D.R. Horton (DHI) 22 Jul 212021 Q3 Earnings call transcript

Company Profile

Participants

Jessica Hansen	Vice President of 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
Stephen Kim	Evercore ISI
Carl Reichardt	BTIG
Deepak Raghav	Wells Fargo Securities
Michael Rehaut	JP Morgan
Matthew Bouley	Barclays
Alan Ratner	Zelman and Associates
Anthony Pettinari	Citi
Truman Patterson	Wolfe Research, LLC
Kenneth Zener	Keybanc Capital

Call transcript

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Operator

Good morning and welcome to the Third Quarter 2021 Earnings Call for D.R. Horton, America's Builder, the largest builder in the United States. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the call over to Jessica Hansen, Vice President of Investor Relations for D.R Horton.

Jessica Hansen

Thank you, Darrell and good morning. to XXXX. results call quarter the our fiscal of to discuss for our third Welcome

get today's Act we the Before started, Private defined statements Securities by as Litigation Reform of call XXXX. includes forward-looking

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

investor.drhorton.com Additional both and our our information Horton's updated call, Events in annual could which the with found investor on of News report XX-Q, its can on Exchange Relations to D.R performance and presentations the Presentation Form on material quarterly XX-K next for and are site This filed website we about changes week. release factors early file section and morning's be that earnings report we this most under Securities in XX-Q, supplementary is our to After at Commission. reference. plan Form Investor contained your to recent lead post data will on and

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

David Auld

to am quarter share. Executive earnings increase our Officer. an outstanding Jessica Vice wheat, delivered President Executive and a our to highlighted $X.XX you, Operating this morning. also per and DR by XX% Mike President I Bill The and , Murray call team Chief pleased and Thank good be third diluted by in work joined on Vice Officer Financial Chief

improved and profit on XX% revenues increase in consolidated and to margin $X.X points, income our billion Our basis XX.X%. XX% pretax a pretax XXX increased

leverage multiple capabilities, was the June our market to award XX.X% production and the experience are offer and team's further. period XX Our our trailing new remain Housing on our brands. very months at our on return for for scale the broad and same returns on our focused These was equity results points XX.X%. robust. consolidated inventory increasing ended we XX affordable and ability positioning geographic homebuilding return reflect footprint product conditions across our share market to across maximizing homes price And

multiple supply combined economic conditions, less our strong construction the become the However, in improvement in homes predictable. with certain disruptions has for which the tightness labor building have and in chain to new materials in shortages and demand market, resulted in time caused

we sales home consistently homes our is we priority pace when homebuyers, slowed our commitments homebuyers. and ensure close the align current cycle for our date certainty our our of As top to home construction in to the our more to have better levels later closely selling fulfill can our production

our our inventory capacity. double home building and XX,XXX strong liquidity generating by conditions. believe and from year levels through We financial through cash XXXX. strong to very issues positioned expect production investments. digit the balance homes started in on plan incentives, from us a inventory to We ago strong on quarter, offerings, effectively optimize sales well return flows maintain pricing, work and position homes in pace flexible leverage our to us We construction our and XX,XXX increase Mike? operate low and our June finish XXXX operational and our positioning again changing this to to XX, home increased our managing a sheet, product at to XXXX, economic XX% homes to growth these achieve operations We and inventory

Mike Murray

share to compared the in $X.XX income year to XX% compared quarter $X.X to per the XXXX Earnings fiscal of per for to $X.XX increased quarter. quarter billion for share, third prior XX% the increased diluted $XXX.X Net million.

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

average homes and price quarter $XXX,XXX was of size Our our the closed average Bill? was for closing the down X%.

Bill Wheat

The quarter orders from X% sales $X.X prior our for value to while net year decreased sales in to of increased homes. billion, orders the the the our XX% third net quarter XX,XXX

Our average selling the increased communities X% and quarter number from of was sequentially. prior down X% active year

Our XX% quarter third down orders The sales in average quarter. for sales third the XX%, $XXX,XXX. rate the price prior the from was on in net quarter was year cancellation

are in prices Based by our sales our orders community during buyers. community providing value production pace our demand homes communities of schedules of capacity, to lot stage strong to the inventory, teams their the and on each As David on we market number position. to on completion pace to of basis, our expect on time fourth environment, They continue described a of continue sales adjust while construction homes over sales restricting in this of current very and quarter. local and the restricting based in focused and the fiscal paces inventory, staying our

a our As fourth lower sales quarter. to than net we orders be third quarter the expect result,

well with backlog, confident deliver in inventory, homes XX,XXX volume homes will growth double robust a XX,XXX relationships. supplier Jessica? digit positioned strong However, supply and in in be are we we trade lot that to and fiscal XXXX

Jessica Hansen

basis, our housing June increased per up XXX quarter the March X.X%. X.X% sales gross to the per up our margin And brick allowed third March strong in On for on has foot square increased profit of lower square from in our in quarter. prices a broad cost Our home reflects market. exceeded level incentives supply X.X%. the to costs The foot homes our lot was The communities. increase limited points expectations revenue demand strength basis to of while stick us and were sequentially, margin from XX.X%, gross raise our of revenues sequentially sales of the or continue our and the a most

our on lot foot and We square construction both to will increase costs per expect continue a basis.

our we price conditions; today's home quarter to to gross offset slightly fourth expect pace be and similar sales return and each than with and better on conditions market the sales pressures to quarter. the margin third cost in expect home communities focused the strength adjust market We the local to investments or the However, currently our any incentives in with in demand. remain We inventory our new optimize Bill? pricing, of managing to on increases.

Bill Wheat

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

And percentage our controlling David? is SG&A homebuilding ensuring focused expense quarter infrastructure than as our on lower revenues Our history. our remain business. our SG&A a that in while supports any we adequately of

David Auld

expect constraints on inventory ultimately the current our to our housing response and chain to strength supply have increased We and we subside. of demand the

XX,XXX quarter XX% we third XX% XX unsold, months at started were June of up quarter, XX,XXX total in a inventory, homes. from Mike? which complete. XX,XXX XXX ago; This ended XXth this were trailing bringing homes quarter our homes, We year XX,XXX our homes with to up from the last of year, starts

Mike Murray

At purchase home at control which building of XX% them. finished our and lots, XX% purchase of June owned, were be least XXth, our lots or through are our lot controlled contracts. approximately XX% total were we position XX% finished and consisted when will of are lots XXX,XXX owned

key to increase efforts in growing is demand. our our production strong to and to our portfolio also lot volume homebuyer Our supports capital a competitive position meet efficient

land for in $XXX Forestar. for totaled and million third $X.X development billion, of million lots; our of quarter Our finished quarter purchases which lots, in was from land. lot million acquire land to homebuilding $XXX was development, in the $XXX $XXX investments third million total was were

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

with opposition expects to debt their and XX% XXth, pre recognized of Forestar lots a subject XX.X% XX% and D. profit is to delivering a now At owned R. margin lots, of on are ago to contract XX%, year-over- XX% the year our agreement. grow to of million lot XX,XXX by right and June to expectations ax are first supply of lot XX,XXX to its Forestar's lots, its deliveries a owned XX,XXX XXXX from fiscal extinguishment high loss of growth range with increased offer on excluding Forestar's during Horton $XX.X year a master approximately quarter. under controlled

liquidity had Jessica? business. lot net capitalization of million D.R. a strong D.R. supply, Horton, from Forestar's their of with end separately a quarter Horton Forestar to With with XX.X%. relationship ratio capitalized growing and and capital at debt profitably approximately plans $XXX continue to

Jessica Hansen

the our income pricing to pretax in on by pretax fluctuations the was the to Services third million $XX.X pretax the primarily and in due lower services margin $XX.X competitive prior Financial gains profit compared in this financial pressure million, market with The caused in quarter XX.X% increased originated decline net loans quarter margin year-over-year market. XX.X% of year quarter. was and profit

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

the handled the Mike? by this First time closings homebuyers represented XX% company quarter. of mortgage

Mike Murray

completed additional At construction projects are process. XX occupancy based our on in and that had in marketing lease June XXth, active an a leased our multifamily phase, four and up projects operations under rental

of quarter to the projects We XXXX. three two expect during fourth these fiscal or sell of

producing we single of began XX. constructing sold rental family community communities. achieve assets rental level rental are After for marketed June income least Each and sale. multifamily leasing communities Our $XXX.X occupancy. constructed year, as stabilized a million and is these homes at Last

family and the our communities, gross million of to to communities included our the year. of million at beginning rental revenue, the quarter, million $XXX.X During $XX.X of for June million single related single third rental $XX.X sold assets related XX family profit. $XX.X second homebuilding XX in inventory At of compared we fiscal to community assets XX,

rental pleased and performance growing for look to Bill? multifamily we are our profits teams, future the single and contributions We and of the returns. with forward our

Bill Wheat

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

scale while and adjust During homebuilding cash and operating cash and believe the capital to reinvested expand unrestricted of months level June is business capacity million, our to conditions. billion cash increased provided homebuilding homebuilding to activity $X.X $X.X of have facility. available the strong market in demand. support to nine At in we revolving of liquidity, had $XXX flexibility We of our billion into was even homebuilding credit to on we this response of homebuilding our by operations to consisting liquidity provide XX, changing $X inventories our appropriate and significant June billion homebuilding

at stockholders $XX.XX, a XX, per value book Our equity in months. was leverage was outstanding June June, At XX from ago. XX% the share $X.X no XX% senior next was homebuilding the notes public billion and our and billion, with of homebuilding of note $XX.X end maturities year up

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

During million in to declared fiscal the We shares we $XXX.X cash $XX.X the last a And of paid X.X the board be our million. same August. for shares repurchase of dividend during repurchased level paid X.X dividends at quarter, for total quarterly quarter $XXX.X has common million million quarter year-to-date of stock for a million. as

repurchase repurchases and on a XX million. our remain share to Jessica? $XXX.X outstanding fiscal each to remaining was our dividends shareholders June through consistent capital basis We reducing authorization share Our returning to both share in count year. committed and

Jessica Hansen

homes. In billion to XX,XXX billion expect to consolidated fourth be of market based we range XXXX on close quarter the in $X.X and homes our revenues the conditions, of XX,XXX today's fiscal $X.X between and to generate

the range our SG&A as the approximately X%. expect our in be of of expect to margin home anticipate quarter the income rate financial tax fourth and in revenues we profit pretax homebuilding XX.X% range to the And XX.X%. percentage We approximately We in margin to XX% XX% to a be gross be XX%. services sales to our of quarter fourth in

revenues full and to For reinvestment have inventories higher to $XX.X increase our homes. land of now of we prioritized fiscal demand. to lot our billion This year billion and between close XXXX, year, operating housing and we of XX,XXX and consolidated XX,XXX expect the support to $XX.X capital

the and multi paying flow a cash increasing repurchasing Among fiscal maintaining strong our our liquidity, XXXX. share shares investment other David? of dividend approximately by remain platforms, Our from family counts outstanding and our conservative rental single and homebuilding to leverage reduce X% balanced. beginning priorities in

David Auld

brands. raw market closing, and reflect geographic Industry In capabilities. our our and teams multiple footprint production across offerings product share, results leading diverse experience

to Our homebuyer in opportunity front production we of response capacity as us results also illustrate growth in the increase demand.

capital value Our our market to leverage changing with strong a long-term on investing and and to maintain share team for basis. to the significant effectively flexibility to of Thank capital Horton enhance our hard the capitalize low plan entire We a your to sheet liquidity through approach shareholders the disciplined financial and today's economic consistent balance company, on conditions. to and D.R. you us which provide returning includes repurchases operating to robust work. in dividends focus

are As and efforts, these of prepared our continue concludes growing incredibly a result well to This remarks. we improving operations. positioned our

will We now questions. host

Operator

[Operator from Stephen with Instructions] come the Kim Our is ISI. Evercore line first question of

StephenKim

degree. wanted to here, might Yes, about thanks related in meaningful past very continue little Are I in quarter, the And was really wondering been much results. bit the your if around I little and we've a And really severity to you to of those you continue you Do restriction guys, restrictions quarter. you bit I color this the starts. September more you could to indicated provide interesting impressive to in sales the quarter? times do. it's that. Throughout others expected September that be a June talk seeing September a expecting similar guess you which restrictions think

infrastructure And to to see were that of starts starts, And provide building I talked could if regard, X% grow. you think wondered you more little the do about needed you around could that when or level was color higher so in that. a thought I curious down housing your so sequentially

restrict And continuing on color you degree to to the more September, starts past sales and are September? be So maybe outlook. the at same in going

DavidAuld

increasing starts Well, to over consistently out our a outlook, there by plan community on time. have community, the be is And plan. we production

in XX,XXX each to starts that at look for the was quarterly XX,XXX we're our plan quarter. year. That run rate, you this If

take position land, that is affect next that plan people lots to And out Our year. we to plan.

think the our be than is And it's our in a understand house ability homeowner buy tell the for rather have we're that is never keep to you and is is our on need out harder house our people extent something the tough provide remember to the an models focus can I question. rest and that later, home to I've our foreign So I seen just and going makes frustration. environment a I as difficult of sooner in history, ever office demand them it time And demand efficient for to a our walk to somebody there through today. trades But is I can't don't everybody a injecting in. is have as walking just people. you into just sales most seen. how today and us a is We that anything to sales anything travels, just to to market It on to I've tell And -- our in seen. on manner. unlike ever I've the built get today. again; their the and Demand patient that's to we talk a it unbelievable I for process our impacts superintendent, into meet and talk

StephenKim

continue likely you will they ahead, September? the past September to look And and anticipate they they are in same were to quarter? -- the continue to degree restrictions, the Largely,

DavidAuld

that buy XXXXs got contract, mean, at the production out able did an probably all And managing he's and in We this And to expand in can a days, not and which just our multiply a place the builders in across the cycle, of as demand. pay release email has sales, are still a been have figured us there. last we're market of the the our continuing than buyer none waiting. just multiple And bought see, through been We into size this And, that returns. difference XX cycle. aspect and going are we're think somewhere it's on market times a it is and walked cycle to lot I on get they geometrically hasn't I I part had for you under in to that all all of in to focused I demand country, deliveries, my else. builders capability, because hadn't capital them And cycle restrict with the XXXXs year house. from a history, how model, increased a ever soon we've this a our from waters as put buyer seen. it's if increased again, out -- in did, we're we you things general every We're again, of, demand super disciplined now. month, the week, it's, our again. focused un-chartered prior who right improving a was models expand to the efficiency;

JessicaHansen

specifically just of on community decisions terms be a sales, community to going basis. are in made continue restricting Steve, And to those by

accelerated where open can we So is more up where get for the more we'll quickly. start sales

MikeMurray

production as to them can a be to Where thing to their happy then experience into deliver homeowner very into their starts get to very ready. getting as better not them when do to a commitment well the timelines. move going certainty put as worst We when It's house want we be to accelerated want able they and the backlog, with home's it. great and be The to our disruptive. we -- have homebuyer is

will fourth work those quarter. the fourth based sales, likely place remain as us them foresee current with made by to restrict issues. So community lead times, sharing some quarter, We're that adopted through in our chain earlier partners, chain of the continuing restrictions disruptions, processes, a us the conditions. resolving decision the upon community of again, trade as we've hopeful we But more for through some of but through helping to our that's in things we've with lot supply work the information can are the those local in worked helping I process longer supply

StephenKim

that. appreciate Okay,

think XX% of quarter, look mix up what you us as wondering help if much your the could next ASP order, how quarter was about a order price, that remarkably well in increase or be was year cost of ASP. the was year order as from cadence lumber you quite Your us I two? we the sequentially cost? effect quarter cost absorbing you quarter thinking in I understand about. if give ASP order a peak here shift it's actual is into next in cadence March could understand so over this Obviously, ASP your that help do at it us was flowing lumber curious for the And bit in should the sense shift? just lumber gyrated you fits mix was in kind Or margin gross versus how as past

MikeMurray

Steve, in cost. quarter a think expecting lumber gyrating closings. lumber coming word in your higher the take through I to June our through I'll was market, our good costs saw don't September the coming quarter cost. word the fourth for that peak that, we'll fourth deliveries lumber we costs I'm confident seeing quarter see trends able and that early that quarter in we've And have price deliveries. the into lumber into our that than deliveries been very order offset more seen well, to I'm margins that our lumber and absorb we've

JessicaHansen

flow that. But Yes, mean, our I Steve, like of of and closing forward typically directly through price. are indicator orders a terms it good our mix, doesn't in sales

a But lot expect closing be or our mix. we we same our So quarter of equivalent sales at orders. next whole seen to the price wouldn't haven't to magnitude

on closings we gross a like our our mean, improvement. lot seeing I like flowing it in for and you margin, of see So through price are can

Operator

question is from Carl Our the Reichardt BTIG. with next of line come

CarlReichardt

the is in your when much chain this that little higher support you're of starts And supply are guess you that specifically in What can incremental there? expand release, level? support really, costs? And morning, of be I'm really expectation In referring such David? And bit, the side place that you've infrastructure building your mentioned demand on is starts side to good will So control, how what a Thanks, forward. are those housing the to there level you that infrastructure isn't? to going out is, asking versus I everybody. of

DavidAuld

it's generally levels the In we think we number we push for understand can I partners, what lots they community. can can controlling, with least control, control we're the timing Carl, into trade pushing of sure are the absorption control staffing our of our out. the of we that's been that what levels the and problems, communication we and pace; make because

communities. So to and add it's efficient a support just you have very process. But

in consolidating which just capacity markets, those do trade really it has a far I driving every and that as process work So think scale, don't with it's to a XX,XXX within and mean, as trailing XX done the incredibly day. we And And that else operations, through did almost that's field go we is done base anybody aggregating sub of months. just out hard result start has homes, and ever I that. in field. being

CarlReichardt

to felt then, And manage a past, sales, cycle some the things you you in beginning pricing rates. on decision if are level. I think market, lot at pace, curious know now, to brake that's I to said put dynamic of demand, builders far pricing be negatively try David. there's which about use restriction Thanks the sales And we've it -- that important this and a then price like too, that something sales also in concerns absorption and may a to saw, is or that's more And whether you I looks you and I'm is. on not seen impact share to the made local rates. that made positive turnover

So not untangle you me can is to that sale? costs good, still like just price or prices on really cover using that help you're and because sort feel you using and we demand break price of and for using

DavidAuld

price very today. pushback. the that demand could impact seeing ever don't could It's know we're know -- you you today I I that think little price

ahead. go So,

MikeMurray

being by just not people just buying. stop buy, on and pricing increase sales until restriction driven let's large Our is

we're it's the releasing adjust going. contract for actually in do released homes we're sale, go the releasing buy price by not homes seeing waiting to absorption and not are get not the are until very the We for pace of that just which to the that certain homes sale. production sale When take by for We're of homes. varies under a But then using to process, community. and buyers those homes particular through delivery stage quick we're homes

JessicaHansen

Still significantly than on of and ASP still the buyers we our lower we've affordability even the to a in our is keep to in gone And of we've price very lose. and increases focused rest our public in do by with increases tests of affordability, We really continue profile that seen pace our even the with even market. buyers and on credit where ASPs in seen do builders it so want large. focus the don't shape like to very we want maintain Carl, backlog, stress looks spite have the that's are when good

Operator

Our line the Wells Fargo is Deepak next from Raghav of Securities. come with question

DeepakRaghav

XXXX. just to Hi, into get If feel time good back. of should catch revenue builders and that not supply -- pricing question. here, commodities And some it give compelled for benefits you morning giving pacing from the all all. Thanks -- leverage that to, And may you margin able you're into into outlooks given the feels for moderate up. Can XXXX? early breathing all your that are outlook. all sales hopefully chain growth to the taking good you're talk my digit on through like may Early double you

gross comp? a margin up XXXX they to to still be Or flat would tough about from think we margins? pressures should gross So

MikeMurray

Thanks, Deepak. Sure, thanks.

to we to has a XX.X%. to off QX, the orders pricing XX% gross in believe we're position slightly over through. that certainly guided seeing in been quarter come and sales margin last see of into gross the the our increases slightly in taken the or what to maintain commented in September have or quarter that with our can backlog in see or on We already we over our excess two, And based of quarter and margin cost our our we're today increases next two

slight maybe clearly, expect quarter Obviously, we short like we two, visibility, do a our margin. we or So as in current for next the in term. good have the upside or near feel don't run, much margins our to but have the stability we beyond stability gross that,

DeepakRaghav

fair. that's Okay,

mentioned the some in as on the the quarter, you have you elaborate in also incremental new any flip the chain as one? also And any we the that chain, cropped And talk in seen or about quarter. ones two, prior those? new easing please quarter You up supply well? racquetball constraints on constraints, Can -- side, supply

MikeMurray

So on the supply as I constraints, was to chain, were were if want new don't there construed constraints. that there new imply any anything

referenced those I and a in of bit with teams chain the a jump particular solve have we challenges supply been last one it, quarter and category whack think that suppliers to mole, a work issues. up that on pops that and the the

we're communicating the partners far of actual production One of that available in a with things is the how time, chain sure product us. for we point supply done But part over business. that we There's particular a It's have acute just adjusted with right start that to how could now. internally lot is lead incredibly make of our I XX,XXX we any to one this item as quarter. do. what delivered day we've the of or solve every homes last issues in not That's new of advance series

Operator

question is from Our coming line next the Morgan. Rehaut Michael with of JP

MichaelRehaut

you'd to a morning, confused bit relative the the to is But get tracking to that little I'm Thanks. little pace I obviously of And call. sense of starts a supply here your approach and is on a of on better at already XX,XXX what to XX,XXX. Good bit kind orders a pace discussion said production constraints. everyone. want to plan

that's are no yet of are your constraints, orders prior commentary Also, to that. said new really just out You there constraints ongoing there digits. single contrast supply down in XX%. to more flat down And

driving really understand approach that really result that's quarter difference order your just the during the and on that been So something different to wanted relative side, has changed if there's what commentary? in to the prior

BillWheat

a Well, really which we of been number in were which effect we times. previously chain, beyond construction impacting supply seen think longer have what what elongation manifesting of of is our I is a seeing an that Mike, are that themselves ongoing so have things construction are times cumulative

And us so sales the best resulted as we we're previously. construction than manage in has releasing we managing can experience were that in that and cycle customer to communities trying later as in the more

and I So sales, a probably it's as of would ago. construction essentially say, supply in in and that's But visibility chain an issues resulted better have able the we and a a it's at on we start probably production, sales orders. a, cycle work incremental catch bit and quarter later on restriction order get of restriction up anticipated a sales of we'll the better been more to something have resume a than that's more be bit through pace to our would production

MikeMurray

means the them. deliver home A shorter we time, customers our time to when sign when the of to and give have a the certainty backlog compress that process, from us trying they contract, timeframe, deliver period we're the we in to goal control in to for of the them more home, consciously give more

DavidAuld

now. particular to move mean on When date time a house, frame extended I of to from an is that slab release install, right you windows period

call And life trying we impacted any became been call and their was just and market need days. days release anything improve it the appliances out market. this than have is in person is to of somebody around you different adjustment, to later, you, homebuyer. pushed close as the ready is because trust be out other XX we the in XX insulation, to to taking be than And that of a in will And become are crushing that we Is soul me. more somebody it revolves houses or buy we'll out date, what that significant just glad close, that what through keep quarter to we've intend ourselves XX last change is me us obvious yes, not they're to done, six months, so what And XX cycle to really a house. to or as that indicative willing when part buy. ever by able reading me the demand, restricted to we people still to this certainty It was everything that I've have to a windows there of. we experience in have any walk tell trying We to date and the available date place that And them. to we give whole

So tough it's market -- environment. a

MichaelRehaut

I appreciate Right, it. not no, disappointing customers and those obviously key is comments, of David, a part your

contrast also just circle XX% to back straight XXXX you XXX wanted But price XXXX, XX%, year-over-year. for level. bit over ASP up around in anywhere near stark the XXX, three that order backlog stands price XX% -- It not essentially to up I right over years. closing to home maintain periods were the up question, where had through of you appreciation, the year-over-year, a little to around obviously same Second able average

guys the real building the current slightly that vulnerable more out been but year maybe perhaps here pride the further either what is or are maybe that something in or that to through below question to that there it's trend, current backdrop that's any be that of products, concerns the So footprints price particularly or you on. marketplace, the be, attached take or different might price rise? you rates your might but you reverse maybe more monthly forward The perhaps to you to, two okay two. reverse that a most understand slightly that over action yourselves has going can is next I trend, still might the year extent next it that in payment peers, Is in the doing have obviously, whatever

you're anything of help your geographic product that your in So terms might issues. doing solves mix mix those that

DavidAuld

see our to footage take continue place. probably and have will we that you square decreased Well,

in number set or We the homes I to houses the offer two we're lay with. storey build we communities. we are we're that I offer the market of reducing have going we're detailing mean going we're the production schedule up model, a that and my mean, picking with

continue pressure yes, vast to tick are be consolidate and we and very more we to offer and when loan us very service monitoring, if And and where buyers a FHA it. price If sensitive affordable we're to production again, that it continue core, will risk as the we are. so, And we're So to majority mitigator, trust limits. point, that's and because are my sensitive tracking I of up labor the that is believe we we markets challenge increase, able comes. our improve, on capabilities that rates price. these will to do in we to But it we meet homes. That

Operator

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

MatthewBouley

back not despite I across Thank sales it decisions. by community on seems to was it restricting Morning. point, really markets, but of consistently affected the local questions. pace. like just guess Good degree belabor your to for similar these community taking Because the you the

really look to you these of to, So and ideally frustrated to like for telling go homes sales in strategy mechanics, those you and today management want begin extended sales in I you releasing sort said sort communicates versus you said, the individual you folks, people to what earlier, how guess, you. can of them and times the you operators terms thank over of, order all Horton of cycle where believe inventory are again, I be,

DavidAuld

specs, for I market. of have sitting day, year, at front of be we're buyers, the a XX%- to looking only specs, inventory think haven't to level XX% the we'd this houses, are we time get typically, what our in the on of released we is the

told ready they moving it out. the is side the expectation, when again, bought told; have sold, maybe So and grab help a in into trying efficiency and June And of customer frustration eliminates buyer where house both be they lot a January. to the is in on -- does it's will And building meet we're they've house And a been that is by house move been to process. it into. coming they controlling also

the the need just and right they're honest don't the progress adds So it. of community. of against with day, don't to be progress there it today. house every that you their the other want we We difficulty level out monitoring in home now every And of

frustrated hard middle upset. to get in stay frustrated gets the process; meet the they once expectation Somebody for very a very they long time

take by off our that pressure further pushing buyer limiting our and some by it. of inject a inventory the of to the process we trades closed customers in of our trying down frustration more into of amount maturity So be drive could May it We're before the And it this process on at does were February. we divisions, Xst house that of builders. started future would production would place? significant with I it in dealing just April, take will point spending it tell some And other really other January, of divisions it in you, divisions the took got in the what April we state by and of then that where time large spending hold efficiency very some on our of were or their Texas a and things we expense doing time capability. the and to state the in in

-- was in over months, ending it's process Texas. again it that ending really So place multiple and in a one beginning division took

of very house out job can better day amount to enough there if build than So the Texas; to get any other better demand Don care public he'd out anybody build meet never to not at else. times, or Horton We're a Horton, lots trade going It's state every Don thought there. tell in Texas. don't tremendous said difficult of you -- But builders the of doing. many house today. I sell we're is get I it's what a a today could And in doing demand there. state we're the he capacity you're when there see a are he or couldn't of

MatthewBouley

and And that look at restrictions. looking current seasonally? and say fairness gives that's my in said just of in it you you more far in just Or expect, your exceeding are there. might at I previously and you're helpful really talk traffic, confidence in part orders? also about seeing that up, into capacity, guess than what exceeding traffic is, slip demand that clear to perhaps how the quantifiably, guess actually your around are the, which that when capacity. you color your was that, communities simply you communities, you follow really segue is is demand you the I is it's No, you when strong What own your And shortfall

MikeMurray

the can large, and we stage and our not look for they or Matt, see released of at, are unsold stages and likely homes sale. and construction construction, by early across available of at are

haven't stage sales breathing, So for started we're and and writing we construction. by more pre contracts, generally yet of sales, mature a large and not reaching

the time contract date the certainty, we So signed with them. can we deliver a buyer with closing at to that

JessicaHansen

homeowners is that And every demand lists is demand lists many continue why far, have answer wait And us question homebuyers. interest on internal an this that capacity or single even so the is to far of And what have robust. under exceed so and the extremely decision we was which you of still production construction, that our communities our and there. based taking was care our hear

Operator

Our next Ratner questions Alan Associates. with come from of Zelman the line and

AlanRatner

call. for taking guys, morning. Thanks my Hey, good

your to impact made the on could questions a on what surprised credit to little stable that given said price have a bit you that are the the to increases, point, a comment going pretty buyers of the profile of home after on earlier a the I half regards of with your just little profile in XX% incomes affordability, we up seen increases buyers, pace second fact are the up drill this instituted So Jessica, rates bit home keeping of down lot a love know in last not was and first in you've you've I now I'd question, obviously price year-over-year, quite you which at think obviously credit year. and

towards the are interest slowly historically seen up I maybe or interpret over your the your least buyers a years. than first kind you've mix more of more to of move buyer of buyers shifting at that list should few maybe the or buyer imply time a that So in last affluent

JessicaHansen

across mix which our average in across the sales our with move versus to higher entry we result change brands, of as credit of really, this would look higher at a average our even seen brands, as prices level improvement an a the be haven't a FIFO really year all reduction an our indicator And we if loan up. we're we've slight that really even saw, We profile experiencing. income, seen amount in score, in a debt best

I first are our don't buyers. attribute no, I to XX% time to that. mean, of it I So have -- almost buyers still wouldn't we XX%

MikeMurray

of a to and been buyers have given that home inventory home. not because not that there. buy a existing able that could a levels A very want home large at get unsatisfied look are the available just number they marketplaces. not They're buy there, out home people we And to

price we had were our so quick the that to quickly into last we've homes, the homes, their very delivery to when lot sale, at certainty they better the of environment which we're the that in to is a completed restricted then of And time homebuyer of moving signed date. market sale to the rising a date. specs we closer process with able the they And the the give the in marketplace, were restricting price obviously to delivery year, were absorbed contract,

AlanRatner

Got it.

there. color extra that appreciate I And Okay.

it's environment obviously the an tight to then supply guess that up I follow So today. point is incredibly

are are the back guys lot same or holding kind restricting sales, You other sales. A thing. saying builders doing of of

a started released Not of here, today. are being sale. of yet for those homes if you connect homes like seem the kind lot are would of lot it a So dots

meaningful demand it's way be tricky away. the on So demand Because at and to buyers you're that you think when right firm of probably the now inventory a market a would point is pretty then, some is to the little in will what absorb to sufficient to a that? the future, course turning going question in come get is grasp

to do same would lower to at builders bit? quite that accept thought other in thing. homes? willing point starting or say builders let's of you releasing expected anticipate the you you start are discount local pace? later if going to little Are Are this process is year, your would homes a a a on to start kind for the in the What how that be? responding just demand tracking other what with absorption not XQ what more terms be? sales it maybe sale, And restricting you you doing basis So of you are fiscal And your

JessicaHansen

to going be Alan community. read existing It's on first is by our And usually, home a side. different answer community the

both very schedule are conditions. with inventory down going in market. or existing guys based as on can up And local tune on in market and our search our always we what's other with public builders their home adjust So

demand to that today, if what at when going to, which market, are are were country start business do of there signs the So national looking they're to periods. saying is the be to not kind having come to plan and future market we But we're of like consolidate just to a we going ways what profile share, feels that, that be of conditions. the there we our to adjust starts to to And going to they're local demand we're what able up end supply specs. accordingly with the be we those you're long continue would in signs, a and pay forward, continue we by completed make level. certainly always the don't best do some far attention to sort to time on believe operators from like be increased from, true, be of our supply their now do market in going saw right completed for with homes conversation sure away But our all excess those community position across of XXX where would like things that plan looks community so of regardless we an the regardless

DavidAuld

and are least we're -- other if points there, so the in feel market, the my on at payment. any be does slowdown opinion, house is by now. higher, horizon in not And that driven going like it right to anything builders is the at we look the of price focused lower you we on out public again, even if can their the assure scale. price end And And I

MikeMurray

what I sale demand plan any don't the sales builders going think we available at I and believe near if starts to start, coming and the have offices don't our the inventory And them do. to them amount of we that you look don't I for we other believe satisfy that's seeing have in of we've that we're today, at today. coming what started at what

see sale said, don't being going at builders to any push That's a new that's this the into why level in able just available dent watch demand. horizon, in of a I a inventory local in marketplace term So happening the Jessica the short significantly lot home medium for existing to we home of that to kind what's market.

AlanRatner

over times few the interesting the I unlike it'll mentioned next in many to is look helpful. to be the in process appreciate one? versus sneak David, this And business quarters. very one having your of thing cycles obviously strategy. turn terms you've land obviously, big That's you now away. I one your thought anything last and there. changed When Can is that's prior buyers in seen terms at on the I of strategy see

more cetera. fewer You third lot of own a basis you much lots in have smaller party supply you're than contracts, year supply the And through a reliant land on or a on past. developers option et

own the supply does in land, more you; perhaps that than shifting whole your towards curious you're It's timelines on in development it I'm seeing they developers what of the just grow facing So vis-à-vis had But the the industry with ability pressure what that perhaps are obviously, you're strategy. process And I'm smaller a not your inhibit portfolio? outsize down? to their from curious, or past? seeing that slowing more is way, any on is own

DavidAuld

been I have their know party guys, with them with and in in in trouble. out structure mean, of step controlling our where in out for step so a customer. sheet the third market got good are building the this. and close to mean, know why And and relationship do guy have working biggest about day and flexibility day on developers the maintain. if to I a day These year, balance they of then help. and of work our their an capabilities. we now. guys' these really of ours. we That's the we job their years. and and they very We local done day multiple it's of been, -- skis, And we benefit we people has who we bring one are in we last platform out. out partners added of five liquidity the got developments lots talked exceptional that's, years over with trade couple a this them We've and these done our of operations Forestar, had capital we that And that lots over gets we've we And times these

every production that was that I at this to growing is with ability competitive market we, allows and when that basis. is an on our and in to the us of it just so lot thinking about plan number incredible And morning, have actually own you And consistent look week a advantage. in trades. today's embedded communicate drive we set a and starts world That every a our counts control to

what to know they we're that going So start.

And to going trade lot Our, to they our And that. that we're with the mean, platform start November, October, base we're of are result been there's has what majority never of vast is as it. D.R. very industry work a they like And, into And Horton know this when proud our in this accomplish. a position. down. what But platform December, we're aligned key today. anything of in And spent of we'd like I outstanding of that's our going partners January. and we're deliver a results vision to trying start

JessicaHansen

for just reference our control And position. lot

a so grow own not ability very us in It's hindrance continue lots from So being have lot to we year the what able is us ago, the comfortable future. XX% do in the and what in our position of and feel got so grow. supported to up addition have, being to to we our to we like front about actually to

AlanRatner

clarify, that, I guys. was more appreciate you there the And it developed. I lots lots, to implying wasn't just don't control are

DavidAuld

we and That's own a a valid an we're concern whether or monitor, lot, that is buying option. something we

sure lots have make We on divisions get in other with every delivered. to working people those community

Operator

question is from come the Pettinari of line with Citi. Our Anthony next

AnthonyPettinari

any Christmas? of the of issue. buyer sequentially of was quarter. kind then underlying pandemic we that expect the think historical sounds price if of But you noise? people another anything as out Are homes demand. year, up behind think in of low seasonality Thanksgiving, look it But seasonality? Last of cancellation Or window, ticked there standards. you behavior by modestly buy your the terms I year that? of in seeing should And looking home at week like morning. kind the the you threw week to rate, there Good Was just an anything wasn't I wondering extremely very saw It there just return

JessicaHansen

on low note XXs out still the I very historical point I to mean, in low. nothing -- comfortable on it's nothing there. that's the Typically, the today, that first question, seasonality, at normalized cancellation the ranges so a rate. Nothing we To XX and versus yes. we're mentioned think of are the

DavidAuld

release for going you're define -- we if the when I Again, track to don't improve seasonality process program you start, from our selling sale. houses houses. them to of inventory more -- if based is think number our we see of We're you sales how I upon that releases. houses building and that And release as you that, know

MikeMurray

be sale it's demand homes, range of in a very fiscal a past the various good a is be to supply the digit our able would indicator continue the indicating over good in in a we've of about broad months. to for And deliver historically We sales in with growth deliver homes our 'XX. indicator pre as production. XX had good and had double the available And to and in in that starts stages production sell marketplace, of XX,XXX Today, available. demand marketplace. deliveries. we've great going sales been place has really homes and of to what we're And We're feel almost

AnthonyPettinari

as just a little digits very Great. pivot I community count, the you've or that think bit low That's talked I follow you a about estimate change then Is to as impact? mean, rising up, selling any And to helpful. homes later. single past, there its in

MikeMurray

would to community accounts the communities have expect share sold you there's the community on as over but where we market longer longer a that. grow, some account focus some market goal the to out to obviously at sooner share, with we'd for fluctuation expect Our low see we longer our modest pace consolidate be over continue gaining the to in mid we to today demand, and term. grow trend over But strong digit single the so continue pace at a term, quarterly to term

Operator

Patterson come with from of Truman line Wolfe Research. will Our the next question

TrumanPatterson

my for Hey, taking good questions. morning, everyone. Thanks

of your shortages, question that little supply the first material issues. bit of just playing alluded the growth how that risks these out hoping really, digit growth, labor I'm explain demand We've issues constraints some some see to to side? So double heard biggest impede development you in that might that a community just availability, lot or you with question on outlook, you double some into and 'XX. approvals, can of risks are of those XXXX. the I'm to in press on about growth understand, my unit demand but pertain release And doesn't hoping what achieving digit really

JessicaHansen

bit Mike we've nothing this it's new. been on a is you earlier little things, it all time. really Truman, but working as entire mentioned, of said It's through everything

it that. everything there navigating market, fantastic one is, daily doing say we feel So confident wouldn't July. what we double and a the to wouldn't if but a it's that's up in constraint the to our our to demand adequately manage through you thing, those, job the are operators ramp here varies be essentially, saying on we in digit constraints. and through are ability the any basis, more And outlined. But the didn't production And of market, by meet that continue in

MikeMurray

about a that trailing XX,XXX months started in is growth year. XX% deliveries by But X,XXX on inventory see XX itself our basis, positioning, homes, inventory, increase did this this our are and we've can over year-over-year, in double units the what plan of quarter, we up our digit

to that we're in position challenges in our maintain the in be 'XX. continue that feel teams starts. deliver on and But to our current improve we're to haven't yet. 'XX working our on ability great So We we unknown to into with and we move it dealt improve confident on to we're into and that. do already challenges. position There'll double and There'll like that expand move digit, be we pace incrementally on as as

JessicaHansen

July; relatively comment today. high I And a know finished our haven't fiscal in sitting year. that's we level We're

would just specific target. guidance, we So in November the give expect to to more in addition double digit closing

TrumanPatterson

I'm of Okay. which product? of contracts you across your get of windows, especially do side; but at material depends mean, to we've is concrete, doors, of level looking the Really, kind shortages right? But it board, have the in I market, actually with that place, actually what kind suppliers heard on

MikeMurray

deliver I to our what relationships matter with they the you're and no they're want have you going going get We to give with to to. to suppliers. who mean, deliver going what they're says, contract

is so work a the very us. hard to And in production commitment partner, and commitment made with making to are. they've sure plans And them. good our to And labor, they and materials trade our our be we both suppliers understand what

DavidAuld

supplier back within every a in to markets. do mean, about customer important just we're markets. Again, scale those it material these I to goes very

right, Mike's is but about as So future it's relationships, it relationships, about well.

because is no no us. it is don't saying path, to going we be them somebody, So be difficult be to saying just going want to to to difficult, they're yes, it

TrumanPatterson

quarter-over-quarter. and strong And just a Understood. lot employ up starting a ASP to follow best We've process. seen order final just of my up then bidding XX%, a very follow builders up question

hoping either other any it talk, your portion there's of of in affordability what up. Have process. the your there's the some to communities with And been that on understand in just been local you portion or of that taking Just believe of side came markets? that some bidding the seen incentives I some from the industry price then

DavidAuld

like Certainly happening from in limited on we and a component we're in around margin. any seen that. impactful, by offering that all want entry the running intended transferring not house in market, home. to into guy communities on again And these 'XX haven't not or incentive our then never price in don't false used Texas, house about And California we extended stuff, contract, our of our 'XX, that's we stay seeing longer what a trying to houses ticking because Because was up. and have have worth achievable in certain communities, it's a certainly putting invest level we're every under and giant we're from get is by and especially into the pricing markets. sudden, But don't a the pay. house it's what And that's process. guy We're Certainly fund close, a to demand I my walks for a but lot personally model right bid where expectation California going is having and to sell on we're false there price work have we don't goal people sales I operators the in at our points there like a certainly everybody they there. supply. very very willing of to to our have, is to now, close the to

Operator

come Kenneth Capital. from the will next line with Our of question Keybanc Zener

KennethZener

everybody. don't the on there. pick And Good folks California morning,

DavidAuld

We're making a lot now. of money in California right

KennethZener

supply, printing You that demand, the housing, across all structurally so we very $X limited and there's that record And right, this property. today, record is mean, cycle categories, unit stocks XX,XXX right, interest for more builders, propensity other XX,XXX- low buying COVID. $X Alright, all there. can it's institutional coming Very all are and have what's right? margins, governments from different high the portfolios very consumer credit, all you, look, buyers, rates a high are something time in money. reporting make billion large the I billion, like the builders,

best you many supply. you're think guys I working in the look, and your business on ways, have obviously So, land model

operator, looking you seems good? to you you where at will the the rather it than that Yes, you are you. on I are looking to Thank are that when? an looking separate you? but whip is on as that is side? an see -- I look you the mean, people that'll bidding cap by nothing looking actually investor, side. that. in, all low. it that there's what it because like it. institutional mean, going over -- What leverage events is the individual divided coming are not Yes, this But But at Are unison causes obviously, How at if I are you maybe to inventory do you're guys, your rates are so guess, be down? properties than how think I factor existing macro got all You're the money And operational at for, you're going operations indicate is there's from That's So look don't at there? margins know your still a I your historically. what to up. are understand earning, is whip it capitalized I mean less what that's

MikeMurray

are the significant Rising always the a could affordability. can rates never I cost that like storm at the two next think clouds from, monitor looking into that pandemic ago. six happen anticipated, looking and interest that or input we and the business. we like things homes we a of that closely happen There macro at the that be that certainly what didn't payment. years year in obviously might months things very might the value anticipate worldwide are impact And a that monthly

it upward some think withstand that in backlog testing did I we stress movement the points two touched can on the right the now. with Jessica before backlog, rate interest

levels we're size our seeing little In quarter, most this the addition, despite debt-to-income average recent going the taking bit down actually up. borrowers the DTI, a loan in

qualities credit our So buyers of are good. the

outtake sale vast communities. the and out don't are homes for of buyers Looking the for homes. any communities, have sale at our institutional programs owner majority of occupied those We relational

to balance strong and into the communities the can continue future, and the where very thing turn years market as many are good where focus take and very focused equity It's of outperformance. said, you advantage sale a level market and would for at to from hard But us of on change on strong, liquidity is a to Our that institutional which build flexible things allows business. leverage may in have separate Kenn. we maintaining that all market they know local consolidate have share, sheet as change we side do capitalization, great apart the leverage share be conditions direct focus we low especially that our for on one the local

Operator

session. to the now back turn Thank for the time we I question-and-answer management would remarks. to you. That call any the is all like over for have today closing

David Auld

November. speaking the you to you, in family, our account the you and call Thank D.R. your time three entire look forward on Horton accomplishments in and team, Horton focus again fourth Tremendous Darrell. appreciate the quarter share We quarters. to and everybody's And Under results executive hard today. year Don the for work. first delivering with thank full

numbers and Thank board strong finish ever nobody's that the seen. put you. on go Let's

Operator

today's conclude teleconference. Thank participation. you your for does This

time. You may Have at this lines disconnect your great a day.

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