Welcome to Lennar's Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to David Collins for the reading of the forward-looking statement.

Thank you, and good morning, everyone. Today's conference call may include forward-looking statements, including statements regarding Lennar's business, financial condition, results of operations, cash flows, strategies and prospects. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause Lennar's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our earnings release and our SEC filings, including those under the caption Risk Factors contained in Lennar's annual report on Form 10-K, most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements.

I would now like to introduce your host, Mr. Stuart Miller, Executive Chairman. Sir, you may begin.

Very good. Thank you, and good morning, everyone, and thanks for joining us this morning. Pardon me, I've got a bit of a cold, so you'll hear that in my voice. I cough a little. So, today, I'm in Miami, together with Jon Jaffe, our Co-CEO and President; Diane Bessette, our Chief Financial Officer; David Collins, who you just heard from, our Controller and Vice President; and Bruce Gross, our CEO of Lennar Financial Services. We're all here in Miami together. As usual, I'm going to give a macro and strategic overview of the company and our performance. After my introductory remarks, Jon is going to give some color on overall market conditions. He is going to comment on our land position and then he is going to give an operational overview, updating supply chain, cycle time and construction costs. And as usual, Diane is going to give a detailed financial highlight, along with some limited guidance for the fourth quarter and year-end 2023 to assist in forward-thinking and modeling. And then, we'll answer as many questions as we can, and please limit yourself to one question and one follow-up as usual. Now, as you all know, since our last earnings call, Rick Beckwitt retired effective the end of the third quarter. Rick began his 17 years with Lennar at the very beginning of the Great Recession, as it's called, in 2006. He rejoined an industry that was operating at the top of its game and was prepared to reach for even higher heights. Rick found himself, however, in an industry that was caught in a changing and devolving economic environment that altered expectations and aspirations. Rick jumped in at Lennar and treated problems as his own side-by-side with the rest of the team. And over the next years, he…

Thanks, Stuart. Good morning, everyone. As Stuart noted, the housing market is healthy overall, as supply remains tight, demand remains strong and buyers have become more comfortable with higher mortgage rates. In our third quarter, we continued to offer a combination of attractive pricing and compelling mortgage rate programs to capture that demand. Our price-to-market strategy reflects our balance sheet-first focus, so we can maintain starts and sales, increase market share, generate cash flow and keep our homebuilding machine going. The execution of our pricing strategy is based on the strength [indiscernible] market matched against the level of production we have in that market is done on a community-by-community basis. In the current environment, all of our markets are benefiting from greater demand than supply. And while some markets like in Florida or the Carolinas are stronger than others, we were able to achieve our desired sales pace in all our markets. In our third quarter, the majority of our markets had a higher sales pace in Q3 compared to Q2 and also used higher incentives in Q3, along with an increase in marketing and broker spend. In all markets, our homebuilding teams worked closely with Lennar Mortgage to find the right solution for each buyer to help fulfill their desire to purchase. Our sales strategy of finding market clearing pricing is designed to match the pace of homes under construction, which in turn gives us confidence to maintain a consistent pace of starts. This consistent start pace is the foundation for our production-first strategy. As we continuously improved the way we execute this game plan, we have grown our trade base, maintained lower construction costs and reduced cycle time. These improvements enabled our third quarter starts to increase 17% from the prior year. Continued focus on our production-first strategy…

Thank you, Jon, and good morning, everyone. So, Stuart and Jon have provided a great deal of color regarding our Homebuilding performance. So therefore, I'm going to spend a few minutes on the results of our Financial Services operations and our balance sheet and then provide guidance for Q4 2023. So starting with Financial Services. For the third quarter, our Financial Services team had operating earnings of $148 million. Looking at the details, mortgage operating earnings were $111 million compared to $64 million in the prior year. The increase in earnings was driven by higher locked volume as a result of higher orders and capture rates and higher profit per locked loan as a result of lower cost per loan, as the team continues to focus on efficiencies, and additionally, higher secondary margins. Title operating earnings were $37 million compared to earnings of $33 million, which excludes a $36 million one-time charge due to a litigation accrual in the prior year. Title earnings increased primarily as a result of higher volume and a decrease in cost per transaction, as the team continues to focus on using technology to increase productivity. These solid results were accomplished as a result of great synergies between our Homebuilding and Financial Services teams. They truly operate under the banner of One Lennar. So, now turning to the balance sheet. This quarter, once again, we were steadfast in our determination to turn our inventory and generate cash by maintaining production and pricing homes to market to deliver as many homes as possible to meet housing demand. The drumbeat also continued with our determination to preserve cash and increase asset efficiency. The end result of these actions was that we ended the quarter with $3.9 billion of cash and had no borrowings on our $2.6 billion revolving…

Thank you. We will now begin the question-and-answer session of today's conference call. [Operator Instructions] Our first question comes from Truman Patterson from Wolfe Research. Please go ahead.

Hey. Good morning, everyone. Thanks for taking my question. So, Diane, thanks for clarifying that at the end, the '24 growth target of about 10%. But looking at your fourth quarter guide, you had very strong third quarter orders. Just trying to understand that fiscal fourth quarter order guide down about 15% sequentially. Was that really due to the healthy third quarter selling, where you reduced your spec availability and kind of internal inventory positioning going into the fourth quarter? Is it just normal seasonality? Does it imply a modest deceleration in the consumer, given the recent rate move? Just hoping you can help us unpack that.

Sure. Thanks, Truman. Yes, you're right to tie those together. The fact is that as we enter the fourth quarter, which is seasonally a more quieter time of the year. We did have very strong third quarter sales. We do expect to see strength in the fourth quarter. But seasonality has returned to some extent. And additionally, we've seen interest rates pick up again. So, we're just moderating our view of where the fourth quarter goes and making sure that as we come into the fourth quarter, we're well positioned to achieve exactly what we said.

And I'll just add, Truman, that it's all part of our process to have a design sales pace so that matches the production coming out of our assembly line out in our communities.

Okay. Perfect. And then, I thought Rick was going to be on this call to congratulate him on retirement, but since he can't defend himself, maybe we should just air our grievances against him. But look, just big picture, how are the two of you, Jon, Stuart, just kind of dividing responsibilities given Rick's retirement?

Well, listen, we have very comfortably streamlined the business. Jon is overseeing operations across the country at this point, and he has been doing that for some time now. And what has happened over the past years is, our regional presidents and our operators have just really stepped up and have become far more self-sufficient, driven by some of the technology support that we've created across the platform. There's just a very orderly program of operations as we go forward that is guided by Jon on a regular basis in combination between what we call our daily call, it's actually every other day, and additionally, our operations review meetings, which we're kind of in the middle of right now. We begin at the beginning of each quarter. Jon goes to some. I go to some. But we are present, we are engaged, we are involved in kind of level setting our divisional focus across the platform. And Jon and I have comfortably shared responsibility for about 40 years. I think we've kind of been stepping in tune with doing that. We'll be able to comfortably do that right now.

Yes, I think that can't be underestimated, the familiarity of working together for 40 years and managing the business across the country. But I think starting on the key point, which is we're a different company today. The efficiencies that we're driving in large part are because we've become much simpler, particularly at the land acquisition standpoint. You remember, we used to have a lot of complex joint ventures. We used to speculate more on land. Today, we're a very efficient buyer of finished homesites from some strategic land partnerships and strategic land banks. And that really fuels the front-end of a machine that is very orderly and very focused in today's world for Lennar.

Perfect. Thank you, all.

Okay. Thank you, Truman.

Our next question comes from Susan Maklari from Goldman Sachs. Please go ahead.

Thank you. Good morning, everyone. My first question is, Stuart, you mentioned that you continue to expect to see growth next year even with the meaningful strides that you've made over the last several quarters in there. When you think about the construction -- the production constraints in the industry though, can you talk to how you think you can add capacity in this kind of an environment? And any thoughts on how to think about 2024 from a volume perspective?

So look, as we've looked at 2024, it's not so much about adding production at this point. We are positioned for a very strong 2024 right now. We have the land. We have it identified. It is under contract or in our pipeline. It is under development. 2024 at this point, except for the overall sales environment, is pretty much embedded in our system. So, we have pretty good visibility at this point. We keep talking about selling and building and programming by process. And by process, we just have great visibility into what we're able to produce for 2024. And in fact, if you look at our kind of five-year land planning and overall production schedules, we have pretty good visibility even beyond. Now, the question is, what's the market going to do and how is the market going to react? We are going to continue to price to market conditions. We are an operating -- manufacturing platform that is going to price to market. And if the market moves a little bit, you're going to see our margins be, as I said before, the shock absorber. So, when we talk about a projection of growth for 2024, we have pretty good certainty that we can accomplish that. And how the market unfolds in these kinds of uncertain times where interest rates are moving, the Fed is clearly trying to take liquidity out of the system, we're going to wait and see how it actually evolves. But our target right now is in that low-double digit level of growth for 2024. And we think it's achieve -- we know it's achievable. We'll see how the market performs.

And Susan, you asked about our production capacity. That visibility Stuart speaks to, we clearly communicate that with our trade partners today about what is coming in the future quarters. So they're prepared and we're prepared as that production, as already in our system, will be coming online to be able to manage that volume.

And Susan, I guess I'd just add that 10%, low-double digits, that's from a volume perspective. We'll have to see how kind of margin and other items play out, but at least it gives you a perspective on the volume level.

The target.

Target, yeah.

Okay. That's very helpful. And maybe building on that a bit, you've obviously talked a lot about thinking of the cash generation of the business and converting net income to cash flows. As you think about the go-forward and the environment that we're in and the increased agility in the business, what could that mean for cash generation next year? Any thoughts there?

Everything that we have done to reconfigure our business is focused on turning profitability into cash flow and making sure that we are generating a consistent level of cash coming in. And everything that we're underwriting right now, even if margin moves up or down to some extent as a moderator for where sales or interest rates might go, our cash flow is still going to be very, very strong as we go forward.

Okay. Great. Thank you for the color, and good luck.

Okay. Thank you.

Next, we'll go to the line of Stephen Kim from Evercore ISI. Please go ahead.

Yeah, thanks very much, guys. Appreciate all the color, and congrats on the results. I did want to touch on the -- some of your longer-term comments. So first of all, not to get too granular, but in 2024, the closings number, we've observed that as cycle times have improved, you've been able to deliver more units or close more units than you've taken orders for. I was curious as you look into 2024, Diane, is it reasonable to think that you could likely close as many units as you take orders for? And then secondarily, you talked about -- I think, Stuart, you talked about return on assets as being an important metric for you. Curious if you could give us a sense for longer term, where you target your ROA as you look -- think about the business going forward?

Okay. So, we do think that as we sell, our delivery schedule is really tied pretty closely to -- given the fact that we are not selling way out in front, it's pretty much tied to how we're selling and the current sales pace. And so you can look at that today and see our operating machine really working. Sales and starts and closings are all working in close proximity to one another. In terms of return on assets, Steve, which is a great question, we have the difficulty of an asset base that just because of strong earnings and strong cash, it becomes a tougher and tougher hurdle. Our focus is on return on assets closer to 20%. So, it gets harder to achieve as we keep adding earnings and asset base to the program. And one could argue that we need to be buying back stock a little bit more aggressively. Diane and I talk about this all the time. And I'd say that we look at this opportunistically. Looks like today's stock price is getting even more attractive. So it's part of the program, but we are targeting in excess of a 20% return on assets.

Yes, I think that's right, Steve. You have to kind of make it a little bit more granular, right, as we focus on turning our inventory, as we focus on reducing our years of owned. Those are all helpful components, of course, to return on assets. And if we pair that with a consistent buyback program, which we have been consistent, the amounts may vary quarter-to-quarter, but we have a pretty consistent program. And I think that all bodes well in us achieving something over 20% as time goes on.

Yes, that's really helpful, and that's kind of where I was going to go next. So I appreciate you anticipating that.

We saw you coming.

Next question I have -- yeah, exactly. Next question I have relates to sort of market conditions and, in particular, the entry level of the market in light of the rate increase. So I would say -- my question is, in general, would you say that the move-up segment right now is performing a little stronger than entry level? And at the entry level, when we think of rate buy-downs, like what percent of your sales are using a rate buy-down? And are you going into the market buying -- making forward purchase commitments? And are you increasing the degree of rate buy-down relative to the prevailing rate? Or are you continuing to buy down that rate by about the same spread?

So, listen, as we've said, as rates move around, as demand moves around, we are tapping incentives up or down, we're maintaining pace. But the fact is that we haven't had to move dramatically in either direction as rates have moved currently. You asked whether it's the entry-level buyer or the move-up buyer that is doing better, frankly, there's strong demand across the platform. And in all segments, we are seeing strong demand out there. Affordability is kind of a question, and meeting the buyer where the affordability exists is kind of the trick of the market and getting it just right. And so, these are tweaks right now up and down. And of course, depending on where interest rates go, that is going to be the determinant of how much of an incentive has to be given or doesn't have to be given. And that's what we're kind of working our way through right now as you go through pricing. Jon, could you add to that?

Yeah. Steve, you asked the question. We do buy forward commitments, but we do see even as interest rates fluctuate, the participation and those commitments stays very steady from the month-to-month, quarter-to-quarter. And it's primarily used for our first-time buyers. And as you know, with our production model, it's very effective because we sell homes closer to being completed versus selling homes before they're started. So, we're able to lock-in our buyers, which is really important, because those buyers once they're locked-in aren't at risk to suddenly not qualifying if rates move on them. We keep the spread pretty consistent on an average, but obviously, we have to help our first-time buyers more than our move-up buyers. But because of our ability to do that and really manage it closely to our production pace, we don't really see a difference in the levels of demand from quarter-over-quarter, month-to-month between those buyer segments.

That's really helpful. Thanks very much, guys.

Okay. Thanks, Steve.

Next, we'll go to the line of Carl Reichardt from BTIG. Please go ahead.

Thanks. Good morning, everybody. Stuart, I hope you feel better. I have a question on dynamic pricing. I think it's fair to say, if we ran the tape last year, that using dynamic pricing allowed you to make -- find elasticity, make -- find homes at market clearing prices really quickly and across the platform quickly. So, if you look at the model today and look at sort of a histogram across your geographies and markets, where do you see pricing power? Where are things still weak? And do you effectively say more markets are stable than we have more markets where we're making a lot of adjustments up or down?

Hey, Carl, it's Jon. In every market we are using closing costs, mortgage rate buy-downs, pricing to hit that desired pace. Clearly, we don't have to use it as much in, say, Florida, the Carolinas, parts of Texas, other markets around the country where there's immigration, strong job growth. In some markets, where you've seen a shift, in Austin, in Boise, parts of California, we have to use them a little bit more. But as I said earlier in my comments, we're able to achieve our desired pace by managing those levers with each individual buyer, at each community, home by home basis, to find the right monthly payment for them to deal with their mortgage qualification issues, get them locked into a loan, and to hit our production levels.

Okay, thanks, Jon. And then, on SG&A, again, long-term strategy for the company has been to lower buyers' brokers' commissions, probably more aggressively than any other builder, at least that I cover. Market got weaker, buyers' brokers have come back. So, where does that strategy sit now in terms of your reliance on those brokers or your desire to continue to effectively disintermediate them or rely less on them? Thanks, all.

We pretty consistently said that the realtor community that supports the industry and that comes in and does the work of bringing customers to our sales center and actually engages the process is a friend of Lennar. And we're always trying to work with the realtor community. But at the same time, what we've tried to do is eliminate the friends and family component that is basically just giving away. So, we've done a pretty good job of creating a constructive relationship with the broker community while not overspending. And it migrates up and down as traffic is represented more and more by realtors. Now, of course, as the existing market has been more constrained, the realtors have been more focused on the new home market, and that means that we're getting a lot more traffic from the realtor community than we were getting when the existing market was more normalized. And with that said, you'll see our brokerage spend go up and down a little bit, which affects our SG&A.

But it's all highlighted, it's at very low levels compared to our historical norms. And the way that we use the broker community is really just where we have completed inventory homes to move. We're very disciplined about what we make available to the broker community so that we maintain that focus and control of our SG&A.

And let me just say lastly, we've talked an awful lot about our digital sales funnel together with our dynamic pricing level and sales engagement. We are really striving to drive more and more of our customer engagement through our digital world where we access customers, meet them where they want to find us, and engage them very directly. That's where we think we can have the very best engagement with our customers. And so, we've talked about our digital sales machine. It's an important part of the way that we're creating a process around our sales program for the future, and it is evolving.

I appreciate that. Thanks, guys.

Okay.

Next, we'll go to the line of Alan Ratner from Zelman & Associates. Please go ahead.

Hey, guys. Good morning. Really strong results. Nice job. Stuart, first question. When you kind of talked about the net price declines in that kind of 10%, 11% range, historically, the typical spread between a new home and a resale, I believe, has been around 15%. I'm not sure you see it that way, but that's kind of what the data would show roughly. And we clearly haven't seen that level of price declines in the resale market, which it feels like to me when you compare the strengths we're seeing in the new home market today versus the resale market, I think there's a thesis out there, it's all inventory driven, but it feels like some of that historical spread is definitely narrowed this year as you and other builders have been more aggressive on pricing to market. So, when you think about that and you think about some of your other comments with your land cost is probably going to continue to rise, construction costs, while -- there's been progress made there, it's probably stable from this point forward. If you don't see resale prices rising, can you maintain that progress you've made this year as far as now closing that spread versus resale? Or do you see that spread returning just as a function of higher costs over time?

Well, I'll tell you, Alan, that you're kind of sitting in a very strange configuration of the housing market right now. The resale market is inventory very, very constrained. It's been well documented that interest rates rising as much as they have left existing homeowners with two assets. They have a home that is valuable and they have equity. They also have a mortgage that is at a very low interest rate and that also has great value. So, they're just not bringing existing homes to market as much as or at the rate that you would traditionally see. And that short supply of existing homes has enabled that part of the market to stay a little bit more robust in pricing as the new home market has used incentives to meet the market where affordability actually exists. So, that configuration is creating an anomaly in the way that existing homes and new homes are priced. I've said in the past that I still think that the existing home market is kind of a zero-sum game in terms of the supply and demand, because every time somebody sells an existing home, they go out and they have to buy another home. So, you add inventory, you subtract inventory. And I think that's kind of how that's configured. But from a pricing standpoint, I'm not surprised to see a little bit more parity between new and existing homes at this point. And yes, I think that we can continue on our trajectory depending on the overall macro environment, the interest rate environment. And where affordability is down, I think we can continue on our existing trajectory even as the existing home market remains relatively strong because of short supply.

Got it. That's helpful to hear your thoughts there. Second, I guess circling back to the ROA conversation, it has been a few quarters I think since you've talked publicly about the SpinCo plans and recognizing that's seemingly on hold for the time being, you still have about 10% of your assets right now not generating returns, which is clearly, I think, impacting the overall return calculation. So, just curious if you care to provide any updated thoughts on ways to monetize that more quickly, recognizing the capital markets may not be most advantageous right now.

Yeah, I think that you've laid it out well, that it has been some time, and the capital markets continue to be not very constructive for executing a plan. It does sit in the background, in the ring, and I think it's something that will come back into light at another point in time. It's very much at the front of our mind. We think about how we're going to configure some of those assets that can be positioned differently and there will be a moment in time when we come forward with a plan. It's not something that we've stopped thinking about. It is something that we've stopped talking about because we just don't think that the capital markets are constructive for a program right now.

Understood. Appreciate the update, guys. Thanks a lot.

Okay, next.

Thank you. Next, we'll go to the line of Ken Zener from Seaport Research Partners. Please go ahead.

Good afternoon, everybody.

Good afternoon.

So, I have two questions. They might have some subparts to them, so bear with me. But first question is, broadly speaking, the prioritization of returns versus growth. And I ask, because this is basically a balance that you're striking between even flow and gross margins. So, first item is, it seems like even flow is in this 19,000 plus or minus range. The word even would suggest less variance in seasonality. So quarterly, I mean, do you think variance is, let's say, about 10% sequentially in that start number? Or how is your machine working? Because it's obviously not set to the larger variance of normal seasonality. And then, related to that, it doesn't appear that we're seeing your focus on pace affecting gross margins, right, at 24%. So, could you maybe kind of talk to that? I haven't heard you really talk about the dynamics of gross margins much, but the pace relative to the margins and what you think your start pace can be on a variance basis?

So, Ken, we've been fairly unapologetic about saying that pace is our core focus. We're looking at even flow. We're using even flow to drive efficiencies, whether it's in SG&A or whether it's in construction costs, you can expect, as we've said before, that, that consistent drumbeat of production is going to prevail and we're going to use margin as shock absorber or moderator to enable us to maintain production pace. Your numbers are by and large correct. There will be some adjustments for seasonality, which is anticipated. You see this in our fourth quarter projections or guidance. But with that said, you can expect that you're going to see an even flow production model that within boundaries, we recognize that if the market really moves dramatically one way or another, we'll adjust those production levels. But within boundaries, you're going to see us focus on that constant production pace, defining a constant sales pace.

Okay. And then, the second question, I didn't hear the necessarily gross margin, which seems to be in a positive position versus your implied 20% return on capital. But the second question, and I think this is the most important issue that investors are overlooking for Lennar. Even flow tied to capital light, less capital intensities, 85% finished. Homesites acquired in the quarter, one-and-a-half years of land. If that were to fall to one year, which if you keep buying finished lots, it doesn't seem crazy, it's hypothetical, but one-and-a-half down to one year, that would be almost a third decline in land requirement on a land base of nearly $7 billion, equivalent to nearly $3 billion of decapitalization. I ask as EPS, right, as you get smoother, your EPS is increasingly going to be a cashflow metric, which affects valuation, but it also, right, if you're going to be generating earnings plus this $3 billion or so in land and whatever comes through WIP, it seems as though you will be forced into a systematic buyback program, which is an okay problem. I'm just thinking of some of your peers have gotten deeply into a negative leverage position. Is that something that you're thinking about avoiding and comment on the cash flow from less owned land? Thank you.

Jon, did you want to add something?

Yeah, just on the gross margin question, everything we're doing, as Stuart mentioned, is really driving to efficiencies. A big part of that efficiency is all aimed around how do we bring construction costs down for the benefit of affordability and for margins. And so, if we try to look at direct construction costs as percent of revenues, they are falling and that is helping support our margins even though we are aggressively managing the pace.

Okay. And to your more recent question, we think about the size of our stock buyback. We're very focused on continuing to drive cash flow. You are correct. Our land owned and controlled relationship is an area of focus. The year supply is very much an area of focus. You've seen these numbers migrate from much higher to the point that they're at now and we're not finished. We recognize that there will be an additional level of cash that comes into the company. We don't think it puts us in a bad position to end up with negative net to total cap -- negative net debt to total cap. And we recognize that we will continue to be cash generative. We fully expect that. We think that at year-end, we'll probably be in a better position than we are right now. And so, without projecting, let me say, that we are very focused on stock buyback and using our capital strategically to position the company well, to have flexibility, to have liquidity for the opportunities that might present themselves for us as markets kind of adjust. But at the same time, our stock buyback program is front and center of the way that we're thinking about our future.

And I guess I'd add, Ken, that just operationally we are focused on getting to the point where net income equals cash flow. We're not there yet, but it is a focus. And then, what we do with that capital -- cash flow is [indiscernible] answer, but I think it is a real goal for us to have those two equate. Not there yet, but it's a goal.

Thank you so much.

Why don't we now take one last question.

Thank you. And our final question comes from John Lovallo from UBS. Please go ahead.

Hi, guys. Thank you for fitting me in here. Maybe the first one, just going back to the 10% growth target for next year, curious how you're thinking about community count in the context of that 10%. Are you expecting high-single digits, maybe low-double digits community count growth? Is this really going to be driven more by absorptions?

So, let me preface this by saying that community count is probably the most difficult part of the number in a projection to get right. So, whatever Jon is going to say about community count right now, I am saying this is not a projection, this is not guidance, this is just Jon answering your question.

Thank you for that caveat. But it's very true, whether it's municipalities, litigation, it is the most challenging aspect to hit right on the timeline. But with that said, we have in place, as Stuart said earlier, a land pipeline that makes us very comfortable to target that 10%, that low-double digit growth. That will come from probably like a high-single digit community count and some increased absorption as we bring on more affordable workforce housing communities across our platform.

So, you can expect that our community count will grow. It will grow somewhere around where our growth expectations are generally. But it's not all about same store sales. Our business doesn't work perfectly that way. I'm not talking about Lennar's business, I'm talking about the new home business, it doesn't work perfectly that way. So, we expect our community count to grow.

Understood. Okay. And then, maybe just going back quickly to Alan's question, if I can, on Quarterra. There's clearly economic uncertainty out there, but the capital markets do seem to be improving. I mean, there's even a homebuilder IPO out there in the market. I mean, have you guys dusted off the plans here at least on Quarterra? Is this something that could get back in motion here in the near term? Maybe any incremental thoughts there?

Well, the reality is we never really put it on the shelf. We've been working in the background on the way that we might or might not configure Quarterra. And so, it's not something to be dusted off. It's just at the right time, we will make the right move, something that works and dovetails with where we're going and how our company is configured. But we have to stop talking about it, because quarter-by-quarter we don't want to feel like we're missing expectations. We don't want to put something out there that just isn't right or doesn't feel right. One thing that I will say is that the opportunity to spin or to move off balance sheet some of our assets, we think is constructive for return on assets and some of the other calculations, we recognize that opportunity. It'll happen at the right time.

Understood. Thank you, guys.

Thank you. And so, let's leave it there. I want to thank everybody for joining us. We really look forward to continued execution as we go forward. I'm very happy with our third quarter. Looking forward to reporting year-end and look into 2024. We'll talk next time. Thank you.

That concludes today's conference. Thank you all for participating. You may disconnect your line and please enjoy the rest of your day.