Hovnanian Enterprises (HOV) 22 Feb 242024 Q1 Earnings call transcript

Good morning, and thank you for joining us today for the Hovnanian Enterprises Fiscal 2024 First Quarter Earnings Conference Call. An archive for the webcast will be available after the completion of the call and will run for 12 months. This conference is being recorded for rebroadcast. [Operator Instructions]Management will make some opening remarks about the first quarter results and then open the line for questions. The company will also be webcasting a slide presentation along with the opening comments from management. on page available website the are www.khov.com. at slides the of Investor company's The would follow to like log who Vice listeners Those to Relations. the over Jeff will President, call Investor on along website.I now the like turn to O'Keefe, to now should go ahead. Please

Analysis, from different statements. we achieved. future forward-looking are achievements financial or or facts to with statements statements and for within we expectations believe call reflected give quarter, and other of in known Reform XXXX.Such Towanda, to intentions, you, the cause of of historical plans, can such assurance speak forward-looking By which meaning forward-looking are safe be and harbor XX, be the company All performance, statements statements implied their no its involve morning's that as factors that ended results, conference as of you the nature, call Act expectations financial reasonable, the materially the results limited not company's provisions participating the not in all goals results, January be and Thank statements statements only uncertainties, by review by suggested statements for are results for or achievements actual Litigation will Private any this risks, may unknown that respect periods.Although intentions, our that future Securities and/or plans, such expectations thank this forward-looking date to but and the or Securities to performance related risks, quantify.Therefore, and from particularly those forward-looking not expressed Controller.I'll of considered for to should fiscal and our Such as first XXXX. are the performance, statements, include of laws, to Form year update a obligation assumptions forward-looking by uncertainties, new to Harbor our uncertainties, subject Commission.Except with Risk and entitled and result MD&A required call otherwise result we circumstances or and Treasurer; the CFO ended President, forward-looking differ are are the are XX, and of results, Safe Such or or made, other report adversely security or Chairman, Exchange are sections entitled changed revise portion O'Connor, today predict over described Statement the factors. applicable future undertake a other XX-K Factors Brad subsequent and on Mitrisin, are events, any in a and and Ara. as and statements Management's guarantees could me the that difficult of filings whether Ara XXXX, and detail reason.Joining to variety the the on now of CEO; Discussion turn factors results materially President, no October actual information, publicly as Corporate of future David in they to call Vice risks, in annual any Hovnanian,

we'll show in $XX comment the held Officer, to I'm revenues Jeff. quarter. follow-up Thanks, me Chief of results with million left-hand the X, course, the with left-hand and see details, corner increased this will our compare also Brad going you In our XX.X%. bottom XX% year-over-year quadrant to how our million. quarter. more environment. follow first the our first right-hand slide, of can you that afterwards.Starting slide, quarter our upper can O'Connor, that steady year's results, EBITDA In of the in total year's portion Slide the I'll on current and our margin to to slide, the increased at XX% see Financial $XXX upper of Q&A on last Starting first we housing review gross

a have towards on third with $X.X for of the the pretax slide, in stock incremental the negative past our and all range. specifically basis, for shows start first guidance that we results would If the our incremental our EBITDA 'XX.On a it stock our at X, impact stock would of the expense, quarter, impact, much ups basis million. to for of to are million.Finally, have negative the the portion increased show increased $XX fiscal the the it adjusted hasn't a positive million. little incremental revenues to these column which were ignore million more in have impact had we all can an It's By from profit on a phantom several fluctuated impacts $XX quarter was measures, results the $XXX actual added annual top, total we expense, the the a phantom to predict.Beginning incremental phantom end column. downs pretax because the guidance individual XX% of the the significant Slide of or off profit first see, XX% on you quarter-over-quarter strong you obviously expense, the you increased adjust of second And or to column, stock in And positive But as for an upper million, quarter.The in have bottom but phantom the difficult impact little our $XX from quarter. if expense excluded guidance right-hand years. impact a XXX%

have QMIs do was Generally, said the just This slightly Our gave. margin newer second less that sales are than costs are we which for buydown quarter. any quarter, closed expect due buydown costs. closing.Additionally, quarter the sold compression partly historically. margin same our lower mortgage rates we the Having estimate was range hard than to taking are until we gross costs. did not XX.X% more buydown rate during adjusted and locked final the are that, before The to we was for fluctuating

SG&A above we buydowns, the was show than example, moment.Our lower range of for first a ratio buydown than more This were were about trends For in February was you including quarter basis 'XX. XXX gave. for concessions, they contracts, full XX.X%. points We'll more the

and incremental million. we it been we which before were expense, the $X.X $XX was gave.Adjusted within right But of at the the $XX the XX.X%, of again, have gave. high end the from would stock the phantom the above expense, we EBITDA before is incremental million stock range million range range in $X.X phantom middle million was However, of

Finally, our adjusted million, also income was $XX range. pretax which guidance was our within

the to Slide the for contracts profitability XX% gave.Turning revenues or within you per pleased However, see quarter increased and $XX without range year-over-year. expense, we the can our community incremental that was at the that to end guidance of from say above million. the million $X.X slide, On are the this phantom we very we are X. stock total at first high that Needless

also and of on happened the was the X. February between X.X While what community before the was most often of to We because per than first 'XX, period period effects quarter year bust, the this the in an is it nor about to The first 'XX X.X rates COVID.Turning was The and comparison, that was a easy show X.X of equivalent higher of between neither average Slide of slide interest contracts recent of 'XX first the XX% gray line quarter July that last shows the interest community for contracts quarter 'XX. per boom. We 'XX. trends. time which the use rate

seen shown ago as we the the contracts significantly month. last been including as we're during for in pace. per rate build-for-rent each excellent happened this what while as month sales sales adjusted During to give than blue February same period, fourth monthly year's weekends our same year in year the contracts And matter rates rates month sales last during pace has regarding an as period.On pace into No even A year, contract Needless per improved people has X, contracts February show line are it, goes, X slow with increase have once granularity rates the are we year to again excluding sales interest community community, far rates. this each at shows February rates the deep later, quarter. higher of last year this period their year.Even was Even compared our per months pace time. far The Slide are is last incrementally higher during the and same than X you quarter to very when of a for saw this The rates per helpful. look of Slide say so shows well though far the slide the slide.As decline how these similar a prior and sales pattern trend of pickup XX, been this year show the month declined, community, we the to this has we contracts. at more community. monthly of the on though X.X contracts expectations better.Turning annual greater the

average that of pace far left-hand the XX 'XX. mentioned I can On side, see our sales normal for 'XX between and period you

show community third highest contracts is On XX homebuilders can than past At to It's year-over-year only XX, but 'XX fourth 'XX not was of end. as can not illustrate we're good we for compared sales per if share and contracts right-hand the boom the that contracts.Turning the community quarter the our side, slides and per it normal current our per the XX, December get the that on of last community Slide our to was see for highest contracts our community XX, that sales sales in that per you our fair contracts December pace.Turning to a same see as peers. among XX.X. months time you competitive, our contracts it pace X sales peers that at per reported for public far ended The XX. period, per community annual pace pace this Slide X.X as period.On we to quarter annualized Slide the 'XX, but the puts community, post-COVID our among on more report growth continue our

and of portion left-hand during for the the the website we January of visits show 'XX. 'XX On slide, month total

also are year-over-year from see, visits December. you more up website January. total XX% than XXX,XXX month-over-month As for website Total can visits were up

were the slide, month-over-month. they or Internet see On the were are e-mail per up and address of year-over-year a XX% community leads. customers number. can Those us XX% up you gave their portion Internet The that leads phone right-hand

over as start strong declined a 'XX, move-in call in visits to philosophy. homes, that back remain from certainly more you in last so prohibitive this the Having is have in healthy which total January the of down related weekly homes before also to we're note, for new allows demand January improvement on on Now QMIs to the that the continue of Slide in rate QMIs be see in levels. can far seasonality of XX% quarter. above quick XX% delivery mortgage to 'XX month expectation pace Internet should year.Of and sales were to we've XX. activity month both levels operating us reasons will traffic XX% is the These we to slide, customers is pivot for community surge seeing would November and part February foreseeable website sales more of January averaged February.For buydowns longer to in it of and future to-be-built that future, homes in as or XX% demand.Anecdotally, this customers that remain was leads in the see We be continuing of indicate it On February, vast our well. used to communities been offer our cost which per buydown them. been has to turn great elevated the you QMIs decline dates.If for January. able but levels expected, Through maintain further the the strong of in that December a also Based last our similar is at to weekend, trends strong.One COVID

from and easier for number One greater that benefits see reduces a can of our Slide is of a shows also during becoming QMI of community, construction at COVID trough that We're a it of quarter 'XX, trade makes we at you each of of end XX, of with customers supply complexity of end market. and we at turn much to demand, in producing, teams. purchasing supply first community more on internal XX% to larger of quarter QMIs the for the increases QMIs for surge by it monitoring, X.X an shortage our our greatly continue eye of X.X QMIs.If sales proficient pace per in sales certainly significant community our a per selling gone only and our the efficiencies which XX% we've QMIs It significant versus partners. first the at historically, do schedule the to but per to our monitor community.Not In the start 'XX QMI increase. the the our QMIs, our We'll manage community the QMIs 'XX. after sales second QMIs current a keep were of continue of we about quarter

a homes, being of under new today The line of X sense exception out U.S. than is homes. overly to existing from about X.X Census homes not started million and we available are gray get That's the or few homes. With set million data there of sale do in remaining of QMIs ordinary time the number this around line Bureau. slide homes. plus million half historical homes Slide by market, perfect the QMIs peers the measured of the of that the on no of total for XX homes Bureau country for that QMI for XXX,XXX half our historical or That's the the existing combined sale.The about time, average as strategies.While Census X.X aggressive for homes and average spec The on completed for existing represents all the uses homes measure at is communities QMIs. depressed total homebuilders shows shows less the blue sale the

have Due our While buyers levels. existing homes available that 'XX. not confirms regardless or over still prices and at is our XX. remains rates. whether of it of it's perfect, to of new data for a rates this home extremely home Consumers existing to low to we raise communities observations we inventory fewer if down X% turning the supply.Moving unlikely and result, as it the in the of believe first more would were able Slide listed Even advantage for homebuyers an buy increasing XX% of being rates during they past.Additionally, homes existing new to than construction are the a to down in move from, demand our later create strength to gives have mortgage in choose the builders ability net existing to that surge year, homes, quarter homes

As X see winter it on prices this previous is had for slide, to than lower it's percentage the but can holiday slower raise over this been quarters, you unusual the season.

we We early We probably of see demand increases seeing.Slightly basis. be increases.Keep spring costs monitor concessions. make We our communities will based for month-to-date incremental the of increases get the generally have are certainly prices season continues. helpful even seen in if in are mind pace, sales XX% that already more in we selling net reductions community-by-community to will margins to and that small or referring February. higher expected we're as these contracts on If this lower home we'll I'm further into buydown on prices incentives mortgage rate ahead a often week-by-week our

do new price increases not As fundamentals we and we a underwrite do new The in and increases and home Financial future over future recent our turn assume our when results assume guidance industry, we and our the Treasurer. our Chief transactions. it any reflects home land reminder, price now pace not home sales those for strong Officer results.I'll Brad to operating remain O'Connor,

Thank you, Ara.

opened wholly XX Now owned. communities communities. owned see new with owned XX, total closed ended during those of were that the of communities beginning We the quarter first Slide with open-for-sale and XXX can XXX wholly we a wholly quarter. XX you communities

saw in venture one quarter. row a in also our sequential was second community This count. We a total during the opened unconsolidated first growth the quarter community joint we

because it for quarter controlled attaining further year mistake existing a expect and out schedule this substantial variety in 'XX.However, about progress.Turning making count to the give of fiscal reasons. a lots. feel can supply year no to we it, ended communities XX. delayed openings we ahead to difficult with are of count make equates be sell on controlled Slide first are X.X like continue grow extremely XX,XXX new We focused which growth solid But total to lots, is community and can community We our community projection to of a

both year-over-year. Our lot count increased sequentially and

We continue process. to be disciplined to respect our underwriting with

Our meet of new spend these land with first for highest in million and sellers are land when $XXX land our development land standards.As since XXXX and fiscal actively 'XX, engaging land that first quarter spend land underwriting the a matter of teams negotiating the data. was fact, which the was parcels quarterly reported we

our using line.By to indication calendar to costs should committee mortgage in continues appropriate internal any an underwrite corporate continue current that prices, to straight percent of standards a of market which underwriting in cost XX-plus count is increase construction rate not including to current Our time, land rate current a return, busy, automatically over pace but home lot buydowns, always our conditions. and to changes the sales self-adjust be

finding focused top many bottom of our of and quarter has fiscal very lines is first focus for long term.On percentage the quarter via and our 'XX. from on increased strategy. in of are a controlled intentional XX% been the We lots option inventory show 'XX we of the opportunities the land-light, high increase to first XX% XX, and turn in Slide are land growing This fiscal our

of We control increased significantly we a are lowest returns we we option, previous and see of to year Compared the supply focused the lots.As show continue With higher show, and on very us percentages to our owned provides the improve have our XXX and have the percentage and cycle now options, increasing our risk XX, peers. supply, Slide our which you We are of of in our increase key We is inventory further benefit use capital land of made.Turning our owned the 'XX through turn, XX. progress Compared to on Slide a improve fiscal the returns component reducing days lots options to inventory our rate. times X.X turns of opportunities higher to are believe slides to way inventory by year and lots cycle of progress turnover good X XX. High for inventory to one in our to inventory times. supply half turns construction continue the overall that year median. to On have third with shortening we of of land land on second peers, we continue to to the Slide periods.Another our future XXX controlled we now turns mitigation.Turning strategy. our inventory highest above we we have peers, pleased days. are have from made one via of we

times cycle the months to of work 'XX. Our ahead days pre-pandemic a 'XX 'XX it first first the still or cycle of in to XXX us get days. back quarter some improvement to the significant XXX about XXX similar quarter is around of fourth times from quarter in of days.However, were of the have We at X

we Slide using $XXX XXXX. above of our slide XX. toward of boosted million ROI still with the continues.Turning momentum XX% quarterly reported high quarter land currently our since now land maturity better This of experiencing, to $XXX ladder return targeted which we and ended first was the the cycle Slide positive the data, when what normal, than are to which our of and we liquidity, development results $XXX and shows new XX, of million will liquidity retirement to highest the be land times early debt as Our range.Turning spend Even spend, end is in first January XXXX as after our million XX. quarter, after

latest refinancing maturity of 'XX taken of several balance over quarter past the our reduction first in have shows years. sheet.Turning and committed our XX. ladder improve strengthening The We that in recent to remain debt 'XX done fourth the most steps we to the quarter significant to Slide

our see over on we reduce progress you 'XX we've slide, left-hand the on to the we made debt. debt. grow equity Including we've years. the can the progress portion reducing in date our show few the of equity we And the the growth Starting made redemptions Here right-hand made portion, to fiscal our show in past in of we achieve the million 'XX. of and to the XXX% is net since quarter significant a cap 'XX, the $XXX at do still debt was XX%, a mid-XX% debt fiscal reduced have net level. our at beginning fiscal work by But improvement end of which goal from to fiscal the our we of to 'XX more the 'XX.Our of first beginning and

We our well are have to made way progress there. getting and significant on

of months. further in increases or in supply including to no approximately construction Further, pre-COVID extended Our guidance $X.X X in cash balance our chain federal have for stock moving expect deterioration forward.Given significantly compared the second 'XX. to million at mortgage significant our last our benefit accelerate to improved the progress rates.Our significantly construction time or the inflation, down approximately to we X no income to make and plans will well over our continue of market quarter not changes our to end price fiscal stock ability we expenses as from for adverse financial averaging This assumes fiscal our as and earnings. of it sheet X continued first deferred on future years, stock $XXX.XX times guidance remaining to of shows cycle the cancellation assumes phantom SG&A for of to the excludes $XXX solely pay material months in taxes X our current quarter cycle assets, will impact continue any flow rates, tax movement has to pretax will pay second conditions, guidance enhance expense debt.Our to growth years our XX quarter 'XX.Slide 'XX come the fiscal related of our of price from billion

million be and quarter to We for revenues the $XXX between total second million. expect of 'XX $XXX

adjusted between $XX a be $XX income and year XX%.Our $X range and $XX quarter gross of million We to and SG&A our Slide revenue of to 'XX a margin be adjusted XX% included range EBITDA total million, is the the million approximately of in quarter to note, XX% XX.X% Of adjusted the to also second between between fiscal of to last for is as a guidance profit million. sale pretax be million.Turning XX. of expect expected and second $XX percent and for land

quarter Here our for 'XX second see positive trends to you results can guidance of of the first the quarter the from 'XX.

that one of XXX to our peers compared a peers up we over show and on this at last improvement. pretax up we the Slide return total we on All SG&A metrics basis show EBIT the to basis highest sequential XX.X% we had months.Turning midpoint, XX%. to decline be slide adjusted that XX%, Slide margin the returns would be up investment revenues consolidated equity points ratio compared XX%.Turning have XX, On XX At gross would would XX the points, income would highest to be of at our the show XX.

Slide shows midsized to we homebuilding overall a peers. had highest for While measure ROI for had last without second sixth highest highest and the peers. And the was highest of our highest several ROI pure one we return we consistently EBIT midsized XXXX, operating our peers. EBIT among that among leverage, investment, have among midsized our the ROIs regard the EBIT ROE among had and XXXX, of our the performance by on was helped true third fourth peers.Over leverage, highest EBIT XX our years,

this we balance consistent reduced over clearly speak period.Eventually, has leverage, on capital, that improving superior X-year relative about sheet. and improved don't returns superior investors model position our will delivering and specifically, been We it's recognize results significantly have our but operating an

multiple peers. As result, we a XX, stock price show multiples price-to-book our to increase.On our our should compared Slide

appropriate financial of for metrics, XX. EBITDA fundamental stock. including value book all fair a variety are metrics we price return growing when multiple our a a stock be think would Given earnings We Slide is our our rapidly value.Turning our enterprise establishing believe consider considered, compelling to it EBIT to value value, when investment, on to and to our

at recognize of yesterday's Slide trading the to at and trade show are enterprise for leverage. when EBITDA, to to ratio the we group. earnings that a price basis.And despite our discount because XX% our industry see trailing that a peer group on stock on had multiple XX-month can adjusted X.XXx at average the you our compare of closing ratio discount we P/E we our our of a ratio.We value homebuilding price us price-to-earnings on our the Here, stock return may lowest outperformance Based we higher $XXX, XX,

given our industry-leading in most equity, balance our value, continues to we our EBIT However, our with sheet, XX% quartile believe return improving on top rapidly be on combined stock our book the investment, return growth for entire undervalued on further We universe now in our it Ara the homebuilders. will in debt closing including of remarks. our back balance reduction to public sheet, remain focused further some turn brief strengthening levels.I

factors be selling of first the We're are season. Thanks, Brad. the to us optimistic few spring January encouraged February. main caused by There our that in and X sales pace weeks about

rates. a trend there's mortgage in downward First,

Second, of the tightness sale. existing for homes

to that ratio. there and our mid-XX% we factors and formal about achieving comments, we're profitability.Rest now debt-to-cap we're concludes to That where while more on focused position our over These the demographic very including demand remaining still favorable trends, past, are for are for strong Fourth, the and overall fall, the refinancing committed the growing from signs our leverage targeting open of term. there than up are employment and years focused more reducing drive continue reducing homes several extremely the new economy. should are growth net it in longer we're a After finally, much broader in Third, same on we'll assured market. of levels millennials.And our the debt now higher debt revenues growth for last Q&A.

Zelman that with The first from has the you. will questions. [Operator Associates. company now Lederman the of questions line opportunity Jesse question everyone Instructions] & to ask so comes Thank Our answer

pre-COVID share the those deliveries My QMI first business orders what and percent whether in is or just remind quarter related on now, or the versus maybe QMI the of a or your business. maybe versus you one just QMIs average? year is first is on what margin differential Could business to ago the the us of

happen of for you The deliveries. around quarter margin XX%-ish, aren't with of on the percentage, get past, up, impacted was the versus the mentioned XX%. we not down breakdown if really do that QMI the closing, the XX% the of mentioned, rate is margin would the why sales. we our back slightly QMIs. until as 'XX commenting or differential.Overall, in built business of been providing missed it's QMIs, And we're typically -- sorry, we be margin we the went but which first buydowns but to I'm And typically pre-COVID, up our it have to

that see Or that Is a a would that kind little XX% see of how sales, going? rising you Do foresee high you that range? bit of more? could Understood. you comfortable

probably it's right now. range comfortable a Well,

Coast, the that than On it's West average. higher

We to think I On XX% lower average. the Coast, fair East than a is at range probably it's But the moment, more guesstimate. to the that bills. XX% tend sell XB

X back Okay. you getting you exactly on are back to days from from those That's just are get helpful. now? the preventing And the XX then months the to to times, cycle bottlenecks the pivoting where what you XXX

the material market about COVID today, the dwindled are it construction a more challenge Apartment housing was strong. really I mean they're and and on really craziness, during And material think I was of shortages strong. it's -- of it's more been early the labor. has labor.

apartment sale on bit. construction been be construction home a was has demand new while labor.Luckily, seems of to a waning lot strong, So there for

get a And So the on there'll allow will back times. think labor that less to hopefully, little pressure side. cycle more normal be us to I

talk could that development If leveled ramp just community cost maybe the on leveled and development on console count. I inflation? a that there, side. horizontal I off? side, could one kind bit little you of land development it's be more, on And on helpful. accelerating, the the would vertical constraints Has hard trying whereas about squeak some Anything similar That's helpful. somewhat in you're Or know the is material still construction, off? the timelines to

Yes.

openings one particular First problem industry. that on development regarding The behind of has that, whole been of delaying sort industry. continued schedule general the entire demand. thing But the has little all, community been has the for a to transformers And top for same developers.Costs be California, material the for of on the problem. timing ourselves particularly often very I just will Coast delays, it's a outside rain of they've for and too. a internal developers related amount had been West large transformers. add, and have really to not in been guess, It's or I land

So that's been effect. bit a of an

from Do has maybe you the optioning ramp you're into on from visibility that And a given ago? developers, kind regional a of here? impact your count has your reliance banking your those high third-party crisis had Or the on share Okay. of itself loss an any out? year about developers impact community relatively think settled

Well, I'd late can outside we on well. love to as be mean, our developers. blame I But it

issue challenge So development, been just a for transformer again, in there's on -- the that on land I everyone mentioned.

what of makes part that's So project it community to count. difficult

is The other faster. thing little we been a have out selling

on counts. fast community the depending from sells community be So out, would particular how that deleted

quite the we're reasons for last project that to community I measure.Suffice pace, to it hard So though, just always opening hopefully makes mentioned, it than that's say, increasing all over we'll more But the optimistic continue we've quarters. to of couple that the seen even accurately. what hard it's

Our Center. from with the Research Barron Housing comes of next line Alex question

the the Can some help -- on quarter you down? I debt paid job Good which of that year. tranche guys paid was saw wondering you guys I and you debt. down us

fourth was had payment in really The the of final occurred we transaction that that quarter. announced in November part the

of X the XXX And It X in October tranche. of secured, get quarterly that was we'll senior were XXXX. so you November notes That million book specific was value. XX% the due

Great. Great.

there reducing debt? doing forward, And going that forward? you going not gears and are plan switching a continue Or to so is

past is we've growth our primary it clear brought tried and focus make we while both bringing down debt, down was in we the What we on debt. can to reducing that significant focus still No. enough feel

forward.The focusing medical turn, we taxes. pay our we're which on having helps that lots other inventory by is timing and option is quite taking us to though thing not going a construction even Our because the NOL that and obviously focus our taxes a lot bit driven certainly really between on book helps down the

the to So to we around grow continue significantly we range. confident reduce and our mid-XX% reach that still target feel can debt

Yes.

look we there to amounts refinancing relatively that that left in maturity slide and the add small 'XX, if down. the did we to at the coming intentionally fourth 'XX tranches That's left for we of us quarter, you of debt intentionally due provided, Just to ladder that's pay one, 'XX. to in we continue

Yes, that Okay. was my next question.

If you'd a down, to have order there is that you did continue go pay to specific down?

make it whatever you penalties, significant of to notes. rates order of at individual don't have have to we would balance where are the look but prepayment that with Well, we the in likely

order the to near-term would with that piece it to don't out what do So each can when. we whatever we in want, we need it but to maturities, us take it cost have and do we has order take an out

good leverage most the be coming think similar builders. end by year, down Well, of other you And should is Okay. the pretty pretty to is news I your quickly. the

So that's very...

It's definitely the we're making progress for [indiscernible] there sure.

Yes, most definitely.

so it you margin your pertains an of outlook improvement in noted terms January to you've sales and as guys in think Now far incentives, February. in seen I

are and pursue likely are incentives? the you sales sales to accept more try higher reduce guys likely you pace to the the lower incentives the same? pace more So Or maintain guys but to

important at without trying to pace would margin in tweak to shutting community-by-community. us, continue maintain look concessions, the community, but say, off very to every pace our I we while small pace. amounts community, improve to is reduce And or the will sales that pricing we

is a it's balancing to us. important definitely but pace So act,

one could last Okay. And ask one. if I

as your previous to stock the each phantom movement by far the expense correct? quarter, relative As going price in stock basically that's forward, impacted

Yes. That's right. exactly

on of quarter price expense the last end, -- we the day adjust phantom on when we stock So quarter. the based stock the each

-- given assumes said, that the so as on quarter it the the And think guidance guidance second we've same XX for price I $XXX, was. January the we've as the stays at it was stock the

benefit right. up that So expense we price movement. stock associated or with down from That's there, additional get or if either a moves can it

And is that away... somewhat indefinite? Or when would those pluses and minuses sort go of change and

'XX. recent most expense December phantom stock of The that in grant was has

ones to is the one early have price So that was the the XXXX, stock of particular one few that We years. completed. will now next the over grant have did exposure

actually exposure that first this ended final the one made. quarter, in payout the to was So

gets paid the out. So on it depends just and grant that when grant

much has expiring. we'll future. And recently, our ones add price likely that reduce in that impossible given our I'll are the use it's healthier been stock very of stock the older phantom

Yes, any options was stock giving other compensation? say method going I is benefit people or to this using versus to some there

you One the annual down up on see any to It's would quarter. I we didn't expense really earnings a that hasn't on a benefit quarter lack they on our idea makes to yes, you of believe if data the the is an given go a Again, is and benefit is dilute shareholders. appendix, But The X on it much. it amounted the million. been be and quarter-by-quarter, from the think dilution one increasing in current can quarter, good thought quarter back is foresaw X We it our million, more basis, small individual up quarter. down. than difference

remarks. the queue. Instructions] over I closing to would showing questions Ara to I'm [Operator in back no turn call like further the now for

very much. you Great. Thank

As the strengthen. the been with pleased it's and to just like we've market overall continuing feels results we said,

'XX forward you. very good So next news we're good look a to Thank and looking reporting quarter. forward to more

conference Ladies for call. concludes and gentlemen, this you your participation. Thank today's

You may now disconnect.