D.R. Horton (DHI) 21 Jan 252025 Q1 Earnings call transcript

Company Profile

Participants

Jessica Hansen	executive
Paul Romanowski	executive
Michael Murray	executive
Bill Wheat	executive
John Lovallo	analyst
Alan Ratner	analyst
Stephen Kim	analyst
Carl Reichardt	analyst
Michael Rehaut	analyst
Matthew Bouley	analyst
Richard Reid	analyst
Eric Bosshard	analyst
Anthony Pettinari	analyst
Michael Dahl	analyst
Kenneth Zener	analyst
Rafe Jadrosich	analyst
Buck Horne	analyst
Susan Maklari	analyst
Alex Barrón	analyst
Jade Rahmani	analyst

Call transcript

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Operator

Good morning, and welcome to the First Quarter 2025 Earnings Conference Call for D.R. Horton, America's Builder, the largest builder in the United States. [Operator Instructions] Please note, this conference is being recorded. I will now turn the call over to Jessica Hansen, Senior Vice President of Communications for D.R. Horton.

Jessica Hansen

good and Paul, you, morning. Thank call Welcome for our results discuss first to quarter our the of financial to fiscal XXXX.

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

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

Securities information is Exchange could contained Additional on Commission. lead performance Horton's D.R. changes the annual report in is that and factors in which Form to about XX-K, material with filed

found will website few can Relations site and updated note that investor.drhorton.com, our performance. XX-Q This Please under slides updated strategy at we file we added and our release to next supplementary Events in have presentations in plan the morning's returns-focused reference. on several and highlight call, post earnings section Investor on this our and to our investor to investor data your we presentation for After the be days. Presentations our News and

Now the our I Romanowski, call CEO. will turn President and over Paul to

Paul Romanowski

Officer; by and Financial Wheat, morning. Bill Chief call Executive Jessica, Murray, Mike also President Chief and this I Vice good on our Operating you, President be Thank am pleased our joined to Officer. and Vice Executive and

earnings D.R. delivered by results, diluted team solid share. Horton $X.XX For quarter, of the the first highlighted per

XX.X%. efficiency cash produce a revenues $X.X on on sustainable returns enhancing billion pretax capital $X.X of to was income focused pretax profit of margin remain consolidated with We flow. and Our billion

trailing return pretax for inventory XX December homebuilding Our was XX.X%. XX months the ended on

and XX.X% assets equity XX.X%. on Our return was was return on

companies assets in past top and XXX for periods. Our XX% of S&P return on XX-year the the X all ranks X,

of flow operating and billion returned XX, $XXX months share $X.X we ended cash the generated to December X shareholders million, During repurchases consolidated through and dividends.

at essentially returned supporting is still demand of the and generated demand of and increased dividends. shareholders smaller Over the existing to affordability, the -- To our to homes such the new help mortgage to demographics levels, floor limited. remained through rate favorable. plans. cash affordable more are sell points historically have both start buydowns we from use all we inventories have price generally of the low continuing housing and home we supply XX spur as address we and past repurchases And although and months, incentives continued more of Overall,

Our net local successful this the the orders with meeting slightly teams quarter been decreasing have from only market prior year. sales

offerings, and quarter, are representative market of the experience levels the finished our homes seasonally inventory times we returns pace, With the remainder balance construction quarter on in positioned cycle closings enter in as the demand our sold position to to and margin conditions. fiscal focus generally same and sales well sales incentive product for first of typically slowest right XXXX. and With seek find our quarter current operators first continued local we also We of sales, XX% pipeline, community our our levels of incentives pricing, Mike? each affordable tenured available our the our in optimal in inventory improvement gross lots are and spring. for

Michael Murray

Net X% was prior the compared income of year the decreased for first share on $X.X million billion. quarter. quarter share per XXXX per Earnings to in consolidated fiscal for diluted $X.XX quarter $XXX to revenues $X.XX the of

on compared XX,XXX $X.X year in billion XX,XXX billion on home to closed first quarter. sales the quarter $X.X Our closed revenues homes were homes prior

with flat the price for X% quarter. down closing the quarter sequentially roughly $XXX,XXX, Bill? and average prior was Our year

Bill Wheat

from X% decreased quarter and first the for value year billion. X% the orders to $X.X XX,XXX order to homes prior sales decreased net Our

in from rate and the year was XX% the from for cancellation down sequentially XX%, quarter Our quarter. prior XX%

Our price of average both sales was active number X% first net was and Jessica? in orders sequentially year sequentially XX% the which quarter average the of The selling $XXX,XXX, up and year-over-year. quarter. prior down up communities X%, from was

Jessica Hansen

sales stick costs quarter gross square and higher while the both margin revenue the lot basis a relatively XX.X%, were per costs. revenues flat X%. due Our increased from profit on first to foot was home sequentially home sales quarter incentive and in expected XX brick On points and September sequentially cost approximately down basis, as

the to to be are next over further few quarter. the to lower first the increase homes home we incentive sales closed compared so our second in Our months, expected expect on costs margin gross quarter

levels and incentive season XXXX full demand for interest changes year will during strength on fiscal selling Bill? margin in home dependent be of other market the spring sales in conditions. and to mortgage Our the of gross addition rates the

Bill Wheat

expense expenses SG&A year homebuilding a of by from last was from points SG&A quarter prior same up increased basis first the year the in in our line our with revenues In X% homebuilding as XX X.X%, the and percentage quarter, and expectations.

costs Our platform. due our to primarily expansion the of operating are increased SG&A

Our count is ago. employee X% up year a from

XXX and and XX% community The execute investments plans us to in Our Paul? made strategic platform have produce our strong gains. is cash share market market sustain team count position markets to our has and count flow XX and up increased our returns, we to and X% states.

Paul Romanowski

XX end inventory, homes December the a ago were from our completed, quarter completed X of of quarter at unsold homes homes started with lower and September. in year December were greater than for our end ended and in approximately homes X,XXX months. quarter XX,XXX which unsold, We X,XXX homes XX,XXX year-end. the at with down been have XX,XXX relatively XX% the XX,XXX flat of at than

in closed weeks from homes improved and from fourth ago. times the days construction first For quarter a approximately few quarter, year our cycle the we X a

inventory inventory pace homes on based housing turn faster and us conditions targeted community. Mike? our market to by closings in and to to our continue improved will cycle XXXX, and Our and achieve we times manage position

Michael Murray

were which We relationships XX% country quarter. enhances either and the from XXX,XXX across land efficiency, on others, Our XX which homebuilding operational remain allow controlled returns on lots homes December our with flexibility. a of developers our contracts. the and were a homes or of quarter, by owned XX% lot us at on consisted were focused to to prior more purchase capital position XX% this lots, through by build XX% developed Of party, closed third lot the developed we in year up approximately Forestar

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

Paul Romanowski

In the pretax operations generated rental the million of $XX $XXX revenues XXX first from million quarter, and homes of multifamily single-family of units. XXX sale on rental our rental income

in and This recent communities. higher purchasers for interest capital quarter's rental markets impacted was rates of pretax uncertainty the by profit margin rental

continue a in communities. We rental which sell model operate merchant to and build we construct purpose-built

enhancing rental to homebuilding more purchasing trade provide opportunities by pipeline. operations Our our providing absorption and for scale our synergies lot efficient operations land of and our of labor and utilization

improving and our operational on businesses. focused execution both are efficiencies in We our rental

single-family we rental operations. rental During of to to of the strategy efficiency in been some have capital improve the several successful continue plan quarters, our our We leasing communities this stabilization. and last prior to monetizing returns

consisted billion properties property $XXX of Our inventory billion, $X at $X.X and single-family multifamily rental was XX rental which of million rental of December properties.

our We level the quarters. several to remain inventory for around total current expect rental next the Jessica?

Jessica Hansen

pretax sold first our with for on million majority-owned residential lot the revenues company quarter X,XXX reported Forestar, million. $XX development income lots of $XXX of

Forestar's of to in Forestar's of D.R. lots at first lots. owned contract the Forestar. lots a purchased December are under first were and lot controlled was from XX% quarter with owned of offer position to our XXX,XXX are right $XXX million finished XX Horton. subject

Forestar XX.X%. $XXX debt-to-capital a at million end quarter had of approximately of with net ratio liquidity

component Our of is returns-focused with our strategic Forestar model. business relationship vital a

capitalized operating and position Mike? over balance and platform several well aggregate homebuilding market finished growing significant to industry next Forestar's of shortage strong separately in on lot years. to sheet, the capitalize the the lots share supply them

Michael Murray

the on Services million quarter first income of pretax of $XXX $XX revenues, Financial profit of million in resulting earned in a margin XX.X%. pretax

the Horton ratio During D.R. XX% the FICO an with had average and an handled loans homebuyers. mortgage originating company Borrowers XXX of quarter our financing XX%. loan-to-value average this the first of for our mortgage score quarter, of

homebuyers First-time of represented Bill? XX% the our mortgage closing quarter. this company by

Bill Wheat

disciplined strategy is cash flows, allocation an operating produces compelling growth. balanced capital to that platform substantial and and for Our sustain while operating returns positioning

with sheet We and have significant financial strong which a low opportunities. conditions changing adapt us and provides to market flexibility to balance strong liquidity, with leverage

X% from million billion, the our of provided repurchased During prior consolidated year, quarter reduced year. the of We $XXX first the $X.X was count shares by million. outstanding share by operations months which X.X stock during common X for the cash

share the repurchases stock of our we accelerated during some planned for As year. the quarter, price declined our

authorization remaining share Our at repurchase billion. XX $X.X December was

$XXX billion of totaled consolidated the billion $X.X and also $X.XX we XX, quarter, cash our XX At the had at billion the paid million billion consisting our available maturing February. paid we on and capacity quarter of the cash $XXX to of with in totaling credit declared in $X.X same at quarterly senior Board next December Debt liquidity, a of $X During level dividend $X.X months. of end has million, the of of notes per dividends be share, facilities.

term. maintain around Our we XX% consolidated our to the leverage at December and XX over long was XX%, plan leverage

our year December $XX.X XX, per XX% equity was ago. share a stockholders' was value At up book and billion, from $XX.XX,

XX.X%. our months our trailing assets was consolidated was ended XX.X% Jessica? return XX, XX return the on December and equity For on

Jessica Hansen

to Looking and to $X.X forward of expect by of generate XX,XXX $X.X homes to closed second we in revenues operations to homebuilding our the XX,XXX range homes. to currently consolidated be quarter, the billion billion

for XX.X%. margin margin range to and expect of our XX.X% be the sales pretax our to to home to quarter XX.X% consolidated XX% profit We approximately second in gross be the

consolidated margin overall expectations. meaningful have for insight to more pretax guidance We profit to our added provide profit

margin. for As a our plan profit guidance to SG&A financial longer or we provide specific services pretax quarterly no result, homebuilding percentage

year was of Our of be fiscal on to the largely XXXX dependent results for the strength the spring. full

to $XX forecast revenues approximately of rate $XX.X we year, continue XXXX in income to the and an to range approximately homes closed XX,XXX the be of for tax expect We XX,XXX operations by For billion to homes. our billion fiscal XX%. now to consolidated homebuilding of generate

for expectation activity of repurchase to in common between our full fiscal position, year. billion increased Based for repurchase XXXX, strong now $X.X cash our first the share on quarter plan and we operations financial $X.X stock from flows and billion our

annual Paul? expect million. to payments continue $XXX also of We around dividend

Paul Romanowski

footprint In closing, on broad our share, teams, geographic our results and focus and affordable experienced position industry-leading product reflect offerings. market

are flows cash while and substantial ability our continuing strong grow returns, that generate aggregate these components platform share. business of produce operating All to sustain to our of key market the

to capital returns approach and by We disciplined company. financial to long-term shareholders of the operational providing our have maintain significant enhance compelling allocation value we plan and to flexibility, our our to

Thank you your land Horton concludes vendors This to estate employees, trade and hard the real of continued efforts developers, for family work. entire prepared D.R. our remarks. and agents partners,

We will questions. host now

Operator

[Operator Instructions] is the from question UBS. today And from first John coming Lovallo

John Lovallo

just starting quarter. gross second the the Maybe margin off outlook in with

like you higher XX.X is sequentially some that terms that to something of us labor moving mean, I looks help is sequentially of changes from of just So Or going land, there. materials? really with in and Can just XX.X incentive to levels? pieces there XX. the expectation the

Paul Romanowski

levels quarter. this today. XX% -- we it's sold matter the incentive in really, the what John, the and market homes quarter a in of seeing closed were we're XX% of or closed We've just

we our a little we representative the closings kind and quarter, December X prior was in looking months. than So where of on lower think throughout of margin are, the

margin do based closings our a second quarter. we market, in on on we what step So seeing in today, in the expect down slight have we're the visibility

John Lovallo

XX,XXX X,XXX Understood. lies of that? end, then full of Or top conservatism, didn't anything quarter knowing into pulled characterize there we the little you terms of year. of would into maintain looks by just Was what as the you ahead spring? like guide is the deliveries, beat still a that XX,XXX you it the not to that bit first kind move units this expect? forward just about more How versus And in for guys kind

Michael Murray

the little and people we're fourth a the and a home. inventory delivering inventory I always did to think environment. of fiscal teams had with the that concerned closings sales job calendar on quarter, our in putting great demand first We the

of positioned the really we're good execution deliver sell the quarter do to and that about to close feel quarter, number got to So to so. going to homes, need fair this And continue inventory the we board. position this across but a homes we've we're

Jessica Hansen

did for sell that's bit times build just the be a than improvement typically that would fact in it I XX% close intra-quarter, think reflects our and the a December our beat homes and continued higher really quarter. little we also of

Operator

from Associates. is Alan next Zelman Ratner from coming question The &

Alan Ratner

the for details Thanks so far.

I But That's question row, the in makes year-over-year. trending pace. think First three given start on which a quarters sense here, been lower down the environment.

about Just pace like the you given curious back just going match about hit improving in that start full feel cycle forward going sales BTO times, Or how just of you're forward. appropriately bringing thinking time, still some business? components start the thinking the given of can you that improving you guide? year Are back do more cycle and the

Paul Romanowski

us turn because inventory, sell process that our sequential the we number faster. lower carry a in that homes have start times have of allow you've in just to believe that decline to that's allowed cycle It these seen I us ability the improved Alan, Yes, earlier of our seen does to pace. and why

does broader that buyer go-forward you're inventory scale line expect start our to or would the out as have basis So we grow demographic a just the that pace. and see sales up replenish on the it year. to to build demand pick there. little more with on in to throughout our We that's allow starts be I going us we a

Alan Ratner

Great. Okay.

might integration X doing day talking backdrop anticipation lot we're future which any or I'm anything direction how housing-related some administration, the next the in question, of are go you of the or just you're several and Second about in about the here years policies new on or whether that? of tariffs we're whether changing thinking of in, the curious a strategies GSEs. the guys uncertainty about

Bill Wheat

open we're and ultimately, administrations buyers our to been at We're are afford. else, an everyone home going product and for price in to to we're shelter will to do price of as the to going we Alongside on continue There we've keeping changes to homes we to needs try an country, affordably focused possible what it But eye meet is and can. can on a a we of in as continue occur. before, for need supply through buyers. core best the affordable can and just number communities our what as

Operator

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

Stephen Kim

was Appreciate see did share the a to environment impressive. quarter, tough this you cash and encouraged color. Really it's the repurchases the flow and

us help cash Can now combined cash XXXX. you to had about guide how that -- to operations -- a because you're I in guided guiding for sense and even think I flow better. from thinking continuing above a share dividends you're little relative think for flow dial you give might your repurchases and bit

Bill Wheat

Sure.

As flow operations remarks, of we've the repurchases distributed last months essentially our through and XX to dividends. all said our from in scripted over cash we shareholders

so cash substantial go And our would general continue the to and that expectation our dividends. to is repurchases of flow majority be will

where and for range the would from of we of cash to operations good guide to the of repurchases a of dividends is our proxy So year. the $X.X our billion the for flow $XXX be generally $X.X billion million expect

Stephen Kim

Appreciate relates your then term. That's longer question to And impressive. that. second leverage Yes.

term your for think a us around to sense is of like you I do like long-term is indicated had leverage guys good longer give balance the you a XX%. kind would typically So what you target for that debt kind net think Can carry? cash cap in of company? other what words, goal you

Jessica Hansen

Sure.

XX%. You're cash approximately end $X probably quarter $X Net, highest And is our from anywhere roughly balance XX%. consolidated billion. it's at the billion typically our is it, to call probably vary to of cash though year, correct billion. the the then the We leverage balance fiscal or have other going or $X at Cash to on target quarter-to-quarter. below closer heaviest

Operator

from next The Carl BTIG. Reichardt is question from coming

Carl Reichardt

about want second. SG&A I to talk for a

talked So of returns the had going so margins talk rate those and about we'll you've count, lots added, more you've -- talked growth to people you with Mike about pace the forward. in rate and and and rates, I sort store anniversary your start business think growth balancing growth in

your So ought some do SG&A SG&A be? do you're anymore. of to Where guiding you target expect think And better leverage happen? to see will the you because later next to on going seasonally, this sort be especially not Is see dollars. to it this know when Or years? more of on in going it be to will we those I start year? couple

Bill Wheat

was As investments. We've increased have market commented, we count, our made expanded community counts. our

we As as always efficient can. as are as you being on know well, Carl, we focused

overall our we So leverage would SG&A. see in to expect

we little as it those we into 'XX in fiscal expect was move at leverage we certainly 'XX investments future we 'XX, homebuilding a in SG&A probably today, would think than to beyond is I 'XX, percentage expect higher look years. as but our

very can will infrastructure maintaining on focused to we of support We an be as as growth. our efficient

Carl Reichardt

said contracts And you think your you think, total XX% then from I finished I with have or lot about, option of lot developers.

what about you on can talk at your The doing bit perspective lots comment on XX%, banking can all you own talk And little land books? sort other about and I versus a farmer auctions land self-developed transactions. versus transactions call of self-development bank your

Michael Murray

think, or the were closings on we a talked that Carl, party were about developed lots the XX% I other quarter Forestar. by third in

and lot professional from comes developing projects we for a deals And they contracts gamut that assign kind that there. of lots us. would the source, So enter entity and source that runs into finished to is them buyback be development

capital efficient homes lots usage other banking continue of services, it, efficiency all banking to the done to we we are pipeline. and closed continue call for we self-developed land our lots lot explore in that, sort evaluate that's capital land most whether On process, and on drive development looking were our and -- sheet, those the we on we to the balance self-developed, ways accretive

Jessica Hansen

excess But for. have that. of lot to ready no lots where development little traditional on supply or contracts. of have We're of that finished transfer, not a We'll we true bankers we're in risk don't land transfer lot use focused the if of land terms structures of an our in technically you we have risk XXX%

Operator

from is from Michael Rehaut question next coming The JPMorgan.

Michael Rehaut

Congrats on the results.

perhaps regional at to into to generally a question, stronger -- see and comment in a is than which points. around that I'd regions bit I'd might weaker levels. circle dial back love levels. was, And First to price the inventory be you in or had little seen limited a in differentiation remarks across supply there's still And that comment a prepared if love any your corporate result, markets versus a little that little the inventory you've you operate as average? affordable

Paul Romanowski

pretty have the seen Texas being the of footprint, We eventually builders as put to Florida other shape. in the others. like just what kind The more responsible the certainly -- going and across been generally their to homes and move some inventory markets. good in play and has their Florida and buildup the little the across loosen of like think resale market people brings, continue feel we terms market in that the reported, the market, markets, some is a market and But certain in we and of out up in on sizing based the We pretty than in market. same is watching inventory on

Michael Rehaut

percentage I guess, that. your option XX%. Appreciate Okay. of secondly, lot

you think the a of or XX%. I reached high last of maybe year kind over X,

X.X that a X year, going talked you've of supply. year's range. owned stay in you Maybe years in past, below not of most about likely I think worth the kind

of improvement you And rethinking that X owned about we look option next be wondering the are to capital on those that about build how over times. levers still where to years? or just able I'm I turns look improving years forward, go as you're what cycle further know inventory you percentage move. to think supply there's X guys might efficiency, So lot any to or if talking

Bill Wheat

markets have it's Well, we than -- it's as markets average that said higher do our across well. than Mike, XX% is operations. lower that. we obviously, our We And have that

we have So we that we developers as on third-party good can. as to utilizing a are network we're still much continuing Forestar and ensure focused of

at there increase of that. is for those opportunity are a So to lower some percentage markets option still that

state are did Jessica As on transfer. focused very earlier, we risk

developing or capital we're And so to whether we're if we're balancing to the paying risk going it's pay banking to efficiency benefits a use transfer third and the versus what are. what lots, or party

do efficient us expect find and something we so we opportunities there with to Mike get And for will earlier, that's more pipeline continue going ways as be to evaluate, forward. to our lot said

Operator

Barclays. question The will next be from Bouley from Matthew

Matthew Bouley

closings guidance, higher maybe for like the homes half. the the second so implies So think, than XX,XXX first or XX% closed something or I half

greater little than normal I at think a least or is bit history.

to like but want keep as of just in color just your And as some you better in I part closings. step assumptions making to, we in that So of get sounds for that should times, it other up confidence around step-up consider you're cycle that, any kind there? that alluding sure,

Paul Romanowski

No.

we -- our about as inventory inventory just well we feel efficiency think achieve good as about good numbers. to we those I today. housing of very need position that our feel the We lot

deliver of the be believe course, to operators are to the very position XX,XXX selling on we the need up year. us of But the and show season Of need for in season, take the spring homes and for spring guide early sales. our positioned advantage we see to we're to selling our to that spring in -- XX,XXX

Matthew Bouley

margin. I on then little the lower Got December than months, margin secondly, prior back the It heard the sounded Okay. you exited like it. correctly. And if a gross X

the margin? assuming December gross homes, would would margin the at sold be guide And or what to you that point during margin QX December? quarter second hold lower kind than guess, that is and look of guess, conceptually, So the line to I closed I more on on similar

Michael Murray

of mortgage mortgage what entered environment, we rolled we to But at with. quarter the look the we the environment, in the a roughly X% QX neighborhoods affect which level. X% in quarter us exited see demand a kind in we and for the -- into about and is the community returns pricing and traffic a at we maximizing in So to continue margin

a through spring coloring margin it bit but outlook and at that's well, lower trends we're a about so looking we being selling perhaps is quarter, as we as work it way optimistic historically And season, December and better second than our the see. our is the

Operator

Sam be will question next from Wells The Reid from Fargo.

Richard Reid

that give just a to gross prior follow-up a So in in plan backlog margin as on that maybe is sense here. just a what there. embedded us sense any guys provided curious that bought-down for second question of would number on close quarters. the other you in number maybe point rough one on Could quarter. is then the to you houses your rate you in be I Kind And as believe to what the backlog. past your

So number an we've there. got if just updated curious

Bill Wheat

to one we're that With Sure. items we do guide. have key regard preparing backlog, when and our margin visibility that the to the of is

margin depending prevailing relatively $X.XX $X.XX is that generally offering QX. offices. market of we're And our really backlog while the providing with prevailing our range between across here So today, what's in last then to the the for sales is the out range we're consistent on in that little rate there terms product in for

Jessica Hansen

change that quarter average this no last rate really there's And meaningful quarter. in versus

Richard Reid

some helps. I'm -- natural material costs It costs. from more higher hold we're on administration's sounds and more ability those that stick or although maybe costs to you tone then a labor it's new on your broadly me about But on rebuild. wrong. are disaster seeing, No, level and in bit if buckets question brick to talk of correct just maybe of could like looking QX, higher higher exogenous remigration factors little these two these the the costs whether back a manage of on And

labor sort your should as through how manage to stick get see those brick? to and inflation we in sense rough trying you Just of and

Paul Romanowski

happens is our see today, to time. hold markets and scarce need labor to becomes and/or the market we with and administration I good our more feel access to a allowed it seeing able both in pretty our the about are the that impact tariffs this improvements and given what through we need, either but with little what's positioning on out if our we and in to good labor inflation see see play and expect we maintain and continue -- either the have XX ability that, need to those that's in It we parts we tight us think have to to the has and And pieces the much next we cycle labor. materials don't over and been still pricing labor months. what to of yet share for we've materials

Operator

The Bosshard next Cleveland question Research. from will be Eric from

Eric Bosshard

have things, I if two I could.

think something something address more affordability? all, the to an doing meaningful changing need terms demand in there you're of there but about unlock your more is or First you I I a in forward, talked X%. curious smaller by considering steps know homes, to unlock opportunity changing and product ASP? I'm of it's down ASP as Is that affordability, you taking think indicated towards looking meaningful or to your

Michael Murray

Hard can change mean, term from a we're I make in doing. that kind it's by of what swing the neighborhood neighborhood. incremental massive to we say near an

frame. term, certain efficient number brick footage of and a usage more X- costs continue to approving deliver on a a of ways dollars You're kind X-month time some guidelines the evaluate the bathrooms stick development our homeowner. the square short kind but for to land product the are of, and in also ability limit a want and of say takes it relative in, the within Oftentimes, that by to significantly for approved to flex and don't and are bedrooms, locked that Longer I call to we to parameters they're lots that it, municipalities. ground be to

Jessica Hansen

business, for year X% was which of footage points years. data a this closed, share from roughly our a And For square low in flat. it single-digit up quarter townhomes percentage ago, was was so has that homes, another on homes sequentially. we the been XX% down of which did last we call was our tick XX% number duplexes closed, and it couple average we of relatively that attached from see down up Sequentially, the

Eric Bosshard

a feels is the in rates rates X, selling Is to to same? X. responding And especially where customer look Or behaving longer. the you an bit it know with higher are incentives different as were differently Okay. we're rates traffic little consumer I Curious, the way? secondly, Is forward at X. environment same for it were spring like rates back back season, your time at then X? the Is X, this

Paul Romanowski

and our utilizing a We monthly comfortable that in as consumer is some needed quarter, quarter sold be enough least the the place rate increased payment. still in incentive in homes to the form us throughout to maintain achieving try has of closed quarter. most to for -- best in successful and them and to we're Still impactful rates to in the the at seem with what the for move their of as forward we quarter far that XX%

we able that to the on spring with It's this to been way go It's quarter. long models, navigate traffic quarter. We're seeing a weeks selling of got far, were continues. see a But pleased this we're only early. levels through So past pace the and couple still the that our how with it into sales so I've we'll in season.

Operator

be will Anthony Citi. from next The Pettinari from question

Anthony Pettinari

the holding qualify? versus of you're with than what I wonder availability at is if consumer you better can move, -- one be a you're look then if or give the change may to and And of an update when any buyer true real up debt group other? ability you in kind seeing sort of seeing levels on first-time more first

Paul Romanowski

we've forward. easier It's move for to move our today, traffic that the that offices. of would got levels little up buyer a I say in

to get to that's to get stronger been Just sale quarter. little final the the last a determination, the and certainly,

significant of in were think, up spend level we buyers buyers score quarter our credit XX%, go We I a of -- those available in time working their our the past change significantly, home. but buyer world position our on a first company because the makeup open sell in the down the get it buy us, to would a in to offices of sales challenges could to mortgage up debt lot if where through credit We significantly them first-time or credit through do our homebuyers. we buyers haven't this seen our really the live open we and

Anthony Pettinari

Okay. town gross it Is with of products format at the then understanding by That's or the compares offering, possible profile homes helpful. homes following a about more how just returns or like if homes talk of varies it on And to traditional all? duplexes, margin community. up or smaller smaller-format sort

Michael Murray

margin It's we to at product If very the very performances, similar, look project be and our actually. similar. is going

the If your house, you're price, whether your in and the returns. product, detached, outcomes going margin right to well right positioned the you're attached right get similar it's or with

Operator

will The Mike RBC next Capital from from Dahl Markets. question be

Michael Dahl

that and really want at you points. basis appreciate about margin points guiding you're I basis wanted XXX But year-on-year way. you're midpoint your frame down the gross I forward, going pretax business I look if to margins, guidance. to ask margins it, this down XXX the pretax guiding at only

seems kind like -- surface, specifically you something this terms of there rentals can of quarter, it So else on or in Forestar is whether it's XQ. or underneath the SG&A

So can you help us that? understand

Bill Wheat

capital really markets the buyers last been that the properties them. call -- rates, lower, Rental we higher the to Sure. for are challenging interest more commented year uncertainty it's have and due over of rental margins on as

'XX I'd the some margin It's that out alleviate in dealing say and that lower. as year-over-year in margins forward part business into homebuilding the been XXXX, should the change business in expect that have the with there beyond gross move primarily a we change that be the latter 'XX. to to of and rental would supply that segment. But is challenge, a in we're we're move with but So continuing would

Michael Dahl

it. Got Okay.

and So down margin revenue year-on-year rental biggest driver. significantly

Bill Wheat

Yes.

Michael Dahl

versus Got slides you some and you it, think And guess and a made that around added as point the then back pace guiding going of I I return of added -- that you've change guess again, you've price about some way focus discussion. additional -- the things. kind it. certain to you're the

bit So more bit views there? you be How -- But a focused like for things little kind near of that shifting keep know you to focus biased little in would your focus I current actually that is a environment, return versus actually been more price you've term. say the in the margin let's volume kind while. towards and are of a evolving

Michael Murray

homes start the and saying of price And know a maximize times And it's those that's about to what repetitive pace the more based the market We -- that are bring local then homes, I absorb. to lean in margin more Well, price or to pace into by pace relative we behind they're there margin homes and in pace to see decisions you currently oftentimes at it a for corporate Community sales pace and to is and buildup up a pace the given the don't, returns. is the a and to to project a And those it's when lot you it's again, us can they sell probably submarket community, them best a at get the demand dictate level, happening. supply balance community returns up, at going are to at a very lot up. outcomes upon there, operators can this, what's we the that evaluate available a level. making much But the continue given than it's looking asked have or that that business maximize our seeing submarket that and very but once community-by-community a drive we it's help art heavily for margin science. much, field.

Operator

The Research will Seaport from from be next Zener question Partners. Ken

Kenneth Zener

between their markets other XX XXX of your you're XX top and spread as Could also are the margin spread we at those XX Could the comment you maybe are because between most on you of spec around markets? give as see color builders XX% the closings. -- XX% backlog and about the about margin markets the well closings markets, most talk

Bill Wheat

spec and your first part your between our So was backlog closings of -- question

Michael Murray

and than -- quarter. I in But you give the I the Between in that to rate that front that I we prior -- we're have the have exited interest I in lower closed of margin don't XX% magnitude and December. the sold different quarter quarter a would me. can't same a at going say environment, what any at in think breakdown. slightly be don't we don't it's higher the have were can. to I'm I sorry, sold

Kenneth Zener

Okay.

talked guys of multi-years I ago. you points, the I about hundred think couple mean a basis past, in

might if So that be a... know I didn't

Jessica Hansen

That been have build-to-order would spec. versus

Kenneth Zener

similar Okay. of Regional Florida, there see any many out business. business peers having necessarily margins, range reason didn't Texas, XX% pretty very your regional they're stand in more the because all margins you we in similar that LTM. versus guys Is West, across dispersion the your in of margins

a some in we versus Just of perhaps see didn't curious markets others. spike why as to more

Michael Murray

Ken, is just think markets our specific or it out that in enough market is aggregation blends sure, of execution there's an exactly not think where of differently I performing any I of the regional groupings one each differences our different. kind market

Bill Wheat

on All maximizing community. markets of are returns focused by our community

a pace turns. margin between it's and so And inventory balance and

so yes, as the better margin, the returns better And generally the well.

And the so board. that across is focused

Operator

Jadrosich question Rafe next Bank from will be of The from America.

Rafe Jadrosich

to on First, I seeing land just inflation today. want that -- the you're

does see you're of quarter-over-quarter. we'll later you I trend? think any about what that the we I for contracting up through that to think mean do the how the there you in year? how And like you relief flow remainder Can said are us on? that then seeing just implies run X% that year-over-year for today, what compare

Jessica Hansen

we've be digit X double year-over-year a a has to XX%, a it quarters. were year-over-year basis, to And to continued up mid-single-digit single for low high increase. X last least sequential, On just low up a been at we on which the to

case prices necessarily costs to the is look a going when for not you down, forward, seeing I think land development remain foreseeable certainly base not at come future. mid-single low it our will We're lot over think, couple on digit. a quarters, to that single all-in to But here basis a of an cost. should we high year-over-year moderate next maybe just point the at mid- some do

Rafe Jadrosich

the philosophy it the the pace, about outlook especially of the pace have about then we guidance. year? cash just up related strategy was? change there relative like in And to And think just pace talk like free we sort any the go the Okay. in where then of terms you step-up do stepped you stock that if continued in you Or Was to in the as return That's repurchase of is pace the flow? price Can buyback or of in sort in quarter-to-date? change buyback capital the through of share quarter on helpful. -- how the

Bill Wheat

Yes, strategy. change overall in no

we when quarter that targets, We saw the quarter. will liquidity the flexibility continued have accelerate liquidity this our our end to repurchases be do availability the under that of some we repurchases balance manage through is share within price and Obviously, our but and really the within to sheet able that pressure.

has And So on market. to the aggressive been out obviously, price repurchases. we judging bit be in quarter, continue in more where our this stock the based still early a we're

We have guide are acceleration quarter we characterize would I still increase in so would billion occurred that not first in of but to increase the some -- as of guide, QX. the $X.X an by that full And $X.X you the being amount acceleration active. the the that billion. implied did our by

liquidity and of advantage depending take we a stock. the it we of see in So is some and balance continue -- But we what valuation bit see overall to the will on and where manage ebb like we based flow the cash on will our our we feel stock sheet allow. plan, opportunities when to and flow dips our

Operator

next The Research. question from Allinson be Trevor will Wolf from

Unknown Analyst

weaker you just about demand any on First, South you and talk geographically, different trends year-over-year can Central basis. guys for regions two Southeast a were

So perhaps helpful. would any Florida and Texas demand commentary in be

Matthew Bouley

Yes.

we've we that footprint. moderation they saw the we've enter we've in a of first in been of little some you and few as I across a the we our portions generally, has Texas weeks We've where some spring, But offices inventory what into as these valuations. our pleased with significant markets seen there. sales some the of seen run-up look in as at some market isolated well to think to on buildup talked sales seen the had Florida in impact earlier, when

Unknown Analyst

on that helpful. just question, lot the new some potentially some And you? what have and with if that think possible could color see impact of guys understanding second think a could were be of then change That's immigration administration. Can tariffs to unknowns Okay. potential give do also major you then you us Just or on Mexico? on and you on impacts a early we it's kind China

Michael Murray

we're not to be to going change would is the impact sure foresee Hard what yet. and what be, the

buyers So get we into the an and that we provide said a can for to product our continue for to, prepared as Bill before, homeowner affordable qualify mortgage.

into to we cost if goal not to And so be that of think going housing I affordability. a there that stated we increases, affordability And do bring do play. everything can is the for administration. housing is And is affordability helpful

drive we're able that to will affordability. do things help some hopeful So that they're

Jessica Hansen

to had past. have deal we with And and tariffs changes the both immigration in

our that remains we're outcome, say regional likely more is it's familiar to sweeping to likely, but ultimate too something with. it's nature than across footprint, in it be something early entire it the although And So way seen.

Operator

question will The Buck Raymond from from be next Horne James.

Buck Horne

investor in bulk wanted if Just seen come was finished consider investors any inbound rental uptick the maybe one inbound a of or quick negotiating you've SFR in wondering deal you if single-family interest for or off me. some that Or doing your and take I from longer-dated one would inventory hands? some unsold in an to inventory? of

Matthew Bouley

more for merchant business a maintained have as of build. really our rent We single-family

those and for stabilization. sale those, as started can in sell we prepared our some of buyers into that have to -- to final a stated those remarks, on ahead have we We more do plenty opportunity of of forward

the bulk very buyers. that's those to the haven't inventory in selling units, been to inventory. comfortable largely we all as offer to plenty have. with exactly have our inventory enter heavy season. into We've maintained we in tend we We at where we spring selling number want completed the So and to We're of be

our about good that a for on both the for sides sale and on rent feel we on So build basis. of inventory

Operator

from The Sachs. from Maklari Susan question is coming Goldman next

Susan Maklari

level expected think a result But is of than If the Fed consumer on year or and as the rate versus, some you expected of that. environment. this last cut less times question the first fewer say, stability than Do rates does realize that that, some My uncertainty on of confidence see could to leaving think and actually need you a lift Or do to more down that in the we are rates come of the enough sidelines? some see be fears or ease activity? the that to of people year.

Jessica Hansen

rates affordability easier take is be. our And I and of period great manage the If going off They'll consumers their if to that what thought go that's to think to time, fence don't. an buy day reset going rates need for to today, stability what we'd stable long. to get think we house. were expectations on pick they lower they all could ultimately if rate it's they we business a remain I much going the extended drive know afford can and something if ultimately

rate in positive really, as that we -- stability rate Certainly, declines helpful. scenario, base be But would case we we assumes move guidance a nothing So throughout would take as our the don't we have the as move pretty just year. year. throughout

Susan Maklari

Okay. question rental things. side of That's the one And then on helpful. last just

operational to efforts You some and did realize there. efficiencies greater mention execution

from can about think that own of eventually in improving market? a come that how overall margin, you shift the much efforts your versus As

Michael Murray

we're what greater perspective sell at capital some of projects from ability a us. the looking from the Susan, prior efficiency to is to think there, stabilization I

focusing the selling homebuilding looking rates communities in the cap -- earlier our for the and operating the materially side rents, But to side. in in the So process, valuation financial them the efficiency rental DNA prior buyers across That's and well just working in of assets, the those, it decrease to increase the platform in we're in cost net and with can as sell the that fundamental control income terms of we part performance stabilization. the on stick those sale control build-to-rent is changes brick a operate on always we're to change see But different efficiently. as everything cost platform. takes some and of of truly to

Operator

question The Barrón from be from will Research next Center. Housing Alex

Alex Barrón

you have whether pace. to little means you a if some that whatever certain even versus approached balance of it takes to ask year. business homes to of and you it of the or Wondering a seem the do there, have trying in willingness differently a same to terms to philosophy historically if Good the interest low rates. sell have super approach start get I your of maintained wanted number to it your margin offering competitors guys maybe to guys have

If you can that. on comment

Paul Romanowski

as alluded a for we to we're by communities think looking a I have community those margin return it's allows us pace buildup. And a always that community. in drive community by and community consistent to earlier,

rely here. So to in what market. they we need balance need aren't making our the competitive operators They that local We decision from to to. on do be

be to end to. we the offer pace, So or market-by-market higher margin us the when it's we activity sometimes a the to we competitive But daily day, our need. the of at it hope a And where rate returns would drive achieve operators. absorptions allows an on going in to incentive community-by-community, and may we get we're level. a beyond But market therefore, at for

Alex Barrón

Got it. if seem It then wondering you maintain but to for like can suppose, And there I expected are a seems Forestar. year. number to sold, the number same on than lots you comment of the mostly they generally, was lower

you issue? So comment that? was that anything Or can just a on timing

Jessica Hansen

related. heavy little bit purely they was a increase Yes, lighter throughout just that's pretty the it was Alex, to They had in year. timing. expect to in us QX, lot a QX, the they it would remainder percentage but that sold deliveries timing and of we their say do

Operator

Rahmani KBW. be question from next The will from Jade

Jade Rahmani

lower consolidated cuts any and guidance, to pricing sale assume because prices. you out average price there the revenue get somewhat the need it like on guidance comment to environment the Can that's to assumes whether seems we

Bill Wheat

price our Our average sales reflect from buydowns of the incentives rate level largely. does

that the the expect at higher to rates market we having cost the impact QX, higher pay be buy of those in on will mortgage in incentives selling yes, prevailing And terms movement net expect the declines probably price, the of some average -- further we on being rate an does largely quarter, selling bit the average price And price. a slight little with have net have impact we've to rates average and still that which downward in we're of the last our of selling year, downs ASP. do the end costs in because so seen our in over

Alex Barrón

for be around So would reasonable to what's XXX,XXX? a ASP it assume, range

Bill Wheat

we've to we're specifically. Really sequentially that modest But not guiding or Yes, seen that. X% X% than generally expecting more not change. much

Operator

for queue no remarks. time. questions closing I call this now Paul back other in Romanowski the will turn There to were at

Paul Romanowski

the appreciate Horton Paul. everyone's to time our call solid look quarter on you, the to family speaking Thank to today share Congratulations in entire producing results you with quarter. April. on We a forward first again and D.R. second

this honored represent on appreciate you are greatly to do. call and all We that you

Operator

Thank you. This does conference. conclude today's

lines may time. You disconnect your participation. at this your you Thank for

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