Welcome to Lennar's First Quarter Earnings Conference Call. [Operator Instructions] 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 of 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.

Okay. Good morning, everybody, and thanks for joining us today. We're in Miami. And I'm here with Diane Bessette, our Chief Financial Officer; David Collins, who you just heard from, our Controller and Vice President; Katherine Martin, our Chief Legal Officer; Bruce Gross, CEO of Lennar Financial Services; Eric Faders here, President of Lennox, and we have today, Jim Parker and David Grove, our Area Presidents who are new to this program and who are now overseeing operations across the company. As you know, Jon Jaffe officially retired at the start of this year. And while Jon's absence is deeply felt, the depth of experience and leadership on our team ensures that we're just not going to miss a step. And Jon, if you're listening, all is good, and we know you're listening. We hope that you're enjoying your time at the beach. We're working hard. And I promise you that Jim and David are comfortable with everything in their day-to-day new positions, except for the trauma embedded in today's conference call, but it really is the only thing that you didn't prepare them for. All right. So let's move on. And as usual, today, I'm going to give a brief macro and strategic overview of the company. After my introductory remarks, you will hear briefly from Jim Parker and David Grove, who will give a brief operational overview. We hope you'll all get to know them over time over the next quarters as we are certain, you will be quite impressed. Of course, after they speak, Diane is going to give a detailed financial overview, along with some limited guidance for the second quarter of 2026. And then, of course, we'll have our question-and-answer period. [Operator Instructions] So let me begin. As we noted in our press release last…

Thanks, Stuart, and good morning, everyone. I am Jim Parker, and I'm Lennar's Area President for the Eastern half of the country. I came to Lennar about 8 years ago through the CalAtlantic transaction and have been in the homebuilding business for over 30 years. David, [indiscernible] and I worked together to drive performance across the Lennar platform and you would hear from David right after me. Let me start by saying that I'm very enthusiastic about where we are as a company and the tremendous progress we've made over the past 3.5 years. While the market has been difficult since interest rates spiked in 2022, we have had a clear and well-communicated plan at Lennar, and we have been coordinated in our execution. The overall housing market has and continues to adjust to a combination of elevated prices in the wake of coded and elevated interest rates, pressuring affordability and homebuyer confidence across our geographies. Instead of waiting for the market to correct, we believe this was a new normal and began to adapt our business execution to provide the volume the market needs at the prices and incentives where the market can transact. We are focused on refining products, optimizing our everything's included packages, rebuilding margins and using mortgage rate buydown to maintain or regain momentum. Through our first quarter, we've been seeing early signs of a more consistent demand environment. We will see how that holds up as the market adjusts to the new geopolitical turmoil. Over the last 3 weeks, over the next 3 weeks. David and I will visit each of our divisions and conduct our quarterly operations reviews, which happened at the beginning of each quarter. And this is always exciting as we walk through the market at a very local level, we get…

Thanks, Jim. Good morning, everyone. I'm David Grove, I'm the Area President for the West. Nice to be with you today. As Stuart said, we remain extremely focused on capitalizing on our strategy of asset-light and even flow production to fuel operational efficiencies and consistent growth. The execution of our strategy is resulting in exactly the outcome we expected. While we have certainly impacted our margin, we are also realizing lower costs, improved cycle time and continue to buy well structured land at rationalized prices, all while continuing to drive efficiencies in our operations. So let me start with our cost savings and cycle time improvement. Our technology-driven bid tool software, coupled with our even flow starts and everything's included strategy has allowed us to consistently realize cost savings quarter-over-quarter. We have lowered our direct cost 12 of 13 quarters sequentially, and we are down 12% over the last 2 years. Our direct are now below pre-COVID levels. In Q1, we achieved just over a 2.5% reduction in direct construction costs from Q4, which represents a 7% year-over-year reduction. Our cycle time on single-family detached homes was down another 5 days quarter-over-quarter to 122 days. This is an 11% year-over-year reduction and an all-time low for Lennar. On the land front, we continue to capitalize on strong relationships with developers and land sellers to fill our land pipeline. Our consistent strategy and creative problem solving has given us the ability to negotiate both land pricing and terms that will position us for stronger margins and allow us to maintain our land life strategy. These operational improvements increased our inventory turn by 47% from prior year to [ 2.5 ]%. Turning briefly to our marketing and sales machine, which through constant refinement continues to mature and facilitates our ability to execute…

Before we go forward, Diane, great job guys. But David, how many years have you been with the company?

27.

So I just want to make sure that everybody understands, Jim, you've got 30 years in the industry -- and 8 years here at Lennar, the during from the [indiscernible] program and David 27 years right here at Lennar.

Homegrown

Carry on.

Okay. Good morning, everyone. So Stuart, Jim and David have provided a great deal of color regarding our operating performance. So therefore, I'm going to spend a few minutes on the results of our financial services operations. summarized balance sheet highlights and then provide estimates for the second quarter. So starting with Financial Services. For the first quarter, our financial services team had operating earnings of $91 million. The lower earnings were mainly derived from our mortgage business. The decrease was primarily based on the mix of buy-down programs offered to our homebuilding divisions, including an increase in ARMs versus fixed rate mortgages with ARMs generating significantly lower earnings. And now turning to the balance sheet. Note that this quarter, once again, we were highly focused on generating cash by pricing homes to meet affordability. The result of these actions was that we ended the quarter with $2.1 billion of cash and total liquidity of $5.2 billion. We are well positioned as a land light manufacturing homebuilder. Our year supply of owned homesites was it 0.1 year and our homesites controlled percentage was 98%. This configuration significantly lowered our balance sheet risk, especially in challenging environments. We ended the quarter owning 11,000 homesites and controlling 486,000 for a total of 497,000 homesites. We believe this portfolio of primarily option homesites provides us with a strong competitive position to continue to grow market share in a capital-efficient way. Our inventory turn increased to 2.5x with a return on inventory of approximately 17%. We maintain our focus on increasing asset turns which will enable us to capture greater improvement in returns when margins normalize. During the quarter, we started approximately 17,400 homes and ended the quarter with approximately 38,600 homes in inventory. This includes about 5,000 completed unsold homes, which as we've…

[Operator Instructions] And our first question comes from Alan Ratner from Zelman & Associates.

Thanks for the detail, and David Jim did a nice job. Glad to have you on the call. So first question, obviously, I think, top of mind on recent activity, I think you kind of phrased it well, Stuart. But I'm just curious with the move we've seen in rates here over the last couple of weeks. Obviously, you kind of probably started the process of thinking about the guidance towards the end of your quarter in February when rates were 20, 25 basis points below where they are today. A, I'm curious, have you continued to see the ability to either stabilize in lower your incentives even over the last couple of weeks emits this volatility and b, has the cost of rate buydowns gone up alongside the move in rates we've seen here? And how is that contemplated in the margin guide?

So the question is interesting, Alan, because it happens to be an interesting time to do an earnings call. There's enough brand-new volatility since the end of our quarter, to call into question any number of things. I think that we've tried to give as much guidance as we saw through the quarter and not do too much to update that thinking or guidance kind of under the banner that one week in a row doesn't make a trend either to the positive or to the negative. And the benefit we had right now today is that immediately after this call both Jim and David, as Jim carefully described, will be in the field working with the divisions to see what the actual impact is and think about what we do to either offset or lean into the things we're seeing in the field. As we sit today, without doing too much to update. I don't think we have an update. We haven't seen significant movement either in traffic or in the ability to sell and I'll let Jim and David weigh in on that in a second. But I just don't think that there's enough information to know whether this will be a short-term program. or even if a long-term program, what they're domestically, it will be a net positive or net negative. But as we see things right now, we're not seeing significant movement in the market, it really has been pretty steady. Jim, you first?

No, I agree. Right now, we haven't seen an impact, but it's early to tell. We talked to our division presidents this morning, and they have not seen any change to date this week or the previous week. So we're confident, but we're being very cautious. And like Stuart said, we're making sure we stay really close to the local markets -- make sure we stay in tune with that. David?

Yes, we're generally in the last -- this week, seeing a similar demand pattern that we've seen in the prior couple. So no significant negative impact. I think, generally speaking, that's positive in light of the state of the macro economics.

So look, I would just summarize and say that first of all, we generally don't give updated guidance or information. But given the anomalous moment that we're in, it's worth putting it on the table that right now, things are steady as we see them, both Jim and David and myself for that matter, are day-to-day in touch with our operators to get that feedback in real time. And we're not seeing something that would adjust the way that we have thought about the information that we've given, including our guidance. And for those of you who've known me well, I don't complete writing the material that I deliver in our earnings call until generally late at night or early in the morning, the night before, so we keep it pretty up to date and this was pretty well thought through.

That is incredibly helpful. So I appreciate just kind of walk through the timing there of when you kind of put this plan together on what you've seen. Second question on SG&A, recognizing you're not going to give guidance beyond the second quarter. I just wanted to touch on, I think, some of the comments you made, Stuart, about I think you referenced an expected improvement in SG&A in '26 versus '25 given all of the exchanges and maybe some of the headcount changes, I guess, that have gone on the last several quarters. Just want to make sure I'm understanding that correctly. I mean if I look at your SG&A as a percentage of revenue year-to-date through the first half of the year, at least including your 2Q guidance, you're going to be up about roughly 100 basis points year-on-year as a percentage of revenue. Does that mean you're anticipating that to actually be lower on a year-over-year basis in the back half of the year? Or am I reading too much into that commentary?

So let me say that first, let me broaden the discussion to overhead, which is broader than just SG&A. But the answer is that as numbers are reduced, it takes time for those numbers to flow through and come through our earnings reports. I think theoretically, yes, we are seeing opportunities and expectations that our overhead is going to be meaningfully lower as we come to the end of the year whether it actually flows through 1 quarter or another, we're going to wait and see. Some of these things get a little bit sticky. But at the end of the day, it's happening in so many interesting areas that we're reducing costs. Some of the costs associated with our technology initiatives are clearly front-end loaded. The transition from world to E1 was extraordinarily expensive. That's tapering off. It might take some time for that to flow through. But that's happening more quickly, but there are other elements of what we and they're working on. And even the things where we missed that and went down bed adds initially where money was spent and we don't have to spend that money anymore. Additionally, as I talked about senior management, we have so many extraordinary people within our company that are deciding to use this opportunity to retire and let the next-generation shine. Though we haven't put out a public announcement, I'm sitting off from one of our favorites in Bruce. Bruce is going to be retiring. This has been embedded in that. We've known this for a month. And Bruce is actually going to transition and become part of the Lennar foundation working hand-in-hand with Marshall. But it's really across the company recognizing that overhead reduction or overhead reduction is a positive, but enabling the next generation of leaders to come up step up and put themselves on display just as you've seen here this morning is really a greater good. And when I say fresh legs, if you look at the energy that Jim and David are bringing to the equation, if you listen to [ Laura Escobar ] and Financial Services. You listen to others around the company, the opportunity to take a fresh look at a lot of things is a really unique opportunity that we're leading into right now.

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

Appreciate it. Thanks, as usual, for all the info. I guess my first question has to do with how you determine what's the optimal level of volume that you need to extract the efficiencies in your homebuilding operation given all the technology initiatives as well. I'm curious, is it based on a certain market share? Or is it more sort of a bottoms-up kind of approach? And therefore, like independent of what volumes are doing in the broader market. Like last year, it sounded like it was a little bit more like the latter. You were focused on achieving a certain level of volume, so you get the efficiencies that you needed because industry starts were down high single digits segment, you happen to gain a lot of share, right? But -- so this focus wasn't on the share. It was on maintaining a certain level of volume. But in your opening remarks, you also mentioned about growing market share almost as if it was a goal in itself. So I just wanted to make clear, how should we think about how you think about the volume that you need in any given year? Are there situations, for example, where you would willingly relinquish some market share or are you -- or should we think that you're always looking to gain market share?

Well, Steve, the -- interesting question, I'm thinking about it as you're asking it. The reality is that the answer is unique to each market and each market is a little bit different. And so when you look at the roll-up of our company, it would be hard to cobble together a unified strategy. The fact of the matter is, there are a number of considerations that are going into that calculation. Some of them are -- and they're all very market specific. We don't have a specific mandate to grow market share, but we do recognize that with advantaged market share, we are able to work with trade partners and landholders to do a better job of negotiating. So I'm going to turn it over to David, first, why don't you talk a little bit about land opportunities and things like that. And then, Jim, maybe you'll think about some other components.

Yes. Sure. I'd say that market share -- by market, we understand based on our position in the market, where we ought to be, and we have a target. But that doesn't really drive what you're asking about. What drives our consistent volume is the way that we thoughtfully put together each one of our land positions and our communities, and we have expectations out early on that we hit a certain pace. And our strategy right now is to maintain that pace, which is the increased market share is a derivative of our maintained pace on a community-by-community basis to our underwriting and then the competitors that generally slowing down a little bit.

Jim, trade partners, any thoughts about that?

Yes. I think the trade partners, we absolutely -- we build it from the bottom up. It really starts with the community it really starts when you plan that community and you come up with what the ideal absorption is, and then we try to build from that. And the better job we do with that with trade partners and land sellers and everything else, the growth kind of comes with it. We get more looks at different communities in the future. And it just kind of all ties together. But I really think it's not going in having a set number of mine. It's really from building from the bottom up of the communities as we open more communities, that's really what really accelerates that market share. So it's smart growth, but we're really trying to get to a set absorption based on what the market will give us. in what we think is the right level with the trade and everything else and it just kind of builds up from there.

And I just have to say that the volatility embedded in putting our foot on the accelerator and you take it off and putting on the brake and going back and forth, it only creates inefficiencies in the development process in the construction process and all the process. If we can build the tangibility for our trade partners and even for land partners, we're going to get the best pricing, and we're using that to our advantage. And in each market, we are doing our own very separate, very focused market study to think about the combination of pricing and pacing in our own unique way, focused not on answering competitive information or contextualizing it in terms of how can we rationalize affordability with cost structure to end up with the best configuration for the future. And I just want to say one last thing, and I've said this over and over again, that we didn't start with this -- with a notion that we're going to wait for the market to recover. Instead, market by market, we have focused on how do we construct the best version of Lennar to build efficiencies market that's likely to remain stubborn for a long time. It's now 3.5 years and we haven't had that throw back to the past. We're constructing an operating platform that is reconfigured to be able to build affordability for the future. And if you think back to the over time and to the inflationary period that we went through in 2022, '23. The cost structures grew alongside the pricing structures were left with the pricing and the cost structure is very sticky, both on land and on vertical construction, horizontal as well and rebuilding the company to be better positioned to build affordability has been hard work. It's being done at every division, division by division within its own structure, and that rolls up to the number that you see corporately.

Got you. That's very helpful. I appreciate that. I guess my second question has to do with volume through the year. So you've reiterated the guide to $85,000 in closings and you're kind of off to a little bit of a slower start than even last year. And it just sort of feels like the year is going to be kind of more back-end weighted. And I just wanted to ask how important is it for you to achieve a more sort of even flow of volume through the year? Is the fact that this year is not going to be quite maybe as much as you might like. Is that a hindrance to you're achieving the efficiencies that you ultimately want to get. Longer term, should we be expecting that you're going to achieve more of a kind of a 50-50 kind of front half, back half kind of cadence?

Look, this is an art, not a science. I can't predetermine today what we're going to do throughout the year. As I said, Steve, and as Jim carefully laid out. Jim and David are getting out into the field for operations reviews, division by division, bottom-up approach, working with the people. And that happens at Lennar all the way through the year. So what we say today might change over the next couple of weeks. We know that there's a lot going on in the world that is affecting both gas prices, inflation levels, interest rates and that might be short term, it might be longer term. We're going to be connected with what's happening on the ground. And it might be unique to different markets, how it actually plays out. What we are solving to is how do we use as much volume consistency as we can to build efficiency in everything that we're doing. But we don't want to, at the same time, not pay attention to what the market is allowing us to do. We don't want to break the market until it's a balancing act. And that's why I say it's not a science. Jim, do you want to add on that?

Yes. I would just say this is a huge priority for the divisions. We start this process even before the year begins with our early forecasting. We look at the different quarters, we look at whether they are as equal as they possibly can be. It really goes back to focusing in on the land and opening communities in a timely manner and not letting delays hit. And I think we're getting much better at that. But I think it really comes down to looking out 18 months, seeing what quarters look like, and that's when we decide where we have a community account, what do we need to push, what do we need to do -- you take Northeast markets, what do we need to do as far as getting the home sites to develop quicker with different methods dealing through the weather. So I think it really starts with planning. And I think you see divisions that are doing it well. They just have a tremendously well brand machine.

David, [ anything to add ]?

To say that we are focused on consistency of volume, but we are also responsive to the market as the market shifts underneath us. I think what holds us in good stead is that we have clarity of strategy. We are going to start at our sales paces, open communities on time. We're going to price to market where the market happens to be, and we're going to deliver our homes and not carry excess inventory now.

And our pricing mechanism, our pricing tool is really primarily focused on getting a kind of tactile sense of where the customer is and where affordability lies. And this is our primary driver in our day-to-day hands on pricing all the way through the company.

Next, we'll go to the line of Susan Maklari from Goldman Sachs.

My first question is, it's impressive to see how the inventory turns hit 2.5x this quarter despite all the pressure that you are seeing in the market. I guess, could you talk about where you see the upside to inventory as you think about the construct of those [ new ] areas of focus that you're really looking to achieve as we move through the next several quarters?

Well, not only that's a good question, that's a timely question. Eric and I spent some time in New York working through some of the capital markets approaches that we think about and dream about in terms of charting the path for the future of the company. I'm not going to be able to give you an answer as to where I think it can go. But I think that there's a field of opportunity. I will say that I think that the financial transformation that we've gone through and that is separating land from homebuilding and balance sheet is really interesting. It's getting more interesting by the day. If you look at and think about risk-adjusted pricing for capital when you look at risk profiles and you separate risk profile, there's a field of opportunity to rationalize the cost that are associated with the different dimensions of land that we currently have. I said in my remarks that we are targeting specific land banking programs and relationships and trying to find the right bucket for the right land to maximize or minimize the capital costs associated, the option costs associated. But additionally, we think that over time by taking a capital market thought process to the way that we have configured this, we're going to be able to think even better about how we bring land into availability for the company, how we manage the just-in-time delivery system. And all of this is going to have incremental benefit to that inventory turn number. So I don't think you've heard the last of inventory turn. I think that we're continuing to reach higher. And I think that we're going to see more come of this. I think that we're all going to find that the program that -- the program that we put in place is going to enable us to marry this operational view of our business with a capital markets view and make us better. So one of the things that I want to detail -- and maybe Dave and Jim, you'll weigh in on this, is the importance of our core product to this discussion. The more we migrate to fewer products that we build over and over again, the more efficiency we're going to inject. I still look at our cycle times and how they've come down just year-over-year from 137 days to 122. And quarter-over-quarter, you're looking at, I think it was 127 days down to 122 to -- might have been 126, but I look at the focus in the field and the opportunity to make it better by using core products. How would you say to talk about that?

Yes. I think the core product is going to -- is not only producing -- or resulting in our cycle time reduction. I think it's going to continue to improve. Also, it helps us rationalize our cost structure a couple of core products that are designed very efficiently within everything's included packet. It helps us capitalize on our purchasing structure, capitalize on our scale and that combination of volume core product, efficiency of build is materializing in lower cost than factor cycle times, which are going to be accretive to our inventory turns.

I would just say the cycle time, you go to these ops meetings and the teams are so proud of getting lower and lower and it's become the best friendly competition I've seen amongst divisions. So I love sitting there and when Charlotte says, they're at 101, they say, well, that's great, but why is Greenville at 96, they come back the next quarter and even hit it harder. So it's become a very badge of honor. And the core plans just makes us so much more efficient for our trades to build. They know they get repetition. They know what they're looking for and inspections go smoother. So it really all helps at the cycle time.

Yes. And look, I've been there with you. You've been the instigator. And it's not just a competition to see who can do things faster. It's a combination of being able to bring the consistency that we give to our trade partners and even to land partners, but to our trade partners, enabling us to get better and better at the coordinated [ dance ] of building homes and some of our divisions are just really pay the new ground to improve that cycle time in a very constructive way.

Yes. And the best thing is quality is improved with cycle time. It becomes so much more efficient.

Quality and customer experience. North stars for the company.

Okay. Well, that was very helpful color. And actually, just following up on it quickly, where are you in terms of the core plans? Can you talk to what percentage of the deliveries today are coming from that? Is there any kind of a target that you can share with us as you think about, I don't know, the next 12 or 24 months. And I guess also as part of that, it leads to the question around capital allocation. And as this comes together, can you talk to how you're thinking about the top uses of cash and how shareholder returns and growth and all these other initiatives fit within that?

So look, the discussion of core plans, again, we can talk about it corporately, but the reality is it's division by division by division. But the more important thing is how technology plays into all of this because we are migrating to a place where our due diligence program relative to land is going to be tied to an element of core plan engagement that is going to merge the company using technology towards greater and greater use of core plans. Now you can imagine if we're talking about the land engagement and due diligence process, it's going to take some time for this to actually come through the system, but this is an area where monitor technologies across a diffuse platform, 50 divisions coast-to-coast and getting that entire enterprise to push towards core plan, it is going to be technology that really drives us forward, and we're building those connectors right now. But is there anything that you guys would say about where core plans are percentage-wise and how we are migrating through your [indiscernible] views and division engagements.

That's generally across the platform, call it, 65% core, and that's going to vary by division from some at 50% to some at 90%. And that is really relative to the rollout of our core in order to meet different buyer profiles at different price points.

Our final question comes from John Lovallo from UBS.

Maybe firstly, in trying to kind of bridge the homebuilding cash it appears that there's roughly maybe $1 billion or so of cash flow use in the first quarter. It seems like it was largely attributable to inventory, which it was a bit surprising given that you started and you delivered roughly the same number of homes in the quarter. So kind of what's driving the pressure on cash flow given the expectation for a pretty strong conversion in 2026?

It probably relates most to average sales price coming down.

Yes, I think so, John, I'll jump in. We're -- as you know, we're very focused on pricing to market. Our incentives are on a higher level. And so while we're getting cost savings that are increasing cash, as you've heard us say, it's hard to outpace the lower revenue on a per home basis. So we have to keep purchasing homesites to keep the production going. So I think you'll see a little bit of better matching against the quarters progress, but the first quarter is still light on revenue because it's light on deliveries. It's a little bit of an anomaly for the year.

Okay. Understood. And understanding that they were in a pretty dynamic market right now. I just wanted to follow up on Steve's question. The 85,000 delivery target seems to imply that you plan to start more homes than your orders in the second quarter. And they kind of work through that inventory in the back half. If that's correct, I mean what's -- if that's not correct, maybe I'll say it that way, what's driving the much higher kind of second half deliveries than the implied second quarter inventory?

So first of all, let me say, we have -- we clearly have question marks around the 2 things that I detailed as things that have happened in the short term that it's kind of changed the landscape. And of course, turmoil in the Middle East has everybody's attention and we have a question mark, what that going to in? How is it going to ripple through? And number two, the sidelining of the institutional investor is another component of that there are a lot of people thinking about it. And if the institutional investors are really sidelined. Is that going to instigate more more primary buyers to the market as some believe or is it going to reduce volume. We're going to have to wait and see. And I tried to leave room for those changes. That impacts the question of what will our deliveries be as we come through the year. But what drives us to continue to aim for that number is a base belief base optimism that I've been getting from both David and Jim about the configuration of our business. And so on the one hand, you have the geopolitical issues or domestic issues that are counterbalancing. But I will tell you that leading up to the past couple of weeks, there is -- has been a sense of optimism about programs that we have in place. Jim, why don't you talk about that a little bit?

Well, look, I think it comes down to -- we see the steadiness in a lot of markets, but more importantly, we see the energy with our associates and they're starting to really see these different programs. We're starting to see the advantage to it. A quick example is virtual customer care. And I had ops meetings yesterday at 3 divisions over the last 2 days, and every division they all talked about. At first, they were challenged now sudden the efficiency, the customer experience, the quickness of the response to the customer. I think that's really what we're seeing is our teams are really starting to buy into what we've been working on for years, and we're now seeing the advantages and optimism fuels a lot of people. And I think that you get that positive energy going, that's what's driving it.

David?

I just said that we have the privilege right now of being able to -- having the time to read what the market gives us over the next few months within this environment. And we have -- because of our cycle time reduction, we have the room to adjust accordingly so that we can determine as the year progresses, whether $85,000 is rational or not.

Well, I think that generally speaking, the unified view right now is it's definitely within our scope and within the opportunity set, and we're pretty enthusiastic about the programs that we have in place that have given us somewhat of an edge on the market, certainly an edge on information flow and staying close to the market. And of course, that very careful dance that we dance of having corporate or time to the individuals and the divisions that are actually seeing what's happening on the ground. I think that there's a general sense of optimism to the company right now that we're going to do as good as the market allows. And I think that's a good place to stop. I want to thank everyone for joining us. I couldn't be more excited about the program we have in place and having David and Jim make it through their first traumatic conference call. And we look forward to coming back together, of course, in the second quarter and beyond as a management team that's invigorated and focused on the best of a tough situation. Thank you.

That concludes Lennar's First Quarter Earnings Conference Call. Thank you all for participating. You may now disconnect your lines. Please enjoy the rest of your day.