Hello, and welcome to the M/I Homes third quarter earnings conference call. My name is Brika, and I'll be the operator for today. We will have a Q&A session today. If you would like to ask a question, please press star followed by one on your telephone keypad. I will now hand over to Phil Creek to begin today's presentation. Phil, please go ahead. Thank you. Joining me on the call today is Bob Schottenstein, our CEO and President, Derek Klutch, President of our mortgage company, Ann Marie Hunker, VP, Chief Accounting Officer, Controller, and Kevin Hake, Senior VP. First, to address Regulation Fair Disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant non-public items with you directly. As to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today's press release also applies to any comments made during this call. Also, be advised that the company undertakes no obligation to update any forward-looking statements made during this call. With that, I'll turn the call over to Bob. Thanks, Phil. Good afternoon, and thank you for joining us. We are pleased with our third quarter performance, highlighted by a number of records, including record revenue of $904 million and a record third quarter pre-tax income of $116.2 million, 22% better than a year ago, and a very strong return on equity of 27%. We sold 1,964 homes during the quarter, a decline of 33% from the record sales reported during last year's third quarter. Despite the decline in sales, housing demand throughout most of our markets remains very strong. Our decline in sales is due to the fact that we are operating in 15% fewer communities than a year ago, and we continue to limit sales in the majority of our communities in order to better manage deliveries and control costs. Our third quarter monthly sales pace was 3.7 homes per community. Other than last year, this is the highest monthly per community sales pace we've seen in over 10 years and reflects the underlying strength of demand. Year to date, we have sold 7,340 homes, 1% ahead of last year's record, despite, as noted, community count being down 15% and continuing to limit sales in the majority of our communities. We ended the quarter with 176 active communities. We will be opening a record number of new communities in 2022. Specifically, we expect to grow our community count next year by 15% or more and end 2022 with between 200 and 220 communities. We closed 2,045 homes during the quarter, a 4% decrease from last year. Clearly, our closings were negatively impacted by the well-documented supply chain disruptions that continue to stretch our build times and impact the entire industry. On average, it is taking us 45 days longer to get homes closed. We have always been focused on achieving fast and efficient build times while assuring that homes are properly complete and ready to be delivered. We will continue to manage in this way. Our backlog is very strong. We ended the quarter with an all-time record backlog of $2.5 billion, 40% better than last year, and units in backlog increased by 20% to a third quarter record of 5,407 homes, with an average price in backlog of $471,000, which is 17% higher than a year ago. In addition to reporting record third quarter income, our returns were also very strong. Gross margins improved by 160 basis points year-over-year to 24.5%, and our SG&A expense ratio improved by 90 basis points to 10.7%. Excluding the one-time charge for debt extinguishment, our pre-tax income percentage improved from 11.2% last year to nearly 14%. As noted, all of this resulted in a very strong return on equity of 27%. Now I will provide some additional comments on our markets. First, let me begin by stating that I'm very excited to announce that we are commencing home building operations in Nashville, Tennessee, one of the nation's most dynamic and fastest-growing housing markets, ranking eleventh nationally in 2020 based on single-family permits. Nashville continues to benefit from a very healthy economy, significant population growth and job growth, and we look forward to building our competitive position in the market over the next few years. As our sixteenth market, Nashville will, for reporting purposes, be included in our Southern region together with Charlotte and Raleigh, our four Texas markets, and our three Florida markets. We experienced strong performance from our home building divisions in the third quarter, led by Orlando, Tampa, Minneapolis, Dallas, Chicago, Columbus, and Charlotte. In fact, all of our markets produced strong results. Our deliveries decreased 8% from last year in the southern region to 1,169 deliveries, or 57% of the total. The northern region contributed 876 deliveries, an increase of 1% over last year. Our owned and controlled lot position in the southern region increased by 11% compared to last year, and increased by 5% in the northern region compared to a year ago. 34% of our owned and controlled lots are in the northern region, while the balance, roughly 66%, is in the southern region. We have a very strong land position. Company-wide, we own approximately 22,700 lots, which equates to a roughly 2.5-year supply. On top of that, we control via option contracts an additional 20,300 lots. In total, our owned and controlled lots are approximately 43,000 lots, or about a 5-year supply. Based on our record backlog, we expect to finish out the year with another very strong performance. Our financial condition is strong with $1.5 billion of equity at September 30 and a book value of $53 per share. We ended the quarter with a cash balance of $221 million and zero borrowings under our $550 million unsecured revolving credit facility. This resulted in a net debt to net capital ratio of 24%. Our company is in excellent shape, the best shape ever, and we are poised to have an outstanding fourth quarter and an outstanding full year in 2021. With that, I'll turn it over to Phil. Thanks, Bob. New contracts for the third quarter decreased to 1,964, compared to 2,949 for last year's third quarter. In last year's third quarter, our new contracts were a record and were up 71% from the prior year. Our new contracts were down 32% in July, down 41% in August, and down 24% in September, and our cancellation rate was 8% in the third quarter. As to our buyer profile, about 50% of our third quarter sales were to first-time buyers, compared to 51% in the second quarter. In addition, 39% of our third quarter sales were inventory homes, compared to 43% in the second quarter. Our community count was 176 at the end of the quarter, compared to 207 at the end of last year's third quarter. The breakdown by region is 85 in the northern region and 91 in the southern region. During the quarter, we opened 26 new communities while closing 25. During last year's third quarter, we opened 12 new communities. We have opened 63 new communities in the first 9 months of this year, compared to 51 last year. We delivered 2,045 homes in the third quarter, delivering 37% of our backlog, compared to 58% a year ago. Year-to-date, we delivered 6,322 homes, which is 16% more than a year ago. We now have 5,300 homes in the field, which is 20% more than the 4,000 we had this time last year. Revenue increased 7% in the third quarter, reaching a third quarter record of $904 million. Our average closing price for the quarter was $430,000, a 13% increase when compared to last year's third quarter average closing price of $380,000. Our backlog average sale price is an all-time record of $471,000, up from $404,000 a year ago. Our backlog average sale price for our Smart Series is $374,000. Our third quarter gross margin was 24.5%, up a hundred and sixty basis points year-over-year. Our third quarter SG&A expenses were 10.7% of revenue, improving 90 basis points compared to 11.6% a year ago. This reflects greater operating leverage, and it was our lowest third quarter percentage in our company history. Interest expense decreased $1.3 million for the quarter compared to last year. Interest incurred for the quarter was $9.3 million, compared to $10 million a year ago. This decrease is due to lower outstanding borrowings and higher interest capitalization due to higher levels of in-inventory under development than last year. During the third quarter, we issued $300 million of senior notes due 2030, and used the majority of the proceeds to redeem all of our $250 million of senior notes that were due in 2025. This resulted in a $9.1 million loss on early extinguishment of debt. We are very pleased with our returns for the third quarter. Our pre-tax income was 13%, and 14% excluding our debt charge, versus 11% a year ago. Our return on equity was 27% versus 19% a year ago. During the quarter, we generated $132 million of EBITDA, compared to $111 million last year's third quarter. We used $34 million of cash flow from operations for the first nine months, compared to generating $197 million a year ago, primarily due to our increased land purchases. We have $23 million of capitalized interest on our balance sheet. This is about 1% of our total assets. Our effective tax rate was 22% in the third quarter compared to 23% in last year's third quarter. We currently estimate our annual effective rate this year to be around 22%. Our earnings per diluted share for the quarter increased to $3.03 per share from $2.51 per share last year. During the quarter, we repurchased 243,000 of our outstanding common shares for $16 million, and we have $84 million available under our current repurchase authority. Our current plans, based on the existing market conditions, are to continue repurchasing our shares. Now I'll turn it over to Derek to cover our mortgage company results. Thanks, Phil. Our mortgage and title operations achieved pretax income of $9.9 million compared with $19.2 million in 2020's third quarter. Revenue decreased 28% from last year to $20.8 million. This was due to a lower volume of loans closed and sold, and due to more competitive market conditions, significantly lower pricing margins than we experienced in last year's third quarter. The loan to value on our first mortgages was 82% compared to 84% in 2020's third quarter. 81% of the loans closed were conventional and 19% FHA or VA, compared to 76% and 24%, respectively, in 2020's third quarter. Our average mortgage amount increased to $349,000 compared to $314,000 last year. However, loans originated decreased to 1,554 loans, down 5% from last year, and the volume of loans sold decreased by 8%. Our borrower profile remains solid, with an average down payment of almost 18% and an average credit score on mortgages originated by M/I Financial of 751, up from 747 last quarter. Our mortgage operation captured 85% of our business in the third quarter, the same as last year. We maintain two separate mortgage warehouse facilities that provide us with funding for our mortgage originations prior to the sale to investors. At September 30, we had $142 million outstanding under the M/I Financial warehousing agreement, which expires in May 2022. We also had $70 million outstanding under a separate $90 million repo facility, which we recently extended through October 2022. Both facilities are typical 364-day mortgage warehouse lines that we extend annually. Now I'll turn the call back over to Phil. Thanks, Derek. As far as the balance sheet, we ended the third quarter with cash of $221 million and no borrowings under our unsecured revolving credit facility. Total home building inventory at 9/30/2021 was $2.4 billion, an increase of $0.5 billion from September 30 of last year. Our unsold land investment at 9/30/2021 is $991 million, compared to $762 million a year ago. At 9/30, we had $663 million of raw land and land under development and $328 million of finished unsold lots. We own 4,343 unsold finished lots with an average cost of $75,000 per lot, and this average lot cost is about 16% of our $471,000 backlog average sale price. Our goal is to own a two to three year supply of land, and we now own 23,000 lots, which is about a 2.5-year supply. During the third quarter, we spent $231 million on land purchases and $124 million on land development, for a total of $355 million, which was up from $196 million in last year's third quarter. At the end of the quarter, we had 62 completed inventory homes and 1,042 total inventory homes. Of the total inventory, 658 are in the Northern region and 384 are in the Southern region. Last year at 9/30, we had 266 completed inventory homes and 1,113 total inventory homes. This completes our presentation. We'll now open the call for any questions or comments. We have the first question on the phone lines from Alan Ratner from Zelman & Associates. Alan, please go ahead. I've opened your line. Hey, guys. Thanks for taking my questions and nice quarter. Wanted to hear a little bit more about entering the Nashville market. What's kind of attracting you to that area? Can you discuss the motivations of entering a new market versus allocating capital to an existing market? Great question, and thanks for asking it. First of all, we've been looking at Nashville for a long time, and we've always been interested in it for all kinds of reasons, not the least of which are the very strong macroeconomic metrics that seem to be dominating that market and have done so over the past nearly seven, eight years. It's one of the fastest-growing markets in the United States. Whereas maybe a decade ago, it was not that easy for the large publics to compete there. That is less so today. We would have liked to have been open there even a few years ago, but we've been searching for the right leader. We have identified and hired the right leader and are very excited about starting up there. We believe strongly that we can be competitive there and that it may take several years, but we will develop a very meaningful operational presence there. As far as allocating capital, there's really two pieces or parts to that question. One is, we don't have to open up in a new market to achieve our growth goals. We're currently operating at a run rate of, you know, around 9,000+ homes a year, and we expect to grow that over the next several years by capturing additional market share through allocating capital to our existing markets. At some point, we believe we begin to somewhat max out in the markets we're in, and another flag certainly wouldn't help, or certainly wouldn't hurt. We think we can do two things at the same time. We can continue to grow in the markets we're in, which remains job one. Job one A is also to start deploying capital to Nashville. Our balance sheet is as strong as it's ever been, and we believe that we'll continue to see strong growth out of our existing markets while also beginning to establish real meaningful presence in Nashville. Understood. That makes sense. It sounds like you have a team leader already set up in the Nashville market. Yeah. Have you acquired any land yet? Do you expect to talk any sort of insights there? Yeah, we haven't technically acquired any land yet, although we're beginning to look very seriously at a number of opportunities. Over between now and the end of the year, we'll be adding additional leadership to the team there and begin to really put a full complement of people in place. Understood. Thanks for the detail. Thank you. Thank you. We now have the next question on the phone lines from Ivy Zelman of Zelman & Associates. Ivy, please go ahead. Thank you. Good afternoon, you guys. You know, just recognizing that, you know, their market is at such a robust level, I'd like to have you opine, you know, a little bit, Bob, on how you think about incremental lot purchases, finished lot purchases, whether it's optioned or outright cash buys in terms of the $75,000, the average lot that you said. I mean, incrementally, the lots that you're acquiring today with a five-year land supply, are you concerned about the level of inflation we've seen in lot prices? And is it getting harder to pencil a return without making some assumptions that home prices will continue to rise and demand is gonna remain at this robust level because there's lots of upward pressure on land prices. You're just giving your big picture thoughts and concerns. No, I appreciate. First of all, Ivy, it's good to hear your voice. Secondly, that's a great question. Thank you. Third, yes, we are concerned. Four, we believe that the purchases we're making are really smart, very well-located pieces. Prices are going up. Everything you said about inflation and affordability is something that we're always balancing. Underwriting is getting more difficult because we're not gonna sit here and believe that conditions as they are now will necessarily be the same in two or three years when some of these pieces are put into service. Look, comparatively speaking, we've always had a healthy percent, at least for the last seven, eight, 10 years. We've had a very significant portion of our owned and controlled lots controlled by options. While that can vary a little bit from quarter to quarter or inside of a year, we'll continue to try to at least have 50% of our controlled land under option agreements so that we have some flexibility if things that aren't expected to occur. At the same time, we're more focused than ever on trying to secure what appear to be very strong A locations. A locations cost more money, but I think one thing we've learned over the arc of time is that, A's tend to hold up better through thick and thin. In fact, they're the only thing that holds up through thick and thin. We think we have a great land position. We hope to close on every piece that we have under option, but we also have contracted for the right to walk away if things do begin to slow down or go in a different direction. We're not crazy bullish, but we're a whole lot more optimistic than not about housing and where it's likely to go over the next 12-24 months. We continue to see more and more millennials entering home ownership rather than rentership, and it doesn't take that many to move the curve, and it doesn't take that many for us to capture additional market share. You put all that in a blender and you sort of come up with where we are. Will our average lot price go up? Yep. Will our Smart Series, which is now over 40% of our business, today, two years ago, it was, you know, less than 30% of our business, will it continue to help us produce more affordable product, notwithstanding higher lot prices? That will help. Greater density in Smart Series locations helps. You know, somewhat mitigate the higher prices we're paying for land. We have additional product that we're launching under our Smart Series umbrella, which is on even smaller lots. We've already begun to sell that in some of our markets, and it's off to a great start. You know, there's a lot of pieces and parts here helping to strike the balance between affordability and rising land costs. That's sort of how we think about all of it. I don't know if... I know Phil wants to add to that. I would add one other thing. We obviously pay a lot of attention to how much land we have under control and the dollars at risk for options and all those things. We pay special attention to what we own. You know, as we said today, we own about 23,000 lots. When you look at our current sales rate of about 9,000 a year, that's about 2.5-year supply. We really try to keep that in that two to three year range. We do feel really good about the land we own, and that's obviously, you know, more risk than what we have, you know, off the books. Overall, we feel very good about it. You know, Bob talked about all the communities that we're going to be opening next year, which we're really excited about. We realize fully that, you know, today we're buying land at the top. Everybody's hoping it's not the top-top. Right. No, that's very helpful. Appreciate your realistic perspective and how you're balancing the risks with the stronger market you're in today. Just switching gears a little bit, you mentioned that 35% of sales were on inventory homes, which was slightly down from last quarter. When you look at the fourth quarter, what we're, you know, at least calendar quarter, you know, we're seeing a big ramp-up in specs, attempting to get homes, you know, on the market to get them closed. You guys are talking about a 50% growth in community count, and a lot of builders are talking and saying they're gonna, you know, grow community count double digits, some as high as 40%. Kind of see a lot of supply possibly coming with spec, becoming a bigger percent of most builders' willingness to, you know, basically go after the market rather than dirt sales. Tell us how you think about all the spec ramp, all the community count ramp, and whether or not that's concerning to you in the face of what is, you know, clearly demand starting to, although still very strong, but starting to moderate. I mean, I think that's a great point. We think about that all the time, at least, you know, maybe not all the time, but a good part of the time. I think that if we weren't limiting sales, and if our community count wasn't down, we would be posting sales similar to what we had a year ago, which were crazy, you know, crazy numbers, very difficult comps. It's not an excuse, it's just the fact. We're down communities and we're pretty significantly limiting sales in over half of our communities today. I think that there's really tremendous demand out there right now. I think that there is a possibility that, you know, we're hopefully gonna open more than 15% new stores next year. The number that we put out was somewhere between 200 and 220 at the end of next year. We got 175 or 176 today in terms of communities. That could be as many as 30 to 50 new stores next year at this time. Other builders are singing, you know, in one form or fashion, a similar tune. What will that mean? People are gonna have lots to move. Will there be more specs? Will there be more discounting? I mean, I think that's what's being, you know. A lot of the analysts and people that watch the builders are asking that same question. We've said this before, and I think there's a lot of really good home builders out there, but execution matters, location matters, product matters, quality matters. You know, those are the hooks that we hang our hat on, and we've competed during all kinds of times in the past, and we think we'll be able to compete very effectively in the future. I'll let Phil answer the spec question. It's been a challenge for us and at least, you know, most of the other builders to get homes built, whether they're dirt or to be built. I wish we had more specs, but we sell them as quick as we start them. You know, we're all sick of the word supply chain disruptions. I'm tired of hearing about that, but it is a reality no matter what you're trying to buy in our economy, whether it's a house or a window or a cigar, it's tough to get anything. I think that's hopefully bottomed out. It appears that it has. I don't think it's getting better, but I think it's bottomed out. You know, we dropped some closings because of it. We haven't lost them, they're just sliding. We'll get them back here in the fourth quarter and beyond. Phillip, if you wanna comment further on specs. I would just comment that we've always been conservative operators. You know, we did get up at one time to 5 or 6 specs per community with 1 or 2 of those being complete. We're obviously less than that now. It's just so difficult, you know, to get houses built. You know, we do have 20% more houses in the field than we did a year ago, and we have this huge backlog of over 5,000. I just don't see us changing our stripes much, you know, and being any type of real estate The last point I'll make on that, and again, I mean, it's sometimes you sound like what's the line? You're protesting too much. We have a lot of houses that we could have closed that were almost done, but not quite. We don't do that. There was a period maybe a decade or two ago when we did do some of that, but you end up paying for it later, either with dissatisfaction or greater warranty expense or paying for the same thing twice. It's taken us a long time to get to a very strong discipline of closing houses when they are done. We have some of the highest home readiness scores in the industry, and we intend on keeping that. That's helped produce better returns, lower warranty expense. That's something that we're not gonna depart from, even when you start to see closing sliding because you can't get windows or some other, you know, some other commodity. Got it. Well, I appreciate all of the detail and good luck. Hey, thanks, Ivy. Good to talk to you. Thank you. We now have another question on the line from Alex Barron of Housing Research Center. So Alex, please go ahead when you're ready. Thanks, guys. I missed how many shares you bought back, Bill. I was hoping you could fill me in. I saw it was $60 million, but I didn't catch, you know, how many shares. Along those lines, you know, what are the thoughts on share buybacks going forward? You know, Alex, we bought back about 243,000 shares, and our current plans, you know, based on how things are in the market and so forth, are to continue repurchasing shares. We have about $84 million left under our current authority. Book value is up to $53 a share. You know, it's up twelve bucks in the last 12 months, so we feel good about that. Is the idea to do it opportunistically or more consistently? I mean, I'm not sure I understand that question, Alex. I mean like, are you guys trying to, you know, do it consistently every quarter or just when you think the stock is cheap? You know, Alex, that's something we look at frequently, and a lot of things go into it. Obviously, with book value up to $53, we look at that. We obviously look always at what our, you know, capital needs are for our existing markets, et cetera. We look at a lot of things. You know, again, I mean, with the stock trading below $60 and book at $53, that obviously is enticing to us to buy back shares. Got it. Yeah, yeah. Another question, you know, as far as margins and trajectory of margins, anything that you guys can comment on, you know, what the outlook is based on your backlog, you know, price increases, lumber costs and all that stuff that you can comment as we move into 2022? Well, I'll make the comment that if you look at, you know, the first quarter of this year, we were, you know, 244. The second quarter we were 251. The third quarter we were 245. Prices have continued, our sales prices have continued to increase pretty substantially. Our third quarter costs really were fairly flat. You know, lumber did come back to us a fair amount, but we've had other things go up. Not making any specific predictions. We're very pleased where our margins are. Our returns are very, very strong. We've been below 11% SG&A, you know, the last two quarters. Our income percentage has been very strong. Our ROE is one of the higher ones in the industry. We're still expecting to produce, you know, strong returns the next couple of quarters. You know, having a backlog over 5,000 and having a lot of houses in the field, you know, we're expecting to have some strong results the next couple of quarters. All right, great. Best of luck. Thanks. Thanks, Alex. Thank you. As a reminder, please press star followed by one to ask any further questions today. We now have the next question from Art Winston from Pilot Advisors. I've opened your line, Art. Art. Please go ahead. Thank you, and thank you for the great results, guys. As a follow-on to your response to Ivy's questions, giving the $500 million plus increase in inventory year to date and the already new large number of new communities open, would you anticipate the growth of inventories going forward would be more modest than it has been or small? You know, when you look at our housing investment, you know, it's up right now about 20% versus a year ago. Last year, we spent about $730 million on land, had a few pretty big deals get postponed for different reasons. We spent $750 million on land the first nine months. Having said that, I would expect the inventory increases to not be as much in general the next few quarters. Nashville will be more of a gradual ramp-up unless we find a really good opportunity. And again, we're considering continuing to look at stock. Yeah, I would expect the housing investment inventories to moderate some the next few quarters. Yeah, that's what I would anticipate. That suggests strong free cash flow. I wondered, the backlog, the average cost of home in the backlog at $471,000 price. With the growth in the Smart Series, which are in the 300,000s, it suggests to me that you're selling other houses somewhere, oh, $550,000-$575,000 to bring the price of the cost of the homes in the backlog to such a high level. Could you comment? Thanks, Art. That's absolutely the case. First of all, there's a couple of things. Number one, the Smart Series, on average, Smart Series homes sell for considerably less than non-Smart Series homes. The other thing that's occurred, and this also relates to Ivy's question about affordability, is that, our Smart Series, on average, those prices have jumped a lot too. It's still the most affordable product we sell and still being very well-received by consumers, strong sales pace, strong returns and so forth. Everything is sort of lifted up, you know, $25,000-$50,000 or so. Another way to think about it is if the Smart Series had stayed relatively flat at 30% or 35% instead of 40% or 42%, our average price in backlog would be, you know, I'm just guessing, probably 10% higher. Your point's well made, and the answer is yes, that's correct. Just as 42%-43% of our business is Smart Series, 58% isn't. That's where it comes from. Just a couple of specifics on that. I mean, we have a great business in Austin, Texas. You know, rough figures a year ago, you know, that backlog was a little below 400. Today, that backlog is right at 500. There's been like a- Right ... you know, a 25%+ increase in our ASPs in Austin. Again, in general, there's been, you know, pretty significant cost inflation in the last 12 months. We still think that, you know, affordability is very important to us. We're trying to address that a lot of different ways, you know, with Smart Series. Within the Smart Series, we kind of have a Smart Series Plus, Smart Series Minus. We're trying to pay a lot of attention to that. The other thing is the cost side of the equation for all kinds of good reasons gets tremendous attention. To really be disciplined in the business, you gotta price to market. Hopefully, people always do price to market. In the back of their mind, they know what their cost is, and you know, you try to keep those things in perspective. If you focus too much on cost and price to cost, you either, A, overprice or underprice. If you can get really smart and price to market, then you're doing the right thing. Very good. Thank you. Thank you very much. No, thank you. We now have a question from Jay McCanless from Wedbush. Jay, please go ahead when you're ready. Hey, good afternoon, guys. Hey, Jay. I got several questions for you. Welcome to Nashville. The first one, lumber impact, higher cost lumber from earlier this year, when do you think we're gonna see the worst of that, Phil? Was it this quarter, or is it gonna be next quarter? How are y'all thinking about that? I think it's gonna be, maybe a little more in the fourth quarter than it was in the third quarter, and then we'll start getting some relief next year, Jay. The next question I had, I guess I could ask it two ways. One, how many closings do you think pushed from 3Q to 4Q? But also, when I look at how many homes y'all closed on a monthly average basis, it was like 4.3 in 2Q, then it decelerated to 3.9 in 3Q. I mean, where is that running right now, maybe for 4Q and/or how many closings did you guys move from one quarter to the next? You know, Jay, the best estimate I can give you is, you know, we did revise budgets the first of July for the rest of the year. For the third quarter, we thought we would close about 200 more houses than what we did. The good news is, if you look at profitability and so forth, you know, the first quarter this year, we closed 2,019 and made $110 million pre-tax. In the third quarter, we closed 2,045, and without the debt charge, we made $125 million pre-tax. We feel good that our profitability and returns are getting better. As far as the outlook for the rest of the year, you know, I said that we have 20% more houses in the field now than a year ago. Obviously, a big part of that is what stage of construction they're at. I guess the easiest kind of answer I'll give you is that we do expect to close more houses in the fourth quarter than the third, but, you know, we continue to have challenges. I thought it was pretty interesting that both the Southern and the Northern regions had roughly the same decline, percentage decline in orders versus last year. When you balance it out, it looks like. Oh, sure. One of the things also, just to follow from the closing, one of the things is that even though our spec levels are getting up kind of where we want to, that 1,000 level, you know, a lot of it, we don't have as many finished specs as we used to that close in the same quarter. That also affects what we're closing on a quarterly basis. Okay. And then just on the orders, again, for the Southern and the Northern region to have basically the same percentage decline versus last year, it got you to a monthly sales absorption of roughly 3.7 per month. I mean, is that three to four, is that where you're limiting sales at the communities in terms of new orders? When do those caps come off? What do you guys need to see to start stripping those caps off and letting your salespeople start selling more aggressively? Let me take the second part of that first, because I'm not sure if I understood the first. The 3.7 is a reflection of all of our communities on average, those that are capped and those that aren't. Now, I don't know if that's what you were asking or not. No, I just think it's interesting that you had the same percentage decline, and I didn't know if you were implementing the same level of cap across the entire footprint. Oh that's why orders were down a very similar percentage. It's the answer to that is the same as the answer to pricing to market. It's a market-to-market, subdivision-to-subdivision analysis. We look to our you know, our market operators to make that decision based upon one single criteria, our ability to get the homes built in a reasonable time with costs that we can control. The reason that we've been capping sales is that in itself, the uncapped, it was pushing cycle time out further and further. If there were no supply chain issues whatsoever, and it was easier to have daylight into, you know, deliveries as well as cost, we would not be capping sales. The issue that has really provoked that has been primarily, the fact that, you know, we don't wanna give people one-year delivery times. You know, we like to be closer to six months. It's pushed out about 45 days. We don't wanna keep pushing it out further and further. You know, it's really a function of that. When will we lift it? When we believe, well, first of all, we're getting very strong returns right now. If the returns stayed exactly the way they are, I think that, you know, sign me up for that. We'll lift the caps when we believe that we can handle the volume without stretching out cycle times too much. You know, I think that's really been the issue across the industry. The only other factor, which is sort of a secondary factor, is running out of communities too fast and not being able to replace them. There's a little bit of that in there, but it's really mostly about managing of cost, managing of delivery time, and really managing the buyer. You know, no one knows what's gonna happen, and, you know, to have a backlog with homes that are closing, you know, 10, 12, 14 months out, that's not our business, and we're not gonna get in that business. Our current estimate. Okay ... Jay, is that we'll still be probably limiting sales in the majority of our communities in the fourth quarter. The percentage might be a little bit lower, but we think it'll still be a majority. The percentage has dropped some, in some respects because some communities have closed out. At one point, it was over 75%. Now it's somewhere between 50% and 60%. Okay. Okay, great. Thank you for the- A year ago at this time, Jay, I don't believe we were limiting sales. If we were, it was in less than 10% of our communities. We really started to limit sales in the fourth quarter of last year. Got it. Thank you for that. Also thank you for the insight around the community count. 200 to 220 by fiscal year-end 2022 is pretty impressive. How are you expecting those to ramp out? Is it gonna be a nice, easy progression, or is it gonna be more back half-weighted into 2022? Slightly more back half. Yeah, it looks more- Maybe 60/40, something like that. Yeah. Okay. Part of that is weather. You know, a meaningful part of our footprint feels winter. Most of our Smart Series communities are self-developed. Of course, there's issues there, materials and delays. We have factored in extra time for that. Again, like Bob said, right now our thoughts are the majority will be the second half of next year. Yeah, one of your competitors earlier today talked about having certain pieces for horizontal land development, seeing some delays there. Are you all feeling the pinch on those as well? A little bit. I don't wanna act like we can't get better at that because I think we can. I also think we've been quite proactive, you know, we sit down with our we sort of look at that the same way we look at national accounts or national suppliers. By that, I mean, in each market, there might be one or two large site contractors that, you know, will seek to have do most of our work, if not all of it. We'll sit with them at the beginning of the year or the beginning of a period and say, "These are the projects we've got coming on over the next 12-18 months. Pencil them in. Get us ready so we don't have to worry about finding people when we're 60 days out. Got it. Well, thank you for taking all my questions. Having said that. Oh. Having said that, I, you know, not to throw too much gasoline on the fire. There is a pipe shortage. It seems like every month there's a different commodity that's hard to find. There is a pipe, both PVC and, I think, iron pipe shortage that has begun to rear its head in Texas and maybe Florida. I know Texas for sure. That's something that we're now working on also. The other builder may have been referring to things like that. Sure. Just on pricing, how much did you guys raise pricing during the quarter? How much are y'all trying to push that right now, just given the run that we've already seen this year in home price appreciation? That's a hard one to answer. I don't know off the top of my head. I don't have that in front of me, how much we raised prices to meet market during the quarter. That's a very subdivision-specific thing. I do know that we have communities where we continue to raise prices as we speak. I don't think it's the majority of our communities. I think it's probably less than a third, but it's probably somewhere in that 15%-35% range, where prices are still being raised maybe every two weeks or every four weeks. The majority of our communities, I do not believe we're raising prices right now. I don't have the specific on that. Okay. Well, thank you for taking all my questions. Appreciate it. Thanks. Okay. Thanks, Jay. Thank you. We now have a question on the line from Adam Starr of Global Asset Management. Adam, I've opened your line. Yeah. It's Adam Starr with an S. In any case, results look pretty good. In the current environment, how long is your building cycle time, and how many months will it take you to build out and close on the current backlog? Well, if you look today compared to a year ago, we're about, depending on the market, 30-60 days longer. If you look at our backlog today of, you know, over 5,000 houses, hopefully we'll be able to get through that in the next three quarters. You know, our current run rate is about, you know, 9,000 from a sales standpoint. The delivery rate is a little less than that. We obviously are planning and hoping to close more houses next year than this year. We talked about having, you know, 5,000 houses in the field now. Our average build time across the entire company from dig, commencement of construction to closing is about 160 days on average. And- That's about 30 or so days longer than it was a year ago at this time. We've also seen a slight stretch in the pre, from contract to dig on that part of the cycle time. Actual hardcore construction from the time we start to, you know, dig on the lot until we get the house completed, and it depends upon the house, but on average it's about 160 days. How far into that- Smart Series would be. The Smart Series houses would be less than that. They make up about Yeah, they as I said earlier, about 40%. The more expensive ones would take longer. Yes. How far into that cycle do they enter backlog? That's when you have a contract. Day one. Day one. If you bought a house. Okay. Yeah, if you bought a house from us yesterday, Adam, it would be, and your contract was approved, you would be part of our backlog today. We try to get the houses. If it's a spec house, it's not in backlog. No. No. Backlog is anything that's sold but not yet closed. Gotcha. That's right. How much of your inventory is for spec now? About 1,000 houses. Okay. Roughly 20%. Okay. Thanks a lot. That's very helpful. Keep up the good work. You know, you do it with so little leverage compared to the other guys. You know, maybe you should give classes. Well, thanks for your comments. Appreciate the questions. Nice to talk to you. Okay. Thanks for your results. Thank you. We have no further questions on the line, but as a reminder, it is star one to ask any further questions. We have no further questions on the line, so we'll hand it back to Mr. Phil Creek to close. Thank you for joining us. That does conclude today's call. Thank you all for joining. You may now disconnect your lines.