MTH
#<UNK>, thanks.
As I said earlier, it's kind of an anomaly.
This was land that we either held for quite a while from the downturn that we wanted to clean up the books at the end of the year and get rid of, that we didn't plan to build on, and we saw an interest from other builders, or land that we had always intended to sell as part of a bigger picture and a bigger strategy.
We went in and bought land for maybe multiple positions, and maybe there were some positions on either smaller or larger lots that we didn't have a product for that was always part of the plan to sell.
I wouldn't expect that, going forward, to happen on a regular basis.
It was a one-time situation and I wouldn't read too much into it.
No, it's never been our strategy to provide quarterly EPS guidance.
I think we had to do that last year, because the analyst community got quite a ways ahead of us, and we wanted to get in more alignment.
So going forward, it will be our strategy to update our unit guidance for the year as we go through the year every quarter and our community-count guidance and that's what we plan to give going forward.
We think that's in line with our peers and that's what we feel most comfortable with.
I don't think we're underperforming relative to our peers on the absorption side.
I think we're right in there with most of our move-up homebuilder peers, but I think we are underperforming as an industry.
There just isn't the volume in the industry in many markets.
Look at Phoenix, for example.
It's 40% to 50% below its historical 30-year average.
The volume is just not there.
And we're not going to force the market by discounting our prices and taking a lower margin.
I actually wish our margins were stronger.
I think we're going to get those absorptions back over a longer period of time by shifting our product to the more entry-level-plus, as I've already articulated.
We are also going to be doing more attached product on the <UNK> Coast and Florida and in the South region ---+ or in the southeast region and in the <UNK>.
I think that's going to help our absorptions, because those communities tend to have a little higher volume and be at a little lower price point.
I'm not losing sleep, staying up at night thinking about our absorptions, but certainly, I would hope that as a Company in this industry, we can improve them.
I would say that comment got a little jumbled there.
We're not saying we are a big entry-level-plus builder in Houston.
I think <UNK> was just trying to say we had some strength in Houston in the fourth quarter, particularly in that Sugarland location.
I would tell you we had a very good December.
December was our best month of the quarter in Houston, but it was because we had more communities.
We had 31 communities at the end of the year in Houston, versus 23 communities the year before.
The communities count was higher.
Our sales for the fourth quarter in Houston were slightly above what they were a year ago, but, again, that was because we had more communities, not because of the sales per store increased.
The sales per store actually decreased in the fourth quarter.
And our ASP in Houston is about $336,000, so it's below the Company average, but it's not because we have a big entry-level-plus percentage.
We're more of a first and second move-up builder there.
Entry-level-plus is more around four.
Our move-up businesses we target closer to three.
In some situations, we will take two to two and a half.
As a Company average, we are really striving to get to three, but for entry-level, entry-level-plus, it's going to be higher than that.
<UNK>, do you want to take that one.
Sure.
What we're seeing there is the impact of us just cutting back on some of the compensation in the quarter, particularly the bonuses.
The year ended up pretty good, but it still wasn't up to our internal expectations, so some of people's bonuses were cut back because of that.
I think you're seeing that reflected there.
And I think you've got to be careful reading in the fourth quarter of this year and extrapolating it out into the future, because I do think that's a little lower than what the run rate will be going forward.
And if you look back at what the run rate was a couple quarters ---+ it was going to bounce back up closer to that rather than remaining at that low level.
I'm not sure I quite understand the question.
Yes, throw the question again.
We were fumbling with some things here.
You were asking about the land market.
No, not really seeing the price of land come down at all.
The best of the markets, we are seeing sort of it stabilize and not see the rapid inflation we were seeing in 2013, 2014, and most of 2015.
Like Phoenix, for example, is a good market where we have seen them sort of flatten, I would say.
But absolutely not down.
The strongest markets we see as it relates to our competitors buying land, we talked about the South region.
There seems to be a lot of investment going on there.
California continues to be the place that people invest, especially Northern California.
In that particular example, I will tell you the price of land continues to go up.
Denver, as well.
The price of land continues to go up in Denver.
Definitely not down.
More flat at best and up in some of the stronger markets.
Thanks.
I don't think we're going to take up leverage significantly.
I think we're going to stay in that 40% to 43% debt-to-cap range, and I think the retained earnings that we have, in combination with the modest amount of land banking we're doing will get us there.
I would reiterate that I don't think it means leveraging up the balance sheet at all.
The 2016 is going to be a little bit more easy to understand because they extended the law to include 2016.
So we are able to book the green tax credits every quarter and not wait until they re-up the law each year.
You should be looking at about a 32%, maybe a little bit more tax rate every quarter.
There is a possibility we may pick up some true-ups from prior years that would even lower it beyond that, because we start out with a little bit of a conservative assumption on how many houses will qualify for the tax credit.
And then as we do the specific work, it usually comes up to be a little bit larger number, but I think 32% is a pretty good number to use throughout the year.
I would reiterate what I ---+ would repeat what I said before about it, so ---+
Thank you.
Operator, I think we will take two more questions and then we will adjourn.
I think <UNK> and <UNK> are probably the next two up, right.
It's too low.
I wish it was a little higher.
Not a lot higher, but a little higher.
7% to 8% is just too low.
We need to try to put more people through the system.
I wouldn't think too much about that.
It's not really a factor, per se.
It is more of an indication of the market being stronger than maybe some of the perceptions that are out there then.
I agree with <UNK> on that.
I expect it to be equal to or better than the industry.
Throughout our 30-year career in homebuilding, we have grown at a faster rate than most of our competitors, so I don't expect that to change.
We are a growth story and we're going to continue to make that happen.
Okay.
Well, thank you very much for your participation in today's call.
That concludes our remarks.
I'll look forward to talking to you again next quarter.
Thank you very much.
