Q1 2024 Landsea Homes Corp Earnings Call

Greetings and welcome to the Atlantic C homes Corporation first quarter 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call.

Operator: Greetings and welcome to the Landsea Homes Corporation first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Drew Mackintosh. Please go ahead.

Conference. Please press Star zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host drew Mackintosh. Please go ahead.

Drew P. Mackintosh: Good morning, and welcome to Landsea Homes' first quarter of 2024 earnings call. Before the call begins, I would like to note that this call will include forward-looking statements within the meaning of the federal security laws. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which may range over time. These risks and uncertainties include but are not limited to the risk factors described by Landsea Homes in its filings with the Securities and Exchange Commission. We do not undertake any obligation to update this forward-looking statement.

Drew P. Mackintosh: Good morning, and welcome to Lindsay homes first quarter of 'twenty 'twenty four earnings call.

Drew P. Mackintosh: Before the call begins I would like to note that this call will include forward looking statements within the meaning of the federal Securities laws.

Drew P. Mackintosh: Lindsay homes caution that forward looking statements are subject to numerous assumptions risks and uncertainties, which range overtime. These.

Drew P. Mackintosh: These risks and uncertainties include but are not limited to the risk factors described by Atlanta homes and in its filings with the Securities and Exchange Commission.

Drew P. Mackintosh: We do not undertake any obligation to update forward looking statements. Additionally reconciliation.

Drew P. Mackintosh: Additionally, reconciliation of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Landsea Homes' website and in its SEC filing. Hosting the call today are John Ho, Landsea's Chief Executive Officer, Mike Forsum, President and Chief Operating Officer, and Chris Porter, Chief Financial Officer. With that, I'd like to turn the call over to John.

Drew P. Mackintosh: non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed Atlanta homes website and in its SEC filings.

Speaker Change: Hosting the call today are John <unk>, Chief Executive Officer, Mike for some President and Chief operating Officer, and Chris Boerner, Chief Financial Officer.

Speaker Change: With that I'd like to turn the call over to John.

John: Good morning, and thank you for joining us today as we go over our results for the first quarter of 2024.

John Ho: Good morning, and thank you for joining us today as we go over our results for the first quarter of 2024, discuss current market conditions, and provide an update on our outlook for the remainder of the year. Landsea Homes delivered strong top line growth of 22% in the first quarter. Thanks to a 7% year-over-year increase in home closings and a 14% rise in average sales price. Order activity during the quarter was also solid, as we generated 612 orders at a sales pace of 3.3 homes per community per month.

John: To discuss current market conditions and provide an update on our outlook for the remainder of the year.

John: Lastly homes delivered strong topline growth of 22% in the first quarter.

John: Thanks to a 7% year over year increase in home closings and a 14% rise in average sales prices.

John: Order activity during the quarter was also solid as well.

John: We generated 612 orders on a sales pace of 3.3 homes per community per month.

John: We continue to see strong interest for our new homes in our markets and look to capitalize on this demand for our well located communities in our desirable high performance home product line.

John Ho: We continue to see strong interest in our new homes in our markets and look to capitalize on this demand through our well-located communities and our desirable high-performance home product line. The macroenvironment remains favorable thanks to a resilient economy, strong job growth, and low levels of existing home inventory.

John: The macro environment remains favorable thanks to a resilient economy strong job growth and low levels of existing home inventory.

John: Against this backdrop, we continue to pursue our strategy of targeting high growth markets.

John Ho: Against this backdrop, we continue to pursue a strategy of targeting high-growth markets and rapidly achieving economies of scale at the local level. This strategy has proven successful in places like Arizona and Florida, and we look to achieve similar success in Texas and Colorado. Our Texas expansion goals got a big boost with the April 1st acquisition of Antares Homes, which provided us with 20 communities and over 2,100 lots in the Dallas-Fort Worth area.

John: And rapidly achieving economies of scale at the local level.

John: This strategy has been proven successful in places like Arizona, and Florida and.

John: And we look to achieve similar success in Texas and Colorado.

John: Our Texas expansion goals got a big boost with the April 1st acquisition of a terrorist homes.

John: Which provided us with 20 communities and over 2100 lots in the Dallas Fort worth area.

John Ho: We are extremely excited about what this acquisition brings to our organization, not only from a land and lots perspective, but also from a talent and local market expertise standpoint. The team from Ontario's Homes shares our vision operationally as it relates to product and new home affordability, as well as our values when it comes to quality home construction and customer service. The integration is proceeding smoothly, and we expect to have Antares operations fully on board our platform by the end of this month.

John: We are extremely excited about what this acquisition brings to our organization not only from a land and loss perspective, but also from a talent and local market expertise standpoint.

John: A team from a terrorist's homes shares our vision operationally as it relates to product and new home affordability as well as our values when it comes to quality home construction and customer service.

John: The integration is proceeding smoothly.

John: We expect to have in Paris operations fully on board on our platform by the end of this month.

John Ho: In addition to the operational progress we made during the quarter, we also executed two capital markets transactions that added more stability to our balance sheet. First, we successfully placed another $2.8 million of shares from our largest shareholder, Landsea Holdings Corporation, with more traditional institutional investors. The transaction brought Landsea Holdings ownership to approximately 47%, meaning Landsea Homes is no longer considered a control company under the ASTEC listing standards.

John: In addition to the operational progress we made during the quarter. We also executed two capital markets transactions, they added more stability to our balance sheet.

John: First we successfully placed another $2 8 million shares from our largest shareholder Clancy Holdings Corporation with more traditional institutional investors.

John: That transaction, but Lance he holdings ownership to approximately 47% meeting Lindsay homes is no longer considered a controlled company under asset listing standards.

John Ho: While we have always operated independently from our largest shareholder, we felt this was an important designation to achieve and believe it is in the best interest of all of our stakeholders to accrue a diverse and stable investor base. The second transaction was our placement of $300 million in senior notes due in 2029 at an interest rate of $8.78. This was a significant achievement for our company as it allowed us to pay down a portion of the outstanding borrowings under a revolving credit facility and provide us with longer-term fixed-rate capital to pursue our growth initiatives.

John: We have always operated independently from our largest shareholder we felt this was an important designation to achieve and believe it is in the best interest of all of our stakeholders to crewing diverse and stable investor base.

John: The second transaction was our placement of $300 million in senior notes due in 2029 and an interest rate of 878.

John: This was a significant achievement for our company as it allowed us to pay down a portion of the outstanding borrowings under our revolving credit facility and provide us with longer term fixed rate capital to pursue our growth initiatives.

John: Given the recent increase in interest rates since the deal closed we felt fortunate to have placed these notes when we did.

John Ho: Given the recent increase in interest rates since the deal closed, we felt fortunate to have placed these notes when we did. One of our goals for the remainder of 2024 is to generate enough cash from operations to bring our net leverage down from current levels while continuing to invest in our home building business. Over the last several quarters, we have made significant upfront investments in our operations, particularly in Texas and Colorado, and we're beginning to see a return on those investments as we sell and close homes.

John: One of our goals for the remainder of 2024 is to generate enough cash from operations to bring our net leverage down from current levels, while continuing to invest in our homebuilding business.

John: Over the last several quarters, we have made significant upfront investments in our operations, particularly in Texas, and Colorado, and we're beginning to see a return on those investments as we sell and close homes.

John: This shifting dynamic will bring more cash in the door as well as improvement in stack up cycle times, which lowers the capital tied up in work in process inventory.

John Ho: This shifting dynamic will bring more cash in the door, as will the improvements in cycle times, which will lower the capital tied up in work-in-process inventory. A higher cash flow on balance will allow us to operate from a position of strength going forward and will give us the option to either reinvest in the business, pay down debt, or return capital to shareholders. We ended the first quarter with 10% fewer shares outstanding as compared to the first quarter last year, a direct result of our share repurchase efforts over the last 12 months.

John: A higher cash balance will allow us to operate from a position of strength going forward and will give us the optionality to either reinvest in the business.

John: Hey, down debt or return capital to shareholders.

John: We ended the first quarter with 10% fewer shares outstanding as compared to the first quarter last year.

John: A direct result of our share repurchase efforts over the last 12 months.

John: We accomplished a lot in the first quarter, both from an operational and financial standpoint.

John Ho: We accomplished a lot in the first quarter, both from an operational and financial standpoint, and feel we are in a great position to achieve our goals for 2024 and beyond. The new home market continues to benefit from a lack of existing home inventory and pent-up demand from buyers who are motivated to own a home. We have made great progress in positioning our company to take advantage of these favorable trends, both in terms of our geographic footprint and our product positioning.

John: We are in a great position to achieve our goals for 2024 and beyond.

John: The new home market continues to benefit from a lack of existing home inventory and pent up demand from buyers who are motivated to own a home.

John: We have made great progress in positioning our company to take advantage of these favorable trends both in terms of our geographic footprint and our product positioning.

John: As a result, I believe last eight homes can build on the success, we've already achieved and establish our company as a top builder in each of our markets.

John Ho: As a result, I believe Landsea Homes can build on the success we've already achieved and establish our company as a top builder in each of our markets. Now, I'd like to turn the call over to Mike, who will provide more color on our operational performance this quarter.

John: Now I'd like to turn the call over to Mike who will provide more color on our operational performance this quarter.

Michael Forsum: Thanks, John, and good morning to everyone. Landsea turned in a solid performance in the first quarter of 2024 as our teams did an excellent job selling and closing homes, culminating in a delivery total of 505 homes, which was higher than our stated guidance. Arizona led the way with 183 deliveries, followed by Florida and California. As John mentioned, we should start to see higher delivery contributions from Colorado and Texas moving forward, particularly with the addition of Antares in the Dallas-Fort Worth market.

Mike: Thanks, John and good morning to everyone.

Mike: Lindsay turned in a solid performance in the first quarter of 'twenty 'twenty four as our teams did an excellent job selling and closing homes, culminating in a delivery total of 505 homes, which was higher than our stated guidance.

Mike: Arizona led the way with 183 deliveries, followed by Florida and California.

Mike: As John mentioned, we should start to see higher delivery contributions from Colorado, and Texas moving forward, particularly with the addition of <unk> in the Dallas Fort worth market.

Michael Forsum: Our operations in Austin are also starting to gain momentum as several phases of new communities are now selling in earnest, with a number of homes under construction and an open model complex. Net new orders were up 23% on a year-over-year basis for the quarter, resulting in a total of 612 home sales. Demand was broad-based across our home building platform as buyers in each of our markets continue to favor our high-performance homes and the value proposition they provide.

Mike: Our operations in Austin are also starting to gain momentum as several phases of new communities are now selling in earnest with a number of homes under construction and an open model complex.

Mike: Net new orders were up 23% on a year over year basis for the quarter, resulting in a total of 612 home sales.

Mike: Demand was broad great broad base across our homebuilding platform as buyers in each of our markets continued to favor our high performance homes and the value proposition they provide.

Mike: Financing incentives continue to be an important selling tool to our communities and the levels that we've needed to use to spur sales activity has mirrored the movements in the mortgage rates we.

Michael Forsum: Financing incentives continue to be an important selling tool for our communities, and the levels that we've needed to use to spur sales activity have mirrored the movements in the mortgage rate. We expect sales incentives to remain elevated as long as rates stay higher for longer. The availability of quick move-in homes continues to attract buyers, which is why we continue to operate with an elevated supply of spec homes. The new home market has filled the void created by the lack of existing homes for sale, and these buyers typically want to close on a home within 60 days.

Mike: We expect sales incentives to remain elevated as long as rates stay higher for longer.

Mike: The availability of quick move in homes continues to attract buyers, which is why we continue to operate with an elevated supply spec homes.

Mike: The new home market has filled the void created by the lack of existing homes for sale and these buyers typically want to close on a home within 60 days.

Mike: Our goal is to start the homes, while leaving enough lead time to allow for personalization and upgrades from the buyer.

Michael Forsum: Our goal is to start the homes while leaving enough lead time to allow for personalization and upgrades from the buyers. We are also being mindful of not letting too many homes reach completion without a buyer in a given community, and we'll adjust the pace of our starts accordingly. We are seeing better labor and material availability in each of our markets, which has resulted in better cycle times and improved inventory terms. This has alleviated some of the cost pressures we've experienced in the past, so land prices continue to rise.

Mike: We are also being mindful of not letting too many homes reached completion without a buyer in a given community and we will adjust the pace of our starts accordingly.

Mike: We are seeing better labor and material availability and each of our markets, which has resulted in better cycle times and improved inventory turns.

Mike: This has alleviated some of the cost pressures we've experienced in the past the land prices continue to rise.

Michael Forsum: Some of this is a function of a tight land market but is also a result of land banking arrangements, which reduce the risk of upfront capital required to own and develop land, but it comes at a cost.

Mike: Some of this is a function of a tightly end market, but it's also a result of land banking arrangements, which reduce the risk of upfront capital required to own and develop land that comes at a cost.

Michael Forsum: In general, we believe the benefits of a land-like strategy outweigh the costs, and we will continue to look for ways to tie up lots in a capital efficient manner. Overall, I would characterize the spring selling season as solid. Traffic and interest from buyers have been consistent throughout the spring, while the changes in interest rates have dictated the level of incentives we have had to offer. Our cancellation rate for the first quarter came in at 10% compared to 16% last year, a sign that buyers who move forward with their purchase remain confident in their decision.

Mike: In general we believe the benefits of a land light strategy outweigh the costs and we will continue to look for ways to tie up lots in a capital efficient manner.

Mike: Overall, I would characterize the spring selling season is solid traffic and interest from buyers have been consistent throughout the spring while the changes in interest rates have dictated the level of incentives we have had to offer.

Mike: Our cancellation rate for the first quarter came in at 10% compared to 16% last year aside that buyers who more move forward with their purchase remain confident in their decision.

Mike: Our existing operations in California, Arizona, and Florida continued to perform well and we're excited about the addition of Anne cars in the Dallas Fort worth market and the growing contributions from Austin in Colorado.

Michael Forsum: Our existing operations in California, Arizona, and Florida continue to perform well, and we're excited about the addition of Antares in the Dallas-Fort Worth market and the growing contributions from Austin and Colorado. We enter the second quarter in great shape, both operationally and financially, and I believe we are on track to meet our goals for this year and beyond. With that, I'd like to turn the call over to Chris, who will provide more detail on our financial results for this quarter.

Mike: We entered the second quarter in great shape, both operationally and financially and I believe we are on track to meet our goals for this year and beyond with that I'd like to turn the call over to Chris who will provide more detail on our financial results this quarter.

Christopher T. Porter: Thank you, Mike. As Mike mentioned, our 505 deliveries were 7% higher than the first quarter of 2023, and our $579,000 average selling price reflected a 14% increase over last year. Both exceeded the high end of our guidance and produced a 22% increase in home sales revenue to $292.6 million. However, our gross margin of 14.9% came in at the low end of guidance as incentives and discounts continued to weigh in the quarter and were approximately 5% of revenue. With the outlook for rates to stay higher for longer, we would expect these levels of incentives to remain relatively constant for some time.

Christopher T. Porter: Thank you Mike.

Christopher T. Porter: As Mike mentioned, our 505 deliveries were 7% higher than first quarter of 'twenty 23, and our 579000 average selling price reflected a 14% increase over last year.

Christopher T. Porter: Both exceeded the high end of our guidance and produced a 22% increase in home sales revenue to $292 6 million or.

Christopher T. Porter: Our gross margin of 14, 9% came in at the low end of guidance as incentives and discounts continued to weigh in the quarter and were approximately 5% of revenue with the outlook for rates to stay higher for longer we would expect these levels of incentives to remain relatively constant for some time.

Christopher T. Porter: Fully adjusted growth margin came in at a stronger 19.4%. We reported net income of $190,000, or $0.01 per share. This compares to $3.2 million in net income, or $0.08 per share, in the first quarter of last year. This quarter we had $1.7 million of transaction costs primarily related to the Antares acquisition along with $2.5 million of purchase price accounting for previous acquisitions. Excluding the one-time transaction costs, our net income was $1.9 million, or $0.05 per share.

Christopher T. Porter: Adjusted gross margin came in at a stronger at 19, 4%.

Christopher T. Porter: We reported net income of 190000 or one cent per share. This compares to $3 2 million and net income or eight cents per share in the first quarter of last year.

Christopher T. Porter: This quarter, we had a $1.7 million of transaction costs, primarily related to an terrorists acquisition, along with $2 5 million of purchase price accounting from previous acquisitions.

Christopher T. Porter: Excluding the onetime transaction costs, our net income was $1 9 million or five cents per share.

Christopher T. Porter: We ended the quarter with 63 average selling communities, up 7% from the first quarter of last year. During the quarter, we opened 10 communities and closed 6 communities. As John noted, with the Antares acquisition, we added 20 communities and approximately 2,100 lots as of April 1st.

Christopher T. Porter: We ended the quarter was 63 average selling communities up 7% from first quarter of last year during the quarter, We opened 10 communities and closed six communities.

Christopher T. Porter: As John noted with the and terrorist acquisition, we added 20 communities and approximately 2100 lots as of April 1st.

Christopher T. Porter: Backlog ended the quarter with 624 homes for a total value of 384 million and then a S. P. A 616000.

Christopher T. Porter: Backlog ended the quarter with 624 homes for a total value of $384 million and an ASP of $616,000. Our SG&A expenses came in at 15.2% of home sales revenue this quarter, 110 basis points better than the first quarter of 2023. Excluding the $1.7 million transaction cost, this ratio would have improved to 14.6%. We will not add any corporate staff or overhead for the Antares acquisition and will begin to see our SG&A leverage improve starting in the second quarter. Our tax benefit of $30,000 for the quarter was primarily the result of our improved stock performance and the additional tax benefits from stock option vesting during the quarter.

Christopher T. Porter: Our SG&A expenses came in at 15, 2% of home sales revenue this quarter 110 basis points better than the first quarter of 2023.

Christopher T. Porter: Excluding the $1 7 million transaction costs. This ratio would have improved to 14, 6%.

Christopher T. Porter: We will not add any corporate staff, our overhead for the interest acquisition and we'll begin to see our SG&A leverage improve starting in the second quarter.

Christopher T. Porter: Our tax benefit of 30000 for the quarter was primarily the result of our improved stock performance and the additional tax benefits from stock option vesting in the quarter.

Christopher T. Porter: Now turning to our balance sheet, we ended the quarter with $364 million in liquidity, $140 million in cash and cash equivalents, and $224 million in availability under our revolver. Our leverage ratios remained in line with our expectations, ending the quarter at 46% debt to total capital and 35% net debt to total capital. On April 1, we utilized cash on hand and revolver capacity to purchase on-terrace homes for approximately $242.5 million and closed on the issuance of our $300 million five-year note, which gave us longer-term fixed-rate capital and reduced our reliance on our revolving credit facility.

Christopher T. Porter: Now turning to our balance sheet, we ended the quarter with 364 million in liquidity.

Christopher T. Porter: Third and $40 million in cash and cash equivalents and 224 million in availability under our revolver, our leverage ratios remained in line with our expectations ending the quarter at 46% debt to total capital and 35% net debt to total capital.

Christopher T. Porter: On April 1st we utilized cash on hand, and revolver capacity to purchase on terrorists homes for approximately $242 5 million and closed on the issuance of our $300 million five year note, which gave us longer term fixed rate capital and reduces our reliance on our revolving credit facility.

Christopher T. Porter: The rate is effectively equivalent to our current pricing and our revolver. Subsequent to these transactions, we completed the refinance of our revolver led by Bank of America and U.S. Bank that broadened our bank group by adding two new banks to the syndicate and extended the term into 2027. We reduced capacity to a total of $355 million, reflecting the lower reliance on this facility and paid down $75 million during the quarter.

Christopher T. Porter: The rate is effectively equivalent to our current pricing and our revolver.

Christopher T. Porter: Subsequent to these transactions, we completed the refinance of our revolver led by Bank of America, and U S Bank that broadened our bank group by adding two new banks to the syndicate and extended the term into 2027.

Christopher T. Porter: We reduced capacity to a total of $355 million, reflecting the lower reliance for this facility and paid down $75 million during the quarter.

Operator: We continue to have an accordion feature to increase up to $850 million should we need the capacity. Additionally, we updated our pricing to a grid price and will initially realize an approximately 50 basis point improvement in rate. Net-net, consistent with what we have been indicating, our leverage will increase temporarily for the acquisition and should be back in our targeted levels at 45% debt to cap within one year. Now looking forward to the second quarter, we anticipate our new home deliveries to be between $600,000 and $650,000 at an average selling price between $525,000 and $530,000 with gap gross margins of 15% to 16%.

Christopher T. Porter: We continue to have an accordion feature to increase up to $850 million should we need the capacity.

Christopher T. Porter: Additionally, we updated our pricing to a grid pricing and will initially realize an approximately 50 basis point improvement in rate.

Operator: Net net consistent with what we had been indicating our leverage will increase temporarily for the acquisition and should be back in our targeted levels at 45% debt to cap within one year.

Michael Forsum: Now looking forward to the second quarter, we anticipate our new home deliveries to be between 600 and 650 at an average selling price between 525000 $530000 with GAAP gross margins of 15% to 16%.

Operator: And for the full year, we are confirming our previous guidance of new home deliveries in the range of 2,500 to 2,900 units. We expect ASPs of these deliveries to be in the range of $500,000 to $525,000. Additionally, we anticipate GAP home sales gross margin for the full year to be in the 17 to 18 percent range. These gross margin ranges are dependent upon assumptions in our purchase price accounting for the Antares Acquisition.

Operator: And for the full year, we are confirming our previous guidance of new home deliveries in the range of 2500 2900 units. We expect asps of these deliveries to be in the range of 500 to $525000.

Operator: We anticipate GAAP home sales gross margin for the full year to be in the 17% to 18% range.

Operator: These gross margin ranges are dependent upon assumptions in our purchase price accounting with Dan terrorists acquisition, we will not know the final allocations until later in the second quarter.

Operator: We will not know the final allocations until later in the second quarter. Also, this guidance is based on our estimates as of today with the current market conditions. As inflation, incentives, and interest rates continue to change, overall results could change accordingly. That concludes our prepared remarks, and now we'd like to open the call to questions.

Christopher T. Porter: Also this guidance is based on our estimates as of today with the current market conditions as inflation incentives and interest rates continued to change overall results could change accordingly.

Speaker Change: That concludes our prepared remarks, and now we'd like to open the call up for questions.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would 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.

Operator: Thank you. We will now 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. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Your first question comes from Matthew Bouley with Barclays. Please go ahead.

Operator: Press Star two if he would like to remove your question from the queue.

Christopher T. Porter: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: Your first question comes from Matthew Bouley with Barclays. Please go ahead.

Matthew Adrien Bouley: Morning, everyone. Thank you for taking the questions and congratulations on completing the acquisition I'm on that topic. You know now that you've you know kind of broadened out your exposure and obviously building the Texas footprint here.

Matthew Adrien Bouley: Morning, everyone. Thank you for taking the questions and congratulations on completing the acquisition. On that topic, you know, now that you've, you know, kind of broadened out your exposure and obviously built the Texas footprint here, should we look at this stage as, at least for the time being, that, you know, the focus is really just going to be on organic investment in the markets that you're now in? Or is there kind of any room in the sort of near to medium term where you still feel like you want to fill out some more spots Thank you.

Matthew Adrien Bouley: Should we look at this stage that you know at least for the time being that that you know the focus is really just going to be on organic investment in the in the markets that you're now in or is there kind of any room in the sort of near to medium term rate, where you still feel like you want to fill out some more spots and the geographic footprint. Thank you.

Christopher T. Porter: Sure.

Christopher T. Porter: Hey, Matt Good morning. This is John how are you.

John Ho: Hey Matt, good morning. This is John Ho.

Speaker Change: Yeah, we're very pleased with the closing of the terrorists homes acquisition.

John Ho: Yeah, we're really pleased with the closing of the Antares Homes acquisition. As you know, we moved our headquarters here to Dallas, Texas last year. We believe that Texas, and in particular the DFW area, is a significant base of growth for us and for the future of the company. I think it's a good market to be in, very similar to how we penetrated the Florida market two years ago when we acquired Hanover Family Builders for roughly the same price; we used a combination of cash on hand and availability under the revolver. We're really pleased to have completed the high-yield offering at the same time, essentially as a closing of the..., and Terrace Homes.

John Ho: You know, we moved our headquarters to Dallas, Texas last year.

John Ho: We believe that.

John Ho: Taxes and in particular, the DFW area.

John Ho: It's a significant pace.

Speaker Change: Pace of growth for us.

John Ho: The company.

Speaker Change: I think it's a great market to be in.

Speaker Change: Very similar to how we penetrated the Florida market.

John Ho: Years ago, when we acquired.

Speaker Change: Our family of builders.

Speaker Change: Roughly the same price.

John Ho: You know, we use a combination of cash on hand and availability.

John Ho: Sure.

John Ho: We're really pleased to have completed the high yield.

John Ho: Offering at the same time.

John Ho: Essentially has a closing of the AR.

John Ho: And terrorists homes, so that really puts us.

John Ho: So that really puts us in a really good place from the quality of our debt, the stability of that debt. We usually can, within 12 months, be able to reduce leverage after the acquisition and really be able to drive cash flow generation from that acquisition. And that's where we'll be. You know, you shouldn't expect any year-term M&A, as we have done acquisitions in the past and are really good at them. We integrate them very quickly.

Speaker Change: Really good players from the quality of our debt the stability of that debt.

John Ho: We usually can within 12 months be able to reduce leverage after the acquisition and really be able to drive cash flow generation from that acquisition.

John Ho: And that's where we'll be.

John Ho: You shouldn't expect any near term.

Mike: M&A as you know this is as we have done acquisitions in the past week I'm really good at it.

John Ho: We integrate them very quickly.

John Ho: And then we move to generate significant cash and growth in our business and reduce debt. At the same time, we do grow our businesses organically in each of our respective markets. If I could also have Mike chime in, areas I think potential growth for us in the future.

John Ho: And then we move to generate significant cash and growth in our business and reduce debt.

Mike: At the same time, you know we do grow.

Speaker Change: All businesses organically in each of our respective markets.

John Ho: I can also have Mike chime in in terms of.

Mike: Areas of potential growth for us in the future.

Michael Forsum: Yeah, not much more to add than what John said, Matt, other than it's consistent with our acquisition strategy where we buy and digest, buy and digest. And so it's a stair-stepped approach to growth, not necessary. It's parabolic.

Mike: Not much.

Mike: More to add than what John said, Matt other than it's consistent with our.

Mike: Acquisition strategy, where we buy digest buying digest and so it's a stair stepped approach to growth not necessary parabolic.

Mike: So this is pretty consistent.

Mike: As though we do this we do always remain around the hoop and markets in which we're targeting in looking at in terms of future growth that are consistent with our strategy and.

Michael Forsum: So this is pretty consistent. As though we do this, we do always remain around the hoop in markets that we're targeting and looking at in terms of future growth that are consistent with our strategy. And we'll continue to do that. I think that puts you in a position when it's time again to find these opportunities that will help add accretive growth to our business. You're in a position to do so on a relatively quick basis.

Michael Forsum: And we'll continue to do that.

Michael Forsum: I think that puts you in a position when its time again to find these opportunities that will help add a accretive.

Michael Forsum: Accretive growth to our business you are in a position to do so in a relatively quick basis for instance, and tourists was a company that we've been talking to for almost two years before we brought it over to the bow and did the acquisition. So these things take time.

Michael Forsum: For instance, Antares was a company that we'd been talking to for almost two years before we brought it over to the boat and did the acquisition. So these things take time, and for us, as I said, it's a multi-pronged strategy of, as John said, organic growth along with a consistent look at accretive growth and synthetic growth, and just a continuation towards the place that we want to be, which is one of the highest, most efficient performing home builders in the United States.

Michael Forsum: And.

Michael Forsum: For us as I said.

Michael Forsum: It is it's a multi pronged strategy of as John said organic growth along with a consistent look at.

Michael Forsum: Accretive growth in synthetic growth and just the continuation towards.

Michael Forsum: The place that we want to be which is one of the highest most effective performing homebuilders in the United States.

Speaker Change: Great. Thanks for that color, Mike and John.

Matthew Adrien Bouley: Great, thanks for that caller, Mike and John. Secondly, maybe just kind of zooming into the near term, you know, a lot of great color you gave up on top around, you know, sort of the necessity of keeping incentives elevated, given the latest move in rates, just kind of looking for sort of a finer point on the recent trends, you know, what is happening to incentives since rates have moved over the past, you know, four to six weeks here. And I'm curious as well if there is any color around, you know, the traffic or sales pace in your communities through the month of April. Thank you.

Matthew Adrien Bouley: Secondly, maybe just kind of zooming into the near term.

Matthew Adrien Bouley: Well a lot of great color you gave a pop around you know sort of the necessity of us keeping incentives elevated given the latest move in rates just kind of looking for sort of a finer point on the recent trends you know what is happening to incentives since since rates have moved over.

Matthew Adrien Bouley: In the past you know four to six weeks here and curious as well if any color around you know traffic or sales pace in your communities through the month of April. Thank you.

Michael Forsum: Sure. I'll take this one first.

Matthew Adrien Bouley: Sure.

Michael Forsum: I'll take this one first it's Mike again, Matt.

Speaker Change: For us the spring selling season has been terrific I think that's indicated in our numbers around our orders and then also the closings thereof.

Michael Forsum: It's Mike again, Matt. And for us, the spring selling season has been terrific. I think that's indicated in our numbers around our orders and then also the closings thereof. So, we're very happy with the consumer side of our business as they continue to show strong interest in homes, particularly homes that are deliverable within roughly sixty to forty-five days, which is reflective of the new home market really responding to the dearth of resale that's available out there today. But that being said, we're also in a difficult interest rate market, at least as far as it goes historically.

Speaker Change: So we're very happy with.

Michael Forsum: The consumer side of our business.

Michael Forsum: As they continue to show strong interest in home is particularly homes that are deliverable.

Michael Forsum: Roughly 60% to 45 days, which is reflective of the new home market really responding to the dearth of resale that's available out there today.

Michael Forsum: So, it is requiring us to be active in doing forward mortgage buy-down commitments, which are not cheap, and they move daily almost. And so it is either a day to day or week to week or month to month evaluation and assessment against the backdrop of these rates moving against existing incentives. And then also competitive posturing in terms of what our competitors are doing also. But at the end of the day, we are focused and committed to a consistent sales absorption rate of around three per month per community to continue to drive cash flow.

Michael Forsum: That being said.

Michael Forsum: We're also on a.

Michael Forsum: Interest rate market at least as it has historically so it is requiring us to be active and doing forward mortgage buy down commitments.

Michael Forsum: Which are not cheap.

Michael Forsum: It moves daily almost and so it.

Michael Forsum: It is a.

Michael Forsum: Either our day to day or week to week or month to month evaluation and assessment against the backdrop of these rates moving against.

Michael Forsum: Listing incentives and then also competitive posturing in terms of what our competitors are doing also but at the end of the day we are.

Michael Forsum: Focused and committed to a consistent sales absorption around three per month per community.

Michael Forsum: To continue to drive cash flow. We believe this is a cash flow business and going back to you again, what John has said is that we will continue to do everything we can to have a manageable and appropriate debt rates around our business and so as we kind of do these acquisitions and we maybe go up and pick up a little bit on that we're going to drive our business.

Michael Forsum: We believe this is a cash flow business, and going back to you, what John has said is that we will continue to do everything we can to have manageable and appropriate debt rates around our business. And so, as we kind of do these acquisitions, and we maybe go up and take up a little bit of debt, we're gonna drive our business to generate the cash to buy down, buy down the bed, and then redeploy it into land.

Michael Forsum: To generate the cash to buy that buy down the debt.

Michael Forsum: And then redeploy it.

Michael Forsum: And to land that is more reflective of our cost structure and better positioning as we go forward. So.

Michael Forsum: That is more reflective of our cost structure and better positioning as we go forward. So we're just always sort of in the mix of trying to appropriately respond, maintain margin, keep prices, and elevate prices a little bit. Which, by the way, is also some things that we're able to do in our markets. We're seeing one to three to five percent price increases that we can take as we go forward to sort of mitigate some of the costs associated with it. It's not crazy, but our teams are doing amazing jobs of finding those little opportunities for us to do the best to offset the cost and to continue our absorption and maintain margin where we can.

Michael Forsum: We're just always sort of in the mix of trying to appropriately respond maintain margin he pricing L.

Michael Forsum: Pricing, a little bit which by the way is also some things that we're able to do in our markets, we're seeing 1% to 3% to 5% price increases that we can take them.

Michael Forsum: As we go forward to sort of mitigate some of the costs associated with it it's not crazy but.

Michael Forsum: Our teams are doing an amazing job to finding those little.

Michael Forsum: Opportunities for us to do.

Michael Forsum: Do the best to offset the cost and to continue our absorptions and maintain our margin.

Michael Forsum: Margin, where we can.

Speaker Change: Alright, Thanks, Mike Good luck guys.

Operator: All right. Thanks, Mike. Good luck, guys.

Speaker Change: Thanks, Matt.

Carl Edwin Reichardt: Next question, Carl Reichardt with BTIG, please go ahead. Hey, morning guys.

Operator: Next question Carl Reichardt with <unk>. Please go ahead.

Carl Edwin Reichardt: Hey, good morning guys, hope you're doing well. Thank you for taking my question. Just for housekeeping, Chris, how much backlog in units and dollars did you pull in from Antares on April 1?

Carl Edwin Reichardt: Hey, good morning, guys hope you're doing well. Thank you for taking my question just a housekeeping Chris how much backlog in units and dollars did you pull in from <unk> on April one.

Carl Edwin Reichardt: We're still we haven't disclosed that as far as backlog from there and we did pull in 20 communities.

Christopher T. Porter: We're still, we haven't disclosed that as far as the backlog from there. We did pull in 20 communities, and we'll work through that and work through those numbers, but we don't have those numbers right now, Carl.

Christopher T. Porter: And we'll work through that and and.

Christopher T. Porter: We worked through those numbers, but we don't have those numbers right now Carl.

Christopher T. Porter: Okay, and do you know when you think the purchase accounting will bleed off by 4Q? I'm assuming.

Christopher T. Porter: You know when do you think the purchase accounting will bleed off by four Q I'm assuming.

Carl: Yeah, It will probably be about <unk>.

Christopher T. Porter: Yeah, it'll probably be about 40 to 50 percent in the first year of operation, so between now and this time of next year, and then it will slowly bleed the rest of it off over the next eight months to 12 months. Okay, so longer. Okay.

Christopher T. Porter: 40%, 50% in the first year of operation So between now and at this time of next year and then it will slowly bleed the rest of it off over the next eight months to 12 months after that.

Carl Edwin Reichardt: Okay, so longer, okay. And then, Mike, just to sort of follow up on the last question, can you talk a little bit about performance across the various price points? I'm curious if entry-level versus move-up has seen any sort of differentiation in terms of traffic or conversion rate or sales.

Speaker Change: Oh, Okay. So longer Okay, and then Mike just to sort of following up on the last question can you talk a little bit about performance across.

Carl Edwin Reichardt: Various price points I'm curious at entry level versus versus move up as seen sort of a differentiation in terms of traffic or conversion rate or sales.

Carl Edwin Reichardt: Alright.

Carl Edwin Reichardt:

Mike: Yes, it's interesting.

Michael Forsum: Yeah, it's interesting, and it is evolving. It's fluid, Carl, as you know, as this business is.

Mike: It is evolving and fluid Carl as you know this business.

Michael Forsum: It's actually interesting to me because.

Michael Forsum: It's actually interesting to me because, you know, over the course of my career, markets have been pretty independent of each other. They're not monolithic. And when we came out of the GFC, it was the first time I actually saw the whole country sort of moving in lots of step with each other.

Michael Forsum: Of course my career.

Michael Forsum: Markets have been pretty independent of each other it's not been monolithic and when we came out at the GMC was the first time are actually solve a whole country sort of moving in lock step with each other.

Michael Forsum: But now we're starting to see a little bit of a breakaway where regions are now responding more regionally as opposed to nationally. So everybody is encumbered by rates. So with that being said, one of our highest ASP markets is in Southern California. It's actually doing incredibly well, a very strong market. It's healthy.

Michael Forsum: But now we're starting to see a little bit of a breakaway where regions are now responding more recently as opposed to nationally.

Michael Forsum: Everybody is encumbered by rates, so with that being said.

Michael Forsum: Our highest.

Michael Forsum: Is one of our highest ASP markets, Southern California is actually doing incredibly well with very strong market.

Michael Forsum: It's healthy in terms of the balance of the offering that's out there and price points. And it's also one of the markets in which we're having to apply the least amount of incentives and rate buydowns. And we have a higher monthly mortgage rate per closing there. Florida, on the other hand, is one of our most affordable markets and is doing very, very well. But it's requiring us to have a combination of incentives along with mortgage rate buydowns that are relatively costly against the backdrop of a lower ASP.

Michael Forsum: It's it's healthy as healthy in terms of.

Michael Forsum: The balance of offering thats out there and price points.

Michael Forsum: So.

Michael Forsum: And it's also one of the markets in which we're having to apply the least amount of incentives and rate buy downs.

Michael Forsum: And we have a higher monthly mortgage rate per closing their Florida.

Michael Forsum: On the other hand is in one of our most affordable markets is doing very very well, but it's requiring us to have a combination of incentives along with mortgage rate buy downs that are relatively constant constantly against the backdrop of a lower ASP.

Michael Forsum: What we're really trying to do is to maintain a mid $3,000 monthly mortgage payment, which seems to be a real driving force in that entry-level market. They are very, very focused on their monthly payment, not necessarily what the rate is. They don't translate it that much.

Michael Forsum: There what we're really trying to do is to maintain a mid $3000 a month.

Michael Forsum: <unk> payment.

Michael Forsum: Which seems to be a real driving force in that entry level market.

Michael Forsum: They are very very.

Michael Forsum:

Michael Forsum: Focused on their monthly payment not necessarily what the rate is they don't translate it that much whereas if you took northern California. They get very focused on what their rate is it's the right. It's the ultimate rate for them. So.

Michael Forsum: Whereas if you took Northern California, they get very focused on what their rate is. It's the rate. It's the ultimate rate for them. So we're listening. We're getting data back, and we're trying to be responsive as uniquely to what we're trying to present out there, Carl, as best as we can. But it's really across the board for us.

Michael Forsum: We're listening we're getting data back and we're trying to be responsive as uniquely to what we're trying to present out there Carl is the best as we can but it's really across the board for us.

Carl: I appreciate that color thanks, Mike.

Operator: I appreciate that color.

Alexander John Rygiel: Next question, Alex rigor with B Riley Securities. Please go ahead.

Alexander John Rygiel: Next question: Alex Rygiel with B. Reilly Securities. Please go ahead.

Alexander John Rygiel: Good morning, gentlemen. Nice quarter. A couple questions here. First, as it relates to SG&A, you talked about starting to realize some nice leverage on that, particularly since the terrorist acquisitions are not going to layer on too much more corporate overhead. Can you comment a little bit further on that topic?

Alexander John Rygiel: Good morning, gentlemen, and nice quarter couple of questions here.

Alexander John Rygiel: First as it relates to SG&A, you talked about starting to realize some nice leverage on that.

Alexander John Rygiel: Particularly since the <unk>.

Alexander John Rygiel: Terrorists acquisition snuff going to layer on to much more corporate overhead can you comment a little bit further on that topic.

Speaker Change: Sure. So so if you think about.

Christopher T. Porter: Sure. So, if you think about Alex, the GNA in each of our divisions is roughly three to four percent of home sales revenue, and then layer on the rest of it on the corporate side of that. And when I say SGNA, it's primarily GNA, right? On the sales side, it's typically running pretty consistently between, you know, six, six and a half percent, and that's your variable cost that's in there. And then the SGNA side layers on within the divisions.

Christopher T. Porter: Alex the DNA in each of our divisions is roughly 3% to 4% of home sales revenue and layer on the rest of it.

Christopher T. Porter: The corporate side of that and when I say SG&A, it's primarily G&A right on the on the sales side. Its typically running pretty consistently between you know, 665% and that's your variable costs. That's in there and then the SG&A side layers on within the divisions. So Seth you back.

Christopher T. Porter: And to the corporate perspective of that we will pick up some G&A with terrorists acquisition just from there.

Christopher T. Porter: So if you back into the corporate perspective of that, we will pick up some GNA with the Antares acquisition just from their division operations, et cetera, but we won't layer on any corporate side at all on that one. And so just from a pure leverage standpoint, that will start improving.

Christopher T. Porter: Division operations et cetera, but won't layer on any corporate side at all on that one and so just from a pure.

Christopher T. Porter: Leverage standpoint that that will start improving.

Christopher T. Porter: Excellent one when you look at sort of maybe a year or two down the road.

Christopher T. Porter: Excellent. When we look out sort of maybe a year or two down the road, do you have maybe sort of a targeted sort of target for where SG&A as a percent of revenue can get to?

Christopher T. Porter: Do you have maybe sort of a bracketed sort of target for where SG&A as a percent of revenue can can get to.

Christopher T. Porter: Okay.

Christopher T. Porter: Yeah, I think we think that we can get back to kind of close to where the rest of the industry is now. Size definitely matters, and a lot of that is continuing to grow the top line side of things. But we think that, you know, between that 10 to 12% is where the industry is and where we can typically lay out over time.

Speaker Change: Yes, I think we we think that we can get back to kind of close to where the rest of the industry is outsized and definitely matters and a lot of that is continuing to grow the top line side.

Christopher T. Porter: Side of things, but we think that that you know between that 10% to 12% is where the industry is and where we can typically lay out overtime.

Christopher T. Porter: And then circling back to an earlier question can you talk a little bit about the cadence of new orders sort of January through March and now into April.

Michael Forsum: And then circling back to an earlier point.

Michael Forsum: Hey Alex, it's Mike. Yeah, I guess the cadence is that it's been a strong selling season for us, spring selling season, week over week has been very consistent and actually a little bit better week over week as we go through it. So we're pretty excited about, again, what the market has brought us here in the first four months of the year, and we're building a nice order book and then looking to be in a good position as we go into the summer with a healthy backlog and then, you know, subsidize it through the summertime and then, you know, finish off the year strong.

Mike: Hey, Alex its Mike.

Michael Forsum: Yeah, I guess the cadence says is that it's been a strong selling season for us spring selling season.

Michael Forsum: So per week has been very consistent.

Michael Forsum: Please.

Michael Forsum: Better.

Michael Forsum: A week as we go through it.

Michael Forsum: So we're.

Michael Forsum: We're pretty excited about.

Michael Forsum: Ken.

Michael Forsum: What the market has brought to us.

Michael Forsum: Here in the first four months of the year.

Michael Forsum: And we're building a nice quarter.

Michael Forsum: Order book and then.

Michael Forsum: Looking to.

Michael Forsum: Good position as we go into the summer.

Michael Forsum: With a healthy backlog and then.

Michael Forsum: Subsidize it through the summer time event.

Michael Forsum: <unk> finished off the year strong so I think from our standpoint.

Michael Forsum: Our mix of incentive mortgage rate buy downs, good product offering and the right pricing.

Michael Forsum: Is resonating in our marketplace.

Speaker Change: Great. Thank you very much.

Michael Forsum: Next question Jay Mccanless with Wedbush. Please go ahead.

Jay McCanless: Next question: Jay McCanless with Wedbush, please go ahead.

Jay McCanless: Hey, good morning, everyone.

Jay McCanless: Hey, good morning, everyone. Wanted to touch on the comments earlier that you are able to raise prices in some markets. Could you identify which markets those are and talk a little bit more about, you know, is that a price increase at the same time with a higher mortgage rate buy-down or what's going on there?

Jay McCanless: I wanted to touch on the comments earlier that you are able to raise prices in some markets what could you identify which markets those are in and talk a little bit more about is that a price increase at the same time with a higher mortgage rate by their own or whats going on there.

Mike: Yes, Jay its Mike.

Michael Forsum: Yeah, Jay, it's Mike. I was the one who made that comment. So we're able to do it really in almost every one of our markets currently. And as I said, we're a little fixated on where we can get any Pricing Advantage. You know, we'll go after it.

Speaker Change: Was wondering made that comment so we're we're able to do it really almost in every one of our markets currently.

Mike: And as I said, we're frugal fixated on where we can get any.

Michael Forsum: Okay.

Michael Forsum: But in some cases, it may be a net wash against the mortgage rate buy-down on a price increase. In some cases, we may get the full benefit of that price increase. So, as I said, in Florida, particularly in the northern part of Florida, we've had really strong absorption there. We've been doing the best that we can to continue to raise prices. Southern California, and Arizona is a very, very competitive market right now.

Mike: Pricing advantage, we will go after it.

Michael Forsum: In some cases it may be a net wash against the mortgage rate buy down on a price.

Michael Forsum: Increase in some cases, we may get the full benefit of that price increase so as I said in Florida.

Michael Forsum: Particularly in the northern part of Florida, We've had really strong absorptions there.

Michael Forsum: We've been doing the best that we can continue to raise prices.

Michael Forsum: Southern California, Arizona is a very very competitive market right now.

Michael Forsum: And so, it's probably net neutral as we move through there. In northern California, we're probably a little bit above in terms of getting advantages from raising prices. But we're not talking about raising 8%, 10%, 12% from release to release like we've done in the past when the market gets going. It's just little incremental ticks here and there. But everything matters at this point, along with increasing your cycle times, driving cost reductions through our processes, as well as, you know, just the consistency of watching our spend, which is really fixated on because it's a mix of everything right now. You can't depend on one thing to get you through this.

Michael Forsum: So.

Michael Forsum: Probably net neutral.

Michael Forsum: Or are there in northern California.

Michael Forsum: Probably a little bit above in terms of getting advantages from raising prices, but we're not talking about raising it.

Michael Forsum: And 12%.

Michael Forsum: Or at least or at least like we've done in the past and the market gets running it's just little incremental tickets here and there, but everything matters at this point along with.

Michael Forsum: Increasing your cycle times driving cost reductions through our processes.

Michael Forsum: As well as.

Michael Forsum: Just a consistency of watching our spend.

Michael Forsum: Sure.

Michael Forsum: Because it's a it's a mix of everything right now you can't depend on one thing to get you through this.

Speaker Change: Got it.

Jay McCanless: Got it. I want to ask about the new markets in a second, but could you maybe talk about California and Arizona for a second and what you're expecting for community growth this year in those two markets?

Speaker Change: I want to ask about the new markets in a second but could you maybe talk about California, and Arizona for a second what youre expecting for community growth. This year for those two markets.

Speaker Change: Well I think that Ah I think there'll be consistent with the rest of the debt.

Michael Forsum: Well, I think that they'll be consistent with the rest of the company, which is a 10 to 15% organic growth rate there. So I don't see that either one of those would be any different overall.

Michael Forsum: Company, which is at 10% to 15% organic growth there. So I don't see that either one of those would be any different overall.

Michael Forsum: And then if you could just remind us all about the pace of openings in Austin.

Jay McCanless: And then if you could just remind us all about the pace of openings in Austin and also, are you going to be able to grow the anterior count this year? Is that going to be more of a 25 event?

Jay McCanless: And also are you are you.

Jay McCanless: Going to be able to grow the interiors count this year is that going to be more of a 25 of the.

Speaker Change: Yes, so we're locked and loaded on our communities that we're going to have available to us in Austin, we just need to get the last couple of open.

Michael Forsum: Yeah, so we're locked and loaded on our communities that we're going to have available to us in Austin. We just need to get the last couple open, which they're really driving towards.

Michael Forsum: Which there really driving towards a we have a large community.

Michael Forsum: We have a large community in Kyle, known as Anthem. It's a multi-segmented community. They're very excited about it, and so they're very close to offering the full breadth of our offering. So that's coming along, Jay.

Michael Forsum: It's known as anthem.

Michael Forsum: It's a multi segment N community, they're very excited about it and so they are very close to giving the full breadth of our offering so that's coming along Jay and then.

Michael Forsum: And then, in Antares, we have the acquisition, as Chris said, of roughly 20 communities there. We do have a controlled pipeline through that acquisition, and they will continue to deliver slots along the way for communities that we actually have open and running at this point, as well as identified communities, of which I believe only one, towards the end of the year, would be brought online and open and selling. So we have plenty to eat from that transaction that's going to really help with our growth, and we have a great team over there who are super excited.

Speaker Change: Uh huh.

Michael Forsum: In cars, we have there.

Michael Forsum: Acquisition as Chris said, the things roughly 20 communities wanted there.

Michael Forsum: We do have a controlled pipeline through that acquisition.

Michael Forsum: We'll continue to deliver our slots along the way for communities that we actually have open and running at this point as well as identified communities.

Michael Forsum: Which I believe only one towards the end of the year would be brought online in open and selling so we have plenty to eat from that transaction thats going to really help with our growth and we have a great team over there are super excited.

Michael Forsum: We look to be fully integrated from a marketing sales point by May 15th is our goal. So if you go on our website on May 16th, Antares will no longer exist. They will be full communities with all of the branding through Landsea Homes and staffed through our internal and external sales forces. So we're really excited about our ability to now get faster, better, smoother in terms of our integration around that area, and so we'll bring all of our marketing and sales power to bear, and we're really going to try to drive and do better over there as well. So we're excited. I think there are some exciting things to come from Antares here soon.

Michael Forsum: We look to be fully integrated from a marketing and sales point some point by may 15th and our goal. So if we get on our website on May 16.

Michael Forsum: Tories will no longer exist they will be full.

Michael Forsum: Our communities with all of the branding.

Michael Forsum: Through land sea homes.

Michael Forsum: Through our internal and external sales forces. So we're really excited about our ability to now get faster better smoother in terms of our integration.

Michael Forsum: Around that area. So we'll bring all of our marketing and sales power to bear and we're really going to try to drive and do better over there as well. So we're excited I think if there are some exciting things to come from and tourists here soon.

Speaker Change: Okay. That's great. Thanks, Mike and then the last question I have I'm, just wondering about land cost how much those were up year on year and what kind of increases are you thinking about for the rest of the year.

Jay McCanless: Okay, that's great. Thanks, Mike. And the last question I have, I'm just wondering about land costs and how much those are...

Jay McCanless: Yeah.

Speaker Change: Unfortunate downside about holding sales absorptions.

Michael Forsum: The unfortunate downside about holding sales absorptions through incentives and buy-downs is that the land sellers think everything's great. So from the standpoint of them witnessing any lack of pace or absorptions coming through us, it's hard to prove that the cost of our sales is getting a little bit steeper, and we're trying to drive it through the land residual. So, though I would say they're not going totally crazy, I would still say that they're about a single-digit percentage increase as we go from opportunity to opportunity.

Michael Forsum: True.

Michael Forsum: Centers and buy Downs is.

Michael Forsum: Is that the land sellers thing everything is great. So.

Michael Forsum: From the standpoint of them witnessing any lack of pace or services coming through us.

Michael Forsum: It's hard to prove that.

Michael Forsum: The cost of ourselves are getting a little bit steeper and.

Michael Forsum: And we're trying to drive it through the land residual so.

Michael Forsum: Though I would say, they're not going totally crazy, but I would still say that they are about a single a single digit.

Michael Forsum: <unk> increase as we go from opportunity to opportunity.

Michael Forsum: And honestly, I'm not really sure if I see that really changing. So we're factoring not only higher prices for longer in terms of baking in what it takes us to move houses in our cogs, but also in our land bases going forward. It's going to be a little bit tighter. So, you know, all the things are kind of compressing a little bit, and we're going to have to continue to fight to find every nickel, like I was saying earlier, in the process and in our business to...

Michael Forsum: And honestly I'm not really sure if I see that really changing so we're factoring not only higher for longer in terms of baking in what is taking us to move houses.

Michael Forsum: And our Cogs, but also in our land basis going forward it is going to be a little bit tighter. So.

Michael Forsum: It's just going to.

Michael Forsum: All the things are kind of compressing a little bit and we're going to have to continue to fight to find every nickel like I was saying earlier.

Michael Forsum: In the process and in our business to offset.

Michael Forsum: Those costs that we can't really control right now.

John Ho: I would add, Jay, this is John, that with the acquisition of Antares Homes, Mike mentioned that we're going to add about 2,100 lots to our lot. We've gotten control now of our destiny for the next several years now. So we're really, really focused on building a lot of supply for 2026 and beyond. It gives us a little bit of flexibility and maneuverability to find good land opportunities and be able to take in some of the costs that Mike was talking about.

John Ho: Jay This is John.

John Ho: With the acquisition of a terrorist homes, Mike mentioned.

John Ho: At about 2100 lots to our lives.

John Ho:

Speaker Change: So that would put us.

John Ho: Just over 13000.

John Ho: We've gotten control now.

John Ho: The next several years now.

John Ho: So we're really really focused on building a lot supply really for 2026 and beyond.

Speaker Change: US a little bit of flexibility.

John Ho: Ability to find good land opportunities and be able to make.

John Ho: They can some of the costs that Microsoft is talking about.

Speaker Change: So you think about sort of future years outer years.

Speaker Change: Okay. That's great. Thanks, guys appreciate it.

Jay McCanless: That's great. Thanks, guys. I appreciate it.

Jay McCanless: Once again, if you would like to ask a question. Please press star one on your telephone keypad.

Operator: Once again, if you would like to ask a question, please press star 1 on your telephone keypad. We have a follow-up from Carl Reichardt with BTIG. Please go ahead.

Operator: Have a follow up from Carl Reichardt with BTG. Please go ahead.

Carl Edwin Reichardt: Thanks again. One question, John, on buybacks versus debt paydown. Obviously, I know you want to reduce the DDC back to sort of your norms in the mid-40s. Does that change your thought process on repurchases over the course of the next year or so, despite where the stock is trading?

Carl Edwin Reichardt: Thanks, Hey, guys again just.

Carl Edwin Reichardt: Just one question John on buybacks versus debt pay down I'd, just say I know you want to reduce the D. D C back to.

Carl Edwin Reichardt: Sort of your norms in the mid Forty's does that change your thought process on repurchases over the course of the next year or so despite where the stock is trading.

John Ho: Yeah Carl.

John Ho: Yeah, Carl. The stock buyback has been a useful tool. We've used it, as you guys can tell, in this past year, but it's never been at the expense of growing the business, scaling the business, and leveraging our SG&A. So, we've also demonstrated that we can continue to do that through this acquisition. Now that the debt will be slightly tightening up, we will be focused on reducing debt. And then... thereafter, also thinking about how we can continue to do shareholder distributions, but it's never been at the expense of growth. We gotta grow the business; we get to scale. And like we've done in the past with acquisitions, we've. [inaudible]

John Ho: The stock buybacks has been a useful tool we've used it as you guys can tell in this past year.

Carl Edwin Reichardt: I appreciate that. Thanks, John.

Carl Edwin Reichardt: But it's never been at the expense of growing the business scaling the business and leveraging our SG&A. So we've also demonstrated that we can continue to do that through this acquisition.

Carl Edwin Reichardt: Now that the debt will be a slightly picking up.

Carl Edwin Reichardt: We focus on reduction reducing debt.

Speaker Change: And then.

Carl Edwin Reichardt: Thereafter.

Speaker Change: So thinking about how we can continue to do shareholder distributions.

Carl Edwin Reichardt: It's never been expensive growth you've got to grow the business, we got to get to scale and like we've done in the past with acquisitions.

Carl Edwin Reichardt: Reduced debt.

Carl Edwin Reichardt: First and then we.

Speaker Change: As another tool in our toolbox.

Speaker Change: Some additional capital and cash flow that we generate for.

Speaker Change: For shareholder distributions.

Speaker Change: I appreciate that thanks John.

Speaker Change: There are no further questions I would like to turn the floor over to John <unk> for closing remarks.

John Ho: There are no further questions. I would like to turn the floor over to John Ho for closing remarks.

John Ho: Thank you everyone for joining us today, and we look forward to speaking to you next quarter.

John Ho: Thank you everyone for joining us today, and we look forward to speaking to you next quarter.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

John Ho: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

Operator: ? ? ? ? ? ?

Operator: [music].

Operator: Yeah.

Operator: Okay.

Operator: Okay.

Operator: [music].