Good morning, everyone, and welcome to the Taylor Morrison's second quarter 2022 earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question- and- answer session. To ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. As a reminder, the conference call is being recorded. I would now like to hand over to Mackenzie Aron, Vice President of Investor Relations. Thank you, and good morning, everyone. We appreciate you joining us today. Before we begin, let me remind you that this call, including the question and answer session, will include forward-looking statements that are subject to the safe harbor statement for forward-looking information that you can review in our earnings release on the investor relations portion of our website at www.taylormorrison.com. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the SEC, and we do not undertake any obligation to update our forward-looking statements. In addition, we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in the release. Now, I will turn the call over to our Chairman and Chief Executive Officer, Sheryl Palmer. Thank you, Mackenzie, and good morning. I am pleased to also be joined today by Lou Steffens, our Chief Financial Officer, and Erik Heuser, our Chief Corporate Operations Officer. I will share our second quarter highlights and then provide an update on the market environment and how we are positioned to navigate the headwinds facing our industry today. After my remarks, Erik will discuss our strong land position and why we feel confident in the long-term earnings power of our portfolio, after which Lou will provide a detailed review of our results and updated financial guidance. In the second quarter, we generated record levels of profitability and earnings. Most notably, our home closings gross margin of 26.6% was up 750 basis points from 19.1% a year ago and more than 1,100 basis points from 15.4% two years ago. This improvement reflects strong pricing power as well as the benefit of operational enhancements and acquisition synergies that have transformed our business effectiveness. At the same time, our SG&A percentage improved 140 basis points to 8.8% of home closings revenue, the lowest second quarter level in our history, as we have leveraged our scale and unique virtual capabilities to operate with greater flexibility and resiliency. These results drove our earnings per diluted share to a new company high of $2.45. In addition, we deployed our strong cash flow to reduce debt and repurchase $172 million of our shares outstanding. Combined with the effective execution of our asset-lighter approach to land investment, our return on equity improved more than 1,000 basis points year-over-year to just over 23%. This record performance demonstrates the strength of our scale, team, strategy, land portfolio, and well-qualified consumer set and is a culmination of our years-long acquisition journey. As we go forward, I am confident these strengths will continue to serve us well as we adapt to today's market reality. During the quarter, higher interest rates collided with home price appreciation, stock market volatility, and geopolitical tensions. The rapid deterioration in affordability and consumer confidence cooled home buying demand quickly as shoppers faced significant uncertainty related as much to the shock of higher costs as to the sheer speed of change. We were still managing sales releases in most of our communities in April, less so in May, and almost not at all in June as these headwinds became more pronounced in the latter weeks of the quarter. In total, our monthly sales absorption pace moderated to 2.6 net orders per community, which was down from the record levels experienced during last year's frenzy, but consistent with our second quarter norm prior to 2021. The impact has been felt across our wide range of price points, geographies, and consumer groups, albeit to varying degrees. Our move-up and active lifestyle segments have displayed greater resiliency from a traffic, sales, pricing, and cancellation perspective compared to our entry-level segment. Our home building and mortgage teams have acted quickly to reestablish sales momentum, maintain the quality of our backlog, and manage production and inventory levels. Given the diversity of our price point and product portfolio, our approach to managing pace and price is calibrated at the community level, which is even more critical in today's highly fluid market that has required a nimble and strategic response that we are fine-tuning by the day. We have deployed a number of mortgage financing programs through our wholly owned mortgage company to customize solutions depending on customer needs and maximize the benefit of our targeted incentive dollars. By using finance as a sales tool, we are helping our customers address their greatest concerns, whether that be monthly payment, cash to close, or some combination of both. Our strategic allocation of incentive dollars is often far more beneficial to the homebuyer than the typical industry playbook of price adjustments, as those dollars go further to reduce buyers' payments and secure mortgage qualification, while also better protecting our profitability as well as the long-term value of our communities. This approach extends to our backlog of over 8,900 homes, where the vast majority of our buyers continue to be strongly committed to their home purchases. These customers have average deposits of nearly 10% embedded equity, solid financial positions backed by the confidence of a pre-qualification with our mortgage company, and lastly, the attachment our to-be-built customers have to the home they have designed to meet their individualized lifestyle. For these reasons, while our second quarter cancellation rate increased sequentially to 10.8% of gross orders and just over 3% of our opening backlog from historic lows, it remains well below our long-term run rate. As I always share, our buyers tend to be highly qualified and financially secure. In the second quarter, borrowers' average credit scores were among all-time highs at 755. Average household income increased 13% from a year ago, and average down payments increased 300 basis points to 23% despite larger loan amounts. As a result, our buyers continue to have the flexibility to absorb higher mortgage rates from a qualification perspective. Per our second quarter mortgage closings, the buffer between actual contract interest rate and the estimated maximum rate allowed for qualification for our typical buyer was approximately 530 basis points for conventional borrowers, which accounts for more than 80% of our volume and 270 basis points for the smaller mid-teen share of our customers that utilize government-backed FHA or VA financing. However, while most of our buyers can qualify at higher rates, we do recognize the emotional element of the equation will likely take some time to reset. As the market continues to search for its new equilibrium, we have seen continued pressure on sales activity thus far in July, as well as an expected increase in cancellations. However, in many of our markets, we're beginning to see signs that our new sales programs and adjustments have begun to provide necessary confidence to shoppers to cautiously reengage. Our web traffic is trending higher once again. Mortgage pre-qualification volume has also inflected positively since mid-June, and weekly sales conversion rates have been improving over the last few weeks, including a conversion rate of nearly 30% thus far in July for our online sales tools, which are a small but growing piece of our overall volume. Additionally, since the rollout of our national summer marketing event, early survey feedback has revealed a growing share of our shoppers are looking to purchase as soon as possible, indicating healthy demand elasticity. Our recent consumer research also shows that our shoppers are more optimistic about their household income and personal financial situation over the next 12 months compared to a national survey benchmark, which we believe once again reflects the overall strength of our buyers. Let me end by saying that we remain constructive on the long-term underlying drivers of demand in our markets and consumer groups and are confident in our team's ability to navigate any uncertainty ahead. We will be diligent in protecting our strong balance sheet and maintaining disciplined guardrails on land investment. With a well-vintaged land pipeline of 82,000 home sites, we are well- positioned to drive future growth, be patient with investment spend and weather any changing market conditions. Most importantly, we will continue to take a consumer-centric, dynamic approach to managing our business for the long term as housing finds a new footing in the months ahead. Now I will turn the call over to Erik to discuss our land strategy. Thanks, Sheryl, and good morning, everyone. Starting with our current land position, as Sheryl mentioned, we own and control a robust land pipeline of approximately 82,000 home building lots at quarter-end, which represented a strong foundation of 6.1 years of total supply. Of these lots, we controlled 41% via options and other off-balance sheet structures that enhance the capital efficiency and reduce risk. This controlled share is up from 35% a year ago and 28% two years ago. In addition to our ongoing use of seller financing and joint ventures, this meaningful shift has been facilitated in part via the land banking agreements we established with Värde Partners last year. Since inception, this off-balance sheet vehicle has closed on 6,800 lots across 11 markets. We evaluate each land deal through our portfolio investment committee to determine the optimal financing vehicle by weighing cost of capital, duration, and underwriting assumptions to maximize our long-term risk-adjusted expected returns. Going forward, further expansion in our controlled share will be dependent on market dynamics, as we are pleased with the current balanced mix of our portfolio. It is also worth highlighting that still more than 60% of our owned lots were contracted in 2020 or earlier. These lots are booked on our balance sheet at an attractive historic basis considering today's land pricing, which is a meaningful source of embedded value. During the quarter, our homebuilding land investment totalled $451 million, of which 52% was spent on development versus 45% a year ago as we are working to monetize our well-vintaged land and drive community count growth. On the acquisition front, we are closely reviewing our deal pipeline to stress test every transaction before closing to ensure each deal still meets our underwriting thresholds, successfully renegotiating terms when appropriate, and positioning ourselves to be opportunistic as the market evolves. With nearly all lots already owned or controlled for targeted home closings through 2024, we are looking out to 2025 and beyond as we evaluate new land opportunities, providing us with valuable flexibility to be patient in today's fluid market. As a result, we now expect to invest a total of about $2 billion in homebuilding land acquisition and development this year, down from our prior expectation, as we are taking a more opportunistic stance through the remainder of the year. Now, let me share a brief update on our Build- to-R ent operations. Since finalizing our new $850 million Build- to-R ent joint venture with Värde Partners last quarter, we have already closed on 11 assets in Texas, Florida, North Carolina, and Arizona, totalling nearly 2,400 lots in this vehicle, with a majority of these deals negotiated more than one year ago. We are pleased with the quick progress we have made to efficiently scale the partnership to fuel our growth in the attractive horizontal rental arena, which we believe has become even more compelling in today's higher interest rate environment. These amenitized communities are intentionally and transparently zoned as multi-family communities that contribute to the affordable housing options available in our markets. In addition to allowing us to meet the needs of rental households, we also expect some portion of these leasing customers to ultimately evolve to buyers of our for sale homes over time. Lastly, we continue to expect to monetize our first asset later this year as it approaches stabilized leasing levels. With that, I will turn the call to Lou to discuss the company's financial review and outlook. Thanks, Erik, and good morning, everyone. To begin, we generated second quarter net income of $291 million or $2.45 per diluted share. During the quarter, we recorded non-recurring gains on the extinguishment of debt and land transfers to unconsolidated joint ventures. Excluding these items, our adjusted net income was $271 million, and our adjusted earnings per share was $2.27. This adjusted EPS was up 139% from the second quarter of 2021 due to strong top- line growth, significant improvement in our home closings gross margin, strong SG&A leverage, and a lower share count. Turning to the details of the quarter, we delivered 3,032 homes at an average selling price of $621,000, which generated home closings revenue of $1.9 billion. This is up 15% year-over-year. Supply chain challenges remain persistent across various points of the development and construction process, driving a modest extension in our cycle times. Most notably, we experienced increased delays amongst some municipalities for inspections and permitting, which offset stabilization at the front end of the construction timeline, where material and labour availability is beginning to show some signs of improvement. As we head into the second half of the year, we expect a significant volume of home closings across the industry to further pressure supply chain dynamics. Combined with the overall level of uncertainty in the market, we now expect our full- year home closings to be around 13,500 deliveries. This includes approximately 3,200-3,400 homes in the third quarter. From a pricing perspective, we still expect the average price of our closed homes this year to be at least $625,000. Our home closings gross margin for the quarter was 26.6%, which was up 750 basis points from a year ago and more than 1,100 basis points from two years ago. This improvement reflects strong pricing power, operational enhancements, and acquisition synergies. Based on the composition of our sold homes and backlog, we expect our third quarter gross margin to be consistent with the second quarter. For the full year, we are once again raising our outlook and now expect to generate a full year homes closings gross margin of 25%-26% versus at least 24.5% previously. During the quarter, SG&A as a percentage of home closings revenue was 8.8%, which represented 140 basis points of year-over-year leverage. We continue to expect our SG&A ratio to be in the mid- to high-8% range this year versus 9.3% in 2021. Now to community count. We ended the quarter with 323 communities, which was similar to the prior quarter. This was above our prior guidance range, given fewer than expected community closeouts related to the moderation in sales. Looking ahead, we expect to end the third quarter with approximately 315-325 communities and continue to anticipate ending the year with around 350 communities. Followed by further growth in 2023. Now turning to our balance sheet. Our capital position is strong with almost $1.1 billion of total liquidity at quarter end, including $378 million of unrestricted cash and $684 million of undrawn capacity on our revolving credit facilities. During the quarter, we retired $265 million of our debt outstanding through a successful tender of our 6. 58% 2027 Senior Notes. This will enhance future gross margins by reducing capitalized interest and brought our gross debt closer to targeted levels at a gross debt to capitalization ratio just below 40%. Our net debt to capitalization ratio equals 36.4%, and we continue to expect to reduce our net leverage to the mid-20% range by year-end. From an inventory perspective, we ended the quarter with approximately 3,000 spec homes across the country, which only about 60 were completed. To manage inventory levels, we moderated our monthly start pace to 3.4 homes per community during the quarter as intended following the strategic acceleration in the first quarter. Going forward, our start pace will closely align with sales, while our to-be-built mix will normalize to more traditional levels. Lastly, we repurchased 6.8 million shares outstanding for $172 million at an average share price of $25.43. This represented approximately 5.5% of our prior quarter's diluted share count and marked our highest level of repurchase activity since 2018, which we believe was an attractive use of our capital, given our undervalued stock price. At quarter end, we had $425 million remaining on our repurchase authorization, which our board of directors increased to $500 million in May. Because of these actions and the strong expected growth in our earnings, we continue to expect to drive a mid- to high-20% return on our equity this year. Now, let me turn the call back over to Sheryl. Thank you, Lou. To wrap, I would like to share some more detailed market color to give you a pulse of what we are experiencing across the country. While no market has been spared from the slowdown and shoppers broadly are in a waiting pattern until interest rate and economic uncertainty fade, the degree of moderation has varied across geographies and even more so among buyer groups and location quality. Beginning in Florida, typical seasonality during the slow summer months is evident across the state. Although our large active lifestyle portfolio in Naples, Sarasota, and Orlando are still seeing traffic. However, these savvy, often out-of-state consumers are generally in a wait-and-see mode. These buyers are less concerned about price and more focused on selling their current home. Our entry-level offerings in the state have slowed, with Jacksonville being a positive outlier given healthy non-local demand for its affordable product among relocation buyers. In the Southeast, Charlotte, Raleigh, and Atlanta were more consistent quarter-over-quarter than most other parts of the country. Raleigh delivered the company's strongest year-over-year improvement in second quarter sales pace, where its largely first and second move-up portfolio showed strong resiliency as well as the strongest year-over-year gain in home closings gross margin. Moving to Texas, we have begun to see a pickup in traffic, sales center appointments, and mortgage pre-qualifications in Austin and Houston. Despite Austin experiencing some of the most robust pricing increases, its sales and traffic per outlet were strongest in the state, and its cancellation rate was below average, as buyers are well-qualified and determined to move ahead. Both Houston and Austin continue to see interest in their active lifestyle communities, which tend to be more dependent on in-state buyers compared to our Florida active lifestyle business. In our largest division by volume, Phoenix has experienced a steep decline in both traffic and orders. Although its conversion rate and cancellation rate were both healthier than the company average. Move-in-ready inventory homes remain in strong demand. In both Las Vegas and Denver, we have seen a pickup in pre-qualification activity from the June lows, and Las Vegas is still benefiting from strong relocation buyers, particularly from California. Lastly, moving to the West Coast, Southern California and the Bay Area held up relatively better than Sacramento and Seattle. Similar to other geographies, our entry-level communities softened and cancellation rates increased, although this consumer group, particularly in the Inland Empire, is the most eager to work with mortgage incentives to reduce their monthly payment and cover closing costs. In Sacramento, activity in its first active lifestyle community slowed a bit, but is still up year-over-year as the recent grand opening of its amenity center has spurred some more interest and sales. Across the country, our dedicated and talented team members are working tirelessly. Their effort delivered a record second quarter for our company despite the obstacles and will allow us to continue to perform as we adapt going forward. To each of you, I offer my most sincere appreciation for always showing up with resiliency, empathy, and creativity to serve our customers and each other. With that, let's open the call to your questions. Operator, please provide our participants with instructions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask a question, please ensure your phone is unmuted locally. Our next question comes from Matthew Bouley from Barclays. Matthew, your line is now open. Good morning. You have Elizabeth Langan for Matt today. I was just wondering, could you give us an idea of how your current incentive how that level compares historically? Do you expect you'll be able to continue to use the targeted financing incentives, given the stress on affordability, or do you think that you'll eventually have to move to pricing adjustments? Hi, Elizabeth. Good morning. Thank you for the question. With respect to the incentives, when we look year-over-year, actually Q2 was lower than Q1, and certainly all of last year. Obviously, there's a little bit more out in the market from a sales standpoint today. When we think about continuing to use financing as an incentive, certainly, I hope so. Because when you look at the impacts of using financing compared to reducing the overall price, base price, even lots, options for the consumer, it makes a marked difference. I mean, those dollars work for you 4-to-1. I mean, $10,000 of incentive would be like reducing the price by $40,000. To the extent I can make more of a difference for that consumer with respect to their overall qualifying power. Absolutely, their monthly mortgage payments, you know, and our buyer group is gonna be, you know, hundreds and hundreds of dollars less when I look at the overall interest that they're paying over the life of the loan. A lot of it's gonna depend, Elizabeth, on really the market reaction, as we're protecting kind of values for our customers in their communities by using finance. That would be the preferred approach. If we see tremendous reductions in price from our competitors, we would have to reevaluate. Okay. Thank you. That's really helpful. Would it also be helpful if you could talk a little bit, the different trends that you're seeing between the different buyer groups? I know that you said that move-up and active adult was more resilient versus the first- time buyer. Can you talk a little bit more about that? Yeah, certainly. You know, I think there's been a lot of discussion around the different consumer groups and how they're each performing. Let me walk through them. When I look at the year-over-year or even the two-year trends, we are seeing the greatest reduction in sales and pace from the entry-level buyer. That's where we saw in Q2, quarter-over-quarter, year-over-year, the most significant reductions. They're still, by the way, our strongest pace, but the greatest reduction from period to period. Not really surprising if you think about how the combination of interest rates and price appreciation has affected them from a true affordability standpoint. You know, and I'm talking true demand. I'm not sure, you know, some of the numbers could be masked by selling to that consumer to institutional investors. When I'm looking at true consumer demand, which is what our quarter is showing, they're clearly the most affected. We tend to serve a more financially secure kind of first-time, maybe even move-up buyers, so they're doing a little bit better. When I look at the trends, and I look at the greatest reduction in their ability to qualify, it's certainly that consumer. You know, it makes sense. They don't really have the equity to bring to the table. We know cash to close is the second greatest challenge for the consumer right behind monthly mortgage payments. When I look at their overall qualification criteria at both the conventional and the FHA first- time buyer, you know, as I said in my prepared remarks, they're just a little bit tighter. Right now, when I look at our backlog, that consumer, the first- time buyer, you know, they still have some room in their back-end ratios, but honestly, if they were paying higher interest rates, that would change for them. They don't have as much cash to bring to the table or equity from a prior purchase. Once again, probably the greatest impact. When I then look at our backlog, I'll go to the active adult. Let me go to the other side. You know, that's probably the most sophisticated buyer group. They're behaving in a couple different ways, and honestly, it really depends on where you are in the country. I think back to the COVID days, and they pulled back the furthest at the beginning of COVID, and then they were the most aggressive about changing their lifestyle wants. What I have found interesting is the greatest out-of-state penetrations we have for that consumer, like Sarasota and Naples, which is primarily an active adult business, that's where, as we've moved into the late spring and early summer, we've seen that pullback. Where we see a more local active adult buyer, and that would be in our California, that would be in our Southeast, our buyer has actually provided the greatest strength. As you know, they spend the most on lot premiums, options, so they have a lot more room to manoeuvre and not affected by interest rates because we see such a high penetration of our cash buyers there. Just not as affected by rates, but at the same time, a more savvy buyer that in today's environment is gonna make sure they understand what's really happening from a macro standpoint. Then I would take the middle slice quickly and say, you know, we've seen great strength in that first move up. Once again, there's some blurring of the lines between that entry level and that first- time move- up buyer. When I look at the paces overall, that first move up has held up actually pretty darn well, maybe even best of all. The luxury has held up very well, but that second move up is where we've probably seen a little bit more pain for that consumer. Thank you. You bet. Thank you. Our next question comes from Carl Reichardt from BTIG. Carl, your line is now open. Thanks. Morning, everybody. Can you talk, Sheryl, about the percentage of your orders this quarter that were on build to order versus specs, regardless of the consumer segment, and if that's changed over the last couple of two quarters? Yeah. Lou, what is that? Yeah. Good question, Carl. It definitely. We've actually seen some strength in the to-be-built this month to date. It's actually picked up from what we've seen earlier in the year. As we talked in the prepared remarks, we're starting to see some of that normalization, as these buyers are choosing, you know, what they want in their homes. You know, it's small uptick, but it's 500-600 basis points higher than we've seen the last couple of quarters. If you were to kind of dissect it, do you agree, Lou, that, you know, where we're seeing the real strength of that to-be-built is the active adult, it's the move up? Luxury Yes. Where we're really focused on specs, Carl, no surprise, would be in that entry-level buyer. Sure. Roughly, what's the split between the two, if you have that, Lou? Sure. Month to date. It's about 45% to be built, and last quarter was set 37%. Okay, great. Moving back closer to our historical averages. Correct. Okay. Thank you. Sort of the same question on cancellations. If you look at, you know, again, they're not enormous in terms of the unit increase, but is there a differentiation between cancellations on to-be-builts versus pre-started? Good question. You know, I think the most interesting stat, Carl, is really that when I look at our cans for Q2, 75% of those cans were written this year. What does that really say? It says the folks that probably paid towards the peak or at the peak are the ones that said, you know, 'We're gonna take a kind of wait and see.' I would say generally it's a little bit more heavily weighted toward those spec sales because when you just look at the percentage of specs we were selling, that would, you know, it would align there. There absolutely is some to- be- built, once again, for the consumer that bought early this year. Generally, on the spec sales, we don't take as large of deposits if they're quick closes, so we see a little bit more movement on cancellations there. Yeah. Sure. Lou will be back. Okay. Great. Okay. I appreciate it. I'll get back. Thanks. Thank you, Carl. Our next question comes from Jay McCanless from Wedbush. Jay, your line is now open. Hey, good morning, everyone. Thanks for taking my questions. Of course. Excited to see the land bankings moving forward. I guess with the potential for more interest rate hikes on the way and kind of an uncertain consumer, what are you hearing from those land bankers around terms and just any kind of color you can give us there, because I like the strategy, but just wondering if it's gonna get more expensive and potentially weigh on gross margins out in the future. Hi, Jay. This is Erik. I'll take a crack at that. Yeah, I think, you know, as the market evolves, yeah, I think it's natural for that conversation to kind of have a tenor that evolves with a little bit north, you know, with regard to interest rate expectations. That said, I would tell you as far as our facility is concerned, you know, we feel real good about it. So it really depends on, I think, the partner that's selected, as well as, you know, the terms associated with the land bank deal. So there's really as far as ours is concerned, there's really no unusual terms in there. From a cost standpoint, you know, our facility was really negotiated at a really attractive point in time. I think we feel real good about our facility. We still have some, about 25% room in there, to grow it. You know, we'll just kind of address that as the market evolves. It's a lever that we have to pull. It's not the only one. We think it's, you know, one that we can continue to hold in the quiver for us. We do expect that land sellers will evolve as the market's evolving too. Our priority would always be to go back to kind of land seller financing, JVs. Yep. Like you said, it's just one of many of our levers. Typically, the land seller is the cheapest way of, you know, h aving controlled lots. Yeah. That's, you know, I agree completely. You start to see that in the softening of the market. That's where we That's good to hear. The second question I had, Lou, and I apologize, I didn't catch all this, but I think you were saying that in your prepared comments that you guys are still seeing a lot of municipal issues, I'm assuming on the back end, the last 60 days of the build, but the front end of the build is getting better. Is that did I hear that correctly? Yes, definitely. Remains tight on the back end, probably for the quarter. We saw our cycle times increase one to two weeks, seeing a lot of municipality delays a lot longer from the time you get your final inspections to them issuing COs, meter delays, you know, from the utility companies, but are seeing some signs of light on the front end and a lot more inbound calls from people looking for work as starts have started to soften across the sector. Yeah. A little fearful, would you agree, Lou, that it's not going to have a great impact on the deliveries for this year? Right Because you've got that bottleneck, but it's really nice to see the kind of forward visibility. I think the one that's really up for grabs the most is the municipalities kind of evolution because we haven't seen any relief there at all, and, from a staffing standpoint and back to work. We'll see how that one continues to move. Yeah, totally. When you really look at the overall lengthening of cycle time from the beginning of COVID is where we saw the biggest increase is frame start to installation. That's, you know, the area that we'll start to see in the middle that we get some relief on the cycle time and start returning back to more normal, you know, long-term cycle time averages. Okay. That's great. Thank you. Just one other quick follow-up. The cancellations that you are getting, how much luck are you having reselling those and/or maybe getting a little bit higher price on them? Yeah, a lot of it's going to depend, you know, how old the can is. Like I said, most of those cans were written early this year. I'd say pricing is relatively neutral. Maybe you have some additional finance incentives, if they were written in the first quarter versus the second quarter. We still have a very, very low finished inventory, so we're able to move through them. Okay. Great. Thanks again for taking my questions. Thank you. Our next question comes from Alan Ratner from Zelman & Associates. Your line is now open. Hey, good morning, guys. Thanks as always for the great commentary and information. I guess first off, I'd love to expand upon maybe, Sheryl, some of your July commentary, which, you know, on the surface sounds pretty encouraging given what we've seen kind of in June and early July. You know, is there any way you can help quantify some of the trends you highlighted for us? I think you mentioned, you know, the sales programs were responsible maybe for some of the renewed activity or, you know, what exactly does that mean? How have those incentives on orders maybe compared to where you were running at in the second quarter and any, you know, quantification of where your actual absorption rate is in July versus June? Yeah. I can give it a shot, Alan. You know, I think we have to keep these last many weeks in perspective, is where I'd start, because I think some of this, you have to almost go back to the end of the first quarter when the Fed really made their move. There was so much momentum still that didn't really show up in communities, I would say, till sometime in early June, because there was, like I said, just so much momentum, and the consumer just had to catch up with everything they were feeling and seeing in the economy. We start feeling it, I would say in early June. If I kind of dissect Q2, April was good, May was better. That was actually our peak sales month, and then we saw it move the other direction in June. I would say as you got to the Fourth of July, that probably was the trough. Now, it's hard to call peak to trough all in 30 days, but if I'm going to just use the last 60, 90 days, that's absolutely the case. Since the Fourth of July week, what we've seen week-over-week, I think, are encouraging signs. You know, that's three weeks, Alan. We need some more time under our belt. We've seen pre-quals move back up on a week-to-week basis. We've seen web traffic significantly move up. I would say foot traffic, fairly similar. I think you have to look at both sales and retaining the backlog. At the same time, we've also, our financial services team has spent quite a bit of time making sure that we're in touch with our backlog, you know, closings month by month. We're in a tremendous position right now when I look at how much of our backlog we've got locked for the balance of the year. It's, you know, 150% up from what you would typically see. I feel good on the programs that our sales team have in front of them using finance as a sales tool, and I also feel good on the work that's being done in the backlog. We'll see what the next many weeks hold. The consumer, it's almost like you had to refill the pipeline, Alan, because the folks that were there in the first and second quarter, there was a lot of fatigue in, you know, going from H&BOs and lotteries to not being able to get lots, to then, you know, moving into a new environment of finance incentives. It's great to see the pipelines getting back full, and we'll see how the coming weeks perform. Great. That's really helpful, Sheryl. Thanks for walking through the chronological developments there. Second question, you know, I guess just on the land spend guidance reduction for the full year. I think, you know, obviously it makes sense given the uncertainty and given your strong land position. You know, can you talk a little bit about specifically what's driving that reduction? Is that, you know, you assuming that you're gonna maybe walk away from some option deals as they come, you know, come up for takedown because you don't need that many lots? Or is it mothballing development on, you know, raw land that's currently sitting on your balance sheet? What specifically is driving that reduction in land spend expectations for the back half of the year? Hey, Alan, it's Erik again. I wouldn't say mothballing is part of the equation. That is not. I would say it's really more of an opportunistic stance, you know, maybe to take one step backward and just kind of repaint the backdrop. W e actually did add among the least of land to our portfolio since second quarter of 2020. That's for good reason, because 60% of our own land was negotiated in 2020 and prior. We feel real good about the land we have and the associated balance with it. As we fast-forward to today, you know, we are really focused on core locations. As you know, that's been kind of a key mantra of ours over time, and that will consistently be the case. You know, I think kind of that forcing ourselves to be focused on core locations is somewhat related to that moderation in spend. I think just feeling good about where we are with 6.1 years. You know, I think we also said that 2023 and 2024 is very secure, so we've kind of earned the right to be very selective. You know, we do like our balance of 41% control, and we do have all those levers to pull. You know, 52% of our spend is being dedicated to development. So we've got a lot of flexibility there in terms of pulling that lever. That kind of puts us again in that kind of selective position. You know, as Lou has stated, we've got a really strong cash position, and so that really sets us up to be opportunistic as we think about, you know, the spend going forward. We're seeing a little bit of capitulation in the market, not a lot. There hasn't been any, you know, systemic resets in the market, but we're seeing a little bit of cracks, and we're prepared to take advantage of that. Would you agree, Erik, I mean, if we're very transparent, 2020, we pulled back. We've had a little bit of COVID, and we just closed on a very large acquisition. We filled the portfolio quite nice. 2021, Alan, as you saw, prices move fairly meaningfully on land, you know, I think the number was about 30%. When things start to get that frenzied, that's the time that you really should pull back. If we pull on our old playbook from prior cycles, it's really the time you become very selective last year, which is why we added such a little amount to the portfolio. You really keep your dry powder for another day. I think that's what we're doing. We don't have to go buy land today, so we'll be prepared to be very opportunistic, to Erik's point, as we see any capitulation in the markets. Yeah, really hard to be a day trader in the land game, but I think, we engaged our first normalization study in third quarter of last year. We really have been kind of looking forward to this kind of transpiring at some point, not knowing exactly when. Yeah, we did. What duration and magnitude, but you know, really an eye on it. That's why we're spending so much time today, you know, from an underwriting standpoint, really stress testing the deals and making sure they're filling the right pieces of the business plan and not being afraid to modify deals. You know, I would say a high percentage of the deals coming through, we are modifying in some way. If we move forward. Yeah. Great. I appreciate that, guys. Thanks a lot. Thanks, Alan. Our next question comes from Truman Patterson from Wolfe Research. Your line is now open. Yeah. Actually, this is Paul Przybylski. Good morning, everyone. I appreciate the color you gave on the out-of-state active adult buyer trends. Was wondering if you could, you know, provide some color on the mix, relative mix of inter and intra demand trends across the greater portfolio, or, you know, is that migratory buyer slowing at the same pace or slowing faster than the intra-market buyer? You know, it's really interesting if I'm understanding your question correctly, Paul. As we look at kind of the migration patterns, we are continuing market by market to see some pretty significant kind of out-of-state migration. If I look at Florida, for example, I mean, more than half of our business is coming from out of state. If I look at Nevada, more than half of our business is coming from out of state. As we look really over the last, I'm gonna say, three, four years, we continue. You know, I won't bore you by going market by market, but we continue to see some very significant movement. It's not really different between our shoppers and our buyers, as you would expect. I think I've pointed out the most meaningful, you know, it's really across consumer groups. When I think about a market like Las Vegas, like I said, more than half of our buyers are coming from out of state, and that is not necessarily an active adult market for us. It's really a first-time market. When I look at Florida, I'm seeing it both in Sarasota and Naples, where you would expect to see it with that active adult consumer. I'm also seeing those same penetrations in Orlando and Tampa, which has a very high first-time buyer segment. Truly, continuing to see the same trends we've been talking about. Okay. Fair enough. I'm just curious, how is your virtual community? How's the performance of that holding up in this new sales environment? You know, it's been really strong. W e started, as you probably remember, Paul, our virtual kind of very slowly back in the spring of 2020. I think weeks after the COVID shutdown in April, late April 2020, we started reservations. When I look at, you know, what's happened between 2020 and 2021, and I compare it to the first six months of 2022, our sales from a virtual standpoint have doubled on a monthly basis. Actually, a little bit more than that. The actual penetration of our total sales has doubled as well. Our inventory homes, virtual sales, have been in play for a while. Our to-be- built is just now really starting to take hold across the portfolio. Our to-be- built virtual sales have our highest conversion, followed closely by our spec virtual sales. I'm actually pretty excited given that the consumer. This is not COVID related, right? When I look at this doubling of sales from a penetration standpoint, albeit a small piece of the business still in total, and now we really put it through the full portfolio. This is the consumer saying, "Meet me where I wanna be met," and they're showing up. It's pretty exciting, I think, as we continue to roll this forward. Okay. You had some really nice SG&A control in the quarter, flat basically, year- over- year. Were there any one-time or timing benefits, et cetera, that we need to be aware of? No. It was just our revenue leverage, I'd say, and the growth we've experienced over the years. Okay. Thank you. Thank you. Our next question comes from Mike Rehaut from JPMorgan. Your line is now open. Hi. Good morning, guys. Doug Ward on for Mike. I was just wondering if you could give a little bit more color. I know you talked about, you know, you gave great color on market by market. I was wondering if you could talk more about the incentives in some of the hotter markets, you know, before the little bit of the slowdown. Have you seen less incentives being used in Texas, for example, Austin and markets in Florida than the other markets you operate in? And if so, moving forward, do you anticipate that, you know, remaining the same? Yeah. Interesting. Good question. I know nobody loves this answer, but it's the honest one. I would be very careful to paint an incentive brush over a market, because within our markets, I would tell you there are some. You know, very few communities that we might still be doing a controlled sales floor, where there's absolutely no incentives. That would generally be on the luxury side, where we're still seeing that kind of activity. Then I can move to a different consumer group in that same market, and we could be offering strong finance incentives. I wouldn't look at it by market. I would look at it by community, and I think we're seeing a range of those finance incentives, in each of our markets, from very little to, you know, 5%. Interesting. Thank you. In terms of, I know you guys have kind of seen a pickup from the June lows, and you kind of gave a little bit of color on that earlier. Are there any particular markets that have had improved performance from June that you can see now? Obviously, you have a few more weeks to go, but has there been anywhere that surprised you in terms of their performance from last month? Yeah. I don't know that there's anything that's really surprising. I think as we have found kind of the right programs by consumer group, we've gotten footing. I think SoCal is probably a good one if you think about the Inland Empire, a lot of competition, really being able to get in front of that consumer, letting them know how these finance tools can work for them to really tailor, excuse the pun, but kind of tailor a program to their very needs, be that, you know, helping them on a buy down. Maybe it's a 2-1 or 7-1 ARM. One that's been very successful for our consumers to really help monthly payments is, you know, paying down their mortgage insurance. Being able to customize the program for them and helping them understand to. As we've gotten that message out across the markets, I think that's what's giving us the strength. I don't know that I would point to one market over another. Okay. Interesting. Thank you. You bet. Our next question comes from Dan Oppenheim from Credit Suisse. Your line is now open. Thanks very much. Just given the comments you talked about some of the inflection or some improvement since the Fourth of July, I guess, with the environment where buyers have a bit more choice out there, are you seeing some of the better conversion based on what you've done in terms of having communities in the more established areas, and you're seeing that helping in terms of both traffic and conversion? Yeah. Locations always matter. I'd say your very well located communities, good transportation, good schools. Absolutely. That's where you're gonna continue to have the greatest strength. You know, there's a direct correlation, Dan, to the further you go out, that tends to be the more affordable buyer, and that's where we're seeing the greatest pain. I'd say yes. Our larger master plans, I'd say, would be the other thing I would point to that continue to perform very well. Great. I guess, secondly, just wondering in terms of the spec homes, which still obviously very modest relative to the community count. Of those 3,000, where would you say they are, sort of generally in terms of construction cycle, given sort of buyers shifting closer to a near-term close and such? Yeah, no, that's a great question. Most of our specs are still more in the earlier stages before drywall, and that's, I think, one of our opportunities as the year progresses. As you saw, we only had 60 finished specs, and so what we're hearing from our sales teams are, as those get closer to completion, we're having a lot more interest in them. As we did that pivot late last year, early this year to start more specs, as those are progressing through the process, we hope we'll also get some more sales activity on those as those get a little closer to drywall and beyond. Great. Thanks very much. Thank you. Our next question comes from Mike Dahl from RBC Capital Markets. Your line is now open. Hey, guys. This is Ryan Frank on for Mike. Thanks for taking my question today. I wanted to get back to the monthly cadence a little bit, if we could, because to us it seems like June might have been down 40% or 50%. Is that the right magnitude? I appreciate the color with the week-over-week improvements in July. I mean, does that mean we're exiting July around down 40%, or is that more like 25% like you were in the quarter? Yeah. I would tell you from a monthly cadence, like, although we don't generally give the individual details, absolutely, May was our peak. Yeah, June certainly was 2 times April. July, I think it's a little too early to say. We've still got, you know, another week to go here. It's hard to tell you where July's gonna finish up. Once again, I think what we're seeing is all the green shoots so far in July, and those early indicators around pre-quals, around web traffic, kind of even sales in the pending pipeline, would put us kind of at a two-year of probably down, you know, mid-twenties, thirties, and we'll have to see how the one-year finishes up. Okay. Got it. Thank you. That's helpful there at the end. The follow-up to that is if your pace is currently, you know, closer to two a month than three a month, it might be pretty expensive to kind of incentivize back to that three a month range. How are you guys thinking about what the right pace is to target today, and then how are incentives kind of impacting that? Yeah. Good question. You know, once again, we do this kind of supply/demand analysis on a community-by-community basis. There are some, you know, where the competition might say that you support a strategy. You've got a couple positions that neighbours that are selling out and being very aggressive, so you'll probably deal with a lower pace for a short time. There's others where now you gotta find market and make sure you're selling. Our pace is across the board, probably to your point, range from anywhere in that, you know, 2, maybe even under, to mid-3s, depending on the position. We're not gonna manage to a specific pace across the portfolio. We're gonna manage to paces by community, and really, what the intent for our teams are is to get to their underwriting numbers. You also, community- by- community, really understand what kind of elasticity you find with those incentives and where you can get that pace through. Once again, looking at your overall offering on financial incentives, recognizing that so much of the pricing over the last year has come through lot premiums, looking at those. You have a number of different tools in your toolbox to pull out. Got it. Thank you. That's very helpful. Thanks for taking the questions. Thank you. Our next question comes from Alex Rygiel from B. Riley. Your line is now open, Alex. Yeah. What percentage of homes are all cash, and how has that changed over the last couple quarters, and how might it change in the new environment? I think it was about 16% in Q2, but let me just verify that for you real quick. It's picked up a bit. I think for that 16%, I think we were probably more historically in that low teens, 13%-14%, if I'm not mistaken. Yep, we were 16% in the quarter. Last year, that was 12%. Hard to say what happens looking forward, but when I look at the overall mortgage, and I look at on a higher price, like I said in my prepared comments on overall LTVs continuing to go down. I mean, we're seeing 77%. A year ago, i t was 80%. So we're seeing more all- cash, and we're seeing higher cash down payments. Once again, we're seeing higher incomes as well, so very supportive of that. Which is, I think, why in total, even the comments I made about our buyer and the research we're doing, both our shoppers and buyers believing today that their financial picture is better than it was a year ago, and when they look forward to the next year they expect it to even be stronger compared to national averages. I think that's why you continue to see the strength in our cans and things like that. Thank you very much. Thank you. Our next question comes from Deepa Raghavan from Wells Fargo Securities. Your line is now open. Hi. Good morning. Thanks for taking my question. Sheryl, when you provided the initial soft guide for 2022 gross margins of 20%+, this was roughly a year ago, did you have in mind a 25%-26% number that you've currently guided to, or was it less healthy than this? The ultimate question I'm trying to ask is what is the post-integration gross margin versus the margin benefit that was driven by the pandemic lift? How sustainable is just the post-integration gross margin in a moderating environment? Lou and I will tag team this one for you, Deepa. When we guided to something, I think to 2022 a year ago, you always give yourself a little room, but you also, we also clearly recognize the pressures that we were seeing from the supply chain, and you have to account for that. You've had a number of things kind of assist you. One has been, I think we've done a much better job than we would have initially planned on getting some of those synergies to actually flow into the business. We've certainly had nice pricing power. The efficiencies the teams have recognized and our national purchasing and staving off of kind of increases have all served us well. Then I'm sure, Lou, there's some lumber specific information we can talk to as well. Yeah, Deepa, I'd say the simplification, which we've talked about after acquisition of our options and floor plans, I think has added a lift. Our vintage lots, well, I think also is a strength we've had and will continue to be. The fact that we've focused more in core markets has really helped us through the, you know, the pandemic in terms of, you know, strong market strength in terms of pricing. All those combined, I think helped, you know, us do a little bit better than we expected. The last thing I'd throw on is as you parse apart the portfolio, Deepa, you know, once again, the entry-level buyer, which was certainly primarily lifted in our portfolio from the last two big acquisitions, those have an embedded lower margin. When we look at our margin from kind of the more historic vintage Taylor Morrison land, that's the active adult, the move up, the luxury, you know, we're seeing margins that are obviously much higher. There's a little bit of a mixed penetration issue as well there. That's helpful. Thanks very much. A broader industry question from me. Just given the moderating housing outlooks, are you seeing any aggressive pricing from builders in your markets? And also, any markets you would expect to see the most agile pricing, should we head into a down cycle? Deepa, I think that as we've heard and you have on these calls, the builders are generally trying to look at the use of kind of financial incentives because of the greater impact that that has on the consumer and protecting valuations. You know, everyone's also managing through kind of backlogs and making sure that we do everything we can to protect the pricing in those communities. When you're bringing new communities to market and you don't have, you know, the backlogs in tow, I would tell you the builders are doing exactly what they should do, and that's pricing to market. You know, you can play this game two ways, right? You can say how high are your incentives and are you right- priced at market. I think it's a healthy combination. Once again, I would not point to holistic markets, Deepa. I would point to certain positions. Once again, as you get more fringe on the outskirts, I would expect that's where you'll see more pricing pressure. That's where they're just gonna, you know. If there's big positions out there, that's where you'd likely see your greatest adjustments. I think, Sheryl, that that environment is partially informed by the resale market, too, right? Because that's part of our competition. I think we're keeping a keen eye on kind of listings and any trends there. That's something to be mindful of. True. That's fair. Thanks very much, and good luck. Thank you. Bye, Deepa. Our next question comes from Alex Barron from Housing Research Center. Your line is now open. Yeah. Thank you. I'm not sure if I missed it, but if you already gave it or if not, can you provide what the starts were in the quarter and what, you know, how are you thinking about starts over the third quarter? Sure, Alex. This is Lou. We had 3,283 starts in the quarter, and as we talked about in our prepared remarks, they'll probably more closely align with our go-forward sales pace. As we got, you know, as we ramped up our spec starts to more desired levels and as well the last few quarters, we've really made a lot of progress reducing our sold not started. Okay. Great. I think you mentioned that you're getting more inbound calls from the front-end trades. I guess, you know, given the lower volumes, are you guys also getting better pricing? Yeah. I would say it depends, by market a little bit. For sure we've been able to push off increases, and we're starting to hear, you know, by market opportunities in terms of, you know, the initial slab or framing crews actually even making adjustments downward. Expect more of that to come. Okay. Great. I think that's it for me. Thank you. Thanks, Alex. Thank you, everyone. That concludes the Q&A session for today. I will now refer you back to Mackenzie Aron for further remarks. Thank you for joining us on today's call, and we look forward to speaking to you next quarter. That concludes the Taylor Morrison Home Corporation second quarter 2022 earnings call. Thank you for your participation. You may now disconnect your lines.