Taylor Morrison Home (TMHC) 27 Apr 222022 Q1 Earnings call transcript

Good morning and welcome to Taylor Morrison’s First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce you to Mackenzie Aron, Vice President of Investor Relations. Please go ahead.

Thank you and good morning.

for let session, you are earnings includes the www.taylormorrison.com. Harbor started, including today’s subject release, get you of Safe question-and-answer that our on the forward-looking statement Relations which we is me in the that remind call, to will available Before find information Investor today’s portion forward-looking statements at that website actual risks results subject statements to and expectations uncertainties and could our are projections. differ to cause materially from These that limited not with are those but we include, uncertainties and and to filings risks in identified our do obligation release statements. the to, the our any These factors and forward-looking update not in undertake SEC

we call, release. addition, measures refer reconciled financial in non-GAAP on which the In the to to will certain are GAAP figures

over me Chairman Palmer. the our Sheryl Officer, let and Executive turn call to Chief Now,

good gross points since the the each highlights, swift to across level chain the margin of facing expectations closings our our results Among Erik as be in inflationary a also Chief rise Thank XXXX. highlights everyone. you, joined Financial investment detailed from our give Steffens, I performance, update the this our discuss review Mackenzie quarter we share mortgage today’s favorable Heuser, constraints, in Officer market exceeded pressure challenges further of home of basis Officer. the strongest After our metrics quarterly Chief despite Louis positioning today and pleased our rates. Louis an and and on year-over-year environment XXX results portfolio I Operations improved share begin, the rate are will first our and the am supply supply ongoing disciplined remarks, to land financial key and industry to guidance. Erik and pleased To from morning by which our our our operating environment. the Corporate my will strategy will quarter rising well and as of

reflect points highest basis Each our to quarter since improved the to points diversification level which years combination XXX percentage tripled SG&A and deliveries basis the results critical ago add our ever first scale and than record XXXX. equity to return business. the our on XXX return our these nearly to began declined annual Our acquisition lowest of nearly and XX of more journey,

backlog since and you discuss capabilities As on entirely have positions and focused This have leverage last investments. market production our These ever X driving land greater to with prime priorities capital products. homes. to than X,XXX in more are in heard efficiency of is we simplifying momentum designed me quarters ahead, years our effectively our before, before. ago, and expected to acquisition completing core drive us that positive our to even our improvements consumer-centric results includes stronger land This streamlining compete starting sold operational strengths the are scale, structural primarily allowing long-term our business of been

closings portfolio. and to focus our XX% operational high our power anticipated raising our equity our team’s guidance attractive lighter XXXX the with to of results land home basis improve we up and nearly XXXX of mid As I range. XXXX. margin In absolute least basis unique from XXXX both once share relative XX,XXX now a return deliveries terms, and to guidance on XX.X%. points which strategy, over to are our XXX am to XXXX XXX expect success closings be SG&A home guidance, capture on the And effectiveness would we reflect we are of raising gross again that are these earnings XX,XXX combined the and land and at This to we result, reaffirming margin leverage well-balanced pleased points strong to from our also

perspective, our activity complexity effectively quarter. of of the While sales pace of price. of with time, challenging shoppers our At the a confident year while quarter continued on rising interest through across a house a strategies and lot record monthly this already net on sales raised premiums layer higher order in a and net From our prices to added bidding another focused manage and same operating long-term X.X performance. sales rates driving was were our delivering outlook higher and geopolitical value drove revenue ended eye in We protecting financial increase our are communities average we also issues we healthy with are year-over-year environment, the all per XX% consumer demand based community. our in groups in emphasizing engaged competitive to option and an Collectively, in absorption our the first communities. markets and orders have

increased demand price. of we our cycle sales strong spec this intentionally certainly of and While the release available the in visibility exceeded and cost until delayed into gain majority metered level, maximize communities later in construction vast to the homes

sale spec and in our stages of very of majority to for homes the few of production limited. be homes number the was units, released finished With ready early available

our However, the a quarter accelerated quarter, note. on progressed the spec ended high inventory through and as pace our sales

Additionally, we transaction serve tools our are with leveraging added convenience enhancing flexibility to efficiency. and virtual while buyers our sales also

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expect consumer, entry small a of communities should we the segment which rates on rise recent However, affordable most buyers, portfolio. are impact the our of only in level in mortgage minority to focused the that could particularly begin

am position groups diversification of by as In our overall today, land and strength our encouraged consumer our quality backlog, at I positions. look portfolio I the fact, our buyers, of our the of of

strong embedded some This per XX,XXX deposits X% of confidence. than unit, equity well enjoy more share buyers lows been homes and contributes me Beginning up we Funding and all-time these of Home by Taylor significantly why are nearly factors and in higher which with our upfront are these X% let game on our were as as both backlog, backed drive sold by than thoughts X,XXX are Morrison So year-over-year our our our additional skin of prequalification the collections. below-average our increasing last all nearly to approximately at diligent which cancellation among averages as market have rates, successfully quarter. continued

secure prime set reflects our positions our seek the to with Additionally, serve financially backlog consumer core land in submarkets. well-diversified we

larger average an I affordability example, Taylor buffer higher rates, on interest Funding remain given buyers scores healthy qualification strength. always as Morrison rate financed we an are backlog, although closely payments recent higher amount. and perspective, Unsurprisingly, of credit of when among buffers increases. XXX, track highs borrowers at in For than loan are share, our From and impressed alongside our most consumer owned as at of our year ago and a indicator down XX% levels company, rate rising average important of all-time they the even by quarter wholly interest the these strength the credit Home mortgage incomes first considering a

XX% qualify terms strength qualified absorb borrowers positions loan adjusting or borrowers Specifically, rate we have their our rate. higher higher rates the loan extends than This other our at into conventional offsets. basis for where estimate points interest to similarly looking conventional have of first backlog before closings, XXX at strong an actual quarter nearly could financial

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in say land opting move down their different demand home who they all location, amenities. single-digit are home is current rates surveys shoppers First, with their in reducing increased This core Xx shoppers to if either payment tear more search health shoppers concentration search markets at would our higher of affordability a search search, much suggesting determined modify were impact XXXX indicated stop the Slicing continue is would looking instead that indicate response more reinforcing to in to stop as their or twice to to down to how likely stop their respond emerging said slowing employment, on and they from by schools constraint, in time, ahead. a their prime mortgage data when what search. markets likely would by and coenceasing their rates surge, proximity positions quite new they their as plans than would only became percentage

levels. our fact, emerging different XX% of levels only resiliency communities consumer income The feedback rating and groups In system. reveals also our internal be considered according markets would among of to

indicated of communities home impact in no other For lifestyle as that over shoppers. a shoppers their active higher example, our more half on have would just compared rates to home than all search of quarter

a portfolio and of and strategy. segment, and of rate margin element Given attractive about their is revenue business, lifestyle average the in this accounts for lower our important quarter we our an generate which gross active above sales, sensitivity total our

and incomes looking lower or Generally, those first-time higher other stop our are more the higher prioritized affordably we to to search buyers these prices. portfolio likely income On movement from priced help equity offset home support slow for hand, with interest homes and compared price their shoppers relatively home more have existing have rates. the business. a in approach insights long to These do consumer an why not to and help

well-qualified, creditworthy strengthened over homebuyers acquisitions of intentionally many critical to in portfolio past housing while attractive and that grounded the a returns best investment, generate product the been prime risk-adjusted with our years, serving disciplined our Over scale has have is cycle. land core market diversified we high-quality strategy and positioned on to positions. diversification view course position organic a focus staying to This our multiple market our add

portfolio. Erik turn land over call to provide will I additional the our detail to Now, on

lots, discuss and our disciplined investments. good apply Sheryl was strong our that the of benefit as the of prior well-timed in at the including our land years organic pipeline booked today’s which land morning well both to XXXX land contracted sheet increase homebuilder have land a or investments last XX,XXX meaningful quarter will an is Through and balance earlier established now attractive the lots, as considering in which embedded land majority represented roughly a basis, Thanks, value multiple approximately we in total of I occurred own approximately position that robust and our source end. this margins pricing, significant months. we land, everyone. approach our homebuilding The X.X land controlled supply should owned of These lots has returns prices are XX% and years. for coming of at over acquisitions, our to historic XX on

we are of because to our and anticipated to we Additionally, all meet for fulfilling the XXXX, nearly the control already XXXX lots are land own closings, out investments we making beyond and XXXX today. needed home or looking XXXX

accretive As of opportunities a the We our insights, competitive market Corporate to teams have every our local scenario we will housing land to decision. in investment cycle. and utilized highly analyses pursue and to as consumer that result, believe the judiciously research Committee we expertise flexibility and deep be market we examine the portfolio today’s Investment be selective throughout

year, last the was by in favorable lot our fact, accelerating, third, highlighting to increased In supply inflation XX% when when portfolio more investment land the grew position deploying be a land by patient are when we dollars. we industry’s price our roughly

as in our We approach land share our evidenced on are also development. of balanced total spend the by increasing

of For example, just count growth. monetize investment was working a of are million to our over spent quarter drive we our on year and land XX% first well-vintaged development versus community $XXX land land ago as XX%

quarter to In supply entirely words, while total lots which a add our I year-over-year target was year, XX% we other homebuilding the remainder off-balance as of the other driven maintain in down of were we via ago. year versus billion the have our options balanced growth at increase $X.X would sheet supply increased up significantly owned lot homebuilding XX%, structures control $X.X X%. share billion. mix we X% and end land the total lots, investment to controlled were For of expect that this in by XX% to lot

Varde risk strategic This expected investment with has Following supported controlled we on to sheet, of and capital-efficient By continue focus in by by part increase meaningfully held our this our controlling on through arrangements, Partners. minimize to inventory arrangements reduced amount XX% been our success, these balance improve the land we site end. expect to year home lots financing approximately long-term percentage returns.

vehicles As these we programmatic us through to allow have at new lots land financing discussed recent efficiently attractive an quarters, in of control scalable cost capital.

our this quarter, fund pleased expanded a and approximately XX% the we again that on levered over years. Through specific support to will to contribute we alluded arrangement, build-to-rent to dedicated share sheet operations. several our next a equates equity the BTR to we recently expect are balance partnership, by fund, relief last XX% to $X to of As which over basis, we billion the establishing operations

to the As financial and a unwilling the unable void BTR who are believe outlook. that company’s important growing serve fills segment call and lifestyle-oriented to single-family this commit for to discuss Louis turn reminder, With those we we the are in about to or we homeownership, rental as housing. that, will our consumers excited business market review an I

closings generated billion. team the $XXX,XXX, homebuilding count. increase gross delivered provide revenue Thanks, of of share significant begin, services average our XX% and in well well an a upline execution Erik, of due leverage first a homes to as up closings closing for and we generated results and financial year-over-year as Thanks home SG&A our as home per good the was guidance in morning, Combined strong everyone. earnings quarter to growth price metrics I’ll second strong lower with key overview on diluted margin, improvement share. by quarter our and the to this members, quarter This our $X.XX strong To during full we a as X,XXX first XX% quarter. $X.X year.

closing the above range despite availability and guidance at chain was labor various increased supply our of points Our in cycle. on pressure volume the midpoint slightly prior material

We our continue enhancing expanding our floor base. by steps address plans scheduling to offerings, our rationalizing option trade mitigate and take these and and processes to issues

begin our are cycle accelerated anticipated is we the longer on This addition, the of than experiencing. start month all X.X per In quarter, full homes for production normal during pace times per account year community our we to to construction earlier closings. to nearly

at XXXX. per at approximately the quarter spec homes increased nearly X from end of of X also We end homes community homes to our inventory

supply we the chain do increase conditions. drive homes, which we now year, a expect be ahead, closed of expect look to the homes to assume year this price significant home homes X,XXX XX,XXX will X,XXX And revenue. from to this pricing between $XXX,XXX, quarter. forecasts we XX,XXX a closing deliver in including to our average our As least any to not continue in at in second perspective, These change

was was margin, primarily from and power, now have XXXX. first from basis synergies XXX closing This home allowed the offset of a of XXX first basis our XXXX the us up that to more points margin This Turning balanced quarter first is gross and to and XX.X%. quarter operating improvement to points strong due acquisition mix lastly, better manage and improved efficiencies to-be-built versus pricing costs sales. spec of quarter

by we And quarter. the in primarily year points home another be generate based more This XXXX in on homes this to a backlog, our mentioned, second the margin our basis than to least gross sold XXXX. closings approximately as at full Following up in margin we XXX strength, from XX.X%. basis guidance of gross XX.X% would are XXX of raising Sheryl expect XX% points the composition

has While pricing floor, is continue combined efforts sales and of profitability. to us our stronger control this to rate our and an operations pressure our increased annualized the cost leveraging allowing with streamlining supplier inflation to drive around XX%, relationships offset by costs our strategies to cost on

During tools. growth revenue leverage the now XXXX. which our of points This percentage to was the be we to down cost X.X%, home to XXX sales expect SG&A sales a year-over-year. mid- X.X% high is SG&A efficiencies management improve closings strong as virtual In to from due in XXXX, range X% and quarter, in our was line from top basis

from Now sales the ended guidance to communities. Sheryl quarter due count, restrictive more discussed. to prior the primarily we our XXX with was up community This range, as strategy,

further by our capital growth brief And to XXX second I ending with communities communities, around a allocation approximately and anticipate provide overview priorities. to continue quarter position the expect in year we will the end to followed lastly, and of ahead, XXX XXX Looking with XXXX.

our $XXX cash of over unrestricted of which maturity total liquidity, meeting $X.X the improve capitalization ratios. quarter our $XXX recently capital XXXX date million amended strong lower further provides credit of To including reduced revolving is and sheet on our and from extended at March with flexibility, of February billion upon we pricing revolver, end. million capacity undrawn $XXX XXXX balance Our to million of facilities

equaled million Our repurchased shares remain our net And range to during debt-to-capital million $XX At million debt on authorization. to ratio for reduce we and million our had XX.X%, end, net year-end. lastly, $XXX the to we outstanding capitalization mid-XX% X.X on quarter track remaining by we quarter. the ratio $XXX

expect capital shares. Thank deploying and and active our to strong dedication our year. Going you excess for helping to forward, start work, to opportunistic our we achieve to repurchase hard in this be teams their us

Now let me turn the call to back Sheryl. over

Thank you, Louis.

housing exclusive stewardship long-term Wildlife Federation our baseline National environmental a year, footprint. in safeguarded This achievements combating by advancing efforts communities. Before with our I we reducing report. partnership This resilient highlighted as want sustainable the ESG the establishing back X,XXX crisis, published we have this our integrate on month workforce are across emphasis diversity we carbon call, business social our earlier end this greater gas throughout greenhouse in which and our giving to the such highlight organization strategy Wildlife and emissions committing our to governance environmental, acres of are advancing the and year’s fourth and establish help annual practices and further to and resources our of We we includes proud the to that developing part in our doing to report. communities our homelessness our we more inclusion, fostering habitat than initiatives our

legacy to on just the industry-leading and geopolitical to their We diversity. In seek of racial our continuing limited as closing, call hand are dynamic inflation participants times, remains as rising I unique representation on demographics, on gender some ethnic These and our And these have team let’s with my that, also the updating efforts and look customers questions. ever, underway. our members focus supply trends navigate ways our With we and we other. am mortgage successfully and as with environment our our open to to on one are Operator, to exciting housing build of continue I’d issues to the instructions. to we like commitment appreciation tremendous please to our offer and The favorable will team organization. progress. for initiatives your expand deepest and employment provide confident our rapidly you rates, on forward to

Our is Carl, open. from Instructions] BTIG. [Operator please your you. from question line go Reichardt Thank first comes ahead today now Carl

Good Thanks everybody. very much. morning,

morning. Good

how to April, talk Sheryl, know sell into – if that course I morning bit order-wise, and the you’d segments over that? active wonder quarter, if so could us – little about good you first-time adult the let move-up a of versus also versus buyer performed different the you

enough, You those were look entry-level, great deal paces bet, Carl. quarter at We in look the consistent at did our I year-over-year numbers. see Interestingly when two. difference the a pretty the I active of when adult, between

pretty the But Our highest the first total I was in of pace in when move-up second business. consistent. year-over-year, kind look

seeing, no I So some consumer I folks robust you’re communities in April And country, mentioned the have the pre-calls few to a where quarter. contract. you get through as we’re tell all on through When going seeing the demand you in more affordable we to across really go call, that those April. would real sets in difference

may the lifestyle buyer really got a that worried about that doing positions more position be the You’ve adult macro. where country is across well. active are There

So, speaking board. across pretty kind It’s of there is to. worthy no trends of good generally that the are

for Thanks talked the Sheryl. getting that starts And then a follow-up, in you year. this about as Great. earlier ground

in cost quarter remove with of you’ll of average the the to and Thanks. some completion you beginning vertical in have point restrictions? in those Kind and are if time? side, up sale? an like you what when feel process, release you do go where can think those for start ready do construction product homes you sort you have confidence the And So to sales

Fair.

team I Louis this. and You tag bet. will

still sales On in we’re ourselves April. fairly a side, environment through the finding restrictive think I

little the first us that the to Carl, really environment paces those expect quarter. to the more quarter? this we more I get of a a think would to the about the all for ourselves to, - it’s in saw we I’m bit by talk because you Would we I similar want latter find So get healthier environment. first just be in to in quarter, to open starts hopeful time what part the

Yes, sure. Carl. Good morning,

have down backlog our seen, you’ve are want working unstarted progressing. as specs as Also, we significant and where ahead those normalized closings probably to of our we’d of specs, So on been pretty we’ve to starts say of the And have those be. we homes. to increased our as close where basis a number gotten

We will start to be releasing those – have more release than we have historically.

in start So see future future, the align year with the I think you’ll as our sales pace our more progresses.

we’ve agree are good Carl, pretty there bases, And portfolio, community, once some down where closer comes releasing early supply-demand you It communities. we mix Louis, have that and a might generally, holding are community complete. to the that by to got in frame we across very the be process, we really some

market-by-market Yes. I’d a say little bit differ.

Okay.

you, Okay. Appreciate Thanks, Great. Thank Sheryl. it. Louis. I

you. Thank

you. Thank

is Alan, please line Thank Zelman Associates. question from Alan comes ahead next open. go from your you. Ratner today now The

and Hey, Good for questions as all it. always. great the detail taking guys. morning. my Thanks Appreciate

Good morning, Alan.

hi, – morning. question First good

First expanding I comments bit weighted of that more the signaled more sounds adult community the sense your which bit this bit a between question withstand your definitely active going buyers’ I new the of move maybe forward discernible maybe would like and in If But Sheryl, you differences it we’ve no I’m question, kind disproportionately be seen, a lines, go price optimism towards about but rates is maybe move-up segment point entry on I a maybe logical. reading on ability think year to back last in terms yet. level. openings order, that

open price of I sales these as bit is little maybe communities up. think kind lower at the our time, a signaled you new mix

your curious going in land your about which think big you the of is, Has is a the business So as business is this it’s mix to desirable segmentation the forward? that of as has your as as plan altered thinking stay, I acquisition just thinking as assumption, far I’m guess rates, assuming far here obviously? what forward, going move

mix over Thanks, consumer is you’re I at segments of But between I I look that will lot mean Alan. groups business, and and Maybe quarter the tackle the there. the kind portfolio. the being I that There like love community of year-over-year, tell business where in we’re the a at. the when I EriK X% you overall the Alan, that movement X%, diversity would the I of lifestyle seeing quarters, it. of

to You’ve the about entry move level seen XX%. down

we’ve quite before, talked a buyer in you very entry-level even the our portfolio, from that FHA it’s, As between affordable look X.X% backlog. those at have think, cohort, of positions in difference and I about I a our

So piece. it’s very a small

throughout at on communities look that I coming the As are board, the year.

it’s think I EriK, a today. kind any portfolio mix in of have the pretty consistent to we movement? what real

through the intentional; think would b, that coming and just consumer the what time coming very and that terms balance all. intentional. can Yes. We of be a of we what’s that underwriting kind over project will will I a, to take That’s lot backward, see it’s of kind to the consistent, spent discerning years, as that’s look expect pretty that be. is: reiterate, I and in we a step we at look like of

We’re delighted.

We’re market the the bringing country. spod across communities to more

strength then continue pretty the is say consistent, see you’ll And balance the So would, there. to would Alan. really I

that appreciate color I that in it think lot believe ones I the Yes, off, drill that’s vintage And about very that because it’s I’d for helpful. I topic helpful, on talk guys only first I love commend disclosure and on, the talking and giving that you’re you very way. that through there. second to

you for thank that. So

Sure.

look contracted before guess I when you I kind lots of and I XXXX. pipeline, your XX% lot think owned were at highlighted of that

if delivery? moderate since is XX% And nice a the eventually that those price when out. If there a where lots? appreciation sensitivity margins on the months, higher whether there those home that tied going that clearly, stays couple even to in for up, etcetera? start the annualized does for been not sure if of be an might environment the at a has what’s runway XX inch So XX% or COVID start level inflation isolate margins to on over I we a the happens cost to are strong last lots, here. guess year I’m we’re years they up to flow finished on what plus, timing land prices through stop incentives developed, this

XX% again, I increased average Erik but up talked just XX%. us of of said and last by what controlled, sure Once or an when me heard that it under lot this, correctly. growth we we we make tackle you of kind by is inventory went Yes. about year, our think will When I the owned the let industry

So in we’ve these years. very have we’ve into we X.X been contract some about under well of adult months be land especially are year, diligence months side, on When last the though selective. we’re for months actual active you’d that, or think for under and projects appreciate even Alan, bringing on, a able it purchased to the the to year,

we bit actually, the how I look XX So mean, the little residual prior talk like do about Erik, years? to – compared to a you when want stacks and up that

you Alan. question things of great in today, And I a had number a it’s think Yes, there.

relatively think consistent. through, land of would we the kind of that’s I think I blend say coming about as type of the

in we in dedicated ratio closely. residual pretty Sheryl’s being procured. deals seen today an alluded going I last can, years. From previously We we residual step point, also And a that in but get finished a can is of slightly you half That less our develop scenarios with elevated the we right I – conditions but spend of we we’re lot. to to standpoint, is of various and sensitivities the self-serve that will projects – of anywhere assets that we is underwriting what word going them lots the actually that obviously know the what to to terms in couple think to these that look track and we’re we we’ve have to ASP, use at assure The like kind than these of word, of the forward. lots run development kind

seen we’ve been would over be and the of kind expectations, margin Erik, I think years when have they the last months, look in the last at thing, return the actually years. of just XX, highest XX some margin we

think that’s So the back, even market given the position. if ourselves very a all in there, good out I see narrative to were we Alan, settle

mean, our Pricing of be to, but and judicious, is to selective the spoke we’ve acquisitions competitive, we right? Yes. the today. I very ability elevated, And market we’re in is kind as got

Yes.

a the heading And well this trailing industry, count Yes. into as guys obviously, that lot you growth view here. had and I the definitely, signals the position positive strong period as

So it’s through for know hearing but to all I a helpful the question you thanks answer, that. tough it’s color. talk

So thank you.

appreciate No, it.

ahead, go Jay next question line The Jay, is you. Wedbush. Please now comes Thank from your today open. from McCanless

start maybe everyone. come move different those to passed Thanks. rates and their up before market ask purchase around on rate a you to to mortgage question. to Good have the some morning, some lines? on topic, Are to of that people may have back Wanted maybe see assumptions as land you their starting rethink these original

Go ahead.

that yet. Unfortunately, conversation of yet. kind as of have force not Yes. don’t I conditions really And think

not to seen date. a is we’ve frankly, is market the about to And short meaningful were usually X-month if answer lag land capitulation there that in occur. So the

again, bringing I us be ones are that selective the we to comes back that the not think judicious to today, but so ability really being in to – really you. and And certainly having

we’ve X-month once is sales and would because But not I Jay, that Erik, the correlation mean, real market in about just this there before, the been you reduction agree, between talked sales remarkable generally follows, yet. lag a that’s And for land. builder appetite in case that

arrow don’t – yet. kind we have a yet, is the that and of there in just not so Yes. We delay, quiver

with to you my talked the rationalization, about but you to relative that then see good some move being how guess option. also I customer? can those starting a up. same That’s And hear. second those? time, maximize SKU to And benefit how that is, revenue are wanting with cut at the started to builder, to I type Maybe you do to option really guess gross supply margin wanting the from question revenue of have I talked cutting about SKUs? chain you some Okay. judging much your guess build-to-order

We’ve great of Canvas last the Jay. Street It’s to a about program. question, for the talked our couple years

a a ‘XX I strong know even balanced to-be-built had very and as would which us fairly we’re, So we of going I think a and ‘XX, builder, out absolutely, And hurt business, part call year I saw into coming and on actually had the big and that, us lumber kind really what a a that take consumers we a of with everything. that toll of bit last build-to-suit did optionality business.

very the think most that, that significantly is So the would price in but portfolio. not Xx about started some only just adult honest, groups, to-be-built. opportunity of Florida options, of say And said I higher something packages even that Having like that be I continue a on optionality business say talked center. the that think that want adult, subset across and business, overall side. active our opportunity I average. and really design I in have actually just option they the selections. adult being successfully the that the will across business. that, consumer Canvas our exception probably strategies think think balanced you the at to business the our We’ve but we in talked the We’ve And and hold. I simplification active one customize to Canvas overwhelming than in exists see taken there, land that in there us I today as spec company a have would the look consumer to is the much design the seeing to introduced options the appreciates I are When amongst our past the about revenue and the process simplification generally active more

from I benefit there see total the I answer product say think long simplified think you’ll in both, don’t a is category that that model. it’s really but won’t So to a

questions. Great. Okay. taking for Thanks my

course. Of

next from please comes go Thank Alex, you, Riley Jay. The Alex Financial. today open. B. line from Rygiel question now is your ahead

you that? and quick Sheryl, on – the us market build-to-rent you update business overall Thank bill-to-rent and give a good for your morning. the can

Yes. of well kind as that as do manages entire process that Actually, R-Day. with just Erik since signed I’ll he ask I to think the deal we that

last success having can then we update new maybe an our the about deal. since land call talk and we’re So the just and

years as for the may the into it you question, it’s able a aligned only Yes. XX X.X last with just it. Hi, we’re plans two efforts wholly aspirational be Yes, And Alex, homes the or simplification fuller think being three thanks and off kind about coming month. of an company of the about question. to produce

So from we’re our kind nine way of to XX markets. moving

As is a model. reminder, a it hybrid

of news kind community. apartment-like living the there the is single within but of of a an good not lot And kind family is whole across context it’s a them experience So country. the of

able enable then a sure but good XX-plus and relationship we And get to before grow announced do able able core move-ins, we on Partners kind to really kind beyond able early pipeline Phoenix, really got of From capitalization a business. pre-lease affordably give going from XX of were our coming to sell brief would hindering of three that continue scale in So we Maybe Pardee We the Sheryl’s first we’ve that. horizontal vertical, to can year to going by relatively of it XX% venture. update to believe we in the so did the with asset and leased. scale communities that do produced here early to – it, be make standpoint, we the to pretty recently we’re were really you us the on and that month just this pipeline a business, without point, that we then expect a a of end. just units two standpoint to one and

then just about follow-up that, that business Sheryl, a in environment? you how to rising rate on And do think

excited. pretty Actually,

[indiscernible] Alex, started have we we – X started how about hole years tremendous. at once in X.X, piece I single-family point And X.X tell business that, thesis we was was ago. we middle the the think when will apartments piece, the the ago, is you and to time. of it go rentals, of I play the would middle probably Rates this, that some missing started really up years and part these missing original is then but work on this to

community. consumer see we to these them a lifestyle really lifestyle one, have positions, gated for the a well-located secure So benefits, in the family opportunity in allowing

test through building progress into science also this wonderful lack when homeownership We Morrison. opportunity standpoint. with relationships as to allows garner kitchen these the see see naturally relationship a And we a an this them as with they building of set are description consumer it from for lastly, to a that then Taylor better ready

think planned years work, X Alex. So kind this I never better tell is positioned. the I macro we’re But you, would And of the can given X, timing. don’t the culmination of environment, of we

we that fact of of be underwriting, part The rates, certainly scenario and cap rents the maybe on your But end to just And of than right? simply like front the sales Great. Yes. would add very I the at core same it’s the our like that to relative question prices sensitivities, volatile that. business, housing. less time, mindful actually we’re tend

homes and at this business it. XXX community, we be XXX, chasing to reminder, relatively And well. hedge the the in a money be of though of ability core will that and an as a lots in have space to in have inflationary of business, we even rents can another but Morrison, of Taylor flexible the our So remain core the There average pivot an environment. is

Yes.

We will move Yes. through quick. very each of these

Thank you.

Thanks, Alex.

today from next Matthew, The from Matthew you. question Barclays. Thank go Bouley ahead. please comes

Your line is now open.

Ashley Matt Good question. for Kim today. taking Thanks morning. on my is for This

can or relatively supply? more you you waitlist seeing may So selling still are of orders of today if had that communities if talk about you you that confirm the long home kind bidding could activity any quickly take

is the strategy the large majority how we different and on as and across said, we of very pace a Through that country. Ashley. manage we first the Certainly, our the communities quarter,

[ph], Some markets, the the highest best it’s through and Habo offer.

just natural release Some weeks, a it’s it’s lotteries. process every through couple of some

frustrating But a was moved a experience. have would that be customer. very as It’s from tell at markets out fourth have moved very key probably off the it. I strategy. I it I the back Habos Habos of last April, go strategy. the not strong, that to gate that third, it’s continues. we hopeful I wonderful away we year, would We for moving the When look experience came still into start you am think that has quarter we it. into Honestly,

to few ago. play have a a to experience. through we a floor So that just I minutes and more us we as more said, ideally, open move am like allows hopeful I a sales QX, that get natural

door, I really Ashley, addition The system, in in where reservations are to modified trying reset thing we tell end where the you would both back of spec is started in our February, we it actually online benefiting just the walking it on people of not because reservation is we from, for acquiring kind houses. other our frenzied to deposit and multiple tie environment, web but to-be-built a were our the the

game. wanted to skin the have them we in more So,

would Just you, I done hundreds since tell last, and I deposits. the eight mean, over of have – hundreds weeks, we website

we So consumer shares and seeing. and hopefully, need that of demand you the this acceptance with are the just environment that virtual

through signs if of Thanks for relief compared even if the that’s Sheryl, to detail quarter? helpful. then And of times that that suggest progressed I cycle any And kind that’s improvement not there. the year, ask, could how last assumption? underlying could

the I quarter. chain difficult Ashley. would equally it environment has was labor the remained fourth as supply Hi in and definitely Yes. say

last beginning first week probably quarter, of COVID, eight to weeks to since weeks. cycle times the probably and weeks one two this year, six another extended Our

and significant steps material are we closed confidence year. our quarter production compared and about XX% under year, talked This units the municipality as closing comfort us we last with at well We have end XX% issues, first seeing have the labor taken although significant like or to to feel allow delays our inspections in the availability projections. as of of we were

some quicker that process confidence simplification that bit now starting our to the of XX% on us of building versus earlier, at were having our year. our And last in spec think pivoted and cycle than that backlog process our significantly homes in of our little SKU rationalization about helped sold Sheryl I our in to so quarter this is helps half also specs we spoke As a specs, ensure same times and option less improve year. XX% portfolio deliveries is least more

are awaited we anxiously real… So, some all

a on counting birthday. Not

Yes.

We are hoping.

it Thanks there. I will for And leave everyone. the color

Thank you.

go next Wolfe Research. The today please you. from Patterson Thank question comes from ahead. Truman, Truman

Your line open. is now

on guess efficiency guide your Thanks. price/cost – a margin maybe that how versus growth conservatism more Actually, from much favorable in relationship is or gains you could increase, gross any Good original the being those internal it’s outlook. just derived on Przybylski. morning. Paul break some out way maybe your I

really much contributes. to it hard It’s break down that how simplification, with

the script, will QX, little we the a the that start growth a our lumber But second we see bit probably Near I we seeing the lumber see to see the from year. sequential we approximately But will very first each this will a think near sequentially, of relief cost we be of our third highest to despite will noted in quarter, are the costs quarter. in the that end of start best lumber. headwinds and bit in fourth are quarter QX tailwinds of in of XX% we includes increasing And ‘XX, anticipating the higher year. which annualized QX into will increase, lumber tailwinds end going half. there. have point then

lot parts and the And there we articulated of because we hopefully the timing of given a don’t conservatism, what’s I now. it that Paul. used some right out there. words I our in growth why would would I the know have say appropriate, confidence That’s volatility call and guidance, the least of is the moving at in

rate taking past Okay. buyers six actually power noticed your lock, four of up that Fair your are weeks And then pricing I any in year maybe you we trends? have on what weeks, look to extended the deceleration as you the percent offer? over you enough. guess mentioned

bet. You

XXX far days. an I this. since would days. have mean XX nearly years locks, the you had last as would rate middle extended the or really we tell Paul, probably days in as the tell lock, over that X-month have the I seen date days, would had had extended be tell last seen have call then in, So, I XX-month XX have X total. we I XX than of the rate But we in you expiration that April, X-month, last introduced locks, over always lock, we anything But the more have I in right. lock rate an XXX, rate locks. locks just would we probably we you, XXX And in would which XX these extended over

buyer settle get in free appreciation to got has a back harm one-time the an rates – of them and float because is the are the there for down. they and So, really no environment we

reasons, confidence and ability high of the And it really some right. out in have fact having that as environment are then to my been now, be, prepared because does the received. mentioned they it’s would to the the them absolute frothy the really end game So, in give remarks, for well payment different what’s right put fairly their the X% them I skin is on gives

you fact for are You that fighting and their the lives. banks bankers everything And refi the can that given large independent mortgage dried doing have got just to that have they really grab brokers business got share the up. has the are really, then

out the have so And silly REITs offered. have there that been been relatively

really this and into gives gives get great us, getting their a capture that – to to ability the our for table. us visibility customers So, closing really us

trends pricing power color any four your six on over then And the weeks past Okay. weeks? to

would into we This grow get I out numbers, I I the with a at then yet new don’t to hearing, month, is the went month. Paul, the But the sustainable where company-wide have I we But but When taking of based a year-over-year, saw just not it moderate. XX% I say, have keep we that continues year. through of what in hopeful, normal again. look again the the look actually everyone continue sustainability, April, that am release end first through has the we still to increases We cost feedback saw because at those mean I we monthly when been as are to accelerate increases the formula. size numbers as have did will the once – marketplace. your they I we each be think seeing. to am stats we the quarter March. quarter, pressures come can up these the we – that increase that at on the pricing know calendar would doing week we I environment new this the of been I the

we normalized So, I kind a get am place. of more hoping to

Appreciate Great. Perfect. it. you. Thank

you. Thank

Thank ahead. today you. please from question Zener from Ken KeyBanc. next The go Ken, comes

line now open. Your is

everybody. morning Good

Good morning.

guys your you includes In under not of that mind, so if an actually starts, get you relation the Sheryl, the most spoke just what to report some adding in actual a know and that’s on all know guidance or about I comment unit units? sense starts did past, construction. about those Do inventory could are we the you actual I we level? to not XX-K started, this backlog

quarter – If with Yes, there follow-up... ended X,XXX sure. the a We sorry. is

No, go ahead.

ended the XX,XXX units with Yes. quarter construction. We under

units we ‘XX, QX earlier, X,XXX I we made reducing of of huge down One spoke strides started. had not the started, in like sold about have our to areas we XXX. sold are not and

So, really the and that’s of some working quarters. to reason accelerated backlog another of starts our been for couple aging, started get the last

it have against disclosure. that lot makes guess in appreciate usually Related sense, your you those actual WIP file that, running do to I that inventory you K, are I then a No, and that Right. you of but units? the

afterwards, We can Ken. you get it to

you that as of just – you take you right, interesting, deposit of if just do X.X. do was very to curious Do – two that be – is I them? that that Yes, appreciate that PayPal, excluding I deposits, how or very online? – would that. bit. on realize in then try that someone see are terms efficiency the might And that – And houses? I little the think Is a a or Great. to it’s find how And could kind deposits is then I that interesting, a you that you three buy that limiting expand am

what it it’s It’s we is, a No, is do to a point. the think the Stripe. it’s I called really quite $XXX But Yes. this are at technology, about Ken, it. modest, excited process first and ones

and think and their is will XX and to to reserving the XX hours, different over card, I to them what deliver but And because see going technology be that – payments multiple you, will something fact give right we going really the putting XX lots. to us you first can they people they those for a time deposit, introduced lot very have doing how they hours are continue now, them that’s I their a the were in prevents But on for give would deposits credit make people the are in enhanced. tell process contract. that hours, also time become when

So, has really got little the to consumers the it. we And a address interested the do are smarter is put that really can’t to most But same control some e-mail technology want energy what at qualified. you and trying it. the and level, are and now

have their here by in deposit. $XXX with think days I saw our will the platform our reservations house. belt, of second credit and But that next the within out days to would top to-be-built XX are spec be we lot they pick a strongest That’s so we when we pick to conversions seeing, go And that have days, in expect cards. that will we conversions XX find a could I people our wipe reservations. markets, XX where under because reservation conversions our – have been with in we good actually a and all this

exciting. So, for Continue it’s to pretty watch the enhancements.

Thank you. innovative. Very

Thank you.

Mike, from next The Markets. question go you. Dahl please RBC Mike today Thank from ahead. comes Capital

is line Your open. now

for and Hi. my Ryan me This for here. Mike. on Frank in taking question squeezing is for Thanks

really production that. of to your prioritize sales kind is things like on and offer and decision my over of of question dislike some given higher demand maybe now right and best your for the these So, and final kind environment

talk you when more want selling the why are than to to pursuing strategy you be you about are can So, now of faster? kind selling you start

on that had a customers along to them so closing start to further selling confidence Well, chain the supply experience little the dates decision process and in say I challenges, more specs based make we made the more we our would better. the first, conscious a for in

have that releases under at pivot those much of over So, And are that with increase further now pretty point the X,XXX time. see along, start I say those this made will specs over we moving construction. to we would

at occurring couple So, that optimum consider the of quarters, pivot level. what been we has the the there spec essentially in – last

So, we will start next being of to over those the more couple see forward quarters. released going of

out that numbers supply the we for it’s of and the to that, I would we the challenges, a really only that’s a the expedite we is we experience Ryan, of a not And to many mean I coming start. Louis add had that reviewed to started last do year, last when everything can process built, very important consumer. how Yes. year sold chain sell painful thing that be

felt we it to critical was most the So, enhance journey.

tube for build our to year. because of and delivered energy population focus ground. in them we large those We ability that because get on starts have a two, the our getting One, need the of their and

level, start stay say, And at let’s pace match demand coming I quarters? helpful. the then would over sales That’s current try if, to guess to were Okay. with pace the you

Yes.

done as the they have you think be seen would elevated I and over have last quarters the starts really really the have that we is align. good we work the intent two intent said our because that where sales should

I look forward, be think that you expect as And us. from so should what you

you the slow start gap? then of point, of Okay. to would this would maintain a slow, kind a And if bit little on pace at guess side, you then or flip were demand I your

to inventory your by in be ground. makes are built are to that a to sense Well, you put manage you going continue going to to and community, the spec

always by at and there look going you trajectory But – would the you if your are yes, be your the right shifts, what’s so So obviously sort decide yes, there. to sales, some community spec market do. as of pace alignment

really end for finished At had Yes. many will And the be specs how XX. of big the us indicator we the quarter, have. we

of we our going So, we buildup see a if would that. we But finished will make on forward. keep adjustments eye back inventory, an

from look Yes. all some at you And place arguably, you perfect an inventory, kind the of what’s when stages. want at

the look you about communities, we when at short. XXX spec So, are finished XXX

got So, we have to a ways go.

you Got helpful. Thank it. That’s very much.

Thank you.

Dan, go please Thank from Suisse. ahead. today question next Credit from Oppenheim you. comes Dan The

open. now Your line is

to Great. eight And end that a we lower at bit the sort overall that think of level to there, just of finished little specs the question, the much. of seasonally on continue community of thinking I of Thanks appropriate of environment? level managing level on last second does – are of finished end second you so quarter, got just are to about the maybe it very was you it in but wondering, based is in are specs. trying for the in think based quarter, the end think just you given I or about of this you Would guess this terms that specs you overall of that really talking per having goal terms quarter? the if your that like an would quarter, the with how the your maybe about about sort specs there want – get through

to Dan. while. you. It’s Good It’s a a talk combination. a to been It’s combination,

You specs. want some finished

number you quarter, second that What You have said want you for season the quickly have we want move ending, to in the on. that opportunity are through coming school move buyers inventory probably certainly the buyers since as you portfolio. that is environment, the William Lyon of think to that, at look about us important. today’s I eight across when the is even of in seven been kind more acquisition for has right And

look So, you feel product right at community we across your good total numbers about that. the of country you size right But the and look at your now. mix, kind mix pretty

the about in that of the fall then then you down quarter. will Great. about of dip how just or year, of coming the And of community in obviously end – the lot sort talked season it much is is quarter see that where we sort terms thinking fourth count, the those the through second end how had much And the based the on a in year, should quarter third before the of before open the there? getting of

our sequentially start see the to outlet said, QX you count. improvement in We will as

XXX counting of at XXX For XX the is to us net openings are and on first we outlets. end overall the around by get year, the year, somewhere increasing closings the

And the XXX. Yes. or would quarter we the we third quarter, that said second XXX, for be

a before modest enhancement. So, you see might see sequential that you dip

increase quarter. largest in the the Probably fourth

Yes.

Thanks Okay. so Great. much.

Thank you.

from Dan. Thank Center. Alex Barrón from comes The please you, Alex, Housing Research today go final ahead. question

Your now line is open.

you track guys me buyer. I other know the Thank for squeezing Yes. generally in. you state

if that, was might the I whether today that? have am are curious year missed it’s second time. tracking versus So, buyback looking is, I thoughts you just that’s stock how at or not on sure ago, how but that question you plans. I higher, a And discussed at guys your similar this

with I will one Out-of-state, You this let we have on share bit quarter, each take the first interesting. little the Alex, it’s talked bet. a start and Louis repurchase. about and

and And you continuing would trends are first I both it see me we have at for a really We out-of-state fall shoppers category. to buyers. are interesting quarter compared there tell does Where and seeing. when I ago, to first is any When doubled. deep active dive quarter look our more year buyers adult are gets of the it I kind that into the

tell in But generally, to for like Colorado, as XX%, the other penetration the coming probably communities can and Phoenix, of states California, very California. Nevada, country, buys exception. and and can Illinois, where, New parts local from We a Florida, as led see California, another tremendous example, other a buyer in that’s XX% Jersey the in New through see some have from our really of XX% I huge from when I Washington with very or California from lifestyle country start in rest California, states Arizona, of whichever, XX% significant, you, I York, I by some XX% company, traveling some little our shifts. like that much then would I see can being very

your reloads you But have great migration tell happening I that. business. deal that active it’s across country the a would great of in is you a deal business. of adult the for Obviously, So,

year on Hi operating Alex, based of earnings we strong our and related a question, to improved cash your flow outlook. expect second

core generate lots based cash And want that, increased also that more on first our on reinvest foremost, in based Additionally, significant additional controlled shift and we to will existing business. flow. to

our would be follow to in And maturities of believe on but through we then to again mindful years. by of continue are is as I going the our to Second, meeting upcoming say really upcoming be we the to want we stock lastly, our year. guidance mid-XXs net the our debt opportunistic end in the undervalued,

Thank Okay. luck. of you. and Very best helpful

much. so you Thank

questions Thank additional you, at are There Alex. no waiting time. this

pass like would to to closing Sheryl I So, conference remarks. for the over Palmer

results first field for our to most thank send all quarter our teams next and We quarter. shout day-out can’t opportunity great care. to who them everyone. recognize importantly, National our day-in, Thank work. seeing another and our probably opportunity really our Day quarter Admin the to look Take for the keeps support their really great company you with miss running I the the to appreciate to you. in We share work and first out thank forward

first concludes Thank the participation. XXXX That quarter earnings Taylor conference you Morrison’s your for call.

You may now disconnect your lines.