Taylor Morrison Home Corporation (NYSE: TMHC) early Wednesday reported net income of $67 million, or earnings per share of $0.63, for its third quarter ended September 30. The gain was down from from $0.84 per share in the prior-year quarter. Wall Street was anticipating a gain of $0.65 per share.
Among the results:
Average community count was 346, which resulted in an average monthly sales pace per community of 2.4 for the quarter. This compared to a sales pace of 2.2 in the third quarter of 2018. The company ended the quarter with 5,295 units in backlog, a year-over-year increase of 19%, with a sales value of approximately $2.5 billion.
Said Sheryl Palmer, chairman and CEO of Taylor Morrison, "Although declining interest rates have been a benefit for our buyers, we believe there's a lot more beyond that giving consumers confidence, including rising incomes, strong stock markets, near record unemployment levels and improving equity in owned homes."
Palmer continued, "In mid-September we released our July and August sales sharing our year-over-year order growth of 30% for the first two months of the quarter, nicely illustrating the buildup of strength that we saw as the quarter progressed with September up more than 60% year-over-year. This growth in sales was driven by strength across all regions, as well as price points. All three of our regions had sales orders up at least 20%, led by the East which was up nearly 64%."
"Having just passed the one-year anniversary of the AV Homes acquisition, it's clear that the increased scale we gained through the deal is having a material impact on our results," said Palmer. "Sales paces are up, margins continue to outperform expectations and we expect leverage on our overhead in the coming quarters as a result of the transaction. All in all, we are delighted with the new AV team members, assets acquired and the positive timing of the deal, which we believe positions us to capitalize on a strong real estate market."
Home building inventories were $4.3 billion at the end of the quarter, including 6,709 homes in inventory, compared to 5,478 homes in inventory at the end of the prior year quarter. Homes in inventory at the end of the quarter consisted of 4,198 sold units, 462 model homes and 2,049 inventory units, of which 385 were finished.
The company finished the quarter with $224 million in total cash and a net home building debt to capitalization ratio of 42.7%. As of September 30, 2019, Taylor Morrison owned or controlled approximately 54,000 lots, representing 5.4 years of supply based on a trailing twelve months of closings, including a full year of AV.