Greetings, and welcome to The New Home Company Third Quarter 2020 Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host, Drew Mackintosh Investor Relations with The New Home Company. Thank you, you may begin.

Good morning. Welcome to The New Home Company's earnings conference call. Earlier today, the company released its financial results for the third quarter of 2020. Documents detailing these results are available in the Investor Relations section of the Company's website at nwhm.com. Before the call begins, I would like to remind everyone that certain statements made in the course of this call, which are not historical facts, are forward-looking statements that involve risks and uncertainties. A discussion of such risks and uncertainties and other important factors that could cause actual operating results to differ materially from those in the forward-looking statements are detailed in the Company's filings made with the SEC, including its most recent Annual Report on Form 10-K and in its Quarterly Reports on Form 10-Q. The Company undertakes no duty to update these forward-looking statements that are made during the course of this call. Additionally, non-GAAP financial measures may be discussed on this conference call. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through The New Home Company's website and in its filings with the SEC. Hosting the call today is Larry Webb, Executive Chairman, Leonard Miller, President and Chief Executive Officer and John Stephens, Chief Financial Officer. With that, I will now turn the call over to Larry.

Thanks Drew, and good morning to everyone joining us on the call today as we go over our results for the third quarter of 2020, provide an update of our strategic outlook and give some additional color on our operations. The New Home Company made significant progress on a series of strategic initiatives and generated profit in the third quarter of 2020. We experienced healthy expansion to our homebuilding gross margin, while continuing to emphasize overhead cost containment. Thanks to several operational improvements in a very strong housing rebound. We generated 251 net new orders in the quarter, representing a 102% increase as compared to last year, mainly as a result of a 75% improvement in our sales space, which came in at 3.5 homes per community per month. Order activity improved as the quarter progressed and we have seen demand trends stay above normal seasonal levels since the quarter ended. The New Home market is benefiting from several positive factors, including record low interest rates, the scarcity of existing home inventory, and a noticeable shift in attitudes towards home ownership. Some of this shift can be attributed to the ongoing pandemic, which has made many Americans rethink how and where they live given all the ways the virus is impacting our lives. But an equally important factor driving the move to homeownership has been the emergence of the millennial age cohort as a buyer demographic. This sizable age group was slower to enter the housing market relative to earlier generations due to a number of factors. But we are now seeing millennials make up an increasingly large share of the buyer population. This demographic shift was occurring well before the pandemic started, and we believe it will be a driving force for our industry well after the pandemic catch. While the positive fundamental backdrop for our industry has been a nice tailwind for our business. We believe our strong order activity this quarter was also the result of our expansion to more affordable price points. Over the last few years, we have been transitioning much of our portfolio away from high ASP communities and into the more affordable segments of the market. The goal is to take our premium brand experience that is centered around industry leading customer service, best-in-class quality and innovative design and make it more accessible through efficient, floor plans and higher density projects. This focus has served us well in recent quarters and dovetails nicely with the millennial demographic trends I just mentioned. Order activity in our newly opened affordable communities has outpaced our legacy higher price communities by a wide margin. And we are seeing better prices and margin trends at these lower price communities as well. This pricing power has been a key ingredient in making headway with one of our main initiatives for the year gross margin expansion. Over the past several quarters, our margins have been depressed due to our focus on generating cash, shoring up the balance sheet and turning through higher price legacy communities. Now that we are in a much better position from both the financial and product standpoint, we have an opportunity to show real improvement under gross margin front. We posted a 320 basis point year-over-year increase to our homebuilding gross margin in the third quarter, excluding impairments in the prior year. And we feel we can push margins higher over time through steady price increases, better product mix and cost containment. While this margin progression will fluctuate depending on the mix of costs, we believe the long-term trajectory is headed in the right direction. With a healthy demand outlook, a great product profile, rising margins in a much improved balance sheet. The New Home Company is in a great position to end the year on a strong note and carry that momentum into the New Year. With that, I'd like to turn the call over to Leonard who will provide more detail on our operations.

Thanks, Larry, and good morning to everyone joining us on the call today. We experienced a widespread acceleration demand in the third quarter driven by low mortgage rates, limited existing home supply, a desire from buyers to move to less densely populated areas, and the surge in millennial buyers that Larry mentioned. The demand was broad-base, both from a price point and geographic standpoint, which allowed us to push pricing at nearly all of our communities during the quarter. Traffic conversion rates are at all time highs, as buyers feel a sense of urgency to move forward with a purchase decision given the lack of available supply and low interest rates. As a result, our homes in backlog increased at 329 which represented a 59% year-over-year improvement in the quarter. Looking ahead, we expect order activity to remain above normal seasonal trends in the near-term. But our focus has shifted slightly given the size of our backlog and our desire to increased margins. We want to make sure our sales don't get too far out in front of our starts, while also maximizing the profit from each new home sale. To that end, we have delayed some sales releases in an effort to align our sales with construction starts and implement additional price increases. While this we moderate our sales pace from the levels we have experienced recently. We believe this is a prudent way to manage our backlog and improve our margins. In terms of cost, lumber recently hit an all time high driven by diminished capacities, tariffs, uncertainty of COVID on workers in the mills and a rapid increase in sales and starts. Fortunately, we have started to see lumber pricing come down from its highs and hope this trend continues. Outside of lumber our material costs have remained relatively flat. With respect to our markets, Arizona continues to be the standout performer for us, averaging 4.1 sales per community per month. This strong absorption was driven by 7 new communities we've recently opened over the past five months, which have also generated gross margins meaningfully higher than the company average. Our [indiscernible] posts a mini master plan consisting of three product segments open the last week of September and sold 18 homes during the quarter, while our Mosaic mini master plan continues to experience solid sales as well. We will deliver our first homes from our affordably priced communities in Arizona in the fourth quarter. And we expect these communities to contribute significantly to the company's profit in 2021. Arizona still remains our most challenge market when it comes to labor and sub trade availability, and we have seen a lengthening of our cycle times by a few weeks as a result. We are working hard to overcome these issues and believe Arizona will be a key contributor to our company's success moving forward. The market dynamics in California as a whole feel the best that they've been during the current housing cycle. Order paces continue to run at high levels. And we are seeing cycle time stay relatively consistent. In Southern California, our communities averaged a sales pace of 3.1 per month during the quarter. Demand was particularly strong in the core areas of the Inland Empire, where we can offer our premium brand experience at lower price points. We've targeted this region as a key component of our expansion into more affordable product. And we anticipate opening five affordably priced communities within the Inland Empire over the next 18 months. In Northern California, our communities averaged 3.6 sales per month for the quarter with strength across the board. Affordability remains an issue for most buyers in the core Bay area. And we've limited our exposure to this market as we have nearly closed out our remaining community in Milpitas. We continue to see a migration from the Bay area into the more affordable areas in and around Sacramento. Our four communities in Vacaville, California. have benefited significantly from this migration, as our monthly sales absorption pace was 4.4 homes per community during the 2020 third quarter. As we continue to make changes to improve our profitability, we believe there is potential in our fee building business and are currently sourcing new opportunities. During the third quarter, we started construction on the model complex at [Atlas], our fee building community for Fivepoint at the Great Park in Irvine, and expect to open for sales in early 2021. This arrangement is different than most of the traditional fee building arrangements we've had in the past, as The New Home Company will also brand, market and sell these homes. We are currently in discussions with other land owners to build for-sale housing, and single-family rental housing on a fee basis. These future opportunities will help partially offset a near-term reduction in fee building revenues resulting from Irvine Pacific's decision to manage their construction of their homebuilding operations on their own and phase-out our fee building arrangement with them. As a result, we expect our fee building revenues to decline over the next year and then increase in 2022 as new opportunities start generating fee revenue and profits. We are excited for these new opportunities and believe they can generate meaningful income in the future using nominal capital. In summary, we continue to benefit from extremely strong housing fundamentals in all of our markets, and our recently open communities have been well received. We are working hard to take advantage of the demand strength we are seeing with targeted price increases in an effort to improve our profitability. We make good strides on this [brighten] third quarter and expect to make further progress in the future. Now I'd like to turn it over to John for more detail on our financial results this quarter.

Thank you, Leonard and good morning. For the 2020 third quarter, we generated pre-tax income of $1.5 million compared to $4.8 million pre-tax loss in a year ago period. To 2019, third quarter included a total of $3.6 million of inventory impairment charges and a $1.5 million loss on the land sale in the prior year third quarter. Net income for the quarter was $1.2 million or $0.06 per diluted share, compared to a net loss of $4.6 million or $0.23 per diluted share in the prior year period. Our home sales revenue for the third quarter was $117.4 million, compared to $118.8 million in the prior year period. The slight decrease compared to the prior year was attributable to a 22% decrease in average selling price to $748,000 resulting from our continued expansion into lower price points, which was partially offset by 27% increase in deliveries. We estimate 2020 fourth quarter home sales revenue to be between $115 million and $125 million. And our average selling price for the fourth quarter to be approximately $720,000. Our gross margin for the 2020 third quarter was 14.2% versus 9.5% in the prior year period and exceeded the top end of our previously issued guidance. The 2019 third quarter gross margin excluding impairments of $1.7 million was 11%. The 320 basis point improvement in gross margin, excluding the prior year impairments was primarily due to a product mix shift to more affordable product, which generally have higher gross margins and to a lesser extent fewer deliveries from lower margin move up condominium communities compared to the 2019 third quarter. These positive factors were partially offset by 60 basis point increase in capitalized interest included in cost of sales due to the mix of homes delivered during the quarter. Excluding interest in cost of sales and impairments, our adjusted gross margin from home sales was 20% as compared to 16.2% in the year ago period. For the 2020 fourth quarter, we estimate our gross margin to be between 13.8% and 14.2%. Our SG&A rate as a percentage of home sales revenue for the third quarter was 12.3% versus 11.1% in the year ago period. The higher SG&A rate in 2020 was primarily the result of higher commissions, incentive compensation and professional fees and to a lesser extent a $300,000 reduction in G&A expenses allocated to fee building cost of sales. For the 2020 fourth quarter, we estimate our SG&A rate to be between 12.4% and 12.8%. The higher projected SG&A rate relative to Q3 is partially the result of a lower anticipated allocation of G&A expenses to the fee business due to lower anticipated fee revenue in Q4 due to the Irvine Pacific wind down. We opened four new communities in Arizona during the quarter and ended the quarter with 25 active communities, which was a 14% increase compared to the prior year third quarter. We have one new community that opened in October and expect to sell out of approximately three communities before the end of the year. Fee building revenue for the 2020 third quarter was $13.4 million compared to $22.3 million in the prior year period. Fee building gross margin for the 2020 third quarter was 268,000 compared to 647,000 in the prior year period. The reduction in fee building gross margin was primarily due to lower fee building activity in Irvine, California. For the 2020 fourth quarter we estimate our fee building revenue to be between $5 million and $8 million. We continue to wind down our joint ventures. During the quarter we finalized the sale of our interest in the Bedford land development joint venture and delivered the final homes at our McKinley Village homebuilding joint venture in Sacramento, California. Of the company's three remaining active joint ventures, we have seven homes remaining to deliver at the Mountain Shadows, homebuilding joint venture in Arizona, three home sites to sell at our Davis Land Development joint venture in Northern California. And we continue to actively pursue an exit from the Russell Ranch land development in Folsom, California. During the third quarter, we generate $40 million in operating cash flow and reduced our net debt to capital ratio to 45.1%, a 980 basis point improvement compared to the year ago period, and the lowest level since December 2017. We ended the quarter with $126 million in cash and cash equivalents and had no borrowings outstanding under our $60 million revolving credit facility. We also repurchased $5.2 million in principle of our senior notes due 2022 at a discount. We further strengthen our balance sheet by extending our debt maturity profile subsequent to the quarter end. In October, we issued $250 million of new 7.25% senior notes due October 2025 to refinance our existing senior notes due April 2022. In connection with this refinance, we estimated one-time pre-tax charge of approximately $8 million to be recorded in the fourth quarter. We also entered into a new $60 million senior and secured revolving credit facility on October 30, that has a maturity date of April 30, 2023, a one and a half year extension from the previous bank credit facility. The extension of these debt maturities will allow us to make long-term investments as we replenish our land portfolio and position the company for long-term success. Lastly, we spent $14 million on land and land deposits during the quarter. We plan on increasing our land spend in the near future, but remain focused on maintaining a proper balance between building liquidity, managing leverage and rebuilding our land pipeline. I'll turn the call back to Larry for his concluding remarks.

Thanks, John. We've been working hard as a company to make progress on a number of fronts this year. And our results for the third quarter demonstrate that we have made significant headway. We improved our profitability by expanding our gross margins, and further diversify our operations by continuing to close out legacy high priced communities and open more affordable, faster selling communities. We also strengthened our balance sheet by generating strong cash flow from operations, reducing our net leverage and extending our debt maturity profile. These achievements have put us on more stable footing and give us a clear path to better results in the future. I want to thank all of our team members for how they perform during these difficult times. Handling the significant increase in business we've experienced would be challenging enough during normal times, let alone in the middle of a pandemic. And I'm really appreciative of your effort. That concludes our prepared remarks. And now we'd be happy to take your questions.

Thank you. At this time, we'll be conducting a question and answer session. [Operator Instructions] Our first question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question.

Hey, guys, good morning. Congrats on all the progress during the quarter and the strong results. First question, maybe start off on the pricing side, Larry or Leonard? So sounds like you guys have had some success pushing price in the quarter. And obviously the longer term margin goal is certainly I think looking a lot stronger now given the pricing environment. But I'm curious if you could maybe just talk a little bit and quantify maybe a level of price increases you guys have pushed through in the last couple of months. And I'm curious if you've seen any pushback to any of those price increases at this point. I guess during early November, assuming some of those price increases have been more recent.

Leonard want to take – thank you take it Leonard.

Thanks, Larry. Thanks, Alan and good morning. Yes, I would say across the quarter, we continue to push pricing in all of our communities, we literally raised prices at 100% of our communities. And on average, the average price increase was a little over 4%. There's kind of age qualified community, second home communities at the lower end, and then at the higher end are really some of our suburban communities, we've continued to price it -- push those prices all through the quarter. And really, we haven't seen the resistance yet as of today, and continue to look for every opportunity we can to grow margins.

That's great to hear. Second question, you mentioned and this is a similar message, what we've heard from other builders, just about the need to, kind of slow things down a little bit not get backlogs too far extended. And I think that makes a lot of sense. Although, for you guys, you're in a little bit of a different situation, in that you're growing off and admittedly fairly small level of activity. So I was a little bit surprised that, you wouldn't be in a position where you could kind of let things run a bit hotter here. And I'm curious if you could talk a little bit maybe rank order, the constraints that you're seeing that would prevent you from letting that go hotter for a longer period of time, in terms of your absorption rate? Is it a land issue? I know, your lot count has been trending quite a bit lower in the more recent quarters or is it more difficulty sourcing labor, perhaps, the scale benefits to some of the larger builders have is that working as a disadvantage to you guys and trying to get labor in this tight environment right now?

Yes, it's Leonard again, what I try the latter of the two is driving it more or less, Alan is like in a perfect world you'd sell one home per week and start four homes per month. And really, that's what our trade partners are set up for. And we've kind of prepared them for that they've made the commitment to deliver that. So we just want to make sure again, that our sold and un-started backlog doesn't get too far out floods, especially in an environment of rising prices, we know that future land prices, lands going to cost more in the future. And so really, it's the capacity of our trade partners. So we continue to measure that, we've gone a little bit lighter on sales releases for that reason. And we think that's the best course of action.

And one if I could add, I really do think it varies by market and also by newer housing program or older housing program. So it isn't just a one size fits all, Leonard and John have worked pretty carefully at trying to analyze where we have opportunities and where there's more challenges. And in some cases, our goal is to build out our older projects and get through it. But in other cases, if we're not going to be able to start a house for two or three months, it doesn't make any sense that put it up for sale in a market that continues to be strong and so, I actually think we're being very logical. And we're attempting to maximize the profits. And if you look at the communities we've opened in the last 12 months, you'd see a significant increase in both absorption and margin. And this, we're hoping that we're going to be able to keep that the absorption steady, and the margins are improving, there's no reason why we shouldn't be able to.

Great, I appreciate that extra color there, Larry. And if I could just sneak in one more here. You kind of brought up the land market a little bit. What are you seeing right now because now that the debt refinancing is behind you guys, you obviously have a little bit more runway and disability from the balance sheet perspective. So I would imagine, you're kind of stepping on the gas a little bit here on the land side of things. And at the same time, I would imagine your competitors are as well given how strong selling environment has been. So what what's the availability of some of those quick return deals that you could kind of put your pen and paper to and potentially get on the ground here over the next 12 or 18 months?

Well, go ahead Larry.

Well, it's -- well, let me just start Leonard and then jump through. Land in the market we're in has always been challenging always. And one of the strengths of our organization has been that we have land relationships that go back over 30 years, whether with master developers or with individuals and it is tougher with now. But we're continuing to find opportunities. And there is no reason why we won't be able to grow the business over the next two to three years. But one thing you have to be aware of, and our investors, I hope they all understand is that when California is your strongest marketplace, it takes a couple of years to -- when you buy a piece of ground to one year closing houses. And we've been planning that and we understand that that's the situation we're in, but don't lose track if anything, when the market is particularly tough or difficult because of a lot of competition. Relationships matter more than ever. And that's one thing that we have. And we always had, and we always will have. And with that, Leonard, please keep going.

Yes, I think you hit most of the points, Larry, I would say, Alan, we're certainly back in the market. And we are kind of book [endianness] we're looking for opportunities that we can basically get control of that we can open a model home within 12 to 18 months, and then we're because of somewhat limited capital, we're looking for opportunities to fill our ‘23, ‘24 pipeline and those -- the profile those deals would look quite differently. That land market is completely is really competitive right now, as you would expect. We've had some success, trying up some interesting opportunities. And I would say Arizona is the most competitive land environment today. And so that's probably our biggest challenge is to identify assets that makes sense. There's positions available, but we want to make sure they make sense, and that we can deliver on those returns. I'd add one other thing to your prior question real quick. When you talk about kind of sales pace and running it a little bit hotter, I will say even with the steps that we've taken and we just closed the month of October, October was a really strong month even with those measures. It's the third strongest sales month in the company's history where sales were up 65%. And we averaged -- average absorption of 3.5. And that's even counting close our communities where we have 2 3 4 homes left to sell to kind of weighs that down a little bit. So again, it's still an extremely strong market. And we're kind of really excited about the future what it can mean for the company.

Great. Thanks a lot, guys. And sounds promising and good luck.

Thanks Alan.

Thank you.

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

Good morning, guys. Great job.

Thanks, Alex.

Thanks, Alex.

I was curious. You've mentioned you're starting to do some fee work for Fivepoint. Do you have any sense of timing you can share with those [vendors] first deliveries or revenues? Well, I guess if you want to probably you get booked earnings, right when construction happens. So can you kind of help and give us an idea how to model that?

Sure. This is -- good morning, Alex. This is Leonard. I'm sure you're aware it's a slightly different fee structure than say what we've done with the Irvine Company in the past. And so in this case, we take on all of the normal builder responsibilities in the community will be branded under the new home name, we sell a market homes, construct them and then take the backend service as well. So the community will open during the first quarter and open for sale. So that's when we will go to sale and then within the next two to three months, we should see first closing. So the way the fee structure works is we get a portion of the fee through the life of the project and then we get a backend portion of the fee at the close to the home. So even today we'd be recognized a small amount of fee but the significant fee would start coming in by the end of Q1, early Q2. We're also really excited I think it was noted in the release that over the last six months, we've been approached on several different fronts from it for some pretty exciting fee opportunities including the single-family rental business where we're talking to folks in Arizona. And we have a really exciting opportunity here in California to build up to 1,300, 1,400 homes. So we think it can drive a significant part of our business, help us grow earnings while not having to put any form of significant capital into the business.

Okay, great. And then on the joint venture side, I noticed there's very few lots left. Is that basically winding down or will you -- will that stay alive, I guess, in two, three years.

Hey, Alex it’s John Stephens. Yes, we are sort of winding down the joint venture business. We've got, like I said, on the call or a few lots left in our Davis Cannery Project in Northern California, we have about, I think, seven homes left to deliver out on our [channel’s] community. And then really, the remaining lots are at our Folsom Ranch deal up in Northern California called Russell Ranch. And we're in the process of exiting that partnership right now. And I would say in the near-term, we really don't have any plans to enter into any new joint ventures at this time. But, it's possible if the right opportunity came along that we would entertain that, but for now, that part of the business was really winding down.

Okay, great. And then on the [indiscernible] more on the new debt that you guys just raised? Is the plan to pay off the 2022 short-term or closer --

Yes, it's already done. Yes, we effectuated that last week, we closed on the new bonds, I believe it was on the October 28, and all the previous 22 notes have been extinguished. And so that's done. And then we use some of the -- some of our cash on hand to pay off the balance because we raised $250 million in new notes, and we had about roughly $292 million of principal in the old note, so.

Okay, great. I'll get back to the queue. Good job.

Sure, thanks.

Thank you. Our next question comes from line of Jason [indiscernible] with Private Investor. Please proceed with your question.

Thanks for taking my question, guys and congratulations on the strong quarter. My question really just kind of pertains to the priorities for capital deployment going forward. You mentioned how you successfully leveraged the balance sheet and extended all maturities. And the outlook for the business seems exceptionally strong. And you guys are significantly generating cash flow. But what's your stock trading at half of book value or basically half the tangible book value? It's hard to really imagine there's a better use of cash right now. We're partly used to cash right now and buying back your own stock. So really, what are your thoughts around potential share repurchases? And really, how can we focus and think about priorities of capital deployment going forward?

That's a great question. Jason. Thank you. Yes, we've looked at all aspects of -- use of our capital. And we've been very focused, as you mentioned, on really deleveraging the business and refinancing our bonds and pushing out the revolver extension, which was a was a big, important thing that we completed on Friday. So it really puts us in a position now where we can reinvest in the business, obviously, we did buy quite a few shares in the front half of the year, when we saw the stock price depress very significantly, and I agree with you at trading at half of multiples book value isn't where we'd like to be. But on the other hand, we do need to reinvest in our business a little bit. And we will evaluate really all aspects and where to allocate the capital going forward. We do have a little bit left on our authorization from our board, I think it was about $1.7 million left authorized currently. But again, we've been on pause on the Land Act side for a little bit now. And we will sort of layer some of that in going forward again. We do need to sort of balance our capital allocation. And it's a fair question, but we do need to reinvest in the business too. So we'll continue to evaluate on all fronts moving forward.

John, do you also want to address the idea where we are with leverage where we came from and where you see us moving to the future?

Yes, I mean, I think our net debt to cash come down significantly at 45.1% at the end of the quarter. It's down almost 1,000 basis points from where we were a year ago. We will -- as I mentioned in my prepared remarks, we will have a charge from the refinance of the old bonds which will come through in Q4, but moving forward we're probably running the company with the idea of between 45% and 50% on a net debt to cap basis moving forward.

Any other questions?

Not from me. Thank you and congratulations again. Good luck.

Thank you.

Thanks, Jason.

Thank you. Our next question is a follow up from the line of Alex Barron with Housing Research Center. Please proceed with your question.

Yes, thanks for taking my follow up. So I noticed in Arizona, you guys managed to open several communities this quarter. Just wondering if there's any more in the pipeline going into next year or is this roughly going to be the community down through next year?

Yes, Alex, this is Leonard. You're right. The last five months, we've opened seven communities in three different locations. And obviously, we're very excited about the early results where we're seeing strong absorption and strong margins. So again, we're really excited about our team there on the ground. We have one community slated to open in the first half of next year. And that's, at this point, we have other things that we're currently working on. But that's primarily the one that we can talk about today.

Yes. And it looks like we're at eight communities now at the end of Q3. I think one of them probably dropped off in Q4 and then would probably run that seven, community range plus or minus for the year.

Right.

Depending on how quickly we sell through some of these communities. And that's what we're expecting for the bulk of next year. But it may taper a little bit in Q4 of next year until we reload a few communities we're working on now.

Okay, great. And then, as far as gross margins, I think you gave us a range for next year. I mean, for next quarter, which is a little bit down versus this quarter is that mainly because of the impact of lumber or is there something else there?

It really has to do with some of the close up communities we have on the luxury condominium side where -- the good news is we're selling through those downside is that the margins are a little bit weaker in those communities. And we're kind on a higher average selling price, Alex. So I think once those all get disposed of and delivered in Q4, I think our margins look positive, moving forward. And again, I think [13, 8 to 14, 2], we feel pretty good about that. But again, part of it's going to be what have those higher price lower margin communities sort of deliver and close out in Q4 is primarily the impact for the margin.

Okay, awesome. Thanks. Best of luck for next year. Thanks.

Thanks, Alex.

Thanks, Alex.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Webb, for any final comments.

Thanks very much. As all of you could see, we have really made significant progress over the last three months. And when -- and of course, part of it is because of the improved housing market, but a part of it has been in the works for a long time based on our strategic planning. And I wanted to comment on Leonard and John, because they've really done a terrific job. We really believe the future is bright for The New Home Company. And we're extremely excited about the next two years as we move forward. So with that, I want to thank all of you. And stay tuned because, again, there's no light at the end of the tunnel. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.