Financial Data and Key Metrics Changes - Total revenues for the fourth quarter reached $818 million, a 17% decline year-over-year, primarily due to a 13% reduction in deliveries and the absence of a significant land sale from the previous year [5][6] - Adjusted gross margin was 16.3%, showing a year-over-year decline driven by higher incentives to support affordability, with incentives accounting for 12.2% of the average sales price [5][7] - Adjusted EBITDA for the quarter was $89 million, exceeding guidance, while adjusted pre-tax income was $49 million, close to the midpoint of guidance [5][6] Business Line Data and Key Metrics Changes - The number of contracts in the fourth quarter fell by 8% compared to last year, reflecting overall market conditions [9] - Sales pace for each month in the fourth quarter was lower than the same months last year, with contracts per community declining 16% compared to the 1997-2002 period [10][12] - Quick-moving homes (QMIs) comprised 73% of total sales, down from 79% in prior quarters, indicating a focus on aligning starts with sales pace [15] Market Data and Key Metrics Changes - Traffic per community increased significantly in three of the four months of the fourth quarter compared to last year, indicating a positive trend in buyer interest [9] - Despite higher mortgage rates and a slower sales pace nationwide, net prices increased in 36% of communities during the fourth quarter, particularly in stronger markets [16] Company Strategy and Development Direction - The company is focusing on sales pace over price, prioritizing the clearance of older vintage lots to make way for new land acquisitions with better margins [8][21] - The strategy includes maintaining a robust inventory of QMIs to enable quick sales and optimize inventory levels [14][15] - The company plans to continue using mortgage rate buy-downs and similar incentives to support sales while managing costs through negotiations with suppliers [39][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market conditions but expressed optimism about performance bottoming out in the upcoming quarter and gradually improving thereafter [45] - The company expects gross margins to bottom in the first quarter of fiscal 2026 and to improve in subsequent quarters if market conditions remain stable [25][36] Other Important Information - The company ended the fourth quarter with $404 million in liquidity, well above the targeted range, and completed a significant refinancing, marking a milestone in reducing debt risk [22][23] - The lot count decreased 14% year-over-year, reflecting disciplined land acquisition strategies [19][20] Q&A Session Summary Question: Are you doing anything to offset some of the pressure from gross margins? - The company has successfully controlled costs and reduced expenses in some areas, maintaining flat costs despite increases from tariffs [39] Question: When do you expect gross margin to take higher next year? - The improvement in gross margins is expected to be a mix of working through older properties and bringing on newer land deals identified in 2024 and 2025 [41]

Financial Data and Key Metrics Changes - The company reported net income of $201 million or $2.01 per diluted share, with adjusted net income at $211 million or $2.11 per diluted share [20][24] - Home closings revenue reached $2 billion from delivering 3,324 homes, slightly exceeding guidance [20][24] - The average closing price of homes was $602,000, ahead of the guidance of approximately $600,000 [20][24] - Home closing gross margin was reported at 22.1%, with adjusted gross margin at 22.4%, slightly above the guidance of approximately 22% [23][24] Business Line Data and Key Metrics Changes - The company started 1,963 homes during the quarter, with an average of 1.9 homes per community [21] - Spec homes accounted for 72% of third-quarter sales but only 61% of closings, indicating a shift in inventory strategy [24] - The company expects to deliver between 3,100 to 3,300 homes in Q4, leading to a full-year target of 12,800 to 13,000 homes [23][24] Market Data and Key Metrics Changes - Monthly net absorption improved each month during the quarter, with September showing the strongest level since May [9] - The mix of orders by buyer group remained consistent: 30% entry level, 51% move-up, and 19% resort lifestyle [10] - Cancellation rates increased to 10.1% of the beginning backlog, but remained below industry averages [25] Company Strategy and Development Direction - The company is focused on innovative pricing and incentives to support buyer confidence and improve affordability [5][6] - A balanced operating strategy is being executed to maintain performance despite market challenges [4][7] - The company plans to open over 100 new communities in 2026, anticipating mid to high single-digit outlet growth [12][25] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic and political uncertainties have impacted buyer urgency and sentiment [5][10] - The company is optimistic about future growth as market dynamics stabilize, emphasizing cost management and operational efficiencies [7][10] - Management highlighted the importance of consumer confidence in driving demand stabilization, particularly in discretionary home purchases [10][11] Other Important Information - The company ended the quarter with strong liquidity of approximately $1.3 billion, including $371 million in unrestricted cash [27] - The net home building debt to capitalization ratio was 21.3%, down from 22.5% a year ago [27] - The company repurchased 1.3 million shares for $75 million during the quarter, with a total of 5.3 million shares repurchased year-to-date [27][28] Q&A Session Summary Question: Views on potential administration actions to encourage volumes - Management discussed productive conversations with the administration regarding housing shortages and affordability issues, emphasizing the need for collaboration among stakeholders [33][35] Question: Recent demand trends and consumer segment engagement - Management noted broad-based increases in traffic across consumer segments, with particular engagement from entry-level buyers [37][38] Question: Details on innovative incentives being used - Management highlighted the use of various loan programs, including buy downs and adjustable-rate mortgages, to cater to different customer needs [42][44] Question: Spec inventory and its impact on future revenues - Management acknowledged the need to balance inventory levels with market demand, indicating a cautious approach to new spec starts [46][55] Question: Regional performance and market strength - Management provided insights on regional performance, noting strength in Florida and challenges in Texas, while emphasizing the importance of core assets [58][60]