Greetings, and welcome to Tri Pointe Homes' first quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Lee, Investor Relations for Tri Pointe Homes. Thank you. You may begin. Good morning and welcome to Tri Pointe Homes' earnings conference call. Earlier this morning, the company released its financial results for the first quarter of 2022. Documents detailing these results, including a slide deck, are available at www.tripointehomes.com through the Investors link and under the Events and Presentations tab. Before the call begins, I would like to remind everyone that certain statements made on this call which are not historical facts, including statements concerning future financial and operating performance, are forward-looking statements that involve risks and uncertainties. A discussion of risks and uncertainties and other factors that could cause actual results to differ materially are detailed in the company's SEC filings. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Tri Pointe's website and in its SEC filings. Hosting the call today are Doug Bauer, the company's Chief Executive Officer, Glenn Keeler, the company's Chief Financial Officer, Tom Mitchell, the company's Chief Operating Officer and President, and Linda Mamet, the company's Chief Marketing Officer. With that, I will now turn the call over to Doug. Good morning, and thank you for joining us today as we go over our results for the first quarter of 2022 and provide some thoughts on the balance of the year. Tri Pointe Homes delivered another excellent quarter of profitability, generating earnings of $0.81 per diluted share in the first quarter of 2022 compared to $0.59 in the prior year period. We once again came in at the high end or above our stated guidance for key operational metrics, including new home deliveries of 1,099, average selling price of $660,000, and home building gross margin of 26.8%. Because of strong demand throughout the quarter, we continued to sell homes at an elevated pace of 5.7 homes per community per month. This sales success resulted in a first-quarter ending company record backlog, both in terms of units with 3,955 homes in backlog and dollar value of $2.9 billion, which places us in an excellent position to deliver on our guidance for the full year. We were also successful in meeting our projected new community openings. For the quarter, we opened 22 new communities with excellent initial sales results. Because of demand and our differentiated product offering, we continue to realize accelerated sales with virtual openings. We are still on pace to open 90-100 new communities for the year, which will contribute significantly to delivery growth in the coming years. We are extremely pleased with our results this quarter and are encouraged by our team's ability to work through the supply chain issues that persist in our industry. Demand continued to remain robust in all of our markets in the first quarter, even as mortgage rates have moved materially higher. The home buyers in our backlog are well-qualified and are pre-qualified through our mortgage affiliate prior to purchasing a home. They have an average debt-to-income ratio of 39% and an average FICO score of 749, an average loan-to-value of 82%, and average annual household income of $189,000. The majority of our home buyers are millennials, and this cohort continues to be a strong source of demand for the industry, driven by needs-based, life-changing events such as marriage, a growing family, or a job relocation. This sizable population of buyers is in the prime home buying phase of their lives, and the home building industry stands to benefit from their participation in the markets for years to come. Demand is also being fueled by what we believe will be the long-lasting transformation of home buyer preferences and needs brought about by the pandemic. Whether it's born out of a desire for more living space, the ability to work from home, or a need to feel more in control of one's living conditions, the pandemic has created a heightened desire for homeownership in our country. Another positive dynamic for the industry is the ongoing and severe lack of existing home supply in our markets. This lack of resale competition has caused an increasing number of buyers to consider purchasing a new home. According to the most recent figures from the National Association of Realtors, as of the end of March, the inventory of unsold existing homes stood at 950,000 units, which is equivalent to two months of supply at the current monthly sales pace and well below historical norms. Inventory levels for new homes also remain constrained by the ongoing supply chain issues that have limited the number of homes that can be brought to the market and kept pricing firm while maintaining a sense of urgency for each new home site release. We believe that this supply-demand imbalance for both new and existing homes will persist for some time, providing the new home industry with a healthy fundamental backdrop for the foreseeable future. Given this outlook, Tri Pointe Homes remains focused on consistent operational and financial performance by executing on the five strategic initiatives we have emphasized for the several quarters now. These include the continued monetization of our long-dated California assets, the growth and build-out of our early-stage markets, a disciplined approach to land acquisition, further improvements to our cost structure across our home building platform, and a consistent share repurchase program. With respect to our long-dated California assets, these communities continue to generate positive cash flow and outsized profits for our company due to their favorable land basis, desirable locations, innovative new home designs, and attractive pricing. In terms of our early-stage markets of Austin, Dallas, Sacramento, and the Carolinas, we made further progress towards greater scale and operational efficiency, opening nine new communities in the first quarter. These divisions are now making valuable contributions to the bottom line and generating healthy margins. We continue to be disciplined but active in the land market. Tri Pointe grew its total lot count by 14% on a year-over-year basis in the first quarter, with the bulk of that increase coming via option agreements and land banking arrangements. Lots controlled as a percentage of our total was 47% at the end of the quarter, compared to 38% at the end of the first quarter of 2021. Additionally, we have been expanding our geographic diversity, and as a result of that strategy, deliveries from our non-California divisions are expected to increase to approximately 70% of the company's overall deliveries by 2024 versus 58% in 2021. Tri Pointe continues to look for ways to utilize technology to drive efficiencies across our home building platform. We have made significant investments in virtual sales tools and expanded our online marketing efforts, which we believe have resulted in long-lasting structural changes to the way we do business. With that, we continue to see efficiencies related to our marketing and advertising spending and reductions in both the outside broker attachment rate as well as broker cost per delivery. The final piece of our returns-focused strategy has been to allocate a significant portion of our cash flow to share repurchases. In the first quarter, we repurchased 5.3 million shares for a total of $123 million. With our undervalued stock price and the positive fundamental outlook we see for our industry in the long term, we feel this is an excellent use of our capital that further enhances shareholder returns. As of March 31st, 2022, we had $302 million remaining on our outstanding share repurchase authorization. Currently, we are in a difficult geopolitical and inflationary environment in the U.S. The Federal Reserve has made it their top priority to tame this inflation with higher interest rates and a reduction of their balance sheet. As a result, we have seen mortgage rates increase over 200 basis points, and with higher interest rates, the consumer loses purchasing power. While this creates a challenging environment, we have been there before. Our company is led by seasoned executives who know how to successfully operate during these periods. We acknowledge that higher financing costs will be a headwind for our industry. However, we are encouraged that the U.S. economy remains strong and wages continue to rise, leading us to believe that the demand drivers we see in our industry and our markets can continue to propel the housing market forward and present a much more positive fundamental outlook than our current equity valuation would suggest. In summary, Tri Pointe Homes delivered excellent results in the first quarter of 2022, thanks to a combination of strong execution, careful planning, and a continuation of our returns-focused strategy. While investors remain focused on mortgage rates, we remain centered on doing what is best for the long-term interests of our company and our shareholders and believe we have the right strategy and leadership teams in place to be successful. With that, I'd like to turn the call over to Glenn, who will provide more detail about our results and give an update on our forward-looking guidance. Glenn? Thanks, Doug, and good morning. I'm going to highlight some of our results and key financial metrics for the first quarter and then finish my remarks with our expectations and outlook for the second quarter and full year of 2022. At times, I will be referring to certain information from our slide deck, which is posted on our website. Slide 6 of the earnings call deck provides some of the financial and operational highlights from our first quarter. As Doug mentioned earlier, demand continued to be strong in the first quarter, with an absorption rate of 5.7 homes per community per month. Order activity was healthy across all geographies, with our west region reporting an absorption rate of 5.8 homes per community per month. The central region experienced an absorption rate of 6.0, and the east had an absorption rate of 4.8. So far in April, demand has continued to remain strong, with a similar absorption rate to the first quarter. We reported outstanding results on all key metrics this quarter that either met or exceeded our stated guidance. We delivered 1,099 homes at an average selling price of $660,000, which resulted in home sales revenue of $725 million. Our homebuilding gross margin percentage for the quarter was 26.8%, a 290 basis point improvement year-over-year. The strength of our margins continue to demonstrate our ability to price homes to cover or exceed the cost pressures we have experienced. Finally, SG&A expense as a percentage of home sales revenue came in at 11.1%, which was a 30 basis point improvement year-over-year. Turning to communities, we opened 22 new communities during the quarter, which exceeded our previous guidance of 15. We were able to accelerate several virtual community openings and successfully generate orders using the interactive sales technology that Doug mentioned earlier. For the full year, our expectations for opening between 90 and 100 new communities and having between 150 and 160 active selling communities by the end of the year remain in place. Looking at the balance sheet, at quarter end we had approximately $3.3 billion of real estate inventory. Our total outstanding debt was $1.3 billion, resulting in a debt-to-capital ratio of 35.7% and a net debt to net capital ratio of 27.8%. We ended the quarter with approximately $1 billion of liquidity, consisting of $413 million of cash on hand and $568 million available under our unsecured revolving credit facility. Now I'd like to summarize our outlook for the second quarter and full year. For the second quarter, we anticipate delivering between 1,300 and 1,500 homes at an average sales price between $670,000 and $680,000. We expect homebuilding gross margin percentage to be in the range of 26%-27% for the second quarter of 2022, and anticipate SG&A expense as a percentage of home sales revenue to be in the range of 10%-11%. Lastly, we estimate our effective tax rate for the second quarter of 2022 to be in the range of 25%-26%. For the full year, we continue to anticipate delivering between 6,500 and 6,800 homes. We are raising our guidance of average sales price to the range of $680,000-$690,000. We are also raising our expected homebuilding gross margin range to between 26% and 27%. Our SG&A expense as a percentage of home sold revenue continues to be expected to be in the range of 9.7%-10.2%. Finally, the company is forecasting its effective tax rate for the full year to be in the range of 25%-26%. I will now turn the call back over to Doug for some closing remarks. Thanks, Glenn. We have a lot to be proud of in terms of our performance in the first quarter of 2022. As I mentioned earlier, we came in at the high end or above our stated guidance for key operational metrics in spite of the ongoing industry-wide supply chain challenges. We also generated strong profitability and opened new communities ahead of schedule. While interest rates certainly play an important role in our industry, we believe our company remains on solid footing thanks to the combination of strong job growth, healthy income levels, strong demographics, and low levels of new and existing housing supply. These factors, combined with our strong balance sheet, excellent liquidity and experienced management team, continue to make me very optimistic about the future of Tri Pointe Homes. Finally, I would like to thank all our team members for their efforts this quarter. Every day, it seems as if we are presented with a new challenge for our industry, and you have consistently shown that you are more than up to the task, and I truly appreciate your efforts. That concludes my prepared remarks, and now we'd like to open the call for questions. Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Stephen Kim with Evercore. Please proceed with your question. You know, congrats on the good results. Obviously, I'll start off with what everybody is obviously gonna be thinking about, which is, you know, in light of the fact that you have mortgage rates now up, you know, 200 basis points plus, you know, if you could talk a little bit about what you're seeing, if anything, in terms of changes in the sales centers around, you know, any kind of mortgage qualification issues, cancellations, incentives. Are you finding that the buyers are. Are you having to go deeper into your waiting lists, things like that. If you can just sort of talk about how, despite the strong sales and the good absorptions continuing, if there's maybe something below the surface in terms of, you know, making adjustments to address the higher financing costs. Hey, good morning, Stephen. This is Tom. A lot there in that question, and we're certainly trying to sort that through in our sales hubs as we speak. Certainly from a demand side, we have not seen a fall off in demand, but that doesn't mean there isn't concerned consumers out there. We're holding hands and walking people through this rising rate environment, but so far with our needs-based buyers, they are still fully engaged and moving forward, relative to purchasing their homes. Certainly relative to incentives, we have not really seen any increase in incentives. Actually, our average incentive, I think, was about 1.3% for the quarter, and that compared year-over-year to about 3.2%. Still a very healthy environment out there. There are concerns, though, as interest rates continue to rise, but we have really done a lot of sensitivity analysis around our backlog and feel strongly that our buyers are very well qualified and committed to their purchases, and we don't see anything on the horizon changing that. Relative to those sensitivity tests, we've run that up to about a 6% rate, and that's where we do begin to see some impact to our backlog. It's really very minimal. That would be in the high single digits, low double digits relative to a higher risk profile, as interest rates go to 6%. I'll see if Linda wants to add anything to that commentary. I think you've covered it really well, Tom. I mean, as you say, because demand is strong, we're continuing to operate with low levels of incentive and helping to educate home buyers on the current market, including the low supply of existing resale homes that's also driving more demand for our new home communities. Yeah. I'll finish by saying, Stephen, I mean, there's so many variables that are going into the market right now. Interest rates, higher interest rates reduce your purchasing power. I mean, that's a given fact. We were definitely spending time with our backlog, making sure people are locked in over the rest of this year. We were just out in Phoenix, talking to our sales teams out there, for example, and one of the things that we focus in on in Tri Pointe is really developing and offering products for sale in what I call main and main. Well-located, long transportation corridors, good schools. You talk to our salespeople across the nation, and we have well-located product. We offer product that's kind of more of a first-time premium, first move-up. Those buyers typically have better qualification than the entry-level type of buyer. Location trumps all cards. I remember that, you know, from 2009 to all the cycles I've been through in my 31 years. There's gonna be a bump in the road. You know, we're real. You know, the Fed is determined to put out this fire. That's gonna have an impact as I'm sure the year progresses. The biggest thing they say also is the supply. I mean, everybody wants to compare to prior year cycles, but there's just no supply. Our biggest competitor on the new home side is the resale market. Yep. I think NAR just came out two months of supply. The consumer is on a needs-based basis. As Tom has mentioned, the new home builder is kind of the only choice in town, so to speak. When you throw in, you know, well-planned product, communities, and good locations, you know, the macro, I think, is still very good for housing. Yeah. Couldn't agree more. Really appreciate that. That was very, very helpful, particularly that, you know, the stress test into the backlog. I think that people should find that very, very encouraging. Second question, what relates to the supply chain. You know, we know that Omicron certainly created some problems for folks, you know, in the winter. My sense is that March, you know, things got a lot better in terms of Omicron cases and absenteeism, perhaps. My feeling was that perhaps you might have seen a little bit of improvement sequentially in March and April versus what you were seeing in February. Was curious if you could comment on that. Related to overall production, we have been intrigued by the single-family build-to-rent operators just desperate to get a hold of, you know, product, and I was curious whether or not you've seen your inbounds from that arena increasing over the last few quarters, and what your stance is towards making sales to those sorts of entities. Well, I'll take the supply chain and I got interviewed last week and the simple answer is no. It's Whac-A-Mole. The supply chain isn't gotten any easier. And then when you think about the global supply chain with what's going on in China and Shanghai and so forth, I mean, it's just. There's no relief in sight that we see. And frankly, until the world can get back to getting people back to normal, these. I don't wanna get off on a political rant, but the testing procedures just create more and more roadblocks into municipalities in the supply chain and for the ability for people to consistently come to work. I don't see any relief right now in the way the current situation is being managed in the supply chain. As far as build for rent, we don't see a lot of that. In Texas, we've got some master planned communities we're developing that we may carve out a piece or two, Tom, to sell to a BFR group. You know, they're really pushing for lower price points in areas that really aren't mainstream, as I mentioned earlier. We don't see them in our playbook that much at all. Okay. Great. Thanks so much. The only thing I'd add to that, Stephen, sorry, is relative to supply chain. Obviously this is a very strongly relationship-based industry. While it is challenging day-to-day and something different pops up, we've got very experienced management teams, field operators that have great relationships and are finding ways to make it happen, as evidenced by us coming in at the higher end of our range relative to delivery. It is challenging, but we do think our team has done a fantastic job in creatively sourcing materials, looking for alternatives, and finding ways to get it done. Yeah, appreciate that. Thanks so much, guys. Thanks. Our next question comes from the line of Truman Patterson with Wolfe Research. Please proceed with your question. Hey, good morning, everyone. Thanks for taking my questions. First, just looking at your 2022 guidance, I'm hoping that you all can give an operating cash flow target. When I'm thinking through this, you have six years of owned land below 30% net debt to total capital. Shares are below book, which might present a better risk-adjusted return than buying land. You accelerated, you know, share repurchase to $120 million this quarter. I'm trying to understand whether this level of share repo is kind of the new normal for the time being, or just given some of the actions that the Fed's doing, do you actually just kind of shore up cash, bring up your cash balance a bit in 2022, or work down debt? Just trying to understand how you all are thinking about it. Hey, Truman. Good question. This is Glenn. We're gonna be positive cash flow from operations for the year, if that was your kind of original question. We're still balancing. Yep. You know, buying land. We're active in the land market, but we're continuing our disciplined approach, and we are committed to our share repurchase program, as evidenced by, you know, us having a little over $100 million in the first quarter. That was a little higher than we have done in the past. Like you said, you know, we're in a position to where we could be more aggressive in certain quarters where we feel like the stock is undervalued. But overall, for the year, we're targeting $250 million-$300 million in stock repurchases, as we've talked about in the past. We feel we'll be able to do that without, you know, still have strong cash and cash balances at the end of the year. We don't have any debt coming due until 2024, so we're in a really good position on the balance sheet side. Okay. I'd add to that, Truman. I mean, you know, we talk about our five strategic points in our remarks. You know, I compliment the teams. We've been executing in a very difficult environment. Yes, there's been healthy demand, but at the same time, as we've talked to you and many of you about, you know, we've been very focused on a returns-focused strategy. You know, since 2015, to put it in perspective, you know, we've bought back what? About $1 billion of stock. Yep. On an annual basis, our book value, I think our tangible is up 13% per year. We've created value of, what? About $300 million f or the shareholder. That programmatic approach that Glenn talked about is gonna be consistent because you gotta sit, take a step back and look at the macro thesis. When you look at demand and supply, long term, I think housing is gonna, you know, hit a little more of a bump in the road, let's be real about it. When you look at the macro, that's where the investment community, I think, with all due respect, is missing the macro because of the demand from the millennials and the continued supply constraints. You look at that over the next five to ten years, you know, we're a big believer in our stock, and so we're gonna continue on that programmatic purchase program. Absolutely. The tailwind's over a multiyear period. I absolutely agree with you. Just following up on that last point, as rates have increased, have you noticed any demand shifts between consumer segments? Because I'm thinking, you know, in the entry level, there's absolutely some consumers that get priced out of the market due to affordability. You have the strong millennial demographics trade down, you know, lack of inventory. On the move up, it's a more well-qualified buyer, right? They also experience rate lock. I'm trying to understand, A, how you all think about, you know, those segments going forward, and B, whether or not you've seen any kind of shift between the two recently regarding demand. Truman, thank you. This is Linda. Great question. We're continuing to see a pretty even mix in our segments. In the first quarter, we were 35% entry level with a 6 per month per community per month order pace. 52% of the mix was move up at a 5.3 pace, and 8% was luxury at a five pace, and active adult was 5% of the mix with an order pace of 6.4. Really healthy demand across the segments. As you said, you know, the move-up demand continues to be strong, and while rates are increasing, those buyers also have healthy amounts of equity in their existing homes. We're seeing, you know, that premium entry level and premium first move-up segment is very strong for us at Tri Pointe. One of the things, Truman, that I think benefit us is obviously our diversified product strategies. You know, all of our operating teams really are contributing to all those product segments. As demand shifts, as Doug said when we were out in Phoenix yesterday, we have a diversified product offering that people will be able to shift within our own company and still purchase a home, should they need to adjust to a different payment. Perfect. Thank you, and good luck in the upcoming quarters. Thanks. Our next question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question. Hey, guys. Good morning, and congrats on the really impressive execution in this tough operating environment on the supply chain. Doug, you know, I really appreciate your comments, your balanced view on kind of the, you know, your history in the industry. It's usually not wise to fight the Fed, and it sounds like that's the approach you're taking here. You know, I'm curious if, you know, obviously, rates have continued to move post quarter end, so maybe this is more a go-forward thinking point, as opposed to anything that's changed up to this point. Are you at all kind of adjusting the strategy, you know, whether that's in terms of land acquisition? I noticed this quarter your lot count was pretty flat, which is the first time it hasn't grown in a while sequentially. You know, in your start pace as far as building up more spec inventory, has anything changed on your strategy in response to what's, you know, seeming like it's gonna be a, you know, tough, interest rate environment for the foreseeable future? I would say that, you know, we went into 2022, and we've talked about this before, Alan. As Tom and I've said, we've never been in as good of a land position for our growth, this community count growth that we mentioned in our remarks. Was it going 190 to 100. Going to do 100. This year and many more in 2023. We own and control all that growth all the way through 2024. You know, it's just about 100% even in 2024. From a current land strategy, I'll use baseball terminology and we're focused on hitting singles. We continue to be very disciplined. I mean, the cash we're using today for land is land that we tied up one, two, three years ago, right? We're not buying land today at today's land prices unless they meet our underwriting criteria. We're being much more disciplined in today's environment because whatever we tie up today is really affecting 2025 and 2026. That's our strategy on the land side. The other thing is we mentioned our. We have been very, very focused on putting more and more land off balance sheet. We're up to almost 50%. Our goal is to be at 50% or greater. When you look at the diversification of our company, so I mentioned in the remarks, 70% of our deliveries will be outside of California by the end of 2024. All that land we own and control. That land is much more efficient from a capital standpoint. It gets back to those strategic points I keep mentioning. Returns, being efficient on operations and diversifying our portfolio product and price points, as Tom mentioned. The current land strategy is, as I said, in the baseball terminology, it's hitting singles. Got it. Yeah, and then I guess just the second part of that question. You know, I think you guys were kind of operating under a similar strategy. I know a lot of your peers are just as far as trying to ramp up spec starts and maybe holding those sales off market until they're further along in the construction process, given the cost inflation. So I'm just curious, you know, are you changing that thinking at all? Have you changed your pace of starts at all over the last four to six weeks, you know, given any uncertainty out there? What's the general thinking there? Alan, this is Linda. We've not changed our philosophy on this. We are able to get some more spec starts into the ground as we get more construction capacity. In the quarter, 50% of our starts were to be built and 50% spec. We started a total of 1,849 starts, which was a 37% increase over the fourth quarter and up 10% from Q1 of 2021. We're happy to see that level continue. Great. I appreciate that, Linda. If I can squeak in one more here. I thought I heard a comment earlier from Tom, maybe it was you, Doug, about locking buyers in backlog. Admittedly, I'm not sure what the current norm is, but I thought, you know, generally maybe 60 days out is where buyers can typically lock in their mortgage rates. Are you starting to do maybe extended locks or anything like that to ensure that buyers that might be several months out from delivery are locked in at a lower mortgage rate, or did I misunderstand that? No, you're right on, Alan. This is Tom. Locking has been a key initiative of ours, and we continue to work every day trying to educate buyers that it would behoove them to lock as soon as possible. You know, traditionally, buyers are interested in locking in 60 days out. We do offer longer-term rate locks, and we think it is wise to do so. We've allocated some of our typical financing incentive dollars to help them with those longer-term locks. We have the ability to lock in longer term for 270 days. We think that's a wise strategy for our buyers, and we continue to work on that. Got it. Just to be clear, that cost right now sounds like it's being split amongst you guys and the consumer, depending on the circumstance. Correct. Okay, perfect. Thanks, guys. Appreciate it. Our next question comes from the line of Carl Reichardt with BTIG. Please proceed with your question. Thanks. Morning, everybody. I wanted to ask Glenn about SG&A. You had the 20% drop in sales and marketing expense, and I think G&A was up 17%, which is a big mix shift there in the two components. I was just curious, was there a cost deferral there, some reallocation, or how was sales and marketing down on a dollar basis so much relative to delivery volume? On the sales and marketing side, it's really just the, what we talked about in the prepared remarks, lower advertising and marketing spend, just because the demand is still so strong that, you know, we're not needing to spend those dollars. We are seeing lower broker d ollars. Both the attachment rate is lower than it was a year ago, and the cost per delivery is lower than it was a year ago. That's, you know, a good sign for us and for the industry. Okay. Then on the gross margin guide, we've got an overall annual guide that's not dissimilar from what your second quarter guide is. Are you effectively not expecting the typical seasonal bump in GM in the back half of the year, especially as your volumes ramp? So the portion of your fixed that you cover you should get some leverage there. Is that a function of mix or a function of conservatism, or just, you know, what either geographic mix or product mix, you know, why your margins wouldn't at least see the typical seasonal expansion? Thanks. Well, for us, it is a little bit of mix, but it's also, you know, I think some builders are different in how they, you know, have a certain fixed cost that they, you know, expense on a quarterly basis as revenue grows or margin grows. For us, that's baked into the way we allocate our cost. That doesn't have as big of an impact for us as it does some other builders. That's just more of an accounting difference. For us, it's really just mix. All things being equal, you know, you shouldn't see a seasonality margin change for us, the way we do the accounting. Okay, great. Thanks, Glenn. Thanks, everyone. Our next question comes from the line of Jay McCanless with Wedbush. Please proceed with your question. Hey, thanks for taking my questions. Sticking on gross margin, cash lumber has been coming down for several weeks now, and like Carl, I would've thought maybe some of these costs coming in would help drive higher gross margin. I guess, you know, what are you seeing in the field on lumber pricing? Could it be a tailwind at some point if the prices keep going down like they have? Hey, Jay, it's Tom. We would love to see lumber become a tailwind, and we have seen it, you know, move off of the highs for the year. As you know, it's cyclical based on demand as well. Right now everybody's putting their year-end starts in the ground. We see it following a similar trajectory as we did last year. The hope is that it will continue to move off as we get later into 2Q and that certainly will be a benefit for us. That being said, obviously, you know, other costs are challenging as well. We continue to see increases in other material costs and labor. Got it. The other question I had. Oh, sorry. Go ahead, Doug. Yeah, Jay, I'll add, for the quarter, Tom, I think it was our costs, direct building costs went up 10%-15%. Right. It's still a very healthy cost environment. The lumber question is interesting, but there's so many components and there are so many input costs that are changing. Then you throw in the cost of oil and gas products or related products on the HVAC side that people aren't talking that much about. You see input costs across the equation going up still. Got it. I guess the other question just on where have cycle times gone and are you seeing any improvement there? Yeah, Jay, cycle times are certainly a challenge. Relative to year-over-year stats, our cycle times are running about three weeks longer than they were a year ago. Overall, our cycle times are about two months longer than pre-pandemic schedules. We're still challenged on cycle times. We have done some new initiatives around our sale to start, and we've seen some improvement in those timeframes, so that's benefiting our overall cycle times as well as our complete to close timeframes we've improved on. Overall, we've been able to take a few weeks back out of the schedule because of that. You know, I'm smiling here, Jay, because you know, we can talk about all the challenges on the supply chain, and it can get kind of negative a little bit. To be honest with you, I mean, I'm super proud of the team delivering, as Tom mentioned earlier, on our guidance, and we're sticking to our guidance for the rest of this year. We got a lot of wood to chop, but we've got an excellent management team that knows exactly what they're doing, pulling out all the stops across the supply chain. We're experiencing it, that plans, plans. Hey, we're not the only ones. Everybody should be doing it. I'm really proud of us, you know, hitting our numbers and exceeding them in most cases. Great. Okay. Thanks, guys. Appreciate it. Thanks, Jay. Our next question comes from the line of Mike Dahl with RBC Capital Markets. Please proceed with your question. Morning. Thanks for taking my questions. First one, I appreciate all the color on some of the financing environment. I have kind of a two-part follow-up. So it seems pretty clear that, you know, you're scrubbing the backlog thoroughly in terms of looking at those DTI requirements and true kind of cutoffs. You talked about rate locks. I'm wondering, you know, what portion of your backlog were you able to get into extended rate locks where they're not really absorbing the full brunt of what's happened over the past month? Then the second part is, are you seeing any other changes in terms of either LTVs or loan types, adjustable rate versus fixed? Anything else on that side that buyers are kind of using to offset the full impact of what we've seen on headline rates? Yeah, Mike, all good questions. Relative to the latter first, we started to see some inquiries around adjustable rate, but nobody is really engaging, and we haven't seen anybody shift to any alternate products. Everybody is still firmly planted into a 30 year fixed mode and mentality right now. We do anticipate that could become something that is desirable in the future. We'll keep you posted on that. Relative to locks, I don't have it broken down by exact longer term locks, but right now we've got for our Q2 backlog, 70% of that in a locked position. Then as we go out into Q3, so you're starting to look at some of those longer term rate locks, we're in the mid-30s% relative to a locked buyer. Okay. That's very helpful, Tom. Thank you. Then, my second question is back on the demand side, and you know, I appreciate kind of the moving pieces and your balance. If we look back at, you know, arguably the last time we could see kind of a bump in the road was 2018, 2019, and your sales pace was running about three a month. I know your product mix has shifted and the environment's different, but I guess in light of what you've kind of experienced in the past, and again, arguably that may have even been mild, how are you thinking about pace? You know, you're 60% above that 2018, 2019 level today, so maybe you know, what did you see and how is April tracking? But when you talk about kind of acknowledging that there's probably gonna be some choppiness, what is your framework for thinking about where your pace should be? The pace, I think we mentioned in our remarks in April, are similar to what we experienced in the first quarter. It's a good question, Mike. Historically, we ran our business at our price point in the 3-3.5 range for business planning. We run it today closer to 3.5-4 because our ASP and our growth of our non-California deliveries is dominating the playbook, as I mentioned earlier. When you look at that, we assume a better absorption. Yeah, we're enjoying some outsized absorption now, but, you know, as the Fed is, as I said earlier, locked and loaded to continue to tame this inflation bug, and they're gonna, you know, put some more, you know, cooling on the demand side of housing, you know, you'll see those paces come down, at least the way we're looking at it in our business planning. As Doug said earlier, we're demonstrating that in our disciplined underwriting relative to our land acquisition. We are underwriting to that 3.5-4.5 pace. The interesting thing, Mike, and we can talk about this for hours. We're almost getting up to the top of the hour. You know, there are so many variables. You've got the geopolitical concern, you've got inflation, you've got interest rates, you've got gas prices, you've got a labor market that's very constrained. You got a supply chain. You go back to 2018. We had a lot more supply. The resale market was much greater, Linda. There was a lot of product available. Mortgage rates got into the low 5%-5.5% range back in those days, as you remember, Mike. It really tempered, it kind of pulled back demand. All these cycles we go through are different. I continue to believe on a macro basis that there's more demand in this millennial group that we're still just tapping into, and there's just no supply when you look at the resale, the new home side. The constraints that we are facing as new home builders are significant. When you factor all those things in, yeah, we're gonna hit a bump in the road. When you look at the long-term macro, I continue to think it's gonna be very good for the new home builders. All right. Thanks, Doug. I appreciate that. Our next question comes from the line of Deepa Raghavan with Wells Fargo. Please proceed with your question. Hi, good morning, everyone. You know, just given all the supply chain comments I'm hearing from you, curious on your delivery cadence. Q2 sequentially appears a little lower versus historically, and second half deliveries are on the higher side, even at midpoint. Curious what drives the confidence in keeping the full year guide range for closings at this time? And also within, are you assuming any easing of supply or labor constraints or any color there that you could provide on the confidence that you have in the second half delivery? Yeah, Deepa. Yeah, this is Doug. I mean, the confidence is in our teams. I mean, we delivered on our guidance in the first quarter and it is taking longer to build homes, as Tom said. We've got a very strong team, and we have you know, very strong confidence in our guidance for the second quarter and the rest of the year. I got it. Clearly, Doug, Tom and Glenn, you're preparing to get defensive here a little bit. How about your vendors and ecosystem? I mean, are you seeing maybe land prices starting to maybe moderate given the rate headwinds? Are any of your product suppliers or vendors getting a little bit more cautious? Just curious what kind of defensive moves that you could also deploy should a slowdown become kind of evident maybe later in the year, next year, whenever. Well, I'll take part of that question. I mean, land prices are a function of a land residual based on current revenues and current costs, and we underwrite to very strict guidelines. You know, as I mentioned earlier, talking to Alan, we're hitting singles now. Whatever we're looking at today really doesn't deliver until 2025 or 2026. We've got a very strong land position at a very, very strong margin profile going into the next few years, which is another big difference, by the way, than 2018 and other cycles. I mean, when you're looking at, you know, goalposts of 2022-2026, 28% on margins, that's a pretty good buffer going into an uncertain market environment, which is our very strong land position that we own and control through 2024. You know, today's land prices are based on today's land residual. Got it. If I can sneak one quick one in. Any thoughts on your April order trends? I'll leave it at that. Thank you very much, and it was a great quarter. Thanks. Yeah, we mentioned on the prepared remarks that so far in April, demand's been consistent with the first quarter on an absorption basis, so continue to see really strong demand in April. Our next question comes from the line of Alex Rygiel with B. Riley. Please proceed with your question. Thanks, guys. A lot of my questions have been answered, but if you could just clarify, can you comment on how rates, the rise in rates have impacted your new community count opening plans? It has not impacted our new community opening plan. Then any quick thoughts on average selling prices and the strength in pricing? Obviously, pricing's been really, really strong for the last couple years, with existing home inventory so low. Do you still feel like you've got a little bit of pricing power out there to cover additional or future rising building material costs? Through the first quarter, we were able to cover, you know, our cost, Alex, with price increases. We, you know, based on our strong buyer profile that we've mentioned today on the call, we still feel that there is some pricing power out there. You know, we're really in the environment, we're trying to cover costs. We are not trying to raise price just to raise price right now 'cause we are being mindful of affordability. Excellent. Very helpful. Thank you. Our next question comes from the line of Alex Barron with Housing Research Center. Please proceed with your question. Good morning, gentlemen, and great results. I wanted to ask whether you guys track what percentage of the buyers you're seeing are, you know, coming in from a different state? That's my first question. My second question is, you know, assuming rates were to keep moving higher from here, how are you guys thinking about your product in the future? You know, are you gonna be building smaller homes? Or how would you know, counteract the effect of higher interest rates to try to keep the homes affordable? Thanks. I'll take Alex, it's Doug. I'll take the latter part of that question first 'cause it's actually strategically something we focused on several years ago by diversifying our product offering. You know, I mentioned earlier, 70% of our deliveries are going to be outside of California by the end of 2024. We have intentionally focused on more of that entry-level premium first move up across the nation, kind of even in California, as I think we mentioned in the first call, you know, we're about $100,000. Maybe it was $200,000. I can't remember the exact number. We have very affordable price points in the Inland Empire, even down to San Diego. We're really out of the luxury home building business, so. When you think about our product offering and where it's located, it affords a buyer. You know, when you've got average incomes, Linda, of $188,000, we have very strong buyer profile at that kind of main and main type of real estate location. As interest rates go up, as Tom mentioned, we've stress tested at 6%, but our buyer profile versus being at the very entry level, they're very payment sensitive, no doubt about it. You know, we don't. We're not hitting that type of buyer profile. My personal opinion is we're set up very well for a higher interest rate environment. By the way, some of the stuff you write is great. I love reading your reports. I think they're spot on. And one of the things you're gonna see is the consumer eventually will be going, as we saw, what, 10- 15 years ago, Tom and Linda, variable rate programs and so forth. I think we're positioned really in a sweet spot going forward in a higher interest rate environment. Linda, you can talk about the other question. Yes, Alex, in terms of the out-of-state buyers, in the first quarter, 16% of our home buyers had an address in another state when they purchased their home with us. That's up from 14% in the first quarter of last year. Some interesting changes in the mix of locations for us, where we're seeing more out-of-state buyers in this quarter, Maryland, and in Las Vegas, Raleigh and Charlotte, and in Houston and Austin. You may recall that, in Austin, out-of-state buyers really peaked for us in the fourth quarter of 2020, where they were 35% of our buyers. That's moderating somewhat with 22% of Austin buyers out-of-state this quarter. Okay, great. If I could ask one more. Sure. In terms of investors, what's your policy in terms of selling to investors? If you do sell to them, you know, what percentage is your maximum, I guess? Alex, thank you. This is Linda. That's a really great question. We do not sell to investors. We do a very thorough job of pre-qualifying all of our home buyers through our affiliate mortgage company prior to them purchasing. It would be, you know, less than 0.1% of our buyers that are investors. We've been able to maintain that, you know, very consistently, scrubbing our pre-qualified buyers prior to writing purchase agreements. Okay, excellent. Best of luck for the year. Thank you. Thanks, Alex. There are no further questions in the queue. I'd like to hand the call back to Mr. Bauer for closing remarks. We're at the top of the hour. It was a good hour of discussion and we appreciate everybody joining us today, and we look forward to catching up with everybody after Q2. Thank you, and have a great weekend. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.