Q2 2025 Taylor Morrison Home Corp Earnings Call
Thank you Mackenzie and good morning, everyone. Joining me as Curt Van Hefty, our Chief Financial Officer, and Eric Hughes, Our Chief Corporate operations Officer.
I am pleased to share our second quarter results, which met or exceeded our guidance Hudson stands with all key metrics. Despite the unique environment.
We delivered 3340 homes at an average price of 589000.
It's produced 2 billion of home closings revenue with an adjusted home closings gross margin of 23% and 90 basis points of SG&A expense leverage.
Our performance reflects our diversified product portfolio that serves a broad and well qualified consumer set with two rebuilt and spec offerings concentrated in core locations, especially.
And especially in volatile markets. This balanced strategy is a valuable differentiator that we believe contributes to greater financial resiliency.
As I shared on our last call the start of the spring selling season had been muted as consumers digested stock market volatility tariff uncertainty immigration reform and high interest rates.
As the season progressed sales trends remain softer than normal with some choppiness throughout the quarter. This drove moderation in our monthly net absorption pace to two six per community.
Although this was consistent with our historic second quarter average it was lower than our expectations in normal market conditions due to increased competitive pressures, especially in first in first move up locations as well as a pickup in cancellations.
In this environment, our overall bias between pace and price leaned more heavily towards price and ultimately margin and returns given the value of our attractive land positions desirable communities and discerning customers, especially in our amenity rich move up and resort lifestyle neighborhoods.
We continue to believe that our emphasis on working with each customer hand in hand, with our Taylor Morrison home hunting team to Personalise incentive is the most effective way to create value for both our buyers and our company. This process allows us to educate and inform our customers through <unk>.
Prequalification and tailor programs that provide stability and strengthen their financial goals and needs during homeownership.
We pride ourselves that our mortgage programs are aligned to serve the consumers that most need the support as an example of just one of our programs that has proven successful in driving traffic and assisting a small subset of customers with their financial goals has been a recently introduced three.
Seven five per cent conventional seven year adjustable rate mortgage with no discount fees.
To put the power of such an offer in perspective. This promotional interest rate would increase our typical customers purchasing power by about $138000 on a 500000 dollar home financed with a 20% down payment.
Compared to financing and market interest rates.
Point being I'm sharing that we have a wide range of programs and products to meet each customer's needs continues to be key to our success.
<unk> ability continues to be top of mind for our first time buyers well quality of community and choice remain critical for our other consumer segments as Eric will detail in just a moment.
We are by no means immune from the headwinds facing our industry. However, we believe our strategy of serving well qualified homebuyers across the consumer spectrum with a well balanced portfolio of to be built in spec homes, primarily an attractive core submarkets.
Fundamentals tend to be healthier throughout housing cycles provides important benefits, including a more stable gross margin profile in contrast to significant industry gross margin compression. Our adjusted home closings gross margin has been relatively range bound between 23% and nearly 20.
5% for the last two and a half years. This is much stronger than our historical average due to the improvement in our scale and operating capabilities and most importantly, as we look ahead. Our gross margin is expected to remain within the bounds of our long term target in the low to mid 20% range.
Despite the outsize incentive offers an overall pricing pressure, we are competing against especially on spec sales.
The prevalent and depth of these incentives has shifted consumer preferences.
Even among traditionally to be billed customers towards spec homes.
I'm I'm willing to trade personalization for the deeper incentives currently available prospect inventory across the industry.
As a result, our share of spec sales increased in the second quarter to a new high of 71%, including a higher than typical 50% and our Esplanade segment.
With specs carrying gross margins below that have to be built homes. We expect that this temporary mix shift will impact our home closing gross margin in the third and fourth quarter as our margin is expected to moderate sequentially to approximately 22% however for the year our adjusted home.
Closings gross margin is still expected to be approximately 23% and longer term, we expect our business to remain more equally balanced between to be built and spec home offerings by consumer group, our second quarter orders consisted of 33% entry level, 50% move up in 17.
Were sent resort lifestyle as.
As a reminder, in the first quarter. Our overall resort lifestyle segment was the only to post year over year net order growth during its peak selling season, while our move up sales were roughly stable and the entry level was down most steeply in the second quarter, we saw more consistent sales activity across the consumer spectrum.
With our resort lifestyle and entry level segments, both down in the high teen range, while our move up sales were down in the mid single digits driven by assured lack of urgency due to less confidence.
With our broader resort lifestyle portfolio, our Esplanade communities, which account for about 10% of our total have held up with greater resiliency as we would expect given its affluent customer base and the <unk>.
Second quarter, Ashland odds net sales orders declined 8% versus 12% in total for the company and its home closings gross margin was slightly improved year over year in the high 20% range.
This strong margin is driven in part by Outsize combined average lot and option premiums of nearly 217003 times out of the rest of our business during the quarter. We broke ground on our newest esplanade in summerlin outside of Las Vegas, which already has a robust interest list.
Even before we have initiated our first campaign for the community we remain committed to a robust expansion of this unique brand in the years ahead.
Taking a step back from our current sales environment, we believe the need for affordable desirable new construction remains intact across our markets of operations given the aging of the population migration patterns and evolving buyer preferences, we believe that our diverse portfolio is well.
To serve this need in the years ahead.
While the near term outlook calls for a more patient growth trajectory as we prioritize capital efficiency and returns over volume in today's intensely competitive marketplace. We strongly believe we have the platform and opportunity to jumpstart growth as market dynamics stabilize.
In the meantime, with a healthy land pipeline already controlled and healthy balance sheet, we have flexibility to return capital to shareholders on top of the roughly $2 billion, we have invested in share repurchases since 2015.
As you would expect our teams are highly focused on controlling costs and working with our trades to further increase production and purchasing efficiencies, which has driven year over year improvement in our stick and brick costs.
Additionally, our one of a kind digital sales environment is another source of meaningful cost savings that continues to gain traction and support our healthy SG&A structure.
Has the business our operating priorities are grounded in a disciplined model that we expect can generate mid to high teen returns on equity throughout the course of the cycle, including this year.
Eric: With that let me now turn the call over to Eric.
Eric: Thanks, Cheryl and good morning.
Eric: At quarter end, we owned or controlled 85051 homebuilding logs.
Eric: Just on trailing 12 months closings represented six four years of supply of which $2 six years was the one we.
Eric: We control, 60% of our lot supply via options and off balance sheet structures up from 57% a year ago.
Eric: We continue to make steady progress towards our goal of controlling at least 65% of locks.
Eric: During the quarter, we invested $612 million in homebuilding land.
Eric: 43% of which went towards lot development.
Eric: For the full year, we continue to anticipate our total homebuilding land investment to be around $2 $4 billion.
Eric: With a downside bias given our heightened diligence in these market conditions.
Eric: As always our ultimate cash investment will be dependent on our use of financing tools and market opportunities as the land market has recently exhibited some softness.
Eric: As a reminder, all previously approved transactions as well as future phases of development or re reviewed by our investment committee for final alignment or any necessary adjustments before closing.
We remain committed to executing as a community of developers as the vast majority of our prospective customers tell us that they value the community at least as much as the home we provide.
Eric: While timelines associated with entitlements remains the most notable development challenge tariffs have not had a meaningful impact to our horizontal cost and in fact these costs have moderated and access to trades has eased.
Eric: We continue to keep a careful eye.
Eric: Uncompetitive in supply measures across our portfolio.
Eric: Our research suggests that our spectrum by community is less than the new home averages in the majority of our markets, which we believe is a function of our core location focus.
Eric: With regards to resell inventory there has been some moderation in months of supply across many of our Florida, and Texas markets and the average months of supply for our overall market footprint was lower than the national average to focus upon our consumers for a moment, we've engaged them and attempts to more deeply understand their sentiment.
Eric: Among our shoppers hesitating, our surveys indicate that their primary concern is the overall environment and less so their own personal financial situations.
Eric: When market conditions stabilize we believe this suggests that shoppers will be willing and able to move forward with their desire home purchase.
Eric: We are pleased that despite a more challenging demand environment, our customer satisfaction scores have increased as we engage with both of our shoppers and buyers validating our efforts on creating a differentiated customer experience.
Eric: Lastly, I wanted to provide a brief update on our floor rent yodlee business.
Eric: With long term confidence in positioning this operation to provide an efficient model targeted to address housing availability and affordability challenges by leveraging our core competencies and land and construction, we continue to navigate the interest rate environment and evaluating optimal project disposition strategies.
Eric: At this time, we now expect to exit as many as four communities this year.
Eric: As detailed in this morning's press release, we have executed a flexible finance facility that will enhance cash generation balance sheet relief and greater optionality as we seek to optimize returns overtime and targeting asset exits the.
Eric: The magnitude of this facility is material covering total project cost of $3 billion.
Eric: Serving both existing and new acquisitions.
Eric: Kennedy Lewis with whom we have significant land banking experience will be the capital provider and we are jointly committed to our unique platform and producing efficient communities that will assist customers, who simply cannot afford a new home today, but who desire a single family living experience with that I will turn the call to Kurt.
Kurt: Thanks, Eric and good morning, everyone for.
Kurt: For the second quarter reported net income was $194 million or.
Kurt: Or $1 92 per diluted share up from $1 86, a year ago.
Kurt: After excluding inventory impairment.
Kurt: Certain warranty charges, our adjusted net income was $204 million.
Kurt: Or $2 <unk> per diluted share up from $1 97, a year ago.
Kurt: Our closings volume increased 4% year over year to 3340 homes.
Kurt: Slightly ahead of our prior guidance of approximately 3200 due to a higher number of stocks that were sold and closed during the quarter.
Kurt: The share of closings from specs increased to 65% in the second quarter from 58% in the prior quarter and 59% a year ago.
Kurt: This higher spec penetration contributed to a 2% decline in the average closing price to $589000.
Kurt: This was slightly ahead of our prior guidance of $585000.
Kurt: As a result home closings revenue increased 2% to approximately $2 billion.
Kurt: With 8192 homes under production at quarter end, including 3888 specs of which 842 are finished or.
Kurt: Inventory remains slightly elevated compared to targeted levels.
Kurt: Therefore, we expect our spec closings penetration to remain higher than normal through year end as we prioritize the sale of these homes.
Kurt: Recent customer preferences for quick move in homes.
Kurt: We also expect to slow our starts volume following a monthly starts pace of three four per community or 3500 homes in the second quarter, which allowed us to put the universe of homes and the ground for a full year delivery targets.
Kurt: For the remainder of the year you expected slowdown in new starts will be community specific.
Kurt: We look to optimize our working capital and manage our inventory.
Kurt: Also supportive reduced starts volume, we continue to see improvement in cycle times throughout the build process.
Kurt: We realized more than two weeks of sequential savings in the second quarter, driven by both to be built and spec home production.
Kurt: We believe that this ongoing improvement strengthens our ability to flex our growth potential as market conditions evolve.
Kurt: For the full year, we still expect to deliver between 13000 to 13500 homes.
Kurt: Clothing between 3200 to 3300 homes in the third quarter.
Kurt: Just on the anticipated mix of deliveries, we now expect the average closing price to be in the range of $595000 to $600000 for the full year, including approximately $600000 in the third quarter.
Kurt: In the second quarter home closings gross margin was 22, 3%.
Kurt: Adjusted home closings gross margin, which excludes inventory impairment and certain warranty charges was 23% in line with our prior guidance.
Kurt: As we look into the remainder of the year, we expect incentives to increase and our spec penetration to remain higher than typical as we continue to normalize our inventory position.
Kurt: As a result, we expect our third quarter home closings gross margin to be approximately 22%.
Kurt: Excluding the inventory impairment and warranty charges realized in the first six months of the year, we expect our full year adjusted home closings gross margin to be approximately 23%.
Kurt: Including the charges and assuming no additional charges through the remainder of the year.
Kurt: Expect our GAAP full year home closings gross margin to be approximately 22, 5%.
Kurt: Now to sales, we generated 2733 net orders down 12% year over year as our monthly absorption pace moderated to two six net orders per community from three a year ago.
Kurt: At quarter end, we had 345 communities consistent with our prior guidance.
Kurt: Based on our updated sales expectations and timing of community openings and closings. We now expect our ending outlet count to be between 340 to 345 in the third quarter and approximately 350 by the end of the year.
Kurt: Our cancellation rate was 14, 6% of gross orders up from nine 4% a year ago.
Kurt: As a percentage of our beginning backlog cancellations were nine 2% up from five 2% a year ago.
Kurt: While this increase reflects the change in consumer confidence of late we believe this remains below industry averages, reflecting our strong customer profile prequalification processes and backlog customer deposits of approximately $47000 per home.
Kurt: SG&A expense as a percentage of home closings revenue was nine 3%.
Kurt: This represented 90 basis points of year over year expense leverage due primarily to lower payroll related costs and commission expense.
Kurt: For the year, we continue to expect our SG&A ratio to improve to the mid 9% range due to proactive management of our overhead costs ongoing back office consolidation efforts and growing efficiencies from our digital sales tools.
Kurt: Financial services revenue was $53 million with a gross margin of 51, 1%.
Kurt: Up from $49 million, and 42, 5%, respectively, a year ago.
Kurt: Hoping to manage our incentives effectively our financial services team achieved a strong capture rate of 87% during the quarter.
Kurt: Among buyers using Taylor Morrison home funding credit metrics were healthy and consistent with recent trends with an average credit score of 751 down payment of 22% and household income of $188000.
Kurt: Turning now to our balance sheet, we ended the quarter with liquidity of approximately $1 $1 billion.
Kurt: This included $130 million of unrestricted cash and $952 million of available capacity on our revolving credit facility.
Kurt: We continue to have financial flexibility with our net homebuilding debt to capitalization ratio equaling 22, 9% at quarter end and no senior note maturities until 2027.
Kurt: During the quarter, we repurchased one 7 million shares of our common stock outstanding for $100 million.
Kurt: At quarter end, our remaining repurchase authorization was $675 million.
Kurt: For 2025, we are now targeting total share repurchases of at least $350 million.
Kurt: Since 2015, we have repurchased a total of approximately $2 billion of our shares outstanding or roughly 60%, helping to drive improved earnings and returns for our shareholders.
Kurt: Going forward, we remain committed to both programmatic and opportunistic repurchase strategies to manage our capital and take advantage of the attractive valuation opportunity in our equity.
Kurt: Inclusive of this year's repurchase target, we expect our diluted shares outstanding to average approximately $101 million in the full year, including $100 million in the third quarter.
Sheryl: Now I will turn the call back over to Sheryl.
Sheryl: Thank you Kurt in closing I would like to highlight that we released our annual sustainability and belonging report earlier. This week on Monday. This year. The report that's built around the theme of resiliency of term, we believe captures not only our financial performance in the face of challenging market dynamics, but also.
Sheryl: The performance of our homes as well as the long term desirability and live ability of our carefully planned well located communities. This intentional effort to build resiliency into every facet of our operations is core to who we are as a builder and community developer as you can read more about in this week.
Sheryl: Publication.
Sheryl: And let me express had tremendous thank you to the Taylor Morrison team I'm continually impressed by our team members execution and enthusiasm to be the best we can be thank you to each of you for all you do and how you will do to make the second half of the year a success.
Sheryl: Now, let's open the call to your questions operator, please provide our participants with instructions.
Speaker Change: Thank you we now to open the unsecured Hey, you guys ask a question. Please press star followed by one telephone keypad now.
Speaker Change: That's for me just on the questioning would be stuff went up by two as a reminder to raise the question will be stuff flip up one.
Speaker Change: Last question comes from Matthew Bouley from Barclays. Your line is open.
Matthew Bouley: Good morning, everyone and thank you for taking the questions.
Matthew Bouley: I guess I'll start with a question on the spec mix in the quarter. So that 71% of sales I think you said.
Matthew Bouley: I guess my question is that.
Matthew Bouley: Is that kind of like a market driven I don't know if softness on the to be built side kind of increasing that spec mix, therefore sort of your own decisions around price over pace with the to be built side, because I mean, it seemed like the spec production at the end of the quarter was not too different versus Q1.
Matthew Bouley: So I guess just trying to understand the reasoning behind that jump in spec and then obviously going forward.
Matthew Bouley: Should we expect it to kind of stay at these levels. It sounded like that that's what was expected in the second half, but just any more detail on that thank you.
Matthew Bouley: Okay.
Matthew Bouley: Yeah, Hi, Mike Thanks, and Great question.
Matthew Bouley: Sorry, Matt.
Matthew Bouley: Yes.
Matthew Bouley: Relative to the spec so I think last quarter, when we talked about what kind of Q2 was going to be we kind of set that up that we were going to have a higher spec concentration overall coming through the P&L based on kind of where the inventory was.
Matthew Bouley: Throughout all of our communities, whether it's entry level <unk> move up and as Sheryl alluded to even from kind of a resort lifestyle. So it's a fun it's function of that and on a go forward basis, we still expect that.
Matthew Bouley: We're going to continue to have a higher concentration of specs coming through here in the near term kind of as we work our way through the year, but going forward beyond that we continue to kind of be a fans of a more balanced kind of approach relative beats.
Matthew Bouley: Between the mix between our specs and to be built yeah, and I think Matt Curtis exactly right. The only thing I'd add to it is and you nailed it in your question. It absolutely is a function of what we're hearing from the consumer.
Speaker Change: Eric can go into more detail than I think some of his comments articulated that the buyer has really begun the consumer has really begun to understand the value proposition that's available with inventory homes.
Speaker Change: Even in some instances, where we would generally expect to see a TBA belt buyer.
Speaker Change: And some it's not one size fits all awesome to be built absolutely know what they want and are willing to pay for it a little differently, but the consumer understands the incentive environment, that's sitting with inventory.
Speaker Change: They are prioritizing that and they're in their decision process and we wanted to make sure we have the inventory in the market to address it and maybe just to triple down really quick Matt. We do ask our consumers are asking them for years, what percentage of view of shoppers.
Speaker Change: Need us back have an interest in stocker would be opened to us back and that's been really interesting to see over the last couple of quarters to see that elevate.
Speaker Change: Think to Charles' point to some degree it's because of looking for that deal and the economics.
Speaker Change: But we've tended to try gravitating our spec count.
Speaker Change: The demand from our shoppers, yeah, and the only real difference for US is we are seeing a stronger pickup in what I would say that move up or even the resort lifestyle buyer, which generally that was a smaller piece of that business.
Speaker Change: Okay got it yes, no great color helpful. Yeah. So a lot of it seems like consumer driven.
Speaker Change: And you guys, making sure you have the right product on the ground for that for where that demand is.
Speaker Change: Okay Super helpful. So then I guess secondly, just jumping down to the gross margin side just to double click on that I mean, it sounded like the spec mix was behind the Q3 gross margin guide I just wanted to check if we're if we're talking 'twenty three.
Speaker Change: Adjusted for the full year is the implication that the fourth quarter is actually expect it to be higher than the third quarter within that or roughly flat just any kind of detail on the kind of cadence there in the second half. Thank you.
Speaker Change: Yes, another great question as we kind of look at it we got into Q3 that we're expecting 22%.
Speaker Change: For Q3 based on the higher spec penetration for the full year.
Speaker Change: When we kind of think about what adjusted margin is for the full year at roughly 23% I think you can probably do the math, there and I think it's going to be pretty close to around 22% for Q4, we're not guiding to that right now.
Speaker Change: But I think just based on how the math falls out.
Speaker Change: It will be approximately 22% roughly speaking in Q4, and probably a great <unk>. The only thing that will move that one way or the other generally speaking obviously you have a mix impact, but it's really going to come down to what happens to rates and the incentive load based on.
Speaker Change: The forward commitment.
Speaker Change: The programs that we have available for the consumers in the mortgage market.
Speaker Change: Understood perfect well, thanks, everyone and good luck.
Speaker Change: Thank you Matt.
Speaker Change: Thank you very much. Our next question comes from Michael Rehaut from J P. Morgan Michael Your line is now open.
Speaker Change: Okay.
Michael Rehaut: Great. Thanks, Good morning, everyone. Thanks for taking my questions.
Michael Rehaut: Why it might go a little bit into the.
Speaker Change: Announcement with Kennedy Louis.
Michael Rehaut: Regarding the 3 billion dollar facility.
Michael Rehaut: The press release sided greater some balance sheet relief in greater Optionality.
Michael Rehaut: Specifically I guess in terms of disposition of assets, so I'm kind of curious.
Michael Rehaut: In terms of you know if this would.
Michael Rehaut: This agreement is going to result in some.
Michael Rehaut: Movement of assets.
Michael Rehaut: Off of your balance sheet into the facility I suppose or.
Michael Rehaut: And if you could just go into a little more detail in terms of.
Michael Rehaut: The you know what you mean by greater Optionality.
Michael Rehaut: And if there is you know.
Michael Rehaut: The improvement in.
Michael Rehaut: Perhaps cost of financing for the for.
Michael Rehaut: For the projects.
Mike: Yeah, Hi, Mike I will start with that and good question and I. Appreciate it we're really excited about it.
Speaker Change: As we've mentioned two in the press release, we've we've done some business with kind of your Louis before we understand how each other think and I think thats works for both of us and so.
Speaker Change: To answer one of your questions relative to current assets versus prospective assets. The facility is intended to serve both and so we do own about 35 assets in a fair number of those were contemplated to move over in the facility in the coming couple of quarters.
Speaker Change: And then of course as we think about new deals. The intention is for those to go into that facility as well.
Speaker Change: For all intents and purposes.
Speaker Change: From a functional standpoint, it's akin to a land bank.
Speaker Change: And that we jointly underwrite deals Kennedy Lewis.
Speaker Change: We assign the contract they would purchase it and we would pay for a kind of an interest rate along the way the interest interesting thing on this one is that we will serve all the way through stabilization of the asset through sold through vertical construction.
Speaker Change: Lastly on the Optionality piece I would tell you that.
Speaker Change: Rob has the option to basically optimize the value of those assets and as we think about the competitive arena for each asset.
Speaker Change: Terms of what.
What other assets are available around it.
Speaker Change: As well as cap rates, where we are from a leasing standpoint lease rate and so it just provides a little bit more timing in terms of just having the ability to optimize the value of each asset as we think about the environment and the valuation that the market is telling us and Eric is it fair that on the existing assets and land.
Speaker Change: Tends to be the smaller piece of the overall investment we won't get the even though we will move on we wanted to sort of get the balance sheet relief. We got all the support on the development side are very true so.
Speaker Change: Yes, typically the land burden as a percentage of revenue for these assets was a little bit lighter just sort of <unk> point.
Speaker Change: We do expect the magnitude to be noticeable as we think about conveying those early assets, but some of them are just land.
Speaker Change: Not going to be a huge dollar amount they won.
Speaker Change: Okay. So.
Speaker Change: In terms of just.
Speaker Change: The just to clarify when you talk about moving some of the assets off the balance sheet.
Speaker Change:
Speaker Change: Are you talking about maybe like initially it would be a couple of hundred million dollars and so it wouldn't have that much of a.
Speaker Change: I have a demonstrable impact on on return on assets return on equity.
Speaker Change: For the overall organization, perhaps not but like I said as we alluded to its $3 billion. So we do expect it to ramp over time.
Speaker Change: So really not framing the day, one magnitude but.
Speaker Change: Like I said of those 35 owned assets 13 of them are with the the prior joint venture that we've alluded to and so it's a balanced most of the others are intended to transfer over.
Speaker Change: Okay.
Speaker Change: And just secondly.
Speaker Change: In terms of you know maybe trying to get an early sense of of.
Speaker Change: Growth for 2026.
Speaker Change: You've obviously laid out goals in terms of where you want to get over the next several years.
Speaker Change: You had a competitor talked maybe about community count growth one of your larger competitors at least.
Speaker Change: Maybe in the mid to high single digit range for 2026.
Speaker Change: Given the current backdrop given your own land.
Speaker Change: Option and owned pipeline.
Speaker Change: Is that a reasonable way to think about growth for for Taylor and the upcoming 26 calendar year or.
Speaker Change: Are there other variables to consider.
Speaker Change: Yes, Mike. Thank you obviously you know we haven't we're not rate guide for 2026, but I think as we've implied in our investment day in our last couple.
Speaker Change: Cause we continue to expect growth in each of the out years.
Speaker Change: Having said that you know.
Speaker Change: And I think I said in my comment.
Speaker Change: Comment.
Speaker Change: We really want to look at the market and make sure that we do the right thing on every single asset. We certainly have the operational capabilities. We have the team to take what the market gives us but the way we look at new lands and as we continue to price.
Speaker Change: Prioritize returns is really going to be based on the market.
Speaker Change: As you heard from Eric we still are guiding to something no more than $2 4 billion in land spend.
Speaker Change: But as we sit here today, I think you'd give us another quarter to understand how the market responding and if we continue to see a reduction in inventory I think it will be a lot easier on our next call that talked more about 26.
Speaker Change: Okay.
Speaker Change: Great. Thanks, so much.
Speaker Change: Thanks, Mike.
Speaker Change: Thank you very much as their minds to raise the question will be stuff slipped by one and to move you assess line of questioning will be stuff on it by two.
Trevor Allinson: Our next question comes from Trevor Allinson from Wolfe Research Trevor Your line is now open.
Trevor Allinson: Hi, Good morning. Thank you for taking my questions. Cheryl I wanted to follow up on that last comment just thinking about prioritize prioritizing price and margin here in the current environment. How should we think about your willingness to slow pace further from here if demand were to remain soft as we enter a seasonally slower time.
Trevor Allinson: Or is there a lower bound on absorption pace.
Cheryl: You would not like to dip below demand.
Trevor Allinson: Soft.
Trevor Allinson: Yeah, I think theres a lot of factors that go into that Trevor obviously, if I think about you know confidence today, our sales are all about confidence in with the consumer in today's environment, It's not really about the financial capabilities of our buyer as Eric pointed out.
Trevor Allinson: What we're seeing in our surveys and in the macro data, but we do know the buyers want a deal and in some of our assets that's going to make a lot of sense, where we have inventory and we look at the competitive.
Trevor Allinson: Environment in that local sub market. There are some places where we're going to move pace and there will be a cost to do that having said that there are other assets that honestly, we will be very patient and we're not going to put them on sale.
Trevor Allinson: We have a very strong book of assets and as we move to our active adult in our move up buyers some of those assets and more core locations become very difficult to replace and we're not going to put those on sale.
Trevor Allinson: We've said that structurally we think our paces should be somewhere long term in the low threes.
Trevor Allinson: Obviously, we saw a little bit of a reduction in our pace in Q2.
Trevor Allinson: There are a couple of reasons I look at our active adult specifically, we had a couple of esplanade push out because of power issues that would have had our esplanade business.
Trevor Allinson: <unk> actually up year every year. So you actually have to Peel back the onion to really understand that one.
Trevor Allinson: When I look at the combination of our Closeouts in the third quarter.
Trevor Allinson: Which tend to sometimes move a little slower, but then offset those with some of our openings and thats what gives us confidence in the overall year gives us confidence in our clothing and margin guide.
Trevor Allinson: Yeah.
Trevor Allinson: Okay. Thank you for that very helpful and then.
Matthew Bouley: Switching over to the cost side, a peer of yours yesterday was talking about potentially seeing some relief on development costs and your guys' prepared remarks, you all mentioned seeing some softness in the land market can you provide more color. There how widespread is that any specific markets you're seeing the most relief and then when do you expect to potentially see some of that benefit start to come through.
Trevor Allinson: Thanks.
Trevor Allinson: Hey, Trevor Eric here.
Trevor Allinson: I think it's both sides I think on the acquisition side that was really what we are alluding to with regard to some softness in.
Trevor Allinson: As you think about what that looks like over time, it starts with what kind of timing.
Trevor Allinson: And in terms and deals and then eventually it works its way into some some of the pricing and so we have had some success in our underwriting.
And kind of re calibrating the market.
Trevor Allinson: Realizing some of that through our acquisition.
Trevor Allinson: <unk> underwriting, we expect that to continue a bit and really what we're alluding to is a little bit of a normalization relative to the price inflation that we're seeing in the market. If the long term trend is something like 10%, that's probably been cut in half youre talking low single digits.
Trevor Allinson: On the development side.
Trevor Allinson: Not really I think because development has slowed to some degree across the markets youre seeing a little bit more access to trades, you're seeing a little bit greater ability to negotiate.
Trevor Allinson: On those terms, so again, whatever the long term trend might be in terms of inflation think about half of that on the development side.
Trevor Allinson: So thats what were seeing.
Trevor Allinson: If you think about everything that's coming through the investment Committee.
Trevor Allinson: Would it be fair to say that.
Trevor Allinson: A lot of success in structurally negotiating kind of new assets, maybe even assets that are controlled today price.
Trevor Allinson: Little harder to get but we're seeing some success in some some specific positions, yes, which was kind of the normal the normal train start.
Trevor Allinson: Markets can pick it up and we'll see how long this hesitation in the market loss.
Trevor Allinson: And if it continues we'll continue to review every single deal coming through.
Trevor Allinson: And we will ask for something in many cases, we will get it yeah.
Speaker Change: Very helpful. Thanks for all the color and good luck moving forward.
Trevor Allinson: Yes.
Trevor Allinson: Thanks Trevor.
Trevor Allinson: Yeah.
Trevor Allinson: Yeah.
Speaker Change: Our next question comes from Mike Dahl from RBC, Mike. Your line is now open.
Trevor Allinson: Yeah.
Mike Dahl: Hi, good morning, Thanks for taking my questions.
Mike Dahl: Hey, Mike My first question I, just wanted to go back to.
Just coming back to us for those question, maybe trying to put a finer point on <unk> can you talk about what you've seen in July so far and to the point on pace moving pieces given the back half is normally seasonally lower you're just coming off a quarter that was well below normal seasonal trends.
Mike Dahl: Can you help us understand like do you think you'll hold pace with flattish in the mid twos. So we still expect a further drop off you are.
Mike Dahl: Clothing, you can hit with some of the backlog and the specs, but just trying to understand that.
Mike Dahl: Near term paced dynamic in July comments.
Mike Dahl: Yeah.
Mike Dahl: As the we had a nice finish to June.
Mike Dahl: And didn't started a little slower a nice finish I would say as we rolled into the third quarter, Mike I mean, the holiday the way it fell on the calendar.
Mike Dahl: I would tell you the first week of the month with slow we have seen a pickup in traffic and website activity and sales activity had a laugh.
Mike Dahl: Last week, a nice week, so early results into the quarter, obviously, but I.
Mike Dahl: I think our.
Mike Dahl: Perspective on managing price and pace on a community by community asset holds.
Mike Dahl: Which and with our community openings I like to think we'll be somewhere.
Mike Dahl: A similar place.
Mike Dahl: If I look historically and generally we do see a fall off.
Mike Dahl: From Q2 to Q3.
Mike Dahl: We also expect.
Mike Dahl: Early August you start getting some normalcy back into this <unk>.
Mike Dahl: Seasonality with kids back in school and normalized activity.
Mike Dahl: But a little early to comment on kind of the macro with August and September.
Mike Dahl: Okay fair enough.
Mike Dahl: Sticking with the price versus pace dynamic.
Mike Dahl: I mean, it makes sense.
Mike Dahl: What youre, saying Youre order ASP was still down quite a bit.
Mike Dahl: I assume some of that is mix related but when we think about kind of the <unk>.
Mike Dahl: Order ASP.
Mike Dahl: And how you are managing that pace versus price dynamics any.
Mike Dahl: Any color on.
Mike Dahl: That side.
Mike Dahl: It started to stabilize a little bit because we were down 5% quarter on quarter, 6% year on year.
Mike Dahl: Any help on that.
Mike Dahl: Good.
Mike Dahl: I mean current shared kind of our expectations for price for the balance of the year, but youre absolutely right. It was even though there's a little bit ahead of our guidance. It really was a mix issue and both a geographic mix issue as well as a spec penetration as much as anything.
Mike Dahl: Remember that.
Mike Dahl: We have made some comments that we've got.
Mike Dahl: Inventory more universally across all consumer groups, but the majority of that inventory is always going to address that first time buyer and thats just at a lower price point, even when I look at the active adult penetration specifically a couple of positions in.
Mike Dahl: Florida, Sarah so at a specific way, we had some strong townhome penetrations, which had a lower price than our normal resort lifestyle or esplanade. So not just one thing, but I think all of those contributed to the overall price I Miss Owen in India, you have that's really fair Kurt we had a full.
Mike Dahl: Quarter of <unk>, which is primarily Indianapolis, which is primarily a first time <unk>.
Mike Dahl: Higher market for us so far and we think about last year, we had nine weeks in the quarter.
Mike Dahl: This year, we had a full quarter at that penetration. Good news is when I look at the Indianapolis resolved their pace doubled year over year, so, but it's a good result, but it absolutely is going to have an impact on the ASP.
Speaker Change: Okay. Thank you.
Mike Dahl: Thanks, Mike.
Speaker Change: Thank you very much.
Speaker Change: Next question comes from Alan Ratner from Zelman and Associates. Your line is now open.
Alan Ratner: Hey, guys. Good morning, Thanks, as always for the great detail really appreciate it.
Alan Ratner: Good morning.
Alan Ratner: Question on the cancellation rate.
Alan Ratner: I know I don't want to make a mountain out of molehill here, because it's still a pretty healthy overall level, but you did flag it as kind of something that was a bit of a.
Alan Ratner: Downward surprise in the quarter and up year over year.
Just curious if you can give a little bit more color on these cancellations because I know you guys take a pretty hefty deposit and generally with the build to order business, although it's shrinking that that tends to mitigate some of the cancellations. So.
Alan Ratner: At what stage are you seeing these cans at what price point market specifics, maybe any additional color you can give to understand what's what's driving that would be great.
Speaker Change: Yeah, It's a really fair question, we did highlight highlighted Allen.
Speaker Change: It's hard to find a company wide trends, let me start there.
Speaker Change: Actually we're all start is youre absolutely right. When you look at our can rate. It's I think the flag is it's up quarter over quarter, a little higher than we've seen in a couple of years right, but still as far as the industry goes I would say.
Speaker Change: Honestly quite low.
Speaker Change: When I look across the region.
Speaker Change: You'll see relatively consistent.
Speaker Change: Maybe central being down just a bit.
Speaker Change: If I were to point to.
Speaker Change: The most prevalent it actually wasn't getting financed it was actually in a number of situations.
Speaker Change: It was.
Speaker Change: Home to close that maybe fell out.
Speaker Change: To sell that may be we pushed out a contract because they didn't sell it and we're not going to sit on inventory.
Speaker Change: We had some situations with reload is changing we had some situations.
Speaker Change: We're honestly a buyer.
Speaker Change: <unk> was in contracts for a little bit longer and then they across the street fine.
Speaker Change: Ridiculous deal of an incentive and it's easy to walk away from the deposit, but there wasn't one.
Speaker Change: One I would say Rps.
Speaker Change: Trend across the entire portfolio.
Speaker Change: And as I said, if I had to point to one it would probably be.
Speaker Change: <unk> on their existing home.
Speaker Change: And when you think about our move up buyer.
Speaker Change: Most of them need to sell their existing home, but not all of them.
Speaker Change: That's really helpful and I have a separate question, but hoping to squeeze a quick follow up on that point.
Speaker Change: That circumstance, where somebody is in contract and cant sell their existing house do you guys keep the deposit.
Speaker Change: Generally yes.
Speaker Change: It depends on one did they write it as a contingency.
Speaker Change: We only take a certain number contingencies by community.
Speaker Change: If we're going to take a contingency we're going to really scrub their existing listing and understanding how they are positioned in the marketplace.
Speaker Change: Sometimes they will have a.
Speaker Change: 30 day contingency and then that gets released so I would say unless it falls within the Guy I mean, if it doesn't fall within the guidelines, we do keep a deposit and we have a pretty Ah.
Speaker Change: Pretty black and white line on that.
Speaker Change: Got it actually the only thing I'd add to that as we do incent them Alan to come back within 12 months and we'll reapply the deposit.
Speaker Change: But we would keep at it.
Speaker Change: That makes sense.
Speaker Change: Alright second question, I guess circling back to 26% I know youre not going to give any guidance, there and I'm not looking for it but I'm just curious if you think about.
Speaker Change: The guidance for the remainder of this year, obviously a lot of these closings are coming from from your spec inventory. So.
Speaker Change: Your backlog today is down about 30% year over year, it's probably going to end the year pretty similar spot assuming the mix of business stays elevated specs. So.
Speaker Change: You flagged youre pulling back on starts right now.
Speaker Change: I understand.
Speaker Change: You think about next year spring selling season is there a point, where assuming you're successful in clearing through the specs and.
Speaker Change: Delivering the closing guidance is there a point, where youre going to look at your start pace and say, we really need to reaccelerate things, if we want to show growth in 'twenty six.
Speaker Change: Yeah, it's all going to be dependent on market conditions, Alan but of course, I mean, we're going to really be focused also with our new esplanade openings in some of our new move that positions.
Speaker Change: Where it's possible to accelerate our to be built business right. Because that's generally what we come into the new year with a strong to rebuild backlog. So that will continue to be a priority for the business, but then as we move through these facts, we absolutely will replace them, we'll do them in the right locations, where the consumer wants it.
Speaker Change: Inventory.
Speaker Change: But we have to make sure that the consumer that they are in the right places and I understand kind of the macro but given today's environment. If I were to look at what we're looking at you know today based on consumer feedback with the priority our preference being inventory we have.
Speaker Change: We'll continue to replace them, but at a I'd say, a very responsible way.
Speaker Change: Got it I appreciate that thank you guys. Good luck.
Speaker Change: Thank you.
Speaker Change: Thank you very much as a remind us to raise a question will be star followed by one.
Speaker Change: And certainly for <unk> line of questioning Christoph.
Speaker Change: Our next question comes from Ralph <unk>.
Speaker Change: Bank of America rescue lens is not likely.
Speaker Change: Yeah.
Speaker Change: Hi, good morning, Thanks for taking my question.
Speaker Change: I wanted to point out that you spoke about the absorption pace.
Speaker Change: Move up versus entry level versus resort lifestyle can you talk about the margins or incentives by segments have you seen any changes there.
Speaker Change: Yeah, I would say that when you think about incentives the way I would look at it is we can certainly talk about it by consumer group, but your most expensive.
Speaker Change: Incentives are going to go with finished inventory.
Speaker Change: That's probably where we will focus on forward commitments in those permanent buy downs.
Speaker Change: We've talked in the past about our buy build and some of our other proprietary programs aware.
Speaker Change: On a to be built or an earlier spec, where we can assure our consumer a below market rate those arent quite as expensive.
Speaker Change: The only thing that I would point out is somewhat different from the norm is with the resort lifestyle buyer many of them don't take mortgages.
Speaker Change: Or are they take very small ones. So our incentives there might be more focused on.
Speaker Change: Our percentage of options that they buy or if they buy this many will give them a percentage off.
Speaker Change:
Speaker Change: But that would really be the exception and generally as we've talked about everything else is really tailoring that right promotion, but the further you get down to a completed inventory homes the more expensive your incentives.
Speaker Change: Okay. That's helpful and then when we look at the.
Speaker Change: Third quarter back half margin guidance relative to where you were in the second quarter.
Speaker Change: Just between.
Speaker Change: The higher incentive level and mix impact can you sort of give us some color on each of those pieces, maybe like how much of the step down is from each of those.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Say that.
Speaker Change: But the majority of that is going to be on the spec penetration.
Speaker Change: And maybe some mix, but as we alluded to kind of in our prepared comments most of its predicated on kind of the increase of our spec penetration.
Speaker Change: That is resulting in kind of in that kind of stepped down from a margin standpoint minimal impact from a.
Speaker Change: A mix perspective, we are seeing a little bit higher sales price mix for the rest of the year with some higher price communities kind of getting closings or increased closings kind of our western segment, but most of it's going to be as a result of the increase in our spec penetration and the resulting incentives associated with that.
Speaker Change: And we've assumed relatively stable incentives right.
Speaker Change: Interest rates were going to remain generally where they are now.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Great. Thank you very much.
Ken Zenner: Next question comes from Ken Zenner from Seaport Research Partners, Ken Your line is now open.
Ken Zenner: Good morning, everybody.
Speaker Change: Good morning.
Speaker Change: I Wonder just Florida buyers I know you guys, obviously with your Investor Day, you spent a lot of time down there.
Speaker Change: Asked the same question to hopefully yesterday, but like what percent of those active adult buyers in Florida for those.
Speaker Change: Homes are generally from.
Speaker Change: Lowered.
Speaker Change: If you could.
Speaker Change: Nope that out a little bit.
Speaker Change: Youre active adult buyers in Florida, mostly from out of state or.
Speaker Change: Yeah, and it depends a little bit it's a big state. So it's interesting if you go all the way down in Naples, its historically been as high as 80% over time and Conversely, if you go.
Speaker Change: Up north it's it's something that's going to be closer to 40%, 50% still.
Speaker Change: So a lot and noticeable but it does depend and it is also seasonal right.
Speaker Change: I should emphasize Brian the majority of our buyers around hey, but as you move through the summer months and kind of shoulder you tend to have a more in state buyer. So.
Speaker Change: Having listened to their call yesterday.
Ken Zenner: Ken I wouldn't I would agree with what you heard yesterday, and our Florida buyers come from all over the West Coast internationally East Coast.
Ken Zenner: There is a lot I mean, there is a lot of desire to live in Florida and across the state. So we continue to be quite bullish on Florida.
Speaker Change: Excellent and then if you could.
Speaker Change: And I apologize I should know this but when you say spec 71% can you define spec is that intra quarter order closings and how does that 71% compared to last quarter and a year ago quarter. Thank you very much.
Speaker Change: Yes, the 71% Kim.
Speaker Change: Does the percentage of spec sales in the quarter.
Speaker Change: I think a year ago.
Speaker Change: It was probably in the.
Speaker Change: Just checking my notes.
Speaker Change: Something closer it probably in the.
Speaker Change: What I would say in the mid sixties.
Speaker Change: So that was higher or better.
Speaker Change: Tracy.
Speaker Change: I am sorry, Ken so that was higher as well as our penetration of what we saw broad closed in the quarter. So they were both a bit higher than I would say historical norms, yes, Ken I followed it here.
Speaker Change: A year ago.
Speaker Change: The percentage of our spec sales in the quarter were right around 59%.
Speaker Change: Great and then is that how is that different than intra quarter orders that were closing does that's traditionally how I think about that but what is that look if you have that available. Thank you.
Speaker Change: Yes, the percentage of our specs sold and closed in the quarter was 28%, which again is higher than where we've been historically as well.
Speaker Change: Thank you very much.
Ken Zenner: Thanks, Ken.
Speaker Change: Thank you very much on next question comes from Jay Mccanless from Wedbush. Your line is now.
Ken Zenner: Yeah.
Jay Mccanless: Great. Thanks, good morning, everyone. So.
Jay Mccanless: So three questions for me the east orders.
Jay Mccanless: Formed much better on a comparison basis versus the company average I guess could you talk about what youre seeing in Florida.
Jay Mccanless: Also in Atlanta, I know, that's an important market for you guys.
Jay Mccanless: Yeah, certainly can as I said I talked a little bit already I think about them.
Jay Mccanless: Esplanade.
Jay Mccanless: If I start with kind of the south east Jay that remained quite strong throughout the quarter, we saw year ever sale year over year sales improvement and our Carolina and Atlanta markets I've already talked a little bit about.
Jay Mccanless: And when I moved to Florida.
Jay Mccanless: You know it's.
Jay Mccanless: Little bit of a mixed story, our Orlando business, which is our largest Florida business had a nice year over year increase in sales and that was fueled by some community count growth and a very modest reduction in pace.
Jay Mccanless: Most importantly, when I think about Orlando, it's their mix of communities is really shifting from what we've had the last year or two to a more balanced book of consumer groups.
Jay Mccanless: Away from just exclusively first time buyers, which will continue to improve sales margins and returns.
Jay Mccanless: Sarasota also saw a nice improvement in pace and I think did a nice job reducing their inventory.
Jay Mccanless: But as I mentioned before we saw a pretty strong townhome penetration in Esplanade, which is unusual for us, but it did moderate their ASP.
Jay Mccanless: And brought down even as high as our upgrades were brought down the typical upgrades for the quarter.
Jay Mccanless: Yeah.
Jay Mccanless: I guess before I leave.
Jay Mccanless: So what I did mention that we had that new esplanade opening with a test of great interest lesser in Q3. So that we had planned to open last quarter. So very excited about that when I look at the interest.
Speaker Change: Jack's also had a nice sales growth in both community count and pace expansion.
Speaker Change: You can hear it here a trend here. We're also very excited to open our first esplanade there in St Marys and that will be.
Speaker Change: In the first quarter that one also has a nice interest list and then I would tell you Tampa was probably the only market, where we saw some real softness in the quarter and our paces.
Speaker Change: We saw higher cans than normal and that was predominantly in our first time buyer. Good news across the state MJ, we saw resale inventory month of supply is reduced in almost all our markets.
Speaker Change: Great. Thank you sure.
Speaker Change: And then shifting out west we heard from a couple of your competitors yesterday that.
Speaker Change: Nor Cal, especially may be seeing some some tech job loss or some tech job concerns maybe what what are you hearing from the field out there and how are you thinking about that because I think those community mix is pretty even between nor Cal socal, but anything you could give us on both those areas would be appreciated.
Speaker Change: Yeah.
Speaker Change: You know for Us I'd say, a little different I mean, we've been talking with the street with you Jay for Awhile about lightning, our capital investment, particularly in Socal and reducing our community.
Speaker Change: Sure. So the communities that we have in Socal I would tell you are performing well.
Speaker Change: <unk> the company.
Speaker Change: Average on absorptions, but the fact that community count down which was quite intentional as we've reallocated funds to other markets. It has created some drag on total sales in the west.
Speaker Change: If I head up to northern Cal.
Speaker Change: I would describe Sacramento is stable with relatively consistent community and paces.
Speaker Change: Our base business was flat on sales year over year.
Speaker Change: You know, it's interesting because our cans in the Bay and maybe this goes back to one of the earlier questions I got were actually below the company average even with all the tech noise, we're seeing and I would tell you have moderated quite a bit since the back half of last year.
Speaker Change: So for US the base sales only being flat had to do with open communities. We have three new communities that just opened at the end of the quarter I'm excited about those does that will help grow the balance of the year.
Speaker Change: Our only market with an ASP over $1 million. So you would expect some cautiousness with their equity in the tech.
Speaker Change: The tech market like that but honestly, it's been pretty good overall.
Speaker Change: Yes.
Speaker Change: That's great. Thank you and then.
Speaker Change: <unk>.
Speaker Change: I thought it was pretty interesting the shopper survey. So you talked about in your prepared comments Sheryl.
Speaker Change: I think the bottom line from that is.
Speaker Change: The average Tim consumer who is looking at our house their financial situation is in pretty good shape.
Speaker Change: It's more of a macro that securing them at this point is that is that the bottom line takeaway we need to have from that.
Speaker Change: Perfect summary.
Speaker Change: Youre dealing with this move up active adult buyer tanker moving yeah, you're talking about a more sophisticated consumer so the fact that they want to make sure they're getting the right deal compared to the marketplace.
Speaker Change: The fact that theyre going to be a little bit more cautious and understand how the macro effect span I think makes a lot of sense.
Speaker Change: They have the financial wherewithal.
Speaker Change: It's not that that's holding them the ones that are kind of sitting on the sidelines. When do you any other specifics in the research area that you'd point to no. It's really interesting and I think it's <unk>.
Speaker Change: It goes back to kind of the interest in specs and looking for incentives to that I think it's all tied together and it's really sentiment.
Speaker Change: So again rightly or wrongly in the prepared remarks, we frame that as a positive because it's much more difficult to fixture financial situation than it is.
Speaker Change: At least thats something.
Speaker Change: It's really about the newspaper and the sentiment that seems to be impacting people's desire to be out shopping to make to you.
Speaker Change: You know and we will see in some time, Jay what happens, but I would point to the big beautiful Bell and some of the benefits you know with the salt.
Speaker Change: The salt.
Speaker Change: Deduction cap temporary lifted the permanence of the 750 on mortgage.
Speaker Change: Interest that now won't expire I think some of those things will help the consumer I think all of that's kind of been up in the air for awhile.
Speaker Change: Obviously, the mortgage insurance deductions I think that will be more focused to the.
Speaker Change: The entry level buyer, but I think all of those things as all of this kind of is put to bed I think and get understood by the consumer and then some confidence in what's going to happen with rates I think all of this begins to play a part for them.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: So since you brought it up I am going to go ahead and ask you about I was going to ask this question probably next call. The next quarter's call, but have you all look to see where this increase on the salt cap how.
Speaker Change: How much it might help people I figured I figured everyone's you'd be talking about it looking at it but did you all brought it up earlier I figured I'll go ahead and ask now.
Speaker Change: Yes.
Speaker Change: Yeah, I think we at this point I don't think I can quantify it for you for us its really California, that's going to be impacted right.
Speaker Change: Mostly.
Speaker Change: It's absolutely going to have a benefit I think the benefit goes to your last question, though it really does come around confidence, they're not going to make a purchase decision.
Speaker Change: <unk> decision because of the salt cap, but.
Having that I think in the formula helps them.
Speaker Change: We're looking at it on an overall price point, if you look at the base price I just talked about with the overall ASP at $1 million, it's certainly going to create a benefit I don't think it's going to catch them over some of the confidence issues, they're dealing with but I think it is helpful.
Speaker Change: Absolutely nothing.
Speaker Change: For Texas as well as some of the higher priced homes you sold on there because people forget that Texas is relatively high.
Speaker Change: Property tax market. So I will definitely ask you, perhaps a little later I think it's going to be good for your business and in the industry.
Speaker Change: Thanks for taking my question.
Speaker Change: Thank you I appreciate it.
Sheryl Palmer: Thank you very much. We currently have no further questions. So I'd like to hand about the Sheryl Palmer for any further remarks.
Speaker Change: Okay.
Sheryl Palmer: Thank you all for joining us today I know, we went a little long I appreciate all the questions everyone take care and we'll look forward to talking to you next quarter.
Sheryl Palmer: As we conclude today's call we'd like to thank everyone for joining given that disconnect your lines.
Sheryl Palmer: [music].