Q3 2024 Lennar Corp Earnings Call

And our SEC filings, including those under the caption risk factors contained in <unk> annual report on Form 10-K, most recently filed with the us.

Unknown Executive: Police note that Lennar seems no obligation to update any forward-looking statements.

Please note that Lenoir assumes no obligation to update any forward looking statements.

Stuart Miller: I would now like to introduce your host, Mr. Stuart Miller, Executive Chairman and Co-CEO. Sir, you may begin. Very good, and good morning, everybody, and thank you for joining today. I'm in Miami today together with John Jaffe, our co-CEO and president, Diane Bessette, our chief financial officer, David Collins, who you just heard from, our controller and vice president, Bruce Gross, and Bruce Gross, our CEO of Lennar Financial Services, and a few others are here as well.

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

Very good and good morning, everybody and thank you for joining today.

Speaker Change: I am in Miami today, together with Jon Jaffe, our co CEO and President Diane Bessette, Our Chief Financial Officer, David Collins, who you just heard from our controller and Vice President Bruce gross and Bruce gross our CEO.

Speaker Change: Our financial services and a few others are here as well.

Stuart Miller: As usual, I'm going to give a macro and strategic overview of the company. After my introductory remarks, John's going to give an operational overview, updating construction costs, cycle time, and some of our land strategy and position. As usual, Diane's going to give a detailed financial highlight, along with some limited guidance for our fourth quarter and full year end, 2024. And then, of course, we'll have questions answered. As usual, I'd like to ask that you please limit yourself to one question, one follow-up, so that we can accommodate as many as possible.

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

Speaker Change: As usual Diane is going to give a detailed financial highlight.

Speaker Change: Along with some limited guidance for our fourth quarter and full year year end 2024, and then of course, we'll have question and answer as usual I'd like to ask that you. Please limit yourself to.

Speaker Change: One question one follow up so that we can accommodate as many as possible.

Stuart Miller: So, let me go ahead and begin. Overall, the economic environment remains very constructive for home builders. Demand remains very strong, and migration to lower interest rates will further activate that demand. Lower interest rates will enhance affordability, which will enable many more families to access and attain home ownership at the entry level, while growing families will be able to unlock value from existing homes, enabling them to move up to more bedrooms and more living space. More listings for existing homes will provide supply eventually level homes, while driving more demand for move up product. The dynamic of lower interest rates is likely to accelerate demand for both new and existing homes, while expanding access to home ownership.

Speaker Change: So let me go ahead and begin overall, the economic environment remains very constructive for homebuilders demand remains very strong and the migration to lower interest rates will further activate that demand.

Lower interest rates will enhance affordability, which will enable many more families to access and attain homeownership at the entry level, while growing families will be able to unlike unlock value from existing homes, enabling them to move up to more bedrooms and more living space.

Speaker Change: More listings for existing homes will provide supply of entry level homes, while driving more demand for move up product.

Speaker Change: The dynamic of lower interest rates is likely to accelerate demand for both new and existing homes, while expanding access to homeownership.

Stuart Miller: Of course, affordability has been a limiting factor for demand and access to home ownership to date. Inflation and interest rates have hindered the ability of average families to accumulate a down payment or to qualify for a mortgage. Higher interest rates have also locked households in lower interest rate mortgages and curtailed the natural move up as families expand and need more space. Rate buy downs and incentives have enabled demand to access the market to date. Additionally, across the business landscape, narratives around challenge consumer confidence have peppered earnings calls. Lower rates and controlled inflation will likely boost that confidence.

Speaker Change: Of course affordability has been a limiting factor for demand and access to home ownership date inflation and interest rates have hindered the ability of average families to accumulate a down payment or to qualify for a mortgage higher interest rates have also locked households, and lower interest rate mortgage.

Speaker Change: <unk> and curtailed the natural move up as families expand and need more space.

They buy downs and incentives have enabled demand to access the market to date.

Speaker Change: Additionally across the business landscape narratives around challenged.

Speaker Change: Narratives around challenged consumer confidence have peppered earnings calls.

Speaker Change: Lower rates and controlled inflation will likely boost that confidence.

Stuart Miller: Consumers remain employed; they are generally confident that they will remain employed, and they generally believe that their compensation will rise. This is most often the foundation of a very strong housing market, and we believe that while confidence will ebb and flow, lower rates will stabilize confidence, and the consumer will prioritize shelter and purchase as affordability enables them to do so. We firmly believe that lower rates and controlled inflation will build affordability, enabling more households to access either first-time home ownership or move-up purchase. While strong demand, enabled by incentives and mortgage rate buy-down, has driven the new home market over the past two years, we fully expect an even stronger and more broad-based demand cycle as rates move lower.

Speaker Change: <unk> remain employed they are generally confident that they will remain employed.

Speaker Change: And they generally believed that their compensation will rise.

Speaker Change: This is most often the foundation of a very strong housing market and we believe that while confidence will ebb and flow lower rates will stabilize confidence and the consumer will prioritize shelter and purchase as affordability enables them to do so.

Speaker Change: We firmly believe that lower rates and controlled inflation will build affordability, enabling more households to access either first time homeownership or move up purchase while strong demand enabled by incentives and mortgage rate buy downs has driven the new home market over the past two years, we fully expect and.

Speaker Change: Even stronger and more broad based demand cycle as rates move lower.

Stuart Miller: While demand has been and should remain strong, the supply of homes remains constrained. The well-documented chronic housing shortage is the result of years of under-production. This shortage has been exacerbated by continuing shortfalls in production driven by restrictive land permitting and higher impact fees at local levels, and higher construction costs across the housing landscape. This week's housing starts print at 1.36 million is the continuation of the shortfall in production that is needed for the current population and immigration, let alone catching up on the shortage. Mayors and governors across the country have become acutely aware of the housing shortage and shortfall in their respective geographies.

Speaker Change: While demand has been and should remain strong the supply of homes remains constrained.

Speaker Change: The well documented chronic housing shortage is the result of years of under production.

Speaker Change: This shortage has been exacerbated by continuing shortfalls in production driven by restrictive land permitting and higher impact fees at local levels and higher construction costs across the housing landscape.

Speaker Change: This week's housing starts print at 1.3 dollars 6 million is a continuation of the shortfall in production that is needed for the current population and immigration let alone catching up on the shortage.

Mayors and governors across the country have become acutely aware of the housing shortage in shortfall in their respective geographies.

Stuart Miller: Many have been pounding the table about the need for affordable housing, attainable housing, and workforce housing in their markets. Awareness has begun to give way to the first signs of action, and more recently, even the national narrative has begun to acknowledge the need for programs that activate supply. Greater supply and greater access to home ownership enables the upward mobility and generational wealth building that has long been associated with building the middle class through home ownership. It seems that as we begin to focus on solution, strong demand and strong need will further illuminate the need for supply.

Speaker Change: Many have been pounding the table about the need for affordable housing attainable housing and workforce housing in their markets.

Speaker Change: Awareness has begun to give way to the first signs of action and more recently, even the national narrative has begun to acknowledge the need for programs that activate supply.

Speaker Change: Greater supply and greater access to homeownership enables the upward mobility and generational wealth building that has long been associated with building the middle class through home ownership it.

Speaker Change: It seems that as we begin to focus on solutions strong demand and strong need.

Speaker Change: We will further illuminate the need for supply.

Stuart Miller: Spanned the labor pool and therefore offset the pressure on construction caused increases. On the other hand, the increase in population requires more supply of dwellings to house that growing population. Without politicizing this issue at this rather sensitive time, the new immigrant population will add to demand while at the same time help to control production costs. This configuration is an overall positive for the new home builders, and it adds to our optimism as we look ahead. Overall, while there will be seasonality, incentives, and perhaps some adjustments along the way, we are very optimistic that the road ahead appears very positive for our home building business.

Expanded the labor pool and therefore.

Speaker Change: Offset the pressure on construction cost increases on.

Speaker Change: On the other hand, the increase in population requires more supply of dwellings to how is that growing population.

Speaker Change: Without politicizing this issue at this rather sensitive time, the new immigrant population will add to demand while at the same time helped to control production costs.

Speaker Change: This configuration is an overall positive for the new homebuilders and it adds to our optimism as we look ahead.

Speaker Change: Overall, while there will be seasonality incentives and perhaps some adjustments along the way we are very optimistic that the road ahead appears very positive for our homebuilding business.

Stuart Miller: Against that backdrop, as you can see from our third quarter results, we are adhering to our operating strategy focused on volume while we are sprinting towards the completion of our five-year marathon of migrating our operating platform from an asset-heavy model to a land-like asset-light just-in-time finished home strike delivery month. We have executed that migration without breaking stride, without breaking the stride of delivering consistent and growing start, sales, and closing, and while driving the cash flow and bottom line profitability that market conditions enable. We have literally reorganized the company while we have operated day to day and quarter to quarter with consistent focus on bottom line results.

Against that backdrop as you can see from our third quarter results. We are adhering to our operating strategy focused on volume, while we're sprinting towards the completion of our five year marathon of migrating our operating platform from an asset heavy model to a land light app.

Asset light just in time finished homesite delivery model.

Speaker Change: We have executed that migration without breaking stride.

Breaking the stride of delivering consistent and growing start sales and closings and while driving the cash flow and bottom line profitability that market conditions enabled.

Speaker Change: We have little literally reorganize the company, while we have operated day to day and quarter to quarter with consistent focus on bottom line results.

Stuart Miller: I want to emphasize that our North Star has been exactly this focus on delivering growing volume with consistent cash flow and bottom line results while migrating to an asset-light model. This predictable volume and growth has been and will be the key to recasting our business model. First, it has enabled improving operating efficiencies in construction costs, cycle time, customer acquisition costs, and FGNA. Second, it has driven consistent and dependable cash flow and bottom line results. And third, it has enabled the consistent and predictable take down of just-in-time delivered fully developed home sites that has attracted capital to the structured land banking partnerships that have driven the nearly $20 billion of transactions that have enabled our land-light transformation to date.

Speaker Change: I want to emphasize that our Northstar has been exactly this focus on delivering growing volume with consistent cash flow and bottom line results, while migrating to an asset light model.

Speaker Change: This predictable volume and growth has been and will be the key to recasting our business model.

Speaker Change: It has enabled improving operating efficiencies and construction cost cycle time consumer.

Speaker Change: Customer acquisition costs and SG&A.

Second it has driven consistent and dependable cash flow and bottom line results.

Speaker Change: And third it has enabled the consistent and predictable takedown of just in time delivered fully developed homesite that has attracted capital to the structured land banking partnerships that have driven the nearly $20 billion of transactions that have enabled our land light transformation.

Speaker Change: To date.

Stuart Miller: Since 2020, when we began our financial and operating transformation, the results and comparisons have been rather dramatic and are worthy of some reflection. Since 2020, when we began this journey, we have reduced our year supply of land owned from three years supply to an expected 1.1 year at the end of this year. We have increased our control home sites from 43% control to 81% control expected at the end of the year. And we have increased our inventory turn from under a one times turn to approximately a 1.6 times turn. While our deliveries have gone from approximately 53,000 to a projected 80,500 to 81,000 for a 53% growth rate, our total owned inventory has actually remained flat.

Speaker Change: Since 2020, when we began our financial and operating transformation the results and comparisons have been rather dramatic and are worthy of some reflection.

Speaker Change: Since 2020, when we began this journey, we've we have reduced our year supply of land owned from three years supply to an expected $1 one year at the end of this year.

Speaker Change: We have increased our controlled homesites from 43% control to 81% controls expected at the end of the year.

Speaker Change: And we have increased our inventory turn from under a one times turn to approximately a one six times turn.

Speaker Change: While our deliveries have gone from approximately 53000 to a projected 80580 1004 for a 53% growth rate. Our total owned inventory has actually remained flat.

Stuart Miller: We are clearly doing a lot more with a lot less, as our return on inventory has grown from 16% in 2020 to a forecasted 30% plus at year end this year. But perhaps even more importantly, we have paid down approximately $4.9 billion of debt. By year-end, we will have repurchased approximately 50 million shares of stock for approximately $5.7 billion. And by year-end, we will have distributed approximately $1.9 billion dollars in dividends since 2020. And after all of that, we have a debt to total capital ratio of 7.6%, down from approximately 25% in 2020. And currently we have $4 billion of cash on the books.

Speaker Change: We are clearly doing a lot more.

Speaker Change: With a lot less as a return on inventory has grown from 16% in 2022, a forecasted 30% plus at year end this year.

Speaker Change: But perhaps even more importantly, we have paid down approximately $4 9 billion of debt.

Speaker Change: By year end, we will have repurchased approximately 50 million shares of stock for approximately $5 7 billion.

Speaker Change: And by year end, we will have distributed approximately $1 9 billion in dividends since 2020.

Speaker Change: And after all of that we have a debt to total capital ratio of seven 6% down from approximately 25% in 2020 and currently we have $4 billion of cash on book.

Stuart Miller: So, how did we do that? Well, first, we consistently adhere to our strategy that starts with the results like our third quarter, focused on growth and volume. And second, we attracted capital with our consistent volume and built capital and operating infrastructure that produces that purchases and develops land and delivers fully developed home sites on a just-in-time basis for about one half of our needed home sites. And now, and third, we will complete this transaction for the other one half of our land needs and enhance what we have started with our spin off, no roads.

Speaker Change: So how do we do that.

Speaker Change: Well first we consistently adhere to our strategy that starts with the results like our third quarter focused on growth and volume and.

Speaker Change: And second we attracted capital with our consistent volume and built capital and operating infrastructure that produces that purchases and developed land and delivers fully developed homesites on adjusted time basis for about one half of our needed homesites.

Speaker Change: And now and third we will complete this transaction for the other one half of our land needs and enhance what we've started with our spin off no rose.

Stuart Miller: Let me break this down. First of all, we are very pleased with our third quarter results as they represent another consistent and strategic quarter of operating results and execution for Lennar. The market for new homes remained consistent with strong demand challenged by affordability. As mortgage rates remained higher around seven percent through the first half of our quarter, we added volume with starts while we incentivized to enable affordability, as we know that consistent volume and resulting operating efficiencies will continue to attract capital to our asset light strategy, which will be our greatest strength as interest rates decline.

Speaker Change: Let me break this down.

Speaker Change: First of all we are very pleased with our third quarter results as they represent another consistent and strategic quarter of operating results and execution for Lamar.

Speaker Change: The market for new homes remained consistent with strong demand challenged by affordability.

Speaker Change: As mortgage rates remained higher around 7% through the first half of our quarter, we added volume with starts.

Speaker Change: While we incentivize the sales to enable affordability as we know that consistent volume and resulting operating efficiencies. We will continue to attract capital to our asset light strategy, which will be our greatest strength as interest rates declined.

Stuart Miller: In our third quarter, we increased starts by 8 percent year over year to almost 20,250. We increased new orders by 5 percent year over year to 20,000, almost 20,600, and we increased deliveries by 16 percent year over year to just over 21,500. As we have focused on volume, however, we have hit the bump of some communities selling out and closing out faster than expected, and others facing entitlement and development delays to expected start dates. As community counts sell, we adjusted and pushed volume with greater absorption levels in existing communities, which naturally impacted our margin. We still expect to deliver between 80,500 and 81,000 homes in 2024, more than a 10 percent increase over 2023.

Speaker Change: In our third quarter, we increased starts by 8% year over year to almost 20250.

Speaker Change: We increased new orders by 5% year over year.

To 20.

Speaker Change: Almost 20600, and we increased deliveries by 16% year over year to just over 21500.

Speaker Change: As we have focused on volume. However, we have hit the bump of some communities selling out and closing out faster than expected and others facing entitlement and development delays to expected start dates.

Our community Count fell, we adjusted and pushed volume with greater absorption levels and existing communities, which naturally impacted our margin.

We still expect to deliver between 80580 1000 homes in 2020 for more than a 10% increase over 2023.

Stuart Miller: We also expect to continue into 2025 with an expected 10 percent growth rate as we increased community count somewhat in the third quarter to 1,283 communities, and we expect to be above 1,400 communities by year by year and 24. We expect the impact of the community count lag to correct over the next couple of quarters. During the quarter, sales incentives rose to just over 10 percent as interest rates remained high and we addressed affordability and the community count lag. As an offset, we were able to reduce construction costs and cycle time, and John will detail that shortly, and we reduced our customer acquisition costs in our FGNA to 6.7% versus an expected 7.3% as we leverage our volume to increase efficiencies in our operating platform.

Speaker Change: We also expect to continue into 2025 with an expected 10% growth rate as we increased community count somewhat in the third quarter to 1283 communities and we expect to be above 1400 communities by year.

Speaker Change: By year end 'twenty four.

Speaker Change: We expect the impact of the community count lag to correct over the next couple of quarters.

Speaker Change: During the quarter sales incentives rose to just over 10% as interest rates remain high and we addressed affordability and the community count lag.

Speaker Change: As an offset we were able to reduce construction costs and cycle time, and John will detail that shortly and we've reduced our customer acquisition costs and our SG&A to six 7% versus an expected seven 3% as we leverage our volume to increase efficiencies and our op.

John: <unk> platform.

Stuart Miller: While our gross margin came in lower than we expected at 22.5%, our net margin was higher than expected at 15.8%, driven by operating efficiencies, and we ended the quarter with earnings for shares excluding one-time items of $3.90. As we look ahead to the fourth quarter, given seasonality and customers adjusting to a changing interest rate environment, we expect our gross margin to remain flat as customers build confidence in the changing economic and interest rate landscape. We also expect to see further improvement in our operating efficiencies. As we have driven production pace in sync with sales pace, we have used our margin as a point of adjustment to enable consistent production as market conditions have continued to adjust.

John: Our growth while our gross margin came in lower than we expected at 22, 5%. Our net margin was higher than expected at 15, 8% driven by operating efficiencies and we ended the quarter with earnings per share excluding onetime items of three points.

John: At $3 90.

As we look ahead to the fourth quarter, given seasonality and customers adjusting to a changing interest rate environment. We expect our gross margin to remain flat as customers build confidence in the changing economic and interest rate landscape.

John: We also expect to see further improvement in our operating efficiencies.

John: As we have driven production pace and sync with sales pace, we have used our margin as a point of adjustment to enable consistent production as market conditions have continued to adjust.

Stuart Miller: Our strategy has enabled us to repurchase another $3,400,000 shares of stock for $519 million and end the quarter with $4,000,000 of cash on both and a 7.6% debt to total capital ratio. We have driven excellent operating results today, and we continue to be excellently positioned as a company from balance sheet to operating strategy to execution to be able to adjust and address the market resident poll for the remainder of 2024 and beyond.

Our strategy has enabled us to repurchase another $3 million 400000 shares of stock for $519 million and ended the quarter with $4 billion of cash on book and the seven 6% debt to total capital ratio.

John: We have driven excellent operating results to date, and we continue to be excellently positioned as a company from balance sheet to operating strategy to execution to be able to adjust and address the market evident unfold for the remainder of 2024 and beyond.

John: So with a growing.

Stuart Miller: With a growth and production strategy driving our core business, we embarked on a program to develop a structured and durable land strategies model to systemically purchase and develop land with an option program to purchase fully developed home sites just in time and as needed. While we had always executed option land deals with third-party developers, and we still do, those deals were not always available, and there were simply no developers in many of our markets. We knew that we could only become structurally and durable land light and asset light by both negotiating option deals with landowners and developers and also creating structured land option contracts with private equity capital or permanent capital.

John: With a growth and production strategy driving our core business, we embarked on a program to develop a structured and durable land strategies model to systemically purchase and develop land with an option program to purchase fully developed home sites, just in time and Thats needed.

John: While we had always executed option land deals with third party developers and we still do those deals we're not always available and we're and then we're simply no developers and many of our markets.

John: We knew that we can only become structurally and durably land light and asset life by both negotiating option deals with landowners and developers.

John: And also creating structured land option contract with private equity capital or permanent capital.

Stuart Miller: Our drive to build an asset light manufacturing model has been a five-year marathon that has required a slow but steady attraction of capital to the concept, supported by an operational plumbing system to support the flow of capital and the delivery of home sites. Additionally, there needed to be a fiduciary for that capital that would oversee the generation of attractive returns to capital at market-competitive risk-adjusted returns while also allowing for appropriate profitability for the manufacturer, namely us. Additionally, the notion of land risk needed to be reconsidered. Not all land has the same risk. Short-term land, which is entitled and mostly developed, is left riskier than unentitled farmland.

John: Our drive to build an asset light manufacturing model has been a five year marathon that is required a slow but steady attraction of capital to the concept supported by an operational plumbing system to support the flow of capital and the delivery of Homesites.

John: Additionally, there needed to be a fiduciary for that capital that would oversee the generation of attractive returns to capital at market competitive risk adjusted returns, while also allowing for appropriate profitability for the manufacturer, namely us.

John: Additionally, the notion of land risk needed to be reconsidered.

Speaker Change: Not all land has the same risk short term land, which is entitled and mostly develop is less risky than uninvited farmland.

Stuart Miller: Mixed risk profiles have historically and would always predict a price to the most private equity partners to create homogeneous risk profile land assets. These assets are priced for their risk profile and are professionally managed to a home site purchase platform which we call the Hopper. The Hopper is where land is acquired, held and developed, and ultimately delivered just in time on a rolling option basis, with contractually controlled and limited risk to the manufacturer home builder as homes are ready to be started. Over time, the management of these land relationships has become second nature to our division management, and it's actually driven greater efficiency and effectiveness in the management of our land assets.

Mixed risks risk profiles have historically and would always.

Speaker Change: So the most risky part of the pool.

Speaker Change: Accordingly, we have worked with a series of private equity partners to create homogeneous risk profile land assets.

Speaker Change: These assets are priced for their risk profile and our professionally managed through a homesite purchase platform, which we call the hopper.

Speaker Change: The Hopper is where land is acquired held and develop and ultimately delivered just in time on a rolling option basis with contact contractually controlled and limited risk to the manufacturer homebuilder as homes are ready to be started.

Speaker Change: Over time the management of these lands relationships has become second nature to our division management and has actually driven greater efficiency and effectiveness in the management of our land assets.

Stuart Miller: The assignment of risk profile defines the cost of capital. The orchestration of just-in-time delivery of home becomes as visible and critical as the delivery of lumber and appliances. And the process is becoming increasingly automated for efficiency. But by driving volume through these programs, we have gained advantage insights into the unique values of these structures are now bringing to the overall company.

Speaker Change: The assignment of risk profile defines the cost of capital.

Speaker Change: The orchestration of just in time delivery of home becomes as visible and critical as the delivery of lumber and appliances.

Speaker Change: And the process is becoming increasingly automated for efficiency.

Speaker Change: Yeah.

Speaker Change: But by driving volume through these programs. We have gained advantage insights into the unique value that these structures are now bringing to the overall company.

Stuart Miller: Aside from the natural improvements outlined earlier, five additional insights immediately come to mind. First, as capital markets become familiar and comfortable with a term-based risk, more capital comes to that understood risk, and that expands the capital that is available for these types of terms of land. Second, capital markets get comfortable with a particular risk profile, and the cost of capital can go down as capital is matched with associated risk. Third, the availability of strategic capital for smaller M&A transactions does not tie up corporate capital while home production is ramped up, and this promotes road strategies.

Speaker Change: From the financial improvements outlined earlier.

Additional insights immediately come to mind.

Speaker Change: First as capital markets become familiar and comfortable with a term based risk more capital comes to that understood risk and that expands the capital that is available for these types of terms of land.

Speaker Change: Second.

Speaker Change: Capital markets get comfortable with a particular risk profile and the cost of capital can go down as capital is matched with associated risks.

Speaker Change: Third the availability of strategic capital for smaller M&A transactions does not tie up corporate capital while home production has ramped up.

Speaker Change: And this promotes growth strategies.

Stuart Miller: Fourth, M&A transactions can be absorbed with fewer complicated accounting implications. And fifth, organic growth and existing markets and into new markets can be facilitated with limited balance sheet impact, where there's no existing, existing land developers.

Speaker Change: Fourth M&A transactions can be absorbed with fewer complicated accounting implications.

First organic growth in existing markets and into new markets can be facilitated with limited balance sheet impact where there is no existing existing land developers.

Stuart Miller: As I mentioned in our last call, I do want to specifically highlight our unique and very important relationship with TPG, Angela Gordon, and Ryan Millett. We began this journey together back in 2020, and we learned together that we're significantly better for having endured the bumps and bruises of learning and growing. They have continued to be our single biggest land partner, and we look forward to much more learnings and growing as we grow into the future. It's better as understanding all the benefits.

Speaker Change: As I mentioned in our last call I do want a specific specifically highlight our unique and very important relationship with TPG Angelo Gordon and Ryan Merlette.

Speaker Change: We began this journey together back in 2020, and we learned together that were significantly better for having endured the bumps and bruises of learning and growing.

Speaker Change: They have come to <unk>. They continue to be our single biggest land partner and we look forward to much more learnings and growing as we grow into the future.

Speaker Change: Bottom line, our asset light land light strategy is evolving and we're getting better at understanding all of the benefits.

Stuart Miller: Finally, in the very near future, the spin-off, which we call Milrose, will generally complete this now almost five-year migration to an asset-like operating model. Not surprisingly, we've received a lot of questions about the plan spin-off we announced during the second quarter Ernie School. We're still going through the SEC confidential review process, so I'm limited in what I can say about the spin-off. However, I can tell you a little bit about what it will entail and how it will affect Lennar. We have formed a company called Milrose Properties Inc., which we expect to qualify as a real estate investment trust for Greece.

Finally in the very near future the spinoff, which we call Millrose will generally complete this now almost five year migration to an asset light operating model.

Speaker Change: Not surprisingly we have received a lot of questions about the planned spinoff, we announced during the second quarter earnings call.

Speaker Change: Still going through the SEC confidential review process. So I'm limited in what I can say about the spin off however, I can tell you a bit a little bit about what it will entail and how it will affect lenore.

We have formed a company called no Rose properties, Inc, which we expect to qualify as a real estate investment trust or REIT.

Stuart Miller: Milrose will acquire and develop land for Lennar and other home builders, as and will deliver fully developed home sites under a land option contract. The acquisition, development, and delivery of home sites will be similar to other partners of partnerships that I've just described a little earlier. The REAP structure, however, is unique and will be detailed in the F11 FDC registration statement when it is made public soon. We are going to contribute to Milrose in exchange for its stock, essentially all of our undeveloped, partially developed, and some of our fully developed land, along with cash. The stock will be distributed as a stock dividend of Milrose stock to Lennar shareholders, and it will accordingly reduce inventory on Lennar's book.

Speaker Change: No rose will acquire and develop land for la <unk> and other homebuilders as and will deliver fully developed home sites under a land option contract.

Speaker Change: [laughter].

The acquisition development and delivery of home sites will be similar to other partners of partnerships that I've just described a little earlier.

Speaker Change: The REIT structure, however is unique and will be detailed in the S. 11, SEC registration registration statement when it is made public soon.

Speaker Change: We are going to contribute to mill rose in exchange for its stock essentially all of our undeveloped partially developed and some of our fully developed land.

Along with cash.

Speaker Change: The stock will be distributed as a stock dividend of mill road stock to <unk> shareholders and it will accordingly reduce inventory on <unk> books.

Stuart Miller: That capital, as it cycles within Milrose, will continue to be permanent dependable capital available to Lennar for future land options as further described in the F11 registration statement when it is made public. Milrose will be responsible for advancing the capital for developing the land contributed, using Lennar as a contractor for consistent execution, and Lennar will have option contracts entitling it to repurchase finished home sites on a just-in-time basis and as it needs them for home building activities. Proceeds from the REAP purchase finished home site will be reinvested by Milrose in new land and development transactions for Lennar.

Speaker Change: That capital as it cycles within Millrose will continue to be permanent dependable capital available to Lennart for future land options. As further described in the S. 11 registration statement when it is made public.

Speaker Change: No rose will be responsible for advancing the capital for developing the land contributed using <unk> as the contractor for consistent execution and Linda will have option contracts entitling it to repurchase finished homesites on adjusted.

Speaker Change: Time basis, and as needs as it needs them for homebuilding activities.

Speaker Change: Proceeds from the repurchase finished homesite will be reinvested by Melrose in new land and development transactions for Lamar.

Stuart Miller: Additionally, after the spin-off, the new company would be another additive bucket of capital, consistent and compatible with other relationships that have existed and will continue to thrive alongside Lennar. Of course, the completion of our spin will drive significantly higher returns on inventory and equity, as both inventory and equity are reduced by the amount of assets contributed to mill rows in exchange for stock. Given Lennar's balance sheet strength with a depth of total capital ratio of 7.6%, Lennar's balance sheet will remain very strong after the spin-off, with, we believe, consistent earnings and cash flow to continue to pay down debt and repurchase stock.

Speaker Change: Additionally, after the spin off the new company would be another additive bucket of capital consistent and compatible with other relationships that have existed and will continue to thrive alongside lenore.

Speaker Change: Of course, the completion of our spin will drive significantly higher returns on inventory and equity as both inventory and equity are reduced by the amount of assets contributed to mill rose in exchange for stock.

Speaker Change: Given <unk> balance sheet strength with a debt to total capital ratio of seven 6% <unk> balance sheet will remain very strong after the spinoff with we believe consistent earnings and cash flow.

Speaker Change: To continue to pay down debt and repurchase stock.

Stuart Miller: Because Lennar's inventory is constantly changing, we don't know exactly how much land Lennar will contribute to mill rows, but we expect that it will be land and cash with the book value of between $6 and $8 billion, and we expect that mill rows will seek to enter into land transactions with other builders as well as an independent company. Since the land and cash contributed to mill rows will be debt-free, no rows will be completely independent as the company, with zero Lennar ownership, will be responsible for arranging credit facilities and sources of any debt or equity financing it needs or wants to support its own activities.

Speaker Change: Because <unk> inventory is constantly changing we don't know exactly how much land lenoir will contribute to mill Roes, but we expect that it will be land and cash with the book value of between six and $8 billion.

Speaker Change: And we expect that no Roes, we will seek to enter into land transactions with other builders as well as an independent company.

Speaker Change: Since the land in cash.

Speaker Change: <unk> to mill Rose will be debt free no rose will be completely independent as a company with zero Lin our ownership and will be responsible for arranging credit facilities and sources of any debt or equity financing it needs or wants to support its own activities.

Stuart Miller: Lennar will have option purchase arrangements to purchase back finished home sites on a just-in-time basis. Unlike other land companies that rely on land appreciation for returns, mill rows will receive contractual option fees for maintaining options in effect. It will use these fees to pay its expenses and to make regular distributions to stockholders. In addition to option fees, mill rows will also receive the return of invested capital associated with the option exercises. Unlike traditional private equity-based land banking funds, mill rows will not be required to distribute or return invested capital to investors. Instead, mill rows will repeatedly reinvest the invested capital as it is returned in future land transactions.

Lenoir will have option purchase arrangements to purchase back finished homesites on adjusted time basis.

Unlike other land companies that rely on land appreciation for returns Millrose will receive contractual option fees for maintaining options in effect.

Speaker Change: It will use these fees to pay its expenses and to make regular distributions to stockholders.

Speaker Change: In addition to option fees no rose will also receive the return of invested capital associated with the option exercises.

Speaker Change: Unlike traditional private equity based land banking funds millrose will not be required to distribute or return invested capital to investors.

Instead, no rose will repeatedly reinvest the invested capital as it is return in future land transactions.

Stuart Miller: Therefore, mill rows will be for Lennar and probably other home builders, essentially a self-renewing permanent source of land acquisition and development capital.

Speaker Change: Therefore, millrose will be for Lamar and probably other homebuilders essentially a self renewing.

Speaker Change: Permanent source of land acquisition and development capital.

Stuart Miller: Now, while I'd like to go into more detail about the plan spin-off, as I noted earlier, we're still limited in what we can say until our S-11 SEC registration statement is made public, so more information should become publicly available very soon.

Speaker Change: Now what I'd like to go into more detail about the planned spinoff as I noted earlier, we're still limited in what we can say until our S. 11, SEC registration statement is made public so more information should become publicly available very soon.

Stuart Miller: So, in conclusion, let me say that this is a very exciting time for Lennar. At Lennar, we're continuing to upgrade the Lennar financial and operating flash platform as we drive consistent production and sales. Our third quarter, 2024, has been another strong strategic and operational success for our company. As we focus on driving consistent volume and growth, adjust community count for that growth and complete our company's financial and operational restructure. We are, in fact, nearing the end of a five-year marathon that will have restructured our entire operating platform for long-term success and greater returns on capital and equity.

Speaker Change: So in conclusion, let me say that this is a very exciting time for Illinois.

Speaker Change: <unk>, we're continuing to upgrade the <unk> financial and operating Flash platform as we drive consistent production and sales.

Speaker Change: Our third quarter 2024 has been another strong strategic and operational success for our company as we focus on driving consistent volume and growth adjust community count for that growth and complete our company's financial and operational restructure.

We are in fact nearing the end of a five year marathon that will have restructured our entire operating platform for long term success and greater returns on capital and equity.

Stuart Miller: We have continued to drive production to meet the housing shortage that we know persists across the market. With that said, as interest rates subside and normalize, and now that the Fed has boldly begun to cut rates, we believe that pent-up demands will be activated, and we are well-prepared with growing community count and growing volume. Strong pent-up demand has found ways to access the housing market at higher interest rates. As rates drift down, giving consistent execution, we are extremely well-positioned for even greater success as strong demand for affordable offerings continues to seek short supply in a more affordable interest rate environment.

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

Speaker Change: With that said as interest rates subsides, and normalized and now that the fed has boldly begin to begun to cut rates.

Speaker Change: We believe that pent up demand will be activated and we are well prepared with growing community count and growing volume.

Speaker Change: Strong pent up demand has found ways to access the housing market and higher interest rates as rates drift down given consistent execution, we are extremely well positioned for even greater success as strong demand for affordable offerings continues to seek short supply and.

Speaker Change: More affordable and in a more affordable interest rate environment.

Stuart Miller: Perhaps most importantly, our strong balance sheet affords us flexibility and opportunity to consider and execute upon thoughtful growth for our future. In that regard, we will focus on our manufacturing model and continue to use our land partnerships to grow, with a focus on high returns on capital and equity. We will also continue to focus on our pure-play business model and reduce exposure to non-core assets. We'll continue to drive just-in-time home-site delivery and an asset-life balance sheet, and we'll continue to allocate capital to growth, debt retirement, and stock repurchases as appropriate. As we complete our asset-life transformation, we will continue to execute in the short term while we return capital to our shareholders who dividend and stock buyback, while we also pursue strategic growth.

Perhaps most importantly, our strong balance sheet affords us flexibility and opportunity to consider and execute upon thoughtful growth for our future.

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

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

Speaker Change: We will continue to drive just in time homesite delivery and an asset light balance sheet, and we will continue to allocate capital to growth debt retirement and stock repurchases as appropriate.

Speaker Change: As we complete our asset light transformation, we will continue to execute in the short term, while we return capital to our shareholders through dividend and stock buyback, while we also pursue strategic growth.

Stuart Miller: As we look ahead to completing a successful 2024, we're well-positioned for and expect to see much more of the same in the years ahead. We are confident that by design, we will continue to grow, perform, and drive Linar to new levels of consistent and predictable performance. For now, we are guiding to 22,500 to 23,000 closing's next quarter with a margin that is flat with the third quarter. And we expect to deliver approximately 80,500 to 81,000 homes this year. We also expect to repurchase an excess of $2,000,000 of stock this year as we continue to drive very strong cash flow.

Speaker Change: As we look ahead to completing a successful 2024, we are well positioned for and expect to see much more of the same in the years ahead.

We are confident that by design, we will continue to grow perform and drive lenore to new levels of consistent and predictable performance.

Speaker Change: For now we are guiding to 22500 to 23000 closings next quarter with a margin that is flat with the third quarter and.

Speaker Change: And we expect to deliver approximately 8500 to 81000 homes this year.

We also expect to repurchase in excess of $2 billion of stock. This year as we continue to drive very strong cash flow.

Stuart Miller: We look forward to a strong finish to 2024.

Speaker Change: We look forward to a strong finish to 2024.

Stuart Miller: And for that, I want to thank the extraordinary associates of Lennar for their tremendous focus, effort, and talent.

And for that I want to thank the extraordinary associates at <unk> for their tremendous focus effort and talent and with that let me turn it over to John.

John Jaffe: And with that, let me turn over to John. Good morning. As you heard from Stuart, our operational teams of Lennar continue to focus on executing or operating strategies while responding in real time to market fluctuations throughout the quarter. This intense focus creates a continuous learning and refinement loop, which in turn continuously improves the execution of these strategies.

John: Good morning, as you heard from Stuart our operational teams have and are continuing to focus on executing our operating strategy, while responding in real time to market fluctuations throughout the quarter.

This intense focus creates a continuous learning and refinement loop, which in turn and continuously improving execution of these strategies I.

John Jaffe: I want to discuss our third quarter performance in cost reduction, cycle time reduction, and improved asset-like land position. Our focus on improvement in these areas begins with sales pace, knowingly can produce a rate of sale by design, creates a confidence for the production side of the business. We work on improving on-armry change to produce the needed volume of high quality leads. This starts at the top of the photo, attempting the effectiveness of targeting through various sources, such as FEM or social media, and messaging, such as rate and payment or lifestyle. All the way through to the ultimate result of a purchase and sale agreement.

Speaker Change: I will discuss our third quarter performance and cost reduction cycle time reduction and improved asset light land position.

Speaker Change: Our focus on improvement in these areas begins with sales pace, knowing we can produce a rate of sales by design.

Speaker Change: The confidence for the production side of the business.

Speaker Change: We work on improving our machine to produce the needed volume of high quality leads the starting at the top of the funnel with testing the effectiveness of targeting through various sources, such as SCM with social media and messaging such as rate in payment or lifestyle.

All the way through to the Ultimate result of a purchase and sale agreement.

John Jaffe: Every day, our divisions learn from their engagement with an arm machine, constantly adjusting and testing new tactics. This by design approach drives efficiency and customer acquisition costs while also improving the customer experience. We utilize incentives and interest rate buydown as needed to enable us to address affordability and consumer competence challenges in order to achieve the desired sales pace. This process, against the backdrop of higher interest rates and the impact on consumer firm inflation, informed us of where we needed to buy down interest rates and or other incentives to achieve the desired pace. As noted, our third quarter sales pace of 5.5 homes per community per month matched our start pace of 5.4.

Every day, our divisions learn from their engagement with Illinois machine constantly adjusting and testing new tactics.

Speaker Change: Despite design approach drives efficiency and customer acquisition costs, while also improving the customer experience we.

Speaker Change: We utilize incentives and interest rate buy down as needed to enable us to address affordability and consumer confidence challenges in order to achieve the desired sales pace.

Speaker Change: This process against the backdrop of higher interest rates and the impact on consumer from inflation and informed us as to where we needed and wind down of interest rates and or other incentives to achieve the desired pace.

Speaker Change: As noted our third quarter sales pace of five five homes per community per month matched our start pace of $5 four <unk>.

John Jaffe: Achieving the sales pace also resulted in an ending quarter with an average of just more than one unsolved completed home per community. The resulting confidence from considerably producing the desired sales pace enables planning for an even flow start pace and related production levels. Our goal of the manufacturing process is to rise from this predictability, which drives improvements in direct construction costs and cycle time. All participants and our operations, train partners, and supply chain partners benefit from the combination of this predictability along with our high volume. This manufacturing approach, along with the maximum amount of efficiencies of our product strategy, will allow us to continue to drive down costs in cycle time into 2025.

Speaker Change: Achieving the sales pace also resulted in unit quarter with an average of just more than one unsold completed home per community.

Speaker Change: The resulting confidence from consistently producing the desired sales pace enables planning for an even flow start pace and related production levels.

Speaker Change: Our goal of a manufacturing process derived from this predictability, which drives improvements in direct construction cost and cycle time.

Speaker Change: All participants on our operations trade partners and supply chain partners benefit from the combination of this predictability along with our high volume.

Speaker Change: This manufacturing approach along with the maximize the efficiencies of our product strategy will allow us to continue to drive down cost and cycle time into 2025.

John Jaffe: In the third quarter, our construction cost decreased sequentially from Q2 by over 1%, now the year over year basis by over 6%. Accomplishing a 6% cost reduction during the inflationary environment of the past year demonstrates the effectiveness of our strategy and affirms the benefits of our builder of choice approach. This manufacturing strategy resulted in continued significant gains in cycle time. Our third quarter cycle time decreased by 10 days sequentially from Q2 down to 140 calendar days on average for single family home, which is a 23% decrease year and a material contributor to our inventory try and improve.

In the third quarter, our construction cost decreased sequentially from Q2 by over 1% on a year over year basis by over 6%.

Wishing a 6% cost reduction during the inflationary environment over the past year demonstrates the effectiveness of our strategy and affirms the benefits of our builder of choice approach.

Speaker Change: This manufacturing strategy resulted in continued significant gains in cycle time.

Speaker Change: Third quarter cycle time decreased by 10 days sequentially from Q2 down to 140 calendar days on average for single family homes, which is a 23% a decrease year over year and a material contributor to our inventory churn improvement.

John Jaffe: Next, I'll discuss the execution of our land-like strategy. In the third quarter, we continue to effectively work with our strategic land developers and land bank partners, where they purchase land on our behalf and then deliver just-in-time finished home sites to our home-building machine. In the third quarter, about 82% of our $2 billion or approximately 17,000 home sites acquired in the quarter, we'll finish home sites purchased from these various land structures. During the quarter, our land bank acquired on our behalf about 15,000 home sites for around $800 million in land acquisition and a commitment of about $650 million in land development.

Speaker Change: Next I will discuss the execution of our land light strategy and the third quarter. We continued to effectively work with our strategic land developers and land Bank partners, where they purchased land on our behalf and then deliver just in time finished home sites to our homebuilding machine and the third quarter about 82% of our $2 billion or approximately <unk> <unk>.

Speaker Change: <unk> thousand Homesites acquired in the quarter were finished homesites purchased from these various lam structures.

Speaker Change: During the quarter, our land bank acquired on our behalf about 15000 homesites for around $800 million in land acquisition, and a commitment of about $650 million and land development.

John Jaffe: With its focus on the asset life, our supply of own home sites to create to 1.1 years now for 1.5 years and control home site percentage can create to 81% or 73% year over year. These improvements in the execution of our operating strategies enable reduced site-in-time and less land-owned, resulting in improved inventory turn, which now stands at 1.6 versus 1.4 last year, the 14% increase. As in prior quarters, the third quarter shows continued progress in the execution of each of these strategies, a Stuart Knight reviewed. We started with a focus on our marketing and sales machine, leading to even-flow manufacturing like production and after-light land strategies.

Speaker Change: With this focus on the asset light our supply of owned Homesites to create to $1 one years down from one five years.

Speaker Change: And control home site percentage increased to 81%.

Speaker Change: 73% year over year.

Speaker Change: These improvements in the execution of our operating strategies enable reduced cycle time, and less land owned resulting in improved inventory churn, which now stands at one six versus $1 four last year, a 14% increase.

Speaker Change: As in prior quarters third quarter showed continued progress and execution of each of these strategies with Jordan I reviewed with you.

Speaker Change: Starting with our focus on moving our marketing affiliate machine, leading to even flow manufacturing life production and asset light land strategy, we focused on improving and connecting these strategies together driving even more consistency and improvement.

John Jaffe: We focused on improving and connecting these strategies together, driving even more consistency and improvement.

John Jaffe: In our third quarter, the interest rate fluctuated to preserve the pressure of inflation. We managed, namely, with the aid of new technology-driven tools in the form of real-time data dashboards. The consistent digestion and critical review of the data allows for quick action and improved execution.

Speaker Change: Our third quarter as interest rates fluctuate in consumers felt the pressure of inflation, we manage nimbly with the aid of new technology driven tools in the form of real time data dashboards.

Consistent digestion and critical review of the data allows for quick action and improved execution.

John Jaffe: I want to have my thanks to the associates for their commitment to implementing and executing these strategies.

Speaker Change: Thanks to the associates for their commitment to implementing and executing new strategies now I'd like to turn it over to Diane.

Diane Bessette: Now I'd like to turn it over to Diana. Thank you, John, and good morning, everyone. So Stuart and John have provided a great deal of color regarding our home building performance.

Diane: Thank you John and good morning, everyone. So Stuart and Jon has provided a great deal of color regarding our homebuilding performance. So therefore, our guidance in a few minutes on the results of our other business segments.

Diane Bessette: So therefore, I'm going to spend a few minutes on the results of our other business segments. Pull together again our balance sheet and then provide guidance for Q4.

Speaker Change: Altogether again, our balance sheet highlights and then provide guidance for Q4.

Diane Bessette: So starting with financial services. So the third quarter, our financial services team had operating earnings of 144 million. These earnings were fairly consistent with the prior year. While we had lower lock volume and net secondary margins in our mortgage business, this was partially offset by higher delivery volume and lower cost in our title business. Our financial services team is intently dedicated to providing a great customer experience for each home buyer and has created true partnerships with our home building teams to accomplish that goal. That partnership is reflected in their solid results.

Diane: So starting with financial services.

Diane: Third quarter, our financial services team had operating earnings of $144 million.

Diane: These earnings were fairly consistent with the prior year, while we had lower lock volume and net secondary margins in our mortgage business. This was partially offset by higher delivery volume and lower costs in our title business. Our financial services team is intensely dedicated to providing a great customer experience for each home buyer.

And has created two partnerships with our homebuilding team to accomplish that goal.

Speaker Change: That partnership is reflected in your solid results.

Diane Bessette: Moving into multi-family, to the quarter, our multi-family segment had operating earnings of 79 million. The primary driver of earnings was the gain on sale of assets in our LMV Fund one. As we noted last quarter, we are under contract to sell the assets to multiple buyers. In the third quarter, we closed about 70% of the anticipated sales. We recorded a net gain of 179 million and received about a hundred and forty million of cash. We expect most of the remaining assets to be sold in the fourth quarter.

Speaker Change: Moving into multifamily for the quarter, our multifamily segment had operating earnings of 79 million. The primary driver of earnings was the gain on sale of assets in our Al MZ Fund one as we noted last quarter, we are under contract to sell the assets to multiple buyers.

Speaker Change: In the third quarter, we closed about 70% of the anticipated sale, we recorded a net gain of $179 million and received about $140 million of cash we expect most of the remaining assets to be sold.

Diane Bessette: Miller. A second component for the quarter was a $90 million dollar write-down of non-core assets that are held on book as we focus on immediately monetizing these assets. This is consistent with our pure play asset-like strategy, with the ultimate goal of increasing returns.

Got it.

Speaker Change: A second component for the quarter was $90 million right down of non core assets that are held on book as we focused on immediately monetizing. These assets. This is consistent with our pure play asset light strategy and meet with the ultimate goals of increasing returns.

Diane Bessette: So turning to the balance sheet, this quarter once again, we adhere to our strategy of maximizing return on inventory by turning our inventory at the appropriate market margin. The results of these actions was that we drove cash flow and ended the quarter with 4 billion of cash and no borrowing on our $2.2 billion rebrowling credit facility. This provided total liquidity of $6.2 billion. As a result of our continued focus on balance sheet efficiency and reducing our capital investment, we once again made significant progress on our goal of becoming land-like. As John mentioned, that quarter-round our years owned improved to 1.1 years, with 1.5 years in the prior year, and our home site's control increased to 81% from 73% in the prior year.

Speaker Change: So turning to the balance sheet. This quarter. Once again, we enhanced we adhere to our strategy of maximizing return on inventory by training our inventory at the appropriate market margin.

Speaker Change: The results of these actions does that return of cash flow and ended the quarter with $4 billion of cash and no borrowings on our $2 2 billion.

Speaker Change: The housing credit facility, that's provided total liquidity of $6 2 billion.

Speaker Change: As a result of our continued focus on balance sheet efficiency and reducing our capital investment. We once again made significant progress on our goal of becoming land light.

Speaker Change: As John mentioned at quarter end, our years owned improved to $1. One unit for one five years in the prior year and our Homesites controlled increased to 81% from 73% in the prior year, our lowest years and highest controlled percentage in our history.

Diane Bessette: Our lowest year zones and highest control percentage in our history. At quarter-round, we owned 87,000 home sites and controlled 369,000 home sites for a total of 456,000 home sites. We believe this portfolio provides us with a strong competitive position to continue to grow market share in a capital-efficient way. We spent $2 billion on land purchases this quarter. However, over 80% was finished home sites where vertical construction will soon begin. This is consistent with our manufacturing model of buying land on a just-in-time basis, which is less capital intensive. Of the homes close during the quarter, approximately 64% were from our third-party land structures when we purchased those home sites on a finished basis.

John: At quarter end, we owned 87000, Homesites and controls 369000 home sites for a total of 456000 home sites.

John: We believe this portfolio provides us with a strong competitive position to continue to grow market share in a capital efficient play.

John: We spent $2 billion.

John: Land purchases this quarter. However over 80% was finished home sites with vertical construction will soon begin this is consistent with our manufacturing model defined land on adjusted time basis, which is less capital intensive.

John: The homes closed during the quarter approximately 64% were from our third party land structures, when we purchase homesites on a finished basis.

Diane Bessette: As we continue to reduce our ownership in land and purchase home sites on a just-in-time basis, our running should more consistently approximate cash flow. And over time, it would be up all to align capital returns to shareholders more closely with that cash flow. Finally, our inventory turn was 1.6 times, up from 1.4 times last year. And our return on inventory was 31.3%, up 324 basis points from last year.

John: As we continue to reduce our ownership in land and purchase Homesites on adjusting time basis.

Speaker Change: Can you shed more consistently approximate cash and over time, it would be alcohol to align capital returned to shareholders more closely with that cash flow.

Speaker Change: Finally, our inventory churn was one six times up from one four times last year.

Speaker Change: And our return on inventory was 31, 8% percent up 325 basis points from last year.

Diane Bessette: During the quarter, it is consistent with our production focus. We started about 20,200 homes and ended the quarter with about 40,000 homes in inventory. This inventory number includes approximately 1,750 homes that were completed unsold, which is slightly more than one home community as we successfully manage our finished inventory levels.

Speaker Change: During the quarter and consistent with our production focus we started about 'twenty 200 homes and ended the quarter with about 40 <unk> right.

Speaker Change: This inventory number includes approximately 1750 homes that were completed unsold, which is slightly more than one per community as we successfully managed our finished inventory levels.

Diane Bessette: Looking at our debt maturity profiles, we had no redemption or repurchases of senior notices this quarter. Our next debt maturity is not until May of 2025. We continue to benefit from our previous paydowns of senior notes and strong earnings generation, which brought our debt to total capital down to 7.6 quarter and our lowest ever and strong improvement from 11.5 in the prior year.

Speaker Change: Looking at our debt maturity profile, we had no redemption or repurchases of senior notes. This quarter. Our next debt maturity is not until may of 2025.

Speaker Change: We continue to benefit from our previous pay down the senior notes and strong earnings generation, which brought our debt to total capital down to seven six at quarter end, our lowest ever.

Speaker Change: And a strong improvement from $11 five in the prior year.

Diane Bessette: The significant decrease in leverage is one of the factors that allowed us to receive an upgrade in our debt ratings from Fitch, from triple B to triple B plus. We are pleased to achieve this accomplishment that recognize the strength of our balance sheet and our operating class.

Speaker Change: The significant decrease in leverage is one of the factors that allowed us to receive an upgrade in our debt ratings from Fitch Triple B to Triple B plus we are pleased to achieve this accomplishment that recognize the strength of our balance sheet and our operating platform.

Diane Bessette: One. Assistant, with our commitment to increasing shareholder returns, we repurchased 3.4 million of our outstanding shares for 519 million. Additionally, we paid total dividends is quarter of 136 million. Finally, our stockholders' equity increased to over 27 billion, and our book value per share increased to just over 101.

Speaker Change: Consistent with our commitment to increasing shareholder returns, we repurchased $3 4 million of our outstanding shares for 519 million. Additionally, we paid total dividends this quarter of $136 million.

Finally, our stockholders' equity increased to over $27 billion and our book value per share increased to just over 101 in summary, the strength of our balance sheet strong liquidity and low leverage provides us with significant confidence and financial flexibility as we move through the remainder of 2024 and beyond.

Diane Bessette: In summary, the strength of our balance sheet, strong liquidity and low leverage provides us with significant confidence and financial flexibility.

Diane Bessette: So, with that brief overview, I'd like to turn to Q4 and provide some guidance estimates, starting with new orders. We expect Q4 new orders to be in the range of 19,000 to 19,300 homes, which approximate a 10% year-over-year group. We also expect our year and community count to be about 10% to 12% greater than last year. We anticipate our Q4 deliveries to be in the range of 22,500 to 23,000 homes, with a continued manufacturing focus on turning image variant to cash. Our Q4 average sales price on low delivery should be about 425,000 as we continue to price to market to reach affordability.

Speaker Change: So with that brief overview I'd like to turn to Q4.

Speaker Change: And provide some guidance estimates.

Speaker Change: With new orders, we expect Q4, new orders to be in the range of 19000 to 19300 homes, which approximate a 10% year over year growth.

And expect our year end community count to be about 10% to 12% greater than last year.

Speaker Change: We anticipate our Q4 deliveries to be in the range of 20 to 22000 523000 homes with a continued manufacturing focused on training and mentoring to cash a Q4 average sales price on those deliveries should be about 425000 as.

As we continue to price to market to reach affordability.

Diane Bessette: We expect close margins to be flat with Q3 in our SGA to be in the range of 60.7% to 6.8%, with both estimates dependent on market conditions.

<unk> gross margins to be flat with Q3, and our SG&A to be in the range of $6.

Speaker Change: Six 8%.

Speaker Change: Estimates dependent on market conditions for the combined homebuilding joint venture land sales and other categories.

Diane Bessette: For the combined home-building joint venture, land sales, and other categories, we expect to generate earnings of about 25 million. We anticipate our financial services earnings to be approximately 140 million. And we expect to be about great even in our multi-family business. Turning to on our other, we expect a loss of about 5 million, excluding the impact of any potential market adjustment to our public technology investment. Our Q4 corporate GNA should be about 1.7% of total revenues, and our charitable foundation contribution will be based on $1,000 per home delivery. We expect our Q4 to tax rate to be approximately 24.25%, and the weighted average share count should be approximately 267 million shares.

To generate earnings of about $25 million, we anticipate our financial services earnings to be approximately $140 million and we expect to be about breakeven in our multifamily business.

Speaker Change: Turning to our other we expect a loss of about $5 million, excluding the impact of any potential mark to market adjustment to our public technology investment.

Speaker Change: Q4 clarify Q&A should be about one 7% of total revenues and our charitable foundation contribution will be based on $1000 per home delivered <unk>.

Speaker Change: Our Q4.

Speaker Change: <unk> tax rate to be approximately $24, two 5% and the weighted average share count should be approximately 267 million shares.

Diane Bessette: And so, on a combined basis, these estimates should produce an EPS range of approximately $4.10 to $4.25 per share for the Q4. And also, we remain confident with our cash flow of generation. As such, as Stuart mentioned, we are still targeting a minimum of $2 billion of shared repurchases for fiscal 2024.

Speaker Change: So on a combined basis. These estimates should produce an EPS range of approximately $4 10 to $4 25 per share for the quarter.

Speaker Change: And also we also remain confident with our cash flow generation at such as Stuart mentioned, we are still targeting a minimum of $2 billion of share repurchases for fiscal 2024, and with that let me turn it over to the operator.

Unknown Executive: And with that, let me turn it over to the operator. Thank you at this time.

Okay.

Speaker Change: Okay.

Unknown Executive: We'll begin our question and answer session. If you like to ask a question, please press star, then one. Remember to unmute your phone and record your name and organization clearly when prompted. We ask that you please limit yourself to one question and one follow-up. If you'd like to withdraw that question, you may press star two.

Speaker Change: Thank you at this time, we will begin a question and answer session. If you'd like to ask a question. Please press Star then one remember to on your phone and record your name and organization clearly been pumped. It we ask that you. Please limit yourselves to one question and one follow up if you'd like to withdraw that question you May press star two.

Alan Ratner: Again, our first question comes from Alan Rattler with Zellman and Associates; your line is old. Thank you for all of that detail. Still digesting everything, Stuart, but sounds like you guys are definitely going to be busy, and it's a lot to take in; no questions.

Speaker Change: And our first question comes from Alan Ratner with Zelman and Associates. Your line is open.

Alan Ratner: Hey, guys good morning.

Speaker Change: Well. Thank you for all of that detail still still digesting everything Stuart, but it sounds like he has been busy and as the rush to take no questions. Yes.

Alan Ratner: Yeah, so I guess, you know, recognizing, you know, you might be limited on what you could say on Milrose, but you know, just because you gave some color there, I'll start on that front. You know, I'm curious as you kind of went through this process or are going through the process and maybe comparing and contrasting the various structures you've had over the years on the land side and kind of come up with how you envision Milrose going forward. I think one of the things you mentioned that sounds a little bit different is just kind of like the fees that the business or the company will earn on these option deals.

Speaker Change: So I guess, recognizing you might be limited in what you can say on Melrose just because you gave some some color there I'll start on that front.

Speaker Change: I'm curious as you kind of went through this process or are going through the process and maybe comparing and contrasting the various structures you you've had over the years on the land side and kind of come up with how you envision Melrose going forward I think one of the things you mentioned that that sounds a little bit different is just kind of like the <unk>.

Speaker Change: Is that.

Speaker Change: Business or the company will will earn.

Stuart Miller: And I'm curious from your perspective as the manufacturer and it's the builder, what either margin impact would you expect that to have relative to the current land banking structures you currently have? Is it going to be materially different? You know, it sounds like it might be more beneficial to Milrose, or at least more predictable to them, if you will, but I might be misinterpreting that. So, within the boundaries of what I can and can't say, let me, let me say it this way, Alan: it's a good question. So what I tried to detail in my comments is that think about Milrose as being a mirror image of our other structures; the single biggest differential is the capital component, which is a permanent capital structure versus one where the capital has to be raised repeatedly.

Speaker Change: On these option deals and I'm curious from your perspective is the manufacturer and its the builder one either margin impact would you expect them to have relative to the current land banking structures. You. Currently have is it going to be materially different you know it sounds like it might be more beneficial to mill road or at least more predictable to them. If you will but I might be misinterpreting that.

Speaker Change: So within the boundaries of what I can and cant say, let me, let me say it this way Alan it's a good question.

Speaker Change: So what I tried to detail in my comments is that.

Speaker Change: Think about Millrose as being a mirror image of <unk>.

Speaker Change: Our other structures the single biggest differential is the.

Speaker Change: Capital component, which is a permanent capital structure versus one where the capital has to be raised repeatedly.

Stuart Miller: So we structure this as a rate, as I said, and it's structured through it being a public company as permanent capital that does with the capital itself does not get returned. But aside from that, as we look at what we have done with our, with the first half, let's say, more or less half of our developed home sites has been used in production. As we've migrated over the past years, we expect that the impact will be basically similar. And it's been a relatively small impact on our margin as we have absorbed, you know, option costs which exist in all of those relationships.

So we structured this as a REIT as I said and it's structured through it being a public company as permanent capital that this where the capital itself does not get return.

Speaker Change: But aside from that as we look at.

Speaker Change: What we have done with our.

Speaker Change: With the first half, let's say, it's more or less out of our developed home sites that have been used in production as we've migrated over the past years.

Speaker Change: We expect that the impact will be basically similar and it's been a relatively small impact on our margin as we had absorbed.

Speaker Change: <unk>.

Speaker Change: Option costs.

Speaker Change: Which exists in all of those relationships.

Alan Ratner: And we have included or benefited from efficiencies that have come from the way that we've managed land and the way that we're managing our overall business. Now can I point the specifics as how the offsets actually happen? It's not quite that linear, but we think that the impact is going to be relatively small. I appreciate that, and that that's helpful. So looking forward to seeing it all unfold.

Speaker Change: <unk>.

Speaker Change: And we have included or benefited from efficiencies that have come from the way that we've managed land and the way that we're managing our overall business now can I point to specifics as al the offsets actually happen.

Speaker Change: It's not quite that lithium, but we think that the impact is going to be relatively small.

Speaker Change: Got it I appreciate that and then that's helpful. So looking forward to seeing it all unfolds.

Alan Ratner: Second, you know, just on the gross margin, I'm sure you're expecting lots of questions on this, but you know, relative to where you were three months ago, six months ago, you know, kind of expecting more to ramp this year as opposed to now more kind of flatish through the year on gross margin. And just curious, you know, what I guess surprised you relative to what you would have expected three months ago, because it doesn't seem, if anything, you know, rates have come down about 100 basis points since June. It seems like August was a pretty decent month based on some of the macro data and commentary from other builders, yet, you know, you are expecting a lower margin in Q4 than you, you know, maybe articulated three months ago.

Speaker Change: Secondly, just on the gross margin I am sure Youre expecting lots of questions on this but.

Relative to where you were three months ago six months ago, you know kind of expecting more of a ramp this year as opposed to now more kind of flattish through the year on gross margin.

Speaker Change: I'm just curious what I guess.

Speaker Change: Surprised you relative to what you would have expected three months ago, because it doesn't seem if anything rates have come down about 100 basis points. Since June it seems like August was a pretty pretty decent months based on some of the macro data and commentary from other builders yet.

Speaker Change: Yet you are expecting a lower margin in Q4 than you maybe articulated three months ago. So what was the main driver for that.

Stuart Miller: So what was the main driver for that, you know, revised that look? Well, first of all, let's say, let's start by recognizing that really rates did not start coming down until later into our quarter. For the first half or more of the quarter, rates were kind of sticky up at a 7% kind of range. And that cast a pretty tough affordability cloud on what was happening in the market. And consumer confidence has been slow to kind of kick in as rates have kind of fallen over the second part of the quarter. So I think that that's sticking as kind of been a differentiating factor, and that's market-driven.

Speaker Change: Revised outlook.

Speaker Change: Well first of all let's say, let's start by recognizing that really rates did not start coming down until later into our quarter.

Speaker Change: For the first half or more of the quarter rates were kind of sticky up at a 7% kind of range.

Speaker Change: And in.

Speaker Change: That that cast a pretty tough.

Speaker Change: Affordability cloud on on what was happening in the market and consumer confidence has been slow to kind of kick in as.

Speaker Change: As rates have kind of fallen over the second half of the quarter.

Speaker Change: So I think that that stickiness as kind of been a differentiating factor and thats market driven I think that there is.

Stuart Miller: I think that there is the confluence within our environment of managing the relationship between our reduced cycle time and the falloff of community and community talent. And some communities not coming on as quickly as we had hoped. And that driving in our world, a need given our drive to volume and growth, our need and desire to keep the volume up at a time when interest rates are high, consumer confidence hasn't really kicked in and our community can't fall, increasing our absorption rates. So that's what's kind of come as a differentiating fact as we have continued to migrate towards our restructuring.

Speaker Change: Confluence within our environment of managing the relationship between our reduced cycle times.

Speaker Change: And the falloff of community and community count and some communities not coming on as quickly as we had hoped.

Speaker Change: And that driving in our world a need given our drive to volume and growth.

Our need and desire to keep the volume up at a time when interest rates are high consumer confidence hasnt really kicked in and our community count kind of falls.

Speaker Change: Increasing our absorption rates. So that's what's kind of come as a differentiating factor as we have continued to migrate towards our restructuring and maybe that's what's different between us and others is that we're focused on keeping that volume up so that we can.

Alan Ratner: And maybe that's what's different between us and others is that we're focused on keeping that volume up so that we can facilitate where we're headed and to a program that we think is going to put us in much better stead for the future. And that's driven us forward to drive volume at a time when interest rates are high, consumer confidence has been waning a little bit, and our community can't drop a little bit. We think that's self-correcting over the next quarter, and we think it's solving to a greater good. Thanks for all the income.

Speaker Change: <unk> facilitate where we're headed and to a program that we think is going to put us in much better stead for the future and that's driven us forward to drive volume at a time when interest rates are high consumer confidence has been waning a little bit and in our community count drop.

Speaker Change: A little bit.

Speaker Change: Think that self correcting over the next quarters, and we think it's solving to a greater good.

Speaker Change: Shannon Thanks for all the info.

Stephen Kim: Thank you. Now, the next question comes from Stephen Kim with Evacore ISI. Your line is open. Yeah, thanks a lot, guys. It's obvious you've been busy this summer, so I appreciate all the information you've given so far. I wanted to piggyback a little bit on your most recent answer to Alan with respect to volume growth. I know you're guiding to 10 percent volume growth next year, but I think you just sort of indicated that some of this is in an effort to make sure that you progress towards your restructuring in a helpful manner or in a smooth manner as you can.

Speaker Change: Thank you and our next question comes from Stephen Kim with Evercore ISI. Your line is open.

Stephen Kim: Yes. Thanks, a lot guys. It's obviously you've been busy this summer so I appreciate all the information you've given so far.

Speaker Change: I wanted to.

Stephen Kim: Piggyback a little bit on your most recent answer too Alan with respect to volume growth.

Speaker Change: I know youre guiding to 10% volume growth next year.

Alan Ratner: But I think you just sort of indicated that some of this is.

Speaker Change: In.

Speaker Change: In an effort to.

Speaker Change: Make sure that you progress towards your restructuring.

Speaker Change: In <unk>.

Speaker Change: And as helpful manner oriented smoother manner as you can so maintaining volume may be with others.

Stephen Kim: So maintaining volume maybe when others tweak to down their volume can be explained in a way near term and in this past quarter by the fact that you're progressing towards this millrose rate, the launching of that rate.

Speaker Change: Weak to down their volume can be explained in a way near term.

Speaker Change: And in this past quarter by the fact that you're progressing towards this.

Millrose: Millrose right.

Speaker Change: The launching of that rate.

Stuart Miller: So my question relates to the longer term. If we move beyond, you know, when you, let's say you've accomplished your goals with Millrose, longer term, others in the industry have seemingly been moderating their long-term targets to more of a 5 to 10 percent volume range, and I'm curious, can you talk about what you think is the proper long-term rate of growth for Lanar, longer term that is, and is that dependent upon a certain rate of national housing starts growth or mortgage rates staying below a certain level or something like that. Just, you know, it kind of gave us a tensor long term where you think volume growth should. So right now, we're kind of solving to a 10% steady state worth rate.

Speaker Change: So my question relates to the longer term, if we move beyond <unk>, let's.

Speaker Change: Let's say you've accomplished your goals with Melrose longer term others in the industry have seemingly been moderating their long term targets to more of a 5% to 10% volume range and I'm curious can you talk about what you think is the proper long term rate of growth for <unk> longer term that is and is not dependent upon a certain rate of Nash.

Speaker Change: <unk> housing starts growth or mortgage rates staying below a certain level or something like that just kind of give us a sense for long term, where you think volume growth should be.

Speaker Change: So right now we're kind of solving to a 10% steady state growth rate.

Stuart Miller: And part of that sees relates to our view of what our land strategy has become. The more we are focused on our asset light model, the more we are seeing that we can dovetail a combination of organic growth and strategic new market growth that is facilitated by the structure of the way that our operations will be configured as we go forward. So we're kind of looking at more of a steady state 10%. Now this kind of dovetails with what we think has to happen in terms of building a healthier housing market. Remember that nationally we're supply constraint at local markets; their supply constraint.

Speaker Change: And part of that relates.

Speaker Change: It relates to our view of what our.

Speaker Change: Land strategy has become the more we are focused on.

Speaker Change: Our asset light model.

Speaker Change: The more we are seeing that we can dove tail a combination.

Speaker Change: Organic growth and strategic.

Speaker Change:

Speaker Change: <unk>.

Speaker Change: New market growth that is facilitated by the structure of the way that our operations will be configured as we go forward.

Speaker Change: We're kind of looking at more of a steady state 10% now this kind of dovetails with what we think has to happen in terms of building a healthier housing market remember that nationally we're supply constrained at local markets. There are supply constraints in the market is going to need.

Stuart Miller: And the market is going to need additional supply of homes, particularly as interest rates drift down, particularly as at the local and at the national level, the world focuses on greater volume and greater supply to accommodate the population as it sits right now. Now we're seeing and hearing that narrative come across pretty loudly, even at the national level. And we think that we're positioned to dovetail with what has to be a growth in production levels.

Speaker Change: Need additional supply of homes, particularly as interest rates drift down, particularly as at the local and at the national level. The World focuses on greater volume and greater supply to accommodate the population as it sits right now.

Speaker Change: Now, we're seeing and hearing that narrative come across pretty loudly even at the national level, and we think that we're positioned to dovetail with what has to be a growth.

Speaker Change: Yeah.

Speaker Change: And production levels.

Stephen Kim: And I don't know what new normal is. The print more recently was 1.36 million. That seems white, and it doesn't seem like we're catching up on the supply side. So we're building a model that we think facilitates our ability to participate in growing a healthier housing market, which means greater supply accommodating the demand that has panned up and limited by affordability. Okay, yeah, that's fair enough. Appreciate that.

Speaker Change: And I don't know what new normal is.

Speaker Change: The print.

Speaker Change: More recently was one $3 6 million that seems light and it doesn't seem like we're catching up on the supply side. So were building a model that we think facilitates our ability to participate in growing healthier housing market, which means greater.

Speaker Change: Our supply accommodating the demand that is pent up and limited by affordability.

Speaker Change: Okay, Yeah, that's fair enough I appreciate that.

Stephen Kim: Second half of my question relates to operating margins. I think that maybe the story for some investors this quarter was that you brought the trade-off between volume and margin a little bit more into sharper relief. And so, with respect to the operating margin, and I'm talking about your operating margin after corporate expense, it seems based on your guidance that you're going to be coming in somewhere a little north of 13% this year, which is quite a bit below some of your bigger cap peers. And I'm curious if you could share why you think this is the case.

Speaker Change: Second half of my question relates to operating margins you know I think that may be the story for some investors. This quarter was that you made.

Speaker Change: You brought the trade off between volume and margin a little bit more into sharper relief and so with respect to the operating margin and I'm talking about your operating margin after corporate expense. It seems based on your guidance that you are going to be coming in somewhere a little north of 13% this year, which is.

Speaker Change: Quite a bit below some of your bigger cap peers and I'm curious if you could share why you think this is the case and whether this level is in line with where you think your operating profitability is going to be over the long term.

Stuart Miller: And whether this level is in line with where you think your operating profitability is going to be over the long term, yeah, I guess we'll stop there. So I think you started by saying it sounds like we had a busy summer. In actual fact, the biggest part of the busy summer has been focused on the operations and efficiencies that we inject as we migrate our business to asset light. But more importantly, as we grow volume, using that volume to build efficiencies in the way that we execute and drive a net margin, an operating margin that starts to grow into where we're headed as an operating model.

Speaker Change: Yes, I guess it will stop them.

Speaker Change: So.

Speaker Change: I think you started by saying it sounds like we had a busy summer.

Speaker Change: In actual fact, the biggest part of the busy summer has been focused on.

Speaker Change: <unk> operations and efficiencies that we inject as we migrate our business to asset light, but more importantly, as we grow volume using that volume to build efficiencies in the way that we execute and and drive a net margin and operating margin.

That starts to grow into where we're headed as an operating model. So.

Stuart Miller: So I can't lay out the pathway to where we're going in specificity. But I think that we believe; I know that we believe that our operating margins are going to grow as we go forward. And as we settle into what becomes a normalized full body asset light approach, rather than the building of the approach, actually executing it will enable us to get more and more efficient. Okay. Well, great. We'll be waiting for that, but appreciate all the color in the meantime. Thanks, guys. Very good. Thanks.

Speaker Change: I can't lay out the pathway to where we're going.

Speaker Change: And specificity, but I think that we believe I know that we believe that our operating month.

Speaker Change: Margins are going to grow as we go forward and as we settle into what becomes a normalized full bodied asset light approach rather than the building of the approach actually executing it will enable us to get more and more efficient.

Speaker Change: Okay.

Speaker Change: Great, we'll be waiting for that but I appreciate all the color in the meantime, thanks guys.

Speaker Change: Good thanks.

Susan Maklari: Thank you. Our next question comes from Susan Maklari with Goldman Sachs. Your line is open. Yes, thank you, everyone. Thanks for taking the questions.

Speaker Change: Thank you. Our next question comes from Susan Mcclary with Goldman Sachs. Your line is open.

Yes. Thank you everyone. Thanks for taking the questions.

Susan Maklari: My question is, you know, Stuart, give in the commentary that you gave around the strategic shifts that's coming through, as well as John's comments on the operational improvement that you're focused on. Can you talk a bit about the upside to those inventory turns, which obviously moved really nicely this quarter already? And what that means for the cash generation of the businesses we think about the next year? Well, we've seen it. We've seen this kick-and over these past few years, and that is, as we improve our inventory turn, it just accelerates our cash flow and enables us to be far more efficient in the way that we run our business.

Susan Mcclary: Yes, Stuart given the commentary that you gave around the strategic shift that's coming through as well as John's comments on the operational improvement that you're focused on can you talk a bit about the upside to those inventory turns which obviously moved really nicely this quarter already and what that means for the cash generation of the business.

Stuart Miller: As we think about the next year.

Well, we've seen it we've seen this kick in over these past few years and that is as we improve our inventory turn it just.

Speaker Change: It just accelerates our cash flow and enables us to be far more efficient in the way that we run our business.

Stuart Miller: Now, creating these efficiencies and embedding them in 40 divisions across the country right now takes a little bit of time to get all of these things operating in consistent flow through all the divisions. But division by division, that's exactly what we're doing, focusing on that inventory turn. And we think over time it will trend significantly higher than it is right now. Part of the time that it takes to get there is that we've only affected about half of our delivery system at this point. And as we get more efficient with a full-body approach to an asset-light approach, we think that that inventory turn is going to continue to climb.

Stuart Miller: Wow.

Creating these efficiencies and embedding them in 40 divisions across the country right now.

A little bit of time to get all of these things operating in.

Stuart Miller: Consistent flow through all the divisions, but division by Division and that's exactly what we're doing is focusing on that inventory turn and we think over time it will trend significantly higher than it is right now part of part of the time that it takes to get there is that we've only affected about half of our.

<unk> system at this point and as we get more proficient with a full bodied approach to an asset light approach. We think that that inventory turn is going to continue to decline and I would just add just to think about it simplistically as we set the goal really is to have our cash flow generation equal our net earnings.

Stuart Miller: And so, I would just say just to think about it supistically, as we've said, the goal really is to have our cash flow generation equal our net earnings. And as you think about the usage of that cash, our net maturity ladder that definitely been reducing with our pay-downs and not refinancing, so that leads a fair amount of cash to the deployed back into shareholders. Yes, okay.

Stuart Miller: And as you think about the usage of that cash our debt maturity ladder.

Stuart Miller: <unk> been reducing with our paydowns and not refinance incidentally.

A fair amount of cash to be deployed.

Stuart Miller: Back into shareholders.

Stuart Miller: And building on that perhaps, you know, you did end the quarter; you had $4 billion of cash on the balance sheet. How are you thinking about the amount of cash that you need to hold going forward, giving the strategy that you'll be operating under, and the uses of that extra cash? So, as I've said in past calls, one of the big questions from many of our investors and analysts has been, you know, aren't you carrying a little bit more cash work, maybe even materially more cash than you need? And we've said that we are carrying that as we evolve our business program and think about exactly what the configuration of mill rows is going to look like.

Speaker Change: Yes, Okay and building on that perhaps you did in the quarter you had $4 billion of cash on the balance sheet. How are you thinking about the amount of cash that you need to hold going forward given the strategy that you will be operating under and the uses of that extra cash.

Speaker Change: So as I've said in past calls.

Speaker Change: One of the one of the big.

Speaker Change: Questions from many of our investors and analysts has been.

Speaker Change: Archie carrying a little bit more cash or.

Speaker Change: Maybe even materially more.

Speaker Change: More cash than you need and we've said that we are carrying that as we evolve our business program and think about exactly what the configuration of Millrose is going to look like.

Stuart Miller: I know it seems like we've been taking a lot of time on this. This is hard work, and harder than some might think getting this configuration right actually is. So, the cash that we're holding is what I would call safety stock relative to cash in terms of defining exactly what we're spinning off because it is a moving target, exactly what we're spinning off and what component of cash actually goes into mill rows as well. And that is a matter of strategy that we'll discuss further as we file our S11 in a public format in the near future and as we have further conversation.

Speaker Change: I know it seems like we've been taking a lot of time on this this is hard work and harder than some might think getty.

Speaker Change: Getting this configuration right actually is so the cash that we're holding is what I would call safety stock relative to cash in terms of defining exactly what we're spinning off because it is a moving target exactly what we are spinning off and what component of cash.

Speaker Change: <unk> actually goes into mill roads, as well and that is a matter of strategy that we will discuss further as we file our S 11 in a public format in the near future and as we have further conversation. So I just have to say, it's kind of trust me right now we're holding the <unk>.

Susan Maklari: So, I just have to say, it's kind of trust me right now; we're holding the cash right now as safety stock. It's not needed for the operations or the business, but it is needed for consideration as to how we move forward. Yeah, okay, I appreciate that color. Thank you, and good luck with everything. Okay, thank you. Thank you.

Speaker Change: Cash right now of safety stock.

Speaker Change: Not needed for the operations of the business, but it is easy for consideration as to how we move forward.

Speaker Change: Yeah, Okay I appreciate that color. Thank you and good luck with everything okay. Thank you.

Michael Rehaut: The next question comes from Michael Rehaut with JP Morgan. Your line is open. Good afternoon, Stuart. Right. This would show up.

Speaker Change: Thank you and our next question comes from Michael Rehaut with Jpmorgan. Your line is open.

Speaker Change: Okay.

Michael Rehaut: Good afternoon Stuart.

Alright this switchover.

Michael Rehaut: So, you know, wanted to delve in a little bit more on the land spin. I know, obviously, you remain a little limited on fully what you can say, but, you know, I think that there's a lot of devil in details here that will be interested in kind of to gauge. He talked about, you know, I think last quarter, 68 billion of land. I think, you know, the language this quarter was 68 billion of land and cash. I was hoping to get any kind of rough sense of how much of the cash portion of that, you know, the cash portion would represent also roughly, you know, the stock received in exchange.

Michael Rehaut: Sure.

Michael Rehaut: So.

Speaker Change: I wanted to delve in a little bit more on the land spend I know, obviously you remain a little limited on fully what you can say, but.

I think there's a lot of devil in the details here.

Speaker Change: Who will be interested in trying to gauge.

Speaker Change: He talked about.

Speaker Change: I think last quarter $6 8 billion of land I think you know the language. This quarter was $6 8 billion of land in cash.

Speaker Change: Was hoping to get any kind of rough sense of how much of the cash portion of that.

Speaker Change:

Speaker Change: The cash portion will represent also roughly.

Speaker Change: The stock received in exchange.

Michael Rehaut: You know, if there's any kind of again, you know, range or, you know, degree of magnitude that we should think about. And lastly, if it would affect your cost structure at all by spinning off all these assets.

Speaker Change: If theres any kind of again.

Speaker Change: Range or degree of magnitude that we should think about.

Speaker Change: And lastly, if it would affect your cost structure at all by spinning off all of these assets and I don't know if there's also any associated personnel that might result in a reduction of corporate G&A or your SG&A.

Stuart Miller: And I don't know if there's also any associated personnel that might result in a reduction of corporate DNA or your SGNA. Okay. So, let me start by saying that the words that we would spend $68 billion of land versus $68 billion of land and cash might have been a foot fault on my part. It really hasn't changed. The notion has not changed from quarter to quarter. It was always that there would be a cash component, you know, and exactly what that is, is, as I said, it's moving around. You know, remember that we're contributing to Milrose, a moving set of assets that are constantly coming in, some going out on a rotating basis.

Speaker Change: Okay.

Speaker Change: So let me start by saying that.

Speaker Change: The words.

Speaker Change: That we would spend $6 billion to $8 billion of land versus $6 million to $8 million of lending cash.

Speaker Change: Might've been a foot fault on my part.

Speaker Change: It really hasnt changed the notion has not changed from quarter to quarter.

It was always that there would be a cash component.

Speaker Change: And exactly what that is is as I said, it's moving around.

Remember that we're contributing to Millrose, a moving set of assets that are constantly some coming in some going out on a rotating basis and thats, where until we kind of get to the end, we wont know exactly what the numbers are.

Stuart Miller: And that's where, you know, until we kind of get to the end, we won't know exactly what the numbers are. There's also a strategic component of how we're configuring Milrose. But again, that falls into the category of what I can't talk about.

Speaker Change: There is also a strategic component of how we're configuring mill road, but again that falls into the category of what I can't talk about you might have noticed that our discussion has been almost exclusively on impacts to lenore rather than.

Stuart Miller: So, you might have noticed that our discussion has been almost exclusively on impacts to Lanar rather than too much information on the configuration of Milrose. But I can't quite go there yet, but this is going to come to market pretty soon. So, I just would say, you know, be patient on that. And I think that a lot of the rest of your questions falls into that category as well. There will be very limited personnel movement relative to Milrose. So, the impact to Lanar on SG&A will only be in the context of efficiencies in how we run our business, not in terms of personnel migrating outside of the Lanar environment.

Too much information on the configuration of Melrose, but can't quite go there yet, but this is going to come to market pretty soon.

Speaker Change: I would say.

Speaker Change: Be patient on that and I think that a lot.

Speaker Change: A lot of the rest of your question falls into that category as well there will be very limited.

Personnel movement.

Speaker Change: Relative to Melrose, so the impact of <unk> on SG&A.

Speaker Change: We will only be in the context of efficiencies and how we run our business not in terms of.

Speaker Change: Personnel migrating outside of the limit of our environment and Mike just one clarification it sounded like there might be a little confusion.

Stuart Miller: And my just one clarification that sounded like there might be a little confusion: as we contribute our assets to Milrose, that will be in exchange for Milrose stock. But Lanar will not be holding that Milrose stock. That will be stock dividend that is distributed to our show. Golders. So, it sounds like it might have been a little confusion on that; just wanted to clarify.

Speaker Change: As we contribute our assets to new roles that will be an exchange for mill rolls stock, but we're not and will not be holding that stock that will be stock dividend that is distributed to our shareholders.

Mike: It sounded like it might be a little confusion on that just wanted to clarify.

Michael Rehaut: Okay, no, that's very helpful. I appreciate that.

Speaker Change: Okay.

Speaker Change: That's very helpful. I appreciate that.

Michael Rehaut: You know, secondly, again, it just wasn't fully, I guess, you know, kind of appreciate maybe the answer earlier on the joke gross margin question around, you know, last quarter, you know, kind of the, the arrows were pointing close to the 25% or so. Now you're looking at closer to a 22 and a half percent, and just wanted to better appreciate again, kind of what's changed in the last 90 days and kind of alluded to a couple of different factors. I don't want to put words in your mouth, but, you know, seemingly a pretty different, you know, degree of magnitude shift here.

Speaker Change: Okay.

Speaker Change: Secondly.

Speaker Change: Again, it just wasn't fully I guess.

Speaker Change: Kind of appreciate maybe the answer earlier on the gross margin question around.

Speaker Change: Last quarter, you know kind of the the arrows pointing closer to 25% or so now youre looking at closer to a 22, 5% and just wanted to better appreciate again kind of what's changed in the last 90 days and you kind of alluded to a couple of different factors I don't want to put words.

Speaker Change: In your mouth, but.

Speaker Change: Seemingly a pretty different.

Speaker Change:

Speaker Change: <unk> magnitude shift here and this is also something that is.

Stuart Miller: And if this is also something that, you know, is even more temporary, given some of the factors, perhaps around the middle rows relative to, you know, kind of initially, at least how we should think about fiscal 25 on the ongoing business. Yeah, I think, I think, as I said, all of this kind of melts into one kind of articulation, and that is, you know, our margin story derives from number one, interest rates staying higher for a little bit longer through this quarter, consumer confidence, kind of waning. We've heard this in a lot of conference calls.

Speaker Change: It would be more temporary given some of the factors, perhaps around millrose relative to you know.

Speaker Change: Initially at least how we should think about fiscal 'twenty five on the ongoing business.

Speaker Change: Yes, I think I think as I've said all of this kind of melts into one.

Speaker Change: One kind of.

Speaker Change: Articulation and that is.

Our margin story derived from number one interest rates staying higher for a little bit longer through this quarter.

Speaker Change: Consumer confidence kind of waning we've heard this in a lot of conference calls.

Stuart Miller: You know, even as interest rates have come down, the consumer's been a little sticky in terms of, you know, they're jumping back into the housing market. And the changes in community count driving at a time when, you know, demand has been limited by affordability, and then pushing volume by increasing absorption rates within communities has kind of pushed on margin. And we said clearly in our last earnings call that, look, we're going to focus on volume, generating a consistent volume and growth trajectory. And we are going to use our margin as that shock absorber, and the confluence of these pieces together with the spin-off and the asset-light approach that we've taken has reflected exactly that way.

Speaker Change: Even as interest rates have come down the consumer has been a little sticky in terms of.

Speaker Change: <unk>.

Speaker Change: There.

Jumping back into the housing market.

And.

Speaker Change: The changes in community count driving at a time when.

Speaker Change: Demand has been limited by affordability and then pushing.

Speaker Change: Volume.

Speaker Change: By increasing absorption rates within communities.

Speaker Change: Has kind of pushed our margin and we said clearly in our last earnings call that low.

Speaker Change: We're going to focus on volume generating a consistent volume and growth trajectory.

Speaker Change: And we are going to use our margin as that stock shock absorber and the confluence of these pieces together with the spin off and the.

Speaker Change: The.

Speaker Change: Asset light approach that we've taken has reflected exactly that way and we've been a reference about.

Michael Rehaut: And we've been irreverent about using our margin to make sure that we're maintaining the volume and projecting to where we think the long-term benefit is for the company. Okay. Appreciate it. Thank you.

Speaker Change: Using our margin to make sure that we're maintaining the volume and trajectory to where we think the long term benefit is for the company.

Speaker Change: Okay I appreciate it thank you.

Speaker Change: Okay you bet.

John Lovallo: Now, the next question comes from Trevor Allenson with Wolf Research. Your line is open. Thank you for taking my question. Want to follow up on SGNA. You had really good SG&A control in the quarter. It sounds like some of your internal efficiencies are driving tangible results. You called out the technology benefits. You also mentioned your press release lower broker costs driving the SGNA. The NAR settlement just went into effect not long ago.

Speaker Change: Thank you and our next question comes from Trevor Allinson with Wolfe Research. Your line is open.

Trevor Allinson: Good morning, good afternoon, and thank you for taking my questions.

Trevor Allinson: Wanted to follow up on SG&A, you had really good SG&A control in the quarter. It sounds like some of your internal efficiency.

Speaker Change #100: Our driving tangible results you called out the technology benefits. You also mentioned in your press release lower broker costs driving SG&A. The NAR settlement just went into effect not long ago. So just hoping you could talk about maybe some of the changes youre, making with brokers if any whether that's moving more to a flat fee adjusting the rate you're paying any net impact.

John Lovallo: So hoping you could talk about maybe some of the changes you're making with brokers, if any, you know, whether that's moving more to flat fee, adjusting the rate you're paying, any net impacts from those and then perhaps maybe your views more generally on broker. Research. Yeah, a number of people have asked this about our strategy relative to Realtors. I put this under the heading of Building a Healthier Housing Market. Our focus has been on trying to take out as many unnecessary costs from the housing transaction in order to build affordability for our customers. Realtors, we have great respect for the Realtors that bring us business, and we cooperate and work with Realtors. But at the same time, we've been focused on bringing down that Realtor cost where it is not necessary because, conceptually, it just adds to the cost of the home.

Speaker Change #101: From those and then perhaps maybe your views more generally on brokerage usage.

Speaker Change #102: Yes, the number of people have asked us about our strategy relative to realtors.

Speaker Change #103: I put this under the heading of building a healthier housing market. Our focus has been on trying to take out as many unnecessary costs.

Speaker Change #103: From the housing transaction in order to.

Speaker Change #103: <unk> affordability for our customers.

Speaker Change #104: Realtor is we have a great respect for the realtors that bring us business.

Speaker Change #104: We cooperate and work with realtors, but at the same time, we've been focused on bringing down that realtor costs.

Speaker Change #105: It is not necessary.

Conceptually it just adds to the cost of the home and to the extent that we can repurpose that we're real to really isn't involved.

Stuart Miller: And to the extent that we can repurpose that, where Realtor really isn't involved to bring down the cost of the home for customers, we think we're building a better housing market. If you look at our production, our volume, we are able, with a more robust marketing program, digital marketing program, we are able to maintain our volume and accommodate a lower price home for our customers. So, we've been working with Realtors to come up with plans that actually work for their clients, where they are engaged, and at the same time trying to maintain and bring down the cost of the home for the customer.

Speaker Change #105: To bring down the cost of the home for customers. We think we're building a better housing market.

Speaker Change #105: If you look at our production our volume.

Speaker Change #105: Are we are able with a more robust marketing program digital marketing program.

Speaker Change #105: We're able to maintain our volume.

And accommodate a lower priced home for our customer.

Speaker Change #106: So we've been working with realtors to come up with plans that actually work for their clients where.

Speaker Change #105: Where they are engaged.

And at the same time trying to maintain and bring down the cost of the home for the customer.

Stuart Miller: Okay, makes a lot of sense. And then, given where we are in the election cycle, housing clearly got a lot of attention politically recently. Stuart, I think you alluded to some of the proposals on the supply side, but there's also a proposal for buyers in terms of down payment assistance. And I'm hoping to just get your thoughts on the down assistance proposal. Are you still seeing down payments as a key headwind of homeownership, or is it primarily DTIs? And then, you know, what are your views on potential demand impacts if that were to eventually go into place.

Speaker Change #107: Okay that makes a lot of sense and then just.

Given where we are in the election cycle housing has clearly gotten a lot of attention politically recently Stuart I think you alluded to some of the proposals on the supply side, but Theres also a proposal for buyers in terms of down payment assistance.

Speaker Change #108: And just get your thoughts on the down the system.

Hosel: Hosel are you still seeing down payments as the key headwind to homeownership or is it primarily <unk> and then what are your views on potential demand impact if that were to eventually go into place.

Stuart Miller: Thanks. You know, great question. You know, inflation has been a difficult component in enabling our customer base to accumulate a down payment, and there's no question that the down payment is a hurdle and has been and continues to be a hurdle for our customers looking to acquire specifically at first home, whether it's attainable housing or affordable housing. The down payment is definitely a hurdle. I think that there are a lot of thoughts and programs out there. We'll see where they shake out. I think there's a tightrope that has to be walked. Number one, we've got to remember back to the Great Recession.

Yes, great question.

Inflation has been a.

Difficult component in enabling.

Hosel: Our customer base to accumulate a down payment.

Hosel: And there is no question that the down payment is a hurdle.

And has been and continues to be a hurdle for.

Hosel: For customers looking to acquire specifically at first home.

Hosel: Whether it's.

Hosel: Whether it's attainable housing affordable housing the downpayment is definitely a hurdle.

Speaker Change #110: I think that the there are a lot of thoughts.

Programs out there, we will see where they shake out I think theres a tight rope of it has to be work number one we've got to remember back to the great recession, we certainly don't want to get to that low down payment.

Stuart Miller: We certainly don't want to get to that no down payment kind of programming. It might feel good for a short period of time, but we want a durable housing market. I think we also have to think about inflationary pressures; the balance between additional supply and additional demand is something that's going to have to be walked through. What has me most invigorated is the fact that what we've been hearing from mayors and governors and talking to mayors and governors for a very long time is now starting to reflect in the national narrative. And the fact that the nuanced programs are not perfected yet, but the discussion is starting to activate thinking as to how do we get better and build a healthier housing market is going to in order to the benefit of our housing goods.

Speaker Change #111: Kind of programming.

Speaker Change #111: Might feel good for a short period of time, but we want a durable housing market I.

Speaker Change #112: I think we also have to think about inflationary pressures. So the balance between additional supply and additional demand is something that's going to atrophy walk through what has me. Most invigorated is the fact that what we've been hearing from mayors and governors and talking to mayors and governors for very long time.

Speaker Change #113: It is now starting to reflect in the national narrative and the fact that the nuanced programs are not perfected yet, but the discussion is starting to activate thinking as to how do we get better and build a healthier housing market is going to inure to the benefit of our housing business.

Stuart Miller: with us. All right, thank you. Appreciate your views.

Speaker Change #114: Alright. Thank you I appreciate your views good luck moving forward.

Unknown Executive: Good luck, me in forward.

John Lovallo: Okay, and why don't we take one more question? Okay, and our last question comes from John Lovallo.

Speaker Change #114: Okay, and why don't we take one more question.

Speaker Change #115: Okay and our last question comes from John Lovallo with UBS. Your line is open.

John Lovallo: Would you be as your line is open? Hey guys, thanks for fitting me in here. I wanted to actually dovetail off of Trevor's question to start. You know, SGNA is the percentage of sales was 70 basis points below the midpoint of your outlook. You know, on a slight revenue beat versus your expectations, you talked about pulling back on brokers, but was that pullback on brokers incremental? Is that what the driver was? And, you know, the lack of, you know, broker use for, I guess, one way to say it is that, you know, the lack of broker use relative to some of your competitors.

John Lovallo: Hey, guys. Thanks for fitting me in here I wanted to actually dovetail off of truckers question to start.

John Lovallo: SG&A as a percentage of sales was 70 basis points below the midpoint of your outlook.

On a slight revenue beat versus your expectations, you talked about pulling back on brokers, but was that pullback on brokers incremental is that was what the driver was and the lack of <unk>.

Speaker Change #117: Broker use for I guess, one way to say it is.

The lack of broker use relative to some of your competitors does that mean that few.

John Lovallo: Is that mean that, you know, fewer folks are coming through your communities and because of that, you need more incentives to, you know, to drive that volume that you're looking to keep? Are you taking costs at a one bucket and putting it into other, is the simple way of putting it?

Speaker Change #118: Your folks who come into your communities.

Speaker Change #118: Or that you need more incentives.

Speaker Change #120: To drive that volume that you are looking to keep taking costs out of one bucket and put it as with others is the simple way of putting it.

Stuart Miller: So good question, and one that we think about a lot. It's, you know, it is counterintuitive to us that, you know, first of all, we have not seen a reduction in our traffic. And what we're doing is not something that's new. This is basically a program that we've had in place for a very long time. No, if it's to what we call the machine, the digital marketing program. And the way that we're executing our marketing and sales program. So, our realtor costs have been migrating downward. It has not been a reduction in traffic or people coming through our offices, counterintuitive to us that by adding a cost, we would also be adding a pricing power.

Speaker Change #121: So good question.

Speaker Change #121: And one that we think about a lot.

Speaker Change #122: It is counterintuitive to us.

Speaker Change #121: That.

Speaker Change #121: <unk>.

Speaker Change #123: First of all we have not seen a reduction in our traffic and what we're doing is not something thats. New this is basically a program that we've had in place.

Speaker Change #123: For a very long time relative to what we call the machine the digital marketing programming and the way that we're executing our marketing and sales program.

So our realtor costs have been migrating downward.

Speaker Change #123: Has not been a reduction in traffic or people coming through our offices.

Speaker Change #124: It's counterintuitive to us that by adding a cost we would also be adding a <unk>.

Speaker Change #124: Pricing power.

Stuart Miller: And it's probably just not the way that we think about building a healthier housing market. To the extent that a realtor is actively involved in becoming a procuring cause and finding a customer and bringing them to us, we want to pay appropriately and participate with the realtor community. On the other hand, there's an awful lot of realtor engagement that is kind of ancillary at the active engagement. We try to bleed that out of the system because we are trying to reduce costs. Are we taking it from a more active realtor engagement and putting it into incentives?

Speaker Change #124: And it's probably just not the way that we think about building a healthier housing market to the extent that a realtor is actively involved in becoming a procuring cause and in finding a customer and bringing them to us.

Speaker Change #124: We want to pay appropriately and participate with the realtor community on the other hand, there is an awful lot of realtor engagement that is kind of ancillary to the active engagement. We've tried to bleed that out of the system because we are trying to reduce cost.

Speaker Change #126: Are we taking it from.

Eight more.

Speaker Change #126: Active realtor engagement and putting it into incentives.

Stuart Miller: I guess I'd like to say that I think I hope the answer is kind of yes, but I don't think it's greater incentives outside relative to the realtor cost that we're saving. And I'd like to think that if we're taking a cost out, we're actually able to sell it at a lower price and still produce a better margin. So we're still working with that.

Speaker Change #127: I guess I'd like to say that I think I hope the answer is kind of yes, but I don't.

Speaker Change #127: I don't think its.

Speaker Change #127: It's greater incentives outsized relative to the realtor costs that we're saving.

Speaker Change #127: And.

Speaker Change #127: I'd like to think that if we're taking cost out we're actually able to sell at a lower price and still produce a better margin.

Speaker Change #127: So we're still working with that it's a tough balance it's a complicated balance and it's something that we focus on.

Stuart Miller: It's a tough balance; it's a complicated balance, and it's something that we focus on, frankly, every day. And most definitely, John and I go out to our operations reviews. It's something that we're very close to and watch regularly. Okay, that's helpful color.

Speaker Change #127: Frankly every day and most definitely as John and I go out to our operations reviews, it's something that we're very close to them watch regularly.

Speaker Change #129: Okay. That's helpful color and then the last one is.

John Lovallo: And then the last one is, you know, REITs have to distribute the vast majority of their income to shareholders. Some curious sort of what the pros and cons of a REIT structure for the spin would be. And the reason I ask is, you know, why don't private landbank structure themselves like REITs? I mean, is this going to limit the ability to grow, you know, with Lennar, if it has to distribute the earnings? Well, as I noted, we've had to focus our discussion on around Milrose as it relates to the impacts on Lennar rather than the explicit discussion of how the Milrose structure will actually work.

Speaker Change #130: As you mentioned re tap to distribute the vast majority of their income to shareholders. So I'm curious sort of what the pros and cons of a REIT structure for the spin would be and the reason I ask is why don't private land based structure of themselves like Reits I mean, it's just going to limit the ability to grow with <unk> and Vanessa distribute the earnings.

Speaker Change #129: Well.

Speaker Change #131: As I noted.

Speaker Change #131: We've had to focus our discussion.

Speaker Change #131: Around Melrose.

Speaker Change #132: As it relates to the impacts on lenore rather than be explicit.

Speaker Change #132: The discussion of how.

Speaker Change #132: The mill road structure will actually work, we're going to have to wait on that one for the filing of the S 11.

Stuart Miller: We're going to have to wait on that one for the filing of the S-11. I think it is a unique structure. And, you know, every good book is worth waiting till the next chapter.

Speaker Change #132: I think it is a unique structure.

Speaker Change #132: And every good book is worth waiting until the next chapter so you're just going to have to wait for the next chapter and I. Appreciate the question.

Unknown Executive: So you're just going to have to wait for the next chapter, and I appreciate the question. All right, thank you guys. Good luck. Okay, thanks very much. And as always, we appreciate everyone's attention. Thanks for joining our earnings call. And we look forward to continuing to describe detail our progress as we move forward. We'll see you at the end of the year. Thank you.

Speaker Change #133: Alright. Thank you guys. Good luck.

Speaker Change #133: Thanks, very much and as always we appreciate everyone's attention. Thanks for joining our earnings call and we look forward to continuing to describe detail our progress as we move forward, we will see at the end of the year.

Speaker Change #133: Okay.

Speaker Change #133: Okay.

Unknown Executive: That concludes today's conference. You may all disconnect at this time.

Speaker Change #134: Thank you and that concludes today's conference you may all disconnect at this time.

Speaker Change #134: Yes.