Taylor Morrison (NYSE:TMHC) Home Corporation (NYSE: TMHC) reported strong second-quarter 2024 performance, delivering 3,200 homes at an average price of $600,000 and an adjusted gross margin of 23.9%. The homebuilder posted adjusted earnings of $1.97 per diluted share and a 12% increase in year-over-year book value per share. With a positive outlook, Taylor Morrison expects to deliver between 12,600 to 12,800 homes this year, exceeding previous estimates and maintaining a gross margin of around 24%.
Key Takeaways
- Taylor Morrison delivered 3,200 homes in Q2 2024, with an average price of $600,000.
- Adjusted earnings per diluted share reached $1.97, and book value per share grew by 12%.
- The company forecasts delivering 12,600 to 12,800 homes in 2024, with a gross margin of about 24%.
- Net orders increased by 3% year-over-year, with a positive trend in June and July.
- Land inventory stands at 80,677 lots, with an aim to control 60% to 65% in the near future.
- Full-year land investment is projected to be between $2.3 billion and $2.5 billion.
- Net income for the quarter was $199 million, or $1.86 per diluted share.
- Third-quarter home delivery is estimated at 3,200, with the average price ranging from $600,000 to $610,000.
Company Outlook
- Taylor Morrison expects a stable home closings gross margin of around 24%.
- The company's long-term targets include 10%+ annual home closings growth and mid-to-high teens returns on equity.
- Taylor Morrison aims to increase its controlled lot percentage to at least 60% to 65%.
Bearish Highlights
- The company acknowledges the potential headwinds such as lot cost inflation.
- Seasonality in sales and a cancellation rate of 9.4% of gross orders were noted.
Bullish Highlights
- Taylor Morrison sees a recovery in momentum due to lower interest rates and positive Federal Reserve messaging.
- The portfolio is well-positioned to meet housing market demand.
- The land inventory represents a 6.7-year supply, with 2.9 years owned.
Misses
- No specific unit delivery numbers were provided for the recent acquisition in Indiana.
Q&A Highlights
- The company discussed the margin difference between spec and to-be-built homes, influenced by interest rates.
- Taylor Morrison is close to pre-pandemic cycle times, despite labor market challenges.
- Sales incentives were down quarter-over-quarter and year-over-year.
Taylor Morrison, with its strong financials and strategic land investments, is poised for continued growth. The company's focus on prime community locations and self-development of lots, along with its commitment to maintaining a robust land inventory, positions it well in a competitive housing market. Taylor Morrison's confidence in its business model and market positioning, despite the challenges of cost inflation and labor shortages, reflects a positive outlook for future performance. The company's strategy to manage sales incentives and pricing to adapt to market conditions further demonstrates its proactive approach to sustaining demand and profitability. Investors and stakeholders will be watching closely as Taylor Morrison continues to navigate the evolving real estate landscape in the upcoming quarters.
InvestingPro Insights
Taylor Morrison Home Corporation (NYSE: TMHC) has shown a robust performance in the second quarter of 2024, and the InvestingPro insights provide additional context to the company’s financial health and stock behavior. With a market capitalization of $6.97 billion, the company trades at a P/E ratio of 9.34, suggesting a potentially attractive valuation compared to peers. The adjusted price-to-earnings (P/E) ratio for the last twelve months as of Q1 2024 is even lower at 8.52, which could indicate that the stock is undervalued.
InvestingPro Tips indicate that Taylor Morrison's stock price movements have been quite volatile, a factor that investors may want to consider when assessing the risk associated with the stock. Moreover, the company's stock is trading near its 52-week high, with a price that is 96.93% of this peak. This may suggest confidence from investors in the company's market performance and future outlook. Additionally, the company's liquid assets exceed its short-term obligations, providing financial stability and the ability to cover short-term liabilities.
InvestingPro also highlights that Taylor Morrison has delivered strong returns over the past month, three months, and six months, with respective total price returns of 15.72%, 16.38%, and 28.36%. This trend aligns with the company's positive earnings report and could be indicative of sustained investor optimism.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are 11 more tips available on Taylor Morrison, which can be accessed at InvestingPro's dedicated page for TMHC. These insights can help investors make more informed decisions about their investments in the housing sector.
Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering you comprehensive investment tools and real-time data to enhance your investment strategy.
Full transcript - Taylor Morn Home (TMHC) Q2 2024:
Operator: Good morning and welcome to the Taylor Morrison's Second Quarter 2024 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder this conference call is being recorded. I would like now to introduce Mackenzie Aron, Vice President of Investor Relations.
Mackenzie Aron: Thank you and good morning. We appreciate you joining us today. Before we begin, let me remind you that this call including the question-and-answer session will include forward-looking statements. These statements are subject to the Safe Harbor statement for forward-looking information that you can review in our earnings release on the Investor Relations portion of our website at taylormorrison.com. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to those factors identified in the release and in our filings with the SEC, and we do not undertake any obligation to update our forward-looking statements. In addition, we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in the release. Now, I will turn the call over to our Chairman & Chief Executive Officer, Sheryl Palmer.
Sheryl Palmer: Thank you, Mackenzie, and good morning, everyone. Joining me is Curt VanHyfte, our Chief Financial Officer; and Erik Heuser, our Chief Corporate Operations Officer. Today, I will share our quarterly highlights, our view on the market and the strategic drivers that give us confidence in the business and our long-term target. Erik will provide an update on our land portfolio and investment strategy while Curt will detail our financial results and guidance metrics. To begin, in the second quarter, we delivered 3,200 homes at an average price of $600,000 with an adjusted home closings gross margin of 23.9%. This produced adjusted earnings per diluted share of a $1.97 and 12% year-over-year growth in our book value per share to approximately $52. Despite the impact of higher interest rates during the quarter, both our closings volume and gross margin exceeded our prior guidance. Following this strength, we now expect to deliver between 12,600 to 12,800 homes this year at a home closings gross margin around 24%, both of which are stronger than our prior guidance. Most importantly, our performance and updated outlook once again reflect the overall strength and stability of our diversified consumer and geographic strategy. By meeting the needs of well-qualified home buyers with appropriate product offerings in prime community locations, we continue to benefit from healthy demand and pricing across our portfolio. From a sales perspective, our second quarter net orders increased 3% year-over-year with a monthly absorption pace of three per community. The quarter started with a strong April but we did experience some moderation in traffic and pre-qualifications during May as would be expected given the magnitude of interest rate movement. However, we saw momentum begin to recover in June and thus far in July with activity picking up alongside lower interest rates and the positive shift in the Federal Reserve's messaging, which are once again providing consumers with the needed confidence to move forward with their purchase, especially once they appreciate the compelling finance incentives we are able to offer via Taylor Morrison home funding. Most importantly, when we look at the first six months of the year, our year-to-date absorption pace of 3.3 per month leaves us on track to achieve our full year target in the low 3 range assuming normal seasonal patterns through the remainder of the year. Because we target a broad range of financially secure consumers in the entry level move up and resort lifestyle segments, we believe that our portfolio is well-positioned to serve demand across the housing market while generating healthy gross margins and bottom-line profitability given our product's relative pricing resiliency even during more challenging market conditions. No data point proves this better than the remarkable stability we have experienced in our home closings gross margin over the last six quarters. Over this period, our adjusted margins have remained in an exceptionally tight range at above average levels of 23.9% to 24.2%, despite mortgage rates swinging from 6% to over 8%, with plenty of volatility, macro uncertainty and political unrest along the way. We continue to expect this stability to hold in the quarters ahead as reflected in our improved home closings gross margin outlook of around 24% for the third quarter and for the full year. Beyond the temporary volatility caused by interest rate movement and other headline noise, we remain confident that the need for new construction is firmly intact, supported by a multimillion deficit of housing units and involving demographic trends across multiple generations. In the majority of our markets affordable and desirable inventory options remain limited with months of supply still at manageable levels. And while resale inventory has started gravitating back toward historic norms, particularly in Florida and Texas, we are finding that much of the available product is generally not competitive to our amenity rich communities and quality design and newly constructed homes. Erik will provide some interesting insights on this shortly. It's also worth sharing that based on our home shopper surveys, which we send to all prospective customers after they visit one of our communities, only about 30% of our responding shoppers are considering a resale home as an option in their home buying search. In other words 70% or the vast majority of our prospective customers intend to buy a new home, further mitigating the direct competitive pressure of resale inventory. And I am particularly proud to share that nearly 45% of our shoppers tell us they're only considering a Taylor Morrison Home in their search. In the second quarter, resort lifestyle and move up buyers accounted for a combined 64% of our net sales, which was similar to the first quarter. These generally well-heeled buyers tend to utilize all cash or minimal financing when making their purchase and have the financial ability to personalize their home on their desired lot, generating high margin design center and lot premium revenue. At the same time, our entry level communities, which represented 36% of our second quarter sales are positioned to take advantage of significant pent-up demand among first time buyers for simplified move-and-ready spec homes albeit with more limited financial flexibility. To that point just 35% of our second quarter closings utilized a mortgage forward commitment or similar structure to secure a desired interest rate and an outsized 58% of those customers were first time buyers. While not surprising that these consumers require more financial support, these trends reinforce why we strongly believe the diversification of our portfolio is one of our most meaningful competitive advantages. In total in the second quarter, our buyers financed by Taylor Morrison Home Funding with a capture rate of 89% had an average credit score of 751, down payment of 23% and household income of $174,000. From a production standpoint, we continue to manage our to-be-built and spec home offerings based primarily on each community's targeted consumer set. This approach provides the benefits of both a high margin to-be-built business with the high turns from efficient spec construction as we look to maximize our overall returns. In the second quarter, spec homes accounted for 58% of our total gross orders nearly double the 30% share they represented in the same quarter of 2021, reflecting a strategic shift that has delivered sales and production benefits. At the same time, we have further improved our construction and purchasing efficiencies with the success of our Canvas option packages, which are included in all our spec homes and a growing share of our to-be-built offerings. Since being introduced nationally two years ago, Canvas has grown to represent over 60% of our closings, providing enhanced margins, cycle time savings and strong customer appeal. Driven by these evolutions in our business, our option count has shrunk by nearly 60% since 2020. While our floor plan library has been streamlined by over 20% improving our ability to leverage cost, scale our trade base and most importantly deliver quality homes to our customers. For all of these reasons, I've discussed this morning we believe our business is exceptionally well-positioned to take advantage of strong housing fundamentals in the years ahead to deliver strong results that exceed our historic performance as we strive to be within the top tier of our industry. Our confidence in this outlook is reflected in the long-term targets that we introduced last quarter. These include 10% plus annual home closings growth and annualized low three absorption pace, low-to-mid 20% home closings gross margins and mid-to-high teens returns on equity. Supported by our capital efficient investing model, we also expect to generate sufficient cash to continue to grow our business, while maintaining our strong balance sheet position and returning capital to shareholders in the form of share repurchases. Since expanding our company's breadth and depth through smart and accretive growth and refining our operational capabilities through product and process optimization, I am immensely proud of our team's execution and confident in our ability to achieve these targets on a consistent go-forward basis to deliver attracted results for our shareholders. As we head into the remainder of the year and into 2025 while we are awaiting more clarity from the Federal Reserve after next week's meeting we are cautiously optimistic that lower interest rates and a continuation of positive housing fundamentals has set the stage for continued growth and positive momentum in our business. With that let me now turn the call to Erik.
Erik Heuser: Thanks, Sheryl and good morning. Let me begin by reviewing resale inventory which has rightfully received a growing share of investor interest of late. To better understand these dynamics, our market intelligence team analyzed the true competitive set of resale listings on a community-by-community level for a number of assets across our portfolio with encouraging conclusions. To give just one example one of our communities in Sarasota, Florida has over 300 resale listings within a three-mile radius. However, after filtering those listings by product type, size price point and home vintage to identify those that would be considered directly competitive to our homes the number of listings falls to just 25 or 8%. I am pleased that the findings are directionally similar for communities and other markets that are also experiencing rising levels of resale supply. For the communities we analyze in Florida, Texas and Arizona the average months of resale supply surrounding our assets was 3.8 or nearly 20% less than the relative MSA average. These findings reinforced the value of our core location strategy. It is also worth sharing that several of our markets particularly in the western parts of the country continue to see tight inventory and to experience robust activity throughout the quarter. Moving to land. Our owned and controlled lot inventory was 80,677 home building lots at quarter end. Based on trailing 12-month closings this represented 6.7 years of supply of which just 2.9 years was owned. This strong lot pipeline represents the vast majority of lots needed to fulfill our 10% plus closings growth targets through 2026 which is allowing our teams to focus primarily on new lot acquisitions for deliveries in 2027 and beyond. Of our total lot pipeline, we controlled 57% up from 53% in the first quarter as we continue to make progress in our asset lighter strategy. The specific vehicles and structures used to achieve this off balance sheet control or cash relief include joint ventures with like-minded home builders, seller notes and financing, option take downs and land banking arrangements. Equipped with these tools we expect to increase our controlled lot percentage to at least 60% to 65% in the coming quarters and we will continue to evaluate the optimal long-term mix. From an investment perspective we allocated $369 million to home building land acquisition and $242 million to development of existing assets for a total of $611 million during the quarter. For the full year, we continue to expect our land investment to be between $2.3 billion and $2.5 billion. Approximately 40% of this spend is allocated to development, with the ultimate investment somewhat dependent on our deployment of land deferral tool throughout the remainder of the year. As we've discussed in recent quarters, our land investments are based on a returns driven underwriting framework with strong internal land development expertise, and a wide range of balance sheet friendly financing tools, we self-develop the majority of our lots to gain increased operational control and retain greater financial upside as compared to third-party developed lot deliveries. In addition, to best serve our targeted consumer groups, we focus on prime community locations in core submarkets where competition for large builders is often less heated than might be experienced in more tertiary markets. On the development front, we are focused on activating subsequent phases of existing master plans as well as bringing our controlled lot positions to market with new community openings. Based on these openings and our sales expectations for the remainder of the year, we anticipate our third quarter and year end community count to be in the range of 330 to 340 with meaningful growth expected thereafter. With that, I will turn the call to Curt.
Curt VanHyfte: Thanks, Erik, and good morning. I will now review the financial details of our second quarter and our updated guidance metrics for the third quarter and full year. For the quarter, our reported net income was $199 million, or $1.86 per diluted share, while our adjusted net income was $211 million, or $1.97 per diluted share. We delivered 3,200 home closings at an average price of $600,000, which produced total home closings revenue of $1.9 billion. Compared to our prior guidance, our closings volume benefited, primarily from more homes sold and closed during the quarter. Following this quarter's upside, we now expect to deliver between 12,600 to 12,800 homes this year, up from our prior guidance of at least 12,500 homes. This includes approximately 3,200 homes in the third quarter. At quarter end, we had 9,021 homes on our production, of which 3,368 were specs. Only 478 of these homes were finished. In addition to benefiting from enhanced construction efficiency, our starts volume continues to be highly disciplined with 3,527 homes started during the quarter or 3.4 per community per month. From a pricing perspective, we continue to expect the average closing price of our deliveries to be in the range of $600,000 to $610,000 for the full year, including approximately $600,000 in the third quarter. Our ultimate pricing will be dependent on the mix of specs sold and closed through the remainder of the year. Turning now to margins, our home closings gross margin was 23.8% on a reported basis, and 23.9% adjusted for an inventory impairment. This was similar to the 24% in the first quarter, and 24.2% a year ago as our margins have remained in a tight and healthy range, as Sheryl noted earlier, reflecting the financial resiliency provided by our diversified consumer and geographic strategy. Based on the visibility we have into our backlog of 6,256 homes, we now expect our home closings gross margin to be around 24% for both the third quarter and the full year. Beyond this year, we expect our gross margins to remain above our pre-pandemic averages, in the low-to-mid 20% range. This outlook reflects increased production and operational efficiencies, greater cost leverage from our scale and a lower capitalized interest burden from our reduced debt levels. Our net sales orders increased 3% year-over-year to 3,111 homes. This was driven by a 6% increase in ending community count to 347 outlets and a monthly absorption pace of 3 per community versus 3.1 a year ago. In the first half of the year, our monthly absorption pace averaged 3.3 per community, and as Sheryl discussed, we continue to expect to achieve our annual sales pace goal in the low three range. Cancellation rates equaled 9.4% of gross orders, which was down from 11.2% a year ago. These trends remain within normal ranges and are reflective of the strength of our diversified buyers, diligent prequalification requirements, and average ending customer deposits of $56,000 per home. SG&A as a percentage of home closings revenue was 10.2%. This was up from 9.2% a year ago, due primarily to higher payroll related and external broker expenses and a slight decline in home closings revenue. For the year, we continue to expect an SG&A ratio in the high 9% range. Beyond 2024, we are committed to continually looking for ways to optimize our SG&A, including ongoing centralization and other cost reduction efforts. Our financial services team achieved a capture rate of 89% up from 86% a year ago, as its suite of personalized incentive tools and exceptional service continue to help our buyers achieve their home ownership goals. The improved capture drove financial services revenue of $49 million with a gross margin of 42.5% up from $42 million and 39.5%, a year ago, respectively. Turning now to our strong capital position, we ended the quarter with liquidity of approximately $1.3 billion. This included $247 million of unrestricted cash and $1.1 billion of available capacity on our revolving credit facilities which remain undrawn outside normal course letters of credit. Our net home building debt-to-capitalization ratio was 22.8% and our next senior note maturity is not until 2027, providing us with financial flexibility. We expect to end the year with a net home building debt-to-capitalization in the range of 15% to 20%. Our returns-driven capital allocation priorities remain unchanged and including investing in the business, maintaining a strong liquidity position and returning excess capital to our shareholders in the form of share repurchases. During the quarter, we repurchased 1.7 million shares of our common stock outstanding for $105 million, bringing the first half total to 3.2 million shares and $196 million. This leaves us on track to meet our target of repurchasing a total of approximately $300 million of our common stock this year with an upward bias, as we remain committed to taking advantage of our strong cash generation and balance sheet strength to return excess capital to shareholders and enhance our returns. Based on our share repurchases completed and settled through the second quarter we now expect our diluted shares outstanding to average $106 million in the third quarter and $107 million in the for the full year. As is our normal practice, this guidance does not reflect the potential benefit of any future share repurchases that may occur over the remainder of the year. Now, I will turn the call back over to Sheryl.
Sheryl Palmer: Thank you, Curt. To wrap-up, I'd like to share a few key projects that highlight our constant pursuit to better the communities in which we build. Last month we began moving Banner (NASDAQ:BANR) MD Anderson, Cancer Center patients and their care partners into a community of homes that will serve as places of sanctuary as they undergo treatment. Through our partnership with the Banner Health Foundation, Taylor Morrison and our trade partners and local municipalities, we built and donated these homes which are within walking distance of the cancer center in Gilbert, Arizona eliminating the financial burden of travel and hotel stays for approximately 80 patients and their families each year so they can focus on healing in a comfortable environment. Another project near to our hearts will play out on Prime Time Television in early 2025 and allow millions of viewers to see the heart of Taylor Morrison, after filming a successful pilot episode in Austin, Texas for ABC's reboot of Extreme Makeover: Home Edition, Taylor Morrison has signed on as the show's first ever exclusive home builder for the entire season, allowing us the opportunity to build more than just homes for incredibly deserving families in our Tampa, Houston and Phoenix market. But maybe best of all, we will return to Banner MD Anderson's Cancer Center or will enhance the community of homes for cancer patients in an extremely exciting way. This wouldn't be possible without the generous support of all of our trade partners. Its meaningful work like this that will be reflected in our sixth annual sustainability and belonging report, which will be published next week, I invite you to read it and see how we continue driving positive change by integrating sustainable business practices into all facets of our operations. As always, I'd like to close with a tremendous thank you to the Taylor Morrison team for their hard work and dedication. I'm immensely proud of the commitment you show to our customers each other and our company each day. And I look forward to reporting the results of your efforts, as we move through the second half of the year. With that let's open the call to your questions. Operator, please provide our participants with instructions.
Operator: Thank you. [Operator Instructions] Our first question comes from Michael Rehaut of JPMorgan (NYSE:JPM). Michael, your line is now open.
Michael Rehaut: Great. Thanks so much for taking my questions, and congrats on the results.
Sheryl Palmer: Thanks, Michael.
Michael Rehaut: Yes. First question, I'd love to get the mechanisms and how you're thinking about the 10% plus closings growth over the next couple of years. I know you noted in your prepared remarks that you expect community count to meaningfully accelerate in terms of growth next year. I noticed that lot count was more or less flattish at least on a year-over-year basis total controlled lots up until the most or at least until the first quarter. So are we kind of -- should we expect maybe a running down a little bit of your lot controlled, and more importantly, the growth that we should expect if you're more or less at, or close to that desired sales pace is most of the volume growth over the next couple of years coming from the community count?
Sheryl Palmer: Yes and maybe I'll start and Erik can kick in on our land. Good morning, Michael. I think you have to look at both. It's going to come, as we said, we're estimating approximately 10% closing growth in each year in the coming years, and that will come through a combination of our long-term targets on pace, which will be in the low three and that's substantially different than what the company ran over the last many years somewhere in the mid-2s. At the same time, even though we're not prepared to give community count guidance for 2025 quite yet, I think we have leaned in and shared that you should expect to see community count growth next year and following, and I think that really is obviously the confidence we have in both our own and our controlled land. If you want to pick it up Erik? Answer
Erik Heuser: Yes. Hi, Mike. The 6.7 years of land supply is a little bit elevated and the percent control is also a bit elevated. And we're also seeing some good traction coming through the investment committee. So we're really focused, as we said in the prepared comments, we feel really good about the subscription level for 2025 and 2026. And so most of that activity is really dedicated to fulfilling 2027 and 2028, that's the primary focus for the investment committee today. So, I would actually say, we feel pretty good about the land supply balance for feeding that growth.
Michael Rehaut: Great. Great. That's good to hear. Secondly, wanted to shift the second question to the gross margins. Sheryl you mentioned in your opening remarks that real consistency over the last several quarters in the gross margin, which is really notable. And you expect that to continue into the back half of the year. Without obviously giving guidance for next year, you do have the long-term goal of low to mid-20's gross margins, which could more or less place if you're in that range looking at continuing that 24-ish type gross margins into next year. As you look at your backlog, as you look at your cost outlooks into next year, would there be any major factors that could drive next year's gross margin a little lower than what you're seeing this year outside of maybe any change material change in industry pricing trends let's say?
Sheryl Palmer: Do you want to take that Curt?
Curt VanHyfte: Yes. Hey, Mike. Yes. Generally speaking Mike, as you said, we're in pretty good position relative to our 2024 backlog and our margins as we look out for the rest of the year. When we look into 2025, I would just start with, we're a different company the results of the acquisition, the depth, the breadth of our business now, we've achieved scale, and we're getting benefit of that. So based on that, when you look at our long-term outlook, we're in a pretty good position relative to what we're looking at on a futuristic basis relative to our margin outlook. And as we said, we're not guiding to 2025 at this point, but we feel really good about the targets that we do have out there in the low to the mid-20% range. Are there headwinds out there? I think you've heard from some of our other peers that there is some headwinds relative to lot cost inflation and so we do expect to have some of that in our forward-look as well, but we still think within -- but still within the long-term targets of our margin profile that we just described.
Sheryl Palmer: Yes and maybe the only thing I'd add Curt, if you agree is, when you look out to our future backlog, we're already starting to book a healthy 2025 backlog, Michael. And generally, when you look at the difference between our to-be-built and our spec margins, there's as we've mentioned over the last few quarters, we're seeing a few 100 basis points of difference. So when we look out in '25 today, albeit just to start on the year, we get a lot of confidence on the continued trajectory of our move up business, our active adult business. So we generally will start the year with a much higher margin and then as we fill in each quarter that would generally come through our specs, which are primarily our first time buyers, probably 70% plus of our first time buyer business is inventory homes. So, it gives us where we sit today compared to prior years as Curt said, we feel really good.
Michael Rehaut: Great. Thanks so much for all the help. Appreciate it.
Sheryl Palmer: Thank you.
Operator: Our next question comes from Mike Dahl of RBC (TSX:RY) Capital Markets. Mike, your line is now open.
Mike Dahl: Good morning. Thanks for taking my questions.
Sheryl Palmer: Good morning.
Mike Dahl: Sheryl, maybe just to pick up on the spec dynamic for the first question, so you mentioned being disciplined on starts, but starts worth call it 10%-ish above the order pace this quarter 3.4 versus 3.1. Normally, you'd see the order pace tail off seasonally in the back half. So can you just talk maybe more specifically as you went through the second quarter and as you plan for the second half, how you're thinking about balancing your starts and spec pace here?
Sheryl Palmer: Yes, I'd say nothing really new here, Mike. I mean you're right, we definitely look to aligning our starts with our sales, slightly above our net sales as you noted, but completely consistent with our gross sales for the quarter. So I actually like that alignment. I think we've been running around this pace of 45, 55, 56, 55, one way or the other and I think you'll see that very consistent. It's really not a number that we plan for. It's really based on the consumer group that each community is targeting. And as I mentioned before to Michael, when we -- as you've seen our first-time buyer business continue to creep up over the last many quarters along with that is making sure we have the available inventory for those buyers. So as long as we continue to serve 45% plus of first-time buyers, you're going to see our inventory a little bit higher than you've seen it in the past. At the same time, we really love the balance of that to-be-built business. When I look at the difference and that's part of -- I know the difficulty in guiding honestly in like to ASP, because if I look at like my ASP in the first half of the year, my to-be-built were about 30% higher than my inventory. So as we fill in that spec, it obviously has a significant adjustment to our ASP. But I would expect in general, you'll see us running around, I don't see a significant shift in our consumer set when I look at the forward-looking community. So I don't expect a significant shift in our mix set of to-be-built and specs.
Erik Heuser: And Mike I would just maybe pile on there a little bit in Q1 we oversold our starts by over a couple of 100 units. And so we're kind of making up for some of that backlog that we sold in Q1 and Q2 as well.
Mike Dahl: Okay. Yes, that’s helpful. Thanks. Thanks for that reminder. Okay, and then shifting gears I mean look I think all the builders so far have come out and talked about hey maybe a little more momentum at least in traffic as June went on and it's tough to tell seasonally July is a weird month given the holiday and summer. But everyone seems a little more encouraged about July. We haven't really heard numbers about it. And if I look at some of the more high frequency data build our confidence was still weak even this morning mortgage purchase apps surprisingly weak despite rates coming down. So, maybe can you just help us like give a little quantification around as the quarter progressed, what the order trends looked like? And if you could talk more specifically about the recent weeks and put any numbers around that I think it would be helpful.
Sheryl Palmer: Yes, I can try without getting too specific Michael. What I would tell you is that we saw what I would call, kind of, normal seasonality in the quarter, the peak being April and slightly down from sequentially in May and June. Having said that, April I look back 10 years and April and May was our second best sales month over the last 10 years. So, just honestly quite strong. But as I mentioned in our prepared remarks, there's always a little bit of a lag effect. So, when we saw interest rates start moving up in May, we saw that come through with traffic that brought down June a bit. But once again June pretty strong when I look at over the last 10 years not second best, but top three, so not bad. But then as we saw rate start to move down we actually saw a corresponding increase in both our web traffic and our foot traffic. In fact our registered traffic for the quarter was up significantly year-over-year nearly 40%. When we look at July, I'd say we're now -- once again, I agree with you July is always a little bit of a funky month given the holiday and depending how the holiday starts, we had a very strong finish to June. And so given through the holiday week, it was a little bit slower. But since, then we're now benefiting from the increased traffic that we began to see in June. So, I'd say very consistent with long-term averages and expect to have a good July and summer.
Mike Dahl: Okay. Thanks Sheryl.
Operator: Our next question comes from Matthew Bouley of Barclays (LON:BARC). Matthew, your line is now open.
Matthew Bouley: Good morning. Good morning everyone. Yes, thanks for taking the questions. I guess I'd love to kind of drill down on the Florida and Texas commentary. Really helpful color there around understanding the competitive differentiation of your own communities and how much of a difference that makes. But obviously when there is that much kind of inventory nearby, that was helpful to quantify one community as a way to envision what might be happening in other places. I mean presumably that would still have some impact even on your own business. So, I'm just curious if you can unpack that a little bit. How is this uptick in inventory in these important markets going to impact or do you think will impact your pricing and incentive decisions over these next few months here? Thank you.
Erik Heuser: Hey Matthew, its Erik. Yes, thanks for the question. We've obviously spent some time on this. As mentioned in the prepared comments, rightful interest and maybe just to start briefly with some of the backdrop from a national perspective, it appears that about if you look at the number of houses listed relative to the overall housing stock it's about 1.5% relative to a normal 3%. So, I would start with the national perspective also in that this kind of a four months versus six months that we've seen. And as Sheryl mentioned, we are seeing some real seasonality come into play. And so that's actually been encouraging to look in the past in the rearview mirror and be able to gain some confidence at what normal looks like. And then lastly, I would just tell you that, resale movement can be a good thing. As I think we've shared in the past, about 30% of our buyers are coming from a 3% mortgage rate, because life just happens. And so that's the backdrop that I did want to share with you. Diving a little bit deeper relative to the MSAs, in the states that you mentioned, we are seeing most recently that actually the months of supply has come down as we think about January and February. So, we are monitoring that trend. And then…
Sheryl Palmer: And pretty substantially, right? I mean from February to where we are today.
Erik Heuser: Yes, kind of approaching four to more approaching three, right? Answer
Sheryl Palmer: Yes
Erik Heuser: So high 3s relative to high 2s. And as you mentioned the analysis we did in terms of our sites, if we look at that 3-mile radius around the sites that we studied in all of those markets, we can see that basically, our months of supply was 3.8 versus 4.4 for the overall MSA. So we feel good in terms of positioning within market. And then, as we take those eliminate those homes relative to type and size and price and vintage, it kind of drops the competitive set down to 18.5%. So, all to say, that we do think that it matters in terms of the differentiation within submarket, it matters that it's new homes. And eventually, if supply becomes unhealthy, it can have a pricing impact. We're not seeing that to date. I would say that, again, rightful interest, we're monitoring it and it appears to be more of a normalizing than a glut. So, it can happen, but we're not seeing that to date.
Sheryl Palmer: And I think, the only thing I pile along, and if you said it Erik, I apologize, it's just the preference we're starting to see in new versus resale and we're seeing it within our own shopper data, but we're also seeing it more globally where the consumer is really struggling. I think what the number one reason that consumers opted out of a resale purchase, was home inspections. And that obviously, contemplates the age of the average inventory we're seeing out there. Then obviously, you can very quickly move to the ability that we have to provide incentives that are very different from the resale market.
Erik Heuser: Yes. That in stuff with our shoppers, who are basically telling only about a third of our shoppers were saying that they're even considering resale, because of some of those reasons.
Sheryl Palmer: Lot of data on that.
Q – Matthew Bouley: Yes. No, very, very helpful color there. Thanks, Cheryl. Yes. And then -- so just kind of the second one, maybe just kind of touching on the near-term margins. I mean the guidance implies a very slight step up from the second quarter. I mean effectively, unchanged around 24% in the second half. Just curious to touch on the moving pieces, what's going the wrong direction, what's going the right direction, construction costs, land costs, incentives any kind of quantification on those moving pieces would be helpful. Thank you.
Curt VanHyfte: Sure, Matt. Let's start, overall, I would just start we've got pretty good visibility as I said earlier, into our backlog for this year. We're in a good position, with how many houses we have left to sell to close. So overall, we have real good line of sight whether it's Q3 and for the full year. But if you want to get a little more granular relative to some of the inputs, house costs for Q2 as an example we're pretty flat sequentially from Q1. So we didn't see a lot of movement there overall for the most part. For the rest of the year, we're expecting that same flattishness, if that's a word. We're seeing some things go up, we're seeing some things come down but overall, we're expecting that our house costs will be somewhat pretty stable, with again of course, some something that's going up and down. From a lot cost perspective, again, all those houses are essentially into the ground. We have visibility into how that's playing out here in the near-term. I think what we said back in Q1 was that from 2023 to 2024, we've got what mid-single digit lot cost inflation embedded into the guide for 2024. So, that's all already assumed in for 2024, from that perspective. So overall, like I said, we feel really good about where we're at with our guide for Q3 and the full year, based on the extended backlog that we have for the year.
Erik Heuser: And then, I agree Curt. And then maybe on the land side Matt, I know you mentioned land. I've always said, land is never easy and demand is greater than supply today. But if we look at some external and internal studies and surveys, we see that the word stable come out and so the market seems competitive but somewhat stable. And what that translates to is, kind of, maybe a mid to high single digit appreciation level in the land market, which results in flowing through our P&L at something of low single digits. And so we've been able to cover off a lot of any land inflation that we've seen because of the scaling of the business and the efficiencies we've realized.
Q – Matthew Bouley: Got it. Well, thanks everyone and good luck.
Sheryl Palmer: Thank you.
Curt VanHyfte: Thanks.
Operator: Thank you so much. Our next question comes from Carl Reichardt of BTIG. Carl, your line is now open.
Carl Reichardt: Thanks. Good morning, everybody. Thanks for taking the questions. I wanted to talk a little about cycle times. Sheryl, you've talked about being able to take the option count down, 60%; floor plan count down, 20%. You're talking about higher gross margins than you had pre-pandemic historically higher absorption rates, so mix adjusted cycle times. Is your sense that you're able to get houses vertical, or could be able to get them vertical faster than you did pre-pandemic? And then just sort of a side card of that, how do you feel about the labor market now headed into 2025 in terms of both price and the potential for shortages as we see a number of builders continue to move in the direction of focusing on volume over the next couple of years and store count growth being so significant for so many?
Sheryl Palmer: Yeah, it's a really interesting topic, Carl. I think you have to almost answer your second question before your first because you really do have to look at the competitive set in the labor market that we have today. And we could have a sidebar discussion around the work the industry is doing to enhance the labor environment and our building talent foundation and how we're bringing new labor into the market. But I think that skillset really does help us understand what the ultimate potential is. Certainly we're going to have a more efficient product profile we do today than we did years ago. We've certainly simplified the business all the things that I said and you repeated so I appreciate that very much. Today I'd say we're pretty close in most of our markets to pre-COVID cycle times. Can we pull more time out? We should be able to given the simplicity in the business. And certainly when you look at the mix of our overall shifts, so if I were to compare apples to apples I just don't want to get over my ski tips yet because that's where your second question, I think it's a bigger market issue and the quicker as an industry we continue to work and to solve for this and then we see the technological advances we're seeing from our national suppliers manufacturers. I think all of that plays, but it'd be hard to tell you how much and when to be quite honest.
Carl Reichardt: Okay. I appreciate that. Thank you for that answer. And then just turning to this last quarter, can you talk about sales incentives as a percentage of revenue and how that may have changed sequentially or year-over-year? And then along with that, you had mentioned Sheryl at the Joint Center for Housing Studies Conference in late June. You talked a little bit publicly about seeing a lack of urgency among consumers and that maybe there was a fear of the future versus just a mathematical problem. So really the bigger picture question is does elasticity still exist if you're aggressive with incentives or pricing? Is there a snap response in demand as you see it right now? Or are we looking at a situation that might be a little cloudier than that? Thanks so much.
Sheryl Palmer: Yeah, and I think Carl a couple of things on that. One, absolutely a point in time just as Erik and I have both talked about what happened with interest rates and inventory and the momentum we saw starting in May actually with pre-calls and stuff impacting June as it all settled out, not significantly different. It's interesting when I look at the different consumer groups, for example, I look at the resort lifestyle buyer. There's a lot going on in the market. You think about that buyer is not really affected by interest rates, but that buyer's probably more affected about activity in the stock market. And also in that same May time period we saw the Dow move fairly meaningfully. So there were a lot of things the election tends to affect that buyer group more than anything. I actually think our own offering our resort lifestyle offering and the stage of our communities and amenities coming online was as impactful as anything. So with all that in the rearview mirror, as I said, we've seen momentum pick back up incentives were actually down quarter-over-quarter and year-over-year. And I think you'll see that follow interest rates. I mean, honestly while rates were higher, we did what we had to do to help that first time buyer really qualify. And that's where we see the greatest impact. As you heard in my prepared remarks, a high majority of our first time buyers were able to take advantage of that forward commitment. So I do think they're traveling together, but given where we think we are today with fed commentary and the movement we've seen in rates, I would hope that we would see some continued improvement.
Carl Reichardt: I appreciate that. Thank you, Sheryl. Thanks all.
Sheryl Palmer: Thank you.
Operator: Our next question comes from Alan Ratner of Zelman & Associates. Alan, your line is now open.
Alan Ratner: Hey, guys. Good morning.
Sheryl Palmer: Good morning.
Alan Ratner: Thank you for all the detail and compliments to Erik and the team that put together the resale inventory analysis. I always look forward to your interesting and unique data analysis every quarter on these calls. So I think that that's certainly helpful snapshot and to what you're seeing on that front. My first question, and Sheryl you mentioned how it's difficult to forecast ASP as the business is shifting towards more specs. But I did want to drill in a little bit to your guidance on ASP, just to make sure I'm understanding the moving pieces there because year-to-date you've been right around $600,000. Your guidance for 3Q is also $600,000. Your full year range $600 to $610 implies a pretty wide range in the fourth quarter. And to hit the high end of that for example, I think would imply an ASP in the fourth quarter pushing $640, I'm guessing you're probably not going to tell us to model that out. But is there anything in your backlog or mix of business where we should expect to see a decent step up in closing price in the fourth quarter because that does have some implications for the run rate into 2025?
Curt VanHyfte: Yeah, Alan I'll try to unbundle that a little bit for you. Relative to what I said earlier relative to our line of sight for backlog, if you look at our just generally speaking at our backlog for everything for what's in the press release, it's a pretty significant number, right? So it all comes down to the mix of specs that are going to come into the fold that we're going to sell and close for the year. So the more specs we sell and close as we finish out the year, the lower the price will come down. So yes, you're right now it's elevated in Q4 based on the backlog that's in there. But as we dollar cost average more sales into that between now and the end of the year and the magnitude of how many that ends up being at the end of the day, that's why that is so elastic so to speak for the full year as we sit here today.
Sheryl Palmer: Yeah. And the only thing I'd add Curt is that range is so as Curt said, Alan that range is so important. If you think about what our backlog is for Q3 and Q4, those are generally our resort lifestyle highest priced houses that come with those additional lot premiums. They come with our additional options. I mean I look at our options that are approximately 2.5x in our resort lifestyle are company average. I look at our lot premiums in our resort lifestyle. They're nearly about 4x what they are in the company average. That's what fills our backlog up today. And as Curt suggested from here, it's all about where we sell the specs for the balance of the year. Same exact opportunity for 2025. Today, our backlog is completely to-be-built generally in our resort lifestyle business at a much higher ASP. And once again, if you go back to our to-be-build ASP is about 30% higher than our spec ASP, hopefully that helps the math.
Alan Ratner: Okay. That is helpful. And I guess it sounds like as long as the demand environment stays pretty stable for entry level spec that kind of the more recent run rate is probably what you would expect to see going forward as far as when that mixes into the closing price. Second question I'd love to drill in on cash flow a little bit. So the last two years you guys generated about a dollar of free cash for every dollar of net income which is the home builder holy grail that that a 100% conversion rate and I know a lot of builders have talked to that as far as far as a longer term target is concerned. Year-to-date it looks like from a free cash perspective you've had a bit of a deficit which is not unusual from a seasonal perspective, but we haven't seen seasonality in a while. So if I just try to back into your cash flow or implied cash flow guidance based on the net debt-to-cap range you gave for year end it does imply this year's cash generation will be significantly less than the last several years. At the same time your inventory turnover ratio is down a little bit year-on-year. So can you just talk through the moving pieces on cash generation and where you see that? You gave the longer term targets for margin and absorption but what should we think about as far as cash conversion is concerned?
Curt VanHyfte: Yes. Good question, Alan. Yes, as we look at it we when we just take a step back and we think about some of the growth targets that we kind of set out the 10% growth we've guided to an increase in land spend this year $2.3 billion to $2.5 billion. That's up from $1.8 billion last year. So that's the biggest driving factor there is we have taken our land spanned up year-over-year and so far year-to-date we've spent $1.2 billion in land so it's the function of increased land spend coupled with seasonality of closings. But as we look at between now and the end of the year we still expect to generate $300 million to $400 million of positive cash flow from operations. So we're going to be building on that here over the next two quarters as we round out the year. And then as we said we're not guiding to futuristic cash flow in 2025, but we've been on record saying that we're fans of that net debt in that 15% to 20% range overall from a leverage perspective.
Sheryl Palmer: And I would just add and Curt, Erik I hope you'd agree I just have a great deal of confidence on the focus of the organization on deal structure of the land we're bringing in. Erik talked about some of those details in his prepared remarks and so obviously our guidance would include a majority of cash today. But I would expect you're going to see continued improvement. The business is very focused on returns obviously and our ability to continue to structure the deals we're bringing in. So I think stay tuned you'll see more coming on that.
Alan Ratner: Really appreciate it. Thanks a lot.
Operator: [Operator Instructions] Our next question comes from Jay McCanless of Wedbush. Jay your line now open.
Jay McCanless: Thanks. Good morning, everyone. So one of your very large competitors in the active adult space talked about a little bit of weakness during calendar 2Q in the active adult segment. Would love to hear what you guys saw from that segment during the second quarter. And especially, given what you said a minute ago Sheryl that most of the backlog I think is going to be focused in that resort. And I'm assuming that includes some of the active adult consumers. Just trying to figure out if that consumer is weakening a little bit is that going to have an impact on full year closings?
Sheryl Palmer: Yes. Good question, Jay. I would tell you first of all the backlog I have a great deal of confidence in. You've heard about our deposit numbers and our somewhere around 60,000 in deposits. That's the company average. I assure you that our deposits for our resort lifestyle and they're synonymous active adults we tend to call it resort lifestyle one and the same. I think what we've seen is certainly the more seasonal patterns consistent with just all historic trends. I've been doing resort lifestyle active adult for darn close to 30 years. And you're right the last couple of years we haven't seen seasonality with this buyer. But I'd say number one we're back there. And then as I mentioned our overall portfolio somewhat impacted by amenity openings and lot inventory. But having said that Jay I look at our Naples business and our sales were two times what they were a year ago. And our Naples business is almost exclusively active adult. Our Sarasota business continues strong, not up basically flat year-over-year. So when I look at the business and I break it apart, certainly it was our slowest pace amongst our consumer set. But I don't really have any concerns about where we go from there. I continue to stay very bullish on that segment and some of the openings that we have coming. I mean nationalization of our Esplanade brand is honestly one of the many ways I think you'll see us continue to create synergies across the portfolio and not affected by interest rates. The other thing I really like about that business Jay is our, co-broke participation is about 25% less with our resort lifestyle business than our overall book of business.
Jay McCanless: Got it. Actually you're a mind reader, Sheryl that was the next place I was going to go. Just SG&A dollars have been higher than we expected the last couple quarters and was going to ask about co-broke going through the rest of the year. Do you guys expect it to remain high? And is that a risk to the SG&A, guidance for the full year?
Curt VanHyfte: Yeah. Hey Jay, I'll take that. From an SG&A standpoint, yeah, we were a little high in Q2 for a couple of things; some from payroll related costs some broker expenses et cetera. We had a little bit increase in advertising and just a few things in the sales and marketing front based on the environment we're in. But with that said, as we look forward for the rest of the year our plan is in place. It gives us the confidence to continue to stick with that high 9% range, as we will close more homes down in the back half of the year and get some more increased leverage out of that. So nothing that we see today that would limit our ability to achieve the guidance around SG&A for the full year.
Jay McCanless: Okay. That's great. And then just quickly, could you talk about what percentage of communities you were able to raise prices during 2Q?
Sheryl Palmer: Yeah. it was just about half, Jay. I would say about half we -- just over half we raised prices. I think there was about 10% 11% we reduced prices or took up incentives, but all in all healthy well over 40%, when I netted up.
Jay McCanless: Okay. Great. Thanks for taking my questions.
Sheryl Palmer: Thank you.
Curt VanHyfte: Thanks Jay.
Operator: Thank you so much. Our next question comes from Ken Zenner of Seaport Research Partners. Ken, your line is now open.
Ken Zenner: Good morning, everybody.
Sheryl Palmer: Good morning.
Ken Zenner: Good morning all. I really appreciate the comments around 24% gross margins. Now longer term might be a bit lower. I'd just like to look at it two different ways. Can you clarify perhaps the margin difference between your spec and backlog that you're seeing and if there's that proper context for that?
Curt VanHyfte: Yeah. I mean we do have a differential Jay of our spec and what I'll call, our to-be-built business. It's several 100 kind of what we'll call basis points. Oh, Ken sorry, I'm sorry Ken.
Ken Zenner: Yeah. It's okay.
Curt VanHyfte: Yeah.
Ken Zenner: It's okay.
Curt VanHyfte: It's between our spec and to-be-built business there's about a like I said a several 100 basis point margin differential which is our historical norms relative to that. And of course we do have maybe some outsized margin in our active adult business where that spread might get a little bit bigger. If you just look at the isolated instances relative to our resort lifestyle business that might grow a little bit, but on average we're around that several 100 basis point threshold between our spec and to-be-built. And so when you ask backlog the spec I would compare it between our to-be-built and our spec is what we track.
Sheryl Palmer: And the spec is going to …
Ken Zenner: Perfect.
Sheryl Palmer: …continue to be highly dependent Ken, on interest rates, right?
Curt VanHyfte: Yeah.
Sheryl Palmer: Because once again go back to the 70% of our first-time buyers take a spec home. Those are the ones that we probably lean in a little heavier to help them get to a payment that they can manage. So historically Curt is right, we've seen that several 100 basis point when interest rates were lower honestly they were on top of each other. So the interest rates are really going to drive that differential.
Ken Zenner: Right. And I wonder if we could take that to your segment reporting where if you're talking about 24% now perhaps lower long-term, but you have a spread there east to west in terms of the margin. Do we see the spec mix, a lot different by region? You talked about I think Naples being exclusively lifestyle resorts. So how does the spec play into the regional or the segment margin difference that we see today? And if you can comment on that broadly. Thank you.
Sheryl Palmer: Yes. It's more consumer to be honest, than it is by market. I mean, I think we had and correct me if I'm wrong Curt, we had our highest penetration of spec closings in the west in Q2, which actually put a little bit more pressure on our margin. But if you think about where we have the highest penetration of specs, that would be markets, where we serve that first time buyer like Houston, like Orlando, like Austin where they take a disproportionate their consumer mix is disproportionately weighted, for that first time buyer. If I think about our to-be-built, those are going to be most heavily weighted in our Phoenix market. Not necessarily that's probably the one exception, not necessarily around resort lifestyle, but a very heavily first second move up, Sarasota, Naples those are going to be your more heavily weighted to-be-built buyers. But I probably think about it based on consumer versus necessarily geography.
Curt VanHyfte: No, I think that's fair.
Ken Zenner: And then does that account for the margin difference then that we see by region, given the spread or…
Sheryl Palmer: That's like, it's a waiting right for the west.
Curt VanHyfte: Yes, it just inherently can in the west. It's just a much different environment in the west coast than it is throughout the rest of the country. It's much more competitive from a land standpoint. Every time we show up to buy a piece of land, you've got several bidders on the same parcel. So that's why we see the compression in the margins, on the west coast relative to the other parts of the country.
Ken Zenner: Thank you very much.
Sheryl Palmer: Thank you.
Operator: Thank you. Our next question comes from Alex Barron of Housing Research Center. Alex, your line is now open.
Q – Alex Barron: Yes. Thank you. I guess my main question was, assuming interest rates start to come down from the fed in the coming months, do you guys see that as an opportunity to basically, reduce your incentive and improve your margin or maintain the incentive and try to increase your sales pace by offering, a lower chasing down the interest rates?
Sheryl Palmer: Yes, I think you continue to see some level of movement. It depends I think also why interest rates are coming down. To be honest, Alex, what's going on in the macro environment, how pinched is the consumer with broad inflationary pressures? So, once again, I don't think there's a black and white, but generally I would suggest that if interest rates come down, there will be some added savings in our incentives and that's why we've seen some movement. I mean right now, we're just working to meet the customer needs through these very focused mortgage solutions. And when lower rates have been needed through the quarter, we've leveraged those forward commitments and those tend to cost a little bit more, with those permanent buy downs and some customers just need help maybe with cash to close. So we focus our incentives on closing costs. So, it really depends, but if I had to give you just a single answer, I would think you'll see, some benefit as rates drop just like we did last year when rates came down.
Q – Alex Barron: Got it. And then as far as your Indiana acquisition, I was just curious, if you had the number as far as units that they delivered in the previous 12 months before you acquired them.
Sheryl Palmer: I don't think, we have that right here in front of us at -- for the 12-month period, April to April, but we can certainly get back with you on that.
Q – Alex Barron: Okay. Thank you so much.
Sheryl Palmer: Thank you.
Operator: Thank you so much. We currently have no further questions, so I'll hand back to Sheryl Palmer for closing remarks.
Sheryl Palmer: Thank you all for joining us today. Appreciate everyone's time and look forward to seeing you next quarter, and continuing to report on our progress. Have a great day.
Operator: This concludes today's call. Thank you to everyone for joining. You may now disconnect your lines.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.