Taylor Morrison CEO Talks Mergers and Labor

New York City. It's not fair. I bet it's beautiful now. It's beautiful here, but I was just in your lovely city early in the week talking to investors and it's quite beautiful there too. Just a little could Yeah, it's a little chili. It's actually sunnier today, so we'll take it. But in any case, you've been very busy. You were talking to investors. Earnings out as well as some deal making. Let's talk about deal making first, because making a big

here William Lyon, Yeah, exciting. We actually closed on the transaction last Thursday, so you're right. The timing of earnings and then closing on the deal and then move immediately going onto the road and talking to investors. But it's huge for the organization. It makes us top five builder in the US, and strategically, it really accomplished you know, quite a bit for us. It made us top five position in most of our markets. It put us on the map in Portland's and um uh, washed Seattle and

Las Vegas. It really allowed us to increase kind of our entry level first time mover positions across the portfolio, a lot of synergies. We quoted over eighty million in synergies. So yeah, it's a big, big, big transaction for the organization. We're very excited and we got to welcome nearly eight hundred team members to the company. Yeah, it's a big one.

And uh, tell me how it came about? I mean, was it just sort of a natural next step for you guys what you talked about the adding some geographic diversity, but this particular deal. How to come about this particular one. You know, I've had the opportunity over the years to get you know, it's a small industry kind of right, and so I've had the opportunity to know the CEO, Matt sized as well as the Lion family a great deal of respect UM and for a long time, I

think I believe these two businesses belonged together. And then it was really about, you know, one was the right time because strategically, for all the reasons I just talked about, it just made so much sense. And I think about how they approached the customer. UM. We're the most trusted builder UM in America and five years running, and they were in the top three. So we believed in kind

of the same experience for our customers. Are penetrations in each of our markets were slightly different, so it allowed us to make a bigger impact in each of the markets we do business in. And so then it was about getting you know, a deal that made sense and

working with the family. I think they put a great deal of trust into the organization to do the right thing and kind of carry on the legacy that the general you know, I think began more than started nearly sixty years and so a business like this, Cheryl, you know much better than I. It's high touch, it's very customer focus, very customer service, uh focus. How do you ensure as you get bigger that you sort of hold onto that at the highest level, it's probably where we put,

you know, most of our energy. And you're absolutely right that the integration of bringing these two companies together, it's all about the people. If we get that right and we bring these two companies. When we bring these two companies together the right way then and do the right things internally, it actually allows for a very different, very

different experience for our external customers. We started a partnership well over a year ago with the Ritz Carlton UM and have a very extensive training program and a daily communication vehicle across all three thousand of our team members. All of those things to ensure that our team members are empowered both internally and externally, and I think it makes a difference and it's showing up in our results. Interesting,

tell me about the Ritz Carlton thing. That's fascinating. Well, you know, it's all about experience, right, think about today's economy and its service economy, and it's a high to your point, a high touch point. And I had had the pleasure many many years ago to work with them on the rollout of a community and it was about making sure that you know, one it was a level

of experience you you provided to your customers. And you think about walking into a hotel and what you would expect for the ritz, but hey, that's a hotel room. Think about the experience you should expect as you were about to make the largest, most meaningful UM purchase in

your life. And we really believe that our customers deserve that, and we believe the best way to provide that is to make sure that our team are internal customers one feel part of this organization that they're making a difference in every day and that they're empowered to make decisions and they're treated with respect, and it just becomes a viral within the organization and um, I couldn't be more proud of the work that they've done and really the

way the organization has kind of embraced it, And like I said, it's kind of culminated with this series, this daily huddle where every single person in the company gets together to understand what's going on in their organization. Yeah, that's interesting, and I hadn't really thought about an exactly the way that you just laid out. I mean, it is.

It's it's when you think about sort of these catalytic moments in our lives that things we look back on, you always remember, you know, even if you buy several houses over the course of your lifetime, like you remember each one especially, Uh, those are early experiences. It's a very intimate and in some ways very vulnerable moment, right, Yeah, no matter if it's your first house, if you have a growing family. I mean, my kids are I'm old, so my kids are all grown up, but they still talk.

I mean, their friends are still the friends they had amy and the house we lived in twenty five years ago. So I mean it sounds a little, you know, a little squishy, but we were in the business of creating memories. Yeah. Absolutely. Let's get back to my conversation with Cheryl Palmer, still sticking with me, Thanks for hanging around. Chairman and CEO

of Taylor Morrison joining me on the phone from lovely Scottsdale, Arizona. So, Cheryl, before the break, we were talking about sort of managing the people in your business, that the folks who are you know, dealing with customers and selling homes and things like that. I did want to ask you about the broader labor market because we continue to be in a very tight labor market. I do wonder as you're actually getting homes built and sold. What are you finding? Yeah,

I would say we're seeing exactly the same thing. And this has been with us for a number of years now. Um for a number of different reasons, right, Like you said, the broader market, um, but if you think about the downturn and a lot of people left the industry, some aged doubt. Um, we didn't really grow new talent through the school system. So it's been very tight. It's been

tight both on the home building side. I'd say most recently, the biggest shift we've seen is we're really seeing it on the development side to what we call the horizontal development. The usdergrounds that it's taking longer to bring communities to market, is taking longer to build homes. But this is what we do when we work through it every day, and you really feel the pressure month end, quarter and year ends.

But you know it's UM. We're having to look at opportunities on building sciences and how we get more efficient. We're looking at developing and training and bringing new people into the industry. So there's not one quick answer here. And do you see it sort of playing through to margins and sort of overall profitability at this point, Cheryl, You know, you go through different parts of the construction

cycle where you see pressures. I mean, at some point it's on the commodities where we've seen it most, you know, consistently over the last many years, has been on the labor side. So yes, um, and you see it both directly in cost and you see it and just how long it takes. And so it's really critical that we go into partnerships with our trade partners because it's about getting them to the job and keeping them there and making sure that there's no dead days. The job's ready

for them when they get there. You know that we know. So it truly is and every meaning of the word a partnership for us to get done and deliver the quality homes we need to on time for our customers. So you've had a nice little run in the stock already this year stuck up. Based on what I'm seeing here in my Bloomberg terminal, I do wonder, is that elective in your mind of just great performance on your part, or does this tell us something well, that's clear, but

does it tell us something more broadly about demand? Does it tell us something more broadly about sort of the state of the industry across the US. I think it's you know, I'd love to say it's the performance of the team, and they've done some great work, and certainly that's a piece of it. And um all the things that they've been we've been working on for quite some time seeing finally come through the P and L and

and that being appreciated. And hey, William Lyons our six acquisition in six years, so each time you take a little bit of a step forward to take you know, take one back to take one forward. But I think more than anything, it's really a signal to how everyone's feeling about the industry. You know, we're just coming off of the year and earnings and everybody I think reported very nice results. I look at our fourth quarter and our sales were up for that continued in January, you know,

more than four five um. And it's it's been across all geographies, it's been across all consumer cohorts, and so I think it's really evidence of how the consumers feeling. You know, they're feeling good about their jobs, their incomes are starting to grow. We don't have really any supply to speak of in most parts of the country. Um, so I think it's a number of factors that's actually

playing into the confidence across the board. All right, only about a minute, minute and a half left here, Cheryl, tell me about a market you're especially excited about. I know, it's like choosing among your children because you know, and things like that. But you know, what's the market that maybe we should be thinking about that's not so obvious? It's not so obvious. Um wow, I think that I

point to a couple. Then one is, you know, California has had a lot of noise over the last year, and it could have been terroriffs, it could have been prices, it could have been salved. But both in the Bay as well Southern Cow, we've really seen some consistency back in the business. Interesting. I think that's exciting because you know, I think a year ago the sky was falling and

it really wasn't UM. And then if I were pointing to a couple others that were just seeing continued strength really across the board, it's Phoenix and I don't know if that's expected or not, but it just continues and has for quite some time. And then really through Texas, UM Austin is powerful, UM Houston has been very consistent in Dallas. Very similar to what I'd say about California.

It had seen a pretty tremendous piece of both price and volume a movement, and so it took a little breather, but it's feeling in most some markets feeling once again very consistent. All right, Cheryl Palmer. Always good to catch up with you, Chairman CEO of Taylor Morrison, doing some deals, putting earnings out, joining me on the phone from Scottsdale, Arizona. Looking forward to seeing you the next time you're back in New York City.