Q1 2024 Tri Pointe Homes Inc Earnings Call
Good morning, ladies and gentlemen, and thank you for standing by and welcome to Tri Pointe first quarter 2024 earnings Conference call.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to TRI Pointe's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Should you require operator assistance during the conference, please press star zero to signal an operator. Please note this conference is being recorded. I will now turn the call over to your host, David Lee, General Counsel. Thank you. You may begin.
Operator: At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Operator: Should you require operator assistance during the conference. Please press star zero to signal an operator.
Operator: Please note this conference is being recorded.
Operator: I'll now turn the call over to your host David Lee General Counsel. Thank you you may begin.
David C. Lee: Good morning, and welcome to the TRI Pointe Homes earnings conference call. Earlier this morning, the company released its financial results for the first quarter of 2024. Documents detailing these results, including a slide deck, are available at www.tripointehomes.com through the Investors link and under the Events and Presentations tab. Before the call begins, I would like to remind everyone that certain statements made on this call, which are not historical facts, including statements concerning future financial and operating performance, are forward-looking statements that involve risks and uncertainties.
David C. Lee: Morning, and welcome to Tri Pointe homes earnings Conference call earlier. This morning, the company released its financial results for the first quarter of 2024.
David C. Lee: Documents detailing these results, including a slide deck are available at www Dot Tri Pointe homes dotcom through the investors link and under the events and presentations tab.
David C. Lee: Before the call begins I would like to remind everyone that certain statements made on this call, which are not historical facts, including statements concerning future financial and operating performance are forward looking statements that involve risks and uncertainties.
David C. Lee: The discussion of risks and uncertainties and other factors that could cause actual results to differ materially is detailed in the company's SEC filing. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through TRI Pointe's website and in its SEC file. Hosting the call today are Doug Bauer, the company's Chief Executive Officer, Glenn Keeler, the company's Chief Financial Officer, Tom Mitchell, the company's President and Chief Operating Officer, and Linda Mamet, the company's Executive Vice President and Chief Marketing Officer With that, I will now turn the call over to Doug. Thank you.
David C. Lee: A discussion of risks and uncertainties and other factors that could cause actual results to differ materially are detailed in the company's SEC filings.
David C. Lee: Except as required by law the company undertakes no duty to update these forward looking statements.
David C. Lee: Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Tri Pointe web site and in its SEC filings.
David C. Lee: Hosting the call today are Doug Bauer, the company's Chief Executive Officer, Glenn Keeler, the company's Chief Financial Officer.
David C. Lee: Tom Mitchell, the company's President and Chief operating Officer.
Linda Helen Mamet: Linda MMA, the company's executive Vice President and Chief Marketing Officer with that I will now turn the call over to Doug.
Douglas F. Bauer: Thank you, David, and good morning to everyone on today's call. During the call, we will review operating results for the first quarter, discuss some of our growth initiatives, and provide a Market Update. In addition, we will provide a second quarter and full year outlook for 2024. We're pleased to report that TRI Pointe Homes had an outstanding first quarter that met or exceeded the high-end of our guidance across all key operating metrics. We delivered 1,393 homes at an average sales price of $659,000, resulting in home sales revenue of $918 million, a 20% increase compared to the previous year. Home sales gross margins were 23% for the quarter, which was at the high end of our guidance range resulting from lower incentives.
Douglas F. Bauer: Thank you David and good morning to everyone on today's call.
Douglas F. Bauer: During the call. We will review operating results for the first quarter discuss some of our growth initiatives and provide a market update.
Douglas F. Bauer: In addition, we will provide second quarter and full year outlook for 2024.
Douglas F. Bauer: We're pleased to report that Tri Pointe homes had an outstanding first quarter that met or exceeded the high end of our guidance across all key operating metrics.
Douglas F. Bauer: We delivered 1393 homes at an average sales price of 659000.
Douglas F. Bauer: Resulting in home sales revenue of $918 million.
Douglas F. Bauer: A 20% increase compared to the previous year.
Douglas F. Bauer: Home sales gross margins were 23% for the quarter.
Douglas F. Bauer: Which was at the high end of our guidance range, resulting from lower incentives.
Douglas F. Bauer: Our increased delivery volume allowed us to benefit from improved operating leverage resulting in a decrease in SG&A as a percentage of home sales revenue to 11, 1%.
Douglas F. Bauer: Our increased delivery volume allowed us to benefit from improved operating leverage, resulting in a decrease in SG&A as a percentage of home sales revenue to 11.1%, a 40 basis point improvement compared to the prior year. In addition, our strategic shift towards a higher percentage of spec starts, to meet the prevailing supply-demand gap in the housing market, has enabled us to address consumer needs and further increase delivery. This, along with our ongoing success in reducing cycle times to pre-pandemic levels, creates an efficient engine to generate profit.
Douglas F. Bauer: A 40 basis point improvement compared to the prior year.
Douglas F. Bauer: In addition, our strategic shift towards a higher percentage of spec starts to meet the prevailing supply demand gap in the housing market.
Douglas F. Bauer: Has enabled us to address consumer needs and further increase deliveries.
Douglas F. Bauer: This along with our ongoing success with reducing cycle times to pre pandemic levels.
Douglas F. Bauer: Creates an efficient engine to generate profits.
Douglas F. Bauer: These outstanding results led to net income of 99 million.
Douglas F. Bauer: These outstanding results led to net income of $99 million and diluted earnings per share of $1.03, marking a 41% improvement over the prior year. Relative to demand, market conditions remain favorable for new homebuilders. Today's environment is fueled by a strong economy, low unemployment, and an ongoing shortage of housing supply.
Douglas F. Bauer: And diluted earnings per share of $1.03, marking a 41% improvement over the prior year.
Douglas F. Bauer: Relative to demand market conditions remain favorable for new homebuilders.
Douglas F. Bauer: Today's environment is fueled by a strong economy, low unemployment and an ongoing shortage of housing supply.
Douglas F. Bauer: Tri Pointe homes results reflect our focus on core market locations and innovative products that appeal to well qualified customers.
Douglas F. Bauer: TRI Pointe Homes results reflect our focus on core market locations and innovative products that appeal to well-qualified customers. During the quarter, we recorded 1,814 net new orders, which was an improvement of 12% compared to the prior year. Our absorption base remained healthy throughout the quarter, averaging 3.9 homes per community per month.
Douglas F. Bauer: During the quarter, we recorded 1814 net new orders.
Douglas F. Bauer: Which was an improvement of 12% compared to the prior year.
Douglas F. Bauer: Our absorption pace remained healthy throughout the quarter, averaging 3.9 homes per community per month.
Douglas F. Bauer: With our strong demand, we focus on finding a balance between pace and price to maximize our profitability.
Douglas F. Bauer: With our strong demand, we focus on finding a balance between pace and price to maximize our profitability. During the first quarter, we were able to raise net pricing in most of our communities, with incentives on orders improving to 3.8%, compared to 4.8% sequentially from the fourth quarter. With a substantial backlog of 2,741 homes and a spring selling season that continues to reflect strong demand, we are raising our full year guidance for deliveries, ASP, and gross margin percentage. Glenn will give further details on our guidance in a moment.
Douglas F. Bauer: During the first quarter, we were able to raise net pricing in most of our communities with incentives on orders improving to 3.8%.
Douglas F. Bauer: Compared to 4.8% sequentially from the fourth quarter.
Douglas F. Bauer: With a substantial backlog of 2000, and 741 homes and a spring spring selling season that continues to reflect strong demand.
Douglas F. Bauer: We are raising our full year guidance for deliveries E S P and.
Douglas F. Bauer: And gross margin percentage Glen will give further details on our guidance in a moment.
Douglas F. Bauer: We generated 145 million of positive cash flow from operations and ended the quarter with $944 million of cash on hand.
Douglas F. Bauer: We generated $145 million of positive cash flow from operations and ended the quarter with $944 million of cash on hand. We have $4.5 million of senior notes that are maturing in the second quarter, and we plan to pay these notes off in full. This will decrease our annual interest carry by $26 million and reduce our debt to capital ratio to a low 20% level.
Douglas F. Bauer: We have 450 million of senior notes that are maturing in the second quarter.
Douglas F. Bauer: And we plan to pay these notes off in full.
Douglas F. Bauer: This will decrease our annual interest carry by $26 million and reduce our debt to capital ratio to the low 20% level.
Douglas F. Bauer: Our strong balance sheet and liquidity, along with our ability to generate positive cash flow from operations enables us to grow our business. While also returning capital to our shareholders through our stock repurchase program.
Douglas F. Bauer: Our strong balance sheet and liquidity, along with our ability to generate positive cash flow from operations, enables us to grow our business while also returning capital to our shareholders through our stock repurchase program. During the quarter, we repurchased approximately 1.4 million shares of our common stock at an average price of $34.66, for an aggregate dollar amount of $50 million. We remain committed to our share repurchase program as a key component of our capital allocation strategy as we continue to drive down our shares outstanding and drive up our earnings and book value per share.
Douglas F. Bauer: During the quarter, we repurchased approximately 1.4 million shares of our common stock at an average price of $34.66.
Douglas F. Bauer: For an aggregate dollar amount of $50 million.
Douglas F. Bauer: We remain committed to our share repurchase program is a key component of our capital allocation strategy.
Douglas F. Bauer: As we continue to drive down our shares outstanding and drive up our earnings and book value per share.
Douglas F. Bauer: The cumulative benefit of share repurchases continues to show in our results.
Douglas F. Bauer: The cumulative benefit of share repurchases continues to show in our results. Since the end of 2016, the first year in which we began repurchasing shares, we have increased our book value per share by 279%, or 15% compounded annually. During this same period, our shares outstanding have been reduced by 40%, in addition to strong offer results to kick off 2024.
Douglas F. Bauer: Since the end of 2016, the first year in which we began repurchasing shares.
Douglas F. Bauer: We have increased our book value per share by 279% or 15% compounded annually.
Douglas F. Bauer: During this same period, our shares outstanding have been reduced by 40%.
Douglas F. Bauer: In addition to strong auto results to kick off 2024, we've also executed on key growth initiatives that we discussed on our fourth quarter earnings call.
Douglas F. Bauer: We've also executed on key growth initiatives that we discussed on our fourth quarter earnings call. During the first quarter, our mortgage company, TRI Pointe Connect, became wholly owned by TRI Pointe Homes following the acquisition of the minority stake from Loan Depot. This integration allows for an enhanced customer experience and pricing flexibility while increasing earnings from financial services. Our capture rate with TRI Pointe Connect in the first quarter remains strong at 86%. Our buyers and backlog financing with TRI Pointe Connect demonstrate financial strength, with an average FICO score of 753, and a Debt to Income Ratio of 41%.
Douglas F. Bauer: During the first quarter, our mortgage company Tri Pointe connect.
Douglas F. Bauer: It became a wholly owned by Tri Pointe homes. Following the acquisition of the minority stake from loan depot.
Douglas F. Bauer: This integration allows for an enhanced customer experience and pricing flexibility, while increasing earnings from financial services.
Douglas F. Bauer: Our capture rate with Tri Pointe connect in the first quarter remained strong at 86%.
Douglas F. Bauer: Our buyers in backlog financing would tri Pointe connect demonstrate financial strength with an average FICO score of 753 debt.
Douglas F. Bauer: Debt to income ratio of 41%.
Douglas F. Bauer: The Loan-to-Value Ratio of 80% and an average gross household income of $195,000. Another exciting development for our business is the expansion of the TRI Pointe brand into new markets. Late last year, we announced our entry into the greater Salt Lake City market. And earlier this month, we announced the opening of the Coastal Carolinas and Orlando divisions. We are thrilled to expand into the southeastern markets, leveraging the strong foundation and successes we have established in both Charlotte and Raleigh.
Douglas F. Bauer: Loan to value ratio of 80% and.
Douglas F. Bauer: And in average gross household income of $195000.
Douglas F. Bauer: Another exciting development for our business as the expansion of the Tri Pointe brand into new markets.
Douglas F. Bauer: Late last year, we announced our entry into the greater Salt Lake City market.
Douglas F. Bauer: And earlier this month, we announced the opening of the coastal Carolinas and Orlando divisions.
Douglas F. Bauer: We are thrilled to expand into the south eastern markets leveraging the strong foundation and successes, we had established in both Charlotte and Raleigh.
Douglas F. Bauer: The South East has emerged as an economic engine with South Carolina, and Florida being the two fastest growing states in the nation in 2023.
Douglas F. Bauer: The Southeast has emerged as an economic engine, with South Carolina and Florida being the two fastest growing states in the nation in 2023, growing their populations by 1.7% and 1.6%, respectively. Both markets boast diverse economies that fuel jobs and drive housing demand. We feel these markets provide an excellent opportunity for our brand, which caters to the need for premium entry-level and move-up housing in both markets. We anticipate first deliveries in both the Coastal Carolinas and Orlando divisions in 2026.
Douglas F. Bauer: Growing their populations by 1.7, and one 6% respectively.
Douglas F. Bauer: Both markets, both diverse economies that fuel jobs and drive housing demand.
Douglas F. Bauer: We feel these markets provide an excellent opportunity for our brand that caters to the need for premium entry level and move up housing in both markets.
Douglas F. Bauer: We anticipate first deliveries in both the coastal Carolinas in Orlando divisions in 2026.
Douglas F. Bauer: Well it can be on our first quarter results order activity in April has remained strong despite recent increases in mortgage rates.
Douglas F. Bauer: Looking beyond our first quarter results, order activity in April has remained strong despite recent increases in mortgage rates. We continue to see the shortage of resale supply as a key factor in the ongoing strength of the new housing market, driving high quality traffic to our community. In the current housing cycle, new home builders are continuing to capture a share of the total home sales at an historic percentage, despite near-term inflation-driven rate increases.
Douglas F. Bauer: We continue to see the shortage of resale supply as a key factor in the ongoing strength of the new housing market.
Douglas F. Bauer: Driving high quality traffic to our communities.
Douglas F. Bauer: In the current housing cycle, new homebuilders are continuing to capture share of the total home sales at a historic percentage.
Douglas F. Bauer: Despite near term inflation driven rate increases we remain encouraged about the long term fundamentals of our business.
Douglas F. Bauer: We remain encouraged about the long-term fundamentals of our business, which are supported by a solid economic environment and ongoing household formation, particularly among Millennials and Gen Z buyers who continue to act as a demand catalyst. To wrap up, the outlook for TRI Pointe is very positive for 2024 and beyond, as we leverage our strengths to seize opportunities in both existing and new markets. We are also very optimistic about the outlook for our industry as the undersupply of housing continues to fuel demand.
Douglas F. Bauer: As her supported by solid economic environment.
Douglas F. Bauer: Going household formations.
Douglas F. Bauer: Particularly I'm on that millennials and Gen Z buyers, who continue to act as a demand catalyst.
Douglas F. Bauer: To wrap up the outlook for Tri Pointe is very positive for 2024 and beyond as we leverage our strengths to seize opportunities in both existing and new markets.
Douglas F. Bauer: We are also very optimistic about the outlook for our industry has the under supply of housing continues to fuel demand.
Douglas F. Bauer: As the supply demand gap continues to diverge with no end in sight, we believe our unwavering dedication to long term growth.
Douglas F. Bauer: As the supply-demand gap continues to diverge with no end in sight, we believe our unwavering dedication to long-term growth, coupled with prudent financial management, positions us well for continued success as we create and deliver value for our shareholders and customers alike.
Douglas F. Bauer: Coupled with prudent financial management.
Douglas F. Bauer: Positions us well for continued success as we create and deliver value for our shareholders and customers alike.
Douglas F. Bauer: With that I will now turn the call over to Glenn Glenn.
Glenn J. Keeler: With that, I will now turn the call over to Glenn. Glenn? Thanks, Doug.
Glenn J. Keeler: Thanks, Doug, and good morning. I'm going to highlight some of our results for the first quarter and then finish my remarks with our expectations and outlook for the second quarter and full year of 2024. As Doug mentioned, demand remained strong in the first quarter with net new home orders up 12% year over year at an absorption pace of 3.9 homes per community per month. Our cancellation rate remained low at only 7%, and we ended the quarter with 2,741 homes in backlog, which was a 35% increase year-over-year.
Glenn: Thanks, Doug and good morning, I'm going to highlight some of our results for the first quarter and then finish my remarks, with our expectations and outlook for the second quarter and full year for 2024.
Glenn J. Keeler: As Doug mentioned demand remains strong in the first quarter with net new home orders up 12% year over year at an absorption pace of three nine homes per community per month.
Glenn J. Keeler: Our cancellation rate remained low at only 7% and we ended the quarter with 2000 and 741 homes in backlog, which was a 35% increase year over year.
Glenn J. Keeler: Despite the recent increase in rates, the current demand environment continues to feel positive, and our April absorption pace has remained consistent with the first quarter. With the strong demand experienced in the quarter, we were able to realize some pricing power by increasing base home pricing and reducing incentives. Overall, we were able to increase net pricing in approximately 80% of our communities for an average amount of 2.5%. Incentives on orders for the first quarter were 3.8%, which was within the range of our historical company average of 3 to 4%.
Glenn J. Keeler: Despite the recent increase in rates. The current demand environment continues to feel positive about our April April absorption pace has remained consistent with the first quarter.
Glenn J. Keeler: With the strong demand experienced in the quarter, we were able to realize some pricing power by increasing based on pricing and reducing incentives overall, we were able to increase net pricing and approximately 80% of our communities for an average amount of two 5%.
Glenn J. Keeler: Incentives on orders for the first quarter were three 8%, which was within the range of our historical company average of 3% to 4%.
Glenn J. Keeler: The use of incentives for some type of financing or rate buy-down continues to be a popular consumer choice. With that said, we have started to see the level of rate buydowns and frequency of long-term rate locks decline as homebuyers are climatized to a higher rate environment.
Glenn J. Keeler: The use of incentives for some type of financing or rate buy down continues to be a popular consumer choice.
Glenn J. Keeler: With that said, we have started to see the level of rate buy downs and frequency of long term rate locks decline as homebuyers acclimatized to a higher rate environment.
Glenn J. Keeler: Turning to communities, we opened 20 new communities in the quarter and closed 19, ending with 156 active selling communities, which was a 15% increase over the prior year. Consistent with our previous guidance, we plan to open approximately 65 new communities for the full year, and I expect to close a similar number.
Glenn J. Keeler: Turning to communities, we opened 20, new communities in the quarter and COVID-19, ending with 156 active selling communities, which was a 15% increase over the prior year.
Glenn J. Keeler: Consistent with our previous guidance, we plan to open approximately 65, new communities for the full year I expect to close a similar number with.
Glenn J. Keeler: With our strong land pipeline, we anticipate growing our 2025 ending community count by approximately 10%. We ended the quarter with approximately 34,000 total lots, 46% of which were controlled. Our population of controlled lots increased 19% sequentially from last quarter. And we are well on our way to achieving our stated goal of increasing our controlled law percentage to 50%.
Glenn J. Keeler: With our strong land pipeline, we anticipate growing our 2025 ending community count by approximately 10%.
Glenn J. Keeler: We ended the quarter with approximately 44000 total lots, 46% of which were controlled.
Glenn J. Keeler: Population of controlled lots increased 19% sequentially from last quarter.
Glenn J. Keeler: And we are well on our way to achieving our stated goal of increasing our controlled lot percentage to 50%.
Glenn J. Keeler: Looking at the balance sheet and capital spend we ended the quarter with approximately $1 6 billion of liquidity consisting of 944 million of cash 703 million available under our unsecured revolving credit facility our.
Glenn J. Keeler: Looking at the balance sheet and capital expenditures, we ended the quarter with approximately $1.6 billion of liquidity, consisting of $944 million of cash and $703 million available under our unsecured revolving credit facility. Our debt-to-capital ratio was 31.2%, and our net debt-to-net capital ratio was 12.6%. As Doug mentioned, we plan to use the cash on hand to pay off our $450 million of senior notes that are due in the second quarter. We do not have another debt maturity until 2027, which puts us in a strong position to use our capital to invest in our business and continue to be active in our share repurchase program.
Glenn J. Keeler: Our debt to capital ratio was 31, 2% and our net debt to net capital ratio was 12.6%.
Glenn J. Keeler: As Doug mentioned, we plan to use the cash on hand to pay off a $450 million of senior notes that are due in the second quarter we.
Glenn J. Keeler: We did not have another debt maturity until 2027, which puts us in a strong position to use our capital to invest in our business and continue to be active in our share repurchase program.
Glenn J. Keeler: During the first quarter, we repurchased 1.4 million shares for a total aggregate dollar spend of $50 million, leaving us with $200 million available under our current authorization. In the first quarter, we invested approximately $238 million in land and land development. To support our growth targets, we expect to spend approximately $1.2 billion to $1.5 billion annually on land and land development. Now, I'd like to summarize our outlook for the second quarter and full year of 2024.
Glenn J. Keeler: During the first quarter, we repurchased one 4 million shares for a total aggregate dollar spend of $50 million, leaving us with 200 million available under our current authorization.
Glenn J. Keeler: For the first quarter, we invested approximately 238 million in land and land development.
Glenn J. Keeler: To support our growth targets, we expect to spend approximately $1 2 billion to $1 5 billion annually on land and land development.
Glenn J. Keeler: Now I'd like to summarize our outlook for the second quarter and full year for 2024 for.
Glenn J. Keeler: For the second quarter, we anticipate delivering between 1,500 and 1,600 homes at an average sales price between $670,000 and $680,000. We expect home building gross margin percentage to be in the range of 22.5% to 23.5% and anticipate our SG&A expense ratio to be in the range of 11% to 11.5%. Lastly, we estimate our effective tax rate for the second quarter to be approximately 26%. For the full year, we anticipate delivering between 6,200 and 6,400 homes at an average sales price between $660,000 and $670,000.
Glenn J. Keeler: For the second quarter, we anticipate delivering between 1500 1600 homes at an average sales price between 670600 80000.
Glenn J. Keeler: We expect homebuilding gross margin percentage to be in the range of 22, 5% to 23, 5% and anticipate our SG&A expense ratio to be in the range of 11% to 11, 5%.
Glenn J. Keeler: Lastly, we estimate our effective tax rate for the second quarter to be approximately 26%.
Glenn J. Keeler: For the full year, we anticipate delivering between 6200 6400 homes at an average sales price between 660006 hundred 70000.
Glenn J. Keeler: We expect homebuilding gross margin percentage to be in the range of 22, 5% to 23, 5%.
Glenn J. Keeler: Dissipate, our SG&A expense ratio to be in the range of 10, 5% to 11%.
Glenn J. Keeler: Lastly, we estimate our effective tax rate for the year to be approximately 26%.
Glenn J. Keeler: With that I will now turn the call back over to Doug for some closing remarks.
Glenn J. Keeler: We expect the home building gross margin percentage to be in the range of 22.5% to 23.5% and anticipate our SG&A expense ratio to be in the range of 10.5% to 11%. Lastly, we estimate our effective tax rate for the year to be approximately 26%. With that, I will now turn the call back over to Doug for some closing remarks.
Speaker Change: Thanks Glenn.
Speaker Change: In closing I want to express my deepest gratitude to the entire Tri Pointe team.
Doug: Their dedication innovation and hard work are truly the driving force behind our success as.
Doug: As a premium lifestyle brand, our ability to consistently innovate and differentiate ourselves rests on the shoulders of this extraordinary team.
Doug: Looking ahead, we have confidence in the future of the housing industry and Tri Pointe is growth.
Doug: Our commitment to disciplined execution underscores our pursuit of market share expansion within our existing divisions and strategic growth and our three new markets.
Douglas F. Bauer: In closing, I want to express my deepest gratitude to the entire TRI Pointe team. Their dedication, innovation, and hard work are truly the driving force behind our success. As a premium lifestyle brand, our ability to consistently innovate and differentiate ourselves rests on the shoulders of this extraordinary team. Looking ahead, we have confidence in the future of the housing industry and TRI Pointe's growth. Our commitment to disciplined execution underscores our pursuit of market share expansion within our existing divisions and strategic growth in our three new markets. We're energized to continue delivering value to our shareholders and customers alike. Thank you for your time today. And let's proceed to a Q&A session. Operator?
Douglas F. Bauer: We're energized to continue delivering value to our shareholders and customers alike.
Speaker Change: Thank you for your time today and.
Douglas F. Bauer: Let's proceed to a Q&A session operator.
Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. If you wish to remove your question from the queue. Please press star two for participants using speaker equipment and maybe necessary.
Speaker Change: Pick up your handset before pressing the star keys.
Douglas F. Bauer: Our first question is from Stephen Kim with Evercore. Please proceed.
Speaker Change: Yeah. Thanks, very much guys I appreciate all the color, but as usual we're always looking for a little more so I guess my first question relates to your average selling price and particularly I'm interested in your order a S. P a which looks like it has averaged about 688000.
Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If you wish to remove your question from the queue, please press star 2. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question is from Stephen Kim with Evercore.
Stephen Kim: Over the last six months, but the high end of your full year Guide assumes closing price of only closing price of only mid six seven days or so at the high end and so I'm, assuming that that means that youre thinking youre going to start a lot more lower priced specs and youre going to deliver them in the same quarter.
Stephen Kim: Yeah, thanks very much, guys. I appreciate all the color.
Stephen Kim: But if that's the case I think your backlog turnover ratio would be higher but you're not really seemingly guiding to that so it seems like it's pretty conservative somewhere and I'm just trying to figure out.
Stephen Kim: But, as usual, we're always looking for a little more. So I guess my first question relates to your average selling price. And particularly, I'm interested in your order ASP, which looks like it has averaged about $688,000 over the last six months. But the high end of your full-year guide assumes a closing price of only the mid-670s or so, the high end. And so I'm assuming that that means that you're thinking you're going to start a lot more lower-priced SPACs, and you're going to deliver them in the same quarter.
Stephen Kim: Were you being more conservative so could you maybe address you know why you're a S. P isn't going to be closer to what your order price has been and if its because of specs why youre not taken up your backlog turnover ratio.
Stephen Kim: Stephen Hey, it's Glenn I'll take a shot at that and it is just mix. When you look at that full year price guide and even the Q2 price guide comp.
Stephen Kim: Compared to our ASP and backlog, which is higher and it's just the mix of the additional deliveries we're going to get for the full year based on our communities. There is coming from places like Charlotte Houston, Dallas as just a bigger mix than what's currently in backlog based on communities that are opening and so that is what's kind of overall drive the rest of the year because we still have.
Stephen Kim: But if that's the case, I think your backlog turnover ratio would be higher, but you're not really seemingly guiding to that. So it seems like it's pretty conservative somewhere, and I'm just trying to figure out where you're being more conservative. So could you maybe address why your ASP isn't going to be closer to what your order price has been? And if it's because of SPACs, why aren't you taking up your backlog turnover ratio?
Stephen Kim: Many of houses to sell this year to close this year.
Stephen Kim: And there is just a little bit of mix in Q2 as well from.
Stephen Kim: Timing of delivery of higher Asps homes versus lower SP home. So it's just a mix.
Glenn J. Keeler: Stephen, hey, it's Glenn. I'll take a shot at that.
Glenn J. Keeler: And it is just mixed. When you look at that full-year price guide and even the Q2 price guide, compared to our ASP and backlog, which is higher. It's just the mix of the additional deliveries we're gonna get for the full year based on our communities. It's coming from places like Charlotte, Houston, and Dallas, as just a bigger mix than what's currently in backlog based on communities that are opening. And so that is what's gonna drive the rest of the year because we still have plenty of houses to sell this year to close this year. And there is just a little bit of mix in Q2 as well from timing of delivery of higher ASP homes versus lower ASP homes. So it's just the mix.
Speaker Change: Gotcha, Okay that I think are still being conservative, but that's okay Hum.
Speaker Change: Next question about the gross margin. So it was really encouraging to see that you raised your full year you know gross margin guide by about 100 basis points.
Glenn J. Keeler: But interestingly your <unk> gross margin and really just met the high end of your guide. So this seems to imply that selling conditions improved pretty meaningfully over the past three months and you know that I think he basically said that it in your opening remarks, so that that confirms it but that's really encouraging considering that rates mortgage rates have risen pretty steadily over that time. So.
Speaker Change: I was wondering if maybe you could describe how the strength has unfolded over the course of the quarter in the face of higher rates and obviously continuing into April where I think you said you think that customers are acclimatising to the higher rates just love to hear it here a little bit more commentary about that as you progressed through the quarter.
Stephen Kim: Gotcha. Okay.
Glenn J. Keeler: I think you're still being conservative, but that's okay. The next question is about the gross margin. It was really encouraging to see that you raised your full-year gross margin guide by about 100 basis points. But interestingly, your 1Q gross margin really just met the high end of your guide. This seems to imply that selling conditions improved pretty meaningfully over the past three months. I think you basically said that in your opening remarks, so that confirms it.
Glenn J. Keeler: Yeah, Stephen it's Glenn again, good good question.
Glenn J. Keeler: And like we said we were able to have some pricing power in the first quarter, we saw really strong demand and it started right out of the gate you know January was a higher than seasonal absorption pace for us and so and then that just got.
Glenn J. Keeler: Better throughout the quarter, but overall the quarter was just really strong demand we were able to take that price and then into April we're seeing like we said consistent absorption that we saw in the first quarter.
Glenn J. Keeler: But that's really encouraging considering that mortgage rates have risen pretty steadily over that time. So I was wondering if maybe you could describe how the strength has unfolded over the course of the quarter in the face of higher rates and, obviously, continuing into April where I think you said you think that customers are acclimatizing to the higher rates. I would just love to hear a little bit more commentary about that as you progress through the quarter.
Glenn J. Keeler: Not seeing an increase in incentives incentives are actually slightly down compared to where we were in the first quarter.
Glenn J. Keeler: Again, it just shows that that strong demand.
Glenn J. Keeler: That that we're seeing out there in the market.
Speaker Change: Yeah, that's super encouraging just housekeeping wise could you just give us the production home information. Thanks.
Speaker Change: Thanks, very much guys.
Glenn J. Keeler: Yes, Stephen, it's Glenn again. Good, good question. And like we said, we were able to have some pricing power in the first quarter. We saw really strong demand, and it started right out of the gate. You know, January was a higher-than-seasonal absorption pace for us, and so, and then that just got better throughout the quarter. But overall, the quarter was just really strong demand. We were able to take that price, and then into April, we're seeing, like we said, the consistent absorption that we saw in the first quarter.
Glenn J. Keeler: Yep.
Glenn J. Keeler: We had.
Glenn J. Keeler: Uh huh.
Glenn J. Keeler: Are you talking about.
Glenn J. Keeler: Yes.
Glenn J. Keeler: At the end of the quarter, we had 232 completed unsold homes and then we had another one.
Speaker Change: 1321 under construction unsold homes is that what youre looking for.
Speaker Change: Yeah. So that would mean that you had a total of $15 53.
Glenn J. Keeler: Some snacks unsold stocks correct.
Speaker Change: Okay. These are unsold specs, okay gotcha.
Speaker Change: I appreciate it thanks.
Glenn J. Keeler: Our next question is from Alan Ratner with Zelman and associates.
Glenn J. Keeler: We're not seeing an increase in incentives. Incentives are actually slightly down compared to where we were in the first quarter. And so again, it just shows the strong demand that we're seeing out there in the market.
Speaker Change: Hey, guys. Good morning, Congrats on the strong quarter and the entry into Florida, and Thats been a long time coming so great too great to see that.
Speaker Change: My first question, we've been hearing a little bit of mixed messaging around kind of the quality of the buyer today and I know you gave some helpful. Stats there, but yes. Some builders have kind of signaled that they are starting to see maybe a little bit more stress among the consumers and their financial condition.
Stephen Kim: Yeah, that's super encouraging. Just housekeeping wise, could you just give us the production home information? Thanks very much, guys.
Glenn J. Keeler: We had, where's that? Are you talking about, um... At the end of the quarter, we had 232 completed unsold homes, and then we had another 1,321 under construction unsold homes. Is that what you're looking for? Yeah, so that would...
Glenn J. Keeler: Other builders have kind of cited a pretty meaningful pickup in FHA share, which depending on your interpretation of that might might suggest maybe the down payments are becoming a little bit more challenging. So I'm. Just curious if you would be willing to kind of opine on what youre seeing in your your consumer today in terms of their credit quality and if youre seeing any signs that affordability constraints.
Glenn J. Keeler: Yeah, so that would mean that you had a total of 1553 Spacks. Unsold Spacks. Correct. Okay, these are unsold specs. Okay, gotcha. Appreciate it.
Alan S. Ratner: Our next question is from Alan Ratner with Zellman & Associates.
Alan S. Ratner: Hey, guys, good morning. Congratulations on the strong quarter and the entry into Florida. I know that's been a long time coming, so great to see that.
Alan S. Ratner: Beginning to have an impact on on buyers ability to qualify.
Alan S. Ratner: Hey, Alan it's Doug how are you.
Alan S. Ratner: Great.
Alan S. Ratner: Okay.
Alan S. Ratner: We have not seen any change.
Douglas F. Bauer: Um, my first question is, you know, we've been hearing a little bit of mixed messaging around kind of the quality of the buyer today, and I know you gave some helpful stats there, but, you know, some builders have kind of signaled that they're starting to see maybe a little bit more stress among the consumers and their financial condition. You know, a few other builders have kind of cited a pretty meaningful pickup in FHA share, which, you know, depending on your interpretation of that might suggest maybe down payments are becoming a little bit more challenging.
Alan S. Ratner: Change in our buyer profile actually our buyer consumer profile for our product our entry level premium all way up to the first and second move up.
Douglas F. Bauer: Does resonate with a more qualified buyer I think we pointed out our.
Douglas F. Bauer: Our buyers have some pretty strong mortgage statistics in when you look at average household income of $195000. That's a very healthy when you have an ASP.
Douglas F. Bauer: Mid to high seven hundreds.
Douglas F. Bauer: So it's the.
Douglas F. Bauer: Buyer profile is very strong right now Lenny do you want to add anything to that.
Speaker Change: Yeah. Thanks, Alan FHA is still a relatively low percentage of that backlog is currently at 11%. So is by far our conforming is typical <unk> type for Alison Lewis.
Douglas F. Bauer: So I'm just curious if you would be willing to kind of comment on what you're seeing in your consumers today in terms of their credit quality and if you're seeing any signs that affordability constraints are beginning to have an impact on buyers' ability to qualify.
Speaker Change: Alright, well I appreciate that I appreciate that feedback there.
Douglas F. Bauer: Hey Alan, it's Doug. How are you? Great. Good.
Doug: Second question I guess on the SG&A.
Douglas F. Bauer: We have not seen any change in our buyer profile. Actually, our buyer-consumer profile for our product, our entry-level premium all the way up to the first and second move-up, does resonate with a more qualified buyer. I think we pointed out our buyers have some pretty strong mortgage statistics, and when you look at an average household income of $195,000, that's very healthy. When you have an ASP in the mid-to-high $700s, the buyer profile is very strong right now. Linda, do you want to add anything to that?
Linda: Really really nice improvement on our leverage this quarter. It came in much stronger than you were expecting and I know some of that was it was top line driven you used to be delivered more homes than expected but.
Linda: Im curious if theres anything kind of onetime in nature, there that kind of drove that number a bit lower and be as we think about some of the new market expansion that you've announced here are there going to be any kind of upfront expenses or any kind of headwinds from that that we should be aware of either later this year or into 25 before you start to deliver product in those markets.
Linda: Yes, Alan this is Glenn good good question no one time events in Q1 that led to that probably a little bit more savings on.
Linda Helen Mamet: Yes, thanks. Alan, FHA is still a relatively low percentage of our backlog. It's currently at 11%, so by far, conforming is the most typical loan type for our homebuyers.
Linda: Advertising than we had budgeted just because of the strong demand that we saw.
Alan S. Ratner: Great. Well, I appreciate that feedback there. Second question, I guess, on SG&A. You know, really, really nice improvement on leverage this quarter. It came in, you know, much stronger than you were expecting. And I know some of that was top line driven. You delivered more homes than expected. But, you know, A. I'm curious if there's anything kind of unique in nature there that kind of drove that number a bit lower.
Linda: So maybe a little bit of savings there.
Alan S. Ratner: And then for the startup markets its going to be minimal costs. This year and that's baked into our full year SG&A Guide and then next year, you're probably looking around five ish million of maybe operating costs you know some G&A related to the three new startup divisions.
Alan S. Ratner: And then so overall not a huge burden to our overall SG&A number.
Alan S. Ratner: Then youll start to see some dilip.
Alan S. Ratner: And B, you know, as we think about some of the new market expansions that you've announced here, are there going to be any kind of upfront expenses or any kind of headwinds from that that we should be aware of either later this year or into 2025 before you start to deliver a product in those markets?
Alan S. Ratner: Deliveries in and revenue in 'twenty, six that'll help offset those costs.
Speaker Change: Perfect. Thanks for that Glenn Thanks, a lot good luck guys.
Speaker Change: Thanks Al.
Alan S. Ratner: As a reminder to ask a question. Please press star one our next question is from Mike Dahl with RBC.
Speaker Change: Good morning, Thanks for taking my questions.
Speaker Change: Couple of follow ups here just on the on the selling environment, maybe if you could give us a little more color.
Glenn J. Keeler: Yeah, Alan, this is Glenn. Good, good question. No one-time events in Q1 that led to that. Probably a little bit more savings on advertising than we had budgeted, just because of the strong demand that we saw. So maybe a little bit of savings there. And then for the startup markets, it's going to be minimal cost this year, and that's baked into our full-year SG&A guide. And then next year, you're probably looking around $5-ish million of maybe operating costs, you know, some G&A related to the three new startup divisions. And then, so overall, not a huge burden to our overall SG&A number. And then you'll start to see, you know, some, you know, deliveries and revenue in 26. That'll help offset those.
Glenn J. Keeler: Kind of the cadence of that.
Glenn J. Keeler: Absorption through the quarter.
Glenn J. Keeler: It looked on a monthly basis and then when you look at April.
Glenn J. Keeler: Appreciate the comments on absorption we heard from.
Glenn J. Keeler: One of your peers that absorptions kind of held that Theres, maybe some early signs of traffic.
Glenn J. Keeler: Traffic moderation I think that was more of an entry level.
Speaker Change: But maybe can you just address kind of traffic trends that you're seeing and if there's any sort of.
Glenn J. Keeler: Flashing yellow that youre, starting to see over the past week or so in terms of buyers through the door.
Glenn J. Keeler: In response to this region.
Glenn J. Keeler: Hey, Mike This is Doug.
Glenn J. Keeler: As we reported.
Alan S. Ratner: Thanks a lot. Good luck, guys.
Glenn J. Keeler: The housing market is very strong in the first quarter.
Operator: As a reminder, to ask a question, please press star 1. Our next question is from Mike Dahl with RBC.
Speaker Change: We average absorption pace.
Speaker Change: <unk> 3.9 homes per community per month.
Michael Glaser Dahl: Morning, thanks for taking my questions. A couple of follow-ups here on the selling environment. Maybe if you could give us a little more color on kind of the cadence of absorption through the quarter, how that looked on a monthly basis. And then when you look at April, I appreciate the comments on absorption. We heard from one of your peers that absorption kind of held, but there's maybe some early signs of traffic moderation.
Operator: We're going into the quarter with very similar results. So the consumer is still very engaged.
Michael Glaser Dahl: I think wall Street analysts say everybody else, we are guilty of watching the 10 year Treasury go up and down.
Michael Glaser Dahl: Mostly gone up lately and the buyers are very climatized for what's going on in the market.
Michael Glaser Dahl: So right now we're seeing consistent demand with where we saw it in the first quarter.
Speaker Change: Got it okay. That's good to hear.
Michael Glaser Dahl: I think that was more an entry-level comment, but maybe can you just address the kind of traffic trends that you've seen and if there's any sort of kind of flashing yellow that you're starting to see over the past week or so in terms of buyers through the door? in response to this research.
Michael Glaser Dahl: And then another follow up on.
Michael Glaser Dahl: Steve's question on the ASP.
Michael Glaser Dahl:
Michael Glaser Dahl: When you look at the when you look at the guide for.
Michael Glaser Dahl: The year.
Michael Glaser Dahl: Okay and the increase is.
Douglas F. Bauer: Hey, Mike. This is Doug.
Michael Glaser Dahl: Obviously mix plays a big role, but as the increase in the full year guide is that really reflecting primarily the net pricing.
Douglas F. Bauer: You know, as we reported, the housing market was very strong in the first quarter. We averaged an absorption pace of 3.9 homes per community per month, and we're going into the quarter with very similar results. So the consumer is still very engaged. I think Wall Street, the analysts, everybody else, we're all guilty of watching the 10-year Treasury go up and down, mostly going up lately. And the buyers are very acclimated to what's going on in the market. So right now, we're seeing consistent demand with where we saw it in the first quarter.
Douglas F. Bauer: Actions that you took over the past few months or are there also a mix impact good or bad debt or either netting that up or down.
Speaker Change: Yeah, I would say that the increase to the guide was mainly pricing power there may be a little bit of mix of that but overall the increase of the ASP versus our original plan was with just some of that pricing power we saw.
Speaker Change: Makes sense. Thanks.
Douglas F. Bauer: Yes.
Douglas F. Bauer: Our next question is from Carl Reichardt with BTG.
Glenn J. Keeler: Okay, that's good to hear. And then another follow-up question on Steve's question about ASPs. When you look at the guide for the year now and the increase, obviously, mix plays a big role, but is the increase in the full-year guide really reflective of primarily net pricing? Thank you. Yeah, I would say that the increase to
Speaker Change: Good morning, how are you all right. Thanks for taking my question.
Speaker Change: Could you talk a little bit about just mix of deliveries and orders. This particular quarter between the premium entry level and the remainder of your prototypes.
Glenn J. Keeler: Sure.
Glenn J. Keeler: So it was actually fairly consistent so at entry level absorption was around four for the quarter and move up was around 383738, and so that's how you got to about $3 nine we have a pretty minimal mix of luxury and active adult so it doesn't really factor into the overall metrics, but pretty consistent between entry level and move up.
Glenn J. Keeler: Yeah, I would say that the increase to the guide was mainly due to pricing power. There may be a little bit of a mix of that, but overall, the increase in the ASP versus our original plan was just some of that pricing power we saw.
Carl Edwin Reichardt: Our next question is from Carl Reichardt with BTIG.
Carl Edwin Reichardt: Morning, how are y'all? Thanks for taking my question. Could you talk a little bit about the mix of deliveries and orders in this particular quarter between the premium entry level and the remainder of your product types?
Carl Edwin Reichardt: Okay. Thanks, Glenn and then when you're when you're looking at the pricing dynamic that youre seeing in the market now can you differentiate between those two segments are you seeing more potency in one or the other or is it pretty consistent across the board.
Glenn J. Keeler: Sure. So at entry level, absorption was around four for the quarter, and move up was around 3.8, 3.7, 3.8. And so that's how you got to about 3.9. We have a pretty minimal mix of luxury and active adult, so it doesn't really factor into the overall metrics, but pretty consistent between entry level and move up.
Glenn J. Keeler: Oh. Thanks. This is Linda it's really consistent across the board. So that's great to see.
Speaker Change: Okay. Thank you Linda Thanks Al.
Speaker Change: Thanks, Karl Thanks Karl.
Glenn J. Keeler: Our next question is from Jay Mccanless with Wedbush Securities.
Speaker Change: Hey, good morning, everyone. Thanks for taking my questions.
Glenn J. Keeler: Linda could you talk about what percentage of customers took some type of mortgage rate buy down in the quarter and how that compared to last year.
Speaker Change: Yes, Jay.
Glenn J. Keeler: We are seeing still seeing interest rate buy down, but the degree of rigor.
Linda Helen Mamet: Thanks, Glenn. And then when you're looking at the pricing dynamic that you're seeing in the market now, can you differentiate between those two segments? Are you seeing more potency in one or the other, or is it pretty consistent across the board?
Speaker Change: Auction that customers are thinking is not as great. As it was same time last year. They are more accustomed to the current interest rate environment. So typically they are using less of their incentive dollars that the rate buy down other standards in the first quarter that three point.
Linda Helen Mamet: It's really consistent across the board, so that's great to see.
Carl Edwin Reichardt: Thank you, Linda. Thanks to all.
Carl Edwin Reichardt: Thanks, Carl. Our next question is from Jay McCanless with Wedbush Security.
Carl Edwin Reichardt: Three 8% incentives that were using half of it towards financing and closing costs and half towards guest counts were a year ago. They would have been spending a higher proportion of that towards the financing and CNS.
Jay McCanless: Hey, good morning, everyone. Thanks for taking my questions. So, Linda, could you talk about what percentage of customers took some type of mortgage rate buydown in the quarter and how that compared to last year?
Speaker Change: Got you Okay. That's helpful. Thank you.
Linda Helen Mamet: Yes, Jay. We are still seeing interest in rate buydowns, but the degree of reduction that customers are seeking is not as great as it was at the same time last year. They are more accustomed to the current interest rate environment, so typically they're using less of their incentive dollars for the rate buydown of our incentive in the first quarter, that 3.8% incentive. Today, we're using half of it towards financing and closing costs and half towards discounts, where a year ago, they would have been spending a higher proportion of that towards the financing incentive.
Speaker Change: Then my next question.
Linda Helen Mamet: Your competitors have been talking about.
Linda Helen Mamet: How land costs and land development costs are moving up I guess.
Jay McCanless: What's your take on that issue and if there is going to be a step higher in land cost when should we expect that to start affecting the gross margin.
Linda Helen Mamet: Yes, Jay Good question. This is Tom.
Linda Helen Mamet: We've definitely seen approximately about 5% to 10% increase in land costs year over year, depending on markets.
Linda Helen Mamet: Thankfully, we've had enough pricing power to really be able to offset that so we don't anticipate any headwinds going forward in margin relative to additional land cost.
Jay McCanless: Okay, that's helpful. Thank you.
Thomas J. Mitchell: And then my next question, your competitors have been talking about how land costs and land development costs are moving up. What's your take on that issue? And if there is going to be a step higher in land costs, when should we expect that to start affecting the gross margin?
Thomas J. Mitchell: Hi, Jade, it's Doug I would add I mean, the land costs that you're buying or the land youre buying today is generally being deliberate and what we're looking for is really really early 'twenty seven.
Thomas J. Mitchell: Some 26 for some of the early stage division so.
Thomas J. Mitchell: So those land deals are being underwritten at current market conditions yet.
Thomas J. Mitchell: Yeah, Jay, good question. This is Tom.
Thomas J. Mitchell: We've definitely seen approximately a five to 10% increase in land costs year over year, depending on the markets. Thankfully, we've had enough pricing power to really be able to offset that. So we don't anticipate any headwinds going forward in margin relative to additional land costs.
Thomas J. Mitchell: Correct.
Thomas J. Mitchell: The underwriting metrics that we require so I don't I don't see a big.
Thomas J. Mitchell: Difference between margin today in three or four years from now.
Doug: Okay. Thanks, Doug.
Speaker Change: And last question I had could you talk about the 20% of markets, where you where you didn't raise price. This quarter was that more entry level focused was that more geographically focused anything you can give us on that would be appreciated.
Douglas F. Bauer: Jay, this is Doug. I would add, I mean, the land costs that you're buying or the land you're buying today are generally being delivered and what we're looking for is really early 27, some 26 for some of the early stages of division. So those land deals are being underwritten at current market conditions, at current underwriting metrics that we require. So I don't see a big difference in margin today and three or four years from now.
Linda: Davis as Linda It really is on a community by community basis. This is any one particular geography. So we did find the opportunity to either adjacency Nashville, increasing price broadly across all geographies.
Jay McCanless: Thanks, Doug. And then last question I had: could you talk about the 20% of markets where you didn't raise prices this quarter? Was that more entry level focused? Was that more geographically focused? Anything you can give us on that would be appreciated.
Jay McCanless: Yeah.
Speaker Change: Mike just to add to that like you said, it's more community base.
Jay McCanless: There is some.
Jay McCanless: Communities and even in good markets that might not have that pricing power or there is a lot of units to move through so you're being a little bit more.
Jay McCanless: Pace over price and so those decisions are done on a community by community basis.
Linda Helen Mamet: Jay, this is Linda. It really is on a community-by-community basis versus any one particular geography. So we did find the opportunity to either reduce incentives or increase prices broadly across our geographies.
Speaker Change: Got it okay, great. Thanks for taking my questions.
Speaker Change: Thanks Jay.
Speaker Change: Thanks Jay.
Linda Helen Mamet: Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Doug Bauer for closing remarks.
Linda Helen Mamet: So just to add to that, like she said, it's more community-based, you know, there are some communities in even in good markets that might not have that pricing power or you know there are a lot of units to move through so you're being a little bit more Pace over price, and so those decisions are done on a community by community basis.
Speaker Change: So I'd like to thank everybody for joining us today.
Speaker Change: We look forward to.
Linda Helen Mamet: Chatting with all of you next quarter have a great weekend.
Speaker Change: And a great day. Thank you.
Jay McCanless: Got it. Okay, great. Thanks for taking my question.
Speaker Change: Ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time and thank you for your participation.
Douglas F. Bauer: Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Doug Bauer for closing remarks.
Douglas F. Bauer: Hum.
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Douglas F. Bauer: Okay.
Douglas F. Bauer: Mhm.
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Douglas F. Bauer: I'd like to thank everybody for joining us today. We look forward to chatting with all of you next quarter.
Douglas F. Bauer: Mhm.
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Douglas F. Bauer: Yeah.
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Douglas F. Bauer: Okay.
Operator: Have a great weekend and a great day. Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your line at this time.
Douglas F. Bauer: [music].
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Operator: Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.
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