Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. All right, always good to get
Speaker 1: a sense of what's going on in the home buying,
Speaker 1: home building, all of the residential market. Nobody better to
Speaker 1: talk about than Cheryl Palmer, chairman and CEO of Taylor Morrison,
Speaker 1: joining me on the phone from lovely Scottsdale, Arizona. Cheryl,
Speaker 1: every time I talked to you this time of year,
Speaker 1: I think, wait, why are you? Why do you get
Speaker 1: to be in Scottsdale and I have to be in
Speaker 1: New York City. It's not fair. I bet it's beautiful now.
Speaker 1: It's beautiful here, but I was just in your lovely
Speaker 1: city early in the week talking to investors and it's
Speaker 1: quite beautiful there too. Just a little could Yeah, it's
Speaker 1: a little chili. It's actually sunnier today, so we'll take it.
Speaker 1: But in any case, you've been very busy. You were
Speaker 1: talking to investors. Earnings out as well as some deal making.
Speaker 1: Let's talk about deal making first, because making a big
Speaker 1: here William Lyon, Yeah, exciting. We actually closed on the
Speaker 1: transaction last Thursday, so you're right. The timing of earnings
Speaker 1: and then closing on the deal and then move immediately
Speaker 1: going onto the road and talking to investors. But it's
Speaker 1: huge for the organization. It makes us top five builder
Speaker 1: in the US, and strategically, it really accomplished you know,
Speaker 1: quite a bit for us. It made us top five
Speaker 1: position in most of our markets. It put us on
Speaker 1: the map in Portland's and um uh, washed Seattle and
Speaker 1: Las Vegas. It really allowed us to increase kind of
Speaker 1: our entry level first time mover positions across the portfolio,
Speaker 1: a lot of synergies. We quoted over eighty million in synergies.
Speaker 1: So yeah, it's a big, big, big transaction for the organization.
Speaker 1: We're very excited and we got to welcome nearly eight
Speaker 1: hundred team members to the company. Yeah, it's a big one.
Speaker 1: And uh, tell me how it came about? I mean,
Speaker 1: was it just sort of a natural next step for
Speaker 1: you guys what you talked about the adding some geographic diversity,
Speaker 1: but this particular deal. How to come about this particular one.
Speaker 1: You know, I've had the opportunity over the years to
Speaker 1: get you know, it's a small industry kind of right,
Speaker 1: and so I've had the opportunity to know the CEO,
Speaker 1: Matt sized as well as the Lion family a great
Speaker 1: deal of respect UM and for a long time, I
Speaker 1: think I believe these two businesses belonged together. And then
Speaker 1: it was really about, you know, one was the right
Speaker 1: time because strategically, for all the reasons I just talked about,
Speaker 1: it just made so much sense. And I think about
Speaker 1: how they approached the customer. UM. We're the most trusted
Speaker 1: builder UM in America and five years running, and they
Speaker 1: were in the top three. So we believed in kind
Speaker 1: of the same experience for our customers. Are penetrations in
Speaker 1: each of our markets were slightly different, so it allowed
Speaker 1: us to make a bigger impact in each of the
Speaker 1: markets we do business in. And so then it was
Speaker 1: about getting you know, a deal that made sense and
Speaker 1: working with the family. I think they put a great
Speaker 1: deal of trust into the organization to do the right
Speaker 1: thing and kind of carry on the legacy that the
Speaker 1: general you know, I think began more than started nearly
Speaker 1: sixty years and so a business like this, Cheryl, you
Speaker 1: know much better than I. It's high touch, it's very
Speaker 1: customer focus, very customer service, uh focus. How do you
Speaker 1: ensure as you get bigger that you sort of hold
Speaker 1: onto that at the highest level, it's probably where we put,
Speaker 1: you know, most of our energy. And you're absolutely right
Speaker 1: that the integration of bringing these two companies together, it's
Speaker 1: all about the people. If we get that right and
Speaker 1: we bring these two companies. When we bring these two
Speaker 1: companies together the right way then and do the right
Speaker 1: things internally, it actually allows for a very different, very
Speaker 1: different experience for our external customers. We started a partnership
Speaker 1: well over a year ago with the Ritz Carlton UM
Speaker 1: and have a very extensive training program and a daily
Speaker 1: communication vehicle across all three thousand of our team members.
Speaker 1: All of those things to ensure that our team members
Speaker 1: are empowered both internally and externally, and I think it
Speaker 1: makes a difference and it's showing up in our results. Interesting,
Speaker 1: tell me about the Ritz Carlton thing. That's fascinating. Well,
Speaker 1: you know, it's all about experience, right, think about today's
Speaker 1: economy and its service economy, and it's a high to
Speaker 1: your point, a high touch point. And I had had
Speaker 1: the pleasure many many years ago to work with them
Speaker 1: on the rollout of a community and it was about
Speaker 1: making sure that you know, one it was a level
Speaker 1: of experience you you provided to your customers. And you
Speaker 1: think about walking into a hotel and what you would
Speaker 1: expect for the ritz, but hey, that's a hotel room.
Speaker 1: Think about the experience you should expect as you were
Speaker 1: about to make the largest, most meaningful UM purchase in
Speaker 1: your life. And we really believe that our customers deserve that,
Speaker 1: and we believe the best way to provide that is
Speaker 1: to make sure that our team are internal customers one
Speaker 1: feel part of this organization that they're making a difference
Speaker 1: in every day and that they're empowered to make decisions
Speaker 1: and they're treated with respect, and it just becomes a
Speaker 1: viral within the organization and um, I couldn't be more
Speaker 1: proud of the work that they've done and really the
Speaker 1: way the organization has kind of embraced it, And like
Speaker 1: I said, it's kind of culminated with this series, this
Speaker 1: daily huddle where every single person in the company gets
Speaker 1: together to understand what's going on in their organization. Yeah,
Speaker 1: that's interesting, and I hadn't really thought about an exactly
Speaker 1: the way that you just laid out. I mean, it is.
Speaker 1: It's it's when you think about sort of these catalytic
Speaker 1: moments in our lives that things we look back on,
Speaker 1: you always remember, you know, even if you buy several
Speaker 1: houses over the course of your lifetime, like you remember
Speaker 1: each one especially, Uh, those are early experiences. It's a
Speaker 1: very intimate and in some ways very vulnerable moment, right, Yeah,
Speaker 1: no matter if it's your first house, if you have
Speaker 1: a growing family. I mean, my kids are I'm old,
Speaker 1: so my kids are all grown up, but they still talk.
Speaker 1: I mean, their friends are still the friends they had
Speaker 1: amy and the house we lived in twenty five years ago.
Speaker 1: So I mean it sounds a little, you know, a
Speaker 1: little squishy, but we were in the business of creating memories. Yeah. Absolutely.
Speaker 1: Let's get back to my conversation with Cheryl Palmer, still
Speaker 1: sticking with me, Thanks for hanging around. Chairman and CEO
Speaker 1: of Taylor Morrison joining me on the phone from lovely Scottsdale, Arizona. So, Cheryl,
Speaker 1: before the break, we were talking about sort of managing
Speaker 1: the people in your business, that the folks who are
Speaker 1: you know, dealing with customers and selling homes and things
Speaker 1: like that. I did want to ask you about the
Speaker 1: broader labor market because we continue to be in a
Speaker 1: very tight labor market. I do wonder as you're actually
Speaker 1: getting homes built and sold. What are you finding? Yeah,
Speaker 1: I would say we're seeing exactly the same thing. And
Speaker 1: this has been with us for a number of years now.
Speaker 1: Um for a number of different reasons, right, Like you said,
Speaker 1: the broader market, um, but if you think about the
Speaker 1: downturn and a lot of people left the industry, some
Speaker 1: aged doubt. Um, we didn't really grow new talent through
Speaker 1: the school system. So it's been very tight. It's been
Speaker 1: tight both on the home building side. I'd say most recently,
Speaker 1: the biggest shift we've seen is we're really seeing it
Speaker 1: on the development side to what we call the horizontal development.
Speaker 1: The usdergrounds that it's taking longer to bring communities to market,
Speaker 1: is taking longer to build homes. But this is what
Speaker 1: we do when we work through it every day, and
Speaker 1: you really feel the pressure month end, quarter and year ends.
Speaker 1: But you know it's UM. We're having to look at
Speaker 1: opportunities on building sciences and how we get more efficient.
Speaker 1: We're looking at developing and training and bringing new people
Speaker 1: into the industry. So there's not one quick answer here.
Speaker 1: And do you see it sort of playing through to
Speaker 1: margins and sort of overall profitability at this point, Cheryl,
Speaker 1: You know, you go through different parts of the construction
Speaker 1: cycle where you see pressures. I mean, at some point
Speaker 1: it's on the commodities where we've seen it most, you know,
Speaker 1: consistently over the last many years, has been on the
Speaker 1: labor side. So yes, um, and you see it both
Speaker 1: directly in cost and you see it and just how
Speaker 1: long it takes. And so it's really critical that we
Speaker 1: go into partnerships with our trade partners because it's about
Speaker 1: getting them to the job and keeping them there and
Speaker 1: making sure that there's no dead days. The job's ready
Speaker 1: for them when they get there. You know that we know.
Speaker 1: So it truly is and every meaning of the word
Speaker 1: a partnership for us to get done and deliver the
Speaker 1: quality homes we need to on time for our customers.
Speaker 1: So you've had a nice little run in the stock
Speaker 1: already this year stuck up. Based on what I'm seeing
Speaker 1: here in my Bloomberg terminal, I do wonder, is that
Speaker 1: elective in your mind of just great performance on your part,
Speaker 1: or does this tell us something well, that's clear, but
Speaker 1: does it tell us something more broadly about demand? Does
Speaker 1: it tell us something more broadly about sort of the
Speaker 1: state of the industry across the US. I think it's
Speaker 1: you know, I'd love to say it's the performance of
Speaker 1: the team, and they've done some great work, and certainly
Speaker 1: that's a piece of it. And um all the things
Speaker 1: that they've been we've been working on for quite some
Speaker 1: time seeing finally come through the P and L and
Speaker 1: and that being appreciated. And hey, William Lyons our six
Speaker 1: acquisition in six years, so each time you take a
Speaker 1: little bit of a step forward to take you know,
Speaker 1: take one back to take one forward. But I think
Speaker 1: more than anything, it's really a signal to how everyone's
Speaker 1: feeling about the industry. You know, we're just coming off
Speaker 1: of the year and earnings and everybody I think reported
Speaker 1: very nice results. I look at our fourth quarter and
Speaker 1: our sales were up for that continued in January, you know,
Speaker 1: more than four five um. And it's it's been across
Speaker 1: all geographies, it's been across all consumer cohorts, and so
Speaker 1: I think it's really evidence of how the consumers feeling.
Speaker 1: You know, they're feeling good about their jobs, their incomes
Speaker 1: are starting to grow. We don't have really any supply
Speaker 1: to speak of in most parts of the country. Um,
Speaker 1: so I think it's a number of factors that's actually
Speaker 1: playing into the confidence across the board. All right, only
Speaker 1: about a minute, minute and a half left here, Cheryl,
Speaker 1: tell me about a market you're especially excited about. I know,
Speaker 1: it's like choosing among your children because you know, and
Speaker 1: things like that. But you know, what's the market that
Speaker 1: maybe we should be thinking about that's not so obvious?
Speaker 1: It's not so obvious. Um wow, I think that I
Speaker 1: point to a couple. Then one is, you know, California
Speaker 1: has had a lot of noise over the last year,
Speaker 1: and it could have been terroriffs, it could have been prices,
Speaker 1: it could have been salved. But both in the Bay
Speaker 1: as well Southern Cow, we've really seen some consistency back
Speaker 1: in the business. Interesting. I think that's exciting because you know,
Speaker 1: I think a year ago the sky was falling and
Speaker 1: it really wasn't UM. And then if I were pointing
Speaker 1: to a couple others that were just seeing continued strength
Speaker 1: really across the board, it's Phoenix and I don't know
Speaker 1: if that's expected or not, but it just continues and
Speaker 1: has for quite some time. And then really through Texas,
Speaker 1: UM Austin is powerful, UM Houston has been very consistent
Speaker 1: in Dallas. Very similar to what I'd say about California.
Speaker 1: It had seen a pretty tremendous piece of both price
Speaker 1: and volume a movement, and so it took a little breather,
Speaker 1: but it's feeling in most some markets feeling once again
Speaker 1: very consistent. All right, Cheryl Palmer. Always good to catch
Speaker 1: up with you, Chairman CEO of Taylor Morrison, doing some deals,
Speaker 1: putting earnings out, joining me on the phone from Scottsdale, Arizona.
Speaker 1: Looking forward to seeing you the next time you're back
Speaker 1: in New York City.