Taylor Morrison Home (TMHC) 15 Feb 232022 Q4 Earnings call transcript

Good morning and welcome to Taylor Morrison’s fourth quarter 2022 earnings conference call.

Currently, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time.

As a reminder, this conference call is being recorded.

I would now like to introduce Mackenzie Aron, Vice President of Investor Relations.

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

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

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

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

Thank morning everyone. good you Mackenzie, and

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

metrics. As always, update strategic the will review our build-to-rent our an will After a performance I Lou our provide our guidance as Erik portfolio financial and detailed discuss of an share my remarks, land and update on highlights, priorities. our results market investments on as will well business, and while

at XXX that XX% execution the wrapped change performance. record total up and our margin which in swift was fourth in basis unfolded all-time a nearly Despite our quarter SG&A a income X.X%. by operational This revenue. closings of a low conditions XX% levels increase record XX,XXX delivered Taylor a increase more home of over year, gross ratio points, net on adjusted produced an XX.X%, housing than team’s Our and marked market during in homes team year profitability strong up historic for of Morrison the

earnings our core building we of which significantly after our our billion to building deployed strengthen XX% net strong These home to approximately and XXXX, home at of end drove XX% leverage from by further $X.X sheet investing our balance outstanding shares into business. XX% cash repurchased flow reducing the

value result, a to XX% return and increased book equity our XXX points XX%. than per improved to share As our more nearly over on basis $XX,

profitable enhanced impacts In and invest successful transformational optionality operational to record us validate that and which term increased made the of have with total, integrations these earning results with strategies growth. a stronger our powers long for company

community a best considerations, these to us market conditions maximize strategy of dynamic and respond allows segments by quickly operating performance. have flexible but we serve we to as last affordability. community that affordability land interest and our Since risk and and quickly to volume adapted the driven important minimize through our operating smart year, recalibrate prudent strategies, customers and we each of the segments At in the varying acquisitions these groups balanced, entry Morrison, With expanded we positioning recent our portfolio serve mix a our demanding resort from well our in consumer broad diverse and organic country. range growth, and and footprint and benefit Taylor across strategy. years specification flexible starts in rates began rising shifts Having product this level, investments approach to lifestyle pricing of move-up, levels each home second of first market of has and

dependent base our price on mix dynamics, with highly pricing duration, option various of of our inventory, most levers, starting finance emphasize backlog, speaking, results our entirety adjusted to level perspective, protecting inventory lifestyle Generally across mortgage our to and our communities course to entry priced resort adjustments, market community’s incentives profitably adjustments incentives higher price respond of with the turn while and and combination of value consumer its best reduced center sales encouraging drive premiums, our and move-up in communities far year. design pricing been while concessions, competitive quarter group. a evident of base and premiums, even flex the have a these and incentives. We then backlog. have and lot new and thus we mortgage strategies lot conditions in From The each the also portfolio success more fourth and our of selectively was

We in the and far shopper sentiment have with has positive of the but spring so since season typical the selling typical been anything early we been recent activity in are mid-January. days pleased seasonality in and years, momentum sales but

first gross pace normalized into six per have to as improved the trended cancellation the has month, the mid-teens, pace rate three quarter. our to though net our the weeks our sales X.X of to compared approximately more orders sales driving year, fourth in X.X of Specifically, a and

are or XX% customers secured deposit the our average home by of an forward activity, committed Aiding positive moving of sales backlog per nearly home. vast in with their majority the are and to purchase $XX,XXX strongly

were addition, score and over the Together, average below contributed backlog. capture fourth of XXX our trend our had XX% fourth both average term consistent X% long industry quarter, stronger just provided with of by than at opening of quarter Home whose our year credit of to an financed well average In cancellation ago. an Taylor the Morrison XX%, these in rate our improved factors buyers which to a and Funding, remaining payment rate down

our trends well highly below we competitive availability levels desire enduring limited groups, our in the While and uncertain, of for community outlook remain ownership the well home demand consumer peak particularly housing and strength inventory conditions core these and market as encouraging locations. believe overall underscore as the is in targeted financial

constraints teams using cost in pricing suppliers to tools product to our our processes and and affordability pursuing the with our solve offerings. In the for strategic opportunities rationalization addition and aggressively purchasing within market, building construction are

and targeted sales levels a will Lou have turns driving moderated a inventory and cash focus in align with volume generation. our activity as detail to on Meanwhile, just we moment, healthy asset starts with

a breadth more national and packages to-be-built cost production option rationalizing capture on our of our floor and all improved the use efficiencies including home. spec offerings focus and homes library option depth while plan has XXXX, and since Canvas option of quickly heightened the the expanded Our homes design revenue and center per our not greatly average approach savings ability reducing for to targeted our

Enabled it’s consumer and and XX% construction meet allowing gross demand. of this our ago a price In highlighting two for fact, teams’ while by by further XX% shift were our worth also years orders point, our that fourth spec streamlined up has effective year sales specific inventory purchasing from homes, to positioning XX% ago. us quarter

increase to our sales, average square suggesting across spec and footage sites. premium data square the the with in our less despite be suggesting off to groups addition, home continue included features XXX down year-over-year, our XXXX buyers in would consumer space value buyers In feet trade that was meaningful than willing

unlike improved engage where shop that of topic digital are, buyers and to the to, also in highlight our empower when payment want industry. to and the into shopping providing are us online the with consumers an monthly meeting and advancement we in On they sales like our other visibility success in the from any prospective experience tools they all price purchase I’d ongoing how seeing while

XX% year version last was enhanced their quarter. selections, home a its total with to exterior recently desired to-be-built and our offer popular source Our system homes, kind of lot, in that the choose floor out for online available first for In XX% communities homes as spec most rate sales. rolling allowing upgrades all interior plan, online reservation the options, as driving began top is that the XX% of and shoppers lead design most quarter and in system year, structural reservation packages, we and last total, fourth of our our well conversion in

engaging for I With home consumers reservations progress. nearly forward made in to who shopping consumer our to them. for way this community the did team it’s look by insights, volume believe and incremental fitting with say redesign in to by I earned to continues that exciting purchase visiting sharing customers a journey prior a XX% safe by home our continued of represents person, these business these Backed ever the so most future

flexibility, our our key during in to innovation show face-to-face the of To our focus the new divisions in all with in sales path our were and team nearly success a that XXXX great will each on our beyond. experience operational January, team in of before to road that person XX-stop and delivered customer strategies meet kind was Our a pandemic. recently kick messages leadership to its the on X,XXX the align the program of operational members year since guide off way first and

turn call over investment will Erik land the our I to Now discuss strategy. to

continued opportunistic developments build-to-rent to morning an good and update our and on land our share some I in Thanks will Sheryl portfolio, investments, everyone. our business. exciting approach

we a of which end, controlled and on of ranges. supply, other owned building investment lots project-by-project In determining financing X.X was optimal balance owned. mitigation, remain expected lots, lighter XX% is approximately home options Both capital, measures to up we off-balance approach and a total total Of years our selectively comprising risk controlled At from are year targeted within ago. years our which our sheet via cost we structures, structure XX% the and basis, targeting XX,XXX of returns. year X.X land

and of meets land with and closely on an we invested dollar takedown, addition, thresholds. every timing, our return to terms risk-adjusted expected each In emphasis closing and conditions pricing stress-tested, to market reflect to re-underwrite continue renegotiating phase review and development, deal lot ensure

quarter our we underwriting pre-acquisition As a in result the fourth longer land to requirements. of no this $XX of that abandonment deals million met incurred scrutiny, charges related

in year. our totaled For year, of acquisition XXXX down billion $X.X the on investment nearly target $X.X of $X.X development was which from development. was and initial land billion year full total full This well XX% spent billion, billion the entering investment home our $X.X to and below building,

were recent took as housing reduce I on last softened already our land stance given to calls, strong position. shared As opportunistic the and early a spend have our market year highly action lot in we

of supply of or our owned As an negotiated the update, approximately XX% was XXXX in lot basis earlier.

land XXXX, our XXXX, year full to similar the market dependent although ahead look and we conditions that on investment As be ultimate expect to be to arise. spend will opportunities we

given inventory efficient competitive which was related to community monetize basis and to During $XX approximately pricing well composition portfolio majority we concentrated pressure. of chose of capital of prime the is lot remain the we quickly that that our single million a pleased sub-markets. quarter, west the in Overall, in with underwritten, the impairments, core recognized non-core we

update me let operations. an share Finally, on build-to-rent our

During important our XX%. over margin evolution Phoenix quarter, build-to-rent closing our we business of which property the first attractive a milestone project the with gross of in in sale, the reached an fourth an generated

apartments lifestyle-oriented of communities horizontal year offer six brand, deals we the Unlike we specializes housing, parcels. and by in rental our addition, XX lot under active new prospective under owned concept developed named private announced for-rent end, are which in traditional inspired branded our multi-family backyard we development, consumers. At is build-to-rent cottage-style niche land In in pipeline. more on which single homes that have space our XX review in than build-to-rent Yardly, XX projects markets, our

have single business, moderated in for for attractive we a we growth space offering differentiated on remain alongside market constructive void as pace well potential sale traditional constraints. the fills While to our of rental that solution barriers affordability living, that while term exist as the investment to an our entry all for of long the family the product the

structure by supported levered which As returns, light a is while reminder, leverage, business a provides maintaining high financing overhead the exposure relatively capital and benefits control. and our capital efficient of build-to-rent

will I that, turn With to Lou. the call

performance and financial quarter. our everyone. Thanks will provide good I first and guidance review Erik, the for detailed morning

earnings lower fourth after items. the was share, up $X.XX In one-time Compared XXXX, XX% diluted to generated the of quarter abandonment, our in financial services gross XX% closings fourth $X.XX margin, impairment, leverage, the other home of for SG&A per a share improvement the adjusting improved we lot quarter, count. due and or and to of impact latter diluted profitability,

$X.X of we generated at an average X,XXX which quarter, price delivered $XXX,XXX, home During closings the closing billion. revenue homes of

quarter, chain are cadence. given cycle several the year and volume industry-wide average to our southeast report homes supply of delivery homes operating push by to during that challenging predictable teams Specific during to closed quarter, more times the although divisions I Hurricane Florida For happy anticipated Ian, were end. some our days the at am back that as delayed a dynamics the impacted extended

notable categories, Across beginning expecting this improvement return in in see cycle, we the early of to some construction this are until not any are and improved labor the times country, while stages to product including we in later lead relief overall normalized times a year. availability some cycle

and construction of maintain manage This home in to sales sales, roughly and pace we spec targeted meet production, resulting our homes maintain consumer including to aligning Given us of to-be-built for with finished demand schedules partners, in start levels improved by a inventory. level of efficient our our production XX/XX healthy turns. split trade asset allows

we XXX approximately third the during end, the Of approximately we started X.X quarter With months the were community of fewer finished expect quarter fourth production, at homes X,XXX XXXX in slightly step XXXX. our which up was quarter X.X about positive were had ahead. in than quarter which end spec and to up At or but about home in homes down in from of under spec. start X.X community, only momentum X,XXX per sales, recent pace these the specs, We of one quarter, finished. the X,XXX from per

already permits market dictate. teams valuable opportunities providing have hand, on as additional flexibility Our

and Based XX,XXX homes homes to on we under for deliver expect the X,XXX X,XXX homes year. between starts our first construction full and between these currently to in XX,XXX quarter to volume, projected the

the year unfolds. to $XXX,XXX average year uncertainty as our first we additional in a From we between pricing look provide to guidance full perspective, deliveries quarter $XXX,XXX. the level will market, an on elevated Given the expect price of be closing to

was home year-over-year. higher for XXX price have by Turning gains excluding in margin charges, other which ongoing XX.X%, offered a margin home to achieved benefit conditions. inventory and fourth offset The was to of the quarters response the points from the gross operational ago. adjustments basis and up year was improvement pricing up our prior from impact costs XX.X%, driven XXX enhancements quarter points quarter charges, closings margins, we weaker gross incentive in construction and market increased basis Including our XX.X% those related closings adjusted

from sales expect improved XX gross first This would XXXX. the XX.X%. marked basis despite performance-based SG&A in Looking by quarter X.X% quarter percentage revenue of low. to be home home XX.X% first our driven points modest as revenue ahead, be company of compensation in efficiencies costs, as record our to stable and closings X.X% enhanced prior up we approximately from at quarter closings lower decline marketing margin sequentially well This year a another in as the in the capabilities.

in ratio quarter. forecasting disciplined structure first be a to and maintain to expect we forward, Going cost are an SG&A XX% approximately the

the were net orders in XX% net XXX. ending down count to decline X.X orders absorption year-over-year sales by homes. pace a Our and the The quarter to community per driven X,XXX in decrease a was monthly XX% reduction community X% to in our

which ending XXX noted, land and to Erik pulled we community have will acquisition future count. we increase impact In to in count on first our the expect investment As back development, community both to XXX quarter, our between slightly communities.

XXXX. flow To from year, of $XXX up, cash in billion from million $X.X generated operations up is which the wrap we during

billion to notes steps the redeeming June, position $XXX $XXX in October. in of notes $X retiring future These during our in revolving million interest senior our year, including aligned transactions burden the XXXX solidify of several of corporate to our our gross closer and we September, reduced took size facility addition, XXXX further debt million credit and capital increasing to targeted levels. capitalized In senior strong

ample have with the liquidity monitoring on opportunities. is potential maturity which and for cash are hand closely in to debt March XXXX, we next refinance of Our address market

undrawn capacity the $XXX year revolving letters credit $X.X of approximately facilities, credit. of billion, cash on which million of our total billion of ended normal of with We $X.X were outside unrestricted liquidity and available including

basis the capitalization with to XX.X% ago points year Our from debt year end, goal range. to our XX% XX% at down consistent reach a mid and ratio X,XXX equaled net

share. shares we year, per repurchase the our during a diluted XX% million $XX.XX approximately XX% nearly beginning Lastly, outstanding. $XX.XX, of million, repurchased $XXX of discount The represented which book year-end XX.X shares price value average for was our to

repurchase year remaining Our end. was million authorization at $XXX

into we that as our generate disciplined sheet balances operational priorities allocation of with returns remain As capital to help and balance seek grounded shareholders. the we head long in term growth our attractive a framework for our XXXX, objectives our

the Now Sheryl. back call over I’ll to turn

Thank you Lou.

Morrison push outstanding I’d unwavering loving their have tenacity close, despite customers to so like the challenges, for they our Their Taylor performance we continued team ahead commitment in I their am Before to is recognize and for XXXX. our to and teamwork. and grateful

day Most the Story gives consecutive Trusted that Homebuilder Research members each commitment day again me share and were in once belongs It shoppers’ Life our who named integrity, great and transparency. America’s for trust pleasure eighth to quality, earn an year, to of award out team that home to by with we

In have recognize homebuilder with in to understand needs representation. the importance home gender set overall for of products, were fifth intended buying and industry-leading the racial Bloomberg’s reflecting related proud among to of be greater the increasing With we our in making Index addition, to we am only Gender anticipated home today’s buyers, our and housing to our also shifts drive critical launched we once diversity further USC our diversity I a Equality strides marketing we recently our study diversity running. the and ethnic on our are population. again and year recognized the of team, consumer

a we we [ph] Grenade expect have Choi and professionals, digital bring perspectives gain supply as for their in the diversity. in proud will board real we chain that To model a what turn fellows become in expand management end, added to Sory-Robinson from a boardroom. in share its expanding transformation, and They in invaluable our board to fellowship board knowledge launched will leadership wealth strategic non-voting experience of are world first and Hanna kind outstanding we two board [ph] also that of have Michelle which

you we these new to with on for interest your We sharing more initiatives exciting thank look forward Taylor you in and Morrison.

questions. open to please Operator, call the instructions. provide participants with Let’s your our

[Operator you. Thank instructions]

from question Truman ahead. Research. Our from go Truman, Wolfe please Patterson first comes

Hey, good questions. morning everyone. Thanks my for taking

clarity, normalized have you JV First, was the order first in then pace spend say and the and XXXX you per all up six mix. option X.X just reduced weeks, net absorption for bumped your in but you did month, land

through flattish land we openings - guide to trying maybe you just existing ’XX. your year, quarter kind hoping up count level year basically bit. a Your trying end in first what all are I’m to is move planned little at of year the on understand, pipeline you based cadence, know, community understand development the just to over as

Truman. morning, these. Absolutely, good Well team we’ll couple of tag a

modest. Starting sales, little us yes, - weeks net they the to the further the with on January correctly basis I’d add said heard about that - and on weeks first a a you say kind to were about very of X.X, we first couple were of X. gross sales color a were December six for similar

Our continuing would has was about beginning quarter. in actually January, little best When and really of January. offset we’ve was at in the November weeks month higher momentum first fourth say a in that February, I through couple so that I X.X, the the look seen

With respect to land spend--

say Yes, growth, maybe the had had definitely than bit of had know, extended, at lots you outlets the timelines a that us. morning. end definitely production we development I’d land a XX,XXX permitting of so the outlet good little we ahead turn Truman, year, and strong environment, to pipeline slower similar to XXXX, We expected. Would - through the with

until lot mentioned there shifted sales of shift walk-aways of some softer script, growth then we our there of opportunities, strong the But environment teams some lastly, also growth. the outlet in impact still so developed outlet we have future. deals models which lots some future. as walk-aways, had land our into overall, with and the with into lot are have complete, small been be opportunities so that expect further Our could that produce think finished are I on and entrances bank, openings Then with finished the some one-time can

communities you probably XX% to where number go, we range last far think Truman, higher, this year, we the I XX% impacted be as a about about--you but look by I asked as specifically, closings as something know, openings. to and that Yes, year in of expect opened If well. at obviously mid-XX

Okay, that’s great color. Thank you.

relative throughout margin think with realize a in, the messy a performance - you’re there initiatives. that streamlining you picture and understand all you and through versus incentives, as trying to group peers had etc., of move internal ’XX. relative gross understand juice I’m I XXXX variety discounts, to improvement acquisition nice have macro might integration, some trying more if squeeze to what is the items, all You but the know, inning be we versus pricing on

definitely That’s forward. There’s going the a great profile Truman. puts and of question, in takes terms margin

sold split decent profile, really deposits, ’XX, deposits to still sized really dream you our of you side seeing on we up. ’XX, so margins earlier to-be-built specs homes are that going backlog their a margin very strong putting strong they’re As where into are know, have in building the as in our to-be-builts, XX/XX we strong customers see our plus and home,

talked about you ’XX, In for a Then source vintage land terms also enhancements by going which margin beginning reduced the as over bank, we’ve the of since good of of operational options future, forward. think our Canvas place and, enhancements business I mentioned, tailwinds other we now, that’s ’XX. in the XX% us so that and putting and we our into our into about, in helps initiative our over addition to us favorable fully have simplification simplifying those lumber builders almost operational as XX%, our talked plans have

we’re last ’XX, reduction rates those you’ve help side, it’s front down rates mortgage our come in towards little that we’re on helpful of us finance, the as opportunities small the but prioritized softening more incentives lower with had unfortunately take been of on cost down some will the cost the as bit, with and seeing we’ll until have demand specifically, We see there. homes spec our on seen have a recently, those, or week buying the environment, Most Then the had elevated end. in though, opportunities we do incentives more so.

but there’s very about up strong we slightly in us say feel this again, QX. margin think, and as guided, takes, so gone for the have opportunities really I’d put I a we strong rates Our

and if very I and I the had Lou--when unique more a our you just we’re back know we definitely versus time approach specs picture think, norm. balanced to company Yes, historical big to-be-built, the Truman, think during period were yielding XX case, XXX a today’s not instances XX, environment certainly years, I’d XXX, historically lot that’s two. some in premium, specs the but where we’re and, and for points say, a seeing basis about in of in between the this months last of XXX,

our a that balanced I having that approach certainly think communities comparative us lifestyle we’re that I of how our both strength provide within to-be-built think to the seeing to business, continues group. and is, margin lucrative for also

for and the Perfect. all on. Well, thank you it I’ll pass time,

you. Thank

Our ahead. from next Carl Carl, go Reichardt from BTIG. question please comes

Truman’s lines meaningfully? too, it’s unit from to your XX,XXX mix been the lifestyle what guidance change Along between to everybody. morning the ’XX, about likely question resort for of level, thinking is move-up Thanks, XX,XXX entry and

shift mean, the there’s I I level significant mix went that so. to when don’t at periods compared I in saw both say I the some and certainly - sequentially. wouldn’t [indiscernible]. up our think entry year-over-year quarter any we Obviously prior look

has think I in strength, communities lifestyle our I Our don’t sequentially. really our see mix seen good some round, changing. active But adult the also

of the as research you and you empty an that features Can square you’re two? on about Thanks. off sites might you’ve then or clarify little Okay, out house does a a that does thanks made the that do done your without sort trade does research thinking - altering whistles. what buyers into I in expand larger margins feed turnover? that a look design? for Sheryl. box, bit wanted would that How said to about think bells that and How footage What how what impact year that to Canvas? numbers rolling comment is Then home like next and

Carl. question great Yes,

the at like around think the haven’t putting really the we we it a out plus several half on go package feature back our is Then at basic Canvas of standpoint, both upgrade think really that pointed the can X,XXX, honestly, square houses with I from I even specify but surprised or stressed, what they year, doing years. into when still be I really movement a we our to look right very of or different last affordability they’re it, their was packages. look continue they’re Then seen continuing lifestyle so in they’re in over in have they things homes, spend. significant so and inventory, when they’re our and Canvas I communities reason when go I to that minus, they the I footages can look at last, levels what because

come data moved we’ve that’s It’s hasn’t been interesting option end, in highest options, to but certainly homes, think watch from more best Canvas. a me as slightly other down haven’t down, our kind been percentage higher have with margin Lot a our to any point is I and reduction actually offers, up. as even footage of that we strategic in we really the our bit, those got away and - square Canvas come HABO seen premiums on our is and of certainly

of because once program would again active a be curated, it’s slight but adult shift that it in impacted received offset well would honestly that might highly you slightly first and of the by so lot lifestyle really our they’ve expect business and just impact the a that been It’s timers been hasn’t. community it, ticking so or somewhat up,

the appreciate everyone. I thanks color. you Thank Sheryl, Great,

Thank you.

Matthew, please question next ahead. Barclays. Matthew is from Bouley go Our from

today. for your on Elizabeth have start Good around off I asking of kind to morning, commentary Langan wanted just you Matt on demand.

away might you’ve too into February. adjustments, good you Do You what point you seen the start year mentioned it momentum pricing it view or that through is to soon have or tell incentives at that? for improving from and was to a lean

question. great a That’s

Elizabeth, I too reducing further to many We’ve I’d already incentives think a for because teams, believe between then, think home about we of our reduced you comments, and seeing pricing, we’ve But we back soon cost it for heard quickly we prepared the don’t we’ve in Certainly capture the incentives. say communities, the I reductions use us way. adjustments, last but done better in stabilize would but than reductions we’ve smart so some have--honestly, our in used turn of a allows in some said tell and to already jump over seen, a just quickly partnership that buyers you simply out rather time base for continue never in see me value finance like probably in base and improve the pull effective in the to us in total, mortgage price, by we their incentives market we we’ve it’s we’re honestly find start sure. experience, that create really place. really if a we I business in if place talk we our ourselves base, to markets seen have and to our done our value get and additional base that way to most building more much you’ve much the business, markets that percentage go. the a it’s and pricing is as have lead

to their adjust of continue going depend through there, the to would lot to you markets they obviously they a watch and other behaviors but we’ll work if it as builder lot closely, A on I downward. is continue backlogs, pricing tell

as rates. been the add more I’d that, the just to say incentive with favorable recent opportunities to of Maybe lower have

year. have to rate buyer acceptable to cheaper, going it’s vary to been so an the downs the environment, mentioned, As get on our rate, interest depending I buy the throughout

mid-Xs rates mid environment. an if were such a to X low we in so--yes. Lou, completely where to were par the trying and think today something about important compared high people to pull at to point, Xs, It’s that’s part we quarter, were it’s a get in third when you That’s the of because the in different back,

Thank you.

you. Thank

Our from ahead. Jay next question from Wedbush. go is Jay, McCanless please

Thanks Hey, questions. good morning. taking for my

would because could the ’XX insight down finished topic. price have about are any an guess be I for average quarter that $XXX,XXX. trend through I fourth first appreciated going price you to which through a sense selling over backlog is ASPs or year, way the year, Should give though you with us the $XXX,XXX, any expect question on the average we the drift was

good question. a it’s lot there. Jay, through of order going the Yes noise ASP, with a there’s Maybe starting think off really I

$XXX,XXX things: actually, noise happened them made is quarter we to but ASP $XXX,XXX, X,XXX made get You adjustments ASP retain what’s the units closings. our and for is quarter. our backlog the for quarter on bit fourth the one, was gross over for two also of to we we in mentioned through to our adjustments the our backlog through what’s adding some the deliveries, closed; - quarter any order That’s that them future ASP order for and the made adjustments flowing a then quarter

as of Like a we $XXX,XXX. bit little ASPs I orders our ASPs over over our have We a are generally were $XXX,XXX. spec but say to lower mix definitely than definitely bigger said, I’d gross spec still to-be-builts, to-be-builts, solid

to our of future a locked total. Jay, people And point, I Lou, mentioned, amount quarters it’s look with to noise some backlog that design center significant the and [indiscernible] the take of we’ve it, to immaterial impact on at with when always has when you going number through, as it so the size your But ours for have secure you afterwards, the finance work options you running programs, the ASP. the in to of the of folks but

a you’re about higher gave maybe just roll that want those interested buyer--you active great bit if higher little or well. you portion and think engaged a you it’s you it, your know as it, how be Then end the--I into if adult commentary luxury kind to that buyer, know, are would whether but talk I huge around from and buyers, of not could just seeing but of wondering mix, the of end what

stock the groups. stabilize, back coming to what With market you’re and trying rates seeing buyer two from those wondering just

happy be to. I’d Yes,

lifestyle, First they start year. of improvement the look groups, the really split I the our second I the just was and resort at Then pace new picking in when in consumer at continued seen shoulder up look between move-up we’ve strongest overall all, our the when different season, in our quarter.

period we’ve seen something just at that when seen basis look same Florida. they we’ve seen As for I strongest throughout the active over period, might of example, in shoppers, that - generally exceptions return adult you Houston, point XXX, look don’t buyer, some When improvement. know, XXX I come a we’ve There be our think we that some at that margins. like with to

to-be-built. Honestly, looking at is set Florida in slowed down. in continued keep can’t our buyer that any inventory inventory, our it to just hasn’t challenge biggest we They’ve ground, buy just on the the but them

but that economic less they’ve sophisticated bit is at indicators. rate so looking more they’re all As sensitive, little buyer been the a you know,

just I both had early they highest at year, specifically when make look over which headway. in penetration, expectations, and this budget Sarasota I at that probably increase has When and Naples, highest continues to quarter, the the the look that

of markets I look get and It’s we’ve challenge country, consumer been think that I their has the we’ve seen been their would active once we’ve cans number the and February approved, in all movement Jay, does in in in said, and kind quality even rate because to--for because size six to the the Austin, still in that mid-teens, sales just what to the though following was like ability country. rate as even cadence, like even has though pricing. first an seen first-time in adult first many seen the consumer seen interesting the January, second a that almost on buyer how and when honestly we’ve the it all from we’ve of that can group, of have seen ability effects [indiscernible], you based a where say moved we backlog being probably of I our different first-time to really it’s has It being buyer as and fourth the many the their peak but halved can really you has - purchased blender, move-up, not buyer same groups. little move-up and groups. strongest show at across quarter, across of put it’s The higher over the consumer up. weeks it Places improvement markets again,

has Maybe just buyers at the XX%. which cash buyers buyer and our XX%, to then a are over just to show very strong LTV our profiles. QX, of is XX% our up buyers, solid, really I come to think deposits strength in that, us so to on year-over-year down The XX%, add just record to Jay, for our

average, Then are from than maybe of greater other you COVID about using have are million buyers the where think as so are where as worth, and folks income country. and place place really just in example luxury well a after. an on us, boomers, and of actually million moving $XXX,XXX $X They and a actually closer half to half we’ve than greater $X active telling net these of some than greater that’s than adult, place our it’s through performed

because lifestyle Erik, led Naples, little, it’s point, important where in place communities, it an not by primarily and the a look It’s like all at you lot. QX, company in if a just a resort margin

Thank color. for appreciate you great the details, it. That’s all

you. Thank

next Mike, Rehaut Our question ahead. please from Mike comes from JP go Morgan.

quarter inventory good was this prior what number to throughout Doug charges, this guys impairment your envision quarter, for were expecting moving forward Mike. on you curious regarding what XXXX? the guys, and do morning Wardlaw impairments Hi, for I in was you

quarters, pretty a look XX% are that We talked prepared in overall to I and [indiscernible] accelerate about we’ll that forward, that forward, we pretty out non-core in any every always and the look as bell curve, considering to community our take one pretty accounted we decision project so that impairments systemic there, There profile so to remarks, that good a and are we at one there. impairments impairments have on mentioned location, a we do modest were they a was going we outliers quarter. we of sit. margin made of where think previous had but we feel about outlier. the conscious be in and guided, going the always there outliers portfolio, as in see strong not get here felt we continue Yes But over for we’ve

finding pressures and that spirit of on had it’s pace-- the agree, conditions think I Lou, Yes, from competitive I important all market, in some the market some an to on adjustment make things given we going and that in to asset, note

Which we have.

I we’ve think last in of we we’ve right? --which sold all sold already half in found, year that. January what

Good point.

thanks. positive and it, in few secondly, through weeks first this guys Then of of mentioned some the momentum Got quarter. you February terms

that forward? forward? about do thinking slightly is how incentives, it what we that, with to is demand you’re Regarding now, price would cuts moving incentives If with you to expect think how balance about moving should where on taper stay doing or

across we’ll as reduction we’re I board, earlier, Yes, I already incentives seeing in there. said and our think some start the

very in price adjustments. been selective We taken we’ve have base where

We way their the we help many continue really programs great mentioned last buyers even to help earlier, use for in to in makes overcome had couple finance and our this rates obstacles them. as as we’ve movement that closing, a any our we’re tool, sense weeks, so sales that with to seen little we borrowers in so able

getting down, close. it’s cash rate to Sometimes it’s a sometimes about

we’re finance forward buy recently communities, to-be-builts, on also do of of so we’ve extended our the below The able market Build really able a the again, really, our a gives Once other to our think forward below-market to being very predictability be that term, have purchase. our incentives. and rates focus for our to and I time been that customers and for they value protects long a one-year most around to Secure, at confidence it same Buy in mind putting certainty their quick we able recently new successful us closing. launched thing move gives home gives need, is customers peace rate the them We’ve that most been interest give to program,

guys. you thank it, Got

you. Thank

Capital ahead. Mike comes next Our Markets. from go Mike, RBC from Dahl please question

Hi, question. Ryan taking for Thanks this Frank is my for Mike. on

you’ve I incentives. year to able date see you are if far or up, so XQ just that the you seen Do year? quantification last wanted have or the either follow we can to get incentives any to on quantify for

that which many why past, provided it falls categories. only difficult, different into so not really It’s we’ve the color because is in

higher some have--in prices, in have You not that so where we at places reduced all, prices base might we a have incentive. and instance

some just have cost pricing maybe so communities have you’d some have We made then incentives. closing adjustments, we other where

to blend great you it you visibility. As give honest, doesn’t numbers, those be

I think you our the strength in get of the visibility is profile. margin

look dive deep higher. the at the across markets and incentives. have a were they community understand take to almost were fourth I impacts the lower some community have quarter of to really when You by actually incentives, I country, many year-over-year,

this to are I wanted Thank to land you or is think Is it aggressive year-over-year, guys you. spend acquiring of so really communities? ramp flat I that--will just year, development kind be on just unique that land out. up spend more in you actually Then forecasting break

bit really Yes, opportunistic, where conditions, the of but shared see a to say pivot on to conditions market now, year given the dedicated I we land be you let focus could that us pivot, where think know development for a right development see see Ryan, our side. flat to aggressive conservatively the in as would when absolutely so are we I and more to looking market dollars had should be most we we’re market expecting on this and unless is. where more we’d acquisition we definitely are going quarters, we’ve prior but is pivot,

teams the and being sitting aggressive sellers working in some and, Yes, sidelines. you powder, in some are are in land very sellers we sellers land are the seeing as imagine, momentum out that they’re and with can some opportunities have places, there, there’s with just our when dry the the

market think on see you quarter this we’ll update movement. I to as we each one continue

the opportunistic teams I our be getting so themselves. we of job sheet those very great at a end did place Erik present in think balance year, as as a opportunities said, great our last can

Got Very it, thank you. helpful.

you. Thank

ahead. question Associates. Alan, Ratner Alan from next from go Zelman please comes Our &

morning. good color. always great for guys, Hey as the Thanks

spec were and share that you the is I’m that where how half back do First reselling of intentionally of if so units started quarter your orders year, XX%-plus versus this those specs, the the a from as many curious specs, to were cancelled at follow-on question the the on have of mean, look be the you’ve closings, I do going actually to those specs? to how on plan assume but spec number because of going? starts, - XX,XXX for that based see do many you of your the got you mind to I you a XX,XXX for guidance in are

to a good means don’t We that by cancellation, our example, do question. specs Alan, community, if manage so start we another we Yes have have spec. for

close to we but a higher like dream been last just market. with completion, we still we little have to-be-builts, think the community, There a is a see the the units XX/XX to-be-builts, to but it specs at time split the buyers of we’ll having as we’ll a balance by market split but of lot progresses. to maybe looking back react what for that balance aren’t to we’d for people out because, around that home, adjust XX/XX so total to continue shifts. quarters over believe the drift know, the that that accordingly their and favorably mix--you right love I close those to market we and really move on while. But we look We build we’ll to our several like balance, it’s as are time, there been to

the buyer. first maybe Don’t I higher when move-up split? put move-up You follow continue would turned look Alan, the you to-be-built second say maybe and first-time Lou, those first timers, but probably I adult, active you in we’ll preferred it those into will first points. say think, I the that think, at buyer, We’ll consumer in for builder. our generally it’s But more, a the time, to specs much be cautious to-be-builts would be price where more know, in generally specs,

we on remarks, the we starts. and as up our Yes, are mentioned prepared ramping

finished really in some get have community, than some spec starts we additional to We’re extra per room ground. with the so one less having pleased

helpful. Got it, that’s

more you ago the to order trends clearly would My been them question, have to the more selling talk six to have but might given biggest this out they general the try today to people appropriate as being ground to are? sales your skittishness that home, people an when today, sales just economy? resale second want rate even improved, homes rank do you between weeks What their ask direction and on challenges you figure of existing about prevent from than the to stronger mortgage or see up low challenges, give a the affordability in don’t how greatest challenges

it have was you’re ago the sales even it with last when more would been probably color were would answer to and different to I than days, year, we know, what in sentiment - on and start rates top right weeks a were the was different. all price and the much six interesting very You paying back and about to be really the rate. If We I January fear talking the dollar affordability that their from to them, teams today. the some the XX answers say in on road got very is both happening of go would of

the Today, and of, consumers, of spoke so right that I in think of giving I doing to right them it finance would peace making that. X-X-X the the that really programs our for wonderful down a program can say Secure mind. just that think I It Build do overcoming Buy forward we’re overcome could secure we’re could be some affordability concerns some buy community. helping I be that home job sure moved our has with they them

but we seeing in game, is board sure The help really very it’s the get other mix Alan, place I’d it’s the just that is to have so consumers programs to the say, across making down and changing, sitting thing end different. we’re really that them of the and

that the not houses wanted think know, were where the people we of of people lack confidence of confidence buying pulled a last year, we I that and months, back. them, that I if think back the lot ended six saw, go end there really--you at that you up saw they

those think understand really about folks the seeing we’re market just I it’s into individually. and each with today, working of them back come

helpful, a appreciate Thanks lot that’s very it, guys, it. Got Sheryl.

you. Thank

question from Suisse. ahead. Dan, is next from please go Credit Our Dan Oppenheim

of Was with terms ’XX, or the them shift there and very you’re terms overall, in about of if you of to there is what models doing first-time wondering changes commentary is built up, closing tactical communities a new some more so a if--with opening the anything issues, Thanks getting in communities the in as are you’re such, much. financing what on course it about move-up the think and with of any of terms bit opening doing opening changes, community to over of buyers plans? out communities talk

see overall our a I it’s the communities. shift presence to we’re in would of of think seeing continued at of half I actually that a consumer that look large. millennials, portfolio, the millennials. if were the the don’t I consumer shift the No, portfolio think you’ll and the financial Nearly groups about quarter significant our the about I I stronger it in from sales be stability in of at or talk when look consumer, than at were If

average credit an profiles are some within they finance with strong said, first-time our millennials. like about in interesting like them - look really their they’re credit company buying group second It’s borrowers scores first-time XX% Many but I They of not services of extremely the so may our were communities, home, buyers. have in mid-XXXs. buyers

before, is so also I which the little that initiatives why more As comments. seen [indiscernible] diverse mentioned they’re us I than reason our to racially another in my a bit you’ve shared committed

think the consumer I of in. that share would for slight except within think I I But total significant our groups, see pivot just say don’t cohorts, shifts you’ll

over you’ve terms capital allocation, Great. repurchase year. Then of share a I the done the last the job with in think great

priorities shares Given year. below here some wondering where the given repurchased that XX how at stock the is now, were still and change, look you about book in quarter, the value where fourth versus substantially the well and higher, stock that for is thinking

Yes, that’s a great question, Dan.

really balance As business. want to be first is we priorities, of place, book, to the to of to repurchase the and buy but first such in so share balance feel front. we pleased last allocation all at we good going in opportunistic share a be our big really year able We to invest many sheet we’re on the a were our discount

present to a the but generally going just shares themselves. them to not opportunities ton buy be very of buy when opportunistic We’re

Great, thank you.

you. Thank

ahead. Ken Ken, Zenner is Our please from question go next from Keybanc.

Congrats morning lots - fun. of open Good on the Phoenix everybody.

the that? orders distort questions, is the of the Super quarter, your quarter, I just of as sense comment my which Two is on get generally in what six two-thirds weekend, well, trying what percent--given it’s if really that. speaking can the weeks, Phoenix quarter’s to happened Bowl just question. I’m first a know first percent half

percentage sure make to of What want just quarter? understood what I for I that. the

usually order or think I you half the quarter that a or pace. commented the on Is of quarter, less? the third

over is usually just then historically you is some quarter. of is month, February January up little many and Ken, average, pick over then through we ramp give to Maybe a month and up for March color, the a and year slower so us rest usually a little slightly January the slower

our was We It in really And it’s So but long mean, actually greater we were we’ve and momentum. we’ve typical. thanks fairly within just remarks, I Like but the thousands. on been we I open show. the good know as prepared for seen business got a leads since was the new - thousands as visibility comment it’s like because said so pleased. seen what it, probably normal and tremendous normal don’t -

inventory you units, weekend there. I my could but that the think Yes, was it for restate number? Again is-- question you busy a X,XXX, said

Yes, [indiscernible] units. it was

think, the how you a because I handle very committed you Thank you’re quarter? about the we Just be I how pace, Okay, trying to up great. start measure time to I’m start schedule, you units to to sell. you’ll start, get going much. fourth just you’ll That’s assume you closing given the--or whatever trying on. be, guess, to year-over-year forecast to and do the what by expect those Do think your your get

to I to but we very see, a forward. if we term our carry number great the I down could really we closings. now, it units, if long go end see back times, do we’re many as what times, is still think times No, it’s year-over-year. inventory XX% then slightly, likely carry has won’t say in even challenging, would the if seeing get we can cycle the less of project a in we to and cycle front improving were going cycle continue same our right we still If with as we to lot to is trending end to question, Ken. growth average start need with most

start Yes, be what it’s interesting the see to [indiscernible] really going to is.

much. Thank you very

care take Ken. problem, No

you. Thank

question Alex Housing Our is with final from ahead. Barron Center. Research please Alex, go

I and at indicated quarter flat other so guess Yes, if the it’s point know, given thank was seeing current builders their margins and would trending be you rest be sales I’m you’re on if low most you. guidance I the margins you guys--you the as incentive to curious interesting you year of date. quarter-over-quarter, the thought because might your year, basically first lower, think look this activity

Sequentially that. and right, with up yes, pleased so year-over-year, we’re

a only feel for you this holds but backlog as through we’re that future guiding strong entered QX year, I we us what now, as year. the know, was we right Alex, with the sold think Yes the earlier year during good about

when a comment much you realize you starting has year almost how shifted. guys how Okay, are specs was great. thinking ago, about guys curious on could if fewer I was versus I looking everybody to starting in approach of a that homes quarter, consumers fast has close but starting that how lot specs your sales fourth for were going since are shifted seems houses, lower forward? the it

mentioned we definitely As have we’re we Alex, specs than historically. earlier, a starting more lot

spec sell we’re start as able them to we’re good especially Our seen last several sales years, far so continuing were QX they before complete. with in the so the over we’ve highest specs, to

by those starts a success question the inventory The will real eye making individual we’re really so-- there so in QX in start selling had market an on and good big we’re in is up, keeping be decisions market builders and in But all each ramp-up build to have will specs, we market. with

continue thing margin the Lou, misnomer to-be-builts, add, look think actually for specs I there’s when that a we once wants every to so somewhat don’t approach balance very the others you’re historically especially of our at Once I margin reason different certainly I’d we’ll that have perform balanced time profile. years saw but think like and specs again, again first is to we something keep business. is and the couple groups We for a seeing of for in Yes, opportunity that the the a consumer consumer level, do really ago, at ready. balanced to-be-builts, we the the certain approach pressure that’s only the with more of front move-in

Makes sense. All right, you. well best of luck, and thank

That session, Palmer you. and now the now Thank remarks. for of end closing hand back is Q&A Sheryl I to the you will

much Well, talk a to for thank very call. for to forward Take in We about just you first quarter. our us speaking care. the you look XXXX joining few wrap-up weeks to again

for Thank you call. joining. today’s This concludes

your now may You disconnect lines.