Categories Earnings Call Transcripts, Industrials

DR Horton Inc. (DHI) Q2 2021 Earnings Call Transcript

DHI Earnings Call - Final Transcript

DR Horton Inc.  ( NYSE:DHI ) Q2 2021 earnings call dated Apr. 22, 2021.

Corporate Participants:

Jessica HansenVice President of Investor Relations

David V. AuldPresident and Chief Executive Officer

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Bill W. WheatExecutive Vice President and Chief Financial Officer

Analysts:

John LovalloBank of America — Analyst

Matthew BouleyBarclays — Analyst

Michael RehautJP Morgan — Analyst

Carl ReichardtBTIG — Analyst

Stephen KimEvercore ISI — Analyst

Anthony PettinariCiti — Analyst

Alan RatnerZelman and Associates — Analyst

Mike DahlRBC Capital Markets — Analyst

Truman PattersonWolfe Research, LLC — Analyst

Jay McCanlessWedbush Securities Inc. — Analyst

Presentation:

Operator

Good morning and welcome to the Second Quarter 2021 Earnings Conference Call for D.R. Horton, America’s Builder, the largest builder in the United States. [Operator Instructions] An interactive question-and-answer session will follow the formal presentation. [Operator Instructions]

I would now like to turn the conference over to your host, Jessica Hansen, Vice President of Investor Relations for D.R Horton. Thank you. You may begin.

Jessica HansenVice President of Investor Relations

Thank you Melissa and good morning. Welcome to our call to discuss our results for the second quarter of fiscal 2021. Before we get started, today’s call may include comments that constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to D.R. Horton on the date of this conference call and D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements. Additional information about issues that could lead to material changes in performance is contained in D.R Horton’s annual report on Form 10-K and its most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.

This morning’s earnings release can be found on our website at investor.drhorton.com and we plan to file our 10-Q, early next week. After this call, we will post updated investor and supplementary data presentations to our Investor Relations site on the Presentation section under News and Events for your reference.

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

David V. AuldPresident and Chief Executive Officer

Thank you, Jessica and good morning. I am pleased to also be joined on this call by Mike Murray, our Executive Vice President and Chief Operating Officer and Bill Wheat, our Executive Vice President and Chief Financial Officer. The D.R. Horton team delivered a strong second quarter, highlighted by 95% increase in earnings to $2.53 per diluted share. Our consolidated pre-tax income increased 90%, on a 43% increase in revenues to $6.4 billion and our pre-tax profit margin improved 450 basis points to 18.3%. Our net sales orders for the quarter increased 35% to 27,059 homes and our homes in the inventory increased 38% to 46,100.

Our homebuilding return on inventory for the trailing 12 months ended March 31, was 31.2% and our consolidated return on equity for the same period was 27.1%. These results reflect our experienced teams and expanding production capabilities, our ability to leverage D.R. Horton scale across our broad geographic footprint and our product positioning, to offer homes at affordable price points across multiple brands.

Housing market conditions remain very robust, and we are focused on maximizing returns and capital efficiency in each of our communities, while increasing D.R. Horton’s market share. We believe our strong balance sheet, liquidity and low leverage positions us very well to operate effectively through changing economic conditions. We plan to maintain our flexible, operational and financial position by generating strong cash flows from our homebuilding operations and managing our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments.

Mike?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Earnings for the second quarter of fiscal 2021 increased 95% to $2.53 per diluted share compared to $1.30 per share in the prior year quarter. Net income for the quarter increased 93% to $930 million compared to $483 million. Our second quarter home sales revenues increased 41% to $6.2 billion on 19,701 homes closed, up from $4.4 billion on 14,539 homes closed in the prior year. Our average closing price for the quarter was up 4% from the prior year at $313,200, and the average size of our homes closed was down 2%, reflecting our ongoing efforts to keep our homes affordable.

Bill?

Bill W. WheatExecutive Vice President and Chief Financial Officer

Net sales orders in the second quarter increased 35% to 27,059 homes and the value of those orders was $8.8 billion, up 47% from $6 billion in the prior year. We sold over 14,200 more homes in the first half of fiscal 2021 than the same period last year, supporting further gains in market share and scale. Our average number of active selling communities increased 4% from the prior year quarter and was flat sequentially. Our average sales price on net sales orders in the second quarter was $327,000, up 9% from the prior year. The cancellation rate for the second quarter was 15%, down from 19% in the prior year quarter. Our local teams are managing the sales order pace in each of their communities based on their lot position, number of homes in inventory and pace of home starts and production. Their increasing sales prices were supported by the market, while remaining focused on providing homes at affordable prices. We are pleased with our sales pace to date in April and remain well-positioned in this strong market with our affordable product offerings, lot supply and housing inventories.

Jessica?

Jessica HansenVice President of Investor Relations

Our gross profit margin on home sales revenue in the second quarter was 24.6%, up 50 basis points sequentially from the December quarter. The increase in our gross margin from December to March exceeded our expectations and reflects the broad strength of the housing market across our footprint. The strong demand for a limited supply of homes has allowed us to raise prices or lower the level of sales incentives in most of our communities. On a per square foot basis, our revenues were up 3.5% sequentially, while our stick and brick cost per square foot increased 4.5% and our lot cost increased 2%. We expect both our construction and lot costs will continue to increase on a per square foot basis. However, with the strength in today’s market conditions, we expect to offset these cost pressures with price increases.

We currently expect our home sales gross margin in the third quarter to be similar to or slightly better than the second quarter. We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the return on our inventory investments and adjust to local market conditions and new home demand.

Bill?

Bill W. WheatExecutive Vice President and Chief Financial Officer

In the second quarter, Homebuilding SG&A expense as a percentage of revenues was 7.6%, down 70 basis points from 8.3% in the prior year quarter. The improvement in our SG&A ratio this quarter was better than our expectations and was due to our higher than expected volume of homes closed and the increase in our average selling price. Our homebuilding SG&A expense as a percentage of revenues is at its lowest point in the March quarter in our history, and we remain focused on controlling our SG&A while ensuring that our infrastructure appropriately supports our business.

Mike?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

We have increased our housing inventory in response to the strength of demand. We started 23,700 homes this quarter, up 33% from the second quarter last year and ended the quarter with 46,100 homes in inventory, up 38% from a year ago. 12,200 of our total homes at March 31 were unsold, of which 700 were completed. We also had 1,900 model homes at the end of the quarter. At March 31, our homebuilding lot position consisted of approximately 487,000 lots of which 25% were owned and 75% were controlled through purchase contracts. 26% of our total owned finished lots — owned lots are finished and at least 45% of our controlled lots are or will be finished when we purchase them. Our growing and capital efficient lot portfolio is key to our strong competitive position, allowing us to increase our production volume to meet homebuyer demand. David?

David V. AuldPresident and Chief Executive Officer

Our second quarter homebuilding investments and lots, land and development totaled $1.7 billion of which $980 million was for finished lots, $440 million was for land development and $290 million was to acquire land. $270 million of our lot purchases in the second quarter were from Forestar. Bill?

Bill W. WheatExecutive Vice President and Chief Financial Officer

Forestar, our majority owned subsidiary is a publicly traded residential lot manufacturer operating in 54 markets across 22 states. Our strategic relationship with Forestar as a well-capitalized lot supplier across much of our operating footprint is serving us well and is presenting opportunities for both companies to gain market share. Forestar is delivering on its high growth expectations and now expects to grow its lot deliveries by 40% to 45% in fiscal 2021 to a range of 14,500 to 15,000 lots with a pre-tax profit margin of 10% to 10.5%. At March 31, Forestar’s lot position increased 62% from a year ago to 84,500 lots of which 58,700 are owned and 25,800 are controlled through purchase contracts. 63% of Forestar’s owned lots are under contract with D.R Horton or subject to a right of first offer under our master supply agreement.

Forestar is separately capitalized from D.R Horton and had approximately $500 million of liquidity at quarter end, which included $170 million of unrestricted cash and $330 million of available capacity on its revolving credit facility. At March 31 Forestar’s net debt to capital ratio was 34.1%. Forestar has been active in the public capital markets recently, issuing common stock through its At the Market equity offering program, issuing new senior unsecured notes, calling for redemption of some of its higher coupon senior notes and extending the maturity and increasing the capacity of its revolving credit facility. With low leverage, strong liquidity, capital markets access and its relationship with D.R Horton, Forestar is in a great position to continue to grow their profitable business. Jessica?

Jessica HansenVice President of Investor Relations

Financial services pre-tax income in the second quarter was $107.7 million with a pre-tax profit margin of 47.8% compared to $24.7 million and 23.6% in the prior year quarter. The improvement in our financial services operating margin is primarily due to strong net gains on sale and better G&A leverage due to increased loan volume. For the quarter, 98% of our mortgage company’s loan originations related to homes closed by our homebuilding operations and our mortgage company handled the financing for 67% of our homebuyers. FHA and VA loans accounted for 47% of the mortgage company’s volume. Borrowers originating loans with DHI Mortgage this quarter had an average FICO score of 720 and an average loan to value ratio of 90%. First-time homebuyers represented 57% of the closings handled by our mortgage company in this quarter. Mike?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

At March 31st, our multifamily rental operations had eight projects under active construction and an additional four projects that are completed and in the lease-up phase. Based on our pace of leasing activity, we expect to sell two of these projects during the second half of fiscal 2021. Our multifamily rental assets totaled $394.4 million at March 31st. As we’ve mentioned, we are now constructing and leasing homes within single family rental communities. After these rental communities are constructed and achieved a stabilized level of leased occupancy, each community is expected to be marketed for sale.

Our single-family rental operations are currently reported in our homebuilding segment. There were no sales of single family rental communities during the second quarter. However, we still expect one more sale later this fiscal year. At March 31st, our homebuilding fixed assets included $182.6 million of assets related to our single-family rental platform representing 27 communities, up from 13 communities in the first quarter. We now expect our total investments in our single and multifamily rental platforms will increase between $400 million and $500 million from the beginning to the end of fiscal 2021. Bill?

Bill W. WheatExecutive Vice President and Chief Financial Officer

Our balanced capital approach focuses on being disciplined, flexible and opportunistic. During the six months ended March, our cash provided by homebuilding operations was $138 million compared to $52 million in the prior-year period. $215 million of cash provided by our homebuilding operations was due to a deferral of estimated tax payments, granted by the IRS as a result of the Texas winter storm this year and the cash flow impact of this item will reverse in our third quarter.

At March 31st, we had $3.7 billion of homebuilding liquidity, consisting of $1.9 billion of unrestricted homebuilding cash and $1.8 billion of available capacity on our revolving credit facilities. We plan to continue maintaining higher homebuilding cash balances and liquidity than in prior years to support the increased scale of activity in our business and to provide flexibility to adjust to changing market conditions.

Our homebuilding leverage was 16.8% at the end of March, was $2.5 billion of homebuilding public notes outstanding and no senior note maturities in the next 12 months. At March 31st, our stockholders’ equity was $13 billion and book value per share was $35.96, up 25% from a year ago. For the trailing 12 months ended March, our return on equity was 27.1% compared to 19.1% a year ago. During the quarter, we paid cash dividends of $72.7 million and our Board has declared a quarterly dividend at the same level as last quarter to be paid in May.

We repurchased 4.5 million shares of common stock for $350.4 million during the quarter and the remaining outstanding share repurchase authorization at March 31st was $115.1 million. This week, our Board of Directors authorized a new $1 billion stock repurchase authorization, replacing the company’s previous authorization. The new authorization has no expiration date. We are committed to returning capital to our shareholders through both dividends and share repurchases on a consistent basis and to reducing our outstanding share count, each fiscal year. Jessica?

Jessica HansenVice President of Investor Relations

In the third quarter of fiscal 2021, based on today’s market conditions, we expect to generate consolidated revenues of $7 billion to $7.2 billion and our homes closed to be in a range between 21,500 and 23,000 homes. We expect our home sales gross margin in the third quarter to be in the range of 24.6% to 25% and our homebuilding SG&A as a percentage of revenues in the third quarter to be approximately 7.5%. We anticipate our financial services pre-tax profit margin of approximately 45% and we expect our income tax rate to be in the range of 22% to 23% for the quarter.

For the full fiscal year of 2021, we now expect consolidated revenues of $26.8 billion to $27.5 billion and to close between 82,500 and 84,500 homes. We still expect to generate positive cash flow from our homebuilding operations in fiscal 2021. However, we are not providing specific guidance for our homebuilding cash flow this year as we prioritize augmenting our housing and land and lot inventories to support higher demand. After reinvesting in our homebuilding business, our cash flow priorities are balanced among increasing our investment in both our multi and single-family rental platforms, maintaining our conservative homebuilding leverage and strong liquidity, paying a dividend and repurchasing shares to reduce our outstanding share count by approximately 1.5% from the beginning of fiscal 2021. David?

David V. AuldPresident and Chief Executive Officer

In closing, our results reflect our experienced teams and expanding production capabilities, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands, our strong balance sheet, liquidity and low leverage provide us with significant financial flexibility to capitalize on today’s robust market and to effectively operate in changing economic conditions. We plan to maintain our disciplined approach to investing capital to enhance the long-term value of our company, which includes returning capital to our shareholders through both dividends and share repurchases on a consistent basis.

Thank you to the entire D.R Horton team for your focus and hard work. Your efforts continue to be remarkable. We are incredibly well positioned to continue growing and improving our operations. This concludes our prepared remarks. We will now host questions.

Questions and Answers:

Operator

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of John — John Lovallo with Bank of America. Please proceed with your question.

John LovalloBank of America — Analyst

Hey, guys. Thank you for taking my question. First one, I guess, it really seems like the asset-light strategy that you guys embarked upon a few years ago is really hitting stride now. I mean the option percentage up to close to 75% and buybacks now expected to actually lower the share count. So these are all things that we had hoped for, for some time, and it again really seems to be hitting stride. Two questions on that, I mean, where do you now see, sort of, the target percent option. I know it can fluctuate quarter-to-quarter, but any change in the view longer term on that. And then is the view now on buybacks, has that changed, do you think that you actually would be able to continue your chipping away at the share count over time.

David V. AuldPresident and Chief Executive Officer

John, I’d say we’re always going to try to get better and continuing to push the auction as a percentage of total. We consider that a better utilization cap, so if we’re at 75% now, over time we would expect to turn that into 80%. And we’ll get to 80% over time — different market conditions, it could grow beyond that. So it’s just like, it’s like every time we do, we talk about sustainable scalable and that follows right in track. We believe that auctioning lots is — will drive better cash flow, better returns to our shareholders and as our builders on our platforms out there execute that strategy, relationships grow stronger and it’s just a — there is a momentum that I think will continue.

Bill W. WheatExecutive Vice President and Chief Financial Officer

And then John with respect to share repurchases. I would use the word sustainable as well there, as we have progressed in our capital-light strategy as we’ve generated more cash flow, as we have gotten in position with our scale to reinvest in our business to support the scale that we believe that the market will bear today, and we’ve improved our balance sheet and our liquidity position. We are now in position where I do think we have hit an inflection point where I think we can, more definitively, talk about consistently repurchasing shares and consistently reducing our share count over time. And so we had a little bit of interruption with the COVID last year in which we paused. We reinstated share repurchase last quarter and then this quarter, we’ve accelerated. And at now with the new authorization, we are more definitively stating that we expect to consistently reduce our share count each year going forward and that will be part of our balanced program.

John LovalloBank of America — Analyst

Yeah, that’s really encouraging on both fronts, guys. The second question is, we have heard through the channel of what I would characterize as maybe similarly aggressive behavior by some of your competitors in terms of, whether it’s prices being paid for land, potentially even cutting some corners to get homes closed. Just curious if you guys have heard any rumblings like this in the market and if so, I mean, does it maybe suggest that things are getting a little bit too head over heel, overall.

David V. AuldPresident and Chief Executive Officer

Yeah, yeah. We’ve seen on a very limited basis some erratic behavior on the land front where a builder has positioned themselves, where they just don’t have adequate or even non-adequate supply lodge. They’re buying at a desperation. But it hasn’t been consistent across all the markets and even within markets where I have seen it, it’s not impactful to the overall land valuation. Our entire process through this cycle has been to auction lots, take longer positions where we control pricing through this market and I think we said it on every call, we are incredibly well positioned on our lot supply and if somebody is being erratic, then we will — they’re going to be in a very difficult position to compete. If they’re accelerating — if they’re over bidding land price. Because we are pretty efficient in delivering houses and our land pipeline is long and deep and very well priced.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

John, back to your other question about closing homes before they’re ready. We’ve been in this business a long time and certainly have come to learn the lesson that we don’t want to close the home before its time. So we will wait till the home is ready and the buyers satisfied with the home to be in there. At the same time buyers are very anxious to get in their homes. Build times have elongated a bit with supply chain disruptions and some of the labor availability. Our production process, our consistent cadence of starts helps us overcome a lot of it. Selling homes after we’ve started them in their production cycle gives us more assurance of a completion date and we’re able to better work with the buyers on matching that completion and closing date alignment, what they need to move in from wherever situation they are coming from. So keeping that buyer happy through the process and most importantly, that they then move in their house, they’re very happy with the completed D.R. Horton home that they’ve just purchased.

John LovalloBank of America — Analyst

It’s really helpful. Thanks guys.

Operator

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

Matthew BouleyBarclays — Analyst

Hey good morning everyone. Congrats on the results and thanks for taking the questions. I wanted to ask a question about the revenue guidance. And it’s entirely possible I missed it, but just to the extent you’re raising the full-year revenue guide by about, I guess $1.7 billion at the midpoint, but delivery is up about 2,500 at the midpoint, it seems like there’s a lot more revenue there then would be implied by the deliveries. Just what else is driving that uptick. Thank you.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Yeah. Thanks, Matt. With the sales price increases that we have seen in recent quarters with the sales price increase we’ve seen in our net sales orders this quarter, we are anticipating a further increase in our closing, average prices in Q3 and Q4 versus where we’ve been in the first two quarters. So there is some expectation and visibility to increase sales prices in that revenue guide as well. Our total consolidated revenues, it does include our financial services revenues as well and we’re seeing very strong net gain performance there. And so there’s probably a bit more contribution from that segment of our business into the consolidated revenue guide as well.

Matthew BouleyBarclays — Analyst

Okay, perfect. Thank you. Second one, I wanted to ask about the administration’s first time buyer plan that was laid out the other day, it’s obviously much more, I guess surgically targeted then the broad plan that was initially presented. But do you have any insight into what portion of your buyers might qualify into this down payment plan as it was laid out. Thank you.

Jessica HansenVice President of Investor Relations

I don’t have a percentage to share with you, Matt. Honestly, we haven’t spent a whole lot of time on that to date, I do think it’s a narrower target and then what was initially proposed. And so I don’t know that we expect it to move the needle a whole lot. Honestly, the market strength, today is extremely robust, and we don’t really need anything to increase demand further or put more pressure on home prices which is ultimately what more buyers with a limited supply in the market can drive. So we’re going to continue to maintain our focus on affordability and I’m sure our mortgage company will be focused on what we need to do on that front. And we will support those buyers and as they come into our sales offices, if that is something that they can take advantage of. But we don’t expect that to be a big impact overall.

Matthew BouleyBarclays — Analyst

Got it. Understood. Thanks everyone.

Operator

Thank you. Our next question comes from the line of Michael Rehaut with JP Morgan. Please proceed with your question.

Michael RehautJP Morgan — Analyst

Hi, thanks. Good morning and thanks for taking my question. First, I just wanted to drill down a little bit on the increase of closings guidance, which I think is really noteworthy given all the concerns around the supply chain, in the well publicized limitations around different parts of the supply chain, etc. that we’ve all heard about. Maybe you could kind of walk through, if there are specific efforts that you kind of put into place that give you the better visibility for that in the back half. Certainly, also the increase in closings is much higher than the beat that you had in the second quarter itself. So I was hoping you could kind of talk to, what’s driving that increased guidance if it’s perhaps some improved efficiencies in the field. If it’s better supply chain arrangements or with certain key providers of either lumber or on the labor side, we would love to hear a little bit more about what’s driving that.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Thank you, Michael. What’s giving us confidence from the ability to raise our deliveries guidance has been, the starts we’ve been able to get out for the past two, three quarters, frankly, we’ve had very strong home starts and that’s result of our teams, positioning their operating platforms to be able to have a sustained production cadence in a given neighborhood and a given submarket, and that’s allowed us to enhance our relationships with a lot of the local subcontractors and labor providers in a given market. We’re able to give them a consistent and planful starts program that they can then plan their business back to.

On the material side, there certainly has been, what they’ll call, a whack-a-mole game of trying to find the latest thing that were out of, with our purchasing scale and a lot of our national partners that we’ve been working with, they’ve been really good at helping us get product in the homes that we need to close the homes, and those teams have deep relationships with multiple channels in their markets, able to get the components we need to complete the homes. So, honestly our build times have elongated a little bit here lately, it’s not surprising, but we’re very pleased with the progress we’ve made at holding the line. And the confidence we have in our production process today to up our guidance for the year and deliver more homes due to the strong demand we’re seeing.

Michael RehautJP Morgan — Analyst

Now, that’s very helpful. Thanks for that. I guess, secondly, you continue to do very well obviously, with the sales pace improvements year-over-year. At the same time, you kind of mentioned that you are managing that sales pace with the mind of your capacity on starts. I believe, obviously your order growth came in a touch below our estimate, but obviously still extremely strong, and the need to make sure sales don’t go too far out I think is well understood. How should we think about sales pace in the back half from current quarter levels? Is it something where we should expect more of a flattish type of year-over-year prospect, just given how business is currently being managed or would you see perhaps some further upside potential if you’re able to further improve your starts capacity?

Bill W. WheatExecutive Vice President and Chief Financial Officer

Sure, Mike. Today, our starts pace and our production pace truly is leading our sales pace and we’re essentially selling based on that production schedule as Mike mentioned a few minutes ago. Based on the visibility that we see right now, we think we can continue to expand our capacity and put ourselves in a great position to continue to grow our business into fiscal ’22 at a double-digit pace. But that being said, the quarterly sales order pace, when you look at the sales order pace last year in Q3 and Q4, we had some very strong levels that are some very strong comps that we’re up against in the back half of the year. So, on our normal cadence and in positioning ourselves to grow double-digit next year, our sales order comparables year-over-year in Q3 and Q4 could be in the range of flattish slightly up, slightly down, but that doesn’t really change the positioning that we’re going to be in, in terms of growing our top-line and our bottom line of fiscal ’21 and positioning ourselves for fiscal ’22.

Michael RehautJP Morgan — Analyst

Great, great. That’s very helpful. Appreciate it.

Operator

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

Carl ReichardtBTIG — Analyst

Thanks. Morning, everybody. Thanks for taking my question. I wanted to ask about lot count and how it ties to future community count. I think, lot count was up by I think 48% year-on-year, it’s an enormous increase for a large company. Can you maybe talk about the cadence of how you expect your communities to grow over the next couple of three years based on that significant increase in lot?

David V. AuldPresident and Chief Executive Officer

Yeah. I think we’re looking at what low-single digit community growth. So I mean, when you look at our lot count, a lot of that is option positions that are going to deliver over the next year or two years, and then last for two to three years beyond that. So, at the pace communities are running, we’re looking for 600, 700 lot projects and which done it by community count but it does significantly increase lot count when it’s replacing some of the half that size. So it’s about scale. It’s about driving consistent disciplined starts and demand right now is — it is really good. So when Bill mentioned that our stock pace is driving our sales pace, I mean that is a reality. If we could stock more houses, we’d be selling more houses. So every month with us, it’s about driving production capability and expanding our start program. And if you look at week-to-week-to-week-to week, it’s how we manage it. Our operation — operators out there are doing a great job.

Carl ReichardtBTIG — Analyst

Thanks, David. And then, if I then drill down back to material cost increases and to tie them to the scale that you have, whether it’s local scale or national scale. If you look at conditions now David, do you see — can you maybe talk to some specific examples even of the leverage you’ve been able to get relative to peers on costs or if the acquisition of materials, if there are shortages? Because it seems to me that’s a — that along with the spec model is a pretty important aspect to why you’re continuing to grow as fast as you are, despite the size of the company. Thanks a bunch.

David V. AuldPresident and Chief Executive Officer

Carl, it’s a consistent disciplined start program that we’ve been on and managing very effectively, communicating that to our trade base. And so let’s — they have visibility of what their work process load is going to be over the next 60, 90 days, and the scale matter — absolute discount matters. I feel like every month, every — really every day, every week, every month, our competitive position because of our scale, because of our discipline has just grown and it’s — we talk about sustainable. It is a great market out there and I feel like what we’re doing is we have the ability to sustain.

Jessica HansenVice President of Investor Relations

And Carl, in terms of material cost increases, although we have had to take some cost increases as home prices had continue to rise and our building product partners have been experiencing cost increases in their business. We generally have price protection built in and so, where we have a cap on what our increase is going to be. So when you see a headline price increase for our product category, generally what we’re taking is less, it may just be protected in a form of a back-end rebate, so we can protect the market price for our partners, but we are generally taking something much less than whatever the overall market increase is.

Carl ReichardtBTIG — Analyst

That’s very helpful. Thanks guys. Good, thanks everybody.

Jessica HansenVice President of Investor Relations

Thanks, Carl.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Thanks, Carl.

Operator

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

Stephen KimEvercore ISI — Analyst

Yeah, thanks guys. David, when you were talking about how the market was really good, I was to think about all the people who are reading the transcript, who are not going to be able to capture — the transcript is not going to capture the emphasis there — the same. I want to ask you guys about production capacity. Putting community count growth aside, because I — everyone is very focused on that. I’m focused on the potential for your absorption. Unit production per community to increase from here. One way is obviously through a mix of communities, bringing on the larger communities, I think you referred to that a little bit or more entry-level communities which naturally have a higher level absorptions. But I’d also think you could increase production within each type of community, like each supervisor running a little more labor or paying over time rates or whatever.

So, what I’m wondering is, as you look at your absorption rates today per community, how much room is there from here to increase either your mix of higher running communities, higher absorption communities or, and I should say, how much ability is there to increase your throughput within each type of community through — from here given that your starts are up 34% I think or so this past quarter?

David V. AuldPresident and Chief Executive Officer

Stephen, I think there is always room to improve and we’re pushing that mentality out every day. Nothing is good enough. We got to get better and our operators and our culture in our company, they’re all competing with each other. And so, when you look at the numbers of our divisions and you think, the guidance in the 10th or 11th slot wants to be the number one slot. And so it — but to do that he’s got to get bigger — he’s got to get better, and that’s — that drives a very good result for our shareholders. And we talk about absorption as a global deal, it’s really subdivision-by-subdivision market-by-market. And our improvement in the platform and in the — what had been our smaller markets scaling up to become big markets has been nothing short of phenomenal. I mean, we’ve got great operators out there. That I think have a lot of room to scale up and they are positioned to do it. And we’ve got a market that has really derisked that effort. So I mean, I think our numbers are going to get better Stephen. I think we’ve got a lot of upside in what we’re doing and I didn’t see the chart, how many markets we’re Number 1 in. But last quarter I think, it was 13. I think 13 out and 91. I mean you — I mean our expectation is, we’re going to be Number 1 in every market. So we’ve got a tremendous amount of opportunity to scale-up.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

We hate to put a goal or trying to find what the edge of the universe could be, so we hate to limit ourselves. I think five years ago, if you look back and told us, we’d be doing these absorptions and production capabilities, we’ve been limiting to what we would have said at that time. So as David said, no matter what we’re able to get done, we know we can all do a little bit better and be a little smarter about how we do things.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Stephen, obviously, in the current market with a strongest demand it is, it’s a little different than what we’ve seen in other times in the past, it truly is. We can increase absorption, if we can increase production capacity and capability. So our operators, our construction managers, everyone is looking for how can we continue to expand our starts pace each week, whether that’s finding additional trades or helping our trades to be more efficient.

So they can do more homes in the same amount of time. So everybody’s working to just get a little bit better.

Jessica HansenVice President of Investor Relations

And we’ve consistently been growing at a double-digit pace for several years with just a low single-digit community count growth. So we would continue to point you to our lot count as the driver. If we have a finished lot, we’re going to start to home ultimately and we’re going to sell and close it.And so that’s really more of the drivers than thinking about just that community count growth expectation.

Stephen KimEvercore ISI — Analyst

Yeah, absolutely. All right, upward and onward. Second question relates to kind of affordability. You’re probably getting a lot of questions about — prices are up so much, even affordability being stretched. I was wondering if you could share with us, whether you’re seeing any signs of stress yet at the first time buyer? And then, more sort of holistically, I think that prices that the homebuilders pass through, inherently lags for the resale market when prices are rising this fast, because you know, you all don’t sell above asking price, right? Whereas in the resale market, most homes are now selling above asking price.

And so, given the prices in the resale market are up get fast pretty close to 20% right now. Isn’t it right to think that your prices in your communities should be able to rise further from here based simply on the pricing that has already been achieved in the resale market and which obviously first-time buyers are paying. So I mean, I just want to, so one, can you see any stress on the first time buyer market? And then two, do you agree with me that pricing for builders kind of lags a little bit inherently in this environment?

Jessica HansenVice President of Investor Relations

Yeah. I think we would agree with the latter that pricing may lag a little bit. But we clearly are seeing the ability to continue to push price, our first-time homebuyer percentage is actually up, year-over-year, 57% compared to 53% last year and we actually saw it tick up to the high-60s for Express, and also an improvement in terms of our first time buyer percentage just in our D.R. Horton brand.

Our FICO score stayed extremely stable as have our debt to income levels. So it showing us that the buyer and the consumer is healthy today. And there is still plenty of people out there that can afford to buy a house. That being said, it’s something we recognized that could ultimately become an issue. We still have an average sales price that I think is compared to most people, about $100,000 lower than most of the rest of the public builders. So that puts us in a very strong competitive position to continue to accommodate buyers who really are looking for affordable product offerings.

Stephen KimEvercore ISI — Analyst

Excellent. Great, thanks a lot guys, good job.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Thanks, Steve.

Jessica HansenVice President of Investor Relations

Thanks, Steve.

Operator

Thank you. Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question.

Anthony PettinariCiti — Analyst

Good morning. Just a follow-up on pricing. If it’s possible to generalize, are you seeing price increases among competitors as being steeper than D.R. Horton Communities? If so, is it possible to quantify how much whether that’s half a point or a point, is that continuing to kind of drive your value proposition versus customers or do you think that the rate of increases as maybe more in line with some of your large competitors here?

Jessica HansenVice President of Investor Relations

So there’s a lot of variability as I think David alluded to earlier, market-to-market, community-by-community. But even if you just listen to the other builder conference calls, which I have, generally they’re talking about higher price increases at a minimum on average versus an individual floor plan than we are in most cases. So I think we do believe that we’re continuing to maintain that competitive advantage by not necessarily pushing price, in some communities as much as others. In some communities, I’m sure we’re keeping pace with the market if the ability is there to do so.

David V. AuldPresident and Chief Executive Officer

I just agree with Jessica. Our goal isn’t to sell one house, its to sell communities. And so, we probably are not as aggressive as some of the other builders have been in raising prices. I mean, our margins are great, our returns are phenomenal. But we’re in this for the long haul. So it’s, we’re not doing anything short term that we don’t think is as sustainable over time.

So its just who we are. We like being affordable, we like being the price point leader, we like competitive advantage. We think that drives more consistent, sustainable results over time, which is, is how we think about things.

Jessica HansenVice President of Investor Relations

And our lot position and our production capabilities allow us to continue to do what we’re doing from an affordable product offering perspective, whereas other builders don’t have as deep of a lot position as we do in many markets and they also can’t start as many homes as we can today. So there is really no need for us to push price as much as some other builders are doing. As David said, our returns have been improving, I think at or better than the industry as a whole even while staying affordable.

Bill W. WheatExecutive Vice President and Chief Financial Officer

We do take a long focus to all of this and we do want to be sustainable and continue to grow our market share. We’re committed to growing our market share. We’re committed to returning capital to shareholders and dividends and share repurchases in a meaningful manner.

Anthony PettinariCiti — Analyst

Okay, that’s very helpful. And then, apologies if I missed this. But did you see any impact either from a sales side or from a cost side from the winter storm in February in Texas and other parts of the country? I mean, from the outside, it doesn’t look like it, but I’m just curious what the impact was to your business?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Yeah. I think there were some supply chain disruptions. Some of the petrochemical plants on the Gulf Coast probably are creating some ripples, but by and large, our teams to field did a phenomenal job of working through that protecting the homes we had in production as well as trying to make up the delivery days we may have lost to get those homeowners into their homes as quickly as possible.

Anthony PettinariCiti — Analyst

Okay, that’s helpful. I’ll turn it over.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Thank you.

Operator

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

Alan RatnerZelman and Associates — Analyst

Hey guys, good morning and congrats on the great performance. I’d love to dig a little bit deeper on the price and affordability conversation. And one of the things that really struck me was, it’s pretty amazing your average price over the last five or so years has been remarkably consistent kind of roughly around $300,000. And prices have been going up over that time period, but you guys have obviously been able to offset that through either growing the share of Express or maybe moving a little bit further out into the tertiary submarkets.

And it seemed like now that that prices clearly breaking out of the range up to $330,000. And I guess the question for you is how comfortable are you or how high are you comfortable taking that number, when you think about the lots you require today, what those costs look like, what the material costs look like, what the consumer can afford?

Is there a benchmark in mind recognizing that $300,000 seems to have been kind of the unofficial benchmark over the last five years, where that price could go before you start to get a little bit uncomfortable?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Well, the $300,000 price was not the result of any top down directed approach. It all happened at the subdivision level, the submarket level and the communities. And we can’t make as good decisions from a centralized basis here as our teams the field make, multiple times a day, every day of the week in responding to market conditions, which includes what existing homes are selling for, other new home alternatives the buyer may have as well as their cost inputs to that process.

We work closely with our mortgage partners in the field to understand what the buyers are coming in with in terms of loan qualification process and have their underwriting. And all of that factors on a daily and a weekly basis in determining what the home is worth and can trade for at that point in time. So what we’re seeing as a result of individual decisions made by people who are very experienced in the field, very close to the customers and we’re selling homes, we’re delivering homes, we’re originating and delivering mortgages to well qualified buyers today. So yes — and then that we’re seeing the upside of that is that our aggregate average sales price has increased substantially, both in deliveries for the quarter and in the new sales for the quarter, but it’s the result of what’s actually happening in the marketplace. We have so many model homes and touch points in market and communities. We’re just seeing the result of that rolling up, so you’re seeing a strong consumer as Jessica mentioned before that really wants to own home.

Alan RatnerZelman and Associates — Analyst

Understood. Gotcha. And then kind of related on that point because you brought up any other — the feedback from the field, one thing that we hear a lot from builders lately is their share of buyers coming from out of state has really increased pretty dramatically since before the pandemic. I think some analysis we’ve done, on that share is roughly doubled from builders, we talk to. So I’m curious A, if you’ve looked at that or quantified the share of your business that buyers are buying from out of state versus where that was pre-COVID and I guess on the flip side to that, if that were to slow at all, does that put any pressure on affordability recognizing a lot of people are moving from higher tax state, higher cost states to more affordable markets.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

We don’t have anything that’s we’ve aggregated to track that anecdotally, we’ve heard in my travel, David’s travel — we’ve heard about people relocating into the market, but we also have — when I talk to agents in the models where your buyers coming from, all of they — they’re coming from a zip code over or school district over and they’re looking to get a slightly different home in different stage in their life, for their first home. They’re coming out of the apartment in that market. So I hear what you’re saying. Alan and I understand what a lot of the national numbers have been. We have not necessarily attracted to give you a quantitative answer here.

Jessica HansenVice President of Investor Relations

And Texas and Florida continue to be our two largest states and where I think you’ve seen a lot of in-migration and relocation. But that was happening before COVID. So I’m not sure that as a result of the pandemic easing and whatever changes from a work from home perspective that that really does anything to slow that down and because we really think about that trends haven’t been pre-pandemic and there has been very friendly states that generally have more affordable housing where people have wanted to live and where a lot of businesses have relocated to. So their employees can have a good cost of living and kind of good quality home at the right price.

David V. AuldPresident and Chief Executive Officer

And Alan, I’d say, the builders set a position higher in the price scale, probably experienced more of that than we do. I mean ours is how — we’re still into people forming housing formations. And I do think that a lot of that is just local market buyers, which might be insulates us somewhat from them. People moving back and forth.

Alan RatnerZelman and Associates — Analyst

Got it. That makes sense. All right, guys, thanks a lot. Good luck.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Thank you, Alan.

Operator

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

Mike DahlRBC Capital Markets — Analyst

Hi. Thanks for taking my questions. I appreciate all the color so far, the pricing commentary in particular on a relative basis, tracks with what we’ve been seeing in our work, but I guess the important thing is it’s still very healthy. Price increases as you’ve alluded to, the question is really about implications for margins, and unless I missed it, you only gave 3Q, but conceptually when we think about fiscal 4Q or even beyond that, when you look at maybe cost increase is continuing to accelerate, but your price increases picking up and some of that flowing through the P&L more. Would you expect 4Q to be at least similar to 3Q? Would you expect to be higher? Any other moving pieces, we should be thinking about, call it two quarters or further out.

Jessica HansenVice President of Investor Relations

Sure, Mike. We really only have the best visibility to one quarter out, which is why we’ve stuck to guidance for just Q3 specifically, but clearly market conditions remain very strong. And we’ve been very pleased with our operators and you’ve heard us say every quarter for several quarters, our gross margins have exceeded our expectations, because they’ve done such a great job controlling costs and we have been able to push through some price to offset some of that costs as well. I think our base case would be if market conditions remain this strong, we’re hopeful that we get enough price to offset any cost increases and is there potential upside due to continued market strength, sure. But it’s not something we can sit here and say today about our fourth quarter margins or anything further out. It’s going to continue to be dependent o market strength, affordability and our ability to push through price.

Mike DahlRBC Capital Markets — Analyst

Okay, got it. Thanks, Jessica. It’s helpful. And then my second question is also affordability related just with the rapid level of increases both in existing home market and new home market, really across price points, are you seeing anything from an appraisal standpoint, where you’re starting to see appraisals lag behind the price increases that have been implemented, just any color from the field on that?

Bill W. WheatExecutive Vice President and Chief Financial Officer

Sure. You typically will see in a rising price environment like we’re in today that the appraisals are often backwards looking and it does tend to and maybe where it would go. But what you are seeing in our closed level, our homes that have been fully underwritten and appraised meeting appraisal valuations and so we do hear about it anecdotally. There is oftentimes more education you can provide in that process and more information you can make available that can help with the appraisal process, but it’s not been a significant impediment to the prices that we’re contracting for homes are closing at those prices generally.

Mike DahlRBC Capital Markets — Analyst

Okay, great. Thank you.

Operator

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

Truman PattersonWolfe Research, LLC — Analyst

Hey, good morning everyone. Thanks for taking my questions. At first, I just wanted to talk a little bit more on the cost increases especially lumber is just really started to spike here over the past month or so and I appreciate that literally, every day, the futures are a moving target, but could you give us a big picture, macro overview. Do you think that there is any relief in sight going forward, any new sawmills opening, there is a lot of robust demand or do you think this level if you of lumber pricing is kind of here to stay. And with that, I wanted to follow up on Mike Dahl’s question. Do you think there is enough pricing in the industry to really offset this lumber inflation especially that will probably hit kind of calendar 4Q?

David V. AuldPresident and Chief Executive Officer

Is lumber pricing here to stay. I think a lot of it was driven by mills shutting down due to COVID, I do think as they reopen these mills and increase the capacity to level would, you’re going to see some improvements, some — a little less pressure on it. I think so. Opening up international trade may relieve some pressure on it. But right now today, the demand is so strong, a lot of people over the last so many years deferred buying a house now, the house has been formed and the kids are coming and COVID shows that living in an apartment downtown metropolitan area may not be the lifestyle you want. So a lot of factors driving demand. I don’t know whether that answered your questions, but it’s complicated.

Jessica HansenVice President of Investor Relations

We continue to have the focus on efficiency and regardless of what’s going on in the cost environment, we’re trying to become more efficient every day and we want to be able to put in affordable house on the ground regardless of our input costs and I think we’ve proven that our operators and our scale are allowing us to do that kind of regardless of lumber fluctuations here over the last couple of years and we’ll see where it’s headed, but we adjust to that as necessary and do the best we can to manage those lumber costs as they come through.

Truman PattersonWolfe Research, LLC — Analyst

Okay, thank you. And then another one, just on affordability in pricing, I mean very robust pricing so far this year, especially on a year-over-year basis. And I know a lot of entry-level builders really try to stay below the FHA loan limits within the specific metro, but could you just generally talk about how much wiggle room you have to possibly push pricing going forward before really bumping up against those loan limits, appreciating that you’re probably attempting to continue to switch to a smaller square footage.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

I think, Truman that we’re continually working to make sure we’re affordable to the markets that we serve on our neighborhood-by-neighborhood basis. And we’re seeing that today that we’re not getting any resistance to the pricing that’s coming through, you can just see that by about the level of specs that we have, I think 26% of our homes and inventory are unsold today and probably most of those are fairly recently started, it may not even have been released for sale yet as working our way through the production process.

But as we see, side of softening demand would be an increase in our completed specs and right now, those are down I think about 700 homes that are completed and unsold today, which is — we probably hadn’t been that low ever since 1992.

David V. AuldPresident and Chief Executive Officer

That’s usually the number of Dallas.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Yeah, usually in a given market, we may have that many by intention. And so we are — we see very strong demand, and we’re not seeing any resistance here on the affordability side because as we’ve talked about before, we do try to position ourselves as an affordable value choice against the competitive set we have at any given neighborhood versus other new homes and the compelling buy against existing homes.

Truman PattersonWolfe Research, LLC — Analyst

Asked another way, are you all comfortable going above the FHA loan limits today, just given how strong demand is?

David V. AuldPresident and Chief Executive Officer

In some markets we are — it just adds a risk level to the underwriting.

Truman PattersonWolfe Research, LLC — Analyst

Perfect.

David V. AuldPresident and Chief Executive Officer

I guess that’s one of the things we look at on every project we put under contract is, how much stacks against FHA. And if it’s over FHA, it adds to the risk. But are we comfortable doing this? It depends. It’s all project-driven market-driven.

Truman PattersonWolfe Research, LLC — Analyst

All right, thank you. Good luck on the upcoming quarter.

David V. AuldPresident and Chief Executive Officer

Thank you.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Thank you, Truman.

Operator

Thank you. Ladies and gentlemen, our final question today comes from the line of Jay McCanless with Wedbush Securities. Please proceed with your question.

Jay McCanlessWedbush Securities Inc. — Analyst

Hey, good morning. Thanks for sneaking me in. First question I had, you talked about cycle times moving up a little bit, could you talk about where they are now versus last year?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

They are probably about two to three weeks longer on the build process. What we have seen though on the flip side of that, is that historically with our spec production model that we would have period of time from when a home is completed until finally closed, it’s sold and closed. With the sales and deliveries, we’ve had of our completed unsold homes over the past year. Our time from completion of the home to delivery to the customer has greatly shortened. And so, we’ve maintained a lot of capital efficiency and great inventory turns in that process. But what we have seen an elongation of our build times.

Jay McCanlessWedbush Securities Inc. — Analyst

Okay, got it. And then the other question I had, when you think about the — getting more starts out there, getting the land entitled, I mean is the pinch point right now on the labor side that you don’t have enough people to pour foundations, etc. or are you still having to deal with some headwinds on the municipal side to get on the lots entitled, etc.? What’s — I guess, what’s the bigger issue right now on a national basis?

Michael J. MurrayExecutive Vice President and Chief Operating Officer

I don’t know that you get to point to any one issue, it’s all a challenge in the execution of the business and that — but that’s what we do. That’s what our job is, is to get out there every day, identifying sites that are going to make great neighborhoods, work with local municipalities and land sellers, third-party developers to get the entitlements in place. Generally, anecdotally, it’s usually takes longer than it used to, and people in some markets will complain, then you’ll share a story about a market, well, maybe one with coastal markets and how many years it takes to get do something and then like wow, this is pretty good here.

And then in terms of production capability, we have focused on expanding our production capability through a sustained disciplined starts program that lets us share that information with our subcontractor partners, that they’re able to be planful in their business and allocate the resources to it. They really appreciate working with us and that it’s — they can be — they know what’s coming at them and what the expectations are. And so simplifying our product, simplifying our starts processes has been a big win for us in grabbing more production capacity in the markets and then hanging onto it, by keeping the lots coming, so we can keep starting the houses.

Jay McCanlessWedbush Securities Inc. — Analyst

Sounds great. Thanks again for taking my questions and congrats on a great quarter.

Jessica HansenVice President of Investor Relations

Thanks, Jay.

Michael J. MurrayExecutive Vice President and Chief Operating Officer

Thanks, Jay.

Bill W. WheatExecutive Vice President and Chief Financial Officer

Thanks, Jay.

Operator

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I’ll turn the floor back to Mr. Auld for final comments.

David V. AuldPresident and Chief Executive Officer

Thank you, Melissa. We appreciate everybody’s time on the call today and look forward to speaking with you again to share our third quarter results in July and to the D.R. Horton family, Don Horton and the entire executive team, thank you for your continued focus and hardwork and I’m going to remind you again, stay humble, stay hungry and stay — let’s close out this year in an unbelievable fashion. Thank you.

Operator

[Operator Closing Remarks]

Disclaimer

This transcript is produced by AlphaStreet, Inc. While we strive to produce the best transcripts, it may contain misspellings and other inaccuracies. This transcript is provided as is without express or implied warranties of any kind. As with all our articles, AlphaStreet, Inc. does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Neither the information nor any opinion expressed in this transcript constitutes a solicitation of the purchase or sale of securities or commodities. Any opinion expressed in the transcript does not necessarily reflect the views of AlphaStreet, Inc.

© COPYRIGHT 2021, AlphaStreet, Inc. All rights reserved. Any reproduction, redistribution or retransmission is expressly prohibited.

Most Popular

Earnings calendar for the week of May 3

Leading stock indexes retreated after gaining mid-week when Wall Street biggies like Apple and Amazon reported impressive quarterly numbers. The Dow Jones Industrial Average was down 190 early Friday, while

How did the first quarter of 2021 turn out for the airline industry?

The airlines sector was severely impacted by the disruption caused by the COVID-19 pandemic in 2020. A year later, the industry is still limping its way to a recovery. In

Amazon (AMZN) fine-tunes growth strategy to stay in the fast lane

The company that witnessed the strongest growth during the pandemic is probably Amazon.com, Inc. (NASDAQ: AMZN), which went into overdrive when the crisis triggered an online shopping boom. Taking a

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top