Financial Data and Key Metrics Changes - Total revenues for the first quarter reached $632 million, a 6% decrease compared to the previous year, primarily due to a 12% reduction in home deliveries [5][6][7] - Adjusted gross margin was 13.4%, slightly below expectations, while SG&A expenses were 13.3%, better than the low end of guidance [5][6] - Adjusted EBITDA was $63 million, significantly higher than guidance, and adjusted pre-tax income was $31 million, also above forecasted ranges [6][7] - Income from unconsolidated joint ventures totaled $3 million, slightly below expectations, while income from consolidated joint ventures exceeded expectations with a gain of $27 million recorded as other income [6][21] Business Line Data and Key Metrics Changes - The company delivered 12% fewer homes year-over-year, impacting total revenues, but a land sale helped offset some of the decline [6][7] - Incentives accounted for 12.6% of the average sales price, with a significant increase in mortgage rate buydowns contributing to affordability challenges [8][15] - The percentage of Quick Move-in homes (QMIs) in total sales decreased from 79% to 71%, while to-be-built sales increased from 21% to 29% [16][17] Market Data and Key Metrics Changes - Monthly traffic per community increased significantly in five of the six months shown, with January showing a 40% increase year-over-year [11] - Contracts in February 2026 were up 13% compared to the prior year, indicating a positive trend in buyer engagement [12] - The company experienced fluctuations in contracts over the past 12 months, with January showing an 11% year-over-year gain [11][12] Company Strategy and Development Direction - The company is focused on efficiently turning over existing inventory and advancing sales of Quick Move-in homes while preparing for new land opportunities that promise improved margins [10][20] - A shift in land acquisition strategy is underway, moving away from lower-margin entry-level homes to more move-up homes in prime locations and active adult communities [20][27] - The company aims to maintain a disciplined approach to land management, walking away from less attractive opportunities and focusing on higher-margin developments [24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the housing market, including affordability pressures and economic uncertainties, but expressed confidence in meeting homebuyer demand [36][39] - The expectation for adjusted pre-tax income is to improve in the latter half of 2026, supported by stronger contract activity and the delivery of higher-margin homes [37][39] - The company remains committed to sustainable growth and value for shareholders, with a focus on inventory efficiency and land-light operations [39][40] Other Important Information - The company ended the quarter with $471 million in liquidity, above target, and has seen a significant reduction in net debt [28][30] - The net debt-to-capital ratio improved to 41.4%, a substantial decrease from 146.2% at the start of fiscal 2020 [30] - The company is only providing financial guidance for the next quarter due to current market volatility and challenges in predicting margins [31] Q&A Session Summary Question: On the topic of incentives and their pressure on margins, is there an opportunity to offer less incentives for higher margins? - Management prefers to focus on sales pace rather than price, maintaining incentives to clear lower-margin land and drive liquidity [43] Question: What is the current percentage of Quick Move-in homes versus built-to-order homes? - The percentage of QMIs has dropped to 71%, while demand for built-to-order homes has been increasing, which is beneficial due to higher profit margins [44]