Margin Sustainability
Q: Are Q1 margins sustainable long term?
A: Management noted that despite short‑term pressures from elevated incentives and a 7% mortgage rate environment, full‑year 2024 margins exceeded 24%, which supports a sustainable margin profile moving forward.

Full-Year Guidance
Q: Will Q1 slow start affect full‑year targets?
A: Leadership remains confident that a modest early‑year slowdown will not derail full‑year closings and revenue targets given solid market momentum.

Volume vs Margin
Q: Will lower margins adjust volume strategy?
A: Executives explained they are willing to accept modest margin reductions—targeting around 22‑23%—if needed to sustain the desired volume of sales.

Growth Strategy
Q: Is M&A required to reach 20k units?
A: The team emphasized that organic growth, bolstered by strategic moves like the Elliott Homes acquisition and Huntsville expansion, should drive progress without significant additional M&A.

Land Strategy
Q: Any update on land JV deals?
A: Management highlighted a successful pilot for off‑balance sheet financing in California through a joint venture, with a view to expanding similar arrangements nationally if effective.

SG&A Expenses
Q: Can SG&A fall below 10%?
A: The goal is to achieve long‑term SG&A levels of around 9.5% as the company scales, reflecting disciplined cost management during growth.

Conversion Rate
Q: Will backlog conversion rate change soon?
A: Leaders expect the current high conversion rate to continue, barring any unforeseen extension in cycle times.

Competitive Incentives
Q: Will competitive pressure force margin cuts?
A: They indicated that while competitive forces might necessitate incentive adjustments, the focus remains on maintaining a consistent 4 sales/month target even if margins tighten.

Cycle Times
Q: How long are development cycle times now?
A: Development cycle times for land have roughly doubled compared to pre‑COVID levels, though they remain predictable and vary by region.

Sales Inertia
Q: How balance home starts with incentives?
A: The strategy centers on aligning home starts with the goal of 4 sales/month, using incentives to effectively drive this pace.

Community Growth
Q: How fast will community count grow?
A: Growth is expected to accelerate, especially in the South and Southeast, with a notable pop in Q2 as new communities come online post‑acquisition.

Phoenix Market
Q: How do rising Phoenix listings affect sales?
A: Despite a 10% increase in new listings, Phoenix remains strong thanks to robust fundamentals and the company’s competitive rate lock advantages.

Texas Market
Q: What is Texas inventory outlook?
A: Texas continues to perform well with strong local demand, though submarket dynamics vary; overall, absorption rates remain healthy.

Inventory Risk
Q: Are completed specs at risk for discounting?
A: Management is not overly concerned about discount risk, as their homogeneous, move‑in ready product minimizes the need for price cuts.

Rate Impact
Q: Will stable rates boost buying activity?
A: A more stable mortgage rate environment is seen as beneficial, enhancing consumer confidence and lowering associated rate lock costs.

JV Duration
Q: What is the duration of JV deals?
A: In California, JV deals are structured for longer durations due to extended regulatory timelines, with similar setups potentially being adopted in other markets if successful.

Buyer Mix
Q: What percentage are move‑down buyers?
A: Approximately one‑third of the customer base is made up of move‑down buyers, reflecting a balanced buyer mix.

Sales Price
Q: Do incentives affect net sales price?
A: Yes, incentives—such as rate buydowns—contribute to an overall 4% decline in average sales prices, influenced also by shifts in geography and product mix.