Good day and welcome to the MI Homes First Quarter Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Phil Creek.
Please go ahead.
Thank you. Thank you for joining us today. On the call is Bob Schottenstein, our CEO and President Tom Mason, EVP Derek Klutch, president of our mortgage company Anne Marie Hunker, VP and corporate controller and Kevin Haig, senior VP. First, to address regulation fair disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant nonpublic items with you directly. And as to forward looking statements, I want to remind everyone that the cautionary language about forward looking statements contained in today's press release also applies to any comments made during this call.
Also be advised that the company undertakes no obligation to update any forward looking statements made during this call. I'll now turn the call over to Bob.
Thanks, Phil. Good afternoon, everyone, and thank you for joining our call to review our first quarter results. We had an outstanding first quarter, perhaps the best quarter in company history, setting records on many fronts, including new contracts, deliveries, revenues, and pretax income. Housing conditions in all of our markets are very strong. The robust demand for new housing is being driven by a number of factors, including low mortgage rates, historically low inventory levels, a rapidly growing number of millennials joining the ranks of homeownership, and a shift in buyer preference away from renting in favor of single family homes.
In addition, the quality of buyers in is in as good a shape as we've ever seen. Our average buyer is putting more than 15% down and has a credit score in excess of 740. Taken together, all of these factors have created an excellent environment for new home sales that has contributed to our record setting performance. We are proud of our results as we continue to gain market share and improve our profitability throughout every one of our 15 markets. During the quarter, we sold an all time quarterly record of 3,109 homes, 49% better than a year ago.
Our absorption pace per community improved significantly to 5.3 sales per community compared to 3.1 sales per community a year ago. And we continue to experience very strong results with our Smart Series, which represents our most affordably priced line of homes. Smart Series sales comprised nearly 35% of total company wide sales during the quarter compared to 30% a year ago and just 16% in 02/2019. We are selling our Smart Series product in all 15 of our divisions and in roughly one third of our communities. As we've shared before, on average, our Smart Series communities are larger with more lots, and our Smart Series homes produce better monthly sales space, higher gross margins, faster cycle time, and overall better returns.
Homes delivered during the quarter increased 35% and were a first quarter record. Revenues increased 43% and also represented a first quarter record. Gross margins improved by four twenty basis points to 24.4%. And our overhead expense ratio improved by 120 basis points. As a result, our pretax income was an all time quarterly record of $110,000,000 1 hundred and 60 7 percent better than a year ago with a pretax income percentage of 13.3% compared to 7.2% last year.
These strong returns resulted in a 25% return on equity, improving from the 22% full year return on equity we had in 2020. Our first quarter results continued our trend of strong growth in both revenues and earnings. Specifically, since 2013, our revenues have grown at a compounded annual rate of 19%, and our pretax income has grown at an even more impressive annual rate of 43%. Company wide, our backlog sales value at the end of the quarter was a record $2,400,000,000 80 2 percent better than last year. And our units in backlog increased by 68% to an all time record 5,479 homes with an average price in backlog of $433,000 nearly 10% higher than the average price in backlog last year at this time.
As I indicated earlier, all 15 of our homebuilding divisions contributed significantly to our first quarter performance. And as you'll soon hear, our financial services mortgage and title operations also had a record quarter, highlighted by strong income, an excellent mortgage capture rate, and very solid across the board execution. Now I will provide a few brief comments on our markets. We divide our 15 markets into two regions. The Northern Region consists of six of our markets, namely Columbus, Cincinnati, Indianapolis, Chicago, Minneapolis, and Detroit, while the Southern Region consists of the remaining nine markets, Charlotte and Raleigh, Orlando, Tampa, and Sarasota, and Houston, Dallas, Austin, and San Antonio.
New contracts in the Southern Region increased 46% during the quarter. In the Northern Region, new contracts increased 53% during the quarter. Our deliveries increased 34% in the Southern Region during the quarter to twelve eighteen deliveries or 60% of total. The Northern Region contributed the balance eight zero one deliveries, an increase of 36% over last year. Our owned and controlled lot position in the Southern Region increased by 35% compared to last year and increased by 8% in the Northern Region compared to last year.
While we are selling through communities somewhat faster than expected, we are very well positioned to handle the current level of demand. 35% of our owned and controlled lots are in our Northern Region, while the balance, roughly 65%, are located in the Southern Region. We have a strong land position. Company wide, we own approximately 16,800 lots, which is roughly slightly less than a two year supply. On top of that, we control via option contracts an additional 25,200 lots.
So in total, our owned and controlled lots approximate 42,000 single family lots, which is just under a five year supply. Importantly, and worth noting, 60% of those lots are controlled under option contracts, which gives MI Homes significant flexibility to react to changes in demand or individual or unexpected market conditions. Had 100 communities in the Southern Region at the end of the quarter, which is down from 125 a year ago. In the Northern Region, we had 87 communities at the end of the quarter, which is down 11% from the 98 we had last year at this time. Clearly, this decline in community count is a result of our accelerated sales pace.
But it's also important to recognize that over one third of our communities are now offering our Smart Series homes and that these communities often have more lots in total, but they also produce a greater sales pace. We are managing our sales pace as well as our pricing in our communities to take advantage of the strong demand and to assure delivery of a high return on our investment. Before I turn the call over to Phil, let me just make a few final comments. Our financial condition is very strong with $1,400,000,000 of equity at the end of the quarter and a book value of $46.37 per share. We ended the first quarter with a cash balance of $293,000,000 and zero borrowings under our $500,000,000 unsecured revolving credit facility.
This resulted in a 32% debt to cap ratio, down from 39% a year ago, and a net debt to cap ratio of 21%. We are very excited about our business. Our financial condition has never been better. We have important operating momentum throughout the company. And the quality of our product, along with the quality of our communities and our land position, positions us for continued growth, continued gains in market share and strong results.
We fully expect to have an outstanding year in 2021. With that, I'll turn it over to Phil.
Thanks, Bob. As far as our financial results, new contracts for the first quarter increased 49% to 3,109, an all time quarterly record compared to last year's first quarter two thousand and eighty nine. Our new contracts were up 68% in January, up 21% in February, and up 64% in March. And our sales pace was 5.3 for the first quarter compared to last year's 3.1. And our cancellation rate for the first quarter was 7%.
And as Bob stated, we continue to manage sales pace and returns in our communities closely. As to our buyer profile, about 56% of our first quarter sales were to first time buyers compared to 53 in the fourth quarter of last year. In addition, 43% of our first quarter sales were inventory homes, the same as February fourth quarter. Our community count was one eighty seven at the end of the first quarter compared to 02/23 at the end of February first quarter. The breakdown by region is 87 in the Northern Region and 100 in the Southern Region.
During the quarter, we opened 21 new communities while closing 36. In last year's first quarter, we opened 17 new communities. We delivered a first quarter record of 2,019 homes, delivering 46% of our backlog compared to 56% a year ago. Production cycle times are being lengthened by supply issues. Revenue increased 43% in the first quarter, reaching the first quarter record of 829,000,000.
And our average closing price for the first quarter was 395,000, a 6% increase when compared to last year's first quarter average closing price of 374,000. And our backlog average sale price is 433,000, up from 399,000 a year ago. And our backlog average sales price of our Smart Series is 335,000. Our first quarter gross margin was 24.4%, up four twenty basis points year over year. Our construction and land development costs continue to increase with our biggest impact from lumber.
Our first quarter SG and A expenses were 11% of revenue, improving 120 basis points compared to 12.2 a year ago, reflecting greater operating leverage. Interest expense decreased 3,500,000.0 for the quarter compared to the same period last year, and interest incurred for the quarter was 10,200,000.0 compared to 11,900,000.0 a year ago. And the decrease is due to lower outstanding borrowings in this year's first quarter as well as a lower weighted average borrowing rate. We are pleased with our improved returns for the first quarter. Our pretax income was 13.3% versus 7.2% a year ago, and our return on equity was 25% versus 15% a year ago.
During the quarter, we generated a hundred and 25,000,000 of EBITDA compared to 59,000,000 in last year's first quarter, And we generated $75,000,000 of positive cash flow from operations in the first quarter compared to using $24,000,000 a year ago. We have $22,000,000 in capitalized interest on our balance sheet, about 1% of our total assets, and our effective tax rate was 23% in this year's first quarter, the same as last year's first quarter. And we estimate our annual effective rate this year to be around 24%. And our earnings per diluted share for the quarter increased to $2.85 per share from $1.00 9 per share last year. Now Derek Klutch will address our mortgage company results.
Thanks, Phil. Our mortgage and title operations achieved record first quarter results in pretax income, revenue, and number of loans originated. Revenue was up 120% to $29,600,000 due to a higher volume of loans closed and sold along with higher pricing margins than we experienced last year. For the quarter, pretax income was $19,700,000 which was up 250% over February first quarter. The loan to value on our first mortgages for the quarter was 84%, the same as February first quarter.
Seventy '8 percent of the loans closed in the quarter were conventional and 22% FHA or VA. This compared to 7228% respectively for February. Our average mortgage amount increased to $328,000 compared to $306,000 last year. Loans originated increased to a first quarter record of 1,575 loans, 39% more than last year, and the volume of loans sold increased by 50%. Our borrower profile remains solid with an average down payment of over 15% and an average credit score on mortgages originated by MI Financial of 746, up from seven forty five last quarter.
Our mortgage operation captured over 84% of our business in the first quarter, which was in line with 85% last year. We maintain two separate mortgage warehouse facilities with combined availability of $215,000,000 that provide us with funding for our mortgage originations prior to the sale to investors. At March 31, we had a total of $176,000,000 outstanding under these facilities, which expire in May and October of this year. Both facilities are typical three hundred and sixty four day mortgage warehouse lines that we extend annually. We have requested an extension of the warehouse agreement that expires in May, and we expect the banks to approve the extension shortly with closing anticipated prior to expiration.
Now I'll turn the call back over to Phil. Thanks, Derek. As far
as the balance sheet, our total homebuilding inventory at March 31 was $2,000,000,000 an increase of $138,000,000 from March. Our unsold land investment at March thirty one of this year is 742,000,000 compared to 809,000,000 a year ago. At March 31, we had 426,000,000 of raw land and land under development and 316,000,000 of finished unsold lots. We owned 4,227 unsold finished lots with an average cost of 75,000 per lot, and this average lot cost is 17% of our 433,000 backlog average sale price. Our goal is to own a two to three year supply of land.
During this year's first quarter, we spent 92,000,000 on land purchases and 71,000,000 on land development for a total of a hundred and 63,000,000, which was up from a hundred and 38,000,000 in last year's first quarter. And in the first quarter of this year, we purchased 2,500 lots, of which 75% were raw. In last year's first quarter, we purchased 1,800 lots, of which 70% were raw. In general, most of our Smart Series communities are raw land deals and have above average company pace and margin. We have a strong land position at March 31, controlling 42,000 lots, up 24% from a year ago.
And of the lots controlled, 40% are owned, about a five year supply. And at the end of the quarter, we had 98 completed inventory homes and 708 total inventory homes. And of the total inventory, 423 homes were in the Northern Region and 285 were in the Southern Region. At March 31 last year, we had five fifty six completed inventory homes and thirteen twenty two total inventory homes. This completes our presentation.
We'll now open the call for any questions or comments.
We will now begin the question and answer session. And you would like to withdraw your question, please press then 2. At this time, we will pause momentarily to assemble our roster. First question comes from Jay McCanless with Wedbush. Please go ahead.
Hey, good afternoon. Congratulations on a really great quarter. Just got two or three questions for Yeah, absolutely. And understanding that the February weather probably had an effect on everybody, but can you talk about the sharp increase in order growth from February to March and frame it in the light of metering sales or trying to slow sales so that construction can keep up? Because and not to be a smart aleck about it, but when when we hear this from the builders that they're trying to slow things down and then they put up such really great sales numbers, you know, when is that gonna show up in the order growth, or when is that gonna show up in the closing growth numbers or or in the closing numbers over the next couple of quarters?
Jay, as far as the, orders, you know, we were very pleased with the 3,100 for the quarter, and each month was about a thousand. So just from a number standpoint, it really was, you know, pretty consistent. From a closing standpoint, we were very pleased with our closing number. We probably had 25 to 50 closings delayed from Texas due to the crazy weather they had. You know, as Bob said, we we feel really pretty good about the way we're managing sales and also the construction side of the business and so forth.
We have a very, very strong backlog. Of course, the backlog conversion rate is going down because we don't have as many specs in the pipeline to close quickly, plus it just takes a little more time to manage a bigger backlog. But having said that, you know, we are looking for a a strong second quarter in closings.
Jay, I don't have much to add other than I think the demand was exceptionally strong and has been for more than probably six months, seven months, almost going back to last May actually. I didn't really I don't think there was any discernible difference in demand from January to February to March other than maybe the, you know, the the difficult period in in Texas for about a week or two, you know, with with the electric problems and the bad weather. But but I I I you know, we're we're doing the best we can to manage and control, doing so because we wanna make certain we can deliver homes in timely fashion, protect our costs, protect our margins, and satisfy customers.
Got it. Yes. I'm just trying to get a sense of how the pace is going to go this year from a unit volume perspective. And actually, that, Phil, you touched on closings per month, and that that's what I was gonna ask next because in 02/2019, you guys did 2.4 on average closings per month. Last year, it was 3.2.
And now this first quarter, you closed almost 3.5 homes per month on average in in your communities. Is that the kind of pace we should expect for the rest of the year? Or is that gonna have to slow down now that you've sold through most of the spec inventory you have?
I think some of that increase is due to Smart Series homes, the cycle time for which is, you know, several weeks less than, non Smart Series. And two years ago, keep in mind, it was about 15% of our business, maybe a little more. Today, it's 35% of our business.
And also, Jay, look at closings the last three quarters. You know, we've closed 2,000 plus homes, Third quarter of twenty, the fourth quarter of twenty, and the first quarter of this year, we've been at the run rate of 2,000 plus. So, you know, as Bob says, we're continuing to do all we can to to, deliver as many quality homes as we can. We sure have a strong backlog to do that.
Yeah. I guess. And then the next question I have is when we think about the gross margin, it sounds like you guys closed out a a significant amount of communities this quarter. Was this some of the older Smart Series communities in Texas or in some of your other markets that drove the margin this high? Was it price mix?
What drove the gross margin outperformance? How likely is that to continue?
Well, we don't give margin guidance. But my answer to that would be demand is driving the margins more than mix or land that we bought a long time ago. We haven't had mothballed ground for I don't know if we ever have, but certainly not for a decade. I can't remember if we ever had it, frankly. But my point is, I think that the '24 plus percent margins are being fueled by the economy, by the market that we're operating in.
And based on what we know today, unless things were to slow down, rates were to rise noticeably, or commodity prices were to just go really crazy, unless something really unexpected were to occur, you know, we're we we would expect margins to continue at this pace for the near term, but we don't have any guidance on that. But in terms of expectation, that's what we'd expect.
Understood. And then the last question I have. On the last conference call, you all sounded reasonably confident that you could, maybe start to show some year over year community growth by year end 2021. How are you feeling about that now? And any ideas or hints or where you think we might go in '22 in terms of the community count?
I'll say one thing and then I'll let Phil. We don't have guidance on that, which I think probably frustrates people. But the fact of the matter is, we expect to continue growing. We expect to continue producing strong returns. We expect to continue to gain market share in our markets.
And that is gonna be a combination of continued rollout of Smart Series, but also opening a lot of new communities as we move on down the road. You you know, Jay, last year, we opened, 69 new stores. And as we said on the last call, you know,
we intend to open more stores this year than last year. And we talked about the first quarter of this year, we opened 21 versus 17 of last year, we are selling out of stores a a little faster than we thought. So I think that, having community count growth this year is going to be very challenging. But having said that, with the Smart Series continuing to be a bigger part of our business with stronger pace and stronger margins, but our non Smart Series also has performed better. Mean, one of the big things we're benefiting from, Bob talked about, is just the increased penetration, the increased scale.
If you look at us in the last couple of years, the significant growth we've had in our Texas markets, Sarasota has been very strong for us. Our Detroit acquisition is having improved results. Our Carolina markets where we were a little bit down in communities are now coming back. So we've had some strong performance across the markets, and that improving in scale and gaining market share has really helped our results. And we're we're really focused on continuing to improve income and our returns.
Got it. Well, again. Thanks for taking my questions.
Thanks. Thanks.
Our next question comes from Alan Ratner with Zelman and Associates. Please go ahead.
Hey, guys. Good afternoon, and congrats on the great results. Got a few questions as well. Maybe I'll kick off with the last comment you made about scale. I think, as you guys know, we think that scale is obviously a very important driver of margins and performance across the group.
And I know you guys have been talking about the focus there for a long time. And Bob, you kind of made the comment that 24% gross margin is demand driven, and certainly, I think that that was the biggest catalyst. But I'm curious if you think that historically, you've talked about this being a 20%, twenty one % gross margin business. I'm curious if you assume some normalization in pricing power at some point in the future, do you feel like you guys have done enough in the business in terms of taking market share, gaining scale where structurally perhaps your margins could be a little bit higher than that 20% to 21 range going forward once we kind of get through this this crazy demand period that we're in right now, however long it lasts for?
Well, he addressed it to you, Phil. So you go first, and then I'll go
to the Obviously,
we're focused very much on improving margins in all of our markets. With more volume, hopefully, we'll be able to get the better margins because when you have fewer communities, you know, you tend to be kind of on a treadmill. Maybe you kinda force sales a little bit to get the volume you need. So we do think that our scale will help us improve margins. We always try to stress, you know, and we think our execution with our 15 area presidents has been very, very strong.
Make sure we're market pricing, make sure we, you know, open communities right. There's no reason to get too far out ahead of our cost. So execution really, really matters. So when you're dealing with 3,000,000,000 or 4,000,000,000 of revenue, an eighth or a quarter means a whole lot. So we're sure hoping that we're gonna be able to improve our margins, and do better than, you know, the competition.
What what I would say is I I agree with you, Alan, in that, look, a year or two ago, we were a 6,000 to 7,000 run rate builder. Today, we're north of 10,000 run rate. And we ought to get better pricing on certain national nationally purchased items if our business is 40% larger. We shouldn't be paying the same thing if we're buying 40% more of the same item. We have a great national purchasing program.
I think it's outstanding. But if it stands to reason, if you're buying more, you ought to be have a little bit more leverage maybe to get a little bit better pricing on certain commodities. And that's something we're very focused on. The other issue is, the below the gross margin line benefits of that scale, which I think are the ones that are most important. We brought 13 plus percent to the bottom line this quarter.
Last year at this time, we felt pretty good about ourselves. We brought 7% to the bottom line. Now part of that is the, you know, 400 basis points of it's in gross margin. But, you know, the other two fifty to 300 is below the line leverage. So, you know, right now, we're very excited about the opportunities that scale gives us.
We've known and believed and hoped that it would be coming, and it is. And as we look out over the next several years, you know, we don't know if housing is going to stay as strong as it is now, generally speaking, we're very optimistic about the industry. We believe there has been a shortage of homes produced for many years. I don't know if it's 3,500,000 less than we needed or 5,000,000 or 1,000,000. But I also know that the group that has the greatest potential to impact our industry, which I think is the millennials, are really beginning to increase their home ownership rate by halves and 1%, one and a half percent over twelve month period.
And that's a lot of home purchasers. And, while right now, a lot may be more new than used because there's just so so few used homes for sale, the fact is I think housing has a lot of room to run. And we're very well positioned. Whether our gross margins stay at 24% or maybe even go up a little higher here in the near term, maybe they settle back, maybe they will settle back closer to 22% than 20% to 21%. That remains to be seen.
But I think we have a chance as we grow relative to our peers to continue to improve our returns.
Great. I appreciate both of your viewpoints there, and it'll be interesting to see. Second question, I'd love to dig in a little bit on the production side of things. You kind of touched on it a little bit. You alluded to production cycle times being lent into, a, I was wondering if you could quantify that.
But your sales pace this quarter at over five a month is, I think, a company high. And I'm curious, what are your actual housing starts running at? Are you starting five or six homes a month per community right now? And if so, can that pace be sustained or even improved? And if not, does that mean that you have kind of pull the reins in a little bit on how quickly you're selling going forward?
Let me say a couple of things and then maybe Phil can really provide a more precise response. This is probably close to record pace for us. Think you're right. I actually did not check that. Our Smart Series communities, the pace is slightly greater than six.
And even on our non Smart Series communities, our pace is in excess of five. So we're seeing across the board, you know, really strong response to all of our communities. You know, and that's important to note because, you know, for for the foreseeable future, maybe forever, at least half, if not more, of our business will be non smart just because of the nature of of of our of our operating strategy, not wanting to have too many of our eggs in any one basket. The so I think that that's part of the PACE answer. The other thing I'll just point out is our cycle times have been stretched.
And they're probably a little more stretched today than they even were a month or two ago. It's the problem continues to get a little worse by days at a time, maybe a week. It's not horrible, but, you know, what what have we lost, Phil? About three weeks or so? Yeah.
It looks like cycle time is up about ten days. Again, Smart Series is a little different than what our our non Smart is, but, you know, it is up about that. And we're kinda thinking it may get, you know, a little bit worse than that. As far as your question from a start standpoint, you know, kind of the run rate these days, Alan, is we're we're starting about 900 homes, you know, a month. You know, Bob talked about, you know, that run rate of, you know, 10,000 when you kinda look at what we're running at right now.
When you compare that to last year, that number was about 700. Obviously, last year, this time, a lot of things were going on. But we do feel good that we've been able to to ramp the production side of the business up. But, again, still wanting to make sure we deliver a quality home, take care of our customers. So, overall, we feel pretty good.
I mean, the deliveries the first quarter were a little stronger than we thought, all things considered with Texas and all the challenges. And, you know, looks like we're gonna have a a good strong second quarter, hopefully. I think we're doing a pretty good job as best we can, managing the supply and the cost side jumping around. When you look at the cost side, the first quarter, every market's a little different. There was like a 3% to 5% increase on the cost side as far as materials and labor.
You know, lumber tended to be, you know, five, six thousand dollars a house, and, again, trying to handle that as best we can. But, overall, we feel like, if you look at the margins from the fourth quarter, excluding the impairment we took, the margins in the fourth quarter were 24%. So this quarter, they were up about 40 or 50 basis points. So we feel pretty good about that.
Great. Well, appreciate all that detail, guys, and, keep up the great work.
Thanks a lot. Thanks.
Our next question comes from Alex Barron with the Housing Research Center. Please go ahead.
Good afternoon, guys. Great job on the quarter. Thanks. I had a question regarding interest expense. I think this quarter, you guys expensed $8,000,000 through the cost of goods sold and $1,000,000 below the line.
And I think your interest incurred is roughly 10,000,000. So going forward, is that gonna be roughly the amount that we should expect in cost of goods sold, and nothing in the you know, under the line?
You you know, Alex, as far as the interest incurred, you know, we were, we feel really good about our capital structure. And as I said in the prepared remarks, you know, the interest incurred actually was less than you this year than they were last year. As far as what flows through what line, Anne Marie, can you help, any with that?
Well, I mean, what flows through the line is about as a percentage basis, you can you can kinda keep the same. What what below the line is impacted also by land development. So it's choppy. You know, it depends on how much we have under development, how much gets capitalized. So it can vary, but not by a ton.
But going through cost of sales, it's about the same percentage of the total cost of sales.
Guess my point is it seems like you guys are getting to a scale where 10,000,000 ought to be kind of the ceiling. Right? It wouldn't in other words, you're you're gonna start to see some leverage from interest expense?
A little bit.
It's hard to tell. I would think we
would The land little bit again. Yeah.
I mean, you look as far as what went through the interest expense line, it was, what, you know, $4,000,000 last year and one or two this year. But, you know, we don't we only have 1% of the total balance sheet and capitalized interest. Our interest incurred, you know, we feel really good about. So, hopefully, we're gonna get efficiencies there, you know, just like we do everywhere else. We are developing a little more of our own loss today than we were a year ago.
But, overall, we feel pretty good about that.
Okay. Great. And then, with regards to capital allocation, I believe you guys, obviously, you're growing quite a bit. So I'm just kinda wondering if you could share your thoughts around, you know, you're generating cash. It looks like you're optioning more lots.
Is there any thought to do any share buybacks or or start a dividend?
Well, the first thing, you know, if you look last year, you know, we spent about $730,000,000 on land between land purchases and land development. We talked about in the first quarter, you know, we spent more than last year. Aren't giving any estimate. We but we do expect to spend significantly more this year than last year on land. So we do need to buy, you know, more land to continue our growth.
You know, we continue to to look at, you know, what we need in the business. Feel very good about, you know, where our leverage is now. Watch that very carefully. We'll continue to have discussions internally and with our board about possible stock buybacks, dividends, those type of things. But right now, we feel like with a little bit of cash and a relatively low leverage, that's kind of where we want to be right now, we feel good about where we are.
Okay. Great. One last one. Can you guys comment on what percentage of your orders, or closings were coming from the Smart Series versus a year ago? Same thing on your land holdings.
You know, what percentage of your lots are kind of allocated for Smart Series versus a year ago? Thanks.
On the sales side, I think I said in our remarks, Alex, 35% of our total sales were Smart Series versus about 30% a year ago, nineteen percent two years ago. I don't have the closing percentage in front of me. Do you have the percentage on land holdings?
I I know it's a little bit
higher of our total communities are Smart Series communities.
Yeah.
But they tend to be larger in number of lots. So it could be it would be it would stand then, the math would suggest that a greater percentage of our lots greater than one third are Smart Series.
Okay. Well, great. Keep up the good work. Thank you. Thanks.
Thanks.
This concludes our question and answer session. I would like to turn the conference back over to Phil Creek for any closing remarks.
Thank you very much for joining us. Look forward to talking to you next quarter.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.