Toll Brothers (TOL) 23 Feb 222022 Q1 Earnings call transcript

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

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

forward-looking I conditions on addressing will guidance you this last Before material, on current will the night by of thoughts inflation detail. it I other statement our to on sales, seeing we on of that availability our how some on in and based website. and we read you begin begin, labor many are more information the them. pandemic, are the the discuss markets, beyond earnings events, caution that many factors could results. and about sharing market and with call control side statements and numbers and in I on housing are and the over to I our the the along impact production to challenges interest I economy, ask Marty forward-looking assumptions release turn of significantly the rates, future then world financial affect

compared income last first sales XX%, units share respectively. and year's Our revenues dollars and And first grew solid. results to quarter rose were in Net X% home per quarter. earnings XX% and XX% in

all the demand that see continue market last to the XXX quarter quarter improved in And $XX.X adjusted reaffirming revenue provides, percentage points Due Our of points home our our a XX.X% first visibility backlog billion XX,XXX we our as full end, was and than guidance. homes. stood basis backlog basis expense of last XXX are year At of the in first good over strong and SG&A gross better we the to year's quarter. our margin record year. a at sales

as approximately XX% contracts sales and dollars buyer first we up fiscal first our orders X% geographies. net all units up results over saw broad billion, in and with across units quarter, year's for QX of our $X the when were of compared in strength quarter last X,XXX to in extremely strong segments pleased XXXX. are XX% in We signed We

approximately Our the above contracts signed X.X per averages. at sales The best once remained our average was in demand for us selling $XXX,XXX well first exceeded community quarter. our up contracts communities last of Favorable historical quarter quarter allowed compared in year's $X the nearly dynamics ever. all first of throughout again price million the prices raising continue and first quarter. was to to This quarter

additional continue disruptions, these the It's is chain strong, the home While X us it out from approximately not by wave, demand These point months country labor that longer to ago. especially year important are a January when in deliver versus production taking as X it to challenges remained pressure today delayed delays. peaked. lost. were has side, challenges compounded to deliveries shortages Omicron It we the on across spread from municipal and face supply

and a simply we historically strong It $XX,XXX. due to at continue and and and they to pricing limit timing We supply this and believe us continue right is to issue. chain, extend rates, payment on production. time to with for demand down labor low as enjoy schedules issues, strategy continue construction been our nonrefundable the that focus of supported similar have sales to average are an is cancellation With by contracts as

using many today the and bid price. maximize we Over from of final are communities, over XX%. process the weeks, the resale past sealed allocation we communities X of traditional increased best to to on In number XX%

to would in specs more we typically last year. inventory replenish In addition, starting are we second sold the than quarter

As the homes spec in is metering expect should in in represent revenues, QX as to to delivered half starts note started of this of increase not construction we about of later XXXX. be future sales still and first XX% It homes spec a the process sold reminder, settlements. in spec important that and the purposefully impact normally our the timing be

quarter. So we community the similar our more expect to in contracts per the the to homes pace than we that be sell booked we and in sales to in quarter X.X start expect first QX, we second

are chain taken build we we Our past not of times. most have weeks on production And available. also potential in past nonbinding consistent February available were to popular work given closely and and but readily better manage week. order make In continue more of in deposits deposits and We to necessary of floor supply with deposits first so and issues further X and to available per that those streamline our any a the with and can choices the weeks, which and national these labor continue optimize bottlenecks, X delays order we approximately our XXX on offering the plans we X options by focusing production number anticipate in pace subcontractors chose adjustments. to more to mitigate community, months, could buyers the suppliers was we make operations focus

the pandemic cases the improvement shortages near many in While not encouraged we in of drop any the steep chain restrictions. and we by supply are meaningful relaxing in and recent do labor term, anticipate COVID

boomer equity, pent-up trends continue substantial well continued our appreciation will the equation. long-term is for our the propelled generations, both particular, home. migration housing of the demand demand, Turning from The greater back support demand for side tailwinds into between the home wealth for believe demand and by a We future. supply effect these existing millennial rising and strong to the imbalance tight demographics and to homes market being homes the in homes of of the and

markets dynamic and particularly are living expensive to have across and years. recent This of see continue people Sunbelt cost and less in where country states the values, we where higher to regions. home We the demand in in Mountain states, spurring move from expanded taxes is

issue. an affordability For is of these less buyers,

demand also our an from concerns the seen on are in I buyers increase mortgage rates. impact not you compared entry-level recent affordability market. customers from We to have insulated generally in that better remind the

they and interest when to to buyers they from years multiple homes. higher much have tend They settlement. not today, us in their contract rate and Our lock existing incomes benefited their that with closer portfolios of investment also appreciation understand will until are their they

X/X have don't monthly XX% payments beating rates. that in to of a demand our that of So impact in for is focused being who that approximately conforming our customers, on point who pay our jumbo are mortgages. to buyers clients. of XX% all Also another no homes our cash, XX% loan for And are which than on we about than our value forward lower rise rates, in mind a XX% customers their overall, believe less rates and borrowed average buyers, for by pulled keep currently

rates of analyzed payment This backlog fact, have creditworthiness XX% and before approximately estimate down and X.XX% to an sheets our mortgage. to increase to a other that our In to the higher balance would we've arm, consider or our would alternative backlog just speaks customers. need healthy of

a on our reaffirming guidance As equity of of including for I beginning earlier, mentioned all return we XXXX approximately fiscal are XX%.

flow cash to XXXX. We also in expect substantial generate

growth buying. ago. and capital to the of Our allocation in XX% owned investment optioned priority land X were we capital-efficient through the lots at approximately XX% be compared to highest year the optioned and including and January business, disciplined XX% Of controlled XX, continues XX,XXX were owned

lot an XXXX position is with lots our optioned more our we efficiency count for important to the our provides shift year also projected community capital beyond. us and strategy Our returns. part fiscal and on all in This land of growth need focus

community of fiscal expect 'XX to XX% the the count continue the from by communities XXXX. of at we approximately fiscal end were growth We XXX operating end

to cash In We to million continue return we of first notes. leverage senior and capital the to shareholders. further $XXX reduce use repaid quarter, our excess

reduced We of paid X.X%, repurchased approximately million and by million. $XX of stock, count outstanding also share which our we $XXX dividends approximately our

upgrading declining cash to last With These to flow investment-grade generation and it factors, sheet our balance positive with leverage. that, Moody's with liquidity, credit fundamentals rating over along remains strong to month. ample Marty. us the turn underlying I'll business, contributed Our strong an expected

Doug to chain as our In up X% was delivered of X,XXX price labor mentioned. we We the $XXX,XXX, Settlements, average municipal below at expectation billion, month of dollars the quarter, in XX% greatest units units $X.XX in Omicron first our approximately quarter were that Doug. last most an and which homes of in in came delays the our January, of felt spread generating year acute. Thanks, the XX homebuilding ago. X the revenues impact from due shortages effects of and disruptions, supply

to pandemic the waning. and Omicron Fortunately, now seems be

up were million Our million, quarter per growth both approximately share first quarter Earnings share per first growth. our we earnings the percentages million, to compared the XX% triple to per and diluted approximately X year respectively, of XX% net percentage ago. up The million diluted, $XX.X revenue first and $XXX.X sorry, earned compared share the $X.XX and and $XXX.X pretax XXXX. $X.XX that quarter $XXX.X per -- in were in income growth income share net I'm respectively, were

lumber also environment adjusted quarter year. first prices last from XXX in impact quarter's over improvement reflects spring was The this XX.X% of of to XX.X% margin basis point the gross includes last first closings. elevated pricing Our strong quarter It XXXX. compared the in the the

XX.X% year. We continue gross margin to of the project full for an adjusted approximately

second and first 'XX, This fourth revenue met basis of XX.X% impact a ramp-up third of $XX quarter. Impairments $X.X SG&A first continues. We gross lumber and of were gross better year QX approximately percentage margin the and XX projected. million expect XX.X% in write-offs margin guidance points our adjusted in quarter in elevated a Joint year ramp be followed XX.X% venture, income of was our as of land compared as quarter. other in in greater last fiscal for by the in the and sales at a prices spring quarter. from the the in will last our quarter million to than the quarter

quarter rate guidance tax XX.X% was compared XX%. the of to in Our

future to Turning guidance.

projecting average are fiscal year X,XXX an price second $XXX,XXX. and homes We of with deliveries $XXX,XXX XXXX between quarter

consistent between with with an average and $XXX,XXX. will price maintaining delivery year seasonal XX,XXX patterns. weighted of homes and half be back $XXX,XXX guidance between are be will Deliveries We XX,XXX full and our

We quarter. sales percentage to in home XX.X%. cost of second revenues SG&A as sales We be approximately in approximately to X.X% quarter project be expect second interest of a the

we of revenues full XX.X%. percentage continue project the a approximately year, SG&A to For be as to home sales

be approximately approximately is of expected XX% profit second XXX count unconsolidated approximately year-end. fiscal full the quarter end community entities year. and the by income the income, sales at the be Other expect in gross the XXX quarter from We year. $X second second and for million land to quarter of We for million for rate to $XXX a project XX.X% the and tax and

the be per weighted share Our average to in for $XXX is second beginning earnings the count on full all per to a on for $XXX.X share continue of these and approximately $XX million we year equity full year quarter. return XX%. factors, approximately expected and share Based project million

Now let me hand it to Doug. back

Brothers This Thanks, of our proud for have demonstrate month, their #X to Toll and named FORTUNE the us to we brand thank I They this received to achieving tremendous Magazine very team time our the is high would Most all Marty. like very World's company. This and honor. that, am I our this Admired grateful. continue members Xth recognition. for and Homebuilding customers, dedication

year As prospects excited for I'm and Brothers current our XXth long-term business, market the its company. the about Toll enters in

turn me over to questions. for let it Now Jason

Instructions]. [Operator

question comes Anthony from first Pettinari Citi. from Our

last [ph] time I for rates Sanan Anthony. frame, sales Ashu is, rising did time we on your the guess down my meaningfully. is pace in This saw slow XXXX question

all? demand just was were warning the XXXX, warning those weaken metrics I for you that of around wondering be now. you maybe demand any XXXX in maybe yet, looking to haven't but I for some the we time were have should know on then than early So seen signs started any And frame sign at of what showing impact

foot The up is question. foot now, are and signs good web traffic. traffic traffic web And warning traffic, Very right significantly.

Okay.

over I X expect follow-up, to And your XXXX, same. I quarter, about a As the per you that. want per XQ, you similar for -- to think sales the pace a community little then month -- do for sold in just to thinking homes so in maybe the

a maybe little maybe then community sales just is the more I'm about we of growth out cost wondering, even of and like So normalization sustainable, pace in for coming a bit normal? a rest the at looking maybe new year Or that in that, beyond should more that count the sales pace? XX% think of

a what per everything per the of supply pace a XX this we're chain comments and earlier. homes and talked -- about in about about year. our and because labor as community per improve pace about of of talked settling we We now, have homes pace it's at that higher later over community get I year, XX we're all be all -- right So think at the the going selling of we to will prepared part can settlement the issues, builders

spec XX% second over quarter, As I And to of to many years behind communities we quick were that's X.X quarter. what are about -- many committed on we this of talked on homes we the about sold started starts allocation. more our those we're why the call last of heat or put in about, and move-in focused get XXX the be through market. going the more because There's homes we're so over

term, a so in a cadence. cadence comfortable in and longer very XXs being delivery And are high we the sales both

count And our certainly sell more community there and opportunities are for believe, so chain will labor down we as deliver settles contribute to, both growth, us supply but homes. to

it very over. That's I'll helpful. Okay. turn

from The ISI. next Evercore Stephen from question Kim comes

great about regarding ran buyers the factors all through info and not forward. the pulled being Really you demand

for So thanks that.

I sense net into more. And was, I One your in of back return interesting out to model Can about outlook XXs. In net bit addition, easily what us question of on year? that is have -- about on range what end low my expecting the you've that things at cap a here -- XX%. spinning of I that see was wanted we you equity, thought a for for talked to give of guess kind my debt little we specs based you're debt the is the here, our your your down moving the --

you few at what the in was you time. if period? of construction quarter number one builders and of this the wondering You're give have us number, us actually of that doesn't in any it give year point the what was was homes that breakdown detailed a under could ago I it

directionally So I you're accurate. debt respect the Stephen, question, to think with

to encouraged have plans I with year-end that up always mid-XXs, think timing opportunities we're interested operating they the in acquisition that to or investment fact land from low and to the in grade. year-end. us can quarter-to-quarter but builder or impact the Moody's, We're by opportunities shared of moved our from been

the so opportunities balance with that growth question, feel I which know number that second to process. morning. those very is And we respect cash your us this we the in comfortable in sheet operating with don't generation and levels have on the of liquidity the have starts. we or we we have, With foresee

inventory. our quarter of replenish As second Doug in lot the to mentioned, a depleted will our spec starts be

X,XXX So neighborhood X,XXX we expect of to to the quarter start in in units. the second

But were were of that selling as again, last increased the that, for bit than homes as sold. we we more And in starting we when one have first is and homes reasons a year, did Stephen, the about main start the quarter, allocations we many moment. we

spec replenish to going are the We count.

we there's this in we they're quarter, the that don't they the time margin we least as in the as even a bit time but sell, to those And hopeful market And they had than Marty houses early more able we be so been because but in client, should are if sold in move of later starting time. frame cycle construction homes continues, more this have will, they home, shorter if faster, believe, will at cycle sold. we're said, deliver maybe stages homes -- a a will the in and because those fact, we have

doubt. no Yes,

One brings of things like that the interesting specs. this on the times is higher margin

theoretically those. home have could values much trading Second pre-pandemic. -- easily that all comment reflect check we've that -- was is thought question appreciation heard assumptions pretty have whatever land I been own, relates many of rise how of lots how you that, two price to there. even to you you that the in run on close the or more which had than analysis is it things that One land significantly sort The prices price for were wondering there's that your But rate land suggests that of your negotiated analyzed I had as own, if pricing. of to I've values rise, home you're I've that pre-pandemic your we've book of wanted I that value, of darn Xx could one about likely appreciate. fact you the that.

and thing since my up of X out, have move have is, some same escalator, but your is sort when So options the usually where is at those of radically rate. capped second you values form risen options last land the this escalators understanding escalator you period some have The right? have that the of years, don't

So pandemic. arbitrage an really do roughly an you two Are the as option you correct? time on had the those at anything of that have embedded assumptions

very, kickers very me our is structures, of number to most want But deals land a the that land own I -- tied for respect With that and was It's have with deal let bog the no the don't of kickers. up complicated that down. to was XX% we pre-pandemic. what contracted start pre-pandemic, we we call own answer,

is seller participating back there's land associated with don't taking But a which obsession time. rate over not that deals we So There we success. our of with efficiency, rate a land, on pay may over paying a an upfront. our with be paying have capital with interest associated may With down pay an the be our land interest end most for land later. means all Certainly, banker, we with it may kicker, time. the

case, arm are price kicker, they and they wrestling are over limited participation the have have how small profit very a sells some do there having very, side. participate accounting profit have a of there very, either and our on calculate actually a profit we the where the a may books end or for understand in based and to on back to some of the get home be on into a they get we ultimately revenue that share deals where percentage However,

are profit price point, of revenue have your to they one do percentage of the profit be home a So But but have made, revenue, those when that. is is not the the of have we other component exceptions. and which that. would do Most a itself share participation, cases or the the outsized a

we benefiting our more far profitability goes seller prices are So than up. as our our or

Alan from Associates. The next from Zelman Ratner question comes and

a industry Doug, improve least the prior made to guys limiting Obviously, and supply in ramping kind you thoughts right will maybe hopeful playbook I'm starts. think count about on, a at to be now a that I is I terms think, maybe up, sales, bit. I'd even of going community because the of the seem stabilize a things following follow that And or comment your you curious be goes question comment you lot love similar a on a spec is just to made chain, of to year as lot. a growing

bit or of digits So up be cause X trying supply is Community all months. for double to kind love would the just over is specs a thoughts even hear everybody the that I guess your stabilize about to the catalyst where next count growing supply months, chain X going actually to if next the volume of to the the would ramp little improve? stabilize industry is What chain is I the X over months? why and are struggle I'd

And question. just great that. I by explaining a start it's want to Yes,

for we've recently our modeled in We We and costs fact, our more building -- improvement. any the be to given, increased contingencies we've guidance haven't careful.

pricing continued we're will the that significant guidance be providing be my there way and significant to the business all we're this With will called a few to ago, running X January, pressure. to million assuming and or said looking world returning that pre-COVID. that's made I I don't there -- comment the at million stress the X So be and off is continue normal, just Americans the million in know, minutes X My chart sick, to I'm today.

was that CO the it We who building year million. to We because inspections felt peak a was processes was really prior get was the month. when because we was home. clerk, January really, COs get ago the think a couldn't the home. couldn't town tough I X inspector

We Our last employees saw it and personal don't school. were just our be There's -- that Truck in off lot the in changing Mass and family, a friends that school. week, drivers port, L.A., more to home. I freighters were get my is came sitting saw The lives gives me things in dramatically. with changing going home. optimism my Beach kid's kid's you long that rapidly harbor. that's some XXX normal. will have it

are don't run transport. sitting to dock. thousands truckers in get seeing the of talk beginning about now speed have to containers opportunities their heard factories the the I've You their full on they're suppliers improvements big to some to

of extent And builders are of was it. The the there. to a that I strong. mean, lot out there's action The really I be continues market growing, agree with so you. Alan,

we're of all this going bit the somewhat the progresses, course, as so optimistic But to cautiously year am of using I hopeful a still stressed normal, although term a it environment. see production equation. side of that And and other that's more

on a little, follow to is think that available. product Alan, we that are we know I offering to

available. They've building manufacturers offered studios. We And are what the what popular to we are these that in we actually most is to with product in choosing design drive producing. are that narrowed efficiency. . much is we And are the they that spec marries how produce know narrowing homes items our

it's environment predict here. I there. a to comments know Got it. Appreciate the tough

thinking to it. you're helpful how it's hear about So

would dig mix terms of of a your question, in in the I to love Second bit business. just little

was growth there perhaps not markets have of cycle of in and as where extended optimism the perhaps cycle one been the quite growth luxury times think the in as terms historically areas some on affordable that in times coast. I the extending navigating some newer was the of

your kind with price industry. at curious look I'm consistent if So I broader been growth, it's very of the average strong,

more seem doesn't a much not have affordable it more cycle times your of or of towards product kind So like yet mix affordable stabilized. there's markets, been really obviously

you're not interpretation that, interpret I that there's demand Or should else correct is just on stronger point? the seeing underneath So actually the there? that and higher-end the from something luxury incrementally going price surface

We're decision ramped deliveries timing bit 'XX No. the living in We're business business. these tend tend primarily. almost has age-restricted affordable you of intentional raising because slow markets point into lower the out a of as down -- There's But There's buildings a to to active committed hit. committed priced. be luxury in And new to out, prices that as lot everywhere. adult, living living our of and the city city 'XX. we're to less no that COVID city move

X.XX coming X over plus So out quarters we entered increase country. in can don't percentage a affordable, are house million-plus the I of I able in that these higher at places. lower-priced we houses affordable continues million. a guys, story X.XX Boise these new or equal bit many to it's markets many areas. kind We -- over selling new be buying price But average sales together, we're as of of then homes the $X Boise We around you this read price ago, as homes. and seeing and into a is to It's -- faster land than and There's other will -- definition offer are much $X is expensive some all very going sales to to markets of But tell to those that to price the now guess up I or there's the years minus. when mix said, We coastal. more just where mix. fast last or our be coastal X And in the regions. like it markets suggest

no it's in It's everywhere. prices just So up going change strategy.

All right. Appreciate thoughts. the

from question Fargo. next Deepa comes from The Wells Raghavan

broad me. A one for pretty

that time, low chain you at Any or less given end, season high visibility, governor or guide? what's still more for end? the wide the backlog spring this just waiting is XXXX your cetera, your are range locked supply selling Is driving in in et that there? thoughts to If --

Yes. ahead, Marty. Go

I So a roughly for XX,XXX with XXX XX,XXX is width right, our go. guide think of of units, to XX,XXX those deliveries to

that's think operating in a prudent guide I this environment.

I Sorry, misunderstood. go. XX,XXX to

Sorry.

quarter. we X,XXX Well, in the delivered first

deliver. Got go it. it. Yes. To to Got build XX,XXX to

it's the very think we've comment. I that December We're home had the going margin next -- range, us cycle. quarter we're for margin by XXXX. can I And sales. this said highest selling not seen in in that I sold the sold in quarter reason 'XX the But last home the next now that's prices repeat more in to that X months than later seen comment that continue has highest raise we today are we've a this that because up. costs

second guidance lot our deliveries. to missed first have QX, to of guidance second would quarter. the We the on Obviously, in hit occur in We've in a the full the deliveries half. guidance second in chain. half. supply do of XX% midpoint you quarter deliveries given delivery we our it's 'XX, to in the As hit year If we

XX-year been the at XX%, backlog. And Our is deliveries right and it is status further construction for historically. second than along we've studied half the average it of has

So we prudent because right window XX% of think the spec ultimate can of a delivery are building in. move-in to with for to risk the comfortable that market we XXX-unit But we get that reasons. environment the to keep those now we're that it's low that's think But quick number. impacting I that will sold. very some are still very, conditions, be There need homes

upon we're living in. production think the simply is the environment right now I based conservatism

helpful color. That's

Another for broad one me.

in to other is move There a little there categories, How that prepared in You happened your And that? buyers price little narrative remarks, Doug. that luxury bit this addressed usually trade down a are buyers you luxury out first rate bit the perhaps builders, more address the in interest moving builders as environment. elastic. resulting would portfolio, a in bare high down

We disagree.

through that. the Yes, went understand at numbers decision. look can have financially are we've buyers the of a average our up LTV think prior XX%. gone But numbers a buyers through darling I cycles, is the payment industry when we more because buy. monthly not is went creditworthiness. still times the sound. home at when luxury I I homes. discretionary on been is We our It a rates the much on afford the their

where ability, They mortgage. that's afford up. today the XX% the don't about home, equity a They automobiles. they community don't of more look allows move the a about percentage They think are think have -- in luxury our except been about those as they kids the have XX% the moving home move client and out school, is second are buyers into moving XX% -- buyers as getting can buying sell And in to of their that middle that hit that maybe they have think monthly max bread. in at don't lives. They generated and homes think that Detroit, of existing for up Our it. our that -- down They lot home up. to boomers them Their payment. larger lease the

it a payment but basis not XXX thicken home we Historically, little So straight XX, starter place have were we in points. where better XXX% than down monthly even rate XX, the business been that immune, affordability. up XX, to and comes

great right. color. That's All

comes question Patterson Truman next from Wolfe The from Research.

a back of portion about and hop to signs your cancellation of the year-over-year. up on as to rate point a orders, early warning wanted one just ticked questions the your I First,

mortgage? see simply had rates Or more from for qualify in ability the mortgage impact you saying are buyers' the this just clarity the the to Just field, of if normal beginning cancellations course you to some any business? higher is

cancellation now. is rate like It's our is I'm It lot up last up low looking of years, low large last historical and this long-term standards. bit Truman, backlog back of right by year. looks XX a the tick at X% I the is the little A average. how year. that function a extra was think our ticked

cancellations. in warning at of at you moved if than quarter backlog of And you If an seeing percentage as not look cancellations as they've current sales, percentage hardly early rather all. we will, sign, are a a

think backlog a to percentage herring, backlog, of new It's X.X% So a it backlog gone that's Xs year X.X% X.X% of high to a -- it of was of ago. high I as Xs contracts. of a red from having as bit relates

Perfect. And then second...

us rising And at to for now because higher we cancellations environment, get an the price. opportunity are home in a price a sell right

Okay.

gross cancellations are still margin? the beneficial So for Okay. And...

strategy. a Not

And a not it is strategy.

consumers Fair might if to enough. the And use should And associated how locks. we the you frequently? locks? they where rate so, it second Toll using beginning to seeing then question impact Are think locks cost longer income on rate about and rate statement? more Are

Yes.

to that yet days take for can course We them of advantage XX and period within rate asked in closing, XX seeing by have time a not opportunity. of locks our extended generally a normal of seen be lock we mortgage customers. They are

XX will months XX% that's And we're take X I at on want where located, reiterate, of sauce price to deliver production backlog And -- Toll's how special those to to selling build that That's the and they're to today order, much issues. our are homes homes based right? point. our

forward demand I goes is just And so of before to trying the pull buyers are the case. this grab a because today not that it it's hear commentary rate up, there

buy on Toll able tremendous to have home and And lock XX our rates are a the buyers maybe we to homes know pricing from they In are not risen power. days they lock Our as until lower that last buyers running and in Brothers. a rate month, before delivers. that not home demand XX, seeing are when tremendous

you're Yes, the of it historically, narrative. that if say the it's kind you correct pull-forward data dispels at you actually interesting that exactly when look

I appreciate it. So

The next John UBS. from Lovallo comes question from

how communities to bid away in. is best to you're tend sealed this that The a implementing along new customers final some of avoid in purchase how do lines, react chose those do one many sort curious process? to pushing you And that risk buyers process? that maybe first to home And

and program, final XX call communities be lot. not offer that may are of XXX, So about or currently the our best minus XX every for it, using plus

we'll if outsized moment. how not XX this -- well want because people are and we'll has premium. recall, they everybody it's successful everybody are do running Toll have call, XX, house not been then are then goes used opportunity. those app, trained process. we're We you process gave least Not happy we also -- are through it happy, to just that in are home do we great if you XX the environment that pick where bidding We're do works bid really final that where the the that. transparent. a can how you on go lot it process at bidding If you is have the although to resale resale do the manage the the demand. at home, Buyers special is on because Buyers through And And when that process that I we how a your lot site up know know a market. a how in you But sales it do manage premium, we my an customizing a like of pretty you through XX, it build-to-order it process your in last totally is that app home in to and are finished to on for the generally they a invest. home and the can there cool list now makes happy. on Sometimes that have it the can really environment we I spec detail sites some lifestyle.

in sheet. I we're so a a And And normal the in we've we're house industry. how of of the buyers working not a But of want of it? really a done No. happy People walk it, proud It's I explaining the are with But bit moment. at is job handling it. to and environment yes, new it. good everybody buy a most think understanding off that's I'm in price think

guys lot trading curious mean, I back investment your just are and makes as great I the sense. confident you a Steve's That this as mean, decisions. And if you signal stock to sound then impacts market? more capital in question the right from of allocation about maybe today. the I'm how going even sustainability before of is positive the Yes. your to cycle, where which a now with, we stock be would would agree

stock $XXX bought $XX, at of worth guys. back million we Well,

I that gives So think answer. that the you

Alex next from question comes The from Barron Research Housing Center.

on year. it focus the to Clearly, wanted the back guys like in in margins I job. trend first are gross this in you great in looks the the be half, range. half, XX% in And high the you'll mid-XX%. And the

you're are margins going higher how give of XXXX guys trend where stay as of I we to I'm So but curious margins see guidance, currently? at see move kind year. you to probably unfolding, next more not more into level it us or know towards to the likely Is back

margin Toll Alex, I mentioned the seen highest by has the in sold earlier next Brothers home that Yes, cycle. we've the

think that for XXXX. bodes well I very So

it. Got

then Okay. Great. question expectations to other with on orders. And my has do

I'm moving really you mix obviously had there? guys related of buyers -- October then quarter. the said comment And guys negative seeing and to your your think -- only state growth I I'm what curious get percentage that up, guess strength buyers? your of are to XX% are are are across You and buyers what's in and this in driving you I X back to of of percentage went the trying move are sense what positive that, quarter about a your first-time buyers lines?

clarify, production of those be made will started to I specs quarter QX, also we will a sales to a Sure. as moving down. where getting are sales And XX% now just restricting different it are our sales because we market and to on to very be migration. significantly, clear, focusing think

first-time And what guys? percentage it. of Got

XX% are first home time buyers.

comes Maklari Sachs. Goldman from question from The next Susan

seeing seen But made First people more Are options if Doug, keeping And details you wondering you're they're give you change haven't that any in online. time? what of on? details there? in there spending could question traffic looking the you an terms and high any that. Are seeing Is at what eye really any you just is that they web different products? that the comment, are us less any more remains around changes in

Sure.

allocations have traffic, and buy, our of they're because of about we is to also even -- I very coming visitors though as quarter. our And but website. can't foot $X they our all per million So out. website proud still up I'm mentioned,

We web have team. in have industry America's homebuilder. the website an the luxury being We amazing best better

stickiness, and I long website, amount think spend That's We you time You the on of big how do. website right? the get they on want we the track a it. a one.

look engaged to even clients now that grand every single how consultants communities as very calls, they're And to set We are chat visitors. button in web click on with market where we and your only thinking colors selling, do and with for communities call through and tee do The getting videos It's can see start sales and opportunity and when the walk-throughs custom very texting running every the community some manager also but But thing is community. you with not after open see one up it they engage through products. of the to that the the to service. at their now click like home, represent to up. they're easy concierge web, concierge very, car to them about means with design phone opened the the at the online to of fiddle opening, have sales before online up they local directions set to online and the that because They homes we community. client that in now they page, design

of very available I'm page, on to not the and they closely. but All on going down it that is each track spend bog we different percentages

the We experience. also changed

And million you come good see we to most you So that X up, like. optimal get up figure experience. have pretty efficient, some web most the what us quarter, trends seems pages pictures different out client come visitors when a and different the allow to

and very fluid is website help? our so And changing. Does constantly that

you of consistent? rise that's been last seeing at. the or Anything a we've the guess in what looking couple relative they're stickiness quarters months changes the ago? any it been of are to seen in to ago I different weeks, Yes. But rates couple website has as where were Or of we a or couple

track be But as recently of don't I'd at shocked website. gone time on aware a go or for changed sort on I'm leads has I have web web to that -- consistent. the on -- or Yes, up the reason. think not buyer anything's ultimately -- that last little think changed the I website. any start in I our a hasn't don't don't spend anything buyer world, the bit think if been X of other rates which experience Susan, and I they month because where in It's agreement, We of today's least

Okay.

holistically, Okay. several a that And into of which affordable That's the of about lot didn't potential the growing around a on the luxury last mix When then think about do today, helpful. is the just it piece be is see where luxury And years. piece think versus the in could affordable past. we pieces have focused today, when question the any the you coming? business shift you the you things? rate my changes about you we next affordable the in there luxury going with of the rising think environment luxury grow that to How sort could business

longer it think luxury. not in we've the a of in the at X geographies. not what years that the progress long to our there, I the and course, mix But bit offering the a done. up giving There over we're strategic price quite approach I point, the last By There's a made over points on probably could we're We're long-term maybe product seeing affordable mix. XX% way get towards we're say way, will of but widening I look when that's XX% and more that Right very on I'd now, happy the we're I'm want. way. be say to dollar the value. us not XX%, but Yes. beginning still XX%, opportunity of with XX% longer the we a about success. term it's maybe But price we've term. probably on up luxury come optimal, as lot at and I mix, is we're think the for higher that

actual since would the less of number higher be are expensive. those homes So homes

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

happy and It's support, Thank X. on you, almost really appreciate your way, Thanks, care. and Jason. Take everyone. interest We its March spring.

for Conference presentation. has you Thank now today's attending concluded.

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