Good morning, and welcome to the Beazer Homes Earnings Conference Call for the quarter ended December 31, 2012. Today's call is being recorded and will be hosted by Allan Merrill, the company's Chief Executive Officer. Joining him on the call today will be Bob Salomon, the company's Chief Financial Officer; and Carey Phelps, the company's Director of Investor Relations. At this time, I will turn the call over to Ms. Phelps for the opening remarks. Ms. Phelps?

Thank you, Marianne. Good morning, and welcome to our call this morning, highlighting our financial results for the quarter ended December 31, 2012. Hopefully, by now, you have seen our 10-Q, earnings press release and the PowerPoint slides that typically accompany our earnings calls. These materials are available on the Investor page of beazer.com. Because of the amount of time that has elapsed since we released this information, we will devote most of our time today to answering questions. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors are described in our SEC filings, including our annual report on Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made. And except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for management to predict all such factors. Joining me today are Allan Merrill, our President and Chief Executive Officer; and Bob Salomon, our Executive Vice President and Chief Financial Officer. I will now turn the call over to Allan for some brief prepared remarks.

Good morning, and thank you for joining us. Let me start by apologizing to our investors and analysts for the change in timeline related to this call. We understand that you had many other time commitments and appreciate the difficulties created by us moving things around. We hope you'll agree that our ability to further enhance our balance sheet earlier this week was worth the inconvenience. As Carey said, I'll make a few comments to touch on the first quarter highlights but will use the majority of time to respond to questions. The first quarter represented very good progress in our path to profitability. We were able to report year-over-year improvements in virtually every major financial metric, including revenue, gross margins, SG&A and adjusted EBITDA. These results stem from both an improving housing market and our improving internal operations. For the quarter, we generated $7.7 million in positive adjusted EBITDA, up $3.9 million from last year. We recorded 932 new home orders, an increase of 29% driven by improvements in absorption rates and a significantly lower cancellation rate. We closed 1,038 new homes, up 20%. We ended the quarter with a backlog that was 39% higher in units and 52% higher in value than at the end of the first quarter last year. We increased gross margins in all 3 of our operating segments. We invested $90 million in land and land development, and we maintained substantial liquidity ending the quarter with $397 million in unrestricted cash. Subsequent to the end of the quarter, we completed a refinancing of our 2015 senior notes, shifting that maturity all the way out to 2023, with only a nominal increase in interest expense. At this point, we have less than $200 million in debt coming due in the next 5 years, allowing us…

[Operator Instructions] Our first question comes from Ivy Zelman of Zelman & Associates. Ivy Lynne Zelman - Zelman & Associates, LLC: You know really seeing the improvement and the strength of your orders, I guess, the big question is, as you're right now replenishing your pipeline and the market's really improving, what would you say is your biggest challenge in order to achieve, I guess, what I'd call a home run hitting top line gross margin expansion leverage on SG&A, what's the opportunity in 2013 that you could hit, pretty much, a grand slam here?

Well, Ivy, we've taken an intermediate term view. I do want to say long term, because that's not how the markets work, but for fiscal '13, we want to improve margins. We want to sustain improved absorption rates, and we want to get fully invested for the recovery. That's going to leave us with some challenges on the order side. As we've talked about -- last quarter as we've talked about this quarter. And I think that it would be the definition of a Pyrrhic victory to try and chase orders this year. I think we may have conditions this spring that would allow us to chase orders in an amount that would start to offset, if not, fully offset the declining community count, but that would accelerate the run off of those communities. I think it would leave margin dollars on the table that we otherwise would like to reclaim. So while, hopefully, not lacking in ambition, I would tell you that if we could put runners on second and third this year I'd feel pretty good about that. Ivy Lynne Zelman - Zelman & Associates, LLC: Now that's really helpful. And recognizing that you want to maximize every unit you're selling and get your best return, how should we think about gross margin expansion and the context of gross margins going to improve just because everything that you've been investing in terms of overall improvement in the operations, how much of your gross margin improvement will be contingent on home price inflation?

It's a great question. And as we look at our forecast, I mean, weekly, daily, not quite hourly, I mean, that it's hard to pull that out, as you're looking at a particular division or even at a specific community. Is that price improvement, because of a competitive advantage that we've identified, that we can add a feature or reduce a feature that adds a little margin? Or is it a price change? And is the price change, because we're selling more effectively? Or is it because brand X across the street also raised prices? I really wish I had a very scientific way to answer that. One of the things that I've looked at is just over the last year, our ASP is up about 4% on a trailing 12-month basis, and that's about $9,000. Our costs are up, probably 3% on, call it, $100,000 in direct cost. So of the $9,000 improvement in sales price, you've got a little over $3,000 in cost creep, which means you ought to have in the $5,000 range kind of drop to the bottom line. And if you look at the fourth or fiscal first calendar fourth quarter, we were up about 3 points in gross margin, and it's clear that, that price change contributed a big chunk of that, maybe 2 points. Now trying to peel that further down to where those price changes driven by just robust market conditions or better selling acumen on our part, I don't know, but I know that both of them are still available to us this year. Ivy Lynne Zelman - Zelman & Associates, LLC: Now that's very helpful. And then sort of an unusual question, just to see if you can provide us some consumer trends that you might be seeing where -- I just read an article on Builder Magazine that builders are saying that people want more bedrooms and less -- or more bedrooms as opposed to living room and a dining room. What's the consumer want today? Bigger houses, are they buying more house? And willing to give up space and options and upgrades to have space? Or they want options and upgrades? Give us an update on what you're seeing the consumers want and maybe what cohort -- what age cohort is your first-time buyer today? Are they moving up in age, because they've been waiting for 5 years?

The answer to the last question is absolutely. The FICO scores in the age of our first-time buyers are definitely older. I don't have a number, but the traffic that we're seeing, and certainly, the FICO scores are telling us, we've got a better qualified group of first-time buyers than ever. At the house level, it's interesting, our average house size is only up about 50 square feet. We're in the low 2,200 range, so we haven't seen a dramatic change in the consumption of space. But one of the things that we've been very focused on, and it's a bit esoteric. But one of the things we really try to do is to separate the notion of increasing features from the flexibility to allocate the space differently. Now if you think about structural options, typically, what happens is you can elect to buy a structural option package, and that does typically 2 different things. One thing, it reallocates the space. It lays out differently. It lives differently. But the other thing that gets embedded in that is feature creep. You've got a gourmet kitchen, you've got bigger cabinets, you've got crown moldings, you've got stainless, and they get combined. And so what we try to do market by market and really community by community is figure out, is the buyer in that community more interested in the flexibility of the space allocation, or is it more important that they can pursue a feature enhancement on a room level? And that separation I think is one of the things rather than saying that consumers are sort of generic and that they want one or the other, I think being able to target different consumers in specific submarkets, giving them that choice, that's really one of the key operational strategies we have this year.

Our next question is from David Goldberg of UBS.

Just two quick questions here. The first one, I wanted to get an idea, just a sense of how you guys are thinking about your divisional teams, your land teams on the ground now? Are you comfortable with the people you have in place? Obviously you're putting more capital into the work now as we go forward. Are you comfortable with the teams you have? And you think you're getting good books at land because of your teams or are there places where you think you make need to make some changes?

Great question. So one of the things we were asked in a conference recently was about the turnover in our division president ranks. And a concern was raised about well, are these all finance people, are they experienced, do they know their markets? And it caused us -- it was not something I was intuitively concerned about, I know these, primarily, gentlemen. Although we have a great lady who runs her Indianapolis business. And I knew that they have lots of experience but it was interesting to look at the math. Our division presidents averaged 20 years of experience in home building and more than 13 years in the market that they're serving as a leader in. Now that by itself doesn't tell you anything other than the fact that these aren't a bunch of kids running divisions. Now if you look at where we said we wanted to focus our investments which we've been pretty clear about California, Florida, Texas with North Carolina and Arizona being kind of at a tier right below that, and then the mid-Atlantic which has been our largest concentration of capital sustaining that. You really look at those 6 or 7 markets, I'll be honest, I am very prideful of the quality of the team that we have and the land departments that we have. And honestly, I think we are seeing first-look opportunities in those markets because of the quality of the team that we have.

Great. And then just my other question, just a quick thought here. Have you guys given any thought to looking at some of the land banking arrangements to try to drive some work through? Have you given any more thought to that?

We have. I think it's something we will consider this year. At present with a 400-ish million dollar land spend target, given our liquidity situation that's very comfortable. We have plenty of cash, we've got cash that's clearly generated from our closings. But I think as we see opportunities that extend beyond that, we would clearly look at it. And one of the things you got to realize, and I know you do, a land banking relationship changes the margin characteristics of a deal. And each land banking relationship can be a little different, but you're probably talking somewhere 2 to 4 points reduction in margin based on how the land deal is structured. We've got such a strong focus on driving our margin percentage back above 20% and getting margin dollars per closing back to $50,000. But that cuts a little bit against the notion of adding a 2 to 4 point tax on very many of our transactions. So it takes kind of a special deal. And it would take an order of magnitude of spending beyond what we currently see, but I absolutely will tell you, it's something that we are looking at, will consider. We just got to find the circumstances and the deal structure that makes sense for us.

Our next question is from Dan Oppenheim of Credit Suisse. Daniel Oppenheim - Crédit Suisse AG, Research Division: I was wondering if you can talk in terms of the improvement, in terms of the sales per community. Clearly, working overall, then showing the communities were still less than 1 sale per month and it was down to 14%, just 14% there. Wondering as you think about in terms of just the community count issue this year, do you take steps just to bring the remaining ones in line because clearly, a year ago that meant 1 per month, more than half of the average for a typical community, whereas now, it's less than 40% there, so a little bit worse in this improving environment. Do you do more in terms of just trying to get all of the communities [indiscernible] at this point?

It's funny, you could have been listening in on our sales calls, Dan. I'm a big believer that the change outcomes and averages, you've got to find the outliers. And make no bones about it, having 1/3 of our communities 1.5 years ago dramatically underperforming became the absolute focus, and everybody got tired of hearing me talk about No Community Left Behind. Well No Community Left Behind resulted in us going from 1/3 of our communities to 14% in the most recent quarter underperforming. And there is a direct correlation to the improvement in sales per month per community by moving those laggards along. There is intense focus, attention on a weekly basis on the 4 P's in all of those communities that are still not above the metric that we deem to be performing. Now I will tell you that I think there's probably some frictional or structural nonperforming communities. Is that number 5% or 7%? I don't know. I joked a little bit that it's like unemployment. Apparently, economists will tell you if you have an unemployment rate of 3% or 4%, maybe that's the structural unemployment in an economy. I'm not sure that 0 is the right target for us, but clearly, we can do better than the 14%. I want to drive that below 10% and a disproportionate amount of our effort is focused on those communities to get to that.

[Operator Instructions] Our next question comes from Michael Rehaut of JPMC. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: First question, on the, I guess, the pace versus price, which you've kind of alluded to, Allan. Certainly, it appears that 1Q orders were better than guidance or expectations on the sales pace front. And with kind of the comments around perhaps not chasing volume and maximizing gross margins, the thought came to me in terms of the fact that you might kind of -- I don't know what the word is, cut off your nose to spite your face, in terms of maybe limiting sales, but at the same time, you're not going to necessarily be able to raise price or maximize price above where the market bears. So, therefore, you're not going to get either both the sales or the margins you were hoping for, so just trying to get a sense of why necessarily you wouldn't think that sales pace -- I mean, you had it up in the quarter, I think over 50% year-over-year in the first quarter. It would imply going down below in the teens, I think, to have a negative order growth in the second quarter. And if that's the case, what type of gross margins are you looking for?

All right. So this is the hardest part of our business other than buying land, right, this price volume trade off. So let's talk about a couple of numbers. I'm glad you asked the question, because I think the math is actually pretty compelling. In the first quarter last year, our sales per month per community was 1.3, and this year in the first quarter, it was 2.1. That's the expansion or the acceleration of sales per month per community. And that growth was enough to offset the decline in community counts from 180 to 150. But when you look at the second quarter, and we've guided that our community count's going to be around 150. Last year, it was 188. If -- and last year, we did 2.7 sales per month per community in the second quarter. If we did 3 sales per month per community this year, off of a base of 150, we'd be down 11% to 12% in orders. So I'm not suggesting that we want to decelerate, but what I don't think we need to do is go figure out what price would get us 4 sales per month per community, so that we can print a positive order comp. Is that helpful? Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: I appreciate that, and, I guess, maybe just then on the gross margins. How are you thinking about -- right now you're at 18.1% before interest amortization. Where that might end at the end of the year? I know it's kind of problematic specific guidance. Do you think it would drift higher throughout the year? And also, Bob, if you could give any clarity to the interest expense amortization at 8.5 million in the quarter, when would you expect that to drift down to 0 as you build your inventory?

So on the margin, Mike, in your question, sort of embeds the answer. We don't have a specific margin guidance on a quarterly basis, but I absolutely expect margins to trend up this year. We've been very clear about the fact. We want to get that gross margin excluding impairments and interest above 20%. I don't know that we'll get there this year, but the trajectory is clearly towards improvement. And we're -- it's house by house, plan by plan, community by community. I joked a couple of quarters ago, people didn't laugh, but I joked about eating the elephant one bite at a time. It's an every day, every plan kind of thing. So I'm confident we have better gross margins ahead of us. And I think that, that pattern will continue this year, and I'll defer to Bob on the interest section.

On the interest, we -- a couple of things are happening with -- related to that. And interest in part is down about $15 million annually or, call it, $4 million in the quarter. We also had over a $40 million increase in inventory, and I would tell you the composition of that increase is a little bit more heavily weighted to land, which drove the lower interest expense below the line, as well as through cost of sale. I don't think the cost of sales interest ever goes to 0, because you will always relieve interest with the assets that you pull through cost of sales. So I don't know what the right exact percentage will be, but there will always be interest thrown into cost of sales. I think you'll see -- as we continue to add inventory, you'll continue to see the capitalized interest balance continue to grow in relation with that inventory. I mean, even though the expense number dropped, our cap interest as a percentage of capitalizable assets and even total inventory is relatively stable quarter-over-quarter and from the last quarter.

Our final question comes from Adam Rudiger of Wells Fargo.

I think the 2013 strategy and plans are, we think, clear to us now. So my questions are more on 2014. And if you do the things you want to do this year, and you're able to put some capital to work this year, I was wondering how you feel like you'll be positioned as you enter calendar 2014? Do you think you'll have the assets in place to grow in line or above the overall market at that point?

Well, it's a tough question. I don't know about the overall market. I am confident that we are going to be positioned for great order growth next year and bottom line improvement next year, building on what we're doing this year. But it's a little premature for me to try and guess how we'll perform relative to our peer group. We're clearly not the only ones buying land and opening new communities. I think it is a larger portion of our growth story perhaps than others, but market mixes amongst builders also differ, so that's a bit of a tricky thing to guess. All I know is that if we make the improvements that we're committed to and that we have executed on so far this year, the platform we've got to drive growth in '14 is pretty good.

And then second question actually relates to your elephant eating. You mentioned, I think, earlier that maybe about 2 percentage points of your gross margin improvement might have been price related. So I was wondering if on the other stuff -- the elephant eating, what kind of progress you think you made there? And what kind of room you have left? Have you made a big dent in that, or is it just still kind of nibbling?

I think we're still nibbling. I'm very ambitious about that, and every house, every line item is up for discussion. I think the opportunities are so plentiful. I mean, it's often little things. I was in a community not too long ago, where, looking at our CMA with the sales team and this is a very minor issue, but we had a double oven as a standard feature, because all of our competitors did. Well I've been in our competitive committees and double ovens were an upgrade. They weren't a standard feature. The difference between a double oven and a single oven was about $250. Well, guess what, that's one of my bites to the elephant. That's not a standard feature anymore, that's an upgrade. So I'd like to tell you that we've got a laundry list of those things, because we do. And there's still lots of room and opportunity for improvement for us.

I'll now turn it back to your speakers for closing remarks.

All right, well, look, again, I apologize to the group for messing things up this quarter and changing timing. I know there are a lot of other reports that you've got to get to, but thank you for spending a little bit of time this morning. And as ever, Bob and Carey and myself are available to answer other questions. Thanks. We'll talk to you in about 90 days.

Thank you for joining today's conference call. You may disconnect your phones at this time.