D.R. Horton (DHI) 28 Jul 202020 Q3 Earnings call transcript

Company Profile

Participants

Jessica Hansen	Vice President, Investor Relations
David Auld	President and Chief Executive Officer
Mike Murray	Executive Vice President and Chief Operating Officer
Bill Wheat	Executive Vice President and Chief Financial Officer
Alan Ratner	Zelman & Associates
Stephen Kim	Evercore ISI
John Lovallo	Bank of America
Carl Reichardt	BTIG
Eric Bosshard	Cleveland Research
Michael Rehaut	JPMorgan
Matthew Bouley	Barclays
Truman Patterson	Wells Fargo
Susan Maklari	Goldman Sachs
Buck Horne	Raymond James
Mike Dahl	RBC Capital Markets

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Third Quarter 2020 Earnings Conference Call for D.R. Horton, America’s Builder, the largest builder in the United States. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Jessica Hansen, Vice President, Investor Relations for D.R. Horton. ahead. go please Jessica,

Jessica Hansen

and results Welcome of for to in Kevin to fiscal our discuss addition conditions. market our the current good you, to morning. call XXXX Thank third quarter

defined may get we that statements Securities of started, Reform call by Before include Private the today’s constitute comments forward-looking Act XXXX. Litigation as

available believes materially statements no information forward-looking are Horton any statements. actual outcomes D.R. different. or that based update assurance forward-looking to will on are reasonable revise D.R. not to obligation the this Although be on based any such not All statements any publicly D.R. undertake is date assumptions, call conference Horton there Horton upon of does and

contained subsequent Commission. website in XX-K earnings your found updated investor be plan Horton’s on be about Form or to call, on or & Presentations which Securities report reports and D.R. information post will Exchange at section the This that on to issues to material we is Additional site two. supplementary annual for and After under XX-Q, on lead with the will are morning’s could all Form filed of can changes performance data day release Relations in XX-Q investor.drhorton.com Events our and presentations next our reference. the our this file we Investor News in and

Auld, and CEO. President to our will I David call the Now, over turn

David Auld

to healthcare and on express joined our Operating Murray, We you, be I would our dedicated Jessica to be Officer. Chief all Wheat, President caring to pleased on gratitude – field Vice our and the Chief Bill for frontlines again country’s are and communities. Officer our first also President Financial Vice Thank this who to and our morning. workers by Executive of good like joined to and call Executive Mike am

we serve. with partners priority of safety to communities thoughts customers, and the our trade employees, by our this and continues affected pandemic health the Our remain those be and

latter widespread began the COVID-XX activity part and related business. United During impacts negatively States the to our economic of in the reductions affect of March, across

were when were During increased year decreased April, for lower in April orders ago. sales than and our markets, place sales restrictive a stay-at-home most orders our net cancellations X% orders and our our of

this orders However, In across We resumed, June, and net resulting year our X,XXX economic more restrictive and to began share normal sales further to as markets both to a homes the in our in market Horton same than quarter and year, May levels. to lifted orders increased many of rate be XX% last sold sales the returned our activity order compared quarter prior by gains cancellations more the increased net achieve and increase scale. for sales D.R. than quarter. periods, XX% positioning significantly

a sales a in the XX% and billion. to on a the our $XXX orders net XX,XXX delivered consolidated increase of net increases continued month homes, third orders disruption year. revenues to million quarter, have the Despite in to same operations, July $X.X record income D.R. including team sales strong to in XX% compared see last We in pre-tax from increase COVID-XX Horton

margin profit basis while XXX to diluted share. per XX% the for pre-tax Our EPS our quarter points increased to XX.X%, $X.XX improved

XX same period was the the XX.X%. on for ended return Our homebuilding return our XX trailing inventory months consolidated equity for June and on was XX.X%

on economic and sheet, from that strong today, conditions. and market strong liquidity have While and generating product we the impact overall base investments local cautious pricing, optimize inventory through operating the and operational future. may flexible, in offerings, home as Mike? on operations managing our and communities of our based position housing return plan remain our flows our by our teams, incentives, homebuilding strong to operate We COVID-XX the each inventory financial We our to position balance effectively us housing conditions. our levels well position believe on sales market conditions very maintain are to experienced very cash to economy operations in changing

Mike Murray

per of per XX% increased increased quarter year to retroactively $XXX efficient fiscal share million XXXX for compared to the that tax Net included results, in reinstated the million. per million federal $X.XX of credits share earlier in to for The energy the compared share earnings $XXX Diluted income quarter. third current $X.XX year. were tax XX% prior $XX.X to quarter the benefit home income quarter related to

on prior up sales quarter closed, homes XX% home third the $X.X closed on billion XX,XXX in homes XX,XXX from year. Our revenues increased billion to $X.X

the last with closing our and average down efforts of ongoing affordable. $XXX,XXX homes at Bill? our our average reflecting was flat for Our closed keep price year quarter the X% was to homes size essentially

Bill Wheat

Net billion, in $X.X year. was XX% to the increased XX% sales value quarter of up homes and $X.X orders the third those orders billion in prior XX,XXX the from

was sequentially. and unchanged the both communities essentially Our prior average selling number from of active year

as year our more average net XX%, entry cancellation from was the orders on in the quarter price $XXX,XXX, third our sales a the of the The third the due XX% average for down year, rate region’s quarter for price decline region brand sales West prior the quarter. up during sales quarter. from in X% Our was to in prior level mix Express the primarily shifted to

well-positioned to and increased supply and the homes lots fueled due been at of May urgency by Our interest than by increased and our offerings, inventories, and with this prior June demand the demand. rates, price product April pent-up affordable more completion. housing particularly Jessica? We supply close in to extent, completed and both increase XX% affordable compared homes has to lower in periods. buyer to those net points, limited orders demand remain year some the after were sales We believe increased for

Jessica Hansen

communities quarter. the sales was on revenue expect gross be XXX sales remain the compared investments the the quarter points year our XX and inventory sales up managing margin optimize up demand. gross home pace similar profit conditions in on to prior return from the our adjust the home We in in margin to of basis third points on quarter the quarter sequentially local incentives focused our Our to third and March fourth to and pricing and We quarter. market basis new home each XX.X%, to currently

regarding uncertainty impacts the is and on the impact there of our in future. margins COVID-XX which However, negatively future demand, could the home Bill? economy gross new

Bill Wheat

from as year In of homebuilding the the down expense, was revenues, prior percentage third SG&A points quarter. in basis XX quarter, X.X%, X.X% a

appropriately and Mike? expense our our is at percentage remain our focused revenues its our point Our a SG&A supports controlling homebuilding business. SG&A in as ensuring that history infrastructure we on of lowest while

Mike Murray

third inventory. of homes of completed. with which in homes quarter the our ended XX,XXX were We total X,XXX XX,XXX were unsold,

our Due years. under higher quarter. and normal We also homes and had not construction at in completed in the May is our than significant lower backlog end unsold of sales the in increase X,XXX model number homes is is portion of yet of June, the to recent that our than

total starts a meet our accelerated XX% them. lots, pace we approximately of and consisted most we number least we finished XX% to were home to of be will of contracts. purchase finished As sale at own XX, lot our communities are controlled or XXX,XXX available each At ensure when were lots of across have position community purchase and maintain result, in for demand. of our XX% our our June controlled owned adequate are of lots of which XX% homebuilding through homes an

portfolio ample strong us provide Our competitive of lot price for David? a affordable lots includes current and position. at points an supply homes continues to

David Auld

our million purchases and development for land number our March lots we in and and of investment investments we lot land was homebuilding an for increased development our Forestar. for was slowing million $XXX the After of $XXX finished $XXX which totaled was ensure lots, April, quarter $XXX our to and third finished pace home million lots base. land and Our and land. billion, lots investments development, maintain were adequate of to in quarter have construction land $X.X Bill? of million since support for third in

Bill Wheat

XX traded across manufacturer – owned is markets major our states. publicly XX majority Forestar, a lot operating our residential in subsidiary,

with is share. both companies relationship opportunities market as operating much Forestar serving our during us a well across well-capitalized supplier presenting footprint is to gain this for and time strategic Our lot of volatile

delivering lot right of position Forestar’s of our revenue income which more XX% of owned first XX% XX,XXX growth D.R. a under XXX% are and or XX,XXX of and high are controlled XX,XXX June than with of At purchase its on Forestar’s Horton growth owned net of offer with through XX, is agreement. XXXX. under consisted to subject contract growth expectations fiscal supply Forestar master already contracts. are lots, year-to-date in lots

note available their leverage, next Horton; of Forestar business. position liquidity, includes At Forestar’s which to their separately $XXX economic capacity is of and Jessica? to and very is credit million and ratio unrestricted navigate revolving cash capitalized grow maturity approximately its debt-to-capital from Forestar strong a senior relationship ample $XXX Horton low June in and changing With through is its was and million conditions liquidity, D.R. with $XXX XXXX. continue million XX.X% in on XX, net facility. D.R. has of

Jessica Hansen

our continued pre-tax some developments the loan prior year in conditions. our to impact secondary adapt and continue originates in April to third Financial by of due strong $XX.X disruptions servicing uncertainty selling the COVID-XX net in VA mortgage changes market markets XX.X% operations services $XX.X the of profit third mortgage adjust and of the the the and the markets pre-tax to has servicers mortgage disruption million margin and FHA the March mortgage on quarter mortgages to at gains. with company quarter. in the Act, CARES retaining We during in and among that quarter our compared a income million was monitor we and of XX.X% rights in caused Despite began will the originations to

related this loans FICO by mortgage score homebuilding of an FHA XXX company’s DHI for XX% mortgage VA the closed and Borrowers an financing had buyers. XX%. loan-to-value quarter, of of XX% our accounted with of loans originations Mortgage quarter home company ratio originating our to volume. company’s XX% our loan the average and and homes for operations average handled of the For mortgage our

homebuyers by the focus affordable closings at offering our price XX% represented continued Mike? points. reflecting handled company, of homes on First-time mortgage our

Mike Murray

that was rental to our two selling third under style projects is on and suburban projects this other XXXX. substantially that the the complete were one end and construction year, apartments multifamily slated project Communities our four fiscal After focused quarters fiscal quarter. had be at marketed fourth projects earlier DHI during of no of sold active garden company or

sell the new After based DHI Communities by pausing and on construction a market acquisitions in our couple DHI we in in and leasing platform. assets and of June projects pace and current for we of XX. to began projects June plan expect DHI April, grow Communities new Communities at construction fiscal We plans million March, May, activity. XXXX, starts selectively to $XXX and still totaled resuming

single in We also opportunities for evaluate to the continue family homes. rental our market

homes are of currently segment operations, nine are the of building family in as across leasing We in market. rental in and single our this housing growing our participation the early stages we communities Bill?

Bill Wheat

being capital approach balanced opportunistic. Our on disciplined, flexible, and focuses

sheet, financial and Our flexibility ample conditions to value operate to provide effectively disciplined strong our and significant liquidity, with company. leverage long-term us our to to economic enhance maintain balance investing low capital the we changing approach plan of in

compared liquidity we our billion June $X.X cash prior on provided homebuilding billion and homebuilding billion capacity months homebuilding cash was available operations $X.X $XXX XX, consisting the unrestricted by $X.X credit facilities. of X million the revolving had of At of in our billion $X.X ended period. June, of homebuilding year During to

XX% end year the Our senior public homebuilding leverage note homebuilding of of June outstanding, billion the was in XX, was next June, stockholders billion book of notes a XX.X% equity $XX.XX, value share and ago. up was XX $XX was at and At months. $XXX per maturities million $X.X our from

XX the XX.X% June, For our equity months ago. return a was compared into on XX.X% year to trailing

repurchase we cash repurchases to any quarter, our as operating paid in quarterly financial at visibility We to last near-term the expect Board of August. level to during dividend the to our be dividends declared we During shares market until paid expected quarter quarter did the cautiously future better $XX we same results. has third share conditions flexibility in have a the level maintain of and and manage million not our and

Our down outstanding have and share X% a authorization ago currently we share Jessica? outstanding $XXX repurchase an from year of is million. count

Jessica Hansen

XX,XXX uncertainty XXXX. our to the expect of billion operations now As to our we approximately to economy consolidated close noted range generate XXXX. quarter we quarter, of U.S. from fourth last to we to fourth the billion the due and COVID-XX, quarter, withdrew for XX,XXX in expectations Based today’s In guidance fiscal our providing market revenues for we the on conditions, business $X.X homes. in are $X.X and fiscal the

margin to SG&A in expect We guidance plan in range XX%. be the mid fourth to X% to for revenues. November. market We expect the our and We when on the we the provide David? financial sales fourth to be early in conditions of our homebuilding in to quarter earnings XX% tax margin the quarter gross home approximately X.X% pre-tax call in be annual hopefully and third fourth quarter approximately visibility fiscal we have sufficient XX% into services rate to our similar next humbling XXXX income a anticipate quarter profit of

David Auld

product it’s relating multiple diverse offerings share, closing, results In strength geographic reflect and our of across and the teams brands. footprint market broad operational our experienced

and sheet, changing investing and And us economic entire Horton strong maintain Thank ample work. liquidity hard leverage value effectively approach to financial with long-term team focus operate Our we in the conditions. enhance our your significant to to D.R. of the capital provide to to low company. for you balance our disciplined plan flexibility

Your remarkable. been efforts during time have this

of as spirit and new We their safely prepared continue you positive work on your This your close helping our our are remarks. proud homes. ethic much concludes customers anticipated

will now questions. host We

Operator

question Instructions] [Operator Zelman Our today first coming Ratner you. from Alan & Thank Associates. is from

now Your live. line is

Alan Ratner

on morning, to quarter is good glad well. doing hear and Hey, everyone Congrats guys. great a

the spec given how I sense. came supply, demand right tightness strong are backlog, only percentage which quarter ramp makes just same now as starts build as presumably, you I dynamics existing greater what seems far to a you there as mentioned down question, there. coming? was activity the but inventory healthy your First inventory out And it sure and of the yet on your other of is am builders surprisingly just inflation a in the a obviously any the not to not curious and doing start that’s spec your bit starting any not am here you backlog quite side seeing a started, lot the has on are labor and build replace because up, pretty there, ramp like

David Auld

Labor challenge a has this been cycle. market throughout entire

we treat have that Mike on The efficiency early reality I way to will labor very very, seen the the be the be stable process to partnering the benefit through trades very as of tell trades So, we think and just through has focused operation, build cycle. you, managing on, driving cycles the all continue effective how with our this and build this of our and how is, in situation. proven we

Alan Ratner

it. Got

helpful. that’s Okay,

climate here mentioned you years, – in M&A activity, am given about about the Second done far is demand several and right certainly thinking the M&A you question, seeing here, big so buyback the is a concerned? the as last I as private of ‘XX you pipeline at are start you on this what think to and the curious as point, how this question side of handful buyback you potential sustainability a have transactions are

Bill Wheat

morning, Good Alan.

where it to We more down to add, comes that the company, we to to new long-term base the teams. evaluate can can still continue add different value we people operating but accretive product and serve, the customer opportunities and are where importantly, add to of

any we evaluate probably new to us. to done where are you have will acquisitions, continue for I markets at us builders, the private tuck-ins privates. massive look public that think smaller do existing up the we several with talk but But to won’t to opening adding continue markets we we So more see or do inclined either

Alan Ratner

given to has climate any just remain sell in uncertainty the the or of bounced an emboldened to kind today in seen bit privates’ the activity willingness perhaps this in little changes back company? them you Have a independent

Bill Wheat

to a it’s to to say, based vary as private both it’s whether situation a it’s going thinking they I good would upon operation. them particular bigger still do of a different are place to if join time it’s something builder for and or to and be the

Alan Ratner

Understood.

Good a Okay, Thanks guys. luck. lot.

Bill Wheat

Thank you.

David Auld

we that does of stretch point a great family and would a our win-win have and where be are will we kind join they at. it want not to to to going to need not we to and fit in a position this go be really it’s add have – And don’t for them I at a us.

Operator

Thank you.

Our Stephen next Kim from coming question from ISI. is Evercore

line is Your now live.

Stephen Kim

time Thanks and spec asked. Yes, very guys. much, cycle Alan that the follow-up just to wanted on question I

stable. your very extremely down are and times significantly. surged cycle mentioned I seen obviously say. have obviously encouraging you are would we demand and But That’s specs So has exemplary,

for guess me where so has spec the like they are you able environment, an question are strong would increase to do I bottom it from been? your as today is is and where as levels line So in demand you to

Mike Murray

spec question, to Stephen, would yes, like Answer your first our levels we to increase today.

to We planned will our starting the our sold starts be we increase time, specs. have aggressive homes. At same

we so start And as growth supporting of and trades with big houses. we David But focus early our in capable operational of mentioned efficiency, that are front a have the before, focusing that the in plan us. product, to they the on partnering the being on, and in been have is true it

think to can but inventory, a increase it’s our going able So spec will I be be you not lot we promise do to that. without of we effort,

David Auld

week, that, will we The project. start I focus by sustainable program, as execute what now to our continue project carried. come think on And spec right we consistent accounts week is have driving to to a historically

Stephen Kim

about question pricing curious pricing D.R. Freedom Very versus perhaps seen that mix we Horton semi-custom in – and It business. those the of we increased not is there to local push had And second Horton a that little to saw would on remains a a for are recently take to seeing and June versus obviously ability obviously hear to past, bit out-of-state? you Yes, and is I encouraging would whether price price local extremely or challenges. to driving a out-of-state you we your more flexibility second if than the when whether the interest and question of it for pricing business demand half environment. Horton that’s the look you strong. D.R. and particularly to are ask great. Express that traditional, in what are seeing wanted more I am selling – demand the May difference seems allows you – in a and in

David Auld

I as both would for we the D.R. the branding, to seeing in Freedom demand brand. say, and are uptick Horton

As to the question, profiles. to continues. my of a people both in say from increase The of we’re affordable state seeing tax-friendly relocation I would environment demand down more

our maybe is we COVID think at sites. always each something I’ve kind is that. and – demand week-to-week, I pricing track Pricing flag at upon individual considered based even it’s of accelerating

want down. come never so be pricing to in – you push have back You hard you to back you where adjust a and that it want position to

people a they they will – if always save X like today, bit versus little want will money a buying to buy money they now. feel year from You save months or

and we communities divisions up the make closest here. in those actually, make that to So, made better feel decisions the that can and individual fortunately, and the our structure company, we market people is the than a mentality decision entire are are

Stephen Kim

lot, a very Thanks David. Great. That’s helpful.

Operator

you. Thank

John Our of Bank next Lovallo from from coming is question America. today

live. now is line Your

John Lovallo

Thank my you questions. Hey, for guys. taking

is encouraging. very order growth The first at June and XX% one, clearly year-over-year May

I know was July said you strong, David. Just

basis? way Just a us year-over-year it in was on curious any strong frame help if you that could how

David Auld

June. in It’s consistent May and we with saw what

John Lovallo

that’s… Okay,

David Auld

but out is our a market people testimony positioning now. very-very-very right really and a to good It our there, it’s

John Lovallo

more you your consistent overall That’s of conservatism tone any as the happen than think With might things seen encouraging. just run which guys how could I unemployment, maybe any that just some it slightly cautious you it’s in of of seeing or peers, always with COVID, really be? think just I Okay. slowing have anywhere be the business But is really prudent. sort mind, is signs that and or whatever curious, in traffic this could are given

David Auld

uncertainty out there our of signs It’s just control. completely is slowing. No lot that of a outside of

just be long long-term versus today, March or what where you out If industry, the going you should supply very-very end this the where from in at the look you demand is of industry, happened is But term. to even price good about be feel completely saw I demographics, the in at got to the mean nowhere. future

next the think the reinstate we have year, do I we numbers as get again. November/December into we that So, a will hopefully period visibility we more turnaround lot then can guidance and time can

John Lovallo

Thank you much. very

David Auld

are a CFO, mean, be you I have Bill going are if to got always you We Wheat going conservative. to for conservative.

John Lovallo

guys. Thanks,

Operator

Thank you.

coming BTIG. question Our is from from Carl Reichardt next

line now Your is live.

Carl Reichardt

to of is question have. the Mike with to Good that amount typically your And would are Alan be everybody. at you backlog, look closer going spec, normally time spec maybe completion unsold if than back be you I’m unsold morning, about closer backlog year? this And are this Thanks. your you you and or you – to – of Steve’s time your sold of finishing of and you that David, at this year? would than

Mike Murray

delivering would started of So, and of we to time are line year, sold range say generally similar going with largely the into quarter across be in the are the with this I at fourth specs. the homes the production – that

with maybe to to the September close, less because the they’ve little have if set sold strong sales we’ve them probably will in to bit specs we moved sold close are a sort the of the of demand that had, – We you finished and quarter. category

about being really reload back levels inventory us feel and bring and accumulate. need plan to sustainable the to we demand. able good the ability out starts have support fourth good to able inventory the we that building We the and the to to deliver permits about feel the we’re we So, quarter

Carl Reichardt

on think demand, about deurbanization some folks and if you bigger trying observations your have idea didn’t talked low it’s rates Okay. on function field motivating from to about just if like maybe And a a Obviously, your just of purchase that. of the then a or and of demand. vagaries you this the question, urban market, seeing talk so dedensification driving pent-up more Thanks Thanks picture this folks you seen and call, understand the math release tells of folks. And Mike. in or suburbs coming you areas I’m sense just that in that to or bunch, more exurbs? you’re homes from curious something the sort that’s you’ve I’d and math. some

David Auld

David. I think this well, – is

was And COVID-XX demand – I in that think do of going households it like for next being pandemic I homes what or They that years. – buyer out accelerated tied has pull there forward of lot there housing trend children you and are that’s people plus just think demand generations. than call think whole a to is or be a program and place looking before trend. pent-up later, were the over conservative that the toward the five disciplined I more I think this it’s millennial really forming previous a later, having

Bill Wheat

Hey, Carl.

a still sustainability to too term would a generally as but now, it. referring that trend think to certainly probably effect had and I I pandemics We it’s that it. are I on what of is agree accelerating right early trend you depth of know continuing an is longer the the think is that that is think

comment the as on comment front marches just of to on that and we’ll depth able see in to we and rest then live of we into on. us what So, be time the try

Carl Reichardt

Congrats, Bill. guys. Thanks,

Mike Murray

you. Thank

Operator

Thank you.

coming is Cleveland Bosshard Eric question Research. from from next Our

now live. is line Your

Eric Bosshard

sir. morning, Good

David Auld

morning. Good

Eric Bosshard

are And Yes, of you your Curious, in drill price a price California good then specifically where inventory into orders appears ago I strategy are, in incentive is more terms your had little could sustaining you just and But know morning. and the in what a if bit seeing what terms quarter as incentive. in well. previously healthy; plans question about secondly, talked of that total? of incentives. terms on

Mike Murray

demand so incentive, much So, that can David mentioned strong price in quarter see opened and than were with. it’s we that’s the made. decision sales you before, very quarter we the did local broadly level and sales of where tell a offering as we were very on the on the later I lower incentives

but to turn see firming see So, needing really and going some we is incentives. to go, whether rather incentives and that’s for trends at that buyers, potential see market of we’re money Horton the a wait to where David we pricing in the do heavy right the weeks. everyday, urgency incentives we before, the market or they today sales need tremendous feel created did will we’re Communities, – if little down, with a to now firming But more level that’s like adjustments save and act meet up seeing of strong there bit to pricing mentioned value going and they trends, feeling about without do as than for few

David Auld

As seeing to California, today. there we are stability and consistency out

everywhere has better in much product than and to entry pretty driving returns we it can last or X the X our there the it’s level reset have out and We positioning years. today

Eric Bosshard

I just Great. And if one follow-up could. then

terms more of In in of for it that land securing impact terms has buying the appears in that’s any active and are or improved you cost seeing broadly land, anything the demand on of environment land acquisition as securing builders land? competitive different and broadly are aggressive having

David Auld

Land as prices are going absorptions up to to go continue up. move

our So, have in some been have to with teams with has there advantage. long focus a gives these think sellers will our The markets fact been that developers. be relationships continue the great us land relationships I operational and time,

an ability advantage. close us Our gives to

somebody to high selling are to you you be want lots, who if flag, absorptions. per absorptions going is developing drive very Our to

operational So believe it’s I efficiency. and do we – capital have people a advantage, and just competitive

we us competitors. really you sellers now scare, deals. I COVID tell selling right lot think, had I The to that So seeing been with opportunities open other are a can through relationships primarily of for created

place land sustain in So, our and about to that very today put time. things feel we over good position the

Operator

is your next Our [Operator of proceed question. with Rehaut from question Please JPMorgan. Michael Instructions]

Michael Rehaut

Hi, congrats thanks. and Good morning, everyone results. on the

with First a or apologies incredible in and the of this give at And did XQ either can community had if you didn’t what higher strength count mentioned near-term? and any obviously average catch your the question, on year-over-year quarter you right it, us of sense sell-through sequentially if trend amount thinking least now, I basis? might

Jessica Hansen

Mike. Sure,

But was And can position not sequentially to forward. have see homes count going year-over-year. position as community in continue It to a and maybe slightly strong sales will stay probably you flat and flat, be growth to lot community we to pace, the count both deliver QX. might closer Our down. our imagine, in very with we communities

to community that have growth ability we feel in later bit a very year. little count may So, ultimately continue drive just be further some our confident to out pushed next absorptions and

Michael Rehaut

perhaps some or Okay. kind immaterial, of of other, pre-COVID a how kind to about month same trying would is sense I it’s for was a work understanding little for At very, to results out guidance, that demand deliveries perhaps issue, a looking a Forestar at reconciles, there this of are guys coming July, of looking because but data trying not a obviously bit points? disruption and at prior – is of lot their to activities giving maybe sense I each and was two. that get kind How I a those the of very back timing Also a topic, into that originally strong year less you. reconcile X,XXX patterns maybe time, midpoint for I just of those year two than curious a get of extremely a and with lots two believe the a planned you more just fact in below delivery so, of about despite strong maybe bit on how have development and thought currently guidance next for with Forestar, was just XX,XXX against just

Bill Wheat

Yes, preliminary just XXXX. reestablishing at XXXX July timing. of Forestar guidance. guidance company Mike, customers It’s fiscal a was – it ‘XX And in is primarily time delivery providing their not for which largest largest

And provide next certainly few a up are So, least they growth live for now, the to given XXX% would for it’s hope as visibility been top just their and that we they trends that like the sufficient in industry, revenues D.R. as it to would their This is expectation time. felt conservative hope. year, strength a early, be over this baseline year continue for reestablish it really have fiscal the truly ultimately a bit be over Horton our months right over important I exceed at but story and Forestar XXXX, is guidance line Forestar continues was growth would guidance demand we to and next able as increase the if are expect timing. if that gets

Michael Rehaut

quick I Alright, I one could alright. squeeze in. – another more One if could one if

be and if obviously, Is you margins, getting given the to I able gross that conceptually, gross pricing Again, have not the obviously, back lines, are ‘XX along all are seeing achieving have fiscal guidance giving thoughts? lot trying think just with Is just makes you that on you at XX% pricing, you you what there know incremental just perhaps, looking of obviously, in – sense? factors gross and guidance those mentioned year which some not any to your are but like now. strength right giving wouldn’t I currently are there and any power some conceptually of now, point, the you ground, the incremental right scales, to hit On think are you you this you just achieving just backlog a know but those there if and margins at next momentum margin terms reason etcetera. some

Mike Murray

some from excuse getting XX% And at demand could power environment ’XX the and ‘XX the forward, on and love some fourth be lumber relief early early me, confused strong now into gross margin. my into right and see headwind quarter would could us But do have we we ears. of looking there Conceptually, coming that incentives. a in I pricing we backdrop the – am later

So, into there is winter still tailwinds, some of of happen the and fall next we we progresses what’s looking pandemic outlook have at and the and also positive year. are have we the here broader going that some in through to economy the how the but headwinds

right how So the built looking with we looking says pace feel we are at we margins drive drive every return being consistent we the about community and our us it to return is for that’s every maximize [indiscernible]. ultimately with that ultimately level good to the very what of right

Jessica Hansen

on background Yes, line. am for noise the sure – I the that’s coming our not apologize company-wide I from. where

Mike, almost at of on I inventory generated company-wide that are terms as return we which our a is in ROI, we delivering, have XX.X%, equity And think record overall probably Okay. that on return XX% well.

So maximize we both prices, Mike as will inventory and mentioned, returns continue to equity. for balance in that to pace

Mike Murray

now go you if sorry. Mike, you said ahead, are something, mute, off

Michael Rehaut

a Appreciate lot. it. Thanks

Operator

Matthew from coming is today from question Bouley next Barclays. Our

now Your line live. is

Matthew Bouley

available side. the comparing guess, this doing wanted going Thanks a everyone in versus the gross think the market, margins hope of is Hey, good question. morning. we I today? spec Thank would And stick be spec strength given when pricing spec, should what that? finished some and the be implication in to with margin gross how I just forward, underlying taking here in result specifically for to I have margins of the as are particularly, you. you decline how about built to well.

David Auld

a strong today we between a but margins typically on a have in is normal, of spec, gross and higher versus margins a that gap specs, lot environment than the where is a the we selling built-to-order built-to-order Certainly, on than see completed been between do little gap still but usual. specs tighter narrower still, demand

Matthew Bouley

it of and a foster understood. of repurchase what And but, you. Okay, share sort about that? plans if reaccelerating bit apologies if little speak Bill, just and to I missed take kind secondly this, you help could Thank to then will the

David Auld

moving had is terms it’s there we what our now. and adjustments visibility. a made of of of to we quarter lot forward, going a the do pieces There in and have terms in We through operations in Sure. in our very volatile still demand forward right in went

strong extremely seeing are demand. We

our spec inventory. have seen of sell-through a We

So we are actively reaccelerating our specs now.

level So on lot like inventory we keep reinvest foremost, first feel need inventory like spec and and our business what replenished. would to at are our we keep we we to the our focused and

for what down our sitting we until put with will we repurchase of place will better the so be adjust next in need is plans sense that a get – And in the over we few then core share will we months, our then business, fiscal and give plans as the operators all will we for in that share us better our our of further ‘XX. what and of on then And we’ll putting get that business repurchase. terms across our place define in do clarity set, company help

to accordingly our So, business. visibility in we and get an and plans have is manage update authorization we we’ll our our statement share going those cautiously better still as we in repurchase place are

Matthew Bouley

you for color. Thank Great. the

Operator

you. Thank

coming from Truman Fargo. is Patterson Wells today question next Our from

Your line live. is now

Truman Patterson

Hi, morning, quarter. everyone. Nice good

on bit kind So, expecting growth just you XX% of price to at I at forever your the to given lot next curb really are really pace trying focused just these to in a comfortable community all bit count don’t count think run in the pushing little lever anybody to everything, quarter is which and thinking to pretty absorptions going are and absorptions harder order forward? constraints. this you a trying you on plus lean at or just running Are really side given you these understand more supply

David Auld

‘XX. with comfortable are Right going out lot now, our very into we position

we continued good the significant what side internally results operations pace focus there demand The now. is actually We market on our and increases right have and very advantage price is seen feel increase short-term sustainable and gains. market share consolidation There from pricing is – about consistent and the – competitive certainly sometimes.

markets. an decisions to it’s those and So, leave local we again, art

for XX some had together that going next operating a finalizing. more then ‘XX ‘XX then and we will plan how I drive but Bill one visibility like be for about and the and So, finalizing we’ve it lot position time, days for we’re an ‘XX. to said, putting ‘XX over guess, will

Truman Patterson

trends bucking implied sounds level it falls looks in five look fourth your be at recently. If the lot – like know some quarter backlog I it Thanks Okay. I don’t rate, like positions about for that. years may conversion so. It XX%, your of to lowest – industry the or

do that that’s or get pretty that you clearly conversion kind maybe spec first during a count how backlog COVID. of back in construction ‘XX quarter it running long will function ‘XX think where of I quarter or normalized you flat of for market? your of lack today’s your gets think the starts on to of that, or get there? Do in of think second up also then can normalized and in delays kind you you And take somewhere to

Bill Wheat

yes. Well,

construction are First, not delays. really we seeing

more and really seeing we’re right now, much backlog inventory focus our inventory position Our And cycle a stat on inventory have isn’t consistent been times turns. And that very accelerate. conversion we focus turns really throughout. We our too our on.

homes work last Our completed few increased which our sales the pace – obviously dramatically did in has specs. months, completed down

Also, started completed in been So, of our the is spec inventory our higher not is backlog time. is it that than has sold, some lower than component but normal.

pace, closer position takes our and starts support position those very our we back – and expect deliver it home But as we lot So, normal a will that. accelerate to bring really a our that to to to level, closer strong still volume. to

Truman Patterson

Okay.

think be case you of Asked XQ normalized that your in that the will half of inventory to ‘XX, levels the in would you do lower probably will another way, first more see? be turns kind back gets

Bill Wheat

are they likely. think I

turns that I inventory QX and they are will were our think think than way. actually higher I a year-ago continue

that original inventory of was was that fiscal doing. that expected our think and this what more we our year guidance part housing we ‘XX, turn quickly is to I for are

Truman Patterson

for Thanks my questions. taking Okay.

Operator

question Susan today from Sachs. next Goldman is Our Maklari from coming

Your line is now live.

Susan Maklari

you is of there? first kind we changes thinking or buyer going Thank it think how week? done up later – around on broader that have reduction you’ve over Good the there scheduled stimulus the thoughts programs are are My the in you the base, as of do you this any have forward environment. morning, lot How is the you. And of demand everyone. about any that macro come last has if are the months analysis and impact think that uncertainty played couple into just that about given question to obviously, a your there of seen

Mike Murray

Good go ahead. morning. am sorry, I

David Auld

No, you go ahead.

Mike Murray

out job there. a we are programs or predictable is are most seeing required people with stimulus that relief participating underwriting think first The today of those is we for of and income the not seeing start What I traffic buyers with going a directly are mortgage stream. in packages a that steady our lot to generally the a and are

a follow to I And we’ll and in That’s going conservatism see have of broader To that. so, forward to the plays wait through the a extent part how in is is there to economy. the broader direct we’ve think not impact outlook seen through our economy, the to see. that

David Auld

for have the and pushed I and housing on already been multiple And out is continue to just between pushed end liquidity of people’s to through I to economy positive stimulus the now impact that’s impact out of ability the of to and add, think It’s amount year be will will the markets lot a and a filter think just buy overall house. a years. the that going

Susan Maklari

to home more; or coming layout? for in any being That’s kind of then commentary or of you of the the in the more X% you And COVID, people we your secular larger as home size space any perhaps buyers that from noted home, shifts more Okay. the seeing home are of through kids working are down from their actually your But that looking kind a the are slightly at average came helpful. lot that some quarter. look changes of out a

Mike Murray

bedroom of to a seeing more work-from-home flex extra classroom, be an floor them today. provides today plans are office, or given a very for playroom lesser a space, aggregate rooms our footage, more environment, an that We a to accommodates a a setting space. used at square four consideration it’s that work a lot that’s lot for better bedrooms little accommodate a functional that well But very of whether whether

our respond the current round the buyers in neighborhood. neighborhoods, adjust we able buyer offering inventory next and most of with very offices really to homes of to product sales we for out we quickly with in we to in our what are But starts are with are fortunately, given have pleased the demand So, there. have that asking our

Susan Maklari

Thank Okay. you.

Operator

Thank you.

today next James. from question Buck Horne Our Raymond is coming from

Your line live. is now

Buck Horne

are SG&A flags land Good you the a to people hiring have rapidly sort you the some get near-term as more any up are there? has on SG&A reaccelerating or to the there need of should back ground, accelerate thanks. but going that quarter. on with the bit, morning. right disruption, Is on of consider investment on the – so Question Congrats demand you in ramp keep start in we the you to in to pace side some demand up technology to anything spend disrupt trying reinvest near-term little that Hey, investments and there not as increased is do to now? need

Bill Wheat

No, Buck, I our and been move or It’s don’t homebuilding think we services what operation. but during anything continuation see the that hiring across that just the pandemic, normal hiring a we’re a we’ve freeze of We of at back month of doing. will dramatically. the did financial needle beginning so briefly in to have terms

are growing the We business.

investments in adding hiring few terms things on level expenditures anything thing as some during been not continuing going it at the at Travel to in like historical to. forward. to are address point environment spending need expect money But spending going Same not also is lull we’re able as that can portion of making are percentages where always be. our and be that’s there’s needle that because the a the on pandemic much and to total, to those our in we’ve some the are a and not the SG&A today. a in stay that, Hopefully work-from-home last but past. years technology, big as of we company and it’s redirected we’ve number those out we really over move things of We of

Buck Horne

Alright, very you. helpful. Thank great. Congrats and

rental sell you thoughts how think internally? Just at have thoughts your rent rentals could Would a expand evolved that if family just single-family you or on on like something this that It look with maybe communities. another operate your what partner you like to build you would single in the market that at point? question about point. operator? have product Next you to those for as portfolio for a terms component. the you’re seeing them opportunity this upon just Is do in is potential you I could your seems potential of offering and build wonder

Mike Murray

good that the way something into. purpose today constructed will see. learning have that still that’s communities, I have and handful communities homes we’re the nine feel We believe about of Buck, rental we to really our we for being of

have we way or to portfolio or something portfolio to of are what those a our market eventual we will It’s bring if see disposition. the into aggregate operate for for build today. sale learning We if a to communities some we brings market us to

as that So we progresses. back you will be with

Buck Horne

Okay, it. the congrats fair appreciate and quarter. I on enough. Thanks

Mike Murray

you. Thank

Operator

Thank you.

Dahl question from is coming next Capital Our Markets. Mike RBC from

now line Your live. is

Mike Dahl

Thanks morning. taking Good for my questions.

would you what on of don’t average I cycle basis? would – and back if of previous backlog question compares today I maybe but started responded I have quantification part able to to versus mentioned Bill, but that, build what what the able and think know in question a The normal, average you any first that makes go to which what you kind like not to? a buyers as in delivery year-over-year sold you that than times And you but you guys sense. a percentage wanted few give an what’s Could how – us your to of are of could that new be what to normally an terms is you terms percentage higher know in I not actually flat, quote of quote is be sold started and is

Mike Murray

the and We’d while a start first build are In deliver move upon inventory cycle. time type if that because of have months. part. others four in we’re we can five-month it available based or an community and generally, the able build that’s be looking to as you vary that’s product we of within to like completion now, to a that need and quote can the not the production in I’ll Right take a it’s for it. would ready get going – the in to can soon qualified. to and average within very as the and situation as And the for three home Bill days which from your have as answer homes quick of you may In clarify be you Jessica looking to communities, is. you XX community question have second level some you’re next we part it soon mortgage to available you then that’s

Mike Dahl

Got it. Thanks.

Jessica Hansen

on which over XX% Maybe…. not double digit would not Mike, percentage. we sold sold think then, the And single-digit normally little low running in a a low I we’re started, started, be

Mike Dahl

are of helpful. you it. let a getting you know there, aggressively. have today? are it’s price versus be some of still The And then there incentives really your foreseeable second out operators sense to the while pace if Got of kind operators out that little not local the pace decision the to but That’s local capture the out a are given mentality hard question run those wondering pulse a talked that local and about they that coming – just price much, for of what’s future type operators belabor still the too there but just down decision. what toward pushing versus it’s to making more are uncertainty may understanding you – I leaning your

David Auld

to in versus price with it do Mike, the size community. has margin a versus lot is community or pace the

decisions And or to absolute incentivize them trying trust make to right field the for find make it’s been to be dollar to push good be pace then XX sales part and front cuts decisions. or is communities have you to allows community and margin And a working. of increase. we thousand that’s generates back may four driving on X or lots worth of where either that three or end a of off the might I’ve our and have deliveries model operators inventory you’re here sales you the where actually in been a to months’ than going months’ You the return sales that your And pace we years higher it worth in it seems inventory. of those price other X in a a of you company

is community by really So, it process. community a

Mike Dahl

Thanks. it. Got

quick little or kind a managed? the everything when terms being direction of you’re that just of then, today – follow-up to more plans, are you really is in how you mean, about introduce that pleasing is other it may is I is one versus the you think Just a what nudging seeing as XXXX in

David Auld

could decisions can better day. do We better make much pretty and we every

don’t didn’t and make up you get a mistake, probably You do anything.

and you give And seen going them their the with to going you our shareholder? drive here and relationship better pick to authority So, going walk try decision over to is the and through ultimately, sit empower in years highest we years who drive they we we going not that to managers it’s any become it’s responsibility, we’re a are. them. want up to I and is But to decisions to. and we’re operators when that return Are you and culture. have making years – for you the what market a mean, pricing communities are people and talk and community just

Mike Dahl

Thanks, David. enough. Fair Okay.

Operator

Thank you.

over like back comments. of to further end the our closing the for reached session. question-and-answer have any We floor to I’d turn or David

David Auld

record to look you here Kevin. again, D.R. on once D.R. November. setting represent to that We outperformed you. team, all-time executive we – speaking sales, appreciate thankful unbelievable entire the we to in you, again today for industry, time are are sales to the you And – everybody’s and accomplishment. family, and humbled Horton, call the the record forward Thank have Horton XX,XXX

Operator

conclude Thank you. today’s teleconference. That does

have lines and day. may thank your for You this participation disconnect today. you a time wonderful We at your

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.