Good afternoon, and welcome to Taylor Morrison’s Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to introduce Mr. Jason Lenderman, Vice President Investor Relations and Treasury.

Thank you, Vanessa, and welcome everyone to Taylor Morrison’s fourth quarter 2016 earnings conference call. With me today are Sheryl Palmer, President and Chief Executive Officer; and Dave Cone, Executive Vice President and Chief Financial Officer. Sheryl will begin the call with an overview of our business performance and our strategic priorities. Dave will take you through a financial review of our results, along with our guidance for 2017. Then Sheryl will conclude with the outlook for the business, after which we will be happy to take your questions. Before I turn the call over to Sheryl, let me remind you that today’s call, including the question-and-answer session, includes forward-looking statements that are subject to the Safe Harbor statement for forward-looking information that you will find in today’s news release. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission. And we do not undertake any obligation to update our forward-looking statements. Now, let me turn the call over to Sheryl Palmer.

Thank you, Jason, and good afternoon everyone. We appreciate you joining us today as we share our 2016 results and outline our expectations for 2017. But before I get into those topics, I want to take a minute and mention our equity offering last week. As most of you know by now, we issued 10 million shares of Class A common stock and used the proceeds from that offering to purchase partnership units from our equity sponsors. This offering was not dilutive and our total share count does not change. The biggest change is to our public float, which increased by about a third pushing the total to the mid 30% range. Now, let’s get on to our strong results for the quarter and year. We finished the year with higher than expected closings resulting in more than a 20% increase in year-over-year EBT dollars and an adjusted earnings per share of $1.71. We closed 7,369 homes for the year, which represented nearly a 17% increase year-over-year that was well above the top range of our guidance. In December, we were able to bring forward and close nearly 170 homes originally expected for completion in January furthering our success for the quarter and the year. This is on top of double digit growth from the previous year bringing our two year growth rate to over 30%. Our strong performance in closings is evidence of the strong working relationship with our trade partners as we manage through a tight labor environment, rigorous management on a project by project basis from our field teams and remarkable support provided by our mortgage team during the year-end push. Net sales orders totaled 7,504 for the year and 1,701 for the quarter, which represented a year-over-year increase of more than 12% and 18% respectively. Our…

Thanks, Sheryl, and hello everyone. For the full year, net income from continuing operations was $207 million, a year-over-year increase of 21% and earnings per share of $1.69, an increase of 22%. Total revenues were over $3.5 billion for the year, including homebuilding revenue of $3.4 billion. The fiscal 2016 home closings gross margin was 18.3% as adjusted for a $3.5 million impairment charge taken during the fourth quarter which was isolated to three assets in our Chicago market. The home closings gross margin as adjusted for this impairment is only 7 basis points lower than last year’s margin rate despite headwinds we experienced from selling down our aged completed spec inventory, purchase accounting, a rising labor cost environment and a higher land basis. This was partially offset by overall mix improvement compared to last year. In 2017, we expect our margin rate to be accretive to 2016. Moving to mortgage operations, we generated $60 million of revenue during the year, representing a 39% increase over the prior year. Gross profit was $28 million while our capture rate came in at 80%. SG&A as a percentage of home closings revenue came in 10.6%, which was in line with our expectations. 2016 was a year focused on reinvestment back into the business to support the increasing demands on the infrastructure of the organization. The investments in technology, construction efficiency and strategic procurement will drive benefits in 2017 and beyond. We have always been and will continue to be an organization that is not only mindful of our overhead expenses, but also takes great pride in how we are able to manage those costs. We do anticipate driving leverage in the SG&A line for 2017. Our earnings before income taxes totaled $314 million, or 8.9% of total revenue, which is an increase…

Thank you, Dave. With most of 2017 still in front of us, let me take a minute to discuss just a few of the exciting recent things happening across our organization. As I mentioned earlier, just a few weeks ago, we have received a distinct honor of being recognized as America’s most trusted builder according to Life Story Research for the second year in a row. This credited award which is based on the opinions of more than 31,000 home shoppers actively looking for new homes in the top housing markets in the U.S. Thanks to understand how trust impacts consumers’ evaluations at builder brands. We firmly believe that relationships and trust are the foundation of our success and I am so proud of our teams for this well deserved recognition and achievement. Also in January in partnership with Builder Magazine, we unveil Taylor Morrison’s next adventure home at the International Builder’ Show in Orlando. This home was specifically designed with the active adult consumer in mind and [indiscernible] consumer data, surveys, and market research. There were 100s of home owners interviewed to refine the design and from there we collaborated with innovative architects and designers to make those design elements become a reality. It is located in our prestigious Esplanade at Highland Ranch community in Orlando, which is just one of our 10 Esplanade communities in Florida, specifically designed for those that are 55 and better. This home represents our commitment to understand our customer better and more deeply. Our goal is to build homes that appeal to each of our customer groups in a way that creates community and pride. This project provided us with a more defined and robust customer feedback loop to understand what they want in a home and how they want to live in…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And we have our first question from Stephen East with Wells Fargo.

Thank you. Actually this is Paul Przybylski on for Stephen East. Talking about your January absorptions being up 20% year-over-year, I was wondering if there was any markets that were demonstrating particular strength relative to that improvement and also how the January comp compared to the down 22% comp for 1Q of last year for absorption.

So, on the first question, really we saw strength across the marketplace, across all of our marketplaces. So I wouldn’t tell you that that 20% absorption pace came from any specific part of the country. If I were to call anything out, it’s certainly last year Houston had moderated a bit and so maybe it was a little bit better, easier there. And the second part of the question, can you repeat it? I’m not sure, I got it.

You had a relatively easy comp for absorptions last year. I was wondering count January compared to the 1Q average that was lower than – I think it was down 22% for the quarter.

You’re talking about from Q1 2015 to Q1 2016.

Right.

Yeah, for that one, no, it was pretty much in line with the quarter.

Okay, and then following up on your CRM implementation or upgrade, do you expect any reduction in customer acquisition costs from that?

I think you’re going to get some soft costs there. I think what we are looking to do is continue to enhance the experience, continue to enhance our sales associates’ productivity and I think you will see soft costs in benefit of kind of the whole contract process.

But a lot of it is designed to build the pipeline for customers.

Okay, all right. Thank you. I appreciate it.

Thank you.

Thank you. Our next question comes from Ivy Zelman with Zelman and Associates.

Thank you. Congratulations, guys. Great quarter…

Thanks, Ivy.

Your award and recognition. I think one of the comments that you made, Sheryl, is about being able to lever the business and show improvement with respect to overall operations despite the fact that community growth is going to be flat. I kind of wonder maybe what is embedded into that, recognizing there’s cost inflation in the business. The improvement, I think you were 10.6% as a percent of revenue for SG&A in 2016 and improving upon that, assumingly, are you forecasting sort of whether it is compensation, selling expenses? Can you walk us through sort of what gets you there because you, obviously, are leaner than many companies in the industry, which we commend you for, but is it really feasible with an inflationary environment to control it, which we commend you to do, but can you walk us through it?

Yes, let me make sure I’ve addressed, Ivy. So we will probably – Dave and I will both attack this. From 10.6% on the SG&A, I think what Dave commented in his prepared comments were that as we continue to see top-line growth, we should expect to see some leverage. I appreciate your noting kind of where we operate today, so we are not looking for wholesale changes, but we would expect to continue to leverage as the business grows. Specifically on the cost side, Ivy, there’s not one thing there. I think it is – as we said in our comments, it is really making sure that we optimize our operation in each piece of the business. It is going to be at the front end on our acquisition cost of new customers and through some of that technology. When we look at our land, some acquisition strategies and our structure, we would hope to pick up something there. As you continue through the building cycle and taking advantage of the scale of which this Company has grown to, making sure our local efficiencies are there, our national/regional purchasing opportunities are there, product profiles. So really, Ivy, it is across the board. Most of it is being able to benefit from I just think an excellent operational strategy and releasing the enhancements from the growth the Company has recognized.

I guess just to follow on that and I don’t know, Dave, if you want to add something, but we just hear a lot of competition for really strong division presidents and just along the whole organizational chart that you have and given how strong a builder you are, is it feasible with the alignment and compensation, are you doing it more in stock? How are you rewarding the excellence of your personnel to keep them happy and at the same time not risk losing them?

Yes. That is a great question, Ivy. Once again, I would tell you there’s not one thing. I think compensation is a critical piece of the overall commitment to our team members across the country, but it is one piece. So we have to make sure that we achieve the greatest talent in the marketplace and to have that talent, you have to pay them I would say top quartile from a market standards standpoint. But I think you have to look deeper than the compensation and you have to look at the culture. You have to look at really the strategy of the organization and enabling the division presidents through their operating teams to empower them to run their business, to really be part of an organization that truly has a purpose in the communities that we deliver. I don’t want to sidestep your compensation question, but it goes deeper than that. So just to make sure I finish your questions, I think I was probably too vague. Our compensation, as you can see, in each year in our proxy is a combination of base, bonus and stock and equity and that equity is a combination of time and performance.

And overall, we do see compensation costs increasing as you would expect year-over-year and part of that leads to why we made the investment that we did. We are trying to figure out ways to be more efficient every day to drive down other costs. So at the end of the day, it is a balance between where our costs are going up and where you can get that leverage and then, for us that is what we are focused on to drive EBT accretion year-over-year.

I am going to throw one more thing at it, Ivy. It is interesting; we are here in Atlanta today at our division presidents meeting hosting our earnings call and our division presidents are actually watching through a live feed someplace else in the hotel, their development and getting exposed to what this Company means and being able to participate is part of why I think they work at Taylor Morrison.

Well. Don’t forget shoes off with Sheryl in the New York Times corner office. Congratulations.

Thank you very much.

It really makes a difference, the culture and you guys should be very proud of that. Thanks for taking my questions.

Thank you. Have a great one.

Thank you. Our next question comes from Mike Dahl with Barclays.

Hi, thanks for taking my questions.

You bet.

So Sheryl and Dave, I want to follow-up a little bit on some of the comments around returns in both the press release and your comments just now. So you have clearly given us a couple of the pieces as far as the margins and the revenue growth that you expect. I guess I am curious if there’s a specific level of improvement in returns that you are aiming for in 2017 and beyond because you have also got an increasing equity base. And so just adding up some of the pieces, it seems like still with some of the flatness in the margins this year, it could be a little difficult to drive meaningful improvement in returns. So just any quantification of what you expect there on return on equity.

Sure, Mike. I’m happy to take that one. So I think if you walk through our guidance, we are guiding to accretion on both the homebuilding margin line, as well as the SG&A line. So we expect to see year-over-year accretion on the EBT line as well and we will be positive cash flow from ops here in 2016 and we expect that to continue into 2017. So all of the pieces are there where we are going to anticipate seeing year-over-year accretion in our returns as we move through 2017. As far as a specific target, we don’t have one that we have publicly put out there. Obviously, we have our internal plans, but what we are really focused on is driving some combination of EBT dollars, EBT percentage in the return, maintaining some flexibility around the portfolio to do that in a given year, but, at the end of the day that is what it is; it is about driving year-over-year accretion.

Got it. Thanks. I guess to follow-up on that and just given some of the – you have clearly entered into some different types of land transactions over the past couple of years and so as you think about the maturing of the portfolio and Sheryl, to your point, coming to a close of some of the major transformational issues. As you look out at your land bank, and the incremental spend from here, any thoughts as far as what you are looking to do potentially differently from an owned option mix or continued pursuit of additional joint venture structures?

Yes, I think it is a fair question, Michael and as you heard Dave guide, we guided to about $1 billion of land acquisition and development. I think there’s a couple things worth noting. One would be the change that we saw kind of at the end of the year in our controlled versus our owned that moved. I think about 23% to 27%, so, obviously, that mix will continue to see a benefit. I think JV, land banking, all those tools are in our toolbox. I think structure of the deal really matters. The other thing we have talked about over the last couple quarters is the size of the deals. If I were to go back three or four years, Michael, I would tell you that the size of the deals were probably on average 2 times what they are today. So there’s a number of different strategies that we deploy, but nothing that I would say is a wholesale shift. I just think they are appropriate given the timing in the cycle.

And the method that we ultimately choose, a good portion of that is due to risk mitigation, which is part of what we did for some of the joint ventures, which were kind of larger ticket type deals. It just gives us that flexibility. I mean I look at it as kind of more arrows in the quiver.

Okay, great. Thanks.

Thanks.

Thank you. Our next question comes from Michael Rehault with JPMorgan.

Hi, tanks for taking my question. I wanted to focus a little bit longer-term, if possible and I am thinking specifically in terms of your approach to growth over the next two to three years. Obviously, you have come off a pretty strong cycle in the past two to three years in terms of growing your community count and building out some scale in some key markets. A lot of builders over the next two to three years are trying to take a moderate approach to growth in a modestly improving housing backdrop. Is that the way you guys are thinking about things or given that there’s an element of still geographic diversification goals and perhaps getting deeper in some of your markets, you might want to grow a little bit more than like a plus or minus 10% type of clip?

So there’s a few questions embedded in there, Michael. Let’s give it a shot. I appreciate your comments. You are right; when you look at – I mentioned in my prepared comments that we are coming off 30% plus year-over-year growth rates or compounded growth rates over the last number of years. I would tell you that, organizationally, we have moved from this hyper year-over-year growth to hyper-focused on the bottom line as compared to community count. So I think what you should expect from us, consistent with the backdrop, is a lot of focus on enhancing the types of deals we are doing, which are generating, as I said in my prepared comments, an expected 2.3 pace this year, really focused on making sure that we have the appropriate scale in each of our markets. In some markets, Phoenix, we are number one in; other markets, there’s a couple markets we are not top 10 in, so continued focus on having the right scale in each market. Then, as you mentioned, Michael, I think from a consumer standpoint and to pile onto my comments earlier, we are very focused on kind of the barbells around both the millennial and that 80 million that are moving into home ownership over the next few years and the boomers, when you look at 16 million, 17 million of them entering into retirement over these next few years. We are very well-positioned from a land bank to go after that. So it is really focused on that and driving a bottom-line result and accretion to Dave’s earlier comment as compared to any specific community count target.

I think you will continue to see us be opportunistic in our various markets. Obviously, where we are lower land supply there, we will have a little bit more focus, but we continue to see good opportunities throughout our markets and we try to take advantage of that.

I appreciate that. I guess just secondly, you mentioned – I think you alluded to some key process improvements driving the business and helping SG&A, helping pace. Do you see – I mean over time, as you grow your business and even if it is at this more, let’s say plus or minus 10% type of clip, where a natural, over the next two or three years, can you see SG&A for example going below 10% and in terms of the sales pace, could that improve it even further or do you think that the 2.3 is kind of an end goal so to speak based on how you see mix over the next year or two?

So a couple things, Michael. First of all, very similar to community count. I think those kind of targets are dangerous. I think if you just put a number out there in the future without appreciating and being nimble enough to respond to market conditions, you can actually create risk for your business and I would put that – of course, if the business grows, we generally would expect to leverage things like SG&A. It is very hard today to say what could happen in two or three years. As far as the pace specifically, the 2.3 isn’t a target. The 2.3, very similar to what we have communicated in prior years, is what we hold the businesses to is the underwriting that we approve. So if you go back two, three years, Michael, you will probably find that we guided to something around 2.3 to 2.5 and the next year, it might have been 2.2 to 2.4 or 2 to 2.2 last year and this year, it is 2.3. So that’s not a target per se; that is really a portfolio and how it rolls up and then that is what we share with all of you.

Great, appreciate it. Thanks very much.

Thank you.

Thank you. Our next call comes from Nishu Sood with Deutsche Bank.

Hi, this is actually Tim on for Nishu. So in November, you revised JV guidance down slightly due to timing issues in coastal California communities within the JV. I was just wondering how much of this 2017 guidance was initially slated to fall in 2016 and if so, should we expect heavy in the first half, particularly 1Q?

It was probably a couple of million that we saw shift from 2016 to 2017 and quite honestly, a little bit is probably going to shift 2017 to 2018 as well. As far as Q1, we are going to be – it is probably going to be the lightest of the year and you will see it accelerate from there.

All right, great. And then just to follow up on this, you mentioned JVs adding flexibility in your land strategy. So back in 2012, 2013, JV contributed almost 10% of pretax, even more in some years. So obviously, that was before the Canadian exit, but I was just curious, as you look forward into the latter part of this cycle, how do you think could potentially JV income contribute up high single digits, even above 10%?

Yes, I think you go back to when we had Canada that was a very different business and obviously, [indiscernible] towers kind of more impactful where we are today. For long-term guidance on JVs, it is hard to say because it is going to depend on the land structures that we put in place just depending on market conditions, but we expect that to obviously grow here a little bit in 2017 and then with the JV projects we have going that will probably continue to grow beyond 2017. We are not quite ready to give guidance to that, but we will see it be accretive year-over-year.

Great, thank you.

Thank you.

Thank you. Our next question comes from Jack Micenko with SIG.

Hi, thanks. Sheryl, in the past, we have talked about buybacks relative to the lower float and obviously, the interesting transaction you did last week or the week prior has helped the float. My question would be, all else equal, are you more inclined or less inclined to buy back stock if it was an opportunistic situation for you now versus I guess maybe three weeks ago?

I think you know we have the authorization in place, but I don’t know that this changed our view on that at all, Jack. I think what you have seen us do over the last 12, 18 months is to be opportunistic in our buyback strategy and I would see that continuing forward.

Okay. And then, Dave, 33% net debt to cap now, I know you had said in your capital allocation, you did still mention pay down debt, so that tells me 33% is not where you want to be or it is going to go lower. What are your thoughts on leveraging the balance sheet and sort of balancing that with ROE and that sort of thing?

Yes, from a debt pay down perspective, the point I was trying to make is we paid the revolver down by the end of the year. In 2017, we will continue to do that from a working capital standpoint. So you will see that move around, but obviously overall the balance sheet is growing, which is in part why you are seeing that number come down. On a go forward basis, we don’t have a need to go out and take any long-term debt right now, so we are happy with the 33.7% that is going to move more as a function of the overall Company and where we are on a revolver balance going forward.

All right, thank you.

Thank you. Our next question comes from Will Randow with Citigroup.

Hey, good afternoon and congratulations on the progress.

Thanks, Will.

Just a couple of follow-ups from prior questions. When you kind of think about demand, you talked about 20% absorption improvement in January. Have you seen a continuance of that and have you made any changes in incentives year-over-year or changes to internal or external sales commission? Any color on that would be very helpful.

Yes. Demand we gave through January. Will, we haven’t shared anything else at this point, but as we said in my prepared comments, we were very pleased with the way we rolled into the new year and so nothing new to report there. As far as the commissions, Dave?

Yes, commissions or incentives?

I thought I heard – Will, maybe I misunderstood.

Both, both. Sorry.

There has not been any shift in our commission plan. That is not consistent with what we do each year as we evaluate the sales associates’ communities. Incentives…

Yes, from an incentive standpoint, they were up a bit from Q3, but not much and we expect to see that kind of tick down here in 2017, the normal ebbs and flows.

And then just for a follow-up, how are you guys thinking about building materials and labor inflation in 2017? I know you hinted at some of that. Can you help us quantify where you are seeing pressures and/or benefits? And I assume your expectation is that ASP inflation versus input cost inflation is neutral or I guess any color you can provide there?

Yes. I think our hope is that we will see ASP growth keep pace with the costs. In the fourth quarter, we did see direct build costs; they were up primarily in lumber, stucco and concrete. We continue to use price locks to help offset some of the labor costs – sorry – the lumber costs. And then from a labor perspective, we continue to see that as a challenge mainly in our high-volume markets, but as we roll here into 2017, we expect a modest increase, but again we expect ASPs to at least keep pace with it.

The only thing I would add to that, Will, is, as Dave said, labor remains tight in the majority of our markets and each quarter is probably a different focus point. How that is really manifesting into the business, it is creating longer cycle times. Although at the end of the year, interestingly enough, I think we saw a little bit of stabilization and so it is really incumbent on how we work with our trade partners to ensure that we are their preferred builder and that we have a keen understanding of the work that is required in making sure that we don’t have dry runs at our jobsites and that we are prepared for them and that we are communicating with them. But I think that we are going to continue to see pressure over time.

Yes. Thanks for the color, guys, and congrats again.

Thank you.

Thank you. Our next question comes from Jay McCanless with Wedbush.

Hi, good afternoon, everyone. So the first question, I’m just trying to reconcile the guidance. It looks like you are calling for a 15% increase in the monthly sales pace and then roughly a low to mid-single digit growth in unit closings, but at the same time the gross – you believe that you are going to have gross margin higher than 2016. Am I getting all of that correct?

That’s right.

Okay. So that would suggest I guess either that older legacy land positions like Houston and Phoenix are going to rebound and do better in 2017. Is that the right way to think about it or is it a function of the product mix that you are selling maybe more attached product or more California product versus some of your other product line?

Well, mix always matters. That definitely drives it quarter to quarter, but I think we will start with some of the benefits that were going into 2017 based on what we experienced in 2016. So in 2016, we had purchased accounting, which for the year was about 20 basis points of impact and then you might recall our process to go through and sell our aged specs that was roughly about 10 basis points. And then coupled with that, we expect to see some modest benefits from the activities and investments we made around strategic procurement and some of the construction efficiencies. The combination of that gets us to our belief that we are going to be able to drive some accretion on the margin line year-over-year.

Okay. And so it is not just a function of the market. Those things plus improving on the purchase side?

It is a collection of things; it is not one thing.

Okay, okay. The second question I have is could you talk a little bit about market conditions in South Florida and also market conditions right now in Atlanta, just maybe a little deeper dive on what you are seeing down there?

Yes, both markets – I will start with Florida – really across the business – let me get all of Florida for you. Tampa – or at least the places we operate. Tampa, all economic views I think have been very positive. We have had impressive job growth. Interestingly enough, I think they have replaced all the jobs since the – at the end of 2015, maybe early 2016 that were lost in the recession. Starts are up; closings are up meaningfully; prices are up. I think one of the things that we are really seeing in Tampa is since rents have been up I think low double digits, it has really created a nice opportunity for our townhome business, which is a very accepted product in Tampa and that is a good piece of our overall portfolio. That business continues well. As I move into North Florida, I would consider that very stable growth. It has come off of an interesting time where we are seeing from a land market, we have really seen that evolve a bit with deals getting tied up and then come back to the market, which is creating some opportunities on the land side. But, all in all, I would tell you that when I look across all the fundamentals, we have been quite pleased and with our next adventure house in Orlando that has also created a lot of buzz for us and maybe even the marketplace. Then when I go to Southwest Florida that continues very strong. I think probably in the last couple of calls, I’ve talked about how we came into the new year a little slow last year, so we built momentum through the year and that continued through kind of the shoulder season into this year. If there’s anything I would mention with Southwest Florida, specifically Naples and Sarasota, it is really, given the volume pickup that the market has seen, the municipalities I think have struggled to stay caught up, but the majority of our portfolio there’s the 55 plus market and we have seen just great strength in that market. So all performing well. Atlanta, that business has done really well, as I said in my prepared comments. We merged the two businesses. We are seeing strength at both the affordable side, as well as more the infill, more urban business, the Acadia assets and market conditions are well. We have seen price growth once again and each of the fundamentals has lined up quite well.

Great. Thank you so much.

Thank you.

Thank you. Our next question comes from Carl Reichardt with BTIG.

Hi guys, hope you’re well.

Yes.

I had a question about cycle time. You mentioned that you thought they could improve in 2017 and I wondered if you could quantify that and let me know if that is somewhat of a function of mix or maybe some specifics around what you are doing to get those to improve?

Fair question. In Houston, I would tell you that has been a function of the market. That is a place where cycle times have really gotten protracted in the good old $100 energy days. And then as that market evolved, we saw those cycle times come back and a credit to the team. It wasn’t just the market; it was really the initiatives and the sale to start process, everything they were doing locally, but we really saw some of it come back there. With the other markets, I would tell you it is a combination, but mostly related to the number of the initiatives that we have been talking about and it is everything most specifically around product execution, geopodding and the way we are releasing, our sale to start processes, our communication with our trade, really making sure we are doing everything we can to be the preferred trade partner. So not one thing, but we expect we have seen the worst of the pressure behind us.

Okay. My second question, David, you mentioned acquisitions as sort of the second part of the capital management philosophy going forward. Given you are thinking about scale, if there are deals available, are you more likely to look at them in markets where you already have a reasonable presence or is there an aspect of that that might still be some geographic growth in your mind? Thanks.

The ultimate answer to that is it really depends. It is going to be deal-specific. As you know, we have done three acquisitions in the last two years for various reasons, some new markets, some to gain scale. So for us, it really comes down to each dollar we invest either organically or inorganically where we can drive the best return for the overall Company. We have had three that we have gone through and we have digested. We are working on just overall operational efficiency, but we continue to be mindful of potential opportunities that are out there.

Thank you. That is all the time we have for questions today. I will now turn the call back over to Sheryl Palmer for closing remarks.

Well, thank you. We appreciate you all hanging with us today and have a wonderful evening.