Welcome to Lennar's second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to David Collins for the reading of the forward-looking statement. Thank you and good morning, everyone. Today's conference call may include forward-looking statements, including statements regarding Lennar's business, financial condition, results of operations, cash flows, strategies, and prospects. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are subject to risks and uncertainties. Many factors could affect future results and may cause Lennar's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our earnings release and our SEC filings, including those under the caption "Risk Factors" contained in Lennar's annual report on Form 10-K, most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements. I would now like to introduce your host, Mr. Stuart Miller, Executive Chairman and Co-CEO. Sir, you may begin. Good morning, everybody, and thank you for joining us today. I'm in Miami today together with John Jaffe, our Co-CEO and President, Diane Bessette, our Chief Financial Officer, David Collins, who you just heard from, our Controller and Vice President, Fred Rothman, our Chief Operating Officer, Bruce Gross, our CEO of Lennar Financial Services, Mark Cestana, our General Counsel, and a few others as well. As usual, I'm going to give a macro and strategic overview of the company. After my introductory remarks, John is going to give an operational overview, updating construction costs, cycle time, and some other items. As usual, Diane is going to give a detailed financial highlight along with some guidance for our third quarter of 2025. Of course, we'll take questions in our question-and-answer period. As usual, I'd like to ask that you please limit yourself to one question and one follow-up so that we can accommodate as many as possible. Let me begin. We're very pleased to review our 2025 second quarter results against the continuing backdrop of a challenging economic environment for the housing market. In the second quarter, we remained focused on our stated strategy by driving volume and growth, matching production and sales pace, using margin reduction to enable affordability, and sell and deliver homes to avoid building excess inventory. While our margin and earnings have been adjusting and, of course, falling in order to accommodate the realities of the housing market conditions, we remained focused on volume and even flow production to enable re-rationalized cost structure and overhead in order to find a floor and rebuild margin even as the overall housing market continues to soften. We expected that the new normal of higher interest rates for longer would mean lower margins for longer as we drove affordability. We knew that we and the industry were initially going to have to bring down the price of homes we build through incentives and mortgage buy-downs to meet affordability and normalize the supply and demand balance. We also knew that to rationalize margin from a lower average sales price, we would only be able to rebuild margin from a more efficient cost base. We believe that we have gotten ahead of these market realities, and we are building what will become a stronger margin-driving platform by using volume to enable us to drive costs down across our platform. We know this takes time, but we also know it will help build a healthier housing market and position Lennar for bottom-line growth even as the market remains soft. Admittedly, we have not gotten there yet, but we believe that we are getting very close to the bottom and the time when we will build back margin from a lower cost structure, and I will explain that in more detail shortly. First, I will discuss the market environment, then review our strategy, then relate strategy to our reported numbers and expectations for the near future. Let me start with a macro view of the housing market. Consistent with last quarter's earnings call, the macro economy remains challenging as mortgage interest rates have remained higher, while consumer confidence has been challenged by a wide range of uncertainties, both domestic and global. Across the housing landscape, actionable demand has been diminished by both affordability and consumer confidence, and therefore has continued to soften. At the same time, supply remains constrained by years of underproduction. New construction has slowed as builders have pulled back on production due to mixed demand signals, exacerbating the chronic supply shortage that derived from the Great Recession and its aftermath. Additionally, restrictive land permitting, along with higher impact fees, remain supply constraints, while labor and material costs, lumber in particular is a particular headache, are generally increasing. Accordingly, given short supply, home prices remain high, with median sales hovering around $400,000 in many markets. Demand, however, is still high as people want and need homes. Millennials are hitting the prime buying age and are realizing the benefit and perhaps imperative of homeownership. Affordability and waning confidence around buying now are sending confusing signals. I certainly do not want to overstate the negative as the market is definitely not crashing, it just continues to cool. Inventory is up slightly from last year's lower levels, but still relatively limited. It's just that the housing market right now is driven by supply and demand that can't be properly aligned. This is a difficult cycle as low supply fuels high prices, and high prices lock out many of our buyers. Mayors and governors around the country continue to decry the housing shortage and point to affordability or attainability as a priority concern. As a case in point, I and many other homebuilding leaders last week heard from Governor Cox of Utah explain that there is a significant housing shortage in his state, and they simply need more supply. In fact, they are running a need more supply publicity campaign in the state. He noted that the American dream is homeownership, and his state has a 350,000 home deficit that is maintaining prices at an unaffordably high level. He emphatically argued that they need more starter homes in the state that are affordable to those who are just beginning their careers and their families. He described how he and his state are making noteworthy efforts to eliminate or modify restrictions in zoning and timeliness in order to attract more supply, which will help narrow the supply gap and help align supply and demand. This is a common refrain. The post-pandemic days of strong actionable demand driven by low interest rates are behind us. Initially, many in the housing market held on to the hope that higher interest rates were temporary, expecting inflation to subside and rates to drift back to lower levels. However, this expectation has not materialized. Looking ahead, there is little evidence to support expectations of materially lower interest rates in the near term. As a result, elevated interest rates have solidified as the new normal. The environment is about recognizing that short supply is keeping prices higher and that only lower prices enabled by lower cost structures will define affordability. This trend has started with reducing margins and using incentives to enable affordability. Looking ahead, it is much more about transitioning to lower cost structures. Against this backdrop, let me turn to Lennar's operating strategy. Our strategy is and has remained very clear. First, operationally, we are building and delivering consistent volume by meeting the market at affordability, and using volume, we push efficiencies through our platform. Second, financially, we are focused on driving an efficient asset-light land-light balance sheet to effectively hold and develop our land assets and to build cash flow. As I said earlier, we are not there yet, but we are certain that we are finding a floor with margin and getting close to building it back even in a softer housing market environment. As the current market softness unfolded, we focused on consistent volume by matching our production pace with our sales pace. Although some have questioned why we have maintained volume rather than protect our margin, we are very clear and steadfast on our strategy. Historically, we protected margin as market conditions stalled, and we generally led the way in protecting short-term profitability. We learned through those times that once we step backwards and lose momentum, it becomes increasingly more difficult to restart and recapture volume. The machine slows and does not restart easily. We have concluded that by maintaining volume, we can create new efficiencies and new solutions that are durable for the future and will result in meaningful long-term efficiencies in our cost structure. When we stop and pull back, the restart is difficult and expensive, but even worse, we end up coming back as the exact same company we were before with no significant changes for the future. Today at Lennar, we are laser-focused on injecting technology-assisted solutions into our platform with the expectation that we become meaningfully different and decidedly better. We believe that with volume, we can design and engage real change that will produce significant recurring returns for years to come. It really comes down to using hard times to push, to force, and accomplish hard things, and this is exactly what we're doing. As many know, we have spent considerable time working with, investing in, and exploring technology, and the general business community is consumed with the possibilities and opportunities enabled by modern technology. We think about the extraordinary companies that remade their business by incorporating technology solutions into an older platform like Walmart or Home Depot. They invested heavily in their technology-enabled solutions and cemented themselves as industry leaders. We believe in the virtues of technology solutions and the value and efficiency it can bring. We clearly believe that technology, properly configured, can enhance productivity. Today's technologies can and will combine with extraordinary management teams to bring efficiencies that have never been seen before. We believe that productivity and efficiencies can be enhanced by orders of magnitude when technology-assisted solutions intersect with company-wide adoption. We have learned that modern technology is not plug-and-play. In order to get excellent product development and achieve adoption, it requires substantial monetary investment, management time, and widespread engagement. Additionally, it needs a lot of volume to run through the system for development and for A/B testing. These solutions are very hard to create and even harder to incorporate into an organization that is accustomed to old ways and old habits. We are certain that the returns on investment will be significant in both cost savings and efficiency in the way that we acquire and interact with our customer. This is why we are driving volume and focused on using that volume to enable unique Lennar technology-enabled solutions. I'll review some examples shortly. First, let me briefly reflect on our second core strategy of driving an efficient asset-light land-light balance sheet to efficiently hold and develop our land assets and build cash flow. As I noted last quarter, the Millr ose spin was a critical part of our asset-light land-light strategy, but there is more to accomplish. The land strategy also benefits from our volume as greater predictable volume enables greater certainty for the capital market and will help build a more capital-efficient market for this very important part of our business. We're continuing to drive certainty with volume for our land bank partners, and this will help ensure stability and dependability. In turn, that dependability will translate into certainty and predictability for Lennar. Additionally, this part of our strategy also benefits from our technology-enabled solutions work as a technology-based administration system will enable efficiency at many levels, and I will further address this shortly as well. Now let me turn to our results. As I noted earlier, we're quite pleased with the success embedded in our second quarter results and accomplishments. In very complicated market conditions, Lennar associates have been executing our strategy while learning and developing new technologies for our future. This is hard work, and I thank them all for their amazing contribution to that future. In our second quarter, we started over 24,000 homes, making up for last quarter's shortfall. We delivered over 20,000 homes and sold 22,601 homes. As mortgage interest rates moved higher for longer and consumer confidence declined, we continued to drive volume with our starts while we incentivize sales to enable affordability. As a result, during the second quarter, sales incentives rose again to 13.3%, reducing our gross margin to 18% excluding purchase accounting as expected on a lower than expected average sales price. By that, I mean the partners who put in the roads, water, and sewer on each tract of land that we develop. They too are dependent on consistent volume to ensure that their investment in heavy equipment is continuously working. Idle equipment costs money with no income. Our focus on volume enables us to have conversations and build relationships that were impossible when the market was heated and strong. Given those initiatives, we look ahead to the third quarter of 2025. We expect that our margin will come in at approximately 18%, of course, depending on market conditions. We expect to sell between 22,000 and 23,000 homes and deliver between 22,000 and 23,000 homes. We expect our average sales price to be between $380,000 and $385,000, as we expect to continue to see pricing pressure on homes that will be sold during the quarter. Nevertheless, we are focused on driving sales and closings and driving strong current cash flow even at reduced profitability. We are focused on maintaining properly sized inventory within our two homes completed on sold per community level per month, or no, overall, so that if market conditions stabilize or improve, we will benefit, and if the market conditions soften, we are prepared. We expect our overhead in the third quarter to continue to run on the high side at between 8% and 8.2% as we continue to invest in and evolve various Lennar technology-assisted solutions that will define our future. These initiatives have been and will continue to add SG&A as well as corporate G&A for some time to come as they represent a significant investment in our differentiated future. Let me give you some examples. You might remember the program that we once described as the Lennar Machine. The machine, which is overseen by Ori Klein, Jeff Moses, and Ben Lott, and they do an amazing job, it was and still is our primary digital marketing and customer acquisition product, and it has become central to our overall marketing and sales efforts. It operates on a Salesforce backbone, which ingests data from across the Lennar sales landscape. The machine's components have become native to the Lennar way of selling. We have invested heavily in the future of this high-technology program, which is designed to reduce our customer acquisition costs, both internal and external, and manage the dynamic pricing of our homes. Perhaps most importantly, we are working closely with executives at Salesforce as well as our advisors at McKinsey to evolve and design a Lennar agent force that will be able to quickly engage with customers in coordination with our sales team as well as independently in off-hours. Our development of this tool requires significant data flow and is another reason that we maintained our volume to continue to build our digital marketing and customer acquisition program. Another example is in the land arena. We are at the front end of developing a technology-driven land management system in cooperation with the team at Palantir. Our Lennar interface with Palantir is Yen Liu, who is driving that innovation. As we developed our essential housing and Millr ose business engagement, we knew that asset-light and land-light was not enough. Off-balance sheet acquired land with just-in-time delivery of home sites can potentially harbor inefficiencies. The day-to-day administration from purchasing land to the development of that land and to the delivery of developed home sites is being crafted with a state-of-the-art, high-technology-enabled program. This system will help manage every part of the land and land capital relationship and journey. Of course, in order to execute, it requires money, overhead, executive management time and attention, and substantial volume running through the system that will enable this system to properly evolve. Finally, in July, we will execute, wish us luck, the two-year transition of our ERP system to JD Edwards E1 system. This has been a massive undertaking by the extraordinary Lennar professionals in our IT group that was led by Scott Spragley until his retirement a few weeks ago and to be transitioned by his leadership, Thor, Lee, and Jason. You guys know who you are, who are ready to complete this rather complex feat. Although this is really considered just a technical transition, it will enable our combined team of the IT leadership group and Diane Bessette, our Chief Financial Officer, to begin on modernization of our entire financial platform from the main office to the field. Many of you might have noticed that we at Lennar get prepared fairly quickly to report earnings. The reality is that we close our books within three days of quarter-end. We have a full numbers package three days later, and we have a complete forecast three days after that. The good news is that we could report earnings on the 10th day after the quarter-end. The bad news is that this extraordinary timeframe is handled with limited automation that has been limited by our old-school ERP. David Collins really leads this effort. Our financial team does an exceptional job, but they will be truly supercharged and capable of much more as we get these processes automated, and we will. In conclusion, let me say that while this has been a constructive quarter for Lennar and while the short-term road ahead might seem choppy, we are very optimistic about our future. We are well aware that our numbers this quarter are not where we would like them to be, but neither is the market. This is a tough time to be spending heavily on innovation, but we are. This has been an important quarter for Lennar, and we could not be prouder of the work and dedication of our extraordinary associates who worked together to make it all happen. Together, we have upgraded the financial and operating platforms as we drove production and sales. We are well prepared with a strong and growing national footprint, growing community count, and growing volume. We have continued to drive production to meet the housing shortage that we all know persists across our markets. We have driven growth, production, and volume. We have positioned our company to evolve and create efficiencies and technologies that will make us a better company and built for the future. Perhaps most importantly, our strong balance sheet and even stronger land banking relations and soon our technology-enabled solutions will afford us flexibility and advantaged opportunity to consider and execute on strategic growth for our future as well. In that regard, we will focus on our manufacturing model and continue to use our land partnerships to grow with a focus on high returns on capital and equity. Lennar is extremely well positioned for the future, and we look forward to keeping you up to date on our progress. Let me turn over to John. Thank you. Good morning, everyone. Stuart has described in detail the why and how behind our strategy of being a consistent, high-volume, technology-enabled homebuilding manufacturer and our commitment to execute that strategy. We strongly believe this strategy will produce greater efficiencies and drive down costs throughout our platform. I'll further review this as I discuss our performance on sales pace, cost, and cycle time reductions in the execution of our asset-light land strategy for the second quarter. Our sales pace for the second quarter was 4.7 homes per community per month, in line with our sales plan. The well-documented softness of the spring selling season showed the impact of affordability challenges driven by higher interest rates and elevated home prices, along with the uncertainty associated with the macro environment. As the market softened, we leaned into our people and processes to find market and maintain sales pace. This involves the rigor of a daily review of marketing and sales data to make needed adjustments. Based on real-time analysis of traffic, sales, sales pace, and inventory, we will either make no adjustment to prices, increase incentives, or decrease incentives. This is powered by some of the technology that Stuart referenced, as we have added new automated pricing capabilities to the Lennar Machine. This particular technology analyzes all of this marketing and sales data and provides pricing recommendations. It is in its early stages, but we're encouraged thus far. We continuously make pricing adjustments with the goal of ending the week with both the targeted number of sales and with a focus on selling our completed or soon-to-be completed inventory. If any community falls short of these goals at any given week, the analysis of the data provides us with course-correcting actions. By adhering to this discipline, we ended the quarter well positioned with an average of under two unsold completed homes per community. All of the markets we operate in experienced some level of softening. Even in our strongest performing markets, buyers needed the assistance of incentives. Incentives, while varying across the different markets, were primarily in the form of assistance with mortgage rate buy-downs. The markets that experienced more challenging conditions during the quarter were the Pacific Northwest markets of Seattle and Portland, the Northern California markets of the Bay Area and Sacramento, the Southwestern markets of Phoenix, Las Vegas, and Colorado, and some Eastern markets such as Raleigh, Atlanta, and Jacksonville. These markets experienced sensitivity to higher home prices and/or the macro impact on the technology workforce. Turning to the production side of operations, as Stuart highlighted, achieving construction efficiencies is the goal of our production-first strategy. Our start pace in the second quarter was 5.1 homes per community per month, providing meaningful volume to the supply chain, which is critical to accomplishing our mission of lowering costs and cycle times. Achieving these goals is measured by reducing costs across our entire platform. The proper execution of this strategy will deliver savings in direct construction, land development, land acquisition, indirect costs, and SG&A. Volume, and importantly, consistent even-flow volume, along with efficient to-build plans and digitally-enabled scheduling and quality control processes, all drive cost savings. Our commitment to this consistent volume means our trades can drive down their own cost structure as well as work successfully on lower margins, allowing us to stabilize and ultimately grow our margins. The cost reduction discussions with our supply chain are grounded in both the recognition that our consistent volume and market conditions require a recalibration of costs. Direct construction costs in the second quarter were lower sequentially by 1.5% from Q1 and on a year-over-year basis by 3.5% to our lowest direct construction costs since Q3 of 2021. This trend will continue into our third and fourth quarters. Another benchmark of efficiency is our cycle time. Our second quarter cycle time decreased by five days sequentially from Q1 down to 132 calendar days on average for single-family detached homes. This is an 18-day or 12% decrease year-over-year and is lower than pre-pandemic cycle times. We expect to see continued improvement in cycle time as well throughout our third and fourth quarters. Our operating strategy is also resulting in reductions in land development costs and in restructuring land acquisitions. As Stuart noted, our consistent volume comes into play as it provides consistent and predictable work for land development contractors who depend on the utilization of heavy equipment. Similarly, the consistent and dependable takedown of land in a slowing macro environment allows for the proper alignment of timing of land closings and a recalibration of the purchase price of land. With respect to the question regarding tariffs, consistent with our commentary last quarter, we have had no impact to date to our costs from tariffs. We work closely with the supply chain to prepare for alternative sourcing if it becomes necessary, as well as the expectation that our trade partners will work with us to mitigate and offset cost impacts should they present themselves. As Stuart addressed, and Diane will provide further details, we continue to execute on our asset-light strategy. We ended the quarter with our supply of owned home sites improving to 0.1 years, down from 1.2 years a year ago, and controlled home site percentage increasing to 98% from 79% a year ago. During the quarter, Land Bank acquired on our behalf about 17,000 home sites for about $1.4 billion and a commitment of about $2.1 billion in land development. We purchased during the quarter from our various Land Bank partners almost 22,000 finished home sites for about $2.7 billion. The cost and processes in and around Land Banking provide another area for efficiencies, as Stuart discussed. Our focus on the coordination between land sellers and Land Banks of just-in-time land acquisitions with the commencement of land development. Our consistent volume provides the opportunity for processes and technologies that will lead to cost reductions. These improvements in execution of all of our operating strategies enable capital and production efficiencies, leading to an improved inventory turn, which now stands at 1.8 versus 1.6 last year, a 13% improvement. In our third quarter, we will continue to focus on meeting our planned sales pace while intensifying our efforts to reduce costs and maximize efficiencies across our operating platform. I want to thank all of our Lennar associates for their hard work, focus, and dedication for the work accomplished in our second quarter and for the hard work that lies in front of us. Now I'll turn it over to Diane. Thank you, John, and good morning, everyone. Stuart and John have provided a great deal of color regarding our operating performance. Therefore, I'm going to spend a few minutes on the results of our financial services operation, summarize our balance sheet highlights, and then provide estimates for the third quarter. Starting with financial services. For the second quarter, our financial services team had operating earnings of $157 million. The strong earnings were primarily from our mortgage business and were driven by a higher profit per loan as a result of higher secondary margins and also due to a higher capture rate. The financial services team is intensely dedicated to providing a great customer experience for each homebuyer and has created true partnerships with our home-building teams to best accomplish that goal. Our LFS team, together with our home-building divisions, are truly one Lennar. Turning to our balance sheet, this quarter, once again, we were highly focused on generating cash by pricing homes to market conditions. The result of these actions was that we ended the quarter with $1.2 billion of cash and $5.4 billion of total liquidity. We are now positioned as a land-light, thus lower-risk manufacturing home builder. Our year's supply of owned home sites was 0.1 years, as John noted, and our home sites control percentage was 98%. We ended the quarter owning 12,000 home sites and controlling 520,000 home sites for a total of 532,000 home sites. We believe this portfolio of home sites provides us with a strong competitive position to continue to grow market share and scale in a capital-efficient way. With our focus on returns, we are pleased that our inventory turn increased to 1.8 times, with a solid return on inventory of 27%. As we've stated in the past, we balance margins and asset turnover, as both contribute to higher returns. During the quarter, we started approximately 24,200 homes and ended the quarter with approximately 42,400 homes in inventory. This inventory number includes 2,900 homes that were completed unsold, which, as noted, is under two homes per community and continues to be within our historical range. Turning to our debt position, we opportunistically raised $700 million in senior notes at 5.2% due in July 2030. We primarily used the proceeds to pay off $500 million of senior notes that matured in May. As a result, our homebuilding debt to total capital was 11% at quarter end. Our next debt maturity of $400 million is not due until June of 2026. Consistent with our commitment to increasing shareholder returns, we repurchased 4.7 million of our outstanding shares for $517 million, and we paid dividends totaling $134 million. Our stockholders' equity was just under $23 billion, and our book value per share was about $87. In summary, the strength of our balance sheet provides us with confidence and financial flexibility as we progress through the balance of 2025. With that brief overview, I'd like to turn to Q3 and provide some guidance estimates. Starting with new orders, we expect Q3 new orders to be in the range of 22,000-23,000 homes as we match production and sales pace. We anticipate our Q3 deliveries to also be in the range of 22,000-23,000 homes, with a continued focus on turning inventory into cash. Our Q3 average sales price on those deliveries should be about $380,000-$385,000, and gross margin should be approximately 18% as we continue to price to market and use incentives to enable our customers to attain affordable homes. Our SG&A percentage should be in the range of 8-8.2%, impacted by our continued investment in technology solutions. All of these metrics, of course, are dependent on market conditions. For the combined homebuilding, joint venture, land sales, and other categories, we expect a loss of about $25 million. We anticipate our financial services earnings to be approximately $175-$180 million. For our multifamily business, we expect a loss of about $40 million as we continue to strategically monetize assets to generate higher returns. Turning to Lennar Other, we expect a loss of $35 million, excluding the impact of potential mark-to-market adjustments to our public technology investments. Our Q3 corporate G&A should be about 1.8% of total revenues, and our foundation contribution should be based on $1,000 per home delivery. We expect our Q3 tax rate to be approximately 25.3%, and the weighted average share count should be approximately 257 million shares. On a combined basis, these estimates should produce an EPS range of approximately $2-$2.20 per share for the quarter. In conclusion, I, like Stuart and John, would like to say thank you to the financial teams in our division and in our corporate office. You bring an incredible amount of dedication to the table each and every day, and it is greatly appreciated. With that, let me turn it over to the operator. Thank you. We will now begin the question-and-answer session of today's conference call. We ask that you limit your questions to one question and one follow-up question until all questions have been answered. If you would like to ask a question, please unmute your phone, press star one, and record your name clearly when prompted. If you need to withdraw your question, you may use star two. Again, that is star one to ask a question, and our first question will come from Alan Ratner from Zelman & Associates. Please go ahead. Hey, good morning. Thank you for all the details so far. Very helpful. Lot to touch on here, but I think first, maybe if we could just chat a little bit about the consumer and what you're seeing there. I know, Stuart, you went into a lot of detail about the overall demand environment, but we've been getting a lot of questions, hearing a lot of concerns, reading headlines about just the overall quality of the consumer today and some headlines about student loans, for example, that's beginning to impact some credit scores and just overall kind of stretched kind of quality there. Have you seen any dramatic shifts year to date in terms of credit quality or just the overall ability for consumers to purchase homes, or has this been kind of just a slow, steady grind over the last few years given affordability constraints? Look, I'm just going to say generally, and then I'm going to turn it over to Bruce for a second. Just generally speaking, the market has definitely softened or continued to soften. New normal interest rates are higher, but more importantly, consumer confidence has started to wane a little bit. In our last earnings call, I did talk about the fact that we are seeing higher debt levels in some of our loan applications, and that too is starting to weigh in on the market. Bruce, maybe you could give some more color. Sure. From a credit perspective, if you're thinking about credit scores, it's been very consistent. What we are seeing, though, is a little bit of a shift to more government loans, which helps with the ratios for some people that don't qualify. So our government loans were up from 40% last year to about 48% in the second quarter of this year. That's the one noticeable difference. You also brought up student loans, but people do have to qualify, assuming the student debt. We haven't really seen any shift there with any changes with student loans at this point. Great. It's great to hear your voice, Bruce. Hope you've been doing well. Second question on the just overall, I guess, price elasticity in the market. Stuart, obviously, with the machine and your ability to flex incentives to maintain a targeted sales pace, impressive results there. I'm just curious, across your portfolio, do you feel like there are any markets right now that do not really have elasticity in demand, meaning incentives? It does It does not really matter how high you take them. You are struggling to achieve a certain targeted pace, and as a result, you have dialed back the production, or would you say across the board, there is a market clear in price? It is just a matter of finding what that level is to achieve the targeted absorption? I will just say quickly and then turn over to John that, as you know, Alan, we are on top of these numbers, our divisions, our regions, every day. I would say that you do see somewhat of a rotation where one week it's one market and one week it's another, where the question of elasticity is raised and challenged, and it's a real ebb and flow market out there that moves around. John? Yeah, I would completely agree with that, Stuart. It's nothing you can point to, Alan, where you say, "This market is behaving consistently in a different direction." As I highlighted, some of the markets that are harder to find that pace. As I said, it's in part driven by perhaps where pricing is, and particularly tech workers who are foreign tech workers, just the uncertainty around that. In combination, you tend to see a bigger impact, but that also tends to be very community-specific, and we make the adjustments. Great. Thanks for all the detail, guys. Appreciate it. You bet. Next, we'll go to the line of Steven Kim from Evercore ISI. Please go ahead. Yeah. Thanks very much, guys. Appreciate all the color, as always. I guess last quarter, we discussed your view that long-term normalized operating margins before corporate expense were in the mid to high teens and that you could be nimble in adjusting your operations to a lower level of volume if you needed to. You made clear today, again, you're definitely committed to driving volume-based efficiencies, but based on the third quarter order guide, it looks like maybe you are tweaking down volume a little bit, and your comments there, just in response to Alan, it sounds like maybe some markets where there's an inelasticity of demand, you sort of may be tweaking volume down a bit. I'm just wondering, first of all, to make sure that I heard that correctly, I also noticed you didn't really give—I didn't hear it—at least a full-year volume guide. My question basically is, could you talk a little bit about how you see the overall level of volume on an annualized kind of basis? Has it changed in the last few months? Is there some sort of a metaphorical line in the sand for either volume or margins that is worth talking about in addition to the sort of the long-term normalized level? Is there a bottom line or a bottom or floor level that's worth talking about? That's a number of questions in one, but let me clear up, Steve, that in my comments, I did say that we are still expecting for the full year to hit the bottom of the range that we previously articulated of 86,000-88,000 homes. We did detail that. I think that we're remaining consistent, and we're focusing on driving volume, but we're not trying to break anything. This is a day-by-day kind of program of working with market conditions, and what we're doing is adjusting pricing, using incentives to meet the market at affordability. At the same time, we're working with cost structure to say, "Okay, the market is going to be able to afford X. Now we've got to be able to build something that is market desirable at a cost structure that enables us to make a responsible margin." Is there a breaking point? I do not think so, Steve. I think that we are really focused on saying the market is going to be where it is going to be, and that interest rates—the interest rate is part of the affordability program—we are going to have to find a way. The challenge for the industry is going to be to find a way to build at cost structure and take inefficiencies out of our system, build that cost structure, housing that the market can afford. At the end of the day, this conundrum that you have got a supply shortage and demand challenged at the affordability level, I tried to really highlight that. It is not something that we have really seen before. The market needs supply. It needs supply at a cost structure where we can make a margin and where the customer can afford. That is what we are driving towards with everything that we are doing. I think you said it really well, Stuart. As I highlighted those markets that have some more challenges, Steve, it's exactly as Stuart said. We are finding our way to a recalibrated cost structure to meet that demand. The demand is there. It is just challenged, as we all know. It is up to us to do the hard work to figure out how to provide pricing for their homes that is actionable for those consumers. Yeah. Obviously, a lot of that is just good old blocking and tackling and making sure you're sharing the pain with all of your partners who are benefiting from your volume. You also talked, intriguingly, Stuart, at length about technology and the major productivity gains you anticipate from technology. You made clear that you felt like you were not quite there yet. What I wanted to clarify is, is the gap, is it one of know-how and time, or do you think that you actually need to have a higher level of volume than you have today in order to capture and optimize those productivity gains? It's a really important question. Let me first say, I don't think—I think that we need volume, but I think that we have volume. So I'm not making an argument that we need more volume in order to run through. I think that we have that high level of volume that will enable us to learn. What I did try to articulate is, I don't care if you look at the technology companies that are self-made as technology companies like Amazon, like Meta, like Google. If you look at those companies, the amount of money that they invested to become what they were and before they ever saw a dollar of profit was enormous. If you then back up and look at the companies like Home Depot and Walmart that on an old chassis, they put a brand new engine to enable them to be prepared for a digital future. The dollars that were invested by those companies was not just numbers of dollars, but it was management time. It was general overhead. It was focus and attention. I'm not sure that any of these companies did what they did in the context of a softening market. The coincidence is we did not start what we are doing in a softer market, but we are traversing a softer market as we are building these components that we think position our company to be very unusual within the industry. It just takes time. It takes attention. It takes overhead to get the programs working well. If I look back at the time that I said, "We are developing the machine, and you should all come here and see what we are doing," to today, the advances have been breathtaking, and they are critically important. The problem is, in a descending market, it is hard to see what we are actually doing. Our grasp on the numbers, moment by moment, day by day, of what is coming through our system and how we are set up for sales and how marketing is driving the sales component that we are looking at. If I think about the response time and the quality of engagement with our digital customers, these things are, I'm going to say, revolutionary in terms of what we're used to as a company, and we're learning every day. We're pretty enthusiastic about what we're doing in these spaces, and we are engaging top-flight professionals to work with us so that we're learning what we don't know as we migrate forward. It takes time. We're not there yet, and we probably will never be there, but we're getting closer, and we're adding efficiencies to our program even as we build the systems. Sorry for the long-winded answer. No, it's great. Appreciate all the color, guys. Best of luck. Okay. Thanks, Steve. Next, we'll go to the line of John Lovallo from UBS. Please go ahead. Good morning, guys. Thanks for taking my questions. The first one is, I guess, I understand that you guys are working through some older land assets, and you guys talked about the land management systems today that you're developing. You've also been very clear about what you believe to be the benefits of the even-flow model. I guess what I'm curious about is, what margins and returns are you putting capital to work at today? Interesting question. Look, anything that we're buying today is going to come through the system maybe a year or two years from now. We are working through some older land assets, but even as we work through those land assets, we are reworking and focusing on the horizontal development costs associated with that, and that can be as expensive as the land asset itself. As we look to put assets to work today, just remember that in a declining market, what we might underwrite today might still move around. John, how would you handle this? It will vary by market, obviously, but I'd say we're trying to adhere to finding our way to around a 20% gross margin as we do our underwriting with the expectation, as you heard from Stuart and myself, of recalibrating, driving down our cost structure as a buffer against the market conditions. Just remember that because our land assets are generally much shorter-term than they ever were historically, we are running through, over shorter periods of time, those land assets and reloading with newly configured land assets on a regular basis. That rotation means that we might suffer from some lower margins for a period of time, but over time, there will be a turnaround. Home prices, presumably, will start to migrate up, and that notion will turn on itself where margins will be improved. Fred, do you want to add to that at all? Yeah. I think we're also exhibiting quite a bit of patience as we look at deals today and being very selective as we fine-tune our negotiating skills again and bring back the lessons that we've learned over the many years at Lennar to buy land at the right price and, most importantly, right now, on the right terms. We are not taking down large tracts. We are buying just in time, and we are being very selective in what market we are pursuing. Great point because we've spent a lot of time with this. When you go from strong market conditions and maybe even overheated market conditions, the ability to negotiate and to really make sure that the terms, conditions, and pricing are right really becomes almost impossible. When you then migrate to slower conditions that we are in right now, we have to re-educate ourselves and start incorporating some of those old skills that are critically important. That is exactly what we have been doing. That is why I mentioned my comments are just at the shorter term, but also at our high volume, we generate cash flow for land sellers in a market that the macro conditions are slowing down. It is a very different environment today than what we have been through for the past few years. Okay. Yeah. That is helpful color. It looks like homebuilding cash flow from ops was about a $1 billion outflow in the second quarter and was typically a positive quarter. Can you provide any color around the moving pieces there? Yeah. Sure. I I think what you're seeing, John, is just the impact of the lower average sales price for a variety of reasons and also just some lingering remnants of the Millroad spinoff. The cash flow is really most dependent on RHP and the margin, the bottom-dying margin. You've seen that those are both challenged in the second quarter. Look, in the context of our Millroad spinoff, which is still fresh and some of the ins and outs that derive from that, we're still going through some of those reconciliations, and you're seeing our numbers move around. It'll probably be another quarter of that, but we're really migrating to a strong cash flow environment. Yeah. Continuous cash flow. I think that's really important as we're turning the assets, right? It's one of the most important components of cash flow. So the nominal amount moves around a little bit, but consistent cash flow is definitely our goal. Okay. Thank you, guys. Thank you. Next, we'll go to the line of Susan McClary from Goldman Sachs. Please go ahead. Thank you. Good morning, everyone, or good afternoon now, I guess I should say. My question is on the core product. Can you talk a bit about where you are in terms of integrating that into the business, how that perhaps benefited the improvement in inventory turns that you saw this quarter, and how we should think about the path to you really sort of fully integrating that into the strategy? Yes. As I said, our core product continues to be rolled out across our divisions. It now represents about a third of our starts. Just by way of example, it is more efficient from a cost and cycle time perspective. We expect actually about almost a 20-day improvement in cycle time between non-core to core product as it is designed and engineered to maximize efficiency of both the build process and the cost to build. We are seeing continued improvement, and it just takes some time to roll out across all of our product portfolio. We started at a more entry-level price-sensitive product, knowing how important it is to deal with price sensitivity there. Now we are in the midst of designing product and rolling out for move-up product and attached product like townhomes. Okay. That's helpful. Maybe looking out further with that, do you think you can eventually get to three-times inventory turns, or where can you get to with the turns? What kind of an environment would you need to see that, and how does that work into the cash generation of the business over time? It's interesting that you bring this up. We did not spend a lot of time on core product today, but it is a core focus. That's exactly where our focus becomes. Now, it's going to take us a little bit of time, but we're definitely looking at a three-times kind of turn as a North Star for the company and maybe beyond that. We think that there are still a lot of levers to pull. Our core product focus, something, again, is a drumbeat on a regular basis through our division, and it will make a meaningful impact in our ability to improve our inventory turns. We kind of adjusted our discussion today towards some other things. It's a lot like the machine that we brought back up today. Two years ago, we were talking about it pretty regularly, and then we just went kind of quiet with it. The same thing with core. It is happening every day in the company, but it's not something that we need to talk about. You'll hear more about it over time. Okay. Thank you for the color. Good luck with everything. Okay. You bet. Why do not we take our last question? For the last question, we will go to the line of Michael Rehaut from JPMorgan. Please go ahead. Hi. Thanks. Appreciate it. I guess good afternoon now, everyone. Thank you, Mike. Wanted to first dive in a little bit to the SG&A. You have kind of highlighted different drivers of the SG&A move year over year, quarter to quarter. Even in the press release, initially in the press release earlier on, the rise in SG&A was tied to a further investment and an engagement in future efficiencies. Later on in the press release, you said the rise was primarily due to less leverage, due to lower revenues, and an increase in marketing and selling expenses. I just wanted to dive in a little bit to that line item and understand when you talk about low eights and about up 100-150 basis points roughly over the first half of this year versus last year, is it more the investments that we're talking about, or is it more due to the increase in marketing and selling and sales commissions and other marketing market-related, housing market-related drivers? Mike, you're right on. It's really all of the above. The reduction in average sales price and in revenues, that's just math. We're just pointing out the obvious math. Underlying our very, very strong and high SG&A levels, and corporate for that matter, is the fact that we have running through those items some significant time, attention, investment, specific dollar outlays, but additionally, additional overhead people that are working on these programs that we think build lasting efficiencies. We believe that the return on that investment is going to, in the rearview mirror, look very, very attractive. As you are building these models and programs, it is very hard to be able to identify what that return is going to be, but the investment is nonetheless still there and running through the system. As I said, and this is the tricky part, most companies that have rebuilt systems and spent significant dollars have done it in the context of fairly strong market conditions. Decidedly, right now, we are in an industry that is going through a bit of an industry recession. Therefore, I just say that it is unusually high dollar spent on technology at a time when the market is pulling back. You do have some of that math issue as well. Okay. I appreciate that. I guess secondly, just on the gross margin, just want to understand kind of what is in that and when you give the guidance for next quarter, what is and is not in that. What I am referring to specifically is, first of all, the millroads, dividend payments, or option deposit payments, I think annualized of around $500 million. Is that full annualized impact at this point fully reflected in the 18%, or is that something that might be a headwind for next year? Secondly, when you give the 18% gross margin guidance, is that also inclusive of the 20 basis points of purchase accounting? Mike, I'll take that. The first one. Let's talk about the purchase accounting. Pretty negligible for the third quarter, so I think you can kind of take that off the table. As far as the option maintenance fees, remember since we started our land banking program four or five years ago, that's been embedded in the cost. Now, of course, with the spinoff of Millroads, there is that additional fee. Yeah, it's all included in the margin guidance that we give. As Stuart and John have been really pointing out, all of the pressures, whether it's the market, option fees, all really just keep us incredibly focused on cost efficiencies to offset any of the negatives that are in the gross margin. It is really not just additional option fees. That is one component. All of the headwinds are why we are so passionate about making sure that we are focused on cost efficiencies. I think that one of the things that we have done particularly well given our financial group and the integrity that is wrapped in that financial group, the looking forward and looking backwards is the same. It is consistent. The way that we look at margin is consistent. There are no moving pieces that are changing the way forward versus what we are doing right now. It is exactly consistent with what we have been doing. You are really looking at apples for apples in the evaluation. If you look at the way that we are thinking about margin, again, we know the market is soft. We know the market is difficult. We are injecting some important savings or cost alterations in the negotiating that we're bringing to whether it's horizontal costs, vertical costs, or SG&A costs. We are working through how do we make an attractive or at least appropriate margin given where market affordability is, the product that we have to build, and building it on a more efficient basis and at a lower cost. That's what you're seeing in our margin, and that's how we're approaching the business. With that, Mike, thank you. Thank you, everyone, for joining. We look forward to coming back in the third quarter reporting again. Have a nice day. That concludes Lennar's second quarter earnings conference call. Thank you all for participating. You may disconnect your line, and please enjoy the rest of your day.