D.R. Horton (DHI) 23 Jan 242024 Q1 Earnings call transcript

Good morning, and welcome to the First Quarter 2024 Earnings Conference Call for D.R. Horton, America's Builder, the largest builder in the United States. [Operator Instructions] Please note, this conference is being recorded.

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

good and Holly, you, morning. Thank call Welcome for our results discuss first to quarter our the of financial to fiscal XXXX.

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

Although on assumptions, based actual will there statements different. materially that reasonable not assurance D.R. be believes no Horton such outcomes are any is

undertake publicly call, All the date on or forward-looking D.R. and Horton forward-looking to D.R. Horton statements. statements to are available based any does any revise not this update upon conference obligation information of

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

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

Now call I CEO. President over Romanowski, our will to and Paul turn the

Executive Financial and call good this to President be and pleased also morning. Operating Vice Wheat, am Chief and I on Officer; Bill our Jessica, our and Chief Mike joined President Officer. Murray, by you, Executive Vice Thank

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

billion pretax consolidated pretax a with profit $X.X increase income margin to Our was XX.X%. revenues $X.X X% billion a in of on

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

and supporting Early have demand the prior been and season supply as and is affordable orders net rates XX% selling the Although of existing signs from housing sales demographic price at the mortgage spring limited points elevated, our favorable. quarter homes encouraging. still interest remain for inflation both new remain year increased

normal spring levels. times for and We will more well and returning construction our average cycle on homes the to consolidating focus inventory share XX,XXX to with positioned market are continue in

expect to efficiency improve consistent to our fiscal in compared operating on housing We produce Mike? returns. capital cash and our to homebuilding and XXXX XXXX focus fiscal strong inventory turns ongoing flows

increased the for Earnings quarter share in on quarter. for the to Net prior share compared fiscal $X.X $X.XX quarter diluted year $X.XX consolidated to X% was $XXX per billion. income of per of the revenues million first XXXX

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

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

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

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

Our selling XX% communities average up number active and up X% year-over-year. was of sequentially

affordability prices provide and up quarter. average fiscal homebuyers. challenges, necessary mortgage X% into XXXX rates remain $XXX,XXX, and elevated we our home increased year orders near to in and first adjust sizes we current where The in Based was sequentially have quarter continued from net to prior market and down our our home fiscal market use of changing To the to price the of reduced better to of sales and offerings X% conditions incentives levels expect during XXXX, term. incentive on conditions, the affordability

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

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

X.X% basis, to was costs margin remainder in the home offer during the per rate levels an the were revenue down hedging and quarter. On in X%. homes the margin closed quarter points home on homebuyers, interest while due foot first profit a basis points instruments decrease costs brick was in decline September below-market value XXX sales we of down and from the increased sequential the on in increase our the to X.X%, stick to related quarter. XXX while basis of Our the quarter to square sequentially gross decreased financing primarily sales lot XX.X%, incentive revenues use

we in incentive rates the elevated the expect levels mentioned, but gross remain the margin with home highs, mortgage the our term, expect Bill quarter. to first near from recent be to our sales to generally As quarter second we in declining similar

in for demand will XXXX of Our the and home during of other the the fiscal changes sales gross mortgage market in interest strength dependent rates. on spring margin year addition be to conditions Bill? full

first XX revenues expenses homebuilding of expense by SG&A points and our as prior expansion our growth X.X%, of and year, the increase expense. In quarter stock operations SG&A in to a the compensation to from and year support quarter, equity the up market-based in basis was last percentage due homebuilding future increased an XX% same from primarily

We business. will our supports continue SG&A ensuring our while Paul? to control that adequately platform our

X% down completed, up XX,XXX X,XXX and X started XX,XXX a homes the homes than X% unsold XXX which December were December inventory, XX We of our homes ago and in XX,XXX been months. unsold. year the total greater our were at homes for in quarter had quarter of sequentially. from of with ended completed

level inventory homes upcoming in position of the puts current spring selling us strong season. Our a in for

our start essentially months quarter, For average of are from in complete. we and to to homes cycle closed historical improve, back the times construction we to our X roughly first continued

and continue will to in expect compared and improve Mike? adjust XXXX fiscal to pace on and based conditions our homes to inventory XXXX. fiscal housing as inventory We turns start our market

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

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

land development X% Our sequentially. first quarter billion, homebuilding up investments in lots, totaled and $X.X

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

homes income sale on million $XXX and revenues multifamily of In million XXX the from rental pretax units. rental the quarter, XXX rental our $XX single-family operations first of generated of

rental of properties. XX December inventory $X consisted and single-family of was $X.X at rental of billion which multifamily billion Our $X.X rental properties property billion

rental providing closings guidance segment market current we separate our by to regarding on Jessica? rental exceed projects, due the uncertainty for quarter not second timing the in fluctuations. pipeline year capital of caused and are our Based expect quarter. We volatility closings to first interest our of the rate the revenues this and

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

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

Forestar million debt-to-capital of liquidity had at end more than quarter net of $XXX XX.X%. ratio a with

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

Financial of $XXX Services pretax XX.X%. resulting on million margin first revenues, a earned $XX profit million pretax of the of income in in quarter

XX% quarter, the company and all originations During our our by our related buyers. homebuilding financing essentially the closed first of mortgage to for of our mortgage held loan homes operations, company's

an originating accounted for XX%. XX% XXX company's an of loan-to-value loans loans average had average and ] of this FICO Borrowers MVA quarter [ with volume. score mortgage ratio DHI Mortgage FHA the of

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

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

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

$X.X our the our $X.X Debt consolidated end year, the of consisting billion XXXX. months on available the At X quarter of of of with billion million. and facilities. of $XXX was cash billion of we first had the at XX, $X.X capacity fiscal During in cash note in liquidity, no maturities operations senior credit totaled billion consolidated used $X.X December

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

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

into and assets return For on XX.X% our was XX.X%. return December, equity XX months the consolidated our on was trailing

our X.X stock has $XXX during paid approximately a to paid shares During the dividend We common of million, the million level the declared quarterly for at and be Board million February. in dividends Jessica? we quarter. repurchased same of quarter, $XXX cash

mortgage $X.X the billion to in our in expect business, changes the conditions closed currently economic $X.X significantly homes quarter, range of homes. and impact second could our volatility to billion we be revenues and XX,XXX for homebuilding in rates to to Although XX,XXX by generate consolidated operations of

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

operations. market We are continue to positioned our share well all consolidating in of

revenue, fiscal returns. our to in XXXX Forestar and in efforts pace price meet margins full season spring Our and pricing and financial of selling rental, be to the by maximize conditions by businesses addition determined year strength market demand will services balancing to our and the homebuilding,

and operations range to approximately For $XX $XX.X to expect our the the now to closed revenues homebuilding billion, billion full homes. year of be we expect XX,XXX to generate consolidated fiscal XXXX, XX,XXX homes of of by in

homebuilding operations. of from to $X our approximately expect We billion generate cash flow

in stock reducing We annual to addition our dividend of of also to share common $XXX plan around to billion repurchase million. outstanding approximately count $X.X our continue payments

pay XXXX repurchase We cash and our priorities we operations, on while Finally, tax rate now dividend for shares and Paul? an to maintaining balancing approximately consistently an remain XX%. flow strong leverage. of increased liquidity utilization focused expect conservative income our grow fiscal

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

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

enhance and Thank your of Horton continued company, focus agents a and family partners, to our capital basis. shareholders value consistent employees, work. through estate on remarks. concludes approach and prepared dividends returning you trade entire developers, to vendors real repurchases to our land share the of investing the We capital will This hard includes long-term both which for our maintain D.R. disciplined to the

will host now questions. We

today Your Kim first for question is Instructions] [Operator from Stephen Evercore with coming ISI.

basis And like beginning commentary. for billion and was I points gross think to XXX guess, off what I -- want Appreciate thought all you to clarify can said could $X.X also make $X.X you XQ, in XX,XXX closings you heard right. to affected the just I consolidated said I with, call in I and revenue. of think margin for thanks related I -- clarify, heard you your rate by the sure I the to billion those start just guide to just you about buydowns? mentioned your at of XX,XXX hedging it,

Yes, Steve, that's correct.

billion of the to sequential impact XX,XXX of position revenues to in $X.X home to we second of terms XXX that to billion basis. the consolidated and been and gross that during that For homes. a the And correct due quarter, margin, $X.X sales quarter on basis to make to had the we've rate XX,XXX buydowns closing also you're adjustments was offering points

we've this quarter. guided relatively But in to versus is what of QX a versus that terms QX flat in gross margin to posted the XX.X% XX.X% for XX.X% QX we

that sense been basis is us number of done you something the compares? of has couple I some And you. number have that in Got a XXX the that that guess, past? quarters? that points, can last that what Is over you give

of has or first have very move place programmatic offer is it's essentially It amount the And across hedging quarter our time that positions our has that, up rate that this small either valuation we the country. in all. down. significant been adjusting to a buydowns the Steve, typically at

during December, and quarter, But this adjusted to given volatility rates in sharply in X% November those that. moved hedging had course, mortgage dropped to up rates reflect quarter, in the positions of to the significant be then

we unusual any Generally, an plan one don't other. for situation So move the significant it way was this or quarter.

have was for And the if came That that really in to we you in that the landed we had ] were exclude that below. the reason [ we charge, guided to quarter. margin would gross

you. Got

that the going there's done and of a allocation, job capital in your years the to last I know there. talk Okay. has the several and more about guide, questions D.R. great for That's about wanted that mantra consistency to really reliability now you've predictability and I guess, be been sure helpful. over thing, and I'm but Horton about sort I particular, and

have you as you've position. think But your coming. sufficient like about cash I looks overall got $X billion Currently, cash. It another

that curious with And I other would factors less are and I'm think about $X a rental? billion seem. how the maybe I spoken million. $X pieces dividends. was little than that So has extra X buybacks investment for into land curious big it and those

had your down and land, look years, down about So for for when coming number supply for your but flat. has of been X been coming I supply guess, a now -- your land years, has I at land year been

do wondering, next bring think of kind down land think course us sense this for the in think seeing year? is give in was to be that I you can then you a Or what rental, that that over we're investment inventory rental going you the further? down you And you the be future? the can growth the level of the in may

is going to when it's be versus we production is land the that position, going self-development. in our neighborhoods, we at roughly to for significantly incremental to of developers look more the velocity forward land lots that maintain finished that feel with because Steve, supply be providing year's we our down X bringing own important us

we're up XX% past is quarters. the And from to controlled it's which where been back think I in few up

of to So on incrementally land look our a still to we sheet to lots to feed sheet, to the will control we're supply balance maintain our land production. need going balance more and but lots on primarily by are finished continue being others, that acquire

And the rental inventory?

sustainable quarter-to-quarter, we'll probably consistent rental the platform. but It's a getting inventory, the growth in to fiscal And to volume it's 'XX that revenues during mode. good investing be profits closer and produce will still that some grow

stock. $X.X got we the of terms of already common dividend overall of to, the in to capital million. you guide And We've payments billion allocation, annual $XXX the as alluded did

very We that's also October. in in fiscal early have $XXX million a debt 'XX maturity sizable of

potentially that. maintaining So see we'll is with going like we're feel we going leverage the don't on to too right be if to to early to is that, very we're cash to of say closer, and what out but do refi as prepared conservative focused and get market something we're pay we that go

with is BTIG. from coming Reichardt Carl question next Your

a I want And incentive quarter? then the also you a whether about to new ahead not of being talked can the basis it about and more count with Bill, talk the talk related you've some this growth community entered some second. be you also Can planning. this about points you're associated recently? SG&A or markets might you for little expansion bit comp to talk about of

Yes. Sure.

could we community. selling The in our first factor to average XX% quarter, increase this point our

is So that's obviously a year-over-year quarter up significant increase, and XX% this our well. as SG&A

than and we be last while have to move had have a bigger a over positioning increase that's count several that's So you our in us able to provide the years. guidance, market increased seen

down of we time historic think I SG&A see our couple we bit driven And we're Obviously, that. come we percentage a leverage revenues, back of going here by in quarters that. expect expect grow to our little got as some on SG&a to But we've to revenues, would where a primarily levels. our as higher achieve to

timing the impact in equity comp. stock-based it's X factor and This and terms additional have of a just really, quarter, we factor of

third into quarter. we this amount a in year but quarter our incurred typically have were first some or of second the our timing grants quarter, typically an bit little We earlier that

so it an of QX roughly incurred that million And event. this or was that there's QX QX typically $XX would amount be quarter a in

small. That's Okay.

So it's different this year.

for I picture And question a have then Okay. Paul. bigger

still is a some for And So large a homebuilder. and there. was look offshore seen ago, public deals. and you private the of obviously, We've long acquirer an and seen a player domestic the other fairly in while by that here we've at significant companies business a Horton news biggest acquisition companies historically,

from acquisitions know something little to are would I your of of I'd Horton -- think historically, Paul, this you sit recently, greenfield. where can picture. done more whether you on do conditions consider about not doing what like current your growth perspective, it talked that or you you've given know, a big you've sort bit talk about just most

at in we at but builders entry, interested we're large look that on the us share to We Yes, give tuck-in see or don't acquisition. greenfield the market acquisitions. have continually an horizon, add dose. do look -- existing our opportunity that significant smaller may still some today, I for us, to And always in Carl. more market a

last you've you're to that do lot the of scale in some over But market in a sense. today, we're acquisition share, makes speak referring make couple the to to as us. seen and that Certainly, no available, to some continue years. to those We sense at going shift what they come look significant us but

question next today with Your for from Lovallo coming is John UBS.

first points here your seemingly the is by like to not basis initial that first the expectations at seems impacted hedging was relative one was The least guide. quarter that in margin contemplated gross it of XXX

So would XQ expected hit have flattish a why is, in I that and gross come to guess margin the not if the question is sequentially rates repeat be bit?

with were level increased closing starts closed still be while it -- Well, them number with of but those will are a an higher December, in QX, there and we QX. sold some during of of homes incentives in that rates

far a so entering we little lower bit a presents. what the on still are quarter core margin the And average than basis,

And the a have so those rates lower and incentive obviously, costs dropped, later are sales. but that's in bit so --

And excluding around margins going able the to levels, should so hold we the we current forward. balance, expect be hedging on

mid-single trend quarter? And how for you sort are that in about of normalized last Okay. mix think I were quarter, lot XX% to and there's or Got there that mix. year-over-year, cost the if it. was in And did digits thinking it think geographic XQ? then how accounted I up kind some I in that mean, costs of XX% you but up lot maybe

a what similar to comp. That we quarter. Pretty said was year-over-year last

year-over-year probably probably geographic it's a would that bit continue then basis that we mix. out cost low digit. lot our would moderate say, an still on sequential it And it double less because and are way, in basis. basis, until stripping high to so But digits little it cycle up year, were year-over-year of did single I certainly and on a a And we geography, on up year-over-year of a entire stays terms than have

a X.X% basis. sequential Yes. on

Your Joe coming question Ahlersmeyer with Bank. is Deutsche next from

for I a If about margin. it charge, couple expecting just was similarly, or P&L you're like of stabilized Could has that you're forward, here? given another guess XX And the it point actual the to from point you -- way think then impact that of if the more a sensitivity is whether makes sense, it it deductions still kind on was notionally, about drop, if me something had the humor we COGS. have a XXX on from what impact expecting would XXX just basis you talk got there out you not to are there rates going what based maybe revenue you've on another to hit but hit to gross basis

the was the what it. current of of reflects of Joe, hedging We have always the outstanding approximately, our position, valuation charge some in the takes -- $XX sensitivity. all quarter we and our always the the charge hit believe market terms amount adjustment of is position and the -- million basically outstanding. during that some position that's December quarter care in There's

in to is the there the benefits exposure anytime can significant sudden that so there. Obviously, And business. the opposite that rates is some of side a leave change

business. affordability and a improves sell to in the that at obviously, When point ability rates core improves our drop, price

there the position period on we our as try to And us what but as position. to significant offer we is allows that across be exposure business. manage said, basis this a sudden we a of some to And best consistent like can in broad on below basis can, market hedging rates a do volatility, so

not went significantly in There unique to than in of led They prior very in and severe very interest the up in end being were what of down it's of been Kind rates dynamic the significant the X the quarters. experienced. middle significantly That's came that to quarter. more a the the mark-to-market adjustment we quarter, moves have quarter. they

against the our standard ASP. And of cost rate goods. revenue goods is million just that through cost whereas in routine specifically of $XX interest $XX and offering flows But million sold, does mark-to-market is net in the

That's all very helpful.

As deflation. driving about for materials for a the obviously generally, we're if should just inflation or we materials then those? what's guide? you how to your just starts follow-up, growing, Can competition thinking speak looking And at in volumes think rising inflation XQ perhaps either again maybe the your in outlook and about

business things We're some our encouraging January, all headwinds possible with on Yes. that That starts in to signs expect see cost and it's the the early materials, Certainly, next in to relative cause some labor increase in seeing could see in flatness cost consistent increase the on of from the pressure all through side stay our similar could quarter. which we some side. put of and some peers. or would

next for from is Michael coming with today Your Rehaut JPMorgan. question

stock moment I And higher I about count say, of leverage, think, I being the or negative wanted a the main drivers to and talked SG&A. just circle back on for guess, the you Bill, you comp. community could

You're on of a second leverage going similar to impact negative quarter. see the type

expect of kind you to the and of in run if the that get half? And the out you else curious impacted I'm imply? equal see to first you COGS? at should if portion higher commissions, quarters, this seems that's by impact 'XX part to this of sales the through going event? that Would said broker this back as that to flatten you're that's has You Or time could more everything couple is a remind outside question, maybe of the Or us this in also incentives if of kind all?

sold. goods Yes, our part The are commissions last broker our margins gross are our cost here in Yes. ] [ first. of and

And last fair. longer our and that part commentary of would there guidance specific your the think general year We the over a to out. back But expectation get is is SG&A as provide term only So quarter level we beyond. generally, SG&A that's I not equation. X similar

we're here guiding quarters last little higher where I year. a than for think is it phenomenon bit a couple of a So

equity market position on headwind a tailwind on the comp in QX growth, versus count the community QX that little in QX. recognizing but Little

down -- also we're is year-over-year. And also ASP

basis always And on a for little so down. when are percentage headwind SG&A ASPs a it's a bit of more

Right. fair. sense well. makes No, as that. I that's That appreciate

to to not or expect of levels of and I don't back we get expensive comment -- the dead sense have that to do gross the rate on make point, extent excluding margins, indeed couple beat us gross at ago. made to months, if did XQ in less of the would you a would know margins but down hedging come said not let's I to Secondly, misspoke kind current it last of But a you impact, months you and make say, a kind the kind than, I misspeak. of buydowns that would horse, include you the to Bill, sense orders rates think your one if couple would us

just versus And months think make wanted saying to on carryover I think XQ. that impacted gross you being were where heard in how XQ I some right of I couple to say, the margins taken mid-January, orders of from about a sure kind of let's ago? today by currently or are is

guidance Yes. out. X We provided quarter

So to guided XX.X% we've XX.X%. to

are of the we the lower. even closings the is QX, straddling quarter, a dropped downs But later in QX. of essentially have -- because below that. the of will have end low that after margins rates improving probably Coming quarter in that early the reported the in cost range, we at are GAAP into maybe buy the little So that margin then

What that but the It's spring season, and of really demand comment. what in will out a to spring -- with average, rates. on that? be occur through margin We like range. going -- does so believe And the that's the we look will XX.X% that, what XX.X% really happens to to matter selling can't of a balance mortgage after what

-- margins so that's for fall will average, on we QX. but believe in where things And

Right.

the that end basically, end beginning at that low the the that at range. little a perhaps you're So of low towards higher end imply would the end the below bit end, saying perhaps the quarter Is range, above fair? what is a bit little of high quarter that the or of of

it's out on XX.X%. to balance, think to I XX.X% to balance going

And of homes inter-quarter. we still sell our large portion a

to XX% XX% kind historical our is So average. of

into are sold And so as And through selling those season. look we quarter the and spring the being now.

quarter So certainly, it's this going selling us in to give spring as towards the we emerges end to better look the season as continues, XQ. and visibility of

with question next Wolfe is. Coming Truman from Your Research. Patterson

noise, to you to wait-and-see a the been beat understand a core little just is on some pull but back but of all a weeks? dead coming below taking of philosophy here, below, able I to Not of near-term with hedging bit kind several your rates want there's I old horse kind X%. dynamics this have you realize and more if will, kind much incentives, a past Or this approach? of bit

demand of a I selling you're not so think you ahead momentum mentioned the disrupting season? wait-and-see taking a of the you kind good under rebound early Are in the approach, year. spring

Truman.

we today, activity very this as that it's think us, early. I consistency at has been of still look important. for And

to in we'll if respond continue are, made our incentives the kind. the haven't significant in us we early that then any market see the to us, changes So and gives we we to encouragement market

then fluctuate to If buyers to shop done rate offerings we've rate in stay consistency continue need like incentive payment consistency up, in as of rates past we'll they rate best is to move our as and of buydown the been lift still those our market. has and will the rates our

of giveback and it's bit what margin, the of best strongest on of operators in still gross and And terms to giving our our this based a community the seeing XX%. in year mean, up improved we're to we're of bottom important returns. turn by to our than at line being more little and believe roughly to market are times cycle I and community generate local to a margin what by going going gross continues is inventory be all bit way the market, returns managed little drive that our even with

peak labor of, with when you the and bit little about little lot and sense. these comfortable about around we'll XX,XXX on And demand guidance a today's constraints XXXX level construction there. well prior based or call with Could constraints. bottlenecks really in just get of XX,XXX kind all chain really bumped of lines? a those back total us you your closings trying a were of maybe pool, level all more anything of today in what it, That's that supply to process, issues there not the would create asking to growth along availability. Makes understand help closings that, I'm above

At plan neighborhoods in We've are been lots made consistent of where the back and have front progress months with sure very time, to secured of a our times focused and feeding from of a norms tremendous reducing coming we're of cycle historical to starting on lots us around to home available a we those our starts quarter-to-quarter X us. same our supplied completion. sort that making and we've creating amount

so much that's flexibility giving And us into going this year. greater

position or in deliver going finished the of the to times, still able beginning a in currently strong target With that's and reduce closing the we our to of excess with be lot Xx homes terms. year we're housing have, at combined reduced inventory cycle our

about good feel really what's we happened So there.

to the hard in, upside speculate side that be. to As would bottlenecks the where where what is would on top come

neighborhood have supportive us. We by really we position, relationships trade they've have, the the lot our good we that of that and been very feel about neighborhood supplier partnerships and

lots finished ground more an to about terms put that continue ground. industry great the Truman, in any being lot able to we are constraints, and finish easier of builders houses today. going when to put be the to But issue think getting It's not on on overall a point,

with we we our building biggest the positioned industry when out to our focus so But sure to constraints developers position and And starts third-party make think finished relationships a to lot about we're it overall, for have lots. growth. definitely continue on the with

Your is coming next question Bosshard Eric Research. with from Cleveland

you a perspective. can bit provide if of Curious little

into about time. talked the XX% and first spring You favorable trends

seeing Just strength are in things points are average? you the look across relative where price product and below above terms where as in and of average business, to things you're where regards

as of mean we're generally good our the that homebuyers. consistent of positioning have I it's where kind that. of to We're That's board. that across all our XX% XX% our think really deliveries and geared pretty neighborhoods with we've first-time to positioning the we're I been across offerings. feeling product

deliveries affordability works a our on people a or at monthly payment in us maintaining of which $XXX,XXX XX% their that think less, I focus budget. were and is for for

quite very we've what feel is or good. used the trends a in quarter the really does for but out to January we're spring make hold. in a are buydowns early encouraged interest season, by selling and Hence, excited a going January rate bit. spring not But the Coming

or ] bit perspective you're rates, think with perspective a did product expanding Or days focus more you think a [ of point lower than XX differently you affordability? what you do ago about price do terms From on doing? in

last means and rate we of or that monthly based buying our size. communities, months have think I environment, trend shifted the and has they're we as over up as payment Certainly, to offering with and we that have. across market made the you comfortable down XX that offering have that to they're in adjustments trajectory XX size on going our the product the feel in product look inside whether

monthly affordable But and to we stay across of feel across we a our respond offering opportunities markets, to to our like need we rates and interest good provide continue have as platforms. payment a and all we'll

Ratner & next from coming Alan Zelman Associates. question Your is with for today

kind questions I industry right the to versus on the build spec of dynamic now. in got order some

inventory builder, ] incredibly you consumer in experience. resale manage was BTO-guys of side. to during terms well, I strong I'm You from The gave hard was think, guys as it the Kind of extended versus the had your sure [ the being a cycle advantage Obviously, an advantage tight. a pretty spec pandemic. time

improving build-to-order have is before be about So builders completion? for earlier cycle construction that now kind of process, maybe any differently? the that Are shrunk I times? again, that in to inventory their competition contemplating is across my times whereas construction maybe seem to little be you that a you guess waiting from question you thinking homes you were cycle bit great. Are seeing would higher. the commentary Are on resale closer Any get to more selling ticking in industry, dynamic

to in date with XX-day lock of for that ability are think seeing to still people their based XX- interest and I today, certainty on frame close in we time rate. closing looking

deliver being into I know able the builders to much so don't frames. shift from And that presale significant time we've a build-to-order those seen

very in We're our don't sales focused in continue us. I scenario. to going a a home position, our community. into on across change the completed and play stay significant and to both community markets production expect inventory consistent for to are We homes comfortable resale with total the inventory It's continued shortness and of inventory

sales, volume market of in decline the sales. to a still they're with transaction home Xx Even X new home than existing larger

we've against to position So ourselves just rather new compete homes home tried providers. other always than to those

just stage sale we that up [indiscernible]. to earlier gotten to our move has timing construction back been The of norms because months of of historical of our able delivery have in

count, completion off hold maybe month to or still it. ticking strategy until forward rate? at look about Is to of higher kind bit? to recently. of you completed bit that allow it's are the strategy, a these I mean, a Got But kind from sales in in a that maybe little your terms your thinking homes been here X that little pulling the I Or spec more of lock you're buyer

the the homes. we're in for tick -- inventory, fall not of January available completed houses the through allowing up beginning deliveries and spec selling quick we We're the that you'll inventory Seasonally, have restricting see season. the completed positioned home sale spring for be

are or So the to days. XX XX homes and that people in deliver we're coming in able needing

the a comfortable At the earlier the than sure. we ago in are same as we mentioned, a selling with for a in for compressed rate very buyer times, year and production locking time, were Paul cycle process

could. quick Got One one, if Okay. you. last I

the the because want arms rates you Like the we kind my Just period go would a with around the Is trying of where fell this. are back on market much of pools read that different? going kind of better the guys? back pools that commitment unused to I kind pull understand on those in short would to from of forward time, Or below of this and they was. I'm better. hedge. what's wherever mechanics in just charge builders to of other when sharply buy going past situations heard just kind pool that have

will the is typically buy We next exactly. commitment but as few forward very really it described those of plan. pools for few essentially you've We're a weeks it deliveries No, not weeks. going out far,

when circumstances occurred it significance but exposure in And quarter in pretty the the terms we were some very rate present sharp sudden say so but in the can suddenness the the has rates, that's there, unusual this not and past, moves. change that a of of

was fulfill really it weren't that going it And so just the restructure it to usable. had restructuring be we to pool. not could was so We it used,

quarter, then of And of value the to end the the at the have mark-to-market at always end the we quarter.

a So there factor as that's well. always

like that. is the an phenomena, . about So industry next But sounds this phenomenon, I in that it necessarily Thank important more weeks. obviously, an we'll but learn few not you. appreciate

Your next Anthony with coming question today Citi. from Pettinari is for

you I for the to talk last saw to relative grow rate acquisition maybe was demand and And you I'm expectations. kind saw about There portion maybe a acquisition your operations on an in institutional SFR. we also wondering how as impact Do that that expect we large week. environment? in if trending, of been of could this has just guess homebuilding of builder earlier a just earlier homes build-to-rent the question large business

delivered environment were institutional in we be that last to the market, the first capital in seen were had continue became delivering to markets, buyers and much change that they product year. quarter. But get have the the We anxious we Certainly to with so. that choppier projects the demand still

and year pipeline to that's expect the with the in deliver the We more second throughout quarter then there.

strategy land rapidly us and a derisk our I help positions land portfolio. more to mean, monetize for us, it's

good And when demand demand we've a business. we're seen taking rentals become product, the and for part the expect stabilization and growing good continue the our on the to process still lease-ups on to so that of

last some were on your form of Okay. helpful. a just And buydown a think and offering quarter, loan. That's X.XX I you of XX% conventional then took buyers

I stop of becoming think bit. do But that where fiscal out Just to coming rate talked shift of the back start kind traditional a kind to about of maybe more you you can chief guess buy-downs ones? wondering of where a level if about this earlier mechanism or kind stands incentives update And you incentive XQ. where

that it, buy XX% roughly on in rate sequentially We're probably up, down. terms call take of the

the company. So buyers we we'd our now in the the mortgage that in were XXs utilize and be of range XX%

say So quarter. roughly of took said so to that our buyers overall the business, XX% you XX% was on XX% this

last to XX-plus buydowns XX been rate months And is those months. new the just the incentive. over We've use not that of us utilizing

to cost advantageous. staying believe resale especially competitive only the basis, to monthly go-forward but on I have for payment market So a new lower market, the for a home is us, same to the of not home and ability

rates down. no in we even stop utilizing see plan So have the if we to term shift near it

coming from Partners. with Zener Ken Your question Research Seaport next is

margin has everybody with obviously wonder, industry, statement, the focus likes the I to today. on gross right? So been income the a focus

gets turns, inventory. together However, on about which your inventory you returns initial comments were

the the X your the year quarter because see all but guidance. the forward But just billion had internal year Is modestly for the know flow kept generating fair volume or necessarily same you cash and up business, the you of guys' we started ROI to So metrics the at? higher to than $X you I'm not are X that of took the it trying is output understand part see other. I same. we say

few this and plus the homes Sure. expected Yes. start their with on our returns I their a our more. hundred plans, plans, are week-to-week, month-to-month divisions plans are executing deliver we mean our there quarter, to that line in and out

enter in assets, inventory. investments we spring, expectations very consistent from And an on return our with with so that our our and standpoint as we're inventory the continuing a and turn

Right.

stuff. XX,XXX of to So your you that of see do the assumptions X reach is now? to to your that? starts Can level? -- be you you Do a your then you obviously, cycle you plan underlying that the right closings, just talked or affecting what at end given what's you years to year Is you maybe A? about the have over improving when of kind it part the all And B, last see talk XX,XXX, the use expect been times, have word orders? do seasonality some degree place. that I units it mean, XX,XXX, of inventory Or started

plus and then at as been it response and reduction further past elongation of Ken, has lot been year times cycle inconsistent of space, has that times. to the market look a of the in our starts Yes, cycle to you response in

to can turn few guide expect look Xx you inventory consistent at quarters. little that the sustainable our a over to expansion and see next today starts we and than basically As inventory, our more

spring the grow consistent position maintain level inventory have the to a we as in of quarter-to-quarter to We year. our remainder but we respond selling starts and of our with the be want season consistently to that do need we starts, the over to stay

And as to fiscal grow would we position fiscal we grow, to ourselves look 'XX ourselves consistently 'XX. certainly to one love position over

was in little Xx the a inventory the the it of to with of end than at turning the our start So a 'XX. fiscal we than expectation more of expect be little would it year the at higher year

Maklari Susan Sachs. Your Goldman with next question is coming from

talk about the thinking of ground. the bit wanted to more on a dynamics competitive I

as smaller markets recently come we the home you on through you you're that? positioned those how competitive that in about and of various mean dynamics the perhaps turnover and new through some more to home year. you entered have thoughts markets what Any the for perhaps potential As for could think existing move relative to

build that to builders continually smaller the I that existing provide on overlooked, the And think, constraints to a have lot able in homes start. by what's that the a we're especially payment currently to oftentimes what work in Susan, our capital looking of monthly budget buyers. for going affordable and they're hit are that markets, that's is

to revenue And go lot per maximize so they're looking volume. generally lot per with lower and margin the or

that not that first-time leaving family they're kind a affordable more needs homebuyer target. that so And home, really their of

on seek market So and greenfield go a target new we points. new we market, the out see into affordable we that's a focus and results price when customer the good

And the things bolster think normalized, helpful. sheet? growth holding Or that the do of how balance and thinking out sheet there what I then comfortable for other And generation the the That's perhaps on as sheet, -- guess buybacks? the what the cash you about capital have continue have Okay. to cash, you're increasing balance about as initiatives balance you some of today? the potential as you level allocating

is have Susan, on production from in in have scale the the we that be. of just and volume the the our the size balance our today we like constant we'd and sheet of terms balance business range inventory, today cash of to of where

our the segments So across and business credit facilities. our availability under cash

to incrementally and We that's $X.X our to would we'd dividends by distributions share we time, our repurchase spend on our like 'XX, over up year scale million with plan guidance plans increase and billion the to year. well, XX% just maintain $XXX this With of level consistent as as share this as time. from current be to well, that year dividend are level. over this increasing our we this billion, increased fiscal And part expect shareholders repurchase $X.X on our in year

to we And is increase continue our to be to as And scale would increase incrementally plan so repurchases business, continue levels. last that -- be the able to over an year. dividend those and

next Your Bank for at of from America. question coming Rafe is today Jadrosich

It's Ray.

they what are that then cycles an cycles perspective? were do for that where you in improvement outlook a think the can from now much talk improve? gets you there on Just build And can supply quarter? How chain about like last you build in your XXXX, where

Ray. And X historical to additional is ago. start X our a year when there's this right were complete, that about at then really just norm, quarter, of time That's it terms from in we months to complete from an think months months down X We close. over and

year-over-year of days. basis. very substantial XX by Sequentially, So a improvement about in terms improved it

not they're moved, just improvements on they're average. continued So think here, when improvements about we further from large

to expect So not X where we get drive months. to can below that But we X X. from something that's hopefully,

a seeing driven buyer seeing? the think in that's follow what we you're the home And sort Got on the encouraging season. headline just into And conversion? helpful. just what want that's market. that's that it. on down? I you're understand little color comment Is wanted or by just head to That's number seeing up that spring give rate better Can more coming then you're encouraging as you bit of the traffic you do Just to signs

looking early good people good convergence I think traffic need there's lots are of houses, house, reasons ultimately, and both in but a the seeing for out and spring. we're they

for so have we plan year. set the And up operating

market really to is feel we far, so how responding about the that. And good

Bouley with Your next Barclays. coming Matthew question is from

Okay.

In I land just costs that a that costs higher market, kind pickup seeing land bit demand are that? you terms development the land get you in kind about development said XXXX? more the little a and of know things crunch are and into lot thinking of you moving can offsetting How increases. of

For starts set terms in our our us, are we plan. consistent loss of into delivery of

X our plan and the or in labor And product of side good have in shortness But lots expect and have across so that that not we is to much look reduction we out, that we the near months wouldn't to developing and place the out. next either side, plan the for we're about the look or position anticipating components the costs of term go a feel development with, in in side reduction industry we going not consistent supply and us seen see, as we XX stuck that year have with into much lot as are lots. we we're

Okay. to And then over of kind switching affordability. just

like for of rate sort that kind to anything payment make -- levers those has a as type have else to far buy-downs, you to been have strategies? there responsive from work Or that any the been is Aside buyers of change there as of them? kind

home Product to a make the they'll buy selection, payment work. generally, smaller

that's existing a set plans. an within a or different neighborhood sometimes smaller offering moving to And neighborhood of that's

again relatively average just footage would terms about shift in footage. year-over-year. flat X% square sequentially, square continued we gradual was was mix our So a expect from It moves down but perspective down of

to Paul remarks. Romanowski the question-and-answer now session, will have We the I closing turn over the reached for call end and of

We forward a share to the everyone's first to producing quarter call in with again Holly. appreciate quarter. you and speaking time you, on results Thank the on our April. look Congratulations family Horton solid today D.R. second to entire

do. proud We're you call represent on to this you that all appreciate and

this you today's your concludes participation. lines may time. disconnect and Thank conference, at your you for This