Financial Data and Key Metrics Changes - In Q1 2025, the company reported a pretax income of $53 million and a net income of $39 million, translating to $1.26 per diluted share, with adjusted net income at $42 million or $1.36 per diluted share [18] - Home sales revenues for Q1 were $884 million, down 4% year-over-year, primarily due to lower deliveries and average sales price [19] - The average sales price in Q1 was $387,000, a 1% decrease year-over-year, attributed to higher incentives [19] - The adjusted homebuilding gross margin was 21.6%, down from 22.9% in Q4 2024, while GAAP gross margin was 19.9%, compared to 20.6% in the previous quarter [20] Business Line Data and Key Metrics Changes - Deliveries in Q1 totaled 2,284 homes, a 3% decline from the previous year, influenced by a strategy to manage starts at a lower level [19] - Net new contracts for Q1 were 2,692 homes, a 6% decline compared to the previous year but a 33% increase over Q1 2023 [8] - The company maintained stable homebuilding gross margins of 20.1%, easing by only 80 basis points sequentially [7] Market Data and Key Metrics Changes - The absorption rate averaged 2.8 in Q1 2025, with a sequential increase in February and March, but April's rate is trending below Q1 levels [8] - The company noted that Texas had the lowest absorption performance at 2.1, impacting overall results [30] Company Strategy and Development Direction - The company aims to balance pace and price while managing construction costs and incentives, targeting a growth in deliveries of approximately 10% annually over the next several years [9] - The company is focused on maintaining an appropriate level of spec inventory and matching starts with sales pace [9] - The land strategy involves low-risk, land-light agreements with landowners, minimizing upfront costs and risk exposure [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty, interest rate volatility, and eroding consumer confidence affecting the spring selling season [6] - The company expects to see further sequential increases in deliveries in the latter half of 2025, supported by community count growth [24] - Management remains optimistic about long-term demand, despite current market challenges, and is taking steps to address headwinds [24] Other Important Information - The company was recognized on Newsweek's list of America's most trustworthy companies for the third consecutive year [10] - The company increased its quarterly cash dividend by 12% to $0.29 per share and repurchased 753,000 shares for $56 million at a discount to book value [23] Q&A Session Summary Question: Absorption rate differences between Century Complete and regional businesses - Management noted that Century Complete operates in markets with less direct competition, leading to a more stable absorption profile compared to regional businesses [29] Question: Pricing strategies for moving product - Management indicated that they are using both interest rate buy downs and price reductions to move unsold homes, anticipating a potential margin impact in Q2 [32] Question: Guidance for the back half of the year - Management expects community count growth to support higher closings in the latter half of the year, despite current headwinds [38] Question: SG&A savings from workforce reductions - Management stated that cost savings from various initiatives, including workforce reductions, are incorporated into the full-year SG&A guidance [39] Question: Pricing and incentive strategies - Management explained that pricing decisions are made based on individual subdivisions and market conditions, balancing between price cuts and incentives [85]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss to common shareholders of $1 million, translating to a diluted earnings per share of negative $0.01, primarily due to fair value declines from interest rate volatility and credit spread widening [2][10] - The book value per share as of March 31 was $15.43, a modest decrease from December 31 [2] - The run rate return potential for PMT is currently averaging $0.35 per share, down from $0.37 in the prior quarter [14] Business Line Data and Key Metrics Changes - The Credit Sensitive Strategies contributed $1 million to pretax income, while losses from organically created CRT investments were $5 million [10] - The interest rate sensitive strategies incurred a pretax loss of $5 million, with fair value declines on MSR investments amounting to $56 million [10] - PMT's Correspondent Production segment generated $10 million in income, down from the prior quarter [13] Market Data and Key Metrics Changes - Total correspondent loan acquisition volume was $23 billion in Q1, down 18% from the previous quarter [12] - PMT retained 21% of total conventional correspondent production in Q1, an increase from 19% in the fourth quarter [12] - Current third-party estimates for industry originations in 2025 average $2 trillion, indicating growth in overall volumes [2] Company Strategy and Development Direction - PMT aims to leverage its relationship with PFSI to capitalize on unique investment opportunities, focusing on credit-sensitive strategies while maintaining a consistent securitization cadence [4][7] - The company plans to continue closing approximately one securitization of non-owner occupied loans per month and one jumbo loan securitization per quarter starting in Q2 [7] - PMT's strategy includes a focus on maintaining a stable dividend while navigating the current volatile market environment [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in PMT's ability to navigate the challenging mortgage market, citing strong risk management practices and a diversified investment portfolio [3][9] - The company anticipates continued low delinquency rates due to the overall credit strength of consumers and substantial home equity accumulation [7][8] - Management noted that the current economic environment has led to credit spread widening, but they expect the yield curve to normalize over time, which could improve returns on interest rate-sensitive strategies [36][38] Other Important Information - PMT completed three securitizations of investor loans totaling $1 billion in unpaid principal balance during the first quarter [6] - The fair value of PMT's MSR asset at the end of the quarter was $3.8 billion, slightly down from December 31 [11] Q&A Session Summary Question: Changes in book value and expected ROE since quarter end - Management indicated that book value has decreased by about 2% to 3% due to interest rate volatility and credit spread widening, but remains contained [17][18] Question: Expectation of acquiring a larger percentage of loans from PFSI - Management stated that PMT's acquisition strategy focuses on where capital can be most advantageously deployed, with no expectation of increasing the proportion of loans retained in the second half of the year [22] Question: Outlook on capital allocation and investment strategies - Management expressed satisfaction with current capital allocation, emphasizing the importance of growing credit-sensitive strategies while maintaining correspondent activity [28][30] Question: Visibility on volumes from correspondent loans - Management expects increased correspondent activity starting at the end of April, with the market centered on a $2 trillion origination market [31][32] Question: Outlook for the dividend amidst lower run rate earnings - Management expects the dividend to remain stable despite fluctuations in run rate, emphasizing the importance of dividend stability [36] Question: Return expectations on new loan securitizations - Management noted that return targets on subordinate bonds have increased due to credit spread widening, with expected returns in the mid-teens [41][42]