Taylor Morrison Home - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue rose 11.5% YoY to $1.90B with adjusted diluted EPS of $2.18; both exceeded internal guidance, supported by 80 bps YoY improvement in adjusted home closings gross margin to 24.8% and 70 bps SG&A leverage to 9.7%. Versus S&P Global consensus, TMHC delivered a beat on EPS ($2.18 vs $1.90*) and revenue ($1.90B vs $1.81B*). Values retrieved from S&P Global.
• Demand moderated: net orders fell 8.5% YoY, absorption dipped to 3.3 from 3.7, and cancellations rose to 11% (from 7%), with strength in resort lifestyle (Florida) offset by weaker entry-level.
• Guidance trimmed: FY closings now 13,000–13,500 (prior 13,500–14,000), gross margin “around 23%” (prior 23–24%); land spend cut to ~$2.4B (from ~$2.6B) while buybacks raised to ~$350M.
• Near-term margin pressure expected as spec penetration stays elevated; Q2 guide calls for ~3,200 closings, ~23% gross margin, and ~$585k ASP; management prioritizes price/margin over pace in current competitive spec environment.

What Went Well and What Went Wrong

What Went Well

• Outperformance vs guidance and YoY: “each of our operational metrics met or exceeded our prior guidance,” with adjusted EPS up 25% YoY and book value per share up 16% to ~$58, driven by diversified product and consumer mix.
• Cost discipline and mix drove margin resiliency: adjusted home closings gross margin improved to 24.8% (+80 bps YoY); SG&A fell to 9.7% (-70 bps YoY).
• Balance sheet and capital returns: liquidity ~$1.3B, net homebuilding debt/cap 20.5%, and $135M of share repurchases (2.2M shares) with $775M authorization remaining at quarter-end.

What Went Wrong

• Demand and mix: net orders down 8.5% YoY, absorption 3.3 (vs 3.7), cancellations 11% (vs 7%), with a steeper reduction in entry-level sales, pressuring order value and future mix.
• Elevated spec mix to be cleared: spec closings were ~58% in Q1 and expected higher in Q2, requiring higher incentives and driving Q2 margin guide to ~23% and lower ASP.
• Guidance reduced amid macro/tariff uncertainty and competitive spec pressure: FY closings and gross margin lowered; management cites difficult near-term conviction while maintaining long-term path to ~20,000 closings by 2028.

Transcript

Operator (participant)

Ladies and gentlemen, the KeyOne 2025 Taylor Morrison Home earnings webcast will begin shortly with your host, Mackenzie Aron. We appreciate your patience as we prepare your session today. During the call, we encourage participants to raise any questions they may have. You can raise a question by pressing star followed by one on your telephone keypad, and to move yourself to earner questioning, will be star followed by two. As a reminder, to raise a question, that will be star followed by one. We will begin shortly. Good morning and welcome to Taylor Morrison's first quarter 2025 earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Any instructions will be given at the time. As a reminder, this call is being recorded, and I'd like to introduce Mackenzie Aron, Vice President of Investor Relations.

Mackenzie Aron (VP of Investor Relations)

Thank you and good morning, everyone. 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 and Chief Executive Officer, Sheryl Palmer.

Sheryl Palmer (Chairman and CEO)

Thank you, Mackenzie, and good morning, everyone. Joining me is Curt VanHyfte, our Chief Financial Officer, and Erik Heuser, our Chief Corporate Operations Officer. To begin, I would like to recognize our team's exceptional performance during the first three months of the year. Among the highlights, we delivered 3,048 homes at an average price of $600,000, producing $1.8 billion of home closings revenue at 12% year-over-year, with an adjusted home closings gross margin of 24.8%, up 80 basis points year-over-year. Combined with 70 basis points of SG&A leverage, our adjusted earnings per diluted share increased 25%, while our book value per share grew 16% to approximately $58. Once again, each of our operational metrics met or exceeded our prior guidance. These strong top and bottom line results reflect the benefits of our diversified consumer and product strategy.

Especially in volatile market environments, this diversification is a valuable differentiator that we believe contributes to volume and margin resiliency. From a sales perspective, the slow start in January gave way to stabilization in February and modest growth in March, following the historic pattern, albeit with slightly less velocity than we would have otherwise anticipated during the early spring selling season. In total, our monthly absorption pace increased at 3.3 per community from 2.6 in the fourth quarter, but was down from the near record of 3.7 we achieved a year ago. As I noted on our last earnings call, we experienced exceptional sales strength in the first quarter of 2024, driven by a decline in interest rates that helped unleash rent at demand. Alternatively, this first quarter, interest rates moved higher alongside macroeconomic and political uncertainties related to tariffs and immigration.

More recently, the significant volatility in the stock market and additional policy-related changes have impacted buyer sent urgency, causing some shoppers to move to the sidelines, as we have seen before during periods of uncertainty. Despite these headwinds, it's worth highlighting that our first quarter's pace was still solidly ahead of our pre-COVID historic average of 2.6 from 2013 to 2019, reflecting our strategic shift into higher pacing, larger communities that is helping support our long-term ROE target. It's also worth highlighting that our sales success was in part due to strong year-over-year improvements in conversion of online home reservations, another driver of improved efficiencies. Appreciating the macro backdrop, our first quarter performance highlights several key drivers of our success that I believe are unique to Taylor Morrison.

First, even in the face of rising incentives across our industry, our diversified portfolio is relatively insulated to broader net pricing pressure due to the strength of our buyer and appeal of our quality locations in desirable communities and product offerings. By consumer group, our first quarter orders consisted of 32% entry level, 47% move-up, and 21% resort lifestyle. On a year-over-year basis, our resort lifestyle segment was the only to post growth, with a 3% increase in net orders aided by strength in Florida, while our move-up sales were down just 2% and entry-level sales declined steeply, down 21%. Secondly, our emphasis on personalized finance incentives, including proprietary forward commitment structures, allows us to be tactical in our use of such tools to help our consumers with their home purchase. 42% of our first quarter closings used a forward commitment, just over half of which were first-time home buyers.

By using these and other incentive programs effectively, incentives on new orders increased only 20 basis points sequentially during the quarter. As we have discussed in detail, we believe our diverse consumer segmentation is critically important given varying demand sensitivities and financial profiles among different buyer groups that contribute to healthier, more resilient growth opportunities and pricing over time. To that point, we have been closely monitoring our proprietary shopper survey data for any insight into the consumer mindset of late. This information is always an important input into our marketing and incentive offers as we look to best address consumer needs. Unsurprisingly, home prices and interest rates have been the most common themes cited by shoppers in their home buying decisions. However, parsing the data by generations reveals important differences.

These responses are more common for Gen Z and millennial consumers than for Gen X and boomers, who are instead more focused on finding their next home, floor plan, and community location, as well as selling their existing home. Interestingly, across all age groups, uncertainty around tariffs was cited equally, but not as a significant factor. This data gives us confidence that demand, particularly in our second move-up and resort lifestyle, will likely recover quickly as consumers regain greater clarity on the macro outlook. Lastly, because of the expertise of our local teams, we are nimble in balancing pace and price at the community level as we make daily operating decisions designed to reach our targeted returns.

Given our diversification and emphasis on core locations, there is not a singular approach to our pace versus price strategy, but rather an ongoing community-specific process that considers each asset's unique competitive dynamics, sales momentum, and other market influences. We believe that this community-by-community approach is even more critical in the current environment because we are seeing significant divergence in the performance of core versus non-core locations. As Erik will elaborate, total inventory of both existing and new homes has risen sharply across the country, with the vast majority of this supply located in non-core submarkets. It is in these markets which primarily serve entry-level consumers with spec offerings where discounting and incentives are the greatest. Alternatively, prime core communities, particularly with to-be-built products, are generally faring better with manageable incentives and solid pricing.

With this in mind, it's worth highlighting that 58% of our first quarter closings were spec homes, including a record 27% that were sold and closed interquarters, well ahead of the 21%-24% share in the prior two first quarters. While our teams have been effective in selling and closing spec homes, finished inventory at quarter end was elevated compared to our targeted levels at 2.4 homes per community, following the slower start to the spring. In response, we moderated our first quarter starts pace by 6% year-over-year and will remain highly selective in new starts moving forward. Additionally, we will look to move through finished specs through the remainder of the selling season to return to more normalized inventory levels, resulting in a higher anticipated spec penetration in the second quarter. As a result, we expect incentives to rise more meaningfully in the second quarter.

Given the lower margin and price associated with specs as compared to to-be-built homes, we expect moderation in our home closings gross margin to around 23% and in our average closing price to around $585,000 in the second quarter with approximately 3,200 deliveries. For the remainder of the year, we are assuming incentives remain at current elevated levels, although market conditions are highly fluid and dependent on mortgage rates and consumer confidence. As a result, we now expect to deliver between 13,000-13,500 homes this year at a home closings gross margin around 23%. Alongside this revised volume forecast, we have reduced our expected land investment this year to approximately $2.4 billion from $2.6 billion previously and are ensuring that new land underwriting decisions are sensitized to a wide range of pricing and pace scenarios.

At the same time, we now expect to repurchase approximately $350 million of our shares outstanding this year, the high end of our prior target. While the current environment has made it challenging to provide near-term guidance with strong conviction, we remain confident in our long-term trajectory on our path to 20,000 closings by 2028. The path will not be a straight line as we navigate the market, with 2025 now expected to represent a speedrun on our path there. However, we believe our disciplined underwriting and attractive product position is strongly supported by business capable of generating low to mid-20% home closings gross margin and high team returns on equity over time. Looking further out, we continue to believe the market overall remains undersupplied and demographically supportive of the strong need for new construction.

As you heard at our investor day in March, we have transformed and solidified Taylor Morrison's operational capabilities through strategic rationalization and optimization of our product, community footprint, and customer segmentation. By leveraging digital sales tools and personalized finance incentives, we are driving efficiencies throughout our business from lead generation, sales conversion, and revenue opportunities. Backed by our industry-leading innovation and customer experience, we are confident that we are well-positioned for upsized growth in the years ahead. In aspiring to reach 20,000 closings, we will prioritize bottom line earnings and returns for our shareholders while always maintaining the health of our balance sheet. We are not interested in growth for growth's sake. As our strategy has proven over the last decade plus, we seek to maximize long-term return potential by thoughtfully balancing both pace and price through a uniquely diversified portfolio that is well-positioned to withstand housing cyclicality.

With that, let me now turn the call to Erik.

Erik Heuser (COO)

Thanks, Sheryl, and good morning. Beginning with our land portfolio, our owned and controlled lot inventory was 86,266 home-building lots at quarter end. Based on trailing 12-month closings, this represented 6.5 years of supply, of which only 2.7 years was owned. Of these total lots, 59% were controlled via options and off-balance sheet structures, up from 53% a year ago to a new company high as we continue making progress toward our goal of controlling at least 65% of lots. The importance of being able to self-develop our communities in capital-efficient ways cannot be understated, and our recent survey has suggested that over 80% of our shoppers value the community and amenity options at least as much as the actual home, reinforcing our strength as a community developer.

As Sheryl noted, we now expect our home-building land investment this year to be around $2.4 billion, down from our prior expectation of approximately $2.6 billion, driven by prudence along with the reduction in anticipated full-year closings. Of course, our ultimate cash investment will be dependent on market opportunities as we maintain our disciplined underwriting guardrails. As a reminder, all previously approved transactions, as well as future phases of development, are re-reviewed by our investment committee for final alignment or any necessary adjustments before closing. From a community count perspective, we forecast an ending outlet count of around 345 for the second quarter and at least 355 by the end of the year. As we have discussed previously, our average underwritten outlet size and sales pace expectations have evolved over time.

In recent years, both metrics have increased, allowing us to efficiently expand our business on a smaller community count, calling sequel. As I have shared in recent quarters, we are carefully tracking rising inventory of both resale and new home supply, which has been more pronounced in Florida and Texas. We continue to find that the majority of the supply would not be considered directly competitive to our new home communities. For example, specific to new home inventory in Texas, we have found that the submarkets in which we operate have an average month of supply that is 19% below that of our other submarkets within the respective MSA, again highlighting the benefits of our core focus.

To reinforce that our emphasis on quality locations resonates with our consumers, we recently surveyed our shoppers whether they considered their Taylor Morrison community of interest core, which the overwhelming majority of respondents affirmed. Somewhat related, over half of shoppers also confirmed that they were aware of the home insurance benefits associated with new construction, including superior availability and cost implications. Taken together, both of these factors help partially insulate us from some of the headwinds currently facing our industry. We will continue to leverage our internal muscle of being able to decipher market data and to deeply engage with our shoppers and buyers in understanding their concerns, needs, and wants as the cycle evolves. With that, I will turn the call to Curt.

Curt VanHyfte (CFO)

Thanks, Erik, and good morning, everyone. For the first quarter, reported net income was $213 million, or $2.07 per diluted share.

After excluding an impairment charge, our adjusted net income was $225 million, or $2.18 per diluted share. This was up 25% from adjusted earnings per share of $1.75 in the first quarter of 2024, driven by higher revenue due to increased closing volume, a higher adjusted home closings gross margin, healthy SG&A leverage, and a lower diluted share count. Our closings volume increased 12% year-over-year to 3,048 homes. The average closing price of these deliveries was roughly flat from a year ago at $600,000. This produced home closings revenue of $1.8 billion, up 12%. From a production standpoint, we reduced our start pace by 6% to 3.3 per community from 3.5 a year ago, equating to total starts of 3,382 in the first quarter. This moderation is consistent with our strategy of aligning new starts with sales and carefully managing our inventory to achieve targeted levels.

At quarter end, we had 8,032 homes under production, of which 3,482 were specs, including 840 finished homes, or 2.4 per community. During the quarter, our cycle times continued to improve, and we're down approximately 25 days from the first quarter of 2024 and more than 120 days since the peak we experienced in the first quarter of 2023. The ongoing improvement in cycle times allows us to start and close a higher number of homes during the year, improving our ability to flex our growth potential as market conditions evolve. As Sheryl noted, we now expect to deliver between 13,000-13,500 homes this year, down from our prior guidance of 13,500-14,000 homes. This includes approximately 3,200 homes in the second quarter.

Given a higher anticipated spec penetration in the coming months as we sell through finished inventory, we expect the average closing price to moderate sequentially to approximately $585,000 in the second quarter. However, for the full year, we continue to anticipate the average closing price to be in the range of $590,000-$600,000. Our home closings gross margin was 24% on a reported basis, and 24.8% adjusted for a $15 million impairment charge. This compared to an adjusted home closings gross margin of 24.9% in the prior quarter and 24% a year ago. As we look into the second quarter, we anticipate our home closings gross margin to moderate to approximately 23%. This is reflective of a higher mix of spec homes, which generate lower margins than to-be-built homes, in part due to higher competitive pressures.

We're also expecting incentives to trend higher as they did throughout the first quarter as market dynamics evolved. Recognizing there are more uncertainties than is typical as we look out to the remainder of the year, we currently expect our home closings gross margin to be around 23% this year, the low end of our prior guidance range. This assumes land cost inflation of approximately 7%, low single-digit stick-and-brick cost inflation, and a continuation of challenged market conditions. Taking a step back, we are pleased that this year's home closings gross margin outlook remains within our long-term target of the low to mid-20% range, despite the significant macro headwinds and competitive pressures at play. We continue to believe that our diversified consumer segmentation and mix of spec and to-be-built homes enhances our long-term margin resiliency. Now to sales.

We generated 3,374 net orders, which was down 8% from last year's exceptionally strong first quarter. Our monthly absorption pace was 3.3 per community, down from 3.7 a year ago, while our ending outlet count was up 4% to 344 communities. Cancellations equaled 11% of gross orders. This was consistent with long-term norms as we continue to benefit from our diligent prequalification requirements and average backlog customer deposits of approximately $48,000 per home. SG&A as a percentage of home closings revenue was 9.7%, down 70 basis points from a year ago. For the year, we continue to expect our SG&A ratio to improve to the mid-9% range from 9.9% in 2024. Financial services revenue was $51 million, with a gross margin of 44.7% as compared to $47 million and 46.5% in the first quarter of 2024.

Our financial services team maintained a strong capture rate of 89%, up from 87% a year ago. During the quarter, buyers financed by Taylor Morrison Home Funding had an average credit score of 751, down payment of 22%, and household income of $187,000. Turning now to our balance sheet, we ended the quarter with liquidity of approximately $1.3 billion. This included $378 million of unrestricted cash and $934 million of available capacity on a revolving credit facility, which was undrawn outside normal course letters of credit. Our net home-building debt-to-capitalization ratio was within targeted ranges at 20.5% at quarter end, and our next senior note maturity is not until 2027. During the quarter, we repurchased 2.2 million shares of our common stock outstanding for $135 million. At quarter end, our remaining repurchase authorization was $775 million.

Having repurchased a total of approximately $1.9 billion of our shares outstanding since 2015, we expect to continue utilizing our healthy cash generation to repurchase our shares with programmatic and opportunistic strategies. For 2025, we are now targeting total share repurchases to be around the high end of our prior guide range at approximately $350 million. Inclusive of this target, we now expect our diluted shares outstanding to average approximately 101 million for the full year, including 102 million in the second quarter. Now, I will turn the call back over to Sheryl.

Sheryl Palmer (Chairman and CEO)

Thank you, Curt. As we look ahead, there are more macro-related uncertainties facing the business than I can recall at almost any point in my career outside of the early days of the COVID pandemic.

Consumer confidence is the most critical factor I'm monitoring, as it will be key in determining how sales and pricing hold up through the remainder of the spring selling season. I expect we will continue to see many home shoppers taking a wait-and-see approach to their purchasing decisions until there is greater clarity on the economic outlook. Thankfully, I also believe with confidence that Taylor Morrison has never been in a stronger place organizationally and financially to weather any potential market volatility. We have a strong balance sheet with well over $1 billion in liquidity, a flexible operating model that is able to quickly flex and pivot given our expertise in both spec and to-be-built production, and a stronger-than-average customer base that is well-positioned to move forward with their home buying plans as they regain confidence.

As always, I want to end by thanking our team members across the country, especially in this unique market environment. You distinguish yourselves with your tenacity, dedication, and service to our home buyers. Thank you for all you do. Now, let's open the call to your questions. Operator, please provide our participants with instructions.

Operator (participant)

Thank you very much. With that, I'll open the line for Q&A. If you'd like to ask a question, please press star followed by one on your telephone keypad, and to move yourself out of the questioning, it will be star followed by two. Our first question comes from Paul Przybylski from Wolfe Research. Paul, your line is now open.

Paul Przybylski (Research Analyst)

Thank you. Good morning, everyone.

I guess to start off, Sheryl, can you walk us across the various Texas and Florida markets and provide any color on any positive or negative demand changes you've seen over the past three to four months?

Sheryl Palmer (Chairman and CEO)

Of course. How are you doing, Paul? Thanks for the question. Absolutely. When I think about Florida, and I'm sure we'll spend some time, and I'll probably ask Erik to chime in on the resale market because I think we have some good data. As you saw, our sales were up year over year, and Florida was actually one of our strongest year-over-year beats. I would tell you Orlando continues to be a strong first-time market, first-time buyer market for us. We had very good year-over-year growth despite the market headwinds. It is one of our lowest ASPs in the company. We had some good community openings. I think sales were up.

Community count was up. Closings were a bit flat. That was probably at the cost of a little bit of margin given the first-time penetration. When I look across the rest of the state, Naples also had some strong community count growth and good sales growth. One of the strong continues to be one of the strongest margins in the company along with Sarasota. I would tell you the Esplanade Grand, as we talked about in the last quarter call, we had a lot of new openings that are coming to market with our resort lifestyle. We had a lot of new amenities opening. We saw good traffic with that consumer. Having said that, certainly not at the highs that we would have historically expected. If I were to move to Texas, let me start with Austin.

Despite the market turbulence we've seen there probably now, Paul, for going on two years, I think the team did a tremendous job, really found some traction. Our [audio distortion] rate was down year-over-year, which I consider to be a really good signal of how the market is responding. We closed out of some, I would say, tough competitive community that you're in. Our discounts were generally flat there. There's this market mystique around Austin, so I have high confidence that the market is coming back and we're starting to see some good traction. Dallas, holding on to high margins. It's really a whole new business. It's almost hard to compare Dallas to the prior years. We have outsized growth there this year and in the coming years with really that business doubling in size.

Excited given the size and strength of the Dallas market to see us really show up there in a new differentiated way. I would wrap up Texas with Houston. Another great story. We've talked a lot about the repositioning of that market to self-develop. ASP down, so as a new consumer set, I mean, almost $100,000 paces up, but discounts down. All in all, holding their own. Erik, maybe some resale color would be helpful.

Erik Heuser (COO)

Yeah. Sure. Hi, Paul. Just to round out a couple of those thoughts, as we've shared over time as we think about positioning relative to resales, we've kind of done that study to really understand diving into Florida and Texas specifically in terms of how many homes would be truly competitive in the consumer's eyes.

That's been floating kind of 17%-20%, which we find attractive and competitive. Relative to Texas, as I shared in the prepared comments, the core locations of our portfolio are really helping us out if we think about having lower exposure to inventory levels on a new home level. Maybe bouncing back to Florida briefly, I would just say just taking a look at the recent updates of March resale inventory, the months of supply have gone down from January, February, to March. That's encouraging. We're continuing to watch it, but the average months of supply for our markets in Florida has a five-handle on it. That is still okay. It's elevated in the most recent quarters, and we'll continue to watch it.

Paul Przybylski (Research Analyst)

Okay. Next question, any thoughts on M&A in the current environment?

What are you seeing with regard to deal flow? We've all seen what's happened to the public builder valuations. Are you seeing the private builders and what they're asking becoming more rational? As a follow-on, just how is the Indianapolis integration coming along?

Sheryl Palmer (Chairman and CEO)

Yeah. Good couple of questions there, Paul. On the M&A front, interestingly enough, I would say the amount of packages have probably picked up. It makes sense if you think about just some of the market challenges. I think you're seeing some smaller privates think it's about time. Are we seeing kind of some rational differences between the bid-ask? I think getting better, probably not exactly where it needs to be. We'll continue to look at packages. As we've always said, we have a very high bar on expectations.

Yeah, I think it's been interesting to see some of the package activity pick up.

Erik Heuser (COO)

I think valuation-wise, maybe expectations calibrated to kind of fourth quarter of last year, but maybe not necessarily completely recalibrated.

Sheryl Palmer (Chairman and CEO)

Not quite there yet. I think those are going to be deal-by-deal kind of negotiations to see if any of those start to make sense, but we'll see. As far as Indy, integration's done for the most part. I think we're still, from a system standpoint, there's probably just some of the last plans that are making its way to the system. Honestly, really excited about what we're seeing there. I think I know that we had our best sales quarter in the first quarter. I'd say that was well in line with our expectations.

As we have talked about before, Paul, we are really looking forward to growing that business in more core markets. ASP is under $400,000 this year. It is just a really important new position for the company.

Paul Przybylski (Research Analyst)

Great. Thank you. I appreciate it.

Sheryl Palmer (Chairman and CEO)

Thank you.

Operator (participant)

Thank you very much. Our next question comes from Michael Rehaut of JPMorgan. Michael, your line is now open.

Michael Rehaut (Senior Analyst)

Thanks. Good morning, everyone. Thanks for taking my questions. First, I would love to get, if possible, a little bit of better sense of cadence of order trends through the first quarter and April, specifically in terms of sales pace. Also, to the extent that there has been some volatility, obviously, in the marketplace, what your approach has been to incentives and discounts and perhaps how those have trended as well throughout the first four months of the year.

Sheryl Palmer (Chairman and CEO)

Yeah. Hey there, Michael.

As far as sales cadence, I'll be honest, a little surprised how consistent the first quarter was. We saw a 10% increase in February over January. We saw in March another 13% over February. I think in the last call, we had articulated that we came out the gates in January a little slower. When I look at that compared to last year, which was a stellar first quarter for us, last year, February was down and March was flat. All in all, very, very pleased with the first quarter sales results. As far as what we look like in April, we expected April to probably be the sales peak month of the year. Obviously, we're not done yet. I'm not sure that will be the case. It's actually day by day, week by week.

I look at the April results, Mike, and we definitely saw the impact of the Liberation Day announcement. In the first week, that put, I think, I think that put some folks on the sidelines. We've seen pickup each week since then. Too early to say how we'll finish the month. I'm thinking it's probably closer to first quarter averages. Right now, like you said, we're looking at sales, we're looking at incentives, we're looking at our offering, not on a weekly or monthly, but probably on a daily basis because the consumer's responding to daily news with everything that's going on in the macro marketplace.

Michael Rehaut (Senior Analyst)

Okay. No, no, no. Appreciate that, Sheryl. I guess second question, just kind of focusing a little bit on the back half of the year. I guess the guidance points to roughly a 22.5% gross margin.

I think prior comments, you pointed to a few different drivers of that: land inflation, maybe a little bit of construction cost inflation, maybe a little bit higher incentives, if I heard that right. I was wondering if you kind of coming off of 3Q, I'm sorry, 2Q gross margin guidance of 23 even, I would assume it's a little bit of each. I was wondering if there was also any estimated impact from Paris as far as you can tell or estimate so far. What are kind of the bigger, if you have to kind of rank order the drivers of back half guidance versus 2Q, what might those be?

Curt VanHyfte (CFO)

Hi, Mike. Thanks for the question. There's a lot there. Let me just kind of start.

I think, yeah, from a margin guide for the rest of the year in our prepared comments, we talked a lot about higher spec penetration to a certain extent in some of the quarters, especially as we're looking at Q2. We also have, as we've stated, even back in the prior call from Q1, that we've got lot cost inflation over the course of the year that we're dealing with as well. When we look at kind of the rest of the year, I think a lot of our quarters are going to be hovering around that 23% level, given the course based on the fact of how many to-be-builts we can still sell and close for the year, whether it's late Q3 or even throughout Q4, and then the mix of specs as it balances against that.

We're going to hover around that 23% probably for the rest of the year. As for tariffs, lots of discussion, a lot of noise in the media relative to it. As we're kind of looking at that and its impact on the year, we've kind of, again, guided to some low single-digit house cost inflation for the year. We're starting to see some increases, mainly from the metals and aluminum tariff and the 10% blanket tariff. For the most part, it's all impacting today the metal side or the aluminum side, which is HVAC, which is fireplace boxes, post-tension cable, so along the lines of a lot of the metals that are in our products. We are seeing that.

That will not come through until Q4 because there are recent kind of increases that'll be going into some of our upcoming starts.

Sheryl Palmer (Chairman and CEO)

It was covered in our earlier comments.

Curt VanHyfte (CFO)

It was covered within the guide that we have out there from a low single-digit perspective. The lumber kind of tariff noise, that's on pause. If that comes to fruition, we see that mainly as a 2026 kind of event for us as we look beyond.

Sheryl Palmer (Chairman and CEO)

We would say that about the balance of the tariffs too, right, Curt? I mean, we're not prepared to articulate what kind of impact we might see in 2026, Mike. It is good news that 2025, to Curt's point, is going to be relatively modest. Until we see how these negotiations with different parts of the world really go, I think it's a little early.

We can talk about that hopefully next quarter. The only other comment I would throw on top of Curt's comments on the margin profile, like I said, interest rates really are the name of the game on what is impacting our incentive line. We see a direct correlation as incentives, as rates go up, it costs us a little bit more for those commitments. If rates moderate, we'll see if we end up with a cut or two, and that has a direct impact on the cost of, once again, these forward commitments if rates go down.

Michael Rehaut (Senior Analyst)

Great. No, thanks for all the detail. Appreciate it.

Sheryl Palmer (Chairman and CEO)

Thank you. Have a great day.

Operator (participant)

Thank you very much. As a reminder, to raise a question, we'll be staffed followed by one. To remove yourself out of questioning, we'll be staffed followed by two.

Our next question comes from Alan Ratner of Zelman & Associates. Alan, your line is now open.

Alan Ratner (Managing Director)

Hey, guys. Good morning. Thanks for all the details so far and nice job in a tough market environment. Good morning, Sheryl.

Sheryl Palmer (Chairman and CEO)

Thank you.

Alan Ratner (Managing Director)

First question on the pricing environment. I know your guide assumes a tick up in incentives just to clear through some of that spec inventory. I'm just curious if you think the elasticity is still as high today as it was a year or two ago in terms of are the incremental incentives having the same impact on pulling buyers off the fence, or are there certain situations where maybe base price adjustments are more in the cards in order to get that buyer to the finish line?

Sheryl Palmer (Chairman and CEO)

Yeah, it's a really interesting question, Alan. I think it's almost hard to answer that on a broad base.

I would tell you in certain communities, talking to our sales team, now that we get prepared for this call on our cash calls, we hear a little bit of both. I would tell you there's certain communities where the consumer doesn't believe they're going to hold the mortgage for long or it's about price. We have wonderful tools, as you know, in our toolbox. We recognize the impact on the monthly mortgage payment by using finance incentives. Generally, we will always lean in there. Our TMHF team is tremendous about really personalizing to the individual customer's needs. I would tell you the price adjustment would be the very last thing we would look at. In some communities, we've seen flex dollars where folks can be a little bit more discerning on what's important to them have worked.

I would tell you priority one would be using mortgage incentives. When I think about overall price elasticity, once again, very dependent on customer, obviously, with our move-up act, adult debts, as Erik mentioned in the prepared remarks. The impact of community and home site is, I think it was in your prepared remarks. Okay. Was as important as the home itself. We do have some levers to pull with the value of that home site. We actually even had one or two communities across the portfolio in the quarter where we saw a little bidding action on the home site. Once again, it'd be really dangerous to make broad comments across the portfolio because of the diversity we see in our customer set.

Alan Ratner (Managing Director)

Makes sense. No, I appreciate that. Thank you for the thoughts there.

Second question on the land spend guidance reduction and just kind of thinking through the 20,000 closings target by 2028, how should we think about the multi-year impact of spending less on land this year? Does that kind of push the envelope on 2026 land spend in order to achieve that? Are you assuming maybe some loosening in the land market, either in terms of pricing or just kind of more ability to option or bank land at better terms that will get you to the 20,000? Because I imagine it's not a zero-sum game. If you're spending less on land or tying up less land, that probably does have some type of impact on the multi-year growth trajectory.

Erik Heuser (COO)

Yeah. Hey, Alan. It's Erik. I don't. I would start with we're well subscribed, right?

As you think about 2026, less than a 2% hole in the business plan in terms of the land we need. If you go out to 2027, it is about 12%. Those are very normal numbers. If we are sitting here next year and kind of really slowed it at this time, then it is a pretty relevant topic. Certainly not concerned today, as we said, that six and a half years of supply and still finding ways to elevate that percent control. Those tools are available.

I would say when you think about the access to financing tools, as well as kind of balancing a little bit of the patience I just mentioned with some opportunism, what's really interesting is you think about the deals that have come through our investment committee to date this year, 66% of the lots have come through with takedown or option structures, and 27% have been finished. Those are not normal numbers for us, to be honest with you. I think that the percent takedowns have really gravitated in prior years more around 25%, and the percent of finished lots available to us, more like 15%. We are finding some I wouldn't say truly distressed deals, but there's ways to negotiate deals that have beneficial structures to us as we think about feeding the out here. We're kind of balancing that patience and opportunism.

Alan Ratner (Managing Director)

Great. Thank you so much.

Erik Heuser (COO)

You bet.

Operator (participant)

Thank you very much. Our next question comes from Matthew Bouley of Barclays.

Elizabeth Langan (Assistant VP of Equity Research)

Good morning. You have Elizabeth Langan on for Matt today. Thank you for taking the questions. I wanted to kind of continue that conversation around land. Would you offer any thoughts on what you're actually seeing in the market today in terms of deals that you're looking at right now? Are you seeing changes for what developers are offering given the uncertainty, or is it kind of you're not seeing too many changes at the time?

Erik Heuser (COO)

I would suggest what we've seen to date is the opportunity to negotiate terms, more favorable terms that really allow us all to kind of look at what's transacting today in the market and what we project over the coming months.

Like I said, not an extreme level of distress, but a little bit lower demand or froth in the market, which is just enabling the ability to negotiate terms and make sure that we're insulating ourselves against anything that we don't foresee in the coming months. Really, terms would be the short-term answer.

Elizabeth Langan (Assistant VP of Equity Research)

Okay. Thank you. Touching on gross margins, I know that you kind of mentioned that you're expecting to kind of sit around 23% through the second half. Would you mind talking a little bit about what you're expecting from your spec to-to-be-built mix? Are you kind of expecting the spec to kind of peak a little bit more in Q2 and then taper off? Any color you can offer around that would be helpful.

Curt VanHyfte (CFO)

Yeah. Hello, Elizabeth. Yeah.

I think we had said that I think in Q1, our spec closings were roughly 58%. I think we also alluded to that our spec penetration would be higher in Q2 as well. We are seeing just with our spec inventory that we have available and some of the pressures from a competitive perspective out there, the need to lean in a little bit on some of the specs that we have out there. The penetration for Q2 will continue to be probably in that upper 50s, kind of 60% kind of range as we sit here today.

Elizabeth Langan (Assistant VP of Equity Research)

Okay. Thank you very much. Thank you.

Operator (participant)

Thank you very much. Our next question comes from Mike Dahl of RBC. Mike, your line is now open.

Mike Dahl (Managing Director of Equity Research)

Morning. Thanks for taking my questions.

First question, I want to follow up on the gross margin cadence because the step down from the strong performance in Q1 to Q2 in particular is pretty meaningful. This is a follow-up to a prior question, but just trying to pin down a little bit more on what the magnitude of the increase in incentives is that you've already seen over the course of the last couple of months versus in that Q2 and beyond guide, how much is anticipatory in terms of what you haven't yet seen but expect to have to do to close those homes?

Curt VanHyfte (CFO)

Yeah, Mike, good question. Thanks. As we kind of alluded to, the margin in Q2 is coming down relative to where we've been in large part due to the increased penetration of our specs.

What I would say, based on the market that we're experiencing today, as Sheryl alluded to, we had to lean in a little bit more heavily on the incentive line to kind of help monetize or to help transact those homes. Again, we haven't necessarily given the exact kind of discount per se, but for Q2, that's the underlying assumption is that it's a higher penetration of additional specs coupled with the fact that we'd have a couple of townhome communities that we have an increased penetration on the lower margin as well that are coming in there. The other thing that I would allude to relative to the second quarter is we did have some pull forward from some to-be-builts that we were anticipating closing in Q2 that eventually closed in Q1, which is part of that beat in Q1.

I would also say that from a sell-to-close perspective for Q1, we ended up the mix of that changed from what we thought from our original guide where we closed and sold more higher margin spec units in Q1, which is a natural fallout now for Q2.

Mike Dahl (Managing Director of Equity Research)

Got it. Okay. All right. I appreciate that, Curt. The second question, Sheryl, maybe just also following up on your April comments and want to make sure that we're clear. It sounded like your comments on April, not sure if it will be better than March and previously assumed it would be peak, but then you said something about maybe it's close to the averages for 1Q. Maybe just a little more clarification.

Should we think about April as then being literally just if you sold a little over 3,000 homes in 1Q, April's lining up something around 1,000. And then seasonally, I think you'd normally still come down off that. Just how you're thinking about the seasonality dynamic.

Sheryl Palmer (Chairman and CEO)

Yeah. We'll see how the month ends, Mike. Yeah, you have it right. I said that given the volatility coming out of the beginning of the month, and then you saw some interest rate volatility. There's a mix. It's been a choppy month. There's no denying it. Now, in the room with us today is our division president from Atlanta. They just came off their best week for the year.

We have quite a bit of range across the business, but I would tell you that where we saw this kind of consistent rise through the quarter, week over week, month over month, April has been choppier. No real surprise given the headlines. The further we get away from a kind of a macro event like week one, we see things pick up. I expect after last night, maybe there's a calming influence on the market, and we'll finish strong. Until the month is done, I don't know exactly how we're going to finish, but if I were to predict, I would say it'd be close to the average of Q1.

Mike Dahl (Managing Director of Equity Research)

Okay. Makes sense. Thank you.

Sheryl Palmer (Chairman and CEO)

Thanks.

Operator (participant)

Thank you very much. As a reminder, if you would like to raise a question, please press star followed by one on your telephone keypad.Our next question comes from Carl Reichardt of BTIG. Carl, your line is now open.

Carl Reichardt (Managing Director of Equity Research)

Thanks. Morning, everybody. Nice to talk to you. Thanks for taking my questions. Sheryl, you mentioned you hadn't seen an environment like this in your career, which is kind of funny. I wanted to try to pin down the sort of what you're saying, the lack of urgency and the buyers moving to the sidelines. Do you think this is more related to worries about jobs and income, consumers more worried about costs, what goes out the door, living expenses, or something more related to investments, savings, worry about the nest egg for the future? If you had to sort of pin down the concerns among those who have lost their urgency, where would you stick the pin?

Sheryl Palmer (Chairman and CEO)

I say yes to all of you above. You know, Carl, it's interesting.

I was actually quite encouraged when I was meeting with the teams last week, kind of going through our pre-calls, encouraged on the feedback of traffic as there's folks kind of hanging around the hoop. Clearly, there's aspiration for homeownership across all of the consumer sets. As you look across each of the demographics, it is different. You take those first-timers, it's absolutely, can we afford it? It's a monthly payment against their expenses. Life has just gotten more expensive, no matter what category you want to talk about. As we move up the food chain, we're just dealing with a little bit more sophisticated buyer. All the noise that's going on, if it's inflation, stagnation, or we're going into a recession, I mean, what's happening to rates? It's a lot. They're just trying to understand how it impacts them.

The good news with the diversity of our product offerings, our communities, I think when they find the right house and lot, as Erik discussed in his prepared remarks, I think we get them there. By the way, I think when they get some level of stability, we're going to see a big ramp up because they're still showing up. There's still lots of interest, I just think it's just taking a little bit longer to actually find the dotted line. I would put all of your categories in the mix.

Carl Reichardt (Managing Director of Equity Research)

All right. Thank you, Sheryl. I appreciate that. You talked a bit before about Florida and Texas. I wanted to ask about the West, where the orders were down, I think, 25%. I know stores were down 10. I know the comp was tough.

I'm assuming there's more concentration of entry-level product in the West. Can you talk a little bit about why those trends were softer than the other two markets? I'm assuming mix is part of it, but maybe just give us some detail there. Thanks.

Sheryl Palmer (Chairman and CEO)

Yeah. No, it's a fair question. Thanks for the question. I think, first of all, year-over-year compares in the West are really, really tough. We had some really strong, strong months last year. If I look at Phoenix, Q1, except for Q1 last year, was actually the best quarter, but slightly down year-over-year with a nice margin beat. I think they did a really nice job of kind of managing the pace and price discussion. As we move to California, generally, inventory has not been as large a concern, but we have seen some inventory build-up.

I think you just have a buyer there that's wanting to negotiate. Sales were still up year-over-year. Some of that was community count growth. SAC, and that would be more the Bay, sorry. SAC, I would tell you sales were slightly down, modest discounts, modestly up. Margin was up year-over-year. The overall market in SAC was off, depending on the month, somewhere between 10%-15%. I think some of that was just stoge, the federal layoffs kind of looming, hanging over folks' heads. Southern California, minimal resale competition. Traffic not bad, but we have seen aggressive new home incentives in the market. Some hesitation. Currently, we're with the cultural buyer, but then I look at Orange County, still very, very strong.

If I were to round out kind of our markets, just to be thorough, I would say Denver was a little bit more impacted by inventory. I would put Denver and probably Portland as our two most rate-sensitive markets. You can almost see it to the day. Having said that, I was really encouraged by the recent traction in Denver. Outlets were up. Sales were significantly up. We had good margins. Bay is very steady. Excited about the Esplanade community coming to the marketplace. That will happen later this year. Discounts flat. Very different business for us. ASP profile, very, very good compared to what we were doing last year. The mix of communities is good. If I look at the kind of the Las Vegas strip worker today, I think in this environment, tougher to get them financed. We talked a little bit about Indy.

I'd rounded up with the Southeast. Charlotte, Raleigh, strong community count growth. Sales and closings up. Low can rates. Discounts flat to slightly up. Charlotte enjoys one of our division's highest margins across the business, evolving land strategy. Atlanta, we repositioned that business. The strong community count growth and unit growth. I expect that one to be one of our more consistent markets as I look at each quarter across the year. Hopefully that helps.

Carl Reichardt (Managing Director of Equity Research)

That is great, color. Thank you so much, Sheryl. Thanks, everyone.

Sheryl Palmer (Chairman and CEO)

Thank you.

Operator (participant)

Thank you very much. Our next question comes from Jay McCanless from Wedbush. Jay, your line is now open.

Jay McCanless (Managing Director of Equity Research)

Hey, good morning, everyone. Just one question for me. Sheryl, thank you for the color around sales pace thus far in April, but could you talk about cancellations? I know cancellations for one Q were up a little versus last year, but be interested to see how they've trended so far in April.

Sheryl Palmer (Chairman and CEO)

Yeah. It's a really interesting question, Jay. It's hard to be completely accurate here, and I'll explain why. I mean, I would tell you that once again, around the Liberation Day, with all the stuff happening, we did see a slight tick up in cans, but we always do at the beginning of a new quarter. I don't want to—and I say slight tick up in cans. I don't want to over-respond. My instincts are it's going to level out like it does throughout the balance of the quarter. I think you always have this strong push to the finish at the end of every quarter, and I kind of saw that here.

If I were to tell you the absolute numbers today, they're up slightly.

Jay McCanless (Managing Director of Equity Research)

Okay. That's all I had. Thank you for taking my questions.

Sheryl Palmer (Chairman and CEO)

Thank you.

Thank you very much. Our next question comes from Buck Horne, Raymond James. Buck, your line is now open.

Buck Horne (Managing Director of Equity Research)

Hey, thanks again. Good morning. Congratulations. Quick one for me. Have you guys seen any immigration enforcement actions recently that have either affected your communities directly or indirectly?

Sheryl Palmer (Chairman and CEO)

Yes, but not to our communities directly. Buck, I think the first one we heard about was in Alabama. The second one—we don't build there—the second one we heard about was in Atlanta. I think there was a morning where there was probably a good half a dozen communities impacted. None of them have been ours.

To date, I can't talk about what the future brings, but to date, Taylor Morrison hasn't had any impact in any of our communities.

Buck Horne (Managing Director of Equity Research)

Gotcha. Appreciate that, color. Thank you so much for that. Also, just thinking through the next couple of weeks ahead, student loan debt collections are poised to resume here in May, and it kind of coincides with your push to clear out some of your finished specs, which I presume may be more entry-level weighted. How are you thinking through potential pressures on entry-level consumers, or have you thought about the student loan issue potentially? How that affects your incentive levels to clear out those finished specs?

Sheryl Palmer (Chairman and CEO)

Yeah. No, it's an interesting question. We're always tracking it. Obviously, this isn't the first time we've seen this noise in the system. We've never really had issues with student loan debt on any of our customers.

Obviously, when we look at our first-time buyers, they're just in a little bit different place than I would say a true—for the most part, a true entry-level. When I look at the room that they have—but you might recall that over the years, we've talked a fair amount about the room that our customers have between what they've qualified for, what they've gone, what their rate is versus what they could qualify for. We have, over the years, seen a little bit of compression, obviously, as rates have moved up with our customers. When I look across both our conventional, we're still over 400 basis points of room for our conventional buyers and just under 200 basis points of room with our FHA buyers. That is a little tighter.

It would be naive to say that some of them might not recognize an impact, but I would tell you, to date, we've really not seen it. I still think that the consumer's kind of not stretching themselves to the max. That's why we're still seeing some room, even with the FHA buyer.

Curt VanHyfte (CFO)

Sheryl, back to our surveys. When we ask people, "If you're hesitating, why might you be hesitating?" Back to one of your first questions in terms of non-permanent residents, only 1% of our shoppers said that that's something to contemplate. Not jumping off the page. Didn't see anybody say student debt specifically was a concern or a hesitation. What I also found fascinating is that in March, when you look at consumer confidence, the Gen Zs were actually up.

Sheryl Palmer (Chairman and CEO)

Yeah, which is so interesting. More than any other group, right? Yeah.

Buck Horne (Managing Director of Equity Research)

Very helpful, color. Appreciate the thoughts. Thanks again. Congrats. Good luck.

Sheryl Palmer (Chairman and CEO)

Thank you so much.

Operator (participant)

Thank you very much. Our next question comes from Ken Zener of Seaport Research Partners. Ken, your line is now open.

Ken Zener (Senior Analyst)

Good morning, everybody. I'm interested if you could comment—hello—if you could comment on what you think your year-end units in production and community counts are going to be. Obviously, it's down a little bit now. You're clearing out some specs. I'm just interested in how that cadence, how you're thinking about that, the year-end units under production.

Curt VanHyfte (CFO)

Yeah, I can. Sure. Thanks for the question. Yeah. As we sit here today, we're at 8,032 units.

With the continued cycle time kind of focus of our teams and clearing out some of the anticipated specs over the course of the year, we would expect that number to probably moderate down a little bit further. I do not really have an exact number per se for you, but I would say it is going to continue to moderate down further based on the cycle time reductions and our focus on making sure our balance sheet is in the right position relative to speculative inventory.

Ken Zener (Senior Analyst)

Appreciate that. I guess the path to whatever that number is, it is not a targeted number yet. I am trying to think about your decisions around what you see in orders, given Sheryl's comments about a lack of clarity, high volatility, consistent with the stocks. Really, how you are going to be measuring your starts versus your orders as you are declining spec units.

Because usually, you take up starts versus orders in the second quarter. It seems there's a couple of different moving parts. You pretty much get to tie your starts to orders going forward. Is that what you're thinking about?

Curt VanHyfte (CFO)

Yeah. Ken, normally, what we kind of articulate pretty much every quarter is that we're going to line starts to our sales pace. We may lean in at certain times of the year relative to when we expect those deliveries to come off, so to speak, i.e., in the spring selling season time period. We will carefully kind of manage the starts relative to what we're seeing from a sales pace, sales velocity perspective.

Ken Zener (Senior Analyst)

Thank you very much.

Curt VanHyfte (CFO)

All right. You have a good one.

Sheryl Palmer (Chairman and CEO)

Thank you. Take care.

Operator (participant)

Thank you very much. Our next question comes from Alex Barron of Housing Research Center. Alex, your line is now open.

Alex Barron (President)

Yes. Thank you, everybody. My first question is around the topic of price cuts. Just your general philosophy. Is it more in response to what other builders do? Is it more in terms of finished specs that maybe haven't sold for so many days? Is it mainly on specs and not on builds order? What is your general approach to price cuts?

Sheryl Palmer (Chairman and CEO)

Yeah. It's hard to ignore what's happening in the market around you. As we discussed, Alex, we'll always lean in with our mortgage incentives, and that would be inclusive of forward commitments for maybe finished inventory and some of the proprietary programs that we've discussed in the past for our to-be-built stuff that might not deliver for a few months. We'll always start there.

Once again, I think one of our differentiators is our ability to work with each customer and personalize, understand their needs. Obviously, when you start cutting prices, you're having an impact on your backlog. We look at ways to gift equity to homeowners versus take it away. We've talked about in the past that there's a real difference. We would never consider, I can't imagine we would consider price cuts on our to-be-builts because that's generally where you'll see our greatest margin and greatest strength. There is a wider range of spec performance. I would say that those are generally impacted by what we're seeing in the competitive set. The further out that you move in the marketplace out to more fringe, I would say the more competitive pressure and the higher the incentive size.

Alex Barron (President)

Got it. Thank you.

On a brighter note, I really like the Esplanade and what you guys are doing and what you explained to us in the investor day. Can you talk about how many communities are currently open and what the outlook is for that over the next 12 months, let's say, versus a year ago, just to kind of see the growth pattern there?

Sheryl Palmer (Chairman and CEO)

Yeah. I mean, as we talked about at the investor day, when you look at the actual closings as we expect when we get out to 2028, we expect our actual closings to almost double. Now, that would be a percent. That's obviously based on the penetration. We will see the whole business move. Specifically, we will see the active adult double in total volume.

Honestly, when we look around the portfolio, we have a number of new communities that are coming to market this year, have just come to market. We have a lot of new amenities that are under construction. We are equally excited, Alex. I appreciate your enthusiasm. It is a key part of the overall business. I think you will continue to watch Esplanade open in all parts of the country.

Curt VanHyfte (CFO)

I think, Sheryl, in order of magnitude, what we shared is we have about 35 or so outlets open and about 80-some-plus in the pipeline that are incubating. That is the order of magnitude that Sheryl referenced. Big numbers.

Alex Barron (President)

Got it. Best of luck, everybody. Thank you.

Sheryl Palmer (Chairman and CEO)

Thank you so much. Take care.

Operator (participant)

Thank you very much. We currently have no further questions, so I would like to hand back to Sheryl Palmer for any further remarks.

Sheryl Palmer (Chairman and CEO)

Thank you all for joining us on our Q1 call. We will look very forward to speaking to you at the end of the second quarter. Take care.

Operator (participant)

As we conclude today's call, we'd like to thank everyone for joining. Even now, disconnect your lines.