Taylor Morrison Home (TMHC) 26 Apr 232023 Q1 Earnings call transcript

Hello, everyone, Good morning, and welcome to Taylor Morrison's First Quarter 2023 Earnings Conference Call. Currently, all participants are in listen mode only. 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. difficulty] [technical go Please

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

let that on taylormorrison.com. are remind the we in website forward-looking me Before begin, at can you you Relations Safe statement will review portion forward-looking information our that the earnings question-and-answer include this Investor statements to that release subject our Harbor for the session, including call, of

forward-looking uncertainties and that materially These These could in actual the SEC risks statements do undertake the statements. are include differ expectations subject release and with results limited factors not uncertainties from and any and our not to projections. our to risks to and are to identified obligation filings we cause but our those in update

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

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

and Mackenzie, you, good Thank everyone. morning

our and family his Lou Joining that our Steffens, is morning's Heuser, from require you Curt President. is of with West in will me Operations may relocate to Financial Area VanHyfte, order in Lou to stepping And be our Officer; Officer. earning seen responsibilities to this us out as down Also Erik Chief CFO have attend Chief release, him Corporate matters Arizona.

shifts our processes position, he he the While as where an this of performance. move on Strategic continuous precludes the requirements leadership and with Lou focus enhanced EVP will of will team CFO remain Initiatives, the him of from continuing role member Operational our demanding drive and of important into

and field will Region, look homebuilders, experience, cohesion May Curt CFO ideal nearly corporate strong we years and Curt currently a and step in oversees operator specifically homebuilding the and into as for Lou's under that finance operational In interim and benefited Monday, West president that an from role X. maintains both leader have background of effective roles has tenure. XX several finance regional for division our as this his of finance a and national the from place,

are teams. same are At in finance and we lead incredibly to our confident for ability time, Curt's a the successor, a willingness commencing grateful we permanent and search

We are during CFO best. forward and his contributions his for in the while wishing Lou's all meaningful continued thankful also as his look time leadership most importantly to family Arizona

into dive let's Now our call.

I review and portfolio our my quarterly always, After discuss highlights the guidance update results and will remarks, approach, our will share our and and financial on metrics. land market strategic our Erik will Lou investment As while priorities.

Most XX first just strong ratio report all operational outperformed and gross up In and margin am was I points of homes to X.X%. notably, our at to the quarter, margin pleased our that execution our due efficient across year-over-year of to XX.X% metrics, home-closings approach basis an We dynamics. team's delivered X,XXX and sales. market SG&A results our spec focus a strong due enhancements, rebuilt stabilizing our balanced home gross on key to and this expectations ongoing

total to value revenue, point drove and share $X.XX results improving through allowed XX% in more XX%. share. on our efficiencies our strategic a deliver to in a modest operating in total, In return basis our growth us to strong $XX per nearly focus increase reduction XX% despite the equity earnings diluted than book increase These per on in a margins to XXX

as invest further to capital in approximately ratio forward. liquidity, billion returns declined our net drive quarter And flexibility lastly, to debt we to our low total we while significant ended of business XX%, home financial us all-time an the building leaving $X move with with in to

spring sentiment during selling in in season. sales of As the activity call a experienced early we last shared shoppers' February, I on and rebound weeks our the

progressed, the the facing in market. trends positive further the following As seasonal despite typical quarter uncertainties the March, accelerated patterns,

at total, the while of sales our X.X declined monthly drove to orders cancellation our of gross This rate level per a XX% fourth monthly per to the gross XXXX, pace improved community, third X.X quarter ago. X.X compared healthy to quarter pace more since normalized our the to of net as levels during year quarter In the and orders. a in a X.X sales highest community,

net our XX% carried has leading first including community. Meanwhile, April three the a our also at running with top mortgage of the conversion approximately which momentum home This a and pre-qualifications sales of traffic are indicators, encouraging. of rate in first remain sales source X.X weeks pace orders at digital reservations, through per quarter

financial the Recognizing very groups. with as diverse need health turmoil I'm sector latter of rate part with the quarter, once our that trends as volatility for the new during unfolded consumer the of pleased our as banking again sales well the the well interest highlighting markets in of resiliency significant as the our the strength construction

an our point, to that an XXX Funding whose of financed rate quarter. improved buyers Morrison and To payment had down in of XX% Taylor score average provided first by capture XX% credit average Home the

averaged our home cancellation stronger risk. Both above in per year the in consumers about buyers of customers ago is and our were our these those to for backlog of than or industry first-time XX% The being with XX% $XX,XXX, minimize deposits, homebuyers. a strength helping size also of averages, which metrics even of evident our

Charlotte. stabilization When in our pronounced nearly evident markets. first markets I was led quarter our Strength across the all by look most Florida all across of east of region, our portfolio, was our and in

in Dallas as strong and outlier although Our while there notable stabilization exception Portland. Phoenix a lastly, central was all was west, improved April markets positive quarter supported trends as with of well. the have region our the And mixed improvement signs Houston Austin, by in the during in of was somewhat showed

our the intentional through value flows locations us we which our produce of element groups, ebbs buyer the and the housing that of financial enable of to consumers, our and benefit we from our of of strategy of cycles. country, long-term Across each quality health diversification believe our

This led Parsing for homes of both half by where entry-level our our demand firmly group, up through were strategic move stabilized the was and accounted among net for second while by followed spec lifestyle sales of where pace experienced a with sales as consumer our year-over-year. use move buyer we nearly move the were segment resort by category orders up time time segment, first the trends our up quarter. programs, which our strongest incentive pickup buyers,

teams interest as to rates targeted for XX programs, below-market months rates incentive interest up our tools to pricing to various value and the the advantage leverage to-be-built ability for sales and on lock-in take tool homes. sales, Driving a finance with our our of homes continue spec emphasize of including

as performance. digital Equipped our sales our with capabilities optimal teams marketing continually to adjusting drive tools, offers compelling other well and these to mortgage community market are innovative as conditions

has in value to further on urgency even incentives back begun of our in shoppers of pricing sense raise demand we have communities solidifying of pull our As many and the backlog. and improved, some reinforcing

absolute of land trends, this strategic our approach across our factors mix to-be-built of basis. favorable operational spec is prime in portfolio of home which including an ongoing this success We the and gross enhancements our number our value and believe underlying a on our business, capturing on focus of sales. The evident both outperformance reflects margin outperformed of year-over-year the have and strength recent

community-by-community depending and quarters. latter on averaging consumer targeted on To price adjust have mix point, spec the been around point. we basis mainly sales the XX% a to-be-built recent XX% our gross And group and in

margins two earned between XXXX, fourth Beginning due higher a gross of quarter to-be-built buyers the dream option their at by hundred which in to norms differential inventory. revenue exceeded several margin the built selling discerning in spec basis has required spec greater have home margin premium when when incentives and high least lot typically to historical the reverted and points margins

basis to points supply. sales quarter, on when this margin XXXX the demand outpaced in much the significantly move reversing outperformance amounted ready in In spec homes spread XXXX temporary first and XXX of for nearly

of looking prefer in home is they said XX home. for about in shoppers an While indicated days, especially to XX a majority that important within in personalize a vast remain points, consideration either the quick fully not available lower attractive, the quick only price quarter their remaining homes are they while or move first XX% to our closing

as has data. more years with consistent XXXX in increase averages, in to comprehensive recently over two is This prior quick survey based and the normalize historic our move preferences last back in the demand on

shift our While running given continue times these mix sales overall portfolio. to has to spec our of mix roughly we the been more higher actual to about believe of X better balanced production, at intentional manage our insights support spec XX% sales

to XX% in expect approximately the half. the closings we look the XX.X% we closings quarter mix This gross greater second margin ahead, on the of year. from As proportion be margin XX% perspective, assumes to home between spec deliveries, a our home a in for full second and based of

our are normalized availability driven the return the On value the with on the to efficiencies. pushing construction trade of our product refine early categories. by time cycle and construction tighter cost cycle, business, stages a suppliers of labor we remain some markets, option and In engineering in rationalization and for side product production many our improved times partners to and driving continuing on we lead ahead of schedules and experiencing in relief some offerings focused ongoing

to balance headwinds, enhanced sheet, pressure tight gradual. improved initiatives, of among efficiencies of increased ultimately production the and will of However, This side industry. realization allow potential us the constrained turns, on those returns. be savings the aggregate mirrors work less thereby cost where Despite the labor the inventory number still continues a driving back process end which in of remains the through driving trades our to we inventory construction are cycle as capacity the will equation, carry

For costs driving compared are improved example, to two than sale more and start which from in we studio These option last years for a and by we roughly have our popular XX-day to opportunities. just plan are design floor XX% two traditional the revenue Homes library in construction utilizing starts. reduced packages savings streamlined ways realized our

improvement sentiment. by we and up, say consumer wrap let in me To what the greatly sales are encouraged recent

We interest conditions. economic uncertainties surrounding also and rates recognized the

long-term Given allocation navigate balanced portfolio, scale, and remaining we market to capital the financial disciplined positioning. our while volatility are our in believe to approach well-positioned we grounded market and near-term strength,

to an these emphasize playbook efficiencies field growth, continue our and teams customer smart operational to dynamic and And within leadership experience. exceptional will are conditions. operating Our accustomed

Now call on to let our land Erik, turn to share more strategy. the me

everyone. And Sheryl. Thanks, morning, good

strong approach, an its on investment land Last turn, I our moderated quickly bank and our already our opportunistic. maintaining strong update our allocation. our and stringent lots pipeline market position to in spend while housing attractive will the were conditions we approach began disciplined market controlled, which of remains pace sharpening of land and and to highly positioning. capital to of With share we year, investment owned underwriting still reduce fortunate able a already being

showing Today, be outlook to with tank invested re-underwriting continue includes the housing closing our some prudent stabilization each down decisions. development, investment patient remaining market and highly continues ensure our but return and to thresholds. signs This macroeconomic lot stress-tested to deal phase in conditions land of dollar reflect and every we of uncertain,

that XX% In modest met and of million the to during Also development. land quarter we quarter. development, million first requirements This XX% of our in $XXX which XXXX, of deals we dedicated related longer from spend walkaway to million incurred expenses, over $X was of acquisition homebuilding just quarter, when first was spent related. the note, $XXX a no on in the development down was

we of $X.X continue although our to XXXX development ahead, similar total conditions investment At to around significant time, year deal flow. billion, driven spend market look land we this ultimate we this on to our at financial As by mainly be will opportunities. expect dependent advantage have take and be market to flexibility

lots quarter approximately these and lots, XX% structures. total other end, via homebuilding years At off-balance-sheet represented With options XX,XXX X.X controlled and supply. of owned we controlled this of

project of long-term of and supply owned our new X.X optimizes lots determine each returns mitigation portfolio optimal a targeted to Each cost capital, expected for deals, Our performance. financing metrics evaluate believe we within years. structure these ranges. that balanced was of driving just risk underwriting we remained the When

pleased basis our our portfolio relative and that is profile basis going we concentrated remain attractive historic margin with was XX% lot or we capital-efficient Overall, of the of supply providing our negotiated an in enhance cost composition forward. in gross prime well-underwritten core that expect will own lot Approximately earlier, XXXX submarkets.

the I that, Lou. turn With will call to

everyone. morning, good Thanks, Erik. And

and I will review our financial detailed our quarter results the for guidance full introduce provide expanded second and outlook for year. the

provides I and in, understanding as I me into transition grateful role, with dive need I'm I I'll this Before address this morning's new first address the announcement. to which family for incredibly the Board's Sheryl matters. personal flexibility

successes. I Taylor our success. to the family By I'm Morrison teams significant can your the you my committed and been where advocate our business a Thank remain for have your to to initiatives, and focusing at in strategic for engaged has deeply scale the XX enhanced also terrific be last know leader he I on extended opportunity of and areas will the understanding Curt further will for we and Taylor our will team integration closely years, all capitalize and and support The a continued seat. operational CFO support in continue Morrison. of on

our up We share. share in the a driven With services profitability the delivered Compared that, closings teams to earnings the margin, of diluted this financial by turn quarter was first primarily $X.XX in quarter. to exceptional home improvement first count. greater let's our diluted per lower and gross XX% performance XX% generated of XXXX,

X,XXX average billion. during delivered $XXX,XXX, was guidance, benefited which an expected. at quarter, home sales while homes from the average sold of price as of closings to the homes Compared revenue closing closings our We and closed price greater generated spec $X.X

inventory During approximately finished in improvement volume rebuilding home starts the the X,XXX given levels community. quarter, sales our per focus activity one homes, accelerated approximately our and spec to to maintain we on

community up in from This equal per month, still quarter, a starts below year the per X.X prior X.X but ago. X.X

per only were at finished. result, production, XXX less X,XXX including still X,XXX community we a hundred of specs, homes than are X end, which As under approximately approximately had quarter about

Based pricing homes to XX,XXX between X,XXX meaningful quarter in in homes construction expect we assuming no under on currently deliver homes second between cycle change X,XXX our and to times, the to a and XX,XXX of year. $XXX,XXX we average From full year. $XXX,XXX around in and second deliveries the $XXX,XXX to be closing perspective, price the the full the to expect for for quarter between our

prior to quarters gross than to closing improved pricing primarily of XX and home was net on stronger our margin sold basis guidance margins, This prior from ahead homes to a our expected. Turning ago. XX.X% points in XX.X% originally year concessions fewer due

As margins, expect of XX% our to-be-built margin between to and XX.X%. Sheryl closing our second mix quarter strength gross described, based the we deliveries home expected be of on to

percentage deliveries year. With a X.X% the low second greater of anticipated to closings SG&A as home year's our percentage home of the we X.X%, XX decline and in basis home last gross the closings despite of first-quarter approximately spec revenue margin full half, for from be anticipate to in XX% a record revenue increased points closings.

sales the marketing We and innovative are efficiencies and capabilities and further compared cost increasingly norms. we digital savings benefiting structure from cost historic our that to sales our improve will initiatives other from expect

to range. year, an For ratio SG&A in the are forecasting be we high X% the

sales. to Shifting

X.X as sales gross community the ending per community in was a in community outlets. orders cancellations higher decline to count to in by down per our quarter year-over-year at XXX monthly our pace net Our the driven year-over-year was were X,XXX offset X% homes, X% reduction sales flat net to our improvement X.X pace while

for demand the to the and have throughout at orders a a approximately As running quarter sales three improved quarter roughly between From from second and weeks Sheryl per net full first trends first the of we community XXX expect quarter the ending X.X perspective, XXX community the of count our flat in been be year. to pace outlets in April. noted,

from which normal available our To and ended operations liquidity letters billion with undrawn outside generated during of revolving million unrestricted approximately the $X billion, wrap $X.X we $XXX $XXX credit of included capacity were of of credit. cash of total and up, on million this of facilities, flow quarter cash

XX% all-time XX.X% prior to of low ratio XX% the to and compared year as quarter in Our to declined an a capitalization ago. debt net

debt which approximately As we XXXX, the a by to annual reduced outstanding benefit lowered million reminder, gross our capitalized our $XXX of our gross by million future burden in margins. $XX interest

address, on maturity after debt ample March XXXX. hand in cash next will of to be next Our maturity XXXX, have which we in which our is

strong all and take repurchases arise, share well-equipped Overall, our shareholders. capital us opportunities focus while for in returns driving approach management of leaves to optimal debt investment balanced remaining on our to position as long-term also the with advantage they our

the turn back call Sheryl. I'll Now, over to

Lou. you, Thank

briefly enter call, on of racially XX% focus as our diverse driving cohorts an evolve our to a younger, today's that to long-term of increased XX% homebuying continue significant shift will as XXXX, elaborate In ending prime trends to the I Before one consumers want ethnically just critical the expect homebuyers from organization. XXXX, in years. diverse more we

shared With we strategy increased sales and with growth diverse transparency communities multicultural preferences principles letter, I incorporating of look functional forward our pricing to more by to our needs these to audiences. my the are in shifts land of esthetic responding which website to reshaping update population shareholder you and our our design our continuing growth our focus strategy of to you on recent and on these homebuying and on cater demographics, find base. and consumer can important evolving thoughtfully

our The In appreciative like team for all. teamwork closing, and team is commitment. Morrison their you thank Taylor to of none and impressive Thank so I'm to I'd second another quarter.

With instructions. provide your open Operator, call to our that, with let's please questions. the participants

[Operator go Research. from ahead. first is Instructions] from open. comes Please Wolfe Truman, your question Patterson Truman now Our line

and communities have what percent Actually, what Paul first come is I the those seen be percent in? Przybylski. pricing the guess a And were really Good your of what bottom? incentives seeing this be morning. you actually markets question, off communities would of your then incremental

of far -- good. the number As

you -- missed about do part second those and our pricing well that the repeating? question, And would both It's in you what would mind communities. a I said, As just of as of adjustments far be say as adjustments just we've as adjustments, over seen XX% I the number communities incentives. of reduction

see seeing to incentives? are Yes, continuing what guess, markets I incremental you

incentives. Incremental

So probably Houston that When I portfolio. Tampa tell saw the year. I seen when been places place recovery have our at and would I I you we've look earlier last stressed look and the strength within greatest sales. some Austin we difficulty] in quarter best the Denver in know rest seen Charlotte, earlier we [technical we've two the think years Phoenix you its across in the of the year-over-year quarter. organization, quarter, have from that, that Portland, the across sales incentives quarter, seen really fairly nice the up had in we're like besides Dallas

the colored by, and in Is year I it, so would call a last build-to-order being may let's that half -- a spec be any normal Okay. or spec that of margin customize to differential. way cancellations you than color. have kind temporary you appreciate discounting more second just of homes of

No, I don't think so, Paul.

tell were X% we because to a returning the really the the unfortunately, the price to-be-built because month late back know, price complete, until I fact, to been that are got homes In would and were that months. those XX then of like XXXX, norms. -- you appreciation have next continue as benefit see, appreciation they added and the in XXXX, was to where would I you may didn't early think mean back eight get holding we sales I old also, homes cost. to that builders They say I backlog XX was that something exception what

were points But were XXX, XXX that's closings look year-over-year quick if up our interestingly norm. of at our the in down that, historic over basis Paul, about more to-be-built QX, I and margins

for the that the expected what than I better obviously is But actually say? what buyers first on demand them field keeping are should for finally, qualified, is sideline the prospects, quarter. our hearing And from are you in Okay.

coupled would that we field of drop, it that strong when a are getting as consumer, to of country, there and markets, is actually interesting, the the is markets, in. from the the with feeling different consumers believe continuing Paul. prices one motivation there couple our -- it's little pricing the were say -- behaving for buyers with builders an not a actually narrative more know, aggressive a heard jump to discounts, are unsettling because our In that You I is across

we the thing think saw interest same rates. with I

prices. we've to we difficulty] momentum many I I seen as we're deterioration, recognize price we that rates think sales tool that places part aren't seeing a next And of [technical interest might consumers weekend have continuing settled. actually be in raising viewing the think continued that

and So cancellations look or most side. financial the our been on when first-time I have buyer it's really to sales, cancellations at compared of around capacity ability

different sidelines. the your on return sales real how not up off momentum at think it those answer question the once the the than what we've saw demand the to them on So of year-over-year, what's you to But that I look gross confidence gives we sidelines. and think -- you folks stopping seen I our really again,

your next comes Reichardt BTIG. Carl Our Please now from ahead. question Carl, from go line open. is

in Thanks. Good your best role morning, new too. everybody. Lou, luck of

Sheryl, think So with You're following I -- welcome. Paul's question,

out narrative stay a been, improvement their seeing a in likely to up they're the substantial customers So for gosh, has while rate oh their there there. you're move locked, but spot

thinking curious, people are that hearing or the out? you what I'm is So rate lock about narrative keeping

see chatting to have starting more are move then narratives years. in-migration in customers in post-COVID, up? in interested within how face change couple of I'm you well and state-to-state of so We saw local lots the a And working of about buyers? markets we've just, all been so their stay see now for the move-up that started is world we And the to a I'm

such important It's Carl. the question, topic. an appreciate I

rate been X%. than are right. a like of less has there You're the narrative The sitting XX% country with across something the mortgages

on And touch. have actually so point has happened half pricing at X%. back got side, that a the tough where appreciation certainly they to where with the were Along rates year last been, of was some what

with last have very week that rate over for our say The more but I it's what consumers range. low something X% to that we down movement have settled that than know seen Now consistent think that week, locked in their I saw year. different rates would have rates we've I settled, and is now they've some what ability had,

of so look new just we backlog, I a is and home a are XX% interesting buying is at think own them one. our that Another today current stat when that

a probably The for or number home listing but folks higher of to the than before XX% that And sold folks XX% complete of and significantly they of to home their is be be that. retain that that actually XX%, owned next are we'll already those before their home, at one, maybe rental waiting probably closing probably on will using and buy purchasing. it so a option the XX% home keeping their new home and sitting as

of So where have of settled, a rates I think away. lot because that narrative is going honestly

maybe, point the And we just then point, on Carl, migration point. Sheryl, look the you micro and a a like a from macro lot. footprint if -- at our

I So is and North happening Texas states, $XXX,XXX, terms in-migration, as country capturing in of across of Arizona at about over you right think as Carolina $XXX,XXX. $XXX,XXX, over about of $XXX,XXX winner the now, kind Florida $XXX,XXX the over migration understand, of

think point I point. that's So kind of -- a a micro macro from

lot we operate, a if in buyers which micro-point, Naples, XX% state. market at know look from that our age-targeted buyers, you a coming surveying of a like From of of are out you about

So, kind are if think from about and XX% group coming of consumer consumer about Sacramento, for group you difficulty] in then those you buyers [technical that think of, in-state. example, California, in

a pattern. of terribly kind similar so consumer different a but And migratory

this we've activity seen to post-COVID way historically migration but activity I the in in So best the in-migration continues. that the guess that's waned, summarize traditional that. business has

count. community Okay. Thank question is then you. And second on the

you begin but sell-through that. now, land flat way of and little is would your relatively look be XX I the been deal count, we Thanks. -- more wait part longer? is you generally community below at if to going to more year should community think But 'XX, it's I'm there it's when a an portfolio land ramp the we'll post to inflection curious for it's So expect count or meaningfully bit, not when something

where as lot talked large affecting question, Lyon couple initiatives. we've the strategic Carl. many enhanced were maybe change, of a post And things William about builders. the Texas had good a strategic percentage of plans our middle that the some other of outlets on is quarters our and last few a same One that we in outlets size Yes,

exposure more little slowly, So and our plans communities bit those master drive higher reducing that a been have they've owned to wholly pace.

that outlets sales when the especially we impacted complete. So our negatively to transition and about have environment, bit. has a talked entrances communities a tougher shift also QX, made We've when our models open had teams are our

of outlets walkaways, are later handful had but a the are the probably QX this having pleased QX that we impacted land and year being expected our by portfolio then we still And with of items XX,XXX and we own based lot, It's an mentioned. outlet for on of us bit opportunity currently that a timing say just, future will provide growth. I'd control some those I

been our And hurricanes and due Florida maybe of recent California delayed seen that delayed. lastly, have weather more a small in amount. we've outlets the have some The then and then in opening to transformers other things

planned more some of Lou, But on growth those year. in So total, mean, I pushed into got next had this that we some given obviously, I all factors, guess year.

a But ramp probably up next answer, start that the we next we to than that move of -- number sales, more through you'll like if we'll this said, also Carl, So had see you'll anticipated. see we start communities year as a through you simple sold as ramp-up the and move we've into to year. year

I all. know all about the it in California. much. Thanks weather so appreciate I

Thanks, Carl.

ahead. from now go is question next open. from JPMorgan. Please is Our Mike, your line Mike Rehaut

long and that for Hi, into a extent stays change? event stabilizes the strategy term? good Do environment also macro on robust strategy Doug its your material demand And land your that continues you Wardlaw Mike. morning. anticipate going XXXX. on in land trend, does how demand the the in To change

And good investing Doug. we prudently. been a question, a have Yes, just maybe as It's reminder,

lots, as invest, to We continue Lou we've suggested, X.X XX,XXX years. got

point, where your near-term word So last we that we lean positions accretive today opportunistic sit used think looking can on really and where we to will the number quarters. community environment bit stabilizes, of we a about But quite to we've to a I feel the in growth. the count We're be as real good are the add focused more. in bit

as will leaning point, more. your our the a confidence we bit continue little things gets to think, do stabilize, and crystal a grows clearer, in ball I start as So as to

Got of incentive question. bit, going switching little it. Great. to pricing And gears then I the back I guess guess a kind

Your a strategy there's are that moving some year. basis, areas the levels surprised or to of in point to drop anywhere, more where demand is it the be like community-by-community cuts, base forward regionally recovery In again kind of not I there recently? national based the at you're planning a in seen we've and has kind that, approach there? where then price throughout as incentives a demand or you more so addition just how kind event that is any going of on guys you guess off increase to stays strategy the wise And of

Yes. you you table. those competitive the happen environment to really way I our assistance towards help of And quarter them putting those in need locally decisions price side, I we've help pricing because are strategic closings also in finance that had with the to discount XX% really dollars environment. to to But such greater points and I as consumers do shared think our would we to become because by resorts supply on tell have first think understand last cuts that able closing incentives. a the get about the

do actually the part too had we're not but the often. it's second the that ratio seeing today question I'd And correct? so markets Is some using X:X:X tools know we're And late is of strength? greater as last year of absolutely one to where repricing, where the say meaningful, that that some is, you we very

as from XXXX. where we've seen kind areas a bottom of end there's Also, recovery been strong the towards the of

in would on last be the very they Austin, one pull other seeing Austin, been would strength to continue point of that strong, of -- say quite continue to say In because and on the country the Charlotte, and little up in probably strongest be it's with also pricing the a we're growth the the leading. is surprising the to cans I And seeing would strength. pace to the and the through We've paces higher ramped most In the our net, maybe the first really little Florida in but great I curve. of pricing Bay, a on strong, quarter. growth we're average. one Phoenix fastest Charlotte. really Phoenix, the out call seen one, I company than the be Yes. continues

the across in some mean, of across you're seeing most our board, pockets almost markets. So I

know difficulty] the how demographics last underserved year I concern getting I think of absorbing don't the the and surprises going under-supplied [technical being but in excess you to that one done about absorbed industry. job back a there showing -- inventory feel of Sheryl, was lot and nice

think think that's we I because quite we on worried were key didn't I -- -- the No, haven't we home. new

Yes.

seen of on Because happening amount was Right? resale what the and market. cancellations the and haven't of certainly it we starts with

So we continue to be --

Nice tailwind.

Yes.

line Please question Associates. from and next Zelman Alan, go Alan Our comes your is Ratner now from open. ahead.

bit little on as that remainder into to-be-built a what's Good bit for the margin great information spec that's alluded I could it mix curious margins, I'm guidance costs, embedded a drift from I far a impact implies year of you in the to that and specifically was But wanted a pricing more interesting. to, detail just dig kind And higher far. of the kind spec lower. morning. Thanks thought of guidance as you because as always and commentary just the all more, And really so for your I of specifically? think closings. if of

closed Yes. you One, Really come backlog earlier starting good last I year, still would a is strong good tell or things. of to lot question, Alan, a couple have morning. we sold of our down. that

see quarters. the the latter very price where lower year strong home longer we've to-be-built the our more last sales in bit that cycle a in couple part you'll As a those we've are of generally coming bit through had Those spec of increased time. of have little percentage, little generally

those the bit you'll So some the taking the of a through spec build. but generally benefits longer they're than average year, we little that see remainder of

early into starting strength we're already we to-be-built give after will start So year, of us starting them next of next beginning which to see the year. those at moving pricing some some as

remainder wrap really teams week. calls some that year. last times it for We all of the our with we And is to to with come generally I'd so this our very see up had of what And cycle the overall, down positive. going

still to couple but that, days of back quarters front But that we've we're through on. so year, the opportunities you'd in a industry that us the a lower expect which of seen on the not end, just far, come not from seeing couple counting weeks some after end, of starts will give in later the

opportunities margin on not but we may have backlog if that this today. pull we that into can So we're counting some higher year, of some

you're downside meaningful or to to any But or point, environment, timing or needed incentives to specs more move embedding anything times? any upside through be It's flowing really related the the kind going is those on it. and Got changes. cycle not of cost just that just current any additional

difficulty] that probably embedded. sold or year. early a in little It's little of bit the A [technical the we on last units middle last

noise that thing our Yes, little couple them was discount on the and have much the order the get last quarter didn't because of had to this a that there's haven't we revenues. But finish backlog as nice probably go the We to previous bit. to back quarters, line. we've to had

that me market improving. the of sign a So of strength to is

them specs, standpoint, of pleased. I'd think it, we're And that we we to what from very the rest So sell say showing need been today. the we've

So we up market there. firm if the to hope there's continues opportunities

think the us their in the ago get not Yes. much Alan. as quarters couple question, help And It's to of of then cost it costing rate, I mortgage on a just side interest was the as customers place. on interest rate

So we if spread. we that have to maintain see

not to going were, assumed have back happens think to rates. we've So what interest where we and probably I we did but there's lower to see --

sure a want on note, here. helpful. similar And Got understanding I it. strategy I'm to just That's correctly the make

builders as is paying is of here the has how well kind think on dividends other based So lot and spec last demand of strategy as and resale just type where I a starts trended. market you of year your that ramped

than to is right returning on sounds is historically it to-be-built now which you've historical specs higher been, XX% the Your norms. like demand margin you're differential and improving seeing

through require about which spec this selling would year, the at your I you them more starting replacing of spec back historical or to would you fewer to as pace the mix you course get looking pace are So start going you're are here over forward, starts homes? spec, imagine of think to-be-development a

definitely replace say want would them. I our to Yes, specs as we sell

we've couple quarters, wanted think I starts back last in our get the said our sales of to pace. we to

of the you that our we've more mentioned we up basis sold as went This part but little few short XXX on to-be-built, sales is, from at bit QX. quarter from was this a to-be-built that a X.X%, points quarter

up it bit to So longer sale a those. takes little from the start

Canvas reducing pretty homes made also in to progress our go of have we start times our our significant Although, more as program. sale through

that than So recently. tracking a for more we're I few specs, of we've been think good a starts been but process the overall, getting the ramp-up in more it's we still still us in balance ground like

we're looking prefer by quarter. Yes, some research spec spec, at be of our I us that of would that our aligning is demand going we're buyer, I the time One mean I high shoppers seeing can the they obvious, in said think the a four to at interesting key for a as Alan, but majority they the know percentage. motivated sounds consumer be a the for of for demand. that to first specs so

So I the we're have kind that. can of going Obviously, do we we're environment to-be-built to where that if to macro strategy. think continue is margin to impact enhancement, getting our

time, historically we've up going having due But business. spec and Lou continue production to the of grow bought of we're that, even to to-be-built like our specs as of start at But XX% X% them. environment to replace Today, to ramp said that same incentives. we to because our XX% something the a number in. been to operating But like continue is said, our consumers we kind want though to closer

Maybe having our closing worth to available hope trying huge helped And I our cadence. mentioning, on teams guidance, have close XXXX year our just in to of terms has since strides in Based visibility specs have though. really improve of first consistency. closed we a is think having -- the helps best really which made we've it to in perspective those half, half our our and the before from and base done trade from

Our from next Matthew is Barclays. open. go now line question Matthew, ahead. Please Bouley comes your from

morning. Good

seeing types your incentives responsive people there of people rate particular You And clearing the focus there to Matt know that have Or have finish most been have getting a interest that or strategy. rate that for are people on what a I incentive rate -- you're lock-ins Is Elizabeth particularly been other responsive if for the that a it? they're specific where of -- is today. still number to? over are any line? generally,

I Yes. across are Good the buy-downs country. for our absolutely buyers questions. the of would say preference the most

maybe for cash certainly our as tend them don't -- adult or those more active long. Second, loans or plan incentives, of buyers take Elizabeth, buyers, smaller some holding on would be where use option to

the As part news. actually that's the think price, as the clearing far I best of

new X%. I rate environment, you adjusted rate consumer And the quarter, no at think going X.X%, or note think has are X.XX% I than really to our and the a at look it comfortable. to gotten return this has to around little, As X% We was that when they longer believe think for lower basis few which rates quite QX, QX. that's a consumer was were points something the I generally for where

declines? Thank there mentioned if then seeing you. And if the switching you seeing the they're a if a kind I you you're some dig or could end. that know cycle. that over to of any little maybe I construction costs and in you're touch back on construction are maybe that still pain was points is on more that any there wondering bit in little bit resilient

Lumber our to talked about through No problem, we've remainder question. quarter this starting first as finally year. in Elizabeth. quarters. last stabilization is and costs, the in some this the Yes. throughout P&L Good We we've then seen several definitely, quarter, come the of the

a gone especially see just I Concrete up bit. slightly our has markets. So pressure square like on points probably our a in the said, basis, on we seen recently we've down where large probably volumes commercial the concrete costs, more foot side

in And to optimistic and having some of the pretty we've there ramp-up completed say again Florida pay opportunities have see Florida several our and is specifically the to where with lot going small we jobs. front on been for we not stable premiums had probably been the starts starts But as as more some hurricanes then to otherwise, get with seen of end, while. back when insurance teams their in a a as to but I'd the drywall lower

I about and because our know since you I'm going And should we've Elizabeth. to back-in I question, to-be-built, first back I'm to your talking jump especially neglected going been what have

early programs One introduced by-lock year other our that of six-year. is we this the

that it's that a continued giving our now. know has to-be-built to its in And to confidence by today XX-month they just customers folks overall are lock what that and homes and is in going think doing for can the from rate So be it's increase demand. I XX months lock

line comes is Our now next from Please Wedbush. question open. your from go Jay, McCanless Jay ahead.

everyone. morning, good Hi,

characterized the yesterday are in competitors your comfortable with now of it people one new -- backlogs, Just rate environment. this their

the but on color to that there could fence? backlogs based a their more from potentially the maybe have you provide people it to much some how sounds same that across answers like you a might to terms and any percentage in given think have position, you've discounting couple I do of get

No. range. We're in comfortable seeing that very that really completely. getting I agree would consumer is with the that X.X%

some use. is money think between X% rarely or generally we that we very X.XX%, somewhere strategic low customer I X.XX%. But X.XX% very locking say have would I the

of many opportunity rates slowdown. they programs, we're by continue there will our But and hearing. not the in if And a forward down have to drop for commitments one-time

or lot hearing having So it's a get the to is we're X.XX% back as into that win, down kind X% not and to because people Jay, less cost of far. not than a double need we're our like buy

today's environment. So I adjusted has think the consumer really to

question of the And Sheryl. you, other have Thank pre-XXXX. current said had, think that bought I I then that were XX% the great. That's lots you roughly you the prepared comments during land

margin and that Just starts occurs? shift on type ratio the have it you that, what think might impact gross when to as shift wondering, of that

a down so Erik. quarter. don't It's Yes, that it step X% Jay. over Hey, thrown last every does come out know I it's the of kind quarters, Yes. or number of and we've been

So really continue percent come it we that to negotiated deals down, prior. that's XXXX land of the -- or in and will

negotiating what margin to we're So going kind point at rates, we're again, current is. forward. a margins of And terms for market of that gravitating market identifying strength does normalized approximate where in that today, it to

reloading we're so, And find we at deals market. at current that attractive

years three give Yes, hard two, guidance on now to from forward you what continue. it's very as land happens that they

land I Got rebid sellers then minute. on it. have deals some to what a or seen prices done? land And just Have pricing fast the is now? guess, for on sticking you where opportunities holding any

Yes.

and fourth quarter even I the the think, Jay, maybe into year. just first very part of

little that, [technical not and terms land patience, we wave able But of that of would get tidal on deals little in timelines, coming strategically in stall in through. and capitulation given a necessarily a deals. of did I our prudence a to land mostly were terms think of bit certainly attractive the say was on there creating create a market, prices. not some difficulty] I those bit

with things is consistent of confidence from hearing the I think today, a here bit more. suggested I you're [technical as difficulty] sit some us we of As kind And gaining.

start with bit land. to the did think do a but some think it at not activity. land figuring seeing and other figured you're through, in a really I way didn't -- of each you'll a stabilization it more see and going certainly buyers but market, I So not a lot, fall looking are Sellers hesitate lot

your question from Please from Capital RBC ahead. line go Mike, is Mike now comes Dahl next open. Our Markets.

Ryan is term, is follow in Frank BTO on Dahl. It run I right this to the the spec for kind and XX-XX near Hi, here. sounds me for But wanted squeezing on rate. commentary. Thanks like up of Mike the as drift think mean or Or Morrison you it'll being I normalized front? look-out, for of to of as -- maybe BTO more given that the a area kind heavy kind more margin overtime back down in? operate do we Taylor is

think monitor continue Sheryl to we'll based going And we're on it demand. mentioned, -- I

few is. has a it cadence both, the to do opportunity We mentioned, demand elevated years, perspective. have business the some we But drive of more like helps that us closing it last to In as been an spec the on from we and our provides really spec balance returns. as what depending

follow well So see. orders I just demand margins -- the to think we is, we like because we'll what the build of as premium

market it's what the and we'll does. sort balance a see today good So of just

in one was of that between over And few if little the you other. -- different. market a the period out last short way years, were somewhere always you or look We the take time, XX-XX,

the we XX% if higher it's spec So or mix between. somewhere really specs percentage. But first-time the have to-be-built, Lou's of market, to it more also going communities on depend be market to our once communities. watch we're to Because have buyer a to point, and could in the going XX% to just we again, have

feet. mean square It that X,XXX side, specs. with footage quarter both On square was the I happens or that no like square the the think other the it's over, we up years, moved. of on the what quarter look and feet couple hasn't last interesting about mix, XX over our square as I this XX at and was to-be-built about matter footage it

or So we a the putting where we to-be-built. for that are up adult. mirror buying We're they're making what move the time on sure in ground active first inventory that

just your from is Or digital about of the then at profile talk one, I there, this margin And difference lower from margin Can reservations. of you. it BTO? commissions? higher XX% because last Thank it. point SG&A gross XX%, is Got in think come it sales your savings you

actually combination. Well, they're a

an got right. a So lot. at. you're but the they they completed process entire we all we're and The we XX% look put how If at, through, XX% to online way our look depends then to as secure put and closer the didn't the they deposit money the built reservations but and of down contract that's would combination they XX%, be reservations. order to roaster into our inventory that the as they called want a to absolute, well

probably the in across have the XX%, communities We country. XX% program our of built-to-order

And we're on pretty have the depending high the be Texas. the home depends reservations Houston, from Austin conversion which it's growth and Orlando. on in to highest been highest reservations see build. honestly, to come improvement continuing that's our country parts And those seeing broker our of where participation, in tends So we today

same seen is when seeing days I the So think they complete. benefit when we start the across kind contract from process we're country. haven't we we the will distributed on to are they of improvement when to What

millennials I the highly last these gave participation the it's is targeted them. programs interesting they data point leaving And you really was -- this, when around started, targeted are but were not

Now, we're groups all of about a consumer Xers, balance are of millennials, XX% Gen boomers. seeing XX% XX% good across

that's us. going to fare So I continue for well to think

Our ahead. Oppenheim now is Dan Credit Please open. next comes question Suisse. Dan, from from go your line

Thanks very much.

in ones, that some where How do West? But communities year of question. new the the such. holding the see you've a what's count where as the course the over the point communities closing the as many off have the Just off the ready replenishing was online? you you until I over you models about in community and terms a guess, in you're where then quick you -- flat move hold essentially up wondering talking to I of this through decided year? year. past openings think be and opening given are as coming Central we'll the about Eastern do mix will we Is

And what as the to Southeast, of the growth of seeing west. than going strong higher year the in Yes, openings we I you've earlier. for new are more say, remainder a have some we seen, outlet Texas we're would had the what Florida had and percentage

I the remainder the a the percentage mix be majority for So that would going say forward new the be where year. would openings would as and of of

Got it.

closeouts of much point. openings met of sort some of guess, keeping in that that, elevated the the which And is just there, thinking growth terms Okay. I new obviously, is of west at more slower this into, have

see did as actually growth outlet well. They

open. now from Our Alex, is Barron Please go Housing Alex Center. ahead. comes next line from Research your question

or I And talk were about how you you of you. left not to remember years as wondering had room so, much or thank much? still going right. there a flexibility I'm room consumer for the the Sheryl, thankfully, rates used is up. today, ago Yes, But couple and

it the our that spreadsheet just to interesting for look rate at bit room you thank where I year we bps saw Unfortunately, what Alex. XXXX just early of favorite more XXX. little in It's love points I of FHA was what every have it's end It's rates close it. they little quarter. from closed. XXX the look Well, down conventional at room our XXX that's now question, really my when at qualifying. buyer, I a have before basis they backlog, buyer question, QX, tighter, But difficulty] they up got certainly kind about we [technical the peaked. of got about of so But a challenge from

helpful. Okay. That's

is, you like talking think guys more and more question stuff along maybe were other that. going rationalizing reducing SKUs still have pallets think there? ago, that process? to do of of quarters a a bit is it's I number far The How about couple And you little floor I opportunity much how plans longer,

of all We planned it's actually a continuous from think Lyon, William with divisions work but have I that us. the lot Yes, I Alex, our for was leading charge process our a finalizing it of our mentioned we somebody now. in to part process due it's mean And perspective.

it, along goes popular continue as value the through it. we'll getting the review engineering with we pass it's plans, it and So most floor first making sure have to

the we And involved they our well. seeing them do then the of and options what an if our because teams to as is selling. our eliminate are makes at for gives aren't take-up, sales those trades get cost frequency as -- don't of in not it complicates us really they very many And have options that purchasing looking bid when we're opportunity to bidding process better

painting on the it Golden the team similar somebody think I was Gate to Bridge. said,

done some the understand will library, comments that's again we closing about just true. the you think plan start stale, continue Especially the you if and our really it never they're get the how assume some seeing to get and think consumer I evolving. around can just that with You don't needs of and of to if consumer, have you we're shifts

questions. further for Please the ahead. I would no turn back currently call We like closing to to Sheryl remarks. go have

our We Take joining forward talking you all thank look you for QX us results. to share safe. Well, next to Be to care. quarter.

this today's call. Ladies concludes and gentlemen,

your may lines. Thank you. now You disconnect