D.R. Horton (DHI) 19 Jul 232023 Q3 Earnings call transcript

Good morning, and welcome to the Third Quarter 2023 Earnings Conference Call for D.R. Horton, America's Builder, the largest builder in the United States. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

the Relations to for turn President Hansen, now Investor of D.R. will call Jessica over Vice I Horton.

Thank you, quarter Paul, call to and good morning. our for Welcome results the third of XXXX. discuss fiscal to our

get the Securities by we as XXXX. Act Private started, forward-looking Litigation includes Before statements call defined of Reform today's

upon assurance D.R. such All will outcomes not to on materially different. Although any any based revise of call, reasonable actual statements D.R. this Horton forward-looking to assumptions, update publicly does and that on statements information are the date D.R. based forward-looking statements. or are obligation Horton not believes there available is no conference any undertake be Horton

annual factors to are and could lead XX-K Exchange about report performance its material most information recent is the Form with that Commission. which on D.R. of report XX-Q, both quarterly Form in Additional and Horton's Securities on filed changes contained in

release we presentations we Presentations your website updated News can Investor this under our call, and be will on file This on site Relations for next our After & section early data supplementary to reference. morning's XX-Q investor plan Events earnings week. found and to post investor.drhorton.com, the at our

President the to call I Now, turn will David and Auld, over our CEO.

Jessica, good Thank you, and morning.

and joined Operating and Officer. Officers; Financial I Murray am Executive be Bill Executive Co-Chief Chief and pleased Wheat, to by on President Mike call Vice our this Presidents also and Paul Vice our Romanowski,

For diluted highlighted share. Horton the by earnings delivered quarter, third the $X.XX per D.R. of team results, solid

billion, with of profit an in was on to XX% XX.X%. $X.X pre-tax margin income consolidated Our pre-tax increase $X.X billion a revenues

was and equity return same on was for the June Our homebuilding trailing months our XX ended return XX.X%. XX.X%, period the XX for inventory on

at the favorable. rates mortgage homes the quarter, as home price from and demographics demand of prior-year continued net remain points Despite housing XX% supporting and limited and both inflationary existing new affordable is orders supply our increased sales pressures, high

consolidating of release share returns homes in to times construction to materials, earlier on positioning for each homebuyer maximizing our market focused demand, in and labor both by communities. of in improvements more availability -- of meet We us decreasing, are are efficiency the homes our cycle while sale each capital the capacity supplying and With cycle.

that increase able which increase to in pleased were are X% to quarter, a homebuilding XX,XXX sequential selling starts active We supported we our our this by was homes communities.

year affordability higher operating inflation homebuilding last incentives lower than record mortgage we by Our and adjustments the we are challenges due caused high rates. cost homebuyer address margins to margins pricing and to reported implemented

margins costs to have home However, now from sequentially March reductions our improved the June are in some incentives and our in construction homes closed. realized as prices being quarter stabilized and

with and to well-positioned supply, and growth consistent are position our cash returns, and product flexible sustain experienced liquidity strong offerings, lot operators, We capital and diverse flow. produce

We capital value consistent the including enhance will both company, dividends through share a our maintain disciplined returning long-term to basis. to of approach shareholders capital to on and our repurchases investing our

Paul?

per $X.XX fiscal $X.X quarter diluted decreased to Net billion. for quarter Earnings prior-year income XXXX for $X.X the $X.XX decreased to to share, in on share third per of XX% compared of revenues billion the consolidated the quarter. XX%

billion revenues to home homes homes compared were prior billion on on the closed, $X.X year. sales in quarter third XX,XXX $X.X closed Our XX,XXX

X% down quarter for the closing average was flat from quarter. the price prior-year $XXX,XXX, Our sequentially and

Mike?

homes, value the XX,XXX from in sales XX% orders third to $X.X increased billion. increased prior year quarter and net XX% to the Our order

and XX%, down was Our in flat prior-year sequentially for the from quarter quarter. the XX% rate cancellation

third sales average quarter and from quarter. prior-year in average X% X% down the orders price of up of sequentially Our $XXX,XXX, active X% up number communities selling and was up sequentially the The X% net was year-over-year.

increased we higher and conditions past to of year, incentives and use our our homes To adjust market affordability provide the changing homebuyers. to to rates better of mortgage sizes reduced the over

to higher we and begun stabilize, to utilizing continue year. have a home level incentives compared of Although prices expect to incentives last as

sales factors. in rates changes affected and mortgage Our other economic can by significantly volumes be

will sufficient inventory market and start maintain to to aggregate homes we meet However, and demand continue sales share.

Bill?

square X%. foot Our gross on stick-and-brick margin flat sequentially, and costs costs the sales homes our June quarter on margin revenues On The third stick-and-brick sales a costs XXX lower and revenues up in reflects during profit while the cost March from square lot quarter. foot were decrease basis, incentive in basis the to decrease in decreased was points sequentially a home quarter. both closed gross XX.X%, home per March per from

compared mentioned, compared gross to we costs, quarter. to level and reductions as in -- the to expect continue incentives both to home Mike continue higher XXXX. incentives homebuilding margins we prices of some to third fourth construction stabilization a our the quarter we As due higher in the be recent in and slightly expect But offering to

Jessica?

was market year. revenues, points SG&A the prior same of same to expenses by platform from we've the year and percentage our as points X.X% in the as the SG&A our X.X%, last was quarter, period Fiscal homebuilding XX third increased quarter XX up the In basis share. capacity basis from from homebuilding revenues X% a maintained expense last grow year-to-date of up year of homebuilding SG&A

Paul?

ended quarter, inventory, flat homes and June our from We X,XXX XX March sequentially. XX,XXX quarter up were from the which completed. were year the homes XX% the down quarter. We ago at June in XX,XXX of started of homes with unsold, a XX,XXX in XX%

the a time decreased supply For homes over construction chain. month the closed in in we our reflecting third the quarter, from improvements second quarter, cycle by

our decrease the fourth in closed see expect We time in quarter. a cycle for further to homes

homes and and continue inventory conditions. (ph) based pace will our to market We [ingest] on starts

Mike?

which are contracts. XX lot be or our homebuilding and purchase XX% consisted lots controlled approximately Our of finished were owned finished when were of them. of position owned purchase are XX% through and XXX,XXX will of our XX% lots at lots, XX% controlled total June we

our lot flexible to portfolio key strong Our a position. competitive capital-efficient is and

in homebuilding Our quarter development prior-year XX% totaled third sequentially. and $X.X land up and billion, investments XX% from the quarter lots,

million of billion million finished for development, for acquisition. consisted $XXX lots, $XXX Our current and $X.X investments for land quarter land

Paul?

our $XXX and $XXX During multi-family X,XXX rental of from the homes million sale operations income single-family revenues rental generated pre-tax units. of on million rental the XXX quarter, of

Our billion rental property was properties properties. of inventory at $X.X $X.X multi-family of XX billion billion, single-family and rental which consisted June $X.X rental of

in platform revenues rental generating across our profits operations this as are year, increases Our both markets. expands more significant and

rental For the our than rental greater be to margin quarter, revenues and quarter. our expect lower than fourth quarter third to our profit be we our third

Bill?

residential revenues the for third with sold X,XXX on total $XXX of majority-owned lot Forestar, pre-tax reported income million. company, million $XX quarter our development lots of

owned third at Forestar's owned million of our from lots the finished lot lots. and in position subject of are controlled Forestar. XX under or a XX% with contract purchased first offer Horton. right of lots was Forestar's quarter to XX,XXX to $XXX June D.R. were

liquidity separately to with ratio is net capitalized Forestar capital Horton of and debt million XX.X%. D.R. at from $XXX quarter-end, had than a of more

Horton. its lot Forestar capitalize the market supply is lots to share and with the and D.R. balance in sheet, aggregate years positioned few industry uniquely on over the with strong to shortage next finished homebuilding relationship significant of

Mike?

Financial pre-tax of $XXX in of services resulting third quarter $XX million pre-tax revenues, in on a margin XX.X%. earned income million profit the of

of financing and originations homes During mortgage VA XX% our the buyers. closed quarter, handled operations, the of company XX% our FHA related homebuilding loan mortgage for to of by company's our and our Mortgage ratio loans mortgage XXX loans XX%. Borrowers volume. DHI value had loan and FICO of originating an XX% accounted average for average the to an company's quarter with this of score

First-time homebuyers represented our of XX% this quarter. closings handled by the mortgage company

Bill?

disciplined, on an growth opportunistic support returns, focuses operating that Our to and being balanced and to flexible produces approach capital and flow. platform consistent cash sustain

significant which adjust maintain provides to low us leverage sheet market and a We liquidity, changing to with continue balance to conditions. with strong flexibility

operations the $X.X first our the cash our was nine consolidated provided operations $X.X and During billion. homebuilding months cash by of provided by year, was billion

At June homebuilding available unrestricted capacity $X our $X.X billion XX, of cash billion facility. and billion homebuilding liquidity, on credit of revolving homebuilding of consisting of had $X.X we

in at we includes redeemed early June notes billion, Homebuilding totaled debt that of XX million $XXX which $X.X July. senior

leverage was homebuilding XX.X% net at homebuilding was cash of the June X.X%. and Our leverage end of

June XX.X%. Our was XX was and XX%, cash leverage of consolidated net at leverage consolidated

per stockholders' was a At ago. was June year equity XX, book $XX.XX, share from XX% $XX.X up value and billion, our

June, the return on XX was our trailing equity months ended XX.X%. For

a During declared at the last quarter Board August. quarter, we same paid as level our quarterly cash dividends has dividend of million $XX paid be and in the to

shares repurchased X.X shares of the We for million $XXX year-to-date million stock fiscal quarter $XXX repurchased a for during million. for million X.X of total common

Jessica?

may As market conditions regarding mortgage uncertainty conditions we the economic and forward, current to significantly we markets continue general our business. impact rates, with that capital look expect

and X,XXX XX,XXX between in rental year, in and operations. expect homes we between units X,XXX operations currently close For our the homes full and our homebuilding XX,XXX and to

to billion consolidated of be XXXX a in to revenues We expect our for range $XX.X fiscal billion. $XX.X

billion generate $X XXXX, fiscal flow greater homebuilding primarily from operations. our We than of operations expect to cash from in

expect also our $X.X be year. repurchases to similar billion, XXXX to fiscal We approximately share last

by $X.X be For the of the homes. operations $XX.X fourth homes revenues in expect billion, to billion to generate homebuilding to XX,XXX currently consolidated XX,XXX our and quarter, range we closed to of

approximately be we margin margin the of XX.X% in income the SG&A fourth to revenues in be and XX.X% of approximately expect to be quarter our pre-tax as fourth a the XX%, quarter. X.X% home We percentage our to profit X.X%. in of the to range anticipate to to expect financial gross rate quarter XX%, services and XX% our We fourth tax sales in homebuilding around

flow our liquidity, core strong We shares. maintaining will continue to balance our operations, our an increased rental consistently priorities homebuilding leverage among dividend utilization conservative homebuilding and paying and operations, repurchasing cash

David?

geographic position In market our industry-leading and broad teams, experienced diverse our and product footprint closing, offerings. reflect results share,

sustain aggregate produce cash of continuing our share. flow, to our while growth and market platform these All operating key are to of to ability consistent returns, components

through long-term consistent dividends We will to capital capital includes company, the disciplined value returning investing maintain to share repurchases the basis. a our shareholders on of enhance our and both to which approach

concludes Thank you remarks. the work. Horton team for prepared to hard entire and This our continued your focus D.R.

questions. We will now host

will conducting question today Evercore [Operator Kim is the Thank Stephen from time, coming this At we And is you. Stephen, question-and-answer live. session. be your ISI. a first from line Instructions]

once much guys. quarter Impressive again. very Thanks

construction talk your forward. pace So, congratulations and your on your that. going goals I construction wanted to about of --

a couple look about year, half and even started growing a last this you quarter more. But just quarter. where ago, starts were talked when year of there You a maybe versus quarters we back your

why feel get sense from XX,XXX as that whether wanted You respect should not started quarter. starts cadence? your units be then in also a thinking to going to a you about level could near And I to could factor achieve with or about is and to a term, be if seasonality not? the a not like talk if whether that's you you we you about

talked, we continue our good supplies cycle as balance that and XX-day a we as seen, need we the pretty improvement to about trades seen all divisions with and Yes, reduction throughout have see Stephen, with consistency we in travel time. our cycle improvement time our and in and

it the continued strength a cadence and stayed to we is but If lots for with the of our pace, market you the pace looking to the our position market, up little will, bit, towards a that that that look we to cadence ourselves and see quarter. continue not we did some where sales at and and keep our as Based the push pretty up in we look outpace the have growth. and consistent starts which fourth to on and closings, tick expect ability

Okay.

for, sense like said, that where ago for that a two why sounds a or XX,XXX I is we wasn't row. get a revisit? that level figure it long achieve significant a mind. like Simply couldn't actually it didn't you because So, And whether your really that I in in quarters did is

question rental also if And then second a tack about on I platform. could your

that? to some thinking we going to that with, being level think is in of carried take relative mistaken, Could that Thanks. now? should the [revs] you're your higher, that meaningfully XQ not talk you dollars relative as margins Is maybe right to we about You feel but of regarding look being plans or a did if beyond, grow for to is I balance give even into that billion, going be XQ. to harvest XXXX on and guidance begin in investment, lower you inventory $X.X I'm (ph) rental level Where -- which some sheet? comfortable

to in build continue starts quarter, we Steve, And very on program starts continue that incrementally as XX,XXX an to that labor this ability to gain process, per we with ongoing the to availability material quarter labor focused consolidation, starts capacity. and and the -- our out it's then effort. efficiency we we houses process, Hey, the believe and increasing increasing our And are will to just quarter quarter. consolidate as

of to a No. get out we to we've there have do number? target So, this got

how is target bigger by we and market, by our nature that, bigger and do just these Our going to And increase by flag, share. consolidate of bigger. market flag we're markets get the doing market and

the And I'll question. to rental let Mike reply

Hey, Stephen.

So, and rental projects of basis the have margin between we on at basis times closings largely delivering on cost of expect those a that difference are that margin, were they're a quarter different mix lower the A QX that then and fourth the delivering. the probably QX. a will built of homes segment in between lot into it's when on profit

in see to over pace from We've continue inventory expect our last next do years, over to of do expect ramp levels a the forward level, And we total we're last grow to We growth the investment moderate been inventory continue to years. grow two today. it's couple that in but platform of about years. that will then, in at of that significant our a the of two we billion $X.X what seen terms and growth

guys. Thanks Great. Okay. much, very

from Thank Ahlersmeyer line your question Deutsche live. from Joe, Bank. Joe is you. The coming is next

guys. quarter, good and Thanks,

you. Thank

or wondering consider I wanted there up in I'm to that's year-to-date expect are release not sustain I'm calendar that down to count. And follow that going follow-up. should then about I up more that is year-to-date, half, levels? the those straight-line that into that on just nature? And community going the should but is. we in back anything to sequential anything there we have a go That's to temporary X% or we number,

last than percentage. we our the flag positioned Sure, and on lot forward. Joe. the of mid-single not low-single I clearly count. going to do couple digit count, focused to closer a mean, whereas to more community We've been to digits our feel be years, it's really grow position communities open we're have the We new like moved

some focused So of necessarily count. operators be our around mid-single on forward, and when can not choppiness is ultimately our digits X% online, them are going lot and just flag bring growing there the but out position close determining but communities quarter-to-quarter. There we their

Makes did sense. the just about as that grow those flattish and thinking communities. couple And homes was inventory even actually number, you last the sequentially quarters,

unit to as should part total right levels continue Or the to we grow and higher will maybe expect it on So, this catch that is sort think inventory you homes that is of returning starts? inventory up of turnover? of lag a to

our cycle improving on turn and focused that. our improved, very as We're have inventory times construction facilitating that's

'XX. to that of You of in to we with that, go we've times looking a been been to year. level into our last slower more X get following in able we turn fiscal the year historically, inventory typically we're homes back we as when turn so The has inventory, number look couple years look and that to historic than

a capacity faster making homes quarter-to-quarter, efficient that we more a going is fewer sure question, in to that It so houses actually to back together is these -- deliver with is have our and in start a factor we houses flows start way. the more pace all that quarter-to-quarter. deliver That inventory can and in -- to a continue more the

hear. to very That's great luck. good much, and Thanks

from Lovallo UBS. John, coming is you. John The live. from question next is line Thank your

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

a It is, down would sequential seasonality first mean, I looks orders down bit. about quarter the it they think were like normal quarter improvement third normal one or better The seasonality than sequential to about suggest X%. X%. the was I second the of from cadence looks like by

than or a quarter, seasonality, to that? basis? think how fourth the able fourth better on to about a that into which reasonable call out it, way dynamics bit of typically like quarter, think getting where move the we quarter-over-quarter looks sort might there should it's about better to we a little the bit XX% Is down, As XX% a do you are be

Yeah. Thanks, John.

normal we of in are more seasonality think this patterns. traffic I terms seeing demand year just

we're be. closer be that be a inventory, can inventory the still consistent enough of make supply normal and approach capture there a providing to there the market there existing short in And show so, seasonality we to of new consistent We're in think our got in bit as home level would would orders going forward. and going trying may But starts demand pace and expectations base our to out I we've a home homes to out market. whatever sure to as

But an term, a demand level. be, more there. And so, normal is and I hope back could getting still a see bit would that to we natural consistency there the to longer consumer is our think more over ebb-and-flow a seasonality

believe give do that I the this our certain sell going And shortened given people cycle more to year, date have time a houses to lot and we're close. to to ability a

So, homes we in limited last number were year. the

better So, the going is quarter year-ago seasonality. quarter, it's probably to going a to -- than comparison typical to this look last quarter,

That makes sense.

picture a that Okay. XX,XXX maybe XX,XXX at And ballpark, versus homes, then Industry-wide bigger XXXX, the in just starts delivered XX%, Horton this expected similar single-family year. the -- homes to If XX% D.R. gaining close we is in question. look but a Horton since this today. been expected jump were Obviously, share close pretty publics to and years, for have what's XXXX. XXXX to

important sustainable today? inventory the guess, important overall home how I these of to is gains? build So, your existing how performance? maybe is, this success is How to strategy just are the question And lack homebuilder

'XXs, 'XXs, or there And coming yes, opportunity liquidity now been I and to that. sheet level for have this it. in and didn't building years a it we creating and But focused We've I have business, to didn't I early consistency and was downturn, consolidate call of of or balance And yes. on the are the tremendous we jokingly market. doing out business do think, real a believe simplifying the exist yes, that XXXXs.

So, and as create the just seems liquidity quarterly, into of you grown years it years, to XXXX, it -- company XX our out sheet has in to have balance with at another it XX the a And of either we through like, I coming years, last going since goal take disruptions market. this or been guess, XX advantage disruption. any a least

it. lot So, power we and talk of it's the platform the about a

it's it a going create people, the to nobody seeing consolidate to achieve. you're location, affordability can business it's level And else trying It's out. think simplify I play just markets. and these to product, that's

very much. you Thank

Thank you. BTIG. The Reichardt is line Carl, live. next from Carl question is coming from your

Thanks. Good that trying lumber Could see ask down starting year-on-year. platform. is, morning, we're multi-family I'm obviously, scale of X% what Part is some in And mentioned grow labor? foot, leverage you're assuming in the your everybody. markets construction stick and brick to you out reason that I the think, of are single-family per Bill, the break costs. helping to that then you I rental most, reason lower and to terms to add business materials from and overall

wondering there. that's to starting So, if I'm help

look components It's we in across are the now. other moves at some materials, really There as of components right across there. the primarily now, lumber homes. the Right it both of directions, lumber is primarily the home the minor

what capacity really what the a And cost and the have quarter of builders are the what to are with lower labor think structure on more we have two been cost there think lumber. improvement while. But still really, improvement expect been homes the I forward of had a or we is as the for I then at that on realize we industry edge all depends last doing. bit over the some front we starting than starting in a there

the there, structure to continue to definitely especially leverage our cost more relative scale, bit improvement platform we that which as and our well, as a So, we to industry. advantages have add include the to rental does continue but rest opportunities to of drive down,

starting just David, cases, we're of smaller to just private mentioned of -- privates summer. relative a the to than during builders really Has in privates had you all willingness there in constraints they're the of got Okay. sell being given I a know quarter market expected private. particular them. where presence the have the need But private and can't seen facing Bill. higher-end. you small a much seasonality They we've -- Thanks. terms buydowns, of bulk And to they slower then make purchased do of markets of the the or among publics to lot vagaries Thank what that's talking don't the you, been your in the up harder advantage-wise? if normal movement sort more to, what and now, maybe you've interest competitors, some to right capital

really lot, to is years, we about it it or to cost. a And to It from in increasing talk hard the houses. lot ground. capital struggle now, a Carl, got of either last really these in hard seems private the on build they've banks like private put couple is guys, but with

But hole. peg we guys? a have talk up us a because to we the square do of to into round family, here trying invite a going them for not we're unique take in to we going and Yes, it's the So, have screw culture it do do. lot opportunity a to opportunities force to special to these

having most Coast the in developers already of in region. one about Truland terms lot recent Excited our been our [indiscernible] largest Gulf of

picked developing for operations, homebuilding to be we us will a terms so, us his Gulf component but in and Truland's lots key And Nathan team to Cox up of Coast. the continue and in

somebody who absolutely will to a in for Cox time. with business I a say, is long, that And guy. our be years, example somebody he He's super a relationship we're and He's long culture. an and with good a plus quality going mirrors personal Nathan I've company, built XX had of for

appreciate I Great. all. it. Thanks

Carl. you, Thank

from Rehaut your coming is next Mike, The from live. question you. JPMorgan. line Mike Thank is

thoughts to -- on above a strong around being kind little about orders of can about month, XQ in Lennar also Thanks. circle wanted back and gave muted KB bit the result. their their quarter, the that your new out an lack only order third I normal homebuilders the but third you as provide being Great. all talking there talk seasonality a third XQ strong quarter and Last and for around that's not demand Appreciate a void to earlier in answer based had it. -- trends. that supply demand of demand filling you

take just was So, demand. you kind you I assume third there bit? of as going is normal you your would kind Or going be as than see And to capacity as perhaps think back little back interested if in can. as in demand orders quarter the to back hoping an comments, the you I production to that perhaps to David, seasonality. a there? hold terms think an said, heard answer taking meet of I just you might to much normal type constraints question well, there there what any similar think, I level Again, there you earlier I your seasonality. say is is Bill, better get that you'd is to a finer-tuned ability share of of

Mike. Sure,

for results. long we term. and in over the much So, can shareholder build for in I this we're this We're value mean, as long not to as the term quarterly

about, as So, over consistent, and as quarter focused all quarter, to our and, you've it's David pace. to to quarter being say tied we've talked we're starts heard on over,

cycle weaken seasonality. less we our than seasonality. not normal we bit a than or reason a If normal little able the homes see there started If it don't some to for might managing market's times we're to in better improve, as sales continue many So, market to number be were and QX. ultimately, get be to could the

we increase And like have we've flag improve were times starts positioned cycle we slightly our continued construction about, also, count now, has as we're and grown. QX. talked our Right from to in where feel our to

like returns we So, in on generate frankly, and we positioning worried and go the are 'XX at book than strong add continue do this ourselves year very we're to I But finish we're and value more out we're about strong QX. going well-positioned. position for point same to mean, the feel to very focused XXXX. to

in you appreciate X of -- then of to other over In hit backlog maybe the I year words, turning X at I your to times beginning in Okay. times your guess, relative turned at at kind best, the look closings X low this where It of at the on fiscal the could was able basis, like, or even terms to height times, you'd your be times. The you a were times probably of at XXXX that. 'XX, above, end X.X of given to achieve. deliver, what maybe maybe backlog closer looks potentially amount rough a you you times X be X year. when turnover. conversion backlog

-- So, times for low-double items the were, they where back but of consider? physical is turnover fact and community that even cycle to a the it of are fact given any expect growth to not count or growth, you're the kind to other that number digit looking given year, closings high-single reasonable just other still for improving, next or, constraints again,

Sure, Mike.

so try type As we're that a to this to growth. to talked about we our looking inventory a close 'XX, ourselves deliver -- we've with XX% homes with position, high-single, lot we're growth, in fiscal always and position to are and before. We our position double-digit

positioning And so, what we again, inventory that's today. market the in in we're doing that our so position there is we're see the that

positions a on our we our we in think inventory improve inventory focus lot more lot us with I And our for homes think and do turn, our there get I we inventory that that. it's us can turnover. helps conversion cycle times, than And our ready improved for if inventory backlog.

inventory, homes deliver we can sales release to contract when when home. have Backlog what sign on on a a is we we when starts our to just adjust pace, We we're just of going for those home. we that sale then based on really and factor choose a confidence have focus we in that

we then be visibility well. going we what improve And improves -- closings will to close. those improve that see the your faster, start, our So, and if as honestly, every turnover we're turning are home to will inventory

positioning, inventory then we our turn it's starts how So pace, really and that. about efficiently can our

sell never we're which and is of a so a of being And our our reminder, see is Bill an generally we're what intra-quarter, backlog in homes inventory anyway, as we to close forward why quarter-end a going to close in better XX% to period. those you indicator at reporting in alluding XX% homes our and a and driver starts that home

Thanks Great. so much.

Mike. Thanks,

question next Thank you. is line from The Matthew Barclays. Matthew, Bouley from is your live. coming

for morning. costs. ask Good lot taking wanted Thank about I questions. the you to

little is little per a a I square think term a inflation your lots lots you you then you. around out of to. lots thinking you on in going sort around surprising, implied near sequentially, said how And basis of given in you flat broadly, managing there, just the maybe more foot about costs? Could forward? speak which guidance lot as Thank are shortage were to alluded margin actually what's

we're What that seeing lots and quite some time acquired the through. were ago are closings today contracted coming and in

seeing we're through. of lot a So, coming not cost pressure

Going forward, in lot level. has a prices. along been forward coming development costs we're through and with costs in the higher finished to expecting lot in lot in certainly margins There inflation at lot see scarcity, land and

for factored year. into So, we're way but to the that, that's our next guidance planning we expect the and see business

buydowns, change where for that. you around of rate educate Thank it. that depending mortgage little kind you if the I'm just rates then, how topic mortgage on dynamic prevailing And a of secondly, curious Got go. Okay. us may can

level rise kind could mortgage reduce in you continue play of here, do were out. what's -- of we you. the example, or actually down may guess, rates you maximum from if what to all what rate buydown, I to to would ability And see buydowns? you if kind a to do? have mortgage for were around level So, conversely, would same of amount, curious the of or how rates your that size Just buy you rate by come rates Thank the down,

whether one certainty be continue incentives, to measure improved us execution close we'll explore our The move, us a a of the we in we interest down. go-forward and effective as as a move to that up has roughly our home for basis. of And to and we've well, been point rates payment. have time effective we -- as But have rates been the be Yeah. as rate cycle move incentive have that have or forward a stayed buydown date and that market, our depending we an on we'll that certainty consistent most to below of provide, help found on where it and and

right. All luck. thank good Well, you, and

from Thank coming Eric, from Bosshard Eric Company. you. your The line Cleveland live. question next is is Research

us about, a margin gross notable sense bit path XQ. quarter from guess, progress in be The here. I if and help in gross you of more we you the should progress how of was about curious Thanks. I'm thinking could get talked a margins the

of it's You've range path for world, done of the outlining like gross now, historically you ranges. about how the a seems which good stabilizing But we job in margin? should think

cost what Yeah, Eric, our levels have sales, it's our then, we -- in been. and we have recent what is have basically been and in to recent to what's visibility our certainly visibility what's backlog

starts recent more our on costs the seeing be been we've lower. So,

that So, we've could produce. what to got visibility some

of right our sales, So, backlog see to look in kind modest high-XX%-s in we XX% as at margin sequential the we a up range to improvement QX. recent now, in

You used quarter, we the that used stabilization. bit. word Last a quite word

so, -- we're that. And seeing still and we

of we been And of steady costs, kind period settling are stable and into well. demand so, here think a terms in our pretty more has I as

level certainly improvement term. like but upward, forever don't trajectory see the into modest near-to-medium So, in we think in margin the a here looks a pretty quarter coming the I sustainable

helpful points affordable supply price our risk rates tailwind And will of then, are Significant at in interest margins. compress increases lot margins. the biggest margins. inventory rates A from to to interest limited are

less can days reality you should comfortable trying with is away you what bit the buying been consumers you a with sensitive? of a something becoming going a I'm buying curious down Are that's if to bullet X% get catalyst consumers medium-term you're go been now? seeing are and a be, market if this the sign silver mentioned point gone. mortgage reality ago, it's down a long this, less has contract. for moment out expect? is, in the ahead more the below you're or rates just to seeing rates or I a a that's figure way seeing Within consumers that to Or guess, we I'm

market-by-market we today has a needs rate on The buydown have different a community-by-community to incentive That people's use, button meteoric rise door. like of been may we pull based walking the adjustment an levers lot the interest that. Yeah. that or and in many hot is of buyers the we the that certainly rates of because in and

It's closing tool whether it As today. that's or flow ebb different and or costs a that included just will good features. for price adjusts, been incentives, us with

market comes will us. it We the to as adjust at

the but still quarter, was closed a at than of of percentage on in utilizing in lower was buyers terms third it number in incentive. of homes It the majority the QX was that it we a

Thank you. Great.

from coming you. Zener Seaport Thank line your Partners. from Ken is Ken, Research live. is question The next

Good everybody. morning,

Good morning, Ken.

to other are -- cash and just is just on well, versus about and to take here. on be kind focus I One, of of want of questions by business past. going the where I to two we kind flow, the want level capital community the

EPS flow been $X of so that structures? match inflation on $X to net in and the limits refresh you're kind income, those cost what to think, developed first into about that in inherent what can us What flow, be higher, about could from raw And ability specifically just whether finished? you I going and finished lot billion determine your to raw factors that. raw down is or So, you perhaps, we lots. of options talk plays those cash land the multi-family Obviously, billion this understand XX% of option cash has in expect XX%. lots think I to But so improving, taking

to the it. piece said point time. sure that Sure. expect the of in we in our chime XX% going then is lots of on or I'll start, purchase-finished, terms and to just Ken, we true be I'm remarks scripted that But in Mike a at that's of ops someone our option in

determined take of we're to lot know us, no going that's for and we develop to closing means third-party houses by a quarter-to-quarter XX%-plus That's developer. now finished We're ceiling. a a So on those lot. our from purchased we've lots going where who's already them down a as

find we business, (ph) a a Horton, the D.R. normal put land as seller the we'll go so, and with of option [on course contract -- And land in developer. the] then contract we'll

a floor more than necessarily a So, is the XX% ceiling. of

think to then, well. you going look us to that they'll and take the lot some We're it with very it, I contract and constructing then and work homes that said cases land a in in lots third-party a assign we'll piece that dirt developer title of and time. acquire the start complete sell development then They'll over parcels to finished to. process, on

to place great developers. our as choose, buy we So in up, lots, third-party that some to neighborhood have their markets, one in own XX% expected cases, are develop developing ourselves. negotiating In of capable of every will teams would as the go lots but that from finished well we

more And year. what Ken, driven times this up capital expecting inventory, to our about that, inventory relative that's shift But have because cycle by times. and in that comment year, turnover cycle and specifically, cash we're per flows big -- over and turning I tied tell this in percentage over our our seeing capital Definitely, to is in don't by improvement as to improving. are back time. that component this much we're been primarily about cash We improvement has home of big a see years being your you land that flow many a earnings, construction in circle and initial homes the to those move our homes it's our would faster. year, our of we

Great.

why to as just of opposed develop to, [indiscernible] would like, guess, I one so, And follow-up other land to is want specifically that or you a that, builders that?

struggling that pace down is try be still your be I want to just normalize about why no And so then per about just as sales guys. pace like, I this the new the where you I starts used housing other we for or are your year. to when It It's community don't normal, above reason. is not far question, which X.X. Why industry? we used basically? pace mean, X.X with is an to push to I'm But

If you. you that? could explain Thank

Yeah.

talented And teams in development we lot a have have there our the is on across have are platform. lot important our starts question, to the on think to us we ground. where instances I it's pace

going continue so. at exercise that And being controlling to is that that retain, process we we're to so, to producing to that and and a in lot talent good have order do

from perspective to timing structure us And some deals size. develop just make a and/or and/or more sense for

platform. community-by-community that the decision And so, make to going across we're

some In efficient be larger that community, terms the per -- to I may sales you've that of just activity, seen that portion positioning more on both communities of absorption and think I communities a our construction and drive side. impacting those sales of

Ken. sure I'm got Yeah, not answer I've for an you for sure,

why don't asset down you in with thing really you I'm have. I focused every returns, you as we returns. sure And have on in up the shift answer, to being we comes don't industry a The focus efficient industry If this to of the more only improved. that know has on with come seen either terms could is, more

turns community, you are improve can capital returns each in so, improving. absorption, improve your your if And your on

your industry. higher seeing of you're looking the that bit time perhaps at so, absorptions over higher a of in And little observation pace, come across through

you. Thank

is question line live. next your coming Mike Dahl The Capital. you. RBC Thank Mike, from from is

the Good morning. side. taking for of rental Thanks A questions. my couple on follow-ups

pretty yourselves a well-publicized was SFR large there between deal and a So, company.

of be Within XQ? of for color the can and there's not that, carryover any much or if the some into going the in already reflects full year 'XX? increase provide deal on the in quarter or the closing to And closed guide, fiscal whether the you how that guide

Sure.

leasing that we've projects incorporate continue just will sold our and and Our marketed. guide to and homes are available be the closed does pace to when those and

who it's project there's at to They're money And buying one -- business, that so, portfolio of scale time. that we've interested sold additional we basis, opening continue doesn't just a buy but projects to a a necessarily investors as on institutional projects. one-off interested in want up

about talking speculation. was you're deal The press

estate to are they We all publicly transaction. rental multiple not, haven't of individual communities, our investor on transactions. we're we commented that real look when But selling any projects specifics one or at whether

terms point forward. and to sales continue our sales individual looks number of what of packages have of rental going units we'll basis disclosures projects, sales continue I'm of terms homes do to of of and a we'll to pace in the would completed we sure and to so, unit forward on that like, And in continue we do

And I so there, Okay, got guess a it. specifics. without the follow-up

now total XQ. in guiding the significant portion to you've units a existing close that inventory you outlined, will are Given your the you of and inventory

next so, thinking lower I couple of And for we have earlier of where off of expected that 'XX you close 'XX, call that? closing is really to the it's increased this in on of be forward But a when should timing years. think, 'XX, this in in of might inventory a you versus pulled part understand of on position fully are little some I that in in even terms or your specifics question, guide, can so 'XX kind the with maybe keep you've around you business to growing that the back growth 'XX, a circling a just

give generally We've do and see in unit our but breakdown we breakdowns can our XX-Q, rental been talking you separately. a our platform about combined,

quarter-to-quarter, a pretty year-to-year, expected. be scale going overall growth a family. perspective year continue the an choppy to growth both and on be we're single ultimate from to basis But to scale sides we could annual multi-family going is it as big the of 'XX So, with business, still

great. you. Thank Okay,

Alan, is Thank & you. from Ratner from The Alan your line Zelman live. Associates. next coming is question

morning. Good guys. Hey,

the we impressive somewhat trades time on last the the very the So, seeing negotiating progress a of the year effect in the now guessing cost starts times of and lumber. at probably saw and, back is had and over in pull you big what pull course, that I'm late the industry cycle are lagged front. power back of

the not only You start ones now. your pace ramping are

is least. we similar next but the start are for competitors. pace smaller of messages of is of most expense be think clear going here the it quarters your accelerating privates, the industry hearing handful the at of think I larger Maybe at that to I from some is

And forward? specifically, that from ramping seeing thoughts they on inflation times out progress their into you 'XX? trades? of Are your your Are accelerating heading on the type headcount are have would pace support start made following? what and without they capacity what there cost of anticipation more this seeing growth cycle of sustainability going more in an So, costs the you are

materials, on and Yes, been day. work when it making start simplifying with within those a talking every to and we've base we market and it's these pace aggregate involves That share doing. materials from allowing trade something about to communities. a we've get right the what process job easier us to our And understanding with trades. trades been Aggregating the for complete consistent aggregating they're is about talking of the

Our without easier goal, for. and builder renegotiate a quarter. and trying job And their communication every work to try coming we make more to they price to our be is in the want of to want we to do profitable lot things

sustainable? it is Yes. So,

going get are it, build basically we to continue time month-to-month, a better to and we'll capacity as that continual that. basis. quarter-to-quarter, on on, think at goes focus I on And

the thoughts Appreciate it. Got there.

of hand, the share of buydowns mentioned buydowns. if sensitivity maybe you if curious those where could are any -- little had mortgage Jessica, closings you you seeing that in a, had terms you earlier you're did I was you majority us? it on the specific offering while communities bit you that share to in lower with quarter-over-quarter Second, But, that demand data tick a b, of rate should closings, demand still the seemingly On in resale the buydowns? as inventory market. guys interplay much. I'm those pull it seem the such as are would But probably other on advantage those without have impacting one you back tight you between putting with just back curious strong some pretty ability hand, and a buydowns strong, dialing versus on is demand to the competitive it that. too are like the

buyer community has a that the as process. by and The the look last we use buyer quarters. over sensitivity is downs is by buy been rate it And few community about XX% than of less

that well. to go finding buyer experience great is in our important have do agents every that of with sales what's communities that We through very them what each walks and they in

reduction some stability continue, to And rates. that. we'll so, shows mentioned, certainly that utilize in And as we

range. they've their them power concerned Although similar of that I getting important people about moved purchasing being remained them relief in and/or it as And with comfortable they've think up, in some thing is as the to not use a purchase. allowed the that of has the

color. the Thanks, Appreciate Great. guys.

The from next is from Thank Truman line question live. your Research. is you. Wolfe coming Truman, Patterson

fitting morning, me in. good Hey, for everyone. Thanks

means construction, of of to them a outside on touched been little your land negatively future Star, currently back banking earlier impacted to builders, has kind private Has the deals, for environment overview X but picture call, trying banking smaller in kind environment spec bit on ability the actually Horton. what For et developer it cetera? get are this their a and the pull just First, of seeing for access you of projects? partners big capital

I we as banking secured in us as developer, I it as are developers. their is of challenging. what that. continue in levels inexpensive looking up through with, financing and think great it choosing commitments quarter take as new that over and think the have developers sources have being to their cases, developers able a in not. at the was they're Certainly who third-party more for more past new of third-party was? with or to easy and process. is financing do the support And they industry the work a that it through the been lot comfort with sign through or lot working deals selective to the It Is third-party of kind them. to we've we with long land banking relationship looking And a contract

probably some into help by taking lots positions positions. with opportunities the different of step builder and opportunity little seen to we've side, and stepping On some more or into their private those builders some liquidity a

bit here has we're it if business, a anything, to So, and the help. been, accretive to just

square you combat you. the still consumers footage out consumers have us of you the past that on the Or affordability. about previously based to have can seeing footage these about smaller preferring rotating discussed footage offerings you are -- kind help then, all homes? Any And Perfect. you months? offerings Thank to smaller think way prefer larger actually there, square over square six are homes

prefer they They what can afford.

We So, square continue more they we can as afford, to footage generally continue but constrained and get, what which the more on flat by see of what see on a of want as that X% was by is is why smaller terms sequentially. down about our a It buyers again plans. much to square closed. tick did basis year-over-year footage floor start homes in our they slight can we they're

footage we today. So, moves average continued just gradual down our would expect square in very

Thank you, and in right. 'XX. All luck good

Thanks, Truman.

the question of Bank Rafe your from is from live. Thank America. Rafe, you. And Jadrosich next is line coming

Thanks my questions. Hi, taking good morning. for

cycles asset talk your year, beyond potential improvement, for fourth You days XX peak build the and turns? about historical we Can levels quarter just as And down fourth where about what that in they them mentioned to quarter. how continue do that come into should expect from the further now have you versus you look could levels? then, think you next like are

five-and-a-half Yeah, we which are current days -- in historical XX is about averages. today our that puts above our at us down slightly time, cycle still months

to ability consistent more towards so, depend to And labor. our cycle that towards on going continue -- and see That's labor a we times. normalized trend aggregate our and availability to

but today. start markets could country, you our with the position we the have see that, comfortable labor in feel we on in see across out pressure and capacity trade that space increase the some As certainly in

probably date. months what to at month, efficient operating call, home to after month-and-a-half of down level. five-and-a-half hit a back then, have time the has another a days at another XX And that, probably build come get more month, XX historically we where we about Our have to we that construction and to completion go days until we're when there's we closing been

turn to average, times six cycle a time. units to implies start slightly than that X we're less X inventory better a six little on to to So get closing of months looking or than

That's Thank helpful. you.

Is short-term, bit, should Should longer quarter, any the So about then, think just there outlook the that about units cadence is core there the profits thinking down. quite you're be fourth margin about there's than will profit more guidance or rental is And that's being kind this it margins we opportunity. for be lower something but on driving term? a up rental dynamic we longer-term? being of homebuilding thinking kind still gross of

is Yeah, mentioned as thing, projects of it's we homes were it really was the mix Mike a and through in when earlier, see the coming part construction those the the were well. costs time we as short-term of higher seeing constructed time that which

we look a expect perspective than So, longer-term see phenomenon. anomaly as bit QX pre-tax to our we little a overall. higher still be perspective, that really as gross really margin homebuilding from not would of Maybe and a long-term here event a the in but we and margin QX, rental margins

Great. Very helpful. Thanks.

the I now all have David to like we Thank time call Auld would questions for back That's remarks. for hand the closing you. today. to

fourth forward to and on quarter. November. Thank call today finally, speaking family our you, congratulations in win every the day. We Horton producing on to D.R. appreciate quarter Paul. entire to the share to everyone's And you time Thank a compete, look again you. solid Continue third with results

conference. does This you. conclude Thank today's

lines this you participation. your disconnect your for time. may Thank at You