At Taylor Morrison, we benefit from the well balanced, diverse mix of our portfolio and operating strategy. Having expanded our market footprint and product positioning in recent years through our acquisitions and smart organic growth, we serve a broad range of customers in the entry level, first and second move-up, and resort lifestyle segments across the country. With each of these consumer groups demanding varying levels of home specification and affordability considerations, we have a dynamic and flexible operating strategy that allows us to best serve each of these segments and respond quickly to market conditions community by community to maximize our performance. Since interest rates began rising last year, this flexible but prudent approach has driven important shifts in our pricing strategies, starts volume and land investments as we quickly adapted to minimize risk and recalibrate affordability.

From a pricing perspective, we have adjusted to market conditions across the entirety of our portfolio to drive sales and turn our inventory while also protecting the value of our highly profitably backlog. We flex our various pricing levers, starting with finance incentives and then lot and option premiums, and most selectively base price with each community's mix of adjustments dependent on its backlog, inventory, duration, competitive dynamics, and of course consumer group. Generally speaking, our entry level communities respond best to a combination of mortgage incentives and base price adjustments, while our higher priced move-up and resort lifestyle communities emphasize reduced lot premiums, design center concessions, and mortgage incentives.

The success of these strategies was evident in our fourth quarter results and have been even more encouraging thus far in the new year. We are in the early days of the spring selling season and typical seasonality has been anything but typical in recent years, but so far we have been pleased with the positive momentum in sales activity and shopper sentiment since mid-January. Specifically, though the first six weeks of the year, our gross sales orders have improved to a more normalized pace of approximately three per month, and our cancellation rate has trended into the mid-teens, driving our net sales pace to 2.5 as compared to 1.9 in the fourth quarter. Aiding the positive sales activity, the vast majority of our customers in backlog are strongly committed to moving forward with their home purchase and are secured by an average deposit of 10% or nearly $70,000 per home.

In addition, our buyers financed by Taylor Morrison Home Funding, whose capture rate improved to 78%, had an average credit score of 753 and provided an average down payment of 24% in the fourth quarter, both of which were stronger than a year ago. Together, these factors contributed to our fourth quarter cancellation rate remaining well below the industry average and consistent with our long term trend at just over 7% of our opening backlog. While housing market conditions overall remain well below peak levels and the outlook is highly uncertain, we believe these encouraging trends underscore the enduring desire and demand for home ownership and financial strength in our targeted consumer groups, as well as the limited availability of competitive inventory particularly in our core community locations.

In addition to using strategic pricing tools to solve for the affordability constraints in the market, our construction and purchasing teams are aggressively pursuing cost rationalization opportunities with our suppliers and within our building processes and product offerings. Meanwhile, as Lou will detail in just a moment, we have moderated our starts volume to align with sales activity and targeted inventory levels with a focus on driving healthy asset turns and cash generation. Our heightened focus on rationalizing the breadth and depth of our option offerings and floor plan library since 2020, including the expanded use of our national Canvas option packages and all spec homes and a more targeted design center approach for our to-be-built homes has greatly improved our production efficiencies and ability to quickly capture cost savings while not reducing the average option revenue per home.

In fact, it's worth highlighting that 64% of our fourth quarter gross sales orders were for spec homes, up from 47% a year ago and 28% two years ago. Enabled by our teams' effective inventory positioning by price point, this shift has further streamlined our purchasing and construction while also allowing us to meet specific consumer demand. In addition, despite the meaningful increase in our spec sales, our average square footage in 2022 was down less than 100 square feet year-over-year, suggesting that buyers across consumer groups continue to value the space with our data suggesting buyers would be willing to trade off included features and premium home sites. On the topic of meeting consumers where they are, I'd like to also highlight the success we are seeing from the ongoing advancement in our digital sales tools that empower our prospective buyers to engage and shop with us when and how they want to, all while providing improved visibility into purchase price and monthly payment in an online shopping experience unlike any other in the industry.

Our first of its kind online home reservation system is available for all spec homes and in most communities that offer to-be-built homes, allowing shoppers to choose their desired lot, floor plan, and exterior selections, as well as popular structural options, interior design packages, and upgrades in the most recently enhanced version that we began rolling out last quarter. In total, our online reservation system was our top lead source last year with a conversion rate of 40% in the fourth quarter and 32% for the year, driving 12% of our total sales. With nearly 70% of these reservations for a future home purchase made by consumers who did so prior to ever visiting the community in person, I believe it's safe to say that this volume represents incremental business earned by engaging with customers in a way most fitting for them.

Backed by these exciting consumer insights, our team continues to redesign the home shopping journey and I look forward to sharing our continued progress. Our focus on operational flexibility, innovation in our sales program and customer experience were the key messages that our leadership team recently delivered in person to each of our divisions during a 19-stop road show in January, the first of its kind since before the pandemic. To meet face-to-face with all of our nearly 3,000 team members was a great way to kick off the new year and align on the operational strategies that will guide our path to success in 2023 and beyond. Now I will turn the call over to Erik to discuss our land investment strategy.

Erik Heuser: Thanks Sheryl and good morning everyone. I will share an update on our land portfolio, our continued opportunistic approach to investments, and some exciting developments in our build-to-rent business. At year end, we owned and controlled approximately 75,000 home building lots comprising 5.9 years of total supply, of which 3.5 years is owned. Both measures remain within our targeted ranges. Of our total lots, we controlled 41% via options and other off-balance sheet structures, which was up from 38% a year ago. In determining the optimal financing structure on a project-by-project basis, we are selectively targeting our land lighter investment approach to balance cost of capital, risk mitigation, and expected returns.

In addition, we continue to closely review and re-underwrite every phase of land development, lot takedown, and deal closing with an emphasis on renegotiating timing, terms and pricing to reflect expected market conditions and to ensure each dollar invested meets our stress-tested, risk-adjusted return thresholds. As a result of this scrutiny, we incurred $25 million of pre-acquisition abandonment charges in the fourth quarter related to land deals that no longer met our underwriting requirements. For the full year, our home building, land acquisition and development investment totaled $1.6 billion, of which nearly 60% was spent on development. This total was down from $1.9 billion in 2021 and well below our initial full year investment target of $2.3 billion to $2.4 billion entering the year.

As I have shared on recent calls, we took early action to reduce our land spend as the housing market softened last year and were already in a highly opportunistic stance given our strong lot position. As an update, the basis of approximately 58% of our owned lot supply was negotiated in 2020 or earlier. As we look ahead to 2023, we expect our full year land spend to be similar to 2022, although the ultimate investment will be dependent on market conditions and opportunities that arise. During the quarter, we recognized approximately $25 million of inventory impairments, the majority of which was related to a single non-core community in the west that we chose to monetize quickly given competitive pricing pressure. Overall, we remain pleased with the composition and basis of our well underwritten, capital efficient lot portfolio that is concentrated in prime core sub-markets.

Finally, let me share an update on our build-to-rent operations. During the fourth quarter, we reached an important milestone in the evolution of our build-to-rent business with the closing of our first project sale, a property in Phoenix which generated an attractive gross margin over 35%. In addition, we announced our new build-to-rent brand, named Yardly, which is inspired by the private backyard space that our niche horizontal apartments offer consumers. Unlike traditional multi-family housing, our build-to-rent concept specializes on cottage-style for-rent homes in branded lifestyle-oriented communities developed in single lot parcels. At year end, we owned 16 rental projects in six markets, 10 of which are under active development, and we have more than 40 prospective land deals under review in our pipeline.

While we have moderated the pace of investment alongside our traditional for sale business, we remain constructive on the long term growth potential of the space as well as the barriers to entry that exist for our differentiated product that fills a void in the rental market for single family living, all while offering an attractive solution to affordability constraints. As a reminder, our build-to-rent business is supported by a capital efficient financing structure which provides the benefits of relatively light and levered capital exposure while maintaining overhead leverage, high returns, and control. With that, I will turn the call to Lou.

Lou Steffens: Thanks Erik, and good morning everyone. I will review our financial performance and provide detailed guidance for the first quarter. In the fourth quarter, we generated earnings of $2.51 per diluted share, or $2.93 after adjusting for the impact of impairment, lot abandonment, and other one-time items. Compared to the fourth quarter of 2021, the latter was up 32% due to improvement in our home closings gross margin, SG&A leverage, improved financial services profitability, and a 12% lower diluted share count. During the quarter, we delivered 3,797 homes at an average closing price of $626,000, which generated home closings revenue of $2.4 billion. For homes closed during the quarter, average cycle times extended several days as anticipated given the industry-wide volume push at year end.

Specific to our Florida and southeast divisions that were impacted by Hurricane Ian, challenging supply chain dynamics delayed the delivery of some homes during the quarter, although I am happy to report that our teams are back to a more predictable operating cadence. Across the country, while we are beginning to see some relief in the early stages of this construction cycle, including a return to normalized product lead times and improved labor availability in some categories, we are not expecting any notable improvement in overall cycle times until later this year. Given our roughly 60/40 split of spec and to-be-built home sales, we manage our construction start pace by aligning with sales to maintain targeted levels of homes in production, including a healthy level of finished inventory.

This allows us to meet consumer demand and maintain efficient production schedules for our trade partners, resulting in improved asset turns. At quarter end, we had approximately 7,700 homes under production, of which about 2,300 were spec. Of these specs, only about 280 were finished. We started approximately 1,500 homes during the quarter, or 1.6 per community, which was up slightly from 1.5 in the third quarter of 2022 but down from 3.4 in the fourth quarter of 2021. With fewer than one finished spec home per community at quarter end and the recent positive momentum in sales, we expect to step up our start pace in the months ahead. Our teams already have additional permits on hand, providing valuable flexibility as market opportunities dictate.

Based on these homes under construction and our projected starts volume, we currently expect to deliver between 2,300 to 2,400 homes in the first quarter and between 10,000 to 11,000 homes for the full year. Given the elevated level of uncertainty in the market, we will look to provide additional full year guidance as the year unfolds. From a pricing perspective, we expect an average closing price on our first quarter deliveries to be between $630,000 to $640,000. Turning to margins, excluding inventory related charges, our fourth quarter adjusted home closings gross margin was 24.5%, up 290 basis points from 21.6% a year ago. Including those charges, our home closings gross margin for the quarter was 23.5%, up 190 basis points year-over-year.

The improvement was driven by pricing gains achieved in prior quarters and the ongoing benefit of operational enhancements which offset higher construction costs and the impact from increased incentive and other price adjustments we have offered in response to weaker market conditions. Looking ahead, we expect our first quarter home closings gross margin to be stable sequentially at approximately 23.5%. This would be up from 23.1% in the first quarter of 2022. SG&A as a percentage of home closings revenue improved 50 basis points to 7.3% from 7.8% in the prior year quarter despite the modest decline in revenue driven by lower performance-based compensation costs, as well as enhanced efficiencies in our sales and marketing capabilities. This marked another company record low.

Going forward, we expect to maintain a disciplined cost structure and are forecasting an SG&A ratio to be approximately 11% in the first quarter. Our net sales orders in the quarter were down 42% year-over-year to 1,810 homes. The decline was driven by a 41% reduction in the monthly absorption pace to 1.9 net orders per community and a 2% decrease in our ending community count to 324. As Erik noted, we have pulled back on land investment in both acquisition and development, which will impact our future community count. In the first quarter, we expect our ending community count to increase slightly to between 325 to 330 communities. To wrap up, we generated $1.1 billion of cash flow from operations during the year, which is up from $377 million in 2021.

In addition, we took several steps to further solidify our strong capital position during the year, including retiring $265 million of 2027 senior notes in June, increasing the size of our corporate revolving credit facility to $1 billion in September, and redeeming $350 million of 2023 senior notes in October. These transactions reduced our future capitalized interest burden and aligned our gross debt closer to targeted levels. Our next debt maturity is in March of 2024, which we have ample liquidity to address with cash on hand and are closely monitoring the market for potential refinance opportunities. We ended the year with total liquidity of approximately $1.8 billion, including $724 million of unrestricted cash and $1.1 billion of available capacity on our revolving credit facilities, which were undrawn outside of normal letters of credit.

Our net debt to capitalization ratio equaled 24% at year end, down 1,100 basis points from 34.1% a year ago and consistent with our goal to reach the mid 20% range. Lastly, during the year, we repurchased 14.6 million shares for $376 million, which represented approximately 12% of our beginning shares outstanding. The average repurchase price was $25.83, a nearly 40% discount to our year-end book value of $42.34 per diluted share. Our remaining repurchase authorization was $279 million at year end. As we head into 2023, our capital allocation priorities remain grounded in a disciplined framework that balances our operational and growth objectives with the help of our balance sheet as we seek to generate attractive long term returns for our shareholders.

Now I'll turn the call back over to Sheryl.

Sheryl Palmer: Thank you Lou. Before we close, I'd like to recognize our Taylor Morrison team for their outstanding performance in 2022. Their commitment to loving our customers is unwavering and they have continued to push ahead despite the challenges, and I am so grateful for their tenacity and teamwork. It gives me great pleasure to share that we were once again named America's Most Trusted Homebuilder by Life Story Research for the eighth consecutive year, an award that belongs to each of our team members who earn home shoppers' trust day in and day out with integrity, commitment to quality, and transparency. In addition, we were also once again the only homebuilder to be recognized on Bloomberg's Gender Equality Index for the fifth year running.

With increasing diversity among today's home buyers, we recognize the critical importance of reflecting our consumer set in our team, our marketing and our products, and we have recently launched a study with USC intended to understand anticipated shifts in housing needs related to greater diversity of the overall home buying population. I am proud of our industry-leading gender diversity and the strides we are making to further drive our racial and ethnic representation. To that end, we are also proud to share that we have launched a first of its kind board fellowship in which we have added two outstanding professionals, Hanna Choi Grenade and Michelle Sory-Robinson as non-voting board fellows to expand the perspectives in our boardroom.

They bring a wealth of knowledge from their leadership in digital transformation, supply chain and strategic management and will in turn gain invaluable real world board experience in what we expect will become a model for expanding board diversity. We look forward to sharing more with you on these exciting new initiatives and we thank you for your interest in Taylor Morrison. Let's open the call to your questions. Operator, please provide our participants with instructions.

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