MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the years ended December 31, 2025 and 2023, we recognized $13.3 million and $0.3 million of loss on extinguishment of debt, net, respectively. These charges are recorded to Loss on extinguishment of debt, net on the Consolidated statements of operations. There was no loss or gain on extinguishment of debt for the year ended December 31, 2024.
For the years ended December 31, 2024 and 2023, we recognized $23.1 million and $14.8 million as a change in estimate for our Estimated Development Liability. There was no change in our Estimated Development Liability on our Consolidated balance sheet for the year ended December 31, 2025. These charges are recorded to Other expense, net on the Consolidated statements of operations.
Critical Accounting Policies and Estimates
General
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.
Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses. The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. The significant accounting policies that management believes are the most critical to aid in fully understanding and evaluating our reported financial results are described below.
Revenue Recognition
Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ("ASC 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 ASC 606, the following steps are applied to determine home closings revenue and land closings revenue recognition: (1) identify the contract(s) with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions have one contract, with one performance obligation, with each customer to build and deliver a home (or develop and deliver land). Based on the application of the five steps, the following summarizes the timing and manner of home and land closings revenue:
• Revenue from home closings is recognized when 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 closings 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. From time to time we may enter into land or other asset sales that require recognition of revenue over time, however as of December 31, 2025, no such transactions have been material.
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 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 our Urban Form and Build-to-Rent operations which is recorded as control transfers to the buyer at transaction close and when other criteria of ASC 606 are met. In addition, lease revenue is recognized by Urban Form for commercial and residential leases and Build-to-Rent operations for rental home leases.
Financial Services Revenue
Mortgage operations and hedging activity related to financial services are not within the scope of Topic 606. Generally, the loans TMHF originates are sold to third-party investors within a short 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 generally 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,
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recording a gain/loss on sale in the period of sale. Also included in Financial services revenue/expenses is the realized and unrealized gains and losses from hedging instruments. ASC Topic 815-25, Derivatives and Hedging, requires that all hedging instruments be recognized as assets or liabilities on the Consolidated balance sheets at their fair value. We do not meet the criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the Consolidated statement of operations in the period in which they occur.
Real Estate Inventory Valuation and Costing
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. Vertical construction costs are accumulated and charged to Cost of home closings at the time of home closings when revenue is recognized using the specific identification method. Land acquisition, development, interest, and real estate taxes are capitalized and allocated generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction, and construction utilities are considered overhead costs and are allocated on a per unit basis. These costs are capitalized to inventory beginning with the start of development through construction completion. Changes in estimated costs to be incurred in a community are generally allocated to the remaining project on a prospective basis.
The life cycle of the 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 lives will vary based on the size of the community, the sales absorption rate and whether we purchased the property as raw land or finished lots.
We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.
We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment ("ASC 360"). 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 to determine if the carrying value of the assets in that community exceeds the estimated 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, in certain circumstances, fair value can also 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.
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. For those communities that have been temporarily closed or development has been discontinued, we do not allocate or capitalize interest or other costs to the community’s inventory until activity resumes and such costs are expensed as incurred. If we decide to cease development, we will evaluate the project for impairment and discontinue future development and marketing activity until such a time when we believe that market conditions have improved and positive economic performance can be achieved. 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.
In the ordinary course of business, we enter into land banking agreements with various sellers to acquire lots. 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, for land we own, 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. We incur interest expense and fees on these arrangements. We capitalize qualifying interest costs to inventory during the development and construction periods with the remainder expensed and included in Interest expense/(income), net on the Consolidated statements of operations. These lots are considered controlled, however we are not legally obligated to purchase lots under these agreements and would forfeit any existing deposits and could be subject to financial and other penalties if the lots are not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. As such, these entities are not consolidated. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included on the Consolidated balance sheets.
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
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considered held for sale once it meets all criteria in accordance with ASC 360. 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 statements of operations.
INSURANCE COSTS, SELF-INSURANCE RESERVES AND WARRANTY RESERVES
Insurance Costs and Self-Insurance Reserves
We are the parent of Beneva Indemnity Company (“Beneva”), which provides insurance coverage for construction defects discovered up to ten years following the close of a home, coverage for premise operations risk, and from time to time, property damage. We have certain deductible limits for each of our policies under our workers’ compensation, automobile, and general liability insurance policies, and we record expense and liabilities for the estimated costs of potential claims for construction defects. We also generally require our subcontractors and design professionals to indemnify us and provide evidence of insurance for liabilities arising from their work, subject to certain limitations. Excess liability exposure is aggregated annually and applied in excess of automobile liability, employer’s liability under workers compensation and general liability policies. We accrue for the expected costs associated with the deductibles and self-insured amounts under our various insurance policies based on historical claims, estimates for claims incurred but not reported, and potential for recovery of costs from insurance and other sources. The estimates are subject to significant variability due to factors such as claim settlement patterns, trends, and the extended period of time in which a construction claim might be made after the of a home.
Our loss reserves for claims insured by Beneva are based on factors that include an actuarial study for historical and anticipated claims, trends related to similar product types, number of homes closed, and geographical areas. We regularly review the reasonableness and adequacy of our reserves and make adjustments to the balance of the preexisting reserves to reflect changes in trends and historical data as information becomes available. Self-insurance reserves are included in Accrued expenses and other liabilities on the Consolidated balance sheets. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that actual costs could differ from those recorded and such differences could be material, resulting in a change in future estimated reserves.
Warranty Reserves
We offer a one-year limited warranty to cover various defects in workmanship or materials, a two-year limited warranty on certain systems (such as electrical or cooling systems), and a ten-year limited warranty on structural defects. In addition, any outstanding warranties which were offered by our acquired companies are also honored. We also provide third-party warranty coverage on homes where required by FHA or VA lenders. Warranty reserves are established as homes close in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. Our warranty is not considered a separate performance obligation in the sales arrangement since it is not priced apart from the home; therefore, it is accounted for in accordance with ASC Topic 450, Contingencies, which states that warranties that are not separately priced are generally accounted for by accruing the estimated costs to fulfill the warranty obligation. We accrue the estimated costs to fulfill the warranty obligation at the time a home closes, as a component of Cost of home closings on the Consolidated statements of operations and warranty reserves are included in Accrued expenses and other liabilities on the Consolidated balance sheets.
INVESTMENTS IN UNCONSOLIDATED ENTITIES AND VARIABLE INTEREST ENTITIES
We are involved in joint ventures with independent third parties for real estate development, homebuilding and mortgage lending activities. 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 results 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 they have substantive participating rights that preclude the presumption of control. For these unconsolidated joint ventures, our share of net earnings or losses is included in Net income from unconsolidated entities on the Consolidated statements of operations when earned and distributions are credited against our Investment in unconsolidated entities on the Consolidated balance sheets when received.
We evaluate our investments in unconsolidated joint ventures 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 to recover our investment in the unconsolidated entity, financial condition and long-term prospects of the unconsolidated 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.
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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 ownership and development. In accordance with ASC Topic 810, Consolidation , we have concluded that when we enter into an option or purchase agreement 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, or benefit from rights to residual returns, if they occur. If we are the primary beneficiary of the VIE, we consolidate the VIE in our Consolidated financial statements and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, on the Consolidated balance sheets.
VALUATION OF DEFERRED TAX ASSETS
We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. Changes in existing federal and state tax laws and corporate income tax rates could affect future tax results and the realization of deferred tax assets over time.
In accordance with ASC Topic 740-10, Income Taxes , we evaluate our deferred tax assets by tax jurisdiction, including the benefit from net operating loss (“NOL”) carryforwards by tax jurisdiction, to determine if a valuation allowance is required. We must assess, using significant judgments, whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, experience with operating losses and experience of utilizing tax credit carryforwards and tax planning alternatives. We have not made any material changes in our methodology used to establish our valuation allowance during these periods. If a specific event or transaction were to occur that impacts our valuation allowance, we would reassess the evidence and adjust the allowance accordingly. Although management believes our valuation allowance is reasonable, no assurance can be given that the final tax outcome of these matters will not be different from our current valuation of our deferred tax assets and it is reasonably possible that such differences could be material, resulting in a change in future valuations.
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Results of Operations
The following table sets forth our results of operations for the periods presented:
Years Ended December 31,
(Dollars in thousands, except per share information)
Statements of Operations Data:
Home closings revenue, net
Land closings revenue
Financial services revenue
Amenity and other revenue
Total revenue
Cost of home closings
Cost of land closings
Financial services expenses
Amenity and other expenses
Total cost of revenue
Gross margin
Sales, commissions and other marketing costs
General and administrative expenses
Net income from unconsolidated entities
Interest expense/(income), net
Other expense, net
Loss on extinguishment of debt, net
Income before income taxes
Income tax provision
Net income before allocation to non-controlling interests
Net income attributable to non-controlling interests
Net income
Home closings gross margin
Average selling price per home closed
Sales, commissions and other marketing costs as a percentage of home closings revenue, net
General and administrative expenses as a percentage of home closings revenue, net
Effective income tax rate
Earnings per common share-
Basic
Diluted
Non-GAAP Measures
In addition to the results reported in accordance with GAAP, we have provided information in this Annual Report relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) adjusted home closings gross margin, (iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to capitalization ratio.
Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding, to the extent applicable in a given period, the impact of real estate and inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, unique and unusual warranty charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net, and legal reserves or settlements that the Company deems not to be in the ordinary course of business and in the case of adjusted net income and adjusted earnings per common share, the tax impact due to such items. The legal reserves or settlements amounts presented in the year ended December 31, 2024
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relate to the same claim and are discussed in Note 13 - Commitments and Contingencies in the Notes to the Consolidated financial statements included in this Annual Report.
EBITDA and adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude, as applicable, interest expense/(income), net, amortization of capitalized interest, income provisions, depreciation and amortization to calculate EBITDA. Adjusted EBITDA further excludes non-cash compensation expense, if any, real estate and inventory impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, unique and unusual warranty charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net and legal reserves or settlements that the Company deems not to be in the ordinary course of business, in each case, as applicable in a given period.
Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, plus unamortized debt issuance cost/(premium), net, and less mortgage warehouse borrowings, net of unrestricted cash and cash equivalents ("net homebuilding debt"), by (ii) total capitalization (the sum of net homebuilding debt and total stockholders’ equity).
Adjusted home closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges and unique and unusual warranty charges.
Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our segments, and to set targets for performance-based compensation. We also use the ratio of net homebuilding debt to total capitalization ratio as an indicator of overall financial leverage and to evaluate our performance against other companies in the homebuilding industry. 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.
We believe that adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, as well as 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 net homebuilding debt to total capitalization ratio 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. We believe that adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the varying effects of items or transactions we do not believe are characteristic of our ongoing operations or performance.
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.
A reconciliation of adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, adjusted home closings gross margin, EBITDA, adjusted EBITDA, and ratio of net homebuilding debt to total capitalization to the comparable GAAP measures follows. For purposes of our presentation of our non-GAAP financial measures for the year ended December 31, 2024, such measures have been recast to include certain adjustments being presented in the year ended December 31, 2025 that were previously deemed immaterial in the prior period.
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Adjusted Net Income and Adjusted Earnings Per Common Share
Year ended December 31,
(Dollars in thousands, except per share data)
Net income
Legal reserves or settlements
Real estate impairment charges
Pre-acquisition abandonment charges
Warranty adjustment charges
Loss on extinguishment of debt, net
Tax impact due to above non-GAAP reconciling items
Adjusted net income
Basic weighted average number of shares
Adjusted earnings per common share - Basic
Diluted weighted average number of shares
Adjusted earnings per common share - Diluted
Adjusted Income Before Income Taxes and Related Margin
Year ended December 31,
(Dollars in thousands)
Income before income taxes
Legal reserves or settlements
Real estate impairment charges
Pre-acquisition abandonment charges
Warranty adjustment charges
Loss on extinguishment of debt, net
Adjusted income before income taxes
Total revenue
Income before income taxes margin
Adjusted income before income taxes margin
Adjusted Home Closings Gross Margin
Year Ended December 31,
(Dollars in thousands)
Home closings revenue, net
Cost of home closings
Home closings gross margin
Inventory impairment charges
Warranty adjustment charges
Adjusted home closings gross margin
Home closings gross margin as a percentage of home closings revenue, net
Adjusted home closings gross margin as a percentage of home closings revenue, net
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EBITDA and Adjusted EBITDA Reconciliation
Year Ended December 31,
(Dollars in thousands)
Net income before allocation to non-controlling interests
Interest expense, net
Amortization of capitalized interest
Income tax provision
Depreciation and amortization
EBITDA
Legal reserves or settlements
Non-cash compensation expense
Real estate impairment charges
Pre-acquisition abandonment charges
Warranty adjustment charges
Loss on extinguishment of debt, net
Adjusted EBITDA
Total revenue
Net income before allocation to non-controlling interests as a percentage of total revenue
EBITDA as a percentage of total revenue
Adjusted EBITDA as a percentage of total revenue
Debt to Capitalization Ratios Reconciliation
As of December 31,
(Dollars in thousands)
Total debt
Plus: unamortized debt issuance cost, net
Less: mortgage warehouse facilities borrowings
Total homebuilding debt
Total stockholders' equity
Total capitalization
Total homebuilding debt to capitalization ratio
Total homebuilding debt
Less: cash and cash equivalents
Net homebuilding debt
Total stockholders' equity
Total capitalization
Net homebuilding debt to capitalization ratio
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following tables and related discussion set forth key operating and financial data for our operations as of and for the fiscal years ended December 31, 2025 and 2024. For similar operating and financial data and discussion of our fiscal 2024 results compared to our fiscal 2023 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition
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and Results of Operations” under Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 19, 2025, and is incorporated herein by reference.
Ending Active Selling Communities
Year Ended December 31,
Change
East
Central
West
Total
Ending active selling communities were relatively consistent as of December 31, 2025 and 2024. The increase in the East segment was primarily attributable to the timing of community openings, including master planned communities, which were partially offset by community close-outs. The decreases in the Central and West segments were due to the close-out of several higher paced communities in certain markets. In addition, we strategically delayed certain community openings from the fourth quarter of 2025 into the first quarter of 2026.
Net Sales Orders
Year Ended December 31,
Net Sales Orders (1)
Sales Value (1)
Average Selling Price
(Dollars in thousands)
Change
Change
Change
East
Central
West
Total
(1) Net sales orders and sales value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.
The number of net sales orders decreased by 9.6% for the year ended December 31, 2025, compared to the prior year, which we believe to be primarily due to consumer apprehension as a result of macro economic factors such as mortgage interest rates and inflation which continue to remain elevated. To a lesser extent, we also experienced an increase in cancellations as a result of these factors. Average selling price on net sales orders decreased 2.7% year-over-year primarily due to an increase in discounts, partially offset by increases in option and lot premium revenues in certain markets.
Sales Order Cancellations
Cancellation Rate (1)
Year Ended December 31,
East
Central
West
Total Company
(1) Cancellation rate represents the number of canceled sales orders divided by gross sales orders.
The total company cancellation rate for the year ended December 31, 2025 increased to 13.2 % from 9.5 %, compared to the prior year. We believe the higher cancellation rate was driven by market conditions, including the inability of homeowners to sell their current homes prior to closing on a new home, coupled with consumer apprehension as a result of macroeconomic factors such as mortgage interest rates and inflation, which continue to remain elevated. In addition, we have reduced required customer deposits as means of stimulating new sales orders which can further contribute to higher cancellation rates.
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Sales Order Backlog
As of December 31,
Sold Homes in Backlog (1)
Sales Value
Average Selling Price
(Dollars in thousands)
Change
Change
Change
East
Central
West
Total
(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 sales contracts in our sales order backlog are subject to contingencies including mortgage loan approval and buyers selling their existing homes, which can result in future cancellations.
Total backlog units and total sales value decreased by 40.6% and 41.8%, respectively, at December 31, 2025 compared to December 31, 2024. Overall, we had fewer net sales orders and more quick move-in homes which sold and closed during the year ended December 31, 2025 compared to the year ended December 31, 2024, which contributed to the decrease in company-wide sales order backlog. All of our operating segments improved construction cycle times in the year ended December 31, 2025 which further contributed to the decrease in sales order backlog.
Home Closings Revenue, Net
Year Ended December 31,
Homes Closed
Home Closings Revenue, Net
Average Selling Price
(Dollars in thousands)
Change
Change
Change
East
Central
West
Total
The number of homes closed and home closings revenue, net remained relatively consistent for the year ended December 31, 2025, compared to the prior year. For the year ended December 31, 2025, we improved construction cycle times and sold and closed more quick move-in homes compared to the prior year which favorably impacted home closing units. However, we also experienced fewer net sales orders for the year ended December 31, 2025 as well as lower opening backlog compared to the prior year which unfavorably impacted home closing units.
Land Closings Revenue
Year Ended December 31,
(Dollars in thousands)
Change
East
Central
West
Total
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 or if we determine certain properties no longer fit our strategic plans. 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 period, depending on market conditions and opportunities. Land closings revenue for the year ended December 31, 2025 decreased primarily due to the change in the East region. In the prior year, we sold various lots in our Florida market for a total of $27.9 million, but did not have similar sales in the current year.
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Amenity and Other Revenue
Year Ended December 31,
(Dollars in thousands)
Change
East
Central
West
Corporate
Total
Several of our communities operate amenities such as golf courses, club houses, and fitness centers (generally in the East segment). We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region includes the activity relating to our Build-to-Rent and Urban Form operations. Amenity and other revenue for the year ended December 31, 2025 in Corporate was primarily due to the sale of one Build-to-Rent project and the sale of one Urban Form asset for $55.2 million and $22.8 million, respectively. Amenity and other revenue for the year ended December 31, 2024 in Corporate was primarily due to the sale of two Build-to-Rent projects for an aggregate of $88.4 million.
Segment Home Closings Gross Margins and Adjusted Gross Margins
The following table sets forth a reconciliation of adjusted home closings gross margin to GAAP home closings gross margin on a segment basis (see “Non-GAAP Measures” above for additional information about our use of non-GAAP measures).
Year Ended December 31,
East
Central
West
Consolidated
(Dollars in thousands)
Home closings revenue, net
Cost of home closings
Home closings gross margin
Inventory impairment charges
Warranty adjustment charges
Adjusted home closings gross margin
Home closings gross margin as a percentage of home closings revenue
Adjusted home closings gross margin as a percentage of home closings revenue
Consolidated home closings gross margin decreased 190 basis points to 22.5% for the year ended December 31, 2025, compared to 24.4% in the prior year. Adjusted home closings gross margin decreased 150 basis points to 23.0% for the year ended December 31, 2025, compared to 24.5% in the prior year. Home closings gross margin decreased in the East and Central regions primarily as a result of closing product mix. The East region was also negatively impacted by impairment and increased warranty charges. In addition, a decrease in average selling prices due to an increase in discounts, partially offset by increases in lot premium and option revenue, further contributed to the changes in home closings gross margin for the East and Central regions. The increase in the West region was primarily due to closing product mix. In addition, the West region was negatively impacted by an impairment charge during the year ended December 31, 2025.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Services
The following is a summary for the periods presented of financial services income before income taxes as well as supplemental data:
Year Ended
December 31,
(Dollars in thousands)
Change
Mortgage services revenue
Title services and other revenues
Total financial services revenue
Financial services net income from unconsolidated entities
Total revenue
Financial services expenses
Financial services income before income taxes
Total originations:
Number of Loans
Principal
Year Ended
December 31,
Supplemental data:
Average FICO score
Funded origination breakdown:
Government (FHA,VA,USDA)
Other agency
Total agency
Non-agency
Total
Total financial services revenue increased by 5.0% for the year ended December 31, 2025, compared to the prior year. The increase in total financial services revenue was primarily a result of increased revenue earned on the sale of loans and increased title production.
Sales, Commissions and Other Marketing Costs
Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, marginally increased to 6.0% from 5.9% for the year ended December 31, 2025 compared to the prior year. The relatively consistent results are primarily driven by leverage in controllable sales and marketing costs.
General and Administrative Expenses
General and administrative expenses as a percentage of home closings revenue, net, decreased to 3.5% for the year ended December 31, 2025 compared to 4.0% for the prior year. The decrease was primarily due to a decrease in variable compensation-related expenses.
Net Income from Unconsolidated Entities
Net income from unconsolidated entities was $4.9 million and $6.3 million for the years ended December 31, 2025 and 2024, respectively. The decrease in net income from unconsolidated entities was primarily due to our joint venture relating to our Build-to-Rent operations which is still in the lease ramp-up phase. This decrease was partially offset by increases in income from our joint ventures related to our financial services segment.
Interest Expense, net
Interest expense, net was $47.0 million and $13.3 million for the years ended December 31, 2025 and 2024, respectively. The increase in interest expense, net was primarily due to an increase in the amount of non-capitalizable interest expense relating to our land banking arrangements as well as a decrease in interest income earned on our outstanding cash
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balances. The number of communities financed via land banking arrangements increased by 48% year-over-year, driving the increase in expense.
Other Expense, net
Other expense, net for the years ended December 31, 2025 and 2024 was $37.7 million and $50.6 million, respectively. The year ended December 31, 2025 primarily consisted of $19.6 million in insurance losses and $14.8 million in pre-acquisition abandonment charges for projects we are no longer pursuing. The year ended December 31, 2024 included an aggregate of $23.7 million in legal charges, $21.3 million in insurance losses, and $9.5 million in pre-acquisition abandonment charges. Refer to Note 13 - Commitments and Contingencies in the Notes to Consolidated financial statements included in this Annual Report for additional discussion regarding the legal charges for the year ended December 31, 2024.
Loss on Extinguishment of Debt, net
Loss on extinguishment of debt, net for the year ended December 31, 2025 was $13.3 million. We recognized $12.2 million of loss as a result of our redemption of all of our 2027 5.875% Senior Notes (as defined herein) and the redemption of all of the 2027 6.625% Senior Notes (as defined herein). In addition, we recognized $1.1 million of loss relating to our amended Revolving Credit Facility, due to the write-off of prepaid unamortized debt issuance costs. We had no extinguishment of debt for the year ended December 31, 2024. Refer to “Liquidity and Capital Resources” and Note 7 - Debt in the Notes to the Consolidated Financial Statements included in this Annual Report for additional details regarding the purchase and redemptions.
Income Tax Provision
Our effective tax rate was 24.1% and 23.3% for the years ended December 31, 2025 and December 31, 2024, respectively. Our effective tax rate for both years was affected by state income taxes, non-deductible executive compensation, and excess tax benefits from stock-based compensation. Additionally, the effective tax rate in 2024 benefitted from certain energy tax credits related to homebuilding activities. We did not pursue energy credits in 2025 due to increasing costs to qualify which outweighed the benefits of obtaining such credits.
Net Income
Net income before allocation to non-controlling interests and diluted earnings per common share for the year ended December 31, 2025 were $791.3 million and $7.77, respectively. Net income before allocation to non-controlling interests and diluted earnings per common share for the year ended December 31, 2024 were $886.6 million and $8.27, respectively. The decreases in net income and diluted earnings per common share in the year ended December 31, 2025 compared to the prior year were primarily attributable to lower homebuilding gross margin, higher interest expense, and higher loss on extinguishment of debt, partially offset by lower general and administrative expenses, other expenses, and lower weighted average shares outstanding.
Liquidity and Capital Resources
Liquidity
We finance our operations through the following:
• Cash generated from operations;
• Borrowings under our Revolving Credit Facility;
• 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 homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our Consolidated statements of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During 2025, we (i) completed a cash tender offer (“Tender Offer”) to purchase approximately $479.2 million principal amount of the 5.875% Senior Notes due 2027 issued by TM Communities (a wholly owned subsidiary of the Company) (the "2027 5.875% Senior Notes") and redeemed the remaining $20.8 million principal amount of the 2027 5.875% Senior Notes and (ii)fully redeemed all $1.63 million principal amount of the 6.625% Senior Notes due 2027 issued by William Lyon Homes, Inc. (an indirect wholly owned subsidiary of the Company) (the "2027 6.625% WLH Notes") and $25.44 million principal amount of the 6.625% Senior Notes due 2027 issued by TM Communities (the "2027 6.625% TM Communities Notes," and together with the 2027 6.625% WLH Notes, the "2027 6.625% Senior Notes"), in each case, using net proceeds, together with cash on hand, from the issuance of $525.0 million aggregate principal amount of 5.75% Senior Notes due 2032 issued by TM Communities (the “2032 Senior Notes”). We also amended and restated our existing Revolving Credit Facility, resulting in a loss on extinguishment of debt due to the write-off of prepaid unamortized debt issuance costs. As a result of the redeemed senior notes and amended and restated Revolving Credit Facility, we recorded a net loss on extinguishment of debt of $13.3 million for the year ended December 31, 2025. Refer to Note 7 - Debt in the Notes to the Consolidated financial statements included in this Annual Report for additional details regarding the Tender Offer and redemptions.
The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):
(Dollars in thousands)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Revolving Credit Facility availability
Letters of credit outstanding
Revolving Credit Facility availability
Total liquidity
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 Facility to conduct our operations for the next twelve months. 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, payments of ongoing operating expenses, and repurchases of common stock. We believe we will generate sufficient cash from our operations to meet the demands for such funds, 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. As part of our operations, we may from time to time purchase our outstanding debt or equity through open market purchases, privately negotiated transactions or otherwise. Purchases or retirements of debt and/or purchases of equity, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.
Material Cash Requirements
We have various contractual obligations with commitments to pay third parties, including but not limited to our debt facilities, land purchase and land banking contracts, and leases. These obligations impact our liquidity and capital resource needs and are presented in the table below. Our short-term demands are cash requirements for the next twelve months and long-term demands are cash requirements beyond twelve months.
Cash Requirements
(Dollars in thousands)
Totals
Short-Term Demands
Long-Term Demands
Lease obligations (1)
Lot options and land banking arrangements
Senior notes
Other debt outstanding
Estimated interest expense (2)
Totals
(1) Amount includes interest.
(2) Estimated interest expense amounts for debt outstanding at the respective contractual interest rates, the weighted average of which was 5.1% as of December 31, 2025.
In addition to our contractual obligations, we also have forecasted operational cash outlays on items such as future land purchases or common stock repurchases, to maintain our strategic growth and returns to our investors. Management expects to invest app roximately $2.0 billion i n land acquisition and development during the next twelve months which is
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slightly lower than our spend during 2025. A s of December 31, 2025 we had approximately $529.1 million remaining on our share repurchase authorization. On February 11, 2026, the Board of Directors authorized a renewal of the stock repurchase program, permitting repurchases up to $1.0 billion. This program expires on December 31, 2027 and replaces the prior authorization.
Cash Flow Activities
Operating Cash Flow Activities
Our net cash provided by operating activities was $817.3 million for the year ended December 31, 2025 compared to $210.1 million for the year ended December 31, 2024. The increase in net cash provided by operating activities was primarily attributable to a decrease in spend on real estate inventory and land deposits. Spending also decreased in 2025 as a result of our increased vigilance in underwriting and approving new transactions and additional phases of communities in the current market.
Investing Cash Flow Activities
Net cash used in investing activities was $154.8 million for the year ended December 31, 2025 compared to $136.4 million for the year ended December 31, 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of fixed-maturity and equity securities, partially offset by a decrease in investments of capital into unconsolidated entities.
Financing Cash Flow Activities
Net cash used in financing activities was $298.5 million for the year ended December 31, 2025 compared to $393.6 million for the year ended December 31, 2024. The decrease in cash used in financing activities was primarily due to a net increase in loans payable and other borrowings as well as the proceeds from the issuance of senior notes which were partially offset by repayments on senior notes. Refer to Note 7 - Debt in the Notes to the Consolidated financial statements included in this Annual Report for additional details regarding the issuance of the 2032 Senior Notes and redemption of the 2027 6.625% Senior Notes and 2027 5.875% Senior Notes.
Debt Instruments
For information regarding our debt instruments, including the terms governing our senior notes and our Revolving Credit Facility, see Note 7—Debt in the Notes to the Consolidated financial statements included in this Annual Report.
Financial Guarantees
The following table summarizes our letters of credit and surety bonds as of the dates indicated:
As of December 31,
(Dollars in thousands)
Letters of credit (1)
Surety bonds
Total outstanding letters of credit and surety bonds
(1) As of December 31, 2025 and 2024, there was $200.0 million total capacity of letters of credit available under our Revolving Credit Facility.
Off-Balance Sheet Arrangements as of December 31, 2025
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. Our participation with 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 or strategic partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.
For the years ended December 31, 2025 and 2024, total cash contributed to unconsolidated joint ventures was $85.6 million and $129.8 million, respectively.
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The following is a summary of investments in unconsolidated joint ventures:
As of December 31,
(Dollars in thousands)
East
Central
West
Financial Services / Corporate
Total
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 property owners and their creditors generally have no recourse to the Company. Our exposure with respect to such contracts is generally limited to the forfeiture of the related non-refundable cash deposits. The aggregate purchase price for assets under these contracts was $3.4 billion at December 31, 2025 and $1.9 billion at December 31, 2024.
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ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A | 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 December 31, 2025, approximately 96% of our debt was fixed rate and 4% 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 to borrowings by TMHF under its various warehouse facilities. As of December 31, 2025, we had no outstanding borrowings under our Revolving Credit Facility. As of December 31, 2025, we had approximately $927.9 million of additional availability for borrowings under such facility including $127.9 million of additional availability for letters of credit (giving effect to $72.1 million of letters of credit outstanding as of such date).
The agreements governing our mortgage warehouse facilities as well as our Revolving Credit Facility use SOFR as the basis for determining interest rates. Given the limited history of this rate and potential volatility as compared to other benchmark or market rates, the future performance of this rate cannot be predicted based on historical performance.
We are required to offer to purchase all of our outstanding senior unsecured notes, as described in Note 7 , Debt in the Notes to Consolidated financial statements included in this Annual 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 December 31, 2025. 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 generally sold within 30 days of origination, its outstanding balance is included as a variable rate maturity in the most current period presented.
Expected Maturity Date
(In millions, except percentage data)
Thereafter
Total
Fair
Value
Fixed Rate Debt
Weighted average interest rate (1)
Variable Rate Debt (2)
Weighted average interest rate
(1) Represents the coupon rate of interest on the full principal amount of the debt.
(2) Based upon the amount of variable rate debt at December 31, 2025, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $0.8 million per year.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
Page
Number
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
Consolidated balance sheets
Consolidated statement of operations
Consolidated statement of comprehensive income
Consolidated statement of stockholders’ equity
Consolidated statement of cash flows
Notes to the Consolidated financial statements
Separate combined financial statements of our unconsolidated joint venture investments have been omitted because, if considered in the aggregate, they would not constitute a significant subsidiary as defined by Rule 3-09 of Regulation S-X.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Taylor Morrison Home Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Taylor Morrison Home Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Owned inventory valuation for active selling communities — Refer to Notes 2 and 4 to the financial statements
Critical Audit Matter Description
Owned inventory consists of land, land under development, homes under construction, completed homes and model homes, all of which are stated at cost. Management evaluates its owned inventory for indicators of impairment by community during each reporting period. If indicators of impairment are present for an active selling community, management first performs an undiscounted cash flow analysis to determine if a fair value analysis is required to be performed. The Company’s undiscounted cash flow analysis includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. Changes in these expectations may lead to a change in the outcome of the Company’s impairment analysis, and actual results may also differ from management’s assumptions.
Given the subjectivity in determining whether further impairment analysis is required for an active selling community, management exercises significant judgment when reviewing the indicators of impairment and the undiscounted cash flow
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
analyses, as applicable. Accordingly, auditing management’s judgments regarding the identification of impairment indicators and the key assumptions used in the undiscounted cash flow analyses involved especially subjective auditor judgment.
How the Critical Audit Matter Was Addressed in the Audit
We tested the operating effectiveness of controls over management’s impairment indicator analysis, including controls over key inputs into the analysis such as management’s forecast, and controls over management’s review of any undiscounted cash flows analyses for active selling communities identified with impairment indicators.
We evaluated the reasonableness of management’s impairment indicator analysis by evaluating management's process for identifying impairment indicators, including thresholds used for investigation, and whether management appropriately considered key relevant indicators. We also conducted an independent analysis to determine whether additional factors were present during the period that may indicate that a fair value analysis is required to be performed. Additionally, to evaluate management’s ability to develop estimates, we compared actual results for homes closed in the current year to prior projections for these same homes before closing and investigated variances.
If applicable, we evaluated the reasonableness of the key projections and estimates used in management’s undiscounted cash flow analyses by comparing the assumptions to recent home sales and closings. For any active selling communities without recent home sales and closings information available, we compared management’s estimates to historical estimates for similar communities, taking into consideration factors such as location, size, and type of community. We also inquired with management regarding trends and changing market conditions that were incorporated into management’s undiscounted cash flow projections in addition to consulting third-party analyst reports and projections that could identify factors that could affect an active selling community’s recoverability.
/s/ DELOITTE & TOUCHE LLP
Tempe, Arizona
February 18, 2026
We have served as the Company’s auditor since 2011.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
Assets
Cash and cash equivalents
Restricted cash
Total cash
Real estate inventory:
Owned inventory
Consolidated real estate not owned
Total real estate inventory
Land deposits
Mortgage loans held for sale
Lease right of use assets
Prepaid expenses and other assets, net
Other receivables, net
Investments in unconsolidated entities
Deferred tax assets, net
Property and equipment, net
Goodwill
Total assets
Liabilities
Accounts payable
Accrued expenses and other liabilities
Lease liabilities
Income taxes payable
Customer deposits
Estimated development liabilities
Senior notes, net
Loans payable and other borrowings
Revolving credit facility borrowings
Mortgage warehouse borrowings
Liabilities attributable to consolidated real estate not owned
Total liabilities
COMMITMENTS AND CONTINGENCIES (Note 13)
Stockholders’ equity
Common stock, $ 0.00001 par value, 400,000,000 shares authorized, 162,809,286 and 162,061,709 shares issued, 96,536,827 and 102,241,978 shares outstanding as of December 31, 2025 and December 31, 2024, respectively
Additional paid-in capital
Treasury stock at cost, 66,272,459 and 59,819,731 shares as of December 31, 2025 and December 31, 2024, respectively
Retained earnings
Accumulated other comprehensive income
Total stockholders’ equity attributable to TMHC
Non-controlling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying Notes to the Consolidated financial statements
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Years Ended
December 31,
Home closings revenue, net
Land closings revenue
Financial services revenue
Amenity and other revenue
Total revenue
Cost of home closings
Cost of land closings
Financial services expenses
Amenity and other expenses
Total cost of revenue
Gross margin
Sales, commissions and other marketing costs
General and administrative expenses
Net income from unconsolidated entities
Interest expense/(income), net
Other expense, net
Loss on extinguishment of debt, net
Income before income taxes
Income tax provision
Net income before allocation to non-controlling interests
Net income attributable to non-controlling interests
Net income
Earnings per common share
Basic
Diluted
Weighted average number of shares of common stock:
Basic
Diluted
See accompanying Notes to the Consolidated financial statements
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Years Ended December 31,
Income before non-controlling interests, net of tax
Post-retirement benefits adjustments, net of tax
Comprehensive income
Comprehensive income attributable to non-controlling interests
Comprehensive income available to Taylor Morrison Home Corporation
See accompanying Notes to the Consolidated financial statements
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Common Stock
Additional Paid-In Capital
Treasury Stock
Stockholders’ Equity
(In thousands, except share data)
Shares
Amount
Amount
Shares
Amount
Retained Earnings
Accumulated
Other
Comprehensive
Income/(loss)
Non-
Controlling
Interests
Total
Stockholders’
Equity
Balance — December 31, 2022
Net income
Other comprehensive income
Exercise of stock options and issuance of restricted stock, net (1)
Repurchase of common stock
Stock compensation expense
Balance — December 31, 2023
Net income
Other comprehensive income
Exercise of stock options and issuance of restricted stock, net (2)
Repurchase of common stock (3)
Stock compensation expense
Distributions to non-controlling interests of consolidated joint ventures
Changes in non-controlling interests of consolidated joint ventures, net
Balance — December 31, 2024
Net income
Other comprehensive income
Exercise of stock options and issuance of restricted stock, net (4)
Repurchase of common stock (5)
Stock compensation expense
Distributions to non-controlling interests of consolidated joint ventures
Changes in non-controlling interests of consolidated joint ventures, net
Balance — December 31, 2025
(1) Dollar amount includes $ 26.4 million of stock options exercised offset with the value of shares withheld for taxes on the issuance of restricted stock units which equates to $ 9.4 million
(2) Dollar amount includes $ 10.7 million of stock options exercised offset with the value of shares withheld for taxes on the issuance of restricted stock units which equates to $ 15.4 million
(3) Dollar amount includes $ 200.0 million of Accelerated Share Repurchases and $ 3.5 million for the 1% excise tax on share repurchases
(4) Dollar amount includes $ 10.5 million of stock options exercised offset with the value of shares withheld for taxes on the issuance of restricted stock units which equates to $ 11.0 million
(5) Dollar amount includes $ 100.0 million of Accelerated Share Repurchases and $ 3.3 million for the 1% excise tax on share repurchases
See accompanying Notes to the Consolidated financial statements
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
Cash Flows from Operating Activities
Net income before allocation to non-controlling interests
Adjustments to reconcile net income to net cash provided by operating activities:
Net income from unconsolidated entities
Stock compensation expense
Loss on extinguishment of debt, net
Distributions of earnings from unconsolidated entities
Depreciation and amortization
Lease expense
Debt issuance costs amortization
Estimated development liability change in estimate
Deferred income taxes
Real estate impairment charges
Change in Build-to-Rent/Urban Form assets due to sale
Changes in operating assets and liabilities:
Real estate inventory and land deposits
Mortgage loans held for sale, prepaid expenses and other assets, net
Customer deposits
Accounts payable, accrued expenses and other liabilities
Income taxes payable
Net cash provided by operating activities
Cash Flows from Investing Activities:
Purchase of property and equipment
Distributions of capital from unconsolidated entities
Investments of capital into unconsolidated entities
Purchase of fixed-maturity securities
Proceeds from sale and maturities of fixed-maturity securities
Purchase of equity securities
Net cash used in investing activities
Cash Flows from Financing Activities
Increase in loans payable and other borrowings
Repayments on loans payable and other borrowings
Borrowings on revolving credit facilities
Repayments on revolving credit facilities
Borrowings on mortgage warehouse facilities
Repayments on mortgage warehouse facilities
Proceeds from issuance of senior notes
Repayments on senior notes
Payment of deferred financing costs
Changes in stock option exercises and issuance of restricted stock, net
Payment of principal portion of finance lease
Repurchase of common stock, net
Cash and distributions to non-controlling interests of consolidated joint ventures, net
Net cash used in financing activities
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash — Beginning of period
Cash, Cash Equivalents, and Restricted Cash — End of period
Supplemental Cash Flow Information
Income tax payments
Supplemental Non-Cash Investing and Financing Activities:
Loans payable issued to sellers in connection with land purchase contracts
Change in consolidated real estate not owned
Non-cash portion of loss on debt extinguishment
Accrual of excise tax on share repurchases
See accompanying Notes to the Consolidated financial statements
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TAYLOR MORRISON HOME CORPORATION
NOTES TO THE 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 land developer. We operate in the states of Arizona, California, Colorado, Florida, Georgia, Indiana, Nevada, North and South Carolina, Oregon, Texas, and Washington. We provide a collection of homes across a wide range of price points to appeal to a variety 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 resort lifestyle buyers. We are the general contractors for all real estate projects and engage subcontractors for home construction and land development. Our homebuilding segments operate under the Taylor Morrison and Esplanade brand names. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. We also provide financial services to customers through our wholly owned subsidiaries including mortgage services through Taylor Morrison Home Funding (“TMHF”), title and escrow services through Inspired Title, and homeowner’s insurance policies through Taylor Morrison Insurance Services (“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 audited Consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), include the accounts of TMHC and its consolidated subsidiaries as well as certain consolidated joint ventures. Intercompany balances and transactions have been eliminated in consolidation.
Joint Ventures - 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 Consolidated statements of operations. The assets, liabilities and equity from the percentage of the joint ventures not owned by us is presented as “Non-controlling interests” on the Consolidated balance sheets and Consolidated statements of stockholders’ equity. The balance of Non-controlling interests on the Consolidated balance sheets will fluctuate from period to period as a result of activities within the respective joint ventures which may include the allocation of income or losses and distributions or contributions associated with the partners within the joint venture.
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 audited Consolidated financial statements and accompanying notes. Significant estimates include real estate development costs to complete, valuation of real estate, valuation of goodwill, valuation of estimated 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.
Concentration of Credit Risk — Financial instruments that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and mortgage loans held for sale. Cash and cash equivalents include amounts on deposit with financial institutions in the U.S. that are in excess of the Federal Deposit Insurance Corporation federally insured limits of up to $250,000. Of the different types of mortgage loans held for sale, there was no concentration of mortgage loans with any one borrower for the year ended December 31, 2025. No material losses have been experienced to date.
In addition, the Company is exposed to credit risk to the extent that mortgage loan borrowers fail to meet their contractual obligations. This risk is mitigated by collateralizing the home sold with a mortgage, and entering into forward commitments to sell our mortgage loans held for sale, generally within 30 days of origination.
Cash and Cash Equivalents — Cash and cash equivalents consist of cash on hand, demand and escrow deposits with financial institutions, and investments with original maturities of 90 days or less. At December 31, 2025, the majority of our cash and cash equivalents were invested in highly liquid money market funds or cash on deposit with major financial institutions.
Restricted Cash — For the year ended December 31, 2025 restricted cash consisted of cash held under broker margin accounts associated with derivative instruments.
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 an entire community, such as field construction supervision and related direct overhead. Home vertical construction costs are accumulated and charged to Cost of home closings at the time of home closings when revenue is recognized using the specific identification method. Land acquisition, development,
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interest, and real estate taxes are capitalized and allocated generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction, and construction utilities are considered overhead costs and allocated on a per unit basis. These costs are capitalized to inventory beginning with the start of development through construction completion. Changes in estimated costs to be incurred in a community are generally allocated to the remaining project on a prospective basis.
The life cycle of a community typically 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 finished lots.
We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.
We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment ("Topic 360"). 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 estimated 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, in certain circumstances, fair value can also 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 year ended December 31, 2025 we recorded $ 28.8 million of inventory impairments relating to our East and West segments. For the year ended December 31, 2024 we recorded $ 5.0 million of inventory relating to our East and Central segments. For the year ended December 31, 2023 we recorded $ 11.8 million of charges relating to our West segment. charges relating to real estate inventory are recorded to Cost of home on the Consolidated statements of operations. In addition to real estate inventory, we also review our other real estate assets for . For the year ended December 31, 2024 we recorded $ 12.5 million of real estate asset relating to one Urban Form asset in our Corporate segment. For the years ended December 31, 2025 and December 31, 2023 there were no asset charges relating to our Urban Form operations. charges relating to Urban Form assets are recorded to Amenity and other expenses on the Consolidated statement of operations.
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. For those communities that have been temporarily closed or development has been discontinued, we do not allocate or capitalize interest or other costs to the community’s inventory until activity resumes and such costs are expensed as incurred. In addition, if we cease development, we will evaluate the project for recoverability and discontinue future development and marketing activity until such time when we believe that market conditions have improved and positive economic performance can be achieved. Our assessment of the carrying value of our long-term strategic assets typically includes 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.
Assets Held for Sal e - Real estate or inventory assets are considered held for sale once it is determined that all six criteria in accordance with Topic 360 have been met. Real estate and inventory assets held for sale are reported at the lower of carrying value or estimated fair value, less estimated costs to sell. The estimated fair value is generally based on appraisal, sales listing agreements, purchase and sales agreements, letters of intent, broker price opinions, recent offers received, prices for assets in recent comparable sales transactions, other third-party estimates, or cash flow analyses, depending on the type of asset. Impairment losses on real estate or inventory assets held for sale is recognized when the carrying value is greater than the fair value less estimated costs to sell.
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. For the year ended December 31, 2024, we recorded $ 6.8 million of fair value adjustments for land held for sale in our West reporting segment, which was subsequently sold during 2025. Adjustments for land held for sale are recorded within Cost of land closings on the Consolidated statements of operations.
As of December 31, 2024, Amenity and other expenses on the Consolidated statements of operations included an adjustment to fair value for $ 5.3 million for one Urban Form asset which was classified as held for sale, but was subsequently determined by management that the sale of the asset was no longer probable within the one year requirement. As a result, we reclassified the Urban Form asset from held for sale to held and used during the fourth quarter of 2025. The asset was remeasured at the lower of (1) its carrying amount adjusted for depreciation that would have been recognized had the asset been continuously classified as held and used, and (2) its fair value at the reclassification date. The Urban Form Asset was reclassified with a net carrying value of $ 86.2 million.
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For the years ended December 31, 2025 and 2023 we had no material fair value adjustments for land held for sale.
Land banking arrangements — 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 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. We incur interest expense and fees on these arrangements. We capitalize qualifying interest costs to inventory during the development and construction periods with the remainder expensed and included in Interest expense/(income), net on the Consolidated statements of operations. These lots are considered controlled, however we are not legally obligated to purchase lots under these agreements and would forfeit any existing deposits and could be subject to financial and other penalties if the lots are not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. As such, these entities are not consolidated. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included in the Consolidated balance sheets.
A summary of land banking agreements related to our home building operations is as follows:
As of December 31,
(Dollars in millions)
Lots under land banking agreements
Aggregate purchase price
Exposure to loss
During the year ended December 31, 2025, we entered into a new land banking arrangement related to our Build-to-Rent operations. This land banking agreement is similar to our other land banking arrangements, however the land seller for our Build-to-Rent land banking agreement finances both construction and land development.
A summary of land banking agreements related to our Build-to-Rent operations is as follows:
We did not have any land banking agreements for Build-to-Rent as of December 31, 2024.
As of December 31,
(Dollars in millions)
Build-to-Rent lots under land banking agreements
Build-to-Rent aggregate purchase price
Build-to-Rent exposure to loss
Land Deposits — We make deposits related to land option contracts, land banking and land purchase contracts, which are recorded to Land deposits on the consolidated balance sheets. Land deposits are recorded as real estate inventory in the accompanying Consolidated balance sheets at the time the deposit is applied to the acquisition price of the land based on the terms of the underlying agreements. To the extent the deposits are non-refundable, they are charged to Other expense, net, if the land acquisition process is terminated or no longer determined probable. For the years ended December 31, 2025 and 2024, $ 7.3 million and $ 5.4 million of non-refundable deposits were charged to Other expense, net on the Consolidated statements of operations, respectively.
Mortgage Loans Held for Sale — Mortgage loans held for sale consist of mortgages due from buyers of Taylor Morrison homes that are financed through our wholly-owned mortgage finance subsidiary, TMHF. Mortgage loans held for sale are carried at fair value, using observable market information, including pricing from actual market transactions, investor commitment prices, or broker quotations. The fair value for Mortgage loans held for sale covered by investor commitments is generally based on commitment prices. The fair value for Mortgage loans held for sale not committed to be purchased by an investor is generally based on current delivery prices using best execution pricing.
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Leases — We recognize leases in accordance with ASC Topic 842, Leases. Our operating leases primarily consist of office space, construction trailers, model home leasebacks, and equipment or storage units. Operating and finance leases are recorded in Lease right of use assets and Lease liabilities on the Consolidated balance sheets.
A summary of our leases is shown below:
Operating Leases
As of December 31,
Finance Leases
As of December 31,
(Dollars in millions)
Weighted average discount rate
Weighted average remaining lease term (in years)
Payments on lease liabilities
Lease expense
The future minimum lease payments required under our leases as of December 31, 2025 are as follows (dollars in thousands):
Years Ending December 31,
Operating
Lease
Payments
Finance
Lease
Payments
Total
Lease
Payments
Thereafter
Total lease payments
Less: Interest
Present value of future lease payments
(1) Includes a 90-year land lease with 83 years remaining.
Prepaid Expenses and Other Assets, net — Prepaid expenses and other assets, net consist of the following:
As of December 31,
(Dollars in thousands)
Prepaid expenses
Other assets
Build-to-Rent assets
Total prepaid expenses and other assets, net
Prepaid expenses consist primarily of sales commissions, prepaid rent, impact fees, and unamortized debt issuance costs for the Revolving Credit Facility. Prepaid sales commissions are recorded on pre-closing sales activities, which are recognized on the ultimate closing of the homes to which they relate. Other assets consist primarily of various operating and escrow deposits, land/lot pre-acquisition costs, rebate receivables, investments, income tax receivables, Urban Form assets, and other deferred costs. Build-to-Rent assets consist primarily of land and development costs relating to projects under construction.
The investments recorded in Other assets as of December 31, 2025 consist of equity securities and fixed-maturity securities. Such investments are reported at their estimated fair value with changes in fair value recognized as gains or losses within Other expense, net on the Consolidated statements of operations, pursuant to the fair value option for financial instruments guidance, ASC Topic 825-10, Financial Instruments . As of December 31, 2025, the value of such investments was $ 59.3 million and the net gain/loss on investment was immaterial to Consolidated statements of operations. We had no similar material investments as of December 31, 2024.
Derivative Assets — We enter into interest rate lock commitments (“IRLCs”) when originating 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. We are exposed to interest rate risk as a result of these IRLCs and originated Mortgage loans held for sale until those loans are sold in the secondary market.
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The price risk related to changes in the fair value of IRLCs and Mortgage loans held for sale not committed to be purchased by investors are subject to change primarily due to changes in market interest rates. We manage the interest rate and price risk associated with our outstanding IRLCs and Mortgage loans held for sale not committed to be purchased by investors by entering into hedging instruments such as forward loan sales commitments and mandatory delivery commitments. We expect these instruments will experience changes in fair value inverse to changes in the fair value of the IRLCs and Mortgage loans held for sale not committed to investors, thereby reducing earnings volatility. Best effort sale commitments are also executed for certain loans at the time the IRLC is locked with the borrower. The fair value of the best effort IRLC and Mortgage loans held for sale are valued using the commitment price to the investor. We take into account various factors and strategies in determining what portion of the IRLCs and Mortgage loans held for sale to economically hedge.
The IRLCs meet the definition of a derivative and are reflected on the Consolidated balance sheets at fair value in Prepaid expenses and other assets, net or Accrued expenses and other liabilities based on whether the contracts are in a net gain (asset position) or net loss (liability position), with changes in fair value recognized in Financial Services revenue on the Consolidated statements of operations, in accordance with ASC Topic 815-25, Derivatives and Hedging. We do not meet the criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the Consolidated statements of operations in the period in which they occur. 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. Refer to Note 14—Mortgage Hedging Activities for additional information.
Other Receivables, net — Other receivables primarily consist of amounts expected to be recovered from various community development, municipality, and utility districts and utility deposits. Allowances are maintained for potential losses based on historical experience, present economic conditions, and other factors considered relevant. Allowances are recorded in Other expense, net, when collectability becomes unlikely. Allowances at December 31, 2025 and 2024 were immaterial.
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 give us access to significant lot positions with a minimal initial capital investment and substantially reduce the risk associated with land ownership and development. In accordance with ASC Topic 810, Consolidation , when we enter into agreements to acquire land or lots and pay a non-refundable deposit, we evaluate if a Variable Interest Entity (“VIE”) is created and if we are deemed to have provided subordinated financial support that will absorb some or all of an entity’s expected losses, or rights to residual returns, if they occur. If we are the primary beneficiary of the VIE, we consolidate the VIE and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, on the Consolidated balance sheets.
Unconsolidated Joint Ventures — We use the equity method of accounting for entities, generally joint ventures with other builders, where we do not have a controlling interest over the operating and financial results of the investee. Our share of net earnings or losses is included in Net income from unconsolidated entities on the Consolidated statements of operations when earned and distributions are credited against our Investments in unconsolidated entities on the Consolidated balance sheets when received.
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, trends in the general economic environment, entitlement status of the land, 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. There were no impairment charges related to investments in unconsolidated entities for the years ended December 31, 2025, 2024, and 2023.
Income Taxes — We account for income taxes in accordance with ASC Topic 740, Income Taxes ("ASC 740") . Deferred tax assets and liabilities are recorded based on future tax consequences of temporary differences between the amounts reported for financial reporting purposes and the amounts deductible for income tax purposes, and are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted.
We periodically assess our deferred tax assets, including the benefit from net operating losses, to determine if a valuation allowance is required. A valuation allowance is established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. Realization of the deferred tax assets is dependent upon,
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among other matters, taxable income in prior years available for carryback, estimates of future income, tax planning strategies, and reversal of existing temporary differences.
Property and Equipment, net — Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is generally computed using the straight-line basis over the estimated useful lives of the assets as follows:
Buildings: 20 – 40 years
Building and leasehold improvements: 10 years or remaining life of building/lease term if less than 10 years
Furniture, fixtures, and equipment: 5 years
IT equipment: 3 years
Model and sales office improvements: lesser of 3 years or the expected life of the community
Maintenance and repair costs are expensed as incurred.
Depreciation expense was $ 7.5 million, $ 11.5 million, and $ 9.0 million, respectively, for the years ended December 31, 2025, 2024, and 2023. Depreciation expense is recorded in General and administrative expenses in the Consolidated statement of operations.
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"). 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 fiscal quarter or whenever impairment indicators are present. For the years ended December 31, 2025, 2024 and 2023, there were no indicators of impairment.
Insurance Costs — We have certain deductible limits for each of our policies under our workers’ compensation, automobile, and general liability insurance policies, and we record expense and liabilities for the estimated costs of potential claims for such policies. Excess liability exposure is aggregated annually and applied in excess of automobile liability, employer’s liability under workers compensation and general liability policies.
Self-Insurance Reserves — We are the parent of Beneva Indemnity Company (“Beneva”), a wholly-owned captive insurance company, which provides insurance coverage for construction defects discovered up to ten years following the close of a home, coverage for premise operations risk, and property damage. We accrue for the expected costs associated with the deductibles and self-insured amounts under our various insurance policies based on historical claims, estimates for claims incurred but not reported, and potential for recovery of costs from insurance and other sources. The estimates are subject to significant variability due to factors such as claim settlement patterns, litigation trends, and the extended period of time in which a construction defect claim might be made after the closing of a home. We also generally require our subcontractors and design professionals to indemnify us and provide evidence of insurance for liabilities arising from their work, subject to certain limitations. Our loss reserves for self-insured claims are based on factors that include an actuarial study for historical and anticipated , trends related to similar product types, number of home , and geographical areas. We regularly review the reasonableness and adequacy of our reserves and make adjustments to the balance of the preexisting reserves to reflect changes in trends and historical data as information becomes available. Self-insurance reserves are included in Accrued expenses and other liabilities on the Consolidated balance sheets.
Warranty Reserves — We offer a one year limited warranty to cover various defects in workmanship or materials, a two year limited warranty on certain systems (such as electrical or cooling systems), and a ten year limited warranty on structural defects. We also provide third-party warranty coverage on homes where required by Federal Housing Administration or Veterans Administration lenders. Warranty reserves are established as homes close in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. Our warranty is not considered a separate performance obligation in the sales arrangement since it is not priced separately from the home, therefore, it is accounted for in accordance with ASC Topic 450, Contingencies, which states that warranties that are not separately priced are generally accounted for by accruing the estimated costs to fulfill the warranty obligation. As a result, we accrue the estimated costs to fulfill the warranty obligation at the time a home closes, as a component of Cost of home closings on the Consolidated statements of operations.
Employee Benefit Plans — We maintain a defined contribution plan pursuant to Section 401(k) of the Internal Revenue Code (“401(k) Plan”). Each eligible employee may elect to make before-tax contributions up to the current tax limits. At December 31, 2025, we match 100 % of employees’ voluntary contributions up to 4 % of eligible compensation, and 50 % for each dollar contributed between 4 % and 5 % of eligible compensation. We contributed $ 15.3 million, $ 14.4 million, and $ 13.2 million to the 401(k) Plan for the years ended December 31, 2025, 2024, and 2023, respectively.
Treasury Stock — We account for treasury stock, including the shares repurchased as part of our Accelerated Share Repurchase ("ASR") programs, in accordance with ASC Topic 505-30, Equity—Treasury Stock. Repurchased shares are reflected as a reduction in Stockholders’ equity. Refer to Note 10 - Stockholders' Equity for additional discussion regarding ASR programs.
Stock Based Compensation — We have stock options, performance-based restricted stock units ("PRSUs") and non-performance-based restricted stock units ("RSUs" or "Restricted stock"), which we account for in accordance with ASC Topic
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718-10, Compensation — Stock Compensation. The fair value for stock options is measured and estimated on the date of grant using the Black-Scholes option pricing model and recognized evenly over the vesting period of the options. PRSUs are measured using the closing price on the date of grant and expensed using a probability of attainment calculation which determines the likelihood of achieving the performance targets. RSUs are time-based awards and measured using the closing price on the date of grant and are expensed ratably over the vesting period.
Revenue Recognition — Revenue is recognized 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 home closings revenue and land closings revenue recognition:
(1) identify the contract(s) with our customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions 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 closings revenue:
• Revenue from home closings is recognized when 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 closings is recognized when a significant down payment is received, title passes and collectability of the receivable, if any, is probable, and control of the property transfers to the buyer, 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 club members, which are invoiced and recorded as revenue 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 from our Urban Form operations and Build-to-Rent operations which is recorded as control transfers to the buyer at transaction close and other criteria of ASC 606 are met. In addition, lease revenue is recognized by Urban Form for commercial and residential leases and Build-to-Rent operations for the rental home leases.
During the year ended December 31, 2025, we sold one Urban Form asset in California and one Build-to-Rent asset in Phoenix, generating $ 22.8 million and $ 55.2 million of revenue, respectively, which was recorded in Amenity and other revenue on the Consolidated statements of operations within our Corporate and Unallocated operating and reporting segment. The sale of these assets resulted in $ 0.9 million and $ 9.9 million of gross margin for Urban Form and Build-to-Rent, respectively. For the year ended December 31, 2024, we sold two Build-to-Rent projects for an aggregate of $ 88.4 million in revenue and $ 6.1 million of gross margin.
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. Generally, loans TMHF originates are sold to third-party investors within a short 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 is the realized and unrealized gains and losses from hedging instruments. See "Prepaid Expenses and Other Assets, net — Derivative Assets" above.
Advertising Costs — We expense advertising costs as incurred. For the years ended December 31, 2025, 2024, and 2023, advertising costs were $ 40.7 million, $ 33.8 million, and $ 28.7 million, respectively. Such costs are included in Sales, commissions and other marketing costs on the Consolidated statements of operations.
Recently Issued Accounting Pronouncements — In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2024-03, Disaggregation of Income Statement Expenses , which establishes new disclosure requirements for income statement expenses. Under the new guidance, entities must provide greater disaggregation of expenses which includes disclosing the amounts of purchases of inventory, employee compensation, and
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depreciation included in each relevant expense caption. Entities will also have to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, the total amount of selling expenses, and a definition of selling expenses. ASU 2024-03 can be applied prospectively or retrospectively and is effective for the annual reporting period ending December 31, 2027. The adoption of ASU 2024-03 will not impact our Consolidated financial statements but we are currently reviewing the impact that it may have on our footnote disclosures.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software , which establishes new guidance regarding timing of capitalizing software costs. Under the new guidance, entities are required to start capitalizing software costs when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 can be applied prospectively or retrospectively and is effective for annual and reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are currently reviewing the impact the adoption of ASU 2025-06 will have on our consolidated financial statements or disclosures, however we do not expect it to have a material impact.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which lists the disclosures required under ASC 270 and establishes a disclosure principal. The disclosure principal requires entities issuing condensed statements to disclose events occurring since the end of the most recent fiscal year that have a material impact on the entity. ASU 2025-11 can be applied prospectively or retrospectively and is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are currently reviewing the impact the adoption of ASU 2025-11 will have on our consolidated financial statements or disclosures, however we do not expect it to have a material impact.
3. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income 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:
Year Ended December 31,
Numerator:
Net income
Denominator:
Weighted average shares – basic
Restricted stock
Stock options
Weighted average shares – diluted
Earnings per common share – basic
Earnings per common share – diluted
The above calculations of weighted average shares exclude 230,870 , 120,255 , and 303,033 outstanding anti-dilutive stock options and unvested PRSUs and RSUs for the years ended December 31, 2025, 2024, and 2023, respectively.
In addition, 336,935 and 176,725 shares relating to our ASR (refer to Note 10 - Stockholders' Equity ) were also anti-dilutive and excluded from the above for the year ended December 31, 2025 and December 31, 2024, respectively. There were no ASR transactions in 2023.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
4. REAL ESTATE INVENTORY
Inventory consists of the following:
As of December 31,
(Dollars in thousands)
Real estate developed and under development
Real estate held for development or held for sale (1)
Total land inventory
Operating communities (2)
Capitalized interest
Total owned inventory
Consolidated real estate not owned
Total real estate inventory
(1) Real estate held for development or held for sale includes properties which are not in active production.
(2) Operating communities consist of all vertical construction costs relating to homes in progress and completed homes.
We have land option purchase contracts, land banking arrangements and other controlled lot agreements. We do not have title to the assets, and the sellers and their creditors generally only have recourse against us in the form of retaining non-refundable deposits. We are also not legally obligated to purchase the lots except where we have specific performance obligations.
A summary of owned and controlled lots is as follows:
As of December 31,
Owned lots:
Undeveloped
Under development
Finished
Total owned lots
Controlled lots:
Land option purchase contracts
Land banking arrangements
Other controlled lots (1)
Total controlled lots
Total owned and controlled lots
Homes in inventory
(1) Other controlled lots include single transaction take-downs and lots from our portion of unconsolidated JVs.
Lots which represent homes in progress and completed homes have been excluded from total owned lots. Controlled lots represent lots in which we have a contractual right to acquire real estate, generally through an option contract, land banking arrangement, or a land deposit paid to a seller. Homes in inventory include any lots which have commenced vertical construction.
Capitalized Interest — Interest capitalized, incurred and amortized is as follows:
Year ended December 31,
(Dollars in thousands)
Interest capitalized - beginning of period
Interest capitalized
Interest amortized to cost of home closings
Interest capitalized - end of period
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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, Build-to-Rent, and/or mortgage lending activities. The primary activity of our real estate development joint ventures is the development and sale of lots to joint venture partners and/or unrelated builders.
Summarized, unaudited condensed combined financial information of unconsolidated entities that are accounted for by the equity method are as follows (in thousands):
As of December 31,
Assets:
Real estate inventory
Other assets
Total assets
Liabilities:
Debt
Other liabilities
Total liabilities
Owners’ equity:
TMHC
Others
Total owners’ equity
Total liabilities and owners’ equity
Years ended December 31,
Revenues
Costs and expenses
Net income from unconsolidated entities
TMHC’s share in net income of unconsolidated entities
Distributions to TMHC from unconsolidated entities
Consolidated Entities — We have several joint ventures for the purpose of real estate development and homebuilding activities, which are VIEs. As the managing member, we oversee the daily operations and have the power to direct the activities of these 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 and rewards of these joint ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and the entities are consolidated.
Assets and liabilities of the consolidated joint ventures consist of the following (in thousands):
Years ended December 31,
Cash and cash equivalents
Owned real estate inventory
Other assets
Total assets of consolidated joint ventures
Liabilities of consolidated joint ventures (1)
(1) Liabilities of consolidated joint ventures is primarily comprised of accounts payable and accrued expenses and other liabilities.
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6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following (in thousands):
As of December 31,
Real estate development costs to complete
Compensation and employee benefits
Self-insurance and warranty reserves
Interest payable
Property and sales taxes payable
Other accruals
Total accrued expenses and other liabilities
Self-Insurance and Warranty Reserves — We accrue for the expected costs associated with our limited construction warranty, deductibles and self-insured exposure under our various insurance policies with Beneva. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that actual costs could differ from those reserved and such differences could be material, resulting in a change in future estimated reserves. A summary of the changes in reserves are as follows (in thousands):
Year Ended
December 31,
Reserve - beginning of period
Additions to reserves
Cost of claims incurred
Changes in estimates to pre-existing reserves
Reserve - end of period
The increase in the end of period reserves as of December 31, 2025 is a result of year-to-date net losses generated in Beneva. The reserve estimates utilize third-party actuarial assumptions which are based on historical and recent claims data. Both the frequency of the claims and the cost to resolve the claims have increased in recent years, causing increases in reserves.
7. DEBT
Total debt consists of the following (in thousands):
As of December 31,
Principal
Unamortized
Debt Issuance (Costs)/
Premium
Carrying
Value
Principal
Unamortized
Debt Issuance (Costs)/
Premium
Carrying
Value
5.875 % Senior Notes due 2027
6.625 % Senior Notes due 2027 (1)
5.75 % Senior Notes due 2028
5.125 % Senior Notes due 2030
5.75 % Senior Notes due 2032
Senior Notes subtotal
Loans payable and other borrowings
Revolving Credit Facility (2)
Mortgage warehouse borrowings
Total debt
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(1) Unamortized debt issuance premium is reflective of fair value adjustments as a result of purchase accounting.
(2) Unamortized debt issuance costs are included in Prepaid expenses and other assets, net on the Consolidated balance sheets.
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 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 December 31, 2025, we were in compliance with all of the covenants under the Senior Notes.
Issuance of 5.75 % Senior Notes due 2032 and Tender Offer for and Redemption of the 5.875 % Senior Notes due 2027 and Redemption of 6.625 % Senior Notes due 2027
In the fourth quarter of 2025, we (i) completed a cash tender offer (“Tender Offer”) to purchase approximately $ 479.2 million principal amount of the 5.875 % Senior Notes due 2027 issued by Taylor Morrison Communities, Inc. (“TM Communities”) (a wholly owned subsidiary of the Company) (the "2027 5.875 % Senior Notes") and redeemed the remaining $ 20.8 million principal amount of the 2027 5.875 % Senior Notes and (ii) fully redeemed all $ 1.63 million principal amount of the 6.625 % Senior Notes due 2027 issued by William Lyon Homes, Inc. (an indirect wholly owned subsidiary of the Company) (the "2027 6.625 % WLH Notes") and $ 25.44 million principal amount of the 6.625 % Senior Notes due 2027 issued by TM Communities (the "2027 6.625 % TM Communities Notes," and together with the 2027 6.625 % WLH Notes, the "2027 6.625 % Senior Notes"), , in each case, using net proceeds, together with cash on hand, from the issuance of $ 525.0 million aggregate principal amount of 5.75 % Senior Notes due 2032 issued by TM Communities (the “2032 Senior Notes”).
For the 2027 6.625 % Senior Notes, the redemption price was equal to 100.0 % of the principal amount, plus accrued and unpaid interest to, but excluding the redemption date, November 10, 2025.
For the 2027 5.875 % Senior Notes, (i) the purchase price in the Tender Offer was equal to approximately $1,023.07 per $1,000 principal amount of 2027 5.875 % Senior Notes purchased in such Tender Offer, plus accrued and unpaid interest to, but excluding the settlement date, November 10, 2025 and (ii) the redemption price was equal to a “make-whole” price of approximately $1,021.98 per $1,000 principal amount of 2027 5.875 % Senior Notes redeemed, plus accrued and unpaid interest to, but excluding the redemption date, December 2, 2025. As a result of the early redemption of these notes, we recorded a total net loss on extinguishment of debt of approximately $ 12.2 million in Loss on extinguishment of debt, net in the Consolidated Statement of Operations for the year ended December 31, 2025.
The 2032 Senior Notes mature on November 15, 2032. 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 2032 Senior Notes are similar to those contained in the indentures governing our other Senior Notes.
Prior to May 15, 2032, the 2032 Senior Notes are redeemable at a price equal to 100.0 % plus a "make-whole" premium for payments through May 15, 2032 (plus accrued interest and unpaid interest). Beginning on May 15, 2032, the 2032 Senior Notes are redeemable at par (plus accrued and unpaid interest).
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
On July 22, 2020, TM Communities issued $ 500.0 million aggregate principal amount of 5.125 % Senior Notes due 2030 (the “2030 Senior Notes"), which mature on August 1, 2030. The 2030 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).
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Revolving Credit Facility
On December 22, 2025 we amended and restated our Revolving Credit Facility, resulting in a loss on extinguishment of debt due to the write-off of prepaid unamortized debt issuance costs. A total of $ 1.1 million of such costs was recorded to Loss on extinguishment of debt, net on the Consolidated statement of operations, for the year ended December 31, 2025. As of December 31, 2024, we had $ 2.0 million of unamortized debt issuance costs, which are included in Prepaid expenses and other assets, net, on the Consolidated balance sheets.
The amended and restated facility is a Revolving Credit Facility with commitments of and up to $ 1 Billion and with a maturity date of December 22, 2030 (the "Revolving Credit Facility"). We capitalized $ 5.2 million of debt issuance costs related to the amended facility, which are included in Prepaid expenses and other assets, net, on the Consolidated balance sheets.
As of December 31, 2025 and December 31, 2024, we had $ 72.1 million and $ 52.9 million, respectively, of utilized letters of credit, resulting in $ 927.9 million and $ 947.1 million, respectively, of availability. We had no outstanding borrowings as of December 31, 2025 and December 31, 2024.
The 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, currently of at least (i) approximately $ 4.1 billion plus, (ii) 50 % of cumulative consolidated net income for each complete fiscal quarter commencing after September 30, 2025, plus (ii) 50 % of the cash proceeds of any equity issuance received by Taylor Morrison Home III since September 30, 2025 (subject to certain exceptions and rules set forth in the Revolving Credit Facility. The financial covenants would be in effect for any fiscal quarter during which (a) any loans under the 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) (i) undrawn letters of credit (except to the extent cash collateralized) issued under the Revolving Credit Facility in an aggregate amount greater than $ 40.0 million or (ii) unreimbursed letters of credit issued under the Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for more than five consecutive days during such fiscal quarter.
The Revolving Credit Facility contains certain other covenants including, without limitation, limitations on incurrence of liens, the payment of 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 Revolving Credit Facility contains customary events of default, subject to applicable grace periods, including, without limitation, for nonpayment of principal, interest or other amounts, violation of covenants (including financial covenants) breach of representations and warranties in any material respect, cross default and cross acceleration, bankruptcy, material monetary judgments, ERISA events with material adverse effect, invalidity of material guarantees and change of control.
As of December 31, 2025, we were in compliance with all of the covenants under the Revolving Credit Facility.
Mortgage Warehouse Borrowings
The following is a summary of our TMHF mortgage warehouse borrowings:
As of December 31, 2025
Facility
Amount
Drawn
Facility
Amount
Interest
Rate (1)
Expiration
Date
Collateral (1)
Warehouse B
Term SOFR + 1.70 %
on demand
Mortgage loans
Warehouse C
Term SOFR + 1.50 %
on demand
Mortgage loans
Warehouse D
Daily SOFR + 1.50 %
September 2, 2026
Mortgage loans
Warehouse E
Term SOFR + 1.60 %
on demand
Mortgage loans
Total
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As of December 31, 2024
Facility
Amount
Drawn
Facility
Amount
Interest
Rate (1)
Expiration
Date
Collateral (1)
Warehouse A (2)
Term SOFR + 1.70 %
on demand
Mortgage loans
Warehouse B (2)
Term SOFR + 1.70 %
on demand
Mortgage loans
Warehouse C
Term SOFR + 1.50 %
on demand
Mortgage loans
Warehouse D
Daily SOFR + 1.50 %
September 3. 2025 (3)
Mortgage loans
Warehouse E
Term SOFR + 1.60 %
on demand
Mortgage loans
Total
(1) The mortgage warehouse borrowings outstanding as of December 31, 2025 and 2024, were collateralized by $ 132.5 million and $ 207.9 million, respectively, of Mortgage loans held for sale. "SOFR" refers to the Secured Overnight Financing Rate.
(2) During December 2024, Warehouse A's bank was purchased by Warehouse B's bank and created a new facility referred to as Warehouse B. As a result, there was no availability under Warehouse A as of December 31, 2024. Warehouse B has been relabeled and was labeled as Warehouse F in our 2024 Annual Report.
(3) On August 29, 2025, we extended the term of Warehouse D to September 2, 2026
Loans Payable and Other Borrowings
Loans payable and other borrowings as of December 31, 2025 and 2024 consist of project-level debt to various land sellers and financial institutions for specific communities. Project-level debt is generally secured by the land that was acquired and the principal payments generally coincide with corresponding project lot closings or a principal reduction schedule. These borrowings bear interest at rates that ranged from 0 % to 11 % at each of December 31, 2025 and December 31, 2024, respectively. We impute interest for loans with no stated interest rates.
Future Minimum Principal Payments on Total Debt
Principal maturities of total debt for the year ended December 31, 2025 are as follows (in thousands):
(Dollars in thousands)
Year Ended
December 31,
Thereafter
Total debt
8. FAIR VALUE DISCLOSURES
ASC Topic 820, Fair Value Measurement, 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 IRLCs and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loans, 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 and Loans payable and other borrowings 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.
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During the year ended December 31, 2025, we invested in fixed income funds and equity securities. Fixed income funds consist of investments in diversified portfolios of corporate bonds, U.S. Treasury securities, and other debt instruments. These investments are valued based on the underlying securities’ observable market inputs, including benchmark yields, reported trades of identical or similar securities, issuer spreads, and broker‑quoted prices. Equity securities primarily include investments in publicly traded companies. The fair values of these securities are based on quoted prices in active markets.
There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of December 31, 2025, when compared to December 31, 2024.
The carrying value and fair value of our financial instruments are as follows:
As of December 31, 2025
As Of December 31, 2024
(Dollars in thousands)
Level in Fair
Value Hierarchy
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Description:
Mortgage loans held for sale
IRLCs
MBSs
Mortgage warehouse borrowings
Loans payable and other borrowings
5.875 % Senior Notes due 2027 (1)
6.625 % Senior Notes due 2027 (1)
5.75 % Senior Notes due 2028 (1)
5.125 % Senior Notes due 2030 (1)
5.75 % Senior Notes due 2032 (1)
U.S. Treasury securities
Corporate bonds
Equity securities
(1) Carrying value for Senior Notes, as presented, includes unamortized debt issuance costs or bond premium. Debt issuance costs are not factored into the fair value calculation for the Senior Notes.
Fair value measurements are used for real estate inventory on a nonrecurring basis when events and circumstances indicate that the carrying value of a property is not recoverable. These values are a level 3 in the fair value hierarchy.
The fair value of such inventories are as follows for the periods presented:
(Dollars in thousands)
March 31,
June 30,
September 30,
December 31,
(1) No fair value adjustment recorded in period.
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9. INCOME TAXES
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following:
Year Ended December 31,
(Dollars in thousands)
Current:
Federal
State
Current tax provision
Deferred:
Federal
State
Deferred tax provision
Total income tax provision
A reconciliation of the provision for income taxes and the amount computed by applying the federal statutory income tax rate of 21 % to income before provision for income taxes is as follows:
Year Ended December 31,
(Dollars in thousands)
Tax at federal statutory rate
State income taxes (net of federal benefit) (1)
Tax credits
Changes in valuation allowances
Nontaxable or nondeductible items
Changes in unrecognized tax benefits
Other
Capital loss carryforward
Other adjustments
Effective Rate (2)
(1) State taxes in California and Florida contributed to the majority of the tax effect in this category.
(2) The adoption of ASU 2023-09, Income Taxes has been reflected in our rate reconciliation above including revisions to the presentation of the prior year rate reconciliations for comparative purposes.
Our effective tax rate was 24.1 % and 23.3 % for the years ended December 31, 2025 and December 31, 2024, respectively. Our effective tax rate for both years was affected by state income taxes, non-deductible executive compensation, and excess tax benefits from stock-based compensation. Additionally, the effective tax rate in 2024 benefitted from certain energy tax credits related to homebuilding activities. We did not pursue the credits in 2025 due to increasing costs to qualify for the credits which outweighed the benefits of obtaining such credits.
We have certain tax attributes available to offset the impact of future income taxes. The components of net deferred tax assets and liabilities at December 31, 2025 and 2024 consisted of timing differences related to real estate inventory
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impairments, expense accruals and reserves, net operating loss carryforwards, and intangibles. A summary of these components for the years ending December 31, 2025 and 2024 is as follows:
Years Ended December 31,
(Dollars in thousands)
Deferred tax assets:
Real estate inventory
Accruals and reserves
Net operating losses (1)
Other (2)
Total deferred tax assets
Deferred tax liabilities:
Intangibles (2)
Other (2)
Deferred income
Total Deferred Tax Liabilities
Valuation allowance
Total net deferred tax assets
(1) A portion of our net operating losses is limited by Section 382 of the Internal Revenue Code, stemming from three business acquisitions: 1) the 2011 acquisition of the Company by our former principal equity holders, 2) the 2018 acquisition of AV Homes and 3) the 2022 acquisition of William Lyon Homes. All three acquisitions were deemed to be a change in control as defined by Section 382.
(2) The 2024 deferred tax assets and liabilities have been recast to reflect changes in classifications of certain assets and liabilities for greater clarity in comparison to the classifications reported in 2025. Prior year amounts reported in Real estate inventory and Other deferred tax liabilities have been further broken out into the Intangibles, Other deferred tax assets, and Other deferred tax liabilities categories above.
For the year ended December 31, 2025, we recorded a net valuation allowance of $ 4.6 million related to certain state deferred taxes which are not expected to be realized. We have approximately $ 29.7 million of available tax effected federal net operating loss ("NOL") carryforwards and $ 13.5 million of available tax effected state NOL carryforwards. Federal NOL carryforwards generated prior to January 1, 2018 may be used to offset future taxable income for a period of 20 years or indefinitely and begin to expire in 2029. State NOL carryforwards may be used to offset future taxable income for a period of 10 to 20 years or indefinitely and certain NOLs expire between 2026-2036. On an ongoing basis, we will continue to review all available evidence to determine if we expect to realize our deferred tax assets and federal and state NOL carryovers or if a valuation allowance is necessary.
We account for uncertain tax positions in accordance with ASC 740. ASC 740 requires a company to recognize the financial statement effect of a tax position when it is more likely than not based on the technical merits of the position that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties related to uncertain tax positions are recognized as a component of the income tax provision.
As of December 31, 2025, we had $ 6.4 million of unrecognized tax benefits related to current and prior tax positions taken on certain deferred temporary differences. If recognized, no amount would impact our effective tax rate. We recognized interest and penalties of $ 1.7 million as a component of the income tax provision as of December 31, 2025. There were no unrecognized tax benefits, penalties or interest accrued as of December 31, 2024.
A reconciliation of the change in the unrecognized tax benefits is as follows:
Year Ended December 31,
(Dollars in thousands)
Unrecognized tax benefits - January 1,
Increases related to positions taken during a current period
Decreases related to positions taken during a current period
Increases related to positions taken during a prior period
Decreases related to positions taken during a prior period
Decreases related to settlements with taxing authorities
Reductions related to lapse of the applicable statute of limitations
Unrecognized tax benefits - December 31,
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The statute of limitations for our major taxing jurisdictions remains open for examination for tax years through 2025. We are currently under exam by the IRS for certain federal income tax returns for tax years 2015 through 2018 and 2021. The outcome of these examinations is not yet determinable, but we believe our tax positions meet the more-likely-than-not threshold.
A reconciliation of taxes paid during 2025, net of refunds received, is as follows:
Year Ended December 31,
(Dollars in thousands)
Federal
State
California
Florida
Other
Subtotal state taxes paid
Total taxes paid
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold
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
On October 23, 2024, our Board of Directors authorized a renewal of the Company’s stock repurchase program which permitted the repurchase of up to $ 1 billion of the Company’s Common Stock through December 31, 2026. On February 11, 2026, our Board of Directors increased the amount available for future repurchases under our stock repurchase program to $ 1 billion of the Company’s common stock. This program expires on December 31, 2027 and replaces the prior authorization. Repurchases under the program may occur from time to time through open market purchases, privately negotiated transactions or other transactions. The timing, manner, price and amount of any common stock repurchases will be determined by us in our discretion and will depend on a variety of factors, including prevailing market conditions, our liquidity, the terms of our debt instruments, legal 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.
Using the availability under our stock repurchase program, we may enter into ASR agreements. Such agreements require a cash payment, which has generally been $ 50.0 million for the agreements we have executed. We receive an initial delivery of common stock with an aggregate value of 80 % of the repurchase price on the respective repurchase date, with the remaining 20 % received (or to be received) at final settlement using a volume-weighted average price calculation in accordance with the terms of each ASR agreement. We accounted for the ASRs as common stock repurchases and forward contracts indexed to our own common stock. We determined that the equity classification criteria was met for the forward contracts; therefore, they were not accounted for as derivative instruments.
The following table summarizes share repurchase activity for the program for the years ended December 31, 2025 and 2024:
(Number of Shares)
Number of shares repurchased with ASR
Other share repurchases (1)
Total amount repurchased
(1) Amount represents shares repurchased under our existing stock repurchase program which are not part of ASRs.
The following table summarizes our spend on share repurchases for the years ended December 31, 2025 and 2024:
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(Dollars in thousands)
Amount available for repurchase — beginning of period
Amount cancelled from expired or unused authorizations
Additional amount authorized for repurchase (1)
Amount repurchased (2)
Amount available for repurchase — end of period (1)
(1) On October 23, 2024, the Board of Directors authorized a renewal of the Company's stock repurchase program which permits the repurchase of the Company's common stock through December 31, 2026. On February 11, 2026, the Board of Directors authorized a renewal of the stock repurchase program, permitting repurchases up to $ 1.0 billion. This program expires on December 31, 2027 and replaces the prior authorization.
(2) Exclusive of the 1% excise tax on shares repurchased
11. STOCK BASED COMPENSATION
In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “Plan”). The Plan was most recently amended and restated in May 2022. The Plan provides for the grant of stock options, RSUs, PRSUs, and other equity-based awards deliverable in shares of our common stock. As of December 31, 2025, we had an aggregate of 4,562,431 shares of common stock available for future grants under the Plan.
The following table provides information regarding the amount and components of stock-based compensation expense, which is included in General and administrative expenses on the Consolidated statements of operations (in thousands):
Years Ended December 31,
Restricted stock (1)
Stock options
Total stock compensation
(1) Includes compensation expense related to time-based RSUs and PRSUs.
At December 31, 2025, 2024, and 2023, the aggregate unamortized value of all outstanding stock-based compensation awards was approximately $ 32.7 million, $ 29.2 million, and $ 26.5 million, respectively.
Stock options — Options granted to employees generally vest and become exercisable ratably on the first, second, third, and fourth anniversary of the date of grant. Vesting of the options is subject to continued employment, through the applicable vesting dates, and options expire within ten years from the date of grant.
The following tables summarize stock option activity for the Plan for each year presented:
Years Ended December 31,
Number Of
Options
Weighted Average Exercise/ Grant
Price
Number Of
Options
Weighted Average Exercise/ Grant
Price
Number Of
Options
Weighted Average Exercise/ Grant
Price
Outstanding, beginning
Granted (1)
Exercised
Cancelled/forfeited (1)
Balance, ending
Options exercisable, at December 31
(1) Excludes the number of options granted and canceled in the same period.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
As of December 31,
(Dollars in thousands)
Unamortized value of unvested stock options (net of estimated forfeitures)
Weighted-average period (in years) expense expected to be recognized
Weighted-average remaining contractual life (in years) for options outstanding
Weighted-average remaining contractual life (in years) for options exercisable
The following table summarizes the weighted-average assumptions and fair value used for stock options grants:
Years Ended December 31,
Expected dividend yield
Expected volatility (1)
Risk-free interest rate (1)
Expected term (in years) (1)
Weighted average fair value of options granted during the period
(1) Expected volatility and expected term are based on the historical information of comparable publicly traded homebuilders. Due to the limited number and homogeneous nature of option holders, the expected term was evaluated using a single group. The risk-free rate is based on the U.S. Treasury yield curve for periods equivalent to the expected term of the options on the grant date.
The following table provides information pertaining to the aggregate intrinsic value of options outstanding and exercisable at December 31, 2025, 2024 and 2023:
As of December 31,
(Dollars in thousands)
Aggregate intrinsic value of options outstanding
Aggregate intrinsic value of options exercisable
The aggregate intrinsic value is based on the market price of our common stock on December 31, 2025, the last trading day in December 2025, which was $ 58.87 , less the applicable exercise price of the underlying options. This value represents the amount that would have been realized as additional paid-in capital if all the option holders had exercised their options on December 31, 2025.
Performance-Based Restricted Stock Units – These awards will vest in full based on the achievement of certain performance goals over a three-year performance period, subject to the employee’s continued employment through the last date of the performance period and will be settled in shares of our common stock. The number of shares that may be issued in settlement of the PRSUs to the award recipients may be greater or lesser than the target award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.
The following table summarizes the activity of our PRSUs:
Years Ended December 31,
Balance, beginning
Granted
Vested
Forfeited
Balance, ending
Years Ended December 31,
(Dollars in thousands):
PRSU expense recognized
Unamortized value of PRSUs
Weighted-average period expense is expected to be recognized (in years)
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Non-Performance-Based Restricted Stock Units — Our RSUs consist of shares of our common stock that have been awarded to our employees and members of our Board of Directors. Vesting of RSUs is subject to continued employment with TMHC or continued service on the Board of Directors, as applicable, through the applicable vesting dates. Time-based RSUs granted to employees generally vest ratably over a three to four year period.
Time-based RSUs granted to members of the Board of Directors generally vest on the first anniversary of the grant date.
The following tables summarize the activity of our RSUs:
Years Ended December 31,
Number Of
RSUs
Weighted Average Grant Date Fair
Value
Number Of
RSUs (1)
Weighted Average Grant Date Fair
Value
Number Of
RSUs
Weighted Average Grant Date Fair
Value
Outstanding, beginning
Granted
Vested
Forfeited
Balance, ending
Years Ended December 31,
(Dollars in thousands):
RSU expense recognized
Unamortized value of RSUs
Weighted-average period expense is expected to be recognized (in years)
The Plan permits us to withhold from the total number of shares that would otherwise be distributed to a recipient on vesting of an RSU, an amount equal to the number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining RSU shares to the recipient.
12. OPERATING AND REPORTING SEGMENTS
We have multiple homebuilding operating components which are engaged in the business of acquiring and developing land, constructing homes, marketing and selling 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 which offers a number of finance-related products and services to our customers through our mortgage lending and title operations.
The Company defines the Chief Operating Decision Maker ("CODM") function as the Chief Executive Officer, the Chief Financial Officer, and the Chief Corporate Operations Officer. On a quarterly basis, the CODM is provided with the financial results and key performance metrics at consolidated and disaggregated levels. The Company’s CODM assesses the segment's performance by using each segment's gross margin and income before income taxes (which includes certain corporate overhead allocations to each homebuilding segment for certain costs such as travel and entertainment and payroll-related costs for the marketing department). The CODM makes company decisions and allocates resources based on the results and performance of the reporting segments.
Our reporting segments are as follows:
East
Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa
Central
Austin, Dallas, Denver, Houston, and Indianapolis
West
Bay Area, Las Vegas, Phoenix, Pacific Northwest (1) , Sacramento, and Southern California
Financial Services
Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services
(1) During the year ended December 31, 2025, we combined our Portland and Seattle divisions to become Pacific Northwest
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity. The segment information is consistent with the metrics reviewed in the CODM's package and is as follows (in thousands):
Year Ended December 31, 2025
East
Central
West
Financial
Services
Operating and Reporting Segment Subtotal
Corporate
and
Unallocated (1)
Total
Home closings revenue, net
All other revenue
Total revenue
Cost of home closings
All other cost of revenue
Total cost of revenue
Home closings gross margin
Total gross margin
Sales, commissions and other marketing costs (2)
General and administrative expenses
Net income/(loss) from unconsolidated entities
Interest and other (expense)/income, net (3)
Loss on extinguishment of debt
Income before income taxes
(1) Includes the activity from our Build-To-Rent and Urban Form operations
(2) Includes corporate marketing expense allocations
(3) Interest and other (expense)/income, net includes pre-acquisition write-offs of terminated projects
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Year Ended December 31, 2024
East
Central
West
Financial
Services
Operating and Reporting Segment Subtotal
Corporate
and
Unallocated (1)
Total
Home closings revenue, net
All other revenue
Total revenue
Cost of home closings
All other cost of revenue
Total cost of revenue
Home closings gross margin
Total gross margin
Sales, commissions and other marketing costs (2)
General and administrative expenses
Net (loss)/income from unconsolidated entities
Interest and other (expense)/income, net (3)
Income before income taxes
(1) Includes the assets from our Build-To-Rent and Urban Form operations
(2) Includes corporate marketing expense allocations
(3) Interest and other (expense)/income, net includes pre-acquisition write-offs of terminated projects
Year Ended December 31, 2023
East
Central
West
Financial
Services
Operating and Reporting Segment Subtotal
Corporate
and
Unallocated (1)
Total
Home closings revenue, net
All other revenue
Total revenue
Cost of home closings
All other cost of revenue
Total cost of revenue
Home closings gross margin
Total gross margin
Sales, commissions and other marketing costs (2)
General and administrative expenses
Net (loss)/income from unconsolidated entities
Interest and other expense, net (3)
Loss on extinguishment of debt
Income before income taxes
(1) Includes the assets from our Build-To-Rent and Urban Form operations
(2) Includes corporate marketing expense allocations
(3) Interest and other (expense)/income, net includes pre-acquisition write-offs of terminated projects
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
As of December 31, 2025
East
Central
West
Financial
Services
Operating and Reporting Segment Subtotal
Corporate
and
Unallocated (1)
Total
Real estate inventory and land deposits
Investments in unconsolidated entities
Other assets
Total assets
(1) Includes the assets from our Build-To-Rent and Urban Form operations
As of December 31, 2024
East
Central
West
Financial
Services
Operating and Reporting Segment Subtotal
Corporate
and
Unallocated (1)
Total
Real estate inventory and land deposits
Investments in unconsolidated entities
Other assets
Total assets
(1) Includes 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 $ 1.5 billion and $ 1.4 billion at December 31, 2025 and December 31, 2024, respectively. 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 bonds as of December 31, 2025 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 our ongoing routine business. We have a number of land purchase option contracts and land banking agreements for the right to purchase land or lots at a future point in time on predetermined terms. We do not have title to the property and the property owners and its creditors generally have no recourse to the Company. Our exposure with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits. The aggregate purchase price for assets under these contracts was $ 3.4 billion at December 31, 2025 and $ 1.9 billion at December 31, 2024.
Legal Proceedings — We are involved in various litigation and legal claims in the normal course of business, 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, 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 can be reasonably estimated. At December 31, 2025 and 2024, our legal accruals were $ 53.3 million and $ 49.1 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 accrued liabilities relating to such matter. 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)
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("Avatar"), generally alleging that our collection of club membership fees in connection with the use of one of our amenities in our East homebuilding segment violated various laws relating to homeowner associations and other Florida-specific laws (the "Solivita litigation"). The class action complaint sought 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 Sixth District Court of Appeal (the "District Court") on November 29, 2021, and the plaintiffs agreed to continue to pay club membership fees pending the outcome of the appeal. On June 23, 2023, the District Court affirmed the trial court judgment in a split decision, with three separate opinions. Recognizing the potential “far-reaching effects on homeowners associations throughout the State,” the District Court certified a question of great public importance to the Florida Supreme Court, and we filed a notice to invoke the discretionary review of the Florida Supreme Court. On November 2, 2023, the Florida Supreme Court to exercise jurisdiction. Following the Florida Supreme Court’s decision, we paid $ 64.7 million to the during the quarter ended December 31, 2023, which included the amount of the trial court’s judgment, club membership fees received during the pendency of our appeal, and pre- and post-judgment interest. The Court held evidentiary hearings on July 29 and 30, 2024 with respect to the ' for additional pre-judgment interest and legal fees and heard on August 13, 2024. On November 4, 2024, the Tenth Judicial Circuit Court for Polk County, Florida issued an order granting the ’ motion for attorneys’ fees and taxable costs and their motion for pre-judgment interest at a rate higher than the Florida statutory rate. The Court awarded $ 22.5 million for attorneys' fees, $ 0.6 million for pre-judgment interest at the statutory rate of 9.46%, and $ 0.6 million for reimbursement of taxable costs. We filed a notice of appeal and have recorded an accrual with respect to our estimated liability for the ' legal fees and costs for this matter, which is reflected in our legal accruals as of December 31, 2025.
After reviewing our amenity arrangements in our Florida communities to determine whether such arrangements might subject the Company to liability in light of the outcome of the Solivita litigation described above, we identified one additional community with similar arrangements. On August 13, 2020, Slade Chelbian, a resident of our Bellalago community in Kissimmee, Florida, filed a purported class action suit against Avatar, AV Homes, Inc. and Taylor Morrison Home Corporation in the Circuit Court of the Ninth Circuit in and for Osceola County, Florida, generally alleging that Avatar cannot earn profits from community members for use of club amenities where membership in the club is mandatory for all residents and failure to pay club membership fees could result in the foreclosure of their homes by Avatar. The case was recently transferred to the Business Court and assigned to a new judge. The trial, which was originally scheduled to commence in the first quarter of 2026, has been postponed until further order of the court. While the ultimate outcome and the costs associated with litigation are inherently uncertain and to predict, we have recorded an accrual for our estimated liability for this matter, which is reflected in our legal accruals as of December 31, 2025.
14. MORTGAGE HEDGING ACTIVITIES
The following summarizes derivative instruments as of the periods presented:
December 31, 2025
December 31, 2024
(Dollars in thousands)
Fair Value
Notional Amount (1)
Fair Value
Notional Amount (1)
IRLCs
MBSs
Total
(1) The notional amounts in the table above include mandatory and best effort mortgages, that have been locked and approved.
Total commitments to originate loans approximated $ 276.6 million and $ 246.1 million at December 31, 2025 and 2024, respectively. This amount represents the commitments to originate loans that have been locked and approved by underwriting. The notional amounts in the table above include 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, by placing contractual limits on the amount of unsecured credit extended to any single counterparty, and by 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 9 |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A | CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-K, 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 our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation as of December 31, 2025, our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective in alerting them in a timely manner to material information required to be disclosed in our reports filed or submitted with the SEC.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for the preparation and fair presentation of the consolidated financial statements included in this Annual Report. The consolidated financial statements have been prepared in conformity with GAAP and reflect management’s judgments and estimates concerning events and transactions that are accounted for or disclosed.
Management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management recognizes that there are inherent limitations in the effectiveness of any internal control and effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Additionally, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
In order to ensure that the Company’s internal control over financial reporting is effective, management regularly assesses such controls and did so most recently for its financial reporting as of December 31, 2025. Management’s assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on its assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025.
Deloitte & Touche LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report, has issued its attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Taylor Morrison Home Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Taylor Morrison Home Corporation and subsidiaries (the "Company") as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
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ITEM 9A | CONTROLS AND PROCEDURES
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 18, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's annual report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Tempe, Arizona
February 18, 2026
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ITEM 9B | OTHER INFORMATION
ITEM 9B | OTHER INFORMATION
During the fiscal quarter ended December 31, 2025, none of the Company’s directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
ITEM 9C | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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Part III
ITEM 10.
Directors, Executive Officers and Corporate Governance
