Financial Data and Key Metrics Changes - In 2025, the company delivered 8,921 homes and recorded revenue of $4.4 billion, with pre-tax income of nearly $590 million, down 20% from the previous year's record of $734 million [5][6] - The net income was $403 million, or $14.74 per share, with a return on equity of 13.1% and shareholders' equity increased by 8% year-over-year to $3.2 billion [6][10] - Gross margins for the full year were 24.4%, down 220 basis points from 2024, primarily due to higher incentives and lot costs [6][10] Business Line Data and Key Metrics Changes - The financial services segment achieved a record capture rate of 93% and pre-tax income of $56 million for the year [5][16] - The Smart Series product, which is the most affordably priced, accounted for 49% of total company sales in the fourth quarter, down from 52% a year ago [7] Market Data and Key Metrics Changes - New contracts in the Southern Region increased by 13% year-over-year, while the Northern Region saw a 4% increase [8] - Deliveries in the Southern Region represented 57% of the company-wide total, with a slight increase in homes delivered compared to the previous year [8] Company Strategy and Development Direction - The company is focused on maintaining quality and customer service while navigating economic challenges, and it is well-positioned in its 17 markets [3][10] - The company plans to continue using mortgage rate buydowns as incentives on a community-by-community basis to drive sales [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the industry despite current challenges, stating that the company is in the best financial condition in its history [10] - There is optimism regarding the early traffic improvements and demand as the selling season begins [45][90] Other Important Information - The company ended the year with a cash balance of $689 million and zero borrowings under its unsecured credit facility, resulting in a strong debt-to-capital ratio of 18% [10][18] - The company owns approximately 26,000 lots, with an additional 24,000 lots controlled via option contracts, providing flexibility to respond to market conditions [9] Q&A Session Summary Question: Can you address the 13% growth in the South and bifurcate that into Texas and Florida? - Management noted solid sales across various markets, with Florida's Orlando market performing well and Texas showing mixed results, particularly with Dallas and Houston remaining solid while Austin and San Antonio were weaker [24][25] Question: Can you comment on margin pressures and the differential between intra-quarter closings and backlog? - Management acknowledged that margins are under pressure but noted that a significant portion of sales now comes from spec sales, which have lower margins compared to to-be-built homes [26][35] Question: What is the strategy regarding mortgage rate buy-downs? - The company has been successful with a 4.875% 30-year fixed mortgage rate and offers temporary buydowns to attract buyers [72][74] Question: How is the company structuring its land purchases and development? - Management indicated that land purchases and development spending increased, reflecting confidence in demand, but emphasized that there is no specific strategy driving this increase [64][66] Question: What is the outlook for margins and community openings? - Management did not provide specific guidance on margins but expressed optimism about maintaining a strong sales pace and improving margins through operational efficiencies [82][92]