Good afternoon. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the M/I Homes Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions) I would now like to turn the call over to Phil Creek. Please go ahead.

Thank you. Joining me on the call today is Bob Schottenstein, our CEO and President; Tom Mason, EVP; Paul Rosen, President of our Mortgage Company; Ann Marie Hunker, VP Controller; and Kevin Hake, Senior VP. First, to address regulation fair disclosure, we encourage you to ask any questions regarding issues that you consider material during this call, because we are prohibited from discussing significant non-public items with you directly. And as to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today’s press release also applies to any comments made during this call. Also, be advised that the Company undertakes no obligation to update any forward-looking statements made during this call. With that, I’ll turn the call over to Bob.

Thanks, Phil. Good afternoon, everyone, and thanks for joining our call to review third quarter results. As stated in our release, we had another solid quarter, highlighted by a 62% improvement in pre-tax income. For the quarter, our pre-tax income equal $22.2 million compared to $13.7 million a year ago. The big increase in income was largely due to a 5% increase in homes delivered, a 13% increase in average closing price and continued improvements in our returns. Specifically, our gross margins were up 70 basis points year-over-year. Year-to-date, in the first nine months, our gross margins were 21.1% compared to 19.9% a year ago, a 120 basis point improvement. Improving our returns remains an important area of focus for us and we are pleased to see our third quarter operating margin increase to 7.5%, up 70 basis points from last year. For the first nine months of this year, our operating margin has improved 140 basis points year-over-year. Our sales backlog in September 30 has value of $518 million, 6% better than a year ago and the average sale price in backlog in September 30 equal $333,000 a house, approximately 10% higher than a year ago. Our backlog units at quarter’s end equal 1,554 homes. This is a 3% decline from a year ago. Obviously our backlog is a function of two things – sales and closings. In terms of sales, we have a number of comments. First, we continue to believe that the fundamentals have been in place and remain in place to support further improvement in housing conditions throughout our 13 markets. That said, there is no question that since the beginning of this year, importantly during the third quarter, demand has been uneven in many of our markets. And these uneven and at times choppy conditions…

Thanks, Bob. Our pre-tax income increased 62% in the third quarter compared to last year on 20% revenue growth. And our pre-tax income percentage increased to 6.7% compared to 5% a year ago. New contracts for the third quarter increased 3% to 892 and our traffic for the quarter was down 7%. Our new contracts were up 8% in July, up 5% in August and down 6% in September. As to our buyer profile, 38% of our third quarter sales were to first-time buyers compared to 40% in the second quarter. And 50% of our third quarter sales were inventory homes similar to the second quarter. Our active communities at 147 were flat for the quarter when compared to the prior year. The breakdown by region is 62 in the Midwest, 51 in the South and 34 in the Mid-Atlantic. During the quarter, we opened 15 new communities while closing 13. We continue to experience delays in getting our planned new communities opened. Our current estimate is to end the year with about 150 communities. We delivered 985 homes in the third quarter, delivering 60% of our backlog this quarter compared to 56% a year ago. Our building cycle times were about the same in the third quarter as the second. However, certain markets continue to have challenges. Our construction and land development costs have increased slightly when compared to the third quarter of last year. Our average closing price for the third quarter was $320,000 compared to last year’s third quarter of $284,000 and $306,000 in ‘14’s second quarter. And our backlog sales price is $333,000, up 10% from a year ago. In the third quarter, we recorded pre-tax charges of $622,000 for impairments. These third quarter charges were for older land assets in our Midwest operations. We continue…

Thanks, Phil. Mortgage and title operations pre-tax income decreased from $3.5 million in 2013 third quarter to $3.4 million in the same period for 2014. Our third quarter results include a decrease in loans originated from 689 to 701 and higher average loan amounts. While still strong, the margins on loans sold during this quarter were lower than those we’re able to achieve in the third quarter of 2013. The loan to value on our first mortgages for the third quarter was 85% in 2014 compared to 86% in 2013’s third quarter. We continue to see a shift towards conventional financing with 73% of the loan’s closed conventional and 27% FHA, VA. This compares to 66% and 34% respectively for 2013’s same period. Overall, our average mortgage amount increased 12% to 269,000 in 2014’s third quarter compared to 240,000 in 2013’s third quarter. The average borrower credit score on mortgages originated by M/I Financial was 740 in the third quarter of 2014 compared to 733 in 2014’s second quarter. Our mortgage operation captured 84% of our business in the third quarter compared to 81% in the third quarter of 2013. At September 30, 2014, we had $60 million outstanding under the $110 million MIF credit agreements which expires March 27, 2015. And $14 million outstanding under a separate $15 million repo facility which expires November 5, 2014. We are in the process of extending the repo facility and expect to have it completed prior to the expiration date. Both facilities are typical 364-day mortgage warehouse facilities that we extend annually. Now, I’ll turn the call back over to Phil.

Thanks, Paul. As far as the balance sheet, we continue to manage our balance sheet carefully focusing on investing in new communities, while also managing our capital structure. Total homebuilding inventory at September 30, 2014 was $894 million, an increase of $218 million above September 2013, primarily due to higher investment in our backlog and increased land investment. Our land investment at September 30, 2014 was $426 million compared to$ 296 million a year ago. And at September 30th, we had $260 million of raw land and land under development and $156 million of finished unsold lots. We owned 2,750 unsold finished lots with an average cost of 60,000 per lot and this average lot cost is 18% of our $333,000 backlog average sale price. And the market breakdown of our $426 million of unsold land is $121 million in the Midwest, $187 million in the South and $118 million in the Mid Atlantic. Lots owned and controlled as of September 30, 2014 totaled 21,000 lots, 53% of which were owned and 47% under contract. Our owned and controlled lots of 21,000 is an increase of 16% versus a year ago. We owned 11,200 lots of which 31% are in the Midwest, 45% here in the South and 24% in the Mid Atlantic. We believe, we have a very good solid land position, 29% of our own controlled lots that are in the Midwest, 46% of our land is in the Southern region and 25% is in the Mid Atlantic. During 2014’s third quarter, we spent $59 million on land purchases and $41 million on land development for a total of $100 million. Year-to-date we have spent $277 million on land purchases and land development. And as to our 2014 land purchases about 50% of the purchase amount was raw land. Our estimate today for total 2014 land purchase and development spending is approximately $375 million to$ 425 million and that includes the $277 million we’ve spent year-to-date. At the end of the quarter, we had $160 million in inventory homes, 305 that were completed and 694 inventory homes under construction. This translates into about 7 inventory homes per community. And of the 999 inventory homes, 351 are in the Midwest, 398 are in the Southern region and 250 are in the Mid Atlantic. And as of September 30, 2013, we had 822 inventory homes with an investment of $110 million which was about six homes per community. We believe we are very well positioned with our inventory levels. Our financial condition remains strong with $533 million in equity and net debt to cap ratio of 45%. In September 30, 2014, there was $14 million outstanding than $200 million unsecured revolving credit facility. As we announced today, we have amended this facility extending the maturity four years and increasing availability to $300 million which will provide us with additional financial flexibility. That completes our presentation. We’ll now open the call for any questions or comments.

(Operator instructions) Your first question comes from the line of Michael Rehaut with JPMorgan. Jason Marcus – JPMorgan: Hi, good afternoon. It’s actually Jason Marcus in for Mike.

Hi, Jason. Jason Marcus – JPMorgan: Hi. For the first question, I just wanted to drill down a little bit more on the delay that you’re talking about. And I know you highlighted about permitting and entitlement where I think the main issue is that there’s over availability asset issue as well. And then also, I think if you could just let us know what are some of the markets that are most impacted by this issue. And then I guess finally we’re continuing to show guidance being lowered, what are the biggest drivers there.

Let me take the first part of that. This is Bob Schottenstein and then I’ll – perhaps Phil or someone else here will take the balance. It’s not one thing that’s contributing to the delay. But I’d say that the two most significant factors are permitting and entitlement. And then the third one which would also be in here is frankly labor shortages of land excavators and so forth. But the process has become protracted. Whether deals are being internally developed by us because we purchase them raw or whether we’re buying finished lots from third party developers, we’re more often than not experiencing some delay. Frankly, a lot of the delays have been greater when there’s third party developers involved. But it also is very well account specific and there are certain markets in some markets where it is just taking longer to get entitlements secured, and then inspections signed off on by the appropriate municipal or county authority. In terms of where the new community openings have been and haven’t been, I think I’ll turn that over to Phil.

Yes, as far as the community count outlook, at the start of this year, we thought we would be opening about 75 communities for the calendar year 2014. And our current view is there’ll probably be about 60. So that is the biggest part. We are selling out over few communities a little faster than we thought, but the big drop in the community count and expectation is opening about 15 less communities. You should also remember that last year, we actually opened about 20% more communities. So last year, we did have a very strong performance there. As far as where it is, they’re really across the board as Bob said. We obviously have more things opening in the Southern region. We really have a pretty good run rate right now in Houston and also in San Antonio. And the good news also is we’re starting to deliver houses in the other two Texas markets. But we have delayed openings in every market in our company.

Yes, I mean this is of no consolation. But I think this is fairly industry-wide. And I think that it’s known to be industry-wide. And a lot of the deals where our communities are delayed, there’s other builders who probably confided about who are experiencing the same kind of delays. Jason Marcus – JPMorgan: Okay. Thanks. The next question has to do with the gross margin. As we look at the gross margin and look at the stripping out of the financial services income, looks like they’re declining about 50 basis points sequentially. So I’m just wondering if you could quantify the drivers of that over the next field [ph] or there’s something going on. And then just generally when you look at the backlog of those margin, how did that compare to what you just reported?

We don’t really give any blackboard [ph] projections or guidance for gross margins. We have been pleased – when you look at the last three or four quarters, we have been pleased by the increase in the margins. Also, I’ve been pleased with the average sale price continue to increase. I wouldn’t say anything has really changed a whole lot. We’ve worked through almost all of our legacy land in the Midwest. So those margins have been improving. We’ve talked about the DC market being a little more difficult for us. But other than that, we think our margins are in pretty good shape. We sure hope to improve them in the future, but no guidance or estimates of those. Jason Marcus – JPMorgan: Okay, thank you.

Thanks.

Your next question comes from the line of Ivy Zelman with Zelman & Associates. Ivy Zelman – Zelman & Associates: Good afternoon, guys. And thanks for the question. I guess the hard thing for us to appreciate right now is just how deep your stock is. And I guess when we look at where your stock is trading and the amount of capital that you have access to, I just like you to comment on the prospects of the stock buyback at these varied price variables [ph].

Well, Ivy, how are you? Thanks for joining us. Ivy Zelman – Zelman & Associates: Good. Thank you.

I’ll take a crack at that and then see if anyone wants to answer. We think it’s underpriced too, but we also think that right now the best use of our capital is to deploy it in our divisions where we believe that in virtually every one, we have really good opportunities to continue to grow in getting market share. The goals of the company today are to improve our profitability, to improve our returns. And I want to just emphasize on improving the returns. One of the biggest and most important aspects of that, as we talked about it during the last two calls, is getting more scale particularly on our newer Texas markets. And we’re there and some of them now are at least getting there. And at least with Dallas and Austin, we’re not where we need to be yet because we just don’t have enough time to get there. But we have a lot of opportunities ahead of us to invest in the markets, to grow our community count. We don’t want to over leverage the company and we don’t want to use at least at this point, there’s no decision to use any of our capital to buy back stock. I don’t know, Phil, you or Kevin have anything you want to add to that. Ivy Zelman – Zelman & Associates: Yes, I guess and in fairness to shareholders and everyone that you’re speaking to, I guess would say that the returns that you can get on your stock and then where other builders are trading relative to book value is not as good as the returns that you would via land. And isn’t there room for both? And maybe you don’t have to answer that directly, but is it something that you would consider in the board discussions because I guess it just comes down to the mass of it and understanding right now where the stock trading below book value and you’ve got other companies that are trading well above you. I just would like you guys to consider it frankly.

Well, I appreciate the question. Number one, we bought back stock in the past and we felt it was prudent to do so and so it’s not something we haven’t done. The other thing is it is something that we look at and we talk about. And it’s something that we will look at and talk about in the future. But I think that you’ve absolutely nailed the issue, is where can you get the greatest return on invested capital? And therein lies the debate and the discussion. Ivy Zelman – Zelman & Associates: Okay. I’ll remember that [ph] that and just to kind of go back to some certain hours [ph] of the business, you talked about the challenges and sort of the choppiness of the market where you think about month to month and what you’re seeing in that consumer with respect to the traffic being requeued and it fell year-over-year down in September. Is it from your perspective a sticker shock factor? Is it the consumer who lacks the urgency? Are you getting feedback that they just can’t afford it, they can’t sell their house? Can you walk us through a little bit? Because in recognizing in a market we’re in, it’s a tenuous recovery so far which our growth is tolerating and mortgage rates are always as they are. So if you have any more feedback and maybe you could talk about your winners and losers. We know the DC market has been very challenging and there have been markets that have been better within Texas and a lot of it is related to our growth. So I think a little bit deeper will be helpful to everybody.

I’ll just say a couple of things – and I think, Ivy, you’ve identified a lot of the reasons. But first of all, you have the whole, whatever they’re called, the Millennial group and they’re not entering with any kind of meaningful impact to the new home market at this point for a whole variety or possible reasons. Leaving even that aside, though, the combination of credit not being as easy as they – and I will use easy in an irresponsible way. But the ability to secure credit for that to be a balanced as it should be, by your ignorance, I think you were the one that put the chart that showed how uninformed the average consumer is when it comes to what it takes to buy a house whether it be a new or used house in terms of the amount of down payment and how attached they are with things. Ivy Zelman – Zelman & Associates: Right.

And the education process that we think we do a really good job of, but you firstly got to get to them. But the other thing is just some of the – to be certain, some of the corps [ph] and market to market, the first part of this year the Tampa market was particularly and curiously and unexpectedly slow. In the last number of months, Tampa has become – has, at least for us, come back quite strongly. Orlando, the Orlando market was quite strong through the first six, seven months of the year. And in the last few months, it’s been a little more up and down. You mentioned DC and how the buying conditions there have been just sort of so so. The Texas markets have been, for the most part, good, but I think they’ve even slowed a bit here in the last, at least for us, in the last few months. Look, I think, at the risk of sounding like a broken record, I think there’s a whole lot more reasons to be optimistic than not. I think that housing will have a positive trajectory. We believe that it will. That’s why we’re choosing to invest the way we are. We believe that there’s opportunities for us to grow and the demand will continue to grow in the markets that we’re in. But it just may not happen in quite the linear way that maybe everybody expects. I don’t know where this year is going to end up nationwide on new home sales but it’s going to be nowhere near when a lot of folks start [ph] back in December and November of last year. I don’t know if they ever tell you –

In fact, from our standpoint, we went into this year thinking that we were going to spend perhaps $475 million to $500 million on land. And of course we just updated those numbers to $75 million or $100 million less. Still feel really good about our land position, owning 11,000 lots. But again, things have definitely not been as strong as we would like them to be. We’ve really tried to adjust our business to that. The good news is prices moved up, margins moved up. The SG&A leverage has not been as good as we would like it to be, but again, we’ve had a situation where that when we’re just starting to close houses in two of our 13 markets, plus with D.C. a little slow and there’s other things in SG&A, we’ve had increased benefit cost, we have walked away from a few land transactions and –

So let’s be clear about one thing too. Basically for our community count, our sales were up 3%. And so up is up. Up is better than down. And the inability to get as many of our new communities, particularly in some of the markets where we were so excited to get them opened, has added impact. Ivy Zelman – Zelman & Associates: Sure.

Get them open, rather. So I guess it’s a whole lot of all of that. Ivy Zelman – Zelman & Associates: I guess my last question and stealing, sorry, from the next question – person asking, but you guys, when you underwrite your ground and assuming it’s not going to come on immediately, it could be a year or two years later, are you underwriting to a two – what type of absorption – were you keeping a depressed level but today’s environment is unfortunately experiencing or are you being more optimistic in your underwriting?

We underwrite based on the conditions that exist today, unless there’s some very significant reason not to. Ivy Zelman – Zelman & Associates: So the stuff that you bought when things were stronger, would they have been underwritten higher and therefore –

No, the absorption levels that we project for any new land opportunity is based upon what we believe the selling conditions allow for right now. We don’t think, well, in two years they’ll be a lot better so therefore we can sell twice as many per month. We don’t do that. And the one thing that has changed in our underwriting process is not the minimum levels of return. That has stayed the same, but the return that we expect to get. But I think that we’re now a lot more realistic about opening, when communities will open because a lot of the delays that we’ve experienced and others that experienced as well weren’t unexpected. They’re not as unexpected anymore. So now we’re building more in, which makes it more difficult for deals to cancel because if it takes longer to get something open, that impacts the returns. Ivy Zelman – Zelman & Associates: Thanks. I appreciate it. Thanks a lot.

Thank you.

(Operator instructions) Your next question comes from the line of Alex Barron with Housing Research Center. Alex Barron – Housing Research Center: Hey, guys, how are you?

Good.

Great, Alex. Alex Barron – Housing Research Center: So I wanted to see if we could focus a little bit on the SG&A. I think this year you guys have done a good job of growing the top line and the SG&A seems to be under control. But as I was looking at the previous year, there was a significant bounce [ph] in the fourth quarter. I’m guessing that was maybe incentive compensation but should we expect something similar this quarter – in the fourth quarter?

Well, if you look at the SG&A number, round figures that 13% SG&A number in the quarter, about half of it is SG&A and about half of it is selling. And we look at the selling, about two-thirds of that is variable selling. And our variable selling hasn’t moved a whole lot. It’s increased a little bit in certain markets. You get the incentives go up a little bit sometimes, step [ph] realtors and things like that. But by and large, the selling variable has stayed about the same. The selling non-variable tends to be a little more stubborn because even though we’re not opening as many communities as we’d like, we still are opening a fair amount of communities. So selling hasn’t moved a whole lot. G&A, as I briefly mentioned, I mean there are higher incentive compensation numbers in there this year than last year. Again, we’re talking about our profit going up 60% for the quarter. We also have some higher benefit cost in there. We also have had some higher land write-offs, deposits, prepaid items on land deals we’ve decided not to go forward with. Normally the way our business works, our SG&A percentage gets better as the year goes on because normally deliveries do increase. So, again, we’re starting to close houses in Austin and also in Dallas. And with closings hopefully increasing in the fourth quarter, hopefully we’ll see a little better results there. But we continue to work very hard on getting some more SG&A leverage. Alex Barron – Housing Research Center: Got it. And I was also hoping you could comment on how you guys are seeing October so far maybe versus third quarter? And I guess my last question as we move or you guys are thinking about 2015 land spend, do you think you will continue to grow or you’ve kind of taken a pause to see what happens?

Well, as far as the first question, we don’t have any comment on October sales nor do we have any comments in there about ‘15 expectations or land spend or whatever. But I will comment that, like I said to Ivy, we went into this year thinking we were going to spend maybe more, $475 million to $500 million on land. Now the current estimate is more in the $400 million range, owning 11,000 of lots and have another 10,000 or so behind that under control we feel really good about. Normally we’d like to own about a year of finished lots and we’re a little bit below that right now but that’s okay. But I would see our land staying in the owning the three-year type run rate. So again, we think we’re really in pretty good shape. I think the balance sheet’s in really good shape. So again, I mean, I don’t see really our strategy and direction changing a lot. Hopefully business will be a little bit better. I don’t have any guidance out there either as far as community count next year. But again, we are on this year with about 15 communities opening. Those didn’t just go away. So we are optimistic obviously about next year, as Bob said. Alex Barron – Housing Research Center: Right, okay. Great, thanks a lot.

Thanks.

(Operator instructions) At this time, there are no additional questions.

Thank you very much for joining us.

Thank you. This concludes today’s conference. You may now disconnect.