PulteGroup (PHM) 23 Jul 242024 Q2 Earnings call transcript

Thank you for standing by, and welcome to the PulteGroup's second Quarter 2024 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Jim Zeumer, Vice President of Investor Relations.

You may begin.

Great. Thanks, Rob. everyone, performance earnings ended for XXXX. welcome, our to June to financial strong our want to call PulteGroup's discuss XX, I second quarter

to and Jim Marshall, Senior Vice are O'Shaughnessy, Here Vice Ossowski, QX Finance. CEO; Executive CFO; and Bob Ryan and President President, PulteGroup's review President results

alert and I our of performance. that We'll slides post company's everyone today. audio morning's replay have want website been forward-looking copy of the suggested differ made this corporate our pultegroup.com. A posted by call Actual materially at today. later this to earnings release includes comments about presentation presentation to our could today's those results an from statements future expected

today's risk most the factors These factors annual presentation SEC within that risk significant slides. part reports. accompanying our including are our other and detailed The in of quarterly are release key earnings filings, information and future and affect results could summarized as

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

the to call. Thanks, long this our approach the thank joining generate financial in sell. the which reflect results balance pace PulteGroup superior of quarter and which Jim, strong business term price, you delivered to returns. seek strategy, of an show another on Consistent power to results, and and everyone continue with to the capitalizing we home to financial of value over lot investment we each today's

in drive margin, XX X% second increase an earnings a develop which record to profitability per a and second our our basis increase or Our divisions while we in Specific sales point portfolio assets and average and in our generate share. to helped performance, $X.XX increase realized work a of turning rate. in land quarter in entitle a quarter XX% hard equally aggregate price, and still hard gross extremely worked gain closings secure, to X% exceptional to

on a outstanding results strong in for equity Obviously, growth key on company's Another our overall returns by gross our earnings XX-month high double-digit to continues period. generating highlighted of capital PulteGroup margins. financial the quarter trailing and performance, return resulted a of of invested the be strong financial driver XX.X%

discuss, I of highlight strength As numbers. also margins period the favorable but evident closings will gross vetted in mix would in a pricing from Bob our the

product QX, averaged In $XXX,XXX home of $XXX,XXX. average lot price XX% options represented of per and approximately premiums sales and our

As options appreciate, results, to want deliver to I'm such and know contributor premiums organization work to I can dollars for employees sure our all relative peers. efforts. high how margins and and outstanding an outsized are thank lot our margin to I important you PulteGroup's hard their entire

On say call, As XXXX. first numbers few are, as weeks good QX fair of to demand in as through a the little traffic experienced April. slowed we second first quarter of the quarter less navigated noted buyer consistent that it's period, we than our we earnings has was our the

than a a underbuilt While that in we formation population, for in relative decade. subsequent that checks remains market demand to immigration, fact more the Street housing a channel Wall operating has short-term confirmed are household been change

structural years resulting several of we given for likely to The is housing deficit municipalities. in face a homes million most come zoning challenges the reality

unwilling rise is issue effect been the the are existing the unable the exacerbated new by years market likely X caused rates has But supply underlying the up rate are country's mortgages continues by homeowners years. originated dramatic ago. to over experience give more who Our home lock-in several interest low last in to

for have this buyer appreciate long-term in fluctuate remains of quality existing housing of averages will that demand I the comment reasons country, any The quarter-to-quarter. in inventory homes the below consequence, markets. trends from long-term the in X supply I demand imbalance a As is that but in

buyers some in bump the stretched caused cautious while become beyond to their second in quarter capacity. software example, financial For more interest other ability rates the

increase needed be are down the work limited we markets getting a of any While buy. many in an select a are new are of among clearing have points the a seen excess to more time the price and than impactful for that sale, Texas. Florida supply May process now of finding now new confidence homes is existing to markets good in home in These in inventory. lack we feedback consumers to rates inventory, facing and some cities supply in

consumers resulting we on This you that be it's more we our basis High among returns even making that say payments a more in monthly And lack ago the than are affordability that of a and cautious home. prices, market-by-market, requires this the higher day. new. interest purchasing a concerns. isn't community-by-community first high that year degree rates potential that new fact, was reflects turn every won't high something margin address me and assets delivering we confidence proud. buyers heard It To in

we turning more total market competitive, worked our we pipeline. land In turning increased continue In lots. meeting products, lots faster more efficient are assets, and with Consistent and our build have via that focus option XX% where environment this ensure to are on an needs. prices to conditions the clearly of incentives quarter, controlled to buyer a

lots historic vendors. by third-party directly We increasing base the our successfully sellers land option with are of our building use on land of

lots date, $X.X representing almost To of and into entered XX,XXX have transactions capital. we billion

are more As progress portfolio, part disciplined are our with steady we in we making this land of pipeline. a all land-related assembling but activities, expand in efficient how being we

a guide. only did well margin closing up As at coming X,XXX by guide say very to midpoint are is into initial good we on raise XXXX, for clearly here we would above year our homes, I we sit Relative not gross of our expectations the XXXX, to that Pulte. our initial a be it shaping path

with the times, cycle outcome. outlook we demand company closing discussed with we market pace reasons, actively to best the got as on current well manage but various previously. continue at and homes year a this pace to consistent quarter, Based the positioning in have construction a tougher starts in second XX% to grow the For as and conditions we drive X% to price, conditions little XX,XXX continue start to the consistent homes XXXX, multiyear business

Through the July, on our weeks communities and been traffic demand But the or adjust to needed. down balance paces year, conditions has of depending up each evolve as over absorption first how of we our solid. will the few start pace in market

quarter over Bob turn me a review our results. let call of second Now to the for

period $XXX,XXX. second good increase of revenues in in billion, closing Ryan, X% morning. driven by an X% and XXXX. of PulteGroup increase the average quarter with the X,XXX represents Thanks, increase in sales to combination in second an wholesale $X.X price quarter over which of The XX% revenues homes, to increase generated a was for our

basis, with increase communities increase our price last reflects On first-time The were the also within prices modest of a communities, our in in -- ASP year. our our move-up increases much time business, for and the consistent FX, move-up impact active higher our business. sales $XXX,XXX, average prices in year-over-year prices reflects which in while recorded carried than higher quarter adult the closings at as we first in our

closings move-up the active X% and closings are XX% net Reflecting first development. were in Broken of strong adult. of opening in the higher which quarter in XX% XX% active would was the quarter X% that year's second last nature. the last lumpy by are results. and rates caused consisted mix year's other that down market of and move-up This In dynamics time, buyer news down first-time, highlight from second XX% build-for-rent year, with Del compares by X,XXX group, sales last orders benefited and brand particular, headwinds from exceptionally I QX XX% Webb

As slowdown reported, first month rates got April. rose operating the during the more select of earnings quarter we On conditions did year, has of the move quarter in this as second orders April, markets few buyer we been slowed in as and indicated Florida our through that Texas ultimately the well and traffic impact interest competitive first weeks call period. has during this

is count our second period X% average increase last community over year. the of was quarter, $XXX, which an the For same

More per the our the quarter month buyers increased is adult among among and new in The first-time move-up XX% resulting decreased of down above quarter orders year. decreased the per orders from X.X% in buyers, X.X active average, pre-COVID second last X% granularly, absorption among pace X% buyers. but generated the we net community

report While we we larger continue year-over-year orders. to did in see a decrease their buyers, second quarter strong demand active among adult

Webb and impact communities. and stores That Adjusting primarily net although homes, billion. basis, backlog of X%. year our Del were the of decrease reflects several periods new Consistent an lower X% count the some was to operating in shows at current timing for impact in the dynamics, our of consistently orders that backlog $X.X a only results closings our with value decrease on these order end quarter of unit of community from X%, only down was down our XX,XXX overall order both openings

We to Turning per specs balance us XX,XXX the started XX% community a or of total under levels over X with spec, and X,XXX a the homes finished the delivery meet per These the are of finished targets in quarter put spec to line position production. approximately our XX,XXX with community. X.X X,XXX quarter an Of second under of in of and the construction. and of in XX% our year. targets homes approximately construction, homes including average ended

sustained and changes production, and approximately and starts close continue the our we expect always, down overall -- in third to on year. for their adjust units demand. cadence As to X,XXX stage spec full up are X,XXX to the under prepared expect we the currently between or close to quarter of Based in response XX,XXX homes construction we of in homes have to

price for is the realized consistent which we our sales noted, with quarter, prior $XXX,XXX of in As of guide second $XXX,XXX $XXX,XXX. average pricing to an

be in we same to $XXX,XXX fourth expect closings to quarters the range ahead, $XXX,XXX. that in and third of Looking

gross will sell backlog flows have our price is of year, most our the this left reported points and be While this an year. guide, the We of XX year margin our increase than homes lot powered. in second communities of which both to with production quarter basis a which higher quarter first-time of quarter is in pricing where last XX.X%, average buyer represents of of spec we first second over

the margins quarter. at closing and we environment closed a As our year, favorable sales gross mix a spec in the supportive reported generally QX of many for in reflect this pricing of

in second margins opportunities taken such communities first quarter X.X% portfolio. year. in selling also the we've with the quarter across improve number down a Second pricing benefited net which X.X% closing incentives quarters to is actions, was in in on this from Consistent gross of quarter of our prior from price,

for into guidance. sparked we don't factor about data our While Fed expectations rate cuts, potential recent macro has the optimism such

the of that stretched remain half affordability is be will favorable year. rates mix know do elevated, the delivery we in is What our and less back

factors, call, will As earnings discussed and in be fourth margin more homes profile These most points year. quarter third the approximately competitive combined where the closing with and XX% a relative of in on we in margin we to quarters, did our in to the our region, QX assets the first half gross an we fourth the expected XX.X% turn XX% quarter. in than be lower need in carry West third our of to price

still posed previously, close to we sell units. XX,XXX have As of full meet delivery in year to our guide stated

few our In expense demand sale X.X% quarter, SG&A or the months revenues. reported on Reported conditions includes have results million can next home impact build. SG&A $XXX our the period. So the in year, an In of over was benefit. second a million of million SG&A $XX wholesale a QX expense reported which of $XX was includes insurance million the revenue, last pretax insurance pretax X.X% $XXX recorded or benefit

we expense in X.X% SG&A impact year, of wholesale to X.X% recorded Excluding benefits year the first this in insurance for expect the revenues. continue to range of quarters be the X the of the full to of

quarter, million all title second increase The mortgage, insurance. financial million financial pretax same business Turning reported $XX to XX% $XX from including performance income period operations. services our which is of last income across lines, year. in pretax in up the We in and strong the reflects

a increase XX% including from reported capture an in in second mortgage year. performance capture benefited the the rates quarter $X business was XX% for In quarter, the XX% from Our represents last also rate all income an up last across lines over of of pretax year. billion, increase total, which

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

resolution of benefit effective credits a benefit to tax the includes and data. $XX tax of the for related energy Our favorable state quarter million tax the rate certain

For continue expect to the remaining tax rate range our of in quarters to be this year, XX%, the we XX.X%.

$X.XX reported we reported million, altogether, million prior income Taken per This of share. or year $XXX to net $XXX share. compares net $X.XX of income per

On billion growth a shares per share keeping to on Capitalizing full flows, invest us by as from the approximately year-to-date on spend basis, year. we year. acquisition benefit development invested reduced from $X.X acquisition billion, future strong X% business in second the our cash ongoing approximately our our quarter. This and outstanding in brings a of program, continue land to basis, last we in year-over-year over continue $X.X repurchase share support we development to on the billion our $X land for track land to just and which,

were both the land the option. we the first via quarter under XX% XX% lots and held and acquisition. had X spend For approximately the development At XXX,XXX XXXX, end of was of control, the XX% second months which of allocation of quarter,

the growth count fourth year. over the of to of continue prior land period quarters in we X% and of third X% community forecast our year Given strength comparable last this the pipeline, to

an we Consistent to $XXX.XX at of of In per at average of million year-to-date a a million, share. to X.X quarter, a continuing shareholders. share. total allocation cost price per shares repurchase activity or capital a This return also to cost the share of million brings with repurchased we million our X.X common $XXX.XX priorities, second are $XXX repurchased $XXX capital shares our

In offer notes our in of tender we repurchasing for million addition completed quarter. stock, $XXX second senior the a to also

Del our payable $X.X and the than our in more the billion, ratio debt, $X.X the cash. than during we of and ended quarter result, purchase a $X.X billion investment spending and the now we As decreased our debt-to-capital After level XXXX. equity represents just to land since with is before XX.X% acquired notes lowest which on quarter of billion have Webb more

debt flow improved sheet position, cash capital upgraded at balance upgraded our report outstanding our to also generation an strong its of end that to was outlook while to Moody's X.X%. for Fitch cash our Adjusting debt the net pleased ratio our acknowledgment I'm BBB+, recently positive. operations, and quarter to

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

was Thanks, XXXX, pace communities good historic and half of Bob. the Through first our to absorption slightly above traffic norms. rent

good So back think Fed enter that To degree in I in and the actually I powerful half coming a rates cuts the about will feel year. tailwind that the interest the our XXXX. of psychologically the both opportunities financially provide we months, as

and seventh about we of years draw couple to have your greenfield call a newest sale to state, Jim, XXXX, X increased of openings in XX% earnings few home the last the the more XX back representing revenues our we by first half our grew the I the over by my of reentry XX% Utah turning we share is and Through Before new market initiated would a attention first release reported issued Utah weeks PulteGroup's per year. past than entry over home in ago community along with into years.

XX% land our increased payments we repurchases by by $XXX share to period, billion, year-to-date same dividend the increasing and investment while to XX% Over $X.X million.

of closing PulteGroup the the plans. drive homes well year, of want we an XX,XXX has executed $XXX to press forward. going position We excellent finally, CFO million results are before for our and to to announcing address with I also extremely expectations strong yesterday in release briefly the issued succession call we retired full questions, And opening debt.

end Executive the in Bob will say initiated for retirement Financial remain Vice Bob another career Chief with After title XX impactful next as with I'm will XX-year his PulteGroup, Bob transition is that of at of Officer then February months year. to is toward a process President. this effective X Step as a O'Shaughnessy that pleased early truly XXXX. relinquish us

as our responsibilities our partnerships as financial well business, a During support that strategic committee. our smooth he to management oversee services and transition asset of time, continue CFO will

and of as founding, PulteGroup's work at which reflecting exceptional Area to of has Since had Vice its proud he has Finance greatest as named talented Corporate announce I'm has served Jim the of currently company's Controller, people career the who of Audit. next outstanding Jim of that been VP Corporate depth here, Operations, PulteGroup and has strength President Finance Finance Ossowski, of CFO. Director always XX-year people. been Finance, Senior VP VP an Homebuilding time during this

manages effective as been Jim of he and of In critical Finance, will XXXX. report At SVP asset to directly time President his and has a promoted function. February current of Executive to our Jim ensure me functions. time, Vice management FP&A management our tax, role and changes now, committee CFO that having responsibilities. of these implement to we In transition seamless and will accounting, have announcing responsibility audit, plenty for risk treasury

call let turn Jim. Now me to the back

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

So as and for time process call. ask open the of get Rob questions many I'll Instructions] the remaining this explain and during the we [Operator again can to call questions. as possible to we'll

comes Your question from Kim the from first ISI. Stephen Evercore Instructions] line [Operator of

Congrats on glad Bob, hear to the results, we a that great it's and and got congrats going. to transition Jim -- I'm

So everybody. If about wanted by talking off I gross could I just couple margin questions. to your of start a ask congrats outlook.

be going lower that a West, indicated little margin. You to you're I is more which think, in bit doing the

talked that all how represent banking flow do overall relative think through you But reached you you that to wondering represent were basis, initiative. to could has would results. to and And was mix, impact that, think is bankers, use your the happened, of alone you a about, isolate in targeted the if going little that kind are land land to margin increased us time once take also of is you your of today? level banking much where going a if a the I your on longer-term that you -- I banking land land know you give sense increasing a this to

of it's first about it than continued performed question. better the We question has balance of the the and into had Thanks of year quarter, for it's the related maybe margin And last prior West. periods. part Stephen, the kind in the to Ryan. the the quarter mentioned Yes, West this in

So lower. on are we've coming margins got heavier basis West a a mix relative through. Those bit Coast closings a little of

factored that into the that we've so given and guide And QX. we've margin QX for

are, agree, that think margins incredibly strong we've to. the I at The guided you'll levels

that banking, XX% XX% I of -- We're progress. bankers. kind As the historical great done the is that my out to we've progress, land laid of be great remarks, making incremental at, the goal running to highlighted from we're we're in to get it we've going land XX% been kind that relates with options move prepared was making

It's steady, it's deliberate, and to we're absolutely get to the path on XX%.

is terms the we're we look -- what between and for trade that, trade at transfer we're between is somewhere return, XXX we basis of typically margin In ultimately margin is and XXX XXX Every to XXX we're risk. -- deal that's and And for unique. looking see looking with what typically return. between looking of point

of think, So what margin. with underwrite Stephen, we I know to make paint you to believe Return know but And value. brush fair. return comment is, I'd this, the wouldn't it then a I any is and that, we be not closing more on broad drives the shareholder ultimately

very standard the XXX is And which basis also helpful, XXX across pretty Absolutely. industry. the that's to in increase XX% that points,

returns, able also to return to when times talk helps build So about in you goals. helpful. more your that's because also and, efficiently Wanted therefore, being talk more quickly you cycle about

cycle of give since wrapped kind us you can let's you ICG. talk you in situation? on can relative where opportunities today a sit It's heard update a there's of update we've on pre-pandemic if additional times you you an while and that, And think there been it. say, about kind us a -- up your talk Can to,

X about had You've think. for years, I it now

that progression? into sense give where fits for time a cycle Just of the sort overall us

It's a great Stephen. question,

probably below in times still a where holding so what's days of say on cycle target days, tell number availability do But the kind some where So those elevated. were where is XXX-day for quarter week closings time would at some about we've set from today, we of a trade it's that pickup divisions we QX. are divisions or that's got were I back. the XXX a that you of cycle divisions of have ourselves. we I'd in

'XX. think as elevated in that forward, we'll year, the first of to be Looking and we we working that slightly we target over look probably the we hard, we're set, but half can there XXX-day the get end of

a mix in how Stephen, of with ICG through I'll located take Ryan. pleased commercial southeast is X of and single-family We've other decent plants, performing. Again, active the well, in both homebuilder plants have part runs we the our do frame U.S. the along We're question. got those it's a package as of business the apartments. ICG amount with for predominantly that business, business They

ICG apartment and ICG -- That's for the -- be our apartment that we a slowdown part a starting, it projects business in business and location new location the was of do if owned development third lagging we with there -- or plant. actually have secured, secured a that's physical commercial apartment would own than new more

We yet. started have on not construction that

new just location. parameters for that the finalizing design We're of some

to So as on in get pleased not as to able more the we're it benefits buy the pickups, We're better safety, time also get ICG, we of way we cost sure only plant. better the the ICG be share -- think particularly cycle that, we that have we'll flows out with we just quality details it. into

happy performing. with that how is So business

of from from comes John Lovallo next Your UBS. question the line

kind Are You side I characterize impact levels there mentioned. markets are an of you more spoke inventory on home the markets that And move-up in Texas, business certain Are concerning uptick about concerning? Or to of on these in how would think inventory and your you entry Florida that? existing your you? versus the where you is Southwest level? seeing any like

a levels -- be There, Southwest that's to question. months. we've X inventory John, what resale it's like ideally the higher would about X market we'd inventory seen than Florida. Probably approach good Yes, see

benchmark the months. With being the or of kind equilibrium X rate

long strong market I it elevated. That's been tad a consider So time. a we're for very wouldn't a concerning.

really second a and desirable place be for homeowners. to continues retirees it think I

and inventory some had that the It There Part in of So price through an in that markets of bit we're price, reason probably X of a go that levels. think a The that market I the seeing to find be think the clearing appreciation inventory would I market come will I will highlight. elevated a more Texas think unprecedented a normal levels I I'd situation, are Austin, expect would to of kind back similar are range. few Dallas adjustment.

That -- growth in seen Southwest also I that and have months characterize than unprecedented inventory home But jobs as price population other of X I'd in the increases. resulting Florida, there's probably nothing concerning.

add One that's that. it thing not, It's I to home a buyer. more might than selling a if worth remember to often they're also

pricing So not It And can else. market. been competitor. to our much advantage anything rate supply as today it's being add buyers. have we to of offer incentives able to the really retail the always biggest as We -- net the always have has influence

So we for first the demand choice are that that's inventory. resale there, of compelling a

guys I kind flow, more half is repurchase And helpful. flow billion quarter. still thinking in $XXX the about and the in for the year? did, quarter, cash cash the are to you in You That's guide just first ability another that How cash flow the buybacks shares? $X.X think, on million second $XXX of full the then the Okay. back of million

let not given I our our kind to going in of speak think Well, current. view is And for we've to cash we're themselves. how actions periods. the still certainly, much historically We've a be forward as flow guide repurchasing

expect You continue market. in to can to us be see and should

line Anthony the Pettinari from comes question Citigroup. of next Your from

Congratulations to Jim. Bob and

kind doesn't to to anticipate prospective to gross the XX You of sidelines lower rates. question you wondering, that indicated were bps a a do rates holding we group until else there's benchmark get would sense And is kind margin answer, in if I'm of quantify what do harder your And just meaningful then are all bps, fall that or to on of it move guidance rates? XXX possible get that maybe equal? a buyers mortgage

it the lot what you, that rates, question, for but before. a healthy economy a wallet It's is If job prompting some of save I wish allows had have perfect about Yes. them means money. and good I that still lower because rates a it We've is environment the answer they on will right? an the depend lower consumer's interesting decline and rate healthy, to interest talked still is in this are and

in in recessionary our load likely expect is as think That I margins concert see tailwind are incentive to we're we influence. If impacts, goes with about it today. another not healthy that, they not would a GDP, as that down. worried environment, solid has because jobs,

thing little bit other some this in talked a more It's We The is supply, about right? it markets. competitive. that

be to there. where could the want there find so scenario homes, to And it a made and we've price clear going we going we're sell to that's get

some where other of little for be some that bit we're While we form of money the position may save a incentive. we on in to of able a incentive the financing, may giving in be

are to said, I interesting, equation. don't just to said consumer important the what of are always only So know, is is you rates happened broader comment, the if I to rates. like environment We've element Ryan, they X want but that but

this, in costs then the in half those second terms brick but then Okay. I you assume and margin gross missed if guidance quarter color and trends? of or contemplates, us what can stick on That's And maybe kind helpful. sorry of just your give

That's So foot. in $XX costs the first flat year. per this second square of quarter with the stick the brick were and quarter

ahead, backings. manageable digits over the year the look single of we we low expect inflation balance to maybe As be

we've into And provided. that guide that's the incorporated

costs, referencing I kind that of vertical. primarily highlighting talked land in think embedded single-digit The high increases about Maybe worth Jim's we've also guide. through 'XX

Michael line the from Rehaut JPMorgan. from comes question next of Your

Jim. also and to offer want I to my Bob congrats

but to of you back to to lot of a want basis points the we just perhaps of shifts gross take you comments more XXX time the it lot return position First, that gross to from that out kind XXX bank right. that equity, margin, of owned that business kind land a position. regular I shift margin, wanted when on of heard shift sure optioning if the clarify circle wanted it to into understood that and over just around kind we I land to to comments make right, the said of move earlier,

talking about XX% of to of from XX%, business, shift about ROE. impact to the a XXX we're XX to gross effectively moving if margin we're XX And bps talking bps XXX times

consider make optioning other we're Just any land more to factors that that should longer-term and sure banking? correctly. want that that there's lot move understanding if And to we in

Ryan. it's Mike,

articulated I think way the you've is accurate.

the Those today understanding land X right. the case options. think for that's that with years. X or are XX% I and reiterate of seller, would I our is the we been underlying last land business the in your So options that have

So that's expect And in XX-ish that not forward, to going remain that change. range. of a kind percent we'd

from incremental taking XX, more the have banking it. land XX optionality the that in will to that's So piece us

speaking the return margin our Yes. a point opposed to Like on get level. it is that deal-by-deal banks to as clarification. on XXX of ultimately we're Maybe a to then lots roughly nonbank, benefit X to roughly But to XXX influenced basis the gets of the by point point versus I'd and just XXX transaction you return and a equity. basis other on kind our parent basis, of on transaction. rather equity cost to XXX IRR things the when

And I helpful. to Right. very that's important clarify it's think that.

XX% correct balance are debt I'm wrong, levels, are believe kind XX% Secondly, X around the net below which, running sheet, of last to quarters. the still more less you believe your if at the or several debt-to-cap I target maybe ratio, me looking I

a sheet about and towards more companies. been extent leverage. increase as particularly repurchase in optioning? And the next you're that other this about ability, type maybe the share about shifting potential that? to you're as should How should should years? extent of thinking Pulte back there's more is and in coming we think perhaps we kind as range? to start entering the How the I even rates of potential targeted getting What's think for for right amount What of about to balance that the the your macro how to several the that down, backdrop tailwind think of the even to more a we've potential lot leverage we that think with

you first Yes, into is much Mike, do needs How And into of investment with How investment evidenced to investment into in about do over allocation put want want land? that the of capital retiring way to much to the that starts as we've the do repo we the at look even we foremost. last to couple dividends? share much how I'd we put and think put and business we want years, debt. been ask

the performing business that cash think and collective we at we debt how generating we've then the are and position in going business flow of flow used haven't that. favorable the is well, in business. look put to needed The needs cash So we the finance levels of great that a incredibly been where about and we we've us very historically

agree amount all can a we an standpoint. of that and think I So appropriate advantageous a return having business is efficient leverage in from

lower investment tail part at from we're look lower to to we're the wag an in and going position we look to XX%. That's going great standpoint. want set that how we're to finance need that reason let for to XX% we debt the business, capital do about at in dog kind the leverage, that we do things still the to the all rate not We and the of But target that a it. position we then we're have run think how that want we of of here. our the And in, strategically at

day the and level run the the how any in absorb else debt to we to want that? twice the Sunday. do take Bob, more again, certainly but I we're debt that you finance handle Could add to the week position So an business it. overall then or of from out go do figure and want to we how anything business priority is #X on

lot impact on flows changes, environment going not that from generate from than here. so flows where other inventory a more get get the be cyclicality today leveling furthering optionality, point, operate to and I a pipeline, cash match cash it point think No, of likely sheet is we less we -- to that we so as on i.e., the of which that we earnings balance the better of efficiently our more a we would the cash say Ryan's our is

Gap] [Audio

in then expect comments the prices you in higher inventory the price process? slowdown would driving you And correct forward? the attribute we Have is already? discovery on those seen markets, that? what's that too? and that Like are where Or the something process, going

for thanks question. Ray, Yes, the

that created the created at affordability whatever become for struggling to Those high this what's bit increase owners of in prospective rise price, some unprecedented reason. to buyers an of think I prices in are challenge is inventory a of digest kind the has have some which sellers point. caused

clearing here, X that what of on over a market be prior will mentioned of there'll happen kind I happens adjustment time. bit a of price I little questions, As the think price process

long terribly would over X the through of some of I X, that inventory. to the expect work next months, a probably buildup takes time. of kind it think market I X, But

I'd point you Austin. to as an example,

at saw all of We work to the that to X and unprecedented slowdown. it market sales with a more of It of back rate of for years of in rate. market about probably ago, the inventory. going Austin build normal growth couple you a the combined of post-COVID bit came of growth, some market If back a kind years unprecedented months took kind through into prices, job kind X inventory looked run a settled sudden, rise in a

for So as relates probably my to similar would be Florida. happen Southwest it expectation something to

are by is change in and I factors for expectation you the for And that exit the That's consistent for the the of fourth second year, the that outlook there of Or expectation half through gross are the mix? back just rate, other quarter the half, margin then quarter? driven changing think entirely the for of the sort really the for previously helpful. XX% on fourth sort expecting were guidance that

things. really saw we It's coming. One to that a is combination X primary degree, mix highlighted. And of we've Yes. it's the a that

of in that we back So the the XX continued. at quarter, given has the it had first area but that end was

XX a got than ago. we saw we've days bigger of number kind So mix

market's highlighted And really, sell we the told a be homes bit we've close. you likely gotten to so incentive. see to a there's little little We and bit we've that and more got choppier

as our And so projecting guide well. that we're into

worth at we've it at includes the but bit that the little think had same given the that first been I range we lower, quarter. a end is highlighting -- it's the point now beginning of that

see So I circumstance. change misconstrue. of to really in don't just don't want big kind a anybody We market. This is

question line Zelman Alan next comes from Ratner Our & Associates. the from of

Bob my For Jim congrats well. as to and

is of to question So consider actually I when shift year. prior the side kind similar to bit your the opposite back of the the this the going what you of guide because moving the margin guidance mix think a upside take of pieces quarter, like I'm the of pretty half a actually in kind seems with

to it might a sounds word, like bit of of And Florida reconcile a the strong And of a volume. of comments bracing of and back the generate of part I half on little pretty guess business, I was because but some you're bit you that's the war, over incentive in in maybe kind Texas order states too those closings. your little that sizable hoping an XX% with X for probably a are year

that year. the back headwind feels an is not guess, factoring I of it you're in in incentive question like of guidance necessarily or the of my So half much the interpretation

can bit? kind little you just a through So of talk that

answer to I question prior that. Alan, address Ray's Bob's think Yes, help to

for going been and proud. assets, combine with and to the It's confidence that little choppier. environment I'd affordability specifically, us consumer the has Now made to bit be a that margin not we're comment turn demand important our that I

a of more we incentives. bit add we're a combination with the going Coast a to where in few incremental West mix to have think So few little markets

The of XX%, guide where put the a at the just we unchanged margins left QX, We've fall given of range quarter we approximately accommodate and think around some incremental some for just some to and that of for described. or kind we more fourth range things kind I finite in QX.

bit Okay. That's a what in dissimilar months maybe not pretty -- X it sounds from too in helpful. states... from It your at just the though seems least little ago, outlook like those even like, conservatism there's X it's outlook more

majority X the next we've mean I months. units backlog, are point, going XX,XXX got of other over vast deliver to of One which the

to lot a see we what could incentives about we already that. homes. know And your those of the incentive So on forward point are load,

So an it's really just decrementally...

That's it. helpful. Got

is Second a bigger a question. of picture, question higher-level bit just

reasons, business the level kind for your long-term and or of of just mix, Some have the entry have run And are put from absorption of of of raise historically. kind more businesses targets those maybe better kind a various where maybe more reset out efficiencies. just for peers spec that

do historically? give the very to return your your term margin proud, of I'm to margin, an absorption commentary how that? curious, focus not being rate the where run to at higher opportunity as compared but run the obviously, margins, there if look longer to and up it's much you business strong about any, is have you And take achieve

Alan. Yes,

in would the country. have my land an is both thing largely is difficult how think We're around reorient I it be in that to I not entitled municipalities. probably that this environment focus the would backyard in anti-growth environment

develop we're and of commodity, we such. a entitled it we're the land precious have become treating and that to able So somewhat as

And part and performance value. of such that. of multiyear last it we're balancing to what just a shareholder that a that's company decade to returns and it's And a we I demonstrates as fundamentally laid period. the from best we part over pace price can Growth reason growth the story. in very because believe treating the And our creates drive this of target is we important that quarter, our XX% of last X% multiyear out think

to that the we'll that we're be the going of range for higher XXXX, for business at XXXX. deliver in end So

expect within to I highlighted And then XXXX, in for we'd that remarks, that be of my range. kind prepared

business X% So leave that the XX% out that probably the by going been total absorption there thinking capital, level rates. multi-year I'd volume deliveries to community much target. investing the are to way about it of growth opposed way of been we've with as kind we've aligned absorption and into And community very

sense. of I comments. appreciate Makes the a lot

next Your from question comes Sam line of Wells Reid from Fargo. the

more One on here. Florida question

guess, your the Just I maybe latest I to should market. insurance perspective wanted hear say, your or on perspective,

some latest finding that. the across Just building the insurance your of higher obviously, inland houses potentially to state You that on are rates a driver there? But build are are wanted codes. that also perspective further trepidation generally buyer you behind the

entire something it's -- Sam, with, is that grappling just country the Florida. not Yes, think I it's

think up acute number maybe markets. states. issues the Certainly, I the rates in we've Florida seen of in are more insurance go a

We our are They insurance got agency. that own fortunate amazing job. we've do an

our buying have it in do to attractive for the at -- not high and buyers coverage provide able that to a capture only are insurance communities. We but very they're provide rate

in way more how your to To also point, built type they building that terms rain of events in cetera. handle retention, both our kind et of land this resilient, They're events development, water and of of we but homes rising because the code. terms are materials up-to-date manage on-site drainage,

to it's be to think an ability I dismissed, that's it's but impact our not So something sell on not homes. having

Florida, in be Florida. The other They're buyers, might you've and typically, at highlight that that of lot Florida location. kind selling got home I would least lives already another moving in to thing they with a of somebody the

So a they've insurance. rates. relative basis, paying had higher insurance on They've been

are as the of shock state outside relates And coming also, from of necessarily it buyers a in to Florida. so There's that there. not there's

lower They a be but basis they're paying relative terms on are be state they in they to of might where property no rates, there tax tax. leaving, higher picking other benefits be income that rates, may might up

don't to things have shovel there some you that. So -- like and is snow

rates. puts So some insurance takes and to there's

and No, hitting on the to land At that's more more sounds clarification is talking in and And single-digit least And switching P&L here. just question. like a what's margin. of gross quickly then this gears that It flowing increase helps. maybe of touching year. through you're costs land high a your really this

to any single let's call expectation I it, represent that all, And to want Because change make to, correctly. I'm I that high your be mid- hearing commentary? the does that your of sure just from believe closer earlier to was then for digits. First original

Just thinking correctly. want sure of that make to we're

Yes. Apologies clear. we weren't if

We single XX%. haven't digits of the X% between it's and I be digits. It I high changed saying And mid- single to thing. same land. our versus may apologize, cost estimates high for means guilty somewhere

comes RBC Capital from Your next from Dahl the question line of Markets. Mike

my yet. quite Jim. quick Bob, Bob ones you're not and of I couple of us Congrats end. A free from guess all

July past around Obviously, You would and over characterized solid. the some month as flow. normal then rates you the pieces moving traffic seasonality,

down third your the quarter-on-quarter kind of absorption be would quarter. in typically mid-teens I think

is XQ Just given And characterize further you the consistent what of like How a are trying give that? all are that the has how you can looked? from with attention and against clarity of was solid kind beginning you analysts kind choppy, of little clarify more on would what investors worth. kind as of this you'd to expect

it's tricky about X July. in Mike, traffic of Yes, weeks always we're when giving qualitative descriptions

our words choose to try we carefully. So

performing. The been X business kind second pleased that we're how have was weeks July, and early quarter, others But solid, heard in reported. is in, things our from the I us and you've throughout virtual quarter. of with think from It have choppy the

our probably sets that business we you And of on reaffirmation kind that of what of our the how can for the thing year, deliver focus biggest for we we I'd XXXX. is believe and view the of how kind entire kind up start us want rate, to

XXXX. I Those are know in 'XX on are things of it. are July, look certainly, of they're important. about I important. what's of going So how I to the more the there's of picture year a focus probably bigger weeks data I we think know that X kind But the lot of full think like, thinking are

Yes.

setting markets, going in kind quarter. specifically any your the just performance in fair. X%, there at as additional If keep Florida of a Dallas? challenged orders, on us the Is those some X% and we sorry your Florida markets orders Austin, way was down kind perspective down level Texas could Okay. in on quarter? Texas just look order to Southwest How the exercise. the Florida And you were Understood in give the those then stuff, in of and and but

his there, prepared the Bob for quarter. only big those of of impact Webb. the in kind in Del point Del Both thing markets I'd remarks, probably some Webb Mike, to about the Yes. of are talked that markets

count Del some some any new beyond and closing transition the of with really having granular opening, that than wouldn't transition, community the that. I Webbs So go count more community we're

Maklari comes question the of line from Susan from Sachs. Goldman final Your

there Good morning, the that is, there your be caution? third causing characterize as more everyone. think that quarter motivating that the generally is anything to Thanks comments My more health you what and the you for for would come into you're bit on And Is How a mentioned bit is the the a half? from that squeezing seems in in insure them your a hearing cautious. in. ground them? you first back me about factor you consumer more question salespeople think increased do of

morning. good the Yes, question. Susan, for Thanks

I and consumer One, think around psychology really things. X it's confidence.

when How question. right was feel change good with do now think I noticeable kind So confidence is -- of impact period when we buy. you early now in in that prospective We we consumer when response a saw of rates time kind in question. that website the to is time some a buyers comes level ask buy. to the that right it a that of surveying early uptick to it had that of kind real to kind in our April, time do of about And on

and newspapers. think, reading I the rate in Susan, So the just change is that and people news in things the are hearing the

impacted versus know. is affordability, hard to is X other by how much to it of Some attributable the

come might later rates potentially that prospect the down the think I So year. in

into play could of biopsychology confidence positive similarly that a think consumer I in way.

recently reentered then And Utah. that you mentioned helpful. also That's Okay. you

about to that interesting do to current out are markets -- of perhaps you're seeing think there perspective? fit geographic you about products how you could the As current you some that's time, X% more that anything else the offer? growth And a in, or the your geographic from profile over there market that that for XX% footprint your target think and markets you

always at for are could we're population create us. cities interesting looking there new Yes, opportunities where And going? that growth the is

today. or last to entered we're in there Could we we've over the With X the markets X X need of markets that -- years, get we've the got think that that all be close in I down off, cities of that kind but kind don't into. have any of I think we the to major we've never remaining Sure, opportunities road? growth I be

-- smaller And of then rate. new with markets, kind to we're small relates into of growth embedded the how today all of are our in growth we're they're performing. X% as the and it all to targets, kind businesses and cities relatively pleased in XX% our view And those those that growth cities that's

And now Zeumer to over closing question-and-answer remarks. our I that will session. Jim the for concludes call back turn

Thank certainly you. Appreciate time this in end around morning. the We're and available the of day.

to If speaking with you next And call. look have questions, our them. otherwise, will please you any forward on we submit

This for you conference participation. call. today's your concludes Thank

disconnect. now may You