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 30, ~~2021~~2022


☐			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, 2021~~27, 2022
Common stock, $0.00001 par value						~~125,289,090~~113,659,175

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 ~~30, 2021~~ 3 0 , 2022 and December 31, ~~2020~~2021			2

Condensed Consolidated Statements of Operations for the three and six ~~month periods~~ months ended June 30 , 2022 and 2021 ~~and 2020~~			3

Condensed Consolidated Statements of Comprehensive Income for the three and six ~~month periods~~ months ended June 30 , 2022 and 2021 ~~and 2020~~			4

Condensed Consolidated Statement of Stockholders’ Equity for the three and six ~~month periods~~months ended June 30 , 2022 and 2021 ~~and 2020~~			5

Condensed Consolidated Statements of Cash Flows for the six ~~month periods~~months ended June 30 , 2022 and 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			2624

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4238

Item 4. Controls and Procedures			4339

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			4440

Item 1A. Risk Factors			4440

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4440

Item 3. Defaults Upon Senior Securities			4440

Item 4. Mine Safety Disclosures			4440

Item 5. Other Information			4440

Item 6. Exhibits			4542

SIGNATURES			4643

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			June 30, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	366,267	$	532,843	Cash and cash equivalents	$	378,340	$	832,821
Restricted cash	Restricted cash	1,854		1,266		Restricted cash	953		3,519
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	379,293		836,340

Owned inventory	Owned inventory	5,692,753		5,209,653		Owned inventory	5,975,551		5,444,207
Consolidated real estate not owned	Consolidated real estate not owned	63,717		122,773		Consolidated real estate not owned	70,817		55,314
Total real estate inventory	Total real estate inventory	5,756,470		5,332,426		Total real estate inventory	6,046,368		5,499,521
Land deposits	Land deposits	126,015		125,625		Land deposits	278,314		229,535
Mortgage loans held for sale	Mortgage loans held for sale	277,017		201,177		Mortgage loans held for sale	203,238		467,534
Derivative assets	Derivative assets	3,687		5,294		Derivative assets	4,918		2,110
Lease right of use assets	Lease right of use assets	68,490		73,222		Lease right of use assets	82,876		85,863
Prepaid expenses and other assets, net	Prepaid expenses and other assets, net	278,806		242,744		Prepaid expenses and other assets, net	157,252		314,986
Other receivables, net	Other receivables, net	100,969		96,241		Other receivables, net	171,737		150,864
Investments in unconsolidated entities	Investments in unconsolidated entities	130,044		127,955		Investments in unconsolidated entities	291,560		171,406
Deferred tax assets, net	Deferred tax assets, net	238,078		238,078		Deferred tax assets, net	151,240		151,240
Property and equipment, net	Property and equipment, net	127,869		97,927		Property and equipment, net	220,230		155,181

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

Total assets	Total assets	$	8,138,763	$	7,737,995	Total assets	$	8,650,223	$	8,727,777
Liabilities	Liabilities					Liabilities
Accounts payable	Accounts payable	$	269,924	$	215,047	Accounts payable	$	291,337	$	253,348
Accrued expenses and other liabilities	Accrued expenses and other liabilities	435,466		430,067		Accrued expenses and other liabilities	431,478		525,209
Lease liabilities	Lease liabilities	78,814		83,240		Lease liabilities	91,872		96,172
Income taxes payable	Income taxes payable	18,677		12,841		Income taxes payable	1,855		—
Customer deposits	Customer deposits	481,312		311,257		Customer deposits	579,945		485,705
Estimated development liability		39,356		40,625
Estimated development liabilities						Estimated development liabilities	38,280		38,923
Senior notes, net	Senior notes, net	2,452,344		2,452,365		Senior notes, net	2,173,998		2,452,322
Loans payable and other borrowings	Loans payable and other borrowings	415,074		348,741		Loans payable and other borrowings	447,191		404,386
Revolving credit facility borrowings	Revolving credit facility borrowings	0		0		Revolving credit facility borrowings	150,000		31,529
Mortgage warehouse borrowings	Mortgage warehouse borrowings	215,230		127,289		Mortgage warehouse borrowings	179,555		413,887
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	70,817		55,314

Total liabilities	Total liabilities	$4,469,914		$4,144,245		Total liabilities	$	4,456,328	$	4,756,795
COMMITMENTS AND CONTINGENCIES (Note 14)		0		0
COMMITMENTS AND CONTINGENCIES (Note 13)						COMMITMENTS AND CONTINGENCIES (Note 13)	0		0
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity

Total stockholders’ equity	Total stockholders’ equity	3,668,849		3,593,750		Total stockholders’ equity	4,193,895		3,970,982
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	8,138,763	$	7,737,995	Total liabilities and stockholders’ equity	$	8,650,223	$	8,727,777

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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Home closings revenue, net	Home closings revenue, net	$	1,644,380	$	1,470,994	$	3,007,809	$	2,735,634	Home closings revenue, net	$	1,883,020	$	1,644,380	$	3,527,429	$	3,007,809
Land closings revenue	Land closings revenue	32,057		10,546		36,946		33,485		Land closings revenue	36,816		32,057		52,426		36,946
Financial services revenue	Financial services revenue	37,392		40,297		81,457		68,336		Financial services revenue	35,471		37,392		70,670		81,457
Amenity and other revenue	Amenity and other revenue	5,451		4,848		10,880		34,929		Amenity and other revenue	39,716		5,451		47,622		10,880
Total revenue	Total revenue	1,719,280		1,526,685		3,137,092		2,872,384		Total revenue	1,995,023		1,719,280		3,698,147		3,137,092
Cost of home closings	Cost of home closings	1,331,041		1,244,224		2,441,283		2,314,727		Cost of home closings	1,381,610		1,331,041		2,646,584		2,441,283
Cost of land closings	Cost of land closings	28,138		10,287		32,165		37,419		Cost of land closings	24,204		28,138		38,568		32,165
Financial services expenses	Financial services expenses	25,935		22,796		49,934		43,443		Financial services expenses	21,483		25,935		45,697		49,934
Amenity and other expenses	Amenity and other expenses	5,463		5,200		10,566		34,861		Amenity and other expenses	26,246		5,463		32,690		10,566
Total cost of revenue	Total cost of revenue	1,390,577		1,282,507		2,533,948		2,430,450		Total cost of revenue	1,453,543		1,390,577		2,763,539		2,533,948
Gross margin	Gross margin	328,703		244,178		603,144		441,934		Gross margin	541,480		328,703		934,608		603,144
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	96,135		97,560		185,258		183,512
General and administrative expenses	General and administrative expenses	69,997		51,112		131,550		101,638		General and administrative expenses	69,407		69,997		137,549		131,550
Equity in income of unconsolidated entities		(2,126)		(3,495)		(7,787)		(5,921)
Net loss/(income) from unconsolidated entities										Net loss/(income) from unconsolidated entities	3,637		(2,126)		1,806		(7,787)
Interest expense/(income), net	Interest expense/(income), net	3		(337)		(116)		(897)		Interest expense/(income), net	5,189		3		9,441		(116)
Other expense/(income), net		45		(696)		1,020		5,595
Transaction expenses		0		18,712		0		105,086
Other (income)/expense, net										Other (income)/expense, net	(11,014)		45		(10,472)		1,020

Gain on extinguishment of debt, net										Gain on extinguishment of debt, net	(13,471)		—		(13,471)		—

Income before income taxes	Income before income taxes	163,224		84,844		294,965		56,068		Income before income taxes	391,597		163,224		624,497		294,965
Income tax provision	Income tax provision	38,469		17,622		67,767		18,403		Income tax provision	98,443		38,469		152,882		67,767

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	293,154		124,755		471,615		227,198
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	(2,167)		(608)		(3,925)		(5,030)

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	$	290,987	$	124,147	$	467,690	$	222,168
Earnings per common share	Earnings per common share									Earnings per common share
Basic	Basic	$	0.97	$	0.51	$	1.73	$	0.27	Basic	$	2.47	$	0.97	$	3.91	$	1.73
Diluted	Diluted	$	0.95	$	0.50	$	1.70	$	0.27	Diluted	$	2.45	$	0.95	$	3.87	$	1.70
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	117,932		128,440		119,550		128,661
Diluted	Diluted	130,259		130,364		130,766		126,726		Diluted	118,931		130,259		120,796		130,766

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,
2021 2020 2021 2020
Income before non-controlling interests, net of tax $ 124,755 $ 67,222 $ 227,198 $ 37,665
Post-retirement benefits adjustments, net of tax 0 0 0 (13)
Comprehensive income 124,755 67,222 227,198 37,652
Comprehensive income attributable to non-controlling interests (608) (1,548) (5,030) (3,423)
Comprehensive income available to Taylor Morrison Home Corporation $ 124,147 $ 65,674 $ 222,168 $ 34,229


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Comprehensive Income before non-controlling interests, net of tax	$	293,154	$	124,755	$	471,615	$	227,198




Comprehensive income attributable to non-controlling interests	(2,167)		(608)		(3,925)		(5,030)

Comprehensive income available to Taylor Morrison Home Corporation	$	290,987	$	124,147	$	467,690	$	222,168

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 June 30, 2022																	For the three months ended June 30, 2022

		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 – March 31, 2022																	Balance – March 31, 2022		120,365,390				$	1				$	3,002,809	38,776,746		$	(818,892)		$	1,865,518		$	689		$	44,673			$	4,094,798
Net income	Net income	—	—			—		—	—		124,147		—		608					124,755		Net income			—						—			—			—			290,987			—	2,167			293,154

Exercise of stock options	Exercise of stock options	281,951	—			6,113		—	—		—		—		—					6,113		Exercise of stock options			30,913						556			—			—			—			—	—			556
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)			23,920						(24)			—			—			—			—	—			(24)
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			(6,779,498)						—			6,779,498			(172,384)			—			—	—			(172,384)
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			—						5,278			—			—			—			—	—			5,278

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			—						—			—			—			—			—	(27,176)			(27,176)
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			—						—			—			—			—			—	(307)			(307)
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 – June 30, 2022																	Balance – June 30, 2022		113,640,725				$	1				$	3,008,619	45,556,244		$	(991,276)		$	2,156,505		$	689		$	19,357			$	4,193,895

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


For the three months ended June 30, 2020
For the three months ended June 30, 2021																	For the three months ended June 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 – 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 – March 31, 2021																	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
Net income																	Net income		—				—					—		—		—			124,147			—			608				124,755

Exercise of stock options	Exercise of stock options	52,373	—			823		—	—		—		—		—					823		Exercise of stock options			281,951	—					6,113			—			—			—			—	—			6,113
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)			22,796	—					(193)			—			—			—			—	—			(193)
Issuance of equity in connection with business combinations		—	—			(60,742)		—	—		—		—		—					(60,742)

Warrant exercises																	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)
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)
Stock compensation expense	Stock compensation expense	—	—			4,986		—	—		—		—		—					4,986		Stock compensation expense			—	—					4,654			—			—			—			—	—			4,654

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			—	—					—			—			—			—			—	(16,883)			(16,883)
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			—	—					—			—			—			—			—	1,596			1,596
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 – 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

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

Table of Contents


For the six months ended June 30, 2022

	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
Balance – December 31, 2021	121,833,649	$	1		$	2,997,211	36,828,559	$	(760,863)	$	1,688,815	$	689	$	45,129	$	3,970,982
Net income	—	—			—		—	—		467,690		—		3,925		471,615

Exercise of stock options	131,989	—			2,912		—	—		—		—		—		2,912
Issuance of restricted stock units, net of shares withheld for tax(1)	402,772	—			(3,645)		—	—		—		—		—		(3,645)


Repurchase of common stock	(8,727,685)	—			—		8,727,685	(230,413)		—		—		—		(230,413)

Stock compensation expense	—	—			12,141		—	—		—		—		—		12,141


Distributions to non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		(28,928)		(28,928)
Changes in non-controlling interests of consolidated joint ventures	—	—			—		—	—		—		—		(769)		(769)
Balance – June 30, 2022	113,640,725	$	1		$	3,008,619	45,556,244	$	(991,276)	$	2,156,505	$	689	$	19,357	$	4,193,895

(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 six months ended June 30, 2021																			For the six months ended June 30, 2021
		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
																	Common Stock								Additional Paid-in Capital	Treasury Stock				Stockholders' Equity
																	Shares				Amount					Amount	Shares			Amount		Retained Earnings			Accumulated Other Comprehensive Income			Non-controlling Interest					Total Stockholders’ Equity
Balance – 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		—	—					—			—		—			222,168			—		5,030			227,198

Other comprehensive loss																Other comprehensive loss	—				—					—	—			—		—			—			—					—
Exercise of stock options	Exercise of stock options	631,626	—		12,434		—	—		—		—		—				12,434		Exercise of stock options		631,626	—					12,434			—		—			—			—		—			12,434
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)		380,009	—					(4,857)			—		—			—			—		—			(4,857)
Warrant exercises		1,704,205	—		32,584		—	—		—		—		—				32,584

Warrant Exercises																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		(5,256,737)	—					—			5,256,737		(145,172)			—			—		—			(145,172)
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		—	—					10,335			—		—			—			—		—			10,335

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		—	—					—			—		—			—			—		(24,844)			(24,844)
Changes in non-controlling interests of consolidated joint ventures	Changes in non-controlling interests of consolidated joint ventures	—	—		—		—	—		—		—		8				8		Changes in non-controlling interests of consolidated joint ventures		—	$	—				$	—		—		$	—		$	—		$	—	$	8		$	8
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	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

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

For the six months ended June 30, 2020
Common Stock Additional
Paid-in
Capital Treasury Stock Stockholders' Equity
Shares Amount Amount Shares Amount Retained
Earnings Accumulated
Other
Comprehensive
Income Non-controlling
Interest Total
Stockholders’
Equity
Balance – 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 — — — — — 34,243 — 3,423 37,666
Other comprehensive income — — — (13) — (13)
Exercise of stock options 302,522 — 5,371 — — — — — 5,371
Issuance of restricted stock units, net of shares withheld for tax(1)
634,133 — (7,252) — — — — — (7,252)
Issuance of equity in connection with business combinations 28,327,290 — 789,179 — — — — — 789,179
Repurchase of common stock (5,436,479) — 5,436,479 (90,163) — — — (90,163)
Stock compensation expense — — 16,882 — — — — — 16,882
Stock compensation expense related to WLH acquisition — — 5,106 — — — — — 5,106
WLH equity award accelerations due to change in control — — 8,421 — — — — — 8,421
Distributions to non-controlling interests of consolidated joint ventures — — — — — — — (23,673) (23,673)
Changes in non-controlling interests of consolidated joint ventures — — — — — — — 137,504 137,504
Balance – June 30, 2020 129,678,751 $ 1 $ 2,915,702 25,379,911 $ (433,687) $ 816,593 $ 871 $ 125,260 $ 3,424,740

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

taxes.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

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



	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests	$	471,615	$	227,198
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Net loss/(income) from unconsolidated entities	1,806		(7,787)
Stock compensation expense	12,141		10,335
Gain on extinguishment of debt, net	(13,471)		—
Gain on land transfers	(13,700)		—
Distributions of earnings from unconsolidated entities	4,252		7,210
Depreciation and amortization	17,758		19,798
Operating lease expense	13,632		7,958
Debt issuance costs amortization	544		236
Change in Urban Form assets due to sale	11,675		—





Changes in operating assets and liabilities:
Real estate inventory and land deposits	(667,846)		(483,490)
Mortgages held for sale, prepaid expenses and other assets	305,465		(149,748)
Customer deposits	94,240		170,055
Accounts payable, accrued expenses and other liabilities	(44,476)		94,805
Income taxes payable	1,855		5,836
Net cash provided by/(used in) operating activities	195,490		(97,594)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(12,801)		(20,523)

Distributions of capital from unconsolidated entities	86,576		13,132
Investments of capital into unconsolidated entities	(69,582)		(14,643)

Net cash provided by/(used in) investing activities	4,193		(22,034)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable and other borrowings	29,877		72,295
Repayments on loans payable and other borrowings	(45,226)		(44,231)
Borrowings on revolving credit facilities	182,548		—
Repayments on revolving credit facilities	(64,077)		—
Borrowings on mortgage warehouse facilities	1,193,232		1,499,258
Repayments on mortgage warehouse facilities	(1,427,564)		(1,411,317)

Repayments on senior notes	(264,111)		—



Proceeds from stock option exercises	2,912		12,434




Payment of principal portion of finance lease	(1,335)		(1,325)
Repurchase of common stock, net	(230,413)		(145,172)
Payment of taxes related to net share settlement of equity awards	(3,645)		(5,483)
Cash and distributions to non-controlling interests of consolidated joint ventures, net	(28,928)		(22,819)
Net cash used in financing activities	(656,730)		(46,360)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	(457,047)	$	(165,988)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	836,340		534,109
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	379,293	$	368,121
SUPPLEMENTAL CASH FLOW INFORMATION:
Income tax payments	$	(112,167)	$	(61,404)
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in loans payable issued to sellers in connection with land purchase contracts	$	159,637	$	121,380
Change in inventory not owned	$	15,503	$	(59,056)
Investments of land in unconsolidated joint ventures, net	$	143,206	$	—



Net non-cash distributions from non-controlling interests	$	—	$	(2,025)

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

Table of Contents

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~~We provide an assortment of homes across a wide range of price points to appeal to an array of consumer ~~groups from coast to coast, including first time,~~groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up ~~luxury,~~ and ~~50 plus~~55-plus active lifestyle (formerly referred to as active adult). Our homebuilding segments operate under our Taylor Morrison, Darling Homes, 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. buyers. We are the general contractors for all real estate projects and retain subcontractors for home construction and land development. Our homebuilding segments operate under our Taylor Morrison, Darling Homes Collection by Taylor Morrison, and Esplanade brand names. We also 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~~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~~In addition, we develop and ~~constructs~~construct multi-use properties consisting of commercial space, retail, and multi-family ~~units. Our Financial Services segment provides~~properties under the “Urban Form” brand. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, ~~operating as~~ Taylor Morrison Home Funding, ~~LLC~~Inc. (“TMHF”), 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 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.

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~~2021 (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 unaudited Condensed Consolidated Financial Statements and these accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, ~~valuation of acquired assets,~~ valuation of goodwill, valuation of development liabilities, valuation of equity awards, valuation allowance on deferred tax assets, and reserves for warranty and self-insured risks. Actual results could differ from those estimates.

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 quarter of ~~2021~~2022 as indicators of impairment were not ~~present as of June 30, 2021.~~present.

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~~purchasing, vertical

Table of Contents

~~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.

The life cycle of a typical community generally ranges from two to five years, commencing with the acquisition of unentitled or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery of homes. Actual community duration will vary based on the size of the community, the sales absorption rate and whether we purchased the property as raw land or as finished lots.

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 is generally prepared in order to determine if the carrying value of the assets in that community exceeds the ~~expected~~estimated undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, ~~then~~ the assets are ~~deemed to be~~potentially impaired, ~~and are recorded at~~requiring a fair value ~~as of the assessment date.~~analysis. Our determination of fair value is primarily based on a discounted cash flow model which includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. However, fair value can be determined through other methods, such as appraisals, contractual purchase offers, and other third party opinions of value. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions. For the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, 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 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~one~~no inactive ~~project in our East region with a carrying value of $13.5 million.~~projects.

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

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

Land banking arrangements — We have land purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources, we may transfer our right under certain specific performance ~~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.~~deposit. We are not legally obligated to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to financial and other penalties if the lots were not purchased. We do not have an ownership

Table of Contents

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 Condensed 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~~the partners have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in ~~Equity in~~ Net loss/income offrom 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~~

~~Table of Contents~~

~~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.~~semi-annually. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized, if any, is the excess of the investment's 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 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~~recorded no material impairment charges related to the investments in unconsolidated entities for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

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

Table of Contents

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,~~Accounting Standards Update (“ASU”) 2020-04, ~~Income Taxes (Topic 740): Simplifying~~Facilitation of the ~~Accounting for Income Taxes~~Effects of Reference Rate Reform on Financial Reporting ~~(“ASU 2019-12”)~~, which ~~is intended~~provides optional expedients for applying U.S. GAAP to ~~simplify various aspects related~~contracts affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to ~~accounting for income taxes. ASU 2019-12 removes certain exceptions~~be discontinued. The guidance was effective beginning March 12, 2020 and entities may elect to apply the ~~general principles in Topic 740 and also clarifies and amends existing~~amendments prospectively through December 31, 2022. We are currently evaluating the effect of adopting the new guidance ~~to improve consistent application. We adopted~~

~~Table of Contents~~

~~ASU 2019-12 as of January 1, 2021, but this pronouncement did not have a material impact~~ on our consolidated financial statements and related disclosures. However, we do not believe the effect of adopting will have a material impact.

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.~~

~~Table of Contents~~

For the three months ended June 30, For the six months ended
June 30,
(Dollars in thousands except per share data)
2020
(Pro forma)
2020
(Pro forma)
Total revenue $ 1,526,685 $ 2,959,482
Net income before allocation to non-controlling interests $ 80,396 $ 79,130
Net income attributable to non-controlling interests (1,548) (2,536)
Net income available to TMHC $ 78,848 $ 76,594
Weighted average shares - Basic 129,964 154,431
Weighted average shares - Diluted 130,700 155,389
Earnings per share - Basic $ 0.61 $ 0.50
Earnings per share - Diluted $ 0.60 $ 0.49

For the three and six months ended June 30, 2020, total revenue on the condensed consolidated statement of operations included $384.4 million and $667.0 million, respectively, from WLH since the date of acquisition. For the three and six months ended June 30, 2020, income before income taxes on the condensed consolidated statement of operations included losses of $64.5 million and $96.2 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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
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	$	290,987	$	124,147	$	467,690	$	222,168
Denominator:	Denominator:									Denominator:
Weighted average shares – basic	Weighted average shares – basic	128,440		129,629		128,661		125,768		Weighted average shares – basic	117,932		128,440		119,550		128,661
Restricted stock units	Restricted stock units	801		585		892		721		Restricted stock units	513		801		667		892
Stock Options	Stock Options	824		150		834		237		Stock Options	486		824		579		834
Warrants	Warrants	194		0		379		0		Warrants	—		194		—		379
Weighted average shares – diluted	Weighted average shares – diluted	130,259		130,364		130,766		126,726		Weighted average shares – diluted	118,931		130,259		120,796		130,766
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	$	2.47	$	0.97	$	3.91	$	1.73
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	$	2.45	$	0.95	$	3.87	$	1.70

The above calculations of weighted average shares exclude ~~1,133,597~~2,176,897 and ~~982,940 outstanding~~1,462,766 anti-dilutive stock options and unvested restricted stock units (“RSUs”) for the three and six months ended June 30, ~~2021,~~2022, respectively, and ~~4,225,888~~1,133,597 and ~~3,530,837~~982,940 anti-dilutive stock options and unvested RSUs for the three and six months ended June 30, ~~2020,~~2021, respectively.

Table of Contents

4. REAL ESTATE INVENTORY AND LAND DEPOSITS

Inventory consists of the following (in thousands):

~~Table of Contents~~


		As of					As of
		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Real estate developed and under development	Real estate developed and under development	$	4,011,925	$	3,862,785	Real estate developed and under development	$	3,879,560	$	3,895,681
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)	72,411		70,305
Operating communities (2)	Operating communities (2)	1,385,501		1,072,134		Operating communities (2)	1,838,216		1,309,551
Capitalized interest	Capitalized interest	180,520		163,780		Capitalized interest	185,364		168,670
Total owned inventory	Total owned inventory	5,692,753		5,209,653		Total owned inventory	5,975,551		5,444,207
Consolidated real estate not owned	Consolidated real estate not owned	63,717		122,773		Consolidated real estate not owned	70,817		55,314
Total real estate inventory	Total real estate inventory	$	5,756,470	$	5,332,426	Total real estate inventory	$	6,046,368	$	5,499,521

(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				June 30, 2022			December 31, 2021
		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
Homebuilding owned lots								Homebuilding owned lots
Raw	Raw	5,252	$	232,473	7,032	$	239,554	Raw	3,801	$	172,327	4,017	$	178,952
Partially developed	Partially developed	21,749	1,322,628		19,495	1,215,419		Partially developed	24,641	1,619,200		24,636	1,568,967
Finished	Finished	22,417	2,444,805		21,396	2,388,177		Finished	19,939	2,145,750		19,360	2,119,128
Long-term strategic assets		158	13,462		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	48,381	3,937,277		48,013	3,867,047
Commercial assets		5,298	113,364		5,298	117,126
Other assets(1)								Other assets(1)	—	14,694		5,298	98,939
Total owned lots	Total owned lots	54,874	$	4,126,732	53,379	$	3,973,738	Total owned lots	48,381	$	3,951,971	53,311	$	3,965,986

(1) The remaining book value of land and development as of June 30, 2022 relates to parcels of commercial assets which are. excluded from the owned lots presented in the table.

~~Land~~We have land option purchase contracts, land banking arrangements and other controlled lot agreements. We do not have title to the properties, and the creditors of the property owner generally only have recourse against us in the form of retaining any non-refundable deposits. We are also not legally obligated to purchase the balance of the lots. Deposits ~~— We provide deposits~~ related to ~~land options and land purchase contracts, which~~these lots are capitalized when paid and classified as Land deposits until the associated property is purchased. The table below presents a summary of our controlled lots for the following periods (dollars in thousands):


	As of
	June 30, 2022					December 31, 2021
	Controlled Lots	Purchase Price		Land Deposit (1)		Controlled Lots	Purchase Price		Land Deposit (1)
Homebuilding controlled lots
Land option purchase contracts	6,805	$	390,373	$	49,587	8,360	$	507,161	$	57,554
Land banking arrangements	7,173	1,063,392		157,433		5,731	749,813		117,721
Other controlled lots	19,972	1,243,367		61,241		14,671	1,338,284		38,505
Total controlled lots	33,950	$	2,697,132	$	268,261	28,762	$	2,595,258	$	213,780

Table of ~~June 30, 2021~~Contents

(1) Land deposits noted are all non-refundable and December 31, 2020, we had the right to purchase 9,353 and 7,449 lots under land option purchase contracts, respectively, for an aggregate purchase price of $596.7 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 30, 2021 and December 31, 2020,represent our exposure to loss related to our ~~option~~ contracts with third parties, ~~and~~ unconsolidated entities, ~~consisted of non-refundable deposits totaling $90.6 million~~ and ~~$65.3 million, respectively.~~

~~We also have various~~ land banking arrangements. ~~As of~~. In addition, at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021 we had ~~the right to purchase 1,251 lots and 2,426 lots under such land agreements for an aggregate purchase price~~refundable deposits of ~~$112.7~~$10.1 million and ~~$275.0~~$15.7 million respectively. We are not legally obligated to purchase the balance of the lots. As of June 30, 2021 and December 31, 2020, our exposure to loss related to deposits on land banking arrangements totaled $26.6 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

~~Table of Contents~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest capitalized - beginning of period	$	177,969	$	174,174	$	168,670	$	163,780
Interest incurred and capitalized	40,815		40,416		80,544		78,135
Interest amortized to cost of home closings	(33,420)		(34,070)		(63,850)		(61,395)
Interest capitalized - end of period	$	185,364	$	180,520	$	185,364	$	180,520

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

During the quarter ended June 30, 2022, we transferred land at fair value as part of an investment in 2 new joint ventures with third parties. In accordance with ASC 606 this was considered a transfer as we have no continuing involvement and the joint venture obtained title, physical possession, maintains risks and rewards of the property and has accepted the property. Included in Other (income)/expense, net on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 is a $13.7 million gain related to these transfers and represents the difference between the fair value and carrying value of the land at the time of contribution.

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


		As of					As of
		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Assets:	Assets:					Assets:
Real estate inventory	Real estate inventory	$	323,093	$	342,451	Real estate inventory	$	668,474	$	414,687
Other assets	Other assets	124,756		133,903		Other assets	129,062		118,990
Total assets	Total assets	$	447,849	$	476,354	Total assets	$	797,536	$	533,677
Liabilities and owners’ equity:	Liabilities and owners’ equity:					Liabilities and owners’ equity:
Debt	Debt	$	165,384	$	183,911	Debt	$	130,284	$	167,842
Other liabilities	Other liabilities	15,457		21,215		Other liabilities	23,169		16,245
Total liabilities	Total liabilities	180,841		205,126		Total liabilities	153,453		184,087
Owners’ equity:	Owners’ equity:					Owners’ equity:
TMHC	TMHC	130,044		127,955		TMHC	291,560		171,406
Others	Others	136,964		143,273		Others	352,523		178,184
Total owners’ equity	Total owners’ equity	267,008		271,228		Total owners’ equity	644,083		349,590
Total liabilities and owners’ equity	Total liabilities and owners’ equity	$	447,849	$	476,354	Total liabilities and owners’ equity	$	797,536	$	533,677

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Revenues $ 29,745 $ 46,172 $ 79,626 $ 95,144
Costs and expenses (22,901) (36,353) (57,059) (77,847)
Income of unconsolidated entities $ 6,844 $ 9,819 $ 22,567 $ 17,297
TMHC’s share in income of unconsolidated entities $ 2,126 $ 3,495 $ 7,788 $ 5,921
Distributions to TMHC from unconsolidated entities $ 9,729 $ 20,053 $ 20,342 $ 28,255

Table of Contents


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	94,166	$	29,745	$	124,567	$	79,626
Costs and expenses	(94,086)		(22,901)		(119,016)		(57,059)
Income of unconsolidated entities	$	80	$	6,844	$	5,551	$	22,567
TMHC’s share in (loss)/income of unconsolidated entities	$	(3,637)	$	2,126	$	(1,806)	$	7,788
Distributions to TMHC from unconsolidated entities	$	88,770	$	9,729	$	90,828	$	20,342

Consolidated Entities

We have ~~a total of 19~~several joint ventures ~~as of June 30, 2021~~ for the purpose of ~~land~~real estate development and homebuilding activities, which we have determined to be VIEs. As the managing member, we oversee the daily operations and have the power to direct the activities of the VIEs, or joint ventures. ~~Based~~For this specific subset of joint ventures, based upon the allocation of income and loss per the applicable joint venture agreements and certain performance guarantees, we have potentially significant exposure to the risks and rewards of the joint ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and these entities ~~were consolidated as of June 30, 2021.~~are consolidated.

As of June 30, 2022, the assets of the consolidated joint ventures totaled $267.9 million, of which $27.9 million was cash and cash equivalents, $66.8 million was owned inventory and $124.0 million was fixed assets. The fixed asset balance is held for sale as of June 30, 2022. As of December 31, 2021, the assets of the consolidated joint ventures totaled ~~$311.6~~$291.8 million, of which ~~$13.4~~$22.3 million was cash and cash equivalents, ~~and $222.6~~$147.6 million was owned ~~inventory. As of December 31, 2020, the assets of the consolidated joint ventures totaled $389.2 million, of which $25.8~~inventory and $74.3 million was ~~cash and cash equivalents and $320.4 million was owned inventory.~~fixed assets. The liabilities of the consolidated joint ventures totaled ~~$160.9~~$145.1 million and ~~$216.4~~$165.1 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.

~~Table of Contents~~

7.6. 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 June 30, 2022		As of December 31, 2021
Real estate development costs to complete	Real estate development costs to complete	$	47,919	$	38,935	Real estate development costs to complete	$	45,974	$	49,833
Compensation and employee benefits	Compensation and employee benefits	118,636		113,896		Compensation and employee benefits	103,291		166,272
Self-insurance and warranty reserves	Self-insurance and warranty reserves	116,121		118,116		Self-insurance and warranty reserves	137,491		141,839
Interest payable	Interest payable	46,240		45,917		Interest payable	40,977		48,551
Property and sales taxes payable	Property and sales taxes payable	28,001		28,523		Property and sales taxes payable	25,053		29,384
Other accruals	Other accruals	78,549		84,680		Other accruals	78,692		89,330
Total accrued expenses and other liabilities	Total accrued expenses and other liabilities	$	435,466	$	430,067	Total accrued expenses and other liabilities	$	431,478	$	525,209

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"~~(“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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Reserve - beginning of period	Reserve - beginning of period	$	116,406	$	121,964	$	118,116	$	120,048	Reserve - beginning of period	$	140,970	$	116,406	$	141,839	$	118,116

Net additions to reserves due to WLH acquisition		0		0		0		9,130
Other additions to reserves		18,394		17,005		30,784		26,743

Additions to reserves										Additions to reserves	23,519		18,394		32,403		30,784
Cost of claims incurred	Cost of claims incurred	(19,067)		(23,277)		(34,931)		(42,264)		Cost of claims incurred	(27,729)		(19,067)		(40,202)		(34,931)
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	731		388		3,451		2,152

Reserve - end of period	Reserve - end of period	$	116,121	$	117,462	$	116,121	$	117,462	Reserve - end of period	$	137,491	$	116,121	$	137,491	$	116,121

1514

Table of Contents

8.7. DEBT

Total debt consists of the following (in thousands):


		As of													As of
		June 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
		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	$	(449)	$	349,551	$	350,000	$	(733)	$	349,267

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		(897)		349,103		350,000		(1,166)		348,834

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		(3,851)		496,149		500,000		(4,243)		495,757
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)~~	35,889		1,928		37,817		300,000		17,718		317,718
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		(3,498)		446,502		450,000		(3,814)		446,186
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		(5,124)		494,876		500,000		(5,440)		494,560
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	$	2,185,889	$	(11,891)	$	2,173,998	$	2,450,000	$	2,322	$	2,452,322
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	447,191		—		447,191		404,386		—		404,386
Revolving Credit Facility		0		0		0		0		0		0
$800 Million Revolving Credit Facility(1)														$800 Million Revolving Credit Facility(1)	150,000		—		150,000		—		—		—
$100 Million Revolving Credit Facility(1)														$100 Million Revolving Credit Facility(1)	—		—		—		31,529		—		31,529
Mortgage warehouse borrowings	Mortgage warehouse borrowings	215,230		0		215,230		127,289		0		127,289		Mortgage warehouse borrowings	179,555		—		179,555		413,887		—		413,887
Total debt	Total debt	$	3,080,304	$	2,344	$	3,082,648	$	2,926,030	$	2,365	$	2,928,395	Total debt	$	2,962,635	$	(11,891)	$	2,950,744	$	3,299,802	$	2,322	$	3,302,124

(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~~The $800 Million Revolving Credit Agreement together 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.~~$100 Million Revolving Credit Agreement, the “Credit Facilities”

~~Senior Notes~~Debt Instruments

~~All of~~Excluding the debt instruments discussed below, the terms governing all other debt instruments listed in the table above have not substantially changed from the year ended December 31, 2021. For information regarding such instruments, refer to Note 8 to the Consolidated Financial Statements in 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 (exceptAnnual Report on Form 10-K 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.year ended December 31, 2021. As of June 30, ~~2021,~~2022, 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~~debt instruments listed in the ~~indentures governing our other Senior Notes.~~

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

~~5.875% Senior Notes due 2027~~

~~Table of Contents~~

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).table above.

6.625% Senior Notes due 2027

Following our exchange offer in the first quarter of 2020 (the “Exchange Offer”), whereby Taylor Morrison Communities, Inc (“TM ~~Communities~~Communities”) offered to exchange any and all outstanding senior notes issued by ~~WLH,~~William Lyon Homes (“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 Taylor Morrison Home III Corporation, Taylor Morrison Holdings, Inc. and their homebuilding subsidiaries (collectively, 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.~~ “Guarantors”).

In connection with the consummation of the ~~exchange offer,~~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.

On June 13, 2022, TM Communities announced a cash tender offer to purchase any and all of the $290.4 million outstanding aggregate principal amount of the 2027 6.625% TM Communities Notes (the “Tender Offer”), which expired July 12, 2022.As of June 30, 2022, TM Communities had purchased $264.1 million of the 2027 6.625% TM Communities Notes pursuant to the Tender Offer using cash on hand and borrowings on our $800 Million Revolving Credit Facility at a price equal to 100% of the principal amount, plus accrued and unpaid interest up to, but excluding, the settlement date. As a result of the Tender Offer, we recorded a total net gain on extinguishment of debt of approximately $13.5 million on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022. Subsequent to quarter end, TM Communities repurchased an additional $0.8 million of the 2027 6.625% TM Communities Notes at a price equal to 97% of the principal amount, resulting in a total of $265.0 million in aggregate principal amount of outstanding 2027 6.625% TM Communities Notes being repurchased pursuant to the Tender Offer.

Table of Contents

In connection with the Tender Offer, TM Communities also solicited consents from holders of the 2027 6.625% TM Communities Notes to amend the indenture governing such notes to, among other things, eliminate substantially all of the restrictive covenants of the indenture (the “Proposed Amendments”).As of June 27, 2022, TM Communities had received the requisite consents to effect the Proposed Amendments and, as a result, a supplemental indenture was executed to effect the Proposed Amendments, which became effective on June 29, 2022.

The remaining 2027 6.625% Senior Notes mature on July 15, 2027. Prior to July 15, 2022, the remaining 2027 6.625% Senior Notes ~~may be redeemed~~were redeemable 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 remaining 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 remaining 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,~~$800 Million Revolving Credit Facility

On March 11, 2022, we ~~may, at~~amended our ~~option, on one or more occasions, redeem~~$800 Million Revolving Credit Facility, which extends the maturity date from February 6, 2024 to March 11, 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.~~includes reduced pricing upon meeting lower capitalization ratios. The ~~2028 Senior Notes are~~facility remains 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~~

In July 2020, $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

~~Table of Contents~~

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 ended December 31, 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).

In connection with our Tender Offer, we have borrowed $150.0 million under our $800

~~Revolving Credit Facility~~

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

which remained outstanding as of June 30, 2022. We had no outstanding borrowings as of December 31, 2021.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$1.3~~$3.0 million and ~~$1.6~~$1.1 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 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$45.5~~$66.3 million and ~~$64.3~~$58.7 million, respectively, of utilized letters of credit, resulting in ~~$754.5~~$583.7 million and ~~$735.7~~$741.3 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~~$2.5 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, the payment of dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The $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 30, ~~2021,~~2022, we were in compliance with all of the covenants under the $800 Million Revolving Credit Facility.

Mortgage Warehouse Borrowings

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

1816

Table of Contents

As of June 30, 2021

As of June 30, 2022

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

4,538

10,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

55,050

75,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

20,143

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

43,170

125,000

LIBOR + 1.95%

On Demand

Mortgage Loans and Restricted Cash

Warehouse D

54,267

100,000

LIBOR + 1.65%

November 15, 2021

Mortgage Loans

Warehouse D

52,733

100,000

LIBOR + 1.65%

November 20, 2022

Mortgage Loans

Warehouse E

58,971

100,000

LIBOR + 1.50%

On Demand

Mortgage Loans

Total

215,230

310,000

Total

179,555

410,000

As of December 31, 2020

As of December 31, 2021

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

10,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

19,457

85,000

LIBOR + 1.75%

On Demand

Mortgage Loans

Warehouse B

86,409

150,000

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

116,601

250,000

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

105,065

150,000

LIBOR + 1.65%

November 20, 2022

Mortgage Loans

Warehouse E

105,800

200,000

LIBOR + 1.50%

On Demand

Mortgage Loans

Total

127,289

295,000

Total

413,887

760,000

(1) Subject to certain interest rate floors.

(2) The mortgage warehouse borrowings outstanding as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were collateralized by ~~$277.0~~$203.2 million and ~~$201.2~~$467.5 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage loans held for sale, and approximately ~~$1.8~~$0.9 million and ~~$1.3~~$3.5 million, respectively, of cash which is restricted cash on our ~~balance sheet.~~Condensed Consolidated Balance Sheet.

Loans Payable and Other Borrowings

Loans payable and other borrowings as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consist of project-level debt due to various land sellers and financial institutions for specific ~~communities.~~projects. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot ~~sales~~closings or a principal reduction schedule. Loans payable bear interest at rates that ranged from 0% to 8% at each of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

9.8. FAIR VALUE DISCLOSURES

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

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

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

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

The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. The fair value of derivative 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~~Facilities approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The fair value of our Equity Security Investment in a public company is based upon quoted prices for

Table of Contents

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 30, ~~2021,~~2022, when compared to December 31, ~~2020.~~2021.

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

~~Table of Contents~~


			June 30, 2021				December 31, 2020						June 30, 2022				December 31, 2021
(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	$	203,238	$	203,238	$	467,534	$	467,534
IRLCs	IRLCs	3	3,687		3,687		5,294		5,294		IRLCs	3	4,918		4,918		2,110		2,110
MBSs	MBSs	2	(11)		(11)		(1,847)		(1,847)		MBSs	2	(1,330)		(1,330)		(449)		(449)

Mortgage warehouse borrowings	Mortgage warehouse borrowings	2	215,230		215,230		127,289		127,289		Mortgage warehouse borrowings	2	179,555		179,555		413,887		413,887
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	447,191		447,191		404,386		404,386

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	349,551		349,125		349,267		365,890

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	349,103		340,270		348,834		372,750

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	496,149		460,850		495,757		560,000
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	37,817		34,378		317,718		315,750
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	446,502		403,785		446,186		502,875
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	494,876		415,250		494,560		550,000
$800 Million Revolving Credit Facility											$800 Million Revolving Credit Facility	2	150,000		150,000		—		—
$100 Million Revolving Credit Facility											$100 Million Revolving Credit Facility	2	—		—		31,529		31,529
Equity Security Investment											Equity Security Investment	1	2,180		2,180		6,400		6,400

(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.

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

~~10.~~9. INCOME TAXES

The effective tax rate for the three and six months ended June 30, ~~2021~~2022 was 25.1% and 24.5%, respectively, compared to 23.6% and 23.0%, respectively, ~~compared to 20.8% and 32.8%~~ for the same periods in ~~2020, respectively.~~2021. For both the three and six months ended June 30, 2022 and 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 prior homebuilding activities. ~~The effective tax rate for the six months ended June 30, 2020 was driven primarily by expenses related to the acquisition of WLH which are not deductible for tax purposes.~~

At both June 30, ~~2021~~2022 and December 31, ~~2020, cumulative gross~~2021, there were no unrecognized tax benefits were $5.8 million. If the unrecognized tax benefits as of June 30, 2021 were to be recognized, approximately $4.6 million would affect the effective tax rate. We had $0.6 million and $0.5 million of gross interest and penalties related to unrecognized tax positions accrued as of June 30, 2021 and December 31, 2020, respectively.benefits.

~~11.~~10. 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~~

~~Table of Contents~~

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 on our Condensed Consolidated Statements of Stockholders' Equity. As of June 30, 2021, there were no outstanding warrants to purchase shares of our common stock.

Stock Repurchase Program

On ~~June 1, 2021, our~~May 31, 2022, the Board of Directors authorized a ~~renewal of our~~new stock repurchase program which permits the Company to repurchase of up to ~~$250.0~~$500.0 million of the Company's Common Stock until December 31, ~~2022.~~2023. The new stock repurchase program replaced the Company’s prior $250.0 million repurchase program, which had been scheduled to expire on June 30, 2024. Repurchases ~~of our Common Stock~~ under the new program may 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.

Table of Contents

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

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



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Amount available for repurchase — beginning of period	$	172,384	$	48,413	$	230,413	$	86,831
Amount cancelled from expired or unused authorizations	(75,000)		—		(75,000)		—
Additional amount authorized for repurchase	500,000		250,000		500,000		250,000

Amount repurchased	(172,384)		(106,754)		(230,413)		(145,172)
Amount available for repurchase — end of period	$	425,000	$	191,659	$	425,000	$	191,659

The ~~number of~~Company repurchased 6,779,498 and 8,727,685 shares ~~repurchased at cost~~ under the share repurchase program during the three and six months ended June 30, 2022, respectively. The number of shares repurchased were 3,809,428 and 5,256,737 during the three and six months ended June 30, 2021, respectively. ~~We repurchased 0 and 5,436,479 shares during the three and six months ended June 30, 2020, respectively.~~

~~12.~~11. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the ~~"Plan"~~“Plan”). The Plan

was most recently amended and restated in May ~~2017.~~2022. The Plan provides for the grant of ~~RSU's,~~ stock options, restricted stock units

(“RSUs”), performance-based restricted stock units (“PRSUs”), and other equity-based awards deliverable in shares of our

Common Stock. As of June 30, ~~2021,~~2022, we had an aggregate of ~~5,328,802~~5,498,968 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~~RSUs and stock options as of June 30, ~~2021:~~2022:

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

~~Table of Contents~~


	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, 2022	1,633,914	$	27.34	3,499,994	$	23.15

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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Restricted stock units (1)	Restricted stock units (1)	$	3,615	$	3,989	$	8,362	$	11,708	Restricted stock units (1)	$	4,137	$	3,615	$	9,918	$	8,362
Stock options	Stock options	1,039		997		1,973		5,174		Stock options	1,141		1,039		2,223		1,973

Total stock compensation	Total stock compensation	$	4,654	$	4,986	$	10,335	$	16,882	Total stock compensation	$	5,278	$	4,654	$	12,141	$	10,335

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

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately ~~$35.9~~$38.1 million and ~~$23.8~~$26.5 million, respectively.

~~13.~~12. REPORTING SEGMENTS

We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer service. We aggregate our homebuilding operating components into 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.

Table of Contents

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.~~

~~Table of Contents~~


		Three Months Ended June 30, 2020													Three Months Ended June 30, 2022
		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	$	635,862	$	457,512	$	832,274	$	35,471	$	33,904	$	1,995,023

Gross margin	Gross margin	78,736		83,614		65,199		17,501		(872)		244,178		Gross margin	174,535		117,356		222,687		13,988		12,914		541,480
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	(44,589)		(33,499)		(42,374)		—		(45,080)		(165,542)
Equity in (loss)/income of unconsolidated entities		0		(42)		240		3,297		0		3,495
Interest and other expense, net (2)		(129)		(1,619)		(6,026)		(6,038)		(3,867)		(17,679)

Net (loss)/income from unconsolidated entities														Net (loss)/income from unconsolidated entities	—		(39)		(5,793)		2,195		—		(3,637)
Interest and other income/(expense), net(2)														Interest and other income/(expense), net(2)	10,110		(1,076)		(3,703)		—		494		5,825
Gain on extinguishment of debt, net														Gain on extinguishment of debt, net	—		—		—		—		13,471		13,471
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	$	140,056	$	82,742	$	170,817	$	16,183	$	(18,201)	$	391,597

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

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


		Six Months Ended June 30, 2021													Three Months Ended June 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	$	1,034,723	$	708,452	$	1,312,169	$	81,457	$	291	$	3,137,092	Total revenue	$	581,362	$	385,839	$	714,439	$	37,392	$	248	$	1,719,280

Gross margin	Gross margin	207,308		133,784		231,031		31,523		(502)		603,144		Gross margin	122,241		68,606		126,593		11,457		(194)		328,703
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	(46,365)		(32,342)		(47,203)		—		(41,647)		(167,557)
Equity in (loss)/income of unconsolidated entities		0		(70)		1,996		5,871		(10)		7,787
Interest and other income/(expense), net		91		(891)		(1,420)		0		1,316		(904)
Net (loss)/income from unconsolidated entities														Net (loss)/income from unconsolidated entities	—		(6)		4		2,128		—		2,126
Interest and other income/(expense), net (2)														Interest and other income/(expense), net (2)	49		(518)		(1,311)		—		1,732		(48)

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	$	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.~~

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
(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



	Six Months Ended June 30, 2022
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	1,160,983	$	828,247	$	1,602,484	$	70,670	$	35,763	$	3,698,147

Gross margin	300,226		191,364		404,218		24,973		13,827		934,608
Selling, general and administrative expenses	(84,915)		(62,939)		(85,893)		—		(89,060)		(322,807)
Net income/(loss) from unconsolidated entities	—		46		(6,105)		4,253		—		(1,806)
Interest and other income/(expense), net(2)	9,678		(2,936)		(5,669)		—		(42)		1,031
Gain on extinguishment of debt, net	—		—		—		—		13,471		13,471
Income/(loss) before income taxes	$	224,989	$	125,535	$	306,551	$	29,226	$	(61,804)	$	624,497

2320

Table of Contents

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

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



	Six Months Ended June 30, 2021
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Total revenue	$	1,034,723	$	708,452	$	1,312,169	$	81,457	$	291	$	3,137,092

Gross margin	207,308		133,784		231,031		31,523		(502)		603,144
Selling, general and administrative expenses	(84,964)		(60,900)		(88,755)		—		(80,443)		(315,062)
Net (loss)/income from unconsolidated entities	—		(70)		1,996		5,871		(10)		7,787
Interest and other income/(expense), net (2)	91		(891)		(1,420)		—		1,316		(904)


Income/(loss) before income taxes	$	122,435	$	71,923	$	142,852	$	37,394	$	(79,639)	$	294,965

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

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


	As of June 30, 2022
	East		Central		West		Financial Services		Corporate and Unallocated(1)		Total
Real estate inventory and land deposits	$	2,017,995	$	1,514,185	$	2,792,502	$	—	$	—	$	6,324,682
Investments in unconsolidated entities	42,283		89,454		127,811		4,342		27,670		291,560
Other assets	167,882		220,763		566,028		302,182		777,126		2,033,981
Total assets	$	2,228,160	$	1,824,402	$	3,486,341	$	306,524	$	804,796	$	8,650,223

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


		As of December 31, 2020													As of December 31, 2021
		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	$	1,781,948	$	1,282,024	$	2,665,084	$	—	$	—	$	5,729,056
Investments in unconsolidated entities	Investments in unconsolidated entities	0		58,052		65,395		4,498		10		127,955		Investments in unconsolidated entities	—		87,600		79,531		4,275		—		171,406
Other assets	Other assets	170,382		192,981		578,231		284,265		926,130		2,151,989		Other assets	196,126		221,906		588,520		559,233		1,261,530		2,827,315
Total assets	Total assets	$	1,883,234	$	1,427,637	$	3,212,221	$	288,763	$	926,140	$	7,737,995	Total assets	$	1,978,074	$	1,591,530	$	3,333,135	$	563,508	$	1,261,530	$	8,727,777

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

~~14.~~13. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit and surety bonds under these arrangements totaled ~~$1.0~~$1.2 billion ~~at each~~as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. 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 letters of credit or surety bonds as of June 30, ~~2021~~2022 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 of the property owner 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 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the aggregate purchase price of these contracts was ~~$709.4 million~~$1.5 billion and ~~$760.4 million,~~$1.3 billion, respectively.

Legal Proceedings — We are involved in various litigation and legal claims in the normal course of our business operations, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal

Table of Contents

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 30, ~~2021~~2022 and December 31, ~~2020,~~2021, our legal accruals were ~~$17.6~~$23.5 million and ~~$23.5~~$21.7 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.

On April 26, 2017, a class action complaint was filed in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida by Norman Gundel, William Mann, and Brenda Taylor against Avatar Properties, Inc. (an acquired AV Homes entity), generally alleging that our collection of club membership fees in connection with the use of one of our amenities in our East homebuilding segment violates various laws relating to homeowner associations and other Florida-specific laws. The class action complaint seeks an injunction to prohibit future collection of club membership fees. On November 2, 2021, the court determined that the club membership fees were improper and that plaintiffs were entitled to $35.0 million in fee reimbursements. We appealed the court’s ruling to the Second District Court of Appeal on November 29, 2021, and as of June 30, 2022, our appeal remains pending. Plaintiffs have agreed to continue to pay club membership fees pending the outcome of the appeal. We believe, based on our assessment and the opinion of external legal counsel, that the court’s legal interpretation constitutes legal error and the court incorrectly ruled on this matter. In accordance with ASC Topic 450, Contingencies, we evaluated the range of loss and the likelihood of each potential amount of loss within the range.

While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, in evaluating the potential outcomes, we believe the more likely outcome is that we win the appeal. This belief is based on our review of the legal merit of the judgement, as well as the opinion of external legal counsel. Accordingly, in assessing the range of possible loss, we believe the more likely outcome is that we win on appeal and will have zero liability.

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~~$91.9 million and ~~$83.2~~$96.2 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. We recorded lease expense of approximately $6.7 million and $13.6 million for the three and six months ended June 30, 2022, and $4.0 million and $8.0 million for the three and six months ended June 30, 2021, ~~and $4.8 million and $8.6 million for the three and six months ended June 30, 2020,~~ respectively, within general and administrative expenses on our Condensed Consolidated Statement of Operations.

~~15.~~14. MORTGAGE HEDGING ACTIVITIES

We enter into IRLCs to originate residential mortgage loans held for sale, at specified interest rates and within a specified period of time (generally between 30 and 60 days), with customers who have applied for a loan and meet certain credit and underwriting criteria. These IRLCs meet the definition of a derivative and are reflected on the balance sheet at fair value with changes in fair value recognized in 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,

~~Table of Contents~~

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

Table of Contents


	As of
	June 30, 2022				December 31, 2021
(Dollars in thousands)	Fair Value		Notional Amount (1)		Fair Value		Notional Amount (1)
IRLCs	$	4,918	$	703,747	$	2,110	$	158,299
MBSs	(1,330)		585,168		(449)		407,000
Total	$	3,588			$	1,661

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

Total commitments to originate loans approximated ~~$280.2~~$767.8 million and ~~$290.3~~$173.7 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

2523

Table of Contents

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 Company's Annual Report on Form 10-K for the year ended December 31, 2021 (“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 30, ~~2021~~2022 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

2624

Table of Contents

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 30, ~~2021,~~2022, we employed approximately ~~2,900~~3,100 full-time equivalent persons. Of these, approximately ~~2,450~~2,600 were

engaged in corporate and homebuilding operations, and the remaining approximately ~~450~~500 were engaged in financial

services.

Factors Affecting Comparability of Results

For the three and six months ended June 30, ~~2020,~~2022, we recognized ~~various costs~~a $13.7 million gain on land transfers relating to our unconsolidated joint ventures which is included in Other (income)/expense, net on the ~~acquisition~~Condensed Consolidated Statements of ~~William Lyon Homes, Inc. (“WLH”). Such costs~~Operations. In addition, 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~~2022, we recognized a $13.5 million net gain on extinguishment of ~~transaction expenses and $60.5 million~~debt relating to our partial redemption of ~~purchase accounting adjustments.~~the 6.625% Senior Notes due 2027 which is included in Gain on extinguishment of debt, net on our Condensed Consolidated Statements of Operations. We did not incur such costs for the three or six months ended June 30, 2021.

Second Quarter ~~2021~~2022 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated):

•~~Monthly absorptions~~Home closings revenue increased 2315 percent to ~~3.4 net sales orders per community.~~$1.9 billion.

•Home closings gross margin ~~increased 370~~improved 750 basis points to ~~19.1~~26.6 percent.

•~~Backlog increased 50 percent~~SG&A as a percentage of home closings revenue improved 140 basis points to ~~10,228 sold homes with a sales value of $5.7 billion, up 78~~8.8 percent.

•Homebuilding lot supply increased 13eight percent to approximately ~~76,000 total lots~~82,000 owned and ~~controlled.~~controlled homesites.

•Controlled lots as a percentage of total lot supply increased approximately ~~700~~600 basis points to 3541 percent.

•Repurchased 6.8 million shares outstanding for $172 million.

•Return on equity improved 1,090 basis points to 23.1 percent.

Table of Contents

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 June 30,						Six Months Ended June 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			2021			2020			(Dollars in thousands)	2022			2021			2022			2021
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	$	1,883,020		$	1,644,380		$	3,527,429		$	3,007,809
Land closings revenue	Land closings revenue	32,057			10,546			36,946			33,485			Land closings revenue	36,816			32,057			52,426			36,946
Financial services revenue	Financial services revenue	37,392			40,297			81,457			68,336			Financial services revenue	35,471			37,392			70,670			81,457
Amenity and other revenue	Amenity and other revenue	5,451			4,848			10,880			34,929			Amenity and other revenue	39,716			5,451			47,622			10,880
Total revenue	Total revenue	1,719,280			1,526,685			3,137,092			2,872,384			Total revenue	1,995,023			1,719,280			3,698,147			3,137,092
Cost of home closings	Cost of home closings	1,331,041			1,244,224			2,441,283			2,314,727			Cost of home closings	1,381,610			1,331,041			2,646,584			2,441,283
Cost of land closings	Cost of land closings	28,138			10,287			32,165			37,419			Cost of land closings	24,204			28,138			38,568			32,165
Financial services expenses	Financial services expenses	25,935			22,796			49,934			43,443			Financial services expenses	21,483			25,935			45,697			49,934
Amenity and other expenses	Amenity and other expenses	5,463			5,200			10,566			34,861			Amenity and other expenses	26,246			5,463			32,690			10,566
Gross margin	Gross margin	328,703			244,178			603,144			441,934			Gross margin	541,480			328,703			934,608			603,144
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	96,135			97,560			185,258			183,512
General and administrative expenses	General and administrative expenses	69,997			51,112			131,550			101,638			General and administrative expenses	69,407			69,997			137,549			131,550
Equity in income of unconsolidated entities		(2,126)			(3,495)			(7,787)			(5,921)
Net loss/(income) from unconsolidated entities														Net loss/(income) from unconsolidated entities	3,637			(2,126)			1,806			(7,787)
Interest expense/(income), net	Interest expense/(income), net	3			(337)			(116)			(897)			Interest expense/(income), net	5,189			3			9,441			(116)
Other expense/(income), net		45			(696)			1,020			5,595
Transaction expenses		—			18,712			—			105,086
Other (income)/expense, net														Other (income)/expense, net	(11,014)			45			(10,472)			1,020

Gain on extinguishment of debt, net														Gain on extinguishment of debt, net	(13,471)			—			(13,471)			—

Income before income taxes	Income before income taxes	163,224			84,844			294,965			56,068			Income before income taxes	391,597			163,224			624,497			294,965
Income tax provision	Income tax provision	38,469			17,622			67,767			18,403			Income tax provision	98,443			38,469			152,882			67,767

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	293,154			124,755			471,615			227,198
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	(2,167)			(608)			(3,925)			(5,030)

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	$	290,987		$	124,147		$	467,690		$	222,168
Home closings gross margin	Home closings gross margin	19.1		%	15.4		%	18.8		%	15.4		%	Home closings gross margin	26.6		%	19.1		%	25.0		%	18.8		%

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	5.1		%	5.9		%	5.3		%	6.1		%
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	3.7		%	4.3		%	3.9		%	4.4		%

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 relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, ~~(ii)~~(iii) EBITDA and adjusted EBITDA ~~(iii)~~and (iv) net homebuilding debt to capitalization ratio.

Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding the impact of gains on land transfers and extinguishment of debt, net, and in the case of adjusted net income and adjusted earnings per common share, ~~(iv) net homebuilding debt~~the tax impact due to ~~capitalization ratio, and (v) adjusted home closings gross margin.~~

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 of William Lyon Homes (“WLH”) and transaction expenses.such items. EBITDA and Adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude 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~~gains on land transfers and extinguishment of WLH and transaction expenses. 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 of WLH and, transaction expenses and the tax impact due to such items.debt, net. 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~~

2826

Table of Contents

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 net income, adjusted earnings per common share, 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 June 30,
(Dollars in thousands, except per share data)	2022		2021








Net income available to TMHC	$	290,987	$	124,147





Gain on land transfers	(13,700)		—
Gain on extinguishment of debt, net	(13,471)		—
Tax impact due to above non-GAAP reconciling items	6,749		—
Adjusted net income	$	270,565	$	124,147

Basic weighted average shares	117,932		128,440
Adjusted earnings per common share - Basic	$	2.29	$	0.97


Diluted weighted average shares	118,931		130,259
Adjusted earnings per common share - Diluted	$	2.27	$	0.95

2927

Table of Contents


Adjusted Income Before Income Taxes and Related Margin	Adjusted Income Before Income Taxes and Related Margin							Adjusted Income Before Income Taxes and Related Margin
		Three Months Ended June 30,							Three Months Ended June 30,
($ in thousands)		2021			2020
(Dollars in thousands)								(Dollars in thousands)	2022			2021
Income before income taxes	Income before income taxes	$	163,224		$	84,844		Income before income taxes	$	391,597		$	163,224
William Lyon Homes related purchase accounting adjustments		—			32,138

Transaction expenses		—			18,712

Gain on land transfers								Gain on land transfers	(13,700)			—
Gain on extinguishment of debt, net								Gain on extinguishment of debt, net	(13,471)			—
Adjusted income before income taxes	Adjusted income before income taxes	$	163,224		$	135,694		Adjusted income before income taxes	$	364,426		$	163,224

Total revenues	Total revenues	$	1,719,280		$	1,526,685		Total revenues	$	1,995,023		$	1,719,280

Income before income taxes margin	Income before income taxes margin	9.5		%	5.6		%	Income before income taxes margin	19.6		%	9.5		%
Adjusted income before income taxes margin	Adjusted income before income taxes margin	9.5		%	8.9		%	Adjusted income before income taxes margin	18.3		%	9.5		%

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 %


EBITDA and Adjusted EBITDA Reconciliation
	Three Months Ended June 30,
(Dollars in thousands)	2022			2021
Net income before allocation to non-controlling interests	$	293,154		$	124,755
Interest expense, net	5,189			3
Amortization of capitalized interest	33,420			34,070
Income tax provision	98,443			38,469
Depreciation and amortization	1,442			2,193
EBITDA	$	431,648		$	199,490
Non-cash compensation expense	5,278			4,654



Gain on land transfers	(13,700)			—
Gain on extinguishment of debt, net	(13,471)			—
Adjusted EBITDA	$	409,755		$	204,144

Total revenues	$	1,995,023		$	1,719,280
Net income before allocation to non-controlling interests as a percentage of total revenues	14.7		%	7.3		%
EBITDA as a percentage of total revenues	21.6		%	11.6		%
Adjusted EBITDA as a percentage of total revenues	20.5		%	11.9		%

3028

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
(Dollars in thousands)	As of June 30, 2022			As of March 31, 2022
Total debt	$	2,950,744		$	3,048,373
Less unamortized debt issuance (cost)/premiums, net	(11,891)			2,311
Less mortgage warehouse borrowings	179,555			200,662
Total homebuilding debt	$	2,783,080		$	2,845,400
Less cash and cash equivalents	378,340			569,249
Net homebuilding debt	$	2,404,740		$	2,276,151
Total equity	4,193,895			4,094,798
Total capitalization	$	6,598,635		$	6,370,949

Net homebuilding debt to capitalization ratio	36.4		%	35.7		%

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 %

~~Table of Contents~~

Three ~~And Six Months Ended~~and six months ended June 30, ~~2021 Compared~~2022 compared to ~~Three And Six Months Ended~~three and six months ended June 30, ~~2020~~2021

The results for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 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. DuringSince the second half of 2020, demand for housing has increased ~~at a~~ nationwide, ~~level. Interest~~and remained strong through the first quarter of 2022. We believe the recent increases in interest rates ~~declined, offering greater~~during 2022 have caused buyer apprehension, affordability concerns, and ~~for various reasons, more affordable markets saw a significant~~an increase in ~~demand from out-of-state customers. As~~cancellations. Through the first half of ~~June 30, 2021, interest rates continue to remain low and the demand for new housing remains high as re-sale inventory is low. In addition,~~2022, we continue to experience market-wide supply chain disruptions, trade labor shortages, and ~~increasing~~high costs related to materials ~~specifically lumber. While we believe our~~due to inflationary impacts. The overall strong demand for housing has allowed us to utilize pricing strategies ~~will offset~~that mitigated 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. Our total average active selling communities have decreased compared to the same periods in the prior year as a result of such demand.costs. The average sales price for net sales orders, backlog, and homes closed during the three and six months ended June 30, ~~2021~~2022 all increased compared to the ~~three~~same periods in the prior year. However, these supply chain delays and ~~six months ended June 30, 2020. Additional~~labor shortages have extended our build cycle times. To combat this, several markets have shifted to a strategy of selling more spec homes, which allows the homes to be further along the cycle time before releasing them to be sold. Operational information ~~for~~related to each ~~metric~~period is ~~provided below.~~presented below:

~~Average~~Ending Active Selling Communities


		Three Months Ended June 30,
		2021	2020	Change			As of June 30, 2022	As of March 31, 2022	Change
East	East	126	153	(17.6)	%	East	117	121	(3.3)	%
Central	Central	101	132	(23.5)		Central	104	106	(1.9)
West	West	105	126	(16.7)		West	102	97	5.2
Total	Total	332	411	(19.2)	%	Total	323	324	(0.3)	%

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
(Dollars in thousands) 2021 2020 Change 2021 2020 Change 2021 2020 Change
East 1,302 1,176 10.7 % $ 713,398 $ 484,701 47.2 % $ 548 $ 412 33.0 %
Central 850 1,003 (15.3) 500,976 437,568 14.5 589 436 35.1
West 1,270 1,274 (0.3) 828,731 643,156 28.9 653 505 29.3
Total 3,422 3,453 (0.9) % $ 2,043,105 $ 1,565,425 30.5 % $ 597 $ 453 31.8 %

~~Table of Contents~~


		Six Months Ended June 30,																	Three Months Ended June 30,
		Net Sales Orders (1)				Sales Value (1)						Average Selling Price							Net Sales Orders (1)				Sales Value (1)						Average Selling Price
(Dollars in thousands)	(Dollars in thousands)	2021	2020	Change		2021		2020		Change		2021		2020		Change		(Dollars in thousands)	2022	2021	Change		2022		2021		Change		2022		2021		Change
East	East	3,079	2,537	21.4	%	$	1,591,982	$	1,046,245	52.2	%	$	517	$	412	25.5	%	East	1,121	1,302	(13.9)	%	$	730,495	$	713,398	2.4	%	$	652	$	548	19.0	%
Central	Central	1,922	1,909	0.7		1,084,457		861,631		25.9		564		451		25.1		Central	642	850	(24.5)		443,146		500,976		(11.5)		690		589		17.1
West	West	2,913	2,473	17.8		1,839,497		1,275,399		44.2		631		516		22.3		West	791	1,270	(37.7)		610,932		828,731		(26.3)		772		653		18.2
Total	Total	7,914	6,919	14.4	%	$	4,515,936	$	3,183,275	41.9	%	$	571	$	460	24.1	%	Total	2,554	3,422	(25.4)	%	$	1,784,573	$	2,043,105	(12.7)	%	$	699	$	597	17.1	%

(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:~~

Table of Contents

~~The number of net~~



	Six Months Ended June 30,
	Net Sales Orders (1)				Sales Value (1)						Average Selling Price
(Dollars in thousands)	2022	2021	Change		2022		2021		Change		2022		2021		Change
East	2,148	3,079	(30.2)	%	$	1,336,705	$	1,591,982	(16.0)	%	$	622	$	517	20.3	%
Central	1,529	1,922	(20.4)		1,026,426		1,084,457		(5.4)		671		564		19.0
West	1,931	2,913	(33.7)		1,506,663		1,839,497		(18.1)		780		631		23.6
Total	5,608	7,914	(29.1)	%	$	3,869,794	$	4,515,936	(14.3)	%	$	690	$	571	20.8	%

Net sales orders and sales ~~values increased~~value decreased by ~~10.7%~~25.4% and ~~47.2%~~12.7%, respectively, for the three months ended June 30, ~~2021~~2022, and ~~21.4%~~29.1% and ~~52.2%~~14.3%, respectively, for the six months ended June 30, ~~2021~~2022, compared to the same periods in the prior year. ~~The increase~~We believe the decreases were primarily the result of the change in ~~net sales orders was primarily~~economic conditions and home buyer apprehensions due to ~~demand~~rising mortgage interest rates and inflationary pressures. The decrease in ~~our Florida markets, including the 50 plus lifestyle market, which remained strong during the three~~sales was partially offset by an increase of average selling prices. Sales price appreciation increased average selling prices by 17.1% 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%20.8% for the three and six months ended June 30, ~~2021, respectively,~~2022, compared to the same periods in the prior year. ~~Market appreciation as well as product and geographical mix contributed to the change in average selling price for both comparative periods.~~

~~Central:~~

The net sales orders decreased by 15.3% in the three months ended June 30, 2021 compared to the same period in the prior year, while the net sales values increased 14.5% compared to the same period in the prior year. The decrease in net sales orders for the second quarter is a result of a decrease in 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 region also contributed to 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 offset by the imposition of sales caps during the current quarter. Net sales values increased 25.9% compared to the same period in the prior year primarily due to market appreciation.

~~West:~~

The number of net sales orders remained flat for the three months ended June 30, 2021 compared to the same period in the prior year, while net sales values increased by 28.9% 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 months ended June 30, 2021 compared to the same period in the prior year. The sales order increase is mainly due to continued strong demand and an effort to increase our footprint in several markets. The increase in the net sales value is 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 June 30,				Six Months Ended June 30,

		2021		2020		2021		2020			2022		2021		2022		2021
East	East	4.5	%	15.4	%	5.4	%	13.7	%	East	7.8	%	4.5	%	6.4	%	5.4	%
Central	Central	5.9	%	20.8	%	6.2	%	18.6	%	Central	13.2	%	5.9	%	9.5	%	6.2	%
West	West	5.6	%	19.5	%	6.0	%	16.9	%	West	12.9	%	5.6	%	9.8	%	6.0	%
Total Company	Total Company	5.2	%	18.6	%	5.8	%	16.2	%	Total Company	10.8	%	5.2	%	8.5	%	5.8	%

(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% from 18.6% and 5.8% from 16.2%, respectively,~~increased for the three and six months ended June 30, ~~2021~~2022 compared to the same periods in the prior year. ~~We believe the decrease~~This increase in cancellations ~~for the three and six months ended June 30, 2021, compared~~is due to ~~the prior year periods, was a result of the high demand and customers wanting to secure housing as a result of low inventory levels, low~~recent increases in mortgage interest rates and ~~price appreciation. In addition, we believe~~extended build cycle times. The Freddie Mac average 30 year fixed mortgage rate has increased ~~consumer confidence relative~~260 basis points in 2022 to ~~the prior year periods, which were negatively impacted by the COVID-19 pandemic, contributed to the lower cancellation rate.~~5.70% as of June 30, 2022.

Sales Order Backlog


		As of June 30,																	As of June 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)	2022	2021	Change		2022		2021		Change		2022		2021		Change
East	East	3,617	2,271	59.3	%	$	1,903,206	$	974,860	95.2	%	$	526	$	429	22.6	%	East	3,333	3,617	(7.9)	%	$	2,119,850	$	1,903,206	11.4	%	$	636	$	526	20.9	%
Central	Central	2,838	2,111	34.4		1,581,686		1,006,002		57.2		557		477		16.8		Central	2,874	2,838	1.3		1,948,678		1,581,686		23.2		678		557		21.7
West	West	3,773	2,423	55.7		2,250,680		1,245,301		80.7		597		514		16.1		West	2,715	3,773	(28.0)		2,030,972		2,250,680		(9.8)		748		597		25.3
Total	Total	10,228	6,805	50.3	%	$	5,735,572	$	3,226,163	77.8	%	$	561	$	474	18.4	%	Total	8,922	10,228	(12.8)	%	$	6,099,500	$	5,735,572	6.3	%	$	684	$	561	21.9	%

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

Total sold homes in backlog ~~units~~decreased by 12.8% and total sales value increased by ~~50.3% and 77.8%~~6.3% at June 30, ~~2021, respectively,~~2022, compared to June 30, ~~2020.~~2021. The decrease in sold homes in backlog is primarily the result of a decrease in net sales as well as an increase in cancellations. Despite a lower number of sold homes in backlog, ~~units and~~the total sales value ~~was primarily due to a strong sales environment~~increased as a result of ~~demand for housing and low interest rates.~~sales price appreciation increasing the average selling price by 21.9%. In addition, ~~various~~we strategically metered sales releases to better manage supply chain ~~disruptions, trade~~and labor ~~availability, and inclement weather have led~~constraints in the earlier part of 2022. Furthermore, our strategy of spec home sales shifted, allowing homes to ~~a small increase~~be further along in the build cycle ~~times, which contributes~~before releasing them to ~~an increase in backlog inventory.~~be sold.

Home Closings Revenue

Three 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 1,245 1,097 13.5 % $ 563,326 $ 467,154 20.6 % $ 452 $ 426 6.1 %
Central 791 1,059 (25.3) 382,743 473,549 (19.2) 484 447 8.3
West 1,232 1,056 16.7 698,311 530,291 31.7 567 502 12.9
Total 3,268 3,212 1.7 % $ 1,644,380 $ 1,470,994 11.8 % $ 503 $ 458 9.8 %

Table of Contents


	Three Months Ended June 30,
	Homes Closed				Home Closings Revenue, Net						Average Selling Price
(Dollars in thousands)	2022	2021	Change		2022		2021		Change		2022		2021		Change
East	1,097	1,245	(11.9)	%	$	613,176	$	563,326	8.8	%	$	559	$	452	23.7	%
Central	778	791	(1.6)		457,006		382,743		19.4		587		484		21.3
West	1,157	1,232	(6.1)		812,838		698,311		16.4		703		567		24.0
Total	3,032	3,268	(7.2)	%	$	1,883,020	$	1,644,380	14.5	%	$	621	$	503	23.5	%



	Six Months Ended June 30,
	Homes Closed				Home Closings Revenue, Net						Average Selling Price
(Dollars in thousands)	2022	2021	Change		2022		2021		Change		2022		2021		Change
East	2,034	2,297	(11.4)	%	$	1,119,172	$	1,009,211	10.9	%	$	550	$	439	25.3	%
Central	1,442	1,482	(2.7)		825,582		702,920		17.5		573		474		20.9
West	2,324	2,310	0.6		1,582,675		1,295,678		22.2		681		561		21.4
Total	5,800	6,089	(4.7)	%	$	3,527,429	$	3,007,809	17.3	%	$	608	$	494	23.1	%

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 %

~~East:~~

The number of homes closed decreased by 7.2% and ~~home closings revenue, net, increased by 13.5% and 20.6%~~4.7%, respectively, for the three months ended June 30, 2021 and 10.3% and 17.0%, respectively, for the six months ended June 30, 2021 compared to the same periods in the prior year. This is primarily due to strong market demand and increased sales pace in certain of our Florida markets in the latter half of 2020. 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 June 30, ~~2021 compared to the same period in the prior year.~~

~~Central:~~

~~Table of Contents~~

~~The number of homes closed and~~2022, while home closings revenue, net ~~decreased~~increased by ~~25.3%~~14.5% and ~~19.2%~~17.3%, 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 June 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% and 31.7%, respectively, for the three months ended June 30, 2021 and 14.8% and 26.3%, respectively, for the six months ended June 30, 20212022 compared to the same periods in the prior year. The ~~increase~~decrease in ~~both units and dollars was~~the number of homes closed is primarily due to ~~strong market demand~~an increase in cancellations and ~~increases~~fewer spec sales in the current year periods compared to the prior year periods. The increase in home closings revenue, net is a result of sales price appreciation which caused average selling ~~prices.~~prices to increase by 23.5% and 23.1% for the three and six months ended June 30, 2022, respectively.

Land Closings Revenue


		Three Months Ended June 30,							Three Months Ended June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Change		(Dollars in thousands)	2022		2021		Change
East	East	$	13,203	$	3,230	$	9,973	East	$	17,310	$	13,203	$	4,107
Central	Central	3,096		7,316		(4,220)		Central	506		3,096		(2,590)
West	West	15,758		—		15,758		West	19,000		15,758		3,242
Total	Total	$	32,057	$	10,546	$	21,511	Total	$	36,816	$	32,057	$	4,759


		Six Months Ended June 30,								Six Months Ended June 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020		Change		(Dollars in thousands)	2022		2021		Change
East	East	$	15,656	C	$	25,854	$	(10,198)	East	$	30,751	$	15,656	$	15,095
Central	Central	5,532			7,631		(2,099)		Central	2,665		5,532		(2,867)
West	West	15,758			—		15,758		West	19,010		15,758		3,252
Total	Total	$	36,946		$	33,485	$	3,461	Total	$	52,426	$	36,946	$	15,480

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

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

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

or land parcels to manage our land and lot supply on larger tracts of land. 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~~East for the ~~three and~~ six months ended June 30, ~~2021 is~~2022 was due to the sale of certain ~~projects~~commercial assets as well as the sale of residential lots in our ~~Washington and Arizona markets.~~

Florida market.

3531

Table of Contents

Amenity and Other Revenue


		Three Months Ended June 30,							Three Months Ended June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Change		(Dollars in thousands)	2022		2021		Change
East	East	$	4,833	$	4,239	$	594	East	$	5,376	$	4,833	$	543
Central	Central	—		—		—		Central	—		—		—
West	West	370		498		(128)		West	436		370		66
Corporate	Corporate	248		111		137		Corporate	33,904		248		33,656
Total	Total	$	5,451	$	4,848	$	603	Total	$	39,716	$	5,451	$	34,265


		Six Months Ended June 30,								Six Months Ended June 30,
(Dollars in thousands)	(Dollars in thousands)	2021			2020		Change		(Dollars in thousands)	2022		2021		Change
East	East	$	9,856	C	$	9,290	$	566	East	$	11,060	$	9,856	$	1,204
Central	Central	—			—		—		Central	—		—		—
West	West	733			921		(188)		West	799		733		66
Corporate	Corporate	$	291		$	24,718	$	(24,427)	Corporate	35,763		291		35,472
Total	Total	$	10,880		$	34,929	$	(24,049)	Total	$	47,622	$	10,880	$	36,742

Several of our communities operate amenities such as golf courses, club houses, and fitness centers. We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region also includes the activity relating to our Build-To-Rent and Urban Form ~~operations which primarily develops~~operations. The increase in amenity and ~~constructs multi-use properties consisting~~other revenue in Corporate for the three months ended June 30, 2022 is due to the sale of ~~commercial space, retail, and multi-family units.~~an asset relating to our Urban Form operations.

Home Closings Gross Margin


	Three Months Ended June 30,
	East						Central						West						Consolidated
(Dollars in thousands)	2022			2021			2022			2021			2022			2021			2022			2021
Home closings revenue, net	$	613,176		$	563,326		$	457,006		$	382,743		$	812,838		$	698,311		$	1,883,020		$	1,644,380
Cost of home closings	445,587			447,172			339,768			311,980			596,255			571,889			1,381,610			1,331,041
Home closings gross margin	$	167,589		$	116,154		$	117,238		$	70,763		$	216,583		$	126,422		$	501,410		$	313,339



Home closings gross margin %	27.3		%	20.6		%	25.7		%	18.5		%	26.6		%	18.1		%	26.6		%	19.1		%



	Six Months Ended June 30,
	East						Central						West						Consolidated
(Dollars in thousands)	2022			2021			2022			2021			2022			2021			2022			2021
Home closings revenue, net	$	1,119,172		$	1,009,211		$	825,582		$	702,920		$	1,582,675		$	1,295,678		$	3,527,429		$	3,007,809
Cost of home closings	827,534			809,148			634,825			567,379			1,184,225			1,064,756			2,646,584			2,441,283
Home closings gross margin	$	291,638		$	200,063		$	190,757		$	135,541		$	398,450		$	230,922		$	880,845		$	566,526



Home closings gross margin %	26.1		%	19.8		%	23.1		%	19.3		%	25.2		%	17.8		%	25.0		%	18.8		%

Home closings gross margin increased 750 basis points to 26.6% for the three months ended June 30, 2022, compared to 19.1% in the prior year period and ~~Adjusted Home Closings Gross Margin~~

Three Months Ended June 30,
East Central West Consolidated
(Dollars in thousands) 2021 2020 2021 2020 2021 2020 2021 2020
Home closings revenue, net $ 563,326 $ 467,154 $ 382,743 $ 473,549 $ 698,311 $ 530,291 $ 1,644,380 $ 1,470,994
Cost of home closings 447,172 389,180 311,980 390,169 571,889 464,875 1,331,041 1,244,224
Home closings gross margin 116,154 77,974 70,763 83,380 126,422 65,416 313,339 226,770
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 % 20.6 % 16.7 % 18.5 % 17.6 % 18.1 % 12.3 % 19.1 % 15.4 %
Adjusted home closings gross margin % 20.6 % 16.7 % 18.5 % 20.1 % 18.1 % 16.1 % 19.1 % 17.6 %

620 basis points to 25.0% for the six months ended June 30, 2022, compared to 18.8% in the prior year period. The increase for both the three and six months ended June 30, 2022 is a reflection of pricing power in excess of inflationary cost pressure, operational enhancements, and acquisition synergies. In addition, we strategically metered sales releases to better manage supply chain and labor constraints in the earlier part of 2022.

3632

Table of Contents

Six Months Ended June 30,
East Central West Consolidated
(Dollars in thousands) 2021 2020 2021 2020 2021 2020 2021 2020
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
Cost of home closings 809,148 723,200 567,379 699,469 1,064,756 892,058 2,441,283 2,314,727
Home closings gross margin 200,063 139,670 135,541 147,104 230,922 134,133 566,526 420,907
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 % 19.8 % 16.2 % 19.3 % 17.4 % 17.8 % 13.1 % 18.8 % 15.4 %
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 increased to 20.6% from 16.7% and to 19.8% from 16.2%, respectively, for the three and six months ended June 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 and adjusted home closings gross margin percentages were 18.5% and 19.3%, respectively, for the three and six 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 June 30, 2021 compared to the same periods in the prior year, was driven by product and geographic mix, primarily due to WLH communities having lower margins than legacy TMHC 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 our financial services income before income taxes as well as supplemental data:

~~Table of Contents~~


		Three Months Ended June 30,					Six Months Ended June 30,									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
(Dollars in thousands)															(Dollars in thousands)		2022		2021		Change		2022		2021		Change
Financial services revenue	Financial services revenue		$	29,521	$	33,929	(13.0)	%	$	67,034	$	56,817	18.0	%	Financial services revenue		$	25,786	$	29,521	(12.7)	%	$	53,500	$	67,034	(20.2)	%
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

Title services and other revenue															Title services and other revenue		9,685		7,871		23.0		17,170		14,423		19.0
Total financial services revenue	Total financial services revenue		37,392		40,297		(7.2)	%	81,457		68,336		19.2	%	Total financial services revenue		35,471		37,392		(5.1)	%	70,670		81,457		(13.2)	%
Financial services equity in income of unconsolidated entities			2,128		3,297		(35.5)		5,797		5,527		4.9
Financial services net income from unconsolidated entities															Financial services net income from unconsolidated entities		2,195		2,128		3.1		4,253		5,797		(26.6)
Total revenue	Total revenue		39,520		43,594		(9.3)		87,254		73,863		18.1		Total revenue		37,666		39,520		(4.7)		74,923		87,254		(14.1)
Financial services expenses	Financial services expenses		25,935		22,796		13.8		49,934		43,443		14.9		Financial services expenses		21,483		25,935		(17.2)		45,697		49,934		(8.5)
Financial services transaction expenses			—		6,038		(100.0)		—		7,438		—

Financial services income before income taxes	Financial services income before income taxes		$	13,585	$	14,760	(8.0)	%	$	37,320	$	22,982	62.4	%	Financial services income before income taxes		$	16,183	$	13,585	19.1	%	$	29,226	$	37,320	(21.7)	%

Total originations:	Total originations:														Total originations:
Number of Loans	Number of Loans		2,336		2,082		12.2	%	4,464		3,781		18.1	%	Number of Loans		1,595		2,336		(31.7)	%	3,177		4,464		(28.8)	%
Principal	Principal		$	910,953	$	747,348	21.9	%	$	1,720,669	$	1,263,878	36.1	%	Principal		$	718,133	$	910,953	(21.2)	%	$	1,406,799	$	1,720,669	(18.2)	%


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Supplemental data:	Supplemental data:									Supplemental data:
Average FICO score	Average FICO score	750		750		750		750		Average FICO score	755		750		754		750
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	%	18	%	17	%	18	%
Other agency	Other agency	79	%	80	%	79	%	79	%	Other agency	77	%	79	%	78	%	79	%
Total agency	Total agency	97	%	97	%	97	%	95	%	Total agency	94	%	97	%	95	%	97	%
Non-agency	Non-agency	3	%	3	%	3	%	5	%	Non-agency	6	%	3	%	5	%	3	%
Total funded originations	Total funded originations	100.0	%	100	%	100	%	100	%	Total funded originations	100	%	100	%	100	%	100	%

~~Financial~~Total financial services revenue decreased by ~~7.2%~~5.1% and ~~increased by 19.2%, respectively,~~13.2% for the three and six months ended June 30, ~~2021~~2022 compared to the same periods in the prior ~~year.~~year, respectively. The decrease in total financial services revenue was a result of lower home closings during the period. Despite a decrease in total financial services revenue, financial services income before income taxes increased by 19.1% for the three months ended June 30, ~~2021~~2022 compared to the same period in the prior year is as a result of ~~the prior year period's fair value of IRLC’s being at an all-time high, combined with our offering of higher incentives~~a decrease in ~~2021. This was partially offset by increases~~certain volume driven expenses as well as a decrease in ~~revenue stemming from increased mortgage closings~~other general and ~~increases in average mortgage borrowings per unit. The increase in financial services revenue for the six months ended June 30, 2021 was primarily~~administrative expenses due to ~~increased mortgage closings and an increase in capture rate.~~operational efficiencies.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, decreased to ~~5.9%~~5.1% from ~~6.4%~~5.9%, and ~~6.1%~~to 5.3% from ~~6.6%,~~6.1% for the three and six months ended June 30, ~~2021,~~2022, 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~~controllable sales and marketing ~~functions.~~costs.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, ~~increased~~decreased to 3.7% from 4.3% and to 3.9% from ~~3.5% and~~ 4.4% ~~from 3.7%~~ for the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year. The ~~increases are~~decrease was primarily due to the ~~normalization~~increase in ~~our spend in the current year as employees return~~home closings revenue, net, while general and administrative expenses remained relatively consistent due to ~~the office, resume travel, and incur various expenses that had been reduced in 2020 in response to the COVID-19 pandemic.~~operational efficiencies.

~~Equity in Income of~~Net Loss/(Income) from Unconsolidated Entities

~~Equity in income of~~We had a net loss from unconsolidated entities ~~was $2.1~~of $3.6 million and ~~$3.5~~net income from unconsolidated entities of $2.1 million for the three months ended June 30, 2022 and 2021, ~~and 2020, respectively, and $7.8~~respectively. We also had a net loss of $1.8 million and ~~$5.9 million for the six months ended June 30, 2021 and 2020, respectively. Our joint ventures relating to our financial services segment experienced a decrease in~~net income ~~for the three and six months ended June~~of $7.8

3833

Table of Contents

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,

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

~~Other expense/(income), net, was $45 thousand in expense and $696 thousand in income for the three months ended June 30, 2021 and 2020, respectively, and $1.0~~ million ~~and $5.6 million in expense, respectively,~~ for the six months ended June 30, 2022 and 2021, respectively. Net loss/(income) generated from unconsolidated entities is dependent on the number of joint venture investments and ~~2020. The decreases~~the stage of our investment. We recently made several new investments in ~~other expense/(income)~~unconsolidated joint ventures which have yet to yield returns.

Other (Income)/Expense, Net

Other income, net was $11.0 million and $10.5 million for the three and six months ended June 30, ~~2021 were~~2022, respectively, and other expense, net was $45.0 thousand and $1.0 million for the same periods in the prior year, respectively. For the three and six months ended June 30, 2022, other income was primarily ~~a result~~related to $13.7 million in gains on land transferred at fair value as part of ~~higher acquisition-related costs on projects we are no longer pursuing.~~investments in two new joint ventures with third parties, partially offset by $2.7 million of other expenses. This gain represents the difference between the fair value and carrying value of the land at the time of transfer.

~~Transaction Expenses~~Gain on Extinguishment of Debt, Net

~~We had no transaction expenses~~

Gain on extinguishment of debt, net was $13.5 million for the three and six months ended June 30, ~~2021, compared with $18.7 million~~2022. This gain is due to the Tender Offer and ~~$105.1 million~~purchase of ~~expenses, respectively, for the three and six months ended~~our 6.625% Senior Notes due 2027 in June 30, 2020. Transaction expenses for the three and six months ended June 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.2022.

Income Tax Provision

The effective tax rate for the three and six months ended June 30, ~~2021~~2022 was 25.1% and 24.5%, respectively, compared to 23.6% and 23.0%, respectively, ~~compared to 20.8% and 32.8%~~ for the same periods in ~~2020, respectively.~~2021. For both the three and six months ended June 30, 2022 and June 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 prior homebuilding activities. ~~The effective tax rate for the six months ended June 30, 2020 was driven primarily by expenses related to the acquisition of WLH which are not deductible for tax purposes.~~

Net Income

Net income and diluted earnings per share for the three months ended June 30, 2022 was $291.0 million and $2.45, respectively. Net income and diluted earnings per share for the three months ended June 30, 2021 was $124.1 million and $0.95, respectively. ~~Net income and diluted earnings per share for the three months ended June 30, 2020 was $65.7 million and $0.50, 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~~The three months ended June 30, ~~2020~~2022 also included ~~transaction expenses~~one time gains related to the transfer of land and ~~other compensation expenses as a result~~extinguishment of ~~the WLH acquisition.~~debt described above.

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 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.

~~Table of Contents~~

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

Table of Contents


	As of
(Dollars in thousands)	June 30, 2022		December 31, 2021
Total cash, excluding restricted cash	$	378,340	$	832,821
$800 Million Revolving Credit Facility	800,000		800,000
$100 Million Revolving Credit Facility	100,000		100,000
Letters of credit outstanding	(66,314)		(58,738)
$800 Million Revolving Credit Facility borrowings outstanding	(150,000)		—
$100 Million Revolving Credit Facility borrowings outstanding	—		(31,529)
Revolving credit facilities availability	683,686		809,733
Total liquidity	$	1,062,026	$	1,642,554

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 Facilities to conduct our operations for the next twelve months. This includes the repayment or refinancing of our 5.875% Senior Notes due 2023. Beyond the next twelve months, our primary demand for funds will be for payments of our long-term debt as it becomes due, land purchases, lot development, home and amenity construction, long-term capital investments, investments in our joint ventures, and repurchases of common stock. We believe we will generate sufficient cash from our operations to meet the demands for such payments, however we may also access the capital markets to obtain additional liquidity through debt and equity offerings or refinance debt to secure capital for such long-term demands.

Cash Flow Activities

Operating Cash Flow Activities

Our net cash ~~used in~~provided by operating activities was ~~$97.6~~$195.5 million for the six months ended June 30, ~~2021,~~2022, compared to ~~$323.2~~$97.6 million of cash ~~provided by~~used in operating activities for the six months ended June 30, ~~2020.~~2021. The year-over-year ~~fluctuation~~increase in cash ~~used in~~provided by operating activities during the six months ended June 30, ~~2021 reflects significantly higher~~2022 is primarily driven by an increase in net income ~~during the 2021 period,~~and a decrease in mortgage loans held for sale. These increases were partially offset by ~~greater spend on~~a decrease in accounts payable, accrued expenses and other liabilities and an increase in real estate inventory and land deposits and an increase in mortgages held for sale. In addition, during the six months ended June 30, 2020, we reduced all non-essential operating expenses and capital expenditures to mitigate the financial uncertainty of COVID-19.deposits.

Investing Cash Flow Activities

Net cash ~~used in~~provided by investing activities was ~~$22.0~~$4.2 million for the six months ended June 30, ~~2021,~~2022, compared to ~~$278.8~~$22.0 million of cash used in investing activities for the six months ended June 30, ~~2020.~~2021. The ~~decrease~~increase in cash ~~used in~~provided by investing activities was primarily due to ~~the use~~an increase in capital distributions from unconsolidated entities and a decrease in purchases of ~~cash in the WLH acquisition in the prior year period. This was~~property and equipment, partially offset by ~~an increase in cash used in the current year for~~increased investments in new unconsolidated ~~entities.~~entities during the period.

Financing Cash Flow Activities

Net cash used in financing activities was $656.7 million for the six months ended June 30, 2022, compared to $46.4 million for the six months ended June 30, 2021, compared to $303.9 million of cash provided by financing activities for the six months ended June 30, 2020. During the six months ended June 30, 2020, we borrowed $485.0 million on our Revolving Credit Facility as a precautionary measure as a result of COVID-19. During the six months ended June 30, 2021, we had no borrowings under our Revolving Credit Facility, and we had an2021. The increase in cash used ~~for repurchasing~~in financing activities was primarily due to repayments on senior notes and mortgage warehouse facilities and repurchase of ~~common stock.~~our Common Stock. The increase in cash used in financing activities was partially offset by net borrowings on our revolving credit facilities.

Debt Instruments

For information regarding our debt instruments, including the terms governing our Senior Notes and our ~~Revolving~~ Credit ~~Facility,~~Facilities, see Note 87 - Debt to the Unaudited Condensed Consolidated Financial Statements included in this quarterly report.

Off-Balance Sheet Arrangements as of June 30, ~~2021~~2022

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.~~

4035

Table of Contents

homebuilding expertise with access to our partners’ capital. For example, in April 2022, we established a joint venture with Värde Partners (“Värde”), a leading global alternative investment firm, to develop rental properties as a part of our Build-To-Rent program. The venture includes $850 million in equity commitments, funded 60 percent by Värde and 40 percent by the Company. The venture provides Värde with the exclusive opportunity to invest in the acquisition and development of Build-To-Rent projects identified by the Company that meet the venture's investment guidelines.

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~~six months ended, June 30, 2022 and 2021, total cash ~~invested in~~contributions to unconsolidated joint ventures ~~was~~were $69.6 million and $14.6 ~~million.~~million, respectively.

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 of the property owner generally have no ~~recourse.~~recourse to the Company. 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 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the aggregate purchase price offor land under these contracts was ~~$709.4 million~~$1.5 billion and ~~$760.4 million,~~$1.3 billion, respectively.

Seasonality

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

•the timing of the introduction and start of construction of new projects;

•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,~~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.

Table of Contents

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, ~~2021~~2022 compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.

4137

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate and variable rate debt. At June 30, ~~2021,~~2022, 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 30, ~~2021,~~2022, we had $150.0 million of outstanding borrowings under our $800 Million Revolving Credit Facility, and no outstanding borrowings under our $100 Million Revolving Credit Facility. We had ~~$754.5~~$683.7 million of additional availability for borrowings under the Credit Facilities including ~~$154.5~~$133.7 million of additional availability for letters of credit under our $800 Million Revolving Credit Facility as of June 30, ~~2021~~2022 (giving effect to ~~$45.5~~$66.3 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 8,7, 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 30, ~~2021.~~2022. 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)	2022			2023			2024			2025			2026			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	$	136.7		$	509.8		$	402.9		$	39.9		$	27.5		$	1,516.3		$	2,633.1		$	2,450.8
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)	2.7		%	4.7		%	5.3		%	2.7		%	2.7		%	5.6		%	5.2		%
Variable Rate Debt(2)	Variable Rate Debt(2)	$	215.2		$	—		$	—		$	—		$	—		$	—		$	215.2		$	215.2	Variable Rate Debt(2)	$	329.6		$	—		$	—		$	—		$	—		$	—		$	329.6		$	329.6
Weighted average interest rate	Weighted average interest rate	2.0		%	—			—			—			—			—			2.0		%			Weighted average interest rate	1.7		%	—			—			—			—			—			1.7		%

(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 30, ~~2021,~~2022, 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~~$3.3 million per year.

4238

Table of Contents

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 30, ~~2021.~~2022. Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that, as of June 30, ~~2021,~~2022, 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 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

4339

Table of Contents

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required with respect to this item can be found in Note 1413 - Commitments and Contingencies under “Legal Proceedings” in the Notes to the Consolidated Financial ~~statements~~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 30, ~~2021.~~2022.

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)
April 1 to April 30, 2022	833,421	$	26.86	833,421	$	150,000
May 1 to May 31, 2022	2,746,436	27.31		2,746,436	500,000
June 1 to June 30, 2022	3,199,641	23.44		3,199,641	425,000
Total	6,779,498			6,779,498

~~(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,~~May 31, 2022, 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~~$500.0 million of the Company's Common Stock ~~until~~through December 31, ~~2022.~~2023, which authorization replaced the Company’s prior $250.0 million repurchase authorization, which was announced December 13, 2021 and had been scheduled to expire on June 30, 2024. Repurchases of the Company's Common Stock under the new 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~~statutory requirements, planned land investment and development spending, acquisition and other investment opportunities and ongoing capital requirements. The program does not require us to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of

Certain Officers; Compensatory Arrangements of Certain Officers

4440

Table of Contents

On July 26, 2022, Taylor Morrison, Inc. (“TMI”), a Delaware corporation and an indirect, wholly-owned subsidiary of the Company, entered into employment agreement amendments (collectively, the “Employment Agreement Amendments”) with each of Sheryl D. Palmer, the Company’s President, Chief Executive Officer and Chairman of the Board of Directors, Louis Steffens, the Company’s Executive Vice President and Chief Financial Officer and Darrell C. Sherman, the Company’s Executive Vice President, Chief Legal Officer and Secretary (collectively, our “named executive officers”). Under each of the Employment Agreement Amendments: Section 5(b) of each named executive officer’s respective employment agreement was amended to provide that if the named executive officer experiences a “Change in Control Qualifying Termination” (as such term is defined in the named executive officer’s employment agreement), then TMI will pay the named executive officer a prorated portion of the annual profit sharing program bonus payable with respect to the calendar year in which such termination occurs, determined on a daily basis, based solely on the actual level of achievement of the applicable performance goals for such year, and payable if and when annual profit sharing program bonuses are paid to other senior executives of TMI with respect to such year.

Table of Contents

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 herein 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~~3.1 to the Company’s Current Report on Form 8-K filed on ~~October 26, 2018)~~December 13, 2021).

~~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.~~2013 Omnibus Equity Award Plan (Amended and ~~C. David Cone~~Restated as of May 26, 2022) (incorporated herein by reference to Exhibit 10.1 to the ~~Company's~~Company ’s Current Report on Form 8-K filed on May 31, 2022)

10.2*†						Limited Liability Company Agreement of TMVP BTR Venture, LLC

10.3						Third Supplemental Indenture for 6.625% Senior Notes due 2027 , dated as of June ~~21, 2021).~~27, 2022,between Taylor Morrison Communities, Inc., the undersigned Guarantors and U.S. Bank Trust Company, National Association

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,~~Louis Steffens, 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,~~Louis Steffens, 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 30, ~~2021,~~2022, formatted in inline XBRL (and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

† Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant

treats as private or confidential.

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.

4542

Table of Contents

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, 2021~~27, 2022
		/s/ Sheryl D. Palmer
		Sheryl D. Palmer
		Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)

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

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

4643


For the six months ended June 30, 2020
	Common Stock			Additional Paid-in Capital	Treasury Stock				Stockholders' Equity
	Shares	Amount				Amount		Shares		Amount		Retained Earnings		Accumulated Other Comprehensive Income		Non-controlling Interest		Total Stockholders’ Equity
Balance – 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	—	—				—		—		—		34,243		—		3,423		37,666
Other comprehensive income	—					—						—		(13)		—		(13)
Exercise of stock options	302,522	—				5,371		—		—		—		—		—		5,371
Issuance of restricted stock units, net of shares withheld for tax(1)	634,133	—				(7,252)		—		—		—		—		—		(7,252)
Issuance of equity in connection with business combinations	28,327,290	—				789,179		—		—		—		—		—		789,179
Repurchase of common stock	(5,436,479)	—						5,436,479		(90,163)		—		—		—		(90,163)
Stock compensation expense	—	—				16,882		—		—		—		—		—		16,882
Stock compensation expense related to WLH acquisition	—	—				5,106		—		—		—		—		—		5,106
WLH equity award accelerations due to change in control	—	—				8,421		—		—		—		—		—		8,421
Distributions to non-controlling interests of consolidated joint ventures	—	—				—		—		—		—		—		(23,673)		(23,673)
Changes in non-controlling interests of consolidated joint ventures	—	—				—		—		—		—		—		137,504		137,504
Balance – June 30, 2020	129,678,751	$	1			$	2,915,702	25,379,911		$	(433,687)	$	816,593	$	871	$	125,260	$	3,424,740



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

Net income before allocation to non-controlling interests	$	80,396	$	79,130
Net income attributable to non-controlling interests	(1,548)		(2,536)
Net income available to TMHC	$	78,848	$	76,594

Weighted average shares - Basic	129,964		154,431
Weighted average shares - Diluted	130,700		155,389

Earnings per share - Basic	$	0.61	$	0.50
Earnings per share - Diluted	$	0.60	$	0.49


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



	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 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		%