MHO
#It's <UNK> <UNK>.
I'll take the first part of that question and I'll let somebody else here answer the second part.
I think that the labor issues probably stabilized for us throughout the year.
It was a bit of a challenge during the first quarter, slightly less of a challenge during the second; you sort of got used to it in the third and then I think we were beginning to do a better job managing it by the fourth.
So every market is a little bit different, but I think that ---+ and I think the other thing is, I think we were successful in closing a few more spec homes in the fourth quarter than in quarters in particular, maybe two and three.
And so I think it was the aggregate of those things.
As far as pricing and margins, <UNK>, maybe you want to talk about that.
Yes.
I guess just a little more information.
It looks like our costs were up about 2% to 3% last year.
Labor issues continue to be a challenge and every market tends to be a little bit different.
From a margin standpoint, we were very pleased that our fourth quarter margins were above a year ago.
Our full-year margins were above a year ago.
We think we did a pretty good job managing pricing and pace.
So overall we felt pretty good about our margins in 2015.
Well, I think that part of it's impacted by the slowdown in sales that we experienced in Houston, where not many communities met their pace or absorption objectives.
I think I mentioned in my comments that we had particularly strong years in Tampa and Orlando and we did ---+ and San Antonio was a little sluggish.
So I think there were some puts and takes, and the takes may have exceeded the puts slightly.
<UNK>, I don't know if you or <UNK> or anyone else want to comment on that.
No, I think that it was a little slower in some of our Texas markets and Florida was very strong the year before or so.
No, that's true.
We haven't done it in a while.
And this is probably the same way we answer ---+ I was trying to go back and see how we answered it the last time it was asked, because we felt the same way then that we do now, and that is that something you always look at, you always discuss and you hopefully are thoughtful about it.
I think we are, not just with ourselves and certainly with our Board.
Right now ---+ and I share your view of the stock price in terms of where it's trading below book value and in our judgment it's nowhere near any kind of reflection of our performance.
The fact is that we feel that the best use of our capital is where it's headed now, which is back into our markets, which growing income 36% year-over-year excluding the one-time debt charge.
What we see in terms of the conditions in the field today, our outlook for this year, even though we provide no guidance, we do expect to continue growing, not just in terms of top line, but bottom line and improving margins and returns.
And when you take all that into account, that's ---+ right now we have no plans to buy back any shares.
<UNK> is that ---+ you're looking at me noddingly.
I assume that that's sort of how you see it as well.
Yes.
Remember we always ---+ like you said, we always look at it and continue to consider potential use of some amount of cash, but right now we think we have good investment opportunities.
I think both ---+ we want to always keep one eye very closely on our balance sheet.
We ---+ our debt levels are ---+ our debt to cap ratio is around 50% and that's about as high as we'd like to see it go just in terms of the way we want to manage the ship.
But we believe that ---+ but the good news is we do not need to open up in any new markets to achieve our current and multi-year growth goals, but the fact is there are other markets that we continue to look at.
And the possibility that we might open up in another market or two over the next 12 months to 18 months, I think is ---+ it's at least worth noting.
Whether it happens or not will depend upon finding not just the right market, but the right leader to help us run that operation.
Whether it would be a pure start-up or combined or consisted of something like we did in Minneapolis, where we bought a relatively small builder, but still a builder whose units, they were doing 125 or so ---+ Hans Hagen was doing around 125 units to 140 units a year, which will rank them I think 10th in the Minneapolis/St.
<UNK> market, so they were technically a top 10 builder.
The acquisition of that size is possible, if you could find the right one, right land position and so forth.
But back to the answer, we don't need to open up in any new markets to achieve our growth goals, we believe we have meaningful organic growth, maybe not in all, but certainly in almost or most of our ---+ almost all or most of our markets, but we are looking.
But let me just say a couple of things first.
We entered five new markets between 2008 and Dallas was, I think 2013; Chicago plus the four Texas markets.
And in hindsight, there is not one ---+ there is no part of this that feels anything but that they were all the right decisions.
We feel really good about having done that.
And we do not feel that ---+ I mean Houston is what it is.
When you're in 14 markets, there's always going to be something, someplace, somewhere.
And I haven't seen too many instances where that hasn't been the case.
It's just sort of reality of life.
So we feel really good about our operation in Austin.
The Dallas ---+ Dallas is off to a very good start as I indicated.
While things were sort of sluggish in San Antonio, we're seeing improving conditions there.
And in terms of asset deployment and intensity, we feel okay about Houston.
<UNK>, you want to add something to that.
Yes.
As far as, <UNK>, in total we have 175 active communities end of the year and as we said 38 of those communities are in Texas.
There were 32 of them at the end of 2014.
So again, as of the end of 2015, 38 of 175 communities are in Texas.
And the breakdown of the four divisions, I mean, there is a few less in Dallas, because it's more of a start-up, that type of thing, but it's kind of evenly spread.
As far as the investment level and risk or whatever, we feel really pretty good about our land position, our investment level.
We did take a $3.5 million impairment that was in DC, as <UNK> talked about ---+ we've talked about the last couple of calls.
Demand has been a little bit weak there and I think a lot of other builders share that.
As far as investment levels, we talked about we have $597 million of unsold land on our books at 12-31-2015, and of that $597 million of unsold land, $227 million is in the South region.
That includes the four Texas divisions and also the two Florida divisions.
But overall we feel we're like in a good shape.
Have we invested as much in Houston and DC, some of those markets, had it been a little slowing down.
No, we're always mindful of the market conditions and so forth as we make investments.
But we feel really pretty good about our investment level, our spec levels, our land position.
We feel like we're in pretty good shape.
It's very consistent with the other divisions.
I think overall, our view is that markets in general will be a little bit better this year.
As far as Texas, we're probably more that things are probably going to be a little more challenging with things going on there.
So we're a little more conservative ---+.
Not necessarily all of Texas, but Houston.
Houston, for example.
For Houston.
Yes.
Your question was specifically Houston.
Are you asking from a macro standpoint what do we see happening there.
I think it's pretty consistent with what we're seeing for most of the forecasters and that is that it's still a very large market.
But there's pressures, there is negative pressures, job growth has slowed and I think, best case, starts will be flat, but starts will probably be off slightly.
But we're in markets now where starts were up 4% or 5%, and our business was up 15%.
And it's so location price product and community-driven at the same time.
So I appreciate the question, but I have to provide the fact that individual performance can radically be different.
Chicago is one of our best operations and it's not rated as a very good market.
It was a couple of communities, <UNK>.
It was one community that we developed.
There was also some developed lots.
And it's really been driven more by the weakness in the market there in the last year or so.
And us basically writing down some assets to what we think the market value is to move down through the pipeline.
We think we have one of the cleanest balance sheets in the business.
We don't really have anything mothballed or hail type thing.
We continue to work through our assets.
It really was more market-driven and we thought it was a good business decision to deal with that now.
I mentioned it earlier, so I think around 125.
Yes, 2014.
In 2014, they did 125 homes.
We acquired them in the fourth quarter of 2015.
I think he already asked his question.
Those kinds of things are all like hard to predict based on market conditions and competition and so forth.
We think that we very much dealt with the issues that we felt we needed to.
Again we tend to work through assets as opposed to postponing some of those type of things, but we felt like we dealt with everything we needed to right now.
We haven't given any guidance yet at this point for our peak usage this year, 2016.
This is <UNK>.
And I expect we will be ---+ we do have our sort of our budgets rolled up and our planning that we will give something probably when we put out our 10-K, but at this point we haven't given necessarily a peak amount.
We certainly wouldn't expect it to be any higher than I think where we peaked last year.
We did get in the range of $70 million of proceeds of excess from the refinancing of our senior note.
So we're growing the business, but I think it'd be something less than where we peaked last year.
Thank you very much for joining us.
