Good afternoon. My name is John, and I'll be your conference operator today. I would like to welcome everyone to the KB Home twenty twenty-four third quarter earnings conference call. Currently, 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 twenty-fourth, twenty twenty-four. And now 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 twenty twenty-four. On the call are Jeff Mezger, Chairman and Chief Executive Officer, Rob McGibney, President and Chief Operating Officer, Jeff Kaminski, Executive Vice President and Chief Financial Officer, and Bill Hollinger, Senior Vice President and Chief Accounting Officer. 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 measure 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, and with that, here is Jeff Mezger. Thank you, Jill. Good afternoon, everyone. We achieved double-digit year-over-year growth in revenues and diluted earnings per share in the third quarter. With these results and our expectations for the remainder of this year, we believe we are well positioned to produce about $6.9 billion in revenues in 2024 at a gross margin exceeding 21%. As we work to finish the year strong, we remain focused on growing our community count, maintaining our high levels of customer satisfaction, and executing our personalized Built-to-Order model, offering customers choice and flexibility based on what they value and can afford. As for the details of our results, we generated total revenues of over $1.75 billion and diluted earnings per share of $2.04. We delivered more homes during the quarter than we had anticipated, as cancellation rates remained low and our build times have compressed. Our gross margin was slightly lower than we have seen in the past two quarters at 20.6%, which we will provide some detail on in a moment. Although our operating income margin was within our guided range at 10.8%, our performance drove our book value per share up 13% year-over-year. Long-term housing market conditions remain positive, supported by an undersupply of new and resale homes, solid employment, wage growth, and favorable demographics and household formations. Although resale inventory is rising in certain of our markets, it remains well below historically normalized levels, is very limited at our price points, and days on the market are still low. We generated 3,085 net orders in the third quarter, flat with the year-ago period. Our monthly absorption pace per community of 4.1 homes was in line with our third quarter average over the past decade, although slightly below the 4.3 pace in last year's third quarter. Our cancellation rate remained stable sequentially at a historically low level, indicating a solid pool of buyers ready and able to close on their homes when completed. The desire for homeownership is strong, and we saw evidence of this during the third quarter with higher year-over-year traffic within our communities and increased leads from our digital marketing efforts. That said, buyers were hesitant as interest rates remained elevated and concerns about a slowing economy increased, and demand began to soften in late June through July. In this environment, we took steps to adjust pricing as necessary to hold our pace. Rates moderated in August and demand strengthened, with our weekly net orders improving sequentially in each of the last three weeks of August. We are encouraged by this positive trend, and we continue to see solid sales quarter to date in September. With the Federal Reserve lowering interest rates by fifty basis points last week, we believe this will further benefit consumer confidence and affordability. Given the soft comparison in the year-ago fourth quarter, even normal seasonality will produce a strong year-over-year comparison in our twenty twenty-four fourth quarter net orders, setting us up with momentum as we enter the new year. And with that, I'll pause for a moment and ask Rob to provide an operational update. Rob? Thank you, Jeff. I will begin by providing additional color on our net order results. Although traffic increased 8% year-over-year, some buyers hesitated on their purchase decision due to concerns about transacting too early, given the uncertainty around interest rates, and news headlines fueling an expectation of interest rate cuts by the Federal Reserve. Ultimately, lower mortgage rates do help to stimulate demand, and we saw evidence of this in August, with net orders increasing sequentially week by week as the month progressed. While buyers are rate sensitive, we believe the primary motivation of most customers is to secure a home that meets their needs at the best price, not the biggest incentive or rate buydown. Understanding this, and considering the price increases we had taken in most of our communities in the first half of this fiscal year, we strategically and selectively adjusted pricing at the community level as needed to stimulate demand and optimize the pace price balance of each asset, which favorably impacted our net orders in August. Our pricing strategy focuses on offering the best possible price versus continually increasing incentives. Although we achieved the same gross margin by offering a reduction in price or an equivalent dollar value of incentives, buyers care about the price of the home, and our teams emphasize the value of the personalized home and the community more than an incentive or mortgage rate. That said, we did continue to utilize mortgage concessions in the third quarter, with net orders that had some form of mortgage concession, whether a rate lock or a buydown, in the low 60% range, consistent with the past three quarters. We began to reduce the dollar amount of mortgage concessions on our net orders in August, in conjunction with the lower prices that I just spoke of, and we expect to be able to lower our use of this incentive in the fourth quarter, considering improved affordability levels provided by the recent relief in mortgage rates. As to mortgage concessions on homes delivered in the third quarter, they averaged just under 2% of housing revenues. We started nearly 3,000 homes in the quarter, ending the quarter with over 7,700 homes in production, including models. Our expectation is to end the year having started roughly 20% more homes in 2024 than we did in 2023. Given our production, backlog, and lower build times, we have returned to more historical levels of converting our backlog to deliveries. Going forward, we plan to continue aligning our starts with sales, which will help keep our production in balance with the majority of those starts already sold. Our build times on homes delivered during the quarter was about 150 days, a two-week improvement sequentially and a factor in delivering more homes in the third quarter than we projected. Going forward, we are focused on continued progress to drive build times down to four months, which is the lower end of our historical range. We reduced costs on our homes started during the third quarter, which were down sequentially in a low single-digit range, helping to offset the impact of pricing changes, incentives, and land costs. The categories where we have seen the biggest changes recently are in lumber and stucco. We are aggressively pursuing additional opportunities to further reduce our direct cost, enhancing affordability and expanding our reach to a wider range of potential customers. Before I wrap up, I will review the credit metrics of our buyers who finance their mortgages through our joint venture, KBHS Home Loans. We had a solid year-over-year increase in our capture rate, with 88% of the mortgages funded during the quarter having been financed through our joint venture, as compared to 84% in the prior year quarter. Higher capture rates help us manage our backlog more effectively and provide more visibility in closings, which benefits our company as well as our buyers. In addition, we see higher customer satisfaction levels from buyers who use KBHS versus other lenders. The average cash down payment was stable, both sequentially and year-over-year, at 16%, equating to about $77,000. On average, the household income of customers who use KBHS was nearly $133,000, and they had a FICO score of 742. Even with about one half of our customers purchasing their first home, we are attracting buyers who can qualify for their mortgage while making a significant down payment. As we head into year-end, we do so with a continued daily emphasis on maintaining our high customer satisfaction levels, further improving build times, and value engineering our products to lower direct costs. Our objectives remain consistent in increasing our scale, profitability, and returns. We expect to execute on these goals by reinvesting in our growth, opening our communities on time, offering a compelling value proposition to our customers, and optimizing each asset on a community-by-community basis to increase our margins and returns. And with that, I will turn the call back over to Jeff. Thanks, Rob. During the quarter, we invested $845 million in land acquisition and development, an increase of over 50% year-over-year, with more than $425 million going toward acquiring new land. Year to date, we have invested $2.1 billion in acquiring and developing land, more than we spent in all of fiscal 2023. As we continue to accelerate our land investment in 2024, we remain diligent with respect to our underwriting criteria, product strategy, and price points. We increased our lot position 21% year-over-year, ending the quarter with over 69,000 lots owned or controlled, positioning the company for future growth. Overall, we remain focused on capital efficiency, developing lots in smaller phases wherever possible, balancing development with our starts pace to manage our inventory of finished lots. The composition of our land portfolio is strong, aligned with our product and pricing strategy, and provides opportunities for us to gain share in our served markets. In addition to growing our established divisions, we are also beginning to see solid growth in our newest markets, Boise and Charlotte, as well as Seattle, which had its first deliveries only five years ago and is already on the cusp of a top three market share position. These three divisions are a great representation of our geographic expansion strategy, as we can absorb the overhead costs of a new market entry in our existing business, and as these new markets mature, they become meaningful contributors to our results. We maintain a balanced approach in allocating our cash, enabling us to meaningfully reinvest in our growth, which remains our top priority, while also returning capital to stockholders. With the $150 million in share repurchases that we completed in our third quarter, the highest quarterly amount this year, we have already achieved the increased level of buybacks for the year that we shared on our last earnings call. We do plan to continue repurchasing our shares in the remainder of this fiscal year and intend for it to be an ongoing part of our capital allocation plans beyond 2024. Since we began repurchasing shares on a regular basis in 2021, we have repurchased more than 24% of the shares then outstanding, accretive to both our diluted earnings per share and return on equity. Over that time frame, we have returned nearly $1.2 billion in cash to our stockholders, including dividends. In closing, I want to recognize the entire KB Home team for their commitment to serving our home buyers and contributing to our performance in the third quarter. Our company is well positioned for future growth as we meaningfully invest in the expansion of our business and diversify our geographic footprint. We have an experienced management team and a business model that provides customers choice and flexibility in purchasing a home that meets their needs and budgets. With about two months remaining in this fiscal year, we are on track to achieve about $6.9 billion in revenues, with the highest level of deliveries in many years, which will drive well over $8 in diluted earnings per share, representing significant year-over-year growth. This increase in scale and profitability, together with the favorable impact of share repurchases, will contribute to a return on equity of around 16.5%. As we look ahead to fiscal 2025, our initial guidance for revenue next year is about $7.5 billion. We are committed to enhancing stockholder value by profitably expanding our volume, driving higher returns, as well as continuing to return cash to stockholders through both share repurchases and our quarterly dividend. 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 2024 third quarter and provide our current outlook for the fourth quarter and full year. We are pleased with our execution during the third quarter, as our housing revenues increased 11% compared to the prior year and reached the high end of our guidance range. Combined with our healthy operating margin of nearly 11%, we generated robust cash flow that enabled us in the quarter to invest approximately $845 million in land and development and return roughly $168 million to our stockholders through share repurchases and our quarterly dividend. Our housing revenues grew to $1.75 billion for the quarter, compared to $1.57 billion for the prior year period. The growth in our overall housing revenue was driven by increases of 8% in the number of homes delivered and 3% in their overall average selling price. Our third quarter deliveries of 3,631 represented a backlog conversion rate of 58%, a significant improvement from 46% in the year earlier period. Our current quarterly delivery performance was favorably impacted by continued improvements in construction cycle time and lower cancellation rates. We anticipate these factors will also benefit our fourth quarter deliveries and have considered them in our guidance. Based on our current backlog and expected construction cycle times, we project our 2024 fourth quarter housing revenues will be in a range of $1.94-$2.04 billion. In the third quarter, our overall average selling price of homes delivered was approximately $481,000, up from approximately $466,000 in the prior year period. This increase primarily reflected a mix shift in homes delivered towards our higher priced West Coast region. Looking ahead to the fourth quarter, we are projecting a year-over-year increase of $23,000 in the overall average selling price to approximately $510,000, mainly driven, as in the third quarter, by an expected higher proportion of deliveries from our West Coast region. Our home building operating income for the third quarter increased to $189 million as compared to $179 million for the year earlier period. Operating income margin of 10.8% compared to 11.3% in the prior year. For the fourth quarter, we expect improvements in both our housing gross margin and SG&A expense ratio to drive expansion in our home building operating income margin to the range of 11.4%-11.8%, assuming no inventory-related charges, representing both a sequential and year-over-year improvement. Our housing gross profit margin for the quarter was 20.6%, as compared to 21.5% for the prior year period. The margin result relative to the prior year was primarily due to product and geographic mix shift of homes delivered, along with other factors, including the impact of pricing adjustments to support demand, partly offset by reduced total home buyer incentives. The mix impact mainly resulted from a higher percentage of revenues in the West Coast region, with gross margins below the company average. Excluding inventory-related charges of $1.2 million in the quarter and $0.6 million a year ago, our margin of 20.7% for the quarter was down 80 basis points year-over-year. We expect to see a sequential improvement in our fourth quarter gross margin. Assuming no inventory-related charges, we believe our fourth quarter housing gross profit margin will be in the range of 21% to 21.4%. Our selling general and administrative expense ratio of 9.8% for the quarter improved by 40 basis points, as compared to 10.2% in the prior year, primarily due to increased operating leverage from higher housing revenues. Supported by another expected sequential increase in quarterly housing revenues, we believe our SG&A expense ratio will further improve in the fourth quarter to approximately 9.6%. Our income tax expense for the third quarter of $50.1 million represented an effective tax rate of 24.2%, compared to 22.9% for the prior year period. We expect our effective tax rate for the 2024 fourth quarter to be approximately 24%. Overall, we reported net income for the third quarter of $157.3 million, or $2.04 per diluted share, compared to $149.9 million, $1.80 per diluted share for the prior year period. The 13% increase in our diluted earnings per share reflected higher earnings, as well as the stock repurchases we have completed over the past several quarters. Turning now to community count, our third quarter average of 251 increased 5% from the year-earlier quarter. We ended the quarter with 254 communities open for sales, up 10% as compared to 230 communities at the end of the 2023 third quarter. We still believe our 2024 year-end community count will be in a range of 250 to 255, resulting in a 7% to 8% increase in the fourth quarter average community count. As Jeff mentioned, we invested $845 million in land and development during the third quarter, a significant increase from the same quarter of the prior year. 50% of the current quarter investment represented new land acquisitions, contributing to the growth in our land pipeline to over 69,000 lots at quarter end, of which 58% were owned and 42% were under contract. At quarter end, we had total liquidity of $1.46 billion, including $375 million of cash and $1.08 billion available under our unsecured revolving credit facility, with no cash borrowings outstanding. During the third quarter, in addition to significantly increasing our land investments, we repurchased roughly 1.9 million shares of our common stock at a total cost of $150 million, while maintaining our historic low leverage ratio of 29.8%. With $800 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 3.46 million shares at an average cost of $72.24 per share, helping to drive an improvement in our expected full-year return on equity to approximately 16.5%. In summary, we are pleased with our solid third quarter financial performance and operational execution, and believe we are well positioned to both achieve our goals for the 2024 fourth quarter and drive higher housing revenues in 2025. Using the midpoints of our fourth quarter guidance, we expect full-year housing revenues of approximately $6.9 billion, with an operating income margin of over 11%, exceeding both our 2023 results and our initial expectations for 2024, as shared during our January earnings call. As Jeff mentioned, we also expect growth in our 2025 housing revenues, reaching approximately $7.5 billion.... We believe our ongoing focus on accelerating profitable growth and expanding our returns by leveraging our larger scale, strong community portfolio, and uniquely compelling Built-to-Order business model will produce measurable expansion in our book value per share and enhance long-term stockholder value. We will now take your questions. John, please open the lines. Thank you, sir. We will now conduct a question-and-answer session. If you would like to ask a question, please press the star key followed by one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two to remove a 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 any questions. And the first question comes from the line of Matthew Bouley with Barclays. Please proceed with your question. Good afternoon, everyone. Thank you for taking the questions. Maybe I'll start on that $7.5 billion revenue outlook for 2025. See if we can unpack that a little bit. It sounds like you're talking to an ASP of around 510 here in Q4 due to mix, but I'm not sure if we should really draw that into next year. So I guess we talk about $7.5 billion, is this going to be more kind of volume driven, price driven? And I guess how does the community growth sort of play into that volume side? Thank you. Yeah. On a high level, Matt, you know, we decided to provide some high-level guidance this quarter. We believe our community count, our backlog, our starts, our absorption assumptions all support our estimate of the $7.5 billion. You know, given where we're at today economically, and particularly with some of the uncertainty, you know, around what the Fed actions will be for the rest of the year, the election results, and macroeconomic, geopolitical, et cetera, et cetera, we decided to keep it very high level, and really keep our guidance really only that top-line number. So I... You know, at this point in time, we're not going to provide a lot of detail or dive into some of the components of it. You know, as typical, you see pretty much all the above, usually when you're driving volume, you know, from the point of view of absorption, growth, community count, and price. Probably fair to assume the same for next year, but we're going to wait till we come back to you guys in January and discuss all of our key metrics and guidance and expectations at that point in time, like we normally do. Okay, fair enough. Thanks for that, Jeff. Secondly, you know, you mentioned your strategy of sort of focusing on adjusting home prices rather than really toggling incentives to a significant degree, if I heard you correctly. Obviously, now you've got lower mortgage rates relative to a few months ago. So my question is really around how you will approach a lower rate environment. It sounds like you're willing to kind of pull back a little on the mortgage concessions here in Q4. But, you know, what should we expect around home prices, right? How did that trend as you got into August, as you did start to see demand improve? You know, is there a scenario where you could, you know, sort of turn around here and start adjusting home prices in the other direction, given where rates have gone, or is that a little bit too early? Any color on how you're going to approach that lower rate environment? Thank you. Rob, you want to take that? Sure. So, you know, obviously, lower rates are good for us. They're good for the, for the consumer, for our buyer. You know, affordability has been a big challenge. Rates have been a big piece of that, so we're certainly happy to see them come down. As we mentioned in our prepared remarks, we are focused on selling the home and the value of that home versus just, you know, who, who can offer the biggest buydown or the biggest mortgage incentive, and, you know, we, we put that in play throughout the quarter. You know, June started off fairly strong from a sales perspective, and then it got weaker as we moved through the latter part of June, a little weaker still in July, and then better in August. And as we've done that, you know, as the market was weakening, we found the need to lower prices in some of our communities to drive pace and to optimize that asset. At the same time, we had others where we were lifting price again. So it really just gets to managing each asset individually and what that buyer needs or what that community needs to hit the volume levels that we're pursuing and to optimize each of those assets. But certainly, as rates come down, and if they continue to come down, we expect to be able to lower our incentives and do that without having to further lower revenue, which should expand our overall gross margins on orders. Thank you. Our next question comes from the line of Stephen Kim with Evercore ISI. Please proceed with your question. Yeah, thanks very much, guys. I'm going to follow up on Matthew's question. Just, because that $7.5 billion is a really encouraging figure, you know, and it implies closings, you know, probably of 15,000 or more. And so, you know, you've talked about... I think you addressed absorptions. I just want to make sure, that I'm understanding the interplay of absorptions and, and community count, from this point forward. Is it right that you think that there's, headroom on your absorptions from the level that you're, you know, currently at? And in terms of community count, it's going to be, I think, kind of flattish, you know, here in the next couple of months. But when is this, inflection in community count, likely to happen? Is it, you know, is it imminent, or is it something that you expect to sort of... you know, reach by the end of next year? Yeah, like we said, Steve, we're not really going to comment too much more in detail on the outlook for next year. Wanted to range, you know, the top-line target for the company and let you guys know where we're heading. I think a lot will play out here over the next few months with the macroeconomic situation, and particularly as we get through the election cycle and whatnot, and, you know, we look forward to hopefully a very strong spring selling season. You know, as far as absorptions and room on absorptions, yeah, there's always room for us to improve in that area. We've had to, as we talked, you know, quite a bit, quite extensively over the last several quarters, we're not an incentive-based company. We've had to incentivize a bit on the mortgage rate more than we'd like to. As demand conditions improve and as the rate, hopefully, the mortgage rates start coming down, we see less need to do that, and we do think that will be a demand driver going into next year. You know, from a personal point of view, outlook, I don't have a crystal ball any more than any of you do, but you know, with a lower rate environment and given that the consumer has been a little more conditioned on these higher rates for the past you know, couple of years or so, you know, we're expecting to see a pretty strong spring selling season, given the right conditions. But there's a lot of ground to cover before we get to that point, so we're kind of holding back on a lot of the details until we have more visibility into the macro. But we did want to kind of range out next year for you. So just, you know, please forgive us for lack of details at this point. Like I said, we'll provide a lot more in January and come back to you. Great. Well, I mean, it's certainly a higher level of revenues than I think most people were looking for, so, that is encouraging to hear that you're targeting that level and that you see the internal opportunity for it. From a longer-term perspective, I wanted to talk about your margin. If I think about your operating margin, I know over the past several years, you know, you've had issues like, you know, mothballed communities, you had your interest expense running through cost of goods sold, and, you know, at this point, I think most of those issues are kind of behind you and things have improved. So I'm trying to figure out whether or not the long-term operating margin opportunity for the company is materially higher than where you're at today, call it, like, 11% or so, or not. So can you give us a sense for what you think is kind of an appropriate long-term operating margin range for the company? Sure, so I'll talk maybe non-quantitative a little bit on this one, but you know, as we have a lot of focus on growing our scale through obviously through market share gain, through growing community count, and hopefully we'll see some market expansion as well with you know, affordability maybe becoming a little more favorable for the consumer. We think with that additional scale, there's certainly upside in operating margin. You've seen us break you know, that double digit, that 10% mark on the SG&A ratio here for several quarters, and we think that's attainable, especially with a higher top line. With the margins where they've been trending over the past 12 months, given that we've been offering a lot of incentives at the same time, you know, just purely a pullback in incentives at the same price points that we have today could add incrementally to the gross margin. So, you know, short of guiding where we're going next year on that operating margin, I think there is potential for the company to improve in that area. It's certainly goal of the company to improve in that area, and we'll see, again, based on the macro environment, if we can get there. Thank you. And the next question comes from the line of John Lovallo with UBS. Please proceed with your question. Hey, guys. Thanks for taking my questions as well. I know you gave some of the factors on the gross margin, but I'm just curious, in the quarter, the 20.7% relative to the 21% to 21.4% outlook, just maybe if you could just kind of bucket those a little bit, help us understand, you know, what the delta was there. And then along the same lines, what's the driver of that sequential increase as we move into the fourth quarter, please? Yes, yeah, both, very good questions. So on the quarter itself, relative to guidance, as I mentioned in prepared remarks, a lot of it was just driven by the West Coast mix in the quarter. Virtually all of the upside that we had on the top line, relative to the midpoint of our guidance, came from our West Coast business, and currently, that business is carrying margins lower than the company average, so that was a little bit of a drag on the percent margin that we, that we had for the quarter. In dollar terms, obviously, you know, it was, it was nice to have it. The other two factors that I mentioned was pricing was a negative, so we did see some price moves, but on the positive side, total incentives, total homebuyer concessions in the quarter were actually a little bit favorable. So those three factors were really the drivers, but the largest of the three as far as the guidance miss was the West Coast mix. When you look at it sequentially, we will have some additional West Coast deliveries and revenues in the fourth quarter, but the delta won't be as high as it was, especially on a year-over-year basis, as it was in the third quarter. So there'll be a little bit of drag there, but on the upside, we're also looking at the West Coast margins improving, between third quarter and fourth quarter, so there'll be a little less going into it. And as always, I mean, we guide margins based on a very detailed forecast. So we start actually with our backlog, which is actually house by house. It gets rolled up to community, gets rolled up to division, and gets consolidated. So, you know, the vast majority of our deliveries in a quarter are already on the books with known pricing and known costs. ... the swing factor often for us is just, you know, which homes get closed. So what, you know, does the mix factor look like in the quarter? And also, we typically run about 20% of quarterly deliveries that are sold and closed in the same quarter. So those are obviously just estimates that we have to do at the beginning of the quarter. But that sequential improvement looks pretty solid to us at this point, and, you know, we'll see how the quarter progresses and see where we get our deliveries. But, you know, we're pretty confident in the guidance numbers that we provided. Okay. No, that's really helpful. And, you know, I can tell you that, you know, some of the more cautious feedback that we're getting from folks is that, well, you know, rates are coming down. This is not a new story, but that existing home inventory is going to come back into the market. We're already seeing the builders post lower than expected gross margins as they're battling that. That doesn't seem to be the case. You guys are talking about existing home inventories still being pretty much in check, you know, going up in some markets, and the expectation that you will be able to, you know, pare back on incentives, you know, as rates come down. Just, you know, I want to make sure I'm understanding your thoughts on that correctly and, you know, and how you do sort of see that dynamic of existing home inventory coming back in certain markets. Look, John, I think you shaped it the right way. I think if there's more resale inventory, it'll help the overall housing market. There's a lot of people that are locked out of moving up, because there's not enough product or they don't want to sell their current home, but they need to move up. I think the whole thing opens up. What we call the housing food chain will all unlock if inventory would come up a little bit. And as I shared in the prepared remarks, the days on the market is still very favorable. So while inventory is ticking up, it's clearing pretty quickly in most of the markets. And you have to look at it sub-market by sub-market in every city. And when you do, there's been a lot of headlines on pricing coming down and inventory up, but it's in the higher price point submarkets than where we operate. Down at the more affordable levels that we operate at, the inventory is pretty limited still. So we think we're in a good position to compete very favorably as resale opens up some. Thank you. And the next question comes from the line of Michael Rehaut with J.P. Morgan. Please proceed with your question. Hi, guys, this is Andrew on for Mike. Thank you for taking my questions. I just wanted to follow up maybe with the recent NAR settlement. Wanted to ask if there are any potential changes that you're making with brokers, if any, and kind of any net impacts from those, and maybe your views more generally on brokers. It's still very early in the process, and like everyone else, we're watching the movements and trying to come up with whatever our strategy would be. But, Rob, why don't you share what we're seeing right now? Yeah, it's, you know, like, like Jeff mentioned, it's a process. It's kind of in flux. I think it's a process that will continue to evolve over time, but we are seeing that evolution speed up a little bit now that buyers are required to sign an agreement with their Realtor that defines the terms of the compensation. And we've had some interesting situations in the field over the last couple of months, where buyers, some buyers had signed agreements and didn't really know what they had signed up for. And we've also had customers come into our sales office and tell us that they chose not to work with a Realtor because they didn't want to be on the hook for covering that commission. So now we're working directly with them, and they're working with our team. You know, we value the Realtors and the relationships that we have with them, and if they bring us business we wouldn't otherwise be getting, and they're the procuring cause for the sale, if you will, we truly value that and want to continue cooperating with them and compensating them fairly for it. But at the same time, it's a pretty significant cost addition to the home, and affordability can be tough, and we're focused on removing any extra costs that we can. You know, one change that we have in play is now that we require the buyer to show us that compensation agreement with their Realtor, and we typically pay up to 2%, but not more. Sometimes it's a flat fee. If that agreement says that the buyer's paying one percent, then that's what we're going to pay. So still in flux. We'll adjust our approach and our strategy as we learn more about it and see how things are playing out. But our main focus is going to continue to be trying to reach that buyer, working to reach that buyer directly through our digital marketing programs, our website, and other outreach and advertising, and just offer a straightforward, simple process for purchasing a home. You know, I would say it's interesting that one statistic that our Q3 orders, we saw that Realtor participation was down about five percentage points sequentially. So, not sure if that's a direct correlation to the NAR settlement or if that's just kind of movement around in the numbers in the new process, but something that we're going to continue watching closely. Thank you for that. That was very thorough and helpful. You know, maybe moving on to kind of your build cycle times having somewhat normalized recently, do you think maybe there's an opportunity to bring those cycle times lower than your historical average over time? Yes, absolutely. You know, we've still got a little ways to go to get to the lower end of our historical average, about another thirty days. But we've got a lot of divisions, many divisions today that are building lower than that. You know, some of them are in the 110-day build time range. So other divisions were, you know, not quite as much available labor. It's a little slower, but I think, you know, we've got programs in place to continue accelerating those build times. It just does so much for us, whether that's, you know, pulling in deliveries from a future quarter or all of our return on inventory ratio. So definitely something we're focused on. I think it's an opportunity for us. If we can just get kind of our outlier divisions that are building longer down to, even our company average, I think we'll get much closer to that four months, and I was, nobody on our team likes to hear this, but at one point, when I was in Vegas, we were building houses in about ninety days from sale to close. That may be a little too high of a goal, but, we're gonna get what we can. Thank you. Our next question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question. Hey, guys. Good afternoon. Thanks for all the details so far. You know, first, I guess, Jeff K, you know, on the 2025 outlook, and I'm gonna be very careful not to ask you to parse it too finely, you know, your message was clear. But one of the things that you mentioned that gives you the confidence in growth next year, you pointed to your backlog and you know kind of the homes under production. And I just wanna make sure I'm thinking about this right, because, you know, on a year-over-year basis, your backlog's been pretty consistently down, you know, roughly 15%. I believe the homes under production number you gave was roughly flat year-over-year. So I'm just trying to figure out, like, from a spec mix standpoint, you know, you came into this year building more specs, and that allowed you to grow closings, even though your backlog was lower. Should we expect an incremental increase in spec building ahead of next spring, given your optimism there? Or are you just taking a forward view of what demand is gonna be in the spring, and given your improving cycle times, are confident that you can get those homes built and delivered and hit that closing target? Yeah, you said it the right way. I should have actually combined that cycle time with the backlog in that comment, because that's a pretty important factor for us, and the improving cycle time has been a big generator and nice increment on our revenues. But yeah, it's our forward look of where we expect things to go, based on home starts, start plans, and what we expect to see going into the spring. Got it. Okay, that, that's helpful. And then second question, you know, kind of on the balance sheet, asset efficiency side. You know, you guys have done a really great job with the capital allocation and buying back stock. And, you know, as I look at your cash balance today and the cash flow year to date, you're roughly breakeven on a free cash basis. You know, your option share of land has increased, but the owned supply is still kind of sitting three to four years, which is similar to where it's been of late. So how should we think about your free cash generation going forward? You know, other builders have kind of set a target of roughly 100% conversion earnings to cash flow. I'm assuming fourth quarter will be a solid cash generation quarter for you guys, but it would seem like in order to get to that 100% number or something close, you would need to see that year's supply of owned land move closer to maybe one or two years, where some other builders are. Right. We focus mostly on asset efficiency, Alan, from the point of view of inventory turn and, you know, what we're doing with the communities that we have out there. You know, we're a relatively high-paced company from an absorption point of view, typically one of the tops in the industry on turning our inventory once the communities are up and running. So that's really the primary focus for us as far as asset efficiency goes, and that can generate a lot of cash. You know, the reduction of build times has been a big cash generator for the business, and we don't think we're... As Rob mentioned earlier, we think there's still a little room on that to generate some incremental cash on a go-forward basis, and that's where we'll focus. Of course, if we can achieve some operating margin expansion, that's just a bonus on top of it. So land monetization for us is very important, big cash driver and, you know, we'll continue to allocate capital very carefully based on our forward outlook on cash flow and balance sheet. The one nice thing for us is we can really focus on, I would term it as more shareholder-friendly allocations of capital, particularly with our balance sheet in the condition that it's in today, which I don't think it's ever been better, from a leverage point of view. So, you know, that's a big favorable for us as well. Thank you. Our next question comes from the line of Rafe Jadrosich with Bank of America. Please proceed with your question. Hi. Hi, good afternoon. Thanks for taking my question. First, I just wanted to. You mentioned that direct cost had come down a little bit, you'd seen some opportunity. Can you talk about the outlook going forward on the direct cost side? And then also, what are you seeing on land inflation today? Rob, that's right up your alley. Okay. So you know, yeah, we've driven direct costs down, you know, sequentially. I still think on directs, you know, some of it's gonna be based on market conditions and how busy our suppliers and our trade partners are, but I think we've got opportunities to continue driving it down. It may not necessarily come from simple things like rebidding, but we've got initiatives going on throughout the company in an effort to get to better affordability for our buyers of driving costs out of those homes, whether it's the elevation, the look of the outside of the home, whether that's simplifying the options that we offer that we've been working on. It's an ongoing process, and we're seeing relief in cost from that. And just value engineering the projects. You know, we've got San Antonio, for example, as we're trying to get to a more affordable price point, we're introducing new models with they're a little less elevated and more simplified in terms of you know, they're box-on-box type construction, getting rid of offsets and overhangs and things like that. So a real opportunity that we're continuing to drive there, that I expect to see more cost decreases on the direct cost side coming. And of course, you know, we'll take everything the market will give us as well in terms of rebidding and just negotiating lower costs. I'm sorry, what was the question on land? Just what you're seeing in terms of land costs today, what level of inflation, and how has it changed? Yeah, well, there's an ongoing land grab in most of our markets, so it certainly puts pressure on both the raw land side and the development cost. I'd say that that's definitely slowed down and stabilized some from what we saw, you know, back in 2022 and 2023. So, on the land side. On development costs, I would say they've generally stabilized, but now stabilized at a higher level. So, yeah, between land and land development, we do see higher overall lot costs, not necessarily as a percentage of our revenue, but, you know, we're incorporating that into all of our underwriting. And, you know, we're only doing deals that make sense to us. As the land costs go up or something else has gotta move down, maybe that's direct costs like we talked about, but still just focused on making sure each deal that we do hits our underwriting hurdles, and we feel good about our portfolio and the process going forward. And then, the second question is just: where is your spec versus BTO mix right now, and how do we think about the margin differential between the two segments? In terms of sales, it's roughly 60/40 on what we've had. And we expect that probably to come down more in the historical range. It's been more like 80/20. And we do see a drop-off. We get higher margins when we're selling a BTO home, when somebody's personalizing that home for themselves, which is one of the reasons we'd like to keep that ratio closer to the 80/20. That's our primary focus. Our primary business model is selling personalized homes, and that's what we're going to continue doing. Thank you. Our next question comes from the line of Trevor Allinson with Wolfe Research. Please proceed with your question. Hi, good afternoon, and thank you for taking my questions. I wanted to follow up on Alan's question regarding your land bank. Your option lot percentage has really jumped the last couple of quarters. Is that a function of just timing, or has there been a different approach there, and do you expect that to stay near these higher levels or over the next several quarters, kind of gravitate back towards your 25% option level that you've been at recently? Yeah, Trevor, Rob touched on the fact that most of the markets we're in, land is very competitive, and you'd love to buy every deal on a rolling option. In some markets, you can do it, and some you can't. We have been successful with a lot of our bulk purchases going to a phase takedown, where you may buy half of it today and half of it 18 months out. And, as you look at our percentage movement, as we're investing more in our growth, I would say it's all the above. We're seeing more option deals. We're seeing more phase takedowns. We're also buying some deals bulk within it. And I think, over time, you'll see the option percentage go up a little more from where it is today. But, our primary mission right now is to create a bigger growth platform and capture the business that we can and grow our share. Yeah, makes a lot of sense. Okay. And then, second question on geography. Clearly, Florida and Texas have gotten a lot of attention the last few months. From an order standpoint, it looks like the Central is maybe a little bit softer for you guys sequentially, but the Southeast, you know, was improved relative to your overall company average. It only moved down modestly quarter over quarter. Can you just talk about how Florida and Texas demand trended throughout the quarter, and how that compares to your business overall? Thanks. Rob? Yeah, you know, it was a little... We talked about the resale and inventory. You know, just to give you an example, we've got... It really is market by market. You know, just look at a division like Jacksonville, where the resale inventory, it's about five and a half months of supply now, which is approaching the longer-term historical average, and it's up, you know, more than two months year-over-year. So there is more pressure on there from resales, and I think that was a factor. Orlando is similar, some of the Florida markets that we've got. So as we looked at the moves that we needed to make to lift our sales pace, those were some of the areas that we did lower prices in, and we've seen that those have been fairly effective, and sales have bounced back in August. Texas, I would say, is similar. You know, really different if you go from Austin to San Antonio as far as buyer profile and price point, but both of those markets too, we've seen resale inventory start to climb back up. It's become a bigger competitor, and we've taken a similar approach there. We've taken steps to find the market. Some of that included lowering prices in certain communities, and again, saw it come back, and we're pleased with where things headed in August, with sales improving each week of the month and continuing into September. As we look at early September, we're also seeing really strong activity on our leads and traffic, so it gives us good optimism here as we look through the fourth quarter. Thank you. Our next question comes from the line of Jay McCanless with Wedbush. Please proceed with your question. Thank you very much. Absorption pace dipped to four point one. Could you just comment on what your target is and, ... you know, what you're expecting, say, for next year? Sure. And I could have answered Stephen's question earlier along these lines, so thanks for the question. If you look back at 2022, when the markets were really strong in the early part of the year, we were at six, six and a half a month in the springtime. And that's an illustration that we're gonna optimize the asset, take the price, balance price, and pace. And what we have found over time is you have to hold at about four a month minimum. So you take the steps you have to to get to four, and if it's a large lot position in a sub-market that's easily replenishable, you'll let it run at six or even seven or eight, like we've done in some of our communities. So, as we look at this year, we've been navigating some real volatility in market demand, and we're gonna run right around four a month at the end of the day, based on where we're at and where we're headed. But that's certainly not a ceiling, it's a floor. So I think if the markets were to improve, you'd see us lift above the four. Our stated range- And then honing in on California. I'm sorry. The stated range that we've given is we'll average four to six. Every community's got its own story, though. Thank you very much. And honing in on California, how would you characterize, you know, the demand trends you saw in the quarter, since that's your largest market? Rob, you want to handle that? Yeah. It's, you know, California has been strong for us. You know, Southern California's done really well. Inland Empire has been one of our strongest divisions in terms of sales, and they kept on chugging in Q3. Overall, you know, pleased with our demand in California, and continues to do very well. I don't have a lot to add to that. It's been a good story for us. Thank you. And our final question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your question. Thank you, and thank you for taking the questions. My first question is around buyer sentiment. The election, housing's gotten a lot more attention from both of these candidates. Do you think that that's having an effect on people's decision-making process and their willingness to perhaps step into the market today? Well, it's pleasing, Susan, to hear both sides talking about doing things to help housing. So that's encouraging for us. Our industry continues to underbuild. We have real affordability issues that we're navigating as an industry, and anything that they can do would be a help. So that would be a good thing, and whatever they do, it'll still take some time to catch up, if we ever catch up, frankly, because there are some structural things that we're dealing with. The consumer has a lot of triggers when they make a home buying decision, and most of them are life-changing. Whether it's getting married, having a baby, relocating, promotion, demotion, you know, all those things. Retire. All those things drive the need to change your home ownership, and all those have been going on all year. So I think there was a pause because interest rates stuck. Everybody thought they were at a peak, and sooner or later, the Fed would move, and they now have. And as interest rates slid, we saw almost an instant reaction out of the consumer, where in the month of August, leads went up, traffic went up, visits to the community, everything was very favorable. And I think that's just the human nature of things, not necessarily somebody's platform for what they're gonna do for housing. So I think if some- Okay ... if either side does something, I think it'll be helpful, but I don't think that's the principal driver right now with the decisions being made. Yeah. Okay, that's helpful color. And then, just one last question on the Design Studios. As we move through the quarter and you saw the movements on the demand side and thinking about the outlook for the fourth quarter and even into next year, any changes in the options and things that people are picking there and the amount that they're spending in the Design Studios? It's been pretty static, but we keep sharing that. But, the buyers are spending what they're spending, and the percentage on the price really hasn't moved in a couple of years. Thank you. Ladies and gentlemen, that does conclude the question and answer session, and this also concludes today's teleconference. Thank you for your participation. You may now disconnect your lines.