D.R. Horton (DHI) 26 Apr 222022 Q2 Earnings call transcript

Company Profile

Participants

Jessica Hansen	Vice President, Investor Relations
David Auld	President & Chief Executive Officer.
Mike Murray	Executive Vice President & Co-Chief Operating Officer
Bill Wheat	Executive Vice President & Chief Financial Officer
Paul Romanowski	Executive Vice President & Co-Chief Operating Officer
Carl Reichardt	BTIG
John Lovallo	UBS
Stephen Kim	Evercore ISI
Ivy Zelman	Zelman & Associates
Matthew Bouley	Barclays
Anthony Pettinari	Citigroup
Mike Rehaut	JPMorgan
Truman Patterson	Wolfe Research
Deepa Raghavan	Wells Fargo
Susan Maklari	Goldman Sachs
Jay McCanless	Wedbush
Dan Oppenheim	Credit Suisse

Call transcript

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Operator

Good morning, and welcome to the Second Quarter 2022 Earnings Conference Call for D.R. Horton, America’s Builder, the largest builder in the United States. At this time, all participants are have been placed on a listen-only mode, and the floor will be open for your questions and comments after the presentation. I will now turn the call over to Jessica Hansen, Vice President of Investor Relations for D.R. Horton.

Jessica Hansen

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

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

there does different. date any to believes Horton D.R. information and undertake outcomes are reasonable that Horton D.R. of statements obligations call to is be are D.R. such assurance materially Although 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

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

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

David Auld

to by Operating diluted Murray D.R. you, increase and second Paul Horton Co-Chief our Bill and share. and XX% an Mike on Romanowski, outstanding I highlighted Officer. and good per call earnings am morning. this pleased Vice Wheat, Thank and team by Jessica, Vice Chief Officers; in President [ph] joined to quarter, also our $X.XX be Executive Financial Executive delivered a, Presidents

And profit $X.X income in increased a consolidated XX.X%. basis XX% margin pre-tax Our our on points increase billion to XXX consolidated pre-tax to XX% improved revenues.

experienced for and production trailing XX%. to our the our for results These leverage D.R. inventory return teams, equity reflect on across remained and the was capabilities recent our strong our March on XXst months XX market demand same return geographic in continuing a homebuilding period Horton scale materials the in XX.X%, and ended consolidated focused Our footprint. was ability still rates to despite including Housing on in very mortgage are chain, tight increase building supply There shortages are challenges the significant share. market and labor market. certain the maximizing returns aggregate while broad we

returns. completed further with Our year historical this and quarter, trade to and across on this continue times quarter, homes from the inventory work than our for to plan homes through operate XX% greater optimize our We home to managing growth well-positioned flexible balance leverage strong our pace, by offerings, financial liquidity incentives, are loss supply XX,XXX we in construction nation. low and of strong homes starting relationships, cash effectively extended norms. while from to operational construction supplier were year. to changing conditions. on reducing operations, homes revenue homebuilding unsold and believe a cycle XX,XXX our sales XXX cycle XX% and We After in inventory Mike? consolidated then stabilizing increased sheet, homes our strong and With only and generating flows our XX,XXX ago pricing, we inventory, robust this maintain position backlog, times us position and product levels economic

Mike Murray

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

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

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

Paul Romanowski

from XX% to orders XX,XXX second value sales the prior billion. the $X.X net XX% decreased quarter while to in year Our increased homes, the

Our price the and sales XX% orders quarter second XX% The XX% net was average selling quarter. for The X% in average sales up number quarter. prior X% active was year rate sequentially. year up was increased prior of from $XXX,XXX, prior the cancellation in communities the compared the quarter from year of to second quarter the

New strong rise remains very demand recent mortgage despite rates. home the in

home We sales are of close virtually construction. better homes construction occurring later start cycle the sell prior with continuing for to to to certainty homebuyers no ensure date home the our the in the of

pace We for same of year. the manner the expect sales to continue Bill? in managing the our rest

Bill Wheat

sequentially. for communities. On points a The homes, per low The supply XX.X%, profit a of continue strong prices limited December allowed gross to maintain to from sales the was Our home in up with our on March in the has were us and quarter. XXX level to incentives demand the gross the basis sequentially a quarter of market. second raise for reflects our combined foot most broad up increase X.X% home sales margin housing very December in of strength revenues basis, sales revenues margin square

and increased While lot and X.X% stick X.X%. brick increased per foot our cost square cost

will to our cost expect increase. continue We

we Jessica? the strength offset to be pressures slightly price with margin gross We be near-term. second quarter most However, the sales than by expect of today's third home expect market quarter. increases better in the in our currently conditions, cost the to

Jessica Hansen

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

homebuilding lower history, SG&A, quarter while This and revenues was quarter, business. our focused a infrastructure than that our controlling on ensuring supports of in SG&A our percentage our adequately as any remain Paul? we expense our

Paul Romanowski

year quarter homes XX-month X% to the quarter We from inventory, homes. XXX completed. ended the during a homes XX,XXX starts total with in bringing last March of homes up ago. which were XX% XX,XXX year, from unsold, XX,XXX trailing our started XXst up of our second only were the We XX,XXX quarter, at

from average a two months the two year quarter second weeks homes in since by and times cycle for quarter first ago. construction Our over increased our closed almost

stabilize our construction the reduce have supply Although seen cycle we working improvement to historical to then times continue Mike? we not in norms. and yet, chain

Mike Murray

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

portfolio key capital efficient strong to position. lot large is competitive our a Our

Our $XXX billion, was and second land. quarter million for land $X.X homebuilding investments development lots, land was in lots, which development billion finished for acquire $XXX of to Paul? totaled and $X.X was million

Paul Romanowski

development lot continues residential execute well. majority-owned to our Forestar, company

revenues pre-tax income second and During reported Forestar the $XXX.X quarter, of total $XX.X million. million, of

subject margin XX.X%. Forestar's At a to lots, XX% a owned from controlled XX,XXX deliver lot For March XX% with the were contract to to the Forestar. position to year ago XX,XXX purchased Forestar's second XX% first generate offer of pre-tax from owned $X.X to our lots of of are and expects to Horton. right a XX, of profit quarter year, and D.R. lots $XXX in million billion lives. XX,XXX under or finished full revenues Forestar increased with of

capitalized separately $XXX D.R. at debt-to-capital is liquidity a had and of quarter net with from million approximately ratio end Horton, XX.X%. Forestar of

D.R. Bill?? capitalization, their Forestar's strong with supply lot profitable Horton them growth. to positions continue and relationship

Bill Wheat

and $XX.X margin the XX.X% of Financial income profit million quarter million compared year pre-tax a quarter. was $XXX.X to in XX.X%, second services the prior in with pre-tax

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

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

Mike Murray

million on in Our million rental the $XXX operations revenues of of income quarter. generated second pre-tax $XXX

we XXX sold single-family homes During the $XX for sold properties totaling rental one XXX property for consisting $XXX quarter, million. units and million, rental multifamily we three of

XXst $XXX Our billion, million rental March to properties. a property $XXX XXst year of million million single-family properties included rental and compared at was Rental property multifamily $XXX inventory of approximately at rental inventory March ago. $X.X

As our homebuilding in and single-family homes rental a sales are and not segment our or and rental in reminder, revenues included are inventories closed our inventories. segments multifamily reported

estate Rental, subject rental no a a on cash our $XXX base into credit rental entered subsidiary, the facility. more facility the the expect the than million million $XXX end. There and revenues to under calculation assets. four-year senior based rental During Availability We unrestricted revolving facility credit revolving XXXX. book unsecured to is quarter, DRH credit of were rental at borrowing now borrowings value in outstanding fiscal on quarter real during our generate DRH rental operations operations

and Our than second fourth quarter will be the year. highest be quarter sales will of rental the the third quarter sales lower

platform our a more grow We to XXXX billion significant current projects. projects now $X.X inventories our of on expect in total than also future fiscal in development and rental based pipeline by

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

Bill Wheat

of At disciplined, homebuilding March facility. capital flexible, on on billion $X.X of approach focuses billion liquidity, credit balanced XXst, had opportunistic. we $X revolving consisting of our cash $X.X billion capacity of and available Our homebuilding unrestricted being and homebuilding

cash homebuilding was homebuilding end XX.X%. Our of of XX.X% was leverage net March at leverage and the

share from XXst cash value our was billion XX% was March book up a Our consolidated of and XXst, XX.X%. per and $XX.XX, March at net $XX.X consolidated ago. leverage was XX.X% year At stockholders' leverage was equity

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

of inventory which During homebuilding the used cash million, $XXX year, the homes our the increased impact six to in extended construction demand cycle-times. and of and months meet was first operations our reflects

X% date. common the million total share XX% repurchased to now period authorized repurchase to as repurchased $XX.X a year-to-date in has through ago. $X the during authorization The During X.X year quarter stock prior consistent a Jessica? last Board basis our quarter, and stock, our the each and to new paid dividend dividends fiscal year. XXXX. to million, during to May. up a share committed reducing the same same to of for declared We for $XXX.X of of quarterly for on dividends a at million reduce of no capital and repurchases shares count be increase an paid million outstanding level returning replacing has by common Board our cash quarter X.X expiration our shareholders our $XXX Subsequent outstanding fiscal end, we the count expect million of our to We shares billion share our to authorization. both compared remain We fiscal quarter of

Jessica Hansen

market third strong of the to we with quarter continuing reflect continue supply forward chain look demand from expect fiscal to homebuyers we XXXX, conditions As to challenges.

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

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

fiscal consolidated income leverage tax the in we to We for David? among year, maintaining to share of and we X% operations by this XX,XXX will XXXX, billion generate core from generate now dividend homes. billion an our XXXX reduce our our repurchasing For forecast to will roughly operations utilization flow $XX.X shares. strong consistently that the increased homebuilding we of XXXX. range $XX.X at of homebuilding count the inventories, share repurchases to an of our revenues end to our approximately expect and to flow operations, rental fiscal continue paying XX%, still outstanding compared conservative increasing full and We year, priorities XX,XXX our liquidity, and be positive cash balance homebuilding by homes and fiscal of to homebuilding expect cash closed rate fiscal expect a our end

David Auld

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

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

concludes well-positioned years. in are and continue our We and This operations remarks. to prepared remainder XXXX the improving growing incredibly future of our during

will now questions. We host

Operator

with open is coming Your Instructions] is and floor for Carl questions. the Reichardt first today now Ladies your question [Operator line is gentlemen, Carl, for from BTIG. live.

Carl Reichardt

Morning much. very everybody. Thanks

order the you progression the at talk were the little end in about I'm a you being about course not demand catching is that think and decided Can January, the flat, or of production fact, deteriorating bit of when you -- component I of up was as or maybe slightly recognize orders side in to up And slow XX. this quarter. the down talked to quarter? assuming was you well? a and orders They in the over there pace,

Mike Murray

Carl, it on based all orders slow sales think to I was our production decision capacity.

of extend, in backlog give better delivery we continue when customers sale. did think there until and see provide and for decision we quarter several we I and geographies the for qualified good continue times today to buyers and to cycle more we the we saw demand out to could our process. those homes a homes a them that But made release see the the our for in our date them of experience buyers, better delay during release very to

see strong the in very times a the demand did cycle saw we quarter, elongate. we but So

two to in experience. make I we not we think buyers and backlog unhappy we unfortunately, did wanted quarter, more with added an weeks sure create this

Carl Reichardt

whether And Great. not didn't transaction, think discuss very assets deal grow? strategic for of to you function water rights a the or the Vidler Thanks and a is is that this could or if that rationale Mike. related Water Thanks and much. overview business would the of potentially you give like to then you this an just I

Jessica Hansen

talking markets put water-related lack of in to the out total completion that $XXX transaction million and portfolio it's owning time don't of and going look We offer, press supply. do close a considering to the approximately several Carl. our of premium much quarters of of in closes. Sure, to the generally this Vidler what we say other the it Southwest the We in we it and across coming in two. at successful tender to pretty much that rights I month mentioned have adequate to or expect But we're a on assets forward next the subject value about after terms about release say

Carl Reichardt

Well thanks tried. Jess, Thanks I everybody.

Operator

is Your with line next question coming John live. Lovallo from your is John, UBS.

John Lovallo

Good you morning for guys thank my and questions. taking

is is the The higher concern some and when I the moderate if activity does some point I how moderate, and and rates given first have does question have will activity one prices. higher at think that likely And this that investors on sort and towards off foot capital of off allocation? of I thoughts share buybacks will sort things take buying your change, on nature? land if maybe more of mean, and at -- all, on back the you switch the pedal that

Bill Wheat

continue at focused impact But Thanks to to some time. will impact impacts land we a market on and that positioning at of certainly in grow. we're in demand impact that point adjust will But we capital position strong our believe in continue share and to certainly, allocation rates those on John. We're aggregating affordability through always time. investment would decisions and on we're any demand, do impact that Certainly, point, of to cycle. have economic some ourselves at our

John Lovallo

up maintain and I than just ago. does a down when still lot good and XX%, that's And number, have the to become contract MVR position much acquisition option thought Forestar, to, mean pretty it Forestar call plus, XX% grown your as a then terms. I this the how and favorable of its think what impact mean, years strategy bring closer anyone does XX% and do that's getting get getting with I hear. the that random this to but few the significantly it, across option much closer occurred on percentage ownership communities? spread you a higher and to mean just going that's seeming to back Okay, could the

about Forestar you're thinking how curious term? longer just So,

David Auld

if will Forestar just to it. of making very still a look From to bad markets But lot point, geared focused that is percentage, investment to is their yes, at at It's to we auction with scale XXX%. and on making, place not there's more shareholders very Forestar. And some think will the desire just focus point, earnings Forestar. good you a can to we're kind but be going are to liquidate going deconsolidate, we better efficient. help But it. of been our it's into as and continue at is Forestar, it's we than have of overall platform lot -- the -- continue to be it get obviously, yes, We're our our but it more our to on some mean I There -- happy deconsolidate. build-out percentage goal of it at capped toward some a and shares.

John Lovallo

Thanks guys.

Jessica Hansen

Thanks John.

Operator

with is Evercore coming line for Stephen Stephen, live. from is today next ISI. Kim question Your your

Stephen Kim

Yeah. Thanks rise Obviously, Congratulations are with everyone's rates, guys. the strong slow. results. to going the things on in that much very big concerned

in I I John the in making do you -- anything understanding would yet? secondly, then in obviously, seen -- rate have you terms your talk with maybe they say, locks, questions can that which next is that why not do with your the two, for you just haven't haven't home think being guess, communities rise helpful can think that? amenity of we of in do an be seen or in would about affordability communities online would you like your it to anything role despite, think talk terms more that margin? on you conversations adjustments And we are the customers, of respect the of seen just two judged. rates. opening. about gross planning new anything we yet why Why year, come anything is, sizes, Where expectations. people's you're that year impact to the mentioned likely One have that's or communities, let's are there the next or planned And levels you

David Auld

think buyers. But design, a I your what in are design, continues significant shift and significant terms on affordability, of to then It towards some we going it in to not put the those don't community from we'll first but in smaller a mean the change are may how bill. build, if focus homes Stephen, place. I I push where appropriate we to see affordable range a plan be we continue today. homes, to we question, work think

like don't out certainly, In later we in the concern we we sales -- to from and exposure conditions. rates, if sales putting close rate we're later offices, do. why as our but over backlog our the We the that buying shifts that a is our at. people selling and far of the selling that's to rate a much in in terms And were process communities closer to to we've frame, there could they're public to have as continued in restrict time so going at

Stephen Kim

That that of quarter, sense give done I'm us for were lot makes can closings In lock sense. the a a this orders? of many to, the not referring with you rate closings your a how

Jessica Hansen

Yes.

essentially locked. quarter's you the to percentage months at majority actually then would and month, closing four-plus it's of looked expect, got as minimis you a de down, And basis, the more that's ticks so next percentage. out I on that a forward-looking April, it that locked but So we XXX% get our before and have to are

Stephen Kim

guys. much very Thanks great. Okay,

Operator

your Associates. Ivy is Your from Zelman next live. question for line with Zelman is Ivy, today coming &

Ivy Zelman

relates be as as in it hear rental chasing developing projects. pre-sold. Can that the you. out with multifamily some your that's of merchant within are buying multifamily perspective build Thank talk already have both can as Maybe least appetite the have selling in asset pressured. so And single-family us the and give guys rates you congrats this capital morning started the seen as really business about you're changes just to you rental well with appears be chatter And strong Good there at any many communities how surge them overall we with to the still you much them values to valuation on class? just on results.

Mike Murray

development see Thank stabilization. the do We're phase. this strong during we the a selling of at communities the phase lease-up very execution We sell strong pricing; lot point our of you, any at do in demand them Ivy. -- not on and at

very seeing we we're have pricing So, execution those and still good very on good that transactions closed demand on.

interest rental affected leasing we're So, you current cap expect rising also strong affect and by very cap but growth, which would could rates seeing demand be rates, certainly rate very strong outlook, outlooks.

Jessica Hansen

margin sales a we soften strong expect a the to on still were to at if profits very these And and XX%-plus XX% to bit, generate returns. market

Ivy Zelman

the through not industry And anymore. then versus the the to components us with you overall some delay like of side sourcing a impact is like with related difference is just obviously, Great. impacted. Can the the respect to secondly, are development problem in on walk municipalities, materials because materials and

it is So, side everyone well much as and whack-a-mole, a in side increase like how the development two-month what's it's but talks impacting the cycle-time? municipality about of the on on year-over-year as that

Mike Murray

in bringing Well, when think lots new municipalities of full And I challenges and/or the process. terms seen through municipality we certainly return process of you're got you've talking entitlement inspection permitting haven't still about the market. to

some impacting that through move to you see So, of challenges in of municipality next then is is work do and some that were the the supply chain as we we -- the inspections delays it on seeing. some stage, certainly and finally services we homes it

impact our to certainly it's the of been time extension. cycle part So,

Ivy Zelman

X just me one, last in let could. sneak And if I

that market. Just recognizing are outright? what maybe inflation specific relative option. just the lot you ago? buying be to a has land of your seeing controlled with pricing obviously seen. Like changed be more you by inflation it's different we've that to on Are year is predominantly general you via respect Can the to because on And

David Auld

of I'd overall sales track market say the land as the price homes.

we at buy XXX,XXX position today four in ago, years where be and not something. control to good lots prices ago years two it in position have years go where ago, three a to So, contracted is we be a

we a to credit conservative we're is ability at at to monitoring protect markets believe liquidity for it. competitive that. We're huge and is are to we contract this through and that looking this we we're So, deals we there in be banks proceed going take think, market. not searches the I that going have drive buy our anything. share position under not a benefit significant And land year going to, are to to of as where a in I that. are gains to of we see close. us good risk there But advantage will out We're and/or going put be that go market we

Ivy Zelman

you. Good Thank luck.

David Auld

Thank you.

Operator

Your is live. for Matthew next today line your from Barclays. question coming Matthew with is Bouley

Matthew Bouley

everyone. you Morning questions. for the Thank taking

changes question a you what on another as Just we what D.R. can community slow, from How activity your you To to talking you replenishment this are supply that? medium you. plans Horton control should term what think own were we're flex perspective just again perspective? from medium-term demand, in volume viewing interest about does degree housing what does about growth? these with Thank thinking or starts annual where and in scenario how morning, rates for a do all

Mike Murray

individual and going bottom-up see operators community a we're level company, demand needs and the that in in demand upon to that we And home local to look community at much are starts field. seeing. very each in those demand submarkets match based replacement that our driven evaluate we're submarket Matt, see and community real-time couples we with for

be subdivision for market. some adjusting smaller term, more given look as to term, well we'll some adjust we'll if product near phase starts. at that's continue the the as in the and medium we then sizing. may And So appropriate Paul sizes, In touched on openings before, to

Matthew Bouley

you. Got

maybe Thank weeks, sort just pockets just not like seeing But that's you're or I then perhaps on become And little edge, you've helpful. changes it housing April? and appearing work, seen in to seems margin very in market various seeing in interest whether trends in think the in little That's our data, rates. Just in of some choppy into near-term, zooming secondly, have demand the on of survey in a the own the recent given incentives again, move more housing might maybe back the a and markets? into anything any some later March the of Okay. very leading you. surprising anything you're bit

David Auld

is buyers rate still it's people trying qualify to But increase experience. homes home from buy The buy produce eliminating today. more we some -- can than people we the have

was One through when cycle, after saw really, is shock back come then the that had after we've has of but reduced. back impressed rapid don't demand rate demand in rate and very saw shock come in is was which -- a in significantly think, back more mitigated, qualify strong. we the you demand just But even anymore, yes, the rate I me rates, things people that strong. side to XXXX rise still this rapid increases, the And

Its price So years. just own mean, escalated a is have the it costs new home in the faster very housing homes -- be I then even is prices for And the in all of their XX ownership fact want home, growth and locking lock rents talk want may escalating that coming that desire the to and markets can the than of or homes, it and out cost, and and the today. place. to is fast even families get your in. cherished where out they the people thing are to raise a other the about to inflation just coming individuals want own in relocating millennials they they from they to housing -- neighborhoods taking

Matthew Bouley

luck. and and good that Well, thank everyone, you thanks for David,

David Auld

you. Thank

Operator

Anthony Your Anthony, next live. is line your is coming Pettinari question from Citigroup. with

Anthony Pettinari

of or that morning. mortgages? rates record in if characterize kind no more rates, as you maybe stay customers longer a levels. cancellations Would Good able again I more to at bps, decline noise secure Cancellation from low XQ current maybe you've analysis maybe high clearly, rates. Would single-digit rise picked XXX their past, up how expect provided now guess, I backlog thoughts potentially be risk above the X% on has at that sort in shaken in out of with think level? rates? around And sort mid-single-digit, now of sensitivity XXX bp of that we're could kind Any on that a you

Jessica Hansen

We we main is ultimately abnormally cancellation that teens run typically historically our It's Anthony. can flat. I we're running high XXs. still for very change home low. comfortable can't essentially the in look at. purchase. at low buyers a The qualify continues that's And rate a Sure, to be low rate to the X% mean in -- reason

So, that XX%, on XX%, concerns XX% wherever that each it end. us falls no quarter, out from really

we to of quarters. as last rate each run we've talked the the did analysis, terms few sensitivity same In of sensitivity

I and that call already for run kind ago, of at to, rates call, where run be backlog but couple buyers it, at only today risk. would had of as have to think ticked roughly this a it we up weeks up of prepped XX% was

I a in of to locked they're answer is mortgage mentioned earlier already rate question, all As company. another through going if April

today, that And from those to a they wouldn't additional could of to out at income. look if because no then they fall second qualify, take would piece work then the that product to guys And kind we behind see buyers them different some to So, document said have unfortunately people or can't there's be their shortage loan also things that already of for buyers place. risk. move do

Anthony Pettinari

you your there? offering is weather to rising up, think understanding move like positioned maybe down more wouldn't any shifts entire buyers? normally seeing affordable, Are talk And very you rates, then higher affordable of with fairly of market different do types strategic making just are to it or best does target you a your you that's helpful. which kind buyer Okay, offerings is any thoughts and buyers of to moving that rates, mix to

Mike Murray

We to made for. to that payment don't shift home rates to size for they a really need then reset It's that qualify more the to rise. be as of price shock they significant have folks when haven't maybe can going and see or any

have up that fall pick to and/or in communities. price still people curve be to home them of our So, size we're of that and buying down majority catch the a able going been up those may

real the we're of no demand, with our mentioned, strong So, shift in what seeing demographics. everyone's as We're spectrum. still doing buyer any across

Anthony Pettinari

it Okay, that’s over. helpful. turn I'll

Operator

line question live. Rehaut next from is coming is Mike, with Your JPMorgan. Mike your

Mike Rehaut

the it basis low. throughout And think taking We've believe, as basis if curious anything perhaps of question. you versus rate there's I to Hi curious a change But Jessica, the morning and year any was if XX, a to move that. maybe the thanks. in ended Good I for everyone you April, metric days. of beginning. that around at kind essentially thanks key XXX the revisit higher rate, can than wanted a the the XXX points, change any Obviously, quarter you've which and it of And think I number impact sequentially. up quarter, flat understand at XX was throughout and the my points over I seen as been I last just potential ago, mentioned, quarter the thought extremely

Jessica Hansen

or It relatively the take, flat really throughout X% a give was quarter, change.

were So I we XX%. sequentially, ago we were -- the guess, year both a we last at quarter, and in were

the XX%, This range were we at was of for the quarter, and it duration court. around that right

Mike Rehaut

haven't in third changed said as improvement Okay. that the marketplace Also, pricing your throughout gross continue the quarter, then and incentives really all. expect And your that result, quarter. to supply. that the strong, you more in than demand presume at you margins remained had improve. I further a you've margin demand has Obviously, would the power

the case make marketplace? changes as if the Just for well was witnessed sure wanted as and that yourselves the broader as you it any case in to was well

Bill Wheat

Mike, order have in seeing in next closing that confidence backlog through quarter, increases pricing. our the raise we closings our prices our consistent to through what see those to and our in to that be our because us the margins are flow we slightly through better through the quarter, quarter. gives ability consistent coming sales pricing going next That's seen can say sales then prices

date, to raise not change our in to have a ability seen prices. we So

longer I of impact and signs think any expect rates would At of increases. this overall with we bit have yet. naturally some point, the as that point, impact look little we of seeing price But a that term we not moderate. as to at

Mike Rehaut

last One quick one, if Okay. could. I

of previously. reduction share X% the year-end versus count X% Just

price of Sorry couple is I if that market or the repurchase share I dollars in missed in by but greater of last months? reduction driven over dedicated the a amount want to part this share just a earlier, make in to function recent the of sure,

Bill Wheat

bit A Mike. of little both,

But mean much at utilize allocation expectations share estimates. gone we I current more has buy us for year, certainly, allow as shares up well. prior a dollar then would to valuation As repurchase the our for our would per stock we versus does dollars we our look utilize, capital our how the of

And so of estimate it's reduction from X% our to both, allowed that's and increase a to little bit us X% reduction. a

Mike Rehaut

Great. Thanks much. Appreciate it. so

Operator

next line Your with Wolfe Research. question Truman, from is for today live. is Patterson coming your Truman

Truman Patterson

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

cash this you have or on homes capital share And that year. I'm how John's up the an rate But going construction, day more halfway it commentary net which realize allocation Fed questions do operating a on now seems the you cycle repurchase. you're fund, just been you increasing, working then possibly follow-up to one or you balance the can given all through rainy update expectation. times XXXX But ties like on capital. around with previously. liquidity potentially Just of your XX,XXX the number if have flow -- extended, wanted give to hoping you're under even we're based I possibly will? going programmatic a from having a increasing be with bit decision just continue and to

Bill Wheat

But then year. platform, basis, our is significant, Truman. expect our we And guidance we're balance, other it a cash by includes the that flow is this one today $X.X times, factor longer capital. back improving certainly stabilizing some XXXX. extension to we a certainly, than up towards our year to fiscal would capital start of the we ago, working and a bring and those longer cash being into XXXX significant two than expect does that end our flow are not flow that do investments operating build cycle tying operating certainly those cash cash than months generate our consolidated billion are also then regarding We're obviously some operations. amount constant positive dollar a fiscal which to tie our from of which of specific the homebuilding On up in making giving increasing of is rental towards certainly Yes,

is -- see in flexible position our stay and and and what position allocation, for we our balance we returns sure handle targets, possible to as just plan are we share aggregation as ourselves the a as we So, to we our market market a further strong generating it in -- plan seeking today to growth, make capital and shareholders. and the liquidity

Truman Patterson

And final that. then for conditions. Thanks one one Okay. on just current market

maybe market? have this metros kind are but the unfair in an be more bit of somewhat really to searching entered, how in are buyers Just realize others? And I started any if you recently after before incremental that the question, than we Were seeing continuing higher a today, are been rates they move, for the of that then or they come seeing long you might will. buyers purchasing the little to rate environment slower are

Mike Murray

production strong I the markets, we see and buyer across have population see are country more we capacity they're still and we to levels the performance demand, footprint, they've for mean within migration all markets but areas have today. gaining that the on demand the demand, have I certainly, Truman, think incredibly been. where markets but very strong. patterns our varying of than relative

encouraged very still by that. we're so And

we how on their share long data while. any quite more those entries, of exactly you search. a been are we but hard have Others the for recent been could have buyers conducting Some with don't marketplace they've in

Truman Patterson

And year. the you. good in Thank Okay. upcoming luck

Mike Murray

Thanks.

Operator

Fargo. next from live. is is line for today your Deepa, Deepa Your question coming Raghavan with Wells

Deepa Raghavan

is, is any off forward? relief going the that I'm Omicron-related? with kind some cycle there think now of in the that there it two chain way carry weeks much improvement think baking been Good elongated you assuming to and question. have must sequential how I be where of are time supply I'm from Omicron? headwinds, Of everyone assuming us taking we're probably behind a should how Thanks for about is morning. much incremental

Jessica Hansen

with Yes, you in continue still able of I it slightly be to we agree get and there's area I but Omicron front. it's seem Drivers need on really to facilities, manufacturing labor does improving. sites. still job mean products challenges be centers, the a harder distribution certainly big to would to be to by, think labor come to

any we're times. in if build In in terms improvement incremental of baking our

guidance range. high XX guide. think, houses. tell you buyer. them completed of for our our in the to getting feel of to certainly the have across We we the we've we where achieve build of to closings do more comfortable XX would we're our felt because need just I stages of of end like improvement from what we the we I early see did a matter today. still, leave that seen do And lowered with the although line us to in XX finish It's the and But maybe in times any we would range closing to that,

Deepa Raghavan

unless like gross good the I you Staying to missed it, it for for color the some that it. any but gross tailwinds think the want guided good you Got visibility. you topic full on look on margin and Do into of guide. give some QX don't QX? does provide that margins year extend you have I definitely can

Bill Wheat

one QX. that and average our will that, we some quarter of some be with currently, our out that with prices guide we do gross do that Deepa, into only backlog the orders have Yes, have close recent been in would homes on agree I in you margin, but would tailwinds which sales

quarter. have do true to really we our But said we've many think as I times, go some margin doesn't far the tailwinds. visibility beyond

to do So guide we through as very specifically still But good well. we to margins gross QX. like see feel we're QX only going

Deepa Raghavan

color. That’s luck. Thanks very helpful good and much very

Operator

Your next coming Maklari Sachs. is from is question today with for Susan line live. Susan, Goldman your

Susan Maklari

obviously, question so your gross but you. Thank My SG&A on has SG&A. impressive, I year. margin is mean, morning. performance this the has been Good first the

time And we you've where talk can guided where modeled to where there? coming see well-below You are over and range? that continue to in down to continue to, solidly you now X% we to to that the maybe potential can come in get that we're

Bill Wheat

part you, Sue. important Obviously, model. and of culture an our Thank business our

would than as while we infrastructure appreciation and have that on very percentage of overhead percentage We stay honestly, bit support faster, the our we've that with focused overhead, with well. and our we ensuring sure that very we're our the modeled revenue that has still then efficient making building as dropping price alongside But aided seen to the growth. a certainly in a SG&A are

the we that. pleased with have leverage over good very providing seen that But there. another to XX SG&A the ourselves want assumes still expect see very QX, make And so coming in and that sure we been Certainly, continue so, we that next or to with that we've see improvement prices year-over-year for to SG&A. with we we're guidance we position point the quarter adequately do basis

getting term into rate staying we at see do yes, sixes least A an the there. near ourselves SG& four down with the So and

Susan Maklari

there extend and confidence to the what peoples mean terms continue in effort keeping sustains perhaps that of ownership? Okay. around make as different comment that demand David bit even made into Thank to of is And get confidence. today try coming desirability how the certainly, out a where what really talk willingness in term. level is were, of overall, could around you. that rise And perhaps the relative homeownership home? cycle. question earlier then home And the rates consumer right. longer pool and you last second All that and my that very to do Can we to and to

David Auld

I've -- a just long And and kind a sense is, your the family. gives this nest a of of American It think, or American you doing to for the desire part to build time. an I home safety own been a I of culture.

in I that values home on were where homes. XXXX, think So, pause just the put own XXXX, big a the decimated to XXXX downturn desire

it's I the it home kind get to housing all of to I think ownership elongate, those continue to neighborhood things, and schools, to of think as dream close American again. this cycle continues returned the kind going formation, desire the to

is it's was home. nearly not But first hard a my when I today as it home it's bought as in So, getting harder.

is like feels be higher homes a than significantly that the it I -- it's or cultural it's can from demand a shift produced. almost community family and think to the So, return

So.

Susan Maklari

those Okay, well luck thank with you everything. for and thoughts good

David Auld

Thank you.

Operator

for today your coming live. Jay, question from line Wedbush. is with next Your is Jay McCanless

Jay McCanless

taking questions. thanks my for Hey,

orders the already, a rental up you've guidance to down in in that's operation. the in the full I but That's not wanted think this down clarify, slowing the homes to slowing production into shift -- for Just year, guys keep to the closing with discussed field production. you or just

Jessica Hansen

for our to what build separate -- the those our there's numbers. in to are basis. on and We've from we're ability kept completed close transition in those no what completely It's rent a to yes, be homebuilding when homes for-sale reporting going quarter, rental

Mike Murray

guidance good-looking One with completed It's has side the have and completion for house to communities for is business. the nothing of business a both another. when the in from change plan solely businesses. We the And of the buyer dealing one for with a for-sale the rent side to into of homes, transitioning house that one the do ready. putting

Jay McCanless

Got it.

smaller clarifying Okay. prices being Thank then does And mean with I private liquidity, competitive the far wave especially we've advantage, this seen up. in question, so of was that. liquidity M&A for some when force than of you second bigger especially land the of talking what my when for does think I I a that moving builders, about lack David earlier post-COVID? think, really

David Auld

to for at and favorable market market very in home up our control the open the on positions projects share ability aggregate opportunity longer to sale and on to to start us, both different program. forward larger inability do force or that to financing that know side ability to numbers. longer even their going going a secure don't I houses think M&A to is move it's I land

risk. made liquidity cycle that strong impact point, loans. are and two-plus these believe the careers. at at I their -- point, It's protect our going and else, of at than to that's it's over tremendous what the faster much And some then houses at -- very still to -- have guaranteeing and started So, and going when especially position. done And not are anybody we -- at you're on builders. the expansion got you month just a understand of we put there's to I of building time our look a some to to a money pressure continue liquidity, And private everything they're a guys lot

we take And when that does -- that's up market those to do us. I think it market share are for to open gains well-positioned market So going very open.

Jay McCanless

could That’s to guys that for I one sneak How it Bill change hear the it. about And great. encourage more full you year was sequentially. in, Got and was that percentage on if are basis? feeling count year-on-year just a up community

Bill Wheat

at ago. -- get still them from a replenish we to has low been basically months single-digit a year yeah, early we We're bit looking -- communities down the to communities XX more opened, ran to good it increase, starting see but our

a increase So see solid in communities. still incremental

Jessica Hansen

that core count a more as to our and we're And in to another markets expand the biggest going new we organic planning markets did We're that behind to quarter. growth have markets markets into XXX but of now add our is be driver, few list well. still in this market

Jay McCanless

Thanks questions. for great. taking my That’s

Operator

Your Credit next Oppenheim from Suisse. Dan, today with question for your Dan line is live. coming is

Dan Oppenheim

Thanks very much.

question. quick a Just

that of seeing and had success now out? coming and how for going buyers in this Given the of share from that are competition generally, what potentially terms terms Express environment you've just in Express Homes taking seeing you're in share you in market

David Auld

You bit, cut out a Dan. little

Dan Oppenheim

in -- the terms market gains for what's terms seeing to of of in of happening in of the share, terms there, now? that efficiency Sorry, affordability how given the right you're Express consumer the

David Auld

be the and want lower a kind little may have. advantage tremendous home. as especially significantly referenced great pool to But first I we before, that think The produce their people of there, is bar we’ll qualification be able value buy end deeper a home at to tougher. really

low the I our homebuyers in own advantage lot very whereas, and to we competitive their have continue gets comes which ultimately our at up home and get And payment. if first-time business brand, it location, price a that have may And, a buying just stronger. in of desires somebody So better. better rate, a Horton see a pushed just to community very, nice segment very down of

Dan Oppenheim

you. Thank Great.

Operator

all we floor time turn questions. I would for and back to have over the remarks. gentlemen, Ladies closing the for that's to now like David

David Auld

And again you and results and family, and third Holly. an time Horton to D.R. to congratulate July. you, the everybody's Thank forward to Horton entire We team, thank on Don executive in outstanding quarter you our the share speaking with quarter. look on second appreciate you the delivering call today

We are incredibly well-positioned today.

once industry. you. the the have in You of best again proven best this Thank you are

Operator

you. Ladies and today's gentlemen, Thank does event. conclude this

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

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