D.R. Horton (DHI) 18 Jul 242024 Q3 Earnings call transcript

Good morning, and welcome to the Third 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 Paul, you, morning. Thank call Welcome for our results discuss third 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

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

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

over will David the call to I Now Chairman. Auld, our turn Executive

you, good Jessica, Thank morning. and

possible. as as does with Americans [indiscernible] today establish in the founder, to the foundation would will Horton, we as to and that culture ethic our tribute moment who home incredible our of ownership. many our with was Dan it Before company to drive discuss not passed pay tireless a take and work an company. I D.R. results, dream away Horton, exist the win help of May. pursuit unstoppable Don an Achieve

years Dan million More built us more from driven himself. first company ago, country. sold XX provided homes has families our through closed and X for across the mission that home than than simple has the This the

D.R. or It the his else company's passing. brokers customers, bittersweet our first time is We sellers, employees to are his be of we included suppliers, publicly work. life's the in with family. talking contractors, done since Dan, estate for and Horton beneficiaries everyone homeowners, his Along about and all land for and thankful real a results

company's returns at Onto the America public past in the decade. all the a for companies great profitability have pride which in and top been growth, of shareholder

day leaders work upon continue our of messages to from our and their other people homebuilding who to to and companies. every We the like country, the industry share hundreds received many this and build of the [indiscernible] will operations to we to Catalyst across preserve legacy company. heard improve would us also contacted We we thank value employees of from

bankers Our family On for we so suppliers, developers the you man. remarkable missed. company, more. He words will be lot and a and tributes many behalf and and Don's kind to thank of our

I'll CEO. to our Now Paul and President call turn Romanowski the over

sentiments all words for sharing Thank on us D.R. Horton. behalf of and those of you, David, at Don about

President addition Officer; In Executive on be Executive joined Officer. Wheat, this to Vice call Bill Operating David Chief and Financial Murray, and to Jessica, Mike President also and I Vice and pleased by Chief am

$X.XX of Horton For solid the an of from results, which increase the team quarter. X% the earnings year by diluted per third delivered D.R. quarter, share, highlighted was prior

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

$XXX operations June cash ended homebuilding months X cash our the consolidated from generated and million. During XX, of million of we flow $XXX flow

positioned approximately season during interest homes was spring months With continued elevated, supply rates the our to in an and was the for of June ended price selling Our remained equity remain market both at favorable. new XX.X%. return selling demand although continue inflation housing XX.X%, the on we demand and XX supporting inventory trailing and consolidating mortgage the homebuilding XX,XXX average period demographics on was inventory, well XX are affordable affordability price the and of limited, return despite still existing share. good same for is homes Homebuyer challenges. $XXX,XXX, points

our construction dividends. focused Driving returns enhancing repurchases produce to terms. cycle in quarter. shareholders average We flows through to inventory times and operating Our are return we capital back to housing on our from can the capital more normal efficiency improved remain consolidated both cash Mike? consistent, improvement so additional that to and sustainable share increase second and

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

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

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

sales quarter the the orders was from billion. year just prior order over third to homes net increased Our XX,XXX flat $X.X for X% value at and

rate was for from quarter prior Our the the with sequentially cancellation XX%, and up XX% quarter. year flat

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

we using and and the reduced as of To necessary. prices still such have are sizes incentives address homes our we affordability, buydowns mortgage where rate

expect significant home our these Jessica? levels, mortgage conditions gross market changes similar improved quarter, no incentives in them rates. and sequentially are to margin remain Although elevated, this assuming we sales and near

XX%, home the on quarter third XX margin up sales sequentially quarter. revenues March profit was in points the basis gross from Our

costs the due the square X% approximately costs lower per costs lot gross second margin down than increased sales On quarter. to while in better than were brick expected, revenues a X.X%. were and incentive X%, quarter, up basis, primarily Home and in foot Our was stick

to the rates Bill? home gross expect quarter. sales margin changes the be our third demand, our out, sales dependent home For quarter, to market Further we will to fourth strength other be home gross continue in new and the margin mortgage conditions. of similar on

year-to-date percentage the quarter as revenues the expansion X.X%, In including operations, third up prior basis year. of from expense X.X% XX% increased revenues, by new up homebuilding our last an was homebuilding primarily from markets points a was and the the of our quarter, count. homebuilding and period Fiscal in year, same same XX of XX last basis SG&A increased expenses to community year SG&A due SG&A from the points

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

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

below quarter, the construction our in historical quarter, closed times from bringing improved cycle times. our average we us homes cycle slightly third the For second

inventory meet and to inventory our demand maintain us a remaining construction allow focused pace terms capital efficiency. homes homes to to We faster improving Our plan housing and start and manage more and on while Mike? efficiently. sufficient

allow across more the others. were country. through Our by which [indiscernible] us homebuilding relationships developed were on relationships Of party. by of or XX% and lot controlled XXX,XXX XX% homes position to lots lots, build a owned at June consisted contracts. a the remain of homes either developed were developers our focused XX% third XX These on We purchase Forestar approximately lot land with

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

$X.X third billion. Our lots, development investments quarter and totaled homebuilding in land

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

of sale million revenues operations In rental quarter, generated pretax the million from the rental [indiscernible] income on $XXX of $XX third of our units.

to We purpose-built communities them sell model investors. in merchant-build rental which operate construct continue a and we to

utilization more scale Our efficient providing our to enhancing of our trade land parcels. provide purchasing rental operations opportunities and synergies homebuilding for and by labor business

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

next total quarters. Jessica? for remain to inventory the We expect current our level rental around several the

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

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

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

relationship our operations. model a strategic Our business our rental for returns-focused and of Forestar is vital with component homebuilding

operating and them to in years. finished on capitalized and well Mike? homebuilding capitalize the of balance Forestar's growing to lots aggregate position next platform industry several market over significant separately strong lot the supply shortage the sheet share

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

closed essentially volume. our our the company's by our all related During third financing and handled mortgage and for XX% mortgage of XX% homes the of to operations, company accounted homebuilding loans the VA buyers. our quarter, loan FHA for originations company's mortgage of

average average represented the of loan-to-value by company ] mortgages First-time loans originating a of [ Borrowers The HI quarter. XXX handled an quarter FICO XX% an score with Bill? and XX%. this homebuyers had closings of mortgage the ratio

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

have balance sheet provides We ability and liquidity significant with adjust to leverage conditions. changing low market with to us strong which the a

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

expect we end consisting maturing of $XXX totaled billion our billion, had credit notes of with to capacity of $X.X XX, billion Debt quarter senior available at of of of October the consolidated and refinance. liquidity we the which billion $X.X cash At facilities. and June in on $X.X $X million

consolidated slightly at term. XX% was and leverage leverage we long below Our over or June XX.X%, plan our to XX the around maintain

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

return on consolidated assets return For XX%, equity ] and the [ was our [indiscernible] was trailing on XX.X%. our

dividend quarter. $XX quarter, paid level per a X be the During stock We of and totaling has declared the quarterly same repurchased $X.XX August. our million dividends shares we paid common of at for million, million the during to $XXX in Board cash share

share through by repurchase expectation year cash $X.X billion. the share fiscal repurchases reduced which count same period for year recently ago. from increased June authorization on and a strong new flows, stock Our a Jessica? to totaling outstanding over X% $X financial last year-to-date approved Based position billion, our from XX% Board our by our increased

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

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

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

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

Finally, when guidance plan full annual XXXX plan of earnings repurchase our common our dollars. to approximately our we for to we stock dividend $X.X we fiscal with addition after in payments provide October to billion now process completed in We the our and operators. have report fourth quarter year, [indiscernible]

to further our be increase market to positioned expect share year. We next

We higher Paul? share repurchases also operations fiscal which expect our flow to utilize XXXX, shareholders to increase in and from cash dividends. increased generate proportionately returns plan to to we through

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

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

returns allocation we financial by disciplined to the capital our to significant shareholders of to plan have to our value flexibility, high company. We maintain and providing enhance consistently our long-term approach

remarks. the hard D.R. and efforts partners, entire of vendors developers, work. agents This real employees, land Horton prepared your for trade concludes family to estate you our continued Thank and

host We questions. will now

first today [Operator the is UBS. question from Instructions] from Lovallo And John coming

would XX know was is years. high The normal seasonality absorptions basis above your few first over normal some seasonality worse one the XX%. suggest. noise the points than there's been end were of past somewhat in I at outlook Margin

it, sales in fourth So XX%, maybe rose maybe the guys quarter-over-quarter April, quarter. percent lines, is, the in along a home decline, I on to more little as rates more you bit absorptions and tend question versus focus pace guess the call those did maintaining profitability per

How quarter? of are kind you the thinking the seasonality about in fourth

John. Yes,

good about I And saw but sales perform about the did through balance incentives fluctuation too the continue choppiness and the and you responded accordingly. that's demand saw We the pace the guidance in to result hard. the didn't saw pace, opportunity We to drive and in as you we on community lean overall price [indiscernible] interest quarter feel position, in rates, to our we in maintain but by, have full we think still where year. our for backlog

in Got encompasses it which then were orders lighter and was South is maybe [indiscernible] obviously is Texas the for. looking think in little than a markets good quarter, bit a And inventory in it. the were Southeast, pickup Florida Yes, was normalization it we next those lot. more a we and Central, question existing the what outcome. in And as spoke characterized Paul, than I when home seemed which of that a

think the product. existing points housing the impact those weren't of the was specifically and How with the the that X I price did the age DHS higher are thinking in markets And just inventory you about home existing negatively quarter? in orders inventory thought that today? And competitive stock

the good in our in just and points to through Florida seen operate to last opportunity being be but in with rates. and similar in incentive price But to still about inventory market. feel quarter with we've the think what flexible and the advantage, we yes, competitive increase, I today, able especially across not that continues we package

And in prior we as not saw as those think the in that regions feel so vibrant demand, good inventory, quarters. across the still that in I some about was by sales of don't and increase significantly flatness just impacted you it was

from next Reichardt BTIG. question is Carl from coming The

privately Once industry your for my I again, me, and all sorry expressed loss for as the really I'm on passing. too. you D.R.'s to very condolences

said, and one but that questions, intra-quarter about So of about to John I ask my took wanted closings. sales

you've long basis? closing normalized a it heading good year, go-forward the of And and as sales what last times what's to you're term is and into of curious was quarter. sort really think level into to over that next is I'm this inventory got cycle guess sort XX% going to amount quarter. back your quarter of on it given QX inner a be I

choppy impacted seen we've are the saw traffic a when interest the with through and rates environment volatile think we the quarter. traffic at that move, I pattern rate patterns

coming certainty patterns, on when program. I home to What think demand that rate them better we rate that more see trying a and into get felt have they we ended the a we would and to buying quarter into with help can so is better also with are that traffic people interest they're our can that closer are because are build better forward completion homes interest attractive July. on

buying And a little at later. the means that bit same we're time,

on high a And number quarter. homes sold closing And to the and are in a drive closed those same space occur start so going we're sales and a seeing of level the between we're focused to things. X

forward the now of as And in one in you talked I you're deals elements lot transactions? within then goal of going of out still to of and communities And land the Is getting entitlements, in XX Okay. of going right guys we've and in deals have curious, realistic XX you're your current what longer. your hit have I'm of seen times percentage cash deck. development out it's longer of underwrite, about cash months idea in Is Obviously, months. looking that? that getting and you that take your those think past, here. to at still this And kind maybe as see your expect that

a Carl, own until of to We aren't underwriting ready. intend that has several it's yes, looking us years, really and for land to to been standard shovel hold on that we that.

longer. although the may entitlement take So

third-party that of expectation ourselves partners are help. time contract to we have We in can development positioning so under properties and/or that involved

that back. And maintain makes for third-party building XX-month we more developer lots us on developed it have, easier to lots so that that were by cash more the that homes we're a

love underwriting that we standard to to. do intend but sometimes, on So hit it's sets We'd hold always an reality say but we absolutely in we to don't it.

from question Evercore is next The from Kim coming ISI. Stephen

both all of echo year me your then D.R., have do Carl Let also encouraging, a your pleasure in man, them and to very those about work about also you what sentiments quarter years. about which intimation flow real great it this was I to year. terms ask want remaining really commentary, found next and cash the I with

increase I flow or year deploy looking were cash more increase that dividends. towards think maybe repurchases to and to you next said hoped and free expected you you obviously

leaning into a bit just more. little that So

rental operating has offsets have where to Your typically building flow, guidance kind cash been and been around that. home of Forestar

consolidated being than your -- lower so meaningfully or flow, little a your lower cash free cash And your obviously flow. than homebuilding

But you going think the I to right is said, I rental that heard you going consistent inventory forward. remain

closer or are to homebuilding flow, are going to cash much now consolidated your So operating talking that does you you your free going when Or your say much increasing consolidated be and flow to that can free next pretty that's cash about is you talking mean cash homebuilding? forward, hoping talk increase we flow year?

would a This And on for will current us rental rental. won't this cash we of as asking future consolidated cash cash be flattening there flow clarify about homebuilding a much would from are basis. Thanks level, anticipate out, homebuilding flow that have consolidated stabilizing flow based Steve. the Thanks, flow flow. this. a inventory that range around we consolidated the 'XX, level. With we cash nearer talking on fiscal within be offset our helps an We our cash be will now from much question. Yes, guidance provide

just consolidated to as Forestar them would financials. use cash We expect to reminder, in capitalized. a totally separately our flow. is continue they're But

utilize cash improvement turns this So cycle we inventory it we year. really year, next with for flow returns. doesn't shareholder our our sharp in into have the that times available improved, to continue But have impact to the improvement past expect

that forward to do with improve the going reflected utilizing improving next share authorized that's repurchase So the paid that income we that level and Board of cash be flow repurchases in we'll generation then of as and flow higher being we operation is should our an increased authorization cash stabilization our share in flow. the year in out therefore, see proportionately and to our homebuilding increased expect consolidated efficiency cash rental, continue expect dividends from

Well, great. that all sounds pretty

So to of your levels segue expect. turns question, my spec can That we thanks to nicely that. very does and next also relates which for backlog inventory that

for fourth turnover. backlog guidance level quarter fairly of closings a high implies Your the

you going similar And backlog level expect can basis? can like sense a total for what a I'm at running kind a of this kind going-forward what per your inventory, if seeing of wondering comfortable us expect turn we year that we're spec Is is community. forward? we that, XX think can -- level tied you're I a on to of specs And give

you actually, community. report don't Well,

Or me we Let what and are Whatever total give finished basis way. this color is is your put us turnover it per and they on specs on if ratio? what basis? can for in normal the a some levels go-forward today, backlog a terms range specs spec community, of target expect you and on finished are both there can about basis, that a where

Sure. to I'll That a my questions. your all was but of best lot to do unpack answer Steve,

part, you expectation as on is specs. latter community know, a the really business, there We run global the of for So number no by community.

their And how each specs they're that their experiencing. going they're our what community carry so on sales starting on to they're many and in in environment terms are individual adjusting based operators run rate based sales of

finished speeding And of to down do the quickly up, have adjust either we so to conditions they lot can position or market slowing so. in current very assuming terms

to of comfortable that perspective. homes want that later So Paul's with where construction. certainty the are today, on one earlier still of said very we call I We're up in close. think rolls points selling a we as bottoms-up Mike's kind we're And a from remarks buyers just of

being today, we're we than completed the able us higher XX comfortable lock historically. much our conversion run to it to with so to And rate very position and at the allowing spec of is backlog XX days have rates

our that for We extended running don't excess completed have houses backlog on sitting period focus turning supply with an really not specs been focus conversion. on time We an of of unsold. and

aged very focus levels on our completed comfortable those that's houses our extended really as we're as is at so to specs And the today. period continuing of running for aren't we're long an with time, faster. And turn

is from next The from Rehaut coming question JPMorgan. Mike

to great Great. of the the the express to And and of I visionary loss said I industry, obviously, earlier, first you some question choppiness sorely there wanted D.R., condolences obviously, quarter also comments my around, the earlier on wanted during was missed. and start off think just in be for little the higher. with they'll leader my made a some rates you quarter, being on a I

we've less the come incentives kind of them expected just subsided a X has At are talked XQ time, bit about so. it have upside. little the little versus perhaps that or the of last I came that as it in the the either may last was month incentives impact same as X, just rates similar appears gross maybe rates down margin trends in seen any any had months. be subsided? X, little in to that or the and going a you end on incentives see than lower in drove And you or being a range If as if of curious, bit those choppiness more maybe broadly you but demand XQ, that

some the front reduced today. of still beneficial, as market that we affordability incentives to or incentive would we are balancing rates, cost we're Obviously, incentive we least the and relief have that in would expect just issues at in the the any are to overall offering but on be pullback call able with

cost have to to particularly we extent, relatively our a pressures, we do which ability the would margin And flat pull back incentive do costs is to lot continue side. for gross log we do even the QX because costs, on guide higher experience some have why on be if

helpful more over was prices of if that to makes prepared highlighted that remarks, just a maybe degree quarters. in and comment. reduced know obviously, broadly along around the Also of to ASP closing that we to or get you Okay. more you that's the sizes quarter sense. maybe specific line this in several love a broadly, little see and I No, and the just questioning, backlog homes the over don't And last we'd ASP. more can clarity But just

obviously, mix curious, you've reduced percent by of those either us sense a homes that how much, Maybe and there's just of by kind just impacts lowered numbers. give raised or where contrast, sizes communities But of that prices -- prices forward and the you've that or ASP homes if or how there's think of percent going a about to 'XX? the business into been for

There's that Mark. a in Yes. lot question, there

Let me try.

average So to in and to given house a be they're is community from a affordability down about that And to mix size submarket. in we to sequentially. a might moving more communities and total, our the flat are given X% targets a online, reflection of for our meet a start you're to what communities year ago operators about few townhome and is that planning choosing right, come try

and market regard decreases, demand, With future inventory engaging by or level their their that's price lot our much conditions increases as price supply. to operators occurring week-to-week a community they're very their at

making those right a everybody price aggregate about was decision So say flat. of had up and we take XX% communities we good the feel increase, else really don't XX% teams the and really of decrease, we

we community look look to at a here. level high turning We our we are inventory housing community and those at numbers we by driving the best we just returns tend don't can. are at

Great.

Matthew next is The Barclays. from coming question Bouley from

to comment the I to back around spec. go wanted finished

But finished sequentially. the the later rise lot of homes in I obvious were intentionally you're spec did reasons. of number cycle think a construction you for obviously, that selling clear

should around going forward Your implication clear if margins finish with spec starts of of sequentially. did there have there trying or that the kind state incentives to is you of we signal of that being we to understand is any price. down sort from either to come should take higher, about And demand. extent an with I'm to how think the some

Matthew. Yes,

that, consistent you've in I think is in improvement we is a have specs times. completed what seen cycle our increase seen of that some

So they're moving sooner. pace, a through construction means reaching the those completion homes faster which at are

those it in us still sell closer homes later allows may with to we selling the though even process, certainty. So them construction be a now

We more lot a about of that. once it's completion. are focused through as on they as completed them sitting earlier, pointed many Jessica cycle we'll a So worry are don't percentage exactly out reach how they

tends or slower be age as community we've an community. demand So that they absorption indicator that to seen by

on So starts levels either demand, lots we're pullback the we looking in front and based us increase that on to going housing maintaining the moderate assuming community, need we're that we're we inventory pace or that with to that need have each of focused for. continue in we

We're inventory about into good have don't comfortable with aged of housing that fourth very that we inventory feel buildup a the and have. going the quarter. We

it. Got

That's Okay. very clear, Paul.

and as come Secondly, the brick next into expectation mean, noticed fourth down. I were think curious basis. to Costs you that is sequentially. foot brick we guide is the stick sequentially in square that stick quarter? continuing and about I mentioned I'm quarter the down down earlier were margin per further that flat quarter of

what in construction guess, of able actually I to terms specifically And you press down are on. costs,

some we're trying of there. brick markets to a and the starts. stick pulled we're maybe seeing have various some cost. little balance to pressing coming in get progress kind of cost, come for increases, some I next and have looking stick and starts and in brick We've with back. work neighborhood more -- I that effectively a lot phase we're sharper bit looking decreases through. for next think for to People The the level that pencil able our consistent make lumber price the the flat think tailwind we're a And out of probably coming of gotten in

quarter, will QX. fourth QX margin in And That's in flat probably margin in a for quarter. at that fourth lot A an the heavily drive we very significant quarter north the and fourth felt upon of are see levels then in brick. and expect determine escalation forward concession based flat stick cost to into a ultimate the since going So the of XX%. comfortable closings of is looking That the what We'll like will be some environment And the going quarter. ultimate portion our sold margin. why we

luck. All right. Good

next The Zelman. is from Ratner coming from Alan question

share and to the also in family on my this you I D.R.'s passing condolences quarter.

So some just consumer-facing credit other thank on handful all the in far. and other months, info decline. of so consumer we've savings seen We've builders also the recently companies quality heard over the last for you the of rates some great deterioration, from I the guess, about

of fantastic if some curious a But insight funds guys in are Credit of just into would what your through their walk You debt, be you have et for there the great. card you provide qualify -- are low to ability drivers seeing and Any down price from can point that. done terms you keeping consumer the payment. all cetera? today job I'm color

can buyers our rate to low us the rate are and for being teens XXs. to still offices their feel qualify. about cancellation around very making high our historical sales A their we ability that way With into would comfortable XX%, be

And consistently. what low for quarter, so X.XX%, second FICO On we actually the at think, very closed we're quarter I the rate. a of at comfortable cancellation end, this strong

of to environment the ultimately noticeable that terms in difference unfortunately, of buyers selling the has, is course, and that income to rise today. average their continue we're rate because only to interest had The closing of

quarter. company closed $XXX,XXX, household I buyers income basis, -- the [ think the household to average ] third our is on roughly mortgage So on was home at quarter, to we a and utilize in the up first it a rounded it in $XX.X. the were income

offices But really very have into credit do to deterioration that's buyers noticeable noticeable metrics. able be we're income has and only coming higher been no is the selling today in have stable. those so to qualify. difference sales our that what closing, Everything of terms to in And

second, that, appreciate hear. allocation. great flow on really I And the positive cash a That's Jessica. and commentary capital to

last I going I reducing been year X% share to excite that's look around investors. If count each that least amount. years, buying by your that, certainly your you've think at at your back several shares or of

higher that looking have take certainly than Some a a bit other that. builders It sounds been to here. like you're higher bit

insight know you annualized have doesn't give to us could Could that be us to range? that. about kind expect authorization single-digit lot target a there where kind what Is it but of mid- you in an go to of a the timing place, I of can on utilize really in you high into think give the basis? just you

does it an expiration not date. have Yes,

issued first was last authorization quarter. Our our in

XX-month So Typically, guidance cash not But specific that 'XX range. yet. been lasted one in or as we're about providing of repurchase they've months. for X flow the

we want our budgeting we As specific commented, process to we go guidance. through provide before that

cash But flow next provide a does increase expect year. as we that do significant

proportionately We our dividends that. will repurchases increase to and

really in our So the to share because share a and expect reduction the be in of ultimately, and the function be of meaningful allocating in price as a it that well is will we're be in with level step-up market. will combination count where repurchases we we dollars do

I get to able share next year the dollars. with few has we're But the those We'll greater be count that shares than repurchase it to would in last in reduction expect years. been

The next question Cleveland is Bosshard Research. coming from from Eric

things. X

would orders result rate First thought buy much little now how prevalence, on rates. of Can a the of less with back buydown circle of I movement help that bit and you I as down? consumers guess a have influence using choppiness are better? there'd in the to just curious, rate the all, me on I'm that. relative visibility understand just be And to to a demand the

Yes. tick we're the We offering the vast in XX%. the that the rate what company, of of buyers in market majority number buyers it up which saw is today our permanent mortgage slight of the roughly utilized was getting actually a buydown,

or business, the overall that ago. quarter, from that of a think from was was more about significantly year and up I it second the XX% slightly translates take and up to give

and them. of come into up, that put a understand that I they monthly us. might my have prospective or to as to they in I and available moving think, to rates expectation we're are into buyer behavior our They got an moving office and office sales think lot payment. whether come different noise they are budget, the them rate affects had when at different rates a what's not mortgage talk a I X% something work sales you and in and Once to the that the to in marketplace to and able going make in there's can come

a bit what's up to opens It eyes possible. our quite

good traffic we traffic. headline becomes can get sometimes, the But the we're -- patterns. get struggle conversion. If the if depress traffic, interest we pretty the rates around And so all the noise

It to going could response has both. continue the what continues you be what a and on and like doing there for dig Florida or to And in grow? your little terms important to market. communities to position there an to just then that us price in business of Okay. if doing been successful sounds sensitivity it and into traffic Curious more are you're bit what's

we to country. Yes. is challenged love us, it in like important Florida continue to in want market live to see and migration. be affordability the People there across has is but to Florida been an certainly

rise in it's the rates in And Florida across prices where so and significant certainly sticking they country. with seen interest And have, we've taxing.

price we're the higher they a at to And Florida, is little in think And what sales need real really Jessica change static make spoke in that's on more interest homes I a that's not of environment. seeing and to just as significant afford sales buyers change we basic and that at the to impact as a a what matter traffic much the many right price do want. people that position demand or strive right continuing point reaches the that's new continue house possible, so and/or communities. It's to we as provide our in to to affordable of rate

from coming question Reid Fargo. Wells is next The from Sam

rental your to business. on So touch I wanted

less also a to bigger they're space. more standpoint. capital-intensive your from approaching the One looking of competitors in is it do But perhaps

to talk build-to-rent say. I there space, segment more opportunities longer it maybe should through or rental third-party first, perhaps space with implications second, But guess, So as I are run capital. the the recapitalize enter builders term, more the this

are to now. It if rethink rightsized sounds room rental like there's just down your road here. inventories to the But curious structure capital for approach the

Yes.

and communities. the of we business, space. rent think we efficient at seeing investment of As moderation these and sell levels to have how to we more capitalize we've that not basis, a growth our for we continually in how of with what that's level think that in the And consistency single-family see you're ways expect become we there. execute continue I only want in we're looking I inventory And from grow this some but produce to out to this the in capital

And we of undersupply see and meet still what's demand still the demand. out an see there. so We ability strong to

So as and it's going to maintain. We're it going we to with be can continue as on capital. efficient that to be ourselves focused

helpful. then it's throughout And QX, in you past, expect up strong to growth aspirations. not That's providing mistaken. to community was you'll been obviously, of I And account digits community XXXX. a growth to the you've order next in in double really believe that not still if gears It count. And guidance, need slow. market I'm I switching know But that gain to sustain hit year XXXX. there's those for level share you're curious indicated if

the top Sure, is we from and And of thing terms size share the in great -- of strength of even XX coming generally Sam. regardless. the we're if grow sub-XX%, position growing were consolidating builder a

cycle years, going community is the we couple whereas from think for forward, I the we going tried to our of that coming get count more have absorption. quarters been believe of come really last But early increased it's the from do the of outside of growth point to most across

grow, to continue to So communities. increased we those going to that we're do to recognize continue need

has few position our get we've of enter our new a got continuing Some into, last on additional we're can where flags hit those several finished to through over work comes lot quite of count, market open we expanded to a list dramatically that sooner. still increased which and the to And markets years.

we're some quarter maybe mid- continue increase we I it then community I a quarter count a think at at not is maintain double does can least But single-digit be high, to last some going think in to time. may for hopeful X, It digit. though to And up period low grow be have at hold to to it what we it our still within of next the or said to point, mid moderate. won't just think high a may I mid.

a already it's either and bringing on new talk or of things there are of though, right get As in you to sales one pace. about to indicated many out the closing us of for kind terms so community one pieces hardest moving because

we give ever sit here our So on. today. pass But don't guidance. estimate that's as specific I'll it best we

The is from from Citi. Any next Pettinari coming question Anthony

single fiscal cash in Can thoughts a the down it for mid-single digit of any of what trends? on mix maybe lot in in were just those normalize and go on that you've of kind buying expectations digit? stronger 'XX, the cost kind low we prices about the maybe 'XX, quarter, should been lot to land expect you -- to bit or and talk inflation cost adjusted costs could then based a back Or lot for

Yes.

lot We singles, moderate slight but cost us. do We a increases know at in that headwind have of continued revenue. we high in a significantly. see double to increase see to for low that digits, our as settles don't that whether be expect to don't and expect overall percentage I

cost in put relief haven't much to the lot that. Is the of reality a ground. just seen on the We

expect see to And continued climb. so we a

square mix we up still asked were on up as basis. we on Central basis, cost have are lot specifics, the that a that the double-digit our on you for markets. lower and percentage, we've impact a lower to In of percentage were terms would generally up foot which said Southeast I talk and those per since in lot South sequentially, making about terms slightly of to closings, X.X% continued still low Year-over-year, a a cost call, some the of

increased a of it we've cost is sales revenue talk we're heart of range percentage we averages, typically the terms that with the XX% to of you even been of just today And generally the to give in right home pretty kind experiencing. XX% that lot and lot in about our data another consistently, range point in cost

of then obviously helpful. is very source aside putting you. And lots the land you a the kind Got and pipeline banking just it. it. But partners? for of major just Forestar your Got developed could on touch Forestar, That's health of

pulled us. from sources sort the companies development it find but land had them capital I is willing pipeline. somebody they country help necessarily of when that collection there's banking step back it different regional a the some able for the like and as that of as pipeline able other lots that up of community to large refer we've keep have D.R. business to developers banks Horton refer in to -- experience very seasoned been lot It's those Yes. to folks for land wouldn't sources we've frankly, to some a lot a as developer other I'd capital for a to had producing working have blending, look capital and been sources been to

of a else Horton, and came on our business XX% D.R. strategy. part someone developed this quarter great by that's of closings besides our And lots

turn it That's helpful. over. I'll very Okay.

from The next Raymond is Horne Buck James. coming question from

on what My just question a And do that is Forestar. longer-term recapitalize Forestar for could just thought is a eventually there's to eventually to an so that plan be on quick one with Forestar there the deconsolidated? if update

Yes.

platform. own not capital shareholders available and able Forestar growing they're to support is does and with their them our strategy company growth offset are have capitalized. They a very any of and parent important it our the with on part separately their for being cash their the sources

are they're And they their as markets, XX I them grow alongside platforms, believe. about working we at now so

So markets D.R. the is in. Horton that roughly of half

got still platform. they've opportunities to of a grow So lot that

grow, at delivering then they they're them And to to us get as continue them improve as would to so continue and I they they rent. our with focus the industry. can raising mature, right now to as And as lots efficient operations, is to to to their work capital. expect

determinations that ultimately in investment. our visibility the we so as terms will structure be on give able of And to the what then make do us that matures, to

opportunity contribute don't down line stake, need obviously, so and you needed not Forestar at at the a any a point contributed But or and some to investment forward. be at And to will additional they're to level. buy we to expect to look made mature there an majority that an capitalization additional have we when capital their we will going more

about think for point, terms the multifamily. Got is some do I it there how at multifamily more it's shifts kind now, rental Or operations, out think looks quickly inventory right single-family that's do rental, of you going towards And the the X/X think it like on about to forward? balance, of track helpful. mix given that. the right inventory Is weighting? the it. SFR in you Got you inventory amount X/X appreciate the of it. going current That's that

near deals I towards our few the based the a little next of that bit weighting the term, in quarters. on term is think expectation is near pipeline multifamily probably we have higher the

term, to up. balance out long the little a it multifamily. a I Over expect term, bit than But FSR back probably picks that bit as near would in is little more where today heavier

where kind Okay. the balance optimal right you'd like to it of like XX-XX to? get

a don't our have market It's demand community is returns community set best the We level is whatever whatever necessarily. across by mix and -- for the markets. the believe we

from is Goldman next from Sachs. Susan question coming Maklari The

basis? actually where moved is have And about that improvement we on question especially down come relative how is, if you from? a times and you do cycle come perhaps Can saw first picks talk where activity that your the do up, normalized a you you levels below My think sustainable that rates mentioned world historically. see

coming controls site mostly from job and labor the of strengthened. that seen our And and That has and consistent We've and kind supply we really largely of that that has with don't production healed have -- market we we we need chain have together. seen parts We've just all labor efficiency, Yes. challenges. we need build. scale, to have and and pieces the maintenance

bit where that's a times norms. you've seen little our historical below drop our And cycle

we're more on focus process to every being efficient focused and the on day. construction something with continue We

to talk bit what helpful. turning then about M&A is anything Can perhaps seeing That's a Okay. that the looking changed? And there? how And you're you environment. today? pipeline Has

we that the can some position things tuck-in people prefer and along will a our with emerging footprint new We small where in still acquisitions. We acquire like lot either expand geography work then with as we a places, developer. principle and the it to in business Forestar. stay title becomes a the homes selling in in And able to other construction, were oftentimes

strategy deals country as good pretty we're lot a in say And partners what would to a see Still very for the look of But us do around willing selective of that's now. to at. on successful flow we're creating been development well. I right

Good Okay. everything. luck with

The from Rafe America. of is coming next Jadrosich Bank question from

add D.R. I'll on my condolences

why earlier to price The XXXX. quarter, in targeting quarter-on-quarter level? a gross your gains Just pace single-family at Like are the higher -- strategy not second for share they're though. starts comments at shift in more and incentivize your census tracking starts and But margin up I market going down If push they're all? was or has then been the this on down your year-over-year. there back quarter, orders margin at look X%

gains? would question about we how plan pace second your my going to starts forward then do for the share think And market be, relative

No we our as than We in this right? change why seen maybe operation, seeing might have strategy, is you've are continue starch lower been in But pace which to efficiencies a pace through Yes. little or expected. keep with our start market, in move we're going you to overall the overall increase, to I growth see will, in to goals. if improvement have some guess, space the

the of community us based to moved price inventory availability that our goals have looking process front in PACE by just we'll managing our need community based get construction and those and But manage us. community really community lot ability for, hit on sure we of through inventory, that and the we that to it's homes by on we're making

flattish margin And incentives. price like guidance flat then with just It on expecting the quarter-over-quarter. to gross quarter net of fourth sounds be you're

stick being about land and talked up. brick flattish is and You then

what's relief piece mix quarter-over-quarter? you broker is with cost to another flat that's to that the side, -- commission is on or be What get in happening giving going there there like to

As some we've we into obviously, growth. we ASP had going sequential see look the here, as quarter we're rate volatility -- did

of We go And a bit cost bit saw quarter. little of probably down our our a incentives so of this there's price. little sequentially

a assumption So quarter bit reduction a increase. probably a price, the little an in little bit of cost of little log cost of the there's bit to incentive offset

The Mike next Dahl Capital be Markets. RBC will question from from

of the pace. follow-up Just on versus a question kind Rafe's price about

you rate there more a more But near-term incentives guess of perception else aggressively. was because that didn't from standpoint, not heavily was volatility, far lean in like give wouldn't your response? just a decision at to the to quarter, the there anything was sound hit it demand can you as just -- if as time not be sufficient to I again. decision it made kind the on push Sorry more did you during Or a

the here were making at scale. to on and on which that aren't wish traffic and We decision they broad rates -- we enough way front make the have those to buyers level sales in going based know them to I demand of daily a go. that were our on a that decisions rely volume people basis. a we good the But on they that operators have community and

and place the inventory a in pace for quarter overall, and have year. what would, And hit the that sales solid to I we're they didn't we like us margin think is that the sales achieved for resulted maybe that increase, the a seasonally but in we in our good with guidance

it. Got Got it.

you Okay. And been the are business, environment your about for the sell to the rental fourth quarters, Can quarter, fourth for rental the last then it's either just talk obviously, volatile specifically on platform? specifically expectations or what multifamily. more on X SFR quarter a

rental deals. our timing there The guide, is uncertainty closings revenue consolidated into Yes. and of of rental around is baked

of on providing the guidance specific bit in rental. range other in that's numbers, built But little revenues but into So the QX our a those guide. lumpiness that there's no from we're revenue

Right. Okay.

session I And to back Romanowski does remarks. to like you. today. Paul this Thank for closing would Q&A conclude our hand call the

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

represent to all you do. on honored are this We you appreciate greatly call and that

This you. does Thank conference. conclude today's

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