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Executives

Steven J. Hilton – Chairman and Chief Executive Officer

Meritage Homes Corporation (MTH) Citi 2012 North American Credit Conference Call November 14, 2012 10:05 AM ET

Unidentified Analyst

Meritage and Citi were publishing research again. Meritage is one of the largest home builders in the U.S. They build mainly in Arizona, Texas, California, Nevada, Colorado, Florida, and North Carolina. In the last 12 months they have generated over $1 billion of revenue via closing the delivery of 3.9000 units. Steve Hilton is with us here today. The format of today’s presentation is going to be fireside chat. So I will start out with some questions, Steve will go into some discussion and I hope that is very interactive, so if there is questions from the audience we’ll go to the audience as well.

We will start out with some general discussions about the industry. One of the popular topics I think is better is, will there be M&A in the industry? What do you think will happen in terms of public-to-public M&A? What needs to happen, or think at point yet or do you think it is years away before we see publics merging with each other?

Steven J. Hilton

I think public to public M&A is a quite a years away, I mean that public CEOs, our founder still, those would have been around a long time like myself. I think really wouldn’t create a lot of shareholder value. In the early stages of this recovery over the next few years, so I just don't feel lot of M&A in general even amongst private builders in that robust, usually next couple of two years until we get later in to the cycle.

Unidentified Analyst

If you think these different tax assets that are in place right now are prevented as in terms of M&A as well, is than an obstacle?

Steven J. Hilton

I think that’s certainly is an obstacle, goodwill is also an obstacle, be it later in the cycle and values tend to come closer and on book value that I think potentially could happen with it, I just don’t see it happening in the short-term.

Unidentified Analyst

If new home sales were to, the pace of new home sales were slow over the next year or two, how would that impact your strategy?

Steven J. Hilton

I mean it’s so much way in the other direction I think new home sales are going to increase. We are still at historically low levels from around 3000 single family house and start to the $400,000 plus pace we are on right now. I mean peak of the market, we’re over a $1 million. So I think we have a long way to go. I think the key to mitigate any slowing is to not comprising your underwriting standards, and I think we are still even today with higher land prices buying land a lots that deliver high margins.

So when the market does, if the market does change correct then we can absorb some of the declining prices through our high profit margins so, but I don’t see the markets slowing anytime soon. I mean if anything that maybe the pace of the recovery could moderate a little bit but I still think we are going to see some positive year-over-year numbers for a while.

Unidentified Analyst

And you mentioned financing standards you think the current mortgage environment is such that it would support a 1 million starts or is it something we could change or is there any obstacles in the current mortgage environment holding back housing?

Steven J. Hilton

Certainly we could sell more homes if credit was a little loser I think as more clarity comes to the mortgage industry around QRM and mortgage putback rules, credit will loosen, I also believe that as we see improvement in the pricing model through the housing credit will also loose and prices will become less and less of an issue. And I think we will go to underwrite mortgages to higher sales volume. So more of an issue on the entry level business, it’s very small portion of our business, family of U.S. homebuilders, but in those entry level builders feel the entire credit more so than we do.

Unidentified Analyst

And for the line, can you explain QRM and various moving theses in terms of what the government is potentially going to do and wants to do and how that might impact the industry?

Steven J. Hilton

Well, I’m not an authority on QRM but from what I read is the government is going to designate, going to define what’s a qualified residential mortgage. And that will be based upon the buyer's down payment and the buyer's credit score. Some of our early discussions were, you need to have a 20% down payment to have a qualified residential mortgage. If the mortgage isn't – it’ll never be (inaudible). I think the down payment is going to be a lot less than that. If the mortgage isn’t qualified the bank will be required to have 5% holdback of that mortgage amount on their balance sheet for a specific period of time.

It could potentially be the life of the mortgage, it could be three years, five years and that is so that the underwriting or the issuing institution has some skin in the game on those mortgages. Obviously if the bank got to put out 5%, retain that, even after they sell the mortgage off to Fannie Mae or to somebody else, that’s going to require higher pricing and then higher credit standards. So we want qualified residential mortgages to be almost all mortgages.

Today almost all mortgages that are written through our company are either FHA/VA Fannie Mae or Freddie Mac and our average buyer puts up 11% down payment, it makes about $100,000 a year, and has about a 729 credit score. So certainly some of those buyers put up less down payment, have less credit score and those are the ones that could potentially be outside the box on the QR in the qualified residential mortgage.

We don’t know what that’s going to be yet. It’s being debated right now in Washington. We expect over the next few months that’s going to resolve itself and hopefully Washington will be smart enough to do no harm to the house industry because housing is one of the bright spots in the economy and is leading the accepted recovery that we are here in today. So I’m hoping that it we’ll be closer to 5% than 10% for qualified residential mortgage on the down payment side.

Unidentified Analyst

And in terms of – sure

Unidentified Analyst

(Inaudible)

Steven J. Hilton

Of the loan amount – for the loan amount or it could be the sales price or the loan amount, so if the house sells for $200,000 and buyers going to have to have $10,000.

Unidentified Analyst

(Inaudible)

Steven J. Hilton

Well we’re talking about two different things. We’re talking about one with the definition of a qualified residential mortgage and that would be a minimum down payment of 5% or 10% or 20%. The second piece of that if it wasn’t a qualified residential mortgage because it didn’t meet the down payment requirements or the credit requirements or whatever other requirements they come up with, the way Dodd-Frank is written that bank will have to put 5% up, whole 5% on their balance sheet against that mortgage but then they sell off to somebody else. Another topics that’s been in the news has been what would happen if mortgage interest reduction, what caps or changes to some extent. And I think there is some misunderstanding that it could be impactful and maybe it really isn’t, what’s your thoughts on that?

Steven J. Hilton

It certainly is an important psychological component to the home the people’s desire to own, to buy a home. They believe that deduction, it’s important to them. It’s debatable at the end of the day how important it really is. You may have seen some articles about this recently, heard that up to 70% of the people in this country don’t even itemize on their tax return and even though they be entitled to deduction, they’re not taking it. So (inaudible) to believe that they will completely eliminate the mortgage interest reduction, it’s so ingrained into the culture of our country, that I think because a lot of people are going to lobby to keep it. I could see it being reduced and certainly I could see it eliminated for second homes. I could comment on how important it really is, I mean I think that’s far different viewpoints on that.

Unidentified Analyst

So moving to another topic, in terms of new homes that you are selling and constructing, what’s your bigger competition, is it the resale markets, is it renter sector that you’re trying to attract in terms of the multiple-mortgage payment now, its attractive versus renting.

Steven J. Hilton

That’s a changing dynamic. Certainly the new home business is only less than 15% of all housing transactions, new and resale homes but certainly there is a lot of people I’m hoping buying resale homes that are buying new, like to convert some of those resale buyers into new home buyers.

Of course, a lot of those homes are in locations that we don’t build in. Builders generally, even in A and B locations, these locations tend to be little bit more on the peripheral and more in newer suburban neighborhood, they’re not in some of the older neighborhoods that certain statements that the buyer population want to live in.

So, as the market was in the early stages of the recovery, still in early stages, but year or two ago we were competing with a lot more resale homes because it was number one, there was less new home competitors and number two there was a lot of resale products on the market, either to foreclosures or short sales or other types of stress situations and we were really pegging our prices more to those opportunities that were available to the buyers.

Today the inventory of homes for sale has gone down dramatically and some markets, it’s even below normal level, it’s down to two or three months. So, competing less and less with resale homes are, I like to call them used homes and we’re competing more and more with other new home builders as they’re bringing more communities to the market and the new home markets become more of a competitive landscape so you still compete with resales but we compete more today with other builders than we did at say a year ago.

Unidentified Analyst

And as the housing recovery continues, are there markets that you’re looking to expand into that you haven’t had a big presence in the past?

Steven J. Hilton

We just announced over the last year or so, three new markets we have entered into, the first one was Raleigh, North Carolina, great market lots of job growth, very educated workforce there great opportunities for builders to build new homes, we’re making money there already we have five or six communities already on the ground in business. The next community, the next city we announced that we entered was at Tampa. We already have a couple of communities open in Tampa. We expect to open some more later this year into next year.

And lastly, we announced our entry into Charlotte. Charlotte also another North Carolina market, that has great employment statistics and very good demographics for home building. And we really see this building out of our South East region. We have a strong business in Orlando, building more than 500 houses a year. We are the top three builders in that market and we really want to grow our footprint in the entire South East, so having Tampa, Charlotte, Raleigh rounding that out it’s important for our growth. We want to grow business in Texas, one of the biggest public builders in that market. We operate all four markets, all four major housing markets in Texas, where our community counters down significantly from where it was in the last cycle.

And we want to go back community count back up of course Arizona is important to our business and then California and Colorado are two places we want to grow significantly as well. We are relatively small in California as well our markets for us to grow in there and our Denver business in Colorado is also being growing quite nicely over the last year or so we are very pleased with that.

Unidentified Analyst

And as you expand obviously these new markets, can you give us an idea of what kind of profitability in these new markets versus the markets that you’ve been for a number of years in terms of significant EBIT margins?

Steven J. Hilton

Well, the first couple of years, you are trying to hit yourself up to a volume level, a minimum volume of what couple of hundreds almost a year. We’re able to leverage your overhead, putting the infrastructure in place when you have a Division President, and land acquisition guy, and a sales manager, and construction operation person that to build leverage those expenses you need to be doing a volume of business.

So you really need to get four or five communities opened on the ground before a market can make a meaningful contribution. And that really also depends on how good a land which you buy, buy low margins deals that no one else want it, you are paying down tax for the new market. And so we tried to be careful for buying the right loss in the right location and that’s why having some local market now it’s really important.

I’m pretty excited about the teams we have in the three new markets that we have and the early success we’ve had in finding the right land opportunities. And certainly what we’ve done in Raleigh has been a demonstration of that, because we are already making money in that market and that happened less than a year.

Unidentified Analyst

And from a bigger picture perspective, public homebuilders have always stated that they had a – the competitive advantage versus the private builders in terms of access to capital. And during the upturn, it was necessarily as evidenced, and now like the downturn this happened, can you explain what the competitive market is between a public homebuilder and private…

Steven J. Hilton

Well, I think the whole discussion of access to capital or public versus private has never been more relative than it is today, I mean, I’ve been in housing now for almost 30 years, and I never seen it like it is today. I mean builders have raised capital over the last six months with very attractive costs on both the debt side, and the equity side and private builders can get capital, even though larger regional players are struggling to access the capital markets. And then even more so a smaller midsize guys are doing 100, 200, 300 units a year, they can get capital a lot, but they can get capital through private equity. So we’re seeing a great opportunity in a lot of our markets to increase market share, a very strong rate and expected to be that way for a while now, I don’t see the banking industry really starting to lend to the private homebuilders in the near future.

Unidentified Analyst

And as you use this advantage to grow your business and you invent new markets, do you think that you’ll start to add more divisions, the industry in general, lower than number of divisions in order to save costs on the way down?

Steven J. Hilton

I think there’s opportunities for us to get into a new market, but I don’t think that’s our primary growth strategy for the next couple of years, because I still think we have an opportunity to get much bigger in the markets that we’re in. I think these markets that we’re in today are going to grow dramatically. If you look at our market like Phoenix, its gone from about 6,000 houses start to 12,000,where we’re still half of the 30-year historical average, that market should be doing 25,000, 30,000 houses and starts fix upon its job growth, the net migration to the market on a regular basis, year in, year out.

And so we’re still at half that rate. And so I think there’s an opportunity for us to grow dramatically even in that market, we have a dominant position. but in all the other markets as well, because they’re operating historically low level. So it’s a lot lesser risk, growing your business in markets that you know versus going to new markets or by making an acquisition in a new market where you might not know the market. So I think for us to answer our peers, the opportunities are in our own backyard and we are going to take advantage of those.

Unidentified Analyst

And moving on to the cost side of business, between land, labor and would you see – what do you see the most sort of pressure in terms of costs of getting the business and trying to keep your margins high and getting them higher?

Steven J. Hilton

I mean certainly there is a pressure on costs in all of our markets. The number one, pressure point is land. Land prices have risen dramatically in most markets, but check your number, it is 4:5:1 ratio relationship between housing prices in land. If housing prices go up 10%, land prices can go up 40%, 50% we can still be in track because the land price is an effective grade in that. If you take out the improvement cost of land, the land itself maybe only 10% of the price of the house, so it would go up as much as 8 or 9 times, well to that (inaudible) total lot, lot and the land together.

So certainly early in the market recovery, land prices always shoot up quickest, thus being the early mover in buying land, it really makes a difference and I think we have been an early mover in a lot of our markets. And then as you move in to construction certainly in those markets where (inaudible) increased the quickest, like Phoenix, cost have gone up the most.

It’s in pretty moderate, very small cost increases in Texas and bigger cost increases in Arizona and in Florida. But on the whole, we’ve been able to raise our prices in line with what our costs have increased, and I think you’re going to see over the next couple of quarters, our margin start to expand to show those costs, those price increases have outpaced the cost increases.

Unidentified Analyst

And just moving over to the balance sheet, as the business grows over the next couple of years, do you proceed meetings to access the capital markets in order to grow your business, or do you think you’re going to be able to sustain with the current cash and the liquidity you have?

Steven J. Hilton

No, we did four capital market transactions in the last seven or eight months. We did equity deal. We did a refinancing of all $300 million of debt. We did a convertible, we did a, put a bank line employee slide, I think we are pretty much done sorry, if any investment bankers in the room, we are doing any capital markets deals in the short-term, we still have $100 million of privately placed bonds outstanding that are robust 7%, but the call premiums on that is still too high for those mix sends for us call in, may be at some point down the road we will replace those with a lower price capital, but as far as adding additional capital, I don’t think its some that we need to do, we have a lot of cash on our balance sheet, like to spend some of that cash down and put it to work, more lots and lands. We will be generating good retained earnings over the next several years, without paying any taxes. So I think our balance sheet looks pretty good and very comfortable that we have the capital that we need to grow our business at very interesting growth rate.

Unidentified Analyst

And in terms of the liquidity you currently have is very healthy, do you as you bring the cash balance down, do you have a target liquidity that you’d like to?

Steven J. Hilton

Yeah, now we’d like to keep about $150 million, $100 million, $150 million of liquidity under our balance sheet, back that up with a bank lines, maybe at some point we increase the bank lines, but I think we are going to run our business a little more conservatively than we did in the last cycle. We think probably any cash around last time when we used our credit line is kind of our piggyback and I don’t think that we’re going to do that way this time, I think we are going to keep a little more liquidity and try to keep our leverage lower as we go into the next cycle.

Unidentified Analyst

And from your perspective is it investment and your business is more attracted to them actually returning cash to shareholders how do you?

Steven J. Hilton

Certainly at this rate right now, when our earnings is still very low and on the early stages of the recovery I would be foolish right now that to buyback stock or say any kind of dividend program, the growth prospect for us are pretty dynamic going forward.

Unidentified Analyst

And in terms of – sorry go ahead.

Question-and-Answer Session

Unidentified Analyst

(Inaudible)

Steven J. Hilton

Only 125 million, I think this four banks and no point in really put a big revolver in place right now, we currently got $1.1 billion, but we are just paying non use fees and it’s not really something that we expect to use in the near future. So we just want to have it there as a fall back position, but it’s not something we expect to happen to. Are there any other questions from the audience?

Unidentified Analyst

Thanks. just had a question in terms of how you’re differentiated versus other builders and kind of focusing on three points. one, you’ve managed your law position fairly well in terms of being in the A and B markets. And two, if you can talk about how you’ve outperformed in terms of returns in the last cycle, because you’re more of a merchant builder models of exchange in the day. And then the third when you think about going forward what’s going to change in terms of your land spending, development costs in particular?

Steven J. Hilton

Well, (inaudible) a few of those points and add a few more. Number one, I think we’re in a lot of markets that are showing substantial recoveries. I think there’s a real difference in the southern half of the country and the middle to northern half of the country. I think markets like Orlando and Tampa and Texas and Arizona are doing better than markets like Chicago and Indianapolis and some of the Midwestern markets.

So I think for us, because we’re less diversified, we’ll actually mean that our growth rates are going to be stronger than those builders that are more diversified in more markets that weren’t much affected by the recovery. I think we’re going to be, we’re buying more land today then to develop than we ever have before. There is less loss available that are finished and ready to go and there’s less loss available on options and the last market cycle we had 85% of the loss we control were through options in land banks. Today 85% of a loss, we controlled, we own on our balance sheet, that’s just a dynamics of the credit market, and the fact that there is no way make us really in business today. Over time I think that will change and will come back into the market, and we buy more or less on option which allows to grow even faster.

I think the couple of differences between us and some of the other builders, the number one the research we do, in underwriting land, underwriting the rate submarkets within the markets to be in, in a market like Phoenix that could be 30 different submarkets. We don't want to rebuild in all 30 submarkets. We want to be building in the best submarkets where people want to live, where they have the best schools, they have the best access to shopping, and transportation, et cetera, so there maybe only 10 or 11 markets out of those 30 that really appeal to us. But we have to have their underlying research and the debt on the existing housing market in those 30 markets understand where the best opportunities for growth and where we're going to have the most pricing power.

So I think our underwriting in analyzing new acquisitions of land for new communities, second to none. And I think it always gives us competitive advantages of extreme energy efficiency strategy. 85% of the homes are sold in this country are resale homes and our job every day is to try to convince some of those buyers they’re out in the market to buy a resale home to buy a new home and new home to buy Meritage Homes, and we’re start talking to about energy efficiency. We can really get their attention, because there is a lot less expensive to operate, own and operate a brand-new Meritage green home that reduced by a traditional resale home, because the synergy cost of our homes can be 50% or even two thirds less than a typical resale home. And when you calculate in that different synergy cost and you apply that money to today’s low mortgage rate, you can almost buy a new home for the same monthly payments as a resale home. And you get that new home now and that new home warranty and that new home feeling it should not going to give when you have a resale home and then it’s hard to become an interesting conversation.

And then on top of that, we talk about our homes are most healthy, because we have the state-of-the-art filtering system or bringing fresher in from the outside and we are filtering it and we clean all the dust and all the pollens with our MERV 8 air filters. And we are also – the walls in our home are still tighter because of straight home insulation. And less docs that’s coming through those walls, those area location, (inaudible) you are not going to hear jets going over, a car is going by like you would in 20-year, 30-year old resale home.

So if you haven’t been to one that to me that I encourage you to check it out, we have – what we call a deconstructed model in most of our communities see on these pictures here. We have cutaways of the walls and the ceiling, but we show the straight home installation, and we have a demonstration or we have a basically a big box and we have two pieces of insulation one is a fiberglass batt, one is a chunk of straight home insulation and we (inaudible) under each one of them and we put a ping-pong-ball and tube on top of each one of them. And you can see the air going right through the fiberglass batt insulation top of this ping-pong-ball and then the other one was the straight one, there is no air coming through because it’s solid.

It’s a very, very powerful demonstration for our products. We also have as you can see in this picture, these three windows sort of the good, better, best window and put your hand is light ball on each window. It is the window from our competition or it is the window you will find in the used home and here is the window you find in a Meritage Home. And you can feel the heat coming through the first two windows and you don’t feel any heat on the third window, very powerful demonstration there in and of itself.

So we are doing things like that and all of our model homes really demonstrate our product and when we get somebody in there thinking about buying a resale home and (inaudible) new home deconstruction portion of our new home presentation, we can really move them over to buy from us. And I did have a slide in here about sales per community. I think he will be out of the mix because they are predominantly of entry level builder and entry level builders are still have higher volumes than move up home builders, but I think our sales per community amongst the move up home builders in the amongst of that.

And I think that’s because of our extreme energy efficient strategy and the fact that we are able to pull homes away from the resale – pull buyers away from the resale market and pull buyers away from some of our competitors where we do compete. We don’t compete heads-up with every homebuilder at every community, it’s all based upon geography within the market.

And in some markets we have different competitors and others, but when move up home builders compete head to head in the same price region and same product style, I think our energy efficiency strategy will win the day and we will built to drive higher absorption, which helped us leverage our overhead and brings higher profit to the bottom-line.

Unidentified Analyst

Just going to your lots supply, how much of it is pre-2009 how do you compare where your lots supply is in terms of years of lots versus your competitors. And where would you like that supply that go into future, do you have that target of how many years of…?

Steven J. Hilton

Number one, I’d say more than 80% of the lots that we control today we bought post 2009, the only lots that we have that are prior to 2009 today are from active adult lots in Arizona with the couple thousand lots, some lots in Vegas there were one in a way out of and then about 10 or 12 mothball communities in Arizona and a little bit in Texas that we are probably going to work our way through 2013.

We are starting to bring some of these mothballs communities back online, so we have a fairly new land position I’m very comfortable having a four or five year supply of lots. The typical 100 lots to 150 lots community it’s got about three year life to it and traditionally when you buy a land it takes about a year to 18 months to get it online.

So four to five years really seems to be the right number for us I mean, we’re merchant homebuilding company. We are now land development company. We are not speculating land, we are buying land that we can put into our system right away and it’s nice to build a lockup longer term positions with some key locations, but I think we’re still in the growth mode and we’re better served to push for a higher return on capital and to build a diversify in more locations and more markets.

So I don’t think we are a disadvantage to any builders that have longer land division, I think quite to the contrary some of those builders that have very long land divisions, have a lot of lots on their books that really can’t be developed today or couldn’t be sold, there is a two far out, they are in a remote locations or they are on their balance sheet at cost numbers that don't make economic sense, certainly as the market prices increased those lots will become more usable. But I don't know that they're going to get high margins on those lots any time in the near future. So its kind of dead capital, I think certainly because of lot options we are trying be available today, we are amongst the highest return on capital in the industry between 2000 and 2006. And I certainly like to get back to that point.

Unidentified Analyst

And some of your competitors get into the downturn more land, how is that impacted the margins currently, are they benefiting, are they...

Steven J. Hilton

I think it's too early to tell, I think it's too early to tell on, what’s the impact of mothballed land has our margins. Because even some of those guys who have lot of lands went out in nine and 10 and even 11 started to buy some new land with stress prices and some of that land is flowing through their income statement today, so you can’t tell old versus new...

Unidentified Analyst

If they are selling that land, the stress prices and straighter margins for short period of time versus what mothball...

Steven J. Hilton

I mean I would (inaudible) or some of the bigger builders they need to buy a land, they got seven, eight, nine year, 10 years to apply a land. Well the reason to buy a land, they need to buy a land, they need to buy a land is because that land doesn’t work right now, so they got to buy land that work to their income statement. Its different, there is different school to thought on that but I’m very comfortable with our land position I don’t think it put us disadvantage or what so ever.

Unidentified Analyst

And I guess given it’s a credit confidence, so asking about your ratings targets you currently, are you happy with your current ratings, which you like to move up over time?

Steven J. Hilton

I think we certainly like to try to get a positive outlook from one or two of our rating agencies and we’re working every day to convince them to do that, but I think the numbers we speak with them. And I don’t expect that we’re going to become an investment grade credit anytime soon nor that our one of our objectives, but to get a solid BB rating I think there is a certainly what we’ve inspired to and or expect us to be. I do really believe that we need to be a little more conservative this cycle. And we need to keep our debt, keep our debt down and how long this cycle last if its five years, six years, seven years, ten years when it does cycle down again I want to have our balance sheet in much better shape than it was. Not that it was a bad shape last downturn I think we did better than most others. I would like to be even stronger next time around.

Unidentified Analyst

So couple of minutes left is there any questions from the audience.

Unidentified Analyst

Just based on what you reiterate to see statistics of lot of your market, thinking specifically on the Phoenix market. Recovery being driven by cash buyers, investors and you don’t bring that up much you talk about more just the fundamentals of employment growth, population increases. Do you see that or does that just move people out of the existing home sales or priced out to go to new communities or is that just the relevant to…

Steven J. Hilton

Yeah, I think there is a lot of misperception about investors in the new home market. We don’t sell houses to investors per se. One or two of them may slip in here and there, 5% of our sales maybe, that’s (inaudible) on facts, but we are not selling homes to traditional investors. I mean investors particularly at Phoenix that are buying homes or buying entry level homes and not very desirable location, nowhere near where we’re building new homes. I think what you guys think about in Phoenix and other markets is half the homes are still under water, so half the homes in the market cannot transact.

Even if they want to sell their home, they can’t sell their home because they have no equity and they have no, they have no equity to be able to even pay closing cost, take commission. So half the people are out of the market, the other half that are in the market, some of them are waiting for higher prices, so these dynamics are really causing this shortage of supply, which is shifting people from the new home market. Now as prices rise over time, that’s going to come more into balance. I think these markets like Sacramento and other markets, there’s only one or two months of supply at housing inventory, we'll change overtime. But I don't think it’s going to still completely the opposite direction.

So I think it’s a misnomer to believe that this is all driven by investors. Investors are buying totally different products what our customers are looking for in both the new home space and in the resale housing market space.

Unidentified Analyst

I think time is up right now. Thanks very much. Appreciate it.

Steven J. Hilton

Okay. Thank you.

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