Thank you. Good morning and welcome to the Toll Brothers Second Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Douglas Yearley, CEO. Please go ahead.

Thank you, Joe. Welcome and thank you for joining us. With me today are Marty Connor, Chief Financial Officer; Fred Cooper, Senior VP of Finance and Investor Relations; Wendy Marlett, Chief Marketing Officer; and Gregg Ziegler, Senior VP and Treasurer. Before I begin, I ask you to read the statement on forward-looking information in our earnings release of last night and on our website. I caution you that many statements on this call are forward-looking based on assumptions about the economy, world events, housing and financial markets, the impact of the pandemic, interest rates, inflation, and many other factors beyond our control that could significantly affect future results. I'm very pleased with our second quarter results as we beat our guidance on nearly every metric. We delivered 2,271 homes for record second quarter homebuilding revenue of $1.84 billion. Our adjusted gross margin of 24.4% increased 150 basis points year-over-year and was 100 basis points above our guidance. SG&A, as a percentage of homebuilding revenue, was 11.9%, an improvement of 190 basis points year-over-year and 110 basis points better than guidance. Pretax income of $169.8 million and EPS of $1.01 per share increased 66% and 71%, respectively compared to the prior year period. Contracts and backlog in both dollars and units were all time records. Our backlog at quarter end was valued at $8.7 billion on 10,104 units, up 58% in dollars and 57% in units compared to last year. We signed 3,487 net new contracts for $3.1 billion in the quarter. On a year-over-year basis, our net signed contracts in the second quarter were up 85% in units and 97% in dollars. As a result of our excellent results in the quarter and based on the significant visibility our backlog provides, we are raising our full year guidance on nearly…

Thanks, Doug. Good morning, everyone. We had a terrific quarter. Our business continues to fire on all cylinders, especially our production teams out in the field. We delivered 2,271 homes at an average price of approximately $809,000, generating record second quarter homebuilding revenue of $1.84 billion. Deliveries were up 18% in units and 21% in dollars compared to one year ago. Our second quarter pre-tax income was $169.8 million, compared to $102.1 million in the second quarter of 2020. Net income was $127.9 million or $1.01 per share diluted, compared to $75.7 million and $0.59 per share diluted one year ago. It's important to note that our second quarter pre-tax and net income included a $34.2 million pre-tax charge or $0.20 per share after tax related to the early redemption of debt. Without this one-time charge, earnings per share would have been $1.21. Second quarter adjusted gross margin was 24.4% and compared to 22.9% in fiscal year 2020 second quarter and 100 basis points better than projected. The outperformance was due primarily to pricing power, higher-margin option sales, favorable mix, operational efficiencies and cost controls. Looking forward, we are now projecting adjusted gross margin for full year 2021 of 24.6%, up 30 basis points from prior guidance. Despite recent increases in material and labor costs led by lumber prices, we are confident in our adjusted gross margin projection for the second half of fiscal year 2021 and our ability to further expand it in fiscal year 2022. With new home demand far outstripping supply, we have been able to push prices, which has more than offset cost increases. We are intensely focused on our construction budgets and managing building costs. Before we build any of our homes, we have contracts in place for substantially all of our components and trades…

Thank you, Marty. To wrap it up, we continue to believe that with our strong land position, our plans to grow community count this year and next and the wide variety of homes that we offer in 24 states and 50 markets we are very well positioned to capitalize on the extraordinary demand we are seeing in the housing market. And with the structural changes we have made and continue to make in how we operate, including our relentless focus on capital efficiency, returns and internal operating efficiencies we believe that our results will continue to improve in both the short and long-term. Before I open it up to questions, I want to remind all of you of our upcoming virtual Analyst and Investor Day that we will be hosting next Wednesday, June 2 starting at 11:00 a.m. Eastern Time. We will showcase many of our team members, products and our communities and you will become much more familiar with our operations and our culture and we hope you will come to understand what makes Toll Brothers such a special company, and how much we have evolved in the past decade. I'm really looking forward to it and I hope you'll be able to join us on Wednesday. I'd also like to encourage you to take a look at our recently released ESG report, which is now available on our website. This is our first report and it includes important information regarding the many initiatives we have taken with respect to ESG. And finally, I'd like to thank all of our Toll employees for their contributions to our great results this quarter. We couldn't have achieved these results without your hard work, dedication and commitment to providing our customers an experience unmatched in the homebuilding industry. With that, Drew, let's open it up for questions.

We will now begin the question-and-answer session. As a reminder, the company is planning to end the call at 9:30 when the market opens. [Operator Instructions]. The first question comes from Mike Dahl with RBC Capital Markets. Please go ahead.

Hi. This is Chris Kalata on for Mike. Thanks for taking our questions. My first question is just on the assumptions behind the greater than 20% ROE expectation for 2022. Obviously, the strength in sales and margins, they're driving much of that improvement. But are you assuming any benefit if at all on buybacks or benefits from balance sheet repositioning?

I think there is modest benefit assumed from that. The big drivers of that expansion in ROE are revenue growth and gross margin.

Understood. And I know you guys said you didn't want to provide 2022 guidance. But I know last quarter you guys spoke to expecting gross margins above 25% in the first half of the year given the strength and the exit rates expected this year. Any update you'd be willing to provide on what you're expecting specifically for the first half on gross margins?

I think in the prepared remarks I mentioned that our -- the math leads you to 25.4% as the gross margin for our fourth quarter and we expect it to be higher than that in 2022.

And I'll refer you Chris back to my comment in my prepared remarks, when I said, our gross margin for 2022, and I'm reading, will significantly exceed 2021.

Understood. Fair enough. Thanks for taking my question.

Thank you.

The next question comes from Stephen Kim with Evercore ISI. Please go ahead.

Yes. Thanks guys. I appreciate all the color. Exciting times out there and a lot of changes in terms of the way builders are pricing given the scarcity of supply and you all have obviously got a lot of experience with selling scarcity to your customer base. But this -- the auctions and the sealed bids that we've kind of been hearing about as well as some builders putting in escalators for potential increases in costs, one of the things that I've gotten from builders when they talk about those strategies is that they are concerned about the customer service blowback that implementing some of these things may generate. I've got my own views on that, but I would be curious if you could explain how you think about any potentially negative ramifications from changing -- altering the way in which you price versus the past? And then specifically with respect to escalators, cost escalators in your sales contracts. Is that something that you guys actually are doing or would consider doing or not?

Great question, Steve. I look forward to the days when we are able to sell everybody who wants a home, one of our beautiful homes, but that is not today's market. And there's [precedent set] (ph) of course in the resale market. When things are hot for -- the five of you have made an offer by tomorrow night at 5 o'clock we need your final invest in an envelope. And so that occurs in the housing market. We have -- as I mentioned have now gone on allocation in two-thirds of our communities because of just significant demand that far exceeds our ability to sell or our desire to sell frankly because we want to manage our growth with 58% up in backlog. And our construction teams are doing a fantastic job out there, but it is time to start taking price and managing operations, managing demand and managing growth. And so what we have done in our communities that are on allocation is basically two things. Some communities have been taking a list. And by the way, the people on that list have been prequalified for a mortgage and they're ready to go. And if we've given people a number on the list Mr. and Mrs. Smith is 20 on the list and you're number seven and at the pace we're going we think we're going to get to you in the month of July or whatever it may be that's one way. And then every couple of weeks when we offer a couple of lots, we raise the price. And we may raise it 50000. It just depends on the community. The way we've now migrated, not in all cases but in many, is those people on the list that are number seven, 12, 20, 32 say…

Yeah. That's great. Really appreciate that, Doug. Second question relates to margins. I mean, particularly, what I'm talking about is not margins in the third quarter, but really what the margin opportunity is, as you look forward assuming that the current environment doesn't dissipate very rapidly for whatever reason. When I look back in history and I look at, let's say, the 2003 to 2005 period which is probably the most analogous time to today in terms of pricing, obviously, the bone structure was much worse back then than it is today. But pricing back then in the industry was call it got to 15%. We're now running 25% year-over-year in the resale market. So we're running much hotter than we were even then. In that period of time, you're gross margins went up about 670 basis points. I think people may have forgotten that. And I know that there are some things that would work against you from achieving something like that over the next couple of years. The ones that come to mind are your increasing affordable luxury focus as well as the material cost inflation that you're fighting against, but probably still incurring to some degree. And possibly a change in your land investment just, sort of, trying to go to a more just in time. So as we think about what you saw during that period of time in terms of pricing and the margin impacts and you assess these three things that I laid out that are sort of drags to your margin, can you dimensionalize some of those for us and help us understand how significant some of these headwinds theoretically might be to margin expansion versus the opportunity from price?

Sure. Let's start with land. Yes, as you can tell by our prepared comments and what we've been talking about lately we are structurally changing how we buy land. We are very, very focused on ROE. I know it's shining through and we're proud of it and it will continue. And it's permanent. Right now those 70,000-plus lots that we control and I mentioned it most of those lots were controlled were put under contract pre-pandemic before prices ran. So we're in a really good position where we can be selective in how we grow the land bank. And I think that is not maybe the headwind you suggested as much as it would appear for that reason. Affordable luxury which is a growing part of our business and we thought would be lower margin than our luxury business is not. Because of the strength of that market, because of the 70 million-plus millennials coming out the affordable luxury margins are right there with our core luxury business. Our move to the south, our move to the Mountain state has helped has been a tailwind to margin because those are growth areas in this country. We've had pricing power. And while one would think you go to Tampa, you go to Jacksonville, you go to Atlanta you're going to have a little margin compression not the case because of the strength of those markets and how this country is migrating. And the Pacific, California, Oregon and Seattle, there's 40 million people in California they're not all leaving. We are seeing tremendous growth 80% plus -- 85% order growth Q2 coming out of California with significant pricing power. So I'm not going to comment historically on what happened to gross margins. Thank you for being with us for that length of time. I remember those good old days, but we are certainly feeling strong tailwinds. I'm not going to speculate on where lumber goes, but Marty talked at length about how we are fully budgeted with contingencies for the building costs that have been rising. We are -- we also pushed back with our trades. If a plumber wants a price increase, it's not fair that he asked for it on a house in backlog. We sold that house to that client with that plumbers contract in place. And he will honor that contract for that price. If we need to talk about an increase on the next home sold that we can then properly budget for, that may be a fair conversation, but we fight hard to protect that backlog. And it's working.

That makes a lot of sense. Thanks, Doug. By the way, I misspoke it was 670 on the operating margin not the gross. That's what I meant. But – thanks for that fulsome answer. Really appreciate it.

Very welcome. Thanks, Stephen.

The next question comes from Michael Rehaut with JPMorgan. Please go ahead.

Hi. Thanks. Good morning, everyone and congrats on the results.

Hi, Mike.

Hi. So I wanted to -- my first question, I guess, I found it really interesting around the relocating buyers and in different states how that helps with consumers accepting price increases perhaps coming from higher cost states to lower cost states or coastal to inland. I was curious if you track any of those stack, for example, out-of-state buyers in Florida or some of your inner western markets relative to California. And how that might have changed -- has changed over the last year or two?

Sure. We do track it as best we can. And in those markets that are seeing more and more of the northeasterners and the Californians. And that's not the only migration right? But those are the two big ones. You've got the Boston to Washington D.C. corridor that's moving South or moving West, and you've got the Californians who are – they're moving to East somewhere, nowhere to go west. We're at about 40% of our sales in those accepting markets are people coming from what I just mentioned. Now, there's some markets that are 50%, 60%, there's others that may be lower. But that's call it about almost half, right, just shy of half of the buyers are coming from out of state. And it's – the phenomenon is fascinating. We've never seen migration like this. It obviously caught wind early in the pandemic when people thought they would be working in their sweat pants from their kitchen table forever. But it's continuing as people now realize that, well maybe, I'm not at my kitchen table every day of the week. But Austin, Texas, the pricing in Austin, which is the pricing power of Austin, which is number one in the country is driven by California. Plain and simple. The pricing power of Boise Idaho, of Reno, of Phoenix, of Vegas, of Florida, where we're in Charleston, we're in Greenville, South Carolina, Atlanta, Raleigh, Charlotte. It's the obvious market, Denver. I mean this can go on this – I need to cut it off here. So they they're moving from areas that are very expensive. The homes are expensive, that taxes are high. And it's giving us more power to raise the price without affordability issues being apparent. The traffic is holding up. Yes, a year ago, could the California have gotten one of our homes in Boise for 400 and is it now 600? Yes, but it's a $1 million house, they're trading out of in California or maybe it's $1.2 million now and it was $1 million a year ago. And so – and their monthly payment is so much less because of the tax structure. So we are very happy and we're benefiting from these migration patterns from expensive to less expensive.

That's helpful, Doug. And it's a really fascinating pattern that I think is accelerated as you're pointing out. I guess secondly, I just wanted to shift a little bit to ROE and the goal that you have set for 2022. You mentioned earlier Marty that, the big ROE drivers or improvement drivers would be revenues and gross margin. You also mentioned earlier at some point in the talk that – in your prepared remarks that you're going to become more programmatic on your stock repurchases. Just wanted to get a sense if possible, what you mean by programmatic? I mean I think it points – the stock repurchases over the prior couple of years have been somewhat sizable one quarter then more modest prior – in subsequent quarters. Should we be thinking about maybe 1 million or 2 million shares per quarter here? Something on that type of a run rate or any type of rough annual spend, any type of directional guidance would be helpful?

Sure. Mike, we are focused on return on equity and shareholder value now more than ever before. And the rough magnitude you outlined of 1 million to 2 million shares is probably a good entry point, particularly as we look at I'll say quarters other than the first or second, when we are generally using more cash in operations. And conversely, Q3 and Q4 is when we generate a lot more cash. So we're going to maintain some flexibility. We've been opportunistic in the past. We're going to be more programmatic in the future.

Great. Thanks very much.

You’re very welcome, Mike.

The next question comes from Alan Ratner with Zelman & Associates. Please go ahead.

Hey, guys. Good morning. Thanks for taking my questions.

Hi, Alan.

Doug, first I'd love to maybe just expand a little bit on the out-of-state buyer topic. So very interesting the data you gave there. First, I'm curious, I might have missed it but the 40% to 50% number you gave kind of where that's running at today, what was that pre-COVID? And I guess the follow-on to that would be, I'm sure it's a little bit difficult to look at this on a weekly or monthly basis. But now that offices are starting to open back up in the Northeast and schools are not going to be remote in the fall, have you heard any chatter about that trend slowing any bid on the margin more recently?

So Alan, your first question, about 30% pre-COVID in Florida, some of these markets I mentioned that have been for some time accepting out-of-staters because of – back then it was more. It was lifestyle in Florida but places like Austin, would have been tremendous job growth. So let's call it 30% to just shy of 50% is probably the move from pre-COVID today. And you would think that we would see less migration for the reasons today than nine months ago for the reason you just described that we are not. And I don't have a great answer as to why that is. I think people for example -- and I'm of the age, where you start thinking about where is the retirement home going to be. And I just know so many people that are doing that earlier. And they're doing that while they're still working. Because they want to set it up at 55 instead of at 63 and they know they don't have to be in on Wall Street every day of every month and they can figure out it's going to be a week in Florida. I'll fly back for the next week. But I'm going to begin to set up the next phase of my life. So I think part of that is why this continues to sustain itself even as people go back to work. I know our company while we are going -- we believe we are better when we are together, and that's become a tagline of Toll Brothers as we begin to come back together, we of course, will be flexible. We're not going to be able to hire people and retain people unless we show some level of flexibility. And so I think people recognize that in most companies. And therefore, I think this migration pattern to live where you want and not where you're tethered is continuing.

I also think, Alan, you're seeing more companies move their operations to lower cost of operations areas. The migration of corporate headquarters to Texas is well documented. And I think you're also seeing companies while they may not move the headquarters, they see where the people are going, and they'll move a back-office or a support function to that area. So people can be in an office, if not the headquarters office as part of their workday.

Got it. I appreciate those thoughts. Second, I'd love to drill in a little bit more on the shift in your spec strategy, because I think this is going to be something that's really interesting to track over the next few quarters. So, I know you not expect builder to begin with but even kind of delaying the sales of some of those homes, I would imagine at some point later this year you're going to have more specs coming to the market that are closer to completion. And I think the shift has probably been even more dramatic from some other builders. I mean some builders that are primarily built to order builders have completely shifted their sales strategies, and are effectively building up spec homes and we'll release those later in the year. And in addition, you guys are talking about 10% community count growth between now and the end of the year and other builders are as well. So, I'd love to hear your confidence and your thoughts about what the pricing power will be later this year when it seems like as this shift in sales strategy unfold and you have more inventory coming to the market, recognizing that there's a ton of demand today, but do you think the pricing power will still be as strong as it is today once all of the -- these new communities and specs ultimately get listed for sale?

Yes. So, I -- you're not going to see, what you describe as a larger number of finished specs coming to market later in the year. We actually have 1,500 specs and we define a spec -- actually we don't -- we hate that word around here. It's a QMI, Quick Move In. We had 1,500 QMIs last year, and that's defined as framing has begun. And we have 1,000 today. So, because of how hot the market is, we are actually undersupplied at the moment, but we are catching up, because we are forcing and requiring all divisions to build QMIs into their backlog every month. And so I think it's -- it will be fairly consistent, and I'm not worried about all of a sudden a lot of finished homes come to the market, and oh boy, I hope the market is still in good shape. That's -- I think it's formulaic. I think it's progressive, and I think it's fairly consistent in the number that we're starting, the number that we're selling. We just -- we'd sell a specked frame. But not today, because to sell a specked frame, the market is so hot, somebody that truly wanted a new home custom designed. Well, if all they can get is a housed frame where they can't do the custom design of the structural changes, they can only go to the design studio for the finishes. They're going to grab it. And we would rather have those people wait their turn to buy the new home and save that spec home until it is beyond drywall. Obviously, we know every single cost at that point without any issue. I mean I already gave the story about we push back on the plumber that wants a price increase on backlog. But, if the house gets beyond drywall, we're in fantastic shape when it comes to costs, but more importantly, we're riding an appreciating market and we will make more money, drive more margin improve ROE by selling that house a bit later at a higher price. And that strategy has been in place now for a while. We're just a bit more obsessed about it, and it's mandatory now that you have to hold the specked until that point.

Understood. Thanks a lot.

Welcome. Thank you.

The next question comes from Deepa Raghavan with Wells Fargo. Please go ahead.

Hey. Good morning, everyone. Great quarter. Can you Doug -- hey, thanks. Doug, can you talk about your luxury spend versus active-adult, you mentioned some of that but also some of the trends you're witnessing there? Just talk about how your active-adult category, for example was pretty strong. How do you think that trend this year and next few years, and curious how that could benefit your margins or your balance sheet?

Sure. So when I break down the 85% order growth in Q2, affordable luxury was up 103%, luxury was up 48%. Each targeted empty nester the baby boomer crowd was up 135%, and the smaller City Living operation was up 171%. So affordable luxury will be the fastest growing part of Toll Brothers as we focus more and more on the 400 to 650 price point for the 35-year-old millennial and you're going to see that grow fastest and as I mentioned earlier the gross margin out of that business is now matching our traditional luxury business. So we're very, very pleased with that. We knew it would have higher ROEs because the land is less expensive and we turn houses faster because they're smaller we're just, obviously, delighted that the gross margin has been higher than we had thought. So going forward we're not giving up on luxury. And as those millennials age more and more, they're going to be buying their second and third home. It's not that far away when we've got the 42 year old millennial who is ready to move up. And so -- and that -- we worked hard on this brand. And I hope you all join us next Wednesday, because I am sure based on how hard we're working here, you are going to be blown away by some of the product, videos and photography and presentations by our management team and just how we do it. And so affordable luxury will be the number one grower, obviously, age-targeted empty nester with that boomer crowd is doing better and better because they're on the sidelines for a long time through COVID.

It may be in the next quarter or two the strongest performing segment.

Because of the…

Because of the low base from a year ago.

Correct. Right. But I know we talk about it, but we do have the widest offering in the industry. You can buy a $300,000 house from Toll Brothers and you can buy a $5 million house. And that wide offering and the wider geography with all these new markets we've mentioned is what gives us such great confidence and excitement about the outsized growth that we can achieve.

Got it. Definitely looking forward to your Investor Day presentation. My follow-up question is what -- on pricing mostly a little bit two-part. What are your thoughts on keeping price when commodity starts to moderate? That's one part of it. Second part of the pricing question is, right now you're capping your orders per community. When do you expect to be caught up? I appreciate if you have any thoughts on when you expect to be caught up. You know your lot positions, you know what you're taking right now your intake. So you should probably have an idea when you expect to be caught up. So once you get to that equilibrium level, which enables you to lift caps would pricing then still will pricing start to get competitor? Would you start to think about probably lowering price especially when that commodity start to moderate? I mean, a couple of points there, but I appreciate any thoughts?

Sure. So we have never based the price of our homes on the cost to build them. That's not the business model of Toll Brothers and I don't believe it's a business model of many builders out there. We sell -- we do detail market comps on how much can we sell the home for? What will the market bear? What are the other new home communities by other builders selling for? What is the resale market selling for? Our business, we will drive this price as high as the client will pay. If costs moderate and we still have the demand at the levels we have today, no we're not stopping our strategy of allocation. We're not stopping our price increases or our seal bid process. It is completely based upon market demand and market pricing. With respect to when we get caught up, yeah, obviously we're moderating sales right now as we have discussed. The beauty is at the moment we control how much we sell. So we have the levers in place to decide, hey let's open five this weekend. It's all -- right now it's all internal and we can make those decisions and as this backlog, up 57% starts coming down a bit and we have a little bit less pressure on production where the next homes sold can be delivered, not in 13 months or not in 12 months, but in 10 months then you'll start seeing more and more of our communities open up as I said the way I'd like them to be where we can sell everybody else. But the pricing decisions will not be based on anything but the level of demand and the market comps.

And Deepa our allocation decisions are community-by-community right now, and coming off allocation will be community-by-community as well not overall company evaluation.

Right.

And the last questioner today will be, Truman Patterson with Wolfe Research. Please go ahead.

Hey. Good morning guys. And thanks for taking my questions. I appreciate it. So, first, I feel like, I might be beating this to death a little bit, but look, and clearly lumber costs are a big topic of conversation. It sounds like you all have a lot of confidence in your gross margins going out to 2022. As of today, spot lumber costs as of May, labor et cetera, et cetera. You all have more than enough pricing in hand today to offset all of your costs, at today's levels? And then, given, all of these bidding processes that you all have been talking about, excluding mix shift to the affordable, what do you think core pricing was up in the quarter or year-over-year?

I think the best way that we look at the pricing versus cost equation which is where I think you're going Truman is, to overly simplify this. We have an $800,000 home we're selling. We have a 25% gross margin. And we have around 25% of the costs that are associated with the land and improvements. And so those have been paid for previously. So it's a two-for-one kind of equation. A 2% cost increase can be offset with a 1% price increase, when you're looking at those cost increases from a labor and materials perspective.

Okay. Yeah, I got that. On the core pricing, quarter-over-quarter or year-over-year, do you all have that metric?

When you say price cost or sales price?

Sales price, yeah.

Yeah, the sales price, okay. Okay, all right. And on the affordable luxury, I know it's moved to 30% of your sales. Is this rolled out nationwide? Are there any new metros? Is there any additional expansion? And where do you think you could ultimately take that to? And Doug you made a comment, I believe in the prepared remarks about the streamlined construction process and possibly bringing these techniques to your other product segments. Could you just elaborate a little bit on that?

Sure. So, affordable luxury is now rolled out nationwide. That doesn't mean, every single one of our 50 markets has it. But it is in place around the country. We have markets that are primarily all affordable luxury, Jacksonville, Boise, as two obvious examples. We have other divisions that sell $2 million houses. And they also have a significant affordable luxury business, example, Phoenix. And you'll continue to see new markets that may be lower price. One example, we're going to announce shortly that we're kind of announcing today, but we're going to be reentering San Antonio. While San Antonio is primarily an affordable luxury market throughout, as Jacksonville is. But there's going to be other markets that we will enter, that will be both luxury and affordable. And you will see more-and-more affordable luxury in the existing footprint. With respect to cycle time, our cycle time came down again, from the first quarter to the second quarter, by about 10 days. That was a combination of our operations teams clicking. And we have restructured how we operate in the field. And more affordable luxury but by its nature we turn those houses faster. So the things we are learning, on the affordable luxury side, Marty talked a bit about optimizing our plans. And we're going to talk more about this …

Yeah.

… next Wednesday. We're not changing the buyer experience. We're not pulling the opportunity of choice, the opportunity to upgrade your home out. We're just optimizing the plans. We're making them more efficient. We're making them better. Better can also be less expensive, better can also mean, you can build faster. And that's what optimization is all about. So even though we're hot and we're busy, we are actually building houses faster than we ever have. And it's a combination of all those things, as I just mentioned.

Perfect. Thank you, guys for the time. And good luck in the upcoming quarter.

Thank you, Truman.

Thanks, Truman.

Just a reminder, the market is opening. So this concludes our question-and-answer session. I would like to turn the conference back over to Doug Yearley, for any closing remarks.

Drew, I thank you. Thanks everyone for your interest and support. I'm sorry, that we didn't get to every question, but next Wednesday, there will be plenty of opportunity, during our three-hour Analyst and Investor Day, for Q&A. We have built Q&A in throughout the day. And I'm really as I said excited to share next Wednesday with all of you. So proud of this company and just so proud of what we're going to be able to show you next week about how we operate. And most importantly, the people, within this company that do all the work. So hope, you can join us. And thanks again. Have a great balance of the week and weekend. And we'll see you next week. Thanks.

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