Taylor Morrison Home (TMHC) 26 Jul 232023 Q2 Earnings call transcript

Good morning, and welcome to Taylor Morrison's Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

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

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

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

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

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

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

good Thank everyone. you, morning, Mackenzie, and

Operations Chief Joining VanHyfte, Heuser, me is Curt our Chief Financial Erik Officer. and Officer; Corporate our

our he of Lyon He and more in pleased the held Officer. in role. by As XXXX them Directors acquisition. the Curt XX-year you Financial been interim seen serving field Curt joined throughout have has Chief has finance CFO numerous may earnings I William been homebuilding his roles couldn't be since has this company leadership nearly when and and way career, to have as Board our and with has May appointed our of as EVP since release, the morning's

our our and market portfolio results quarterly metrics. my our investment After Now strong and diving strategic into our the discuss will guidance while I Curt and Erik with as call, and land will review strategy remarks, highlights begin financial usual, update on will our priorities.

streamlined once expectations continue conditions. and key again market operations results as scale, balanced benefits the across quarter we all of along portfolio, improved our our second with Our to realize metrics outperformed

diluted earnings drove equity homes a value nearly SG&A to we Coupled $X.XX. of of per million highlights, the in in with on delivered X,XXX share and increase an book over share almost closings repurchases year-over-year share a $XXX XX% at ratio months, this of $XX X.X%, return and XX%. in margin home performance XX.X% of our last resulting the XX a Among gross per

on generated been matched by that these the operational stewardship. focus balance Our sheet efficiencies has equally earnings our

a down result, As from we never as a to a with just support ended an a points growth year debt net in of we all-time and the XXXX quarter have position basis liquidity position stronger capital been high $X.X ratio which ago. was future billion homebuilding XX.X% of to

sales spring the On a increased quarter X% and and season. X.X healthy of monthly X.X community pace throughout the in demand to front, sequentially the year-over-year, in year the shopper selling the began that a driven early net our sales maintaining total, per absorption as activity X.X XX% In ago. compared remained by orders and momentum quarter, first

our intentional driving absorption leverage approximately one noting and our sales we worth historical It's the invested an our average returns enhanced low reflects improve newly to and low as long-term range also rate the community are geographic as capital. the businesses time, on that the shift size X turning recent will drive same XX% years. which of communities in increased the targeting mid-Xs. our we period, footprint have underwritten ways by in in increase more our same by we velocity a efficient, which At in mix annualized compared to This many the faster of cost over

was by look our our I across Phoenix. West momentum was all and sales our Strength led Seattle in most region, across evident When portfolio, again nearly Sacramento, once pronounced markets.

in slower start positively. out Raleigh the meaningfully, and which East, to was And lastly, all Our standing markets with nearly encouraging and Dallas notably the in most improved its also Charlotte our trends Houston, most given see Central year. continue region healthy to

second quarter were strongly, our core XX%. recovered ago, our lifestyle segment at or in raised the segment in move-up has Group, orders recent our Compared lifestyle to Consumer the quarter. entry in communities have remained communities the resort while second By incentives quarters and during entry-level improvement a demand, our net paces. XX% comprised Alongside at sales our resort we at sequentially of most of and at healthy XX%, majority our move-up pricing our stable the reduced year category level sales

a renewed also with These secured urgency pricing basis. X% home, the affordability adjustments has of have further backlog, by this power or and Most offsetting shopper continue on community-by-community balance our is any to of deposits solidified reinforced over average also value per just pricing while stability cost $XX,XXX been generally which pressures. importantly, we of modest as sense partially

digital has consistent activity including mortgage July, and in leading with seasonal web home been levels. healthy stable are far reservations traffic, Thus at prequalifications norms and foot while indicators,

the our quarter worth it's On home all-time second conversion of sales an XX% rate our XX%. contributed latter, of that reservation outsized online systems with sharing gross

of This met over the of for-sale meaningful share new with listings of home for interest incentives have Federal norms align today's Since higher ago, more with construction, product the X%. the inventory At interest than the our has an below approximately has gains offerings over expectations against hold where equilibrium their been rate new its in with from and fight homeowners market. Reserve year existing consumers market, emerged began time, where industry aggressive has consumers of have historic and environment. one the home little to inflation doubling lack its same driven recalibrated rates to reset percentage XX% X/X a a long-term pricing,

dynamics, increasingly Further preferring ease or compounding for research new that are living, our homebuyers to homes preferences. cultural indicates existing construction these customization of

of some lack inventory, top for the more and underlying price remains coupled the support those manageable mind new with monthly who strength especially resilient homes. While points true supported a entry-level for of in achieve demand most demographic affordability challenge consumers, payment, require to have

of well that invest where are and in been entry felt we most housing to the continue of serve core we primarily has performance Morrison, submarkets each last In lifestyle months, those the move-up pressures were noncore the segments, Taylor across to positioned acutely well-located balanced need communities. XX our portfolio most proven At prime to resort areas in where case over durable exposure. throughout has pricing have cycles be as level, as we little

our us housing who to a this carry well homebuyers costs qualified even first-time In generally attract consumer better are among equipped addition, higher to strategy needed. allows if relatively

age buyers. Home Gen by another example, our XX% For financed funding XX% And second millennials the were and group, were buyers by Morrison Taylor Z. quarter, X% in were of first-time

XX% to-be-built Across an square with Also credit average a average $XXX,XXX. credit score the those the income above environment. of an the of of of household interest metrics borrowers, all average footage these choosing an increased payment strength our buyer, despite were year-to-date of XXX, home down underscoring excellent typical has and average rate

of emphasize this As calls, incentive high headwind margin offer of you the our gross sales strategy have leveraging closings Driving as from pricing compelling experience on me reinforces second as to of margin are quarter all-time gross we mortgage outsized XX%, power an evidenced we customers while would our capture personalized home confidence interest and the a first minimizing XX.X%. adjustments solutions. finance prior committed also the otherwise earnings rate offer tool of and finance we rate overcome various heard can value strength volatility to the by

streamlining. side and and of driving the lower simplification focused faster construction remain tighter production On we costs the through schedules business, on inventory turns,

critical have we offerings opportunity is substantial to partners drive made While reducing and option progress breadth the trade of in for ongoing. sacrificing builders appeal, without efficiencies our our floor consumer plans and the

price rates as the strong buyers aesthetics packages value, are Critical offerings. responding and have of all our to Canvas those points across our efforts, ease option well-curated design achieved utilization to

managed savings addition of operational have our year-to-date those the In studios. margins design option nationally our time exceeded to in Canvas packages, ease and these

Driven on of initiatives, going our us improve second and X our approximately cycle will more amount part our quarter reduce potential. inventory overall sheet, including by forward sequentially turns the in and production work expected the in these balance to improving increase allow progress inventory in weeks times,

this future put place the highly continued services need rate our while uncertainty, growth the team operating investing navigate up, interest have we our week's in on reserve and do cohesion last federal between reinforced have to over a efficiently, we we focused tools again wrap are exceptional and for The approach as macroeconomic homebuilding business and managing serving once to I volatility customers and year to remain us for dynamic strongly the continue Before will well actions so. financial to our well. equipped allow

and results to strengths move innovation simplifying We we operations growth leverage critical opportunity to and by greater continue embracing have bottom gained as scale, enhanced line our advantages drive both will we forward. those achieving and

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

morning. quarter, which was second In we million, Thanks, of our sequentially Sheryl, development-related. the of and accelerated development land and $XXX homebuilding acquisition XX% to investments good pace

Our preferences drivers are land meet that well long-term positioned efficient, growth from markets investment focused and to is consumer and achieving well-balanced approach in needs sets. capital accretive on demand benefit of the our

housing we market well-timed calls, transactions already spend last meaningfully of an what land our have by over on year. prior as and lots. pipeline Doubling opportunistic down in M&A we discussed conditions our stance moderated slowed that afforded As bolstered earnings was owned controlled the

cash allowed a generation approach employed opportunities, position our manage our prudent to history. company's playbook strong and ourselves throughout portfolio for we growth long-standing risk, preserve that This have successfully potential us

as stable. are the evaluate by renewed we encouraged stability, been while pricing described, As have demand market values today, resilient land the relatively trends we driving Sheryl

expect months maintain approximately as favoring into capital we to to accretive assets anticipated closings will increased be our we our deal to are billion, see in further total still today's lens, of now year we At existing strong into with in growth ahead. XXXX time, deals. this our spend the land this flow opportunities deploy $X.X While development highly converts scrutinizing base beginning

XX% these X.X over of maximize via our will deal structures, and of each we and years metrics lots remain sheet determination on homebuilding With quarter just financing Each vehicle of for XX,XXX of mix end, X.X lots land At and This returns. total ranges other supply. a to within based expected controlled control these years. owned the supply lots. was our off-balance future be targeted just own options optimal our of represented

negotiated approximately an our XX% that supply basis. of providing or worth It's attractive historic was owned XXXX cost sharing lot in also earlier,

our build-to-rent business, me update offer Yardly. also brief Let growing a on

development. lots we which second X,XXX As of of across already are controlled owned projects, of some phase the approximately XX under approximately half or quarter, about

These concepts. the rental highly differentiated meet a communities other remain apartment to amenitized compared void and market horizontal unique build-to-rent in

in levels. growth leasing and reach stabilized expect today projects underway XXXX We beyond as

will I Curt. that, the to turn With call

finance talented Thanks, about over opportunity to the to I months also and role. teams our a and results. drive excited forward the the for as Erik, and has in ahead. excitement for three our support good in with morning, grow potential continue time closely the working interim we everyone. This reinforced I'm to teams company the the many have last my grateful meeting of you of months and meaningful look

times. second closings nearly homebuilding our $X billion $XXX factors, the details $XXX,XXX. quarter, into closed benefited conversions and more of earnings revenue Diving stronger was including home our X,XXX share. diluted or closing from $X.X latter per and Total of our number sold at from quarter, million an our of cycle the The price volume we including prior was $X.XX homes Compared operations. closing approximately closing driven generated average spec during improvement by to a of in guidance, billion

second than times construction sequential back did improvement the of remain cycle schedule, we closings. weeks historical about While our norms quarter to see for X primarily the due longer of end

complete, backlog we homes to to expect cycle continue older As normalize. average times

expect another trends further encouraging Given starts, by we year's on year-end declines at into new X-week improvement XXXX. this and least

XX% X.X accelerated year-over-year from our by sequentially X,XXX and a X.X X% X.X During the to ago. in approximately community month, prior equaled we successfully per quarter year homes. quarter, volume This starts and up per the start

below spec XXX were community. quarter including finished X,XXX we home of at remaining which homes X,XXX target well less per end, result, one of our finished a than specs, production, under had As approximately

of the Based production on for the various homes homes with earlier impact under to third starts year volume includes cycle XX,XXX sequential to homes. compared full these prior year. reflecting approximately as we and approximately the This the lower times, now weather-related the our X,XXX dynamics units in range to decline and quarter last year's delays this XX,XXX expect of impacting guidance deliver XX,XXX

in As growth. drive year's into we we look reacceleration and XXXX, construction activity higher this normalization expect starts meaningful timelines a and to

deliveries of lease the to closing We in the year. around to price in be the share continue quarter $XXX,XXX of approximately a the full back third higher spec home average the half including reflecting expect year, closings of for $XXX,XXX

During was margin the quarter, gross our home XX.X%. closings

record year the believe greater While years company's performance enhancements as in of a and in our this our homes. of still near homebuilding in levels strategic structural well benefit to-be-built XX.X% highest was balanced level achieving was from the down this the spec ago, history. of as mix among highlights our it efficiencies We operations and scale recent since the

profile lower this share home in Looking gross ahead, home second of previously. closing which to the compared full returned our XX% spec third to to-be-built a average around in margin homes. have normalized our margin we outlook now half decline as prices, be closings anticipated This with greater margin approximately gross a for includes compared reflects to quarter. anticipate closings XX% the to Consistent year approximately XX.X%

This XX.X%. incentive as cost has Sheryl million strategy XX%, and million financial mortgage such months margin moderated ago to stabilized, finance at a of of revenue the as team $XX an services margin of and $XX performance of a With year incentives captures in first rate our our of our gross all-time produced has the high capture recent described. benefit compared pricing

SG&A revenue as a was percentage X.X%. of home closings

was adjusted remained X.X% we to in as from efficient basis a lowest, ago, points While this year market have it history. most our among conditions, up levels the XX

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

a the in X,XXX monthly ending in X% our count year-over-year a our X.X per by XXX XX% pace, absorption outlets. driven to homes the improvement increase community sales, to XX% Shifting community and increased in orders net our to quarter

gross consistent rate orders. Our cancellation was with norms of historical XX.X% at

cash $X.X To and expect we to ahead, approximately $XXX undrawn available for remain outside billion to operations billion. of cash ending remain of year. look $X.X of normal our ended generated we $X.X included both quarter million wrap This with unrestricted credit and during revolving liquidity between position outlets billion full quarter which our XXX on a from up, record we and total credit. flow third of of of capacity As letters course facilities, the XXX flattish the continue to

low debt of year net declined homebuilding Our capitalization XX.X% ratio compared as all-time a to XX.X% ago. to another

cash which We on XXXX. next have maturity upcoming hand $XXX maturity debt have will a March in to address, we after in million XXXX, which our ample be

have received upgraded proactive strong from quarter, the from BAX and approach to to During credit BAX we with are rating pleased reduction. outlook to of stable an a Moody's recognition our and liquidity debt profile

to evaluate expect capital management and Going repurchases. share we forward, framework we discipline our and as allocation debt opportunities, opportunistic maintain growth

turn call will back Sheryl. I to Now over the

risk first inventory including covering social X I key gas ever well We introduction emissions you, dedication task we our this our greenhouse governance as climate line as organization's with our to recently the report disclosures. showcases financial share inaugural and our force our to fifth climate-related emissions Thank analysis proud annual report, progress. X year's environmental, management on and Curt. published X, am In the several made of ESG Scope which have that advancements, in

environmental establishing our By to we emphasizes land our baselines, develop livability deliver country. homes energy the which customers across will able of these the biodiversity refine and stewardship strategy, efficiency the the better and be we and we the of long-term to

serve expanded with workforce's to disclosures aim commitment and to customer we on accountability to down best we and composition, and base. change racial evolving demonstrating ethnic our for are our for doubled commitment diversity our meaningful ensure inclusion also as to We our able transparency

proud most all companies we responsible long-standing these one our across integrating by are named of aspects been America's as ESG have to of of Newsweek. recently business, commitments to Because principles

up, dedicated thank overcome another facing outstanding work of we of deeply to am to quarter. like tirelessly With I they for members mind, each I'd Before wrap customers team of the efforts. our our industry, appreciative and our top obstacles so their day each

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

first our question JPMorgan. from And Mike from Instructions]. Rehaut [Operator comes

moving the something how or seasonality. seasonality looking quick on be question think in with from if normal [indiscernible] you roughly at line A forward sales And patterns? you're historical would pace

we Thank QX, tell think you you and question. flat are summer into year seasonality, we would get historic times, the seasonal we And I the of we are like kind out half And that, if of at look take QX XX% peak XX%, late the to feels going period into half back XXXX then the that more as environment. When COVID the when would see Yes. year. generally, the of season. we see of is each we'll a and with try kind generally trends. generally about it more other. to of for the we of pre-COVID of I paces a as moderation kind the And drop normalized go kind back I in do holiday back the

now, sales low something on a of moderation into you prepared Right certainly our said focused really get looking range, the we managing of and remarks, paces. And that season, I my probably bit X in the in in back year. as have the little at with as half teams

secondly, And and as increases, are just into guys and guidance the you the year costs given XXXX incentives for rest to I moving expecting guess, the construction of then well? margin where go Great.

Yes, and thanks for the question.

the of tailwinds sticky. that's kind first comment what was for rest And items still it's to the year. construction and of but under pretty to so going construction costs. the rest house some your relative the for the nationally, lumber on I the we're the of We've costs, components remains other that's the that of recent to going to put been sticky, pressure. be expecting they've kind year think pickup start of Relative riding the been of pretty far, probably

starts, for forward new we're If of based we We seeing divisions improvements. with potentially QX on some we at do But standpoint, from look of see expect they'll pretty savings our across some some we we're at as do what some go-forward and in our looking sticky. still still be basis. overall for the a think start on we year, a divisions look

and You markets well like very markets did had think both not there. of past that's but gains initially Curt, almost Curt's It's so but seeing pressure. we're It's is a better benefit years portfolio, strain, relief fair, the look kind any kind some feeling hoped relief bit a for. side, so to and more And it's some little where and across couple material labor pace, seeing it's really the significant price that -- in you of on interesting. point, seeing we we're higher the not still over the of had our in that we're what if little

would I component the And was question incentive then the of I think agree. second your on front.

new orders to Just just see incentives new did sequentially from QX. I seeing, anecdotally dropped or we think And and from a go-forward on a we're I what our basis, QX think of sequential based will very to our pleased the reduction basis. QX does. with be environment lot rate a on QX we're from But on that determined interest incentives the in what

The next Carl question BTIG. comes from from Reichardt

so permanently, months of relative can strong midpoint or higher? walk think what and It's Curt, range, it next had from We've XX% to volume. you for the get you was well guide? Curt. other particular in number -- to the ahead I guide the of particularly the this Welcome April, quarter the so. what guidance seen on much your's builders, just that two through question gave that changed but in me a delivery when I

a It's fair question. Yes.

X, we in and a the to some get get the to. have aren't the is ourselves across market finish that that was the of would it's just the -- it's this expectations couple were were generally And them past think just for quarter we houses continued ability better closings I'd complete. labor past the that finish the really up things. we quite had last, Carl, we One, couple weeks In X have year, get quarter, of would the of I line. set certain so the line. of able and we say, I that of constrained just couldn't make years stuff -- the In we to to sure woes going say across

the So time. ourselves we gave

success cycle strongest sales, with front. our we But with one really in had spring improvement even And on were quarters an combined they in the that, think anticipated, I spec just with great the season, of inventory than time, inventory the stronger we've selling sales, it seen helped. our

did You quarter have beat, our put on the nice it put pressure a and a a third two together, quarter. and but you're big did we really little right,

picture a you. question. got bigger then I And

talked about public lot large years in last to that. a companies of You've help scale, a growing you to add few bought the and to couple

markets next It this about with still So level to need you're acquisitions deliveries as or table, year. you now? today? be stair-step thinking XX,XXX in like as want optimization that at are of you you or -- want at are company look got growth year as scale now the where growth how sort Are for you you've large additional you sounds this Or Sheryl, some coming on the you to be? the

Yes.

great question. Another

focused We organization the are of maximizing each as our very markets. of scale an on

tell some top market acquisition, markets all X to But it the land scale you, like, I a and kind of kind people know of cadence. of comes think, a But position when would benefits it's little we I different certainly, to in top by does that Carl, market. what construction look X. So

number our a bit. would scale, say of I there's think I were quite portfolio, there's markets good I look today. run? I a markets. is what when Actually across I say, think room But some would the couple do additional significant at in scale to scale One opportunities. of a So but

or a we're top room lot subscale, or just that call that if there's would I think run but to the X. X think I in others only X of many there's I X have

think I there's And then markets. complementary

ourselves. We they have to as look at present opportunities those

to to strategic be the fit. portfolio. going to before, a about Carl, going good be have accretive there's talked They're we've have As to to

continue certainly, look given if but see think, on coming But feeling. in the focused opportunities private to themselves that opportunities community present of those I we're most we'll growth. stress the the is -- will organic building the think I at we'll So year

next comes Bouley Matthew from question The Barclays. from

morning. Good

Langan, You have Matt on Elizabeth today. for

to XQ second of just kind and differential the margin spec the said I be margin or that of a on what on portion is you -- mind little account So of touch spec of greater wanted kind half know the differential. build-to-order between margin will Would I bit lower closings. you the refreshing that the homes is?

it's Yes, year back Elizabeth. margin for of, I got really percentage our Yes, just overall would what the top We've And I the the closings to more price then product communities at relative just to more QX is on for call a reiterate, by profile guide that, -- QX. a the closing to contributing West affordable impacted of probably markets half of mix. of guess, Coast higher mix points. for

normalized and and So and homes between spread to-be-built what differential right our roughly call XXX mentioned, points, our levels, to returning as we are basis we spec you is that's more are that XXX, seeing -- speaking. would around

it's a bit but are little Some kind bit of rounding that some more, higher, of into are a overall, area. little out kind

markets that. we're if a it's that widespread that? move or If you're incentives you're are seeing that That's more where -- maybe particular the there digging regional into mind where seeing you of pricing are seeing if would on where And you I lower had said that higher? kind the kind more, seeing markets little bit know any stepped of you're And Okay. touching then pricing there helpful. trends,

Yes.

across most Curt's would be what hand think, that I Houston, year like think up because if back Austin, we I even at in we half of comments second look to in Southern When call I communities we prices look as California follow our the the look I Orlando, I markets, organization. in do and my the of think look we hand. markets pricing some quarter, in than raised those remarks, I our where go more half they across when on prepared in at inventory, at we the have, When would of affordable specs. the mentioned,

Some of those modest. are

Some more those meaningful. little are of a bit

across Portland, real seeing traction to I probably get I there. look all sales actually be where when the opportunities it's quarter would more really pricing I in just been a little might Dallas difficult seeing at bit exception that But marketplace. We're Certainly markets. and those had really some that we've opportunities. say two more best growth in just markets nice years, we're begun pricing than parts like Florida, its the of Texas, think of

we are the opportunities then seeing We're with be would with out strength. call pricing adult And active for probably minimal Sacramento another buyer me the in across market. country where really offering incentives that

So different the that ways pricing the market, across we're seeing really based portfolio. on power getting it in entire we're but

is Patterson from question next The Wolfe from Truman Research.

an little in update your versus that of believe trying orders which history? Could comfortable you are foreseeable First, give I'm future that kind trended mentioned XQ? XX% on bit elevated to running I the for of during the XX% understand, how the a quarter. last quarter, all you you that in specs really about And level were seems

Yes.

were to-be-built the standpoint that reciprocal of a in of range. kind For We XX% from standpoint. QMI course, QX. consistent XX% spec upper spec QX, and pretty was would And a of or of with that our the be mix low in then, kind

kind So and forward, I Kind quarter-over-quarter. we guess, our like to of your of balanced on a between approach pretty point, to-be-built. consistent go spec

continue like best that XX-XX balanced offers anywhere think we one way and XX-XX, other, hover the approach. to the both to will time, think I us. over or that it We of

in also we the more We business have kind And our have of communities, continue approach. don't say it so communities we but the more attack resort strong specs to kind we spec mean from then business we lifestyle up, from an our appreciate to to-be-built entry-level we standpoint, but the of attack entry-level our doesn't in and move balanced and our move-up standpoint.

as generally tend we'll It's communities the you to think specific them But said. But about key in our off Curt's the to Truman, put maybe really market what's move portfolio each the going the in communities in affordable I come communities. right we going to to having it's more point, Those point XX-XX, inventory materially going open the for XX% continue that's think based to be lower-margin think a the to to specs don't ratio. on is we're of our keep more down available sale. way. don't manage I majority as but To well. the It's I

range. of Got think kind in we'll the discuss able and pre-COVID, had on be it margin your of normalized and where you we've picture, streamlining integrating past prior cetera, pricing work if you. running, been realize in gross all's XX% hoping over And the few work I'm might past a have baseline? given years with And margins big your model. but all et lot are moving a business costs, to robust gross you a the you and there's Understood. hoping lot done clearly, the parts call done of acquisitions years like to you've the today, that the few see

are at two, higher our It's talk a that past can library, a that answer in what levels just but different: think we the One, pre but I we on infrastructure the in scale last not difference. as about good try, simplification versus the the discussions prepared certainly, look in to resale. at making when quite difference mean given those -- standpoint; And COVID. industry, look at talked made meaningful I we're specs. we've we've I've All our the think don't going talk we're saw scale builders the of change it, are I is the plan the than our at I company, industry. about let's what things about same to quarter. really a you stabilize I the done had margins that Truman, is Certainly, different from when the

So I was think high low generally, teens, old moves what XXs up. the

far. I into to say next think be quarter, get as able we we'll how

was traction their only we've think integration even And I also simplification wasn't the you moving when that see the was think work about the was you we've in front. than had of those from lower can ours baseline talked that It about that 'XX, builders, ours. 'XX. of the something on

gave thing So the it catch-up we was had opportunity. a new a and clearly scale us new for it a right do, to us because but

forward for prior organization. a I level higher us. in you at than a it's reset So to look saw And I kind much of the think anything

Wedbush. comes The from Jay McCanless from next question

So, ask Sheryl, to I first. want

at said where that I prepared have that that could the go? might Is that are ago frame and converting could you you think number where you year a think quarter. online leads comments in XX% correct? And this been maybe

at more year-over-year. and Jay, was XX%. Thanks up That's process then our Yes. The stopped the overall XX%, XX%. a sales to partially in, because came reservations I reserved XX% that that question. our can participation look it than when the to for bit little was and The conversion moves at at complicate but more, just it of I folks

So it's a very meaningful number.

If I just you were give a on trend. little interesting as an color to it, been it's

places would overall expected like our of have highest out are is reservations those think coming reservations Bay, the unique. to in I percentage highest of I of which Texas. are out me but coming Texas,

you really to-be-built tripled since earlier And also year. this reservations. last the those actually we them at our introduced introduced As year, end have know, we of

So interesting. that's been

are followed reservations spec to-be-built at the by highest reservations. our The to be rate only actually converting

interesting Another they of provides making relatively into finding are organically the they're is system folks the that because reservation seeing doing Jay, community. it of And that stat, convenience them. are majority reservations, it come just before the we're a

your question way stat groups. Gen at Xs of well and boomers the our high all pretty then about we think XXs that go to divided on consumer it's is is And do low here, the of XX%, I millennials are are second between from are leading XXs. equally goes your maybe and last the I mean exciting this I part think where

So we're the with overall kind the the which a brands consumer consumer way seeing take-up kind of change across all talks to in I of today. think engages just groups,

higher what do just Or are market opportunities growth land for basis guess, appreciate market. you that. Sure. of I is that That's count talked something we fiscal to great. as maybe out the in 'XX? I you could net there? on in detail maybe and second see what about community into a all on the you My net the start potential the community go types land I move question, think -- seeing opportunities that

taking opportunities. to land out kind it's competitive bit expectations regard Jay, Erik. count are land and little and of I'll expectation the color will growth. growth kind we our community future opportunities Yes, seeing our the it's on maybe a market, That with up definitely there. With ultimately spend of is generate -- the of give just you

We were, little And in and more kind us. shy in times. prices a 'XX. know, during bit saw this huge surprising 'XX to of you as increase bit What's land little those we been a

kind expectations, increases come seeing market the has speed. market As but evolved our us kind we competitiveness the the garnered that's land and necessarily. of is consumers are spend has Where not we're this in confidence and to land competitive, on huge of stronger gotten leading of we've kind increasing seeing prices back

see the So on move terms to go quickly of a the landscape, become competitive deals. away being to has we across it really advantage the able as kind with followed starting

of kind that's not we've in a lift on so So pricing dissipating seeing that in prior bit. land we're far. huge the But seen little cycles

And when at look you showing the in up right? that's our really residual,

up, but land have into Yes. we've for margin that land standpoint, hold we prices consistently ratio. underwriting able expectations falls able From to been kind which gross -- really been an of our are residual

regard the we're to our those deals So are with expectations. way with comfortable that flowing

those those starting how that Austin, on one is Phoenix, like some could I now? a of then could you more And Denver, get to last faring encouraged and year were I say Maybe Great. was hear markets sneak and you that surprised if to Sheryl, in. are markets really bit little problem Okay. touch better. Phoenix

of think Phoenix the at budget I and for neglected well. the I neglected, Jay, really thank question, so because Phoenix Phoenix, think really, mention. you I last Yes. asking doing is to comment I my in we've market. and in both When nice new strength and of board, pace and in the really kind I expectations seen openings, their just across kind look

very So that's encouraging. very, been

because I and mention the Dallas of both in along was one had with one's worthy of last Dallas Austin greatest sales, a and struggling. the we've Phoenix, sometime best peaks pace. it would That be market price mentioned seen would that certainly where quarter of been be another interesting. year,

gross have -- paces strong. relatively I continued think paces

Carolinas. a cancellations but few plagued than we're our forget strength interestingly of more our country Charlotte, to of cans of would enough, highest to longer other to may pace than The highest and many be in Orlando. Seattle started in it was only I third finally the been the the market can't some there. see mean continuing dissipate, we have the country. think, there, has I took holding followed good mention but to I say have I with out it's the came in paces I think And expected, by markets. The nets

being nice redundant, the strength across really year. we're of a seeing So without been market as good first half it's the

from question next comes The Alan Zelman. from Ratner

congratulations, Curt, way question throw maybe your a I'll first.

active in few You a bit guys taken have a years were of year-to-date. very repurchasers last little and here pause the

capital think are you reason. is that's But stock updated reason how Obviously, some give a you should repurchases still give of with can any about any maybe But a mentioned know pace haven't up there specific forward? the you lot, the the I allocation thoughts. we if you along share part can color why curious active your Just is year-to-date? strategy. been going

again, bought stock term, in opportunistic the public. going long bought along debt much back or specific part investing standpoint, kind will if you. quarter Yes. of from we of overall capital share more repurchase management. it, business about Alan, share continue But over to you of Yes, in repurchase, the yes, to be we XX% as here so. recent haven't But an think nice talking since to and allocation with our our framework, just

XX stock back share nearly months, the a to standpoint. opportunistic I worth share. roughly at be of to our we million that we're going would say a $XXX last repurchase $XX In bought continue from And

of you it have has taking As volatile. really somewhat been very slipped that. good we've been relative is know, advantages to our And at when aggressive sector down that and

say, repurchase our from standpoint. And in continue so approach opportunistic be, we'll what I'll share to a

And do have we how on much our left authorization?

on authorization. million left $XXX our have We

said, shape good there. of and in continue move to of we're the our like rest be platform, I it's of as year. we And the we'll a opportunistic So kind be through going to staple

Okay. Perfect.

geographic and there growth Carolinas more have Sheryl, that, issues strategic surrounding I to have you has ESG and been insurance issue local with the prepared seems brought hookups hearing question It based I remarks, on moratoriums of some headlines forward. property Florida issues Second as somewhat last such sewer related been could that the efforts months, kind up related question, -- there. your like exposure. related certain the in that, and on a in your like in to of somewhat several been some water Arizona. storms potentially dealing things we've to going things around impact related mean

going forward going of dollars, your with you in you're associated risks how in that strategic the allocate does of about front? I on all mean, terms your this where planning that Any thinking affect investment forward? thoughts How footprint?

take to it? want you Do

those right? factors cost account, mitigation of by I'll just way and of Yes, of standpoint, kind play all into have it underwriting are an Yes, some that start. And Erik. Alan, it's from to risk expectations. is

with question. ask a issue. Maybe for to So raised, projects right our It's which of expected water the to to in future on kind Phoenix you're one just one regard you is touch them factor sure. of the

to We It's little a more to subject stick. we with strictness the reach are to market. here bar supply a measuring XXX-year bit that regard on need the

a news issue. about I in the up the got solution favorable a already a kind of of the market got pretty expectation from come The is years. that percentage good in part council help over lots or with that government's freed designated will XX,XXX is guess, address the water we've The that next good they the put are and place it's to [indiscernible], available X a are that.

got that that of subject kind are risk. our that projects of pre-approved. We've in lots none that all there's to about XX,XXX are So

a issue. it's an it's kind be that not but X. the of over years, solved So It's needs today, something of coming DEFCON to as

issues these I political think some We're hurricanes, won't a of of thousands a Florida, little it XX-year look We're available versus supply to designated Erik's still are Alan, codes. business. about that mentioned really that's deep that we've have in here, there's insurance till and go I being of the across are the you we've you've Arizona, kind It water. but but place average had XXX. mean, and building feels here, when at point feels and the that nothing like good country lots about When got over -- issues, all real. impacting I a

the that make Charlotte, move as So about through we the almost I sure When like all over. two are now, appropriate. feel teams point, Erik's growth talking about our things patterns we've years for to that been these in think all that country, sewer to we are our are

the So there's plans nothing here organization. across that's stopping of growth kind our

to And that more to any significant see of mix just as and the of one that risks these from a to that point see being another? causing nothing business? In other defer you you There's market being it. you finer other words, is to causing geographic Sheryl. you out don't one -- than capital materially Got the put your on think there changing about

the any about all, we've talked of at on Alan. not issues No,

the think sure ground I advantage have right that on in well the planners. and we just of fact, are In that actually better market them, because have people strategic to allows the ahead it's we're making us a

The next is Mike from RBC. from Dahl question

on of spec mix of of second mix of of please? represent, quarter, terms assumption In versus question year, half One the spec what and the . guidance the for your did closings more percentage the closings, to-be-built. what's your spec in of kind in the

QX be for standpoint, mix XX% And of we're within really to-be-built. to closing But kind and, of well. contemplated of higher on kind that end now, standpoint that course, of XX% our we're the it's spec that, guiding mix QX, from probably the QX our within that as Mike, but probably a you the relative Yes. could for year. showing right a not included margin and specs from percentage will assume

Mike, a from year already has and to-be-built started. going backlog a obviously, that's Everything make spec. in it be everything to And the is in to

of also being margins? margin a in spec spec we that's is in -- driver just of necessarily Right. underlying a sequential kind of the the but as bigger about decline in decline of mix Is higher And guess function since a the margin, the when it I normalization higher percentage think not attributed is end. the follow-up, it that to spec sequential closings

three, it's think Mike. I

specs I spec of mix I on percentage think closings, to-be-built, important geographic between point just those that of think and really a are. I and it's the spec the down it's think most the is difference Curt where doubled

it's So a as lot margin operate lower slightly to a of Coast. well the most them are in and tend affordable our West Those of at our products.

all one So but of the just of combination not it's it's factor, those.

next is Credit Suisse. Oppenheim The question from Dan from

I of in terms the was in better absorption. the you Great. of had you've the wondering the West talked about margins trends some looking at versus on where terms and specs to-be-built

of in see make gap Given other we've of how that in much we more the seen margins you -- can regions? where terms to relative Or the getting West terms do of closer some in the how are of they on terms with the that? absorption, the do margins, you to

question, Good Dan.

to and of come we'll things working will we're to improve one is to It's overall, said, that's on overnight work far West that West in Coast going time. based on that that margins But I the of on lower our we happen our trying and As the are margin, guess, communities. so that. not necessarily continue

in quarter-over-quarter -- some We said, I decrease our we on orders. our saw incentives like

Because, kind of and -- to upside most we as Coast costs the because and/or additional price so we builds, standpoint new kind cost. that probably got starts, can through look our on new mentioned into on our the earliest. markets they probably probably our from speak, have fray, to West of I see earlier, do pursue our either we'll what escalation price So in

markets. probably earlier they've gotten cost other so house And some standpoint a of than from some our benefit

know on up. that kind just and those to elasticity kind incentive we'll house we keep pushing push of cost So have the monitor to side the because that of we're do going continue to price side and and

it But given will add point, I the plans to some your a Curt, the you I'd need be journey of thing the and master the tend continue. think the the trail. a of higher. in will But only the same probably much And bridge expectation probably dollars participation from is is percentage, see the will this But margin is a never the the as be we rest but gap. country, to and to perspective, percent, margin historic from the

from Ken Research. Seaport next The comes question Zener from

you to of finished? percent talk about you thank logic your talk of you could for finished? land raw you. Congratulations, be portfolio. expected Curt. to I taking that the or motivation have that auction wonder, can First all, down is thinking if And What

is that give feel shot, I'll chime Yes. then a in, free to Curt. Ken. and This Erik,

are a the kind have But lot land kind preference of part part developers of fact is terms with of have of good a the the to lots are the always Those for of of as back the coming mix. have in will We the sidelines. as the the cycle finished acquisition. now to matter of portfolio. evolving, stepped They

that in favorably the future. think will change I So

development got fortunately, we've But at and a it. engine we're good

our of of have by most come raw through, way XX% land condition, underwriting. we in So seen about through coming

that will And forward. something so future persist in I going think the that's

but finished certainly lots, So it for somewhat it. the seen We're hunting has availability of we've diminished. been

then, in And Sheryl, Sacramento. California. I'm Northern you mentioned

a the rates, early a to to now. secular I back point in a that decline going inventory fair it's really which shows when has research one rise Our duration, the in secular right think observe XXs

in cetera, despite you looking being tech, jobs like? Are pool obviously, could leaving you in is are affected California buying talk to strength tech, as would there to, well, market? that be California Northern So appreciated. but by of et Because the in can detail it in weakness Sacramento, talk and given they what more people

Yes, you bet.

has are and if movement. something, Sacramento missed an interesting of always but of from been kind we Ken, mix, jump on Curt we of the lot kind think I cycle, in-market an mix, get And pricing always inbound I think of where a in here been I the interesting Bay. has Sacramento depending

dissipates. sometimes high sales very total a be of can completely and that sometimes it percentage And

our interesting, market. understand the been kind adult, I an in-state as And that's into buyer, active penetrations our of it. lifestyle added once We've resort really again,

Some movement when as I from here think approaching bay at have opportunity continued are retirement. just for outlet we people look the growth. But I --

were the higher year, When for saw margin at paces has us. first than in we our they I low in of look really really, been rate. cancellation healthy historically half The kind XX% of the just

we're adult think second us I So and penetration, I see active to you'll about I grow. the continue position, the excited know think, well. that with buyer family and the as

The Alex next question Housing Center. is from from Barrón Research

in you if here Yes. your how I'm not the Thanks if beat but at and down you it, such given answered guys the third back continue understand filling closings what for a the on is happen a this that, just you just beat for of bunch your your it at wouldn't deliveries I'm did quarter? guidance versus a to missed accelerate me trying and build pace? reason, similar end. then big to can't you guidance to affected I related much Or in sure why some or that Is time? X,XXX.

Yes.

said, able from QX to Alex, certainly As we were in QX. some we bring to

driver, was think it's it. that but But is correct I me wrong, X if I'm of really piece a think I small Curt, a the part. what So

fall few slowed unfortunately where off, Coast, lost we significant saw we we happened year, and year, of starts. of interest think I then we especially early what that rain to West at weeks it's the the the that given compounded end and the in down starts got the demand rates and in a saw a back

This So see, our have in Alex, gave, up QX. universe large. as the something same you not universe. in But see did we year. guided Hopefully, don't we above just we put all we X as the for of what QX those but in factors than together we'll you is

this is for So QX. just strictly piece timing a

This today's Q&A session. concludes

remarks. the for hand I'll call Sheryl So back closing Palmer to any

all you earnings for to us we look talking busy will and day, quarter. to on joining you very thank forward this next Well,

very Thank call. your today's concludes attendance. much for you This

may disconnect lines. now your You