Good afternoon. My name is John, and I will be your conference operator today. I would like to welcome everyone to the KB Home 2023 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the company's opening remarks, we will open the lines for questions. Today's conference call is being recorded and will be available for replay at the company's website, kbhome.com, through October 20. I would like to turn the call over to Jill Peters, Senior Vice President, Investor Relations. Thank you, Jill. You may begin. Thank you, John. Good afternoon, everyone, and thank you for joining us today to review our results for the third quarter of fiscal 2023. On the call are Jeff Mezger, Chairman, President, and Chief Executive Officer, Rob McGibney, Executive Vice President and Chief Operating Officer, Jeff Kaminski, Executive Vice President and Chief Financial Officer, Bill Hollinger, Senior Vice President and Chief Accounting Officer, and Thad Johnson, Senior Vice President and Treasurer. During this call, items will be discussed that are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future results, and the company does not undertake any obligation to update them. Due to various factors, including those detailed in today's press release and in our filings with the Securities and Exchange Commission, actual results could be materially different from those stated or implied in the forward-looking statements. In addition, a reconciliation of the non-GAAP measures of adjusted housing gross profit margin, which excludes inventory-related charges and any other non-GAAP measure referenced during today's discussion to its most directly comparable GAAP measure, can be found in today's press release and/or on the investor relations page of our website at kbhome.com. With that, here is Jeff Mezger. Thank you, Jill, and good afternoon, everyone. We delivered another quarter of strong performance, highlighted by our closings and margins, which exceeded our previous guidance. With these favorable results and our improved outlook for the fourth quarter, we are again raising our revenue and earnings outlook for our 2023 fiscal year. Our business is performing well, and our teams are executing on their plans to balance pace, price, and starts, reduce build times, and drive high customer satisfaction while growing their volumes and profits. As for the details of the third quarter, we generated total revenues of $1.6 billion and diluted earnings per share of $1.80. We closed 3,375 homes, a strong outcome that was driven primarily by a continued reduction in build times and fewer cancellations. Our margins were healthy at 11.3% in operating income and a 21.5% gross margin. While the year-over-year comparisons are difficult due to the record profits we achieved in last year's third quarter, our results and the cumulative benefit of ongoing share repurchases drove our book value per share to $48.29, an increase of 18% year-over-year. The outlook remains healthy for housing market conditions, driven by low existing home inventory and constrained availability of new homes at our price points. With over 140 million combined Millennials and Gen Zs, first-time buyers will likely fuel the housing market over the next decade, which is favorable for our business as we primarily serve the first-time and affordable first-move-up segments. Demand for our product at our price points was solid. On a per-community basis, our absorption pace averaged 4.3 monthly net orders, higher than our historical pre-pandemic third-quarter average. Although interest rates rose as the quarter progressed, our net orders remained fairly consistent month-to-month. The combination of an acute shortage of homes, together with the demographic factors I just referenced, led to strong absorption and a cancellation rate that has returned to historical levels. We generated net orders of 3,097 within our guided range, a healthy result during a seasonally slower time of year. While we were pleased with our net orders and pace during the third quarter, we recognize the impact that both higher mortgage rates and overall economic conditions may have on our buyers. With that in mind, and based on normal fourth-quarter seasonality, we project a monthly absorption pace of between three and four net orders per community, producing a range of between 2,070 and 2,760 net orders in our fourth quarter. We believe we are well positioned to navigate any possible shift in demand should rates go higher or if the economy softens, and we are prepared to take the steps necessary to adjust to changing conditions as we have done in past cycles. The flexibility inherent in our Built-to-Order approach, with buyers selecting their lot, floor plan, and finishes in our design studios, is a meaningful differentiator, as buyers are empowered to significantly influence their overall sales price based on their choices. Approximately 70% of our communities offer plans with square footage below 1,600. Smaller homes, which feature similar room counts and livability that are a more affordable option. Offering a range of products and price points that buyers choose, gives us early insight in how the market is moving, allowing us to adjust appropriately in the homes we model and price points we feature. Our backlog was just over 7,000 homes, valued at approximately $3.4 billion. As we saw in our results, our large backlog provides a stable base of deliveries with good visibility on margins. We are now primarily focused on selling the homes we need to support deliveries in the first half of 2024. We started 3,850 homes during the quarter, ramping up our starts to position ourselves for growth, given the steady demand we've experienced. We ended the quarter with close to 7,800 homes in production, of which about 73% are sold, consistent with our targeted range. With that, I'll pause for a moment and ask Rob to provide an operational update. Rob? Thank you, Jeff. Let me begin by providing some color on our net order results. I want to emphasize a point that Jeff made, in that our strategy has remained consistent on optimizing each asset on a community-by-community basis, balancing pace, price, and margin. Demand was healthy across our markets, enabling us to raise prices in 65% of our communities, while decreasing prices in only 10%. We offered mortgage concessions as needed, primarily in cases where the buyer did not qualify. Anecdotally, we hear from our teams in the field that buyers are compelled by the combination of the best price and value, not just the best interest rate, which is aligned with our business model and our culture of selling Built-to-Order homes. Our divisions executed well on their plans to reduce build times, with a 35-day sequential reduction in the third quarter. As a result, we are currently building homes in approximately six months, and this progress puts us another step closer to returning to our historical level of between four and five months. Further improvement remains a priority, which we expect to achieve by simplifying and refining our product offerings while leveraging the even flow of production inherent in our Built-to-Order model, and the long-term relationships we have developed with our trade partners and suppliers. Lower build times will help to generate incremental deliveries and drive higher inventory turns and cash flow, in addition to helping our sales effort of personalized homes. We are essentially back to business as usual with our supply chain, outside of some specific challenges related to roofing materials and electrical equipment, specifically transformers, which has been widely discussed across our industry. We are also seeing an improvement in the availability of labor for our trades. We significantly reduced our direct costs by over $20,000 in the first half of 2023, relative to their peak in August 2022, which helped to offset the price reductions we took earlier in the year to generate sales. Costs on homes started in the third quarter held steady, despite pressure from certain items, including concrete, roofing materials, and diesel fuel. Going forward, our focus is on incremental cost reductions through value engineering. As we work to finish the year strong, our key operational priorities remain centered on executing our Built-to-Order business model and maintaining our high customer satisfaction scores, in addition to the areas that I already, already discussed. With that, I will turn the call back over to Jeff. Thanks, Rob. Switching gears to our mortgage joint venture, KBHS Home Loans. 84% of the mortgages funded during the quarter were financed through our JV, which is meaningfully higher year-over-year, and a positive development as higher capture rates help us manage our backlog more effectively. These buyers continue to have strong credit profiles, with about 60% of KBHS customers utilizing a conventional mortgage and over 90% using fixed-rate products. The average cash down payment held steady with the second quarter at 15%, equating to roughly $70,000 down. The average household income of our KBHS customers was over $130,000, higher than the median household income in our submarkets, and they had an average FICO score of 735. Even with one half of our buyers purchasing their first home in the quarter, we are attracting buyers above our targeted income levels with healthy credit, who can qualify at elevated mortgage rates and make a significant down payment. These data points underscore the solid demand amid the lack of supply. We sequentially increased our land investment by about $100 million, spending approximately $550 million to both acquire and develop land, while remaining diligent with respect to our underwriting criteria, product strategy, and price points. We expect to accelerate our investment activity in the fourth quarter and beyond to support our future growth targets. Our lot position stands at roughly 57,100 lots owned or controlled, of which approximately 42,700 are owned, representing just over three years' supply, consistent with our historical level. We continue to focus on developing lots in smaller phases to limit our capital outlays and balance our development phasing with our starts pace to manage our inventory of finished lots. We believe we are well-positioned, as we currently own or control the vast majority of the lots we need to achieve our delivery growth targets through 2025 and are working on filling the gaps for 2026. We do anticipate our community count will be lower at year-end relative to the prior year, before growing again in 2024. As we have shared on previous calls, we had intentionally paused on developing lots in most of our communities from mid-2022 through the first quarter of 2023, given market conditions at the time, which has delayed many openings into 2024. We now have a significantly higher year-over-year number of grand openings projected for next year and expect community count growth of 15% in 2024. Our balance sheet is in excellent shape, with a leverage ratio of about 30% at the low end of our targeted range. This enables us to continue to allocate our strong operating cash flow toward reinvestment for future growth and the return of capital to our shareholders. Since we began our share repurchase initiative in August 2021, we have deployed approximately $590 million to buy back more than 15 million shares, representing almost 17% of the outstanding shares at that time, at an average price below $39 per share. These repurchases have resulted in a meaningful increase to diluted earnings per share at $0.27 just in the third quarter, and an increase of nearly 2 percentage points in our return on equity. Over the same period, together with our regular quarterly dividends, which we increased in July, we have now returned nearly $700 million to shareholders. In closing, I want to recognize the entire KB Home team for their contributions to our strong third quarter results. We are now projecting roughly $6.3 billion in revenues for 2023 at healthy margins, and we're positioned for meaningful community count growth in 2024. We remain committed to becoming a larger, more profitable company that will generate solid returns and maximize long-term stockholder value. With that, I'll now turn the call over to Jeff for the financial review. Jeff? Thank you, Jeff, and good afternoon, everyone. I will now review highlights of our financial performance for the 2023 third quarter, discuss our current outlook for the fourth quarter, and provide our full-year revenue and community count expectations for 2024. In the third quarter, we realized significant construction cycle time improvements favorably impacting our deliveries that resulted in our housing revenues exceeding the upper end of our guidance range. We also generated a solid monthly sales absorption pace of 4.3 net orders per community and a higher-than-expected operating margin. In addition, our robust operating cash flow allowed us to repurchase an additional 1.5 million shares of our common stock, while ending the quarter with over $600 million of cash and $1.7 billion of total liquidity. Our housing revenues were $1.57 billion for the quarter, compared to $1.84 billion for the prior year period. This reflected a 7% decrease in the number of homes delivered and an 8% decline in their overall average selling price. Though down relative to our strong 2022 third quarter results, our current quarter delivery performance reflected continued construction cycle time improvements and lower cancellation rates. We anticipate similar positive factors benefiting our fourth quarter deliveries and have considered them in our updated outlook. Based on our current backlog, expected construction cycle times, and incremental move-in-ready home deliveries, we anticipate our 2023 fourth quarter housing revenues will be in a range of $1.55 billion-$1.65 billion. In the third quarter, our overall average selling price of homes delivered was approximately $466,000, compared to approximately $509,000 in the prior year period, primarily reflecting a mix shift away from our higher-priced West Coast region, along with lower year-over-year pricing and higher mortgage interest rate and other concessions in the current quarter. For the fourth quarter, we are projecting an increase of $20,000 in the overall average selling price to approximately $486,000 due to an expected mix shift towards higher-priced West Coast deliveries. Our third quarter homebuilding operating income totaled $179.2 million, as compared to $325.1 million in the year-earlier period, which was a third quarter record. Operating income margin reached 11.3%, exceeding the high end of our guidance by more than 100 basis points due to both our gross profit margin and SG&A expense ratio surpassing expectations. The current quarter included abandonment charges of $600,000 versus $8.5 million of inventory-related charges a year ago. For the fourth quarter, we expect our homebuilding operating income margin, excluding the impact of any inventory-related charges, will be approximately 10.5%. Our housing gross profit margin for the quarter was 21.5%, down 520 basis points from the prior year period and 80 basis points higher than the midpoint of our guidance range. The margin result relative to the prior year was primarily due to price decreases and other concessions aligned to housing market conditions... particularly the higher mortgage rate environment, as well as higher construction costs and a shift in the mix of homes delivered. Excluding inventory-related charges from both periods, our 21.5% margin for the quarter was down 550 basis points year-over-year. We expect to see a sequential decline in our fourth quarter gross margin due to both the pull forward of higher margin deliveries into the third quarter and the fact that a majority of our expected fourth quarter deliveries were contracted in the first quarter, when we implemented selective pricing adjustments and offered other buyer concessions to improve our sales pace. Gross margins relating to 2023 first quarter sales contracts represented a trough, and the gross margin on orders taken in the second and third quarters have steadily increased. As a result, we believe the fourth quarter deliveries will reflect a gross margin inflection point. Assuming no inventory-related charges, we expect our fourth quarter housing gross profit margin will be approximately 20.5%. At the same time, our expected full year margin of approximately 21.3% is slightly above our prior guidance due to the strength of our third quarter performance and higher full-year revenue expectations, providing incremental leverage and fixed costs included in cost of goods sold. Our selling, general, and administrative expense ratio of 10.2% for the quarter increased by 130 basis points as compared to the prior year, primarily due to reduced operating leverage from lower housing revenues and higher sales commissions. As we position our business for growth in 2024 housing revenues, we believe that our fourth quarter SG&A expense ratio will be about 10%. Our income tax expense for the third quarter of $44.6 million represented an effective tax rate of 23%, compared to 22% for the prior year period. We expect our effective tax rate for the 2023 fourth quarter to be approximately 24%. Overall, we reported net income for the third quarter of $149.9 million, or $1.80 per diluted share, compared to $255.3 million, or $2.86 per diluted share for the prior year period, which were the highest third quarter levels in our history. Turning now to community count. Our third quarter average of 240 increased 9% from the year-earlier quarter. We ended the quarter with 230 communities open for sales, as compared to 227 communities at the end of the 2022 third quarter. We believe our 2023 year-end community count will be approximately flat sequentially as compared to the third quarter. We invested $555 million in land, land development, and fees during the third quarter, with $199 million or 36% of the total representing new land acquisitions. We ended the quarter with a pipeline of over 57,000 lots owned or under contract that we expect will support a significant number of new community openings to drive community count growth in 2024. At quarter end, we had total liquidity of $1.7 billion, including $612 million of cash and $1.08 billion available under our unsecured revolving credit facility, with no cash borrowings outstanding. During the third quarter, our board of directors increased the quarterly cash dividend on our common stock to $0.20 per share, up 33% from $0.15 per share. In addition, we repurchased approximately 1.5 million shares of our common stock at a total cost of $82.5 million, while driving our quarter-end leverage ratio to a historic low of 30.6%. With $325 million remaining under our current common stock repurchase authorization, we intend to continue to repurchase shares with the pace, volume, and timing based on considerations of our operating cash flow, liquidity outlook, land investment opportunities and needs, the market price of our shares, and the housing market and general economic environments. Year to date, we have repurchased 5.7 million shares at an average cost 9% below our book value per share at the end of the third quarter. Shifting to our expectations for 2024, we are forecasting full year housing revenues in a range of $6.5 billion-$7 billion, supported by our anticipated 2023 year-end backlog, expected cycle time improvements and community count growth, and assumed stable housing market conditions throughout next year. We expect more than 150 new community openings over the next five quarters to drive sequential increases in ending community count beginning in the second quarter of next year. We believe our 2024 year-end community count will be up about 15% year-over-year. In summary, we are very pleased with our solid third quarter financial performance and strong operational execution, and believe we are well positioned to achieve our goals for the 2023 fourth quarter. In addition, considering our third quarter performance and expected fourth quarter results, we have raised our full-year 2023 outlook, with forecasted housing revenues of approximately $6.3 billion, up $300 million compared to the midpoint of our prior guidance, ... and a 30 basis point improvement in our operating margin, excluding inventory-related charges, to about 11.3%. We believe our ongoing focus on accelerating profitable growth and expanding our returns by leveraging our larger scale, strong community portfolio, and uniquely compelling build-to-order business model will, along with our stock repurchase activity, produce measurable enhancements in both book value per share and stockholder value in future periods. We will now take your questions. John, please open the lines. Thank you, sir. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up. Thank you. One moment, please, while we poll for questions. The first question comes from the line of Matthew Bouley with Barclays. Please proceed with your question. Good afternoon, everyone. Thanks for taking the questions. Maybe just start off the question on, on the kind of pricing strategy here. I think you said you were able to raise price in 65% of communities. You know, curious how that trended as you got into August and maybe September, given this latest move in interest rates and, you know, strategically, you know, thinking about, you know, sort of what happened a year ago, you know, where you guys sort of chose to protect the backlog, perhaps at the expense of orders in the near term. How are you kind of thinking about, you know, how that may play out, you know, here into the fourth quarter? Thank you. Matt, I'll answer the second half of the question first, and then kick it to Rob for any comments on the pricing trends month to month in the quarter. But we're in a totally different spot than we were a year ago. First off, interest rates moved really quickly, and the buyers were in shock, basically, because their payments moved so much if their rates weren't locked. This year, while rates have ticked up, it's been a more gradual increase, and the buyers have been digesting them and moving with us. So the buyer psyche and the backlog, I think, are in far better shape than a year ago. And at the same time last year, our backlog was really extended because of our build times. We were selling a lot of houses, and we couldn't get them built in through the system in our historical time frames. So you had a much larger backlog to protect, and we were more sensitive to a year ago than we are today, where our backlog is now down, really in balance with our build time. So we like how we're positioned with the backlog to support our revenue projections, and you don't have to go to the extreme to protect the backlog the way we did last year. So as things go forward, if something happens and demand shifts, if that were to occur, we would take the steps we need real time on a per community basis. Both Rob and I shared in our comments that we evaluate every community every week, and its pace, price, optimize the asset, and some go up, and most did in the quarter, but we'll be moving pretty quickly. We don't have the same dynamic as last year. Rob, you any thoughts on pricing? I mean, I know every community is a different story, but anything you want to add on that? Well, just that it was fairly broad-based, the price increases we implemented in the third quarter across the majority of our footprint. You know, every division had at least some communities where we lifted price during the quarter. And I don't necessarily track it by week or by month, but you know, all the way through August, despite rates increasing, as Jeff mentioned, balance, pace, price, margin, optimize the asset. We had many communities where we continued to raise prices based on those dynamics, so really didn't see it slow down. Obviously, we're sensitive to what's going on with rates in the market, but if the demand's there and we're selling faster than our targeted pace, we're going to continue leaning on price and improving margins in those communities where we've got the pace. Got it. That's a very helpful color there. Thank you both. Second one, just kind of zooming into the margin outlook. I think, you know, you sort of highlighted that the fourth quarter margin might be reflecting the more challenging environment on sales back in the first quarter. So, I guess, just any color around, you know, early 2024, what might be some of those puts and takes, assuming the fourth quarter is the trough? I think you said margins were better on sales in Q2 and Q3. So, you know, any additional color on the kind of magnitude there, whether it's, you know, on those cost reductions, you mentioned some price increases that were occurring at that time. How can we think about that early 2024 gross margin? Thank you. Sure. Just, you know, just looking at gross margins, you know, just pointing out, you know, for the full year, we're actually up a little bit incrementally versus our, our last quarter guide, which we're obviously pleased about. And we had some dynamic shifting, some of those margins quarter to quarter. And as you rightly point out, the fourth quarter is impacted by the selling environment earlier in the year when we had a lot of pricing activity and whatnot to help support our sales pace. When we look out into 2024, as I mentioned, our current order activity and backlog definitely supports us an improving trend for 2024. But as we all know, gross margin is impacted by both favorable and unfavorable factors relating to housing market and general economic environments, which...... You know, can impact things like sales price and sales pace and need for concessions, build costs, et cetera, et cetera. So, we are encouraged by the favorable trends we're seeing in the order gross margins. We'll come back and provide a more detailed outlook for 2024 during the fourth quarter call, including, you know, obviously quantitative and numbers on the quarterly trends and what we see for the full year. But so far so good, and we like the trend that we're seeing right now with our relating to our margins embedded in the orders. Thank you. And our next question comes from the line of Stephen Kim with Evercore. Please proceed with your question. Yeah, thanks very much, guys. Appreciate all the color. And I guess my first question relates to mortgage. I think you've referred to mortgage incentives, and I guess I'm thinking mortgage rate buydowns specifically. You know, that's something that I know that you all have not really felt like you've really needed to use, you know, all that much. Was curious if you could sort of talk about in this quarter that we just—that you're reporting, what was the percentage, if you will, of the sales that you made that did have a mortgage rate buydown? Would you expect that to increase, and you know, is it, is that something that you are going into the market and sort of buying for commitments for, or are you doing it more on a case-by-case basis? Steve, you asked five questions there. We'll do our best. And again, I can let Rob go into the specifics, but at a high level, if you think of our business, we're built to order. And on a Built-to-Order sale, and with that customer, you're working to lock the rate, and it costs a little more 'cause you're further out, but they want comfort knowing they'll get the rate when the home is completed. And other than that, we're not really doing financing concessions on our Built-to-Order sale. That buyer picks everything, like I said in my comments, and it's all about the best price for the best value, and they build it, and they're happy at that price. But whether it was the higher cancel rate earlier in the year or late last year, and we had some inventory build up, we actually also started some more inventory homes to have that choice available if the customer wants it. And that's where you fall into the situation where you typically have to offer some type of financing concession or mortgage concession, as you call it, to move that inventory. So where we had that type of activity was on the specs, not on Built-to-Order sales. But Rob, you want to give them the numbers on the, you know, the magnitude or any trends you saw from Q2 to Q3? Sure. Yeah, the trend, Stephen, didn't really change that much. I mean, you know, as Jeff mentioned, any mortgage buydowns or points that we paid primarily went to moving inventory homes that were later and later along in the cycle and closer to closing. But as far as the total percentage on mortgage concessions, it was roughly the same quarter-over-quarter. You know, 1.6%, I believe, as a percentage of revenue this quarter versus 1.5% or 1.6% last quarter. So it stayed relatively flat quarter-over-quarter. Yeah, appreciate that. I mean, I think that it's really interesting how you're able to see your demand remaining strong despite not really having to rely very much on rate buydowns. I think there's a misconception on the part of a lot of folks that, you know, the only way builders are getting sales is by doing a rate buydown, but I think you're showing very clearly that your buyer is actually extremely well qualified. So that's really encouraging. I did want to shift gears and ask about your community count decline. You know, this is something that it... You know, as I know, you've attributed to slower development sort of in the back half of last year, but it seems like maybe you had hoped that you would be able to maybe make up some ground, no pun intended, and you weren't able to. You know, you didn't exceed the higher end of your order range, right? So it's not like you sold out of a lot more communities. It sounds like you had ran into some, you know, maybe more difficulty sort of getting that last bit to open the community than you expected. Could you elaborate on what is happening there on the community development side? Is it just generally getting a lot harder than you would have expected? Steven, in general terms, I can say it is harder. And it's interesting, as the labor base has reset and the supply chain has settled down, if there's an area where labor is still tighter, it's in the land development side. And I think in part, it's because of the push-pull with all the federal money being spent on infrastructure. And a lot of our contractor base has been, they're getting stretched because of all the government work that's going on. And between that and, processing times are taking longer to get permits out of the city to start development than we projected early in the year. So, both of those are planning components. It's not 'cause we oversold and sold through necessarily faster. We just had a lot of communities that rolled over. With how our year ends in November, we're, if we get a community ready to open in November, it would be a quote, "soft opening," and we'll wait till January to hit it harder in a better selling environment. So that'll play into it as well. But I don't know, Rob, if there's anything else you want to add on? I think that covers that. And we also touched in our remarks in the beginning some of the issues with electrical equipment, specifically transformers, and yeah, that's out there as well. We've got a number of communities that we know it's coming, we just don't know when. They're generally ready to go outside of waiting for those to be installed and energized. So it is getting more challenging, whether it's that or just getting things processed through the municipalities. But, we're confident about the communities that we've got coming, and they're going to start showing up here as we move forward. Thank you. And our next question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question. Hey, guys. Good afternoon. Thanks for taking my questions. Jeff, you know, last quarter, you kind of made a comment that you wouldn't be surprised to see, you know, maybe a better-than-seasonal back half of the year. And I think one of the comments you made at the time was that you were starting to see kind of month-over-month improvement in the demand for build-to-order products. I think, you know, specs were definitely more desired maybe later last year or earlier this year, and you were starting to see a little bit of a shift there. The third quarter order results and the guide for 4Q kind of implies more of a normal seasonal pattern, which, you know, there's nothing, nothing wrong with that. I'm just curious if you think about the comments you made last quarter, has anything changed as far as the buyers' kind of relative demand between Build- to-O rder and spec, that might be causing, you know, that subtle shift in the guide versus your comments? Well, I think our customers in Q3, we actually shifted to more Built-to-Order sales and less inventory, but in part, it's because we had less inventory to sell, I think. It's still a situation where there is no inventory in the markets that we're in at our price points. There's a lot of cities where inventory is still quoted in weeks, maybe a month and a half. You think, "Okay, half of those listings aren't even habitable." It's like a tear down that's available for sale. There is not a lot of inventory choice for the customer today, and I think that's part of what's... If you couple that with the demographic demand, you have a lot of people that need a roof over their head and not a lot of houses to choose from. And then in between, you've got rates that have been slowly ticking up, and it's a math equation, and we stay on top of it, but at some point, that customer may say, "I don't want to buy, and I'm going to wait for a better time." And then you got to go find the next customer. So I think you've phrased it the right way, Alan, in that, as these rates have continued upward, I think it has brought it back down to what I'll call a more normal seasonal pattern, is what we're expecting. And in part, we just don't know where rates are headed from here. They could go up, they could go down. They don't seem to be in sync necessarily each month with what's going on with the T-bills and the 10-year and whatnot. But, I would say we're expecting a seasonally normal fourth quarter. That's helpful, and I appreciate that and certainly, you know, recognize the rate environment has changed. So I appreciate you talking through that. Second question, maybe this one's better for Jeff K. Just on the 2024 revenue guide, I didn't do the exact math here, but it sounds like that'll be up 5% or 10% year-over-year. If I'm doing the math correctly, I think your backlog, at least in units, is going to be down probably about 20% entering next year. So is there any way you can kind of just parse out that revenue increase between price, better cycle times, and order growth in 2024? Just to kind of give us a rough idea of where that directional growth is coming from. Sure, sure. So, you know, a couple things. We're looking to rebuild community accounts as we go through the years. I talked about the prepared comments, and you can see sort of the, the cadence on that a bit. I mean, it's a little early to call it, you know, by quarter at this point, but we're looking, you know, to be relatively flat going through the end of the first quarter and then starting to increase sequentially. So obviously, with a higher community count and a building community count, that always helps your, your sales and in turn, your deliveries. Construction cycle times are pretty big one for us. You know, we're, we're looking to hang on to the gains that we've already experienced, and we had a really, really solid third quarter of performance along those factors and looking to have a really nice fourth quarter as well. And just by holding those gains, it pulls in additional units into the year, both into 2023 and assuming you hold on to those gains, into 2024 as well. So those are probably the two largest factors affecting it for 2024. And, you know, if you back up and look at a big picture for a minute, you know, it's pretty early, obviously, to forecast a full year. We haven't even sold units into the third quarter yet, really. And, you know, we'll be updating that again as we get into the first quarter. But that we always like to give our first kind of look or expectation during this quarter's call, and then we'll refine it as we go from there. Thank you. The next question comes from the line of John Lovallo with UBS. Please proceed with your question. Good evening, guys. Thank you for taking my questions. This one sort of dovetails, Jeff, off of the answer to the last question there from Alan. You know, the 4-5 month cycle time that you guys think about is kind of normalized. I mean, you had 35 days of sequential improvement in the quarter. You know, is the-- I guess the question is: Is the low-hanging fruit, if there is such a thing, kind of taken care of at this point? I mean, how quickly could you get back to that 4-5 months? I mean, could we expect another, you know, decline very similar to what we saw sequentially in the, you know, in the fourth quarter? Rob, you want to take that? Yeah, John, I would be surprised. You know, we've had some pretty significant gains over the last couple of quarters, and I think we get into an area where we see some amount of diminishing returns just on, you know, the improvement that we're able to make. But we do have our sights set on getting back to that 4-5 months, and we're only 30 days away from that. You know, I don't think it's gonna take us a long time to get there, but I would be surprised just looking into, you know, this next quarter that we see that same kind of improvement, like another month off of cycle time. Certainly over the next two, three quarters, you know, driving to get towards that old historical build time of 4-5 months. Okay, that's helpful. Thank you. And then, you know, I'm not sure if I got the numbers right here, but I think for orders, you guys, you talked about 3-4 for the absorption, so 2,070-2,760, I believe, were the numbers. You know, I think it's a-- that's a, it's a fairly wide range, and it's understandable given some of the uncertainties out there. But I guess what I'm trying to understand is, what sort of drives the high or low end of the range? I mean, what are the variables? Is it really just contingent upon interest rates? If that is the fact, you know, the big, the big factor, if rates were to remain where they are today, would that put you in position for the higher end of that, of that range, or do you need rates to actually fall from here? Oh, we're not assuming they're gonna fall, John. If rates were to hold where they are, we'd probably be around the midpoint. If rates go up, you may tilt down to the low point. We also have some communities opening this quarter, and depending on when they open, if we hit our opening dates, it helps orders, and if they miss their opening day, it'll hurt orders. We’ve got that variable as well. What we were trying to guide is really it's a... We view it right now as a pretty normal environment, and we expect normal absorption rates. Part of our balancing price, price and pace, we're not gonna let them run above 4. If a community is selling well, we'd rather take the margin and hold it, you know, down around four, as opposed to letting everything run right now. Thank you. The next question comes from the line of Michael Rehaut with J.P. Morgan. Please proceed with your question. Hi, thanks for taking my question. Good afternoon, everybody. I wanted to focus a little bit on, you know, the balance in terms of fiscal 2024, how you're thinking about capital deployment. You know, you laid out an aggressive community count growth target for the end of the year. And, you know, how you think about, you know, either deploying capital or capital allocation as it relates to funding your organic needs, which obviously take priority, generally speaking, compared to share repurchase activity. And, you know, this year, you, I think you've done $250 million, I believe, of share repurchase through the first three quarters. You know, does your... Do your anticipated capital needs for next year, would that kind of affect or I guess, you know, lower, let's say, all else equal, the potential for a similar amount of share repurchase, or we look for something, you know, perhaps more moderate? Just any kind of directional thoughts there would be helpful. Sure. Yeah. Well, I think as we've indicated the past few quarters, you know, we see this stock buyback strategy as a very powerful tool right now, particularly given our leverage, low leverage ratio and very strong cash generation in the business. We are, you know, investing in land, as you mentioned, and we do want to stay focused on that and on growing the business, but we do believe it's an and equation, not an or equation at this point. And for many years, we had a dual strategy of delevering, frankly, and taking our debt levels down while reinvesting in the business. And given our current leverage ratio and what we foresee for the future and our targets, that debt reduction need is no longer there. So we're pivoting more towards share repurchases, combined with reinvestment in the business towards growth at favorable returns. So, you know, I listed, I don't know, how many factors impacting our share buyback strategy and the decisions we make on a quarter-to-quarter basis. So there are a lot of things that go into it, but certainly all things being equal, we'd like to continue down that path. We think it's been very positive for the company and very positive for our shareholders, and we'd like to see that continue. And if things pan out as expected for next year, we do plan to continue it. Okay. Yeah. No, I appreciate that, Jeff. I guess I was just, you know, wondering about maybe, you know, the rate of repurchase potentially moderating a little bit, not necessarily either/or, but I guess we'll have to see how next year plays out. Yeah. Yeah, I, I view it right now, Mike, that, you know, we're, we're at a very comfortable level of repurchases. We've still been growing cash balances, and all the ratios are staying very well aligned, so we're not even close to that point. Like I said, we'll see, we'll see how it plays out, but that's the overall strategy. Hopefully, that's helpful for you. Yep. No, no, it's great. I guess secondly, you know, and I'm sorry if I missed this earlier, you know, I, I think Rob laid out that, you know, during the quarter, you raised price in 65% of your communities, lowered in 10%.... You know, I'm curious, on that, you know, if there's an ability to maybe drill down a little further. You know, curious on the 65%, you know, what was the, you know, rough degree of magnitude of those price increases? And, and also, you know, as I think someone else kind of asked earlier, and I apologize if I didn't get to hear the answer, but you know, how pricing kind of progressed in, in August and September, as, you know, seasonality returned, as, as rates kind of moved a little bit higher. If perhaps those price increase trends kind of moderated or maybe just completely subsided. I'd love any color there as well. Rob, you want to go through it again? Sure. So yeah, I guess just to take your, the last part first, I think we touched on that before, but we really didn't see it change dramatically as far as the increases from week to week or from month to month in the quarter. Despite rates moving up in August, we still had a good number of communities we were selling faster than our planned pace. So in those communities, we continued to lift price. As far as the magnitude of the increases on the 65% we were increased, across the company, that was about $9,000 on average. Thank you. And our next question comes from the line of Truman Patterson with Wolfe Research. Please proceed with your question. Hey, good afternoon, everyone. Thanks for taking my questions. You know, clearly, you all have been discussing increasing the investment spend, you know, going into the back part of the year. Are you actually finding many or any kind of quick turn, finished lot deals, and whether this is contemplated in the year-end 2024 community count growth of 15%? And then big picture, you know, some in the industry have been moving towards an option-heavier land strategy. I'm just would love to get your thoughts on, you know, potentially deploying, you know, more land banking, you know, further down, moving further into option land, et cetera? Truman, we are seeing some finished lot deals, and that the land market appears to be freeing up a little bit, so that's, that's encouraging. None of those would be included in our, our guide for next year. When we're doing our planning, until it's Land Committee approved, nothing gets counted in anything. It's, it's out there, but it's not, it's not part of, community count. So, if we are able to snag some, it, you may come out of, 2024 with more, who knows? We'll see. As to, land bank, I can't speak for any of the other builders. Our view has been, with the size of the communities we're buying, we, we don't want to do the land bank. We don't need to, and, hate to give the margin away because it, it is, diluting- Yep -the margin because the land bank is taking some of the margin, and it doesn't really mitigate risk. So you're, you're not de-risking, you're just moving money around, and we'd rather focus on phasing our developments, having as few finished lots hanging around as possible and just real-time. We've got a known sales pace, we know where we're headed. We can pull the trigger on some more development. What's happened is costs have gone up. The development side of land is actually now higher than the land acquisition side itself. Mm. So, you can control your development, and it's just we think right now it's the best approach for us because we can keep lifting our margin a bit along the way. Okay, perfect. And then, you know, the SG&A moving a little bit higher, I think a lot of that's lack of, of leverage, right? Just from the, the closings differential. But, one of your peers mentioned that they were seeing increased third-party broker commissions. I'm just hoping you could help us think through that. You know, where do kind of broker, broker commissions stand as- Sure ... a percentage of, you know, closings today versus history, and whether or not you all expect them to kind of gradually normalize? Because they were at pretty depressed levels in 2021 and the first part of 2022. Well, when the markets were, were stronger, it's a combination of strong markets, but also leveraging our technology and what we can do now with the internet, where the brokers aren't as critical. Consumers still go to them to help them negotiate the deal. I think Jeff shared it in his comments, that our commissions were up a little bit, primarily in that when you're selling a completed inventory home, you're really competing with other resales. It's a house versus a house, and we go to whatever the market commissions are for brokers on those homes. So it did tick up our realtor commissions 20 basis points, I think it was in the quarter, or 30 basis points. Our participation rate really hasn't changed. It's been running around 65% as a company, and it's been there for years. Even when we were paying a little less in commission, the participation rate didn't go down, and with it ticking up, it's holding about the same. It's a different business approach when you're selling a spec than a build-to-order. Thank you. Our next question comes from the line of Buck Horne with Raymond James. Please proceed with your question. Hey, thanks. Good evening, guys. Looking at the community count acceleration that you're expecting for 2024, just thinking about the mix of those communities, ... you know, would those be geared more towards, again, entry-level, first-time buyer type product? And, and/or would you potentially gear those towards or, or jumpstart those new communities with additional spec home starts, to get those, absorption rates to your target levels? And Buck, the communities we're opening are spot on with our current product and price strategy. We try to target the median household income in that submarket, and if it's a land-constrained, very desirable, with no inventory, you can go a little above median income. But we try to hold the median income, which means our communities are going to target first time and affordable first move-up, primarily, and that's where we're going to stay. As to the spec homes, to quote, "get them going," we find that those are the hardest homes to sell as you open the community. So unless it's a new product series in a city where we're opening up, and we want to shake down the framing design, if you will, and make sure the structures are all designed the right way and value-engineered, we'll go start inventory in those situations, but they're very limited. We go as fast as we can to get the models built, we open the store, we get sales going, and we build houses. All right. Perfect. Thank you for the color there. I think I probably know the answer to this question, but I'll ask it anyway. Just wondering if you've had any recent discussions or having any thoughts about single-family rental partnerships, or have had any inbound discussions with, you know, you know, rental operators that are looking for some capacity recently? Well, we're always looking at that, Buck, and every time we've looked at it, we find that we get the best return just building it for sale and sticking to our knitting. So we're really not interested in going there. Some of the deal flow we're seeing on lots is single-family rental companies that need to offload some assets. So that would suggest that whether it's the financing side and getting their communities developed, or whether it's the financial returns and the rents and whatever, maybe their strategy has changed a bit, but some of the lots we're seeing right now are deal flow coming from those companies. Thank you. The next question comes from Joe Ahlersmeyer with Deutsche Bank. Please proceed with your question. Hey, thanks. Good afternoon, everybody. Just a quick one on the fiscal 2024 revenue guide. Would you be willing to at least discuss that somewhat in terms of price versus volume? And I ask because I'm looking at your delivery ASP relative to your backlog. I think this is the first quarter where it's actually been below the backlog ASP, and then you're sort of guiding for it to be in line. So should we maybe just think about the more recent order prices as indicative of where you're heading in 2024 for closings, or how would you sort of disaggregate that? Sure. Yeah. Right now, we normally, during this call, just kind of give a big range on the revenue side without diving into too many details. We're still refining some of those plans right now, and we'll want to see how the fourth quarter shapes up, and we'll give you tons of detail on all that, ASPs, units, revenues, and all that, during the fourth quarter call. Okay, understood. And then thinking about the community count guide, especially in light of the comment around some of the crowding out of the infrastructure spending on... Those contractors are busy with that. If we see an acceleration in that spend next year, which I think is what many in that industry have been calling for, would that represent an incremental risk to you hitting that target, or is that acceleration sort of baked into your considerations at this point? Yeah, I, I think any sort of worsening in supply conditions would be an incremental risk. Again, you know, community count is a very difficult number to peg. There's a lot of moving pieces, not, not just on the grand opening side and how many communities get open, but just on sales pace and what the selling environment's like as well, how many closeouts you're going to have. So we think right now it's a pretty much, middle-of-the-road, estimate for end-of-year community count is to be up about 15% from this year, and, and, you know, we'll see how it goes. We're... There's some challenges out there. Rob, you know, highlighted a few of them. Jeff talked about a couple on the development side, but there's always challenges on getting communities open. You know, we've been doing a pretty good job staying on track in most of our openings, particularly the last couple of quarters, and hope to continue down that path and, you know, achieve a new community count and new community portfolio that will, you know, support future growth for the company. That's the objective. Thank you. And our final question comes from the line of Jay McCanless with Wedbush Securities. Please proceed with your question. Hey, thanks, everyone. So my first question, I think you may have answered this when you talked about the mix of what's closing in the fourth quarter, but last quarter, you guys had said that the third quarter was probably going to be the trough in gross margins. Was it just the cycle times improving on some of the to-be-built homes, or, you know, can you walk us through why the trough got moved to fourth quarter from third quarter? Yeah, I talked a little bit about it during the prepared remarks. There was, you know, pull forward, a higher margin, closings into the quarter. We overachieved on deliveries, and a lot of those deliveries were sold earlier last year before some of the price increases came into effect that would have otherwise closed in the fourth quarter. It's probably as simple as that. ... and then the other question I had, in the areas where you're having to cut prices still, is there an opportunity maybe to put some smaller square footage plans out there? Or are you just trying to sell through what you have now and then reset to square footages when you start out in the new communities? Yeah, that, that's in part why I, I mentioned what I did about the smaller floor plans we have available. And, you know, you cover us well. You know, in a Built-to-Order business, you're really a consumer laboratory. Every day, you're getting feedback on what the consumer wants, what they think, and most importantly, what they buy. And so we, we watch the trends closely on frequency by plan in this area, in this community. Is it rotating to smaller plans or not? And, if it is, and we haven't seen real evidence of it yet, we're down incrementally a few feet on average, but it's not, it hasn't moved much over the last nine months. If it did, we can quickly go introduce a smaller model into the model park, and we'll do so to, to help sales there. We'd rather do that and hold margin than just drop price on what what you're offering and hit the margin. So it's one of the levers we pull, and we've done it a lot in the past, in part because we have product on the shelf. We can go plug and play. It's already plan-checked, it's approved, and we can go insert it as a model and help help that community succeed. So it's one of the things we track very closely. Ladies and gentlemen, that does conclude today's teleconference. Thank you for your participation. You may now disconnect your line.