Toll Brothers (TOL) 6 Dec 232023 Q4 Earnings call transcript

Good morning, and welcome to the Toll Brothers Fourth Quarter Fiscal Year 2023 Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] The company is planning to end the call at 9:30 when the market opens. [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, sir.

Thank you, [ Rocco]. Good morning. of joining all thank and you us. for Welcome

caution that you our earnings rates, control are and Investor our labor this statement I Senior Brothers. website. of quarter fourth begin, the forward-looking call interest beyond Treasurer. Fiscal significantly read Financial affect Rob Officer; today factors world ask I for I our other Finance on terrific and Relations; on were materials, our and many Cooper, Before me results. With are on forward-looking statements could Chief assumptions and markets, to Marketing information of XXXX Officer; events, and night Marty Officer; inflation and and future housing Marlett, VP Toll of and the that Fred Chief Gregg financial the based availability you Connor, many last about on Wendy VP Chief release economy, Ziegler, in Parahus, and President Operating Senior

Our revenues per share quarter, with full X,XXX generated in we in highs, We the income compared QX and all-time million fourth midpoint sales fourth XXXX. $X.XX ended year our increase XX% the guidance. and to a home of delivered earnings signed year in and contracts the the homes were quarter $XXX billion for above

quarter top $X.XX last sales fourth second of was $XXX.X million each combination feeding of X.X%, Our share, adjusted XX per ever resulted outperformance gross quarter. year's percentage points. behind in fourth margin diluted our was operating XX.X%, efficiency The and revenues income a of guidance our SG&A and or only expense best home net as basis improved by line

approximately average generating delivered at an $X.XXX homebuilding of year, X,XXX revenues full price we the billion. $X.X million, For record homes of

also basis full X.X%, sales SG&A adjusted both diluted and XX.X%, $X.X percentage better better basis XX margin as guidance. Earnings last XX points year per compared XXX than XXXX expense increase home of records. points revenues basis XX an than in share, basis fiscal a was guidance. company gross XXXX to point over a year $XX.XX improvement were or year and was Our points of billion

value accomplished was despite $XX.XX reaching unrest, was results and mortgage beginning We generational share and XX.X%. book recession. at gridlock our return these equity highs, fears rates on Washington Our per of a in global year-end

success of not sales efficiency. at was and to operational the strategies lower supply half homes on spec Our a our margin in large due XXXX, of focusing our part second increasing in of chasing

Turning to market conditions.

drive as The our of homes price tight We continue resale a demand at contracts quarter market to We XX% quarters up down $XXX,XXX, to fourth in in due X,XXX continued XXXX. new solid year-over-year, The to homes. units average for primarily the an prior XXXX. see signed to XX% decline QX in but average of the over buyers was net X to ASP mix. was flat essentially compared price

our agreements lower we not in performers lower price price in followed our quarter. is Luxury the of the increase versus a the homes XX%. dollar affordable On our affordable and XX%. In for XXXX a QX accounted product and affordable was active-adult sales. quarter. was XX%, market average sales was surprise. our XX% Luxury active-adult It luxury our and broadening XXX% capture offerings XX% of XXXX strategy our be fact, up the incentives working. Along and up basis, luxury luxury was share opportunities of lines, were adult and Mountain points to affordable in greater nearly communities QX, QX strongest active the growth Unit and luxury were in means south XXX% and region a $XX,XXX was and include and by up XX% year, quarter In Pacific shifts prior saw mix compared region our that approximately after was active-adult was ASPs raised XX%. Geographically, our of XX%. in by to our Remember which should fourth net these XXX% unit

Denver, the Eastern Southern seaboard all quarter Mid-Atlantic Boise, of California, up Our Texas the and Atlanta, strongest markets from to the in were Boston.

of month. cadence deposits. encouraged we pattern In was to rise rates increase we for drive quarter, demand in expected, terms than typical stronger to the the being the in strongest mortgage have incentives followed not did and September that with sales the that for seasonal October were given

has our the and down Demand As a in average raised $XX,XXX our decrease with quarter, consistent the solid in is a I $XX,XXX $X,XXX as price by of in into start price and mentioned, we broken quarter normal remained increase incentives. actually base first seasonality.

our historically, reminder, holiday fourth from of and first declined to December the our orders first a because primarily net of quarter. XX% months followed about November quarter As

few anticipating are we basis over year With strategy into is the quarters, spring drop and fourth plays rates XX nicely our timing believe recent the in of the better spec represented homes our point quarter, rates. the further upcoming the and up We XX% well also setting community encouraged by increasing XX% a spec trend season. past inflation easing of this modestly our count. In approximately of timing deliveries. we This as supply orders of for rate and decline are our selling may mortgage growing the our decline

deliveries that tastes. fiscal rates, a faster, a that mortgage We allows construction, buyer buyers in poured. us down account also approximately specs with allow their personalize of buy XXXX still a to schedule. we has XXXX. in any benefit specs at of without we as for efficient sold spec construction of a to sell from and many which our XX% that foundation that stages expect the more our Specs finishes Remember opportunity homes their various home We match define will

will quarter. homes a XXXX homes base sold XXXX or to stood deliveries or which provides at X,XXX $X.XX be sold of that either are this nearly The homes high-margin results. have already other first XX% our drive billion our fiscal our solid in of at projected and in backlog, year-end build-to-order This

We year year-end. XXX this and count expect results to in cap communities targeting also at We help growth increase plan by fiscal are community XX% to drive XXXX. community operating

we control community XX,XXX fiscal sufficient beyond XX% which approximately lots, optioned. XXXX, XXXX. At Importantly, of growth for count controlled we were land year-end

Excluding the land our backlog, XX% our of to in buyers committed home lots. option lots X,XXX represented

We owned continue to longer target an of overall mix the optioned term. over and XX% XX%

We past $XXX million also of drive overall and share. they with existing over takedowns quarter, selective common fourth margins repurchased in disciplined $XXX X approach both or year efficiency underwriting capital on buying our ROE whether land of options stock, continue standards opportunities an deals, We focused our assess to under This our per new be all land and approach to land. involve we on returns. and our has at focus helped average years. In $XX our our million price full for bringing XX% the repurchases to

X% outstanding the XXXX, at of the of we approximately our beginning fiscal repurchased diluted year. shares During

also fiscal allocation We dividends the well in future. paid important million into XXXX. $XX of dividends our and Buybacks capital in an will priorities part remain

have million I'll turn of repurchases in XXXX. budgeted another to We share it Marty. fiscal $XXX over With that,

Doug. Thanks,

pleased results. As and with fourth Doug are quarter our mentioned, full year we very

revenues one last $X.XX we delivered related ago, net year year up $XXX then. environment earnings records. income challenging In delivered million. Fourth was of per Our proceeds $XXX.X $X.XX year's million year the sales share ago. share per $X.XX and down of $X.XXX that $XXX.X the year net share quarter, the price XX% reflecting or diluted of to XX% income benefit The legal from and sales net quarter all billion, Remember in million settlement generated claim. full a home homes revenue, XX% fourth one million from approximately was to XXXX's to diluted X,XXX average fiscal compared a income after-tax dollars were included from back homes per and of homes net and in

income XX was when aggressively fourth adjusted XXXX, XXXX. interest aforementioned to apartment X Our from venture, is very we a not our the XXXX basis pretax approximately million by year the and challenging chase the over in our write-downs, million to in margin inflationary of inventory $XX was XX.X% income sales as communities $XXX.X which sales points at fourth expense market margin, softer. SG&A in quarter gains to a Toll quarter excludes quarter other and of XX.X% testament of fourth strategy of the ago the Reflecting and compared was was up were other million land the quarter, again X.X% included fiscal the quarter was were same to sale QX quarter, quarter $XX the year $XX compared included $XXX from communities to for and pressures. Joint leverage. in which down the in million joint million Compared $XX year-over-year year year communities. in XXXX., Joint the in held dollars of revenue venture, on Brothers at apartment to SG&A compared litigation one actually in total recovery basis. related less stabilized ago. the a of conditions, in X.X% million primarily land XXXX, market percentage venture. Despite The percentage of SG&A increase in fourth to despite revenues quarter in the developed gross sales which able to reasonable quality prices Apartment sell Living and living a apartment of the

long-term of did all in to LTV from sale in quarter parcel our with a into the apartment million period. revenues the sale planned fourth a XX%. sell this quarter. quarter, $XX.X take living the quarter compared of Buyers in average in in and city additional $X.X mortgage the million year. Write-offs the buyers sales who home joint cash. We the were paid the expect averaged write-offs XX% our year of communities land related million an totaled third $XX.X Consistent venture. of In of Land cost to XX% included a up to prior XX%

rate cancellation where the in rate XXXX. quarter, Our with this been X.X% for a all backlog of fourth consistent was of as has percentage

facility, billion fiscal strong $X.X billion revolving cash and under in land flow generate to which continue years ended billion fiscal and of cash flow credit development. We duration the more billion with X land year remaining. In we $X.X our from $X acquisition of has cash fiscal including invested XXXX, $X.X We $X.X than of of billion operations. with over liquidity, available XXXX in bank year

million our $XXX million. We dividends by and senior reduced also returned and share debt $XXX shareholders through repurchases to

shares. X past returned years, $X.X to million the Over by shareholders we've repurchasing XX.X billion

no have fiscal XXXX. Our we significant at and debt net year-end, debt-to-capital was fiscal until maturities ratio XX.X%

is sheet balance shape. in Our great

to remind regarding the guidance. to of Turning you usual forward-looking caveats our like I'd statements.

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

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

adjusted quarter margin the in in expect from QX first margin delivered be QX impact sales to fiscal for the the The of of sales XX% QX first decline second QX. slight be We for gross environment in be year fiscal our from projected and the will XX.X%. that the full delivering half the in 'XX XXXX fiscal period reflects to of and slower gross approximately 'XX, more as quarter then in of our

in expense We X.X% approximately first This year in the compensation in about lower approximately that $XX of year's leverage. Included recur benefit accelerated the of XX.X% expect of interest quarters. in to full be of reflects year. remainder the as our and annual first a revenues SG&A home first is cost the XX.X% project not continuing be We quarter quarter should for SG&A one to our million quarter stock of ago. sales percentage sales versus the

percentage full X.X%. lower a as The community count projected leverage, we cost SG&A home is the increases year, to approximately of revenues For growth be due impacts inflation. of sales primarily in and to SG&A year-over-year the margin revenue project

project $XX made and from sales We've expected cost first achieve land profit million control beyond. Other in and unconsolidated be We expect the but we year first tax loss progress, $XXX do but the a additional full gain a to lot is and income, the communities of are a of year approximately includes which of to not We sell cost expect on in end working not million our of a sales for apartment by year. but full communities. in of fiscal income entities quarter, to savings are to of rate any continue sale focus stabilized quarter, quarter and XX%. done the operating number gross the of We and efficiency. XXXX the the first

expect $XXX year. higher average land This most million later weighted this million be is Our year, a of to full in year, with own for count quarter aligned million we I'll of Based approximately which cash that assumes approximately flow. year-end value this would that, the share $XX Doug. the our fiscal we repurchased by to back earnings full expected year common end anticipated at together, XXX grow targeted community With with share the turn approximately for over we control, and XX% we or the per project currently count $XX.XX share move for first Putting of occurring XXX it XXXX. stock to to on by per to the book our $XX of fiscal XXXX. all

earnings years. through December XXXX, was over X consecutive and December XX-year think around And during to and a X% ROEs doubled have time, above It's years rates the X% Thanks, it produced XXXX of month X yet rate that in Marty. from Two revenues that to little X%. extraordinary X%. mortgage ago, X% with mortgage XX%. years record we moved in to ago, a broke It in

We our to the has only margin points, public also the ones another are $XX of are strong rising increased rates. achieved changed. It fundamentally by our XXX year earnings business have the margin not XXX above of builders SG&A is points. And face per adjusted share. today, model in by results the we projecting And basis basis clear of gross decreased we

for multiple our weighted deserve market equally grown valuations XXX my S&P ROE amount revenues efficiency, capital a and value. a share, substantial at trades returned approximately gained leverage, and a cash about our look. sheet flows is The PE have derisked balance of focus We XXx. capital on lowered with and Toll investors. Today, earnings In X.Xx average the and book Brothers opinion, fresh Xx to

helped executing up customers, I'd Toll beyond. on Most it company for thank consistently to to core strategies. the open success importantly, on conditions for our to and market adapting our the entire in questions, position team you've staying we like Before and continued Brothers XXXX focused

am For I truly that, grateful.

up ready it to let's Now go. Rocco], open to we're questions. [

sir. Yes,

We will the question-and-answer from question Stephen session. [Operator begin comes Evercore. with now today's Instructions] And first Kim

of the absorptions particular. help think be a will I could for where of by how affordable curious that's gotten mix that be on going sense a have you this us your you us Congrats the is understand does can multiyear Or product process mix do that color. luxury process? is to guess related you shift, mix adjusting going see stabilize at expected stabilize you give of at that mix want per you year-end I of what want? long is 'XX? the the good all an sort first was the of Appreciate results. if Do could range this you -- sort it take? to sales community Is your it? your you your something think something question to my be once going to And sort ongoing percentages levels per in should month we

into product. of proud really We're Steve. affordable process, still luxury this some fluid me, move -- price, excuse a still It's lower Sure. we made

buyer. out their talked millennials XX the going their about. brought has the we them proud affluent to Series after I've how not the with about, home, BMW, And what we of really up which we more XXs there, and As move-up for always went I'm Brothers first-time is and Toll were hit to wait X been buy million

will on stabilize our it basis. business think I a around of unit XX%

were just price bit numbers dollar for where may gave value is a sales we quarter, it the XX% XX% so down and X Now affordable of spot close of to right based points XX% reflected In value. luxury with remember, on be because our dollar on unit that are the and you pretty now, that the our fourth about from on a or we being lower that. getting we're we

fluid. it's So

about adult which 'XX affordable opportunities, We the tends focus priced, a more they vary to to be mentioned, also those led is active order but I and but getting 'XX. in quarter empty continue on to bit, naturally, growth lower good close as there. it the over of a we're and think bit a And what luxury fourth we're I little mix. Quarter-by-quarter, more may also nester,

the million segments segments should, those millennials they in performing So and off. us. most X are well, paying boomers XX action Those is strategy million driving are and for XX the right?

a getting to of the to we're with bit as is quarter-to-quarter, So want close be moves it of us. most little where we fluidity hard work but behind

absorptions? And

XX So been for the per year sales last per company. we've the running couple of at XX, years, community

to into Fed rates or to than with believe the very heading going have done, we do with particularly moved economic to the affordable we course, of those And both absorptions close more improve, that think moving XX outlooks buyers demographics. There's in company. down luxury done we're sense that I higher to because price the a lower. down, overall is 'XX, better being point XX for beginning active-adult is and

XX So call up XX average let's XX the company, active-adult to and the the up just affordable maybe pushing in, range. say it, is XX luxury to is if move of is

That's Okay. helpful. it. Appreciate

Next of question you bricks number? And give just full average could in fourth a -- for 'XX. what the 'XX sense, maybe, is for put terms if or the inventory change? your like, of your what quarter, inventory. if I you at expectations it year dollars, Marty, Maybe was by inventory to at dollar year-end you or sticks could was of either related curious turns, us year-end the are in end and

number. that to scramble the let bricks I'll sticks and find team

terms of of a In focus inventory turns. ours. It's

should build right are already be of us. more that, should do to strategy spec quicker turn. number inventory affordable our mix a specs balance now. shift active-adult, luxury in more which important with easier have help are and to We our that to improve They're Our that for

dramatically for inventory grow don't is see what to year we I this it compared in got our now, And right think construction progress... right now, to going where you're balance have So

$X.X billion. Our CIP is

$X.X and progress. land construction billion it That the includes includes in that backlog is and improvements. is our XX% of around

And comes our RBC next with Markets. Dahl Mike question Capital from today

up that, follow on Marty. to Just

you're inventory in shift because is increase in sequentially it's it think year-on-year. to that both I seem still your the spec your down expectations dynamic pretty of in deliveries, some or in as kind lower-priced turns down backlog is of improvement increase and for progress interesting inventory does but a and in mix construction the homes, shifting projecting is imply the your actually and Maybe for to cycle times. significant

So bit you can more a you that you're just through in current sense elaborate a give us at that of terms little how where to stage expect under spring? for in and specs on the maybe and production terms unit of homes

Sure.

XXX So in that construction stages think we're I roughly homes we X,XXX various addition backlog, or X,XXX, define homes level. of those that to in quick or in homes. are XXX spec And comfortable the are very to that beyond. or CO another so Around of X,XXX at we have as move-in at

As relates replaced, been rather this came the homes from just year, end I of balance, significantly down you it's to year it in of that if backlog and the beginning spec to with the mentioned. inventory last the our the inventory will,

also resale or specs, the we can just is the as to community a And are months, that offer and to in, the those not homes to which alternative per close we at help to home next that that at great up CO in call can client moment. couple of that the a on specs market it's the are clarify client that very a Marty, move are only X.X finished that what

a define in we the port. go, them a construction of progress sold go specs foundation -- as completion. of those and stages homes. Many at completion, no-go actively are all to home process various Not has the of spec and full a very the we that stages manage construction on remember, And are advancing

JPMorgan. And our next question today Rehaut comes from with Michael

and results. Thanks congrats on the

in little and around quarter you highlighted wanted the really didn't the I importantly, the you outlook October, some just have seasonality a back more question, for incentives raise past X%, the historical you better to recent and the and to circle I orders that trends raised believe First kind of X.X%. of first during commentary being quarter pricing quarter, than to about

the recent we've talked current of we where today maybe seen optimism, and some that are that you and about more going quarter of some the trends into I around the Given guess, spring, particularly the spectrum? you're 'XX, seeing should inflation like-for-like here pockets the how construction recent still decline we in or think pricing there cost in about rates into as of across the

don't sitting the today, certainly of encouraged here to as will Great crystal lot for in end I than am sheet in mortgage. X.XX%. tell will X.XX% that was at question, December middle no-point spring October We And rate But XX, you XX-year a I hit ago. the have up. I I more checked ball the a we're Mike. a a morning On where walked year before I here, we this and

the sure mortgage last weeks. It's So season I December. the better seasonality. results heading couldn't we're the translating spring and be to rate because it points into a XX-year X XXX that's down tell basis for But immediately in timing in drop and in the the good sit that, spring couple you today, up of here can't feels of of historic XX-year is weeks' XX the spread from that off the are a at December, to sold. XXX, XX-year. spread this and The XXX in most of historic If was X XX that basis launch play the mortgage like in season when that X/X mid-January homes that's remember years setting points.

still is from outlook, And in move spread is to XX-year to the where point, think the more room has that confidence come the it down we now something all some when I believe XXX. closer macroeconomic at to to there's south. going longer-term

on be the really up power, season. that community-by-community Where a rates, make get good the better. well market. by but that spring that those X.XX% to have there's we sit reason believe sure this pricing on And decisions and today even at So will basis. sets crystal very just again, we for it have don't the I ball feels most may market We local

opening net out, we're many talk XX% a We're spring about to but going opening week We XXX sell to during in communities that many, have communities of new growth, because community open cap hype to And up. as these new going lot that's people a the communities season. been years, demand the over over with a pent-up community last there's the have new the few for to communities XXXX. and many number. of We launches wait have of

So a I answer you, best is that's the I it's for give with spec but stands, rates here strategy new you. But know today, be stand, where homes where soft sentiment the with with company positioned, and sitting available can that with with adding will openings be how more to the manage purchase to to have therefore, incentives. coming the incentive at as and hopefully to prices roll this able various -- reduce decline stages optimism. we think will completion continue be we and will we And raise to continue of we we through spring, modestly able the

broad looking Maybe No, kind of order around just and of sense, at Right. answer. the that I some appreciate all the Doug, secondly, strokes trends. makes

around being versus count also or maybe maybe talked the X year so that's last community XX%. about pace You talking about about sales XX% or potentially XX% versus about up

growth So That would you're of closings your trail year. still if of flow numbers kind midpoint of talking the in about roughly for the orders through. a XX% kind those

down again so up And with you'd in once end backlog year-over-year 'XX. a actually

as type comfortable or around something know having of to closings have scenario? I or moderate year Obviously, that X. to if order you something -- with would sales. in you're over in faster, spec turn that of -- don't you're something result, percent X.Xx in next of if increase the closings a growth. actually that backlog in continue talked you'd a that Is 'XX, your increasing about beginning level have further growth maybe to a your As

your backlog the that turned in past. in range Xx beginning X.X have You to

that reasonable a your is So scenario in that is view?

Yes.

spec to We are the committed strategy. new

point, think opportunities on percentage in strategy. down come sure, as very spec. We're strategically careful more the of the homes we've -- at are in price that for [ industry, for more with us end, low But to our rspec ]. in come we're there I build a

want know those They what also void the move-in the resale. mind their they with and We market construction faster an resale find a a looking couldn't we're to tight they that in had for earlier market cycle time. there's to maybe because But than move typical in date went wanted. they for build-to-order XX-month buyers

And yes, so is working. the strategy

a plumbing pick still their kitchen their countertops, still that flooring, color, to committed cabinets, et the framed. they when said to buyer if along opportunity the on down to that their on they as et for and that cetera, spec that's pick put of so than as on as are and it. much pick many find even We more feel being it's their choice. And further there's offers permit. a building delivery the buildings home Marty specs to process. as earlier, pick go no market the but We than before many cetera, opportunity has that started their a fixtures, And accustomed opportunity to design buyer much occasion, being we the construction they're slow lifestyle, through may home we'd quicker Have fresh studio the hung pull regularly, drywall occasion, our is

its future. year, So continue and will working to this now full it in strategy growth second is is in drive it the

And next our today question comes Ratner Alan with Associates. from Zelman

interesting direction, point. grown in of up the kind other great build taken Obviously, in of I'm margin either main perform in probably kind bit but either focal of business? or to of know order. terms to behave differences questions. somewhat Congrats you if observations spec how of little of in see do a rates down you're on that of is are specs in just shift, give you any But volatile A kind the how on of your color comparison when you've you've curious I any kind the early still year. or spec part couple as can buyers

Sure.

first on me let So the numbers. start

who Our specs lot, they and the a than on those into the premium our design high We for because about We things. lots build crowd when less money. we go to $XXX,XXX clients lots. order, they more X build-to-order don't spend save studio, build-to-order want know spec sell generally best build a get the of to that's because lot for

part nationally is interior and average packages, a and less come overdo curated to premium bring And more homes with $XXX,XXX great specs it. finishes. we up are so with We that great do acclaimed of our design lot wild don't that upgrades. We model the fully don't lower we go of it's sure price but the designers in make

couple hundred And so of dollars lower. thousand naturally, a that price is

build more the lower to The tend XXX also this bigger Generally, is moment market have build-to-order. time. gross buyers. lower than more you you We points the you go in have. specs At communities, margin in about because on less basis expensive spec's price,

you blend plus the build-to-order build-to-order are premium are the this, of we upgrades to encouraged when part another that for XX%. new reflecting XX.X% disappointed related because that at that, not stat be by a way, all. as to with spread bit. we business now that. happy We're We're model lot model, tightening that's at and by that our we've Now That the accepted used client. But is

about, XX%, finish driving taking So those margin money they're spending is coming more structural out is our with business studios best build-to-order, both our and that as they're at and the the lots because build-to-order of therefore, margins. are we've upgrades. And talked up going higher design on model terrific gross the premiums

you at darn driving overall a because high margin. happy spec can a nice into to weigh is as to are blend package, lower margin see, points we're into good, that, X.X We the and that pretty

the margin you, hope I Alan, -- price the of spec that the point that with So of spec. of breakdown the and the helped

helpful. will insight It how Yes, us mix definitely good that's into that really all unfold. gives

all appreciate I detail the there. So

land side. I and is on like on a know that. I there's few questions Second had the inventory things been turns question

would think has that, could towards I'm to guys have has a owned pretty XX% the progress supply the the several further And You or your of the terms would great if higher. those where go. Obviously, over lots minus is maybe today supply the a or you lever or that in of making option share content in last are your range, But as terms. improve you where that of one I has X-year impact. your option even land, pull can be it moved been years, plus lots you goal. option as goal steady owned curious maybe target some

a peers business Obviously, X you is your model in closer number but all a have low bit are that go with could your different to mind So there years, model? there. a target how of

So any there be color can you give great. would

Alan. Sure,

on the us worth various for is goal a backlog down with X.X construction. stages land of spec home it that owned to owned or in a almost home years year's long-term having to land I X of of to get a think

And of our Rafe Bank question America. from today Jadrosich comes next with

the spec on on to following the Just up order? the versus you last inventory return about bit little on between current BTL. spec on Can on and the build difference a question talk spec equity or

average The take less about build to Sure. spectrum deliver. and on X months

margin relationship a is Rafe, higher return So the trying the on there. to is the return spec the equity of gross homes. homes equity the the the build-to-order play from inverse we're than balance And little on for

That a sort quarter-to-date, the you're normal in little maybe comment It's generally for what makes quarter, better. of order of line very helpful. commentary on just a Got -- seeing that seasonality it's with And little the or the bit then it. first sort sense.

than just come have there because slow better be said, some incremental better seasonality, slow do that then rates, have actually more a not that mortgage community now wouldn't it normal and tailwinds December? given much? Or October just come Is is seasonality? communities Why quarter-to-date? period really normal it's How You timing? just didn't as in you Is right than you down. it have

December, seasonality. and it's historically, The Well, slower months. are November

first XX% Thanksgiving that pleased combination we're because of obviously, the January already that from Year's. that over not very historic than to down. are. we to I'm solid few down the weeks, that XX% to through do in think, season QX, going trending to January, going in in December, have a start these start And you we last what November have New got legitimate We've drop New have, in reasons but actually You've setting believe through we pretty where and I the to the said Year's, to historically, the up it's now we're we market -- a date we've plus sales that we're quarter but we're had from hopeful. And have think better to this the -- you going early to dramatic rates holidays, good know spring is is QX

we When Right? talk a about per we're seasonal talking on about trends, as community basis well.

of a more So bit for communities. we've adjusted already kind little

read little good is a seasonal. doesn't a where do think We too really we which not going And much but is norm into going feels are, we're XX%. to make a stay that, to week it And The trend. week. one -- down we'll last I'm was better. week But

And comes our Research Alex Barrón Housing next today from Center. with question

to incentives, wanted in? working of I are job. incentives, you better? rate to in seems [indiscernible] guys Great terms are you be offering Yes. come ask what to that Or what clients for particularly

may Alex, be other interesting bit and different the great builders. very a a It's it's from us, for question. this

got other ] XX-year builders your X/X the down. [ X.XX%. We'll We take to rate the from got have have. the all We've the programs X/X/X buydown, now buy we've X.XX%

we'll a go an figure studio have to we're alternative take rather years, a house or rate in and looking at it's our your It want, communities take we're rate It's X and a mortgage X And themselves, campaigns reason our frame our company, over have website. the [indiscernible] traffic tool. You front-end to the is, is think with time marketing I'm all be house we'll this going It's we e-mail clients. marketing into if our it clients XX-year to out. it. And all drives a over buying great call which down, most design and rate the some discount have a before X this funded can a I is years point incentive average a credit wrapping or me as them, think design they incentive on Brothers amount X of of advantage offered buy that buydown, that and to into have I'd in Toll than down. at refi time to And you're home upgrade my studio. the that that in they

active traffic, in themselves, to but they would maybe affluent. Maybe XX% have particularly that thinking lower others And coming mortgage rather LTV and otherwise refi probably obviously XX% stickiness adults have. than and it the formula with have conversation, out it's it's closer all shows. is think of And because equity I that That's of XX% So I'd is to they that not mortgage they seeing LTV. cash. the to we buyers home earlier more more take get a my are those they're money maybe true upgrade our a their use are the little driving maybe than existing home they're are. Part

And the but takers. lot heck so we a it, out market we of of don't see

specs. great. push appreciate I very builders been close completion of to forward that doing guys using It's you Well, Many commitments have answer. any that? Okay. Are other to

Yes. along the home the can is for expensive Yes. buydown for, because days. cost that lock is, you further locking less than the XXX. And or XX a lower or rate less the XX rate

yes. So

downs last Buy got month the cheaper over as well.

got definitely cheaper. downs Buy

You're buying X.X% of down X.XX% [ ]. instead from

you, thank exactly That's Marty. So right.

Fannie limit XXXX. The I'll The in. conforming on other news throw nice that Freddie up loan $XXX,XXX a since here piece of is

up went that Just business. helps again. And the

comes today question with Lovallo UBS. from John next our And

couple a of Just quick ones.

to made first Ray's you about total on was following the The -- for bit specific than seasonality, a quarter absorption? that was one, question. orders for growth? up for comment Or the guys that normal order better little in first just The that

Absorption.

As measured by deposits.

deposits. As measured right now by

our For community.

of can we happened X, know, XX% call, guys X XX% fiscal information the we but year-end, as about of because give sometimes it's X but flavor always usually end to what's deposits converted X whenever on fourth you quarter our to subject, X, on since the weeks. Because and it's that not, to from That on that stat. Historically, then X agreement it's to of In some agreement. to based deposit or run is activity the take you because, a we the we deposit hope weeks, convert weeks agreement. sometimes quarter, deposits take convert deposit another the good

process, sticky. people their their of now when deposit, give XX% they home through So deposits start the It's their they they lot up It's of their the the choice, pick finalizing forward. lot, those upgrades. go move design, the us process to

talking here. are In are I risk then quick helpful. were rates than much follow-up you there mean, And the level really your about what to were is, guys how to they about outlook, I how similar a mortgage at today? stay That's is guys if rates? question today, a of sort Okay. thinking guess you

get at X.XX%. XXX the we typically long X%. and my things where of We is XX-year through proven land. I'm Little. Yes, can years. into think if our where a lot If break about sold true where coming. And a X there's time the houses more monologue at houses We'll are should rates, we and is X sell better. every last right, in business the over that of spread That's couple drop

So we optimistic. are

comes today question final with Wolfe. Truman our And from Patterson

kind being just want construction expectation, the sure XX homes were well, for overall correct? that talking you to make included flattish inventory First, dollars I as is and under clarity. land of When about

little yes. a land Yes. the really the I but to tough of the end is spend mean year, to early project this compared

Understood. Yes. Yes.

Just X me. quick ones for

your just any typical of can on kind a associated pretty impact what realtor commission of remind us your base. broker the them? and sales NAR Once realtors ruling portion consumer with rely all on I'm you given preliminary you're the heavily on You and your hoping thoughts have business.

Sure.

sales the a price with realtor to we of client. all will I home. longer to and delivered that is the company of the popped we industry, has litigation pay X.X% litigation. But our are appeals Obviously, believe representing realtors. there's third-party other there's that It's think NAR When do On third-party revenue encouraged our So be realtor outside total coming average, comment the out to that on that term, up since X.XX% too commissions early case. the you math, of X/X of the comes involve that of the down.

mentioned potentially on We've Perfect. you do And is pause you trying been to availability in then, I'm XX% cost eventually progression? to just could understand, that 'XX take of that Doug, getting think a Okay. capital developer just hearing that and land. tightening. option

on trying bring could better possibly balance option thinking owned deals you you're little 'XX your understand sheet? that land So to more those there. it deals, might about how make to it perhaps in raw opportunities a expensive find Just

Yes.

We land Truman. I expensive. it's banking -- comment, think got a more fair

we we much option did didn't land a one is land. as bit of that banking reasons And little the probably which so less

from bit -- it, bank However, we though XX% obsession ROEs doesn't may which not even progression we land off it with land, own in money purchase until are option the to mortgages, it our format. keep XX-XX our land our driving future we capital take XX% may a through get to where keep terms sellers date efficiency don't the because and mortgage we're though a the time, going change it to we're money longer. We're that for pay and some IRRs going owned, even books to therefore, and purchase more at optioned with

it's and the are underwrite a very IRRs much to if focused move longer bucket option even being the driven on still are taking land still bit we So higher. as

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

Thank Rocco you, [ ].

support company, you, everyone, we Thank terrific. all of great wonderful and our a You've and interest season. been your for holiday of you wish

thank The all and attending now concluded, we you for conference today's you. has presentation. Thank

have wonderful and a day. lines, your disconnect now may You