title services through our wholly owned title services subsidiary, Inspired Title Services, LLC (“Inspired Title”), and homeowner’s insurance policies through our insurance agency, Taylor Morrison Insurance Services, LLC (“TMIS”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full fiscal year.

We consolidate certain joint ventures in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation. The income from the percentage of the joint venture not owned by us is presented as “Net income attributable to non-controlling interests” on the Condensed Consolidated Statements of Operations.

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 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.

Goodwill — The excess of the purchase price of a business acquisition over the net fair value of assets acquired and liabilities assumed is capitalized as goodwill in accordance with ASC Topic 350, Intangibles — Goodwill and Other. ASC 350 requires that goodwill and intangible assets that do not have finite lives not be amortized, but rather assessed for impairment at least annually or more frequently if certain impairment indicators are present. We perform our annual impairment test during the fourth quarter or whenever impairment indicators are present. We did not perform an impairment test during the ~~second~~third quarter of 2021 as indicators of impairment were not present as of ~~June~~September 30, 2021.

Real Estate Inventory — 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 direct carrying costs, we also capitalize interest, real estate taxes, and related development costs that benefit the entire community, such as field construction supervision and related direct overhead. Home vertical construction costs are accumulated and charged to cost of sales 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 our materials procurement

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process, 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. 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.

We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to cost of sales when the related inventory is charged to cost of sales.

We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment. We review our real estate inventory for indicators of impairment 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 to determine if the carrying value of the assets in that community exceeds the expected undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, then the assets are deemed to be impaired and are recorded at fair value as of the assessment date. 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. 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 ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, no impairment charges 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. 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 subjective 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~~September 30, 2021 we had no inactive projects and December 31, 2020, we had one inactive project in our East region with a carrying value of $13.5 million.

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 purchase 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 typically equal to 15% to 25% of the total purchase price. 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.

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 risks associated with land ownership and development. In accordance with ASC Topic 810, Consolidation, we have concluded that when we enter into these agreements to acquire land or lots and pay a non-refundable deposit, a Variable Interest Entity (“VIE”) may be created because 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 will consolidate the VIE in our Condensed Consolidated Financial Statements and reflect such assets and liabilities as Consolidated real estate not owned within our real estate inventory balance and Liabilities attributable to consolidated real estate not owned, respectively, in the Consolidated Balance Sheets.

Unconsolidated Joint Ventures — We use the equity method of accounting for entities over 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 they have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in Equity in income of unconsolidated entities when earned and distributions are credited against our investment in the joint venture when distributions are received. Our share of the joint venture profit relating to lots we purchase

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from the joint ventures is deferred until homes are delivered by us and title passes to a third party. These joint ventures are recorded in Investments in unconsolidated entities on the Consolidated Balance Sheets.

We evaluate our investments in unconsolidated entities for indicators of impairment at least semi-annually, or whenever indicators of impairment are present. 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 is the excess of the carrying amount of our investment 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, intent and ability for us to recover our investment in the entity, financial condition and long-term prospects of the 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~~ partners. If we believe that the decline in the fair value of the investment is temporary, then no impairment is recorded. We did not record any impairment charges for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

Revenue Recognition — We recognize revenue 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 the proper home closings revenue and land closings revenue recognition: (1) we identify the contract(s) with our customer; (2) we identify the performance obligations in the contract; (3) we determine the transaction price; (4) we allocate the transaction price to the performance obligations in the contract; and (5) we recognize revenue when (or as) we satisfy the performance obligation. For our home sales transactions, we 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 home and land sales revenue:

•Revenue from closings of residential real estate is recognized when closings have occurred, the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.

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

Amenity and other revenue

We own and operate certain amenities such as golf courses, club houses, and fitness centers, which require us to provide club members with access to the facilities in exchange for the payment of club dues. We collect club dues and other fees from the club members, which are invoiced on a monthly basis. Revenue from our golf club operations is also included in amenity and other revenue. Amenity and other revenue also includes revenue from the sale of assets which include multi-use properties as part of our Urban Form operations.

Financial services revenue

Mortgage operations 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 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; therefore, we derecognize the mortgage loans at time of sale, based on the difference between the selling price and carrying value of the related loans upon sale, recording a gain/loss on sale in the period of sale. Also included in Financial services revenue/expenses are realized and unrealized gains and losses from hedging instruments.

Recently Issued Accounting Pronouncements — In ~~December 2019,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued ~~ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying~~Accounting Standards Update 2020-04, “Facilitation of the ~~Accounting~~Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients for ~~Income Taxes~~applying U.S. GAAP to contracts affected by the discontinuation of the London Interbank Offered Rate (“~~ASU 2019-12”~~LIBOR”)~~, which is intended~~ or by another reference rate expected to ~~simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing~~be discontinued. The guidance ~~to improve consistent application. We adopted~~was effective beginning March

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~~ASU 2019-12 as~~12, 2020 and entities may elect to apply the amendments prospectively through December 31, 2022. We are currently evaluating the effect of ~~January 1, 2021, but this pronouncement did not have a material impact~~adopting the new guidance on our consolidated financial statements and related disclosures.

3. BUSINESS COMBINATIONS

In accordance with ASC Topic 805, Business Combinations, all assets acquired and liabilities assumed from our acquisition of William Lyon Homes (“WLH”) on February 6, 2020 were measured and recognized at fair value as of the date of the acquisition to reflect the purchase price paid. Upon finalization, total purchase consideration of the WLH acquisition was $1.1 billion, consisting of multiple components: (i) cash of $157.8 million, (ii) the issuance of approximately 28.3 million shares of TMHC Common Stock with a value of $773.9 million, (iii) the repayment of $160.8 million of borrowings under WLH's Revolving Credit Facility, and (iv) the conversion of WLH issued equity instruments consisting of restricted stock units, restricted stock awards, options and warrants to TMHC awards and warrants with a value of $24.1 million.

We determined the estimated fair value of real estate inventory on a community-level basis, using a reasonable range of market comparable gross margins based on the inventory geography and product type. These estimates are significantly impacted by assumptions related to expected average home 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. Such estimates were made for each individual community and varied significantly between communities. We believe our estimates and assumptions are reasonable.

The following is a summary of the final fair value of assets acquired and liabilities assumed.


(Dollars in thousands)
Acquisition Date	February 6, 2020
Assets acquired
Real estate inventory	$	2,069,323

Prepaid expenses and other assets(1)	265,729
Deferred tax assets, net	148,193

Goodwill(2)	513,768
Total assets	$	2,997,013

Less liabilities assumed
Accrued expenses and other liabilities	$	457,365

Total debt	1,306,578
Non-controlling interest	116,157
Net assets acquired	$	1,116,913

(1) Includes cash acquired.

(2) Goodwill is not deductible for tax purposes. We allocated $465.6 million and $48.2 million of goodwill to the West and Central homebuilding segments, respectively.

Unaudited Pro Forma Results of Business Combinations

The following unaudited pro forma information for the period presented includes the results of operations of our acquisition of WLH as if it had been completed on January 1, 2019. The pro forma results are presented for informational purposes only and do not purport to be indicative of the results of operations or future results that would have been achieved if the acquisition had taken place one year prior to the acquisition year. The pro forma information combines the historical results of the Company with the historical results of WLH for the periods presented.

The unaudited pro forma results do not give effect to any synergies, operating efficiencies, or other costs savings that may result from the acquisition, or other significant non-reoccurring expenses or transactions that do not have a continuing impact. Earnings per share utilizes pro forma net income available to TMHC and total weighted average shares of common stock. The pro forma amounts are based on available information and certain assumptions that we believe are reasonable.

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		For the three months ended June 30,		For the six months ended June 30,			For the three months ended September 30,	For the nine months ended September 30,
(Dollars in thousands except per share data)	(Dollars in thousands except per share data)	2020 (Pro forma)		2020 (Pro forma)		(Dollars in thousands except per share data)		2020 (Pro forma)		2020 (Pro forma)
Total revenue	Total revenue	$	1,526,685	$	2,959,482	Total revenue		$	1,699,434	$	4,658,916

Net income before allocation to non-controlling interests	Net income before allocation to non-controlling interests	$	80,396	$	79,130	Net income before allocation to non-controlling interests		$	118,579	$	197,708
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	(1,548)		(2,536)		Net income attributable to non-controlling interests		(422)		(2,958)
Net income available to TMHC	Net income available to TMHC	$	78,848	$	76,594	Net income available to TMHC		$	118,157	$	194,750

Weighted average shares - Basic	Weighted average shares - Basic	129,964		154,431		Weighted average shares - Basic		130,110		131,274
Weighted average shares - Diluted	Weighted average shares - Diluted	130,700		155,389		Weighted average shares - Diluted		131,769		132,242

Earnings per share - Basic	Earnings per share - Basic	$	0.61	$	0.50	Earnings per share - Basic		$	0.91	$	1.48
Earnings per share - Diluted	Earnings per share - Diluted	$	0.60	$	0.49	Earnings per share - Diluted		$	0.90	$	1.47

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, total revenue on the condensed consolidated statement of operations included ~~$384.4~~$431.3 million and ~~$667.0 million,~~$1.1 billion, respectively, from WLH since the date of acquisition. For the three and ~~six~~nine months ended ~~June~~September 30, 2020, income before income taxes on the condensed consolidated statement of operations included losses of ~~$64.5~~$23.1 million and ~~$96.2~~$119.3 million, respectively, from WLH since the date of acquisition.

4. 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 Common Stock outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if all outstanding dilutive equity awards to issue shares of Common Stock were exercised or settled.

The following is a summary of the components of basic and diluted earnings per share (in thousands, except per share amounts):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Numerator:	Numerator:									Numerator:
Net income available to TMHC	Net income available to TMHC	$	124,147	$	65,674	$	222,168	$	34,242	Net income available to TMHC	$	168,134	$	114,777	$	390,302	$	149,020
Denominator:	Denominator:									Denominator:
Weighted average shares – basic	Weighted average shares – basic	128,440		129,629		128,661		125,768		Weighted average shares – basic	124,378		129,775		127,217		127,113
Restricted stock units	Restricted stock units	801		585		892		721		Restricted stock units	796		812		833		669
Stock Options	Stock Options	824		150		834		237		Stock Options	596		520		756		252
Warrants	Warrants	194		0		379		0		Warrants	—		326		237		47
Weighted average shares – diluted	Weighted average shares – diluted	130,259		130,364		130,766		126,726		Weighted average shares – diluted	125,770		131,433		129,043		128,081
Earnings per common share – basic:	Earnings per common share – basic:									Earnings per common share – basic:
Net income available to Taylor Morrison Home Corporation	Net income available to Taylor Morrison Home Corporation	$	0.97	$	0.51	$	1.73	$	0.27	Net income available to Taylor Morrison Home Corporation	$	1.35	$	0.88	$	3.07	$	1.17
Earnings per common share – diluted:	Earnings per common share – diluted:									Earnings per common share – diluted:
Net income available to Taylor Morrison Home Corporation	Net income available to Taylor Morrison Home Corporation	$	0.95	$	0.50	$	1.70	$	0.27	Net income available to Taylor Morrison Home Corporation	$	1.34	$	0.87	$	3.02	$	1.16

The above calculations of weighted average shares exclude ~~1,133,597~~1,218,781 and ~~982,940~~1,063,586 outstanding anti-dilutive stock options and unvested restricted stock units (“RSUs”) for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, and ~~4,225,888~~1,098,706 and ~~3,530,837~~3,013,093 for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively.

5. REAL ESTATE INVENTORY AND LAND DEPOSITS

Inventory consists of the following (in thousands):

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		As of					As of
		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Real estate developed and under development	Real estate developed and under development	$	4,011,925	$	3,862,785	Real estate developed and under development	$	4,054,002	$	3,862,785
Real estate held for development or held for sale (1)	Real estate held for development or held for sale (1)	114,807		110,954		Real estate held for development or held for sale (1)	81,131		110,954
Operating communities (2)	Operating communities (2)	1,385,501		1,072,134		Operating communities (2)	1,530,074		1,072,134
Capitalized interest	Capitalized interest	180,520		163,780		Capitalized interest	180,560		163,780
Total owned inventory	Total owned inventory	5,692,753		5,209,653		Total owned inventory	5,845,767		5,209,653
Consolidated real estate not owned	Consolidated real estate not owned	63,717		122,773		Consolidated real estate not owned	58,429		122,773
Total real estate inventory	Total real estate inventory	$	5,756,470	$	5,332,426	Total real estate inventory	$	5,904,196	$	5,332,426

(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, and, if applicable, long-term strategic assets.

(2) Operating communities consist of all vertical construction costs relating to homes in progress and completed ~~homes for all active inventory.~~homes.

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


		As of							As of
		June 30, 2021			December 31, 2020				September 30, 2021			December 31, 2020
		Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development			Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development
Raw	Raw	5,252	$	232,473	7,032	$	239,554	Raw	6,114	$	238,088	7,032	$	239,554
Partially developed	Partially developed	21,749	1,322,628		19,495	1,215,419		Partially developed	21,610	1,375,501		19,495	1,215,419
Finished	Finished	22,417	2,444,805		21,396	2,388,177		Finished	21,853	2,413,178		21,396	2,388,177
Long-term strategic assets	Long-term strategic assets	158	13,462		158	13,462		Long-term strategic assets	—	—		158	13,462
Total homebuilding owned lots	Total homebuilding owned lots	49,576	4,013,368		48,081	3,856,612		Total homebuilding owned lots	49,577	4,026,767		48,081	3,856,612
Commercial assets	Commercial assets	5,298	113,364		5,298	117,126		Commercial assets	5,298	108,366		5,298	117,127
Total owned lots	Total owned lots	54,874	$	4,126,732	53,379	$	3,973,738	Total owned lots	54,875	$	4,135,133	53,379	$	3,973,739

Land Deposits — We provide deposits related to land options and land purchase contracts, which are capitalized when paid and classified as Land deposits until the associated property is purchased.

As of ~~June~~September 30, 2021 and December 31, 2020, we had the right to purchase ~~9,353~~8,869 and 7,449 lots under land option purchase contracts, respectively, for an aggregate purchase price of ~~$596.7~~$534.9 million and $485.4 million, respectively. We do not have title to the properties, and the creditors generally have no recourse against us. As of ~~June~~September 30, 2021 and December 31, 2020, our exposure to loss related to our option contracts with third parties and unconsolidated entities consisted of non-refundable deposits totaling ~~$90.6~~$86.0 million and $65.3 million, respectively.

We also have various land banking arrangements. As of ~~June~~September 30, 2021 and December 31, 2020, we had the right to purchase ~~1,251~~3,464 lots and 2,426 lots under such land agreements for an aggregate purchase price of ~~$112.7~~$409.3 million and $275.0 million, respectively. We are not legally obligated to purchase the balance of the lots. As of ~~June~~September 30, 2021 and December 31, 2020, our exposure to loss related to deposits on land banking arrangements totaled ~~$26.6~~$64.7 million and $60.3 million, respectively.

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

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Interest capitalized - beginning of period $ 174,174 $ 128,870 $ 163,780 $ 115,593
Interest incurred 40,416 43,237 78,135 80,812
Interest amortized to cost of home closings (34,070) (28,667) (61,395) (52,965)
Interest capitalized - end of period $ 180,520 $ 143,440 $ 180,520 $ 143,440

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest capitalized - beginning of period	$	180,520	$	143,440	$	163,780	$	115,593
Interest incurred and capitalized	37,991		41,554		116,126		122,366
Interest amortized to cost of home closings	(37,951)		(34,321)		(99,346)		(87,286)
Interest capitalized - end of period	$	180,560	$	150,673	$	180,560	$	150,673

6. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

Unconsolidated Entities

We have investments in a number of joint ventures with third parties, with ownership interests up to 50.0%. These entities are generally involved in real estate development, homebuilding and/or mortgage lending activities. Some of these joint ventures develop land for the sole use of the joint venture participants, including us, and others develop land for sale to both the joint venture participants and to 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.

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


		As of					As of
		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Assets:	Assets:					Assets:
Real estate inventory	Real estate inventory	$	323,093	$	342,451	Real estate inventory	$	349,185	$	342,451
Other assets	Other assets	124,756		133,903		Other assets	128,796		133,903
Total assets	Total assets	$	447,849	$	476,354	Total assets	$	477,981	$	476,354
Liabilities and owners’ equity:	Liabilities and owners’ equity:					Liabilities and owners’ equity:
Debt	Debt	$	165,384	$	183,911	Debt	$	162,036	$	183,911
Other liabilities	Other liabilities	15,457		21,215		Other liabilities	17,837		21,215
Total liabilities	Total liabilities	180,841		205,126		Total liabilities	179,873		205,126
Owners’ equity:	Owners’ equity:					Owners’ equity:
TMHC	TMHC	130,044		127,955		TMHC	145,780		127,955
Others	Others	136,964		143,273		Others	152,328		143,273
Total owners’ equity	Total owners’ equity	267,008		271,228		Total owners’ equity	298,108		271,228
Total liabilities and owners’ equity	Total liabilities and owners’ equity	$	447,849	$	476,354	Total liabilities and owners’ equity	$	477,981	$	476,354


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Revenues	Revenues	$	29,745	$	46,172	$	79,626	$	95,144	Revenues	$	21,833	$	38,305	$	101,458	$	133,452
Costs and expenses	Costs and expenses	(22,901)		(36,353)		(57,059)		(77,847)		Costs and expenses	(16,647)		(29,309)		(73,705)		(107,156)
Income of unconsolidated entities	Income of unconsolidated entities	$	6,844	$	9,819	$	22,567	$	17,297	Income of unconsolidated entities	$	5,186	$	8,996	$	27,753	$	26,296
TMHC’s share in income of unconsolidated entities	TMHC’s share in income of unconsolidated entities	$	2,126	$	3,495	$	7,788	$	5,921	TMHC’s share in income of unconsolidated entities	$	1,482	$	2,957	$	9,269	$	8,878
Distributions to TMHC from unconsolidated entities	Distributions to TMHC from unconsolidated entities	$	9,729	$	20,053	$	20,342	$	28,255	Distributions to TMHC from unconsolidated entities	$	2,945	$	11,849	$	23,287	$	40,104

Consolidated Entities

We have ~~a total of 19~~several joint ventures as of ~~June~~September 30, 2021 for the purpose of land 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. 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

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ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and these entities were consolidated as of ~~June~~September 30, 2021.

As of ~~June~~September 30, 2021, the assets of the consolidated joint ventures totaled ~~$311.6~~$315.8 million, of which ~~$13.4~~$21.2 million was cash and cash equivalents and ~~$222.6~~$193.9 million was owned inventory. As of December 31, 2020, the assets of the consolidated joint ventures totaled $389.2 million, of which $25.8 million was cash and cash equivalents and $320.4 million was owned inventory. The liabilities of the consolidated joint ventures totaled ~~$160.9~~$175.2 million and $216.4 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.

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7. ACCRUED EXPENSES AND OTHER LIABILITIES

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


		As of June 30, 2021		As of December 31, 2020			As of September 30, 2021		As of December 31, 2020
Real estate development costs to complete	Real estate development costs to complete	$	47,919	$	38,935	Real estate development costs to complete	$	47,043	$	38,935
Compensation and employee benefits	Compensation and employee benefits	118,636		113,896		Compensation and employee benefits	145,060		113,896
Self-insurance and warranty reserves	Self-insurance and warranty reserves	116,121		118,116		Self-insurance and warranty reserves	116,546		118,116
Interest payable	Interest payable	46,240		45,917		Interest payable	37,357		45,917
Property and sales taxes payable	Property and sales taxes payable	28,001		28,523		Property and sales taxes payable	36,399		28,523
Other accruals	Other accruals	78,549		84,680		Other accruals	106,111		84,680
Total accrued expenses and other liabilities	Total accrued expenses and other liabilities	$	435,466	$	430,067	Total accrued expenses and other liabilities	$	488,516	$	430,067

Self-Insurance and Warranty Reserves – We accrue for the expected costs associated with our limited warranty, deductibles and self-insured amounts under our various insurance policies within Beneva Indemnity Company ("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,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Reserve - beginning of period	Reserve - beginning of period	$	116,406	$	121,964	$	118,116	$	120,048	Reserve - beginning of period	$	116,121	$	117,462	$	118,116	$	120,048

Net additions to reserves due to WLH acquisition	Net additions to reserves due to WLH acquisition	0		0		0		9,130		Net additions to reserves due to WLH acquisition	—		—		—		9,130
Other additions to reserves	Other additions to reserves	18,394		17,005		30,784		26,743		Other additions to reserves	19,459		12,268		50,244		39,011
Cost of claims incurred	Cost of claims incurred	(19,067)		(23,277)		(34,931)		(42,264)		Cost of claims incurred	(19,313)		(19,180)		(54,245)		(61,444)
Changes in estimates to pre-existing reserves	Changes in estimates to pre-existing reserves	388		1,770		2,152		3,805		Changes in estimates to pre-existing reserves	279		2,016		2,431		5,821

Reserve - end of period	Reserve - end of period	$	116,121	$	117,462	$	116,121	$	117,462	Reserve - end of period	$	116,546	$	112,566	$	116,546	$	112,566

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8. DEBT

Total debt consists of the following (in thousands):


		As of													As of
		June 30, 2021						December 31, 2020							September 30, 2021						December 31, 2020
		Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value		Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value			Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value		Principal		Unamortized Debt Issuance (Costs)/Premium		Carrying Value

5.875% Senior Notes due 2023	5.875% Senior Notes due 2023	$	350,000	$	(1,016)	$	348,984	$	350,000	$	(1,300)	$	348,700	5.875% Senior Notes due 2023	$	350,000	$	(874)	$	349,126	$	350,000	$	(1,300)	$	348,700

5.625% Senior Notes due 2024	5.625% Senior Notes due 2024	350,000		(1,435)		348,565		350,000		(1,705)		348,295		5.625% Senior Notes due 2024	350,000		(1,301)		348,699		350,000		(1,705)		348,295

5.875% Senior Notes due 2027	5.875% Senior Notes due 2027	500,000		(4,635)		495,365		500,000		(5,026)		494,974		5.875% Senior Notes due 2027	500,000		(4,439)		495,561		500,000		(5,026)		494,974
6.625% Senior Notes due 2027(1)	6.625% Senior Notes due 2027(1)	300,000		19,317		319,317		300,000		20,915		320,915		6.625% Senior Notes due 2027(1)	300,000		18,518		318,518		300,000		20,915		320,915
5.75% Senior Notes due 2028	5.75% Senior Notes due 2028	450,000		(4,130)		445,870		450,000		(4,445)		445,555		5.75% Senior Notes due 2028	450,000		(3,972)		446,028		450,000		(4,445)		445,555
5.125% Senior Notes due 2030	5.125% Senior Notes due 2030	500,000		(5,757)		494,243		500,000		(6,074)		493,926		5.125% Senior Notes due 2030	500,000		(5,599)		494,401		500,000		(6,074)		493,926
Senior Notes subtotal	Senior Notes subtotal	$	2,450,000	$	2,344	$	2,452,344	$	2,450,000	$	2,365	$	2,452,365	Senior Notes subtotal	$	2,450,000	$	2,333	$	2,452,333	$	2,450,000	$	2,365	$	2,452,365
Loans payable and other borrowings	Loans payable and other borrowings	415,074		0		415,074		348,741		0		348,741		Loans payable and other borrowings	406,859		—		406,859		348,741		—		348,741
Revolving Credit Facility		0		0		0		0		0		0
$800 Million Revolving Credit Facility(2), (4)														$800 Million Revolving Credit Facility(2), (4)	100,000		—		100,000		—		—		—
$100 Million Revolving Credit Facility(3), (4)														$100 Million Revolving Credit Facility(3), (4)	26,692		—		26,692		—		—		—
Mortgage warehouse borrowings	Mortgage warehouse borrowings	215,230		0		215,230		127,289		0		127,289		Mortgage warehouse borrowings	235,685		—		235,685		127,289		—		127,289
Total debt	Total debt	$	3,080,304	$	2,344	$	3,082,648	$	2,926,030	$	2,365	$	2,928,395	Total debt	$	3,219,236	$	2,333	$	3,221,569	$	2,926,030	$	2,365	$	2,928,395

(1) Consists of the remaining $9.6 million of 2027 6.625% WLH notes and $290.4 million 2027 6.625% TM Communities Notes issued by TM Communities in connection with the exchange offer as described below. Unamortized Debt Issuance (Cost)/Premium for such notes is reflective of fair value adjustments as a result of purchase accounting estimates.

(2) As of December 31, 2020, we had no outstanding borrowings on the $800 Million Revolving Credit Facility.

(3) The $100 Million Revolving Credit Facility was entered into during the third quarter of 2021.

(4)Unamortized debt issuance costs are included in Prepaid expenses and other assets, net on the Condensed Consolidated Balance Sheets. See balances of unamortized debt issuance cost below in the facility's description.

Senior Notes

All of our senior notes (the “Senior Notes”) described below and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indentures governing our Senior Notes (except for the remaining 2027 6.625% WLH Notes, as described below) contain covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions and contain customary events of default. None of the indentures for the Senior Notes have financial maintenance covenants. As of ~~June~~September 30, 2021, we were in compliance with all of the covenants under the Senior Notes.

5.875% Senior Notes due 2023

On April 16, 2015, Taylor Morrison Communities, Inc (“TM Communities”) issued $350.0 million aggregate principal amount of 5.875% Senior Notes due 2023 (the “2023 5.875% Senior Notes”), which mature on April 15, 2023. The 2023 5.875% Senior Notes are guaranteed by Taylor Morrison Home III Corporation, Taylor Morrison Holdings, Inc. and their homebuilding subsidiaries (collectively, the “Guarantors”). We are required to offer to repurchase the 2023 5.875% Senior Notes at a price equal to 101% of their aggregate principal amount (plus accrued and unpaid interest) upon certain change of control events where there is a credit rating downgrade that occurs in connection with the change of control.

Prior to January 15, 2023, the 2023 5.875% 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 5.875% Senior Notes are redeemable at par (plus accrued and unpaid interest).

5.625% Senior Notes due 2024

On March 5, 2014, TM Communities issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024 Senior Notes”), which mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the Guarantors. The change of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

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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).

5.875% Senior Notes due 2027

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On June 5, 2019, TM Communities issued $500.0 million aggregate principal amount of 5.875% Senior Notes due 2027 (the “2027 5.875% Senior Notes”), which mature on June 15, 2027. The 2027 5.875% Senior Notes are guaranteed by the Guarantors. The change of control provisions in the indenture governing the 2027 5.875% Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

Prior to March 15, 2027, the 2027 5.875% Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through March 15, 2027 (plus accrued and unpaid interest). Beginning on March 15, 2027, the 2027 5.875% Senior Notes are redeemable at par (plus accrued and unpaid interest).

6.625% Senior Notes due 2027

Following our exchange offer in the first quarter of 2020, whereby TM Communities offered to exchange any and all outstanding senior notes issued by WLH, we had $290.4 million aggregate principal amount of 6.625% Senior Notes due 2027 issued by TM Communities (the “2027 6.625% TM Communities Notes”) and $9.6 million aggregate principal amount of 6.625% Senior Notes due 2027 issued by WLH (the “2027 6.625% WLH Notes” and together with the 2027 6.625% TM Communities Notes, the “2027 6.625% Senior Notes”) (the “Exchange offer”). The 2027 6.625% TM Communities Notes are obligations of TM Communities and are guaranteed by the Guarantors. The change of control provisions in the indenture governing the 2027 6.625% TM Communities Notes are similar to those contained in the indentures governing our other Senior Notes. In connection with the consummation of the exchange offer, WLH entered into a supplemental indenture to eliminate substantially all of the covenants in the indenture governing the 2027 6.625% WLH Notes, including the requirements to offer to purchase such notes upon a change of control, and to eliminate certain other restrictive provisions and events that constitute an “Event of Default” in such indenture.

The 2027 6.625% Senior Notes mature on July 15, 2027. Prior to July 15, 2022, the 2027 6.625% Senior Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, and accrued and unpaid interest, if any, to, but not including, the redemption date. On or after July 15, 2022, the 2027 6.625% Senior Notes are redeemable at a price equal to 103.313% of principal (plus accrued and unpaid interest). On or after July 15, 2023, the 2027 6.625% Senior Notes are redeemable at a price equal to 102.208% of principal (plus accrued and unpaid interest). On or after July 31, 2024, the 2027 6.625% Senior Notes are redeemable at a price equal to a 101.104% of principal (plus accrued and unpaid interest). On or after July 15, 2025, the 2027 6.625% Senior Notes are redeemable at a price equal to 100% of principal (plus accrued and unpaid interest).

In addition, at any time prior to July 15, 2022, we may, at our option, on one or more occasions, redeem the 2027 6.625% Senior Notes (including any additional notes that may be issued in the future under the 2027 6.625% Senior Notes Indenture) in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2027 6.625% Senior Notes at a redemption price (expressed as a percentage of principal amount) of 106.625%, plus accrued and unpaid interest, if any, to, but not including, the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

5.75% Senior Notes due 2028

On August 1, 2019, TM Communities issued $450.0 million aggregate principal amount of 5.75% Senior Notes due 2028 (the “2028 Senior Notes”), which mature on January 15, 2028. The 2028 Senior Notes are guaranteed by the Guarantors. The change of control provisions in the indenture governing the 2028 Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

Prior to October 15, 2027, the 2028 Senior Notes are redeemable at a price equal to 100% plus a “make-whole” premium for payments through October 15, 2027 (plus accrued and unpaid interest). Beginning on October 15, 2027, the 2028 Senior Notes are redeemable at par (plus accrued and unpaid interest).

5.125% Senior Notes due 2030 and Redemption of the 2023 6.00% Senior Notes and Redemption of the 2025 Senior Notes

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In July 2020, we partially redeemed $266.9 million of our 6.00% Senior Notes due 2023 (the “2023 6.00% Senior Notes”) and $333.1 million of our 5.875% Senior Notes due 2025 (the “2025 Senior Notes”) ~~were partially redeemed~~ using the net proceeds from the issuance of $500.0 million aggregate principal amount of 5.125% Senior Notes due 2030 (the “2030 Senior Notes”). In September 2020, we redeemed the remaining $83.1 million and $103.8 million of 2023 6.00% Senior Notes and 2025 Senior Notes, respectively, using cash on hand. For the 2023 6.00% Senior Notes, the redemption price was equal to 100.0% of the principal amount, plus a make-whole premium of 0.11% plus 50 basis points, plus accrued and unpaid interest to but excluding the redemption date. For the 2025 Senior Notes, the redemption price was equal to 102.938% of the principal amount, plus accrued and unpaid

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interest to but excluding the redemption date. As a result of the early redemption of the 2023 6.00% Senior Notes and 2025 Senior Notes, we recorded a total net loss on extinguishment of debt of approximately $10.2 million in Loss on extinguishment of debt, net, in the Consolidated Statement of Operations for the ~~year~~nine months ended ~~December 31,~~September 30, 2020.

The 2030 Senior Notes mature on August 1, 2030. The Senior Notes are guaranteed by the Guarantors. The change of control provisions in the indenture governing the 2030 Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

Prior to February 1, 2030, the 2030 Senior Notes are redeemable at a price equal to 100.0% plus a “make-whole” premium for payments through February 1, 2030 (plus accrued and unpaid interest). Beginning on February 1, 2030, the 2030 Senior Notes are redeemable at par (plus accrued and unpaid interest).

$800 Million Revolving Credit Facility

Our ~~$800.0 million~~$800 Million Revolving Credit Facility matures on February 6, 2024 and is guaranteed by the Guarantors.

Borrowings outstanding under our $800 Million Revolving Credit Facility as of September 30, 2021 were $100.0 million. We had no borrowings outstanding as of December 31, 2020.

As of ~~June~~September 30, 2021 and December 31, 2020, we had ~~$1.3~~$1.2 million and $1.6 million, respectively, of unamortized debt issuance costs relating to our $800 Million Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the Condensed Consolidated Balance Sheets. As of ~~June~~September 30, 2021 and December 31, 2020, we had ~~$45.5~~$51.4 million and $64.3 million, respectively, of utilized letters of credit, resulting in ~~$754.5~~$648.6 million and $735.7 million, respectively, of availability under the $800 Million Revolving Credit Facility.

The $800 Million 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 ~~$2.2~~$2.3 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $800 Million 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 $800 Million Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the $800 Million 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 $800 Million 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 4 consecutive fiscal quarters and up to 5 times overall.

The $800 Million 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 $800 Million 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 ~~June~~September 30, 2021, we were in compliance with all of the covenants under the $800 Million Revolving Credit Facility.

$100 Million Revolving Credit Facility

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On September 17, 2021, we entered into a $100 Million Revolving Credit Facility, which matures on September 17, 2024 and is guaranteed by the Guarantors (the $100 Million Revolving Credit Agreement together with the $800 Million Revolving Credit Agreement, the "Credit Facilities"). This facility is specific to our Build-to-Rent operations. Borrowings outstanding under our $100 Million Revolving Credit Facility as of September 30, 2021, was $26.7 million.

As of September 30, 2021, we had $0.8 million of unamortized debt issuance costs relating to our $100 Million Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the Condensed Consolidated Balance Sheets. As of September 30, 2021 we had no utilized letters of credit, resulting in $73.3 million of availability under the $100 Million Revolving Credit Facility.

The $100 Million 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 $2.3 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $100 Million 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 $100 Million Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the $100 Million 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 $100 Million 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 4 consecutive fiscal quarters and up to 5 times overall.

The $100 Million Revolving Credit Facility includes the same restrictive covenants as are included in the $800 Million Revolving Credit Facility, described above. As of September 30, 2021, we were in compliance with all of the covenants under the $100 Million Revolving Credit Facility.

Mortgage Warehouse Borrowings

The following is a summary of our mortgage warehouse borrowings (in thousands):

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As of June 30, 2021

As of September 30, 2021

Facility

Amount Drawn

Facility Amount

Interest Rate(1)

Expiration Date

Collateral (2)

Facility

Amount Drawn

Facility Amount

Interest Rate(1)

Expiration Date

Collateral (2)

Warehouse A

8,737

10,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse A

4,079

10,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

55,050

75,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

57,047

75,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse C

97,176

125,000

LIBOR + 2.05%

On Demand

Mortgage Loans and Restricted Cash

Warehouse C

109,207

125,000

LIBOR + 2.05%

On Demand

Mortgage Loans and Restricted Cash

Warehouse D(3)

54,267

100,000

LIBOR + 1.65%

November 15, 2021

Mortgage Loans

Warehouse D(3)

65,352

100,000

LIBOR + 1.65%

November 15, 2021

Mortgage Loans

Total

215,230

310,000

Total

235,685

310,000

As of December 31, 2020

Facility

Amount Drawn

Facility Amount

Interest Rate

Expiration Date

Collateral (2)

Facility

Amount Drawn

Facility Amount

Interest Rate(1)

Expiration Date

Collateral (2)

Warehouse A

40,958

55,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse A

40,958

55,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

19,457

85,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

19,457

85,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse C

43,148

75,000

LIBOR + 2.05%

On Demand

Mortgage Loans and Restricted Cash

Warehouse C

43,148

75,000

LIBOR + 2.05%

On Demand

Mortgage Loans and Restricted Cash

Warehouse D

23,726

80,000

LIBOR + 1.65%

November 15, 2021

Mortgage Loans

Warehouse D

23,726

80,000

LIBOR + 1.65%

November 15, 2021

Mortgage Loans

Total

127,289

295,000

Total

127,289

295,000

(1) Subject to certain interest rate floors.

(2) The mortgage warehouse borrowings outstanding as of ~~June~~September 30, 2021 and December 31, 2020 were collateralized by ~~$277.0~~$286.0 million and $201.2 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage loans held for sale, and approximately ~~$1.8~~$1.6 million and $1.3 million, respectively, of cash which is restricted cash on our ~~balance sheet.~~Condensed Consolidated Balance Sheet.

(3) We intend on renewing this warehouse upon expiration.

Loans Payable and Other Borrowings

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Loans payable and other borrowings as of ~~June~~September 30, 2021 and December 31, 2020 consist of project-level debt due to various land sellers and financial institutions for specific communities. 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 each of ~~June~~September 30, 2021 and December 31, 2020.

9. 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 assets and liabilities includes 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, 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, the borrowings under our Revolving Credit Facility 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 our Equity Security Investment in a public company is based upon quoted prices for identical assets in 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 ~~June~~September 30, 2021, when compared to December 31, 2020.

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

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			June 30, 2021				December 31, 2020						September 30, 2021				December 31, 2020
(Dollars in thousands)	(Dollars in thousands)	Level in Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		(Dollars in thousands)	Level in Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Description:	Description:										Description:
Mortgage loans held for sale	Mortgage loans held for sale	2	$	277,017	$	277,017	$	201,177	$	201,177	Mortgage loans held for sale	2	$	286,006	$	286,006	$	201,177	$	201,177
IRLCs	IRLCs	3	3,687		3,687		5,294		5,294		IRLCs	3	1,998		1,998		5,294		5,294
MBSs	MBSs	2	(11)		(11)		(1,847)		(1,847)		MBSs	2	1,640		1,640		(1,847)		(1,847)

Mortgage warehouse borrowings	Mortgage warehouse borrowings	2	215,230		215,230		127,289		127,289		Mortgage warehouse borrowings	2	235,685		235,685		127,289		127,289
Loans payable and other borrowings	Loans payable and other borrowings	2	415,074		415,074		348,741		348,741		Loans payable and other borrowings	2	406,859		406,859		348,741		348,741

5.875% Senior Notes due 2023 (1)	5.875% Senior Notes due 2023 (1)	2	348,984		373,660		348,700		371,000		5.875% Senior Notes due 2023 (1)	2	349,126		365,750		348,700		371,000

5.625% Senior Notes due 2024 (1)	5.625% Senior Notes due 2024 (1)	2	348,565		379,295		348,295		375,830		5.625% Senior Notes due 2024 (1)	2	348,699		377,405		348,295		375,830

5.875% Senior Notes due 2027 (1)	5.875% Senior Notes due 2027 (1)	2	495,365		565,650		494,974		566,650		5.875% Senior Notes due 2027 (1)	2	495,561		570,000		494,974		566,650
6.625% Senior Notes due 2027 (1)	6.625% Senior Notes due 2027 (1)	2	319,317		321,000		320,915		324,240		6.625% Senior Notes due 2027 (1)	2	318,518		316,500		320,915		324,240
5.75% Senior Notes due 2028(1)	5.75% Senior Notes due 2028(1)	2	445,870		508,050		445,555		509,625		5.75% Senior Notes due 2028(1)	2	446,028		501,300		445,555		509,625
5.125% Senior Notes due 2030(1)	5.125% Senior Notes due 2030(1)	2	494,243		540,650		493,926		560,000		5.125% Senior Notes due 2030(1)	2	494,401		538,150		493,926		560,000
$800 Million Revolving Credit Facility(2)											$800 Million Revolving Credit Facility(2)	2	100,000		100,000		—		—
$100 Million Revolving Credit Facility (3)											$100 Million Revolving Credit Facility (3)	2	26,692		26,692		—		—
Equity Security Investment (3)											Equity Security Investment (3)	1	8,720		8,720		—		—

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

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(2) As of December 31, 2020, we had no outstanding borrowings on the $800 Million Revolving Credit Facility.

(3) This financial instrument was acquired during the third quarter of 2021.

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:


(Dollars in thousands)		For the Year Ended December 31,
Description:	Level in Fair Value Hierarchy	2020
Inventories	3	$	22,556

As of ~~June~~September 30, 2021, the fair value for such inventories was not determined as there were no events and circumstances that indicated ~~their~~the carrying value was not recoverable.

10. INCOME TAXES

The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2021 was ~~23.6%~~23.5% and ~~23.0%~~23.2%, respectively, compared to ~~20.8%~~22.7% and ~~32.8%~~25.4% for the same periods in 2020, respectively. For the three months ended ~~June~~September 30, 2021, 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 homebuilding activities. The effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2020 was driven primarily by expenses related to the acquisition of WLH which ~~are~~were not deductible for tax purposes.

At both ~~June~~September 30, 2021 and December 31, 2020, cumulative gross unrecognized tax benefits were $5.8 million. If the unrecognized tax benefits as of ~~June~~September 30, 2021 were to be recognized, approximately $4.6 million would affect the effective tax rate. We ~~had~~accrued $0.6 million and $0.5 million of gross interest and penalties related to unrecognized tax positions ~~accrued~~ as of ~~June~~September 30, 2021 and December 31, 2020, respectively.

11. STOCKHOLDERS’ EQUITY

Capital Stock

The Company’s authorized capital stock consists of 400,000,000 shares of common stock, par value $0.00001 per share (the “Common Stock”), and 50,000,000 shares of preferred stock, par value $0.00001 per share.

Warrants

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In connection with our acquisition of WLH, we issued 1,704,205 warrants to purchase shares of TMHC Common Stock at an exercise price of $19.12 per share. These warrants were exercised on April 30, 2021 through the settlement of approximately 1.0 million surrendered shares. The exercise was recognized in accordance with ASC 718, Compensation - Stock Compensation, and has been reflected in Additional paid in capital and Treasury ~~Stock~~stock on our Condensed Consolidated Statements of Stockholders' Equity. As of ~~June~~September 30, 2021, there were no outstanding warrants to purchase shares of our common stock.

Stock Repurchase Program

On June 1, 2021, our Board of Directors authorized a renewal of our stock repurchase program which permits the repurchase of up to $250.0 million of the Company's Common Stock until December 31, 2022. Repurchases of our Common Stock under the program occur from time to time through open market purchases, privately negotiated transactions or other transactions. The timing, manner, price and amount of any common stock repurchases will be determined by us in our discretion and will depend on a variety of factors, including prevailing market conditions, our liquidity, the terms of our debt instruments, legal 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.

The following table summarizes share repurchase activity for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2021 2020 2021 2020
Amount available for repurchase — beginning of period(1)
$ 48,413 $ 9,837 $ 86,831 $ 0
Additional amount authorized for repurchase 250,000 0 250,000 100,000
Amount repurchased at cost (106,754) 0 (145,172) (90,163)
Amount available for repurchase — end of period $ 191,659 9,837 $ 191,659 $ 9,837

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	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Amount available for repurchase — beginning of period(1)	$	191,659	$	9,837	$	86,831	$	—

Additional amount authorized for repurchase	��		—		250,000		100,000
Amount repurchased at cost	(91,659)		—		(236,831)		(90,163)
Amount available for repurchase — end of period	$	100,000	$	9,837	$	100,000	$	9,837

(1) Represents the amount available for repurchase as of January 1 for the years ~~provided,~~presented, adjusted for previously expired share repurchase authorizations.

The number of shares repurchased at cost under the share repurchase program were ~~3,809,428~~3,309,196 and ~~5,256,737~~8,565,933 during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. We ~~repurchased 0~~had no repurchases for the three months ended September 30, 2020 and 5,436,479 ~~shares~~share repurchases during the ~~three and six~~nine months ended ~~June~~September 30, ~~2020, respectively.~~2020.

12. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the "Plan"). The Plan was most recently amended and restated in May 2017. The Plan provides for the grant of RSU's, stock options, and other equity-based awards deliverable in shares of our Common Stock. As of ~~June~~September 30, 2021, we had an aggregate of ~~5,328,802~~5,414,796 shares of Common Stock available for future grants under the Plan.

Our time-based and performance-based RSUs consist of awards that settle in shares of Common Stock and have been awarded to our employees. Time-based RSUs will vest ratably over a certain period of time and performance-based RSU's will vest in full, subject to certain performance criteria. Both time-based and performance-based RSU vesting is subject to continued employment with TMHC. In addition, we grant stock options to employees which vest and become exercisable ratably on the anniversary of the date of grant. Vesting of the options is also subject to continued employment with TMHC and options expire within ten years from the date of grant. From time to time, we may also grant time-based RSUs or stock options to members of our Board of Directors.

The following table provides the outstanding balance of time-based and performance based RSU's and stock options as of ~~June~~September 30, 2021:

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, 2021 1,738,878 $ 24.13 3,754,049 $ 21.47

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	Restricted Stock Units (time and performance)			Stock Options
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Exercise Price Per Share




Balance at September 30, 2021	1,726,997	$	24.16	3,457,805	$	21.55

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020(2)
Restricted stock units (1)	Restricted stock units (1)	$	3,615	$	3,989	$	8,362	$	11,708	Restricted stock units (1)	$	3,746	$	4,273	$	12,108	$	15,980
Stock options	Stock options	1,039		997		1,973		5,174		Stock options	1,047		999		3,020		6,174

Total stock compensation	Total stock compensation	$	4,654	$	4,986	$	10,335	$	16,882	Total stock compensation	$	4,793	$	5,272	$	15,128	$	22,154

(1) Includes compensation expense related to time-based RSUs and performance-based RSUs.

(2) Excludes $5.1 million of stock based compensation expense relating to the acceleration of restricted stock awards from the WLH acquisition for the nine months ended September 30, 2020, which were charged to Transaction and corporate reorganization expenses on the Condensed Consolidated Statement of Operations.

At ~~June~~September 30, 2021 and December 31, 2020, the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately ~~$35.9~~$31.1 million and $23.8 million, respectively.

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13. 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 3 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 financial services reporting segment. We have no inter-segment sales as all sales are to external customers.

Our reporting segments are as follows:


East			Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
Central			Austin, Dallas, Denver, and Houston
West			Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial Services			Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

Segment information is as follows (in thousands):

Three Months Ended June 30, 2021
East Central West Financial Services
Corporate
and
Unallocated(1)
Total
Total revenue $ 581,362 $ 385,839 $ 714,439 $ 37,392 $ 248 $ 1,719,280
Gross margin 122,241 68,606 126,593 11,457 (194) 328,703
Selling, general and administrative expenses (46,365) (32,342) (47,203) 0 (41,647) (167,557)
Equity in (loss)/income of unconsolidated entities 0 (6) 4 2,128 0 2,126
Interest and other income/(expense), net 49 (518) (1,311) 0 1,732 (48)
Income/(loss) before income taxes $ 75,925 $ 35,740 $ 78,083 $ 13,585 $ (40,109) $ 163,224

~~(1)~~ ~~Includes the activity from our Build-To-Rent and Urban Form operations.~~

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		Three Months Ended June 30, 2020													Three Months Ended September 30, 2021
		East		Central		West		Financial Services		Corporate and Unallocated (1)		Total			East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	Total revenue	$	474,623	$	480,865	$	530,789	$	40,297	$	111	$	1,526,685	Total revenue	$	571,879	$	401,948	$	846,082	$	38,046	$	796	$	1,858,751

Gross margin	Gross margin	78,736		83,614		65,199		17,501		(872)		244,178		Gross margin	129,234		78,292		173,062		11,844		18		392,450
Selling, general and administrative expenses	Selling, general and administrative expenses	(40,460)		(35,968)		(40,962)		0		(27,760)		(145,150)		Selling, general and administrative expenses	(43,439)		(31,325)		(48,627)		—		(44,219)		(167,610)
Equity in (loss)/income of unconsolidated entities	Equity in (loss)/income of unconsolidated entities	0		(42)		240		3,297		0		3,495		Equity in (loss)/income of unconsolidated entities	—		(15)		143		1,354		—		1,482
Interest and other expense, net (2)		(129)		(1,619)		(6,026)		(6,038)		(3,867)		(17,679)

Interest and other income/(expense), net(2)														Interest and other income/(expense), net(2)	(419)		(803)		254		—		211		(757)

Income/(loss) before income taxes	Income/(loss) before income taxes	$	38,147	$	45,985	$	18,451	$	14,760	$	(32,499)	$	84,844	Income/(loss) before income taxes	$	85,376	$	46,149	$	124,832	$	13,198	$	(43,990)	$	225,565

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

(2) Interest and other expense, net includes transaction related expenses and pre-acquisition write-offs of terminated projects.


		Six Months Ended June 30, 2021													Three Months Ended September 30, 2020
		East		Central		West		Financial Services		Corporate and Unallocated(1)		Total			East		Central		West		Financial Services		Corporate and Unallocated (1)		Total
Total revenue	Total revenue	$	1,034,723	$	708,452	$	1,312,169	$	81,457	$	291	$	3,137,092	Total revenue	$	507,541	$	426,275	$	718,167	$	47,451	$	—	$	1,699,434

Gross margin	Gross margin	207,308		133,784		231,031		31,523		(502)		603,144		Gross margin	90,018		87,352		107,075		25,244		—		309,689
Selling, general and administrative expenses	Selling, general and administrative expenses	(84,964)		(60,900)		(88,755)		0		(80,443)		(315,062)		Selling, general and administrative expenses	(41,450)		(33,181)		(45,525)		—		(27,011)		(147,167)
Equity in (loss)/income of unconsolidated entities	Equity in (loss)/income of unconsolidated entities	0		(70)		1,996		5,871		(10)		7,787		Equity in (loss)/income of unconsolidated entities	—		(5)		325		2,637		—		2,957
Interest and other income/(expense), net		91		(891)		(1,420)		0		1,316		(904)
Interest and other expense, net (2)														Interest and other expense, net (2)	(194)		(359)		(2,880)		(1,442)		(1,399)		(6,274)
Loss on extinguishment of debt														Loss on extinguishment of debt	—		—		—		—		(10,247)		(10,247)

Income/(loss) before income taxes	Income/(loss) before income taxes	$	122,435	$	71,923	$	142,852	$	37,394	$	(79,639)	$	294,965	Income/(loss) before income taxes	$	48,374	$	53,807	$	58,995	$	26,439	$	(38,657)	$	148,958

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

(2) Interest and other expense, net includes transaction related expenses and pre-acquisition write-offs of terminated projects.

Six Months Ended June 30, 2020
East Central West Financial
Services
Corporate
and
Unallocated(1)
Total
Total revenue $ 898,014 $ 854,204 $ 1,027,112 $ 68,336 $ 24,718 $ 2,872,384
Gross margin 136,756 147,371 133,789 24,893 (875) 441,934
Selling, general and administrative expenses (76,798) (68,224) (75,812) 0 (61,169) (282,003)
Equity in (loss)/income of unconsolidated entities 0 (161) 574 5,527 (19) 5,921
Interest and other expense, net (2)
(113) (3,871) (13,290) (7,438) (85,072) (109,784)
Income/(loss) before income taxes $ 59,845 $ 75,115 $ 45,261 $ 22,982 $ (147,135) $ 56,068

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	Nine Months Ended September 30, 2021
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	1,606,603	$	1,110,399	$	2,158,251	$	119,503	$	1,087	$	4,995,843

Gross margin	336,542		212,076		404,093		43,367		(484)		995,594
Selling, general and administrative expenses	(128,402)		(92,225)		(137,384)		—		(124,661)		(482,672)
Equity in (loss)/income of unconsolidated entities	—		(85)		2,139		7,225		(10)		9,269
Interest and other income/(expense), net(2)	(328)		(1,694)		(1,165)		—		1,526		(1,661)

Income/(loss) before income taxes	$	207,812	$	118,072	$	267,683	$	50,592	$	(123,629)	$	520,530

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

(2) Interest and other expense, net includes transaction related expenses and pre-acquisition write-offs of terminated projects.

As of June 30, 2021
East Central West Financial Services
Corporate
and
Unallocated(1)
Total
Real estate inventory and land deposits $ 1,811,744 $ 1,296,563 $ 2,774,178 $ 0 $ 0 $ 5,882,485
Investments in unconsolidated entities 0 65,563 60,204 4,277 0 130,044
Other assets 164,246 208,555 577,658 362,006 813,769 2,126,234
Total assets $ 1,975,990 $ 1,570,681 $ 3,412,040 $ 366,283 $ 813,769 $ 8,138,763



	Nine Months Ended September 30, 2020
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	1,405,556	$	1,280,479	$	1,745,279	$	115,787	$	24,717	$	4,571,818

Gross margin	226,771		234,723		240,864		50,137		(872)		751,623
Selling, general and administrative expenses	(118,249)		(101,405)		(121,337)		—		(88,179)		(429,170)
Equity in (loss)/income of unconsolidated entities	—		(166)		899		8,164		(19)		8,878
Interest and other expense, net (2)	(308)		(4,230)		(16,170)		(8,880)		(86,469)		(116,057)
Loss on extinguishment of debt	—		—		—		—		(10,247)		(10,247)

Income/(loss) before income taxes	$	108,214	$	128,922	$	104,256	$	49,421	$	(185,786)	$	205,027

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

23(2) Interest and other expense, net includes transaction related expenses and pre-acquisition write-offs of terminated projects.

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	As of September 30, 2021
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Real estate inventory and land deposits	$	1,859,846	$	1,387,972	$	2,820,108	$	—	$	—	$	6,067,926
Investments in unconsolidated entities	—		65,633		75,872		4,275		—		145,780
Other assets	147,866		234,912		580,877		384,706		840,982		2,189,343
Total assets	$	2,007,712	$	1,688,517	$	3,476,857	$	388,981	$	840,982	$	8,403,049

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


		As of December 31, 2020													As of December 31, 2020
		East		Central		West		Financial Services		Corporate and Unallocated (1)		Total			East		Central		West		Financial Services		Corporate and Unallocated (1)		Total
Real estate inventory and land deposits	Real estate inventory and land deposits	$	1,712,852	$	1,176,604	$	2,568,595	$	0	$	0	$	5,458,051	Real estate inventory and land deposits	$	1,712,852	$	1,176,604	$	2,568,595	$	—	$	—	$	5,458,051
Investments in unconsolidated entities	Investments in unconsolidated entities	0		58,052		65,395		4,498		10		127,955		Investments in unconsolidated entities	—		58,052		65,395		4,498		10		127,955
Other assets	Other assets	170,382		192,981		578,231		284,265		926,130		2,151,989		Other assets	170,382		192,981		578,231		284,265		926,130		2,151,989
Total assets	Total assets	$	1,883,234	$	1,427,637	$	3,212,221	$	288,763	$	926,140	$	7,737,995	Total assets	$	1,883,234	$	1,427,637	$	3,212,221	$	288,763	$	926,140	$	7,737,995

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

14. COMMITMENTS AND CONTINGENCIES

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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 ~~$1.0~~$1.1 billion ~~at each~~and $981.8 million as of ~~June~~September 30, 2021 and December 31, ~~2020.~~2020, respectively. 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 ~~June~~September 30, 2021 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 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 and/or letters of credit provided to obtain the options. At ~~June~~September 30, 2021 and December 31, 2020, the aggregate purchase price of these contracts was ~~$709.4~~$944.2 million and $760.4 million, 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, title and insurance agency operations, safety and other employment ~~safety~~ 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. At ~~June~~September 30, 2021 and December 31, 2020, our legal accruals were ~~$17.6~~$21.0 million and $23.5 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. Predicting the ultimate resolution of the pending matters, the related timing or the eventual 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 matters. 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.

Leases — Our leases primarily consist of office space, construction trailers, model home leasebacks, a ground lease, equipment, and storage units. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases. Lease obligations were ~~$78.8~~$81.6 million and $83.2 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. We recorded lease expense of approximately ~~$4.0~~$4.2 million and ~~$8.0~~$12.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, and ~~$4.8~~$4.3 million and ~~$8.6~~$12.9 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, within general and administrative expenses on our Condensed Consolidated Statement of Operations.

15. 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 Financial Services revenue/expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income. Unrealized gains and losses on the IRLCs, reflected as derivative assets or liabilities,

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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:

As of
June 30, 2021 December 31, 2020
(Dollars in thousands) Fair Value Notional Amount Fair Value Notional Amount
IRLCs $ 3,687 $ 255,477 $ 5,294 $ 260,954
MBSs (11) 309,750 (1,847) 376,000
Total $ 3,676 $ 3,447

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	As of
	September 30, 2021				December 31, 2020
(Dollars in thousands)	Fair Value		Notional Amount		Fair Value		Notional Amount
IRLCs	$	1,998	$	245,217	$	5,294	$	260,954
MBSs	1,640		328,000		(1,847)		376,000
Total	$	3,638			$	3,447

Total commitments to originate loans approximated ~~$280.2~~$267.5 million and $290.3 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. This amount represents the commitments to originate loans that have been locked and approved by underwriting. The notional amounts in the table above includes 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.

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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 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 the Annual Report and in our subsequent filings with the U.S. Securities and Exchange Commission (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.

Business Overview

Our principal business is residential homebuilding and the development of lifestyle communities with operations geographically focused in Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. We serve a wide array of consumer groups from coast to coast, including entry-level, move-up, and ~~50 plus~~55-plus active lifestyle (formerly referred to as active adult) buyers, building single and multi-family attached and detached homes. Our homebuilding company operates under our Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade brand names. We have an exclusive partnership with Christopher Todd Communities, a growing Phoenix-based developer of innovative, luxury rental communities to operate a “Build-to-Rent” homebuilding business. We serve as a land acquirer, developer, and homebuilder while Christopher Todd Communities provides community design and property management consultation. We also operate Urban Form Development, LLC (“Urban Form”), which primarily develops and constructs multi-use properties consisting of commercial space, retail, and multi-family units. We have operations which provide financial services to customers through our wholly owned mortgage subsidiary, Taylor Morrison Home Funding, INC (“TMHF”), title services through our wholly owned title services subsidiary, Inspired Title Services, LLC (“Inspired Title”), and homeowner’s insurance policies through our insurance agency, Taylor Morrison Insurance Services, LLC (“TMIS”). Our business as of ~~June~~September 30, 2021 is organized into multiple homebuilding operating components, and a financial services component, all of which are managed as four reportable segments: East, Central, West and Financial Services, as follows:


East						Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
Central						Austin, Dallas, Denver, and Houston
West						Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial Services						Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

Community development includes the acquisition and development of land, which may include obtaining significant planning and entitlement approvals and completing construction of off-site and on-site utilities and infrastructure. We generally operate

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as community developers, but in some communities we operate solely as merchant builders, in which case we acquire fully entitled and developed lots. We remain disciplined in our underwriting to acquire land where we see opportunities to drive profitable growth over the full cycle, with the land acquisitions we are approving today largely expected to impact deliveries in the next 24 to 48 months.

In our homebuilding operations, we either directly, or indirectly through our subcontractors, purchase ~~our~~the significant materials necessary to construct a home such as drywall, cement, steel, lumber, insulation and the other building materials. While these materials are generally widely available from a variety of sources, from time to time we experience material shortages on a localized basis which can substantially increase the price for such materials and our construction process can be slowed.

As of ~~June~~September 30, 2021, we employed approximately ~~2,900~~3,000 full-time equivalent persons. Of these, approximately ~~2,450~~2,530 were

engaged in corporate and homebuilding operations, and the remaining approximately ~~450~~470 were engaged in financial

services.

Factors Affecting Comparability of Results

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, we recognized ~~various costs~~transaction expenses relating to the acquisition of William Lyon Homes, Inc. (“WLH”). Such costs for the three months ended June 30, 2020 include $18.7 million of transaction expenses, which have been included in Transaction expenses on our Condensed Consolidated Statement of Operations, and $32.1 million of purchase accounting related adjustments which have been recognized in Cost of home closings on our Condensed Consolidated Statement of Operations. For the six months ended June 30, 2020, those costs were $105.1 million of transaction expenses and $60.5 million of purchase accounting adjustments. We did not incur such costs for the three ~~or six~~and nine months ended ~~June~~September 30, 2021.

During the third quarter of 2020, we redeemed our 2023 6.00% Senior Notes and 2025 Senior Notes. As a result of the early redemption, we recorded a net loss on extinguishment debt for the three and nine months ended September 30, 2020. We did not incur such losses in the three and nine months ended September 30, 2021.

~~Second~~Third Quarter 2021 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated) :

•~~Monthly absorptions increased 23 percent to 3.4 net sales orders per community.~~

•Home closings gross margin increased ~~370~~400 basis points to ~~19.1~~21.2 percent.

•Backlog increased 5032 percent to ~~10,228~~10,273 sold homes with a sales value of ~~$5.7~~$6.1 billion, up 7863 percent.

•~~Homebuilding lot supply increased 13 percent to approximately 76,000 total lots owned and controlled.~~

•Controlled lots as a percentage of total lot supply increased approximately 700 basis points to 3536 percent.

•Homebuilding lot supply increased 15 percent to approximately 78,000 total lots owned and controlled.

•The Company repurchased 3.3 million shares outstanding for $92 million.

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Results of Operations

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			2021			2020			(Dollars in thousands)	2021			2020			2021			2020
Statements of Operations Data:	Statements of Operations Data:													Statements of Operations Data:
Home closings revenue, net	Home closings revenue, net	$	1,644,380		$	1,470,994		$	3,007,809		$	2,735,634		Home closings revenue, net	$	1,772,495		$	1,640,584		$	4,780,304		$	4,376,218
Land closings revenue	Land closings revenue	32,057			10,546			36,946			33,485			Land closings revenue	42,228			6,756			79,174			40,241
Financial services revenue	Financial services revenue	37,392			40,297			81,457			68,336			Financial services revenue	38,046			47,451			119,503			115,787
Amenity and other revenue	Amenity and other revenue	5,451			4,848			10,880			34,929			Amenity and other revenue	5,982			4,643			16,862			39,572
Total revenue	Total revenue	1,719,280			1,526,685			3,137,092			2,872,384			Total revenue	1,858,751			1,699,434			4,995,843			4,571,818
Cost of home closings	Cost of home closings	1,331,041			1,244,224			2,441,283			2,314,727			Cost of home closings	1,397,319			1,358,196			3,838,602			3,672,923
Cost of land closings	Cost of land closings	28,138			10,287			32,165			37,419			Cost of land closings	36,439			5,217			68,604			42,636
Financial services expenses	Financial services expenses	25,935			22,796			49,934			43,443			Financial services expenses	26,202			22,207			76,136			65,650
Amenity and other expenses	Amenity and other expenses	5,463			5,200			10,566			34,861			Amenity and other expenses	6,341			4,125			16,907			38,986
Gross margin	Gross margin	328,703			244,178			603,144			441,934			Gross margin	392,450			309,689			995,594			751,623
Sales, commissions and other marketing costs	Sales, commissions and other marketing costs	97,560			94,038			183,512			180,365			Sales, commissions and other marketing costs	97,185			102,015			280,697			282,380
General and administrative expenses	General and administrative expenses	69,997			51,112			131,550			101,638			General and administrative expenses	70,425			45,152			201,975			146,790
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	(2,126)			(3,495)			(7,787)			(5,921)			Equity in income of unconsolidated entities	(1,482)			(2,957)			(9,269)			(8,878)
Interest expense/(income), net	Interest expense/(income), net	3			(337)			(116)			(897)			Interest expense/(income), net	710			(347)			594			(1,244)
Other expense/(income), net		45			(696)			1,020			5,595
Other expense, net														Other expense, net	47			1,830			1,067			7,424
Transaction expenses	Transaction expenses	—			18,712			—			105,086			Transaction expenses	—			4,791			—			109,877

Loss on extinguishment of debt, net														Loss on extinguishment of debt, net	—			10,247			—			10,247

Income before income taxes	Income before income taxes	163,224			84,844			294,965			56,068			Income before income taxes	225,565			148,958			520,530			205,027
Income tax provision	Income tax provision	38,469			17,622			67,767			18,403			Income tax provision	53,098			33,759			120,865			52,162

Net income before allocation to non-controlling interests	Net income before allocation to non-controlling interests	124,755			67,222			227,198			37,665			Net income before allocation to non-controlling interests	172,467			115,199			399,665			152,865
Net income attributable to non-controlling interests — joint ventures	Net income attributable to non-controlling interests — joint ventures	(608)			(1,548)			(5,030)			(3,423)			Net income attributable to non-controlling interests — joint ventures	(4,333)			(422)			(9,363)			(3,845)

Net income available to Taylor Morrison Home Corporation	Net income available to Taylor Morrison Home Corporation	$	124,147		$	65,674		$	222,168		$	34,242		Net income available to Taylor Morrison Home Corporation	$	168,134		$	114,777		$	390,302		$	149,020
Home closings gross margin	Home closings gross margin	19.1		%	15.4		%	18.8		%	15.4		%	Home closings gross margin	21.2		%	17.2		%	19.7		%	16.1		%

Sales, commissions and other marketing costs as a percentage of home closings revenue, net	Sales, commissions and other marketing costs as a percentage of home closings revenue, net	5.9		%	6.4		%	6.1		%	6.6		%	Sales, commissions and other marketing costs as a percentage of home closings revenue, net	5.5		%	6.2		%	5.9		%	6.5		%
General and administrative expenses as a percentage of home closings revenue, net	General and administrative expenses as a percentage of home closings revenue, net	4.3		%	3.5		%	4.4		%	3.7		%	General and administrative expenses as a percentage of home closings revenue, net	4.0		%	2.8		%	4.2		%	3.4		%

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided information in this ~~quarterly report~~filing relating to: (i) adjusted income before income taxes and related margin, (ii) EBITDA and adjusted EBITDA, (iii) adjusted net income and adjusted earnings per share and (iv) net homebuilding debt to capitalization ~~ratio, and (v) adjusted home closings gross margin.~~ratio.

Adjusted income before income taxes (and related margin) is a non-GAAP financial measure that reflects our income before income taxes excluding the impact of ~~purchase accounting adjustments related to the acquisition~~transaction expenses and loss on extinguishment of ~~William Lyon Homes (“WLH”) and transaction expenses.~~debt. EBITDA and Adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude interest expense/(income), net, amortization of capitalized interest, income taxes, depreciation and amortization (EBITDA), non-cash compensation expense, if any, ~~purchase accounting adjustments relating to the acquisition~~transaction expenses and loss on extinguishment of ~~WLH and transaction expenses.~~debt. Adjusted net income and adjusted earnings per share are non-GAAP financial measures that reflect the net income available to the Company excluding the impact of ~~purchase accounting adjustments relating to the acquisition~~transaction expenses, loss on extinguishment of ~~WLH and, transaction expenses~~debt and the tax impact due to such items. Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, less unamortized debt issuance ~~costs/~~premiums, net, and mortgage warehouse borrowings, net of unrestricted cash and cash equivalents, by (ii) total capitalization (the sum of net homebuilding debt and total stockholders’ equity). ~~Adjusted home~~Beginning with the third quarter of fiscal 2021, we are no longer excluding purchase accounting adjustments from these non-GAAP financial measures, and prior period measures have been recast to exclude this adjustment.

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closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding purchase accounting adjustments relating to the acquisition of WLH.

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. A reconciliation of our forward-looking net homebuilding debt to capitalization ratio to the most directly comparable GAAP financial measure cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. 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 income before income taxes and related margin, adjusted net income and adjusted earnings per share, 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.

Adjusted Net Income and Adjusted Earnings Per Share
Three Months Ended
June 30,
($ in thousands, except per share data) 2021 2020
Net income available to TMHC $ 124,147 $ 65,674
William Lyon Homes related purchase accounting adjustments — 32,138
Transaction expenses — 18,712
Tax impact due to above non-GAAP reconciling items — (12,709)
Adjusted net income $ 124,147 $ 103,815
Basic weighted average shares 128,440 129,629
Adjusted earnings per common share - Basic $ 0.97 $ 0.80
Diluted weighted average shares 130,259 130,364
Adjusted earnings per common share - Diluted $ 0.95 $ 0.80


Adjusted Net Income and Adjusted Earnings Per Share
	Three Months Ended September 30,
(Dollars in thousands, except per share data)	2021		2020








Net income available to TMHC	$	168,134	$	114,777




Transaction expenses	—		4,791
Loss on extinguishment of debt, net	—		10,247
Tax impact due to above non-GAAP reconciling items	—		(3,764)
Adjusted net income	$	168,134	$	126,051

Basic weighted average shares	124,378		129,775
Adjusted earnings per common share - Basic	$	1.35	$	0.97


Diluted weighted average shares	125,770		131,433
Adjusted earnings per common share - Diluted	$	1.34	$	0.96

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Adjusted Income Before Income Taxes and Related Margin
Three Months Ended June 30,
($ in thousands) 2021 2020
Income before income taxes $ 163,224 $ 84,844
William Lyon Homes related purchase accounting adjustments — 32,138
Transaction expenses — 18,712
Adjusted income before income taxes $ 163,224 $ 135,694
Total revenues $ 1,719,280 $ 1,526,685
Income before income taxes margin 9.5 % 5.6 %
Adjusted income before income taxes margin 9.5 % 8.9 %



Adjusted Income Before Income Taxes and Related Margin
	Three Months Ended September 30,
(Dollars in thousands)	2021			2020
Income before income taxes	$	225,565		$	148,958


Transaction expenses	—			4,791
Loss on extinguishment of debt, net	—			10,247
Adjusted income before income taxes	$	225,565		$	163,996

Total revenues	$	1,858,751		$	1,699,434

Income before income taxes margin	12.1		%	8.8		%
Adjusted income before income taxes margin	12.1		%	9.7		%

Adjusted Home Closings Gross Margin
Three Months Ended
June 30,
($ in thousands) 2021 2020
Home closings revenue $ 1,644,380 $ 1,470,994
Cost of home closings 1,331,041 1,244,224
Home closings gross margin $ 313,339 $ 226,770
William Lyon Homes homebuilding related purchase accounting adjustments — 32,138
Adjusted home closings gross margin $ 313,339 $ 258,908
Home closings gross margin as a percentage of home closings revenue 19.1 % 15.4 %
Adjusted home closings gross margin as a percentage of home closings revenue 19.1 % 17.6 %

~~Table of Contents~~

EBITDA and Adjusted EBITDA Reconciliation
Three Months Ended
June 30,
(Dollars in thousands) 2021 2020
Net income before allocation to non-controlling interests $ 124,755 $ 67,222
Interest expense/(income), net 3 (337)
Amortization of capitalized interest 34,070 28,667
Income tax provision 38,469 17,622
Depreciation and amortization 2,193 1,467
EBITDA $ 199,490 $ 114,641
Non-cash compensation expense 4,654 4,986
William Lyon Homes related purchase accounting adjustments — 32,138
Transaction expenses — 18,712
Adjusted EBITDA $ 204,144 $ 170,477
Total revenues $ 1,719,280 $ 1,526,685
EBITDA as a percentage of total revenues 11.6 % 7.5 %
Adjusted EBITDA as a percentage of total revenues 11.9 % 11.2 %

Net Homebuilding Debt to Capitalization Ratio Reconciliation
($ in thousands) As of
June 30, 2021 As of
March 31, 2021
Total debt $ 3,082,648 $ 3,025,587
Less unamortized debt issuance premiums, net 2,344 2,354
Less mortgage warehouse borrowings 215,230 180,833
Total homebuilding debt $ 2,865,074 $ 2,842,400
Less cash and cash equivalents 366,267 392,500
Net homebuilding debt $ 2,498,807 $ 2,449,900
Total equity 3,668,849 3,655,564
Total capitalization $ 6,167,656 $ 6,105,464
Net homebuilding debt to capitalization ratio 40.5 % 40.1 %


EBITDA and Adjusted EBITDA Reconciliation
	Three Months Ended September 30,
(Dollars in thousands)	2021			2020
Net income before allocation to non-controlling interests	$	172,467		$	115,199
Interest expense/(income), net	710			(347)
Amortization of capitalized interest	37,951			34,321
Income tax provision	53,098			33,759
Depreciation and amortization	2,164			1,714
EBITDA	$	266,390		$	184,646
Non-cash compensation expense	4,793			5,272


Transaction expenses	—			4,791
Loss on extinguishment of debt, net	—			10,247
Adjusted EBITDA	$	271,183		$	204,956

Total revenues	$	1,858,751		$	1,699,434
Net income before allocation to non-controlling interests as a percentage of total revenues	9.3		%	6.8		%
EBITDA as a percentage of total revenues	14.3		%	10.9		%
Adjusted EBITDA as a percentage of total revenues	14.6		%	12.1		%

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Net Homebuilding Debt to Capitalization Ratio Reconciliation
(Dollars in thousands)	As of September 30, 2021			As of June 30, 2021
Total debt	$	3,221,569		$	3,082,648
Less unamortized debt issuance premiums, net	2,333			2,344
Less mortgage warehouse borrowings	235,685			215,230
Total homebuilding debt	$	2,983,551		$	2,865,074
Less cash and cash equivalents	373,407			366,267
Net homebuilding debt	$	2,610,144		$	2,498,807
Total equity	3,745,896			3,668,849
Total capitalization	$	6,356,040		$	6,167,656

Net homebuilding debt to capitalization ratio	41.1		%	40.5		%

Three And ~~Six~~Nine Months Ended ~~June~~September 30, 2021 Compared to Three And ~~Six~~Nine Months Ended ~~June~~September 30, 2020

The results for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, were impacted by various macro economic conditions. The first six months of the prior year was negatively impacted with the onset of COVID-19. For a limited period of time during 2020, we experienced an increase in our cancellation rate and a decrease in our net sales orders, among other changes. During the second half of 2020, demand for housing increased at a nationwide ~~level. Interest~~level as uncertainty of the impact of COVID-19 abated. In addition, interest rates declined, offering greater affordability, ~~and for various reasons, more affordable markets saw a significant increase in demand from out-of-state customers. As of June 30, 2021, interest rates continue~~which added to ~~remain low and~~ the demand for new housing remains high as re-sale inventory is low. In addition, we continue to experience supply chain disruptions, labor shortages, and increasing costs related to materials, specifically lumber. While we believe our pricing strategies will offset increases in cost, the supply chain delays and labor shortages have extended our cycle times. We have also intentionally limited our sales releases and delayed the release of speculative homes. Despite these conditions, we experienced a strong sales pace of 3.4 for the second quarter and 3.9 for the first half of 2021, a 21% and 34% increase from the same periods in the prior year, respectively.increased demand. Our total average active selling communities have decreased compared to the same periods in the prior year as a result of such ~~demand.~~demand and the resulting sell-out of communities.

Through the third quarter of 2021, we continued to experience market-wide supply chain disruptions, trade labor shortages, and increasing costs related to materials. The strong demand for housing has allowed us to put into place pricing strategies that partially mitigated increases in cost. Migration trends continue as we experience a growing share of out-of-state buyers, particularly from higher-cost markets such as California, New York and New Jersey to our Texas, Nevada and Florida markets. The average sales price for net sales orders, backlog, and homes closed during the three and ~~six~~nine months ended ~~June~~September 30, 2021 all increased compared to the three and ~~six~~nine months ended ~~June~~September 30, 2020. However, the supply chain delays and labor shortages have extended our build cycle times. We have also intentionally limited our sales releases and delayed the release of speculative homes; however, we maintained a healthy monthly sales pace of 3.3 for the third quarter of 2021, a 15.8% decrease from the same period in the prior year. Additional information for each metric is provided below.

Average Active Selling Communities


		Three Months Ended June 30,					Three Months Ended September 30,
		2021	2020	Change			2021	2020	Change
East	East	126	153	(17.6)	%	East	136	145	(6.2)	%
Central	Central	101	132	(23.5)		Central	98	122	(19.7)
West	West	105	126	(16.7)		West	104	126	(17.5)
Total	Total	332	411	(19.2)	%	Total	338	393	(14.0)	%

Six Months Ended June 30,
2021 2020 Change
East 127 148 (14.2) %
Central 102 133 (23.3)
West 106 112 (5.4)
Total 335 393 (14.8) %

Average active selling communities for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020 decreased by 19.2% and 14.8%, respectively. The decrease is primarily attributable to early community close outs. The close outs were the result of our strong sales environment for the last twelve months causing active selling communities to sell out ahead of schedule. Average community count is expected to increase by the end of 2022 and continuing on into 2023 as land we currently control becomes owned and transitions into active selling communities.

~~Net Sales Orders~~


		Three Months Ended June 30,
		Net Sales Orders (1)				Sales Value (1)						Average Selling Price							Nine Months Ended September 30,
(Dollars in thousands)		2021	2020	Change		2021		2020		Change		2021		2020		Change
																			2021	2020	Change
East	East	1,302	1,176	10.7	%	$	713,398	$	484,701	47.2	%	$	548	$	412	33.0	%	East	131	146	(10.3)	%
Central	Central	850	1,003	(15.3)		500,976		437,568		14.5		589		436		35.1		Central	100	130	(23.1)
West	West	1,270	1,274	(0.3)		828,731		643,156		28.9		653		505		29.3		West	106	116	(8.6)
Total	Total	3,422	3,453	(0.9)	%	$	2,043,105	$	1,565,425	30.5	%	$	597	$	453	31.8	%	Total	337	392	(14.0)	%

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Six Months Ended June 30,

Net Sales Orders (1)
Sales Value (1)
Average Selling Price
(Dollars in thousands) 2021 2020 Change 2021 2020 Change 2021 2020 Change
East 3,079 2,537 21.4 % $ 1,591,982 $ 1,046,245 52.2 % $ 517 $ 412 25.5 %
Central 1,922 1,909 0.7 1,084,457 861,631 25.9 564 451 25.1
West 2,913 2,473 17.8 1,839,497 1,275,399 44.2 631 516 22.3
Total 7,914 6,919 14.4 % $ 4,515,936 $ 3,183,275 41.9 % $ 571 $ 460 24.1 %
Average active selling communities for both the three and nine months ended September 30, 2021, decreased by 14.0% compared to the same periods in the prior year. The decrease is primarily attributable to early community close outs resulting from the strong housing demand experienced since the second half of 2020 causing active selling communities to sell out.

Net Sales Orders


	Three Months Ended September 30,
	Net Sales Orders (1)				Sales Value (1)						Average Selling Price
(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change
East	1,279	1,548	(17.4)	%	$	742,449	$	682,744	8.7	%	$	580	$	441	31.5	%
Central	921	1,133	(18.7)		577,477		537,265		7.5		627		474		32.3
West	1,172	1,744	(32.8)		840,963		946,439		(11.1)		718		543		32.2
Total	3,372	4,425	(23.8)	%	$	2,160,889	$	2,166,448	(0.3)	%	$	641	$	490	30.8	%



	Nine Months Ended September 30,
	Net Sales Orders (1)				Sales Value (1)						Average Selling Price
(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change
East	4,358	4,085	6.7	%	$	2,334,431	$	1,728,989	35.0	%	$	536	$	423	26.7	%
Central	2,843	3,042	(6.5)		1,661,934		1,398,896		18.8		585		460		27.2
West	4,085	4,217	(3.1)		2,680,460		2,221,838		20.6		656		527		24.5
Total	11,286	11,344	(0.5)	%	$	6,676,825	$	5,349,723	24.8	%	$	592	$	472	25.4	%

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

East:

The number of net sales orders ~~and sales values increased~~decreased by ~~10.7% and 47.2%, respectively,~~17.4% for the three months ended ~~June~~September 30, 2021, and ~~21.4% and 52.2%, respectively,~~increased by 6.7% for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to the same periods in the prior year. The decrease in net sales orders for the three months ended September 30, 2021, was primarily due to strategically limiting sales releases to optimize profitability, combined with supply chain disruptions which have elongated build cycle times. The increase in net sales orders for the nine months ended September 30, 2021, compared to the same period in the prior year was ~~primarily due to~~driven by demand in our Florida markets, including the ~~50 plus~~55-plus active lifestyle market, which ~~remained~~has continued to remain strong ~~during~~since the ~~three~~onset of COVID-19.

Net sales values increased by 8.7% and six months ended June 30, 2021 as compared to the same periods in the prior year when the COVID-19 pandemic negatively impacted net sales orders. In addition, sales order pace increased 30.8% and 37.9%35.0%, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, ~~2021, respectively, compared to the same periods in the prior year.~~2021. Market appreciation as well as product and geographical mix contributed to the change in average selling price for both comparative periods.

Central:

The number of net sales orders decreased by ~~15.3% in~~18.7% for the three months ended ~~June~~September 30, 2021, and 6.5% for the nine months ended September 30, 2021, compared to the same ~~period~~periods in the prior ~~year, while~~year. The decrease in net sales orders for the ~~net~~three and nine months ended September 30, 2021, was a result of a decrease in average community count and strategically limiting sales releases to optimize profitability, combined with supply chain disruptions which have elongated build cycle times.

Net sales values increased ~~14.5%~~by 7.5% and 18.8%, respectively, for the three and nine months ended September 30, 2021. Market appreciation and raising selling prices were the primary drivers for the increases in sales value.

West:

The number of net sales orders and sales value decreased by 32.8% and 11.1%, respectively, for the three months ended September 30, 2021, compared to the same period in the prior year. The decrease in net sales orders ~~for the second quarter is a result of~~was primarily due to a decrease in average community count along with an increase in sales pace per community. We also raised selling prices in many of our communities for these same reasons. In addition, extreme weather conditions in certain markets within the Central regioncounts which also contributed to the decline in net sales value. The decrease in net sales ~~orders for the second quarter.~~

~~The net sales orders remained relatively flat for the six months ended June 30, 2021 compared to the same period in the prior year, due to strong sales orders during the prior quarter~~value was partially offset by ~~the imposition of sales caps during the current quarter. Net sales values increased 25.9% compared to the same period~~an increase in ~~the prior year~~average selling price. This increase in average selling price was primarily due to market appreciation.

~~West:~~

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~~The number of net~~Net sales orders ~~remained flat for the three months ended June 30, 2021 compared to the same period in the prior year,~~decreased by 3.1% while net sales values increased by ~~28.9%~~20.6% for the same period. A decrease in community count along with an increase in sales pace per community contributed to the relatively flat net sales orders during the second quarter. We have also raised selling prices in many of our communities to optimize our cycle times and balance increased demand with supply chain disruptions and trade labor availability.

~~The net sales orders and net sales values increased 17.8% and 44.2%, respectively, for the~~ ~~six~~nine months ended ~~June~~September 30, 2021, compared to the same period in the prior year. The sales order ~~increase is~~decrease was mainly due to ~~continued strong demand and an effort~~reduced average community counts along with strategically limiting sales releases to ~~increase our footprint in several markets.~~optimize profitability, combined with supply chain disruptions which have elongated build cycle times. The increase in the net sales value iswas mainly due to market appreciation and product mix.

Sales Order Cancellations


		Cancellation Rate(1)									Cancellation Rate(1)
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,

		2021		2020		2021		2020			2021		2020		2021		2020
East	East	4.5	%	15.4	%	5.4	%	13.7	%	East	5.6	%	8.1	%	5.5	%	11.7	%
Central	Central	5.9	%	20.8	%	6.2	%	18.6	%	Central	7.5	%	12.1	%	6.7	%	16.3	%
West	West	5.6	%	19.5	%	6.0	%	16.9	%	West	7.4	%	9.4	%	6.4	%	13.9	%
Total Company	Total Company	5.2	%	18.6	%	5.8	%	16.2	%	Total Company	6.7	%	9.7	%	6.1	%	13.8	%

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

~~Table of Contents~~

The total company cancellation rate decreased to ~~5.2%~~6.7% from ~~18.6%~~9.7% and ~~5.8%~~6.1% from ~~16.2%, respectively,~~13.8% for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, compared to the same periods in the prior year. We believe the decrease in cancellations for the three and ~~six~~nine months ended ~~June~~September 30, 2021, compared to the prior year periods, was a result of the ~~high~~continued demand ~~and customers wanting~~ to secure housing as a result of low inventory levels, low interest rates, and price appreciation. ~~In addition, we believe increased consumer confidence relative to the prior year periods, which were negatively impacted by the COVID-19 pandemic, contributed to the lower cancellation rate.~~

Sales Order Backlog


		As of June 30,																	As of September 30,
		Sold Homes in Backlog (1)				Sales Value						Average Selling Price							Sold Homes in Backlog (1)				Sales Value						Average Selling Price
(Dollars in thousands)	(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change		(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change
East	East	3,617	2,271	59.3	%	$	1,903,206	$	974,860	95.2	%	$	526	$	429	22.6	%	East	3,729	2,603	43.3	%	$	2,090,661	$	1,158,391	80.5	%	$	561	$	445	26.1	%
Central	Central	2,838	2,111	34.4		1,581,686		1,006,002		57.2		557		477		16.8		Central	2,995	2,331	28.5		1,760,401		1,119,626		57.2		588		480		22.5
West	West	3,773	2,423	55.7		2,250,680		1,245,301		80.7		597		514		16.1		West	3,549	2,827	25.5		2,272,904		1,474,011		54.2		640		521		22.8
Total	Total	10,228	6,805	50.3	%	$	5,735,572	$	3,226,163	77.8	%	$	561	$	474	18.4	%	Total	10,273	7,761	32.4	%	$	6,123,966	$	3,752,028	63.2	%	$	596	$	483	23.4	%

(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 backlog units and total sales value increased by ~~50.3%~~32.4% and ~~77.8%~~63.2% at ~~June~~September 30, 2021, respectively, compared to ~~June~~September 30, 2020. The increase in backlog units and sales value was primarily due to a strong sales environment as a result of demand for housing and low interest rates. In addition, various supply chain disruptions and trade labor ~~availability, and inclement weather~~shortages have led to ~~a small~~an increase in build cycle times, which ~~contributes~~contributed to an increase in backlog inventory.

Home Closings Revenue


		Three Months Ended June 30,																	Three Months Ended September 30,
		Homes Closed				Home Closings Revenue, Net						Average Selling Price							Homes Closed				Home Closings Revenue, Net						Average Selling Price
(Dollars in thousands)	(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change		(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change
East	East	1,245	1,097	13.5	%	$	563,326	$	467,154	20.6	%	$	452	$	426	6.1	%	East	1,167	1,216	(4.0)	%	$	554,995	$	499,212	11.2	%	$	476	$	411	15.8	%
Central	Central	791	1,059	(25.3)		382,743		473,549		(19.2)		484		447		8.3		Central	764	913	(16.3)		398,762		423,642		(5.9)		522		464		12.5
West	West	1,232	1,056	16.7		698,311		530,291		31.7		567		502		12.9		West	1,396	1,340	4.2		818,738		717,730		14.1		586		536		9.3
Total	Total	3,268	3,212	1.7	%	$	1,644,380	$	1,470,994	11.8	%	$	503	$	458	9.8	%	Total	3,327	3,469	(4.1)	%	$	1,772,495	$	1,640,584	8.0	%	$	533	$	473	12.7	%

Six Months Ended June 30,
Homes Closed Home Closings Revenue, Net Average Selling Price
(Dollars in thousands) 2021 2020 Change 2021 2020 Change 2021 2020 Change
East 2,297 2,082 10.3 % $ 1,009,211 $ 862,870 17.0 % $ 439 $ 414 6.0 %
Central 1,482 1,878 (21.1) 702,920 846,573 (17.0) 474 451 5.1
West 2,310 2,013 14.8 1,295,678 1,026,191 26.3 561 510 10.0
Total 6,089 5,973 1.9 % $ 3,007,809 $ 2,735,634 9.9 % $ 494 $ 458 7.9 %

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	Nine Months Ended September 30,
	Homes Closed				Home Closings Revenue, Net						Average Selling Price
(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change
East	3,464	3,298	5.0	%	$	1,564,206	$	1,362,082	14.8	%	$	452	$	413	9.4	%
Central	2,246	2,791	(19.5)		1,101,681		1,270,215		(13.3)		491		455		7.9
West	3,706	3,353	10.5		2,114,417		1,743,921		21.2		571		520		9.8
Total	9,416	9,442	(0.3)	%	$	4,780,304	$	4,376,218	9.2	%	$	508	$	463	9.7	%

East:

The number of homes closed decreased by 4.0%, while home closings revenue, net increased by 11.2% for the three months ended September 30, 2021, compared to the same period in the prior year. The decrease in homes closed was primarily due to extended build cycle times from delays in the supply chain and trade labor shortages. The increase in home closings revenue, net was primarily due to strong market demand driving sales price appreciation. For the nine months ended September 30, 2021, the number of homes closed and homes closing revenue, net increased by 5.0% and 14.8%, compared to the same period in the prior year, respectively. Our Florida market was the primary driver for the increase in home closings units for the nine months ended September 30, 2021, compared to the same period in the prior year. Product mix along with market price appreciation contributed to the increase in home closings revenue, net for the nine months ended September 30, 2021 compared to the same period in the prior year.

Central:

The number of homes closed and home closings revenue, net, ~~increased~~decreased by ~~13.5%~~16.3% and ~~20.6%~~5.9%, respectively, for the three months ended ~~June~~September 30, 2021, and ~~10.3%~~19.5% and ~~17.0%~~13.3%, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to the same periods in the prior year. ~~This is primarily~~These decreases in both units and dollars were due to ~~strong market demand and increased sales pace in certain of our Florida markets~~extended build cycle times from delays in the ~~latter half of 2020.~~supply chain, increase in material cost and trade labor shortages. Geographical and product mix along with market price appreciation contributed to the increase in average selling price of homes closed for the three and ~~six~~nine months ended ~~June 30, 2021 compared to the same period in the prior year.~~

~~Central:~~

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The number of homes closed and home closings revenue, net, decreased by 25.3% and 19.2%, respectively, for the three months ended June 30, 2021 and 21.1% and 17.0%, respectively, for the six months ended June 30, 2021 compared to the same periods in the prior year. These decreases in both units and dollars were due to extended cycle times from delays in the supply chain, increase in material cost, extreme weather in certain of our markets, and labor availability. Geographical and product mix along with market price appreciation contributed to the increase in average selling price of homes closed for the three and six months ended JuneSeptember 30, 2021, compared to the same period in the prior year.

West:

The number of homes closed and home closings revenue, net, increased by ~~16.7%~~4.2% and ~~31.7%~~14.1%, respectively, for the three months ended ~~June~~September 30, 2021 and ~~14.8%~~10.5% and ~~26.3%~~21.2%, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to the same periods in the prior year. The increase in both units and dollars was primarily due to strong ~~market demand and~~sales orders in the latter half of 2020, which closed in 2021 combined with increases in selling prices.

Land Closings Revenue


		Three Months Ended June 30,							Three Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Change		(Dollars in thousands)	2021		2020		Change
East	East	$	13,203	$	3,230	$	9,973	East	$	11,987	$	4,123	$	7,864
Central	Central	3,096		7,316		(4,220)		Central	3,186		2,633		553
West	West	15,758		—		15,758		West	27,055		—		27,055
Total	Total	$	32,057	$	10,546	$	21,511	Total	$	42,228	$	6,756	$	35,472


		Six Months Ended June 30,								Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020		Change		(Dollars in thousands)	2021		2020		Change
East	East	$	15,656	C	$	25,854	$	(10,198)	East	$	27,643	$	29,977	$	(2,334)
Central	Central	5,532			7,631		(2,099)		Central	8,718		10,264		(1,546)
West	West	15,758			—		15,758		West	42,813		—		42,813
Total	Total	$	36,946		$	33,485	$	3,461	Total	$	79,174	$	40,241	$	38,933

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

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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 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 land closings revenue in the West for the three ~~and six~~ months ended ~~June~~September 30, 2021 iswas due to the sale of certain projects in our Oregon market while the land closings revenue for the nine months ended September 30, 2021 also includes project sales in our Washington and Arizona markets.

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Amenity and Other Revenue


		Three Months Ended June 30,							Three Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Change		(Dollars in thousands)	2021		2020		Change
East	East	$	4,833	$	4,239	$	594	East	$	4,897	$	4,206	$	691
Central	Central	—		—		—		Central	—		—		—
West	West	370		498		(128)		West	289		437		(148)
Corporate	Corporate	248		111		137		Corporate	796		—		796
Total	Total	$	5,451	$	4,848	$	603	Total	$	5,982	$	4,643	$	1,339


		Six Months Ended June 30,								Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020		Change		(Dollars in thousands)	2021		2020		Change
East	East	$	9,856	C	$	9,290	$	566	East	$	14,754	$	13,497	$	1,257
Central	Central	—			—		—		Central	—		—		—
West	West	733			921		(188)		West	1,021		1,358		(337)
Corporate	Corporate	$	291		$	24,718	$	(24,427)	Corporate	1,087		24,717		(23,630)
Total	Total	$	10,880		$	34,929	$	(24,049)	Total	$	16,862	$	39,572	$	(22,710)

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 Urban Form operations which primarily develops and constructs multi-use properties consisting of commercial space, retail, and multi-family units. In the prior year, Urban Form sold an asset in the quarter ended March 31, 2020, generating $24.7 million in revenue.

Home Closings Gross Margin ~~and Adjusted Home Closings Gross Margin~~


		Three Months Ended June 30,																									Three Months Ended September 30,
		East						Central						West						Consolidated							East						Central						West						Consolidated
(Dollars in thousands)	(Dollars in thousands)	2021			2020			2021			2020			2021			2020			2021			2020			(Dollars in thousands)	2021			2020			2021			2020			2021			2020			2021			2020
Home closings revenue, net	Home closings revenue, net	$	563,326		$	467,154		$	382,743		$	473,549		$	698,311		$	530,291		$	1,644,380		$	1,470,994		Home closings revenue, net	$	554,995		$	499,213		$	398,762		$	423,641		$	818,738		$	717,730		$	1,772,495		$	1,640,584
Cost of home closings	Cost of home closings	447,172			389,180			311,980			390,169			571,889			464,875			1,331,041			1,244,224			Cost of home closings	428,908			410,248			320,783			337,222			647,628			610,726			1,397,319			1,358,196
Home closings gross margin	Home closings gross margin	116,154			77,974			70,763			83,380			126,422			65,416			313,339			226,770			Home closings gross margin	$	126,087		$	88,965		$	77,979		$	86,419		$	171,110		$	107,004		$	375,176		$	282,388
Purchase accounting adjustments		—			—			—			12,005			—			20,133			—			32,138

Adjusted home closings gross margin		$	116,154		$	77,974		$	70,763		$	95,385		$	126,422		$	85,549		$	313,339		$	258,908

Home closings gross margin %	Home closings gross margin %	20.6		%	16.7		%	18.5		%	17.6		%	18.1		%	12.3		%	19.1		%	15.4		%	Home closings gross margin %	22.7		%	17.8		%	19.6		%	20.4		%	20.9		%	14.9		%	21.2		%	17.2		%
Adjusted home closings gross margin %		20.6		%	16.7		%	18.5		%	20.1		%	18.1		%	16.1		%	19.1		%	17.6		%

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		Six Months Ended June 30,																									Nine Months Ended September 30,
		East						Central						West						Consolidated							East						Central						West						Consolidated
(Dollars in thousands)	(Dollars in thousands)	2021			2020			2021			2020			2021			2020			2021			2020			(Dollars in thousands)	2021			2020			2021			2020			2021			2020			2021			2020
Home closings revenue, net	Home closings revenue, net	$	1,009,211		$	862,870		$	702,920		$	846,573		$	1,295,678		$	1,026,191		$	3,007,809		$	2,735,634		Home closings revenue, net	$	1,564,206		$	1,362,082		$	1,101,681		$	1,270,215		$	2,114,417		$	1,743,921		$	4,780,304		$	4,376,218
Cost of home closings	Cost of home closings	809,148			723,200			567,379			699,469			1,064,756			892,058			2,441,283			2,314,727			Cost of home closings	1,238,056			1,133,448			888,162			1,036,691			1,712,384			1,502,784			3,838,602			3,672,923
Home closings gross margin	Home closings gross margin	200,063			139,670			135,541			147,104			230,922			134,133			566,526			420,907			Home closings gross margin	$	326,150		$	228,634		$	213,519		$	233,524		$	402,033		$	241,137		$	941,702		$	703,295
Purchase accounting adjustments		—			—			—			22,412			—			38,093			—			60,505

Adjusted home closings gross margin		$	200,063		$	139,670		$	135,541		$	169,516		$	230,922		$	172,226		$	566,526		$	481,412

Home closings gross margin %	Home closings gross margin %	19.8		%	16.2		%	19.3		%	17.4		%	17.8		%	13.1		%	18.8		%	15.4		%	Home closings gross margin %	20.9		%	16.8		%	19.4		%	18.4		%	19.0		%	13.8		%	19.7		%	16.1		%
Adjusted home closings gross margin %		19.8		%	16.2		%	19.3		%	20.0		%	17.8		%	16.8		%	18.8		%	17.6		%

East:

Home closings gross margin ~~and adjusted home closings gross margin percentages both~~percentage increased to ~~20.6%~~22.7% from ~~16.7%~~17.8% and to ~~19.8%~~20.9% from ~~16.2%~~16.8%, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2021, compared to the same periods in the prior year. The primary drivers for the increases were product mix, geographic mix and market appreciation compared to the same periods in the prior year. ~~The East region was not impacted by our WLH acquisition and therefore did not have any purchase accounting adjustments for the three and six months ended June 30, 2020.~~

Central:

Home closings gross margin percentage decreased to 19.6% from 20.4% and ~~adjusted~~increased to 19.4% from 18.4% for the three and nine months ended September 30, 2021, respectively. The decrease in home closings gross margin percentage for the three months ended September 30, 2021 compared to the same period in the prior year was due to an increase in construction costs which was partially offset by an increase in average selling price. The increase in home closings gross margin percentage for the nine months ended September 30, 2021 compared to the same period in the prior year was driven primarily by market appreciation and product mix. In addition, in the current year we experienced cost synergies from our acquisition of WLH.

West:

Home closings gross margin percentages ~~were 18.5%~~increased to 20.9% from 14.9% and ~~19.3%~~to 19.0% from 13.8%, respectively, for the three and ~~six~~nine months ended June 30, 2021. When compared with the same periods in the prior year, home closings gross margin increased while adjusted home closings gross margin decreased. Home closings gross margin was negatively impacted for the three and six months ended June 30, 2020 as a result of purchase accounting adjustments from the WLH acquisition. The decrease in adjusted home closings gross margin in the three and six months ended JuneSeptember 30, 2021 compared to the same periods in the prior ~~year, was driven by~~year. The primary drivers for the increases were price appreciation from strong demand and product ~~and geographic mix, primarily due to~~mix. In addition, homes closed during 2020 from WLH communities ~~having~~had lower home closings gross margins than legacy TMHC communities and we have since experienced cost synergies from these communities.

~~West:~~

Home closings gross margin and adjusted home closings gross margin percentages were 18.1% and 17.8%, respectively, for the three and six months ended June 30, 2021. When compared to the same periods in the prior year, home closings gross margin and adjusted home closings gross margin both increased primarily due to price appreciation and product mix. Home closings gross margin was negatively impacted for the three and six months ended June 30, 2020 as a result of purchase accounting adjustments from the WLH acquisition.

Financial Services

Our Financial Services segment provides mortgage lending through our subsidiary, TMHF, title services through our subsidiary, Inspired Title, and homeowner's insurance policies through our insurance agency, TMIS. The following is a summary for the periods presented of financial services income before income taxes as well as supplemental data:



	Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)		2021		2020		Change		2021		2020		Change
Financial services revenue		$	29,721	$	40,341	(26.3)	%	$	96,756	$	97,158	(0.4)	%
Title services revenue		6,950		5,789		20.1		18,571		14,780		25.6
Financial services revenue - other		1,375		1,321		4.1		4,176		3,849		8.5
Total financial services revenue		38,046		47,451		(19.8)	%	119,503		115,787		3.2	%
Financial services equity in income of unconsolidated entities		1,354		2,637		(48.7)		7,225		8,164		(11.5)
Total revenue		39,400		50,088		(21.3)		126,728		123,951		2.2
Financial services expenses		26,202		22,207		18.0		76,136		65,650		16.0
Financial services transaction expenses		—		1,442		(100.0)		—		8,880		(100.0)
Financial services income before income taxes		$	13,198	$	26,439	(50.1)	%	$	50,592	$	49,421	2.4	%
Total originations:
Number of Loans		2,254		2,355		(4.3)	%	6,718		6,136		9.5	%
Principal		$	900,404	$	843,744	6.7	%	$	2,621,103	$	2,107,622	24.4	%

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Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands, except for the number of loan originations) 2021 2020 Change 2021 2020 Change
Financial services revenue $ 29,521 $ 33,929 (13.0) % $ 67,034 $ 56,817 18.0 %
Title services revenue 1,304 1,446 (9.8) 2,801 2,527 10.8
Financial services revenue - other 6,567 4,922 33.4 11,622 8,992 29.2
     Total financial services revenue 37,392 40,297 (7.2) % 81,457 68,336 19.2 %
Financial services equity in income of unconsolidated entities 2,128 3,297 (35.5) 5,797 5,527 4.9
     Total revenue 39,520 43,594 (9.3) 87,254 73,863 18.1
Financial services expenses 25,935 22,796 13.8 49,934 43,443 14.9
Financial services transaction expenses — 6,038 (100.0) — 7,438 —
Financial services income before income taxes $ 13,585 $ 14,760 (8.0) % $ 37,320 $ 22,982 62.4 %
Total originations:
     Number of Loans 2,336 2,082 12.2 % 4,464 3,781 18.1 %
     Principal $ 910,953 $ 747,348 21.9 % $ 1,720,669 $ 1,263,878 36.1 %


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Supplemental data:	Supplemental data:									Supplemental data:
Average FICO score	Average FICO score	750		750		750		750		Average FICO score	752		753		751		751
Funded origination breakdown:	Funded origination breakdown:									Funded origination breakdown:
Government (FHA,VA,USDA)	Government (FHA,VA,USDA)	18	%	17	%	18	%	16	%	Government (FHA,VA,USDA)	17	%	17	%	18	%	16	%
Other agency	Other agency	79	%	80	%	79	%	79	%	Other agency	79	%	80	%	79	%	79	%
Total agency	Total agency	97	%	97	%	97	%	95	%	Total agency	96	%	97	%	97	%	95	%
Non-agency	Non-agency	3	%	3	%	3	%	5	%	Non-agency	4	%	3	%	3	%	5	%
Total funded originations	Total funded originations	100.0	%	100	%	100	%	100	%	Total funded originations	100	%	100	%	100	%	100	%

Financial services revenue decreased by ~~7.2%~~19.8% and increased by ~~19.2%, respectively,~~3.2% for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, compared to the same periods in the prior year. The decrease in revenue for the three months ended ~~June~~September 30, 2021, compared to the same period in the prior year iswas as a result of the prior year period's fair value of IRLC’s being at an all-time high, combined with ~~our~~ offering, direct to customer, lender incentives beginning in the fourth quarter of ~~higher incentives in 2021. This was partially offset by increases in revenue stemming from increased mortgage closings and increases in average mortgage borrowings per unit.~~2020. The increase in financial services revenue for the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily due to increased mortgage closings and an increase in capture ~~rate.~~rate, compared to the same period in the prior year.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, decreased to 5.5% from 6.2% and to 5.9% from ~~6.4% and 6.1% from 6.6%~~6.5%, for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, compared to the same periods in the prior year. The decrease was primarily driven by leverage from an increase in home closings revenue, net, as well as sustained leverage in our sales and marketing functions.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, increased to ~~4.3%~~4.0% from ~~3.5%~~2.8% and ~~4.4%~~to 4.2% from ~~3.7%~~3.4% for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, compared to the same periods in the prior year. The increases ~~are~~were primarily due to the normalization in our spend in the current year as employees continue to return to the office, resume travel, and incur various expenses that had been reduced in 2020 in response to the COVID-19 pandemic.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities was ~~$2.1~~$1.5 million and ~~$3.5~~$3.0 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, and ~~$7.8~~$9.3 million and ~~$5.9~~$8.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Our joint ventures relating to our financial services segment experienced a decrease in income for the three and ~~six~~nine months ended ~~June~~

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September 30, 2021. The decreases in our financial services joint venture were partially offset by certain joint ventures in our home building operations which began closing units ~~during the three and six months ended June 30, 2021,~~in 2021.

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

Other ~~expense/(income),~~expense, net was ~~$45~~$47 thousand ~~in expense~~ and ~~$696 thousand in income~~$1.8 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, and ~~$1.0~~$1.1 million and ~~$5.6~~$7.4 million, ~~in expense,~~ respectively, for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020. The decreases in other ~~expense/(income)~~expense for the three and ~~six~~nine months ended ~~June~~September 30, 2021 were primarily a result of higher acquisition-related costs on projects from 2020 we are no longer pursuing.

Transaction Expenses

We had no transaction expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2021, compared with ~~$18.7~~$4.8 million and ~~$105.1~~$109.9 million of expenses, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2020. Transaction expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2020 consisted of acquisition related costs from the acquisition of WLH, which included investment banking fees, severance, compensation, legal fees, expenses relating to credit facility paydowns and terminations, and other various integration costs.

Income Tax Provision

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Net Income

Net income and diluted earnings per share for the three months ended ~~June~~September 30, 2021 was ~~$124.1~~$168.1 million and ~~$0.95,~~$1.34, respectively. Net income and diluted earnings per share for the three months ended ~~June~~September 30, 2020 was ~~$65.7~~$114.8 million and ~~$0.50,~~$0.87, respectively. The increases in net income and diluted earnings per share from the prior year were primarily attributable to higher homebuilding revenues, net, and higher gross margin dollars. ~~In addition, the three months ended June 30, 2020 included transaction expenses and other compensation expenses as a result of the WLH acquisition.~~

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

•Cash generated from operations;

•Borrowings under our Revolving Credit ~~Facility;~~Facilities;

•Our various series of Senior Notes;

•Mortgage warehouse facilities;

•Project-level real estate financing (including non-recourse loans, land banking, and joint ventures); and

•Performance, payment and completion surety bonds, and letters of credit.

We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources from borrowings under our Revolving Credit ~~Facility~~Facilities to conduct our operations for the next twelve months.

We may also access the capital markets to obtain additional liquidity through debt and equity offerings on an opportunistic basis. Generally, our principal uses of capital relate to 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.

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.

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Our wholly-owned mortgage subsidiary, TMHF, retains MSRs on certain of the loans it originates. Servicing advances TMHF makes may be subject to delays in recovery to the extent the loans we service go into forbearance or delinquency. We do not currently expect our MSR portfolio to become a significant part of TMHF’s business, though a substantial increase in the volume of loans that we service coupled with a significant increase in the number of such loans which become delinquent or subject to forbearance, could affect TMHF’s short-term liquidity and revenue from operations.

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

As of
(Dollars in thousands) June 30, 2021 December 31, 2020
Total cash, excluding restricted cash $ 366,267 $ 532,843
Total revolving credit facility 800,000 800,000
Letters of credit outstanding (45,483) (64,274)
Revolving credit facility availability 754,517 735,726
Total liquidity $ 1,120,784 $ 1,268,569

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	As of
(Dollars in thousands)	September 30, 2021		December 31, 2020
Total cash, excluding restricted cash	$	373,407	$	532,843
$800 Million Revolving Credit Facility	800,000		800,000
$100 Million Revolving Credit Facility	100,000		—
Letters of credit outstanding	(51,415)		(64,274)
$800 Million Revolving Credit Facility borrowings outstanding(1)	(100,000)		—
$100 Million Revolving Credit Facility borrowings outstanding	(26,692)		—
Revolving credit facilities availability	721,893		735,726
Total liquidity	$	1,095,300	$	1,268,569

(1) We intend to repay outstanding borrowings during the fourth quarter of 2021.

Cash Flow Activities

Operating Cash Flow Activities

Our net cash used in operating activities was ~~$97.6~~$103.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to ~~$323.2~~$798.0 million of cash provided by operating activities for the ~~six~~nine months ended ~~June~~September 30, 2020. The year-over-year fluctuation in cash used in operating activities during the ~~six~~nine months ended ~~June~~September 30, 2021 reflects ~~significantly higher net income during the 2021 period, offset by~~a greater spend on real estate inventory, ~~and~~ land deposits, and an increase in mortgages held for sale. These increases were partially offset by a significantly higher net income during the 2021 period. In addition, during the ~~six~~nine months ended ~~June~~September 30, 2020, we reduced spend on land acquisition and development, all non-essential operating expenses and capital expenditures to mitigate the financial uncertainty of COVID-19.

Investing Cash Flow Activities

Net cash used in investing activities was ~~$22.0~~$43.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to ~~$278.8~~$297.5 million for the ~~six~~nine months ended ~~June~~September 30, 2020. The decrease in cash used in investing activities was primarily due to the significant use of cash in the WLH acquisition in the prior year period. This was partially offset by an increase in net cash ~~used in the current year for~~ investments of capital in unconsolidated entities.

Financing Cash Flow Activities

Net cash used in financing activities was ~~$46.4~~$12.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021, compared to ~~$303.9~~$280.1 million ~~of cash provided by financing activities~~ for the ~~six~~nine months ended ~~June~~September 30, 2020. During the ~~six~~nine months ended ~~June~~September 30, 2020, we ~~borrowed~~used cash for the repayments of Senior Notes that was partially offset by borrowings of $485.0 million on our $800 Million Revolving Credit Facility as a precautionary measure as a result of COVID-19. During the ~~six~~nine months ended ~~June~~September 30, 2021, ~~we had no borrowings under our Revolving Credit Facility, and~~ we had an increase in cash used for repurchasing of common ~~stock.~~stock that was partially offset by increased borrowings on our various mortgage warehouses.

Debt Instruments

For information regarding our debt instruments, including the terms governing our Senior Notes and our Revolving Credit ~~Facility,~~Facilities, see Note 8 - Debt to the Unaudited Condensed Consolidated Financial Statements included in this quarterly report.

Off-Balance Sheet Arrangements as of ~~June~~September 30, 2021

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 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.

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

For the quarter ended, ~~June~~September 30, 2021, total cash invested in unconsolidated joint ventures was ~~$14.6~~$31.8 million.

Land Option Contracts and Land Banking Agreements

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 our routine 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 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 and/or letters of credit provided to obtain the options. At ~~June~~September 30, 2021 and December 31, 2020, the aggregate purchase price of these contracts was ~~$709.4~~$944.2 million and $760.4 million, 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;

•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 cost and availability of materials and labor; and

•weather conditions in the markets in which we build.

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 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

There have been no significant changes to our critical accounting policies during the ~~six~~nine months ended ~~June~~September 30, 2021 compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.

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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 ~~June~~September 30, 2021, approximately ~~93%~~89% of our debt was fixed rate and 7%11% 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 and borrowings by TMHF under its various warehouse facilities. As of ~~June~~September 30, 2021, we had no$126.7 million outstanding borrowings under our $800 Million Revolving Credit Facility and $100 Million Revolving Credit Facility. We had ~~$754.5~~$721.9 million of additional availability for borrowings under the Credit Facilities including ~~$154.5~~$148.6 million of additional availability for letters of credit under our $800 Million Revolving Credit Facility as of ~~June~~September 30, 2021 (giving effect to ~~$45.5~~$51.4 million of letters of credit outstanding as of such date). We are required to offer to purchase all of our outstanding senior unsecured notes, as described in Note 8, Debt to the 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.

The following table sets forth principal payments by scheduled maturity and effective weighted average interest rates and estimated fair value of our debt obligations as of ~~June~~September 30, 2021. The interest rate for our variable rate debt represents the interest rate on 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																					Fair Value			Expected Maturity Date																					Fair Value
(In millions, except percentage data)	(In millions, except percentage data)	2021			2022			2023			2024			2025			Thereafter			Total					(In millions, except percentage data)	2021			2022			2023			2024			2025			Thereafter			Total
Fixed Rate Debt	Fixed Rate Debt	$	132.0		$	114.7		$	460.5		$	368.2		$	12.2		$	1,777.5		$	2,865.1		$	3,103.4	Fixed Rate Debt	$	94.0		$	148.4		$	449.3		$	358.0		$	13.8		$	1,793.3		$	2,856.8		$	3,076.0
Weighted average interest rate(1)	Weighted average interest rate(1)	2.9		%	2.9		%	5.1		%	5.6		%	2.9		%	5.7		%	5.3		%			Weighted average interest rate(1)	2.9		%	2.9		%	5.1		%	5.7		%	2.9		%	5.7		%	5.3		%
Variable Rate Debt(2)	Variable Rate Debt(2)	$	215.2		$	—		$	—		$	—		$	—		$	—		$	215.2		$	215.2	Variable Rate Debt(2)	$	362.4		$	—		$	—		$	—		$	—		$	—		$	362.4		$	362.4
Weighted average interest rate	Weighted average interest rate	2.0		%	—			—			—			—			—			2.0		%			Weighted average interest rate	1.9		%	—			—			—			—			—			1.9		%

(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 ~~June~~September 30, 2021, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately ~~$2.2~~$3.6 million per year.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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 ~~June~~September 30, 2021. Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that, as of ~~June~~September 30, 2021, the Company's disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

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) and 15d-15(f) under the Exchange Act) during the quarter ended ~~June~~September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required with respect to this item can be found in Note 14 - Commitments and Contingencies under “Legal Proceedings” in the Notes to the Consolidated Financial statements included in this report.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in Part I, Item 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.

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

The table below sets forth information regarding repurchases by the Company of its Common Stock during the three months ended ~~June~~September 30, 2021.

Period 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)
April 1 to April 30, 2021(1)
1,031,279 $ 31.76 5,580 $ 48,245
May 1 to May 31, 2021 1,643,797 $ 29.35 1,643,797 $ —
June 1 to June 30, 2021(2)
2,160,051 $ 27.01 2,160,051 $ 191,659
Total 4,835,127 3,809,428




Period	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)
July 1 to July 31, 2021	625,533	$	26.63	625,533	$	175,000
August 1 to August 31, 2021	1,920,254	27.83		1,920,254	121,567
September 1 to September 30, 2021	763,409	$	28.25	763,409	$	100,000
Total	3,309,196			3,309,196

~~(1)~~ ~~1,025,699 shares were repurchased in connection with the net settlement of certain outstanding warrants at an agreed upon price of $31.77 per share~~

~~(2)~~ ~~Includes $250.0 million reauthorization announced June 1, 2021.~~

On June 1, 2021, we announced that our Board of Directors had authorized a renewal of the Company's stock repurchase program. The stock repurchase program approved by the Board of Directors permits the repurchase of up to $250.0 million of the Company's Common Stock until December 31, 2022. 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.

Any stock repurchase program is subject to prevailing market conditions and other considerations, including our liquidity, the terms of our debt instruments, legal 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.

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ITEM 6. EXHIBITS


Exhibit No.						Description

2.1						Agreement and Plan of Merger, dated November 5, 2019, by and among Taylor Morrison Home Corporation, Tower Merger Sub, Inc. and William Lyon Homes (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 (File No. 333-235410)).

3.1						Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 30, 2019).

3.2						Amended and Restated By-laws (incorporated herein by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on October 26, 2018).

3.3						Amendment to the Amended and Restated By-laws (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed on October 26, 2018).


~~10.1~~						Retirement Agreement, dated as of June 21, 2021, between Taylor Morrison Home Corporation, Taylor Morrison, Inc. and C. David Cone (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 21, 2021).

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*						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.SCH*						Inline XBRL Taxonomy Extension Schema Document.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104.1*						Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2021, formatted in inline XBRL (and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

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.

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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.


		TAYLOR MORRISON HOME CORPORATION
		Registrant
DATE:	~~July 29,~~October 27, 2021
		/s/ Sheryl D. Palmer
		Sheryl D. Palmer
		Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)

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

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


	Three Months Ended June 30, 2021
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	581,362	$	385,839	$	714,439	$	37,392	$	248	$	1,719,280

Gross margin	122,241		68,606		126,593		11,457		(194)		328,703
Selling, general and administrative expenses	(46,365)		(32,342)		(47,203)		0		(41,647)		(167,557)
Equity in (loss)/income of unconsolidated entities	0		(6)		4		2,128		0		2,126
Interest and other income/(expense), net	49		(518)		(1,311)		0		1,732		(48)

Income/(loss) before income taxes	$	75,925	$	35,740	$	78,083	$	13,585	$	(40,109)	$	163,224



	Six Months Ended June 30, 2020
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	898,014	$	854,204	$	1,027,112	$	68,336	$	24,718	$	2,872,384

Gross margin	136,756		147,371		133,789		24,893		(875)		441,934
Selling, general and administrative expenses	(76,798)		(68,224)		(75,812)		0		(61,169)		(282,003)
Equity in (loss)/income of unconsolidated entities	0		(161)		574		5,527		(19)		5,921
Interest and other expense, net (2)	(113)		(3,871)		(13,290)		(7,438)		(85,072)		(109,784)


Income/(loss) before income taxes	$	59,845	$	75,115	$	45,261	$	22,982	$	(147,135)	$	56,068


Adjusted Net Income and Adjusted Earnings Per Share
	Three Months Ended June 30,
($ in thousands, except per share data)	2021		2020








Net income available to TMHC	$	124,147	$	65,674

William Lyon Homes related purchase accounting adjustments	—		32,138


Transaction expenses	—		18,712

Tax impact due to above non-GAAP reconciling items	—		(12,709)
Adjusted net income	$	124,147	$	103,815

Basic weighted average shares	128,440		129,629
Adjusted earnings per common share - Basic	$	0.97	$	0.80


Diluted weighted average shares	130,259		130,364
Adjusted earnings per common share - Diluted	$	0.95	$	0.80



Adjusted Income Before Income Taxes and Related Margin
	Three Months Ended June 30,
($ in thousands)	2021			2020
Income before income taxes	$	163,224		$	84,844
William Lyon Homes related purchase accounting adjustments	—			32,138

Transaction expenses	—			18,712

Adjusted income before income taxes	$	163,224		$	135,694

Total revenues	$	1,719,280		$	1,526,685

Income before income taxes margin	9.5		%	5.6		%
Adjusted income before income taxes margin	9.5		%	8.9		%



	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands, except for the number of loan originations)		2021		2020		Change		2021		2020		Change
Financial services revenue		$	29,521	$	33,929	(13.0)	%	$	67,034	$	56,817	18.0	%
Title services revenue		1,304		1,446		(9.8)		2,801		2,527		10.8
Financial services revenue - other		6,567		4,922		33.4		11,622		8,992		29.2
Total financial services revenue		37,392		40,297		(7.2)	%	81,457		68,336		19.2	%
Financial services equity in income of unconsolidated entities		2,128		3,297		(35.5)		5,797		5,527		4.9
Total revenue		39,520		43,594		(9.3)		87,254		73,863		18.1
Financial services expenses		25,935		22,796		13.8		49,934		43,443		14.9
Financial services transaction expenses		—		6,038		(100.0)		—		7,438		—
Financial services income before income taxes		$	13,585	$	14,760	(8.0)	%	$	37,320	$	22,982	62.4	%
Total originations:
Number of Loans		2,336		2,082		12.2	%	4,464		3,781		18.1	%
Principal		$	910,953	$	747,348	21.9	%	$	1,720,669	$	1,263,878	36.1	%