Good morning. My name is Carol and I will your conference operator today. At this time, I would like to welcome everyone to the PulteGroup, Inc.'s Third Quarter 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Mr. Jim Zeumer, you may begin your conference.

Great. Thank you, Carol, and good morning, everyone participating this morning's conference call to discuss PulteGroup's third quarter financial results for the three months ended September 30, 2015. Joining me for today's call are Richard Dugas, Chairman, President, and CEO; Bob O'Shaughnessy, Executive Vice President and CFO; and Jim Ossowski, Vice President, Finance and Controller. A copy of this morning's earnings release and the presentation slides that accompany today's discussion are posted to our corporate website at pultegroupinc.com. We will also post an audio replay of today's call to the site later on. Let me remind all participants that today's presentation may include forward-looking statements about PulteGroup's future performance. Actual results could differ materially from those suggested by any comments made today. The most significant risk factors that could affect future results are summarized as part of today's earnings release and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports. Now let me turn the call over to Richard Dugas. Richard? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you, Jim, and good morning, everyone. PulteGroup's third quarter financial results reflect another quarter of strong business performance across key operating metrics, partially offset by the challenging production environment that is impacting us in many housing markets across the country. More specifically, I would highlight our strong sales performance and the increase in absolute signups and absorption paces, both of which moved higher in the quarter. I believe these results attest to the sustained rebound in overall U.S. housing demand and are consistent with our expectations that the recovery path for this housing cycle will be gradual and prolonged. Beyond signups, I would also highlight that our gross margins of 23.6% are…

Great. Thank you, Richard. We will now open the call for questions. So, that we can speak with as many participants as possible during the remaining time of this call, we ask that you limit yourselves to one question and one follow-up. Carol, if you'll explain the process, we'll get started.

Certainly. Your first question comes from the line of Haendel St. Juste from Morgan Stanley. Your line is open. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Good morning, gentlemen. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Morning. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Morning. Haendel E. St. Juste - Morgan Stanley & Co. LLC: My question – I'd like to follow-up a bit on the construction bottlenecks comment you made earlier, appeared to be impacting your conversion rates. If I'm understanding this correctly, it sounds like an issue with, I guess, obtaining and retaining labor? If that's the case, what can you do or what are you willing to do to remediate the issue, or are you comfortable with the lower conversion? And, I guess, are you offering incentives to buyers in your backlog like we've heard some of your peers doing? Would you be willing to offer incentives to people experiencing delays in home deliveries? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Haendel this is Richard. There's quite a few questions there. In general, labor is the primary culprit of our lower conversion. No, we're not happy about it, overall, it's clearly impacting our production. In general, we're having to pay more for labor, and we're beginning to work hard to try to source additional trades, either taking trades from some markets that have capacity to other markets, or look for additional trades in markets beyond the ones that we've been using. Having said that, it's going to be a slower process to correct than we had anticipated, which is one of the reasons why our conversion was weak this quarter. Having said that, we are not offering incentives to buyers to extend their closing. We're doing our best to estimate proper closing times when they sign contracts, so we have not had issues in that regard. And then finally, we are beginning to start a little bit more spec inventory at this time of year in order for additional deliveries to be available for us in the early part and middle part of 2016, in order to help even our production flow out, so we're not quite as spiked toward Q3 and Q4 like we have been. That's going to take some time to implement, but that's as many broad pieces of the issue as I can get to. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Okay.

Your next question comes from the line of Stephen East from Evercore ISI. Your line is open.

Thank you. Good morning, guys. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Hi, Steve.

Richard, maybe just talk a little bit more on the orders. You gave a nice roundup on what's happening geographically. Your absorption has moved up, your ASP moved up a bit. What's your strategy right now? You're also putting more specs on the ground. At this point, given your land spend, are you trying to drive absorptions much more quickly than you have in the past, or are you trying to ramp your margin as much as you can? I know that's been your strategy in the past, but just trying to understand if there has been any change here on your strategy? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yes, Steve, there has been absolutely no change to be clear. Our absorption strength, we believe, is driven by good land locations and sticking to our discipline of driving as much price as we can, particularly in a constrained environment, where we're having difficulty getting homes delivered. With regard to increased spec, I want to be crystal clear. It's a modest increase in spec, and it's, frankly, timed when the spec inventory would be available during the strength of the selling season, which we would say would start, call it, late January through May or June. It's not sort of a broad brush change in strategy. But with only 17 of our homes in production being spec, we have cut it pretty far back, and we think there's an opportunity to potentially modestly even the flow of deliveries in the future, which will help reduce the dependence on this kind of maddening Q3 and Q4 spike at the end of the year. But no change in terms of policies with regard to discounting and/or driving absorptions over price. It's still a focus on return. We obviously balance both, but I will say, as evidenced by Bob's comments, this is the umpteenth quarter in a row that option – margin – excuse me – option dollar contributions and lot premiums are up, and that's not by accident.

Okay. Thanks. One thing I forgot to mention, before I go on to my next question. The West, you've categorized is robust, we've heard some rumblings recently that the West has slowed. One, I was wanting to know, if you're seeing anything on that? And then, as you look at your land spend, any difference in brand allocation, where you're going with it moving forward, or your regions? And what's land market look like as far as re-trading with costs moving up? Have you started to see more re-trading in the market? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Okay. I'll start and then throw it to Bob for a little more color. With regard to the West, specifically, Stephen, Arizona is doing quite well. Our Northern California business continues to do well. We don't have as much investment as some in Southern Cal, but we are doing well with the good locations there. And then we have a pretty small business in Pac-Northwest that we're trying to ramp up, so it's not as relevant to our total; but in general, we're pleased with what we see. With regard to land spend, we're continuing to allocate most of the dollars to the Pulte brand and selective Del Webb positions as we rotate out of others, with a little bit less in the Centex brand, but as Bob highlighted, we're beginning to put more money into the first-time category that served through the Pulte brand for this urban millennial category in many markets, which we have really good demand characteristics from. With regard to land pricing and any re-trading, I've not heard of much, but Bob, any more color on land pricing? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: No. As we've talked about, we're typically staying closer into the core. We haven't seen a significant pullback there. It's still competitive for just about every position we look at, and we're not seeing a lot of returning.

Okay. Thanks a lot, guys. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you.

Your next question comes from the line of John Lovallo from Merrill Lynch. Your line is open. John Lovallo - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Hey, guys. Thanks very much for taking my call. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Good morning. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Good morning. John Lovallo - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Good morning. First question, just touching back on labor for a minute, if we can. It's been widely talked about that there's been labor constraints in the market, but our feeling was that it was kind of isolated to markets like Colorado and Texas. Are you seeing more of a widespread impact at this point? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: John, this is Richard. The Journal had an article a couple of weeks ago that referenced this. It is definitely widespread. There's no question about it. There's not a market in the country that we're not experiencing some degree of labor shortage pressure. So, yes, it's definitely more than just Texas and Colorado. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: And it may be a different trade base, depending upon the geography that you're dealing with. It may be framers in one area, it may be masons in another, but you can find it across most of our major markets. John Lovallo - Merrill Lynch, Pierce, Fenner & Smith, Inc.: That's helpful. Thanks. And then, moving on, there has been some bank data that has come out, and some of the retailers have even talked about the environment in Texas just starting to soften even more than some had expected. You guys are just still seeing it kind of at the higher end, is that correct? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: The higher end in Houston, to be more specific. I think, as we indicated, Dallas had a good quarter. Houston and San Antonio effectively offset that to give us that negative 5% comp; so, candidly, it doesn't feel a lot different than it has for most of the year with some oil related softening at the higher end, and Houston being the primary driver of Texas weakness. John Lovallo - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Great. Thanks very much, guys. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Thank you. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you.

Our next question comes from the line of Alan Ratner from Zelman & Associates. Your line is open. Alan Ratner - Zelman & Associates: Hey, guys, good morning. Thanks for taking my question. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Hey, Alan. Alan Ratner - Zelman & Associates: So, I know the focus this morning is obviously on the construction delays, but I was actually hoping to ask a question on another topic, which I think is a big focal point of Pulte investors, which is the growth potential over the next few years. And as we look here at your forward-looking growth indicators here, your land spend is going to be up about 30% this year. Your lot count is up double-digits over the last couple years. Your SG&A dollars are up about 10% year-over-year, which usually come in advance of community count growth. And I know you've been reluctant to talk about community count guidance in the past, but when I look at all those metrics, it points to inflection point that should be coming soon. And what I was really hoping you could give is a little bit of a blueprint on where you see the business growing over the next several years? Are we wrong to extrapolate those numbers and think that growth should eventually break out of this low single-digit range that you've been in, on the community count side for the last couple of years? And any timing and magnitude of that, I think, would be helpful, just in framing expectations out there? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: So, Alan, this is Richard. First of all, we will be giving community count guidance on the Q4 call, as we traditionally do. It gives us…

Our next question comes from the line of Michael Rehaut from JPMorgan. Your line is open.

Thanks. Good morning, everyone. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Morning, Mike. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Morning, Mike.

First question on – just going back to the gross margins for a moment. A little bit better, I think, than we were looking for, perhaps than what you were implying in your guidance last quarter. And I just wanted to get a sense of, number one, to the extent that's true, it was maybe a little bit better, what was driving that? And as you look into 2016, I know you don't want to give guidance at this point, but, just strategically, you've talked in the past about not going too far down the rabbit hole, chasing the entry-level buyer, given that you feel that the absorption isn't there yet, to justify the lower gross margins. If that's something that as you kind of balance margin versus, perhaps, incremental segment in that area, is there a balance? Are you willing to kind of increase that by a little bit? I know the Centex piece, which you consider more entry-level, is more focused on that segment and seems to continue to shrink. Just how to think about that segment's influence on gross margins going forward? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Mike, this is Richard. I have a couple thoughts in that regard. First of all, we're not going to give specific margin targets for next year. I would suspect that most of our margin performance will be driven by whatever costs are coming through the pipeline with regard to land and house. And, obviously, offset by whatever the revenue side is from a selling environment. The reason I point that out, is we do not intend to kind of change our strategy with regard to our focus. You pointed out the declining focus on entry-level. I'll just point out that the first-time buyer, as reflected in some of these urban projects, we are ramping up some investment in overall. But it's really going to be largely dependent on what happens when we get into the spring selling season, in terms of what kind of margins we deliver next year, along with the land costs coming through. And just lastly, I will tell you that our Centex margins continue to be strong, even though we're driving a combination of pace and price there. So, again, I apologize for not providing details for you in terms of guidance going forward. I think the most relevant thing you can take away is, we're not intending to change our strategy.

And just so I'm clear on that question. Was the gross margins maybe a little bit better than expected in 3Q – and then my second question is – and if that's so, what was driving that? And my second question is, the interest expense amortization continues to come down. Directionally, should we expect that to continue in 2016 as a percent of sales and on an absolute basis? Any thoughts there would be helpful. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah. So, on Q3 margins, obviously mix matters, Mike. The margins were in line with what we expected. The relative mix of it moved it a little bit. But, we don't have complete vision of what our margins are going to be. So, when we said 23.3%-ish (34:23) that is reflective of what we saw actually in the third quarter. On interest expense, no commentary yet on next year. Although, our cash spend has been less than what we're expensing, so you can expect it to go down more. We'll give some color on that towards the end of the year. But, as a percentage of sales, you'd have to look at what your model projects for volumes.

Great. Thanks, guys. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Thank you. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you.

Your next question comes from the line of Mike Dahl from Credit Suisse. Your line is open.

Hi. This is actually Matt (35:01) on for Mike. Thanks for taking my questions. So, just with respect to the challenging production environment, you were very clear that labor was the bulk of that. But was it all labor issues you're referring to or is there something else on the land development side, or even lingering weather delays that we should be thinking about? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah, Matt (35:27), we indicated in our prepared remarks, it was primarily labor, but there was also some community delays, primarily from earlier in the year, that impacted our ability to get homes begun on time, and then ultimately get closed on time, that had a portion of it. So, the way to read it is, the majority was labor, some of it was community opening delays, and I think Bob indicated in his prepared remarks, some of that was driven by weather from earlier in the year that got us started slower than expected, and we were not able to make up as much ground as we anticipated. But the majority of it was labor.

Okay. That's helpful. Thank you. And then, you disclosed a very balanced mix of a first-time move-up and active adult. So, just wondering if you could provide some historical context. How has that looked year-over-year? And then, maybe the relative strength of each one currently? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah, this is Richard. I can speak to a couple pieces there. We just began the break-out of first-time move-up in active adult last quarter. So, we don't have a huge amount of historical data at our fingertips. Perhaps, we could get back to you later with some detail, if we can find it there. In terms of the demand characteristics for each category, both the first-time category, as well as the move-up category, had strong absorption growth for the quarter. I don't have at my fingertips the exact numbers. And then active adult was relatively flat, it was actually slightly down on a same-store sales basis, from prior. But the other two categories were up fairly strongly.

Okay. Thank you very much.

Our next question comes from the line of Haendel St. Juste from Morgan Stanley. Your line is open. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Thanks for taking my – I guess, my second question. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: There you go. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Sorry about that. Too many pieces in the first one. Sorry about that. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Looks like you caught me trying to be sneaky there. I guess the question I had is a bit on the absorption pace trend during the quarter in each segment, and how it's currently trending. Can you give some color on that? And then a little color on the weakness in San Antonio, please? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Through the quarter, Haendel, if I'm understanding your question, through the quarter, we were relatively sort of normal seasonality there. Didn't see a tremendous amount of variation through the quarter. So, if you are asking sort of sequentially, there was nothing unusual there. We didn't see one month in the quarter spike. In terms of San Antonio, did you ask specifically? We had some weakness in San Antonio, along with Houston, kind of offset by Dallas. It wasn't anything dramatic, but the net combine there had us down 5% in Texas. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Can you give us a little color on what's driving the weakness, though, in San Antonio, a little bit of market color? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Candidly, I don't have much more because it, frankly, wasn't a big move, one way or another. So, we didn't get real granular on that one. So, we could certainly look for that after the call, if we want to get back to you. But there was nothing unusual driving things in San Antonio. It wasn't a gigantic drop. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Okay. Thank you. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you.

Your next question comes from the line of Jack Micenko from SIG. Your line is open.

Good morning. Question for Bob. Looking at the backlog conversion for the fourth quarter, you guys have been in the high-60%s the last couple of years. And I just want to get some clarification. I think your commentary was, it would be better than that, am I understanding you correctly? And are you able to maybe put a sharper point on how we should think about conversion rates into the fourth quarter, given some of the delays? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah, I think what we were saying was not that it was better than that, but we'd be moving towards it, and that we would seek to catch up on the difference for what we've left on the table, to this point this year, through the first half of next year. And you're right. The last two years or three years, we've been 66%, 67%. And so, that is something that we will look to get towards, but I wouldn't say we told you we were going to beat it.

Okay. Thanks. And then I know you had said earlier, you haven't been incenting to keep buyers in the backlog, but have you seen any change in cancellation rates with the construction delays? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: No. The sales environment continues to be strong and, frankly, the level of inventory out there continues to be modest. So, those would both indicate not significant cancellation worries, and we certainly are not seeing a spike. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah. So, actually, third quarter versus third quarter, it's 17.1% this year, it was 17.6% last year.

Okay. Okay. Thanks a lot. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thanks.

Your next question comes from the line of Bob Wetenhall from RBC Capital Markets. Your line is open.

Hey. Good morning. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Hey, Bob.

I noticed in new orders, it looks like your average selling price rose from $331,000 last year, to $358,000 this quarter, and that's an 8% year-over-year increase. And that's one of the better trends we've seen out of the homebuilders that are reported. What's driving the big uptick in order growth ASP? And is that something – and I know you're not giving forward guidance, but how critical is that in terms of offsetting higher labor costs and sustaining a 23% gross margin? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Bob, this is Richard. It's reflective of a couple things. One is just the shifting mix from the prior investments that we've made in the Pulte category, the move-up category, primarily, which would have been our 2014 and early 2015 investments beginning to sort of come through. And then secondly, obviously, the pricing environment. In terms of its overall impact on margins and profitability, again, we're not trying to give any projections for 2016, but ASPs matter. I'll just point out, it's one quarter, and we have to see what ASPs develop like, say, in Q4, as it reflects into our next year's backlog, et cetera. But it was a pretty significant move, you're right.

That's nice momentum. And for Bob, I was surprised by the SG&A which looked a little bit elevated versus what I was thinking. I know you had a reversal of a charge in there, as well. Is this kind of like a transitory situation with lower revenues, when you convert your backlog you're going to get very good revenue growth? How should we be thinking, not just this quarter, because I'm not that concerned about it, but longer term about normalized SG&A levels as a percentage of revenues? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah, Bob, certainly the volume of the business impacts our ability to leverage our overheads, and as we've talked about before, because commissions don't flow through our SG&A, our SG&A is much more fixed than others might be. Certainly, we've got start-up and we've talked about the fact that, with all the community turnover this year, our start-up expenses are up. So I think, actually, about 25% of the increase year-over-year relates to community-related spend. But, certainly, we think that it is leveragable, because so much of it is fixed on a relative basis. And just to highlight, with the $6 million net benefit, if you exclude that, we were $165 million of spend for SG&A, and as we had said at the beginning of the year, we predict to be between $160 million and $165 million every quarter. So it was consistent with what we expected to spend.

But, I'm just trying to understand, next year you are expecting to get better operating leverage off the SG&A line, correct? Like from... Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah, we'll provide some color going into the year of what we think our SG&A spend will be. And then, obviously, as Richard talked about, we've been investing to try and grow the top line. So, yeah, we think it's leveragable over time.

Got it. Good luck, guys. Thank you very much. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thanks, Bob.

Your next question comes from the line of Stephen Kim from Barclays. Your line is open.

Yeah. Thanks very much, guys. Your land spend expectations of $2.3 billion this year, just even taking or adjusting for the delays on closings in this quarter, it seems like you're sort of targeting around 38% or something in that vicinity as a percentage of revenues, which is quite high, particularly given the fact that you already have close to 100,000 lots owned. So, I was wondering, are you implying a geographic or price-point repositioning that's forthcoming? Just given the fact that you have a very significant amount of land-owned already. You are forecasting a fairly elevated level of land spend now. Just wondering whether or not there's maybe certain areas that you feel your current land base can't provide you the opportunity to go into, and so that's some of what is driving the increased land spend? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Steve, this is Richard. I'll offer three or four different pieces, there. First of all, roughly a third of our total lot count is still tied up in Del Webb positions, many of which are long-lived positions, and that trend is going to take years to modify. There's only so much we can drive out of each existing Del Webb position. So, when you look at our overall balance of land, you have to factor that in as a significant chunk, makes our matrix look a little different than others. Secondly, Bob pointed out in the prepared remarks that we are skewing our land investment towards the shorter end, and most of our new land investment communities are roughly around 100 homes each, so at any kind of a normalized absorption pace, that's no more than a couple of year's worth in each land position. So, while our land spend is…

Got it, yeah. I mean, your answer's one and three, I resonate strongly with. I would just say that the second point about how you are skewing your investment to smaller communities, I mean, that still would suggest that, let's say, your recent land spend is going to be what you are building on over the next couple of years. It still leaves the question of the existing land bank that's there, so whether you are buying more sort of shorter-dated lots, or whether you are using up kind of a FIFO basis, it still leaves you with a very large land position. But I hear you on the points one and three. I guess my second question relates to the labor issues that we've heard a lot about. I was curious as to whether or not, in addition to some of the other considerations that you weigh when contemplating going out to the entry-level market more aggressively, if, underlying your assessment about opportunity, if the production challenges you're seeing from tight labor makes targeting this segment even less appealing than it did before? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Steve, to be clear, we're focused really on the first-time buyer, as opposed to the entry-level buyer.

Right. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: And there's a difference. The first-time buyer is typically – we're seeing a $300,000 to $400,000 urban product serve them. And I'm not hearing or seeing differences in labor challenges there versus any other segment. I just want to comment on your point, too, around land spend. We hear you that we have a large land bank. And I guess the point I'm trying to make is that you can only get so much out of existing communities that have large lot positions, but the total dollars that we have invested in the business are going into shorter and shorter positions, which we feel like is a really good risk mitigation tool and is far different than our prior behavior. So, you have to dig beneath the numbers to really appreciate the way we're running the business. And frankly, we can't be focused on returns so aggressively and not pay a lot of attention to the balance sheet. So, we hear your concern and I want you to know we are paying attention to that a lot.

Well, I appreciate that, and thanks very much for the answers. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thank you.

Your next question comes from the line of Susan Maklari from UBS. Your line is open.

Good morning. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Good morning, Susan.

You mentioned in your comments that you're at about 60% of your closings are commonly managed. That's up pretty considerably year-over-year. Given all of these issues that we've talked about on this call, how do you think that that has helped you, or how do you think the commonly managed plans have helped with that? And maybe are there any changes in the way you are rolling it out, given what you are facing? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Susan, I would say, if anything, the commonly managed plans give us an advantage in two regards. One is our absorption pace. The commonly managed plans are all consumer tested. We have a warehouse facility here in Atlanta that we bring buyers through to test all of our plans before we put them out into the field, and I think our absorption rates per community are being helped by designs, candidly, that our consumers tell us they really like. And then specifically, we believe it's helping to hold up our margins. That, along with the pricing data that Bob gave are the two components that we feel are helpful, so those are the benefits from commonly managed plans, and we're really pleased that it's this big a portion of our total production.

Okay. And then at the beginning of this month, we finally had the implementation (50:58) of TRID that came in. Have you seen any disruptions related to that or anything that has changed meaningfully? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Well, certainly for us, I would tell you we were ready for it. We have loans in production under the new process. Actually some of them are slated to close in October. I think it's too soon to tell from an industry perspective. I'm hearing that people were generally ready, smaller mortgage lenders might be having a little bit more systemic issues with it, and so time will tell. But we haven't seen it as an impediment to this point. So, so far, so good.

Our next question comes from the line of Nishu Sood from Deutsche Bank. Your line is open.

Thanks. Following up on Susan's question about the new mortgage rules. With their initial proposed implementation being right at the beginning of the fourth quarter, was there any volatility around your order flows, or trying to get contracts and mortgage applications in? And, really, I guess the question there would be, was there any pull forward of orders from 4Q into 3Q, as a result of that original implementation date? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Certainly not for us, Nishu.

Got it. Great. And I know there has been a lot of discussion about the cost issues. Just taking a step back. I think the broad-level concern that investors have is that, with labor and then, obviously, land as well, prices running the way that they have, that the dynamic is if they would threaten – and it would threaten to overwhelm pricing power, which has obviously slowed from where it was a year or two ago. And, therefore, threaten the longer-term profitability of the business. I know, obviously, you're not, and you've said this many times, giving forward guidance; but Richard, as you sit back and look at the dynamics that are in place right now, would you share that concern? Is that a legitimate concern? Or do you see a situation in which it's a healthy dynamic which is driving those cost increases, and therefore, there should be the pricing power longer-term to match those cost increases. Or do you share that concern about the unhealthy dynamic? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Nishu, I'll say it this way. I understand people's concern about it, overall. I can simply tell you that, given our visibility into our backlog, we have not yet seen it manifest itself in terms of significant pressure. Given our Q4 closings that are upcoming, as we've indicated, we expect margins, frankly, to be about what they are in Q3, which is a very robust level. Again, I won't comment on margins going forward. We don't have enough visibility to really do that. We'll try to give you as much as we can each quarter regarding kind of the next quarter, overall. So, I certainly understand it, but I do think that the normal tendency in this industry that I've seen in my time, has been for us to be able to get price generally to offset costs. I can't guarantee that that's the case going forward, but that would be an expectation that would be reasonable based on what we've seen throughout the industry. I do think that there is an acute shortage of some trades today that have not come back as quickly into this business after the last downturn, and I think it's been elongated more than many, including us, in the industry would have expected. Having said that, we'll work our way through it, and live to fight another day, so to speak.

Our next question comes from the line of Ken Zener from KeyBanc. Your line is open.

Morning, gentlemen. Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Morning, Ken. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Morning, Ken.

So, your gross margins, at the 26% level, pre the interest, have been steady. I wonder, could you highlight some of these components? Because your commonly managed plan, which obviously was part of your redesign process, in addition to just being very steady and focusing on a more, capital-return model. Could you highlight how much that community, you said, Richard, that you think it's helping. I assume you have some metrics around that? Talk about the labor, how much that's going up? And have you considered paying the people more to get more labor on-site? Because some larger builders haven't really highlighted this labor issue, but they've done more. So, I'm just trying to figure out the different components, as you think about your very steady gross margins? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah, well, certainly, our margins, we think, are a factor or are impacted by lots of things. First of all, the land we're buying, the process we're using, the value creation efforts that we've talked about. So, you've seen lot premiums increasing, options increasing. Maintaining low discounts because we're not doing a lot of spec building. Clearly, things that will influence our margin going forward are; land prices are going up, so we'll have an increase there, and labor rates will change depending on different markets. So, I don't think you can point to any one thing, commonly managed plans or anything else, that says this is why margins are what they are. It's the way we're approaching the business and all those different things that we think will allow us, over time, to generate higher gross margins than we historically would have. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: And Ken, this is Richard. Just to add one other quick thing. Higher relative to what others may be doing with their business. To Bob's point, our business model is such that we believe the commonly managed plans, the pricing, et cetera, help us to stay at the high end. We are obviously subject to market conditions. We're subject to labor pressure. We are paying more for labor than we have. But on a relative basis, we continue to outperform on the margin line, we think, because of all the pieces that Bob ran through.

Okay. You obviously, at your Analyst Day talked about capital allocation, but you're sitting on quite a bit of cash. You're starting to buy back. You're having measured spend on your land more geared to developments, which means you can obviously harvest that land. Have you got a little more comfortable around, perhaps, liquidity levels that we should target? I mean, you're at about 30% now. I mean, as we model rising cash, can we just always assume you're going to be largely putting that back into sales, given your moderate view on how the housing recovery is unfolding? I mean, you guys have bought back... Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah, as we highlighted, we like leverage between 30% and 40%. We were underlevered coming into this quarter, obviously, you saw we borrowed some money late in the third quarter, and you'll see in the Q that we actually were borrowed on our revolver at a point in time during the quarter. So, most of liquidity that we had we spent during the quarter. Obviously, as closings start to ramp up and with the borrowings, we ended the quarter with a fairly sizable cash position, but we're working with that too. So, we highlight that we have a pretty big spend on land and development in the fourth quarter, roughly $800 million. We've talked about the dividend, we've obviously been buying back stock. So, we're looking out over the next 12 months and looking at the capital profile, and we like where we sit today, at 30% or 31% debt-to-cap. So, it's not as much about managing what's the dollars that we want to keep in the bank, because those move every day. It's how do we keep liquidity sufficient to do the things we want to do. And our capital market activity will help to drive that, offset, obviously, by closings.

Your next question comes from the line of Jay McCanless from Sterne Agee. Your line is open.

Morning, everyone. First question I had, could you give us a sense of what percentage of closings have been spec versus dirt over the last couple of quarters? And then also maybe the gross margin differential between those two that you've seen? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Jay, I'm not sure... Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Jay, we're digging to see if we have that... Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah. So, just for perspective, we... [Audio Break] (1:00:06-1:00:23)

Participants, please stand by. This is the operator. I apologize that there's been a slight delay in today's conference. Please hold, and the conference will resume as soon as possible. Thank you for your patience. [Audio Break] (1:00:34-1:02:30) Thank you again for your patience on today's call. We are still experiencing a slight delay in the call. Please hold, and the conference will resume momentarily. [Audio Break] (1:02:39-1:03:43) And thank you for your patience today. We're now ready to resume today's conference. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Jay, are you on the line?

I am. Can you hear me? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: We can. Sorry. Did you get any of our answer?

No, I didn't. Sorry. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Okay. Can you repeat your question? We'll start all over again. I apologize to everybody else on the line.

Okay. No problem. Was just trying to get a sense of the gross margin spread between spec and dirt and what percentage over the last couple of quarters have been spec closings versus dirt closings? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah, Jay, I don't know exactly what the closing profile is, but what we can tell you is that for the last couple of years, we've been between 15% and 20% spec starts. And what we've talked about for a couple of years now is we don't mind spec starts at all, because you don't see much margin degradation, as long as you sell it before it finals. The other thing I can tell you is we have very little spec final on the ground. We were at 340-ish units at the end of September, and that number has held pretty constant over time. So, again, we are not uncomfortable with spec. The margin differential isn't big, unless you have three or four of them on the ground at one point in time, in which case, oftentimes, you have to discount the homes.

Got it. I'm just trying to get a sense of how we should model a little bit more spec coming in in 2016. The other question I had, with you guys taking out the term loan, should we expect you to redeem the 2016 notes, the, I think it's $480 million. Should we expect you guys to redeem those at maturity and then look to refinance the term loan? Or how are you thinking about the debt structure at this point? Robert T. O'Shaughnessy - Chief Financial Officer & Executive Vice President: Yeah, we've talked about it for a couple of years now, in terms of how we're looking at maturity profile. Obviously, we went short on this particular one. The rate is very attractive, the market was very supportive, and it happened to be at a point in time when the capital markets were a little bit unsteady. So, we really like the execution on the term loan that we did. Looking forward, obviously, a lot of it will depend on capital needs, timing of that. Obviously, the big maturity is the one that's next year. And that obviously factors into every or any decision that we're going to make over the next nine months before we get there. So, no firm commitment on how and when we'll deal with that, but it's sort of next in the queue.

Got it. Okay. Thanks, guys. Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Thanks, Jay.

Your next question comes from the line of Buck Horne from Raymond James. Your line is open. Buck Horne - Raymond James & Associates, Inc.: Hey, thanks. Good morning. I know we're way over time, so I appreciate you staying on to answer a couple more questions. Going back to the comment about the active adult segment, and I think you said that absorption there was slightly down year-over-year, on a same store basis. I was wondering if you could just give us some commentary about, are you surprised that the active adult segment is not seeing maybe a stronger lift or better absorption at this stage of the cycle? Is there anything in particular about the Del Webb product that's notable about, or maybe location-wise, that's affecting that absorption trend? And have you thought about maybe introducing a different kind of Del Webb product? Could you go more urban or maybe high-rise with the Del Webb brand as well? Any thoughts on that? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: Yeah, Buck, this is Richard. The active adult buyer is obviously continuing to read sort of the broader signals overall, and they typically do lag more than the other categories. Having said that, we did close out several positions in the Southeast part of the country that were Del Webb, that probably had as much to do with it as anything. Buck Horne - Raymond James & Associates, Inc.: Okay. And maybe I missed it earlier in the call. Did you guys give the net order comparisons by brand in this quarter? Richard J. Dugas, Jr. - Chairman, President & Chief Executive Officer: I don't think we did. Although, I indicated that both the first-time category, as well as the move-up category, were up nicely, and then Webb was down some... Buck Horne - Raymond James & Associates, Inc.: Okay. All right. Thank you.

This concludes today's question-and-answer question, due to time constraints. I'll now turn the call back over to Mr. Zeumer for closing remarks.

Thank you, everybody, and I apologize for the technical difficulties in the middle of this. We are around all day, so if you've got any follow-up questions, please give us a call. Otherwise, we'll look forward to talking to you in Q4. Thank you.

This concludes today's conference. You may now disconnect.