D.R. Horton (DHI) Q4 2019 Earnings Call Transcript

D.R. Horton (DHI 0.78%)
Q4 2019 Earnings Call
Nov 12, 2019, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the fourth-quarter 2019 earnings conference call for D.R. Horton, America's Builder, the largest builder in the United States. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jessica Hansen, vice president of investor relations for D.R.

Horton. Thank you. You may begin.

Jessica Hansen -- Vice President of Investor Relations

Thank you, Melissa, and good morning. Welcome to our call to discuss our fourth quarter and fiscal 2019 financial results. Before we get started, today's call may include comments that constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although D.R.

Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to D.R. Horton on the date of this conference call, and D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements.

Additional information about issues that could lead to material changes in performance is contained in D.R. Horton's annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q, all of which are filed with the Securities and Exchange Commission. This morning's earnings release can be found on our website at investor.drhorton.com, and we plan to file our 10-K next week. After this call, we will post updated investor and supplementary data presentations to our investor relations site on the presentations section under news and events for your reference.

Now I will turn the call over to David Auld, our president and CEO.

David Auld -- President and Chief Executive Officer

Thank you, Jessica, and good morning. In addition to Jessica, I am pleased to be joined on the call by Mike Murray, our executive vice president and chief operating officer; and Bill Wheat, our executive vice president and chief financial officer. Our D.R. Horton team finished the year strong.

Pretax income for the fourth-quarter increased 9% to $660 million on $5 billion of revenue and our pre-tax operating margin was 13.1%. For the year, EPS increased 13% to $4.29 per diluted share, and consolidated pre-tax income increased to $2.1 billion on $17.6 billion of revenues. Our consolidated pre-tax margin for the year was 12.1%. We closed 56,975 homes this year, an increase of over 5,000 homes or 10% from last year.

Our homebuilding return on inventory was 18.1%, and our return on equity was 17.2%. These results reflect the strength of our operational teams, our ability to leverage D.R. Horton's scale across our broad geographic footprint and our product positioning to offer homes at affordable price points across multiple brands. Our homebuilding cash flow from operations in 2019 was $1.4 billion.

Over the past five years, we have generated approximately $4 billion of cash flow from homebuilding operations, while growing our homebuilding revenues by more than $9 billion or 117% and our earnings per share by 186%. During these five years, in addition to organically growing the business, we have invested approximately $1 billion in acquisitions and returned over $1.4 billion to shareholders through dividends and share repurchases, while reducing homebuilding debt by $1.3 billion. As a result, our return on equity increased by 540 basis points, while our homebuilding debt-to-capital ratio decreased by less than half of its level five years ago. Our strategic focus is to continue consolidating market share, while growing both our revenues and pre-tax profits, generating strong cash flows and returns and maintaining a flexible financial position.

With a conservative balance sheet that includes an ample supply of homes, lots and land to support growth and a good October sales pace, we are well positioned as we begin 2020. Mike?

Mike Murray -- Executive Vice President and Chief Operating Officer

Diluted earnings per share for the fourth-quarter of fiscal 2019 increased 11% to $1.35 per share compared to $1.22 per share in the prior-year quarter. Net income for the quarter increased 8% to $505 million compared to $466 million. Our consolidated pre-tax income increased 9% to $660 million in the fourth-quarter from $608 million and homebuilding pre-tax income increased 3% to $594 million from $578 million. Our fourth-quarter home sales revenues increased 10% to $4.8 billion on 16,024 homes closed, up from $4.4 billion on 14,674 homes closed in the year-ago quarter.

Our average closing price for the quarter was $299,500, flat with the prior year. Bill?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Net sales orders in the fourth-quarter increased 14% to 13,130 homes, and the value of those orders was $4 billion, up 16% from $3.4 billion in the prior year. Our average number of active selling communities increased 9% from the prior year and was flat sequentially. Excluding the builders we acquired earlier this year, our fourth-quarter net sales orders were up 11%, and our average number of active selling communities increased 2%. Our average sales price on net sales orders in the fourth-quarter was $302,300, up 1% from the prior year.

The cancellation rate for the fourth quarter was 23%, down from 26% in the same quarter last year. Jessica?

Jessica Hansen -- Vice President of Investor Relations

Our gross profit margin on home sales revenue in the fourth quarter was 21%, up 70 basis points sequentially from the June quarter. The sequential increase in our gross margin from June to September exceeded our expectations and was primarily due to lower sales incentives. Based on today's market conditions, we currently expect our home sales gross margin in the first quarter to be consistent with the fourth quarter, subject to possible fluctuations due to product and geographic mix as well as the relative impact of warranty, litigation and purchase accounting. Bill?

Bill Wheat -- Executive Vice President and Chief Financial Officer

In the fourth quarter, SG&A expense as a percentage of homebuilding revenues was 8.5% compared to 8.4% from the prior-year quarter. The increase in our fourth-quarter SG&A year over year was primarily due to compensation accruals related to increases in our stock price. For the full year, homebuilding SG&A was 8.7% compared to 8.6% in 2018. We did not achieve SG&A leverage this year after we lowered our revenue growth expectations in our fiscal first quarter, and worked to align our inventory levels and operations with our revised expectations throughout the year.

We remain focused on controlling our SG&A while ensuring our infrastructure adequately supports our growth and we expect to improve our SG&A rate in 2020. Jessica?

Jessica Hansen -- Vice President of Investor Relations

Financial services pre-tax income in the fourth quarter was $61 million, and the pre-tax operating margin was 44.8%. For the year, financial services pre-tax income was $166 million on $442 million of revenues, representing a 37.6% pre-tax operating margin. 97% of our mortgage company's loan originations during the quarter related to homes closed via our homebuilding operations and our mortgage company handled the financing for 63% of our home buyers. FHA and VA loans accounted for 48% of the mortgage company's volume.

Borrowers originating loans with DHI mortgage this quarter had an average FICO score of 720 and an average loan-to-value ratio of 89%. First-time homebuyers represented 50% closings handled by our mortgage company, up from 49% in the prior-year quarter, reflecting our continued focus on offering homes at affordable price points for entry level buyers. Mike?

Mike Murray -- Executive Vice President and Chief Operating Officer

We ended the year with 27,700 homes in inventory, essentially flat with last year. 16,000 of our total homes were unsold, of which 5,200 were completed. Our fourth-quarter homebuilding investments in lots, land and development totaled $990 million, of which $610 million was to replenish finished lots and land and $380 million was for land development. For the year, we invested $3.7 billion in lots, land and development.

David?

David Auld -- President and Chief Executive Officer

At September 30, our homebuilding lot position consisted of approximately 307,000 lots, of which 40% were owned and 60% were controlled. 30% of our total owned lots are finished and at least 54% of our controlled lots are or will be finished when we purchase them. We continue working to increase our lot position being developed by third parties by supporting the growth of Forestar's national lot manufacturing platform and expanding our relationships with lot developers across the country. Our current lot portfolio includes an ample supply of lots for homes at affordable price points and continues to provide a strong competitive advantage.

Mike?

Mike Murray -- Executive Vice President and Chief Operating Officer

Forestar, our majority-owned subsidiary, is a publicly traded residential lot manufacturer now operating in 51 markets across 20 states. At September 30, Forestar's lot position consisted of 38,300 lots, of which 29,700 are owned and 8,600 are controlled through purchase contracts. 79% of Forestar's owned lots are already under contract with D.R. Horton, or subject to a right of first offer under the master supply agreement.

Forestar exceeded its guidance for the year by delivering 4,132 lots and generating $428 million of revenue for its fiscal year ended September 30. Forestar expects to deliver 10,000 lots and generate $750 million to $850 million of revenue in fiscal 2020, and to deliver 12,000 lots and generate $900 million to $1 billion of revenue in fiscal 2021. These expectations are for Forestar's stand-alone results. Forestar is making steady progress in building its operational platform and capital structure to support its significant growth plans.

During the quarter, Forestar issued approximately 6 million shares of its common stock in a public offering. Net proceeds from this offering were approximately $100 million, which will help force -- which will help support Forestar's future growth. After the issuance, D.R. Horton's ownership percentage of Forestar decreased from 75% to approximately 66%.

Forestar plans to opportunistically access the capital markets as necessary to provide additional capital for long-term growth. Forestar is separately capitalized from D.R. Horton and is targeting a long-term net debt-to-capital ratio of 40% or less. We are excited about Forestar's growing operating platform and the value this relationship will create over the long-term for both D.R.

Horton and Forestar's shareholders. David?

David Auld -- President and Chief Executive Officer

DHI Communities is our multifamily rental company focused on suburban garden-style apartments with operations primarily in Texas, Arizona and Florida. DHI Communities currently has four projects under active construction and two projects that were substantially complete at the end of the quarter, one of which was under contract to sell at September 30. During 2019, DHI Communities sold two multifamily rental properties for $133.4 million and recorded a gain on sale of $51.9 million. DHI Communities total assets were $204 million at the end of the year.

We expect DHI Community assets to increase significantly in 2020 as its pipeline of multifamily rental projects grows. We also expect to sell two rental properties in 2020. Bill?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Our balanced capital approach focuses on being flexible, opportunistic and disciplined. Our balance sheet strength and operating results have increased our flexibility, and we are utilizing our strong position to enhance the long-term value of the company. During fiscal 2019, cash generated by homebuilding operations was $1.4 billion, bringing our cumulative cash generated from homebuilding operations for the past five years to approximately $4 billion. At September 30, we had $2.2 billion of homebuilding liquidity, consisting of $1 billion of unrestricted homebuilding cash and $1.2 billion of available capacity on our revolving credit facility.

Our consolidated leverage improved 100 basis points from a year ago to 25.3%, and homebuilding leverage improved 440 basis points to 17%. The balance of our homebuilding public notes outstanding at fiscal year-end was $1.9 billion, and we have $500 million of senior note maturities due in the next 12 months. Subsequent to year-end, we issued $500 million of 2.5% senior notes due in 2024. We also extended the maturity date of our revolving credit facility by just over a year and increased its capacity to $1.59 billion.

At September 30, our stockholders' equity was $10 billion, and book value per share was $27.20, up 14% from a year ago. During the quarter, we paid cash dividends of $55.5 million and repurchased 2.1 million shares of common stock for $104.3 million. For the year, we paid cash dividends of $223.4 million and repurchased 11.9 million shares of common stock for $479.8 million. As a result of our share repurchases this year, we reduced our outstanding share count by 2% compared to a year ago.

The company's remaining stock repurchase authorization at September 30 was $895.7 million with no expiration date. Based on our financial position and outlook for fiscal 2020, our board of directors increased our quarterly cash dividend by 17% to $0.175 per share. We currently expect to pay dividends of approximately $250 million in fiscal 2020. Jessica?

Jessica Hansen -- Vice President of Investor Relations

Looking forward to the first quarter of fiscal 2020, we expect to generate consolidated revenues of $3.7 billion to $3.8 billion, and our homes closed to be in a range between 12,100 and 12,400 homes. We expect our home sales gross margin in the first quarter to be approximately 21% and homebuilding SG&A in the first quarter to be around 9.5% of homebuilding revenues. Based on today's market conditions, our expected growth for fiscal 2020 is still in the mid- to high single-digit percentage range for both consolidated revenues and homes closed. We currently expect to generate consolidated revenues for the full year of $18.5 billion to $19 billion and to close between 60,000 and 61,000 homes.

We forecast an income tax rate for fiscal 2020 of approximately 25%, and we expect to reduce our outstanding share count by approximately 2% at the end of fiscal 2020 compared to the end of fiscal 2019. We also expect to generate homebuilding cash flow from operations in excess of $1 billion again during fiscal 2020. David?

David Auld -- President and Chief Executive Officer

In closing, our results reflect the strength of our well-established operating platform across the country. We are focused on consolidating market share while growing our revenues and profits and generating strong annual cash flows and returns, while maintaining a flexible financial position. We are well positioned to do so with our conservative balance sheet, broad geographic footprint, affordable product offerings across multiple brands, attractive finished lot and land position, and most importantly, our outstanding experienced team across the country. We congratulate the entire D.R.

Horton team on closing the most homes in a year in company history, and we thank you for your hard work and accomplishments. We're incredibly well positioned to continue growing and improving our operations in 2020. This concludes our prepared remarks. We will now host questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of John Lovallo with Bank of America. Please proceed with your question.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Thank you for taking my question. I guess, first of all, the cash flow from operations target of greater than $1 billion could be interpreted as being somewhat conservative given the 2019 performance of $1.4 billion. And what appears to be a set up here for improved profitability in fiscal year '20.

What do you see kind of as the biggest variables here? And is there any reason that you can point to why cash flow would be lower on a year-over-year basis?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah. John, we expect to generate consistently strong cash flow in excess of $1 billion. Year-to-year, that number can move around a little bit just depending on timing of investments in homebuilding. And given that we're early in the year.

And we want to see how demand goes through the year, that could impact our investment levels in the business. So a greater than $1 billion is certainly a solid range. And that gives us flexibility, then as we move through the year, and we'll update that estimate as we need to.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

OK. That makes sense. And then last year, I think you guys outlined a potential acquisition target range of like $400 million to $600 million. How are you guys thinking about that heading into 2020? And what does the pipeline look like?

Bill Wheat -- Executive Vice President and Chief Financial Officer

We're still actively looking at some opportunities, John. But we're very selective and wanting to be very targeted in what we're doing there. So while we're looking at some, they're very hard to predict when they're actually going to happen. This year, we don't have that same level of clarity to a number that we had at this time last year.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

OK. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question.

Alan Ratner -- Zelman and Associates -- Analyst

Hey, guys. Good morning. Congrats on a strong close to the year. So my first question, I've always kind of thought about the homes in inventory data point that you guys provide as a little bit of a leading indicator in terms of how you see the business growing over the next few quarters.

And I think this is the first quarter in a while where it's actually been down a bit on a year-over-year basis. And I'm just curious, as you think about that mid- to high single-digit growth target in 2020, should we start to see that number move higher? Or is there any kind of change in the way you're thinking about having specs on the ground and homes in inventory and maybe any shifts in demand for to-be-built homes versus specs that would be potentially driving that number lower than I would have suspected?

Bill Wheat -- Executive Vice President and Chief Financial Officer

I think, Alan, as we're seeing a similar breakdown between our to-be-builts and our available homes that we have in inventory, but we're excited looking at going into this year with a good demand environment and an opportunity to improve -- continue improving our returns. And part of the way we've talked about last quarter of improving returns is to focus on improving our home inventory turnover. And so that's something we're excited about the opportunity to deliver on in fiscal '20.

Alan Ratner -- Zelman and Associates -- Analyst

Great. And then I guess just a follow-up on that, but implied there, I guess, is you're still confident that you can maintain the very high backlog conversion rates that you've delivered in the past and while keeping a lower inventory level in total? Is that the way to interpret that?

Bill Wheat -- Executive Vice President and Chief Financial Officer

I think you will see our inventory level increase from where we are at this point in the year, but we're looking to be more efficient with the capital. So we look to see a higher overall turnover rate.

Alan Ratner -- Zelman and Associates -- Analyst

OK. That's helpful. And if I could just ask one more. Investors obviously have been very focused on the 10-year treasury yield, which has been climbing off of recent lows of late and still incredibly low levels from an absolute standpoint.

But you mentioned the strong sales environment in October, which obviously coincides with that move up we've seen in recent weeks. How do you see the rate environment today? I mean is there any -- what you see maybe pull-forward from buyers that are trying to jump in before rates continue to move higher? Is it not a concern at all of yours in the marketplace? Any commentary you can give just in terms of what you're thinking about or seeing on the ground from the rate environment would be helpful.

David Auld -- President and Chief Executive Officer

I think anything that impacts affordability is always going to be a concern. I will say, when you look at what drives homebuilding, which is job growth and the overall economy. We feel very, very good about what's happening there. And homes, they're affordable as they're going to get.

I do think, yes, there may be a little bit of pull-forward demand. But right now, the market feels really, really good.

Jessica Hansen -- Vice President of Investor Relations

And Alan, it's one positive came out of last year at this time. And what we experienced, it was a renewed focus in the field for us to stay and make sure we have those affordable product offerings kind of regardless of what interest rates are doing. So we've continued to see our average square footage come down slightly. It was down about 3% on a year-over-year basis again, and we've proactively gotten the houses out there that we believe are affordable in today's market, and we'll continue to adjust as necessary to whatever rate environment we find ourselves in.

But clearly, today, is a little bit better rate environment than it was last year at this time.

Alan Ratner -- Zelman and Associates -- Analyst

Sure. Appreciate that guys. Thanks a lot.

Operator

Thank you. Our next question comes from the line of Carl Reichardt with BTIG. Please proceed with your question.

Carl Reichardt -- BTIG -- Analyst

Thanks. Good morning all. I wanted to ask David a little bit about competition, especially for entry-level lots in particular. A number of your peers are making a move in the direction that you made some time ago.

And you've had a couple of smaller peers talk about how it's been harder to find assets out where they'd like to build smaller homes. Can you talk a little bit about what you're seeing competitively? Obviously, a lots to play, it is what it is, and it's strong, but you'll be looking for more -- there'll be more looking in the same area as you are. So I'm just curious as to your thoughts there?

David Auld -- President and Chief Executive Officer

Carl, we compete every day. And yes, I do think that we're seeing more people attempt to get lower in price point and drive better affordability. But again, like we've talked about in the past, our positions are very long, very deep, and we don't intend to give up market share in that that's servicing that bar. I will say demand is still very, very deep.

And I think from my travels that supply is still tight, especially as you achieve true affordability. So but we take a lot of comfort in the fact that we've got a long runway in very affordable positions, deep and long, so.

Carl Reichardt -- BTIG -- Analyst

Thanks, David. And then Bill, I just -- I want to follow up on Alan's question about inventories. I think you've made a few reclassifications to what's unsold versus removed models, I think. But look, thinking back to, I think, three years ago or so where you entered the year feeling like you were short a little bit of inventory and it hurt you from a delivery perspective.

I just want to make sure you're not feeling that way now, you feel comfortable, the inventory that you got in the ground as you head into this first quarter is there, and you're not feeling the same way that you did three years ago.

Mike Murray -- Executive Vice President and Chief Operating Officer

Carl, this is Mike. And I would say it's different from three years ago that not just -- we feel really good about the focus we've had on housing turns and how to improve that as well as having the lots on the ground to support the starts that we'll need to be making over this quarter to support what we hope to be a really robust spring selling season. So three years ago, we were struggling, not just with the inventory levels of housing, but also with our finished lot positions behind that.

Jessica Hansen -- Vice President of Investor Relations

So we feel very comfortable with the 60,000 to 61,000 annual target, but the reason we right now wouldn't say we're comfortable moving higher than that for this next fiscal year is because where we're starting from, from a home's perspective. So 60,000 to 61,000, we feel very comfortable with.

Carl Reichardt -- BTIG -- Analyst

All right. Thanks, Jessica. Thanks all.

Operator

Thank you. Our next question comes from the line of Truman Patterson with Wells Fargo. Please proceed with your question.

Truman Patterson -- Wells Fargo Securities -- Analyst

Hi. Good morning, everybody and nice results. First, I wanted to touch on SG&A. It came in a little bit above your guidance.

Could you just walk us through the drivers of this? And how we should think about incremental SG&A going forward? I'm really thinking about 2020, you mentioned some leverage. But you guys are guiding to mid- to high single-digit revenue growth, which is pretty much what you all did in 2019 and your SG&A was kind of flattish. Could you just kind of break it out why 2020 would improve, while 2019 didn't necessarily tick down?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Sure. Sure, Truman, this is Bill. Specifically, in the fourth quarter, we missed our guidance. That was specifically due to some of our compensation accruals are tied to changes in our share price.

And as our stock price increased pretty sharply in the fourth quarter, we had to increase a number of those accruals. And that entirely accounts for the miss versus our guidance for the Q4 SG&A rate. As you look back over the full year of '19, and as we look forward to '20, though, it's a little bit of a broader, a broader discussion. As you recall, in fiscal 2019, at the start of the year, we had expectations to grow more in the double-digit pace.

But I think very early in the year, we saw a softer market in the first quarter. We lowered our revenue expectations. And -- but we were -- we had our infrastructure in place and homes in place, homes in inventory obviously to support a higher revenue number. So really, throughout this year, we've been working to adjust our inventory levels and our operations to kind of fit that lower revenue expectation.

And we've run typically about 10 basis points higher than the prior year, all year long. As we go into fiscal 2020, while we have the same revenue expectations that we ultimately achieved in '19, we feel our positioning is appropriate for that revenue. And with mid- to high single-digit revenue growth, we should see SG&A leverage. And so we do expect to improve on our SG&A rate versus 2019 as we go into fiscal 2020.

Truman Patterson -- Wells Fargo Securities -- Analyst

OK. Thanks for that. And then on the financial services side, I think it's the best result you guys have had in history. Could you just walk us through the drivers of this? And possibly how sustainable it is going forward?

Jessica Hansen -- Vice President of Investor Relations

Sure. Truman, it was mainly due to favorable market conditions just because of the low interest rate environment. So that was by far, the strongest driver. Our mortgage company, though, has also done a fantastic job working on becoming more efficient.

They've improved their capture rate. I think 63% this quarter was one of the highest we've seen in quite some time. But a normal historical operating margin is more in the 30% range, the low-30s and we do anticipate that's what they're ultimately going to return to, but no question, this year was a very strong performance for that business.

Truman Patterson -- Wells Fargo Securities -- Analyst

OK. Thank you all.

Operator

Thank you. Our next question comes from the line of Eric Bosshard with Cleveland Research. Please proceed with your question.

Eric Bosshard -- Cleveland Research -- Analyst

Good morning. Question on gross margin. As you look at price and incentives and gross margin, curious how you would compare your thinking for the coming year relative to the year that you just completed?

Mike Murray -- Executive Vice President and Chief Operating Officer

I think we're going to see, frankly, a more of the same. We see a lower level of incentives than where we've been sequentially through the year. Margins have come up nicely as we walked from the second quarter low that we've had. We've been very intentional about trying to manage that to drive the best returns.

And looking into fiscal '20, as clear as our cloudy ball shows this, we're expecting margins to be about flat, kind of where we've been in the fourth quarter.

Eric Bosshard -- Cleveland Research -- Analyst

And then secondly, in terms of Forestar and option. Can you talk about the progress you've made and where that number is going and how it's going -- how you would characterize how it's going?

Mike Murray -- Executive Vice President and Chief Operating Officer

Overall, we feel really well about the progress we've made to get to 60%. I know that's a little bit bouncy quarter to quarter, and we've talked about it, it's a dynamic number that measured at any quarter end, it's going to move a little bit directionally. I hope we get a little more progress on that this year and the trend continues. Forestar continues to add to their operating platform, add to their team, which is a great first source of -- for us, for a third-party developer.

And at the same time, we work really hard developing relationships with other third-party developers as well. And continuing to expand those relationships that we have in various markets and getting people in markets where we have not historically been able to get developers to step in, to step in and complete lots for us. It's an ongoing long-term process.

Eric Bosshard -- Cleveland Research -- Analyst

And the destination, ultimately, the 60%, where would you like that number to get to? And over what time frame?

Mike Murray -- Executive Vice President and Chief Operating Officer

Hard to say an ultimate number, higher than where it is today. But it's something we'll probably be working at very hard for our entire careers here at D.R. Horton.

Eric Bosshard -- Cleveland Research -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from the line of Stephen Kim with Evercore ISI. Please proceed with your question.

Stephen Kim -- Evercore ISI -- Analyst

Yeah, thanks very much guys. Mike, just wanted to clarify one thing. You just said, I think, with respect to margins in 2020 that you're thinking you can probably be flat with where you were in 4Q '19. So in other words, kind of around that 21% gross margin in 2020 is kind of what you're thinking, right?

Mike Murray -- Executive Vice President and Chief Operating Officer

Yes, sir.

Stephen Kim -- Evercore ISI -- Analyst

OK. Great. Just wanted to clarify that. That's great.

The second question relates to SG&A. So I believe, Bill, you were talking about the impact of the stock-based compensation in 4Q, in your September quarter, you made adjustments to your accruals for the higher stock price. I was wondering if -- there shouldn't be any lingering impact from that, let's say, if your stock price were to remain flat into next year, should there? The reason I'm asking is because your 1Q guide on SG&A is for flat, even though your closings are up about 7%, just kind of like what you're thinking for the year. So just trying to figure out why we wouldn't see a little more leverage in 1Q like you're expecting to see for the full year?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Right. Yeah, the change in the accrual should not have any lingering effect, that you're correct in that assumption. As we look at our absolute level of SG&A spend going into the first quarter, along with our revenue guide, we believe the nine and a half percent is the level that we feel like we will be at. If you do go back a year ago, though, as you're comparing year over year, in the first quarter we had some -- I hate to say benefit, but we did have some benefit from a reduction in our stock price life turns.

So some of those accruals were pulled down a year ago in the first quarter. So it's simply timing on that basis, but it does move the needle a bit. It can move it 10 to 20 basis points.

Stephen Kim -- Evercore ISI -- Analyst

Got it. Yep, that's very clear. And then lastly, I think in your opening remarks, you talked about October off to a strong start. Was just wondering if you could give us a little bit more color.

Are we seeing in any way, an acceleration into October in any way, either in terms of being able to reduce incentives at a more aggressive pace? Or any other kind of color you can provide around the demand environment in October.

David Auld -- President and Chief Executive Officer

Well. This October feels so much better than last October but...

Stephen Kim -- Evercore ISI -- Analyst

Sure.

David Auld -- President and Chief Executive Officer

It's hard not to be a little bit excited about what the year brings. I can tell you the -- we're not thinking that we're going to see a margin expansion because I do believe there's going to be more competition. But where we see the business right now today is very, very solid and feel comfortable at least today with sharing that we're looking for pretty flat margins going forward, which as you know, we're not typically the most optimistic group out there.

Stephen Kim -- Evercore ISI -- Analyst

Right. But just the hardest working. Appreciate it guys.

David Auld -- President and Chief Executive Officer

Yes, sir.

Operator

Thank you. Our next question comes from the line of Matthew Bouley with Barclays. Please proceed with your question.

Matthew Bouley -- Barclays -- Analyst

Hi. Good morning. Thank you for taking my questions. Impressive results.

I want to start with a question on the Q1 gross margin guide, consistent with Q4. Can you just kind of go through some of the sequential puts and takes in that? So I guess what are you guys assuming around incentives and direct costs and perhaps, if there was any purchase accounting that's still rolling off?

Jessica Hansen -- Vice President of Investor Relations

It's really just looking at kind of our core lot level gross margin and assuming all else remains equal. So really no impact one way or another from warranty and litigation or interest or property taxes. Now those can move the needle quarter to quarter, but are really hard to project. So right now, they are approximately 21%, would assume those are relatively in the same range as they were in Q4.

And then we're able to maintain a flat pricing environment or a pricing environment that has increased at the same level as our cost. So that's what we saw this quarter sequentially -- well, actually, sequentially, we saw an improvement because of the continued pullback on incentives, which we think we're through the most of, but our revenues per square foot were up about 2%, and our stick and brick costs were up about 1%.

Matthew Bouley -- Barclays -- Analyst

OK. Thank you for that color, Jessica. And then I wanted to ask about some of the regional trends as well because it looked like the South Central really accelerated. So any elaboration if you guys are sort of leaning into Texas again.

So you guys have seemingly pulled back a bit there the past couple of quarters. And then I guess any color on the West and California as well.

Bill Wheat -- Executive Vice President and Chief Financial Officer

So I think looking at taking the second part of your question first. California and the West, we're seeing good sales trends out there. We've kind of refocused ourselves on maintaining affordability. And at the price points we're offering our teams out there doing a good job executing for those buyers.

And we're seeing the buyers respond. In Texas, it's home. We've been dominating here for a long time and will continue to do so. And those communities are performing exceptionally well, great teams on those projects.

And the economy is strong here and the interest rate adjustments, as David mentioned before, helps affordability, but we have always been focused on meeting that affordable need in the state of Texas, and we're seeing great response.

David Auld -- President and Chief Executive Officer

I'll just add that a lot of it's positioning. And I think coming into this year, we feel very good about the way we're positioned in both, really, California with the price that we've been able to drive down to, and in Texas with the lots out in front of our building operation.

Matthew Bouley -- Barclays -- Analyst

All right. Appreciate the color. Thank you.

Operator

Thank you. Our next question comes from the line of Michael Rehaut with J. P. Morgan.

Please proceed with your question.

Michael Rehaut -- J.P. Morgan -- Analyst

Hi. Thanks. Good morning everyone. First question I had was on how you're thinking about growth next year? And what I mean by that, obviously, you gave the guidance much appreciated and in line with your prior expectations.

But if you go back over the last 5, 10 years, you've had a couple of different initiatives that I think have really been extremely helpful in driving the growth and taking share around the Horton Express and around the Emerald. I think you've talked in the past about other strategic goals to allow for consistent growth going forward, including the Freedom Homes, the active adult maybe even getting deeper in the east footprint as areas of opportunity. I was curious, as you look over the next year or two, how prominent those areas of strategic focus will be or the role that it will play in allowing you to continue to reach higher heights obviously getting the 60,000, you're up now consistently for the last three or four years, you're going up 4,000, 5,000, 6,000 closings per year. So I was just curious, as you look at the next year or two, achieving the next ladders up of growth, is that going to be more broad-based, just kind of market driven? Or do you see specific gains in some of those strategic initiatives that you've talked about in the past?

David Auld -- President and Chief Executive Officer

I think on the last call, Bill talked about the fact that we're only top five and -- yeah, top five -- No. 1 in 13 -- top five in 30.

Bill Wheat -- Executive Vice President and Chief Financial Officer

32.

David Auld -- President and Chief Executive Officer

32 markets. So we've got a lot of runway in those markets. And as to the brand, we're trying to drive optionality for the buyers and to create a focus and product to meet everybody's needs in the market. So I guess I feel like we've got all kinds of runway to get better in markets that we're not doing as good as we should be and offer products that everybody's going to want to buy.

Jessica Hansen -- Vice President of Investor Relations

So Rehaut, in addition to product positioning and our current footprint and deepening our market share. In our current footprint, we have continued to expand where we operate and our market count this quarter actually moved from 87 markets to 90. And so we continue to assess where there are good permits and jobs in areas that there isn't affordable housing on the ground, which, honestly, is almost every market across the entire U.S. So we'll look to continue to expand our footprint as well.

Mike Murray -- Executive Vice President and Chief Operating Officer

And then you did mention kind of the east and the Midwest. With our acquisitions a year ago in the Midwest, we're working with those teams, and they're growing their platforms. There's opportunity for that to be a stronger contributor for growth for us going forward. And then we've talked about the Northeast, and we continue to, day by day, improve our operations there, and our teams are working hard, and we think that's going to be an increasing driver of our continued growth as well.

Michael Rehaut -- J.P. Morgan -- Analyst

That's great. I appreciate all the color there. I guess secondly, as you think about order growth or closings growth next year. This year, you kind of moved from sales pace being maybe flattish or slightly up to flat.

And then this quarter, excluding acquisitions, you had more of a high single-digit type of growth. And that's consistent with a lot of the builders that have seen an improved market as well as an easier comp. As you get into next year, how should we expect the balance of community count and sales pace to influence the overall unit volume growth?

Jessica Hansen -- Vice President of Investor Relations

And Mike, after we cycle through this next quarter, really, that's when we acquired the three companies we did. And really what has been putting our community count growth in that high single-digit range. So without those acquisitions, we've been trending in a pretty low single-digit range, only 1% or 2% on a year-over-year basis. And I think we really just kind of anticipate more of the same in fiscal '20.

So community count slightly up. And it can be a little choppy along the way.

Mike Murray -- Executive Vice President and Chief Operating Officer

But we are seeing, as with our refocus on affordability and ensuring that we're driving that at everywhere that we can. We are seeing improved absorption per community. And so with our guide of mid- to high-single-digit growth on a community count of low single digit, we're assuming further improvement in per community sales price.

Michael Rehaut -- J.P. Morgan -- Analyst

Great. Great. Very helpful. Thanks a lot guys.

Appreciate it. Good luck for the -- for fiscal '20.

Mike Murray -- Executive Vice President and Chief Operating Officer

Thank you, Mike.

Operator

Thank you. Our next question comes from the line of Megan McGrath with Buckingham Research Group. Please proceed with your question.

Megan McGrath -- Buckingham Research Group -- Analyst

Thanks. Good morning. I guess I wanted to ask if you think about this fiscal year 2019. We went through a lot of movements in interest rates, both up and down and ticking back up a little bit.

But I guess looking back, could you tell us, did anything surprise you in terms of the reaction of your buyer groups to those rate moves which had been debated for a while, what would happen? And if rates continue to tick up, is there anything you would do differently or adjust your strategy as we move forward?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Megan, we saw the buyers, every time that affordability is constrained, the buyers have to readjust and there's certainly a pause in the marketplace, and interest rates are a big driver of affordability. At the same time, as Jessica mentioned earlier, that gave us the real focus to get back into our product and think about what we were offering and try to bring housing prices down for our customers at a way that provides -- still provided a good margin for the company. And we did that, and we'll continue to adjust to the marketplace for whatever the interest rate environment gives us. I do think one of the things that we are seeing is that there's continued job growth in the economy, and there's some continued wage growth.

And that's very helpful for households. And that large population, that large demographic is aging one year further down and they're having life events that often drive them to prefer single-family housing as their housing choice. And we're well positioned to provide them with a home for that.

Megan McGrath -- Buckingham Research Group -- Analyst

Great. Thanks. And then just a follow-up on gross margin you talked about flattish from the fourth quarter. Could you maybe walk us through how you're thinking about the headwinds and tailwinds of the big components of gross margin as we look into next year, generally, labor, materials and pricing?

Jessica Hansen -- Vice President of Investor Relations

So it's really just more of the same, Megan. So what we're saying in that guide is that we don't have the same level to pull back on incentives as we did this year. We pretty much have cycled through the higher incentives that we had to institute last year at this time to drive the sales pace. So we continue to have some limited cost pressures on the labor front, that's consistently been somewhat of a headwind, but we've worked to offset it in other categories.

And generally, now that we've also cycled the higher lumber costs, our material costs are net neutral. Our purchasing team is doing a great job of when we do have a category that the cost is going up, they find a category where we can look to offset it. So I think our base case would be just to be able to keep those costs in line with whatever type of pricing power or lack of pricing power we might have. As a reminder, though, really, the fiscal '20 gross margin is going to be dependent on the strength of the spring selling season.

And so this is where we sit today. We feel good about maintaining our gross margin around the range it is right now, but it's really going to be dependent on the spring.

Mike Murray -- Executive Vice President and Chief Operating Officer

As you know, we're focused, first and foremost, on returns. And so we're going to balance margin, pricing, incentives and pace to generate the best return for community. Right now, we see a good market in front of us. And so that would indicate we should be able to maintain margins.

Megan McGrath -- Buckingham Research Group -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Jack Micenko with SIG. Please proceed with your question.

Jack Micenko -- Susquehanna International Group -- Analyst

Hi. Good morning. Bill, I wanted to revisit the cash flow comment, I think, from maybe the first lead-off question on the call, $1.4 billion this year, north of $1 billion next year. The October issue, very nice refi of the February 2020 coming due.

Is anything around the cash flow guide contemplating the December 2020. I know that's a 2%, that's a pretty attractive yield. It's going to be probably hard to beat that. But is any of that in the guide for cash flow for next year?

Bill Wheat -- Executive Vice President and Chief Financial Officer

No, that would be beyond our fiscal year. So we're kind of looking at that as a fiscal '21 event. So naturally, with the two and a half percent five-year notes we issued in October, that does essentially provide the funds to refi and pay off the maturity that we have in the spring, the $500 million we have in the spring. So that gives us flexibility in our liquidity as we go into the year to invest further or be able to be opportunistic as we need to.

Jack Micenko -- Susquehanna International Group -- Analyst

OK. Great. And then on DHI Communities. Can you maybe help us size what those gains? Obviously, it's a market transaction deal, so I'm not looking for ZIP Code, but maybe area code around maybe gains, timing? And then 2b of the question.

Thoughts on single-family rental. There are some going that way among your peers, some have said, that's not really for us. Just curious, as you're growing the rental business overall, where your current thinking is on the single-family side?

Bill Wheat -- Executive Vice President and Chief Financial Officer

So in DHI Communities, we mentioned, we do expect to sell another two projects in fiscal 2020, one of which is under contract to sell as of September 30. So we would expect the first project to close in our first fiscal quarter. And then we expect one more over the course of the year. A little hard to comment on individual transactions around the size of potential gains until they close.

But our projects are ranging in size from the high 200 units up to 350 to 400 units in general. And so they're in a fairly tight range in terms of size. So I wouldn't expect significant variations versus the ones we saw this past year. And then in terms of single-family rentals.

Mike Murray -- Executive Vice President and Chief Operating Officer

We're continuing to look at that business, Jack. We think it's -- we have an opportunity to provide some value in that space. And we're looking for the best ways we can do that right now.

Jack Micenko -- Susquehanna International Group -- Analyst

All right. Thank you.

Operator

Thank you. Our next question comes from the line of Mark Weintraub with Seaport Global. Please proceed with your question.

Mark Weintraub -- Seaport Global -- Analyst

Thank you. Good morning. I certainly understand with the strong backlog, you've got good visibility on the next six months, whatever margins, et cetera. I guess I was a little surprised that when talking about labor and materials, you wouldn't potentially be anticipating more pressure as we get to later into next year, given the order growth that we've been seeing.

And given some of the inventory dynamics, which affected you this year and probably the industry as well, which would suggest there's going to be more stress on the homebuilding complex and so more stress on labor in particular. Any further thoughts on how you are thinking about that and your ability to be in a position because it sounded like it wasn't so much that you'd be raising price, but you thought that those wouldn't be material impacts to your year ahead?

Bill Wheat -- Executive Vice President and Chief Financial Officer

So part of the confidence we had in our cost outlook is looking at a lot of the national contracts we have from our scale. Secondarily, at a local level, the scale we have certainly supports great labor relationships that we've had over the years and our ability to continue to source adequate labor to build our homes on a timely fashion is very constructive for us. And there is cost pressure because the market is strong, we would also expect that there's potentially a lower level of incentives that would help us mitigate any of those cost leakage that we had come through.

David Auld -- President and Chief Executive Officer

I'll just add that we worked very, very hard over the years to drive a process that has allowed us to drive more square footage with the same labor hours. And that gives us a lot of comfort and confidence that when labor does get tight again, which I anticipate it will, in the spring that we're going to command the greatest percentage of it.

Mark Weintraub -- Seaport Global -- Analyst

And maybe just as a follow-on, did you think your local market scale access is an even bigger advantage in that type of market than what we've been seeing? And how does that play out as?

David Auld -- President and Chief Executive Officer

Well, absolutely. I think it's a local market scale. I think it's also our commitment to drive consistent production at each flag. So we get the trade base into the communities.

We -- our absorption in our typical community is very, very high. And so we keep them there. And they're not out looking for work while they're waiting on us to start houses. So it's just a process.

It's something we've been working on for a long, long, long time. And I think we do have a loyal trade base and good markets, bad markets, they know they're going to get paid. So that is a competitive advantage for us.

Mark Weintraub -- Seaport Global -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Ken Zener with KeyBanc Capital Markets. Please proceed with your question.

Ken Zener -- KeyBanc Capital Markets -- Analyst

Good morning, everybody.

David Auld -- President and Chief Executive Officer

Good morning.

Ken Zener -- KeyBanc Capital Markets -- Analyst

All right. Checking there. I know. I know.

Let's start with intra-quarter order closings, please. 3% of closings were intra-quarter orders of closings?

Jessica Hansen -- Vice President of Investor Relations

Sure. It was right where we typically expected in the, call it, 35%, 36% range. It fluctuates anywhere from 30% to 40% on average with a little bit of the seasonality sometimes.

Ken Zener -- KeyBanc Capital Markets -- Analyst

Right. So if I do that calculation. First, what I believe, was 34% last year. What that shows is your closings were up about 7% out of your backlog, that's a nice cadence, but really spiked in the spec homes.

Year over year, if you just look at it at units. I ask that to get an understanding of how the margins for your spec versus backlog are trending with a third of your closings being spec in an environment where pricing became firmer. Could you kind of talk about that a little bit?

Mike Murray -- Executive Vice President and Chief Operating Officer

We saw spec margins compress or get closer to backlog margin. So they came up relative to backlog margins. That difference shrunk in the quarter.

Ken Zener -- KeyBanc Capital Markets -- Analyst

And what would you attribute that to?

Mike Murray -- Executive Vice President and Chief Operating Officer

As what you said is it was a firmer pricing environment, a lower incentive environment in the -- our fiscal fourth quarter than it was, say, in the fiscal second quarter.

Ken Zener -- KeyBanc Capital Markets -- Analyst

Now the guidance you gave for revenue. You talked about feeling good in October. It's nice. It seems, though, like -- it seems like you guys have -- except for the first quarter, you guys have really been kind of following what I would consider normal seasonal trends.

And Bill, I think you said you expect pace to actually increase in FY '20. Was I mistaken?

Bill Wheat -- Executive Vice President and Chief Financial Officer

We do -- we're expecting our community count to be up low single digit, but our overall pace to be up mid- to high single digit, yes.

Ken Zener -- KeyBanc Capital Markets -- Analyst

Why is that? What gives you that confidence? What I'm asking to expect seasonality to accelerate on an order pace basis?

Jessica Hansen -- Vice President of Investor Relations

No.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Just in general, we would expect that on an annual basis, as we've seen that, as we're refocusing on providing attainable housing for people that we're able to see communities perform at a higher sales per flag per week pace than other communities. I mean so it's something that we've consistently seen for the past several years is that as these communities open, we're positioning them with the right inventory to get going out of the gate strong and run at very high absorption rates.

Mike Murray -- Executive Vice President and Chief Operating Officer

And I would agree with you, Ken. We're not seeing anything different than normal seasonality, though, necessarily. We do expect we can run a little bit tighter on our housing inventory in fiscal '20 than we did in '19. We started strong, and then as we adjusted our revenue expectations, we kind of spent the year adjusting to align.

But we thought we're very well aligned going into fiscal '20.

David Auld -- President and Chief Executive Officer

And I'll just add, our confidence level is really driven by what we're seeing out in the field. And we talk a lot about our people. We talk a lot about trying to get better year over year, quarter over quarter, day-over-day, really. And I would just say we are getting better.

So even though our absorption per flag has been very high through this whole cycle. We are a better company today than we were a year ago. Better positioned, and our people got another year's experience.

Ken Zener -- KeyBanc Capital Markets -- Analyst

Understanding it. It appears that way for your results. Can you talk about how you're trying to control your -- use your size vis-a-vis vendors? And if you are seeing, whether it's the lumber, appliances or these types of other things, perhaps what you've learned over the last year? And any changes that you're implementing for FY '20? Thank you very much.

Mike Murray -- Executive Vice President and Chief Operating Officer

Thank you, Ken. I think we're continuing to do what we have done with a lot of our national supply partners and that creating a good relationship for us and for them, providing a lot of consistent volume demand and potential halo effect into a given marketplace by bringing their product into the trade base. There's some follow-on benefit and we participate in that, and they certainly benefit from it as well. Thank you.

Operator

Thank you. Our next question comes from the line of Alex Barron with Housing Research Center. Please proceed with your question.

Alex Barron -- Housing Research Center -- Analyst

Yeah. Thanks. I was curious whether you guys feel the growth in the overall industry is going to be pretty much in line with the growth you guys are guiding to?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, Alex, I would think that we would continue to expect to take market share. And as we like to say, outperform the market. Year on year, we expect to do better.

Alex Barron -- Housing Research Center -- Analyst

OK. So does that mean you expect your affordable percentage of homes to I guess keep growing?

Jessica Hansen -- Vice President of Investor Relations

You may not see it from a pure brand perspective in our business. But what we've been introducing really over the last year or so is more and more entry-level type houses in our Horton brand as well. So the answer is yes, but you may not see our express percentage of the business climb from the mid-30s where it is today.

Alex Barron -- Housing Research Center -- Analyst

Got it. And then in your financial services segment. You guys got pretty nice leverage this quarter. Do you expect that to continue in 2020?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, yes. We certainly have seen some improvement in efficiencies. Our cost per loan is down. They've increased their capture rate, which provides efficiencies on overhead as well.

But a large part of the expansion in margin is due to very favorable market conditions as rates drop for this year. The service release premiums are very healthy in that sort of a market and there's less competition from -- because there's more refi business out there. So we wouldn't expect to sustain the same level of margins, they should come down a bit. But we are pleased with the continued efficiencies we are building into that business.

David Auld -- President and Chief Executive Officer

And I'll just say our mortgage company did a spectacular job this year, not only driving efficiency through their process but in aligning with our homebuilding operations to make the overall transaction better for our customers.

Alex Barron -- Housing Research Center -- Analyst

OK. And one last one, if I may, on the Forestar. As you guys are now incurring interest due to the debt you raised. Is that going to be capitalized? Or is that going to be showing up in expenses in your -- in what you guys report?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Now Forestar, their active inventory is greater than their debt, so they are capitalizing 100% of their interest into their inventory at Forestar.

Alex Barron -- Housing Research Center -- Analyst

OK, thanks. Appreciate it. Best of luck.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, our final question this morning will come from the line of Mike Dahl with RBC Capital Markets. Please proceed with your question.

Unknown speaker

Hi. This is actually Chris on for Mike. Thanks for squeezing me in here. So my first question is just on M&A.

Are you embedding any M&A in your 2020 guidance? And given the recent activity in the space, could you just give us an update of how you're thinking about public versus private opportunities?

Bill Wheat -- Executive Vice President and Chief Financial Officer

We are not embedding any M&A activity into our growth guidance. With regard to our outlook for M&A for what's right for Horton. Typically, it's been the private builders -- the add-on builders that give us new capabilities, new teams in various markets. So that's where we'll continue to have our focus right now.

But we are always open and are always evaluating whatever is right going to be right for us.

Unknown speaker

Got it. Thanks for that. And secondly, are you able to provide the percentage of communities that raised price this quarter? And any regional color or commentary you can provide on pricing power you saw in 4Q?

Jessica Hansen -- Vice President of Investor Relations

So the communities we raise price on isn't something we've typically disclosed. We clearly still don't have broad-based pricing power across the board. But I would say, at this point, we've had an ability to pull back on incentives, which is a different function of price across most of our footprint, at this point, maybe a little bit less so at the higher price points, where incentives have remained elevated.

Unknown speaker

Got it. Thanks. Appreciate that.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Auld for any final comments.

David Auld -- President and Chief Executive Officer

Thank you, Melissa. We appreciate everyone's time on the call today and look forward to talking to you again in January to share our first-quarter results. And to the D.R. Horton team, congratulations on finishing No.

1 for the 18th consecutive year. You are truly the best of the best in this industry. Mike, Bill, Jessica and I are honored and humbled to represent you on these calls. Thank you.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Jessica Hansen -- Vice President of Investor Relations

David Auld -- President and Chief Executive Officer

Mike Murray -- Executive Vice President and Chief Operating Officer

Bill Wheat -- Executive Vice President and Chief Financial Officer

John Lovallo -- Bank of America Merrill Lynch -- Analyst

Alan Ratner -- Zelman and Associates -- Analyst

Carl Reichardt -- BTIG -- Analyst

Truman Patterson -- Wells Fargo Securities -- Analyst

Eric Bosshard -- Cleveland Research -- Analyst

Stephen Kim -- Evercore ISI -- Analyst

Matthew Bouley -- Barclays -- Analyst

Michael Rehaut -- J.P. Morgan -- Analyst

Megan McGrath -- Buckingham Research Group -- Analyst

Jack Micenko -- Susquehanna International Group -- Analyst

Mark Weintraub -- Seaport Global -- Analyst

Ken Zener -- KeyBanc Capital Markets -- Analyst

Alex Barron -- Housing Research Center -- Analyst

Unknown speaker

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