Q1 2022 Forestar Group Inc Earnings Call
Good afternoon, and welcome to <unk> first quarter 2022 earnings conference call.
At this time all participants are in a listen only mode and the floor will be open for your questions and comments following the presentation.
I will now turn the call over to Katy Smith director of Finance and Investor Relations for four star.
Thank you Catherine good afternoon, everyone and welcome to the call to discuss <unk> first quarter results. Thank you for joining us.
Before we get started today's call includes forward looking statements as defined by the private Securities Litigation Reform Act of 1995.
Although <unk> believes any such statements are based on reasonable assumptions. There is no assurance that actual outcomes will not be materially different.
All forward looking statements are based upon information available to <unk> on the date of this conference call and we do not undertake any obligation to update or revise any forward looking statements publicly.
Additional information about factors that could lead to material changes in performance is contained in <unk> annual report on Form 10-K filed with the SEC.
This afternoon's earnings release is on our website at Investor <unk> Dot Com and we plan to file our 10-Q tomorrow.
After this call we will post an updated investor presentation to our Investor Relations site under events and presentations for your reference now.
Now I will turn the call over to Dan Bartok CEO .
Thank you Katie and good afternoon, everyone.
In addition to Katie I am pleased to be joined on the call today by Jim Allen, Our Chief Financial Officer.
As reflected in our results we had a strong start to our fiscal year. So I'd like to start the call by thanking the <unk> team.
People are the key to our business and I continue to be extremely proud of our excellent performance our teams ability to execute on the operational platform that we've built.
Our outstanding first quarter as a direct result of the team's capabilities and commitment to <unk>.
During the quarter, we maintained our momentum by achieving significant revenue growth and margin expansion.
The highlight of the first quarter is an 84% increase in our net income of $40 5 million or <unk> 81 of earnings per diluted share.
<unk> achieved an 83% increase in pretax income to $53 $5 million and our pre tax profit margin expanded 360 basis points year over year to 13, 1%.
Revenue increased 33% to $407 6 million.
Primarily driven by a 27% increase in lot deliveries to 4516 lots.
We continue to make progress delivering more lots from forced our source projects.
42% of our lots sold in the quarter were forced our sourced compared to 13% in the first quarter of 2021.
This combined with our strategy of pricing last closer to the time of completion enabled for starting to take advantage of favorable market conditions when setting finished lot prices.
We are maintaining our focus on development projects and are doing less lot banking than a year ago. As a result, our gross profit margin expanded 360 basis points to 18% compared to 14, 4% in the fourth quarter of 2021.
We continued to increase our market share in the highly fragmented lot development industry.
<unk> made further progress selling lots of third party customers, while growing our live sold the D. R. Horton as a percentage of D. R. Horton closings, both year over year and sequentially.
We estimate our national market share is now two 2%.
One 4% a year ago based on <unk> trailing 12 months lot deliveries and new single family homes sold in calendar year 2021.
Our intermediate term goal is to achieve 5% national market share representing one out of every 20, new homes sold in the U S being built I think four-star developed law.
Our increasing profitability is translating into higher returns for our shareholders for STAAR achieved a 13, 2% return on equity for the trailing 12 months ended December 31 2021.
This was a 550 basis point improvement from the same period, a year ago, and our seventh consecutive quarter of ROE improvement.
This continued improvement further demonstrates that our high turnover lower risk manufacturing strategy is fundamentally stronger than that of a traditional land developer.
We expect our platform, we'll gain additional maturity and scale as our team continues to capture market share in their respective markets.
This will drive further improvements to our returns on equity and inventory.
We will now discuss our first quarter financial results in more detail Jim.
Thank you Dan.
In the first quarter <unk> net income increased to 84% to $45 million or <unk> 81 per diluted share compared to $22 million or <unk> 46 per diluted share in the prior year quarter.
Consolidated first quarter revenues increased 33% to $407 $6 million, which.
You did $3 $5 million of track sales and other revenue.
Lots sold increased 27% year over year to 4516 lots with an average sales price of $89000.
Our ASP was higher this quarter due to the mix of lot deliveries from communities and higher price point markets.
We expect our ASP will continue to fluctuate quarter to quarter based on the geographic location in lot size mix of our deliveries.
97% of lots sold were from development projects up from 87% in the same quarter of 2021.
89% of <unk> first quarter lot deliveries were sold to D. R. Horton down from 95% in the first quarter of fiscal 2021.
We sold 502 lots to eight customers other than D. R. Horton during the quarter.
182% increase in lots sold to other customers compared to the prior year quarter.
Dan.
Our pre tax income for the first quarter was $53 $5 million with a pre tax profit margin of 13, 1%.
This was an improvement of 360 basis points over the prior year quarter.
Our gross profit margin was 18%.
So a 360 basis point increase from 14, 4% a year ago.
As I mentioned earlier this improvement was primarily due to increased margins on lot sales from development projects, which was largely driven by capitalizing on the strong demand for finished lots.
SG&A expense as a percentage of revenue in the first quarter was five 3%.
Compared to 5% in the prior year quarter.
We are extremely pleased with the progress we've made building our team and we continue to attract high quality talent. We remained focused on managing our SG&A efficiently while building out our infrastructure to support our significant growth.
We believe we will continue to manage our business at a mid single digit SG&A percentage.
Katie.
<unk> underwriting criteria for new development projects.
The minimum 15% annual pre tax return on inventory and a return of the initial cash investment within 36 months during.
During the first quarter investments in land and land development and totaled $380 million of which $135 million was for land and $245 million with for land development.
First theres lot position at December 31, with 103300 lots of which 65700 lots were owned and 37600 lots were controlled through purchase contracts.
And we had 4900 finished lots.
Finished lots have accounted for less than 10% of course starz owned portfolio for five consecutive quarters, demonstrating continued strength in demand.
At December 31, 54% of our owned lots were sourced by four star up from 46% a year ago.
As Dan said in his opening remarks, 22% of Blackstone in the quarter with <unk> projects.
13% a year ago that.
That percentage will continue to trend higher as more four-star sourced projects start to deliver lot.
Growth in core Star source project support further improvement in our gross margin and we expect that percentage of our portfolio to continue to increase every time.
We also had good visibility into future revenues.
Over 65701 lakh, 30% are under contract to sell to D. R Horton, representing approximately $1 $5 billion of future revenue.
Another 28% of our end market are subject to a right of first offer to D. R. Horton based on executed purchase and sale agreement.
We remain very disciplined in investing in new projects and our acquisition teams are finding ample opportunities that meet our underwriting criteria.
We reiterate our plan to invest at least $1 $75 billion in land and land development during fiscal 2022 subject to market condition.
We're continuing to target a three to four year end inventory of land and lots.
Kim.
<unk> remains focused on maintaining a strong balance sheet with ample liquidity and modest leverage at.
At December 31, we had approximately $500 million of liquidity.
<unk> $160 million of unrestricted cash and $340 million of available capacity on our revolving credit facility.
Total debt at December 31 was $705 million with no senior note maturities until 2026, and our net debt to capital ratio at quarter end was 33, 9%.
<unk> capital structure is one of our key competitive advantages and allows us the ability to price lots later in the development process.
Most traditional land developers are encumbered by project level financing, which inhibits stem from pricing locks closer to completion after development costs are finalized.
Additionally project level financing can make accelerating or slowing development to match market conditions more difficult.
With our access to institutional corporate level financing four-star has unparalleled flexibility.
At December 31, Stockholders' equity was $1 1 billion.
And our book value per share increased to $21 29.
Up 15% from a year ago Dan.
Given the strength of our first quarter results and the current market conditions, we are increasing our fiscal 2022 guidance.
We now expect to deliver between $19 520000 lots this year.
And to generate approximately $1 $7 billion of revenue.
We expect our pre tax profit margin to be between 13, 5% and 14% for the fiscal year.
Consistent with our last earnings call, we expect revenue to be higher in the second half of the year than the first half.
And we expect lower pre tax profit margins in the first half of the year compared to the second half due to the quarterly mix of expected lot deliveries and to a lesser extent operating leverage.
Finally, we expect our effective tax rate in fiscal 2020 to be approximately 24, 5%.
The core drivers of our business remain healthy and strong and our teams and contractors continue to outperform our expectations.
Accomplishments of our teams combined with our growth plan and proven business model give us confidence in <unk> ability to execute through the remainder of our fiscal year and beyond.
We're extremely excited about the opportunities ahead of us for STAAR is uniquely positioned to gain market share increased profitability.
To generate meaningfully meaningful value for our shareholders.
Catherine at this time, we will open up the line for questions.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone now we ask that will posing your question. Please pickup your handset it listening on speaker phone to provide optimum sound quality. Please hold a moment, while we poll for questions.
Your first question is coming from Carl Reichardt.
Your line is live.
Hey, everyone. How are you doing thanks for taking the time today.
I had a couple for you one.
The market share story is obviously really important here for the long term growth of the company, but I am curious, maybe Jim or Dan you talk about that.
Private periods project level financing.
What kind of a basis point capital advantage do you have what is there what are their debt structures look like.
If the market begins to slow some day rates or whatever whats your anticipation of how financing sources, we will look at those private peers and what they might do what kind of advantage with that provide you given the stability of your capital sources.
Colorado, I don't know that I would call it a basis point advantage as much as it's a structural structural and operational advantage.
And I go back to.
When times are tough banks tend to pull in their financing.
One project has a problem.
The banks have to figure out how to how to balance that loan are rebalanced that long either through additional equity.
And then oftentimes these deals are all cross collateralized for developers. So it just really gives them an administrative issue. The other thing that I think really helps for us is our ability to pay really rapidly our contractors. So I think if anything that does probably generate better cost pricing for us.
Someone who has to go through the bank loan draw process.
Every month, we paid.
Could go like weekly.
And cut checks.
Checked weekly so I mean, our people they get that invoice in it gets approved and paid pretty rapidly is that I think it's more of an operational advantage that I'd say a debt pricing advantage.
However, we do have fixed rate financing for.
For a long period of time that again, we can kind of.
Control on a more conservative basis, and I think what happens with it.
Project is all of a sudden funded on a loan to cost basis cost go up and then how do they balance that loan is new cost structures oftentimes the.
The banks will require to have those those sales contracts in hand before they even fund the land acquisition. So they're locking in there their sale price even before they really might know their final development cost. So I think there's all kinds of advantages just don't know that it's purely based on the debt pricing itself.
Yes that makes a lot of sense. Thank you Dan and then.
Whether it's Horton where some of your other customers are you seeing demand for four communities with larger lot positions increase we've heard obviously from some move yourself developing.
That's the direction they are kind of headed and if thats an overall trend what does that mean for your for your margins.
Growth absorb or absorption.
I don't know that I don't know that we really look at it that way.
Demand for lots of strong whether it's a 99 lot community 300 lot community.
But we also only price based on what we think is a phase or roughly a year's worth of demand.
And then and then as we develop that next phase we will put more lots on the ground, we can accelerate it or slow down based on demand but.
But we really kind of focus on the phase by phase aspect of the larger communities.
Although in some cases, we're delivering multiple product types. So we have room for that.
Builder to have different products in there or even bring in multiple builders into the same project, but I think overall I see I, probably see more builders competing on land acquisitions for larger projects that I did in the past.
But as far as the loss.
If they can get a lot position frankly.
Frankly, we just recently did a 28 lot deal that made a lot of sense.
The size of it I don't think is really.
That important for people wanting to buy the finished lots okay. Thank.
Thank you and then if I can squeeze one more in just on <unk>.
On the horizontal side.
We've talked a little about some some additional time its taking to get to get lots ready to go do you see that as a function of is it cities and approval processes is it the shortage of greater as a shortage of ore expenses hard to get pipe can you just maybe talk a little bit about that.
If there are significant or meaningful supply chain challenges you are seeing now.
And when you might expect those to abate if youre seeing them. Thanks, a bunch.
It's funny.
Overall basis.
From where I sit today than where I sat maybe six months ago I don't feel like the supply chain is getting worse for us.
If anything but I think we've learned how to adapt a little better order material sooner in the development process.
And really be able to deliver lots.
Really hasnt extended as much as maybe I had anticipated.
Can you kind of see that in our first quarter results.
We probably guided everybody, even though we didn't give direct number that we did better than we thought we would this quarter and I think that show, but the areas that I would say.
Makes me the most nervous is frankly the utility companies that's getting.
Getting projects have getting transformers, onsite and getting the utility companies to get electricity to the lots is probably where I see the biggest issue.
It's sporadic its not nationwide, but it is clearly in different parts of the country, we're seeing that similar theme.
And then the other was a little bit and getting acceptance from the cities.
Where they don't have the same staffing.
<unk> managed that final acceptance process like because of the volume.
Dan. Thank you so much take care guys. Thanks, a lot.
Karl Thank you.
Your next question is coming from Depo Ragavan.
Your line is live.
Hi, good afternoon, everyone. Thanks for taking the call.
First question, obviously topical interest rate.
Dan does any of the upward pressure.
In rates.
Sure.
Upcoming.
Does that change your capital raising strategy or any of your balance sheet dynamics.
Well, we've always been pretty strategic in our capital raising strategies, both in debt and equity.
I think we're going to continue to be strategic.
And when the opportunities make sense for US, we'll we will continue to grow our capital stack I think the thing that I feel maybe better about almost a daily one day to the next is that we can really continue to maintain a pretty strong growth rate without expanding the capital base I mean, just being able.
We'll reinvest our earnings.
As we had in this quarter alone is really helps fuel that future growth.
And we just continue operating we are we're not really that dependent on.
Adding to our debt or equity stack too.
Fueled the growth path that we're on.
Okay.
Just following up on Karl's question, but just slightly differently does this upward pressure change any of the comprehensive nature of the industry.
Specifically the land development does it mean now maybe some of your peers, maybe unable to compete in this environment you probably can have a better <unk>.
Is there any any of those.
Possible.
Just given there.
Interest rates are probably here.
Yes, I think.
So we will still be low low enough that it may not make impact.
A couple of years I don't know.
Any color there yes.
Yes, I mean at this point I cant say that were seeing any change in the demand for lots I think there is.
I think the demand for lots still outstrips the supply.
Yes.
<unk> has given us some pricing power.
I think if the market does soften and I know I've alluded to this in past calls, but if the market does soften I think.
There's going to be some things that actually will help.
I believe we will help our business model and gain market share one of that.
Our homebuilders historically, we will stop buying land and want to focus more on buying developed block and stop developing their own lots sooner in the cycle.
And I think that the banks will be more hesitant to do project level financing for the smaller local developers I think just those two things alone I think really helped our business so that even though overall market demand might slow.
I believe we still have an ability to continue to grow market share.
Okay, that's fair.
Last one.
It's pretty strong ways to margin.
Can you talk to some of the drivers behind that.
And specifically address.
Is that all coming mainly because of your mix your.
Self sourced a lot or is there.
The leverage benefit or any other dynamic that's helping you.
Yes, Mike and died.
Substantially.
But this is Jim.
Primarily the increase has come from more development projects lots sold and and really more for STAAR.
<unk> slots.
And we've talked about that we've talked about that during the during the call.
Flexibility that forced our source projects give us.
<unk> to build their source projects that allows us to price lots.
Later in.
Our closer to when we are ready to sell them. So that's that's really probably the biggest the biggest driver of the increase in margin.
Alright, Thanks, very much question, Dan and Jim. Thank you Okay. Thank you.
Your next question is coming from Truman Patterson.
Your line is live.
Hey, good afternoon, everyone. Thanks for taking my questions.
So look.
Clearly investors are worried about.
Sustained downturn in housing right now.
Not necessarily our view, but.
Can you just remind us how much of your finished lot costs as discretionary development and in the event of a downturn do you will pull back on development shore up liquidity to take advantage of the land market or do you continue developing taking market share.
Using that structural advantage you discussed earlier.
Yes, I think.
Your first question Truman.
About 30% of the cost of the finished lot for us to develop what is in the land itself has about 70%.
The development cost of grading the pipe in the ground the streets the things that make it a finished lot that ratio again, although it varies from market to market I think overall for us with our national footprint is still stays pretty close to what we what we thought it was a couple of years, but I haven't seen any big change in that.
As far as what happens going forward.
I think a little bit the same way the abilities of Iraq first thing will be to slow up land purchases.
But we'll really look at every project individually and not necessarily make a blanket reaction to all of our projects will look at where where our sales still strong word as traffic in the model, so strong and kind of make those decisions again on the timing of putting those next phases in the ground.
The key is that.
Can't tell a lot if it isn't finished alright, so having those finished lots on the ground I think the key for us.
But we will we will we will be.
Be very cognizant of keeping that strong balance sheet and I think as we've said several times before is trying to take advantage of.
Land prices do reset and gives us the opportunity to gain market share.
He has tried to continue to keep that strong balance sheet.
And really look at project by project, where the strength is versus the weakness.
Okay, Okay and then.
You mentioned in the event of a downturn, possibly pulling.
Pulling back in the weaker markets right.
Currently in the current environment are there any areas in the country, where you're intentionally curbing land acquisition markets, you might perceive as a bit frothy.
Well I think if you if you.
I know the investor presentation, probably isn't live yet, but we have that map on there youll, probably see that some of our.
Owned and controlled lot totals are lower in kind of the western States being Washington, Oregon, Utah is probably has come down a little bit.
Rest of the country continues to grow.
Some of that is a function of higher land prices accelerating land prices as well as tougher regulatory.
<unk> environment.
A little bit harder to get those lots on the ground.
As far as.
I think Theres, a second question, there and where am I seeing rapid land inflation.
My answer is the same as last quarter kind of Austin, Texas, and Phoenix are probably where we're seeing pretty big increases in the.
Price to buy land, but.
<unk>.
Again, the demand has been extremely strong.
So far those markets have been able to absorb those land increases for now.
Yeah, I know that's definitely encouraging that you haven't seen any deceleration in lot demand.
Despite the uptick in rates, but.
When I'm looking at your SG&A.
Picked up slightly year over year, just trying to understand the driver of that.
Whether we should expect some leverage on this line in 'twenty, two or more courses you continue to build out your infrastructure nationwide.
Yes.
We continue to try to guide to the mid single digits kind of in that.
Maybe 5% to 6% range I think.
The uptick is mostly timing we are continuing to build out our teams in our core markets.
Overall for the year I think we really kind of look at that.
Our PCI number and probably expect our SG&A, if you netted out to be pretty close to what it was last year on a percentage basis I don't know if we see a lot of.
Leverage to the good but I don't really see it.
I don't see that as being a trend if I was at 5% last quarter or 4%, where we were last quarter in phase III, it's not like.
It is going up significantly, it's mostly the timing of opening offices, and adding people and how that kind of.
Hits the hits the timing versus.
One of those odds are being delivered.
Okay. Thank you.
Your next question is coming from Mike Rehaut.
Your line is live.
Hi, Doug Ward from Mike Rehaut.
You guys updated your annual guidance this quarter and I was wondering if you guys could give a further breakdown on how you think that's going to shake out throughout the year.
There are some changes or you guys feel there could be potential changes what could be some drivers of that.
Speaker 1: Yeah, so we did increase our lot guidance by 500 lots, and like we said in our scripted remarks, Dan alluded to it, we expect for the higher revenue to come in the back half of the year relative to the first half of the year. So that's where we're going to see probably the greatest pickup.
Yes, so we did increase our loss guidance by 500 blocks and like we said in our scripted remarks annually and we expect the higher revenue to come in the back half of the year relative to the first half of the year.
That's where we're going to see probably the greatest take up.
Yes.
Okay.
Does that answer your question or do you have anything else.
Speaker 2: Um, yeah, I just was just curious on, I know it's only 500 last, but you guys were talking about the uptick in rates. Like, is that something that's already been accounted for moving forward in terms of the guidance as well?
Yes, just was.
Just curious on I know.
These 500 loss, but you guys were talking about the uptick in rates, but is that something that's already been accounted for moving forward in terms of the guidance as well.
Speaker 3: Yes, we definitely considered that when we were updating our guidance. We've, you know, just really continued to see strength in demand and a lot of demand for our lots and we've been able to develop them a little bit quicker than we had originally anticipated. We were thinking that the supply chain might deteriorate further and we really haven't seen that happen and so we just felt more comfortable saying that we were going to deliver more lots this year than we did last quarter. Awesome, thank you.
Yes, we definitely consider that when we were updating our guidance.
We really continue to see strengthening demand and a lot of demand for lots and we've been able to develop them a little bit quicker than we had originally anticipated.
Thinking that the supply chain might deteriorate further and we really haven't seen that happen and so we just felt more comfortable saying that we were going to deliver more lots this year than we did last quarter.
Awesome. Thank you.
Your next question is coming from Anthony Pettinari.
Speaker 4: Your line is live.
Your line is live.
Speaker 3: Hi, this is Asher Sonin on for Anthony. I was just wondering, I think previously you got it to about $1.75 billion of land spend and development spend in 22, and I was just wondering if that's still intact.
Hi, this is <unk>.
<unk> founded on France, I was just wondering I think previously you guided to about $1 75 billion.
Land spend and development spend in 'twenty, two and I was just wondering if that's still intact.
Speaker 3: And just, you know, I kind of implied, maybe, you know, high single digit growth over 2021, you know, compared to your, you know, roughly 24%, a lot delivered guidance growth. So, I'm just wondering, I mean, that makes sense. Given, you're, you're, you're at the maybe at the higher end of your 3 to 4 year.
And just kind of implies maybe.
High single digit growth over our 2021 compared to here.
Roughly 24%.
Delivered guidance growth. So I'm, just wondering I mean that makes sense given youre at maybe at the higher end of year three to four years.
Speaker 3: target range for your supplies of own lots. But I was just wondering, going forward, is maybe high single-digit growth in land spend what you expect for the next couple of years, or maybe does it step down in 23, or how should I think about that?
Target range for your supply.
But I was just wondering going forward is maybe high single digit growth in land spend what you expect for that couple of years and maybe does it step down in 'twenty, three or how should I think about that.
Alright, Yes. This is Katie I'll take that too.
Speaker 1: Yeah, this is Katie. I'll take that too. We expect to extend at least $1.75 billion in land and land development this year.
We expect kicks in at least $1 $75 billion in land and land development. This year.
Speaker 1: And so that's really our baseline. If we see good opportunities or need to accelerate development, that number could obviously fluctuate higher, but we feel really good about.
And so that's really our baseline if we see good opportunities or needs to accelerate development that number obviously fluctuate hired I believe.
We feel really good about being able to place Adam and getting back that amount of capital in land and land development.
Speaker 1: being able to invest that amount of capital in land and land development this year. Going forward, yeah, I would say that that sounds about right, but what we've really always said is we have a very good law position that we've built up so far, and now we really wanna.
Year.
Going forward, yes, I would say that that sounds about right, but what we've really always said is we have a very good loss position that we've built so far and now we really want it is now let I'll, let that land and start to generate earnings.
Speaker 1: all of that land and start to generate earnings from those dollars that we had already invested. So you'll see a greater proportion of our land development spend go into development versus just you know acquiring new positions.
So the dollars that we had already invested so youll see a greater proportion of our land and land development and go into development versus just acquiring new physicians.
Okay. Thanks, that's helpful and then.
Speaker 3: You know, you talked a lot about, you know, that that demand for loss on the part of the builders remains strong, you know, in spite of rates, et cetera. I was just wondering in terms of, you know, how pricing negotiations are going for, you know, on contract on contract loss. I mean, not on the national level, we may be seeing, you know, some of the home price appreciating start to slow a little bit, lose some momentum. I'm just wondering if any of that.
Talked a lot about.
Demand for lots on the part of the builders remains strong despite a break et cetera. I was just wondering in terms of pricing negotiations are going on.
Contracted boss.
On the national level, we may be seeing some of the.
Depreciation and stock a lot a little bit looser momentum I was just wondering if any of that.
Speaker 3: It's reflected in conversations you're having with builders in terms of price growth on your deliveries.
It's reflected in kind of conversations you are having with builders in terms of price growth on your on your deliveries.
Speaker 5: You know, builders never like to see a lot of prices go up. So I'd say every time that we start off with a pricing discussion, there's pushback.
No.
Well theres never liked to see lot prices go up so I would say every time that we start off with a pricing discussion there's pushback.
Yes.
Speaker 5: You know, our goal is to find that balance between what we think is the best price we can achieve, but at the same time making sure there's velocity in those subdivisions.
Our goal is to find that balance between what we think is the best price, we can achieve but at the same time, making sure theres velocity in those subdivisions.
Speaker 5: Again, with our return focus model, velocity is every bit as important as the margin that we're getting.
Because again with our returns focused model velocity is every bit as important as the margin that we're getting.
Speaker 5: And we're really focused on asset turns. So it's a, every conversation.
And we're really focused on asset turns so I'd say every every conversation.
Speaker 5: You know, they always say that their prices, you know, we can't we can't pay that, but we always find a way to come to a resolution. And there's lots of, you know, there's lots of demand. So
They always say that their pricing.
While we can't we can't pay that we always find a way to come to a resolution and theres lots of there's lots of demand.
Speaker 5: You know, one of the nice things of the way the Master Supply Agreement works is the right or first offer process, because it does allow us to really find what we think is that right market price, you know, again, considering velocity into the equation. You know, we get a lot, you know, builders that, you know, we continue to get good pricing discovery. But it's...
Yes.
One of the nice things of the way the Master supply agreement works is the right of first offer process is it does allow us to really find what we think is that right market price again, considering velocity into the equation.
We get a lot.
Builders that we continue to get good pricing discovery.
But it's.
Speaker 5: I'd say every project's a little different. It's finding the, I don't know how many.
Every project is a little different it's finding.
How many.
Speaker 5: I probably said it more times than I should, but it's that balance, that fine balance between price and velocity that works.
Having said that it's more times than I should but it's that balance that fine balance between price and velocity that we're concerned with.
Speaker 1: Yeah, and this is Katie, I would also add, you know, if rates do rise really quickly and we do see some sort of a slowdown in housing, we might see a buyer's pause while they digest those new rates, but we're really focused on developing lots for affordably priced homes. And, you know, we still believe that there will be demand for new affordably priced homes. And so we feel confident in our business model. All right.
And.
I would also add if rates do rise really quickly and we do see some sort of a slowdown in housing.
We might see a buyer's pause, while they digest those new rates.
We're really focused on developing lots for affordably priced homes.
We still believe that there will be demand for new affordably priced homes and so we feel confident in that.
Business model.
Understood and thanks for taking my questions I'll turn it over.
Yes.
We have no further questions from the lines at this time I would now like to turn the floor back to Dan Bartok for closing remarks.
Speaker 6: We have no further questions from the lines at this time. I would now like to turn the floor back to Dan Bartok for closing remarks.
Yes.
Speaker 5: Thank you, Catherine, and thank you to everyone on the 4STAR team for your focus and hard work. We look forward to working together as we strive for increased efficiency while continuing our growth.
Thank you Catherine and thank you to everyone on the <unk> team for your focus and hard work, we look forward to working together as we strive for increased efficiencies, while continuing our growth.
Speaker 5: We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results.
We appreciate everyone's time on the call today and look forward to speaking with you again in April to share our second quarter results. Thank you.
Yeah.
Speaker 6: Thank you, ladies and gentlemen. This concludes today's conference call. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Thank you ladies and gentlemen. This concludes today's conference call. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Okay.