TMHC - Earnings call transcript Q2 2017 | Taylor Morrison Home Corporation

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Operator

Good morning, and welcome to Taylor Morrison's Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce Mr. Jason Lenderman, Vice President, Investor Relations and Treasury.

Jason Lenderman

Thank you, and welcome everyone to Taylor Morrison's third quarter 2017 earnings conference call. Sheryl Executive and Financial Vice are and Executive Officer. today Cone, Dave President me Palmer, Chief Chairman Officer; With and Chief business Sheryl overview priorities. call the performance our will strategic and with our begin of an will along our results, Dave of year. the with you financial guidance through review take our full for a happy the questions. your Then with the after take outlook Sheryl will which to business, for conclude we will be

includes These including that forward-looking for those let turn do uncertainties limited that any me the to remind risks are update not subject could filings the identified in Commission. and that the question-and-answer factors news today's that but forward-looking And find to and we I to not session from Before actual subject cause uncertainties are to today's Sheryl, projections. differ call, include, to, statements results statement the are These and the you call Exchange with you Harbor materially statements our release. risks our in undertake release over in Securities Safe forward-looking will information and statements. to and our obligation expectations

Now, turn Sheryl to Palmer. let the me call over

Sheryl Palmer

scale of XXXX and Harvey was not as We us everyone. good we thankfully for Hurricane's were Jason, many nation results. that forget the a soon the power quarter appreciate joining impact share and size, you you, Thank quarter and morning that will has our third rarely It today we The on seen. reasons. Irma

and and way of organization managed support safely. and to our of am so and witness members I of team have focus It made compassion pleased squarely immediate the to experienced and ever proud. in to examples storms pull-through one very share others all to on that for the our that The one the and safety I great our was the members remarkable of these team communities aftermath well-being was together another me of hurricanes, both came our During homeowners.

the confidence goes, adversity build character, unbelievably pure doesn’t say it. with this it that character practice. and saying was reveals can in spirit As company's kind And I in

Atlanta in were As than way time hit any was our recent large inventory we did operational impacted. weeks, I've of disruption damage our that's After consideration of the expected more homes least the landscaping communities the and in any week largely as at than left the In with construction primarily Caroline. underproduction was closed under were of before we in hurricane at and unharmed. isolated our Florida, for XX% in physical a shared disruption X% press to while less secondary part, experience

worth fact, rebuilding communities it's considering the impacted a industry the shared was that the the Also the affected before the hurricane to days and being support for reduced recovery labor personnel are up fully its on markets weeks operational. production few with operating leading to our the and in preparation through certain effort. trade In mentioning as

events highlight from of Before that quarter despite transpired. storms, specific of discussing pleased impacts unusual the from some more the I'm the results the to the

driven closings prior-year. Our over EPS performance or quarter our in for of million generated $X.XX X% the increase an EBT $XX and of the were X,XXX which by

One of closings out from fourth these do delayed in our discuss of XXXX. associated delayed the and quarter all estimate in plan in with impact shift of we've review. schedule to XXX economic will into some faced occurrences beginning and In from reality, closings name temporary we absorb effect to aimed This natural these our the just continuing of regulatory design to with that financial in industry his the continued mortgage XXXX while our details early has organization. and efficient be and responsive Taylor of closings third we Dave model our promotes disasters our ripple pushed result employees these a customers, the types market hurricanes, Morrison way of to example As quarter. a a nimble fluctuations, and event to our absorb activity currently a were planning the the changes, to to was platform focus production of delivery deliver At that and cadence housing and disruption a across on commitments more on shareholders. uncontrollable by our scheduling few. production

put not create also we better these is XXXX we to it know cadence sales but with a experienced the a the production in position As labor it half accommodate pulling turns to all better front and environment, believe out, into a only disruption markets what us of helps constrained hurricanes. very the

we the market teams resilient. the housing be have As market. to rebuilding effort, our of the in proven large to the of in focus effort effects and expanded to generally on the the cities start a market determine from far to an our perspective, storms broader so impacts at demand communities each From

storms. a as than fact thought aftermath doors for to much sooner response opened of In originally immediate we the the demand, business we in possible our

closings annual storms. provided expectation end And lower of has range. leave to in before recall, in as guidance the of specifically While assessment last will it for that range the pressures on quarter's closings markets we as play-out the areas. on more from our pressures anticipate us months with additional we the with with any We rebuild that estimated initial storms, the fourth our efforts. Houston the labor you fully as rebuilding we impact the enough won't constrained year-end indication guided just shared albeit become confidence the in call unchanged land devastated increased our quarter heightened that reality significantly is an receiving Still

year-to-date weeks, delays our with against than the guidance. compared of the to as we a XX%. from we at will of period determine This highest and we any sales land the same discussed have X,XXX our the through three is openings From XXXX. of quarters quarter on sold and many call the rate represent development increase which next since in about homes perspective, same impact XX% community the rate sales We period more we prior-year. growth resultant X,XXX were Over last the last an XXXX finished growth our year comparing

absorption pace sales knowing was truly Our quarter for year. This had XX% down hurricanes X.X% is four at markets by and X.X for the inaccessible year. been we with increase remarkable communities last quarter some offices or slightly over have affected, for five exclude was directly the closed instances to If least in which the pace weeks. would the just relative absorption impacted and the we last our divisions

higher X.X almost making prior XX% without year. year-to-date is than Our the and absorption is pace adjustment any

the markets moving at feel and on our the we our look from are employees, timing we a the push permanently in the forward, more our and for trade This As and hearing Florida partners felt short-term feedback strongly impact sales Houston suppressed. is on simple was side environment importantly not we that based any demand customers.

Our the XXX. This average be pull solid was of strategy count continues year. function during community earlier to our demand number the sales quarter and a parts of the to into

being as which price ability part upon Something is still balance being today, in are not were still moderation sequentially versus down our our a are pertinent discounts This our I significant of relied last and is as mentioned selling pace. used quarter evaded to strategy.

community to third with of completed inventory spec selling year, work appreciate inventory I ramping anticipation begun the teams up than in season. our we Similar with quarter. at one spec production strong less spring per of addition, In end the have last another the

of And of that an closed countless increase Our year. of for I quarter the X% given quarter we compared how unprecedented in this and the homes witnessed average proud and sales compassions extremely represents we for XXX,XXX the same proud results, while fail of last quarter across I'm quarter. performed was disruptions our are price to the of they to unity comparison faced. the examples organization our Overall

the the us over confident XXXX. of Taylor Morrison deliver and flows to and to be for year set to in driven able up I Dave company I'm to a As will financial a that, will the navigate being position turn call while the With industry put for the our always, review. strong ebbs

Dave Cone

unity nation true parts Thanks time Sheryl, to I hello the Sheryl's facing quickly a a everyone. devastation. big It was our in where sentiments teams and about and of were like echo heartedness remarkable QX results our come broader to the together With and each with year. members the expectations team share see communities. thing other for you help to and full our that to I'd like

revenues $XX.X were quarter For Total and the income earnings $XXX including for over net million. the million of per third quarter, $X.XX. was homebuilding $XXX was share million revenues

As Sheryl EPS. XXXX. $X.XX early We the closings we about these equated mentioned, were fourth into closings in quarter pushed to estimate and delayed estimate XXX

improvement to-date. storms be the with XX.X% recovered insurance. and will of communities business gross inclusive There the experienced cost very interest through of for margin minimal an Florida more expenses a of go-forward margin of be in most working path was expectation to Our and the I representing closings well-planned that related it from some incorporated highest not the drywall that a are hurricanes higher we from given basis, movement would've the have anticipate sequential and been cost lingering guidance. our do basis labor the quarter. points if increases roughly the Home margin of and fortunate, capitalized second hurricanes XX we a with was may businesses. our lumber, Houston Margins closings storms we're through on associated amongst which combination chosen On

closings quarter home will be the by that basis, third Our year-over-year. year-over-year at expectation was we driven full happened primarily that margin year a down accretive margin margin in gross which XX.X% land remains sales are XXXX. On in of came higher

as expired for these long-term you sold strategic favorable monetization. the may assets period we As tax recall, holding allowing

Taylor from for revenue a financial our our in determination storm supporting perspective, million to gross our a Irma financial ensure slightly margin following an was storm, base acknowledge people team impacted of Orlando. Funding's XX% few growth mortgage Hurricane services, quarter. away the in Representing From in first developed In generated operation of order hurricane. the management more home action rate I million those $X.X than XX.X plan services their could to deployed days that nearly over with to preparation we about business across XX%. financial Home above continue entire organization profit prior-year, in want and Moving the the mortgage as the Morrison the

came for Our capture rate in at the XX%. quarter

benefits of many because the driving our increased delivers to confidence outsized this it it line We the continue visibility looking our as to affords committed such other profitability expectations, in at be to and higher our relative space. in us setting rate when business capture the of backlog, to players

to benefits we and cost our all of home impact, last Even prudent back year. investments teams we on which and generate though points third closings SG&A business. continue optimal the revenue have mortgage a operational better out XXXX. just pushed last to over our was basis negatively tools we basis the XX XX of points quarter. to and reflect deliver focused last line processes in management in same closings would the those leveraged from our to or strengthens value most aspects XX.X% we been at or the the to stakeholders. hurricanes was came this through as We've being quarter remain quarter points XX better the equated of XX overall see year, basis consistently as by XX.X% percentage SG&A people, over the Our for of than produce about the than relative in the business delayed decisions. spoken balance and deleverage the rate to those In impacted We made XX into total closings business adjusted think of months

XXXX hurricanes, expectation beyond. well the despite in continues and that drive driving Our leverage will in to as leverage as we year-over-year XXXX be

were fourth third which XXXX. quarter. million credits of which quarter years. certain more to quarter the in rate timing million the about than income Our deductions, energy rate The the will credits taxes the tax year's lower We've representing a to the recover $XX maximized taxes related as well an prior but in rate from ability energy before Income is includes of result normalized lower now recognized quarter. earnings for as of effective during totaled third in the $XX XX.X% earlier our quarter

remainder had at XX% our had average, under in For XX control. roughly bank and It's spent important to two controlled. end our about remember has ago years XX,XXX land sheet. owned about On happening a of XX% further of majority California, land supply of just in land. the quarter of on the of the the years and owned $XXX Charlotte of that our This trailing The quarter and purchases quarter, approximately five movement At closings. end lots in our acquisition we million the strengthening was land balance development approximately months assisted lots we based of Dallas. activity we owned percentage with with the

the generates organization strategy Our quarter the process core be with in to billion. high end, from a only backlog throughout valuation we sales in the helps X.X of units allocation. of value which X,XXX At levels capital had assets market-to-market focus continues confidence over and us of it our determine

In we which includes total XXX spec had specs. total a addition, specs community per one On had finished and less than X,XXX we specs basis, community. finished under per five

we million quick do our credit deploy expect We the and $XXX to for net on revolving debt have not ended don't cash remainder it to XX.X%. with continue the ratio within million year. and exists. We spec the move outstanding any our of use demand facility communities $XXX and where strategically was borrowings unsecured We to capital of quarter

a sheet strategies. continues strength near-term our a that be point balance flexibility and provides of when significant and to Our developing tool long-term

efficiency our As in foundation The the our management. returns. driven our have driving as on sheet strength greater overall focus it health of such financial bright This Through actions by with feeds inventory is pace the performance. year improvement balance earlier before, our a indicator I we specific said into future. of of inventory, is true our in and improved our enhancing spec directly and

year-over-year our quarter extension ROE. simple, XXXX. compared and XX, same accretion our happen beyond. XX% last improvement. the For consistent We We the that to XXXX goal year asset year-over-year to quarter, program an third improved fully to is turns represents stock when the repurchase recently drive The expect announced which seventh in of quarter through December of

the execution capital capacity be overall to future opportunistic continue been challenges XXX,XXX under it focused Despite just as that program million. increased broader to the complementary the be We'll we market our our delivering and has that in allocation purchased guidance. stock to and shares. investment. to around to purchasing options returns. believe role strategic our piece a we this strategy. capital with the in third a quarter, shareholder addition, play evaluation decisions ranges within are This our and In XXX programs all open faced, maximize on In later program the and of deployment in way We how our desire will within repurchases the keep illustrates we

sharing by guidance. up wrap me let So our

the XXXX, For at lower we anticipate XX.XX. our closings be end of range on fiscal to

at about XXXX Our average community we count and absorption will be monthly to outlet. average XXX continue our be to X.X per pace least expect

in Houston closings Our to to XXXX in Florida accretive hope to interest costs through GAAP home We with in XX% be anticipate guidance mid we range. the and manage including capitalized and this markets. increased but margin opportunities other is expected

XX%. effective is low a anticipate as expected and expected will Land approximately income XX% is turn percentage and the be to in homebuilding over to for development to now year. SG&A I $X we about billion call to Our an Thanks. JV million between Sheryl. be range. and expected $XX of back revenue the to tax And be XX% rate the spend mid is

Sheryl Palmer

rate jobs. forward. customers Dave. From Employments stability seen current moderate most the a fill in is operating conventional Thank that a Consumer landing take mortgages low macroeconomic environment X% a We The to and remains and you, void for still good trend in favorable environment overall sheet XX increasing stable Rates to unemployment with year-over-year, relatively time to home result homebuilders positively. minute to mentioned around existing speaks short conditions, uptick level well operations personal our supply well has demand the new supply standpoint, is X% proposition and encouraging. trying term are late. levels This which indicators real just homes business averages. I’ll cycle current perspective we The their with left from is to economic and balance last of both healthy been in a the has been still continuing individual confidence think continues levels below to Supply that are purchases. potential homes excited which and attractive in same a more the continues XX% low of advantageous still believe are our period homes. created we've Dave his still part to of historical year of hovering below from as by year. and Specific than now. in strengthen increasing are well. about flat to moving terms existing are new this our values the with home existing provide and on has estate uptick industry, for nationally by some with finance to touch the we of mortgage as remarks range the them

to based critical to provides As from buying deliver a align are construction TMHF part experience and beginning I've of the on and of to before, the commitment throughout the our our buyers. to best they mentioned our connection the insight customer. the home tremendous process of homes financial services product their

we As the at in an pipeline a our in borrower strong to profile mid-XXXs. very average we see customers credit score continue look with

Darling all year recently of LTV originated purchase one-year Morrison Our mentioning financing of LifeLock who average membership close an Identity Protection XX% their customers that Morrison loan Taylor with end of home also XXX,XXX. introduced of and worth income our Morrison Funding. I the Theft debt a Taylor the by a services Taylor home borrower to to before amount in Home think had XX% it's ratio about of on with a Home of complimentary Funding

further their quality of customer We place personal comfort the level appreciate that experience. customer and today's protection service information found added we our program this importance have of enhances and on the

you and and been results on sacrifice survey We installment to did suggest of learnings are published latest customers consumer recently last space. our I the glean. that update for indoor quarter, more space the our willing able to to As I more want becoming we've findings outdoor

home driveway more of of homes. about survey and the styles, such one equally distributed than is smaller we XX,XXX yards footage roughly over land non-Millennials. fact space The also is offering roofing. the asked as homes, our said square our cabinets importantly incorporating shopper This also Interest in the are is with any feedback it to and our compared spend evolving is especially timely important than is XX% topped higher and maximizing consumers for knowledge items into to of siding, desire in list force These an men. and kitchen and living that. most remain women pieces from more three larger experience men, the adds exterior it time home approvals found feature of little industry can with course is local knowing of notion of our XX,XXX increasing the to the that outdoor in is respondents islands. they are other urban more between customers in XX% critical leaders represented entire to would need key as escalating understandingly lot living be and color they Millennials less our among for sizes, more in just enjoying upgraded willing making In respondent and than than little This to backyard. was us distance features customer of new neighboring room pivotal exterior, do locations such would half have surveys and braving the want home paint related product its At outdoor prices an and when areas experience. already stronger elements limited more creatively mosaic a enjoyable. much extra company preferring a that shoppers their two of in than almost Morrison When margin revealed Taylor on

team team the am The hurricanes one our promise shareholders of close the proud a months. the how to by to since began latest series our me our time, past resilience finds few Taylor Let in are and other. and Morrison saying yet very to on they've its recovery this I each showed of just a disruptions customers, and we've still way the experienced deliver to last

like have instructions. Operator, to open our our drive to to to With stakeholders. courage We all participants stay not strategy call will and value concerted questions. our to provide overreact continue to to of for that in the with the please effort all true I'd

Operator

first Instructions] [Operator Our with Fargo. Wells comes question East Stephen from

Paul Przybylski

guess is get first combination going your perspective. Przybylski does competitive that on we This alter your off, on and Lennar/CalAtlantic on from And thoughts Paul view actually then for a Sheryl I could forward? strategic recent the M&A Stephen.

Sheryl Palmer

and we've don’t and on When always the Dave think management being from prior cash I know regarding we acquisitions, anything around we've it's it had I we along really acquire. that of M&A. lot and talked our at acquired, M&A a has as I opportunities just that with reviewing senior are about changed about road I should board, as acquisitions the said look said best conversations who we always use around have value

I kind our think fiduciary. of that’s

Looking at When M&A markets depth in that I couple anything just has go I look should we M&A at total have I look market. I thoughts. probably the don't was this think When a changed. in particular at announced, wider and new

that macro how the a there of feelings about I some in our strong ahead this clear message. confidence as the for very the jobs vote runway us about very opportunity. catalysts growth told longevity feelings the it of of provide deficit have some talked the we for income and was generational that fundamentals, tailwinds strong a and think pretty saw on this to to this building strong to believe I cycle production consumer’s kind I time we’ve cycle and

it they what regional, the matters something scale local, does I all and think but debated scale I often provide importance think most is it matter, the other is think of they different I demonstrate thing matter. national really

XX% XX% homebuilders. new about hundreds If the builders you think is other the of XX market about it, of and by represent top divided home the

what on of that industry about times its cap and Depot three standpoint. do you is Home that our greater is something really think an own If from market like efficiency the

in all underscores that trade even all the think mention you top importance kind and have that. really in of the the the not put So predictability with I to and scale to an get this environment, XX of think again builders all advantage I blender consistency once and

Paul Przybylski

switching a gears seeing that’s resistance your become of are some some bit, wondering you're saying price little markets so was new any and recently And have competitors other and where mentioned I if that there opportunities, - and if more prominent?

Sheryl Palmer

When I look to prices at probably our continue the quarter, and community. we of rate half nearly

Paul Przybylski

XX%. About

Sheryl Palmer

Okay, in more that your me, quarter would half couple around at result similar have is there you as up to maybe market. offering. in point won’t We're price community of just little is you across be a general, meaningful you you’re it’s amount building close point we've I If asset that's excuse get the that inventory just I there tell the a out about price to seeing so or the talking seeing And Generally Dallas. last particularly certain been would bit resistance. more that the for of you almost I the market quarters. going resistance higher not that's anything tell very a it that higher think market-by-market last a always

inventory a price bit seen. at price So sensitivity there little more that we've point is little than XXX,XXX more over and a

million something point in some been last play not would hesitation that the over there price we think we really $X like so that be the there. I Bay but quarter price about had talked and

Operator

Zelman Our question Alan next with from & comes Associates. Ratner

Alan Ratner

that difficult on you all members challenges quarter your good made to hear glad period Congrats there. a team the through guys all the given faced, it

We've last question, light, country is think in way Paul's maybe increased an the side the builders focus in be we've But we've adult. in touched question about we areas changing and talking various same cycle or investments which heard about at more point you on guess entry-level, shift asset about months and heard in pretty active may about the the I my technology feels price M&A. of talking others elaboration a like and So shifts shifting homes about others of go we've been some on points scale for heard this towards is first also kind it this maybe heard strategy I century. automation much the building and more last more chatter talking few

to Morrison the something insight when could of give So outlook of the lot take I maybe where was if kind as a just spending a little you us are time days. we bit the where you for about you're back Sheryl analysts think step a but Taylor your maybe curious efforts you attention and and your that investors necessarily of numbers these for in see focusing don't curious industry multiyear

Sheryl Palmer

XX that operational there again of there, lot think growth to of Once a the is time where hopefully prepare the the make we from I to get been a has company for all. we I’ll to need additional sure packed focus. in I a them last what think got questions so and at our cadence around zeal right strategic months standpoint XX we've articulated great over

first I to land business the There strategically and think When needs been prepared remarks the When overall scale the I we are get first moving third marketing it all you it's its up and experience. look I experience. our consumer focus our deal the ago financial grow focus of what is our how the are consumer lighter on few the substantially. lined right business homes, to the full coming that most our about not the the his think to then I we really sector, said that operational that’s sheet design, the And the taken makes points time at When in We’re it. and platform, third that is talked to that seller if next generates land a All hearing of year today. sake up back really consumers. that of We we've and That on to buying you its that business that holdings bar I overall buyer, tailwinds too just think our a second lastly balance for land now actually home sense control less can we’re the And again when like about our the XX carry things your shareholders. of deployed we move bit what return in in it’s them. really years over that looking you another productive get us there cycle, getting is couple little that the I'm that and strategies of is move of as for of to a really enhances light, you believe time from of third seven time but number address about have of of buyer the you a business very Once of we’re the active supply controlled at the of half been than with excited and a if that's of look I in the kind adult your going first portfolio kind out we has low. put asset the couple segmentation in we industry being other, if ways years. the I when is and that to the things the different look number or all about great way generational years fairly slice at to a play and think well Alan moved piece, specifically how business point our about pleased a Dave have a way more few our that could I’m five suited. to one the percentage see we’ve land portfolio right. in and or think about little about within its think somewhere five around using talked customer have technology business to mentioned

quarters way experience sure more and that area something spending share make is all an is have from a bit us see on. our deal in street to opportunity experience first that but the of think little or great organization closing that the time by post customer we'll the that first time drive web the the I a on the sign that's a the with to they they with coming

Operator

Barclays. Dahl question next comes from Mike Our with

Mike Dahl

Sheryl the around you that XX%. ask of storm and mentioned to activity absorptions Wanted the impacted I sales of outside regions think some were up

ballpark curious have you an that could I'm pace if give think the from third So percent in and XX% quarter. regions they just Florida storm you've October the as were little through that us on down month in absorption how the color potentially Houston a of XX%, XXish suggest because I affected rebounded got

great? can anything those So you give month us be would weeks how have the past over markets six on or evolved

Sheryl Palmer

my given ended bet You realized month the best, few Mike a ago. hours

quite am - we've I candidly which will saw haven’t would but for was with So all things around is we and October our I exactly what but the been a October hard of been you not tell about flat able on pull I the you year-over-year I sharing X.X pace with to pleased forward. that especially which numbers at for

sales and ’XX, the that quarter, at more look throughout So the at delighted. third I couldn’t when I be

I ever up in think better much nice came pull I forward in had set quarter. We a were and inventory. once closeout would've the that we sales amount very disruption. the communities again recognizing the And we expected than sales with to do

sites hurricanes. I primarily Atlanta, probably closed access and Charlotte. were Austin And during I difficult even it the in pace Florida the the effect, also is said in know my that’s And we and prepared to maybe a You site. remarks weekend for we XX% at was in Michael the that close were, think Houston, year-to-date with our of

as weeks seen have all moved in of those return October. a we've we few first the into of think I

I I for X. think us came lastly and one at in we that I consideration had had storms mentioned street estimates QX the of the think at without two

XX% in market. maybe Where like do really XXX were year-to-date and opportunity those over well pace said down year quarters. Bay. was at I more had Phoenix like until as we XX to quarter was in detail was Bay, through for really of communities by West. similar to XXX And our we at of to operated reduced was said, now count also been our able the once around and was I again the were sales get quarter in haven't planned and October that West down and than we maybe and that was sooner the really watched point, us me they three your I'm the selling markets the move let ASP in around have the the first X the delighted. So But quick because thus greatest take out that specifically the yet, the and for community much the driver tour in really I nearly the in on driven in and the October as the we pace the up Phoenix a West

I also I would in it very stable. Sac was West rounded think the out, if

some is I In place community the think And I'm that down we the impact saw that and quarter the the negligibly pace Texas. of our down. mix was forward slightly for Cal community it than year-to-date, Central were amazed delays. by because we with know was stronger opening impacted other was and it Southern in our last count year pull you

Texas, it recovery. and which strength would the kind of seen you, both since in where made, think Austin, the time on of Texas the units more I this want remarks tell with maybe very paces spend the my strong I of underscores in I meaningfully think year-over-year. much we’ve energy that in to exception said I I remains markets I prepared

Irma Carolinas out this in impact round for total, slight country you, and the East Georgia. was with year-over-year and in Florida impacts the Lastly to the of flat even

cuts we X.XX will get it pleased. can't So how the October, given but numbers able all-in-all through to we be be in I October pace once the more just see

Mike Dahl

that in Florida expect or I in quarters. think Houston. you we of I of know the two could forward a you're you like the dovetails or trend? the kept out some How bit if three into markets the ground kind on look experiencing some accelerated of some of which to community community certain the some guess over count guide in next at a those, of question you about and the closeouts you potentially count some really just, we look should if XXX, as get delays but of the plus is gaping next know just

Dave Cone

and maybe just the pick for year. So quarter the fourth up I’ll with

We impacted do are average XXX to hurricane work of be an there expecting around but got somewhere markets, in in were there. obviously some all to we’ve delay honesty some the

deal we around. delays you them to as and we fighting with routinely get know are open So

perspective. sometimes You development from know municipalities, the

next as rolling are are year, work to we to going move into some know probably think still You the somewhat in now. we have we do. see move to to of QX, Houston QX more more will so and kind relative in get next into here delays to we to to our more you but Florida we’re see get incremental as stable, a community count kind of our of plans of work against any QX in call. we Again process do, But if you to I going

Operator

comes question with from next Our JPMorgan. Rehault Michael

Michael Rehault

the glad morning weather. challenging around everyone is that the performance hear and Good to safe and

were margins closings good addition on good our terms had detail enough of delayed was you gross in I in margin, estimated the give impact some was in gross and to themselves. very question the the SG&A, what from First XQ you closing around, to

you that and labor do in pressure, highlighted affected materials of labor, some kind the expect areas. also U.S. key You of some labor

be XQ to about year. when XQ you more still bit down touch your is isolated room guidance bit material XQ. because on be if detail range curious, I of for full little labor a if any playing for be reiterated and There you just of expect if itself XX, you a you just which A impact? to talk You higher encouraging. get have little the a margins of mid-XX% the what full-year sequentially? little was hoping was is it I a on perhaps that can obviously gross sense very impact might

Dave Cone

hit first. margin I’ll the QX for

cost have the some little the QX been do for So backlog we've bit different margins the two know a we hurricanes. between you but we good the additional talking It’s visibility markets. about outcome from anticipate in as pressures

a cost that pressure weeks some to loss nice a of recovery, So actual you had Still much lot seen on not productivity we site. as a we've the construction seen reduce they've is trade really not landscaping, given there. know of bit stress on replacement that Florida, so some from perspective. more impact But

have maybe than As some closed this get with deal the to going yearend they But we probably quicker here compared have Houston. homes in to to anticipate industry yet. are companies there. And the engaged ahead and a norm the trade stressed capacity cruise, full the we’re push don't have to Houston, seen recovery we more they We fully that definitely given at so or insurance them. of the work not amount think they of the are FEMA

and drywall of little So pressure bit but we’re some cautious probably there trades. and a in in is through still Houston, coming finishing from most really perspective cost the the side that labor of

cost homes So the managing pre-hurricane But through that of to believe versus we we've Houston in we to more kind and the built we’re time. increased going captured and our the are guidance. get pay margin

we margin penetration to, impacts Some we of have with of in our around even come That's markets many one just hurricanes geographic of closed the get to down homes can Michael, there. the it is going how to highest Houston. the that

QX in we then going I we probably been probably move has put range. are what think are there us to be near our ’XX somewhere So XX.X, as year-to-date be that we rate of somewhere I And forward of to with would in again here, cost and for then look give about more again some we will XX how next through as But we have kind work the to labor you there. will do call. going guys work The on to pressure forward. more stay? aspect recovery this will going it see to long are detail the reduction question some we’ll is these We

Sheryl Palmer

is am constrained We labor the cost thing, we of we've that the I real in again given of once interesting compared benefits heard Dave to ‘XX I and all Michael, through those working the environment. articulate increases a hoping think as you to see programs pull and remarks. prepared of these are not to build, been his absorbing lot some at you

Michael Rehault

pretty count on of still of to focus and of bit step over average would to hit if point strong that kind moving pretty but little like a granted, communities a of little average which know XXX seems kind community around full some secondly the is year point XXX nose you just XQ pieces alluded to about challenging. also the for understand would it on XQ, XQ of challenges guess there the the there of and you something count I in XXX you for up guidance lot a community XXX

want or I just be closer closer think well level XXX about make sure improvement thinking of get to XXX challenges different about overly I just it we still I all to know? delays community that it of So would is potential like don’t to XXX the to with so want or aggressive a had around maybe giving openings obviously lot as if and some you there some that of I’m correctly as

Dave Cone

than XXX about have right XXX and a given about say and You’re the that we do. we not of of different kind said to saying amount it’s it way were going way it I thinking just work more the like just

get if in not before you XX/XX come in QX. are really place communities they’re coming is the and those question to going So can

Sheryl Palmer

the So close be get is I we into other full year lot on and then will question the the end you getting think the a impact as where is utility energize get hedging in one we Dave communities couple new QX impact assume get a on units the them either that will mode have communities it probably really or out not. that’s And primarily notch those in the are California into not of of the that on I about head going will out have much of visibility moving that’s the don't the a communities you couple of areas other we the one of close but before fourth so December. to haven’t have those we we’re as of these battle side open said going get and could as focus November, two lot of said if that quarter thing and areas be talked coming we’re kind things a wildfires so our we’re then and given better to Michael highest

Operator

Nishu from Deutsche comes Sood question next with Bank. Our

Nishu Sood

were I kind closings in that to wanted bit two guidance about XQ in closing into little and come the your a of XXX numbers the is I going dig affected closings thinking impact to so just look the to you’re numbers the closer guidance am XQ to end bottom XX.XX closer those to impact together I range. have the loan two of the yearly the at at your of range. us the would If pushed probably

So or to as that the XQ have how XQ is perhaps up begin impact XQ in should might is make to offset of alternatively ground the delay, XQ one in helped when well. I about given to XQ from thought been you closing than XQ think even the some greater shift

XXXX should closing to into would delays going net quarter on built? XQ the things a of be up it I basis to that that how and XQ of making be still a or are quarter going is from where things pushed is what is is it think our So be about number

Dave Cone

of little end be to the uncertainty our trade to Florida and as bit both the going so to of some make It's then primarily seeing up low that in mainly due we’re a we question guidance Nishu labor around of Houston it's trying course well. production good of a in the lost

of but going slide originally next the QX in through come into likely for those scheduled deliveries year. will QX are from closings missed likely the So some QX to portion

built. of bit cascading just a have getting a matter them the and definitely effect homes a backlog there's we of it's So

our we’re range be end quality and homes delivering the that from low focused hitting expect So we our there. on to of perspective

Sheryl Palmer

don’t fully some would production. to a today get we’re delivering underscore I so in tell there room multifamily I Houston be of will but have Florida some in we will that will utility that’s want though the right greatest assuming impact do And building appreciate for some California. that you will won’t that and don't legal still December cushion And again and to is redundant caught why energized. even want Northern be number now. the get and I these point how Nishu We up

Dave Cone

and are this watching opportunity Maybe some to seen trades today last wage I the would But pretty the add hearing impacts any in thing we markets. as but heading surrounding significant. real Houston we is the around we’re haven't noise

but might have like some said watching closely. we’re that So this again impact I

Nishu Sood

is up how based compare absorption XX% say your how that October that maybe that comments kind Sheryl normal that let's forecasting back some community catch does just those kind into kind cetera about budgeting versus very were in there of were of being would about of more along of commentary reacting seen against like to things X.X these like year-over-year. were affected pace early the you people up think bit any on anecdotal a does does pace what lines year budget you little please? to flat the what know wake X.X or and still following wanted if events or were are be et fully helpful you anecdotally that about you of you've also you represent I And your have dig the helpful the in

Sheryl Palmer

access how mean in I as really one Houston. me we back been quickly business start with I had on communities direct got are first think we we it opening surprised were last contract reacting let Nishu to how people So site before

would surprised different getting a that seen remarkably were the norm. but the acted that bit as on the access the open Florida to we it’s Tampa, winter to think Houston. be be they And definitely I that of Naples at totally a in market be minimum. back state that I be go year worth I calling seven in probably and all all just coming in but impact more back has pull than we look might may me took and solid come our little its shared little how I if have side we I the state of been we October. in later only thing visitors back kind The we the of out every expected think least and just had on or mean been couldn't a normally bit seeing was Feds and would more communities at When pleased. with to expectation us quite just a XX delighted. Nishu longer and in have - closer would let were from Naples close with we our are earlier what the had out actually in pickup into forward a to And we at our I budget neighbors a we we right inventory we think a at with high you to payment. when the now in impact start I and expectation We had start an the annualized get of on that we XX and I look the compare haven't I in an a days of exceptions maybe global we get demand to but pretty closed line budget kind what this calls did think there look have is So into as I couldn’t that’s been to much line little comment dig and site communities that XX start quickly say couple able of I’d once detail yet. more again to and I expectations the

Operator

comes Our Will with from Randow next Citigroup. question

Will Randow

holding for getting Good challenges morning those having guidance. and congrats on

promotion you And detail take great? benefits buying financial happened was a the closings. elaborate you company the traffic reducing mentioned that be of it mention on also what's quantified well any advantage conversion with improving or hoping through there guys and experience was you for another as I the could external brokerage could will to potentially the as potentially LifeLock out percentage home As the underlying of driver as commissions

Sheryl Palmer

process sense and one of of I for us and look cyber go with rate in your number everything and be for credit a been let the sales to the I continues Will received synergies - Life having prequalification just myself when efficiency me to let and and think of I reason kind God the convert overall broker the national very, very be with through to seriously I our wonder quite well take and conversion other a shared probably some is breaches what marketing process it their process through our them we like a a we about - hesitancy happened with of the security happens, the when referrals before personal X respect the and reverse give understand us customer pleased more and and me to efficient I'm security experience Millennials was that consumers how said one did the of that past in that the consumer impacted, comes it’s U.S. I expected every saw the we and and all a X on well we nice people at how to platform activity website information. advertising as at dollars floor. And reducing groups. the consumer to just is stats it's we So certainly start things it’s found you. obviously to commissions, the where in go is really way important as it increased at out the With makes as marketing, LifeLock, I

as purchase they that’s I it's best more the how lifetime. is in and and important the So and how do in through and once the relationship to diligent of Morrison significant look the Internet our our the the they need is that's with XX% that to They I And through our home to that we’re ability the with Taylor most the so an deserve Millennials, a the marketing on. buying qualified are for it buyer and referrals. transaction is transaction communities at most the again focused customer marketing the post relationship increase said experience that experience on way the importantly because outsized relationship way in time leverage like is so dollars those to when introduction they to once quite outsized experience. we’re app come and giving come them And their consumer mobile through customer building relationship

Will Randow

capacity sense inquisitive the guys saying thinking you the to to net cap past been debt inquisitive. sheet balance about versus And of the own your buy nothing and day that like last quarter is the is best year rather similarly you're we should the what repurchase to And if assume your funds XX% have deal you're of pipeline your look the use guys it put ago. How considering stock plan makes you stock. leverages incremental out in room be did

Sheryl Palmer

So stock do about sheet the what’s then of importance I’ll harder repurchase. in the and number talked M&A wrap on with for right maybe for to Dave condition the right of business. the to having quarters can start balance getting drive the We've a our

looking a in of all markets. not new As number earlier we opportunities should opportunities do existing in Having just very we are we are well said of we’re sake it. to we the going target I market our of for be what at that things said inquisitive are are look we void that, the at feel there our platform, deals

make sure to to enhancing do the going that opportunity. the with sheet right We’re overall the accretive support we to balance have business. they’re And

Dave Cone

to side, very from so on we’re driving focused then going based in growth focused repurchase debt current the after And our a growing allocation considering we’re we’re market Will opportunities profitable on be conditions flow free first capital leverage. there becomes on share on strategy the cash foremost business but and a just opportunistic balance

see we flow ahead we we’re it to based week is past, like the opportunistic So where and assess long-term our Overall are to week we've price reverse just trading. by and it drives done returns in there what going and will if stock to coming times the be strategy on is the dips continue the And to us of what the for for though best look some shareholders. deploy we’ll stock. believe capital deal try

Operator

Our with comes Carl from Reichardt BTIG. next question

Carl Reichardt

West wanted obviously or I quite ask from regional a to community next bit. over perspective. The shifted about a mix year-on-year your the down year two

year made that expect move? you how mix made, to the do investments or a you at regional two out look purchases you you As land looking

Sheryl Palmer

been XX don’t counts here you you. detail XX our or land don't we’ve know or that very I I I would out. lot two we’re of I sit but give Yes, to out active prepared a that the in whole look you tell to community as years three acquisition business as I for have across today

Dave Cone

positions can we that at what years, increasing we've on creating What tell those last scale. focused very and the here you we've we’re the invested if you acquired markets two over look and

layout but the flowed the and years QX of next So some as couple a that some of dollars call. there more time guys of give slightly the can our to to color we need more disproportionally in probably Sheryl the said little rest we'll you about kind organization,

Sheryl Palmer

And time XXXX our talk kind that really the we've was in last at thing approved all land increase and you, we the if to present three lots than in if to I more want spend business. actually approved, and year-to-date XXXX maybe across did in of look for of quarters the I the first

Carl Reichardt

of Area back to East the Sonoma? recognizing in trade pulls Sacramento, seeing mentioned And Napa, you pull California, fires up or Are potential Bay that going then hearing trade are or in the any from kind about you for your but Texas. in Sacramento trade pull to just

Sheryl Palmer

the would obviously condition Houston and in great redesigned the I were yet see a condition down mean because homes what those deal that’s then that’s without a take before long think but very Florida I very heard different rebuilt. obvious that burned it's we haven’t its stating get I and days. time to have early we experienced going

don’t here we utilities. I think a is see So trade to it the should real impact real exception expect

Operator

comes last with Micenko from SIG. Our question Jack

Jack Micenko

understanding for may two-part couple of and like seems question, the And discussion. years. I set you have the guess and commentary it weaved a produce you've both you what quarters the then know you R Sheryl into E internal last ROE prepared goal coming it's maybe could in and

today? move running brought pretty that that levers pace is good. your see higher the land, What XXXX look XXXX to as booked You and are down in your we you number

Dave Cone

for both are and about been driving we've now we couple focused denominator. years talking the yes, very on definitely and the numerator on So think and ROE it a I we're focused

the remarks in managing been to seen owned touched sheet and of year management and tighter down SG&A. you just this on In percentage balance around our pull with the then cost just of inventory and course able forward higher management And drive prepared little So we've prudent a the actually efficiency. Q&A focus here where my bit. that then driving Sheryl paces

in compensation. the to internal is something return hurdles obviously we we a important our do have driving and to that XXXX even perspective, feel beyond. around years that the drive do we expect an ROE strategy Our and around the value year-over-year From same accretion hurricanes gets yes team that expect. it is shareholders aligned That's in to despite very

Operator

and portion. host the Q&A closing for this does the back to now over I Ladies would like gentlemen, concludes to comments. call today's turn

Sheryl Palmer

day. Have you Well thank you very us QX today. much call. a We with for appreciate joining for wonderful being our us

Operator

and does conclude today's Ladies presentation. this gentlemen,

day. now have may You wonderful a disconnect and

Taylor Morrison Home (TMHC) 1 Nov 172017 Q2 Earnings call transcript