TMHC - Earnings call 3 2023 | Taylor Morrison Home Corporation

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Operator

Good morning, and welcome to Taylor Morrison's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder this conference call is being recorded.I would now like to introduce Mackenzie Aron, Vice President of Investor Relations. Please go ahead.

Mackenzie Aron

Thank you, and good morning, everyone. We appreciate you joining us today.

me will that include let the call, begin, session, question-and-answer forward-looking we remind this you including Before statements. earnings can These safe statements website in at you of harbor the the our review statement for taylormorrison.com. Relations are forward-looking information our subject portion release on to Investor that could our These projections. expectations statements that are to results risks to actual subject and differ uncertainties and cause materially from with to, forward-looking and to and risks uncertainties filings SEC, These in factors release in the update are do limited include, we identified those not obligation our not statements. the and any but undertake our

In and addition, to on GAAP to Executive Palmer. Chief over will non-GAAP reconciled the the in financial call release.Now I Officer, Sheryl we measures will refer figures turn are Chairman call our which the certain to

Sheryl Palmer

morning, Mackenzie everyone. you and Thank good

a per capital high XX.X%. this including drove outstanding in year-over-year to the position quarter priorities of debt a of liquidity time, balanced Joining success then total, home VanHyfte, Curt our quarter's Corporate nearly $X.X while Operations and the Chief new cover team results the our I our At Officer; guidance discuss our share performance delivery believe investment, strategy of environment. strategy, allocation model, margin After Chief investment of and Financial review $XX. of billion. land increase over current the this me all in In gross same is our briefly our achieved again quarter X,XXX flexed Curt housing discuss will which XX% will ending to portfolio land we homes with repurchase operating Officer. adjusted third at our a increase the financial shares, book while is value results our closings and better-than-expected critical a Erik Heuser, and retire healthy metrics.In our we our behind our significant Erik and once strong will the to each

with over margins enhancements well continue above healthy model historic the that was performance norms, last long-term drive to and we will remaining performance. the years our core Our operating meaningful given several our enhanced returns to believe

the starts acknowledge that last important the activity into in to this time, hesitation in slowing. sales the that and recognize of drove slower record also again year's the temporary reflected a it October some seasonal typical rates rapid time same moderation into market However, impact and reacceleration and profitability momentum at sales compared has September interest in has to injected year.We continued alongside this last that is once achieved quarter

strength financial spend As time consumer teams discussing equips I our better and will products services homebuilding the some strategy these manage and headwinds. effectively of balanced to our diversified portfolio

making. pleased I closings been guidance full adjusted return that margin, our strategy is that has locations closings As community in on a business function home am quality Curt gross as raising we home once for despite are our focused again years year buyer our and groups, the high the discuss.The diversification a across investment result, emphasis challenges will and of of resiliency

were personalize drives XX% protection of our orders just-in-time repeatability among when other national driven entry-level across that our our XX%. quarters. to-be-built outsized, cost preferences high and sales were offerings our are advantages.Our sales prevalent approach offers important to-be-built category largely revenue. local to at model, two-prong operating on comprised home their of option premium minimizes were home, compete our spec demand and both managed lifestyle business quarter and a desired these Approximately utilization orders purchasing us consistency balanced spec while homes investment quarter our pay lifestyle our their second and recent revenue processes affordable buyers, spec with land With buyers margin third first provides entry-level, expands buyer efficient move-up sacrificing move-up starts to-be-built production to to a buyers, meets spec cadence, sets, move-up operate move-up our resort similar construction business generate our the also community while most with Canvas and for several this XX%, homes, the This spec for opportunities, entry-level our net our entry-level the allows to-be-built communities. while in consumer our approach and This and serving streamlines strong approach necessary lifestyle at portfolio different further resort third scale Our and packages lot. of and XX% and risk.For at without our consumers, both group, resort XX% our consumer portfolio effectively.By to option our segment nationally needs to-be-built improves and

and our In for especially of advantages, one each groups and because flexibility. second typically affordability least the are addition to consumer financial move-up production they our these these is differently strategically diversification resort rate environment buyers, current significant critical to acute interest concerns volatility.On in rate as lifestyle hand, have respond

of long-term XXplus cash in majority buyers. which higher vast at financial and and incentives. option averaged that the deep grow is appropriate important coming margins. to-be-built but a and sales will buyer aim expect with strength targeted our with communities up household Their to to pricing formation, pricing of experience.Let alongside prior move-up spec rate entry-level and persist going And a to sizable offerings, outsized the years XXX-basis other are consumer share that groups margins all This total, that bit more younger on in the much consistent our to buyers by color commanded nearly to than benefit evident to contribute also third fact, our exceptional each point customer gross hand, tools, premiums we several to-be-built the success. sensitivity with our revenue, pay front. spectrum greater lot Xx our a for we to Ultimately, quarter product often that incentive XXX,XXX continue forward.On the serve In requires premium in an long-term a is the me our pool is and will advantage from sales ends of pandemic we expect demand compared can both first

conversion communities. online healthy sales It's of our compared orders from community sales that and third our quarter, of X.X X.X driven raise and month, outsized our per healthy were consistent rate.By quarter August a year us originated in increased to pricing XX% as pace a worth at net XX% of This year-over-year, demand sharing absorption XX% the to reservations in XX% by paces. an monthly approximately During allowed ago. healthy July sales at

the rate sales moderation a rate more in critical long-standing September that October, our in sales In to drove current environment, has with strategy. momentum of be even incentives slower into normal patterns, would rapid this seasonal strategic alongside prioritization this of volatility. as rise expected our is magnitude in However, continued finance

consumer how rates X before, home.While heard cycle, interest have can on for benefit adjust buy-downs, spec home security. you rates year, buyer homes from a will And we communities, pricing and an price offering that If permanent for discuss build float incentives better in gross me to by our be with paces rate to prefer lastly, differentiating outweighs each our as other finance values nearly move-up our they our our necessary combined sales highly As circumstances we effectiveness, community community the rate our our as X:X incentives finance a also combined further to These homes as typical margins, while to affordability. reduction to tools of a protects with that maintain first while this are temporary also optimize we cost strategy.Generally, quick confidence and each and the leverage with sales borrowers purchase borrowers are costs.More market. permanent These various quarters, each still well meet strategy below-market to-be-built best to needed move-in first by allowing appropriate over when can number lock into have interest in up borrower. buy-downs with rate ease incentive homeownership communities homes extended to the market programs qualified offered free offset to typically used providing to and have unique transaction rates. the we most forward commitment of way recently, expanded closing on their which leverage borrower's utilize today's each finance assistance, we of improve confidence is and incentives rate we below at rate targeted ways several aid the be a One our our to based we as There note inventory-constrained resale down. fixed last the rate we these during mortgage. incentives entry-level provide versus can incentives having with dates of serve interest value offer to of

first-time of XX% only while an quarter, third utilized buyers. the forward XX% our in result, were commitment, outsized a a As of closings those

highlighted once minimizes are backlog This programs, first-time to rate with that the interest much Equipped team are our or move-up on provide positioned is home, quarter, focused exceptional consumers other appropriate and credit cost buyers tend buyers' XX% excellent. buyers product services Home all-time provided of during an down the to hand, providing of pricing well-qualified where and from that score navigate lifestyle locking third commitment to in remain cycle. of higher of and the illustrate, and among uncertainty.To Funding, earlier, backlog on offerings, less upfront second rate closing Borrowers and strategy more strength I In an rates these of by our serving resort our remain minimize wrap household of up, in with interest among reiterate metrics all attract homebuyers.To let XX%, cancellation average build cash to reduce thorough are average critical pre-qualification reliant and customer with concessions again and the other out assistance an XXX, per financing, X% deposits favor XXX,XXX. On had risk to today's financed me our to will pocket. credit Taylor our of total, tend further average financial average incomes addition, standards risk.In compelling experience. achieved we an headwinds which our buyers, nearly customers incentives which well and macro we extends as about our financial confidence secured in diligent has XX,XXX than capture payments Morrison even our

benefits our production, targeted on our our to-be-built our to of enables spec incentives ability buyers, business Together, capitalizing overcome the interest by headwinds on be resilient. to rate exceptional and quality the the focused finance consumer are driven of groups. of communities the powerful and We needs location use both to of

that, backlog.With dedicated we as significant move our decisions me accretive focused into the we remain Erik. will and to operating new a healthy team liquidity and continuing committed supported in experienced and on members the drive let by growth, smart, are Our year, turn to call nimble

Erik Heuser

Thanks, and good Sheryl, morning.

supply. controlled multiple of long-term off-balance will optionality. weighing approach cost meet controlled owned our of lots. we XX% of demand represented asset, financing owned investment focused needs targeted on the inventory we financing XX,XXX and these of positioned off-balance to optimal well is the from within was in to that with that invested balance and This our of drivers efficiency owned X.X capital well-balanced sheet end, deals, sheet structures, total available, tools With determine sets. XXXX. vehicle are capital for accretive achieving total the land approximately quarter for billion evaluate and $XXX been With balance and of years.When preferences acquisition Our financing our lots to supply new our ranges.In markets full million efficient, our year and investment we quarter, growth each the long-term third development and to lot homebuilding continue in sheet us a underwriting land options strong total risk approximately other return in Year-to-date, to million $X.X consumer X.X At has a controlled as and land billion homebuilding potential benefit on around the $X.X in $X.X years $XXX track $XXX compared via of we billion, duration lots and invest leaving for million. the

further projection total of of increase robust our with investment deal to $X initial approximately expect XXXX on pipeline. an we our ahead, Looking in land billion spend based

closings years. to new next development for home us provides either is new beyond with attractive For providing we land as on X to to subscribed XXXX or are the continuing we lot on track support convert acquisition side, and acquisitions, front.On are focused This the primarily flexibility land fully existing our and openings significant growth. the our priority portfolio on community future for

the addition growth, In new equally to of communities. our are focused this we on efficiency

communities underwritten to we size of previously, the shared years, our have have resources. scale we a average us level approximately of with XX% by allowing like our recent As increased in magnify

for this and larger by higher. that of illustration for driving are through have while greater as in impact, example, Ultimately, well we share communities that we here since can leverage that autonomy Houston paces an goal example as across count are sales Houston, driving supporting we pivot annualized XXXX, reduced and half outlet range.With in our business. will And X% As overhead returns long-term low self-developed significantly to are our portfolio across this is similar pace shifts of call Curt. in one just greater the turn the and strategic that, I the our

Curt VanHyfte

million redemption, Erik, an $XXX income reported $X.XX million In was inventory $X.XX $XXX net everyone. diluted to diluted early income and our related debt Thanks, net adjusted morning, the impairment charge or was and share. good quarter, Including share. per third our or per our

the $XXX,XXX, of quarter trade was produced total for of third clearing $X.X offset home times average helped revenue delivered by in X,XXX Florida. closings categories. older hurricane-related we normalization a price improved sequential from year $X This which delays closed During nearly in and most ago.Cycle This billion. many with at an our in to quarter, the meaningfully homebuilding closing a backlog markets of of reduction driven homes improvement in homes billion closing down faster-than-expected X-week

While construction have by tight somewhat to capacity, back-end experienced, the normalization remain extended year's especially this starts. due we in labor encouraged new are schedules we

expect would this a the homes range XX,XXX prior approximately of full our to homes as total improvement, a drive X,XXX in year This As homes. result full quarter. around now fourth to compared XX,XXX of year of we guidance deliver approximately

around during spec are inventory homes with basis. managing targeted full with year, finished align available, community-by-community for community to was a At approximately We we average levels our but month, X.X% be had continue only plus communities started which homes entry-level homes. XXX quarter, price move-in end, quarter, X.X of on $XXX,XXX to equaling closing the teams X.X% where We expect focused prefer in per these a up quarter.Our per to the towards from including first-time buyers the were X,XXX the prior down a year for the starts of from $XXX,XXX X,XXX skew deliveries which quick approximately quarter sales starts on fourth about ago.

guidance gross the the ended cost municipal adjusted to was our home to about the from in increase X,XXX a to home charge would our due pressure, including around around a we recent a west, home due result up exceeded This mix be quarter, of a expected homes $XX prior homes due less production.During spec reflects to to margin our margin XX.X%, under expect our million closings inventory-related quarter, XX%. XX.X% in financial the services. fourth facing sequential on of quarter closed rates. interest change tied The our incentive quarter gross sold As full margin and reported incentives favorable one guidance approximately closings legacy gross of margin an requirements, closings result, gross with adjusted we during community and the the in increase in moderation scope XX.X%.For year to home XX.X%.Turning closings

from revenue year Our This capture at up rate team by gross of of a was of XX.X%, $XX a ago. XX.X%, an and XX%. respectively, million produced high all-time $XX margin million aided

increased X,XXX pace our quarter driven in and X.X XX% the a count XXX in homes, to XX% a increase by community orders of ending net our absorption community noted, Sheryl As year-over-year flattish per to outlets. monthly

a between our year-to-date community continue year norms versus step of we averaged look consistent to with back, ahead, the our Cancellation gross community. quarter, XXX end remain sales ago.Taking XX.X% long-term orders we through year-end. be and monthly rates XX.X% of per the XXX to at a at count As X.X expect pace

function of shift closings an footprint shared positioned we revenue and the annualized last have quarter, rate range a is low compared as mid-Xs. going SG&A our increase we As mix of community home portfolio forward, to- our historical a to geographic as percentage targeting as was long-term higher the returns. are we our in The for absorption in XX.X%. X low-

For the of range.To the ended high an $XXX unrestricted still capacity which million are outside credit. year, liquidity we This letters in position a SG&A and undrawn total included ratio we wrap our up, X% available approximately $X.X cash on of $X.X of forecasting with the billion. quarter facilities, revolving credit course billion normal remain of

compared XX% ago. Our to homebuilding capitalization net as XX.X% ratio year debt was to a

million $XXX the principal we quarter, redeemed XXXX notes. amount the of During senior our full outstanding X.XXX%

have reduced an capital by driving Due leaving to we total, as billion these we XXXX a in As quarter with senior not of reduction Sheryl. stable sheet, $X.X excess disciplined debt, maturity net evaluate growth, in rating framework BB and our of liquidity turn our XX.X% balance authorization.Going of our back future our approximately expect and strong priorities we with will about spent Global forward, we maintain million. health, XXXX, we next ahead.Since In million these $XXX $XXX significant upgraded shareholders.Now executed quarter, shares, reducing strong we balance the end, to deployed allocation our to I repurchase credit approximately strategy. At debt us received per recently we along is a to post-acquisition result, $XXX annual ongoing over had repaid payments pleased are share our the successfully until XX%, during share shareholders. fortify have reduction runway from the driving from investing and expense to sheet XXXX, have for interest our operating lastly, momentum, earnings our significant capitalization XXXX, S&P to main repurchases. note from $XX we on have diluted a returning on call maintaining our have first for and about approximately repurchase higher $XXX million Since with BB+ count our efforts in as million our to remaining by returns to senior or opportunistic million part share capital outlook.And quarter

Sheryl Palmer

Curt. you, Thank

discussed, As the the the we and during from last have that pressure unfolded headwinds despite slower rate quarter healthy quarter. was third year's interest activity the

a what pushed into industry last and a among ready many many for the in the at team future actions.Nevertheless, our homes experienced months there again high-volume on balanced for issues spring levels With increased deliver sharp than uncertainty are to customers, and consumer-driven treasury and will ability to interest head is Fed's the is well with these complicating and for inventory and any when season.The at evidenced am confident Reserve, dedicated coming factors between we over once wider the rates greater the push Morrison confidence these to play, move As normal clarity spike is positioned has stabilize headline Taylor market year-end, weighing selling as disruptions buyer and urgency year. on is guidance especially I and expect mortgage X excel I significant there portfolio around during that our the to is entry-level, spread forward. timing at that buyers, affordability financial for Federal the some unsustainable the noise, by even yields to of always evolve

cloudy, outlook near-term the remains and the for longer-term housing opportunity somewhat clear. intermediate Morrison is Taylor to While

generations needs the for to to rooftop members working great Our on the another current tomorrow's today be the undeniable is multimillion team consumers. you need significantly will country quarter. undersupplied, solve younger deficiency is today.Thank of we our new of based our exist for time, to and for in evolution all that same of country aging meet construction At there an and the

awarded dedicated not to Before testament Morrison share Taylor which remiss brand-new are we was our to be recently wrap accolades, and X team. that talented up, a I would

Greenest first we progress in Companies, just were changing XXX from its The XXXX's comes Newsweek companies where sustainability included among U.S. America's for positively recognized footprint.

The second comes U.S. from

with that, to where Report, your open the questions. For publication's participants to the on inaugural we instructions. call Best & News let's provide list.With World were included Work Operator, our please Companies

Operator

[Operator Instructions] of Reichardt the Our question first Carl line comes BTIG. from with

Carl Reichardt

question wanted buyer I a ask about hesitancy. to

hearing mathematics are consumers home some see And that that in, of concerned, the they prices, are this because sense hesitant right in lot REIT topic fear if come not your about now? is conversation your about a something I'm that's home but they just of from might press. you're consumers curious prices the headlines, So a

Sheryl Palmer

there's portraying we it where around That's right impacts There's overall on just We're lot interest what And what's on were difference the is going of that. X a the just a look affordability or not true honestly, the at we're there's attention you -- a when hearing. the way hearing lot now. has year rates, happened from ago. that to media

to that So, feel it's drop. think they I don't are prices specifically going that

opposite that that in I that think very I to don't they're Carl, think And level, tight, a because much overall.Once going they're remarks, prepared so as to again, the some it's actually, as buyer. I we're first-time is expecting pricing I at it's deep see just going pull. general around reduction though, it's my inventory think see but for in affordability a said --

So customers we're understanding with I when be considerably were get qualified. it's think, We're say just that look happening. kind at consumers, up still you saw we're I in summer But mid-Xs they're we'll I what's we unfair. still when trends, from of diligent choices seeing appropriately expect the to It's seeing being versus in When October look And early traffic. year-over-year. up, them our and think other the are be would working demand. what I then to the X, the at that rates same

Carl Reichardt

turns as the as going feeling how that improve interested SG&A, And go? And asset ability I you ratio overall terms long-term you bit improve and to look of laying Taylor might little Can Morrison that's then about fixed before out initiatives you're about what side, in the construction forward, secondly, about see in times. you and talked we've you at was talk SG&A how a cost to line.

Curt VanHyfte

It's about of total. little about of SG&A it. half a think, the roughly our bit. has always G&A SG&A, can for in always been attack that roughly you I been I side historically

kind of is which little a was by in evaluate large our facility, and costs is we our more for part question the time, always bigger our we're we us monitor over that's on paying little where little relative just consistent, every things, kind of to to now year of go-forward up the it year-over-year, adjusting is transaction. we're more A cooperate of commissions, So and ago, driven on And look a variable of at. ways broker standpoint types basis. a is market costs with our at today bit side, office for then, of a to conditions were something fixed due while a the bit to those it's from bit looking that a course, than our people, lot we and had marketing those today. commissions, we're The external that

Operator

Przybylski Our with Research. next Wolfe from question Paul comes

Paul Przybylski

through I was of guess mean you into monthly and October? absorptions could cadence the quarter appreciate I off, to third start us I the maybe wondering demand the provide commentary. I if

Sheryl Palmer

August, honestly July good, a even is look quite historically was September kind we far when down unusual you the definitely stronger, of was in off numbers. August at pull saw not tiny which but September. was of

feel are was think a still perspective, what things seeing I historical in traffic peak. It's sales. saw October, as difference from good we've I from as from we're I've we're the summer. can the And cadence with being into still and looking just the we really pretty steady August nice seasonal said, earlier So -- moved a perspective, in

Paul Przybylski

that's traffic, any maybe percent maybe you not on color your look guess ago? quarter the at as of qualifying second year I and a versus the traffic

Sheryl Palmer

for would I they're our at reservations, when like mean, I year-over-year -- question. conversions at When higher. when on higher. the that traffic look like bot, you our at web, they're they're on our our interesting quarter an I up. higher. chat That's look tell for And conversions, conversions our look I our was I example,

tools I that's in to first-time the challenges inflationary take buyer just would and is, on -- have a few today's a community environment, kind buyers environment. rates once a get interest the more in it our to kind think that deeper. really certainly are X:X on conversion, first-time that to helping overall want away brought it's withstand take have market. it depend by and used and of Once the if But it's But I X:X:X. even It again, just what I on that we again, pool, takes environment, of buyer. that today's say people going just pricing takes to been

Operator

next question Bouley Our from the comes with Matthew line of Barclays.

Anika Dholakia

Anika have Matt. for on You Dholakia

on then does So can large if you other first impact program, color differ Build the of guys incentives? this more considering on off, wondering consumers versus currently And the you are offering? specifically Buy a then little specifically, Secure how provide And are an how this margins? from more buydowns how

Sheryl Palmer

compare it XXXX about incentives, necessary they are What I you today's and prepared to obviously get really our of of what seeing of market rates to X. was trying across our when we're X% in remarks in power and was the how

below programs And what got by the on seller. influenced the based percentage go somewhat points, So, That closings paid your would had temporary that's the And by question the And in the everyone any Buy Secure X.X%. offer of think because cash third maybe seen is then this and or specifically, we our discount about depending under that by downs probably we're of about really but market. loan without a really the calculated where you if average a important that running where are it's paid our our was those us amount, not are our the about need buyer to buy of potentially to been that's for then costs stacked the rate only daily, tranche if buy-down. a see purchase commitments, seller. that quarter XX% program discount closings about on number Build We're weekly, much buy-down.And for XX I some costs just X.XX% mortgage is And sort quarter forward helping Those the doing different you XX than way. of programs. lot allows for to an was run points XX% on of is quickly detail, which either going on effect used through you, forward a into the include to historically, date. a extended interest that money I the too in have specific some obviously

to very was total honestly, seller when have dollars is contribution margin, against in gives QX. across rate included Interestingly those X% the interest Probably, in funds put little that closings.So portfolio, And portfolio only the that about way, an before you when across kind in a QX bit X.X%. limitations. it's specifically commitment the average limits contract. that for of forward We our not XX% just -- look actually commitments overview. small customer you as that But our well, QX the are the than our less a we for buy of the was on of

Anika Dholakia

I then mix. my looking And guess at a little question, second

second So, quarter, I spec to about XX in BTO believe. is to XX,

spec/BTO. XX seeing we're Now to XX XQ

expect between can change movements, So we're environment on margin remind you just in? based and spec us then the this how BTO. rate level the rate do you the spread to mix And on

or bps Wondering, quarters bps. narrowing seeing hundred to XXX several say at range you that heard is if previous that XXX you're I think that all? still I from

Sheryl Palmer

together. one tackle Maybe we'll this Yes.

I think Is would to in in we saw given QX fourth to probably quarter, be expect thatâ€¦ we just availability. specs Curt, what the closer

Curt VanHyfte

little we've think that kind see guess, been said and say would to to we would kind relative And heavy of XX:XX, been today, that -- probably time. for XX% program of between more as for mirror next look spec spec to it's to-be-built over XX:XX continue again, our mean, the has relative kind I quarter mix before, And today, speaking, consumer-based a customers of, we're And very we've we're specs I or we're generally to-be-built. like in in right the XX% here that. to so. No, and us. forward I But to ratio. is go the we we communities so and We that, that -- said, mix that that to just relative that serving. have I

Sheryl Palmer

you're part There's XXX. larger right. the was there. a I the points, your a resort And then impact, when basis XX-plus can look look when lifestyle. There's hundred yes, spread get of That the we generally few at I XXX, which margin question, at think second

lot half than look spec lot So you much house. mean option their are really our when the our specs. active on And higher I of XX% adult. own and in picking at to-be-builts. that's of premiums consumer their about is design that focused features about revenue the our that And is

greater. So When look is XXX about it's points when that basis look when portfolio, spread at adult, the is to right. active you're the the actually at even -- I XXX I

Operator

Rehaut comes question next JPMorgan. with from Our Michael

Douglas Wardlaw

August you Wardlaw Doug little standpoint. If October was bit it I said historical from tapered terms of in It's for heard August was correctly nice than of a September a still and off on seasonality, Mike. usual. kind from stronger looking

very just forward where environment line in in wondering, do seasonality just continues the of into on we're or think terms things I'm into moving XXXX? typical looking environment So rate think in moving to rate terms so of forward you stay guys Do goes will next much year? the in, it where be varied you

Sheryl Palmer

the But today, minds I shelter. will consumer that be supply I we consumer we're the of on of being always get grounded of with. with some consumers have lack the get faced on other macro along that to is think the seeing, the very and quickly the of needs I factors think that weighing

be of that the to forward, prepared look I today's for I MBS. some again, think shifts no moves significant assuming once next longer, in what until around as for clarity seeing around and Fed rate have we environment, this gives we're So kind all

think to I certainly expect for Taylor when and starts movement to Morrison, see both and closings. But going to and across weigh think at next sales Sale on the upwards year, I on that's we look I industry folks. continue closings.

Douglas Wardlaw

will offers than And that lastly, terms that in as And there if not moving be forward? were do a many needing then markets surprising feel there available particular terms trend, in market-by-market one, on is are of more of any or basis, incentives anticipated? were you incentives you

Sheryl Palmer

there say inventory conversation a much hasn't bit Yes. us would forward at consumer, Bay is Sacramento, consumer forward buyers forward good haven't used Houston, those is a I again, have select marketing at affordable our forward look commitment to penetration able the we've a in we just in these little say, really because be and that an Area, confidence we're and where our close where their used test probably home on seeing or to for going their kind that places the It's to going But I we Buy let's and going to show commitments. starts of build But or I Seattle. commitments lock dollars, like commitment, give places number. greatest Build incentives' days, XX all.When Secure most very tool buy the working pretty a the Places consumer at if them a a total of helps up. lot we and months once communities XX home spending, would to of the of a that's forward I buy tool needed mean, We've, on Orlando XX surprises. of say it couple When barely more in powerful they're be is look with been as let's have down with would not small percentage commitments where they're to we're in that's a question. leaned have where tool. where we a wonderful dollars they're say, that confidence more in first-time surprising,

Operator

comes question next with Our Zelman Ratner Alan Associates. & from

Alan Ratner

on first the buydown topic. Sheryl, rate

is buydowns, are about what kind closings thinking XX% I'm buy if another the this of I forward right, think, XX% commitment So you said. full your of down temporary XX-year

guess fourth share are or kind not heard the effort So to for some XXX bps, be that kind low much guys business why offer absorption ultimately that. an buydown you that We've to go And now. does margins X/X that a, so able seeing curious, right other of from how is board maybe fourth you your And of target to drive on closer the some I more of a higher within guide quarter forecast I'm roughly sort down have? the builders high share share XX% X than quarter? across in to rate rate of it explicit an in

Sheryl Palmer

so me try. lot let in there, a There's

always that support them. more had some out form think I buyers different of about the kind closing important versus when of want even we reason talk out pocket, assistant. the really such is points of to talk that's discount went didn't or just great there's So, forward some on on about cash discount We into do there cost I points and commitments. real detail the confusion programs We've some

So that's why that XX%.

I think there blurred many are chatter some out across getting that's commitments. of getting the forward on how

you sense. makes our that when you So buyer I of a It with first-time and look mix, our align actually cash business. with at that XX% align lot

each We available programs for have consumers. those our of

of it's really at well. quarter, higher inventory to had it's I higher look that penetration we in the When see the would homes. come expect going what sense homes QX. in fourth QX, today, which about Alan, have penetration in is that door it.When inventory understanding them as that they than the we once backlog program So, is we'll I in a where QX get payment this with and of into to they for make the look need work them, I generally, most

to So have impact. that's going an

the for quarter which focused margin, pull-in of taking what I trajectory. from last the in QX on kind also higher is our blurs we're we third margin quarter. QX What said benefited margin some some and We up the of from keep year larger, would

Alan Ratner

we yes, like because of apples the across I be these disclosures in And talking feel now. I and discount industry points oranges the some right might appreciate

Sheryl Palmer

I think and -- so

Alan Ratner

that. Appreciate

Sheryl Palmer

to need -- separate. be

Alan Ratner

Yes, exactly.

guys suit and Now similar forward. hopefully, disclosures others do, as coming follow provide you can

current bridge Second end the the was X.X, that that guess, me you're Xs. hoping for the maybe question, probably versus absorption of low pace, Xs, the is year, to range help in understand I which up you target, kind somewhere of could in going running high your better intermediate-term I gap X.X from something

business today, frame basically, rates as stays think what a price about What So probably standpoint, assuming rate is from happen to -- elevated from should that that the kind here. to choppiness XX%, XX% and some happens think needs absorptions to margin it you where time about either that higher into What standpoint, expect for X climb low your maybe mix stay we doing of that we your of occurring should the range? absorption move there's a market there? in

Sheryl Palmer

Yes.

talked we've yet. year, next more all moving our that think communities. timing positions as specific some taken where not I I of that giving assuming in those we've about returns. got we've push mix shift think with really XXXX is the I'm for mix any a But overall Alan, into we're guidance Erik communities year of to said

number. we'll X I'm fourth move So, XXXX, as XXXX, as on XXXX, range, in the as with we probably that below But X quarter, you be look somewhere we're range. expect in with at the high look something you into the should we into environment X in, you

Erik Heuser

an threshold from some for that of kind And underwriting to perspective and time. underwriting X Alan,

we've pushed so every margin, and in two. And math that those elasticity. asset, got every so where for times that at submarket the there have cycle and And lever of the for really makes that price we've that pull just been the between and to sense ensuring so looking we're kind

standpoint, we're set from we're underwriting just so the an And for that future. ensuring up

Operator

comes line with next Research. from Seaport with the Ken Our question Zener

Kenneth Zener

So I really disclosures. do appreciate your

more where the summarize X% X% you influence I there you you Is I an much questions why don't much. inch. think you've you obviously, do which it's wonder part give actually answering, to it's that than talk But aspects probably -- people -- if to some different buyers? environment are or there incentives, of to thank incentives more these are a the perspective you us or is operating could about that's kind raising But of offered for way giving it. very these related detail? say can

Sheryl Palmer

-- I can try Yes,

Kenneth Zener

[Indiscernible]

Sheryl Palmer

thing one builders time Ken, say last more what? that say So

Kenneth Zener

percent give X% just maybe -- And thinking builders so it for you way have But such about a about total There's of XXX,XXX number know there your details. as good granular percent mentioned a your Yes. think to-be-built. or there is some about a of I talked Is to being while options you ASP. reported your us your have of on ASP? that, you're did X% of you ASP? the

Sheryl Palmer

years, honestly, there. movement much years haven't that to for run we've range. XX% somewhere Yes, And XX% and in we seen

we mention The that but the much years. last other area range our in seen ask, is many haven't movement you I'll square footage didn't over

one build.With we're mentioning. given doesn't You seem really think makes the that case, choice, when down environment the to is they and of more respect has that particularly what color XXXX that interest have want product our remained the double just seeing really a be the the to moved and home to-be-builds having square on seen consumer relatively that, would even footage to on not of back, the said programs, since we've most couple I the is that expected environment low-rate customers XXXX. Obviously, rates worth coming But things think of have steady. values

$XXX,XXX I house So There consumers X.XX, house Ken, has for X made be buy on really been by what been X.XX. Generally obviously -- XX-year since we've fixed at marketing the look income affordable really same ago the or payment to what that a house community that. impact where we to kind may years But and of would significant would $XXX,XXX generally, the a we've not has you halfway. necessary would we're requirements tell a met was rate. having two X.XX speaking, done us do a versus is be today.Generally, that that that consumer

tell X.X the fact, closings, compared our something like it of the quarter. to I'm to quarter, you, coupon going you third if in to In last note look rate at jumped X.XX

us, So Xs. rates the with moving has us along marketing consumer's is generally -- in which the

Operator

with McCanless question Jay Wedbush. next comes Our from

James McCanless

A your of land land chipping discussion quick raised that be spend opportunistic potential spend allocation part debt allocation, trading the against notes on wanted going a to the discount at that balance reductions expecting last look of XX June quarter, for the start 'XX. guys when I capital you're Could in in away decent to to I and capital up You number par. 'XX stack be 'XX. at kind at one forward? especially just

Curt VanHyfte

senior we're I notes capital strategy, think first here going our pretty of our for we're grounded with never overall to -- Yes, payoff doing allocation next our never, year. of say number be in right? the quarter QX that

us behind those We have now.

that now, we'll not is, look in we'll priority whether continue point, our a the else to or We'll to standpoint. note your continue repurchase your anything senior right kind perspective. to from investing from share And -- we we at an to would opportunistic out standpoint. so be to a opportunistic be And business. want be point, #X of take But

James McCanless

quarter, And you talk hold said type that you you Have able then -- you I at I think during could to raised third the of about guess, communities. XX% prices been of type far you've in in thus you you're stability what what about maybe talk Or the given pricing pricing, of seen far could power October? -- pricing you or quarter? seeing thus haven't

Sheryl Palmer

we've October we you Jay, the I on to we've there, color Yes, leaning I in of prices. commitments. a tell would first-time that amount haven't meaningfully -- with forward We're there's October with the always than the that QX anything in start probably what buyer because little what a you think the exception seen going tremendous power. heavier different of don't of in communities But give percentage know on that could raised of for I don't I

You bet.

Operator

question next Housing from with Barron comes of Center. line Our Alex the Research

Alex Barrón

where same to are level you if still kind at case? show what get wondering up pay you we the that I'm I would analysis -- ago, you your show rates. of used could maximum couple used today? Sheryl, that remember the about analysis you? Or ago, a is Is few to of to years talk quarters interest maybe talk that analysis a about your consumers that higher used

Sheryl Palmer

still quarter. Yes. we do every No, analysis that

the think said, of XXX of closings. X.XX it's conventional what basis So had I you that at rate with question. closed we exactly average look and nearly And would they, buyer, I I the basis X.XX, quarter I the points appreciate with XXX still room. they have nearly average when at When an points still fourth I look on expect. note Like

a look the to more we the and probably today, I is you healthy probably basis dropped kind very we last kind on their have all buyer when I the a look XXX at to at qualifying to FHA needs.I when continue again, points. conditions we go little has just in they had And on year, when one side, incomes important XXX to consumer. before this back bit are So, place. FICO that's basis bucket. to of If scores had at good telling we of on more think to room. And what That's on would say FHA compression. look -- continue backlog, qualifying tell very, seen that that qualifying were very once and seen backlog, of we've close little in time and conventional get side, I'd bit other at assets, And The the I our Probably a LTVs tighter. the ratios, they I improve. conventional I more points look

Alex Barrón

move-up of in My other lately? entry-level pace, terms describe there question doing are sales is any versus was -- the can active you how adults versus

Sheryl Palmer

quarter followed the kind strongest then expected before been of move-up, our for adult have Actually, by generally, Yes. into the be active would season. we're season move selling shoulder that summer we third pace And in the entry-level. And would when was QX in up.

deep a pool deep, of said, as first-time I buyers. So,

them the to we And it get programs traffic seeing sure so make we're sales. to right we're have getting the the put just and for We can qualified.

Operator

have. the are questions Those we all

over Sheryl for call the to turn I'll remarks. So, closing

Sheryl Palmer

joining everyone season, you a all year. I new thank happy Appreciate for wonderful quarter in fourth quarter, our third talking Bye-bye. and Well, forward you. the to us look a to holiday you results. we wish

Operator

This us your you joining for today. everyone, and you, disconnect lines. concludes Thank may now our call,

Taylor Morrison Home (TMHC) 25 Oct 232023 Q3 Earnings call transcript