PulteGroup (PHM) 31 Jan 232022 Q4 Earnings call transcript

Good morning. My name is Devin, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the PulteGroup, Inc. Q4 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After for [Operator you patience. Instructions] Thank your

you the may Zeumer, Jim Mr. begin conference.

for been outstanding Great. Good Look quarter XX, PulteGroup's Devin. President Joined Ryan on thank and ended today's earnings XXXX. corporate and CEO; fourth call VP, President this I’m morning, Devin. forward A at of copy Vice presentation Finance. release morning's Good and and to morning the our CFO; Bob December and period Marshall, O’Shaughnessy, posted slides pultegroup.com. have our Website Executive by Senior Jim you, to discussing earnings Ossowski,

We an replay later call will post of this audio today.

Please in fourth to benefit adjusted this write-off reported A of note, tax you we a period. reported quarter analysis reconciliation tables the to release, numbers and earnings and and review certain release insurance as performance. pre-acquisition morning's exclude is the reserve our our of slides. financials in business with income the today's these that adjusted as within this adjustments charge as well well We spend of your morning's assist results of our will be webcast encourage our JV and to included discussing as deposits consistent recorded to results our in financial

today. alert And from including quarterly detailed significant materially in most accompanying could key are differ and includes slides. SEC factors part forward-looking today's our finally, those filings, These other expected that of today's earnings release are results The presentation our that Actual suggested to within reports. the affect future I as could made results and summarized information annual our statements comments future risk want presentation everyone risk about performance. the by factors company's

call Now over Marshall. turn let the to Ryan? me Ryan

a as of billion quarter all-time Jim, the revenues note and the finish in closed ended billion per with few turn, homes X,XXX delivered a QX These ratio records cash helped $X.XX and morning. $X.X and debt-to-capital share. high we earnings year of fourth PulteGroup net almost minutes. in and XXXX detail on homebuilding good We $X Thanks, results with in results, rest will our over Bob a of belowXX%.

the by year great delivered of results. financial performance, quarter another exceptional PulteGroup Driven fourth company's

our to XX% year $XX.X increased dividends shareholders, returning earnings to billion, and increased business, share over while increased repurchases. home per billion provided reported sale earnings XXXX, our invest reported $XX.XX into XX% billion For pre-tax revenues prior to to $X.X the results the to share. the flexibility our billion by us These and $X.X over$X.X XX%

here Let in organization financial great thank me pause results and a entire some just right and market our for delivering challenging efforts under conditions. operating their such

assessing volume, truly stronger margin In We the XXXX. such fortunate gross appreciate XXXX environment demand that financial fully pricing, to are we an reflect results, gains our have in existed earnings and that team. outstanding in earlier

all XXXX successfully we the Xx Federal to the fight Reserve slowing decision know, economy, housing. rate As is inflation and including its against hike in

with Consistent XX% year, XXXX. were new sales the XXXX net trend XX% and the respectively across national home For the these XX%, full XXXX. our country new roughly fell and numbers, from of national existing down from orders

higher buyer quarter environment continued of fourth through as to rate dominating the priced demand higher we progressed the this as demand national moved the given the Despite risks. have saw along consumers by the January. improve experienced The can who strength result mortgage confirm individuals out and prices higher the of those of conversation, we've market softer with and sidelines month a market and uncertainties rates,

desire attests for I country. exists but to ongoing to progress have things will think the in see how improvement We that here, homeownership from this this

the month month of and both each and through we move number absolute fourth through of absorption increased Net January. as in pace quarter signups the

the have trends quarter short, distorted in progressed years, encouraged over been atypical. sales. is the by new as moving improvement In past we're fourth the seasonal sales While recent monthly higher our few home

on the in add with I among to Consistent for in been that rates. to gaining our rate we've buydowns decline Based actions offices, this overall affordability our Along idea, sales with responding mortgage top buyers improve feedback be rates, have to remain mortgage customers. help the the traction. decline incentives would from taken appear

enable alignment QX consumers turn today's buydowns, lower rate reductions cost even incentives. our can these seen or our of homes continue in lot implement programs with and to find assets, price higher in environment. to include which strategy premiums, In The we to price be rate buy programs higher might that our

the is up to this a quarter in On closings quarter, basis, increased of of incentives X.X% from price. XXXX. sequential third fourth In on the X.X% sales

adjusting prices floor communities, incentives associated just in of our to smaller lower have future and Beyond we introduced help many active plans already costs.

overall The on smaller help construction costs But all honest this obvious price. introduction sides. to effort call, one answer I've now lower Like plans sales of this knows. on pressure offset of just question strong the is of will comprehensive both us really floor that of on the strengthening to heard no is The continue? a is demand part arguments

the picture that respond but Fed seeing soft real. employment is Home a optimist of want and Builders by the landing, But buyers actions happens better recession is And believe rates, can are uncertain. nature. lower I risk weaken is a fed pricing. currently what the to We're to orchestrate

around one plans volatile is of its today's frequent over operate Pulte investors our to With conversations with dynamics, business near-term. market the how

plan, to dynamics home adjust as construction, long market development need set the to Given timelines require. associated land prepared with a but be and we

for best how a to future. remain to production. the our share foreseeable of core, our we system we high-level, I'd operate At like order but a with the volume plan builder, steady At build a business operates

sales. consistent As our plan consistent starts. a for spec starting such, on the -- of with new include our This is a homes cadence plan for would spec pace

are the dates. delivery have on calls homes that shared showing buyers that prior preference We've near-term current for environment, in a

fourth XX% the in represented sales over example, an our spec quarter, orders. of new As

Our price are and set price pricing clearing recent tools finding we to that sales the incentives. using show strategic market our

we environment, today's Within through the machine about and optimize we process as assets. our production our will intelligent land turn sales be

our always, focus through will the cycle. strong returns capital to primary invested deliver relative be on As

universe assumed we with homes XXXX, us the our cycle for remain months. we will X-plus planning Combining to have in currently for production, XX,XXX expect In close of a several time approximately have next starts, homes allow in reality current months our will planned XXXX. to XX,XXX production that the our

cutting operating work done. remains cycle a but the this are year coming will Buyer days, ultimately of to teams and We procurement determine time, looks our have already lot demand to in be is goals construction plan. and reduce success place but in our realizing what like, production

of cash level continue the position appropriate trades We when which this leg housing strategic specs we local assets, and approach negotiating balanced checks with while the our is to cycle. inventory, as maintain suppliers. a see our in business We key namely; the boxes, an prudent, production keep critical seeking production in that for generate level to turn communities, finished control a and and we of next of

but will Given our not today's opportunity approach we guidance be conceptualize the providing have quarter, this at conveyed market first for operational our we thoughtful we our time, see In business. XXXX, process hopefully the for a sharing dynamics, full year. and for

fourth results. to over call our the turn now quarter review of Bob for me detailed a Let

our and Thanks, by of can results, Ryan, strong performance, for PulteGroup the my a company's financial and numbers delivering fourth I specific benefits financial completed adjusted the which Jim morning. throughout seen at of review the this good analysis reported the our items the call. noted year start operating financials of our as will quarter well In be as statements.

in billion. revenues by sale year a closings for the $XXX,XXX. to all the The gains increase revenues pricing in over buyer sales quarter average to in combination sales price increase to $X.X with quarter X,XXX fourth driven X% Higher price was by in driven period XX% PulteGroup's XX% average home groups. across a in homes in double-digit last increased were increase

was sales of quarter quarter closed from closings came the our closings, Ian. first adult. time, Our which This quarter XX% year's with of XX% and Florida of active that above XX% as and move-up impact and comprised closings Hurricane last operations move-up in were XX% XX% compares faster-than-anticipated buyers, the benefited active in in buyers a we the adult. for guide the higher first-time recovery QX our The mix following fourth spec XX% in

our is buyer first-time first-time of The greater in increase closings of mix the our and availability consistent with homes spec in neighborhoods. changes in communities

production in targeting communities spec buyers. of units within Centex our are spec XX% almost emphasizes strategy as brand first-time Our

ongoing the increase year. orders in the is The the rates homes, we a interest orders by for realized the net new In recorded softness significant period higher caused the experienced decrease in X,XXX same of in decline last 'XX period which period. cancellations the buyer in demand of reflects XX% from with in combination in quarter,

As prior would percentage the year. pandemic, compared as in relation in line I so sign-ups, the of this of XX% totaled fourth percentage in XX% in with as the cancellation X% the fourth the last quarter the Cancellations beginning rate with backlog was quarter of quarter compared at a a XX% cancellations with averaged backlog quarterly to in a of in fourth cancellations to the quarter historic the were percentage backlog XX%, X period year. beginning QX note years last that norms. year

our planned quarter of of Based XXX was XXX, closings, last which average up our to on Community approximately certain community XXX reflects from community count closeout and neighborhoods. quarter, 'XX fourth average in openings year. new well of the community the sequentially openings slower count count is In average growth communities. be an or flat community first we expect the as as X%

year expect to the the XX% quarterly X% For we quarter. 'XX, over up to remainder count comparable community be prior of

XX% homes. orders X,XXX, demand fourth while and active to X,XXX XX% move-up decreased to lower By buyer X,XXX group, adult XX% quarter to by first-time declined was to homes buyers

for As housing as and years has have of buyers. higher under been rates widely appreciation price affordability pressure interest demand stretched remains discussed,

compares We ended with a prior billion. billion. homes of backlog a of the the homes with quarter $X.X of XX,XXX of This to value $X.X year with XX,XXX value a backlog

keep our to inventory an requires is -- of turning start which As homes. keep number objective that Ryan we appropriate turning, discussed,

quarter. with homes we which on a of the sequential XX% down quarter and, XX% which third a XX% ended the quarter last the of from the quarter, of fourth homes, fourth started In in year, finished. approximately fourth is were XX,XXX from total production, X,XXX about We basis, down

of is above we our total of but specs more homes spec. construction, under were close, for in our slightly XX% process, buyer quicker few comfortable Of are having preference comprised having a XX% This production. a homes in approximately our work target given

we of the between quarter in first deliver Based production expect currently X,XXX to year. on the pipeline, our homes X,XXX and

numbers production assume the As continuation construction Ryan production potential have indicated, for of full we current close a will These the XX,XXX approximately times. year, to cycle homes.

Given to sales expect close quarter of for the of At in mix the QX, an homes the homes XX% this expect the we of spec price 'XX. be first of anticipated midpoint, QX closings average closings backlog, level price be increase the we to $XXX,XXX the over would of between to $XXX,XXX. and in

of comparable prior down year highs In we reported near of the the an we delivered XX.X% the represents This the points quarter. period, increase margins period, XX.X%, third although for historic from which the XXX basis sequentially company. gross remain margin in gross over

we ahead, lumber realized benefit in and labor see includes in in gross 'XX of QX the 'XX have renegotiation lumber to quarter material prices of contracts benefits the ongoing from future margins this our be work strong quarters, with which much will will expect of to fall to closings. due costs XX%, the and another of Looking our versus back savings how Any we lower of half deliver 'XX.

SG&A this adjusted million our in revenues. or net million fourth home quarter Exclusive million, SG&A was reported of of period. $XXX from X.X% sale adjustments insurance-related includes benefit the reserves $XXX of expense of Our $XX or revenues, X.X% to expense sale a of pre-tax home recorded benefit,

our of home revenues. adjusted SG&A a adjustments QX year, of of insurance-related of sale last $XXX of Exclusive $XXmillion home included reserve pre-tax net reported In SG&A revenues benefit or X.X% that expense of $XXX million X.X% was expense [ph]. from our sale benefit, million or

the our demand, are overheads properly With housing pullback conditions. to overall we’ve worked aligned in with hard today's ensure operating tougher

SG&A with position closing a words, expect In QX last to be in with compared are the even that range we of expense XX.X%to overhead leverage in is realize we year. such, XX.X% As to comparable 'XX. lower to other in volumes, XX%

by volumes from income rate was an last decline per as million, pre-tax Reported $XX origination fourth XX%. from XX reflects capture percentage quarter mortgage both services decrease pre-tax operations $XXmillion in The our overall year. lower loan financial income loan declined down in to profitability and points

land walked $XXX million option future the and acquisition we In associated XX,XXX an in quarter, fourth away spend. from lots

of for in actions, the charge the in a by sale pre-acquisition we was a income gain the of related write-off $XX charge incurred offset pre-tax $XX This of million and As associated completed pretax quarter. result with of these property of deposits. JV costs million commercial a

fourth Our reported was the tax million, quarter rate tax an expense represents which for ofXX.X%. effective $XXX

included taxes tax the valuation recorded with deferred $XX adjustments charge QX in associated Our period. a million allowance

rate for the first our 'XX expect XX%. year and We tax in the be quarter in to full

of On per was per year adjusted share. million net share. million line, or million $X.XX net $XXX for the our $XXX adjusted per On income results net the and the bottom income $X.XX basis, reported $XXX per quarter reported compared of an income or share. net share, $X.XX prior million with income $XXX or These or$X.XX company's fourth was

past in for fourth quarter, XX% of invested land almost statement, we $X.X income assets. and of existing the Moving spend this billion in the with development land acquisition development

full a in For of development $X.X invested spend. we billion land, the total of $X.X $X.X of and year, acquisition billion billion including

decisions X% XXX,XXX with and last is recent of under year down lots option which from to from peak down we the exit year XX% recent land QX Given lots. ended XXX,XXX the positions, certain control,

the With XX% currently of lots drop over lot the owned past option control. two to under represent lots deals quarters, decision

of expect activity, XX% in spend capital to be on total lower with earnings time, discussed we’ve approximately$X.X dramatically shareholders. positions. estimated given As plan overall of in prior investment XXXX. land land the back to At continue calls, Along an we going business, this dollars development toward the with land slowdown we housing these owned in our we billion, to to investing allocate our our

XX% of fourth $XX.XX $XXX quarter, in of outstanding, in an XXXX, a shares of million stock the share most the or repurchased price In common of for million continues XX.X repurchase programs X.X per at $XX.XX for $X.Xbillion of PulteGroup having repurchased one active cost almost industry, common at of share. to an shares we the average cost million our per shares average maintain share.

On and our quarter and XX.X% returned down shareholders share and the net to we over through debt gross capital $X.X last to billion $X.X billion business our capital was XX.X%, After of of to the to a we XXXX, a allocating capital dividends. In cash with from shareholders, basis, debt year. repurchases is ended X.X%. ratio ratio which

turn call some to me for back the final comments. let Now Ryan

Bob. Thanks,

was For year had I the countless all bottlenecks build in disruptions but in the and financial year chain a resulted success When demand, that we almost realized hard navigate. XXXX, out, we can cycles. tell extended started unlimited you it supply to

viewed can -- to as have there sidelines, push today's competitive the as as As adapted environment, the in favorable rates lining dynamic. rising favorable of interest and we progressed quickly I we we and be a more a initiated challenging a think year consumers silver to operational changes supply more If what conditions. demand the series market more is supply

Relators Association of source inventory Existing the of or industry's for XXX,XXX, competition, show certainly from supply is so biggest supply. homes sale months figures limited the only National existing such of at advantageous. X.X are homes of Recent our

for we here best, but prepare goes, about incrementally I’m sit the hope but expression more As the today, ahead, worst. the optimistic the year as for

in plans in have cause of will we to turning At incremental system that we've with terms meet our XXXX to don't the self-inflicted -- us pressures. we’ve same in done an We units I excess setup head assets. and into will spec business. with demand of think I production continue we’ve that homes the done well, allow production think what how enough time, that

strong within a We serve. position the that in we markets are competitive

and to flow. in land have are financial those years time and strong comes, There among and PulteGroup cash to the When take are be ability debt X even we opportunities of with liquidity, are upon for conditions. of biggest municipalities. serve of in the sellers price seized provides all challenging markets, to the We typically flexibility builders for our year points in opportunities. our with another advantage market maturities plenty position will expectations opportunities finally, no exceptional And

again I outstanding PulteGroup exceptional build for year their will by the past homes customer thanking experience. entire to organization an and to close this provide work

now call Jim me turn Zeumer. the Let to back

Ryan. Thanks,

we We one you if are follow-up. through remaining. for for it to so up get many that possible now and call yourself all prepared open questions will as set. questions time question limit the to can open one the as We we are ask questions, Devin, during you

Lovallo question first with John from UBS. Our comes

for Thank you my questions. taking Good morning, guys.

the us just average? margin one move-in on give the to of homes The company first can an idea you is, quick compared

It you seeing Florida, Yes. activity, where Obviously, of to bit are it think in the interesting. stronger stronger mix, see specs challenged. difference. are give depends, makes markets we West and sales I It's the to little are performance a a geographically, hate more going but we I out Southeast

about it a we've So interestingly, We've more about where. seen if -- mix. for getting geographic you it. out of matter of which our of that spec think of on relative guide. guide outperformed we gave little was also On but that balance, of we talked margins, volume the better did we sales, Part anticipated we strength than because QX Florida those does really is when margin better our bit performances, the one

Got you.

the on mean, broad us then just demand how across commentary And certain getting idea much your was to pretty was quarter better into Or Okay. markets? and of it you and Can limited the interesting I give through that was it January based demand it was encouraging. an was? footprint?

relative basis. a across improvement really the the on footprint John, came

and we geographically, in continue Speaking strength to Southeast. Florida the see

answer, more performance of probably encouraging we markets our of see to Texas seen Southern we've out Western great highlighted see those as Las the California, see started last signs one just to to come we Vegas, back the Phoenix, we Bob California, that the in Northern markets. markets, As And to started continue life.

the kind So improvement broad based footprint. across of

Thanks Great. lot a guys.

Thanks, John.

next Our Truman question Research. Wolfe with from Patterson comes

taking Thanks questions. morning, good Hey, my guys. for

the you flow through have stick beginning and First savings. question, lumber some cost P&L lower to costs perhaps brick other and

of likely think in costs demand us be through pricing. also low higher and perhaps for quarter Do I'm you uncertainty We sequential seen? margins. first can likely the year some you have point given the will help hoping kind land improvement it around gross you've that the think

think in And time, out variables as a you've the And given of point provide we've the for in there. going at extent I mentioned to that highlighted kind comments, of we are this I are at point. Truman, that's guide QX. my this what

Understood is might how submarkets work-from-home tertiary to a within end tailwinds off the that. you. maybe thinking tertiary prior impact time, same better at leveling Got entry-level squeezed Okay. on move-up here, provide I'm are markets, performing that And communities which worker proposition. in relative value metros and bit be but remote tertiary or a closer affordability negatively might the the the markets segments?

talked affordability core, strategy the sectors. certainly stay I think, our attempted and to We closer first the entry-level closer we've into with there about acquisition market matters. buyer to have as business we've Truman, over of years, in sizable some Well, retail land time a the the job

growth footprint as some of communities goes have our land that in as on more our So in and we the far tertiary out areas, rings quite believe but competitors. -- that do maybe don't I are the the

John return. speaking, it's depends structure the of So the really a margin, sales anything, seen from that's well. strength think, I us the to board, a deal. margin to going not relative community-by-community is, that question underwrite community of And a across dependent of as but and kind we've situation we like, focus that asked, standpoint, by lot on much that's tell it don't back in geographically But land improvement situations, we the -- gross underwriting just as community heard is the on as you on what in you've I'd of from kind

you Thank for Perfect. all time. the

Thanks, Truman.

& with next Zelman Alan Ratner question Our from comes Associates.

I be just guys. know Ryan, Good curious larger through a for to the now more a When a beyond a it's and right while lag if time you thanks are the you your XQ, by level than I compare on focused talk guys little you're see Hey, might the spec wide there outperformance. not still Nice competitors, bit. but guiding your could pretty basis little XXX, there outperforming margins to And of are, I'm a margin, some execution, little maybe understand I bit you just points. given morning. bit XXX of surprising here. they're

you that is outperformance, resulting you're there to little talk my could timing opinion? going something issue? guys doing Or a is are just guidance, that a your not give bit So is in in that understanding about you

touched us years, the the that. buying. homes. higher is those the our have Yes, price the question. Alan, initiatives business how over I part higher that to we big dirt and from in communities design it number of kind for that we've we way has homes everybody and is part Those and everything cycle, in returns housing quality really of really of that sell that the I a think changes that have been operate for it, and have And certainly, we for we're margins driven a the of aware thanks our I category, implemented that appreciate of yourself think, that followed important way

announced as A ago. the part for that little that of way with to have we And requisite risk those a Truman the underwritten communities. evaluated and back returns question risk we and minute bit ask associated the that the associated

seeing I off. seeing certainly So I pay think -- that you're think you're

And we market going sell way of price. kind We and inventory in are prepared tougher remarks, to and operating our good get to important flow-through feel we that this highlighted really environment, it's turn the is on business clearing run the to have call, this a a define in environment. which my to

really we reaping market immune of while model the that and pressures the have we that that to So the rewards be it, we we operating is a some believe are won't great from one, there. homebuilder, very we But and are be continue efficient to think in the are are way we are pricing decisions. to we going prudent disciplined making we that that an out and certainly

all appreciate the thoughts I Great. there.

cost question side. on the Second

the we've what think, lower, was have to ability up I comments the your that be pretty as especially from we've be heard a about they some homebuilders inputs others renegotiate filtering as from And are to similar lot much back last of to look as improvement shaping up over volume outlook a what and as few optimism and in well. starts months, be lumber their that costs have 'XX. I help to market costs at other XX% seems year-to-date heard here. but showing can't some perhaps to might imagining through that pulled

bit current Or what now find So feeling side? do still given your year to feel a Are ability of push marketplace? to some you less on you seems on? as bullish on little there like costs cost thinking you kind what's relief be goes the a back your about strengthening the can

prices looking cost be on down the the the to pinch. that comes we quarters. break going that address continue I and not consumers of cost that that help I the of side think as to consumer components affordability reason we over I talked challenge lot in that to all of side. believe to at just a a think and we've had will be move being feeling affordability is that about going And theme the it's biggest are we couple With it's are the part through Alan, the kind XXXX, to that tricky, of pinch, Well, find highlighting. last spending, but appropriately you're several affordability we've some in so worked affordability hard housing, We've

from the reception about the very we're they've reduce from in front We've certainly seeing -- new prices reduced seen We slowdown have lumber. been things gotten trade a costs progress and hearing really a commodity of to house That's as as our of We've change. they we've in to started of what see seen with pulled. lot kind of a they've collaborative of partners permits certainly kind those kind consumers. and our end and help talking can And as well. around and we've positive worked starts

on that. an we'll keep So eye

be will think given, hard Probably the will material the to labor that side the they're is is easier but thing be things. success provided will but increases success been side have get to piece be think once real, more material think the Not and of the that impossible, -- will likely going I on side hardest those the been material back. sticky. And you wage that's I tell side labor. Those cost wage I would increases than the or saying not have or we easy, I on have we side

So tell time plays year out. as the will

working really As costs. some in our of that reduce my some to remarks, I highlighted we've are goals teams got procurement on aggressive overall

Got it.

Just if one I could squeeze in one last there.

of understand So on the I the lumber sure this. side, I just make want to timing

year. deliveries from saw you're on the You pullback that last XQ we benefiting mentioned now

Assuming of higher, this little Would of kind bit kind even be increase type a headwind impact? to a goes half when or maybe be that here a would holds XX% your eventually of second year this margins? that

Yes.

it. Thank Bob. Appreciate you,

Efficient, very efficient answer.

JPMorgan. comes with Rehaut from next Our Michael question

everyone. morning, Good Thanks.

Hi, Mike.

when circle double significant a not trend, doesn't more. it's fourth And in back obviously gap we this to bps talking and guide. but if quarter in point. that, quarter interesting the of now and referenced, the look industry relative And to positively in you’ve margins first the the Alan to wanted gross the your at I favor, rest to of the back that, you XXX one a quarters are in historical two XXX make range, the margins was gap years, gross obviously, or prior as

understand actions of of unusual there's significantly for, some were didn't it remember for investors type if to items any the allow be are I isn't wanted have any or margins. in kind have Because would than you that kind this the backlog I doing because just not in the kind to helpful continue. order If what mix make of puts a helping proud, sure comments being quarter kind of within the there to growth takes you that to lower things you're and we wanted that of or that gap relative anything margin think and of in but gross if to of and looking number significantly reason different understand. we there, there's all short-term the some marketplace made larger might industry last you just the short-term

And our I question. it's unusual you I Hopefully, I or there's provide we an nothing on when there the margin Mike, we appreciate, happening adjustment your form quarter. unusual things data. tell them, you can, fourth if we to directly present when your Yes, about the think in understand happening, as whether in in as are commentary adjusted of our answer question results,

We anything first in our are are the in that we unusual than closing. to the not projecting margin other homes happen quarter

what if they're answer and can't you on thoughtful comment the a only where return. relativity offer doing other we on a comment a can business, I on the consumer gave, people's the wise. pricing get to reflect can point is affordability are we're earn margins, run which We to trying can doing lines, think we what to we that doing, to Ryan where I pricing what

nothing there's margins. where know you but unusual happening that need don't So to if gets be, in our I

can to the deliver allow predictable turn being keep and to you a It's just inventory. are about. comment way to find accurate. not market Bob efficiently the consistent I And and made to laid maybe comment that's we in is that Yes, about out, that tried going a pick up the us this and business me reflect running made our Mike, proud, be we XXX% quarter high maintain that business, I way last let our the we've of price the operating which will about on talked margin returns that still

much are standpoint sales comparable the So we endeavor do from what we certainly had fourth a while -- in to better would quarter. than we

to that I think relative to market competitively our you that are going our we with peer see are make to And continue homes. we priced we set, are selling offerings. can sure

have revert and a the think, I midpoint to doesn't I I kind positive that secondly, appreciate in don't similar guess, mean, ago. was SG&A a understand given is give, to yet that's guidance significant were quarter you I I get guidance, pretty might you closings would case. of that to No, which Yes. to to year here think something the people gap I second in want we as that. was But okay, that. encouraging there normal, as to [indiscernible] well the but the the maybe allow like backlog being decline drop sound it gap guess trying

to a that into little delve So wanted bit. just

similar If type let's either quarter, decline in coming percentage what or, been on something to closings? talk terms in is XX% in if given XX%-ish SG&A see a of there kind the spite doing side or similar decline what other to could the able quarters, you're say, And expect the of management? you of could that were in do cost we X%, about a headcount we cost first you've where a of in

the they you scale Yes, Mike, call, recent hopefully, that highlighted most operating we overheads sure be make of at are today. given can had would we we efficient our are appreciate that business to the looking our on --

We and actions is that market are they on on performing. particular have taken varied how market costs, depending by

As volatile, to not market can a relates it's efficient looking Are a everything in us think are do expect running but and you it. that, should a always to first -- mean it volatile beyond else, the quarter, always there's flux. we right? an we business? it's like I I at --

business will a our the We develop, our as well. we on overhead of -- But I guide haven't looking overheads develop be we can spend tell you, plans as see at as provided around that. part will we

Right.

wanted to Just year, response you percentage a to year-to-date lumber is costs a get the prior lower and dollar a on amount, which was. it's sense from kind significantly impacting basis being that about you. obfuscates of back I It's mean, on one, an half lower maybe is when in about the absolute sneaking you the of somewhat clarification if one lumber kind the think where could. When on -- than question. it of also basis, dollar up just I actually quick the talk last

labor in one And else the that. X to increase half savings over the months way, lumber, potential some just come there's equal a to the of sounds offsets there's XX% in amount secondly, and I would that presume all last has through might given potential but, market also me, back gone where

to thought you? wanted you that if Just know what makes to

Yes.

$XX,XXX in lumber impacts the obviously QX in load will So that down the deliveries. we about that was math, benefit have it. in real gave. guide our That margin

those say you know heard down. don't that able Ryan to a be costs little to think I we're going really be labor actually is likely stickier to we bit if drive so

is we have the our We or true house statement for impact order think, pricing feel we in the closings Ryan, it our in future, feel when our the pricing So we the the pricing. of two the in lumber a commodity. most three quarters -- And Lumber market, quarters of build right, that's commodity said later. typically well. because and then so income I two

you, be order we I so talked where little trades, been other in would market, than a with that's seen and Again, it's being are and pressure on now. our working how sticky. build, we working are right Ryan labor we teams them inflationary And tell a more pricing. what an lumber, we to it's procurement price, Obviously, offer can on about efficient we've our build, better help bit us

close quarters into process, the early build a whatever our two, or would 'XX commentary, And time it margin again, now. with impact we even price and the 'XX yields, negotiated start in then time, in get highlighted into by from prepared those likely three that houses that changes X-month as late flowing profile will

much Perfect. Thank you so

next Our from Reichardt comes Carl question BTIG. [Operator Instructions] with

unit way? time, be active of that XX,XXX 'XX meaningful Thanks. Good you expectation or XX XX% deliveries for any adult. Bob, up, in Is first XX% mentioned, or on morning, the your mix to 'XX than different everybody. guide or much that -- shift move Ryan mix [Indiscernible]

Carl. interesting, our our They have in first-time a XX% things meaningful, It's are us. I spec. sales inventory couple our heard hopefully from -- don't know largely certainly, that you communities. been is of spec but of

the richer X% which bit our in time. little of is lots was up preponderance towards count, year-over-year, that community forward Our first first-time of is communities. a looking mix The

you a that was if the quarter, has it call think space. you decline in about in tell that wouldn't -- been sales the lowest paces shift. the I big yes, even would But the I first-time So first-time

is the that's activity So where today.

stock just then that business Okay. Thanks a the has a for adult, so the just be environment, tough. in in is an environment this to the I'm months confirming been little Thanks. rates? how market on attitudinally? Bob. about has thin existing you active contrast customer it move-up course with but that bit curious market trended. over chat that, that home and time about of customer pay Has likely first how given worried maybe We been them faring you're less to And cash, the in more Could had sales just seeing seems the last what four like or

as of Yes, And and are it's think question. proud the a really great our overall you're of Delaware our we to Carl, of adds business what it I kind aware, portfolio. mix

market. there's lately. that amount that buyer been maybe stop. be to and certainly to most broader of pause cause highlighted to opposed to the fair You reactive, That negative, probably within of a volatility positive And tends to buyer as tends kind volatility

resale it's side, On the market. inventory you highlighted a thin positive

looking been the has mortgage at their certainly mortgage or to small. price. on so side, their able been buy pretty for They've that think And but good a not the for think I able And sell looking they're home. sell to I pretty buyer they're is home, necessarily

A the middle. first-time some serve, to are as in -- there that they highlight, strong the were the that other as of quite I'd and active we puts groups two adult other was relative takes. buyer. the couple weren't So They buyer things

a were than move, strong I by think, did sensitive. Again, or more -- be options, I rate mostly fact because better they're the they driven don't they buyer, not that as They little think certainly can have move-up to the got they've more patient.

So on things active will enterprise. we about be And all considered. the space, benefit adult the to balance, continue feel pretty strong it to a Carl, overall of I good kind think

question Our Citi. from Pettinari next comes with Anthony

Good morning.

mix is on kind following of X% shift any look you affordability, out order between ASP, break I to net guess, possible when and at Just based up saw? it we quarter-over-quarter, incentives that reductions down price that

Anthony, provided and we going to haven't so that, reluctantly. not we're

is way there? about directionally, mean, of can if think shift there's I know put or I mix not any there a Yes. you parameters don't significant? being as kind significant to

what would Yes. you tell I Anthony, I is think fluid. that it's

those are price reductions. kind or as that base discounts of a things lot rolled kind sometimes to sometimes into off base or of And price price start of adjustments premiums, changes

gets market discount embedded into kind over the of what is. the price so time And new

going about not But of as are you is probably the this to what continue that market-clearing on break we out point. as it based see, reduction think we talked point, load Bob's sell to So, kind can we homes. are base the incentive price, well at I of price finding to the to

largely under And Okay, the think to partially just land that even pandemic. on your then I control or okay. maybe prior Understood. selling put homes was

on kind to you Just or cost pressure just you then impairment would level what community review need can margin of of sort before And price you roughly long impairment? would exhaust under a see of of touch how before that -- what come risk? basis? I kind mean for

Yes.

buying you When of development the we, to land. neighborhood answer question, years. time years first in in around going land hanging the lines, to been X average, in I to So is be of on X think X X add --

And In think system so that, we if land kind of its way the impairment working you the would be reviews pre-pandemic do obviously, through of impairment every to question, response quarter. now.

about X -- the costs actually at XXcommunities pretty about we of but coming flow them for most for XX are in from margin instance, We we and quarter, not. this that a looked quarter, look strong the recent in it for $X impairments million was did and, position, through impaired always other

remark in book. I of real market, And our shift widespread think, a kind structural the absent of some anticipate so I wouldn't

are think one by I at to on community, conditions a evaluate this, in communities the depending adjust. see with these the we like position will look continue were communities for if you quarter, we'll four one. in we And that as we us market

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

A far. color Ryan, taking couple follow-ups questions. so appreciate Thanks of here. my the for Good Bob, morning.

the but also incentives, on to you -- mistaken, about on but Can price increase just load the In incentive you terms further making us can given adjustments us of your understand, the and help you on current think incentives, I'm are if that? maybe think orders, in give we What's the closings, I I demand, improvement incentives. talked X%.

an the we so it's And comment just Mike, sales is you dynamic adjust that think haven't. Pricing incentive, doesn't market, base if well. pricing, I show it right? And as he it to Yes, the just lower said in Ryan made, a price.

a basis, a position so And in given haven't where a over margin. we on time, relative are guide we on

but the in incentive to QX given which given for all was almost we that, double, guide done that price I embedded think the we've margin will factor you load so there. which those this what went X.X%, to, and too, we've reflects changes there have were point, everything leave is So We it right? things in,

January? here, -- commentary I us you the of appreciate, like saw And progressing you to terms can you basis? then in through it. but have the January, did quarter the understand the about in magnitude gave specifics Got improvement Help versus through orders get the quarter, the since what a Where quarter? into through month-to-date you where fourth improvement stood you year-on-year the on in us just enlighten of

that given inter-quarter Mike, type trajectory. Yes, kind of kind we've we never don't -- of of

of seen So is not only we on is which going mentioned, continue we've probably to as atypical into strength kind saw we I what things pretty based and at, fourth January. quarter build certainly encouraged, quarter, it optimistic we to leave where fourth but we're also the progressed are strength, are the that which, see through

rates and in certainly optimistic have cautiously been lower. period So that

contributed. So think that has we

the we've be all see talked which of the here environment, at [indiscernible] in operating we've I to think things considered, does meeting. But will -- Fed going the next kind more We difficult. is what

sales are what with [ph]. for in are We we pleased the seeing pretty

ISI. from question comes next Our with Kim Stephen Evercore

business, are At comment the follow-up would Yes. on driver I actually not of major regarding your for purposes having point, How would prospective that let's wanted on Thanks application you're XXXX. compared been or you're say seeing. and say, said a to the as to aligns very think you seeing their in relative that improvement seen about to, comments XX,XXX used able much what much, rates do starts guys. rejected? qualify we're term them XXXX. you And to stuff when I be that. with, have your rental about think time, longer something of say, your well. production you with being mortgage to this that what So let's Encouraging buyers like a that you you've expect seeing you market, share again, hearing certainly what normal

and Bob first, the now sales your so well. So, the that. way equation. rate rate, really trajectory you of mortgage things rate is Stephen, let the driving will let we've What's helped comment that loans in it. is we've repriced, done I way tell the me that piece also affordability grab of of is part have side. as of We've I take would affordability, the -- created the first right part kind on rate incentive

will it. big So I skip a I to about think that's that production. said of couple a you things of part

that we've we'd universe got same our plus be have on what close, page, production to in enough production such based homes. in that -- Just will homes our to XX,XXX this what deliver will such was production, approximately that so the intend big to on enough clarify is we start already everybody year to universe enough expect

ago question, targeted roughly -- announcement works then kind a X-year do we up. we rental X,XXX -- few have want -- period, get homes a once fully made we years back about So X,XXX of of homes we've rental to your year that you from over out -- if a ramped to kind a go and to be the

can how of our about he which small flip that. we the And to talk of fairly business, piece. I'll So piece is kind strategically mortgage Bob, it designed and

people haven't because prequalifying go rising way guess know more I seen spend. to they the people's a increasing being haven't we often really they disproportionate good I to seen is, can as people ability And think process. not, not we rates. than qualify through in in a They're or the able Stephen, change qualify, news Yes. of the what

but -- of I won't know the X they consistent are because say seen we I qualify. not the over the canceling people rates. look or the a over you year can't in versus that last change has if percentage moved So of have with contracts materially XXXX, that that cadence pretty back It

at XX,XXX from that's you encouraging. just about mentioned actually what is interesting guess, sort specific me addressing And I I have mark, comment your about That's if that Yes. fewer like ability were and I start down it correct scale helpful. XX,XXX wrong, of was. may because peaked think, you you're -- as you sort and of gathered starts than that in really more your comment XXXX, and so I actually, I'm you your sort that's starts you to Ryan, XX,XXX, think your unit of

of it? do curious, along that could And you And XXXX? into first again I'm that And level my so that lot ofXX,XXX could starts? when of quickly guess count, expect question that I do quarter. whenever permitted market your with regarding business thinking quickly How count things it reattain sort this owned relatively further What conditions about you happens. to that how lot would that, Is then think half normalize size something you're declined the of it you decline if the you your take?

with try Bob spend lion's substantially to year, control, from XXX,XXX what can, of little there's start XXXX touch to are will land we're maybe going for bit in I on highlighted so We've with as of We've be help going will and lot down the got lots here. spend is amount question. our your I of Stephen, starts to development. a kind be that as I'll half in for the those the owned. there. ask Well, land that a unpack of which of many share XXXX and we with I

the open. purchased communities owned going and underwritten to Soon money and get we kind it we've and got in entitlement we're are developed we've of we've stuff that we've and those the pipeline, and to spend --

and we've strength, production market land with pipeline our that such ramp we the consumer behavior. I got can continued see the assuming in we think So cooperates the concert that

there anything of feel I answer. you if there there couple about help is Bob, So a here me pieces pretty other that asked, that. good that the are is maybe out -- And then

lots see further in be and [Indiscernible] to decline. there we what would QX, are if going

I think it the was …

owned, lots or decline year next lots owned this quarter. yes, In in

depends deferral we anything of Are environment, will on an like many Well, it desire demand negotiate? part homes for example, that. to it as lots, how the be of option else, If are we we that so close a things under today. able

it's an contracts negotiating because give time. hard that, are answer all So the Stephen, we on you to

Okay. could All was asking, a how of XX,XXX reattain I what right. quickly also Ryan, And you level was starts?

was Yes. commentary Stephen, land. my address I trying that's to what with around

do we have the We it. can pipeline that such land

us you've that So trades reason job get is continue sites. job be also dependent our trades to consumer site? those our to really to that deep of to a allows -- the how on that heard on can we us part deep production how and the we level the back It's retain are say of on demand, going maintain

delivering demand level. know to answer I capable that So it is because I demand think we've if the say, production of hard going they're that's machine when suffice a is question to there. a on to think got It's answer I linked. to that don't return But

Our Sachs. from Susan with final comes question Goldman Maklari

is is This question at the kind in this pre-pandemic XQ sell QX is to in that from space Charles line in actually improvement you. activity a first the QX? XX% looking guess at with be my expect improvement Thank seasonality of seen you've it for to Susan. sequentially to fair January, historical I to [indiscernible] to XX% through time

it's sales on highlighted And the commentary what variable. any environment. we've provided haven't is that We

-- that? I want question decide wouldn't So for to you. answer That's that try you and can

Okay.

labor potential production? availability the improve improvements addressing in year. the supply through issues Okay. in lead XXXX, that are material of versus key And could you second, challenges the cycle chain to the between maybe What some the you to factors highlighted times

chain. overall Well, supply less there's in production the

better in less that sites the -- the times that -- the So work of a we the related. environment, pandemic. work-from-home, on been to of sized decent elongation contributed with the that's healing. in years it was of probably than over the big labor job there. chain couple in variable of an is safe last I don't biggest efficient There is of was be can I mean work that couple I it issue then over was but environment years of cycle really And A also less part more supply to municipal think offices. impacts terms piece to of the the last things, inspectors biggest victory, want it's combination job the as was declare the sites, it's permit reviewers probably supply a but chain really environment,

closing call to Q&A I Mr. call. the now remarks. over today's concludes turn for of That the Zeumer

today. Appreciate time everybody's

the We Otherwise, we forward call. remainder around of are next with any to look certainly the you've speaking got if on questions. our day for you

presentation. Thank conference. today's for today's you concludes That attending

You now disconnect. may