PulteGroup (PHM) 25 Jul 232023 Q2 Earnings call transcript

Good morning, ladies and gentlemen. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the PulteGroup Incorporated, Second Quarter 2023 Earnings Conference Call. Today’s conference is being recorded and all lines have been placed on mute, to prevent any background noise. [Operator Instructions].

you. Thank now Investor over Relations. will Vice Jim the of President turn I to conference Zeumer, And

You begin. may

Good morning. financial PulteGroup's value And ownership our to to affirming discuss second thank approach ongoing balanced and you for exceptional the business. demonstrate overall the quarter and joining the second quarter strength disciplined operating buyer for numbers of and desire results. of with PulteGroup’s Along home today’s demand, call, strategic the

are call CFO; this to of President discuss VP Joining Ryan me posted results, Executive and Marshall, release morning’s CEO; QX President of on been pultegroup.com. have Jim to Shaughnessy, Pablo and today's slides our earnings copy and corporate our our at Senior presentation Finance. Vice A Ossowski, website

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

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

Ryan Let to turn me the call Marshall. Ryan? over

Thanks, Jim. morning. Good

and we read statement. this flow as results outstanding strong posted morning's balance cash PulteGroup, in you for financial sheet As our press an release, was quarter QX throughout P&L,

In approaching net highs quarter. all-time gross second fact, income were operating second our for quarter or are revenues, at and and our margins

net to our cash zero. almost flows cash drove capital while raise ratio financial position dropping to performance to billion, record Our turn helped strong in to debt $X.X our that

financial XX the our market these conditions in operated I homebuilding for given are past which we've months. services am delivering really for variable even more impressive proud teams, of results the great and

running balanced take disciplined Within I financial approach success these the and in believe our dynamics, operating homebuilding reflects and complicated market business. we PulteGroup's

In a We move-up implement based with buyer primarily combination model model a serves adult both successfully first-time to build-to-order that spec communities. our our continue buyers. and active within

our other that spec most under In cadence are Our is branded started words, model. a weighted pace. communities, have operate homes spec with managed Centex aligned to production spec, heavily which sales we our starts production toward

Given Centex is maintain serving to of model long-term a in is needs focused these spec build on buyers, first-time the communities. plan our

By more demand assets of of objective being turning build-to-order and meet critical a higher support of across the buyer consistent achieve more home in our spec more balanced returns. production, and starts, maintain we effectively, cadence we

can averaged we QX this line in You specs see as stated approach our just finish end. managed is Of one over these units the total production spec which practical per of XX% our goal. under community, application of in quarter with at numbers, units,

Along with XX% our buyer between goal the spec groups we time and consistent adult. build-to-order first diversified being all of our production, having balanced XX% and across active were with XX% long-term move-up appropriately

dynamics, each such active to associated underpinning and important? that but so time today's directly, More to high we've is not but have rate much buyer balanced across maintain. build-to-order, an no we are hinder consumers. from first mean of longer position selling to buyer market as group of also spec can adult margins responses strength. different Being meet this is been among Why to different headwind may important profiles with less rising changing which we a The groups production able environment, financial the be gross buyer demand, a extremely enough buyers,

and up certainly our still we our to in are buyers closings, that same the all core Along serves $XXX,XXX we These strong to our as opportunities XX.X% margin that in two-thirds while options we build-to-order we've reported gross achieved per are In continue driver important divisions business are these quarter. lines, think within premiums in dollars margin increased move prices I mix exceeded quarter able and were of the primarily buyers. raise right an see the orders our home. time recent among high and first law of most not active adult as prevalent QX. pricing

on And the assets, XX% When to Bob turn return couldn't remainder as for proud, both market year, delivering are better that QX we drove said in XX% and high margin the turns, our we margins will which of rather had XXXX, detail growth guiding achieving started our or price asset the slowing of high we I find be equity. in margins but XX% orders. the and

is we Beyond for homes June from showed X dynamics down specific seasonally business, the company's our Realtors stock demand from supply of year. from houses sale. favorable of available appreciate run how million and realizing million, June staggering National of existing for data X.X which we resulting existing sales last the a the Association of benefits, home limited we're adjusted

has existing that that back mortgages an below recent anytime X% before that been I most mortgages showed a cycle recently of FHA have than more well the soon. there current rate graph rate X%. getting show As I are of the holders seen who forecasts low Fed haven't sitting XX% any of to mortgage are millions country rate established saw on reported, hikes. homeowners rate

foreseeable the released that be which rates homes suggests stay during likely an existing homes forecasts rate FHA with period X%, it's remain along in an above short there of that which prevents mortgage mortgage into market. supply existing So future. being data, extended may likely for oversupply the

$X.X we the income months net of billion of $X.X billion cash flow XXXX, six and of operations. from generated Through first

we while and cash position returning by $XXX almost shareholders million through result, million, our $XXX to increased dividends. a almost As repurchases share

well performance remainder powerful worth XXXX. to cycle backlog I are a the be billion homes we positioned solid company our even $X.X results a land think supply, these stronger times the to delivering. built, is of numbers demonstrate of clearly of deliver With improving and over

call of Bob, detailed review to turn a for let quarter, the over Now Bob? the me

Thanks, good Ryan and morning.

so and quarter turn overall speak in for of housing numbers dive demonstrating our second of in. the in I'll demand, operations, right Our just terms themselves strength

Our homes, Higher closings second X% year. revenues an billion, by were increase to quarter in in X,XXX sales driven quarter $XXX,XXX. to $X.X revenues combination with X% for the in increase of totaled X% price over wholesale a average last a increase

exceed Our period meet prior allowed the us guidance. demand ability to inventory to in available stronger our with closing spec slightly

the was first line adult For buyers. first with our closing year, comprised move-up active remains XX% was business our in of In active closings XX% mix of breakdown the buyers quarter of stated last adult. time targets XX% move-up XX% second XX% XX% our our quarter time, buyers, move-up XX% active time, mix XX% first and and of of The XX% adult. and

market new in the orders along quarter increased of the through overall net strength last our capture benefited orders double-digit with in ability Our XX% demand the year in over to our homes. average period count community from in our a to XX% second X,XXX increase increase demand The XXX this to neighborhoods.

quarter, X% percentage basis cancellation XXX is a beginning points The was almost strength demand our of backlog a sequential period evident rate. of this on basis first is down which Cancellations as from the quarter. consumer in also in

and our from adult the X.X and across reflects last new second resulted home. quarter month, of increased In prior in per increased net net X% first buyers orders X,XXX period X,XXX orders in increased from active The groups. XX% homes all month new the net our buyers XX% increase for move-up an in from year up year new orders time pace absorption X.X increase homes buyers orders higher over buyer XXXX per to to to homes. Orders homes XX%

is The requirements compelling of the and year-over-year homes continue same test this demand. our to the the our net a positive and broad and adult development affordability active orders time first that increase shows in buyer buyer group. of in offer meet mix time, higher to a move-up housing new value strength orders At buyers

X% third compared each XX% in prior with our count fourth guidance, comparable year of we period. community and expect Consistent to prior the quarters, growth the to month year-over-year

backlog the of of homes billion. the was at second a of a value billion. quarter valued our record Our XX,XXX quarter at homes, the second backlog year, stood with peak at In last $XX.X of end $X.X XX,XXX

with second approximately total a were of the XXXX spec. of XX,XXX quarter which or homes under construction, XX% ended We

were continue manage spec closely XX% consistent also to from end as are year. finished the specs per We we rate down community. with last spec production Finished historical quarter as quarter total carry under about one construction ended our at specs with

which we quarter, X,XXX second compared to the started homes, this first year. quarter up is of the approximately In XX%

would we third of XX,XXX and to delivery strength backlog and a full deliveries X,XXX the quarter. homes. our status with orders of XXXX in coupled and intake the establishing universe, of between target deliver we're this homes production Of the total year year Given XXXX PulteGroup's expect

in times, be third are homes the third coupled Our year cycle they closing are delivery with targets sales quarter we anticipated the improvements and quarters as average Based approximately construction homes full and backlog quarter today. on spec our deliver fourth times are and are home $XXX,XXX. periods, we third we from expect the fourth of those to in price cycle closings operations to realizing in of mix starting benefiting projecting expect meaningful improved on

sales was prior as our the due was our previous improve our to XX.X%. our The to on estimates. second compared from compared spec improvement in quarter margin higher and increased reported our markets, closings margins Turning gross margin guide in pricing to margins, to features

adult prior better. we benefiting up discussed and active from earnings is call, margins business, our In gross aggregate our where profitability move-up addition, are holding in as our

we the XX.X%, margin XX.X% to of year. our 'XX. and fourth gross to remainder this Based be expect in expect on to dynamics, throughout the maintain strong of of range in quarter current And the market both margin third the position

groups our As numbers. deliveries, the actual second mix impact for the terms we of and buyer both may of quarter experienced geography in reported

we targets of in remainder X% the $XX third quarter the delivery our to in was of the or of X.X% home revenues. reported quarter year, our and In in revenues second sale was quarter. sale the be SG&A to the a of range X.X% of SG&A the quarter expect of expense million year, expense home insurance in the revenues, on sale $XXX X.X% home range pretax in X.X% home last revenues for Based Our the in sale expense period. of included $XXX recorded to second million, or fourth X.X% the of benefit million, SG&A

conditions improved services second last increased to year. to XX% rate Second insurance benefited XX% the our in Pricing from income profitability our but in $XX million. year earnings improved over the within quarter Capture by last XX% pretax operations. quarter operations with quarterly generated remain industry, highly competitive financial compared title and mortgage

tax tax expense rate was reported the XX.X%. quarter in Our effective second an for of million $XXX

to 'XX XX.X%. of We remainder be expect rate our tax for the

the line, was or On $XXX quarter a million million income or reported year's record income $XXX reported per $X.XX second bottom share. was last share. our per net $X.XX of net from This up

cash per our our share. the outstanding common million, million repurchase we of in at on million we’ve the financial six results of at and shares $XXX price an $XX.XX X.X resulting flows, common shares have a average or million repurchased shares Capitalizing cost $XXX months used 'XX, to of of quarter outstanding. Through first X.X X.X%

to $XXX invested from which We the the invested period keeps basis, development, is in and last $X in down billion of second land million during was and billion in the between through On us year. invest year. acquisition have billion $XXX in $X.X total, for related million, year, this our full also we a In $X.X quarter land quarter. track million $XXX sale acquisition year-to-date on development billion land the $X.X which

year are we which lots option. positions the the via held supply option via of controlled XX% from our of working rebuild in we second to quarter, option end and back number were the lots The we both of of percentage QX this had of of under control increased XXX,XXX control, half At the exiting total lot we lots after as XXXX.

ratio billion ended also of debt-to-capital and the $X.X cash of a gross with XX.X%. second We quarter

net Given cash ratio position, now below is large to our capital our X%. debt

basis, financial year-to-date our of income a stock to our billion, generated the on At XX book lows, of results, value the have XX%. shareholders. of to returned $XXX to generated we return and million our have time, year net XX% drove the months full and we financial our at equity briefly has historic by trailing Looking for reduce same $X.X performance permitted us a on leverage

some for the and you, to turn Thank I'll call Ryan back final comments.

Bob. Thanks,

find homes opportunities period, we dynamics to As above quarter local was second year we've month of for pricing overwhelming exceed year. in and demand positive, at modestly the X.X sales pace averages. the strong had coming above homebuyer pre-COVID to was increase markets, our expectation last continued an the net pace to per pricing to commented, second communities. our for majority the Further, of and absorption are continue stable into we generally in many In our quarter and the of the

Demand said, second a being on which as basis, where XX% continue and our still orders, to communities a of turn And we communities Western That in across was month. saw month are to relative month to anticipate, markets, our having has positive our the July. and/or entice from continued we to are ensure there markets pricing we in buyers with adjust our into quarter incentives fairly assets. you consistent demand the generally increase into would in

the is particularly customers. higher slight in the changes one number among environment, have cash our buyers, increase the seen the adult interest Given rate active of of we

into plans they debt higher rates. moves for retirement, today's to group making carry buyer mortgage are this our less decision given As the

price At end rates. by the among of also buyers higher impacted purchase spectrum, the being other first-time are decisions final

a As in offer why are fewer data to suggests, buyers go less upgrades significant options mortgage purchase is today's need such home is to as tool. environment effective incentive or footage with a dynamic an ability some and sales first-time market square our nationally opting to buyers

primary move remain remain At making if With the millennials down source to parents that resilient we homeownership. need personal payment. the same buyers financially savings self-support first-time getting they from continue are said, our the as help into see time, of

than from indicate an buyers that putting our as are customers. compelling felt note and the our the they to rather we existing construction a bought it buyer overall extremely first-time are best about a on value. feedback to thoughtful we been offering new home overwhelming ensure home we We've majority sentiment, home recent incentives ground offering to the an final offered the because are Pulte designs value One help

second buyer These within efforts comments combination in are with quarter first-time orders increase success. with our meeting our in indicate the XX% group

such I closing, delivering entire team thank financial in In outstanding for want to operating PulteGroup and the their efforts results.

our homes home Beyond provide exceptional the buying customers. statements, experiences to in continue show and and numbers our we to financial

back Jim. turn I call now will the to

to open prepared call now We're Ryan. Thanks, the for questions.

follow-up. now and process to call get explain We the you. Thank yourself as and Abby as And questions to remaining. So possible we questions. can many to limit that ask I'll during you time for ask one the question the one open

question Instructions] John from with will Lovallo We [Operator our first UBS. take

Your is open. line

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

is the clearly The that and first expecting one the margins quarter XX% you're third we in quarter are well what to XX.X% forecasting. fourth gross above the were

expect And the be there benefit. Is in of unusual there? of margin? would sort quickly going as towards view we you how we sustainable do normalized you this -- I'm It Is sustainable? rate that are sounds get is there what is, to rate? more a not, really if that reversion mix curious, Just trying are think should like items at to a any what about? And

mix of how been stated recent remarks, in is in we what of sign-ups John, from the Ryan. of kind past business, in we groups for our with strength line certainly, how the Thanks quarter. performing our And our months. really consistent most some and goals. I us We're totally prepared with pleased have of as the you've consumer of the very think, with seen XX it's mentioned all It's over good The consumer by question. group morning. saw

really So note. I that would of there nothing highlight

the of for of both into giving not is of QX, balance that which business we've think And of to I we we're that's year, see given this forward want margin terms the you and beyond then kind clearly the the a for anything of that point. where guide kind in at read QX what kind profile,

more Okay. margin. That's helpful. one And question on maybe just

kind spread think a move-in end. a the an between last bit back of norms portion on to you sort entry reverting adult, that quarter, I quick guys I the back lower of going was about talked move-up historical and active level little think

quick higher to move portion housing today for move-in desire are the expecting many trend where demand is actually sort folks that in of Given you and again? quickly, to

Yes, John, We of from coming the pretty buyer a time that the the bit seen running very we've is are spent machine terms part and production, stable about we're which quite in actually orders community that intentional number like the reason talking investment of that of by be spec of we our that to understand production today. specific our way is group.

that our that active your of with higher predominantly is business our in a a business. hundred of of buyer kind we saw lower your our first-time basis our typically lowest a will are reversion spec business the group, for is out our which was And pre-COVID come then business to highest of family times The to couple point us. point, to margin. margins communities. We what out adult and get margin first-time points move-up Specifically,

today. the for incorporated you of guide. I the year. that We're definitely the all or is that entry-level chunk seeing other of big a our for is would highlight really big we've business, business from time first part into given our kind guide margins that in which point of the our that A balance of That's business for

it. you, guys. Got Thank

We'll JP Morgan. Rehaut take question Michael next from with our

open. line Your is

oriented, not of you industry that adjustments spec pricing higher and 'XX, made. incentives more impact different for so the perspective, guess, kind backdrop question, challenged the more the much. about gross margins first you just of think were promotional, then promotional, immediate but demand. When I that that saw faced question and have builders a back half many the in Thanks from builders Great. more asking that I the a on of

income estimating a build-to-order of more You would for We more effect. that, run builders that that have were a saw lag much statement immediately. through the

maintain you've to walk the able dynamics of of fourth the quarter? how kind you can been since through So,

You perhaps the builder, the modest a as XQ pretty financials impacted that pullback factor, more how had there's to nothing to well nice of and 'XX, but spec-oriented, that extent decline allowed has if some half. product the is as mix the stability have first-time more heavy much the build-to-order but a offsets a back from environment Perhaps for a builders. into promotional of element higher that, going

and but perhaps minuses half higher sorry So to understand the back trying for pluses and to offsets the just in there? what the the are incentive backdrop long-winded, the

maybe let on Yes, give -- a a sequentially. we seen in down Mike. Bob I'll discounts just quarter, of tab which actually the we've of more the little kind detail you kind come

So, in effectively terms with our toward money mortgage that It's particularly of the using are we first-time discounts, affected buyer. rate discount buydowns.

some most the reports I somewhere buyers which X.X%. for on the that's around of and there sweet out think data spot rate environment, the mortgage suggests is

lot So away of environment. rate from those incentives are have finding we're to for really used incentive reallocating it's dollars things buyers us, mortgage incentives used the in a being that been those may previously toward

any you weigh Bob, the price adjustment, guide. kind of in year to higher the there, it from that if, it or pluses the you And half seem extent can discounting the back would full any impact and had in minuses that of on of would be

some making backdrop other sure to more challenging just we've yes... of worked through here” so or “shoe of And drop kind guess I there. there's the no

shoe, right? guide. no there's yes, provided have We Sorry, a

circumstances the over And has six three either the if months. back you're focused limited activity of somewhat it will on half or next so closed close 'XX, sales from to

for quite as And the space, reflected have half it, already didn't P&L margins or So of have 'XX. we and about as 'XX much was didn't others the guide markets into go much it's the given. spec to part we you that our think that production relativity the our in did. in of up of as if The beginning in reason our

the were product we pricing were getting ahead for times and it full contracting it value months often time. they so three time and was nine And completed, at of whereas six

market that of that home, the were the some benefit margin price constructing profile the And went the on full so time then. in during the we of we feel appreciation didn't our in

of dollar And the builders so capturing every spec-heavy you saw kind value. really of

level. weren't of against they into think once inflationary 'XX, next if the and again about particularly -- lumber half market. honestly, cost 'XX-- pricing load, Now cost and sorry, had heavy a you They and environment structure 'XX quickly, the of influencing running quite of in an prices their the that at as back were full entry

bought So they underwriting reversion reflected think that the construction. of timing their the land of their I and

in spec are Ours, -- business, we that our that that Again, that. again, fully on today. for now is engaged you're margins seeing

we price entry-level play it closer worth always It's bit little that a to typically little in. business, at point higher bit in a highlight

quite it's set. some so our apples-to-apples not with And competitive of

want would quarters don't nothing the I really defensive, and margin there's out. There's have to this next is quarter's that's going pretty So couple sound we coming to it or margin nothing but in stay strong. called of the unique unique in

We'll take Reichardt next with Carl question from BTIG. our

is Your line open.

then mix how change lot guys. Does to incentives, prices, divisions putting price you Thanks, reduction Could more the were was average that price about base actually increasing increase talk Just right upgrades, quarter. get bit? that now. mentioned order the And little Ryan, into activity in on raised premium? color your that you're a mix over on options prices want had expand up? a the little that and you you of of that two-thirds mean the course can prices net

some see Carl. two-thirds communities did We of the Yes, things our increases price of in there. division. Two in

question, So answer we're pricing But your net increase the it's seeing every community. that it strength to, it in of are every you wasn't I'll through a all the able we listed. wasn't coming is affirmative, to options single division, where pockets it of and net

kind adjusted increases. And pricing. are current are of there So off we -- are those would those what would floor of cycle note I modest consider that

pricing. like of environment, bit sales modestly to the a we which strengthening seen So overall in us we've feel increase allowed

on where target where you Ryan. think improvement, a in you business normalized Centex And cycle next quarters? with time backlog of business, little three sort Okay, you buyer of on drill now couple can the what sort of over the color then And kind of supply then down first-time are mention been, thank go that you you, and to can conversion have specifically? rate maybe spec you course you chain the more of where bit Thanks. do

I on that of you offline with buyer you have a for group. follow that a -- could match be. spec that that. a backlog business, really predictable to on don't start monthly Carl. specifically, specific and rate. things monitoring we're sales there, specific running The with we're Yes, conversion our been, We number we've consistent start to up we're what monthly believe rate has And worked we that with running rate will is and

And think heard me rate our to of so my matched rate, prepared done. talk effectively the it's part we you what sales getting remarks about in around we've which start

then our construction come much and us with helped throughout those our It's second hard Carl, our in teams, see work easy, very question starting of times. year. have down to we're certainly anticipated improvements not the cycle times, managers those by yes, been line been reduce partners trade the procurement a And to our lot that it's cycle

and full today. deliver. in increased updated at success, that starts are we've even seeing of expect bit but contributor times a we're those only So maybe certainly cycle by weeks and that the provided little closings couple of That's more for guide not been to the that in today. big a time QX, the our year get to out a going come to We'd the least ground

Thanks, Ryan.

Stephen take from our question ISI. will Kim Evercore next with We

open. is Your line

kind here? of What count, volume. general give to your XQ Can sense question, you I guys. in dispersion Great. to a community three rates? you're of you like rate growth in looks can for guess I across the level side community out Beats go the had about, segments? necessarily. And a Great kind story. just what of It's current regarding not sense absorption you us Nice a support? us spend on see. on. What major growth can what much, also job. give for touch specific Thanks that that the of Can a the volume allocating count to looking the question of land very

your Stephen. Yes, beyond we I'm first answer to third because quarters. provided fourth view and the reluctant any haven't question

so And that. pass on I'm going to

absorption the terms paces, What that is business detail. now, is of of move-up the part you tell the quickest-growing can enough. haven't then And I current we right operating in that environment, in provided interestingly of the level

absorption demographics. absorptions all grew So faster. three We there had across growth

we had time, the was adult. But richest XX% contributor highlighted all a up. move-up in in were actually store XX% X% the so space. of that active and the growth The first the on them move-up And per to in basis,

And from our question Matthew Barclays. we'll Bouley with take next

is open. line Your

I for you Thank put gross everyone. morning, a just point to I'll taking to Good finer back questions. Maybe the it. just guess side. go the margin on

point. incentivized the, of you heard guess, of from I at mix product think I has sort of I this say build-to-order that end 'XX sales largely through worked

margin to greater Is gross buyer of I that me, margins? the third Thank So entirely a exactly relative in first-time you. -- level spec? headwind entry cause the second the headwind what worse is in quarter? down the quarter excuse what it exactly guess, be, in mix step would sequential to Or or

we One, inflationary an it's are things. of couple Yes, environment. a

land labor materials more expensive, expensive. expensive, more is is more Our

up to trending going come on basis faster certainly, then lumbers our see into given the can of that the You geographic mix is the some back matters. a production cycle year. half in the of And

that the year. margin we've see contributions communities had gone from normal. to we'll so some adjust It's through some we've And as

I mix a So but matters conversation. always that it's non-answer, in know

it. Got

I back Bob. is clearly, move-up, the a last the that secondly, at that you just around guess, Okay. comp of And around then, you just point, but obviously, detail? year, up mean, mean point there. what's nice for of in home step-up tick your existing seeing I finer I Thank That's move-up but business. this sellers nice Any improvement color looking the in a at little top of gave on lot helpful. at this bit the kind locking last you are second easier, in a quarter

think you it do of continue what that? relative entry you. do to is sort kind of And to expect Thank So driving you level?

there's is driver just biggest the supply options choose shortage fewer for that's think and such to move-up buyer from. of I Matthew, Yes. that a

choices we've quality of designs. that move-up looking of a I have bigger that get The seeing much that our homes homes. advanced got that are communities, technological building, you're to really energy-efficient, newer, as homes there, percentage move-up So piece or benefit are that's think think, the speaking more add more great new to a And I available we've a that. out business the I that. would excellent share become of buyer got more space we're from

advantage the higher well. are that our mortgage to resale as tool rate working national interest well. market to a is environment, move-up buyer we're And program our the think to incentive is leverage rate the that not So same degree. things able ability meaningful at our in That's effectively to I as those offer this

think a factors there's being I the just with number So there headline inventory there. of less out

luck, Bob. Ryan. Got Thanks, Thanks, it. guys. Good

And our next we'll with Alan question take & Zelman Associates. Ratner

Your line open. is

taking for questions. Thanks the morning. Good

First, little topic bit spend. to about I'd love drill Steve's in land a on question from the

in the And this at changed, gone XX% coming your range. still end guide the for in the year of land spend end. start so of range, low about $X $X.X versus answer kind your up you If that's the since high guide, And know look to it's closer you're billion year. maybe to really a that closing big the I billion is hasn't

and things levels and lid land And a of do and prevent guess, risk to the market, have that some few to drive aggressive to these is land to land what I the market do dynamic about you're pedal sales alternatively, at pretty the don't an seeing that get years, on billion, where opportunities point, to feel land, as close but at billion below, to the But bit today to area you a next curious, $X.X is from years few a kind on start think mean, maybe replacement and there where probably going a you you I you is of there, as a you're future see to in level ago, I'm keep a think of to gap-outs? again demand metal like you spend more limit just $X growth? similar stays unfolding about put if the

with questions. couple Yes, of start A Maybe the Alan, thanks I'd things. there. for Ryan.

our projected actually For quarter starters, a about ago. we did land spend number increase

to So billion, when high right we last down think and high I around the year, we as $X.X end billion. We've and moved $X as year, up was that billion intentional. went were from into $X.X with certainly the that

When we those are lots, of look got at our controlled via lot XXX,XXX or controlled control. minus, options. supply, half under we've Over plus

and part feel for that the in will that trying good strategy. are what to we what's business. and we're things our of of Market growth kind our mean do with the and of So share part certainly about story the pipeline pretty

liquidated we've your what done. in being that's question, delivered you results Alan, deals tell is -- quarters To around are and years. the market, It to opportunities, land consistent a able anything disciplined doing isn't land a to get process, seeing has the our I'd job yielded certainly of competitive are stayed but we've the sold, are several our or that that we're over types and fire and we market, good teams there we with nice last finding underwriting which

stay spots stick picking business really capital. that where we're to with to continue, with investing more running focused disciplined and being is plan a to balanced laser very good on our and our So and

don't pedal to to think point, of So metal. need anything lines the the this we put to I do along the

holds, run going that grow the that market think that on market. on monetizing to going foot but will we're see focus to to will what be but which continue continue opportunity the nice we'll us an a the the XXX,XXX I to have, continue business very think gas, in to lots we give I to we're

I helpful. That's it. that. appreciate Got really

question a about have do Florida. I Second,

of because you I'm anything Florida, pretty some know you aware there's seeing concern been insurance in in property like might are of some industry issue, a certainly of large the sensationalized. it that this kind the with and that become And about A, are have ramifications? with to be it the a issues could today in late lot home homeowners state? doing pretty written more B, are among of guys buyers and be or And curious, there. deal can staggering seems long-term potential as that state I increases of You the some But

Alan. Yes,

in heavy communities. we've Florida prevalent. and very for when Orlando. regions. our got then to in become home Florida, second And businesses our And make Tampa buyers South And Florida great into a buyers We've level there. entry to into that seen best-performing in ranges consumer Florida a from We business business move-up you fact, get diversified haven't active are adult decision our to and got it the move a one business problem strongest been of very our has

have insurance that the solve a company. Part and we we helping captive talk aggregate about and job the insurance we problems. those business our service nice as financial part to some portfolio. our does agency numbers our services find financial generate of an overall they of operation, of But that We

Florida they personally Alan, are flow saw and leave, own been but lived companies, ebb long having of they'd the renew, back come with then I they want back, business they for those come and XX a and insurers the and that the There's is leave they they years time. years. I for in one again. places, over that happened Florida in the wouldn't of my years inevitably, market, last think a an over insurance few

on in a about is state eye that it. keep losses. we'll recently state lot So an that large been news there's insurance the due to of the other the lot left California companies a have media

more flood developed recent systems view that eye homes code. are -- They're would in standpoint, the on. plain, a there things I than They're current better. keep they're The up is that that an past. built to homes been have certainly, are to drainage to -- new in there that performed out we a So want flood highlight prevalent. spec of from higher

efficient. got You've more electrical, they're new energy

less there's argument risk say with to there's potentially homes. So an newer constructed

Thanks for the time. Appreciated.

will We next question with from Capital RBC our Markets. take Dahl Mike

open. is line Your

Good thoughts some land liquidation hopes banking necessarily The that or can were mentioned land might not competitive. my on Maybe One There you opportunities. more lose. on to regional you're follow-up morning. comment shake is that. some questions. side. seeing market like the for taking fallout you Thanks Ryan, the some of

the it also it and box? competition adjusted that price, point? getting downward? given has that been more of underwriting your as average, I'm because your more buyers-- then to current your blend, helping more out terms land classes have has on there's box been kind is have having, there, of also but in are a at price some adjusted? you're current things this teams that pace improved? has that Or at buyer sellers hit it what it sure Or actually Is do pace is you and more the think that But

Yes.

Ryan as said, land always, on not sale. As is

transactions I We private of And market have and combination not a you where probably terms any think seen banks substance. opportunities on country. of the activity levels, large-scale both for or are it depends on of current things it's in in the

that underwrite, we're on screen they're firm. on we pretty And able land are But of have we -- can Based market we large, where negotiate but see little we all. are levels make was XX the willingness is the not underwriting months is not country There it them parts activity by our a seen and or at market project, changed than stickier the some to on XX to because no, and ago. sale. have

lumber next, we follow-up, quarter? alluded your second any cost on that more think some about thinking say, side, inflationary quantification some Okay. the in I'll thinking on to way cost, of but your be about that maybe maybe should and creeping about sticks half? you dynamics then How and know the maybe lot the just That in, how you bricks? quarters? over be Bob. lumber And And more both -- touch makes here increases I bricks at then of four in in Slightly dynamics, just we sticks broaden a could the as these when should sense, we out. specifically

Yes.

think I we have any our always this side, way, in down or answer portfolio. the ramp on ramp we up don't and land it land

then the it normal and it. inflationary buy increments. aspect We cost comes we so in And land We three-year we develop see it on off. if build

last it so think wouldn't over pretty five the on the seen we it are to And steady because a moved. on I percentage you put varies the pricing want way a increase. we've in has years, if particular -- when

the X%. development down. the On there. call, of we call year highlighted of to horizontal XX% still projecting, costs. side to into came We've side side were We the We're been that XX% the in and the on the dirt, it, increase to vertical able outside to even we on get X% last acquisition dial

is to materials going total year. work able with to inclusive of driver that. lumber pick earlier labor house that's be up, So in year-over-year, save about it. trades and that up the started and is It our to back cost Ryan find been real talked about try of to and efficiencies. We've our the

cadence all purchasing that easier to X% reduce now We in said, of healthier, that not want aspect inflationary of the materials efficiency, wash like production on it we're the through because, increases when kind a to you is side And able I consistency the that trades. of there. the is for again, X%. be cost consistent costs together, seeing the up, some that to starts, production cycle for And makes we've been chain supply

Bob. Thanks, helpful. Very

Research. We from Truman will take question next Wolfe our Patterson with

Your open. line is

Thanks everyone. taking morning, questions. Good for my

generate really year. income operating hoping can the just some the of investment, you of your spec run cash in half $X.X your cash all the operating year flow year. rebuilding you're potential. pluses you should through pretty cutting some the healthy generated and kind pipeline, half minuses almost in still but flow back the First, you've of first of Clearly, some us net been full you back on I'm billion land in 'XX on

Yes.

it, the mean, given on guide of for in we an reduce the estimates that And certainly, a we of that price of through investment rich. year. because we is on if pretty inventory but balance the cycle levels to margin times. business But at you change. have think of opportunity forward operating will actually sales the the volumes think, think our in-house put, over and year exactly haven't $XXX the I SG&A, billion you closing cost months generated about And you're and first six that We the if for the $X.X right. Tru, I margins million improvement

going So in cash a to the year. your of of generate the bunch half point, we're back to

follow on Fair then enough. And a up enough. to Fair prior wanted question. just

little so as call of you healthy your XQ over if rebound at past were bit whether are above the pretty Could absorption run again just or historical absorptions what levels, decade, just looks any the segment kind perhaps it actually consumer where you're there demand you quarter? we'll will. healthy far, second levels curbing through Given the a like of averages geographies

is. unique with of amount oversubscribed, machine than what capacity we're us Yes, we look, other way not there is in that -- we're we trade the developed have restriction production balancing of community well mode type as front a we're of COVID. our as that the always or here during But in Truman, land maybe our allocation saw that

you. Thank Alright. Right.

question We our Anthony with next will Pettinari take from Citigroup.

is line open. Your

net were Was maybe orders seeing have Anthony. gotten This your you call on all sequential to broadly, the where Thanks versus growth in for just it at impact? I has last price Or ask ASP much relative mix pricing quarter. taking stronger question. pretty would saw is power sort some the Soni been wanted Ashu on of for might my to like-for-like? in [ph] on there sort that then more of April? say you And you in

Yes.

a that been I question able was a what have made we certain after last certain highlighted pricing from increase think arguably our and in to we geographies we earlier, that there was and communities modestly in late remarks, some prices of floor have adjustments prepared year.

that an incentive, increases. shortage is modest the and some solve us which market help part of some of use of related affordability challenges. that mortgage price But inventory a is make is allowing to part of effective to used real there's So we've to the

as results in well So of for as that's the QX reflected for the year. we that the kind that balance of given this guide all we've of had

you've housing times? cycle of times cycle pressure And you of up. then sustainability Great. Are anticipate are do on of made on the kind maybe progress into is costs -- heading Thanks. on kind as thoughts activity and back 'XX you what heating your

question And for that actually We just continue do to in Truman. the Bob answered Yes. more. we got he it ago that to opportunity still minute believe highlighted a

healing given reduce a incredibly to balance 'XX. had cash, it opportunity that in a as chain only It's predominantly removing to relates but of we time, this feel in, that broken the but -- inefficient. to into supply got the from cycle and As year, we of of coming were and well the we've not crept inefficiencies chain supply lot trades a continue

we're near We're with So we're progress. but it, pleased to making probably like be. nowhere we'd where

I where to remains back Our times, the is pre-COVID think getting target still which company operate. cycle can

Great. Thank you. I’ll over. turn it

Sachs. We our Goldman from will with Susan take next Maklari question

open. Your line is

everyone. think seeing first about perhaps thinking My are continues more higher? could how we family, as generally and bubble that Thank improve that the perhaps specifically some rise we're focused the demand any starts issues single this sustain bit where on question some to move you. up Good again? morning, in chain areas is to a within there supply of about or industry's you're to do you see And the ability overall and continue

Yes.

it products is to pretty think using that it's focus. working. So certainly that buildings, that we ordered in available, time continuing has chain more feel -- are get about. I'd of and electrical continued customized efficiently, we're extend. goes so gear And find cycle. tight, unique specifically I while multifamily and places we're into components, and the But those Supply townhomes around area highlight things is it's lead mostly difficult to switch and to Those the the one to are sometimes condos. we're are making chain, There pockets generally supply healthy. labor, good where The

transformers go of short development horizontal in one other into land are would side supply. things. The also so the transformer, be that Those

couple operating tell are a you on electrical side. of and component the So that, supply than labor Other I effectively. chain things that would pretty

business seen or dynamics to stabilize recently, pandemic? perhaps to relative the about ROE come on you think that you about and longer touch coming starts perhaps were things that today were hold thinking Are early think longer-term peak ground there in low then that changed COVID? we've can off but we And to you can operating you where into a how XX% the the the higher range Okay. the they've that more you’re on as so before the than XX% that term,

Susan, I'll Bob. It's try.

I this We've million got creating through the think earnings capital. we share got our lot we we've done we're $XXX repurchase to a that with But activity equity already. of are We've be year efficient the highlighted. seeking business. of

decision We're that factor making, decisions doesn't right? ability into So really trying think return on over do making modeling to the time. I you're generate to investment our

do we with think we've historically? than opportunity sheet. more Yes, be to can done better our I Do there's course, balance that of efficient an

an that extra We're of we $X opportunity in-house. highlighted which billion trying -- XX% had about for So talked today our sorry. be would of the long us year as to well. this XX%, book, earlier optionality up capital increase land We've we at tied

to progress So continue can those strong if we make to we on I think have generate fronts, an returns opportunity really through time.

Okay. Thank for you the color.

our Ahlersmeyer Bank. We with next Deutsche will Joe take question from

Your line is open.

Good morning, everybody. Thanks.

just might Just could limit maybe Perhaps in mind, that upper a balance given question. And going an leverage in your last increasing on if then you've you carry your about that if the talk talk sheet, got forward? facility on follow-up just also your appetite on idle business? cash your for you just the

of guardrails Yes, how we're don't take pretty terms capital. we We've pretty clear do. time our I allocate want been, think, XX-plus it's of to Yes. been that that we've that. clear wouldn't around now know and in assessment anything put in don't there's a to years I I -- point we also going

and excess business through first business a that that dividend. the a pay we'll use created, in have back that use We capital refresher stock capital the decisions iterate to We buy manage we and we to make and model invest leverage. a time on We want plan and we've a that return. to to how against high just

expected the reduced business. leverage the We've in

ago, XX% that back We we between gross said debt think XX% cap. to a and today. you If that adjusted under XX% XX%. decade to We're

going we exactly working the of the We'll I x you different do down will have be something to Board we're think going of us what I want to different. path. could spent time lots continue We cash, capital that's dollars with than same more forward. And say, well, we wouldn't through decisions see think if do the things. I make. And

relative specifically, And about pre-pandemic the Got back it. out on gross talk just if if then a in your production inventory, off-site around And Thanks, returns just doing? the you've number quantify call an improvement there's Bob. there? could construction the margins improvements ICG you could if and to anything into how taken more if update to maybe and getting your space, you even actions there's is on maybe

Yes.

me really with Let that piece. ICG take is how operating. pleased business the We're

doing. up operational doing we're get very are We is of team we'll gains, factories percentage really time and there. a share talked factories covering bigger us, the getting seeing that with that the what have up from we're we're about additional it's business, that but what the pleased we savings and detail cycle business more well and about open with for some cost We've we're that and two once pleased

part terms In the of it... your question, of first

be are would It's -- the true. the productivity you're I are there the asking correctly, would there tell virtue exactly productivity gained gains that to pandemic. of save might we've if by tell we're question post interesting. I that you, I if is understood you're asking opposite you we If pandemic gains. able

business, heard that. chain here to Ryan we ago, you And efficient dynamics minute And efficiency. on it our up cycle lose less we've it in times, a right? say caused opportunity have shows to and got the We production a supply think us improve from

guys. That’s great, Thanks Good that. appreciate I luck.

We Research Barron will from with next question Housing take Alex our Center.

is open. line Your

Yes. Thanks, guys.

the roll ICG. out near term? markets any to to more Just again ask Is there to plans on this

still eight we're path on. That's haven't and the holds off-site XX% announced believe over our the our overall we -- Yes, our about that we volume. We openings, of any of plants made can acquisition We're time strategic our when but of will off-site about efforts. we firm. business said manufacturing production plants Alex, still we that new around impact direction the eight to first up have XX%

you I'm land sure if missed Got and guys did not I an position but it. And owned your option? give it,

lots. give for the is The lots control, total option total but a lots. the control I you XXX,XXX gave owned I of is XX,XXX XXX,XXX

the seeing that lots Got hold end obviously, builders, guess, or slowdown still included lot current in are kind kind months just of terms is year, something I of few of last of it. but direction, the of at And reaccelerate of levels? guys yourselves you a next acquisition near will

updated land investment Alex, Yes, of portfolio. kind which a acquisition. guide, half lot at our our not in gave insignificant -- we we Roughly overall of money. of new that billion, is $X It's land gave is an which is

our are market The other lots for half continue margins fair help we that returns find team I to in of already development back industry-leading that on good generate answers us that to similar and our us in runway is and going and we're business. of XXX,XXX the and continue really continue spend ample that grow questions confident negotiate to we supply land gross will to prices some what spots, us on gives own. lots to certainly gave go-forward on the acquisitions help earlier, business believe

Rafe question of Jadrosich America. with we'll Bank our And from next take

Your line open. is

my sort from questions. talk Hi, about specific the what step-up quarter margin drivers in Thanks of upside of the And a quarter? to then guidance drove the good for morning. your in just ago? second relative taking gross Can quarter-over-quarter you

right? sequentially, meaning You're

Correct.

Yes.

little of got than communities we on couple So a things relative is that was to got looked closings specs highlighted different mix were projecting. it our from thought. bit pricing had the we we than And better influence we the a that One guide. we of second

environment market that out, why two the that strong. able translate we we [ph]. sales from called primary the specs drivers were that's are the see to saw. it can the you was in that those Really, pretty So We Rafe

Got it.

mix And about forward. a strategy And forward? little we current to Okay. about helpful. think underwriting going longer-term target what's the like relative going your the How then That's should bit you've option the XX%? spoken

increased so pretty Yes, a ago, had we've XX% year we targeted to XX%. or a We clear. that of been target

increase XX%, a XX%. We able now highlighted, the that pulled closer the had back have we at again, this quarter. And XX%. lots point, back the to be When from walked of XX,XXX recent richest, think gotten about us target most large. down We at to to XXXX. half very over I try you to starting we're to remains to still been We rebuild again, about we've in were

Thank Great. you.

And and the all now back will Zeumer remarks. Jim we questions today. I for that turn call closing the have for to Mr. is time gentlemen, And ladies

I with call. available look around appreciate forward next We're everybody the Thank on day you've if joining quarterly you. our to any us the got today. you call to we'll of Otherwise, questions. speaking and on remainder the

conference gentlemen, and participation. for We call. your Ladies this thank today's you concludes

You may now disconnect.