Operating and Reporting Segments |
3. OPERATING AND REPORTING SEGMENTS
In accordance with ASC Topic 280, Segment Reporting, we have
12 homebuilding operating divisions which we aggregate into three
reportable homebuilding segments. These segments are engaged in the
business of acquiring and developing land, constructing homes,
marketing and selling those homes, and providing warranty and
customer service. We aggregate our operating segments into a
reporting segment based on similar long-term economic
characteristics. We have no inter-segment sales as all home sales
are to external customers. To the extent we have inter-segment land
sales, the profit is deferred until the land is sold to a third
party. In addition, we include Mortgage Operations as a separate
segment. Our reporting segments are as follows:
|
|
|
East (Domestic) |
|
Houston (which includes a Taylor Morrison
division and a Darling Homes division), Austin, Dallas, North
Florida and West Florida |
West (Domestic) |
|
Phoenix, Northern
California, Southern California and Denver |
Canada (Foreign) |
|
Kitchener-Waterloo, Ottawa and Toronto |
Mortgage Operations (Domestic) |
|
Mortgage and Financial Services |
Management evaluates segment performance based on segment adjusted
gross margin, which is comprised of GAAP gross margin, less
interest amortized to cost of home closings (“adjusted gross
margin”). We define segment gross margin as homebuilding and
land revenue less cost of home construction, commissions and other
sales costs, land development and other land sales costs and other
costs incurred by or allocated to each segment, including
impairments. Operating results for each segment may not be
indicative of the results for such segment had it been an
independent, stand-alone entity.
Our segment information is as follows (in thousands):
|
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|
|
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|
Three Months Ended
September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2014 |
|
|
% |
|
|
2013 |
|
|
% |
|
|
2014 |
|
|
% |
|
|
2013 |
|
|
% |
|
Revenue:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East
|
|
$ |
346,065 |
|
|
|
45.6 |
|
|
$ |
279,747 |
|
|
|
44.1 |
|
|
$ |
968,488 |
|
|
|
50.0 |
|
|
$ |
751,623 |
|
|
|
49.3 |
|
West
|
|
|
274,698 |
|
|
|
36.2 |
|
|
|
203,480 |
|
|
|
32.1 |
|
|
|
705,321 |
|
|
|
36.4 |
|
|
|
504,562 |
|
|
|
33.1 |
|
Canada
|
|
|
129,842 |
|
|
|
17.1 |
|
|
|
143,423 |
|
|
|
22.6 |
|
|
|
239,348 |
|
|
|
12.4 |
|
|
|
247,737 |
|
|
|
16.2 |
|
Mortgage Operations
|
|
|
8,433 |
|
|
|
1.1 |
|
|
|
7,791 |
|
|
|
1.2 |
|
|
|
22,870 |
|
|
|
1.2 |
|
|
|
20,896 |
|
|
|
1.4 |
|
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|
|
|
|
|
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|
|
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|
|
|
|
Total revenues
|
|
|
759,038 |
|
|
|
|
|
|
|
634,441 |
|
|
|
|
|
|
|
1,936,027 |
|
|
|
|
|
|
|
1,524,818 |
|
|
|
|
|
Gross margin:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East
|
|
|
76,975 |
|
|
|
22.2 |
|
|
|
56,828 |
|
|
|
20.3 |
|
|
|
213,204 |
|
|
|
22.0 |
|
|
|
146,418 |
|
|
|
19.5 |
|
West
|
|
|
51,601 |
|
|
|
18.8 |
|
|
|
44,570 |
|
|
|
21.9 |
|
|
|
140,252 |
|
|
|
19.9 |
|
|
|
108,285 |
|
|
|
21.5 |
|
Canada
|
|
|
21,438 |
|
|
|
16.5 |
|
|
|
29,419 |
|
|
|
20.5 |
|
|
|
43,353 |
|
|
|
18.1 |
|
|
|
57,053 |
|
|
|
23.0 |
|
Mortgage Operations
|
|
|
3,376 |
|
|
|
40.0 |
|
|
|
3,406 |
|
|
|
43.7 |
|
|
|
9,229 |
|
|
|
40.4 |
|
|
|
8,952 |
|
|
|
42.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total gross margin
|
|
|
153,390 |
|
|
|
20.2 |
|
|
|
134,223 |
|
|
|
21.2 |
|
|
|
406,038 |
|
|
|
21.0 |
|
|
|
320,708 |
|
|
|
21.0 |
|
Sales, commissions and other marketing costs(1)
|
|
|
(47,186 |
) |
|
|
|
|
|
|
(37,029 |
) |
|
|
|
|
|
|
(124,303 |
) |
|
|
|
|
|
|
(97,238 |
) |
|
|
|
|
General and administrative expenses(1)
|
|
|
(21,572 |
) |
|
|
|
|
|
|
(21,944 |
) |
|
|
|
|
|
|
(66,274 |
) |
|
|
|
|
|
|
(68,193 |
) |
|
|
|
|
Equity in income of unconsolidated entities
|
|
|
11,756 |
|
|
|
|
|
|
|
9,425 |
|
|
|
|
|
|
|
22,497 |
|
|
|
|
|
|
|
21,049 |
|
|
|
|
|
Indemnification and transaction (expense) income
|
|
|
(21 |
) |
|
|
|
|
|
|
(396 |
) |
|
|
|
|
|
|
142 |
|
|
|
|
|
|
|
(188,320 |
) |
|
|
|
|
Loss on extinguishment of debt
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
(10,141 |
) |
|
|
|
|
Interest and other (expense) income, net
|
|
|
(3,347 |
) |
|
|
|
|
|
|
28 |
|
|
|
|
|
|
|
(11,043 |
) |
|
|
|
|
|
|
(1,469 |
) |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$ |
93,020 |
|
|
|
12.3 |
|
|
$ |
84,307 |
|
|
|
13.3 |
|
|
$ |
227,057 |
|
|
|
11.7 |
|
|
$ |
(23,604 |
) |
|
|
(1.5 |
) |
|
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|
(1) |
Represents sales, commissions and
other marketing costs, and general and administrative expenses,
including segment G&A. |
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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|
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|
Gross Margin by Segment:
|
|
Three Months Ended
September 30, 2014 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Total |
|
Gross margin
|
|
$ |
76,975 |
|
|
$ |
51,601 |
|
|
$ |
21,438 |
|
|
$ |
3,376 |
|
|
$ |
153,390 |
|
Add back interest amortized to cost of revenue
|
|
|
6,152 |
|
|
|
9,078 |
|
|
|
7,082 |
|
|
|
— |
|
|
|
22,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
|
|
$ |
83,127 |
|
|
$ |
60,679 |
|
|
$ |
28,520 |
|
|
$ |
3,376 |
|
|
$ |
175,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin %
|
|
|
24.0 |
% |
|
|
22.1 |
% |
|
|
22.0 |
% |
|
|
40.0 |
% |
|
|
23.1 |
% |
|
|
|
|
Three Months Ended
September 30, 2013 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Total |
|
Gross margin
|
|
$ |
56,828 |
|
|
$ |
44,570 |
|
|
$ |
29,419 |
|
|
$ |
3,406 |
|
|
$ |
134,223 |
|
Add back interest amortized to cost of revenue
|
|
|
4,891 |
|
|
|
5,332 |
|
|
|
6,121 |
|
|
|
— |
|
|
|
16,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
|
|
$ |
61,719 |
|
|
$ |
49,902 |
|
|
$ |
35,540 |
|
|
$ |
3,406 |
|
|
$ |
150,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin %
|
|
|
22.1 |
% |
|
|
24.5 |
% |
|
|
24.8 |
% |
|
|
43.7 |
% |
|
|
23.7 |
% |
|
|
|
|
Nine Months Ended September 30,
2014 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Total |
|
Gross margin
|
|
$ |
213,204 |
|
|
$ |
140,252 |
|
|
$ |
43,353 |
|
|
$ |
9,229 |
|
|
$ |
406,038 |
|
Add back interest amortized to cost of revenue
|
|
|
15,878 |
|
|
|
23,899 |
|
|
|
10,715 |
|
|
|
— |
|
|
|
50,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
|
|
$ |
229,082 |
|
|
$ |
164,151 |
|
|
$ |
54,068 |
|
|
$ |
9,229 |
|
|
$ |
456,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin %
|
|
|
23.7 |
% |
|
|
23.3 |
% |
|
|
22.6 |
% |
|
|
40.4 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
2013 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Total |
|
Gross margin
|
|
$ |
146,418 |
|
|
$ |
108,285 |
|
|
$ |
57,053 |
|
|
$ |
8,952 |
|
|
$ |
320,708 |
|
Add back interest amortized to cost of revenue
|
|
|
11,614 |
|
|
|
13,232 |
|
|
|
11,123 |
|
|
|
— |
|
|
|
35,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin
|
|
$ |
158,032 |
|
|
$ |
121,517 |
|
|
$ |
68,176 |
|
|
$ |
8,952 |
|
|
$ |
356,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross margin %
|
|
|
21.0 |
% |
|
|
24.1 |
% |
|
|
27.5 |
% |
|
|
42.8 |
% |
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory by Segment:
|
|
September 30, 2014 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Corporate
and
Unallocated |
|
|
Total |
|
Real estate inventory and land deposits
|
|
$ |
1,316,415 |
|
|
$ |
1,352,522 |
|
|
$ |
223,161 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,892,098 |
|
Investments in unconsolidated entities
|
|
|
51,747 |
|
|
|
33,960 |
|
|
|
129,826 |
|
|
|
1,244 |
|
|
|
— |
|
|
|
216,777 |
|
Other assets
|
|
|
142,694 |
|
|
|
47,169 |
|
|
|
263,749 |
|
|
|
83,840 |
|
|
|
386,813 |
|
|
|
924,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,510,856 |
|
|
$ |
1,433,651 |
|
|
$ |
616,736 |
|
|
$ |
85,084 |
|
|
$ |
386,813 |
|
|
$ |
4,033,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
|
|
East |
|
|
West |
|
|
Canada |
|
|
Mortgage
Operations |
|
|
Corporate
and
Unallocated |
|
|
Total |
|
Real estate inventory and land deposits
|
|
$ |
1,048,091 |
|
|
$ |
1,002,500 |
|
|
$ |
255,487 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,306,078 |
|
Investments in unconsolidated entities
|
|
|
20,191 |
|
|
|
— |
|
|
|
118,115 |
|
|
|
1,244 |
|
|
|
— |
|
|
|
139,550 |
|
Other assets
|
|
|
103,107 |
|
|
|
27,842 |
|
|
|
289,527 |
|
|
|
110,004 |
|
|
|
462,450 |
|
|
|
992,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,171,389 |
|
|
$ |
1,030,342 |
|
|
$ |
663,129 |
|
|
$ |
111,248 |
|
|
$ |
462,450 |
|
|
$ |
3,438,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|