Welcome to the second quarter 2013 Taylor Morrison Home Corporation Earnings Conference Call. My name is [Batiba] and I’ll be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now turn the call over to Calvin Boyd, Corporate Treasurer. Mr. Boyd, you may begin.

Thank you. Please note that some of our comments on today’s conference call refer to non-GAAP financial measures which we believe provide useful information for you [daily] business performance. This information should be considered as supplemental in nature and should not be consider an isolation or as a substitute for the related financial information impaired in the quarters with GAAP. In addition these non-GAAP financial measures may not be the same as similarly entitled measures with Board of our other companies. Reconciliations to the most directly comparable GAAP financial measures are available on the Investor Relations portion of our website at taylormorrison.com and in our earnings release. Finally please keep in mind everything we cover during today’s conference call, including the question-and-answer session is subject to the Safe Harbor statement or forward-looking statements within the meaning of U.S. securities laws. This may include statements about our current expectations or forecast of market and economic conditions, our business activities, prospects, strategies and future business and financial performance. These forward-looking statements are not guarantees of future performance and actual results could differ materially from those suggested by our comments made during today’s conference call. I will call your attention to the description of risk that could effect our future results that is contained in our registration statement of Form S1 and subsequent reports filed with the SEC. Now let me turn the call over to our President and CEO, Sheryl Palmer.

Thank you Calvin and good afternoon everyone. Thank you for joining us for our earnings call to discuss the second quarter financial results. With me on the call this afternoon is Dave Cone, Chief Financial Officer; Calvin Boyd, our Corporate Treasurer; and also in the room is Dave Hreha, our Corporate Controller and Erin Willis, our Director of Corporate Communication. I would like to begin with a brief overview of our results which demonstrate the continued success of our operating strategy and also discuss general market conditions. Dave Cone will take you through the financial review as well as our guidance for the third quarter and the 2013 year. Then I will provide an update of the operations of the business, after which we will take your questions. As you know, this quarter includes certain charges of approximately 120 million related to our IPO which closed on April 12, 2013. In addition Taylor Morrison in coordination with our former UK parent company reached a settlement with the IRS on open tax matters relating to the period prior to July 2011 resulting in an expense in a substantially offsetting tax benefit in our operations during our second quarter 2013. Dave will take you through each of these items in more detail in his prepared comments. During today’s call, we think it’s important to discuss our financial results both as reported and as adjusted to exclude the effect of certain charges, so you can get the full visibility of the strength of the actual business result as well as the accounting and reporting implications of these charges. The accounting effects of our recent IPO, the IRS settlement and corresponding indemnification can be ongoing impact of purchase accounting from our Darling acquisition could over shadow the strength of our operating metrics. However given…

Thanks, Sheryl and hello everyone. As Sheryl discussed, we incurred certain charges related to the IPO in the second quarter. These include pretax expense for a $10.1 million loss on early extinguishment of debt related to the redemption of a portion of our existing 7.75% senior notes due 2020. $29.8 million for the termination of the management agreement with our sponsors and an $80.2 million non-cash charge associated with the reorganization of our equity structure in connection with the IPO. In addition, we had a $79.6 million charge related to the reversal of a tax indemnification receivable related to our former parent company with a substantially offsetting tax benefit. In connection with the July 2011 acquisition, our former parent indemnified us for certain income tax position. During the second quarter Taylor Morrison, in coordination with our former parent, settled with the IRS for an amount less than the receivable which resulted in the write-off of the remaining receivable balance. Excluding, these charges, we had earnings per share of $0.27 on adjusted net income of $32.9 million in the second quarter of 2013, as reported the company had earnings of $0.16 per share on a GAAP net income of $5.3 available to Class A shareholders. As of the IPO, we now have Class A and Class B shareholders, with Class B representing the majority owners. Certain onetime charges occurring before our IPO and the earnings that occurred prior to the IPO were allocated solely to the Class B shareholders and are not considered in earnings available to the Class A shareholders which represent 27.1% of the ownership of the company. Net sales orders totaled 1,596 units representing a 26% increase when compared to the same quarter a year ago. Net sales orders in our U.S. operations improved 33% to 1,403 units,…

Thanks, Dave. And I want to say again how pleased we are with our second quarter performance. Our continuing strength and backlog at the end of the quarter provides a firm foundation and excellent visibility for the balance of the year and into 2014. As we look forward, it will be critical to ensure that we keep adequate lots in front of the business to meet future demand. To achieve that, we spent 302 million in land purchases and development during the second quarter and 445 million year-to-date. As we look to the end of 2013, we are still well positioned to spend over a $1 billion in land acquisitions and development for the year. Approximately one-third of that is planned development spend. Many of the allots acquired year-to-date in 2013 were generally negotiated in 2012 or earlier and are just now being purchased. Interest rates are garnering a lot of attention recently with concern that rising rates will hamper the U.S. housing recovery. We view normalizing interest rates as a positive indicator, signaling that the economy is expanding, employment is improving and banks will be more willing to lend. From a historical perspective, today’s current rates are still very attractive and enticing for many borrowers. We also understand that rate increase can negatively affect affordability for homes and we believe it's important to separate the discussion about the impacts of our current interest rate environment in to terms of backlog and your prospect. So turning to our backlog, interest rates fluctuation can change monthly payment and qualification thresholds for buyers. So we would expect someone naturally be disappointed as they had separate expectation on an interest rate with a three handle. We monitor our borrowers and backlog and work with them on extended lot programs and product alternatives to…

We will now begin the question-and-answer session. (Operator Instructions) and our first question comes from Will Randow. Go ahead (inaudible)

Just kind of curious in terms of metering sales pace, are you seeing that more so in your July backlog and call it may be your first week or two of August and how should we think about that physically clearly that should impact some of your margins that we would expect?

I would tell you that we have been metering quite a bit of time now, because if you look at how the year stated at and you look how I think we came out of the gate as well as the interest industry, it was really quite strong, and so I think we have to take look at the entire business, decision by decision and make those decisions. I would tell you that there are some communities dependent on competitive environment, our land supply, markets strength, and a number of different factors which will help drive those decisions and some will let drive the little bit harder. But there are further communities across the organization that were holding to really a few last a week or month to make sure that we have the ability now when we are going to be able to start that the construction on them. So it’s really a little bit of everything depending on market-by-market.

Thanks for that, and just a follow up on Austin. In regards we are seeing at least asking prices builds up pretty rapidly year-to-date. What other benefit are you seeing from that in regards to Darling?

Yes, and Will just to make sure I understood you, did you say Austin because we don't have our Darling brand in Austin.

No I apologize, the Texas market in general.

Okay. Fair enough. What I would tell you about Texas is once again I probably won’t paint it with one brush. We're seeing sub-market by sub-market we would evaluate. But if I look at, for example, our Houston business, we've had some great pricing power over really year-to-date and I would tell you the same in Dallas. In Austin we’ve probably seen it be a little bit more about a reduction in incentive compared to maybe increases on the base purchase price. I guess it’s the same place, but the strategy shifts a little bit in each sub-market.

Thank you. And our next question comes from Ivy Zelman. Go ahead Ivy. Ivy Zelman - Zelman & Associates: I'd like to just drill in Sheryl because you gave us so much great information and your recent trends are really great. But I normally love one and a follow up. First on the margin I think Dave you gave us good information on borrowing and the first accounting impacting. Can you quantify that, on what the impact was for margins in (inaudible)? And then just more broadly Sheryl, I think with your views of the business in a longer term opportunity for recovery could continue. Can you think that generally the market whatever pause there was that we are now seeing a re-acceleration with [pace] hasn't been really stable and realizing that you guys didn't see that or from what you see in the marketplace. Generally we had a lot of mix data points from the second quarter earnings with some company saying they felt the impact, it sounds like that wasn't the case for you. So we're just really hoping maybe you can help us read these (inaudible) a little bit and certainly your July commentary was excellent and helpful but just generally we're already re-accelerating from what had been this pause if there was in the business?

Okay, no, I appreciate that, Ivy. Dave, why don’t you start with?

On the Darling side, so ideally to quantify that. It was about a 95 basis points drag on the overall margin and then we also had a fairly sizeable drag from Canada too as that margin starts to moderate a bit. Overall though the rate increase that we had of 120 basis points, that was primarily driven by rate in the west and the legacy Taylor Morrison communities.

And maybe just to add to that, Dave, I mean if you look at these specific impacts, Ivy, of purchase accounting, I would tell you those lots that were under construction at the time of acquisition, January 1, probably got a write up of eight times of what the future lots did. And so the impact on that is very significant going forward and what's really happened is we're burning through good news-bad news. We're burning through that inventory quicker so it's coming through fast. But it's definitely creating a drag in the second quarter. Moving to I think your more global question, Ivy and I'll try to make sure that I cover it. It's been an interesting time and certainly recent commentary; I think commentary has been a little bit mix on what's going on and from our perspective, what I would tell you is we haven't seen a very meaningful effect. When we look at historic rates, as you know, we are in a very, very good place and very very, affordable and I believe rates don’t really impact demand but affordability but if we go back a few weeks and we look at the reaction that we saw back in early June, it was pretty significant 80 to 100 basis points of movement is really significant and people had a lot of questions. I would tell you that we’ve already seen stabilization as new families are entering into the market and I think they appreciate by all standards that our rates are very, very low today. And I think as we look forward and we look a kind of the correlations between interest rates and sales, it's actually pretty fascinating over the past 30 years, as you probably know better than me, mortgage rates have posted increases…

Thank you.

Thank you. And our next is going to come from Michael Rehaut. Go ahead Michael.

Thanks, good afternoon everyone, a nice quarter.

Thanks, Michael.

First question I had was on the order trends and Sheryl appreciate all the color commentary, but as you look at the 26% order growth and the 33% in the U.S. I think as in terms of sales per community there was little bit of a deceleration versus last year there was an improvement. And I was just hoping to get a sense of how much of that was intentional? How much of that maybe was mix shift because Darling certainly had an impact. And I know you were mentioning that the metering of sales or the management of sales pace and release something that you've been doing for a while but was there any greater focus on that or that or you kind of dialed that up a little bit during the quarter given what you did in the first quarter?

Good question, Michael. I would tell you that there was no specific change that I would point to. Having said that what I would tell you is as time moves on and we continue to see our buyer profile be more focused to that first second time move up buyers. Our absorptions, we don't underwrite those deals at the same velocity that we would a first time buyer or another buyer segment. So when I am look at our sales paces, we continue to be ahead of our expectation. I think, candidly, what we have to come to grips with is what the expectations are because, it depends what you're looking at as a base line. Last year won't be the appropriate base line for us, as our sales price continuous to move up and we might be underwriting some deal, but 2 a month versus 3.5 month. So if we actually get 2.5 that's very intentional on our parts and as you will consistently hear from us, we will continue to prioritize price over pace. Having said that I'll talk out of the other side of my mouth, there are some communities before, we'll run it a little faster. So I would tell you most of it, is really intentional based on the actual absorptions that are planned. I would tell you secondary to that based on the success that we've had and our ability to make sure that we can deliver those per expectations at the right cost base. We are being very, very planned about our releases.

Okay, thanks for that, and I guess the second question is - it also very helpful in terms of breaking out some of the impacts during the quarter in terms of on the gross margin side with Darling and the sales broker commissions in Canada, conversely on the SG&A side, well, I'm sorry those two affected SG&A but also the purchase accounting impact from Darling. Are those expected to mostly moderate in the third quarter? I know you said that we're to - at least the purchase accounting should continue, but when you think about gross margins being up year over year and for the full year and SG&A being flattish. It would seem to me that, that should pretty much moderate, pretty meaningfully in the third quarter, if I'm not mistaken.

Michael you're correct. As we move to the third quarter, taking Darling as an example and as Sheryl mentioned, we still do that a little bit faster, so some of that that we expected second half of the year has shifted forward. We'll still get some of the drag obviously as we close the wholly owned high rise towers and have a little bit of the selling. But the drag is going to be less in the back half than it was in the first half. And I think if you look at our percentage of sales being a little bit higher and our SG&A as percent of home building revenue a little bit higher part of that is that $7 million legal accrual reversal, but it is those drags that will moderate and we will fall in-line with last year.

Thank you. And the next question is coming from Adam Rudiger. Go ahead Adam.

Hi this is Joey Matthews on for Adam. I think you just alluded to this but, I wanted to see what your thoughts were on the increase in G&A and selling and commissions costs this quarter, especially versus the last year’s second quarter, it seems like there was pretty large increase as a percent of sales which I don't think we necessarily expected given the increase in revenue. We thought they would be little bit more leverage. Any thoughts on why if there is anything, one-timing nature in that number this quarter and help going forward?

It's actually the one-time of last year and we've been talking about the $7 million legal accrual reversal that we took in Q2 of ‘12. So that lowered that overall expense and that by itself is almost 250 basis points deal. So when you factor that out actually on the G&A line, we actually would have levered that line. The selling was still a little de-levered because of Darling and the high rise brokerage, but as we go forward, it's going to moderate. Some of it's just timing of expenses and that’s why we still feel comfortable for our year guidance around SG&A being flat for last year.

And just to make sure that we have 100% clarity on what that means with respect to the Co-broke because of the wholly-owned versus the JV towers and our high rise business in Canada, last year we did not have any wholly-owned towers. We actually don’t really do much broker participation if any in our single-family detach business in Canada. So when you have a quarter like you did last quarter, so today it point us the timing, but when you have a quarter like you did last quarter where a 100% of your closings had no Co-broke and this second quarter because we actually have a wholly-owned tower so that will come through the SG&A compared to the JV line. You have 50% of your closings with corporation; it’s going to make a significant difference, so you will see that lumpiness through the quarters as we close wholly-owned towers.

So on the gross margin you had mentioned the drag from Canada and you had given the specific basis impact from Darling, could you share with us what the Canadian drag was on basis points?

Yeah, if you look at it from the drag perspective, it is about 80 basis points. If you look at kind of all-in on the Canadian margin, it was down about 260 basis points on a standalone. So then take the penetration from sales and that’s how you get to that 80.

And in all fairness state that drag, I mean a piece of that is to the Co-broke, but we also have a very that we closed out of some very high end community. So there is a more permanent shift in our margin in Canada.

Yeah, and that’s fair, I mean our longer-term view is that we expect that Canadian margin to moderate, something more in line with the U.S. And this is the first quarter that we’ve seen that and we continue that to carry on as we move forward.

Our next question is going to come from Daniel Oppenheim. Go ahead, Dan.

I was wondering if you can talk a little bit more in terms of just pace of the order activity, I understand why you talk about the intentional slowing and certainly can see in terms of the trend in the west Victoria, the market fundamentals certainly would dictate that, but looking at the Eastern Texas where that region now has much more [sort of Texas] following Darling. I am wondering about that, where the absorptions especially flat year-over-year with Texas being more of that region, shouldn’t we expect to see a bit more absorption there at this point given what typically see in terms of the business in Texas being higher absorption?

Yeah, and I mean it’s a good question Dan. And if I haven’t been clear on that, I am sorry. I think it’s important to understand that our business in Texas might not be your typical business in Texas and where Texas I think historically has always been known for kind of a high pay, high turn business, kind of low margin, high turn, ours have actually been a very good solid turn and high margin business. And specifically if you look at the Darling kind of methodology, that’s actually a very semi-custom business model and we do a lot of custom changes in many of our builds there. And so it’s a little bit of a slower turn and it had a much higher price point. So we are actually ahead, as I said before we are actually slightly ahead of our absorptions that we had planned through the acquisition. So when we look at the total business model there we are actually quite pleased with the pace. I think the other thing is maybe I alluded to but not clear enough, I think it’s important to appreciate that we are going to be very planned in our release approach when you look at the labor constraints that fit in many of our markets today and make sure that we release a note what our costing is before we start construction on home and we are only going to let that backlog gets along ahead of us.

Great, thank you. And the second question you talked related to this in terms of the margins such, or obviously the real focused on that in terms of controlling construction costs and such and understanding there is lot of issues impacting the margins right now, but any chance sort of you can give us a sense of what you see us from a same house margin and backlog in terms of the improvement that you are seeing based on some of the focus on the slowing right now?

We see improvement.

Yeah, we continue to see some accretion in our backlog margins. And Sheryl discussed earlier as we continue to focus on price and we are seeing price increase ahead of cost increases. Plus you know the fact that the impact from Darling is starting to moderate from the purchase accounting, so there is definitely opportunity there in that backlog.

Yeah, so you are going to end up with that improvement that they are speaking to, a little bit offsetting kind of the higher margins we saw in Canada last year.

Okay, thank you.

Our next question is going to come from Nishu Sood. Go ahead, Nishu.

I want to ask a question about the community counts, obviously you’ve had a very, very strong community count growth this year helps by the Darling acquisition, you focus on our prior discussions, you’ve also had a very aggressive plans with the 25% order of magnitude community count growth for next year as well. So I just wanted to get an update on that given the state of the market, how demand trends has been going, your management of backlog, etcetera, interest rates, and just an update on that your plans in that regard for next year?

Yeah, actually pretty strong I think as you said Nishu. When we look at next year, I think we plan on 25% really being the minimum; it's actually probably closer to 30%. Obviously there is always timing and when we get those on board from an average standpoint. But the good news is that's really secured. So we feel very good about our community count as we start looking into 2014. Most of that growth I would tell you it's not all of it is coming in the U.S. but it's kind of there already.

Got it, great. Thanks. That's very helpful. And on mortgage rates, I know there has been a lot of questions asked already and you touched on this a little bit previously, but I just wanted to focus in on there is a sense among investors that there is a differing effect of rising mortgage rates on the low end buyer versus the move up buyer. And you already gave your broad comments as to how you folk see it, but some of if you could share your thoughts on that low end versus move up distinction as well?

I think that's a very fair comment Nishu. And as we look into each of our markets and talk to the operator, I think what you have on the kind of more move up luxury buyer is someone that can afford the additional rate for them as more do they want to. I think at that first time buyer, it certainly could take some people out of the market. I think more than anything what it really does is have folks reset expectations because once again even if you're dealing with that first time buyer at all historical levels, a 4%, 4.25% interest rate is still very, very good and still better than renting but absolutely, I think that the first time more affordable buyer has to be more impacted in reality and psychologically.

Thank you and now last question is going to come from Alex Barron. Go ahead, Alex. Alex Barrón - Housing Research: Thank you, I guess wanted to ask in terms of some of the markets they have seen slow down due to increase in the interest rates. And I am just wondering how strategically you guys are dealing with that if you are seeing any communities with the slowdown. Are you increasing incentives yet? Are you just kind of going to weather it out and see what happens?

Yeah, I guess to be quite candid, Alex, I would probably disagree that you could point to a slowness as of just from interest rates to date. I think what you have is a number of different factors that are potentially weighing in to at the top of list being just general seasonality. But more specifically to answer your question, we have not introduced incentives in the U.S. and as I look at the quarter and I look, I think, Dave mentioned in his prepared comments that we saw price increases in many of our communities and we actually do not see increases in incentives or decreases in any community across the U.S. in the second quarter. Alex Barrón - Housing Research: Right. I guess, my comments were more pertaining to post-second quarter, because obviously everybody did really well in the second quarter but the slowdown, I think started to happen more like in July. I was maybe thinking more forward-looking.

Yeah, when we look at July trends and I would echo what I said for the quarter, we didn’t change our strategy as far as pricing at all in fact in many communities when I look at the July reports we actually saw price increases maybe not at the same level. I would argue that's actually okay and the right thing for the overall business. So I guess very specifically no, we do not see any change to the overall strategy in the business as a result of the interest rate.

And I would just, Alex, reiterate our guidance, we still, we're unchanged there for closings and we still believe there some accretion on the margin lines so and that’s taken it as we see it today. So we still feel pretty good for the year. Alex Barrón - Housing Research: Right and kind of switching gears in terms of the tower business, I guess my understanding is you're going to deliver a lot of those units that are in backlog this year, is there a longer term plan to I guess keep focusing or reinvesting in that business. So is that something that’s going to kind of weighing down as we move into 2014?

Well we have three towers next year, we have obviously the towers this year, we have three towers next year and then we have towers in '16. We continue to invest where it makes sense. We have not done a recent acquisition in high rise. So from a long term strategy standpoint, I would tell you that generally the market has seen an overall shift from the single family detached business to high rise. And as we look at the next few years the company is really well positioned to deliver towers and 2014, likely not in 15, but then we come back with a couples that we'll deliver in 2016. And as I mentioned in my comments this year everything that’s delivering is sold next year, we have less than 25 units to sell. Alex Barrón - Housing Research: Got it. Okay, great. Thanks a lot.

Thank you so much. Well, thank you very much. We really appreciate everyone’s attendance on the call today and have a great afternoon.