Financial Data and Key Metrics Changes - The company reported net income of $194 million or $1.92 per diluted share, up from $1.86 a year ago [21] - Adjusted net income was $204 million or $2.20 per diluted share, up from $1.97 a year ago [21] - Home closings revenue increased 2% to approximately $2 billion, with a 2% decline in average closing price to $589,000 [22] - The adjusted home closings gross margin was 23%, in line with prior guidance, while the overall gross margin was 22.3% [24][25] Business Line Data and Key Metrics Changes - The company delivered 3,340 homes, with 71% of sales coming from spec homes, an increase from 58% in the prior quarter [21][11] - The share of closings from specs increased from 59% a year ago [21] - The second quarter orders consisted of 33% entry-level, 50% move-up, and 17% resort lifestyle [11] Market Data and Key Metrics Changes - The overall cancellation rate was 14.6% of gross orders, up from 9.4% a year ago, reflecting a change in consumer confidence [26] - The average credit score among buyers using Taylor Morrison home funding was 751, with a down payment of 22% and household income of $188,000 [28] Company Strategy and Development Direction - The company emphasizes a balanced portfolio of to-be-built and spec homes, primarily in attractive core submarkets [10] - The strategy includes prioritizing capital efficiency and returns over volume in a competitive marketplace [13] - The company plans to continue expanding its Esplanade brand, which has shown resilience in sales [13] Management's Comments on Operating Environment and Future Outlook - Management noted that the sales environment has been impacted by consumer confidence, with buyers prioritizing deals and incentives [66] - The company expects to maintain a higher concentration of spec homes in the near term due to consumer preferences [35] - Management believes the need for affordable new construction remains intact across markets, despite current headwinds [13] Other Important Information - The company has a liquidity of approximately $1.1 billion, including $130 million of unrestricted cash [28] - The company repurchased 1.7 million shares for $100 million during the quarter, with a remaining repurchase authorization of $675 million [29] Q&A Session Summary Question: Spec mix in the quarter - Management indicated that the increase in spec sales was driven by consumer preferences for inventory homes and the current market environment [35][36] Question: Gross margin expectations - Management expects Q3 gross margin to be around 22%, with Q4 expected to be approximately 22% as well [43] Question: $3 billion facility with Kennedy Lewis - The facility is intended to provide balance sheet relief and greater optionality for asset disposition, serving both existing and new acquisitions [48][51] Question: Absorption pace and market conditions - Management noted that the absorption pace is influenced by consumer confidence and market conditions, with expectations for a stable pace in the near term [66][82] Question: Cancellation rates - Cancellations were noted to be higher due to various factors, including buyers finding better deals elsewhere, but overall rates remain below industry averages [94][95]