Taylor Morrison Home Corporation (TMHC): Business Model Canvas [10-2024 Updated]

Understanding the business model of Taylor Morrison Home Corporation (TMHC) reveals the strategic framework that drives its success in the competitive homebuilding industry. With a focus on high-quality, customizable homes and a commitment to sustainable practices, TMHC effectively engages diverse customer segments, from first-time buyers to investors. This blog post delves into the intricacies of TMHC's business model canvas, highlighting its key partnerships, activities, and value propositions that position the company as a leader in residential development. Discover how TMHC navigates the market to deliver exceptional value and service to its customers.

Taylor Morrison Home Corporation (TMHC) - Business Model: Key Partnerships

Collaborations with land developers

Taylor Morrison Home Corporation engages in strategic partnerships with various land developers to secure land for residential construction. As of September 30, 2024, the company controlled 83,579 homebuilding lots, with a record 58% of these lots controlled off balance sheet. The company had the right to purchase 5,822 lots under land agreements for an aggregate purchase price of $968.4 million. This collaboration allows TMHC to expand its footprint in key markets and manage land supply effectively.

Relationships with suppliers and contractors

TMHC relies on a network of suppliers and contractors for its homebuilding operations. As of Q3 2024, the cost of home closings was reported at $1.53 billion. The company aims to maintain strong relationships with these partners to ensure the timely delivery of materials and services, which is critical for maintaining project timelines and cost efficiency. The gross margin from home closings increased to 24.8% in Q3 2024, up from 23.1% the previous year, indicating effective management of costs associated with suppliers and contractors.

Partnerships with financial institutions for mortgage services

Taylor Morrison has established partnerships with financial institutions through its financial services segment, Taylor Morrison Home Funding. In Q3 2024, the company reported mortgage services revenue of $38.3 million, reflecting a 23.1% increase from the previous year. Total financial services revenue increased by 24.0% for the three months ended September 30, 2024, resulting from a 33% increase in mortgage originations. This partnership helps facilitate financing options for homebuyers, enhancing the overall customer experience.

Alliances with local governments for community development

Taylor Morrison collaborates with local governments to support community development initiatives. These alliances enable the company to align its projects with local zoning laws and community needs. As of September 30, 2024, TMHC had a total liquidity of $1.2 billion, which includes access to various financing facilities that support its community development projects. This financial strength allows TMHC to engage effectively with local governments and invest in community enhancement projects.

Partnership Type	Description	Key Financial Data
Land Developers	Collaborations for land acquisition and management.	Controlled 83,579 lots; right to purchase 5,822 lots for $968.4 million.
Suppliers & Contractors	Network for building materials and services.	Cost of home closings: $1.53 billion; gross margin: 24.8%.
Financial Institutions	Mortgage services partnerships for financing options.	Mortgage services revenue: $38.3 million; total financial services revenue: $49.7 million.
Local Governments	Alliances for community development and compliance.	Total liquidity: $1.2 billion.

Taylor Morrison Home Corporation (TMHC) - Business Model: Key Activities

Home construction and development

Taylor Morrison Home Corporation (TMHC) engages in the construction and development of residential properties across various regions in the United States. For the three months ended September 30, 2024, TMHC reported home closings revenue of $2.0 billion, which was driven by 3,394 closings at an average selling price of $598,000. The gross margin for home closings was 24.8%, an increase from 23.1% in the prior year.

Land acquisition and management

Land acquisition is a critical activity for TMHC, with the company controlling 83,579 homebuilding lots as of September 30, 2024. Notably, 58% of these lots were controlled off balance sheet. The aggregate purchase price for land under option contracts was approximately $1.8 billion.

Sales and marketing of residential properties

Sales and marketing efforts are vital to TMHC's operations, with net sales orders increasing by 9.2% to 2,830 for the three months ended September 30, 2024. The company incurred sales, commissions, and other marketing costs amounting to $117.7 million for the same period, representing 5.8% of home closings revenue.

Customer service and support

Customer service is a key focus area for TMHC, ensuring satisfaction throughout the home purchasing process. The company has seen a decrease in the cancellation rate to 9.3% in the third quarter of 2024, down from 11.4% in the previous year, indicating improved buyer confidence.

Key Activity	Q3 2024 Performance	Q3 2023 Performance	Change (%)
Home Closings Revenue	$2,029,134,000	$1,611,883,000	25.9%
Average Selling Price	$598,000	$611,000	-2.1%
Gross Margin (Home Closings)	24.8%	23.1%	1.7%
Net Sales Orders	2,830	2,592	9.2%
Cancellation Rate	9.3%	11.4%	-1.9%

Taylor Morrison Home Corporation (TMHC) - Business Model: Key Resources

Skilled labor and construction teams

As of September 30, 2024, Taylor Morrison Home Corporation employed approximately 3,000 full-time equivalent persons, with about 2,600 engaged in corporate and homebuilding operations and 400 in financial services.

Real estate inventory and land assets

As of September 30, 2024, Taylor Morrison reported a total real estate inventory and land deposits of $6,714,492 (in thousands), broken down as follows:

Region	Real Estate Inventory and Land Deposits (in thousands)
East	$2,379,080
Central	$1,315,754
West	$3,019,658
Total	$6,714,492

Additionally, as of September 30, 2024, Taylor Morrison had 83,579 homebuilding lots, with a record 58% controlled off balance sheet.

Strong brand reputation in homebuilding

Taylor Morrison's brand is recognized for its commitment to quality and customer satisfaction in the homebuilding industry. The company's net sales orders increased by 9.2% for the three months ended September 30, 2024, compared to the same period in the prior year, reflecting improved buyer confidence.

Financial resources for land purchases and construction

As of September 30, 2024, Taylor Morrison reported total liquidity of $1,202,225 (in thousands), which includes:

Financial Resource	Amount (in thousands)
Total cash, excluding restricted cash	$256,447
Revolving Credit Facility availability	$1,000,000
Letters of credit outstanding	($54,222)
Revolving Credit Facilities availability	$945,778

The company utilized various financing mechanisms to support its operations, including a $1 billion revolving credit facility and several series of senior notes.

Taylor Morrison Home Corporation (TMHC) - Business Model: Value Propositions

High-quality, customizable homes

Taylor Morrison Home Corporation specializes in delivering high-quality homes that can be customized to meet the specific preferences of buyers. As of September 30, 2024, the average selling price of homes was approximately $599,000, reflecting a decrease of 3.4% compared to the previous year. The company reported a total home closings revenue of $2.0 billion for the third quarter of 2024, driven by 3,394 closings.

Sustainable building practices

The company emphasizes sustainable building practices in its operations, contributing to environmentally friendly developments. Taylor Morrison has committed to reducing its carbon footprint and enhancing energy efficiency in its homes. This commitment aligns with growing consumer demand for sustainability in housing.

Strong customer service and support

Taylor Morrison places a strong emphasis on customer service, providing extensive support throughout the home buying process. The company's cancellation rate decreased to 9.3% in Q3 2024 from 11.4% in Q3 2023, indicating improved buyer confidence. In addition, the effective tax rate for the company was 24.4% for Q3 2024, slightly lower than the previous year's 25.4%, showcasing effective financial management that supports customer service initiatives.

Diverse community offerings

The company has expanded its portfolio to include a variety of community offerings, catering to different lifestyle preferences and demographics. As of September 30, 2024, Taylor Morrison had 340 active selling communities, an increase of 4.6% from the previous year. The total revenue from all segments for the nine months ended September 30, 2024, was reported at $5.81 billion, reflecting a solid performance across diverse markets.

Metric	Q3 2024	Q3 2023	Change
Average Selling Price	$599,000	$620,000	-3.4%
Total Home Closings Revenue	$2.0 billion	$1.6 billion	+25.9%
Homes Closed	3,394	2,639	+28.6%
Active Selling Communities	340	325	+4.6%
Cancellation Rate	9.3%	11.4%	-2.1%

Taylor Morrison Home Corporation (TMHC) - Business Model: Customer Relationships

Personalized customer service during the buying process

Taylor Morrison Home Corporation (TMHC) emphasizes personalized customer service throughout the home buying process. This includes dedicated sales representatives who guide customers from initial contact through closing. TMHC reported a net sales order increase of 9.2% for the three months ended September 30, 2024, compared to the same period in the prior year, indicating strong customer engagement and personalized service effectiveness.

Ongoing support post-purchase

Post-purchase support is a critical aspect of TMHC's customer relationship strategy. The company provides various resources, including a dedicated customer service team that assists homeowners with questions and issues after closing. In the third quarter of 2024, TMHC achieved a cancellation rate of 9.3%, down from 11.4% in the previous year, suggesting improved customer satisfaction and ongoing support effectiveness.

Engagement through community events and activities

TMHC actively engages its customers through community events and activities. The company hosted multiple community openings and events in 2024, leading to an increase in active selling communities by 4.6% compared to the previous year. This engagement fosters a sense of belonging among homeowners, enhancing their overall experience and brand loyalty.

Loyalty programs for repeat buyers

To encourage repeat business, TMHC has implemented loyalty programs that reward customers for referrals and repeat purchases. As of September 30, 2024, the company reported a total liquidity of $1.2 billion, indicating a healthy financial position that supports these initiatives. The loyalty programs are part of a broader strategy to maintain relationships and encourage customers to return for future home purchases.

Metric	Q3 2024	Q3 2023	Change
Net Sales Orders	2,830	2,592	+9.2%
Cancellations Rate	9.3%	11.4%	-2.1%
Active Selling Communities	340	325	+4.6%
Total Liquidity	$1.2 billion	N/A	N/A

Taylor Morrison Home Corporation (TMHC) - Business Model: Channels

Direct sales through company-owned model homes

Taylor Morrison operates a network of company-owned model homes which serve as direct sales channels. As of September 30, 2024, the company closed 3,394 homes, generating home closings revenue of $2.03 billion, with an average selling price of approximately $598,000.

Online platforms for property listings and customer engagement

The company has a robust online presence that facilitates property listings and customer engagement. In 2024, Taylor Morrison reported total revenue of $5.81 billion, with significant contributions from online sales activities. The online platforms are integral to their sales strategy, enhancing customer access to property information and facilitating transactions.

Real estate agents and brokers

Taylor Morrison collaborates with a network of real estate agents and brokers, leveraging their market knowledge and customer relationships. For the nine months ended September 30, 2024, the company experienced a 12.3% increase in home closings compared to the same period in 2023. This growth is partly attributed to effective partnerships with real estate professionals who drive sales through referrals and local market expertise.

Marketing campaigns targeting potential homebuyers

Strategic marketing campaigns play a critical role in Taylor Morrison's sales channels. The company allocated approximately $334.3 million in sales, commissions, and marketing costs for the nine months ended September 30, 2024. These campaigns are designed to attract potential homebuyers and enhance brand visibility across various markets.

Channel Type	Key Metrics	Impact on Revenue
Direct Sales	3,394 homes closed	$2.03 billion in revenue
Online Platforms	Part of $5.81 billion total revenue	Significant contribution to sales
Real Estate Agents/Brokers	12.3% increase in home closings	Enhanced market penetration
Marketing Campaigns	$334.3 million spent	Increased brand visibility and sales

Taylor Morrison Home Corporation (TMHC) - Business Model: Customer Segments

First-time homebuyers

Taylor Morrison targets first-time homebuyers by offering affordable housing options. The average selling price for homes sold in 2024 was $599,000, which is structured to appeal to this demographic, especially in entry-level markets. In the nine months ended September 30, 2024, the East region saw a 17.3% increase in sales value, indicating strong demand from first-time buyers.

Move-up buyers looking for larger homes

Move-up buyers are a significant segment for Taylor Morrison, particularly in growing markets. The average selling price for homes in the West region was $693,000 as of September 30, 2024, reflecting the demand for larger homes. In the same period, sales orders for the Central region increased by 16.2%, highlighting a trend among move-up buyers seeking more space.

Investors in rental properties

Investors represent another key customer segment for Taylor Morrison, especially with the ongoing demand for rental properties. The company has engaged in bulk sales to real estate investors, which contributed to inventory turnover. As of September 30, 2024, Taylor Morrison had a backlog of 5,692 homes under contract, with a sales value of approximately $3.83 billion.

Buyers seeking retirement communities

Taylor Morrison also caters to buyers looking for retirement communities, offering specialized product lines that focus on low-maintenance living. The company has developed several active adult communities, which have been well-received. The East region reported a 32.5% increase in home closings for the three months ended September 30, 2024, suggesting a growing interest among retirees.

Customer Segment	Average Selling Price	Sales Orders (2024)	Sales Value (2024)	Market Growth Rate
First-time Homebuyers	$599,000	9,627	$5,770,889	13.7%
Move-up Buyers	$693,000	2,466	$1,362,042	16.2%
Investors	N/A	N/A	$3,830,004 (Backlog)	N/A
Retirement Communities	N/A	N/A	N/A	32.5% (East Region closings)

Taylor Morrison Home Corporation (TMHC) - Business Model: Cost Structure

Construction and material costs

As of September 30, 2024, the total cost of home closings for Taylor Morrison Home Corporation was $1,525,825,000, compared to $1,238,999,000 for the same period in 2023. This represents a significant increase due to rising construction and material costs, which have been influenced by supply chain disruptions and inflationary pressures in the housing market.

Land acquisition expenses

Land acquisition costs for Taylor Morrison are substantial, with real estate inventory reported at $1,232,415,000 as of September 30, 2024. The company’s land closings revenue for the three months ended September 30, 2024, was $27,820,000, reflecting a notable increase from $14,291,000 in the same quarter of 2023.

Marketing and sales expenses

Marketing and sales expenses, categorized under sales, commissions, and other marketing costs, amounted to $117,714,000 for the three months ended September 30, 2024, up from $98,797,000 in the same period of the previous year. This increase is attributed to enhanced advertising efforts and external commission costs aimed at maintaining sales traffic amidst competitive market conditions.

Administrative and operational costs

General and administrative expenses for the third quarter of 2024 totaled $81,627,000, compared to $68,994,000 in the prior year. These costs were approximately 4.0% of home closings revenue, net, down from 4.3% year-over-year, indicating improved operational efficiency despite the rise in absolute costs.

Cost Category	Q3 2024 Amount (in thousands)	Q3 2023 Amount (in thousands)	Change (%)
Cost of Home Closings	$1,525,825	$1,238,999	23.2%
Land Closings Revenue	$27,820	$14,291	95.5%
Marketing and Sales Expenses	$117,714	$98,797	19.1%
General and Administrative Expenses	$81,627	$68,994	18.2%

Taylor Morrison Home Corporation (TMHC) - Business Model: Revenue Streams

Home Sales Revenue

For the nine months ended September 30, 2024, Taylor Morrison Home Corporation reported total home closings revenue of $5,585,516 thousand, compared to $5,221,225 thousand in the same period of 2023, reflecting a 7.0% increase. The number of homes closed during this period was 9,325, up from 8,305 in 2023, indicating a 12.3% increase in home closings.

The average selling price for homes decreased to $599 thousand in 2024 from $629 thousand in 2023, a decline of 4.8%.

Revenue from Land Sales

In the third quarter of 2024, Taylor Morrison generated $27,820 thousand from land sales, compared to $14,291 thousand in the same quarter of 2023, a substantial increase of 13,529 thousand. For the nine-month period ending September 30, 2024, total revenue from land sales was $48,279 thousand, up from $31,439 thousand in 2023.

Financial Services Income from Mortgage Operations

Financial services revenue, which includes mortgage services and title services, amounted to $145,529 thousand for the nine months ended September 30, 2024, compared to $117,108 thousand in 2023, marking a 24.3% increase. Mortgage services revenue specifically rose to $113,423 thousand, a 29.4% increase from $87,637 thousand in the previous year. Title services and other revenues also increased to $32,106 thousand, an 8.9% rise.

Revenue from Amenities and Community Services

The revenue derived from amenities and community services is not explicitly detailed in the financial reports. However, it can be inferred that this revenue is included within the broader home sales and community development initiatives. Taylor Morrison focuses on enhancing community value through added amenities in their developments, which typically contributes to overall property value and sales.

Revenue Stream	Q3 2024 Revenue (in thousands)	Q3 2023 Revenue (in thousands)	Change (%)
Home Sales Revenue	$2,029,134	$1,611,883	25.9%
Land Sales Revenue	$27,820	$14,291	94.6%
Financial Services Revenue	$49,654	$40,045	24.0%

Article updated on 8 Nov 2024

Resources:

1. Taylor Morrison Home Corporation (TMHC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Taylor Morrison Home Corporation (TMHC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Taylor Morrison Home Corporation (TMHC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.