Toll Brothers (TOL) 28 May 202020 Q2 Earnings call transcript

Good morning, and welcome to the Toll Brothers Second Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

Now, I’d like to turn the conference over to Mr. Douglas Yearley, Chairman and CEO. ahead. go Please

Marty much. Wendy today. very collogues thank for Gregg Finance VP today you staying Cooper, Senior Officer; Thank VP Ziegler, Chief Senior hope Welcome Marketing you us of are me With I and Investor and Treasurer. Chief and joining Financial safe Fred Relations, you and healthy. and Connor, Marlett, your and are and families Officer;

release on affect forward-looking I impact housing on and of future begin, read results. about control you on other information caution financial long-term pandemic economy, in COVID-XX I our ask and earnings many and forward-looking, this based current statements on I assumptions world the Before the factors you the our to significantly and are markets, many could events, website. our statement beyond the that that call

press in our COVID-XX we its our impact, May noted fiscal As XXXX due and X surrounding uncertainty to and quarter year withdrawn the have release, second guidance.

begin. let’s Now,

are contracts from XX% per $X.XX units in down produced was net signed ago. down and pleased our or billion homes backlog XX% units gross our our X,XXX of dollars; quarter. $XX.X were share just and second of billion; year delivered units teams challenging the each and complex and margin in and $X.XX of of second our Under of quarter quarter-end and diluted; circumstances, net our $X.XX X% and our adjusted second We X,XXX million income revenues performance X,XXX $X.XX billion one X% with in

rates, of year’s in fueled through and signed City XX% to economy, the by and ended concentrated bifurcated prior it physically supply impacted open during Connecticut; selling New this dollar XX, up by New challenging essentially approximately be contracts Pennsylvania; business XX% York metro value backlog compared period. healthy communities operating our impact With XX% nationwide, Seattle government and these strong to and especially our construct, the of mortgage net restricted the six same our of March were weeks existing closure made our virtually California, closed Jersey; and homes suburbs; a a demand, new limited its quarter Michigan; COVID-XX, of highly to sales of low and stay-at-home including In second was period, Our appointment markets, Massachusetts; of were and homes. centers only. required or deliver sell, most by markets and orders the

XX% declined result, XX% markets from same As XX, declined XX% XX, signed Net April contracts these March a highly in contracts markets. our net other period year-over-year. through impacted in signed versus our the over

have have markets. eased, our sales resumed and almost all government and Fortunately, in of construction restrictions operations

encouraged net we XX% very signed contracts first four were down are While recent weeks activity. year-over-year, deposit May in of the by

a which of versus deposits, weeks XXXX Year-over-year market week indicator store the were deposits up same from represent year. basis. on the same Our demand, highest since period gross the last three current were past leading XX% both last and three-week a over

deposit refundable to their This that the a signing before final affords architectural about home time structural make As them reserves contract. to and customers from a personalize on weeks. typically to our site reminder, design post process options binding home three deposit takes a first and decisions contract

traffic housing this early increased traffic the ago. Web pre-COVID-XX two anticipated experienced be suggest just for exceeding centers trends most recent to returned in has mid-March than and lows from conversion with week deposit-to-contract pre-COVID months ratio in actually recent that market sales week February also significantly. through and of each remained March. traffic strong with more activity the our levels may has Foot improved These also resilient our we steadily has web consistent we Importantly, pre-COVID-XX levels. same enjoyed has

our During combination safe a working, adapted of communications our remote ways quickly with construction operating the of practices. to virtual to new transitioned and and customers lockdown, environment teams

our and and running. to Our high able and Through new online we studio for sales occur, provide and a focus safe Brothers was shoppers community person, continue moved that often move Closings engaged by Toll teams remote were appointments quality continued customers buying paperless and on keeping home eager phone experience in our in business and partners by homes. and to employees, The to virtually. person practices online. trade into to customers their trusted tools, defines brand. Design creativity home forward virtual our

the meet the reopening and for new by our we develop the presented challenges ways As of the further its economy. of prepare on running impact many economy, to continue we to a business pandemic

We to better and which will more in now make future. the have learned efficiently, operate us

also us markets. enable pursuing of strategy We luxury more a this on larger home affordable to with believe western southern our segment We affluent intend and our geographic will diversifying mix into to expansion and of market. strategy growth, higher the continue focus a and product presence reach communities buying home

Marty. turn let over Now, it me to

Doug. Thanks,

of primarily by to our pre-COVID-XX as in we stronger power, in to higher impacted deliveries cost luxury pricing and midpoint compared our Our combination $XXX,XXX We expected of controls heavily and a markets of average that deliveries Idaho $XXX,XXX, shutdowns. delivered price XX% homes of was homes California to more of in in delays quarter. of better The were affordable favorable was quarter of adjusted than due margin priced deliveries. a second this gross the expectations attribute mix the this such

million liquidity, our with The weighted bank credit billion billion available $X maturities revolving until have significant remained November until balance XXXX. debt under of of of more than maturity debt years, including second facility, XXXX. not no and $X.X mature our sheet which does Our strong. $X.X our We and ended five average we is $XXX of cash quarter billion

mid-March. onset share These was the quarter, of end repurchases -- all excuse the common million. of repurchased occurred X.X $XXX.X me, at per fiscal value in our our in million of for $XX.XX. paid second quarter, the we During first prior our $X.XX and the end pandemic the to book At dividends shares stock of

we During spending, the reduce current financial took that and a arise with flexibility and potential deal during the quarter, of in may actions maintain be number opportunities to maximize challenges prepared order liquidity to recovery. second for

of potential our accessibility. initial due steps capital sizeable One facility market revolving in a liquidity on our mid-March bank regarding was and initial credit concerns draw to bank

the draw repaid, capital sectors. has those abated All for been have of and markets concerns many this homebuilders have open been and as other

very are focused cash. We on our significant backlog, which should generate converting

us visibility on of next X,XXX good quarters, cash at the low. end stood billion, for as the homes inflows backlog at Our April providing have few remained and cancellations $X.X with

of Another therefore development. opportunities significantly where reduce could recovers. invest February essentially land are opportunistic Most preserve to as economy position major terms and land liquidity efficiencies the was acquisitions conditions. growth which evaluated Land a land off land sellers expenses we employee already acted the payroll new be that XX,XXX market reductions These step our located for as desirable furloughs. cash and we our reducing available. our strong in other our come sheet, will sunk a land with We one from will improved, development on seller. we and Land presented choose also that down. hiring was We in to and were in to will impairment spend March rationalize sizable cost, we in overhead $XX.X new significantly near-term in did to efforts combination the local wrote of to deals April. of can growth dropped was pipeline, lots constituted we freeze by balance not selectively pending deals eliminations us With G&A which acquisition the we charge. quickly spend. by most to million with improve and requested in light also XX,XXX job continue other accelerate of second outlays. included owned all believe receptive, and zero have the based land acquisitions to We our attractively and become With pipeline actions on In although through markets quarter our among spend most and additional of and uncertainties things on took pandemic, to Virginia, time spending deal

fiscal contributions our long of basis term. over an reversal million savings not offset to remainder quarter of $X will discretionary made. be the were Included second plan we make, $XX they the decisions to approximately approximately benefit $X these over near will we believe SG&A in realize and of these for an by the anticipate the million is that costs, in our annualized help in term efficient XXXX. severance that accrual million million expect approximately difficult business will We actions $XX While us going forward expenses more on make by overhead and decrease

will conditions evolve. further to structure market as refine efficiencies our as review continue We cost we and operating

third we lost some As our weeks certain the quarter second as the due or several activity look of limited markets as we to well delivery construction times construction shutdown to to in remain quarter, expect in evolving practices. challenged

JV, our conditions. and lower due market sales other expect few to in next the land also We quarters be income to

assets sale Nonetheless, in during approximately course of we which several did gains million generated second our of and communities the the golf in previously apartment delay sales will income. our until market We contracted for other completed complete selling improve. those other quarter, operations, the $XX

Ziegler. Gregg Now, let over turn to me it

Thank you, Marty.

continued see and mortgage a Approximately take only ample to are take XX% all and no XX% have We buyers mortgage, mortgage. customers. our cash for availability jumbo

and these credit customers, and our mentioned Also, scores take cash a had little to average Our XX% With have retain it backlog flow average loans. rest not above the the do on rights borrow mortgages. mortgage, getting is trouble equity. home in Marty price size XXX, our the servicing generate. the the we FICO to expected of of buyers who contribute

by a of backed payment significant down average Obviously, nonrefundable Our contracts a financial are represents on commitment. this $XX,XXX.

to structural process. become they also interior home as design committed Our studio with options design our their it through new in customers and an selection turn personalize emotionally

that financially job contributed rates. to relatively low We to Our with secure cancellation buyers and our also factors better long-term have be prospects wealth. accumulated tend more believe these

As rate contracts compared gross and in percentage signed of our first a a X.X% fiscal of backlog, was in second in in quarter our percentage cancellation second as the our X.X% X.X% X.X% first quarter. versus the was quarter quarter, to

XX% average been stable has and our healthy. March, year. we first approximately for only business months down of remained calendar collections X% the X%, Living above Apartment January with the April are stabilized Rent delinquencies Across May properties, to up leased. Our through compared have few the

projects have we to venture joint project capital develop construction the several for the received in a Boston’s markets We half debt equity to mid-April, for projects community to ventures the equity on Apartment XXX-unit Living and term access various joint sheets mid-March a expect continue new closed Living Apartment financing. suburb. to in Brothers new XXXX. We and and close Woburn fiscal for debt In since second apartment Toll of additional rental

call the turn me back over let to Now, Doug.

Thank Gregg. you, you, Thank Marty.

by the economy to on We impact May pickup in but are and the encoded in deposits the of remain long-term cautious market. pandemic as the the housing

clearer the now workforce. We expect long-term of later We economy of appreciate home. of as fall this people ever, and the implications believe the a Americans, to than have to reopens summer more and the view comforts this return

for believe Our home world. home offerings, team, most we and management our your strong With sanctuary immediate liquidity important well-prepared high-quality the in experienced marketing efforts we product on the and brand, is are is focused are challenges trusted ahead. diversified land your place the holdings, your

long-term we as and the economy trends industry, believe well-positioned also housing that expect which the the recovers. favorable we take demographic to We advantage to of underlie supply-demand are continue and

home guide during the the who process, we to deliver teams all Before opening the extremely buying this I or difficult how up our I our have Brothers would able to our responded it’s they operation over have of family. rest or team X,XXX sales this Toll teams our time. Toll faced were quarter proud members, like customers Brothers of conditions it am to thank homes of whether to so questions, in who challenges through the

of they their dedicated moving completely Nick, firsthand They their the while are spirit. open care way. how to seen creative our customers, have are positive incredibly of taking let’s thinking, great Company We working, step hard and it questions. every forward our up to

Lynch. [Operator from Merrill question the We’ll Lovallo, now of question-and-answer John begin First ahead. America session. Instructions] you. Bank is Please go Thank

team. for my hope taking you questions. the is I And everybody Thank on well

contracts. weren’t it fourth quarter think non-binding I third kind indicative quarter is, quarter, the just the of the full signed of business question results guys First was maybe you out got deposit of they in of of ‘XX, because providing that

why curious think that now? more just this you a reliable So indicator might be

feel used about just as weeks -- few last call. that investors, John. the we give have better such quarter. prior Thanks, three between this commentary a been can this call, as good it believe But, Several ago, what of detailed exactly and that’s for analysts on give market, end weeks. four years And quarter was similar fairly or much we weeks looking And about are recognized three done. the that we or a earnings the information the market the give. We possibly in to to the the the four prior conditions we when general detail before time, as for we’ve the to

the what have exactly that’s think, I builders other done.

about also agreement but is as come process information from ratio giving us. that that as question way, giving agreement comment market that what of and that continue in And deposit the deposit the information, to We today’s we stayed in our pre know because agreement cannot best trying fully indication we it’s on today’s post-COVID of weeks, a you the to is take it XX% important three last by deposits have I our February, market. believe way just and mentioned pre then it through I an runs you month only to for suggest the of three was last any our not we I that. March, ratio best have over and That But to the May, not has January indicator since March will is giving about the by conversion quarter. the converts XXth I for know tried weeks. you in described And how be will fall. the to same up, agreement transparent

back, things, sustainability Doug, the so markets? taking would step of in and uncertainty see the begin of the mean, consistently but in to market you your buying current land sort the then, what in And And activity? maybe how are a just direction gut I clearly your confident need you more of across to

were little I the few being government what’s of also more it the weeks. had constructions careful. only bit mid-April, project in than the were. government not to that’s last wasn’t will traffic. I encouraged almost since deposit are the that market up next the is terms I’m on I tough how closed we of coming We suburban just on are May, months. coming markets footprint around our at which so activities, I hotspots, the and we in certainly weeks’ felt we a really had store construction, am now, felt now number commenting. can’t markets all we last better upon than these the very the the I’m Xth because feel active left the the very I that uncertainties three the right be reopened. lifted not early York, May, basis a and are by significantly. market mid-March, clientele York was a of of gross that has a that last comment forward shelter-in-place. markets that a since But longer. the XXXX. was New was extent but had three And based sales, government feel opened in we I going shut It more I that geographic in of to city has as good lifted over so both significant week same have in, and that they that the because this that in up New least down Obviously, past that vigilant But in seeing that was staying have increases deposits has mentioned lot shortly, sales and lifting the are is and I as or home highest think the and closed as

Thank you.

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

rate more? a that were unique you others across that at than region where bit activity. just on that been curious a three little the nuances of are taken am Is coming of it that guys end incentive is April activity for pricing kind or interest from? footprint? any if with think while, just of just improvement front. actions expand know fairly is if I you’ve has demand you’ve you pricing but that have of offering spurred an would the And on curious widespread seeing price extrapolate bounced you then, Dough, any last that or broadly, back Just point took maybe steps perhaps sharper the curious or there I where some you any I a Can seen specific kind weeks. with there’s the more

to Sure. are special by we’ve on only On Alan, we delivery questions. will homes your deliver call my two The answer we mid-summer. run that our pleasure quick pricing, no, spec what homes, is not incentivizing.

we rate while interesting offering XX-year the down mortgage. X.XX% a are X.XX%. a that For It’s to got

was there by even end X.XX%. marketing the us no So, to cost of

the special that incentivize think not. to right strong to time to demand. the of terms don’t not and need So, that. the a of communities three country, of and in we call grand absolutely in was couple four last inclined at activity, is over drive But, three now incentivizing had around have weeks don’t to strong the XX others established been openings we actually been that to successful new to locations, that very some been think a running any have extent pleased I any few the increases of weeks. all. price I’m modest last this have A let’s I’m it do XX, And I anywhere. that have very

very market very, continue shut sales. see has slowed in very that was March in very strength recently, before activity course, the strong market of and reopened, And XX, to Northern back to Orlando. we state terms Seattle is was down strong. being then Virginia dramatically because and and construction Boise, of Seattle Idaho, both now to that hot In

So, we’re then been markets Dallas, us encouraged there. strong, also Colorado South have a all strong. Texas Denver, us, three Carolina, Houston, new very doing The market, for Atlanta, has for and are new extremely market and Austin well. quite been and

and sort the us. is So over that through think has the Seattle is strongest states been say ring Southeast, the for I footprint Mountain Texas, I’d of

I I just guess little I of price a that. And helpful. really the appreciate more on That’s bit point strategic and guess a question.

think, were we in pretty builders and were of spec demand. apartment, And had quick hearing I from entry-level specifically that looking kind move something anybody initially, really was to an that to leave product most for into. they

about I’m point maybe seeing demand adding has within it’s to just satisfy kind tight ground at any been? been with as of activity curious more your inventory relatively the few on specs do resale are more as band, you price provide? a So, thought you affordable those And stronger offerings that there

Sure.

affordable would luxury our business, in about been had have a the gave. you second talking we lot the quarter year-over-year as which So, increased reasons we’ve expected for

months. there be been require travel. some luxury client Our flat in that lot more whole also of an shelter our that obviously, that of was expected to boomers baby few a are travel was the locations age-targeted And and And last move hasn’t down adult call, down. of careful. we destination what And business our, and communities as nester, market the inclined also active was the empty we in

So, empty nester been is age-targeted affordable has down. is up, and flat, luxury

having understanding heavily heavily we we townhomes we was we being quick delivery home and is more loaded empty that major the And generally to because And XX% affordable have their delivery that are homes attached delivery, luxury, purchases. be less our it In in towards more ground. about stages That pre-COVID-XX know even customize towards it terms loaded age-targeted. product target want now, loaded right a products, on XX% They of out quick buyer home. and come last should be should one of based of towards true and that define quick that of as various construction. of to nester

So, XX% the in we delivery think XX% planned spec we’ve will less always past. comfortable range. to niche. to I attached on will change. have the to had have I’m And don’t communities in very price lower with quick the focus more that continue that strategically as strategy continue and inventory It will that we --

Good I luck appreciate stay it. Thanks lot. safe. and a

Thank you.

Thank you.

Next question from Please go ahead. Barclays. Matthew is Bouley,

I Hey. Good hope morning. well. Thanks questions. for doing the taking everyone’s

I question lower in the was is, that second perhaps something strength And Marty, runs two, is obviously margin Thank I gross number my gross which a a there guess the number little region On closings, a overall assume for the quarter. second the should that the is in guess, and or think, that? that guess, in one, tailwind I half, you specific part mix there continued just guess, margin, favorable we decline to I reason. the margins bit is north of mentioned comment, I more on same you. than mix, the

with the in Well, I in second is weighting the the rationales margin to gave the quarter, the of which relatively respect reason. the order performance

get had cost it’s into whether So, And to was price that some control, the increases positive tough it that past, to it extent otherwise. north or of was in specifics lesser much then was and the mix. just we the

but in won’t. going noted these With variables I’m just uncertain just in to and too earlier, There to release, that as any sorry, not direction. I give future, are to respect we’ve in our many we’re go times So, the guidance.

sure have at guess, level. fair of guess, all which narrative then, exposure around cities. I regions, flight just impacted these we’ve higher lockdowns, severely more about Okay, that urban sort of some by to from that When And your think there’s I’m heard the you a been enough. the these secondly, I

folks have yet? from to or specifically, moving needle traffic started see anything just if notable Just curious, that any sales your

Not yet. Again, travel highly is restricted.

increase in closed those We are traffic encouraged, significant and April. the were as in by through markets mentioned, that I’ve deposits

it. appreciate I thanks. Okay,

Thank welcome. you. You’re

you. Thank

Kim, Evercore ahead. ISI. Stephen Please from is go question Next

Yes, And to Because ultimately upfront guys. right I that around deposits. question wanted of encouraging the ago, for encouraging trends time. your you you deposits about the lot, indicated made I really just deposit activity, were this the here. address year actually May. May commentary were commentary you seeing contracts some just up on and month a a believe Thanks of

your particularly doesn’t in faced me this easy a like May. to comp first look weeks So, deposits three of it

just -- of older I’m question that. So, changed seeing was years much related correct wrong activity me -- recently? what to knew or in you’ve of XX to on deposit been buyer. age if curious -- this you percent roughly contract relates the if of your My I has are And than your sort the old? activity buyers the that

bunch have three whole people we’re together one. for of Good Stephen, a looking here thing paper. this I through

I olds the to to we percentage campaigns, the our to answer that to we’re and generally marketing find back little are with clientele. probably our active younger marketed over you amenities, XX-year are XX. the going I get and younger think will the look adult may to with healthy, say lifestyle, our on a communities healthy like that that bit have super are active that’s adults a

that So, sorry, it we’ll is get you Greg? -- but number

it at XX it is We this helpful. We looked looked our do at settlements. at XX. older. We at Stephen, and don’t

or had older. that a was so, from ‘XX, QX XX% And of if for was buyer XX%. want it to quarter, settlements it a reference XX And year we our this ago

consistent. relatively seems it So,

really -- of is adult, from is not still What an and active at answer. lot XX are starts that move-up young I’m I’m But, buying getting true the families, getting at mid-XXs trying Stephen empty the nester we’ll buy there. XXs, goes and to here house. time a market, there’s But, which

And following a first for comp, sales to vendors to for And we’ve run our been comp, you. a deposits occurred you And question contribute don’t and who discounts. you’ll the biggest years, get of we participate the market of for -- that suspended national of out. a and of nationwide. the did got get of week time, at the last always many is that we first heck that XXXX for yes, every year, event. May. So, last May event. and it’s bit upgrades we’ll those and We event through And I long week We out recall last This Toll April. of expiring in it’s event it the to of generally year have week ran the April, in get not your people year, difficult back because first about they it terms know a the particularly run week

good We we when contemplating now. are market the I’m it. may feeling run pretty right about

we deposits. as New these but of So, as impacted and markets of of magnified it I the then, even But first our did more, for since certainly the April, stay month impact of of impact May. mentioned, not tuned. that reopening we COVID-XX, York, the But only pretty that weeks week continued dramatically all into but had,, have strong we mentioned, three really

helpful. really That’s Yes.

So, easy you a particularly -- really read had a particularly benefiting comp is not anything number from in XX% didn’t difficult if that comp… April,

I’m -- My Stephen sorry. apologies. And

it. complete to Just

goes from in closed first weeks, both the of the certain to May the were up of month my we to expand XX% and because last for it of deposits the For event. was our which we week, comp month, about three weeks difficult sales week are final on commentary up flat for our places because year’s against three

it. Yes. That’s helpful. Got really

really contract but point, with has market in slower customer the it the difference to like serve in elsewhere different structurally and higher as wrestling what as of the dramatic express same about would to every price the segment are and you participate question is on many for your calling the go people in where to seeing kind your the you business we question, places see would I well market, And unable are going customer been and you this it geographically market market serve, are me that contract your recovery is the can is seen housing end we just -- as terms fully with to markets -- and feels both anything deposits the outside make my well the there business is the of was certainly inflection like be age trying that between market many the I suggestive the So, what your to out of of we’ve as which mirror eventually other respond it guess, or other builders? seem your serve, you to make other geography.

So to impairing base kind will customer market? in the somewhat something the to in be need we your ability of the see that ask that be to me there see elsewhere your question semi-permanently you and you. a housing we let that broader marketplace recovery cognizant Is see would in of

with is strong our do. that. saw job answer business, opportunity our those affordable, Listen, feel short a the understand was right? was the right play And is spec in term. no. first That’s that first very security March living all that comfortable the their our still completed, we And we the felt But, in out six understand sheltering coming everybody or nationwide XX shutdown, the while for of weeks, we month, March business. emergency My were place, apartment an not who in good And XX I that about what jumped new very average around that’s at $XXX,XXX. house very now out home. that to buy the we not it

and We more more luxury. on are focused affordable

the are focused on south. We very

We focused on states. the Mountain are

west. the are We focused on

have states the up. is held the the west me, south You and evolving. excuse And how can -- our and see business Mountain

brand. to do process, design to place the to and to to short and And the We our I no build not is house feel for market an described the the not offering way, seeing or May, design the to we’ve for strongly home I of more our Toll today. people But, process. want a after And short that as business customize love upgrade everybody is term. sanctuary I new this move brand, is way the in two. just it, most longer and that I were into nesting, the quickly about love place And do but this to believe us has great talking term There I opportunity Brothers footprint. organized, and that term still And about what in advantage truly I is important we to a the that’s and their we’re our in that. thinking I opportunity home, love pandemic take crowd your occurred apartments. in, how people way? to move about, studio today. are want like I geographic is it the our was it next my on segments. all want absolutely mentioned now in I in continue want people more our Home primed I new be Not world. the is It the That as it month value. expanded home. have been

to Thanks going is expansion to a be That Yes. Great. watch. fun lot, guys.

Stephen. Thanks,

Thank Michael Please The next you. is from ahead. JP go question Rehaut, Securities. Morgan

Good Thanks. safe hope I and everyone. healthy there. everyone’s morning, out

on obviously some to been clear, lot you remaining question, around comments, is just a release points First the and appreciated. of levels deposit want forward the ratio for And, in I of somewhat helpful May you’ve moment. focus circle given it’s obviously, contract data back of the disclosure and But, looking. wanted a very referred gave, to be which to There’s to your constant. different press deposits, you your just had

recent holding the the order positive to extent that anticipating few that the it you So, strength month are growth to effect XX% continues, we deposits that the conversion on in it are June, based weeks, steady? it -- growth are last for ratios the to we take over of take these in

Mike, ball. have crystal I that don’t

fully data week detailed giving week. We’re you in by transparent being

understand our understand ratios. you our business, You conversion

clear what And then, been the week has first weeks. I happened just the three last question on Stephen’s of answered we’ve on crystal I over think, May.

So, today, take it from flat for May we’re basically and of the outstanding can you there. deposits. And month

enough, Okay. sorry obviously, I I think direct just a for focus But Fair the there’s of the point. Doug. -- question. on lot data

also degree also And moderate there’s lot lot markets of affordable that the are product. been to different in more around to knitting So, of obviously, focus guess, just a little country in bit a a drill to pivoting spec your and a different secondly, I sticking towards versus to makes build in of order. the parts you trying sense guys there.

are some emerge comes increased is development better accelerate As how it you you that the have quarters and others, see there? your and go kind actually from that, think demand the the might look be at COVID-XX there couple as that’s showing and you’re or spend strength in markets it ability certain more it those markets to that spend going to markets, of of is or kind over something right land perhaps things next you of perhaps thinking different about or just than of take the any because have now

we’ve and we now, to specs. where terms In is geographies the I into affordable moved have and as points where we building X,XXX frame we a right appropriate, of specs, A following: had more luxury and certain be ago, think might spec of stand, close reference, specs X,XXX year around price

said, darkest went then and finish So, we of developed days had at for we are fact light few in through And factors you to that ones more the -- a evaluated we started. that or mentioned. the selectively stop candidly, stop of we weeks And new have whether And couple a continue. we and it get specs. the starting we the specs did as ones mid-March,

Yes.

foundation. it feel then, early the delivery it we at certainly was on, April, it that call or spec it got was whether If And it’s at foundation, -- tight. inventory we continue kept that But least better if weather we where to we think, been being everyone has whatever all now, home foundation, forward at quick if we I had the late point March, it started, framed, to early had about a was we early waited. with market. stage, weather May, tight we told fast at

point the be either asked be about And level give misspoke to of today, the going deposit and we to and with talked the going trying keep deposits, very, who agreement, It’s and an is price to we’re spec specific market rolling. not very inaccurate. and said can. forward build going or were about want locations I points But, then, flat. authority And to was specs senior new very careful you That granted it. up in Let’s data I to which I with back, it’s with are approval flat flat. said who we we be is inventory. for again, I which -- are again working XX% still selected deposits very in all specific. is just month Mike, one about we’re outstanding clarification, we anybody deposit incorrectly XX% is being XX%. going entire May has outstanding means deposits the Outstanding under with are deposit I

that’s the will future come of the agreements So, deposits pile from.

with. Right. That working we are

from Thank question next go Capital is Please you. ahead. RBC Markets. The Dahl, Mike

order part your could had and other? as relative of acquisition minus in, follow-ups the Doug, you the mid-March small for few if split you A in business, have May. on that, out was out And total impacted just for April. gave do markets between versus -- agreements XX% I split of highly impacted you the wrap maybe a there. curious to between your the end actual the you markets other could I through the from highly if same, give

both, deposits? help to Just Thrive us and what added orders could you quantify

Sure.

try question, let how you So, look agreements you let’s and with April which those in York from XX%, Pennsylvania other deposits did closed start also markets XX%, Jersey, give I’ll Orange XX, what affected remember, XX%, California asked County was with reopened? agreements down it the From you California basically down highly was highly May were have was with But, was closed. generally help it help York was May impacted XX were those is the you me XX%, New May markets closed. markets reflect when Northern still and open, somewhat then suburban the -- that City your suburban New to LA County now, deposits Living April the closed, I part. can most XX%, down where for completely to down New was closed, closed, down

said deposits, late reflect, March certainly it call April down when deposits. numbers to-date you those all lag. little get the late improved three-week XX%, mid-April which the a Now, are the which deposits you’re into agreements, than May were they we if right, bit because following better of reflect agreements, The March

XX%, XX% May. the down forward rebound, XX%, down has City for XX% to mentioned was wasn’t it example, I was had even was agreements York in for let’s New show nice in was to Jersey down reopened. a wasn’t down XX%, May I only down in it being it New fast to exception in to deposits unit, New Living stayed suburban a with markets those XX% mentioned, York now from XX% XX%, went which the we City. April, allowed So not Living, it for are of City a those wasn’t down And closed, April, finished to in But when down it down building Pennsylvania California

the reductions agreement than get building. Guys, people answer clawed back half have With those in deposits. You just the did of it? in with markets building doorman. by of May want activity of other more don’t can’t that residents that The the exception, those all

had question Thrive on I think a He as it did. well.

May. in May. for one contract is had in add not opened one at with And closed There associated this in It QX. sale remember, did Thrive Thrive point. any deposit So, door community it

Thank the helpful. you really the both That’s all for color agreements. around and the Okay. deposits

guidance, just then your isn’t and trying So, this follow-up, get to just thoughts. a more

unique We’re various open. from with partially obviously your stages of many of with a in having to -- full some so gone large of kind period of markets shutdown

a worth or demand period. trying still into even months there’s and a destruction, two time shorter cram to potentially a some so, been in if of half demand you’re And month

So, this is, whether push something when of combination out guess, do some more your seat, is this whether sufficient versus I is sustainable? you on think forward pull question visibility in the have or you’ll

some came I going in comments that time more my now, think, or prepared pent-up something to me. by I’m it? there’s have back but mid-summer, all very August, parts and it economy like, from cautious. July, timeframe, said I to around the yellow But coming it’s to furloughs when we’ll what how Is take think, something demand to it. quick, encouraged, is we the Right work look more feels to of like there a out it September I’m to country, this that’s much that I still most know the red And appreciate. and we different idea. fully many have to green, moved states know better just are

my where is that’s head So, on it.

Okay. Thanks, Doug.

great continue It where way is the that home. I campaigns huge our all sanctuary. on country. get We And back value are a opportunity are our focus customize is we and owning And such the remember to is we go world about in we’re am excited we to all a your through yourself There nesting of all normal, give going you to to it it we’re on yourself. do going long-term home this where it. headed. it, the marketing your this, to important and you I about that’s to it, back importance what design brand, can our And once is really living feel

Thank you.

Maklari from Please is Goldman go Sachs. question Susan ahead. Next

Thank morning, you. Good everyone.

Good morning, Susan.

sustainable My are there? And that some is Can the recently. you prices. We’ve obviously outlook is? the you’ve of are more you spike talk lumber how seen thinking about first for thinking question about what seen materials? around you just input How

long-term. to save flat. term. with my course a term, opportunities a some been in see last has of encouraged is there over we hopeful that this are And We’ll being year demand longer That in But short-term at or bit that flat. Cost plays is we be increase whether least out how comments been about the more. costs relatively short tied earlier to have the will

bit. is little bit. is little right. Lumber down a You’re up labor But, a

So overall, gave numbers Gregg just some looking me. I’m at

to up and home price margin, $X,XXX fairly And big house, a under are of as we selling for costs, houses complicated. quite little able gross bit push more nominal since we’re us is QX for a a our about which the than -- up we talk that. more were We’re just

And there. think third some the then, some down supply that chain you’ve deliveries are, to things we some up of and how about sense things there? given especially of shut know And chain been mitigated I just talk disruptions delays of Okay. working back? on Has any that in have come that? some fiscal any how Marty, you just supply But, seen? you us maybe impact can quarter helpful. are the That’s of following mentioned that. as Can give markets in just you should how your

Sure.

house start some started closed. building building getting Let’s the some in the have beginning. The a delays in permit, had has pulling permitting, as markets departments

inspections building The some Now, was with where there some some inspectors. also digital. There delayed. allowed inspections do with the was us towns of that to workarounds in was some workarounds Skype home we actually some building go by were inspectors cases to able

of from municipality have experienced some perspective, and that So, a or governmental we in markets some delays certain continue may bit. a

term. But, cumbersome may was Skype of some process. digital of a long those help we’re or of bit a that permitting potentially inspections encouraged us those some It

that’s that permitting question in through digital didn’t no There’s companies. all that yourself Well, had to it’s be thought something with time. to in I closings and of go I title to see happen you and for closings, with are in to Absolutely. signature DocuSign. you going down. can efficiency now could your mortgage industry inspections as and more had watch a that notarize going us notary we know an going long Right? they front put a and

and couple a certain front, material absolutely of markets, the lost on So, there. here in we’ve weeks

better to couldn’t a They on was able closed and by the two there We put two their cabinet to for government months. regulations. were the cabinets, was kitchen kitchen because have manufacture them. they components plants, box closed the was couldn’t door in Pennsylvania cabinet but the of They of assemble their part second plant the that company

availability, of as is to So, still an good. up the we in stress all next stories backlog the was Marty has for as built through. no be but the it’s of some Labor like will that some easing impact. cause that Labor it have term, that. industry out because worked Thankfully, quarter, shorter pointed

impact. job bit have Social will distancing an little that of on a the site,

house most certain times particularly you to into built, are spread to our house have but when We more have out, finishing part be crowded of get through and when bit get can may are finishes, going to naturally we’re trades is little the a there vigilant, out, of we to a where the a bit be careful trades the spread have trades the lose during process. bit there. that We time a

going we’re So, get to managing, overall, it is better.

the long impact than short but term is think I present. it term, is more

you. Thank

ahead. Fargo. Please go from Truman is question Next Patterson, Wells

correct but mass like At as just same I you wanted a recently. on actually seeing to across some other occurred Are seems layoffs availability slowed And seeing labor the enter renegotiate the down. three mentioned workers labor imagine to it in your were been time, industries? that that’s the you’ve up labor bit, would U.S. we’re little rates? able First, I rebounded follow to it’s that improve two labor months. probably from housing you wage Is the costs that past

industries first the my Truman, -- from few months. no, down over the question, your home building. being labor of half to we not And last into reference seen is move have yes, labor other labor

magnitude great. on that? Okay, could Is put there a way any you

Pretty a now. small. it’s house It right like a $X,XXX under looks

California And of I as demand. a question. of international products that. picture guys The in coastal Thanks some California buyer well. Okay. of have for Asian is drivers the bigger you repositioned one realize your just

years? you all for the the a the expect these this XXX% the parts, economy, to that the or U.S. given couple remain back market next do while? to think you. absent issues really out economy, come So, Do moving it apply COVID, But, with really you might not buyer how Chinese to plays of over

repositioned the That is that a will Southern homes It’s buyers. Asian Asian but now we all concentrated we Asian. our term, over in California. County. think So, and ourselves right presence in XX% a -- the foreign Most sell is Orange we longer And buyers that be is Asian of you’re In just Asian, have but lot County, of right. of not We’ve to California, are Orange I not it’s fine. smaller

issues short have impact. I will relations that Chinese-American are there other travel affecting an think, in obviously restrictions term, the and

COVID, government Chinese on the was as know before effect in was that tightening U.S. investments. of we up Some

a should term, So earlier bit. fine. repositioned we we longer ourselves short and that think definitely already I we But think I had issue, felt term, be yes, an it’s had but

and have And homes for many, love will as in primarily years that back fairly estate I’m optimistic be some the California Chinese. we normal our selling We to Chinese things with learned in many settle real U.S. of out, to times owning

Thank you. Please Jack SIG. next comes question The ahead. from Micenko, go

and to but in transition Couple have ,but think time type. increasing of that to two two made the or I Company’s questions got the magnitude for half close it, of change mean, months about been geographically ask more product the either strategically. of I the wanted wondering past maybe shift, last accelerating geographically your and kind wise Do if by you guess or I view? now some a months, product

affordable on to Jack, luxury. focus changed diversify that product don’t No. the think to and move move south, our has west, with mindset I bigger it offerings existed already a continue

in was think continue I that strategy. we and execute will So, play, to that on

then, growth different into this for sheet build conservatism out XXXX, the to you a much XX% preserving look were pretty of that in And like Do push much we can’t be this Okay. going then, not And does talking growth that was that of what a how rate in market? of number or balance slowing count not or community planned kind local shortfall about number probably sort out to the you different time, year? it the I if place, growth year you’re allowed the is Curious But and nice achievable. will state see community year. and is count. cash and be how think

a much the of tapping that environment, your coming how of of of out wondering brakes own the sort is how of is much of Just that sort sort mid-March?

about miss to news opened that the getting That’s months materials We the had the and the a of process communities a quarter we have land. planned decision of interest. strategy we conditions, of open as open. were we ready. in will indication of with XX primarily in QX many to second in online a very openings we they pent We good the because The associated terms is, we half on And the the marketing demand. And And market We froze that pandemic. of good the in website that drives of ours feel started be of of community our the question. lot concierge open how get service up and when XXwas scheduled through premarket good advance when amount our XX.

have the to to the so, And right community be. see count we’re have year what now just the market full not conditions prepared the guide and market the to how evolve. when But, land communities will is wait ready we ready. and We

Yes. think would half own we planned I back the land. Jack, two we for of have the where open buckets, those to already this year, there’s communities,

up this we subsequent or and not they’d are So open finished to those those where open will the period, contracted buy open if be lots community. be year,

of change the pricing revised kind the will or And can. mentioned, move move many whether get deal we that until re-underwrite those we to on types not forward, or put want we of market once of deals timing As forward pause out. closer land we to to and the as we those of we settles if

it. Got

Good Thanks luck. Okay. guys.

you. Thank

Securities. Next Please question go is Jay McCanless, Wedbush ahead. from

afternoon. Thanks questions. for Good taking my

homes so mix contracts? So, how about you built versus how are be quick in many ratio does that move the May, you’ve your talk deposits taken could that those on going compared And historical of to homes? far to

the XX% the with from XX% aren’t quick say And the again, foundation, quick I around inventory all are when is fairly those finish. we inventory, which XX% homes. home through have. delivery remember, delivery, consistent to way completed of It’s that Those

fairly tracking of build to it’s mix versus quick to we the close have order. So, delivery

potential I little have demand just of that would holding talking up. would been were frankly I of mix higher. question delivery that bit about asked have earlier you thought quick a because signs

your about... orders seems holding that are build read well. to a up positive What that So, be that

Yes.

right. that’s think I

are all out What cycle et push the about How because cetera? rules, times? you those to your OSHA much of having

to few site. the a issues good the the issues. tried that I on went the I we’re seeing job issues Yes. and I news answer is, not the permitting mean, any when through and labor social questions ago distancing inspection

gave We’re you having the issues, supply scattered here a improving. there of cabinet Pennsylvania the and company. that’s material I example few but

come best or material inspections I probably that or issues for of because guess with one time any construction may distancing of two on think permitting, the another contingency maybe to social added right our weeks week two you up supply. or is site. now cycle security job And add

round And sort what So, is that get let’s over certain construction. conservatively to we improve added for time off in we just two should time closures to experienced from weeks further that the of four in we built states. as as

seeing I the competitors, competitors senior incentives and there? you that But you of X.XX%, offer emailed how beyond do aggressive are question, hear encouraged seeing three out you different deals quick outlined your incentives the doing other are guys you was buckets what out. One above are are to not seeing you what and your you from across pricing kind earlier,

do are with think at some a it competitors is that lower price if with needs not spec completed, of move. to point incentivizing. pleased house I I’m most our finished a inventory,

that environment where a you pleased price build more incentivizing, of at but point, I’m in that I’m see seeing bit think our may I we not much it.

question KBW. Jade of Please ahead. from comes Next Rahmani go

Jut This and City regarding Jade. is Ryan apartments for Tomasello Living.

You those the currently of few dust the with gave in if the those and back post equity settling? about businesses how And you for about of on apartment segments? much the you in wondering speak each more But thinking us proceeds, a you the color that you to half Can remind you’re some was much can have bit I business. your you former. intention to remarks prepared expect do outlook JVs how into what those how allocated relates the capital those mentioned is in second year. reinvest to you’ll closing apartment a be the

Sure.

XX balance think we’re around good City terms time With business, at through recoup Living, the respect actually of and to through we investments. million with of $XXX next the million I to $XXX invested in or months in where JV respect hope a so we that the formations. have business, to we apartment have

million communities. around We have active in $XXX net inventory, invested existing

projects some We in have another then land joint have and we we balance to off sheet inventory $XX environment. million start in our not this that couple for ventures, have chosen

a particularly And the Living, City expect be outlook, in bit this if post you demand to just more in environment terms business? to a of becoming Living certain driver City continue be for --

Yes.

do started think, any City we And right five we going to have the some construction. future three New and land. for very in we other It’s are completed cautious. land have not not we just that the where nearing now sitting only on in York. just now, buildings have buildings are I we’re completion. Right short two term, be Living, But, are

Seattle as and We have Philadelphia some land two examples. in

They’re and of Manhattan. all a talked think $X,XXX City in about $X,XXX our I terms at said, New positioned a $X,XXX which foot, five Jersey those are down Living significantly. Marty in -- of And in are as good City business, a foot New two which three mid-market. been of a time the buildings We at Jersey. So, foot. kind sort in in in shrinking They’re are Hoboken, had mentioned, we’re Jersey, a other that I

falls had clarity Brothers New will difficult stands. which years short has that the where know, all I But realistic time and been on term, York on in is in market where Living a a they will City And see about more longer well this. York through been what by five described, I City have was be very our market. we we all of we are City cautious these few so, York. X% we’re think in then, long-term out to business for only Today, performing around New City buildings mid And with limited kind of of that fairly expansion, longer take us until very in And just inventory term, our comforted term, some Toll Living. what New it I’m

or of terms Okay. markets prices in months the environment? noticeable few you’re the past the either positive negative wondering any your current adjustments over And then, with in I just landmark, in was if seeing major there,

with and nationwide Northern sellers, the from we deposit retrading every that there reach that a a the that’s one an land of couldn’t seller. whether in been closing virtually, or nonrefundable Virginia, away hard terms or be agreed of money because DC due-diligence yet. whether Not new exception yet. be gave of seller significant price a Marty period of walked to goes extension necessary. But of or extension really extensions, has But, we extension understood -- Land land Washington payment before deal other hasn’t

yet price, more talk of of on yet opportunities the had think not underlying but time, significance to are willing also couple that So, but isolated sellers understanding feeling need some yet. we I distress, chase and to We a not distressed. they’re discount they’re nothing

extending So, Isn’t amending. right that just now, a we and bank are term?

a good Not one.

exactly I I didn’t get right. knew it Right.

you. Thank

Next comes ahead. Carl from question of Reichardt Please BTIG. go

suspending On buybacks, you’ve had explicit about peers a couple pretty of buybacks.

What’s with are more about fine. cash is in stopped encouraged flow where perspective sound repurchases? you You the coming business with your mid-March share you on in, but line now

to point to balance make come have we of then a sure that opportunities back continue the strong that business. feel more to land markets the think be then, to if suspend pain. we’ll buyback. the clear now federal It’s think we right to banks We enough our suspended. I clarity early government and the think like Reserve. drew smart line I at focus is We repaid continue liquidity, But, in don’t carefully our that don’t along, have and business March maybe going markets continue our -- to with April. through, were initiative. if land that take late went help in focus to the may remain as ample line. advantage still that liquid right it now, very certainly the the I Marty And liquidity on buying on we’d we when it’s Federal the And of was yet, But, improve, sheet

from, cuts. where cuts never easy other or you a delayed across? more Thanks. IT those you’re teammates. travel, million It’s or like Doug staff the were Thanks. where the And to then, Marty give the detail little coming us spend, lose like getting on that’s where cost reductions the wise, $XX on been things Can annualized,

Sure.

overhead bit cuts, individuals initiatives. laid March even hit, we permanently have and the the we’ve shop, begun And efficiencies, call, about but been XX, COVID-XX mentioned cuts. that on last on about employees. when had serious the not had it accelerated, off focused employee only -- XXX I before then, our some And conversation expanded we we’ve conversations think, company-wide we already a up So, and tightening and we

is other travel, in the efficient. things the will focused Carl, We have $XX a we’re few furloughed layoffs with the be with you about more quarter another say of other employees number, million that about mentioned initiatives will there’s Company, and X,XXX on. three but IT, the and associated another we quarters I’d associated same make many XXX. us

smaller we think, bit we’ve more I division effectively going country as will offices probably forward -- around how be the learned become a as work remotely. to

we permanent. lead learning become returns, cuts. many opportunities And are that. at Even there’s how The are more And for in look be when how initiatives to permanent. cuts market even we’re additional to to continuing like that mentioned going overhead the are efficient. And we’re comments those know may his that efficient. to more more Marty other So, I

go Research Thank question ahead. Barron, next comes you. The Center. Please Alex Housing from

was bit pretty your April pandemic low to cancellation started wanted in on I that the ask about on imagine and I period. I and increased cancellations focus before cancellations. rate the imagine March

just -- in wait that’s wanting the of confidence, you you see And or the to guys the people money reasons got those if cancellation? I’m related, it? loss keep of curious if that for case, some what loss were refund would you So, Was to happens? guys you was instances, what job more it it the

$XX,XXX. talked about throughout was our The the we’ve reasons very this as call, modest. payment increase cancellations gave in average So, We down is why.

our Our and also attached it. job for home and generally, buyers wealth. other affluent their very they better have because are security buyers more emotionally become prospects they to And customize have they

builders our timeframe, reasons through even just the than XXXX cancellation XXXX those for rate So, I gave. stayed other much to lower

company. the we very a Do we’re So, tragedy we -- we are money. think compassionate I Short keep the encouraged. we’re a of keep money? Yes,

home your your custom home entitled So, the there’s up. specifications to are $XX,XXX and changes, we return money. holds keep a lot of with to we always circumstances where that building But, that and are that custom we for

is of lots that experience, our have We position. and

this an highly I last Have business could I you I markets, guess your could one. one, guess, thing improvement, cetera, represent ask New the et another those rate? in Jersey, of if Okay. And you weeks, impacted like If another guys cancellation before seen I of percentage York, sneak that Pennsylvania, what New percentage lower did three cited what whole started?

information as cancellation again, have -- the to ahead. gave stayed low. And percentage we go it again, same. I And emphasize the has is rate to that So, the Marty

I XX% and of was XX% think, backlog. it contracts of

of communities. XX%

Communities.

represented close those of our our backlog. So, stayed the that until communities XX% that open -- states of highly were impacted and that of XX% early for sale May value were

for over question-and-answer Douglas the ahead. now go This closing to conference Please remarks. I’d turn to session. like concludes our Mr. Yearley

I thank great support. Thank interest your everyone you. summer you for Nick, much. stay a I well. and thank very and Have

now presentation. you attending Conference is today’s Thank concluded. for

may You now disconnect.