Lennar (LEN) 19 Dec 242024 Q4 Earnings call transcript

Welcome to Lennar's Fourth Quarter Earnings Conference Call. [Operator Instructions]. Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the call over to David Collins for the reading of the forward-looking statement.

morning, good and you, everyone. Thank may Today's regarding strategies statements, statements forward-looking business, conference and financial flows, call Lennar's cash condition, including operations, include results prospects. of

conference on statements any give to date Forward-looking Lennar's results. as are estimates future only of intended represent assurance this call actual to and not the

results future that actual These statements our caption no to the Many uncertainties. risks note that SEC matters yet differ results Risk may these Lennar's any have to our affect to cause and those most forward-looking report factors or the the statements. in SEC. filings, Please Because results update to contained XX-K include with statements annual from occurred, activities Lennar's and in described earnings factors release obligation forward-looking not anticipated relate activities are subject filed materially could inherently assumes Factors under Lennar statements. and on in including those Form and recently forward-looking

introduce Stuart I begin. like Sir, Miller, host, may Co-CEO. and to you would Chairman Executive your Mr.

good, a everyone, Rothman with for from, in Chief morning, I'm Officer; our few today. and heard with Diane who and Charitable today, Chairman Collins, President, others. well, thank our and you just Marshall as along and David our Vice is President; together Controller Chief Fred here, and joining Jaffe, Miami Ames you. Officer; Jon Financial thanks Bessette, Lennar Operating our Very Co-CEO of Foundation the Good

overview, construction cycle a of After my introductory strategy going position. As some an to is macro our strategic company. updating cost, and going the remarks, usual, and some I'm and land to operational overview time give Jon of give

course, that can highlights some limit ask going I'd as have follow-up, you the so a we'll question, like usual, to detailed guidance accommodate along of to our we XXXX. of As usual, many for to And period. question-and-answer possible. X as give then, X Diane And with is first quarter that limited as financial please

let So begin. me

declined buydowns XX.X% to we challenging avoid fourth challenged fourth XX,XXX the expected, increased at Accordingly, saw as quarter basis quarter a activate adjustments our levels. quarter, Our incentive necessitated through and points incentives, was XX.X%, affordability. of and rates rate quarter inventory short that new and price further in expected. buildup. and interest quarter missed were Lennar the increased price was Starting we sales of gross results the the That XX,XXX our early sales short stall margin as approximately orders expectations we existing then XXX interest at and

increased the incentives and turned The moderating stabilized. shortfall margins was and have expectations steadily Accordingly, for Overall, which quarter margin homebuilding in quarter first environment, for more sales of constructive along XXXX as are last since quarter. the believe longer-term within industry, delivered the earnings as economic last has resulted and adjusts certainly mortgage market from in our interest on rates climbed call. our sold rates, we challenging we the homes the with

remains dwelling remains underlying to and cost wavering confidence elevated the ability combination consumer While desire challenged very customers' have and new transact. available acquisition of short, chronically for strong homes the demand a and supply of of

actually be transact urgency for traffic the customers to a customers homes, considerable normal. adjust continues of new there While quieted looking to to has as

have Rate and to and need have more buydowns access rates households qualify average to interest market. in families payment incentives Higher enabled and mortgages rate lower mortgage. time the of for hindered and the now. has move or homeownership also up affordability as locked interest have interest for factor curtailed to accumulate access some rates Inflation natural a space. demand for been a course, to Of the a limiting the and demand family expand down ability

are confident inflation and or compensation have employed to remain remain their outstripped will act. rates interest they ability While and desire and that will rise, consumers employed higher their generally

goes sidelines. with with housing hand many often employment have the strong hand a While in strong market, on rates need interest put

enabled driven and past has the mortgage demand market buydowns over the incentives home by strong new rate years. As

reestablish We short stabilize expect the or to broad-based continues pent-up and demand as cycle moderate build as to rates demand against even supply.

by has exacerbated and across demand years land shortage permitting the shortage The costs with remains the need the in and demand, shortfalls already aware in by been While result respective chronic at existing Many landscape. acutely across now attainable respective the impact for of are and This continuing country their by shortage local affordability, of homes constrained supply together production housing is the underproduction. housing the in pounding about well-documented of constrained. housing shortfall of driven higher housing fees restricted muted geographies. housing affordable governors their workforce have levels construction housing the table markets. higher been Mayors and is and

been confronting that addressed questions to to discuss concerns list to and this the shaped detail added potential impact note, being Jon of issues industry. be these landscape a still cannot shortly. and recently have certainty. and us early further Nevertheless, We our limited the On the suggests as is immigration around industry, final in with recognize and will the tariffs evaluation

macro of the continue this parts operating around X backdrop, our core to we Against strategy. conviction have

base. focused and are the with matching production sales volume on First, our we

the While and we to was and challenged the and adapt new not market change and we interest pricing did rapid fourth we direction our adjust by adjusted incentives levels spike. did execution inventory quarter conditions, in enable of our in and rates, unexpected the to

had as order fourth sales keeping on quarter. We and mix our we the correct in in are accelerate that we currently the up catch to pace focused volume sales

homes. cost we pace to XX,XXX and XX,XXX homes is in between XX,XXX first at a cost the between on Accordingly, sales additional ahead that in XXXX, the and course, comes expect deliveries Of the deliver quarter to looked catch-up we homes as of pressure margin. sell and XX,XXX have and

we be sold and to will Nevertheless, quarter quarter, in our the XX% margin will to the the already embedded dilute be backlog. in during expect is expect as our deliveries margin XX% this We the XX.XX% that of and XX% focused driving are sales at conditions will margins strong and inventory driving maintaining growing normalized improve, closings, profitability carefully on cash flow benefit stabilize managed market from as reduced or our across and that volume. even we levels so current approximately we

Secondly platform configuration. and simultaneously, we continue to our to asset-light an migrate operating

model value We discuss are conviction we happens that land-light, homebuilder a of just-in-time with with manufacturing lower much rework of that continue becoming this been be spin, closer I'll profile our to the the volume lower to and that asset-light land base to the much land-light far operating company structured a the that growth predictable asset more our asset at shortly. from in from and strategic being seen build pure-play has detail model, execution have will delivery. operating in model. the and our a homes completion Again, Millrose more benefits platform to homesite finished enables our The be risk of structure conjunction Rausch this of combination and of core in Coleman will light-land,

growth construction and Consistent enables SG&A. operating costs cycle customer time, acquisition costs, and volume efficiencies in improving

variable cash driven and has it results. dependable Additionally, flow bottom even with line consistent

to developed to transactions date. that enabled consistent billion land-light and partnerships just-in-time have banking the home enabled And transformation the capital driven that the predictable has have our structured fully finally, of attracted has sites, delivered land of nearly and that it takedown $XX

as We consistent volume developed positioned and our delivery to best be just-in-time with and our are homesites margins be our to rationalize best continue strategy volume company strong of will with operating growth confident enable a that to structure positioned of cost normalize.

me Let back operating briefly turn our fourth quarter to results.

with the our difficult our and strategic As environment. with I fourth affordability of they a disappointed noted a do first in results are represent quarter operating quarter we actual context earlier, results, quarter of while -- consistent

As X% through volume around quarter, rates with incentivized affordability. migrated starts, to interest mortgage we we higher, the drove sales enable while to

almost started approximately our and In XX,XXX homes. sold almost homes XX,XXX fourth closed XX,XXX homes, we quarter,

While I've has of a the at which in market later starts community attributable corrected. count the lighter about quarter, been were now already beginning sales to talked also conditions,

community been than quarter we higher shortfall up prior the brought X,XXX our XX% able higher the to quarter, from quarter XX% community now We third solve have and last described is to of X,XXX we at year. the communities, that count end the and communities count than last which

count to lower drive at better rates expect volume materially us absorption community we the XXXX. positions as Our we enter

on XXXX. expect to stress put we We time XX,XXX and our less over XX% reflecting margin between increase absorption in homes an X% XXXX, lower deliver as rates XX,XXX to over

affordability During XX.X% we and the incentives rose as lag. addressed community count quarter, the fourth sales to

price leverage. reflecting As an costs Jon customer to as will X.X% and to while and we our our shortly, have offset, maintain volume reduce costs we acquisition rose cycle and construction sales maintained detail average time, lower lower and SG&A were our able

with On the abused cash side, production in the pace sales flow. positive and consistent of side, have enable point our as on a margin we pace adjustment positive driven to sync

Our us bringing million strategy over for fourth total in billion repurchase the our $XXX for quarter, X million enabled has million the shares of cash. repurchase shares to stock stock $X another to XX.X year in for

of $X.X We debt-to-total ended a billion cash on the quarter and X.X% capital with book ratio.

continue operating results debt to We shares able strong and be as to overall are Millrose positioned repurchase and to well have extremely reduce to to we spin driven date.

unfolds and positioned be as our our address to as be We to company continue exceptionally operating strategy to enter balance market adjust XXXX. sheet to we a it from as able the

about optimistic future. very With that our said, we're

one reduce volume the our Volume to will will the and Demand hand, adapt dominant volatility cost will we driven interest bottom to line. affordability theme. will normalize, our by new remain structure rates multiply normal On a supply help shortage current and and the will that incentives the remain confident will increased normalize continue subside. margins will and and

the we Millrose way and enthusiastic and are On together. both Rausch equally other acquisition will the the work Coleman about the hand, spin

our carry yesterday's it a fully almost will Properties, be to of REIT ago, future, the inventory reform very time an release, that you has provide purchase land the model. filed spin-off website. home from and near the platform listed spin developed banking call will now most just-in-time SEC the first that will for site public complete operating homesite be will migration registration option we is to now use the SEC and and some available X-year Lennar. the Millrose statement, In publicly hopper As our asset-light to we out announced know public press subsidiary the Millrose on that

land XX Dor Lennar procedures and suite development operate across of firm refined billion designed $XX Lennar-related approximately and is and Lennar as and of to acquisition, with in managed used Investments the AUM scale institutional land -- by and comprehensive other over with financing ventures development at Lennar extensive be the well. and of The U.S. manage externally a hopper investment assets both systems business for homebuilders will by Lewis to subsequently years. with the and Kennedy a experience homebuilders. subsidiary past for the Millrose and alternative land and

fee, Millrose's of by operating through management have its costs of All Lewis employees paid will and no will Millrose own. Kennedy be its

Millrose and dividends fully to development will and sale a the receive sale which cash pursuant proceeds receive without option homesites. the of of pay raise developed will consistent from to be predictable initial to additionally acquisition and to recycle from contracts. monthly used deposits homesites fully investments payments, option will It needing flows proceeds land funds. developed deals will new new recurring Millrose shareholders receive into will

based. are capital as more option that to and other Accordingly, agreements currently of addition private developers organically an for source with managed added permanent professionally an equity and programs Millrose Lennar negotiated is

As $X.X such, undeveloped equity improved enables Lennar. and billion and cash contribute Millrose Lennar billion land-light inorganic an and strong land generation of flow growth developed of cash. approximately opportunities, inventory and it approximately strategy important attractive will on is through and to as organic to Millrose evolution our return partially as $X

Lennar approximately WIP of the Millrose as with believe can our that operations. the inventory and asset-light land while manner Coleman facilitate We as will Additionally the acquisition, will well. million Millrose an relationship homebuilding acquire asset of other transactions ongoing $XXX Rausch acquire part in

strategic buyback equity will XX% or to operate that Lennar shareholders. will stock of its business distribute have will needed of X a nonvoting way, sheet capital of shares a of a will or for exchange every potential share dispose will shares, thereafter be balance growth. Lennar Millrose cashless in which for engagement for or the the enables with for stock Lennar There basically remaining effectuate additional positioned XX%, by the would Lennar and shortly of Millrose Lennar. as to adequate debt distribution shares. be core Millrose Millrose is which, of shares of X Lennar a

near shares The very confusing. of a this is brief distributed we say very to it more either will for interest excited buyback. Lennar me as quickly a nonvoting to Let for which Millrose say, very little be to retained will one public shares or Needless additional a might Lennar time period effectuate bring exchanged stock in future. and cashless time XX% be be by are the

Now Rausch briefly to Coleman the let acquisition. me turn

in led XXst will largest to Coleman As look the homebuilder welcoming family builder his I join work and Rausch Rausch as fourth-generation built in this a which extraordinary of by will continue John work company. associates have in hand announced and Fayetteville, noted, the the with to the Lennar the Rausch as forward John alongside many is company country. team We partner to purchase our hand the of John Coleman Lennar is Millrose actually spin who will based Arkansas. into Coleman previously a Rausch, Homes,

strategic our WIP our limited acquiring where operating acquires assets, high enabled the acquires spin-off, producing Millrose investment and by growth of property and Lennar Lennar a squarely to enables acquire This concert into acquisition the platform. Millrose in plan a landholdings. This Millrose including with with companies the fits return

builds Alabama, few in in our existing markets delivering basic common while by is building changes share market markets. Oklahoma states across building our these into new Texas, Rausch and Lennar, with Coleman sharing on within Lennar, in strong markets Florida. an and on overall primary #X This a in cultural and philosophy home XX homes for the Rausch will in budget Coleman builder proven designs. Coleman has and Missouri, Rausch expanding reasonably X acquisition offers to and and the high-quality is growing result operations of in very focused desirable optional markets Arkansas, Kansas priced fit homes commitment Like a strong of schedule. on X operational

by that new that will will and end deliveries first controlled than Lennar's XXX of and add homesites this the communities, for assuming X,XXX activity, the We there closes quarter. XXXX in after be in acquisition Millrose through approximately more XXXX, X,XXX orders XXXX operations the expect acquisition XX,XXX beyond. the

in exceptional integrate Lennar we of well-run will into concentrated as markets activity XX% Lennar XX% Rausch new has in take reputation XXXX markets one is operations and advantage The where operations and existing where Coleman's Lennar.

about excited Lennar the addition Coleman We to are very Rausch the footprint.

we while quarter a bumps little are the a we've So optimistic the an me a in road while for year-end in Lennar, conclusion, longer-term the might road platform say short-term financial and lot. covered exciting been and this and sales. And ahead. spite ahead Lennar. the let road, time we difficult is of very about that this look Lennar, In has production At as for upgrading we drive are operating choppy,

to we to persist continued that the have shortage drive markets. know housing We production across our meet

community flexibility future. and strong and activated execute upon afford land interest and rates count growth will Perhaps our growing and volume. as well pent-up balance our said, to growing opportunity for that stronger footprint and us thoughtful and we margin importantly, recover, relations will even normalize, sheet believe most banking strong be consider with we are prepared a With that growing demand national and

on In partnerships continue grow and that regard, the our we will manufacturing and land on to to on equity. focus capital with focus use returns high model our

We continue exposure business on focus will assets. our also noncore to reduce model pure-play and to

to sheet. continue and just-in-time balance delivery an will asset-light We site drive home

and buyback pursue flow we our And cash while return transformation, and strong generate strategic will as growth. to complete we asset-light shareholders continue our through dividends stock also to capital we

approximately XX.XX%. For first XX,XXX and home we margin XX% are expect XXXX. of in with We to quarter in -- guiding of to to XX,XXX now, we to closings deliver XX,XXX 'XX XX,XXX a to the

determine perform. land continue our to their and effort as the look that, the watch We And Lennar amount for of expect XXXX. to talent. XXXX, and spin and associates model to Millrose stock operating extraordinary want in for we of our we light evolution to tremendous the thank will repurchase also forward I We focus,

over it Jon. let to with turn me that, And

morning, everyone. good Thanks, Stuart, and

at our strategy homebuilding shock executing consistent As you operating as Lennar just on operational to to high-volume become manufacturer heard, margin absorber. using our teams continue focus a

and sales pace, time land I cycle will position. our reduction on reduction cost performance quarter fourth discuss asset-light

Our performed and needed focus cycle conditions the what changed match not production both production pace noted, our while pace, as market sales time sales knowing pace pace. begins did expected, anticipated we as keep from to our and with Stuart start our

As the and quarter to began, we ease, expected accordingly. affordability we priced

However, mortgage first the of lowering of our theme declined sales pace designed the [indiscernible] instead and quarter. price the for rates this led to part

mortgage rates to market higher and where the adjusted consumer with it that needed we we As pricing the saw more was. remained help meet our affordability,

desired continuously the were we As to we measured the pace, cost closing their form it primarily then price incentives against achieving for buyers, And results adjust we some made use we buydowns we further. were adjustments, rate specific of mortgage if These reductions not and or pace. still these in address needs.

to divisions needed shortfall adjusting our the of pace to fourth we sales X.X. daily adjust sales addition homes of appointments digital pricing, lower of and and not led X.X Lennar per In marketing with evaluate our overall if we have volume engaged per leads start than the community our if machine pace quarter being month to plan. The

our quarter market average that be To the homes end community wasn't for we from will quarter even adjusting of sales November, pace. Contrasted improved and slower in production focus our our first were of continued X to our to XXXX. challenging along X.X continue noted, with time cycle as construction pace maximized the with time focus incentives enabled quarter, our sales the per fourth in November it cost an and the improved market cost was was on benefit about approach, unsold This per clear, part cycle that month I allow resulting of the adjusted, where strategy along us community. a completed to to core sales per While efficiencies of the product with at us manufacturing flow throughout improve the with environment, our volume. to more high a it into on

cost year-over-year by an labor the were construction inputs with quarter, and tariffs, the X%. respect cost fourth and demonstrate ago With over and past higher time. In for average detached X strategy our immigration a homes. a time. majority to QX basis The XXX our environment or material where contributor builder-of-choice and continued we improvement. Asian single-family the by policies chain to This down cost made and for a of inventory Chinese consistent year XX-day I our QX, during cycle new tariffs decreased of on consisting inflationary time decrease what we costs is supply supply on other Accomplishing cycle of manufacturing impact X% approach. away to comment on move also of shift quarter days our major affirms in affecting effectiveness the a X or chain calendar the in turn This benefits manufacturers. to days U.S.-based years has from fourth from strategy each from sequentially from manufacturing also want resulted to reduction is XX% potential of on purchase of today, potential the our to as the a decreased material cycle starting average year-over-year and our reduction

the tariffs, we've here. more remains of the are potential respect $X,XXX grown shifted primarily to range $X,XXX parts subject to per to These products of [indiscernible]. become in timber. impact in There in electronic to Made we estimate lumber, be some assembled usage of used that cost domestically the already components to With China, components manufacturing

much policies issue [indiscernible] difficult impact immigration, immigration to the of of the assess. On potential is more

know what do not policies be we will implemented. First,

or be what on is our and local there for labor to information workforce trades enforcement. manufacturers the for may Additionally, subject regulation percentage of new no reliable

takedowns we position we consistent that the and manufacturers do our the just the sorry, the with fourth fourth our disruptions will chain of in our on builder-of-choice supply What during effectively solutions to that find be the same most to how then the land because will a partners purchases we the able experience us historic volume work continue land strategic quarter, but know, our developers be to we likely to bank with just-in-time the and on community-by-community trades able pandemic, prior high quarter behalf chain, land our basis. the land efficiencies. of local deliver effective break quarter homesites is work to with machine. a to again. In important disruptions, Diane is to give work production strategic land minimize most impact learned the allowing purchase and from our -- and to on homebuilding purchases effectively the to strategy our focus from finished our out, just-in-time on developers detail pace in with how our match do bank to we'll believe national are supply We've

commitment banks During in on behalf million $XXX $X.X the home about acquisition of quarter, sites about for XX,XXX land land about billion of acquired development. a our and land in

from year, focus down the to buyers to owned, afford. increased in improvements XX% achieve needed can which environment XX% years being our improved mortgage as stands enabled higher, challenged in supply turn, X% homesites and a years, time more These on homesites monthly of moved of less a X.X operating at to rates land execution controlled decreased X.X% last home year-over-year. help and now With from a the versus our cycle quarter resulting reduced they strategies and owned asset-light, percentage increase. Fourth was payment X.X% inventory operating X.X

whichever of the of move We to market will XXXX. pricing with navigate direction continue in strategy we as rates our

extraordinary associates even flow hard I'll focus now We over execution. And and and to acknowledge [indiscernible] stay turn execute sales also on work, focused into place, and asset-light strategy. land lean for our want it our even high-volume will and Millrose production, I their better the manufacturing Lennar thank Diane. to machine with in on

good Jon, and Thank everyone. you, morning,

color a have Jon operating provided and our performance. great Stuart regarding of deal So

for summarizing the therefore, few spend minutes then first the to So quarter. provide I'm a balance sheet going estimates highlights and

the of inventory we volume-based The actions was strategy and This So maximizing margin. on as of the revolving turning sheet. Once approximately flow billion cash turning and with by billion appropriate again, of at borrowings heard, to $X.X that liquidity $X.X drove you've of returns we these ended to total result billion. balance no market our provided year our adhere cash $X.X credit the facility.

of migrate goal sheet again continue efficiency becoming once result our At a to and capital our years, continued focus XX%. towards years our and our owned As X.X of reducing we balance land-light. controlled on our year-end, homesites was investments, was

Our purchases highest $X.X XXX,XXX We portfolio home owned in lowest We and sites on spent provides owning year us homesites share percentage land ended sites. years control position the controlling with to history. We XXX,XXX capital-efficient and this strong XX,XXX our of grow competitive for a to home a total billion this in way. continue quarter. believe a market

almost consistent manufacturing buying just-in-time is were homes home closed model This our vertical soon the finished with on approximately will during a XX% the where XX% sites construction return finally, of were up basis. Of However, our begin. land X.Xx, was we inventory last X.Xx from XX.X%. a finished on structures and was purchased basis. our turn And the inventory third-party where from site home on year, quarter, land

we forward Millrose reduce with move As land our homesites and on to of spin-off just-in-time continue thus, ownership and the a basis. purchase

should closely cash over goal to with would more it return align time, earnings approximate flow our to and more consistently cash capital Our shareholders be this flow.

range. And homes were our community position, that is about production the within X in or unsold we homes had inventory which XX,XXX notes completed, per approximately and consistent repurchases with historical X,XXX and redemptions focus, started then homes no turning XX,XXX quarter number the of ended senior with homes our this quarter, we quarter. inventory. includes to debt our and about During This

million savings of our with over or XXXX, repaid at lowest rate down debt homebuilding However, $XXX for until have actions to total almost since ever. X.X% to May notes. for is billion we the and XXXX next our of not interest notes $X our And ratio of maturity $XXX year, year-end, repurchased XXXX. of These we capital an million. debt repaid

for million. our total returns, of with to billion. year we the commitment our million shares totaling outstanding to Consistent XX.X This repurchased $XXX Stuart the increase as $X.X brought shares million X noted, for shareholder

cash this Additionally, of of dividends for million we $XXX year. the total $XXX and total approximately million a paid quarter

$X.X our returned So in XXXX we the for billion to and about debt holders. aggregate fiscal equity

increased Our flexibility book $XX confidence provides as us XXXX. increased strong almost our In we liquidity per move sheet, financial stockholders' summary, value equity to strength low the share into with and significant our $XXX. billion, and balance in to of leverage

brief some that overview, guidance to or impact spin-off. Note turn the of that provide to I'd and not include these of with like So QX estimates. do acquisition Coleman Millrose the estimates Rausch

starting new So orders. with

We to production. pace as range we be of with inventory into be turning of homes continued cash. the to to homes XX,XXX focus range XX,XXX expect anticipate orders XX,XXX QX sales in new in the with a on match QX We our deliveries to XX,XXX

continue to market to Our affordability. price to be QX average we as sales on those should deliveries meet about $XXX,XXX $XXX,XXX to price

and XX% between be XX.XX%. to margins gross our expect We

close the closing. Stuart additional about this be to margin and in backlog visibility will the anticipate sell expect in quarter, to the first roughly So which have homes at gross provide expected context, in the first into What the we close of our to we XX%. we both do is to, has on not alluded margin is as gross quarter point XX%

backlog. here in the to will sit closings we mid-December going are our As visibility the we season, margin than lower these with limited have anticipate a have we gross spring into selling

conditions market from will this we However, if benefit improve, upside.

year. the always are that impacted the costs lowest since Additionally, revenues field negatively in margins of expensing are our the by of recall QX period current QX

low first the will margins is quarter during XXXX. the for case, Additionally, be as historically the point

increased should to sales costs SG&A activity. be percentage we to in maintain Our as the range of X.X% X.X% anticipate

be our $XXX about we be For to categories, the million and homebuilding venture combined $XXX expect financial approximately joint to We million. services land other sales earnings anticipate breakeven. to

expect loss For $XX about million. business, a our multifamily of we

remember of impact million Other, potential any $XX loss to public our Turning adjustments to mark-to-market the investments. excludes However, we about Lennar that of expect this a technology

QX contribution Our will delivery. corporate total $X,XXX be our about revenues, X.X% per G&A on charitable and of home based should be foundation

share count average be tax million should shares. We expect XX.X% approximately weighted to the be QX our approximately XXX rate and

uncertain, estimates for approximately are noted, XXXX, me per on the delivery XXXX, $X.XX since the So an since we conditions homes the of guidance, turn to we the to $X.XX -- XX,XXX for we between providing should are full consolidated that, basis, produce Rausch only operator. acquisition. With XX,XXX market as range of a quarter. let we're turn it over deliver targeting to to share including year And Coleman EPS and these as

[Operator you Zelman with sir. Associates, & ahead, Instructions] go Alan Ratner may

going all on the lot right for a detail, Thanks definitely now.

thoughts I'd kind the your rates drivers quarter. compared certainly were weaker were I you it Obviously, than in the just So guys that and why makes bit back during think appreciate I the the hear in that. to the a September, I sense of Stuart, And consumer where on wrong expected. direction. things moved love impacted guess to demand

But if things quarter, the high to weaker in it at look mortgage and meaningfully spring rate the in selling it's Yet, were at from we fairly in not year sounds an too maybe of demand just ago. what dissimilar the overall X% you like absolute Xs, were 'XX hitting perspective. a

much feel of put have that the you changed economy do how it supply/demand have to? picture, at seasonality? to drastically specs like softer been because given in So attribute Is a type picture the warrant environment. ground the that what it doesn't on Is many it that rate things

think combination factors. a it's I of Alan,

it's a for come up level, down. down, that and level. rate the at inflated mortgage. acquiring mean and I down have is the harder to particularly It's I prices into doesn't inflation but what down have mean gone a prices today's you has as move-up entry move environment. payment to think harder qualify up the that by that And come the even consumer a accumulate in of But and payment,

interest that up, there's down. and down of combination and think moving a moving rates up moving I moving

little people created the It's of and a bit hesitancy a actually trigger. pulling

purchase. make have actually just You factors in difficult environment sprinkled to on, seasonality There going are decision to are and of that some buyer the become the a more get to here. a number it's

then movements. And then As moving as rates we the to didn't reduction. interest we Fed first XX in point down, the up there seen down the we of rates coming the fourth quarter, down responsiveness that trending end where came and picked from wake prior the in quarter our basis into interest had of moved see third rates were same to

it been sidelined. just just The of a -- by felt like and consumer that, surprised felt they kind more it's little

a say it's harder little and consumer purchase and during our that we of it fourth waters it's at the waters And tools, have the Centers. the harder price more started at and particular, as felt have combination all of up the rate to it components navigating became things navigate the took -- little that and migrating bit the door rates reductions, I'd a just get So became trickier, a we to of over incentives Home buydown quarter, as those fence. Welcome in

of pace Got second, there. then I And just versus additional it. appreciate kind strategy. on color your the overall price

closings growth, put always there out where the price achieve market as I'm of a were margin You've bit 'XX though even to lower. too curious, kind the ago, targets. shifted you seems X and and volume the from the for think you not have targets articulated months being just to dissimilar lever you about

to to on sensitivity the achieve normalized? to you at margin you least on volume there time of incentives now being, go consider put What there kind thinking that that lower Is right what be willing or there bound a are are you've now? that the targets you're upper margins below out an on bound for the below,

at and steady-state cost both have well help volume as and bricks time. us We as over at the overhead rationalize level sticks conviction that here costs, land will hard the level

we're going maintain We're so the adjust is going to to market. volume. to answer And

rates to going maintain or conditions adjust to as strategy and and the there to issues, Of land it boundaries. going just as is new erratic it But leverage we're affordability, normalization we're volume, use to outside relates market that of as straight market, relates adjustment a change normal production affordability the it's be we to both rationalize that because can our to to something the might in the so interest that costs. course, point and a

Our JPMorgan. next Rehaut caller is Michael with

I'm going we on But that to I'd the think investors questions, focus I sure to, a lot focus that with hear the is Millrose most clients really -- just that of speaking core the we're business, speak First about love of we're which on shortly. to times from your from line of volume couple move you're terms company of a finished with stabilize. yourselves you benefit that things normalized of historicals you're kind Stuart, spec a to in of the when mentioned today. keeping positioning -- continuing kind in to positioning margin

seeing year. in also margin might over of gross normalized first -- to think for How the XX to, through past what the think quarter months margin the a we seen the Lennar, I'm get first the think conviction more the trying about gross bumpy a terms we in alluded XX, you've what say, for means in Diane that margin seeing next to You I year, once period. alluded what should the you're this relative what let's mean to what -- should normalized lowest about your you're quarter. be

look times. There's are out to turbulence normalized, is we system hard interest the What would don't certainly It's maybe it's is especially north is. where think And that I a I consider rates lot around. what I word, moving know in turbulent are overall. a in ahead, to now. but strong injected number exactly of Mike, what be change of too

to and normal. adjusting that a the and market the is shortage is think I a is in everything by There just demand underlying new formation. building population background household supply

are ebbs larger ahead difficult. we'll forces to price we've down. it's and gas going up will to and store where And coming a So gas by now. where we And going going be activated market interest What will the volume means and are it. enabled and to or migrate back that is means at margin. on times by the know that enabled pump market or and be There as focused normalized market going right with rates, work up we of we now right what It's that than margin easier number. stabilized as is conditions the prices to conditions, margin along all are by pricing, grocery market down be these It's together. move is will things are to demand our a flows, climb either multiplying by higher

find that just I chain there efficiencies our that the strategy will as of enables is us margin all to really supply you add, to Mike, the heard help from equation. our costs and would reduce to approach continue

I it's the shift volumes XX% appreciate intend and few for both fiscal you I annually Stuart about times, wanted Last to Jon. you've this and perhaps towards that, grow last quarter you quarter, I line. stated think top guess and I what and second a now reiterated beyond. 'XX to question,

perhaps kind Your first implies guidance X% X% of of going for less an you range. to close that Lennar of organic we to obviously Is was there? a 'XX that I variability I'm said fiscal X% the some growth, competitor just about volume to 'XX. growth is XX% challenges least the that kind though now just part in aspire volume Rausch as growth might -- D.R. the about up of growth little of X% "normal" stated basis a bit all-in online. How the growth XX% you include a the about due only big units there if in an X,XXX which like you forward? Is think other to builders. communities to quarter, from view organic talk number? flat it or you wondering, going still fiscal organic Horton that to does do think seems a size. contribution yours at of in slight on goal that Is forward, below Coleman, had certainly growth be you that And because similar should organic contribution year, getting of

the as we're is And has a little grow, that and between Mike, the become we communities. line inorganic adding organic bit reason more blurry.

smaller decided that adding of we're as affiliation with through an have who the avenue forward. a collaboration better communities builders or Sometimes acquisition us

of And really X. has at sometimes acquisition on just instead additional we're that's basis buying different in this different got of communities regular that ongoing rates. a And markets the is buying X, something

where organic hard it's So inorganic between line decipher kind and is. of the to

rather people system the acquisition. operating we're a So looking de With rate, novo two. that of some a we that and that Rausch already between markets where community kind has have existing an with into markets And high-quality robust platform. of Coleman, already combination the markets tremendous we come where are embedded the we we're along Coleman Rausch we're or to new working basically reputation growth other count growing with at adding have a combination the

at organic the between looking do strategy. begs separate and can out Coleman, of being So and as really it. tied it even with our look both Rausch with We're the inorganic really inorganic we line growth at question and organic together we how

I add that, think just Mike, with Rausch as Yes, you're seeing I would Coleman.

We're return. is the bottom the to we big more markets, just into While remember at that's new in growth. what's we we inorganic call high we'll these, differentiator. adding markets, to are WIP, we're that benefits growing we're grow structuring and way the a that's really goal expanding really really market the from a important that also think existing share, think I profitability I And the them, share line market market. also achieve it buying And because greater and the turning really quickly,

M&A very It a sort that. that a in to goodwill I you think M&A. activity, organic light. to you negative. with be than to akin is It So And to about used a think will, But different historically. very came you of have be think way if lot different and think this about thinking it might about like is growth things I more of

any not as Rausch impact accounting I result, include first quarter, in Diane. be then appreciate for I not margins, any is there expect it the just quarter, expected? that does third clarify, Coleman. say, for And gross but a in the to second accounting first purchase guess quarter purchase Yes. that, the quarter, to let's impact

the second we if to material close, deliveries in the be in margins estimate over fourth that can will third accounting you we quarter Yes, overall. when we X,XXX there'll and But I'd on the first at of I impact quarter, that see and if if depending quarter not second, were we're purchase some think second close quarter. the -- impact to be accounting end if it, about say purchase again, the

next with Kim caller ISI. Stephen is Our Evercore

I of on heard that kind running the margins indicated you want And try first that if sort I think -- that percentage a the think or has clean gross say gross little you closings to you bit, margin. that you are that of the XX%. can, Stuart, That it the sold, yet get backlog up not I half, to that your easy. you in I thought number of margin to of XQ of the would was sold closer over of I that weeks, you're makes of then have an be implies going you're gross here coming it at may margin. not right? the November be or gross that So sort quarter, stuff yet thinking XX% had selling sort end that about the implies the in XX% that to

I catch-up also sales XQ a that your on missed in think you has because of you sort going XQ indicated, though, sales.

you're a gross if because So of sort is figure little is for that you little suggest XQ. margin that bit might trying you're sort state make what to a of probably that overselling, steady up a to out will, actually lower XX% if

if we some need adjustment or that about? make about other to to sure that I'm there's want thinking thinking be Just right,

that think doing activity level, going job. activity. at see we'll right on. how to have a we're you're pretty And to actually market or to That's solve unfolds enables enables the good I and but not

there market you improve, of that sit we to Stephen. from has middle here because already a think if that. visibility that. And conditions really gave just on But Yes, conservative as levels I margin, impact in December. the about right trying isn't upside of now details lot I And we're to of it, it some there's the QX, be the increased right, Jon XX% think that's incentive think you if which

rationalizing volume. structure least on to giving and look, some able on those they whether on, hold count more building say, make add able trade side, are with the those they it's that and our either solve what partners, we cost we're And just to it's flinching let progress know in whether working a volume while bring that at that tough land not of But we we're And production our to of can to to in are the is efficiencies volume the solving volume. relationships the or me by cost cost on think we'll or side, predictable numbers. We've doing be costs hard environment. enables consistent us rework and be we our some steady to down rationalizing we continued

offsets some in of important are our that to we're all this there So that are the business. thinking about way

you that think helpful. I And also a indicated mentioned than sort also I that's year. full Yes, margins have that has should of XQ lower

-- like sort XX also of that's exactly being of so an top conservative. number isn't So annualized anyway on

Yes. me... And let

Yes.

well, impact field that is immaterial not Steve, as have We number. which an

by say And community community let go do the of back at bolstering level. alleviate to helps fallen also pressure off. community this our to me that count want the some third I of The community the where had quarter count that detailed I

in So going over these that, to things now, that. by And we're lower fact work to going time, a little right it to out. confident number. okay, bigger we're like going but We're the and through we we're a multiply and are normalize work

Got you.

Switching volume. to Okay. gears

hit I that ratio guess about turnover year think you're XX,XXX noticeably one XX%. year? closings for my question to is, other. assume backlog for Your I to the guide, the a that it does higher assume the or Or is up the in need does going guide to above range? orders XX,XXX meaningfully closings Because order closing

ratio. ask, including you it's me cycle -- got time higher last that order or curious, no, is workers. kind turnover my it's need sort me XQ, north you're turnover contemplating be XX% you I'm to ratio we're thinking, to are model And than which telling you're it of from impacts a -- either tell want is crackdown if I because it's to higher well undocumented just was me, to are You're going then, And sure if on backlog to of right, if of going number orders so XQ higher higher. year. to to it? And orders going probably growth going have telling in that like have no, Rausch. I'm make and than well be have to that maybe orders a backlog

Yes.

with going machine across our efficiency it's bringing the through little it's through generation the the new we it's not on order we more is orders, mean answer, marketing getting think you're attention to be digital whether our those the side, by or and what look, and my more dynamic that So sales pricing but driving happy I the focus to through both. platform. are a building mechanism, And are whether we're of programs. that bit I efficient and And of

you growth that backlog And the focus brought the embedded cycle will be there additionally, this. that if mean Jon's just conversion efficiencies enables so it's that construction pressured It's are and steady time, environment. listen I business. our in holding injecting higher also cycle But time to to accelerate order we're that not costs in down. have in articulation, coming which to some we attention a

meshes that one the partners understand to immigration for And figure question out they we of of to we're doing to that us. immigration kind to will is as and there are need with that's so Now here. and them we're be all the with for overlay is injecting trade our that you we're we're them, going predictability there policy. together. I have out that happens going say that an But raised of And a wildcard there. what how things

quid that market a And themselves. flinching the to in we version the best of laying kind pro been is exists says that be rock-solid consistent And that even we're enables predictability flinch, of not logistics a predictability is the when that quo the have them out and in and value-add. the market, and

predictability simplification. real to with Steve, a comes on would that add just I that, focus

we to, than the happen and labor which which truly described to to we the used Stuart So you work reduced have, the enabled count force execution have both as greatly manufacturers. SKU just through

but you're cycle I'm to have so affect time affecting cycle any assuming you going not time? It any assuming if the do are you impacts just clear, it's So sounds people, you. other like not it because market,

saying? what clear, of sort I'm you're that so is Just

the mercenary. we're accomplishing. to we And all we're on to of solving most them. consistency But competitors to accomplish to be well. things not the are We time, chasing do with hunters X our are we the that's able quite Well, our bear want our production, laser-focused the that cycle and

about much will thinking. look there given to assuming quite it's trade with, with we here, was this that eventualities. clear be are clear that are not something environment, at at answers working an to something not, we we're But in are Jon Now asleep about Are a point? thinking of part the there and uncertain that. our variability talking There partners it's is bit, that that naturally political and at switch very a

next Wolfe is Trevor Our caller Research. with Allinson

first are wanted just and you suppliers in given cost to on some cost volumes comments excluding follow margins see up to here, the back your concessions changes talking pre-pandemic in impacts from are focus your on suppliers? some growing you made XXXX to I you maybe With XQ with about Stuart, here gross your trades with to both conversations policy, your expecting trades from some levels. expecting see concessions are but and any

find Yes. a efficiencies program down. with to of discussions This is Jon. We supply and bring our costs continuous chain -- it's

product is to big the expect thing enables down. it we margin biggest consistent, we've to continue. of discussed before. come strategy, that our as partners and is strategy, have is volume I just have which discussion part down coming the to But reduction. details A So that mentioned, that do to core our gets just with relative our margin trade our us their predictable SKU product of

inventory levels the got in more overall expand levels levels with markets extended. lot just That in and if like talk feel makes relatively inventory sounds you of of environment And lot then industry you. inventory levels levels. been your sense. you in completed It about inventory demand completed to where comfort then your your there's talk in at Can Got perhaps are normal. that of a and any Okay. your your markets, a remain about elevated the completed commentary the second, they've current completed

great that's Yes, Trevor. a question,

to on an was high within at the inventory as And year the maintaining end our our inventory very range, range. came of the appropriate. level Our we're is we focused end of that but

to So and it's a We we inventory to have that a let buildup cloud on If grow. going your me recognize way is actually talk inventory, too over really depressant best pricing margins in about the be appropriate. dark cast where constantly future. can much

we're level So keeping on inventory range. laser-focused our within a

enables X do range now customer really given that. And X the opposed in and community that actually that versus we Now but home land, is that us closer we needs something we've production under per closer we've to migrated want maybe strategy, to range at to address than little that trended as to therefore, per within we have X historically, home above be to X that the get And we our where enabled the to but now, homes. We've land-light to think to carry just community or homes historically. we're thinking comes to a been want right a X we're production. not of one to home that's under that bit process a more

historical going maintain what as to we're thinking. inventory, little we're how of matter bit that's but going We're towards a be a strategy. to. our to we're solving That's So carefully higher side

to that, just that levels, very Trevor, inventory. just inventory maintaining add the freshness of but And we're not focused to on

at or XX% inventory, is you XX our So it if we're letting look about on aging very age. from fresher days not of perspective. it focused And an

overall part big a it's of operating focus of So our this platform.

Susan with caller Goldman next Maklari Sachs. is Our

those generation offerings? you more benefit on of question where there. Can standardizing the you will in first the about margin also in and get cost business? you structure are How over both some next how My product quarters the the the but of talk there structure much can to of over the rationalizing in going several cash just time, then back is focus terms that

refer So to hard to a And going product X/X at which expect at to as starts 'XX, our our our it represented in work we and about we've of about product. been that's grow XX% core starts, we XXXX. that, in offering, standardized of

and our be do will also labor cycle further think cost create supply very more chain, efficiency that as and by both and we there both So more consistency that but help consistency, we will with materials is positively rationalization time. that received

a to X/X we've about migration laser-focused product The of line, is that opportunity The to to from been a building as and here engineering both Susan, on. of our it migrating deal of bottom and tremendous design really there's not value renegotiating XX% amount the with core our efficiency of home home. great about efficiency, into much the is that the which equates the production as is trades of

more that. over we next so think product more in a the associated lot lot a year, reduction And see and that we'll cost with core

of obviously Okay. of the into and to one stock And a comments focus evolve can as repurchasing evolve as perhaps then, business. shareholder for? that that get you're returns, that you're change understanding in there, through was there's key to will on process. going out made you could continue how the a and factors do of the move watching That's model helpful. that but Millrose the some we can And Stuart, and we Millrose lot to you that moves newer that talk the

Well, let's Millrose all, that of ongoing first of a end been is X remember, process that has the for years.

So a is experience a housing other grow. Gordon, with essential Angelo land program continue And to we have with tremendous we opportunity and of step. to and partners, tremendous Millrose amount a our banking next where starting have

the to is of to The where and going group has as round that, is capital raising next with Millrose a a biggest capital. vehicle opposed permanent difference it up keep one

about there's strategic So Millrose. something

especially into capital land, going take start-up to how endeavor. it we're move land Millrose at we flows, remaining see portion the large the our the of As of system, and a

will the your will that the capital which a either to dovetail with there to I'm as not actually mature rolling owners with we're be as startup go as dealing go develop now we and stock return confidence strategy debt but option land-light public, programs what with as a and of will flow just the we're land that producing, a our relationships As all land programs process. And engagement our episodic we fully will be other we as engagement, cash well it's banking as through where as we're well. goes as mature through question, public. around answers producing sure we'll how that, dividend Millrose the or that much that paying we're shareholders buyback goes down through process of well. maturing have

And our think returns equal that, and I and that is I a that that cash we'll sure through as really I journey income dividends you be year a And flow. mechanisms goal Yes. Susan, making of coming net all to shareholder of is where lot sort embarking have the increasing we're together, said is of to the would on XXXX remember, still add buybacks. our

I look from point longer-term will cash the on But And net debt get I think ladder large close a a think to that we where is flow. to income as standpoint. don't we sustained basis, maturity pretty you have a

that buybacks. focused on will formally very towards we the design, by be debt flow were reduction. cash since more geared heavily So

step in to that where direction. And to -- give of going. trajectory are think What's taking think of step you we program. should I have sort another a that is a important I sustained we're a us So that

Our next with UBS. Lovallo John caller is

one same you with curious an And you sort what Millrose deal. in then partner the why first to lines, just spin. decided the along the do external Maybe the the I'm on book be REITs. mean of of we should at, I looking to trade mean age mortgage they as comps? right I XX% value. to call think do tend discount at a it, manager

curious an consider why just you be what good to is comps and manager. I'm So would external

want the Lewis business, it. Fred, Kennedy participant Kennedy execution of manager to the the And and external And chose a and just the us Rothman manager, on and Millrose. Kennedy amount a been saying, a for programming Gordon done has Fred I'm for thanks Fred along we next do the question. relationship? I been you strong we has sitting start in in external by this weigh way. to of Lewis right building going me. around chose tremendous work started because John, they've got Lewis the Angelo counterparty on we an to

Sure.

a of that a working they're X. going using need day develop our has outside get produced conveying the sites Kennedy to and home be up internal an and a already large and an going have allows Lewis relationship hopper. develop to history very We we transferring familiar We're running managers them systems long, with and and Millrose strong good to as be Millrose from very, number platform to here of to

up X, day partner very and running be Millrose for active on So strong will be a Lennar. and

let let and And go Angelo we've for me Gordon you, extremely you beneficial Angelo relationship the with with that to asked, have me pools been to the that multiple Gordon. say we going of done why us matter add but benefit into and capital tell the wouldn't strong And are it and future. is as just industry

land in And land, developing as Fred that familiar, through so are the moving of land, way orderly the govern oversight therefore, financing said, system participants have strong we hopper overall the the that and we it with purchasing fashion.

professionals manager. We have a at experience external Lewis They of already. the natural a Kennedy with lot were

supports administration. external the gives very visibility manager? for simple of cost what is are The the a A asked be going of clear overhead It on structure comps. what associated professional by clear an fee the it you to Why world is payment understand. And of the more a the then -- the borne with much of the to manager. is. structure question all It's structure cost

I think the of leave we that take months we're going public. Millrose to to couple next as

that markets a but see, and manufacturer we're little of the the within as means there's we're of So future very this enthusiastic and addition benefits to just-in-time now. the a from it right homesites. SXX going to the homebuilder for of what and the of stay bit capital about wait in what's boundaries delivery

to I John, want Yes. just add. I would --

perfect, not I to think compare I you income. to cash about example. that from think -- have a and with about sustainable for returns it's sort flows while - Millrose of you're investment, of one getting that the Millrose to bond produce about If recurring that think was goals the And

component will And important. that, so sustainable very that recurring be think -- that I

mentioned, from goal I goals as flow, that think having Millrose about we're to a will accomplish cash think, of and so that trying trying standpoint. income -- And the that against the fee we're accomplish to as very investment you one fixed structure Stuart recurring an

Fred, anything else you would add?

the record sustainable day make And on success has transition the Just of a proven Millrose to future the seamless that's is X. think just us and that Kennedy I and critical a growth Lewis going team this the of track for has together just and Lennar. put for

growth in as I The just wanted And That's earlier follow-up, question out just to strategy the XX% pre-Rausch. delivery, go a was the target just there really to then here. understand helpful. back to sure make an I

including have guys high end, that maintained You the Rausch. at

is would the I not at conversely, hard the you lowered question just guess a still Rausch, pace giving opportunity So that to have were of communities get if you higher that target? for Rausch as same perhaps existing in Or is push it the not and margin? volume sort quite

before working on became just long something me work is it little of on let public. correction. been relationship a best fit. amount our the time add tremendous it We've deal the working in not In a a thoughtful and through together. bringing Rausch deals, but we spend we do about negotiation And have when how world, things relationship just So all

and been for Rausch. a a strategic predisposed growth really be aware our of So part. and our XX% didn't predate of We've this strategy to part very

you or been at has have look part in place. about way we way in it, densifying we it the the that some been strategy of about the we're divisions thinking If have growth thinking today already

we broader geography. But them also our a to of bring brand been Some are already we've thinking densified. about how

acquisition new been thoughtful And to entering component the accelerant growth. so about thought a markets we've an way has that of

boundaries fit And the expecting within our the strategy. program of we've own growth has of Rausch what well been

going driver Now and primary to Rausch that? once you add negotiator to again, say would has Fred I'm around the been in deal. Fred, the

markets has in Well, of strong many not the Rausch we're also in. a position

market the ground in So the we hit in. Rash we're running as share with many markets of by not #X

opportunities and markets, a in going forward. excellent of Coleman the So will we capture track to accessing new and the able combined bunch builder access growth Rausch be the record land to #X of ability, being our the immediately with

for both exciting So opportunity really an companies.

challenged a lower point, at which price affordability And market. is in today's attractive

Short to our and back lumpy; to excited today. want a everyone a turbulent joining about it's day, end I thank reporting at ride, term, excited. holidays. for the look Well, bit of but long-term, a And we're Have know forward happy quarter. future. we everyone, I pretty of nice first our

today's you. concludes This call. Thank conference

may disconnect ahead and You go at this time.