Good morning, welcome to Taylor Morrison's fourth quarter 2022 earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to introduce Mackenzie Aron, Vice President of Investor Relations. Thank you. 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 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. Good morning, everyone. Joining me is Lou Steffens, our Chief Financial Officer, and Erik Heuser, our Chief Corporate Operations Officer. As always, I will share our performance highlights, an update on the market, and our strategic priorities. After my remarks, Erik will discuss our land portfolio and investments, as well as an update on our build-to-rent business, while Lou will provide a detailed review of our financial results and guidance metrics. Our team's strong fourth quarter execution wrapped up a historic year for Taylor Morrison, marked by record levels of profitability and operational performance. Despite the swift change in housing market conditions that unfolded during the year, our team delivered over 12,600 homes at a record adjusted home closings gross margin of 25.5%, which was up more than 500 basis points and an all-time low SG&A ratio of 8.2%. This produced a nearly 60% increase in our net income on a 10% increase in total revenue. These earnings drove strong cash flow, which we deployed to further strengthen our balance sheet by significantly reducing our net home building leverage to 24% from 34% at the end of 2021 and repurchased approximately 12% of our shares outstanding after investing $1.6 billion into our core home building business. As a result, our book value per share increased 33% to more than $42 and our return on equity improved nearly 700 basis points to over 24%. In total, these record results validate the transformational impacts of our successful integrations and operational strategies that have made us a stronger company with enhanced earning powers and increased optionality with which to invest for long-term profitable growth. At Taylor Morrison, we benefit from the well-balanced, diverse mix of our portfolio and operating strategy. Having expanded our market footprint and product positioning in recent years through our acquisitions and smart organic growth, we serve a broad range of customers in the entry-level, first- and second-move-up, and resort lifestyle segments across the country. With each of these consumer groups demanding varying levels of home specification and affordability considerations, we have a dynamic and flexible operating strategy that allows us to best serve each of these segments and respond quickly to market conditions, community by community, to maximize our performance. Since interest rates began rising last year, this flexible but prudent approach has driven important shifts in our pricing strategies, starts volume, and land investments as we quickly adapted to minimize risk and recalibrate affordability. From a pricing perspective, we have adjusted to market conditions across the entirety of our portfolio to drive sales and turn our inventory while also protecting the value of our highly profitable backlog. We flex our various pricing levers, starting with finance incentives and then lot and option premiums, and most selectively base price with each community's mix of adjustments dependent on its backlog, inventory, duration, competitive dynamics, and of course, consumer group. Generally speaking, our entry-level communities respond best to a combination of mortgage incentives and base price adjustments, while our higher-priced move-up and resort lifestyle communities emphasize reduced lot premiums, design center concessions, and mortgage incentives. The success of these strategies was evident in our fourth quarter results and have been even more encouraging thus far in the new year. We are in the early days of the spring selling season, and typical seasonality has been anything but typical in recent years. So far, we have been pleased with the positive momentum in sales activity and shopper sentiment since mid-January. Specifically, through the first six weeks of the year, our gross sales orders have improved to a more normalized pace of approximately three per month, and our cancellation rate has trended into the mid-teens, driving our net sales pace to 2.5 as compared to 1.9 in the fourth quarter. Aiding the positive sales activity, the vast majority of our customers in backlog are strongly committed to moving forward with their home purchase and are secured by an average deposit of 10% or nearly $70,000 per home. In addition, our buyers financed by Taylor Morrison Home Funding, whose capture rate improved to 78%, had an average credit score of 753 and provided an average down payment of 24% in the fourth quarter, both of which were stronger than a year ago. Together, these factors contributed to our fourth quarter cancellation rate remaining well below the industry average and consistent with our long-term trend at just over 7% of our opening backlog. While housing market conditions overall remain well below peak levels and the outlook is highly uncertain, we believe these encouraging trends underscore the enduring desire and demand for homeownership and financial strength in our targeted consumer groups, as well as the limited availability of competitive inventory, particularly in our core community locations. In addition to using strategic pricing tools to solve for the affordability constraints in the market, our construction and purchasing teams are aggressively pursuing cost rationalization opportunities with our suppliers and within our building processes and product offerings. As Lou will detail in just a moment, we have moderated our starts volume to align with sales activity and targeted inventory levels with a focus on driving healthy asset turns and cash generation. Our heightened focus on rationalizing the breadth and depth of our option offerings and floor plan library since 2020, including the expanded use of our national Canvas option packages in all spec homes and a more targeted design center approach for our to-be-built homes, has greatly improved our production efficiencies and ability to quickly capture cost savings while not reducing the average option revenue per home. It's worth highlighting that 64% of our fourth quarter gross sales orders were for spec homes, up from 47% a year ago and 28% two years ago. Enabled by our team's effective inventory positioning by price point, this shift has further streamlined our purchasing and construction while also allowing us to meet specific consumer demand. Despite the meaningful increase in our spec sales, our average square footage in 2022 was down less than 100 sq ft year-over-year, suggesting that buyers across consumer groups continue to value the space, with our data suggesting buyers would be willing to trade off included features and premium home sites. On the topic of meeting consumers where they are, I'd like to also highlight the success we are seeing from the ongoing advancement in our digital sales tools that empower our prospective buyers to engage and shop with us when and how they want to, all while providing improved visibility into purchase price and monthly payment in an online shopping experience unlike any other in the industry. Our first of its kind online home reservation system is available for all spec homes and in most communities that offer to-be-built homes, allowing shoppers to choose their desired lot, floor plan, and exterior selections, as well as popular structural options, interior design packages, and upgrades in the most recently enhanced version that we began rolling out last quarter. In total, our online reservation system was our top lead source last year, with a conversion rate of 40% in the fourth quarter and 32% for the year, driving 12% of our total sales. With nearly 70% of these reservations for a future home purchase made by consumers who did so prior to ever visiting the community in person, I believe it's safe to say that this volume represents incremental business earned by engaging with customers in a way most fitting for them. Backed by these exciting consumer insights, our team continues to redesign the home shopping journey, and I look forward to sharing our continued progress. Our focus on operational flexibility, innovation in our sales program, and customer experience were the key messages that our leadership team recently delivered in person to each of our divisions during a 19-stop roadshow in January, the first of its kind since before the pandemic. To meet face to face with all of our nearly 3,000 team members was a great way to kick off the new year and align on the operational strategies that will guide our path to success in 2023 and beyond. I will turn the call over to Erik to discuss our land investment strategy. Thanks, Sheryl. Good morning, everyone. I will share an update on our land portfolio, our continued opportunistic approach to investments, and some exciting developments in our build-to-rent business. At year-end, we owned and controlled approximately 75,000 home-building lots comprising 5.9 years of total supply, of which 3.5 years is owned. Both measures remain within our targeted ranges. Of our total lots, we controlled 41% via options and other off-balance sheet structures, which was up from 38% a year ago. In determining the optimal financing structure on a project-by-project basis, we are selectively targeting our landlighter investment approach to balance cost of capital, risk mitigation, and expected returns. In addition, we continue to closely review and re-underwrite every phase of land development, lot takedown, and deal closing with an emphasis on renegotiating timing, terms, and pricing to reflect expected market conditions and to ensure each dollar invested meets our stress-tested risk-adjusted return thresholds. As a result of this scrutiny, we incurred $25 million of pre-acquisition abandonment charges in the fourth quarter related to land deals that no longer met our underwriting requirements. For the full year, our home building land acquisition and development investment totaled $1.6 billion, of which nearly 60% was spent on development. This total was down from $1.9 billion in 2021 and well below our initial full-year investment target of $2.3 billion-$2.4 billion entering the year. As I have shared on recent calls, we took early action to reduce our land spend as the housing market softened last year. We're already in a highly opportunistic stance given our strong lot position. As an update, the basis of approximately 58% of our owned lot supply was negotiated in 2020 or earlier. As we look ahead to 2023, we expect our full-year land spend to be similar to 2022, although the ultimate investment will be dependent on market conditions and opportunities that arise. During the quarter, we recognized approximately $25 million of inventory impairments, the majority of which was related to a single non-core community in the West that we chose to monetize quickly given competitive pricing pressure. Overall, we remain pleased with the composition and basis of our well-underwritten capital-efficient lot portfolio that is concentrated in prime core submarkets. Finally, let me share an update on our build-to-rent operations. During the 4th quarter, we reached an important milestone in the evolution of our build-to-rent business with the closing of our first project sale, a property in Phoenix which generated an attractive gross margin over 35%. In addition, we announced our new build-to-rent brand named Yardly, which is inspired by the private backyard space that our niche horizontal apartments offer consumers. Unlike traditional multifamily housing, our build-to-rent concept specializes in cottage-style for-rent homes in branded, lifestyle-oriented communities developed in single-lot parcels. At year-end, we own 16 rental projects in six markets, 10 of which are under active development, and we have more than 40 prospective land deals under review in our pipeline. While we have moderated the pace of investment alongside our traditional for-sale business, we remain constructive on the long-term growth potential of the space, as well as the barriers to entry that exist for our differentiated product that fills a void in the rental market for single-family living, all while offering an attractive solution to affordability constraints. As a reminder, our build-to-rent business is supported by a capital-efficient financing structure, which provides the benefits of relatively light and levered capital exposure while maintaining overhead leverage, high returns, and control. With that, I will turn the call to Lou. Thanks, Erik, and good morning, everyone. I will review our financial performance and provide detailed guidance for the first quarter. In the fourth quarter, we generated earnings of $2.51 per diluted share or $2.93 after adjusting for the impact of impairment, lot abandonment, and other one-time items. Compared to the fourth quarter of 2021, the latter was up 32% due to improvement in our home closings gross margin, SG&A leverage, improved financial services profitability, and a 12% lower diluted share count. During the quarter, we delivered 3,797 homes at an average closing price of $626,000, which generated home closings revenue of $2.4 billion. For homes closed during the quarter, average cycle times extended several days as anticipated given the industry-wide volume push at year-end. Specific to our Florida and Southeast divisions that were impacted by Hurricane Ian, challenging supply chain dynamics delayed the delivery of some homes during the quarter, although I am happy to report that our teams are back to a more predictable operating cadence. Across the country, while we are beginning to see some relief in the early stages of this construction cycle, including a return to normalized product lead times and improved labor availability in some categories, we are not expecting any notable improvement in overall cycle times until later this year. Given our roughly 60-40 split of spec and to-be-built home sales, we manage our construction start pace by aligning with sales to maintain targeted level of homes in production, including a healthy level of finished inventory. This allows us to meet consumer demand and maintain efficient production schedules for our trade partners, resulting in improved asset turns. At quarter-end, we had approximately 7,700 homes under production, of which about 2,300 were specs. Of these specs, only about 280 were finished. We started approximately 1,500 homes during the quarter, or 1.6 per community, which was up slightly from 1.5 in the third quarter of 2022, but down from 3.4 in the fourth quarter of 2021. With fewer than one finished spec home per community at quarter end and the recent positive momentum in sales, we expect to step up our start pace in the months ahead. Our teams already have additional permits on hand, providing valuable flexibility as market opportunities dictate. Based on these homes under construction and our projected starts volume, we currently expect to deliver between 2,300-2,400 homes in the first quarter and between 10,000-11,000 homes for the full year. Given the elevated level of uncertainty in the market, we will look to provide additional full year guidance as the year unfolds. From a pricing perspective, we expect the average closing price on our first quarter deliveries to be between $630,000-$640,000. Turning to margins, excluding inventory related charges, our fourth quarter adjusted home closings gross margin was 24.5%, up 290 basis points from 21.6% a year ago. Including those charges, our home closings gross margin for the quarter was 23.5%, up 190 basis points year-over-year. The improvement was driven by pricing gains achieved in prior quarters and the ongoing benefit of operational enhancements, which offset higher construction costs and the impact from increased incentives and other price adjustments we have offered in response to weaker market conditions. Looking ahead, we expect our first quarter home closings gross margin to be stable sequentially at approximately 23.5%. This would be up from 23.1% in the first quarter of 2022. SG&A, as a percentage of home closings revenue, improved 50 basis points to 7.3% from 7.8% in the prior year quarter, despite the modest decline in revenue, driven by lower performance-based compensation costs, as well as enhanced efficiencies in our sales and marketing capabilities. This marked another company record low. Going forward, we expect to maintain a disciplined cost structure and are forecasting an SG&A ratio to be approximately 11% in the first quarter. Our net sales order in the quarter were down 42% year-over-year to 1,810 homes. The decline was driven by a 41% reduction in the monthly absorption pace to 1.9 net orders per community, and a 2% decrease in our ending community count to 324. As Erik noted, we have pulled back on land investment in both acquisition and development, which will impact our future community count. In the first quarter, we expect our ending community count to increase slightly to between 325-330 communities. To wrap up, we generated $1.1 billion of cash flow from operations during the year, which is up from $377 million in 2021. In addition, we took several steps to further solidify our strong capital position during the year, including retiring $265 million of 2027 senior notes in June, increasing the size of our corporate revolving credit facility to $1 billion in September, and redeeming $350 million of 2023 senior notes in October. These transactions reduced our futurized capitalized interest burden and aligned our gross debt closer to targeted levels. Our next debt maturity is in March of 2024, which we have ample liquidity to address with cash on hand and are closely monitoring the market for potential refinance opportunities. We ended the year with total liquidity of approximately $1.8 billion, including $724 million of unrestricted cash and $1.1 billion of available capacity on our revolving credit facilities, which were undrawn outside of normal letters of credit. Our net debt to capitalization ratio equals 24% at year-end, down 1,100 basis points from 34.1% a year ago and consistent with our goal to reach the mid 20% range. Lastly, during the year, we repurchased 14.6 million shares for $376 million, which represented approximately 12% of our beginning shares outstanding. The average repurchase price was $25.83, a nearly 40% discount to our year-end book value of $42.34 per diluted share. Our remaining repurchase authorization was $279 million at year-end. As we head into 2023, our capital allocation priorities remain grounded in a disciplined framework that balances our operational and growth objectives with the health of our balance sheet as we seek to generate attractive long-term returns for our shareholders. Now I'll turn the call back over to Sheryl. Thank you, Lou. Before we close, I'd like to recognize our Taylor Morrison team for their outstanding performance in 2022. Their commitment to loving our customers is unwavering, they have continued to push ahead despite the challenges. I am so grateful for their tenacity and teamwork. It gives me great pleasure to share that we were once again named America's Most Trusted Home Builder by Lifestory Research for the 8th consecutive year, an award that belongs to each of our team members who earn home shoppers' trust day in and day out with integrity, commitment to quality, and transparency. In addition, we were also, once again, the only home builder to be recognized on Bloomberg's Gender Equality Index for the 5th year running. With increasing diversity among today's home buyers, we recognize the critical importance of reflecting our consumer set in our team, our marketing, and our products. We have recently launched a study with USC intended to understand anticipated shifts in housing needs related to greater diversity of the overall home buying population. I am proud of our industry-leading gender diversity and the strides we are making to further drive our racial and ethnic representation. To that end, we are also proud to share that we have launched a first of its kind board fellowship in which we have added two outstanding professionals, Hannah Choi Granade and Michelle Sourie Robinson, as non-voting board fellows to expand the perspectives in our boardroom. They bring a wealth of knowledge from their leadership in digital transformation, supply chain, and strategic management, and will in turn gain invaluable real-world board experience in what we expect will become a model for expanding board diversity. We look forward to sharing more with you on these exciting new initiatives, and we thank you for your interest in Taylor Morrison. 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. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. As a reminder, that is star followed by one to ask a question. Our first question comes from Truman Patterson from Wolfe Research. Truman, please go ahead. Hey. Hey, good morning, everyone. Thanks for taking my questions. At first just clarity. Good morning. Good morning. Did, for clarity, in the first six weeks, did you say the normalized net order absorption pace was 2.5 per month? You all have reduced land spend in 2022, but you bumped up your option in JV mix. Your first quarter community count guide is basically flattish year-over-year, maybe up a little bit. I'm just trying to understand based on your existing land development pipeline, the planned openings as we move through the year, you know, cadence, just trying to understand what level you all are kinda hoping to end at in 2023. Well, good morning, Truman. Absolutely. We'll tag-team a couple of these. Starting with the sales, yes, you heard us correctly. We said for the first six weeks that sales on a net basis were about 2.5, and on a gross about three. I'd add a little further color to say the first couple weeks of January were very similar to December. They were kind of modest. Our best month was in November in the fourth quarter. When I look at January, that was actually about 2.5, and we've seen continued momentum through February. I would say a little higher in the first couple weeks that really have offset the beginning January. With respect to land spend. Yeah. Maybe in terms of outlets. Truman, good morning. You know, we've definitely been, with the 75,000 lots that we have at the end of the year, a strong pipeline ahead of us, would definitely say through 2022, similar to the production environment, land development and permitting timelines had extended. Outlet growth, you know, a little bit slower than we had expected. Our teams have also, with the softer sales environment, shifted openings until models and entrances are complete, so one-time shift in some of our outlet growth. Lastly, as we mentioned on the script, that there have been some walkaways, some of which are deals that had finished lot opportunities. There could be some small outlet impact with walkaways of finished lots and then further developed lot opportunities into the future. Overall, I think with our strong land bank, still expect we can produce, you know, growth into the future. Yeah. I think specifically, Truman Patterson, you asked about openings, and if I look at last year, you know, we probably opened about, you know, something in the mid-90 range as far as communities go, where this year we expect that to be 25%-30% higher, but obviously impacted by a number of closings as well. Okay. Okay. No, that's great color. Thank you. You all throughout 2022 have had, you know, a nice relative gross margin improvement versus the group, you know, variety of items, acquisition, integration, internal streamlining initiatives. I'm trying to understand what inning you all think that you're in. I realize, look, the macro picture's, you know, messy with pricing, incentives, discounts, et cetera. Trying to understand if there might be some more juice to squeeze on the relative, performance versus peers as we move through 2023. Yeah. That's a great question, Truman. You know, there's definitely puts and takes in terms of the margin profile going forward. As you know, you know, we have a decent sized backlog going into 23, so homes sold earlier in 22, very strong margin profile. Plus, you know, our 60/40 split of specs to to-be builds, we still are seeing really strong margins on the to-be build side, where our customers are building their dream home, and as you see in our deposits, really strong deposit, you know, deposits that they're putting up. In terms of, you know, our vintage land bank, which we've talked about in the future, I think that's also a source of, you know, good margin for us going forward. As you mentioned, the operational enhancements. Since the beginning of 2021, we've reduced our options by over 50%, simplifying our business and our plans over 20%, in addition to putting our Canvas Initiative, you know, almost fully into place now. We have those operational enhancements and simplification that helps us. As other builders have talked about favorable, you know, lumber tailwinds into 2023. You know, we do have cost reduction opportunities that we're seeing on the front end. Most of those though, you know, unfortunately, will help us more in 2024, we'll see some small opportunities there. On the take side, you know, with the softening demand environment, we have had elevated, you know, incentives on our spec homes specifically. With the lower mortgage rates until more recently, it's been helpful as we prioritize our incentives towards finance. The cost of buying down those rates had come down a little bit. As you've seen in the last week or so, you know, our rates have gone up slightly. I'd say there's puts and takes, but we feel very strong about the opportunities for us this year as we guided, I think, a really strong margin in Q1. When do you think, Lou, that when I think about just the company big picture and our balanced approach to specs versus to-be builds. You know, Truman, we're definitely back in a more historical norm. I know we had this very unique period of time during the last, you know, 12, 18 months where specs were certainly yielding a premium. In today's environment, and I'd say historically for a lot of years, that's not the case. We're seeing 500, 600, 700 basis points in some instances between the two. I think our balanced approach of having both a to-be build business, certainly we're seeing that within our lifestyle communities and how lucrative that is, I think also continues to provide margin strength for us comparative to the group. Perfect. Well, thank you all for the time. I'll pass it on. Thanks. Thanks, Truman. Thank you. Our next question comes from Carl Reichardt from BTIG. Carl, please go ahead. Thanks. Morning, everybody. Morning. Along the lines of Truman's question too, if you're thinking about the 10,000-11,000 unit guidance for 2023, is your mix between entry-level, move-up, and resort lifestyle likely to change from what it's been, meaningfully? I don't think so, Truman. I wouldn't say that there's any significant shift. I mean, obviously, we saw some shifts in the quarter. When I look at the mix compared to prior periods, I mean, our entry level, certainly went up both year-over-year, and sequentially. Our active adult has also seen some good strength, our lifestyle communities, sequentially. I think in the, in the round, I don't see our mix really changing. Okay. Thanks, Sheryl. Wanted to clarify a comment you made about the research you'd done that said that buyers would trade off features and home sites for what I think was an empty box, a larger square footage house without- bells and whistles. Can you sort of expand on that a little bit? Is that altering how you're thinking about rolling out design? How does that feed into Canvas? What does that do to margins and turnover? How does that research impact what your numbers might look like in the next year or two? Thanks. Yeah, great question, Carl. You know, I think the reason we pointed it out is I continue to be surprised that even in, you know, the back half of last year when I think affordability was so stretched, we really haven't seen significant movement in our square footages right around that 2,500 sq ft plus, take, ±, over the last, honestly, several years. When I look at things like what they're putting into the houses from a feature standpoint, both on the inventory, because we have different levels of our Canvas package. They can go with a very basic Canvas or they can really upgrade it, but they're still packages. I look at our lifestyle communities, and I look at, what they're doing when they go in and really specify their homes. They're continuing to spend. It's been interesting to me to watch that we haven't really seen any reduction in our options, even with Canvas. Lot premiums have certainly come down a bit, but that's been kind of strategic on our end, and certainly as we moved away from those HABO, highest and best offers. Square footage hasn't come down. I think the other data point is as we've got more Canvas in a higher percentage of our homes, our option margin is actually slightly up. It's been a really well-received program because they've been so highly curated. Once again, a lot of that might be somewhat impacted by the shift in our lifestyle community or active adult business ticking slightly up, but it's so slight that you would expect that the offset of first-timers would impact it. Honestly, it just hasn't. Great. I appreciate the color. Thank you, Sheryl. Thanks, everyone. Thanks, Carl. Thank you. Our next question is from Matthew Bouley from Barclays. Matthew, please go ahead. Good morning. You have Elizabeth Langan on for Matt today. I just wanted to kind of start off asking around your commentary on demand. You know, you mentioned that it was improving through the year, and, you've seen, like, good momentum into February. Do you have a view at what point you might start to, you know, lean away from incentives or, you know, pricing adjustments, or is it too soon to tell for that? It's a great question. I think in total, you know, I'd probably start out by it's too soon to tell for sure. I would quickly jump in and say we already have. Honestly, we already have seen a pullback in incentives. I don't think we're seeing many adjustments, further reductions in base pricing. And as we said in our prepared comments, Elizabeth, kind of reductions in base pricing is the last place we go. Certainly, we've done that in some markets in a percentage of our communities, but we have some markets that we've honestly never reduced base. We've really used incentives to lead the way, and we've done that because you've heard me over time talk about the value of our partnership between, you know, the home building business and our mortgage teams. We really continue to believe that if you use smart finance incentives to create the most value for our buyers rather than just simply reducing the base price, it allows us to get additional capture, improve their experience. It's a much more cost-effective way for us to stabilize the business. If you see a market turn like we've so quickly seen, we find ourselves in a much better place. A lot there, but I would tell you we'll continue to watch the markets closely, and obviously, a lot of it's gonna depend on other builder behaviors as they work through their backlog, if they continue to adjust, pricing downward. Maybe just to add to that, I'd say the incentive opportunities have been more favorable as of recent with the lower rates. As I mentioned, our buy downs have been cheaper. Depending on the rate environment, you know, to get the buyer to an acceptable, you know, interest rate, it's gonna vary throughout the year. It's such an important point, Lou, because if you think about where we were kind of in third quarter when rates were in the mid 7s and we were trying to get people to You know, a high 4 compared to something today that's at par, you know, in the low to mid 6s, it's a completely different environment. That's part of the pullback. Yeah. Thank you, Beth. You bet. Thank you. Our next question is from Jay McCanless from Wedbush. Jay, please go ahead. Hey, good morning. Thanks for taking my questions. I guess the first question I have is any sense you could give us about which way ASPs are gonna trend through the year because you finished 2022 with an average backlog price over $680. The average selling price, though, for the fourth quarter was $578. I guess, should we expect kind of a drift down through the year or any insight would be appreciated on that topic. Yeah, Jay, it's really good question. You know, maybe starting off with the order ASP, I think there's a lot of noise going through there. You mentioned the $578. Actually, our gross order ASP for the quarter was over $600. What's happened is two things. One, adjustments we made through the quarter for our fourth quarter deliveries. We made some adjustments to our backlog to retain them and get them closed. Then also what's flowing through the order ASP is any adjustments on our 5,900 units that we made in backlog for future quarter closings. That's adding a bit of noise to the ASP for the quarter. You know, like I said, gross orders were over $600. We definitely, as we have a bigger mix of spec to to-be builds, our spec ASPs are generally a little bit lower than our to-be builds. I'd definitely say, you know, still, you know, solid ASP is over $600. To your point, Lou, when I look at the number of folks that we've locked in backlog for future quarters with some of our finance programs, as you mentioned, I mean, Jay, you always have the noise with kind of options running through that people go into the design center afterwards, but it's so immaterial to the total. When you take a backlog the size of ours and you really work to secure it had a significant impact on the ASP. Right. Okay. If you could maybe talk about the. I know it's not a huge portion of your mix, but just kind of wondering what you're seeing from the luxury or higher-end buyer, whether that buyer is. You know, I think you gave a little bit of commentary around it, but just how interested and engaged those higher-end buyers, and if you want to roll active adult into it, that would be great as well. You know, with the stock market coming back, and rates trying to stabilize, just wondering what you're seeing from those two buyer groups. Yeah. I'd be happy to. You know, first of all, when I look at just the overall kind of split between the different consumer groups, our second move up was our strongest pace in the quarter. Then when I look at our resort lifestyle, they really start picking up in the shoulder season, and we've seen continued improvement in the new year. As you know, when we look at that buyer, they generally come with some of our strongest margins. There might be some exceptions to that. I don't think we've seen that same return in Houston, for example, that we've seen throughout Florida. When I look at the active adult shoppers, just period over period, we've seen something like a 5, 600 basis point improvement. Honestly, looking at our inventory, our biggest challenge in that buyer set in Florida is we just can't keep any inventory on the ground. It hasn't slowed them down. They've just continued to buy to-be built. As you know, that buyer's a little bit less rate sensitive, but they're more sophisticated, so they've been looking at kind of all the economic indicators. When I look specifically at the quarter, you know, both Sarasota and Naples, which has the highest penetration, they probably had the highest increase over kind of budget expectations. When I look at that, early in this year, that just continues to make headway. You know, it's interesting. As you look across the country, I would say we've seen a number of different kind of effects based on consumer groups. I have many markets where we've seen that move-up, first and second move-up and active adult buyer being the strongest consumer group. In many markets, we've seen that first time buyer really show up. The challenge has been their ability to get approved. I think when you put it all in the blender, honestly, Jay, we've seen movement in almost all of the consumer groups. It really has been how does their ability to qualify and the CANs affect it. Even though, as we said, our CAN rate has moved to, for the first 6 weeks, to kind of the mid-teens and even once again, just like following the sales cadence, we've seen an improvement in CANs in February over January, it's not, it's not the same across the country. Places like Austin, even though their CAN rate has probably halved from what it was in the fourth quarter, it's still a little higher because of that first time buyer and the size of that backlog, being purchased kind of at peak pricing. Maybe just to add to that, Jay, just to show the strength of our buyers. Our deposits are up 20% year-over-year to just over 10%. The LTV on our buyers has come down to 76%, which, you know, very solid. Our cash buyers in Q4, I think a record for us at 21%. You know, really strong buyer profiles. Then maybe just using Naples as an example, as you think about luxury and active adult. You know, that's a place where greater than half of our buyers are boomers, and actually greater than half are moving from some other place in the country. They actually have, on average, these folks are telling us greater than $200,000 of income and closer to $2 million than $1 million net worth. A place where it really performed well through COVID and after and still. It's an important point, Eric, because if you look at a place like Naples where it's primarily just all resort lifestyle communities, it led the company in margin in Q4, and by not a little, a lot. Great color. Thank you. Thank you for all the details. Appreciate it. Thank you. Have a great day. Thanks, guys. Thank you. Our next question comes from Michael Rehaut from JPMorgan. Mike, please go ahead. Hi. Good morning, guys. Doug Wardlaw on for Mike. I was curious on regarding your inventory impairment charges, was this number in this quarter what you guys were expecting prior to the quarter? What do you envision for impairments moving forward throughout 2023? As we've talked about in previous quarters, we take a look at impairments every quarter. You know, there are always outliers on that bell curve. As we mentioned in the prepared remarks, we had one community that accounted for over 50% of the impairments in a non-core location that we made a conscious decision to accelerate and get out of there. We do not see any you know, systemic impairments in our overall portfolio, but there are always gonna be outliers here and there. You know, we felt they were pretty modest considering that one project that was the outlier. We'll continue to look going forward. As we've guided, I think we have a pretty strong margin profile going forward, so feel pretty good about where we sit. Yeah, I agree. On that asset, though, I think it's important to note that, you know, we had to make an adjustment given market conditions and some pressures from some competitive things going on in the market, all in the spirit of finding pace. Which we have. ... which we found, right? I think we've already sold half in January what we sold all of last year in that quarter. Yeah. Good point. Got it. Thanks. Secondly, in terms of you guys mentioned, some positive momentum through the first few weeks of February and this quarter, regarding that, how should we think about incentives moving forward? You know, as if demand is to stay, you know, where it is now, do you expect to kind of taper slightly on incentives? How would that balance with what you're thinking about, doing with price cuts moving forward? Yeah. As I said earlier, I think we're already seeing some reduction in our incentives across the board. We'll start there. We have been very selective in where we've taken base price adjustments. We continue to use finance as a sales tool. As we mentioned earlier, I mean, we have so many great programs to help our borrowers kind of overcome their obstacles in closing. Even with the little movement that we've seen in rates this last couple weeks, we're really able to help our buyers in any way that makes sense for them. Sometimes it's about, you know, getting a rate down, sometimes it's cash to close. The other thing is we have been very successful most recently to being able to buy kind of forward below-market interest rates to give our customers the certainty that they need. We've been able to do that on quick closing. We've also most recently launched a new program, Buy Build Secure, that gives them a below-market rate for a 1-year extended for to-be-built. We're really putting our focus around our finance incentives. Once again, it really, I think, long-term, protects the value of our communities. At the same time, gives us predictability and gives our customers confidence and peace of mind to be able to move forward in their home purchase. Got it. Thank you, guys. Thanks, Doug. Thank you. Our next question comes from Mike Dahl from RBC Capital Markets. Mike, please go ahead. Hi, this is Ryan Frank for Mike. Thanks for taking my question. I just wanted to follow up, see if we can get any quantification kind of on the incentives. Do you have or are you able to quantify the incentives that you've seen so far year to date for either Q4 or last year? It's really difficult, which is why we've not provided that color in the past, only because it falls in so many different categories. You have, in some places where we have not reduced prices, base prices at all. In that instance, we might be of a higher incentive. We have other communities where we have made some pricing adjustments, you would have maybe just some closing cost incentives. As you blend those numbers, to be honest, it doesn't give you great visibility. I think the visibility you get is in the strength of our margin profile. You really have to take a deep dive, almost community by community to understand the impacts of incentives. I have many markets across the country. When I look at fourth quarter incentives, they were actually lower year-over-year. Okay. Some were higher. Understood. Thank you. Thank you. I think you guys are unique, in kind of forecasting flat, land spend year-over-year. I just kind of wanted to break that out. Will you be more aggressive on actually acquiring land this year, or is it really just kind of development spend to ramp up communities? Yeah. I think, Ryan, as we shared in prior quarters, you know, we've really had a pivot where most of our dollars are dedicated to development given the market conditions. We are absolutely looking to be opportunistic and so we definitely could see a pivot, but the market's gonna let us know when and where that is. I would say right now, conservatively, we're expecting flat, and you should see a bit more focus on development for this year, unless you see market conditions pivot, where we'd be more aggressive on the land acquisition side. Where the opportunities are out there, we have the dry powder. As you can imagine, our teams are being very aggressive in working with land sellers. In some places they're seeing some momentum with the land sellers and there's some, the sellers are just sitting on the sidelines. I think we'll continue to update you on this one each quarter as we see market movement. I think as Erik said, our teams did a great job getting our balance sheet in a great place at the end of last year. We can be very opportunistic as those opportunities present themselves. Yeah. Got it. Thank you. Very helpful. Thank you. Thank you. Our next question comes from Alan Ratner from Zelman & Associates. Alan, please go ahead. Hey, guys. Good morning. Thanks, as always for the great color. First question on the specs. I'm curious, you know, if you look at the 60% plus of your orders this quarter that were specs, how many of those were started intentionally as a spec versus, you know, kind of reselling canceled units from the back half of the year? The follow on to that is where do you see the spec share going? I mean, of the guidance for 10,000-11,000 closings, do you have a number in mind? You know, I would assume you do because you gotta kind of plan for that based on your starts of how many of those are actually gonna be specs. Yeah. Alan, good question. We do manage our specs, you know, by community. If, for example, we have a cancellation, that means we don't have to start another spec. I think we just look at our specs in total by community, what we believe is the right balance. The mix, you know, we have been close to that 60/40 split for a while. We love to-be builds, you know, but we react to the market as time progresses. There are a lot of buyers out there that are really looking favorably to having those units close to completion, but we still see a balance of people that like to build their dream home. We'll adjust accordingly as the market shifts. But it's been around that 60/40 split for the last several quarters. We'll continue to balance it because, you know, over time we'd like to drift back maybe a little higher to to-be builds, but we'll move with the market. Don't you think, Lou, we'll generally follow our consumer split? You know, the first time buyer, I would say we're maybe to be builds turned into specs, Alan. It's probably in that more first time, maybe first move-up buyer. I would say when you look at the second move-up and kind of active adult, those generally continue to be a preferred to-be build builder. We'll put the specs in for those first timers, but we'll be much more, I think, cautious in the higher price points. As we mentioned on the prepared remarks, we are ramping up our starts. We're really pleased with having less than 1 finished spec per community, so we have some extra room to get some additional starts in the ground. Got it. That's helpful. Second question. You know, this might have been more appropriate to ask six weeks ago given trends have clearly improved. When you kind of talk to your salespeople on the ground and kind of try to figure out the biggest challenges to selling more homes today, how would you rank order them between, you know, people that, you know, don't wanna give up, you know, their low mortgage rate in a resale or an existing home, affordability challenges, you know, just general sc-... Skittishness about the direction of the economy. you know, what do you see as the greatest challenges today to, you know, prevent sales from being even stronger than they are? You know, you're right. That would have probably been a very different answer six weeks ago than it is today. We got some really interesting color from the sales teams in January when we were all on the road talking to them. I would say even in the last 30 days, their answers would be very different. If I were to go back to the start of the year, it was much more about sentiment and affordability with what was happening to the rates and the fear of paying top dollar on both price and rate. Today, I would say that has moved to making sure they can secure the right home in the right community. I really do think we're doing a wonderful job overcoming some of the affordability concerns with our finance programs and giving them that peace of mind with it could be our 3-2-1 buy down for some consumers, it could be that forward Buy Build Secure program that I just spoke of. I think we're helping them overcome that. The other thing I'd say, Alan, is just the mix of consumers that we're seeing across the board is really changing. It's really sitting down and making sure that we have the programs in place to help them get to the end game. It's very different. I think the confidence that we saw, the lack of confidence that we saw, at the end of last year, where people really, if you know, if you go back 6 months, there was a lot of people that wanted houses that ended up not buying them. I think they pulled back. I think we're seeing those folks come back into the market today and just really understand it's about working with each of them individually. Got it. That's very helpful, Sheryl. Thanks a lot, guys. Appreciate it. You bet. Thank you. Our next question is from Dan Oppenheim from Credit Suisse. Dan, please go ahead. Thanks very much. Was wondering if, with some of the commentary on the first time buyers with the financing issues, as you think about communities closing out over the course of 23, talked about what you're doing with opening new communities and getting them to models built and such. In terms of tactical changes, is there anything that you're doing in terms of a bit of a shift to more move-up communities opening up, or what is it overall if there are any changes in terms of community opening plans? I don't think you'll see a significant shift in our consumer groups or when I look at the portfolio of communities. If I were to talk about a shift in the overall portfolio, I think it would be about the continuing presence that we're seeing of the millennials. Nearly half of our sales in the quarter were from millennials. When I look at the financial stability of that consumer, it's actually stronger than the consumer at large. It, it's an interesting group. Like I said, about 50% of our borrowers within our finance services company were millennials. Many of them are buying their second home, so they're not really first-time buyers. In some, in some communities, they may look like first-time buyers. They have extremely strong credit profiles with average credit scores in the mid-700s. As I mentioned before, they're also a little bit more racially diverse than our total universe, which is another reason why you've seen us so committed to the initiatives that I shared in my comments. I think except for that slight pivot within our consumer groups, I would say the share of just total cohorts, I don't think you'll see significant shifts in. Great. In terms of the capital allocation, I think you've done a great job with the share repurchase over the last year. Given where the shares were repurchased in the fourth quarter to $25 and change versus where the stock is now, substantially higher, wondering how you look at that given that the stock is still well below book value here, and thinking about some priorities for the year. Yeah, it's a great question, Dan. You know, as we balance all of the allocation priorities, you know, first, you know, we wanna first invest in the business, feel our balance sheet's in a really good place. We're really pleased to be able to buy so many of our shares last year at such a big discount to book. We're gonna be opportunistic on the share repurchase front. We're not gonna generally just buy a ton of shares to buy them, but be very opportunistic when the opportunities present themselves. Great. Thank you. Take care. Thank you. Our next question is from Ken Zener from KeyBank. Ken, please go ahead. Good morning, everybody. Congrats on the Phoenix Open. Lots of fun. 2 questions. What%, given your comment on the first 6 weeks, generally speaking, what% of the quarter's orders is that? I know super cold weekend, which just happened in Phoenix as well, can really distort that. I'm just trying to sense if it's half the quarter, you know, two-thirds of the quarter, is my first question. I just wanna make sure I understood that. What% of what for the quarter? Six weeks Since you commented on the order pace, is that usually half the quarter or, you know, a third of the quarter or less? Maybe just to give you some color, maybe a color there, Ken, is usually January is a little slower for us, and then February and March ramp up slightly each month-over-month. Historically over many year average, usually January is a little slower, and then we pick up through the rest of the quarter. fairly typical. I mean- Right ... like I said in the prepared remarks, it's, you don't know what normal is like because it's been so long since we've seen it. It's as normal- Right as we've seen, but probably greater momentum. Thanks for the comment on the Open. We actually, we're really pleased. It got just tremendous visibility and new leads, within our business. I mean, thousands and thousands. It was a good show. Yeah. It was a busy weekend there. Again, for the inventory units, could you restate that number? I think you said 7,700, but my question is. Yeah, just shy of 7,700 units. Okay, great. Do you think given your closing forecast and your start schedule, do you expect those units to be up year-over-year by the time we get to the fourth quarter? Just trying to think about how you'll measure the, you know, or how much, how committed you'll be, I guess, to the start pace. 'Cause whatever you start, I assume you're gonna sell. You know, that's just what I'm trying to get a handle on. Thank you very much. Yeah. No, it's a great question, Ken. I really think it has a lot to do with what we see with cycle times going forward. If we were to go to our long-term average in cycle times, we could carry 30% less inventory and still get to the same number of closings. I would say if we continue to see, as we're seeing right now, the front end is improving slightly. The back end is still very challenging, but if we can start trending down in our cycle times, then most likely, you know, we won't need to carry as many units even if we project growth over, year-over-year. Thank you very much. It's really gonna be interesting to see what the start to the year is. No problem. Take care, Ken. Thank you. Our final question is from Alex Barron from Housing Research Center. Alex, please go ahead. Yes. Thank you. Yeah. I thought your guidance on, for first quarter margins was interesting 'cause, you know, it's basically flat, quarter-over-quarter. Most other builders, I guess, indicated their margins would be trending lower. I'm curious if you guys, you know, as you look at the rest of the year, if you think this might be the low point given, you know, the current sales and incentive activity you're seeing year-to-date? Well, that's sequentially and up year-over-year, right? Yeah, we're pleased with that. Yeah. Alex, as you know, we're only guiding through Q1 right now. As we entered the year with a strong backlog that was sold earlier during the year, you know, I think we feel good about what the future holds for us this year. Okay, great. I was curious if you guys could comment on how you guys are thinking about starting specs versus, you know, a year ago. How much has that shifted? I realize almost everybody starting fewer homes when the sales were lower in fourth quarter, but as you know, since it seems a lot of consumers are looking for fast closed houses, how has that shifted your approach to starting specs going forward? Yeah. As we mentioned earlier, Alex, you know, we're definitely, you know, starting a lot more specs than we have historically. Our QMI or spec sales in Q4 was the highest we've seen so far over the last several years. We're good with continuing to start specs, especially as we're able to sell them before they complete. You know, the real question is will there be a big ramp-up in starts in Q1 with all the builders, and will inventory start to build up? We're keeping an eye on each individual market we're in and making those decisions market by market, but we've had really good success on selling specs so. I think the only thing I'd add, Lou, is there's somewhat a misnomer that every consumer wants something that's move-in ready. We actually really do, once again, like the balanced approach of specs for certain consumer groups and the opportunity for to-be-built, especially when we look at the margin profile. Once again, certainly 2 years ago, we saw for the 1st time historically specs perform at a very different level. I think the reason we don't have the margin pressure that you're seeing with others is our more balanced approach to to-be-built. We'll continue to keep that balance in front of the business. Makes sense. All right. Well, best of luck, and thank you. Bye, Alex. Thank you. Thank you. That is now the end of the Q&A session, and I will now hand you back to Sheryl Palmer for closing remarks. Well, thank you very much for joining us for our 2022 wrap-up call. We look forward to speaking to you again in just a few weeks to talk about the first quarter. Take care. This concludes today's call. Thank you for joining. You may now disconnect your lines.