Good morning and thank you for joining us today for the Hovnanian Enterprises Fiscal 2015 First Quarter Earnings Conference Call. An archive of the webcast will be available after the completion of the call and run for 12 months. This conference is being recorded for rebroadcast, and all participants are currently in a listen-only mode. Management will make some opening remarks about the first quarter results, and then open the line for questions. The company will also be webcasting a slide presentation along with the opening comments from management. The slides are available on the Investor Relations' page of the company's website at www.khov.com. Those listeners who would like to follow along should log on to the website at this time. Before we begin, I'd like to turn the call over to Jeff O'Keefe, Vice President, Investor Relations. Jeff, please go ahead. Jeffrey T. O’Keefe - Vice President of Investor Relations: Thank you, Nicole, and thank you all for participating in this morning's call to review the results for our first quarter which ended January 31, 2015. All statements in this conference call that are not historical facts should be considered as forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. Such risks, uncertainties and other factors include, but are not limited to, changes in general and…

Thank you. The company will now answer questions. So that everyone has an opportunity to ask questions, participants will be limited to one question and one follow up. After which, they will have the option to return back to the queue. At this time, we will open the call for questions. Our first question comes from the line of Alan Ratner of Zelman & Associates. Your line is now open. Alan Ratner - Zelman & Associates: Hey, good morning, guys. Thanks for taking my question. First question, on the February order trends, pretty significant slowdown from what you saw in the quarter. Was – I know you mentioned weather as a possible headwind there, but I was curious if you can give any color on what you saw, specifically, in Houston in February, and also maybe just talk a little bit more about what you're hearing from your salespeople about what could have caused that – at least, the sequential decline in absorptions in February, which is pretty unusual for this time of year. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Yeah, as I tried to elaborate with a lot of detail, Houston continues to be performing quite well into February, into March. So Houston wasn't any significant impact. I just think it was a little slower. The only thing we can come up with is maybe weather in some of our markets, but we're very pleased that the first couple of weeks in March that little slower trend we saw in February completely reversed and the market seems to be back stronger, again. So that's about all the color I can give you. Alan Ratner - Zelman & Associates: Okay, great. I appreciate that. Second question, just on the spec strategy, I think that you…

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

Thanks. Good morning, everyone. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Good morning.

First question I just had, I wanted to just kind of review and make sure I'm fully capturing the updated guidance around the gross margins. So, previously you had said that you expected fiscal 2015 gross margins pre-interest to be around like roughly flattish with 2014's 19.9% and now you're saying you expect it to be closer to the first quarter's 18.2%, is that correct? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: No. Previously, we said it was going to be flattish around the fourth quarter's 19.2%, 19.3%, I don't have it memorized. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: 3 (34:25). J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: 3 (34:26).

Okay. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: 19.3% (34:27) for the full year and now we're saying it's going to be around the 18.2% we've reported for the first quarter with a step-down from that 18.2% in the second quarter by about 100 basis points.

Okay. No, thanks for that clarification. So – and then the interest amortization in COGS in fiscal 2014 was 2.6%. Would that be a similar number in 2015 or a little bit higher or lower? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: It's a reasonable assumption for you to make that it's – follow what it was last year.

Okay. And then just on the gross margins as well. The – you mentioned the de-mothballing of lots and is about – you expect 900 lots in fiscal 2015. I was wondering if you could give us a sense of how much in terms of closings, percent of closings do you expect – closings from these de-mothballed communities to be as a percent of the total and the gross margins of these closings relative to the broader corporate average. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Well, first of all, one of those communities that we're un-mothballing is a 12-story or 13-story building, so we'll be starting that in the spring with kind of two-year construction cycle. So, don't expect much impact from that. But given that it's a larger building, those generally have higher gross margins to compensate for the longer build time. And that's on the Gold Coast of New Jersey, overlooking Manhattan and the river. The other large one we're un-mothballing is on the West Coast in Northern California. It's going to start really in the fall, so the impact is just not going to move the needle in terms of our overall delivery projection. So, I know you're looking for a little more specific guidance, but I'd say don't get hung up on the un-mothballing effect. I just don't recall from memory the gross margin projection for that compared to the overall average. But, again, it doesn't start until the fall and just not going to meaningful (37:17) in the overall scheme of (37:18). J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: I think neither is going to have any impact on gross margin in 2015, and in 2016 it will be an insignificant impact, up or down, as Ara mentioned.

Okay. One last one if I could, guys. Any thoughts around closings and ASPs for the full year? I know, obviously a lot has to depend on the spring, but at least now that you're seeing – you're kind of getting into the second quarter and maybe directionally you can give us a sense of ASPs and then maybe perhaps, some type of a range for closings? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: We're just not prepared to give more guidance than we did in the formal part of our scripted call. I mean, you can be encouraged that we had seven – an increase of seven in the community count in this last month. So that gives you a little bit of an insight. And we also gave you some insight that we expect community count to continue to grow in the latter half of this year. And that will impact sales more than it's going to impact deliveries this year, but it's really setting up 2016.

All right, great. Thanks, Larry.

Thank you. Our next question comes from the line of David Goldberg of UBS. Your line is now open.

Good morning. It's actually Sue on for David. My first question goes back to the difficulty that you talked about in terms of acquiring lot. Have you made any adjustments to your underwriting in order to perhaps be more aggressive and to win more of those deals? Ara K. Hovnanian - Chairman, President & Chief Executive Officer: So, we're trying to stay disciplined, and that's why it didn't make as much progress this quarter. We just think it's the smart way to go. But we're finding sufficient opportunities. And I think we mentioned, we're in great shape for our planned fiscal 2016 deliveries already in terms of land acquisition. And that includes substantial growth. So, we don't feel pressured to make the land acquisitions or lower our underwriting criteria right now. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Actually, we did the opposite. After the first half of 2014 showed slower contracts per community, we actually increased our hurdle rate from 20% to 25% because of the uncertainty of the markets. And when we were spending the money and buying land, we wanted to make sure that they were good deals. So, we actually increased our hurdle rate. In spite of that increase in hurdle rate, we've continued to find deals, but we also, during the due diligence period on our other deals, if they didn't underwrite to that kind of a level or we found some other issues that caused us pause during the due diligence period, we walked away from. But we're in fine shape. Our teams are very busy out there and I would expect the pace of our land acquisitions to grow in the future.

Okay, thanks. That's very helpful. And then in terms of your liquidity range, you've been very consistent in the range that you've given us throughout the sort of improvement that we've seen in demand. As we get closer to fiscal 2016, which as you said could potentially be a breakout year for you, could we see you get maybe a little more aggressive in that in terms of maybe moving to the lower end of the range, or maybe even just changing the range? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: I think we'll probably keep the range somewhere to what it is now and as we see opportunities to invest in land, at or near the bottom of this cycle, we would like to get into the range or even to the bottom of the range. It's really more a function of finding sufficient land deals that meet our underwriting hurdle rates, rather than our desire to manage that number higher than our range. So, as we find deals, we're going to invest. And I would say that's going to be true all the way through 2015 and into 2016. And then at some point, if we think the industry is beginning to kind of see some significant growth in housing starts and approach higher and higher levels of starts across the country, that's when we would want to begin to kind of tap on the break of our investment and maybe build our cash position higher or even start to pay off debt.

Okay, great. Thank you.

Thank you. Our next question comes from the line Joel Locker of FBN Securities. Your line is now open.

Hi, guys. Just talk about the February orders down 2% and then a March pickup you've seen in the last week and a half or so. Is that – I mean, March last year was 20% absorption rates and seems like that might be traditional seasonal. So, are you seeing more than just the actual 20% increase in seasonality that kind of goes from February to March, or is it just an increase from February? Ara K. Hovnanian - Chairman, President & Chief Executive Officer: We're – I mean we try to give a lot of granularity and that's why we report the most current month even though when it's after the quarter, and we try to give a flavor for March. But we've only had two weekends. We don't want to be uber-specific. But suffice it to say, we're very pleased with the March start so far.

All right, thanks. And just a follow up on direct costs. What were they, up or down year-over-year in the fourth quarter per square feet? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: I don't think we have that number at our fingertips. But, I mean, I can give you kind of a generic answer to that, and that is that I think most of the cost pressure that we experienced in 2013 in terms of both labor and materials abated during 2014. So, my expectation, though I don't have the specifics on a per-square-foot basis at my fingertips, is we didn't see much of a change.

Right. All right, thanks a lot, guys. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Okay.

Thank you. Our next question comes from James Finnerty of Citi. Your line is now open.

Hi. Good morning. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Good morning.

So just looking at your specs on slide 6, what percentage of, say, 1Q specs were located in Houston? Can you give us an idea of that? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Jeff, do we have that? If you got another question while we're looking that up...

Sure thing. And the one bigger picture question is regarding liquidity, in 2015, do you see any need – I know you said you don't want to raise equity, is there any need to raise additional capital in 2015 based on what you're looking to do in terms of community count and in terms of de-mothballing the building in New Jersey? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Debt comes due in October of 2015, so we'll either pay that off or refinance it as we get closer to that maturity date. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Yeah. But the plan is not net additional capital. The property, the 12-story building we referred to on the New Jersey coast, highly likely we'll have a joint venture partner on that. And we already owned the land without any project-specific debt on it. So, we don't anticipate that to be a big drain. And so overall, we feel very comfortable with the capital position, and we don't have any expectations to go to the market to increase, although at some point we will go to market just to refinance a few dollars of the short-term maturities coming up.

Okay, thank you. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: As of the end of February, just a little over 200 of our total specs were located in Houston.

A little over 200. Great. Thank you very much. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes from the line of Brendan Lynch of Sidoti & Co. Your line is now open. Brendan Lynch - Sidoti & Co. LLC: Good morning. Thanks for taking my questions. First, Ara, you mentioned that there have been some regulatory and development delays in opening new communities. Can you tell us what has changed recently to cause these delays? Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Yes. Well, first, there have been more communities as I've mentioned that we're acquiring that needed land development and, along with that, some final entitlements. This has been a shift that accelerated a bit this past year. So, what that means is as opposed to having lots on the ground, streets in and you're not needing to go back to the municipalities, more recently, we and all of our peers have had to go back to the municipalities. And that's just delayed municipalities because they haven't – they've had years of very little activity as, of course, overall activity was down in general, plus we were all building sites that had already been through the process. So, there's just a little bit of a bottleneck; more than most of us expected. Brendan Lynch - Sidoti & Co. LLC: Great. That's helpful. And you also mentioned that the pace of net additions to your total lot count waned a bit and you're finding it harder to source land. What, besides price, are the particular constraints and are there are particular markets where you're finding it particularly difficult, and do you anticipate this is temporary? Ara K. Hovnanian - Chairman, President & Chief Executive Officer: I do anticipate it being temporary. We go through these periods. Land prices are always sticky on the way down. So we underwrite, always, to current market, and since we saw a little more price and pace challenge, our underwriting standards reflected that and that translates to sometimes lower prices; and sellers weren't willing to do it. But as I mentioned, we feel pretty good about our land position. We're well out in front and have most of next year quite secure. So, we can afford to be selective right now. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: And that's after expecting some significant increase in community count deliveries in 2016, too. So, it already takes that into account when we say virtually – well, most of it. 90%-plus of our expected 2016 deliveries are already tied up from a land perspective. Brendan Lynch - Sidoti & Co. LLC: Great. Thank you very much.

Thank you. And our next question comes from the line of Michael Rehaut of JPMorgan. Your line is now open.

Thanks. Thanks for taking my follow up. I just wanted to clarify a couple of quick things. When you discussed Texas, I think – or was it – I think it's Houston, more specifically, just wanted to make sure I heard it right that you said Houston orders in the first quarter were flat. Is that right? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: I said per community, they're flat. Yes.

Okay. And did you have any commentary on – when you talked earlier, I think it was the first question out there about the February trend reversing in March, was that more of a broad-based overall company statement, or was that – was there anything about Houston trends in that statement in terms of February being down a little bit, but reversing in March? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Nothing Houston-specific in that comment; it was broad company consolidated comment.

Okay. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: We know people find it surprising, but given what's happening with oil prices, and I think our peers are seeing the same thing, generally, that is that the Houston market just remains quite tight and solid; so at this point, no issues. We don't tend to build in many of the big master plans that can get a little overheated. We do a little more infill, quite a bit more infill, and in less intensely crowded location. So, that could have an effect on it as well. We're also quite active in the non-oil patch part. Houston, as you probably know, has huge medical area as well. So we're nicely balanced and we're having great results right now in Houston. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Given the interest in Houston, I'll give everybody one more little factoid, and that is – is that, similar to our consolidated comment about a pickup in sales in March versus February on a consolidated basis, we saw that exact same thing in Houston. So the last couple of weeks, Houston sales, for whatever reason, have also been stronger.

That's helpful. And I know you kind of also tried to offer ideas around why February was down a little bit, and maybe you pointed to some weather issues, but were you surprised aside from that, because, typically, the sales pace in February would be demonstrably stronger than January, as you saw last year? And so, now, it was a little bit softer. So, did it – I mean, was there anything, also, about perhaps the number of new communities that opened in January versus February? I know your total active community count went up, so I don't know if that's the case. But that slightly lower sales pace in February versus January, I think, was what was also a little surprising. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Yeah. Frankly, it was a little surprising to us as well. We had made some great progress, as we reported, in the quarter overall. I can only think that some record weather, particularly in the Northeast, but even snow in Dallas has had an effect. But we're not overly concerned. Again, March is off to a great start. So, we think – just hopefully, just was a little postponement based on some odd factors.

Right. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Just a little choppiness, so... Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Yeah. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: ...we'll see as we go forward. We remain quite optimistic about the remainder of the spring selling season.

Fair enough. I appreciate it guys.

Thank you. And our next question comes from the line of Nishu Sood of Deutsche Bank. Your line is now open.

Thanks. This is Rob Hansen on for Nishu. I just wanted to kind of return to the specs a little bit. And I just wanted to kind of get an idea, what was the kind of average age of these specs? And I just wanted to confirm right, you kind of mentioned it, this is more targeted in certain markets. And then just looking at this from a bigger kind of gross-margin perspective, is this largely a kind of 1Q, 2Q event for you folks? And then kind of the back half of the year, we start to see kind of more normalized margins, like – well, closer to normalized margins kind of like how we saw in 2014. J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: Yeah. Let me tackle that. I tried to give pretty good granularity in the script on this point. But I would say that the falloff in gross margins that we saw in the first quarter, and the further falloff that we're expecting to see in the second quarter, another 100 basis points down, is almost entirely weighted towards the actions that we've taken on specs to sell both the older specs and some of the specs where we had too many in particular communities and we've consciously tried to reduce. And then the other piece of data that we gave you all was that we expect margins to pick back up in the second half of the year or the third quarter and fourth quarter for that to happen, either we're expecting the gross margin on our to-be-builts to increase or we're expecting our margins on specs to increase, I'll just tell you, we're expecting our margins on specs to climb back up somewhat to where we can come to that year average of 18.2% or so. And there might even be more upside to that if the spring selling season continues to be strong. So most of the erosion that we're seeing, if not all of it, is related to the actions we've taken on specs.

Got it. And what is the kind of dirt sale – what's the kind of difference between a dirt sale and a spec sale kind of normally for you folks? And then what is the gap going to kind of widen to here? J. Larry Sorsby - Chief Financial Officer, Director & Executive VP: >: I'm not sure we're prepared to give you the – what is going to widen to, but traditionally, somewhere around 150 basis points might be the difference between a to-be-built and a spec.

Got it. Thanks. That's all I have for now. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Okay, thanks.

Thank you. I'm showing no further questions at this time. I'd like to hand the call back over to Ara Hovnanian for any closing remarks. Ara K. Hovnanian - Chairman, President & Chief Executive Officer: Great. Thank you very much. Well, again, we're optimistic on the spring selling season, and we'll look forward to reporting some good results in our next quarter. Thank you.