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Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Fourth Quarter and Fiscal Year Ended September 30th 2024. Today's call is being recorded and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company's website at www.beazer.com. At this point, I will turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer.

Thank you. Good afternoon, and welcome to the Beazer Homes conference call discussing our results for the fourth quarter and full year of fiscal 2024. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of the date this statement is made. We do not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. New factors emerge from time-to-time and it is simply not possible to predict all such factors. Joining me today is Allan Merrill, our Chairman and Chief Executive Officer. On our call today, Allan will discuss highlights from our fiscal 2024 results, the recent environment for new-home sales, our preliminary outlook for fiscal 2025 and the significant progress we are making towards our multi-year goals. I'll then provide detailed guidance for our first quarter results, additional color on our outlook for the full fiscal year and end with a discussion of both our balance sheet and our land spend expectations. Allan will conclude with a wrap-up, after which we will take any questions in the remaining time. I will now turn the call over to Allan.

Thank you, Dave, and thank you for joining us on our call this afternoon. We had a very productive fiscal '24, during which we invested for the future, generated double-digit returns for shareholders, and accelerated our adoption of

Thanks, Allan. This afternoon, I will concentrate on providing some more specifics on our first quarter guidance and our outlook for the fiscal year. I will conclude my comments with a discussion of our balance sheet and our land position. We have detailed our fourth quarter and full fiscal year 2024 results in our presentation, our press release and our 10-K, and of course, we're happy to discuss them during the Q&A portion of our call. Let's start with our expectations for the first quarter of fiscal 2025. Period end community count should be up about 20% versus the same period last year as we benefit from our increased land spending over the past few years. Our sales pace should accelerate versus the prior year by about 10%. More communities and a higher pace should generate year-over-year sales growth around 30%. We anticipate closing more than 925 homes with an average ASP of around $515,000. Adjusted gross margin should to be around 19%. The sequential reduction in gross margin from the fourth quarter is a function of two related factors. First, specs increase as a percentage of our total sales in the back half of 2024 and have typically carried margins 2 points to 3 points below our to-be-built. Second, we lean pretty heavily into incentives in a handful of markets in the fourth quarter, particularly on our spec homes to stimulate sales base. Even though we've since reduced these incentives or in some cases sold out of the communities, margins will be impacted in the first quarter. The first quarter should represent a trough for our gross margin for the fiscal year. SG&A as a percentage of revenue should be around 13%, about 1 point lower than the same time last year, helping to support our operating margin. We expect to generate about $30 million in adjusted EBITDA. Interest amortized as a percent of homebuilding revenue should be just over 3%, and our effective tax rate should be approximately 15%. The higher tax rate versus 2024 is in line with our expectations as we won't have the benefit of harvesting tax credits generated in prior years in 2025. This should lead to diluted earnings per share of about $0.30. I want to pick up where Allan left off on our full year outlook and give you a perspective on how we're thinking about the range of potential outcomes on community count, sales pace and gross margin. Predicting community count with precision is pretty challenging given variability in land development timing, weather and closeouts. With this caution, we expect to add 18 to 22 communities to our average community count, reflecting 12.5% to 15% growth. We'd note our activations are weighted more to the back half of the year and our community count could be flat or down sequentially in the second quarter depending on the timing of closeouts. We are committed to achieving a sales pace between 2.5 and 3 sales per community per month for the full year, more in line with our historical norms and an improvement off of fiscal 2024. The margin in our backlog at 9/30 is about 20.5%, including most of the lower margin homes will close in the first quarter. This implies the balance of the backlog has much higher margins. Nonetheless, for the full year, we anticipate gross margin will be between 19.5% and 20.5% because we expect spec sales and closings to remain elevated through the year. The high end of the range is attainable if we're able to sell a greater share of to-be-builts in the spring or we can drive further reductions in incentives. ASP and SG&A are less subject to market fluctuation and as such we have better visibility into our expectations for the year. Given our ASP and backlog near $540,000 and the mix of community openings and closings, we believe our ASP should be over $530,000. Further, while we're still investing heavily for growth, our higher community count should lead to revenue growing faster than our overheads in fiscal year 2025, driving our SG&A percentage to be about 11%. Here's the key point. Even at the low end of each of the ranges, we expect to generate EBITDA that would represent another year of double-digit return on capital employed. Any improvement in our metrics above the low end of our ranges will drive EBITDA growth and even better returns. Our balance sheet remains healthy with total liquidity exceeding $500 million at the end of the fiscal year, no maturities until October 2027 and more than enough liquidity to fuel our growth aspirations. We expect to end fiscal 2025 with a net debt to net cap in the low-to-mid 30s and we're on a path to get our net debt to net cap below 30% by the end of fiscal 2026, as our improving profitability and cash generation will de-lever the balance sheet. Over the last five years, we've been able to sustain a double-digit return on capital and have grown our book value at a 19% compounded annual growth rate even as we've increased our land investment. Our capital allocation and execution has increased the quality of our book value and positions us for another year of growth in fiscal 2025. Since fiscal 2020, we've run our total owned and auctioned land position from fewer than 17,000 lots to nearly 28,000 lots. And we've done that primarily through increase in our option lots, which have gone from 35% of our total to nearly 60%. In 2025, we expect land spend to grow to around $850 million and our owned and option lot position should exceed 30,000. With that, I'll now turn the call back over to Allan.

Thank you, Dave. In summary, 2024 was a successful year for the company as we executed our growth strategy and generated double-digit returns. We're entering 2025 with a growing community count, a differentiated product strategy and a healthy balance sheet, positioning us to make real progress on our multi-year goals. Finally, I remain convinced we have the team and the strategy to create growing and durable value for our stakeholders in the years ahead. With that, I'll turn the call over to the operator to take us into Q&A.

[Operator Instructions] Our first question will come from Julio Romero with Sidoti & Company. Your line is open.

Hello. This is Alex Hantman on for Julio. Thanks for taking questions.

Hey, Alex, how are you doing?

Good, how are you?

Good.

Great. Well, thank you very much for sharing the guide. And maybe we could talk a little bit about the community count ramp. Would love to hear how you're thinking about your confidence in the ramp you've outlined and that path for growth.

Look, I would tell you, Alex, we feel pretty confident about the ramp. Obviously, with the growth in the land position that we've had and the visibility that we have on kind of communities coming online, we feel real good about the growth that we talked about, the 18 to 22 net new communities and ending the year around 180.

Thank you. And maybe just touching on sales pacing, could you talk a little bit about what you're seeing in October, maybe some improvement relative to September?

Yeah, Alex, hey, it's Allan. Things got better in September. And as rates started to back up a little bit, I was concerned that we might see that slowdown. But frankly, October looked a lot like September. And I was encouraged because we peeled away some of the heavier incentives that we had offered to clear out some older inventory and we saw a nice pickup in to-be-built sales. So it wasn't just around more heavily discounted specs.

Great. Thank you for the context. I'll hop back in queue.

Thank you.

Thank you. Next, we will hear from Alan Ratner with

Hey guys, good afternoon. Thanks as always for all the helpful details so far. So I know it's tough to give any full year guidance at this point. It's a pretty rapidly changing environment. But one of the data points I wanted to just drill in a little bit more on is your outlook for absorptions for the year. Given a range of 2.5, I guess at the low end to 3 at the high end, your absorption pace this year was just under 2.5 per month. And obviously, the year ended challengingly but it was generally a pretty solid year, especially in the spring. So I'm curious if you could just talk through a little bit more your expectations there because it doesn't seem like you're anticipating any meaningful improvement in the macro as far as mortgage rates or the economy. It seems like you've pulled back a little bit on those incentives that drove some of the momentum in October. So what gives you the confidence that even at the low end of your guidance range that they'll come in with a better absorption rate in '25 versus '24?

It's a great question, Alan. Look, 2.4 was the lowest absorption rate we've had in a long time and it was disappointing and it was characterized by an 8% mortgage rate in the first quarter last year that made the October and November months really challenging. And as I told you and others on the call in August, I feel like we kind of got punched in the mouth by our competitors in May, June, and it took us a minute to find our footing. I think we had over-specced or over-specified the spec homes that we had started and we were a little bit out of position and we addressed that. And I think the combination of getting better dialed in on and accepting a somewhat larger share of specs as a part of our sales mix and not being in an 8% mortgage rate environment, which is obviously how we started last year. I think those two things together give us confidence we will be back in the range that we've historically been in. Now exactly where in that range, I obviously don't know at this point, but we are going to be up in sales pace next year. This year. Sorry, I do that too. I get confused between September and December. When I said next year, I meant 2025, our fiscal year.

No, understood. I appreciate that, Allan. Second question, if I look at your 1Q margin guide, 19% adjusted, that would be I think if our model is right, the lowest margin you've generated in over a decade. And I know you're expecting that to ramp through the year and I think your explanation makes sense to me. But we're starting to hear a little bit of chatter from some land sellers and developers that not necessarily Beazer specific, but some builders are attempting to maybe renegotiate some option terms and take down prices, just given the fact that rates have clearly stayed higher than many had expected, incentives have remained more elevated. So, as you look at where your margin is today and a relatively thinner margin than perhaps some of your peers and maybe where you had expected, are you in the process of maybe trying to take some of your more recent land buys and renegotiate them given the changing macro-environment? Or do you feel like as those deals come to market even with the choppier environment that will still generate margins better than you're generating today?

Yeah. I mean because there are -- I mean, literally nearly 100 transactions in flight between LOIs and under contract or just closed, obviously, answering that is a little tricky because I could cherry pick and answer it one way or I could cherry pick and answer it a different way. I think broadly, we did re-underwrite a bunch of deals through the summer as we were struggling with sales pace. We walked away from one that I can think of right off the top of my head and I think we had in the third quarter $1 million write-off associated with it. We have renegotiated pricing on a handful of deals. We've gotten tougher on our underwriting for new deals. But our '25 and frankly, our '26 is largely in place at this point. So I wouldn't say that there is some wholesale reset that's available. I think one of the ways to think about it, and I think a little bit about this, what is our finished lot cost as a percentage of our ASP? And I think it's back to a level where it was in 2000. We had the benefit, '21, '22, '23 and I mean, frankly, everybody did. There was more HPA on top of a historical cost base and that kind of inflated margins. I think land prices are a little bit elevated relative to ASPs. But as I look back to that pre-COVID period, they're not substantially different than they were then.

Great. I appreciate the thoughts. Thanks a lot.

Thanks, Alan.

Our next question comes from Tyler Batory with Oppenheimer. Your line is open.

Hey, good afternoon. Thanks for taking my questions. Couple from me. And I want to start, Allan, in your prepared comments, you talked about the

Well, let me take the second part first because I can't give you basis points and answers, but directionally, you've touched on something that's hugely important to us. I am incredibly confident we can reduce the cost of delivering

Okay. Excellent detail. Thank you very much. Follow-up question on the incentives. You sound like you ramped up incentives and you pulled back. I guess, which markets did you lean in a little bit more? Are those the same markets where you've been able to pull back? And then when you look ahead to fiscal '25, it sounds like lower incentives are part of that gross margin improvement. Just talk a little bit more about your kind of your confidence in that? Your expectations for incentives next year? And maybe just for the industry overall, I mean, it does appear like the competitive environment, it was pretty robust. There are lots of builders out there that are getting pretty aggressive in terms of what they're offering. I mean, what needs to happen for that to change? I mean, do you think these incentive levels are just kind of here to stay? Is it in a mortgage rate sort of scenario? I'd just be curious your thoughts on all those topics.

All right. Well, gosh, there's a lot there. How about -- I'll take a piece of it. I'm going to hand the baton to Dave and let him take a piece of it. But let me talk for just a second about the incentives in the markets. Now I'm not trying to be a smart, but last quarter I singled out a couple of markets and said, hey, our sales pace is just not good here and we got to fix it. And when I did that, I did it intentionally, it was accurate, but I got to tell you, it made my team in those markets not feel very good. They know who they are. I am happy to say that those are exactly the places we did the things that we said we were going to do. We fixed our spec strategy in terms of what's the level of specification. But we also reallocated closing cost to price reductions and we lowered prices to be more competitive. So we did all of these things and it led directly in those markets to a dramatic improvement in sales pace. In fact, I will give a little shout-out to Houston because I called on them last quarter. I think between August and September and I -- this number is approximately right. I know we more than doubled our monthly sales. I know that that sales pace in October stayed quite elevated even as they were withdrawing the sales incentives. So I feel pretty good about. We diagnosed the problem and I think we applied an appropriate and short term solution. The good news is it allowed us to sell out of some communities in submarkets and at price points that's really not our wheelhouse. And so I don't think that that has a long-term lingering effect. And that is certainly part of our margin guide that Q1 has got some stuff in it that's not in Q2, Q3 or Q4. Now for the full year, I think we said something really important. We expect specs to be 60% of our closings. In my tenure, we've never had a year where closings were 60% specs. And definitely, they have consistently had, well, but for two years in the middle of COVID, they've consistently had margins of two to three points lower than our to-be-builts. So that's predicated or our guide or our outlook is sort of predicated on that where we are accepting that we are in a higher rate environment that's going to carry a larger specs percentage and we have reflected in what we've shared today that outcome in our margins. Now if we get a robust spring selling season where we're able to between now really in April, sell a bunch of to-be-builts, our full-year margins are going to be better than the low-end of that range for sure because that's really the biggest driver. And then secondarily, if we see any rate relief, there will be some reduction in incentives and that would flow through as well. But we are not betting on any of that.

Yeah. Look, the only thing I would tell you, Tyler, is Allan talked about some price costs on

Okay, great. So last question for me, and I don't want to put you too much on the spot here. I appreciate all the detail for 2025. Sometimes updating a model real-time can be a little bit treacherous. But just based on the -- if I've used the low-end of your guide, I mean, it sounds like EBITDA should be growing next year. Do you think you can see EPS growth next year or perhaps there's a tax-rate issue that's impacting the -- just the different growth rates there on a year-over-year basis?

So, let's start, Tyler, with the tax situation. So in 2024, we were still benefiting from harvesting energy efficiency credits from previous years. So the tax rate is going to be a little bit higher than what we saw as we looked at -- as we look forward into 2025 and we gave Q1 guidance on being around 15%, that will affect the comparability. What I would tell you from a return on capital, and we made it pretty clear in our comments, we're expecting to generate a double-digit return on capital employed. Now this year, we were in the 11s. We'd be pretty disappointed if our ROCE was lower than it was this year. But again, we've kind of expressed that we expect it to be 10% or better, right

Okay. All right. I'll leave it there. Appreciate all the detail. Thank you.

Thanks, Tyler.

Our next question will come from Jay McCanless with Wedbush. You may proceed.

Hey, good afternoon, everyone. Just want to clarify, on the fiscal '25 guidance, that is adjusted gross margin you're forecasting to, correct?

That is adjusted gross margin, Jay.

Okay. And then I guess the next question I have, I guess, could you guys reconcile and I know you said the community count is going to grow, but there may be some pickups along the way. I guess why try to push on absorptions and get back to a more normal level in the guidance when it doesn't -- it sounds like you've got confidence that the count is going to grow, but you're not sure exactly how quickly it's going to grow. So I guess why go aggressive on the guidance given maybe some pitfalls along the way with community count?

Well, there are two different things, right, Jay. I mean, community count and pace left hand, right hand. So on the pace side, we're simply we've done better in October. I expect that we're going to do better in November than a pretty easy comp. And I want us and we expect to sustain better paces. I don't think we'll have the problem next summer that we had this summer. So I think on balance, we ought to be up year-over-year on pace, and that's what we've guided to. Separate and apart from that, I mean, it's related clearly, but a different point is, we're entering the year with a bunch more communities. We're up 20%. We're up 20%, so it's more than 20%. The timing of the new communities coming on and the timing of close-outs, boy, you can miss by a month and slip from one quarter into the other quarter either because you sold a little faster in that community or a little slower or you had a two-week delay before you were able to grant open because the DOT didn't get the turn lane put in. Those kinds of things can happen. So what we've said is, we're going to be up in average community count between 18 and 22 communities. Get to about 180 at the end f the year, that math all foots. What Dave said though is that between the first and the second quarter, I don't know, we don't know for sure whether we will be sequentially up from Q1 to Q2. But Q2 will be up double digits over Q2 a year ago. And Q3 will be up double-digits over Q3 a year ago. And Q4 will be up double digits over Q4 a year ago. So I think we were just trying to provide some clarity that the sequential move may be a little uneven, but the year-over-year growth is locked in for '25.

Yeah. Jay, the only thing I would tell you is and I understand the question, I would tell you that one of the reasons we gave ranges and really focus on words like outlook, there's a lot of uncertainty now. And I don't think we're being aggressive. I think we're trying to give you a low end of what we think could happen. And if things get better, as Allan said and mentioned enough a number of scenarios where things could get better, then yeah, we'd expect to be toward the high-end of the range.

Okay. And then just the last question I had with what you guys are going to open on community count in '25, and given what seems to be better demand across the industry for move-up, whether it's first or second move-up homes, do you have any flexibility to change some of this product up to go from -- to bring that 60% spec down, which I'm assuming most of that's going to be entry-level, bring some of that down and put it out there as to-be-builts or is your mix that 60% pretty locked-in with what you're opening on the community front this year?

So, Jay, I really appreciate this question, but I -- respectfully, I want to disconnect something for you. When we say specs at 60% and you left to that's kind of entry-level, I wouldn't think about it that way in the case of Beazer. I mean in any given community, if we're going to sell, let's say, 50 homes in a year, maybe 30 of them are specs in that community, 20 of them are to-be-builts or some other ratio, but it's not like the specs or other communities. You follow me?

Yeah.

So we don't have to position different communities, it's just the mix within the communities that we have. And clearly, we are not the price leader in the market. So I don't know that I call us a move-up builder, but there are -- in every market we're in, there is a builder with a home with a lower price. Absolutely. When you're building

Look, I would tell you, Jay, the commitment to get to 100%

Okay. Got it. Great. Thanks, guys.

You got it, buddy.

[Operator Instructions] Next, we will hear from Alex Rygiel with B. Riley. Your line is open.

Thank you. Nice quarter, gentlemen. Any chance you could sort of go around the country and talk to us a little bit about some of the strengths and weaknesses across the different geographies?

Yeah. I'd be happy to tell you that I have to offer you though my traditional surgeon general health warning, which is when we see a market perform really well, maybe it's because we're awesome. We did great and maybe it's because the market did great. And I'll try and differentiate that. We had an interesting mix of -- in the fourth quarter in particular, we had an interesting mix of markets in very disparate locations and price points that did pretty well. I mean, I would highlight, our Virginia team did a nice job, our Myrtle Beach team. That's a very different buyer that we see in Myrtle Beach than what we see in the closer in suburbs of DC and Virginia. Atlanta was pretty good. And then out West for us, Las Vegas and Northern California really showed up. And I think in those markets, they were generally healthy conditions. So part of it's got to be us, but I think part of it was probably the market. Where we struggled in the third quarter was in Texas. And I think a lot of it was us candidly, and I think we've addressed that and I feel pretty good about where we are in Texas. We're just not very big in some of the other major markets. And so I just feel like our experience good or bad is a little bit more idiosyncratic and I'd be reluctant to comment on them because I don't want to make a comment, for example, about a Phoenix at some level because gosh, there are seven or eight builders there that are doing 5 times to 10 times the volume we are. They can probably give you a better read on the market. I could only tell you how our handful of communities there did.

Very helpful. And then it sounded like in September and October, dirt builds actually picked-up a little bit.

It did.

But yet your messaging is, in the next 12 months to sort of expect the mix shift towards more spec builds. So if you could maybe reconcile those two.

Yeah, it's coming off of a crazy high number. I mean, August was 70-ish kind of percent of specs and September was a little bit lower than that and October was lower than that. So the trend is definitely in the right direction in terms of a little bit more strength in the to-be-builts. But candidly, it was still a majority of specs. It just wasn't as exaggerated a majority as we experienced in July and August. So the 60% reflects a higher level than normal for us, but certainly better than where we were in August and September.

Super helpful. Thank you.

Thanks, Alex.

Our last question will come from Alex Barron with Housing Research Center. Your line is open.

Hey guys, thank you and I appreciate all the details. I was hoping you could elaborate what changed and the example you gave of Houston where the sales doubled, if you could give more specifics on what's driving the confidence in the increase and sales pace you guys are expecting this year?

Well, I think, in the specs in particular, in Houston, some of the things that we did, and let me be clear, we took some lower margins, like that helped. But I think we had over-specced the specs. The flooring, the cabinet, the countertops, I think we aimed a little high and we found ourselves out of the market. And I think a very detailed review of that spec level proved that we were putting money in the home that we weren't getting paid for. And so we had to get over ourselves, fix it. And the next spec start didn't have it. But we did other things. We took our closing costs away and moved it into a price reduction or we substantially reallocated the incentive to price reductions. Sometimes it's as simple, honestly as geography. If you're advertising $419,000 with a $40,000 incentive, you might be better off advertising $379,000. And I think it was some things like that that we did. Now, in fact, there were some margin consequences, but we were very scalpel-like as it related to specs and closeout communities. And I think it was a combination of getting those communities working and then just dialing in a little bit our strategy with specs and to-be-built pricing that has kind of helped us sustain a heavier or a healthier level of activity.

Got it. Yeah. No, it makes a ton of sense. I think taking a little bit less margin if you can double your sales or 30% increase your sales makes a ton of sense. Now that you guys are building more specs, are you by the same notion offering either forward commitment or share buyback -- share -- I'm sorry, rate buydown or something that causes people to basically absorb those before they get to completion?

Well, I mean, we've always had a temporary and a permanent buydown set of options for our customers. I feel like our mortgage toys program gives us a great lineup. We get multiple lenders bidding effectively for that customer's business. And if a short-term buydown to conserve some cash is important, they can do that. If a permanent buydown so that they can qualify is important. We get proposals or our customers get proposals for that. So yes, we've got the full arsenal of mortgage tools and I would argue really more than most because literally every customer in order to get our closing cost incentive, one of our policies is you have to get more than one loan proposal. So we know our customers are getting the benefit of choice.

Got it. And if I could ask one last one, any thoughts on share buybacks given your stock is still below one-time book?

No, Jay, I would -- Alex, excuse me, I would tell you, we always think about this the same way. We think about excess capital and excess liquidity in the business and we think about risk-adjusted returns. And so while we're not certainly opposed, if it's the highest risk-adjusted return with our excess capital, we certainly think about it and it's an arrow in the quiver. That said, the primary focus as it has been for a while has been land spend and growth and that's not going to change.

Okay. Best of luck, guys. Thank you.

Thanks, Alex.

Thank you. And now we do have a follow-up question from Alan Ratner with

Am I in trouble now, Alan?

No, thank you for squeezing me in again. No, I don't -- well, I'm not sure it's a softball, but I'm curious.

I know you too well to expect a softball, my friend, so I'm ready.

No, absolutely. Well, I'm surprised it didn't come up, which is why I hopped back in. So we're a week of post-election and obviously still a few months away from the administration change. But just curious as you think about all the proposals and discussion that have been kind of thrown out there up to this point related to a whole host of issues. Any thoughts about kind of how -- what impact, if any like the discussion about, for example, mass deportation, does that concern you at all as far as labor availability? Anything about GSE reform? Just kind of a jump ball here, but curious if you've given any thoughts to the upcoming administration change.

Well, I'm going to dodge GSE reform because, as you know, I'm on the Board at one of the GSEs. But I would say as we talk about other issues, I think there are puts and takes so far. A little cast in stone, as you point out. I would tell you it's fairly significant. One of the through lines in our comments this quarter is a kind of a realization that it is more likely than not that rates stay elevated compared frankly to what I thought 90 days ago. I mean, we were on a pretty good rate of decline in mortgage rates through July, August and to the beginning part of September, and that's all gone away. In fact, I think rates are 50 basis points higher today than they were the last time we talked. So I think we have accepted that whether it's reduction in taxes or more spending or some combination thereof, there is some realistic chance that mortgage rates, notwithstanding Fed action, could stay elevated. So that's one thing that we've internalized and we could be wrong, but that's an assumption that we've made that's different. As I think about the growth side, I do feel like when you start talking about and actually doing some level of deregulation and creating clarity on tax cuts or tax levels and there's less fear of adverse changes, I think that will be pretty helpful from an enthusiasm and the economy standpoint. Now the third leg and you mentioned it is around immigration policy. And I'm -- it's a super tricky issue. Like the level of undocumented and other than entirely legal immigration that took place has clearly had all sorts of impacts on our society. I don't think that they are broadly employed in the housing sector. The policies that we have that we require our trades to have would suggest that they're not direct beneficiaries. But of course, if a number of people are withdrawn from the country who are doing other jobs, does that create some competition for labor that changes the dynamic? That could certainly happen. I think as ambitious as that mandate is, I think the details of it are far from clear. The timing of it is far from clear. So I've got my eye on it, but I can't make any kind of an intelligent projection about what exact effect it will have. The two we felt pretty good about. I do think there's going to be a little more confidence with rates and tax rates and regulations. And I think we're likely going to pay for it in the form of higher mortgage rates.

Very helpful. Thanks again.

You bet, Alan.

Thank you. We are showing no further questions at this time.

All right. I want to thank everybody for joining us on our fiscal fourth quarter call and we look-forward to talking to everybody in next quarter. Thank you so much. This ends today's call.