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CEO James Brickman explained that tariff impacts have been minimal so far but are a "wildcard." President & COO Jed Dolson noted that Trophy brand incentives are in line with the company average. Brickman added that incentives are primarily driven by location quality, increasing in perimeter areas. The executives confirmed they are seeing opportunities from dropped deals in the land market, particularly for build-for-rent projects, but remain highly selective. Brickman also clarified that share repurchases can be "lumpy" because the company prioritizes deploying large chunks of capital for unique, complex land acquisitions that peers often avoid.

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President and COO Jed Dolson noted that early 2025 sales were similar to the prior year, with incentives ticking down. CEO James Brickman and Jed Dolson explained the increased development spend is for land acquired in 2023-2024, with community count growth expected soon. CFO Rick Costello discussed SG&A, highlighting the long-term benefit from the efficient Trophy brand but noting the delayed impact of current investments. Jed Dolson confirmed a similar 50/50 brand mix is projected for 2025.

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CEO Jim Brickman described October business as 'good' but declined to provide specific monthly data to avoid setting a precedent. CFO Rick Costello suggested a 2-to-3 quarter lag between starts and deliveries is a more accurate forecast due to potential volatility in finished inventory levels. Regarding cash flow, Costello noted that significant land closings and a large Q4 tax payment might necessitate borrowing on their credit lines, as the company is on track for its $700 million land spend for the year.

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CEO Eric Lipar confirmed that buyer concerns go beyond rates, as today's more financially savvy buyers are also weighing broader economic uncertainty. He expressed confidence that full-year targets are achievable, supported by two key factors: the expected performance improvement from the large number of salespeople hired over the last year as they gain experience, and the sheer volume contribution from new community openings planned for the remainder of the year.

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CFO Charles Merdian clarified that the 'other income' was primarily $4.5 million from land sales and that this line item is expected to be lumpy and unpredictable. CEO Eric Lipar addressed compensation, explaining that the commission percentage for salespeople remains unchanged. Because commissions are paid on total revenue, the higher average selling price helps maintain salesperson income levels, even with lower unit volume per community.

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CFO Hilla Sferruzza explained that a large portion of their off-balance-sheet lots are structured deals with land sellers, not costly arrangements with third-party land bankers. CEO Phillippe Lord stated that the slack in the labor market is broad-based and not concentrated in any specific region or trade, describing the situation as 'status quo' across the board.

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CEO Phillippe Lord stated that horizontal development cycle times remain elevated at roughly double pre-COVID levels, though they have stabilized, making them more predictable. CFO Hilla Sferruzza estimated that move-down buyers, including first-time move-up, constitute about one-third of their total business.

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CEO Phillippe Lord described the Elliott deal as highly strategic for entering the Gulf Coast, a target region. He emphasized that 'Plan A' remains organic growth to become a top-three builder in existing markets, which alone could achieve the 20,000-unit goal. CFO Hilla Sferruzza added that the original 20,000-unit target was based entirely on organic growth, making any M&A incremental to that plan.

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Sheryl Palmer, Chairman and CEO, explained that buyer concerns vary by demographic, from affordability for first-time buyers to broader economic uncertainty for move-up buyers. Regarding the West, she attributed the softness to very tough year-over-year comparisons and provided market-specific details, including inventory buildup in California and rate sensitivity in Denver, while noting Phoenix managed its pace and price well.

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Chief Corporate Operations Officer Erik Heuser explained that increased capital in the space has made land banking costs more attractive. He provided a specific example from a recent facility where they accepted a 197 basis point hit to gross margin to achieve a 750 basis point improvement in return, representing a 3.8x trade-off. He also emphasized that seller financing remains another key tool for controlling lots.

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An executive confirmed the margin beat was primarily due to a favorable geographic mix, with stronger-than-expected closings in the West. Chairman and CEO Sheryl Palmer agreed that exceeding the current ROE target is a realistic possibility given the company's transformation, including its land-light strategy and operational efficiencies. She noted a more explicit long-term outlook would be shared at a future Investor Day.

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CFO John Dixon explained that the Century Complete brand faces less direct competition in its markets, leading to more stable absorption. CEO Robert Francescon added that the Texas market was a notable underperformer, which dragged down the core brand's average. Regarding sales strategy, Robert Francescon confirmed they are using both price reductions and interest rate buydowns on completed, unsold homes, and have factored in up to 200 basis points of additional incentives for Q2.

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Financial Officer John Dixon stated there are no significant differences in incentives between the two brands, though Century Complete might have slightly more on the mortgage financing side. He noted that over 60% of homes were sold and closed in Q4, a figure he expects to remain stable. Dixon also confirmed the 2025 delivery guidance does not assume any new M&A and clarified that impairments on owned land are in cost of sales, while pre-acquisition feasibility costs are in other income/expense.

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Co-CEO Robert Francescon stated the controlled lot increase is a mix of finished lot options and land for self-development. Chairman and Co-CEO Dale Francescon clarified that the 10% growth target is primarily organic, driven by taking market share from private homebuilders who face capital constraints. He added that while they are always looking at opportunities, the focus is on deepening their presence in existing markets.

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EVP and COO Michael Murray noted strong demand from first-time homebuyers and in supply-constrained markets. President and CEO Paul Romanowski stated that the primary incentive tool remains interest rate buydowns, as they are more cost-effective than price cuts, which are used selectively at the community level. Executive Jessica Hansen added that the usage of rate buydowns has increased year-over-year.

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CFO Bill Wheat acknowledged recent investments in market and community count growth, expecting the homebuilding SG&A percentage in fiscal '25 to be slightly higher than '24, with leverage expected in '26 and beyond. COO Michael Murray and Executive Jessica Hansen clarified that 65% of Q1 closings were on lots from third-party developers or Forestar, and the company prioritizes risk transfer in its contracts over traditional land banking.

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EVP & COO Michael Murray reported that hurricane impacts were minimal, causing only minor timing delays. President & CEO Paul Romanowski noted no significant changes in traffic or commissions from the NAR settlement yet. EVP & CFO Bill Wheat explained that while they have been investing in growth, he expects community count growth to moderate to mid-single-digits, which should improve SG&A leverage over time.

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President and CEO Anthony Oxley explained the guidance change is prospective, based on community-level inventory, and that he does not anticipate significant margin changes. COO Mark Walker noted that land sellers are offering more flexibility on terms but not on price. CFO James Allen clarified that Forestar allows homebuilders to assign contracts to lot bankers, so the pricing and returns are identical to a direct sale to the builder.

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Chief Operating Officer Mark Walker confirmed that development costs have been stable for the past 12 months and cycle times have improved, though government entitlement processes still cause delays. Chief Financial Officer James Allen stated that SG&A expense is expected to moderate but remain in the high single digits for the year. Allen and executive Anthony Oxley attributed the high average sales price to a specific high-priced infill project, adding that they anticipate low to mid-single-digit price escalation going forward.

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Executive Katie Smith stated that lot sales to D.R. Horton will remain in the 85-90% range in the near term. COO Mark Walker detailed that while grading takes about 120 days, government approvals have extended overall cycle times, though they have seen a 90-day improvement from the peak. He also noted that the lot price to homebuilder ASP ratio has remained consistent in the mid-to-high 20s.

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President and COO Tom Mitchell stated that Design Studio revenue should grow in line with overall homebuilding operations and that it achieves a high gross margin target of 40%. He noted the company's mix would shift slightly closer to 50% spec and 50% build-to-order. CFO Glenn Keeler added that about half of their non-JV optioned lots are via land bank and that he expects downward pressure on land bank pricing due to market competition.

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CFO Glenn Keeler attributed the SG&A guidance range (10.5% to 10.9%) to the timing of certain expenses and costs associated with ramping up its three new startup divisions. CEO Douglas Bauer confirmed that the company is leaning heavily into its new expansion markets in Utah, Orlando, and the Carolinas, where its premium brand is being well-received, suggesting greenfield growth is the primary focus over acquisitions.

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CEO Dale Asplund stated that the development-to-maintenance conversion rate is improving and is higher than the mid-teens level reported last year, calling it the 'tip of the spear' for the maintenance group. He expressed strong confidence in the development business's ability to grow in any economic environment by expanding into new markets and leveraging its industry-leading team.

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