Greetings, and welcome to the TRI Pointe Group Second Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Doug Bauer, Chief Executive Officer. Thank you, sir. You may begin.

Good morning, and welcome to TRI Pointe Group's earnings conference call. Earlier today, the company released its financial results for the second quarter of 2020. Documents detailing these results, including a slide deck under the Presentations tab, are available on the company's Investor Relations website at www.tripointegroup.com. 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 important 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 to the most comparable GAAP measures can be accessed through TRI Pointe's website and its SEC filings. Hosting the call today along with myself is Glenn Keeler, the company's Chief Financial Officer; and Tom Mitchell, the company's Chief Operating Officer and President; and Linda Mamet, the company's Chief Marketing Officer. Again, I want to thank all of you for joining us today, as we go over our results for the second quarter of 2020, discuss our ongoing strategic initiatives and provide some color on our company's outlook. I hope all of you and your families are well and safe. Our thoughts and gratitude continue to go out to those across the country who are on the frontlines risking their own safety to care for others. While, COVID-19 continues to impact many areas of the country, there is positive news coming from the homebuilding industry, and within TRI Pointe. TRI Pointe Group generated net income of $56.5 million in the second quarter or $0.43 per diluted share,…

Thanks, Doug. And good morning, everyone. I'm going to highlight some of our results and key financial metrics for the second quarter and then finish my remarks with our expectations and outlook for the third quarter and full year 2020. At times, I'll be referring to certain information from our slide deck that is posted on our website, as mentioned earlier. Slide 6 of the earnings call deck, provides some of the financial and operational highlights from our second quarter. The impacts of COVID-19 on orders were significant to start the quarter, with the month of April orders down 54% year-over-year. We began to see demand increase in late April and early May and finished the quarter strong, resulting in an overall order decline of only 11%. Specifically, for the month of June, we achieved our second highest order month in the company's history, recording 624 net new home orders, which was a 28% increase year-over-year, and was driven by an absorption rate of 4.3 homes per community per month, compared to 3.3 a year ago. The increase in absorption rates for the month of June was broad based across all reporting segments. The cancellation rate for the second quarter was 21% and went from a high point in April of 36%, down to only 13% for the month of June. Turning to deliveries, we delivered 1,229 homes during the quarter, which was a 9% increase year-over-year. This resulted in home sales revenue of $767 million, which was an 11% increase year-over-year on an average selling price of $624,000 per home. Our homebuilding gross margin percentage for the quarter was 21.6%, representing a 460 basis point improvement year-over-year. The increase in gross margin percentage was across all reporting segments and reflective of strong market dynamics. In addition, there was a…

Well, thanks Glenn. In conclusion, I'm very pleased with our performance this quarter, particularly in light of what our expectations were three months ago, when we took precautionary measures to preserve capital and prepare for the possibility of a protracted slowdown. However, market dynamics during the pandemic have benefited the new home market. Our strategic positioning, diversified product offering, an experienced management team has us well-positioned for both short and long-term success. We continue to be vigilant and disciplined with our capital, as there are still many uncertainties relative to the pandemic and its impact on the economy. But based on our team's experience and how we were able to adapt to the changing environment in the second quarter, I am confident that TRI Pointe Group has the right people, strategy and operating discipline in place to succeed and overcome any challenges we may encounter in the future. That concludes my prepared remarks, and now we'd be happy to take your questions.

Thank you. We will now be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Alan Ratner with Zelman and Associates. Please proceed with your question.

Hey, guys, good morning. Nice job navigating through this crazy time here, but glad to hear you're all doing well. My first question, if I could just dig in a little bit on the closing guidance for the back-half of the year. It seems a little conservative just on the surface based on where your backlog is right now. And I know there's a lot of moving parts here. Obviously, your orders have picked up quite a bit towards the end of the quarter. So, I'm guessing a lot of those deliveries slipped into 21. But I guess what I'm really trying to get an understanding of is, is the guidance assuming any, as far as spec supply, like where are your current spec inventories? Is it assuming just lower than normal availability of spec products heading into the back-half of the year, compared to what you normally have? Or is there something else that would drive your conversion rate to be so much lower than it's been in the past?

Hey, Alan, good question. This is Glenn. We did start the quarter speaking specifically to your question about specs. We had only roughly 300 specs to start the quarter, and we finished the quarter with 198, which is 1.4 per community. So we don't have a lot of specs to pull into this year. And so you're right in that, on the surface the backlog conversion looks lower than normal, it's because we had such a strong June of orders and those are all -- but majority of those are being delivered in '21. So that's why the percentages look lower.

Got it. Okay. That's helpful. And then just as far as the strategy on specs, have you accelerated the pace of new speculative starts? Or are you still taking somewhat of a wait and see approach to see if the strength in demand here persists for another few months?

Yes. Alan, this is Doug. To kind of tag on to the last question and that one, obviously, the pandemic put everybody reacted to -- all the companies reacted to it differently. We definitely did take a kind of a pause for roughly 45 days. We did take a more conservative view on starting spec. Since that time we have opened up our operations to normal, looking to run at three to five specs per community. So in a nutshell, we are increasing our spec level. And it's at community level. It's driven by community level too. There's tremendous demand in the entry level. First move up out in the -- its pick on Banning Beaumont for example, where we've sold how many homes, Tom, we've sold about 83 -- I'm sorry, 115 homes in that year-to-date, 79 in what the last 65 -- 85 days. So in those markets, we've had a very strong appetite to increasing spec level.

That's really helpful, thank you for that. And then if I could just add one more on the pricing side, obviously very strong order activity here in June and July. Curious what steps if any, you've taken on pricing? And just as far as the impact on margin, is there any mixed impact that we should be aware of just given the timing of the deliveries in the back-half of the year? It seems like you're expecting fairly stable margins, but I wasn't sure if there's any mixed nuances you would want to point out from that?

Good morning, Alan. This is Tom. Obviously, we continue to try to manage and balance pace in price, but we are really encouraged by our demand profile overall. And so, for the most part, the majority of our product offerings, we have been able to increase price or either reduce incentives and/or increase price. So we're encouraged by that trend. As always, we do have some of our higher price long dated legacy assets that have an impact on mix as we deliver those. So you should be aware of that, but nothing out of the normal.

Alan, it's Doug. Just to clarify my last comment on Banning. And our Atwell master plan, it's pretty amazing statistics out of two communities, we sold 114 homes net in 95 days. This is no different than what you're hearing from the other builders. There is tremendous demand in our Lake Elsinore, and all these communities start at $295,000. We sold 42 net sales in 52 days. So there's obviously a tremendous demand. The pandemic has definitely created a sense of urgency for especially that entry level first move up buyer.

It's great to hear. Good luck, guys.

Thank you.

Thank you. Our next question comes from the line of Mike Dahl with RBC Capital Markets. Please proceed with your question.

Good morning. Thanks for taking my questions and nice to see the rebound these last couple of months. Just go back to Alan's question on pricing power. I guess it's good to kind of feed the machine a little bit over -- to rebuild some of the backlog that was maybe lost in April and to a lesser extent in May. But even with your mix shift, I don't think the business is really -- you haven't really run this business as a for sale a month type of absorption model. And so as you look at the back-half of the year, how much -- in terms of incremental pricing power acceleration and pricing power. How actively are you going to look at really managing that pace back down, versus letting it run a little hot for now? And just looking for a little more color there.

Well, it's a balanced approach. Mike, this is Doug. It's a balanced approach. We're constantly analyzing and adjusting all the communities. For example, we were just talking about Banning, we've got a lot of lots out there, and we've got a lot of product to offer. So we're definitely pushing pace over price. I also feel that there's just an incremental view towards a little bit of pace of a price building into a nice backlog going into '21. And the reason I say that is because there's just tremendous uncertainty running into this continued wave of test scores going up, pandemic issues, political election year issues, fiscal stimulus issue. So, there's enough unknowns out there that we're going to continue a balanced approach. And where there's communities that have less inventory and less runaway will definitely push and be pushing on price more so. For example, down in San Diego, there’ll be more push on price down there. So it's all project by project, but I am encouraged to build a strong backlog, because there's a lot unknowns, as I said. We'll see where '21 could shape up after this yearend election.

Okay. Thanks. Yes, and I guess that makes sense given the uncertainty at the same time, you are running down your community count a bit into yearend, and you do have a lot of land behind it. So that's why I'm just curious to get the take there. I guess second question just sticking with Banning and maybe just taking your Inland portfolio in California, in total as an example. Do you have any data or anecdotes on how many of your recent buyers have been effectively in market buyers versus in migration from more coastal areas?

Yes. Mike, this is Tom. Nothing specifically, but we are seeing a trend that’s happening throughout the country relative to the pandemic. With people working remotely, it does provide people the opportunity to go a little further out, to get more attainable pricing. So certainly, there has been some of that, but nothing extremely out of the normal.

Okay. And last one if I could sneak one in. I mean, Doug, you mentioned the urgency buyer were a handful of months into the pandemic. So obviously, it continues to roll along and unfortunately but from a buyer standpoint, buyers had some time to adjust and think about what they want or need at this point. So when you're hearing about or looking at kind of urgency in the market, any shift in the dynamic in terms of buyers coming in the door, and whether there's actually a more of a patients now and a willingness to take a delivery that's maybe six, nine months out versus needing to be in the next couple of months?

Hi Mike, this is Linda. There’s definitely an understanding with buyers now that there is high demand in the new home market, especially as they see such low supply levels on the resale market. So yes, we do see buyers willing to be patient, waiting to purchase a home, but they also want to personalize their home. They want what they want, and they can attain more with historically low rates. So they're prioritizing things like home offices, private outdoor living space, adult children returning to home, renewed interest in things like cooking, home technology, so that's definitely a motivating factor for out to-be-built sales.

Okay. Thank you.

Thanks Mike.

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

Yes. Thanks very much guys. And certainly, I would think that with the lower rates as a benefit here that all the things that you just mentioned about on things on people's wish lists, so that they now have the actual ability to pay for those things. So, that's encouraging. I'm curious about the timing of when you started raising prices, because Doug, obviously, when you were talking in April, things were pretty scary. You talked about 45 days sort of halt to the business, so to speak. But things have really started coming back quickly. And I'm wondering if kind of like Meritage mentioned yesterday, maybe you started -- you would say that you kind of started raising prices in earnest sometime in maybe mid to late June. Is that a fair guess?

Hey, Stephen. This is Tom. I think everyone needs to remember that the year started off strong. So, we started raising prices very early in the year and then we took a pause, obviously, as the pandemic really had a significant impact and slowdown. And then obviously, as order demand began to pick back up, we've been constantly looking at our pricing models and where we've had the ability to raise prices we have. And I'd say that probably started back in earlier June, would be a better guess as the resurgence in price activity.

We think that's true. Stephen, it's Doug. I mean, what Tom saying is very logical, right? I mean, the industry was very strong through February, early March. Then you come out of this thing. Nobody -- we were all staring each other thinking, is this going to be the ultimate depression recession? Is housing going to be just one of those bleak industries? And then we turn around, and the most obvious thing that a lot of us missed was the fact that people sheltered in place and the home is now the most important asset. Nobody's traveling, nobody's going out much. They're saving money, blah, blah, blah. And so, we start selling. Sales start ramping up, to start pushing the pricing level during a pandemic, because you want to see that that momentum gets going, the momentum gets going. And certain communities, yes, you start pushing price may be in early June, but probably more later -- latter part of June. So it's a very logical progression when you're trying to manage your business during one of the most uncertain times I've ever had in my career. So, I think it all makes sense.

For sure. And I guess where I was kind of going with it is that in light of a backlog turnover ratio that's going to be below 50% here in the third quarter from your guide that, by the same token, if you've had a sort of a reacceleration in pricing in sort of June and then maybe in July, and then going forward. We're really not going to see the bulk of that price increase flowing through your gross margins until really kind of like -- really late in the year and really into 2021. And that was what I was just trying to make sure that I was correct on.

Yes. I think you're thinking about that correct.

Yes. And so, hence, when you give your guidance, that's what we should be thinking. With respect to the SG&A, I was really intrigued, Doug, by your comment about how this new way of going about merchandising your homes and interfacing with your customers has really provided some increase in efficiency. And I think this is an area that we know we've kind of heard, but it feels like this environment -- this COVID environment really has created like this really interesting test case. It sort of forced everybody to sort of try to test this new way of doing business. And your SG&A guidance, given your revenue outlook suggests that this strong SG&A performance we saw or SG&A control we saw this quarter is going to really continue or get even better in the third quarter and beyond. And so I'm really wondering if you could maybe enumerate some of the things, specific things about this more digital way of marketing your homes, that are resulting in real tangible savings that we're able to see like right now?

Stephen this is Linda. I think there are several factors at play. Certainly, over the longer-term, we do believe that a more virtual online sales platform will have cost efficiencies. With the high demand we're currently seeing in the market, we have been able to pull back on advertising spend and focus on middle and lower funnel customers that are already showing high home buying intent. We do see a short-term lift in brokers, because resale supply is so low right now. But over time, we still believe that the online model will result in savings in that sales cost area as well.

And Stephen, this is Glenn. Just to add to that, I think the other part that you're seeing flow through that SG&A line is the reduction in force that we took. And we're just really focusing on operating at a little bit more of a streamlined basis and being more efficient. We've invested in technology over the last couple of years, including our back office systems. And we're starting to see some of the benefits of that.

Additionally, Steve, I mean, as we look to the future and when we think about the virtual experience and our ability to do maybe some unattended access, some self-guided touring, and more things will be able to be done virtually versus having to have the amount of capital invested in a fully merchandised model complex. We will have models out and available, but we think we'll be able to do it more efficiently.

All those makes sense. Thanks a lot, guys. It'll be interesting to see how things progress, but it's looking good. Thanks.

Thanks, Stephen.

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

Hi, good morning, guys. Thanks for taking my question and nice quarter. So first, your July order growth accelerated versus June, which is a little atypical relative to some of your peers. But I was just hoping, could you just dissect this for us? How the trends are playing out geographically? Are you seeing the relatively underperforming areas in April and May, which might have been hit a little bit harder from the COVID shutdowns? Are those areas starting to rebound more quickly and kind of catch up on a relative basis in June and July? I'm just trying to understand some of the current trends, as to how your July order trends outperformed June.

Yes. That's a good question. Truman, its Doug. We're seeing a lot of tremendous growth in California in the entry level first move up segments. I mentioned out in Banning on Beaumont. It is very, very strong. But we're also feeling a lot of strength in the Phoenix market, and that's really a move up buyer. We've opened a master plan in the Gilbert Chandlery caller Waterston, and we've had sales pace of about 4.9 per week, price in the five to seven. So, it's a very broad based sales effort, order effort. It's across all segments. But I think the strongest I'd say Tom, is we've seen in the last four weeks has been in California and in Phoenix.

Yes, without a doubt. Truman, the other thing where it maybe is not so much geographically driven, I think there's a correlation to our new product offerings. I mean, specifically, we have introduced, as Doug just talked about, some new master plans in the Gilbert Chandler area and Arizona, as well as those new products we've offered in the Inland Empire. But across the board, our new product offerings seem to have more receptivity and a higher absorption pace, which is giving you that strong July order trend.

Okay, thanks. I take it those new designs probably have some form of study or something to really target the needs of kind of like COVID buyer today.

Yes, this is Linda. We’ve always focused on flexibility within our flow plan designs, so easily being able to adapt those spaces to people's needs at the time.

Okay. Thanks for that. And just a follow-up on Alan's question on your closings guidance. We were expecting a little bit more and I understand there's some spec issues, but want to come at it from a little bit of a different angle. But is there anything else that's capping your back-half closings? Is it from the state closures early on in COVID and muni closures, construction delays from labor shortages, any other muni issues or on top of some of the spec items? Is it somewhat out of just caution that you don't necessarily know how the COVID situation is going to play out in the back-half of the year?

Truman, its Doug. I mean, just remember, from March 15 through end of April, there is pretty heavy shelter-in-place orders. Yes, there were parts of that. I mean, housing was deemed essential, but there were a lot of issues in working around that. And in particular, we don't generate huge volume in the Bay area right now compared to the other areas. But in Seattle, we're very constrained. Although, Seattle was selling homes under the most constrained environment, I've ever seen in my life. But we couldn't build them or could only build them so quickly. So, I mean, let's face it. And then, as we mentioned, Tom and I put a very tight firm grip on the number of specs starting. So when you factor that in, that was all very prudent management at a time. And then you gradually let your foot off the break and you start pushing on the gas pedal. Maybe some people pushed harder earlier or later. That's just how we viewed it, as we were working our way through the pandemic and managing our business and our cash flow on our balance sheet.

Yes. Truman, relative to supply chain constraints or labor constraints, as well as efficiencies within various jurisdictions, we're not seeing any significant global impact relative to that. We still are operating. So, I wouldn't say that is a hindrance or an obstacle to our deliveries. Although, our cycle times and construction schedules have extended anywhere from about 3% to 10%. So, there is some timing delays there, different municipalities certainly are shorthanded. The ability to obtain approvals, permits and inspections are probably seeing some delays. But overall, I think you have to factor in like Doug said, relative to that initial pause, that push back the opening and production starts on several new communities that Glenn spoke to in his prepared remarks, that also is probably putting the biggest factor on our limited ability to ramp up more production for yearend completions.

Okay. Thank you. I appreciate it.

Thank you. Our next question comes from the line of Jay McCanless with Wedbush. Please proceed with your question.

Good morning. Thanks for taking my question. I guess first on Vegas. It looks like the absorption there was pretty rough during the quarter. What are y'all seeing now as you move into the third quarter on that market?

Yes. Jay, this is Tom. We're encouraged in Vegas. I mean, surprisingly, so you can imagine what that market and economy looks like with its dependence on entertainment and gaming. But we have seen kind of a broad based return at all price segments from that consumer. So, positive trends going through June and continuing into July, and so we look to continue to have a bright optimistic outlook for the Vegas market.

To put some numbers on that, Jay, absorptions in April were 1.3 and 2.2 in May and 2.6 in June. So, we continue to see a ramp up. And it's still pulling a lot of consumers from the higher cost states, namely California next door. So, that's been a -- if you go into the casinos, as they're opening partially, you'll see a lot of California is in there, that's for sure.

That's great to hear. And then Doug, your commentary about trying to go to lower price points more entry level, I guess more affordable first move up. Could, you maybe remind us where TRI Pointe's entry level exposure is now? And where you expect it to be over the next two to three years?

Well, we talked -- and the entry level is relative to each market that you're in right? We've got a very strong entry level first move up exposure here in California, which we highlighted in the script. In the Inland Empire up in LA, long-term, California assets, we've been able to reposition those to pretty much -- most of those assets are starting at or below 750, and that's a very attractive price. And then on the Inland Empire, we're starting at 295. So, we've got a very, very strong line-up. We also have another community that will come on in the next 18 months, down in San Diego called Meadowood, which will continue kind of that first move up strong price point. When you look at the growth of the company though, it's going to happen more east, especially when you think about Texas, the Carolinas, Colorado, those are all going to be driving more entry level premium first move up. So, there's tremendous growth. All the land deals that we had tied up at the beginning of the year, we were successful on and pushing those out with the sellers. And now they're slowly being brought back to the system. And that's where you're going to see tremendous growth over the next couple years is east of California. We will still be a dominant player here in California, probably doing about 2,000 deliveries a year or so. But, the big growth is coming outside, and that's all entry level premium first move up.

Yes. Jay, relative to overall percentages right now, for the second quarter, about 33% of our orders came from entry level, about 49% from move up. So, we have seen just even over this last year, a slight improvement in those numbers, and a little bit of a reduction in our overall luxury category.

I would add, Jay, that that move to more affordable price points while still providing that premium brand experience. And when we started that back in '18, as you recall, there's been a pretty strong affordability issue when rates kind of spiked a little bit. But overall pricing has made a lot of markets less affordable, whether you're in Colorado, Phoenix wherever. So, we intentionally drove our business towards that product offering, smaller lots, both attached, detached and more affordable price points, because before you know when interest rates go up another 100 bps, everybody is going to say, oh my god, the sky is falling, because we're all spoiled right now. The consumer gets very acclimated very quickly. So, being in affordable price points can be important for the future.

It sounds great. Thanks again.

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

Good morning. I was hoping to start by maybe talking in broad strokes around potential 2021 community count. When I think about -- I think you mentioned 15 communities pushed into next year, you got some of these new markets, I think coming online in 2021. Looking back historically, you've been sort of a mid-single-digit grower for the last five or six years, ex-acquisitions. With that push out and with the new markets coming online, is it fair to assume with what we know now around the uncertainty, is it fair to assume the community count growth should be well above historical averages in 2021 for those factors? Or is there a component that we might be missing that would reduce that sort of back down below that?

No, I think you're -- like I said in my prepared remarks, there'll be more meaningful community count growth than you've seen in the last couple years. And we'll give more specific guidance, obviously as we get closer to '21 regarding community count. But you will see it at a higher percentage than it has been over the last few years.

How much of that can you say at this point is from some of the new markets?

A good bit of it. We're obviously growing in the Carolinas. We're going to end this year with three communities in the Carolinas, and that's only going to grow from there. Sacramento is another area where we've just really got going. That's another area that's going to grow. Austin, Dallas, Colorado, and then there's some organic growth in our existing markets as well.

Okay. And then historically and even in the earlier part of the quarter, you've been fairly strategic about buying up stock and in the context of this forward growth. How do you think about share repurchases maybe through the balance of the year? What would it take you to, if not now, what would it take you to see in the business maybe to restart that? Just curious on capital.

Yes. Jack, as we mentioned in the remarks we're very return focused, whether it's building more entry level premium first time move up, focusing in on higher inventory turns, better returns on our equity are driven, obviously, by increased earnings, which is our -- we are a growth company that's going to grow and increase our scale and leverage. And at the same time, we're also focused on what I call the financial levers that can affect and manage our balance sheet and our growth and those types of returns. So we'll be looking at all that. We've got a very, very strong balance sheet with a lot of liquidity to handle our growth and also use the right financial levers to move forward and enhancing those returns, whether it's through acquisition, buyback stock and so on and so forth. I mean, those are all available to us.

Okay. All right. Thanks.

Thanks.

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

Thanks. Hi, guys. Actually, Jay got my questions. But I wanted to ask, just to go back to over the long time Doug, you've talked about the multiple brand strategy. It's still here. It's important to you guys. Can you walk through if your thinking has changed on that at all? The idea that maybe as a national builder, a single brand might be more cost effective, more efficient? Or are there things about the multiple brand strategy that continue to be enhancements or advancements for you all?

Well, I think the multiple brand strategy as it sits today is still bodes well for us. When you go into Texas and especially with the consumer, the trend maker brand resonates very, very well. I mean, I've always argued brand is earned over time. And so, we continue to see some strong acceptance by the consumer. Obviously, when it comes to any sort of brand strategy, it really comes down to the culture and people that you can have in place to execute, whether it's buying, having the relationships by land, subcontractors, attract people. So it can be done in either format. But we're still happy and focused on the best of big and small.

Look Carl, I would add, as we continue to look at ways to become more efficient and effective in our business, we do look at overall strategies to streamline it. And there may be opportunities for us to improve as we look at maybe some regionalization and then some economies relative to some of our home office shared services.

Thanks, Tom. And then you talked a little bit about California's importance, your share there, growth in new markets. As you kind of look out the next three to five years, let's assume things get a little better in '21, we have a relatively normalized market. Are you still thinking that half your asset base will be a California? Or as you sell through the legacy assets there, and take that cash, are you expecting to reinvest it in California spread it out more? I'm just trying to get a sense of several years from now what the geographic panoply looks like? Thanks guys.

Hey, Carl. This is Glenn. Good question. I think you will see a shift to more -- if you look at our overall lot supply to more outside of California, just because we've had such a long-term supply of those lots. And as we work through those lots and those convert to cash, we're investing that cash still within California, obviously, because there are certain markets that don't have those long-term California assets that we need to invest in. But by and large, you'll see more of a balanced lot supply throughout the U.S.

Thanks, Glenn. Thanks, guys.

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Bauer for any closing remarks.

Well, I want to thank everyone, and I hope everyone stay safe and healthy. And we look forward to talking to all of you next quarter. Thank you very much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.