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Table of Contents
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 March 31, 2022
OR

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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par valueTMHCNew 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 April 27, 2022
Common stock, $0.00001 par value  119,638,931


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TAYLOR MORRISON HOME CORPORATION
TABLE OF CONTENTS
 Page
1

Table of Contents
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

March 31,
2022
December 31,
2021
Assets
Cash and cash equivalents$569,249 $832,821 
Restricted cash1,578 3,519 
Total cash, cash equivalents, and restricted cash570,827 836,340 
Owned inventory5,699,709 5,444,207 
Consolidated real estate not owned 43,418 55,314 
Total real estate inventory5,743,127 5,499,521 
Land deposits260,861 229,535 
Mortgage loans held for sale229,651 467,534 
Derivative assets5,501 2,110 
Lease right of use assets85,582 85,863 
Prepaid expenses and other assets, net271,180 314,986 
Other receivables, net155,660 150,864 
Investments in unconsolidated entities173,231 171,406 
Deferred tax assets, net151,240 151,240 
Property and equipment, net207,918 155,181 
Goodwill663,197 663,197 
Total assets$8,517,975 $8,727,777 
Liabilities
Accounts payable$225,312 $253,348 
Accrued expenses and other liabilities416,881 525,209 
Lease liabilities94,405 96,172 
Income taxes payable15,350 — 
Customer deposits540,916 485,705 
Estimated development liabilities38,522 38,923 
Senior notes, net2,452,311 2,452,322 
Loans payable and other borrowings395,400 404,386 
Revolving credit facility borrowings— 31,529 
Mortgage warehouse borrowings200,662 413,887 
Liabilities attributable to consolidated real estate not owned 43,418 55,314 
Total liabilities$4,423,177 $4,756,795 
COMMITMENTS AND CONTINGENCIES (Note 13)
Stockholders’ Equity
Total stockholders’ equity4,094,798 3,970,982 
Total liabilities and stockholders’ equity$8,517,975 $8,727,777 

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
2

Table of Contents
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
 Three Months Ended
March 31,
 20222021
Home closings revenue, net$1,644,409 $1,363,429 
Land closings revenue15,610 4,889 
Financial services revenue35,199 44,065 
Amenity and other revenue7,906 5,429 
Total revenue1,703,124 1,417,812 
Cost of home closings1,264,974 1,110,242 
Cost of land closings14,364 4,027 
Financial services expenses24,214 23,999 
Amenity and other expenses6,444 5,103 
Total cost of revenue1,309,996 1,143,371 
Gross margin393,128 274,441 
Sales, commissions and other marketing costs89,123 85,952 
General and administrative expenses68,142 61,553 
Equity in income of unconsolidated entities(1,831)(5,661)
Interest expense/(income), net4,252 (119)
Other expense, net542 975 
Income before income taxes232,900 131,741 
Income tax provision54,439 29,298 
Net income before allocation to non-controlling interests 178,461 102,443 
Net income attributable to non-controlling interests(1,758)(4,422)
Net income available to Taylor Morrison Home Corporation$176,703 $98,021 
Earnings per common share
Basic$1.46 $0.76 
Diluted$1.44 $0.75 
Weighted average number of shares of common stock:
Basic121,186 128,883 
Diluted122,657 131,246 

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
3

Table of Contents
TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)
 Three Months Ended March 31,
 20222021
Comprehensive Income before non-controlling interests, net of tax$178,461 $102,443 
Comprehensive income attributable to non-controlling interests (1,758)(4,422)
Comprehensive income available to Taylor Morrison Home Corporation$176,703 $98,021 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
4

Table of Contents

TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands, except share data, unaudited)
For the three months ended March 31, 2022
 Common StockAdditional
Paid-in
Capital
Treasury StockStockholders' Equity
 SharesAmountAmountSharesAmountRetained
Earnings
Accumulated 
Other
Comprehensive
Loss
Non-controlling
Interest 
Total
Stockholders’
Equity
Balance – December 31, 2021
121,833,649 $$2,997,211 36,828,559 $(760,863)$1,688,815 $689 $45,129 $3,970,982 
Net income— — — — 176,703 — 1,758 178,461 
Exercise of stock options101,076 2,356 — — — — — 2,356 
Issuance of restricted stock units, net of shares withheld for tax(1)
378,852 (3,621)— — — — — (3,621)
Repurchase of common stock(1,948,187)— 1,948,187 (58,029)— — — (58,029)
Stock compensation expense— 6,863 — — — — — 6,863 
Distributions to non-controlling interests of consolidated joint ventures— — — — — — (1,752)(1,752)
Changes in non-controlling interests of consolidated joint ventures— — — — — — (462)(462)
Balance – March 31, 2022
120,365,390 $$3,002,809 38,776,746 $(818,892)$1,865,518 $689 $44,673 $4,094,798 
(1) Dollar amount represents the value of shares withheld for taxes.

For the three months ended March 31, 2021
 
 Common StockAdditional
Paid-in
Capital
Treasury StockStockholders' Equity
 SharesAmountAmountSharesAmountRetained
Earnings
Accumulated 
Other
Comprehensive
Income
Non-controlling
Interest
Total
Stockholders’
Equity
Balance – December 31, 2020
129,476,914 $$2,926,773 25,884,756 $(446,856)$1,025,789 $(1,166)$89,209 $3,593,750 
Net income— — — — — 98,021 — 4,422 102,443 
Exercise of stock options349,675 — 6,320 — — — — — 6,320 
Issuance of restricted stock units, net of shares withheld for tax(1)
357,213 — (4,664)— — — — — (4,664)
Repurchase of common stock(1,447,309)— — 1,447,309 (38,418)— — — (38,418)
Stock compensation expense— — 5,682 — — — — — 5,682 
Distributions to non-controlling interests of consolidated joint ventures— — — — — — — (7,961)(7,961)
Changes in non-controlling interests of consolidated joint ventures— — — — — — — (1,588)(1,588)
Balance – March 31, 2021
128,736,493 $$2,934,111 27,332,065 $(485,274)$1,123,810 $(1,166)$84,082 $3,655,564 
(1) Dollar amount represents the value of shares withheld for taxes.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5

Table of Contents

TAYLOR MORRISON HOME CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 Three Months Ended March 31,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before allocation to non-controlling interests$178,461 $102,443 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Equity in income of unconsolidated entities(1,831)(5,661)
Stock compensation expense6,863 5,682 
Distributions of earnings from unconsolidated entities2,058 3,162 
Depreciation and amortization8,841 9,636 
Operating lease expense6,913 3,969 
Debt issuance costs amortization191 118 
Changes in operating assets and liabilities:
Real estate inventory and land deposits(286,828)(356,519)
Mortgages held for sale, prepaid expenses and other assets171,618 (85,270)
Customer deposits55,211 110,581 
Accounts payable, accrued expenses and other liabilities(138,247)34,208 
Income taxes payable54,211 33,343 
Net cash provided by/(used in) operating activities57,461 (144,308)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(5,389)(7,824)
Distributions of capital from unconsolidated entities— 7,451 
Investments of capital into unconsolidated entities(2,052)(13,102)
Net cash used in investing activities(7,441)(13,475)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable and other borrowings18,287 36,868 
Repayments on loans payable and other borrowings(26,688)(27,580)
Borrowings on revolving credit facilities32,548 — 
Repayments on revolving credit facilities(64,077)— 
Borrowings on mortgage warehouse facilities562,024 697,398 
Repayments on mortgage warehouse facilities(775,249)(643,854)
Proceeds from stock option exercises2,356 6,320 
Payment of principle portion of finance lease(1,332)(1,325)
Repurchase of common stock, net(58,029)(38,418)
Payment of taxes related to net share settlement of equity awards(3,621)(5,288)
Cash and distributions to non-controlling interests of consolidated joint ventures, net(1,752)(6,971)
Net cash (used in)/provided by financing activities(315,533)17,150 
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH$(265,513)$(140,633)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period836,340 534,109 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period$570,827 $393,476 
SUPPLEMENTAL CASH FLOW INFORMATION:
Income tax (payments)/refund, net$(228)$4,592 
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in loans payable issued to sellers in connection with land purchase contracts$59,830 $82,378 
Change in inventory not owned$(11,896)$(64,916)
Net non-cash distributions from non-controlling interests$— $(990)
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
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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. We provide an assortment of homes across a wide range of price points to appeal to an array of consumer groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up and 55-plus active lifestyle (formerly referred to as active adult) 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. We serve as a land acquirer, developer, and homebuilder while Christopher Todd Communities provides community design and property management consultation. In addition, we develop and construct multi-use properties consisting of commercial space, retail, and multi-family properties under the “Urban Form” brand. We also have operations which provide financial services to customers through our wholly owned mortgage subsidiary, 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 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.

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, 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 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 first quarter of 2022 as indicators of impairment were not 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 purchasing, vertical
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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, an undiscounted cash flow analysis is generally prepared in order to determine if the carrying value of the assets in that community exceeds the undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, the assets are potentially impaired, requiring a fair value 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 months ended March 31, 2022 and 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 March 31, 2022 and December 31, 2021, we had no inactive projects.

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 Consolidated Statement of Operations.

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

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
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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 and reflect such assets and liabilities as Consolidated real estate not owned within our real estate inventory balance in the Consolidated Balance Sheets.

Unconsolidated Joint Ventures — We use the equity method of accounting for entities over which we exercise significant influence but do not have a controlling interest over the operating and financial policies of the investee. For unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint venture partners and determined that the partners have substantive participating rights that preclude the presumption of control. Our share of net earnings or losses is included in Equity in income of unconsolidated entities when earned and distributions are credited against our investment in the joint venture when received. 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 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 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 recorded no impairment charges related to the investments in unconsolidated entities for the three months ended March 31, 2022 and 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 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
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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 March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients for applying U.S. GAAP to contracts affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The guidance was effective beginning March 12, 2020 and entities may elect to apply the amendments prospectively through December 31, 2022. We are currently evaluating the effect of adopting the new guidance on our consolidated financial statements and related disclosures. However, we do not believe the effect of adopting will have a material impact.


3. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income available to TMHC by the weighted average number of shares of 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
March 31,
20222021
Numerator:
Net income available to TMHC $176,703 $98,021 
Denominator:
Weighted average shares – basic 121,186 128,883 
Restricted stock units 801 975 
Stock Options 670 844 
Warrants — 544 
Weighted average shares – diluted122,657 131,246 
Earnings per common share – basic:
Net income available to Taylor Morrison Home Corporation$1.46 $0.76 
Earnings per common share – diluted:
Net income available to Taylor Morrison Home Corporation$1.44 $0.75 

The above calculations of weighted average shares exclude 1,045,290 and 811,658 anti-dilutive stock options and unvested restricted stock units (“RSUs”) for the three months ended March 31, 2022 and 2021, respectively.


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4. REAL ESTATE INVENTORY AND LAND DEPOSITS
Inventory consists of the following (in thousands):
As of
March 31,
2022
December 31, 2021
Real estate developed and under development $3,895,167 $3,895,681 
Real estate held for development or held for sale (1)
72,022 70,305 
Operating communities (2)
1,554,551 1,309,551 
Capitalized interest177,969 168,670 
Total owned inventory5,699,709 5,444,207 
Consolidated real estate not owned43,418 55,314 
Total real estate inventory$5,743,127 $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.

The development status of our land inventory is as follows (dollars in thousands):
 
As of
March 31, 2022December 31, 2021
 Owned LotsBook Value of Land
and Development
Owned LotsBook Value of Land
and Development
Homebuilding owned lots
Raw3,933 $179,376 4,017 $178,952 
Partially developed23,237 1,572,778 24,636 1,568,967 
Finished19,999 2,124,655 19,360 2,119,128 
Total homebuilding owned lots47,169 3,876,809 48,013 3,867,047 
Other assets5,298 90,380 5,298 98,939 
Total owned lots52,467 $3,967,189 53,311 $3,965,986 

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 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 related to 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
March 31, 2022December 31, 2021
Controlled LotsPurchase Price
Land Deposit (1)
Controlled LotsPurchase Price
Land Deposit (1)
Homebuilding controlled lots
Land option purchase contracts7,831 $457,796 $52,213 8,360 $507,161 $57,554 
Land banking arrangements 7,117 1,000,881 136,404 5,731 749,813 117,721 
Other controlled lots14,766 1,303,421 49,792 14,671 1,338,284 38,505 
Total controlled lots29,714 $2,762,098 $238,409 28,762 $2,595,258 $213,780 
(1) Land deposits noted are all non-refundable and represent our exposure to loss related to our contracts with third parties, unconsolidated entities, and land banking arrangements.. In addition, at March 31, 2022 and December 31, 2021 we had refundable deposits of $22.5 million and $15.7 million respectively.

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Capitalized Interest — Interest capitalized, incurred and amortized is as follows (in thousands):
 Three Months Ended
March 31,
 20222021
Interest capitalized - beginning of period$168,670 $163,780 
Interest incurred and capitalized39,729 37,719 
Interest amortized to cost of home closings(30,430)(27,325)
Interest capitalized - end of period$177,969 $174,174 

5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES
Unconsolidated Entities
We have investments in a number of joint ventures with third parties. These entities are generally involved in real estate development, homebuilding and/or mortgage lending activities. The real estate development joint ventures primary activity is development and sale of lots to joint venture 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.

Summarized, unaudited combined financial information of unconsolidated entities that are accounted for by the equity method are as follows (in thousands):
As of
March 31,
2022
December 31,
2021
Assets:
Real estate inventory$418,004 $414,687 
Other assets134,890 118,990 
Total assets$552,894 $533,677 
Liabilities and owners’ equity:
Debt$176,477 $167,842 
Other liabilities23,231 16,245 
Total liabilities199,708 184,087 
Owners’ equity:
TMHC173,231 171,406 
Others179,955 178,184 
Total owners’ equity353,186 349,590 
Total liabilities and owners’ equity$552,894 $533,677 

 Three Months Ended
March 31,
 20222021
Revenues$30,401 $49,880 
Costs and expenses(25,694)(34,157)
Income of unconsolidated entities$4,707 $15,723 
TMHC’s share in income of unconsolidated entities$1,831 $5,661 
Distributions to TMHC from unconsolidated entities$2,058 $10,613 

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

As of March 31, 2022, the assets of the consolidated joint ventures totaled $260.0 million, of which $23.1 million was cash and cash equivalents and $79.0 million was owned inventory. As of December 31, 2021, the assets of the consolidated joint ventures totaled $291.8 million, of which $22.3 million was cash and cash equivalents and $147.6 million was owned inventory. The liabilities of the consolidated joint ventures totaled $141.2 million and $165.1 million as of March 31, 2022 and December 31, 2021, respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.

6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following (in thousands):

As of
March 31, 2022
As of
December 31, 2021
Real estate development costs to complete$46,044 $49,833 
Compensation and employee benefits78,849 166,272 
Self-insurance and warranty reserves140,970 141,839 
Interest payable39,241 48,551 
Property and sales taxes payable27,115 29,384 
Other accruals84,662 89,330 
Total accrued expenses and other liabilities$416,881 $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”), a wholly owned subsidiary. A summary of the changes in our reserves are as follows (in thousands):
 Three Months Ended
March 31,
20222021
Reserve - beginning of period$141,839 $118,116 
Other additions to reserves8,884 12,391 
Cost of claims incurred(12,473)(15,865)
Changes in estimates to pre-existing reserves2,720 1,764 
Reserve - end of period$140,970 $116,406 


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7. DEBT
Total debt consists of the following (in thousands):
As of
March 31, 2022December 31, 2021
PrincipalUnamortized Debt Issuance (Costs)/PremiumCarrying ValuePrincipalUnamortized Debt Issuance (Costs)/PremiumCarrying Value
5.875% Senior Notes due 2023
$350,000 $(591)$349,409 $350,000 $(733)$349,267 
5.625% Senior Notes due 2024
350,000 (1,032)348,968 350,000 (1,166)348,834 
5.875% Senior Notes due 2027
500,000 (4,047)495,953 500,000 (4,243)495,757 
6.625% Senior Notes due 2027
300,000 16,919 316,919 300,000 17,718 317,718 
5.75% Senior Notes due 2028
450,000 (3,656)446,344 450,000 (3,814)446,186 
5.125% Senior Notes due 2030
500,000 (5,282)494,718 500,000 (5,440)494,560 
Senior Notes subtotal$2,450,000 $2,311 $2,452,311 $2,450,000 $2,322 $2,452,322 
Loans payable and other borrowings395,400 — 395,400 404,386 — 404,386 
$800 Million Revolving Credit Facility
— — — — — — 
$100 Million Revolving Credit Facility
— — — 31,529 — 31,529 
Mortgage warehouse borrowings200,662 — 200,662 413,887 — 413,887 
Total debt$3,046,062 $2,311 $3,048,373 $3,299,802 $2,322 $3,302,124 

Senior Notes
All of our senior notes (the “Senior Notes”) described below and the related guarantees are senior unsecured obligations and are not subject to registration rights. The indentures governing our Senior Notes (except for the remaining 2027 6.625% WLH Notes, as described below) contain covenants that limit our ability to incur debt secured by liens and enter into certain sale and leaseback transactions and contain customary events of default. None of the indentures for the Senior Notes have financial maintenance covenants. As of March 31, 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 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
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
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Guarantors. The change of control provisions in the indenture governing the 2027 5.875% Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

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

6.625% Senior Notes due 2027

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

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

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

5.75% Senior Notes due 2028

On August 1, 2019, TM Communities issued $450.0 million aggregate principal amount of 5.75% Senior Notes due 2028 (the “2028 Senior Notes”), which mature on January 15, 2028. The 2028 Senior Notes are guaranteed by the same Guarantors that guarantee our other Senior Notes. 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 5.875% 2025 Senior Notes

In July 2020, we partially redeemed $266.9 million of our 6.00% Senior Notes due 2023 (the “2023 Senior Notes”) and $333.1 million of our 5.875% Senior Notes due 2025 (the “2025 Senior Notes”) 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 Senior Notes and 2025 Senior Notes, respectively, using cash on hand. For the 2023 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 interest to but excluding the redemption date. As a result of the early redemption of the 2023 Senior Notes and 2025 Senior Notes, we
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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 same Guarantors that guarantee our other Senior Notes. The change of control provisions in the indenture governing the 2030 Senior Notes are similar to those contained in the indentures governing our other Senior Notes.

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


$800 Million Revolving Credit Facility
On March 11, 2022, we amended our $800 Million Revolving Credit Facility, which extends the maturity date from February 6, 2024 to March 11, 2027 and includes reduced pricing upon meeting lower capitalization ratios. The facility remains guaranteed by the Guarantors.

We had no outstanding borrowings under our $800 Million Revolving Credit Facility as of March 31, 2022 or December 31, 2021.
As of March 31, 2022 and December 31, 2021, we had $3.2 million and $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 March 31, 2022 and December 31, 2021, we had $52.9 million and $58.7 million, respectively, of utilized letters of credit, resulting in $747.1 million and $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 $2.5 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 four consecutive fiscal quarters and up to five times overall.

The $800 Million Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations on prepayment of subordinated indebtedness and limitations on fundamental changes. The $800 Million Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of material guarantees and change of control.

As of March 31, 2022, we were in compliance with all of the covenants under the $800 Million Revolving Credit Facility.

$100 Million Revolving Credit Facility

On September 17, 2021, we entered into a $100 Million Revolving Credit Facility, which matures on September 17, 2024 and is guaranteed by the Guarantors (the $100 Million Revolving Credit Agreement together with the $800 Million Revolving Credit Agreement, the “Credit Facilities”). This facility is specific to our Build-to-Rent operations. We had no borrowings outstanding under our $100 Million Revolving Credit Facility as of March 31, 2022, and had $31.5 million in outstanding borrowings as of December 31, 2021.

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As of March 31, 2022 and December 31, 2021, we had $0.6 million and $0.7 million, respectively, of unamortized debt issuance costs relating to our $100 Million Revolving Credit Facility, which are included in Prepaid expenses and other assets, net, on the Condensed Consolidated Balance Sheets. As of March 31, 2022 we had no utilized letters of credit, resulting in $100.0 million of availability under the $100 Million Revolving Credit Facility. As of December 31, 2021, we had $68.5 million of availability under the $100 Million Revolving Credit Facility.

The $100 Million Revolving Credit Facility contains certain “springing” financial covenants, requiring us and our subsidiaries to comply with a maximum debt to capitalization ratio of not more than 0.60 to 1.00 and a minimum consolidated tangible net worth level of at least $2.5 billion. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the $100 Million Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued under the $100 Million Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters of credit issued under the $100 Million Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial covenants for any fiscal quarter, the $100 Million Revolving Credit Facility provides that we may exercise an equity cure by issuing certain permitted securities for cash or otherwise recording cash contributions to our capital that will, upon the contribution of such cash to the borrower, be included in the calculation of consolidated tangible net worth and consolidated total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and up to five times overall.

The $100 Million Revolving Credit Facility includes the same restrictive covenants as are included in the $800 Million Revolving Credit Facility, described above. As of March 31, 2022, we were in compliance with all of the covenants under the $100 Million Revolving Credit Facility.

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

 As of March 31, 2022
FacilityAmount
Drawn
Facility
Amount
Interest Rate(1)
Expiration Date
Collateral (2)
Warehouse A$2,553 $10,000 
LIBOR + 1.75%
On DemandMortgage Loans
Warehouse B21,618 75,000 
LIBOR + 1.75%
On DemandMortgage Loans
Warehouse C69,898 125,000 
LIBOR + 2.05%
On DemandMortgage Loans and Restricted Cash
Warehouse D30,556 100,000 
LIBOR + 1.65%
November 20, 2022Mortgage Loans
Warehouse E76,037 100,000 
LIBOR + 1.50%
On DemandMortgage Loans
Total$200,662 $410,000 
 As of December 31, 2021
FacilityAmount DrawnFacility Amount
Interest Rate(1)
Expiration Date
Collateral (2)
Warehouse A$12 $10,000 
LIBOR + 1.75%
On DemandMortgage Loans
Warehouse B86,409 150,000 
LIBOR + 1.75%
On DemandMortgage Loans
Warehouse C116,601 250,000 
LIBOR + 2.05%
On DemandMortgage Loans and Restricted Cash
Warehouse D105,065 150,000 
LIBOR + 1.65%
November 20, 2022Mortgage Loans
Warehouse E105,800 200,000 
LIBOR + 1.50%
On DemandMortgage Loans
Total$413,887 $760,000 
(1) Subject to certain interest rate floors.
(2) The mortgage warehouse borrowings outstanding as of March 31, 2022 and December 31, 2021 were collateralized by $229.7 million and $467.5 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage loans held for sale, and approximately $1.6 million and $3.5 million, respectively, of cash which is restricted cash on our Condensed Consolidated Balance Sheet.

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

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

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

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

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

The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. The fair value of derivative assets and liabilities includes interest rate lock commitments (“IRLCs”) and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loan, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our mortgage warehouse borrowings, loans payable and other borrowings, the borrowings under our Revolving Credit Facility approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The fair value of our Equity Security Investment in a public company is based upon quoted prices for identical assets in an active market. There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of March 31, 2022, when compared to December 31, 2021.

The carrying value and fair value of our financial instruments are as follows:
  March 31, 2022December 31, 2021
(Dollars in thousands)Level in Fair
Value Hierarchy
Carrying
Value
Estimated
Fair
Value
Carrying
Value
Estimated
Fair
Value
Description:
Mortgage loans held for sale2$229,651 $229,651 $467,534 $467,534 
IRLCs3420 420 2,110 2,110 
MBSs25,080 5,080 (449)(449)
Mortgage warehouse borrowings2200,662 200,662 413,887 413,887 
Loans payable and other borrowings2395,400 395,400 404,386 404,386 
5.875% Senior Notes due 2023 (1)
2349,409 354,830 349,267 365,890 
5.625% Senior Notes due 2024 (1)
2348,968 360,150 348,834 372,750 
5.875% Senior Notes due 2027 (1)
2495,953 520,000 495,757 560,000 
6.625% Senior Notes due 2027 (1)
2316,919 308,250 317,718 315,750 
5.75% Senior Notes due 2028(1)
2446,344 463,500 446,186 502,875 
5.125% Senior Notes due 2030(1)
2494,718 490,000 494,560 550,000 
$800 Million Revolving Credit Facility
2— — — — 
$100 Million Revolving Credit Facility
2— — 31,529 31,529 
Equity Security Investment 15,030 5,030 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.


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9. INCOME TAXES
The effective tax rate for the three months ended March 31, 2022 was 23.4%, compared to 22.2% for the same period in 2021. For both the three months ended March 31, 2022 and March 31, 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.

At both March 31, 2022 and December 31, 2021, there were no unrecognized tax benefits.

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.

Stock Repurchase Program

The following table summarizes share repurchase activity for the periods presented:
Three Months Ended March 31,
(Dollars in thousands)20222021
Amount available for repurchase — beginning of period(1)
$230,413 $86,831 
Amount repurchased(58,029)(38,418)
Amount available for repurchase — end of period$172,384 $48,413 
(1) Represents the amount available for repurchase as of January 1 for the years presented, adjusted for previously expired share repurchase authorizations.

The Company repurchased 1,948,187 shares under the share repurchase program during the three months ended March 31, 2022 and 1,447,309 during the three months ended March 31, 2021.

11. STOCK BASED COMPENSATION
Equity-Based Compensation
The following table provides the outstanding balance of time-based and performance based RSUs and stock options as of March 31, 2022:
Restricted Stock Units
 (time and performance)
Stock Options
UnitsWeighted Average
Grant Date Fair
Value
UnitsWeighted
Average Exercise
Price Per Share
Balance at March 31, 20221,641,411 $27.28 3,582,800 $23.10 

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
March 31,
 20222021
Restricted stock units (1)
$5,780 $4,748 
Stock options1,083 934 
Total stock compensation$6,863 $5,682 
(1) Includes compensation expense related to time-based RSUs and performance-based RSUs.
At March 31, 2022 and December 31, 2021, the aggregate unrecognized value of all outstanding stock-based compensation awards was approximately $43.2 million and $26.5 million, respectively.
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12. REPORTING SEGMENTS
We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer service. We aggregate our homebuilding operating components into three reporting segments, East, Central, and West, based on similar long-term economic characteristics. The activity from our Build-to-Rent and Urban Form operations are included in our Corporate segment. We also have a financial services reporting segment. We have no inter-segment sales as all sales are to external customers.

Our reporting segments are as follows:
 
EastAtlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
CentralAustin, Dallas, Denver, and Houston
WestBay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial ServicesTaylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

Segment information is as follows (in thousands):

 Three Months Ended March 31, 2022
 EastCentralWestFinancial Services
Corporate
and
Unallocated(1)
Total
Total revenue$525,121 $370,735 $770,210 $35,199 $1,859 $1,703,124 
Gross margin125,691 74,008 181,531 10,985 913 393,128 
Selling, general and administrative expenses(40,326)(29,440)(43,519)— (43,980)(157,265)
Equity in (loss)/income of unconsolidated entities— 85 (312)2,058 — 1,831 
Interest and other expense, net(2)
(432)(1,860)(1,966)— (536)(4,794)
Income/(loss) before income taxes$84,933 $42,793 $135,734 $13,043 $(43,603)$232,900 
(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.
 Three Months Ended March 31, 2021
 EastCentralWestFinancial Services
Corporate
and
Unallocated (1)
Total
Total revenue$453,362 $322,612 $597,730 $44,065 $43 $1,417,812 
Gross margin85,067 65,178 104,438 20,066 (308)274,441 
Selling, general and administrative expenses(38,598)(28,558)(41,554)— (38,795)(147,505)
Equity in (loss)/income of unconsolidated entities— (64)1,992 3,743 (10)5,661 
Interest and other income/(expense), net (2)
42 (373)(108)— (417)(856)
Income/(loss) before income taxes$46,511 $36,183 $64,768 $23,809 $(39,530)$131,741 
(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.


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 As of March 31, 2022
 EastCentralWestFinancial Services
Corporate
and
Unallocated(1)
Total
Real estate inventory and land deposits$1,905,120 $1,389,070 $2,709,798 $— $— $6,003,988 
Investments in unconsolidated entities— 87,737 81,219 4,275 — 173,231 
Other assets153,946 198,151 550,998 334,568 1,103,093 2,340,756 
Total assets$2,059,066 $1,674,958 $3,342,015 $338,843 $1,103,093 $8,517,975 
(1) Includes corporate cash and the assets from our Build-To-Rent and Urban Form operations.
 
 As of December 31, 2021
 EastCentralWestFinancial Services
Corporate
and
Unallocated (1)
Total
Real estate inventory and land deposits$1,781,948 $1,282,024 $2,665,084 $— $— $5,729,056 
Investments in unconsolidated entities— 87,600 79,531 4,275 — 171,406 
Other assets196,126 221,906 588,520 559,233 1,261,530 2,827,315 
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.

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 $1.2 billion as of March 31, 2022 and December 31, 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 March 31, 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 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 March 31, 2022 and December 31, 2021, the aggregate purchase price of these contracts was $1.5 billion and $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 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 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 March 31, 2022 and December 31, 2021, our legal accruals were $23.1 million and $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
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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 March 31, 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 $94.4 million and $96.2 million as of March 31, 2022 and December 31, 2021, respectively. We recorded lease expense of approximately $6.9 million and $4.0 million for the three months ended March 31, 2022, and 2021, respectively, within general and administrative expenses on our Condensed Consolidated Statement of Operations.

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, 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 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
March 31, 2022December 31, 2021
(Dollars in thousands)Fair Value
Notional Amount (1)
Fair Value
Notional Amount (1)
IRLCs$420 $386,707 $2,110 $158,299 
MBSs5,080 404,000 (449)407,000 
Total$5,500 $1,661 
(1) The notional amounts in the table above includes mandatory and best effort mortgages, that have been locked and approved.

Total commitments to originate loans approximated $417.7 million and $173.7 million as of March 31, 2022 and December 31, 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, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with counterparties, as appropriate. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For purposes of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “we,” “us,” or “our” refer to Taylor Morrison Home Corporation (“TMHC”) and its subsidiaries. The Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial statements included elsewhere in this quarterly report.

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

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

Business Overview
Our principal business is residential homebuilding and the development of lifestyle communities with operations geographically focused in Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. We serve a wide array of consumer groups from coast to coast, including entry-level, move-up, and 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 March 31, 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
CentralAustin, Dallas, Denver, and Houston
West  Bay Area, Las Vegas, Phoenix, Portland, Sacramento, Seattle, and Southern California
Financial Services  Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

Community development includes the acquisition and development of land, which may include obtaining significant planning and entitlement approvals and completing construction of off-site and on-site utilities and infrastructure. We generally operate
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as community developers, but in some communities we operate solely as merchant builders, in which case we acquire fully entitled and developed lots. We remain disciplined in our underwriting to acquire land where we see opportunities to drive profitable growth over the full cycle, with the land acquisitions we are approving today largely expected to impact deliveries in the next 24 to 48 months.

In our homebuilding operations, we either directly, or indirectly through our subcontractors, purchase 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 March 31, 2022, we employed approximately 3,062 full-time equivalent persons. Of these, approximately 2,568 were engaged in corporate and homebuilding operations, and the remaining approximately 494 were engaged in financial services.


First Quarter 2022 Highlights (all comparisons are of the current quarter to the prior year quarter, unless otherwise indicated):
Home closings revenue increased 21 percent to $1.6 billion.
Home closings gross margin improved 450 basis points to 23.1 percent.
SG&A as a percentage of home closings revenue improved 120 basis points to 9.6 percent.
Backlog decreased seven percent to 9,400 with an average sales price of $659,000, up 24 percent.
Homebuilding lot supply increased five percent to approximately 77,000 total lots owned and controlled.
Controlled lots as a percentage of total lot supply increased approximately 700 basis points to 39 percent.
Repurchased 1.9 million shares outstanding for $58 million.
Return on equity improved 860 basis points to 19.1 percent.



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

Three Months Ended
March 31,
 (Dollars in thousands)
20222021
Statements of Operations Data:
Home closings revenue, net$1,644,409 $1,363,429 
Land closings revenue15,610 4,889 
Financial services revenue35,199 44,065 
Amenity and other revenue7,906 5,429 
Total revenue1,703,124 1,417,812 
Cost of home closings1,264,974 1,110,242 
Cost of land closings14,364 4,027 
Financial services expenses24,214 23,999 
Amenity and other expenses6,444 5,103 
Gross margin393,128 274,441 
Sales, commissions and other marketing costs89,123 85,952 
General and administrative expenses68,142 61,553 
Equity in income of unconsolidated entities(1,831)(5,661)
Interest expense/(income), net4,252 (119)
Other expense, net542 975 
Income before income taxes232,900 131,741 
Income tax provision54,439 29,298 
Net income before allocation to non-controlling interests178,461 102,443 
Net income attributable to non-controlling interests — joint ventures(1,758)(4,422)
Net income available to Taylor Morrison Home Corporation$176,703 $98,021 
Home closings gross margin23.1 %18.6 %
Sales, commissions and other marketing costs as a percentage of home closings revenue, net5.4 %6.3 %
General and administrative expenses as a percentage of home closings revenue, net4.2 %4.5 %

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 filing relating to: (i) EBITDA and adjusted EBITDA and (ii) net homebuilding debt to capitalization ratio.

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) and non-cash compensation expense, if any. Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, less unamortized debt issuance 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).

Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our regions, and to set targets for performance-based compensation. We also use the ratio of net homebuilding debt to total capitalization as an indicator of overall leverage and to evaluate our performance against other companies in the homebuilding industry. In prior periods, we have disclosed additional non-GAAP financial measures beyond those listed above, including (i) adjusted net income and adjusted earnings per shares, (ii) adjusted income before income taxes and related margin and (iii) adjusted home closings gross margin. However, in the periods presented herein, no transactions exist to warrant presenting such measures. 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.
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We believe that 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.

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.

EBITDA and Adjusted EBITDA Reconciliation
 Three Months Ended March 31,
(Dollars in thousands)20222021
Net income before allocation to non-controlling interests$178,461 $102,443 
Interest expense/(income), net4,252 (119)
Amortization of capitalized interest30,430 27,325 
Income tax provision54,439 29,298 
Depreciation and amortization1,930 1,910 
EBITDA$269,512 $160,857 
Non-cash compensation expense6,863 5,682 
Adjusted EBITDA $276,375 $166,539 
Total revenues$1,703,124 $1,417,812 
Net income before allocation to non-controlling interests as a percentage of total revenues10.5 %7.2 %
EBITDA as a percentage of total revenues15.8 %11.3 %
Adjusted EBITDA as a percentage of total revenues16.2 %11.7 %

Net Homebuilding Debt to Capitalization Ratio Reconciliation
(Dollars in thousands)As of
March 31, 2022
As of
December 31, 2021
Total debt$3,048,373 $3,302,124 
Less unamortized debt issuance premiums, net2,311 2,322 
Less mortgage warehouse borrowings200,662 413,887 
Total homebuilding debt$2,845,400 $2,885,915 
Less cash and cash equivalents569,249 832,821 
Net homebuilding debt$2,276,151 $2,053,094 
Total equity4,094,798 3,970,982 
Total capitalization$6,370,949 $6,024,076 
Net homebuilding debt to capitalization ratio35.7 %34.1 %

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Three months ended March 31, 2022 Compared to Three months ended March 31, 2021
The results for the three months ended March 31, 2022 and 2021, were impacted by various macro economic conditions. Since the second half of 2020, demand for housing has increased nationwide, and has remained strong despite recent increases in interest rates. Through the first quarter of 2022, we continue to experience market-wide supply chain disruptions, trade labor shortages, and high costs related to materials due to inflationary impacts. The strong demand for housing has allowed us to utilize pricing strategies that partially mitigated increases in cost. The average sales price for net sales orders, backlog, and homes closed during the three months ended March 31, 2022 all increased compared to the three months ended March 31, 2021. However, the supply chain delays and 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 related to each period is presented below:

Ending Active Selling Communities
 As of
March 31, 2022
As of
December 31, 2021
Change
East121 123 (1.6)%
Central106 102 3.9 
West97 105 (7.6)
Total324 330 (1.8)%
Net Sales Orders
Three Months Ended March 31,
 
Net Sales Orders (1)
Sales Value (1)
Average Selling Price
(Dollars in thousands)20222021Change20222021Change20222021Change
East1,027 1,777 (42.2)%$606,210 $878,584 (31.0)%$590 $494 19.4 %
Central8871,072(17.3)583,279 583,482 — 658 544 21.0 
West1,1401,643(30.6)895,730 1,010,767 (11.4)786 615 27.8 
Total3,054 4,492 (32.0)%$2,085,219 $2,472,833 (15.7)%$683 $550 24.2 %
(1) Net sales orders and sales value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.

Net sales orders and sales value decreased by 32.0% and 15.7%, respectively, for the three months ended March 31, 2022, compared to the same period in the prior year. The decreases were primarily the result of decreases in active selling communities, increasing interest rates, and inflationary impacts, partially offset by an increase of average selling prices of 24.2%. Average selling prices continued to increase as a result of market appreciation. In addition, in certain markets, we continue to strategically meter sales releases to better manage supply chain and labor constraints as well as shifting to a strategy of spec home sales allowing homes to get further along in the build cycle before releasing them to be sold.

Sales Order Cancellations
Cancellation Rate(1)
Three Months Ended March 31,
 20222021
East4.8 %5.9 %
Central6.6 %6.1 %
West7.5 %6.2 %
Total Company6.4 %6.0 %
(1) Cancellation rate represents the number of canceled sales orders divided by gross sales orders.
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The total company cancellation rate increased to 6.4% from 6.0% for the three months ended March 31, 2022, compared to the same period in the prior year. This increase in cancellations is due to extended build cycle times and recent increases in interest rates.

Sales Order Backlog
 As of March 31,
Sold Homes in Backlog (1)
Sales ValueAverage Selling Price
(Dollars in thousands)20222021Change20222021Change20222021Change
East3,309 3,560 (7.1)%$2,002,530 $1,753,135 14.2 %$605 $492 23.0 %
Central3,010 2,779 8.3 1,962,538 1,463,453 34.1 652 527 23.7 
West3,081 3,735 (17.5)2,232,878 2,120,260 5.3 725 568 27.6 
Total9,400 10,074 (6.7)%$6,197,946 $5,336,848 16.1 %$659 $530 24.3 %
(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 decreased by 6.7% and total sales value increased by 16.1% at March 31, 2022, compared to March 31, 2021. The decreases were primarily the result of decreases in active selling communities, increasing interest rates, and inflationary impacts, partially offset by an increase in average selling prices of 24.3%. In addition, we continue to strategically meter sales releases to better manage supply chain and labor constraints as well as shifting to a strategy of spec home sales allowing homes to get further along in the build cycle before releasing them to be sold. The increase in total sales value in backlog was driven by a 24.3% increase in average sales price.

Home Closings Revenue
 Three Months Ended March 31,
Homes ClosedHome Closings Revenue, NetAverage Selling Price
(Dollars in thousands)20222021Change20222021Change20222021Change
East937 1,052 (10.9)%$505,998 $445,885 13.5 %$540 $424 27.4 %
Central664 691 (3.9)368,575 320,177 15.1 555 463 19.9 
West1,167 1,078 8.3 769,836 597,367 28.9 660 554 19.1 
Total2,768 2,821 (1.9)%$1,644,409 $1,363,429 20.6 %$594 $483 23.0 %
The number of homes closed remained relatively flat while home closings revenue, net increased by 20.6% for the three months ended March 31, 2022, compared to the same period in the prior year. While overall homes closed remained flat, the homes that closed had an average sales price 23.0% higher year over year, driving the increase in total home building revenue.

Land Closings Revenue
Three Months Ended March 31,
(Dollars in thousands)20222021Change
East$13,440 $2,454 $10,986 
Central2,160 2,435 (275)
West10 — 10 
Total$15,610 $4,889 $10,721 
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
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period, depending upon market opportunities and our land management strategy. The land closings revenue in the East for the three months ended March 31, 2022 was due to the sale of certain commercial assets as well as the sale of residential lots in our Florida market.

Amenity and Other Revenue
Three Months Ended March 31,
(Dollars in thousands)20222021Change
East$5,683 $5,023 $660 
Central— — — 
West364 363 
Corporate1,859 43 1,816 
Total$7,906 $5,429 $2,477 
Several of our communities operate amenities such as golf courses, club houses, and fitness centers. We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region also includes the activity relating to our Urban Form operations which primarily develops and constructs multi-use properties consisting of commercial space, retail, and multi-family units.

Home Closings Gross Margin
Three Months Ended March 31,
EastCentralWestConsolidated
(Dollars in thousands)20222021202220212022202120222021
Home closings revenue, net$505,998 $445,885 $368,575 $320,177 $769,836 $597,367 $1,644,409 $1,363,429 
Cost of home closings381,946 361,977 295,057 255,399 587,971 492,866 1,264,974 1,110,242 
Home closings gross margin$124,052 $83,908 $73,518 $64,778 $181,865 $104,501 $379,435 $253,187 
Home closings gross margin %24.5 %18.8 %19.9 %20.2 %23.6 %17.5 %23.1 %18.6 %
Home closings gross margin increased 450 basis points to 23.1% for the three months ended March 31, 2022, compared to 18.6% in the prior year. The increase is a reflection of operational enhancements, acquisition synergies and pricing power in excess of inflationary cost pressure. Low inventory levels, low interest rates and market appreciation have led to the ability to increase average selling prices to offset high material costs. We also continue to strategically meter sales and shift to an emphasis on spec homes to maximize profits and create margin protection as build cycle times extend due to supply chain issues and trade labor shortages.


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Financial Services
Our Financial Services segment provides mortgage lending through our subsidiary, TMHF, title services through our subsidiary, Inspired Title, and homeowner's insurance policies through our insurance agency, TMIS. The following is a summary for the periods presented of financial services income before income taxes as well as supplemental data:
Three Months Ended
March 31,
(Dollars in thousands)20222021Change
Financial services revenue$27,715 $37,514 (26.1)%
Title services revenue5,999 5,054 18.7 
Financial services revenue - other1,485 1,497 (0.8)
     Total financial services revenue35,199 44,065 (20.1)%
Financial services equity in income of unconsolidated entities2,058 3,669 (43.9)
     Total revenue37,257 47,734 (21.9)
Financial services expenses24,214 23,999 0.9 
Financial services income before income taxes$13,043 $23,735 (45.0)%
Total originations:
     Number of Loans1,582 2,128 (25.7)%
     Principal$688,665 $809,746 (15.0)%

Three Months Ended
March 31,
20222021
Supplemental data:
     Average FICO score753 750 
Funded origination breakdown:
     Government (FHA,VA,USDA)16.6 %19.5 %
     Other agency80.0 %77.7 %
     Total agency96.6 %97.2 %
     Non-agency3.4 %2.8 %
Total funded originations100.0 %100 %
Total financial services revenue decreased by 20.1% for the three months ended March 31, 2022 compared to the same period in the prior year. The decrease in total financial services revenue was a result of lower home closings during the period.

Sales, Commissions and Other Marketing Costs
Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, decreased to 5.4% from 6.3% for the three months ended March 31, 2022 compared to the same period in the prior year. The decrease was primarily driven by leverage from an increase in home closings revenue, net, as well as sustained leverage in our sales and marketing functions.

General and Administrative Expenses
General and administrative expenses as a percentage of home closings revenue, net, decreased to 4.2% from 4.5% for the three months ended March 31, 2022 compared to the same period in the prior year. The decrease was primarily due to the increase in home closings revenue, net, while general and administrative expenses remained relatively consistent.

Equity in Income of Unconsolidated Entities
Equity in income of unconsolidated entities was $1.8 million and $5.7 million for the three months ended March 31, 2022 and 2021, respectively. Our joint ventures relating to our financial services segment experienced a decrease in income for the three months ended March 31, 2022 compared to the same period in the prior year, coupled with a decrease in income related to joint ventures that are nearing close-out.

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Other Expense, Net
Other expense, net was $0.5 million and $1.0 million for the three months ended March 31, 2022 and 2021, respectively.

Income Tax Provision
The effective tax rate for the three months ended March 31, 2022 was 23.4%, compared to 22.2% for the same period in 2021. For both the three months ended March 31, 2022 and March 31, 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.


Net Income
Net income and diluted earnings per share for the three months ended March 31, 2022 was $176.7 million and $1.44, respectively. Net income and diluted earnings per share for the three months ended March 31, 2021 was $98.0 million and $0.75, 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.

Liquidity and Capital Resources
Liquidity

We finance our operations through the following:

Cash generated from operations;
Borrowings under our Revolving Credit 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.

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.

The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):
As of
(Dollars in thousands)March 31, 2022December 31, 2021
Total cash, excluding restricted cash$569,249 $832,821 
$800 Million Revolving Credit Facility800,000 800,000 
$100 Million Revolving Credit Facility100,000 100,000 
Letters of credit outstanding(52,938)(58,738)
$800 Million Revolving Credit Facility borrowings outstanding— — 
$100 Million Revolving Credit Facility borrowings outstanding— (31,529)
Revolving credit facilities availability847,062 809,733 
Total liquidity $1,416,311 $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.
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Cash Flow Activities

Operating Cash Flow Activities
Our net cash provided by operating activities was $57.5 million for the three months ended March 31, 2022, compared to $144.3 million of cash used in operating activities for the three months ended March 31, 2021. The year-over-year increase in cash provided by operating activities during the three months ended March 31, 2022 is primarily driven by a decrease in the cash flow effect from real estate inventory and land deposits, an increase in net income, and a decrease in mortgage loans held for sale. These increases were partially offset by a decrease in accounts payable and accrued liabilities and a decrease in the cash flow effect from customer deposits.

Investing Cash Flow Activities
Net cash used in investing activities was $7.4 million for the three months ended March 31, 2022, compared to $13.5 million for the three months ended March 31, 2021. The decrease in cash used in investing activities was primarily due to a decrease in the cash flow effect from our investments in unconsolidated entities combined with less purchases of property, plant and equipment in the current period.

Financing Cash Flow Activities
Net cash used in financing activities was $315.5 million for the three months ended March 31, 2022, compared to $17.2 million provided by financing activities for the three months ended March 31, 2021. During the three months ended March 31, 2022, we used cash for the repayment of our $100 Million Revolving Credit Facility and reduced our borrowings on our mortgage warehouse facilities. We also continue to use cash to repurchase our Common Stock.

Debt Instruments

For information regarding our debt instruments, including the terms governing our Senior Notes and our Revolving Credit Facilities, see Note 7 - Debt to the Unaudited Condensed Consolidated Financial Statements included in this quarterly report.
Off-Balance Sheet Arrangements as of March 31, 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.

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 quarters ended, March 31, 2022 and 2021, total cash contributed to unconsolidated joint ventures was $2.1 million and $13.1 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 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 March 31, 2022 and December 31, 2021, the aggregate purchase price of these contracts was $1.5 billion and $1.3 billion, respectively.

Seasonality
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Our business is seasonal. We have historically experienced, and in the future expect to continue to experience, variability in our results on a quarterly basis. We generally have more homes under construction, close more homes and have greater revenues and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are obtained throughout the year, a higher portion of our home closings occur during the third and fourth calendar quarters. Our revenue therefore may fluctuate significantly on a quarterly basis, and we must maintain sufficient liquidity to meet short-term operating requirements. Factors expected to contribute to these fluctuations include:
 
the timing of the introduction and start of construction of new projects;
the timing of project sales;
the timing of closings of homes, lots and parcels;
the timing of receipt of regulatory approvals for development and construction;
the condition of the real estate market and general economic conditions in the areas in which we operate;
mix of homes closed;
construction timetables;
the cost and availability of materials and labor; and
weather conditions in the markets in which we build.

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

Inflation
We and the homebuilding industry in general may be adversely affected during periods of high inflation, primarily because of higher land, financing, labor and construction material costs. In addition, higher mortgage interest rates can significantly affect the affordability of mortgage financing to prospective homebuyers. We attempt to pass through to our customers increases in our costs through increased sales prices. However, during periods of soft housing market conditions, we may not be able to offset our cost increases with higher selling prices.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates during the three months ended March 31, 2022 compared to those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate and variable rate debt. At March 31, 2022, approximately 93% of our debt was fixed rate and 7% 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 March 31, 2022, we had no outstanding borrowings under our $800 Million Revolving Credit Facility or $100 Million Revolving Credit Facility. We had $847.1 million of additional availability for borrowings under the Credit Facilities including $147.1 million of additional availability for letters of credit under our $800 Million Revolving Credit Facility as of March 31, 2022 (giving effect to $52.9 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 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 March 31, 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 DateFair
Value
(In millions, except percentage data)20222023202420252026ThereafterTotal
Fixed Rate Debt$162.4 $487.7 $392.8 $30.9 $14.3 $1,757.3 $2,845.4 $2,892.1 
Weighted average interest rate(1)
2.8 %4.9 %5.4 %2.8 %2.8 %5.7 %5.3 %
Variable Rate Debt(2)
$200.7 $— $— $— $— $— $200.7 $200.7 
Weighted average interest rate1.3 %— — — — — — %
(1) Represents the coupon rate of interest on the full principal amount of the debt.
(2) Based upon the amount of variable rate debt outstanding at March 31, 2022, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $2.0 million per year.



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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer and principal accounting officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2022.  Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that, as of March 31, 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 March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
The information required with respect to this item can be found in Note 13 - Commitments and Contingencies under “Legal Proceedings” in the Notes to the Consolidated Financial statements included in this report.


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


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information regarding repurchases by the Company of its Common Stock during the three months ended March 31, 2022.
PeriodTotal number of shares purchasedAverage price paid per shareTotal number of shares purchased as part of publicly announced plans or programsApproximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)
January 1 to January 31, 2022157,166 $34.44 157,166 $225,000 
February 1 to February 28, 20221,106,334 28.62 1,106,334 193,335 
March 1 to March 31, 2022684,687 30.60 684,687 172,384 
   Total1,948,187 1,948,187 


On December 13, 2021, we announced that our Board of Directors had authorized a $250.0 million renewal of the Company's stock repurchase program which expires on June 30, 2024. Repurchases of the Company's Common Stock under the program will occur from time to time, if at all, in open market purchases, privately negotiated transactions or other transactions.

Any stock repurchase program is subject to prevailing market conditions and other considerations, including our liquidity, the terms of our debt instruments, 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.
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ITEM 6. EXHIBITS
Exhibit
No.
  Description
3.1
3.2
10.1
31.1*  
31.2*  
32.1**  
32.2**  
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 March 31, 2022, formatted in inline XBRL (and contained in Exhibit 101).
* Filed herewith
** Furnished herewith

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

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  TAYLOR MORRISON HOME CORPORATION
  Registrant
DATE: April 27, 2022  
  /s/ Sheryl D. Palmer
  Sheryl D. Palmer
  Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer)
  /s/ Louis Steffens
  Louis Steffens
  Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
  /s/ Joseph Terracciano
  Joseph Terracciano
  Chief Accounting Officer
(Principal Accounting Officer)

38

EXHIBIT 31.1
CEO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES – OXLEY ACT OF 2002
I, Sheryl D. Palmer, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2022 of Taylor Morrison Home Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 27, 2022
 
By: /s/ Sheryl D. Palmer
 Sheryl D. Palmer
 Chairman of the Board of Directors and Chief Executive Officer
 Taylor Morrison Home Corporation


EXHIBIT 31.2
CFO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES – OXLEY ACT OF 2002
I, Louis Steffens, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2022 of Taylor Morrison Home Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 27, 2022
 
By: /s/ Louis Steffens
 Louis Steffens
 Executive Vice President and Chief Financial Officer
Taylor Morrison Home Corporation


EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Taylor Morrison Home Corporation (the “Company”) for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sheryl D. Palmer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
April 27, 2022 /s/ Sheryl D. Palmer
 Sheryl D. Palmer
 Chairman of the Board of Directors and Chief Executive Officer
 Taylor Morrison Home Corporation


EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Taylor Morrison Home Corporation (the “Company”) for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Louis Steffens, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
April 27, 2022 /s/ Louis Steffens
 Louis Steffens
 Executive Vice President and Chief Financial Officer
 Taylor Morrison Home Corporation