Toll Brothers (TOL) 21 Aug 242024 Q3 Earnings call transcript

Good morning, and welcome to the Toll Brothers Third Quarter Fiscal Year 2024 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]. is event this note, being recorded. Please

now Douglas Yearley, would like to to over conference the CEO. turn I Please ahead. go

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

the based economy, many that events, statements this on you assumptions markets, caution forward-looking about materials, inflation financial availability I usual, and factors and As the many could that future of world significantly control and call housing results. on rates, other are interest our affect beyond labor

and on website understand our with forward-looking risks better statement our our associated forward-looking the read our on night earnings statements. in to Please last information release of

another fiscal our $X.XX at generating We revenues home pleased and X,XXX third average sale quarter quarter record price had very homes We of $XXX,XXX delivered quarter an are with terrific third billion. results. of

Our operations margin to our points in basis greater favorable efficiencies guidance primarily homebuilding exceeded adjusted by of well due as mix. gross as XXX XX.X%

and Outperformance Our both XX basis Brothers. on track guidance. was great for revenues the another sale year or $X.XX SG&A better drove Toll than top share, X.X% expense points earnings margin keeping us of home then line of diluted our in per to deliver

in approximately third XX% per community versus a quarter. units year's at third signed third down basis, X.X for both In billion, X,XXX we in X.X we of pace homes sold quarter, up dollars contracts pace we the per sold the last slightly compared last net and a quarter. On year's month, to $X.X

the third started through month. especially but was the quarter, quarter into in in the was out Demand and strong, strongest latter the of May month our half in June. July slowed uneven.

and trending we for into in new and their this continued and point lower, seen that year imbalance strength XXXX. and continue of solid optimistic rates demand at favorable weeks 'XX the remain the sale, of the fiscal lowest homes With in are August. X through for mortgage demographics end a have into will first supply We of homes demand

was seeing by our also and demand buyer D.C., we trends New segments. We where quarter Price We country we approximately others. strength California. continued quarter prices we Atlanta, average me, community in quarter -- adjustments Vegas markets market dependent. our are lowered in it of Jersey, Overall, and and flat are all in Metro across included pricing Demand the Las Boise, in were to of raised encouraged to compared Pennsylvania, sales across the price. saw communities particular and South Carolina, the X.X% the run where second incentives some and excuse

market in they homebuilders optimistic remain by place, firmly accumulated we driven home wealth. have earlier, first are noted remain the later their many drivers of and future. The underlying positive into that in millennials, incomes are whom including demographics, buying for life I As foreseeable will conditions higher of when demand favorable

XXs, next their tailwind luxury over for business move-up provide decade. which hitting are Older the should now millennials a our

In lifestyles. their moving they addition, new homes are baby as retire and boomers into adjust

by of chronic levels. challenged underbuilt sale, aging the XX will resale homes fully But lower, undersupply higher of stock to supply the inventory to which with effect even and keeping an continues also at will of is rates Lower remain exacerbated of due low the There of be years undersupply homes for lock-in rates, the rates as address alone we believe interest housing. move not nearly underproduction. historically

elevated. period homes in in rates in new a a are demand have sharp and proven for have the mortgage years face impactful The rise remained fundamentals how with past prolonged these of remaining solid which several rates

by well-capitalized large, We we rates this of would from are a clearly welcome market. environment XX% excited normalizing performed up lower prospect benefited homebuilder, and year-to-date. well very with and the have sales in a As housing

strategy affordable and us of has a supply to meet our more our demand while homes Our and spec homes geographies include increasing efficient price of points becoming more homebuilder. helped widening

markets have we come builders with of now in price down price, country. variety core business widest grow As we a across and homebuilding presents of our of of to the widest any our us opportunity have product and in great expanded the the range XX the which

represented quarter. Our the of deliveries third XX% orders in spec and XX% approximately homes of

are We continue who strong to business demand move-ins. looking about target XX% from quicker continued of as buyers with for spec our

that define construction, home at of which opportunity as we reminder, We provides the port. foundation a buyers a has any our sell nationwide. spec one our personalize of various their many XX of at stages buyer As a specs without design homes a to studios our

us schedule. of construction efficient buyers offers faster which degree with is experience, pillar This buying more Brothers Toll a spec providing and choice, our in key a while the a

end, billion At stood at and homes. third quarter X,XXX $X.X our backlog

cancellation Our backlog from percentage X.X% and in second quarter, our the third our of X.X% a consistent down was X.X%. as quarter with rate of in long-term average

personalize is low down the the their significant homes upfront rate industry as well due payments attachment form emotional make as they to as with Our our cancellation buyers they us.

all who XX% XX%. our our cash long-term buyers above consistent quarter affluent. mortgage tend approximately to our for of Approximately XX%. loan-to-value the second buyers took with The be in a significantly and third was ratio quarter also buyers paid average Our of more approximately

base. our and buyers mortgage, they who entire highlight affluence So down our metrics customer for put average, XX% on financial XX%. These the took of of a the strength

cycle process times hyper We our and faster homes. spec strong construction cash our further our and consistent turn already continue product optimization on focused in We forward, focus increase flows. which benefit our with to to continuing move remain in as our improve modest we should times on see improvement construction

start are growth the on year. compared to are year-end, XX% operating the from represent our fiscal the XXX by would to we target We XXX reach of at from communities of goal communities which operating

continue or half lots, land our we to of be our in control have next X,XXX needed end, for of position do year, excluding XXXX beyond, controlled disciplined and which land XX% under and us lots lots. on selective, in were community to to represents other when sufficient growth XX,XXX growing opportunities. we plan it. land and This controlled owned, fiscal sufficient backlog count and the to land and lots quarter provides the with efficiency At have We our new controlled us continue focused we assess allows owned

that be margin This including more for seek development stockholders. that land ventures to similar use through we efforts to more of and focus capital us land our standards continues programmatically joint incorporate payments option and new out underwriting allow increased stringent to returns, banks, to efficient, structures for acquisition continue and extends both and on and us opportunities capital returns threshold Our our to arrangements, and and efficiency capital other operations. includes land lot return to takedowns. beyond defer It our allow also land

of we bringing year-to-date our of million at start common share. repurchases price $XXX of quarter, the to $XXX our stock, repurchased approximately per Since the million an $XXX average

$XX dividends million paid over year-to-date. also We in

approximately X% count. And X/X year, and this share of XXXX, back year-end diluted far bought since of we approximately we've the company. our So repurchased

to flows, of are to $XXX strong be will operating financial $XXX our strategy Dividends including important for cash part full allocation our year continue expectations buybacks buyback our raising million. the an Given outstanding we million a and that capital performance, the and key on an a We our row third year-to-date will return this maintaining in be ROE beginning factor expect on we XX%. XX.X% return attractive year approximately be now equity. to in This equity an over generate from year.

I over With will to Marty. that, turn it

Thanks, or per We Doug. the share, $XXX to $X.XX quarter. was of $XXX earnings everyone. with diluted Good well great million a above after being earned taxes we Thanks before us. million and morning, earnings for guided It last quarter.

an revenues of quarter sale our homes. quarter, X,XXX spec direct the billion year of is compared were third strategies X delivered outcome This to and the our and of ago. year-over-year. our Home of supply We in points increase X% increasing a quarter, a unit price growth up homes in XX.X% $X.XX broadening record

our and results the homes, we increase guidance. raising expect previous of the quarter of now midpoint third at fourth homes for XXX our on full our expectations XX,XXX guidance. Based We our an to XX,XXX and between year deliveries are quarter, deliver

price between $XX.X of guidance. increasing over also $XXX revenue for year to for are guidance projection midpoint a billion our the or the to previous $XX.X full delivered $XX,XXX $XXX,XXX. by and This average We billion revenue of translates million additional homebuilding compared year full of to

second approximately third flat signed the average The units. of XX% and quarter X,XXX compared the of billion, contracts in the third was quarter in the both of dollars net $XXX,XXX, approximately quarter signed year. up contracts year last which quarter for in this We and price about to was $X.X

third we had to Our operations the margin and The than of quarter was efficiency to XXXX XXX homebuilding as in third was XX.X% XX.X% quarter mix. this gross greater better as was adjusted well basis guide our compared points in favorable due to primarily outperformance projected.

we XX.X% With XX.X%. year adjusted guidance our margin raising our quarter, to third are full in the outperformance from gross

We implied adjusted gross are basis now our of guidance. margin point projecting a fourth XX.X%, quarter compared previous to increase a XX

dollars, G&A quarter. X.X% modestly And percentage XX SG&A X.X% in terms points had third by but expenses reduction of better this offset part year. than increased of quarter quarter basis in in revenue for compared we the this openings. to expense a was total higher the was community of as in due third we this to last reduced projected was selling Year-over-year,

seeing through before, our As becoming been and on are to of we results. benefits we've continue pointed out efficiency more that very flow focused we've efficient the

XX we home For quarter, And to basis X.X%. a sales the now the represents X.X% year, for This expect be point previous expense guidance. to fourth it improvement full we revenues. of expect our be over SG&A

Third which joint was venture, sales $X land with income million, other guidance. was our and quarter breakeven consistent

quarter. venture our and joint be expect We to implying $XX full year million, approximately other in million approximately fourth to continue income $XXX sales the land

in tax Our rate quarter was the XX.X%.

expect tax full would We to quarter fourth the rate approximately which XX.X%. XX%, be to rate year bring our

quarter benefit year of interest the our from expect cost reduced continue full be the and X.X% in leverage. we to We to as and for sales approximately fourth

would community community from As are to land year-end. the communities do guidance XXXX maintaining our growth of began Doug count plan XX% by opened with. growing to we approximately year fiscal fiscal count continue it. approximately the year and have XXX mentioned, represent we communities the in for This We sale XXX

cash quarter a XX.X%. net to revolving finished in bank balance facility. our $X.X $XXX million of billion credit debt-to-capital billion the We ratio Turning with $X.XX sheet. and under equivalents, and the available

significant until November We no bank or debt XXXX. have senior maturities

grow on focus generating we to with return attractive capital to flexibility provides continue All our as business and both of returns. this us to ample stockholders

million XXX.X weighted the Our for is and average expected for approximately be XXX.XX full to the share count fourth million quarter. year

noted, we've Doug guidance year, share As repurchase quarter. million million approximately approximately of buybacks in $XXX this the of repurchases implying to increased our $XXX fourth

we between Putting fiscal this in earn per together, $XX.XX share now and $XX.XX diluted to all XXXX. expect

We expect This $XX.X. book would full off return to achieve beginning to Brothers. year-end for XX.X% a of equity and over approximately year value we Toll great at expect be our cap another on year

me turn let back it Now to Doug.

you, Marty. Thank

Before ensure Toll up our of recognize is our I'd for customers to for success. our all passion hard I like questions, to and that open the our commitment business, will luxury their employees. dedication it brand to It continued our work of

for open Dave, questions. it up let's

comes [Operator Evercore Stephen Kim Instructions] question with ISI. Our first from

was we're you and greater color get just about the ask seems Appreciate a in far elaborate that I degree homebuilding could by a in your of sort to your intrigued job all good comment to imply I in about the the efficiency a to operations. margins. sustainability wanted that so sense I quarter. profitability. And seeing you there's the strength to if that of of And there. wanted

us And -- year. that for for, as of guidance number variables? across the, would XXXX, years, haven't a inflated use comment by the a think of is next any on know that several it look you base? as that feel operating is a level is that you level helpful so think, a generally? is of is you particular you to hear to be forward Is given How that margin think call sustainable you generating your sort it, the business that you're a kind over sort reasonable I but here Or you I this that XX.X% level you

is question. operating Great sustainable. Steve. we is, believe yes, quick that you The referenced Thanks, answer margin

We SG&A are the wide definitely XX% more luxury new margin efficient a and we to this And XX% model range. we become is targeting think which a long operating about XX% longer-term you've of long the on term in business wide point, term that very sustainable. very with line, communities over price a spec, margin geography, couple more gross of more the last affordable as seen years,

that's Well, super clear.

and very And the could that's had both your quarter? in regarding actual a that I that, had about about What was Was that encouraging. little So the then what obviously and -- a about little a total more appreciate bit level. specs -- number model. I in follow-up finished you wondering bit that specs of if your you talk spec

At the end were had X.X we of per or quarter, at around XXX beyond community. Around those specs. CO Steve, the or X,XXX of

interesting. That's

Okay.

forward community? That a as -- What changing is levels had you see below do you number go total, forward? but finished was also or perhaps or specs, we expect are about X.X we going level is X. that -- of -- said we per So those that per community growing this you the can numbers that those of

Steve, we're we spec for -- essentially starting sell. we're a home every

the specs of So spec, BTO XX-XX. X and X include starts one starts kind

BTO is built to order.

And we've a... I think hit

Not for the people the [Bachman-Turner] older call. on

taking So here, Doug. of we care business are

up point So of here spec on our had an I think strategy. to a we XX% bit equilibrium

vary for settlements in Now equilibrium But strategically, quarter-to-quarter. of little our terms a hit we've kind that will bit point of here.

that Steve, buying just business. about we hope know, Toll enough buyers as on important, have It's still enough Brothers know level and pick at early that the not half spec the is we we are but before, some finishes. time -- they I you choice least alive But at of still to well. talked do very of build-to-order

early, studio and of very inside can it buy customize truly home. you that you If hit design the your

the for some kitchen that countertops. buy cabinets, If for buyer you that wants to we then, move of quickly in. as course, have faster opportunity you get delivered be are for bit it can a that described, some little later, there a flooring, end for And

foundation and So without ground the we in do buyer define the spec accordingly. as market a the we

because, choice that little accretive be business that big company the a to studio the is to drives of you margin. the tend still know, as So margin That more part a also to model. upgrades design bit

Yes, X the very level an of below per encouraging, would finished at is community That's here high community. And number. all unusually specs I per absolutely. not say,

clear very your process it's So that is working.

John Lovallo next UBS. with question the from And comes

question. Maybe up just Steve's following on

times few how has we to past you kind down of that get move into can are spec backlog increased worked Your and to the continued mean, over years. drive cycle this level confident improved I as continue delivery XXXX? growth

it excuse continue -- conversion to it, down right XX-XX, will We're rate down up. spec this about at backlog The doing confident. we've being apologies. houses about our them built My more go We're very to now. are come will deliver And talked continue quicker. as and keep as those able faster. to has can come We're -- on the we me,

We will turn faster. houses

get turn these to faster. at the better it as continues it. You spec houses we mature, know meant. business what And We

conversion. see improvement going that to You're in an

to reverse then gross is the Makes XXX third this would it respect basis third Was expected BTO? on quarter? what of mix fourth what I it the drive decline impact the Was quarter? impact? quarter product moving And in margin, from versus sequential mix specifically mean the that the was sense. point geographic? And positive the

Sure.

of and we delivering less quarter, guide homes a homes way, necessarily when South anticipated. That have the is will in Yes, not within It we mix. delivering communities South had the deliver the you we homes where and less mentioned the and have QX gross QX, South gap the of remember, margin. we the Pacific. and entire the fourth this points from in compare reverses Pacific QX the deliveries high-margin the raised blowout basis the our because delivering And have we and and guidance margin. had about more the high bigger. was of is by than high-margin margin Pacific those South we certain fourth had let's And as in of spec. of XX% gross QX. be XXX higher those bit better we quarter in will QX, We to So less the that is for margin it there have where Pacific than more spec

-- from business our from have mid-$XXX million. with the $X to now running we So homes over

that We large have very margins a have gross range.

We have gross with with margin, have a few communities communities XX% XX% gross and margin. we

more builders margin. of And have some you quarter-to-quarter, the little variation a business, naturally bit of so be price may point when look and other at much that a tighter range than our there

third variety we've where just comfortable XX the be long-term bit as quarter-to-quarter, And XX% and while to in overall, more XX% so variation QX. this margin, headed. modest little there's -- guided in there, we're with quarter is that could business some as a very saw you to But there

and Alan the next from comes And question Associates. Zelman Ratner with

Nice in Doug, quarter, far. to and so detail thanks for on all the pricing. I'd helpful love drill

Your suggest or as was seen the I'm pretty here weeks curious, activity. by Have sound the minus, kind do on lower, back begin rate started depending it or rates pricing dialing pulling you again? community. X the raising buydowns of have plus now that pretty you Or are prices you recent August, quarter, on either you a even incentives in begin start flattish some comments given encouraged sit to into or bit of still choppiness? ability to any back maybe the premature the to that is to

Yes.

bit August. We accelerating much first, builders that the went of call, month in our quarter saw the a have being with And things into looking talked pretty event of cadence definitely of beginning as through last choppy run was June were a May, best the pretty other about. spec July end did to and a then has it slowdown, the up I a we pickup So the of the all we through July. July in and May saw of of continued week and good.

July specs, some on along particularly those been specs that in construction. have incentives increased So further we communities modestly in in might

in However, raise homes. July, build-to-order our on did prices we

down the week XX-year traffic down. and pretty with flat. a as effect rate feeling of up. The a So are sit going year, lowest in come now X further. in the rates third But improved. sitting We're on traffic are overall the here mortgage of much was Rates has those no-point to we X/X August, is that quality

bit more So a now. we seeing power are pricing right

time We as And are just and encouraged mid-August with how because rates think and kids not prices, are that is the head currently summer families aggressively we are generally will are activity. higher-quality fall. the pricing we closing down power more careful with to breath. But and normally raise we as we being school houses an where traffic, things in go into fall, improvement a lined see do getting deep have the will we where think into we up in have the we taking

our for now rate that Alan, the in to They to The the accomplish us other thing environment. are offerings. note, are buydowns less to extent lower is incentive expensive part of

I Marty. that, on up Yes, follow going was to

expensive, you quantify basis rate? for basis when buy buying need say XXX that? the Is you so, actually don't less? are points? Or down So it whatever because lower less same a you you XX lesser solve it it points, down rate actually can if costing is, that is you And to to a magnitude

less. costing It's

your picked. we country deal X/X. around is X to to down the number rate So That's the buy-down buy our typical and

Not question... Marty, spot, you did from of and X X when X/X. the it's more you that? X X/X, buy X And When you from buy to the and to expensive. but on X/X amount put ask to the you and so

X X of it Around down. to that balance X/X and the is that X/X XX X% Remember amount reverts a year years. to mortgage the and the of X buy for X% to

could design as spoken of but a take in tend in they in a it's it. lot have version affluent don't have to overpaying drives incentive, don't to year incentive they'd And gag. clients. They're That qualify. a dollars. the may in take with so that that pass the the of to finishes It a home our incentive come of we've or lot to to and home. with a before, rate They down, nature our those the actually company and the increase studios their the of dependent. goes they probably X, studio will the fun their we it, we lower so be great rate probably marketing rebuy rates average they need X.X% They traffic, lifestyle on not design rather and permanently sell recognize because improve People

Michael with The next JPMorgan. Rehaut comes question from

the And shift or to a the years still, the bit or quarter. preference fits your now, prior XX%. over price wanted towards pace. degree, X, I ongoing little with your in that year about on being kind guess, dive -- over your spec over Congrats to last some I of of in how

to relative buildings of it order of specs quarter, points increase as more a reporting of time, up spec. your prior consistent you're you incentives estimates. And half generally where where margin. least build to, bit margins this think more and of of This that relative same to put that's fall probably did and you periods your to the at you you you're quarter, in one much. a in to interesting have a a in our probably At gross are the maybe a too of I operate volume estimates the growth how a little pretty orders in shifting was and had temporary little out stronger going off There model or hold softness our you if between or with gap what more this on bit business more spec little

that to is variability that or past balance? And if pace going sensitive And there's perhaps of gross softness more quarter a little a margin to to about points wondering, your be how should if degrees I'm if to going go greater relative in the forward, past? you're so be investors And where going X? going think drive would to any

be they more business fair it's and that I that price to good the need they friend, little Marshall not is compared other move. products Pulte, pace of are bit Ryan from builders we balance. have Mike, on to than of steal But It say to my focused may margin spec think to proud. have more a a that we a line a So

are We top definitely growth. line focused on

to that focused is gross also sustainable we margin XX% this believe long are on XX% term. We

We becoming and long are SG&A, also focused on more lower margin term. operating higher more efficient,

We I've when our about, we it of sell aware inventory, we is it what it are also, earlier. more as talked of very to spec put construction we need at, can if how stage make on margin the market,

all of And We so on the back we is that And reports that something it it think worry far but is business heavy occasion, end, to how that have aggressive, spec not we because on bit too business is aging a need to which working. yes, spec. might have be is I The about. The maturing. of it on focus more model. you strategy gets this if hasn't along

the a few ran spec in build-to-order. sell time event same we Modest, to which prices a in was long-term spec, about at margin, on more of are just it allowed just we the on as are on means, place. the plan XX% us us the little we've point -- proud. And build-to-order is talked incentive focus a for and where July. margin spec not, when yes, by the any modest we could but more, there's a But but in business at XX% We about, business, hit equilibrium price raise and we the increase

And between end, we're and there margin in all I worked And that it confident it. are that in at. you the think and build-to-order out. spec we good mix getting long-term have really that it's So very

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

on going think seem that and you just versus and and the a spec promotion, running go it which on efficiency, when took margin why I immediate up mix the lifted unclear keep which in gross about may the prior have you Steve So that sustainable you're followed guess to more XQ your dynamics. understanding margin, term. little time, same does about talking prior, -- all the of your incentives. the kind of the kind about would At that away comments up

load And us can I understand third just quarter just know as projected can that deliveries a incentive to fourth your then quarter you So vary the bit your your quite help well. that's of maybe be versus deliveries? terms in spec in regionally margins

So on out spec a kind going year-to-date? maybe like-for-like you run BTO margin versus that what basis, in you us think what quarter of fourth let to it's your if could is been know versus

So the is $XXX delivered on price math same X.X% about QX. to $XX,XXX. out our be comes the range. the was are in homes that to our houses that ] incentive that in $XX,XXX That about Simple QX believe [ we will of of and incentive

the incentive QX. is I be QX don't margin very differential related. going sensitive to think between and It's mix

mean to we about spec what Right? what's home in spec. tend We margin. average our doesn't and lot whole on bunch And sell I'll incentivize hurting to so remember, the have XX% more and the the we'll community. we talked about how That think for build QX, that's of those, call we a

to put higher. their studio want the design very the and the backyard lot They into more beautiful build-to-order lots, in save with let affluent. lake high business and client backyard we home beautiful be to because them in to best the dream a with green tend the XXth the that have, woods They of upgrades overlooking on the in the premium that a margin that wild special run home. want is tends we for lot dream We lots,

shouldn't -- margin. spec when the it -- build-to-order to think the comparing you So margin, about took you the be

home premium much would lot, that in a and build-to-order the You need lower design was know a to generally we lot as on the recognize is spend studio even design on that and not client more accretive. the spec it if average is margin generally, that lot studio, built

incentivize little it on home the average that and that and to be So what towards small more build-to-order. difference gets if lot we margin bit a it between spec it is that move would been margin may end while have had unsold, to a a the is

The XX.X%. below was orders were that quarter build-to-orders average. XXX that, were specs average, that. below points the points probably the were that for to The margin and average Our XXX XXX to above XXX above

mix kind sure something it a back fewer was was surface of versus that's I dynamic to Yes. triangulating make incremental. under the

I could mix. said have just question your answered and

Sorry.

[indiscernible] for Sorry minutes. X

level in looking that about your seeing about the still third quarter. -- and and provide I be you weird seeing digits of on far? And a decline Should of trends trends seasonality, look, came of potential you versus pace in in you'd seasonal would color then double typically, talking -- fourth to below challenging July. Any pace down order for. so was help think in kind quarter acceleration you're should just above, be just keep based thinking we you're your Obviously, That setting? XQ. were typically, XQ on coming what sequentially expecting through the terms be we want out low

So there. you're work right. Good

orders typically XX%. is going guess that. we is about to quarter weeks that fourth QX. do confident X QX better we're versus may best Our to typically our in, are -- down be lower XX% we're -- flat And than think than we'll We

Research. the Trevor question Allinson from comes next And with Wolfe

touch I just one, to on wanted geography. First

clearly Florida demand months. business markets. have better-performing has attention trended lot guys overall? few markets any how markets last comment You to of over or believe of don't out gotten those the you relative in a you some mentioned the I those laid your on Can in Texas,

Different July of but August, it Texas elevated directly, Texas. stories Houston, there had different and in some market not And feeling are there's Sure. good end Austin, no inventory. as inventory. We're issues. there's an August. markets good conversation a bit good and has of that overhang in inventory a Dallas in around has

of sticker over the some maybe lot pause. But a that of there and was be a last was of buyers to a few so working increases there a shock think bit bit little little and just price out. taking years seems itself I

elevated hard Jacksonville, called has Palm November. Beach, gauge bit Florida, inventory we the for But I As in the in Texas average. Florida to margin to which a levels have The margin. were the seen Raton We're There our quarter, Florida company's October was down in Coast, of average our we as sits at that margin. has a at slower bit for -- okay. done the is we've have is action in very when Tampa months. average some West, last Florida our way, Texas. and do then held improvement market. things better. It's up even which been margin, Florida pretty the and by We'll that a a Boca for above It summer been in month, really last softer. the market in and significant see small company the back selling bit houses. and us, East area and Orlando comes state the Jupiter, We're company how Southwest saw us is in

been community few average down at as Actually agreements had But years where from company think that's that. Florida performing per for well. the I before

Well August. said. Panhandle, XX it. weekend, our community weekend, took We killed in opened we just and our the last We first in sales first

So that's exciting.

better bit Texas best better about to and is about Florida way lot I it. a describe feel feel So a the

encouraging. like on Okay. things It SG&A. in And direction question the are That's then right definitely there. a trending definitely sounds

moving term And think leveraged? about is that SG&A that there to it longer down a being by to looks longer-term Should as some XQ is driving Or got for Or then nicely that? that you X% of type of level? due anything XXXX? tech talked specifically, just it You've sequentially. else like down more of stepping we initiatives

away manager allowing becoming community more us efficiently. sales, moved stack from is in we our to land We're more et system growing efficient. cetera, development, acquisition, where land changed without much legacy the grow that have organizational construction our structure this And We company run We that project openings. adding operations people, field. leads to

without front, And confident we're more so do spending the we can more very on G&A dollars.

On the We're paying our bit a the S more. little up S side, a been sales has little variable. agents that's inside bit, but actually

grow more sales goes, new broker We how on a have involve S as just we just and G&A We're with a bit spending XX% that the on third-party there with the realtor. overall, and of will advertising. But flat commissions. move see particularly And we'll is our sales. money little rules leverage marketing around

XXXX dollars homes to XX% Trevor, to terms deliver versus communities. be more flat roughly XX%, essentially XX% and in of in think, and spent going XXXX I have more we're XX% G&A

The that. bit showing staffing for job proud the also showing of teams. commissions out the side variable the the And -- pretty the sales So a sites little at S marketing. the we're and is nature it's communities at of for for expenditures more

question from comes Next of Rafe Jadrosich with Bank America.

on orders on forward. going the So of questions deliveries a earlier versus some follow-up sort

the as tracking orders and to outgrow do to of in here? spec. you deliveries orders about increase would XXXX? deliveries spec the been because going How in anticipate into business deliveries of we relative forward You've had go that's straight X of think terms BTO partly Like we above years

don't I think so.

homes -- that nuance cycle, looked be the cycle. luxury, few in and we in more the bigger think build-to-orders concentrate The the spec homes, build the the at have a really be build and longer shorter nuance that more months have may may generally haven't I this. a

been, long one, And is like follow so term, there the we not when a probably we start revenue build-to-orders but to have for for XX% one perspective. from potential a

it. Got

Okay. deliveries like the forward? outpace you then do And That's continue to orders think helpful. going can --

reach will soon here. They equilibrium pretty

And Okay. what which And sort said that on talk I about kind increased past. you the you you don't Doug, you've -- drove for of programmatic buyback the year. return, just decision? capital second the in Can think I the question, guidance said then of think

capital Or return think buyback about here? there been and has forward? So change should we going how any

because $X to strong So shareholders, bit shareholders. our billion. free to our our to return of performance. $XXX to reward of we And cash continue up we capital That's a flow expect little want million

on very are focused equity. on return We

program. levers is the of return buyback equity a of main stock keeping robust high having on programmatic One

In we buy course, addition, turn we build and efficiently to and quickly land. how of houses can can how

a great our time and And because so that performance additional flow like $XXX seemed it -- of the cash free $XXX to the to we up million take have. million

will buy as regularly continue see going consistently and and us will programmatically, we talked predictably about to XXXX, continue you back you forward, to Going our company's back. stock

Yes.

our the we at to thought don't year But back of probably the point. it. opportunistic. not goes we're or programmatic use have opportunity I to We just think be X going eliminate a term this

comes next Sam Fargo. Reid from The with Wells question

order color quarter. fourth the into cadence you on gave the Appreciate

promos want looking piggyback the you trend rates? be helping of that questions. addition Just run seasonal to just that versus benefits than from those in off be in more relative to you seeing the of better quarter, Are specs lower selling targeted might any might to fourth some overall quarter to the third

They're are are regional, on than event different calendar prior We already. to are sales. a some But no occur some do nothing local, in month run September. there's the caution, They're That's we sales some No. ordinary. beyond out We always have sales national. do events, traditionally years. I And the occurred of on again. like of That that, years. for the guide many will national don't

quality said get more want not sales than some let's fall. And so predicting in as we don't do you but new when think guidance did to not be market we're that, And what open QX. That's rates because to to I thinking roaring better we communities, we'll me. don't we're down now I'm continue on a improves, we that the XX%. could down, have I a think giving a right come that. we consistent limiter with hopeful And we I'm normal my that right. the let's are we'll we with those X or That's weeks I like get know the approach how wanted It have sales. business, suggest it feels in doesn't where have this we I QX. traffic. than to with and should this feel where opening XX% cooking, of are to be communities number at thing out that let's market, good in the and of better we see blow hope, with open it down is. But just

but little talk is level here, [ from to a this 'XX very just ] high maybe And quickly helps. certainly a want ambitious I that standpoint. No,

You've your the going you're types got and communities delivering. land to into good be of some visibility pipeline

end, to to any might community what over track potentially you long we kind So especially the to you as of to have count see, that term? on XX% X% to do be sense grow as look growth

More like in come with number. I to X% that to I'm December. XX%. you

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

much. very you thank Dave,

your You interest are everyone, Have terrific. for a wonderful support. Thanks, of your and summer. end

answer to and you always care. here look all Take soon. have, are we of questions any you Thanks. to We forward seeing may

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

now may You disconnect.