Hello and welcome to the Meritage Homes Second Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please also note this event is being recorded. Now I would like to turn the conference over to Brent Anderson. Mr. Anderson, please go ahead.

Thank you, Keith. Good morning everyone and welcome to our analyst call to discuss our second quarter results which we issued in a press release before the market opened today. If you need a copy of that release or the slides that accompany this webcast, you can find them on our website at investors.meritagehomes.com or by selecting the Investor Relations link at the bottom left of our homepage. You referred to Slide 2 of our presentation I’ll go through he customary cautionary language. Our statements during this call and the accompanying materials contain projections and forward-looking statements, which are the current opinions of management and subject to change. We undertake no obligation to update these projections or opinions. Our actual results may also be materially different than those expectations due to various risk factors, which are listed and explained in our press release and most recent filings with the Securities and Exchange Commission, specifically our 2014 Annual Report on Form 10-K and subsequent reports on Form 10-Q Today’s presentation also includes certain non-GAAP financial measures as defined by the SEC, and we’ve provided a reconciliation of those non-GAAP measures to the closest GAAP figures within our earnings press release. Referring to Slide 3. With me due to discuss our results are Steve HILTON, Chairman and CEO; Phillippe Lord our Chief Operating Officer and Larry Seay, Chief Financial Officer. We expect the call to run about an hour and a replay will be available on the website approximately 1 hour after we concluded. It will remain active for 30 days. I will now turn over the call to Mr. Hilton to review our second quarter results. Steve?

Thank you, Brent. I would like to welcome everyone to our call this morning and thank you for your interest in Meritage Homes. Demand remains strong through the second half of this spring selling season and sales continued to a healthy pace through June. Market conditions are favorable across our entire footprint; job growth is driving increase out to formation. Interest rates remain low and affordability is high. Consumer confidence is improved, the supply home available for sale is low and home values are appreciating. We have a positive outlook for the future based on continued growth in the economy, modest increases in interest rates and the return of the first time home buyer to the market. Turning to Slide 4. Our second quarter 2015 highlights included strong topline growth with an 18% increase in home closing revenue over the second quarter of 2014 including a 14% increase in home closings and 3% increase in average price. Units stronger order growth included 24% increase in units and 25% percent increase in total order value. And ending backlog value, there was 36% higher than it was a year ago. Net earnings for the quarter was 17% lower than last year’s second quarter due anticipated declines in our gross margin, which Larry will review in more detail. We’ve grown our company like community count by 60% is the first quarter of 2012 primarily due to our eastern expansion. Well our legacy markets are performing well with more than double their active selling communities in the east region, resulting a 37% increase in our total community count from June 30, 2014 continued 30 of this year. We’re giving our operations 1000 with our new markets in the east and then made some adjustments to improve their performance. I commensally board our new Chief Operating Officer for leadership and making those changes, which shouldn’t enhance our future profitability. We remain committed to all of our markets and probably strategic investments we made over last few years we paid dividends in the future. I would like to turn it over to Phillippe to review order trends by market. Phillippe?

Thank you, Steve and good morning. Slide 5, our consolidated orders for the second quarter of 2015 increased by 21% over 2014, primarily due to a 29% increased in our average asset selling communities during the quarter and a 4% increase in our average sales price driven by strong sales growth dropped spring selling season our ending backlog value at June 30 was 36% higher than it was at the end of the second quarter last year. - : Order trends were positive in all our market except taxes in Tennessee, which were down from last year due to fewer communities. In the west, our sales continued to improve in Phoenix this quarter. After to answering the quarter in the first quarter of this year Arizona orders were up 34% in the second quarter of 2015 compared to 2014. [Indiscernible] has improved this spring selling season and its welcome change after the week demand we experience last year. California continues to remain our strongest market in the last. As measured by sales pace within a 11.6 average sales per community in the second quarter of 2015. Well above our company average of 8.5 orders for nearly in the second quarter this year. California’s orders grew 16% over the second quarter of 2014. As I noted last quarter most of the improvements has been driven by our communities in Northern California where we are very well positioned close to the bay area job quarters. We have some great new communities opening up in Southern California as well by expect improving trends there also. Colorado demand remains strong within 11.3 average sales per community and 29% increased orders over the last year’s second quarter. Texas orders were down 12% due to 13% fewer after the selling communities in the second quarter of…

Thanks, Phillippe. Turing to Slide 6. We product net earnings for diluted share of $0.70 for the second quarter of 2015 compared to $0.85 in the second quarter of 2014, primarily reflecting lower gross margins on higher home closing revenue partially offset by the benefit of the lower tax rate this year. Our second quarter 2015 home closing gross margin was 19.3%, an increase of 80 basis points from our first quarter though down from 21.9% in the second quarter of 2014. As we’ve discussed before, margins in 2013 and 2014, were inflated by rapid appreciation in home prices and low cost land. The year-over-year decline sense and reflects more modest home price appreciation and higher cost land. Additionally, we have the temporary negative impact to do the purchase accounting adjustments from our acquisitions. We believe our home closing gross margins are normalizing back to our normal 20% under writing target, now approximate that for the full year of 2015. Purchase accouting adjustments from our acquisition of legendary communities last August reduced our second quarter consolidate home closing gross margin by 28 basis points. That’s much lower than it was in the previous two quarters and should be less of drag on future quarters margins. Additionally we took a $1.6 million impairment on one community in Tusan during the quarter. As we explained last quarter, our margins in the east region also reflect a fact that the newer divisions are still ramping up and growing their community count rapidly from a little base. Their rapid growth is good, but upfront cost reduced from margins and those divisions until they reach closing volumes that overhead cost and begin to provide positive leverage for the region and our consolidated margins. We expect margins in the east region to improve overtime, as those…

Thank you, Larry. In summary we’re pleased with our operating results for the second quarter of 2015. We achieved strong growth in sales, closing and backlog with greater increases in closing revenue, order value and backlog value. Due to more actively selling communities and higher average sales prices. Our strategic expansion and positioning in the right markets is driving topline growth providing a solid basis for earnings growth in the coming years. We expect to achieve continued improvement in our margins as newer divisions contribute positive leverage on a consolidated bases. Phillippe discussed the impact of the abnormally having rainfall across Texas and Colorado during most of the second quarter. As you said we estimate that approximately 250 to 300 closing that we’d projected for the third quarter this year. We pushed out which could impact our earnings for the quarter by $0.25 to $0.30 per share while we expect to make up some of those in the fourth quarter capacity constrains to push most of the into next year. Because of that we are reducing our projected home closing revenue guidance to $2.65 billion to $2.75 billion for the year translated 24% to 28% growth over 2014 compared to over previous guidance of 25% to 30% revenue growth. - : We still expect to achieve significant increases over last year in our fourth quarter revenue in earnings as a result of our strong order growth in the first half of 2015. Thank you for your support and your time today. We will now open up for questions and the operator will remind you of the instructions. Operator?

Yes thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Stephen Kim with Barclays.

Thanks very much guys. Good quarter.

Thank you.

My first question relates to your margins story, so what we are hearing here is that the East region which you have ramped up obviously is going to bear the burden of sort of start up always having little bit lower profitability initially. What am I really interested is what do you think the margins in the East generally will look like relative to your corporate average today, once you have ramped them up and once you are sort of firing in all cylinders there and maybe if you can put into some kind of context relative to the margin detectors which you said sort of higher than the company average?

I kind of look at things like in the West, margins are generally a little higher than 20%, inflation appreciation is stronger because less competition certainly in certain markets in the West like California, Texas is generally right around 20% and then I think some of the markets in the east will be little bit under 20% but as on a whole I think there are entire margins on average around 20% but there might be a point or so less in the east.

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Well first of all, last quarter we spent about $154 million, so we are just a little bit higher this year. So I don’t see us necessarily slowing down on the other hand we will continue to buy land and continue to grow our land positions. So I don’t think you should expect to see that decrease if anything as we get bigger you will see that gradually increase.

I don’t say as a percentage of just to clarify Larry, I am talking as a percentage of revenues because obviously quarter-to-quarter there would be valuations and as you said you are going to grow but I guess I am talking relative to the size of your business or your revenues, you have been decelerating for three straight quarters and so but it is not a bad thing, I mean it is actually, it is pretty normal I would say right now but just as a percentage of revenues, what do you think your land spend will do?

Again I think we will keep up our land spend and try to maintain our approximate five year of lot supply out in front of us.

That is not Stephen that is not a metric that we are tracking, so I don’t think Larry can tell you. Where land spend as a percentage of revenue, I would tell you that we won’t spend anymore on land this year than we did last year even though we have a bigger base and strong community count and there is a probability we will spend little bit less normally in this year than we did last year. So we are trying to generate little bit more free cash flow and bring our debt to cap back down to closer to 40% and the land market is pretty tight, so we are being pretty choosy.

Great, that is exactly what I needed. Thanks very much guys.

Okay.

Thank you. And the next question comes from Nishu Sood with Deutsche Bank.

Thanks. So first question I wanted to ask about momentum of demand through the quarter, Steve you mentioned that across all regions and you really appreciated the color that Phillippe gave, and through the monsoon and into June, the year-over-year order pace slowing from 30 to 21, how should we put that in context to some of that due to the weather effects maybe on demand in Texas or is that the East coast absorptions being a little bit less than the west and central. How should we think about that, it sounded like the momentum maintained in the second quarter relative to the first quarter but just trying to put that drop in the year-over-year gain in context.

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Got it. And then thinking about the weather effect, they differ all of 200 closings from 2015 and to 2016. So the decrease in the guidance is basically just a direct reflection of that, if you kind of run the numbers on the 200 closings. It that the right way to think about it. And then on the gross margin, Larry, you had mentioned that you still expect to achieve the gross margins even though the closings that are being differed or higher than fleet average. So does that mean that gross margins, pricing trends have been coming up little bit better than expected. I’m sorry that was two questions but.

It’s okay. Now, we still think it’s something that we can hit it probably a little bit tougher pot because we are missing those 200 closings coming a lot from Texas. But it’s still something we are expecting to do. The other thing you got to factor in is, we have this very small impairment from Tusan which is a little bit of a decrease as our margins are little too. So those two factors make it little more difficult to hit the 20% exactly but I think we can get there.

Got it. And the drop in the guidance is just directly those 200 closings, there isn’t any movement on the other.

Exactly.

Okay. Great. Thanks for the color.

Thank you. And the next question comes from Ivy Zelman with Zelman & Associates.

Hey, guys, good morning. It’s actually Alan and thank you very much for all the detail. Steve and Phillippe, just adding on the comments about the south and legendary. So in the absorption rate in Georgia right now is running just over one a month and you mentioned, you are doing some things strategically to improve I guess, presumably about the sales phase and the margin but then Steve, you made that comment that it’s lower absorption by design. So I was hoping that you could just kind of expand a little bit upon what you are doing in Atlanta to improve those operations and how we should think about that business longer term from a sales space perspective?

Maybe lower by design was in the right terminology I mean lower by expectation just when we bought the business there, we looked at their absorptions and they were signifianctly lower than our’s and there were lot of smaller communities that kind of coupled together with 20, 30, 40 lots versus 100 lot communities and then may share a model between communities. So their business strategy was a little bit different than our’s. But just it’s going to take us a little bit of time to kind of set it up the Meritage way. And call me now some of the really absorption communities that over the great economic sense and focusing our land acquisitions on more higher volume, stronger absorbing communities. So that and some things we are doing on the sales front together with our land strategy overtime should increase their absorptions to a higher number but I still think traditionally that part of the country, the absorptions are going to be less than we’re going to see like in the west and even in Texas.

Steve, if I going to add to almost all of their divisions were controlled through very soft options, very low take down rates as Steve said, they didn’t necessarily have full model presentation so that was well overhead to and that allowed them to operate at a lower absorption pace and still make good money even because of this low risk strategy. As we continued to grow the business there, we will take better positions and better parts of the market where we have to invest a little bit more maybe we can get a soft option strategy and that will gradually transition from slower absorption kind of structure to higher absorption structure.

Got it, that’s helpful and second on the EPS guidance, I may missed I was hoping you could just give us a little bit of color on how you expect that trajectory to play out between the 3Q and 4Q you mentioned the 250 to 300 closings like I slipped into 4Q but I don’t believe you had previously given any base there so just kind of frame expectations I think that would be helpful.

Steve I'll cover that. I think in Steve’s comments the last part of his comments he mentioned that we are expecting our per share impact from 250 to 300 closings getting pushed out in the third quarter do impact EPS by about $0.25 or $0.30 we haven’t given specific guidance for the third quarter and are doing so but I think people could take their own models and adjust their own models downward for something in that range.

Great, okay that’s helpful. And if I could seeking one more just on Florida and the sales pace there was healthy but it was down quite a bit year-over-year so I was hoping you could give a little bit of color on what you’re seeing from a sales trend perspective in Florida?

Nothing, nothing really specific or unique, struggles have been more in Tampa. We just haven got the momentum that we are looking for yet in Tampa but working hard on it but Orlando, how that very well, quite pleased with our sales there.

Great, thanks and good luck.

Thank you. And the next question comes from Michael Rehaut with JPMorgan.

Thanks. Good morning everyone. I also wanted to hit on sales pace a little bit and hoping you could give a little color around California, the sales pace there was down about 10% year-over-year still like you said one of the best on an absolute basis one of the best numbers in the company but, if you look at first quarter you’re up little over 10% on its sales pace. This quarter you down about 10% so just curious is there any drivers to that if its timing with communities you mentioned that you’re set to open up some new communities in Southern California and also if you go into a little more detail of the Texas markets, I believe you said that Huston was still solid but if you can give any additional granularity there in terms of different price points that will be helpful as well.

I think, in California we slowed down the pace a little bit in a few Northern California communities try to capture more price lift and then, may be a few communities in Southern California haven’t come on as best as we it held for so, I don’t read too much into that 10% decline in California in general, in Texas, we’re really pleased with the performance there other than the rain that we experienced in April and May that with some sales and certainly hit us on the start side which resulting closing delays and the market was very healthy and very strong and we still have not seen hardly any impact from the lower oil prices in Huston, actually our sales per community in Huston were better this year then they were last year. Our business in San Antonio is strong as ever been and the Dallas markets also very strong and we had a lot of communities coming online in the coming quarters in Huston so we really bullish about our future in that market. So we’re very satisfied and very pleased with the direction, our Texas business is going right now.

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As we said, we underwrite 20% obviously though you do have the seasonality in the business where you just closed fewer units in the first quarter or two and the overhead leverage and construction overhead is well leverage, so I always guide people to have a little bit lower gross margin expectations in the first quarter or two and see ramp up through the year. It is possible to that with improvements we will see on the East business, you could have a little bit of overall elevated margin from this year but again it is not something we guide people to precisely because it is not what we underwrite to. But we are hopeful that will happen and margins in 2016 a small amount.

Great, thanks and then one last one technically on the income statement, tax rate how should we be thinking about this for the back half and for next year if possible?

Sure, well it depends on Congress renewing the green federal doing [indiscernible] haven’t done that in 2015, you never know when Congress is going to act but our sources tell us that is going to happen, you never know with Congress but that is what we are being told from a modelling standpoint, just to be conservative, I would factor that hit or the improvement in tax rate all in the fourth quarter because Congress usually the first things until the very end, but as we’ve said that full year impact for all of the green credits of the houses we sold in 2015 is factored into our guidance and it’s about a 2% improvement in margins without that it would be around 34%, with that it is around 32% overall tax rate.

Great, thanks.

Thank you. And the next question comes from Stephen East with Evercore ISI.

Thank you. Good morning guys. Steve sort of combined orders and gross margin here but as you think about your pace versus price on orders, where incentives are and you expect strategy which was pretty heavy in the first quarter versus what you typically do as we look out call it over the next year or so. Had you envisioned that pace versus price and where the spec strategy fits in is the 40% or something that you will start to lean on a bit more where you worked that down as you move through time?

I think we would rather have our spec to be more 30% to 35% area that is kind of where we feel little bit more comfortable, we have been pushing that down a little bit, there has been little bit of margin dilution between the specs and build order home. So we preferred to sell more homes on a build order basis than by building specs and as we’ve always said before we inspired to sell at least three homes a month in every one of our communities and once we get to that level we can start pushing price more. So it is a store-by-store initiative, it is not a one size fits all and some parts of the country we are pushing price pretty hard right now and others we’re not. So okay, hope that answer your question to some degree.

Yes. It does. So you are pretty close, you are right on that border line for the overall company’s if you give little bit better volume, we know what to expect from there. I guess if you look at your costs, both your construction cost and your land cost, what are they doing on a year-over-year basis that’s flowing through right now.

They are rising. I don’t have the peercentages with me. Larry, would you, can you help with that a little bit.

We have said in the last couple of calls that we aren’t seeing as much cost pressure this year as we were previous years and that more of the cost pressure has come from land. I don’t want to give a exact percentage as it does vary from market to market. But at this point in time, we are seeing demand to be strong enough so it’s offsetting those cost pressures and we are able maintain our underwriting. As we said before, we don’t underwrite home appreciation into our model but we don’t underwrite cost inflation either. And of course as we’ve said too is the land cost is six that’s not going on a change but development, construction cost could. So we see that being fairly nudge and balance today. Again, we’d like to hope that, that as the market continues to improve that, then we could improve margins a bit but that’s not something we are factoring into our thinking today.

Sure. Okay. And just one last question, last quarter you all talked a lot about spending and Texas on land, looking out again over the next two to four quarters, where is that, where you still going to see a lot of your land spend, we rotating some toward California, it sounds like what’s going on there?

No. I don’t think there is a disproportionate dollars being spent in Texas, we do have a lot of communities opening over the next several quarters in Texas that we already spend the money for continuing to spend money on development cost. I think we are going to, you will maintain the same balance that we’ve been hitting across the company. I don’t think our reliance spend has good in change from one market to another, we haven’t spent much money in Arizona, I don’t see it spending money on land in Arizona next few quarters we’re pretty well stocked here. As we’ve said, California is an area we’ve been focusing on. And to the extent we could buy in deals there, we’re going to spend money in that state. So hopefully I answered your question.

Okay. Thanks. I appreciate it.

Thanks.

Thank you. And the next question comes from Susan Maklari with UBS.

Thank you. Good morning.

Good morning.

You guys have done a lot of work and put in the first half of this year in terms of adjusting your speck count thinking about that strategy, can you talk a little bit or you are happy with where you are now and is there anything that changes the [indiscernible].

I think we’re pretty happy with where we are now, it’s a little more balanced and not I don’t expect much change in that area.

Okay. And then on, in terms of your capital allocation, we’ve been hearing some builders increasingly about them taking sort of more balanced approach in this cycle. Can you talk about how you think about your capital as the type of funds grow and maybe what the priority for cash are?

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Okay. That’s helpful. Thanks.

Thanks.

Thank you. And the next question comes from Mike Dahl with Credit Suisse.

Hi, thanks for taking my questions. I wanted to ask a question about phoenix markets seeing little bit of resurgence here over the past couple of years we’ve seen these many boom box and a lot of builders are reporting some nice growth there and seeing in permits but wanted to get your sense especially since you say you’re not focused on incremental spend there, so how you’re thinking about that then market and what you’re seeing on the ground in terms of inventory and pricing trends on the new home side?

Phillippe if you want to take this one.

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Yes, I want to read anything into that, we obviously have a strong outreach program to realtors because that people are buying a move up house, I think more typically go through a brokers or its important for us to do that. On the other hand we have a very strong online presence and presence to other marketing efforts, so we’re pushing on all of the above and just because that went up a little bit this quarter. I wouldn’t read into that is a big push for us, it is always a pust to make sure we are going to brokers as well as people who come to us directly.

Okay. If I could sneak one, quick one and the tax guidance 32% in the current guidance, what was it in the prior guidance?

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Got it. Thanks.

Thank you. And the next question is from Jade Rahmani with KBW.

Hi this is actually Ryan Tomasello on for Jade. I know you had a few questions on the land market, but I was wondering if you can give a little bit more of a sense of the amount of deal flow you are seeing and if that is concentrated in certain markets and where the current level of competition stands?

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Thanks. And has the current environment changed the way you view the duration of what you’re willing to put on the balance sheet for the deals you are doing in the land market?

It hasn’t changed that much over the last several quarters. I mean this is not 2010 or 2011 where There was a sea of cheap logs out there to buy and as I have been saying now for quite a while, prices are stronger but house prices are up too. So it has been tracking together but that is why the markets are more around 20%, not 23%, 24% because we’re not able to find that lower price land.

Great, thanks.

Thank you. And the next question comes from Joel Locker with FBN Securities.

Hi guys. Just quick question on our community count, I didn’t hear anything on the call but what do you expect it to end 2015 and any early indications of what growth do you expect for 2016?

I think we said, Larry correct me if I’m wrong. Year end community count is going to be in the 250 to 260 range.

Correct.

And we haven’t really given any guidance or community count for next year, I think we’ll probably do that on the next quarter conference call but we’re not really prepared to do that today.

Okay. And just a follow-up question on G&A, it was hovering between $29 million and $30 million in the last two quarters and it dipped down to $27.7 million. Was there any one-time benefit in the second quarter and what do you expect the run rate going forward?

What ‘s causing that dip from the first quarter to the second quarter is that if you recall last quarter we had a change in vesting for some of our restricted stock that accelerate vesting. So that is why that quarter was a bit elevated. This quarter as we have discussed had the past COO departure number in there but then that was mostly offset by some trips of accruals which offset that. So the number we are seeing for this quarter is a pretty good number, although I would say as we grow the business in particularly as we get into the back half of the year where we are making most of our profit there are some bonus accruals that will cause that number to go up some. So I would expect to go up some but as a base level that is a pretty good number that you are looking at for the second quarter.

Sure. Just last one on interest expense, where do you see that going forward?

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All right. Thanks a lot guys.

Thank you.

Thank you. And the next question comes from Will Randow with Citigroup.

Hey good morning and thanks for taking my questions. On the particularly I apologize if I missed it, but on the Tuskan impairment as well as sales paid in the Phoenix Metro area, have you seen any deceleration in July relative to June or June relative to prior months and what drove the impairment?

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Thanks for that and then just one follow-up on your Texas after community count, it is now representing about a quarter of total communities that is down pretty substantially, are you tactically doing that or there are other drivers?

No, like we have been saying before previously where we have lot of communities coming online in Texas that are in the development cycle right now and we expect our community count in that phase to increase over the next several quarters and that should probably put us back close to that 30% area we traditionally been.

Thanks again guys. Appreciate it.

Thank you and the next question comes from [indiscernible].

[Alex] (Ph) you there?

Yes. Can you hear me?

We do now.

Okay. Sorry about that. I was hoping you could clarify the EPS change that you mentioned because what I heard and what I saw in the transcript for two different amounts was it $0.25 or $0.30 something like that?

The impact on EPS of those 250 to 300 closings moving out of the third quarter some end of the fourth quarter most in the next year, that’s effecting the third quarter, we believe by about $0.25 tp $0.30.

Okay. I thought that’s what I heard. Thanks. Thanks, Larry. My question was on labor, have you guys experienced any kind of labor issues where there is shortages or something along those lines and if so what trades are the ones that are towards demand right now?

Labor has been challenging in some markets, but not in all markets. We’ve had some challenges in Denver, we have little bit of challenges in Dallas, concrete and framing seems to be an area that has been the most difficult, so couldn’t tell you too much more than that but it’s much more of an issue this cycle than it was last cycle.

Okay. And the first incentives how do incentives track this year versus last year.

I guess market-by-market but probably a bit last Larry, would you say?

I agree, where the markets gotten a little bit stronger so the incentives are little bit less.

Okay. Thanks.

Thank you.

Thank you.

Thank you. And we have time for two more questions. And the next question comes from Jay McCanless with Sterne, Agee ECRT.

Good morning, guys. first question, on the community opening you are doing in Texas in the back half of this year, could you talk about what price points you expect to target and maybe which geographies we are going to see those openings?

Well, sorry, ask that again.

Sure. For the openings that you are doing in Texas in the back half of this year, could you talk about, are these going to be mostly move out communities and which are you going to be focusing on once city or two cities versus other cities.

No. I mean we have a quite a few communities opening in Austin and Huston, mostly move up at some entry level plus. An then have community count increasing certainly in the south and then in the east also in the move up in the entry level plus area.

Okay. And then the second question, and just want to find out, how ordered are trended July any other commentary you would be willing to us on 3Q.

Months not over yet, but in this season we’re slower in July than it is other months. But it’s kind of trending long once of our expectation. So nothing really news, weather report on July sales.

Okay. Thank you.

Thank you. And our last question today is a follow-up from Stephen East with Evercore ISI.

Thanks. Steve, just a follow on, the entry level plus that you mentioned, what part of your business now is entry level plus and where do you want to take as you move forward and I know you and I talk some about the in-fill and attach you are trying to do. So maybe what’s happening with that.

Today depand on how you define it it’s really more than 20% to 25% area and would really let you get it, close to a 35%, so we would like to increase that area substantivly. We think that’s where growing demand is going to be and we have quite a few new communities that meet that target coming on line and in the somewhere at southern markets and in our Austin market, and in some other areas as well.

Okay. And is the __ type product is that a meaningful piece of the puzzle with that.

Certainly in the west, it is. And to some degree in the south but probably more so in the west and we just opened an infield community in Scottsdale and Phoenix does pretty well and it’s the strategy that we are continuing to pursue.

Okay, thanks. End of Q&A

Thank you and as it was last question, I would like to turn the call back over to management for any closing comments.

Well thank you very much for participating in this quarter and we look forward to talking to you all next quarter. Thank you. Have a good day.