Good morning, and welcome to the Toll Brothers third quarter fiscal year 2024 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then One on your telephone keypad. To withdraw your question, please press Star then Two. The company is planning to end the call at 9:30 A.M. when the market opens. During the Q&A, please limit yourself to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Douglas Yearley, CEO. Please go ahead. Thank you, Dave. Good morning. Welcome, and thank you for joining us. With me today are Marty Connor, Chief Financial Officer, Rob Parahus, President and Chief Operating Officer, Wendy Marlett, Chief Marketing Officer, and Gregg Ziegler, Senior VP, Treasurer, and our Head of Investor Relations. As usual, I caution you that many statements on this call are forward-looking, based on assumptions about the economy, world events, housing and financial markets, interest rates, the availability of labor and materials, inflation, and many other factors beyond our control that could significantly affect future results. Please read our statement on forward-looking information in our earnings release of last night and on our website to better understand the risks associated with our forward-looking statements. We had another terrific quarter and are very pleased with our fiscal third quarter results. We delivered 2,814 homes at an average price of $968,000, generating record third quarter home sale revenues of $2.72 billion. Our adjusted gross margin of 28.8% exceeded guidance by 110 basis points, primarily due to greater efficiencies in our home building operations, as well as favorable mix. Our SG&A expense was 9.0% of home sale revenues, or 20 basis points better than guidance. Outperformance in both the top line and in our margin drove earnings of $3.60 per diluted share, keeping us on track to deliver another great year for Toll Brothers. In the third quarter, we signed 2,490 net contracts for $2.4 billion, up approximately 11% in both units and dollars compared to last year's third quarter. On a per community basis, we sold at a pace of 2.1 homes per month, down slightly versus the 2.2 pace we sold in last year's third quarter. Demand in our third quarter was uneven. May started out strong, but slowed into and through June. July was the strongest month in the quarter, especially in the latter half of the month. We have seen this strength continue into the first three weeks of August. With mortgage rates at their lowest point in a year and trending lower, favorable demographics and continued imbalance in the supply and demand of homes for sale, we are optimistic that demand for new homes will remain solid through the end of fiscal 2024 and into 2025. We are encouraged by demand trends we are seeing across the country and also across our buyer segments. Demand, excuse me, markets where we saw particular strength in the quarter included New Jersey, Pennsylvania, Metro D.C., South Carolina, Atlanta, Boise, Las Vegas, and all of California. Price adjustments in the quarter were community and market-dependent. We raised prices in some communities and lowered it in others. Overall, pricing was flat compared to the second quarter, and incentives continued to run approximately 5.5% of our average sales price. As I noted earlier, we are optimistic that market conditions will remain positive for home builders into the foreseeable future. The underlying drivers of demand remain firmly in place, including favorable demographics driven by millennials, many of whom are buying their first home later in life when they have higher incomes and accumulated wealth. Older millennials are now hitting their forties, which should provide a tailwind for our luxury move-up business over the next decade. In addition, baby boomers are moving into new homes as they retire and adjust their lifestyles. There also continues to be an underbuilt and aging stock of homes for sale, with the undersupply exacerbated by the lock-in effect of higher rates, which is keeping resale inventory at historically low levels. But even as interest rates move lower, we believe the supply of homes will remain challenged due to nearly 15 years of underproduction. Lower rates alone will not fully address the chronic undersupply of housing. The past several years have proven how impactful these fundamentals are, with demand for new homes remaining solid in the face of a sharp rise in mortgage rates and a prolonged period in which rates have remained elevated. As a large, well-capitalized home builder, we have benefited from and performed very well in this environment, with sales up 25% year-to-date, but we would clearly welcome lower rates and are excited by the prospect of a normalizing housing market. Our strategy of widening our geographies and price points to include more affordable homes and increasing our supply of spec homes has helped us meet demand while becoming a more efficient home builder. As we have expanded and come down in price, we now have the widest variety of product and the widest range of price of any of the builders, which presents us with a great opportunity to grow our core home building business in our 60 markets across the country. Our spec homes represented approximately 54% of orders and 49% of deliveries in the third quarter. We continue to target about 50% of our business as spec, with continued strong demand from buyers who are looking for quicker move-ins. As a reminder, we define a spec as any home without a buyer that has a foundation poured. We sell our specs at various stages of construction, which provides many of our buyers the opportunity to personalize their homes at one of our 40 Design Studios nationwide. This offers our spec buyers a degree of choice, which is a key pillar in the Toll Brothers buying experience, while providing us with a faster and more efficient construction schedule. At third quarter end, our backlog stood at $7.1 billion and 6,769 homes. Our cancellation rate as a percentage of backlog was 2.4% in the third quarter, down from 2.8% in our second quarter and consistent with our long-term average of 2.3%. Our industry-low cancellation rate is due to the significant upfront down payments our buyers make, as well as the emotional attachment they form as they personalize their homes with us. Our buyers also tend to be more affluent. Approximately 28% of our buyers paid all cash in the third quarter, consistent with our second quarter and significantly above our long-term average of approximately 20%. The loan-to-value ratio for buyers who took a mortgage was approximately 69%. So for the 72% of our buyers who took a mortgage, on average, they put down 31%. These metrics highlight the financial strength and affluence of our entire customer base. We continue to see modest improvement in our construction cycle times, consistent with our focus on product and process optimization and our increase in fast return spec homes. We remain hyper-focused on continuing to improve our construction times as we move forward, which should further benefit our already strong cash flows. We are on target to reach our goal of operating from 410 communities by fiscal year-end, which would represent 11% growth compared to the 370 communities we were operating from at the start of the year. We plan to continue growing community count next year, and we have sufficient land under control to do it. At quarter end, we owned or controlled 72,700 lots, half of which were controlled and the other half owned. Excluding the 6,769 lots in our backlog, our controlled land represents 55% of our lots. This land position provides us with sufficient lots needed for growth in fiscal 2025 and beyond, and allows us to continue to be selective, disciplined, and focused on efficiency when we assess new land opportunities. Our underwriting standards for new land continues to incorporate stringent three thresholds for both margins and returns, and we continue to seek out land acquisition and development opportunities that allow us to be more capital efficient, including through increased use of option arrangements, land banks, joint ventures, and similar structures that allow us to defer payments and lot takedowns. This focus on capital efficiency and returns extends beyond our land and other operations. It also includes our efforts to more programmatically return capital to our stockholders. Since the start of our third quarter, we've repurchased $246 million of our common stock, bringing our year-to-date repurchases to $427 million, at an average price of approximately $119 per share. We also paid over $70 million in dividends year to date. So far this year, we've repurchased approximately 3% of our year-end diluted share count, and since 2016, we've bought back approximately one half of the company. Given our outstanding year-to-date financial performance, including strong operating cash flows, we are raising our buyback expectations for the full year from $500 million-$600 million. Dividends and buybacks will continue to be an important part of our capital allocation strategy and a key factor in maintaining an attractive return on equity. We now expect our return on beginning equity to be approximately 22.5% this year. This will be the third year in a row that we generate an ROE over 20%. With that, I will turn it over to Marty. Thanks, Doug. Good morning, everyone. Thanks for being with us. It was a great quarter. We earned $504 million before taxes and $375 million after, or $3.60 of earnings per diluted share, well above the earnings we guided to last quarter. Home sale revenues were $2.72 billion in the quarter, a third quarter record and an increase of 2% compared to one year ago. We delivered 2,814 homes in the quarter, up 11.5% year over year. This unit growth is a direct outcome of our strategies of broadening our price points and increasing our supply of spec homes. Based on our third quarter results and our expectations for the fourth quarter, we are raising our full year deliveries guidance. We now expect to deliver between 10,650 and 10,750 homes, an increase of 100 homes at the midpoint of our previous guidance. We are also increasing our guidance for full year average delivered price by $10,000 to $975,000. This translates to a home building revenue projection of between $10.4 billion and $10.5 billion for the full year, or over $200 million of additional revenue compared to the midpoint of our previous guidance. We signed 2,490 net contracts in the third quarter for $2.4 billion, up approximately 11% in dollars and units. The average price of contracts signed in the quarter was approximately $967,000, which was about flat compared to both the third quarter of last year and the second quarter of this year. Our third quarter adjusted gross margin was 28.8% compared to 29.3% in the third quarter of 2023, and this was 110 basis points better than we had projected. The outperformance to guide was due primarily to greater efficiency in our home building operations, as well as favorable mix. With the outperformance in our third quarter, we are raising our full year adjusted gross margin guidance from 28.0% to 28.3%. We are now projecting a fourth quarter adjusted gross margin of 27.5%, a 10 basis point increase compared to our previous implied guidance. SG&A, as a percentage of revenue, was 9.0% in the third quarter, compared to 8.6% in the third quarter of last year, and this was 20 basis points better than we had projected for this quarter. Year over year, we modestly reduced G&A expenses in terms of total dollars, but this reduction was offset by higher selling expenses, due in part to increased community openings. As we've pointed out before, we've been very focused on becoming more efficient, and we are seeing the benefits of that efficiency continue to flow through our results. For the fourth quarter, we expect SG&A expense to be 8.6% of home sales revenues, and for the full year, we now expect it to be 9.4%. This represents a 20 basis point improvement over our previous guidance. Third quarter joint venture, land sales, and other income was $1 million, which was consistent with our breakeven guidance. We continue to expect our full year joint venture, land sales, and other income to be approximately $260 million, implying approximately $47 million in the fourth quarter. Our tax rate in the quarter was 25.6%. We expect our fourth quarter tax rate to be 26%, which would bring the full year rate to approximately 25.4%. We expect interest in cost of sales to be approximately 1.3% in the fourth quarter and for the full year as we continue to benefit from our reduced leverage. As Doug mentioned, we are maintaining our community count guidance of approximately 410 communities open for sale by fiscal year-end. This would represent approximately 11% growth from the 370 communities we began the year with. We plan to continue growing community count in fiscal year 2025 and have the land to do it. Turning to the balance sheet, we finished the quarter with a net debt to capital ratio of 19.6%, $893 million in cash and equivalents, and $1.8 billion available under our $1.96 billion revolving bank credit facility. We have no significant bank or senior debt maturities until November 2025. All of this provides us with ample flexibility to both grow our business and return capital to stockholders as we continue to focus on generating attractive returns. Our weighted average share count is expected to be approximately 104.75 million for the full year and 102.5 million for the fourth quarter. As Doug noted, we've increased our share repurchase guidance to approximately $600 million of repurchases this year, implying approximately $175 million of buybacks in the fourth quarter. Putting this all together, we now expect to earn between $14.50 and $14.75 per diluted share in fiscal 2024. We expect to achieve a full year return on beginning equity of approximately 22.5%, and we expect our book value at year-end to be over $76.50. This would cap off another great year for Toll Brothers. Now let me turn it back to Doug. Thank you, Marty. Before I open it up for questions, I'd like to recognize the hard work of all of our Toll employees. It is their passion for our business, dedication to our luxury brand, and commitment to our customers that will ensure our continued success. Dave, let's open it up to questions. We will now begin the question and answer session. As a reminder, the company is planning to end the call at 9:30 A.M. when the market opens. During the Q&A, please limit yourself to one question and one follow-up. To ask a question, you may press Star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star, then two. Our first question comes from Stephen Kim with Evercore ISI. Please go ahead. Yeah, thanks very much, guys. Appreciate all the color so far, and good job in the quarter. Wanted to ask—sure, yeah. I wanted to ask you about profitability, and I was intrigued by your comment about greater efficiency in the homebuilding operations. Wanted to just sort of get a sense of if you could elaborate there, and that seems to imply that there's a degree of sustainability to the strength that we're seeing in your margins. And so I know you haven't given guidance here for twenty twenty-five, but it would be helpful for, I think, us to hear you comment on the, call it, the 17.5% operating margin you're generating this year. How sustainable you think that is generally? Is that a number that you think is inflated by any particular variables? Or is that a level that you sort of, as you look forward across your business over the next several years, is that a level that you sort of feel is a reasonable level to use as kind of a base? Thanks, Steve. Great question. The quick answer is, yes, we believe that operating margin you referenced is sustainable. We are targeting long term with this new business model of a very wide price point, a very wide geography, about 50% spec, more and more affordable luxury communities, a longer-term gross margin in the 27%-28% range, and as we become more efficient on the SG&A line, which you've seen over the last couple of years, we think that operating margin long term is definitely sustainable. Well, that's super clear, so appreciate that. And that's obviously very encouraging. Was wondering if you could talk a little bit about yours, a little bit more about your spec model. What was the actual number of specs, both of finished and in total specs that you had in the quarter? And then I had a follow-up regarding what that, about that level. At the end of the quarter, Steve, we had around 3,400 specs. Around 750 of those were at CO or beyond, or 1.8 per community. That's interesting. Okay, so you had about eight and a half per community total, but finished was, you said, you know, below two. That level of those levels of specs, is that a number? Are those numbers per community what we can also expect going forward, or is that or do you see this changing, like, growing perhaps, as we go forward? Steven, we're starting a spec essentially for every home we sell. So the starts and specs include one BTO and one spec, kind of fifty/fifty. BTO is build to order. Yep. And, I think we've hit a bit- Not Bachman-Turner Overdrive—for the older people on the call. We are taking care of business here, Doug. I think we've hit a bit of an equilibrium point here on our up to 50% spec strategy. Now, that'll vary a little bit in terms of settlements or sales quarter to quarter, but strategically, we've kind of hit our equilibrium point here. And it's important. I know, Steve, we talked about it before, as you know, but we, you know, choice at Toll Brothers is still alive and well. It's still very important, not just on the build-to-order business, but we do hope that at least half of the spec buyers are buying early enough that they have enough time to pick some level of finishes. If you buy it very early, you can hit that Design Studio and truly customize the inside of your home. If you buy it a little bit later, you have some opportunity for flooring, for kitchen cabinets, for countertops. And then, of course, there are some, as we described, that get to the end, can be delivered quickly for that buyer that wants a faster move-in. So, you know, we do define the spec as a foundation in the ground without a buyer, and we market accordingly, so that choice is still, you know, a big part of that business model. That also drives a little bit more margin, because as you know, the upgrades to the Design Studio tend to be accretive to the company margin. Yeah, absolutely. And the level of finished specs here per community is very encouraging. I would say below two, two per community, that's not at all an unusually high number. So it's very clear that your process is working. So great. Well, appreciate all the color. Thanks very much. Thank you. And the next question comes from John Lovallo with UBS. Please go ahead. Good morning, guys. Thanks for taking my questions as well. Maybe just- Hi, John. Following up on... Hey, hi, how are you? Maybe just following up on Steve's question. You know, your backlog has continued to kind of get worked down over the past few years. I mean, how confident are you that improved cycle times and this increased spec level can continue to drive delivery growth as we move into twenty twenty-five? We're very confident. We're doing it right now, and, you know, the more as we talked about it, if we can keep this spec at about 50/50, those houses are being built faster. You know, we're able to deliver them quicker. The conversion rate on our backlog has come down and will continue to come down as this, excuse me, will continue to go up. My apologies. It will. We will turn houses faster. You know what I meant. And, you know, as the spec business continues to mature, we get better at it. We turn these houses faster. You're gonna see an improvement in that conversion. Makes sense. Then, you know, moving on to the fourth quarter gross margin, you know, what would drive the expected 100 basis points sequential decline from the third quarter? I mean, is this the reverse of the positive mix impact in the third quarter? And what specifically was that mix impact? Was it geographic? Was it product or spec versus BTO? Thank you. Sure. So let's remember, we raised guidance for Q4 gross margin. Yes, when you compare it to the blowout gross margin of Q3, the gap there is bigger. Q3, as we mentioned, was one hundred and ten basis points better than guide. Because of mix, we had more high-margin homes delivering in the Pacific and the South. And we had less spec homes delivering than we had anticipated. That reverses a bit in the fourth quarter, where we will have less high-margin homes delivering from the South and the Pacific. And by the way, the entire South and Pacific is not necessarily high margin. It is certain communities within the South and the Pacific that have this higher margin, where we had more of those deliver Q3 and less of those in Q4, and we will have about 60% of our deliveries in the fourth quarter be spec. So, you know, with our business running from... You know, we now have homes from the mid-$300s to over $5 million. We have gross margins that have a very large range. You know, we have, we have a few communities with 10% gross margin, and we have communities with 50% gross margin. And so when you look at our business, quarter to quarter, there may be a little bit more variation, naturally, than some of the other builders that have a much tighter range of price point and margin. And so there's a little bit more variety there, as you just saw in the third quarter, and as we've guided to in Q4. But overall, you know, that 20%-28%, 27%-28% long-term margin, while there could be some modest variation quarter to quarter, we're very comfortable with where this business is headed. And the next question comes from Alan Ratner with Zelman & Associates. Please go ahead. Hey, guys. Good morning. Nice quarter, and thanks for all the helpful detail so far. Thanks, Alan. Doug, you know, I, I'd love to drill in on pricing. You know, your comments suggest pricing was pretty flattish in the quarter, you know, plus or minus, depending on the community. I'm curious, as you kind of sit here three weeks into August, you know, you sound pretty encouraged by the recent activity. Have you started to, or have you seen any, ability to begin either dialing back incentives now that rates are, are a bit lower, maybe pulling back on some of the rate buydowns or, or even start to, you know, begin raising prices again? Or is it, is it still premature to do that, given the, the choppiness? Yeah, so it was a bit of a choppy quarter, as we and other builders have talked about. You know, I went through the cadence. First, the beginning of May, pretty much up to our call, you know, things were looking pretty good, and then the last week of May through all of June, definitely saw a slowdown, and we saw an accelerating pickup in July, with the end of July being the best, and that has continued into August. We did run a spec event in the month of July, so we increased incentives modestly in July in some communities on specs, particularly those specs that might have been further along in construction. However, in July, we did raise prices on our build-to-order homes, so the overall effect was pretty much flat. But as we sit here in the third week of August, traffic is up, the quality of traffic is improved, rates are now down. We're sitting on a 6 5/8%, lowest rate in a year, thirty-year, no-point mortgage, with a feeling that those rates are going to come down further. So we are seeing a bit more pricing power right now. We are being careful because mid-August is not normally the time to aggressively raise prices, as families are just closing down summer houses and getting kids into school and taking a deep breath. But in the fall, we generally do see an improvement in activity, and with how things are lined up with where the rates we think will go and where we currently have higher quality traffic, we are encouraged that we think we will have more pricing power as we head into the fall. The other thing to note, Alan, is that the extent buydowns are part of our incentive offerings, they are less expensive for us to accomplish now in the lower rate environment. Yeah, I was gonna follow up on that, Marty, so, thank you for adding that. So when you say less expensive, are you buying down the rate a lesser magnitude because you don't need to solve, you know, for a lower rate? Or is it actually, you know, to buy down that same, whatever it is, fifty basis points, hundred basis points, is it actually costing you less? And if so, can you quantify that? It's costing less. Our typical buydown deal around the country is to buy your rate down to 4 3/8. That's the number we picked. And so when you buy from 7 to 4 3/8, it's more expensive than when you buy from 6 5/8 to 4 3/8. Marty, the amount of that, not to put you on the spot, but you did ask- Around- -the question. Around 5%-6% of the mortgage amount to buy it down. Remember, that 4 3/8 is a one-year- Yes. It reverts to 5.375 for the balance of the 29 years. Right. And as we've spoken before, it's a great marketing gag. It drives traffic, but we don't actually sell a lot of it. People tend to take a pass on that version of the incentive, and they take the 5.5% average incentive we have in the company and have a lot of fun in our design studios with it, increase the finishes in the home. That goes to the affluent nature of our client. They're not rate dependent. They don't need that lower rate to qualify. They recognize rates will probably come down, so they may be overpaying, because in a year or two, they could probably refi, and so they'd rather permanently improve their home to their lifestyle, to the design studio with those incentive dollars. Thanks, Alan. The next question comes from Michael Rehaut with J.P. Morgan. Please go ahead. Hi, thanks. Appreciate you taking my questions. Good morning, everyone. Congrats on the quarter. Great. Thanks, Mike. I wanted to dial in a little bit about your, over the years now, I guess over the last year or two, your shift towards spec being 50% and how that kind of fits in with your prior or still to some degree ongoing, you know, preference of price over pace. You know, this quarter, it was pretty interesting in that you probably had a relative to prior builders reporting a little bit more of a gap between at least our estimates of order growth and what you put out, and probably one of the stronger gross margins relative to our estimates. I think that's generally consistent with how you operate in more temporary periods of softness where, you know, maybe volume or orders fall off a little bit more and you hold on to the margin. At the same time, you're shifting in this, you know, more of a spec model or, you know, half of your business spec. There are points where you're going to have to, as you did in this quarter, increase incentives if your specs build up a little too much. And so I'm wondering, going forward, how investors should think about that balance. You know, if there's gonna be points where perhaps you're going to be a little more sensitive to pace, you know, if softness is going to go past a quarter or two, and if that would, you know, drive any greater degrees of variability in your gross margin relative to the past? So Mike, I think it's fair to say that we may be a little bit more focused on price than pace compared to the other builders that have more of a spec business, and they have product that they need to move. But to steal a line from my good friend, Ryan Marshall at Pulte, we are not margin proud. It is a balance. We are definitely focused on top-line growth. We are also focused on this 27%-28% gross margin that we believe is sustainable long term. We are also focused on becoming more and more efficient, higher operating margin long term. We also, as I've talked about, are very aware of our spec inventory, what stage of construction it is at, when we need to put it on the market, how we can make more margin if we sell it earlier. And so, you know, we have aging reports of all that spec. We focus on how far along it is, if it gets too heavy on the back end, which it hasn't, because of this business model, then yes, on occasion, we might have to be a bit more aggressive, but that is not something that I think you need to worry about. The business is working, the spec strategy is maturing. We are just at, just about at a point where we've hit the equilibrium of long-term 50% spec, 50% build-to-order, and the business plan is in place. But yes, there's a little more focus for us on price and margin, but we are not by any means margin-proud. And as we talked about, you know, we ran a spec event in July, modest increase in the incentive on the spec business, which allowed us to sell a few more. But it was at the same time when we could raise prices on the build-to-order. So in the end, it all worked out. And it's that mix between spec and build-to-order that I think we're getting really good at, and we are very confident in that long-term margin. And there you have it. The next question comes from Mike Dahl with RBC Capital Markets. Please go ahead. Morning. Thanks for taking my questions. Hi, Mike. Hey. So just, just to keep going on kind of the margin and the spec and all the mix dynamics, I guess when you think about the Q4 gross margin, understanding that you took it up a little prior versus your prior, you know, you're talking about kind of running that promotion, which may have lifted incentives. At the same time, you know, Steve followed up on your comments about efficiency, which does seem more sustainable and, you know, unclear why that would go away in the immediate term. So can you just help us understand, you know, in terms of maybe just the incentive load that's projected to be in your fourth quarter deliveries, versus your third quarter deliveries? And then I know that your spec margins can vary quite a bit regionally as well. So maybe if you could let us know, kind of on a like-for-like basis, what you think that spec versus BTO margin is gonna run at in your fourth quarter versus what it's been year-to-date? So our incentive is about 5.5% of the delivered price of our homes. That comes out to about $50,000-$55,000. Simple math on houses that are in the $950,000 range. That was Q3, and we believe that will be the same incentive in Q4. I don't think the margin differential is gonna be very incentive sensitive between Q3 and Q4. It's mix related. Right, and so remember, and we talked about how for Q4, we think we'll have about 60% of our homes spec. That doesn't mean we incentivize the whole bunch to sell those, and that's what's hurting the margin. We tend to build spec on what I'll call the more average lot in a community. We tend to save the very high-premium lots, the special lots, overlooking the eighteenth green, with beautiful woods in the backyard, with a beautiful lake in the backyard, for the build-to-order business, because that client is more affluent. They want to put a lot of upgrades into their dream home. They want that dream home on the best lot we have, and we let them run wild in the design studio, and that margin tends to be higher. So when you think about the spec margin, you shouldn't be comparing it to the build-to-order margin. You need to recognize that the spec is generally built on a more average lot, lower lot premium, and that client generally, even if it was a build-to-order home on that lot, would not spend as much in the design studio, and we know the design studio is margin accretive. So while we may have to incentivize a little bit more to move that spec home on that average lot, if it gets towards the end and is unsold, it is a small difference between that margin and what the margin would be, had it been a build-to-order. Okay. Our average margin for the quarter was 28.8%. Build-to-orders were above that, the specs were below that. Speaks for itself. Specs were probably 100-200 points below that average, and the build-to-orders were 100-200 points above that average. Yeah, I was kind of triangulating back to make sure it was that pure mix dynamic versus something under the surface that's you know, incremental spec. So thank you for that. I could have answered your question and just said, "mix." Sorry. Sorry for- No, no... Waiting four, four minutes. That was the color that, that we were looking for. And then, just thinking about seasonality, if you're you know, typically, you'd still keep seeing order pace decline in the fourth quarter. You know, obviously, you just came through a weird and challenging third quarter, and you're talking about potential acceleration in trends coming out of July. Any help you wanna provide in terms of level setting? I think typically, your pace would be down kind of low double digits sequentially in four Q versus three Q. Should we be expecting kind of on seasonal trends above, below, based on what you're seeing so far? So you're right. Good work there. Our fourth quarter is typically... Orders are typically about 10% lower than Q3, and we're confident we're gonna do better than that. We think we'll, you know, our best guess three weeks in, is that we may be flat to Q3 versus down 10%. And the next question comes from Trevor Allinson, with Wolfe Research. Please go ahead. Hi, good morning. Thank you for taking my questions. First one, just wanted to touch on geography. You guys laid out some of the better performing markets. I don't believe you mentioned any markets in Florida or Texas. Those have clearly gotten a lot of attention over the last few months. Can you comment on how demand in those markets has trended relative to your business overall? Sure. Texas has had a good August, a good end of July and good August. Different stories in different markets in Texas. Austin has some elevated inventory. We're not feeling it directly, but you know, there's a bit of an overhang in that market, as there's conversation around inventory. In Dallas and Houston, there are not inventory issues. I think there was just a lot of price increases over the last few years, and so there was a little bit of sticker shock, and maybe some buyers taking a little bit of a pause. But that seems to be working itself out, as for the last month we've seen you know, pretty significant improvement in our action in the state of Texas. Florida... And by the way, the Texas margin, even when we saw things that were a bit slower, you know, last quarter, that margin held up and was above our company's average. Florida sits at our company average margin. It has been a bit softer. There have been some elevated inventory levels in Florida West, which is very small for us, which is, I call Southwest, and in the Tampa market. The East Coast, Jacksonville, Orlando, and then for us, down in the Jupiter, Palm Beach, Boca Raton area, has done a bit better. It's really hard to gauge Florida in the summer months. We'll have to see how we do as the market comes back in October and November. But Florida's okay. We're selling houses, we're at company average margin. Actually, at company average, agreements per community as well. Cor- right. But I think that's down from where Florida had been performing- Right ... for the few years before that. Well said. We just opened, last weekend, our first community in the Panhandle, and we killed it. We took- 10 ... 10 sales our first weekend, in August. So that's exciting. So, feeling a lot better about Texas, and feeling a bit better about Florida, is the best way to describe it. Okay, thank you for that. That's definitely encouraging. Sounds like things are definitely trending in the right direction there. And then, a question on SG&A. You've talked about that moving down to 9% longer term due to some tech initiatives.... By 2025, or is that more of a longer term type of SG&A level? And then for 4Q specifically, looks like you've got it stepping down nicely, sequentially. Should we think of that as just being leverage, or is there anything else driving that? Thanks. You know, we're growing this company without adding people. We're becoming more efficient. We changed our operations in the field. We moved away from our legacy project manager system to where we have stack leads that run land acquisition, land development, construction sales, et cetera, community openings. And that organizational structure is allowing us to grow much more efficiently. And so on the G&A front, we're very confident we can do more without spending more dollars. On the S side, the S has actually been up a little bit, but that's variable. You know, we're paying our inside sales agents a little bit more. We have 65% of our sales involve a third-party Realtor. We're spending a little bit more money on marketing and advertising. But overall... There is leverage as we grow on flat SG&A, and, you know, the S will just move with sales, and we'll just see how that goes, particularly with, you know, the new rules around broker commissions. Yeah, I think, Trevor, we're gonna be essentially flat in terms of SG&A dollar spend in 2024 versus 2023, and deliver roughly 10%-12% more homes and have 10%, 11% more communities. So we're pretty proud of that. The S side is showing the variable nature of the commissions and staffing out at the job sites for the communities for the sales teams, and it's also showing a little bit more expenditures for marketing. Next question comes from Rafe Jadrosich with Bank of America. Go ahead, please. Hi, yeah, good morning. It's Rafe. Thanks for taking my question. So I- Sure. Wanna follow up on some earlier questions on sort of the deliveries versus orders going forward. You've had three straight years of deliveries tracking above orders, and that's partly been because of the increase in spec. How do we think about deliveries relative to orders going forward here? Like, would you anticipate spec to outgrow the BTO, the BTO business in terms of deliveries as we go into 2025? I don't think so. I think, you know, the nuance may be that. And we haven't really looked at this. The nuance may be that the build-to-orders generally concentrate more in the luxury, more in the bigger homes, have a few months longer build cycle, and the spec homes have a shorter build cycle. And so when we start one for one, like we have been, there is a potential for the build-to-orders to fall below 50% long term, but probably not from a revenue perspective. Got it. Okay, that's helpful. Then, like, do you think deliveries can continue to outpace orders going forward? No, they will, they will reach equilibrium pretty soon here. Okay. And then the second question, just on, you know, you increased the buyback guidance for the year. Can you talk about kind of what drove that decision? And Doug, I think you said, you know, programmatic capital return, which I don't think you've sort of said in the past. So has there been any change here, or how should we think about capital return and buyback going forward? So we expect free cash flow of $800 million-$1 billion. That's up a little bit because of our strong performance, and we want to continue to reward our shareholders, return capital to our shareholders. We are very focused on return on equity. We know one of the main levers of keeping return on equity high is having a robust, programmatic stock buyback program, in addition, of course, to how quickly we can build and turn houses and how efficiently we can buy land. And so it seemed like a great time to take the $500 up to $600 because of our performance, and the additional free cash flow that we have. Going forward, you will continue, as we talked about going back to 2016, you will continue to see us programmatically, regularly, and consistently and predictably buy our company stock back. Yeah, I think our use of the term programmatic probably goes back a year or two at this point, but we're not gonna eliminate the opportunity to be opportunistic. Right. We just hope we don't have it. The next question comes from Sam Reid with Wells Fargo. Please go ahead. Awesome. Thanks, guys. Appreciate the color you gave on order cadence into the fourth quarter. Just wanna piggyback off of some of those questions. You know, are you looking to run any targeted promos in the fourth quarter that might be helping that better versus seasonal trend relative to the third quarter, in addition to the benefits you might be seeing from selling more specs than just lower overall rates? No. You know, we always run sales events. Some are local, some are regional, some are national. They're on the calendar already. They're no different than prior years. We do traditionally have a national sales event in the month of September. That's occurred for many years. That will occur again. But beyond that, there's nothing out of the ordinary. And I do caution, you know, we don't like to guide on sales, and so when I said, you know, we think we'll be better than down 10%, you know, we're thinking more consistent with what we did in Q3, that's not a limiter to me. You know, I'm hopeful as rates come down, the market improves, we continue to open new communities that, you know, we could have a roaring fall. I'm not predicting that, but I don't want you to think we're giving some guidance right now on, you know, on sales, because we don't do that. And, let's get a good market, let's get this thing cooking, and let's blow out sales. That's how I approach this business, and we'll have to see where it is. But where we are three weeks in, with the communities we have open, with those we know that are opening, with the quality of traffic, I just wanted to suggest that the normal number of down 10% doesn't feel right. It feels like it should be at, or in my hope, better than Q3. Yeah, that certainly helps. And, you know, maybe this is a little ambitious here, but, wanna quickly talk 2025, just from a very high level standpoint. You know, you've got some good visibility into your land pipeline and the types of communities you're gonna be delivering. So to that end, you know, do you have any sense as to what kind of community count growth, you know, we might be on track to see, you know, especially as you look to potentially grow 5%-10% over the long term? I like that number. I'm with you, five to 10. More to come in December. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Dave, thank you very much. You were terrific. Thanks, everyone, for your interest and support. Have a wonderful end of your summer. We are here always to answer any questions you may have, and we look forward to seeing all of you soon. Thanks. Take care. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.