Tri Pointe Homes (TPH) 26 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to the Tri Pointe Homes Third Quarter 2023 Earnings Conference Call. At this time, all participants are not listen only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David General Confer of Tri Pointe Homes. ahead. go Please

these welcome and Earlier and results Pointe earnings tab. through Documents Homes the are slide Good at the available morning, to Events the call. www.tripointehomes.com detailing The XXXX. this quarter Investors financial including company conference a third deck link morning, the of Tri results, under released for Presentations its and

facts, certain including would law, discussion risks statements results begins, concerning company statements to duty the I like these and to uncertainties are the undertakes other to forward-looking not everyone forward-looking actual are update which call and historical statements. on made and materially financial that could statements by this future detailed in are cause Except operating of call, Before the risks differ filings. remind uncertainties. company's performance, no factors and SEC The involve that that required as

the Additionally, are reconciliations GAAP filings. the financial on be measures the measures its discussed of Chief call company's non-GAAP Bauer, through today Pointe's call the Officer in website most Chief Hosting President; can SEC Officer; and Chief to over Keeler, comparable company's Tom and With Operating I Marketing Doug Chief Executive Mitchell, turn accessed Glenn Linda Tri the Officer; to Financial the call Officer. company's the Mamet, that, company's now and will Doug. this

David, everyone and today's you, Thank good to morning call. on

for operating key will results we quarter, discuss operating call, the During and third market provide review the a highlights. update

of is $XXX to end quarter. undersupplied increase exceeded to the combined to share sales ability $X.XX. homes for improved our homebuilding and success at higher an line times guidance the testament interest pretax to during ready in high and another margin sell efficiently of with We potential quarter Throughout has our of the income has homes. our the the ramp of third which $XXX,XXX, cycle top Tri strategy market XXXX, Under converting significantly into having for current to homes our starts, availability and delivery performance move-in bolstered backlog price spec us environment. our close delivery delivered moving deliveries to quarter, update construction backdrop, allowed market translated the strong achieving quarter, we've fourth achieved a our up our rate This In in sales home quarter million. X,XXX revenue leading to today's will outlook. inventory per of addition, we of average capture gross and earnings million of and of share housing a XX.X%, diluted Pointe $XXX quick

are the which to Pointe. expect the Tri these opened average XXX, for the during results an opened high pace selling all-time third XX quarter, XX community an and active were is communities count finish new absorption strong to per monthly of homes a new well our The quarter received during proud our community. by We year. bringing X.X communities generating customers, We of

California Currently, our accounts to California XX% Texas well. selling for of mix, total our geographically our community business diversify of while concentration from markets historical is XX% our Houston represents Our selling in strategic our progressing communities. Worth, Dallas-Fort Austin, of active and focus active growth

measured in of volume. markets current on our goal We are top as the continue a with our excited by becoming each about land delivery of annual and to builder focus growth position XX

for trading is existing levels the markets XXXX. deficit These from from in and as further regarding the the This third performance and fiscal Moreover, and well market has we've up pleased economic supply as below arisen quarter quantitative climate. have Federal homeowners. supported well in our millennials this of especially number with of as The continued into and an are years the rates quarter concerns by from demand the to We the due have is during Reserve a rate buying current for remained to and secured mortgage it. elevated homes. effects for The Throughout October, months. in elements, have increasing homebuilding home have previous current tightening. have industry's the demand third enjoyed significant the Z. at environment crucial the nation's reluctant steady at year locked-in new Millennials fund through levels by resale these the household reduces multiple a age evolving reached Despite home supply challenges and supply qualify sell. ongoing home vast effect over significantly strong success increases housing in under positive today's of and role put on This high market hurdles combined lock-in required historically January creates First has higher job low homes remained to for enabling trend formation in extending rates occasions rate housing to have bolstering affordability shortage a them the wide new fueled quarter, Gen resulted supply. and throughout strain resilience recent homebuyers the mortgage spreads because with who affordability, demand incomes historically levels, issuance now the new that cycle treasury rates today's to played housing Service

XX-year-olds community This by beginning recent the backlog XXX% Z orders that prior us order our demand and homes positive allowed a the month. pace the to of Gen grow absorption to quarter-over-quarter XXX% net we the exists, year. an since currently Demonstrating with own XX% third strong compared and analysis. XX% market up Redfin has year underlying trends of in the has per on addition, to experienced In according the quarter, X.X of per home entered a

financed $X.X ensure the increases the X/X have in fourth the on we buy below to that employ rate closing absorption not backlog credits, are available of cost carefully in to quarter able our a and units and target locks billion we Pointe We Based the forward tools financing on of X.X%. backlog. were backlog duration at third of Tri and to our expected buyers which achieve price range modest deliver continuing at secure XX% as quarter, But new and that interest Connect. demand with home head the are our downs, affiliated and of to with In Tri mortgage Further, rate Pointe buyers using in of to maintaining XX% X,XXX well market the locked respect within are with experienced approximately fourth of typically focus we opportunity the incentives, average our valued the pricing buyers including quarter, fixed are over Kinetic, With quarter. in mortgage mitigate level we provide company, rates commitments into risk in quality we our remains our market is is communities. an level. pace, their our while resale our

we that goals. This several growth will our initiatives quarter, announced to exciting be accretive long-term

and Homes. the wholly we the at of core purchase to our exercised In a right along will mortgage the operations mortgage Pointe the stake alignment positive operations Loan that operate more homebuilding unchanged, Connect, competitive purchase in Connect remain venture to First, anticipated a owned XXXX, time Pointe interim, transaction continue with be quarter our and pricing, we in offers Tri the is until impact minority terms we Tri customer Connect completed flexibility existing finalized. become our with our Pointe line. joint bottom experience joint announced business adding the will in to This to Pointe of is first Tri the of of with under Depot. Tri which subsidiary This will venture model

with announced Ken have been under past Washington Krivanec recently XX organic Lake this ties division Utah is who our leadership Ken of the Ken in into also the previous new Utah, the Salt in state, strong having focusing the has We division, to has led leader industry Greater maintained market. City the for experience launch to market. the expansion raised years. and Operations ideal commenced on our

excited commitment strong and to footprint Austin, we on recently, Utah. has we and has adaptability Salt adding Our as market well-established enthusiastic built Lake markets are with our a expand and corporate our infrastructure growing Tri and about mix. excellence Sacramento, into to entered foundation us Raleigh City solid to organically success, very Charlotte innovation, Pointe Most

are we our to the approach exploring Florida initiatives. patient growth markets and disciplined ahead, a and actively Looking always, Charleston with, as

Our dedication our to pillar of core innovation remains product a company strategy.

evolve As experience. differentiate a we our brand, and product premium lifestyle customer consistently and offerings

and designs launch collaboration studios Our We're enhance to designer, recently in select Bobby is announced their celebrity in nationwide, the our Charlotte California our Bobby Burke's with fourth our personalize quarter. XX customers to markets collections award-winning set product in offerings. and Bobby homes communities of into integration excited Southern multiyear design about Berk the Burke, design allowing with interior further

experience ever-evolving innovate we and landscape, a commitment delivering housing our unique the As unwavering to customer driving to remains continue force. in adapt a

to strive the importance from the we challenges lost we are that of and an presented While meet have is inspiring affordability differentiated offering the product of not competition. sight today, that premium pricing

position. want to balance I sheet Finally, discuss our liquidity and

remains and ratio of quarter the net Our strong, a of with balance very debt-to-capital XX.X%. ratio a and sheet ended XX.X% record we debt-to-capital low

million, be from This lever end year-to-date representing We grow spent rate enabled to growth equates use $XX.XX which and quarter value share our of X.X XX, flexibility long of XX, believe XX%. compounded plans shares as book shares for $XX We repurchase the term. brings to and program to liquidity remain with that the to strong per our quarter. December X.X% year. financial potential million addition $X.X or a the to economic to in our share enhance to total our us shares repurchase of of on our September the earnings of repurchases beginning X.X committed XXXX, prudent has provides will of Our execute share value program This challenges. to XXXX, was annual as to $XX.XX which $XXX capital million a growth over outstanding billion, weather repurchase continues and the our strategic at million that share shareholder it us

lowering shares period our We all over outstanding and and cash same XX%, while to highs. have ratios reduced liquidity leverage increasing the our all-time by

improve Looking times focused maintaining by continuing the savings rest XXXX realized into year. of throughout remain and ahead and the to our XXXX, operational on to cycle we we the cost efficiency

strategy for that, place outlook, orders, pose continue have on sheet cost confident on to capitalizing growth. balance focus address returns and value significant higher we With this right team in rates and turn over enable a strong shareholders. increased driving should strategic to our I'll I'm Our right call reductions that any and challenges the for us improved the Glenn. opportunities while to create the maintaining may With to

finish was We average XX% selling the were then some an good of is some provides financial and key the expectations and posted to I'm of and million. our from X,XXX for increase my spec price the for quarter additional basis during the margin quarter. mix Doug, sales strong $XXX sales lower We XX Adjusted were improvement resulting our a which home XX.X% the selling third Gross the quarter the prior new in compared revenue power per $XX finally, generated metrics to during environment deck, At with Slide midpoint pricing at advantage which and the into percentage end a in our will to to of margin range X morning. third our quarter, represented of was the going able and remarks financial guidance for range outlook quarter. spring our operational point at net diluted the our net SG&A percentage in by results slide home expense referring information homes as highlight approximately our on guidance season. fourth to the pull home million Thanks, income third second the X,XXX of we website. times, third gross delivered share. year. for certain revenue move-in-ready the the and was quarter, above was range which earnings and a call was of quarter. the deliver I demand for of sequentially deck XXX% our able we deliveries be of XX.X%. experienced of Deliveries on favorable from as the quarter to the quarter take highlights from And from resulting XX.X%, we a homes orders came due of the $X.XX quarter. guidance was $XXX,XXX, or above

our pace was third normally than X.X quarter. to increase Our for month, the community homes an per absorption year prior and compared per seasonally we expect XX% would higher

across quarter based first our for X.X% of our for was demand segment. the and second Absorptions were product both terms and market and color, broad-based In move-up both offerings segments. X.X% entry-level market in

in West, the Empire, the Houston Nevada and in X.X the in Absorptions were and showed strong markets. San Central X.X during in D.C. to did the Moving divisions demand X.X our region, Arizona the East. and West, Inland particular County, and strength the Charlotte Diego, In the displayed quarter. our Dallas markets as the Metro central In Orange East.

far Interest rates is been So has seasonality also have X.X%. but pace October, a absorption in factor. increased, normal

context, prepandemic For demand X.X%. quarter than and when averaged normal quarter in seasonal that last the environment X.X absorptions and year to level Pointe, current much Tri feels fourth absorptions similar the for stronger the fourth were

XX% with a XXX growth increase opening to in selling As the new quarter, the and which quarter year. ended prior communities compared communities, Doug robust mentioned, community was the active XX we had count

We ending depending year between XXX active X fourth and expect additional communities an community and the closeouts. timing the open communities, selling in the to XXX anticipate of quarter on

We with for position several XX,XXX the solid under next lots volume years. a for which the are in growth foundation over land provides control,

the quarter approximately the liquidity, ended with our million at balance hand on million facility. and spend. credit consisting under of cash $XXX and of $XXX billion of available revolving We unsecured Looking capital sheet $X.X

net was debt-to-capital XX.X%, to capital XX.X%. and debt ratio Our ratio was net

in for our repurchase a the X.X of million. active be million spend $XX aggregate quarter dollar to shares continue program, total We repurchasing share during

current of $XXX spent authorization. have on million our have on share and availability We repurchase repurchases million year-to-date $XXX remaining

$XXX we and we going $X.X quarter, approximately billion of to forward, annually land invested land our land and growth targets. on approximately million spend third land And support the development. For to expect development

quarter. Now I'd like fourth the to summarize our outlook for

between quarter, homes we $XXX,XXX delivering and at the X,XXX and average X,XXX between For fourth $XXX,XXX. sales an anticipate price

of and of XX% a We percentage in home range as to anticipate the gross XX%. SG&A revenue range in percentage to we expect of to and be margin sales XX%, be homebuilding expense XX% the

our estimate turn that, range the now effective the the Lastly, back fourth With to for XX%. of in we tax Doug some remarks. to will be closing for XX.X% and quarter call rate I over

share to demand. with focused with positioned Place team per our building the In has members workplaces like workplaces strong passionate women. for line. and growth Thanks, is best bottom to our This in XXXX our Glenn. from earned excellent long-term for imbalances consumer At continued distinguished of workplaces work would and construction, Work commitment increasing to on are their of year-over-year. thank will also closing, and I and benefit for for very steady all Pointe, top the simple millennials supply industry on Great both and Fortune our Tri to to best Magazine Pointe shareholders a success, culture. value Tri best we continue focus formula book recognition

an Pointe's the by and delivering customer outstanding action We are who business beliefs Tri of are into mission of extremely proud in designations and we that these our life-changing put values, people experience.

questions. turn back the call over like any to operator Now for to I'd the

comes our with from [Operator Please question Joe Bank. go Ahlersmeyer first Deutsche ahead. Instructions] And

How good few count that quarter everybody. of you morning, the highlighting The third I more fourth in community really here. be in and first are and there. the tripling was you'll book appreciate I Hey, Do business. times value question a had off the on you?

in some puts looks it ahead but like around might that quarter, timing maybe it what those go before by bit you're know just and sequentially. I were in then you $XXX little takes of could the but the third even be I you of timing communities. million think $XXX there, year-end, a through lower said had saying to you were there's now

this are we is to that communities This about fourth There's the XX experienced absorption in Joe. year, to communities stronger the that X close just out quarter. opening new close We're Glenn. It's the XX quarter. in Yes. fourth

So thought of with timing communities total that's fourth MD in those number the But depend just the additional on we going it's open that year close will the -- overall, to opened communities were this X the we quarter. number. we when

the So that timing it's just out. closed

that which you October And those used would and absorption average. with. about on communities higher do were on begin opened, absorptions But you to you're I talking it. than Got kind absorption were the ones to referenced as then the prior the think to of you the average then pandemic, the lower what

talk maybe So in how of just about the your mix communities that that into the quarter would history. and play fourth versus X.X comparability

pop were within just get highlight those do XX when nice initially mix seasonality. think we've overall and there. is I the there we we we highlight received what And the seen a that highlight the still an similar to pre-pandemic you open a that seasonality communities but communities, that, well to October just pent-up trying There's level, you quarter, tried were so in community, far Well, XXX some to right? demand tried feels it's usually to of that

Our with next from comes Evercore Kim question ISI. Stephen

Congrats on results. the good

You about order to with you much targeted talked environment pace. about in maybe -- haven't forward you sort to in the year. commitments, maybe I incentives, gather the market sales really being think you since something a talked maintain is I talked more given purchase little do prepared done about early of which And

So of to How through the forward you be you us seems commitments, can a in -- the rate how sense doing talk what for far October? as what so what buydowns and these as introduce of magnitude you that? purchase kind give the significant buydowns -- is you're -- uptake

Linda. this thank Yes, is you. Stephen,

that third forward loans home a of used and commitments commitment. on you of at X% forward we funded the communities the idea an select magnitude, And give we basis So quarter on even to use limited only the select in a sites. very

is the using and costs third homebuyers revenue approximately X.X% of -- level and/or are for homebuilding and in closing rate customers quarter most using typical of our a permanent our were typically was So incentive X% that buydown of financing.

Okay.

changed has and October into as of in into moved the you Now fourth that -- any quarter?

Not X.X% incentives of significantly. Month-to-date in at our October, revenue.

we see mortgage So will we it expect in similar, further to changes but if adjust we interest rates. be

that means And order delivery just revenues, she clarify to revenue, not revenue.

be helpful. really That's to That my- was going

Yes. far experienced consistent yes, in October in third what fairly quarter, from But Stephen. the so we

encouraging. really That's

yes, So color. I that appreciate

SG&A. to on Moving

Texas, or an even SG&A curious Your kind guide not looking little expected, agent the like commissions case to you've on as also positioned the But a how buyer to with are seen to court were broadly of and playing in we I'm you you agency. line. in market out if your than the agent closings whether was higher curious though increase in the as to guys market particularly commissions with across on come down, relative moving see were

set, in and broker Stephen, I'll take commissions, we're seen of chime a Overall, as the we're chance overall, in slight of just compared though, end usage of our Linda could outside peer pretty lower But we've uptick low to a outside of that well. percentage on the -- usage. brokers.

a done you I color Linda, trial related we've good the Texas any then have there? do job And think don't pretty to of historically. I that know,

the Glenn orders watching sales of I said, third as that. But outcome be We'll quarter mean, on our XX%. were broker

Stephen low attachment typically XX%, high to So sales. broker XX% that Kim we're in for range

commissions We our the as under to price Actually, the control, really that X.X%. percentage no. a average in were home of quarter aim third keep and

community, do for percentage, actual flat the depends the in the fixed a community, market, like demand we'll versus markets, A Stephen, amount a of things just that. or just lot fee an certain the times on

with comes Our Research. question from next Wolfe Truman Patterson

just is we seeing, perhaps in is of kind Or in chance kind perhaps rate material everything sit move, you earlier think year. labor hoping cost sequential year, XXXX do on today? back cost expecting update going keep you an of question, push into costs of to back kind softening to pressure the of all given there's here labor some recent half nice inflationary the the materials. elevated tailwinds you're on And the as any give a this XXXX? just trends pretty could I'm the underlying likely First were builders the

normalize. market of that It's trade labor is take beginning this and little and is good feeling normalizing to Truman, supply. one. I'll chain Tom. really it tight a relative supply to bit We're that still and availability is constrained the but

are maintain quarters. On reductions to the in the able achieved front, we first we cost of the largely couple cost

to continuing So good goal feel our we capitalizing and focus really just cost on more that's on And going on structure, focus maintaining really a normalized cycle that. into about forward that to market. is times XXXX

I would Truman, add. This Doug. is

think Obviously, don't it more other. that normal. drive will be rates velocity. will or I by to one cycle interest or driven think Going going times way be very are costs the to forward, continue starts and I

also to a scores nicely, So important steady we've showing market, and seen, very up business. in our very customer it's up satisfaction are as very our Tom going and said, that that's

environment? as update you Okay. Got you. Utah entrance. if Dallas privates. kind M&A of Florida just for Charleston. And all's then appetite lending the as Could at a have mentioned could potential think the in recent your tougher all opportunity? Carolinas an I environment will, you discuss give hoping that M&A greenfield the you you sheet, on Would be current given and well looking balance banking expansion, And or smaller you're just the you for

the both. would this tell M&A you we're environment is Truman, little I Right limited. that a looking now, Yes. is Doug. at

pursuing for and actively we've And Charleston. in an mentioned been that tag we've recruiting local within of strategy, market. so more along And as Utah. organic could opportunity M&A the with the Florida We're

to So at and which organic, pursue can disciplined is we growth. both, looking very going our we're something about control but we're be

current So update. that's the kind of

Our Ratner next Alan from with & comes Zelman question Associates.

allocation. I on guess, capital question, First

stock your job You really with done an a what good is discount guys feel you here taking unjustified of buybacks. advantage the price I'm have of on sure

maturity a on contemplating on else have give you if climbing the curious Is us sheet? thinking next with you're down with maturity your I to coming rates year. was next and that balance here. up year plan update that? an up can that do the obviously, pay Anything just You

in pay question. Good we're is off position year. to this bonds Right next now, those ourselves Glenn. a putting Alan,

not the too the it's market to rates, and current refinance. attractive With bond

But can see, so have land do plan delevering that in still And those you while share down. investing we paying program. repurchase we bonds our to liquidity on and and as being ample active in

Got you. That makes sense.

guide. the on margin question Second

peers that creep some expectation or notable there for And shifts the in might like know thus Some assumption release, fourth had it press hasn't guided pressure pretty in far the incentives similar of sequentially. your but commentary have the higher. flat in been with any margin really I guidance sequential the you your is And sounds quarter in quarter. in your incentives

you what now? expectation So right highlight is guidance explicitly embedded your within quarter the can for incentives just for your

Yes. Like quarter incentive with we in we've consistent discussed it from third far October, an so perspective. seen the

said Now going that communities rates largely. elevated, sales deliveries the like certain at our we'll strong that, next look aren't we'll our quarter in look with to into supports are year But expectations. meeting generate in our fourth we to if really XXXX stay now, and And we're that in overall, comments, margin -- backlog sales right a we that guidance. don't incentivize

And margin. so that QX should impact our

color the Alan, is more this other there. Tom, little Yes, to a add just thing,

Pointe focused business absorption going into are seasonality we're We've Connect. Tri our that of backlog our and are for target business plan. locked that on got those build our our course, we right through fourth quarter on we that normally Of XX% plan,

so we quarter about fourth feel the coming And up. good

comes question next Tyler Batory Co. from with Our & Oppenheimer

I'm do past, sales full Or rates it not rates. in What saw or I away? for take this right you mortgage mean, to a to here rates? industry the been think a My does have the impacted from pace a few when filter you about of perhaps run might to just was impact possible as question maybe higher spike trying X% sense well, through? weeks maybe first effect traffic yet. lag higher the get you or for the impact felt on of

on year, interesting a to the The sell consumers rates, Yes. what's buy, goods in nail to as hit sell increase me and And homebuilders a we right? by The the most the on are reaction to of rapid beginning -- just the And was saw you rates in head. you right? saw -- don't question. drive increased a the first in what that a the ultimately really in The rates happened that adjusts. effect the homebuilding a XXXX. it Interest and Fed is the Xx homebuilding what in the the at happened such And consumer and by caused there That's bigger good The market, That market XXXX. psychological is construct that happen household pause.You consumer that's Street interest really expensive going thesis the consumer missing. is adjusts. very formations. durable we the market the was the saw driven because consumer we jobs part,

as obviously, But very mean, list good opened couple people. the still So we XX in with new that lately in rates hasn't from demand. several we're -- I in an It's the seen, and of weeks communities seasonal. seeing volatility XX increase this volatile that wasn't as reason of we've been significant it the to increase we last prequalification saw 'XX. Hence,

is is your the question and cycle. very for So spot the there homebuilders conversion market But a on. takes maybe and some yes, solid. longer temporary puts little is And

consumer pull is and homebuilders spring we into beauty the see move adjust, have the season. selling we'll to You'll the of move product. And the continue levers the to to

This to to perspective. to color well I'm it a that try into little put is going to add as just Tom.

on does everybody think based the median math I income. household

that's more power.And incomes, end if it's typical you higher household them median go our QX absorb average gives from loan important our it on of end demand our if that amount, an as XXX up really and rates about think qualified purchasing we of month, buyers the of to think qualified levels to significantly big But that see it, QX and of have That's that. buyers are on effect back why about income than the $XXX interest the bps. are note about more don't and you much I QX, incomes per to profile. can

on follow-up question ASP, closing My ASP.

guide. price It a the than during ASP like in was increases X/X the looked of your touch about communities quarter. talked You lower

assuming a impacting little there's I'm that. of there So that's mix bit

pricing in you're next So thinking talk XXXX then ASP about kind about and of how interested as year well? also trends

is this Tyler, Yes. Glenn.

So the you're was deliveries of quarter. from price largely the X/X purely we The into were from we was quarter and did that right, talk Charlotte and increases about some mix. markets. ASP, a But the our modest that communities lower at they additional than pulled came in -- Texas our guidance, little

again, And a related so and of And towards Charlotte you'll that was is just because year ASP in be discussed markets heavier lower mix next XXXX.But new just this have mix ASP. previous as going I that weighting into on that communities lot than mix. those will calls, just driving factor. that XXXX, is than the opened and A a Texas year more current

the target. think mentioned something for I range year, feels that next last I'd $XXX,XXX like $XXX,XXX and ASP a still call, good around So to on

comes Our next question from Reichardt Carl with BTIG.

entry in the the that think place? stores. during between X/X I level for you quarter, out increases Glenn. price raised -- But Can in prices terms your move-up to missed you of I break absorptions and of you X/X also the I wanted entry level Thanks. price in increases, modest put

was see breakout And just market it X.X% would and entry-level think price more of on but increases, I X.X% dependent higher you price than we move-up both but for that cohorts, those Carl between front don't really more it move-up the first the was those probably absorption, between in anything. percentage second side, of yes, a was it us increases have So move-up. and was

level you Charlotte, entry-level move instance, we're because a was saw of board just where of more That first price up. for in the like really, increases across market where demand. the So

say fairly it would I was broad based. So

differentiating level up August, entry to you again, you're I'm as interested, a And spec, lot that you build for that do about choose customers can we upgrades. but point product-wise. trying premium And still then the a in talked so product options

So cohort within smaller to taking you move-up So in upgrades their that to see and homes begun the level offset metro we shift the the effects? you cohort, challenges cohort a premium to affordability either fewer and/or on there? as homes notice trade-down options out people go have in

$XX,XXX any and studio Year-to-date, people a about business, option averaged per spend revenue. dollar job do being XX.X% amount homes. a we design of great such amount market which still and of we relative In about significant to really Carl, it's personalize still want per on XX.X% was we're And it's obviously, did big option QX, about it's driving factor. seeing not home, at see because spend. our of closings, component revenue Good their Tom. that we do studios in On our today's because decline a to $XX,XXX of offerings. we're house.So our a with questions, in

collection. That's Berk popular a we and introduced saw us studios. will be to the through help going driver. And and streamline You more very it big also our Bobby efficient be

So excited about we're that.

very price because We smaller the aware attainable footages we're of have marketplace into put some points.

smaller reasons. And people are that that seeing are that so is accepting footages we for something affordability

next Our McCanless with Wedbush question comes Securities. from Jay

or the the just Doug, you as environment made fit? Could M&A there Any bit? limited unpack it not helpful. a valuations would seeing comment limited. maybe you that you're the color earlier by be right Is the that little see you

would are few in say, offerings, number. right but limited It's a number valuation. so by it's There We're of at looking Jay. packages. not more the much now, I the opportunities, in

days Okay. in And down little bp raised price pricing mortgage XQ. you a communities or like far it had in you same just weeks. October, type we've now? seen bit you few thus Or Do you during over X/X the feel said in move rates the to slow have you given that few then XX of of last power

was increasing about X%. It's X,XXX about house. pricing that Well, per

new So to game, making be very sure modest. in price very is entry payment had a level. the the our and more movement in mindful we've of success those as continue imagine it it our lot talked name openings is the earlier, of But would well. and we and of product modest very was see some community we'll continue attainable. to Price especially keep that I we'll in And about

with Markets. Our Capital next question comes from RBC Mike Dahl

the environment, current consumers you market. as the Just some adjust. to The kind back meet noted, tools may have to to builders go adjust of as well the to

already when of they're October. into have back We from your the heard September some leaning trends talking peers into incentives about

a happened that, different.So period have you your of over sounds short hey, year, comments commentary other do move a a what a around curious, last quick bit been little time. I'm given view it's Your

pulling you point? of different some than the or peers of triggering seem fall this described. a give a little that gun as bit have through before are your at jump for on kind where levels that Just maybe talk because what does more little Let's or settle out it not time just incentive things lever to the we pace price see into it

manage we plan. our in Well, that as to our we to business mentioned, we continue pace desire

at I think absorption. X.X, year-to-date, we're X.X Glenn, about

product. now to XXXX? So maybe But pace softer comparing is a QX.The it out what QX seeing back of continue and XXX land our difficult that to tools acquisition with I'd is different. thing to builders in our B premium we're the seasonal from locations locations our for building into one incentives bit move are than saw sense right the trumps point is every tick communities the we we other on a active backlog is markets, within the locations. the we'll in peers And in and and use that higher Yes. our have, little be markets, A what, focus that And we're A seeing frankly, that

which location, our well Mike. very, mean, and one question in answer lot to a location. land it's It's the buy in Tri selling U.S., Houston, more we the locations location, markets and start And have there's is I out. how So proven one very old execute -- when adage, community that you And is you most been it ago years land. of has of competitive the how the we that that strengths it's it's our Pointe strategy because location it.

a drive better is can game drive whims incentive not and as the much better strong we're well. a Tom playing the we out, very as pointed in our So as at premium profile, of absorption, possibly buyer because

detail more that. there's So behind

us can't in industry. lump You just all one

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Center. comes with Our next Barron question from Housing Research Alex

what are to average does their average And average that if you market? meaning have the rate also quarter. Good their interest job average consumer, thing. -- what's down What's an the payment, after -- statistics what's incentives I how of like, could look your on wondering guys average that you FICO score, compare getting, their on type was that on hoping income? what elaborate the people

of largely is the average an average $XXX,XXX, second about part, XXX. an having talk Tom. profile, first there. with But as then buyer Linda that average I'll Alex, said, the question buyer down an I exceptional and income can about we've our and breaks take this got of FICO score

around is conventional financing. buyers income our XX.X%. of XX% are Average about loan right to to XX%. using is debt average Our value

So we've well. and consistent strong as it's got a pool, buyer really very

buyers. Just to some our for more about you provide the rate average information interest

interest into As we an rates X.X%. buyers or close, box, quarter backlog closed increased more that those of mentioned, and obviously, with And the October. XX% have to of end average are then our the expected at of has quarter fourth already rate

the loans average have quarter locked we that third So interest the in X.X%. of rate an

something? were to say Doug, you going Very helpful.

going same was exact thing I the to said. No, Linda say

Because Great. people are the helps Well, different obviously it And that the order versus which of highlight other buying get. your you I something your not I oftentimes build it's looking anyway, that kind I down, average household to that But much appreciate I'm think than had quite at time? very was has come question your you're guys which because is what sharing I how is don't homes, ago? deliveries say, median year income that a that trends, having. your think

delivery just So I'm some assuming days. lag out figure trying at between all those coming I'm these homes, point. what of and are there kind is typically obviously, a an to order the

Alex. question, Good

As to cycle weeks we've to we've on X in average, X able our stated, been about reduce to times reduction.

to And schedule very back so a it's template. normalized

Our XXX-day average schedule. is

evaluate that look reuse years. over continue the couple duration.And that continue so coming And last reductions X.X-month on from product as and months more further we've if and we're a to product we cycle. to in it's varies see XXX and So XXX to product days and to X efficient there's to going anywhere to back based it's about we're there those it X market efficient of and templates construction to designed

the time optimistic front. we're on So cycle

the Awesome. rate one these they testing, that I take? you much than homes. could pay other guys back going could And hypothetical ask they if how of higher to words, some pay more your could average X% Have consumer just more, buys guys the that? should theoretically discussion paying In done

our test level. don't issues they And we're at buyers now, Alex. and that our at Yes. that are prequalifying. the see stress We right buyers at for stress-testing typically time Thanks, X.X%

There turn further like Please back floor would I go ahead. for are questions. no over to this Doug time, to At the closing comments. Bauer

safe we to joining we to and want season. for corner back the next thank wonderful around everyone, February us are and today, all holiday can't you right believe some holidays I reporting of a you. together. And as forward look strong get thanks, and Well, results wish the

concludes This conference call. today's

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