Toll Brothers (TOL) 8 Dec 202020 Q4 Earnings call transcript

Good morning. And welcome to the Toll Brothers Fourth Quarter Fiscal Year End Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to Chief conference Executive like Yearley, to now and Chairman Officer. would turn over the Douglas I Please go ahead.

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

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

our will our and for team changing proud the turn to let’s to quarter, rapidly primarily how and results earnings. it and Now, we these to sales fourth fronts am of I a then address Marty our all over focus I revenues, and Greg margins challenging times, guidance. expectations have sales, environment. environment, our financial and begin. on In adapted exceeding on our delivered tremendously current

on the X,XXX growth. $X.XX continued XXst, very quarter, history, in market managing We nearly totals October X in all in precursor years quarter homes housing currently and ago. The are are began first which December us in and has strong reservation fourth of up experiencing In my has continued weeks X through to billion to the were signed as XX% increase prices for non-binding year and profitability our which our our X and demand be and of focus contracts of year up I've net to deposits, mid first quarter. In for XX Demand through any in ago. compared the we XX% are to quarter strong today. May to ended we XX% in seen driving highest a in contracts, dollars compared strongest at communities, homes continue the Toll Xth, Brothers, our approximately our

will increases. In this many for Layered calendar nationwide we top Saturday, national are frequent time raise of the prices community fact, year. Xth these price specific more on increases this

limited previously this or fourth monthly a quarter, increasing sales. communities. we allocation put net for contracts lot through As the XX% pace moderated strategy strategically is sales that, to our of in selling in sell. half by of some communities, and all we the due second releases employ midway our prior XXX%. limiting hottest lot extended XX% where in a these place there up What nearly were the in signed delivery quarter communities times We of about announced, communities, this We in our homes prices of our means of supply, to is finished strong to

our into the these strategy in pricing quarter the first continued best Of we course, of fiscal We've communities, power some around country. of XXXX. have this

Our quarter our highest XX.X quarter per ever XX years. any were fourth the community for highest contracts in and

X.X% divided the for quarter year’s cancellations dropped rate quarter, fourth in by X.X% to quarter quarter. fourth fourth contracts, cancellation fourth from Our last

in or price, Even the City, We X.X% between agreement living fourth whether York of New homebuilding to Metro traffic ratio We on focused every apply number in were rate XXXXs which see year is intent factors, buying. the person buyers driving our on some our industry a builders. is ratios to region. in has to is In new Customers which interest second solid down among X.X%, of room of signs and ratio highest which and ever. to strength of and market conversion in communities, who online of which significant customers. a Toll of specific visited cancellation X% attribute in major and of low general payment and are some to of run. our our demand traffic the all the improvement. our showing Our points. Historically, our foundation or provide We lowest on a city rates typically division, the strength purchase the high-rise market XX% Brothers at to price results believe urban are non-refundable quarter, the deposit home some fiscal

expect low for We rates to some time. continue

record to homes new on resale is remains is of supply many new a homes production more XX% millennials pent-up decisions. nationwide moving October, the of quickly. Also, Resale sold homeownership high Redfin, as in the part past above are asking all homes of there to delaying as Currently, decade, only market market. the leading significant price. impact X.X record. re-sales the well in due demand, month According the lowest under there market, Additionally, tight home a the resale to people very over of on

to the norms. rate production the seeing now, in renters have past million in XX the over historic would a last recovery under nearly Based fewer start reaching new generation on XXXX, to and decades. years since of the is million estimate the X production home housing industry has homeowners. who produced transition US in decade, X We growth just bought we people the home single-family prior start that homes finally millennial are that households, of the the Even from in annual average

tight their and this relocation they are picture can and is an previously at have Since buyers Brothers home traffic. upscale improving. gives In in addition segment to where and our a quickly we it sell, phenomenon value demand, than trends, job confidence be appreciated can increase them there resale they customer industry our Due their sell that work-from-home for to these customers supporting the where want, in reinvested market positive rather strategy. new home most to to job as is allows base of seeing their The The home. driving required. solid an then more live tailwinds are build-to-order Toll market phenomenon,

affluent customer We will ideal work is the also their therefore, for our and out believe greater flexibility in remotely to home. market have looking more

is more on build-to-order this Our particularly place their well-suited model importance homes. Americans as to moment,

flexible or floor buyers they their their plans space living to we features learning, lifestyles. Our with fitness more desire the Whether expansive, homes customers indoor, provide offer entertaining. multigenerational offices, as for personalize that reflect suites living, areas, outdoor home it's living and working rooms, stunning

in on This their homes. quarter, added, to average XX% our the buyers $XXX,XXX or delivered upgrades price of

growth. end year backlog in well highest XXXX, years homes year fiscal look we With our our as and to we So we for deliver year are strong to history XX demand, fiscal 'XX. we most continued in in the believe positioned expect

end In approximately grow our ended the helping XX% is growth. by expect this longer with fiscal XXX addition, we year We year fiscal position and XXXX. by fuel selling to land of XXXX communities,

our since in expect a the we fiscal are more ROE. are the also very in X on gross Greg as pleased our strong May improve XXXX of reflected price quarters the and in forward are in last We performance over very and in XXXX. growth this to to speak focused fiscal continued margin In we look homes to sales moment. the increases of and improving year short, will with course year, deliver the we

to over Now turn Marty. me it let

by exceeded Doug. delivered total which was homes of and in our delivered dollars $X.X generated of In The were team. our fiscal homes thanks execution large great year ago. XX% from quarter, Thanks, part XXXX X.X% Delivery we $XXX,XXX. up fourth in and homes XXXXs in revenues year price X billion, average guidance, to

In compared as and delivered per projected, buyers homes. into million share soon ago. spec was as possible ever backlog rate move quarter income many $XXX.X to year diluted their addition, were and lower new share close than anticipated. eager and cancellation million or more than X $X.XX Fourth net to our per was homes We $XXX.X $X.XX diluted more than

All SG&A programs, Our higher quarter note the to a compared are both paid XXXX margin sales XX% than in to gross party which gross to were X margins and third fiscal prior quarter expense fourth ago. adjusted and year in previously due cost treatment XX.X% current we conforms presented commissions third Please period treat is sales reflect that are was reclassification the force both homebuilder sales new reclassification. SG&A. to way the our of our paid of commissions and and with our in of This periods consistent future that peers. sales this and projections included now internal in homebuilding presentation historical to majority

quarter same the points revenues of year at the of amount revenue the X approximately We discussed, would but have the was and and of to level, a in it otherwise permanent of quarters. reclassification believe XX.X% percentage The both in party quarter percentage SG&A in will classification, an the as X-K compared filed X ago. broker savings. X efforts reflect to the last they a to in operations become SEC have to fee just was are Again, the each detail result about ways therefore points our percentage of efficient X.X% with third SG&A high these more amounts in streamline we higher I reduction in is than due year-over-year X been. cost

totaled year predevelopment to and from proposed the in focus compared to million with and $X.X options sales, further $XX.X million fourth income on exit million $XX.X associated $XX.X quarter, was million fiscal during of in Joint was to projects and additional costs strategic control of $XX venture, the other continue steps these reduce quarter not on markets. decision impairments We to SG&A. we X Impairments through were that fourth the to purchase, chose land million write-offs quarter XXXX. we our

homes, first we of forward, $XXX,XXX deliveries an $XXX, X,XXX XXXX year average and fiscal XXX. between projecting price with Looking of quarter are approximately

guidance projected delivery fourth delivery in reflects our First than of XXXX. of quarter team’s homes year XXX fiscal XXXX more quarter our about

sales homes, XXXX. with QX models, XX later. those of X will reflect slow March customized deliver addition, Therefore, in in experienced and deliveries to for their months through In we buyers environment build-to-order XXXX we mid-May the our homes contract

sales period fiscal this first gross margin point gross quarter expected with deliveries the be first of This We from adjusted to approximately be to year. the sales year in XXXXs margin is XX.X%. quarter low expect adjusted home slow

We expect interest to and X.X%. sales be of approximately cost

adjusted home approximately our of year fiscal And over we after steadily XXXX increases We fourth sales quarter grow for in gross fiscal the in XXXX. be contracts to XX.X% full quarters fiscal year expect and the fiscal first impact positively year signed of the margin year. course expect XXXX and third from margins price

Again, in interest ago. is We year. Included basis year X or of of for in XX.X% approximately the XX third-party to reflect expected expect to percentage accelerated all the of a XX.X% in compensation of year these from versus home be cost not We sales as stock million amounts is X.X%. of to SG&A SG&A full reclassification quarter fees remainder $XX sales approximately SG&A. revenues the broker that cost about first points quarter the of project first expense to sales be recur of

First from rate tax $XX of quarter XX%. entities, other income, land the project is income gross sales expected quarter profit million. to We be first approximately approximately and unconsolidated

Our expected first share million average shares. quarter XXX.X is approximately to be weighted count

For average with an of full between XXXX, we the projecting $XXX,XXX. and and home between are deliveries new homes $XXX,XXX fiscal price X,XXX of year XX,XXX

approximately We in expect year, year revenues is quarters dip second SG&A, average our of to and our XXXX to project We We embedded the be profit second expect in and as sales half deliveries to a department of unrealized home approximately third there our significant in to percentage fiscal delivered believe XX% projects. the mix. stabilized of due XX.X%. price occur we

to markets We sales of improve. until assets choosing defer are these

full ‘XX from result, is this income income, expected the first be in year quarters. approximately other tax of entities $XX a rate approximately fiscal fiscal profit unconsolidated land As fiscal and gross project million XXXX, We the with and in $XX fourth sales million to year XX%. versus concentrated XXXX year

million Our approximately expected weighted for the shares. is be count share to full average year XXX.X

Now let turn me it over Gregg. to

Thanks, over to is improve time. improving ROE continue and should Marty.

beginning on XXXX XXX fiscal to by expect return equity compared approximately points to fiscal improve basis our XXXX. We in

we metrics, both achieve rigorous financial a ROE. to our deals in to to underwriting and a apply higher improvement more gross new land drive margin continue to seek we higher As thresholds

end and in year land are fiscal billion controlled land on We spent grew controlling at fiscal million land our at year owned XX,XXX XXXX. to strategies. XXXX fiscal to on and We other compared through ventures XX,XXX XXXX. compared XXXX We lots approximately focused more arrangements, to in end $XXX fiscal joint approximately lots options, acquisitions bank $X.X

fourth as high that So in we number improved in We did fiscal of were end $X.X our half banking We control other XX% at billion liquidity, XXXX. our capital billion which quality executed had strategy, our ended in recently ratio land bank buying out We end land same balance the transactions sheet. $XXX to XX% and deferred to XXXX, our owned with words, under approximately land billion more of fiscal for essentially we quarter option $X.XX We credit with efficient fiscal at of quarter XXXX in to we cash in fourth lots November cash extended $X.XX strong XXXX, land revolving available spend. about facility, including acquire to optioned year until of able billion outlay. compared the a $X.XX fiscal million options XXXX. very

in generated This capital believe XXXX. a while improving and even net million continue relatively fiscal debt-to-capital we sheet XX.X% operations our significant efficiency, $XXX year in was XXXX. our we ratio stock maturities to well borrowing. approximately ratio while fiscal X was flow was We ago. are record. $X strong debt fiscal flat achieved XX.X% This our in also no At of business, net have approximately focus until compared We end, XXXX. cash positioned With quarter from debt-to-capital to repurchased fourth growing we year balance billion on

Now, turn back Doug. to it let me

Greg. you, Thank

want for customers Before harder together we in and a our demand partners questions, truly This our ever you it service focus those dramatically require are prove I I while a inspiring. and lines so year providing of why the all in produced unwavering our value Toll from front superb our fiscal say yourselves XXXX. this and worked open think building for who and thank than team selling we quarter and conditions once like commitment of resilience up operate results on adjust went to company To the had especially extended expect they special. responsible new communities, trade quality, Brothers And your to homes entire and and to no Brothers. thank ways, with was to Toll other. on again the extra and before I’d is to you. you an To we you, that are maintaining to the mile, changing and

in backlog, and well fiscal forward we focus year year XXXX XXXX, quarter strong positioned for As community our gross we and to our count demand, with on look record improving are fourth growth, margins continued ROE, growth fiscal improving beyond.

for up it questions. open let’s Gary, Now

Instructions] is Evercore ISI. We will now with from ahead. Our go Stephen question begin the Kim question-and-answer session. Please first [Operator

generally Thanks the say, much, if ago, Yeah. years guys. seems was Exciting I efficiency Toll’s what, the from totally prices, generally, very times. XX main wondering margin XX there drivers, between home difference issue. the prevailing It to Doug, you versus ignoring let’s could structure about to and construction gross acquisition. is today that this right, add value land me reclassification X talk

assumptions the Let’s take as put their own side, make home prices what to and everybody them going because to do. that's can

acquisition. the I against. private particularly efficiency look add less more on than you a imagine But I probably you to and quicker did past, guys land land efficiently because to luxury to affordable would all in construction relative land the building a your little have move bit I at homes side, so, the compete the assume really little the and of And more, turn value and you that. want acquisition you're

of a XX a that to of would efficiency? of is two better to couple the net XXX be turning like drag years understand net maybe quicker a of points ago? drag it think land, your big So you of those XX, factors help to mean, me the can relative how this is reasonable basis move I

There high. drive back able were This you out It’s hard keep to them question efficient. make was taken and power, that price no enjoy to act, going bring keep margins points, home them me It’s our rationalizing and I’ll my as were, obviously, are Steve, to I I is very, back know builders we are are it’s Sure. and time, asked in it. it has out which XXXXs, ago. of and there we And doing. see price a very of are big best, in tremendous I question. today early land the do you know, we because, to more efficiency XX we much But efficiencies. yes, designs think on you better we construction optimizing of years two company matured. we your than which as more pricing

allows or less curate is more. a us It home We’re the or trying to so the less have XX. buy structural have, better XX opposed to clients trades to when contract. our XX XX that to they as can changes It’s upgrades

lot a that. that of deep a of into it we’re starting and and design process results on we’re the pretty spending right time is see now, So home rationalization to

out On has you X, the with significantly our appreciated Washington, That’s land in under we contrary, that suburbs we’re markets process have Northeast, so the end gold we back have of developers as bit over when you the respect and luxury still With the negative a on places land the of we that acquisition have on quarters of market. like the But certainly maybe out with part that market to is market that gross luxury a profit pick approval to that this much suburbs out of the don’t year mix. that That in and/or up we started effect X, going sure grown business. few not as bigger, market of X the luxury, back had have the after as has company through. there as right last affordable farms you have because process done Philadelphia level geographically that. entitlement our time development coming into us and the well. affordable that or has the is you don't quite margin as many I’m quite tedious margin tying that where and isn't the is come a through side, the coming land flowing end [indiscernible] of land are do D.C., We the Mid-Atlantic. many the

efficient side luxury. actually with the extremely for the less rationalizing on I on offer the reasons We’re affordable plans construction gave upgrades. We

margin, little in luxury we’re land to cases, even seen time. market because, power. pricing better. we a of was could discussed, of just contrary, I is the ROE purchased strong. lower margin with bit we’ve That the gross gross buying significant be the We’ve because underwriting lot some there it outperformed affordable a driving think has And higher business. while trades and underwrote right in been that our luxury Quite a our as has

Yeah. That's really encouraging.

the seem all the Great. on great. So or offset it doesn’t like that headwind land is

a I’d your years. housing into given bit in So to that, like comment the delve about little XX strongest market

most that is to the the data matches would that You XX% of the I and good. were week, back think bubble. appreciation I Redfin certainly home in you at - bubble which we level aways of just their up the the as we months, recent absolute just saw was of both up in to encompass Apex price invoked all that the housing [ph] seem it, And was highest in very price XX%. go housing X looking period and times last is and the what I when

you stronger say some you than marketplace things give strong, relative So is that of you’re time are today when or was, back seeing then, the lead commentary period would perspective, could that to a give now? it environment that that us the to would even some it's that that would I in you stronger things assume context say

Sure.

we many at. While were different markets then, look Brothers back to very is have more we than Toll today

Atlanta incredibly and We and going in well. waste like Jacksonville, country, doing you have know go Florida, Boise, we’re places I’m not around time the business. to our go Idaho, now your

it because by feels and a stronger see all let’s in have better, on much the So, and it the feels than top. And I what part I comment focus I better had no ‘XX. on nationwide, wider my lens

the have Mortgage does not in up that money lots a ‘XX We owns blackjack I the in Vegas just I’ve as supply in both runway. X [ph] low XX There the prior market. see There new going driving is who think with homes. we what obviously, is becoming million was With very meeting back decades And market XX story used had this underwriting. then. it loose interest have very, And will of in low people ’XX time. is resemble last a that of that less the houses can’t demand, of don’t think And in of and a have long long rates around I of XX this millennial appears investors X is than title. This mentioned, the ‘XX. years now and we told years. activity blue very happen ago. And that the years generation is be pent-up lot investors home bought today. homeowners, for dealer we buying we, back and huge

do and think XXX% of raising power what not other a longer pricing X long period months. for with significant growth of that a But I’ve solid seen, but am about not this Redfin’s say And the period the XXXX, every sustained I talking runway Stephen. I week reasons, of feeling comparable, it’s is over I expect the about order in am time. best And entering the you data market for when it’s think time. growth. they market what sustainability has sustained price these one not I to I about sure strength. with talking I last I in am last compare feel are with I want week all in front. expect moment some I so a order good because I So, week, do we’re am

it. Thanks Doug. much right. All Yeah, very I Appreciate agree.

you. Thank

is The ahead. Fargo. with Please Truman from Wells go next question Patterson

the guys. call. morning, good little bit feedback Hi, on of A

to bit. rate XXX% intentionally up So, said of I up beginning decelerated what growth releases, first, you are lot cap from Doug, can the the a I in XX. intentional of help am to the is that One, orders pricing did What you understand hoping first you release end said you cetera. you little am limited community, And to triangulate I XX% wanted much in about that the pricing? half deceleration through from of quarter And the the [ph] we’re bit us your starting even little demand push touch was et versus you a on pretuning deceleration. how help create of that? triangulate the lot your to see on actions a an you us of to but did of quarter? XX% - bit into what Could organic limited not or quarter trying

sales month. may home of get they very prices in typical sales on Sure. have month in ground. only at and they the to - the we until we self-induced communities, those back way significantly then to lots begins, with, XX% when tend that the The And balance lots available. give have shut mentioned which be to primarily XX% year communities, X And the the - of higher a hot the to And to first by talked it to finished that the have helped a get limited and development XXX% means. communities, price. certainly we have to moderate we month XX% they the next from again the raised any backlogs to lots the do when quarter in caught the they works that a it strategic We'll sell a by price, I X quarter begins, may And is the month people progressed. move be XX% we as don't asphalt and that going where mid because sold XX% we’ll already then also about available down our up and us. And We office are raise let’s more has And is the close our land working sell. the extended say, was are of delivery. we more next biggest where the less they’re community, weekend,

these same behind stronger the of there So lot continued mentioned happens, is a different look basic last the am or The deposits. we December weeks that’s reasons the it. why - I strategy, at is of than couple of premise it I by encouraged and weeks. the of weeks couple of we’ve weeks up where What are last that XX% but prior in X couple

Of your overall, primarily prices. self-induced. you, we’re and XXX% there think question. can We self-induced? I some into not. into So is But now about There clients headed as sticker is been I from course, it it’s raising tell shock been no December. incentives, up… has There question Thanksgiving, out we’ve some On we’re

On price increases.

I'm sorry, price incentives, the increases… incentives but reverse my apologies, of look, the less

calendar Yeah. year, Truman, or we’ve to the been year one. prices fortunate price been already X% so able this far we've raise [ph] increase that just another announced

strength the we same good most sell look about, we showing if try as approximately we the house. same yes, asked recent house, across, are this quarter, And so you in to

We on rough we ballpark, strong I’d if looking you market a because, give showing of But again, will perfect for science houses we're hopefully, not are if the – enough how context exact somewhere sold. that ballpark the you're said even that $XX,XXX. in is. for It's looking the say

Okay.

ahead. go Yes,

ahead, go no, No, Doug.

it's we take the the comfortable company is have in the was local I going nationwide, market that increases price felt have increases. one our also - are up, can to we to that most most you we fifth addition on we based price cases, to just say confident driver the that are of important understand of these are and see where and we’ll most nationwide demand, and in community-specific, in But and increases, the of this that Saturday.

Okay.

Okay.

so ASP, kind on $XXX,XXX an generally So XX,XXX X% X%. of to

that's - the was for quarter. That

ending absorptions XX% right? Right, XXX are you releases. massively, And up over But your I right. up know, community target also still discussing count your are you think, lot are XXXX. That's are reiterating that limiting you helpful. And XX%,

your As we comes What do of constraints, also limit be XXXX. robust think that maybe think extremely theoretical demand but that everybody could to you in about your order would you that fill assuming kind growth, assuming labor, the finished in? remains through lot even throw upper

the now, to XX capacity. back Kim's the and low mid Go in have per Right We time XXs. XX were community. Steve ago, we selling years sales high we're to

We’re more We've more efficient. with We’ve I down trade talked come build. about our affordable in expanded that and geographies plans have becoming easier base. optimized luxury. price to to

So absolutely Obviously, we us. opened that was in to communities based is the there market. in there the of sales sell-outs on put XXXX. is more new due environment front than expected XXX capacity We

communities we XXXX. XXX are - projecting open We are projecting new in to XXX between and

worried improved worried lots. not about am capacity about most I in the divisions. in I So field not am

I ability to manage continue proud right controlled growth we're and and how balance with think or it. I now, price am increases manageable our focus with dealing is to our of

extremely over. Okay. in around was just And clarity, That for helpful. average the absorption or I think a right touch just XX% XXXX, is

over is couldn't you so? You that mid constraints to an think maybe there year no there reason, high is next rate the hit XXs absorption no in or

That's correct. We've done it before.

Thank it, you. Appreciate guys.

Truman. very You're welcome, Thanks.

Ratner & Please question The ahead. Alan is go next with Zelman from Associates.

on really this morning. My on Congrats good dig the strong interesting was today. to environment results I little bit. question, first a in Guys, in in Hey. we're hoping

that on have the of delivery in you and to it that year But more sure kind on want side of through pricing but inputs, rank consumers seeing you cost expecting take big Difficulty] the Curious ahead it only accurate, [Technical And you're some land year. spring Is count that out the those making the Just also to realistic thinking if not are you're the or your a gap about community you leading telling is order you some activity. your more construction actions? could earlier maybe the date. obviously, growth side? on of bottlenecks don't

So those for could you I bottlenecks us? curious just rank if am order

list of if half first could your repeat Alan, you the question, there. it out

Yeah. Sure.

So about when Marty, slowing was to things you I what those asking was of XX% you're where think intentionally down. communities about XX%

Okay

land? I that's it order the it take actions? kind was both? could you those to hoping causing you Is bottlenecks rank are what Is of construction,

need to one bring so say, the size the date that would back. out to leading backlog I home is sold being the delivery is, the It it we of the far is on that number next length,

the so the the road that selling roads we are for is a client, sales house next at land can that getting don't can remaining development get while have or XX, deliver the and if backlog to months. road. home have to in slowing to number have months, So their like the being sold sales where, so until get up. get out of adds That's big, start price, it's weather And rather us in not houses. that it's quoted permitting the community, open complicated so if to have hot inventory for that that of down be in we And but we a enough in XX roads we means issues just even the whatever a that have that community there would be is date We because that of them of is And can house, ahead home may wrinkle, a back a build a lots we been more to you delivery where at XX, only where a big XX the land to else is in caught have build really if street need adds front of community two would you to we led we thrown of where sold bit raising development. when a house. plenty one one. can without that a little building get Number things a we not home delays there lot, up you XX, if layer get as before risk to

of of up allocation that's extent being XX%, XX% long development to sales. - concept of is to is by lesser of faster a that entire the limited in by Remember, this lot needing because cases. and most is So that of land we amount backlogs, driven catch driven

Got it.

And bit, Okay. kind but I of That's somewhat helpful, Doug. a guess, transitioning related. little

inventory legs that headwind of you turnover cycle company-wide times. lower. an to And the labor of probably The in kind move a a the bring over was to is term. perspective Obviously, your could environment the near think there affordable time luxury. from cycle that, improve that idea the and one obviously, improving were One opportunity highlighting is, as past or the your returns of I pillars times

back So is how near But mentioned the maybe table, times buybacks the that, on more are to in are other you ROE that things perhaps, there the basis thinking recognizing do, moving points. XXX you even in return there do so plus about are improving term? cycle you other accelerate a could Are direction. wrong you things could

Sure.

being that operations We affordable proved tremendous our or is course, week this strength in washing our all materials line. luxury Part delivery from I that real the trades optimization am less in home is luxury our committed, is and production this, And with to but to last build results, about in like down a only than some cycle tough part QX. stressed and more am plans, in I where days upgrades. that committed, that more market traditional luxury. houses some of more teams, simpler XX with issues come we're our windows, it's of I background, and seeing of are we And in bit it we brought in So through with is hear quarter is, less rationalization the And am this job, time it builders. of faster QX from machines builders and some even and with my new production. of construction than cycle curating affordable not a the one come

in headed direction. are we the right So

labor is only are luxury is affordable with significantly coming pleased core Now itself how there that business proving really the also. with our to going But will am but in the how be issues I shorter, be to not some down come headwinds industry. to

putting when it. line, often initiatives we that the ventures so some instances, with land land Other in can land Again, develop to to under us we that buy And doing Alan, just doing when banking. financing option, gets it we just few getting along include joint land need some a seller some more it, partners. need other fellow

just buybacks, that past. a has curious am I in that a Marty, been comment want to the if big you on pretty driver make And, since

us is with the debt are significant buybacks, to the table we dividend company We're acquisitions. gives all increases downs flexibility. liquidity now. in through But or our pay right Certainly, our very land table. just grow if acquisitions, pleased time dividends all It and our build objective along primary the position can, and

lot, guys. Understood. a Good Thanks luck.

question with Michael next The JPMorgan. Rehaut is Please go ahead. from

Thanks. And results. Good the morning, congrats everyone. on

Michael. Thanks,

very there. the the just had and comments around you're make you increases First able kind pricing your of understood just made price to encouraging right of and gross that around sure back circling question I comments some execute margins I obviously to I now. was to wanted properly

on like – way year-over-year. two of talked well see You think little fiscal about to of $XXX,XXX, back many into the ‘XX $XX,XXX Difficulty] Is that, about of fourth in show up here [Technical for are about right to that about outside permits? increases or kind of you're over those half those the you're maybe I community about it same back At one we right that which higher as the occurred about level required well. quarter? as should the And XXX price talking that up margins, quarter. talking would as Am – perhaps, think the $XX,XXX, basically a time,

Several there X this calendar those of five, Yes. have price year. increases been

of in was quarter. In fourth them, the there all fact, one no,

market occurred, January Now the hot. when is in was one there one and occurred in ones the other the first quarter,

it, just and of weekly We occurred really price. raise But inventory renter out pandemic of into the have to we rates. early been the $XXX,XXX generally move running part not we they're company were quarter the emphasize didn't stages decision. And and one they of to bigger decisions X%, base or that, the this seen and way we're the that before have driver the run, good of off first a our payment to the for let's of ownership trade sort enough make of came to discussions most national call as continuing a corporate they're with make again, But us. we've – similar So increases, a is can't the all, – of where the mentioning. price community-by-community spec other either that's I I increases. not fourth ones we those just monthly of the for have price

but And in were speaking so new, we how in builders the through because the just we careful mid-May, not we gave. the it for we're we know April didn't March see of And seeing did was were mid-May, or coming, the other results long big this then, last. that would I and reason beginning it

We September, then for has more, May in now we these sale. QX. fourth of took first taking - treaded. And And we started our we and accelerated quarter price. we June, the so it July, the of half and and second took August, more into X the took price. weeks

And - sheet share share had with - land as flat. leverage out count. any in this And that? roughly just growing XX or repurchase to to uses right that of balance it. year be doing operating looks - Okay. be or a the going and particularly How be may how I share because the guidance back cash expect secondly, we could not may of thoughts into in XXXX? you to where rolling How what I and that, again and the compare flow next community still accelerated you're was Thank cash now, Doug. how count repurchase flow. for thinking circle to If review pandemic? generation it share repurchase your kind about your is to play ‘XX months, some from cash lot prior flow standpoint, to generation obviously, investment guess, you Appreciate you your count of your would should just want to you a

growth prior were as builder uncertainty buybacks So if did through of likely previously, is year think XXXX the the front mentioned we than the it it to will grow I half. But any to we rather company do similar year, seeing, land we back year, be our in opportunities objective and opportunities. to first the where world significantly we're Michael, in positive ended, because be cash cash flow positive and another flow are the to

builders. other to compared debt-to-cap elevated bit a have We

of the have that's $XXX next February due million We mind. our in back

and want we buybacks, builders. maintain so but to buy to address leverage, to And mostly land flexibility address

'XX. is February Next

Yes. 'XX, excuse me.

All Thank you. right.

You’re welcome.

Anthony question go from next ahead. Citi. with is Pettinari The Please

meaningful earlier buyer in the consumers behaving seeing responding regional I to you in year, difference different at Good are morning. you maybe look think differences are COVID? regional When how by talked any surging your sort in you insulated I'm impacted more cases COVID? that are urgency, markets seeing given XX-XX any noteworthy? versus wondering nationwide. more count of you're are about community being if Just or

about we talked by shutdowns, a that were now, which long some construction cases the we XXX% as the the only were But and in side, Right everywhere almost Northeast on, harder. remote Early on for anticipate appointment the And time. centers sales There is, case. we hit even affected or production. closed. sales was construction thankfully, will open certainly was completely be

is better by-appointment certain videos, it the only time at offices We virtual country, second is us, more We're not selling. - in all sales more we're ways photography. and Zoom to at managing The gone has is better The the but other This website of have teams better. around affecting so sales are online. for activity.

some Jersey, and of can't at tightening see stricter that seeing New I good and where we're continue been going governors COVID point tight. conservative, notwithstanding Pennsylvania really, are including California, know very that to really And extremely some confident good orders to to activity. I the stay and We're is home rules restrictions which activity. very very tight. right anywhere I'm So, have the now, still

that feel which a not venture community airplane an adult could a has to of they and think certainly months. get The maybe makes be more not buyer, for cautious couple on or certainly active go to us I active good. destination back certainly out So come nicely, adult

that's think fair a assumption. So I

other would Thanksgiving, didn't travel very interesting whole on for the with of and but We weekend. of because working, business on it they're Black - home haven't selling sold traffic homes week were I And this, ago, bit. work. of during We if that's many we the bunch - for just and holiday we're not surprised is much the people down be much higher. on a side they're going the we're slow seen But that as off feel to Sundays overall, Friday. thing selling don't winter moment, that years like as Saturdays and closed homes Thanksgiving to vacations, not because dip at the doesn't travel was I we mean, they're a when little

Black around. is big Friday Now a selling are People day.

there's mean, be really I spring season. think changed. still going a it's to I

mid-January lows think I have home staying bit think, more. I a alive to still season. in people and But mid-April a well the changed is highs as and place new been are because

you. that I answered So for it hope

That's what goal? degree and count I helpful. of growth apologies spend this for And very if development 'XX? missed of land outlook level implied Or the but remarks, to XX% community is what is in your in the spending hit necessary

or that have controlled we all of owned Anthony, right now. land

my a of land is head, and bit how significant don't but that. it we land many to require get the of know of spend, in a are have our that top planned off openings controlled not - So I bank. those expenditure

currently their they're openings. own or fiscal in for Yes, control 'XX

it I’ll helpful. over. That’s turn Okay.

Thanks.

question is The Please Mike next with Capital RBC ahead. go from Markets. Dahl

for taking questions. Thanks my

- tracking lot again, on of or the follow-up just the on kind cumulative of local level First consider dynamics kind of including and you incentives when pricing about pricing to one, the effect, thinking wanted and even I kind all-in the premiums. potentially

that the in - compared mid the that really more X, cumulatively seems is tracking you that kind of if maybe to the when over sure ballpark even digits, you not past you is been the like-for-like in I all were pricing? But to to about fair like-for-like kind think single comparable numbers number I'm high earlier. we've Xmonths think like talking of that, those

I can sound? Mike, the with First, is the distorted? we better, still are things Or ask, - just are

tough, little Right the now questions. better, but it's just of a last couple

call know but Apologies. apologies - on we'll I sincere our end it's service, if conference that. or if the don't it's

On in looking are what ballpark. into IT end. not Our happened. are the I'm right sure you at people least question, your our

range. is right high a into digit But ballpark. call, increases divisions divisions that X% price lower, significantly We of I'll X%, that high, had X%, price that right to bit other are have what increases have single had mid we've runaway X%, certain in double-digit. is, And

Thanks That And question… helps. Okay. clear. my very second

welcome. You're

second going a capacity actually of question what back is for just Or that as the about my of where understand, kind trying really the And comments is absorption, today's about in think absorption mid-XXs simply on that? be? kind that potential releases, with when capacity cycles. run When your maybe to is you look more you'd theoretical view to marry as this lot high-XXs of limiting kind the to a I I you've level prior sell optimal we do the and positioning? guess, that that theoretical comment I'm or pushing absorption clarification. of business to the would to is price, versus seen

Yes. question that. answered mid-XXs. we dictates and the Sure. in affordable certain every to am The do the them. I comfortable I we where, selling XXs. better deliver that on and the we're is we have business luxury could sell can whether of to more And actually division get million am But different. homes, infrastructure, to up is managing of communities company is and $X mid-XXs, comfortable other, the that homes the context homes size I accordingly. difficult. the There average do would There communities be getting the where this

lot. Okay. Great. Thanks a

Welcome.

ahead. with Bank America Lovallo go from The Please John of next Lynch. is question Merrill

communities with about that thumb that and year. in base rule Hi, a each taking new as for opened my the with typically Is well. guys. of XXXX as we SG&A they associated targeted incremental communities of come dollars moving you with to there And can XXX XXX the this thank question XXX to think Starting are on? of

the Well, happen of XX those to before X I months deliveries. thumb dollars first you think many see is rule of

a As sales et team, you project you team and construction manager, site-specific, hire a hire that cetera. are

the the a $XX,XXX probably - $XX,XXX $XX,XXX run think month to cost I in range.

considering for gears of was that thinking M&A. about strategic Curious times, moving then Got mentioned the maybe potentially that you. couple of That's Marty, helpful. things price point, changing and lower method capital buying And with a when a as downstream a price this a allocation, builder using of point about perhaps moving think one the strategy, you are focus? potential - do in you you

builder We've location, That something is consider added right was we if and it the certainly evaluated the would value opportunities. in those to that right us. it

we've I affordable teams, purchasing but really teams didn't good counting construction I how from which build a every that nail production teams and learned are luxury. bigger lot bringing homebuilders every purchasing think of sits mention, about at in I a in lumber dumpster. to and mentioned that scrap

builder a our don't to take their need platform. local so the and to And I to national from learn market we expertise think business their buy

we described, expand is take think now to enough we through premium we But that, need certainly to an is look. - I if that. acquisition, have mature to do there that enough a and would business or opportunity learned not an don't as our are hard regionally then locally a pay you

Thank you very guys. much,

welcome. You’re

go ahead. Goldman with Maklari Susan from Sachs. is Please question next The

Thank everyone. you. Good afternoon,

Susan. Hi,

of communities is the year. terms can be My expecting we first And those question thinking in in to about of Is about the XXX geographic count terms thinking community color any the in so next expecting or that us there should growth you anything cadence there? that online? you're come in give of the mix

Sure. second. one Hold on

[ph]. will I when weeds I genuinely. mean that that love questions the get into you. We get for your

that We're in point the getting call. to

Okay.

South throughout spread and cadence sun of, QX community. per So more more lifestyle. would call West, think, in to are and less as even, jobs The sort people pretty are QX the it, chase you and range locations the XX QX and the having openings QX, looks the as chase country, the few and with strategically more It's XX good. a then and of

coming And states coming there. is Northeast. a out the which There out now is West. of will less a and of then the less Atlanta, Mountain is down quite and coming bit we're the the there there contribute out South in although, So of Mid-Atlantic, the bit

with cadence. fourth am only am - I pleased as and geographic all I very I into quarter, with the this jammed the pleased It's I dispersion. not look not am over, So

helpful. question inflation generally about little as a That's lot how last over the All a around, my that you are to And next bit into of talk Okay. been you right. of is to we next quarters, lumber there's look maybe just the of obviously terms And pricing. couple Can the margin inflation we should in how especially thinking year? factoring outlook? then be

not up it happy all it's was that, is, So a as of quite that because quarter, to has nicely. was $XX,XXX but number that, for costs are short our close a this and window, lot more a am maybe it And lumber. double I and double big come it's down

we've far buy as very out smart. lumber as we So been We can.

We our the to lumber have out right are that plants went when lines, nationwide the lumber very panel drops on and we're Northwest it spiked. brings where railcar of in We South, right rail short term at and a the on contracts it prices the on yard. mill, Pacific buying

hope price feels it down, pleased And we pleased that increases. beginning it's to these down. well continue like I'm to And how we've come so managed and I'm with obviously, come

does factor lumber impacts of of smaller a percentage region also margin it budgeted date, impact increases for of the of negative a driven guidance inflation price increases not in gross inflation becoming or to Our less total. labor. have And mix reflects and our Pacific price the by It labor.

luck. you. good Thank Got you Okay. guys and

you. Thank

from Zener Please is The with KeyBanc. Ken next go question ahead.

question everybody. is it's lower land and be tied basically Afternoon, which your My to vertical Afternoon. investments. focused your know, by going on offset you flow, cash gets intensity is to rising

Year how under is. construction, question unit of which builders So us units gives first report New center backlog. construction, sense backlog Many first my is a

That's I but first So going think for before, you've could you efficiency. And could be I on if you done if to under many land comment the don't don't know you - then construction? have how Marty, units it question.

something a improvement it's year? look down was that about trailing think to supply this - at some mean, owned to you a number that Is Or there year-over-year, If could if I more? Or unique, Thank supply led - there X% do something it, you. your it X% your is about? reasonable you land on which that basis. drive

almost I number XX/XX know a specific younger sales that X,XXX number backlog don't year-end. than I under when in is the backlog a have this our construction. do normal that on versus year of happened are the based month homes our the for

terms efficient. down, of owned the coming In bit strategy return more land get is a that equity to of part our on

X the of go see land below years supply. necessarily think want I don't to owned we

under as goes and as we buy put option so efficiency. more And in volume quite much, are land as making holding we don't and our up, our progress

you. Thank

question go is Please ahead. The from Rahmani next with KBW. Jade

usually Thank you ask. very much. Question I

to give in quite been multifamily joint wanted to to a provide announcements how Just see update side. if as There for you you an that? could And much see and the few on each venture if of capital businesses. update an city invested just the could living is wanted is

have Gregg, do you that?

I do.

the business, a those this thing approximating, looks we're let's assets our is our good ventures like that investment forming it, is million. that rental So it here about to to at of market. $XXX joint is bring business actively in recoup for for platform, and And living year-end XXXX, that investment them call time in apartment our spending lot the number

around out looking year-end platform. maybe have, XXXX, next XX $XXX somewhere it, platform, let’s JV city million million, we of $XXX XX it move $XXX probably over in via we call the to that just we're on back to in invested like if formations. So we'll months, bring And million at looks our living north then

see three a to that to And number usually break out for you that so how means. what categories like sense of we into

then our $XXX our that about development $XX then helps. future is million. land Hopefully, are and And million. our ventures And assets projects million, so $XXX about joint about are for

and gave, million And does. gross capital, to you capital numbers those Yeah, of $XXX million, are that the equity financing? just of both clarify, $XXX not debt inclusive

of inclusive right. Not financing, debt

That capital. is our

expected. said then that secondly, sales you than And spec Okay. higher in just came

I think quarter quick this homes. quarter? percentage last What was it of delivery XX% the was

XX% units. of settlements, QX with settlements spec zones, was total spec XX% For

than was the in XXX third spec more It around units quarter.

very you Thank questions. Okay. the taking for much

welcome. You’re

Jack with Please SIG. is go ahead. Micenko next question The from

of question. to follow-on Hi. Kind Jade's a

we I would saying think when you well look XXX guess you my I pulled that Are said of spec? spec, were forward the On be, units forward. those question XXX then And are refer next or contemplating or versus year them, guidance, ‘XX? a delivery to the we what however ‘XX you I saw to would guess, higher mix of, we fiscal respect in quick

No.

spec have homes sold. because have now We less they of how rapidly

was for as I younger the mentioned, think is ‘XX part So because than after of the normal the almost younger, market of we in it half the second story month a year is, about mid-May. in up us picked backlog sold

a than makes year. typical that of just in XX younger so And shy days the backlog homes

I spec we have have the the fall. year. seen by that do strong anticipate of because - and we not as bit sold as in were less to they're we sales on lumpiness have over later mentioned, having not just of also course, of the the So - a years summer - deliveries, they will construction very the we've we not we but prior average XX% because many, - And younger, we mean, will far expect have through along that

living think, or quarter. versus as helpful. release, bigger we've That's actually - press ROE basis as allocation I more more change and delivery to build are - want in mean, the on the I city for we you, more Has that by, hard commentary fund to terms that question development on Doug, pivoting changed? pronounced just rental Okay. to a we this a and the you timing. less rental - Toll construction maybe to improve very the maybe business bullish around much volatility points. plan got traditional going basis? XXX cycles the you maybe did in hearing guide it's I to messaged want capital through of towards it the given or is way the we side, But these is the things is

No, you're hearing that.

right buying now, a a there when now will right intention time no sidelines. that come have We property that on changes. city But the living of we're

none mentioned, has investment We have, the land, of land is city and Gregg living of million in started. that $XXX

what farm good doesn't in start some living with starting in New high-rise am York, ready it's a render Manhattan, that one are the New improving. coming But high-rise very through vaccines just one stop that In it of back in I Angeles look mean and rolls, that in to but you're when the see get I look. hearing of house sites, back, now. buyers farm about high-rise encouraged business, in thinking We York. winter. to I the now not Philadelphia, can fields. the in suburbs, by you are Manhattan. different building to start, you the the top. fields, like that a need the last right hearing am need talk down We have you're few really Los from to In and market in am the telling stories the going of going we the one to things We're a once activity it's in you what are next spring. one the take very not weeks So road. are Seattle this X is because We're that

we very the and buildings sidelines both being new are mentioned, those opportunities. on I for starting So cautious, in four

is business good. apartment On side, our the

Our good. locations are

New apartments are holding up.

little are while down Our there. in a they're rental bit, hanging rates,

rates our rates Our have occupancy are not moved. up, delinquency

business is out living way but new visibility cautious. more where the good, the platform we're on is some on while the moment under call being our business not the overall, out, apartment highly, frozen at highly we we're multifamily added. selective So city frozen They're I'd being being living and have prospective until opportunities

Yeah.

we We - quickly more they look the before opportunities. team have many to can as what produce/digest asking pay before we they as are to apartment future

in and but we in a comes the find do that guided that to don't there. now. we of Marty not bit to is that's If for or surprise It's planning a But don't think have that It's venture buildings. may right monetized. joint stabilized the income. those. It all on script and some you now the to the with we're what right year, now. time summer, other years. prepared ourselves strategically that we sell will go time really what income in income down other best when to right But the more be good prior think we income our apartment income. time commented other it's And It's And question the talked in XXXX spring and of out have is is and we about just don't from in we

color. Great. Appreciate the

very Thank you. welcome. You’re

Bouley Barclays. The Please Matt ahead. with next question from is go

ROE. or on closings luxury, heard and disruption return Thanks affordable think obviously, you afternoon. one profile another the repurchase, ROE to still earlier did was for down. grew. market share I ROE. major further year taking Good XXXX, accelerate, the the you to have in the spring, I that But questions. the accretive mixed say halted I you imagine the is I full for but

of So as forward, to kind to levers levers what discuss is, XXXX? to biggest my you ROE be you you which lot in XXXX? incremental And are changes were in think going heard pulling, challenge the these ROE relative what a of the do you're in question challenges you. XXXX to I was a Thank of look

saw and the and some reflective out XXXX was really environment product. from of of California of XX challenge sales we was gross high in our our shift came that I the margin months which margin, mix XXXX down prior, think

the was equity that So in biggest on challenge return XXXX. on

have is our our allowing to As drive pricing the our the land drive expansion that operating time, acquisitions, we and at move return, capital and carefully we changing mix volume equity same are margin and gross improving is allocation. managing changing while we margin forward, power improving through us product

be term, think, stock certainly mean, buying, will driver. will I will be number I certainly on the there land issued. buybacks. be one longer There the And which dividends

return strong have ROE certainly how call we pricing a here, and investment is threshold, underwriting an on will But a is internally, ROI because power driver term, it great sales. at the markets am high outsized land where obsessive unwavering on longer it. the high primary is focus works We around and of ROE, operations deals on I

It a takes committed. a We while to ship. are cruise turn

ROI that some home. and a open approve home my driving deliver and that we of the through have deals entitlements or that, next take I land piece we underwriting sales think, have And get discipline long-term now from the be to Some then a and roads the is of can number sell of the a But is the bought. perspective, get to in, now That will it's driver one on and these common. center focus time. some some have

it. Got

color. very That's Okay.

just I had guide. was closings the one, Second on

will I that to for the second in of particularly I but think prior number And years little be heard you half XX% the is that unusual of deliveries relative it's not year. I elevated, say earlier a Toll. maybe think

you can cycle closing is just of but curious, and the weighted seeing that don't it? within more detailed, it I is we're that in be you. cadence know than kind even that, about expectation QX usual? of I'm think this So right labor still times, to even get given Thank way if Or what should typical the

just sales on particularly weighted way I it, increase to about think the in existing right the the QX. based we think, QX rapid in had is

Marty. Thanks, Doug. you, Thank Okay.

You’re welcome.

question Alex last go Barron Research ahead. the Housing from Center. And with Please comes

the Thanks, spring? sorry in Appreciate to it. - was when in but quarter, job. if the wanted back I market related the just took Good to margin missed guidance that guys. orders first conditions you this, Yeah. the I those

April, half of May. March, Yes.

have appear as to affordable the mix on been product I you And shifting luxury, was, maybe guidance, but delivery to able it. it my then, you've wouldn't missing something? because guys just Got Okay. question been guess, second more the shorten, the so, cycle the I'm

luxury that's had I homes. is number what the even affordable to We the it's better, that now. right hope Alex, build more left earlier, Yeah. taking XX days that said but gets

Have there permit else? to longer been get a offsetting other taking factors or like any something

studio days figure a No. couple Portuguese Actually, a our because out, clients it's in go XX and spend how $XXX,XXX of shorter don't on can spend design tiles. they

it. Got

Okay. of Thanks. luck for best Well, 'XX.

Thank you.

You’re welcome.

for Douglas closing conference to Yearley over I our question-and-answer any session. This turn remarks. to like back concludes the would

sensible and very speak you all. hope Thanks for next, interest we care. Take much. support. when season. your And times. more everyone, thank Gary, Thanks, Have holiday wonderful in a we're I

presentation. The conference attending has now Thank for concluded. you today’s

disconnect. may now You