Taylor Morrison Home Corporation (NYSE: TMHC), Scottsdale, on Friday reported preliminary results for its first quarter and outlined steps it has taken to ensure the safety of its employees and customers during the COVID-19 shutdown.
“For many businesses, Taylor Morrison included, the COVID-19 pandemic is uncharted waters,” said Sheryl Palmer, Taylor Morrison chairman and CEO. “With suggested guidelines and protocols changing daily, even hourly, we have had to take proactive and preventive measures for the best interest of our team members, customers and trade partners. While transparent, timely communication—with emphasis on health and safety—have always been two of our guiding principles, considering recent events, each has become more important than ever.”
The company last month instituted procedures and protocols including enhanced cleaning procedures in offices, design centers, model homes and construction offices; restriction of air travel; cancellation of in-person trainings and meetings; community amenity center closures. Division and corporate office team members began a work-from-home protocol effective March 17 and until further notice. The company is awarding any team member who tests positive for COVID-19 five additional days of paid time off (PTO) and guaranteeing that all out-of-pocket medical costs associated with a confirmed case will be covered. All team members working in the field will also receive five additional PTO days for any needed quarantine or sick time. It contributed additional funds to its internal Taylor Morrison Care Fund in anticipation of any team members who may be impacted by the crisis and in need of financial support. The Care Fund was established in late 2017 after Hurricanes Harvey and Irma and has to-date assisted 30 team members and donated thousands to team members in need.
Additionally, top executives at the company have taken the following actions:
- Chairman and CEO, Sheryl Palmer, requested that the Compensation Committee cancel her recent special equity award, which had a grant date value of $3,000,000.
- Effective immediately, the company’s named executive officers have reduced their base salaries by 25% and will defer those payments through the duration of the federally advised social distancing/economic shut down restrictions. Additionally, substantially all members of senior corporate management and division presidents have voluntarily decided to take the same temporary pay deferral.
- Non-employee directors have agreed to defer their cash retainer fees payable for the second quarter.
- All company team member promotions have been put on temporary hold and the annual merit process for determining compensation increases for all team members has been deferred.
- The company is limiting all non-essential cash expenditures including, but not limited to, temporarily reducing or deferring new land acquisitions, phasing development and implementing a revised cadence on all new inventory homes starts.
The company stated, “Customer traffic and sales have slowed since social distancing and government mandated economic shutdowns began, and due to uncertainty surrounding this ongoing public health crisis and its continued impact on the U.S. economy, we cannot predict either the near-term or long-term effects that the pandemic will have on our business.”
Preliminiary first-quarter operating results included:
- Net sales orders were 3,466, a 33 percent increase over the prior year’s first quarter
- Average monthly sales pace per community was 3.1, compared to 2.3, a 35 percent increase from Q1 2019
- Home closings were 2,761, a 42 percent increase over the prior year’s first quarter
- Ending backlog units were 6,565, a 36 percent increase over the prior year’s first quarter
- Available liquidity was more than $750 million at end of quarter, after paying $50 million of debt at the closing of the William Lyon Homes acquisition in February 2020
- Cancellations for the quarter was 13.8 percent compared to 13.3 percent for Q1 2019
- Despite the challenges brought about by COVID-19, our efforts to integrate William Lyon Homes continue on-track through our remote work environment.
“Our strong quarter closings helped to bolster our already healthy liquidity position,” said Dave Cone, Executive Vice President and Chief Financial Officer. “We ended the quarter with about $750 million in available liquidity through a combination of more than $500 million of cash on hand and the remainder in available capacity on our corporate revolving credit facility. Additionally, there are no senior notes maturities until 2023.”
