Financial Data and Key Metrics Changes - The company delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2,900,000,000, which represents a 5% increase in units and a 6% increase in dollars compared to the previous year [5][15] - Adjusted gross margin was 27.5%, exceeding guidance by 25 basis points, while SG&A expense was 8.8% of home sales revenues, 40 basis points better than guidance [5][16] - Third-quarter earnings were $370,000,000 or $3.73 per diluted share, with a cancellation rate of 3.2%, which remains the lowest in the industry [10][15] Business Line Data and Key Metrics Changes - The company signed 2,388 net contracts for $2,400,000,000, with units down approximately 4% year over year, but dollars flat due to an increase in average sales price to just over $1,000,000 [5][15] - The average sales price (ASP) was up 4.5% versus 2024 and up 3% versus the last quarter, indicating resilience in the luxury business [5][15] - The backlog stood at 5,492 homes valued at $6,376,000,000, with an average sales price in the backlog of $1,160,000 [9] Market Data and Key Metrics Changes - The company ended the third quarter with 420 active selling communities and expects to end the fiscal year with 440 to 450 communities, representing 8% to 10% year-over-year growth [11][12] - The company has 3,200 spec homes at various stages of completion and another 1,800 building permits ready to go, allowing for quick ramp-up of spec production as market conditions improve [7][9] Company Strategy and Development Direction - The company continues to prioritize price and margin over pace, actively managing spec starts and inventory levels on a community-by-community basis to match local market conditions [6][11] - The strategy of selling spec homes at various stages of construction allows buyers to personalize their homes while providing a faster construction schedule [8][9] - The company remains disciplined in its land acquisition strategy, focusing on high-quality land at attractive returns while keeping land off balance sheet as long as practical [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a full-year adjusted gross margin of 27.25% and expects to deliver approximately 11,200 homes for the full year [6][23] - The company anticipates a modest decline in build costs and has not seen significant impacts from tariffs, with expectations for build costs to come down in the foreseeable future [10][11] - Management highlighted the importance of community openings and spec strategy to drive growth in fiscal year 2026, with optimism about market conditions improving [36][41] Other Important Information - The company returned approximately $226,000,000 to stockholders through dividends and share repurchases in the quarter [5] - The company issued $500,000,000 of ten-year senior notes at a 5.6% coupon and called $350,000,000 of senior notes scheduled to mature in November [20][21] Q&A Session Summary Question: Cash flow from operations guidance - The year-to-date cash flow from operations is approximately $400 million, with expectations to reach over $1,000,000,000 by year-end [29][30] Question: Construction costs expectations - Management expects construction costs to be flat to modestly down in the short term, with some progress in negotiating better pricing for materials [31][32] Question: Sales pace and community growth - Management confirmed no change in the sales pace target of two homes per community per month and expressed excitement about community count growth in fiscal year 2026 [35][36] Question: Incentives and sales trends - Incentives increased to 8% due to more discounting on finished specs, but management noted that incentives have stabilized recently [50][51] Question: Development costs and community count guidance - Management has not seen much relief on land development costs but expects community count growth to be spread throughout the quarter without significant regional concentration [69][72]

Financial Data and Key Metrics Changes - The company delivered 2,899 homes at an average price of approximately $934,000, generating record second quarter home sales revenue of $2,710,000,000, which is $236,000,000 better than the midpoint of guidance [4][5] - Adjusted gross margin was 27.5%, and SG&A margin was 9.5%, which were 25 and 80 basis points better than guidance respectively [4][20] - Earnings for the quarter were $352,400,000 or $3.5 per diluted share, marking a record for second quarter earnings per share [5][18] Business Line Data and Key Metrics Changes - The average sales price in the quarter was approximately $983,000, down from $1,000,000 in the first quarter and up from $967,000 in the second quarter of fiscal year 2024 [7] - The company signed 2,650 net agreements for $2,600,000,000, down approximately 13% in units and 11% in dollars compared to the previous year's second quarter [6][19] - The backlog at the end of the second quarter stood at $6,840,000,000 and 6,063 homes, down 7% in dollars and 15% in units compared to a year ago [19] Market Data and Key Metrics Changes - Softer demand was noted in the second quarter due to a decline in consumer confidence driven by increased economic uncertainty [6] - The company experienced a modest increase in incentives, which were approximately 7% of the average sales price, up from a recent average of 5% to 6% [7] - The financial strength of the customer base was highlighted by an industry-low cancellation rate of 2.8% and a high percentage of all-cash buyers at approximately 24% [10] Company Strategy and Development Direction - The company is focused on prioritizing price and margin over pace in the current market environment [6][24] - A balanced approach is being maintained to navigate the market effectively, with a strategy of reducing spec starts to match local market conditions [8][11] - The company aims for community count growth, projecting to reach approximately 440 to 450 communities by the end of fiscal year 2025, representing an 8% to 10% increase [11][26] Management's Comments on Operating Environment and Future Outlook - The near-term outlook for the housing market remains cloudy due to affordability pressures and macroeconomic volatility, but the long-term outlook for the luxury home market is positive [9] - Management expressed confidence in the financial strength of their customer base and the ability to navigate through challenging markets [10][12] - The company has tightened underwriting standards and reduced land spend on new deals, expecting this to primarily impact fiscal year 2026 [13] Other Important Information - The company controlled approximately 78,600 lots at the end of the second quarter, with 58% optioned, reflecting a focus on capital-efficient land deals [12] - Cash and cash equivalents stood at approximately $686,000,000, with a net debt to capital ratio of 19.8% [13][21] - The company increased its projected share repurchases for fiscal year 2025 from $500,000,000 to $600,000,000 [14][22] Q&A Session Summary Question: Update on spec data and homes under construction - The company has just over 1,000 fully completed spec units and approximately 2,400 in progress, with permits available for another 1,000 to 2,000 [34][36] Question: Thoughts on second half gross margin sustainability - The company expects the fourth quarter margin to be about the same as the third quarter at 27.25%, with some downward pressure from spec sell and settles but offset by a favorable mix [46] Question: Granularity on homes in progress and potential settlements - Approximately 1,900 homes will need to come from spec inventory, with 1,000 completed and more than 900 under construction expected to deliver by the end of the fiscal year [52][54] Question: Demand trends in May compared to previous months - Demand in May was consistent with March and April, with expectations for better sales in June and July, but overall market conditions remain softer than anticipated [62][66] Question: Commentary on foreign national buyers - Less than 5% of buyers are foreign nationals, with no significant changes in demand noted year to date [96]

Financial Data and Key Metrics Changes - The company delivered 2,899 homes at an average price of approximately $934,000, generating record second quarter home sales revenue of $2,710,000,000, which is $236,000,000 better than the midpoint of guidance [4][16] - Adjusted gross margin was 27.5%, and SG&A margin was 9.5%, which were 25 and 80 basis points better than guidance respectively [4][18] - Earnings for the quarter were $352,400,000 or $3.5 per diluted share, marking a record for second quarter earnings per share [5] Business Line Data and Key Metrics Changes - The company signed 2,650 net agreements for $2,600,000,000, down approximately 13% in units and 11% in dollars compared to the previous year's second quarter [6][17] - The average price of contracts signed in the quarter was approximately $983,000, up 1.6% compared to last year [17] - The backlog at the end of the second quarter stood at $6,840,000,000 and 6,063 homes, down 7% in dollars and 15% in units compared to a year ago [17] Market Data and Key Metrics Changes - The average sales price in the quarter was approximately $983,000, compared to $1,000,000 in the first quarter and $967,000 in the second quarter of the previous fiscal year [7] - Incentives were approximately 7% of the average sales price, up from the recent average of 5% to 6% [7] - The company has been reducing spec starts to match local market conditions [8] Company Strategy and Development Direction - The company is focused on prioritizing price and margin over pace in the current market environment [6][21] - The strategy includes a balanced approach to managing spec homes while enhancing capital efficiency and returning capital to stockholders [8][14] - The long-term outlook for the new home market remains positive, particularly for the luxury niche, despite short-term challenges [10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has declined due to increased economic uncertainty, impacting demand [6][10] - The company is confident in its ability to navigate the current market conditions and maintain its guidance for fiscal 2025 [5][12] - Management highlighted the financial strength of its customer base, with a low cancellation rate and a high percentage of all-cash buyers [11] Other Important Information - The company controlled approximately 78,600 lots at the end of the second quarter, with 58% optioned [13] - Cash and cash equivalents stood at approximately $686,000,000, with a net debt to capital ratio of 19.8% [14][19] - The company plans to increase projected share repurchases in fiscal 2025 from $500,000,000 to $600,000,000 [15][20] Q&A Session Summary Question: Update on spec data and homes under construction - The company has just over 1,000 fully completed spec units and approximately 2,400 in progress, with permits available for another 1,000 or two [29][32] Question: Insights on gross margin outlook for the second half - The company expects the fourth quarter margin to be about the same as the third quarter at 27.25%, with some downward pressure from spec sell and settles [42][43] Question: Clarification on backlog and deliveries - The company has roughly 6,400 units left to deliver this year, with about 4,500 expected from backlog and 1,900 from spec inventory [46][48] Question: Commentary on demand trends and market conditions - Demand has been softer than expected, but the company is managing well in the current market, with a focus on affluent buyers [58][62] Question: Land spend dynamics and confidence in the land market - The land spend in the second quarter was $362,000,000, with a cautious approach expected moving forward due to market conditions [104][106] Question: Geographic market performance - Strong markets included New Jersey, Pennsylvania, New York, and parts of California, while softer markets included the Pacific Northwest and parts of Florida [110]