D.R. Horton (DHI) 9 Nov 212021 Q4 Earnings call transcript

Company Profile

Participants

David Auld	President and CEO
Jessica Hansen	Vice President of Investor Relations
Mike Murray	Executive Vice President and Co-Chief Operating Officer
Bill Wheat	Executive Vice President and Chief Financial Officer
Paul Romanowski	Executive Vice President and Co-Chief Operating Officer
Carl Reichardt	BTIG
Stephen Kim	Evercore ISI
Matthew Bouley	Barclays
Mike Rehaut	JP Morgan
Deepak Raghav	Analyst
Asher Sohnen	Citigroup
Jade Rahmani	KBW
Truman Patterson	Wolfe Research
Eric Bosshard	Cleveland Research
Alan Ratner	Zelman and Associates

Call transcript

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Operator

Good morning and welcome to the Fourth Quarter 2021 Earnings Conference Call for D.R. Horton, America's Builder, the largest builder in the U.S. I will now turn the call over to Jessica Hansen, Vice President of Investor Relations for D.R. Horton.

Jessica Hansen

Thank you, Tom, and good morning. to fourth call XXXX and our results. financial to discuss quarter our fiscal Welcome

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

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

Form information on with is all morning's or are could contained Additional Exchange the the Report be of lead performance file Horton will our D.R. and changes on release 's Annual XX-K in can week. and we that to end XX-Q, factors our next Securities in at filed XX-K plan on Commission. which to website about Form towards earnings material be This reports of investor. and drhorton.com found subsequent

geographic home-building realigned segments referenced operating quarter aggregation press our our better release, the in regions. reporting this into we segments allocate X of segments our our new As across reportable to home-building operating

quarterly our conforms to closings, As be that presentations, of region we site, backlog, and posting Relations data a will homes, geographic lock to to result, investor sales, addition updated presentation. our years X also in and standard supplementary data new our Investor

investor. reference. under and your News found All of section this Events, can drhorton.com on Presentations at the be for

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

David Auld

President Officer. be President our as himself our we a recently D.R. as call Mike been get and most started, morning. also serving was since we Paul Operating for and brief XX years, and good with like for President years. Vice Murray, and President introduce Financial Jessica, Horton our Romanowski Paul to have have XXXX Today, Wheat, also Florida you, and I'd Officer. am this Co-Chief Florida Vice South Paul who I by Vice before Chief has Bill to X Operating pleased recently, us, Co-Chief promoted Officer, Region and with Executive Executive to Executive Division on President Paul. Thank moment our joined to take

Paul Romanowski

you, David. Thank role everyone. new for analysts Horton year. serve on management know my and investors excited coming And team, to the D.R. hello, look I opportunity the in I'm and to the in getting our forward to

David Auld

Thank you, Paul.

to active role, $X.X our he strengthen today, Given that but participant to quarter, The building home revenue fourth an consolidated team we in and and executive to year be finished increase will $X.X his the are with new Paul us will to his team. not Horton billion experience is believe which -tax with glad have extensive D.R. increase income strong included a in pre XX% a billion. XX% a him

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

$XX.X a -tax For XX% of billion to on year, $X.X consolidated pre increased billion the income revenue.

low while over to profit XX,XXX record We home basis -tax this pre closed to XX% X.X%. percentage year, XX.X%, an XXX homes last Our SG&A achieving the of year, margin increased also $XX.XX. a a earnings XX% improved building year increase share our diluted homes points per for of or from and XX,XXX historical

capabilities. was on in and their XX.X%, return XX.X%, our production experienced Our equity results home on building was our reflect these inventory teams return

multiple scale broad at brands. Horton leverage to geographic product our footprint, ability points Our across D.R. price affordable positioning homes to and across our offer

for operations XXXX $X.X home-building billion. Our was from cash flow

cash $X.X generated have we flow years, X from operations. past the billion Over of homebuilding

by consolidated our XXX%. share per our earnings revenues by and XXX% growing While

homebuilding our than Market conditions doubled more share, equity. returns and returns $X.X reduced market increased our and share XXX%, on billion, inventory leverage all and are maximizing remain we this During robust our significantly liquidity also further. on while book increasing our per increasing and very time, by homebuilding our we value focused

challenges tightness the are there certain in significant including supply labor chain, still the materials building in shortages in However, market. and

As result, restricting levels certainty our during home to our sales by homebuyers. quarter for a base of continued better selling our cycle align date in the with ensure closing the homes later home we production fourth construction and

XXth, product our production construction pace, September and homes we position further optimize increased our by XX,XXX more expect generating inventory this pricing, strong strong supply to Mike. to We on home in us achieve October, low economic to well inventory offerings, effectively and position challenges homes to changing In very started homebuilding our We year managing at sheet, XXXX. ultimately than financial We sales the growth flexible leverage and to holds starting in XX,XXX and quarter, through plan again incentives, ago homes approve chain our believe liquidity XX% capacity. returns. homes, positioning operate balance our flows XXXX. levels operational increase our our After maintain conditions. and to operations a double-digit from from X,XXX cash

Mike Murray

and diluted share billion. Diluted increased XX% to income the net per earnings income Net for per increased XX% for increased share, the XX% fiscal quarter quarter and earnings to billion the $X.X per year, to for XXXX for fourth $XX.XX. share to XX% of $X.XX the year, increased $X.X

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

size homes price average was down the was our last the Bill? from X%, Our XX% for closing $XXX,XXX, quarter closed average up And year. of

Bill Wheat

of fourth challenges to when available quarter the orders our down from chain that $X.X value to year supply XXXX. orders orders XX,XXX XX% first more had pandemic prior during the the XX% quarter surgeon the in and to prior the arose demand billion to housing significantly XX% sales completed were due was the decreased those up year of and we the A in billion net ago, $X homes, sales in year. Net fourth homes sell

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

quarter the $XXX,XXX, fourth from cancellation was prior-year net fourth the Our quarter. prior orders sales quarter the XX% sales with The was average for XX%, year. rate flat price in up on the

described, are local based our sales to They number the new homes position. on inventory, continuing to value remains home David to production in while focused where staying our market our continue times, As providing on basis and order teams adjust on prices buyers. restrict strong community-by-community demand and pace sales capacity, also very lock necessary a of construction to

than a the orders restricting sales our of We our quarter, lesser first quarter. during fourth our extent are during fiscal still but pace to

last result, sales slightly equal to XX,XXX our higher net quarter As the expect be we first in our a approximately first quarter than orders orders to year. sales or

sales in trade XXXX, growth net double-digit homes in inventory, and with volume October remain homes in line Our in our are and with XX,XXX supplier robust we volume plans confident that and fiscal order backlog, was to deliver relationships. well-positioned Jessica? a we XX,XXX strong supply, lot

Jessica Hansen

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

will continue We expect costs both to lot increase. and our construction

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

Bill Wheat

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

For the expense down from SG&A XXXX. homebuilding in year, basis X.X% XX points was X.X%

percentage a Our for continuing is expense, on are while control history. quarter that David? our we And SG&A a our homebuilding focused lowest for to a point our our of as in ensuring and revenues, business. infrastructure supports its year SG&A at adequately

David Auld

total XXX fiscal in inventory XX% our compared housing capabilities to XXXX, from further. and XX,XXX with of homes increased We strength quarter an a completed. XX,XXX ago. XXth homes were inventory, homes up increase unsold, fiscal year at of is September were ended are which which focused the homes response year XX,XXX of XX% have to fourth and our demand, of XXXX. during our expanding and XX,XXX during the We the We production on started

chain improvement current in to yet in we expect XXXX. we point seen not some have supply Although moderate significant the constraints at the Mike? ultimately

Mike Murray

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

and key will is demand. competitive increase meet strong in efforts to our lot position production volume efficient growing capital support our to our Our portfolio home-buyer to

Bill. for $XXX was $X.X $XXX land, which quarter million of and fourth lots, development. $X for finished in lot, billion Our investments and billion, totaled for development was land home-building was million land,

Bill Wheat

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

increase extremely continues to XX,XXX plan, lots by its XX% XXXX, year. Forestar during they execute their high-growth fiscal on as compared to sold the prior well to lots

a supply million in subject D.R. improved XXth, and are XX.X%, to an land of margin Forestar's -tax loss year for D.R. September $XX.X controlled offer, under owned right were and Forestar's quarter from $XXX Forestar increased million fourth debt. XXX lots. from position ago of Horton Horton's or under 's to on owned XX% profit of our the lot a lot purchases pre basis lots the XX,XXX agreement. to Forestar. extinguishment with points excluding year master contract first XX% of At

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

Jessica Hansen

the XX.X%. million $XXX pre $XXX was quarter pre margin -tax with profit a -tax at of income services in revenues, fourth on Financial million

income -tax $XXX pre financial For revenues $XXX services XX.X% of was profit tax margin. the free million a million representing year, on

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

handled by quarter. Mike? mortgage closings the buyers of home our Company First-time represented XX% this

Mike Murray

Our multi-family $XX.X fourth generated and million in million and single-family pretax combined operations in the quarter fiscal income XXXX. of rental $XX.X

$XXX $XXX sold to X to were of rental rental for from sale XXX one Our fourth generate during XXXX, homes of properties million communities property September XXth property during ago. quarter, rental XXXX to multi-family sold total than units quarter operations $XX.X X sales. during revenues fourth XXX We in for fiscal our million, compared totaling rental which sold $XXX was sold fiscal fiscal million $XX expect in revenue. the including the in inventory XX year million We single-family a million properties XXXX In dollars totaling at fiscal homes XXX for units more dollars, we all in compared million totaling $XXX.X X XXXX.

in future We multi-family rental rental rental in grow projects. our to in single current also fiscal $X based platforms by development investment more billion of total projects and than our our on and significant pipeline inventory the expect XXXX

and We Bill. positioning operations years. rental a revenues, contributor significant future to our be returns profits, in are our to

Bill Wheat

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

level billion homebuilding of $X.X $X.X years by had At for XXXX, generated cumulative cash was This significant cash of and conditions. $X $X our and on of the changing dollars, available liquidity fiscal homebuilding market homebuilding provided cash consisting past September billion flexibility liquidity, of building capacity X $X revolving home billion. credit unrestricted from our of billion During our to operations operations facility. provides adjust to homebuilding we was XXth, billion

At billion, a with year-end, of home home-building value per fiscal up the XXth, XX was notes stockholder's public months. in ago. $XXX September matures from next billion $XX.X million outstanding, was book equity Our building our XX.X% of leverage $XX.XX, XX% share and was at which $X.X year

year, XX.X%, our on ago. a improvement the an return basis of XXX For from equity year points was XX.X%

paid of of the during year. dividends During for cash dividends $XX.X million quarter, paid of million a we total $XXX.X

common shares of for fiscal $XXX During year million. million X.X million stock repurchases $XXX.X stock quarter, for we million. repurchased shares the totaled our during XXXX And XX.X

a repurchase ago, shareholders our to million is count on to remaining our September outstanding returning count on both position from XXXX, consistent dividend $XX.X We and Our fiscal dividends basis, and of Board authorization financial our Directors to through dollars. to X% outstanding repurchases our outlook capital per quarterly share Based share share increased reducing our each and and XXth for XX% committed share Jessica. $XXX.X at a year. by was share. down remain year fiscal our cash

Jessica Hansen

As are remain demand home but similar challenges forward that will expecting of home to with quarter completions, we fiscal look from chain delay we the and strong first to market closings. continuing conditions constructions, buyers, XXXX, supply

in by homes consolidated range our be homebuilding quarter generate December billion in XX,XXX homes. to between revenues XX,XXX and closed We our $X.X $X.X of a operations expect to and billion our to

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

generate Looking rate close income corporate future XX% and rate. XX,XXX the further expect We in could consolidated $XX.X of XXXX of increase for fiscal that to to out, federal between tax an tax homes. and of to forecast potential approximately we XXXX subject XX,XXX full $XX.X legislation to the fiscal billion changes for year currently revenues

We that at XXXX. XXXX reduce of to outstanding X% our by will repurchases expect share the approximately end compared end our of also share fiscal count the fiscal

building after our generate growth. operations to to home expect fiscal homebuilding We in positive in XXXX inventories, support flow investments our cash from double-digit

liquidity, our flow conservative among an in and our increased We will rental paying investment homebuilding increasing priorities operation, leverage consistently then repurchasing maintaining utilization the strong balance David? dividend cash and shares.

David Auld

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

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

year efforts share are and Your improving market the during This We Company's and concludes growing in remarkable. XX% XXXX we closed returns. prepared well-positioned in our our were continue achieving record our XXXX. profits most homes to remarks. in And with a history, operations incredibly

will We now questions. host

Operator

to X time, now Ladies open the to is questions. participants Instructions] for and gentlemen, of themselves [Operator interest floor In question we remind and each. X please the limit follow-up

while quality. your ahead. please We also listening BTIG. your Please provide pick-up Reichardt first that live. sound Please to hold line optimum question. And if from Carl the question, question your from phone coming speaker poll we Carl, is is posing go on while asked handset for

Carl Reichardt

the Thanks. for growth which Morning, to ask next on doing and your for for wanted perhaps internal Thanks orders, in more talk about your question. absorptions my a year. everybody. in little your about for plans Paul. count you bit taking Welcome, what I to relative community see lean you 'XX fiscal

David Auld

again, think working we're we that. deliver our a that count we're up making sell to sure good. is Well, still community as have deliver. side. sales -- I level we the believing on and allowed what into continues stabilization houses low single-digit. the absorptions believe -- efficiency is the And side you're [Indiscernible] to as labor to then has Carl, as that. first far to when allowed years. that for know our has as plan and us projecting consistent the home, to single-digit to more We've -- as just going count, the the starts drive flat community us key the labor sales to and see XXXX that to and And If I been that XX do it's going when market then, place of our sales homes XX,XXX base that XX,XXX And we And on continuing is and we've for us is expanding matches got deliver last numbers the material on that there

Jessica Hansen

rather and quarter-to-quarter. than going really to close count, And we focus community a we're sell inflows on start a it. it house, adds ultimately If

on focused and homes and inventory, really our we So, lot our position.

Carl Reichardt

Thanks, Thanks, Sure. Jessica. David.

David Auld

Both very, right good are in shape of which now. very

Carl Reichardt

back D.R. I'm that. when you. dirt probably it land that much idea go options I that significant cash Yeah, don't other others to you something hurt two hear to and the okay. too the your of Thank the has from but really about approval probably within fronts. getting And we months Horton is in, XX talked delays then the out processes investments to on curious past, put this of appreciate and David, of wanted I improve. allowed has in entitlement that. One, finding hand, on and shift that to is

So a months see investments lot. out can time? thanks goal about cash And how getting of you land that your talk changing within of you XX over and that your

David Auld

hurdle of, in have not say That's a or on out more going non-negotiable have balance and not the to place the something future. it's positions requirement coming program, long our goal and a risk does your long, of divisions because that I we at wavered that happen downturn what events But sheet what underwriting level your a the that saw it's we land to probably owning would that face. might unforeseen long is our less. of put and that off we toughest

part primary in a of been lot we still we deal underwrite I find because to has position So the and factor option a -- cash XX-month have driving our every back is partners. think it's

control. controllable We lots have to want to to we

with good major underwriting cash the and in So be trends, through requirement in the a to got XX this we've the these get -- entire is that think focus table off that partners unrelenting got factor a that's cycle. to your And months. been I just you

Bill Wheat

things extending and own that a doesn't we working our lots approvals third-party in one to and applies we're buying not times land I is your the more place. extension we're it with we're lots we're that self-developing. when say homes delays. return our ready those about like necessarily buying affect return turns of and chain Carl construction until delays supply do the when in and cash by our point And our are with that, start to our cash would impacting actually is to our the XX months recently, thing ability and because

We that were construction our times. elongation side material stabilization were our we is on achieve hopefully, a that in our a bit believe weeks, seen basis, on friction times turns closings longer the bit contract a the than last the now. causing longer some is over about quarter further have I quarter -- -- inventory will that of by of will hopefully, stabilize see so right construction would and we is again. a and, which X But, we this year-over-year as year, reported be factor we coming

Carl Reichardt

Thank the Bill. answers. And thanks, really everybody. you, I appreciate

David Auld

Thanks, Carl.

Jessica Hansen

Carl. Thanks,

Operator

line Stephen, Stephen from is question coming your ISI. Please go from And Kim Evercore your next ahead. live is

Stephen Kim

into margin, got coming question guess a you're Okay, affordability for quarter. to guess relates should is gross things to first through I through this efficiencies? to I comments imagine am Company's driving going to your right you affordability. And all constant? margin? held my much. lumber primarily I info. we that regulated very then, about I thanks think construction the first, peak December operates design Thanks think your All Or your that imply lower guys

fiscal low that stays to is for lumber quarter where the point the think margins if it would year? now, is 'XX right So it maybe be reasonable be to likely the December

Bill Wheat

further of believe of so into terms seeing lumber They cost, rose fiscal rise in our are still in do that Well, seen them they we We've cost. we are lumber October, rising. QX. peak the that further

increases. well, even have think offset However, costs some XXXX, will into we as other we're move by costs be increasing so further increasing across-the-board seeing fiscal we other as are see I perhaps lumber cost when relief really from that

of As effect and our truly is demand the strength the around the and we fiscal able as should depend the environment ability with move into offset But, fourth far be Right depend offset spring our continue as we margins we XXXX, the environment. season, ultimately that gross to of in margin, as net on view our reported through that price with now, to to quarter. just move we demand prices. will the are on the strength that short-term that the level cost it will on maintain costs

Jessica Hansen

house continued average to Clearly, the to to focus square our to that's limiting thing has limiting smaller affordability really as And and house, our again, our Homes able any doing the And of thing we over regard. is our of control plans. a been trades very focused footage building see would more on, extent, construction ability come long, and house lesser across in particularly brand, way we've and have continue affordability also It's our our can floor sides the a the well, over all-day site been on plans, Express things. we multitude we that options, at to not one our being benefit to. job over and that then same to down, achieve a and is repetitively to efficiencies point scale in floor

David Auld

we're affordable cost our is stop. a buyers, total to to effort going derive for more Stephen, occupancy never and that constantly trying

Stephen Kim

was implies that all held gross a constant, right? lower margin, of else question unnecessarily think of Right, none gist and I the my that

David Auld

we're No, -- don't I not that. seeing

Stephen Kim

wanted why I That's clarify. right. All to

really we that could and see big, because because restrictions, It's regarding you secondly, the production your externally the inflection you and weakened. inventory. be analysis your your sales saw a ask then from a about hear your we an of that's starts in obviously so are demand And restrictions to has we reducing themselves wanted positive do comment things that metrics encouraging, yes, really somebody or I restrictions, hey, certainly we can Okay. We layperson and sales outside our say, sales listening will about agree.

that. aren't as there therefore, on list so many like waiting things people And and

was more maybe March. you or sales And are alleviated what -- demand a clarify I could of get to increasing just if is little restrictions back a you go detail, it's starting not with wanted that wondering demand, so And to supply? you said I being these are in assuming or sign slowing relaxed, which a weakening of to

that test I you felt if a you was backlog. comfort affordability, stress think Jessica, they get of your a I recently? wondering did gave about lot that that that I

Mike Murray

last that in and change. at yes, update our look quarter question, we every stress no real the That and test backlog did we found

that production function In fact, homes them process of of quarter that to the experience We're give been have don't the certainly maybe to restrictions, that the in supply. have a slight the been points, more more to delivery and demand give pull a it's seeing buyer that where in anyway, we to In environment. able think saw from a to better it's process. sales date reflective I able the March confident quarter are a sales backlog. improvement in what to we we September

expectations customer We our take and we advantage meet have not those properly. push until of to sales that consciously contracts can demand chosen

our inventory any homes, country, homes. inventory. normal that's X,XXX of in we're business. able so unsold the below in homes that the It's available course of scattered are And still it's So that across we're to seeing sell we've are up not seen homes we're those pile releasing when completed like

Jessica Hansen

fallout test generally and what those our it's at-risk may done commentary like, basis to a different would really document buyers quantify single-digit look point and mid-to-high mortgage the at if and that, perspective. As We to were of of total with XXX potential pretty to risks. expect full that those XXX We still that's a And not feel ability anticipating. just currently rates buyer at-risk have basis that in just the is we've affordability the products to rise move, would quarter percentage a our buyers reminder comfortable regard. that stress additional on points, put with for look last we they heard stress additional an backlog from not look interest and income,

Stephen Kim

the info, appreciate all for it. Thanks

Operator

from Matthew, your from Your line Please ahead. live. is is next go Barclays. question coming Matthew Bouley

Matthew Bouley

everyone. results morning, Thanks here the a question pretty the and for on tough Good taking Hey. congrats in environment.

I'd So on the call Bill, released uptick certainly can you and unusual Or your Does the surprising not should yet above suggesting I lack this you perhaps continue QX, are for to another, outlook, well versus it a Thank understand to just we better equilibrium historical ahead think QX I you XX% atypical the released sales sequentially lessen to restrictions. you. as uptick the homes that restrictions as order those guess uptick term? there. is and norms, higher we you of that which basically those spoke sales given and back kind get inventory and inventory position of of see spring sales the

Bill Wheat

Yeah. Thanks, Matt.

unusual an still The don't really prior-year we're to where we apply environment. think are today. trends in I

sales, pace by order are supply, by the they driven that sales homes shareholders the stand. the pace inventory ready by sales for we our to or have in sequential and is governed that in by them and our really Our have really reached our homes stage release production so of where constrained we were started, that that volumes

we move which And be sales. QX, are year's is when think unusual in we believe where level, sales pattern were deliver we're will the now, versus an inventory we restricting pattern have in sequential the where I right so by were governed the to our better last visibility will that as into than equal QX year, that we levels. then we still position we maybe, And with to slightly or

Mike Murray

production you're what date, to as see through think Bill that those stages to sales, the on expectation had sales. that over as delivery few reach it's able we're those said, production starts in homes gonna with kind for quarters past come marketplace then our aligning I a forward and confident in the release of growth we've we're in our

Matthew Bouley

Thank great. That's that. you both for

consecutive well mix there guide right, high increases we assumptions Obviously, implies ASP's, year ASP doing or revenue north into in temper mid on single-digit have think might I quarters, of Secondly, been to geographic be any you're in if that closing year? Are that maybe not around QX. s should north product ASP's that the 'XX take. order the two from next aware math of here give or for in that of ASP's fiscal

Bill Wheat

we're the looking be selling season. and the ultimately year will for whole spring our the at dependent ASP what will as on a year be

And assumption be will so think prices to year prices fast will that increase as to for mid-to-high these up they not that's single-digit, We're continue assume I as have. the going that fair. the

moderation business. sales focused so to continue an be there affordability some our will be base will And to on from intentional our We're assumption perspective be in prices. for going

challenges seen. set that for And to our the to of be. seeing look the chain initial will guide supply like, the continue ASP to spring what year seeing the course our do so And will going over target we've will as the you've year, prior what what into prior to us

Matthew Bouley

and Great. luck. Well, thank good you all

Bill Wheat

you. Thank

Operator

live. is Please coming question next Morgan. ahead. of Mike Mike, JP is line your Rehaut from Your go

Mike Rehaut

good everyone. morning, Thanks,

guess, Understanding, a how longer flux. throughout sense same cost, and you're in think lot you even just between you First least the a terms of directionally tailwind. and of other the get reduction place, fiscal a a have get are through perhaps of look year, you in question, thinking at through focusing incentives current little cost on inflation At how of the rest things obviously, the areas assuming 'XX discounts the But of you cost the people I rest some this are lumber margins? additional how At sense of steady, and in about of I term. a as progress lumber of might trying in 'XX. that have lot gross inflation pricing was to to is obviously and hoping other as bit time, headwinds point of

Jessica Hansen

or quarter specific which so heard margin with was two, gross essentially much fiscal our have our line margin don't We to relatively gross you really a QX, QX. in guide for past visibility

lumber headwinds quarter. Bill that December As mentioned, continued in

year as in margins in chain and least to maintain Some necessary with the going to at how should position that hopefully here. see ultimately, achieved some these for off whole But dependent as today's good selling the which of move we're on. strength But pretty year. the as feel to fiscal strength very do throughout continue far the gross unfolds update some margin gross pressures market, we'll we increases. drive next throughout does back as a spring supply of be and the of we a we think that move are cost But season, on we I we from is spring the out continuing to XXXX be that

Mike Rehaut

that. Appreciate longer guess term. just Right. I also

You're in plus here XX%. of around in a new state terms minus or of play

Just versus X were to last at years ago XX% the you cycle. and closer

in XX.X% around XXXX. was peak your think I

X should a mean fuller just unquote years, curious, but How them or have months, normal next we pipe or you or X, that a complete we like and assuming Over incentive returns, that. don't a the component obviously, whatnot. even XX the to as let's say, a about Again, a over quote new XX reversion margin for there normal? to backdrop a X, was this today, your underwrite think gross underwriting in next deals

Mike Murray

it's and and just a margin. first One, point. and not that, we do foremost on Appreciate focus returns the great

as years And from of three a for it lot credibility have equation. had be we don't component is now, think gotten and the I we three were prediction. we think right, mentioned we'd will time, a years that at we XX%. at if You're XX% the you return said around of ago,

the hard, Jeff periods what give of cash encouraged confidence forward think ultimately driving do it's that's out. really underwriting, forward. are our to predicting see mentioned And any really before, So to us as we back we accurately our be in several by great what what investment that in margins return today. achieve and will and able is degree be it's in I decisions margins we'll the going

Jessica Hansen

of maintain in not things would lot we They're that. cost what flowing gross to, leverage, we us maintaining are over margin the balance can't margin believe With we have the in we've to we changes would can point will interest forward. our through we've that improvement of but with maintain scale can other seen. that be to term point expect of from what our going the sheet two consistently the -- in questions a of sales keep XX%, our done of also long about less There we things of reducing advantages. some in higher Two to enough lead level less historically But business than that structural then sales. terms been to our a cost at

David Auld

is, [Indiscernible] more you're around has it's associated typically My been cycles. Coincidentally anticipation going prior maturing see stability consolidated, to than a industry.

that discipline has there today, a consistency industry think in existed. that is the I never

Mike Rehaut

should for if think XXXX of could One last in, how terms community pace in -- count of think in in XXXX quick one, we both from terms sales I it growth sneak both and versus about just aspects. I

Jessica Hansen

If by continue have close driven the houses at to referenced the in community call. absorption for rather increase we I ultimately expect as and community of year the going going to have be the count. than in to modest think would outset count. house. full a at But lots, the selling apparel I mainly to we're It's our We

the absolute is doing. that and so And our generally is our just business 's community of better where going count indicator what

Mike Rehaut

you. Thank Great.

Jessica Hansen

Mike. Thanks,

Operator

coming from ahead. Please question is your live. next Deepak, line is Raghav. Your Deepak go

Deepak Raghav

pretty that My quarter solid timing first benefit questions. Nice everyone. for Ohio morning, some in is X-K Good thanks possess X a on and your Hi. Perhaps there's rate. start my Homes taking October, near-term, walk a puts you touched-pace upside deliveries can normalized through rate is or of takes But chain us to supply the improves? with when and run for some good here. this perhaps XXXX space a

David Auld

I think first of X well the for X the year. targeting is a that to run we're established months this rate pretty

consistent a targeting. that's run rate So we're

the we than everything supply growth projecting the basing the had double-digit exists today. chain way and the typically we're support our we inventory And houses for and on we're year that do think I and guidance past. to to what on have have to that more carry

and -- material either we'll the mitigate, or worse. So brains resolve, labor see we're the get and what what positioning we'll for issues spring supply see

Jessica Hansen

a to easier is slow than It's it lot start to our it up. down speed

our based adjust outlook start our is. what So on we forward consistently

David Auld

liquidity, allows our flexible, target mitigator and in our more process, very targets. we on operate. is we're and control we focused we And that it's to our a us and What how the what risk liquidity, because be

Bill Wheat

sales and We're with unusual terms in extended an inventory about construction how in already an looks. disruptions. also the what our call times are all we historical close, unusual time We've of relative our time this to can of on of talked and pace in measures terms homes we

David same As in a more the ago. inventory to few hold today closings homes of we deliver years number said, versus have to

Jessica Hansen

in impressive own to is supply, that offset The we so very of lot years terms driving a of we are land, returns. still

David Auld

Well, very and maintaining think the a I advantage, flexibility, key whatever market. again, the focused that competitive we're is happens on liquidity for in

Deepak Raghav

think just to that How you All best-case, the Thank in the is don't quarter out what to Thanks Do thoughts level are enter high just visibility as what you. more My go the you're that. fiscal not but at appreciate extent supply scenario best, all want beyond some the spring realistic a XXXX? question do we to follow-up on selling to play even you XXXX, current for or scenarios fair playing discuss. are is given pretty going the season? chain your if out? state, willing out the great worst-case is comments. to Or of

David Auld

the chain do the get And best that on think have you've people out. figured focused I'm and with supply industry, I of ever confident. best I it existed some very companies think to that, will are done world of history the conversion think in in but the business going a that so a that past, confident standpoint, I Was that, they're very in get return a on I what I working that don't the inventory little we the consistent got From QX? best of are that maybe happens to QX, the we've it to when with people the even that's better. going am it QX, know rate result, we are an and that

Deepak Raghav

All luck. good right, great. that's very much pass it I'll and thanks on,

David Auld

you much. Thank very

Operator

question live. Anthony next Your Pettinari go Anthony, coming your from is Please ahead. line from is Citigroup.

Asher Sohnen

eventually, a need or new deliver able target count chain become I same Asher new supply then that normal you Anthony this kind normalized Are ask, your on number for spec homes clear forward? reduce do or you when inventory is the Hi, to that more want expect just in count the because Sohnen articulate you this of mentioned to maybe and going it's now up, spec to like And do for homes. you of to normal?

Bill Wheat

David we if turns Absolutely. a in return and When our we and you would looked more to can get that of you normalized said, inventory we Historically, back historical our could that's to or back beginning pretty take us, homes time, better. inventory close for what expect well would next you the the year. year as norms, double to or at the

worse. that, little than sometimes we've done better a little a Sometimes

is not tough will to Given as now, as we remains do right current -- it able the be we it if probably environment that.

to would we construction are returns it more obviously back we're turn expect focus time, environment would get our that, and simply and possibly reflection count elongated to we times would the a we imply that is seeing of can. When on we guidance our but inventory reduce current spec best Our absolutely. generating in, This normal the a the

Asher Sohnen

-- you any And just sales of supply. quarter I'm as then Great. frothy understanding around or get is are kind markets in start curious. to And function away starting have prices you seen But follow-up, bit to declines a around affordability, buyers have that any the concerned some a a just -- the that the of where maybe margins? seeing you're maybe walk

Mike Murray

as very it's sale strong the still being incentives homes as now seeing hot I releasing think and levels pretty we're spring. still But in that in we're quite demand, white for very not of are historical was place. low the is absorbed market well with right it clear that the

prior that completion process. that very construction few are homes not So we're being seeing to complete sold

David Auld

out gone selling be up It's it's a number rise when something houses there a has our is though ASP it think and quarter-to-quarter-to-quarter, sell. also indicates level of the I'd even not the of I sustainable today. time houses but you that restrict that you to say good demand And

Asher Sohnen

supply? Demand still exceed

David Auld

Yes.

Jessica Hansen

in And I high spring. as 's think, comment terms quite is as of Mike not

a think, to as return during be selling seeing, somewhat wouldn't as well. of are expect to the the spring it market season. normal today is strong We We I seasonality as

move as the we So we 'XX, to very throughout good that robust. going still is fiscal remain feel market

Mike Murray

completed extended that period and been almost have XXX out less homes. completed have are unsold, of time, an homes we Those of XX,XXX for than XXX

Asher Sohnen

I'll over. helpful. up it I'll turn Thanks, it -- that's very turn

Operator

Thank line from next Rahmani your Jade Jade, go your is question live. is Please ahead. KBW. coming from you,

Jade Rahmani

very much. you Thank

lot up land the side, On you were you they're said that costs year-over-year? quarter-over-quarter. think much sequentially X% do up How

Jessica Hansen

one second, a up a me as just -- which year-over-year they are about it. basis. year Jade. has on consistent been Give of mid-single-digit have I pretty too I percentage, last

Jade Rahmani

Do these at expect perhaps land lots? timing usually to at line clip. in appreciates of which you moderate accelerating? Okay. the surprising pace That's because lot historically, somewhat growth faster the think, costs appreciation, I reflective with of or acquired Is you a begin

Mike Murray

contracted it, do for That's a It's delivering a Jade. variety to delivered and so vintages, seeing of through. you're acquisitions, on land, the homes blend -- come we're this quarter and lot of lot big for large lots, got contracted when a of are with the we the

into but near seeing So those and costs to in reflected a generally for several closings. muted takes lot and the buying -- our currently it what and takes costs we're our inflation, it's and term fully it through we be years cost are -- impact

Bill Wheat

so prices and strengths pipeline And got controlled a at at lot lot because this that we've or position. our reap for the lock by controlled long the land of fixed lots is lot prices known having controlled benefits generally one and position we strong our of of and

Jade Rahmani

the questions. taking Thanks for

Operator

Wolfe go from coming is from question live. Truman, line your Research. Truman Patterson next Your is ahead. Please

Truman Patterson

Hey, my good for on morning, Paul, and questions, congratulations Thanks everyone. taking the promotion.

wanted follow year-over-year XX% your on midpoint. expectations closings Just prior the a but about up 'XX up at to question,

XXXX improvement lines, couple what Just in mentioned multiple they growth adding I'm capacity. support? currently, Are level made David, think they your you are expect of just suppliers of etc.? but to a do all products sort XXXX. respect that of what understand you and You material you've telegraphing employees, to shortages they can comments with trying

David Auld

us. material months we're all months. the commitments going guys. to major last got know X They X and from support start our our our accomplish. They're what for next see trying They the numbers. to They know of We've base

about So entire myself each companies. partnership half to pill to executive bunch a -- and with commitment they and forget Don CEO team, of a it's are names out and of really of came good not the because I'm in Horton, I'll going of them. other. Oracle and level

I a new think result of of home of And share existed a significant real in market the housing XX% I the that past. number. just industry, think the hadn't as consolidation is the and

Jessica Hansen

expected they going as to some away are lines, benefit impact. new they conversations have unemployment opening our in And are hiring,

to is I some are but we move Texas be to work said, pressures D.R. impacts calendar taking first And through, as business are doing also of a us. for those smaller as be into a they help support our worked them to expect Horton's expected need think these XXXX. things while through to freeze the as and we of do David what from extended the what versus business. lot And they support builders to to always, solved

David Auld

-- service and I of really smaller, huge a better benefit scale those scale. than significant us access markets, less gives think -- with scale is Having people in less these for some and more us

Mike Murray

a Having conversation talking locked in the suppliers. piece lots as million powerful makes it of large with forward a pretty pipeline X.X over

Truman Patterson

chair? And capital don't could this in your heard the well it's Co-COO or you you're behind MNA. second allocation that I inter I'm run fair seeing discuss anything our point. your creating valuation Could decision that you -- Then about sure stretched any level through I the in question, a priorities, believe but just Okay, enough. pipeline just at just deserved, all the

Mike Murray

be we're of The It's similar for at quarters. the question. and accomplish would M&A let hard in to it's any team the on with where scale transformational It is Sure. acquisitions few looking looking major it's to the landscape take looking for to platforms for second question great past first David to opportunities. people been at handle those us the ongoing one tucking major maybe not front M&A today. are the I'll pretty And anecdotal. for in We're that today. people and we add at use country, but look conversation we any an growth. But capital the that process, don't where across of

David Auld

have five gas get in a doubled were account. and our had became would infrastructure, COO talking and really an talking it basically Co-COO statement the comfortable president was on get at then officer I executive our about being to from on the a but places trying a And looking not the because during roles, and I less quick platform employees last I might less regional was was our and have only about COVID then the years, immediately standpoint. last about it infrastructure to think with asking which in that, dual platform, call from standpoint, and doubling We program, reach

skill to as you So that changes. levels. We've coincide with move set world that and we're share in got scale we're up our gaining. platform, that market are performed great But that make exceptional scale-up the to next continuing people -- the the at step, up changes to

he get about a mind, divisions. through up younger young to you've talked to divisions what it's we've guys role training top And regional to of the position process. -- guy a and on a is here, So get my in in a working you've got instead got anyway, of into where position,

scaling got scale we regional need to gives we've while guys ability market, great consistently. a in us so to more And touch markets absorptions, more new people. in Paul up to be the and And we're the in consistently, while up

make travel. something Mike to a regions, forced a that and the and to we a were that As to them he we of within of kind I able role to it's get number divisions just And people consistent by travels, leadership access and more where learn roles, then you're people happens before travels, job change. increasing elevate give to stairstep chance

we've honest our region cycle. the and make level at in continuing -- in row, it's good compared It's or it people you, the got Company next of we [Indiscernible] scale with a I a the and compared when X an What that when help hold to went incredibly that something Paul I think better. strong Company of great So management even quality I the for core call be to started got it's and get and a or going time. with super-cycle is to -- to is it's people. with our -- position we've public, So level division about us to team, incredibly that's to people, the last compared And good even incredibly years

-- So

Truman Patterson

Perfect. Thank you all.

Operator

Eric ahead. is Your next your Eric, Cleveland live. from Bosshard question Please is from go coming line Research.

Eric Bosshard

things. Two Thank you.

First of you of that the all, in selling don't it. season, visibility I know terms spring have to

could in seeing just market now, the definition, the you're to some uncertainty. you spring? of as know But your so And identify look these there's, position of by what get notable and until degree uncertainty you you won't the at that you areas are

Mike Murray

production going and from big Always a unknown-unknown. peer the year and to we're ponder the is not side. into figure things That's happen. the what's It's of demand a a of out But trying around capacity the always quarter, question. to the one is great unknown one but side, from going

what get the with said nine is to stay deal get law different handle going maybe over it I David the six and free mean, to to parts before, day. worse. of same better, being may challenges next prepared it's it As months we or those every

very our rest when to traffic, this say, Still still problems, and out really been people in of fall. buy there, the strong, the our can models. of can that's good of we want and solve trends to see interest good the participation demand traffic, fall we As homes, Quality job. starting [Indiscernible] see traffic, has

So that be happens. for good would us, for that what a continuing sign

David Auld

we be and we What feel about. very spring good the and inventory can to we is Eric, in it market, of that front position how control,

we is We can and have can that plan. -- have the we'll can then can it where that to market execute respond we as a comes. targets, So we plan

Eric Bosshard

you of the I a house. XXX,XXX, know of about your in I [Indiscernible] is And paying a the helpful. think relative there's different have how especially, you of and respond than And then for I'm but ago think ultimately, coming earlier think you lot it it products customers certainly customer, to the secondly, was lot the to out the How about Company. two ASP, just now components that. the affordability, about respond relative to or That's three to talk that that years which do is it's Okay. that, the price call of If you order affordability consumers how and them different and markets. curious for path think for forward?

Mike Murray

It's try can see affordable marketplace. something choice at look in homes to statistics on we and affordable we the our being relative and mortgage and stay more given about We at focused this income reported companies talked a had income a less. of purposes, or of -- quarter the buyers almost XX% least $XX,XXX our for household our that almost were mortgage XX% of first-time buyers homebuyers, and combined providing

to target look not size loan consistent. underwriting we're has the come that's average we It's the while seen serve. And seeing debt-to-income up continue that And pricing provides that a good pretty still loans to -- so have budged. been think to and ratios for market really across we come we're us up

Jessica Hansen

price increase do has whole we all to builders. the speaking, a as prices, sales continued industry Generally the almost still have the as than public average generally And large sales lowest

Eric Bosshard

that's you. helpful thank Okay, context,

David Auld

Thank you.

Operator

coming And is and Associates. live. the Alan line go Ratner Alan, Please from time for today your question from Zelman we final have is ahead.

Alan Ratner

of love here. -- breaking bit rental revenue some on obviously over squeezing this got to think me the in it operations, Hey, I'd guys. plans quarter, certainly, growth a for in drill there. clearly $XXX Thanks out and morning. little million Good aggressive I

big selling what hear rental I'd reaffirmed on surprised been this or and trends So communities start thoughts to there up your on who them? what's interesting up single-family first rollout Are they on any you or of that to how as kind these this the business you've are new longer people are? provide on the and love waiting to either piece focusing your you built? side, you leasing point views home to a maybe the seeing at? maybe you can choosing target Are for And of be longer-term a there? of data anecdotal renters Are to term, do renters they want Any rent?

David Auld

they're they're for as I and saw. into for have the looking white-hot a I may the would People year type from than that first-time housing, a rental better to lifestyle. that from Things surprised different ramp affordable build consider investor looking demand standpoint, what compared sale renters not kind of say for terribly us, we're home areas, business on not institutional level the it that intermixed land, but that sale lack buyers. of, the positioning are moving a the probably not of only not this has base bought business, with a way It last But self-contained, be we year. especially these for three a white-hot projects is housing.

Alan Ratner

of approach? the established I as margin on and institutional capital, some up guess, first still to of like that that million a demand the choosing note, is partnered approach. of is there. that David, $XXX+ You at kind is the of do those the merchant-build realistic that guys peers with that ventures been, some XX% margin more intermediate-term joint mentioned revenue? you're the It on a lot so business, either with And it, has investors seems your have strong Got investment you off, of plan or generated merchant-build ongoing

maybe changes reason the why strategy So longer-term, profitability and there. any

Bill Wheat

build still we've will level we size we've We've those far seen. expect very still levels our to a of those the rental the grow be needs got that accretive be to the but shown margins as larger to on the see that return, than it pretax on projects margin We to business on on will place as wouldn't little volume I but support the expect an expect for-sale held have the infrastructure in with profits, generate the profit generate pleased few, these a some plugged business do and sample same platform a we continue thus that profit across of to we a and country. small are do to profit been current little sample bit longer. on generate bit size assets the first because higher see is very little but bit to higher, small. the expect We levels still business, attractive rental we've necessarily

Alan Ratner

we've as about we'd said capitalization learn then we business. capitalizing business before, the decisions how make And go as to the about our

that, So looking we're evaluating there. still options at

David Auld

this sustainable certainly I can to will everything scalable, scalable. worked we with think want rental things tell everything is say our of that market sustainable about, the we that side do you seem and are and that I on, platform we and

excited So about we're pretty it.

Alan Ratner

guys. all thanks the for color Great, there

Operator

David floor session. does Thank the today's question-and-answer to like back now turn I for you. comments. will conclude closing to Auld This

David Auld

D.R. everybody's We Thank with in to January entire team. the Horton on speaking again forward congratulations our finally, and Tom. you, appreciate And call time today you the on look to results. first-quarter

year. first way were you homes, the and more homes on stay XX,XXX are first year, well than humble, than a in hungry, close you're close greater stay more and now builder to You than close focused. homes your the Stay becoming a to the home-builder first XXX,XXX in to XX,XXX to home

and win day. to compete you. You'll Thank continue every

Operator

conference conclude gentlemen, call. Ladies thus, this, and today's

Thank lines wonderful You disconnect phone your for this have may day. your a at participation. you and time

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