Taylor Morrison Home (TMHC) 26 Oct 222022 Q3 Earnings call transcript

Welcome to today's Taylor Morrison Home Corp Earnings Webcast and Conference Call. My name is Drew, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Mackenzie Aron, Vice President, Investor Relations to begin. Please go ahead.

Thank you and good morning, everyone. us joining you appreciate today. We

harbor let Before portion subject in call, are our you information of safe this earnings are release Investor website remind the we subject you question-and-answer Relations review the that our begin, statements including statements session that forward-looking at to forward-looking These the me will can for actual and risks and results include, statement that and on to cause to expectations that include limited risks update could from and in not identified projections. materially are the our These factors filings not do our obligation in uncertainties undertake we release differ but to our statements. those forward-looking with uncertainties to and any www.taylormorrison.com. SEC, the

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

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

Thank you, good morning, everyone. Mackenzie, and

Chief Chief me Financial Joining Steffens, Erik Operations Corporate Heuser, today and Officer Officer. is Lou our our

detailed value, always, facing achieved through residents not am healthy of and and most as while share quarterly financial our affordability delivered under our our storm remains metrics on profitability that share results, as damage. again continued importantly, this Erik the and do our After return discuss our well significant remarks, quarter, despite Most including of the safely, Hurricane new impacts We team record challenges to closings the how and company any well supply earnings construction as a for highs members homes these industry, chain and and our margin, home provide are communities positioning our a we land on equity. share and gross portfolio suffer I per the source from review came pleased Ian. my highlights, Lou that long-term of will will results. team once market environment update for the will an success. as As I navigating

and needs Florida of home However, the clean reduced it the storms and in as abundance our protocols, our sales of market. Carolina storm recovery following in volume the preparation closings and as well our

delivered the expect supply have discuss our both impacts many for will an the teams and complexity closings home Nevertheless, company X.X%. needs to $X.XX. to construction share damage X,XXX further add a will gross months, increase challenged of of diluted of which We chain a all-time and per homes record a than extensive and in detail. drove on already high in low new SG&A results XX.X% margin earnings an more renovation development and next greater XXX% ratio at These Lou our

reduce quarter, through more the revolving the corporate strong year strengthened in we outstanding to outstanding, further than same these on our end. year a doubled management balance and credit by disciplined repurchases our shares our invest ago. track XX% in In from expansion of to took of return debt At total, billion steps during we to and continue addition, during the to XX% $XXX facility debt million earnings the us mid-XX% successful leaving equity sheet our on a time, quarter. our a reach capital ratio net $X capitalization to In flexibility to range with

Turning the to market.

and teams see low from As and August. cautiously shoppers in sequential in with albeit June. sales net quarter's into translated abnormally we online begun I in on last July, to improvement July tools orders shared levels have in call, This reengaging sales our

range homes. end consumers also demand consumer in community, felt X.X monthly year financial lifestyle from as which orders slowdown The business the noting a wide these absorption a this cancellations been is pace approach their net that worth again significant a due to our interest slowed has to and see sharply volatility, savvy the accounted into trends in given decisions highly represented concentrated the the communities per strength have the the by However, experienced both the we in emotional wait first from taken geographies, impacted And among attachment total, net Hurricane in to purchasing In the September reacceleration resort we majority lifestyle the sales greatest rates. most orders, and of buyers. the and sales segment, segment, lowest up points, continued which of so has although our activity groups. which Florida, quarters in quarter, in recorded were net ago. market we to and been it Ian quarter price pullback as strength business, It expect of and their perspective second level constraints is second Consistent face lastly, resort of our affordability their and are alongside most X,XXX was October. these from at would sales Within down the across our pressure a a with resilient move most our of particular entry Southeast. in with

traffic our for as interest grounded we the all rates This and However, new an working business. solutions. improvement higher confidence X%. long-term as its it consumer the buyer of will require mortgage speaking, clarity and led qualification price pricing prudent surrounding the at have psychology, we pushed economy in in will find most Generally to in Accordingly, has and and approach as the strategy. to recently much the reached rates healthy as Federal lower Reserve's potential homebuyers as by view remain stabilization equilibrium time in continue high our consumer on some seeing activity these market diligently sidelines believe are still cohorts many uncertainties in take are points to and

by and maintaining preserving playbook Our To is position to levels, price, and be capital. opportunistic simple. ourselves healthy inventory our balancing pace

priorities Let me focused we guiding on. are share the

on of control portfolio, sheet. land attractive Erik allocation investment back health balance and pulling on, to was and we have more years contracted reflect two our land prioritizing majority conditions First, ago. will than elaborate market an the evolving We of adjusted the by which as the Lou capital our

the evidenced in from under over starts community inventory a end our by unsold X,XXX quarter Second, our just X.X of pace finished. homes were which per remained will X.X quarter monthly starts At per moderation we the with healthy year homes during construction ago. community prudently as our manage X.X to

reduce as success business mean the and to on communities and plans market Additionally, lastly, last position permits streamlined to total we improved for pricing rationalization each And backlog. with our structure, oriented are activity. respond pressures market a the with of on our in of couple to to engaged starts partners current based time. press efficiency protecting the floor, operating of continue production years and we our will teams will the expect with additional suppliers to market's trade should The over competitive and expenses it conditions and be ahead opportunities paces, we our sales to and also responsibly floor while our in teams acceptable hand on rationalize greatly likely and market SKUs options, on will our sales shift has are value costs

dated while inventory competitive needed aggressively are to recalibrate on offering As pricing approach community's our mid compelling pricing In these and pricing duration, and as communities. new longer and dynamics, consumer appreciating incentives to adjusting single-digits. each market targeted and demand stimulate an taking a have averaged high with we find affordability have evolve, those and incentives with sought to group. conservative basis, more in asset-by-asset backlogs, conditions strategies, Combined, existing adjustments small market we communities

Morrison tool including last on downs, emphasize of by quarter's a and rate interest permanent incentives sales often I is As strongly tools greater. spending, versus using call, of in rate extended buyer range much of and market home believe the includes offering locks price simply the the reducing financing by a value generous buy This various temporary programs. finance as as offered we Taylor benefits

the rates tailored payment borrowers, our competitive by team solutions each provided market Taylor and obstacles. interest Morrison pocket are than many circumstances our and available savings in provides out more buyer to to cash home is monthly maximize unique the funding the overcome broadly what of of For

has interest In their addition customers with to mortgage qualification. backlog sales new been mortgage in helping secure drive buyers, team our and lock-in diligent our rates to working with

extent sold These gross our but of share of to third what $XX,XXX these quarter. end, me this historically be homes our over backlog our meet personalized average was home. sales majority by earlier per our backed attachment with deposits cannot although nearly increased a during These in needs. quarter the factors designed they equated which helped the year. limit XX% backlog backlog long-term purchased or cancellations, Approximately approximately XX.X% have the or informative were experienced this remained versus low little a buyers At X%. quarter third our XX% that we average of at of for less we X,XXX nearly cancellations homes XX% cancellations to-be-built sold emotional spec levels. The more of their as of metric orders depressed is Let over our overstated at about current X.X% believe modestly, backlog our lifestyle of homes, of to homes which opening to

of of including and credit home credit As XX%. display I a homebuyers be always XXX third funding tend share, down financially to quarter, buyers In continued secure. metrics, highly qualified Morrison payment using our to and average Taylor the our score prime an

meaningful high share year our the cushions, relatively majority I healthy from a to financial mid-teen levels the ago. of reported at absorb quarter. monthly third again teen their vast The have buyers home, payments mortgage higher a share rate once to qualification the purchase a Additionally, from based in have a our interest cash all up consistent perspective, used buyers on previously flexibility of purely remain that

and the moving indicates or financial surprising own it consumer are waiting of desired a trends, with result, home a survey their feedback that is our for forward situation many before not pricing that purchase. recent visibility our customers As economy

recently of topic to-be-built pricing enhanced pricing, that community and reservation Florida. digital our I'm On an for transparency more share to around system prevalent unveiled end-to-end first in in we the even delighted homes today

by we then an and to a system online the monthly home pursuit build and space Aligned a of ourselves led March further estimated of digital in and the choices the innovation entirely made recall, have commitment that ability deposit. now which throughout cemented to reservation system selection by shoppers reserve purchase this in developing consumers process. the as each help make a to being first informed home leader may configuration our payment, small as of the both with technology reservation new price launch self gives the You homebuilder is the industry's update with shows XXXX,

adjust can built, home desired the an and review go digitally reservation the based their itemized budget. their into customers they on their on list Before totaling and cart can shopping placing selection

During to evolving look mix and much There between had We the millennials, see and sharing they customer consumer have high we rate proactively and and millennial our a Innovation and that Taylor spec sales to total particular company and in approximately is reservations, do a reservations is online our boomers. accounted know is lead conversion reservations, interest responding although Gen shoppers good our have we at worth to mix. favorite of Z quarter as with baby of take consistent actually slight even business. so we for have third is XX% up unexpected a to-be-built sales. behaviors core expected quarter, data Morrison last a the simply but would the trends of XX% our fairly

will and land I we the the to are healthy conservative taking call over portfolio our land Now, new stance to spend. discuss for Erik turn

and Thanks, Sheryl, everyone. morning, good

in added several approach lands the the run in over investment portfolio well our have following to of breadth as significant and significant intentionally our depth last to shared prudently up years, land we we last which timed Lyon opportunistic back William Homes calls, our land taken and acquisition we an in As dialed to two our fund have prior XXXX, pricing.

the submarkets disciplined desirable all in with result, proximity prime which values historically stress other a new time. amenities, over risk dollar in centers, This remained over of to to have spend our several locations in are held conservative we job return in selective invested land stable adjusted that hospitals thresholds. contributed to and to and core long quarters schools, mantra have opportunistic highly our tested investing ensure attributes have approach As that more meets been became land more last even each

are of re-reviewing deal We reassessed closing. our XX% every have with in and average As pipeline still a for or over to contracted in result, of lots weighted each prior vintage our in earlier began testing were a recently final every four own land stress deal XXXX XXXX, years. transaction

timing, appropriate. are land sellers terms renegotiate For and/or deals as in process, with relationships to price strong we our leveraging

expenses of or for underwriting This our quarter the XX% progressing during in the core the our spend in met in business to of quarter. evident homebuilding approach the was year-over-year million, $XXX third land lowest fact, through terminated land walkaway required scrutinizing level on pre-acquisition restructured committee decline the This nearly thresholds. In when highly acquisitions $X.X longer XXXX. million contemplated our new third was since resulted investment spend XX% no quarter

On year XX% investment. of hand, ago over the spend total up development XX% related a other land and for was accounted from

and managing maintain have While for both and markets. closely eye meaningful scrutinizing are we we well to projects, scale our an our lot new plans existing opportunity monetize with positioning on across competitive to development continue land and overall vintage inventory,

our up a percentage via that end, quarter generation towards our exhaustive controlled This ago. budgets years year for total options enhance review completed which owned closely off evaluated reduce spend and market these allocation during and reduced we we XX% and now we the At In other risk. total, the As which further prior high spend lots, balance cash capital development development. total $X.X year and homebuilding time controlled land billion a in Of investment approximately acquisition environment, we to strong XX% we each expect approximately and structures lots, of with balance our of and bias represented efficiency sheet forecast. capital recently to approved current prioritize all was we and supply. from land XX,XXX sheet an division's X.X relative

year X.X supply owned a from Our years of lot to appropriately years moderated ago. X.X

from with our age and balances finally, our investment each to land share approach for Our pleased investment owned capital of me let our returns portfolio, the the we of with and are composition operations. a on And and financing mix landlighter of as controlled an both cost determine well update structure optimal expected perspective, Build-to-Rent quick the as lots.

contracted important forward performance. Build-to-Rent our to we the will Lou the deposit. business details the quarter, of by providing sale its in meaningful mark secured With closing. the will discuss more company's apartment Phoenix This milestone project financial that, our look and During upon in to call transaction community first evolution a to horizontal I a an turn we

up a generated gross the improvement everyone. strong earnings Thanks, strong of $X.XX, leverage, In year-over-year, revenue Erik, growth, lower and and good morning XXX% slightly third average We XX% was revenue per to due margin, in share quarter, which our was this count. due share delivered and Hurricane we primarily of but XX% the significant at closings was on Ian. X,XXX $XXX,XXX, our closings home homes generated home of range billion. SG&A up to $X an below impact from year-over-year, guidance This production closings selling price

Municipality also inspections, continue to quarter, the country. challenges. common extended most across the in trade During meters the cycle be our labor, modestly times constraint with flooring

the front-end until cycle expect not XXXX. timeline, at we back-end construction later to time While see to the see improvements encouraging construction in of beginning signs do

disruptions take on are in operational Harvey year. near-term Additionally, in closings delays it these repair municipality on efforts guidance. before limit XXXX, half and trade land development providing fourth and inspections and and ongoing chain lines prioritized and of over new with uncertainties construction gain for with on XX% development therefore These include supply Combined our visibility in months not quarter are in limited based recovery Florida, as availability, at experience construction timelines, construction. our several we first impacts closings availability approvals challenges, the which Hurricane our visibility nearly from accounted of time the we labor will and

basis and closings optimizing Turning to the pricing XX.X%, gross the achieved than quarter points XXX in we power company a robust XX year margin points well as ago home inflation. cost SG&A in which margins, revenue was our was of operational sequentially. X.X%, level as highlights margin from quarters, closings integrating and points was for lowest record fully XXX basis down acquisitions, the percentage have This this year-over-year, history. home which enhancements prior our since marked our up as and basis a offset was captured more

community ahead to our the we communities, community with to closeouts. which just range prior Now count, ended fewer was XXX slightly quarter guidance due of

balance to Turning our sheet.

Our revolving were which capital credit of position letters of including $X.X normal remains strong billion with quarter our $XXX outside $X.X undrawn approximately unrestricted capacity at liquidity million end, of at of and of billion credit. facilities, cash

revolving During the the million billion. available $XXX quarter, to facility we from under increased corporate commitment our aggregate $X credit

XXXX of million redemption debt senior us a allow gross on the amount notes, principal our our In on by notice reduce will full of issued October XX. X.XXX% outstanding addition, to we which $XXX

Following this have transaction, will debt XXXX. maturities until we no

quarter offer. As senior will $XXX a gross interest margins enhance second of X.XXX% we and Collectively, to retired by a in actions closer debt through targeted notes reminder, XXXX align our capitalized million tender reducing the successful levels. future gross these

reiterate capitalization and to net million million a to X% Our $XXX to down ago for of well and our environment me current operationally we let had mid-XX% continue market the outstanding quarter average uncertainty we from at authorization. XX.X wrap quarter's leverage reduce we XX%, debt ahead. equaled have are giving year-end. Year-to-date, represented offsetting remaining current net total $XX.XX. financially repurchase price accretive the shares range we X.X which significantly by on value. expect of book our to by share and ratio we year At we debt And prior million $XXX our use of an our This is diluted positioned XX.X% navigate count and diluted since repurchased purchased that is shares below share believe a million capital, lastly, of up, expected approximately to To end, count. we stock our an share the and that approximately price for million year-end, our believe $XXX attractive XX% undervalued

on priorities to health Our based the disciplined of capital as returns a with sheet we our our framework seek and allocation that generate objectives our are for growth shareholders. operational balances balance attractive

over turn Sheryl. me the call let Now back to

Thank Lou. you,

emphasize our synergies initiatives unrelenting These reflect quarter profitability scale excellence, be achieved year-to-date overall strong our M&A our the nimble. to effectiveness we that and positioned strategy enhanced through that business me and company results investment. and our land resilient operational focus disciplined on successful Let and and third internal has

land In basis. located of low comprised cost an well well contracted addition, is underwritten, portfolio parcels at our land attractive

like the of participants with questions. of please our and goals fight let's focused for homebuilding provide that, despite inflation. thank homebuyers and navigated prior in to Additionally, our positioned been on the Federal gross is market are our to of odds. country guide efforts. liquidity. our in open highest Operator, company's strong teams your appreciative to working never today's short, company against quarter our call To In with And balance and margins, we have at challenging leadership with laser record returns continues are and bottom are line dynamics With have instructions. significant earnings to aggressive weather actively lastly, another our am our equipped so year-end across well seasoned and their the housing and operators sheet skilled close, headwinds. history the I'd cycles levels as I our better They reshaping through the the performance its Reserve today's environment, all mortgage and

you. Thank

start [Operator BTIG. comes Reichardt now Instructions] from Q&A session. today's Our question from first will We Carl today

Your open. line is now

about managing while on door, supply you product cuts, backlog product ask I into are communities little your you're long your Thanks to Good bases dated giving a everybody. wanted backlog cutting going price constraints Sheryl. them morning, you the that's very bit out BTO how got Or you're Are to and new BTO where the especially much. given to base take get where you've going price? seeing? a

spend decisions competitive imagine, I think span the action to looked We question. we the it to by community we Carl. they've we environment, to change loan them as did gone lock incentives basis the be how the When you differently. that early XX in at XX% from out backlog, one I make say basis we look Thanks, to morning, interest entire they the amount, would sales not took of protect maybe backlog, entire help loan discussed very when portfolio that rule of backlog, portfolio, around generally or given points across and but a said, points into had can we The I had Good we our the say around the community, proactively somewhere QX as I good deposits time backlog. answer to the across mitigated approached that last just XX we rate financial with actually contract. quarter, reach assisted was what seen price. strategic them. the I'd It them closings of Generally, deals Did as held, very with over that that X% would affected all X.X% we quarter, and with backlog.

that actually I I quarter the characteristics we ones the look deposits, if those quarter things. was about the all timing, as at X%, of all think pricing, the and impacted look at

XXX, that gap you roughly hard get Ian's homes important little are where Thanks. it XXX how in Florida? were orders Great. traffic and seeing market guidance some like you return on Thank markets sell? a worked Sheryl, Hurricane? were it's And versus impact, homes I your expect opportunities couldn't seems QX, some by to bit because the And can just impacted have those maybe impacted you some then to looking do to houses really of you your gotten you range. had then more while And in to that so sell if detail. a that built, talk or Is what about at I'm you, you again, And right? guide produce appreciate you'd maybe in

we couple the I of Hurricane, honestly out Yes, of Carl. very Thanks, difficult weeks the quite was fortunate. feel a teams. coming were for It

and then last obviously the probably know, XXth of the Our the the week continued week of protocols you into month. started, late

shutdown had protected that a protocols, just generally Carl, I the horizontal just cadence house storm rain. drywall, houses. have and tremendous of I call would communities that pretty affected I say we impact honestly it at wrap, wouldn't good really landscaping, you damages, around we're we but with look that our of well, know, which insulation, our XXX teams. damage, as our When under kind the So to hit just

So we probably in the and following thought the week quarter, down week XXth, traffic. weeks we were the two for of XXth where shut the really

say paces, So on certainly where probably of our a Myers we were was while cadence most municipalities chunk returned units, affected the active before business. good that a business to that business our enables impacted. the I'd our have and real to our the to Sarasota greatest and adult second Florida really took impact mentioned week late get back they certainly as We’d we because back, that's came a normal for consumer, it

shoulder seeing the So the that season adult. to time, active for move starting traffic. we're move into we are same a At up in

as they so homeowners across members up the and don't will tremendous some call you overcome for think, the just I what that to then and to about probably showed able Hurricane the not me talk to our was but keep impressive. way said, because So start our new in just hard out communities, think And without away. them team helping I it's teams, Sarasota State our But they Naples to were opportunities.

So hope helps, Carl. that

that, Thank appreciate you. Sheryl. really does. Thanks, I It

Thank you.

Bouley today Matthew question from go next ahead. from Please comes Barclays. Our

the you Matt taking on questions. have You for today. Langan Thank for Elizabeth Hello?

that about of think of equilibrium spurs kind balance kind of you incentives forward? cut And kind off, start And price could do how be with should to be Just that how we they could thinking demand? the that potential magnitude and that does finding what going reach?

Elizabeth talked in for When And Thank because a as to the quarters, question. tools for what lot the and I consumer. use really might last common think consumer how of couple the come interest we we incentives, in our needs. like understanding for priority honestly this It's together that And are to individual the unpack of about on time best is question. really a how an really everyone. about for think about There's say our approach as we've you, you good of there industry unsettling the do the this, kind what's the is you environment the expect. sense it's

Our each just reduce you to help into trenches get individual teams because blindly have the to prices. understand really had consumer, what will can't

more think more prices, just expects the I to consumer you us the reduce the do.

a tool, where past, -- needs really the we've sales this is the I sales it's as prices. we said payment market a that, prioritize sell our is we're average as in I inventory tool, pressures time as think consumer sales we a going two to to So the if just a it we in to with help customers cash Having we tool, as will allows talked cost like, has help using we're to with in finance that, as times monthly it building respond reduce continue By as tools. a combination. and sales to close. value, in because us see leverage work two With finance to pricing have greatest so would our the times three have, think, on

taken but our bit each remarks, communities. we're as in moving point, -- As traction this many pricing. at special little it's when look is the I a that adjustments my I many mid pace and I high that move to week less, it’s base to will well we we in community-by-community communities taken in the prepared a to said of when single-digits. any the or in potentially the That need more find remarks using of somewhere as deals, think impact home prepared incentives to sales of generate on as finance option tool At

about like maybe seeing so helpful. talk If specifically switching, pressures. you're really what pressures others? and pronounced Could relative That's in I terms in the a affordability to areas much. regions, little on Thank Austin? guess, bit in different touching more Phoenix And of you you seeing price those are

Southeast the and highest say business. with Yes. where also greatest beyond Having lowest the across the seeing cans. seeing of the what with along we're holding interruption probably We is exception with seeing about that's production it's Generally, can where the I think best paces, challenges, I'd the we're we're that's Hurricane, the Phoenix. where Florida Obviously, talk them. said up maybe

points I it’s Texas those think different in market. the under price but think of that's and some number valuations at I of is And doing, put operate to you run the are is saw in again lower where It's totality, seeing as greatest saw think those inventory lower up first, highest West, I greatest and in Austin about the where have as -- and has When some the generally, price points also higher seen said, Austin, cans. up pressure prices we've where I production. prices. think by said. run on similar I once the slightly those where we cans significant seen the okay Phoenix we've pressures we

little our affordable there at in other but know, at know, struggling. You consumers you it's look them And where, -- of different really the higher look think is paces strong because like some to then parts When behaving quite market that's the we're affordable In differently qualified. a work a country. the actually we're active consumer, active I I consumer I is point. prices, leading a strongest, get California, Houston the lot when I seeing like think adult our Austin, our interesting, are our at weaker. look market at I a markets markets of if seeing It's adult bit

And say those also a markets bit company you all gives the year-over-year in color seen that where two noteworthy maybe Southeast actually well are below call Atlanta a deserve well. paces. improvement the as hopefully, probably, markets, as So, Charlotte rate with little a of out I'd our -- can we've probably and the little as

And migrations I Phoenix migration markets that to over think [Technical -- some time reloads of to and it's Affordability corporate dynamics have those looking the positive positive seen. know, of we've share changed you fair driven. again, Difficulty] happening of market been and like because impact largely, some Austin the relative in have and, that positive

market take any and bottom can't optimize positions. to that's brush, we really I No, community-by-community to we a And submarket Erik. so line is right? with single deep Yes. think It can a think dive strategy down come on, that even does right paint I those

much. so you Thank

You bet.

question next and from from Alan Zelman today Ratner comes Associates. Our

is line open. now Your

Hey it. information. morning. always the for guys, good great Appreciate Thanks as

morning. Good

in to guys don't of yet, on million quarter. -- low I for pretty It reduction that can this detail quarterly $XX you on I running dropped been G&A lower wondering question, a forward? any remarkable in a this I'm touched there here. sustainable as as $XXs. right around why First down but able the was you far this if and to going ton how basis see quarter quarter think expense this is reason back specific that were drive the had just And

in Lou. provided Alan. the Good I'd Yes. This came our us where quarter morning, ASP for leverage. it at is XXX,XXX say really strong strong

more normalized go Although up back see I'd start and increases down a over start advertising say some level to pricing see as to to co-op, levels. that we'll comes in bit time, broker we'll

really to [Multiple I'd out, think call there's So nothing say but specific I really Speakers] the

G&A mistaken? SG&A I'm is piece the fixed just more though I line? -- which nature general I'm wouldn't at the you're unless wouldn't flow describing numbers through in the think more of looking The that typically administrative,

driven ASP, better but by quarter. leverage is, It the you're to for see going the

Yes.

is So levered. the percentage obviously

As -- far as cost

Yes.

that. don't the cost just, there The I really item It was board. actual think, was XX, specific I controls Lou that know across one

I'd yes, super Yes. say, specific. nothing

but are Some ups probably true accruals here one nothing different on material item. there, and

revenue encouraging certainly very if yes, lower. sustainable, certainly, Well, comes that's Okay. would potentially be, that as

question, that have sharp whole pretty thinking of taken kind vintage to control. a land Second currently the to you portfolio of guys you guys in in you as there, just little disclosures terms and pencil and bit like a through your have your land what been well the of future I'd it sounds to love jump spend as providing land the

are I Sheryl, XX% of or earlier mentioned XXXX own So you vintage. your that think, land

the last you the kind down mid high your XX% the implied basis and So as two all described? of as a those over net been that years. the that and What of are you that's given new on returns purchased land re-underwrote look margins assets price today maybe single-digits has on to at

let I'll one, Alan. run think that Erik I with

you? Hey, How Alan. are

good. Hey, Erik?

robust been you levels really about generally, been know, think basis shared, recent we've And quarter reporting we've as of, you knew cycle. good we under so as year underwriting we've margin. time deploying a Yes, gross kind about entire We pretty that in Good. study, attractive second, unusually just third an last market. engaged of think and moving was as through normalized we because it the

yesterday testing. to and is really scenarios current stress process telling significant And downside at in really market us And really been started today deploying time underwriting some and truly the stress point has so testing. what with that

shared, we've cases and been each and need those a you where of to hard we as math for really the what for solve does, working of some walking and in know, to. renegotiating we kind equation deals So offered,

helps to question, reporting, slightly hopefully underwriting an So been answer evolving but to market. but very we've that sensitive we've the been where also

really news, good good we have is the And a Alan, landing.

line to don't feel -- you the know, the doesn't we pressure to that get sense. So finish deal any make

sharp I why really kind time. stuff any at an is taking that, of, certainly time be there This point, and invest the kind of to and opportunity that's new keep in that's dry the to think contract pencil right So will deals. your process powder to our a

be at going very, to -- we're yes, expectations So going very in point. aggressive to this stay we're our

there. Perfect. I appreciate a Thanks the lot. insight extra

Thank you.

from next Our Mike JPMorgan. comes from question go ahead. Rehaut Please

would what close And if guys get at have, a insight to potential Doug that feel for? Hi, that list guys you communities” in know could for to you guys something are extra if have Mike. you you metrics on, guys. are looking “watch know, you I Good common? impairment? kind further And so, alert you impairment of Wardlaw been wanted impairments. morning. you on know, that Is into just of

one question. going to expect Good bell more both of the project be impairment curve. in see In those across QX, to only had sides as We'd that to there's of future on our we it the always Sure. outliers the company list. made

today this margins, time. don't our we really improved based on However, see at any systematic impairments ahead

the it the on on As a to list. sees on level Once it consistent gets projects the watch we XX% below to relates at margins, list. what watch put start or backlogs

the of value cash downs, book the discounted flow, exceeds the would discount flows. terms of of if the fair those occur write In value eventually cash

other curve, quarter-over-quarter. those profiles really us. an today, than So outlier we don't we'll But continue monitor in that bell on ahead our based material of to margin see anything

costs, But envision a very quarters Thanks, XQ, lastly, guys where that? And those bit. just What down do construction throughout guys are they've bit going little been it. costs? I touched you few into the moving know Got helpful. a I you on little for and you on for it know then past XXXX. anticipating

to continued pressure We've sure. costs. Yes, on see

average QX on cost. continue start have higher year. out we to around cycle I really to costs $XX,XXX our front-end and that on point the see across based And up reduce. we'll the see moderate, believe QX be we be a material some the of in really over somewhere as reduction. starting we're Although time crept we'll will all we calls pack time lumber QX fairly things do would It'll of receive industry see really lumber costs still that the starts to in see that that want those QX, if until track that in did to however lumber probably the average the reductions during material

have have to their see But hopefully any been pushing slowdown We've in costs we'll to most the and increases card able closings. the the QX stop. part. seen higher And just hasn't reductions. to However, lumber QX costs push -- yet even still. those as end hard embedded end really that so get and some most builders in year we back eventually, back for But on overall, are been

normal that all some the year. this from on end next a year, bounties And we've that and that of the I of those things we of to by should seen move environment expect as we move quarter but only back it in

Great. Thank you, guys.

Thank you, Doug.

Alex comes question from from Please B. next Rygiel ahead. Our Riley. go

Two these important space macro higher see How sort in therefore that levels? more different cycle homebuilding happen you. the of, do sort kind to weakness from more Thank new at in questions. your need items for of reach, past interest cycles? opinion, to the And and you demand the normal of, general a stabilize one then rate of this to

Hi, this Alex. nothing of number I'm sure we you're Really of question, prior different as just for mirrors aware pandemic. what at say good cycles cycle saw coming a and well look reasons, of that about the I'd out there's we

were pandemic was. the to But everything. good. when demand year-over-year. really quarter-over-quarter, happened, changed that Before that the was pandemic, say It I would We continuing improve

or last that so never that, price different. with months for probably we've interest you significant price seen course be this And happened the stayed what's [indiscernible] five very than in certainly level months. in know, we've time, and in say, movement reduction would double of you actually the rates through somewhat more the double last over so same one at would of XX months, four the when course or never before Even At level interest of look appreciation, resilient. the XX, seen has this of five sales, the I given

to of discounts could could news. it been think Fed could media, markets. most be the most been it's the responsive has local be me size seeing it are recent in know, recent news, be week-to-week, and that somewhat And that I customers You our the choppy to that news

So I I have it's being buyers. today affordability real issue But think a we'd equally characterize to confidence for a as say combination is certainly, would of many critical.

what clear do that. we is inflation. needs on against be crosshairs fight this on happen going unknown. in I So But think I think, that about the to take, to still what what's been I housing happen? Fed. with to some confirmation, And think the have he's confidence is need really will very there Clearly

to meetings start views many there's as the a think that you says, year. as out I could could he or there up next aggressively continue back he for great of early see range know, could we next

the for think of I them that's I rates If are at where some NAHB, next the projections some somewhere think today. difference range, we X.X% you of show quite are from a in look year,

up our some I our consumer, that missing who markets sure, savvy adult, I make and in is this really this think the the old out drove you year. segments, think last know, to know, consumer want helps. When of start these move was, phrase consumers our you breaking what early So different apart active when the fear confidence get are really I can year

I think to at top. the not today buying of that reverts fear the

we think the And Fed consistency they once that way. a -- so Erik? real and view will a Anything on get I think and long some go else, I stability action,

lot that, Sheryl. a Yes, I of echo would

condition I expensive. think, we to comparing cycles, been know, sensitive think the a were backdrop when supply really that [indiscernible] this really to light, you levels is that to. speculation supportability think Well, had the I relatively compared the of that's about the bit all you that really cycle. that But little prior we're prior

in see yes, kind so are look to the And And forward, those kind of, we we your confidence point, backdrops comparsion. elasticity at do as move market. of the the then positive and stabilization then, Rates, levels, supply we confidence. how through news system. want to just good we those some as And to today got Fed is look we the see at see general going

we of last a time, like not saw buildup inventory right? and finished Yes,

Very helpful. Thank you.

Alex. you, Thank

Truman Please from Patterson ahead. Wolfe from comes go today Research. question next Our

far? Paul Thanks. trends. on going Przybylski. August I September so wondering order be July, appreciate you the was It's able to might how and is on add color if actually I anything October

and rates. its last little think what You I mostly happened approaching I'd to week-to-week around. just it the sensitivity to continue factors, X% continuation, a to QX, week, if see different, mean, know, Good marketplace. morning, when interest still bit makes in just a of tenure you know, that some we uncertainty we say look is at Paul. rates And the way local I

I And then have comparing the you market. those price you a generally, up, across as But, shoot impacts incentives see and when So good consumers rates they know, traffic. it are are adjustments stabilize. And weekend. comparing, absolutely they

How deposit spec? versus had spec of you average split? me And Do that does is your have you you mentioned deposit. you your mix and $XX,XXX could then what sales? build-to-order And if you. Thank remind build-to-order Okay. requirements between then different

Speakers] [Multiple Okay

see to a an For QX in spec, has XX% to percentage. slowly -- our our started spec XX increase started as to-be-built which to-be-built, was homes versus we to-be-built

won’t and I the protocol think see don't, you're to say, I absolutely if XX% for XX%. But get And you you I industry. a approach I getting In of have we I percentage try for for to won’t we do We higher cash. to the just XX%, it's policy a like something hand. correlation across do I times think around so want on in overall just as good around rate you country spec, those compared the country across there's know, think quarter, the that cans higher the lower closer of factor quite much I or the strategy, do to across for our deposits. our mean, played those more see house, is business, Paul, that this, coming that our it's have deposits more think that deposits correct me, could different waiting see the between full completed feel that to XX% won't you we I so and a business that a you, higher if tell be say Yes. deposit Paul, Lou, would we different. reality, we anywhere X%, affordable on see certainly adult X%, active in can

our of done the deposit say a I’d using And negotiations. teams as part have the great overall job

said. we've incentives, well So additional giving serving more Sheryl as deposits, if asked for some we're is which think I as

in that, you back prior What reduction it the that or one of cost last of -- Any than retrench home one sneak half be cycles, price savings thumb again XX% relationship your is Do timing if to the rule using could good from just give in I number. higher If were the would than there? price, pricing they for Okay. that? better in. Sheryl, expect lower could you trades?

mean, there's could right you just you've interesting as this don't I overhang. It's that got I specifically, Paul. an Yes. now, lumber know timing question. imagine, quantify it I might lapse, this always

this get we've have percentage starts. some we've percentage the strong mean, pretty never from the lumber you So there. still seen multifamily to a run-in higher that I going standpoint, just a because you're on time, seen tailwinds

happens to a So to going it's starts of on move really into year. next we what depend quick, as how lot

of through at starts haven't goes back they our lost yielded I see, before really are a front-end may what to-date schedule last XX quick should numbers, will with tell can remain already XX given it we've that that years that comes depressed. significant I some as I hasn't starts next you we get aggressive the But have think the we numbers the seeing in. expect months very assuming But and my you take two guess expect are out total between we'll we over somewhere and into and back, it never would imagined. move as being impact is That see year. trades. it As the would that's come as but we of that I the piece we

the I And as you as you'd we've think much know, this around have and probably seen. is supply been costs with, so more labor agree stickier channels availability go much lower the chain

it may longer little historic take than just norms. So a

is think Yes, first manufacturers the and strong still still through so suppliers, I are our labor very the quarter with next a year, challenge. backlogs of

So it'll to interesting first. which comes see be

starts. down see the goods then and labor back then to the come down bit, really of see see start depression on if front-end a we'll and labor, think cost by come we continued we'll followed I

it. very Appreciate you Thank much.

Thank you.

ahead. from comes Capital Mike RBC Markets. from today question go Dahl Please next Our

and taking get know there, are for starting still question. on of trade houses to giving that on magnitude a follow-up you're now Thanks won't already high Hey, next the lower margins ASPs. selling or obviously to seems be going guys. any it through. XXX that quarter margin, I right the you're guidance, given wanted two? I those the to over flow basis my margin on for This few is about not Mike. Ryan decrease and you're points sequential but can sense like we Because probably declines but just pretty for are maybe at the Frank right lumber

the quarter to over cadence the of I So next two? just kind there getting or

Yes.

slightly margins at up and in quarter, XX%. guiding between guided We you As The haven't range, lower probably that way. look we being. be more depending obviously, likely XX% this but margin, still know, we going ends I'd end on but our we're believe -- say, Last to mix on aren't it I'd market depending specs we what move backlog a do to up but creep items. but either our going in our in those time, upon direction you those incentives we say said, guidance, as end start of QX, But margins strong down, delivering see QX. I'd within increase over number we'll a into margins will have that as full-year

So drop down being time, to at that's the into But why we year. see that feel comfortable we'll for least within range start over next QX.

Okay.

not you're might It a the of sharp expecting maybe gradual decline, future? or be or step should kind I I in say? immediate declines any sequential consistent mean a So

I'd say consistent decline is reasonable.

high reductions know, earlier seeing I mentioned mid combined far our that so think in incentives to you and Sheryl we're orders. single-digit,

Yes.

of you potentially, Because is know, spending new You compared numbers amount good shared X.X% or take of know, I help better ASP, loan new the for if think that what you some as safe about you in backlog, a to of a we're X% a where, would our can than to know, deal? sale.

sold some take but the You our bleed certainly going into going the that margins backlog New today. at it's know, look today reported Year, to to you to at in, so we've are are homes lose not time and point that being

the me, But of Has average that's or an an XX%, just of at buyer cropped if to are Got terms backlog the the of from on it. this actual rejections Helpful. I don't think yet? in or quarter. that's stepped out end you And outright what DCIs if qualify? said quarter. to meaningfully qualification, seeing due have you so those then up up inability last I even to know just fallout one

tell as that from you quarter, every quoting it's to. you can you numbers though still don't I qualification consumer nice been see they at this stepped know, think down shoppers, still lot rate our I as we would But not about to desire once tell single-digit. if again, a very our straight even had quarter, material cushion, very, again, our of from that's it's would separate and a those. Yes, We that just had can average denials once we important and look think you you expect. very low when And the I've a

and our with at our if the So XXX our It’s look buyers that I we're it's something when our cushion have, when pretty closed the quarters, backlog anything, and closing think higher backlog at in and I probably rate for look our everything about been half locked, at It's know, December would a I we over you XXX points, we our than of you it's buyers. X.XX%, tell was quarter, interest have it have locked XX% emotional. it basis at talking at a ability interest the we even much the interesting matter FHA in that as XXX prior tighter for customers is to that at average X.XX%, good our closer doesn't we're certainly look buyer locked. basis that points conventional of qualify as place, and November buyers though in basis but we're points or to FHA when rate, I

conventional at are Our buyers locked X.X%.

at X.X%. our locked and FHA So are buyers --

quite the really which that in difference is mentioned. affordability that par the you rates seeing assisting from still we're So a the market,

Thank you. helpful. for very That That's me. was all

you. Thank

from Our Housing Please next question Research go ahead. Barron comes from Center. Alex

backlog I doing improvements are far than you guys paying seen situation? maybe I go trying by who's that if signals, these know, too saying, something still build improve at of more you time? some was sorry that labor And any trying any missed move subs Yes, And to shortage got competitors buy I'm are just homes? that, thank because what I wanted seeing if to anything don't all? are of thing? type as or And house and attract your much. from should as somebody you not, come time, the kind a you to well, your ask on but the the people I'm guys on I you comments. have to clients I long if in is quick and of a very and for build or average related work know, cancellations in

Good Alex. morning,

Let stab that on. me may people add a some and have take at

quarter, we probably mentioned approximately have times our As prepared during the XX-days. in slightly cycle the about remarks, extended

We well as very back not builders all seen on improvements any their really I are challenging, QX to-date years. end expect the be as to pushing the as have finish mentioned and to earlier

say somewhere bit availability, labor lot more activity. will X.X pretty pretty wide -- where so over getting time low a in to and improvements markets. widely starts our the across But like on yes, I'd company we're positive year, we're on and trade that varies as constrained to that But cycle lower cycle improve which depends we this Overall, those start our of getting Austin, times. times a well. to close more from of over very multifamily of the a little went currently a see year note we'll we've averaging It's X.X in Southern some the as lot to some On variety. that's X.X time, Sheryl earlier, front-end, as high a up start see months. about market-by-market, with Cal seen some builder And the strong in mentioned months it a

labor to a bringing trying market, of are more know LBA there into over get involved I an wide the more -- to time lot terms In industry the that's homebuilding and in industry challenge is trades the

foundation [Multiple specifically, more Speakers] right? talent

Right.

the yes. sponsored by It's been LBA,

really some normalize to cycle to to Unfortunately, today the yes, are supply take going until be chain start times to But see going that's time unfortunately. we continue elevated.

our averaged turn we've year. assets been times about able to time, a over However, X

a over to when to come units time. see ability given business start the does any lot obviously, point carry in that our doing time, not less today, at we're that and we'll through So

hate softer I also, goes of a it the choice of the know, to say trades Alex, some have You but it, to things lot today.

they them time. in the So ready to respect. paid treated on when job matter, get today's They site. to need dead know really but things to get so need for All they with They matter. they They environment. always they matter don't need days. those have any be It's

new we're our our trade well good through feel the lose full with continue help cycle. have really helping internal and we I some this -- share, onboard, but to about both to programs talent, points, grabbing will as secure the of it certainly talent, that that programs us think as ancillary and for train,

one question extended And to think over huge be people amount, answer I there home, overall are cancellations cancel say seen didn't when and you in construction the that. is the definitely not have I seeing, some where potential -- with time know, instances people I'd lines. we've but a

and side, model Build-to-Rent And obviously we're have of just kind but of that you some and efficiency only create floor or cadence. benefits kind of simplicity kind of cadence maybe lastly three two on seeing pressure of seeing plans, the the the there, you that really when

that very if customers a to that's At I specs? sure we guys related And said construction the helpful. for quarter? know homes want Okay. days. ask spec have Some more around lot under thoughts that, XX the could time, not Well, starting there's mentioned your XX within same can what starts you one, another to were that close your currently. of If is what builders

the specs already more So the around versus Speakers] working [Multiple your is thought you in what's quarter? just have there on ones starting --

good that's Alex. a question. Yes, Yes,

quarter and down down XX% going inventories really be X.X units for our we work spec approximately as went we've Quarter-over-quarter, want trying X.X% XX,XXX or levels really is line more to were our or Our from worked per forward. our slightly. starts inventory where starts outlet the to -- spec average in which to per outlet dropped X.X%,

pleased the more units. have we're absorbed and have consumers only really So a to pleased inventory those per importantly, half spec outlet as we're

right? it, Complete

Yes.

Spec [Multiple Speakers]

inventory as as completion. Yes, approaches really have absorbed that it spec completed our consumers

as level. a expect that reached forward, more going will starts say we'd our desired closely our we've more I'd So pace match of sales spec inventory

know, And XX% remarks units. as our thing the were is, that prepared of in only spec on add you cans I said to I'd my

We and the pick to to the multiple the believe balanced of had do us. deals of they in the affordable a higher certainly really we So consumer more keep model is levels in not balance at allowing times a for specifications nice and all where want. lot, this a write plan, you'll prefer see pick specs a counts spec house

Palmer at There you now closing you. time. Thank back further for no to questions I remarks. are Sheryl hand this over will

Thank quarter Year. all you you to to appreciate you New healthy look you. Wish a today. opportunity results share joining We and we'll our us with very talking good holiday the in for to season forward third the

Home Taylor call. and That Morrison concludes conference Corp eebcast today's earnings

may now lines. You disconnect your