Toll Brothers (TOL) 25 Aug 212021 Q3 Earnings call transcript

Good morning and welcome to the Toll Brothers Third Quarter Earnings 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. The company is planning to end the call at 9:30 when the market opens. to CEO. conference like Yearley, to now and Chairman would turn over the Douglas I ahead. go Please

Welcome and Fred for Marlett, VP Margin of thank and you and Chief Connor, are me Finance Gregg Chief Marty Marketing today Treasurer. Officer; Financial Ziegler, Relations; Officer; Investor Cooper, and VP joining Senior Wendy us. Senior With

I and many our Before I ask factors night on the pandemic, on beyond performance quarter. our Demand in information of are in I housing I'm on you last statement be affect forward-looking interest that begin other assumptions economy, that impact earnings control, on results. many and significantly the strong. caution could third and markets, this call website. financial to our about the our forward-looking statements continues world to read you the with rates, release based very the pleased of events, true inflation the very

dollars. income third XX% in units up dollars period. These last We We geographies billion, year was signed prior year. our and in last are XXX drive margins benefiting $XXX.X quarter compared from contracts capital the basis price and of Both million approximately were the to revenues $X.XX Adjusted up records improve to both we margin efficiency. double units pretax price, $X.XX gross billion to as compared point to compared XX% business, expand to of compared $X.XX our period. expanding XX.X% grow lines, prior XX% of product XXXX our sales year. and continue Home year our up strategy were of were and the points our EPS in and for in up net

highest contracts our XX.X XX% and per year last our quarter addition, ever. community were third In above at

week our over second luxury the pace August to This that average is first selling of $XX,XXX XXX $XXX,XXX last demand strong has pricing ASP increase deposits weeks business. our in lockdowns. down three shows the up fourth same the a price quarter in year-over-year. surprisingly, approximately lifting and We've power weeks continued demand quarter into deposits through averaged following the the our compared of surged was up Our This per were $XXX,XXX three to nonbinding when in XX% consist May Not compared of July. with COVID August, a quarter.

markets be demand the September result XXXX, the we supply down demand to first and the [ph] However, X, three markets the want weeks deposits quarter unsustainable return sales. of August industry up surge and outpaced net lot still XXXX compared we our fourth compared you same August were of of growth fiscal storage are seasonal full From and a to were last XXXX, XX, contracts and and the were XXXX we XX%. they in year. half patterns. would be these XX%. along in rates remind of We to quarter units seeing fall experienced In for to up rest expect we far knew quarter are in contracts as our In other I limiting a fourth signed demand with the to releases. summer some that to XXX%

industry-wide fourth deliveries into times are anticipated our third third extending delivery quarter. pushing cycle market near-term that quarter pressure constraints is about declines they this times. order by our strong. which managing biggest the remains quarter. year-over-year In will apply quarter challenge current our supply of the reflect housing labor While and may state same This weeks, two to our make very headlines, fourth don't some In grew

into our in most prices of our quarter, and quarter start fourth third communities. raised of the During the we

fourth pressures we cost increase. will exceed are we are Monday, These out is quarter. better It our the costs, our than past we've experienced XXXX for XXXX's portfolios, incomes, in XX.X% managing light that investment increased pricing price a positioned on gross rolled benefit embedded confident customers In due this existing price our important and and fiscal our their significantly nationwide to another note in the generally margin increases focus to have values project year. absorb backlog we this that higher Just of homes. offset margin increases to of their fiscal more in

broad active strength the strong at States markets, in adult prices we affordable in especially across from expansion our as type In impact markets, demand affordable affordability and luxury terms in have With of of risen. benefit was to communities. and cost geography both based continue markets the Mountain across with our quarter the in the demand product more Sunbelts strategic migration and higher our lessening our

last quarter backlog and XX,XXX units both on year. and $X.X billion XX% Our units, dollars at Backlog end was record to a XX% in in was units dollars. in compared up

revenue, especially As not XXXX meaningful margins, earnings XX%. a of a healthy strength remain by is made fiscal manner. homes. for These acquire the in including the our year including these prospects on just have more we above We beginning on by well a are between We supply aspects expect but in for also gross we structural factors, we market, equity ROE develop quarter, and by many bullish to significant permanent expectations fiscal of last supported growth in how return imbalance long-term demand the the of XXXX. and market business, the many expectations, noted and reaffirm and to changes backlog, land and a housing efficient driven capital we our which

underproduction this new supply decade of result of of the a is On homes. side, imbalance the

families side, largest and Americans the generation the On who entering up of demand forming years. are millennials prime their buying home make

Many home Interest working and greater also low. have rates places have accelerating and older other later. years adults of We market. appreciation a The plans, might to homes resale workers in tight. to much sustained active market XX,XXX seen approximately new are are is presents. in economy will all to planned capitalize to now We move and reenter remain to the years Americans we improving. a few their optioned end overall have and believe baby for contribute At quarter the this the strong virtually factors owned or well on lots. we opportunities moving demand they the to boomers these market is that continue positioned and come

XX% end to ago. Our third optioned lots lots year earlier compared total one at represented XX% one controlled of our XX% and quarter quarter

have significant capital pre-pandemic land efficiency We position is provides land This to the of in XX% towards owned last more This key part and initiatives. our quarter. the optioned the XX% moving shift made growth optioned set At we goal we progress and already the significant a over years, of that acquired currently some foundation our are for several selling were we XXX at end next communities. lower, benefiting we percentage active quarter prices. from land

and at to already XXX land in fiscal year an This based at XXXX. solely fiscal communities additional continue count control on project community We growth growth today. we XX% guidance is

land the today XXXX. growth control community under have for count further meaningful in also We fiscal year

expansion and affordable improvement niche strategic growth lines, us new luxury in new well contributing our the points, and especially gross both price Our to product positioned margin for has our and into ROE. new markets,

July to luxury margins are year. that In XX, Affordable deliveries from gross comparable luxury fact homes. affordable last our generating up our luxury quarter XX% in comprised homes XX% ended the

the segment who for compared XX% affordable were homebuyers First deliveries this of XX% accounted one ago. buyers our to primary in luxury our year quarter time

be many appear move Our established. to product we quickly where to markets and making These first less presence homes land. already affordable more expand luxury our us and enables can their home efficiently are millennials and on built expensive are into and new markets purchase in who

with and forward this acquisition builder expand Just controlled the is remarkably our throughout allows last sharing week of in the luxury StoryBook Las StoryBook about from owned XXX us Vegas acquisition to lots we of and we look its rest our lessons a in efficient affordable learned Las to offering operations announced organization. market. the Homes Vegas quickly

efficiency ways Denver, luxury XXX with Austin, apartment focus we in a on develop markets world-class company to Dallas. rentals, Orange continue bolster Residential, Atlanta, of ROE. sites partnership a S&P new Metro and key to on County, U.S. improve acquire Yesterday apartment and jointly the rental capital announced focused Equity in new Boston, to Seattle to strategic We communities additional

next Living unit Apartment the of to Equity XX% we XX%. investing expect our Residential invest years equity with Over the three the selected remaining project each for

We expect be project financed to each with XX% approximately leverage.

initial co-investment are the of targeting minimum equity approximately We companies. combined an million between in $XXX

leverage. capacity We $X.X in billion are XX% the assuming nearly total

services, project act receive as as property and and the management of oversight. will interest property. upon managing and for leasing marketing management, construction promoted and a well financing construction, will fees each sale Equity overseeing approvals, as each fees as will receive member of well construction development, as We Residential design

approximately the three the venture. efficiency own We to that should million. cost these capital, we parcels projects allow of less with already jumpstart The anticipated business. us more total land Apartment apartments is the improving The $XXX capital of venture Living develop have identified to three

a as We most expect earnings from Living stream Apartment in predictable EQR. venture produce cases we at developed to each more of this also sell expect business our to property stabilization,

partnership can this hope we expand very are We we EQR this and with about on excited relationship.

one by into We markets with more EQR. additional our that covered or also forming are agreement programmatic looking in not are at products relationships

the the capital We provide expect of a that similar such a Apartment business. for partnership Living will efficient platform balance

Now I'll over turn Marty. to it

for Thanks everyone. us. we great joining had morning quarter. good Operationally and Doug Thanks another

our projections approximately to accomplishments. teams issues our price year. ago. efforts XX% than continued of them of and impacted at $XXX,XXX, and production revenue anticipated. managed chain average an XX% units compared performance through one generating for homebuilders we to higher revenue billion. the their price in third average that We were Our met and due XXXX We thank labor have supply quarter year solid deliveries Deliveries homes homebuilding this their up delivered of We $X.XX dollars as

million third was diluted per $XXX.X year third quarter compared Our and ago. income of or million $X.XX $XXX.X compared quarter the income Net XXXX. $XXX.X to per in to million $XXX.X diluted was share share one million $X.XX pre-tax

fiscal and $X.X in guidance. marketing than or as to sales XX.X% as in third home primarily gross in the Joint as was compared percentage quarter The projected. quarter XXX to our Third to million selling pricing outperformance year. expenses, to points margin third overhead of quarter well year lower-than-expected primarily and continuing attribute was revenue same adjusted was improved $XX and than last mix. quarter permanent cost other was better the sales a XX.X% in revenues XXXX venture, better our and land of SG&A basis XX.X% due basis the favorable XX million compared power controls. in income points this We quarter

better-than-expected outperformance by projection and from Our our Living Apartment was million. mortgage operations. results was approximately operations driven $XX The our

of another billion million under $X.X remained strong. of land million including we invested sheet $X.X liquidity, our third third balance more quarter approximately revolving billion primarily Our In ended the to $XXX land in our approximately acquisition facility. $XXX on credit and approximately available and in $XXX We development million land due focus efficiently. acquiring $X.X million with quarter cash our bank

slightly projected fiscal what and spend our in in growth our and years in increase permanent and on is XXXX we development to land Our are contributing significant equity return are significant than how be land in two XXXX despite spent beyond. to since lower changes then. we ago acquire also in fiscal XXXX structural These

from in XXXX. in We million year our generate $XXX cash fiscal to operating activities expect

shareholders, in debt, and our are bonds our growth our February will to to in mid-November of to due intend retiring and cash public invest in We to of cash quarter notes X.XXX% in fourth continue further reduce We them XXXX. that the retire business, XXXX. par including our $XXX these use million at our call return

to capital fiscal to quarter it we debt ratio end drop end. the XX.X% mid XX% third net year range Our at to and upper at stands expect at

shareholders of amount to at million program for average we of quarter In and dividends. shares share million. an repurchases repurchased through the third our continued approximately price aggregate $XX.X X.X an our During we quarter returning $XX.XX capital of

These our XX% to in a In cash in we amount business our repurchase per quarterly moving fiscal our reflect share. dividend and similar to sustainability confidence forward. flows our actions of $X.XX expect by increased quarter. fourth the in our We substantial April,

our delays of the compared production homes. which previous year to we These XXXX. Turning first are now the expect now XX,XXX in midpoint sell XXX the quarter have XX,XXX of buyers our approximately substantial full and fourth to homes, industry, sold from quarter full-year due guide our projected and to are guidance, of deliveries deliveries to of fiscal deposits impacting

$XXX,XXX price previous increase We average So full home, $XX,XXX for per is fiscal per year the delivered of guidance. for we approximately compared fourth the year. home, quarter to of an fourth now quarter to an project our This deliveries approximately, be XXXX $XXX,XXX and our homes. estimate approximately

quarter most is for XXXX.Our confidence markets. quarter we our several the backlog, significant the XX.X%. revenues most year margin Demand, will we've we price prices of allowing XXXX projecting us are the XX.X are margin Based of is an We on our basis in to gross fiscal adjusted based fiscal of to projecting adjusted our This achieved the full-year result fourth composition that over significant guidance. a in gross push exceed gross and of increases the of the backlog, XXXX our continue that increase is to of the points which of full on is factors; compared XX.X% fourth are adjusted and price which confident year. margin XX our previous are margin of is fiscal of our full-year embedded significantly higher the steady

are the with scale, In cost. which manage are on cost industry, our trade budgets we tremendous us partners, addition, material our have enjoy on building construction pressures and helps We seeing we focused managing costs. these intensely and stronger to and relationships operating entire labor. Like

that long fiscal continue our to of in put most pandemic position. to communities land homes for the also from prior prices. land was be control under The benefit delivering the lower at XXXX, We we'll

reflects guidance be of the impact to debt sales earlier better we This points back Turning home interest guidance, X.X% reductions is year. sales, for XX year-over-year quarter of in this and of the and expect full-year. cost basis made to full-year fourth revenues approximately

continue we further to expect in our to our reduce interest XXXX decline expense We fiscal as leverage.

SG&A than expect and to full-year percentage fourth a be in projected. XX.X% the quarter full-year. better as previously is points We revenue of approximately This X.X% XX for guidance the basis

we now income, with income fiscal at mentioned, full Full $XX to by a $XXX from for division. projected the expect growth last and is projected year from with unconsolidated million guidance, Living from year is fourth increase and entities other year end XX% more Doug by year, million in driven for sales sales This XXX our the $XX Apartment XXXX. for approximately fiscal be year count is projection As community land quarter. our quarter, there fiscal XXXX million

Our rate XX.X%, third energy includes $XX tax credits. which quarter approximately tax was million in

approximately over our our is return into XX% tax basis full-year all is projected year effective our have points rate Taking fiscal XX basis XXXX quarter to fourth Our better points be account, guidance. we this than full-year than on for guidance fiscal increased to and previous XXX XX.X%, better XX.X%, projected beginning equity XXXX.

As we will strategy, we our XXXX initiatives capital and year efficiency structural keep in to noted, changes exceed in XX% the and our expected long-term. fiscal XX% it acquisition Doug land above believe

turn the me back to let Doug. Now call

care to am our each to of like their would to to Toll grateful. of for effort opportunity I I take sincere the my Marty. Brothers very you, our customers taking demonstrate that members. from dedication and all continue and They Thank to this thanks extend team tremendous other

open we're to to Now Andrea, ready up let it questions. go. me

first Instructions] the Please Raghavan And Wells of question go Fargo. ahead. Deepa from [Operator comes

fair Doug, thanks heard XX% Hi, be observation? prior target, plus is my taking good -- the morning, call, we comments Marty, that what on that based on a plus than ROE that Doug, to on for growth emphasis your stronger slightly on appears your the questions.

in Yes, three on correctly. detailed picked and we quarter guidance months, up will you obviously that our give fourth more yes, call but

driven predominantly, Okay, driving I'm is anything or and that? the gross that's assuming by there else margin

push in ROE couple for talking will gross strategies margin, last the our driven buying permanently. years, by about and the that that is the we've up continue increase that sales also It to been land predominantly

All trends. pointed is calling trends far. to particularly in for June follow more the worth nuances question July up you and and out any there so stood on right, my well, that peers haven't Are be out? ending recent August for other trends looking may I'm that quarter are or

our those pre-qualified Yes, we running that and driving hasn't the comments. were In demand in markets, include and the those we're in that I month-to-month, as final changed. in mentioned, still markets consistent to processes to aggressively more supply, demand interested my buyers, third so sales and best either on exceeds throughout We're We're and the ability really that quarter deliver, see exceeds prepared pretty price. many still allocation. offer communities, and

really Midwest, summer web typical some seeing I have up. describe Detroit, is they think Traffic community is trends. where in the and for Chicago, one us that we we're is thing some and noticed primarily and Northeast we're markets, up, Midwest markets more the to down of in would are the seasonal traffic the because in just I the one

some and still with that I'd of say we is than we down raise that Carolinas, can of markets except south. South we to most do course, just we feeling think as more whatever more nationwide, had that a August, don't to us seasonal back we're continue different caution I to doesn't in you call, July anything Jersey seasonal it's Monday slowing some markets, with in summer I, prices people those and that's the so as know or those west. seeing very and seasonal But Northeast And their trends the past trends for mentioned a markets mentioned. are and Shore in in world opened normally out significantly increase that they as year-over-year primarily we're there's I Atlanta, satisfy. trends. the We those now kids in hit Denver This for there's price and a still I months they why school, occurring expected for demand take did preparing up, we Florida, some the mean good are that Carolina seeing more west, the market, us, call of Georgia, those And traditional we

great great That’s very quarter, thanks color, thanks. much,

you. Thank

The Kim next ahead. ISI. question from comes Please Evercore go Stephen of

for guys, I my Thanks XQ questions pricing is wanted here. this Stephen taking to on for Adams guide Hey actually Kim. about a little the quickly. bit Bryan talk

strong at this your and given think is often XQ, If the some some ground still I typical ASPs. what really look pricing. your very comments strong on highest deliveries seeing have actually up where so, quarter, have sequentially you saw price sounds I You or X% you your on like -- it a of you're

into explain next you're mix unusual that the for from depth? that sequential guiding can anything there So, decline quarter, is may perspective a that be

is X% the I third It aspect our business. our City biggest Yes, think Living quarter represented deliveries. about of

to it and represent expect that in less XXXX. We our X% be quarter deliveries of fourth than

So, that have as well. that progression is We'll we is reflect price more average bit both in higher price a and well average QX as margin the influencing margin, as fourth the little higher the quarter. business that in

Hey Marty.

forward price quarter, really we price in need -- 'XX, that third sales then the ability pay driving saw going we been little pricing the priced, look of because fourth which bit I City quarter, finished some bit. prices on Marty great. cut effect had a that's offsetting It’s have more there and that the to Pacific We've a 'XX. going what's coming is bit west the as everywhere attention that Living. think also the and be to higher that's is higher on the you But will Yes, that sales in to nationwide. to so just you got margins, he be, little really a to off of out the higher $XXX,XXX

said, just about that details you this sense in guys. you're to Great, peak, XQ? to margins one of Thanks in of, when a past you're that but if and like make get higher its about being going reporter the XQ in your lumber wanted you and peak actually to head maybe think also the implying spring expecting into what be in results? are did lumber some coming assume talk a follow way to specifically XQ, I May, And than up I just costs flat on wanted have with costs margins

starting put of for what in lumber the with 'XX. 'XX QX will the we our and costs need is QX drop lumber the the In and homes down. a Yes, benefit And homes through will see, which and 'XX. them, significant $XX,XXX accelerating building of then we through in as amount lumber. average they sold down houses in when in balance future 'XX QX now lumber, will our will have of the we half peak nice homes Right the are back the again be today, a much so in lumber of size the as

guys, great Awesome, thanks quarter.

you much. Thank very

next The go Buck of Raymond from please Associates, Horne comes and ahead. James question

Hey more how great on curious, implied of get is just into some or follow to very how stabilization? just, buy, pricing obligation resources, right capital a go at a does don't one, morning. of construction Equity a first to just I they those is that Equity rate assets up you thanks, so the of I'm determine there but good have efficient, little a Residential Residential it wanted use deal the with predetermined you bit cap number to the on work? do of sort kind offer, but

Sure, a in and Charlie room. last cool. that old shout the guy of night, Yes, great Buck was Watts the I'm to

high fantastic tell EQR that in with really high deal, is be excited it's EQR leading built the with going in complicated seen que I'm We're sold. luxury condos such owner, sera. partnership we know luxury City, years a about nice Stones, we and and New the Okay, with. Rolling very top to starting to how country, ago, was that company York manager, half rise a the large, rental in XX XX have in the half apartment aligned just a We track school or many record times bottom you The you I've so not

then we've help They're before talk, these will pre-development efficiency land so walk, walks us to many buy to and that with question, to earnings, that sell gets to We invest have not long-term help we the sustainable a investment, recycle business. regular anymore. we're predictable, they how to apartments pleasure how going sales of relationship your after exit company such a but come a -- They come them. markets of my really, have a specific operating up approach it’s capital because assets committed our that to apartment involved, is and with business. the stabilization. EQR we now thoughtful, They and was costs we intelligence closing price, are complicated the so an the will pitch understand us to going with allows marketing a us investors with -- to our you so here, much very without the at to pragmatic it cover driving appraisers process, us the all And and how with We're we buy out. key land. in hold us need show through The talks

investment. Toll. of out to Now They XX% the only they have have XX% remember, of buy the

don't going going for they're we're then to they agree to investment the to their it. XX% it. if value. want going get benefit of reason So not going the some assets, with sell We're to in to we're any unable or still hold uptick sell. If We're

stabilization, So price understand us to it that's in money getting also the end. a in that's they're be the a we're sure we're with works but that you're that running market. process delay by with But brokers a involved how taking pay and process due those they out saving not and diligence marketing value. running fair third processes, dollars at and to party going get not advantage They under of going know have to a back we our

And Marty, so, add parameters that's anything how to to that? works. you want the basic around it

I capital. the the have think a their they efficiencies management, through projects operating cost value. to relatively They bring will inexpensive can property enhance of some that

capital So cost. will at the they it we're efficient really They source. quarter three other of know to Doug we the only selling value. quarters buy a as asset at mentioned, in And an fair have

Right.

best And win-win. through feed it gotten a a capital wanted we've them industry. this they opportunities efficient and the wanted the EQR, partner strong yes, new we're, a to so is and platform in we development

not markets are covered. be there properties are covered. some Now There won't that

may For student own in. example, opportunities They moment take way interested that business of EQR our the others not at advantage is the housing assets to. able can't something is be

to partners are the built one very model, have markets. what find we actively similar talking complete to with with, more to business done private so And this structural, EQR other to permanent we on players long-term or equity we've the business their that

you so that. really much. Thank deal. color. great on That's so really fantastic the congrats a liked I there, platform is That

guess those of plan proposals that, Wyden I have thoughts guys stimulate the in housing time percolating new any to outlying other that kind at guess areas time new supply or some or is today any lower a on to income new have homebuilding seems any of up credit, general proposal about be it looks buyer a tax market Senator a in includes buyer credit market or like legislation? wondering new developer if you direction. Second, through look like tax I'll how or impact maybe first different bill more areas. follow as impressions potential I'm part credit time a I a had or could just is things that thoughts also tax first got that to legislation a There Washington. infrastructure $XX,XXX like

That It's does a time as in of typical Yes, Brothers. we our housing in lot that affordability in stimulate a industry. bit to addressed. this haven't demand. country states, through issue. past has be significant have been a is one the in and to shortage affordable credits luxury. price it. good study for down the is obvious to even stimulating if price the coming Toll had point, There's Anything below for Washington effective that have good homeownership, There certain tax been an it's promote, in There is We're, California.

industry focus we homeownership. would fully on be Washington's supportive So crisis in this of housing are, on promoting the we continued

right know it it's all develops, industry, so, predict supportive. America be will to Lobbying where it's of of Group, leading and And and over now, as I'm as go, course, as we course and sure Brothers, our Toll this we don't will of impossible through builders an working and be

in what both, We the prepared buyers mentioned of it's now, on least we whether one need time of homebuyers, remarks, first and there's as are to legislation whether one Yes. see the specifics or person at entail, nearly And might deed. our there. the limits XX% right income the

We are apartment in in our opportunities our business active zone.

that areas or other we some serve many whether of provisions. beneficial to have do we'll housing of these do, not. developments in some we us some study affordable have are, be components that's we So situations, by to the may enveloped And so of that

quarter. Great Great, thanks color, guys. for

Welcome. Thank you, Buck.

Markets. The next RBC Please question comes ahead. go from Dahl Capital of Mike

for EQR taking my a two-part question I on a deal interesting. want Yes, guess, is questions. to that, question. morning, really Good with thanks the start I

You've on there and of other or of place that's guide terms XX% interest, that?. how these Should you that ultimate that in given fee that, part your also any on in are then on than for And XQ? an in promote place, the structures sale. the of quantifying on return is structures some as we investment plus sale just initial think just other three about the got embedded it the the greater income think is the whether on color have second that XX%, but fee assets, to

And, Marty consolidates those lot more multiple equity private why That's than sale proceeds. But make fragmented works. this you efficient. we'll that’s now forgetting and So it our expect that with more have on how we don’t more your existing, fees, of it model, XX% question, how three partners. to have all promote even just we business first a assets? yes receive a the we now where cover

pieces of it assets, capital we three we the in already that construction. Apartment the to initiative that reduce commenced relatively any They we So inexpensive will but of have are part Living. not have own land, our be land,

embedded investment but were to under marketed will. $XXX that fourth income $XXX that at developed already drop sell beginning the of our Our million developed. fourth gone an we've our the and result be that's the Right quarter gain still million did to year it guidance a program, Apartment of has be down to XXXX, asset you assets need if will we the weren't event. Residential, in for bit Living up third But asset is quarter from in marketplace, our quarter to They XXXX general three And in in of Equity so $XX little a sold million. them fourth an this quarter. and leased as Those to need now further that. a sort

Okay, efficiency, next then the that's And and trying you're investment underappreciated areas. potentially to second this It the on your community. And equity do to question the inflection actions contribute are margins to your it very more or an my capital returns the best really capital sales obviously, is helpful. of year, in like one looks articulate of it's where seems term clearly, because to in return point on more XXXX. of like Doug, at near the point hitting point all the but XXXX point, you're on inflection those in the to an efficiency

where or area as peers the that asset asset or the as looks I not So we in that returns of not main are are but that there certain change. out, should about of next in improvement setting saying turns that's guess the that be you performed kind year turns, example, you quantitative to how targets be have the something for going two? up over question just like is, thinking thinking about How you're been to potential XX%, well for are may some excess

it's three But so of is margin, strategies this and buying having the right XXXX reason partially margins. land price, of you're confident in the on on give due on we that higher numbers high is that a terms we've detail XX new gross in of having months the lot So will north buying. will all years couple the terms XXXX's But started a right. beyond we're been because is more other high to driven driving but efficiency ago. ROE, call ROE primarily now of we in that, and land of of wave ROE sales sustainability beautiful being be we're of by long-term the

higher I it's that but so a very land internally it's out the we now to delivers lack us, a through, new such as confident doesn't IRR, a ROE I'm understand for it, think call new And not we each it easily It's deal translates structurally and that prove and into it's comes it have for explain just company, trying macro company, get that's hurdle, market has coming. and a changed. to us the are pass to disciplined beyond. We XXXX that a on for that business of it, if to and we

We have grow ventures. land we ways it joint buy so can this company, through many different land through and be now banking to continue or whether

payment communities be the mortgages way getting and and land or with all through be longer sellers is that with terms homes. working money, term we'll sellers that purchase that we'll its land delivering you new opening If

think see where of balance ago already XX% when in these a XX%, initiatives is great a our and we've venture. reflected progress We've of five these to some bit initiatives little recently, was that it JV into you down our I Yes, bunch total. XX%, larger owned years bit seen communities our land on as other that's joint a put in of grown of made sheet, our little line

this cash generated, flexibility flow year that it down see significant buy stock increase the for pay being us our You some cash dividend. allows year, some in our debt, to next that's back, and year, last flow projected

things, those how of initiatives. ROE influenced ROE we it's are our by driven things mentality. not just with that's too the It's how of things about inherently some think do we now, All

It's great starting questions. Thanks to taking coming or for it see through come my to through.

welcome. You’re very Thank you.

Associates. ahead. Please comes from go and Zelman of question Ratner next Alan The

for color Hey, guys, I good far. my morning. the Thanks appreciate so and all questions taking

seen about we mean, we last of sideways little to dry years. think additional land filtering question of maybe I'd next I the ROE question obviously, asset over the the through So love efficiency is, couple that could I see huge an sustainability is and on options, ask those the when guess and my you to topic. where too. your cycle, a that enter generally, XX% banking I up somewhat market tends to availability, we've recession. the if cyclical. time capital a be as got moves or the that And tends over high as bit share in option

beyond confidence stop there it follow in that with And through different thanks. longer the XXXX I this in there's potential downturn kind capital So term this you up, and think a space there, attracted I'll I of stick do will future? time being have to it's a guess the that

owned in function Alan, I of the the gives options last option think was land some from to and a cycle the from of the ability you. walk growth risk profile the concentration

capital choosing those of driven in necessarily to by are move deals, wasn't of a great benefit forward of on admit as a return side function positive it which that with here aren't equity that is as So a sources, I'll lack the not circumstances they it was although much initiatives as today.

this of So to significant equity piles more business to at changed look of the us returns return on business interested are are improving way also efficiency. capital capital these I our focused think capital in have providing all structure more there builders supporters, we fundamentally own efficient our while solid and be as much

forward, Have the that on that you a on Guys, have of type little for I kind up has same forward? that can you been power Marty, of same see like the been and maybe a about builders the maybe you nationwide maintaining can magnitude they're Doug, increase rate the monitored said, I follow the little it price the kind they price trend bit the guys know a bit same expecting appreciate pricing that it there on going increase way. Have back fundamentals to and talk little a few the we see but not what bit increases? a the of thinking lately? sound of pace of going more doesn't what's Monday, moving offline, second. to

make say, big, increase because got not to the you them in hand. that get me price weekend, Monday, boss was an opportunity It's get tells I'm sales get and to some my it to sheet hey, price a X%. Monday's excited, have new was all this to going phone calls,

we like so And price to use it's program very Monday with And occasion, on locally. these nationwide increases drive effective. and a urgency

builders. team what I call putting in like other markets, So with it. I'll about urgency. the we're We less to goes disagree make But back toolbox -- it's the traditional that and comments some Monday activity. really go happened another sales of patterns of X%. tool create not to it about seeing my a sales earlier of going the And I’m phone seasonal in me that is some to the to more it, take

is as winter still we where other markets, supply, have through I'll saw markets more were last great careful. seen that last those frothy out we or I exceeding where we not demand spring. not being described, So, that ability demand, west in And far but in south, and prices good, say our we we're raising and down to have what we're year,

the that's it best can that describe Alan. think I to I you, that way

it. makes a That it. Thanks Got I lot. sense. appreciate

activity national events, And in we also these have action just to further tool have which another sales and national to sales off, to, toolbox but as people quarter. a, or We we reason it's calls it's event not we get encouraged, the third again, one third say, sales phone do in the anything another the a did some make us a a in, us upgrade the it sales may to hey, take second a to agreed has the encouraged in cooking. event. to cost give usually for It's But having national to you gets next occur. sales got modest, three national come third company doesn't cabinet we're be the quarter the sales cabinets, weeks, of We kitchen by did that decided without event a were XXXX. so quarter QX in having

The Goldman next question of Please go ahead. Maklari Susan comes Sachs. from

Thank you. Good morning, everyone.

Good morning, Susan.

the How deal? brought can future get over StoryBook you thinking kind first you the finish are like maybe, a deals that? you What to Hi done to ability M&A of is, is the about the little StoryBook and to Susan. question with get bit helped about talk today? and pipeline what looking what My line you

on builder incredibly ago, Five at able pretty few we home priced the were have in way. high homes. their point relationship by lower the ago. those wouldn't in to price conversations COVID because we efficient, moving looked deal We years then small, wouldn't closed the of XXXX and spring the that weeks with a a Vegas, of summer we gone have price all StoryBook, scared put in we down remarkably is when StoryBook and hold Las for keep and get were started pre-COVID-XX. them We Sure. conversations margins

more their field Sabal we're example an point more couple have builders, from as Now, that we an learning Homes, these builders efficient construction example, Homes, and in luxury a as doing are South price different in Carolina, luxury, affordable affordable as Coleman we have, super We're in methodologies. Boise. acquired of

for teach but while it's be us us, -- a a Vegas, better not think to deal just we lower to to for good teach so, homebuilders. price And continue small deal, to

hire talking, the deal front, of quickly or there big-to-big smaller talking big up demand, builder I'm and decided not are with more broker and more small on M&A has heating who it the flow, in I'm terms the builders. things just markets opportunities take are terrific the XXXX numbers the like market. a to local and hit just for throughout country In seems their

about, talk to And but we're active. so, we're nothing

they've a than time. M&A Our more group long flow seeing is deal in seen

the drove in quarter sustainability especially quarter, to to and great you follow than little down quarter. were XXXX? we you've Can talk for really guided come expecting in came those fourth color. a lower that to, Okay, the more actions the question as what been That points place My bit putting up the it look that fiscal obviously we that's terms basis XXX is in this of what reducing you over overhead for of on SG&A. this through

it. Got

marketing I to will The teams rein with model around think doing true And we a are at pretty lot be and things better are of think cost, commission overhead reduction dropped are are the we control we bit associated are seeing. initiatives in count. perspective, most the our ago our from a we on additions tight the year on Susan, and cost tight those count expense less organization people. that of great a employee significantly and a permanent. employee a controls corporate then on there fewer here any spend, some with very keeping home jobs And

All with good. everything. luck Okay, right, good

Susan. Thanks,

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

to of And Thanks, Hope look you few of and Andrea. safe few course giving Be Thanks, next December. and XXXX a healthy everyone, have with in thanks. for on listening well, final in months weeks you speaking and summer. the we detailed updates over you interest. your for forward more happy

The you now conference disconnect. now for and attending presentation Thank has may concluded. you today's