Financial Data and Key Metrics Changes - In Q4 2025, home closing revenue was $1.4 billion, a 12% decrease year-over-year due to a 7% lower home closing volume and a 5% decrease in average selling price (ASP) to $375,000 per home [23][30] - Adjusted diluted EPS decreased by 30% year-over-year to $1.67 from $2.39 in Q4 2024 [30] - The company completed $150 million in share buybacks, returning nearly $180 million in total capital to shareholders this quarter [9][33] Business Line Data and Key Metrics Changes - Q4 2025 sales orders totaled 3,224, with an average absorption pace of 3.2 net sales per month, reflecting a pullback in buyer urgency [8] - The cancellation rate increased to 14%, slightly below the historical average [15] - The average community count grew by 15% year-over-year to 336 communities, with 35 new communities brought online in Q4 [15][16] Market Data and Key Metrics Changes - Demand patterns were localized, with stronger absorption in markets like Dallas and Houston, while facing lower demand in Austin and parts of Florida [17][18] - The ASP on orders decreased by 6% year-over-year, influenced by increased incentives and geographic mix [17] - The company anticipates continued challenges from elevated mortgage rates and job security concerns, but long-term housing demand remains supported by favorable demographics [10] Company Strategy and Development Direction - The company is focused on a balanced approach to capital allocation, terminating certain land deals to redeploy capital towards share repurchases and acquiring new land [11][12] - A multi-year technology initiative aims to improve back-office productivity and operational efficiency [13] - The company plans to redeploy $400 million towards share buybacks in 2026, indicating a belief that the stock is undervalued [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions are expected to remain challenging in the near term but expressed optimism for improved demand in the spring selling season [10][68] - The company is cautious about the current economic environment but believes it is well-positioned to capture market share as conditions improve [16][38] - Management highlighted the importance of consumer confidence as a key factor influencing demand [61] Other Important Information - The company ended Q4 2025 with approximately 7,000 specs and backlog units, down from about 8,600 units a year prior [20] - The balance sheet remained healthy with cash of $775 million and no debt drawn on the credit facility [32] - The company plans to maintain a net debt to cap ceiling in the mid-20% range [32][91] Q&A Session Summary Question: 2026 outlook and absorption pace - Management indicated that while they aim for an average of 4 net sales per month, they are willing to operate below that temporarily due to current market conditions [41][43] Question: Specs per community - Management stated that they are close to their target of 17 specs per community but would like to adjust the ratio of finished specs to improve efficiency [46][48] Question: Community count guidance - The company clarified that the 5%-10% growth in community count is based on the year-end count, not an average [53] Question: Margin guidance and seasonality - Management acknowledged typical seasonal margin pressure and indicated that Q1 guidance reflects this [55][56] Question: Demand trends in January - Management expressed optimism for improved demand in January compared to Q4, citing better realtor feedback and reduced discounting [68][69] Question: Share repurchase strategy - Management emphasized the importance of balancing share repurchases with operational growth and returning capital to shareholders [73][74] Question: Delivery outlook and community conversions - Management noted that while community count growth has been strong, conversions in new communities have been modest compared to historical trends [83][85]