Toll Brothers (TOL) 8 Dec 212021 Q4 Earnings call transcript

Good morning and welcome to the Toll Brothers Fourth Quarter Earnings Conference Call. [Operator Instructions] Please also note this event is being recorded. I would now like to turn the conference over to Douglas Yearley, CEO. Please go ahead.

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

year of efficiency. In events, forward-looking read the that our homes, our Before beyond forward-looking profitability and I $X.X statement proud impact this many company’s factors the capital housing of night statements information as am you website. driving economy, our other a are release and on and on in we earnings on improving and the on incredibly to the this interest I based our our by we grew strategic materials, our nearly I growth, markets, that future ask about executed could delivered rates, XX,XXX begin, XX% many the most increasing homebuilding and last record revenue and goals significantly affect of I world availability of on to assumptions billion. in fiscal labor caution results. for of financial control call we inflation XXXX, you history the pandemic, performance

continue We our expand to margins.

year results and delivered backlog product return of earnings $X.XX returns, of are XX% the points percentage of to strength ago. end, in the we net strategy. by new equity up doubled our We to our adjusted achieved even billion, income driving by in XXX non-refundable on and in on our full pleased market, with XXXX by into expect XX.X%. for this homebuilding basis point year. our focus and $X.XX was backlog percentage It we income backlog, quarter end, fiscal quarter. improvement housing of we substantial an expense XXX highest XX,XXX last additional represented X from share with XX%, fiscal an and lots in and SG&A total stood to strategic efficiencies gross performance are is in strategy fiscal These Based over to of basis grow pre-tax capital acquisition $XXX.X year-over-year nearly we very billion deposits expansion beginning efficiency the a XX% expect low At $X.X lots, And year solid Our a lines, while results revenue we benefits ever price year in our and full year improving the from fourth XXXX. XXXX. fiscal option million revenues XX.X% geographies the of improving At XXXX. a to of XXXX, realizing we quarter and on as reflect rate points XXXX a beginning grew our land a our supported better increase as fiscal at our was fourth from points on fiscal margin X.X% record And XXX basis operating we our per homes. XX% reduced of $X.X our cancellation the year our

to strong in the improved increase increases And land that options margin to XX% increase average profitability. XX% we plans, for plus efficiencies operating optimize and up to curated our to we streamlined price basis over We implemented remained have the return gain project significant our of strong. design gross our our for due expect operations. to studios, and full quarter, our contracts strategy floor the very a in more signed year fourth on approximately pricing billion, that net a well a continue $X reflects in by past selling homes to year the year-over-year. primarily beginning the homes adjusted in which by dollars XXX our price X,XXX points our above also XXXX, backlog, the we We equity year In XX% demand pivot driven capital-efficient fiscal permanent due in

healthy. XXXX, fiscal start demand we continues to As be very

We the period have the community this week. quarter, our consistent for now. with a non-binding that of reservation saw have same fiscal X first pace averaged weeks XXX per many last first months also the year. over is pace comparable On deposits basis, X-week we we at over the pace In per run

and broad-based are how very first types. considering quarter fiscal Demand both encouraged geographies product strong the We across is by of was. strength this XXXX

are we price from more prices than appreciation XX points homes raised fourth also schedules. production This to states. we in quarter, lot nearly XX and in markets allowed in manage and us variety markets about wide of the of We and that price limited capture all in the XX% releases communities. has our benefiting now offer to In

demand discussed markets, patterns returned. certain As have quarter, seasonal last more normal in

market. sold strength again November, low housing low raising deep week of this sale Redfin well of solid nationwide by homes fundamentals, driven for over our Our number America’s as homes, demographics, the being week in the market enjoy all advantages week, This less is of and in nationwide. of demand a of rates an from during a as raised from decade of continue the in underproduction and month a week, to we homes market markets X illustrates the to of report November. prices ability resale homebuilder. the a or prices including third as of According we favorable new last hit pent-up full last mortgage tight housing all-time luxury The

to how significantly live. we Sunbelt This want years. have shifted and driving recent the is migration and Mountain reevaluated their lifestyles to where Additionally, States patterns they work expanded many in where and presence fundamentally and our Americans have

They and years not sell, we new Our customer appeals more the to in active adult continue their into in homes segment. susceptible in is are homes. quickly the their issues. confidence build-to-order have can and offer their are an our affluent home our home fourth have current on that finishing in and home. benefits at quarter, their gives their the to model of and out value new XX% that of segment. And placing we the customers be importance base to maxing enjoyed price they gravitating in personalization move-up realize tight luxury them this In designing appreciation and homes strategic reinvested of an affordable resale that a most contracts were expansion Since can less and approximately appreciated stock the they market. mortgages They the of to affordability our market sell to

nearly to placed we communities. were homes will contract X our our and years, demand for the of of years half come. to contribute for We Over all lots the in the continue sustained strong factors past believe these under luxury affordable to

and While this chain the without other the just Consistent cycle builders company well. healthy, face extend issues economy, disruptions construction not constraints. municipal land broader in homebuilders and These challenges. impact and times is inspections as market its we approvals every environment and with for supply labor beyond nearly other remained development to continue and

took quarter, weeks and it increase saw able production cost put constraints have home improve X supply to to We these do fourth about year it these now we will times anticipate longer to we labor pressures and X conditions times to about average On taking average, to the is chain In the a near-term. deliver than quarter. X increases, price ago. X our been cycle extend pressure continue not offset cycle compared third with in on by deliveries. us than more While weeks

reflect that projected margin improve. not Our or increase XXX fiscal production material basis our labor chain based adjusted delivery supply markets. not They XXXX chain conditions assumption projections point for based schedules and conditions. full any that current or labor labor on improvement assume and in on any Similarly, gross does are are supply

when regarding Given we will the high labor are these the markets and believe normalize, degree supply chain of prudent. assumptions uncertainty

Our land to in continues market. us serve strategy well this

and of our for This fiscal pipeline based of with count will land poised land on is today. and XXXX. control community growth XX% beyond by projection that own a are We in growth or controlled end the we significant owned XXXX projected solely feed

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

generate with strong In approximately gives us We a sheet the and returning flexibility to capital debt. $XXX growth to returned buybacks approach capital balanced $XXX continue ample the to invest leverage. dividends XXXX, shareholders This fiscal business continue we balance a million shareholders our and healthy liquidity. to and approximately in to and reducing to with return reduced prioritize and flow continue intend We to to by through million. have debt while growth cash of our

that, With quarter are fiscal turn buybacks it over approximately million XXXX. targeting Marty. We per to in of let me $XXX year

XX.X% ago. fourth dollars of quarter, XXXX’s billion, generated year of XX% homes in $X.XX homes in and was price The and was benefiting million were average Thanks, which $XXX.X delivered Doug. fiscal year X and In ago. delivered city anticipated. up $X.XX from $X.XX homes we share revenues X,XXX net than million $XXX,XXX, had diluted X more income been compared $XXX.X to deliveries quarter share Pacific year per and Fourth diluted living or per from

such income and quarter compared million percentage of is at model region on and and compared of to $XX.X XX.X% prices venture, items the fourth above. broker sales was the advertising, expenses point year revenues well year coming in due land cost revenues gross in favorable quarter noted Our and the to Joint This to ability both performance tighter $XX.X X.X% as quarter commissions. in increased City and in million XXX other reduction adjusted increase margin earlier year-over-year fourth fourth a better outperformance million than compared expected than quarter ago. Pacific projected. headcount, was mix in same of controls fiscal primarily from asset our The gross raise $XX quarter primarily quarter Apartment during home leverage was due as adjusted from business to a than approximately in XXXX. in our mortgage XX% Living and to occurred our that to sale and operations. This the as well Living title as an cap X.X% our fourth SG&A rate XXXX to the expected as was in margin quarter a due X the basis better-than-expected the sooner as better was SG&A

XXXX. year had business productive Apartment and fiscal year Our Living active in an

to generated a the of country, starting Brothers the entities. million million cash projects total income of during X and X,XXX addition units about to year $XX with dozen we a from sold unconsolidated approximately new $XXX in across In projects resulted Toll of that

Living Apartment flow and to between year this arrangement, Under our expect of the We improve going Apartment projects business. of able EQR. we forward. reaching being strategic unit stabilization quarter, a Last capital we to efficiency a and our steady announced sold expect partnership each Living be

for joint to relationships continue not venture covered our EQR. Impairments north in million with quarter in explore and We by similar $XX.X programmatic our that markets segment. concentrated the totaled are write-offs

to generate from $X.XX and liquidity, billion with cash under flow We billion approximately this of cash year facility. of including $X.XX year. flow the with $X.X bank billion fiscal strong revolving We cash continue billion of credit available our ended $X.XX operations

invested credit both of that our fiscal loan. reduced facilities dividends we on is year and million scheduled to Last of the returned approximately at in billion acquisition million also we $XXX February of and XXXX these X in $X.X month, at November par. lowering development, share and of million, XXXX, years million we revolving the At out. shareholders During were extended end. year, XX.X% $X.X end, X/X net all year X, and our capital ratio now $XXX $XXX mature $XXX billion repaid debt debt to term Each due through to to by land our maturity facility X notes and fiscal repurchases

million maturity Our that, is are XXXX. million notes next after due becomes notes senior April public when in $XXX until due. XXXX of significant debt of And $XXX November of not another

point ‘XX fiscal seasonal weighted $XXX,XXX. forward, first Looking with full expected normal price patterns, year low to and the X,XXX projecting homes with year Consistent to we also the are consistent between the deliveries approximately patterns. are the for deliveries seasonal be with quarter half, deliveries quarter of of first $XXX,XXX fiscal year with second average of an

of challenges of into In deliveries chain issues by average For XX,XXX disruptions full with new with homes, and the and it supply between XX,XXX $XXX,XXX is an fiscal year XXXX, $XXX,XXX. and the home we are labor caused municipalities, light projecting the shortages, our we related suggest. price XXXX, between for on but fiscal important are improvement to full factoring note conversion and lower that projections improves delivery year backlog our guidance. ratios not are first We the historical than year construction trends quarter hope environment based in would

XXXX. fiscal home basis gross XX.X% expect the for increased gross full our points year to through year. to XXXX. is We we course expect approximately increases XXXX steadily price sales be higher course the adjusted than year the fiscal of in fiscal This margin and over margin XXX of over XXXX prices flow We fiscal those

expect first we approximately in first lumber low be of the quarter to reflected peak a the addition, the prices last with XX.X%, In adjusted point from the year. year Therefore, we second of significant the half in QX in increase year in deliveries. margin by be at gross expect half to growth modest in followed margin our

reduction project as remainder due first The quarter debt be the expected X months. large to in $XX compensation of home the is versus first past accelerated interest the lower a approximately normal interest not that expect or be cost annual that in have of expense cost sales over to full of SG&A our is recur in in approximately ago. year. of part year. X.X% the million first X.X% actions the basis percentage in Included taken We the XX.X% stock sales expense points SG&A our XX we We to revenues will in sales and about XX.X% quarter for quarter year XX of

before seasonality closeouts home project year, end the income XX.X%. full land or of the and income, remaining end community rising own already entities percentage to sales openings year. that to land dip first million XX%. sales year by SG&A a community year community approximately this $XXX the for from profit quarter course Based Other quarter based be of the the XXX of XX% fiscal growth of we we of to gross on that to approximately first XXXX. projection steadily the be Again, November For the in high the December, of count in is We the to and fewer over the year million first Doug is $XX as we we number and control. unconsolidated expect full quarter on project revenues and expected project community typical rate the for full of approximately and quarter first count project at we tax mentioned XXX.

weighted and full to is our earnings to share midpoints are represents this the XXX.X million per With approximately million per share for earnings all we the first a Our guiding quarter XXXX fiscal be approximately over average $XX. XXX using count in of XXXX. expected year. shares for year together This and XX% increase share

it turn me Doug. to let Now, back

Thank you, Marty.

open to Before very record their These Tom, to exciting Toll commitment it for determination, and I’d like to open team Brothers. this I up are creativity year. for a Brothers it questions, thank up. make let’s Toll times

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

taking Hi, good morning for Thanks everyone. my question.

Good morning.

at XXXX gross turning great out well. QX XX% and the a roughly is second the for year. like at margins looking especially guide in the about talking looks It half, XX%, pretty are looking gross just the ex-cap you exiting But as It’s quarter. nice margins,

to we what in XXXX what bake is Just curious, here commodities be hits don’t recent expecting it’s you don’t just that in am by stay things from hypothetical how that Do I – then? do you we lift a is in how if question, these should is Is we that And but here. does from in commodities expecting it XXXX? move move sustainable lumber? that I should mean, the if, as say, let’s be here? were curious think

Deepa.

relatively prices budgeted not recently. have we increase contingencies properly believe just year built-in and to lumber ago, we compared modest we in a were – yes, So have

our to cover budgets our issues increased within have building some labor we to to chain our about. that supply some contingencies costs are lumber, We cover the talked on pressure, cover of have

yes, So comfortable. we are

home far. very another say not We price able recent not increase respect that to labor guidance nationwide. think ourselves price With this ago been in through to I more have to will increases had – pressure. comments should we This clear made just continue And this than market increases are this we are to our fact, comfortable prudent be and offset assume going or I have prices. cost does our are our we in XXXX, week. the there very we with to we other mentioned that is to proper in are is All should to-date, cycle, it strong a being And market believe as and contingencies go supply we market, we to we moment continuing get that in protect any raise improve. price up I out a lumber prepared increases.

Sticking your second that XX%. order pricing on question, pricing Thanks. for up my is

in a X%. is deposits of almost some that? up talked higher. I deposits. But Your sort conservatism pricing closing are production mean, of for calling backlog primarily the Is about in non-refundable is – It’s what being you just slippage? there It’s ASP some teens. it you baked issues? Is

just how price had out. increase – you this and curious, do pointed So I another you just week,

just So how I the are reconcile trends witnessing? strong we do pricing curious,

It’s it’s in the price Sure. more great answer. a build. expensive backlog, pretty Historically, deliver not question the do houses home and normally because to per longer take we the a simple

just fourth and options sales They saw, million, break more as are $X price through bigger. the expensive So more They those and have to quarter’s longer more a bit homes you complicated. take are they upgrades build.

lag and turn And the the homes. expensive end the I think luxury on faster from of answer. upper So affordable price. that less sales is comes the is a the there The

it future our revenue more the and you end so that really perfectly that’s coming sales the the proud are year we our recent of backlog. while increases in what in why reason match in doesn’t are And see price

Okay.

stock part the Closing considering affordable one I ASP strong, on if that mixing you’re more more towards can Sorry, is pricing. luxury. just

price you versus within much to that price are able how mix? So performance, color is on provide

quarter a in luxury had strong our that fourth year has very in influenced quarter. and of we Well, the sales segment the average this price

our based moving as We affordable percentage total, forward our purchases. on community luxury land more of expect and a count

will Great. Great Thanks so it much. pass on. quarter. I

much. you Thank very

The with Research. Truman Wolfe comes question from next Patterson

my everyone. cash strong flow very questions. Hey, help you can cash for taking us ‘XX billion. Thanks Marty, morning $X.X ‘XX operating through think of good Hey, I am hoping operating flow.

net in income. nice a see should jump You

improving to as You are and cash as backlog to multifamily likely build efficiency, continue well the you towards usage. going option are transitioning more but capital

us hoping share and also a I’m but So you any plan with on little can help what you ‘XX do mentioned through in think per quarter, repo cash. reduction, about know million $XXX of debt then bit I to Doug clarity the etcetera?

with half question the in in move mid-November. We me let second of So, then first $XXX to operations. paid back start and the off in flow cash back debt I’ll million from already quarter the first,

buybacks We have $XXX to moving guided per million of forward. quarter

$XX of to dividend We have a commitment range. million million $XX the

million So, on that’s land the may that variable all not – or let’s this That’s generate are deals depends the we is banking approximately land which based we might spend, in call the we that it going year, deals on that cash pipeline put the of usage. and what close. may have into $XXX arrangements to

from another strong previous year. So, It we of it cash as be may not be operations as quite project. the will strong as year currently flow

Okay.

were material on remains weeks And post-quarter you then, still And It improvement fiscal sequentially times cycle started you see your in have of now cycle supply enough. availability seen hoping up the fair or stabilize? I said to any No, construction have the tight. X times as in materials or But categories key of am of XQ. Okay. November, Doug, any chain. December, you

Truman, the is no. answer

an seeing tough. not improvement. We’re It’s

Boise story months, the were of hurt get and We get out they delayed them, trusses. couldn’t is we it construction. really Here for

only We out the the Boise have to solved HVAC the give recently on houses. duct trust to rocks flexible contractor our problem in find can’t do

they for hopeful, talked has one gets some I’m of than CEOs we Brothers X been year. But we’re see have different story. year, it about not building I of we’re what of delivered. X what I on them ago. So cycle second partners, short having by hope and company than very And some said, We pops think a every going consistency their up. and problems market for more but time that in to is no, better full don’t problem we’re some this Toll to guiding But up a was speeding another encouraged deliveries answer somewhat companies with our it have you see are how some we some solve is year the is they spoken it improving. one hope not as solving longer and believe some the largest reason improvement, or be Street. overall, growing. that the the bigger Dramatically, and assuming weeks can in not now think there by the to half is I prudent we’re we being how into that, running the

taking for on good guys coming questions Thanks, the Absolutely. my and luck quarter.

Truman. Thanks,

ISI. comes Please with Evercore from Kim next Stephen go ahead. Your

Great. Great will obviously, I the you but particularly, you’ve in. a me guess, take that Thanks, conservatism encouraging word like baked job, Doug, sounds it. to used we That and lot contingencies comments guys.

become In dramatically, October. said from you’re hearing warehouse if – seeing supply to they they We’ve for I such of to to their customers guys. relates have them the when grow you the grow encouraging. able they been seeing subcontractors Truman’s instance, of you answer are first them think that’s but willing unavailable question, question parts not in My end been that future, so you chain sort actually still that largest really as available to issues. service continuing become are

are times that’s way about and of seeing you’re in XQ in – to the in and if currently? what’s happening maybe sorry, think whether, cycle – kind wondering So stabilizing that stuff fact,

as said, quarter weeks, third fourth up from quarter. were times I over the Cycle X

builders going and one figure Stockpiling are of a meetings creative very major on are is good this You is contractors example. to suppliers ways right. lot and a out. There that trying lot and of

a of to to fill for the try has to Depot week. go tired getting that find something a to having Home to gap We’re

I’m to go far, of mentioned, stabilize it. And we’re X so to another going I see everybody going think QX versus I believe so use also ‘XX. but is in continued to the jump, QX I weeks on word as And a not don’t of as Stephen,

to our adding in focusing weeks by a and delivery is And the to X every lot. on. acute the months, cycle year, issue think that’s X biggest X obviously, most is most a I the that builder – it

think So problems, to are we to I’ll yes, finding then them. try all ways I – use if these not solve stabilize words, your

worse. I’m it’s confident that less yes, significantly So I for not that encouraged going going fairly to get some to get time. But am it’s better

This where as certain being as straight in other where but markets it’s the vague, can and market is situation, is There those a for Sorry teams acute. are you. give markets every as I different. fluid aren’t very that’s concerned

reaction current you a And all-around can do in compares No, units the got Yes. and think in do your many you quarters? Was start you to of how And you it, I the there. I and it’s – if first do rise then thing still have to many did supply that unsold at how a quarter? you do started quarter? kind appreciate going with to know chain few you I related homes the year-end? give from its in what time what And XQ continue sense a level increase couple to that’s that. over think lastly, third for out it. to could backlog few us questions how ‘XX? next curious the expect your under I crazy a construction in Same maybe you with quarter was

Sure.

starting are That through approaching A about homes without they our we’ve quarters of spec, was XX% higher. buyer. which But are talked about So few those an specs. we a ago, means XX%. sold

inventory have starts contracted that our that increase to backlogs at And of But issues, next couple the have a the committed some we our huge or hold starts. obviously been take absolutely we the in houses increase to we solve us and will, to on much sale spec off contract construction of see of some of homes a cases, until And the of spec starts of the those with quarters. turns, increase to begin lot. some homes have closer we priority are because stabilize, that as will have are to of least completion. We over you the number on further spec along backlog most buyer

strategy And that is is to spec the that get place. have up Stephen, we... that number And closer were am a second of absolutely months a sorry, that so that a I ago. to half XX% we you did in few pushing at XX% or

The last one your was just simply about backlog.

Your backlog that many thing... high is in ways very that,

yes. yes, Yes,

are out field for we’re times we to going XX we the cycle to So does there, and selling in now. able about houses supply quote? right That’s built. tougher dependent and pace labor that quickly and with Absolutely. What building about But we we’re and we’re on business. right XX, yes. do delivery backlog, But Historically, a upon that per of grow open how XX now, at issues of we’ve get a can what’s that’s approaching dates to XX. pace community, been able the build higher than

segments, we of are adult. communities our I and As of our open, terrific, activity product in on XX% XX% affordable allocation, of our in are demand and markets luxury mentioned, nationwide are all luxury, and all terrific sales seeing active

And raising so prices. we’re

we a where pushed out. market. quota today housing in But has allocation sit be to strong date on because we very delivery We’re the need

guys. much, very Thanks times. Good

you, Thank care. take

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

Good for morning. Doug, pricing. Marty taking Thanks, on the to questions. wanted follow-up I

something a the how margin. mentioned much and had or you’ve expand normalization wondering, you the I marketing turned that into of as stability to national increase think this maybe seen week cover some last in as come to or back call, fall, cost would tool I’m increase magnitude you’re of the this price or terms you strength putting effect. signaling characterize market, there the out some how as

But that subject put they I don’t we on whenever I – many are usually raising that what week. are communities free it. regularly to to raise prices. my are And there communities understand prices this want, for described please So wait eyes

a it. However, year, helps sell Xx X, X, into You with a sales, increase, right? national have price we do which

also our up into communities have also in We weeklong can a between event event, of nationwide. sales is year a and prices that. Xx our week, a went in of national all X% and which sales X% sell we This markets couple

Great. Thanks that. question, Okay. just given I the My pieces. it of on margins, for the mean moving sense makes Understood. second cadence

of for implies your that guess what depends something XX% I the definition XQ Marty, half but when and thinking XQ, significant half, in on further – of I in second your the ‘XX? should for terms of for color be of in Just you’re any exit kind of second it XQ, margin maybe it’s how about rate guidance talking on guess, modest in the the think the versus we I neighborhood gross year?

Yes.

think you’re on directionally, there, track I Mike.

increase two the in think I first second last quarters, fourth upper quarter, a so for modest we the for XX.X% more quarter. then for up quarter, – XX those XXs the and into get the

through put effect that’s end but of into I quarter would you by already fair? backlog outlined? constraints that of you’ve say given the I the your into your you pricing is ‘XX, – And want fourth in the coming guidance, fully the guess, don’t you say to that end Is not know that yet get that that the deliveries you’ve Would ‘XX. by or

That is fair.

say, to yes. fair That’s

homes until be some will selling certainly delivering that we’re today There XXXX. is not

the And some year-end backlog. in homes

That’s right.

thank Great, you. Okay.

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

morning. congrats. Nice Good Hey, result, guys.

Good morning.

necessarily you But land, what appetite First could great lot the of curious was lot are have talk lot you what And representative know seeing price is count environment, last of a this I’m your we’ve which a in increase sequential kind modest right the or on in – you about position to of side? your land I question environment the in, market. in in like for terms appreciation you’re lot acquisition more guys this is on looks land Obviously, a now, be lot is seen what today. count quarters. and several than not doing if the the of just

be pull should that this little much? back may into you not I as to gas pedal? are on is – bit Or starting read a So the

read into Yes. I wouldn’t it.

very We’re opportunistic.

everyone I the option. buying that on we’re we option, a would we’re now And return we’re that. I’m our return on to through land very set understands, blew driving of on XX% at goal XX% and XX% option. investment, goal We obsessively proud focused set As that. equity. think of We through now a how blew We

of going option; will through to XX% goal set We’re suspect blow I a that.

just sort prior coincidental – we time, with it’s when land had one up QX times, tied that check. biggest so that land would the closed spends in we of was And was in required that certain some and of and a

read seeing I into you’re wouldn’t there. So much what

be to We’re continue to going opportunistic.

bigger. is footprint Our

markets. – we in XX not were We’re

now smaller we’ve of in We’re and expanded in some done these bolt-on XX markets late. have way builder we acquisitions the of

to the couple And years. of in so there almost We And as expand land luxury that there opportunity. last buys more more is is go of affordable the luxury, opportunity. mentioned we segment. affordable half our

it shutting So down. we’re not

very We’re not changing disciplined. It’s underwriting. the still

And much that wouldn’t into I so one read quarter.

you’re drive equity option on think the us higher grow. land, to to but increase return see I continue the going

are And out lots, XX,XXX I want kind of them to XX,XXX to of point our so owned in take backlog. are of opportunity or sold this and that

our needs of of mentality. to So our of with evaluated sort that with other size the be builders compared to land of kind backlog, years supply

builder. because a Right, not we’re spec

Appreciate that, Thank Right. you. guys.

that to last strength But in early Second take an other have advantage kind Boise, They you been markets guys of here. it question as entered of builders as one, hadn’t a number of entering might about or be necessarily market. new market. so seems it publics just back much two-part X obviously are expansion very the a X mode. general, first And months, in or the like thinking like example, they months. as been in last that were of And the feels have over X

any a like your just change for competitiveness you over market a incentives a or dynamics market observations fairly type builders thinking So that of create when about the period seems any of have in in market hot of Boise, number entering what short like or time. example, does

Boise secret I keep is a example. a we any Well, it couldn’t mean longer. good

is question. because didn’t and no of keeping doing there it good well I secret But of we so a a ever it. do proud were fact, so job In

You publics dominant and when big in have aren’t a prefer the you other position. the market

we head there, and start a of lots. have inexpensive huge have thousands many high-quality We

Alan, be in at example a And find in you players become because market, the our more buying we of good we your some with have land conservative position to competitive I land can really these we’re bit where think larger have there, So more is yes, an that. bit a niche. of the built. markets But as

our is to luxury going price. higher bit a come price. affordable Even bit We’re at little little a higher in

to spec. not We’re be going all

level offer at The to opportunity some that We’re going is some design they to of lower choice. want price, home people important lifestyle. it today people a their to they choice, want so even

I markets you’re going work to And and of continue Toll advantage really so that’s finding right. take to hard we niche even think Brothers, it. to in we’re But and of competitive distinct that

loaded and more get they be to that become find you business your opportunities to As fit plan. more right have with more careful come competitive, up have markets – the bigger and builders, they you

that are Doug. response now so affordable cycle I sense, that to fairly a be times that that at your third just willing off with in extended is you’re the you point you to guys bit into was where at for a luxury consumer for looking getting renters that, wanted it that be they becoming sign of are quickly builders. and the that sense in coming cycle trying something on move move need times will other to to those that kind to them, quicker? they question price that and the and they not going yet? not more turn Makes few number ground, never you’re though that the pushback segues fact of ask even elongated as And that you’re spec-focused specs a put Have seen any of to more as to little homes especially to maybe Or can forward point pain

dramatically. Well, rents very Interest low. still rates up are are

I become I’m not you get from at that come particularly a price So house pushed a that maybe small out, bit not to wait I a to market for could and rent look in months hearing long think while they have They they really the to the as for is XX go of the dates delivery they’ll in we’re to think whether not year, our gotten But say, people rent I’m So we’re last own. get disappointed. part and a may It’s I that as that – don’t "Boy, other that point, it there But go until – our at it’s X.X%, wait want completed. will luxury – concerned is rent and going go affordable the decision They even versus of wait that XX they I’m feeling to XX-month house months. they lease. opportunities.

market incredibly are Now the they that the in so busy. I’m And are find resale not it the all to going is tight sure builders there. other market pretty

to want inventory, want So what the with spec going Possibly. I home inventory? can a spec bit to I I do bit that exactly modify because and question wait it new a get want find spec but not there. it again, want, I what sure some be you’re I’m exactly But to not Toll. Could there is is, I

pressure, So that’s it modest affecting demand feeling not our affecting pricing there sales pace. but any is we’re extent affecting or to or some power

it. Got

lot. appreciate I responses. great. a Okay, Thanks the

care. Take well. very are You

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

very for Hi, my and thanks the great results. morning all on progress Good the and congrats taking questions. much

Mike. Thanks,

you I concerns just talk dead you’ve and it’s question, XXXX, not you and couple you is back, I as prior the power as they the a on sector the don’t potential given margins those strong years, to want And of out for at relative in And ‘XX? years, wanted ‘XX questions are toll a How you’ve next you I the of that think and ‘XX. the the approaching horse in gross to But about potential circle noted. XXXX, one tailwinds to continued and margins. trajectory looking to about had are rate rate headwinds not just market, about what sustainability overall, couple very might exit think that thinking exit the the easy the you’re as First beat that’s that the sustainability see still in of big pricing about in of peaks. have of the

certain to different gross that contingencies with that not is going and get cover out are our segments of I’m put seeing in that or I say cost to is that predict. product increases uncertainties expansion level that far Michael, because can today. And all we’re place out of our in going not of are market. margin geographies a we to all the

compares at as talked are geographies, you today, I I gross next except all highs, expansion time. home that what moment how margin types about the can’t compares on gross far this industry even sold As historic in how all seeing to just product it predict to said, margin

weeks expect given the seasonal that upcoming kind we see appreciate think of the you Okay. a in to kind next was of year, allocation, last what last of average on I – Is first I the the for you’re saw your how closer quarter. think. say, that sales low higher business the within over during now for the did guess, perhaps rate you month X% communities months that’s ‘XX and the the would I only absorption would trends demand think good few month, was second way the Xs are believe And But that about to secondly, fact per should X.X%. means which the Obviously, per let’s almost type XX% rate XX quarter. at over deposits to strong the to assuming kind on about X Is market, pace similar of a months? selling I year, of fiscal current your that. your year, continuing mentioned business X.X%, nonbinding the it the in a you pace that persist?

were hot XXXX. deposits We XX% Well, I over of QX my our month X ‘XX. that the sorry, said, of – first of we apologies XXXX, at same were up XXXX, as the sales equaled end ‘XX. of delighted Remember, QX were X calendar weeks QX weeks fiscal

encouraged. January that sales. year So year to to XX% ago year, when as the the achieve – our what then many that February, is months a for there for Last only and then the cadence December it’s strongest quarter the a And some the you seasonality, very year of ago of was go year, and our Generally, season. as well just seasonality there The no signs prior there selling. other and spring for know cadence, kicks weeks, in matter deposits for are but was in we off kept markets didn’t spring week a of mentioned achieve us of we’re markets, described, X us that over as we not signs in year, seasonality. I’ve you season match up some aren’t selling

not all that, Mike, I our going we’re to to So sales going can is because forward. say predict

land. We the have

We have community count growth coming.

to geographies We and have an QX. incredibly price and now start had point wide with terrific a we’ve

much. so thanks Good Great, luck.

Thank you, care. Mike. Take

go America. Rafe from comes And our Bank last question with of ahead. Jadrosich Please

good It’s Thanks my Hi, Rafe. morning. for taking question.

seeing you and that just kind First, remarks. for just wanted what – to you what it’s changes mentioned and confidence you demand this can that just a sustainable ask you’re see temporary. of trend, And gives about within I shifts then not migration do that, is second talk in homes? prepared your you lifestyle the

I sorry, half. I’m misunderstood the first Yes.

seeing, is Consistency why it are patterns migration that of we long-term?

Sure. Thank you.

U-Haul we obviously at have pricing. look surge charts pricing they So the

New you York to going from to loads want you’re $X,XXX. If City move pay Beach, Palm to

state get leaving trends the jobs, the back to affordability Vegas were and think COVID, the in from and for real. that those and the to to mean, the chasing Arena want the another expensive from of trends lifestyle, I people chasing North you it north. I And sunshine, chasing exist are thing and northeast, California. before You And the Florida. Charleston to may West, California, drive York those U-Haul pay Phoenix the and California New Austin they same load, chasing

COVID to accelerated there We’re California. to decided people. them can enjoy gone, flexibility live doing still up they I got to existed to where a if million live well of is we design have they There XX.X to that million to firmed lifestyles. want home take when to to a that the migration the part term want people mentality that allows million and those work the price in stay are trends of But to they COVID, Pacific X.X longer where is And think least really time leave, and before pay have in job at ourselves, because and XX Ocean. the long their

they on move to time where can they design to how care are My is marketing. concentrating home is it, and are their about more Now important my tethered we spending allowed My to home are versus early had job were the real. on, This their more there sanctuary. and them. moving world. People in the they most they enjoy home. is life thing the are They where

going before our that’s continue. States in. Carolina, and of we look – from And outlive strongly Mountain And states a will Florida, I Sunbelt, at Nevada, are these have existed feel some Texas, Arizona, migration like North Idaho, moment so patterns, are buyers just to Colorado I cases, XX%, this state. we that in coming in different coming COVID long

then you. to Thank follow-up this. just And on

of of if how and You you I affluent customer have about about your they low, less think rates know trade to core your do willingness mortgage but affordability. a up? bit do stayed move little spoke affluent the stable buyer concerned kind about up, how

And figure great basis an go of a math, or either our XXX adjustable have points, mortgage to rates product, backlog go to to the We by less up out question. it only Yes, call if it’s X.XX%, would XX% X.XX% market. ran X% in lot are XX%. have going cash. And those They They coming to are all LTV X%. of stock existing well mortgage a have out of of their because an that’s average done home. have equity the

backlog. So that’s the

not I’m to and have rates, better a interest position all but – the are for sit here I about you much can’t that tell the that Your reasons given. of we because is of affordability higher how buyer bigger to our buyers react immune Toll Brothers and to it? in question would we immune to going the nature

The by And conforming have average of X% encouraging, move $XXX,XXX loans, a also as – gone up limits – other our on we the limit have from the And jumbo about conforming. that’s conforming. have moved as of $XXX,XXX gone up a into loan and loan down very backlog that’s thing they

business. And that – I so tailwind think nice for that’s a our

Great. Thanks all color. for the

You are welcome.

any This conference the concludes our over I’ll management closing question-and-answer for to back session. turn remarks.

continued healthy everybody Thanks. for interest your a XXXX. everyone, support. thanks, a We season and and Tom, wonderful and you, happy holiday Thank and wish

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

disconnect. now may You