Q4 2023 Lennar Corp Earnings Call
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[music].
Welcome to <unk> fourth quarter earnings conference call. At this time, all participants are in a listen only mode. After the presentation. We will conduct a question and answer session. 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 statements.
David Collins: Thank you and good morning, everyone.
David Collins: Today's conference call May include forward looking statements, including statements regarding <unk> business financial condition results of operations.
David Collins: Those strategies and prospects forward.
David Collins: We're looking statements represent only <unk> estimates on the date of this conference call and are not intended to give any assurance as to actual future results.
Because forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties.
David Collins: Many factors could affect future results and may cause <unk> actual activities or results to differ materially from the activities and results anticipated in forward looking statements.
David Collins: These factors include those described in our earnings release, and our SEC filings, including those under the caption risk factors contained in one of our annual report on Form 10-K, most recently filed with the SEC.
David Collins: Please note that <unk> assumes no obligation to update any forward looking statements.
David Collins: I would now like to introduce your host Mr. Stuart Miller Executive Chair.
Speaker Change: Decorative chairman, Sir you may begin.
Stuart Miller: Very good good morning, everybody and thank you for joining today.
Speaker Change: And then Miami today, together with Jon Jaffe, our co CEO and President Diane Bessette, Our Chief Financial Officer, David Collins, who you just heard from our controller and Vice President Bruce gross our CEO of <unk> financial services, and a few others as well.
Speaker Change: As usual I'm going to give up.
Macro and strategic overview of the company. After my introductory remarks, John is going to give an operational overview updating construction cost cycle time.
John: And some of our land strategy and position as usual Diane is going to give a detailed financial highlights along with some limited guidance for fourth quarter and full year of 2024.
John: And then of course, we will have our question and answer period as usual I would like to ask that you. Please limit yourself to one question and one follow up so that we can accommodate as many as possible.
John: So let's begin.
John: We're very pleased to report another very strong quarter and year end of operating results for LNR.
John: We've executed our operating plan effectively over the past year, and accordingly have simply never been better position from balance sheet to operating strategy to address market conditions and the new year 2024.
John: Throughout 2023, the dominant theme at the macro level has been the impact of higher interest rates on the homebuilding consumer as affordability has been tested and demand has been constrained by the ability to purchase <unk>.
John: Affordability and the ability to qualify.
John: Generally speaking consumers are employed and are generally confident that they will remain employed and that their compensation will generally rise.
John: Overall consumer confidence has been reasonably strong and buyers that can transact pep transacted.
John: Underlying this environment as a general chronic supply shortage of homes, especially affordable homes across the country as well as a growing pent up demand for housing that has that is and has been held back by materially higher interest rates.
John: Been a very short supply of affordable product and a very strong demand for that affordable product.
John: The new homebuilders have worked out a variety of incentive structures that range from interest rate buy downs to closing cost pickups to price reductions to meet the buyer the purchaser at the intersection of need and affordability.
John: The existing home market has been quiet as existing homeowners have covenant, they're low interest rate mortgages and remained on the sidelines.
John: Homebuilders have been uniquely able to activate demand by using incentives that unlock the affordability constraint and enable purchasers to transact.
John: Over the past quarter. This narrative has been particularly difficult as interest rates spike through the first two months of the quarter and then began to ease in November.
John: As mortgage rates began to migrate from seven 5% towards 8% the market began to feel like it was hitting a real inflection point and the overall market conditions softened materially.
John: Most recently of course sure Paul and the fed has signaled that we might be closer to the end of the tightening cycle and we might see lower rates as we entered 2024 you get into the new year, we will see.
John: Against this backdrop <unk> consistent strategy throughout the past year has been to continue to drive volume defined affordability to meet demand by using our dynamic pricing model and using appropriate incentives and provide supply to the market.
John: Over the past year, we have consistently detailed our operating strategy with the expectation that we would do as follows.
John: <unk> reduced our land assets, while growing our business.
John: Number two drive strong and consistent bottom line earnings while concurrently generating consistent net cash flow.
John: Number three reduce our construction cycle times, while increasing our inventory turn.
John: And and number four ultimately enhance the quality of our returns on equity and return on assets by focusing on the allocation of liquid assets Ie cash.
John: 2023 was a year of strategy and successful execution for Lenoir and sets us up extremely well for another strong year of execution in 2024.
John: We began the year with a strong statement of operating strategy in a higher interest rate environment, and we focus on execution throughout the year.
Even as the macroeconomic environment continued to shift and adjust to inflation with higher interest rates.
John: We adhere to our strategy and we drove volume and production.
John: We believe that demand was strong, though constrained by affordability and supply was very limited.
John: As others pulled back we leaned in and maintained pace.
John: We defined our operating strategy is driving production and sales pace, while using price incentives and margin reduction to enable affordability.
Rather than further constraining supply, we drove production and used our formidable size and scale to enable cost and operating efficiencies to drive affordability.
John: As you've seen in our press release, while driving higher volume. We also achieved strong operating results.
John: We delivered over 73000 homes in 2023, which represents a 10% year over year volume increase over 2022.
John: And we delivered and we delivered a strong bottom line of $3 9 billion or $4 82 a share.
John: We also generated well in excess of the three $5 billion of homebuilding cash flow that we generated relative to what we generated in 2002.
John: And we are well positioned with land and community count to expect to deliver 80000 homes in 2024.
John: Again, another 10% increase year over year.
John: Given the current interest rate signals from the fed we would also expect that margins will be at least consistent with our 2023 levels.
John: And although we have embedded lower margins that will flow through the first quarter.
John: Those reduced margins will clear over the next quarter and using our dynamic pricing tool, we will recover margin quickly and efficiently as lower interest rates enable us to reduce incentives.
John: The strategic benefits of driving volume.
And we will continue to come.
John: With advantages that are both immediately valuable as well as durable for the company's future.
John: I'd like to briefly detail some of those advantages.
John: First by driving volume, we gained market share in most of our core markets as we leaned in when some others pulled that back.
John: Our trade partners saw a consistent and dependable partner that became worthy of the designation of builder of choice.
John: We worked side by side with our traditional trade partners and Additionally, we found additional trade partner relationships with participants that found that they had dependable and consistent work with our strategy.
John: Through market share growth in local markets, we enhanced the ability to better manage our costs enhance our efficiency of operation reduced cycle times with efficient production templates and enhance our inventory churns.
Speaker Change: John will discuss this in more detail shortly.
John: Next and maybe most important by driving volume, we are positioned with land and communities for strong volume in all of our operating markets.
John: As we drove volume and delivered homes, we purchased new land and communities for the next years deliveries.
John: We're extremely well positioned to continue to sell on pace as prices recover and as incentive subside along alongside lower interest rates.
We are positioned to drive even stronger bottom line results and cash flow as market conditions normalize.
John: Additionally, by driving volume, we gained market share in land acquisition.
John: Simply put we continue to sell land by selling homes, and then purchased land to replace communities, especially when others walked away.
John: Market share advances have given us the critical position to be in an even stronger land buyer of choice to the owners and developers of critical land assets.
John: Saw a dependable market participant remain consistent as market conditions became more tenuous and we found that we were able to experiment with innovative land structures that work constructively as markets falter and then recover.
John: Noteworthy in this regard is our variable land pricing tool that enables homesite values to move up or down as a percentage of the sale price.
John: The home as markets move up and down.
Next.
John: By driving consistent volume, even at lower margins, we've generated consistent cash flow through more challenging times and enhanced our balance sheet and our cash liquidity, even after redeeming or repurchasing $1 $1 billion of senior notes through the year and repurchasing.
John: 10 million shares shares of our stock through the year.
John: Situated today with a nine 6% homebuilding debt to total cap ratio with $6 $3 billion of cash on hand, and $0 drawn on our revolver and with an expected.
John: Three and a half plus or minus $1 billion of net cash flow over the next year.
John: We have the flexibility to invest capital strategically and growth, while retiring debt as it matures and repurchasing shares when our stock, which we expect to repurchase at least $2 billion 2 billion of stock over the next year.
John: Fourth by driving volume, we gained advantaged insights into and Brook bind the workings of our strategic land banks.
John: The flow of volume through the land banking relationships that define our current approach to land acquisition was invaluable.
John: Questions have now been answered as to the durability of the capital partners that makeup the counterparty relationship with the homebuilding machine.
John: Our consistent volume helped define both trust and dependability, and making those and taking those relationships to another level as neither party flinched as market conditions tested the boundaries of relationship.
John: While adjustments were made and lessons were learned the structures and relationships became stronger and more durable.
John: Fifth by driving volume, especially in the more difficult interest rate environments of the past year, we were able to develop enhanced yields and improve <unk> machine.
John: Our sales marketing and dynamic pricing machine is quickly becoming an advanced digital engine that has materially benefited by aggressive focused use and engagement while the market was most difficult.
John: We focused on what was required to drive volume while market conditions challenged affordability.
John: We pushed data and engagement through the component parts of this digital tool and stress that often and to its limits.
John: We reviewed 40 points of feedback from our 40 operating divisions and made adjustments and refinements as we learn.
John: Good day and the result is that <unk> machine is becoming an invaluable partner as we drive volume by finding market at affordable pricing and driving sales at the same pace as production.
John: Overall, our strategic focus on driving volume in both production and sales has enabled us to become a stronger and better positioned company that has become more durable through the ups and downs of housing cycles.
John: Our balance sheet has never been stronger and our operation our operating platform has never been better aligned.
John: Our fourth quarter and year end of 2023 has been another strategic and operational success for our company.
John: While market conditions have been challenging we have consistently learned and found ways to address market need.
John: We know the demand is strong and there is a chronic housing supply shortage that needs to be filled.
John: We will continue to drive production to meet the housing shortage that we know persist across our markets.
John: With that said as interest rates subsided normalize and if the fed is going to begin to actually cut rates. We believe that pent up demand will be activated and we will be well prepared.
John: To date, we have seen overall market conditions remain generally constructive for our industry as.
As higher interest rates has subsided strong pent up demand has found ways to access to the housing market.
John: Most recent movements in interest rates suggest a better road ahead.
John: Accordingly, we executed on our core strategy against the most difficult economic and industry backdrop.
John: Given consistent execution, we are extremely well positioned for even greater success as strong demand for affordable offerings continues to seek short supply.
John: We expect to start the new year with strong sales strong starts sales and closings as we have guided to 16000 517000 deliveries.
John: In the first quarter.
John: And a 21% to 21.25% margin as lower margin sales move through the first quarter.
John: We engaged the changing tides of the past year with a consistent strategy that has enabled certainty of execution throughout our company.
John: Our strategy is well known and understood throughout our division offices, and we have a simple and consistent model of execution.
John: We focus on maintaining volume, while we price our homes to drive matched pace.
John: We work with our trade base to manage cost and efficiencies and adjust product offerings to meet the market.
John: We manage both our land and our production inventories to drive efficiency cash flow and returns on our asset base.
John: We focus on a land light model in order to drive balance sheet efficiency.
John: Finally, we fortify our balance sheet to have the liquidity for strength and flexibility.
John: Knowing what to do and executing per plan has driven this quarter's and this year's success and ensures consistent success for the foreseeable future.
John: As we look ahead to a successful 2024, we are well positioned for an effective and expect to see much more of the same.
John: We are confident that by design, we will continue to grow perform and drive, Illinois to new levels of performance.
Speaker Change: And with that let me turn it over to John.
Speaker Change: <unk>.
John: <unk> discussed our operational teams that we are continued focusing on executing our operating strategy and our fourth quarter as our divisions continuously learn from their engagements with all of our machine to provide feedback through enhancements that improve the machine in our execution of our strategies you can see the evolution of this improvement in our even flow operating strategy.
Throughout the year, our starts and sales for the second half of 2023 were evenly matched a 37053 and 37032, respectively.
The fourth quarter, our production patients defined by an average of five starts per community per month and average sales pace of four seven sales per community per month.
John: Importantly, this strategy is not just about the pace of sales, but as importantly about selling the right homes at the right pace, our machining matches up unsold production as homes progress towards completion with pricing information from our dynamic pricing model on a community by community and home by home basis, and our fourth quarter.
John: As interest rates peak this process informed us.
John: Informed us as to how much we needed to buy down interest rates and offer other incentives maintain the desired pace.
John: We maintain consistent starts and sales paces generating increased market share in almost all of the markets. We are building. This.
John: This is seen in our overall growth of 10% from last year as our consistent starts have filled the void of other builders who have pulled back some.
John: Some examples of markets, where we have a leading and increased market share in 2023 over 2022 are as follows.
In South Florida, we are ranked as the number one builder with a market share of 74% up from 63% a year ago in Dade County, and 33% in Broward County up from 28%.
John: Across the space and southwest, Florida, we have a 38% market share double that of the number two builder and.
John: In the Carolinas, we are the number one ranked order in Charlotte Raleigh, and Charleston, with market shares are generally half of 16, and 22, 5%, respectively, representing an average increase in share of about 150 basis points.
In the Midwest, we're number one in Indianapolis, and Minnesota with over 25% market share in each market an increase of over 400 basis points in each.
John: In Texas, we have increased market share in each of the markets they're in.
John: Austin and Dallas Fort worth by 200 basis points to 11, five and 10% respectively in Houston by 300 basis points to 11, 5% and in San Antonio by 700 basis points to 22, 5%.
John: Colorado, where we ranked number one in almost 10% market share, which is double that of the number two builder who has been the perennial market leader.
John: Moving out west in Phoenix, and Las Vegas, we have the number one share with 12 and 18% respectively.
John: In California, we're the number one builder in all of the markets there and have grown our significant market share across the state from 25% in the inland Empire and central valley to more than 35% in San Diego in Sacramento.
Lastly in the Pacific Northwest, we're the largest in Seattle, and Portland, with 14 of 17% share respectively. Both an increase of about 250 basis points.
John: The execution of our pricing strategy is based on the strength of each individual market in Mexico the level of production by community in that market.
John: As Stuart noted the market conditions, our fourth quarter was defined by the chronic shortage of housing supply and more volatile interest rate environment as compared to greater variations of market strength across our markets that we saw in prior quarters.
Current market environment, all markets are benefiting to similar degrees from greater demand and supply.
John: From a sales pace of $4 seven homes per community in Q4 was up from a pace of $3 seven compared to Q4 2022.
John: Further demonstrating improvement in executing the strategy of the patients.
Q4 is that it was the same as our overall pace for fiscal 2023.
John: As interest rates rapidly moved higher during the quarter. Our homebuilding teams work in close coordination with our mortgage to find the right mortgage solution homebuyer Baidu buyer.
John: Focused execution of the process I just described led to completing the quarter with less than one unsold inventory homes per community.
John: Our strategy of finding market clearing pricing to match the pace of sales to homes under construction allows us to maintain both a high volume and a consistent volume of homes under construction, which is the foundation for our builder of choice program with our trade partners.
John: As we continuously improve the way we execute this game plan, we are deepening the partnerships with our trade base working.
John: Working together with our trade partners, we are consistently eliminated <unk> prevented supply chain constraints and reduce cycle times.
John: And other efficiencies that benefit our trade partners enable us to lower construction cost in a cooperative manner with our trades.
John: By consistently starting homes, despite the changing interest rate environment during the quarter, we increased our starts in the fourth quarter by 43% from the prior year and starts were.
John: Flat sequentially from Q3.
John: This increase in starts attracts larger trade VIX, Illinois, and together with a normalized supply chain environment led to another significant improvement in our cycle time for the fourth quarter cycle time decreased by 22 days sequentially from Q3 down to 161 days on average for single family homes and most of our markets. This <unk>.
John: Presents being at or close to prepayment cycle times.
John: Looking at our fourth quarter as expected our construction costs fell sequentially from Q3 by about 4%. In addition, our Q4 costs were down about 13% on a year over year basis. This is the direction of construction costs, we expect in our guidance from last quarter.
John: Moving forward, we expect cost to be consistent with where they are now over the next few quarters.
John: In order to further improve our production efficiencies, we are working side by side with our trade partners on value engineering quote planned charities and production sequencing across markets to reduce the cost and time to bill with the goal of delivering a greater value to the homebuyer customer.
Next I will discuss the execution of our land light strategy and our fourth quarter. We continued to effectively work with our strategic land and land Bank partners with a purchase had on our behalf and then deliver just in time finished home sites to our homebuilding machine or Stuart described.
John: Distant with the third quarter about 84% of our $1 5 billion of land acquisition in the quarter was finished homesites purchased from our various land structures. We have made significant progress in the fourth quarter as our year supply of owned Homesites improved to one four years from one nine years and our control homesite percentage.
John: The 76% from 69% year over year.
John: Bottomline is focusing on our operating strategies, which results in a reduction in cycle time, and a reduction of homeland has stood articulated increased our cash flow as well as help improve our inventory churn, which now stands at one five versus $1 two last year and 25% increase.
Our community count at least.
John: At the end of the fourth quarter was 206, which was up 4% from the year ago period.
John: To increase our community count in the mid to high single digits by the end of fiscal 2024.
John: I want to recognize and thank all of our associates for their hard work and dedication and focusing on the execution of our strategies and also importantly for accomplishing the change management needed for the required process changes and implementing these strategies of our machine while at the same time, delivering a very strong fourth quarter and fiscal 2023.
John: I'd now like to turn it over to Diane.
Diane Bessette: Thank you John and good morning, everyone. So Stuart and Jon have provided a great deal of color refining our homebuilding for funding.
Diane Bessette: <unk> spent a few minutes on the results of our financial services operations and our balance sheet.
Speaker Change: Can you comment on the first quarter. So we are looking at financial services for the fourth.
Quarter, the financial services team had operating earnings of $168 million.
Speaker Change: Mortgage operating earnings were $119 million compared to $80 million in the prior year the increase.
Speaker Change: <unk> earnings was driven by higher lock volume as a result of higher orders and calculate on higher profit current locks alone as a result of higher secondary marketing and lowest cost per loan is the key.
Speaker Change: Team continues to focus on efficiencies.
Speaker Change: Final operating earnings were $50 million compared to $44 million in the prior year.
Speaker Change: Earnings increased primarily as a result of higher volume in greater productivity of the team continues to embrace technology to run a more efficient business.
Speaker Change: These solid results were accomplished.
Speaker Change: Results are great synergies between our homebuilding and financial services team a truly operate under the banner of one on.
Now turning to our balance sheet. This quarter. Once again, we were steadfast in our determination to turn on inventory and generate cash on maintaining production and pricing homes to market with the goal of delivering as many homes as possible to meet demand.
Speaker Change: Results of these actions was that we ended the quarter was $6 3 billion of cash and no borrowings on our $2 6 billion revolving credit facility, which provided a total of $8 9 billion of homebuilding liquidity.
Speaker Change: As a result of these.
Our continued focus on balance sheet efficiency.
Speaker Change: We once again as John mentioned made significant progress on our goal of becoming asset light.
Speaker Change: At quarter end, our year increased to one four years from one nine years in the prior year and our Homesites controlled increased to 76% from 69% in the prior year, our lowest yields higher.
Speaker Change: Highest controlled percent in our history.
Speaker Change: At quarter end, we own just under 100000 home sites and control 210000 Homesites.
Speaker Change: A 410000 homesites.
Speaker Change: We believe this portfolio provides us with a strong competitive position to continue to grow market share in a capital efficient way.
Speaker Change: <unk>, one 5 billion on repurchases this quarter with 84% in finished home sites with vertical construction will soon begin.
Speaker Change: This is consistent with our manufacturing model of buying land on adjustment Foundation, which is less capital intensive.
Finally, looking at returns on insights from you was one five times and our return on inventory was 29%.
Speaker Change: Let me make one comment about our inside Allianz this quarter, we re class deposits on future land purchases and inventory into a separate line on our balance sheet. This re class, which was about 2 billion at year end was named to better align ourselves with most participants in our industry and thus bringing greater.
Speaker Change: <unk> and less confusion.
Speaker Change: That certainly analyst communities.
Speaker Change: During the quarter and consistent with our production focus we started about 18400 homes and ended the quarter with approximately 38200 total homes and William Stein.
Speaker Change: Inventory number includes about 2200 models and also includes about 1200 home network completed unsold, which is slightly less than one home per community as we successfully managed our finished inventory levels.
Speaker Change: Continued assets and further strengthen and derisk, our balance sheet by reducing our debt balances.
Speaker Change: And in the fourth quarter.
Speaker Change: <unk> and remaining balance $378 million of our.
Speaker Change: 478 senior notes due in December 2023.
We purchased $120 million of senior notes due in fiscal 2024 and seven <unk>.
Speaker Change: <unk> or below par for a quarterly total of $488 million for the full year, we repaid or between $1 1 billion of senior notes.
Speaker Change: As a result of these debt each debt reduction initiatives. We ended the quarter with a total senior note balance of about $2 5 billion. There is only one note due in 2024, which is $464 million due in April combined.
Speaker Change: Combined with strong earnings our homebuilding debt to total capital was nine six to put around our lowest ever which is an improvement from $14 four in the prior year.
Consistent with our commitment to strategic capital allocation, we repurchased $3 million of our outstanding shares for $337 million in the fourth quarter and for the year, we repurchased 10 million shares totaling $1 1 billion. Additionally, we paid dividends of 105 million during the quarter and 431.
Speaker Change: And yet.
Speaker Change: So in total we returned almost $1 billion to our equity and debt holders in the fourth quarter and about $2 7 billion for the full fiscal year.
Nancy final points regarding our balance sheet, our stockholders' equity increased to almost $27 billion and our book value per share increased to $94 61.
Nancy: In summary, the strength of our balance sheet and strong liquidity position provides us with significant confidence and financial flexibility as we enter 2024.
Nancy: With that overview I'd like to turn to Q1.
Nancy: Given the.
Nancy: Evolving interest rate environment, we would like to once again provide some guidelines for Q1 to assist with your modeling starting with new orders, we expect Q1, new orders to be in the range of 17500.
Nancy: To 18000 homes as we keep production pace and sales teams plus four alone we anticipate our Q1 deliveries to be in the range of 16000 517000 loans with a continued focus on efficiently turning in time to cash.
Nancy: Our Q1 average sales price should be about 420000.
And we expect gross margins to be in the range of 21 to 21, 5%, indicating some impact from higher interest rates in Q4.
Nancy: Additionally, also remember that our Q1 margins are only negatively impacted by the current period expensing of steel costs. While we are working towards an even sales process of starting in constructing homes daily consistent quarterly basis revenues in Q1 are the lowest of the year because of <unk>.
Nancy: Alrighty.
This Q1, the current period expensing will have a negative gross margin impact of approximately 150 basis points. When you look sequentially from Q4.
Nancy: Also note consistent with last year, the first quarter will be the low point of margins during 2024.
Nancy: Turning to SG&A, we expect to be in the range of eight to eight 2% for Q1 for.
For the combined homebuilding joint venture land sales and other categories. We expect to have earnings of about $20 million, we anticipate our financial services earnings for Q1 to be in the range of $85 million to $90 million.
Nancy: And we expect a loss of about $25 million multifamily business and a launch of about $15 million favorable in our other category.
Other estimate does not include any potential mark to market adjustments to our public technology investments what adjustment will be determined by their stock prices at the end of the quarter.
Nancy: We expect our Q1 corporate G&A to be about two 2% of total revenues. These expenses are likely to turn up a bit as we continue to invest in cyber security and technology development that is robust and durable.
Nancy: Our future growth in.
Nancy: And a charitable foundation contribution will be based on $1 per home delivery.
Nancy: We expect our tax rate to be about 24, 5% and a weighted average share count should be approximately 279 million shares.
Nancy: Combined basis. These estimates should produce an EPS range of approximately $2 15 to 2020.
Nancy: Firstly after the first quarter.
And then finally just to reiterate a few months on fiscal 2024.
Nancy: As we indicated we reaffirm our target of 10% to literally growth in 2024, which would result in approximately 80000 deliveries for the year and for gross margin as Stuart mentioned, we expect to maintain the level produced in 2023.
We also remain confident in our cash flow generation as such we continue to be committed to allocating capital to our stakeholders.
Nancy: We're getting a total capital allocation of at least $2 5 billion for 2024, remembering that $454 million will be allotted to our April 2020 debt maturity and the balance of roughly $2 billion to share repurchases.
Speaker Change: I'd like to end by sincerely thanking <unk> financial team accounting planning and IR.
Speaker Change: Combined great assets that allow us to host our yearend earnings call. Two weeks. After year end you guys are amazing and with that let me turn it over to the operator.
Speaker Change: Thank you we will now begin the question answer session of todays conference. We ask that you limit your questions to one question and one follow up question until all questions have been answered if you would like to ask a question. Please on mute your phone press star one and record your name clearly when prompted.
Speaker Change: You need to withdraw your question at any time you may you start to again that is star one to ask a question.
Speaker Change: Our first question will come from the line of Stephen Kim from Evercore ISI. Please go ahead.
Stephen Kim: Great. Thanks, very much guys, yes, so much great information you provided so thanks a lot.
Stephen Kim: Hi.
Stephen Kim: I imagine folks will be asking you about a little bit more detail on the gross margin. So what I actually wanted to focus on was your balance sheet and in particular you ended the year with.
Stephen Kim: Very heavy level of cash.
Stephen Kim: Over $6 billion I think on the homebuilding cash.
Stephen Kim: And I was curious what do you feel a sort of a normal level once all the dust settles in.
Stephen Kim: You get to a level of cash where you feel sort of sustainable and appropriate to sustain over the long term what that level roughly would be how we should think about that.
Stephen Kim: And related to that given that I assume 6 billion is probably more than that number.
Stephen Kim: I'm guessing maybe a couple of billion or something like that.
Your 2 billion in share repurchases that you sort of said as as the.
Stephen Kim: The baseline level.
Stephen Kim: Seems frankly, a little low.
Stephen Kim: Given that we're expecting you guys to generate cash flow and so forth. This year. So I was wondering if you could help us understand how.
Stephen Kim: How we should be thinking about your cash balance.
Stephen Kim: Going forward and what it would take for you to.
Stephen Kim: Applying more of that to repurchases.
Speaker Change: And I guess I should have specified that I'm curious if you could articulate why you're willing to hold more cash than you need.
Speaker Change: At this time.
Speaker Change: Well, Steve let me start by saying you know the old adage richer core it's good to have cash right.
Speaker Change: So just starting there.
Speaker Change: I would say that.
Speaker Change: We're really growing into the new us in developing a.
By design approach to the way that we operate our business and as is the case with.
Speaker Change: With.
Evolution in general you kind of grow into with <unk>.
Speaker Change: Some stops and starts.
The new version of how you kind of look at the way you are configured.
Speaker Change: So I would say I would say, yes, we are.
Speaker Change: Starting to look at our cash flow numbers.
Speaker Change: Cash flow generation.
Speaker Change: We're starting to see kind of a consistency.
Year over year in the.
Speaker Change: Kind of a baseline in $335 billion range.
Speaker Change: Youll, probably see in our Q that.
Our K that.
Speaker Change: That that number will be higher for 2023.
Speaker Change: The amount of consistent.
Speaker Change: Annual cash flow is something that we are.
We're watching develop over time.
When you asked your question that fits into the context of.
Speaker Change: How do we think about the certainties of the programming that we have in place.
Speaker Change: As I noted in my comments one of the interesting things of this past year.
Looking at the durability of our land banking relationships, the capital providers and the execution in and around land bank as markets become stressed.
Speaker Change: There's been a tremendous amount of learning around that and evolution.
Speaker Change: So the answer to the question as we kind of see our.
Speaker Change: Steady state cash flow is developing around three $3 5 billion a year.
Speaker Change: How much cash we feel comfortable holding.
Speaker Change: It's something that we are.
Speaker Change: We recognize that.
Speaker Change: Maybe.
Speaker Change: Maybe a $6 billion or $5 billion or $7 billion.
Speaker Change: Some might say that thats too much as we gain confidence as we start looking at.
Speaker Change: By design approaches to the component parts.
Speaker Change: Whats developing into Illinois machine.
Speaker Change: We are going to be an increasingly amount that we returned to shareholders through stock buybacks and other mechanisms and in.
Speaker Change: And so we might be a bit behind the curve that people perceive.
Speaker Change: Right now, we're going slower rather than faster as we develop real core components to our strategy that are becoming etched in stone and where we're developing confidence.
Speaker Change: Again, it might be a little slower than some might think it should be.
But we are hitting stride with our comfort zone in buying back stock and thinking about the deployment of liquid assets.
Speaker Change: That's really helpful. Because obviously you are undergoing a very.
Speaker Change: Significant transformation and I think I'm hearing a lot of steady state I'm hearing a lot of predictability and what's you're laying out.
Speaker Change: And obviously, that's something that we think is critically important to an eventual revaluation.
It just seems like when you had initially when you started off your comments you said, it's great to have cash, but I think that when you are arguing for a revaluation of some of the investors will be speak with would argue that holding too much cash.
Speaker Change: Actually is.
Speaker Change: A hindrance to a revaluation because it effectively it seems like the company maybe holding on to cash with the hope that they could deploy it in some sort of traditional way I E land or or something like that which maybe isn't.
Speaker Change: In line with what a lot of the rhetoric around being asset light is so.
Speaker Change: Your commentary about this is a period of time, where you were sort of gradually.
Speaker Change: Developing the systems to a point, where you have that predictability I guess that's helpful. So if I'm interpreting your comments right. We should basically expect the level of cash to come down to a more to.
Maybe a lower level. Once you have established those systems to your satisfaction, but youre not there yet is that a proper way of paraphrasing, what you are saying.
Speaker Change: Thank you for the commentary I think that helps me answer a little bit better and let me say that we are decidedly not holding onto cash to execute the next large scale M&A program or some.
Speaker Change: Out of the box growth program.
Speaker Change: So I wanted to spell that thought process. It simply is in this past year has been an incredible year for our company in terms of developing the confidence around durable systems that are actually working very well, it's been a proving ground and.
Speaker Change: So I would say don't read too much into the holding this cash.
Speaker Change: It simply is the development of confidence and stride in terms of the way that we deploy liquid assets.
Speaker Change: Okay. That's that's helpful really appreciate it.
Speaker Change: There was some news very recently regarding the marketing of your rental portfolio. I was wondering if you could put some context around that for us because we got a lot of questions from folks around whether this is something that we should be expecting to provide a cash infusion even above and beyond the normal.
Speaker Change: Operations will generate.
Speaker Change: Alright so.
Speaker Change: Look I think that the answer to that question is we will see.
Speaker Change: The.
Speaker Change: Determination to market the portfolio was driven by.
Speaker Change: By.
Speaker Change: Limited partners.
Speaker Change: And.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: The timing is.
Speaker Change: <unk>.
Speaker Change: It is one where it's kind of a sub optimal time to be thinking about.
Speaker Change: Although who knows where interest rates go.
Speaker Change: That could change quickly.
Speaker Change: So, we'll see what happens what might or might not be.
Wishes and episodic.
Kind of.
Program, where.
Speaker Change: It'll happen or won't.
Speaker Change: But it won't be material to the.
Speaker Change: The balance sheet or the income statement and company owned shortly.
Speaker Change: Any profit would be discounted.
And <unk>.
Speaker Change: And in terms of the cash infusion it would simply be.
Speaker Change: Additive to our cash position and might even inspire us too.
Speaker Change: Do more stock buybacks. So we will just have to wait and see on that I don't think theres any additional guidance that could be given at this point.
Speaker Change: I appreciate that thanks, so much.
Speaker Change: Thank you Steve.
Speaker Change: Next we'll go to the line.
Speaker Change: Alan Ratner from Zelman <unk> Associates. Please go ahead.
Alan Ratner: Hey, guys. Good morning, Thanks for all the detail and congrats on the great performance this year.
Stuart I'd love to get your thoughts because I heard a lot in the commentary about that.
Alan Ratner: <unk> that you guys had over the course of this year related to tight inventory.
Alan Ratner: Interest rate move these last few days or weeks, it's been obviously striking but I think one of the great unknowns and uncertainty is what impact that does have on the resale market as far as.
Alan Ratner: Potentially freeing up some inventory and getting some people to move and obviously there is puts and takes to that on your business, but what is your expectation there assuming kind of rates settle out near current levels as far as what that could do to the resale market and how the new home market might might react to higher inventory levels.
Alan Ratner: 24.
Speaker Change: Yes, it's really interesting question Allen.
Speaker Change: I've thought about this a lot over the past year.
As the resale market has appropriately held onto mortgages that are very attractive interest rates and therefore have not added to the traditional supply that defines the resale market.
Speaker Change: More I think about it in cash my thinking it just seems to me to be a zero sum game.
Speaker Change: If the resale market is activated by.
Speaker Change: A tick down in interest rates, which it might be.
In traditional fashion first time buyers find that the family is growing and they move up to two a move up second move up position.
Speaker Change: It does seem to be that to the extent that interest rates do activate the resale market and additional supply comes on the market along with that supply comes additional demand.
Speaker Change: What has been missing from the market as the traditional resell buyer looking for that move up home and decided.
Speaker Change: The first time.
For the first time market has been.
Speaker Change: Very thirsty for four new home product because of the traditional resale products simply hasnt been available. So I suspect if the existing home market is activated as interest rates do trend down should they trend down.
Speaker Change: That it will result in.
Speaker Change: Additional supply for the first time buyer and additional demand for the move up buyer and we've been thinking a lot about that and I think that we're very well prepared for that migration as well.
Speaker Change: Great I appreciate your thoughts on on that topic.
Speaker Change: On the margin interesting so youre not given formal full year guidance, but I guess, we can certainly piece together your expectations by.
Speaker Change: Are you, saying that you expect full year margins to be pretty similar to 'twenty three so that would imply a fairly healthy ramp through the year.
Speaker Change: I was hoping you can just give us maybe some specifics on what type of trajectory on incentives does that imply.
Speaker Change: I would imagine land costs are going to be trending up in terms of what's flowing through the P&L. So should we just interpret that as your expectation that incentive should come down to 300 plus basis points over the course of the year from where they sit today.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: If you go back to.
Speaker Change: The days when the seasonality was the norm.
Speaker Change: We went almost seasonality hiatus for a period of time that.
Speaker Change: That was always the case the trajectory of our margins.
Speaker Change: <unk> lower in the first quarter and accelerated through the year and I think I have detailed.
Speaker Change: In her comments, that's all that has been the case.
Think that.
In our case, specifically as we went through the fourth quarter.
Speaker Change: <unk>.
Speaker Change: The fourth quarter, it was a pretty rugged interest rate quarter, especially as we went through the first couple of months.
Speaker Change: And so I think that you have kind of an and.
Speaker Change: Anomalous.
Speaker Change: Margin.
Speaker Change: Pushed down in.
Speaker Change: In our first quarter, I think that youre going to see a normal flow.
Speaker Change: Margin improvement as we go through the year I think the more extreme.
Speaker Change: <unk> in the fourth quarter to maintain pace.
Speaker Change:
Speaker Change: Was it looks today as is and it's really a thing of the past at that level.
Speaker Change: And as.
As we look at where our margin is likely to go I think we have pretty good visibility because we went through.
Speaker Change: November and then early December and seeing the market kind of EBITDA and the buyer come back to the market.
Speaker Change: <unk>.
Speaker Change: Interest rates did start to ease John do you want to weigh in on that.
John: I would agree with what you said Stuart. In addition, we did see as we moved into the holiday season at the end of the quarter.
John: <unk>.
John: Less of a rebound as interest rates came down.
Due to the holiday seasonality, which was swapped.
John: Sort of normal.
John: I also think that you should expect that with a real focus on such as the fact that rates are lower but more effective use of adjustable rates.
In order to bring down the cost of mortgage buy downs as the buyer is still is in need of a.
John: The lower effective interest rates, both qualifying and afford homes at today's prices.
Speaker Change: Great. Thanks, again, guys I appreciate it.
Speaker Change: Okay. Thank you Tom.
Speaker Change: Next we will go to the line of Kenneth sooner from Seaport Research partners. Please go ahead.
Kenneth Sooner: Good morning, everybody.
Kenneth Sooner: Good morning.
Kenneth Sooner: A key part of even flow.
Kenneth Sooner: Cadence.
Kenneth Sooner: As structuring land as a variable cost.
Kenneth Sooner: I think a very meaningful innovation for you guys.
Kenneth Sooner: So can you quantify what percent of your closings.
Kenneth Sooner: Have been coming from these finished homesites that averaged 85% to 90% of your purchases. This year. So how many what percent of the closings came from these finished home sites in the quarter. If you could give us some context that would be useful versus last year or earlier. This year and then this is the key question quantify the.
Kenneth Sooner: Margin impact that you are making versus the asset efficiency that youre, achieving because I think the latter point is misunderstood. That's my first question. Thank you.
Speaker Change: Well can I can just jump in so in the fourth quarter up 48% of our deliveries.
Speaker Change: We're on some sites that we purchase from third parties I don't know what it was at the beginning of the year, but I'm sure in alternative F&B equivalent.
Speaker Change: I think that we should expect to see that trending up in 2024.
Speaker Change: Continue to become even more land later.
Speaker Change: Finishing line on our balance sheet and having more control.
There was a second part too.
Speaker Change: Right.
Speaker Change: The margin per se.
Speaker Change: The asset efficiency.
Speaker Change: Yes, So I think if you look big picture, it's a growing number but I would say that it's probably 20 or 30 basis points is probably a good issue and that will probably grow.
Speaker Change: <unk>.
Speaker Change: Increase that percentage.
Speaker Change: Thats unallocated about 20 or 30 basis points.
Speaker Change: Excellent.
Speaker Change: I think the second item and I think this is more about messaging and we've spoken about this in the past but investors are.
Speaker Change: Seeking clarity on net income to cash flow and buybacks.
Speaker Change: Realized.
Speaker Change: Your company is evolving as you reduce your land exposure, but just generally as you heuristic.
Speaker Change: Could you kind of in front of the statement I think Diane you might have said this actually that the balance of cash flow will go to share repurchases absent that payments is that as simple rule of thumb that is guiding your company and.
Speaker Change: Stuart I think you were highlighting that you are not looking for large land deals. So I think with the simple heuristics people would have more confidence in that.
Application of your cash flow, yes. Thank you.
Stuart Miller: Yes, I think thats, a good characterization for right now.
Stuart Miller: But what I'm trying to articulate is that we are evolving our thinking in this regard.
Stuart Miller: <unk>.
I want to say emphatically that we're not looking for what we're looking for and holding back for large land deals, we're not looking for and holding back for M&A transactions.
Stuart Miller: So, let's let's say that that's not the direction that we're that we're growing right now.
Stuart Miller: And that the cash flow generated.
Both conservatively right now allocation between debt retirement as <unk>.
Stuart Miller: <unk> and the remainder for stock buyback.
Speaker Change: I think Ken I would also add.
As it relates to get you might be referring to the fact that in.
Speaker Change: <unk> closed in prior years.
Speaker Change: We did a fair amount of earlier than earlier.
Speaker Change: Sure.
Speaker Change: On our futures and.
Speaker Change: And then just because we have only one I've always said that while the debt to total capital ratio is important I think perhaps more important in line nine is one of the nominal dollars on your balance sheet. It's really really wanted to take down the nominal dollars are exceeding our balance and number two and a half billion.
Speaker Change: Billion.
Speaker Change: It feels like there is.
Speaker Change: Quite the need to keep climbing that following we can just kind of pay it down in an orderly fashion as it becomes there. So that's how we're thinking about it at the moment.
Speaker Change: Thank you very much.
Thank you.
Speaker Change: Thank you next we'll go to the line of Michael Rehaut from Jpmorgan. Please go ahead.
Speaker Change: Thanks.
Michael Rehaut: Good morning, everyone are I guess almost good afternoon. Thanks for all the comments so far and also congrats on the fast turnaround after year end that is very impressive. So I would agree with Dan's comments earlier.
Michael Rehaut: I wanted to.
Michael Rehaut: Zero in a little bit on SG&A and corporate G&A for the first quarter.
Michael Rehaut: It looks like you are having.
Michael Rehaut: Yeah.
Revenue growth expectations, alongside the predominantly driven by the higher closings.
Michael Rehaut: But.
No.
Michael Rehaut: Negative leverage I guess on on both metrics.
Michael Rehaut: Pretty decent margin given given the double digit revenue growth outlook. So I just wanted to understand the drivers of that I know you said on the corporate G&A, there's more investments. So maybe just talking a little bit more on SG&A, if there's higher commissions or other factors that we should be aware of and on a full year.
Michael Rehaut: Should we expect SG&A incorporate G&A leverage.
Michael Rehaut: Outside of just this first quarter dynamic.
Speaker Change: Yeah, So I think Mike.
Speaker Change: We've been as we've been articulating we have been seeing a little bit more broker participation ourselves too thin.
Speaker Change: Although challenging at certain times.
Speaker Change: Utilizing programs judiciously.
Certainly.
Speaker Change: <unk> programs and the like to ensure.
Speaker Change: That means our catchment sales, but spending dollars judiciously. Additionally, as you kind of talked about the machine.
Speaker Change: A very big harvest that.
Speaker Change: Sure.
Speaker Change: Lead generation on the digital side, how do we get more into the funnel. So that we have higher conversion rates and so we've been again judiciously spending dollars on match them because we believe that in the end.
Speaker Change: That will really produce a higher margin for us.
Speaker Change: Constantly focus on other things. So I think those are the two areas that.
Speaker Change: <unk> has really been impacting our SG&A in the last few quarters, yes that was that was required articulation.
Speaker Change: The operational side of it that was good.
Speaker Change: But.
Speaker Change: The fact is that as we've gone through this.
Sure.
Speaker Change: <unk> downs in the past year with interest rates.
Speaker Change: <unk>.
Speaker Change: The use of our digital platform has really been a learning curve.
And has challenged us to get better and better and better.
Speaker Change: And while we have great affection for and engagement with our realtor community.
We certainly don't want to incur costs that we don't have to incur.
Speaker Change: And so we.
We have been working.
Speaker Change: Carefully to make sure we're managing the balance.
Speaker Change: Between.
The necessary engagement with.
Speaker Change: With Realtors and what we can actually accomplish organically to our digital platform and that is rippling through our SG&A.
Speaker Change: We've seen.
Speaker Change: Sure.
Speaker Change: Realtor spend and some of the marketing spend tick up as we are.
Speaker Change: Driven to maintain.
Speaker Change: Sales pace. So we're seeing some of that is going to be a story of evolution. As we go through 2024 anything you want to think.
Speaker Change: Thats the right articulation as you said in your opening remarks that we're continuing to learn about the execution of our machine.
Speaker Change: Turn the dials or whether it's interest rate buy downs or incentives or.
Speaker Change: Flow through our digital funnel or the selected use of brokers.
Speaker Change: We're in that stage, where we are Troy learning experimenting and providing feedback to how do we get better and more efficient at each of those.
Speaker Change: Levers that we pull to drive this consistent production and sales pace.
Speaker Change: Great Great no. Thank you for that.
Speaker Change: I guess, secondly, just drilling down a little bit more on the gross margins and understanding it's a pretty fluid situation certainly but.
Speaker Change: <unk> kind of a backdrop, where you've done low 24% gross margins in the back half of 'twenty. Three now you are talking about low 21% in the first quarter, but perhaps the full year getting back to something around.
Speaker Change: What you did on a full year basis in 'twenty three it.
Speaker Change: It would seem like this upcoming first quarter.
Speaker Change: Obviously took steps to ensure volume and orders coming in the door.
Speaker Change: That appear to be maybe I don't want to say extraordinary but.
You did what you needed to do let's say to ensure those volumes coming through and maybe a little bit more of a stress period.
Speaker Change: Sure.
Speaker Change: Is it fair to kind of.
Speaker Change: Think about perhaps the.
Speaker Change: A 200 basis point or two to 300 basis points.
Speaker Change: First quarter deviation.
Speaker Change: As being.
Speaker Change: Kind of.
Speaker Change: I don't want to say.
Speaker Change: A one time event, but.
Speaker Change: As you have the.
Speaker Change: A more recent interest rate backdrop coming back to late summer.
Speaker Change: And where you did a gross margin closer to that 24.
Speaker Change: Is there any reason not to think that you'll be getting back to that 23, 24% type of gross margin in relatively short order.
Speaker Change: Outside of again, perhaps some more aggressive measures that you took from an insane.
Speaker Change: That are kind of tangible and.
Speaker Change: Quantifiable that you see as more of just affecting the first quarter is that kind.
Speaker Change: The right way to think about.
Speaker Change: Kind of moving past this.
Speaker Change: Period in the very short term.
Speaker Change: So two <unk>.
Great question, Mike and it's one that we're thinking a lot about and I think that the answer to that is we will see whether it is our interesting that that is very much. The case as I noted in the fourth quarter.
Really you really saw as interest rates started to migrate.
Speaker Change: Above 75% towards eight.
Speaker Change: As I said in my remarks.
Speaker Change: It really felt like you were hitting an inflection point, where we really fell.
Speaker Change: In the field.
Speaker Change: That the buyers.
Speaker Change: There may be starting to hit a tipping point of losing some confidence.
Speaker Change: The way I think about it is.
Speaker Change: As we've gone through this.
<unk> of higher interest rates, even as we saw a sharp increase in interest rates at the inception.
We were able to see incentives work.
Speaker Change: Incentives were able to help the buyer get to a point of affordability and they transacted on the need for their housing.
<unk>.
Speaker Change: As we got into the fourth quarter.
Speaker Change: And we're starting to get to that point, where we werent sure.
Speaker Change: Incentives even on the aggressive side.
Going to work.
Speaker Change: Yes.
I went on interest rates started to moderate just a little bit not kind of as they did in the past couple of days.
Speaker Change: It's just that that moderation took kind of the edge off and maybe the market needed to get to a new normal I don't know what that was actually going to be but the question is.
Speaker Change: The answer to your question is we did what we had to do we did what it took to activate the market at the moment in time, we're not going to build inventory we are not going to.
Speaker Change: To pull back on the overriding strategy.
Speaker Change: Driving cash flow, we're going to meet the market, where the market is and we're going to drive through it and Thats exactly what we did through our fourth quarter. You are right that some of the margin impact might be a bit more severe as we reflect that through the first quarter.
And there could well be a.
Speaker Change: Kind of snap back and we will have to wait and see because we are going through the seasonality of this time of the year right now.
Speaker Change: If I could add as you think about the machine and the process that we've been describing to you for quarters now.
Speaker Change: It's really a reflection of the reality that none of US has a crystal ball at any moment in time to see which way rates or.
Speaker Change: Our buyer enthusiasm is moving so as we sat in the fourth quarter. We just dealt with the rate for what they were versus the speculation of where they might go and so Stuart just articulated we appropriately used.
Speaker Change: Mortgage rate buy downs to keep a pace going.
Speaker Change: As we sit here today, the rates look better, but again, we don't know where they're going but we are well positioned to maintain that pace, which by definition means.
Speaker Change: The use of lower cost mortgage buy downs continue to drive the consistent pace.
Speaker Change: As a step or two data remember articulated we'll use our margin as a shock absorber to the market conditions interest rate environments.
Speaker Change: Should see it move up and down as the market moves up and down.
Speaker Change: One last thing I'll say is.
An interesting anomaly that we noted to our for our fourth quarter was there was greater reluctance.
Speaker Change: To use an arm product that would normally take place as we go through an interest rate cycle and much more focus on a 30 year fixed buy down.
Which was more expensive.
Speaker Change: And.
And just a small tech or normalization of interest rates and especially what's happened over the past days.
Speaker Change: Really is migrating.
Speaker Change: Tension of buyers to the prospect of an arm product being more acceptable. This is of course reduces the amount of.
Speaker Change: Incentive is flowing through the system and.
Speaker Change: So we're going to have to wait and see again touching fee.
Speaker Change: Day by day basis, and that's what we're working on.
Speaker Change: Why don't we take one more question.
Thank you. Our final question comes from Susan Mcclary from Goldman Sachs. Please go ahead.
Susan Mcclary: Thank you for squeezing me in and good afternoon.
Susan Mcclary: Yes.
Speaker Change: My first question is just building on your comments in response to the last question, which is as you think about coming into the year with less than one finished spec per community, which is the low and especially relative to maybe some of your peers that are in.
Speaker Change: Similar product price points market how.
Speaker Change: How do you think about the ability to leverage the improvements in our non machine to flex the business to get to the 80000 closings that you've guided to or even perhaps flex up or flex down relative to that number depending on how the market comes together this year.
Speaker Change: Look.
Speaker Change: To that extent everything that we're doing even the migration to.
Speaker Change: The larger number of deliveries is by design, it's about the number of communities that we have in the phase III those communities.
Speaker Change: And this is becoming very much a.
Speaker Change: Focus detailed program that is managed by John.
Speaker Change: With what we call our daily call. It's actually every other day and our operating group is laser focused on.
Hence the production pace starts pace.
Speaker Change: And cycle times, Dovetailing with sales pace at the division and community level.
Speaker Change: This work is being handled.
Speaker Change: Very active Amazon basis John.
This is as sensitive as a by design approach is to not have completed inventory, which have new inventory moving through our production machine.
Speaker Change: Which we don't need to flex up or down it will consistently come through and will consistently drive deliveries towards our goal of about 80000 for this year. So the market conditions will ebb and flow on most likely but I would assure will be very consistent through that delivering that by design.
Target that we have.
Speaker Change: Okay and then in your comments you detailed some really impressive market share gains that you've realized over the course of the year. As you think about the forward year can you talk a bit to maybe who those share gains you stick largely came from and then the ability to further outgrow the market as you drive some of these company specific initiatives.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: We're certainly not going to be naming names and it's different across the platform.
Speaker Change: I don't think you would even be able to identify a specific.
Speaker Change: Where it came from.
Speaker Change: Every market is different every every strategy in various markets.
Speaker Change: The competitive landscape has been different.
Remember that.
Speaker Change: There are some there are some numbers that have been constrained by access to capital.
Speaker Change: And then others that just has a very different strategy our strategy has been clear and consistent.
And where there has been pulled back by one another or a group of.
Speaker Change: Other builders.
Speaker Change: We then we filled certain voids and picked up market share in that process, whether it's in our land acquisition, whether it's within the acquisition of new trade partners too.
Speaker Change: To help focus on cycle time.
Speaker Change: It helped putting caution into focus or whether it has been in.
Speaker Change: Accelerating.
Speaker Change: Sales of our sales pace, we've been able across the board.
Speaker Change: <unk>.
Speaker Change: In and drive market share.
Speaker Change: I think the market share that position as a byproduct of the strategy as you're hearing it's becoming the most efficient effective buyer of choice for many sellers and the most efficient effective builder of choice for our trade partners, that's what really drives our strategy and it produces because there's other builders pull back or maybe accelerate.
Speaker Change: We will provide us consistent growth consistent volumes of both DRAM sellers into our trade partners.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Okay. Thank you very much.
Speaker Change: We're going to end it there I won't say, thank everybody for joining us it's been a really exciting year for our company in terms of evolution in terms of execution and in terms of learning curve.
Speaker Change: Look forward to reporting on progress through 2024, thanks for joining.
Speaker Change: That concludes today's conference. Thank you all for participating you may now disconnect your lines and please enjoy the rest of your day.
Speaker Change: Thank you.
Speaker Change: Yeah.