Century Communities - Q4 2023

Transcript

Operator (participant)

Greetings! Welcome to Century Communities' Q4 and Full Year 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this conference call is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.

Tyler J. Langton (SVP of Investor Relations)

Good afternoon. Thank you for joining us today for Century Communities' earnings conference call for the Q4 and full year 2023. Before the call begins, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements. Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's latest 10-K, as supplemented by our latest 10-Q and other SEC filings. We undertake no duty to update our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call.

The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer, Rob Francescon, Co-Chief Executive Officer and President, and Dave Messenger, Chief Financial Officer. Following today's prepared remarks, we will open the line up for questions. With that, I'll turn the call over to Dale.

Dale Francescon (Chairman and Co-CEO)

Thank you, Tyler, and good afternoon, everyone. I'd like to begin by saying that we are pleased not only with our results, but also with the meaningful improvement that we have seen in the housing market in general and our business in particular. Our orders and deliveries exceeded our expectations in the Q4, and 2023 was our 21st consecutive year of profitability. We are optimistic about our outlook for 2024, given both the progress Century made over the course of 2023 and the underlying strength of the housing market. In the Q4, our deliveries of 3,157 homes were a quarterly record and increased by 9% versus the prior year period.

On a quarter-over-quarter basis, our deliveries increased by 39% and grew sequentially for the third quarter in a row as we continued to benefit from improved cycle times and our increased level of home starts, which began in the Q1 of 2023. On the back of these higher deliveries, our Q4 revenues were $1.2 billion, a 36% sequential increase, and our highest level since the Q4 of 2021. Diluted earnings per share of $2.83 increased for the fourth sequential quarter and represented an improvement of 15% over year-ago levels. For the full year of 2023, we delivered 9,568 homes and generated home sales revenues of $3.6 billion, exceeding the upper end of our guidance for both deliveries and home sales revenues.

Our book value per share increased by 11% on a year-over-year basis to $75.12, a company record, and we ended the year with 22.4% net leverage, the lowest year-end level in our history as a public company. Our Q4 net new contracts increased 86% to 2,340 homes compared to the Q4 of 2022. On a sequential basis, our net orders in the Q4 increased by 9%. This level of sales activity was much stronger than we were anticipating, as our Q4 net orders have experienced an average 10% sequential decline in each of the last four years. January has continued to see strength with our sales more than 30% ahead of the prior year's January.

Regardless of the market served, the Century Communities and Century Complete brands target building and selling affordable homes with more than 90% of our Q4 deliveries priced below FHA limits. In addition to that affordability, both brands build nearly 100% of their homes on a spec basis, which allows for direct cost control, availability of quick move-ins, and buyer certainty of financing. Our focus on affordability positions us well for future growth and continued success as we can target the widest range of potential home buyers. Our average sales price of $376,000 is among the lowest of the publicly traded home builders, while Century Complete's average sales price came in at $258,000 this quarter. Additionally, through our Century Complete business, we have developed an expertise in entering and operating in secondary markets where there is less competition from the public home builders-...

where we believe we can take share from smaller private builders that are more capital-constrained and have higher development and construction costs. As a reminder, our Century Complete business only acquires finished lots and typically on a just-in-time basis. Last week, we announced the strategic acquisition of the assets of Landmark Homes of Tennessee, which will grow Century's already sizable presence in the greater Nashville market through the addition of 6 active Landmark Homes communities. Importantly, this transaction provides us with a pipeline of controlled lots that will be delivered to us in the future as land development is completed, and furthers our goal of increasing market share throughout and beyond our 18-state geographic footprint through the opportunistic acquisition of other home builders to augment the organic expansion of our land portfolio.

In closing, I want to thank all of our team members for their hard work and dedication that drove significant improvements in our business in 2023, and that positioned Century for continued success in 2024 and beyond. I'll now turn the call over to Rob to discuss our operations and land position in more detail.

Rob Francescon (Co-CEO and President)

Thank you, Dale, and good afternoon, everyone. As expected, incentives on closed homes increased to roughly 800 basis points in the Q4 of 2023, up from over 600 basis points in the third quarter. These higher costs were primarily due to the increased cost of mortgage rate buydowns in the quarter. Interest rate buydowns continue to be the most important incentive for our customers, given their ability to significantly lower monthly payments, a key focus for our entry-level buyers. With the recent decline in interest rates, we've been able to pull back on our level of incentives on new orders in December and in January. 2023 saw our team shorten cycle times, control direct construction costs, and grow our land pipeline and community count.

During the Q4, our cycle times further improved, putting us in a position that we can now typically start and complete homes in a normal 4-5-month time frame. We also had continued success in controlling our costs in the Q4. On a sequential basis, we saw a further 1% reduction in our direct construction costs on the homes we started, even with the continued strength in the housing market. On the land front, we ended the Q4 with approximately 74,000 owned and controlled lots, an 8% sequential improvement and 39% year-over-year increase. The higher lot count this year was driven entirely by an increase in our controlled lots, which accounted for 59% of our total lots in the Q4, with our number of owned lots remaining relatively static for the eighth consecutive quarter.

Additionally, at year-end, Texas and the Southeast accounted for roughly 50% of our total lot count, up from 43% at year-end 2022, and reflective of our strategy to grow our presence in these attractive markets that are benefiting from relative affordability and strong employment and population growth. Combined with Century Complete, these more affordable markets comprise nearly 75% of our owned and controlled lot land supply. We ended 2023 with a community count of 251, the second-highest level in our company's history, and an increase of 21% versus year-ago levels, with every region we operate in experiencing growth.

Century Complete accounted for over 40% of our total community count and 37% of total deliveries in 2023, while the Southeast and Texas combined accounted for close to 30% of our total community count and over 30% of total deliveries for the year. In summary, our year-end 2023 community count of 251 and total owned and controlled lots of nearly 74,000 gives us confidence that 2024 will be a growth year for us. I'll now turn the call over to Dave to discuss our financial results in more detail.

Dave Messenger (CFO)

Thank you, Rob. During the Q4 of 2023, pre-tax income was $126.1 million, and net income was $91.3 million, or $2.83 per diluted share, a 15% year-over-year increase. EBITDA for the quarter was $145.2 million, a 20% increase over year-ago levels. Revenues for the Q4 were $1.2 billion, up 36% sequentially, and 2% versus the prior year's quarter. Our record fourth quarter deliveries of 3,157 homes increased 39% on a sequential basis and by 9% versus prior year levels. For the Q1 2024, we expect our deliveries to see their typical seasonal decline. As a reminder, the Q1 typically represents the low point for our deliveries during the year, with Q1 deliveries having accounted for a little over 20% of our full-year deliveries on average over the past 5 years.

Our average sale price of $376,000 in the Q4 decreased by 2% on a sequential basis, mainly due to higher levels of incentive and mix, as Century Complete accounted for 39% of Q4 deliveries versus 36% in the third quarter of 2023. At quarter end, our backlog of sold homes was 1,070, valued at $401 million, with an average price of $375,000. This is the direct result of intentionally selling homes later in the construction process. In the Q4, adjusted homebuilding gross margin percentage was 23%, compared to 19.8% in the Q4 of 2022. Homebuilding gross margin was 21.6% compared to 17.6% in the prior year quarter.

As expected, our gross margins decreased sequentially in the Q4, primarily due to higher levels of incentives. Looking out to 2024, we expect to be able to reduce our levels of incentives versus Q4 2023 levels. SG&A, as a percent of home sales revenue, was 11.1% in the Q4, compared to 9.5% in the prior year. The largest driver of this year-over-year increase was more normalized commission rates on home sales. For the full year 2023, our SG&A was 12.4% versus 9.8% in the prior year, being impacted by higher commission rates, lower home sales revenues due to decreased homes closed at a lower ASP, and a significant number of new communities that we opened in 2023.

For 2024, we expect our SG&A as a percent of home sales revenues to decline on a year-over-year basis as we look to grow our deliveries and keep our fixed levels of G&A relatively constant. In the Q4, our tax rate was 27.6%, compared to 22.4% in the prior year quarter, and 26.1% for the full year 2023. The increase in our annual effective rate in 2023 as compared to 2022, was primarily driven by a reduced number of homes qualifying for 45L credits. We expect our full year tax rate for 2024 to be similar to the full year 2023 levels.

Our net home building debt to net capital ratio decreased to 22.4% compared to 23.5% in the prior year quarter, and represented the lowest year-end level in our history as a public company. Our home building debt to capital ratio decreased to 29.9% at quarter end, compared to 32% at the end of the same period last year. During the quarter, we maintained our quarterly cash dividend at $0.23 per share and ended the quarter with $2.4 billion in stockholders' equity, $1.1 billion in total liquidity, and $328 million in cash. At 12/31, we had no borrowings outstanding on our $800 million unsecured revolving credit facility that does not mature until April 2026.

Additionally, we have no senior debt maturities until June of 2027, providing us ample flexibility with our leverage management. Home buyers are exhibiting strong demand for affordable new homes, our cycle times have returned to historical levels, and further growth in our community count is anticipated. Accordingly, we expect our full year 2024 deliveries to be in the range of 10,000-11,000 homes, and home sales revenues to be in the range of $3.8 billion-$4.2 billion. With that, I'll open the line for questions. Operator?

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Carl Reichardt with BTIG. Please go ahead.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Thanks. Good afternoon, gentlemen.

Dave Messenger (CFO)

Good afternoon.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Good afternoon. David, just got to my question at the very end on community count. Obviously, the growth, 2023 was super strong. So can you talk a little bit how you, how you plan to lay it out in, in 2024? I'm assuming it's slower. Is there a cadence to the community count that you expect to be front-end or back-end loaded in terms of new stores? And if you can give us a sense of the growth, it would be helpful.

Dave Messenger (CFO)

Yeah, I think that, you know, as we've been talking, we wanted to see 2023 as, you know, a significant amount of growth. We invested a lot of capital in the land to get to that 250, and we want that to be our new plateau, kind of the new jumping off point for the company going forward. We do expect to be growing community count. It would be, you know, probably you'd see more of that growth come online, you know, in Q3 as we're finishing getting communities out of the ground in the first half of this year and start looking for sales in that Q3 timeframe.

Right now, we don't have a guidance range out there, but we do expect to see community count at a slower pace than 25% year-over-year, but we do have land and assets that we wanna get into production and increase that growth going forward.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Okay. Thanks, Dave. And then, also just on the rapidity with which you turned your backlog this quarter, recognizing business improved and you had inventory ready to go. So as you look... And your cycle times have normalized, too. So when you talked about we're trying to sell homes later in construction process, like on average, between taking the order and closing the house, what's your timeframe? And can you tell me what percentage of homes in the Q4 you both saw orders and delivery within that quarter? Thanks.

Dave Messenger (CFO)

I'm sorry, can you repeat the last part of that question? I've got the first part in terms of how fast we're returning.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Correct. Yeah. The last one was, if you look at your delivery volume in Q4, what percentage of those deliveries did you have ordered and closed in that same quarter, in the Q4?

Dale Francescon (Chairman and Co-CEO)

Well, you can see that from our backlog conversion rate, we had a significant amount that got sold and closed during the quarter. I believe we turned our backlog, not quite 170%. It's like 167%, in the Q4. So obviously, there was a significant amount of homes that were sold and closed during that period. And given the amount of time that we have between selling and closing, it's typically about a quarter. You know, a few months that we're able to sell and close a home, and, you know, just depending on where it is in the process.

Obviously, quick move-in homes these days have been in fashion, and so people have been able to find those on our website and been able to sell and close homes in the Q4.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Okay, so a quarter turn is kind of what you're back to that normal rate after having flushed through inventory this quarter. Okay. And then last question, sorry to add one more. Just on the acquisition, I think we've asked before, and maybe all of you guys can talk about what the environment looks like for private company acquisitions. We started to see a few crop up, but a number of builders now have things loosened up? Are there particular places that you're especially interested in, beyond Tennessee? Thanks.

Dale Francescon (Chairman and Co-CEO)

Yeah, Carl. We definitely have seen more M&A offerings, and we expect that that's gonna continue. You know, part of it is when you look at the private builders, the capital constraints are starting to become impactful to them. As well as you just look at it, that in many cases, the people who founded the business are starting to age a bit, and they'd like to be able to liquidate their holdings. For example, in the situation that we found ourselves in, in Nashville, where we found a, you know, a great company that had been in business for 30 years, and they, they've now become our land development source as we go forward. We have an ongoing relationship with them.

It was one of their expertise, and they wanted to exit the home building business but stay and keep their hand in land and land development. And so we have an ongoing relationship with them there. And so, you know, from our standpoint, we find that to be, you know, a very valuable thing, that we can create those ongoing relationships. In terms of markets, you know, we really look at M&A at this point, as really opportunistic abilities to enhance our organic portfolio of land. In terms of voids in our market, the only ones that we really have, we'd like a higher presence within Florida. We're there throughout Florida in our Century Complete brand, but on our Communities brand, we're only in Jacksonville.

You know, Florida, our experience has been very positive, and, you know, we'd like to expand our presence there, and M&A would be one way to do that.

Carl Reichardt (Managing Director and Senior Equity Research Analyst)

Great. I appreciate the answers, guys. Thanks so much.

Dale Francescon (Chairman and Co-CEO)

You're welcome. Thank you.

Operator (participant)

The next question is from Jay McCanless with Wedbush Securities. Please go ahead.

Jay McCanless (Managing Director of Equity Research)

Hey, good afternoon, everyone. Great quarter.

Dale Francescon (Chairman and Co-CEO)

Thanks, Jay.

Jay McCanless (Managing Director of Equity Research)

The good news on January being up 30%, I guess, when in 2023 did you guys start to see the turn? Just wondering when the comps are gonna get harder from a year-over-year perspective.

Dale Francescon (Chairman and Co-CEO)

I think, I think that, you know, we probably started seeing a turn, midway, you know, Q2. If you're thinking, 2023 is we started out the year with relatively high interest rates. We saw some interest rate relief as we got into kind of March and April. We started seeing a pickup in sales, and then it really kind of bounced around. So I think comps, based on any given month, may be hard or light, just given on where we were and where interest rates were at that given time of last year.

Jay McCanless (Managing Director of Equity Research)

Okay, thanks for that. And then I guess the other question, if you're bringing incentives down, I guess, what's more impactful right now, the volume that you're generating or the incentives coming down? Just trying to think about what Q1 gross margin would look like relative to what you put up in the Q4.

Dale Francescon (Chairman and Co-CEO)

And I think, you know, while we don't have guidance out there on margins, we're obviously thinking that as incentives are getting pulled back, we think there's some stability to that gross margin line. And, you know, heading into the year, I don't think we're not anticipating it falling like it did from Q4 to Q3.

Jay McCanless (Managing Director of Equity Research)

Okay. Okay, great. That's all I had. I'll get back in queue. Thank you.

Dale Francescon (Chairman and Co-CEO)

Great. Thanks.

Operator (participant)

The next question is from Alex Rygiel with B. Riley FBR. Please go ahead.

Alex Rygiel (Managing Director and Senior Equity Research Analyst)

Thanks. A great quarter, gentlemen. How should we think about, Century Complete growth in 2024 versus, the base business?

Dale Francescon (Chairman and Co-CEO)

You know, our Century Complete business has, you know, for quite some time, it was roughly a third of our volume. We moved it up to 35%-36%. We're now just under 40%. It's the type of thing that because we only buy finished lots, and we're typically buying them just in time, some of our constraints on growing that business is impacted by some of our land development partners and the timing in which they're able to complete and deliver lots to us. But as we look at it right now, we're just under 40% of our overall business in terms of units on Century Complete.

As we've said, we'd ideally like to see it get to 50%, but as the community side continues to grow, that becomes harder to make Century Complete 50%. But we're very happy with it at the point that it currently is.

Alex Rygiel (Managing Director and Senior Equity Research Analyst)

And then, is there a magical rate right now that's really getting your home buyers active?

Dave Messenger (CFO)

I don't know if there's a magical rate. I know that I think we've talked about that in the past. I'd say right now, as buyers have seen rate, the overall rates come down, they are exhibiting more confidence, and we're seeing that demand come out to a marketplace. And so while there may be individual buydowns that occur, you know, on a closing table, like, which always occurs, I think that today we're just seeing the fact that the macro economy and the macro interest rate levels have been coming down, buyers are more encouraged about going out and buying that house. So I don't know that I would say there's definitely a magic rate out there at the moment.

Alex Rygiel (Managing Director and Senior Equity Research Analyst)

Well, thank you.

Operator (participant)

The next question is from Jesse Lederman with Zelman & Associates. Please go ahead.

Jesse Lederman (Director of Research and Securities)

Hey, thanks for taking my question, and congrats on the really strong end to the year.

Dave Messenger (CFO)

Hey, thanks, Jesse.

Jesse Lederman (Director of Research and Securities)

My first question is just a follow-up on the Century Complete brand. Can you remind us if there's any gross margin or return differential between that, the Century Complete product and the Communities brand?

Dave Messenger (CFO)

In terms of gross margin, because we're only buying finished lots, so we really have no land profit built into the margins. The margins tend to be structurally a bit lower. On the flip side, because we are not carrying land and developing land, the returns are significantly higher.

Jesse Lederman (Director of Research and Securities)

Got it. Yeah, that makes sense. And then just a quick follow-up on that. Are you seeing any... I mean, you talked about the constraint there in terms of your developer, you know, you're kind of at the mercy of your developers. Can you talk about maybe what they're seeing, or what you're seeing from them in terms of their ability to, I guess, financing and, you know, continuing the development process?

Dave Messenger (CFO)

Yeah.

Rob Francescon (Co-CEO and President)

You know, obviously, financing has tightened up in the last 12 months on that, or more. But when we look at it, the stronger developers have been able to figure out workarounds, whether they can get financing or figure out other ways to fund their projects, as well as our structure sometimes on our optioned lots on how we'll do things. So we've been able to navigate that, but clearly, as a general statement, it is tighter from a financing front for the land development communities, and so we're continuing to source good partners in that daily, and we're getting through that fine, but it has tightened up.

Jesse Lederman (Director of Research and Securities)

That's helpful. One more, if I may just-

Rob Francescon (Co-CEO and President)

One other thing, though, on a positive side, we've seen-

Jesse Lederman (Director of Research and Securities)

Yeah

Rob Francescon (Co-CEO and President)

A flattening of increases in L.D. costs, and so with that, where we were seeing rampant increases in the past, we've seen a flattening now, so that's a good thing going forward.

Jesse Lederman (Director of Research and Securities)

That's great. It's very encouraging. Generally, spec builders have a higher inventory turnover ratio, and you're hovering around 1 times, which is a bit below the peer group. You know, now that your cycle times are improving and you're on more consistent start cadence since the beginning of the year, do you have internal targets that you're striving for in terms of working capital as a percentage of revenue or inventory turnover, that you discuss internally to drive the business?

Dave Messenger (CFO)

Not to try to avoid your question, but yes, we obviously have a variety of internal metrics, internal hurdles that we're looking at, everything from the time that we are reviewing land deals to when we're doing starts for homes and opening new communities, but it's nothing that we've published or put out there right now.

Jesse Lederman (Director of Research and Securities)

Okay, understood. Thanks for all the color.

Dave Messenger (CFO)

Okay. Thank you.

Rob Francescon (Co-CEO and President)

Thanks, Jesse.

Operator (participant)

The next question is from Michael Rehaut with JP Morgan. Please go ahead.

Michael Rehaut (Managing Director and Senior Equity Analyst)

Hi, guys. This is Andrew Azzi on for Mike. I appreciate you taking my question.

Dave Messenger (CFO)

Sure.

Michael Rehaut (Managing Director and Senior Equity Analyst)

I just... Yeah, congrats on the quarter as well. I just wanted to maybe, obviously, with understanding that you're not guiding margins, help us think maybe through some of your assumptions or thoughts on, construction costs, pricing or the land environment, to help us think of gross margins next year, or this year, rather.

Dave Messenger (CFO)

I think it's obviously gonna be a combination of all those things that given, you know, right now our guidance is estimating an ASP of around $380,000 in the low and high end, and then we are looking to pull back incentives. But we know that some of that is, some of those savings will get eaten up by some direct cost increases. So while we're still experiencing positive trends in the Q4, you know, we later this year, we may see increases. So it'll end up being, how well can we negotiate direct costs down across our national platform in order to provide some additional margin lifted?

Michael Rehaut (Managing Director and Senior Equity Analyst)

Thank you for that. And then maybe if you can just review your capital allocation priorities going forward.

Dave Messenger (CFO)

Yeah, I would say that, you know, we continue to invest in the business. We've got, you know, roughly 75,000 lots owned and controlled, with about 60% of those being off balance sheet under some form of option and a controlled arrangement. And we're looking to continue growing the business. As I said earlier, with somebody else's quite with one of the other analyst questions, we're looking to grow community count, so we think that we'll have plenty of opportunities to be reinvesting this capital that we're generating back into the business and grow organically, as well as Dale, you know, said, you know, look, there are other parts of the market that we'd like to see M&A opportunities and, you know, Florida being one of them.

We just executed on the transaction in Tennessee, and so, you know, we think there'll be other opportunities that come up for us to utilize this capital to continue to grow the business.

Dale Francescon (Chairman and Co-CEO)

Thank you, Dave. I appreciate that. That's all for me.

Operator (participant)

Again, if you have a question, please press star, then one. The next question is a follow-up from Jay McCanless with Wedbush Securities. Please go ahead.

Jay McCanless (Managing Director of Equity Research)

Hey, thanks for taking my follow-ups. Just wanted to get a sense of what percentage of communities during the Q4 you're able to raise price and what pricing power looks like as you start the new year.

Dale Francescon (Chairman and Co-CEO)

You know, Jay, it's you know, I can't give you a specific number, but it really comes down to, you know, we're adjusting prices and reviewing them on a weekly basis on a subdivision by subdivision level. I can give you just kind of a general feel that certainly once we saw some interest rate relief we started raising prices, reducing our incentives because most of we look at it most of our homes have some type of incentive in it. Most of the increased price is really reflected in reduced incentives although there are increased base prices, you know, from a case-to-case basis, but it's really more incentives. And it's...

And so, which is all based on what we see in terms of competition for that particular subdivision, the level of inventory we have, that type of thing. But in general, on a directional basis, we are seeing that, our incentives are going down, and that's really where our focus is.

Jay McCanless (Managing Director of Equity Research)

Okay, that's great. And then, the other follow-up I had, what are you seeing from competitors right now? Has some of the frenzy, discounting, and promotions that we're seeing in the Q4, has that lessened somewhat, or is it still pretty, pretty aggressive, what you're seeing from some of the larger competitors?

Dale Francescon (Chairman and Co-CEO)

Well, it's, you know, notwithstanding the fact that still generally inventories are very low, everybody is looking to move product, and from time to time, one competitor or another may be discounting homes more than the rest of the market. But in general, we're not seeing rampant discounting going on out in the market. And what was there in the Q4 seems to have settled down as we've gone into the new year.

Jay McCanless (Managing Director of Equity Research)

Okay. That's great. Thanks again.

Dale Francescon (Chairman and Co-CEO)

Thanks, Jay.

Operator (participant)

This concludes our question and answer session. We will now turn the line back over to Dale for some brief closing remarks.

Dale Francescon (Chairman and Co-CEO)

To everyone on the call, thank you for your time today and your interest in Century Communities. To our team members, thank you for your incredible efforts, dedication to Century, and commitment to our valued homebuyers. To our investors, we appreciate your continued support and look forward to speaking with you again next quarter and sharing with you our continued progress.

Operator (participant)

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.