Q3 2024 Landsea Homes Corp Earnings Call
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Operator: Please stand by, your program is about to begin. If you need assistance on today's program, please press star zero.
Speaker Change: Please standby your program is about to begin do you need assistance on todays program. Please press star zero.
Drew Mackintosh: Good day everyone, and welcome to the Landsea Homes Corporation 3rd Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing Star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing Star 2. Please note, this call may be recorded. I'll be standing by if you should need any.
Speaker Change: Good day, everyone and welcome to the land Sea homes Corporation third quarter 2024 earnings call.
Speaker Change: At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session. You may registered to ask a question at any time by pressing star one on your telephone keypad.
Withdrawing yourself from the queue by pressing star two. Please note. This call may be recorded I'll be standing by if you should need any assistance. It is now my pleasure to turn the program over to drew Mackintosh.
Drew Mackintosh: It is now my pleasure to turn the program over to Drew Mackintosh. Good morning, and welcome to Landsea Homes' third quarter of 2024 earnings call. Before the call begins, I would like to note that this call will include forward-looking statements within the meaning of the federal securities laws. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. These risks and uncertainties include, but are not limited to, the risk factors described by Landsea Homes in its filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements.
Drew Mackintosh: Good morning, and welcome to lengthy homes third quarter of 2024 earnings call or the call began I'd like to note that this call will include forward looking statements within the meaning of the federal Securities laws.
Ladies b homes caution that forward looking statements are subject to numerous assumptions risks and uncertainties, which change over time. These risks and uncertainties include but are not limited to the risk factors described by Lindsay homes in its filings with Securities and Exchange Commission.
Not undertake any obligation to update forward looking statements.
Drew Mackintosh: Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Landsea Homes' website and in its SEC filings.
Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Lindsay homes website SEC filings.
Drew Mackintosh: Hosting the call today are John Ho, Landsea's Chief Executive Officer, Mike Forsum, President and Chief Operating Officer, and Chris Porter, Chief Financial Officer.
Speaker Change: Hosting the call today are John Lindsay.
Speaker Change: <unk>, Chief Executive Officer, Mike Olson, President and Chief Operating Officer, Chris Boerner, Chief Financial Officer, with that I'd like to turn the call over to John.
John Ho: With that, I'd like to turn the call over to John. Good morning. Thank you for joining us today as we go over our results for the third quarter of 2024 to provide an update on our operations. Landsea Homes reported a 29% increase in net income, $11.1 million, a 36% increase in earnings per share, 30 cents in the third quarter. Home sales revenue rose 26% year-over-year on a 40% increase in delivery. Net new orders grew 29% with sales pace 2.5 homes per community per month. Home sales gross margin came in at 17.1%, well in excess of our guidance.
John: Good morning, Thank you for joining us today as we go over our results for the third quarter 2024.
John: An update on our operations.
John: Nancy House reported a 29% increase in net income.
$7 1 million.
John: 36% increase earnings per share 30.
John: In the third quarter.
John: Home sales revenue rose, 26% year over year, and a 40% increase in deliveries.
John: Our net new orders grew 29% the sales pace.
John: <unk> homes per community per month.
Home sales gross margin came in at 17, 1%.
John: Well in excess of our guidance.
John Ho: and SG&A as a percent of revenue grew to 13.9 percent, representing a 250 basis point reduction for last year.
John: And SG&A as a percent of revenue grew to $13, 9%, representing a 250 basis point reduction over last year.
John Ho: Overall, it was a very productive quarter for our company, and I'm pleased with the progress we made on a number of fronts. We continue to see a long-run way of growth for Landsea in our existing market. which represent some of the best home building markets in the country. Florida, Texas, Colorado, Arizona, and California are great places to live with vibrant economies. We believe the need for new housing in these states exists for years to come. We entered most of these markets via acquisitions, which allowed us to establish a presence more rapidly than if we expanded organically.
Overall, it was a very productive quarter for our company I'm pleased with the progress we made on a number of fronts.
John: We continue to see a long runway of growth for <unk> in our existing markets.
John: Which represent some of the best homebuilding markets in the country.
John: Florida, Texas, Colorado, Arizona, and California are great places to live vibrant economies, we believe the need for new housing any states for.
For years to come.
We entered most of these markets via acquisition.
John: It allowed us to establish a presence more rapidly and if we expanded organically.
John Ho: Difficult task of integrating these acquisitions, largely behind us, we are now focused on growing our presence beyond what it is today. We've been reaping the benefits of increased scale. 250 basis point year-over-year improvement in our SG&A ratio this quarter, tangible evidence of this strategy working. We also see it playing out in the form of better rebates and terms for our suppliers and trade partners. We will continue to focus on these benefits of scale we execute on our growth strategy. New home demand trends in the third quarter were solid as we experienced consistent traffic to our communities throughout the quarter.
John: Difficult task of integrating these acquisitions largely behind US we are now focused on growing our presence beyond what it is today.
Reaping the benefits of increased scale.
John: 250 basis point year over year improvement in our SG&A ratio this quarter.
John: Evidence strategy Marquis.
John: We also see it playing out in the form of better rebates.
John: Our suppliers.
John: We will continue to focus on these benefits of scale, we execute on our growth strategy.
John: New home demand trends in the third quarter were solid.
John: We experienced consistent traffic to our communities throughout the quarter.
John Ho: Buyers continue to respond to financing incentives as a way to offset higher mortgage rates. This selling tool remains a key advantage at the new home market as over the existing home market. Another advantage that Landsea has over the existing home market, other home builders, differentiation that we offer for a high-performance home. which feature the latest in new home automation and energy efficiency. Purchasing a home is likely the biggest investment a family will ever make. We believe that most buyers are willing to pay a little extra to live in a home that is equipped with features and amenities that will enhance their quality of life.
John: Buyers continue to respond to financing incentives the way to offset higher mortgage rates.
John: This selling tool remains a key advantage at the new home market is over the existing home market.
John: Another advantage, then lastly half of that existing home market other homebuilders.
Speaker Change: <unk> that we offer for high performance foams.
John: Feature the latest new home automation and energy efficiency.
John: Purchasing a home it's likely the biggest investment family will ever make we believe that most buyers are willing to pay a little extra live in a home that is equipped with features and amenities that will enhance their quality of life.
John Ho: When you visit a Landsea Homes community, the difference is clear. We know that making a strong impression at the point of sale is key to driving sales.
When you visit Alaska Holmes community.
John: It is clear, we know that making a strong impression at the point of sale.
John: Key to driving sales.
John Ho: From a macro perspective, we believe the outlook for our business continues to be favorable. The Fed has charted a path to lower interest rates, while the economy appears to be headed towards a soft landing. Inflation coming down and the economy showing signs of resilience. There appears to be real interest in reducing the barriers to new home construction from both parties in an effort to solve the housing affordability crisis that persists in most markets. Existing home inventory has increased in some markets but remains well below historical levels on an absolute basis. which is driving a higher percentage of buyers to the new home market.
John: From a macro perspective, we believe the outlook for our business continues to be favorable.
John: The fed has chartered a path to lower interest rates, while the economy appears to be headed towards a soft landing.
John: Inflation coming down the economy showing signs of resiliency.
There appears to be real interest in reducing the barriers to new home construction and both parties in an effort to solve the housing affordability crisis persists those markets.
Existing home inventory has increased in some markets remains well below historical levels on an absolute basis.
John: Just driving a higher percentage of buyers for the new home market.
John Ho: All those factors point to a brighter future for our industry. While we intend to take advantage of these favorable dynamics, we will do so within a framework of a conservative balance sheet. We made further progress toward our goal of getting our debt-to-cap ratio into the mid-40% range, reducing our leverage by another 100 basis points this quarter compared to the end of the second quarter. We expect to achieve our mid 40% target by the end of the first quarter of 2025. who put us in a great position to operate from a position of strength, financial strength.
John: All of those factors point to a brighter future for our industry.
John: While we intend to take advantage of these favorable dynamics, we will do so within the framework of our conservative balance sheet.
John: We made further progress toward our goal of getting our debt to cap ratio.
John: 30% range.
John: Reducing our leverage by another 100 basis points this quarter.
John: And just a second.
John: We expect to achieve by mid 40% target by the end of the first quarter of 2025.
John: So put us in a great position to offer great from a position of strength financial strength.
John Ho: As we turn our attention to the fourth quarter, prepare for next year's Spring Selle Season. I feel good about what lies ahead for our country. We have a strong backlog in place and enough in-process inventory to hit our delivery goals for the year. Our communities are well positioned throughout our markets. Our high-performance homes continue to perform well versus the competition. We are on track to meet our balance sheet goals by the first part of next year. We should continue to see the benefits of our increased scale in the form of better expense leverage. As a result, I believe Landsea Homes is on the path to greater success in the future.
John: As we turn our attention to the fourth quarter are for next year spring selling season.
John: I feel good about what lies ahead for our company.
John: We have a strong backlog in place enough in process inventory to hit our delivery costs for the year.
John: Communities are well positioned throughout our markets our high performance homes continued to perform well versus the competition.
We are on track to meet our balance sheet goals.
John: As part of next year, we should continue to see the benefits of our increased scale the form of better expense leverage.
John: As a result, I believe lansky homes on the path to greater success in the future.
Mike Forsum: Now I'd like to turn the call over to Mike who will provide more color on our operational performance this quarter. Thanks, John, and good morning to everyone. Selling conditions in the third quarter were solid as we were able to maintain consistent level of sales through the use of incentives, including mortgage rates by now. We did experience a bit of hesitation from buyers during the quarter, either because of mortgage rate volatility or economy and political uncertainty, but our sales team did an excellent job putting these fears at ease and working with buyers to make purchase decisions and absorptions rates in line with 3Q last year.
John: Now I'd like to turn the call over to Mike who will provide more color on our operational performance this quarter.
Mike: Thanks, Sean and good morning to everyone.
Mike: Conditions in the third quarter were solid as we were able to maintain consistent level of sales through the use of incentives, including mortgage rates by now.
Mike: We did experience a bit of hesitation from buyers during the quarter, either because of mortgage rate volatility or economy, and politically and political uncertainty, but our sales team did an excellent job.
Mike: These fears at ease and working with buyers to make purchase decisions and absorptions right in line with <unk> last year.
Mike Forsum: Florida continues to be a great market for us, and we have seen no evidence of a meaningful drop-off in buyer interest despite the recent storms and higher existing home inventory levels. In fact, with similar volume of orders, our ASPs were up 7% 3Q last year. We experienced no major setbacks to our operations as a result of the storms in that region and, more importantly, no reported injuries to our team members there. Competition among homebuilders in Central Florida region remained fierce, which is to be expected in such an attractive home building market. But we feel we have a distinct advantage with our high-performance homes and well-located communities to go head-to-head with anyone.
Mike: Florida continues to be a great market for us and we have seen no evidence of a meaningful drop off in buyer interest. Despite the recent storms and higher existing home inventory levels.
John: In fact with similar volume orders, our Asps were up 7% <unk> last year.
John: We experienced no major setbacks to our operations as a result of the storms in that region and more importantly, no reported injuries to our team members there.
John: Competition, among homebuilders and Central Florida region remained fierce which is to be expected in such an attractive homebuilding market, but we feel we have a distinct advantage with our high performance foams and well located communities to go head to head with anyone.
Mike Forsum: The same is true of Texas, where we took another step forward in further establishing our presence in the Austin and Dallas Fort Worth market. We are currently selling out of three communities in Austin and 18 in Dallas-Fort Worth and look to grow those numbers in the coming years. The heavy lifting associated with integrating our recent acquisition of Entaris Homes in Dallas onto the Landsea Homes platform is already behind us. And we are excited about the opportunities that lie ahead as a result of this acquisition. Our operations in Colorado, Arizona, and California all performed well in the third quarter and demonstrate the positive benefits of geographic diversification.
John: The same is true of Texas, where we took another step forward in further establishing our presence in the Austin and Dallas Fort worth markets.
John: We are currently selling out of three communities in Austin and 18 in Dallas Fort worth and look to grow those numbers in the coming years.
John: The heavy lifting associated with integrating our recent acquisition of.
John: <unk> homes in Dallas.
John: To the Lansing Holmes platform is already behind us.
John: And we are excited about the opportunities that lie ahead as a result of this acquisition.
John: Our operations in Colorado, Arizona, and California, all performed well in the third quarter and demonstrate the positive benefits of geographic diversification.
Mike Forsum: We have carved out a solid niche for our company in each of these markets by offering affordable homes with an emphasis on energy efficiency, smart home technologies, and quality construction. We ended the quarter with 83 selling communities, up 40% from the third quarter last year. As stated already, Texas added 21 communities to our count this quarter compared to third quarter last year. Build conditions continue to be favorable as we now are back to pre-COVID construction cycle times in most markets and in some instances we've been able to improve on those times. For instance, we reduced cycle times for our typical single family detached home by 25 calendar days, just from last quarter alone, equating to a 13.4% decrease in construction time.
John: We have carved out a solid niche for our company in each of these markets by offering affordable homes with an emphasis on energy efficiency smart home technologies and quality construction.
John: We ended the quarter with 83 selling communities up 40% from the third quarter last year.
John: As stated already Texas added 21 communities to our account this quarter compared to third quarter last year.
John: Bill conditions continued to be favorable as we now are back to pre COVID-19 construction cycle times in most markets and in some instances, we've been able to improve on those times.
John: For instance, we reduce cycle times for our typical single family detached com by 'twenty five calendar days from last quarter alone equating to a 13, 4% decrease in construction time.
Mike Forsum: We've also experienced better responsiveness from municipalities when it comes to permitting and approvals, which has helped further expedite building process from permit application to start of Homes Foundation. These impressive improvements and cycle time reductions are timely as we have started to see a modest shift in consumer preferences back to dirt sales as opposed to spec homes, as some buyers have become more comfortable with the lead times associated with build-to-order homes. While this may reduce backlog turnover rates we achieved in recent quarters, we feel it is a more risk averse and higher margin way of doing business.
John: We've also experienced better responsiveness from municipalities when it comes to permitting and approvals, which has helped further expedite building process from permit application to start of homes Foundation.
John: These impressive improvements in cycle time reductions are timely as we have started to see a modest shift in consumer preference is back to dirt sales as opposed to spec homes as some.
John: Buyers have become more comfortable with the lead times associated with build to order homes.
John: While this may reduce backlog backlog turnover rates, we achieved in recent quarters. We feel it is a more risk averse and higher margin way of doing business.
Mike Forsum: Having our buyers more invested in the early process of their home build is essential in fostering deeper customer relationships and an overall brand building. Regardless, we still plan on having plenty of move in ready homes at our communities for those that want a quicker close, as we believe this product offering will be necessary to compete against quick close resale and other competitors spec inventory.
John: Having our buyers more invested in the early process of their homebuilding is essential in fostering deeper customer relationships and an overall brand building.
John: Regardless, we still plan on having plenty of move in ready homes at our communities for those that want a quicker close as we believe this product offering will be necessary to compete against quick closed resale and other competitors spec inventory.
Mike Forsum: As John mentioned, we are really starting to see the benefits of our increased size and scale. As an example, we have lowered direct housing costs over the last couple of years, and as a result, we have been able to drive down overall building costs throughout all of our divisions. On average, our building costs are down three to five percent year over year, and we look to continue to improve upon that metric in quarters to come. As well, we have plenty of room for growth in each of our markets, and we strongly believe we have the right product, people, and strategy in place to increase our market share.
Speaker Change: As John mentioned, we are really starting to see the benefits of our increased size and scale. As an example, we have lower direct housing costs over the last couple of years and as a result, we've been able to drive down overall building cost throughout all of our divisions.
John: On average our building costs are down 3% to 5% year over year, and we look to continue to improve upon that metric in quarters to come.
John: As well, we have plenty of room for growth in each of our markets and we strongly believe we have the right product people and strategy in place to increase our market share.
Mike Forsum: Overall, I feel good about how we have executed in the quarter and how our company is positioned as we head into the end of the year. Market conditions remain generally favorable and our home offerings continue to sell well versus competition by way of our clear value proposition. At the same time, our team continues to drive improvements in operating efficiencies, construction costs, and cycle times, while looking to lowering selling costs when possible, which will continue to add to our overall positive results in the quarters to come.
John: Overall I feel good about how we've executed in the quarter and how our company is positioned as we head into the end of the year.
John: Market conditions remain generally favorable in our home offerings continue to sell well versus competition by way of our clear value proposition.
John: At the same time, our team continues to drive improvements in operating efficiencies construction costs and cycle times, while looking to lowering selling costs when possible, which will continue to add to our overall positive results in the quarters to come.
Chris Porter: With that, I'd like to turn the call over to Chris, who will provide more detail on our financial results this quarter and give an update on our forward-looking guidance. Thank you, Mike. As John noted, Landsea Homes reported net income of $11.1 million. for $0.30 per share for the third quarter compared to $8.6 million or $0.22 per share in the third quarter of 2023. We reported fully adjusted net income of $15.9 million and adjusted earnings per share of 44 cents, which were up 36% and 47% respectively from third quarter of last year. Our fully adjusted net income includes $5.6 million of purchase price accounting booked in the quarter.
John: With that I'd like to turn the call over to Chris who will provide more detail on our financial results this quarter and give an update on our forward looking guidance.
Chris: Thank you Mike.
Chris: John noted Lantzy home's reported net income of $11 1 million.
Chris: <unk> 30 per share for the third quarter compared to $8 6 million or 22 per share in the third quarter of 2003.
John: We reported fully adjusted net income of $15 $9 million and adjusted earnings per share of <unk> 44.
John: Which were up 36% and 47% respectively from third quarter of last year.
John: Our fully adjusted net income includes $5 6 million of purchase price accounting, but during the quarter.
Chris Porter: We had 629 deliveries, which was 40% higher than the third quarter of 2023, and home sales revenue increased 26% to $325.6 million. As we have stated, our goal is to have a more balanced portfolio between California, Arizona, Texas, and Florida, with Colorado adding between 5% and 10%. With the performance of both our Texas and Arizona operations, we are closer to our goals. Texas contributed 20% of our closings and 16% of our home sales revenue in the quarter, and Arizona contributed 31% of our closings and 26% of our home sales revenue. We are very pleased with our gross margin of 17.1%, which exceeded our guidance as we enjoyed the lower cost of incentives and stability of our direct costs, and our adjusted gross margin was a stronger 22.8%.
John: We had 629 deliveries, which was 40% higher than the third quarter of 2003 and home sales revenue increased 26% to $325 6 million. As we've stated our goal is to have a more balanced portfolio between California, Arizona, Texas, and Florida, with Colorado, adding between 5% and 10%.
John: With the performance of both our Texas and Arizona operations, we are closer to our goals, Texas contributed 20% of our closings at 16% of our home sales revenue in the quarter and Arizona contributed 31% of our closings and 26% of our home sales revenue.
John: We are very pleased with our gross margin of 17, 1%, which exceeded our guidance as we enjoyed the lower cost of incentives and stability of our direct costs and our adjusted gross margin was stronger 22, 8%.
Chris Porter: Incentives and discounts for the quarter were just below 6% of home sales revenue, which was a slight improvement over second quarter. We saw an improvement in this cost starting in July as the 10-year treasury dropped below 4.5% and ultimately into the 3.6% range. We've seen that trend reverse recently with economic news released and are watching the incentives closely for their impact in fourth quarter, but we do expect them to remain at an elevated state. We have also seen more aggressively advertised fixed rate incentives from competitors, with many offering 3.99% rates, which cost more to offer than the 4.99% rates we have been using.
John: Incentives and discounts for the quarter were just below 6% of home sales revenue, which was a slight improvement over second quarter.
John: An improvement in this cost starting in July as the 10 year Treasury dropped below four 5% and ultimately into the three 6% range.
John: We've seen that trend reverse recently with economic news released and are watching the incentives closely for their impact in the fourth quarter, we do expect them to remain at an elevated state.
John: We have also seen more aggressively advertise fixed rate incentives from competitors with many offering 399% rate, which costs more to offer than the $4, 99% rate we have been using.
Chris Porter: Backlog ended the quarter with 691 homes for a total value of $373.1 million, or an ASP of $540,000. During the quarter, we had a 91% backlog conversion rate. Our SG&A expense was 13.9% of home sales revenue this quarter. The improvements from our cost realignment strategy that we discussed last quarter really helped this result. We see this ratio improving further in fourth quarter as we deliver more homes and have higher home sales revenue but relatively stable G&A. We continue to target improving this ratio further next year. Our tax rate in the quarter was 23.5% and expect a full year tax rate between 24% and 26%.
John: Backlog ended the quarter with 691 homes for a total value of $373 1 million or <unk> <unk>.
John: 540000.
John: During the quarter.
John: 91% backlog conversion rate.
John: SG&A expense was 13, 9% of home sales revenue this quarter the improvements from our cost realignment strategy that we discussed last quarter really helped this result, we say this ratio improving further in fourth quarter as we deliver more homes and have higher home sales revenue relatively stable G&A, we continue to target improving this ratio further.
John: Next year.
John: Our tax rate in the quarter was 23, 5% and expect a full year tax rate between 24% and 26%.
Chris Porter: Now turning to our balance sheet, we ended the quarter with $263 million in liquidity, $36 million in cash and cash equivalents, and $227 million in availability under our revolver. As we have mentioned previously, we are focused on being more efficient with our cash and reducing our overall leverage and interest expense. During the quarter, we reduced our leverage 100 basis points sequentially to 51.8% debt to total capital and ended the quarter at 49.2% net debt to total capital. We continue to focus on generating cash flow from our acquisition and reducing leverage back to within our stated policies of 45% total debt to capital and mid-30s net debt to total capital by the end of first quarter.
John: Now turning to our balance sheet, we ended the quarter with $263 million in liquidity $36 million in cash and cash equivalents and $227 million in availability under our revolver.
John: As we have mentioned previously we are focused on being more efficient with our cash and reducing our overall leverage and interest expense during the quarter, we reduced our leverage 100 basis points sequentially to 51, 8% debt to total capital and <unk>.
John: Ended the quarter at 49, 2% net debt to total capital.
John: We continue to focus on generating cash flow from our acquisition and reducing leverage back to within our stated policies of 45% total debt to capital and mid <unk> net debt to total capital by the end of first quarter.
Chris Porter: Coming off of our successful third quarter, but realizing the continued higher levels of mortgage rates and related incentives, we now expect full year new home deliveries to be between 2,890 units and 3,000 units, with average sales prices between $520,000 and $535,000. Home sales gross margins are expected to be in the 15% range and adjusted gross margins should be around 21%. These sales and gross margins reflect our best estimate as of today with the current market conditions. As the volatility in the 10-year Treasury remains high and incentives and mortgage rates continue to change, overall results could change accordingly.
John: Coming off of our successful third quarter, realizing the continued high higher levels of mortgage rates and related incentives. We now expect full year, new home deliveries to be between 2890 units and 3000 units.
John: With average sales prices between 520000 and $535000.
John: Home sales gross margins are expected to be in the 15% range and adjusted gross margins should be around 21%.
John: These sales and gross margins reflect our best estimate as of today with the current market conditions as the volatility in the 10 year Treasury remains high and incentives and mortgage rates continue to change the overall results could change accordingly.
Operator: With that, that concludes our prepared remarks, and now we'd like to open up the call for questions. At this time, if you would like to ask a question, please press star 1 now on your telephone keypad. To withdraw yourself from the queue, you may press star 2. Once again, to ask a question, that is star 1 on your telephone keypad.
John: With that that concludes our prepared remarks, and now we'd like to open up the call for questions.
Speaker Change: At this time, if you would like to ask a question. Please press star one now on your telephone keypad to withdraw yourself from the queue. You May press star two once again to ask a question that is star one on your telephone keypad, one moment, while we queue.
Operator: One moment while we queue.
Matthew Bouley: We'll take our first question from Matthew Bouley of Barclays. Good morning, everyone. Thank you for taking the questions. I wanted to first start on the topic I believe Mike was mentioning earlier around the mix between quick move in and build to order, because obviously looking at the model today, it feels like you're you know, you're obviously still assuming a fair amount of quick move in to kind of get to the delivery guide this year.
Speaker Change: We will take our first question from Matthew Bouley of.
John: Barclays.
Matthew Bouley: Good morning, everyone. Thank you for taking the questions.
Matthew Bouley: I wanted to first start on the topic of I believe Mike was mentioning earlier around.
Matthew Bouley: The mix between quick move in and built to order.
John: Obviously looking at the model today, it feels like you're you're obviously still assuming a fair amount of quick move in.
John: Just kind of get to the delivery guide this year. So I'm just curious if you can kind of level set us on where you are today between I guess built to order in <unk> and kind of how youre thinking about actually enacting that shift as you get into 2025 and sort of what it would mean for pace and margin and all of that thank you.
Matthew Bouley: So I'm just curious if you can kind of level set us on where you are today between, I guess, build to order and QMI and kind of how you're thinking about actually enacting that shift as you get into 2025 and sort of what it would mean for pace and margin and all that. Thank you.
John: Sure.
Mike Forsum: Hey, Matt. Good morning. Thanks for the question.
Speaker Change: Hey, Matt.
Speaker Change: Good morning, Thanks for the question.
Mike Forsum: Yeah, we are seeing a bit of a pivot, not a major pivot, but a gentle pivot more towards buyers coming back and looking for a what we would call sort of bill to order, you know, dirt starts is the lingo. That is because there's a sense of that if rates may be coming down, moderating, that there isn't this high level of urgency to get into a home today because of enough possibility that they may miss out on rates if they're going back up. So, for us, we've seen a more desirous position coming from many of our consumers today to engage with us early, build the house to order, to spend a little bit more time customizing the home to them and their family, but also along the way that we've also increased our cycle times to the extent that within their ability of the time horizon, it's fairly quick, you know, in terms of being able to deliver that house back to them.
Speaker Change: Yes, we are seeing a bit of a pivot not not a major pivot, but a gentle pivot more toward buyers coming back and looking for a what we would call sort of built to order or start as the lingo.
Speaker Change: That is because there is a sense of that.
John: Rates may be coming down moderating.
John: There isn't this high level of urgency to get into a home today.
John: <unk>.
John: Im not possibility that they may miss out on rate because theyre going back up so for us we see a more desirous.
John: Position coming from many of our consumers today too.
John: Engage with US early build the house.
John: Order to spend a little bit more time, customizing the home to them and their family.
John: But also along the way is that we've also increased our cycle times to the extent that within their ability of the time horizon is.
John: Fairly quick.
John: In terms of being able to deliver that house back to them. So.
Mike Forsum: So, we think this is a good adjustment, although it's not We've completely eliminated spec sales. So from our standpoint, we've probably moved from almost no dirt orders here not too long ago to roughly around 20% to 25%, roughly, maybe 30% roughly in terms of where we are in the country, then to a dirt start to our spec start around 70%. Most of all, if not all of them today that we're having are really deliveries that are going to be happening in the first and second quarter of next year.
John: We think this is this is a good adjustment although it is not.
John: Completely eliminated spec sales so from our standpoint, we probably move from <unk>.
John: Almost no dirt orders here not too long ago to roughly around 20% to 25% roughly maybe 30 roughly in terms of where we are in the country.
John: Then to.
John: Third start to our spec start around 70%.
John: Most of all if not all of them today that we're having a really deliveries are going to be happening in the first and second quarter of next year and.
Mike Forsum: And we'll continue to kind of feel that out as we go forward to see if we want to expand that and contract it. But like I said, on the call, Matt, is that, you know, we do definitely see that, particularly in light of the fact that there is A lot of competition out there from from the new home builders that are doing just in time, what we call sort of just in time or near term delivery that we're going to constantly have to have spec inventory in front of us to feed into that demand.
John: And we will continue to kind of feel that out as we go forward to see if we want to expand that contracted.
John: Like I said on the call Matt is that we do definitely see that particularly in light of the fact that there is.
John: A lot of competition out there from from the new home builders that are doing just in time.
John: What we call for just in time or near term deliveries that were going to constantly have to have spec inventory in front of us to feed into that demand.
John: Yeah.
Matthew Bouley: Great, that's that's really helpful, Collar.
Matthew Bouley: Great that's really helpful color.
Matthew Bouley: And then, secondly, I wanted to zoom into the margin guide. I think the implication of with the full year guide is that the fourth quarter gross margin is probably a little bit lower than what you guys had previously signaled. And obviously, Landsea is not unique in that. I mean, it sounds like across the board, the incentives are kind of persistently higher and stickier.
Speaker Change: And then secondly, I wanted to zoom into the margin guide.
Speaker Change: I think the implication of what the full year guide is that the fourth quarter gross margin.
John: Probably a little bit lower than what you guys had previously signaled and obviously lance he is not unique in that I mean, it sounds like across the board. The incentives are kind of persistently higher and stickier. So I guess just number one.
John Ho: So I guess just number one, you know, if you can kind of bridge us between the prior guide and the new guide for the fourth quarter gross margin, and then maybe just at a higher level, you know, this kind of stickiness of incentives, just your kind of overall thought on what it would take to really see incentives actually start to move lower. Thank you.
John: If you can kind of bridge us between the prior guide in the New guide for the fourth quarter gross margin and then maybe just at a higher level.
John: Stickiness of incentives just your kind of overall thought on what it would take to really see incentives actually start to move lower thank you.
John Ho: Hey Matt, this is John Ho. I'll take the first part of that question and then Chris and Mike can also follow up. I think you're right, we're now unique. We are anticipating and seeing, given the increased inventory of quick-moving homes available and coming into this fourth quarter, it is a very highly competitive environment out there, particularly in markets like Florida and Texas, where there's more volume, more competition. So we're anticipating some of that in our fourth quarter in our guidance. We also see some pressures as it relates to the cost of those rate buydowns. Incentives are prevalent.
John: Hey, Matt This is John I'll take the first part of that question and then Chris.
John: Mike can also follow up.
Speaker Change: I think.
Speaker Change: You are right we're not unique.
Speaker Change: Anticipating and seeing given the increased inventory of quick.
Speaker Change: Quick move in homes available and coming into this fourth quarter. It is very highly competitive environment out there, particularly in markets like Florida and Texas.
Speaker Change: Whether it's more volume more competition. So we're anticipating some of that in our fourth quarter and our guidance.
Speaker Change: We also see some pressures as it relates to the cost of those rate buy downs.
Speaker Change: <unk> are prevalent there.
Chris Porter: They're the tool that we're using to be able to get homebuyers off the fence and committed to purchasing a home. But we're also balancing it against what Mike is saying is that we've got. Nice pivot in terms of demand. built-to-order homes that we'll see in the next first, second quarter. Yeah, and I would say just specifically on the numbers, Matt, I think our original guidance, you know, was looking at the trend for where the tenure is and where these incentives had settled down between, you know, depending on the market between a 499, a 575, you know, just depending on where the market is.
Speaker Change: All that we're using to be able to get home buyers off the fence and committed to purchasing a home.
Speaker Change: But we're also balancing it against what Mike is saying is that we've got.
Speaker Change: Nice pivot in terms of demand.
Speaker Change: Build to order homes that we will see in the next.
Speaker Change: For our second quarters of 2025.
Speaker Change: Yeah, and I would say just specifically on the on the numbers, Matt I think our original guidance.
Speaker Change: I was looking at the trend for where the tenure is and where.
John: These incentives had settled down between depending on the market between the 499 at $5 75.
John: Just dependent depending on where the market is and we've seen two.
Chris Porter: And we've seen two things, one, the competition and the willingness to offer 399 mortgages, 499 more sparingly, and then also the cost of those backing back up with the tenure volatility. I mean, it's moved back up, as you know, you know, 60, 70 basis points in the last month or so. So those costs are different, and that's really what's driving the big bulk of the change associated there. We did have a little bit of mixed shift between third quarter and fourth quarter as well that played into that. But really, it's primarily around the incentives. One of the things, again, that we're working towards is we're being a little more surgical about some of these mortgage rate buy downs and really focusing on the locations and the rates that are needed to continue to move our homes.
John: Two things one the competition and their willingness to offer 399 mortgages.
Speaker Change: 499.
John: More sparingly and then also the cost of those backing back up with the 10 year.
John: Volatility I mean, it's.
Speaker Change: It's moved back up as you know 60 70 basis points in the last month or so.
Speaker Change: <unk> costs are are different and that's really what's driving the big bulk of the change.
Speaker Change: Associated there, we did have a little bit of mix shift between third quarter and fourth quarter as well that played into that but really it's primarily around the incentives.
Speaker Change: One of the things again that we're working towards is we're being a little more surgical about some of these mortgage rate buy downs and really focusing on the locations and the rates that are needed to continue to move our homes and our team is doing an exceptional job of.
Matthew Bouley: And our team's doing an exceptional job of really toning in on exactly which rates within which markets are going to be driving that volume down. Got it.
Speaker Change: Really honing in on exactly which rates within which markets are going to be driving that volume that we need.
Speaker Change: Got it well thanks, everyone for all the details and good luck.
Matthew Bouley: Well, thanks everyone for all the details and good luck.
Speaker Change: Thanks.
Carl Reichardt: We'll take our next question from Carl Reichardt of BTIG. Hey, thanks. Hey, guys.
Speaker Change: We'll take our next question from Carl Reichardt of BTG.
Speaker Change: Hey, Thanks, Hey, guys Chris.
Carl Reichardt: Chris, can you just explain again, the margin guide for this quarter was 15, I think, and you did 17-1, right? So you talked about incentives being lower, but that's still a pretty big delta. What else was in there that allowed the GM this quarter to beat Guy by so much? Yeah, I think Carl, good question. It's really is the backup of incentives. The cost has really changed quite a bit this quarter. And the delta between A 499 rate and a 399 rate is is pretty substantial. And as we see that continue for a little bit on the 399 side, just our costs are higher on those incentives.
Carl Reichardt: Chris can you just explain again.
Carl Reichardt: The margin guide for this quarter was 15, I think and you did 17, one right. So you talked about incentives being lower but that's still a pretty big Delta what else was in there that allowed the GM this quarter to beat by so much.
Chris: Yes, I think Carl good question, it's really is the backup of incentives.
Speaker Change: Cost is really.
Speaker Change: Changed quite a bit this quarter.
Speaker Change: And the Delta between.
Speaker Change: At 499 rate and a 399 rate is pretty substantial.
Speaker Change: And as we see that continue for a little bit on the 399 side just our costs are higher on those incentives.
Carl Reichardt: And then and then, as I said, with Matt, a little bit of it was mix just between deliveries and where we were able to deliver. You know, we had a little bit more California this quarter and and expect more on the Florida side next quarter. So a little bit of it was mixed, but really a lot of it is driven off of the, the cost increases around the 399 plus the move in the 10 year treasury. Okay. All right, thank you for that.
Speaker Change: And then and then as I said with Matt.
Speaker Change: A little bit of it was mix just between deliveries and where we are.
Speaker Change: We're able to deliver we had a little bit more California this quarter.
Speaker Change: And expect more on the Florida side next quarter, so a little bit of it was mix, but really a lot of it is driven off of the cost increases around the 399, plus the move in the 10 year Treasury.
Speaker Change: Okay, Alright, thank you for that and then.
Carl Reichardt: And then just bigger picture question. So, if you're talking about intending to to grow market share as you go here, who do you intend to take the share from? I mean, in your case, many of the markets that you guys occupy are also heavily trafficked by the other large publics and in many of them, there's not a whole lot of market share headroom left for those who are not already the large public. So, what's your sort of surgical tactical approach to gaining share in these places where you are up against the large spec guys in particular the volume focus players?
Speaker Change: Just bigger picture question.
Speaker Change: So.
Speaker Change: If youre talking about intending to grow market share as you go here.
Speaker Change: Do you intend to take the share from.
Speaker Change: In your case many of the markets that you guys occupy are also.
Speaker Change: Heavily traffic by the other large publics and in many of them theres not a whole lot of market share headroom.
Speaker Change: <unk> for those who are not already the large public so what's your sort of surgical tactical approach to gaining share in these places where you are up against the large spec guys in particular, the volume focused players.
John Ho: Hey Carl, this is John. I'll start and then maybe I'll hand it over to Mike to follow up. I think for us, certainly it's how we've penetrated some of these markets, whether it was Phoenix in Arizona or Orlando, Florida, and now the DFW market. We mentioned obviously we've grown pretty quickly through acquisitions. In each of those three sparks of markets, we acquired one, two builders to penetrate the market and then grow that market through organic growth, new community count and growing our market share in that presence. So it continues to be part of our strategy.
Speaker Change: Hey, Carl this is John.
John Lindsay: I'll start and then maybe I'll hand, it over to Mike to follow up I think for US certainly is how we've penetrated some of these markets, whether it was Phoenix and Arizona, Orlando, Florida, and now the DFW market.
Speaker Change: We mentioned, obviously, we've grown pretty quickly through acquisitions.
Speaker Change: Each of those respective markets, we acquired one two builders.
Speaker Change: To penetrate the market.
Speaker Change: And then grow that market through organic growth new.
Speaker Change: New community count.
Speaker Change: And growing our market share in that presence.
Speaker Change: That continues to be part of our strategy.
John Ho: We also see that. We understand that this is a business of scale, we have to get bigger in each of our markets. We have to be able to compete with some of our larger peers. And we're doing that quite successfully. We've been doing it by integrating acquisitions. And we've also seen, as the largest have been getting larger, we've seen the smallest privates really sort of retract for the market as well and not be as.
Speaker Change: We also see that.
Speaker Change: And understand that this is a business of scale, we have to get bigger in each of our markets.
Speaker Change: Have to be able to compete with some of our larger peers.
Speaker Change: And we're doing that.
Speaker Change: Quite successfully we've been doing it by integrating acquisitions.
Speaker Change: We've also seen as the largest gain larger we've seen the smaller.
Speaker Change: This release would've retract.
Speaker Change: For the market as well and not be as competitive.
Mike Forsum: I'll turn it over to Mike.
Speaker Change: I'll turn it over to Mike <unk> hasn't yet.
Mike Forsum: No, no, I think you did a good coverage on that, John. You know, Carl, again, I would just say that, you know, we're operating in the mindset of leaner, faster, better, and everywhere that we're at. And we believe that by execution of our business, defining the products of which the consumers want the most, really differentiating ourselves through our value proposition and the markets in which we're operating in against other home builders, the uniqueness just of what we do in around our pillars of our high-performance home strategies, and then just purely by the people. I mean, we just believe that we have outstanding people in all of our operating divisions that really know the game and the markets in which they're operating in locally, and that they know that at the end of the day that they've got to deliver against the competition.
Speaker Change: No no I think you did.
Speaker Change: Good coverage on that Jon Karl again, I would just say that we're operating in the mindset of leaner faster better and everywhere that we're at and we believe that by execution of our business.
Speaker Change: Defining the products of which the consumers want the most.
Speaker Change: Really differentiating ourselves through our value proposition and the markets in which we're operating in against other homebuilders.
Speaker Change: Uniqueness.
Speaker Change: Of what we do in around our pillars of our high performance foams strategies and then just purely by the people and we just believe that we have outstanding people in all of our operating divisions that really know the game in the markets in which they're operating and locally and that they know that at the end of the day that they've got to deliver.
Mike Forsum: We're not afraid of competition. We knew we were going to go into those markets that we were going to be going up head-to-head against some incredibly formidable players, but personally, my whole career has been that, whether it's at KB, Ryland, Taylor Morrison. We're always going to have competition, and we always have to learn how to define ourselves and how to win the day.
Speaker Change: Against the competition and we're not afraid of competition. We knew we were going to go into those markets that we were going to be going up.
Speaker Change: <unk> had against some incredibly formidable players but are personally my whole career has been that.
Speaker Change: It's a cave Reiland Taylor Morrison.
Speaker Change: We're always going to have competition and we always have to learn how to define ourselves and how to win the day. So it's a little bit preachy here, but yes.
Mike Forsum: So, it's a little bit preachy here, but, you know, at the end, it's really about the people, and we believe that we have outstanding teams on the ground that really know their stuff, like I said, and they've got their sandbox, and every day, they're putting up a good fight and figuring out a way to grab that incremental buyer as we go forward, and we'll continue to do that.
Speaker Change: It's really about the people.
Speaker Change: We believe that we have outstanding teams on the ground that really know their stuff like I said and they've got their sandbox and everyday they're putting up the good fight and figuring out a way to.
Speaker Change: Grabbed that incremental buyer as we go forward and we'll continue to do that.
Carl Reichardt: I appreciate that, guys. Thanks so much.
Speaker Change: I appreciate that guys. Thanks, so much.
Operator: Thank you.
Speaker Change: Okay. Thank you we'll take our next question from Alex Rygiel of B.
Alex Rygiel: We'll take our next question from Alex Rygiel of B Riley. Thanks. Good morning, John. And very nice quarter. Could you talk a little bit about the margin implications, gross margin implications, sort of a modest shift from move in, quick move in to build or Yeah, so I think that, you know, it really varies, right? But what we see on the build to order with the options that are out there, we're clearly making a higher margin on some of those options that are added in there. Additionally, you're not having to give quite as much on the incentive side, although we see that shifting from time to time.
Speaker Change: B Riley.
Alex Rygiel: Thanks, Good morning, gentlemen, very nice quarter.
Alex Rygiel: Could you talk a little bit about the margin implications gross margin implications.
Speaker Change: Or a modest shift from move in quick move into build to order.
Speaker Change: Yes, so I think that.
Speaker Change: It really varies right, but what we see on the.
Speaker Change: Built to order with the options that are out there, we're clearly making a higher margin on some of those options that are added in there. Additionally, youre not having to give quite as mentioned on the incentive side, although we see that.
Speaker Change: Shifting from time to time.
Alex Rygiel: So typically, Alex, we're looking at, you know, anywhere between 100 to 200 basis point difference between those two components. When you look at gross variable, and then.
Speaker Change: So typically Alex we're looking at anywhere between 100 to 200 basis point dip.
Speaker Change: France between.
Speaker Change: Those two components.
Speaker Change: When you look at gross margin.
Speaker Change: Very helpful.
Speaker Change: Then.
Alex Rygiel: My compliments to you in improving SG&A, and it sounds like you've got some more plans in 2025.
Speaker Change: My compliments to you and.
Speaker Change: Improving SG&A and it sounds like you've got some more plans in 2025, so what kind of actions that you're taking in order to.
John Ho: So what kind of actions are you taking in order to reduce SG&A?
Speaker Change: Reduce SG&A.
John Ho: Hey, Alex, this is John. Earlier this year, in May, we made some changes in terms of our GNA, obviously with the move to Dallas, Texas, with our corporate headquarters. say, efficiencies that we've improved on in California, really creating one operating unit there, and then also just being, I would say, leaner on the corporate side. That's all improved in terms of our total GNA dollars that we're spending. At the same time, you know, our business is growing, you know, our volume year over year, you can see the benefits of having the DFW division and a growing Texas business, as well as growth that we've seen in Arizona.
Speaker Change: Alex This is John.
John Lindsay: Earlier this year in May we made some changes in terms of our G&A, obviously with the move to Dallas, Texas with our corporate headquarters.
John Lindsay: The.
Speaker Change: I would say efficiencies.
Speaker Change: Yes.
Speaker Change: Moved on in California, really creating one operating unit out there and then also just being I would say leaner on the corporate side.
Speaker Change: That's all improved in terms of our total G&A dollars that we're spending.
Speaker Change: At the same time, our business is growing.
Speaker Change: Our volume year over year, you can see the benefits of having the.
Speaker Change: The DFW division.
Speaker Change: Growing Texas business as.
Speaker Change: As well as growth that we've seen in Arizona as.
John Ho: as well as in California and Florida. So our volume is growing. We're leveraging our scale, our SG&A scale. So we've really built this company to achieve efficiencies of 4,000, 5,000 units. We really don't need any more, let's say, G&A to continue to build this business. We're just gonna continue to see additional scale through the growth of our divisions and the growth of our business.
As well as in California, and Florida. So our volume is growing we're leveraging our scale our SG&A a scale.
Speaker Change: So we've really built this company to achieve efficiencies.
Speaker Change: For 5000 units, we really don't need any more let's say G&A to continue to build this business, which is going to continue to see yes.
Speaker Change: Additional scale to the growth of our divisions.
Speaker Change: And the growth of our business.
Alex Rygiel: Perfect.
Speaker Change: Perfect. Thank you.
Jay Mccanless: Thank you. And once again, to ask a question that is star one on your telephone keypad, we'll move next to Jay McCanless of Wedbush. Hey, good morning, everyone.
Speaker Change: And once again to ask a question that is star one on your telephone keypad will move next to Jay Mccanless of Wedbush.
Jay Mccanless: Hey, good morning, everyone.
Chris Porter: Chris, could you say again what the purchase accounting impact was this quarter on gross margin and maybe what you're expecting for the fourth quarter? Sure, so it was $5.6 million for the quarter, which is about 1.7% on the gross margin add back there. Jay, although we don't give specific guidance around that, we would think that it would be in and around that same level. We still got a little bit left on Florida, and that gets bled out through the homes that are sold. And then the bulk of it is in the DFW side of it.
Jay Mccanless: Chris could you say again, what the purchase accounting impact was this quarter on gross margin and maybe what youre expecting for the fourth quarter.
Speaker Change: Sure so.
Speaker Change: So it was $5 $6 million.
Speaker Change: For the quarter, which is about one 7% on that gross margin add back there.
Speaker Change: And <unk>.
Speaker Change: Although we don't give specific guidance around that we would think that it would be in and around that same level, we still got a little bit left on Florida and that gets bled out through.
Speaker Change: The homes that are sold and then the bulk of it is in the DFW side of it we.
Chris Porter: We'll see a larger amortization of that in 2025, but we'll still see a pretty nice clip still here in fourth quarter and probably in and around that same level.
Speaker Change: We will see a larger amortization of that in 2025, but we will still see a pretty nice clip.
Speaker Change: Clip still here in fourth quarter, and probably in and around that same level.
Jay Mccanless: Great. And then. Last quarter, you guys talked about move up and getting some pricing power there.
Speaker Change: Great and then.
Speaker Change: Last quarter, you guys talked about move up and getting some pricing power. There maybe could you tell us what percentage of your communities now are move up and how youre thinking about that percentage.
Jay Mccanless: Maybe could you tell us what percentage of your communities now are move up and how you're thinking about that percentage in terms of what you're going to be opening going into 25?
Speaker Change: In terms of what youre going to be opening going into 'twenty five.
Mike Forsum: Hey, Jay, it's Mike. Yeah, I think we see a slight gravitational pull to the move of buyers, particularly those buyers that are coming out of unlocked homes in the resale inventory that have been tied to mortgage rates that are in that 3, 3.5%. As they see mortgage rates coming down, they're seeing sort of that that moment of which there's probably not a big differentiation between their monthly payments and where they are today, and then meeting their needs to, you know, So, for us, we're looking at that as a segment that's going to be coming back a little bit stronger into the future.
Mike: Hey, Jay its Mike.
Mike: Yes, I think we see a slight gravitational pull to the move up buyer, particularly those buyers that are coming out of unlocked.
Mike: Homes in the resale inventory that have been tied to mark mortgage rates that are in that 335.
Mike: 5%.
Speaker Change: As they see mortgage rates coming down.
Speaker Change: They're seeing sort of that.
Speaker Change: That moment of which there's probably not a big differentiation between their monthly payments and where they are today.
Speaker Change: And then meeting their needs too.
Speaker Change: Better their housing situations. So for us we're looking at that as a segment, that's going to be coming back a little bit stronger into the future.
Mike Forsum: And we have been approaching that in our terms of our segmentation, particularly in the master planning communities where we develop them ourselves, where we have a product offering and, you know, we're looking at that as a segment that's going to be coming back a little bit stronger into the future. such that we always will have a planning area that allows for that move-up buyer to find a product within that community that suits their needs.
Speaker Change: And we have been approaching that in terms of our segmentation and particularly in the master plan communities, where we develop them ourselves, where we have a product offering.
Speaker Change: Such that we always will have a planning area that allows for that move up buyer.
Speaker Change: To find a product within that community.
Speaker Change: Suits their needs.
Mike Forsum: We see that not being a huge portion of our future offering. We're not going to get disproportionate there. We still see ourselves as primarily a first-time builder of homes for the most attainable products in that marketplace in which we're serving. But we'll see maybe roughly around, probably around that 20%-ish, so to speak, of that first-time move-up, second-time move-up. And then from time to time, we do carry a luxury position. We think it's great for brand building. It helps us in terms of our ability to forward see new products that are coming in in terms of specs that we can then introduce into our more attainable houses into the future.
Speaker Change: We see that not being a huge portion of our future offering we're not going to get disproportionate there we still see ourselves as primarily a first time.
Speaker Change: Builder Av homes for the most sustainable products in that marketplace. So much we're serving but we will see maybe roughly around probably around that 20% ish.
Speaker Change: To speak of that first time move up second time move up.
Speaker Change: And then from time to time, we do carry a luxury position. We think it's great for brand building helps us in terms of our ability to forward fee.
Speaker Change: New products that are coming in in terms of specs that we can then introduce into our more attainable houses into the future. So we.
Mike Forsum: So we do play in different pricing spectrums. But again, at the bottom of the pyramid will be roughly around 40% first-time affordable, another 20% of that first-time move-up. And then we kind of break it up probably in increments of 5% to 10%.
Speaker Change: We do play in <unk>.
Speaker Change: Current pricing spectrum, but again the bottom of the period pyramid will be roughly around 40%.
Speaker Change: First time affordable another 20% of that first time move up and then we kind of break it up probably in increments of 5% to 10% from there.
Jay Mccanless: Okay, great, Mike.
Speaker Change: Okay, Great and then just last for me any commentary on October orders are pricing trends.
Jay Mccanless: And then just last for me, any commentary on October orders or pricing trends? Anything you can give us on October and the beginning of November?
Speaker Change: How.
Speaker Change: Anything you can give us on October and beginning of November.
Mike Forsum: I can say, and I'll turn it back over to John and Chris, is that, you know, we've been very pleased with what we're seeing going on in October in terms of our showroom floors and the conversion into sales. So, it's not abating. We're having a strong fall season, so we're feeling pretty good. Yeah, Jay, from from a little bit more specifics, we've actually seen absorptions in October tick up from where we saw them in August and September. So that makes us feel a little bit better as we close out October and start into November. That's great.
Speaker Change: I can say and I'll turn it back over to John and Chris is that.
Speaker Change: We've been very pleased with what we're seeing going on in October in terms of our silver in Florida and the conversion into <unk>.
Speaker Change: Sales so it's not it's not abating.
Speaker Change: We're having a strong fall season, so we're feeling pretty good.
Speaker Change: Yes, Jay if I'm, if I'm, a little bit more specifics, we've actually seen absorptions in October tick up from where we saw them in.
Speaker Change: August and September so that makes it a little bit better as we close out October and start into November.
Speaker Change: Okay. That's great. Thanks, guys appreciate all the color.
Jay Mccanless: Thanks, guys. Thanks. Nice try.
Speaker Change: Thanks Jay.
Operator: And it appears that we have no further questions at this time.
Speaker Change: And it appears that we have no further questions at this time I'd be happy to return the call to our host for any concluding remarks.
Operator: I'd be happy to return the call to our hosts for any concluding remarks. Thank you all for joining us on our third quarter earnings call, and we look forward to speaking to you again at the next.
Speaker Change: Thank you all for joining us on our third quarter earnings call and we look forward to speaking you again.
Speaker Change: The next earnings call.
Operator: But this does conclude today's conference. You may now disconnect your lines, and everyone have a great day.
Speaker Change: This does conclude today's conference you may now disconnect your lines and everyone have a great day.
Operator: www.FoxF เจ Mitski Music and John H. Holt. Thank you.
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Operator: Phone Ringing and Landsea's All aboard! Landsea Homes Mmm, mmm © BF-WATCH TV 2021 THE END
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