Good morning, and welcome to the Beazer Homes Earnings Conference Call for the quarter ended December 31, 2014. Today’s call is being recorded and a replay will be available on the company’s website later today. In addition, PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company’s website at www.beazer.com. At this point, I will turn the meeting over to your host, Ms. Carey Phelps, Director of Investor Relations.

Thank you, Ala. Good morning and welcome to the Beazer Homes conference call discussing our results for the first quarter of fiscal year 2015. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, which are described in our SEC filings including our Form 10-K, which may cause actual results to differ materially. Any forward-looking statements speaks only as of the date on which such statement is made and except as required by law, we do not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. New factors emerge from time-to-time and it is not possible for management to predict all such factors. Joining me today are Allan Merrill, our President and Chief Executive Officer and Bob Salomon, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will take questions in the time remaining. I will now turn the call over to Allan.

Thank you, Carey and thank you for joining us. You have likely seen the press release that we issued this morning. In it, we reported a larger than expected net loss of $22 million for our fiscal first quarter, which included $13.6 million of additional warranty reserves related to the stucco issues in Florida that we discussed last call as well as a $4 million charge related to our discontinued operations. Bob will talk in more detail about the reserves in a few minutes, but first I want to highlight the operational results for the quarter and comment on current market conditions. While losing money is disappointing, there were plenty of good things that happened in the quarter. Orders rose 7.9% with absorption rates in line with our expectations. Our ending community count was up 13%. We also saw further improvements in our ASP, which increased to $296,000, up 6% year-over-year. Homebuilding gross margins, excluding the warranty charges, grew by 60 basis points over last year to a healthy 21.8% and we ended the quarter with an ASP and backlog of $317,000, which was 11% higher than last year. This led to a dollar value of backlog of more than $560 million, the highest it has been on December 31 since 2007. While these results demonstrated continued improvement in our core 2B-10 metrics, there were clearly two areas of disappointment in the quarter as well. In addition to the nearly $18 million in reserves we took, our quarterly revenue fell short of our expectations. We expected revenue to be about even with last year. And we fell about 10% short of that level. The shortfall related to a combination of a lower backlog conversion rate, which also reduced our ASPs, ASP and the quarter’s closings and about $5 million in…

Thanks Allan. I want to start off with some more color on the $13.6 million of unexpected warranty charges that we recorded this quarter. You may recall that we first discussed some stucco issues in Florida last November. We believe that a number of our subcontractors failed to properly install stucco on some of the homes we built in Fort Myers and Tampa, resulting in water intrusion issues. The average age of homes is more than 8 years old. In November, we believe that these issues were likely confined to certain house claims in several specific communities. However, since that time, the call volume has from home effective homeowners increased. We learned that more communities were impacted than we had thought. And we stepped up our own process to estimate our potential exposure for homes, for which we have not yet received any claims. As a result, we recorded additional warranty charges this quarter intended to cover both of repair costs for the homes that have already been identified as having water intrusion issues as well as an estimate related to potential future claims. We will aggressively pursue recoveries from a variety of sources, including our own insurers as well as the subcontractors and their insurers. While we believe that some recoveries are likely because the amount cannot be reasonably estimated at this time, we have not included any assumption of recoveries in our warranty charge calculations. Now, while we are on the topic of legacy construction issues, we also took a $4 million reserve for the cost of resolving the construction defect issue in one of the markets we exited several years ago. This charge is in the discontinued operations line of our income statement. When I get into the discussion of our 2B-10 progress, you will note the…

Thanks Bob. With the exception of my disappointment about the big charges and shortfall in revenue this quarter, I feel pretty good about how we started off the year. We have got a robust backlog, improving sales trends and more new communities coming this year. So, we are well-positioned for another year of progress in our 2B-10 objectives. We know that we don’t compete in a vacuum, community counts are rising in most of our markets and many of our competitors are talking about incentives. The oil price drop will likely also post some new challenges, but despite these complications we continue to expect to increase our full year adjusted EBITDA by at least $20 million to approximately $150 million, excluding the stucco and disco operations charges that we took this quarter. This quarter we have resisted the temptation to tweak each of our target metrics for the full year. While I am sure there will be some twists and turns throughout the year, at this point there were any specific changes, we feel compelled to make is exactly what we said in November. For the full year, we are targeting year-over-year percentage growth in our average active community count in mid-teens, absorption rates that are flat with fiscal 2014, mid-teen order growth in line with the community count growth that we expect. Mid single-digit percentage growth in closings since we won’t have a full year of closings from our larger expected community count, revenue growth that will be higher than closings growth and ASPs likely approaching $320,000, up more than 10% over last year. On the margins side, while acknowledging the risks in the market, we are still targeting around 22% for the full year excluding the stucco costs. And the anticipated revenue growth will help us leverage our fixed costs, which should enable us to reach an SG&A ratio of about 12.5% of total revenue for the year. There is little doubt that we will end up exceeding some of these current targets and missing others, but we are determined to drive to the expected improvement in profitability regardless of the mix of results on our operational metrics. Our top priority is achieving 2B-10 in 2016 and we intend to make significant progress towards those objectives this year. Thanks for joining the call today. And at this point I will open it up for Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Mr. Michael Rehaut. Sir your line is now open.

Thanks. Good morning everyone.

Good morning Michael.

First question I had was on the competitive backdrop, Allan you made reference to some other builders so far this season talking about perhaps incentives coming up a little bit, at the same time we have heard from you and others that there has been some positive momentum in the marketplace recently maybe perhaps since Thanksgiving into January, I was hoping maybe we could dive deeper and perhaps just cover if there is any particular markets on your footprint that standout that either we can make sense from the comments of the competitive elements that perhaps there are some markets where you have seen a little bit of a pickup in incentives or if there are any markets in particular also that where it drives your comments about some positive momentum being seen in demand?

Okay. So, as we think about markets obviously where our stores are located or our communities and the products that we offer, it differs. And so we may have a really strong competitive position in a market that’s a little softer or we maybe in a little weaker position in a market that’s strong. So, I just caution listeners that the read through and our commentary about markets is what we are experiencing, but you kind of have to triangulate that with other data points to see if that’s giving you a market read and that’s kind of obvious, but I wanted to make that point. And I would tell you for us there were a number of places that continued to be strong, a couple that stood out as a little bit stronger and a couple that were a little bit weaker. I will start on the weaker side and it’s not a great revelation, but Bakersfield where we have one community, actually two communities in a single kind of master plan, you got just over 100 lots. Bakersfield is really, really tough. We actually impaired that asset in September largely related to the FHA reduction of loan limits and it hadn’t gotten any easier. I am happy we have only got the two communities there and I expect that to be a slog all year and that really would standout as a particularly difficult place. In the other end of the spectrum, I would tell you that our coastal Carolina markets have been very strong. Charleston, in particular, has been very, very good for us and incrementally good compared to last year. I’d say the same thing surprisingly perhaps to many about Dallas. Dallas has not only been strong. It’s gotten stronger for us this year. We have…

That’s a great answer, very comprehensive, I appreciate it. I guess just a second question to look at one of the components of your full year expectations I guess that you reiterated, I guess you reiterated all the components, just the ASP wanted to get perhaps a little bit additional level of clarity there. Your ASP was $296 million in the first quarter and I understand it was hurt by some of the timing of the deliveries of some higher ASP products. But even with that being said, your backlog is $316 million and you said that for the 2Q, you expect to be over $300 million, but it would seem that in the back half of the year to do a full year ASP nearing $320 million, let’s say, $315 million, you would have to be solidly above $320 million in the back half of the year, maybe closer to $330 million or $325 million. Is that the right way to think about it and is that what you kind of see playing out based on your backlog and mix of price communities throughout the year?

Uncharacteristically, I have a single word answer, yes.

Alright, short and sweet, that’s good for me. Thanks.

Alright, thank you.

Thank you. Our next question comes from the line of Mr. David Goldberg. Sir, your line is now open.

Thanks. Good morning everybody.

Good morning, David.

My first question, I wanted to get a little more clarity on these 120 units that got pushed and I really want to ask the question from two perspectives. Bob, I think you kind of went through in your part of the commentary that some of it was cancellations and some of it was just things got delayed, so maybe just some more clarity on the kind of breakout between those? But then also with that, when I think about the guidance for second quarter closings being down year-over-year right, I mean, the backlog is up, you have these 120 units that push some of which presumably aren’t in backlog now, because they were cancellations. And so what’s driving that, is it just a different mix of homes in backlog now? Can you give us some color? And I think that would be very helpful.

Yes. I would look forward to the question, David, and perhaps now in contrast to the prior one, this one will be a little bit more than one word. So, I want to direct you to Slide 7, which was the slide where we have the backlog activity. And there are couple of things that we have pointed out differently and these are kernels of the answer, but I think there are important things to realize. I think as we have been sustaining kind of low and mid 50s conversion rates in our backlog, there has been kind of a dynamic going on inside of that. On the one hand, the percentage of our backlog at quarter end that was scheduled to close in the immediate – in the following quarter has been declining pretty significantly as our mix of 2B builds has grown over the last year or two. So, just as an example, at the beginning of this quarter of the first quarter, about 50% of the backlog that we had was scheduled to close in the quarter. We actually closed more than that. We closed a 105% of that. And in fact in the fourth quarter, I think the ratio was about 110%. Well, if you go back a year or two what you would have seen is that more like 60% of the backlog was scheduled to close in the subsequent quarter. And our closings were at or below a 100% of that number. So, you have got a dynamic where the backlog is slightly longer dated, the percentage has moved as I said from sort of 60 into 50s. And I think for the quarter, Bob gave you a number, actually only 48% of the backlog at 12/31 is scheduled to close in the March…

I think I understand.

Okay. So, in terms of the 120 as Bob said, there really are three different things that go on. You do get some cans of homes that are expected to close. And I can tell you that two thirds of the cans that we got on homes that were expected to close were resold during the quarter, but not very many of them were resold and closed during the quarter. So, that’s a normal dynamic, a handful of them as always, nothing dramatic, but a handful of them were delayed for construction permit, weather issues or possibly lender or borrower issues. And then we do make every quarter as we think about okay, what this quarter look like, we do make some assumptions about which specs do we think are targeted price to sell going to be in the mix. And in the December quarter, we had lots of interest in and reasoned expectations for some spec sales on some pretty high ASP product. You follow us pretty closely. We have got a Gramercy town home or condo project in Hollywood, where our ASP is at 700. We have got right next to the Under Armour campus in Baltimore on the Inner Harbor, we have got a community that’s in the 500 and 600s. We sold homes in both of those communities in the quarter, but they didn’t sell and close in the quarter. And that’s the kind of nature of what happened with the 120. And then in terms of the 60 that came back the other way where we were able to either pull forward from a construction standpoint or where we were able to sell other specs and that happens. We can’t be exactly right about which specs we are going to sell other spectrum that happens.…

Okay, that’s – excuse me, very thorough. I was hoping, I could get a follow-up, although I have taken a lot of time, but real quick, I guess I was wondering if you could talk about the warranty charge. And I think in the comments, there were more claims kind of as you went forward here than what maybe you had expected or what you have seen earlier. Maybe you can just talk about the methodology for determining what’s your reserve would be, because I thought it would be based more on the subcontractor and the community as opposed to the claims activity. In other words, if you had a stucco on water issue in one home, most builders would tell you, you have to take a reserve against, assuming it’s in a lot of homes, if there is no claims, because it was a similar contractor, it was a same sub or whatever or it’s the same construction technique as opposed to the actual number of claims, maybe you can just talk about how that varied and what change in the assumption base?

It is a good question, Michael. And actually…

David.

Sorry, David, I’m sorry.

Michael will have a lot of time, don’t worry.

Actually, we took both of those things into account. The first time that you have kind of are alerted to these things are through calls that you get from the homeowners. And what happened this quarter was the call volume increased. We had more calls in additional communities than we had thought we had had the problems or the subcontractors that had done the work in the original community that we had issues with in the fourth quarter. And so we had to broaden our methodology and look at really all of the communities that we had built homes in Fort Myers and Tampa where the subcontractors worked. And we did make some estimations of potential claims in communities and on homes for which we have not yet received any customer call.

Which were driven, David, exactly by your point like through the sub’s work. If sub X had a 90% defect rate in a community that we knew about and sub X was present in another community even if we hadn’t heard from them, we needed to make some allowance for the fact, sub X probably didn’t magically get better in a different community. And that absolutely was at the epicenter of this quarter’s estimate.

Got it, very helpful. Thank you very much.

Thank you. Our next – thank you. Our next question comes from the line of Ivy Zelman. Your line is now open.

Thank you. Good morning, guys. Maybe Allan, you could start with apples-to-apples what right now would you see in price appreciation roughly or maybe you can go by market, but just kind of getting idea, are you seeing flat, up a few percent…

Yes. You can see there….

On same house, same floor plan?

Yes, it’s either up 1% to 3% apples-to-apples-to-apples not in Bakersfield.

Yes. But does that include Phoenix?

It does actually. We are seeing a little bit of lift there. Now, it’s not a lot, 1% feels pretty good though after the last two years.

And then Bakersfield with FHA loan limits coming down, are you optimistic that the new 97% LTV could actually help with the higher loan limits there?

I do, although now we have a jobs problem. So I think if oil hadn’t fallen out, I think again its two communities and we are obviously working on a much, much larger platform. But if I just think about that area, yes that was a specific solution to an acute problem in Bakersfield that 97% down program – or the 97% LTV program. And I think that was very responsive. And I think that will frankly be helpful Ivy in Vegas and in Phoenix.

Okay. And then just because you have always been known as an entry level builder, do you expect strategic leader start to offer more products and competing against Express Homes in that 160, 170 given your average ASP is so much higher now and roughly what percent of the market or percent of your offering would be at the low end if at all?

It is a very low percentage that’s not, I want to be first time and first move-up which has been our bread-and-butter with a nice dollop of retirement business particularly in a condo context in the Mid-Atlantic. Those have been the mainstay businesses for us and they will stay that way. Our mix has shifted a little bit to the Mid-Atlantic and California, so our ASP is drifting up. We are not trying to be something different. But I don’t have a strategy right now to try and go way down from my perspective. And again we are a small company compared to the folks that are executing that strategy. And the compromises and I don’t mean it to sound pejorative because I am respectful of what they are doing. But the things they have to do to hit those price points that relate to location and product selection, I think are heightened in a downturn. And we really don’t have the battleship here to absorb that if those things in a different economic environment are problematic. So I don’t see a lot of merit for us, not for anybody else, but I don’t see a lot of merit for us to try and get down there.

Are you worried on there is a lot of competition in that first time move-up segment of the market, it seems like there might be arguably some that would say that market is being saturated with too much new community and that’s part of the problem that there is not enough broader product offering for entry level. So you don’t ascribe to that?

Well, but the definition as you know better than I do move-up is a pretty wide range. I talked last quarter about 60 foot lots in the East side of Phoenix and there were 100 new communities in Phoenix and 80 of them were 60 foot lots in Gilbert, Chandler and Mesa. We did exactly zero of those deals. So I – yes your thesis is right. There are areas where there are over concentrations of homogeneous products that have created supply imbalances, that’s an absolutely accurate statement. On the other hand if I think about the distinction between first time and first move-up is getting a little bit blurry as you know and your workers pointed out the first-time buyers are more affluent and a little over than they were a generation ago. So I don’t really feel like we have changed our stripes or that we are trying to change our stripes. And we can list off all our competitors, their ASPs are still between $50,000 and $100,000 higher than ours. So I am – I still like our position. And I think with our choice options and our mortgage choices we are doing some things to differentiate ourselves so that we are just not another box on box price per square foot play.

Okay, good luck. Thank you.

Thanks.

Thank you. Next question comes from the line of Ms. Will Randow. Your line is now open.

Hey, good morning and thanks for taking my question.

Good morning.

In terms of regional color on gross margin and mix that’s provided on Slide 23, I guess how do you think about the key drivers of the changes in gross margin, it looks like for example the West compression maybe rising land costs potentially some negative mix on what makes neutral ASPs, but I guess could you provide further details on the key drivers for the three segments and your directional expectations for trends in the second half?

Sure. The overall as just to kind is set the table we have said is we are targeting that 22. And I think what you will see among this, I do expect further lift in the East, one of the things that will happen seasonally. And I know my East team is listening. So I am glad for that is we do get better pace in the back half of the year out of the East and there are some fixed costs that get leveraged with pace. I also think the new communities are – there are significant number of them that have been on our East segment in that mid-Atlantic region and I think the margins in those communities are going to be very attractive. I mean, these are assets that we bought a couple of years ago. We have been working through the development issues on. We are going to start to get closings out of those in the back half of the year and I think that those will be accretive to margins. Honestly, I don’t see a dramatic change in the Southeast. I think it can move up just a little bit. We are very well-positioned in the markets that we are in there. I don’t think that we have got a really unfavorable land cost mix issue and the labor issues are not particularly acute in any of those markets. So, that feels to me like a market where we might see a little bit left, but I wouldn’t expect too much. The West is tricky for us, because it does cover both Houston, Dallas; Phoenix, Vegas in California. And in California, we have got some very high-end product. We have got product out in the desert. We are as I talked about being in Hollywood and we have got Houston, Dallas as I said. So, it’s very hard for me to tell you prospectively unless we go community by community what the mix of sales going to be. I don’t see there isn’t – there isn’t a single, I wish there were. It would be easier to answer your question if I could say look, here are the two things that are going to drive it down or drive it up. I would tell you I expect our gross margins to have two handles on the amount of the West segment, but whether or not, it’s closer to the 20 or the 22 has a huge – it’s a huge factor what that exact mix is. And it’s – I realized it’s a little frustrating answer, but I just can’t tell you exactly what the Southern California versus Phoenix, Vegas versus Texas mix will be in our third and fourth quarter, because we haven’t made the sales yet.

Got it. Thanks for that. And just follow up on the comments on mix neutral price appreciation being low single-digit…

Yes.

For the past month or two, it looks like the existing home sales, call it, prices are running at mid single-digit with a little bit tighter inventory. And I guess in some ways I think about that as a leading indicator, but just kind of curious, do you think its more incentives builders closing the gap between kind of the spread that’s been created between new and existing homes or what do you think the key driver for differentiation is there?

Yes, I mean, the thing I always worried about and I mean it was a very precisely asked question, which was absolutely apples-to-apples is the mix thing always is going to drive any of these home price indexes. New homes, used homes, distressed homes, whatever it is, it’s virtually impossible to measure exactly apples-to-apples. I think you made a good point good point that the gap in many markets between new and used homes has gotten historically wide. And I think that, that probably has some effect on new homes relative to used homes, but I am not totally convinced that, that isn’t also a mix driven issue by what’s available on the market on the used side. So, I think that’s at play a little bit. I think supply and demand is what’s driving pricing and there are clearly submarkets and you cover the industry closely, so you know there are submarkets where you got 10 builders, each of them have three communities trying to get at a single buyer profile, that’s a tough context in which to drive price appreciation. But on balance even though there has been growth in community counts, we are not seeing that as a consistent theme. Those are places by and large I am happy not to be and I think that’s why we can still see although I haven’t forecast any price appreciation. The question was prospectively what have we seen over the last couple of months and that’s kind of what we have seen.

Thanks. As always, I appreciate the insightful comments.

Yes, thank you.

Thank you. Mr. Jay McCanless, your line is now open.

Hi, good morning everyone. Thanks for taking my questions. The first question I had is on the deferred tax asset and also we are going to tie in the debt refinance, could you reiterate Bob your comments about the DTA and whether you guys will bring it back on balance sheet and also the interest expense looks like it ran about $9.4 million this quarter, should we expect that to trend down through the year even with the 2019 notes not being refinanced yet?

Yes, thanks Jay. The DTA what we said and what we believe is that we will bring it back on our balance sheet at some point or at least some portion of it by the end of the year. And that the charges we took this quarter will prove to be make it a little bit difficult to bring some of the DTA on to the balance sheet sooner than the end of the year, but we still expect and hope that we will be at the end of the year will bring the DTA back on the balance sheet. As for interest expense, what we said last November and what we still believe is that the direct expense as the balance sheet continues to grow regardless of the refinancing should trend towards about $35 million for the year. Obviously, we refinanced the 2019 unsecured notes and have favorable interest coupon experience that will also benefit a decline in that more than maybe the $35 million over time.

Okay, okay. And then Allan going back to the question about first time buyers, some of your larger competitors seemed to have a dichotomous view, where either the entry-level buyer is back, they can get a mortgage and the demand for the housing is there, then you have others who are saying that, no, the demand doesn’t seem like it’s reappearing? What are you hearing from your mortgage contacts and the people you work with, with your Beazer mortgage program right now?

I think there is significant pent-up demand among a very wide group of firsthand buyers that would be anywhere from the mid 100s, up into the 300s as geographic differences and incomes vary. I still think there are a couple of impediments. So, I believe it’s there. I see it in our traffic. I hear it from our mortgage contacts. The household formations are there. The demand is there. It isn’t fully realized. Now, is that the customer? Is it the mortgage process? And that’s where it’s hard. It’s both of those things, but lot of the folks and it’s interesting, I mean, I have been on a whirlwind tour, I have been in 14 of our communities in the last 6 – or 14 of our divisions in the last 6 weeks and I have been in mostly going to talk to new home counselors, because they are the ones who actually know what’s happening in our business day-to-day. And they will tell you people have real concern about their income growth, which is a subtle issue, but it’s different from being concerned about their job. Two years ago, do I have a job, can I get a job, will I keep my job? It was a pervasive fear. It feels different now. It’s more about my income is not going up. And so this is a long-term commitment, whether I intend to look here 3 years, 5 years, 10 years, people who are not withstanding 30-year mortgages probably aren’t going to live there for 30 years, but they are worried about that income continuity. I think the other thing is there is still tremendous ignorance about who can qualify and how. And probably the biggest part of handholding that we do with those first time buyers and that’s…

Okay, that’s great. Thanks for the answer. And then if I could sneak one more in, from a land development meaning opening perspective, it seems like weather shouldn’t be a hindrance to that this year like it was last year. Could you talk a little bit about how the comps are going to look from an order and from a community perspective? And then also are you seeing any relief on the local side where more people are there to determine, get plans approved etcetera, etcetera?

Well, on the last part first, no, there isn’t a lot of relief there. We have sort of reconciled ourselves to having short staffed municipalities and utility companies. And we have kind of had to adjust our expectations. I am sure there are some places that have staffed up. And our – I think the better answer is there hasn’t been much change. We do expect the progression of communities. I think I said or Bob said in the script that we expect to add at least eight net new communities by the end of March. We will have an additional increment of new communities in the June quarter. We haven’t given a number for that, but we have said we expect to have our average community count for the full year to be up in the mid-teens. But the bulk of the growth in community count is going to happen from this point in Q2 and Q3. Bob also said and I think it’s important that it wasn’t intended to be too subtle. I don’t know that the pace in Q2 or Q3 is going to be point this or point that. I think the expression that he used is that we expect the pace to hover around 3% in each of the remaining three quarters. We will have more communities active and selling in Q3 than Q2 and that has led us to have the expectations that Q3 orders will exceed Q2 orders.

Okay, great. Thanks everyone.

Thank you. Our last question comes from the line of Mr. Adam Rudiger. Sir, your line is now open.

Hi. Thank you. I want to ask two questions and some clarification from Slide 5. One of the comments was you said January sales were better than last year I was just curious if that was absorptions or just overall orders. And the second clarification I want is, you said there is less pressure on margin versus peers, and I wanted you to elaborate a little bit on why that might be the case or what you are really saying there?

Alright. Let me take the second one first. In getting prepared for these calls, we are thinking about everything that we are to try and talk about ultimately some things go to the cutting room floor because there are different points of emphasis. But one of the things that I think has been lost a little bit in a lot of the hand-wringing over margins is on a company specific basis, what are the specific issues that individual companies have and the narrative for one company maybe exactly the same or could be really different. I think, though it’s not necessarily a point of pride, it’s accurate that we were not significant participants in a distress land market in 2011 and 2012. And the consequence to us has been that we have lagged on a time period basis the margins of many of our peers. And I think that regression to the mean is a tough thing if you can’t replace those distressed land deals. And I think that is a significant headwind narrative pressure that they are facing. I have said boldly on this before, we get up to 2016 and we are on kind of apples-to-apples in terms of we are buying land, they are buying land in the ‘13, ‘14, ‘15 time period. I think a lot of that sort of works its way out. We have seen progression even as others have seen regression. And I think that that’s what I mean. We have got to deal with incentives. We have got to deal with features and base pricing like everybody else. We are not immune to that, but the comps for us are less weighted by things that we can’t replace, does that make sense.

Yes, absolutely. Thank you.

Okay. So the second question, through three weeks, which is not a month, but through three weeks both orders and pace are a little better in – and the orders are a lot better and pace is a little better in January.

Okay. The second question was, some others have just allay or maybe you can exaggerate fears of Houston and other have offered their exposure to clarify, because we have our own numbers, and but I just wondered if you would care to offer what your either revenue or closing contribution from Houston was in 2014?

What I would say is because we don’t break out individual divisions and it’s a little bit of a slippery slope. But I am glad to you asked me a specific Houston question because there are a couple of things I do want to say. I think that both Houston and Dallas represent on the order of 10% of our business. And you look at that each. You can look at that assets, orders, closings just a little about 10% on any of those metrics. So, you can kind of reconcile that to all the published reports of who sold how many homes because there are a plenty of third parties that do that. But there is a more subtle point that I wanted to make about Houston which is where you are in Houston really matters, I mean it is one of the largest metropolitan areas in the United States. And I can tell you having been there in the last two weeks that to drive from one end to the other is a 3-hour exercise and that’s assuming you don’t have bad traffic. So, the thing that I would encourage folks to do as you think about Houston, there will be different impacts of whatever the downturn looks like in Houston in different locations. There is an energy corridor that’s North – that’s loaded with white-collar high end oil company executives. There is a Western market. There are Southern markets. And one of the things I think you would see just pull up our website, look at where the pins in the maps are. We have a larger share in the South and Southeast now. So, we are pretty heavily levered to transportation, healthcare and petrochemicals. We had an opening of a community this week in La Porte,…

Great, thank you.

Alright. Ala, I think if that was our last call, I want to thank everybody for participating. Thank you for the good questions. I look forward to talking to you in about 90 days.